<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 4, 1995
REGISTRATION NO. 33-63783
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
UJB FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
NEW JERSEY 22-1903313
6712
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NO.)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION) 301 CARNEGIE CENTER
P.O. BOX 2066
PRINCETON, NEW JERSEY 08543-2066
(609) 987-3200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
RICHARD F. OBER, JR., ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
UJB FINANCIAL CORP.
301 CARNEGIE CENTER, P.O. BOX 2066
PRINCETON, NEW JERSEY 08543-2066
(609) 987-3442
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
ROGER MEHNER, ESQ. JOHN F. KUNTZ, ESQ.
BOURNE, NOLL & KENYON SENIOR VICE PRESIDENT,
382 SPRINGFIELD AVENUE CORPORATE SECRETARY AND GENERAL
SUMMIT, NEW JERSEY 07901 COUNSEL
(908) 277-2200 THE SUMMIT BANCORPORATION
ONE MAIN STREET
CHATHAM, NEW JERSEY 07928
(201) 701-2665
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement and upon
consummation of the merger of The Summit Bancorporation into Registrant as
described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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- -------------------------------------------------------------------------------
<PAGE>
UJB FINANCIAL CORP.
CROSS-REFERENCE SHEET FOR
REGISTRATION STATEMENT ON FORM S-4 AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER CAPTION IN FORM S-4 CAPTION IN PROXY STATEMENT-PROSPECTUS
- ----------- ------------------- -------------------------------------
<S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1.Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus..... Facing Page of Registration Statement;
Cross Reference Sheet; Outside Front Cover
Page of Prospectus
2.Inside Front and Outside Back
Cover Pages of Prospectus.... Incorporation of Certain Documents by
Reference; Available Information; Table of
Contents
3.Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information.................. Incorporation of Certain Documents by
Reference; Summary; Introduction; Selected
Financial Data; Pro Forma Financial
Information
4.Terms of the Transaction....... Summary; Introduction; The Merger; The
Merger Agreement; Description of UJB
Capital Stock; Description of Summit
Capital Stock
5.Pro Forma Financial
Information.................. Selected Financial Data; Pro Forma
Financial Information
6.Material Contacts with the
Company Being Acquired....... The Merger
7.Additional Information Required
for Re-offering by Persons
and Parties Deemed to be
Underwriters................. Not Applicable
8.Interests of Named Experts and
Counsel...................... Legal Matters
9.Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities.................. Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10.Information with Respect to S-3
Registrants.................. Incorporation of Certain Documents by
Reference; UJB Financial Corp.;
Description of UJB Capital Stock
11.Incorporation of Certain
Information by Reference..... Incorporation of Certain Documents by
Reference
12.Information with Respect to S-2
or S-3 Registrants........... Not Applicable
13.Incorporation of Certain
Information by Reference..... Not Applicable
14.Information with Respect to
Registrants Other Than S-2 or
S-3 Registrants.............. Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
<S> <C>
15.Information with Respect to S-3
Companies....................... Incorporation of Certain Documents by
Reference; The Summit Bancorporation;
Description of Summit Capital Stock.
16.Information with Respect to S-2 or
S-3 Companies................... Not Applicable
17.Information with Respect to
Companies Other Than S-2 or S-3
Companies....................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18.Information if Proxies, Consents
or Authorizations are to be
Solicited....................... Incorporation of Certain Documents by
Reference; Summary; Introduction; The
Merger; UJB Financial Corp.; The Summit
Bancorporation; Shareholder Proposals for
the 1996 Annual Meetings.
19.Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange
Offer........................... Not Applicable
</TABLE>
<PAGE>
[LETTERHEAD OF T. JOSEPH SEMROD]
, 1995
Dear Fellow Shareholder:
On September 11, 1995, UJB Financial Corp. announced the signing of a
definitive agreement to merge with The Summit Bancorporation of Chatham, New
Jersey. This is a highly significant, strategic acquisition for UJB, and
requires the approval of the shareholders of both companies.
You are cordially invited to attend a Special Meeting of the Shareholders of
UJB Financial Corp. to be held at The Hyatt Regency Princeton, 102 Carnegie
Center, Route 1 at Alexander Road, Princeton, New Jersey, on January 12, 1996,
at p.m. At the Special Meeting you will be asked to consider and vote on
the Agreement and Plan of Merger by which The Summit Bancorporation will be
merged with and into UJB Financial Corp. Shareholders of The Summit
Bancorporation will consider approval of the merger at a special meeting to be
held on the same day.
The Agreement and Plan of Merger provides that shareholders of The Summit
Bancorporation will receive 0.90 shares of UJB Financial Corp. common stock
for each outstanding share of The Summit Bancorporation common stock. Upon
consummation of the merger, The Summit Bancorporation's President and Chief
Executive Officer, Robert G. Cox, will become President of the combined
organization. Mr. Cox will also become a member of the Board of Directors of
UJB Financial Corp., as will five other members of The Summit Bancorporation's
Board of Directors, thereby increasing the number of UJB directors to 19. UJB
will be the surviving corporation in the Merger, although the name of the
combined organization will be changed to "Summit Bancorp." Your management and
directors believe that the merger will create a strong bank holding company
with a significant franchise in many of the top banking markets of New Jersey
and complement our eastern Pennsylvania franchise.
The investment banking firm of Merrill Lynch & Co. has advised your Board of
Directors, in an opinion dated December 1, 1995, that the exchange ratio is
fair to holders of UJB Financial Corp. common stock from a financial point of
view. Details on the proposed acquisition and Special Meeting (including the
Merrill Lynch & Co. opinion letter) are contained in the attached Notice of
Meeting and Proxy Statement-Prospectus. Your vote on the merger proposal is
important to UJB Financial Corp., so please read this information carefully.
Your prompt cooperation is appreciated.
THE AGREEMENT AND PLAN OF MERGER HAS BEEN APPROVED BY YOUR DIRECTORS WHO
UNANIMOUSLY RECOMMEND THAT YOU VOTE TO APPROVE THE MERGER.
Whether or not you plan to attend the Special Meeting, please complete, sign
and return the enclosed proxy promptly to assure that your shares will be
voted at the Special Meeting. On behalf of your Board of Directors and
management, I urge you to vote FOR approval of the merger.
Thank you for your continued support.
Sincerely,
<PAGE>
[LETTERHEAD OF THOMAS D. SAYLES, JR.]
December , 1995
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders of The
Summit Bancorporation ("Summit") to be held on January 12, 1996 at p.m.,
at The Madison Hotel, Madison Avenue, Convent Station, New Jersey (the
"Special Meeting"). At the Special Meeting, you will be asked to consider and
vote upon a proposal to approve an Agreement and Plan of Merger (the
"Agreement") which provides for the merger (the "Merger") of Summit with UJB
Financial Corp. ("UJB").
Upon consummation of the Merger, you will receive 0.90 shares (the "Exchange
Ratio") of UJB common stock for each share of Summit common stock which you
own, together with a cash payment in lieu of any fractional shares of UJB
common stock which you otherwise would be entitled to receive. Based on the
closing price of UJB common stock on November 29, 1995 of $32.375 per share,
shareholders would receive an equivalent value of $29.138 for each share of
Summit common stock. The price of UJB common stock (and therefore the
equivalent value of Summit common stock) may change prior to and following
consummation of the Merger. The Agreement also provides that the $25 stated
value Adjustable Rate Cumulative Preferred Stock of Summit shall be converted,
upon consummation of the Merger, into a like number of shares of UJB Series C
Preferred ($25 stated value) having the same relative rights, preferences and
limitations as the Summit Adjustable Rate Cumulative Preferred.
The proposed Merger has been unanimously approved by the Board of Directors
of both Summit and UJB. Your Board of Directors believes that the Merger
provides enhanced opportunities for Summit's shareholders, has determined that
the Merger is in the best interests of Summit and its shareholders, and
unanimously recommends that you vote FOR approval of the Agreement. Your Board
of Directors also unanimously recommends that you vote FOR the proposal
approving an adjournment of the Special Meeting for the purpose of soliciting
additional proxies, if necessary.
The investment banking firm of Keefe, Bruyette & Woods, Inc. has issued a
written opinion dated as of , 1995 to your Board of Directors that, as of
such date, the Exchange Ratio in the Agreement is fair to holders of Summit
common stock from a financial point of view.
Specific information regarding the Special Meeting is contained in the
enclosed Notice of Special Meeting and Proxy Statement-Prospectus. Please read
these materials carefully. The enclosed Proxy-Statement Prospectus relating to
Summit common stock will also serve as a Prospectus for the shares of UJB
preferred stock that holders of Summit's Adjustable Rate Cumulative Preferred
Stock become entitled to receive in the Merger. However, such holders are not
entitled to vote at the Special Meeting and will not receive their copy of the
Prospectus until after the Merger becomes effective.
It is very important that your shares be represented at the Special Meeting,
whether or not you plan to attend in person. The affirmative vote of a
majority of the votes cast by all shareholders present and entitled to vote at
the Special Meeting is required to approve the Agreement. Therefore, we urge
you to execute, date, and return the enclosed proxy card in the enclosed
postage paid envelope as soon as possible to assure that your shares will be
voted at the Special Meeting. YOU SHOULD NOT SEND IN CERTIFICATES FOR YOUR
SUMMIT SHARES AT THIS TIME. YOU WILL RECEIVE INSTRUCTIONS AS TO THE EXCHANGE
OF YOUR SUMMIT SHARES AFTER CONSUMMATION OF THE MERGER.
On behalf of the Board of Directors, we thank you for your support and urge
you to vote FOR approval of the Agreement and FOR the proposal approving
adjournment of the Special Meeting, if necessary.
Sincerely,
Thomas D. Sayles, Jr.
<PAGE>
UJB FINANCIAL CORP.
301 CARNEGIE CENTER
PRINCETON, NEW JERSEY 08543-2066
----------------
NOTICE
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 12, 1996
----------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of UJB
Financial Corp. will be held at The Hyatt Regency Princeton, 102 Carnegie
Center, Route 1 at Alexander Road, Princeton, New Jersey, on January 12, 1996
at p.m. (local time), for the purpose of considering and voting on the
following matters:
1. A proposal to approve the Agreement and Plan of Merger dated September
10, 1995, as amended by Amendment No. 1 dated December 1, 1995, between UJB
Financial Corp. and The Summit Bancorporation and the transactions
contemplated thereby including (i) the merger of The Summit Bancorporation
with and into UJB Financial Corp. and the issuance of 0.90 shares of UJB
Financial Corp. Common Stock for each share of the outstanding Common Stock
of The Summit Bancorporation, and (ii) an amendment to the Restated
Certificate of Incorporation of UJB Financial Corp. changing the name of
UJB Financial Corp. to "Summit Bancorp.", all as more fully described in
the accompanying Proxy Statement-Prospectus.
2. The transaction of such other business as may properly come before the
Special Meeting.
A description of the proposal to be considered is contained in the Proxy
Statement-Prospectus that accompanies this Notice.
Pursuant to the By-Laws of UJB Financial Corp., the Board of Directors has
fixed December , 1995 as the record date for the determination of
shareholders entitled to notice of and to vote at the Special Meeting and any
adjournments thereof. Only record holders of outstanding UJB common stock as
of the close of business on that date will be entitled to notice of and to
vote at the Special Meeting or any adjournments thereof.
By order of the Board of Directors
[Signature Cut]
Richard F. Ober, Jr.
Secretary
Princeton, New Jersey
December , 1995
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER YOU
PLAN TO BE PRESENT IN PERSON AT THE SPECIAL MEETING OR NOT, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE SELF-ADDRESSED POSTAGE-
PAID ENVELOPE.
THE BOARD OF DIRECTORS OF UJB FINANCIAL CORP. UNANIMOUSLY RECOMMENDS THAT
ITS SHAREHOLDERS VOTE TO APPROVE THE AGREEMENT AND PLAN OF MERGER.
<PAGE>
THE SUMMIT BANCORPORATION
ONE MAIN STREET
CHATHAM, NEW JERSEY 07928
----------------
NOTICE
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 12, 1996
----------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of The Summit
Bancorporation ("Summit") will be held at The Madison Hotel, Madison Avenue,
Convent Station, New Jersey, on January 12, 1996 at p.m. (local time), (the
"Special Meeting") for the purpose of considering and voting on the following
matters:
1. A proposal to approve the Agreement and Plan of Merger dated September
10, 1995 as amended by Amendment No. 1 dated December 1, 1995, between UJB
Financial Corp. ("UJB") and Summit (the "Merger Agreement") and the
transactions contemplated thereby, which agreement provides, among other
things, for the merger of Summit with and into UJB under the name Summit
Bancorp., for the conversion of outstanding shares of the common stock, no
par value, of Summit into whole shares of the common stock, par value $1.20
per share, of UJB and cash in lieu of fractional shares of UJB common
stock, based on an exchange ratio of 0.90 shares of UJB common stock for
each share of Summit common stock, for the conversion of outstanding shares
of the $25 stated value Adjustable Rate Cumulative Preferred Stock of
Summit into shares of an adjustable rate cumulative preferred stock of UJB
of $25 stated value having the same relative rights, preferences and
limitations and for the selection of six members of the Summit Board of
Directors to the Board of Directors of UJB, all as more fully described in
the accompanying Proxy Statement-Prospectus.
2. A proposal to approve adjournment of the Special Meeting if
insufficient shares are present at the Special Meeting to constitute a
quorum or to approve the Merger Agreement, in order to permit further
solicitation of proxies by Summit (the "Summit Adjournment Proposal").
3. The transaction of such other business as may properly come before the
Special Meeting.
A description of the matters to be considered at the Special Meeting is
contained in the Proxy Statement-Prospectus that accompanies this Notice.
Pursuant to the Bylaws of Summit, the Board of Directors has fixed December
, 1995 as the record date for the determination of shareholders entitled to
notice of and to vote at the Special Meeting and any adjournments thereof.
Only record holders of outstanding common stock of Summit as of the close of
business on that date will be entitled to notice of and to vote at the Special
Meeting or any adjournments thereof. Holders of Summit's Adjustable Rate
Cumulative Preferred Stock are not entitled to vote on the Merger Agreement or
the Summit Adjournment Proposal and, consequently, will not receive any notice
of, or an opportunity to vote at, the Special Meeting.
By order of the Board of Directors
[Signature Cut]
John F. Kuntz
Corporate Secretary
Chatham, New Jersey
December , 1995
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER YOU
PLAN TO BE PRESENT IN PERSON AT THE SPECIAL MEETING OR NOT, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE SELF-ADDRESSED POSTAGE-
PAID ENVELOPE.
THE BOARD OF DIRECTORS OF SUMMIT UNANIMOUSLY RECOMMENDS THAT ITS
SHAREHOLDERS VOTE TO APPROVE THE AGREEMENT AND PLAN OF MERGER AND THE SUMMIT
ADJOURNMENT PROPOSAL.
<PAGE>
[Summit LOGO] [UJB LOGO]
PROXY STATEMENT PROXY STATEMENT-PROSPECTUS
THE SUMMIT BANCORPORATION UJB FINANCIAL CORP.
ONE MAIN STREET 301 CARNEGIE CENTER
CHATHAM, NEW JERSEY 07928 PRINCETON, NEW JERSEY 08543-2066
35,820,273 SHARES OF COMMON STOCK (PAR VALUE $1.20 PER SHARE)
504,481 SHARES OF ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK, SERIES C ($25
STATED VALUE)
This Proxy Statement-Prospectus is being furnished to the holders of the
common stock, par value $1.20 per share ("UJB Common"), of UJB Financial Corp.
("UJB"), a New Jersey corporation and registered bank holding company, in
connection with the solicitation of proxies by the Board of Directors of UJB
("UJB Board") for use at the Special Meeting of Shareholders of UJB to be held
at The Hyatt Regency Princeton, 102 Carnegie Center, Route 1 at Alexander
Road, Princeton, New Jersey, at p.m. (local time) on January 12, 1996, and
at any adjournments thereof ("UJB Special Meeting").
This Proxy Statement-Prospectus is also being furnished to the holders of
the common stock, no par value ("Summit Common"), of The Summit Bancorporation
("Summit"), a New Jersey corporation and registered bank holding company, in
connection with the solicitation of proxies by the Board of Directors of
Summit ("Summit Board") for use at the Special Meeting of Shareholders of
Summit to be held at The Madison Hotel, Madison Avenue, Convent Station, New
Jersey, at p.m. (local time) on January 12, 1996, and at any adjournments
thereof ("Summit Special Meeting").
This Proxy Statement-Prospectus relates to up to 35,820,273 shares of UJB
Common to be issued upon the merger ("Merger") of Summit with and into UJB,
pursuant to an Agreement and Plan of Merger dated September 10, 1995, as
amended by Amendment No. 1 dated December 1, 1995, ("Merger Agreement"). In
the Merger, shares of Summit Common outstanding at the Effective Time (as
defined herein) will be converted into the right to receive whole shares of
UJB Common and cash in lieu of any fractional shares of UJB Common resulting
from the conversion, based on an exchange ratio of 0.90 shares of UJB Common
for each share of Summit Common ("Exchange Ratio").
This Proxy Statement-Prospectus also relates to up to 504,481 shares of a
$25 stated value adjustable rate cumulative preferred stock of UJB to be
titled the Adjustable Rate Cumulative Preferred Stock, Series C ($25 stated
value) ("UJB Series C Preferred") to be issued in the Merger in exchange for
the $25 stated value Adjustable Rate Cumulative Preferred Stock of Summit
("Summit Adjustable Preferred"). The Merger Agreement provides for the
conversion at the Effective Time of outstanding shares of the Summit
Adjustable Preferred into a like number of shares of UJB Series C Preferred
having the same relative rights, preferences and limitations as the Summit
Adjustable Preferred. This Proxy Statement-Prospectus will be furnished to
holders of the Summit Adjustable Preferred following the Effective Time.
However, the holders of the Summit Adjustable Preferred have no right to vote
with respect to the Merger or the other matters to be considered at the Summit
Special Meeting, and, accordingly, no vote by the holders of the Summit
Adjustable Preferred is required or being solicited.
This Proxy Statement-Prospectus constitutes (1) the Proxy Statement of UJB
relating to the solicitation of proxies by the UJB Board for use at the UJB
Special Meeting to be held for the purpose of considering and voting upon a
proposal to approve the Merger Agreement and the transactions contemplated
thereby, including the Merger and the amendment to the Restated Certificate of
Incorporation of UJB changing UJB's name to Summit Bancorp., (2) the Proxy
Statement of Summit relating to the solicitation of proxies by the Summit
Board for use at the Summit Special Meeting to be held for the purpose of (i)
considering and voting upon a proposal to approve the Merger Agreement and the
transactions contemplated thereby, and (ii) considering and voting on a
proposal to approve in advance an adjournment of the Summit Special Meeting if
insufficient shares are present at the Summit Special Meeting to constitute a
quorum or to approve the Merger Agreement in order to permit further
solicitation of proxies by Summit (the "Summit Adjournment Proposal"), (3) the
Prospectus of UJB with respect to the UJB Common to be issued in the Merger,
and (4) the Prospectus of UJB with respect to the UJB Series C Preferred to be
issued in the Merger. Consummation of the Merger is subject to various
conditions, including the approvals of the holders of shares of Summit Common
and UJB Common and the Board of Governors of the Federal Reserve System
("Federal Reserve Board").
UJB Common is traded on the New York Stock Exchange, and Summit Common is
traded on the NASDAQ Stock Market--National Market System. The closing sale
prices of UJB Common and Summit Common were $36.625 and $25.75, respectively,
on September 8, 1995 (the last trading day prior to the public announcement of
the Merger), and were $32.375 and $28.375, respectively, on November 29, 1995.
All information contained in this Proxy Statement-Prospectus with respect to
UJB has been supplied by UJB, and all information with respect to Summit has
been supplied by Summit.
The Proxy Statement-Prospectus is first being mailed to the holders of UJB
Common and Summit Common on or about December , 1995.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT-
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENTAL AGENCY.
---------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES
OFFERED BY THIS PROXY STATEMENT-PROSPECTUS OR THE SOLICITATION OF A PROXY IN
ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT WOULD BE UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION OF AN OFFER OR PROXY SOLICITATION. NEITHER THE
DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF THE
SECURITIES TO WHICH THIS PROXY STATEMENT-PROSPECTUS RELATES SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF UJB OR SUMMIT OR IN THE INFORMATION SET FORTH HEREIN SINCE THE DATE
OF THIS PROXY STATEMENT-PROSPECTUS.
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS DECEMBER , 1995.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
INDEX OF DEFINED TERMS................................................... (iii)
AVAILABLE INFORMATION.................................................... (iv)
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.......................... (v)
SUMMARY.................................................................. 1
The Companies.......................................................... 1
UJB Special Meeting.................................................... 1
Stock Held By UJB Affiliates........................................... 2
Summit Special Meeting................................................. 2
Stock Held By Summit Affiliates........................................ 2
The Merger............................................................. 3
Market Prices and Dividends............................................ 7
Recent Developments.................................................... 8
Summary of Comparative Per Share Financial Information................. 9
INTRODUCTION............................................................. 10
UJB SPECIAL MEETING...................................................... 10
Record Date; Vote Required............................................. 10
Proxies; Revocation; Solicitation...................................... 10
SUMMIT SPECIAL MEETING................................................... 11
Record Date; Vote Required............................................. 11
Proxies; Revocation; Solicitation...................................... 12
SELECTED FINANCIAL DATA.................................................. 13
PRO FORMA FINANCIAL INFORMATION.......................................... 16
Pro Forma Condensed Combined Balance Sheet............................. 17
Pro Forma Condensed Combined Statements of Income...................... 18
Notes to Pro Forma Financial Information............................... 23
MARKET PRICE AND DIVIDEND MATTERS........................................ 23
Market Price and Dividend History...................................... 23
Coordination of and Limitations on Dividends Under Merger Agreement.... 24
Dividend Limitations................................................... 24
THE MERGER............................................................... 24
Closing and Effective Time............................................. 24
Merger of Constituent Corporations; Name of Surviving Corporation;
Merger of Subsidiary Banks............................................ 25
Conversion of Summit Common............................................ 25
Conversion of Summit Adjustable Preferred.............................. 25
Exchange of Summit Certificates........................................ 26
Conversion of Stock Award Plan Options................................. 27
Recommendation of the Boards of Directors.............................. 27
Background............................................................. 27
Reasons for the Merger................................................. 31
Opinion of Summit's Financial Advisor.................................. 33
Opinion of UJB's Financial Advisor..................................... 37
Stock Option Agreements................................................ 42
Charter and By-Laws of Surviving Corporation........................... 44
Board of Directors and Officers of Surviving Corporation............... 44
Regulatory Approvals................................................... 44
Interests of Certain Persons in the Merger............................. 45
The Merger Agreement................................................... 48
No Dissenters' Rights.................................................. 50
</TABLE>
(i)
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<TABLE>
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PAGE
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New York Stock Exchange Listing......................................... 50
Accounting Treatment.................................................... 50
Certain Federal Income Tax Consequences................................. 51
Resales of UJB Stock.................................................... 52
Differences in Shareholders' Rights..................................... 52
UJB FINANCIAL CORP........................................................ 56
Description of Business................................................. 56
Recent Developments..................................................... 56
DESCRIPTION OF UJB CAPITAL STOCK.......................................... 57
Common Stock............................................................ 57
Preferred Stock......................................................... 58
Shareholder Rights Plan................................................. 58
THE SUMMIT BANCORPORATION................................................. 59
Description of Business................................................. 59
Recent Developments..................................................... 59
DESCRIPTION OF SUMMIT CAPITAL STOCK....................................... 60
Common Stock............................................................ 60
Preferred Stock......................................................... 61
Shareholder Rights Plan................................................. 61
SHAREHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETINGS........................ 61
LEGAL MATTERS............................................................. 62
EXPERTS................................................................... 62
AGREEMENT AND PLAN OF MERGER (without exhibits) AND AMENDMENT NO. 1 DATED
DECEMBER 1, 1995 .................................................. Appendix A
OPINION OF KEEFE, BRUYETTE & WOODS, INC. ........................... Appendix B
OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED....... Appendix C
UJB FINANCIAL CORP. STOCK OPTION AGREEMENT.......................... Appendix D
THE SUMMIT BANCORPORATION STOCK OPTION AGREEMENT.................... Appendix E
</TABLE>
(ii)
<PAGE>
INDEX OF DEFINED TERMS
(INDEX OF CAPITALIZED TERMS DEFINED IN THIS PROXY STATEMENT-PROSPECTUS)
<TABLE>
<CAPTION>
PAGE IN
DEFINED TERM PROSPECTUS
- ------------ ----------
<S> <C>
Acquisition Proposal................................................. 48
Acquisition Transaction.............................................. 42
Bancorp.............................................................. 7
Bancorp Acquisition.................................................. 7
BHC Act.............................................................. 44
Cash In Lieu Amount.................................................. 3
Certificate of Merger................................................ 3
Change of Control Event.............................................. 46
Closing.............................................................. 25
Closing Date......................................................... 25
Closing Notice....................................................... 25
Code................................................................. 5
Commission........................................................... (iv)
Common Stock Merger Consideration.................................... 3
Contingent Fee....................................................... 36
Effective Time....................................................... 3
Engagement Letter.................................................... 33
Exchange Act......................................................... (iv)
Exchange Agent....................................................... 3
Exchange Ratio....................................................... Cover
Extension Event...................................................... 42
Federal Reserve Board................................................ Cover
Flemington........................................................... 7
Flemington Acquisition............................................... 7
Garden State......................................................... 8
Garden State Acquisition............................................. 8
Grantee.............................................................. 42
GSBank............................................................... 59
Issuer............................................................... 42
Justice Department................................................... 5
Keefe, Bruyette...................................................... 4
Lancaster............................................................ 58
Market Value of UJB Common........................................... 28
Merger............................................................... Cover
Merger Agreement..................................................... Cover
Merrill Lynch........................................................ 4
NASDAQ............................................................... (iv)
New Award Plan Option................................................ 4
New Jersey Corporation Act........................................... 3
NJSB................................................................. 56
NYSE................................................................. (iv)
Opinions............................................................. 50
Options.............................................................. 6
Original Award Plan Option........................................... 4
Pooling Acquisitions................................................. 8
Purchase Event....................................................... 43
Registration Rights.................................................. 43
</TABLE>
<TABLE>
<CAPTION>
PAGE IN
DEFINED TERM PROSPECTUS
- ------------ ----------
<S> <C>
Registration Statement............................................... 43
Repurchase........................................................... 43
Securities Act....................................................... (iv)
SERP................................................................. 46
Stock Option Agreements.............................................. 6
Substitute Option.................................................... 43
Summit............................................................... Cover
Summit Adjournment Proposal.......................................... Cover
Summit Adjustable Preferred.......................................... Cover
Summit Bank.......................................................... 3
Summit Board......................................................... Cover
Summit Certificates.................................................. 3
Summit Common........................................................ Cover
Summit Common Certificates........................................... 3
Summit Dividend Plan................................................. 12
Summit Option........................................................ 6
Summit Preferred Certificates........................................ 3
Summit Profit Sharing Plan........................................... 13
Summit Record Date................................................... 2
Summit Retirement Plan............................................... 46
Summit Right......................................................... 52
Summit Rights Plan................................................... 52
Summit Shareholders.................................................. 2
Summit Special Meeting............................................... Cover
Summit Stock......................................................... 4
Summit Stock Award Plans............................................. 4
Summit Stock Option Agreement........................................ 6
Surviving Corporation................................................ 3
UJB.................................................................. Cover
UJB Board............................................................ Cover
UJB Certificates..................................................... 4
UJB Common........................................................... Cover
UJB Common Certificate............................................... 3
UJB Dividend Plan.................................................... 11
UJB Option........................................................... 6
UJB Rights........................................................... 57
UJB Rights Plan...................................................... 57
UJB Record Date...................................................... 1
UJB Savings Plan..................................................... 11
UJB Series B Preferred............................................... 54
UJB Series C Preferred............................................... Cover
UJB Series C Preferred Certificate................................... 3
UJB Series R Preferred............................................... 57
UJB Shareholders..................................................... 1
UJB Special Meeting.................................................. Cover
UJB Stock............................................................ 4
UJB Stock Option Agreement........................................... 6
UJBank............................................................... 1
</TABLE>
(iii)
<PAGE>
AVAILABLE INFORMATION
Each of UJB and Summit is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act") and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission ("Commission"), relating to its
businesses, financial statements and other matters. The Registration Statement
discussed below and the exhibits thereto as well as such reports, proxy
statements and other information filed by UJB and Summit may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the following
regional offices of the Commission: Chicago Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and New York Regional Office,
7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, UJB Common is listed on the New York Stock Exchange ("NYSE") and
reports, proxy statements and other information concerning UJB are available
for inspection at the offices of the NYSE, 20 Broad Street, New York, New York
10005. Summit Common is listed on the NASDAQ Stock Market--National Market
System ("NASDAQ") and reports, proxy statements and other information
concerning Summit are available for inspection at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
UJB has filed with the Commission a registration statement on Form S-4 under
the Securities Act of 1933, as amended ("Securities Act"), in respect of the
UJB Common and UJB Series C Preferred to be issued in the Merger
("Registration Statement"). As permitted by the rules and regulations of the
Commission, this Proxy Statement-Prospectus omits certain information,
exhibits and undertakings contained in the Registration Statement. For such
information, reference is made to the Registration Statement and the exhibits
filed as a part thereof or incorporated by reference therein.
All information pertaining to UJB contained in this Proxy Statement-
Prospectus has been provided by UJB and all information pertaining to Summit
contained in the Proxy Statement-Prospectus has been provided by Summit.
(iv)
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference into and made a part of this
Proxy Statement-Prospectus the following documents filed by UJB (File No. 1-
6451) with the Commission: (1) the Annual Report on Form 10-K for the fiscal
year ended December 31, 1994; (2) the Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1995, June 30, 1995 and September 30, 1995;
(3) the Current Reports on Form 8-K dated January 19, 1995, August 1, 1995,
September 10, 1995 (two at such date) and October 27 1995; and (4) the
description of UJB Common contained in UJB's Registration Statement on Form 10
filed pursuant to Section 12(b) of the Exchange Act, dated August 31, 1970,
and the description of the preferred stock purchase rights appurtenant to the
UJB Common contained in UJB's Registration Statement on Form 8-A filed
pursuant to Section 12(b) of the Exchange Act, dated August 28, 1989,
including all amendments thereto and reports filed under the Exchange Act for
the purpose of updating such description. Such incorporation by reference will
not be deemed to specifically incorporate by reference the information
referred to in Item 402(a)(8) of Regulation S-K. There are hereby incorporated
by reference into and made a part of this Proxy Statement-Prospectus the
following documents filed by Summit (File No. 0-8026) with the Commission: (1)
the Annual Report on Form 10-K for the fiscal year ended December 31, 1994;
(2) the Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1995, June 30, 1995 and September 30, 1995; (3) the Current Reports on Form 8-
K filed May 16, 1995, July 7, 1995 and September 27, 1995; and (4) the
description of the Summit Shareholder Rights Plan contained in Summit's
Registration Statement on Form 8-A filed February 5, 1990 including all
amendments thereto and reports filed under the Exchange Act for the purpose of
updating such description. Such incorporation by reference will not be deemed
to specifically incorporate by reference the information referred to in Item
402(a)(8) of Regulation S-K.
All documents filed by UJB and Summit pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Proxy Statement-Prospectus
and prior to the date of the UJB and Summit Special Meetings shall be deemed
to be incorporated by reference into this Proxy Statement-Prospectus and to be
a part hereof from the respective dates of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement-Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document that is also incorporated
or deemed incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Proxy
Statement-Prospectus.
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. UJB AND SUMMIT EACH HEREBY
UNDERTAKES, WITH RESPECT TO THE DOCUMENTS LISTED ABOVE FILED BY IT WITH THE
COMMISSION, TO PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL
OWNER, TO WHOM THIS PROXY STATEMENT-PROSPECTUS HAS BEEN DELIVERED, UPON THE
WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS
REFERRED TO ABOVE THAT HAVE BEEN OR MAY BE INCORPORATED INTO THIS PROXY
STATEMENT-PROSPECTUS AND DEEMED TO BE PART HEREOF, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN
SUCH DOCUMENTS. REQUESTS FOR DOCUMENTS FILED BY UJB SHOULD BE DIRECTED TO
RICHARD F. OBER, JR., SECRETARY, UJB FINANCIAL CORP., 301 CARNEGIE CENTER,
P.O. BOX 2066, PRINCETON, NEW JERSEY 08543-2066 (TELEPHONE (609) 987-3442).
REQUESTS FOR DOCUMENTS FILED BY SUMMIT SHOULD BE DIRECTED TO JOHN F. KUNTZ,
CORPORATE SECRETARY, THE SUMMIT BANCORPORATION, ONE MAIN STREET, CHATHAM, NEW
JERSEY 07928 (TELEPHONE (201) 701-2665). IN ORDER TO ENSURE TIMELY DELIVERY OF
DOCUMENTS PRIOR TO THE UJB SPECIAL MEETING OR SUMMIT SPECIAL MEETING, ANY
REQUEST SHOULD BE MADE BY JANUARY 2, 1996.
(v)
<PAGE>
SUMMARY
The following constitutes a brief summary for the convenience of the
shareholders of UJB and Summit of the information contained in this Proxy
Statement-Prospectus relating to the proposal to approve the Merger Agreement,
including the Appendices hereto. The summary is necessarily selective and is
qualified in its entirety by the more extensive discussion contained elsewhere
in this Proxy Statement-Prospectus and the documents incorporated by reference
herein relating to the proposal to approve the Merger Agreement. UJB and Summit
shareholders are encouraged to read carefully this Proxy Statement-Prospectus
in its entirety, including such Appendices.
THE COMPANIES
UJB
UJB Financial Corp., a New Jersey corporation and registered bank holding
company with principal executive offices at 301 Carnegie Center, Princeton, New
Jersey, through its wholly owned subsidiary banks, United Jersey Bank
("UJBank") and First Valley Bank, operated, as of September 30, 1995, 290
banking offices located in New Jersey and eastern Pennsylvania. The subsidiary
banks of UJB are engaged in a general banking business. They offer demand and
interest bearing deposit accounts, make business, real estate, personal and
installment loans, and provide lease financing and trust and fiduciary
services. In addition, UJB owns eight active nonbank subsidiaries that are
engaged primarily in discount brokerage, venture capital investment, commercial
finance lending, lease financing and reinsuring credit life and disability
insurance policies related to consumer loans made by the bank subsidiaries.
SUMMIT
The Summit Bancorporation, a New Jersey corporation and registered bank
holding company with principal executive offices at One Main Street, Chatham,
New Jersey, through its wholly owned subsidiary bank, Summit Bank, operated, as
of September 30, 1995, 90 banking offices located throughout 11 counties in
central and northern New Jersey. Summit Bank is engaged in a general banking
business. It provides a broad range of commercial banking, retail banking, real
estate lending, private banking/asset management and other financial services.
UJB SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE
The UJB Special Meeting will be held on January 12, 1996 at p.m. (local
time), at The Hyatt Regency Princeton, 102 Carnegie Center, Route 1 at
Alexander Road, Princeton, New Jersey, to consider and vote upon a proposal to
approve the Merger Agreement and the transactions contemplated thereby, as set
forth in the accompanying Notice of Special Meeting. A copy of the Merger
Agreement (without exhibits) is attached hereto as Appendix A.
RECORD DATE; VOTE REQUIRED
The record date for determining the UJB shareholders entitled to notice of
and to vote at the UJB Special Meeting ("UJB Shareholders") is December , 1995
("UJB Record Date"). The presence, in person or by proxy, of at least a
majority of the shares of UJB Common outstanding on the UJB Record Date is
necessary to constitute a quorum at the UJB Special Meeting. Assuming a quorum
is present the affirmative vote of a majority of the votes cast at the UJB
Special Meeting is necessary to approve the Merger Agreement. In the event that
a quorum is not present or there are not sufficient votes to approve the Merger
Agreement, the UJB Special Meeting may be adjourned by the chairman of the UJB
Special Meeting or a majority of the shares so represented in order to permit
further solicitation of proxies by UJB.
1
<PAGE>
STOCK HELD BY UJB AFFILIATES
The directors and executive officers of UJB beneficially owned as of the UJB
Record Date shares of UJB Common entitled to vote at the Special Meeting,
representing % of the shares of UJB Common outstanding at the UJB Record
Date. The directors and the executive officers of UJB have all indicated that
they will vote their shares of UJB Common in favor of the Merger Agreement. As
of the UJB Record Date, the banking and trust subsidiaries of UJB, as
fiduciaries, custodians or agents, held a total of shares, or %, of the
outstanding shares of UJB Common under trust agreements and other instruments
and agreements. These entities maintained sole or shared voting power with
respect to of such shares.
Summit beneficially owns 96,519 shares of UJB Common, and, by virtue of
holding the UJB Option (as defined herein), could be deemed the beneficial
owner of an additional 11,450,000 shares of UJB Common, representing 19.9% of
the shares of UJB Common outstanding on the UJB Record Date. However, the UJB
Option is not presently exercisable and the UJB Common represented thereby has
not been issued and cannot be voted.
SUMMIT SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE
The Summit Special Meeting will be held on January 12, 1996 at p.m. (local
time), at The Madison Hotel, Madison Avenue, Convent Station, New Jersey, to
consider and vote upon (i) a proposal to approve the Merger Agreement and the
transactions contemplated thereby and (ii) a proposal to approve in advance an
adjournment of the Summit Special Meeting if insufficient shares are present to
constitute a quorum or to approve the Merger Agreement in order to permit
further solicitation of proxies by Summit (the "Summit Adjournment Proposal")
as set forth in the accompanying Notice of Special Meeting. A copy of the
Merger Agreement (without exhibits) is attached hereto as Appendix A.
RECORD DATE; VOTE REQUIRED
The record date for determining the holders of Summit Common entitled to
notice of and to vote at the Summit Special Meeting ("Summit Shareholders") is
December , 1995 ("Summit Record Date"). The presence, in person or by proxy,
of at least a majority of the shares of Summit Common outstanding on the Summit
Record Date is necessary to constitute a quorum at the Summit Special Meeting.
Assuming a quorum is present, the affirmative vote of a majority of the votes
cast at the Summit Special Meeting is necessary to approve the Merger Agreement
and the Summit Adjournment Proposal. See "Summit Special Meeting--Record Date;
Vote Required."
Holders of Summit Adjustable Preferred are not entitled by law or Summit's
Restated Certificate of Incorporation to vote on the Merger Agreement or the
Summit Adjournment Proposal. Consequently, their vote is not being solicited
with respect to the Merger Agreement or the Summit Adjournment Proposal in
connection with the Special Meeting or otherwise.
STOCK HELD BY SUMMIT AFFILIATES
The directors and executive officers of Summit beneficially owned as of the
Summit Record Date shares of Summit Common entitled to vote at the Summit
Special Meeting, representing % of the outstanding shares of Summit Common
outstanding on the Summit Record Date. The directors and the executive officers
of Summit have all indicated that they will vote their shares of Summit Common
in favor of the Merger Agreement.
UJB, by virtue of holding the Summit Option (as defined herein), could be
deemed the beneficial owner of 6,730,000 shares of Summit Common, representing
19.9% of the shares of Summit Common outstanding on the Summit Record Date.
However, the Summit Option is not presently exercisable and the Summit Common
represented thereby has not been issued and cannot be voted.
2
<PAGE>
THE MERGER
EFFECTIVE TIME
The Merger will become effective at the hour and on the date ("Effective
Time") specified in the Certificate of Merger ("Certificate of Merger") to be
filed pursuant to the New Jersey Business Corporation Act ("New Jersey
Corporation Act") with the Secretary of State of the State of New Jersey
immediately following the closing of the Merger. If the Merger is approved by
the UJB Shareholders and Summit Shareholders, subject to the satisfaction or
waiver of other certain conditions set forth in the Merger Agreement, it is
currently contemplated that the Effective Time will occur during the first
quarter of 1996. See "THE MERGER--The Merger Agreement."
NAME OF SURVIVING CORPORATION
At the Effective Time, Summit will be merged with and into UJB (UJB as the
surviving corporation in the Merger is sometimes referred to herein as the
"Surviving Corporation"). Simultaneously with the effectiveness of the Merger,
the name of the Surviving Corporation will be changed to "Summit Bancorp." In
the Merger Agreement UJB has agreed to merge Summit Bank, the wholly-owned, New
Jersey chartered bank subsidiary of Summit ("Summit Bank"), with and into
UJBank under the name "Summit Bank" as soon as reasonably practicable following
the Effective Time.
NOTWITHSTANDING THE CHANGE IN UJB'S NAME WHICH WILL OCCUR AT THE EFFECTIVE
TIME, HOLDERS OF UJB STOCK CERTIFICATES AT THE EFFECTIVE TIME WILL NOT RECEIVE
NEW UJB STOCK CERTIFICATES REFLECTING THE NAME CHANGE. SUCH HOLDERS SHOULD NOT
ATTEMPT TO EXCHANGE THEIR EXISTING UJB STOCK CERTIFICATES FOR NEW CERTIFICATES.
EXISTING UJB STOCK CERTIFICATES WILL CONTINUE AFTER THE EFFECTIVE TIME TO BE
VALID FOR ALL RELEVANT PURPOSES.
CONVERSION OF SUMMIT COMMON
At the Effective Time, each outstanding share of Summit Common, other than
shares of Summit Common beneficially owned by UJB or a subsidiary of UJB (other
than shares of Summit Common held in a fiduciary capacity or as a result of
debts previously contracted), if any, and shares held in the treasury of
Summit, if any, will be converted into and represent the right to receive whole
shares of UJB Common and cash in lieu of any fractional shares of UJB Common
resulting from the conversion ("Cash In Lieu Amount") based on the Exchange
Ratio of 0.90 shares of UJB Common for each share of Summit Common, subject to
anti-dilution adjustment in the event of changes in the capitalization of UJB.
(Such whole shares of UJB Common and such Cash In Lieu Amounts determined in
accordance with the Exchange Ratio, and any anti-dilution adjustment required
under the Merger Agreement, are referred to collectively herein as the "Common
Stock Merger Consideration".) As soon as practicable following the Effective
Time, each holder of Summit Common will receive from First Chicago Trust
Company of New York acting as the exchange agent for the Merger ("Exchange
Agent"), in exchange for all certificates representing their Summit Common
("Summit Common Certificates"), a certificate representing the whole shares of
UJB Common into which their Summit Common has been converted ("UJB Common
Certificate") and, to the extent entitled thereto, a check representing a Cash
In Lieu Amount.
CONVERSION OF SUMMIT ADJUSTABLE PREFERRED
At the Effective Time, each outstanding share of Summit Adjustable Preferred,
other than shares of Summit Adjustable Preferred beneficially owned by UJB or a
subsidiary of UJB (other than shares of Summit Adjustable Rate Preferred held
in a fiduciary capacity or as a result of debts previously contracted), if any,
and shares held in the treasury of Summit, if any, will be converted into and
represent the right to receive one share of UJB Series C Preferred. As soon as
practicable following the Effective Time, each holder of Summit Adjustable
Preferred will receive from the Exchange Agent, in exchange for all
certificates representing their Summit Adjustable Preferred ("Summit Preferred
Certificates"), a certificate representing the shares of UJB Series C Preferred
into which their Summit Adjustable Preferred has been converted ("UJB Series C
Preferred Certificate"). (The Summit Preferred Certificates and the Summit
Common Certificates are sometimes collectively referred to herein as the
"Summit Certificates," and the UJB Series C Preferred Certificates and the
3
<PAGE>
UJB Common Certificates are sometimes collectively referred to herein as the
"UJB Certificates".) (The Summit Common and the Summit Adjustable Preferred are
sometimes collectively referred to herein as the "Summit Stock," and the UJB
Common and the UJB Series C Preferred are sometimes collectively referred to
herein as the "UJB Stock").
CONVERSION OF SUMMIT DIRECTOR AND EMPLOYEE STOCK OPTIONS
Each stock option relating to Summit Common ("Original Award Plan Option")
outstanding at the Effective Time and granted to a director or employee
pursuant to the Summit Stock Incentive Plan, the Summit 1995 Stock Incentive
Plan and the Summit 1995 Director Stock Option Plan (collectively, the "Summit
Stock Award Plans"), will be converted automatically at the Effective Time into
an option to purchase UJB Common ("New Award Plan Option"). The vesting of any
unexercisable Original Award Plan Options will be accelerated in connection
with the Merger. Subject to the adjustment described below, the New Award Plan
Option will continue to be governed by the terms of the Summit Stock Award Plan
under which the corresponding Original Award Plan Option was granted and the
stock option agreement by which it was evidenced. The number of shares of UJB
Common subject to the New Award Plan Options and the exercise price of the New
Award Plan Options will be adjusted as provided in the Merger Agreement to give
effect to the Exchange Ratio. The Merger Agreement provides for Summit
directors and officers receiving New Award Plan Options at the Effective Time
to have the additional right to exercise the New Award Plan Options as stock
appreciation rights and receive upon exercise a number of shares of UJB Common
equal in market value to the difference between the exercise price and market
price in the aggregate of the shares of UJB Common as to which the New Award
Plan Options were so exercised. The vesting of certain restricted stock awards
and performance share units granted under the Summit Stock Award Plans will be
accelerated in connection with the Merger. See "THE MERGER--Conversion of Stock
Award Plan Options."
RECOMMENDATIONS OF THE BOARDS
The UJB Board unanimously recommends that UJB Shareholders vote to approve
the Merger Agreement. The Summit Board unanimously recommends that Summit
Shareholders vote to approve the Merger Agreement and the Summit Adjournment
Proposal.
OPINION OF SUMMIT'S FINANCIAL ADVISOR
Summit engaged Keefe, Bruyette & Woods Inc. ("Keefe, Bruyette") to render
financial advisory and investment banking services with respect to the Merger.
Pursuant to such engagement, Keefe, Bruyette has evaluated the financial terms
of the Merger. Keefe, Bruyette has delivered to Summit an opinion dated ,
1995 stating that, as of such date, based on the review and assumptions and
subject to the limitations described therein the Exchange Ratio was fair, from
a financial point of view, to the holders of Summit Common. A copy of Keefe,
Bruyette's opinion is attached as Appendix B to this Proxy Statement-Prospectus
and should be read in its entirety. See "THE MERGER--Opinion of Summit's
Financial Advisor."
OPINION OF UJB'S FINANCIAL ADVISOR
UJB engaged Merrill Lynch & Co. ("Merrill Lynch") to render financial
advisory and investment banking services with respect to the Merger. Pursuant
to such engagement, Merrill Lynch has evaluated the financial terms of the
Merger. Merrill Lynch has delivered to UJB an opinion dated December 1, 1995
stating that, as of such date, based on the review and assumptions and subject
to the limitations described therein, the Exchange Ratio is fair to holders of
UJB Common from a financial point of view. A copy of Merrill Lynch's opinion is
attached as Appendix C to this Proxy Statement-Prospectus and should be read in
its entirety. See "THE MERGER--Opinion of UJB's Financial Advisor."
NO DISSENTERS' RIGHTS
Under the New Jersey Corporation Act, there are no dissenters' rights of
appraisal available to holders of UJB Stock or Summit Stock in connection with
the Merger. See "THE MERGER--No Dissenters' Rights."
4
<PAGE>
ACCOUNTING TREATMENT
It is anticipated that the Merger, when consummated, will be accounted for as
a pooling-of-interests. The Merger will not be consummated in the event that
the Merger cannot be accounted for as a pooling-of-interests.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is expected to qualify as a "tax-free" reorganization under
Section 368 of the Internal Revenue Code of 1986, as amended ("Code"). UJB and
Summit have each received an opinion of counsel to the effect that, assuming
the Merger occurs in accordance with the Merger Agreement and conditioned on
the accuracy of certain representations made by UJB and Summit, the Merger will
constitute a "reorganization" within the meaning of Section 368 of the Code for
federal income tax purposes. Summit has received an opinion of counsel that (i)
no gain or loss will be recognized for federal income tax purposes by holders
of Summit Common upon the exchange of their Summit Common solely for the Common
Stock Merger Consideration, except with respect to any Cash in Lieu Amounts
received, and (ii) no gain or loss will be recognized for federal income tax
purposes by holders of Summit Adjustable Preferred upon the exchange of their
Summit Adjustable Preferred solely for UJB Series C Preferred. Each Summit
shareholder is urged to consult his or her own tax advisor to determine the
specific tax consequences of the Merger to such shareholder, including the
applicability of various state, local, and foreign tax laws. See "THE MERGER--
Certain Federal Income Tax Consequences."
REGULATORY APPROVALS
Consummation of the Merger requires, and is conditioned upon receipt of, the
approval of the Merger by the Federal Reserve Board. The Merger may not be
consummated until after the expiration of a 15-to-30-day statutory waiting
period following receipt of Federal Reserve Board approval without objection to
the Merger by the United States Department of Justice ("Justice Department").
There can be no assurance that the approval of the Federal Reserve Board will
be obtained or as to the timing or conditions of such approvals. See "THE
MERGER--Regulatory Approvals."
CONDITIONS OF THE MERGER
Consummation of the Merger is subject, among other things, to the approval of
the Merger Agreement by the requisite vote of UJB Shareholders and Summit
Shareholders and the receipt of all requisite regulatory approvals. See "THE
MERGER--The Merger Agreement--Conditions to the Merger; Termination."
EXCHANGE OF CERTIFICATES
After the Effective Time, holders of record of Summit Common and Summit
Adjustable Preferred at the Effective Time will receive in the mail from the
Exchange Agent instructions for exchanging their Summit Common Certificates or
Summit Preferred Certificates or both, as appropriate, for the Common Stock
Merger Consideration or UJB Series C Preferred or both, as appropriate, to
which they become entitled in the Merger. Summit's shareholders should not
surrender their Summit Certificates until they receive such instructions. See
"THE MERGER--Exchange of Summit Certificates."
In the event a Summit Certificate has been, lost, stolen, destroyed or is not
properly registered, the holder of the Summit Stock represented thereby is
urged, in order to avoid delays and additional expense, to notify Summit's
registrar and transfer agent, First Chicago Trust Company of New York, now, at
(201) 324-0498 (inside New Jersey) or (800) 446-2617 (outside New Jersey) of
such fact and begin the process of having replacement certificates issued.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Directors and executive officers of Summit have interests in the Merger that
are in addition to their interests as shareholders of Summit. These interests
include: (i) the indemnification of directors and officers of Summit
5
<PAGE>
against certain claims that may arise after the Effective Time based on
services provided to Summit or any subsidiary of Summit prior to the Effective
Time; (ii) UJB's covenant to use its best efforts to purchase insurance for six
years after the Effective Time, subject to a maximum premium limitation,
protecting the Summit directors and officers against such claims; (iii) UJB's
covenant to enter, on or before the Closing Date (as defined herein), into an
employment agreement with Robert G. Cox providing for Mr. Cox to serve,
commencing at the Effective Time, as the President of the Surviving Corporation
and UJBank, the wholly-owned, New Jersey chartered subsidiary bank of UJB for a
maximum term of five years with a base salary of at least $500,000 per year;
(iv) for Robert G. Cox, John R. Feeney, Dennis S. McChesney, Elwood Bowman II
and James S. Little payments of $3,382,573, $1,351,317, $1,463,867, $611,093
and $798,697, respectively, under their change of control agreements with
Summit in the event their employment is terminated within certain specified
periods prior to or following the Effective Time by Summit or UJB for certain
reasons other than for cause; (v) for Messrs. Cox, Fenney and McChesney, the
vesting of benefits under the Summit Supplemental Executive Retirement Plan
with an estimated present value of $116,414, $167,121 and $265,966,
respectively; (vi) for directors and officers holding at the Effective Time
Original Award Plan Options which are not currently exercisable, such Original
Award Plan Options will become exercisable in connection with the Merger and
the additional right provided for in the Merger Agreement to exercise the New
Award Plan Options as stock appreciation rights and receive upon exercise an
amount of UJB Common equal to the difference between exercise price and market
price in the aggregate; and (vii) the selection of Mr. Cox and five other
Summit Board members to the Board of the Surviving Corporation for a period of
service to include at least one full three-year term (except with respect to
Thomas D. Sayles, Jr. who, UJB and Summit have separately agreed, if selected,
would serve a term ending at the 1997 annual meeting of shareholders of the
Surviving Corporation). In reference to (vi) above, the aggregate number of
shares and estimated value thereof (based on the closing sale price of UJB
Common on November 29, 1995 of $32.375) of UJB Common issuable upon exercise of
New Award Plan Options as stock appreciation rights by Messrs. Cox, Feeney,
McChesney, Bowman and Little would be 140,928 shares and $4,562,603. These
interests and the underlying assumptions are described in more detail below
under "THE MERGER AGREEMENT--Interests of Certain Persons in the Merger."
DIFFERENCES IN SHAREHOLDERS' RIGHTS
Because UJB and Summit are both New Jersey business corporations, any
differences in rights of holders of their respective stocks are due to
differences in the restated certificates of incorporation and by-laws of the
two companies. At the Effective Time, holders of Summit Stock will become
shareholders of UJB, and their rights as shareholders of UJB will be determined
by UJB's Restated Certificate of Incorporation and By-Laws. See "THE MERGER--
Differences in Shareholder's Rights."
ISSUANCE AND SALE OF OPTIONS
In connection with the execution of the Merger Agreement, on September 11,
1995, UJB entered into a Stock Option Agreement with Summit ("UJB Stock Option
Agreement") and Summit entered into a Stock Option Agreement with UJB ("Summit
Stock Option Agreement," and, collectively with the UJB Stock Option Agreement,
the "Stock Option Agreements"). Pursuant to the Stock Option Agreements, UJB
issued to Summit an option to purchase 11,450,000 shares of UJB Common,
representing 19.9% of UJB Common outstanding at that date, at $36.625 per
share, exercisable under certain circumstances ("UJB Option"), and Summit
issued to UJB an option to purchase 6,730,000 shares of Summit Common,
representing 19.9% of Summit Common outstanding at that date, at $26.75 per
share, exercisable under certain circumstances ("Summit Option," and,
collectively with the UJB Option, the "Options"). The UJB Option and Summit
Option are identical in all material respects. See "THE MERGER--Stock Option
Agreements."
6
<PAGE>
MARKET PRICES AND DIVIDENDS
UJB Common is listed and traded on the NYSE. Summit Common is listed and
traded on NASDAQ. The following table presents for the periods indicated
(rounded to the nearest cent and adjusted for all stock splits and stock
dividends) the high and low sale prices of a share of UJB Common and a share of
Summit Common and dividends declared per share on UJB Common and Summit Common.
<TABLE>
<CAPTION>
UJB COMMON SUMMIT COMMON
----------------------- -----------------------
SALE PRICES SALE PRICES
------------- DIVIDENDS ------------- DIVIDENDS
YEAR HIGH LOW PER SHARE HIGH LOW PER SHARE
- ---- ------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
1992.......................... $24.50 $14.00 $0.60 $19.25 $11.13 $0.73
1993.......................... 33.25 21.63 0.69 22.50 16.88 0.74
1994.......................... 29.25 22.50 0.94 21.75 17.25 0.78
1995 (through November 29,
1995)........................ 37.25 24.13 0.87 30.00 18.75 0.63
</TABLE>
The following table presents (rounded to the nearest cent) for September 8,
1995, the last full trading day prior to the public announcement of the
execution of the Merger Agreement, and for November 29, 1995, the last sale
price of a share of UJB Common, the last sale price of a share of Summit Common
and the pro forma equivalent in UJB Common of a share of Summit Common computed
by multiplying the last sale price of UJB Common on each of the dates specified
in the table by the Exchange Ratio of 0.90.
<TABLE>
<CAPTION>
PRO FORMA
UJB SUMMIT SUMMIT EQUIVALENT
------- ------- -----------------
<S> <C> <C> <C>
September 8, 1995............................. $36.625 $25.750 $32.963
November 29, 1995............................. 32.375 28.375 29.138
</TABLE>
NO ASSURANCE CAN BE GIVEN AS TO WHAT THE MARKET PRICE OF UJB COMMON WILL BE
IF AND WHEN THE MERGER IS CONSUMMATED. BECAUSE THE EXCHANGE RATIO IS FIXED AND
BECAUSE THE MARKET PRICE OF UJB COMMON IS SUBJECT TO FLUCTUATION, THE VALUE OF
THE SHARES OF UJB COMMON THAT HOLDERS OF SUMMIT COMMON WILL RECEIVE IN THE
MERGER MAY INCREASE OR DECREASE PRIOR TO AND FOLLOWING THE MERGER. UJB AND
SUMMIT SHAREHOLDERS ARE ADVISED TO OBTAIN CURRENT MARKET QUOTATIONS FOR UJB
COMMON AND SUMMIT COMMON. IN ADDITION, PAST DIVIDENDS PAID IN RESPECT OF UJB
COMMON AND SUMMIT COMMON ARE NOT NECESSARILY INDICATIVE OF FUTURE DIVIDENDS,
WHICH MAY BE DECLARED AND PAID. NO ASSURANCE CAN BE GIVEN CONCERNING DIVIDENDS
TO BE DECLARED AND PAID IN RESPECT OF UJB COMMON AND SUMMIT COMMON BEFORE OR
AFTER THE EFFECTIVE TIME. SEE "MARKET PRICE AND DIVIDEND MATTERS."
The following table presents, as of November 29, 1995, the current annualized
dividend rate for a share of UJB Common, for a share of Summit Common and
(rounded to the nearest cent) for the pro forma equivalent in UJB Common of a
share of Summit Common computed by multiplying the annualized dividend rate of
a share of UJB Common by the Exchange Ratio of 0.90.
<TABLE>
<CAPTION>
PRO FORMA
UJB SUMMIT SUMMIT EXCHANGE
----- ------ ---------------
<S> <C> <C> <C>
November 29, 1995.................................. $1.16 $.84 $1.04
</TABLE>
7
<PAGE>
RECENT DEVELOPMENTS
UJB
On July 11, 1995, UJB completed the acquisition of Bancorp New Jersey, Inc.
("Bancorp"), a New Jersey-headquartered bank holding company, which has been
accounted for on a purchase accounting basis ("Bancorp Acquisition"). At July
11, 1995, Bancorp had assets of $506 million and deposits of $451 million. In
the transaction, 60 percent of the outstanding Bancorp common stock was
exchanged for UJB Common at the exchange ratio of 1.5441 shares of UJB Common
for each share of Bancorp common stock, resulting in a total of 1,948,153
shares of UJB Common being issued, and the remaining 40 percent of outstanding
Bancorp common stock was exchanged for cash at the rate of $43.10 per share,
for an aggregate cash payment of $36,273,463.
On August 1, 1995, UJB entered into an Agreement and Plan of Merger with The
Flemington National Bank and Trust Company ("Flemington"), a national banking
association, providing for the merger of Flemington with and into UJBank, and
for the issuance of UJB Common to the shareholders of Flemington at an exchange
ratio which will be determined in accordance with a formula set forth in the
Agreement and Plan of Merger and which will depend primarily on the average
closing price of UJB Common over a ten trading day period ending on or shortly
before the closing of the transaction ("Flemington Acquisition"). The exchange
ratio may not be higher than 1.7241 shares of UJB Common for each share of
Flemington common stock, nor lower than 1.3514 shares of UJB Common for each
share of Flemington common stock except under certain circumstances giving
Flemington the right to terminate the agreement unless UJB increases the
relative value of Flemington common stock in the exchange ratio. At August 1,
1995, Flemington had assets of $288 million and 958,476 shares of common stock
outstanding. The transaction is expected to be accounted for as a pooling-of-
interests.
SUMMIT
On June 13, 1995, Summit entered into an Agreement and Plan of Merger with
Garden State Bancshares, Inc. ("Garden State"), a New Jersey-headquartered bank
holding company, providing for the merger of Garden State with and into Summit
and for the exchange of Garden State common stock into Summit Common at the
exchange ratio of 1.08 shares of Summit Common (and cash in lieu of fractional
shares) for each share of Garden State common stock ("Garden State
Acquisition", and, together with the Flemington Acquisition, the "Pooling
Acquisitions"). At September 30, 1995, Garden State had total consolidated
assets of $314 million, deposits of $284 million and shareholders' equity of
$29 million. The transaction is expected to be accounted for as a pooling-of-
interests.
The Pooling Acquisitions are reflected in the pro forma financial
information, unless otherwise indicated. See "SELECTED FINANCIAL DATA" and "PRO
FORMA FINANCIAL INFORMATION."
On May 9, 1995, Summit announced that the Summit Board authorized the
repurchase of up to 7% of the total of the Summit Common issued and
outstanding, or approximately 2.3 million shares. Summit announced that it
expected to repurchase the common shares from time to time in the open market
or through privately negotiated transactions subject to market conditions. As
of September 10, 1995, the day the Merger Agreement was executed, Summit had
repurchased 84,485 shares of Summit Common pursuant to such repurchase program.
In the Merger Agreement, Summit agreed not to engage in any further repurchases
of Summit Common during term of the Merger Agreement.
8
<PAGE>
SUMMARY OF COMPARATIVE PER SHARE FINANCIAL INFORMATION
The following summary presents, for the periods indicated, selected
comparative per share financial data: (i) on a historical basis for both UJB
and Summit; (ii) on a pro forma combined basis for UJB, giving effect to the
Merger, assuming that the Merger had been effective at the beginning of the
periods presented; (iii) on a pro forma combined basis for UJB giving effect to
the Merger and the Pooling Acquisitions, assuming that the Merger and the
Pooling Acquisitions had been effective at the beginning of the periods
presented; and (iv) on a pro forma equivalent basis per common share for
Summit, assuming that the Merger, and the Merger and the Pooling Acquisitions
had been effective for all periods presented. Such data are computed on a pro
forma equivalent basis with respect to a share of Summit Common by multiplying
the pro forma combined amount (giving effect to the Merger and the Merger and
the Pooling Acquisitions) by the Exchange Ratio of 0.90 provided for in the
Merger Agreement. The pro forma consolidated statements of income do not give
effect to anticipated expenses and nonrecurring charges related to the Merger
and the estimated effect of revenue enhancements and expense savings associated
with the consolidation of the operations of UJB and Summit. See "SELECTED
FINANCIAL DATA" and "PRO FORMA FINANCIAL INFORMATION."
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
----------------- -----------------
1995 1994 1994 1993 1992
-------- -------- ----- ----- -----
<S> <C> <C> <C> <C> <C>
NET INCOME PER SHARE (1)
Historical:
UJB....................................... $ 2.20 $ 1.73 $2.35 $1.50 $1.09
Summit.................................... 1.56 0.21 0.70 1.54 1.07
Pro Forma Combined:
UJB and Summit (2)........................ 2.04 1.20 1.80 1.57 1.13
All transactions Pro Forma Combined....... 1.98 1.19 1.77 1.52 1.08
Pro Forma Summit Equivalent of:
UJB and Summit (3)........................ 1.84 1.08 1.62 1.41 1.02
All transactions Pro Forma Combined (3)... 1.78 1.07 1.59 1.37 0.97
DIVIDENDS PER SHARE(1)
Historical:
UJB....................................... 0.87 0.68 0.94 0.69 0.60
Summit.................................... 0.63 0.57 0.78 0.74 0.73
Pro Forma Combined:
UJB and Summit (4)........................ 0.87 0.68 0.94 0.69 0.60
All transactions Pro Forma Combined (4)... 0.87 0.68 0.94 0.69 0.60
Pro Forma Summit Equivalent of:
UJB and Summit (3)........................ 0.78 0.61 0.85 0.62 0.54
All transactions Pro Forma Combined (3)... 0.78 0.61 0.85 0.62 0.54
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
BOOK VALUE PER SHARE (1)
Historical:
UJB..................................... $21.43 $19.53
Summit.................................. 13.92 12.31
Pro Forma Combined:
UJB and Summit (5)...................... 18.74 17.45
All transactions Pro Forma Combined
(5)(6)(7).............................. 18.24 17.04
Pro Forma Summit Equivalent of:
UJB and Summit (3)(5)................... 16.87 15.71
All transactions Pro Forma Combined
(3)(5)(6)(7)........................... 16.42 15.34
</TABLE>
- --------
(1) The financial information for Summit and All Transactions Pro Forma
Combined has been restated to reflect all stock dividends and all stock
splits. Pro Forma combined reflects the elimination of UJB Common owned by
Summit. All Transactions also reflects the elimination of Flemington common
stock owned by Summit.
(2) Pro forma combined net income per common share was computed based on pro
forma combined net income less preferred dividends divided by the weighted
average number of shares outstanding during the periods presented.
(3) Summit pro forma equivalent per share data is computed by multiplying UJB's
pro forma per share data (giving effect to the Merger) by the Exchange
Ratio.
(4) Pro forma amounts assume that UJB would have declared cash dividends per
share equal to its historical cash dividend per share declared.
(5) Gives effect to the Merger as if it had occurred at the end of the period.
The September 30, 1995 pro forma book value per share also includes the
anticipated $85 million of merger-related charges ($54 million after the
related tax effects), but does not reflect the estimated expense savings
and revenue enhancements anticipated to result from the Merger.
(6) Gives effect to the merger of Garden State with and into Summit as if it
had occurred at the end of the period. The September 30, 1995 pro forma
book value per share also includes the anticipated $7.4 million of merger-
related charges ($4.4 million after the related tax effects).
(7) Gives effect to the merger of Flemington with and into UJB as if it had
occurred at the end of the period. The September 30, 1995 pro forma book
value per share also includes the anticipated $3.9 million of merger-
related charges ($2.3 million after the related tax effect).
9
<PAGE>
INTRODUCTION
This Proxy Statement-Prospectus is being furnished to UJB Shareholders in
connection with the solicitation of proxies by the UJB Board for use at the
UJB Special Meeting to be held on January 12, 1996, at The Hyatt Regency
Princeton, 102 Carnegie Center, Route 1 at Alexander Road, Princeton, New
Jersey, at 6 p.m. (local time) or any adjournments thereof, and to Summit
Shareholders in connection with the solicitation of proxies by the Summit
Board for use at the Summit Special Meeting to be held on January 12, 1996, at
The Madison Hotel, Madison Avenue, Convent Station, New Jersey, at p.m.
(local time) or any adjournments thereof. The purpose of each Special Meeting
is to consider and vote upon a proposal to approve the Merger Agreement and
the transactions contemplated thereby, as more fully set forth in the Notice
of Special Meeting accompanying this Proxy Statement-Prospectus.
THE BOARDS OF DIRECTORS OF UJB AND SUMMIT HAVE EACH UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND RESPECTIVELY RECOMMEND THAT UJB SHAREHOLDERS AND SUMMIT
SHAREHOLDERS VOTE FOR ITS APPROVAL. IN ADDITION, THE SUMMIT BOARD UNANIMOUSLY
RECOMMENDS THAT SUMMIT SHAREHOLDERS VOTE FOR THE SUMMIT ADJOURNMENT PROPOSAL.
The information contained herein with respect to UJB has been supplied by
UJB and the information contained herein with respect to Summit has been
supplied by Summit.
UJB SPECIAL MEETING
RECORD DATE; VOTE REQUIRED
The securities to be voted at the UJB Special Meeting consist of shares of
UJB Common, with each share entitling its owner to one vote on the proposal
brought before the UJB Special Meeting. UJB had no other class of securities
entitled to vote on the Merger Agreement outstanding at the close of business
on the UJB Record Date. There were holders of record of UJB Common and
shares of UJB Common outstanding and eligible to be voted at the UJB Special
Meeting as of the Record Date. It is anticipated that this Proxy Statement-
Prospectus, together with the UJB form of proxy, will be mailed to UJB
Shareholders on or about December , 1995.
The presence at the UJB Special Meeting, in person or by proxy, of the
holders of a majority of the outstanding shares of UJB Common will constitute
a quorum for the transaction of business. Under the New Jersey Corporation Act
and UJB's Restated Certificate of Incorporation, the approval of the Merger
Agreement requires the affirmative vote of a majority of the votes cast
thereon, provided a quorum is present at the UJB Special Meeting. The UJB
Special Meeting may be adjourned by the chairman of the UJB Special Meeting or
a majority of the shares so represented, from time to time, if necessary to
obtain a quorum or to obtain the votes necessary to approve the Merger
Agreement. In connection therewith, however, proxies voting against the Merger
Agreement will not be used by the proxy holders to vote in favor of the
adjournment pursuant to such proxy holders' discretionary voting authority.
The approval of the Merger Agreement by UJB Shareholders is a condition to the
consummation of the Merger. See "THE MERGER--The Merger Agreement--Conditions
to the Merger; Termination."
For purposes of determining the number of votes cast with respect to a
matter, only those votes cast "for" and "against"a proposal are counted. There
will be no "broker non-votes" (i.e., shares held by brokers or nominees as to
which instructions have not been received from the beneficial owners or the
persons entitled to vote such shares and the broker or nominee does not have
discretionary voting power under the applicable NYSE rules) submitted by
brokers or nominees in connection with the Special Meeting because, even
though the proposal to approve the Merger Agreement is a nondiscretionary
matter under rules of the NYSE, it is the only proposal. Consequently, broker
non-votes will have no impact on the votes counted as "for" or "against" for
purposes of determining the number of votes cast and no impact on the
determination whether a quorum is present. Abstentions will be treated as
shares that are present for purposes of determining the presence of a quorum
but will not be counted "for" or "against" the proposal.
PROXIES; REVOCATION; SOLICITATION
If the form of UJB proxy is properly executed and returned to UJB in time to
be voted at the UJB Special Meeting, the shares represented thereby will be
voted in accordance with the instructions marked thereon. UJB proxies that are
executed, but as to which no instructions have been marked, will be voted FOR
the approval of
10
<PAGE>
the Merger Agreement. Should any other matter properly come before the UJB
Special Meeting, the persons named as proxies in the UJB proxy, acting by a
majority of those proxies present, will have discretionary authority to vote
on such matters in accordance with their judgment. As of the time of the
preparation of this Proxy Statement-Prospectus, the UJB Board does not know of
any matter, other than those matters referred to in the UJB Notice of Special
Meeting of Shareholders, to be presented for action at the UJB Special
Meeting.
The cost of soliciting proxies will be borne by UJB. In addition to use of
the mails, proxies may be solicited personally or by telephone, telecopier or
telegraph by officers, directors or employees of UJB, who will not be
specially compensated for such solicitation activities. Arrangements will also
be made by UJB to reimburse brokerage houses and other custodians, nominees
and fiduciaries for their reasonable expenses incurred in forwarding
solicitation materials to the beneficial owners of shares held of record by
such persons. UJB has retained Morrow & Co., Inc., a proxy soliciting firm, to
assist in the solicitation of proxies, at a fee of $ plus fees for direct
telephone solicitations, if authorized, and reimbursement of certain out-of-
pocket costs.
If a UJB Shareholder is participating in UJB's Dividend Reinvestment and
Stock Purchase Plan (the "UJB Dividend Plan"), such shareholder will receive a
single proxy covering both the shares of UJB Common held by the UJB
Shareholder in certificate form and the shares of UJB Common held on behalf of
such shareholder by the UJB Dividend Plan Administrator in such shareholder's
UJB Dividend Plan account. If a proxy is not returned, shares of UJB Common
represented by the proxy, including any held under the UJB Dividend Plan, will
not be voted.
Employees who hold UJB Common through participation in UJB's Savings
Incentive Plan (the "UJB Savings Plan") will receive a separate card for use
in providing voting instructions to the Trustee of the UJB Savings Plan. Full
shares held by the UJB Savings Plan will be voted by the Trustee in accordance
with instructions received from participants. In the event such participants
fail to return voting instructions, the Trustee will vote the participants'
shares held in the UJB Savings Plan in the manner deemed by the Trustee to be
in the best interests of the beneficial owners of such shares.
A proxy may be revoked by the person giving the proxy at any time prior to
the close of voting. Prior to the UJB Special Meeting a proxy may be revoked
by filing with the Secretary of UJB at UJB Financial Corp., 301 Carnegie
Center, P.O. Box 2066, Princeton, New Jersey, 08543-2066, a written revocation
or a duly executed proxy bearing a later date. During the UJB Special Meeting
a proxy may be revoked by filing a written revocation or a duly executed proxy
bearing a later date with the secretary of the UJB Special Meeting prior to
the close of voting or by attending the UJB Special Meeting and voting in
person. Any shareholder of record may attend the UJB Special Meeting and vote
in person, whether or not a proxy has previously been given.
If a person holding UJB Common in street name wishes to vote such UJB Common
at the UJB Special Meeting, the person must obtain from the nominee holding
the UJB Common in street name a properly executed "legal proxy" identifying
the individual as a UJB Shareholder, authorizing the UJB Shareholder to act on
behalf of the nominee at the UJB Special Meeting and identifying the number of
shares with respect to which the authorization is granted.
SUMMIT SPECIAL MEETING
RECORD DATE; VOTE REQUIRED
The securities to be voted at the Summit Special Meeting consist of shares
of Summit Common, with each share entitling its owner to one vote on each
proposal brought before the Summit Special Meeting. Summit had no other class
of securities entitled to vote on the Merger Agreement or the Summit
Adjournment Proposal outstanding at the close of business on the Record Date.
There were holders of record of Summit Common and shares of Summit
Common outstanding and eligible to be voted at the Summit Special Meeting as
of the Record Date. It is anticipated that this Proxy Statement-Prospectus,
together with the form of Summit proxy, will be mailed to Summit's
Shareholders on or about December , 1995.
The presence at the Summit Special Meeting, in person or by proxy, of the
holders of a majority of the outstanding shares of Summit Common will
constitute a quorum for the transaction of business. Under the New
11
<PAGE>
Jersey Corporation Act and Summit's Restated Certificate of Incorporation, the
approval of the Merger Agreement and the Summit Adjournment Proposal requires
the affirmative vote of a majority of the votes cast thereon, provided a
quorum is present at the Summit Special Meeting. Under Summit's Restated
Certificate of Incorporation, the approval of the Merger Agreement requires
only the vote of a majority of the votes cast thereon because the Summit Board
has approved the Merger Agreement and the Merger meets the fair price tests
set forth in Summit's Restated Certificate of Incorporation. See "THE MERGER--
Differences in Shareholder's Rights." In connection therewith, however,
proxies voting against the Merger Agreement will not be used by the proxy
holders to vote in favor of the Summit Adjournment Proposal unless the
shareholder has voted FOR the approval of the Summit Adjournment Proposal on
the proxy card. The approval of the Merger Agreement by Summit Shareholders is
a condition to the consummation of the Merger. See "THE MERGER--the Merger
Agreement--Conditions to the Merger; Termination."
For purposes of determining the number of votes cast with respect to a
matter, only those votes cast "for" and "against" a proposal are counted.
"Broker non-votes" (i.e., shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or the persons
entitled to vote such shares and the broker or nominee does not have
discretionary voting power under the applicable NYSE rules), if any are
submitted by brokers or nominees in connection with the Summit Special
Meeting, will not be counted as votes "for" or "against" for purposes of
determining the number of votes cast but will be treated as present for quorum
purposes. Abstentions will be treated as shares that are present for purposes
of determining the presence of a quorum but will not be counted "for" or
"against" the proposal.
PROXIES; REVOCATION; SOLICITATION
If the form of Summit proxy is properly executed and returned to Summit in
time to be voted at the Summit Special Meeting, the shares represented thereby
will be voted in accordance with the instructions marked thereon. Summit
proxies that are executed, but as to which no instructions have been marked,
will be voted FOR the approval of the Merger Agreement and the Summit
Adjournment Proposal except that if a proxy is voted against the Merger
Agreement and no instruction is given in connection with the Summit
Adjournment Proposal, the proxy will not be voted in favor of the Summit
Adjournment Proposal. Should any other matter properly come before the Summit
Special Meeting, the persons named as proxies in the Summit proxy, acting by a
majority of those proxies present, will have discretionary authority to vote
on such matters in accordance with their judgement. As of the time of the
preparation of this Proxy Statement-Prospectus, the Summit Board does not know
of any matter, other than those matters referred to in the Summit Notice of
Special Meeting of Shareholders, to be presented for action at the Summit
Special Meeting.
If a quorum is not obtained, or if fewer shares of Summit Common are voted
in favor of approval of the Merger Agreement than the number required for
approval, it is expected that, if a majority of the proxies voted with respect
to the Summit Adjournment Proposal have been voted in favor of the Summit
Adjournment Proposal, the Summit Special Meeting will be postponed or
adjourned for the purpose of allowing additional time for obtaining additional
proxies or votes, and, at any subsequent reconvening of the Summit Special
Meeting, all proxies will be voted in the same manner as such proxies would
have been voted at the original convening of the Summit Special Meeting
(except for any proxies which have theretofore effectively been revoked or
withdrawn).
The cost of soliciting proxies will be borne by Summit. In addition to use
of the mails, proxies may be solicited personally or by telephone, telecopier
or telegraph by officers, directors or employees of Summit, who will not be
specially compensated for such solicitation activities. Arrangements will also
be made by Summit to reimburse brokerage houses and other custodians, nominees
and fiduciaries for their reasonable expenses incurred in forwarding
solicitation materials to the beneficial owners of shares held of record by
such persons. Summit has retained D.F. King & Co., Inc., a proxy soliciting
firm, to assist in the solicitation of proxies, at a fee of $9,500 plus fees
for direct telephone solicitations, if authorized, and reimbursement of
certain out-of-pocket costs.
If a Summit Shareholder is participating in Summit's Dividend Reinvestment
and Stock Purchase Plan (the "Summit Dividend Plan"), such shareholder will
receive a single proxy covering both the shares of Summit Common held by the
Summit Shareholder in certificate form and the shares of Summit Common held on
behalf
12
<PAGE>
of such shareholder by the Summit Dividend Plan Administrator in such
shareholder's Summit Dividend Plan account. If a proxy is not returned, shares
of Summit Common represented by the proxy, including any held under the Summit
Dividend Plan, will not be voted.
Employees who hold Summit Common through participation in Summit's Profit
Sharing Plan (the "Summit Profit Sharing Plan") will receive a separate card
for use in providing voting instructions to the Trustee of the Summit Profit
Sharing Plan. Full shares held by the Summit Profit Sharing Plan will be voted
by the Trustee in accordance with instructions received from participants. In
the event such participants fail to return voting instructions, the Trustee
will not vote the participants' shares held in the Summit Profit Sharing Plan.
A proxy may be revoked by the person giving the proxy at any time prior to
the close of voting. Prior to the Summit Special Meeting a proxy may be
revoked by filing with the Secretary of Summit at The Summit Bancorporation,
One Main Street, Chatham, New Jersey, 07928, a written revocation or a duly
executed proxy bearing a later date. During the Summit Special Meeting a proxy
may be revoked by filing a written revocation or a duly executed proxy bearing
a later date with the secretary of the Summit Special Meeting prior to the
close of voting. Any shareholder of record may attend the Summit Special
Meeting and vote in person, whether or not a proxy has previously been given.
If a person holding Summit Common in street name wishes to vote such Summit
Common at the Summit Special Meeting, the person must obtain from the nominee
holding the Summit Common in street name a properly executed "legal proxy"
identifying the individual as a Summit Shareholder, authorizing the Summit
Shareholder to act on behalf of the nominee at the Summit Special Meeting and
identifying the number of shares with respect to which the authorization is
granted.
SELECTED FINANCIAL DATA
The tables below set forth selected historical financial information for UJB
and Summit for each of the five years in the period ended December 31, 1994
and the nine month periods ended September 30, 1995 and 1994. Such information
has been derived from and should be read in conjunction with the consolidated
financial statements of UJB and Summit, including the respective notes thereto
and management's discussions and analysis of financial condition and results
of operations contained in the respective Form 10-K's andForm 10-Q's of UJB
and Summit, which are incorporated by reference in this Proxy Statement-
Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE". The
selected historical financial information for UJB and Summit for the nine
month periods ended September 30, 1995 and 1994 reflect, in the opinion of the
managements of UJB and Summit, respectively, all adjustments (comprising only
normal recurring accruals) necessary for a fair presentation of the
consolidated operating results and financial position of UJB and Summit for
such interim periods. Results for the interim periods are not necessarily
indicative of results for the full year or any other period.
The tables setting forth selected unaudited pro forma combined financial
information give effect to the Merger and the Merger and the Pooling
Acquisitions under the pooling-of-interests method of accounting. For a
description of the pooling-of-interests accounting method with respect to the
Merger, see "THE MERGER--Accounting Treatment." This information is derived
from the unaudited pro forma condensed combined financial statements appearing
elsewhere herein and should be read in conjunction with those statements. See
"PRO FORMA FINANCIAL INFORMATION." The unaudited pro forma financial
information is prepared based on (i) the Exchange Ratio in the Merger of 0.90
shares of UJB Common for each share of Summit Common, (ii) an exchange ratio
for the Flemington Acquisition of 1.7241 shares of UJB Common for each share
of Flemington common stock (the highest and most dilutive of the fixed
exchange ratios, see "UJB FINANCIAL CORP. --Recent Developments"), and (iii)
an effective exchange ratio for the Garden State Acquisition of 0.972 shares
of UJB Common for each share of Garden State common stock. The pro forma
condensed combined financial statements do not purport to be indicative of the
combined financial position or results of operations for future periods or
indicative of the results that actually would have been realized had the
entities been a single entity during the periods reflected in the tables.
13
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF UJB
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------- ------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income......... $ 817,999 $ 700,202 $ 960,973 $ 907,628 $ 979,008 $ 1,134,624 $ 1,217,082
Interest expense........ 333,725 244,898 344,869 331,720 429,725 634,432 723,064
Net interest income..... 484,274 455,304 616,104 575,908 549,283 500,192 494,018
Provision for loan
losses................. 48,750 55,500 84,000 95,685 139,555 167,650 251,888
Investment securities
gains (losses)......... 5,205 1,846 1,888 8,877 18,485 13,919 (596)
Net income (loss)....... 124,362 95,827 130,150 82,418 56,788 24,252 (11,416)
Net income (loss) per
share.................. 2.20 1.73 2.35 1.50 1.09 0.46 (0.29)
Cash dividends declared
per share.............. 0.87 0.68 0.94 0.69 0.60 0.60 1.02
Average common
shares outstanding..... 55,946 54,604 54,697 53,917 50,398 48,279 47,230
BALANCE SHEET DATA:
Total assets............ $15,533,070 $15,517,860 $15,429,472 $13,789,641 $14,114,550 $13,727,539 $13,156,273
Investment securities... 4,027,611 4,475,756 4,327,716 3,877,473 3,713,506 3,538,905 3,077,065
Loans................... 10,226,745 9,599,558 9,656,574 8,743,708 8,928,580 8,937,873 8,860,622
Total deposits.......... 12,871,632 12,167,335 12,567,791 11,751,499 12,087,328 11,620,247 10,912,739
Long-term debt.......... 204,338 206,252 204,754 208,654 216,945 65,152 72,960
Shareholders' equity.... 1,263,997 1,084,991 1,104,260 1,019,252 959,492 850,873 845,551
Book value per common
share.................. 21.43 19.21 19.53 18.23 17.38 16.92 17.09
SELECTED HISTORICAL FINANCIAL INFORMATION OF SUMMIT
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------- ------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA(1):
Interest income......... $ 296,565 $ 250,643 $ 341,827 $ 329,030 $ 362,496 $ 427,769 $ 487,713
Interest expense........ 134,159 93,910 131,104 125,077 165,032 248,173 312,573
Net interest income..... 162,406 156,733 210,723 203,953 197,464 179,596 175,140
Provision for loan
losses................. 3,600 6,795 7,995 17,200 25,998 24,767 83,528
Investment securities
gains (losses)......... 1,610 180 344 702 710 (553) (2,818)
Net income (loss)(2).... 53,352 7,857 24,400 50,724 33,487 22,244 (12,196)
Net income (loss) per
share.................. 1.56 0.21 0.70 1.54 1.07 0.78 (0.50)
Cash dividends declared
per share.............. 0.63 0.57 0.78 0.74 0.73 0.73 0.73
Average common shares
outstanding............ 33,658 32,997 33,090 32,102 30,220 27,015 26,842
BALANCE SHEET DATA(1):
Total assets............ $ 5,619,300 $ 5,465,190 $ 5,467,465 $ 5,351,949 $ 5,091,270 $ 4,910,431 $ 5,004,114
Investment securities... 1,690,028 1,673,008 1,632,770 1,624,440 1,508,134 1,161,160 1,111,922
Loans................... 3,503,775 3,352,897 3,448,605 3,137,718 3,043,473 3,207,316 3,419,985
Total deposits.......... 4,641,492 4,461,092 4,409,318 4,412,727 4,374,761 4,170,240 4,079,241
Long-term debt.......... 270,402 255,742 338,763 251,800 140,986 194,319 311,341
Shareholders' equity.... 484,583 429,522 431,570 439,360 398,946 323,981 306,235
Book value per common
share.................. 13.92 12.31 12.31 12.98 11.91 11.05 10.66
</TABLE>
14
<PAGE>
SELECTED UJB AND SUMMIT PRO FORMA COMBINED FINANCIAL INFORMATION
(UNAUDITED)
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------- -----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income......... $ 1,114,564 $ 950,845 $ 1,302,800 $ 1,236,658 $ 1,341,504 $ 1,562,393 $ 1,704,795
Interest expense........ 467,884 338,808 475,973 456,797 594,757 882,605 1,035,637
Net interest income..... 646,680 612,037 826,827 779,861 746,747 679,788 669,158
Provision for loan
losses................. 52,350 62,295 91,995 112,885 165,553 192,417 335,416
Investment securities
gains (losses)......... 6,815 2,026 2,232 9,579 19,195 13,366 (3,414)
Net income (loss)....... 177,714 103,684 154,550 133,142 90,275 46,496 (23,612)
Net income (loss) per
share (3)(4)........... 2.04 1.20 1.80 1.57 1.13 0.60 (0.38)
Cash dividends declared
per share.............. 0.87 0.68 0.94 0.69 0.60 0.60 1.02
Average common shares
outstanding (3)........ 86,141 84,204 84,381 82,712 77,499 72,496 71,291
BALANCE SHEET DATA (5):
Total assets............ $21,180,787 $20,980,797 $20,894,815 $19,139,498 $19,204,120 $18,636,270 $18,158,687
Investment securities
(3).................... 5,714,550 6,146,194 5,958,121 5,499,597 5,219,940 4,698,365 4,187,287
Loans................... 13,730,520 12,952,455 13,105,179 11,881,426 11,972,053 12,145,189 12,280,607
Total deposits.......... 17,513,124 16,628,427 16,977,109 16,164,226 16,462,089 15,790,487 14,991,980
Long-term debt.......... 474,740 461,994 543,517 460,454 357,931 259,471 384,301
Shareholders' equity
(3).................... 1,691,997 1,512,267 1,533,717 1,456,527 1,356,744 1,173,160 1,150,098
Book value per common
share (3).............. 18.74 17.25 17.45 16.89 15.93 15.35 15.32
SELECTED ALL TRANSACTIONS PRO FORMA COMBINED FINANCIAL INFORMATION
(UNAUDITED)
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------- -----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income......... $ 1,148,238 $ 979,636 $ 1,342,303 $ 1,274,846 $ 1,383,798 $ 1,609,195 $ 1,752,692
Interest expense........ 481,043 348,421 489,273 470,817 613,998 909,492 1,063,433
Net interest income..... 667,195 631,215 853,030 804,029 769,800 699,703 689,259
Provision for loan
losses................. 52,437 62,762 92,348 114,442 171,824 197,595 344,200
Investment securities
gains (losses)......... 6,815 2,201 2,025 11,349 20,318 13,713 (3,284)
Net income (loss)....... 181,793 106,587 158,787 133,514 90,121 45,682 (24,925)
Net income (loss) per
share (3)(4)........... 1.98 1.19 1.77 1.52 1.08 0.56 (0.38)
Cash dividends declared
per share.............. 0.87 0.68 0.94 0.69 0.60 0.60 1.02
Average common shares
outstanding (3)........ 90,720 87,961 88,238 86,005 80,792 75,775 74,561
BALANCE SHEET DATA
(4)(5)(6):
Total assets............ $21,787,946 $21,562,122 $21,469,008 $19,701,150 $19,788,121 $19,188,578 $18,674,645
Investment securities
(3).................... 5,864,021 6,313,320 6,108,010 5,676,222 5,397,584 4,836,393 4,293,129
Loans................... 14,131,444 13,316,969 13,487,735 12,212,782 12,311,917 12,497,197 12,619,884
Total deposits.......... 18,054,705 17,151,093 17,488,564 16,688,145 17,001,373 16,302,678 15,466,449
Long-term debt.......... 474,740 461,994 543,517 460,454 357,931 259,471 384,301
Shareholders' equity
(3).................... 1,732,188 1,550,366 1,576,421 1,490,399 1,390,101 1,206,635 1,184,559
Book value per common
share (3).............. 18.24 16.92 17.04 16.64 15.70 15.12 15.11
</TABLE>
- --------
(1) Certain reclassifications have been made to historical amounts to conform
to UJB's method of presentation.
(2) Summit incurred charges of $49.0 million, $33.9 million after related tax
effects, in the third quarter of 1994, which consisted of both a loss on
the sale of certain assets of Crestmont Financial Corp. ("Crestmont") and
the accrual of one-time charges for certain restructuring costs and other
transaction-related expenses associated with the acquisitions of Crestmont
and Lancaster Financial Ltd.
(3) Includes the elimination of shares of UJB Common and Flemington common
stock owned by Summit.
(4) Pro forma combined net income per common share was computed based on pro
forma combined net income less preferred dividends divided by the weighted
average number of shares outstanding during the period. Common stock
equivalents are not included in the pro forma calculation as they are not
material.
(5) Balance sheet data as of September 30, 1995 give effect for anticipated
expenses and nonrecurring charges relating to the Merger but do not
reflect estimated expense savings and revenue enhancements anticipated to
result from the Merger.
(6) Balance sheet data as of September 30, 1995 give effect for anticipated
expenses and nonrecurring charges relating to the mergers of Garden State
with and into Summit and Flemington with and into UJB .
15
<PAGE>
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
The following unaudited pro forma condensed combined financial statements
reflect the Merger and the Pooling Acquisitions under the application of the
pooling-of-interests method of accounting. For a description of the pooling-of-
interests method of accounting, see "THE MERGER--Accounting Treatment." This
pro forma financial information is based on the estimates and assumptions set
forth in the notes to such statements. The pro forma adjustments made in
connection with the development of the pro forma information are preliminary
and have been made solely for purposes of developing such pro forma information
as necessary to comply with the disclosure requirements of the Commission. The
pro forma financial information has been prepared using the historical
consolidated financial statements and notes thereto appearing in UJB's Form 10-
K, Summit's Form 10-K, Flemington's Form 10-KSB and Garden State's Form 10-K
each for the fiscal year ended December 31, 1994. The unaudited pro forma
condensed combined financial statements do not purport to be indicative of the
combined financial position or results of operations of future periods or
indicative of the results that actually would have been realized had the
entities been a single entity during these periods.
The Pro Forma Condensed Combined Statements of Income give effect to the
proposed Merger by combining the respective statements of income of UJB,
Summit, Garden State and Flemington for the nine months ended September 30,
1995 and 1994 and for each of the three years in the period ended December 31,
1994. The Pro Forma Condensed Combined Statements of Income do not give effect
to anticipated expenses and nonrecurring charges related to the Merger and the
estimated effect of revenue enhancements and expense savings associated with
the consolidation of the operations of UJB and Summit. Had these expenses and
nonrecurring charges been reflected in the Pro Forma Condensed Combined
Statements of Income for the nine months ended September 30, 1995, UJB and
Summit Pro Forma net income would decrease by $54 million or $.63 per share and
All Transactions Pro Forma net income would decrease by $61 million or $.67 per
share.
Earnings per common share amounts for UJB, Summit, Garden State and
Flemington are based on the historical weighted average number of common shares
outstanding for each company during the period. With respect to the pro forma
earnings per share computation, shares of Summit, Garden State and Flemington
have been adjusted to the equivalent shares of UJB for each period.
The pro forma financial information uses the Exchange Ratio of 0.90 shares of
UJB Common for each share of Summit Common, the exchange ratio of 1.7241 shares
of UJB Common for each share of Flemington common stock (the highest and most
dilutive of the fixed exchange ratios, see "UJB FINANCIAL CORP.--Recent
Developments"), and the effective exchange ratio of 0.972 shares of UJB Common
for each share of Garden State common stock.
16
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1995
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENT UJB AND ADJUSTMENT ALL
INCREASE SUMMIT GARDEN INCREASE TRANSACTIONS
UJB SUMMIT (DECREASE) PRO FORMA STATE FLEMINGTON (DECREASE) PRO FORMA
----------- ---------- ---------- ----------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from
banks.............. $ 807,173 $ 259,414 $ 1,066,587 $ 8,630 $ 10,591 $ 1,085,808
Interest bearing
deposits
with banks......... 15,938 13 15,951 77 -- 16,028
Short-term
investment
securities......... 2,000 68,870 70,870 14,500 850 86,220
Investment
securities......... 4,027,611 1,690,028 $(3,089)(1) 5,714,550 68,450 82,140 $(1,119)(1) 5,864,021
Loans............... 10,226,745 3,503,775 13,730,520 210,538 190,386 14,131,444
Less: Allowance for
loan losses....... 200,337 90,819 291,156 4,110 2,429 297,695
----------- ---------- ----------- -------- -------- -----------
Net loans.......... 10,026,408 3,412,956 13,439,364 206,428 187,957 13,833,749
Premises and
equipment.......... 163,774 43,667 207,441 8,071 3,657 219,169
Other real estate
owned, net......... 27,082 13,401 40,483 3,347 342 44,172
Other assets........ 463,084 130,951 31,506 (1)(3) 625,541 4,401 4,036 4,801 (1)(4)(5) 638,779
----------- ---------- ------- ----------- -------- -------- ------- -----------
Total Assets........ $15,533,070 $5,619,300 $28,417 $21,180,787 $313,904 $289,573 $ 3,682 $21,787,946
=========== ========== ======= =========== ======== ======== ======= ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits............ $12,871,632 $4,641,492 $17,513,124 $283,856 $257,725 $18,054,705
Other borrowed
funds.............. 936,043 157,367 1,093,410 -- 8,640 1,102,050
Other liabilities... 257,060 65,456 $85,000 (3) 407,516 1,422 4,034 $11,291 (4)(5) 424,263
Long-term debt...... 204,338 270,402 474,740 -- -- 474,740
----------- ---------- ------- ----------- -------- -------- ------- -----------
Total Liabilities... 14,269,073 5,134,717 85,000 19,488,790 285,278 270,399 11,291 20,055,758
Shareholders' equity
Preferred stock.... 30,008 12,612 42,620 -- -- 42,620
Common Stock....... 69,098 50,172 (13,678)(2) 105,592 12,302 2,396 (9,130)(2) 111,160
Surplus............. 490,781 314,068 11,977 (1)(2) 816,826 9,900 10,237 8,673 (1)(2) 845,636
Retained earnings... 677,631 105,088 (54,000)(3) 728,719 6,380 7,301 (6,732)(4)(5) 735,668
Net unrealized
(loss) gain on
investment
securities, net
of tax............. (3,521) 2,643 (882)(1) (1,760) 44 (760) (420)(1) (2,896)
----------- ---------- ------- ----------- -------- -------- ------- -----------
Total Shareholders'
equity............. 1,263,997 484,583 (56,583) 1,691,997 28,626 19,174 (7,609) 1,732,188
----------- ---------- ------- ----------- -------- -------- ------- -----------
Total Liabilities
and Shareholders'
Equity............. $15,533,070 $5,619,300 $28,417 $21,180,787 $313,904 $289,573 $ 3,682 $21,787,946
=========== ========== ======= =========== ======== ======== ======= ===========
</TABLE>
See Notes to Pro Forma Financial Information on page 23.
17
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UJB AND ALL
SUMMIT GARDEN TRANSACTIONS
UJB SUMMIT PRO FORMA STATE FLEMINGTON PRO FORMA
-------- -------- --------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on
loans................. $623,270 $216,902 $ 840,172 $15,076 $11,387 $ 866,635
Interest on investment
securities............ 190,296 76,253 266,549 2,984 3,756 273,289
Interest on Federal
funds sold and
securities purchased
under agreements to
resell................ 2,603 3,125 5,728 441 22 6,191
Interest on trading
account securities.... 1,320 37 1,357 -- -- 1,357
Interest on bank
balances.............. 510 248 758 8 -- 766
-------- -------- --------- ------- ------- ---------
Total interest income.. 817,999 296,565 1,114,564 18,509 15,165 1,148,238
Interest Expense
Interest on savings and
time deposits......... 239,057 98,379 337,436 6,246 4,787 348,469
Interest on commercial
certificates of
deposits $100,000 and
over.................. 18,860 11,900 30,760 902 703 32,365
Interest on borrowed
funds................. 75,808 23,880 99,688 74 447 100,209
-------- -------- --------- ------- ------- ---------
Total interest
expense............... 333,725 134,159 467,884 7,222 5,937 481,043
-------- -------- --------- ------- ------- ---------
Net interest income.... 484,274 162,406 646,680 11,287 9,228 667,195
Provision for loan
losses................ 48,750 3,600 52,350 87 -- 52,437
-------- -------- --------- ------- ------- ---------
Net interest income
after provision for
loan losses........... 435,524 158,806 594,330 11,200 9,228 614,758
Non-Interest Income
Service charges on
deposit accounts...... 49,665 15,112 64,777 1,137 731 66,645
Service and loan fee
income................ 20,707 6,601 27,308 411 213 27,932
Trust income........... 16,421 8,740 25,161 462 134 25,757
Investment securities
gains................. 5,205 1,610 6,815 -- -- 6,815
Trading account gains.. 777 175 952 -- -- 952
Other.................. 37,399 5,611 43,010 228 89 43,327
-------- -------- --------- ------- ------- ---------
Total non-interest
income................ 130,174 37,849 168,023 2,238 1,167 171,428
Non-Interest Expenses
Salaries............... 146,639 45,670 192,309 4,082 3,413 199,804
Pension and other
employee benefits..... 47,072 14,955 62,027 1,146 1,057 64,230
Occupancy, net......... 39,329 12,995 52,324 923 862 54,109
Furniture and
equipment............. 37,965 7,032 44,997 582 575 46,154
Other real estate owned
expenses.............. 5,779 1,998 7,777 439 (84) 8,132
FDIC insurance
assessment............ 13,710 5,176 18,886 332 255 19,473
Advertising and public
relations............. 8,585 4,199 12,784 362 161 13,307
Other.................. 72,139 21,754 93,893 1,893 1,742 97,528
-------- -------- --------- ------- ------- ---------
Total non-interest
expenses.............. 371,218 113,779 484,997 9,759 7,981 502,737
-------- -------- --------- ------- ------- ---------
Income before income
taxes.................. 194,480 82,876 277,356 3,679 2,414 283,449
Federal and state
income taxes.......... 70,118 29,524 99,642 1,183 831 101,656
-------- -------- --------- ------- ------- ---------
Net Income.............. $124,362 $ 53,352 $ 177,714 $ 2,496 $ 1,583 $ 181,793
======== ======== ========= ======= ======= =========
Net Income Per Common
Share.................. $ 2.20 $ 1.56 $ 2.04 $ 0.82 $ 1.65 $ 1.98
======== ======== ========= ======= ======= =========
Average Common Shares
Outstanding (1)........ 55,946 33,658 86,141 3,054 958 90,720
======== ======== ========= ======= ======= =========
</TABLE>
See Notes to Pro Forma Financial Information on page 23.
18
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UJB AND ALL
SUMMIT GARDEN TRANSACTIONS
UJB SUMMIT PRO FORMA STATE FLEMINGTON PRO FORMA
-------- -------- --------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on
loans................. $510,472 $178,040 $688,512 $11,901 $9,130 $709,543
Interest on investment
securities............ 188,484 69,461 257,945 3,259 4,268 265,472
Interest on Federal
funds sold and
securities purchased
under agreements to
resell................ 255 2,833 3,088 88 40 3,216
Interest on trading
account securities.... 557 59 616 -- -- 616
Interest on bank
balances.............. 434 250 684 105 -- 789
-------- -------- -------- ------- ------ --------
Total interest income.. 700,202 250,643 950,845 15,353 13,438 979,636
Interest Expense
Interest on savings and
time deposits......... 173,752 72,375 246,127 4,818 3,833 254,778
Interest on commercial
certificates of
deposits $100,000 and
over.................. 8,256 3,686 11,942 505 219 12,666
Interest on borrowed
funds................. 62,890 17,849 80,739 11 227 80,977
-------- -------- -------- ------- ------ --------
Total interest
expense............... 244,898 93,910 338,808 5,334 4,279 348,421
-------- -------- -------- ------- ------ --------
Net interest income.... 455,304 156,733 612,037 10,019 9,159 631,215
Provision for loan
losses................ 55,500 6,795 62,295 467 -- 62,762
-------- -------- -------- ------- ------ --------
Net interest income
after provision for
loan losses........... 399,804 149,938 549,742 9,552 9,159 568,453
Non-Interest Income
Service charges on
deposit accounts...... 48,474 13,378 61,852 915 631 63,398
Service and loan fee
income................ 20,082 10,367 30,449 658 322 31,429
Trust income........... 16,410 8,501 24,911 397 118 25,426
Investment securities
gains................. 1,846 180 2,026 125 50 2,201
Trading account gains.. 522 129 651 -- -- 651
Other.................. 33,109 7,425 40,534 181 80 40,795
-------- -------- -------- ------- ------ --------
Total non-interest
income................ 120,443 39,980 160,423 2,276 1,201 163,900
Non-Interest Expenses
Salaries............... 135,521 51,404 186,925 4,060 3,050 194,035
Pension and other
employee benefits..... 41,721 14,824 56,545 969 1,135 58,649
Occupancy, net......... 38,492 14,444 52,936 908 891 54,735
Furniture and
equipment............. 36,170 6,880 43,050 724 574 44,348
Other real estate owned
expenses.............. 14,467 2,760 17,227 1,215 76 18,518
FDIC insurance
assessment............ 20,815 7,555 28,370 609 437 29,416
Advertising and public
relations............. 8,039 2,991 11,030 310 178 11,518
Restructuring charges.. -- 13,565 13,565 -- -- 13,565
Loss on sale of
assets................ -- 35,390 35,390 -- -- 35,390
Other.................. 70,925 24,897 95,822 1,665 1,457 98,944
-------- -------- -------- ------- ------ --------
Total non-interest
expenses.............. 366,150 174,710 540,860 10,460 7,798 559,118
-------- -------- -------- ------- ------ --------
Income before income
taxes.................. 154,097 15,208 169,305 1,368 2,562 173,235
Federal and state
income taxes.......... 56,539 7,351 63,890 75 952 64,917
-------- -------- -------- ------- ------ --------
Income before cumulative
effect of a change in
accounting principle... 97,558 7,857 105,415 1,293 1,610 108,318
Cumulative effect of a
change in accounting
principle............. (1,731) -- (1,731) -- -- (1,731)
-------- -------- -------- ------- ------ --------
Net Income.............. $ 95,827 $ 7,857 $103,684 $ 1,293 $1,610 $106,587
======== ======== ======== ======= ====== ========
Net Income Per Common
Share:
Income before
cumulative effect of a
change in accounting
principle............. $ 1.76 $ 0.21 $ 1.22 $ 0.59 $ 1.68 $ 1.21
Cumulative effect of a
change in accounting
principle............. (0.03) -- (0.02) -- -- (0.02)
-------- -------- -------- ------- ------ --------
Net Income.............. $ 1.73 $ 0.21 $ 1.20 $ 0.59 $ 1.68 $ 1.19
======== ======== ======== ======= ====== ========
Average Common Shares
Outstanding(1)......... 54,604 32,997 84,204 2,205 958 87,961
======== ======== ======== ======= ====== ========
</TABLE>
See Notes to Pro Forma Financial Information on page 23.
19
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UJB AND ALL
SUMMIT GARDEN TRANSACTIONS
UJB SUMMIT PRO FORMA STATE FLEMINGTON PRO FORMA
-------- -------- --------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on
loans................. $706,049 $244,980 $ 951,029 $16,534 $12,733 $ 980,296
Interest on investment
securities............ 253,027 93,525 346,552 4,274 5,641 356,467
Interest on Federal
funds sold and
securities purchased
under agreements to
resell................ 600 2,918 3,518 140 44 3,702
Interest on trading
account securities.... 668 79 747 -- -- 747
Interest on bank
balances.............. 629 325 954 137 -- 1,091
-------- -------- --------- ------- ------- ---------
Total interest income.. 960,973 341,827 1,302,800 21,085 18,418 1,342,303
Interest Expense
Interest on savings and
time deposits......... 239,714 98,433 338,147 6,513 5,154 349,814
Interest on commercial
certificates of
deposits $100,000 and
over.................. 13,639 7,066 20,705 766 346 21,817
Interest on borrowed
funds................. 91,516 25,605 117,121 54 467 117,642
-------- -------- --------- ------- ------- ---------
Total interest
expense............... 344,869 131,104 475,973 7,333 5,967 489,273
-------- -------- --------- ------- ------- ---------
Net interest income.... 616,104 210,723 826,827 13,752 12,451 853,030
Provision for loan
losses................ 84,000 7,995 91,995 975 (622) 92,348
-------- -------- --------- ------- ------- ---------
Net interest income
after provision for
loan losses........... 532,104 202,728 734,832 12,777 13,073 760,682
Non-Interest Income
Service charges on
deposit accounts...... 64,474 18,523 82,997 1,230 854 85,081
Service and loan fee
income................ 27,531 11,468 38,999 773 408 40,180
Trust income........... 21,792 11,875 33,667 532 155 34,354
Investment securities
gains (losses)........ 1,888 344 2,232 121 (328) 2,025
Trading account gains.. 670 177 847 -- -- 847
Other.................. 43,933 9,611 53,544 257 85 53,886
-------- -------- --------- ------- ------- ---------
Total non-interest
income................ 160,288 51,998 212,286 2,913 1,174 216,373
Non-Interest Expenses
Salaries............... 183,339 66,868 250,207 5,467 4,324 259,998
Pension and other
employee benefits..... 53,386 19,219 72,605 1,320 1,421 75,346
Occupancy, net......... 50,749 18,868 69,617 1,198 1,197 72,012
Furniture and
equipment............. 49,065 9,496 58,561 918 759 60,238
Other real estate owned
expenses.............. 18,287 3,053 21,340 1,404 158 22,902
FDIC insurance
assessment............ 27,933 10,050 37,983 805 572 39,360
Advertising and public
relations............. 10,843 4,761 15,604 474 252 16,330
Restructuring charges.. -- 13,565 13,565 -- -- 13,565
Loss on sale of
assets................ -- 35,390 35,390 -- -- 35,390
Other.................. 94,597 32,416 127,013 2,556 2,096 131,665
-------- -------- --------- ------- ------- ---------
Total non-interest
expenses.............. 488,199 213,686 701,885 14,142 10,779 726,806
-------- -------- --------- ------- ------- ---------
Income before income
taxes.................. 204,193 41,040 245,233 1,548 3,468 250,249
Federal and state
income taxes
(benefit)............. 72,312 16,640 88,952 (509) 1,288 89,731
-------- -------- --------- ------- ------- ---------
Income before cumulative
effect of a change in
accounting principle... 131,881 24,400 156,281 2,057 2,180 160,518
Cumulative effect of a
change in accounting
principle............. (1,731) -- (1,731) -- -- (1,731)
-------- -------- --------- ------- ------- ---------
Net Income.............. $130,150 $ 24,400 $ 154,550 $ 2,057 $ 2,180 $ 158,787
======== ======== ========= ======= ======= =========
Net Income Per Common
Share:
Income before
cumulative effect of a
change in accounting
principle............. $ 2.38 $ 0.70 $ 1.82 $ 0.89 $ 2.28 $ 1.79
Cumulative effect of a
change in accounting
principle............. (0.03) -- (0.02) -- -- (0.02)
-------- -------- --------- ------- ------- ---------
Net Income.............. $ 2.35 $ 0.70 $ 1.80 $ 0.89 $ 2.28 $ 1.77
======== ======== ========= ======= ======= =========
Average Common Shares
Outstanding(1)......... 54,697 33,090 84,381 2,308 958 88,238
======== ======== ========= ======= ======= =========
</TABLE>
See Notes to Pro Forma Financial Information on page 23.
20
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1993
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UJB AND ALL
SUMMIT GARDEN TRANSACTIONS
UJB SUMMIT PRO FORMA STATE FLEMINGTON PRO FORMA
-------- -------- --------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on
loans................. $670,705 $232,981 $ 903,686 $15,751 $10,952 $ 930,389
Interest on investment
securities............ 234,020 89,793 323,813 4,898 6,268 334,979
Interest on Federal
funds sold and
securities purchased
under agreements to
resell................ 955 5,175 6,130 102 156 6,388
Interest on trading
account securities.... 1,297 68 1,365 -- -- 1,365
Interest on bank
balances.............. 651 1,013 1,664 61 -- 1,725
-------- -------- --------- ------- ------- ---------
Total interest income.. 907,628 329,030 1,236,658 20,812 17,376 1,274,846
Interest Expense
Interest on savings and
time deposits......... 271,345 108,452 379,797 7,409 5,758 392,964
Interest on commercial
certificates of
deposits $100,000 and
over.................. 7,319 2,065 9,384 528 231 10,143
Interest on borrowed
funds................. 53,056 14,560 67,616 5 89 67,710
-------- -------- --------- ------- ------- ---------
Total interest
expense............... 331,720 125,077 456,797 7,942 6,078 470,817
-------- -------- --------- ------- ------- ---------
Net interest income.... 575,908 203,953 779,861 12,870 11,298 804,029
Provision for loan
losses................ 95,685 17,200 112,885 1,117 440 114,442
-------- -------- --------- ------- ------- ---------
Net interest income
after provision for
loan losses........... 480,223 186,753 666,976 11,753 10,858 689,587
Non-Interest Income
Service charges on
deposit accounts...... 60,474 16,936 77,410 1,211 800 79,421
Service and loan fee
income................ 21,063 11,751 32,814 1,065 355 34,234
Trust income........... 21,852 11,125 32,977 473 125 33,575
Investment securities
gains................. 8,877 702 9,579 258 1,512 11,349
Trading account gains.. 1,884 331 2,215 -- -- 2,215
Other.................. 49,151 10,472 59,623 217 160 60,000
-------- -------- --------- ------- ------- ---------
Total non-interest
income................ 163,301 51,317 214,618 3,224 2,952 220,794
Non-Interest Expenses
Salaries............... 185,570 67,030 252,600 4,892 3,982 261,474
Pension and other
employee benefits..... 58,601 17,594 76,195 1,009 1,041 78,245
Occupancy, net......... 48,487 18,619 67,106 1,138 992 69,236
Furniture and
equipment............. 45,592 8,927 54,519 887 692 56,098
Other real estate owned
expenses.............. 40,925 6,849 47,774 4,319 1,387 53,480
FDIC insurance
assessment............ 29,244 10,487 39,731 854 581 41,166
Advertising and public
relations............. 10,517 4,443 14,960 293 227 15,480
Restructuring charges.. 21,500 -- 21,500 -- -- 21,500
Other.................. 97,533 36,728 134,261 2,168 3,549 139,978
-------- -------- --------- ------- ------- ---------
Total non-interest
expenses.............. 537,969 170,677 708,646 15,560 12,451 736,657
-------- -------- --------- ------- ------- ---------
Income (loss) before
income taxes........... 105,555 67,393 172,948 (583) 1,359 173,724
Federal and state
income taxes
(benefit)............. 26,953 21,972 48,925 (46) 450 49,329
-------- -------- --------- ------- ------- ---------
Income (loss) before
cumulative effect of a
change in accounting
principle.............. 78,602 45,421 124,023 (537) 909 124,395
Cumulative effect of a
change in accounting
principle............. 3,816 5,303 9,119 -- -- 9,119
-------- -------- --------- ------- ------- ---------
Net Income (loss)....... $ 82,418 $ 50,724 $ 133,142 $ (537) $ 909 $ 133,514
======== ======== ========= ======= ======= =========
Net Income (loss) Per
Common Share:
Income (loss) before
cumulative effect of a
change in accounting
principle............. $ 1.43 $ 1.37 $ 1.46 $ (0.31) $ 0.95 $ 1.41
Cumulative effect of a
change in accounting
principle............. 0.07 0.17 0.11 -- -- 0.11
-------- -------- --------- ------- ------- ---------
Net Income (loss)....... $ 1.50 $ 1.54 $ 1.57 $ (0.31) $ 0.95 $ 1.52
======== ======== ========= ======= ======= =========
Average Common Shares
Outstanding(1)......... 53,917 32,102 82,712 1,724 958 86,005
======== ======== ========= ======= ======= =========
</TABLE>
See Notes to Pro Forma Financial Information on page 23.
21
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1992
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UJB AND ALL
SUMMIT GARDEN TRANSACTIONS
UJB SUMMIT PRO FORMA STATE FLEMINGTON PRO FORMA
-------- -------- --------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on
loans................. $713,987 $260,765 $ 974,752 $18,176 $11,988 $1,004,916
Interest on investment
securities............ 258,371 95,165 353,536 5,270 6,609 365,415
Interest on Federal
funds sold and
securities purchased
under agreements to
resell................ 4,615 4,997 9,612 96 136 9,844
Interest on trading
account securities.... 1,367 66 1,433 -- -- 1,433
Interest on bank
balances.............. 668 1,503 2,171 19 -- 2,190
-------- -------- --------- ------- ------- ----------
Total interest income.. 979,008 362,496 1,341,504 23,561 18,733 1,383,798
Interest Expense
Interest on savings and
time deposits......... 366,023 140,546 506,569 10,167 7,874 524,610
Interest on commercial
certificates of
deposits $100,000 and
over.................. 16,320 3,900 20,220 782 309 21,311
Interest on borrowed
funds................. 47,382 20,586 67,968 6 103 68,077
-------- -------- --------- ------- ------- ----------
Total interest
expense............... 429,725 165,032 594,757 10,955 8,286 613,998
-------- -------- --------- ------- ------- ----------
Net interest income.... 549,283 197,464 746,747 12,606 10,447 769,800
Provision for loan
losses................ 139,555 25,998 165,553 5,501 770 171,824
-------- -------- --------- ------- ------- ----------
Net interest income
after provision for
loan losses........... 409,728 171,466 581,194 7,105 9,677 597,976
Non-Interest Income
Service charges on
deposit accounts...... 54,356 16,233 70,589 1,137 757 72,483
Service and loan fee
income................ 21,261 4,555 25,816 1,371 238 27,425
Trust income........... 19,837 10,899 30,736 314 87 31,137
Investment securities
gains................. 18,485 710 19,195 915 208 20,318
Trading account gains.. 1,804 525 2,329 -- -- 2,329
Other.................. 47,610 8,783 56,393 215 301 56,909
-------- -------- --------- ------- ------- ----------
Total non-interest
income................ 163,353 41,705 205,058 3,952 1,591 210,601
Non-Interest Expenses
Salaries............... 179,457 63,007 242,464 4,585 3,651 250,700
Pension and other
employee benefits..... 51,209 15,429 66,638 737 971 68,346
Occupancy, net......... 47,872 18,890 66,762 1,091 952 68,805
Furniture and
equipment............. 42,404 8,908 51,312 858 698 52,868
Other real estate owned
expenses.............. 38,092 9,258 47,350 2,293 496 50,139
FDIC insurance
assessment............ 26,047 9,349 35,396 637 505 36,538
Advertising and public
relations............. 10,578 2,940 13,518 273 106 13,897
Other.................. 101,204 35,563 136,767 2,225 2,003 140,995
-------- -------- --------- ------- ------- ----------
Total non-interest
expenses.............. 496,863 163,344 660,207 12,699 9,382 682,288
-------- -------- --------- ------- ------- ----------
Income (loss) before
income taxes........... 76,218 49,827 126,045 (1,642) 1,886 126,289
Federal and state
income taxes
(benefit)............. 19,430 16,340 35,770 (257) 655 36,168
-------- -------- --------- ------- ------- ----------
Net Income (loss)....... $ 56,788 $ 33,487 $ 90,275 $(1,385) $ 1,231 $ 90,121
======== ======== ========= ======= ======= ==========
Net Income (loss) Per
Common Share........... $ 1.09 $ 1.07 $ 1.13 $ (0.80) $ 1.28 $ 1.08
======== ======== ========= ======= ======= ==========
Average Common Shares
Outstanding(1)......... 50,398 30,220 77,499 1,724 958 80,792
======== ======== ========= ======= ======= ==========
</TABLE>
See Notes to Pro Forma Financial Information on page 23.
22
<PAGE>
NOTES TO PRO FORMA FINANCIAL INFORMATION
(1) Reflects the elimination of 96,519 shares of UJB Common and 23,548 shares
of Flemington common stock owned by Summit at September 30, 1995.
(2) The Pro Forma Condensed Combined Balance Sheet gives effect to the Merger
and the Pooling Acquisitions by combining the respective balance sheets of
UJB, Summit, Garden State and Flemington at September 30, 1995 on a
pooling-of-interests basis. The capital accounts have been adjusted to
reflect the issuance of 35.3 million shares of UJB Common in exchange for
all the outstanding shares of Summit, Garden State and Flemington.
(3) Reflects charges of approximately $85 million, $54 million after the
related tax effects, which includes estimated severance and outplacement
costs, expenses related to facilities closures and consolidation costs
directly attributable to the Merger.
(4) Reflects charges of approximately $7.4 million, $4.4 million after the
related tax effects, which includes estimated severance and outplacement
costs, expenses related to facilities closures and consolidation costs
directly attributable to the merger of Garden State with and into Summit.
(5) Reflects charges of approximately $3.9 million, $2.3 million after the
related tax effects, which includes estimated severance and outplacement
costs, expenses related to facilities closures and consolidation costs
directly attributable to the merger of Flemington with and into UJB.
MARKET PRICE AND DIVIDEND MATTERS
MARKET PRICE AND DIVIDEND HISTORY
UJB Common is listed and traded on the NYSE and is quoted under the symbol
"UJB." The following table sets forth, for the periods indicated, the high and
low sale prices of a share of UJB Common, as reported in published financial
sources, and quarterly dividends declared per share.
Summit Common is listed and traded on NASDAQ. Summit Common is quoted under
the symbol "SUBN." The following table sets forth, for the periods indicated,
the high and low sale prices of a share of Summit Common, as reported in
published financial sources, and quarterly dividends declared per share.
All stock prices shown in the table below and in the paragraph following the
table have been rounded to the nearest cent and all stock prices and dividends
shown below have been adjusted for Summit stock dividends.
<TABLE>
<CAPTION>
UJB COMMON SUMMIT COMMON
----------------------- -----------------------
SALE PRICES SALE PRICES
------------- DIVIDENDS ------------- DIVIDENDS
HIGH LOW PER SHARE HIGH LOW PER SHARE
------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
1992
First Quarter................. $18.75 $14.00 $0.15 $15.63 $11.13 $0.18
Second Quarter................ 20.38 14.63 0.15 16.13 13.13 0.18
Third Quarter................. 20.75 16.50 0.15 15.88 13.88 0.18
Fourth Quarter................ 24.50 16.13 0.15 19.25 14.13 0.18
1993
First Quarter................. 29.38 22.50 0.16 21.38 18.63 0.18
Second Quarter................ 29.25 21.63 0.16 20.25 16.88 0.18
Third Quarter................. 33.25 24.25 0.16 22.50 18.63 0.18
Fourth Quarter................ 30.25 23.38 0.21 22.25 18.00 0.19
1994
First Quarter................. 28.63 23.50 0.21 20.00 17.75 0.19
Second Quarter................ 29.25 25.50 0.21 20.88 17.25 0.19
Third Quarter................. 29.13 26.13 0.26 21.75 18.88 0.19
Fourth Quarter................ 27.13 22.50 0.26 19.88 18.00 0.21
1995
First Quarter................. 28.75 24.13 0.29 20.00 18.75 0.21
Second Quarter................ 30.75 27.13 0.29 21.63 18.75 0.21
Third Quarter................. 37.25 30.00 0.29 29.13 21.25 0.21
Fourth Quarter (through
November 29, 1995)........... 34.25 31.50 -- 30.00 27.50 --
</TABLE>
23
<PAGE>
On September 8, 1995, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the last sale price of a
share of UJB Common was $36.625 and the last sale price of a share of Summit
Common was $25.75. On November 29, 1995, the last sale price of a share of UJB
Common was $32.375 and the last sale price of Summit Common was $28.375.
NO ASSURANCE CAN BE GIVEN AS TO WHAT THE MARKET PRICE OF UJB COMMON WILL BE
IF AND WHEN THE MERGER IS CONSUMMATED. BECAUSE THE EXCHANGE RATIO IS FIXED AND
BECAUSE THE MARKET PRICE OF UJB COMMON IS SUBJECT TO FLUCTUATION, THE VALUE OF
SHARES OF UJB COMMON THAT HOLDERS OF SUMMIT COMMON WILL RECEIVE IN THE MERGER
MAY INCREASE OR DECREASE PRIOR TO AND FOLLOWING THE MERGER. UJB AND SUMMIT
SHAREHOLDERS ARE ADVISED TO OBTAIN CURRENT MARKET QUOTATIONS FOR UJB COMMON AND
SUMMIT COMMON. IN ADDITION, PAST DIVIDENDS PAID IN RESPECT OF UJB COMMON AND
SUMMIT COMMON ARE NOT NECESSARILY INDICATIVE OF FUTURE DIVIDENDS WHICH MAY BE
DECLARED AND PAID. NO ASSURANCE CAN BE GIVEN CONCERNING DIVIDENDS TO BE
DECLARED AND PAID IN RESPECT OF UJB COMMON AND SUMMIT COMMON BEFORE OR AFTER
THE EFFECTIVE TIME.
COORDINATION OF AND LIMITATIONS ON DIVIDENDS UNDER MERGER AGREEMENT
In order to ensure that Summit shareholders would be paid at least one but no
more than one dividend in the calendar quarter in which the Merger is
consummated, Summit agreed in the Merger Agreement to coordinate with UJB the
declaration of any dividends and the setting of any record or payment dates.
DIVIDEND LIMITATIONS
The bank subsidiaries of UJB are restricted by law in the amount of dividends
they may pay to UJB. In addition, UJB is restricted by certain debt agreements
in the amount of dividends it may pay to its shareholders. Assuming the Merger
was effective at September 30, 1995, under the most restrictive of such
agreements, the amount that would have been available on that date for dividend
payments to holders of UJB Common was approximately $675 million.
THE MERGER
The following information concerning the Merger, insofar as it relates to
matters contained in the Merger Agreement, is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached hereto as
Appendix A and incorporated herein by reference.
CLOSING AND EFFECTIVE TIME
The Merger Agreement provides that the closing of the Merger ("Closing") will
be held on at least five business days notice ("Closing Notice") given to
Summit by UJB, on a date ("Closing Date") not earlier than the last to occur,
but not later than 40 days after the last to occur, of: (1) the date the Merger
Agreement is approved by the Summit Shareholders and the UJB Shareholders; (2)
if the transactions contemplated by the Merger Agreement are being contested in
any legal proceedings, the date all such proceedings have been brought to a
favorable conclusion, or such date as UJB and Summit shall elect, prior to a
favorable conclusion; and (3) the date all required governmental approvals are
received and all required waiting periods have expired.
The Merger will become effective at the hour and on the date specified in the
Certificate of Merger to be filed with respect to the Merger under the New
Jersey Corporation Act with the Secretary of State of the State of New Jersey.
The Merger Agreement requires that the Certificate of Merger be filed no later
than one business day following the Closing Date and that the Effective Time
specified in the Certificate of Merger be no later than 12:01 a.m. on the day
immediately following the day the Certificate of Merger is filed. If the Merger
Agreement is approved by the UJB Shareholders and the Summit Shareholders,
subject to the satisfaction or waiver of certain other conditions described
herein, it is presently contemplated that the Effective Time will
24
<PAGE>
occur during the first calendar quarter of 1996. The Merger Agreement may be
terminated by either party if, among other things, the Effective Time does not
occur on or before August 31, 1996, unless the failure of such occurrence is
due solely to the failure of the party seeking to terminate the Merger
Agreement to perform or observe its agreements set forth in the Merger
Agreement required to be performed or observed by such party on or before the
Closing Date. See "THE MERGER--The Merger Agreement--Conditions of the Merger;
Termination."
MERGER OF CONSTITUENT CORPORATIONS; NAME OF SURVIVING CORPORATION; MERGER OF
SUBSIDIARY BANKS
At the Effective Time, Summit will be merged with and into UJB, with UJB
being the Surviving Corporation. In addition, the Merger Agreement requires
that the Certificate of Merger filed by UJB with the Secretary of State of the
State of New Jersey contain as an attachment a Restated Certificate of
Incorporation of UJB changing the name of UJB to "Summit Bancorp."
Consequently, at the Effective Time, the name of the Surviving Corporation will
be changed to "Summit Bancorp." UJB and Summit have also agreed in the Merger
Agreement that, as soon as practicable after the Effective Time, UJBank and
Summit Bank will be merged under the name "Summit Bank."
NOTWITHSTANDING THE CHANGE IN UJB'S NAME WHICH WILL OCCUR AT THE EFFECTIVE
TIME, HOLDERS OF UJB STOCK CERTIFICATES AT THE EFFECTIVE TIME WILL NOT RECEIVE
NEW UJB STOCK CERTIFICATES REFLECTING THE NAME CHANGE. SUCH HOLDERS SHOULD NOT
ATTEMPT TO EXCHANGE THEIR EXISTING UJB STOCK CERTIFICATES FOR NEW CERTIFICATES.
EXISTING UJB STOCK CERTIFICATES WILL CONTINUE AFTER THE EFFECTIVE TIME TO BE
VALID FOR ALL RELEVANT PURPOSES.
CONVERSION OF SUMMIT COMMON
Upon consummation of the Merger outstanding shares of Summit Common, other
than shares of Summit Common beneficially owned by UJB or a subsidiary of UJB,
if any, and shares of Summit Common held in the treasury of Summit, if any,
will be converted into and represent the right to receive shares of UJB Common
at the Exchange Ratio of 0.90 shares of UJB Common for each share of Summit
Common. Shares of Summit Common outstanding at the Effective Time (other than
shares held in Summit's treasury and shares owned by UJB, if any) will be
converted at the Exchange Ratio and represent whole shares of UJB Common and,
in lieu of any fractional share of UJB Common resulting from the conversion, a
Cash In Lieu Amount representing a cash amount equal to the fractional share
resulting from the conversion multiplied by the closing price of UJB Common on
the business day preceding the Effective Time. The Exchange Ratio is subject to
appropriate adjustments in the event that, from the date of the Merger
Agreement to the Effective Time, the outstanding shares of UJB Common are
increased or decreased, changed into or exchanged for a different number or
kind of shares or securities through reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split or other
similar changes.
CONVERSION OF SUMMIT ADJUSTABLE PREFERRED
At the Effective Time, each outstanding share of Summit Adjustable Preferred,
other than shares of Summit Adjustable Preferred beneficially owned by UJB or a
subsidiary of UJB, if any, and shares held in the treasury of Summit, if any,
will be converted into and represent the right to receive one share of UJB
Series C Preferred, a series of adjustable rate cumulative preferred stock of
UJB to be created at the Effective Time, to be titled the Adjustable Rate
Cumulative Preferred Stock, Series C ($25 stated value) and to have relative
rights, preferences and limitations identical to those of the Summit Adjustable
Preferred. The Restated Certificate of Incorporation of UJB to be filed as an
attachment to the Certificate of Incorporation will contain a provision
creating the UJB Series C Preferred and specifying the relative rights,
preferences and limitations thereof.
The UJB Series C Preferred will rank on a parity with the UJB Series B
Preferred (as defined herein) as to dividends and liquidation preference. The
UJB Series C Preferred will be entitled to cumulative dividends that are
payable quarterly on March 15, June 15, September 15 and December 15 of each
year. For each quarterly
25
<PAGE>
period, the dividend rate will be determined in advance of such period, and
will be 2.75 percent less than the highest of the 3-month U.S. Treasury Bill
Rate, the Ten Year Constant Maturity Rate and the Twenty Year Constant Maturity
Rate, which are average yields on certain U.S. Treasury fixed rate securities,
as published by the Federal Reserve Board. However, the dividend rate for any
dividend period will not be less than 6 percent per annum nor greater than 12
percent per annum. The UJB Series C Preferred will be redeemable at the option
of UJB, in whole or in part, at $25 per share, plus accrued and unpaid
dividends. Holders of UJB Series C Preferred will have the right to vote as a
class on certain amendments to the Restated Certificate of Incorporation of UJB
that may adversely affect the rights or preferences of the UJB Series C
Preferred and in the event of a failure to pay full cumulative dividends for
six quarters holders of the UJB Series C Preferred will be entitled to vote in
the election of directors on the same basis as the holders of UJB Common.
Holders of the UJB Series C Preferred will have no other voting rights. The UJB
Series C Preferred will not be convertible into shares of UJB Common and will
have no preemptive rights. The UJB Series C Preferred will not be subject to
any sinking fund or other repurchase or retirement obligations of UJB. First
Chicago Trust Company of New York will be the transfer agent, dividend
disbursing agent and registrar for shares of the UJB Series C Preferred.
The holders of the Summit Adjustable Preferred have no right to vote with
respect to the Merger or the other matters to be submitted to the Summit
Special Meeting and, accordingly, no vote of the holders of the Summit
Adjustable Preferred is being solicited.
EXCHANGE OF SUMMIT CERTIFICATES
Prior to the Effective Time, UJB will appoint First Chicago Trust Company of
New York as the Exchange Agent. A letter of transmittal and other appropriate
and customary exchange materials will be mailed by the Exchange Agent to each
holder of record of Summit Stock as of the Effective Time for use in exchanging
(i) Summit Common Certificates for a UJB Common Certificate and, if a Summit
shareholder is entitled thereto, a check representing the appropriate Cash In
Lieu Amount, and (ii) Summit Adjustable Preferred Certificates for UJB Series C
Preferred Certificates.
To effect a proper surrender and exchange of Summit Certificates, the Summit
Certificates must be surrendered to the Exchange Agent with a properly executed
and completed letter of transmittal. Until so surrendered, UJB may, at its
option, refuse to pay to the holders of the Summit Certificates dividends or
other distributions, if any, payable to holders of UJB Stock; provided,
however, that, upon surrender and exchange of the Summit Certificates, there
will be paid to such holders the amount, without interest, of dividends and
other distributions, if any, which became payable prior thereto but which were
not paid. No transfer of Summit Stock will be effected on the stock transfer
books of Summit at and after the Effective Time.
The Exchange Agent shall have reasonable discretion to determine whether
letters of transmittal have been properly completed and executed and to
disregard immaterial defects, and any good faith decisions of UJB regarding
such matters as may be referred to it by the Exchange Agent shall be binding
and conclusive.
Neither certificates for fractions of shares of UJB Common nor scrip
certificates for such fractions will be issued, and holders of Summit Common
Certificates who would otherwise be entitled to receive fractions of shares of
UJB Common will have none of the rights with respect to such fractions of
shares (including, without limitation, the right to receive dividends) that a
holder of a full share of UJB Common would possess in respect of such full
share, and will receive in lieu thereof the Cash In Lieu Amount.
If more than one Summit Certificate is surrendered for the same Summit
shareholder account, the number of full shares of UJB Stock for which UJB
Certificates will be issued pursuant to the Merger Agreement will be computed
on the basis of the aggregate number of shares of Summit Stock represented by
the Summit Certificates so surrendered.
SUMMIT SHAREHOLDERS SHOULD NOT SURRENDER THEIR SUMMIT CERTIFICATES FOR
EXCHANGE UNTIL A LETTER OF TRANSMITTAL, INSTRUCTIONS AND OTHER EXCHANGE
MATERIALS ARE RECEIVED FROM THE EXCHANGE AGENT. HOWEVER, SUMMIT SHAREHOLDERS
ARE URGED TO NOTIFY SUMMIT'S REGISTRAR AND TRANSFER AGENT, FIRST CHICAGO TRUST
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COMPANY OF NEW YORK, NOW, AT (201) 324-0498 (INSIDE NEW JERSEY) OR (800) 446-
2617 (OUTSIDE NEW JERSEY), IF THEIR SUMMIT CERTIFICATES ARE LOST, STOLEN,
DESTROYED OR NOT PROPERLY REGISTERED, IN ORDER TO BEGIN THE PROCESS OF ISSUING
REPLACEMENT SUMMIT CERTIFICATES.
CONVERSION OF STOCK AWARD PLAN OPTIONS
Each Original Award Plan Option granted pursuant to the Summit Stock Award
Plans which is outstanding and unexercised at the Effective Time will be
converted automatically at the Effective Time into a New Award Plan Option. The
vesting of any unexercisable Original Award Plan Options granted under the
Summit Stock Award Plans will be accelerated in connection with the Merger.
Subject to the adjustment described below, each New Award Plan Option will
continue to be governed by the terms of the Summit Stock Award Plan under which
the corresponding Original Award Plan Option was granted and the stock option
agreement by which it was evidenced, including terms and provisions regarding
exercisability. In each case, (i) the number of shares of UJB Common subject to
the New Award Plan Option will be equal to the product of the number of shares
of Summit Common subject to the Original Award Plan Option and the Exchange
Ratio, rounded down to the next lower full share, and (ii) the exercise price
per share of UJB Common subject to the New Award Plan Option will be equal to
the exercise price per share of Summit Common subject to the Original Award
Plan Option divided by the Exchange Ratio.
Further, pursuant to the Merger Agreement, holders of exercisable New Award
Plan Options will be permitted, in lieu of purchasing the UJB Common subject to
the New Award Plan Option, to elect to receive the number of shares of UJB
Common (rounded down to the nearest whole share) equal in market value to the
amount obtained by multiplying (i) the difference obtained by subtracting the
exercise price of the New Award Plan Option from the "Market Value of UJB
Common" (as defined below) on the date the election is made, by (ii) the number
of shares of UJB Common with respect to which the election has been made. For
purposes of the preceding sentence, "Market Value of UJB Common" means the
average of the high and low sales prices of a share of UJB Common as reported
on the NYSE--Composite Transactions List on the date the election is made.
As soon as practicable after the Effective Time, UJB will issue to each
holder of New Award Plan Options, upon receipt and cancellation of all
agreements under which Original Award Plan Options were issued to such holder,
appropriate instruments confirming the conversion described above; provided,
however, that UJB will not be obligated to issue such confirming instruments or
any shares of UJB Common issuable upon exercise of a New Award Plan Option
until the shares of UJB Common issuable upon exercise of the New Award Plan
Options have been registered with the Commission and authorized for listing on
the NYSE and for sale by any appropriate state securities regulators, which UJB
will use its best efforts to effect as promptly as practicable, but in no event
more than 30 days after the Effective Time.
RECOMMENDATION OF THE BOARDS OF DIRECTORS
THE MERGER AGREEMENT HAS BEEN APPROVED BY THE UJB BOARD AND THE SUMMIT BOARD.
BOTH THE UJB BOARD AND THE SUMMIT BOARD BELIEVE THAT THE MERGER IS IN THE BEST
INTERESTS OF THEIR RESPECTIVE SHAREHOLDERS. EACH OF THE UJB BOARD AND THE
SUMMIT BOARD UNANIMOUSLY RECOMMENDS THAT THEIR RESPECTIVE SHAREHOLDERS VOTE FOR
THE PROPOSAL TO APPROVE THE MERGER AGREEMENT. IN ADDITION, THE SUMMIT BOARD
UNANIMOUSLY RECOMMENDS THAT SUMMIT'S SHAREHOLDERS VOTE FOR THE SUMMIT
ADJOURNMENT PROPOSAL.
BACKGROUND
Summit
From time to time Summit's management and the Summit Board considered and
evaluated Summit's strategic plan and direction. The acceleration of
consolidation activity in the banking industry, and, in particular, the merger
announcements by First Fidelity Bancorporation and First Union Corporation on
June 19, 1995 and
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by Midlantic Corporation and PNC Bank Corp. on July 10, 1995, and the impact
these proposed transactions would have on the competitive landscape of the New
Jersey banking market, by introducing much larger financial institutions into
that market, prompted Summit's management and Summit's Board to reevaluate
Summit's strategic plan.
On July 18, 1995, Summit's management together with representatives of Keefe,
Bruyette met with the Executive Committee of Summit's Board to review Summit's
market position, financial performance and prospects and strategic options. At
that Executive Committee meeting various strategic options were considered,
including: remaining independent; merging with another entity in a merger of
equals transaction; engaging in a sale of control of Summit for a market
premium to a substantially larger acquiror; or pursuing a value-creating
strategic affiliation involving a market premium with Summit's shareholders
owning a substantial portion of the combined company and having a continuing
role in the direction of the combined company, which would be a more viable and
valuable franchise able to compete with the larger financial institutions
entering the New Jersey market. The Executive Committee concluded that, of
these alternatives: (1) remaining independent would remain a viable alternative
if no strategic affiliation transaction were available; (2) no viable
candidates for a merger of equals with sufficient market overlap to generate
needed cost savings existed; and (3) a control sale would provide less
opportunity for enhanced franchise value than a strategic affiliation. The
Executive Committee authorized Summit's management to explore the value-
creating strategic affiliation option because it believed this option, if
available, offered the possibility of achieving an attractive transaction for
holders of Summit Common while preserving the opportunity for significant
participation in the future growth and opportunities of a combined entity with
a more attractive regional banking franchise. Summit retained Keefe, Bruyette
to assist in this review (such engagement was subsequently confirmed in writing
on September 6, 1995). Robert G. Cox, President of Summit, who regularly met
for breakfast every three or four months with John G. Collins, Vice Chairman of
UJB and Mr. Cox's successor as Chairman of the New Jersey Bankers Association,
met with Mr. Collins on the morning of July 21, 1995 at a breakfast meeting
scheduled prior to the July 18, 1995 meeting of Summit's Executive Committee
and expressed an interest in exploring the feasibility of a merger with UJB.
Although T. Joseph Semrod, Chairman, President and Chief Executive Officer of
UJB, Mr. Collins and Mr. Cox had had general discussions over the years about
the possible merger of UJB and Summit, this was the first time Mr. Cox
expressed a specific interest in exploring the feasibility of a merger with
UJB.
A follow-up meeting among representatives of Keefe, Bruyette, senior
management of Summit and members of Summit's Executive Committee was held on
August 7, 1995. At that meeting UJB and other banking institutions with an
interest in the New Jersey banking market were discussed as possible candidates
for a strategic business combination based on the projected impact of such a
transaction. The Executive Committee authorized Robert G. Cox, Summit's
President and Chief Executive Officer, to explore with senior management of UJB
whether there was any mutual interest in entering into a business combination
with Summit. Mr. Collins telephoned Mr. Cox on August 8, 1995 to follow up on
Mr. Cox's expression of interest at the breakfast meeting of July 21, 1995 and
was informed by Mr. Cox of the authorization Mr. Cox had received from the
Summit Board the prior day.
Mr. Cox then met with Mr. Semrod and Mr. Collins on August 17, 1995. Mr. Cox
subsequently met with Mr. Semrod on August 22, 1995 and with both Messrs.
Semrod and Collins on August 23, 1995 to further explore a possible business
combination between Summit and UJB. The results of these meetings were reviewed
and discussed by Mr. Cox at a special meeting of the Executive Committee held
on August 29, 1995.
At a special meeting of the Summit Board held on September 4, 1995,
management and Keefe, Bruyette reviewed the deliberations of the Executive
Committee and the background and nature of Mr. Cox's discussions with Messrs.
Semrod and Collins. The Board of Directors authorized Summit's management to
continue merger discussions with UJB.
On September 7, and 8, 1995 meetings were held among selected members of
management of UJB and Summit and certain of their respective financial and
legal advisors to review financial forecasts, asset profiles,
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credit quality assessments, operations, employee benefits issues and other
information relative to the proposed consolidation of UJB and Summit and the
future operations of the merged companies. The parties arrived at the Exchange
Ratio through negotiation, including negotiations conducted by and through
their respective financial advisors during the period from September 5, 1995 to
September 8, 1995. The Exchange Ratio resulted in a sale price per share which
was within a range which Summit, based on the advice and analysis of Keefe,
Bruyette, deemed to be acceptable. See "THE MERGER--Opinion of Summit's
Financial Advisor." The discussions from August 17, 1995 to September 8, 1995
were positive and reflected conceptual agreement to an affiliation which would
create a more valuable combined franchise consistent with the approach
originally authorized by the Executive Committee and approved by the Summit
Board.
On September 8, 1995, Mr. Cox and Mr. Semrod reached an agreement on the
principal terms of the Merger, subject to Summit Board and UJB Board approval.
In the following days leading up to the execution of the Merger Agreement on
September 10, 1995, negotiation of a definitive agreement and Stock Option
Agreements proceeded. The Stock Option Agreements were sought by both parties
as inducements to enter into the Merger Agreement. See "THE MERGER--Stock
Option Agreements."
The Summit Board met on September 9, 1995 and September 10, 1995. At those
meetings, management of Summit, Keefe, Bruyette and Summit's legal advisors
reviewed the terms of the Merger Agreement and Stock Option Agreements
negotiated between the parties, and the Keefe, Bruyette fairness opinion
concerning the Exchange Ratio in the Merger. Based on that review, the Summit
Board unanimously approved and authorized the execution and delivery of the
Merger Agreement and Stock Option Agreements on September 10, 1995. No other
bids from third parties were solicited or received by Summit. The proposed
transaction with UJB was consistent with the Summit Board's strategy since
holders of Summit Common would be paid a market premium, would own a
substantial portion of the combined company and would have a continuing role in
the combined company.
UJB
In recent years, UJB's major objectives have been to reinforce its position
as a regional market leader in financial services and to deliver long-term
shareholder value. Two key component strategies to achieve these objectives
have been the restructuring of the company and an in-market acquisition
strategy. The in-market strategy covers UJB's existing and adjacent geographic
markets in New Jersey and eastern Pennsylvania.
The restructuring of UJB along lines of business was completed during 1994,
as well as the consolidation of UJB's member banks into UJBank in New Jersey
and First Valley Bank in eastern Pennsylvania. Working through the four core
business lines--commercial banking, retail banking, mortgage banking and
investment management--UJB has streamlined the company for competitive
advantage and increased profitability.
UJB's acquisition strategy has been to negotiate a series of financially
attractive in-market transactions. Goals of the strategy have been to increase
the value of UJB's franchise and to improve the performance of acquired units
through cost savings and revenue enhancements.
Prior to the announcement of the Merger, UJB had announced four acquisitions
of local bank and thrift institutions since December, 1993. Three of these
acquisitions have been completed and the pending acquisition of Flemington is
expected to be completed in the first quarter of 1996. These institutions,
which total $1.4 billion of assets, add important market penetration to UJB's
franchise and are all projected to be accretive to earnings per share. As a
result of these acquisitions and UJB's internal consolidations, UJB has
developed an effective merger integration process which focuses on cost
savings, customer service, revenue enhancement and customer retention.
At a meeting of the UJB Board held on August 16, 1995, Chairman Semrod and
Vice Chairman Collins led a review and UJB Board discussion of UJB's
acquisition strategy. Subjects discussed included the competitive
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scene, UJB's strategic plan and acquisition criteria, trends in banking
acquisitions, and a full range of potential acquisition opportunities.
Regarding the competitive scene, the UJB Board noted the rapid changes taking
place in banking through reengineering, consolidation, nationwide interstate
banking and technology advances. The UJB Board also discussed the large
regional bank mergers announced in recent months. Of particular interest were
the acquisition of First Fidelity Bancorporation by First Union Corporation and
the acquisition of Midlantic Corporation by PNC Bank Corp.
The UJB Board reviewed information on a number of potential bank and thrift
acquisition candidates located in New Jersey, Pennsylvania and other
neighboring states, each having total assets of less than $1 billion. This type
of acquisition would have been a continuation of UJB's recent activities
involving relatively small fill-in acquisitions.
The UJB Board also discussed the consideration of substantially larger in-
market and contiguous opportunities for bank and thrift acquisitions. Relevant
information was reviewed for a number of institutions. This information
included performance statistics and potential transaction pricing data.
An extensive UJB Board discussion took place regarding Summit. The UJB Board
reviewed materials which included performance data, market share facts,
hypothetical transaction pricing and a detailed pro forma financial model. The
UJB Board considered the benefits and risks of a large in-market transaction.
The opportunity for substantial cost savings was identified as a major
potential financial benefit to the transaction. The UJB Board thought that
UJB's successful experience in merger integrations would serve to minimize
operational risks.
The UJB Board noted that the combined institution would have substantial
market share in a large number of New Jersey's counties, with particular
strengths in some of the region's most desirable markets. Also considered were
Summit's excellent reputation, strong historical performance and acknowledged
strengths in retail banking and trust services. The pro forma financial data
indicated that the transaction would improve UJB's asset quality ratios and be
neutral to capital ratios. The UJB Board perceived Summit to be among the most
attractive of possible in-market transactions, taking into consideration
Summit's market position, financial performance and the cost efficiencies to be
gained in such a combination. The UJB Board encouraged management to pursue
discussions consistent with the financial parameters reviewed at the UJB Board
meeting.
Mr. Semrod, Mr. Collins and Mr. Cox have known one another for many years as
a result of service with various banking industry groups. From time to time
during the past several years, Mr. Semrod or Mr. Collins have met with Mr. Cox
to discuss regional and national developments in the financial services
industry as well as developments affecting their respective companies. As noted
previously in this Background discussion relating to Summit, Messrs. Semrod,
Collins and Cox had had general discussions over the years as well about the
possible merger of UJB and Summit. Following the meeting, previously described,
of Summit's Executive Committee on July 18, 1995 at which strategic
alternatives for Summit were explored, Mr. Cox, at a breakfast meeting with Mr.
Collins on July 21, 1995, for the first time expressed a specific interest to
Mr. Collins in exploring the feasibility of a merger with UJB. Mr. Cox and Mr.
Collins, who had succeeded Mr. Cox as Chairman of the New Jersey Bankers
Association, had regularly met for breakfast every three or four months. Mr.
Collins telephoned Mr. Cox on August 8, 1995 to follow up on Mr. Cox's
expression of interest on July 21, 1995 and was informed by Mr. Cox of the
authorization he had received to explore the feasibility of a merger with UJB.
There were several meetings among Messrs. Semrod, Collins and Cox between
August 17, 1995 and September 10, 1995, regarding a potential merger of the
companies. Discussions included the value of a merger between UJB and Summit,
and the framework of the possible transaction structure. During this time
period, members of UJB's management team conducted a due diligence
investigation of Summit's business and
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negotiated issues in the Merger Agreement and Stock Option Agreements. UJB
also worked with its financial advisor to construct financial forecasts and
cost savings assumptions.
On September 8, 1995, Mr. Semrod and Mr. Cox reached an agreement on the
principal terms of the Merger, subject to UJB Board and Summit Board approval.
Final negotiations proceeded on remaining issues of the Merger Agreement and
Stock Option Agreements. The UJB Board met on September 10, 1995. Management
reviewed the terms of the Merger Agreement and Stock Option Agreements and
presented a summary of the due diligence investigation of Summit's business.
Merrill Lynch presented its fairness opinion concerning the Exchange Ratio.
Based on this information, and after consideration of other factors, the UJB
Board unanimously approved and authorized the execution and delivery of the
Merger Agreement and Stock Option Agreements.
REASONS FOR THE MERGER
General
In reaching their decisions to approve the Merger Agreement and Stock Option
Agreements, the UJB Board and Summit Board considered that the Merger would
create the second largest bank in New Jersey. The combined company would hold
the leading deposit market share in four of the nation's top twenty-five
counties, as ranked by per capita income.
Each Board also considered that the Merger would represent an alliance of
two institutions with complementary strengths and that the UJB and Summit
shareholders would realize the expected benefits of such an alliance,
including, but not limited to, the future earnings per share and stock value
prospects of the combined company, the combined company's financial strength
and the cost savings to be realized through consolidation of functions.
Each Board determined that the Merger would significantly enhance the
combined company's ability to compete effectively, to meet the constantly
changing needs of its customers and communities and to take advantages of
future opportunities for growth and diversification. Each Board believes that
the Merger will create a combined company with greater efficiency, capital
strength and revenue growth potential than either institution would have on
its own. Each Board also believes that both companies have strong management
teams with experience in successful implementation of merger transactions and
related cost reductions.
Summit
In determining to approve the Merger Agreement the Summit Board also
considered, among other things, the following factors:
(1) Summit's business, operations, financial condition and earnings;
(2) The current and prospective economic, regulatory and competitive
environment facing Summit, including the consolidation activity currently
underway in the banking industry, the need for Summit to diversify and
expand its non-interest income revenue sources, the need for investment in
technology and alternative product delivery systems and the difficulties
faced by Summit in attempting to meet such challenges as a stand-alone
entity, together with the alternatives available to Summit to meet these
challenges;
(3) A review of the historical financial condition, operating results,
capital levels and asset quality of Summit and UJB and their projected
future value and prospects as separate entities and on a combined basis and
the results of Summit's due diligence investigation of UJB;
(4) The advice of Summit's financial advisor, Keefe, Bruyette and a
review of the detailed financial analysis, pro forma results and other
information presented by Keefe, Bruyette. The Summit Board considered the
oral opinion of Keefe, Bruyette, that, as of September 10, 1995 and based
upon the matters considered by Keefe, Bruyette in rendering its opinion as
of that date, the Exchange Ratio in the Merger was fair from a financial
point of view to the holders of Summit Common. See "THE MERGER--Opinion of
Summit's Financial Advisor";
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(5) The anticipated cost savings and operating efficiencies available to
the combined institution after the Merger;
(6) The consideration that current Summit management would be expected to
play a continuing role in the combined company and that Mr. Cox would be
elected or appointed President of the Surviving Corporation and that Mr.
Cox and five other members of the Summit Board would be selected as members
of the Board of Directors of the Surviving Corporation;
(7) Consideration of the terms of the Merger Agreement and the
transactions contemplated thereby, including the Stock Option Agreements;
(8) The expectation that the Merger will generally be a tax-free
transaction to Summit and its shareholders. See "THE MERGER--Certain
Federal Income Tax Consequences"; and
(9) The consideration of the complementary nature of the businesses,
business strategies and product offerings of Summit and UJB, including the
fact that each is a middle market and consumer-focused banking company and
that the resulting New Jersey banking operation will represent the second
largest in the State of New Jersey from a deposit share standpoint.
The foregoing discussion of the factors considered by the Summit Board is
not intended to be exhaustive but includes all material factors considered by
the Summit Board. In reaching its determination to approve and recommend the
Merger Agreement, the Summit Board did not assign relative or specific weights
to the forgoing factors, and individual directors may have given differing
weights to different factors. Throughout its deliberations, the Summit Board
received the advice of both in-house and outside counsel. After deliberating
with respect to the Merger and the other transactions contemplated by the
Merger Agreement, including, without limitation, the Stock Option Agreements,
considering, among other things, the matters discussed above and the opinion
of Keefe, Bruyette referred to above, the Summit Board, by unanimous vote of
all Directors, approved the Merger Agreement as being in the best interests of
Summit and its shareholders, authorized execution and delivery of the Merger
Agreement and the Stock Option Agreements, and directed that the Merger
Agreement be submitted to the shareholders of Summit Common for a vote at the
Special Meeting.
UJB
In reaching its conclusion to approve the Merger Agreement and the Stock
Option Agreements, the UJB Board considered a number of factors, including the
following:
(1) The effectiveness of the Merger as a method of implementing and
accelerating UJB's strategies for long term growth and enhanced shareholder
value. This included (a) the creation of a premier franchise in some of the
nation's most desirable local banking markets, (b) a respected Summit
management team with similar business philosophy and organizational
culture, (c) the identification of significant cost savings opportunities
due to the in-market nature of the Merger and the leveraging of UJB
investments in technology, (d) the UJB Board's belief that the Merger will
enhance UJB's ability to effectively compete in its rapidly consolidating
regional banking market, and (e) UJB's previously demonstrated abilities to
successfully implement merger integration processes, including strategies
to achieve cost savings and customer retention.
(2) The financial condition, businesses and prospects of UJB and Summit.
This information included, but was not limited to, information regarding
respective recent and historical stock performance, valuation analyses, pro
forma analyses, comparative financial data and comparable merger and
acquisition transactions as presented by UJB's financial advisor and senior
management. UJB's senior management also reported the results of its due
diligence review of Summit's business. The UJB Board took into account
that, while there would be some dilution in 1996 earnings per share, the
Merger would be expected to have accretive effects by 1997.
(3) The terms of the Merger Agreement and the reciprocal Stock Option
Agreements, the proposed arrangements with respect to the UJB Board
following the Merger, an employment agreement with Mr. Cox and the proposed
use of the Summit name for the combined organization.
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(4) The oral opinion of Merrill Lynch that, as of September 10, 1995, the
Exchange Ratio was fair to the holders of UJB Common from a financial point
of view. See "THE MERGER--Opinion of UJB's Financial Advisor."
(5) The likelihood of the Merger being approved by the appropriate
regulatory authorities. See "THE MERGER--Regulatory Approvals."
The foregoing discussion of the information and factors considered by the
UJB Board is not intended to be exhaustive but is believed to encompass all
material factors considered by the UJB Board. In reaching its determination to
approve and recommend the Merger, the UJB Board did not assign any relative or
specific weights to the foregoing factors, and individual directors may have
given differing weights to different factors. After deliberating with respect
to the Merger and the other transactions contemplated by the Merger Agreement,
considering, among other things, the matters discussed above and the opinion
of Merrill Lynch referred to above, the UJB Board, by unanimous vote of all
directors, approved and adopted the Merger Agreement and the transactions
contemplated thereby, including the Stock Option Agreements, as being in the
best interests of UJB and its shareholders. The UJB Board is unanimous in its
recommendation that holders of UJB Common vote for approval of the Merger
Agreement.
OPINION OF SUMMIT'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated as of September 6, 1995 (the
"Engagement Letter"), Summit retained Keefe, Bruyette to render financial
advisory and investment banking services to Summit in connection with a
possible business combination between Summit and UJB. Keefe, Bruyette had been
providing general advisory and investment banking services to Summit since
early 1994.
Keefe, Bruyette is a nationally recognized investment banking firm and, as
part of its investment banking business, is continually engaged in the
valuation of bank, bank holding company and thrift institution securities in
connection with acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for various other purposes. As specialists in the securities of
banking companies, Keefe, Bruyette has experience in, and knowledge of, the
valuation of banking enterprises. Keefe, Bruyette was selected by Summit on
the basis of its familiarity with Summit, its qualifications, its previous
experience in similar transactions and its reputation in the banking and
investment communities. Keefe, Bruyette will receive a fee from Summit for its
services.
In the ordinary course of its business as a broker-dealer, Keefe, Bruyette
may, from time to time, purchase securities from, and sell securities to,
Summit and UJB, and as a market maker in securities, Keefe, Bruyette may from
time to time have a long or short position in, and buy or sell, equity
securities of Summit and UJB for its own account and for the accounts of its
customers. To the extent that Keefe, Bruyette had any such position as of the
date of the fairness opinion attached as Appendix B hereto, it has been
disclosed to Summit.
At the September 9, 1995 special meeting of the Summit Board, Keefe,
Bruyette rendered its oral opinion to the Summit Board to the effect that, as
of such date, the Exchange Ratio was fair to the holders of Summit Common from
a financial point of view. Keefe, Bruyette has also delivered a written
opinion to the Summit Board dated as of the date of this Proxy Statement-
Prospectus to the effect that, as of such date, the Exchange Ratio was fair to
the holders of Summit Common from a financial point of view.
THE FULL TEXT OF KEEFE, BRUYETTE'S OPINION IS ATTACHED AS APPENDIX B TO THIS
PROXY STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO APPENDIX B. SUMMIT SHAREHOLDERS ARE URGED TO READ THE OPINION IN
ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE,
MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN
BY KEEFE, BRUYETTE IN CONNECTION THEREWITH.
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Keefe, Bruyette's opinion is directed only to the Exchange Ratio and does
not constitute a recommendation to any Summit shareholder as to how such
shareholder should vote at the Special Meeting.
In connection with its opinion, Keefe, Bruyette reviewed, analyzed and
relied upon the following material relating to the financial and operating
condition of Summit and UJB: (i) the Merger Agreement; (ii) Annual Reports to
Shareholders for the four years ended December 31, 1994 for Summit and UJB;
(iii) certain interim reports to shareholders of Summit and UJB and Quarterly
Reports on Form 10-Q of Summit and UJB and certain other communications from
Summit and UJB to their respective shareholders; (iv) other financial
information concerning the businesses and operations of Summit and UJB
furnished to Keefe, Bruyette by Summit and UJB for the purpose of Keefe,
Bruyette's analysis, including certain internal financial analyses and
forecasts for Summit and UJB prepared by the senior managements of Summit and
UJB, respectively; (v) certain publicly available information concerning the
trading of, and the trading market for, the Summit Common and UJB Common; and
(vi) certain publicly available information with respect to banking companies
and the nature and terms of certain other transactions that Keefe, Bruyette
considered relevant to its inquiry. Additionally, in connection with its
written opinion attached as Appendix B to this Proxy Statement-Prospectus,
Keefe, Bruyette reviewed a draft of this Proxy Statement-Prospectus in
substantially the form hereof. Keefe, Bruyette also held discussions with the
senior managements of Summit and UJB concerning their respective past and
current operations, financial condition and prospects. Keefe, Bruyette also
considered such financial and other factors as it deemed appropriate under the
circumstances and took into account its assessment of general economic, market
and financial conditions and its experience in similar transactions, as well
as its experience in securities valuation and its knowledge of banks, bank
holding companies and thrift institutions generally. Keefe, Bruyette's opinion
was necessarily based upon conditions as they existed and could be evaluated
on the date thereof and the information made available to Keefe, Bruyette
through the date thereof.
In conducting its review and arriving at its opinion, Keefe, Bruyette relied
upon and assumed the accuracy and completeness of all of the financial and
other information provided to it or publicly available, and Keefe, Bruyette
did not attempt to verify such information independently. Keefe, Bruyette
relied upon the managements of Summit and UJB as to the reasonableness and
achievability of the financial and operating forecasts (the assumptions and
bases therefor) provided to Keefe, Bruyette and assumed that such forecasts
reflected the best available estimates and judgments of such managements and
that such forecasts will be realized in the amounts and in the time periods
estimated by such managements. Keefe, Bruyette also assumed, without
independent verification, that the aggregate allowances for loan losses for
Summit and UJB are adequate to cover such losses. Keefe, Bruyette did not make
or obtain any evaluations or appraisals of the property of Summit or UJB, nor
did Keefe, Bruyette examine any individual loan credit files. Keefe, Bruyette
was informed by Summit, and assumed for purposes of its opinion, that the
Merger would be accounted for as a pooling-of-interests under generally
accepted accounting principles.
Prior to rendering the written opinion attached to Appendix B to this Proxy
Statement-Prospectus, Keefe, Bruyette reviewed with the Summit Board financial
aspects of the proposed Merger and rendered an oral opinion as to the fairness
of the Exchange Ratio to the Summit Board on September 9, 1995. Set forth
below is a summary of the material factors considered by and valuation
methodologies presented by Keefe, Bruyette to the Summit Board on September 9,
1995 and utilized by Keefe, Bruyette in connection with rendering its opinion
as to the fairness, from a financial point of view, of the Exchange Ratio to
the holders of Summit Common.
Analysis of the UJB Offer. Keefe, Bruyette reviewed certain historical
financial information for Summit and UJB (pro forma for pending acquisitions)
and calculated the imputed value of the UJB offer to holders of Summit Common.
Keefe, Bruyette calculated the multiple which the Exchange Ratio represents,
based on an assumed per share purchase price of $32.88, when compared to
Summit's June 30, 1995 stated fully diluted book value of $12.91, its
estimated fully diluted tangible book value per share of $12.65, and its 1996
consensus earnings estimate of $2.30 per share. Based on these assumptions,
the price to stated fully diluted book value multiple was 2.55 times, the
price to stated fully diluted tangible book value per share multiple was 2.60
times and the price to the 1996 consensus earnings estimate per share multiple
was 14.29 times. Additionally, Keefe, Bruyette analyzed the book value and
earnings per share dilution incurred by UJB at the implied purchase price
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per share of $32.88 and concluded that the dilution of 7.3% to projected 1996
earnings per share prior to cost savings and 10.1% to pro forma book value per
share would be at the upper end of the market's tolerance range.
Selected Peer Group Analysis. Keefe, Bruyette compared the financial
performance and market performance of UJB based on various financial measures
of earnings performance, operating efficiency, capital adequacy and asset
quality and various measures of market performance, including market/book
values, price to earnings and dividend yields to those of a group of
comparable holding companies. For purposes of such analysis, the financial
information used by Keefe, Bruyette was as of and for the six months ended
June 30, 1995 and the market price information was as of September 8, 1995.
The companies in the peer group had total assets ranging from approximately
$29 billion to $12 billion, and included CoreStates Financial Corp., First of
America Bank Corp., U S Bancorp, Huntington Bancshares Inc., Northern Trust
Corp., SouthTrust Corporation, Meridian Bancorp Inc., Integra Financial Corp.,
Crestar Financial and First Empire State Corp.
Keefe, Bruyette's analysis showed the following concerning UJB's financial
performance: that its return on equity on an annualized basis was 14.37%
compared with an average of 15.72% for the peer group; that its return on
assets on an annualized basis was 1.05% compared with an average of 1.19% for
the group; that its net interest margin on an annualized basis was 4.62%
compared with an average of 4.41%; that its efficiency ratio on an annualized
basis was 61.49% compared with an average of 61.31%; that its equity to assets
ratio was 7.28% compared to an average of 7.65%; that its ratio of
nonperforming assets to total loans and other real estate owned was 1.96%
compared to an average of .88%; that its ratio of loan loss reserve to
nonperforming loans was 103% compared to an average of 302%.
Keefe, Bruyette's analysis further showed the following concerning UJB's
market performance: that UJB's price to earnings multiple based on 1996
estimated earnings of $3.20 per share and a stock price as of September 8,
1995 of $36.50 was 11.41 times compared to an average of 10.54 times; that its
price to book value multiple was 1.84 times compared to an average of 1.84
times; its dividend yield was 3.18% compared to an average of 3.15%. For
purposes of the above calculations, all earnings estimates are based upon the
published estimates of Keefe, Bruyette's equity research department.
Analysis of Selected Merger Transactions. Keefe, Bruyette reviewed certain
financial data related to a set of recent comparable bank holding company
acquisitions with aggregate transaction values greater than $500 million which
included the following transactions (identified by acquirer/acquiree):
NationsBank Corp./BankSouth Corporation, Chemical Banking Corp./Chase
Manhattan Corp., National City Corporation/Integra Financial Corp., Boatmen's
Bancshares, Inc./Fourth Financial Corporation, First Bank System/FirsTier
Financial, Mercantile Bancorporation/Hawkeye Bancorp, PNC Bank Corp./Midlantic
Corporation, First Union Corporation/First Fidelity Bancorporation, US
Bancorp/West One Bancorp, Fleet Financial Group, Inc./Shawmut National
Corporation, and Boatmen's Bancshares Inc./Worthen Banking Corp.
Keefe, Bruyette calculated averages (measured at September 9, 1995) for the
premium to the target's earnings for the last four quarters (trailing 12
months) of 14.25 times compared with a multiple of 16.60 associated with the
UJB proposal; an average premium to the target's stated book value of 191%
compared with a multiple of 255% associated with the UJB proposal, and an
average premium to the target's tangible book value of 219% compared with 260%
associated with the UJB proposal.
No company or transaction used as a comparison in the above analysis is
identical to Summit, UJB or the Merger. Accordingly, an analysis of the
results of the foregoing is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the
public trading value of the companies to which they are being compared.
Contribution Analysis. Keefe, Bruyette analyzed the relative contribution of
each of Summit and UJB to certain balance sheet and income statement items,
including assets, deposits, shareholders' equity and estimated earnings.
Keefe, Bruyette then compared the relative contribution of such balance sheet
and income statement items, with ownership percentage of approximately 36% for
Summit shareholders based on an Exchange Ratio of 0.90. The contribution
analysis showed that under the UJB proposal, Summit would contribute
approximately
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26% of the combined assets, 26% of the combined deposits, 29% of the combined
shareholder's equity and 31% of the estimated 1996 earnings of the two
companies (before cost savings).
Discounted Cash Flow Analysis. Keefe, Bruyette estimated the present value
of the future streams of after-tax cash flows of Summit as a standalone,
independent entity through the year 2000 and then a subsequent sale to a
larger financial institution. The analysis was based on several assumptions,
including an earnings per share of $2.30 for Summit in 1996. A terminal value
was calculated for the year 2000 by multiplying Summit's projected 2000
earnings by a price/earnings multiple of 12.75-14.75 times trailing earnings.
The terminal valuation and the estimated earnings were discounted at a rate of
14-18%, producing present values of $25.67-$33.05. Keefe, Bruyette compared
these values to the potential value provided to Summit shareholders in the
Merger.
The discounted cash flow analysis was based upon varying assumptions
concerning earnings growth rates, dividend rates and terminal values, which
assumptions are themselves based upon many factors and assumptions many of
which are beyond the control of Summit and UJB. As indicated below, this
analysis is not necessarily indicative of actual values or actual future
results and does not purport to reflect the prices at which any security may
trade at the present time or any time in the future.
The summary contained herein provides a description of the material analyses
prepared by Keefe, Bruyette in connection with the rendering of its opinion.
The summary set forth above does not purport to be a complete description of
the analyses performed by Keefe, Bruyette in connection with the rendering of
its opinion. The preparation of a fairness opinion is not necessarily
susceptible to partial analysis or summary description. Keefe, Bruyette
believes that its analyses and the summary set forth above must be considered
as a whole and that selecting portions of its analyses without considering all
analyses, or selecting part of the above summary, without considering all
factors and analyses, would create an incomplete view of the processes
underlying the analyses set forth in Keefe, Bruyette's presentations and
opinion. The ranges of valuations resulting from any particular analysis
described above should not be taken to be Keefe, Bruyette's view of the actual
value of Summit and UJB. The fact that any specific analysis has been referred
to in the summary above is not meant to indicate that such analysis was given
greater weight than any other analyses.
In performing its analyses, Keefe, Bruyette made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Summit and UJB. The
analyses performed by Keefe, Bruyette are not necessarily indicative of actual
values or actual future results which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely
as part of Keefe, Bruyette's analysis of the fairness, from a financial point
of view, of the Exchange Ratio and were provided to the Summit Board in
connection with the delivery of Keefe, Bruyette's opinion. The analyses do not
purport to be appraisals or to reflect the prices at which a company actually
might be sold or the prices at which any securities may trade at the present
time or at any time in the future. In addition, as described above, Keefe,
Bruyette's opinion, along with its presentation to the Summit Board, was just
one of many factors taken into consideration by the Summit Board in
unanimously approving the Merger Agreement.
Pursuant to the Engagement Letter, Summit has agreed to pay Keefe, Bruyette
a cash fee of $250,000 concurrently with the first to be executed of an
agreement in principle or definitive agreement contemplating the consummation
of the Merger. On the closing of the Merger, Summit agrees to pay an
additional cash fee to Keefe, Bruyette of .375% of the market value, as
determined at the time of such closing ("Contingent Fee") of all consideration
offered in exchange for the outstanding shares of Summit Common. The $250,000
previously paid will be credited against the Contingent Fee. Keefe, Bruyette
also agrees that at the closing of the Merger, a fee of $350,000 will be
deducted from the Contingent Fee and paid to Ryan Beck & Co. for general
advisory services provided to Keefe, Bruyette in its role as financial advisor
to Summit regarding the merger and acquisition market in New Jersey. Summit
has agreed to reimburse Keefe, Bruyette for its reasonable out-of-pocket
expenses, including reasonable fees and disbursements of its counsel, and to
indemnify Keefe, Bruyette against certain liabilities. While the payment of
all or a significant portion of fees related to financial advisory
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services provided in connection with arm's-length merger and other business
combination transactions upon consummation of such transactions, as is the case
with the Merger, might be viewed as giving such financial advisors a financial
interest in the successful completion of such transactions, such compensation
arrangements are standard and customary for transactions of the size and type
of the Merger.
Prior to its retention by Summit in connection with the Merger, Keefe,
Bruyette provided professional services to Summit for its advisory work related
to the pending acquisition of Garden State and the proposed acquisition of
Bankers Corp., which was not consummated. In connection with the acquisition of
Garden State, Summit agreed to pay Keefe, Bruyette a fee of $225,000 plus
Keefe, Bruyette's out-of-pocket expenses. In connection with the advisory work
for the acquisition of Bankers Corp., Summit agreed to pay Keefe, Bruyette a
fee of $50,000 after execution of the letter of intent plus Keefe, Bruyette's
out-of-pocket expenses.
OPINION OF UJB'S FINANCIAL ADVISOR
UJB has retained Merrill Lynch to act as its financial advisor in connection
with rendering a fairness opinion with respect to the Merger. Merrill Lynch
rendered its oral opinion that, based upon and subject to the various
considerations set forth therein, as of September 10, 1995, the Exchange Ratio
was fair from a financial point of view to the holders of UJB Common. The oral
opinion was reconfirmed in writing, as of the date of this Proxy Statement-
Prospectus.
THE FULL TEXT OF MERRILL LYNCH'S OPINION, WHICH SETS FORTH ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN BY MERRILL LYNCH, IS
ATTACHED HERETO AS APPENDIX C. HOLDERS OF UJB COMMON ARE URGED TO AND SHOULD
---------------------------------------------
READ SUCH OPINION IN ITS ENTIRETY. THE SUMMARY SET FORTH IN THIS PROXY
- ----------------------------------
STATEMENT-PROSPECTUS OF MERRILL LYNCH'S OPINION IS QUALIFIED IN ENTIRETY BY
REFERENCE TO THE FULL TEXT OF SUCH OPINION.
Merrill Lynch's opinion is addressed to the UJB Board and does not constitute
a recommendation to any shareholder of UJB as to how such shareholder should
vote at any shareholder meeting of UJB held in connection with the Merger.
In connection with its opinion, Merrill Lynch has, among other things: (i)
reviewed Summit's Annual Reports to Shareholders, Annual Reports on Form 10-K
and related financial information for the five fiscal years ended December 31,
1994 and Summit's Quarterly Reports on Form 10-Q and the related unaudited
financial information for the quarterly periods ending March 31, 1995 and June
30, 1995; (ii) reviewed UJB's Annual Reports to Shareholders, Annual Reports on
Form 10-K and related financial information for the five fiscal years ended
December 31, 1994 and UJB's Quarterly Reports on Form 10-Q and the related
unaudited financial information for the quarterly periods ending March 31, 1995
and June 30, 1995; (iii) reviewed certain information, including financial
forecasts and assumptions regarding incremental revenue and cost savings
resulting from the Merger, relating to the business, earnings, assets, and
prospects of Summit and UJB as a Merged entity, furnished by UJB; (iv)
conducted discussions with members of senior management of Summit and UJB
concerning their respective financial condition, businesses, operations,
regulatory condition, financial forecasts, and prospects; (v) reviewed the
historical market prices and trading activity for the Summit Common and the UJB
Common and compared them with those of certain publicly traded companies deemed
to be relevant; (vi) compared the results of operations of Summit and UJB with
those of certain companies deemed to be relevant; (vii) compared the proposed
financial terms of the Merger contemplated by the Merger Agreement with the
financial terms of certain other mergers and acquisitions deemed to be
relevant; (viii) analyzed, based upon the information provided by Summit and
UJB's senior management, the pro forma impact of the transaction on earnings,
book and tangible book value per share, consolidated capitalization and certain
balance sheet and profitability ratios of UJB; (ix) reviewed the Merger
Agreement; (x) reviewed the Stock Option Agreements; and (xi) reviewed such
other financial studies and analyses and performed such other investigations
and took into account such other matters as deemed appropriate.
In preparing its opinion, Merrill Lynch relied on the accuracy and
completeness of all information supplied or otherwise made available to it by
Summit and UJB, and it has not independently verified such information or
undertaken an independent evaluation or appraisal of the assets or liabilities
of Summit or UJB or any of their subsidiaries, nor has it been furnished any
such evaluation or appraisal. Merrill Lynch has also relied upon the
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managements of Summit and UJB as to the reasonableness and achievability of
the financial forecasts (and the assumptions and bases therefor) provided to
them. In that regard, they have assumed with UJB's consent that such
forecasts, including without limitation, financial forecasts, projected cost
savings and operating synergies resulting from the Merger and projections
regarding future economic conditions and results of operations reflect the
best currently available estimates and judgments of such respective
managements as to the future financial performance of Summit and UJB. Merrill
Lynch is not an expert in the evaluation of allowances for loan losses, and
has not assumed any responsibility for making an independent evaluation of the
adequacy of the allowance for loan losses of Summit and UJB nor has Merrill
Lynch reviewed any individual credit files.
In connection with rendering its opinion, Merrill Lynch performed a variety
of financial analyses, which are summarized below. Merrill Lynch believes that
its analyses must be considered as a whole and that selecting portions of such
analyses and the factors considered therein, without considering all factors
and analyses, could create an incomplete view of the analyses and the
processes underlying Merrill Lynch's opinion. The preparation of a fairness
opinion is a complex process involving subjective judgments and is not
necessarily susceptible to partial analysis or summary description. In its
analyses, Merrill Lynch also took into account its assessment of general
economic, market, and financial conditions and its experience in other merger
transactions, as well as its experience in securities valuation and its
knowledge of the banking industry generally. With respect to the peer group
analysis and selected merger transaction analysis summarized below, no public
company or transaction utilized as a comparison is identical to UJB or Summit
or the Merger, and such analyses necessarily involve complex considerations
and judgments concerning the differences in financial and operating
characteristics of the companies and transactions, and other factors that
could affect the companies concerned. Any estimates contained in Merrill
Lynch's analyses are not necessarily indicative of future results or values,
which may be significantly more or less favorable than such estimates.
Estimates of values of companies do not purport to be appraisals or
necessarily reflect the prices at which companies or their securities actually
may be sold. None of the analyses performed by Merrill Lynch was assigned a
greater significance by Merrill Lynch than any other.
The following is a summary of selected analyses presented to the UJB Board
by Merrill Lynch on September 10, 1995 in connection with its oral opinion.
Transaction Summary. Merrill Lynch reviewed with the UJB Board the key
financial terms of the proposed Merger. Merrill Lynch noted that based on
UJB's average closing stock price of $35.50 for the five (5) trading days
ended September 8, 1995, the value to Summit was $31.95 per share,
representing a 24.08% premium to Summit's September 8, 1995 price of $25.75
and a 30.84% premium to the 30-Day Average price of such shares. Merrill Lynch
noted that the $31.95 value per share represented a multiple of 2.41 times
Summit's book value per share as of June 30, 1995, a multiple of 2.47 times
Summit's tangible book value per share as of June 30, 1995 and a multiple of
15.21 times Summit's latest annualized earnings for the six-months ended
June 30, 1995. Merrill Lynch also noted that the Merger would constitute a
tax-free exchange of common stock and would be accounted for as a pooling-of-
interests.
Overview of Summit. Merrill Lynch reviewed with the UJB Board a financial
overview of Summit. Merrill Lynch described the key businesses and financial
attributes and reviewed with the UJB Board Summit's market share, loan and
deposit composition and common stock shareholder profile. Merrill Lynch noted
that at June 30, 1995 Summit had total assets of $5.5 billion, loans of $3.4
billion, deposits of $4.5 billion and total stockholders' equity of $467
million and that for the six months ended June 30, 1995, Summit earned $35.2
million, translating into a return on average assets and return on average
equity of 1.29% and 15.80% respectively.
Overview of UJB. Merrill Lynch reviewed with the UJB Board a financial
overview of UJB. Merrill Lynch described the key businesses, financial
attributes and reviewed with the UJB Board, UJB's market share, loan and
deposit composition and common stock shareholder profile. Merrill Lynch noted
that at June 30, 1995 UJB had total assets of $15.4 billion, loans of $9.6
billion, deposits on $12.7 billion and total equity of $1.2 billion and that
for the six months ended June 30, 1995, UJB earned $80.3 million, translating
into a return on average assets and a return on average equity of 1.06% and
14.05%, respectively.
Pro Forma Merger Analysis. Merrill Lynch analyzed, based upon discussions
with senior management of UJB and Summit, certain pro forma effects resulting
from the Merger as if consummated on March 31, 1996. This analysis indicated
that the transaction (excluding the effects of any restructuring charges)
would be modestly
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accretive to projected earnings per share of UJB Common in 1996 (by
approximately 0.18%) and result in an earnings per share increase of
approximately 6% in 1997 excluding the impact of an assumed pre-tax
restructuring charge at the time of the analysis of $78 million. The analysis
further indicated that at the assumed close of the transaction (March 31,
1996) the transaction would result in book value dilution of 13.27% per share
of UJB Common and tangible book value dilution of 11.84% per share of UJB
Common including the impact of above estimated restructuring charge.
Contribution Analysis. Merrill Lynch reviewed the contribution made by each
of UJB and Summit to various balance sheet items and net income of the
combined company at the proposed exchange ratio based on data at June 30,
1995. Based on such information, Merrill Lynch estimated that Summit will
contribute approximately 26.16% of the pro forma assets, 31.81% of the pro
forma year-to-date net income, 26.27% of the fully diluted common equity,
31.31% of the fully diluted market capitalization, 31.81% of the year to date
net income, 29.08% of the 1995 estimated net income and 30.48% of the 1996
estimated net income. Based on the Exchange Ratio, Summit will own 36.05% of
the pro forma company.
Analysis of Selected Bank Merger Transactions. Merrill Lynch reviewed
publicly available information regarding 8 bank merger transactions with a
value of greater than $500 million which had occurred in the United States
since January 1, 1994, which were as follows (identified by
acquirer/acquiree): NationsBank Corp./Bank South Corporation; National City
Corporation/Integra Financial Corp.; Boatmen's Bancshares, Inc./Fourth
Financial Corporation; PNC Bank Corp./Midlantic Corporation; First Union
Corporation/First Fidelity Bancorporation; US Bancorp/West One Bancorp; Fleet
Financial Group, Inc./Shawmut National Corporation; and Boatmen's Bancshares,
Inc./Worthen Banking Corporation. Merrill Lynch calculated the price to market
30 days prior to announcement, price to earnings, price to fully diluted book,
price to fully diluted tangible book and the implied deposit premium paid
(equal to transaction value minus tangible book value/total deposits) in the
contemplated transaction and such selected bank merger transactions. This
analysis yielded a range of price to market thirty days prior to announcement
multiples of 1.10x to 1.67x with a mean of 1.33x and a median of 1.29x
compared to a transaction multiple of 1.24x (using Summit's closing stock
price at August 8, 1995), a range of price to earnings multiples of 12.44x to
21.41x with a mean of 14.55x and a median of 15.40x compared to a transaction
multiple of 15.51x (using Summit's year-to-date June 30, 1995 annualized
earnings per share of $2.06), a range of price to book multiples of 1.78x to
2.42x with a mean of 2.02x and a median of 2.05x compared to a transaction
multiple of 2.41x (using Summit's June 30, 1995 fully diluted book value of
$13.29), range of price to tangible book multiples of 2.15x to 2.83x with a
mean of 2.31x and a median of 2.41x compared to a transaction multiple of
2.47x (using Summit's June 30, 1995 fully diluted tangible book value of
$13.04), and a range of implied deposit premiums of 8.45% to 20.71% with a
mean of 12.82% and a median of 11.61% compared to a transaction percentage of
14.19% (using Summit's balance sheet data at June 30, 1995).
Merrill Lynch also reviewed publicly available information regarding 7 bank
merger transactions with a value of greater than $100 million which had
occurred in the state of New Jersey since January 1, 1993, which were as
follows (identified by acquirer/acquiree): PNC Bank Corp./Midlantic
Corporation; First Union Corporation/First Fidelity Bancorporation; Meridian
Bancorp, Inc./United Counties Bancorporation, National Westminster
Bancorp/Central Jersey Bancorp, National Westminster Bancorp/Citizens First
Bancorp; Corestates Financial Corp./Constellation Bancorp; and Bank of New
York Company, Inc./National Community Banks. Merrill Lynch calculated the
price to market 30 days prior to announcement, price to earnings, price to
fully diluted book, price to fully diluted tangible book and the implied
deposit premium paid (equal to transaction value minus tangible book
value/total deposits) in the contemplated transaction and such selected bank
merger transactions. This analysis yielded a range of price to market thirty
days prior to announcement multiples of 1.18x to 1.59x with a mean of 1.35 and
a median of 1.30x compared to a transaction multiple of 1.24x (using Summit's
closing stock price at August 8, 1995), a range of price to earnings multiples
of 12.21x to 15.17x with a mean of 14.10x and a median of 14.51x compared to a
transaction multiple of 15.51x (using Summit's year-to-date June 30, 1995
annualized earnings per share of $2.06), a range of price to book multiples of
1.92x to 2.68x with a mean of 2.23x and a median of 2.14x compared to a
transaction multiple of 2.41x (using Summit's June 30, 1995 fully diluted book
value of $13.29), range of price to tangible book multiples of 1.92x to 2.71x
with a mean of 2.38x and a median of 2.41x compared to a transaction multiple
of 2.47x (using Summit's June 30, 1995 fully diluted tangible book value of
$13.04), and a range of implied deposit premiums of 7.60% to 15.43%
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with a mean of 111.62% and a median of 11.12% compared to a transaction
percentage of 14.19% (using Summit's balance sheet data at June 30, 1995).
No company or transaction used in the above analysis as a comparison is
identical to UJB, Summit, or the contemplated transaction. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the value
of the companies to which they are being compared. Mathematical analysis (such
as determining the mean and median) is not, in itself, a meaningful method of
using comparable company data.
Discounted Dividend Analysis. Using a discounted dividend stream analysis,
Merrill Lynch estimated the present value of the future streams of after-tax
cash flow that Summit (assuming projected cost savings and other merger
related benefits), UJB, (on a stand-alone basis), and for the pro forma
combined company could produce from 1996-2000 and distribute to shareholders
("dividendable net income"). In this analysis, Merrill Lynch assumed that
Summit and UJB performed in accordance with the earnings forecasts provided to
Merrill Lynch by Summit's and UJB's respective senior management and projected
the maximum dividends that would permit Summit, UJB and the pro forma combined
company's tangible common equity to asset ratio to be maintained at a 6.5%
level. Merrill Lynch estimated the terminal values for the Summit Common, UJB
Common and the pro forma combined company's common at 10.0 and 11.0 times the
estimated operating income (defined as net income before intangible
amortization) in the year 2000. The dividendable net income streams and
terminal values were then discounted to present values using different
discount rates ranging from 14% to 16% (based on the Capital Asset Pricing
Model). Assuming projected cost savings and other merger related benefits
resulting from the Merger as provided to Merrill Lynch by senior management of
UJB, with respect to Summit and the pro forma combined company, this
discounted dividend stream analysis indicated a reference range of between
$31.85 and $36.40 per share of Summit Common and $32.22 and $36.95 per share
of the pro forma combined common stock. The discounted dividend stream
analysis for UJB on a stand-alone basis (which did not include assumptions
made with respect to projected cost savings and other merger related benefits)
indicated a reference range of between $30.24 and $34.73 per share of UJB
Common. The discounted dividend stream analysis was based on projections,
which were based upon many factors and assumptions, many of which are beyond
the control of an institution's management. As indicated above, such analysis
did not purport to be indicative of actual future results and did not purport
to reflect the prices at which shares of common stock may trade before or
after the Merger. Merrill Lynch noted that the discounted dividend stream
analysis was included because it is a widely used valuation methodology, but
noted that the results of Merrill Lynch's methodology are highly dependent
upon numerous assumptions that must be made, including earnings growth rates,
dividend payout rates, terminal values, and discount rates.
Summary Comparison of Selected Institutions. Merrill Lynch compared selected
balance sheet data, asset quality, capitalization and profitability ratios and
market statistics using financial data at or annualized for the six months
ended June 30, 1995 for Summit to a group of 7 selected bank holding companies
consisting of Citizens Bancorp, Dauphin Deposit Corp., Fulton Financial Corp.,
Keystone Financial, Mercantile Bankshares, ONBANCorp. Inc., and Valley
National Bancorp (the "Summit Peer Group"). This analysis showed that (i)
Summit had a ratio of nonperforming assets to total assets of .82% compared to
a low of .32%, a mean of .61% and a high of 1.27% for the Summit Peer Group;
(ii) Summit had a ratio of nonperforming loans to loans of .91%, compared to a
low of .48%, a mean of .86% and a high of 1.64% for the Summit Peer Group;
(iii) Summit had a ratio of reserves to nonperforming loans of 295.18%
compared to a low of 99.36%, a mean of 229.56% and a high of 333.41% for the
Summit Peer Group; (iv) Summit had a ratio of reserves to nonperforming assets
of 201.53% compared to a low of 68.34%, a mean of 183.81% and a high of
299.76% for the Summit Peer Group; (v) Summit had a ratio of equity to assets
of 8.48% compared to a low of 5.89%, a mean of 9.32% and a high of 12.58% for
the Summit Peer Group; (vi) Summit had a ratio of tangible equity to assets of
8.33% compared to a low of 5.51%, a mean of 9% and a high of 12.27% for the
Summit Peer Group; (vii) Summit had a Tier I Capital ratio of 12.71% compared
to a low of 12.88%, a mean of 14.24%, and a high of 18.14% for the Summit Peer
Group; (viii) Summit had a total capital ratio of 15.34% compared to a low of
14.13%, a mean of 15.46% and a high of 19.40% for the Summit Peer Group; (ix)
Summit had a return on average assets of 1.29% compared with a low of .64%, a
mean of 1.21% and a high of 1.66% for the Summit Peer Group; (x) Summit
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had a return on average equity of 15.78% compared to a low of 10.77%, a mean
of 13.15% and a high of 16.9% for the Summit Peer Group; (xi) Summit had a net
interest margin of 4.34% compared with a low of 2.58%, a mean of 4.21% and a
high of 5.10% for the Summit Peer Group; (xii) Summit had an efficiency ratio
of 57.41% compared with a low of 44.64%, a mean of 56.60% and a high of 63.56%
for the Summit Peer Group; (xiii) Summit had a price (at September 8, 1995) to
six months ended June 30, 1995 annualized earnings per share multiple of 12.5x
compared to a low of 11.89x, a mean of 13.36x and a high of 14.22x for the
Summit Peer Group; (xiv) Summit had a price to 1995 estimated earnings per
share multiple of 12.5x compared to a low of 11.34x, a mean of 12.66x and a
high of 13.71x for the Summit Peer Group; (xv) Summit had a price to 1996
estimated earnings per share multiple of 11.24x compared to a low of 10.3x, a
mean of 11.7x and a high of 12.55x for the Summit Peer Group; (xvi) Summit had
a price to book value multiple of 1.91x compared to a low of 1.32x, a mean of
1.7x and a high of 2.23x for the Summit Peer Group; (xvii) Summit had a price
to tangible book value multiple of 1.95x compared to a low of 1.44x, a mean of
1.77x and a high of 2.33x for the Summit Peer Group; and (xviii) Summit had a
dividend yield of 3.38% compared to a low of 3.09%, a mean of 3.75% and a high
of 4.32% for the Summit Peer Group.
Merrill Lynch also compared selected balance sheet data, asset quality,
capitalization and profitability ratios and market trading statistics using
financial data at or for the twelve months ended June 30, 1995 for UJB to a
group of 14 selected bank holding companies consisting of AmSouth Bancorp.,
BayBanks, Crestar Financial Corp., Central Fidelity Banks, Inc., First Empire
State Corp, First Security Corp., Firstar Corp., First Tennessee National
Corp., Huntington Bancshares, Inc., Meridian Bancorp, Marshall & Ilsley, Old
Kent Financial Corp., Regions Financial Corp., and SouthTrust Corp. (the "UJB
Peer Group"). This analysis showed that (i) UJB had a ratio of nonperforming
assets to total assets of 1.39% compared to a low of .19%, a mean of .54% and
a high of .91% for the UJB Peer Group; (ii) UJB had a ratio of nonperforming
loans to loans of 1.91%, compared to a low of .22%, a mean of .74% and a high
of 1.97% for the UJB Peer Group; (iii) UJB had a ratio of reserves to
nonperforming loans of 103.55% compared to a low of 107.76%, a mean of 341.01%
and a high of 701.33% for the UJB Peer Group; (iv) UJB had a ratio of reserves
to nonperforming assets of 92.54% compared to a low of 144.30%, a mean of
254.79% and a high of 565.87% for the UJB Peer Group; (v) UJB had a ratio of
equity to assets of 7.53% compared to a low of 6.59%, a mean of 7.79% and a
high of 9.12% for the UJB Peer Group; (vi) UJB had a ratio of tangible equity
to assets of 7.26% compared to a low of 5.66%, a mean of 6.96% and a high of
8.63% for the UJB Peer Group; (vii) UJB had a Tier I Capital ratio of 9.82%
compared to a low of 7.51%, a mean of 9.79%, and a high of 11.94% for the UJB
Peer Group; (viii) UJB had a total capital ratio of 12.62% compared to a low
of 10.65%, a mean of 12.52% and a high of 14.23% for the UJB Peer Group; (ix)
UJB had a return on average assets of 1.01% compared with a low of .75%, a
mean of 1.17% and a high of 1.58% for the UJB Peer Group; (x) UJB had a return
on average equity of 13.75% compared to a low of 9.52%, a mean of 14.98% and a
high of 19.03% for the UJB Peer Group; (xi) UJB had a net interest margin of
4.71% compared with a low of 3.64%, a mean of 4.41% and a high of 5.12% for
the UJB Peer Group; (xii) UJB had an efficiency ratio of 59.34% compared with
a low of 55.50%, a mean of 61.89% and a high of 67.00% for the UJB Peer Group;
(xiii) UJB had a price to latest twelve months earnings per share of multiple
of 13.27x compared to a low of 11.34x, a mean of 13.28x and a high of 17.71x
for the UJB Peer Group; (xiv) UJB had a price to 1995 estimated earnings per
share multiple of 12.25x compared to a low of 10.90x, a mean of 11.88x and a
high of 13.28x for the UJB Peer Group; (xv) UJB had a price to 1996 estimated
earnings per share multiple of 11.06x compared to a low of 9.70x, a mean of
10.69x and a high of 11.99x for the UJB Peer Group; (xvi) UJB had a price to
book value multiple of 1.79x compared to a low of 1.62x, a mean of 1.81x and a
high of 2.18x for the UJB Peer Group; (xvii) UJB had a price to tangible book
value multiple of 1.87x compared to a low of 1.65x, a mean of 2.06x and a high
of 2.71x for the UJB Peer Group, and (xviii) UJB had a dividend yield of 3.38%
compared to a low of 1.38%, a mean of 3.42% and a high of 4.22% for the UJB
Peer Group. Merrill Lynch did not establish any valuation or reference ranges
for Summit or UJB from the above comparisons.
General. In connection with its written opinion and for purposes of its
inclusion in this Proxy Statement-Prospectus, Merrill Lynch performed
procedures to update, as necessary, certain of the foregoing analyses and
reviewed the assumptions on which such analyses were based, and the factors
considered in connection therewith. Merrill Lynch did not perform any analyses
in addition to those discussed above.
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Merrill Lynch has been retained by UJB as an independent contractor to act
as financial advisor to UJB with respect to the Merger and will receive a fee
for its services. Merrill Lynch is a nationally recognized investment banking
firm and is continually engaged in the valuation of businesses and securities
in connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, and valuations for estate, corporate and other purposes. UJB
selected Merrill Lynch as a financial advisor in connection with the Merger
because of its reputation and because Merrill Lynch has substantial experience
in transactions such as the Merger.
In addition to the financial advisory services referred to above, Merrill
Lynch has from time to time provided underwriting, financial advisory, and/or
brokerage services to UJB and Summit, for all of which Merrill Lynch has
received customary compensation, and may provide additional services to the
parties in the future. In the ordinary course of business, Merrill Lynch makes
a market in UJB Common and Summit Common and trades the debt and equity
securities of UJB and Summit for its own account and for the account of its
customers and may at any time hold a long or short position in such
securities.
Pursuant to the terms of the Engagement Letter, UJB agreed to pay Merrill
Lynch the following fees for its financial advisory services: (i) a fee of
$100,000, payable in cash on the date of the Engagement Letter; (ii) an
additional fee of $1,400,000, contingent upon and payable in cash upon the
execution of the Merger Agreement; and (iii) if, during the period Merrill
Lynch is retained by UJB or within two years thereafter, (a) the Merger is
consummated or (b) UJB or an affiliate of UJB enters into an agreement with
Summit which subsequently results in a merger, a fee of $3,350,000 payable in
cash upon the closing of such merger. Any fees previously paid to Merrill
Lynch pursuant to clauses (i) and (ii) of this paragraph will be deducted from
any fee to which Merrill Lynch is entitled pursuant to clause (iii). While the
payment of all or a significant portion of fees related to financial advisory
services provided in connection with arm's-length merger and other business
combination transactions upon consummation of such transactions, as is the
case with the Merger, might be viewed as giving such financial advisors a
financial interest in the successful completion of such transactions, such
compensation arrangements are standard and customary for transactions of the
size and type of the Merger.
In addition to any fees that may be payable to Merrill Lynch, UJB has agreed
to reimburse Merrill Lynch, upon request made from time to time, for its
reasonable out-of-pocket expenses incurred in connection with Merrill Lynch's
activities under the Engagement Letter, including the reasonable fees and
disbursements of its legal counsel. In addition, pursuant to the Engagement
Letter, UJB has agreed to indemnify Merrill Lynch against certain liabilities,
including liabilities under the federal securities laws.
STOCK OPTION AGREEMENTS
As an inducement and condition to UJB's willingness to enter into the Merger
Agreement, Summit (as issuer) entered into the Summit Stock Option Agreement
with UJB (as grantee), and as an inducement and condition to Summit's
willingness to enter into the Merger Agreement, UJB (as issuer) entered into
the UJB Stock Option Agreement with Summit (as grantee). Pursuant to the Stock
Option Agreements, Summit granted the Summit Option to UJB and UJB granted the
UJB Option to Summit. The UJB Option is an option to purchase 11,450,000
shares of UJB Common at $36.625 per share, and the Summit Option is an option
to purchase 6,730,000 shares of Summit Common at $26.75 per share both
exercisable as described below. The purchase of any shares of Summit Common or
UJB Common pursuant to the Options is subject to compliance with applicable
law.
For purposes of the following summary of the material provisions of the
Stock Option Agreements, the term (i) "Issuer" means UJB with respect to the
UJB Stock Option Agreement and Summit with respect to the Summit Stock Option
Agreement, and (ii) "Grantee" means Summit with respect to the UJB Stock
Option Agreement and UJB with respect to the Summit Stock Option Agreement.
The material terms of the UJB Option and the Summit Option (other than the
number of shares and exercise price of the Options) are identical.
Unless Grantee is in breach of any covenant or obligation contained in the
Merger Agreement and, if the Merger Agreement has not terminated prior
thereto, such breach would entitle Issuer to terminate the Merger Agreement,
Grantee may exercise the related Option, in whole or in part, at any time and
from time to time
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following the occurrence of a Purchase Event (as defined below); provided that
the related Option will terminate upon the earliest to occur of certain
events, including:
(1) the time immediately prior to the Effective Time;
(2) termination of the Merger Agreement prior to the occurrence of an
Extension Event (as defined below) (other than a termination by Grantee
resulting from a volitional breach thereof by Issuer); or
(3) 15 months after the termination of the Merger Agreement following the
occurrence of an Extension Event (as defined below), or the termination of
the Merger Agreement by Grantee (unless the breach by Issuer giving rise to
such right of termination is non-volitional).
The term "Extension Event" shall mean the occurrence of certain events
without the Grantee's prior written consent, including:
(1) Issuer, its Board of Directors or any of its subsidiaries taking
certain actions (each an "Acquisition Transaction"), including recommending
or entering into an agreement with any third party to effect (a) a merger,
consolidation or similar transaction involving Issuer or any of its banking
subsidiaries, (b) the purchase, lease, or other acquisition of 10 percent
or more of the aggregate value of the assets or deposits of Issuer or any
of its banking subsidiaries, (c) the purchase or other acquisition of 10
percent or more of the voting power of Issuer or any of its banking
subsidiaries or (d) any substantially similar transaction, in each case
except as otherwise permitted by the related Stock Option Agreement;
(2) any third party acquiring beneficial ownership or the right to
acquire beneficial ownership of 10 percent or more of the aggregate voting
power of Issuer or any of its banking subsidiaries;
(3) any third party making a bona fide proposal to Issuer or its
shareholders, by public announcement or written communication that is or
becomes publicly disclosed, to engage in an Acquisition Transaction
(including the commencement of a tender offer or exchange offer to purchase
10 percent or more of the aggregate voting power of Issuer or any of its
banking subsidiaries);
(4) after a proposal by a third party to Issuer or its shareholders to
engage in an Acquisition Transaction, Issuer breaches any representation or
covenant in the Merger Agreement which would entitle Grantee to terminate
the Merger Agreement;
(5) any third party filing an application with any federal or state bank
regulatory authority for approval to engage in an Acquisition Transaction;
(6) failure of the shareholders of Issuer to approve the Merger Agreement
or Issuer's Board of Directors shall have withdrawn or modified in a manner
adverse to the consummation of the Merger, the recommendation of the
Issuer's Board with respect to the Merger Agreement, in each case after an
Extension Event; or
(7) any Purchase Event (as defined below).
The term "Purchase Event" shall mean either of the following events or
transactions:
(1) any third party acquiring beneficial ownership of 25 percent or more
of the aggregate voting power of Issuer or any of its banking subsidiaries,
except as otherwise permitted by the related Stock Option Agreement; or
(2) the occurrence of an Extension Event described in subparagraph (1)
above, except that the percentage referred to in clauses (b) and (c)
thereof shall be 25 percent.
Upon the occurrence of certain events set forth in the related Stock Option
Agreement, at the election of Grantee, the related Option (or shares issued
pursuant to the exercise thereof) must be repurchased by Issuer (the
"Repurchase") or converted into, or exchanged for, an option of another
corporation or Issuer (the "Substitute Option"). In addition, the related
Stock Option Agreement grants certain registration rights ("Registration
Rights") to Grantee with respect to the shares represented by the related
Option. The terms of such Repurchase, Substitute Option and Registration
Rights are set forth in the Stock Option Agreements.
The Stock Option Agreements and the Options are intended to increase the
likelihood that the Merger will be consummated according to the terms set
forth in the Merger Agreement, and may be expected to discourage offers by
third parties to acquire Summit or UJB prior to the Merger.
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To the knowledge of Summit and UJB, no event giving rise to the right to
exercise of either of the Options has occurred as of the date of this Proxy
Statement-Prospectus.
Copies of the Stock Option Agreements are set forth in Appendices D and E to
this Proxy Statement- Prospectus, and reference is made thereto for the
complete terms of the Stock Option Agreements and the Options. The foregoing
discussion is qualified in its entirety by reference to the Stock Option
Agreements.
CHARTER AND BY-LAWS OF SURVIVING CORPORATION
Pursuant to the Merger Agreement, the Certificate of Incorporation of the
Surviving Corporation will contain the provisions of the Restated Certificate
of Incorporation of UJB as in effect at the Effective Time and two additional
provisions, one changing the name of the Surviving Corporation to "Summit Bank
Corp." (as discussed at "THE MERGER--Merger of Constituent Corporations and
Name of Surviving Corporation") and one creating a new series of preferred
stock of the Surviving Corporation to be designated Adjustable Rate Cumulative
Preferred Stock, Series C ($25 stated value) having the same relative rights,
preferences and limitations as the Summit Adjustable Preferred (as discussed
at "THE MERGER--Conversion of Summit Adjustable Preferred"). A Restated
Certificate of Incorporation of UJB filed as an attachment to the Certificate
of Merger will contain all provisions of, and will constitute, the Restated
Certificate of Incorporation of the Surviving Corporation as just described,
unless and until duly amended. The By-Laws of UJB as in effect at the
Effective Time will be the By-Laws of the Surviving Corporation, unless and
until duly amended.
BOARD OF DIRECTORS AND OFFICERS OF SURVIVING CORPORATION
The Merger Agreement provides that the Board of Directors of the Surviving
Corporation will consist of the thirteen members of the Board of Directors of
UJB at the Effective Time and six additional members selected by the Summit
Board from among those persons serving as directors of Summit both at the time
the Merger Agreement is executed and at the Effective Time. The Merger
Agreement provides for the six additional members selected from the Summit
Board to be allocated evenly among the three classes of directors of UJB's
classified Board of Directors, and for the six additional members, subject to
director qualification requirements, to be nominated to serve at least one
full three-year term following any portion of a term they may serve by virtue
of their becoming a UJB director other than at an annual meeting of UJB
shareholders (except with respect to Thomas D. Sayles, Jr. who, UJB and Summit
have separately agreed, if selected, would serve a term ending at the 1997
annual meeting of shareholders of the Surviving Corporation). UJB has agreed
that, prior to the Effective Time, it will not increase above thirteen the
number of directorships on the UJB Board, but UJB is permitted to fill any
vacancies occurring prior to the Effective Time. The Merger Agreement further
provides that Robert G. Cox, Director and President of Summit, will be one of
the six nominees to the Board of the Surviving Corporation from the Summit
Board.
The Merger Agreement also provides that the officers of the Surviving
Corporation at the Effective Time shall consist of the persons serving as
officers of UJB at the Effective Time, except for the office of President
which shall be filled by Robert G. Cox, plus such other persons serving as
officers of Summit as UJB and Summit shall mutually designate.
REGULATORY APPROVALS
The Merger is subject to approval by the Federal Reserve Board under the
Bank Holding Company of 1956, as amended (the "BHC Act"). The BHC Act provides
that the Federal Reserve Board may not approve any transaction (1) that would
result in a monopoly, or that would be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking
in any part of the United States, or (2) the effect of which in any section of
the country may be substantially to lessen competition, or to tend to create a
monopoly, or that in any other manner would be in restraint of trade, unless
the Federal Reserve Board finds that the anticompetitive effects of the
proposed transaction are clearly outweighed in the public interest by the
probable effect of the transaction in meeting the convenience and needs of the
communities to be served. In conducting its review of any application for
approval, the Federal Reserve Board is required to consider the financial and
managerial resources and future prospects of the company or companies and the
banks concerned,
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and the convenience and needs of the communities to be served. Under the BHC
Act as interpreted by the Federal Reserve Board and the courts, the Federal
Reserve Board may deny any application if it determines that the financial or
managerial resources of the acquiring bank holding company are inadequate. The
acquisition by UJB of 5% or more of Summit's voting stock is subject to the
same approval. The BHC Act provides that a transaction approved by the Federal
Reserve Board may not be consummated for 30 days after such approval or, if
certain conditions are met, a shorter period, but in no event less than 15
calendar days after the date of approval. During such period, the Justice
Department may commence legal action challenging the transaction under the
antitrust laws. If, however, the Justice Department does not commence legal
action during the specified waiting period, it may not challenge the
transaction thereafter except in an action commenced under Section 2 of the
Sherman Antitrust Act. Satisfactory financial condition, particularly with
regard to capital adequacy, and satisfactory Community Reinvestment Act
ratings generally are prerequisites to obtaining Federal Reserve Board
approval to make acquisitions. All of UJB's subsidiary banks are currently
rated "satisfactory" or better under the Community Reinvestment Act.
Regulations of the Federal Reserve Board under the BHC Act requires notice
of an application for approval of a merger between bank holding companies to
be published in a newspaper of general circulation and in the Federal Register
and that the public have at least 30 days to comment on the application. In
the event one or more comments protesting approval of the application are
received by the Federal Reserve Board within the time period provided for in
the respective notices, the Federal Reserve Board's regulations permit the
federal reserve bank having jurisdiction over the applicant, acting on
delegated authority from the Federal Reserve Board, to arrange a private
meeting between the applicant and the protestors if the federal reserve bank
decides a private meeting would be appropriate. In addition, if an applicant
or a protestor requests a hearing or if the Federal Reserve Board determines
such to be appropriate, the Federal Reserve Board may order that a formal
hearing on the application be held or that a proceeding permitting all
interested parties to present their views orally before the Federal Reserve
Board or its designated representative be conducted. Due to the possibility
that a private meeting, public hearing or proceeding providing for oral
presentation will be deemed appropriate by the Federal Reserve Board following
receipt of a protest, and due additionally to the procedures relating thereto,
Federal Reserve Board processing of merger applications receiving one or more
protests will generally take longer than the processing of merger applications
not receiving such protests, The comment period relating to UJB's application
for approval of the Merger expires on or about December 16, 1995. As of the
date of this Proxy Statement-Prospectus the Federal Reserve Board has notified
UJB that it has received one comment requesting a hearing.
Based on current precedents, the managements of UJB and Summit anticipate
that the Merger will be approved by the Federal Reserve Board and believe it
is not likely to be challenged by the Justice Department under the antitrust
laws. However, there is no assurance that the Federal Reserve Board or the
Justice Department will not challenge the Merger or that any approval by the
Federal Reserve Board will not contain conditions unacceptable to UJB or
Summit or both. The shareholders of UJB and Summit should be aware that
regulatory approvals of the Merger may be based upon different considerations
than those that would be important to such shareholders in determining whether
or not to approve the Merger. Any such approvals should in no event be
construed by a UJB or Summit shareholder as a recommendation by any regulatory
agency with respect to the Merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Directors and executive officers of Summit have interests in the Merger that
are in addition to their interests as Summit shareholders. These interests are
described in more detail below.
Indemnification and Insurance
In the Merger Agreement, UJB has agreed to indemnify and to advance expenses
in matters that may be subject to indemnification to persons who served as
directors and officers of Summit or any subsidiary of Summit on or before the
Effective Time with respect to liabilities and claims (and related expenses)
made against them resulting from their service as such prior to the Effective
Time in accordance with and subject to the requirements and other provisions
of Summit's or UJB's Restated Certificate of Incorporation and By-Laws in
effect on the
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date the Merger Agreement was executed, whichever is more favorable to the
particular director or officer, and applicable provisions of law.
Also in the Merger Agreement, UJB has agreed that for a period of six (6)
years after the Effective Time it will use its best efforts to provide to the
persons who served as directors or officers of Summit or any subsidiary of
Summit 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 substantially similar in all material
respects to the insurance coverage provided to them in such capacities on the
date of execution of the Merger Agreement; provided that in no event is UJB
required to expend more than 200% of the amount expended by Summit prior to
the execution of the Merger Agreement for such insurance coverage. UJB has
agreed to use its best efforts to obtain as much comparable insurance as is
available for this amount. Summit must renew any existing insurance or
purchase any "discovery period" insurance provided for under existing
insurance at UJB's request and expense.
Directors and Management
As provided in the Merger Agreement, upon consummation of the Merger, Mr.
Cox and five other members of the Summit Board, subject to director
qualification requirements, will be nominated to serve on the Board of
Directors of the Surviving Corporation for a period of service to include at
least one full three-year term, other than with respect to Thomas D. Sayles,
Jr. who, UJB and Summit have separately agreed, if selected, would serve a
term ending at the 1997 annual meeting of shareholders of the Surviving
Corporation. The Merger Agreement also provides that Mr. Cox will be President
of the Surviving Corporation and the employment agreement to be entered into
between Mr. Cox and UJB provides that Mr. Cox will also be the President of
UJBank following consummation of the Merger. See "THE MERGER--Board of
Directors and Officers of Surviving Corporation."
Employment Agreement with Robert G. Cox
UJB has agreed to enter, on or before the Closing Date, into an employment
agreement with Mr. Cox, Director and President of Summit, providing for Mr.
Cox to serve, commencing at the Effective Time, as the President of the
Surviving Corporation and UJBank, for an initial term of three years;
provided, however, on the first and second anniversary dates of the employment
agreement, the term of the employment agreement shall be extended
automatically for one additional year unless not later than 180 days prior to
such anniversary date, either party shall have given written notice to the
other of its or his election not to extend the term of the employment
agreement. The employment agreement additionally provides for Mr. Cox to
receive (i) base salary of not less than $500,000, (ii) an annual bonus at
least equal to the highest annual bonus received by him during any of three
calendar years preceding the Effective Time, (iii) incentive, savings and
retirement plan benefits which in the aggregate are equal to those received by
peer executives of UJB, or, if more favorable, the most favorable incentive,
savings and retirement plan benefits received by him in the 180 days preceding
the Effective Time, (iv) health and welfare plan benefits which in the
aggregate are equal to those received by peer executives of UJB, or, if more
favorable, the most favorable health and welfare plan benefits received by him
in the 180 days preceding the Effective Time, and (v) other customary fringe
benefits received by peer executives of UJB, or, if more favorable, the most
favorable of the fringe benefits received by him in the 180 days preceding the
Effective Time. In the employment agreement Mr. Cox agrees that for a period
of one year following any termination of the employment agreement he will not
accept employment with any national or state bank or thrift institution or
affiliate thereof at a place of employment within 25 miles of any branch
location of UJB or any of its subsidiaries.
Summit Change of Control Agreements
Summit has entered into change of control agreements with certain executive
officers of Summit (Robert G. Cox, John R. Feeney, Dennis S. McChesney, Elwood
Bowman II, Stewart McClure, James S. Little and Richard Ranelli) which provide
for certain payments and benefits to the executive in the event the
executive's employment is terminated following a change of control or a
potential change of control as those terms are defined in the agreements (the
"Change of Control Events"). These agreements also provide for reimbursement
to the executive of a portion of the excise taxes payable (if any) as a result
of receipt by an executive of payments
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and benefits as a result of a termination after a Change of Control Event. The
Merger Agreement constitutes a Change of Control Event for purposes of these
agreements. If, pursuant to the provisions described above, payments were
required to be made to Messrs. Cox, Feeney, McChesney, Little and Bowman (the
five most highly compensated Summit executive officers named in Summit's most
recent annual meeting proxy statement), the estimated amount of such payments
would be $3,382,573, $1,351,317, $1,463,867, $611,093 and $798,697,
respectively. The estimated amount of payments to all the executive officers
with change of control agreements as a group would be $8,759,756. Since Mr.
Cox will enter into an employment agreement providing for him to serve as the
President of the Surviving Corporation and UJBank, he will not be entitled to
payments under his change of control agreement as a result of the Merger.
However, the employment agreement provides for UJB to assume the obligations
of Summit under the change of control agreement between Summit and Mr. Cox.
Supplemental Retirement Benefits
Summit maintains a supplemental executive retirement plan ("SERP") for the
benefit of certain eligible key officers. The SERP provides a participant
benefits that would otherwise be denied a participant by reason of certain
Code limitations on qualified plan benefits such as benefits under the
qualified, noncontributory pension plan maintained by Summit (the "Summit
Retirement Plan"). Messrs. Cox, Feeney and McChesney participate in the SERP
which provides, among other things, that an officer who is a participant in
the SERP on the date of a change of control and who retires, otherwise
terminates employment or dies prior to reaching age 65, will have benefits to
which the participant is entitled under the Summit Retirement Plan determined
without respect to any plan limits and as if the participant had remained
employed until age 65 and had continued to accrue years of service until such
date. The estimated present value of benefits payable to Messrs. Cox, Feeney
and McChesney under the SERP attributable to a change of control would be
$116,414, $167,121 and $265,966, respectively.
Summit Stock Award Plans.
As described under "THE MERGER--Conversion of Stock Award Plan Options,"
Original Award Plan Options outstanding at the Effective Time will be
automatically converted into New Award Plan Options, subject to the terms of
the particular Summit Stock Award Plan and stock option agreement pursuant to
which the Original Award Plan Option was granted. The number of shares covered
by the New Award Plan Options and the exercise price thereof will be set by
reference to the number of shares covered by and the exercise price of the
Original Award Plan Option, adjusted in accordance with the Exchange Ratio.
The Merger Agreement provides that holders of New Award Plan Options, in lieu
of exercising the New Award Plan Option as a stock option, may instead receive
the aggregate difference between the exercise price of the New Award Plan
Option and the market price of UJB Common at the time of exercise in shares of
UJB Common.
The following table sets forth certain information relating to Original
Award Plan Options held by Messrs. Cox, Feeney, McChesney, Bowman and Little
and all directors and executive officers of Summit as a group as follows: (i)
the number of Original Award Plan Options held by such persons; (ii) the
number of Original Award Plan Options held by such persons that are currently
exercisable; (iii) the number of Original Award Plan Options held by such
persons that will become exercisable in connection with the Merger; (iv) the
weighted average exercise price for currently exercisable Original Award Plan
Options; (v) the weighted average exercise price for Original Award Plan
Options that will become exercisable in connection with the Merger; and (vi)
the aggregate value of the Original Award Plan Options based upon the per
share value (i.e., stock price less option exercise price) of Summit Common on
November 29, 1995 of $28.375.
<TABLE>
<CAPTION>
WEIGHTED AVG.
OPTIONS WEIGHTED AVG. EXERCISE PRICE OF
OPTIONS EXERCISABLE EXERCISE PRICE OF OPTIONS EXERCISABLE AGGREGATE
OPTIONS CURRENTLY IN CONNECTION OPTIONS CURRENTLY IN CONNECTION WITH VALUE OF
HELD EXERCISABLE WITH THE MERGER EXERCISABLE THE MERGER OPTIONS
------- ----------- --------------- ----------------- ------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Cox........... 173,839 104,339 69,500 $15.14 $19.04 $2,029,709
John R. Feeney.......... 67,716 41,466 26,250 17.45 18.93 700,947
Dennis S. McChesney..... 63,816 37,566 26,250 17.29 18.93 664,350
James S. Little......... 34,000 18,700 15,300 15.76 19.07 378,267
Elwood L. Bowman II..... 47,094 29,694 17,400 17.17 19.01 495,672
Directors & Executive
Officers as a Group (22
Persons in Total)...... 665,467 422,577 242,890 7,429,317
</TABLE>
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The following table sets forth certain information regarding the number of
shares (rounded to the lowest near whole share) and value (rounded) thereof
(based on the closing sale price of UJB Common on November 29, 1995 of
$32.375) of UJB Common issuable to Messrs. Cox, Fenney, McChesney, Bowman and
Little and all directors and executive officers as a group, upon exercise of
their New Award Plan Options as stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF UJB
SHARES TO BE
WEIGHTED AVG. WEIGHTED AVG. VALUE OF RECEIVED UPON
ORIGINAL EXERCISE PRICE NEW AWARD EXERCISE NEW AWARD EXERCISE OF
AWARD OF ORIGINAL PLAN OPTIONS PRICE OF NEW PLAN OPTIONS NEW AWARD
PLAN AWARD PLAN UPON AWARD PLAN EXCERCISED PLAN OPTIONS
OPTIONS OPTIONS CONVERSION OPTIONS AS SARS AS SARS
-------- -------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Cox........... 173,839 $16.70 156,455 $18.56 $2,161,426 66,762
John R. Feeney.......... 67,716 18.02 60,944 20.03 752,354 23,238
Dennis S. McChesney..... 63,816 17.96 57,434 19.96 713,043 22,024
James S. Little......... 34,000 17.25 30,600 19.17 404,073 12,481
Elwood L. Bowman II..... 47,094 17.85 42,384 19.83 531,707 16,423
Directors & Executive
Officers as a Group (22
Persons in Total)...... 665,467 17.21 598,918 19.12 7,936,145 245,130
</TABLE>
The vesting of certain restricted stock awards and performance share units
granted under the Summit Stock Award Plans will be accelerated in connection
with the Merger. Restricted stock awards and performance share units with
respect to shares of Summit Common of 48,700; 25,650; 22,350; 13,400; and
16,250 shares for Messrs. Cox, Feeney, McChesney, Little and Bowman,
respectively, will vest in connection with the Merger.
Summit Severance Pay Policy
The Merger Agreement provides that any employee of Summit whose employment
is terminated during the one-year period commencing with the Effective Time
shall be entitled to benefits under the Summit Severance Pay Policy. Benefits
provided under the Summit Severance Pay Policy include outplacement assistance
or counseling for terminated officers and employees, a period of bridge pay
for officers to conduct a job search for up to four months and severance pay
based on years of service. Each terminated employee is entitled to a minimum
severance pay equal to four weeks' base salary up to a maximum of 52 week's
base salary for 25 or more years of service. However, by its terms, the Summit
Severance Pay Policy excludes from its coverage those individuals who have
entered into change of control agreements.
THE MERGER AGREEMENT
Amendment
Summit and UJB may jointly amend the Merger Agreement at any time; provided,
however, that, after the Summit Special Meeting, no amendment may reduce the
amount, or change the forms, of consideration to be received by Summit's
shareholders unless such modification is submitted to a vote of the Summit
shareholders or increase the amount of consideration to be paid by UJB unless
such modification is submitted to a vote of the shareholders of UJB.
Covenants
Summit
Pursuant to the Merger Agreement, Summit has covenanted, among other things,
that, until termination of the Merger Agreement, Summit will advise UJB of any
material adverse change in Summit's business and certain other circumstances,
and the business of Summit and its subsidiaries will be carried on diligently
and substantially in the same manner as prior to the execution of the Merger
Agreement. Furthermore, until termination of the Merger Agreement, without the
prior written consent of UJB, Summit will refrain from taking certain other
actions, including certain actions relating to changes in its capital stock,
the incurrence of liabilities and the issuance of capital stock.
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Summit also has agreed that, until termination of the Merger Agreement or
the Effective Time neither Summit nor any of its subsidiaries nor any of the
officers or director of Summit or its subsidiaries shall, and that Summit
shall direct and use its best efforts to cause its employees, agents and
representatives (including investment bankers, brokers, financial or
investment advisors, attorneys or accountants retained by Summit or any of its
subsidiaries) not to (i) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or offer (including
any proposal, tender offer or exchange offer, consolidation, business
combination, takeover or similar transactions other than the Merger involving,
or any purchase of all or any significant portion of the assets or any equity
securities of, Summit or any of its subsidiaries ("Acquisition Proposal") or
(ii) except to the extent legally required for the discharge by the Summit
Board of its fiduciary duties, as advised by written opinion of counsel
furnished to UJB, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, or enter
into any agreement or agreement in principle with any person relating to as an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal. In addition, Summit agreed to notify UJB by
telephone to its chief executive officer or general counsel promptly upon
receipt of any inquiry with respect to a proposed Acquisition Proposal with
another person or receipt of a request for information from any governmental
or regulatory authority with respect to a proposed acquisition of Summit or
any of its subsidiaries or assets by another party, and to immediately deliver
by facsimile transmission to such UJB officer a copy of any document relating
thereto promptly after any such document is received by Summit. In order to
ensure that Summit shareholders would be paid at least one but no more than
one dividend in the calendar quarter in which the Merger is consummated,
Summit agreed in the Merger Agreement to coordinate with UJB the declaration
of any dividends and the setting of any record or payment dates.
UJB
Pursuant to the Merger Agreement, UJB has covenanted, among other things,
that until termination of the Merger Agreement UJB will advise Summit of any
material adverse change in UJB's business and certain other circumstances, and
will use its best efforts to preserve its business organization intact and its
relationship with customers and others having business dealings with it.
UJB has also agreed (i) to merge Summit Bank, the wholly-owned, New Jersey
chartered bank subsidiary of Summit, with and into UJBank under the name
"Summit Bank" as soon as reasonably practicable following the Effective Time,
(ii) that Summit may amend the Summit Profit Sharing Plan to provide for
immediate vesting of unvested benefits if in the written opinion of Summit's
and UJB's independent accounting firm such amendment is consistent with
accounting for the Merger as a pooling-of-interests, (iii) that it will
provide benefits under Summits's severance pay policy to Summit employees who
are terminated during the one-year period following the Effective Date, and
(iv) that it will permit Summit employees who become UJB Employees following
the Effective Time to participate in pension, savings, and health and welfare
plans of UJB to the extent maintained by UJB unless a comparable plan of
Summit is retained.
Conditions to the Merger; Termination
The obligations of both parties to consummate the Merger are subject to the
satisfaction of certain conditions including, among other things: (1) approval
of the Merger Agreement by the requisite vote of the holders of UJB Common and
Summit Common; (2) receipt of all required regulatory approvals by UJB and
Summit without such approvals containing restrictions or limitations, which,
in the reasonable opinion of UJB or Summit, would materially adversely affect
the financial condition of UJB following the consummation of the Merger; (3)
UJB's receipt of an opinion from Thompson & Mitchell and Summit's receipt of
an opinion from Sullivan & Cromwell both as to certain federal income tax
consequences of the Merger; (4) receipt of a letter from KPMG Peat Marwick LLP
to the effect that the Merger will qualify for pooling-of-interests accounting
treatment; (5) the UJB Common and the UJB Series C Preferred to be issued in
the Merger having been approved for listing on the NYSE, subject to official
notice of issuance; (6) neither party is party to any agreement or memorandum
of understanding nor is subject to any order, directive or, supervisory letter
from, any governmental or regulatory authority which restricts materially the
conduct of its respective business or has a material adverse affect upon the
Merger or upon the financial condition of the respective parties or their
banking
49
<PAGE>
subsidiaries, and neither party has been advised that any such authority is
contemplating issuing or requesting, or considering the appropriateness of
issuing or requesting, any of the foregoing; (7) UJB and Mr. Cox executing Mr.
Cox's employment agreement; and (8) other customary conditions described in
the Merger Agreement. Any of such conditions may be waived by the party for
whose benefit the condition was included. However, the Merger will not be
consummated without the receipt of all required regulatory approvals and the
pooling letter from KPMG Peat Marwick LLP.
Either party may terminate the Merger Agreement if (1) the other party's
shareholders fail to approve the Merger Agreement by the requisite vote, (2)
the other party materially breaches a warranty, representation or covenant and
such breach is not cured or capable of being cured within 30 days of the
giving of written notice thereof, (3) on the closing date, all the conditions
precedent to such party's obligation to close are not met, or (4) the Merger
has not been closed by August 31, 1996 unless the failure of such occurrence
is due solely to the failure of the party seeking to terminate the Merger
Agreement to perform or observe its agreements set forth in the Merger
Agreement required to be performed or observed by such party on or before the
closing date. In addition, the parties may terminate the Merger Agreement at
any time by mutual agreement.
Expenses
In the event that the Merger Agreement is terminated by either party, each
party shall be mutually released and discharged from liability to the other
party or to any third party hereunder, and no party shall be liable to any
other party for any costs or expenses incurred in connection with the Merger
Agreement, except that the expenses incurred in connection with the printing
of this Proxy Statement-Prospectus and the Registration Statement and the
filing fees with the Commission and the NYSE shall be borne equally by Summit
and UJB; provided, however, that in the event of a termination, a breaching
party will not be relieved from liability for any uncured willful breach of
the Merger Agreement which gave rise to such termination. Notwithstanding any
termination of the Merger Agreement, each party will indemnify and hold the
other party 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 such party.
Except as provided otherwise in the event of termination of the Merger
Agreement, Summit and its subsidiaries will bear their own expenses incident
to preparing, entering into and carrying out the Merger Agreement and to
consummating the Merger; provided, however, that UJB will pay all printing and
mailing expenses and filing fees associated with the Registration Statement
relating to this Proxy Statement-Prospectus, this Proxy Statement-Prospectus
and regulatory applications.
NO DISSENTERS' RIGHTS
Under applicable New Jersey law, no dissenters' rights of appraisal are
available to holders of either UJB Stock or Summit Stock in connection with
the Merger.
NEW YORK STOCK EXCHANGE LISTING
UJB has agreed in the Merger Agreement to use its best efforts to cause the
shares of UJB Common to be issued in the Merger to be listed on the NYSE.
Listing of such shares of UJB Common on the NYSE (subject to official notice
of issuance) is a condition to the consummation of the Merger.
ACCOUNTING TREATMENT
It is anticipated that the Merger, when consummated, will be accounted for
as a pooling-of-interests, and it is a condition of closing the Merger that
the parties receive a letter from KPMG Peat Marwick LLP, independent auditors
for UJB and Summit, to the effect that the Merger qualifies for such
accounting treatment. Under this method of accounting, the historical book
values of the assets, liabilities and shareholders' equity of Summit, as
reported on its Consolidated Balance Sheet, will be carried over onto the
Consolidated Balance Sheet of UJB and no goodwill or other intangible assets
will be created. UJB will include on its Consolidated Statement of Income the
consolidated results of operations of Summit for the entire fiscal year in
which the consummation of the Merger occurs and will combine and restate its
results of operations for prior periods to include the reported consolidated
results of operations of Summit for prior periods.
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<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the material federal income tax
consequences of the Merger to certain Summit shareholders and does not purport
to be a complete analysis or listing of all potential tax considerations or
consequences relevant to a decision whether to vote for the approval of the
Merger. With respect to the federal income tax consequences to Summit
shareholders, the discussion does not address all aspects of federal income
taxation that may be applicable to Summit shareholders and does not address
the consequences of the Merger to shareholders of Summit subject to special
federal income tax treatment including, without limitation, foreign persons,
tax-exempt entities, retirement plans, dealers in securities, and persons who
acquired their Summit Common pursuant to the exercise of employee stock
options or otherwise as compensation. Each Summit shareholder's individual
circumstances may affect the tax consequences of the Merger to such
shareholder. In addition, no information is provided herein with respect to
the consequences under state, local or foreign tax laws, or under any federal
tax laws other than those pertaining to the federal income tax. CONSEQUENTLY,
EACH SUMMIT SHAREHOLDER IS URGED TO CONSULT SUCH SHAREHOLDER'S OWN TAX ADVISOR
TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH SHAREHOLDER.
UJB has received an opinion from Thompson & Mitchell, special counsel to
UJB, and Summit has received an opinion from Sullivan & Cromwell, special
counsel to Summit (collectively, the "Opinions"), each to the effect that,
assuming the Merger occurs in accordance with the Merger Agreement and the
accuracy of certain representations made by UJB and Summit, for U.S. federal
income tax purposes the Merger will constitute a "reorganization" within the
meaning of Section 368(a)(1) of the Code. In addition, the Opinion received by
Summit addresses the following federal income tax consequences of the Merger
to Summit shareholders:
(1) except with respect to Cash in Lieu Amounts received in respect of
fractional share interests, holders of Summit Common who receive solely the
Common Stock Merger Consideration in the Merger will not recognize gain or
loss for federal income tax purposes;
(2) holders of Summit Adjustable Preferred who receive solely UJB Series
C Preferred in the Merger will not recognize gain or loss for federal
income tax purposes;
(3) the basis of UJB Common received in the Merger (including any
fractional share for which cash is received) will equal the basis of the
Summit Common for which it is exchanged;
(4) the basis of UJB Series C Preferred received in the Merger will equal
the basis of the Summit Adjustable Preferred for which it is exchanged;
(5) the holding period of UJB Common received in the Merger (including
any fractional share for which cash is received) will include the holding
period of the Summit Common for which it is exchanged, assuming that such
Summit Common is a capital asset in the hands of the holder thereof at the
Effective Time; and
(6) the holding period of UJB Series C Preferred received in the Merger
will include the holding period of the Summit Adjustable Preferred for
which it is exchanged, assuming that such Summit Adjustable Preferred is a
capital asset in the hands of the holder thereof at the Effective Time.
The receipt of the Opinions again as of the date of the closing of the
Merger is a condition to the consummation of the Merger, unless waived by the
party entitled to receive such opinion.
The Opinions are subject to the conditions and assumptions stated therein
and rely upon various representations made by UJB and Summit. In addition, the
Opinions are based on the Code, regulations proposed or promulgated
thereunder, and administrative interpretations and judicial precedents
relating thereto, all of which are subject to change. Any such change, which
may or may not be retroactive, could alter the tax consequences discussed
herein. An opinion of counsel, unlike a private letter ruling from the
Internal Revenue Service, has no binding effect on the Internal Revenue
Service. The Internal Revenue Service could take a position contrary to the
Opinions and, if the matter were litigated, a court may reach a decision
contrary to the Opinions. Neither UJB nor Summit has requested a ruling from
the Internal Revenue Service as to the federal income tax consequences of the
Merger, and the Internal Revenue Service is not expected to issue such a
ruling.
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<PAGE>
THE FOREGOING IS A SUMMARY OF THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER TO CERTAIN SUMMIT SHAREHOLDERS AND DOES NOT TAKE INTO ACCOUNT
THE PARTICULAR FACTS AND CIRCUMSTANCES OF EACH SUMMIT SHAREHOLDER'S TAX STATUS
AND ATTRIBUTES. AS A RESULT, THE FEDERAL INCOME TAX CONSEQUENCES ADDRESSED IN
THE FOREGOING DISCUSSION MAY NOT APPLY TO EACH SUMMIT SHAREHOLDER. AS EACH
SHAREHOLDER'S INDIVIDUAL CIRCUMSTANCES MAY AFFECT THE TAX CONSEQUENCES OF THE
MERGER TO SUCH SHAREHOLDER, EACH SUMMIT SHAREHOLDER SHOULD CONSULT SUCH
SHAREHOLDER'S OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE
MERGER TO SUCH SHAREHOLDER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL,
STATE, LOCAL AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL
AND OTHER TAX LAWS.
RESALES OF UJB STOCK
The shares of UJB Common and UJB Series C Preferred into which shares of
Summit Common and Summit Adjustable Preferred are converted on the Effective
Date will be freely transferable under the Securities Act except for shares
issued to any shareholder who may be deemed to be an "affiliate" of Summit for
purposes of Rule 145 under the Securities Act as of the date of the Summit
Special Meeting. Affiliates may not sell their shares of UJB Common and UJB
Series C Preferred acquired in connection with the Merger except pursuant to
an effective registration statement under the Securities Act covering such
shares or in compliance with Rule 145 under the Securities Act or another
applicable exemption from the registration requirements of the Securities Act.
Persons who may be deemed to be affiliates of Summit generally include
individuals or entities that control, are controlled by or are under common
control with Summit and may include certain officers and directors of Summit
as well as principal shareholders of Summit.
UJB and Summit agreed in the Merger Agreement to cause each director,
executive officer and other person who is an affiliate of UJB or Summit to
enter into an agreement with UJB providing that such persons agree to be bound
by the rules which permit the Merger to be treated as a pooling-of-interests
for accounting purposes, and in the case of the Summit affiliates, agreeing to
be bound by the restrictions of Rule 145. See "THE MERGER--Accounting
Treatment." The rules regarding pooling-of-interests accounting treatment
includes restrictions on sales or other dispositions of UJB Common or Summit
Common by affiliates of either UJB or Summit during the period commencing 30
days prior to the Merger and ending at the time of the publication of
financial results covering at least 30 days of combined operations of UJB and
Summit.
DIFFERENCES IN SHAREHOLDERS' RIGHTS
Because UJB and Summit are both New Jersey business corporations, any
differences in rights of holders of their respective stocks are due to
differences in the restated certificates of incorporation and by-laws of the
two companies. Certain of the rights of Summit shareholders described below
that are contained in the Restated Certificate of Incorporation or Bylaws of
Summit, and that are not contained in the Restated Certificate of
Incorporation or By-Laws of UJB, are deemed to have an anti-takeover effect
and will not be available to Summit shareholders as UJB shareholders; however,
certain rights provided for by the Restated Certificate of Incorporation or
By-Laws of UJB are also deemed to have an anti-takeover effect and will be
available to Summit shareholders but only after becoming UJB shareholders. The
following is a summary explanation of the material differences between the
rights of shareholders of Summit and the rights of shareholders of UJB. This
summary is qualified in its entirety by reference to the governing documents
of Summit and UJB referred to above.
Classified Board and Related Provisions.
SUMMIT. Summit's Restated Certificate of Incorporation and Bylaws provide
for a classified Board by dividing the Board into three classes of
approximately equal size, with each class of directors serving a staggered
term of three years.
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UJB. The Restated Certificate of Incorporation of UJB divides the UJB Board
into three classes, with each class of directors serving a staggered term of
three years. Each class of directors must consist, as nearly as possible, of
one third of the number of directors constituting the entire UJB Board.
Presently there are four directors in Class I, five directors in Class II and
four directors in Class III.
Meetings and Consents
SUMMIT. Summit's Bylaws provide that a special meeting of shareholders may
be called for any purpose, at any time, by the Chairman, the President or the
Board, and shall be called by the President upon the written report of
shareholders holding 10% or more of Summit's outstanding shares of capital
stock eligible to vote at a shareholders' meeting.
UJB. The Restated Certificate of Incorporation of UJB requires that all
actions by the shareholders of UJB be taken at a duly called annual or special
meeting of UJB's shareholders or by the unanimous, but not less than
unanimous, written consent of the shareholders. An additional provision in the
Restated Certificate of Incorporation of UJB provides that the affirmative
vote of the holders of 80% or more of the combined voting shares of UJB,
voting as a single class, is required to amend, alter, repeal or take any
action inconsistent with this requirement.
Shareholder Rights Plans
SUMMIT. Summit's shareholder rights plan ("Summit Rights Plan") provides
that automatically attached to each share of Summit Common is one right (a
"Summit Right") which, when exercisable, entitles the holder of the Summit
Right to purchase one-hundredth of a share of Series B Junior Participating
Preferred Stock at a purchase price of $70, subject to adjustment. In certain
events (such as a person or group acquiring or announcing an intent to acquire
15% or more of the Summit Common, or the Summit Board determining that 10% or
more of the Summit Common has been acquired by an "Adverse Person", as defined
in the Summit Rights Plan), holders of the Summit Rights are entitled to
purchase Summit Common or common stock in a surviving corporation with a
market value of two times the exercise purchase price, as defined in the
Summit Rights Plan. Accordingly, exercise of the Summit Rights may cause
substantial dilution to a person that attempts to acquire Summit and may have
certain antitakeover effects. For a further discussion of the Summit Rights
Plan, see "DESCRIPTION OF SUMMIT CAPITAL STOCK--Shareholder Rights Plan."
UJB. UJB has in effect a shareholder rights plan similar to the Summit
Rights Plan pursuant to which holders of shares of UJB Common possess one
preferred stock purchase right for each share of UJB Common held by them. Each
preferred stock purchase right entitles the holder to buy, as of the close of
business on the tenth day following the occurrence of certain takeover-related
events, one-hundredth of a share of a new series of Preferred Stock,
designated the Series R Preferred Stock, at $90 per one-hundredth share, with
full shares having rights per share equal to 100 times the rights of UJB
Common with respect to voting, dividends and distributions upon liquidation or
merger as well as entitling the holder to an additional preferential dividend.
Upon the occurrence of certain subsequently occurring events, holders of the
preferred stock purchase rights become entitled to purchase either shares of
the Series R Preferred Stock of UJB (if not already purchased) or a number of
shares of the "acquiring person" (as defined in the rights plan) equal in
market value to twice the exercise price of the preferred stock purchase
right. The UJB Board has the power to redeem the preferred stock purchase
rights at any time but, after the preferred stock purchase rights become
exercisable, it may do so only upon the majority vote of non-management
directors in connection with a business combination it has approved. For a
further description of UJB's shareholder rights plan, see "DESCRIPTION OF UJB
CAPITAL STOCK--Shareholder Rights Plan."
Nominations to the Board, Shareholder Proposals and Conduct of Meetings
SUMMIT. The Bylaws of Summit provide that the Summit Board may make such
rules or regulations for the conduct of meetings of Summit shareholders as the
Summit Board deems necessary, appropriate or convenient. Subject to such rules
or regulations made by the Summit Board, the chairman of a meeting of Summit
shareholders has the right and authority to prescribe such rules, regulations
and procedures and to do all
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<PAGE>
acts, in the judgment of such chairman, as are necessary, appropriate or
convenient for the proper conduct of the meeting of Summit shareholders. The
Bylaws of Summit further provide that no matter (other than certain procedural
matters) shall be properly before the meeting of Summit shareholders for
consideration unless such matter shall have been identified in the notice of
meeting given by or at the direction or the Summit Board. In the case of any
matter proposed by any Summit shareholder for consideration at a meeting of
Summit shareholders, timely written notice of the same must be given to the
Secretary of Summit in accordance with the Summit Bylaws.
UJB. The By-Laws of UJB contain provisions that empower the UJB Board to
adopt rules, regulations and procedures governing meetings of UJB shareholders
and empower the chairman of a meeting of UJB shareholders, subject to the
rules and regulations adopted by the UJB Board, to adopt such rules,
regulations and procedures and to take such acts that the chairman deems
necessary, appropriate or convenient for the proper conduct of a shareholder
meeting. The UJB By-Laws also contain provisions that (1) establish rules
governing nominations for director and shareholder proposals made at annual
meetings of shareholders and, in general, empower the chairman of an annual
meeting to disallow nominations and shareholder proposals that are not made at
least 80 days in advance of the particular meeting or that otherwise fail to
comply with the requirements of the By-Laws and (2) establish rules governing
nominations for directors made at special meetings of shareholders and empower
the chairman of a special meeting to disallow nominations that are not made at
least 70 days prior to such special meeting or the 10th day following the day
on which public announcement of such special meeting is first made or that
otherwise fail to comply with the requirements of the By-Laws.
Authorized Shares
SUMMIT. Summit has authorized 50,000,000 shares of Summit Common and
12,000,000 shares of Preferred Stock, no par value, issuable in one or more
series and with such terms as the Summit Board determines. As of September 30,
1995, there were 33,897,869 shares of Summit Common, and 504,481 shares of
Summit Adjustable Preferred outstanding. The Summit Board is authorized by
Summit's Restated Certificate of Incorporation, as amended, to issue shares of
Summit Preferred Stock in series and classes and to fix, from time to time,
the number of shares to be included in any class and series and the par value,
dividend rights, voting rights, redemption rights, designation, relative
rights, preferences and limitations, and all other characteristics and rights
of the shares of each class and series.
UJB. The Restated Certificate of Incorporation of UJB authorizes the
issuance of 130,000,000 shares of UJB Common and 4,000,000 shares of preferred
stock, no par value. As of September 30, 1995, there were 57,581,872 shares of
UJB Common and 600,166 shares of the Adjustable Rate Cumulative Preferred
Stock of UJB, Series B ($50 stated value) ("UJB Series B Preferred")
outstanding and 600,000 shares of UJB Series R Preferred reserved in UJB's
Restated Certificate of Incorporation for issuance under the shareholder
rights plan of UJB. The Restated Certificate of Incorporation of UJB and the
New Jersey Corporation Act authorize the UJB Board to amend the Restated
Certificate of Incorporation without shareholder concurrence to divide the
authorized shares of preferred stock into series, to determine the
designations and the number of shares of any such series, and to determine the
relative voting, dividend, conversion, redemption, liquidation and other
rights, preferences and limitations of the authorized shares of preferred
stock.
Voting
SUMMIT. The affirmative vote of a plurality of votes cast by the shares
entitled to vote at a meeting at which a quorum is present is required to
elect directors. Summit's Restated Certificate of Incorporation also provides
that no merger or consolidation or similar transaction involving Summit may be
effected without the approval of voting securities representing at least two-
thirds of the votes entitled to be cast (excluding shares owned by 5%
shareholders and their affiliates) unless the Board has previously approved
the transaction or unless certain fair price tests, meant to ensure equal
price treatment for all shareholders, are met. The effect of this provision,
together with the provisions for the classified Board of Directors and Summit
Rights Plan, may make it difficult for any person to acquire control of Summit
and remove management by means of a hostile takeover.
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UJB. By virtue of the New Jersey Corporation Act, the affirmative vote of a
plurality of the votes cast by shares entitled to vote at a meeting at which a
quorum is present is also required to elect UJB directors. In addition, the
Restated Certificate of Incorporation of UJB requires that resolutions
increasing the number of directors be approved by 80% of, as the case may be,
directors holding office or shares of capital stock of UJB entitled to vote
generally in the election of directors, voting as a single class. The Restated
Certificate of Incorporation of UJB further provides that the affirmative vote
of the holders of 80% or more of the combined voting shares of UJB, voting as
a single class, is required to amend, repeal or take any action inconsistent
with the classified board of directors or the requirement for an 80%
affirmative vote to approve any increase in the number of directors. Similar
to the Summit voting provisions discussed above, the effect of these
provisions is to make it difficult for persons other than those negotiating
directly with the UJB Board to acquire seats on the UJB Board and obtain
control of UJB.
Indemnification; Limitation of Liability
SUMMIT. Article X of Summit's Bylaws provides that Summit shall indemnify
each director, officer or employee to the full extent permitted by law. Summit
may, in a specific case, indemnify any other corporate agent to any extent
permitted by law. Summit's Restated Certificate of Incorporation provides that
no director or officer of Summit shall be personally liable to Summit or its
shareholders for damages for breach of any duty owed to Summit or its
shareholders, except that such provisions shall not relieve a director or
officer from liability for any breach of duty based upon an act or omission:
(i) in breach of such person's duty of loyalty to Summit or its shareholders;
(ii) not in good faith or involving a knowing violation of law; or (iii)
resulting in receipt by such person of an improper personal benefit.
UJB. Section 5 of UJB's By-Laws provides that corporate agents of UJB shall
be indemnified and held harmless by UJB to the fullest extent authorized by
the laws of the State of New Jersey against expenses and liabilities arising
in connection with actions performed by the corporate agent on behalf of UJB.
UJB's Restated Certificate of Incorporation contains provisions substantially
similar to those in Summit's Restated Certificate of Incorporation respecting
the personal liability of directors.
55
<PAGE>
UJB FINANCIAL CORP.
DESCRIPTION OF BUSINESS
UJB commenced operations as a New Jersey corporation on October 1, 1970. As
a bank holding company registered under the BHC Act, UJB owns two bank
subsidiaries and eight active non-bank subsidiaries. At September 30, 1995,
UJB had total consolidated assets of $15.5 billion on the basis of which it
ranked as the third largest New Jersey bank holding company.
The bank subsidiaries engage in a general banking business. UJBank is UJB's
largest bank subsidiary, accounting for approximately 82.3% of UJB's total
consolidated assets at September 30, 1995. UJB's non-bank subsidiaries engage
primarily in discount brokerage, venture capital investment, commercial
finance lending, lease financing, and reinsuring credit life and disability
insurance policies related to consumer loans made by the bank subsidiaries.
The bank subsidiaries operated 290 banking offices located in major trade
centers and suburban areas in New Jersey and Pennsylvania as of September 30,
1995. The following table lists, as of September 30, 1995, each bank
subsidiary, the location in New Jersey or Pennsylvania of its principal
office, the number of its banking offices and, in thousands of dollars, its
total assets and deposits. Both the New Jersey and Pennsylvania subsidiaries
are state banks, however only the New Jersey bank is a member of the Federal
Reserve System.
<TABLE>
<CAPTION>
LOCATION NO. OF
OF PRINCIPAL BANKING TOTAL TOTAL
OFFICES OFFICES ASSETS(1) DEPOSITS(1)
-------------- ------- ----------- -----------
<S> <C> <C> <C> <C>
United Jersey Bank.............. Hackensack, NJ 217 $12,789,672 $10,779,818
First Valley Bank....... ....... Bethlehem, PA 73 2,736,505 2,089,542
</TABLE>
- --------
(1) Not adjusted to exclude interbank deposits or other transactions among the
subsidiaries.
UJB is a legal entity separate and distinct from its subsidiaries. There are
various legal limitations on the extent to which a bank subsidiary may finance
or otherwise supply funds to UJB or its non-bank subsidiaries. Under federal
law, no bank subsidiary may, subject to certain limited exceptions, make loans
or extensions of credit to, or investments in the securities of, UJB or its
non-bank subsidiaries or take their securities as collateral for loans to any
borrower. Each bank subsidiary is also subject to collateral security
requirements for any loans or extensions of credit permitted by such
exceptions. In addition, certain bank regulatory limitations exist on the
availability of subsidiary bank undistributed net assets for the payment of
dividends to UJB without the prior approval of the bank regulatory
authorities. The Federal Reserve Act, which affects UJBank, restricts the
payment of dividends in any calendar year to the net profit of the current
year combined with retained net profits of the preceding two years. Both of
UJB's subsidiary banks, as state-chartered banks, may each declare a dividend
only if, after payment thereof, its capital would be unimpaired and its
remaining surplus would equal 50 percent of its capital (New Jersey) or 100
percent of its capital (Pennsylvania). At September 30, 1995, the total
undistributed net assets of the subsidiary banks were $1.3 billion of which
$234 million was available under the most restrictive limitations for the
payment of dividends to UJB.
RECENT DEVELOPMENTS
On February 15, 1995, the UJB Board increased the quarterly dividend of UJB
to $0.29 a share from $0.26 per share, for an annual rate of $1.16 per share,
representing a 81.3% increase in the annual dividend rate from the $0.64
annual rate in effect in March 1993.
On July 11, 1995, UJB completed the Bancorp Acquisition, which was accounted
for on a purchase accounting basis. At July 11, 1995, Bancorp had assets of
$506 million and deposits of $451 million. In the transaction, 60 percent of
the outstanding Bancorp common stock was exchanged for UJB Common at the
exchange ratio of 1.5441 shares of UJB Common for each share of Bancorp common
stock, resulting in a total
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<PAGE>
of 1,948,153 shares of UJB Common being issued, and the remaining 40 percent
of outstanding Bancorp Common Stock was exchanged for cash at the rate of
$43.10 per share, for an aggregate cash payment of $36,273,463. As of July 11,
1995, Bancorp through its wholly owned subsidiary bank, New Jersey Savings
Bank ("NJSB"), operated nine banking offices located in Basking Ridge,
Bedminster, Bridgewater, Flemington, Hillsborough, Princeton, Somerville,
Somerset and Whitehorse, New Jersey. NJSB's primary business consisted of
attracting deposits from the general public and originating loans that are
secured by residential properties, as well as originating commercial and
consumer loans.
On August 1, 1995, UJB entered into an Agreement and Plan of Merger with
Flemington, a national banking association, providing for the merger of
Flemington with and into UJBank, and for the issuance of UJB Common to the
shareholders of Flemington at an exchange ratio ("exchange ratio" for purposes
of this discussion) which will be determined in accordance with a formula set
forth in the Agreement and Plan of Merger and which will depend primarily on
the average closing price ("average price" for purposes of this discussion) of
UJB Common over a ten trading day period ending on a date ("determination
date" for purposes of this discussion) on or shortly before the closing of the
transaction. As of September 30, 1995, Flemington operated eight banking
offices located in Clinton Township, Delaware Township, East Amwell Township,
Flemington (2), Lambertville, Raritan Township and Three Bridges, New Jersey.
At August 1, 1995, Flemington had assets of $288 million and 958,476 shares of
common stock outstanding. The transaction is expected to be accounted for as a
pooling-of-interests. The exchange ratio will be based upon the following
criteria, subject to certain anti-dilution adjustments:
<TABLE>
<CAPTION>
"AVERAGE PRICE" OF UJB COMMON ON
THE "DETERMINATION DATE" EXCHANGE RATIO
-------------------------------- --------------
<S> <C>
Greater than 37.00................................ 1.3514
Equal to or greater than $29.00 and equal to or
less than $37.00................................. $50.00 (DIVIDED BY) average
price
Less than $29.00 and greater than or equal to
$26.10........................................... 1.7241
Less than $26.10.................................. Flemington may terminate the
merger agreement unless UJB
agrees to an exchange ratio
equal to $45.00 (DIVIDED BY)
average price.
</TABLE>
DESCRIPTION OF UJB CAPITAL STOCK
UJB is presently authorized to issue 130,000,000 shares of Common Stock, par
value $1.20 per share, and 4,000,000 shares of Preferred Stock. As of
September 30, 1995, there were 57,581,872 shares of UJB Common and 600,166
shares of UJB Series B Preferred outstanding and 600,000 shares of UJB Series
R Preferred reserved for issuance in UJB's Restated Certificate of
Incorporation under the UJB Rights Plan. Pursuant to the New Jersey
Corporation Act, the UJB Board has authority to set the terms and conditions
of the authorized but unissued UJB Preferred Stock. UJB may issue any
authorized UJB Common Stock and UJB Preferred Stock without further
shareholder vote, unless required for a particular transaction by applicable
law or stock exchange rules, including rules of the NYSE, on which UJB Common
and UJB Series B Preferred are presently listed. The issuance of additional
UJB Common Stock or UJB Preferred Stock, including UJB Preferred Stock that
might be convertible into UJB Common Stock, may, among other things, affect
the earnings per share applicable to existing UJB Common Stock and the equity
and voting rights of existing holders of UJB Common Stock.
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the New Jersey Corporation Act, UJB's
Restated Certificate of Incorporation, including Certificates of Designation
pursuant to which the UJB Series B Preferred Stock was issued and UJB's
Shareholder Rights Plan.
COMMON STOCK
The rights of holders of UJB Common are subject to the preferences of
holders of the Series B Preferred Stock described below and the preferences as
to dividends and liquidation rights and other prior rights, if any, of
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<PAGE>
any other class or series of UJB Preferred Stock that may be issued. The
holders of UJB Common are entitled to one vote for each share with respect to
all matters voted upon by shareholders, including the election of directors,
and are entitled to receive dividends when, as and if declared by the UJB
Board out of funds of UJB legally available therefor. Shares of UJB Common do
not have cumulative voting rights; accordingly, at any Annual Meeting of UJB
shareholders (or at any special meeting of shareholders where an election of
directors is conducted) the holders of 50 percent plus 1 of the shares
presented at the Annual Meeting (provided a quorum is present) can fill all
positions on the UJB Board that are up for election at such Annual Meeting if
they so choose and, in such event, the holders of the remaining less than 50
percent of the shares will not be able to fill any of such positions. UJB has
a classified Board of Directors, under which approximately one-third of the
directors are elected each year. In the event of the liquidation of UJB,
holders of UJB Common are entitled to share pro rata in the distribution of
UJB's assets available for such purpose. All shares of UJB Common are fully
paid and nonassessable. No preemptive rights attach to the ownership of UJB
Common and no personal liability is imposed on the holders thereof by reason
of the ownership of such shares. First Chicago Trust Company of New York is
the transfer agent, dividend disbursing agent and registrar for the UJB
Common. UJBank is the co-transfer agent.
PREFERRED STOCK
The UJB Series B Preferred is entitled to cumulative dividends that are
payable quarterly on February 1, May 1, August 1 and November 1 of each year.
For each quarterly period, the dividend rate will be determined in advance of
such period, and will be 1.5 percent less than the highest of the 3-month U.S.
Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year
Constant Maturity Rate, which are average yields on certain U.S. Treasury
fixed rate securities, as published by the Federal Reserve Board. However, the
dividend rate for any dividend period will not be less than 6 percent per
annum nor greater than 11 percent per annum. The UJB Series B Preferred is
redeemable at the option of UJB, in whole or in part, at $50 per share, plus
accrued and unpaid dividends. Holders of UJB Series B Preferred have the right
to vote as a class on certain amendments to the Restated Certificate of
Incorporation of UJB that may affect the UJB Series B Preferred and to elect
two directors in the event of a failure to pay full cumulative dividends for
six quarters. They have no other voting rights. The UJB Series B Preferred is
not convertible into shares of UJB Common and has no preemptive rights. The
UJB Series B Preferred is not subject to any sinking fund or other repurchase
or retirement obligation of UJB. First Chicago Trust Company of New York is
the transfer agent, dividend disbursing agent and registrar for shares of the
UJB Series B Preferred.
SHAREHOLDER RIGHTS PLAN
In August 1989, UJB adopted a shareholder rights plan ("UJB Rights Plan"),
under which preferred stock purchase rights ("UJB Rights") attached to UJB
Common outstanding as of the close of business on August 28, 1989. Holders of
shares of UJB Common issued subsequent to that date receive the UJB Rights
with their shares. Except as indicated below, each UJB Right entitles the
registered holder to purchase from UJB one-hundredth of a share of a new
series of UJB Preferred Stock, designated the Series R Preferred Stock of UJB
("UJB Series R Preferred"). The UJB Rights expire on August 16, 1999, and are
subject to redemption and amendment in certain circumstances. The UJB Rights
trade automatically with shares of UJB Common and become exercisable only
under certain circumstances as described below.
In general, the UJB Rights will become exercisable upon the earlier to occur
(a "Distribution Date", as defined in the UJB Rights Plan) of the following:
(1) ten days following a public announcement that a person or group has
acquired beneficial ownership of 15% or more of the UJB Common outstanding at
that time or voting securities of UJB representing 15% or more of the total
voting power of UJB (such person or group becoming an "Acquiring Person", as
defined in the UJB Rights Plan) or (2) ten business days (or such later date
as the UJB Board may determine) after the commencement of a tender offer or
exchange offer that would result in a person or group beneficially owning 30%
or more of the outstanding UJB Common or voting securities representing 30% or
more of the total voting power of UJB.
58
<PAGE>
Generally, in the event a Distribution Date occurs by virtue of a person or
group becoming an Acquiring Person (other than pursuant to an offer for all
outstanding shares of UJB Common and other voting securities that the UJB
Board determines to be fair to shareholders and otherwise in the best
interests of UJB), each UJB Right, other than UJB Rights owned by the
Acquiring Person, will thereafter entitle the holder to receive, upon exercise
of the UJB Right, UJB Series R Preferred having a value equal to two times the
exercise price of the UJB Right.
In the event that a Distribution Date occurs (under either of the
circumstances described above) and UJB is acquired in a merger or other
business combination, or more than 50% of UJB's assets or earning power is
sold or transferred, each UJB Right will thereafter entitle the holder thereof
to receive, upon the exercise of the UJB Right, common stock of the acquiror
having a value equal to two times the exercise price of the UJB Right.
The combination of prohibitive dilution of the Acquiring Person's share
values and the power of the UJB Board to redeem the UJB Rights is intended to
encourage potential acquiring persons to negotiate with the UJB Board with
respect to the terms of any acquisition or business combination and, to the
extent possible, discourage or defeat partial or two-tiered acquisition
proposals.
The foregoing description of the UJB Rights Plan does not purport to be
complete and is qualified in its entirety by reference to the terms of the UJB
Rights Plan, which is more fully described in UJB's Registration Statement on
Form 8-A filed August 28, 1989.
THE SUMMIT BANCORPORATION
DESCRIPTION OF BUSINESS
Summit is a registered bank holding company incorporated in 1973 under the
laws of the State of New Jersey and, as such, is subject to the BHC Act. A
predecessor of Summit Bank, Summit's sole commercial banking subsidiary, began
its operations in 1891. At September 30, 1995, Summit had consolidated assets
of $5.6 billion, consolidated deposits of $4.6 billion, and consolidated
shareholders' equity of $485 million. Based on consolidated assets at
September 30, 1995, Summit was the fourth largest independent bank holding
company headquartered in New Jersey.
Summit conducts its principal operations through its wholly owned commercial
bank subsidiary, Summit Bank, a New Jersey chartered commercial bank. As of
September 30, 1995, Summit Bank had total assets of $5.6 billion and total
deposits of $4.7 billion. Summit Bank provides a broad range of commercial
banking, retail banking, real estate, trust and other financial services
through 90 branches located in 11 counties in Northern and Central New Jersey.
Summit's market area has a diverse base of customers including corporations,
small businesses, professional firms and individuals. Summit Bank directs its
commercial lending efforts toward small and middle-market customers which it
defines as businesses with annual sales of less than $50 million. A wide
variety of retail banking services is also provided by Summit through Summit
Bank.
Summit Bank provides trust services to individual and corporate customers.
Trust assets totaled $3.5 billion at year-end 1994 and fee income from trust
services increased 7% in 1994 to $11.9 million. Summit also originates
residential mortgage loans through its mortgage banking division, The Summit
Mortgage Company. In 1994, origination and servicing income from mortgage
banking activities totaled $9.8 million, unchanged from 1993. The comparison
of mortgage banking revenue for 1994 with 1993 was affected by the inclusion
of such revenues for Lancaster Financial Ltd., Inc. ("Lancaster") in 1994
only. If Lancaster revenues had been included in the results for 1993,
mortgage banking revenue would have decreased $9.5 million or 49% in 1994 from
1993.
RECENT DEVELOPMENTS
On June 13, 1995, Summit entered into an Agreement and Plan of Merger with
Garden State, a New Jersey-headquartered bank holding company, providing for
the merger of Garden State with and into Summit and for
59
<PAGE>
the exchange of Garden State common stock into Summit Common at the exchange
ratio of 1.08 shares of Summit Common (and cash in lieu of fractional shares)
for each share of Garden State common stock. At June 13, 1995, Garden State
had assets of $315 million, deposits of $287 million and 3,043,658 shares of
common stock outstanding. The transaction will be accounted for on a pooling-
of-interests basis. On September 30, 1995, Garden State had total consolidated
assets, deposits and shareholders' equity of $314 million, $284 million and
$29 million, respectively. As of September 30, 1995, Garden State, through its
wholly owned subsidiary bank, Garden State Bank ("GSBank"), operated nine
branches in Ocean and Monmouth Counties, New Jersey. GSBank is a full service
commercial bank and offers services generally performed by commercial banks of
similar size and character including checking, savings and time deposits
accounts, certificates of deposit, secured and unsecured personal and
commercial loans, and residential and commercial real estate loans.
DESCRIPTION OF SUMMIT CAPITAL STOCK
Summit's authorized capital stock consists of 50,000,000 shares of Summit
Common Stock and 12,000,000 shares of Summit Preferred Stock, issuable in one
or more series and with such terms as the Summit Board determines. As of
September 30, 1995, there were 33,897,869 shares of Summit Common outstanding
and 504,481 shares of Summit Adjustable Preferred outstanding. As of September
30, 1995, there were 2,017,568 shares of Summit Common reserved for issuance
under various stock incentive plans, 2,415,382 shares of Summit Common
reserved for issuance under the Summit Dividend Plan and 250,000 shares of
Series B Junior Participating Preferred Stock of Summit reserved for issuance
under the Summit Rights Plan.
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the New Jersey Corporation Act,
Summit's Restated Certificate of Incorporation, including Certificates of
Designation pursuant to which the Summit Adjustable Preferred was issued and
the Summit Rights Plan.
COMMON STOCK
Holders of Summit Common are entitled to receive dividends when and as
declared by the Summit Board out of funds legally available therefor, provided
that, so long as any shares of Summit Preferred Stock are outstanding, no
dividends (other than dividends payable in stock) or other distribution
(including redemptions and purchases) may be made with respect to the Summit
Common unless full dividends on the shares of Summit Preferred Stock,
including accumulations, have been paid. In the event of liquidation of
Summit, holders of Summit Common would be entitled to receive pro rata any
assets legally available for distribution to holders of Summit Common with
respect to shares held by them, subject to any prior rights of any Summit
Preferred Stock then outstanding. The Summit Common does not have any
preemptive rights, redemption privileges, sinking fund privileges, or
conversion rights. Subject to the rights of the Summit Preferred Stock under
certain circumstances, the holders of outstanding Summit Common are entitled
to one vote per share with no cumulative voting. Summit's Restated Certificate
of Incorporation and Bylaws provide for a classified Board of Directors by
dividing the Summit Board into three classes of approximately equal size.
Directors are generally elected for three-year terms which have been
established so that the terms of office of approximately one-third of the
members of the Board expire each year. First Chicago Trust Company of New York
is the transfer agent, dividend disbursing agent and registrar for the Summit
Common.
Summit's Restated Certificate of Incorporation also provides that no merger
or consolidation or similar transaction involving Summit may be effected
without the approval of voting securities representing at least two-thirds of
the votes entitled to be cast (excluding shares owned by 5% shareholders and
their affiliates) unless the Board has previously approved the transaction or
unless certain fair price tests, meant to ensure equal price treatment for all
shareholders, are met. The effect of this provision, together with the
provisions for the classified Board of Directors and the Summit Rights Plan
may make it difficult for any person to acquire control of Summit and remove
management by means of a hostile takeover.
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<PAGE>
PREFERRED STOCK
Summit's only issued and outstanding series of Summit Preferred Stock is the
Summit Adjustable Preferred. Holders of Summit Adjustable Preferred are
entitled to receive, when and as declared by the Summit Board, cumulative
preferred dividends payable quarterly in cash at a rate equal to 2.75% below
the highest of the three-month Treasury Bill Rate, the Ten-Year Constant
Maturity Rate and the Twenty-Year Constant Maturity Rate, which are average
yields on certain U.S. Treasury fixed rate securities, as published by the
Federal Reserve Board, determined in advance of the dividend period. However,
the dividend rate for any dividend period may not be less than 6% per annum
nor greater that 12% per annum. Shares of Summit Adjustable Preferred are
redeemable, in whole or in part, at $25.00 per share. First Chicago Trust
Company of New York is the transfer agent, dividend disbursing agent and
registrar for the Summit Adjustable Preferred.
SHAREHOLDER RIGHTS PLAN
The Summit Rights Plan is intended to protect Summit shareholders in the
event of certain unsolicited offers or attempts to acquire Summit. The Summit
Rights Plan provides that attached to each share of Summit Common is one
Summit Right which, when exercisable, entitles the holder of the Summit Right
to purchase one-hundredth of a share of Series B Junior Participating
Preferred Stock at a purchase price of $70, subject to adjustment. In certain
events (such as a person or group acquiring or announcing an intent to acquire
15% or more of the Summit Common or the Summit Board determining that 10% or
more of the Summit Common has been acquired by an "Adverse Person", as defined
in the Summit Rights Plan), exercise of the Summit Rights would entitle the
holder of the Summit Right to purchase Summit Common or common stock in a
surviving corporation with a market value of two times the exercise purchase
price, as defined in the Summit Rights Plan. Accordingly, exercise of the
Summit Rights may cause substantial dilution to a person that attempts to
acquire Summit. The Summit Rights automatically attach to each outstanding
share of Summit Common. There is no monetary value presently assigned to the
Summit Rights, and they do not trade separately from the shares of Summit
Common unless and until they become exercisable. The Summit Rights expire on
January 15, 2000. The Summit Rights Plan may have certain antitakeover
effects, although it is not intended to preclude any prospective offer for all
of the outstanding shares of Summit Common at a fair price and otherwise in
the best interests of Summit and its shareholders as determined by the Summit
Board. However, a Summit shareholder could potentially disagree with the
Summit Board's determination of what constitutes a fair price or the best
interests of Summit and its shareholders. In connection with its approval of
the Merger, the Summit Board amended the Summit Rights Plan to provide that
the Merger Agreement, Stock Option Agreements and the transactions
contemplated thereby would not constitute an event which would entitle holders
of Summit Rights to exercise such Summit Rights. Upon the conversion of the
Summit Common to the right to receive UJB Common at the Effective Time, the
Summit Rights will automatically extinguish.
The foregoing description of the Summit Rights Plan does not purport to be
complete and is qualified in its entirety by reference to the terms of the
Rights Plan, which is more fully described in Summit's Registration Statement
on Form 8-A filed on February 5, 1990, including all amendments thereto and
reports filed under the Exchange Act for the purpose of updating such
description.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETINGS
The Annual Meeting of Shareholders of Summit is tentatively scheduled to be
held April 16, 1996, subject to the earlier consummation of the Merger. In the
event that the Summit 1996 Annual Meeting is held, proposals of shareholders
intended to be presented at that meeting would have been required to be
received by November 3, 1995, for inclusion in Summit's proxy statement and
form of proxy relating to such Annual Meeting. The submission of such
proposals by shareholders and the consideration of such proposals by Summit
for inclusion in next year's proxy statement and form of proxy are subject to
the applicable rules and regulations of the Commission. Proposals should be
addressed to the Secretary of Summit.
The 1996 Annual Meeting of Shareholders of UJB has not yet been scheduled.
The UJB Board will consider and include in the Proxy Statement for the 1996
Annual Meeting proposals which meet the rules and regulations
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<PAGE>
of the Commission and New Jersey law and which comply with the Company's By-
Laws. Based on the date of last year's Annual Meeting, in order to be
considered for inclusion, proposals would have been required to be received on
or before November 10, 1995.
The By-Laws of UJB provide that shareholder proposals which do not appear in
the Proxy Statement may be considered at an annual meeting of shareholders
only if written notice of the proposal is received by the Secretary of UJB not
less than 80 and not more than 100 days before the date of the first
anniversary of the prior year's annual meeting; provided, however, that, in
the event that the date of the annual meeting is more than 30 days before or
more than 60 days after such anniversary date, written notice must be so
delivered not less than 80 and not more than 100 days before the date of the
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made by UJB. Such shareholder's notice
shall set forth: (A) a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting
and any interest in such business of such shareholder and the beneficial
owner, if any, on whose behalf the proposal is made and (B) as to the
shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
shareholder, as they appear on the UJB books, and of such beneficial owner and
the record owner of the shares beneficially owned, (ii) the class and number
of shares of UJB which are owned beneficially and of record by such
shareholder and such beneficial owner, (iii) a description of all agreements,
arrangements or understandings between such shareholder and beneficial owner
and any other shareholder or beneficial owner relating to the matter to be
voted on and any financial or contractual interest of such shareholder or
beneficial owner in the outcome of such vote and (iv) such other information
regarding the matter to be voted on and the shareholder or beneficial owner
intending to present the matter for a vote as would be required to be included
in a proxy statement soliciting the vote of shareholders in respect of such
matter pursuant to the proxy rules of the Commission. Notwithstanding the
foregoing, the shareholder must also comply with all applicable requirements
of the Exchange Act and the rules and regulations thereunder with respect to
the matters set forth above. Nothing set forth above will be deemed to affect
any rights of shareholders to request inclusion of proposals in UJB's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
LEGAL MATTERS
The legality of the UJB Common and UJB Series C Preferred offered hereby
will be passed upon for UJB by Richard F. Ober, Jr., Esq., Executive Vice
President, General Counsel and Secretary of UJB. Mr. Ober owns 22,811 shares
of UJB Common and options to purchase 67,227 shares of UJB Common at a
weighted average exercise price of $19.11.
EXPERTS
The consolidated financial statements of UJB Financial Corp. and
subsidiaries as of December 31, 1994 and 1993 and for each of the years in the
three-year period ended December 31, 1994, included in UJB's Annual Report on
Form 10-K, incorporated by reference herein and in the Registration Statement,
have been incorporated by reference herein and in the Registration Statement
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP with respect to UJB Financial Corp. and
subsidiaries for the year ended December 31, 1994 refers to a change in the
method of accounting for certain investments and post employment benefits in
1994 and to a change in the method of accounting for income taxes in 1993.
The consolidated financial statements of The Summit Bancorporation and
subsidiaries as of December 31, 1994 and 1993 and for each of the years in the
three-year period ended December 31, 1994, included in Summit's Annual Report
on Form 10-K, incorporated by reference herein and in the Registration
Statement, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
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<PAGE>
BY ORDER OF THE BOARD OF DIRECTORS OF THE SUMMIT BANCORPORATION
[Signature Cut]
John F. Kuntz
Corporate Secretary
, 1995
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO SIGN AND
PROMPTLY RETURN THE ACCOMPANYING WHITE PROXY CARD IN THE ENCLOSED, POSTAGE-
PAID ENVELOPE.
<PAGE>
BY ORDER OF THE BOARD OF DIRECTORS OF UJB FINANCIAL CORP.
[Signature Cut]
T. Joseph Semrod
Chairman, President and
Chief Executive Officer
, 1995
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO SIGN AND
PROMPTLY RETURN THE ACCOMPANYING WHITE PROXY CARD IN THE ENCLOSED, POSTAGE-
PAID ENVELOPE.
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated September 10, 1995, between UJB Financial
Corp., a New Jersey business corporation ("UJB"), and The Summit
Bancorporation, a New Jersey business corporation ("Summit").
W I T N E S S E T H :
WHEREAS, the respective boards of directors of UJB and Summit deem it
advisable and in the best interests of their respective shareholders to merge
Summit into UJB ("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 UJB and Summit 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, UJB and Summit intend on the date after the date of this Agreement
and in consideration of this Agreement to enter into the UJB Stock Option
Agreement (the "UJB Option Agreement") attached hereto as Exhibit A and the
Summit Stock Option Agreement (the "Summit Option Agreement"; and together
with the UJB Option Agreement, the "Option Agreements") attached hereto as
Exhibit B; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Option
Agreements, 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), Summit shall be
merged with and into UJB 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") (UJB as the surviving corporation being hereinafter
sometimes referred to as the "Surviving Corporation").
Section 1.02. Capital Stock of UJB. All shares of the capital stock of UJB
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 Summit Capital Stock.
(a) At the Effective Time, by virtue of the Merger and without any action on
the part of any shareholder of Summit:
(1)(A) All shares of the Common Stock, no par value, of Summit ("Summit
Common") which immediately prior to the Effective Time are either
owned beneficially by UJB or a subsidiary of
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UJB (other than Summit Common held in a fiduciary capacity or as a
result of debts previously contracted), if any, or held in the
treasury of Summit, 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 Summit Common; and
(B) Subject to Sections 1.03(a)(1)(A) and 1.08, each share of Summit
Common outstanding immediately prior to the Effective Time shall be
converted in accordance with the New Jersey Act into .9 shares
("Exchange Ratio") of the Common Stock, par value $1.20 per share, of
UJB ("UJB Common").
(2)(A) All shares of $25 stated value Adjustable Rate Cumulative Preferred
Stock of Summit ("Summit Preferred") which immediately prior to the
Effective Time are either owned beneficially by UJB or a subsidiary of
UJB (other than Summit Preferred held in a fiduciary capacity or as a
result of debts previously contracted), if any, or held in the
treasury of Summit, 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 Summit Preferred; and
(B) Subject to Section 1.03(a)(2)(A), each share of Summit Preferred
outstanding immediately prior to the Effective Time shall be
converted into one share of $25 stated value Adjustable Rate
Cumulative Preferred Stock of UJB ("UJB Preferred"), a class of UJB
Preferred Stock containing the same relative rights, preferences and
limitations as the Summit Preferred.
(b) UJB Common and UJB Preferred are sometimes collectively referred to
herein as "UJB Stock" and Summit Common and Summit Preferred are sometimes
collectively referred to herein as "Summit Stock".
(c) In the event that, from the date hereof to the Effective Time, the
outstanding UJB 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 UJB Stock, the Exchange Ratio and, if necessary, the
form and amount of UJB capital stock issuable in the Merger in exchange for
Summit Stock shall be appropriately adjusted.
Section 1.04. Reservation of UJB Stock; Issuance of Shares Pursuant to the
Merger. UJB shall reserve and make available for issuance to holders of Summit
Stock in connection with the Merger, on the terms and subject to the
conditions of this Agreement, sufficient shares of UJB 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 UJB 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 Summit Common
according to the Exchange Ratio, UJB shall issue the Shares upon consummation
of the Merger to holders of Summit Stock.
Section 1.05. Exchange Agent Arrangements. Prior to the Effective Time, UJB
shall appoint First Chicago Trust Company of New York, or another entity
reasonably satisfactory to Summit, as the exchange agent ("Exchange Agent")
responsible for exchanging, in connection with and upon consummation of the
Merger and subject to Sections 1.03 and 1.08, certificates representing whole
shares of UJB Common ("UJB Common Certificates") and cash in lieu of
fractional shares of UJB Common for certificates representing shares of Summit
Common ("Summit Common Certificates") and certificates representing shares of
UJB Preferred ("UJB Preferred Certificates") for certificates representing
shares of Summit Preferred ("Summit Preferred Certificates") and, upon
consummation of the Merger, UJB shall deliver to the Exchange Agent sufficient
UJB Common Certificates and UJB Preferred Certificates (collectively, the "UJB
Certificates") and cash as shall be required to satisfy UJB's obligations to
holders of Summit Common hereunder with respect to fractional shares of UJB
Common.
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 UJB
and Summit required by this Agreement to be filed with
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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"), but the Effective
Time so specified shall not be later than 12:01 a.m. on the day immediately
following the day the Certificate of Merger is filed. UJB 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 Summit Certificates.
(a) After the Effective Time, each holder (except UJB to the extent provided
in Section 1.03(a)(1)(A) or 1.03(a)(2)(A)) of Summit Certificates, upon
surrender of such Summit Certificates to the Exchange Agent, shall be entitled
to receive in exchange therefor, as the case may be, a UJB Common Certificate
representing the number of whole shares of UJB Common such holder 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 holder may be entitled,
pursuant to Section 1.08, to receive in lieu of a fractional share of UJB
Common, or a UJB Preferred Certificate representing the number of shares of
UJB Preferred such holder is entitled to receive pursuant to Section 1.03.
Until so surrendered, outstanding Summit Certificates held by each holder of
Summit Stock, other than Summit Stock not converted pursuant to Section
1.03(a)(1)(A) or 1.03(a)(2)(A), shall be deemed for all purposes, other than
as provided below with respect to unsurrendered Summit Certificates and UJB's
right to refuse payment of dividends or other distributions, if any, in
respect of UJB Stock, to represent, as the case may be, either the number of
whole shares of UJB Common into which the shares of Summit Common have been
converted and the right to receive cash in lieu of fractional shares of UJB
Common, if any, as provided in Section 1.08, or the number of shares of UJB
Preferred into which the shares of Summit Preferred have been converted. Until
so surrendered, UJB may, at its option, refuse to pay to the holders of Summit
Certificates dividends or other distributions, if any, payable to holders of
UJB Stock; provided, however, that upon surrender and exchange of Summit
Certificates there shall be paid to such holders the amount, without interest,
of dividends and other distributions, if any, which became payable prior
thereto but which were not paid.
(b) Holders of Summit Certificates as of the Effective Time shall cease to
be, and shall have no further rights as, shareholders of Summit.
(c) As promptly as practicable after the Effective Time UJB shall cause the
Exchange Agent to send to each holder of Summit Certificates instructions and
transmittal materials for use in surrendering and exchanging Summit
Certificates. If Summit Certificates are properly presented to the Exchange
Agent, UJB shall cause the Exchange Agent to cancel and exchange them for UJB
Certificates and, where appropriate, cash payments in lieu of fractional
shares, if any.
(d) At and after the Effective Time there shall be no transfers on the stock
transfer books of Summit of the shares of Summit Stock which were outstanding
immediately prior to the Effective Time.
Section 1.08. Fractional Shares. All Summit Common held in the aggregate by
each Summit shareholder shall be multiplied by the Exchange Ratio to determine
the number of shares of UJB Common each such Summit shareholder is entitled to
receive in the Merger. Each Summit shareholder shall be entitled to receive a
UJB Common Certificate for the number of whole shares of UJB Common resulting
from such multiplication. Each Summit shareholder shall be entitled to receive
cash in lieu of any fractional share of UJB Common resulting from such
multiplication in an amount ("Cash In Lieu Amount") determined by multiplying
the fractional share interest to which such holder would otherwise be entitled
by the UJB Common Price on the last business day preceding the Effective Time.
The "UJB Common Price" shall mean the closing price of one share of UJB Common
on the New York Stock Exchange--Composite Transactions List (as reported in
The Wall Street Journal or, in the absence thereof, by any other authoritative
source). 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 UJB in force immediately prior to the
Effective Time, amended to provide for the name of the
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Surviving Corporation to be "Summit Bancorp.", or, if not permissible in any
relevant jurisdiction, "Summit Bancorporation", and amended further to provide
for a class of Preferred Stock designated the "$25 stated value Adjustable
Rate Cumulative Preferred Stock" and having relative rights, preferences and
limitations identical to those of the Summit Preferred, 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. In addition to the Certificate of Merger required to be
filed by UJB pursuant to Section 1.06, UJB shall file as an additional
document together with the Certificate of Merger a Restated Certificate of
Incorporation containing the provisions of UJB's Restated Certificate of
Incorporation in effect on the date hereof amended as provided in the first
sentence of this Section 1.09. The By-Laws of UJB 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.
(a) The UJB Board of Directors shall take or cause to be taken all action
necessary to cause the directors comprising the full Board of Directors of UJB
at the Effective Time to include six persons designated prior to the Effective
Time by the Board of Directors of Summit from among those persons serving as
Summit directors on the date hereof and who continue to serve as Summit
directors through the Effective Time (the "Summit Designees"). UJB shall take
all action necessary to provide that the term of two of the Summit Designees
as a director of UJB shall expire at the first annual meeting of UJB
shareholders held after the Effective Time, and to provide that the remaining
four Summit Designees be divided evenly between the other two classes of
directors. One of the Summit Designees shall be, so long as he is able to
serve, Robert G. Cox, who shall be designated to the class of director whose
term expires at the third annual meeting of UJB shareholders held after the
Effective Time. Subject to the provisions of UJB's Restated Certificate of
Incorporation and By-Laws regarding director qualifications, all Summit
Designees shall be nominated to serve at least one full term of three years in
the class of Directors to which they are initially elected by the Board of
Directors of UJB. UJB agrees not to increase the number of directors above the
13 directorships existing on the date hereof but Summit agrees UJB may fill
any vacancies occurring prior to the Effective Time. If required by the New
Jersey Act, all six Summit Designees shall stand for reelection as UJB
directors, subject to the provisions of UJB's Restated Certificate of
Incorporation then in effect, at the first annual meeting of UJB shareholders
held after the Effective Time.
(b) The President of the Surviving Corporation shall be the person who on
the date hereof is serving as the President of Summit, provided such person is
serving in such capacity immediately prior to the Effective Time, and the
remaining officers of the Surviving Corporation shall consist of the officers
of UJB immediately prior to the Effective Time plus such other persons serving
as officers of Summit immediately prior to the Effective Time as UJB and
Summit shall mutually designate.
(c) The directors and officers of the Surviving Corporation provided for in
this Section 1.10 shall serve as such for the terms prescribed in the Restated
Certificate of Incorporation and By-Laws of UJB, or otherwise as provided by
law or until their earlier deaths, resignation or removal.
Section 1.11. Summit Stock Incentive and Stock Option Plans. At the
Effective Time, each stock option relating to Summit Common ("Summit Options")
outstanding on the date hereof pursuant to the Summit Stock Incentive Plan,
the Summit 1995 Stock Incentive Plan and the Summit 1995 Director Stock Option
Plan ("Summit Stock Award Plans") shall be deemed to constitute, and shall
automatically be converted in accordance with the Exchange Ratio into, stock
options relating to UJB Stock ("UJB Options") and each UJB Option shall be
administered in accordance with the terms and conditions provided for in the
Summit Stock Award Plan under which the corresponding Summit Option was
granted and the stock option agreement by which it was evidenced, including
terms and provisions regarding exercisability. The number of shares of UJB
Stock covered by each UJB Option shall be the number of shares of UJB Stock
which would have been issued in the Merger if the shares of Summit Stock
subject to the corresponding Summit Option were issued and outstanding
immediately prior to the Effective Time; provided, however, that the number of
shares of UJB Stock that may be purchased upon exercise of a UJB Option shall
not include any fractional share interest but shall be rounded down to the
next lower full share. The exercise price per share of UJB Stock subject to a
UJB Option
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shall equal the exercise price per share of Summit Stock subject to the
corresponding Summit Option so converted divided by the Exchange Ratio
(subject to any adjustments provided for in this Agreement). In addition,
holders of exercisable UJB Options shall be permitted during such time as the
UJB Option is exercisable, in lieu of purchasing the UJB Common subject to the
UJB Option, to elect to receive the number of shares of UJB Common (rounded
down to the nearest whole share) equal in market value to the amount obtained
by multiplying (a) times (b), where (a) is the difference obtained by
subtracting the exercise price of the underlying UJB Option from the market
value of a share of UJB Common on the date the election is made, and (b) is
the number of shares of UJB Common with respect to which the election has been
made. For purposes of the foregoing sentence, the market value of a share of
UJB Common shall be the average of the high and low sales prices of a share of
UJB Common 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) on the date the election is made. As soon as
practicable after the Effective Time, UJB shall issue to the holders of such
Summit Options appropriate instruments confirming the rights of such holders
with respect to UJB Stock, on the terms and conditions provided by this
Section 1.11, upon surrender of the outstanding instruments representing such
Summit Options; provided, however, that UJB shall not be obligated to issue
any such confirming instruments which relate to the issuance of UJB Stock, or
issue any shares of UJB Stock, until such time as the shares of UJB Stock
issuable upon exercise of UJB Options shall have been registered with the
Securities and Exchange Commission (the "SEC") pursuant to an effective
registration statement and authorized for listing on the New York Stock
Exchange and for sale by any appropriate state securities regulators, which
UJB shall use its best efforts to effect as promptly as practicable, but in no
event more than 30 days, after the Effective Time. UJB shall use its best
efforts to maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus or prospectuses contained
therein) for so long as the UJB Options remain outstanding. At or prior to the
Effective Time, UJB shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of UJB Common for delivery upon
exercise of UJB Options.
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 Summit 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 Summit or otherwise, all such deeds, bills of sale,
assignments and assurances and to take, in the name and on behalf of Summit,
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 Summit Shareholders to surrender and
exchange Summit Certificates for Merger Consideration, UJB may, at its
election, continue to retain the Exchange Agent for purposes of the surrender
and exchange of Summit Certificates or take possession of such unclaimed
Merger Consideration, in which such latter case, Summit Shareholders who have
theretofore failed to surrender and exchange Summit Certificates shall
thereafter look only to UJB for payment of the Merger Consideration and the
unpaid dividends and distributions on the UJB Stock constituting some or all
of the Merger Consideration, without any interest thereon. Notwithstanding the
foregoing, none of UJB, Summit, the Exchange Agent or any other person shall
be liable to any former holder of shares of Summit Stock for any property
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
Section 1.14. Lost Summit Certificates. In the event any Summit Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Summit Certificate to be lost, stolen or
destroyed and, if required by UJB, the posting by such person of a bond in
such amount as UJB may determine is reasonably necessary as indemnity against
any claim that may be made against it with respect to such Summit Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Summit Certificate the Merger Consideration deliverable in respect thereof
pursuant to this Agreement.
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ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SUMMIT
Summit represents and warrants to UJB as follows:
Section 2.01. Organization, Capital Stock.
(a) Each of Summit 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 Summit 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 and
in good standing 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 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 banking institutions or their
holding companies generally. Each of Summit 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 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) Summit is registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended (the "Bank Holding Company Act").
(c) Summit or one of its subsidiaries is the holder and beneficial owner of
all of the outstanding capital stock of all of Summit's direct and indirect
nonbank subsidiaries.
(d) (1) The authorized capital stock of Summit consists of 50,000,000 shares
of Common Stock, each of no par value, and 12,000,000 shares, each of no par
value, of Preferred Stock, and as of the date hereof:
(A) 33,820,043 shares of Summit Common are outstanding, 33,904,528 shares
of Summit Common are issued, and 504,000 shares of Summit Preferred are
outstanding,
(B) 7,793,505 shares of Summit Common are reserved for issuance pursuant
to the Employee Stock Purchase Plan of Summit dated March 21, 1989, the
Summit Stock Award Plans, Summit's obligations under the Crestmont
Financial Corp. Stock Compensation Plan (the "Crestmont Plan") and the
Summit Dividend Reinvestment and Stock Purchase Plan (collectively, the
"Summit Stock Plans") and pursuant to Summit's obligations under the
Agreement and Plan of Merger between Summit and Garden State Bancshares,
Inc. dated June 14, 1995 (the "Garden State Agreement"). No other shares of
Summit Common are reserved for issuance;
(C) 250,000 shares of Series B Junior Participating Preferred Stock, no
par value (the "Summit Series B Preferred Stock"), are reserved for
issuance in connection with the Summit Rights Agreement, dated as of
January 16, 1990, as amended (the "Summit Rights Agreement"). No other
shares of Summit Preferred Stock are reserved for issuance; and
(D) 84,485 shares of Summit Common are held by Summit in its treasury as
issued but not outstanding or canceled Summit Common.
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(2) All issued shares of the capital stock of Summit 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 and current prospectus under the Securities Act of 1933
(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 Summit
Stock Award Plans, except for Summit Common issuable in connection with the
Summit Stock Plans and the Garden State Agreement, and except for the Summit
Series B Preferred Stock issuable in connection with the Summit Rights
Agreement, there are no other Equity Securities of Summit or any subsidiary of
Summit 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) All plans of Summit for the granting of stock options, stock
appreciation rights or other securities or derivative securities to directors
or employees, and any amendments thereto, have been duly approved by the
shareholders of Summit in accordance with the shareholder approval
requirements of the Code and Rule 16b-3 under the Securities Exchange Act of
1934 (the "Exchange Act"). All such plans are set forth on Summit Schedule
2.01(d) as well as all material information in the aggregate relating to
outstanding awards thereunder, including director and employee stock options
(including without limitation date of grant, exercise price, number of shares,
whether incentive or nonqualified under the Code, any noncustomary terms or
provisions), dividend units (including without limitation units outstanding,
payment amounts or rates, accruals), performance share units (including
without limitation units outstanding, performance goals, payment amounts or
rates) and unvested restricted stock.
(e) Summit owns no bank subsidiary other than Summit Bank ("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
Summit Schedule 2.01(f). Summit is the holder and beneficial owner of all
shares of the issued and outstanding capital stock of Bank. All issued and
outstanding shares of the capital stock of Bank have been fully paid, were
duly authorized and validly issued, are non-assessable, and were not issued in
violation of the preemptive rights of any shareholder. 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 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 Bank are outstanding, in existence, or the subject of an
agreement except for the Garden State Agreement.
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(g) 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 2.02. Financial Statements. The financial statements and schedules
contained or incorporated in (a) Summit's annual report to shareholders for
the fiscal year ended December 31, 1994, (b) Summit's annual report on Form
10-K pursuant to the Exchange Act for the fiscal year ended December 31, 1994,
(c) Summit's quarterly reports on Form 10-Q pursuant to the Exchange Act for
the fiscal quarters ended March 31, 1995 and June 30, 1995, and (d) Bank's
regulatory call reports in 1995 (the "Summit Financial Statements") are true
and correct in all material respects as of their respective dates and each
fairly presents (subject, in the case of unaudited statements, to recurring
audit adjustments normal in nature and amount), in accordance with generally
accepted accounting principles in the case of the reports listed in clauses
(a), (b) and (c), and in accordance with regulatory accounting principles in
the case of the reports listed in clause (d), the consolidated statements of
condition, income, changes in stockholders' equity and 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 related notes or
in the accountants' reports thereon, the Summit Financial Statements were
prepared in accordance with generally accepted accounting principles in the
case of the reports listed in clauses (a), (b) and (c), and in accordance with
regulatory accounting principles in the case of the reports listed in clause
(d). 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 2.03. No Conflicts. Summit 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 Summit, or
the consummation of the transactions contemplated hereby including the Merger
by Summit 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 Summit
or any of its subsidiaries or upon any of the Equity Securities of Summit or
any of its subsidiaries, or constitute an event which could, with the lapse of
time, action or inaction by Summit 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 Summit 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 Summit or any of its subsidiaries is a party or by which Summit 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 Summit Material Adverse Change, or enable any person to
enjoin the transactions contemplated hereby.
Section 2.04. Absence of Undisclosed Liabilities. To the best knowledge of
Summit management, Summit 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 Summit or any of its subsidiaries),
and no loss contingency (as defined in Statement of Financial Accounting
Standards No. 5), other than (a) those reflected in the Summit Financial
Statements or disclosed in the notes thereto, (b) commitments made by Summit
or any of its subsidiaries in the ordinary course
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of its business which are not in the aggregate material in frequency or amount
to Summit and its subsidiaries, taken as a whole, and (c) liabilities arising
in the ordinary course of its business since December 31, 1994, which are not
in the aggregate material in frequency or amount to Summit and its
subsidiaries, taken as a whole. Neither Summit nor any of its subsidiaries
has, since June 30, 1995, become obligated on any debt due in more than one
year from the date of this Agreement in excess of $10,000,000, other than
intra-corporate debt and deposits received, repurchase agreements and
borrowings from the Federal Reserve Bank of New York or the Federal Home Loan
Bank of New York entered into in the ordinary course of business.
Section 2.05. Absence of Litigation; Agreements with Bank Regulators. There
is no outstanding order, injunction or decree of any court or governmental or
self-regulatory body against or affecting 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 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 Summit referred to in Section 2.02 and in Summit Schedule 2.05. Neither
Bank nor 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 material statutory or
regulatory noncompliance discovered in any regulatory examinations, its
capital adequacy, its credit or reserve policies or its management. Neither
Bank nor 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. Neither Bank
nor Summit 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 Summit's business.
Section 2.06. Brokers' Fees. Summit has entered into this Agreement with UJB
as a result of direct negotiations without the assistance or efforts of any
finder, broker, financial advisor or investment banker, other than Keefe,
Bruyette & Woods, Inc. ("Keefe, Bruyette"). Summit Schedule 2.06 consists of
true and complete copies of all agreements between Summit and Keefe, Bruyette
with respect to the transactions contemplated by this Agreement.
Section 2.07. Material Filings. At the time of filing, all filings made by
Summit and its subsidiaries after December 31, 1991 with the SEC and the
appropriate bank regulatory authorities do not or did not contain any untrue
statement of a material fact and do not or did not omit to state any material
fact required to be stated herein or therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. Summit has timely made all filings required by the
Securities Act and the Exchange Act and Bank has timely made all filings
required by applicable Federal and state banking laws.
Section 2.08. Corporate Action. Assuming due execution and delivery by UJB,
and subject to the requisite approval by the shareholders of Summit of this
Agreement, the Merger and the other transactions contemplated hereby in
accordance with Summit's Certificate of Incorporation and the New Jersey Act
at a meeting of such holders to be duly called and held, Summit has the
corporate power and is duly authorized by all necessary corporate action to
execute, deliver and perform this Agreement (except that no separate corporate
action has been taken with respect to the merger referred to in Section 5.18).
The Board of Directors of Summit has taken all action required by law, its
Certificate of Incorporation, its By-Laws or otherwise to authorize the
execution and delivery of this Agreement. 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, fraudulent transfer, moratorium or other similar laws
of general applicability presently or hereafter in effect affecting the
enforcement of creditors' rights generally. The Board of Directors of Summit
in authorizing the execution of this Agreement has determined, at the date of
this
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Agreement, to recommend to the shareholders of Summit 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,
1994, any Summit Material Adverse Change. Except as disclosed in Summit
Schedule 2.09, neither Summit nor any of its subsidiaries has, (a) since June
30, 1995: (i) declared, set aside or paid any dividend or other distribution
in respect of its capital stock, other than dividends from subsidiaries to
Summit or other subsidiaries of Summit and an ordinary cash dividend of $.21
per share, or, directly or indirectly, purchased, redeemed or otherwise
acquired any shares of such stock held by persons other than Summit and its
subsidiaries; (ii) incurred material current liabilities since that date other
than in the ordinary course of business; (iii) sold, exchanged or otherwise
disposed of any of their assets except in the ordinary course of business;
(iv) entered into any transactions which in the aggregate exceeded $10,000,000
other than in the ordinary course of business; or (v) 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 and except pursuant to the
Garden State Agreement, and, (b) since the date of the most recent proxy
statement made any officers' salary increase or wage increase, 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
other than in the ordinary course of business consistent with past practices.
Section 2.10. Allowance for Loan and Lease Losses. At June 30, 1995 and
thereafter the allowance for loan and lease losses of Summit and its
subsidiaries are adequate in all material respects to provide for all losses
on loans and leases outstanding and, to the best of Summit's knowledge, the
loan and lease portfolios of Summit in excess of such allowances are
collectible in the ordinary course of business.
Section 2.11. Taxes and Tax Returns. Neither Summit 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 Summit or any of its subsidiaries.
None of the property being acquired by UJB or its subsidiaries in the Merger
is property which UJB 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. Proper and accurate
amounts have been withheld from employees by Summit and each of its
subsidiaries for all periods in full and complete compliance with the tax,
social security and unemployment withholding provisions of applicable federal,
state and local law. Proper and accurate federal, state and local returns have
been timely filed by Summit and each of its subsidiaries for all periods for
which returns were due, including with respect to employee income tax
withholding, social security and unemployment 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 Summit or its appropriate
subsidiary. Neither Summit nor any of its subsidiaries is required to file tax
returns with any state other than the State of New Jersey and the Commonwealth
of Pennsylvania. Provision has been made on the books of Summit or its
appropriate subsidiary for all unpaid taxes, whether or not disputed, that may
become due and payable by Summit 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 Summit for all taxable years ended on or prior
to December 31, 1993 and the State of New Jersey has audited the New Jersey
income tax returns of Summit and its subsidiaries for all taxable years ended
on or prior to December 31, 1993. Neither Summit nor any of its subsidiaries
is subject to an audit or review of its tax returns by any state other than
the State of New Jersey and the Commonwealth of Pennsylvania. Summit is not
and has not been a United States real property holding corporation as defined
in Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code. Neither Summit 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 Summit's
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knowledge, threatened against Summit 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 Summit nor any of its subsidiaries has agreed to or is required to
make any material adjustment pursuant to Section 481(a) of the Code by reason
of a change in accounting method initiated by Summit or any of its
subsidiaries, and neither Summit nor any of its subsidiaries has any knowledge
that the IRS has proposed any such material adjustment or change in accounting
method. Summit 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. Summit, directly or through its subsidiaries, has
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 Summit 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 Summit
Financial Statements or which in the aggregate do not materially adversely
affect or impair the operation of Summit and its subsidiaries taken as a
whole. Summit and each of its subsidiaries enjoys peaceful and undisturbed
possession under all material leases under which it or any of its subsidiaries
is the lessee, where the failure to enjoy such peaceful and undisturbed
possession would be likely to have a material adverse effect on Summit and its
subsidiaries taken as a whole.
Section 2.13. Condition of Properties; Insurance. All real and tangible
personal properties owned by Summit or any of its subsidiaries or used by
Summit 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
Summit or such subsidiary subject to exceptions which are not, in the
aggregate, material to Summit and its subsidiaries, taken as a whole. Summit
and each of its subsidiaries maintains insurance (with companies which, to the
best of Summit'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 disclosed on Summit Schedule
2.13.
Section 2.14. Contracts.
(a) Except as set forth in Summit Schedule 2.14(a), neither Summit 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 $1,000,000.
(b) Except as set forth in Summit Schedule 2.14(b), neither Summit 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 Summit or a subsidiary, as
appropriate, on 60 days' or less notice; (ii) contract or commitment for
capital expenditures in excess of $2,000,000 in the aggregate for any one
project or in excess of $20,000,000 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 $1,000,000 (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 $2,000,000; or (v) other
contracts material to the business of Summit and its subsidiaries taken as a
whole and not made in the ordinary course of business.
(c) Neither Summit 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 Summit, is
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materially adverse, onerous, or harmful to any aspect of the business of
Summit and its subsidiaries taken as a whole.
Section 2.15. Pension and Benefit Plans.
(a) Neither Summit 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 Summit Schedule 2.15(a) (individually a
"Summit Plan" and collectively the "Summit Plans"). In its present form each
Summit Plan complies in all material respects with all applicable requirements
under ERISA and the Code. Each Summit Plan and the trust created thereunder is
qualified and exempt under Sections 401(a) and 501(a) of the Code, and Summit
or the subsidiary whose employees are covered by such Summit Plan has received
from the IRS a determination letter to that effect. No event has occurred and
to the knowledge of Summit there has been no omission or failure to act which
would adversely affect such qualification or exemption. Each Summit Plan has
been administered and communicated to the participants and beneficiaries in
all material respects in accordance with its terms and ERISA. Except as
disclosed in Summit Schedule 2.15(a), no employee of Summit or any subsidiary
whose employees are covered by a Summit Plan has engaged in any action or, to
the knowledge of Summit, has failed to act in such manner that, as a result of
such action or failure, a participant or beneficiary or a nonparticipating
employee has been denied benefits properly due or to become due under such
Summit Plan or has been misled as to his or her rights under such Summit Plan.
Except as disclosed in Summit Schedule 2.15(a), no Summit Plan is subject to
Section 412 of the Code or Title IV of ERISA. No person has engaged in any
prohibited transaction involving any Summit 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 Summit Plans or any fiduciary thereof which would subject Summit or any of
its subsidiaries to a material liability. All reports, filings, returns and
disclosures required to be made to the participants and beneficiaries, other
employees, the 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,
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. Except as disclosed in Schedule 2.15(a), there are no unfunded
benefit or pension plans or arrangements, whether qualified or not, to which
Summit or any of its subsidiaries has any obligation to contribute. There has
been no change in control of any Summit Plan since the last effective date of
any such change of control disclosed to UJB 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 Summit or any of its
subsidiaries other than Summit Plans (collectively "Benefit Plans") 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. Benefit Plans with an annual cost in excess of
$5,000,000 are listed on Summit Schedule 2.15(b). 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 of
Summit or any of its subsidiaries has engaged in any action or, to the
knowledge of Summit, has failed to act in such manner that, as a result of
such action or failure, a participant or beneficiary or a nonparticipating
employee has been denied benefits properly due or to become due under the
Benefit Plans or has been misled as to their rights under the Benefit Plans.
There are no pending or threatened claims (other than routine claims for
benefits) against the Benefit Plans which would subject Summit or any of its
subsidiaries to a material 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 Summit 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
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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, 1989, Summit 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. Neither Summit 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 Summit 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 Summit's and its subsidiaries'
past claim experience.
Section 2.17. Labor Matters. To the knowledge of Summit, hours worked by and
payment made to employees of Summit 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 Summit 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 Summit or its appropriate
subsidiary except for any immaterial noncompliance. Summit 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, except for any immaterial noncompliance. No labor dispute, strike or
other work stoppage has occurred and is continuing or is threatened with
respect to Summit or any of its subsidiaries. To the knowledge of Summit, no
employee of Summit or any of its subsidiaries has been terminated, suspended,
disciplined or dismissed under circumstances that are likely to result in a
material liability. No employees of Summit 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 Summit pending with, or, to the knowledge of
Summit, threatened by, any labor organization or group of employees of Summit.
Section 2.18. Books and Records. The minute books of Summit and each of its
subsidiaries contain complete and accurate records of and fairly reflect all
actions taken at all meetings and accurately reflect all other corporate
action of the shareholders and the boards of directors and each committee
thereof. The books and records of Summit and each of its subsidiaries fairly
and accurately reflect the transactions to which Summit 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 Summit or any subsidiary of Summit an aggregate
amount equal to more than 10% of the shareholders' equity of Summit or such
subsidiary (including deposits, other debts and contingent liabilities) or
(ii) owes to Summit or any of its subsidiaries an aggregate amount equal to
more than 10% of the shareholders' equity of Summit 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 Summit nor any of its
subsidiaries has received notice or otherwise knows that the manner in which
Summit 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. Environmental Matters.
(a) Except as disclosed in the Forms 10-K and 10-Q of Summit referred to in
Section 2.02 hereof, to the knowledge of Summit:
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(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 Summit 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 Summit 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 Summit
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, 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 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 Summit 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, 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 (as hereinafter defined), 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, 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 Summit 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 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, (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 $50,000 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.
Section 2.22. 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 (A) for pooling-of-interests accounting
treatment or (B) as a reorganization within the meaning of Section 368 of the
Internal Revenue 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 III.
REPRESENTATIONS AND WARRANTIES OF UJB
UJB represents and warrants to Summit as follows:
Section 3.01. Organization; Capital Stock.
(a) UJB 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, as of the date hereof, 57,561,452 shares were outstanding and
8,638,483 shares were reserved for issuance pursuant to the employee stock
option and performance stock plans of UJB, UJB's Dividend Reinvestment and
Stock Purchase Plan, UJB's Savings Incentive Plan and UJB's obligations under
the Agreement and Plan of Merger dated August 1, 1995 between UJB and The
Flemington National Bank and Trust Company (the "Flemington Agreement"), 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) were outstanding and 600,000 shares of Series R Preferred Stock were
reserved for issuance pursuant to UJB's Shareholder Rights Plan. All
outstanding shares of UJB's capital stock have been fully paid, were duly and
validly issued, and are non-assessable.
(b) UJB 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 UJB and its subsidiaries on a consolidated basis or
(ii) the ability of UJB to perform its obligations under, and to consummate
the transactions contemplated by this Agreement (a "UJB Material Adverse
Change"). However, a UJB 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. The bank subsidiaries of
UJB are duly organized, validly existing and in good standing under the laws
of their jurisdiction of organization. UJB 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. UJB is duly registered as a bank holding company under
the Bank Holding Company Act.
(c) All issued shares of the capital stock of UJB 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. UJB or one of its
subsidiaries is the holder and beneficial owner of all of the outstanding
capital stock of its bank subsidiaries. No options covering capital stock of
UJB (excluding board of trade and exchange traded standardized options) or any
of its bank subsidiaries, warrants to purchase or contracts to issue capital
stock of UJB or any of its bank subsidiaries, or any other contracts,
presently exercisable rights (including preemptive rights), commitments or
convertible securities entitling anyone to acquire from UJB 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 UJB or any of
its bank subsidiaries are outstanding, in existence, or the subject of an
agreement, except for employee stock options granted under stock option plans
of UJB, UJB Stock issuable pursuant to UJB's Dividend Reinvestment and Stock
Purchase Plan, UJB Savings Incentive Plan, 1993 Incentive Stock and Option
Plan, the Flemington Agreement and employee stock options outstanding on the
date hereof, Series R Preferred Stock issuable pursuant to the UJB Shareholder
Rights Plan and capital stock of United Jersey Bank ("UJBank") issuable in
connection with the merger of New Jersey Savings Bank into UJBank and in
connection with the merger contemplated by the Flemington Agreement.
Section 3.02. Financial Statements. The financial statements and schedules
contained or incorporated in UJB's (a) annual report to shareholders for the
fiscal year ended December 31, 1994, (b) annual report on Form 10-K pursuant
to the Exchange Act for the fiscal year ended December 31, 1994, (c) quarterly
reports on Form
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10-Q pursuant to the Exchange Act for the fiscal quarters ended March 31, 1994
and June 30, 1994, and (d) news release, Second Quarter Report to shareholders
and bank regulatory call report relating to financial results for the fiscal
quarter ended June 30, 1995 (the "UJB Financial Statements") are true and
correct in all material respects as of their respective dates and each fairly
presents (subject, in the case of unaudited statements, to recurring audit
adjustments normal in nature and amount), in accordance with generally
accepted accounting principles (except for regulatory accounting principles in
the case of the bank regulatory call report), the consolidated balance sheets,
statements of income, statements of shareholders' equity and statements of
cash flows of UJB 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 the accountants' reports thereon, the UJB Financial
Statements were prepared in accordance with generally accepted accounting
principles (except for regulatory accounting principles in the case of the
bank regulatory call report) consistently applied. The UJB 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 UJB Financial Statements, in light of the
circumstances under which they were made, misleading in any respect.
Section 3.03. No Conflicts. UJB and each of it bank 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 UJB, or the
consummation of the Merger by UJB upon the terms and conditions provided
herein (assuming receipt of the Required Consents), violate, conflict with,
result in the breach of, constitute a default under, give rise to a claim or
right of termination, cancellation, revocation of, or acceleration under, or
result in the creation or imposition of any lien, charge or encumbrance upon
any rights, permits, licenses, assets or properties material to UJB and its
subsidiaries, taken as a whole, or upon any of the capital stock of UJB, or
constitute an event which could, with the lapse of time, action or inaction by
UJB 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 UJB;
(b) any applicable 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 UJB is a party or by which UJB or any of its assets or properties are
bound or committed, the consequences of which individually or in the aggregate
would be a UJB Material Adverse Change, or enable any person to enjoin the
transactions contemplated hereby.
Section 3.04. Absence of Undisclosed Liabilities. To the best knowledge of
UJB management, UJB 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 UJB or any of its subsidiaries), and
no loss contingency (as defined in Statement of Financial Accounting Standards
No. 5), material in the aggregate to UJB and its subsidiaries, taken as a
whole, other than (a) those reflected in the UJB Financial Statements or
disclosed in the notes thereto, (b) commitments made by UJB or any of its
subsidiaries in the ordinary course of its business which are not in the
aggregate material in frequency or amount to UJB and its subsidiaries, taken
as a whole, and (c) liabilities arising in the ordinary course of its business
since December 31, 1994 which are not in the aggregate material in frequency
or amount to UJB and its subsidiaries, taken as a whole.
Section 3.05. 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 UJB or its subsidiaries which
materially and adversely affects UJB and its subsidiaries, taken as a whole,
and there are no actions, arbitrations, claims, charges, suits, investigations
or proceedings (formal or informal) material to UJB
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and its subsidiaries, taken as a whole, pending or, to UJB's knowledge,
threatened, against or involving UJB 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 UJB referred to in
Section 3.02. Neither UJB nor any bank subsidiary of UJB 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 UJB nor any bank subsidiary of UJB, 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. UJB and the bank subsidiaries of UJB 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 UJB or such bank subsidiary's business except for any examinations
received within 30 days of the date hereof.
Section 3.06. Brokers' Fees. UJB 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 Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") UJB Schedule 3.06
consists of true and complete copies of all agreements between UJB and Merrill
Lynch with respect to the transactions contemplated by this Agreement.
Section 3.07. Material Information. At the time of filing, all filings made
by UJB and its subsidiaries after December 31, 1991 with the SEC and
appropriate bank regulatory authorities do not or did not contain any untrue
statement of a material fact and do not or did not omit to state any material
fact required to be stated herein or therein or necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. UJB has timely made all filings required
by the Securities Act and the Exchange Act.
Section 3.08. Corporate Action. Assuming due execution and delivery by each
of the other parties thereto, and subject to the approval by the shareholders
of UJB of this Agreement, the Merger and the other transactions contemplated
hereby in accordance with UJB's Restated Certificate of Incorporation and the
New Jersey Act at a meeting of such holders to be duly called and held, UJB
has the corporate power and is duly authorized by all necessary corporate
action to execute, deliver, and perform this Agreement (except that no
separate corporate action has been taken with respect to the merger referred
to in Section 5.18). The Board of Directors of UJB has taken all action
required by law, its Restated Certificate of Incorporation, its By-Laws or
otherwise to authorize the execution and delivery of this Agreement. This
Agreement is a valid and binding agreement of UJB 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 of general applicability presently or hereafter in effect
affecting the enforcement of creditors' rights generally. The Board of
Directors of UJB in authorizing the execution of this Agreement has determined
at the date of this Agreement to recommend to the shareholders of UJB the
approval of this Agreement, the Merger and the other transactions contemplated
hereby.
Section 3.09. Absence of Changes. There has not been, since December 31,
1994, any UJB Material Adverse Change.
Section 3.10. Allowance for Loan and Lease Losses. At June 30, 1995 and
thereafter, the allowances for loan and lease losses of UJB and its
subsidiaries are adequate in all material respects to provide for all losses
on loans and leases outstanding, and to the best of UJB's knowledge, the loan
and lease portfolios of UJB and its subsidiaries in excess of such allowances
are collectible in the ordinary course of business.
Section 3.11. Taxes and Tax Returns. Proper and accurate federal, state and
local returns have been timely filed by UJB and each of its bank subsidiaries
for all periods for which returns were due, including with respect to employee
income tax withholding, social security and unemployment taxes, and the
amounts shown
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thereon to be due and payable have been paid in full or adequate provision
therefor has been included on the books of UJB or its appropriate subsidiary.
Provision has been made on the books of UJB or its appropriate bank subsidiary
for all unpaid taxes, whether or not disputed, that may become due and payable
by UJB or any of its subsidiaries in future periods in respect of
transactions, sales or services previously occurring or performed. UJB is not
and has not been a United States real property holding corporation as defined
in Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code. Neither UJB nor any of its bank
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 UJB's knowledge, threatened against UJB or any of its bank
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 UJB 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 UJB or any of its
subsidiaries, and neither UJB nor any of its bank subsidiaries has any
knowledge that the IRS has proposed any such adjustment or change in
accounting method. UJB 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 3.12. Properties. UJB, directly or through its subsidiaries, has
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 UJB Financial Statements (except properties and assets
disposed of since that date in the ordinary course of business and OREO
property disposed of since that date, which properties and assets are not
subject to any mortgage, pledge, lien, charge or encumbrance other than as
reflected in the UJB Financial Statements or which in the aggregate do not
materially adversely affect or impair the operation of UJB and its
subsidiaries taken as a whole). UJB and each of its subsidiaries enjoys
peaceful and undisturbed possession under all material leases under which it
or any of its subsidiaries is the lessee, where the failure to enjoy such
peaceful and undisturbed possession would be likely to have a material adverse
effect on UJB and its subsidiaries taken as a whole.
Section 3.13. Condition of Properties; Insurance. All real and tangible
personal properties owned by UJB or any of its subsidiaries or used by UJB 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 UJB or such
subsidiary subject to exceptions which are not, in the aggregate, material to
UJB and its subsidiaries, taken as a whole. UJB and each of its subsidiaries
maintains insurance (with companies which, to the best of UJB'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.
Section 3.14. Non-bank Subsidiaries. The non-bank subsidiaries of UJB did
not, taken in the aggregate, constitute a "significant subsidiary" of UJB, as
that term is defined in Rule 1-02(v) of Regulation S-X of the SEC (17 CFR
(S)210.1-02(v)), at December 31, 1994.
Section 3.15. Fidelity Bonds. Since at least January 1, 1989, UJB and each
of its bank 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. Neither UJB nor any of
its bank 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
UJB's and its bank subsidiaries' past claim experience.
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Section 3.16. Labor Matters. To the knowledge of UJB, hours worked by and
payment made to employees of UJB and each of its bank 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 UJB and each of its bank
subsidiaries on account of employee health and welfare insurance have been
paid or accrued as a liability on the books of UJB or its appropriate bank
subsidiary, except for any immaterial noncompliance. UJB 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, except for any immaterial non-compliance. No labor dispute, strike or
other work stoppage has occurred and is continuing or is threatened with
respect to UJB or any of its bank subsidiaries. No employee of UJB or any of
its bank subsidiaries has been terminated, suspended, disciplined or dismissed
under circumstances that are likely to result in a material liability. To the
knowledge of UJB, no employees of UJB or any of its bank 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 UJB pending with, or, to the knowledge of UJB,
threatened by, any labor organization or group of employees of UJB.
Section 3.17. Books and Records. The minute books of UJB and each of its
bank subsidiaries contain complete and accurate records of and fairly reflect
all actions taken at all meetings and accurately reflect all other corporate
action of the shareholders and the boards of directors and each committee
thereof. The books and records of UJB and each of its bank subsidiaries fairly
and accurately reflect the transactions to which UJB and each of its bank
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 3.18. Trademarks and Copyrights. Neither UJB nor any of its
subsidiaries has received notice or otherwise knows that the manner in which
UJB 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 3.19. Environmental Matters. Except as disclosed in the Forms 10-K
and 10-Q of UJB referred to in Section 3.02 hereof, to the knowledge of UJB:
(a) no Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any (i) Present
Property of UJB or a subsidiary, (ii) Former Property of UJB or a
subsidiary during the time of previous ownership, occupancy, lease, holding
or management or (iii) Participation Facility during the time that UJB or a
subsidiary participated in the management of, or may be deemed to be or to
have been an owner or operator of, such facility, where such storage,
treatment, dumping, spilling, disposing, discharging, releasing, or
depositing would have a material adverse effect on UJB and its
subsidiaries, taken as a whole;
(b) neither UJB 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 UJB 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 UJB and its
subsidiaries, taken as a whole;
(c) no Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any Loan
Property, where such storage, treatment, dumping, spilling, disposing,
discharging, releasing, depositing or violation would have a material
adverse effect on UJB and its subsidiaries, taken as a whole, nor is there
with respect to any Loan Property any violation of an environmental law
which could materially adversely affect the value of such Loan Property to
an extent which could prevent or delay UJB or any its subsidiaries from
recovering the full value of its loan in the event of foreclosure on such
Loan Property.
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(d) Neither UJB 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.
Section 3.20. Accounting, Tax and Regulatory Matters. Neither UJB nor any of
its subsidiaries has taken or agreed to take any action or has any knowledge
of any fact or circumstance that would (i) prevent the transactions
contemplated hereby from qualifying (A) for pooling-of-interests accounting
treatment or (B) as a reorganization within the meaning of Section 368 of the
Internal Revenue 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.
Section 3.21. Ownership of Summit Stock. Other than pursuant to the Summit
Stock Option Agreement, as of the date hereof, neither UJB nor any of its
subsidiaries, beneficially owns, directly or indirectly, or are parties to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting, or disposing of, any of the outstanding share of capital stock of
Summit entitled to vote generally in the election of directors (other than
Summit Stock held in a fiduciary capacity or as a result of debts previously
contracted).
Section 3.22. Concentrations of Credit. No customer or affiliated group of
customers (i) is owed by UJB or any subsidiary of UJB an aggregate amount
equal to more than 10% of the shareholders' equity of UJB or such subsidiary
(including deposits, other debts and contingent liabilities) or (ii) owes to
UJB or any of its subsidiaries an aggregate amount equal to more than 10% of
the shareholders' equity of UJB or such subsidiary (including loans and other
debts, guarantees of debts of third parties, and other contingent
liabilities).
Section 3.23. Pension and Benefit Plans.
(a) The employee pension benefit plans, within the meaning of Section 3(2)
of ERISA, maintained by UJB and its subsidiaries on the date hereof
(individually a "UJB Plan" and collectively the "UJB Plans"), in their present
form, comply in all material respects with all applicable requirements under
ERISA and the Code. Each UJB Plan and the trust created thereunder is
qualified and exempt under Sections 401(a) and 501(a) of the Code, and UJB or
the subsidiary whose employees are covered by such UJB Plan has received from
the IRS a determination letter to that effect. No event has occurred and to
the knowledge of UJB there has been no omission or failure to act which would
adversely affect such qualification or exemption. Each UJB Plan has been
administered and communicated to the participants and beneficiaries in all
material respects in accordance with its terms and ERISA. No employee of UJB
or any subsidiary whose employees are covered by a UJB Plan has engaged in any
action or, to the knowledge of UJB, has failed to act in such manner that, as
a result of such action or failure, a participant or beneficiary or a
nonparticipating employee has been denied benefits properly due or to become
due under such UJB Plan or has been misled as to his or her rights under such
UJB Plan. No UJB Plan is subject to Section 412 of the Code or Title IV of
ERISA. No person has engaged in any prohibited transaction involving any UJB
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 UJB Plans or any fiduciary thereof
which would subject UJB or any of its subsidiaries to a material liability.
All reports, filings, returns and disclosures required to be made to the
participants and beneficiaries, other employees, 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, 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. There has been no change in control of any
UJB Plan.
(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
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insurance or dental plans covering employees generally maintained by UJB or
any of its subsidiaries other than UJB Plans (collectively "UJB Benefit
Plans") 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 UJB 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 of
UJB or any of its subsidiaries has engaged in any action or, to the knowledge
of UJB, has failed to act in such manner that, as a result of such action or
failure, a participant or beneficiary or a nonparticipating employee has been
denied benefits properly due or to become due under the UJB Benefit Plans or
has been misled as to their rights under the UJB Benefit Plans. There are no
pending or threatened claims (other than routine claims for benefits) against
the UJB Benefit Plans which would subject UJB or any of its subsidiaries to a
material 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 UJB or any of its subsidiaries, 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.
ARTICLE IV.
COVENANTS OF SUMMIT
Summit hereby covenants and agrees with UJB that:
Section 4.01. Preparation of Registration Statement and Applications for
Required Consents. Summit will cooperate with UJB 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 UJB Stock to
be issued in connection with the Merger, the proxy statement-prospectus
constituting part of the Registration Statement ("Summit Proxy-Prospectus")
that will be used by Summit to solicit approval of the Merger by its
shareholders and the proxy statement that will be used by UJB to solicit
approval of the Merger by its shareholders ("UJB Proxy Statement"). In
connection therewith, Summit will furnish all financial or other information,
including using best efforts to obtain customary consents, certificates,
opinions of counsel and other items concerning Summit reasonably deemed
necessary by counsel to UJB 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). Summit will cooperate with UJB 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 by the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), the listing of the Shares on the New
York Stock Exchange (subject to official notice of issuance) and any other
governmental or regulatory consents or approvals or the taking of any other
governmental or regulatory action necessary to consummate the Merger without a
material adverse effect on the business, results of operations, assets or
financial condition of the Surviving Corporation and its subsidiaries, taken
as a whole (the "Required Consents"). UJB, reasonably in advance of making
such filings, will provide Summit and its counsel a reasonable opportunity to
comment on such filings and regulatory applications and will give due
consideration to any comments of Summit and its counsel before making any such
filing or application; and UJB will provide Summit 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. Summit covenants and agrees
that all information furnished by Summit for inclusion in the Registration
Statement, the UJB Proxy Statement, the Summit Proxy-Prospectus, all
applications to appropriate regulatory agencies for approval of the Merger,
and all information furnished by Summit to UJB 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
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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.
Section 4.02. Notice of Adverse Changes. Summit will promptly advise UJB 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 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 Summit Material Adverse Change, (c) any inability of
Summit to perform or comply in any material respect with the terms or
conditions of this Agreement, (d) the institution or threat of institution of
litigation involving Summit or any of its subsidiaries or assets, which, if
determined adversely to Summit or any of its subsidiaries, would have a
material adverse effect upon Summit and its subsidiaries taken as a whole or
the ability of the parties to timely consummate the Merger and the related
transactions, and (e) any governmental complaint, investigation, hearing, or
communication indicating that such litigation 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 or
a subsidiary subsequent to the date hereof and prior to the Effective Time,
under any agreement, indenture or instrument to which Summit or a subsidiary
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 UJB of any of the provisions of Articles VI or VII.
Section 4.03. Meeting of Shareholders. Summit will call a meeting of its
shareholders for the purpose of voting upon this Agreement, the Merger and the
transactions contemplated hereby to be held as promptly as practicable and, in
connection therewith, will comply with the New Jersey Act and the Exchange Act
and all regulations promulgated thereunder governing shareholder meetings and
proxy solicitations. In connection with such meeting, Summit shall mail the
Summit Proxy-Prospectus to its shareholders and use, unless in the written
opinion of counsel such action would be a breach of the fiduciary duties of
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, Summit will deliver to UJB, 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 Summit or the public.
Section 4.05. No Material Transactions. Until the Effective Time, Summit
will not and will not allow any of its subsidiaries to, without the prior
written consent of UJB: (a) pay (or make a declaration which creates an
obligation to pay) any cash dividends, at a quarterly rate in excess of $.21
per share of Summit Common, other than dividends from subsidiaries of Summit
to Summit or other subsidiaries of Summit and dividends payable on the Summit
Preferred; (b) declare or distribute any stock dividend or authorize or effect
a stock split; (c) except in connection with the Garden State Agreement and as
listed on Summit Schedule 4.05(c), merge with, consolidate with, or sell any
material asset to any other corporation, bank, or person (except for mergers
of subsidiaries of Summit into other subsidiaries of Summit) 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 and other
transactions aggregating not more than $20,000,000; (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 the Summit and its subsidiaries taken as a whole; (f) increase or
enter into any agreement to increase the rate of compensation of all employees
on the date hereof at an average annualized rate exceeding five percent (5%)
in the aggregate, or pay any employee bonuses other than bonuses payable under
the existing employee
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compensation plans providing for formula bonus awards; (g) except as disclosed
in Summit Schedule 4.05(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 or increase 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 Summit Stock Award Plans and Crestmont Plan and
pursuant to the Summit Dividend Reinvestment Plan and Garden State Agreement;
(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, By-Laws or
Shareholder Rights Plan; (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
Summit 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 UJB Benefit Plans; (m) make any
employer contribution to a Summit Plan or a Benefit Plan which under the terms
of the particular Plan is voluntary and within the sole discretion of Summit
to make; or (n) make any discretionary determination or take discretionary
action, including the making of awards, by its Compensation Committee or
otherwise, under or with respect to any Summit Stock Award Plan other than
routine administration of outstanding awards thereunder.
Section 4.06. Operation of Business in Ordinary Course. Summit, 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 diligently and 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 reasonable best efforts to continue in
effect their present insurance coverage on all properties, assets, business
and personnel; (c) will use their reasonable 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 Summit or any of
its subsidiaries may terminate any employee for unsatisfactory performance or
other reasonable business purpose, and provided further, however, that Summit
will notify and consult with UJB prior to terminating any of the five highest
paid employees of Summit; (d) will use their reasonable best efforts to
continue to maintain fidelity bonds insuring Summit 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
knowingly do anything or fail to do anything which will cause a breach of or
default under any representation, warranty or covenant of Summit 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 Summit and its
subsidiaries taken as a whole; and (f) will not change their methods of
accounting in effect at December 31, 1994, or change any of their methods of
reporting income and deductions for Federal income tax purposes from those
employed in the preparation of their Federal income tax returns for the
taxable year ending December 31, 1994, 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 Summit's
independent certified public accountants.
Section 4.07. Further Actions. Summit will: (a) execute and deliver such
instruments and take such other actions as UJB 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
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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 UJB
set forth in Articles VI and VII hereof are satisfied.
Section 4.08. Cooperation. Until the Effective Time, Summit will give to UJB
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 UJB from time to time may reasonably request, and will cause its
managerial employees, counsel and independent certified public accountants to
be available on reasonable request to answer reasonable questions of UJB's
representatives covering the business and affairs of Summit or any of its
subsidiaries.
Section 4.09. Copies of Documents. As promptly as practicable, but not later
than 30 days after the date hereof, Summit will furnish to or make available
to UJB all the documents, contracts, agreements, papers, and writings referred
to in the Summit Schedules or called for by the list or lists provided by UJB
to Summit on or prior to the date hereof (the "Post-Signing Disclosure List").
Section 4.10. Applicable Laws. Summit and its subsidiaries will use their
best efforts to comply promptly with all requirements which federal or state
law may impose on Summit or any of its subsidiaries with respect to the Merger
and will promptly cooperate with and furnish information to UJB in connection
with any such requirements imposed upon UJB or on any of its subsidiaries in
connection with the Merger.
Section 4.11. Agreements of Affiliated Shareholders. Summit agrees to
furnish to UJB, not later than 10 business days prior to the date of mailing
of the Summit Proxy-Prospectus, a list of each person who, in the opinion of
the General Counsel of Summit, is an affiliate of Summit for the purposes of
Rule 145 under the Securities Act (a "Summit Affiliate") and shall use its
best efforts to cause each Summit Affiliate to enter into, prior to the date
of mailing of the Summit Proxy-Prospectus, an agreement, satisfactory in form
and substance to UJB, 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 Summit 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 UJB to Summit or
its representatives pursuant hereto shall be treated as the sole property of
UJB and, if the Merger shall not occur, Summit and its representatives shall
return to UJB 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 UJB, (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 outside counsel, compelled to disclose information
concerning UJB to any tribunal or governmental body or agency or else stand
liable for contempt or
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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 UJB.
Section 4.14. Dividends. Summit will coordinate with UJB the declaration of
any dividends and the record and payment dates thereof so that the holders of
Summit Stock will not be paid two dividends for a single calendar quarter with
respect to their shares of Summit Stock and any shares of UJB Stock they
become entitled to receive in the Merger or fail to be paid one dividend in
each calendar quarter.
Section 4.15. Best Efforts to Ensure Pooling. (a) Summit agrees to use, and
agrees to cause each of its subsidiaries to use, its and their best efforts to
cause the Merger to qualify for pooling-of-interests accounting treatment.
Section 4.16. Acquisition Proposals. Summit agrees that neither Summit nor
any of its subsidiaries nor any of the respective officers and director of
Summit or its subsidiaries shall, and Summit shall direct and use its best
effort to cause its employees, agents and representatives (including, without
limitation, any investment banker, broker, financial or investment advisor,
attorney or accountant retained by Summit or any of its subsidiaries) not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any proposal or offer (including, without limitation, any proposal,
tender offer or exchange offer, consolidation, business combination, takeover
or similar transactions other than the Merger involving, or any purchase of
all or any significant portion of the assets or any equity securities of,
Summit or any of its subsidiaries (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or, except to the extent
legally required for the discharge by the Board of Directors of its fiduciary
duties, as advised by written opinion of counsel furnished to UJB, engage in
any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, or enter into any agreement or agreement in
principle with any person relating to as an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal.
Summit 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. Summit 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, Summit will notify
UJB by telephone to its chief executive officer or general counsel promptly
upon receipt of any inquiry with respect to a proposed Acquisition Proposal
with another person or receipt of a request for information from any
governmental or regulatory authority with respect to a proposed acquisition of
Summit 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 UJB officer notified as required above a copy of any
document relating thereto promptly after any such document is received by
Summit.
ARTICLE V.
COVENANTS OF UJB
UJB hereby covenants and agrees with Summit that:
Section 5.01. Approvals and Registrations. Based on such assistance and
cooperation of Summit as UJB may reasonably request, UJB will use its best
efforts to prepare and file (a) with the SEC, the Registration Statement, the
Summit Proxy-Prospectus and the UJB Proxy Statement, (b) with the Federal
Reserve Board, as an application for approval of the Merger, and (c) with the
New York Stock Exchange, as an application for the listing of the shares of
UJB Stock issuable upon the Merger, subject to official notice of issuance,
except that UJB shall have no obligation to file a new registration statement
or a post-effective amendment to the Registration Statement covering any
reoffering of UJB Stock by Summit Affiliates. In connection therewith, UJB
will furnish all financial or other information, including using best efforts
to obtain customary consents, certificates, opinions of counsel and other
items concerning UJB 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. UJB covenants and agrees that all information
furnished by UJB for inclusion in the Registration
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Statement, the Summit Proxy-Prospectus and the UJB Proxy Statement, all
applications to appropriate regulatory agencies for approval of the Merger and
related transactions and in connection with 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
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.
Section 5.02. Notice of Adverse Changes. UJB 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 UJB contained in this
Agreement or the UJB Schedules, if made on or as of the date of such event or
the Closing Date, untrue or inaccurate in any material respect, (b) any UJB
Material Adverse Change, (c) any inability or perceived inability of UJB or
any of its subsidiaries to perform or comply with the terms or conditions of
this Agreement, (d) the institution or threat of institution of material
litigation involving UJB or any of its subsidiaries or its assets which, if
determined adversely to UJB or any of its subsidiaries, would have a material
adverse effect on UJB and its subsidiaries taken as a whole or the Merger and
related transactions, (e) any governmental complaint, investigation, hearing,
or communication indicating that such litigation 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 UJB or any of its subsidiaries subsequent to the date hereof and prior to
the Effective Time, under any agreement, indenture or instrument to which UJB
or a subsidiary is a party or is subject and which is material to the
business, operation or condition (financial or otherwise) of UJB 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. UJB agrees that the delivery of such
notice shall not constitute a waiver by Summit of any of the provisions of
Articles VI or VIII.
Section 5.03. Meeting of Shareholders. UJB will call a meeting of its
shareholders for the purpose of voting upon the Agreement, the Merger and the
transactions contemplated hereby to be held as promptly as practicable and, in
connection therewith, will comply with the New Jersey Act and the Exchange Act
and all regulations promulgated thereunder governing shareholder meetings and
proxy solicitations. In connection with such meeting, UJB shall mail the UJB
Proxy Statement to its shareholders and use its best efforts to obtain such
shareholder approval of this Agreement, the Merger and the transactions
contemplated hereby.
Section 5.04. Copies of Filings. UJB will promptly provide Summit with
copies of its quarterly financial statements for the quarterly periods ending
between the date of this Agreement and the Closing Date and copies of all
reports filed by it during such period with the SEC on Forms 10-Q, 8-K and
10-K.
Section 5.05. Operation of Business. UJB, on behalf of itself and its bank
subsidiaries, covenants and agrees that from and after the date hereof and
until the Effective Time it: (a) will use its best efforts to continue in
effect its present insurance coverage on all properties, assets, business, and
personnel; (b) will use its best efforts to preserve its business organization
intact and preserve its present relationships with customers, suppliers, and
others having business dealings with it; (c) will use its best efforts to
continue to maintain fidelity bonds insuring it against acts of dishonesty by
each of its 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
its size; (d) will not do anything or fail to do anything which will cause a
breach of or default under any representation, warranty or covenant of UJB or
any contract, agreement, commitment or obligation to which it is a party or by
which it or any of its assets or properties may be bound or committed if the
consequences of such breach may have a material adverse effect on UJB and its
subsidiaries taken as a whole; (e) will not change its methods of accounting
in effect at December 31, 1994, or change any of its methods of reporting
income and deductions for Federal income tax purposes from those employed in
the preparation of its Federal income tax returns for the taxable year ending
December 31, 1994, except as required by changes in laws, regulations or
generally accepted accounting principles or changes that are to a preferable
accounting method, and approved by UJB's independent certified public
accountants; and (f) will carry on their business diligently and substantially
in the same manner
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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.
Section 5.06. Further Actions. UJB will: (a) execute and deliver such
instruments and take such other actions as Summit may reasonably require to
carry out the intent of this Agreement; (b) use all reasonable efforts to
obtain consents of all third parties and governmental bodies necessary or
reasonably desirable for the consummation of the transactions contemplated by
this Agreement; (c) diligently support this Agreement in any proceeding before
any regulatory authority whose approval of any of the transactions
contemplated hereby is required or reasonably desirable or before any court in
which litigation in respect thereof is pending; and (d) use its best efforts
so that the other conditions precedent to the obligations of Summit set forth
in Articles VI and VIII hereof are satisfied and the transactions contemplated
hereby are consummated.
Section 5.07. Applicable Laws. UJB will use its best efforts to comply
promptly with all requirements which federal or state law may impose on UJB
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 5.08. Indemnification and Insurance.
(a) UJB shall indemnify, and advance expenses in matters that may be subject
to indemnification to, persons who served as directors and officers of Summit
or any subsidiary of Summit on or before the Effective Time with respect to
liabilities and claims (and related expenses) made against them resulting from
their service as such prior to the Effective Time in accordance with and
subject to the requirements and other provisions of the more favorable to the
director or officer of (i) Summit's Restated Certificate of Incorporation and
By-Laws or (ii) UJB's Restated Certificate of Incorporation and By-Laws, as in
effect on the date of this Agreement and applicable provisions of law to the
same extent as UJB 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 UJB.
(b) For a period of six (6) years after the Effective Time, UJB will use its
best efforts to provide to the persons who served as directors or officers of
Summit or any subsidiary of Summit 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 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
UJB be required to expend more than 200% of the current amount expended by
Summit (the "Insurance Amount") to maintain or procure insurance coverage
pursuant hereto, and, further provided, that if UJB is unable to maintain or
obtain the insurance called for by this Section 5.08 on commercially
reasonable terms, UJB shall use its best efforts to obtain as much comparable
insurance as available for the Insurance Amount. In lieu of the foregoing,
Summit shall renew any existing insurance or purchase any "discovery period"
insurance provided for thereunder at UJB's request and expense.
(c) This Section 5.08 shall be construed as an agreement as to which the
directors and officers of Summit 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 UJB 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, UJB or such
successor or assign shall take such actions as shall be necessary for the
successors or assigns of UJB to assume the obligations set forth in this
Section 5.08.
Section 5.09. Unpaid Summit Dividends. By virtue of the Merger and without
further action on anyone's part, UJB shall assume the obligation of Summit to
pay dividends, if any, on Summit Stock which have a record date prior to the
Effective Time but are not payable until after the Effective Time.
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Section 5.10. Cooperation. Until the Effective Time, UJB 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, counsel and independent certified public accountants
to be available on reasonable request to answer questions of Summit's
representatives covering the business and affairs of UJB or any of its
subsidiaries.
Section 5.11. Confidentiality. All information furnished by Summit to UJB or
its representatives pursuant hereto shall be treated as the sole property of
Summit and, if the Merger shall not occur, UJB 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 UJB or
any committee thereof for the purpose of considering this Agreement, the
Merger and the related transactions may be kept and maintained by UJB with
other records of Board, and Board committee, meetings subject to a continuing
obligation of confidentiality. UJB 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 UJB's possession prior to the disclosure thereof by Summit, (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, UJB 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, UJB may disclose such information
to such tribunal or governmental body or agency without liability hereunder
and shall so notify Summit.
Section 5.12. Employee Matters.
(a) After the Effective Time, UJB may in its discretion maintain, terminate,
merge or dispose of (i) the Benefit Plans, and (ii) all other health or
welfare plans, if any, maintained by Summit (the "Health or Welfare Plans");
provided, however, that any action taken by UJB shall comply with ERISA, the
Code and other applicable laws and, provided further, that if UJB maintains a
plan which is similar in character or nature to, or which covers risks similar
to those covered by, a Benefit Plan or a Health or Welfare Plan maintained by
Summit then, if such Benefit Plan or Health and Welfare Plan is terminated by
UJB, is merged into the similar UJB plan or otherwise rendered inactive by
UJB, UJB shall offer to the former employees of Summit affected by such plan
termination, Merger or cessation of activity the opportunity to participate in
the similar plan of UJB (i) without being subject to any exclusions due to
pre-existing conditions, (ii) with credit for any deductibles satisfied while
covered by a Summit Benefit Plan or Health and Welfare Plan during the plan
year in which the plan termination, merger or cessation of activity takes
place, and (iii) with credit for years of service with Summit for purposes of
eligibility and vesting; provided, however, that this Section 5.12(a) shall
not be construed to apply to any employee or executive compensation plan of
UJB which by its terms or nature or by practice of UJB is or has been limited
to employees selected for participation in the discretion of a plan
administrator, but Summit employees shall be eligible for participation on the
same basis as other UJB employees similarly situated.
(b) After the Effective Time, UJB may in its discretion maintain, terminate
or merge the Summit Plans; provided, however, that any action taken by UJB
shall comply with ERISA, the Code and other applicable laws and, provided
further, that if UJB maintains an employee pension benefit plan which is
similar in character to a Summit Plan then, if such Summit Plan is terminated
or merged into the similar UJB plan by UJB, UJB shall include the former
employees of Summit affected by such plan termination or merger in the similar
plan of UJB with credit for years of service recognized under the Summit Plan
for purposes of eligibility and vesting. In the event UJB merges the Summit
Bancorporation Retirement Plan or the Summit Supplemental Executive
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Retirement Plan (the "Summit Pension Plans") into the corresponding defined
benefit plan and supplemental executive retirement plan maintained by UJB (the
"UJB Pension Plans"), UJB will amend the UJB Pension Plans to provide that
such employees' accrued benefits under the UJB Pension Plans will be the sum
of (x) the accrued benefits calculated in accordance with the benefit formulae
of the UJB Pension Plans for all periods after the Summit Pension Plans are
merged into the UJB Pension Plans, and (y) the accrued benefits calculated in
accordance with the benefit formulae of the Summit Pension Plans for all
periods before the merger; provided, however, that for so long as it shall be
the practice of UJB that compensation earned after the date of a pension plan
merger be included for purposes of determining a participants' average final
earnings under the pension plan that merged out of existence, UJB shall
include Summit participants in the practice to the extent applicable to each,
provided, further, however, that UJB shall be free to change its practice in
its discretion at any time without notice so long as it treats Summit
participants after the change the same as all other UJB pension plan
participants similarly situated.
(c) Summit employees who are participants on the date hereof in the Summit
Supplemental Executive Retirement Plan as amended through January 1, 1989, as
previously delivered to UJB, will continue to participate therein, until such
plan is amended, merged or otherwise rendered inactive by UJB, provided,
however, that any such amendment, merger or other inactivation shall preserve
the rights of such employees under Section 3.1 of such plan.
(d) Any Summit employee whose employment is terminated during the one-year
period commencing with the Effective Date shall be subject to the conditions
and entitled to the benefits of the Summit Severance Pay Policy heretofore
delivered to UJB.
(e) UJB agrees that Summit may amend the 401(k) savings plan maintained by
Summit on the date hereof to provide for immediate vesting of benefits if in
the written opinion of KPMG Peat Marwick LLP such amendment would be
consistent with accounting for the Merger as a pooling of interests.
Section 5.13. Best Efforts to Ensure Pooling. UJB agrees to use, and agrees
to cause each of its subsidiaries to use, its and their best efforts to cause
the Merger to qualify for pooling-of-interests accounting treatment.
Section 5.14. Special Dividends. UJB will not declare or pay any
extraordinary or special dividend on UJB Common or any other share of UJB
capital stock.
Section 5.15. Charter, By-Law Changes. UJB agrees (a) not to amend its
Restated Certificate of Incorporation or By-Laws in any manner which would
have a material adverse impact on the Merger and related transactions, and (b)
not to amend its Restated Certificate of Incorporation without the prior
written consent of Summit, which shall not be unreasonably withheld or
delayed, in any manner which would be materially adverse to Summit or its
shareholders.
Section 5.16. No Actions. Subject to transactions permitted under Section
8.02, UJB will not, and will cause its subsidiaries not to, take, or omit to
take, any action, including but not limited to making or agreeing to make any
acquisition, that would (i) adversely affect the ability of Summit or UJB to
obtain any necessary approvals, consents, clearances, actions, waivers or
advisory opinions of any governmental authority required for the transactions
contemplated hereby, (ii) adversely affect the ability of UJB to perform its
undertakings and agreements under this Agreement or (iii) adversely affect the
ability of UJB to otherwise consummate the transactions contemplated by this
Agreement.
Section 5.17. Publication of Results of Combined Operations. If the Closing
takes place within the first or third month of any calendar quarter, UJB will
publish financial results including at least a calendar month of not less than
30 days of post-merger combined operations which shall be published promptly
following the first full calendar month following the Closing and which shall
be in accordance with Section 201.01 of the Commission's Codification of
Financial Reporting Policies, and UJB shall file a Form 8-K for this purpose
if necessary.
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Section 5.18. Change of Bank Name. As soon as reasonably practicable
following the Effective Time, Bank and UJBank, shall be merged in accordance
with the provisions of the New Jersey Banking Act of 1948 under the name of
"Summit Bank".
ARTICLE VI.
CONDITIONS PRECEDENT TO THE RESPECTIVE OBLIGATIONS
OF UJB AND SUMMIT
The respective obligations of UJB and Summit 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 UJB and Summit:
Section 6.01. Receipt of Required Consents. UJB and Summit shall have
received the Required Consents; the Required Consents shall not, in the
reasonable opinion of UJB or Summit, contain restrictions or limitations which
would materially adversely affect the financial condition of the Surviving
Corporation after consummation of the Merger; the Required Consents and the
transactions contemplated hereby shall not on the Closing Date be contested by
any federal or state governmental authority; and on the Closing Date the
Required Consents needed for the Merger shall have been obtained and shall not
have been withdrawn or suspended.
Section 6.02. Effective Registration Statement. The Registration Statement
shall have been declared effective by the SEC; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and remain
in effect on the Closing Date; and no proceeding for that purpose shall have
been initiated or, to the knowledge of UJB or Summit, shall be contemplated or
threatened by the SEC on the Closing Date.
Section 6.03. Tax Matters. At the time of the filing of the Registration
Statement and at the Closing Date, UJB shall have received an opinion from
Thompson & Mitchell, special counsel to UJB, as to the matters referred to in
subparagraph (a) below, and Summit shall have received an opinion from
Sullivan & Cromwell, special counsel to Summit, as to all matters referred to
below (the "Tax Opinions"), reasonably satisfactory in form and substance to
UJB or Summit, as the case may be, to the effect that (a) the Merger will
constitute a reorganization within the meaning of Section 368 of the Code, (b)
except with respect to fractional share interests, holders of Summit Common
who receive solely UJB Common in the Merger will not recognize gain or loss
for federal income tax purposes, (c) holders of Summit Preferred who receive
solely UJB Preferred in the Merger will not recognize gain or loss for federal
income tax purposes, (d) the basis of such UJB Common (including any
fractional share for which cash is received) will equal the basis of the
Summit Common for which it is exchanged, and (e) the basis of such UJB
Preferred will equal the basis of the Summit Preferred for which it is
exchanged, (f) the holding period of such UJB Common (including any fractional
share for which cash is received) will include the holding period of the
Summit Common for which it is exchanged, assuming that such Summit Common is a
capital asset in the hands of the holder thereof at the Effective Time, and
(g) the holding period of such UJB Preferred will include the holding period
of the Summit Preferred for which it is exchanged, assuming that such Summit
Preferred is a capital asset in the hands of the holder thereof at the
Effective Time. The Tax Opinions may be based upon assumptions and
representations contained or referred to therein.
In rendering the Tax Opinions, such counsel may rely as to matters of fact,
to the extent they deem proper, on certificates and information obtained from
officers of UJB and Summit, and UJB and Summit agree to provide to such
counsel such certificates as they may reasonably request. The parties
recognize that such counsel may require the execution of tax certificates as a
condition to furnishing the Tax Opinions.
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 or
representations referred to 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.
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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 UJB or any
of its subsidiaries, or Summit or any of its subsidiaries, that is material to
the Merger or to the financial condition of UJB and its subsidiaries taken as
a whole or Summit 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 UJB and its subsidiaries taken as a whole or
Summit and its subsidiaries taken as a whole, as the case may be.
Section 6.05. NYSE Listing. At the Closing Date, the shares of UJB Stock to
be issued in the Merger shall have been listed on the New York Stock Exchange
subject to official notice of issuance.
Section 6.06. Shareholder Approval. The shareholders of UJB and Summit shall
each have authorized and approved the Merger, 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 all instruments of
corporate governance.
Section 6.07. Pooling-of-Interests Letter. The parties hereto shall have
received a letter from KPMG Peat Marwick to the effect that, based on the
facts known to such accountants, the Merger will qualify for pooling-of-
interests accounting treatment if consummated in accordance with this
Agreement.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UJB
The obligation of UJB 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 UJB in writing:
Section 7.01. No Adverse Changes. During the period from December 31, 1994
to the Closing Date there shall not have been any Summit Material Adverse
Change.
Section 7.02. Representations and Covenants.
(a) Except with respect to matters resulting from transactions specifically
contemplated by this Agreement, all representations and warranties made by
Summit in this Agreement and the Summit 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. The condition in this Section
7.02(a) shall be deemed to be satisfied unless the failure of such
representations and warranties to be so true and correct shall constitute,
individually or in the aggregate, a Summit Material Adverse Change or have a
material adverse impact upon the consummation of the Merger and related
transactions.
(b) Summit shall have complied in all material respects with all covenants
and agreements contained herein required to be performed by Summit on or
before the Closing Date.
Section 7.03. Secretary's Certificate. Summit shall have furnished to UJB a
certificate signed by the Secretary of Summit and dated the Closing Date,
certifying to the satisfaction of the conditions set forth in Section 6.06 as
it relates to Summit and the effectiveness of all resolutions adopted by the
Board of Directors (including committees thereof) and shareholders of Summit
relating to this Agreement, and the Merger and related transactions, a copy of
which resolutions shall be attached to such certificate.
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Section 7.04. Officer's Certificate. Summit shall have furnished to UJB a
certificate signed by the Chairman or President of Summit, 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 6.04, as they relate to
Summit, and at Sections 7.01, 7.02, 7.07 and 7.09.
Section 7.05. Opinion of Summit's Counsel. UJB shall have received an
opinion of the General Counsel of Summit, dated the Closing Date and
reasonably satisfactory in form and substance to counsel for UJB,
substantially to the effect provided in Exhibit D.
Section 7.06. Approvals of Legal Counsel. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated
by this Agreement or incidental thereto and all related legal matters shall be
reasonably satisfactory to counsel to UJB, 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 Summit Contracts. All consents, approvals or
waivers, in form and substance reasonably satisfactory to UJB, required to be
obtained in connection with the Merger from other parties to each mortgage,
note, lease, permit, franchise, loan or other agreement, or other contract to
which Summit 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, operations, assets, or financial condition of Summit
and its subsidiaries on a consolidated basis, shall have been obtained.
Section 7.08. FIRPTA Affidavit. Summit shall have delivered to UJB an
affidavit of its Chairman, President or Chief Financial Officer stating, under
penalties of perjury, that Summit 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. Absence of Regulatory Agreements. Neither Summit nor Bank
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 Summit or Bank and its subsidiaries taken as a whole,
and neither Summit 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 UJB shall in no
way constitute a waiver by UJB of any of the provisions of or its rights under
this Agreement.
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE OBLIGATION 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:
Section 8.01. No Adverse Changes. During the period from December 31, 1994
to the Closing Date there shall not have been any UJB Material Adverse Change.
Section 8.02. Representations and Covenants.
(a) Except with respect to matters resulting from transactions specifically
contemplated by this Agreement, all representations and warranties made by UJB
in this Agreement shall be true and correct in all material
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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. The condition in this Section
8.02(a) shall be deemed to be satisfied unless the failure of such
representations and warranties to be so true and correct shall constitute,
individually or in the aggregate, a UJB Material Adverse Change or have a
material adverse impact upon the consummation of the Merger and related
transactions.
(b) UJB shall have complied in all material respects with all covenants and
agreements contained herein required to be performed by UJB on or before the
Closing Date.
(c) The following transactions, and actions reasonably necessary or
appropriate in connection therewith, are specifically permitted by this
Agreement:
(i) All actions necessary to consummate the merger and related
transactions contemplated by the Flemington Agreement;
(ii) The entry by UJB after the date hereof and prior to the Effective
Time into any agreement to acquire or merge with any company or other
entity, provided, however, that UJB shall not be permitted to enter into
agreements to make acquisitions of companies or other entities or engage in
mergers which are reasonably likely, as of the respective dates of such
agreements, to result in the issuance of consideration by UJB and its
subsidiaries of more than $200 million in any one transaction or $300
million in all transactions (excluding the Flemington Agreement), without
the prior written agreement of the President and Chief Executive Officer of
Summit; and
(iii) The issuance by UJB of up to $550 million in the aggregate of debt
and equity, which shall be in addition to the consideration permitted to be
issued in transactions referred to in Sections 8.02(c)(i) and (ii) above;
the issuance by UJB of Series R Preferred Stock pursuant to UJB's
Shareholder Rights Plan; and the redemption or repurchase at market prices
by UJB (subject to Section 5.13) of UJB Stock, Series B Adjustable Rate
Cumulative Preferred Stock, the Rights attached to UJB Stock, or the Series
R Preferred Stock issuable pursuant to UJB's Shareholder Rights Plan.
Section 8.03. Secretary's Certificate. UJB shall have furnished to Summit a
certificate signed by the Secretary of UJB and dated the Closing Date,
certifying to the satisfaction of the condition set forth at Section 6.05 and
at Section 6.06 as it relates to UJB and to the effectiveness of all
resolutions adopted by the Board of Directors (including committees thereof)
and shareholders of UJB relating to this Agreement and the Merger and related
transactions, a copy of which resolutions shall be attached to such
certificate.
Section 8.04. Officer's Certificate. UJB shall have furnished to Summit a
certificate signed by the Chairman, a Vice Chairman, or the President of UJB,
dated the Closing Date, certifying to the satisfaction of the conditions set
forth at Sections 6.01, 6.02, 6.03 (last paragraph) and 6.04, as they relate
to UJB, and at Sections 8.01, 8.02 and 8.07.
Section 8.05. Opinion of UJB's Counsel. Summit shall have received an
opinion of the General Counsel of UJB, dated the Closing Date and reasonably
satisfactory in form and substance to counsel for Summit, 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 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 8.07. Absence of Regulatory Agreements. Neither UJB 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
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the conduct of UJB's business or has a material adverse effect upon the Merger
or upon the financial condition of UJB and its subsidiaries taken as a whole,
and neither UJB 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.
The receipt of the documents required by this Article VIII by Summit shall
in no way constitute a waiver by Summit of any of the provisions of or its
rights under this Agreement.
Section 8.08. Employment Agreement. UJB and Robert G. Cox shall each have
executed an employment agreement employing Robert G. Cox as President of the
Surviving Corporation, in the form attached hereto as Exhibit F, provided he
is able to serve.
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 ("Closing") shall take place on
a date determined by UJB on at least five business days notice (the "Closing
Notice") given to Summit, at the office of UJB, 301 Carnegie Center,
Princeton, New Jersey, commencing at 10:00 a.m., which date shall be after,
but not later than 40 days after, the last to occur of the following:
(a) the date the Merger has been approved by the shareholders of both
Summit and UJB in accordance with, respectively, Section 4.03 and Section
5.03;
(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 UJB and Summit, to
the consummation of the transactions contemplated herein or such prior date
as UJB and Summit shall elect, whether or not such proceeding has been
brought to a conclusion; or
(c) the date all Required Consents have been received (and all waiting
periods required by statute or incorporated into such Required Consents
have expired).
Such date is sometimes referred to herein as the "Closing Date". At the
Closing, the parties will exchange certificates, legal opinions and other
documents for the purpose of determining whether the conditions precedent
to the obligations of the parties set forth herein have been satisfied or
waived. After all such conditions have been satisfied or waived, UJB shall
cause the Certificate of Merger to be filed with the Office of the
Secretary of State of the State of New Jersey 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 Summit and UJB may terminate this Agreement
by mutual consent at any time prior to the Effective Time.
(b) If on the date the Closing must be held as determined by Section 9.01
all the conditions precedent to a party's obligation to close 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.
(c) The Board of Directors of either party may terminate this Agreement in
the event that:
(i) the shareholders of Summit or UJB at the respective meetings of
shareholders called for the purpose of approving the Merger, this Agreement
and the transactions contemplated by this Agreement, upon voting, shall
have failed to approve such by the requisite vote;
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(ii) a material breach of a warranty or representation or covenant made
by the other party shall have occurred and such breach has not been cured,
or is not capable of being cured, within 30 days after written notice of
the existence thereof shall have been given to the other party, which
breach would give the nonbreaching party the right under Article VI, VII or
VIII not to consummate the Merger;
(iii) the Closing is not consummated on or before August 31, 1996, 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.
(iv) the other party does not execute and deliver the Option Agreement in
which it is the Issuer on September 11, 1995.
(d) Upon a termination of this Agreement pursuant to this Section 9.02: (i)
the obligations of the parties under this Agreement (except for those under
this Section 9.02 and Sections 4.13 and 5.11) shall terminate and be of no
further force or effect, each party and it respective officers, directors and
employees shall be mutually released and discharged from liability to the
other party or to any third parties hereunder, and no party or its officers,
directors or employees shall be liable to any other party for any costs or
expenses paid or incurred in connection herewith, and (ii) the expenses
incurred in connection with printing of the UJB Proxy Statement, the Summit
Proxy-Prospectus and the Registration Statement, and the filing fees of the
SEC and the New York Stock Exchange shall be borne equally by UJB and Summit;
provided, however, that in the event of a termination, this Section 9.02(d)
shall not be construed to relieve a breaching party from liability for any
uncured willful breach of this Agreement which gave rise to such termination.
(e) Notwithstanding any termination of this Agreement, (i) Summit shall
indemnify and hold UJB 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 and (ii) UJB 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 UJB.
(f) Except as provided otherwise herein in the event of a termination of
this Agreement, Summit 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 UJB shall pay all printing
and mailing expenses and filing fees associated with the Registration
Statement, the Summit Proxy-Prospectus, the UJB Proxy Statement 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 Summit
Schedules, the Post-Signing Disclosure List and the Exhibits hereto and
thereto, if any, and the Option Agreements to be entered into by the parties
hereto constitute the entire agreement between the parties pertaining to the
subject matter hereof and supersede all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements
between
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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 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 meetings described at Section 4.03 and 5.03 hereof, no such
amendment or modification shall reduce the amount, or change the forms, of
consideration to be received by the shareholders of Summit contemplated by
this Agreement, unless such modification is submitted to a vote of the
shareholders of Summit, or increase the amount of consideration to be paid by
UJB unless such modification is submitted to a vote of the shareholders of
UJB.
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:
UJB: UJB Financial Corp.
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.
UJB Financial Corp.
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3442
Facsimile No.: 609-987-3435
Summit: The Summit Bancorporation
Attn: Robert G. Cox
One Main Street
Chatham, NJ 07928
Telephone No.: 201-701-2505
Facsimile No.: 201-701-2520
With a copy to: Charles R. Berman, Esq.
Bourne, Noll & Kenyon
382 Springfield Avenue
Springfield, NJ 07901
Telephone No.: 908-277-2200
Facsimile No.: 908-277-6808
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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 Summit and UJB, 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 Summit.
Section 10.10. Business Day. The term "business day" shall mean any day that
is not a Saturday, Sunday or legal holiday in the State of New Jersey or a day
on which banking institutions chartered or licensed by the State of New Jersey
are obligated or authorized by law or executive order to close.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
counterparts by their duly authorized officers and their corporate seals to be
hereunto affixed as of the date first above written.
Corporate Seal UJB Financial Corp.
/s/ Richard F. Ober, Jr. /s/ T. Joseph Semrod
Attest ______________________________ By __________________________________
Richard F. Ober, Jr. T. Joseph Semrod
Secretary Chairman of the Board, President
and Chief Executive Officer
Corporate Seal The Summit Bancorporation
/s/ John F. Kuntz /s/ Robert G. Cox
Attest ______________________________ By __________________________________
John F. Kuntz Robert G. Cox
Secretary President and Chief Executive
Officer
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AMENDMENT NO. 1
DATED DECEMBER 1, 1995
TO THE
AGREEMENT AND PLAN OF MERGER
dated September 10, 1995
between
UJB Financial Corp., a New Jersey business corporation ("UJB"),
and
The Summit Bancorporation, a New Jersey business corporation ("Summit")
(the "Agreement")
WITNESSETH:
WHEREAS, UJB and Summit have determined to amend the Agreement to facilitate
the transactions contemplated thereby;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Agreement,
the parties hereto, intending to be legally bound, agree as follows:
A. Section 1.09 of the Agreement is amended to read in full as follows:
Section 1.09. Restated Certificate of Incorporation and By-Laws. The
Restated Certificate of Incorporation of UJB in force immediately prior to
the Effective Time, amended to provide for the name of the Surviving
Corporation to be "Summit Bancorp.", and amended further to provide for a
class of Preferred Stock designated the "Adjustable Rate Cumulative
Preferred Stock, Series C ($25 stated value)" and having relative rights,
preferences and limitations identical to those of the Summit Preferred,
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. In addition to the
Certificate of Merger required to be filed by UJB pursuant to Section 1.06,
UJB shall file as an additional document together with the Certificate of
Merger a Restated Certificate of Incorporation containing the provisions of
UJB's Restated Certificate of Incorporation in effect on the date hereof
amended as provided in the first sentence of this Section 1.09. The By-Laws
of UJB in force immediately prior to the Effective Time shall be the By-
Laws of the Surviving Corporation, except as duly amended thereafter.
B. Section 1.10(a) of the Agreement is amended to read in full as follows:
Section 1.10. Board of Directors and Officers.
(a) The UJB Board of Directors shall take or cause to be taken all action
necessary to cause the directors comprising the full Board of Directors of
UJB at the Effective Time to include six persons designated prior to the
Effective Time by the Board of Directors of Summit from among those persons
serving as Summit directors on the date hereof and who continue to serve as
Summit directors through the Effective Time (the "Summit Designees"). UJB
shall take all action necessary to provide that the term of two of the
Summit Designees as a director of UJB shall expire at the first annual
meeting of UJB shareholders held after the Effective Time, and to provide
that the remaining four Summit Designees be divided evenly between the
other two classes of directors. One of the Summit Designees shall be, so
long as he is able to serve, Robert G. Cox, who shall be designated to the
class of director whose term expires at the third annual meeting of UJB
shareholders held after the Effective Time. Subject to the provisions of
UJB's Restated Certificate of Incorporation and By-Laws regarding director
qualifications, five Summit Designees shall be nominated to serve at least
one full term of three years in the class of Directors to which they are
initially elected by the Board of Directors of UJB. UJB agrees not to
increase the number of directors above the 13 directorships existing on the
date hereof but Summit agrees UJB may fill any
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vacancies occurring prior to the Effective Time. If required by the New
Jersey Act, all six Summit Designees shall stand for reelection as UJB
directors, subject to the provisions of UJB's Restated Certificate of
Incorporation then in effect, at the first annual meeting of UJB
shareholders held after the Effective Time.
IN WITNESS WHEREOF, Summit and UJB have caused this Agreement to be executed
in counterparts by their duly authorized officers and their corporate seals to
be hereunto affixed as of the date first above written.
UJB FINANCIAL CORP.
CORPORATE SEAL
/s/ John G. Collins
By: ____________________________
John G. Collins, Vice Chairman
/s/ Richard F. Ober, Jr.
Attest: ________________________
Richard F. Ober, Jr., Secretary
THE SUMMIT BANCORPORATION
CORPORATE SEAL
/s/ Robert G. Cox
By: ____________________________
Robert G. Cox, President and
Chief Executive Officer
/s/ John F. Kuntz
Attest: ________________________
John F. Kuntz, Secretary
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APPENDIX B
October , 1995
Board of Directors
The Summit Bancorporation
One Main Street
Chatham, NJ 07928
Gentlemen:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the common shareholders of The Summit
Bancorporation ("Summit") of the exchange ratio in the proposed merger (the
"Merger") of Summit with and into UJB Financial Corp. ("UJB"), pursuant to the
Agreement and Plan of Merger dated as of September 10, 1995 between Summit and
UJB (the "Agreement"). Under the terms of the Merger, each outstanding share
of common stock, no par value, of Summit will be exchanged for 0.90 shares of
common stock, $1.20 par value, of UJB (the "Exchange Ratio"). It is our
understanding that the Merger will be structured as a pooling-of-interests
accounting transaction under generally accepted accounting practices.
Keefe, Bruyette & Woods, Inc. as part of its investment banking business, is
continually engaged in the valuation of banking businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate
and other purposes. As specialists in the securities of banking companies, we
have experience in, and knowledge of, the valuation of banking enterprises. In
the ordinary course of our business as a broker-dealer, we may, from time to
time, purchase securities from, and sell securities to, Summit and UJB and as
a market maker in securities we may from time to time have a long or short
position in, and buy or sell, debt or equity securities of Summit and UJB for
our own account and for the accounts of our customers. To the extent we have
any such position as of the date of this opinion it has been disclosed to
Summit. We have acted exclusively for the Board of Directors of Summit in
rendering this fairness opinion and will receive a fee from Summit for our
services.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Registration Statement on Form S-4, including the Proxy
Statement-Prospectus relating to the Special Meeting of Summit Stockholders at
which holders of the Shares will be asked to approve the Merger; Annual
Reports to Stockholders and Annual Reports on Form 10-K of Summit and UJB for
the four years ended December 31, 1994; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of Summit and UJB, and certain
internal financial analyses and forecasts for Summit prepared by management.
We also have held discussions with members of the senior management of Summit
and UJB regarding the past and current business operations, regulatory
relationships, financial condition and future prospects of their respective
companies. In addition, we have compared certain financial and stock market
information for Summit and UJB with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the banking industry and
performed such other studies and analyses as we considered appropriate.
In conducting our review and arriving at our opinion, we have relied upon
and assumed the accuracy and completeness of all of the financial and other
information provided to us or publicly available and we have not assumed any
responsibility for independently verifying any of such information. We have
relied upon the management of Summit as to the reasonableness and
achievability of the financial and operating forecasts and projections (and
the assumptions and bases therefor) provided to us, and we have assumed that
such forecasts and projections reflect the best currently available estimates
and judgments of Summit and that such forecasts
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and projections will be realized in the amounts and in the time periods
currently estimated by such management. We have also assumed that the
aggregate allowances for loan losses for Summit and UJB are adequate to cover
such losses. In rendering our opinion, we have not made or obtained any
evaluations or appraisals of the property of Summit or UJB, nor have we
examined any individual credit files.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following: (i)
the historical and current financial position and results of operations of
Summit and UJB; (ii) the assets and liabilities of Summit and UJB; and (iii)
the nature and terms of certain other merger transactions involving banks and
bank holding companies. We have also taken into account our assessment of
general economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and our
knowledge of the banking industry generally. Our opinion is necessarily based
upon conditions as they exist and can be evaluated on the date hereof and the
information made available to us through the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio in the Merger is fair, from a financial point
of view, to the common shareholders of Summit.
Very truly yours,
KEEFE, BRUYETTE & WOODS, INC.
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APPENDIX C
December 1, 1995
Board of Directors
UJB Financial Corp.
301 Carnegie Center
Princeton, NJ 08543-2066
Members of the Board:
UJB Financial Corporation ("UJB") and Summit Bancorporation ("Summit")
entered into an Agreement and Plan of Merger (the "Agreement") dated September
10, 1995 pursuant to which Summit will be merged with and into UJB in a
transaction (the "Merger") in which each outstanding share of Summit's common
stock, no par value (the "Summit Shares"), will be converted into the right to
receive 0.90 shares (the "Exchange Ratio") of the common stock, par value
$1.20 per share, of UJB (the "UJB Shares"), all as set forth more fully in the
Agreement. In connection with the Merger, the parties also entered into
agreements dated September 10, 1995 (the "Option Agreements") pursuant to
which UJB and Summit have granted to the other an option to acquire, under
certain circumstances, a certain number of their respective shares
outstanding, all as set forth more fully in the Option Agreements.
You have asked us whether, in our opinion, the proposed Exchange Ratio in
the Merger is fair to the holders of UJB Shares from a financial point of
view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed Summit's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1994 and Summit's
Quarterly Reports on Form 10-Q and the related unaudited financial
information for the quarterly periods ending March 31, 1995, June 30, 1995
and September 30, 1995;
(2) Reviewed UJB's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1994 and UJB's
Quarterly Reports on Form 10-Q and the related unaudited financial
information for the quarterly periods ending March 31, 1995, June 30, 1995
and September 30, 1995;
(3) Reviewed certain information, including financial forecasts and
assumptions regarding incremental revenue and cost savings resulting from
the Merger, relating to the respective business, earnings, assets, and
prospects of Summit and UJB, furnished to us by Summit and UJB;
(4) Conducted discussions with members of senior management of Summit and
UJB concerning their respective financial condition, businesses,
operations, regulatory condition, financial forecasts, and prospects;
(5) Reviewed the historical market prices and trading activity for the
Summit Shares and the UJB Shares and compared them with those of certain
publicly traded companies which we deemed to be relevant;
(6) Compared the results of operations of Summit and UJB with those of
certain companies which we deemed to be relevant;
(7) Compared the proposed financial terms of the Merger contemplated by
the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;
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(8) Analyzed, based upon the information provided by Summit and UJB's
senior management, the pro forma impact of the transaction on the earnings,
book and tangible book value per share, consolidated capitalization and
certain balance sheet and profitability ratios of UJB;
(9) Reviewed the Agreement;
(10) Reviewed the Option Agreements; and
(11) Reviewed such other financial studies and analyses and performed
such other investigations and took into account such other matters as we
deemed appropriate.
In preparing our opinion, we have relied on the accuracy and completeness of
all information supplied or otherwise made available to us by Summit and UJB,
and we have not independently verified such information or undertaken an
independent evaluation or appraisal of the assets or liabilities of Summit or
UJB or any of their subsidiaries, nor have we been furnished any such
evaluation or appraisal. We have also relied upon the managements of Summit
and UJB as to the reasonableness and achievability of the financial forecasts
(and the assumptions and bases therefor) provided to us. In that regard, we
have assumed with your consent that such forecasts, including without
limitation, financial forecasts, projected cost savings and operating
synergies resulting from the Merger and projections regarding future economic
conditions and results of operations reflect the best currently available
estimates and judgments of such respective managements as to the future
financial performance of Summit and UJB. Our opinion is necessarily based on
economic, market and other conditions as in effect on, and the information
made available to us as of, the date hereof. We are not experts in the
evaluation of allowances for loan losses, and we have not assumed any
responsibility for making an independent evaluation of the adequacy of the
allowance for loan losses of Summit and UJB nor have we reviewed any
individual credit files.
We have been retained by the Board of Directors of UJB as an independent
contractor to act as financial advisor to UJB with respect to the Merger and
will receive a fee for our services. We have, in the past, provided financial
advisory, investment banking and other services to Summit and UJB and have
received fees for the rendering of such services. In addition, in the ordinary
course of business, we may actively trade debt and/or equity securities of
Summit and UJB and their respective affiliates for our own account and the
accounts of our customers, and we therefore may from time to time hold a long
or short position in such securities.
Our opinion is addressed to the Board of Directors of UJB and does not
constitute a recommendation to any shareholder of UJB as to how such
shareholder should vote at any shareholder meeting of UJB held in connection
with the Merger.
On the basis of, and subject to the foregoing, we are of the opinion that
the proposed Exchange Ratio in the Merger is fair to the holders of UJB Shares
from a financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
/s/ Michael F. Barry
By___________________________________
Director
Investment Banking Group
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APPENDIX D
UJB FINANCIAL CORP. STOCK OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED BY THIS AGREE-
MENT IS SUBJECT TO RESALE RESTRICTIONS ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED.
STOCK OPTION AGREEMENT, dated as of the 11th day of September, 1995 (this
"Agreement"), between The Summit Bancorporation, a New Jersey corporation
("Grantee"), and UJB Financial Corp., a New Jersey corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have on a date prior to the date hereof, entered
into an Agreement and Plan of Merger, dated as of the 10th day of September,
1995 (the "Merger Agreement"). (Capitalized terms used in this Agreement and
not defined herein but defined in the Merger Agreement shall have the meanings
assigned thereto in the Merger Agreement); and
WHEREAS, as a condition and inducement to Grantee's entering into the Merger
Agreement and the issuance by Grantee of an option to Issuer on terms and
conditions substantially similar to those of this Agreement, and in
consideration therefor, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties
hereto agree as follows:
SECTION 1. Grant of Option. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 11,450,000 fully paid and nonassessable shares of the
common stock, par value $1.20 per share, of Issuer ("Common Stock") at a price
per share of $36.625 (such price, as adjusted as hereinafter provided, the
"Option Price"). The number of shares of Common Stock that may be received
upon the exercise of the Option and the Option Price are subject to adjustment
as herein set forth. In no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the number of shares of
Common Stock then issued and outstanding (without consideration of any shares
of Common Stock subject to or issued pursuant to the Option).
SECTION 2. Exercise of Option. (a) Grantee may exercise the Option, in whole
or part, at any time and from time to time following the occurrence of a
Purchase Event (as defined below); provided that the Option shall terminate
and be of no further force and effect upon the earliest to occur of (i) the
time immediately prior to the Effective Time, (ii) the termination of the
Merger Agreement in accordance with the terms thereof prior to the occurrence
of an Extension Event, other than a termination of the Merger Agreement by the
Grantee pursuant to Section 9.02(c)(ii) thereof (if the breach by Issuer
giving rise to such right of termination is volitional), or (iii) 15 months
after the termination of the Merger Agreement following the occurrence of an
Extension Event (as defined below), or the termination of the Merger Agreement
by Grantee pursuant to Section 9.02(c)(ii) thereof (unless the breach by
Issuer giving rise to such right of termination is non-volitional), and
provided further, that any purchase of Common Stock upon exercise of the
Option shall be subject to applicable law, and provided further, that the
Option may not be exercised, nor may Grantee require Issuer to repurchase the
Option (as set forth in Section 7 hereof), if, at the time of exercise or
repurchase, Grantee is in breach of any covenant or obligation contained in
the Merger Agreement and, if the Merger Agreement has not terminated prior
thereto, such breach would entitle Issuer to terminate the Merger Agreement.
The events described in clauses (i)--(iii) in the preceding sentence are
hereinafter collectively referred to as Exercise Termination Events. As
provided in
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Section 8, the rights set forth therein shall terminate upon an Exercise
Termination Event and, as provided in Sections 6 and 7 hereof, the rights to
deliver requests pursuant to Sections 6 or 7 shall terminate 12 months after
an Exercise Termination Event, subject, in such case, to the provisions of
Section 9.
(b) The term "Extension Event" shall mean any of the following events or
transactions occurring without the Grantee's prior written consent after the
date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer Subsidiary"),
shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Securities Exchange Act"), and the rules and regulations thereunder)
other than Grantee or any of its subsidiaries (each a "Grantee Subsidiary")
or the Board of Directors of Issuer shall have recommended that the
shareholders of Issuer approve or accept any Acquisition Transaction with
any person other than Grantee or any Grantee Subsidiary. For purposes of
this Agreement, "Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving Issuer or any of
Issuer's banking subsidiaries ("Bank Subsidiaries"), (x) a purchase, lease
or other acquisition of 10% or more of the aggregate value of the assets or
deposits of Issuer or any Bank Subsidiary, (y) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of
Issuer or a Bank Subsidiary, or (z) any substantially similar transaction,
provided, however, that in no event shall (i) any merger, consolidation or
similar transaction involving Issuer or any Bank Subsidiary in which the
voting securities of Issuer outstanding immediately prior thereto continue
to represent (either by remaining outstanding or being converted into
voting securities of the surviving entity of any such transaction) at least
65% of the combined voting power of the voting securities of the Issuer or
the surviving entity outstanding after the consummation of such merger,
consolidation, or similar transaction, or (ii) any internal merger or
consolidation involving only Issuer and/or Issuer Subsidiaries, be deemed
to be an Acquisition Transaction, provided that any such transaction is not
entered into in violation of the terms of the Merger Agreement;
(ii) Any person (other than Grantee or any Grantee Subsidiary) shall have
acquired beneficial ownership or the right to acquire beneficial ownership
of securities representing 10% or more of the aggregate voting power of
Issuer or any Bank Subsidiary (the term "beneficial ownership" for purposes
of this Agreement having the meaning assigned thereto in Section 13(d) of
the Securities Exchange Act, and the rules and regulations thereunder);
(iii) Any person other than Grantee or any Grantee Subsidiary shall have
made a bona fide proposal to Issuer or its shareholders, by public
announcement or written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction (including,
without limitation, any situation in which any person other than Grantee or
any Grantee Subsidiary shall have commenced (as such term is defined in
Rule 14d-2 under the Exchange Act), or shall have filed a registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to, a tender offer or exchange offer to purchase any
shares of Common Stock such that, upon consummation of such offer, such
person would own or control securities representing 10% or more of the
aggregate voting power of Issuer or any Bank Subsidiary);
(iv) After any person other than Grantee or any Grantee Subsidiary has
made or disclosed an intention to make a proposal to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
(v) Any person other than Grantee or any Grantee Subsidiary shall have
filed an application with, or given a notice to, whether in draft or final
form, the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other governmental authority or regulatory or
administrative agency or
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commission, domestic or foreign (each, a "Governmental Authority"), for
approval to engage in an Acquisition Transaction; or
(vi) the holders of Common Stock shall not have approved the Merger
Agreement at the meeting of such shareholders held for the purpose of
voting on the Merger Agreement, such meeting shall not have been called by
the Board of Directors of Issuer in accordance with Section 5.03 of the
Merger Agreement or held or shall have been canceled prior to termination
of the Merger Agreement or Issuer's Board of Directors shall have withdrawn
or modified in a manner adverse to the consummation of the Merger the
recommendation of Issuer's Board of Directors with respect to the Merger
Agreement, in each case after an Extension Event;
(vii) any Purchase Event (as defined below).
(c) The term "Purchase Event" shall mean either of the following events or
transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or any Grantee
Subsidiary of beneficial ownership of securities representing 25% or more
of the aggregate voting power of Issuer or any Bank Subsidiary; or
(ii) The occurrence of an Extension Event described in Section 2(b)(i)
except that the percentage referred to in clauses (x) and (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Extension Event or Purchase Event; provided however, that the giving of such
notice by Issuer shall not be a condition to the right of Grantee to exercise
the Option.
(e) In the event that Grantee is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares of Common Stock it will purchase pursuant to such exercise, (ii) a
place and date not earlier than three business days nor later than 90 business
days from the Notice Date for the closing of such purchase (the "Closing
Date") and (iii) that the proposed exercise of the Option shall be revocable
by Grantee in the event that the transaction constituting a Purchase Event
that gives rise to such written notice shall not have been consummated prior
to exercise of the Option; provided that if prior notification to or approval
of the Federal Reserve Board or any other Governmental Authority is required
in connection with such purchase, Grantee shall promptly file the required
notice or application for approval and shall expeditiously process the same
and the period of time that otherwise would run pursuant to this sentence
shall run from the later of (x) the date on which any required notification
periods have expired or been terminated and (y) the date on which such
approvals have been obtained and any requisite waiting period or periods shall
have expired. For purposes of Section 2(a), any exercise of the Option shall
be deemed to occur on the Notice Date relating thereto. Grantee shall have the
right to revoke its proposed exercise of the Option in the event that the
transaction constituting a Purchase Event that gives rise to such right to
exercise shall not have been consummated prior to exercise of the Option,
pursuant to the statement of such right in the written notice exercising the
Option as provided in clause 2(e)(iii) above.
(f) At the closing referred to in Section 2(e), Grantee shall surrender this
Agreement (and the Option granted hereby) to Issuer and pay to Issuer the
Option Price for the shares of Common Stock purchased pursuant to the exercise
of the Option in immediately available funds by wire transfer to a bank
account designated by Issuer; provided, however, that failure or refusal of
Issuer to designate such a bank account shall not preclude Grantee from
exercising the Option.
(g) At such closing, simultaneously with the delivery of the Option Price in
immediately available funds as provided in Section 2(f), Issuer shall deliver
to Grantee a certificate or certificates representing the number of shares of
Common Stock purchased by Grantee and, if the Option should be exercised in
part only, a new Option Agreement granting a new Option evidencing the rights
of Grantee thereof to purchase the balance of the shares of Common Stock
purchasable hereunder. All shares of Common Stock issued upon exercise of the
Option shall be accompanied by the same UJB Financial Corp. Shareholder Rights
as held by a majority of the holders of outstanding Common Stock.
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(h) Certificates for Common Stock delivered at a closing hereunder shall be
endorsed with a restrictive legend substantially as follows:
"The transfer of the shares represented by this certificate is subject to
resale restrictions arising under the Securities Act of 1933, as amended,
and to certain provisions of an agreement between The Summit Bancorporation
and UJB Financial Corp. ("Issuer") dated as of the 11th day of September,
1995. A copy of such agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without charge upon receipt by
Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission (the "SEC"), or an opinion of counsel, in form and
substance satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of the written notice of exercise
of the Option provided for in Section 2(e) and the tender of the Option Price
on the Closing Date in immediately available funds, Grantee shall be deemed to
be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of Issuer shall then
be closed or that certificates representing such shares of Common Stock shall
not then actually be delivered to Grantee. Issuer shall pay all expenses and
any and all United States federal, state and local taxes and other charges
that may be payable in connection with the preparation, issue and delivery of
stock certificates under this Section 2 in the name of Grantee or its nominee.
SECTION 3. Reservation of Shares. Issuer agrees: (i) that it shall at all
times until the termination of this Agreement have reserved for issuance upon
the exercise of the Option that number of authorized shares of Common Stock
equal to the maximum number of shares of Common Stock at any time and from
time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid,
nonassessable, and delivered free and clear of all claims, liens, encumbrances
and security interests and not subject to any preemptive rights; (ii) that it
will not, by amendment of its certificate of incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by
any other voluntary act, avoid or seek to avoid the observance or performance
of any of the covenants, stipulations or conditions to be observed or
performed hereunder by Issuer; (iii) promptly to take all action as may from
time to time be required (including (x) complying with all premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
(S) 18a and regulations promulgated thereunder and (y) in the event, under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"), or the Change in
Bank Control Act of 1978, as amended, or any state banking law, prior approval
of or notice to the Federal Reserve Board or to any other Governmental
Authority is necessary before the Option may be exercised, cooperating with
Grantee in preparing such applications or notices and providing such
information to the Federal Reserve Board and each other Governmental Authority
as they may require) in order to permit Grantee to exercise the Option and
Issuer duly and effectively to issue shares of Common Stock pursuant hereto;
and (iv) to take all action provided herein to protect the rights of Grantee
against dilution.
SECTION 4. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of
Issuer, for other agreements providing for Options of different denominations
entitling the holder thereof to purchase, on the same terms and subject to the
same conditions as are set forth herein, in the aggregate the same number of
shares of Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any agreements and related options for which
this Agreement (and the Option granted
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hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
SECTION 5. Adjustment upon Change of Capitalization. The number of shares of
Common Stock purchasable upon the exercise of the Option shall be subject to
adjustment from time to time as follows:
(a) Subject to the last sentence of Section 1, in the event of any change
in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted and proper
provision shall be made so that, in the event that any additional shares of
Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the
Option), the number of shares of Common Stock that remain subject to the
Option shall be increased so that, after such issuance and together with
shares of Common Stock previously issued pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing changes in the
Common Stock), it equals 19.9% of the number of shares of Common Stock then
issued and outstanding (without consideration of any shares of Common Stock
subject to or issued pursuant to the Option).
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Common Stock purchasable after the
adjustment. In no event shall the Option Price be adjusted to less than the
par value of the Common Stock to be issued at such Option Price.
(c) It is intended by the parties hereto that the adjustments provided by
this Section 5 shall fully preserve the economic benefits of this Agreement
for Grantee.
SECTION 6. Registration Rights.
(a) Demand Registration Rights. After the occurrence of a Purchase Event
that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee (whether on its own behalf or on behalf of any subsequent
holder of the Option (or part thereof) delivered prior to an Exercise
Termination Event or at the request of a holder of any of the shares of Common
Stock issued pursuant hereto) delivered no later than 12 months after an
Exercise Termination Event, promptly prepare, file and keep current a shelf
registration statement under the Securities Act covering this Option or any
shares issued and issuable pursuant to the Option (the "Option Shares") and
shall use its best efforts to cause such registration statement to become
effective and remain current and to qualify this Option or any such Option
Shares or other securities for sale under any applicable state securities laws
in order to permit the sale or other disposition of this Option or any Option
Shares in accordance with any plan of disposition requested by Grantee;
provided, however, that Issuer may postpone filing a registration statement
relating to a registration request by Grantee under this Section 6 for a
period of time (not in excess of 90 days) if in its judgment such filing would
require the disclosure of material information that Issuer has a bona fide
business purpose for preserving as confidential. Issuer will use its best
efforts to cause such registration statement first to become effective as soon
as practicable after the filing thereof and then to remain effective for such
period not in excess of 180 days from the day such registration statement
first becomes effective, or such shorter time as may be necessary to effect
such sales or other dispositions. Grantee shall have the right to demand two
such registrations. Grantee shall provide all information reasonably requested
by Issuer for inclusion in any registration statement to be filed hereunder.
In connection with any such registration, Issuer and Grantee shall provide
each other with representations, warranties, and other agreements customarily
given in connection with such registrations. If requested by any Grantee in
connection with such registration, Issuer and
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Grantee shall become a party to any underwriting agreement relating to the
sale of Option Shares, but only to the extent of obligating themselves in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements. Notwithstanding the
foregoing, if Grantee revokes any exercise notice or fails to exercise any
Option with respect to any exercise notice pursuant to Section 2(e), Issuer
shall not be obligated to continue any registration process with respect to
the sale of Option Shares.
(b) Additional Persons With Registration Rights. Upon receiving any request
under this Section 6 from any Grantee, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
(c) Expenses. Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and
expenses of counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being
registered, printing expenses and the costs of special audits or "cold
comfort" letters, expenses of underwriters, excluding discounts and
commissions but including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses of any necessary
special experts) in connection with each registration pursuant to this Section
6 (including the related offerings and sales by holders of Option Shares) and
all other qualifications, notification or exemptions pursuant to Section 6.
(d) Indemnification. In connection with any registration under this Section
6, Issuer hereby indemnifies the Grantee, and each officer, director and
controlling person of Grantee, and each underwriter thereof, including each
person, if any who controls such holder or underwriter within the meaning of
Section 15 of the Securities Act, against all expenses, losses, claims,
damages and liabilities caused by any untrue, or alleged untrue, statement
contained in any registration statement or prospectus or notification or
offering circular (including any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission, or alleged omission, to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such expenses,
losses, claims, damages or liabilities of such indemnified party are caused by
any untrue statement or alleged untrue statement that was included by Issuer
in any such registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance upon
and in conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director and controlling person of Issuer shall be indemnified by such
Grantee, or by such underwriter, as the case may be, for all such expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged
untrue, statement, that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such underwriter,
as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 6(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 6(d), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not relieve it of
any liability which it may otherwise have to any indemnified party under this
Section 6(d). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party
unless (i) the indemnifying party either agrees to pay the same, (ii) the
indemnifying party fails to assume the defense of such action with counsel
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satisfactory to the indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be available to the
indemnifying party that may be contrary to the interests of the indemnified
party. No indemnifying party shall be liable for the fees and expenses of more
than one separate counsel for all indemnified parties or for any settlement
entered into without its consent, which consent may not be unreasonably
withheld.
If the indemnification provided for in this Section 6(d) is unavailable to a
party otherwise entitled to be indemnified in respect of any expenses, losses,
claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to
be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of Issuer, the Grantee and the underwriters in connection with the statements
or omissions which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
amount paid or payable by a party as a result of the expenses, losses, claims,
damages and liabilities referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, however, that in no
case shall any Grantee be responsible, in the aggregate, for any amount in
excess of the net offering proceeds attributable to its Option Shares included
in the offering. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any Grantee to indemnify shall be several
and not joint with other Grantees.
(e) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit
the expeditious sale at any time of any Option Shares by the Grantee thereof
in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144A. Issuer shall at its expense provide the Grantee with any information
necessary in connection with the completion and filing of any reports or forms
required to be filed by Grantee under the Securities Act or the Exchange Act,
or required pursuant to any state securities laws or the rules of any stock
exchange.
SECTION 7. Repurchase at the Option of Grantee or Owner. (a) Upon the
occurrence of a Repurchase Event (as defined below), (i) at the request (the
date of such request being the "Request Date") of Grantee, delivered prior to
an Exercise Termination Event, Issuer (or any successor thereto) shall
repurchase the Option from Grantee at a price (the "Option Repurchase Price")
equal to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which
this Option may then be exercised and (ii) at the request (the date of such
request being the "Request Date") of the owner of Option Shares from time to
time (the "Owner"), delivered within 12 months of the occurrence of a
Repurchase Event (or such later period as provided in Section 9), Issuer shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated.
The term "market/offer price" shall mean the highest of (i) the price per
share of Common Stock at which a tender offer or exchange offer therefor has
been made after the date hereof and on or prior to the Request Date, (ii) the
price per share of Common Stock paid or to be paid by any third party pursuant
to an agreement with Issuer (whether by way of a merger, consolidation or
otherwise), (iii) the highest last sale price for shares of Common Stock
within the 90-day period ending on the Request Date quoted on the New York
Stock Exchange (as reported by The Wall Street Journal, or, if not reported
thereby, another authoritative source), (iv) in the event of a sale of all or
substantially all of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally-recognized independent investment banking firm
selected by Grantee or the Owner, as the case may be, divided by the number of
shares of Common Stock outstanding at the time of such sale. In determining
the market/offer price, the value of consideration other than cash shall be
determined by a nationally-recognized independent investment banking firm
selected by Grantee or the Owner, as the case may be, whose determination
shall be conclusive and binding on all parties.
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(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within the later to
occur of (x) five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the time that is immediately prior to the
occurrence of a Repurchase Event, Issuer shall deliver or cause to be
delivered to Grantee the Option Repurchase Price or to the Owner the Option
Share Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited from so delivering under applicable law and regulation or as a
consequence of administrative policy.
(c) Issuer hereby undertakes to use its reasonable efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from repurchasing the Option and/or the Option Shares in full, Issuer shall
promptly so notify Grantee and/or the Owner and thereafter deliver or cause to
be delivered, from time to time, to Grantee and/or the Owner, as appropriate,
the portion of the Option Repurchase Price and the Option Share Repurchase
Price, respectively, that it is no longer prohibited from delivering, within
five business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to Section 7(b) is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to
Grantee and/or the Owner, as appropriate, the Option Repurchase Price or the
Option Share Repurchase Price, respectively, in full or in any substantial
part, Grantee or the Owner, as appropriate, may revoke its notice of
repurchase of the Option or the Option Shares either in whole or in part
whereupon, in the case of a revocation in part, Issuer shall promptly (i)
deliver to Grantee and/or the Owner, as appropriate, that portion of the
Option Purchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement
evidencing the right of Grantee to purchase that number of shares of Common
Stock equal to the number of shares of Common Stock purchasable immediately
prior to the delivery of the notice of repurchase less the number of shares of
Common Stock covered by the portion of the Option repurchased or (B) to the
Owner, a certificate for the number of Option Shares covered by the
revocation.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or
similar transaction involving Issuer or any Bank Subsidiary any purchase,
lease or other acquisition of all or a substantial portion of the assets of
Issuer or any Bank Subsidiary, other than any such transaction which would not
constitute an Acquisition Transaction pursuant to the proviso to Section
2(b)(i) hereof or (ii) upon the acquisition by any person of beneficial
ownership of securities representing 50% or more of the aggregate voting power
of Issuer or any Bank Subsidiary, provided that no such event shall constitute
a Repurchase Event unless an Extension Event shall have occurred prior to an
Exercise Termination Event. The parties hereto agree that Issuer's obligations
to repurchase the Option or Option Shares under this Section 7 shall not
terminate upon the occurrence of an Exercise Termination Event if an Extension
Event shall have occurred prior to the occurrence of an Exercise Termination
Event.
(e) Issuer shall not enter into any agreement with any party (other than
Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other party thereto assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole
discretion, to require such other party to perform such obligations.
SECTION 8. Substitute Option in the Event of Corporate Change. (a) In the
event that prior to an Exercise Termination Event, Issuer shall enter into an
agreement (i) to consolidate or merge with any person, other than Grantee or a
Grantee Subsidiary, and shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such merger, the
then
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outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other person or cash or any other property or
the then outstanding shares of Common Stock shall after such merger represent
less than 50% of the aggregate voting power of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of such transaction and upon the
terms and conditions set forth herein, be converted into, or exchanged for, an
option (the "Substitute Option"), at the election of Grantee, of either (x)
the Acquiring Corporation (as defined below) or (y) any person that controls
the Acquiring Corporation (the Acquiring Corporation and any such controlling
person being hereinafter referred to as the Substitute Option Issuer)
(b) The Substitute Option shall be exercisable for such number of shares of
the Substitute Common Stock (as is hereinafter defined) as is equal to the
market/offer price (as defined in Section 7) multiplied by the number of
shares of the Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as is hereinafter defined) The exercise price of
the Substitute Option per share of the Substitute Common Stock (the
"Substitute Purchase Price") shall then be equal to the Option Price
multiplied by a fraction in which the numerator is the number of shares of the
Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in
no event less advantageous to Grantee, provided further that the terms of the
Substitute Option shall include (by way of example and not limitation)
provisions for the repurchase of the Substitute Option and Substitute Common
Stock by the Substitute Option Issuer on the same terms and conditions as
provided in Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or any substantial part
of the Issuer's assets (or the assets of Issuer Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued by the
Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Average Price" shall mean the average last sale price of a share
of the Substitute Common Stock (as reported by The Wall Street Journal or,
if not reported therein, by another authoritative source) for the one year
immediately preceding the consolidation, merger or sale in question, but in
no event higher than the last sale price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common stock issued by
Issuer, the person merging into Issuer or by any company which controls or
is controlled by such person, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to the exercise of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (e), the Substitute Option Issuer shall make
a cash payment to Grantee equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in the clause (e). This difference in value shall be determined by
a nationally recognized investment banking firm selected by Grantee and the
Substitute Option Issuer.
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SECTION 9. Extension of Time for Regulatory Approvals. Notwithstanding
Sections 2(e), 6, 7 and 11, if Grantee has given the notice referred to in one
or more of such Sections, the exercise of the rights specified in any such
Section shall be extended (a) if the exercise of such rights requires
obtaining regulatory approvals, to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and (b) to the extent
necessary to avoid liability under Section 16(b) of the Securities Exchange
Act by reason of such exercise; provided that in no event shall any closing
date occur more than 18 months after the related Notice Date, and, if the
closing date shall not have occurred within such period due to the failure to
obtain any required approval by the Federal Reserve Board or any other
Governmental Authority despite the reasonable efforts of Issuer or the
Substitute Option Issuer, as the case may be, to obtain such approvals, the
exercise of the Option shall be deemed to have been rescinded as of the
related Notice Date. In the event (a) Grantee receives official notice that an
approval of the Federal Reserve Board or any other Governmental Authority
required for the purchase and sale of the Option Shares will not be issued or
granted or (b) a closing date has not occurred within 18 months after the
related Notice Date due to the failure to obtain any such required approval,
Grantee shall be entitled to exercise the Option in connection with the resale
of the Option Shares pursuant to a registration statement as provided in
Section 6. Nothing contained in this Agreement shall restrict Grantee from
specifying alternative exercising of rights pursuant to Sections 2(e), 6, 7
and 11, hereof in the event that the exercising of any such rights shall not
have occurred due to the failure to obtain any required approval referred to
in this Section 9.
SECTION 10. Issuer Warranties. Issuer hereby represents and warrants to
Grantee as follows:
(a) Issuer has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly approved by the
Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement
of creditors' rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrances and security interests and not subject to
any preemptive rights.
(c) Upon receipt of the necessary regulatory approvals as contemplated by
this Agreement, the execution, delivery and performance of this Agreement
does not or will not, and the consummation by Issuer of any of the
transactions contemplated hereby will not, constitute or result in (i) a
breach or violation of, or a default under, its certificate of
incorporation or by-laws, or the comparable governing instruments of any of
its subsidiaries, or (ii) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-
governmental permit or license to which it or any of its subsidiaries is
subject, that would in any case give any other person the ability to
prevent or enjoin Issuer's performance under this Agreement in any material
respect.
SECTION 11. Assignment of Option by Grantee. (a) Neither of the parties
hereto may assign any of its rights or delegate any of its obligations under
this Agreement or the Option created hereunder to any other person without the
express written consent of the other party, except that Grantee may assign
this Agreement to a wholly
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owned subsidiary of Grantee and Grantee may assign its rights hereunder in
whole or in part after the occurrence of a Purchase Event; provided, however,
that until the date 15 days following the date at which the Federal Reserve
Board approves an application by Grantee under the BHC Act to acquire the
shares of Common Stock subject to the Option, Grantee may not assign its
rights under the Option except in (i) a widely dispersed public distribution,
(ii) a private placement in which no one party acquires the right to purchase
securities representing in excess of 2% of the aggregate voting power of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution
on Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board. Grantee will pay any reasonable out-of-pocket costs and expenses of
Issuer in connection with any such assignment. The term "Grantee" as used in
this Agreement shall also be deemed to refer to Grantee's permitted assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of Grantee
hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
"The transfer of the option represented by this assignment and the related
option agreement is subject to resale restrictions arising under the
Securities Act of 1933, as amended and to certain provisions of an
agreement between The Summit Bancorporation and UJB Financial Corp.
("Issuer") dated as of the 11th day of September, 1995. A copy of such
agreement is on file at the principal office of Issuer and will be provided
to any permitted assignee of the Option without change upon receipt by
Issuer of a written request therefor."
It is understood and agreed that (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel, in form and substance satisfactory to Issuer, to the effect that such
legend is not required for purposes of the Securities Act; (ii) the reference
to the provisions of this Agreement in the above legend shall be removed by
delivery of substitute assignments without such reference if the Option has
been sold or transferred in compliance with the provisions of this Agreement
and under circumstances that do not require the retention of such reference;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
assignments shall bear any other legend as may be required by law.
SECTION 12. Application for Regulatory Approval. If Grantee is entitled to
exercise the Option and has sent a notice to Issuer pursuant to Section 2(e),
each of Grantee and Issuer will use its reasonable efforts to make all filings
with, and to obtain consents of, all third parties and the Federal Reserve
Board and other Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
making application for listing or quotation, as the case may be, of the shares
of Common Stock issuable hereunder on the New York Stock Exchange and applying
to the Federal Reserve Board under the BHC Act and to state banking
authorities for approval to acquire the shares issuable hereunder.
SECTION 13. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties shall hereto be
enforceable by either party hereto through injunctive or other equitable
relief. Both parties further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such equitable
relief and that this provision is without prejudice to any other rights that
the parties hereto may have for any failure to perform this Agreement.
SECTION 14. Separability of Provisions. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and
effect, and shall in no way be affected, impaired or invalidated. If for any
reason such court or regulatory agency determines that Grantee is not
permitted to acquire, or Issuer is not permitted to repurchase, pursuant to
Section 7, the full number of shares of Common Stock provided in Section 1 (as
adjusted pursuant hereto), it is the express intention of Issuer to allow
Grantee to acquire or to require
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Issuer to repurchase such lesser number of shares as may be permissible,
without any amendment or modification hereof.
SECTION 15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when
delivered in person, by cable, telegram, telecopy or telex, or by registered
or certified mail (postage prepaid, return receipt requested) at the
respective addresses of the parties set forth in the Merger Agreement.
SECTION 16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey.
SECTION 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 18. Expenses. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
SECTION 19. Entire Agreement; No Third-Party Beneficiaries. Except as
otherwise expressly provided herein or in the Merger Agreement, this Agreement
contains the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Nothing
in this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, and their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20. Merger Agreement. Nothing contained in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
SECTION 21. Majority in Interest. In the event that any selection or
determination is to be made by Grantee or the Owner hereunder and at the time
of such selection or determination there is more than one Grantee or Owner,
such selection shall be made by a majority in interest of such Grantees or
Owners.
SECTION 22. Further Assurances. In the event of any exercise of the Option
by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
SECTION 23. No Rights as Shareholder. Except to the extent Grantee exercises
the Option, Grantee shall have no rights to vote or receive dividends or have
any other rights as a shareholder with respect to shares of Common Stock
covered hereby.
SECTION 24. Grantee Representation. The Option and any Option Shares or
other securities acquired by Grantee upon exercise of the Option are not
being, and will not be, as the case may be, acquired with a view to the public
distribution thereof in the United States except as provided for in Sections 6
and 11 hereof and neither the Option nor any Option Shares or other securities
acquired by Grantee upon exercise of the Option will be transferred or
otherwise disposed of by Grantee except in a transaction registered or exempt
from registration under the Securities Act.
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IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
The Summit Bancorporation
/s/ Robert G. Cox
By: _________________________________
UJB Financial Corp.
/s/ T. Joseph Semrod
By: _________________________________
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APPENDIX E
THE SUMMIT BANCORPORATION STOCK OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED BY THIS
AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
STOCK OPTION AGREEMENT, dated as of the 11th day of September, 1995 (this
"Agreement"), between UJB Financial Corp., a New Jersey corporation
("Grantee"), and The Summit Bancorporation, a New Jersey corporation
("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have on a date prior to the date hereof, entered
into an Agreement and Plan of Merger, dated as of the 10th day of September,
1995 (the "Merger Agreement"). (Capitalized terms used in this Agreement and
not defined herein but defined in the Merger Agreement shall have the meanings
assigned thereto in the Merger Agreement); and
WHEREAS, as a condition and inducement to Grantee's entering into the Merger
Agreement and the issuance by Grantee of an option to Issuer on terms and
conditions substantially similar to those of this Agreement, and in
consideration therefor, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties
hereto agree as follows:
SECTION 1. Grant of Option. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 6,730,000 fully paid and nonassessable shares of the
common stock, no par value, of Issuer ("Common Stock") at a price per share of
$26.75 (such price, as adjusted as hereinafter provided, the "Option Price").
The number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein set forth.
In no event shall the number of shares of Common Stock for which this Option
is exercisable exceed 19.9% of the number of shares of Common Stock then
issued and outstanding (without consideration of any shares of Common Stock
subject to or issued pursuant to the Option).
SECTION 2. Exercise of Option. (a) Grantee may exercise the Option, in whole
or part, at any time and from time to time following the occurrence of a
Purchase Event (as defined below); provided that the Option shall terminate
and be of no further force and effect upon the earliest to occur of (i) the
time immediately prior to the Effective Time, (ii) the termination of the
Merger Agreement in accordance with the terms thereof prior to the occurrence
of an Extension Event, other than a termination of the Merger Agreement by the
Grantee pursuant to Section 9.02(c)(ii) thereof (if the breach by Issuer
giving rise to such right of termination is volitional), or (iii) 15 months
after the termination of the Merger Agreement following the occurrence of an
Extension Event (as defined below), or the termination of the Merger Agreement
by Grantee pursuant to Section 9.02(c)(ii) thereof (unless the breach by
Issuer giving rise to such right of termination is non-volitional), and
provided further, that any purchase of Common Stock upon exercise of the
Option shall be subject to applicable law, and provided further, that the
Option may not be exercised, nor may Grantee require Issuer to repurchase the
Option (as set forth in Section 7 hereof), if, at the time of exercise or
repurchase, Grantee is in breach of any covenant or obligation contained in
the Merger Agreement and, if the Merger Agreement has not terminated prior
thereto, such breach would entitle Issuer to terminate the Merger Agreement.
The events described in clauses (i)--(iii) in the preceding sentence are
hereinafter collectively referred to as Exercise Termination Events. As
provided in Section 8, the rights set forth therein shall terminate upon an
Exercise Termination Event and, as provided in Sections 6 and 7 hereof, the
rights to deliver requests pursuant to Sections 6 or 7 shall terminate 12
months after an Exercise Termination Event, subject, in such case, to the
provisions of Section 9.
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(b) The term "Extension Event" shall mean any of the following events or
transactions occurring without the Grantee's prior written consent after the
date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer Subsidiary"),
shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Securities Exchange Act"), and the rules and regulations thereunder)
other than Grantee or any of its subsidiaries (each a "Grantee Subsidiary")
or the Board of Directors of Issuer shall have recommended that the
shareholders of Issuer approve or accept any Acquisition Transaction with
any person other than Grantee or any Grantee Subsidiary. For purposes of
this Agreement, "Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving Issuer or any of
Issuer's banking subsidiaries ("Bank Subsidiaries"), (x) a purchase, lease
or other acquisition of 10% or more of the aggregate value of the assets or
deposits of Issuer or any Bank Subsidiary, (y) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of
Issuer or a Bank Subsidiary, or (z) any substantially similar transaction,
provided, however, that in no event shall (i) any merger, consolidation or
similar transaction involving Issuer or any Bank Subsidiary in which the
voting securities of Issuer outstanding immediately prior thereto continue
to represent (either by remaining outstanding or being converted into
voting securities of the surviving entity of any such transaction) at least
65% of the combined voting power of the voting securities of the Issuer or
the surviving entity outstanding after the consummation of such merger,
consolidation, or similar transaction, or (ii) any internal merger or
consolidation involving only Issuer and/or Issuer Subsidiaries, be deemed
to be an Acquisition Transaction, provided that any such transaction is not
entered into in violation of the terms of the Merger Agreement;
(ii) Any person (other than Grantee or any Grantee Subsidiary) shall have
acquired beneficial ownership or the right to acquire beneficial ownership
of securities representing 10% or more of the aggregate voting power of
Issuer or any Bank Subsidiary (the term "beneficial ownership" for purposes
of this Agreement having the meaning assigned thereto in Section 13(d) of
the Securities Exchange Act, and the rules and regulations thereunder);
(iii) Any person other than Grantee or any Grantee Subsidiary shall have
made a bona fide proposal to Issuer or its shareholders, by public
announcement or written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction (including,
without limitation, any situation in which any person other than Grantee or
any Grantee Subsidiary shall have commenced (as such term is defined in
Rule 14d-2 under the Exchange Act), or shall have filed a registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to, a tender offer or exchange offer to purchase any
shares of Common Stock such that, upon consummation of such offer, such
person would own or control securities representing 10% or more of the
aggregate voting power of Issuer or any Bank Subsidiary);
(iv) After any person other than Grantee or any Grantee Subsidiary has
made or disclosed an intention to make a proposal to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
(v) Any person other than Grantee or any Grantee Subsidiary shall have
filed an application with, or given a notice to, whether in draft or final
form, the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other governmental authority or regulatory or
administrative agency or commission, domestic or foreign (each, a
"Governmental Authority"), for approval to engage in an Acquisition
Transaction; or
(vi) the holders of Common Stock shall not have approved the Merger
Agreement at the meeting of such shareholders held for the purpose of
voting on the Merger Agreement, such meeting shall not have been called by
the Board of Directors of Issuer in accordance with Section 4.03 of the
Merger Agreement
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or held or shall have been canceled prior to termination of the Merger
Agreement or Issuer's Board of Directors shall have withdrawn or modified
in a manner adverse to the consummation of the Merger the recommendation of
Issuer's Board of Directors with respect to the Merger Agreement, in each
case after an Extension Event;
(vii) any Purchase Event (as defined below).
(c) The term "Purchase Event" shall mean either of the following events or
transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or any Grantee
Subsidiary of beneficial ownership of securities representing 25% or more
of the aggregate voting power of Issuer or any Bank Subsidiary; or
(ii) The occurrence of an Extension Event described in Section 2(b)(i)
except that the percentage referred to in clauses (x) and (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Extension Event or Purchase Event; provided however, that the giving of such
notice by Issuer shall not be a condition to the right of Grantee to exercise
the Option.
(e) In the event that Grantee is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares of Common Stock it will purchase pursuant to such exercise, (ii) a
place and date not earlier than three business days nor later than 90 business
days from the Notice Date for the closing of such purchase (the "Closing
Date") and (iii) that the proposed exercise of the Option shall be revocable
by Grantee in the event that the transaction constituting a Purchase Event
that gives rise to such written notice shall not have been consummated prior
to exercise of the Option; provided that if prior notification to or approval
of the Federal Reserve Board or any other Governmental Authority is required
in connection with such purchase, Grantee shall promptly file the required
notice or application for approval and shall expeditiously process the same
and the period of time that otherwise would run pursuant to this sentence
shall run from the later of (x) the date on which any required notification
periods have expired or been terminated and (y) the date on which such
approvals have been obtained and any requisite waiting period or periods shall
have expired. For purposes of Section 2(a), any exercise of the Option shall
be deemed to occur on the Notice Date relating thereto. Grantee shall have the
right to revoke its proposed exercise of the Option in the event that the
transaction constituting a Purchase Event that gives rise to such right to
exercise shall not have been consummated prior to exercise of the Option,
pursuant to the statement of such right in the written notice exercising the
Option as provided in clause 2(e)(iii) above.
(f) At the closing referred to in Section 2(e), Grantee shall surrender this
Agreement (and the Option granted hereby) to Issuer and pay to Issuer the
Option Price for the shares of Common Stock purchased pursuant to the exercise
of the Option in immediately available funds by wire transfer to a bank
account designated by Issuer; provided, however, that failure or refusal of
Issuer to designate such a bank account shall not preclude Grantee from
exercising the Option.
(g) At such closing, simultaneously with the delivery of the Option Price in
immediately available funds as provided in Section 2(f), Issuer shall deliver
to Grantee a certificate or certificates representing the number of shares of
Common Stock purchased by Grantee and, if the Option should be exercised in
part only, a new Option Agreement granting a new Option evidencing the rights
of Grantee thereof to purchase the balance of the shares of Common Stock
purchasable hereunder. All shares of Common Stock issued upon exercise of the
Option shall be accompanied by the same The Summit Bancorporation Shareholder
Rights as held by a majority of the holders of outstanding Common Stock.
(h) Certificates for Common Stock delivered at a closing hereunder shall be
endorsed with a restrictive legend substantially as follows:
"The transfer of the shares represented by this certificate is subject to
resale restrictions arising under the Securities Act of 1933, as amended,
and to certain provisions of an agreement between UJB Financial Corp.
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and The Summit Bancorporation ("Issuer") dated as of the 11th day of
September, 1995. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof without charge
upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission (the "SEC"), or an opinion of counsel, in form and
substance satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of the written notice of exercise
of the Option provided for in Section 2(e) and the tender of the Option Price
on the Closing Date in immediately available funds, Grantee shall be deemed to
be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of Issuer shall then
be closed or that certificates representing such shares of Common Stock shall
not then actually be delivered to Grantee. Issuer shall pay all expenses and
any and all United States federal, state and local taxes and other charges
that may be payable in connection with the preparation, issue and delivery of
stock certificates under this Section 2 in the name of Grantee or its nominee.
SECTION 3. Reservation of Shares. Issuer agrees: (i) that it shall at all
times until the termination of this Agreement have reserved for issuance upon
the exercise of the Option that number of authorized shares of Common Stock
equal to the maximum number of shares of Common Stock at any time and from
time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid,
nonassessable, and delivered free and clear of all claims, liens, encumbrances
and security interests and not subject to any preemptive rights; (ii) that it
will not, by amendment of its certificate of incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by
any other voluntary act, avoid or seek to avoid the observance or performance
of any of the covenants, stipulations or conditions to be observed or
performed hereunder by Issuer; (iii) promptly to take all action as may from
time to time be required (including (x) complying with all premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
(S) 18a and regulations promulgated thereunder and (y) in the event, under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"), or the Change in
Bank Control Act of 1978, as amended, or any state banking law, prior approval
of or notice to the Federal Reserve Board or to any other Governmental
Authority is necessary before the Option may be exercised, cooperating with
Grantee in preparing such applications or notices and providing such
information to the Federal Reserve Board and each other Governmental Authority
as they may require) in order to permit Grantee to exercise the Option and
Issuer duly and effectively to issue shares of Common Stock pursuant hereto;
and (iv) to take all action provided herein to protect the rights of Grantee
against dilution.
SECTION 4. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of
Issuer, for other agreements providing for Options of different denominations
entitling the holder thereof to purchase, on the same terms and subject to the
same conditions as are set forth herein, in the aggregate the same number of
shares of Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any agreements and related options for which
this Agreement (and the Option granted hereby) may be exchanged. Upon receipt
by Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft
or destruction) of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Agreement, if mutilated, Issuer will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional contractual obligation
on the part of Issuer, whether or not the Agreement so lost, stolen, destroyed
or mutilated shall at any time be enforceable by anyone.
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SECTION 5. Adjustment upon Change of Capitalization. The number of shares of
Common Stock purchasable upon the exercise of the Option shall be subject to
adjustment from time to time as follows:
(a) Subject to the last sentence of Section 1, in the event of any change
in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted and proper
provision shall be made so that, in the event that any additional shares of
Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the
Option), the number of shares of Common Stock that remain subject to the
Option shall be increased so that, after such issuance and together with
shares of Common Stock previously issued pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing changes in the
Common Stock), it equals 19.9% of the number of shares of Common Stock then
issued and outstanding (without consideration of any shares of Common Stock
subject to or issued pursuant to the Option).
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Common Stock purchasable after the
adjustment. In no event shall the Option Price be adjusted to less than the
par value of the Common Stock to be issued at such Option Price.
(c) It is intended by the parties hereto that the adjustments provided by
this Section 5 shall fully preserve the economic benefits of this Agreement
for Grantee.
SECTION 6. Registration Rights.
(a) Demand Registration Rights. After the occurrence of a Purchase Event
that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee (whether on its own behalf or on behalf of any subsequent
holder of the Option (or part thereof) delivered prior to an Exercise
Termination Event or at the request of a holder of any of the shares of Common
Stock issued pursuant hereto) delivered no later than 12 months after an
Exercise Termination Event, promptly prepare, file and keep current a shelf
registration statement under the Securities Act covering this Option or any
shares issued and issuable pursuant to the Option (the "Option Shares") and
shall use its best efforts to cause such registration statement to become
effective and remain current and to qualify this Option or any such Option
Shares or other securities for sale under any applicable state securities laws
in order to permit the sale or other disposition of this Option or any Option
Shares in accordance with any plan of disposition requested by Grantee;
provided, however, that Issuer may postpone filing a registration statement
relating to a registration request by Grantee under this Section 6 for a
period of time (not in excess of 90 days) if in its judgment such filing would
require the disclosure of material information that Issuer has a bona fide
business purpose for preserving as confidential. Issuer will use its best
efforts to cause such registration statement first to become effective as soon
as practicable after the filing thereof and then to remain effective for such
period not in excess of 180 days from the day such registration statement
first becomes effective, or such shorter time as may be necessary to effect
such sales or other dispositions. Grantee shall have the right to demand two
such registrations. Grantee shall provide all information reasonably requested
by Issuer for inclusion in any registration statement to be filed hereunder.
In connection with any such registration, Issuer and Grantee shall provide
each other with representations, warranties, and other agreements customarily
given in connection with such registrations. If requested by any Grantee in
connection with such registration, Issuer and Grantee shall become a party to
any underwriting agreement relating to the sale of Option Shares, but only to
the extent of obligating themselves in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements. Notwithstanding the foregoing, if Grantee revokes any exercise
notice or fails to exercise any Option with respect to any exercise notice
pursuant to Section 2(e), Issuer shall not be obligated to continue any
registration process with respect to the sale of Option Shares.
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(b) Additional Persons With Registration Rights. Upon receiving any request
under this Section 6 from any Grantee, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
(c) Expenses. Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and
expenses of counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being
registered, printing expenses and the costs of special audits or "cold
comfort" letters, expenses of underwriters, excluding discounts and
commissions but including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses of any necessary
special experts) in connection with each registration pursuant to this Section
6 (including the related offerings and sales by holders of Option Shares) and
all other qualifications, notification or exemptions pursuant to Section 6.
(d) Indemnification. In connection with any registration under this Section
6, Issuer hereby indemnifies the Grantee, and each officer, director and
controlling person of Grantee, and each underwriter thereof, including each
person, if any who controls such holder or underwriter within the meaning of
Section 15 of the Securities Act, against all expenses, losses, claims,
damages and liabilities caused by any untrue, or alleged untrue, statement
contained in any registration statement or prospectus or notification or
offering circular (including any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission, or alleged omission, to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such expenses,
losses, claims, damages or liabilities of such indemnified party are caused by
any untrue statement or alleged untrue statement that was included by Issuer
in any such registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance upon
and in conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director and controlling person of Issuer shall be indemnified by such
Grantee, or by such underwriter, as the case may be, for all such expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged
untrue, statement, that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such underwriter,
as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 6(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 6(d), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not relieve it of
any liability which it may otherwise have to any indemnified party under this
Section 6(d). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party
unless (i) the indemnifying party either agrees to pay the same, (ii) the
indemnifying party fails to assume the defense of such action with counsel
satisfactory to the indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be available to the
indemnifying party that may be contrary to the interests of the indemnified
party. No indemnifying party shall be liable for the fees and expenses of more
than one separate counsel for all indemnified parties or for any settlement
entered into without its consent, which consent may not be unreasonably
withheld.
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If the indemnification provided for in this Section 6(d) is unavailable to a
party otherwise entitled to be indemnified in respect of any expenses, losses,
claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to
be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of Issuer, the Grantee and the underwriters in connection with the statements
or omissions which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
amount paid or payable by a party as a result of the expenses, losses, claims,
damages and liabilities referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, however, that in no
case shall any Grantee be responsible, in the aggregate, for any amount in
excess of the net offering proceeds attributable to its Option Shares included
in the offering. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any Grantee to indemnify shall be several
and not joint with other Grantees.
(e) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit
the expeditious sale at any time of any Option Shares by the Grantee thereof
in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144A. Issuer shall at its expense provide the Grantee with any information
necessary in connection with the completion and filing of any reports or forms
required to be filed by Grantee under the Securities Act or the Exchange Act,
or required pursuant to any state securities laws or the rules of any stock
exchange.
SECTION 7. Repurchase at the Option of Grantee or Owner. (a) Upon the
occurrence of a Repurchase Event (as defined below), (i) at the request (the
date of such request being the "Request Date") of Grantee, delivered prior to
an Exercise Termination Event, Issuer (or any successor thereto) shall
repurchase the Option from Grantee at a price (the "Option Repurchase Price")
equal to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which
this Option may then be exercised and (ii) at the request (the date of such
request being the "Request Date") of the owner of Option Shares from time to
time (the "Owner"), delivered within 12 months of the occurrence of a
Repurchase Event (or such later period as provided in Section 9), Issuer shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated.
The term "market/offer price" shall mean the highest of (i) the price per
share of Common Stock at which a tender offer or exchange offer therefor has
been made after the date hereof and on or prior to the Request Date, (ii) the
price per share of Common Stock paid or to be paid by any third party pursuant
to an agreement with Issuer (whether by way of a merger, consolidation or
otherwise), (iii) the highest last sale price for shares of Common Stock
within the 90-day period ending on the Request Date quoted on the NASDAQ
National Market System (as reported by The Wall Street Journal, or, if not
reported thereby, another authoritative source), (iv) in the event of a sale
of all or substantially all of Issuer's assets, the sum of the price paid in
such sale for such assets and the current market value of the remaining assets
of Issuer as determined by a nationally-recognized independent investment
banking firm selected by Grantee or the Owner, as the case may be, divided by
the number of shares of Common Stock outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally-recognized independent investment banking
firm selected by Grantee or the Owner, as the case may be, whose determination
shall be conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly
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as practicable, and in any event within the later to occur of (x) five
business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto and (y) the time that is immediately prior to the occurrence of a
Repurchase Event, Issuer shall deliver or cause to be delivered to Grantee the
Option Repurchase Price or to the Owner the Option Share Repurchase Price
therefor or the portion thereof that Issuer is not then prohibited from so
delivering under applicable law and regulation or as a consequence of
administrative policy.
(c) Issuer hereby undertakes to use its reasonable efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from repurchasing the Option and/or the Option Shares in full, Issuer shall
promptly so notify Grantee and/or the Owner and thereafter deliver or cause to
be delivered, from time to time, to Grantee and/or the Owner, as appropriate,
the portion of the Option Repurchase Price and the Option Share Repurchase
Price, respectively, that it is no longer prohibited from delivering, within
five business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to Section 7(b) is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to
Grantee and/or the Owner, as appropriate, the Option Repurchase Price or the
Option Share Repurchase Price, respectively, in full or in any substantial
part, Grantee or the Owner, as appropriate, may revoke its notice of
repurchase of the Option or the Option Shares either in whole or in part
whereupon, in the case of a revocation in part, Issuer shall promptly (i)
deliver to Grantee and/or the Owner, as appropriate, that portion of the
Option Purchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement
evidencing the right of Grantee to purchase that number of shares of Common
Stock equal to the number of shares of Common Stock purchasable immediately
prior to the delivery of the notice of repurchase less the number of shares of
Common Stock covered by the portion of the Option repurchased or (B) to the
Owner, a certificate for the number of Option Shares covered by the
revocation.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or
similar transaction involving Issuer or any Bank Subsidiary any purchase,
lease or other acquisition of all or a substantial portion of the assets of
Issuer or any Bank Subsidiary, other than any such transaction which would not
constitute an Acquisition Transaction pursuant to the proviso to Section
2(b)(i) hereof or (ii) upon the acquisition by any person of beneficial
ownership of securities representing 50% or more of the aggregate voting power
of Issuer or any Bank Subsidiary, provided that no such event shall constitute
a Repurchase Event unless an Extension Event shall have occurred prior to an
Exercise Termination Event. The parties hereto agree that Issuer's obligations
to repurchase the Option or Option Shares under this Section 7 shall not
terminate upon the occurrence of an Exercise Termination Event if an Extension
Event shall have occurred prior to the occurrence of an Exercise Termination
Event.
(e) Issuer shall not enter into any agreement with any party (other than
Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other party thereto assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole
discretion, to require such other party to perform such obligations.
SECTION 8. Substitute Option in the Event of Corporate Change. (a) In the
event that prior to an Exercise Termination Event, Issuer shall enter into an
agreement (i) to consolidate or merge with any person, other than Grantee or a
Grantee Subsidiary, and shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such merger, the
then outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other person or cash or any other property or
the then outstanding shares of Common Stock shall after such merger represent
less than 50% of the aggregate voting power of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than Grantee or a Grantee Subsidiary, then, and
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in each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of such transaction
and upon the terms and conditions set forth herein, be converted into, or
exchanged for, an option (the "Substitute Option"), at the election of
Grantee, of either (x) the Acquiring Corporation (as defined below) or (y) any
person that controls the Acquiring Corporation (the Acquiring Corporation and
any such controlling person being hereinafter referred to as the Substitute
Option Issuer)
(b) The Substitute Option shall be exercisable for such number of shares of
the Substitute Common Stock (as is hereinafter defined) as is equal to the
market/offer price (as defined in Section 7) multiplied by the number of
shares of the Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as is hereinafter defined) The exercise price of
the Substitute Option per share of the Substitute Common Stock (the
"Substitute Purchase Price") shall then be equal to the Option Price
multiplied by a fraction in which the numerator is the number of shares of the
Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in
no event less advantageous to Grantee, provided further that the terms of the
Substitute Option shall include (by way of example and not limitation)
provisions for the repurchase of the Substitute Option and Substitute Common
Stock by the Substitute Option Issuer on the same terms and conditions as
provided in Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or any substantial part
of the Issuer's assets (or the assets of Issuer Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued by the
Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Average Price" shall mean the average last sale price of a share
of the Substitute Common Stock (as reported by The Wall Street Journal or,
if not reported therein, by another authoritative source) for the one year
immediately preceding the consolidation, merger or sale in question, but in
no event higher than the last sale price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common stock issued by
Issuer, the person merging into Issuer or by any company which controls or
is controlled by such person, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to the exercise of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (e), the Substitute Option Issuer shall make
a cash payment to Grantee equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in the clause (e). This difference in value shall be determined by
a nationally recognized investment banking firm selected by Grantee and the
Substitute Option Issuer.
SECTION 9. Extension of Time for Regulatory Approvals. Notwithstanding
Sections 2(e), 6, 7 and 11, if Grantee has given the notice referred to in one
or more of such Sections, the exercise of the rights specified in any such
Section shall be extended (a) if the exercise of such rights requires
obtaining regulatory approvals, to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and (b) to the extent
necessary to avoid liability under Section 16(b) of the Securities Exchange
Act by reason of such exercise;
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provided that in no event shall any closing date occur more than 18 months
after the related Notice Date, and, if the closing date shall not have
occurred within such period due to the failure to obtain any required approval
by the Federal Reserve Board or any other Governmental Authority despite the
reasonable efforts of Issuer or the Substitute Option Issuer, as the case may
be, to obtain such approvals, the exercise of the Option shall be deemed to
have been rescinded as of the related Notice Date. In the event (a) Grantee
receives official notice that an approval of the Federal Reserve Board or any
other Governmental Authority required for the purchase and sale of the Option
Shares will not be issued or granted or (b) a closing date has not occurred
within 18 months after the related Notice Date due to the failure to obtain
any such required approval, Grantee shall be entitled to exercise the Option
in connection with the resale of the Option Shares pursuant to a registration
statement as provided in Section 6. Nothing contained in this Agreement shall
restrict Grantee from specifying alternative exercising of rights pursuant to
Sections 2(e), 6, 7 and 11, hereof in the event that the exercising of any
such rights shall not have occurred due to the failure to obtain any required
approval referred to in this Section 9.
SECTION 10. Issuer Warranties. Issuer hereby represents and warrants to
Grantee as follows:
(a) Issuer has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly approved by the
Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement
of creditors' rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrances and security interests and not subject to
any preemptive rights.
(c) Upon receipt of the necessary regulatory approvals as contemplated by
this Agreement, the execution, delivery and performance of this Agreement
does not or will not, and the consummation by Issuer of any of the
transactions contemplated hereby will not, constitute or result in (i) a
breach or violation of, or a default under, its certificate of
incorporation or by-laws, or the comparable governing instruments of any of
its subsidiaries, or (ii) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-
governmental permit or license to which it or any of its subsidiaries is
subject, that would in any case give any other person the ability to
prevent or enjoin Issuer's performance under this Agreement in any material
respect.
SECTION 11. Assignment of Option by Grantee. (a) Neither of the parties
hereto may assign any of its rights or delegate any of its obligations under
this Agreement or the Option created hereunder to any other person without the
express written consent of the other party, except that Grantee may assign
this Agreement to a wholly owned subsidiary of Grantee and Grantee may assign
its rights hereunder in whole or in part after the occurrence of a Purchase
Event; provided, however, that until the date 15 days following the date at
which the Federal Reserve Board approves an application by Grantee under the
BHC Act to acquire the shares of Common Stock
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subject to the Option, Grantee may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase securities representing
in excess of 2% of the aggregate voting power of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the Federal Reserve Board. Grantee will pay any
reasonable out-of-pocket costs and expenses of Issuer in connection with any
such assignment. The term "Grantee" as used in this Agreement shall also be
deemed to refer to Grantee's permitted assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of Grantee
hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
"The transfer of the option represented by this assignment and the related
option agreement is subject to resale restrictions arising under the
Securities Act of 1933, as amended and to certain provisions of an
agreement between UJB Financial Corp. and The Summit Bancorporation
("Issuer") dated as of the 11th day of September, 1995. A copy of such
agreement is on file at the principal office of Issuer and will be provided
to any permitted assignee of the Option without change upon receipt by
Issuer of a written request therefor."
It is understood and agreed that (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel, in form and substance satisfactory to Issuer, to the effect that such
legend is not required for purposes of the Securities Act; (ii) the reference
to the provisions of this Agreement in the above legend shall be removed by
delivery of substitute assignments without such reference if the Option has
been sold or transferred in compliance with the provisions of this Agreement
and under circumstances that do not require the retention of such reference;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
assignments shall bear any other legend as may be required by law.
SECTION 12. Application for Regulatory Approval. If Grantee is entitled to
exercise the Option and has sent a notice to Issuer pursuant to Section 2(e),
each of Grantee and Issuer will use its reasonable efforts to make all filings
with, and to obtain consents of, all third parties and the Federal Reserve
Board and other Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
making application for listing or quotation, as the case may be, of the shares
of Common Stock issuable hereunder on the NASDAQ National Market System and
applying to the Federal Reserve Board under the BHC Act and to state banking
authorities for approval to acquire the shares issuable hereunder.
SECTION 13. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties shall hereto be
enforceable by either party hereto through injunctive or other equitable
relief. Both parties further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such equitable
relief and that this provision is without prejudice to any other rights that
the parties hereto may have for any failure to perform this Agreement.
SECTION 14. Separability of Provisions. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and
effect, and shall in no way be affected, impaired or invalidated. If for any
reason such court or regulatory agency determines that Grantee is not
permitted to acquire, or Issuer is not permitted to repurchase, pursuant to
Section 7, the full number of shares of Common Stock provided in Section 1 (as
adjusted pursuant hereto), it is the express intention of Issuer to allow
Grantee to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
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SECTION 15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when
delivered in person, by cable, telegram, telecopy or telex, or by registered
or certified mail (postage prepaid, return receipt requested) at the
respective addresses of the parties set forth in the Merger Agreement.
SECTION 16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey.
SECTION 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 18. Expenses. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
SECTION 19. Entire Agreement; No Third-Party Beneficiaries. Except as
otherwise expressly provided herein or in the Merger Agreement, this Agreement
contains the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Nothing
in this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, and their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20. Merger Agreement. Nothing contained in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
SECTION 21. Majority in Interest. In the event that any selection or
determination is to be made by Grantee or the Owner hereunder and at the time
of such selection or determination there is more than one Grantee or Owner,
such selection shall be made by a majority in interest of such Grantees or
Owners.
SECTION 22. Further Assurances. In the event of any exercise of the Option
by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
SECTION 23. No Rights as Shareholder. Except to the extent Grantee exercises
the Option, Grantee shall have no rights to vote or receive dividends or have
any other rights as a shareholder with respect to shares of Common Stock
covered hereby.
SECTION 24. Grantee Representation. The Option and any Option Shares or
other securities acquired by Grantee upon exercise of the Option are not
being, and will not be, as the case may be, acquired with a view to the public
distribution thereof in the United States except as provided for in Sections 6
and 11 hereof and neither the Option nor any Option Shares or other securities
acquired by Grantee upon exercise of the Option will be transferred or
otherwise disposed of by Grantee except in a transaction registered or exempt
from registration under the Securities Act.
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IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
UJB Financial Corp.
/s/ T. Joseph Semrod
By: _________________________________
The Summit Bancorporation
/s/ Robert G. Cox
By: _________________________________
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
With respect to the indemnification of directors and officers, Section 5 of
Article IX of the By-Laws of UJB provides:
Section 5. Indemnification and Insurance. (a) Each person who was or is
made a party or is threatened to be made a party to or is involved in any
proceeding, by reason of the fact that he or she is or was a corporate
agent of the Corporation, whether the basis of such proceeding is alleged
action in an official capacity as a corporate agent or in any other
capacity while serving as a corporate agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the laws of
the State of New Jersey as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such
amendment), against all expenses and liabilities in connection therewith,
and such indemnification shall continue as to a person who has ceased to be
a corporate agent and shall inure to the benefit of such corporate agent's
heirs, executors, administrators and other legal representatives; provided,
however, that except as provided in Section 5(c) of this By-Law, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person
only if such proceeding (or part thereof) was authorized by the Board of
Directors. The right to indemnification conferred in this By-Law shall be a
contract right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its
final disposition, such advances to be paid by the Corporation within 20
days after the receipt by the Corporation of a statement or statements from
the claimant requesting such advance or advances from time to time;
provided, however, that the advancement of counsel fees to a claimant other
than a claimant who is or was a director or Executive Vice President or
higher ranking officer of the Corporation shall be made only when the Board
of Directors or the General Counsel of the Corporation determines that
arrangements for counsel are satisfactory to the Corporation; and provided,
further, that if the laws of the State of New Jersey so require, the
payment of such expenses incurred by a corporate agent in such corporate
agent's capacity as a corporate agent (and not in any other capacity in
which service was or is rendered by such person while a corporate agent,
including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding shall be made only upon
delivery to the Corporation of an undertaking by or on behalf of such
corporate agent to repay all amounts so advanced if it shall ultimately be
determined that such corporate agent is not entitled to be indemnified
under this By-Law or otherwise.
(b) To obtain indemnification under this By-Law, a claimant shall submit
to the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to the claimant
and is reasonably necessary to determine whether and to what extent the
claimant is entitled to indemnification. Upon written request by a claimant
for indemnification pursuant to the first sentence of this Section 5(b), a
determination, if required by applicable law, with respect to the
claimant's entitlement thereto shall be made as follows: (1) if requested
by a claimant who is or was a director or Executive Vice President or
higher ranking officer of this Corporation, by independent counsel (as
hereinafter defined) in a written opinion to the Board of Directors, a copy
of which shall be delivered to the claimant; or (2) if the claimant is not
a person described in Section 5(b)(1), or is such a person and if no
request is made by such a claimant for a determination by independent
counsel, (A) by the Board of Directors by a majority vote of a quorum
consisting of disinterested directors (as hereinafter defined), or (B) if a
quorum of the Board of Directors consisting of disinterested directors is
not obtainable or, even if obtainable, such quorum of disinterested
directors so directs, by independent counsel in a written opinion to the
Board of Directors, a copy of which shall be delivered to the claimant. In
the event the determination of entitlement to indemnification is to be made
by independent counsel at the request of the claimant, the independent
counsel
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shall be selected by the Board of Directors and paid by the Corporation. If
it so determined that the claimant is entitled to indemnification, payment
to the claimant shall be made within 20 days after such determination.
(c) If a claim under Section 5(a) of this By-Law is not paid in full by
the Corporation within thirty days after a written claim pursuant to
Section 5(b) of this By-Law has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim, including attorney's fees. It shall be a defense to
any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the laws of the State of New
Jersey for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors or independent counsel) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper
in the circumstances because the claimant has met the applicable standard
of conduct set forth in the laws of the State of New Jersey, nor an actual
determination by the Corporation (including its Board of Directors or
independent counsel) that the claimant has not met such applicable standard
of conduct, shall be a defense to the action or create a presumption that
the claimant has not met the applicable standard of conduct.
(d) If a determination shall have been made pursuant to Section 5(b) of
this By-Law that the claimant is entitled to indemnification, the
Corporation shall be bound by such determination in any judicial proceeding
commenced pursuant to Section 5(c) of this By-Law.
(e) The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in
this By-Law shall not be exclusive of any other rights which any person may
have or hereafter acquire under any statute, provision of the Certificate
of Incorporation, By-Laws, agreement, vote of shareholders or disinterested
directors or otherwise. No repeal or modification of this By-Law shall in
any way diminish or adversely affect the rights of any corporate agent of
the Corporation hereunder in respect of any occurrence or matter arising
prior to any such repeal or modification.
(f) The Corporation may maintain insurance, at its expense, to protect
itself and any corporate agent of the Corporation or other enterprise
against any expense or liability, whether or not the Corporation would have
the power to indemnify such person against such expense or liability under
the laws of the State of New Jersey.
(g) If any provision or provisions of this By-Law shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (1) the
validity, legality and enforceability of the remaining provisions of this
By-Law (including, without limitation, each portion of any section of this
By-Law containing any such provision held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and
(2) to the fullest extent possible, the provisions of this By-Law
(including, without limitation, each such portion of any section of this
By-Law containing any such provision held to be invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
(h) For purposes of this By-Law:
(1) "disinterested director" means a director of the Corporation who
is not and was not a party to or otherwise involved in the matter in
respect of which indemnification is sought by the claimant.
(2) "independent counsel" means a law firm, a member of a law firm,
or an independent practitioner that is experienced in matters of
corporation law and shall include any person who, under the applicable
standards of professional conduct then prevailing, would not have a
conflict of interest
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in representing either the Corporation or the claimant in an action to
determine the claimant's rights under this By-Law.
(3) "corporate agent" means any person who is or was a director,
officer, employee or agent of the Corporation or of any constituent
corporation absorbed by the Corporation in a consolidation or merger
and any person who is or was a director, officer, trustee, employee or
agent of any subsidiary of the Corporation or of any other enterprise,
serving as such at the request of this Corporation, or of any such
constituent corporation, or the legal representative of any such
director, officer, trustee, employee or agent;
(4) "other enterprise" means any domestic or foreign corporation,
other than the Corporation, and any partnership, joint venture, sole
proprietorship, trust or other enterprise, whether or not for profit,
served by a corporate agent;
(5) "expenses" means reasonable costs, disbursements and counsel
fees;
(6) "liabilities" means amounts paid or incurred in satisfaction of
settlements, judgments, fines and penalties;
(7) "proceeding" means any pending, threatened or completed civil,
criminal, administrative, legislative, investigative or arbitrative
action, suit or proceeding, and any appeal therein and any inquiry or
investigation which could lead to such action, suit or proceeding; and
(8) References to "other enterprises" include employee benefit plans;
references to "fines" include any excise taxes assessed on a person
with respect to an employee benefit plan; and references to "serving at
the request of the indemnifying corporation" include any service as a
corporate agent which imposes duties on, or involves services by, the
corporate agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith
and in a manner the person reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of
the corporation."
(i) Any notice, request or other communication required or permitted to
be given to the Corporation under this By-Law shall be in writing and
either delivered in person or sent by facsimile, telex, telegram, overnight
mail or courier service, or certified or registered mail, postage prepaid,
return receipt requested, to the Secretary of the Corporation and shall be
effective only upon receipt by the Secretary.
(j) This By-Law shall be implemented and construed to provide any
corporate agent described above who is found to have acted in good faith
and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation the maximum indemnification,
advancement of expenses, and reimbursement for liabilities and expenses
allowed by law.
Such provision is consistent with Section 14A:3-5 of the Business
Corporation Act of the State of New Jersey, the state of UJB's incorporation,
which permits the indemnification of officers and directors, under certain
circumstances and subject to specified limitations, against liability which
any officer or director may incur in such capacity.
UJB carries officers' and directors' liability insurance policies which
provide coverage against judgments, settlements and legal costs incurred
because of actual or asserted acts or omissions of such officers and directors
of UJB arising out of their duties as such, subject to certain exceptions,
including, but not limited to, damages based upon illegal personal profits or
adjudicated dishonesty of the person seeking indemnification. The policies
provide coverage of $35,000,000 in the aggregate.
II-3
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
This Registration Statement includes the following exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
2 Agreement and Plan of Merger dated September 10, 1995, as amended
by Amendment No. 1 dated December 1, 1995, between UJB and Summit.
(Included without exhibits as Appendix A to the Proxy Statement-
Prospectus included in this Registration Statement; with Exhibit A
thereto included as Appendix D to the Proxy Statement-Prospectus
included in this Registration Statement, Exhibit B thereto
included as Appendix E to the Proxy Statement-Prospectus included
in this Registration Statement and Exhibits C through F thereto
incorporated by reference to Exhibit (2) to the Current Report on
Form 8-K of UJB, dated September 10, 1995).
3(a) Restated Certificate of Incorporation of UJB, as restated July 1,
1988, as amended through May 19, 1994 (incorporated by reference
to Exhibit (3)A.(i) on Form 10-Q for the quarter ended September
30, 1994).
(b) By-Laws of UJB as amended through October 18, 1995 (filed with
original filing).
4 UJB Stock Option Agreement--included as Appendix D to the Proxy
Statement-Prospectus included with this Registration Statement.
5 Opinion of Richard F. Ober, Jr., Esq. regarding legality of
securities being issued.
8(a) Opinion of Thompson & Mitchell, regarding tax matters.
(b) Opinion of Sullivan & Cromwell, regarding tax matters.
10 Summit Stock Option Agreement--included as Appendix E to the Proxy
Statement-Prospectus included with this Registration Statement.
23(a) Consent of KPMG Peat Marwick LLP (UJB).
(b) Consent of KPMG Peat Marwick LLP (Summit)
(c) Consent of Richard F. Ober, Jr., Esq.--included in his opinion
filed as Exhibit 5 to this Registration Statement.
(d) Consent of Thompson & Mitchell--included in its opinion filed as
Exhibit 8(a) to this Registration Statement.
(e) Consent of Sullivan & Cromwell--included in its opinion filed as
Exhibit 8(b) to this Registration Statement.
24 Power of Attorney--included on the signature page of the original
filing.
99(a) Form of UJB Proxy.
(b) Form of Summit Proxy.
(c) Opinion of Keefe, Bruyette & Woods, Inc.--included as Appendix B
to the Proxy Statement-Prospectus included in this Registration
Statement.
(d) Opinion of Merrill Lynch & Co.--included as Appendix C to the
Proxy Statement-Prospectus included with this Registration
Statement.
(e) Consent of Keefe, Bruyette & Woods, Inc.
(f) Consent of Merrill Lynch & Co.
(g) Consent of Robert G. Cox, regarding directorship.
(h) Consent of Thomas D. Sayles, regarding directorship.
</TABLE>
(b) Financial Statement Schedules.
All financial statement schedules either are not required or are included in
the notes to the financial statements incorporated by reference herein.
II-4
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(ii) of this section do not apply
if the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions set forth in response to Item 20
hereof, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 33-63783 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
TOWNSHIP OF WEST WINDSOR, AND THE STATE OF NEW JERSEY ON THE 1ST DAY OF
DECEMBER, 1995.
UJB Financial Corp.
*
By: _________________________________
T. JOSEPH SEMROD CHAIRMAN OF THE
BOARD OF DIRECTORS AND PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT NO. 33-63783 HAS BEEN SIGNED BELOW ON THE 1ST
DAY OF DECEMBER, 1995 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED.
SIGNATURES TITLES
Chairman of the Board of
* Directors and President (Chief
- ------------------------------------- Executive Officer)
T. JOSEPH SEMROD
Senior Executive Vice President-
* Finance (Principal Financial
- ------------------------------------- Officer)
JOHN R. HAGGERTY
Executive Vice President and
* Comptroller (Principal
- ------------------------------------- Accounting Officer)
WILLIAM J. HEALY
Director
*
- -------------------------------------
ROBERT L. BOYLE
Director
*
- -------------------------------------
JOHN G. COLLINS
II-6
<PAGE>
SIGNATURES TITLES
---------- ------
Director
*
- -------------------------------------
T.J. DERMOT DUNPHY
Director
*
- -------------------------------------
ANNE EVANS ESTABROOK
Director
*
- -------------------------------------
ELINOR J. FERDON
Director
*
- -------------------------------------
FRED G. HARVEY
Director
*
- -------------------------------------
JOHN R. HOWELL
Director
*
- -------------------------------------
FRANCIS J. MERTZ
Director
*
- -------------------------------------
GEORGE L. MILES, JR.
Director
*
- -------------------------------------
HENRY S. PATTERSON II
Director
*
- -------------------------------------
RAYMOND SILVERSTEIN
Director
*
- -------------------------------------
JOSEPH M. TABAK
* RICHARD F. OBER, JR., by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
executed by such persons, filed with the Securities and Exchange Commission.
/s/ Richard F. Ober, Jr.
- -------------------------------------
RICHARD F. OBER, JR.
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<C> <S> <C>
2 Agreement and Plan of Merger dated September 10, 1995,
as amended by Amendment No. 1 dated December 1, 1995,
between UJB and Summit. (Included without exhibits as
Appendix A to the Proxy Statement-Prospectus included
in this Registration Statement; with Exhibit A thereto
included as Appendix D to the Proxy Statement-
Prospectus included in this Registration Statement,
Exhibit B thereto included as Appendix E to the Proxy
Statement-Prospectus included in this Registration
Statement and Exhibits C through F thereto incorporated
by reference to Exhibit (2) to the Current Report on
Form 8-K of UJB, dated September 10, 1995).
3(a) Restated Certificate of Incorporation of UJB, as
restated July 1, 1988, as amended through May 19, 1994
(incorporated by reference to Exhibit (3)A.(i) on Form
10-Q for the quarter ended September 30, 1994).
(b) By-Laws of UJB as amended through October 18, 1995
(filed with original filing).
4 UJB Stock Option Agreement--included as Appendix D to
the Proxy Statement-Prospectus included with this
Registration Statement.
5 Opinion of Richard F. Ober, Jr., Esq. regarding
legality of securities being issued.
8(a) Opinion of Thompson & Mitchell, regarding tax matters.
(b) Opinion of Sullivan & Cromwell, regarding tax matters.
10 Summit Stock Option Agreement--included as Appendix E
to the Proxy Statement-Prospectus included with this
Registration Statement.
23(a) Consent of KPMG Peat Marwick LLP (UJB).
(b) Consent of KPMG Peat Marwick LLP (Summit)
(c) Consent of Richard F. Ober, Jr., Esq.--included in his
opinion filed as Exhibit 5 to this Registration
Statement.
(d) Consent of Thompson & Mitchell--included in its opinion
filed as Exhibit 8(a) to this Registration Statement.
(e) Consent of Sullivan & Cromwell--included in its opinion
filed as Exhibit 8(b) to this Registration Statement.
24 Power of Attorney--included on the signature page of
the original filing.
99(a) Form of UJB Proxy.
(b) Form of Summit Proxy.
(c) Opinion of Keefe, Bruyette & Woods, Inc.--included as
Appendix B to the Proxy Statement-Prospectus included
in this Registration Statement.
(d) Opinion of Merrill Lynch & Co.--included as Appendix C
to the Proxy Statement-Prospectus included with this
Registration Statement.
(e) Consent of Keefe, Bruyette & Woods, Inc.
(f) Consent of Merrill Lynch & Co.
(g) Consent of Robert G. Cox, regarding directorship.
(h) Consent of Thomas D. Sayles, regarding directorship.
</TABLE>
<PAGE>
EXHIBIT 5
[LETTERHEAD OF RICHARD F. OBER, JR., EXECUTIVE VICE PRESIDENT & GENERAL COUNSEL]
December 1, 1995
UJB Financial Corp.
301 Carnegie Center
P.O. Box 2066
Princeton, N.J. 08543
Re: Registration Statement on Form S-4 of UJB Financial Corp.
Relating to Shares of UJB Financial Corp. Common Stock and
Adjustable Rate Cumulative Preferred Stock, Series C Issuable in
Connection with the Merger of The Summit Bancorporation with
and into UJB Financial Corp.
Gentlemen:
This opinion is given in connection with Registration Statement No.
33-63783 on Form S-4 (the "Registration Statement") filed by UJB Financial Corp.
(the "Company") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, with respect to up to 35,820,273 shares of the
Company's Common Stock, par value $1.20 per share (the "Common Shares"), and
with respect to 504,481 shares of the Company's Adjustable Rate Cumulative
Preferred Stock, Series C ($25 stated value) (the "Preferred Shares"), to be
issued to shareholders of The Summit Bancorporation ("Summit") in connection
with the merger of Summit with and into the Company (the "Merger") pursuant to
an Agreement and Plan of Merger dated September 10, 1995, as amended by a letter
agreement dated December 1, 1995 (the "Merger Agreement").
I have acted as counsel for the Company in connection with the filing of
the Registration Statement. In so acting, I have made such investigation,
including the examination of originals or copies, certified or otherwise
identified to my satisfaction, of such corporate documents and instruments as I
have deemed relevant and necessary as a basis for the opinion hereinafter set
forth. In connection therewith I have assumed the genuineness of all signatures
and the authenticity of all documents submitted to me as originals and the
conformity to original documents of all documents submitted to me as certified
or photostatic copies. As to questions of fact material to such opinion, I have
relied upon representations of officers or representatives of the Company.
Based upon the foregoing and assuming that (i) the Merger Agreement is
duly approved by the requisite vote of the shareholders of the Company and
Summit and (ii) that a Certificate of Merger and a Restated Certificate of
Incorporation complying with the Merger Agreement and meeting all applicable
requirements of the New Jersey Business Corporation Act are duly executed and
filed in accordance with the New Jersey Business Corporation Act, I am of the
opinion that the Common Shares and Preferred Shares registered under the
Registration Statement and to be issued in accordance with the Merger Agreement
upon the effectiveness of the Merger in exchange for outstanding shares of,
respectively, the Common Stock, no par value, of Summit and the Adjustable Rate
Cumulative Preferred Stock, $25 stated value, of Summit will be validly issued,
fully paid and nonassessable.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement. I further consent to any and all references to me in the
Proxy Statement-Prospectus which is part of said Registration Statement.
Very truly yours,
<PAGE>
Exhibit 8(a)
[LETTERHEAD OF THOMPSON & MITCHELL]
December 1, 1995
Board of Directors
UJB Financial Corp.
301 Carnegie Center
Princeton, New Jersey 08543
Ladies and Gentleman:
You have requested our opinion with regard to certain federal income tax
consequences of the proposed merger (the "Merger") of The Summit Bancorporation
("Summit") with and into UJB.
In connection with the preparation of our opinion, we have examined and
have relied upon the following:
(i) The Agreement and Plan of Merger between UJB and Summit dated
September 10, 1995, and the amendment thereto dated December 1, 1995, including
the schedules and exhibits thereto (the "Agreement");
(ii) UJB's Registration Statement on Form S-4, including the Proxy
Statement-Prospectus contained therein, filed with the Securities and Exchange
Commission on December 1, 1995, (the "Registration Statement");
(iii) The representations and undertaking of UJB substantially in the
form of Exhibit A hereto;
(iv) The representations and undertaking of Summit, substantially in the
form of Exhibit B hereto; and
(v) The Shareholder Rights Plan between UJB and First Chicago Trust
Company of New York, as Rights Agent, dated as of August 16, 1989, and The
Summit Bancorporation Shareholder Rights Plan dated as of January 16, 1990.
Our opinion is based solely upon applicable law and the factual
information and undertakings contained in the above-mentioned documents. In
rendering our opinion, we have assumed the accuracy of all information and the
performance of all undertakings contained in each of such documents. We also
have assumed the authenticity of all original documents, the conformity of all
copies to the original documents, and the genuineness of all signatures. We have
not attempted to verify independently the accuracy of any information in any
such document, and we have assumed that such documents accurately and completely
set forth all material facts relevant to this opinion. All of our assumptions
were made with your consent. If any fact or assumption described herein or below
is incorrect, any or all of the federal income tax consequences described herein
may be inapplicable.
<PAGE>
UJB Financial Corp.
December 1, 1995
Page 2
Subject to the foregoing, to the conditions and limitations expressed
elsewhere herein, and assuming that the Merger is consummated in accordance with
the Plan, we are of the opinion that for federal income tax purposes, the Merger
will constitute a reorganization within the meaning of sections 368(a)(1)(A) of
the Internal Revenue Code of 1986, as amended to the date hereof (the "Code").
We express no opinion with regard to the federal income or other tax
consequences of the Merger not addressed expressly by this opinion, including
without limitation, the tax consequences, if any, to shareholders of Summit.
Further, our opinion is based upon the Code, Treasury Regulations proposed or
promulgated thereunder, and administrative interpretations and judicial
precedents relating thereto, all of which are subject to change at any time,
possibly with retroactive effect, and we assume no obligation to advise you of
any subsequent change thereto. If there is any change in the applicable law or
regulations, or if there is any new administrative or judicial interpretation of
the applicable law or regulations, any or all of the federal income tax
consequences described herein may become inapplicable.
The foregoing opinion reflects our legal judgment solely on the issues
presented and discussed herein. This opinion has no official status or binding
effect of any kind. Accordingly, we cannot assure you that the Internal Revenue
Service or any court of competent jurisdiction will agree with this opinion.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to all references made to this letter and to this
firm in the Registration Statement.
Very truly yours,
Thompson & Mitchell
<PAGE>
Exhibit 8(b)
[Sullivan & Cromwell Letterhead]
December 1, 1995
The Summit Bancorportion
One Main Street
Chatham, New Jersey 07928
Ladies and Gentlemen:
We have acted as counsel to The Summit Bancorporation, a New Jersey
business corporation ("Summit") in connection with the Agreement and Plan of
Merger dated September 10, 1995, as amended December 1, 1995 (the "Agreement"),
between UJB Financial Corp., a New Jersey business corporation ("UJB"), and
Summit, and we render this opinion to you pursuant to Section 6.03 of the
Agreement.
Capitalized terms used but not defined herein have the meanings ascribed
to them in the Agreement and the Registration Statement on Form S-4 dated
October 27, 1995 of UJB, including the Joint Proxy Statement Prospectus of UJB
and Summit (the "Proxy Statement-Prospectus").
For purposes of this opinion, we have examined (1) the Agreement, (2)
the Proxy Statement-Prospectus, (3) the representations made to us by Summit and
UJB in letters dated December 1, 1995 and (4) such other matters as we
<PAGE>
have deemed necessary or appropriate for purposes of rendering this opinion.
In connection with this opinion and with your consent, we have assumed
and have not attempted to verify independently that:
(1) the Merger will be effected in accordance with the terms of the
Agreement;
(2) the representations made to us in letters from each of Summit and
UJB dated December 1, 1995 are true and complete; and
(3) there will be no change in any of the facts material to this opinion
between the date of this opinion and the Effective Time.
On the basis of the foregoing, we advise you that, in our opinion, for
U.S. federal income tax purposes:
1. the Merger will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code;
2. except with respect to Cash In Lieu Amounts received in respect of
fractional share interests, holders of Summit Common who receive solely the
Common Stock Merger Consideration in the Merger will not recognize gain or loss
for federal income tax purposes;
3. holders of Summit Adjustable Preferred who receive solely UJB Series
C Preferred in the Merger will not recognize gain or loss for federal income tax
purposes;
4. the basis of UJB Common received in the Merger (including any
fractional share for which cash is received)
<PAGE>
will equal the basis of the Summit Common for which it is exchanged;
5. the basis of UJB Series C Preferred received in the Merger will equal
the basis of the Summit Adjustable Preferred for which it is exchanged;
6. the holding period of UJB Common receive in the Merger (including
any fractional share for which cash is received) will include the holding period
of the Summit Common for which it is exchanged, assuming that such Summit Common
is a capital asset in the hands of the holder thereof at the Effective Time; and
7. the holding period of UJB Series C Preferred received in the Merger
will include the holding period of the Summit Adjustable Preferred for which it
is exchanged, assuming that such Summit Adjustable Preferred is a capital asset
in the hands of the holder thereof at the Effective Time.
We express no opinion as to the effect of the Merger on any holder of
Summit Stock who or which is required to recognize unrealized gain or loss with
respect to such Summit Stock for U.S. federal income tax purposes at the end of
a taxable year (or upon the transfer thereof) under a mark-to-market system of
accounting.
The tax consequences described above may not be applicable to a holder
of Summit Stock who acquired Summit Stock pursuant to the exercise of an
employee stock option or otherwise as compensation.
<PAGE>
We hereby consent to the reference to us under the heading "Certain
Federal Income Tax Consequences in General" and "The Merger -- Certain Federal
Income Tax Consequences" in the Proxy Statement-Prospectus and to the filing of
this opinion as an Exhibit to the Registration Statement on Form S-4 of UJB
including the Proxy Statement-Prospectus filed with the Securities and Exchange
Commission. In giving this consent we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules or regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
SULLIVAN & CROMWELL
<PAGE>
EXHIBIT 23(a)
AUDITORS' CONSENT
Board of Directors
UJB Financial Corp.
We consent to the use of our report dated January 18, 1995, relating to the
consolidated balance sheets of UJB Financial Corp. and subsidiaries as of
December 31, 1994 and 1993 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the years in the three year
period ended December 31, 1994, incorporated herein by reference, and to the
reference to our Firm under the heading "Experts" in the registration
statement.
The report of KPMG Peat Marwick LLP refers to changes in the method of
accounting for certain investments and postemployment benefits in 1994 and a
change in the method of accounting for income taxes in 1993.
KPMG Peat Marwick LLP
Short Hills, New Jersey
November 30, 1995
<PAGE>
EXHIBIT 23(b)
AUDITORS' CONSENT
The Board of Directors
The Summit Bancorporation:
We consent to the use of our report dated January 17, 1995, relating to the
consolidated balance sheets of The Summit Bancorporation and subsidiaries as
of December 31, 1994 and 1993 and the related consolidated statements of
income, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1994, incorporated herein by reference,
and to the reference to our Firm under the heading "Experts" in the
registration statement.
KPMG Peat Marwick LLP
Short Hills, New Jersey
November 30, 1995
<PAGE>
EXHIBIT 99(a)
P
R
O
X
Y
[LOGO] UJB FINANCIAL CORP.
Proxy Solicited on Behalf of the Board of Directors
of UJB Financial Corp. for the Special Meeting January 12, 1996
The undersigned hereby constitutes and appoints T. J. Dermot Dunphy, Elinor J.
Ferdon and Henry S. Patterson II, and each of them, the undersigned's true and
lawful agents and proxies with full power of substitution in each, to represent
the undersigned at the Special Meeting of Shareholders of UJB FINANCIAL CORP. to
be held at The Hyatt Regency Princeton, 102 Carnegie Center, Route 1 at
Alexander Road, Princeton, New Jersey on Friday, January 12, 1996, and at any
adjournments thereof, on all matters coming before said meeting.
You are encouraged to specify your choice by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any box if you wish to vote in accordance
with the Board of Directors' recommendations. However, the Proxies cannot vote
your shares unless you sign and return this card.
SEE REVERSE SIDE
<PAGE>
[X] Please mark your
votes as in this
example.
This proxy when properly executed and timely returned will be voted in the
manner directed herein. If properly executed and timely returned but no
direction is made, this proxy will be voted FOR proposal 1.
The Board of Directors recommends a vote FOR proposal 1.
1. APPROVAL OF THE MERGER AGREEMENT FOR AGAINST ABSTAIN
BETWEEN UJB FINANCIAL CORP. AND THE [_] [_] [_]
SUMMIT BANCORPORATION AND THE TRANSACTIONS
contemplated thereby, including (i) the
Merger, and (ii) the amendment to the
Restated Certificate of Incorporation
of UJB Financial Corp. changing the
name of UJB Financial Corp. to "Summit
Bancorp."
[_] Please mark this box if you plan to attend the Special Meeting.
The signer hereby revokes all proxies heretofore given by the signer to vote
at said meeting or any adjournments thereof.
SIGNATURE(S) ______________________________ DATE _____________
SIGNATURE(S) ______________________________ DATE _____________
NOTE: This proxy must be signed exactly as your name appears hereon. Joint
owners should each sign. Please date. Executors, administrators, trustees,
guardians or attorneys should give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer.
<PAGE>
EXHIBIT 99(b)
REVOCABLE PROXY
THE SUMMIT BANCORPORATION
ONE MAIN STREET
CHATHAM, NJ 07928
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints __________, __________ and __________,
and each of them with full power of substitution to act as proxies for the
undersigned to vote all the shares of Common Stock of The Summit Bancorporation
("Summit") which the undersigned would be entitled to vote at the Special
Meeting of Shareholders to be held at __________________, N.J. at _____ P.M.
(local time) on _________, 1995, and at all adjournments thereof (the "Special
Meeting").
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE SPECIAL MEETING, INCLUDING MATTERS RELATING TO THE CONDUCT OF
THE SPECIAL MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN
THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE SPECIAL MEETING.
The undersigned hereby revokes any and all proxies heretofore given with
respect to the undersigned's shares of Summit common stock.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE COMPLETE, DATE AND SIGN ON THE REVERSE SIDE
AND RETURN PROXY PROMPTLY
<PAGE>
1. The approval of the Agreement and Plan of Merger dated September 10,
1995 between UJB Financial Corp. ("UJB") and Summit (the "Merger Agreement") and
the transactions contemplated thereby, which agreement provides, among other
things, for the merger of Summit with and into UJB under the name Summit Bank
Corp., for the conversion of outstanding shares of the common stock, no par
value, of Summit into whole shares of the common stock, par value $1.20 per
share, of UJB and cash in lieu of fractional shares of UJB common stock, based
on an exchange ratio of 0.90 shares of UJB common stock for each share of Summit
common stock, for the conversion of outstanding shares of the $25 stated value
Adjustable Rate Cumulative Preferred Stock of Summit into shares of an
adjustable rate cumulative preferred stock of UJB of $25 stated value having the
same relative rights, preferences and limitations and for the selection of six
members of the Summit Board of Directors to the Board of Directors of UJB.
FOR AGAINST ABSTAIN
[_] [_] [_]
2. The approval to Adjourn the Special Meeting if insufficient shares
are present at the Special Meeting to constitute a quorum or to approve the
Merger Agreement in order to permit further solicitation of proxies by Summit.
FOR AGAINST ABSTAIN
[_] [_] [_]
[_] Please mark this box if you plan to attend the Special Meeting.
Please mark, date and sign your name
as it appears hereon and return in the
enclosed envelope. When signing as an
agent, attorney, executor,
administrator, trustee, or guardian,
please give title as such. If signer
is a corporation, please sign full
corporate name by authorized officer
and attach corporate seal. For joint
account, each joint owner should sign.
DATE , 1995
--------------------------------------
SIGNATURE
--------------------------------------
SIGNATURE
--------------------------------------
<PAGE>
EXHIBIT 99(e)
[LETTERHEAD OF KEEFE, BRUYETTE & WOODS, INC.]
Consent of
Keefe, Bruyette & Woods, Inc.
We hereby consent to the use in this Registration Statement on Form S-4
of our letter to the Board of Directors of The Summit Bancorporation included as
an exhibit to the Proxy Statement/Prospectus forming a part of this Registration
Statement on Form S-4 and to all references to our firm in such Proxy Statement/
Prospectus. In giving such consent, we do not hereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
KEEFE, BRUYETTE & WOODS, INC.
By /s/ Andrew M. Senchak
----------------------------------
Andrew M. Senchak, PhD.
Executive Vice President
<PAGE>
EXHIBIT 99(f)
[LETTERHEAD OF MERRILL LYNCH]
Consent of Merrill Lynch
------------------------
We hereby consent to the use of our opinion letter dated December 1,
1995 to the Board of Directors of UJB Financial Corp. included as Appendix C to
the Proxy Statement which forms a part of the Registration Statement on Form S-4
relating to the proposed merger of UJB Financial Corp. with The Summit
Bancorporation and to the references to such opinion in such Proxy Statement
under the caption "Opinion of Financial Advisor". In giving such consent, we do
not admit and we hereby disclaim that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder, nor do we thereby admit that the terms "experts" as used in the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Michael F. Barry
----------------------------------
Director - Merrill Lynch
Investment Banking Group
December 1, 1995
<PAGE>
Exhibit 99 (g)
CONSENT OF PERSON NAMED AS A PROSPECTIVE DIRECTOR
PURSUANT TO RULE 438 OF THE SECURITIES ACT OF 1933
Pursuant to Rule 438 of the Securities Act of 1933, as amended,
the undersigned hereby consents to the references in the Registration Statement
on Form S-4 (Registration No. 33-63783) of UJB Financial Corp. ("UJB") and the
Joint Proxy Statement/Prospectus of UJB and of The Summit Bancorporation
("Summit") contained therein relating to his intent to serve as a director of
the surviving corporation upon consummation of such merger.
Dated: December 1,1995 /s/ Robert G. Cox
---------------------------
Robert G. Cox
<PAGE>
Exhibit 99(h)
CONSENT OF PERSON NAMED AS A PROSPECTIVE DIRECTOR
PURSUANT TO RULE 438 OF THE SECURITIES ACT OF 1933
Pursuant to Rule 438 of the Securities Act of 1933, as amended, the
undersigned hereby consents to the references in the Registration Statement on
Form S-4 (Registration No. 33-63783) of UJB Financial Corp. ("UBJ") and the
Joint Proxy Statement/Prospectus of UJB and of The Summit Bancorporation
("Summit") contained therein relating to his intent to serve as a director of
the surviving corporation upon consummation of such merger.
Dated: December 1, 1995 /s/ Thomas D. Sayles, Jr.
-------------------------
THOMAS D. SAYLES, JR.
