As filed with the Securities and Exchange Commission on August 6, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
SUMMIT BANCORP.
(Exact name of registrant as specified in its charter)
--------------------
NEW JERSEY 6711 22-1903313
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) identification No.)
of incorporation or
organization)
301 CARNEGIE CENTER, P.O. BOX 2066
PRINCETON, NEW JERSEY 08543-2066
(609) 987-3200
(Name, Address, including ZIP code, and telephone number, including area code,
or registrant's principal executive offices)
--------------------
RICHARD F. OBER, JR., ESQ.
Executive Vice President, General Counsel and Secretary
Summit Bancorp.
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)
--------------------
COPY TO:
JOHN J. SPIDI, ESQ.
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
1301 K STREET, N.W., SUITE 700 EAST
WASHINGTON, D.C. 20005
--------------------
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 Central Jersey Financial Corporation 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. [GRAPHIC OMITTED]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES BEING AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 2,674,194(1) $30.125(2) $80,560,094(3) $27,779.34
par value $1.20
(and associated
stock purchase
rights)(4)
=============================================================================================================
</TABLE>
(1) Based upon the number of shares of Central Jersey Financial Corporation
common stock outstanding on May 22, 1996 (other than shares currently owned
by Registrant), plus the maximum number of such shares which could be
issued prior to consummation of the merger, for an aggregate of 2,697,664
shares, multiplied by .9913, the maximum exchange ratio provided for in the
Agreement and Plan of Merger.
(2) Based upon the average of the high and low sale prices of Central Jersey
Financial Corporation common stock on July 30, 1996 as reported in the
Nasdaq Stock Market-National Market System, pursuant to Rule 457(f)(1).
(3) Based upon the price of Central Jersey Financial Corporation common stock
referred to in footnote (2) hereof multiplied by the number of shares of
Central Jersey Financial Corporation common stock referred to in footnote
(1) hereof.
(4) Prior to the occurrence of certain events, the stock purchase rights will
not be evidenced separately from the common stock.
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>
SUMMIT BANCORP.
Cross-Reference Sheet for
Registration Statement on Form S-4 and Prospectus
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ITEM
NUMBER CAPTION IN FORM S-4 CAPTION IN PROXY STATEMENT-PROSPECTUS
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;
4. Terms of the Transaction. ........................... Summary; Introduction; The Merger; Description of
Summit Capital Stock; Description of Central Jersey
Capital Stock.
5. Pro Forma Financial Information ..................... Not Applicable
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;
Summit Bancorp.; Description of Summit 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>
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<C> <C> <C>
ITEM
NUMBER CAPTION IN FORM S-4 CAPTION IN PROXY STATEMENT-PROSPECTUS
C. INFORMATION ABOUT THE COMPANY
BEING ACQUIRED
15. Information with Respect to S-3 Companies ........... Not Applicable
16. Information with Respect to S-2 or S-3
Companies .......................................... Incorporation of Certain Documents by Reference;
Central Jersey Financial Corporation; Description
of Central Jersey Stock.
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; Central Jersey Annual
Meeting; The Merger; Summit Bancorp.; Central
Jersey Financial Corporation; Election of Central
Jersey Directors; Shareholder Proposals for the
1997 Annual Meetings.
19. Information if Proxies, Consents of
Authorizations are not to be Solicited
or in an Exchange Offer ............................. Not Applicable
</TABLE>
<PAGE>
[CENTRAL JERSEY LETTERHEAD]
__________ ___, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Shareholders Meeting of
Central Jersey Financial Corporation ("Central Jersey") to be held at the East
Brunswick Chateau, 678 Cranbury Road, East Brunswick, New Jersey on __________,
__________ ___, 1996 at ___:___ _.m. Eastern time (the "Meeting").
At the Meeting shareholders will vote on a proposal to approve the
Agreement and Plan of Merger, dated May 22, 1996 (the "Merger Agreement"),
between Central Jersey and Summit Bancorp. ("Summit") under which Central Jersey
will be merged with and into Summit. Upon consummation of the Merger, each
outstanding share of Central Jersey common stock would be converted into the
right to receive Summit common stock and cash in lieu of fractional shares of
Summit Common Stock, based upon an exchange ratio to be determined subsequent to
the date of the Meeting (subject to certain anti-dilution adjustments), all as
more fully described in the accompanying Proxy Statement-Prospectus.
Consummation of the Merger is subject to certain conditions, including approval
of the Merger Agreement by Central Jersey's shareholders and approval of the
Merger by various regulatory agencies. Approval of the Merger Agreement requires
the affirmative vote of a majority of the shares cast and entitled to vote at
the Meeting. At the Meeting you will also be asked to consider and vote upon the
election of four directors of Central Jersey as described in the accompanying
proxy statement, and to approve in advance any adjournment of the Meeting which
may be necessary to solicit additional proxies for a quorum to approve the
Merger Agreement.
The attached Notice of Annual Meeting and Proxy Statement-Prospectus
contain specific information about the Merger Agreement and describe the formal
business to be transacted at the Meeting. During the Meeting, we will also
report on the operations of Central Jersey. Directors and officers of Central
Jersey will be present to respond to any questions shareholders may have.
THE BOARD OF DIRECTORS OF CENTRAL JERSEY HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF CENTRAL
JERSEY VOTE FOR APPROVAL OF THE MERGER AGREEMENT, FOR THE ELECTION OF THE NAMED
DIRECTORS AND FOR THE PROPOSAL TO APPROVE AN ADJOURNMENT OF THE MEETING FOR THE
PURPOSE OF SOLICITING ADDITIONAL PROXIES, IF NECESSARY. YOUR VOTE IS VERY
IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. On behalf of the Board of
Directors, we urge you to sign, date and return the enclosed proxy card as soon
as possible, even if you are currently planning to attend the Meeting. This will
not prevent you from voting in person, but will assure that your vote is counted
if you are unable to attend the Meeting.
Sincerely,
L. Doris Fritsch
President
<PAGE>
CENTRAL JERSEY FINANCIAL CORPORATION
591 CRANBURY ROAD
EAST BRUNSWICK, NEW JERSEY 08816
(908) 254-6600
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON 1996
The Annual Meeting of Shareholders (the "Meeting") of Central Jersey
Financial Corporation ("Central Jersey"), will be held at the East Brunswick
Chateau, 678 Cranbury Road, East Brunswick, New Jersey, on __________,
__________ ___, 1996, at ___:___ _.m. Eastern time for the purpose of
considering and voting upon the following matters:
1. A proposal to approve an Agreement and Plan of Merger, dated May 22,
1996 (the "Merger Agreement"), between Central Jersey and Summit
Bancorp. ("Summit"), pursuant to which Central Jersey will be merged
with and into Summit and shareholders of Central Jersey will receive
Summit common stock, $1.20 par value and cash in lieu of fractional
shares of Summit Common, for each share of Central Jersey common
stock, no par value, held by them, based upon an exchange ratio to be
determined subsequent to the date of the Meeting, as more fully
described in the accompanying Proxy Statement;
2. The election of four directors of Central Jersey to serve for a term
of three years or until consummation of the merger provided for in the
Merger Agreement;
3. A proposal to approve in advance an adjournment of the 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 the Board of Directors of Central Jersey (the "Adjournment
Proposal"); and
4. Such other matters as may properly come before the Meeting or any
adjournments or postponements thereof.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
Any action may be taken on any of the foregoing proposals at the Meeting on
the date specified above or on any dates to which by original or later
adjournment, the Meeting may be adjourned. Shareholders of record at the close
of business on __________ ___, 1996, are the shareholders entitled to vote at
the Meeting and any adjournments thereof.
By order of the Board of Directors
L. Doris Fritsch
President
East Brunswick, New Jersey
__________ ___, 1996
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YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO BE
PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE POSTAGE PREPAID ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING,
YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU
IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
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<PAGE>
CENTRAL JERSEY SUMMIT BANCORP.
LOGO LOGO
PROXY STATEMENT PROSPECTUS
CENTRAL JERSEY FINANCIAL CORPORATION SUMMIT BANCORP.
591 CRANBURY ROAD 301 CARNEGIE CENTER
EAST BRUNSWICK, NEW JERSEY 08816 PRINCETON, NEW JERSEY 08543-2066
(908) 254-6600 (609) 987-3200
2,674,194 SHARES OF COMMON STOCK (PAR VALUE $1.20 PER SHARE)
This Proxy Statement-Prospectus is being furnished to the holders of common
stock, no par value ("Central Jersey Common"), of Central Jersey Financial
Corporation, a New Jersey corporation and savings and loan holding company
("Central Jersey"), in connection with the solicitation of proxies by the Board
of Directors of Central Jersey ("Central Jersey Board") for use at the Annual
Meeting of Shareholders of Central Jersey to be held at the East Brunswick
Chateau, 678 Cranbury Road, East Brunswick, New Jersey at 10:00 a.m. (local
time) on September , 1996, and at any adjournments thereof ("Annual Meeting").
This Proxy Statement-Prospectus relates to up to 2,674,194 shares of common
stock, par value $1.20 per share ("Summit Common"), of Summit Bancorp., a New
Jersey corporation and registered bank holding company ("Summit" ), to be issued
upon the merger ("Merger" ) of Central Jersey with and into Summit pursuant to
an Agreement and Plan of Merger dated May 22, 1996 ("Merger Agreement" ). In the
Merger, shares of Central Jersey Common outstanding at the Effective Time (as
defined herein) will be converted into the right to receive whole shares of
Summit Common and cash in lieu of any fractional shares of Summit Common
resulting from the conversion ("Cash In Lieu Amount"), based on an exchange
ratio to be determined subsequent to the date of the Annual Meeting (the
"Exchange Ratio") adjusted, if necessary, in accordance with certain
anti-dilution provisions (whole shares of Summit Common and any Cash In Lieu
Amount determined in accordance with the Exchange Ratio, as adjusted, if
necessary, in accordance with the anti-dilution provisions, are referred to
collectively herein as the "Merger Consideration"). As set forth in the Merger
Agreement, the Exchange Ratio will be fixed based on the "Average Price" of
Summit Common over a period ending on the "Determination Date" (as both terms
are defined herein). The Exchange Ratio will not be lower than .875 and will not
be higher than .9913 except in certain circumstances more fully described
herein. See "THE MERGER-Exchange Ratio" for further discussion of the Exchange
Ratio.
This Proxy Statement-Prospectus constitutes (1) the Proxy Statement of
Central Jersey relating to the solicitation of proxies by the Central Jersey
Board for use at the Annual Meeting to be held for the purpose of considering
and voting upon (a) a proposal to approve the Merger Agreement and the
transactions contemplated thereby, (b) the election of four directors to serve
for a term of three years or until consummation of the Merger, and (c) a
proposal to approve in advance an adjournment of the Annual Meeting if
insufficient shares are present at the Annual Meeting to constitute a quorum or
to approve the Merger Agreement (the "Adjournment Proposal"), and (2) the
Prospectus of Summit with respect to the Summit Common to be issued in the
Merger. Consummation of the Merger is subject to various conditions, including
the approvals of the shareholders of Central Jersey, the Board of Governors of
the Federal Reserve System ("Federal Reserve Board"), the Office of Thrift
Supervision of the Department of the Treasury ("OTS") and the Commissioner of
Banking and Insurance of the State of New Jersey ("New Jersey Commissioner of
Banking").
Summit Common is traded on the New York Stock Exchange ("NYSE") and Central
Jersey Common is traded on the Nasdaq Stock Market-National Market System
("Nasdaq"). The closing sale prices of Summit Common and Central Jersey Common
were $38.625 and $26.50, respectively, on May 21, 1996 (the last trading day
prior to the public announcement of the Merger), and were $ and $ ,
respectively, on August , 1996.
All information contained in this Proxy Statement-Prospectus with respect
to Summit has been supplied by Summit and all information with respect to
Central Jersey has been supplied by Central Jersey.
The Proxy Statement-Prospectus is first being mailed to Central Jersey
shareholders on or about August , 1996.
------------------
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 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. 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 SUMMIT OR CENTRAL JERSEY OR IN THE INFORMATION SET
FORTH HEREIN SINCE THE DATE OF THIS PROXY STATEMENT-PROSPECTUS.
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS AUGUST__, 1996.
<PAGE>
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION ................................................. (iii)
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ....................... (iv)
SUMMARY ............................................................... 1
The Companies ................................................... 1
Central Jersey Annual Meeting ................................... 1
Stock Held by Central Jersey Affiliates ......................... 2
The Merger ...................................................... 2
Market Prices and Dividends ..................................... 5
Summary of Comparative and Pro Forma Per Share
Financial Information ....................................... 7
INTRODUCTION .......................................................... 9
ANNUAL MEETING ........................................................ 9
Record Date; Vote Required; Revocability of Proxies ............. 9
Holders of Central Jersey Voting Securities ..................... 11
SELECTED FINANCIAL DATA ............................................... 11
MARKET PRICE AND DIVIDEND MATTERS ..................................... 13
Market Price and Dividend History ............................... 13
Coordination and Determination of Dividends
Under Merger Agreement ...................................... 14
Dividend Limitations ............................................ 14
PROPOSAL I - THE MERGER ............................................... 14
General ......................................................... 14
Closing and Effective Time ...................................... 14
Conversion of Central Jersey Common ............................. 15
Exchange Ratio .................................................. 15
Exchange of Central Jersey Certificates ......................... 15
Central Jersey Director and Employee Stock Options .............. 16
Recommendation of Central Jersey Board .......................... 17
Background ...................................................... 17
Reasons for the Merger .......................................... 18
Opinion of Central Jersey's Financial Advisor ................... 19
Stock Option Agreement .......................................... 22
Regulatory Approvals ............................................ 24
Interests of Certain Persons in the Merger ...................... 26
The Merger Agreement ............................................ 28
Charter and By-Laws of Surviving Corporation .................... 30
Board of Directors and Officers of Surviving Corporation ........ 30
No Dissenters' Rights ........................................... 30
New York Stock Exchange Listing ................................. 30
Accounting Treatment ............................................ 30
Certain Federal Income Tax Consequences of the Merger ........... 30
Resale of Summit Common ......................................... 31
Differences in Shareholders' Rights ............................. 32
SUMMIT BANCORP. ....................................................... 36
Description of Business ......................................... 36
(i)
<PAGE>
PAGE
DESCRIPTION OF SUMMIT CAPITAL STOCK ................................... 37
Common Stock .................................................... 37
Preferred Stock ................................................. 38
Shareholder Rights Plan ......................................... 38
CENTRAL JERSEY FINANCIAL CORPORATION .................................. 39
Description of Business ......................................... 39
DESCRIPTION OF CENTRAL JERSEY CAPITAL STOCK ........................... 39
Common Stock .................................................... 39
Preferred Stock ................................................. 40
PROPOSAL II - ELECTION OF DIRECTORS ................................... 41
PROPOSAL III - ADJOURNMENT OF ANNUAL MEETING .......................... 51
SHAREHOLDER PROPOSALS ................................................. 51
OTHER MATTERS ......................................................... 51
LEGAL MATTERS ......................................................... 51
EXPERTS ............................................................... 51
AGREEMENT AND PLAN OF MERGER (without exhibits) ................. Appendix A
OPINION OF ADVEST, INC. ......................................... Appendix B
CENTRAL JERSEY FINANCIAL CORPORATION STOCK OPTION AGREEMENT ..... Appendix C
(ii)
<PAGE>
AVAILABLE INFORMATION
Each of Summit and Central Jersey 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 Summit and Central Jersey 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. The Commission maintains an internet site on the World Wide Web
containing reports, proxy and information statements and other information filed
electronically by Summit and Central Jersey with the Commission. The address of
the World Wide Web site maintained by the Commission is: http://www.sec.gov. In
addition, Summit Common is listed on the NYSE and reports, proxy statements and
other information concerning Summit are available for inspection at the offices
of the NYSE, 20 Broad Street, New York, New York 10005. Central Jersey Common is
listed on Nasdaq and reports, proxy statements and other information concerning
Central Jersey are available for inspection at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
Summit 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 Summit Common 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.
(iii)
<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 Summit (File No.
1-6451) with the Commission: (1) the Annual Report on Form 10-K for the fiscal
year ended December 31, 1995; (2) the Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1996; (3) the Current Reports on Form 8-K dated
March 1, 1996 (as amended by Form 8K/A), March 31, 1996, April 11, 1996, May 22,
1996 and July 16, 1996; and (4) the description of Summit Common contained in
Summit'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 Summit Common contained in Summit'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 Central
Jersey (File No. 0-17839) with the Commission: (1) the Annual Report on Form
10-K for the fiscal year ended March 31, 1996; and (2) the Current Report on
Form 8-K dated July 29, 1996. 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. A copy of Central Jersey's Annual Report on Form
10-K for the fiscal year ended March 31, 1996 is being furnished along with this
Proxy Statement-Prospectus.
All documents filed by Summit and Central Jersey 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 Annual Meeting 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. SUMMIT AND CENTRAL JERSEY 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 SUMMIT SHOULD BE DIRECTED TO
RICHARD F. OBER, JR., SECRETARY, SUMMIT BANCORP., 301 CARNEGIE CENTER, P.O. BOX
2066, PRINCETON, NEW JERSEY 08543-2066 (TELEPHONE (609) 987-3442). REQUESTS FOR
DOCUMENTS FILED BY CENTRAL JERSEY SHOULD BE DIRECTED TO CHARLES BIONDI,
SECRETARY, CENTRAL JERSEY FINANCIAL CORPORATION, 591 CRANBURY ROAD, EAST
BRUNSWICK, NEW JERSEY 08816, (TELEPHONE (908) 254-6600). IN ORDER TO ENSURE
TIMELY DELIVERY OF DOCUMENTS PRIOR TO THE ANNUAL MEETING, ANY REQUEST SHOULD BE
MADE BY SEPTEMBER , 1996.
(iv)
<PAGE>
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SUMMARY
THE FOLLOWING CONSTITUTES A BRIEF SUMMARY FOR THE CONVENIENCE OF THE
SHAREHOLDERS OF CENTRAL JERSEY OF THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT-PROSPECTUS, INCLUDING THE APPENDICES HERETO, RELATING TO THE PROPOSAL
TO APPROVE THE MERGER AGREEMENT. THE SUMMARY IS NECESSARILY SELECTIVE AND IS
QUALIFIED IN ITS ENTIRETY BY THE MORE EXTENSIVE DISCUSSION CONTAINED ELSEWHERE
IN THIS PROXY STATEMENT-PROSPECTUS, THE APPENDICES HERETO AND IN THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN RELATING TO THE PROPOSAL TO APPROVE THE MERGER
AGREEMENT. CENTRAL JERSEY SHAREHOLDERS ARE ENCOURAGED TO READ CAREFULLY THIS
PROXY STATEMENT-PROSPECTUS, INCLUDING THE APPENDICES.
THE COMPANIES
SUMMIT BANCORP.
Summit Bancorp., a New Jersey corporation and registered bank holding
company with its principal executive offices at 301 Carnegie Center, Princeton,
New Jersey, through its wholly-owned subsidiary banks, Summit Bank (Hackensack,
NJ) and Summit Bank (Bethlehem, PA), operated 340 banking offices located in New
Jersey and eastern Pennsylvania as of June 30, 1996. Its telephone number is
(609) 987-3200. The subsidiary banks of Summit 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, Summit owns nonbank
subsidiaries that are engaged 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.
CENTRAL JERSEY FINANCIAL CORPORATION
Central Jersey Financial Corporation, a New Jersey corporation and savings
and loan holding company with its principal executive offices at 591 Cranbury
Road, East Brunswick, New Jersey, through its wholly-owned savings and loan
association subsidiary, Central Jersey Savings Bank, SLA ("CJSB"), operated, as
of June 30, 1996, six banking offices located in Jamesburg, South River, North
Brunswick, East Brunswick (2) and Spotswood, New Jersey. Its telephone number is
(908) 254-6600. Central Jersey's primary business consists of attracting
deposits from the general public and originating loans that are secured by
residential properties, as well as originating commercial and consumer loans.
CENTRAL JERSEY ANNUAL MEETING
TIME, DATE, PLACE AND PURPOSE
The Annual Meeting will be held on September___, 1996 at 10:00 a.m. (local
time), at the East Brunswick Chateau, 678 Cranbury Road, East Brunswick, New
Jersey, to consider and vote upon (1) a proposal to approve the Merger Agreement
and the transactions contemplated thereby, (2) the election of four directors to
serve for a term of three years or until the consummation of the Merger and (3)
a proposal to approve in advance an adjournment of the Annual Meeting if
insufficient shares are present to constitute a quorum or to approve the Merger
Agreement. A copy of the Merger Agreement is attached hereto as Appendix A.
RECORD DATE; VOTE REQUIRED
The record date ("Record Date") for determining Central Jersey shareholders
entitled to notice of and to vote at the Annual Meeting is August , 1996. The
presence, in person or by proxy, of holders of shares entitled to cast a
majority of the votes at the Annual Meeting is necessary to constitute a quorum
at the Annual Meeting. Assuming a quorum is present, an affirmative vote of a
majority of the votes cast and entitled to vote at the Annual Meeting is
necessary to approve the Merger Agreement and the Adjournment Proposal and an
affirmative vote of a plurality of the votes cast at the Annual Meeting is
necessary to elect the four directors. In the event a quorum is not present or
there are insufficient votes to approve any proposal, the Annual Meeting may be
adjourned from time to time by a majority of those present in person or by proxy
in order to permit, as appropriate, further solicitation of proxies by the
Central Jersey Board.
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1
<PAGE>
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STOCK HELD BY CENTRAL JERSEY AFFILIATES
The directors and executive officers of Central Jersey and their affiliates
beneficially owned, as of the Record Date, ___ shares of Central Jersey Common
(assuming the exercise of all options to purchase Central Jersey Common held by
such persons and outstanding on such date), representing ___% of the issued and
outstanding shares of Central Jersey Common. The directors and executive
officers of Central Jersey have all indicated that they will vote their shares
of Central Jersey Common in favor of the proposal to approve the Merger
Agreement.
Summit beneficially owns 129,275 shares of Central Jersey Common which
represents 4.84% of the outstanding Central Jersey Common. Also, by virtue of
holding the Central Jersey Option (as defined herein), Summit could be deemed to
be the beneficial owner of an additional 530,986 shares of Central Jersey
Common. Combined, the shares beneficially owned and the shares deemed
beneficially owned by Summit represent 20.64% of Central Jersey Common
outstanding on the Record Date (assuming, for purposes of calculating this
percentage, that the shares represented by the Central Jersey Option were issued
and outstanding on such date). However, the Central Jersey Option is not
presently exercisable and the Central Jersey Common represented thereby has not
been issued, is not outstanding and cannot be voted. Summit intends to vote its
shares in favor of the proposal to approve the Merger Agreement.
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 with the Secretary of
State of the State of New Jersey immediately following the closing of the
Merger. If the Merger is approved by Central Jersey shareholders, subject to the
satisfaction or waiver of certain other conditions set forth in the Merger
Agreement, it is currently contemplated that the Effective Time will occur
during the fourth calendar quarter of 1996. At the Effective Time, Central
Jersey will be merged with and into Summit. See "THE MERGER--Closing and
Effective Time."
EXCHANGE RATIO
The shares of each holder of Central Jersey Common will be converted in the
Merger into the right to receive the Merger Consideration. However, the number
of whole shares of Summit Common and the Cash In Lieu Amount constituting the
Merger Consideration, and the Exchange Ratio upon which the determination of the
Merger Consideration will be based, have not been fixed and will not be fixed
until a date subsequent to the Annual Meeting. The Merger Agreement provides
that the Exchange Ratio (and thereby the shares of Summit Common and Cash In
Lieu Amount constituting the Merger Consideration) will be fixed as of the
"Determination Date," a date which may be any date selected by Summit between,
and including, the closing date of the Merger (the "Closing Date") and the date
which is ten business days prior to the Closing Date. The Exchange Ratio will be
set by reference to the "Average Price" of Summit Common, which will be the
price representing the average of the closing prices of Summit Common on the
NYSE--Composite Transactions Tape over a ten consecutive trading-day period
ending on the Determination Date, and will be based upon the following criteria:
"AVERAGE PRICE" OF SUMMIT COMMON AS OF
THE "DETERMINATION DATE" EXCHANGE RATIO
------------------------------------- ---------------
Equal to or greater than $32.57 ................. .875
Less than $32.57 but equal to or
greater than $28.75 ......................... $28.50 / Average Price
Less than $28.75 ................................ .9913; however Central
Jersey may terminate the
Merger Agreement
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<PAGE>
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Central Jersey shareholders will be required to vote on the proposal to
approve the Merger Agreement prior to knowing the Exchange Ratio.
The Exchange Ratio is also subject to certain anti-dilution adjustments.
See "THE MERGER-Exchange Ratio."
CONVERSION OF OUTSTANDING CENTRAL JERSEY COMMON AND EXCHANGE OF CERTIFICATES
At the Effective Time, each outstanding share of Central Jersey Common,
other than shares of Central Jersey Common beneficially owned by Summit or a
subsidiary of Summit (other than shares held in a fiduciary capacity or as a
result of debts previously contracted), if any, or shares held in the treasury
of Central Jersey, if any, will be converted into and represent the right to
receive the Merger Consideration. As promptly as practicable after the Effective
Time, but in no event more than 10 days after, First Chicago Trust Company of
New York, acting as the exchange agent for the Merger (the "Exchange Agent")
receives an accurate and complete list of all holders of record of outstanding
Central Jersey Common as of the Effective Time from Central Jersey, Summit will
cause the Exchange Agent to send to each Central Jersey shareholder a letter of
transmittal and instructions for exchanging certificates representing his or her
Central Jersey Common ("Central Jersey Certificates" ) for a certificate
representing whole shares of Summit Common ("Summit Certificate") and, if
entitled thereto, a check representing a Cash In Lieu Amount. Central Jersey
shareholders should not surrender their Central Jersey Certificates until they
receive these instructions. See "THE MERGER-Exchange of Central Jersey
Certificates."
In the event a Central Jersey Certificate has been lost, stolen, destroyed,
or is not properly registered, the holder of Central Jersey Common represented
thereby is urged, in order to avoid delays and additional expense, to notify
Central Jersey's registrar and transfer agent, American Stock Transfer & Trust
Company, telephone number (718) 921-8200, of such fact and begin the process of
having replacement certificates issued.
CENTRAL JERSEY DIRECTOR AND EMPLOYEE STOCK OPTIONS
Each stock option granted to Central Jersey nonemployee directors or
employees ("Stock Option") under the Central Jersey Non-Employee Director Stock
Option Plan, the Central Jersey 1993 Stock Option and Incentive Plan or the
Central Jersey 1984 Stock Option and Incentive Plan ("Central Jersey Option
Plans") which is outstanding at the Effective Time shall receive on or shortly
after the Effective Time, at the election of the holder thereof, either cash or
shares of Summit Common equal in value to the aggregate difference between the
exercise price of such Stock Options (after an adjustment based on the Exchange
Ratio) and the market price of the Summit Common as reported on the NYSE -
Composite Transactions Tape on the business day immediately preceding the
Effective Time. See "THE MERGER - Central Jersey Director and Employee Stock
Options." Accordingly, the vesting of any unexercisable Stock Options will be
accelerated in connection with the Merger. See "THE MERGER-Interests of Certain
Persons in the Merger."
RECOMMENDATION OF CENTRAL JERSEY BOARD
The Central Jersey Board unanimously recommends that Central Jersey
shareholders vote to approve the Merger Agreement and the Adjournment Proposal.
See "THE MERGER-Recommendation of Central Jersey Board."
OPINION OF CENTRAL JERSEY'S FINANCIAL ADVISOR
Central Jersey engaged Advest, Inc. ("Advest") to render financial advisory
and investment banking services in connection with Central Jersey management's
decision to explore various methods to enhance Central Jersey shareholder value.
Pursuant to such engagement, Advest has evaluated the fairness of the
consideration to be received by Central Jersey's shareholders. Advest has
delivered to Central Jersey an opinion dated August , 1996 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 Central Jersey's shareholders. A copy of Advest's opinion is attached as
Appendix B to this Proxy Statement-Prospectus and should be read in its
entirety. See "THE MERGER--Opinion of Central Jersey's Financial Advisor."
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3
<PAGE>
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DISSENTERS' RIGHTS
Under the New Jersey Business Corporation Act, there are no dissenters'
rights of appraisal available to holders of Central Jersey Common in connection
with the Merger. See "THE MERGER--No Dissenters' Rights."
ACCOUNTING TREATMENT
It is anticipated that the Merger, when consummated, will be accounted for
as a purchase. See "THE MERGER--Accounting Treatment."
FEDERAL INCOME TAX CONSEQUENCES
Thompson Coburn, Summit's legal counsel, has delivered its opinion to the
effect that, assuming the Merger occurs in accordance with the Merger Agreement
and conditioned on the accuracy of certain representations made by Summit and
Central Jersey and certain shareholders of Central Jersey, the Merger will
constitute a "reorganization" within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended ("Code" ), for federal income tax purposes and
that, accordingly, no gain or loss will be recognized by Central Jersey
shareholders who exchange their shares of Central Jersey Common solely for
shares of Summit Common in the Merger, except with respect to any Cash In Lieu
Amount received. Each Central Jersey shareholder is urged to consult his or her
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 of the
Merger."
REGULATORY APPROVALS
Consummation of the Merger requires, and is conditioned upon receipt of,
the approval of the Merger by the Federal Reserve Board, the OTS, and the New
Jersey Commissioner of Banking. See "THE MERGER-Regulatory Approvals."
CONDITIONS OF THE MERGER
Consummation of the Merger is subject, among other things, to (i) the
approval of the Merger Agreement by the requisite vote of Central Jersey's
shareholders; (ii) the receipt of all requisite regulatory approvals or consents
and the expiration of any required waiting periods in connection therewith;
(iii) effectiveness of the registration statement; (iv) receipt by Summit and
Central Jersey of the opinion of Thompson Coburn as to certain federal income
tax consequences of the Merger; (v) the Summit Common to be issued in the Merger
having been approved for listing on the NYSE subject to official notice of
issuance; (vi) the absence of any material litigation; (vii) the absence of
regulatory agreements relating to the respective parties; and (viii) the
delivery of officers certificates by Central Jersey and Summit. See "THE
MERGER-The Merger Agreement-Conditions to the Merger: Termination".
TERMINATION
The Merger Agreement may be terminated by mutual consent of the Summit
Board and Central Jersey Board. The Merger Agreement may also be terminated by
either the Summit Board or Central Jersey Board if the conditions precedent to
either Summit's or Central Jersey's obligations to close under the Merger
Agreement have not been met. Further, the Merger Agreement may be terminated by
either Board if (i) the shareholders of Central Jersey have failed to approve
the Merger; (ii) a material breach of a warranty or representation or covenant
has occurred and not been cured or is not capable of being cured (after 30 days
notice thereof has been given and provided that the terminating party is not in
material breach of any representation, warranty, covenant or other agreement);
(iii) Advest is unable to deliver to Central Jersey an opinion as to the
fairness of the transaction; or (iv) the Closing is not consummated on or before
March 31, 1997.
In addition, the Central Jersey Board may terminate the Merger Agreement if
the Average Price on the Determination Date is less than $28.75.
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4
<PAGE>
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
Directors and executive officers of Central Jersey have interests in the
Merger that are in addition to their interests as shareholders of Central
Jersey. These interests include: (1) the indemnification of directors and
officers of Central Jersey against certain claims that may arise after the
Effective Time based on services provided to Central Jersey or any subsidiary of
Central Jersey prior to the Effective Time; (2) Summit's covenant to use its
best efforts to purchase insurance for six years after the Effective Time,
subject to a maximum premium limitation, protecting Central Jersey directors and
officers against such claims; (3) the acceleration of the vesting of any
unexercisable outstanding stock options and the payment on or shortly after the
Effective Time to all nonemployee directors and executive officers of Central
Jersey holding outstanding Stock Options at the Effective Time of the value of
their Stock Options in cash or shares of Summit Common; (4) for L. Doris
Fritsch, Emile L. LeLand, Jr. and John J. Doherty, each an executive officer,
payments under their employment agreements with CJSB, in the event their
employment is terminated without cause within one year of a change of control,
of an amount equal to 2.99 times their "base amount" (as defined in section 280G
of the Internal Revenue Code) and, for Mrs. Fritsch and Mr. LeLand, coverage for
four years under Central Jersey employee benefit plans (one year for Mr.
Doherty); and (5) for executive officers other than Mrs. Fritsch and Messrs.
LeLand and Doherty, payments under the CJSB severance plans. These interests and
the underlying assumptions are described in more detail below under "THE MERGER
- - Interests of Certain Persons in the Merger."
DIFFERENCE IN SHAREHOLDERS' RIGHTS
Because Summit and Central Jersey are both New Jersey corporations, any
differences in the rights of holders of their respective common stock are due to
differences in the certificates of incorporation and by-laws of the two
corporations. At the Effective Time, holders of Central Jersey Common will
become shareholders of Summit and their rights as shareholders of Summit will be
determined by Summit's Restated Certificate of Incorporation and By-Laws. See
"THE MERGER-Differences in Shareholders' Rights".
STOCK OPTION AGREEMENT
As an inducement and condition to Summit's willingness to enter into the
Merger Agreement, Central Jersey (as issuer) entered into the Central Jersey
Stock Option Agreement (the "Merger Option Agreement") with Summit (as grantee),
dated as of May 23, 1996. The Merger Option Agreement is set forth in Appendix C
to this Proxy Statement-Prospectus.
Pursuant to the Merger Option Agreement, Central Jersey granted to Summit
an irrevocable option (the "Central Jersey Option"), exercisable under certain
limited and specifically defined circumstances, none of which, to the best of
Summit's and Central Jersey's knowledge, has occurred as of the date hereof, to
purchase up to 530,986 shares of Central Jersey Common at $27.00 per share,
subject to adjustment in certain circumstances.
The Merger Option Agreement is 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
Central Jersey prior to the Merger. See "THE MERGER-Stock Option Agreement".
MARKET PRICES AND DIVIDENDS
Summit Common is listed and traded on the NYSE under the symbol "SUB".
Central Jersey Common is listed and traded on Nasdaq under the symbol "CJFC".
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 Summit Common and of a share of Central Jersey Common
and dividends declared per share on Summit Common and Central Jersey Common.
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5
<PAGE>
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<TABLE>
<CAPTION>
SUMMIT COMMON CENTRAL JERSEY COMMON
--------------------------------- -------------------------------
DIVIDENDS DIVIDENDS
CALENDAR YEAR HIGH LOW PER SHARE HIGH LOW PER SHARE
- ------------ -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1993 ................................... $33.25 $21.63 $0.69 $16.81 $ 9.06 $0.28
1994 ................................... 29.25 22.50 0.94 22.00 14.56 0.38
1995 ................................... 37.25 24.13 1.19 25.50 15.50 0.44
1996 (through August , 1996) ........
</TABLE>
The following table presents (rounded to the nearest cent) for May 21,
1996, (the last full trading day prior to the public announcement of the
execution of the Merger Agreement), and as of August , 1996 the last sale price
of a share of Summit Common, the last sale price of a share of Central Jersey
Common and the pro forma equivalent in Summit Common of a share of Central
Jersey Common computed by multiplying the last sale price of Summit Common on
each of the dates specified in the table by an Exchange Ratio that was fixed by
assuming, for purposes of the Exchange Ratio criteria set forth in the Merger
Agreement (see "THE MERGER-Exchange Ratio"), that the date set forth in the
first column of the table was the "Determination Date" and that the Average
Price was the last sale price of Summit Common on the assumed Determination
Date. The pro-forma equivalents set forth below are provided for illustration
purposes only. Neither pro forma equivalent is intended to represent the actual
pro forma equivalent that will be applicable to the Merger; such amount will not
be calculable until a date subsequent to the Annual Meeting.
<TABLE>
<CAPTION>
PRO FORMA
CENTRAL JERSEY EXCHANGE
SUMMIT CENTRAL JERSEY EQUIVALENT RATIO (1)
------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
May 21, 1996 ............. $38.63 $26.50 $33.80 .875
August__, 1996 ...........
</TABLE>
ON THE DATE THE EXCHANGE RATIO IS FIXED AND ON THE DATE SUMMIT CERTIFICATES
ARE RECEIVED BY CENTRAL JERSEY SHAREHOLDERS ENTITLED THERETO, THE PRICE OF A
SHARE OF SUMMIT COMMON, THE PRO FORMA CENTRAL JERSEY EQUIVALENT AND THE ACTUAL
EXCHANGE RATIO APPLICABLE IN THE MERGER MAY DIFFER FROM THOSE SET FORTH ABOVE.
CENTRAL JERSEY SHAREHOLDERS SHOULD OBTAIN CURRENT PRICE QUOTATIONS. IN ADDITION,
PAST DIVIDENDS PAID IN RESPECT OF SUMMIT COMMON AND CENTRAL JERSEY 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 SUMMIT COMMON AND CENTRAL JERSEY COMMON BEFORE OR AFTER THE EFFECTIVE
TIME. SEE "MARKET PRICE AND DIVIDEND MATTERS."
The following table presents, as of August , 1996, the current annualized
dividend rate for a share of Summit Common, for a share of Central Jersey
Common, and (rounded to the nearest cent) for the pro forma equivalent in Summit
Common of a share of Central Jersey Common computed by multiplying the
annualized dividend rate of a share of Summit Common by Exchange Ratios of .875
and .9913.
<TABLE>
<CAPTION>
PRO FORMA
CENTRAL JERSEY EXCHANGE
SUMMIT CENTRAL JERSEY EQUIVALENT RATIO (1)
------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
August __, 1996 ............ $1.28 $1.12 $1.12 .875
$1.27 .9913
</TABLE>
- ----------
(1) The listed Exchange Ratios represent the high and low Exchange Ratios
set forth in the Merger Agreement and have been furnished for illustration
purposes only. The Exchange Ratio has not been fixed, will not be fixed until a
date subsequent to the scheduled date of the Annual Meeting, and may, when fixed
as provided for in the Merger Agreement, differ from the Exchange Ratios set
forth above. The Exchange Ratios listed above would be applicable in the
following situations:
AVERAGE PRICE OF SUMMIT COMMON
EXCHANGE RATIO AS OF DETERMINATION DATE
-------------- -------------------------------
.875 Equal to or greater than $32.57
.9913 Less than $28.75
The Merger Agreement provides that, for Average Prices of Summit Common of
less than $32.57 but equal to or greater than $28.75, the Exchange Ratio would
vary from .875 to .9913 (based on a formula of $28.50 / Average Price). If the
Average Price of Summit Common on the Determination Date is less than $28.75,
Central Jersey can terminate the Merger Agreement.
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SUMMARY OF COMPARATIVE AND PRO FORMA PER SHARE FINANCIAL INFORMATION
The following summary presents, for the periods indicated, selected
comparative and pro forma per share financial information: (i) on a historical
basis for both Summit and Central Jersey; (ii) on a pro forma combined basis for
Summit, giving effect to the Merger; and (iii) on a pro forma equivalent basis
per common share for Central Jersey. Such financial information is computed on a
pro forma equivalent basis with respect to a share of Central Jersey Common by
multiplying the pro forma combined amount (giving effect to the Merger) by
Exchange Ratios of .875 and .9913. (If the Average Price of Summit Common is
less than $32.57 but equal to or greater than $28.75, the Exchange Ratio would
vary from .875 to .9913, based on a formula of $28.50 divided by the Average
Price). As previously described, the Exchange Ratio has not yet been fixed and
will not be fixed until a date subsequent to the Annual Meeting. When so fixed
the Exchange Ratio may differ from any of the Exchange Ratios set forth below
for illustration purposes). See "THE MERGER-Exchange Ratio". The following
unaudited pro forma financial information as of and for the fiscal year ended
December 31, 1995 combines the historical audited financial statements of Summit
as of and for the year ended December 31, 1995, as filed on Form 10-K for the
fiscal year ended December 31, 1995, and of Central Jersey as of and for the
year ended March 31, 1996, as filed on Form 10-K for the fiscal year ended March
31, 1996, giving effect to the Merger. The unaudited pro forma financial
information for the six months ended June 30, 1996 combines the historical
unaudited financial statements of Summit at June 30, 1996 and for the six months
ended June 30, 1996 and the unaudited financial statements of Central Jersey at
June 30, 1996 and for the six calendar months ended June 30, 1996, giving effect
to the Merger. The pro forma information does not reflect anticipated cost
savings expected to be realized from the Merger. The allocations of purchase
costs are subject to final determination, based upon estimates and other
evaluations of fair value, as of the close of the transaction. Therefore, the
allocations reflected in the unaudited pro forma financial information may
differ from the amounts ultimately determined. The unaudited pro forma
information does not purport to be indicative of the combined financial position
or results of operations of future periods. The pro forma per share information
includes the effect of the intention of Summit to repurchase outstanding shares
of Summit Common in a number equal to the approximate amount of Summit
Common to be issued in the Merger. See "THE MERGER--Conversion of Central Jersey
Common."
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<TABLE>
<CAPTION>
SIX MONTHS ENDED FOR THE MOST
JUNE 30, 1996 RECENT FISCAL YEAR (1)
--------------- ----------------------
<S> <C> <C>
NET INCOME PER SHARE (2)
Summit (3)(4) ................................................. $.77 $2.77
Pro forma combined at Exchange Ratio of (4):
.875 ........................................................ .77 2.77
.9913 ....................................................... .76 2.76
Central Jersey (fully diluted) (5) ............................ .91 1.96
Pro forma Central Jersey equivalent at Exchange Ratio of (6):
.875 ........................................................ .67 2.42
.9913 ....................................................... .75 2.74
DIVIDENDS PER SHARE (2)
Summit ........................................................ .64 1.19
Pro forma combined (7) ........................................ .64 1.19
Central Jersey (5) ............................................ .40 0.46
Pro forma Central Jersey equivalent at Exchange Ratio of (6):
.875 ........................................................ .56 1.04
.9913 ....................................................... .63 1.18
AT MOST RECENT
JUNE 30, 1996 FISCAL YEAR END (1)
-------------- -------------------
BOOK VALUE PER SHARE (2)
Summit ........................................................ $19.39 $19.89
Pro forma combined ............................................ 19.38 19.88
Central Jersey ................................................ 20.98 20.84
Pro forma Central Jersey equivalent at Exchange Ratio of (6):
.875 ........................................................ 16.96 17.40
.9913 ....................................................... 19.21 19.71
</TABLE>
- ----------
(1) Summit's most recent fiscal year end isDecember 31, 1995 and Central
Jersey's most recent fiscal year end is March 31, 1996.
(2) The financial information for Central Jersey and pro forma combined has
been restated to reflect all stock dividends. Pro Forma combined reflects
the elimination of Central Jersey Common owned by Summit Bancorp.
(3) In the first quarter of 1996, Summit recorded non recurring merger and
restructuring charges of $70 million or $.75 per share (after tax) for
expenses incurred in conjunction with the acquisitions of The Summit
Bancorporation, The Flemington National Bank and Trust Company, Garden
State Bancshares, and a supermarket branch initiative.
(4) Summit and pro forma combined net income per common share were computed
based on net income less preferred dividends divided by the weighted
average number of shares outstanding during the periods presented. Common
stock equivalents are not included in the calculation as they have no
material dilutive effect.
(5) Central Jersey's fiscal year end is March 31, 1996. The amounts reported
for the six months ended June 30, 1996 include Central Jersey's results of
operations and dividends per share for the three months ended March 31,
1996 and three months ended June 30, 1996.
(6) Central Jersey pro forma equivalent per share data is computed by
multiplying Summit Bancorp's pro forma per share data (giving effect to the
Merger) by the Exchange Ratios.
(7) Pro forma amounts assume that Summit would have declared cash dividends per
share equal to its historical cash dividends per share declared.
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8
<PAGE>
INTRODUCTION
This Proxy Statement-Prospectus is being furnished to Central Jersey
shareholders as of the Record Date in connection with the solicitation of
proxies by the Central Jersey Board for use at the Annual Meeting to be held on
September , 1996 or any adjournments thereof, at the East Brunswick Chateau, 678
Cranbury Road, East Brunswick, New Jersey at 10:00 a.m. (local time). The
purpose of the Annual Meeting is to consider and vote upon (i) a proposal to
approve the Merger Agreement and the transactions contemplated thereby; (ii) the
election of four directors to serve for a term of three years or until the
Effective Time of the Merger and (iii) a proposal to approve the Adjournment
Proposal.
THE BOARD OF DIRECTORS OF CENTRAL JERSEY HAS APPROVED THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT CENTRAL JERSEY SHAREHOLDERS VOTE FOR ITS
APPROVAL. THE BOARD OF DIRECTORS OF CENTRAL JERSEY ALSO RECOMMENDS THAT CENTRAL
JERSEY SHAREHOLDERS VOTE FOR THE FOUR DIRECTOR NOMINEES NAMED HEREIN AND FOR
APPROVAL OF THE ADJOURNMENT PROPOSAL.
ANNUAL MEETING
RECORD DATE; VOTE REQUIRED; REVOCABILITY OF PROXIES
The securities to be voted at the Annual Meeting consist of shares of
Central Jersey Common, with each share entitling its owner to one vote on each
Board of Director position to be filled at the Annual Meeting and one vote on
each proposal and on all other matters properly brought before the Annual
Meeting. Central Jersey had no other class of voting securities entitled to vote
on the Merger Agreement, the election of directors or the Adjournment Proposal
outstanding at the close of business on the Record Date, August___, 1996. There
were ______ record holders of Central Jersey Common and ________ shares of
Central Jersey Common outstanding and eligible to be voted at the Annual Meeting
as of the Record Date. It is anticipated that this Proxy Statement-Prospectus,
together with the enclosed proxy card, will be mailed to shareholders on or
about August___, 1996.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Central Jersey will constitute a
quorum for the transaction of business. By checking the appropriate box on the
proxy card provided by the Central Jersey Board, a shareholder may vote "FOR"
approval of the Merger Agreement, vote "AGAINST" approval of the Merger
Agreement or "ABSTAIN". Under the New Jersey Business Corporation Act and
Central Jersey's Certificate of Incorporation and By-Laws, the approval of the
Merger Agreement requires the affirmative vote of a majority of the votes cast
and entitled to vote thereon at the Annual Meeting, provided a quorum is
present, without regard to abstentions or broker non-votes as described below.
Under Central Jersey's Certificate of Incorporation, the approval of the Merger
Agreement requires only the vote of a majority of the votes cast and entitled to
vote thereon because the Merger meets the conditions set forth in Central
Jersey's Certificate of Incorporation which render inapplicable the
supermajority voting requirement for certain business combinations set forth
therein. See "THE MERGER-Differences in Shareholders' 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 Adjournment Proposal unless the
shareholder has voted FOR the approval of the Adjournment Proposal on the proxy
card. The Annual Meeting may be adjourned from time to time if necessary to
obtain a quorum or to obtain the votes necessary to approve the Merger
Agreement. The approval of the Merger Agreement by Central Jersey shareholders
is a condition to the consummation of the Merger. See "THE MERGER -The Merger
Agreement-Conditions to the Merger; Termination."
If a quorum is not obtained, or if fewer shares of Central Jersey 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 Adjournment Proposal have been voted in favor of the Adjournment
Proposal, the Annual 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 Annual Meeting, all proxies will be voted in the
same manner, as such proxies would have been voted at the original convening of
the Annual Meeting (except for any proxies which have theretofore effectively
been revoked or withdrawn).
9
<PAGE>
The proxy card being provided by the Central Jersey Board of Directors
enables a Central Jersey shareholder to vote for the election of the nominees
proposed by the Central Jersey Board, or to withhold authority to vote for one
or more of the nominees being proposed. Assuming the presence of a quorum at the
Annual Meeting, the vote of a plurality of the votes cast at the Annual Meeting
is required to elect the four directors, without regard to either broker
non-votes or proxies as to which authority to vote for one or more of the
nominees being proposed is withheld. The affirmative vote of a majority of the
votes cast at the Annual Meeting is required to approve the Adjournment
Proposal. As to other matters that may properly come before the Annual Meeting,
unless otherwise provided in the certificate of incorporation or bylaws of
Central Jersey or by statute, a majority of those votes cast by shareholders
shall be sufficient to pass on a matter.
For purposes of determining the number of votes cast with respect to a
matter, only those votes cast "for" or "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 with respect to which the broker or nominee does not have
discretionary voting power under the applicable NYSE rules) 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.
If the enclosed form of proxy is properly executed and returned to Central
Jersey in time to be voted at the Annual Meeting, the shares represented thereby
will be voted in accordance with the instructions marked thereon. Proxies that
are executed, but as to which no instructions have been marked, will be voted
FOR the approval of the Merger Agreement, FOR election of the management
designated nominees for director and FOR the approval of the Adjournment
Proposal except that if a proxy is voted against the Merger Agreement and no
instruction is given in connection with the Adjournment Proposal, the proxy will
not be voted in favor of the Adjournment Proposal. Should any other matter
properly come before the Annual Meeting, the persons named as proxies in the
accompanying proxy, acting by a plurality 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,
Central Jersey Board does not know of any matters, other than those referred to
in the Notice of Annual Meeting of Shareholders, to be presented for action at
the Annual Meeting.
Shareholders who execute a proxy retain the right to revoke it at any time
prior to its use. Unless so revoked, the shares represented by such proxies will
be voted at the Annual Meeting and all adjournments thereof. Proxies may be
revoked by written notice to the Secretary of Central Jersey, Charles Biondi, at
the address of Central Jersey shown above or by the filing of a later dated
proxy prior to a vote being taken at the Annual Meeting. A proxy will not be
voted if a shareholder attends the Annual Meeting and votes in person.
If a person holding Central Jersey Common in street name wishes to vote
such Central Jersey Common at the Annual Meeting, the person must obtain from
the nominee holding the Central Jersey Common in street name a properly executed
"legal proxy" identifying the individual as a Central Jersey shareholder,
authorizing the Central Jersey shareholder to act on behalf of the nominee at
the Annual Meeting and identifying the number of shares with respect to which
the authorization is granted.
The cost of soliciting proxies will be borne by Central Jersey. In addition
to use of the mails, proxies may be solicited personally or by telephone,
telecopier or telegraph by officers, directors or employees of Central Jersey,
who will not be specially compensated for such solicitation activities.
Arrangements will also be made by Central Jersey to reimburse brokerage houses
and other custodians, nominees and fiduciaries for their reasonable expense
incurred in forwarding solicitation materials to the beneficial owners of shares
held of record by such persons. Central Jersey has
retained_____________________, a proxy soliciting firm, to assist in the
solicitation of proxies, at a fee of $ _____, including direct telephone
solicitations, if authorized, and reimbursement of certain out-of-pocket costs.
10
<PAGE>
HOLDERS OF CENTRAL JERSEY VOTING SECURITIES
Central Jersey is not aware of any person, other than the person set forth
in the table below, who as of the Record Date was the beneficial owner of more
than five percent (5%) of Central Jersey Common. Security ownership of the Named
Executive Officers (as defined below) and of the directors is included under
"Election of Directors".
AMOUNT AND NATURE
OF BENEFICIAL
NAME OF BENEFICIAL OWNER OWNERSHIP (1) PERCENT OF CLASS
- ----------------------- ------------------- ---------------
L. Doris Fritsch 169,147 (2) 6.2%
- ---------
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for the purposes of this table, of any shares of
Central Jersey Common if he or she has or shares voting or investment power
with respect to such security, or has the right to acquire beneficial
ownership at any time within 60 days of the Record Date.
(2) Includes 51,830 shares which Mrs. Fritsch may acquire pursuant to employee
stock options granted under Central Jersey Option Plans exercisable
within 60 days.
SELECTED FINANCIAL DATA
The tables below set forth selected historical financial information for
Summit for each of the five years in the period ended December 31, 1995 and the
six month periods ended June 30, 1996 and 1995 and Central Jersey for each of
the five fiscal years in the period ended March 31, 1996 and the six month
calendar periods ended June 30, 1996 and 1995. Such information has been derived
from and should be read in conjunction with the consolidated financial
statements of Summit and Central Jersey, 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 and Form 10-Q's of Summit and
Central Jersey, which are incorporated by reference in this Proxy
Statement-Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE". The
selected historical financial information for Summit for the six-month periods
ended June 30, 1996 and 1995 and Central Jersey for the six-month calendar
periods ended June 30, 1996 and 1995 reflect, in the opinion of the managements
of Summit and Central Jersey, respectively, all adjustments (comprising only
normal recurring accruals) necessary for a fair presentation of the consolidated
operating results and financial position of Summit and Central Jersey for such
interim periods. Results for the interim periods are not necessarily indicative
of results for the full year or any other period.
11
<PAGE>
SUMMIT BANCORP.
SUMMARY OF SELECTED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------------- ---------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- ---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income .................... $ 773,599 $ 737,050 $ 1,495,617 $ 1,302,800 $ 1,236,658 $ 1,341,504 $ 1,562,393
Interest expense ................... 319,498 306,750 626,376 475,973 456,797 594,757 882,605
Net interest income ................ 454,101 430,300 869,241 826,827 779,861 746,747 679,788
Provision for loan losses .......... 31,000 33,150 71,850 91,995 112,885 165,553 192,417
Securities gains ................... 2,263 5,046 8,606 2,232 9,579 19,195 13,366
Net income (1) ..................... 73,125 115,537 242,870 154,550 133,142 90,275 46,496
Net income per share (1) ........... 0.77 1.34 2.77 1.80 1.57 1.13 0.60
Cash dividends declared per share .. 0.64 0.58 1.19 0.94 0.69 0.60 0.60
Average common shares outstanding .. 93,354 85,386 86,674 84,381 82,712 77,499 72,496
BALANCE SHEET DATA (at period end)
Total assets ....................... $22,386,787 $20,952,796 $21,536,935 $20,894,815 $19,139,498 $19,204,120 $18,636,270
Securities ......................... 5,696,126 5,691,432 5,483,782 5,958,121 5,499,597 5,219,940 4,698,365
Loans .............................. 14,749,667 13,221,085 14,019,574 13,105,179 11,881,426 11,972,053 12,145,189
Total deposits ..................... 18,198,466 17,185,629 17,955,103 16,977,109 16,164,226 16,462,089 15,790,487
Long-term debt ..................... 392,863 522,890 424,862 544,936 467,501 364,762 270,044
Shareholders' equity ............... 1,859,781 1,628,324 1,802,316 1,533,717 1,456,527 1,356,744 1,173,160
Book value per common share ........ 19.39 18.50 19.89 17.45 16.89 15.93 15.35
</TABLE>
CENTRAL JERSEY
SUMMARY OF SELECTED FINANCIAL DATA (2)
(in thousands, except per share data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED MARCH 31,
----------------------- ---------------------------------------------------------------
1996(3) 1995(3) 1996 1995 1994 1993 1992
---------- ---------- ----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income .................... $ 16,671 $ 15,462 $ 33,097 $ 28,487 $ 28,149 $ 29,439 $ 30,928
Interest expense ................... 8,482 8,069 17,481 13,895 13,037 14,836 19,913
Net interest income ................ 8,189 7,393 15,616 14,592 15,112 14,603 11,015
Provision for loan losses .......... 100 100 250 200 300 807 835
Securities gains (losses) .......... -- -- -- -- (76) -- --
Net income (4) ..................... 2,506 2,375 5,204 4,265 6,151 3,758 1,825
Net income per share (4)(5) ........ .91 .96 1.96 1.75 2.44 1.95 0.95
Cash dividends declared per share .. .40 .20 0.46 0.39 0.31 0.24 0.22
Average common shares
outstanding (5) ................ 2,768 2,739 2,724 2,719 2,722 1,926 1,926
BALANCE SHEET DATA (at period end)
Total assets ....................... $469,289 $462,238 $468,272 $439,884 $408,009 $392,384 $369,725
Securities ......................... 227,718 196,204 221,860 168,853 138,519 123,529 80,393
Loans .............................. 218,854 244,287 225,372 249,068 243,184 244,145 242,535
Total deposits ..................... 385,556 383,970 386,569 361,213 352,829 348,198 328,975
Long-term debt ..................... -- 9,605 -- 9,605 9,970 5,400 5,400
Shareholders' equity ............... 55,989 43,556 55,612 42,261 38,509 32,918 29,647
Book value per common share ........ 20.98 22.18 20.84 21.52 19.94 17.09 15.39
</TABLE>
- ----------
(1) In the first quarter of 1996, Summit recorded non recurring merger and
restructuring charges of $70 million or $.75 per share (after tax) for
expenses recorded in conjunction with the acquisition of The Summit
Bancorporation, The Flemington National Bank and Trust Company, GardenState
Bancshares, and a supermarket branch initiative.
(2) Certain reclassifications have been made to Central Jersey's historical
amounts to conform with the method of presentation of Summit.
(3) Central Jersey's fiscal year end is March 31. The summary of operations for
the interim periods (six months ended June 30, 1996 and 1995) include the
quarters ended March 31, and June 30 of the respective calendar years. The
results of operations for the three months ended March 31, 1996 and 1995
were also included in the results of operations for the respective fiscal
years.
(4) Net income for the year ended March 31, 1994 includes the cumulative effect
of a change in accounting principle, Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes." The cumulative effect
amounted to income of $1.5 million or $.55 per share assuming full
dilution.
(5) Net income per share and average common shares outstanding assume full
dilution.
12
<PAGE>
MARKET PRICE AND DIVIDEND MATTERS
MARKET PRICE AND DIVIDEND HISTORY
Summit Common is listed and traded on the NYSE and is quoted under the
symbol "SUB" and Central Jersey Common is listed and traded on the Nasdaq under
the symbol "CJFC". The following table sets forth, for the periods indicated,
the high and low sale prices of a share of Summit Common and Central Jersey
Common, as reported in published financial sources, and quarterly dividends
declared per share of Summit Common and Central Jersey Common.
All stock prices shown in the table below have been rounded to the nearest
cent. All Central Jersey stock prices and dividends shown below have been
adjusted for stock splits and stock dividends declared per share.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SUMMIT COMMON CENTRAL JERSEY COMMON
-------------------------------- -------------------------------
SALE PRICES DIVIDENDS SALE PRICES DIVIDENDS
-------------------- --------------------
HIGH LOW PER SHARE HIGH LOW PER SHARE
-------- -------- --------- -------- -------- ---------
CALENDAR YEAR 1993
First Quarter .......................... $29.38 $22.50 $0.16 $13.06 $ 9.06 $0.06
Second Quarter ......................... 29.25 21.63 0.16 13.06 11.25 0.06
Third Quarter .......................... 33.25 24.25 0.16 16.00 11.25 0.07
Fourth Quarter ......................... 30.25 23.38 0.21 16.81 14.56 0.09
CALENDAR YEAR 1994
First Quarter .......................... 28.63 23.50 0.21 16.38 14.56 0.09
Second Quarter ......................... 29.25 25.50 0.21 18.63 14.56 0.09
Third Quarter .......................... 29.13 26.13 0.26 22.00 17.50 0.10
Fourth Quarter ......................... 27.13 22.50 0.26 21.50 15.50 0.10
CALENDAR YEAR 1995
First Quarter .......................... 28.75 24.13 0.29 18.50 15.50 0.10
Second Quarter ......................... 30.75 27.13 0.29 21.00 17.00 0.10
Third Quarter .......................... 37.25 30.00 0.29 25.00 19.75 0.12
Fourth Quarter ......................... 35.75 31.50 0.32 25.50 21.00 0.12
CALENDAR YEAR 1996
First Quarter .......................... 40.13 34.38 0.32 30.75 23.75 0.12
Second Quarter ......................... 39.50 34.00 0.32 31.75 25.50 0.28
Third Quarter (through August __, 1996)
</TABLE>
On May 21, 1996, 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
Summit Common was $38.625 and the last sale price of a share of Central Jersey
Common was $26.50. On August , 1996, the last sale price of Summit Common was
$____ and the last sale price of Central Jersey Common was $____. Central Jersey
shareholders are urged to obtain current market quotations.
ON THE DATE THE EXCHANGE RATIO IS FIXED AND ON THE DATE SUMMIT CERTIFICATES
ARE RECEIVED BY CENTRAL JERSEY SHAREHOLDERS ENTITLED THERETO, THE PRICE OF A
SHARE OF SUMMIT COMMON MAY DIFFER FROM THOSE SET FORTH ABOVE. CENTRAL JERSEY
SHAREHOLDERS SHOULD OBTAIN CURRENT PRICE QUOTATIONS. IN ADDITION, PAST DIVIDENDS
PAID IN RESPECT OF SUMMIT COMMON AND CENTRAL JERSEY 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 SUMMIT
COMMON AND CENTRAL JERSEY COMMON BEFORE OR AFTER THE EFFECTIVE TIME.
13
<PAGE>
COORDINATION AND DETERMINATION OF DIVIDENDS UNDER MERGER AGREEMENT
In order to ensure that Central Jersey shareholders would be paid at least
one but no more than one regular dividend in the calendar quarter in which the
Merger is consummated, Central Jersey agreed to coordinate with Summit the
declaration of any dividends and the setting of any record or payment dates.
Under the Merger Agreement, Central Jersey may declare a dividend up to and
including the greater of $.12 per share or the dividend most recently (as of
such date) declared by Summit multiplied by the Exchange Ratio.
DIVIDEND LIMITATIONS
The bank subsidiaries of Summit are restricted by law in the amount of
dividends they may pay to Summit. In addition, Summit is restricted by certain
debt agreements in the amount of dividends it may pay to its shareholders.
Assuming the Merger were effective at June 30, 1996, the amount that would have
been available on that date for dividend payments to holders of Summit Common
was approximately $257.5 million.
PROPOSAL I--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.
GENERAL
The Merger Agreement provides for the merger of Central Jersey with and
into Summit, with Summit being the surviving corporation ("Surviving
Corporation"). Upon consummation of the Merger, each outstanding share of
Central Jersey Common other than (i) shares of Central Jersey Common
beneficially owned by Summit or a subsidiary of Summit (other than shares held
in a fiduciary capacity or as a result of debts previously contracted), if any,
or (ii) shares of Central Jersey Common held in the treasury of Central Jersey,
if any, will be converted into and represent the right to receive the Merger
Consideration.
CLOSING AND EFFECTIVE TIME
The Merger Agreement provides that, unless otherwise agreed, the closing of
the Merger ("Closing") will be held on at least five business days notice
("Closing Notice") given to Central Jersey by Summit, on the Closing Date which
shall not be later than 30 days after the last to occur of the following: (1)
the date of approval of the Merger Agreement by Central Jersey shareholders; (2)
if the transactions contemplated by the Merger Agreement are being contested in
any legal proceedings, the date that all such proceedings have been brought to a
conclusion favorable, in the judgment of Summit and Central Jersey, to the
consummation of the transactions contemplated by the Merger Agreement or such
prior date as Summit and Central Jersey shall elect, whether or not such
proceedings have been brought to a conclusion; or (3) the date on which all
governmental approvals are received and any required waiting periods have
expired.
If the Merger Agreement is approved by the requisite vote of Central Jersey
shareholders and the other conditions of the Merger, including receipt of all
requisite regulatory approvals, are satisfied or waived, the Merger will become
effective at the date and time specified in the Certificate of Merger filed with
the Office of the Secretary of State of the State of New Jersey. The Merger
Agreement requires that the Certificate of Merger be filed not later than one
business day following the Closing Date. If the Merger Agreement is approved by
Central Jersey shareholders, subject to the satisfaction or waiver of certain
other conditions described herein, it is presently contemplated that the
Effective Time will occur during the fourth 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 March 31, 1997, 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 it's 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-Considerations of the
Merger; Termination."
14
<PAGE>
CONVERSION OF CENTRAL JERSEY COMMON
Upon consummation of the Merger, shares of Central Jersey Common
outstanding at the Effective Time, other than shares of Summit Common
beneficially owned by Summit or a subsidiary of Summit (other than shares held
in a fiduciary capacity or as a result of debts previously contracted), if any,
or shares of Central Jersey Common held in the treasury of Central Jersey, if
any, will be converted into and represent the right to receive whole shares of
Summit Common based upon the Exchange Ratio and, in lieu of any fractional share
of Summit 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 Summit Common on the business day
preceding the Effective Time.
Summit intends to repurchase from time to time in the open market
outstanding shares of Summit Common in a number equal to the approximate amount
of Summit Common to be issued in the Merger. Summit has announced that it will
repurchase approximately 2,300,000 shares of Summit Common for issuance in the
Merger. In the event that the number of shares of Summit Common to be issued in
the Merger exceeds 2,300,000, Summit intends to make additional purchases to
obtain such additional shares.
EXCHANGE RATIO
In the Merger, the shares of each holder of Central Jersey will be
converted into and represent the Merger Consideration, the amount of which is
not yet fixed and will not be fixed until the Exchange Ratio is set on a date
subsequent to the Annual Meeting. The Merger Agreement provides for the Exchange
Ratio to be fixed as of the Determination Date--the date designated by Summit in
the Closing Notice as the Determination Date, which may not be later than the
Closing Date and may not be earlier than the date which is ten business days
prior to the Closing Date. The Determination Date is the final trading day of
the ten consecutive trading-day period during which the Average Price (the
average of the closing prices of Summit Common as reported on the
NYSE--Composite Transactions Tape during this period) is determined.
The Exchange Ratio will be determined as follows based on the Average
Price:
(1) If the Average Price of a share of Summit Common is equal to or
greater than $32.57, the Exchange Ratio shall be .875.
(2) If the Average Price of a share of Summit Common is less than
$32.57 but equal to or greater than $28.75, the Exchange Ratio shall be
equal to the quotient obtained by dividing $28.50 by the Average Price.
(3) If the Average Price of a share of Summit Common is less than
$28.75, the Exchange Ratio shall be .9913; provided however, that Central
Jersey has the right to terminate the Merger Agreement by sending a notice
of termination ("Termination Notice") to Summit within three business days
following the later to occur of the Determination Date or the date that
Central Jersey receives the Closing Notice.
The Exchange Ratio is also subject to appropriate adjustments in the event
that, from the date of the Merger Agreement to the Effective Time, the
outstanding shares of Summit 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.
EXCHANGE OF CENTRAL JERSEY CERTIFICATES
Prior to the Effective Time, Summit will appoint First Chicago Trust
Company of New York or another entity reasonably satisfactory to Central Jersey,
as the Exchange Agent. As promptly as practicable after the Effective Time, but
in no event more than 10 days, after the Exchange Agent receives an accurate and
complete list of all holders of record of outstanding Central Jersey Common as
of the Effective Time, Summit will cause the Exchange Agent to send to each
Central Jersey shareholder a letter of transmittal and instructions for
exchanging their Central Jersey Certificates for Summit Certificates and, if
entitled thereto, a check representing a Cash In Lieu Amount.
To effect a proper surrender and exchange of Central Jersey Certificates,
Central Jersey Certificates must be surrendered to the Exchange Agent with
properly executed and completed letters of transmittal. Until so surrendered,
Summit may, at its option, refuse to pay to the holders of Central Jersey
Certificates dividends or other distributions, if any, payable to holders of
Summit Common; provided, however, that, upon surrender and exchange of Central
Jersey Certificates, there will be paid to such holders the amount, without
15
<PAGE>
interest, of dividends and other distributions, if any, which became payable
prior thereto but which were not paid. No transfer of Central Jersey Common will
be effected on the stock transfer books of Central Jersey 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 Summit 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 Summit Common nor scrip
certificates for such fractions will be issued, and holders of Central Jersey
Certificates who would otherwise be entitled to receive fractions of shares of
Summit 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 Summit Common would possess in respect of such full
share, and will receive, in lieu thereof, the Cash In Lieu Amount.
If more than one Central Jersey Certificate is surrendered for the same
Central Jersey shareholder account, the number of full shares of Summit Common
for which Summit Certificates will be issued pursuant to the Merger Agreement
will be computed on the basis of the aggregate number of shares of Central
Jersey Common represented by Central Jersey Certificates so surrendered.
CENTRAL JERSEY SHAREHOLDERS SHOULD NOT SURRENDER THEIR CENTRAL JERSEY
CERTIFICATES FOR EXCHANGE UNTIL A LETTER OF TRANSMITTAL, INSTRUCTIONS AND OTHER
EXCHANGE MATERIALS ARE RECEIVED FROM THE EXCHANGE AGENT. HOWEVER, CENTRAL JERSEY
SHAREHOLDERS ARE URGED TO NOTIFY AMERICAN STOCK TRANSFER &TRUST COMPANY NOW, AT
(718) 921-8200, IF THEIR CENTRAL JERSEY CERTIFICATES ARE LOST, STOLEN, DESTROYED
OR NOT PROPERLY REGISTERED, IN ORDER TO BEGIN THE PROCESS OF ISSUING REPLACEMENT
CENTRAL JERSEY CERTIFICATES.
CENTRAL JERSEY DIRECTOR AND EMPLOYEE STOCK OPTIONS
Each Stock Option granted to Central Jersey non-employee directors or
employees pursuant to Central Jersey Option Plans which is outstanding at the
Effective Time will, at the written election of each holder of a Stock Option
delivered to Summit at the Closing ("Election Notice" ), be converted into
either:
(i) cash equal to the Cash Value (as defined below) of the particular
Stock Option ("Cash Amount"); or
(ii) (A) the number of whole shares of Summit Common obtained by dividing
the Cash Value of the particular Stock Option by the Market Price (as
defined below) of a share of Summit Common, and (B) cash in lieu of
any fractional share of Summit Common resulting from such division
(determined by multiplying such fractional share amount by the Market
Price of a share of Summit Common).
Holders of Stock Options must deliver the Election Notice to Summit at the
Closing with respect to all outstanding Stock Options then held by such holder.
Holders failing to deliver an Election Notice at the Closing shall be deemed to
have elected to receive the Cash Amount with respect to all Stock Options held
by such holder. All Central Jersey Stock Options shall be deemed terminated as
of the Closing Date and may not be exercised as of such date.
For purposes of the above description:
(1) "Cash Value" of a Stock Option is defined to be the amount obtained by
MULTIPLYING (A) the number of Summit Equivalent Shares (as defined below)
represented by the particular Stock Option, TIMES (B) the difference obtained by
subtracting the Summit Equivalent Exercise Price (as defined below) of the
particular Stock Option from the Market Price (as defined below) of a share of
Summit Common.
(2) "Market Price" of a share of Summit Common is hereby defined to mean
the last sale price of a share of Summit Common on the last trading day
immediately preceding the Closing Date, as reported on the NYSE-Composite
Transactions List (by THE WALL STREET JOURNAL or, in the event of its
unavailability, by any other authoritative source agreeable to Summit and
Central Jersey).
(3) "Summit Equivalent Shares" is hereby defined to mean the number
obtained by multiplying the number of shares of Central Jersey Common covered by
a particular Stock Option TIMES the Exchange Ratio.
16
<PAGE>
(4) "Summit Equivalent Exercise Price" is hereby defined to mean the number
obtained by DIVIDING the exercise price of the particular Stock Option by the
Exchange Ratio.
RECOMMENDATION OF CENTRAL JERSEY BOARD
THE MERGER AGREEMENT HAS BEEN APPROVED BY THE CENTRAL JERSEY BOARD. THE
CENTRAL JERSEY BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF
CENTRAL JERSEY SHAREHOLDERS. THE CENTRAL JERSEY BOARD UNANIMOUSLY RECOMMENDS
THAT CENTRAL JERSEY SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE MERGER
AGREEMENT.
BACKGROUND
Beginning in 1994 and continuing into 1996, the Board of Directors
ofCentral Jersey observed the consolidation taking place among banks and thrift
institutions in the nation in general, and in New Jersey in particular. Over
this same period, the level and nature of bank and thrift institutions merger
and acquisition activity in New Jersey significantly impacted the banking
marketplace and the competitive environment in which Central Jersey operates. In
1995, for example, fifteen transactions were announced regarding the acquisition
of banks and thrift institutions inNew Jersey which transactions involved the
acquisition of over $58 billion in total assets. The Board of Directors of
Central Jersey observed further the merger premiums being paid by acquirers, and
assessed the impact of consolidation on Central Jersey's marketplace and its
competitive position.
Since 1994, the Board of Directors periodically evaluated the strategic and
competitive position of Central Jersey, its near-term and longer-term business
prospects, its management resources and performance, and the strategic options
and opportunities available to Central Jersey. From time to time and during this
same period, Central Jersey received several inquiries and unsolicited and
informal indications of interest from other banking companies regarding the
possible acquisition or other similar business combination between it and other
banking companies. In connection with evaluating such inquiries and also in
light of its changing marketplace and competitive position, CentralJersey
retained a consultant in mid-1995 to assist it in a review of the operations and
financial position of the company, to compare its overall financial performance
and condition to its peer group, to identify Central Jersey's strengths and
weaknesses, to analyze and assess Central Jersey's stock price, trading history,
liquidity and float and to evaluate its day-to-day trading price relative to its
peer group, and to estimate the value of the company based upon recent merger
and acquisition transactions.
Upon review of the consultant's report and analysis, and in connection with
the Board of Director's assessment of the continuing trend of consolidation in
the banking industry, the further concentration of market share and
consolidation of operations by larger regional banking companies, and the
continuing general expression of interest on the part of third parties, the
Board of Directors of Central Jersey decided to take steps to enhance
shareholder value. In this regard, Central Jersey encouraged another market
maker to make a market in the common stock. In addition, Central Jersey
announced its intention to redeem its outstanding convertible debentures in the
Summer of 1995. All of the debentures were converted to common stock prior to
redemption. In December 1995, Advest was retained as the financial advisor to
assist the CentralJersey Board of Directors' evaluation of strategic
alternatives available to Central Jersey.
With the advice of Advest, Central Jersey's Board ofDirectors considered
some of the advantages which could be derived from a business combination,
including greater shareholder liquidity, increased market recognition,
additional product offerings and consolidation of administrative functions. The
Board of Directors also reviewed Central Jersey management's internal business
plans and the merger premiums then being obtained for bank and thrift
institution stocks in other transactions, and considered the possibility that
Central Jersey's shareholders could receive more value through a merger than
they would receive if Central Jersey remained as an independent institution,
even if management were able to meet its goals for operating the company
independently.
While considering the alternative of remaining independent and not deciding
to put Central Jersey up for sale, the Board instructed its Mergers and
Acquisitions Committee (the "Committee") with the assistance of Advest, to
determine the level of interest that might exist on the part of other potential
acquirers of Central Jersey.
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Advest contacted a number of financial institutions and holding companies,
from inside and outside Central Jersey's region, that it believed would have an
interest in a business combination with Central Jersey as well as have the
financial resources necessary to successfully complete such a transaction. After
execution of confidentiality agreements, interested parties were provided with
copies of a confidential offering memorandum which had been prepared by Central
Jersey and Advest. Advest contacted 20 companies, including Summit. Copies of
the confidential offering memorandum were provided to the 12 companies which
were interested in receiving information. In April 1996, 7 of these companies
provided preliminary indications of interest in acquiring Central Jersey for
cash and/or stock. After discussing the preliminary indications of interest with
Advest, the Committee determined that three of the preliminary indications of
interest, including that of Summit, merited further discussion. Such preliminary
indications of interest were subject to, among other conditions, completion of
satisfactory due diligence.
Summit and the other parties conducted off-site due diligence during April
and May 1996. After completing their due diligence, each of the parties
increased the amount of consideration offered in its indication of interest.
The Central Jersey Board and Advest met on May 17, 1996, to assess and
consider, among other things, the terms and conditions of the indications of
interest. At this meeting, Advest made a detailed presentation relating to the
indications of interest and the financial institutions and holding companies
which submitted them, as well as updated background information relating to the
value of Central Jersey and recent merger and acquisition pricing. The Board
decided that Summit's indication of interest was the most favorable of all
proposals received and merited further negotiation. The Board reviewed and
discussed the potential terms of a transaction, including the impact on
employees and shareholders and a draft form of merger agreement provided by
Summit. Following extensive discussion, the Board voted to authorize the
Committee to negotiate the terms of a proposed definitive merger agreement with
Summit for its consideration.
During the next several days, the Committee and Summit and their financial
and legal advisors engaged in negotiations concerning the terms of a transaction
and a proposed definitive merger agreement.
On May 22, 1996, the Board, together with Advest and Central Jersey's legal
counsel, met again to consider the proposed definitive merger agreement with
Summit. At that meeting, Advest gave the Board its opinion that the
consideration to be received by the shareholders of Central Jersey from Summit
was fair from a financial point of view. After extensive discussion, the Central
Jersey Board voted to approve the Merger Agreement.
REASONS FOR THE MERGER
CENTRAL JERSEY. The Central Jersey Board believes that the Merger is in the
best interests of Central Jersey and its shareholders. Accordingly, the Central
Jersey Board has unanimously adopted the Merger Agreement. The Central Jersey
Board therefore unanimously recommends that Central Jersey shareholders vote
"For" the approval of the Merger Agreement.
In reaching its determination that the Merger is in the best interest of
Central Jersey and its shareholders, the Central Jersey Board considered a
number of factors both from a short-term and long-term perspective, including,
without limitation, the following:
(i) Central Jersey Board's familiarity with and review of Central Jersey's
business, operations, financial condition, earnings and prospects and
the financial condition, operating results and future prospects of
Summit;
(ii) The immediate and potential long term financial benefits to Central
Jersey shareholders inherent in the Merger, including the Merger
Consideration, a significantly increased dividend rate and the
benefits related to enhanced liquidity and marketability of Summit's
stock;
(iii) the current and prospective economic environment and competitive and
regulatory constraints facing financial institutions and particularly
Central Jersey;
(iv) the limited opportunities for growth and leveraging Central Jersey's
capital and the opportunity for Central Jersey shareholders to
participate in the future growth of Summit;
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(v) the ability to generate an acceptable return on equity without taking
undue risk;
(vi) Central Jersey Board's review, based in part on presentations by
Advest and the due diligence reviews by the Committee, as well as its
financial and legal advisors, of the business, operations, financial
condition, earnings and prospects of parties who submitted indications
of interest;
(vii) the advice of Advest that a business combination with, and the
acquisition proposal by, Summit was fair to Central Jersey
shareholders from a financial point of view;
(viii) Central Jersey Board's review of the differences between the
proposed transactions;
(ix) Central Jersey Board's evaluation of the risks to consummation of the
Merger, including, among others, the risks associated with obtaining
all necessary regulatory approvals without the imposition of any
condition which differs from conditions customarily imposed in
approving acquisitions of the type contemplated by the Merger
Agreement and compliance with which would materially adversely affect
the reasonably anticipated benefits of the transactions to Summit;
and
(x) the terms and conditions of the Merger Agreement, Stock Option
Agreement and the other documents executed in connection with the
Merger, including the ability to terminate the Merger if certain
conditions, including a minimum price of the Summit Common are not met
at Closing.
In view of the variety of factors considered in connection with its
evaluation of the Merger, the Central Jersey Board did not find it practicable
to, and did not, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching its determination.
THE CENTRAL JERSEY BOARD UNANIMOUSLY RECOMMENDS THAT CENTRAL JERSEY
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
SUMMIT. The Summit Board has unanimously approved the Merger Agreement and has
determined that the Merger is in the best interest of Summit and its
shareholders. The Merger expands Summit's retail franchise and competitive
position in key market areas and increases Summit's operating and marketing
scales.
OPINION OF CENTRAL JERSEY'S FINANCIAL ADVISOR
By letter dated December 28, 1995, Central Jersey's Board of Directors
retained the services of Advest as financial advisor in connection with a
possible acquisition transaction and, if an acquisition transaction eventuated,
requested that Advest render a fairness opinion regarding the consideration to
be received by the shareholders of Central Jersey, from a financial point of
view.
Advest is a nationally recognized investment banking firm and, as part of
its investment banking business, is regularly engaged in the valuation of bank,
bank holding company and thrift institution securities in connection with
mergers, acquisitions, and other securities transactions. As the financial
advisor to Central Jersey, Advest was involved in every stage of the discussions
with various financial institutions that resulted in the offer by Summit, as
well as the negotiations with Summit that resulted in the Merger Agreement.
Advest has delivered a written opinion to Central Jersey's Board of
Directors, dated as of May 22, 1996, to the effect that the consideration to be
received by Central Jersey's shareholders, pursuant to the Merger Agreement, is
fair, from a financial point of view. There were no limitations imposed by
Central Jersey on Advest in connection with its rendering of the fairness
opinion. Advest is a market maker in Central Jersey's stock.
THE FULL TEXT OF ADVEST'S FAIRNESS OPINION, WHICH SETS FORTH ASSUMPTIONS
MADE AND MATTERS CONSIDERED, IS ATTACHED AS APPENDIX B TO THIS PROXY
STATEMENT-PROSPECTUS. CENTRAL JERSEY'S SHAREHOLDERS ARE URGED TO READ SUCH
OPINION IN ITS ENTIRETY. ADVEST'S OPINION IS DIRECTED ONLY TO THE CONSIDERATION
OFFERED IN THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY CENTRAL
JERSEY SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE ANNUAL MEETING.
THE SUMMARY INFORMATION REGARDING ADVEST'S OPINION AND THE PROCEDURES FOLLOWED
IN RENDERING SUCH OPINION SET FORTH IN THIS PROXY STATEMENT-PROSPECTUS IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In arriving at the opinion, Advest reviewed, among other things: (i) the
Merger Agreement; (ii) the audited consolidated financial statements and
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management's discussion and analysis of the financial condition and results of
operations of Summit for the three fiscal years ended December 31, 1995 and for
Central Jersey for the three fiscal years ended March 31, 1996; (iii) the
unaudited consolidated financial statements and management's discussion and
analysis of the financial condition and results of operations for the interim
period ending June 30, 1996 for Summit and for Central Jersey; (iv) certain
financial information as filed with federal banking agencies for the three years
ended December 31, 1995, as well as the six months ended June 30, 1996, for both
Central Jersey and Summit; (v) financial analyses and forecasts of Central
Jersey prepared by and/or reviewed with management of Central Jersey; (vi) the
views of senior management of each of Central Jersey and Summit of their
respective past and current business operations, results thereof, financial
condition and future prospects; (vii) the reported price and trading activity
for Central Jersey and Summit common stock, including a comparison of certain
financial and stock market information for Central Jersey and Summit with
similar information for certain other companies the securities of which are
publicly traded; (viii) comparative financial and operating data on the banking
industry and certain institutions which were deemed to be reasonably similar to
both companies; (ix) certain bank mergers and acquisitions on a state, regional
and nationwide basis for institutions which were deemed to be reasonably similar
to Central Jersey and a comparison of the proposed financial consideration in
the Merger with the consideration paid in other relevant mergers and
acquisitions; (x) the pro forma impact of the Merger on Summit and Central
Jersey; (xi) the Proxy Statement-Prospectus dated August___, 1996 and (xii)
other financial information, studies and analyses. Advest performed such other
investigations and took into account such other matters as Advest deemed
appropriate.
In performing its review, Advest assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information reviewed by and discussed with
Advest. Advest did not make any independent evaluation or appraisal of specific
assets, the collateral securing assets or the liabilities of Central Jersey or
Summit or any of their subsidiaries, or the collectibility of any such assets
(relying, where relevant, on the analyses and estimates of Central Jersey and
Summit). With respect to the financial projections reviewed with management,
Advest assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of the respective managements
of the respective future financial performances of each of Central Jersey and
Summit. Advest also assumed that there has been no material change in Central
Jersey's or Summit's assets, financial condition, results of operations,
business or prospects since the date of the last financial statements made
available to Advest.
In connection with rendering its fairness opinion, to the Central Jersey
Board of Directors, Advest performed a variety of financial analyses. The
following is a summary of such analyses, but does not purport to be a complete
description of the Advest analyses. The preparation of a fairness opinion is a
complex process involving subjective judgments and is not necessarily
susceptible to partial analyses or summary description. Advest 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 Advest's opinion.
In performing its analyses, Advest made numerous assumptions with respect
to industry performance, business and economic conditions and various other
matters, many of which cannot be predicted and are beyond the control of Central
Jersey, Summit or Advest. Any estimates contained in Advest'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 may actually be sold. No company or transaction
utilized in Advest's analyses was identical to Central Jersey or Summit or the
Merger. Because such estimates are inherently subject to uncertainty, Advest
assumes no responsibility for their accuracy.
STOCK TRADING HISTORY
Advest examined the history of trading prices for both Central Jersey
common stock and Summit common stock for the periods from December 31, 1993
through July, 1996. Advest also examined the relationship between movements of
the market prices for Central Jersey and Summit to movements in the Nasdaq bank
stock index during the same period.
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CONTRIBUTION ANALYSIS
Advest prepared a contribution analysis showing the percentage contributed
by Central Jersey to the combined company on a pro forma basis of assets,
deposits, common equity and tangible common equity at June 30, 1996, and net
income for the twelve months ended December 31, 1995 for Summit and March 31,
1996 for Central Jersey and six months ended June 30, 1996 for both companies.
Advest then compared these percentages to the Central Jersey shareholder's pro
forma ownership of Summit. This analysis showed that Central Jersey, as of June
30, 1996, would contribute 2.1% of pro forma consolidated assets, 2.1% of pro
forma consolidated deposits, 3.0% of pro forma consolidated equity.
During the first quarter ended March 31, 1996, Summit completed its merger
with The Summit Bancorporation, Garden State Bancshares and The Flemington
National Bank and Trust Company. In addition Summit initiated a supermarket
branching program with Pathmark Supermarkets. As part of these mergers and
consolidations and the new supermarket branch program, Summit incurred
nonrecurring merger and restructuring charges of $70 million after tax. During
the six months ended June 30, 1996, Central Jersey incurred nonrecurring merger
related expenses of $236,000 after tax. After adjusting the net income of both
companies for these nonrecurring merger and restructuring expenses, Central
Jersey would contribute 2.1% of the pro forma net income for the twelve month
fiscal 1995 period and 1.9% for the six month period ended June 30, 1996.
Central Jersey shareholders would hold 2.5% of the pro forma ownership of
the combined company.
COMPARABLE COMPANY ANALYSIS
In undertaking its analysis, Advest compared the financial condition and
financial operating performance of Central Jersey with a peer group of 14
savings institutions in New Jersey with between $250 to $750 million in assets.
The review considered asset size, return on average assets and equity, the
equity to assets ratio and the ratio of nonperforming assets to total assets,
among other information. Compared to Central Jersey, which had a return on
average assets of 1.06%, and return on average equity of 10.45%, based on
annualized operating results for the three months ended March 31, 1996, and
equity to assets ratio of 10.25% and nonperforming assets to total assets ratio
of 1.55% at March 31, 1996, the peer group had a median return on average assets
of .87%, and return on average equity of 8.21% based on annualized March 31,
1996 operating results, and an equity to average assets ratio of 10.16% and a
nonperforming assets to total assets ratio of .86% at March 31, 1996. In sum,
the peer group reported a weaker operating performance than Central Jersey, a
lower level of nonperforming assets and a comparable equity to asset ratio.
ANALYSIS OF SELECTED MERGER TRANSACTIONS
Advest reviewed certain financial data related to 217 acquisitions of
thrift institutions, nationwide, with assets between $200 - $750 million
announced since January 1, 1993, 42 of which were announced since January 1,
1995. Advest also reviewed selected regional acquisitions including the
following transactions which were the most recent in the Mid-Atlantic region
(identified by acquirer/acquiree): Valley National Bancorp/Lakeland First
Financial, UJB Financial Corp./Bancorp New Jersey, F&M Bancorp/Home Federal
Corp, Harris Savings Bank, MHC/First Harrisburg, Reliance Bancorp Inc./Sunrise
Bancorp Inc., Sovereign Bancorp/First State Financial Services, Republic New
York/Brooklyn Bancorp, Independence Community/Bay Ridge Bancorp and Dime Savings
Bank of Williamsburgh/Conestoga Bancorp.
Advest calculated median price as a multiple of the targets earnings for
the last four quarters (trailing 12 months), and as a percentage of stated book
value and tangible book value, and Advest calculated premium to tangible book
value as a percentage of core deposits. For nationwide thrift transactions
announced since January 1, 1995, the calculations yielded, as of the date of
announcement of these transactions, the following averages: (i) price offered as
a multiple of earnings of 17.2 times (17.9 times for regional transactions),
compared with a multiple of 17.5 times associated with the Summit proposal; (ii)
price offered as a percentage of book value of 145% (151% for regional
transactions), compared with 158% associated with the Summit proposal; (iii)
price offered as a percent of tangible book value of 146% (151% for regional
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transactions), compared with 170% associated with the Summit proposal; and (iv)
premium to tangible book value as a percent of core deposits of 5.86% (7.43% for
regional transactions), compared to 9.45% associated with the Summit proposal.
No company or transaction used as a comparison in the above analysis is
identical to Central Jersey, Summit 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
acquisition value of the companies to which they are being compared.
IMPACT ANALYSIS
Advest analyzed the changes in the amount of fully diluted earnings per
share and book value represented by the issuance of .875 of a share of Summit
common stock for each share of Central Jersey common stock. The analysis
evaluated, among other things, possible dilution or accretion in fully diluted
earnings per share and book value per share for Summit. The analysis was based
upon (i) June 30, 1996 balance sheet data for Summit and Central Jersey; (ii)
net income for the six months ended June 30, 1996 for Summit and Central Jersey,
as adjusted for the non-recurring merger and restructuring expenses; and (iii)
net income for the twelve months ended December 31, 1995 for Summit and March
31, 1996 for Central Jersey.
As of the time performed, these pro forma analyses indicated that the
Merger would be approximately .15% and .21% dilutive to Summit's fully diluted
earnings per share for the twelve months ended December 31, 1995 and six months
ended June 30, 1996, respectively and approximately .06% dilutive to Summit's
book value per share as of June 30, 1996, assuming no cost savings or Revenue
enhancements were realized as a result of the Merger.
Advest also analyzed the impact of the Merger on certain Summit values per
Central Jersey share based on the Exchange Ratio of .875 of a share of Summit
common stock for one share of Central Jersey common stock. That analysis, which
was based on certain assumptions made by Advest, found that based on the
proposed Exchange Ratio, Central Jersey's equivalent earnings per share would be
$2.42 per share or 24% greater than the existing Central Jersey earnings per
share for the twelve months ended March 31, 1996 and $1.33 or 34% greater than
the existing Central Jersey earnings per share for the six month period ended
June 30, 1996; that Central Jersey's equivalent book value per share would be
$16.96 or 19% less than the existing Central Jersey book value per share; and
that Central Jersey's equivalent dividend would be $.28 per share based upon the
most recent Summit quarterly dividend declared on June 30, 1996 and paid August
1, 1996.
Advest's engagement agreement provides that Central Jersey will pay Advest
a transaction fee in connection with the Merger, a substantial portion of which
is contingent upon consummation of the Merger. Under the terms of the agreement,
Central Jersey agreed to pay Advest a fee equal to 1% of the aggregate
consideration paid to shareholders and option holders in the Merger, or
approximately $860,000 assuming a market price of $36 for Summit common stock),
net of $225,000 in fees already paid to Advest in relation to the Merger
(including $50,000 upon acceptance of the retainer agreement with Advest,
$75,000 upon execution of the Merger Agreement and $100,000 upon delivery of the
initial written fairness opinion) so that the total fees for Advest's engagement
by Central Jersey, excluding reimbursement for out-of-pocket expenses, will not
exceed 1% of the market value of the aggregate consideration in the Merger.
While the payment of all or a significant portion of fees related to financial
advisory services provided in connection with arms-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. Central Jersey has also agreed to indemnify Advest
against certain liabilities, including liabilities under the federal securities
laws.
STOCK OPTION AGREEMENT
As an inducement and condition to Summit's willingness to enter into the
Merger Agreement, Central Jersey (as issuer) entered into the Merger Option
Agreement with Summit (as grantee). Pursuant to the Merger Option Agreement,
Central Jersey granted the Central Jersey Option to Summit. The Central Jersey
Option is an option to purchase 530,986 shares of Central Jersey Common at
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$27.00 per share, exercisable as described below. The purchase of any shares of
Central Jersey Common pursuant to the Central Jersey Option is subject to
compliance with applicable law.
Unless Summit is in breach of any material covenant or obligation contained
in the Merger Agreement and, if the Merger Agreement has not terminated prior
thereto, such breach would entitle Central Jersey to terminate the Merger
Agreement, Summit may exercise the Central Jersey Option, in whole or in part,
at any time and from time to time following the occurrence of a Purchase Event
(as defined below); provided that the Central Jersey 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 Summit
resulting from a volitional breach thereof by Central Jersey); or
(3) 12 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 Summit (unless the breach by Central Jersey
giving rise to such right of termination is non-volitional).
The term "Extension Event" shall mean the occurrence of certain events
without Summit's prior written consent, including:
(1) Central Jersey, 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
Central Jersey or any of its banking subsidiaries, (b) the purchase,
lease, or other acquisition of 10 percent of more of the aggregate
value of the assets or deposits of Central Jersey or any of its
banking subsidiaries, (c) the purchase or other acquisition of 10
percent or more of the voting power of Central Jersey or any of its
banking subsidiaries or (d) any substantially similar transaction, in
each case except as otherwise permitted by the Merger 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 Central Jersey or any of its banking subsidiaries;
(3) any third party making a bona fide proposal to Central Jersey 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 Central
Jersey or any of its banking subsidiaries);
(4) after a proposal by a third party to Central Jersey or its
shareholders to engage in an Acquisition Transaction, Central Jersey
breaches (without cure) any representation or covenant in the Merger
Agreement which would entitle Summit 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 Central Jersey to approve the Merger
Agreement or Central Jersey's Board of Directors shall have withdrawn
or modified in a manner adverse to the consummation of the Merger, the
recommendation of Central Jersey'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 Central Jersey or any of its banking
subsidiaries, except as otherwise permitted by the Merger Option
Agreement; or
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(2) the occurrence of an Extension Event described in subparagraph (1) of
the definition of "Extension Event" 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 Merger Option
Agreement, at the election of Summit, the Central Jersey Option (or shares
issued pursuant to the exercise thereof) must be converted into, or exchanged
for, an option of another corporation or Central Jersey (the "Substitute
Option"). In addition, the Merger Option Agreement grants certain registration
rights ("Registration Rights") to Summit with respect to the shares represented
by the Central Jersey Option. The terms of such Substitute Option and
Registration Rights are set forth in the Merger Option Agreement.
The Merger Option Agreement and the Central Jersey Option 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 Central Jersey prior to the Merger.
To the knowledge of Summit and Central Jersey, no event giving rise to the
right to exercise of the Central Jersey Option has occurred as of the date of
this Proxy Statement-Prospectus.
Copies of the Merger Option Agreement are set forth in Appendix C to this
Proxy Statement-Prospectus, and reference is made thereto for the complete terms
of the Merger Option Agreement and the Central Jersey Option. The foregoing
discussion is qualified in its entirety by reference to the Merger Option
Agreement.
REGULATORY APPROVALS
The Merger is subject to approval by the Federal Reserve Board under
section 4 of the BankHolding Company Act of 1956, as amended (the "BHC Act").
Section 4 of the BHC Act provides that a bank holding company shall not acquire
the voting shares of any company that is not a bank (including the shares of a
savings association such as CJSB) unless the Federal Reserve Board determines
that the transaction can reasonably be expected to produce benefits to the
public that outweigh possible adverse effects such as undue concentration of
resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices.
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 Summit of more than 5% of Central Jersey's voting
stock is subject to the same approval requirements as described above.
Satisfactory financial condition, particularly with regard to capital adequacy,
and satisfactory Community Reinvestment Act ratings are generally prerequisites
to obtaining Federal Reserve Board approval to make acquisitions. All of
Summit's subsidiary banks are currently rated "satisfactory" or better under the
Community Reinvestment Act.
An application with respect the Merger will be filed by Summit with the
Federal Reserve Board. Regulations of the Federal Reserve Board under the BHC
Act require notice of an application for approval of the Merger 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 scheduled 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
Summit's application for approval of the Merger expires on or about
_____________ , 1996. As of the date of this Proxy Statement-Prospectus Summit
has been advised by the Federal Reserve Board that it has received ___ comment
protesting the Merger.
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Federal law provides that no person or entity acting directly or indirectly
or through or in concert with one or more other persons, may acquire control of
a federally-insured savings institution without written notice to the OTS and
providing the OTS an opportunity to disapprove the proposed acquisition. The
acquisition by Summit of more than 10% of Central Jersey's voting stock is
subject to the same approval. The OTS must approve the application unless it
determines that (i) the financial and managerial resources and future prospects
of the applicant and association involved would be detrimental to the
association or the insurance risk of the Savings Association Insurance Fund
("SAIF") or the Bank Insurance Fund ("BIF"); (ii) the applicant fails or refuses
to furnish the information requested by the OTS; (iii) the acquisition would
result in a monopoly, or would be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the savings and loan
business in any part of the United States; or (iv) the effect of the acquisition
may be substantially to lessen competition or tend to create a monopoly, or the
acquisition would in any other manner be in restraint of trade, unless the OTS
finds that the anti-competitive effects of the proposed acquisition are clearly
outweighed by the probable effect of the acquisition in meeting the convenience
and needs of the community to be served.
Regulations of the OTS require that notice of the application to the OTS
for approval of the acquisition of Central Jersey bySummit must be published in
a newspaper of general circulation within three days of the filing of the
application and that the public have at least (20) days to comment on the
application. Up to an additional 20 days extension to file comments may be
obtained upon a showing of good cause if a written request is received by the
OTS within the initial 20 day period.
The OTS has adopted procedures applicable to protests to applications.
Within 10 days following receipt of a timely protest, the OTS RegionalDirector
makes a determination whether or not the protest is "substantial". If the
protest is determined not to be substantial, then the application is processed
the same as an unprotested application. If the protest is deemed substantial,
then the Community Investment Officer attached to the Regional Office of OTS may
attempt to mediate the differences between applicant and protestant and to
establish a dialogue between the parties. At the request of a party filing a
substantial protest, and if certain criteria are met, then oral argument on the
application may be held before the Regional Director with a transcript made of
the proceeding. The possibility of mediation by the Community Investment Officer
and of oral argument before the OTSRegional Director means that the filing of a
protest could result in delays in the processing of Summit's application to the
OTS.
Upon consummation of the Merger, CJSB is to become a wholly-owned
subsidiary of Summit, thereby causing Summit to become a savings and loan
holding company. OTS Regulations require that savings and loan holding companies
must register with the OTS within 90 days after becoming a savings and loan
holding company, and thereby become subject to OTS supervision and requirements.
Summit intends to file a registration statement, which is effective upon filing,
with the OTS promptly after consummation of the Merger.
Summit must notify the New Jersey Commissioner of Banking in writing of its
intent to acquire CJSB sixty (60) days prior to the proposed acquisition. The
acquisition by Summit of 25% or more of Central Jersey's voting stock is subject
to the same requirement. If the New Jersey Commissioner of Banking does not
notify Summit that she disapproves the proposed acquisition during that period
or during an additional thirty (30) day period immediately thereafter, Summit
may consummate the acquisition. An acquisition may be made prior to the
expiration of the disapproval period if the New Jersey Commissioner of Banking
issues written notice of her intent not to disapprove the acquisition. The New
Jersey Commissioner of Banking may disapprove a proposed acquisition if (i) the
financial condition of the acquiring person is such as might jeopardize the
financial stability of the state association or prejudice the interests of the
depositors thereof; (ii) the competence, experience, or integrity of the
acquiring person indicated that it would not be in the interest of the
depositors of the state association or in the interests of the public to permit
such person to control the state association; or (iii) the acquiring person
neglects, fails, or refuses to furnish all the information required.
Based on current precedents, the managements of Summit and Central Jersey
anticipate that the Merger will be approved by the Federal Reserve Board, the
OTS and the New Jersey Commissioner of Banking and Insurance. However, there is
no assurance that the Federal Reserve Board, the OTS, the Antitrust Division of
the United States Department of Justice or the New Jersey Commissioner of
Banking will not challenge the Merger or that any approval by the Federal
Reserve Board, the OTS or the New Jersey Commissioner of Banking
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will not contain conditions unacceptable to Summit or Central Jersey or both.
Central Jersey shareholders 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 Central Jersey
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 Central Jersey have interests in the
Merger that are in addition to their interests as Central Jersey shareholders.
These interests are described in more detail below.
INDEMNIFICATION
In the Merger Agreement, Summit 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 Central Jersey or any subsidiary of Central Jersey
on or before the Effective Time with respect to liabilities and claims (and
related expenses including fees and disbursements of counsel) made against them
resulting from their service as such prior to the Effective Time in accordance
with and subject to the requirements and other provisions of the Summit Restated
Certificate of Incorporation and By-Laws in effect on the date the Merger
Agreement was executed and applicable provisions of law to the same extent as
Summit is obliged thereunder to indemnify and advance expenses to its own
directors and officers with respect to liabilities and claims made against them
resulting from their service to Summit.
In the Merger Agreement, Summit also agreed that, for a period of six (6)
years after the Effective Time, Summit would use its best efforts to provide to
the persons who served as directors or officers of Central Jersey or any
subsidiary of Central Jersey on or before the Effective Time insurance against
liabilities and claims (and related expenses) made against them resulting from
their service as such prior to the Effective Time comparable in coverage to that
provided by Summit to its own directors and officers, but, if not available on
commercially reasonable terms, then coverage substantially similar in all
material respects to the insurance coverage provided to them in such capacities
on the date of the Merger Agreement; provided that in no event is Summit
required to expend more than 200% of the amount expended by Central Jersey prior
to the execution of the Merger Agreement for its insurance coverage. Summit has
agreed to use its best efforts to obtain as much comparable insurance as is
available for this amount. Central Jersey must renew any existing insurance or
purchase any "discovery period" insurance provided for under existing insurance
at Summit's request.
EMPLOYMENT AGREEMENTS
L. Doris Fritsch and Emile LeLand, Jr. are parties to employment agreements
with CJSB, effective April 1, 1984, and amended on June 25, 1985, October 22,
1986, June 1, 1988, July 15, 1992 and March 20, 1996, pursuant to which Mrs.
Fritsch is employed as President and Chief Executive Officer of CJSB and Mr.
LeLand is employed as Senior Vice President of CJSB which provide, respectively,
among other things, that if Mrs. Fritsch's or Mr. LeLand's employment is
terminated without cause, (or by Mrs. Fritsch or Mr. LeLand, respectively, with
or without cause) upon or following a "Change of Control" of CJSB (which as
defined therein, would include the Merger) Mrs. Fritsch and Mr. LeLand are
entitled to a lump sum payment equal to 2.99 times "base amount", as defined in
section 280G of the Code, and are entitled to coverage under Central Jersey's
employee benefit plan for four years. The agreements also provide that payments
received in connection with a change in control will be reduced to the extent
necessary to avoid the imposition of an excise tax under federal tax laws. Mrs.
Fritsch's and Mr. LeLand's minimum annual salary under their employment
agreements are $231,000 and $146,000 respectively.
John J. Doherty is a party to a employment agreement with CJSB, dated
October 21, 1987, as amended October 1, 1989, July 15, 1992 and March 20, 1996
pursuant to which Mr. Doherty is employed as Vice President and Chief Financial
Officer of CJSB, which provides, among other things, that if Mr. Doherty's
employment is terminated (including by Mr. Doherty), without cause, upon or
after a "Change of Control" of CJSB (which as defined therein would include the
Merger), Mr. Doherty is entitled to receive a lump sum payment equal to 2.99
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times his "base amount" as defined in section 280G of the Code. The agreement
also provides that payments thereunder will be reduced to the extent necessary
to avoid the imposition of an excise tax under federal tax law. Mr. Doherty is
also entitled to receive coverage under CJSB's employee benefit plans for the
greater of the remaining term of the agreement or one year. Mr. Doherty's
minimum salary under his employment agreement is $100,000.
If, pursuant to the "Change of Control"provisions described above, payments
were required to be made to Mrs. Fritsch and Messrs. LeLand and Doherty, the
estimated amount of such payments would be $726,000, $435,000 and $280,000,
respectively.
Pursuant to the Merger Agreement, Summit shall assume the obligations of
Central Jersey with respect to the foregoing employment agreements.
CENTRAL JERSEY SAVINGS BANK SEVERANCE PLANS
CJSB maintains a severance plan for officer/assistant officer employees
(The "Officer Plan") as well as a severance plan for non-officer employees (the
"Non-Officer Plan"). Pursuant to the Officer Plan, officers whose positions have
been eliminated as a result of a restructuring, reorganization or downsizing of
CJSB's operations are eligible to receive severance pay at a rate of two weeks
of pay for each year of completed service, to a maximum benefit of 52 weeks,
with a minimum of five weeks of pay without regard to length of service and
assistant officers are eligible to receive one and one half weeks of pay for
each year of completed service, up to a maximum of 52 weeks, with a minimum of
three weeks of pay regardless of length of service (unless among other things,
such officer or assistant officer is offered reassignment or voluntarily
terminates his/her employment). Under the Non-Officer Plan, participants are
entitled to receive one week of pay for each year of completed service, to a
maximum of 30 weeks. Lump sum payments of severance pay shall be paid as of the
effective date of the Merger to participants who will have their employment
terminated within 30 days of the Merger.
Pursuant to the Merger Agreement, Summit shall assume the obligations of
Central Jersey with respect to the foregoing severance plans, excluding persons
who are covered by employment agreements.
CENTRAL JERSEY SAVINGS BANK STOCK OPTION PLANS
As described under "THE MERGER--Central Jersey Director and Employee Stock
Options", pursuant to the Merger Agreement, at the Effective Time, holders of
Central Jersey Options are entitled to receive payment of the Cash Value of
their Central Jersey Options, including Stock Options which are not otherwise
currently exercisable, in cash or shares of Summit Common.
The following table sets forth certain information relating to Central
Jersey Stock Options held by Mrs. Fritsch, Messrs. LeLand, Doherty and
Sievewright and all directors and executive officers of Central Jersey as a
group as follows: (i) the number of Central Jersey Options held by such persons;
(ii) the number of Central Jersey Options held by such person that are currently
exercisable; (iii) the number of Central Jersey Options that will be accelerated
as a result of the Merger; (iv) the weighted average exercise price of currently
exercisable Central Jersey Options; (v) the weighted average exercise price for
Central Jersey Options that will be accelerated as a result of the Merger and
(vi) the aggregate Cash Value of Central Jersey Options based upon the closing
sale price of Summit Common on , 1996.
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
AVERAGE EXERCISE
OPTIONS EXERCISE PRICE OF
ACCELERATED PRICE OF OPTIONS AGGREGATE
OPTIONS AS A RESULT OPTIONS ACCELERATED CASH
OPTIONS CURRENTLY OF THE CURRENTLY AS A RESULT OF VALUE OF
HELD EXERCISABLE MERGER EXERCISABLE THE MERGER OPTIONS
-------- ---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
L. Doris Fritsch .................. 51,830 51,830 -0- $9.08 $-- $
Emile L. LeLand, Jr. .............. 25,408 25,408 -0- 9.29 --
John J. Doherty ................... 14,987 14,987 -0- 18.71 --
William M. Sievewright ............ 5,854 3,544 2,310 12.68 13.42
Directors and Executive
Officers as a Group
(20 persons total) .............. 152,504 139,513 12,991 10.83 16.48
</TABLE>
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DIRECTORS QUALIFYING SHARES
Each of the directors of CJSB owns one-fiftieth (1/50) of a share of CJSB
common stock which was acquired to satisfy a state banking law requirement that
directors of a capital stock association be a shareholder of such association.
Pursuant to a shareholders agreement between Central Jersey and the directors of
CJSB, upon the occurrence of a "Repurchase Event" (in general, when a director
ceases to be a director of CJSB or upon the election of Central Jersey to
purchase such shares) such shares will be repurchased for consideration limited
to the original purchase price paid. The directors of CJSB purchased their 1/50
of a share at prices ranging from $580-$760.
THE MERGER AGREEMENT
AMENDMENT
Central Jersey and Summit may jointly amend the Merger Agreement at any
time; provided, however, that, after the Annual Meeting, no amendment may reduce
the amount of, or change the form of consideration to be received by Central
Jersey shareholders unless such modification is submitted to a vote of Central
Jersey shareholders.
CENTRAL JERSEY COVENANTS
Pursuant to the Merger Agreement, Central Jersey has covenanted, among
other things, that, until termination of the Merger Agreement, Central Jersey
will advise Summit of any material adverse change in Central Jersey's business
and certain other circumstances, and the business of Central Jersey 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
Summit, Central Jersey will not declare or pay any cash dividend at a quarterly
rate in excess of the greater of $.12 per share or the product of the dividend
most recently declared by Summit multiplied by the Exchange Ratio, and 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.
Central Jersey also has agreed that, until termination of the Merger
Agreement or the Effective Time, neither Central Jersey nor any of its
subsidiaries nor any of the officers or directors of Central Jersey or its
subsidiaries shall, and that Central Jersey shall direct and use its best
efforts to cause its employees, agents, affiliates and representatives
(including investment bankers, brokers, financial or investment advisors,
attorneys or accountants retained by Central Jersey of 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 tender offer or exchange
offer, or proposal concerning a merger, consolidation, business combination,
takeover transaction involving Central Jersey or any of its subsidiaries, or the
acquisition of any assets or any securities of, Central Jersey or any of its
subsidiaries ("Acquisition Proposal") or (ii) except to the extent legally
required for the discharge by the Central Jersey Board of its fiduciary duties,
as advised by written opinion of Central Jersey's counsel furnished to Summit,
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 an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal. In addition, Central Jersey agreed to notify Summit 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 Central Jersey or any of its
subsidiaries or assets by another party and to immediately deliver by facsimile
transmission to such Summit officer a copy of any document relating thereto
promptly after any such document is received by Central Jersey.
In order to ensure that Central Jersey shareholders would be paid at least
one, but no more than one, dividend in the calendar quarter in which the Merger
is consummated, Central Jersey agreed in the Merger Agreement to coordinate with
Summit the declaration of any dividends and the setting of any record or payment
dates.
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SUMMIT COVENANTS
Pursuant to the Merger Agreement, Summit has covenanted, among other
things, that, until termination of the Merger Agreement, Summit will advise
Central Jersey of any material adverse change in Summit'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.
Summit has also agreed to permit employees of Central Jersey who become
employees of Summit to participate in pension, savings and health and welfare
plans to the extent maintained by Summit unless a comparable plan of Central
Jersey is retained; provided, however, that Central Jersey employees shall not
be entitled to participate automatically in benefit plans, programs or
arrangements of Summit not maintained by Summit for its employees generally.
Summit has also agreed to assume the obligations of Central Jersey with respect
to employment agreements and, with the exception of the persons who are covered
by employment agreements, severance pay plans.
CONDITIONS TO THE MERGER; TERMINATION
The obligations of both parties to consummate the Merger are subject to the
satisfaction of certain conditions including: (1) approval of the Merger
Agreement by the requisite vote of the holders of Central Jersey Common; (2)
receipt of all required regulatory approvals by Summit and Central Jersey
without such approvals containing restrictions or limitations, which, in the
reasonable opinion of Summit or Central Jersey, would materially adversely
affect the financial condition of Summit following the consummation of the
Merger and the expiration of any waiting periods required by such approvals; (3)
effectiveness of the registration statement; (4) the receipt by Summit and
Central Jersey of an opinion from Thompson Coburn as to certain federal income
tax consequences of the Merger; (5) the shares of Summit Common to be issued in
the Merger having been approved for listing on the NYSE, subject to official
notice of issuance; (6) the receipt of an opinion from Advest regarding the
fairness from a financial part of view of the consideration to be received by
the shareholders of Central Jersey in the Merger; (7) the absence of material
litigation; (8) the absence of regulatory agreements relating to the parties;
(9) the delivery of officers certificates by Central Jersey and Summit; and (10)
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 the
requisite regulatory approvals.
Either party may terminate the Merger Agreement if (1) Central Jersey
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 (provided that the terminating party is not in material
breach of any representation, warranty, covenant or other agreement), (3) on the
Closing Date, all the conditions precedent to such parties obligations to close
are not met, (4) Advest is unable to deliver to Central Jersey an opinion as to
the fairness of the transaction, (5) or for any other reason the Merger has not
been closed by March 31, 1997. In addition, the parties may terminate the Merger
Agreement at any time by mutual agreement.
In addition, the Central Jersey Board may terminate the Merger Agreement if
the Average Price on the Determination Date is less than $28.75.
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, the Federal Reserve Board, the New Jersey Department
of Banking and Insurance, the OTS and the NYSE shall be borne equally by Central
Jersey and Summit. Notwithstanding the foregoing, should either party terminate
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the Merger Agreement because the other party has materially breached a warranty,
representation or covenant or because the other party has not met it conditions
to Closing, then the first party shall be reimbursed by the second party for the
first party's out-of-pocket expenses reasonably incurred in connection with the
Merger Agreement, including counsel fees, printing fees and filing fees, but
excluding any brokers', finders' or investment bankers' fees.
CHARTER AND BY-LAWS OF SURVIVING CORPORATION
Pursuant to the Merger Agreement, the Restated Certificate of Incorporation
and By-Laws of Summit, as in effect at the Effective Time, will be the
Certificate of Incorporation and By-Laws of the Surviving Corporation in the
Merger unless and until amended.
BOARD OF DIRECTORS AND OFFICERS OF SURVIVING CORPORATION
The Merger Agreement provides that the directors and officers of Summit
immediately prior to the Effective Time will continue to be the directors and
officers, respectively, of the Surviving Corporation.
NO DISSENTERS' RIGHTS
Under applicable New Jersey law, no dissenters' rights of appraisal are
available to holders of Central Jersey Common in connection with the Merger.
NEW YORK STOCK EXCHANGE LISTING
Summit has agreed in the Merger Agreement to use its best efforts to cause
the shares of Summit Common to be issued in the Merger to be listed on the NYSE.
Listing of such shares of Summit 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 purchase.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion is based upon an opinion of Thompson Coburn,
counsel to Summit ("Counsel"), and except as otherwise indicated, reflects
Counsel's opinion. The discussion is a summary of the material United States
federal income tax ("federal income tax") consequences of the Merger to certain
Central Jersey 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 Agreement. The
discussion does not address all aspects of federal income taxation that may be
applicable to Central Jersey shareholders in light of their status or personal
investment circumstances, nor does it address the federal income tax
consequences of the Merger that are applicable to Central Jersey shareholders
subject to special federal income tax treatment including (without limitation)
foreign persons, insurance companies, tax-exempt entities, retirement plans,
dealers in securities, persons who acquired their Central Jersey Common pursuant
to the exercise of employee stock options or otherwise as compensation, and
persons who hold their Central Jersey Common as part of a "straddle", "hedge" or
"conversion transaction". In addition, the discussion does not address the
effect of any applicable state, local or foreign tax laws, or the effect of any
federal tax laws other than those pertaining to the federal income tax. As a
result, each Central Jersey shareholder is urged to consult his or her own tax
advisor to determine the specific tax consequences of the Merger to such
shareholder. The discussion assumes that shares of Central Jersey Common are
held as capital assets (within the meaning of Section 1221 of the Code) at the
Effective Time.
Central Jersey has received an opinion from Counsel to the effect that,
assuming the Merger occurs in accordance with the Merger Agreement, the Merger
will constitute a "reorganization" for federal income tax purposes under Section
368(a)(1) of the Code, with the following federal income tax consequences:
(1) Central Jersey shareholders will recognize no gain or loss as a result of
the exchange of their Central Jersey Common solely for shares of Summit
Common pursuant to the Merger, except with respect to Cash in Lieu with
regard to fractional shares, if any, as discussed below.
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(2) The aggregate adjusted tax basis of the shares of Summit Common received
by each Central Jersey shareholder in the Merger (including any fractional
share of Summit Common deemed to be received, as described in paragraph 4
below) will be equal to the aggregate adjusted tax basis of the shares of
Central Jersey Common surrendered.
(3) The holding period of the shares of Summit Common received by each
Central Jersey shareholder in the Merger (including any fractional share of
Summit Common deemed to be received, as described in paragraph 4 below) will
include the holding period of the shares of Central Jersey Common exchanged
therefor.
(4) A Central Jersey shareholder who receives the Cash In Lieu Amount with
regard to a fractional share of Summit Common will be treated as if the
fractional share had been received by such shareholder in the Merger and then
redeemed by Summit in return for the Cash In Lieu Amount. The receipt of such
cash will cause the recipient to recognize capital gain or loss equal to the
difference between the amount of cash received and the portion of such
holder's adjusted tax basis in the shares of Summit Common allocable to the
fractional share.
Counsel's opinion is subject to the conditions and customary assumptions
that are stated therein and relies upon various representations made by Summit,
Central Jersey, and certain shareholders of Central Jersey. If any of these
representations or assumptions is inaccurate, the tax consequences of the Merger
could differ from those described herein. Counsel's opinion is also based upon
the Code, regulations proposed or promulgated thereunder, judicial precedent
relating thereto, and current administrative rulings and practice, all of which
are subject to change. As such change, which may or may not be retroactive,
could alter the tax consequences discussed herein. The receipt of Counsel's
opinion again as of the date of the closing of the Merger is a condition to the
consummation of the Merger. An opinion of counsel, unlike a private letter
ruling from the Internal Revenue Service ("Service"), has no binding effect .
The Service could take a position contrary to Counsel's opinion and, if the
matter were litigated, a court may reach a decision contrary to the opinion.
Neither Summit nor Central Jersey has requested an advance ruling as to the
federal income tax consequences of the Merger, and the Service is not expected
to issue such a ruling.
THE FOREGOING IS A SUMMARY OF THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER TO CERTAIN CENTRAL JERSEY SHAREHOLDERS AND DOES NOT TAKE INTO
ACCOUNT THE PARTICULAR FACTS AND CIRCUMSTANCES OF EACH CENTRAL JERSEY
SHAREHOLDER'S TAX STATUS AND ATTRIBUTES. AS A RESULT, THE FEDERAL INCOME TAX
CONSEQUENCES ADDRESSED IN THE FOREGOING DISCUSSIONS MAY NOT APPLY TO EACH
CENTRAL JERSEY SHAREHOLDER. ACCORDINGLY, EACH CENTRAL JERSEY SHAREHOLDER SHOULD
CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES OF
THE MERGER, 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.
RESALE OF SUMMIT COMMON
The shares of Summit Common into which shares of Central Jersey Common 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 Central Jersey for purposes of Rule 145 under the Securities Act
as of the date of the Annual Meeting. Affiliates may not sell their shares of
Summit Common 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 Central Jersey generally include individuals
or entities that control, are controlled by or are under common control with
Central Jersey and may include certain officers and directors of Central Jersey
as well as principal shareholders of Central Jersey.
Central Jersey agreed in the Merger Agreement to use its best efforts to
cause each director, executive officer and other persons deemed in the opinion
of Central Jersey's counsel to be affiliates of Central Jersey to enter into an
agreement with Summit providing that such persons agree to be bound by the
restrictions of Rule 145.
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DIFFERENCES IN SHAREHOLDERS' RIGHTS
Because Summit and Central Jersey are both New Jersey business
corporations, any differences in rights of holders of their respective stock are
due to differences in the certificates of incorporation and by-laws of the two
companies. Certain of the rights of Central Jersey shareholders described below
that are contained in the Certificate of Incorporation or By-Laws of Central
Jersey and that are not contained in the Restated Certificate of Incorporation
or By-Laws of Summit are deemed to have an anti-takeover effect and will not be
available to Central Jersey shareholders as Summit shareholders; however,
certain rights provided for by the Restated Certificate of Incorporation or
By-Laws of Summit are also deemed to have an anti-takeover effect and will be
available to Central Jersey shareholders but only after becoming Summit
shareholders. The following is a summary explanation of the material differences
between the rights of shareholders of Central Jersey and the rights of
shareholders of Summit. This summary is qualified in its entirety be reference
to the governing documents of Central Jersey and Summit referred to above.
CLASSIFIED BOARD AND RELATED PROVISIONS:
CENTRAL JERSEY. The Certificate of Incorporation and By-Laws of Central
Jersey divides the Central Jersey Board into three classes, with each class of
directors serving a staggered term of the three years. Each class of directors
must consist, as nearly as possible, of one third of the number of directors
constituting the entire Central Jersey Board. Presently there are four directors
in Class A, three directors in Class B and three directors in Class C.
The By-Laws of Central Jersey require that any resolution of the Central
Jersey Board between Annual Meetings increasing the number of directors on the
Central Jersey Board be approved by the affirmative vote of (i) 75% of directors
holding office and (ii) a majority of any directors who were original members of
the Board of Directors of Central Jersey elected by the public shareholders of
Central Jersey prior to the time any individual became the beneficial owner in
excess of 10% of the voting stock of Central Jersey;
SUMMIT. The Restated Certificate of Incorporation of Summit provides that
the Summit Board shall consist of not less than five and not more than forty
persons and divides the Summit 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 Summit Board. Presently there are seven directors in
Class I, six directors in Class II and six directors in Class III.
The Restated Certificate of Incorporation of Summit further 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 Summit
entitled to vote generally in the election of directors, voting as a single
class.
The Restated Certificate of Incorporation of Summit also provides that the
affirmative vote of the holders of 80% or more of the combined voting shares of
Summit, 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.
MEETINGS AND CONSENTS.
CENTRAL JERSEY. Central Jersey's Certificate of Incorporation and By-Laws
provide that a special meeting of shareholders may be called for any purpose
only upon the affirmative vote of 75% of the entire Board of Directors and may
not be called by Central Jersey's shareholders. With the exception of certain
business combinations which require a meeting of shareholders, the Certificate
of Incorporation of Central Jersey does not contain a provision prohibiting
shareholders voting by written consent in lieu of a meeting. Accordingly, under
the New Jersey Business Corporation Act, any action required or permitted to be
taken at a meeting of shareholders may be taken without a meeting upon the
written consent of shareholders who would have been entitled to cast the minimum
number of votes necessary to authorize such action at a meeting at which all
shareholders entitled to vote thereon were present and voting except that the
unanimous consent is required for mergers, consolidations, sales of
substantially all of the assets and the election of directors.
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SUMMIT. Under Summit's By-laws, except as otherwise provided by law,
special meetings may be called only by the Chairman, Vice Chairman, President or
majority of the entire Board. The Restated Certificate of Incorporation of
Summit requires that all actions by the shareholders of Summit be taken at a
duly called annual or special meeting of Summit'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 Summit
provides that the affirmative vote of the holders of 80% or more of the combined
voting shares of Summit, voting as a single class, is required to amend, alter,
repeal or take any action inconsistent with this requirement. Under the Summit
By-laws, except as otherwise required by law or Summit's Restated Certificate of
Incorporation, all actions by shareholders must be taken at a meeting unless the
Board determines that such action shall be taken by written consent.
FAIR PRICE PROVISION, EVALUATION OF BUSINESS COMBINATIONS
AND SHAREHOLDER RIGHTS PLAN.
CENTRAL JERSEY FAIR PRICE PROVISION. The Certificate of Incorporation of
Central Jersey contains a provision requiring an affirmative vote at a meeting
of shareholders, of the holders of (i) at least 75% of the voting power of the
outstanding shares of Central Jersey entitled to vote in the election of
directors ("Voting Shares") and (ii) a majority of the voting power of the
shares of Central Jersey outstanding, not including those shares beneficially
owned by a "Related Person" (generally a holder of 10% or more of the voting
stock or an affiliate or associate thereof), to approve a "Business Combination"
(as defined below) with a Related Person unless the transaction is either (i)
approved by 75% of the entire Central Jersey Board at any time at which the
relevant Related Person was not a Related Person (ii) approved by 75% of the
entire Central Jersey Board, including a majority of directors who had been
elected by the public shareholders of Central Jersey prior to the time a Related
Person became the beneficial owner of 10% or more of the Voting Shares of
Central Jersey ("Continuing Directors" ); or (iii) is at a minimum fair price
(as determined in Central Jersey's Certificate of Incorporation) during a
specified time period and pursuant to certain procedural requirements AND, among
other things, the Related Person, prior to the consummation of the Business
Combination, shall not have taken certain actions to reduce the representation
by Continuing Directors on the Board below the ratio that the number of Voting
Shares of Central Jersey not held by Related Persons bears to all Voting Shares
outstanding or to acquire a greater holding of Voting Shares. "Business
Combinations" subject to the above described approval and fair price provisions
are defined to, among other things, include: mergers and consolidations with a
Related Person or affiliate thereof; the disposition of assets equaling or
exceeding 10% of the combined consolidated assets of Central Jersey and it
subsidiaries to a Related Person or affiliate thereof; any reclassification of
securities or recapitalization or other transaction which would, directly or
indirectly, increase the proportionate share of the outstanding shares of any
class of equity or convertible securities directly or indirectly owned by a
Related Person or affiliate thereof.
EVALUATION OF OFFERS. The Certificate of Incorporation of Central Jersey
further provides that the Central Jersey Board, when evaluating any offer of
another person to make a Business Combination (as defined above) or tender or
exchange offer shall, in connection with the exercise of its judgment in
determining what is in the best interest of Central Jersey, CJSB and the
shareholders of Central Jersey shall, in addition to considering the adequacy of
the amount to be paid in connection with any such transaction, give due
consideration to all relevant factors, including, without limitation, the social
and economic effects of the transaction on Central Jersey and its subsidiaries,
loan and other customers, depositors, borrowers, creditors and employees and
other elements of the communities in which Central Jersey and CJSB operate or
are located; on the business and financial condition and earnings prospects of
the acquiring entity and the competence, experience and integrity of the
acquiring entity's management. Summit's Restated Certificate of Incorporation
does not contain a similar provision. However, New Jersey corporation law
provides that a director of a New Jersey corporation, in discharging his or her
duties to the corporation and in determining what he or she reasonably believes
to be in the best interests of the corporation, may, in addition to considering
the effects of any action on shareholders, consider any of the following: (a)
the effects of the action on the corporation's employees, suppliers, creditors
and customers; (b) the effects of the action on the community in which the
corporation operates; and (c) the long-term as well as the short-term interests
of the corporation and its shareholders, including the possibility that these
interests may best be served by the continued independence of the corporation.
Determinations resulting in the rejection of a proposal or offer to acquire the
corporation are expressly covered by this provision of the New Jersey Business
Corporation Act.
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SUMMIT SHAREHOLDER RIGHTS PLAN. Summit has in effect a shareholder rights
plan pursuant to which holders of shares of Summit Common possess one preferred
stock purchase right for each share of Summit 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 ("effective time"), one-hundredth of a share of a new series of Preferred
Stock, designated the Series R Preferred Stock, at $90 per one-hundredth share
("exercise price"), with full shares having rights per share equal to 100 times
the rights of Summit 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 (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 Summit 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 Summit's shareholder rights plan, see "DESCRIPTION OF
SUMMIT CAPITAL STOCK -- Shareholder Rights Plan." The combination of prohibitive
dilution of the acquiring person's share values and the power of the Summit
Board to redeem the preferred stock purchase rights is intended to encourage
potential acquiring persons to negotiate with the Summit 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.
Central Jersey has not adopted a shareholder rights plan.
NOMINATIONS TO THE BOARD, SHAREHOLDER PROPOSALS AND CONDUCT OF MEETINGS.
CENTRAL JERSEY. The By-Laws of Central Jersey provide for the Central
Jersey Board to designate either the Chairman of the Board or the President of
Central Jersey to preside at all meetings of Shareholders, or an alternate
officer in their absence. Pursuant to the Central Jersey's By-Laws the Central
Jersey Board acts as a nominating committee for selecting the management
nominees for election as directors. Holders of Central Jersey Common may
nominate directors for election by providing written notice of the nominee's
name, age, occupation, address, number of shares held and certain other
information to Central Jersey's Secretary not less then thirty (30) days prior
to the meeting. The Central Jersey Board may reject any shareholder nomination
to the Central Jersey Board which is not timely made. Holders of Central Jersey
Common may not cumulate their votes in election of directors.
SUMMIT. The By-Laws of Summit contain provisions that empower the Summit
Board to adopt rules, regulations and procedures governing meetings of Summit
shareholders and empower the chairman of a meeting of Summit shareholders,
subject to the rules and regulations adopted by the Summit Board, to adopt such
rules, regulations and procedures and to take such actions that the chairman
deems necessary, appropriate or convenient for the proper conduct of a
shareholder meeting. The Summit By-Laws also contain provisions that (1)
establish rules governing nominations for director and shareholder proposals
made at 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 annual 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. Holders of Summit Common may not cumulate their votes in elections
of directors.
VOTE REQUIRED FOR CHARTER AND BY-LAW AMENDMENTS
CENTRAL JERSEY. The Central Jersey Certificate of Incorporation provides
that the sections thereof relating to Business Combinations, classification of
the Board of Directors and removal of directors may not be amended without the
affirmative vote of a majority of the entire Board of Directors and the
Continuing Directors AND the affirmative vote of the holders of 75% of the
outstanding shares entitled to vote in the election of directors and the holders
of a majority of the outstanding shares that are not beneficially owned by a
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Related Person, unless such amendment is recommended to shareholders by the vote
of 75% of the entire Board ofDirectors and a majority of the Continuing
Directors, in which case such amendment shall only require the vote required
under the New Jersey Business Corporation Act and the CentralJersey Certificate
of Incorporation and By-Laws. Further, the CentralJersey Certificate of
Incorporation provides that no amendment thereto shall be made unless first
proposed by the Board upon the affirmative vote of a majority of the Continuing
Directors, and thereafter approved by the holders of a majority of the total
votes entitled to vote thereon. The Central Jersey Certificate of Incorporation
and By-Laws provide that the By-laws may be amended (1) by the Board upon the
affirmative vote of 75% of the entire Board ofDirectors and a majority of the
Continuing Directors or (2) by the shareholders of Central Jersey at a special
or annual meeting thereof upon the affirmative vote of not less than 75% of the
shares entitled to vote in the election of directors and by the holders of a
majority of the outstanding shares not beneficially owned by a Related Person;
provided however that if such amendment is recommended to the shareholders by a
favorable vote of 75% of the entire Board and a majority of the Continuing
Directors, such amendment shall require only the vote required under the
applicable provisions of the New Jersey Business Corporation Act or the Central
Jersey By-Laws.
SUMMIT. As discussed above, the Restated Certificate of Incorporation of
Summit requires that certain provisions relating to increases in the number of
directors (which number may also be increased by the Board), changes to the
classified board provision and changes to the provision requiring that actions
by shareholders be effected at an annual or special meeting or by unanimous
written consent, receive the affirmative vote of holders of 80% of the combined
voting shares of Summit, voting as a single class. The By-Laws of Summit provide
for amendments upon two-thirds vote of the Board of Directors. Under the New
Jersey Business Corporation Act, by-laws made by a corporation's board may be
altered or repealed and new by-laws made, by the shareholders.
REMOVAL OF DIRECTORS
CENTRAL JERSEY. Under the Central Jersey Certificate of Incorporation, the
Board of Directors, acting by a 75% affirmative vote for the entire board, may
remove a director for cause. In addition, shareholders of Central Jersey may
remove a director for cause upon the affirmative vote of 75% of the shares
entitled to vote in the election of directors voting separately as a class and
the holders of a majority of such shares not beneficially owned by a Related
Person.
SUMMIT. The Summit Restated Certificate of Incorporation contains no
specific provisions with respect to removal of directors. Accordingly, under the
New Jersey Business Corporation Act, directors may be removed by shareholders
for cause by the affirmative vote of the majority of votes cast by the holders
entitled to vote thereon.
AUTHORIZED SHARES
CENTRAL JERSEY. Central Jersey has 40,000,000 authorized shares of capital
stock, 25,000,000 of which is Central Jersey Common and 15,000,000 of which is
preferred stock, no par value ("Central Jersey Preferred"). As of June 30, 1996,
there were 2,668,269 shares of Central Jersey Common outstanding and no shares
of Central Jersey Preferred outstanding. Central Jersey's Certificate of
Incorporation does not provide for preemptive rights to attach to the ownership
of Central Jersey Common.
The Central Jersey Board is authorized by Central Jersey's Certificate of
Incorporation, as amended, to issue shares of Central Jersey 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 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.
SUMMIT. The Restated Certificate of Incorporation of Summit authorizes the
issuance of 130,000,000 shares of Summit Common and 4,000,000 shares of
preferred stock, no par value. As of June 30, 1996, there were 93,712,791 shares
of Summit Common, 600,166 shares of Summit Series B Preferred and 504,481 shares
of Summit Series C Preferred outstanding and 600,000 shares of Summit Series R
Preferred reserved in Summit's Restated Certificate of Incorporation for
issuance under the shareholder rights plan of Summit. The Restated Certificate
of Incorporation of Summit and the New Jersey Business Corporation Act authorize
the Summit 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
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series, and to determine the relative voting, dividend, conversion, redemption,
liquidation and other rights, preferences and limitations of the authorized
shares of preferred stock. No preemptive rights attach to the ownership of
Summit Common.
INDEMNIFICATION; LIMITATION OF LIABILITY
CENTRAL JERSEY. Article VIII of Central Jersey's Certificate of
Incorporation provides that Central Jersey shall indemnify each director,
officer, employee or agent to the fullest extent permitted by law against
expenses and liabilities by reason of having served in such capacity. Articles
IX and X of Central Jersey's Certificate of Incorporation provide that no
director or officer of Central Jersey shall be personally liable to Central
Jersey or its shareholders for damages for breach of a fiduciary duty owed to
Central Jersey or its shareholders, except to the extent not permitted under the
New Jersey Business Corporation Act. Under the New Jersey Business Corporation
Act 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 the corporation 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. Central Jersey By-laws contain similar
provisions with respect to indemnification and limitation of liability.
SUMMIT. Summit's By-Laws provide that corporate agents of Summit shall be
indemnified and held harmless by Summit 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 Summit.
Summit's Restated Certificate of Incorporation contains provisions substantially
similar to those in Central Jersey's Certificate of Incorporation respecting the
personal liability of directors.
SUMMIT BANCORP.
DESCRIPTION OF BUSINESS
Summit commenced operations as a New Jersey corporation on October 1, 1970.
As a bank holding company registered under the BHC Act, Summit owns two bank
subsidiaries and eight active non-bank subsidiaries. At June 30, 1996, Summit
had total consolidated assets of $22.4 billion on the basis of which it ranked
as the largest New Jersey-based bank holding company.
The bank subsidiaries engage in a general banking business. Summit Bank
(Hackensack, NJ) is Summit's largest bank subsidiary, accounting for
approximately 88% of Summit's total consolidated assets at June 30, 1996.
Summit'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 340 banking offices located in major trade
centers and suburban areas in New Jersey and Pennsylvania as of June 30, 1996.
The following table lists, as of June 30, 1996, 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 OF NO. OF
PRINCIPAL OFFICES BANKING OFFICES TOTAL ASSETS (1) TOTAL DEPOSITS (1)
- ---------------------- --------------- ---------------- ------------------
<S> <C> <C> <C>
Summit Bank, Hackensack, NJ 273 $19,595,857 $16,147,245
Summit Bank, Bethlehem, PA 67 2,697,084 2,117,226
</TABLE>
- -------
(1) Not adjusted to exclude interbank deposits or other transactions among the
subsidiaries.
Summit is a legal entity separate and distinct from its subsidiaries. There
are various legal limitations on the extent to which a bank subsidiary may
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finance or otherwise supply funds to Summit or its nonbank 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 Summit 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 Summit
without the prior approval of the bank regulatory authorities. The Federal
Reserve Act, which affects Summit's one state member bank, 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 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 June 30, 1996, the total undistributed net assets of the
subsidiary banks were $1.7 billion of which $257.5 million was available under
the most restrictive limitations for the payment of dividends to Summit.
DESCRIPTION OF SUMMIT CAPITAL STOCK
Summit is presently authorized to issue 130,000,000 shares of Summit Common
and 4,000,000 shares of Preferred Stock, without par value ("Summit Preferred
Stock"). As of June 30, 1996, there were 93,712,791 shares of Summit Common,
600,166 shares of Summit Series B Preferred and 504,481 shares of Summit Series
C Preferred outstanding and 600,000 shares of Summit Series R Preferred reserved
for issuance in Summit's Restated Certificate of Incorporation under the Summit
shareholder rights plan. Pursuant to the New Jersey Business Corporation Act,
the Summit Board has authority to set the terms and conditions of the authorized
but unissued Summit Preferred. Summit may issue any authorized Summit Common and
Summit Preferred without further shareholder vote, unless required for a
particular transaction by applicable law or stock exchange rules, including
rules of the NYSE, on which the Summit Common and the Summit Series B Preferred
are presently listed. The issuance of additional Summit Common or Summit
Preferred, including Summit Preferred that might be convertible into Summit
Common, may, among other things, affect the earnings per share applicable to
existing Summit Common and the equity and voting rights of existing holders of
Summit Common.
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of New Jersey Business Corporation Act,
Summit's Restated Certificate of Incorporation, including Certificates of
Designation pursuant to which the Summit Series B Preferred and Summit Series C
Preferred were issued and Summit's shareholder rights plan.
COMMON STOCK
The rights of holders of Summit Common are subject to the preferences of
holders of the Summit Series B Preferred and Summit Series C Preferred described
below and the preferences as to dividends and liquidation rights and other prior
rights, if any, of any other class or series of Summit Preferred that may be
issued. The holders of Summit 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 Summit Board out of funds of Summit legally available therefor. Shares of
Summit Common do not have cumulative voting rights; accordingly, at any annual
meeting of Summit 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 meeting (provided a quorum is present) can fill all
positions on the Summit Board that are up for election at such 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. Summit 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 Summit,
holders of Summit Common are entitled to share pro rata in the distribution of
Summit's assets available for such purpose. All shares of Summit Common are
fully paid and nonassessable. No preemptive rights attach to the ownership of
Summit Common and no personal liability is imposed on the holders thereof by
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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 Summit
Common. Summit Bank (Hackensack, NJ) is the co-transfer agent.
PREFERRED STOCK
The Summit 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 Summit Series B Preferred is
redeemable at the option of Summit, in whole or in part, at $50 per share, in
each case plus accrued and unpaid dividends. Holders of Summit Series B
Preferred have the right to vote as a class on certain amendments to the
Restated Certificate of Incorporation of Summit that may affect the Summit
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 Summit Series B Preferred is not convertible into shares of Summit Common
and has no preemptive rights. The Summit Series B Preferred is not subject to
any sinking fund or other repurchase or retirement obligation of Summit. First
Chicago Trust Company of New York is the transfer agent, dividend disbursing
agent and registrar for shares of the Summit Series B Preferred.
The Summit Series C Preferred ranks on a parity with the Summit Series B
Preferred as to dividends and liquidation preference. The Summit Series C
Preferred is entitled to cumulative dividends that are payable quarterly on
March 15, June 15, September 15, and December 15 of each year. For each
quarterly period, the dividend rate is determined in advance of such period, and
is 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 annum. The Summit Series C Preferred is redeemable at the option of
Summit, in whole or in part, at $25 per share, plus accrued and unpaid
dividends. Holders of Summit Series C Preferred have the right to vote as a
class on certain amendments to the Restated Certificate of Incorporation of
Summit that may adversely affect the rights or preferences of the Summit Series
C Preferred and, in the event of a failure to pay full cumulative dividends for
six quarters, holders of the Summit Series C Preferred are entitled to vote in
the election of directors on the same basis as the holders of Summit Common.
Holders of the Summit Series C Preferred have no other voting rights. The Summit
Series C Preferred is not convertible into shares of Summit Common and have no
preemptive rights. The Summit Series C Preferred is not subject to any sinking
fund or other repurchase or retirement obligations of Summit. First Chicago
Trust Company of New York is the transfer agent, dividend disbursing agent and
registrar for shares of the Summit Series C Preferred.
SHAREHOLDER RIGHTS PLAN
In August 1989, Summit adopted a shareholder rights plan ("Rights Plan "),
under which preferred stock purchase rights ("Rights") attached to Summit Common
outstanding as of the close of business on August 28, 1989. Holders of shares of
Summit Common issued subsequent to that date receive the Rights with their
shares. Except as indicated below, each Right entitles the registered holder to
purchase from Summit one-hundredth of a share of a new series of Summit
Preferred Stock, designated the Series R Preferred Stock ("Summit Series R
Preferred"). The Rights expire on August 16, 1999, and are subject to redemption
and amendment in certain circumstances. The Rights trade automatically with
shares of Summit Common and become exercisable only under certain circumstances
as described below.
In general, the Rights will become exercisable upon the earlier to occur (a
"Distribution Date", as defined in the 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 Summit Common outstanding at that
time or voting securities of Summit representing 15% or more of the total voting
power of Summit (such person or group becoming an "Acquiring Person ", as
defined in the Rights Plan) or (2) ten business days (or such later date as the
Summit 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
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the outstanding Summit Common or voting securities representing 30% or more of
the total voting power of Summit.
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 Summit Common and other voting securities that the Summit
Board determines to be fair to shareholders and otherwise in the best interests
of Summit), each Right, other than Rights owned by the Acquiring Person, will
thereafter entitle the holder to receive, upon exercise of the Right, Summit
Series R Preferred having a value equal to two times the exercise price of the
Right.
In the event that a Distribution Date occurs (under either of the
circumstances described above) and Summit is acquired in a merger or other
business combination, or more than 50% of Summit's assets or earning power is
sold or transferred, each Right will thereafter entitle the holder thereof to
receive, upon the exercise of the Right, common stock of the acquirer having a
value equal to two times the exercise price of the Right .
The combination of prohibitive dilution of the Acquiring Person's share
values and the power of the Summit Board to redeem the Rights is intended to
encourage potential acquiring persons to negotiate with the Summit 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 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 August 28, 1989.
CENTRAL JERSEY FINANCIAL CORPORATION
DESCRIPTION OF BUSINESS
Central Jersey is a unitary thrift holding company incorporated in the
State of New Jersey. Central Jersey commenced business in December 1989 with the
acquisition of CJSB, its only subsidiary. Principal executive offices of Central
Jersey and CJSB are located at 591 Cranbury Road, East Brunswick, New Jersey
08816 and the telephone number is (908) 254-6600.
CJSB is a state chartered savings and loan association that was organized
in 1892 as "The South River Building and Loan Association." The deposits of CJSB
are insured by the SAIF of the Federal Deposit Insurance Corporation. On
September 20, 1984, CJSB converted from a mutual to a New Jersey stock savings
association through the sale and issuance of a total of 1,239,305 shares of
Central Jersey Common and, on May 7, 1986, CJSB completed a second offering of a
total of 623,907 shares of Central Jersey Common (which totals are adjusted
pursuant to a three-for-two stock split, effective in September 1987, a ten
percent stock dividend paid on October 1, 1992, a five-for-four stock split paid
October 22, 1993 and a ten percent stock dividend paid September 2, 1994). In
December 1989, Central Jersey acquired CJSB as part of the reorganization of
CJSB into a savings and loan holding company structure. Central Jersey conducts
its business through six full-service offices located in East Brunswick, North
Brunswick, Jamesburg, South River and Spotswood, New Jersey.
DESCRIPTION OF CENTRAL JERSEY CAPITAL STOCK
COMMON STOCK
Central Jersey is presently authorized to issue 25,000,000 shares of
Central Jersey Common and 15,000,000 shares of preferred stock, no par value
("Central Jersey Preferred "). As of June 30, 1996, there were 2,668,269 shares
of Central Jersey Common and no shares of Central Jersey Preferred outstanding.
DIVIDENDS. The holders of Central Jersey Common are entitled to receive and
share equally in such dividends as may be declared by Central Jersey Board out
of funds legally available therefor.
VOTING RIGHTS. The holders of Central Jersey Common elect the Central
Jersey Board and act on such other matters as are required to be presented to
them under the New Jersey Business Corporation Act, Central Jersey's Certificate
of Incorporation or as are otherwise presented to them by the Central Jersey
39
<PAGE>
Board. Each holder of Central Jersey Common is entitled to one vote per share.
Holders of Central Jersey Common may not cumulate votes. Directors of Central
Jersey are elected by a plurality of votes cast.
PREEMPTIVE RIGHTS. Holders of Central Jersey Common are not entitled to
preemptive rights with respect to any shares that may be issued.
PREFERRED STOCK
The Central Jersey Board is authorized to approve the issuance of a series
of Central Jersey Preferred without the approval of Central Jersey's
shareholders. The rights, qualifications, limitations and restrictions on each
such series of Central Jersey Preferred issued may be determined by the Central
Jersey Board at the time of issuance and may include, among other things,
redemption rights, stated or participating dividends, special voting rights and
convertibility to Central Jersey Common. Central Jersey Preferred may rank prior
to Central Jersey Common as to dividend rights, liquidation preferences, or
both. Such Central Jersey Preferred may have voting and conversion rights that
could adversely affect the voting power of the holders of Central Jersey Common.
40
<PAGE>
PROPOSAL II--ELECTION OF DIRECTORS
The Bylaws of Central Jersey fix the number of directors at ten, exclusive
of any Directors Emeritus. The Bylaws provide that the Board of Directors shall
be divided into three classes as equal in number as possible. The members of
each class are to be elected for terms of three years, approximately one-third
of whom are to be elected annually in accordance with the Bylaws of Central
Jersey. The nominees set forth below are being elected for a term expiring in
1999 or until the consummation of the Merger.
It is intended that the persons named in the proxies solicited by the
Central Jersey Board will vote for the election of the named nominees. If any
nominee is unable to serve, the shares represented by all valid proxies will be
voted for the election of such substitute as the Central Jersey Board may
recommend. At this time, the Central Jersey Board knows of no reason why any
nominee might be unavailable to serve.
Central Jersey Bylaws provide that shareholders entitled to vote for the
election of directors may name nominees for election to the Central Jersey
Board. Any such nomination must be submitted to the principal executive offices
of Central Jersey in writing at least 30 days prior to the annual meeting. Under
the Central Jersey Bylaws, a shareholder's notice must set forth certain
specific information about the person whom the shareholder proposes to nominate
for election or re-election as a director and about the shareholder giving the
notice. If such a nomination is properly made, ballots will be provided for use
by shareholders at the annual meeting bearing the name of such nominee or
nominees.
The following table sets forth each nominee and continuing director's name,
age, principal occupation during the past five years, the year he or she first
became a director, the year in which his or her current term will expire and the
number of shares and percentage of Central Jersey's Common Stock beneficially
owned on the Record Date. The following table also sets forth, for all executive
officers and directors as a group and for each executive officer listed in the
Summary Compensation Table under the caption "Executive Compensation," the
number of shares and the percentage of Central Jersey's Common Stock
beneficially owned on the Record Date.
41
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH SHARES OF
CENTRAL JERSEY AND COMMON
PRINCIPAL OCCUPATION YEAR FIRST CURRENT STOCK
DURING THE PAST ELECTED TERM TO BENEFICIALLY PERCENT OF
AGE (1) FIVE YEARS (2) DIRECTOR EXPIRE OWNED(3) CLASS
------- ------------------ --------- -------- ---------- ---------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 1999
<S> <C> <C> <C> <C> <C>
Domenick Carratello 59 Owner of Mickey's Gourmet 1993 1996 15,977(5) (6)
Bakery
John J. Doherty 47 Vice President and Chief 1988 1996 16,701(7) (6)
Financial Officer (1989 to
present); Vice President &
Chief Financial Officer of CJSB
since 1987; Previously an
accountant with Coopers &
Lybrand
Arthur E. Fritsch,
Jr. (4) 48 Vice President of E.W. Price 1988 1996 23,898(8) (6)
Agency, Inc., an insurance
agency
Robert V. Noreika 52 Owner of Clarkesburg Inn 1993 1996 1,711(5) (6)
Restaurant
DIRECTORS CONTINUING IN OFFICE
Salvatore Alfieri 38 Attorney and Partner with the 1993 1997 2,949(5) (6)
law firm of Cleary, Alfieri &
Grasso
James J. Kelly 61 Retired. Former Owner and 1987 1997 91,154(9) 3.4%
Chief Operations Officer of
K-D Electrical Contractors
Emile L. LeLand, Jr. 59 Senior Vice President (1989 to 1988 1997 34,829(10) 1.3%
present); Senior Vice President
of CJSB since 1984; and an
officer of CJSB since 1979.
L. Doris Fritsch (4) 74 President and Chief Executive 1964 1998 169,147(11) 6.2%
Officer (1989 to present);
President & Chief Executive
Officer of CJSB since 1964 and
employee of CJSB since 1943
William B. Lewis 72 Retired. Former Executive 1991 1998 3,696(12) (6)
Vice President and Director of
Nutley Savings Bank, SLA.
Former Deputy Commissioner
of Banking, Savings and Loan
Division, New Jersey Dept. of
Banking
Chester J. Pardun, Jr. 70 Retired. Former Secretary and 1982 1998 62,744(13) 2.4%
Treasurer of C. J. Pardun &
Sons, a construction company
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH SHARES OF
CENTRAL JERSEY AND COMMON
PRINCIPAL OCCUPATION YEAR FIRST CURRENT STOCK
DURING THE PAST ELECTED TERM TO BENEFICIALLY PERCENT OF
AGE (1) FIVE YEARS (2) DIRECTOR EXPIRE OWNED(3) CLASS
------- ------------------ --------- -------- ---------- ---------
DIRECTOR EMERITUS (14)
<S> <C> <C> <C> <C>
Arthur E. Fritsch,
Sr. (4) 77 President of E.W. Price 1951 -- 1,323(17) (6)
Agency, Inc., an insurance
agency. Trustee of the
Washington Monumental
Cemetery Association
CERTAIN EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
William M. Sievewright 67 Senior Vice President (1991 to 4,579(15) (6)
present); employee of CJSB
since May 1991; previously,
Senior Vice President of
Shadow Lawn Savings Bank
All executive officers
and directors as a
group (20 persons) 468,074(16) 16.7%
</TABLE>
- ---------
(1) At June 30, 1996.
(2) No nominee, director or director emeritus is a director of any other
company with a class of securities registered pursuant to Section 12 of the
Exchange Act or subject to the requirements of Section 15(d) of the
Exchange Act or of any company registered as an investment company under
the Investment Company Act of 1940.
(3) Unless otherwise noted in this Proxy Statement, all shares are owned
directly by individuals or by their spouses and minor children, over which
shares the individuals effectively exercise sole or shared voting and
investment power.
(4) L. Doris Fritsch, Arthur E. Fritsch, and Arthur E. Fritsch, Jr. are wife,
husband and son.
(5) Includes 1,412 shares subject to stock options exercisable within 60 days
of __________ ___, 1996. Excludes 173 shares owned as unexercisable stock
options.
(6) Less than one percent.
(7) Includes 14,987 shares Mr. Doherty has a right to purchase pursuant to
stock options exercisable within 60 days of __________ ___, 1996.
(8) Includes 1,541 shares Mr. Fritsch has a right to acquire pursuant to Stock
Options exercisable within 60 days of __________ ___, 1996. Excludes 218
shares Mr. Fritsch owns as unexercisable stock options.
(9) Includes 1,323 shares Mr. Kelly has a right to acquire pursuant to Stock
Options exercisable within 60 days of __________ ___, 1996. Excludes 218
shares owned as unexercisable stock options and 4,917 shares owned by Mr.
Kelly's adult children, as to which shares Mr. Kelly disclaims beneficial
ownership.
(10) Includes 25,408 shares Mr. LeLand has a right to purchase pursuant to stock
options exercisable within 60 days of ________ ___, 1996.
(11) Includes 117,317 shares owned solely by L. Doris Fritsch and 51,830 shares
Mrs. Fritsch has a right to purchase pursuant to the exercise of stock
options exercisable within 60 days of __________ ___, 1996.
(12) Includes 130 shares Mr. Lewis has a right to acquire pursuant to stock
options exercisable within 60 days of __________ ___, 1996. Excludes 218
shares Mr. Lewis owns as unexercisable stock options.
(13) Includes 1,323 shares Mr. Pardun has a right to acquire pursuant to stock
options exercisable within 60 days of __________ ___, 1996 and 8,285 shares
owned by his wife and daughter. Excludes 218 shares Mr. Pardun owns as
unexercisable stock options.
(14) In such capacity, Mr. Fritsch may attend meetings of the Board of Directors
but he is not entitled to vote.
(15) Includes 3,544 shares Mr. Sievewright has a right to purchase pursuant to
stock options exercisable within 60 days of __________ ___, 1996. Excludes
2,310 shares Mr. Sievewright owns as unexercisable stock options.
(16) Includes 139,513 shares of Common Stock which officers, directors and
director emeritus as a group have a right to acquire pursuant to stock
options exercisable within 60 days of __________ ___, 1996. Excludes 12,991
shares of Common Stock which are unexercisable stock options.
(17) Includes 1,323 shares Mr. Fritsch has a right to acquire pursuant to stock
options exercisable within 60 days of _______, 1996. Excludes 218 shares
owned as unexercisable stock options.
43
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Common Stock of Central Jersey is registered pursuant to Section 12(g)
of the Exchange Act. The executive officers and directors of Central Jersey and
beneficial owners of greater than 10% of the Central Jersey Common ("10%
beneficial owners") are required to file reports on Forms 3, 4 and 5 with the
SEC disclosing changes in beneficial ownership of Central Jersey Common. Based
on Central Jersey's review of Forms 3, 4 and 5 filed by officers, directors and
10% beneficial owners of Central Jersey Common, no executive officer, director
or 10% beneficial owners of Central Jersey Common failed to file such ownership
reports on a timely basis during the fiscal year ended March 31, 1996 except
Director Carratello who inadvertently omitted reporting 2,230 shares (purchased
in 1990) on Form 3 in 1992 upon becoming a director and each subsequent Form 4
filing.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
CENTRAL JERSEY Central Jersey's Board of Directors conducts its business
through meetings of the Board. During the fiscal year ended March 31, 1996, the
Board of Directors held 13 meetings. No director of Central Jersey attended
fewer than 75% of the total meetings of the Board of Directors and committee
meetings on which such Board member served during this period. The Board of
Directors has created various committees. Several of these committees are
discussed below in more detail.
Central Jersey's full Board of Directors acts as a Nominating Committee for
the annual selection of its nominees for election as directors. While the
Nominating Committee will consider nominees recommended by the shareholders, it
has neither actively solicited recommendations from shareholders nor established
any procedures for this purpose other than as set forth in the Bylaws. The
Central Jersey Board met one time in its capacity as the Nominating Committee
during fiscal 1996.
Central Jersey's Board of Directors has appointed a Stock Option and
Incentive Plan Committee. The Committee's primary function is to determine the
officers, key employees and other persons to whom awards shall be made, the type
of award to be made and the amount of the award. Such committee is comprised of
directors Carratello, Pardun and Arthur E. Fritsch, Jr. During the 1996 fiscal
year, the Committee met two times.
CJSB. The Board of Directors of CJSB (the "CJSB Board of Directors")
conducts its business through meetings of its Board and through the various
activities of its committees. During the fiscal year ended March 31, 1996, CJSB
Board of Directors held 13 meetings. No director of CJSB attended fewer than 75%
of the total meetings of CJSB Board of Directors and committees on which such
Board member served during this period.
CJSB Board of Directors has an Executive Committee whose current members
are L. Doris Fritsch, Emile L. LeLand, Jr., and John J. Doherty. This committee
has no regularly scheduled meetings but is available at all times to aid the
President in making decisions. The Executive Committee did not meet during the
fiscal year ended March 31, 1996.
CJSB Board of Directors has a Salary Committee, whose current members are
Chester J. Pardun, Jr., Salvatore Alfieri and Arthur E. Fritsch. Arthur E.
Fritsch attends all Salary Committee meetings as Director Emeritus, but does not
participate in any discussions involving the salary of L. Doris Fritsch. Actions
taken or recommended by this committee are subsequently ratified by CJSB Board
of Directors. The Salary Committee held two meetings during the fiscal year
ended March 31, 1996.
The entire CJSB Board of Directors serves as the Nominating Committee for
selecting management nominees for election as directors. The Board held one
meeting in its capacity as the Nominating Committee during the fiscal year ended
March 31, 1996.
CJSB Board of Directors has an Audit Committee whose current members are
James J. Kelly, Robert V. Noreika and William B. Lewis. This Committee reviews
and evaluates CJSB's internal controls and accounting procedures and reviews
CJSB's audit reports with CJSB's independent auditors. The Audit Committee held
two meetings during the fiscal year ended March 31, 1996.
44
<PAGE>
DIRECTORS' COMPENSATION
Each non-officer director of Central Jersey or CJSB receives an attendance
fee of $850 for each Board meeting attended with two excused absences permitted
without loss of fee for those meetings; provided, however, that only one
attendance fee is paid in the usual case when Central Jersey and CJSB Board
meetings are held on the same day. Non-officer directors also receive an
attendance fee of $450 for each special meeting attended. All members of the
Salary Committee receive $200 for each meeting attended. Central Jersey paid a
total of $89,800 in directors' and committee fees for the fiscal year ended
March 31, 1996.
EXECUTIVE COMPENSATION
Central Jersey has no full-time employees, relying upon employees of CJSB
for the limited services required by Central Jersey. All compensation paid to
directors, officers and employees is paid by CJSB.
The following table sets forth, for the fiscal years ended March 31, 1996,
1995 and 1994, certain information as to the total remuneration received by the
chief executive officer as well as by each of the other most highly compensated
executive officers of Central Jersey whose total annual salary and bonus
exceeded $100,000 during these periods for services rendered in all capacities
to Central Jersey (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
-------------------------------------------- ---------------------------------------
(A) (B) (C) (D) (E) (F) (G) (H)
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPENSATION STOCK OPTIONS/ COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(L) AWARD(S)($) SARS(#)(2) ($)(3)
- -------------------- ----- --------- --------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
L. Doris Fritsch 1996 $252,390 $ -- -- -- 7,200 $4,500
President and Chief 1995 242,960 -- -- -- 6,000 4,500
Executive Officer 1994 236,687 -- -- -- 7,500 7,100
Emile L. LeLand, Jr. 1996 159,469 20,000 -- -- 3,600 4,500
Director and Senior 1995 153,540 -- -- -- 3,300 4,500
Vice President 1994 149,594 -- -- -- 4,125 4,488
John J. Doherty 1996 108,743 -- -- -- 3,600 3,262
Director, Vice President 1995 104,850 -- -- -- 3,300 3,145
and Chief Financial 1994 102,461 -- -- -- 4,125 3,074
William M. Sievewright 1996 96,617 -- -- -- 250 2,899
Senior Vice President 1995 99,372 -- -- -- 1,100 2,981
1994 134,492 -- -- -- 4,125 4,035
</TABLE>
- ----------
(1) No Named Executive Officer received perquisites (i.e. personal benefits) in
excess of the lesser of $50,000 or 10% of such individual's reported salary
and bonus.
(2) Includes adjustments for stock dividends paid by Central Jersey on
September 2, 1994 and a five-for-four stock split on October 22, 1993.
(3) Includes contributions to Central Jersey's 401(k) Plan.
45
<PAGE>
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
CJSB has in effect employment agreements with President L. Doris Fritsch,
Senior Vice President Emile L. LeLand, Jr. and Vice President John J. Doherty.
President Fritsch's employment agreement with CJSB as last amended on March 20,
1996 is for a three year term commencing on July 15, 1992 and is extended for an
additional year at each meeting of the Board of Directors upon resolution of the
Board. President Fritsch's minimum annual salary is $231,000. The Agreement also
provides for certain death and disability benefits. President Fritsch's
agreement also provides that after reaching age 70, she may elect to terminate
her full-time employment and become a consultant to CJSB for a period of three
years at the annual rate of $50,000 or one third of her highest compensation
during any of the three preceding years.
Senior Vice President LeLand is employed pursuant to an employment
agreement with CJSB last amended on March 20, 1996. The agreement provides for a
term of three years commencing July 15, 1992, which term is to be extended one
additional year at each meeting of the Board of Directors upon resolution of the
Board. Mr. LeLand's minimum annual salary is $146,000. The agreement also
provides for certain death and disability benefits.
Vice President Doherty is employed pursuant to an employment agreement last
amended on March 20, 1996. The agreement provides that Mr. Doherty's employment
would be for a term of three years commencing July 15, 1992, which term is to be
extended one additional year at each meeting of the Board of Directors upon
resolution of the Board. Mr. Doherty's minimum salary is $100,000 per year. The
agreement also provides for certain death and disability benefits.
The agreements with President Fritsch, Senior Vice President LeLand, and
Vice President Doherty also provide for severance payments in the event the
employee is terminated without "cause" or the agreement is not renewed by CJSB,
with special provisions applying following any "change of control" of CJSB. The
severance payments following a "change of control" are 2.99 times the employee's
annual compensation, which will qualify the severance payment for deductibility
by CJSB for federal income tax purposes. Mrs. Fritsch and Mr. LeLand are also
entitled to continue coverage under CJSB's employee benefit plan for a period of
four years after termination. The term "change of control" includes (i) the
termination of the registration of all classes of Central Jersey's securities
under Section 12 of the Exchange Act (ii) the acquisition by any person or any
persons acting in concert of more than 25% of the outstanding Central Jersey
Common or securities of Central Jersey or CJSB entitled to vote in elections of
directors, (iii) the election to the Board of Directors of a majority of
directors who have not been nominated by Central Jersey, (iv) during any period
of two consecutive years when the individuals who were members of the Board of
Directors of Central Jersey at the beginning of such period shall cease for any
reason to constitute a majority of the Board, (v) any "change of control" of
CJSB or Central Jersey within the meaning of the applicable federal banking law,
or (vi) the acquisition of all or substantially all of the assets of Central
Jersey or CJSB.
BENEFITS
INSURANCE AND MEDICAL REIMBURSEMENT. CJSB's full-time officers, without
contribution or expense to them, are provided with hospitalization, major
medical, and dental benefits, life insurance, and disability insurance under
group plans which are available generally and on the same basis to all full-time
employees. CJSB's directors who are not full-time employees are provided with
the hospitalization, major medical and dental benefits given to full-time
employees.
SAVINGS PLAN. Effective as of April 1, 1992, CJSB established Central
Jersey Savings Bank, SLA 401(k) Plan (the "Plan") for the benefit of its
employees. All permanent employees who have been employed for at least 90 days
are eligible to participate in the Plan. Under the terms of the Plan, an
employee may choose to defer a portion of pre-tax wages, which CJSB then
contributes to the Plan. The Plan operates on a calendar year basis. Employees
may elect to defer up to 15 percent of total compensation, subject to provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), that limit an
employee's pre-tax contributions to an annual amount that for 1995 was $9,240.
The Code also imposes a limitation on the amount of annual additions to a
46
<PAGE>
participant's account that generally affects only certain highly-compensated
employees. In order to pass the non-discrimination test imposed by the Code,
CJSB may make discretionary contributions to the Plan to be allocated ratably to
the employees based on amount of compensation. Amounts contributed to the Plan
are invested according to the investment choices made by the employee based on
the menu of investments offered in the Plan. Each eligible employee is always
fully vested in his or her own contributions and all contributions, if any, made
by CJSB. The current trustees of the Plan are John J. Doherty, William M.
Sievewright and James H. Wainwright.
Benefits are generally payable after termination of employment with CJSB.
Employed participants may also obtain a distribution of benefits after attaining
age 59-1/2 or on account of suffering certain hardships as defined in the Plan.
In addition, participants may obtain loans from the Plan.
STOCK OPTION PLANS. In connection with the conversion of CJSB from mutual
to stock form, the Board of Directors of CJSB adopted Central Jersey Savings
Bank, SLA 1984 Stock Option and Incentive Plan (the "1984 Plan"). Pursuant to
the 1984 Plan, an aggregate of 139,855 shares of Common Stock had been reserved
for issuance by Central Jersey upon the exercise of stock options granted to
officers, directors and other key employees. Options granted under the 1984 Plan
may be incentive options within the meaning of Section 422 of the Code or such
options may be non-incentive stock options. The exercise price for incentive
stock options is not less than the fair market value of the Common Stock on the
day of grant, and all options have a maximum term of 10 years. Non-incentive
stock options are granted at an exercise price to be determined at the time of
grant but not less than eighty percent (80%) of the fair market value of the
Common Stock on the day of grant.
The 1984 Plan also contains provisions for stock appreciation rights
("SARs") which may be granted alone or in connection with stock options. The
exercise of SARs, if granted in connection with stock options, requires the
optionee to surrender his stock option for cancellation upon exercise, and the
optionee will receive cash or Common Stock equal to the difference between the
exercise price of the option and the then fair market value of the shares of
Common Stock subject to option.
As the 1984 Plan expired in 1994, the Board adopted, and the shareholders
approved at the 1993 Annual Meeting of Shareholders, the 1993 Stock Option and
Incentive Plan (the "1993 Plan"). The 1993 Plan authorizes the granting of
options and/or SARs covering a total of 100,000 shares of Common Stock. Options
granted under the 1993 Plan may either be incentive stock options or
non-qualified stock options. All options granted under the 1993 Plan will have a
maximum term of 10 years. Subject to the Stock Option Committee's authority to
accelerate exercisability, options granted under the 1993 Plan (i) are not
exercisable until one year after the date such options are granted and (ii) then
generally are exercisable in installments of 20% per annum. The exercise price
for options under the 1993 Plan may not be less than fair market value for
incentive stock options and 80% of fair market value with respect to
non-incentive stock options.
In addition, at the 1993 Annual Meeting of Shareholders, the Shareholders
approved a Non-Employee Director Stock Option Plan ("Director Plan"). The
Director Plan authorizes the issuance of stock options covering up to 25,000
shares of Central Jersey's common stock. Each non-employee director who first
becomes a director of Central Jersey during the term of the Director Plan will
receive a stock option covering 1,000 shares of Common Stock on the date of his
first election as a director. Thereafter, on each August 20 during the term of
the Director Plan, each outside director will receive an option to purchase 100
shares of Common Stock. No outside director shall receive options to purchase
more than 2,000 shares pursuant to the Director Plan. Each option granted under
the Plan generally will have an exercise price equal to fair market value on the
date of grant and a term of 10 years. Generally, options granted under the
Director Plan (i) are not exercisable until one year after the date of grant and
(ii) then generally are exercisable in installments of 33 1/3% per annum.
The following tables set forth certain information regarding the grant of
stock options and SARs to the Named Executive Officers during fiscal 1996 and
the amount and value of unexercised stock options and SARs held at March 31,
1996 by each of the Named Executive Officers.
47
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS OPTION TERM(1)
- --------------------------------------------------------------------------------- -------------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------ ------------ ------------ ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
L. Doris Fritsch 7,200 26.4% $22.25 8/23/05 $100,749 $255,318
Emile L. LeLand, Jr. 3,600 13.2 22.25 8/23/05 50,374 127,659
John J. Doherty 3,600 13.2 22.25 8/23/05 50,374 127,659
William M. Sievewright 250 0.9 22.25 8/23/05 3,498 8,865
</TABLE>
- ---------
(1) Based on actual option term and annual compounding.
OPTION/SAR EXERCISES AND YEAR END VALUE TABLE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END (#)(1) AT FY-END (2)($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ----- --------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
L. Doris Fritsch -- -- 51,830/0 $682,502/0
Emile L. LeLand, Jr. -- -- 25,408/0 329,310/0
John J. Doherty -- -- 14,987/0 125,006/0
William M. Sievewright -- -- 3,544/2,310 32,912/18,399
</TABLE>
- ---------
(1) Includes adjustment for stock dividends paid by Central Jersey on September
2, 1994 and a five-for-four stock split on October 22, 1993.
(2) Market value of the underlying securities at year-end minus the exercise
price.
48
<PAGE>
LONG TERM INCENTIVE PLANS
Central Jersey does not sponsor any long term incentive plans and has made
no awards or payments under any such plans during the fiscal year ended March
31, 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Central Jersey does not have a formal Compensation Committee, but its
functions are served by CJSB's Salary Committee of the Board. The Salary
Committee's members are Arthur E. Fritsch (as Director Emeritus), Chester J.
Pardun, Jr. and Salvatore Alfieri. None of such individuals is or was an officer
or employee of Central Jersey or CJSB. As stated above, Mr. Fritsch is the
President of E.W. Price Agency, an insurance agency which provides insurance
products for Central Jersey and CJSB, and is the husband of Central Jersey's
Chief Executive Officer.
COMPENSATION REPORT
Decisions on compensation of executive officers of Central Jersey and CJSB
generally are made by the Board's Salary Committee (the "Committee"). Members of
the Committee are Salvatore Alfieri, Chester J. Pardun, Jr. and, ex officio,
Arthur E. Fritsch. Mr. Fritsch excluded himself from any discussions regarding
the compensation of L. Doris Fritsch, President and Chief Executive Officer due
to his relationship with her.
The goals of Central Jersey's and CJSB's compensation policies for
executive officers are to provide a competitive level of base salary and other
benefits to attract, retain and motivate high caliber personnel.
Executive officers receive performance and salary reviews each year. Salary
increases are based on an evaluation of the extent to which a particular
executive officer is determined to have assisted Central Jersey in meeting its
business objectives and in contributing to the growth and performance of Central
Jersey. The salaries of Mrs. Fritsch, Messrs. LeLand, Doherty and Sievewright
and other executive officers were established based on an evaluation of their
past experience and/or their contributions to Central Jersey.
Central Jersey believes that its Stock Option Plan plays an important role
in the long-term compensation of executive officers. All stock options are
granted at an exercise price equal to the market price on the grant date. Mrs.
Fritsch and Messrs. LeLand, Doherty and Sievewright have received stock options
during fiscal 1996 as part of their compensation. See "Stock Option Plans"
above.
Pursuant to Central Jersey's 401(k) Retirement Plan, CJSB makes a
contribution of 3% of the individual's pre-tax income to the Plan. Central
Jersey believes that this Plan is an important element in executive long-term
compensation and fosters the retention and motivation of qualified executives.
Salary Committee,
Salvatore Alfieri
Arthur E. Fritsch
Chester J. Pardun, Jr.
CERTAIN TRANSACTIONS WITH CENTRAL JERSEY
CJSB grants loans to Central Jersey's officers, directors and employees on
the security of their personal residences as well as consumer loans and loans
against savings deposits. Loans to such persons are made in the ordinary course
of business and upon substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
CJSB's other customers and do not involve more than the normal risk of
collectibility or present any other unfavorable features.
Director Emeritus Arthur E. Fritsch is the president of E.W. Price Agency
and Director Arthur E. Fritsch, Jr. is the vice president. E.W. Price, an
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insurance agency, is owned by the Fritsch family. CJSB and its affiliates paid
premiums to E.W. Price of $197,195, $199,623 and $195,806 for the fiscal years
ending March 31, 1996, 1995 and 1994, respectively. All transactions between
CJSB, its affiliates and the agency are made in the ordinary course of business
at the same terms and rates made to unaffiliated parties.
Director Alfieri is a partner in the law firm of Cleary, Alfieri & Grasso,
to whom CJSB paid legal fees of $90,197 in fiscal year 1996. Such fees were paid
in the ordinary course of business at the same terms and rates charged to
unaffiliated parties.
PERFORMANCE GRAPH
The following performance graph is for the period from March 31, 1991
through March 31, 1996. The performance graph compares the cumulative total
shareholder return on Central Jersey's Common Stock with (a) the cumulative
total shareholder return on stocks included in the Nasdaq total market index and
(b) the cumulative total shareholder return on stocks included in the Nasdaq
bank index prepared for Nasdaq by the Center for Research of Securities Prices
(CRSP) at the University of Chicago. Comparison with the Nasdaq stock market and
bank indices assumes the investment of $100 as of April 1, 1991. The cumulative
total return for Central Jersey is computed assuming the reinvestment of
dividends at the frequency with which dividends were paid during the period.
CUMULATIVE RETURN COMPARISON
[Graph]
[The following table represents the graph and is
also part of the printed piece.]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
3/31/92 3/31/93 3/31/94 3/31/95 3/31/96
Central Jersey Financial Corporation $110.90 $246.90 $286.10 $354.80 $519.90
CRSP Index for Nasdaq Stock Market 127.50 146.50 158.10 175.90 238.90
CRSP Index for Nasdaq Bank Stocks 148.70 213.60 217.50 240.20 339.80
</TABLE>
There can be no assurance that Central Jersey's future stock performance
will be the same or similar to the historical stock performance shown in the
graph below. Central Jersey will neither make nor endorse any predictions as to
stock performance.
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PROPOSAL III--ADJOURNMENT OF ANNUAL MEETING
In the event there are not sufficient votes to constitute a quorum or to
approve the Merger Agreement at the time of the Annual Meeting, the Merger
Agreement could not be approved unless the Annual Meeting were adjourned in
order to permit further solicitation of proxies. In order to allow proxies that
have been received by Central Jersey at the time of the Annual Meeting to be
voted for such adjournment, if necessary, Central Jersey has submitted the
question of adjournment under such circumstances to its shareholders as a
separate matter for their consideration. A majority of the shares represented
and voting at the Annual Meeting is required in order to approve any such
adjournment. The Board of Directors of Central Jersey recommends that
shareholders vote their proxies in favor of such adjournment so that their
proxies may be used for such purposes in the event it should become necessary.
Properly executed proxies will be voted in favor of any such adjournment unless
otherwise indicated thereon. If it is necessary to adjourn the Annual Meeting,
no notice of the time and place of the adjourned meeting is required to be given
to shareholders other than an announcement of such time and place at the Annual
Meeting.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in Central Jersey's proxy materials
for next year's annual meeting of shareholders in the event that the Merger is
not consummated, any shareholder proposal to take action at such meeting must be
received at Central Jersey's main office at 591 Cranbury Road, East Brunswick,
New Jersey 08816, no later than __________ ___, 1997. Any such proposals shall
be subject to the requirements of the proxy rules adopted under the Exchange
Act.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
The cost of soliciting proxies will be borne by Central Jersey. Central
Jersey will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Central Jersey Common. In addition to solicitations
by mail, directors, officers and regular employees of Central Jersey may solicit
proxies personally or by telegraph or telephone without additional compensation.
Central Jersey anticipates that its transfer agent will assist in the
solicitation of proxies for no additional compensation, other than reasonable
out-of-pocket expenses.
LEGAL MATTERS
The legality of the Summit Common offered hereby will be passed upon for
Summit by Richard F. Ober, Jr., Esq., Executive Vice President, General Counsel
and Secretary of Summit. Mr. Ober owns 23,957 shares of Summit Common and
options to purchase 74,152 shares of Summit Common at a weighted average
exercise price of $20.73. Certain federal tax matters will be passed upon for
Summit and Central Jersey by Thompson Coburn, Saint Louis, Missouri. Certain
legal matters will be passed upon for Central Jersey by Malizia, Spidi, Sloane
&Fisch, P.C., Washington, D.C.
EXPERTS
The consolidated financial statements of Summit Bancorp. and subsidiaries
as of December 31, 1995 and 1994 and for each of the years in the three-year
period ended December 31, 1995, 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.
The report of KPMG Peat Marwick LLP with respect to Summit Bancorp. and
subsidiaries for the year ended December 31, 1995 refers to a change in the
method of accounting for certain investments in debt and equity securities and
post employment benefits in 1994 and to a change in the method of accounting for
income taxes in 1993.
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The consolidated statements of financial condition of Central Jersey and
subsidiary as of March 31, 1996 and 1995 and the related consolidated statements
of operations, stockholders equity and cash flow for each of the years in the
three-year period ended March 31, 1996 have been included in Central Jersey'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 Coopers and Lybrand LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
The report of Coopers and Lybrand LLP with respect to Central Jersey and
subsidiary for the year ended March 31, 1996 refers to a change in the method of
accounting for income taxes in 1993.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated May 22, 1996, between Summit Bancorp., a
New Jersey business corporation ("Summit"), and Central Jersey Financial
Corporation, a New Jersey business corporation ("Central Jersey").
W I T N E S S E T H :
WHEREAS, the respective boards of directors of Summit and Central Jersey
deem it advisable and in the best interests of their respective shareholders to
merge Central Jersey into Summit ("Merger") pursuant to the laws of the State of
New Jersey and this Agreement and Plan of Merger ("Agreement");
WHEREAS, the Board of Directors of Summit and Central Jersey have each
determined that the Merger and the other transactions contemplated hereby are
consistent with, and in furtherance of, their respective business strategies and
goals;
WHEREAS, to effectuate the Merger, the parties hereby adopt a plan of
reorganization in accordance with the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended ("Code");
WHEREAS, Summit and Central Jersey intend on the date after the date of
this Agreement and in consideration of this Agreement to enter into the Stock
Option Agreement ("Option Agreement") attached hereto as Exhibit A; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain other
terms and conditions of the Merger.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Option
Agreement, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I.
GENERAL PROVISIONS
SECTION 1.01 THE MERGER.
(a) Upon the terms and subject to the conditions contained in this
Agreement, at the Effective Time (as defined at Section 1.06), Central Jersey
shall be merged with and into Summit pursuant to and in accordance with the
provisions of, and with the effect provided in, the New Jersey Business
Corporation Act, as amended ("New Jersey Act") (Summit as the surviving
corporation being hereinafter sometimes referred to as the "Surviving
Corporation").
Section 1.02. CAPITAL STOCK OF SUMMIT. All shares of the capital stock of
Summit outstanding immediately prior to the Effective Time shall be unaffected
by the Merger and shall remain outstanding immediately thereafter.
Section 1.03 TERMS OF CONVERSION OF CENTRAL JERSEY CAPITAL STOCK.
(a) At the Effective Time, by virtue of the Merger and without any action
on the part of any shareholder of Central Jersey:
(1) All shares of the Common Stock, no par value, of Central Jersey
("Central Jersey Stock") which immediately prior to the Effective Time
are either owned beneficially by Summit or a subsidiary of Summit
(other than Central Jersey Stock held in a fiduciary capacity or as a
result of debts previously contracted), if any, or held in the
treasury of Central Jersey, if any, shall be canceled and retired and
no cash, securities or other consideration shall be paid or delivered
under this Agreement in exchange for such Central Jersey Stock; and
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(2) Subject to Sections 1.03(a)(1), 1.03(a)(3) and 1.08, each share of
Central Jersey Stock outstanding immediately prior to the Effective
Time shall be converted at the Exchange Ratio (as determined in
accordance with this Section 1.03(a)(2)) into the Common Stock, par
value $1.20 per share, of Summit ("Summit Stock"). In the event the
Average Price (as defined in Section 1.03(b) below) is:
(i) equal to or greater than $32.57, the Exchange Ratio shall be .875
shares of Summit Stock for each share of Central Jersey Stock; or
(ii) less than $32.57 but equal to or greater than $28.75, the Board of
Directors of Central Jersey shall have the right, exercisable only
until 11:59 p.m. on the third business day following the Determination
Date (as defined in Section 9.01), to terminate this Agreement by
giving Summit notice of such termination, referring to this Section
1.03(a)(2)(ii), and this Agreement shall be terminated pursuant to
such notice, effective as of 11:59 p.m. on the third business day
following receipt of such notice by Summit, unless Summit shall, prior
to 11:59 p.m. on the third business day following receipt of such
termination notice, send notice to Central Jersey agreeing that the
Exchange Ratio shall be equal to the quotient obtained by dividing
$28.50 by the Average Price, whereupon the Exchange Ratio shall be
such number (rounded to the fourth decimal place) of shares of Summit
Stock for each share of Central Jersey Stock.
(3) In the event the Average Price is less than $28.75, the Board of
Directors of Central Jersey shall have the right, exercisable only
until 11:59 p.m. on the third business day following the Determination
Date, to terminate this Agreement by giving Summit notice of such
termination, referring to this Section 1.03(a)(3), and this Agreement
shall be terminated pursuant to such notice, effective upon receipt of
such notice by Summit.
(b) For Purposes of This Agreement:
(1) "Average Price" means the average (rounded to the nearest penny) of
the closing prices of a share of Summit Stock on the New York Stock
Exchange Composite Transactions Tape for the 10 consecutive trading
days ending on the Determination Date as reported in The Wall Street
Journal, or if not reported therein, as reported in an authoritative
source mutually agreeable to Summit and Central Jersey.
(2) "business day" shall mean a calendar day other than a Saturday, a
Sunday or the weekdays that member banks of the Federal Reserve Board
(as defined at Section 4.01) are permitted to close pursuant to
regulations of the Federal Reserve Board.
(c) In the event that, from the date hereof to the Effective Time, the
outstanding Summit Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or there occurs other like changes in the outstanding shares
of Summit Stock, the Exchange Ratio and, if necessary, the form and amount of
Summit capital stock issuable in the Merger in exchange for Central Jersey Stock
shall be appropriately adjusted so that Central Jersey shareholders who are
entitled to receive Summit Stock pursuant to the provisions hereof shall be
entitled to receive such number of shares of Summit Stock or other stock as they
would have received if the Effective Time had occurred prior to the happening of
such event.
Section 1.04. RESERVATION OF SUMMIT STOCK; ISSUANCE OF SHARES PURSUANT TO
THE MERGER. Summit shall reserve and make available for issuance to holders of
Central Jersey Stock in connection with the Merger, on the terms and subject to
the conditions of this Agreement, sufficient shares of Summit Stock (which
shares, when issued and delivered, will be duly authorized, legally and validly
issued, fully paid and nonassessable and subject to no preemptive rights). The
shares of Summit Stock to be issued in accordance with this Agreement are
sometimes referred to herein as the "Shares". Upon the terms and subject to the
conditions of this Agreement, including the conversion of Central Jersey Stock
according to the Exchange Ratio, Summit shall issue the Shares upon the
effectiveness of the Merger to Central Jersey Shareholders (as defined in
Section 1.07).
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Section 1.05. EXCHANGE AGENT ARRANGEMENTS. Prior to the Effective Time,
Summit shall appoint First Chicago Trust Company of New York, or another entity
reasonably satisfactory to Central Jersey, as the exchange agent ("Exchange
Agent") responsible for exchanging, in connection with and upon consummation of
the Merger and subject to Sections 1.03 And 1.08, certificates representing
whole shares of Summit Stock ("Summit Certificates") and cash in lieu of
fractional shares of Summit Stock for certificates representing shares of
Central Jersey Stock ("Central Jersey Certificates") and, upon the effectiveness
of the Merger, Summit shall deliver to the Exchange Agent sufficient Summit
Certificates and cash as shall be required to satisfy Summit's obligations to
Central Jersey Shareholders hereunder.
Section 1.06 EFFECTIVE TIME. The Merger shall be effective at the hour and
on the date ("Effective Time") specified in the Certificate of Merger of Summit
and Central Jersey required by this Agreement to be filed with the Secretary of
State of the State of New Jersey in accordance with Section 14A:104.1 of the New
Jersey Act ("Certificate of Merger"). Summit shall file the Certificate of
Merger as promptly as practicable following the Closing (as defined at Section
9.01) but in no event later than one business day following the Closing Date (as
defined at Section 9.01).
Section 1.07. EXCHANGE OF CENTRAL JERSEY CERTIFICATES.
(a) After the Effective Time, each Central Jersey Shareholder (except
Summit to the extent provided in Section 1.03), upon surrender of all Central
Jersey Certificates to the Exchange Agent, shall be entitled to receive in
exchange therefor a Summit Certificate representing the number of whole shares
of Summit Stock such Central Jersey Shareholder is entitled to receive pursuant
to the conversion effected by Section 1.03 and the terms of Section 1.08 and the
cash payment (by check) such Central Jersey Shareholder may be entitled,
pursuant to Section 1.08, to receive in lieu of a fractional share of Summit
Stock. Until so surrendered, outstanding Central Jersey Certificates held by
each Central Jersey Shareholder, other than Central Jersey Stock not converted
pursuant to Section 1.03, shall be deemed for all purposes (other than as
provided below with respect to unsurrendered Central Jersey Certificates and
Summit's right to refuse payment of dividends or other distributions, if any, in
respect of Summit Stock) to represent the number of whole shares of Summit Stock
into which the shares of Central Jersey Stock have been converted and the right
to receive cash in lieu of fractional shares of Summit Stock, if any, all as
provided in Section 1.08. Until so surrendered, Summit may, at its option,
refuse to pay to the holders of the unsurrendered Central Jersey Certificates
dividends or other distributions, if any, payable to holders of Summit Stock;
provided, however, that upon the surrender and exchange of Central Jersey
Certificates following a dividend or other distribution by Summit there shall be
paid to such Central Jersey Shareholders the amount, without interest, of
dividends and other distributions, if any, which became payable prior thereto
but which were not paid.
(b) Holders of Central Jersey Certificates as of the Effective Time shall
cease to be, and shall have no further rights as, shareholders of Central
Jersey.
(c) As promptly as practicable, but in no event more than 10 days, after
the Exchange Agent receives an accurate and complete list of all holders of
record of outstanding Central Jersey Stock as of the Effective Time ("Central
Jersey Shareholders") (including the address and social security number of and
the number of shares of Central Jersey Stock held by each Central Jersey
Shareholder) from Central Jersey ("Final Shareholder List"), Summit shall cause
the Exchange Agent to send to each Central Jersey Shareholder instructions and
transmittal materials for use in surrendering and exchanging Central Jersey
Certificates for the Merger Consideration (as defined in Section 1.08 below). If
Central Jersey Certificates are properly presented to the Exchange Agent (with
proper presentation including satisfaction of all requirements of the letter of
transmittal), Summit shall as soon as practicable, but in no event more than 10
days, after the later to occur of such presentment or the receipt by the
Exchange Agent of an accurate and complete Final Shareholder List from Central
Jersey cause the Exchange Agent to cancel and exchange Central Jersey
Certificates for Summit Certificates and Cash In Lieu Amounts (as defined in
Section 1.08 below), if any.
(d) At and after the Effective Time there shall be no transfers on the
stock transfer books of Central Jersey of the shares of Central Jersey Stock
which were outstanding immediately prior to the Effective Time.
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Section 1.08. FRACTIONAL SHARES. All Central Jersey Stock held in the
aggregate by each Central Jersey Shareholder shall be multiplied by the Exchange
Ratio to determine the number of shares of Summit Stock each such Central Jersey
Shareholder is entitled to receive in the Merger. Each Central Jersey
Shareholder shall be entitled to receive a Summit Certificate for the number of
whole shares of Summit Stock resulting from such multiplication and cash in lieu
of any fractional share of Summit Stock resulting from such multiplication in an
amount ("Cash In Lieu Amount") determined by multiplying the fractional share
interest to which such Central Jersey Shareholder would otherwise be entitled by
the Average Price. The Shares and any Cash In Lieu Amounts payable in the Merger
are sometimes collectively referred to herein as the "Merger Consideration".
Section 1.09. RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS. The
Restated Certificate of Incorporation of Summit in force immediately prior to
the Effective Time shall be the Restated Certificate of Incorporation of the
Surviving Corporation, except as duly amended thereafter and except to the
extent such is affected by the Certificate of Merger. The By-Laws of Summit in
force immediately prior to the Effective Time shall be the By-Laws of the
Surviving Corporation, except as duly amended thereafter.
Section 1.10. BOARD OF DIRECTORS AND OFFICERS. The Board of Directors of
the Surviving Corporation shall consist of the members of the Board of Directors
of Summit at the Effective Time. The officers of the Surviving Corporation shall
consist of the officers of Summit at the Effective Time. Such directors and
officers shall serve as such for the terms prescribed in the Restated
Certificate of Incorporation and By-Laws of Summit, or otherwise as provided by
law or until their earlier deaths, resignation or removal.
Section 1.11. CENTRAL JERSEY STOCK OPTIONS.
(a) At the Effective Time, each holder of a Central Jersey Option (as
defined below) shall be entitled to receive, in exchange for such Central Jersey
Options, at the election of such holder, either:
(i) cash equal to the Cash Value (as defined below) of the particular
Central Jersey Option ("Cash Amount"); or
(ii)(A) the whole shares of Summit Stock obtained by DIVIDING the Cash
Value of the particular Central Jersey Option by the Market Price of a
share of Summit Stock , and (B) cash in lieu of any fractional share of
Summit Stock resulting from such division determined by multiplying such
fractional share amount by the Market Price of a share of Summit Stock
(collectively, the "Stock Consideration").
Holders of Central Jersey Options shall deliver to Summit at the Closing
(as defined at Section 9.01) an election to receive under this Section 1.11
either a Cash Amount or the Stock Consideration with respect to all Central
Jersey Options held by such holder and holders failing to deliver such an
election at the Closing shall be deemed to have elected to receive the Cash
Amount with respect to all Central Jersey Options held by such holder. Summit
shall send, no later than ten business days following the Effective Time, to
each holder of a Central Jersey Option, as appropriate, (i) a check representing
the aggregate Cash Value such holder may be entitled to receive pursuant to this
Section 1.11, or (ii) a certificate representing the aggregate whole shares of
Summit Stock such holder may be entitled to receive pursuant to this Section
1.11 and a check representing any cash such holder may be entitled to receive
pursuant to this Section 1.11 in lieu of a fractional share of Summit Stock;
PROVIDED, however, that with respect to individuals holding more than one
Central Jersey Option the aggregate whole shares of Summit Stock such holder is
entitled to receive shall be determined by adding together the Cash Values of
all such Central Jersey Options and dividing the resultant sum by the Market
Price of a share of Summit Stock and cash such holder is entitled to receive
shall be determined by multiplying the fractional share interest resulting from
such division by the Market Price of a share of Summit Stock. The Central Jersey
Options which become subject to this Section 1.11 shall be deemed terminated as
of the Closing Date (as defined at Section 9.01) and Central Jersey shall not on
or after the Closing Date issue Central Jersey Stock upon any attempted exercise
of such Central Jersey Option. Central Jersey shall deliver to Summit at Closing
a list of all Central Jersey Options (including the address and social security
number of each holder thereof and the Central Jersey Options held by such holder
broken down by plan, type (incentive or nonqualified), grant date, expiration
date, exercise price and the number of shares of Central Jersey Stock subject
thereto).
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(b) For purposes of this section 1.11:
(1) "Central Jersey Option" is hereby defined to mean a stock option for
Central Jersey Stock outstanding on the date hereof granted under the
Central Jersey 1993 Stock Option and Incentive Plan or Central Jersey
Non-Employee Director Stock Option Plan ("Central Jersey Option
Plans") or pursuant to Section 4.05(g), and not subsequently
exercised, terminated or expired prior to the Closing Date.
(2) "Cash Value" of a Central Jersey Option is hereby defined to be the
amount obtained by multiplying (A) the number of Summit Equivalent
Shares (as defined below) represented by the particular Central Jersey
Option, TIMES (B) the difference obtained by subtracting the Summit
Equivalent Exercise Price (as defined below) of the particular Central
Jersey Option from the Market Price (as defined below) of a share of
Summit Stock;
(3) "Market Price" of a share of Summit Stock is hereby defined to mean
the last sale price of a share of Summit Stock on the last trading day
immediately preceeding the Closing Date as reported on the New York
Stock Exchange--Composite Transactions List (by THE WALL STREET
JOURNAL or, in the event of its unavailability, by any other
authoritative source agreeable to Summit and Central Jersey).
(4) "Summit Equivalent Shares" is hereby defined to mean the number
obtained by MULTIPLYING the number of shares of Central Jersey Stock
covered by a particular Central Jersey Option TIMES the Exchange
Ratio.
(5) "Summit Equivalent Exercise Price" is hereby defined to mean the
number obtained by DIVIDING the exercise price of the particular
Central Jersey Option by the Exchange Ratio.
Section 1.12 ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Central Jersey acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of Central Jersey or otherwise, all such deeds, bills of sale,
assignments and assurances and to take, in the name and on behalf of Central
Jersey, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
Section 1.13. UNCLAIMED MERGER CONSIDERATION. If, upon the expiration of
one year following the Effective Time, Merger Consideration remains with the
Exchange Agent due to the failure of Central Jersey Shareholders to surrender
and exchange Central Jersey Certificates for Merger Consideration, Summit may,
at its election, continue to retain the Exchange Agent for purposes of the
surrender and exchange of Central Jersey Certificates or take possession of such
unclaimed Merger Consideration, in which such latter case, Central Jersey
Shareholders who have theretofore failed to surrender and exchange Central
Jersey Certificates shall thereafter look only to Summit for payment of the
Merger Consideration and the unpaid dividends and distributions on the Summit
Stock constituting some or all of the Merger Consideration, without any interest
thereon. Notwithstanding the foregoing, none of Summit, Central Jersey, the
Exchange Agent or any other person shall be liable to any former holder of
shares of Central Jersey Stock for any property properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
Section 1.14. LOST CENTRAL JERSEY CERTIFICATES. In the event any Central
Jersey Certificate shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such Central Jersey Certificate
to be lost, stolen or destroyed and, if required by Summit, the posting by such
person of a bond in such amount as Summit may determine is reasonably necessary
as indemnity against any claim that may be made against it with respect to such
Central Jersey Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Central Jersey Certificate the Merger Consideration
deliverable in respect thereof pursuant to this Agreement.
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Section 1.15. LIQUIDATION ACCOUNT. The liquidation account established by
Central Jersey pursuant to the plan of conversion adopted in connection with its
conversion from mutual to stock form shall, to the extent required by applicable
law, continue to be maintained after the Effective Time for the benefit of those
persons and entities who were savings account holders of Central Jersey on March
31, 1984, and who continue from time to time to have rights therein.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF CENTRAL JERSEY
Central Jersey represents and warrants to Summit as follows:
Section 2.01. ORGANIZATION, CAPITAL STOCK.
(a) Each of Central Jersey and its nonbank subsidiaries, including the
nonbank subsidiaries of bank subsidiaries (the term "subsidiary", as used in
this Agreement, shall mean any corporation or other organization of which 25% or
more of the shares or other interests having by their terms ordinary voting
power to elect a majority of the Board of Directors or other group performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned), all of which are listed, together with their
respective states of incorporation, on Central Jersey Schedule 2.01(a), is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation, qualified to transact business in under the
laws of all jurisdictions where the failure to be so qualified would be likely
to have a material adverse effect on (i) the business, results of operations,
assets or financial condition of Central Jersey and its subsidiaries on a
consolidated basis, or (ii) the ability of Central Jersey to perform its
obligations under, and to consummate the transactions contemplated by, this
Agreement (a "Central Jersey Material Adverse Change"). However, a Central
Jersey Material Adverse Change will not include a change resulting from a change
in law, rule, regulation or generally accepted or regulatory accounting
principles, or from any other matter affecting banking institutions or their
holding companies generally. Each of Central Jersey and its subsidiaries has all
corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease its properties, to occupy its premises and to engage
in its business and activities as presently engaged in, and each has complied in
all material respects with all applicable laws, regulations and orders.
(b) Central Jersey is registered as a unitary savings and loan holding
company under the Home Owners' Loan Act of 1933 ("HOLA").
(c) Central Jersey or one of its subsidiaries is the holder and beneficial
owner of all of the outstanding capital stock of all of Central Jersey's direct
and indirect nonbank subsidiaries.
(d)(1) The authorized capital stock of Central Jersey consists of
25,000,000 shares of Common Stock, each of no par value, and 15,000,000 shares,
each of no par value, of Preferred Stock, and as of the date hereof there were
issued and outstanding 2,668,269 shares of the Common Stock of Central Jersey
and no shares of the Preferred Stock of Central Jersey.
(2) All issued and outstanding shares of the capital stock of Central
Jersey and of each of its nonbank subsidiaries have been fully paid, were duly
authorized and validly issued, are non-assessable and have been issued pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act") or an appropriate exemption from registration
under the Securities Act and were not issued in violation of the preemptive
rights of any shareholder.
(3) Except as set forth above in this Section 2.01(d) or in Section
2.01(a), except for director and employee stock options outstanding under the
Central Jersey Option Plans and except for Central Jersey Stock issuable in
connection with the Central Jersey Option Plans, there are no other Equity
Securities of Central Jersey or any subsidiary of Central Jersey outstanding, in
existence, the subject of an agreement or reserved for issuance.
(4) "Equity Securities" of an issuer means capital stock or other equity
securities of such issuer, options, warrants, scrip, rights to subscribe to,
call or commitments of any character whatsoever relating to, or securities or
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rights convertible into, shares of any capital stock or other Equity Securities
of such issuer, or contracts, commitments, understandings or arrangements by
which such issuer is or may become bound to issue additional shares of its
capital stock or other Equity Securities of such issuer, or options, warrants,
scrip or rights to purchase, acquire, subscribe to, calls on or commitments for
any shares of its capital stock or other Equity Securities.
(5) There are no plans of Central Jersey providing for the granting of
stock options, stock appreciation rights or other securities or derivative
securities to directors or employees other than the Central Jersey Option Plans.
The Central Jersey Option Plans, including all amendments thereto, have been
approved by the shareholders of Central Jersey in accordance with the
shareholder approval requirements of the Code and Rule 16b3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Copies of the Central
Jersey Option Plans, including all amendments thereto, have been previously
provided to Summit. All material information in the aggregate relating to
outstanding grants under the Central Jersey Option Plans, including director and
employee stock options and stock appreciation rights ("SARs") (including without
limitation date of grant, expiration date, plan under which granted, type (if
option, whether nonqualified or incentive; if SAR, whether or not granted in
tandem with an option and, if so, the type of tandem option), exercise price,
number of shares subject thereto) is set forth in Central Jersey Schedule
2.01(d)(5).
(e) Central Jersey owns no bank subsidiary other than Central Jersey
Savings Bank, SLA ("Bank")("bank" is hereby defined to include commercial banks,
savings banks, private banks, trust companies, savings and loan associations,
building and loan associations and similar institutions receiving deposits and
making loans). Bank is a bank duly organized, validly existing, and in good
standing under the laws of the State of New Jersey. Bank is duly authorized to
conduct all activities and exercise all powers contemplated by applicable laws
of the State of New Jersey, is an insured bank as defined in the Federal Deposit
Insurance Act, and has all corporate power and authority and all material
licenses, franchises, certificates, permits and other governmental
authorizations which are legally required to own and lease its properties and
assets, to occupy its premises, and to engage in its business and activities as
presently engaged in, and has complied in all material respects with all
applicable laws, regulations and orders.
(f) The authorized and outstanding capital stock of Bank is as set forth on
Central Jersey Schedule 2.01(f). Central Jersey is the holder and beneficial
owner of all shares of the issued and outstanding capital stock of Bank, other
than director qualifying shares. All issued and outstanding shares of the
capital stock of Bank have been fully paid, were duly authorized and validly
issued, are non-assessable, and were not issued in violation of the preemptive
rights of any shareholder. No Equity Securities of Bank exist other than those
set forth on Central Jersey Schedule 2.01(f). No options covering the capital
stock of Bank, warrants to purchase or contracts to issue capital stock of Bank,
or any other contracts, presently exercisable rights (including preemptive
rights), commitments or convertible securities entitling anyone to acquire from
Central Jersey or any of its subsidiaries or obligating them to issue any
capital stock, or securities convertible into or exchangeable for shares of
capital stock, of Bank are outstanding, in existence, or the subject of an
agreement.
(g) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by Central Jersey or a subsidiary of Central Jersey are held
free and clear of any claims, liens, encumbrances or security interests.
Section 2.02. FINANCIAL STATEMENTS. The financial statements and schedules
contained or incorporated in (a) Central Jersey's annual report to shareholders
for the fiscal year ended March 31, 1995, (b) Central Jersey's annual report on
Form 10-K filed pursuant to the Exchange Act for the fiscal year ended March 31,
1995 and (c) Central Jersey's quarterly reports on Form 10-Q filed pursuant to
the Exchange Act for the fiscal quarters ended June 30, 1995, September 30, 1995
and December 31, 1995 (the "Central Jersey Financial Statements") are true and
correct in all material respects as of their respective dates and each fairly
presents (subject, in the case of unaudited statements, to recurring audit
adjustments normal in nature and amount), in accordance with generally accepted
accounting principles the consolidated statements of condition, income, changes
in stockholders' equity and cash flows of Central Jersey and its subsidiaries at
its respective date and for the period to which it relates, except as may
otherwise be described therein. The Central Jersey Financial Statements do not,
as of the dates thereof, include any material asset or omit any material
liability, absolute or contingent, or other fact, the inclusion or omission of
which renders the Central Jersey Financial Statements, in light of the
circumstances under which they were made, misleading in any respect.
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Section 2.03. NO CONFLICTS. Except as set forth in Schedule 2.03, Central
Jersey and each of its subsidiaries is not in, and has received no notice of,
violation or breach of, or default under, nor will the execution, delivery and
performance of this Agreement by Central Jersey, or the consummation of the
transactions contemplated hereby including the Merger by Central Jersey upon the
terms provided herein (assuming receipt of the Required Consents, as that term
is defined in Section 4.01), violate, conflict with, result in the breach of,
constitute a default under, give rise to a claim or right of termination,
cancellation, revocation of, or acceleration under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the material rights,
permits, licenses, assets or properties of Central Jersey or any of its
subsidiaries or upon any of the Equity Securities of Central Jersey or any of
its subsidiaries, or constitute an event which could, with the lapse of time,
action or inaction by Central Jersey or any of its subsidiaries or a third
party, or the giving of notice and failure to cure, result in any of the
foregoing, under any of the terms, conditions or provisions, as the case may be,
of:
(a) the Certificate of Incorporation or the ByLaws of Central Jersey or any
of its subsidiaries;
(b) any applicable law, statute, rule, ruling, determination, ordinance or
regulation of or agreement with any governmental or regulatory authority;
(c) any judgment, order, writ, award, injunction or decree of any court or
other governmental authority; or
(d) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement or other instrument;
to which Central Jersey or any of its subsidiaries is a party or by which
Central Jersey or any of its subsidiaries or any of their assets or properties
are bound or committed, the consequences of which individually or in the
aggregate would be likely to result in a Central Jersey Material Adverse Change,
or enable any person to enjoin the transactions contemplated hereby.
Section 2.04. ABSENCE OF UNDISCLOSED LIABILITIES. Central Jersey and its
subsidiaries have no liabilities, whether contingent or absolute, direct or
indirect, matured or unmatured (including but not limited to liabilities for
federal, state and local taxes, penalties, assessments, lawsuits or claims
against Central Jersey or any of its subsidiaries), and no loss contingency (as
defined in Statement of Financial Accounting Standards No. 5), other than (a)
those reflected in the Central Jersey Financial Statements or disclosed in the
notes thereto, (b) commitments made by Central Jersey or any of its subsidiaries
in the ordinary course of its business which are not in the aggregate material
in frequency or amount to Central Jersey and its subsidiaries, taken as a whole,
and (c) liabilities arising in the ordinary course of its business since March
31, 1995, which are not in the aggregate material in frequency or amount to
Central Jersey and its subsidiaries, taken as a whole. Other than as reported in
the Forms 10-Q of Central Jersey referred to in Section 2.02, neither Central
Jersey nor any of its subsidiaries has, since March 31, 1995, become obligated
on any debt due in more than one year from the date of this Agreement in excess
of $250,000, other than intra-corporate debt and deposits received, repurchase
agreements and borrowings from the Federal Reserve Bank of New York or the
Federal Home Loan Bank of New York or other like liabilities entered into in the
ordinary course of business.
Section 2.05. ABSENCE OF LITIGATION; AGREEMENTS WITH BANK REGULATORS. There
is no outstanding order, injunction or decree of any court or governmental or
self-regulatory body against or affecting Central Jersey or its subsidiaries
which materially and adversely affects Central Jersey and its subsidiaries,
taken as a whole, and there are no actions, arbitrations, claims, charges,
suits, investigations or proceedings (formal or informal) material to Central
Jersey and its subsidiaries, taken as a whole, pending or, to Central Jersey's
knowledge, threatened, against or involving Central Jersey or any of its
subsidiaries or their officers or directors (in their capacity as such) in law
or equity or before any court, panel or governmental agency, except as disclosed
in the Forms 10-K and 10-Q of Central Jersey referred to in Section 2.02 and in
Central Jersey Schedule 2.05. Neither Bank nor Central Jersey is a party to any
agreement or memorandum of understanding with, or is a party to any commitment
letter to, or has submitted a board of directors resolution or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, any governmental or regulatory
authority which restricts materially the conduct of its business, or in any
manner relates to material statutory or regulatory noncompliance discovered in
any regulatory examinations, its capital adequacy, its credit or reserve
policies or its management. Neither Bank nor Central Jersey has been advised by
any governmental or regulatory authority that it is contemplating issuing or
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requesting (or is considering the appropriateness of issuing or requesting) any
of the foregoing. Neither Bank nor Central Jersey has any reason to believe that
it has failed to resolve to the satisfaction of the applicable regulatory agency
any significant deficiencies cited by any such agency in its most recent
examinations of each aspect of Bank's and Central Jersey's business.
Section 2.06. BROKERS' FEES. Central Jersey has entered into this Agreement
with Summit as a result of direct negotiations without the assistance or efforts
of any finder, broker, financial advisor or investment banker, other than
Advest, Inc. ("Advest"). Central Jersey Schedule 2.06 consists of true and
complete copies of all agreements between Central Jersey and Advest with respect
to the transactions contemplated by this Agreement.
Section 2.07. MATERIAL FILINGS. At the time of filing, all filings made by
Central Jersey and its subsidiaries after December 31, 1989 with the SEC and the
appropriate bank regulatory authorities do not or did not contain any untrue
statement of a material fact and do not or did not omit to state any material
fact required to be stated herein or therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. To the extent such filings were subject to the Securities Act or
Exchange Act, such filings complied in all material respects with the Securities
Act or Exchange Act, as appropriate, and all applicable rules and regulations
thereunder of the SEC. Central Jersey has since December 31, 1993 timely made
all filings required by the Securities Act and the Exchange Act.
Section 2.08. CORPORATE ACTION. Assuming due execution and delivery by
Summit, and subject to the requisite approval by the shareholders of Central
Jersey of this Agreement, the Merger and the other transactions contemplated
hereby in accordance with Central Jersey's Certificate of Incorporation and the
New Jersey Act at a meeting of such holders to be duly called and held, Central
Jersey has the corporate power and is duly authorized by all necessary corporate
action to execute, deliver and perform this Agreement. The Board of Directors of
Central Jersey has taken all action required by law, its Certificate of
Incorporation, its By-Laws or otherwise (i) to authorize the execution and
delivery of this Agreement and (ii) for shareholders of Central Jersey to
approve this Agreement and the transactions contemplated hereby including the
Merger by a simple majority of the votes cast at the meeting held in accordance
with Section 4.03. This Agreement is a valid and binding agreement of Central
Jersey enforceable in accordance with its terms except as such enforcement may
be limited by applicable principles of equity, and by bankruptcy, insolvency,
fraudulent transfer, moratorium or other similar laws of general applicability
presently or hereafter in effect affecting the enforcement of creditors' rights
generally and banks the deposits of which are insured by the Federal Deposit
Insurance Corporation. The Board of Directors of Central Jersey in authorizing
the execution of this Agreement has determined, at the date of this Agreement,
to recommend to the shareholders of Central Jersey the approval of this
Agreement, the Merger and the other transactions contemplated hereby.
Section 2.09. ABSENCE OF CHANGES. There has not been, since December 31,
1995, any Central Jersey Material Adverse Change reported in the Forms 10-Q of
Central Jersey referred to in Section 2.02. Except as disclosed in Central
Jersey Schedule 2.09 or reported in the Forms 10-Q of Central Jersey referred to
in Section 2.02, neither Central Jersey nor any of its subsidiaries has since
March 31, 1995: (a) (i) declared, set aside or paid any dividend or other
distribution in respect of its capital stock, other than dividends from
subsidiaries to Central Jersey or other subsidiaries of Central Jersey and an
ordinary cash dividend of $.12 per share per fiscal quarter, or, (ii) directly
or indirectly, purchased, redeemed or otherwise acquired any shares of such
stock held by persons other than Central Jersey and its subsidiaries, other than
the redemption by Central Jersey of its 7% Convertible Subordinated Debentures,
due April 1, 2003, and related conversion into Central Jersey stock; (b)
incurred current liabilities since that date other than in the ordinary course
of business; (c) sold, exchanged or otherwise disposed of any of their assets
except in the ordinary course of business; (d) made any officers' salary
increase or wage increase not consistent with past practices, entered into any
employment, consulting, severance or change of control contract with any present
or former director, officer or salaried employee, or instituted any employee or
director welfare, bonus, stock option, profit-sharing, retirement, severance or
other benefit plan or arrangement or modified any of the foregoing so as to
increase its obligations thereunder in any material respect; (e) suffered any
taking by condemnation or eminent domain or other damage, destruction or loss in
excess of $50,000, whether or not covered by insurance, adversely affecting its
business, property or assets, or waived any rights of value in excess of
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$50,000; (f) entered into any transactions which in the aggregate exceeded
$250,000 other than in the ordinary course of business; or (g) acquired the
assets or capital stock of another company, except in a fiduciary capacity or in
the course of securing or collecting loans or leases.
Section 2.10. ALLOWANCE FOR LOAN AND LEASE LOSSES. To the knowledge of
Central Jersey, at March 31, 1995 and thereafter the allowances for loan and
lease losses of Central Jersey and its subsidiaries were and are adequate in all
material respects to provide for all losses on loans and leases outstanding and,
to the best of Central Jersey's knowledge, the loan and lease portfolios of
Central Jersey in excess of such allowances are collectible in the ordinary
course of business. Central Jersey Schedule 2.10 constitutes a list of all loans
and leases made by Central Jersey or any of its subsidiaries that have been
"classified" as to quality by any internal or external auditor, accountant or
examiner, and such list is accurate and complete in all material respects.
Section 2.11. TAXES AND TAX RETURNS. Neither Central Jersey nor any of its
subsidiaries has at any time filed a consent pursuant to Section 341(f) of the
Code or consented to have the provisions of Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by Central Jersey or any of its subsidiaries. None
of the property being acquired by Summit or its subsidiaries in the Merger is
property which Summit or its subsidiaries will be required to treat as being
owned by any other person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986 or is "tax-empt use property" within the
meaning of Section 168(h)(1) of the Code. Amounts required to be withheld have
been withheld from employees by Central Jersey and each of its subsidiaries for
all periods in compliance with the tax, social security, unemployment and other
applicable withholding provisions of applicable federal, state and local law.
Proper and accurate federal, state and local returns have been timely filed by
Central Jersey and each of its subsidiaries for all periods for which returns
were due, including with respect to employee income tax withholding, social
security, unemployment and other applicable taxes, and the amounts shown thereon
to be due and payable have been paid in full or adequate provision therefor has
been included on the books of Central Jersey or its appropriate subsidiary.
Neither Central Jersey nor any of its subsidiaries is required to file tax
returns with any state other than the State of New Jersey. Provision has been
made on the books of Central Jersey or its appropriate subsidiary for all unpaid
taxes, whether or not disputed, that may become due and payable by Central
Jersey or any of its subsidiaries in future periods in respect of transactions,
sales or services previously occurring or performed. The Internal Revenue
Service ("IRS") has audited the consolidated federal income tax returns of
Central Jersey for all taxable years ended on or prior to March 31, 1992 and the
State of New Jersey has not audited the New Jersey income tax returns of Central
Jersey and its subsidiaries during the past nine years. Neither Central Jersey
nor any of its subsidiaries has been notified that it is subject to an audit or
review of its tax returns by any state other than the State of New Jersey.
Central Jersey is not and has not been a United States real property holding
corporation as defined in Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code. Neither Central Jersey
nor any of its subsidiaries is currently a party to any tax sharing or similar
agreement with any third party. There are no material matters, assessments,
notices of deficiency, demands for taxes, proceedings, audits or proposed
deficiencies pending or, to Central Jersey's knowledge, threatened against
Central Jersey or any of its subsidiaries and there have been no waivers of
statutes of limitations or agreements related to assessments or collection in
respect of any federal, state or local taxes. Neither Central Jersey nor any of
its subsidiaries has agreed to or is required to make any adjustment pursuant to
Section 481(a) of the Code by reason of a change in accounting method initiated
by Central Jersey or any of its subsidiaries, and neither Central Jersey nor any
of its subsidiaries has any knowledge that the IRS has proposed any such
adjustment or change in accounting method. Central Jersey and its subsidiaries
have complied in all material respects with all requirements relating to
information reporting and withholding (including back-up withholding) and other
requirements relating to the reporting of interest, dividends and other
reportable payments under the Code and state and local tax laws and the
regulations promulgated thereunder and other requirements relating to reporting
under federal law including record keeping and reporting on monetary instruments
transactions.
Section 2.12. PROPERTIES. To the knowledge of Central Jersey, it has,
directly or through its subsidiaries, good and marketable title to all of its
properties and assets, tangible and intangible, including those reflected in the
most recent consolidated balance sheet included in the Central Jersey Financial
Statements (except individual properties and assets disposed of since that date
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in the ordinary course of business), which properties and assets are not subject
to any mortgage, pledge, lien, charge or encumbrance other than as reflected in
the Central Jersey Financial Statements or which in the aggregate do not
materially adversely affect or impair the operation of Central Jersey and its
subsidiaries taken as a whole. Central Jersey and each of its subsidiaries
enjoys peaceful and undisturbed possession under all material leases under which
it or any of its subsidiaries is the lessee, where the failure to enjoy such
peaceful and undisturbed possession would be likely to result in a Central
Jersey Material Adverse Change, and none of such leases contains any unusual or
burdensome provision which would be likely to materially and adversely affect or
impair the operations of Bank and its subsidiaries taken as a whole.
Section 2.13. CONDITION OF PROPERTIES; INSURANCE. All real and tangible
personal properties owned by Central Jersey or any of its subsidiaries or used
by Central Jersey or any of its subsidiaries in its business are in a good state
of maintenance and repair, are in good operating condition, subject to normal
wear and tear, conform in all material respects to all applicable ordinances,
regulations and zoning laws, and are adequate for the business conducted by
Central Jersey or such subsidiary subject to exceptions which are not, in the
aggregate, material to Central Jersey and its subsidiaries, taken as a whole.
Central Jersey and each of its subsidiaries maintains insurance (with companies
which, to the best of Central Jersey's knowledge, are authorized to do business
in New Jersey) against loss relating to such properties in amounts which are
customary, usual and prudent for corporations or banks, as the case may be, of
their size. Such policies are in full force and effect and are carried in an
amount and form and are otherwise adequate to protect Central Jersey and each of
its subsidiaries from any adverse loss resulting from risks and liabilities
reasonably foreseeable at the date hereof, and are disclosed on Central Jersey
Schedule 2.13. All material claims thereunder have been filed in a due and
timely fashion. Since December 31, 1991, neither Central Jersey nor any of its
subsidiaries has ever been refused insurance for which it has applied or had any
policy of insurance terminated (other than at its request).
Section 2.14. CONTRACTS.
(a) Except as set forth in Central Jersey Schedule 2.14(a), neither Central
Jersey nor any of its subsidiaries is a party to and neither they nor any of
their assets are bound by any written or oral lease or license with respect to
any property, real or personal, as tenant or licensee involving an annual
consideration in excess of $50,000.
(b) Except as set forth in Central Jersey Schedule 2.14(b), neither Central
Jersey nor any of its subsidiaries is a party to and neither they nor any of
their assets is bound by any written or oral: (i) employment or severance
contract (including, without limitation, any collective bargaining contract or
union agreement) which is not terminable without penalty by Central Jersey or a
subsidiary, as appropriate, on 60 days or less notice; (ii) contract or
commitment for capital expenditures in excess of $75,000 in the aggregate for
any one project or in excess of $250,000 in the aggregate for all projects;
(iii) contract or commitment whether or not made in the ordinary course of
business for the purchase of materials or supplies or for the performance of
services involving consideration in excess of $50,000 (including advertising and
consulting agreements, data processing agreements, and retainer agreements with
attorneys, accountants, actuaries, or other professionals); (iv) contract or
option to purchase or sell any real or personal property other than OREO
property involving consideration in excess of $75,000; or (v) other contracts
material to the business of Central Jersey and its subsidiaries taken as a whole
and not made in the ordinary course of business.
(c) Neither Central Jersey nor any of its subsidiaries is a party to or
otherwise bound by any contract, agreement, plan, lease, license, commitment or
undertaking which, in the reasonable opinion of management of Central Jersey, is
materially adverse, onerous, or harmful to any aspect of the business of Central
Jersey and its subsidiaries taken as a whole.
Section 2.15. PENSION AND BENEFIT PLANS.
(a) Neither Central Jersey nor any of its subsidiaries maintains an
employee pension benefit plan, within the meaning of Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or has
made any contributions to any such employee pension benefit plan, except
employee pension benefit plans listed in Central Jersey Schedule 2.15(a)
(individually a "Central Jersey Plan" and collectively the "Central Jersey
Plans"). In its present form each Central Jersey Plan complies in all material
respects with all applicable requirements under ERISA and the Code. Each Central
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Jersey Plan and the trust created thereunder is qualified and exempt under
Sections 401(a) and 501(a) of the Code, and Central Jersey or the subsidiary
whose employees are covered by such Central Jersey Plan has received from the
IRS a determination letter to that effect. No event has occurred and there has
been no omission or failure to act which would adversely affect such
qualification or exemption. Each Central Jersey Plan has been administered and
communicated to the participants and beneficiaries in all material respects in
accordance with its terms and ERISA. No employee or agent of Central Jersey or
any subsidiary whose employees are covered by a Central Jersey Plan has engaged
in any action or failed to act in such manner that, as a result of such action
or failure, (i) the IRS could revoke, or refuse to issue (as the case may be), a
favorable determination as to such Central Jersey Plan's qualification and the
associated trust's exemption or impose any liability or penalty under the Code,
or (ii) a participant or beneficiary or a nonparticipating employee has been
denied benefits properly due or to become due under such Central Jersey Plan or
has been misled as to his or her rights under such Central Jersey Plan. No
Central Jersey Plan is subject to Section 412 of the Code or Title IV of ERISA.
No person has engaged in any prohibited transaction involving any Central Jersey
Plan or associated trust within the meaning of Section 406 of ERISA or Section
4975 of the Code. There are no pending or threatened claims (other than routine
claims for benefits) against the Central Jersey Plans or any fiduciary thereof
which would subject Central Jersey or any of its subsidiaries to a material
liability. All reports, filings, returns and disclosures and other
communications which have been required to be made to the participants and
beneficiaries, other employees, the Pension Benefit Guaranty Corporation
("PBGC"), the SEC, the IRS, the U.S. Department of Labor or any other
governmental agency pursuant to the Code, ERISA, or other applicable statute or
regulation have been made in a timely manner and all such reports,
communications, filings, returns and disclosures were true and correct in all
material respects. No liability has been, or is likely to be, incurred on
account of delinquent or incomplete compliance or failure to comply with such
requirements. "ERISA Affiliate" where used in this Agreement means any trade or
business (whether or not incorporated) which is a member of a group of which
Central Jersey is a member and which is under common control within the meaning
of Section 414 of the Code. There are no unfunded benefit or pension plans or
arrangements, or any individual agreements whether qualified or not, to which
Central Jersey or any of its subsidiaries or ERISA affiliates has any obligation
to contribute. There has been no change in control of any Central Jersey Plan
since the last effective date of any such change of control disclosed to Summit
in Schedule 2.15(a).
(b) All bonus, deferred compensation, profit-sharing, retirement, pension,
stock option, stock award and stock purchase plans and all other employee
benefit plans, including medical, major medical, disability, life insurance or
dental plans covering employees generally maintained by Central Jersey or any of
its subsidiaries other than the Central Jersey Plans with an annual cost in
excess of $25,000 (collectively "Benefit Plans") are listed in Central Jersey
Schedule 2.15(b) (unless already listed in Central Jersey Schedule 2.15(a)) and
comply in all material respects with all applicable requirements imposed by the
Securities Act, the Exchange Act, ERISA, the Code, and all applicable rules and
regulations thereunder. The Benefit Plans have been administered and
communicated to the participants and beneficiaries in all material respects in
accordance with their terms and ERISA, and no employee or agent of Central
Jersey or any of its subsidiaries has engaged in any action or failed to act in
such manner that, as a result of such action or failure: (i) the IRS could
revoke, or refuse to issue, a favorable determination as to a Benefit Plan's
qualification and any associated trust's exemption or impose any liability or
penalty under the Code; or (ii) a participant or beneficiary or a
nonparticipating employee has been denied benefits properly due or to become due
under the Benefit Plans or has been misled as to their rights under the Benefit
Plans. There are no pending or threatened claims (other than routine claims for
benefits) against the Benefit Plans which would subject Central Jersey or any of
its subsidiaries to liability. Any trust which is intended to be tax-exempt has
received a determination letter from the IRS to that effect and no event has
occurred which would adversely affect such exemption. All reports, filings,
returns and disclosures required to be made to the participants and
beneficiaries, other employees of Central Jersey or any of its subsidiaries, the
PBGC, the SEC, the IRS, the U.S. Department of Labor and any other governmental
agency pursuant to the Code, ERISA, or other applicable statute or regulation,
if any, have been made in a timely manner and all such reports, filings, returns
and disclosures were true and correct in all material respects. No material
liability has been, or is likely to be, incurred on account of delinquent or
incomplete compliance or failure to comply with such requirements.
Section 2.16. FIDELITY BONDS. Since at least January 1, 1991, Central
Jersey and each of its subsidiaries has continuously maintained fidelity bonds
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insuring them against acts of dishonesty in such amounts as are customary, usual
and prudent for organizations of its size and business. All material claims
thereunder have been filed in a due and timely fashion. Since January 1, 1991,
the aggregate amount of all claims under such bonds has not exceeded the policy
limits of such bonds (excluding, except in the case of excess coverage, a
deductible amount of not more than $50,000) and neither Central Jersey nor any
of its subsidiaries is aware of any facts which would form the basis of a claim
or claims under such bonds aggregating in excess of the applicable deductible
amounts under such bonds. Neither Central Jersey nor any of its subsidiaries has
reason to believe that its respective fidelity coverage will not be renewed by
its carrier on substantially the same terms as the existing coverage, except for
possible premium increases unrelated to Central Jersey's and its subsidiaries'
past claim experience.
Section 2.17. LABOR MATTERS. Hours worked by and payment made to employees
of Central Jersey and each of its subsidiaries have not been in violation of the
Fair Labor Standards Act or any applicable law dealing with such matters; and
all payments due from Central Jersey and each of its subsidiaries on account of
employee health and welfare insurance have been paid or accrued as a liability
on the books of Central Jersey or its appropriate subsidiary. Central Jersey is
in compliance with all other laws and regulations relating to the employment of
labor, including all such laws and regulations relating to collective
bargaining, discrimination, civil rights, safety and health, plant closing
(including the Worker Adjustment Retraining and Notification Act), workers'
compensation and the collection and payment of withholding and Social Security
and similar taxes. No labor dispute, strike or other work stoppage has occurred
and is continuing or is to its knowledge threatened with respect to Central
Jersey or any of its subsidiaries. Since December 31, 1992, no employee of
Central Jersey or any of its subsidiaries has been terminated, suspended,
disciplined or dismissed under circumstances that are reasonably likely to
result in a material liability. No employees of Central Jersey or any of its
subsidiaries are unionized nor has such union representation been requested by
any group of employees or any other person within the last two years. There are
no organizing activities involving Central Jersey pending with, or, to the
knowledge of Central Jersey, threatened by, any labor organization or group of
employees of Central Jersey.
Section 2.18. BOOKS AND RECORDS. The minute books of Central Jersey and
each of its subsidiaries contain, in all material respects, complete and
accurate records of and fairly reflect all actions taken at all meetings and
accurately reflect all other corporate action of the shareholders and the boards
of directors and each committee thereof. The books and records of Central Jersey
and each of its subsidiaries fairly and accurately reflect the transactions to
which Central Jersey and each of its subsidiaries is or has been a party or by
which their properties are subject or bound, and such books and records have
been properly kept and maintained.
Section 2.19. CONCENTRATIONS OF CREDIT. No customer or affiliated group of
customers (i) is owed by Central Jersey or any subsidiary of Central Jersey an
aggregate amount equal to more than 5% of the shareholders' equity of Central
Jersey or such subsidiary (including deposits, other debts and contingent
liabilities) or (ii) owes to Central Jersey or any of its subsidiaries an
aggregate amount equal to more than 5% of the shareholders' equity of Central
Jersey or such subsidiary (including loans and other debts, guarantees of debts
of third parties, and other contingent liabilities).
Section 2.20. TRADEMARKS AND COPYRIGHTS. Neither Central Jersey nor any of
its subsidiaries has received notice or otherwise knows that the manner in which
Central Jersey or any of its subsidiaries conducts its business including its
current use of any material trademark, trade name, service mark or copyright
violates asserted rights of others in any trademark, trade name, service mark,
copyright or other proprietary right.
Section 2.21. EQUITY INTERESTS. Neither Central Jersey nor any of its
subsidiaries owns, directly or indirectly, except for the equity interest of
Central Jersey in Bank, any equity interest, other than by virtue of a security
interest securing an obligation not presently in default, in any bank,
corporation, partnership or other entity, except: (a) in a fiduciary capacity;
or (b) an interest valued at less than $25,000 acquired in connection with a
debt previously contracted.
Section 2.22. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in Schedule 2.22 or in the Forms 10-K and 10-Q of
Central Jersey referred to in Section 2.02 hereof:
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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 Central Jersey or any of its subsidiaries, (2) any
property previously owned, occupied, leased or held or managed in a
representative or fiduciary capacity ("Former Property") by Central
Jersey or any of its subsidiaries during the time of such previous
ownership, occupancy, lease; holding or management or (3) any
Participation Facility (as hereinafter defined) during the time that
Central Jersey or any of its subsidiaries participated in the
management of, or may be deemed to be or to have been an owner or
operator of, such Participation Facility;
(2) Neither Central Jersey nor any of its subsidiaries has disposed of, or
arranged for the disposal of, Hazardous Substances from any Present
Property, Former Property or Participation Facility, and no owner or
operator of a Participation Facility disposed of, or arranged for the
disposal of, Hazardous Substances from a Participation Facility during
the time that Central Jersey or any of its subsidiaries participated
in the management of, or may be deemed to be or to have been an owner
or operator of, such Participation Facility;
(3) No Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any Loan
Property (as hereinafter defined), nor is there, with respect to any
such Loan Property, any violation of environmental law which could
materially adversely affect the value of such Loan Property to an
extent which could prevent or delay Central Jersey or any of its
subsidiaries from recovering the full value of its loan in the event
of a foreclosure on such Loan Property.
(b) Neither Central Jersey nor any subsidiary (i) is aware of any
investigations contemplated, pending or completed by any environmental
regulatory authority with respect to any Present Property, Former Property, Loan
Property or Participation Facility, (ii) has received any information requests
from any environmental regulatory authority, or (iii) been named as a
potentially responsible or liable party in any Superfund, Resource Conservation
and Recovery Act, Toxic Substances Control Act or Clean Water Act proceeding or
other equivalent state or federal proceeding.
(c) As used in this Agreement, (a) "Participation Facility" shall mean any
property or facility of which the relevant person or entity (i) has at any time
participated in the management or (ii) may be deemed to be or to have been an
owner or operator, (b) "Loan Property" shall mean any real property in which the
relevant person or entity holds a security interest in an amount greater than
$30,000 and (c) "Hazardous Substances" shall mean (i) any flammable substances,
explosives, radioactive materials, hazardous materials, hazardous substances,
hazardous wastes, toxic substances, pollutants, contaminants and any related
materials or substances specified in any applicable Federal or state law or
regulation relating to pollution or protection of human health or the
environment (including, without limitation, ambient or indoor air, surface
water, groundwater, land surface or subsurface strata) and (ii) friable
asbestos, polychlorinated biphenyls, urea formaldehyde, and petroleum and
petroleum-containing products and wastes.
It shall be considered material for all purposes of this Agreement if the
cost of taking all remedial or other corrective actions and measures (as
required by applicable law, as recommended or suggested by phase two
investigation reports or as may be prudent in light of serious life, health or
safety concerns) with respect to matters required to be disclosed pursuant to
this Section 2.22 but not so disclosed, is in the aggregate in excess of
$1,000,000, as reasonably estimated by an environmental expert retained for such
purpose by Summit at its sole expense, or if the cost of such actions and
measures cannot be so reasonably estimated by such expert to be such amount or
less with any reasonable degree of certainty.
Section 2.23. ACCOUNTING, TAX AND REGULATORY MATTERS. Neither Central
Jersey nor any of its subsidiaries has taken or agreed to take any action or has
any knowledge of any fact or circumstance that would (i) prevent the
transactions contemplated hereby from qualifying as a reorganization within the
meaning of Section 368 of the Code or (ii) materially impede or delay receipt of
any approval referred to in Section 4.01 or the consummation of the transactions
contemplated by this agreement.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SUMMIT
Summit represents and warrants to Central Jersey as follows:
Section 3.01.Organization, Capital Stock.
(a) Summit is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey with authorized capital stock
consisting of 130,000,000 shares of Common Stock, each of par value $1.20, of
which 93,504,424 shares were issued and outstanding as of April 30, 1996 and
4,000,000 shares of Preferred Stock, each without par value, of which 600,166
shares of Series B Adjustable Rate Cumulative Preferred Stock ($50 stated value)
and 504,481 shares of Series C Adjustable Rate Cumulative Preferred Stock ($25
stated value) were issued and outstanding and 1,000,000 shares of Series R
Preferred Stock were reserved for issuance as of April 30, 1996.
(b) Summit is qualified to transact business in and is in good standing
under the laws of all jurisdictions where the failure to be so qualified would
have a material adverse effect on (i) the business, results of operations,
assets or financial condition of Summit and its subsidiaries on a consolidated
basis, or (ii) the ability of Summit to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement (a "Summit Material
Adverse Change"). However, a Summit Material Adverse Change will not include a
change resulting from a change in law, rule, regulation or generally accepted or
regulatory accounting principles, or from any other matter affecting financial
institutions or their holding companies generally. The bank subsidiaries of
Summit are duly organized, validly existing and in good standing under the laws
of their jurisdiction of organization. Summit and its bank subsidiaries have all
corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease their respective properties, occupy their respective
premises, and to engage in their respective businesses and activities as
presently engaged in. Summit is duly registered as a bank holding company under
the Bank Holding Company Act of 1956, as amended ("Bank Holding Company Act").
(c) All issued shares of the capital stock of Summit and of each of its
bank subsidiaries have been fully paid, were duly authorized and validly issued,
are non-assessable, have been issued pursuant to an effective registration
statement and current prospectus under the Securities Act or an appropriate
exemption from registration under the Securities Act and were not issued in
violation of the preemptive rights of any shareholder. Summit or one of its
subsidiaries is the holder and beneficial owner of all of the issued and
outstanding capital stock of its bank subsidiaries. No options covering capital
stock of Summit or any of its bank subsidiaries, warrants to purchase or
contracts to issue capital stock of Summit or any of its bank subsidiaries, or
any other contracts, rights (including preemptive rights), commitments or
convertible securities entitling anyone to acquire from Summit or any of its
subsidiaries or obligating them to issue any capital stock, or securities
convertible into or exchangeable for shares of capital stock, of Summit or any
of its bank subsidiaries are outstanding, in existence, or the subject of an
agreement, except for Summit Stock issuable upon the exercise of employee stock
options granted under stock option plans of Summit, Summit Stock issuable
pursuant to Summit's Dividend Reinvestment and Stock Purchase Plan, Savings
Incentive Plan and 1993 Incentive Stock and Option Plan and Series R Preferred
Stock issuable pursuant to the Summit Shareholder Rights Plan.
(d) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by Summit or a subsidiary of Summit are held free and clear
of any claims, liens, encumbrances or security interests.
Section 3.02. FINANCIAL STATEMENTS. The financial statements and schedules
contained or incorporated in Summit's (a) annual report to shareholders for the
fiscal year ended December 31, 1995, (b) annual report on Form 10-K pursuant to
the Exchange Act for the fiscal year ended December 31, 1995 and (c) quarterly
report on Form 10-Q pursuant to the Exchange Act for the fiscal quarter ended
March 31, 1996 (the "Summit Financial Statements") are true and correct in all
material respects as of their respective dates and each fairly presents, in
accordance with generally accepted accounting principles consistently applied,
the consolidated balance sheets, statements of income, statements of
shareholders' equity and statements of cash flows of Summit and its subsidiaries
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at its respective date and for the period to which it relates. Except as may
otherwise be described therein or in the related notes or in accountants'
reports thereon, the Summit Financial Statements were prepared in accordance
with generally accepted accounting principles consistently applied. The Summit
Financial Statements do not, as of the dates thereof, include any material asset
or omit any material liability, absolute or contingent, or other fact, the
inclusion or omission of which renders the Summit Financial Statements, in light
of the circumstances under which they were made, misleading in any respect.
Section 3.03. NO CONFLICTS. Summit is not in, and has received no notice
of, violation or breach of, or default under, nor will the execution, delivery
and performance of this Agreement by Summit, or the consummation of the Merger
by Summit upon the terms and conditions provided herein (assuming receipt of the
Required Consents), violate, conflict with, result in the breach of, constitute
a default under, give rise to a claim or right of termination, cancellation,
revocation of, or acceleration under, or result in the creation or imposition of
any lien, charge or encumbrance upon any rights, permits, licenses, assets or
properties material to Summit and its subsidiaries, taken as a whole, or upon
any of the capital stock of Summit, or constitute an event which could, with the
lapse of time, action or inaction by Summit, or a third party, or the giving of
notice and failure to cure, result in any of the foregoing, under any of the
terms, conditions or provisions, as the case may be, of:
(a) the Restated Certificate of Incorporation or the By-Laws of Summit;
(b) any law, statute, rule, ruling, determination, ordinance, or regulation
of any governmental or regulatory authority;
(c) any judgment, order, writ, award, injunction, or decree of any court or
other governmental authority; or
(d) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement, or other instrument;
to which Summit is a party or by which Summit, or any of its assets or
properties are bound or committed, the consequences of which would be a Summit
Material Adverse Change, or enable any person to enjoin the transactions
contemplated hereby.
Section 3.04. ABSENCE OF LITIGATION, AGREEMENTS WITH BANK REGULATORS. There
is no outstanding order, injunction, or decree of any court or governmental or
self-regulatory body against or affecting Summit or its subsidiaries which
materially and adversely affects Summit and its subsidiaries, taken as a whole,
and there are no actions, arbitrations, claims, charges, suits, investigations
or proceedings (formal or informal) material to Summit and its subsidiaries,
taken as a whole, pending or, to Summit's knowledge, threatened, against or
involving Summit or their officers or directors (in their capacity as such) in
law or equity or before any court, panel or governmental agency, except as
disclosed in the Forms 10-K and 10-Q of Summit referred to in Section 3.02 or as
previously provided to Central Jersey. Neither Summit nor any bank subsidiary of
Summit is a party to any agreement or memorandum of understanding with, or is a
party to any commitment letter to, or has submitted a board of directors
resolution or similar undertaking to, or is subject to any order or directive
by, or is a recipient of any extraordinary supervisory letter from, any
governmental or regulatory authority which restricts materially the conduct of
its business, or in any manner relates to its capital adequacy, its credit or
reserve policies or its management. Neither Summit nor any bank subsidiary of
Summit, has been advised by any governmental or regulatory authority that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any of the foregoing. Summit and the bank subsidiaries of
Summit have resolved to the satisfaction of the applicable regulatory agency any
significant deficiencies cited by any such agency in its most recent
examinations of each aspect of Summit or such bank subsidiary's business except
for examinations, if any, received within the 30 days prior to the date hereof.
Section 3.05. MATERIAL INFORMATION. At the time of filing, all filings made
by Summit and its subsidiaries after December 31, 1989 with the SEC and
appropriate bank regulatory authorities do not contain any untrue statement of a
material fact and do not omit to state any material fact required to be stated
herein or therein or necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. To the extent such filings were subject to the Securities Act or
Exchange act, such filings complied in all material respects with the Securities
Act or Exchange Act, as appropriate, and all applicable rules and regulations
thereunder of the SEC. Summit has timely made all filings required by the
Securities Act and the Exchange Act.
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Section 3.06. CORPORATE ACTION. Assuming due execution and delivery by
Central Jersey, Summit has the corporate power and is duly authorized by all
necessary corporate action to execute, deliver, and perform this Agreement. The
Board of Directors of Summit has taken all action required by law or by the
Restated Certificate of Incorporation or By-Laws of Summit or otherwise to
authorize the execution and delivery of this Agreement. Approval by the
shareholders of Summit of this Agreement, the Merger or the transactions
contemplated by this Agreement are not required by applicable law. This
Agreement is a valid and binding agreement of Summit enforceable in accordance
with its terms except as such enforcement may be limited by applicable
principles of equity, and by bankruptcy, insolvency, moratorium or other similar
laws presently or hereafter in effect affecting the enforcement of creditors'
rights generally.
Section 3.07. ABSENCE OF CHANGES. Except as disclosed in the Summit
Financial Statements, there has not been, since December 31, 1995, any Summit
Material Adverse Change and there is no matter or fact which may result in any
such Summit Material Adverse Change in the future.
Section 3.08. NON-BANK SUBSIDIARIES. The non-bank subsidiaries of Summit
did not, taken in the aggregate, constitute a "significant subsidiary" of
Summit, as that term is defined in Rule 1-02(v) of Regulation S-X of the SEC (17
CFR ss.210.102(v)), at December 31, 1995.
Section 3.09. ABSENCE OF UNDISCLOSED LIABILITIES. The Summit Financial
Statements are prepared on an accrual basis and reflect all known assets and
liabilities. There are no material undisclosed liabilities, whether contingent
or absolute, direct or indirect..
Section 3.10. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the Forms 10K and 10Q of Summit referred to in
Section 3.02 hereof:
(1) no Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any (i)
Present Property of Summit or a subsidiary, (ii) Former Property of
Summit or a subsidiary during the time of previous ownership,
occupancy or lease, or (iii) Participation Facility during the time
that Summit or a subsidiary participated in the management of, or may
be deemed to be or to have been an owner or operator of, such
facility, where such storage, treatment, dumping, spilling, disposing,
discharging, releasing, or depositing would have a material adverse
effect on Summit and its subsidiaries, taken as a whole;
(2) neither Summit nor any subsidiary has disposed of or arranged for the
disposal of Hazardous Substances from any Present Property, Former
Property or Participation Facility, and no owner or operator of a
Participation Facility disposed of, or arranged for the disposal of,
Hazardous Substances from a Participation Facility during the time
that Summit or any subsidiary participated in the management of, or
may be deemed to be or to have been an owner or operator of such
Participation Facility, where such disposal or arranging for disposal
would have a material adverse effect on Summit and its subsidiaries,
taken as a whole;
(3) no Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any Loan
Property, nor is there with respect to any Loan Property any violation
of an environmental law, where such storage, treatment, dumping,
spilling, disposing, discharging, releasing, depositing or violation
would have a material adverse effect on Summit and its subsidiaries,
taken as a whole.
(b) Neither Summit nor any subsidiary (i) is aware of any investigations
contemplated, pending or completed by any environmental regulatory authority
with respect to any Present Property, Former Property, Loan Property or
Participation Facility which would be likely to result in a Summit Material
Adverse Change, (ii) has received any information requests from any
environmental regulatory authority with respect to a matter which would be
likely to result in a Summit Material Adverse Change, or (iii) been named as a
potentially responsible or liable party in any Superfund, Resource Conservation
and Recovery Act, Toxic Substances Control Act or Clean Water Act proceeding or
other equivalent state or federal proceeding which would be likely to result in
a Summit Material Adverse Change.
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Section 3.11. BENEFIT PLANS. Summit is in compliance with all laws and
regulations applicable to its employee benefit plans where the failure to so
comply would be likely to result in a Material Adverse Change.
Section 3.12. ACCOUNTING, TAX AND REGULATORY MATTERS. Neither Summit nor
any of its subsidiaries has taken or agreed to take any action or has any
knowledge of any fact or circumstance that would (i) prevent the transactions
contemplated hereby from qualifying as a reorganization within the meaning of
Section 368 of the Code or (ii) materially impede or delay receipt of any
approval referred to in Section 4.01 or the consummation of the transactions
contemplated by this Agreement.
ARTICLE IV.
COVENANTS OF CENTRAL JERSEY
Central Jersey hereby covenants and agrees with Summit that:
Section 4.01. PREPARATION OF REGISTRATION STATEMENT AND APPLICATIONS FOR
REQUIRED CONSENTS. Central Jersey will cooperate with Summit in the preparation
of a Registration Statement on Form S-4 (the "Registration Statement") to be
filed with the SEC under the Securities Act for the registration of the offering
of Summit Stock to be issued in connection with the Merger and the proxy
statement-prospectus constituting part of the Registration Statement
("Proxy-Prospectus") that will be used by Central Jersey to solicit shareholders
of Central Jersey for approval of the Merger. In connection therewith, Central
Jersey will furnish all financial or other information, including using best
efforts to obtain customary consents, certificates, opinions of counsel and
other items concerning Central Jersey reasonably deemed necessary by counsel to
Summit for the filing or preparation for filing under the Securities Act and the
Exchange Act of the Registration Statement (including the proxy statement
portion thereof). Central Jersey will cooperate with Summit and provide such
information as may be advisable in obtaining an order of effectiveness for the
Registration Statement, appropriate permits or approvals under state securities
and "blue sky" laws, the required approval under the Bank Holding Company Act of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), the required approval under HOLA of the Office of Thrift Supervision of
the Department of the Treasury ("OTS"), the listing of the Shares on the New
York Stock Exchange (subject to official notice of issuance) and any other
governmental or regulatory consents or approvals or the taking of any other
governmental or regulatory action necessary to consummate the Merger without a
material adverse effect on the business, results of operations, assets or
financial condition of the Surviving Corporation and its subsidiaries, taken as
a whole (the "Required Consents"). Summit, reasonably in advance of making such
filings, will provide Central Jersey and its counsel a reasonable opportunity to
comment on such filings and regulatory applications and will give due
consideration to any comments of Central Jersey and its counsel before making
any such filing or application; and Summit will provide Central Jersey and its
counsel with copies of all such filings and applications at the time filed if
such filings and applications are made at any time before the Effective Time.
Central Jersey covenants and agrees that all information furnished by Central
Jersey for inclusion in the Registration Statement, the Proxy-Prospectus, all
applications to appropriate regulatory agencies for approval of the Merger, and
all information furnished by Central Jersey to Summit pursuant to this Agreement
or in connection with obtaining Required Consents, will comply in all material
respects with the provisions of applicable law, including the Securities Act and
the Exchange Act and the rules and regulations of the SEC thereunder, and will
not contain any untrue statement of a material fact and will not omit to state
any material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. Central Jersey will furnish to Advest such
information as Advest may reasonably request for purposes of the opinion
referred to in Section 8.07.
Section 4.02. NOTICE OF ADVERSE CHANGES. Central Jersey will promptly
advise Summit in writing of (a) any event occurring subsequent to the date of
this Agreement which would render any representation or warranty of Central
Jersey contained in this Agreement or the Central Jersey Schedules or the
materials furnished pursuant to the Post-Signing Disclosure List (as defined in
Section 4.09), if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect, (b) any Central Jersey Material
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Adverse Change, (c) any inability or perceived inability of Central Jersey to
perform or comply with the terms or conditions of this Agreement, (d) the
institution or threat of institution of litigation or administrative proceedings
involving Central Jersey or any of its subsidiaries or assets, which, if
determined adversely to Central Jersey or any of its subsidiaries, would have a
material adverse effect upon Central Jersey and its subsidiaries taken as a
whole or the ability of the parties to timely consummate the Merger and the
related transactions, (e) any governmental complaint, investigation, hearing, or
communication indicating that such litigation or administrative proceeding is
contemplated, (f) any written notice of, or other communication relating to, a
default or event which, with notice or lapse of time or both, would become a
default, received by Central Jersey or a subsidiary subsequent to the date
hereof and prior to the Effective Time, under any agreement, indenture or
instrument to which Central Jersey or a subsidiary is a party or is subject and
which is material to the business, operation or condition (financial or
otherwise) of Central Jersey and its subsidiaries taken as a whole, and (g) any
written notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement including the Merger. Central Jersey
agrees that the delivery of such notice shall not constitute a waiver by Summit
of any of the provisions of Articles VI or VII.
Section 4.03. MEETING OF SHAREHOLDERS. Central Jersey will call a meeting
of its shareholders for the purpose of voting upon this Agreement, the Merger
and the transactions contemplated hereby to be held as promptly as practicable
and, in connection therewith, will comply in all material respects with the New
Jersey Act and the Exchange Act and all regulations promulgated thereunder
governing shareholder meetings and proxy solicitations. In connection with such
meeting, Central Jersey shall mail the Proxy-Prospectus to its shareholders and
use, unless in the written opinion of counsel such action would be a breach of
the fiduciary duties by the directors under applicable law, its best efforts to
obtain shareholder approval of this Agreement, the Merger and the transactions
contemplated hereby.
Section 4.04. COPIES OF FILINGS. Without limiting the provisions of Section
4.01, Central Jersey will deliver to Summit, at least twenty-four hours prior to
an anticipated date of filing or distribution, all documents to be filed with
the SEC or any bank regulatory authority or to be distributed in any manner to
the shareholders of Central Jersey or the public.
Section 4.05. NO MATERIAL TRANSACTIONS. Until the Effective Time, Central
Jersey will not and will not allow any of its subsidiaries to, without the prior
written consent of Summit: (a) pay (or make a declaration which creates an
obligation to pay) any cash dividends, other than dividends from subsidiaries of
Central Jersey to Central Jersey or other subsidiaries of Central Jersey except
that Central Jersey may declare, set aside and pay a dividend up to and
including the greater of $.12 per share or the dividend most recently (as of
such date) declared by Summit multiplied by the Exchange Ratio; (b) declare or
distribute any stock dividend or authorize or effect a stock split; (c) subject
to the fiduciary duties of the Central Jersey Board of Directors, merge with,
consolidate with, or sell any material asset to any other corporation, bank, or
person (except for mergers of subsidiaries of Central Jersey into other
subsidiaries of Central Jersey) or enter into any other transaction not in the
ordinary course of business; (d) incur any liability or obligation other than
intracompany obligations, make or agree to make any commitment or disbursement,
acquire or dispose or agree to acquire or dispose of any property or asset
(tangible or intangible), make or agree to make any contract or agreement or
engage or agree to engage in any other transaction, except transactions in the
ordinary course of business or other transactions of not more than $100,000; (e)
subject any of its properties or assets to any lien, claim, charge, option or
encumbrance, except in the ordinary course of business and for amounts not
material in the aggregate to Central Jersey and its subsidiaries taken as a
whole; (f) increase or enter into any agreement to increase the rate of
compensation of any employee on the date hereof which is not consistent with
past practices and policies or which when considered with all such increases or
agreements to increase constitutes an average annualized rate exceeding five
percent (5%), or pay any employee bonuses; (g) create, adopt or modify any
employment or severance arrangement or any pension or profit sharing plan,
bonus, deferred compensation, death benefit, retirement or other employee or
director benefit plan of whatsoever nature, or change the level of benefits
under any such arrangement or plan, or increase any severance or termination pay
benefit or any other fringe benefit, or make, increase or amend in any manner
any grant or award under any compensation plan, including stock incentive and
stock option plans; (h) distribute, issue, sell or grant any of its Equity
Securities or any stock appreciation rights except pursuant to the exercise of
director and employee stock options under the Central Jersey Option Plans; (i)
except in a fiduciary capacity, purchase, redeem, retire, repurchase, or
exchange, or otherwise acquire or dispose of, directly or indirectly, any of its
Equity Securities, whether pursuant to the terms of such Equity Securities or
otherwise, or enter into any agreement providing for any of the foregoing
transactions; (j) amend its Certificate of Incorporation or By-Laws; (k) modify,
amend or cancel any of its existing borrowings other than intra-corporate
borrowings and borrowings of federal funds from correspondent banks and the
Federal Reserve Bank of New York or the Federal Home Loan Bank of New York or
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enter into any contract, agreement, lease or understanding, or any contracts,
agreements, leases or understandings other than those in the ordinary course of
business or which do not involve the creation of any material obligation or
release of any material right of Central Jersey or any of its subsidiaries,
taken as a whole; (l) create, or accelerate the exercisability of, any stock
appreciation rights or options or the release of any restrictions on stock
issued under the Central Jersey Benefit Plans; (m) make any employer
contribution to a Central Jersey Plan or a Benefit Plan which under the terms of
the particular plan is voluntary and within the sole discretion of Central
Jersey to make, except such contributions made in accordance with plan terms in
effect on the date hereof; or (n) make any determination or take any action, by
its Compensation Committee or otherwise, under or with respect to any Central
Jersey Option Plan other than routine administration of outstanding awards
thereunder.
Section 4.06. OPERATION OF BUSINESS IN ORDINARY COURSE. Central Jersey, on
behalf of itself and its subsidiaries, covenants and agrees that from and after
the date hereof and until the Effective Time, it and its subsidiaries: (a) will
carry on their business substantially in the same manner as heretofore and will
not institute any unusual or novel methods of management or operation of their
properties or business and will maintain such in their customary manner; (b)
will use their best efforts to continue in effect their present insurance
coverage on all properties, assets, business and personnel; (c) will use their
best efforts to preserve their business organization intact, preserve their
present relationships with customers, suppliers, and others having business
dealings with them, and keep available their present employees, provided,
however, that Central Jersey or any of its subsidiaries may terminate any
employee for unsatisfactory performance or other reasonable business purpose,
and provided further, however, that Central Jersey will notify and consult with
Summit prior to terminating any of the five highest paid employees of Central
Jersey; (d) will use their best efforts to continue to maintain fidelity bonds
insuring Central Jersey and its subsidiaries against acts of dishonesty by each
of their employees in such amounts (not less than present coverage) as are
customary, usual and prudent for corporations or banks, as the case may be, of
their size; (e) will not do anything or fail to do anything which will cause a
breach of or default under any representation, warranty or covenant of Central
Jersey or any contract, agreement, commitment or obligation to which they or any
one of them is a party or by which they or any of their assets or properties may
be bound or committed if the consequence of such, individually or in the
aggregate, would be likely to have a material adverse effect on Central Jersey
and its subsidiaries taken as a whole; and (f) will not change their methods of
accounting in effect at March 31, 1995, or change any of their methods of
reporting income and deductions for Federal income tax purposes from those
employed in the preparation of their Federal income tax returns for the taxable
year ending March 31, 1995, except as required by changes in laws, regulations
or generally accepted accounting principles or changes that are to a preferable
accounting method, and approved in writing by Central Jersey's independent
certified public accountants.
Section 4.07. FURTHER ACTIONS. Central Jersey will: (a) execute and deliver
such instruments and take such other actions as Summit may reasonably require to
carry out the intent of this Agreement; (b) use all reasonable efforts to obtain
consents of all third parties and governmental bodies necessary or reasonably
desirable for the consummation of the transactions contemplated by this
Agreement; (c) subject to the fiduciary duties of the Central Jersey Board of
Directors diligently support this Agreement in any proceeding before any
regulatory authority whose approval of any of the transactions contemplated
hereby is required or reasonably desirable or before any court in which
litigation in respect thereof is pending; and (d) use its best efforts so that
the other conditions precedent to the obligations of Summit set forth in
Articles VI and VII hereof are satisfied.
Section 4.08. COOPERATION. Until the effective time, Central Jersey will
give to Summit and to its representatives, including its accountants, KPMG Peat
Marwick LLP, and its legal counsel, full access during normal business hours to
all of its property, documents, contracts and records relevant to this Agreement
and the Merger, will provide such information with respect to its business
affairs and properties as Summit from time to time may reasonably request, and
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will cause its managerial employees, and will use its best efforst to cause its
counsel and independent certified public accountants, to be available on
reasonable request to answer questions of summit's representatives covering the
business and affairs of Central Jersey or any of its subsidiaries.
Section 4.09. COPIES OF DOCUMENTS. As promptly as practicable, but not
later than 45 days after the date hereof, Central Jersey will furnish to or make
available to Summit all the documents, contracts, agreements, papers, and
writings referred to in the Central Jersey Schedules or called for by the list
attached hereto as Exhibit B (the "Post-Signing Disclosure List").
Section 4.10. APPLICABLE LAWS. Central Jersey and its subsidiaries will use
their best efforts to comply promptly with all requirements which federal or
state law may impose on Central Jersey or any of its subsidiaries with respect
to the Merger and will promptly cooperate with and furnish information to Summit
in connection with any such requirements imposed upon Summit or on any of its
subsidiaries in connection with the Merger.
Section 4.11. AGREEMENTS OF AFFILIATED SHAREHOLDERS. Central Jersey agrees
to furnish to Summit, not later than 10 business days prior to the date of
mailing of the Proxy-Prospectus, a list containing the name of each person who
is identified in a letter received from counsel to Central Jersey as an
affiliate of Central Jersey for the purposes of Rule 145 under the Securities
Act (a "Central Jersey Affiliate") and shall use its best efforts to cause each
Central Jersey Affiliate to enter into, prior to the date of mailing of the
Proxy- Prospectus, an agreement, satisfactory in form and substance to Summit,
substantially in the form of Exhibit C hereto, and effective prior to such date
(an "Affiliate Agreement").
Section 4.12. LOANS AND LEASES TO AFFILIATES. All loans and leases
hereafter made by Central Jersey or any of its subsidiaries to any of its
present or former directors or executive officers or their respective related
interests shall be made only in the ordinary course of business and on the same
terms and at the same interest rates as those prevailing for comparable
transactions with others and shall not involve more than the normal risk of
repayment or present other unfavorable features.
Section 4.13. CONFIDENTIALITY. All information furnished by Summit to
Central Jersey or its representatives pursuant hereto shall be treated as the
sole property of Summit and, if the Merger shall not occur, Central Jersey and
its representatives shall return to Summit all of such written information and
all documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information, except that any such
confidential information or notes or abstracts therefrom presented to the Board
of Directors of Central Jersey or any committee thereof for the purpose of
considering this Agreement, the Merger and the related transactions may be kept
and maintained by Central Jersey with other records of Board, and Board
committee, meetings subject to a continuing obligation of confidentiality.
Central Jersey shall, and shall use its best efforts to cause its
representatives to, keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purposes. The obligation to keep such information confidential shall
continue for five years from the date the proposed Merger is abandoned and shall
not apply to: (i) any information which (x) was legally in Central Jersey's
possession prior to the disclosure thereof by Summit, (y) was then generally
known to the public, or (z) was disclosed to Central Jersey by a third party not
bound by an obligation of confidentiality; or (ii) disclosures made as required
by law. It is further agreed that if, in the absence of a protective order or
the receipt of a waiver hereunder, Central Jersey is nonetheless, in the written
opinion of its outside counsel, compelled to disclose information concerning
Summit to any tribunal or governmental body or agency or else stand liable for
contempt or suffer other censure or penalty, Central Jersey may disclose such
information to such tribunal or governmental body or agency without liability
hereunder and shall so notify Summit. This Section 4.13 shall survive any
termination of this Agreement.
Section 4.14. DIVIDENDS. Central Jersey will coordinate with Summit the
declaration of any dividends and the record and payment dates thereof so that
the holders of Central Jersey Stock will not be paid two dividends for a single
calendar quarter with respect to their shares of Central Jersey Stock and any
shares of Summit Stock they become entitled to receive in the Merger or fail to
be paid one dividend in each calendar quarter between the date hereof and the
Effective Time.
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Section 4.15. ACQUISITION PROPOSALS. Central Jersey agrees that neither
Central Jersey nor any of its subsidiaries nor any of the respective officers
and directors of Central Jersey or its subsidiaries shall, and Central Jersey
shall direct and use its best effort to cause its employees, affiliates, agents
and representatives (including, without limitation, any investment banker,
broker, financial or investment advisor, attorney or accountant retained by
Central Jersey or any of its subsidiaries) not to, initiate, solicit or
encourage, directly or indirectly, any inquiries proposals or offers with
respect to, or engage in any negotiations or discussions with any person,
provide any nonpublic information, or authorize or enter into any agreement or
agreement in principle concerning, or recommend or endorse any Acquisition
Proposal (as defined below); provided however, that the Board of Directors of
Central Jersey may furnish or cause to be furnished nonpublic information and
may participate in such discussions and negotiations directly or through its
representatives and may authorize or enter into any agreement or agreement in
principle concerning, or recommend or endorse any Acquisition Proposal (as
defined below), if such Board of Directors has determined, after having
consulted with and received the written opinion of outside counsel to the
effect, that the failure to provide such nonpublic information or participate in
such negotiations and discussions or authorize or enter into or recommend or
endorse any agreement or agreement in principle relating to an Acquisition
Proposal would cause the members of such Board of Directors to breach their
fiduciary duties under applicable laws. "Acquisition Proposal" is hereby defined
to be any offer, including an exchange offer or tender offer, or proposal
concerning a merger, consolidation, or other business combination or takeover
transaction involving Central Jersey or any of its subsidiaries or the
acquisition of any assets (otherwise than as permitted by Section 4.05) or
securities of Central Jersey or any of its subsidiaries. Central Jersey will
immediately cease and cause to be terminated any existing activities, discussion
or negotiations with any parties conducted heretofore with respect to any of the
foregoing. Central Jersey will take the necessary steps to inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section. In addition, Central Jersey will notify
Summit by telephone to its chief executive officer or general counsel promptly
upon receipt of any communication with respect to a proposed Acquisition
Proposal with another person or receipt of a request for information from any
governmental or regulatory authority with respect to a proposed acquisition of
Central Jersey or any of its subsidiaries or assets by another party, and will
immediately deliver as soon as possible by facsimile transmission, receipt
acknowledged, to the Summit officer notified as required above a copy of any
document relating thereto promptly after any such document is received by
Central Jersey.
Section 4.16. TAX OPINION CERTIFICATES. Central Jersey shall execute and
deliver to Thompson & Coburn any tax opinion certificate reasonably required by
Thompson & Coburn in connection with the issuance of one or more of the Tax
Opinions (as defined at Section 6.03), dated as of the date of effectiveness of
the Registration Statement and as of the Closing Date, and Central Jersey shall
use its best efforts to cause each of its executive officers, directors and
holders of five percent (5%) or more of outstanding Central Jersey Stock
(including shares beneficially held) to execute and deliver to Thompson & Coburn
any tax opinion certificate reasonably required by Thompson & Coburn in
connection with the issuance of one or more of the Tax Opinions, dated as of the
date of effectiveness of the Registration Statement and as of the Closing Date.
ARTICLE V.
COVENANTS OF SUMMIT
Summit hereby covenants and agrees with Central Jersey that:
Section 5.01. APPROVALS AND REGISTRATIONS. Summit will use its best efforts
to prepare and file (a) with the SEC, the Registration Statement, (b) with the
Federal Reserve Board, an application for approval of the Merger, (c) with the
OTS, an application for approval of Summit as a savings and loan holding
company, and (d) with the New York Stock Exchange, an application for the
listing of the shares of Summit Stock issuable upon the Merger, subject to
official notice of issuance, except that Summit shall have no obligation to file
a new registration statement or a post-effective amendment to the Registration
Statement covering any reoffering of Summit Stock by Central Jersey Affiliates.
Summit covenants and agrees that all information furnished by Summit for
inclusion in the Registration Statement, the Proxy-Prospectus, and all
applications and submissions for the Required Consents will comply in all
material respects with the provisions of applicable law, including the
Securities Act and the Exchange Act and the rules and regulations of the SEC,
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Federal Reserve Board and OTS, and will not contain any untrue statement of a
material fact and will not omit to state any material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. Summit will furnish to
Advest, investment bankers advising Central Jersey, such information as they may
reasonably request for purposes of the opinion referred to in Section 8.07.
Section 5.02. NOTICE OF ADVERSE CHANGES. Summit will promptly advise
Central Jersey in writing of (a) any event occurring subsequent to the date of
this Agreement which would render any representation or warranty of Summit
contained in this Agreement or the Summit Schedules, if made on or as of the
date of such event or the Closing Date, untrue or inaccurate in any material
respect, (b) any Summit Material Adverse Change, (c) any inability or perceived
inability of Summit to perform or comply with the terms or conditions of this
Agreement, (d) the institution or threat of institution of material litigation
or administrative proceeding involving Summit or its assets which, if determined
adversely to Summit, would have a material adverse effect on Summit and its
subsidiaries taken as a whole or the Merger, (e) any governmental complaint,
investigation, or hearing or communication indicating that such litigation or
administrative proceeding is contemplated, (f) any written notice of, or other
communication relating to, a default or event which, with notice or lapse of
time or both, would become a default, received by Summit subsequent to the date
hereof and prior to the Effective Time, under any agreement, indenture or
instrument to which Summit is a party or is subject and which is material to the
business, operation or condition (financial or otherwise) of Summit and its
subsidiaries taken as a whole, and (g) any written notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement
including the Merger. Summit agrees that the delivery of such notice shall not
constitute a waiver by Central Jersey of any of the provisions of Articles VI or
VIII.
Section 5.03. COPIES OF FILINGS. Summit shall promptly provide to Central
Jersey and its counsel copies of the applications filed with the Federal Reserve
Board and the OTS and all reports filed by it with the SEC on Forms 10Q, 8K and
10K.
Section 5.04. FURTHER ACTIONS. Summit will: (a) execute and deliver such
instruments and take such other actions as Central Jersey may reasonably require
to carry out the intent of this Agreement; (b) use all reasonable efforts to
obtain consents of all third parties and governmental bodies necessary or
reasonably desirable for the consummation of the transactions contemplated by
this Agreement; (c) diligently support this Agreement in any proceeding before
any regulatory authority whose approval of any of the transactions contemplated
hereby is required or reasonably desirable or before any court in which
litigation in respect thereof is pending; and (d) use its best efforts so that
the other conditions precedent to the obligations of Central Jersey set forth in
Articles VI and VIII hereof are satisfied.
Section 5.05. APPLICABLE LAWS. Summit will use its best efforts to comply
promptly with all requirements which federal or state law may impose on Summit
with respect to the Merger and will promptly cooperate with and furnish
information to Central Jersey in connection with any such requirements imposed
upon Central Jersey or on any of its subsidiaries in connection with the Merger.
Section 5.06. UNPAID CENTRAL JERSEY DIVIDENDS. By virtue of the Merger and
without further action on anyone's part, Summit shall assume the obligation of
Central Jersey to pay dividends, if any, on Central Jersey Stock which have a
record date prior to the Effective Time but which are not payable until after
the Effective Time.
Section 5.07. COOPERATION. Until the Effective Time, Summit will provide
such information with respect to its business affairs and properties as Central
Jersey from time to time may reasonably request, and will cause its managerial
employees, counsel and independent certified public accountants to be available
on reasonable request to answer questions of Central Jersey's representatives
covering the business and affairs of Summit or any of its subsidiaries.
Section 5.08. CONFIDENTIALITY. All information furnished by Central Jersey
to Summit or its representatives pursuant hereto shall be treated as the sole
property of Central Jersey and, if the Merger shall not occur, Summit and its
representatives shall return to Central Jersey all of such written information
and all documents, notes, summaries or other materials containing, reflecting or
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referring to, or derived from, such information, except that any such
confidential information or notes or abstracts therefrom presented to the Board
of Directors of Summit or any committee thereof for the purpose of considering
this Agreement, the Merger and the related transactions may be kept and
maintained by Summit with other records of Board, and Board committee, meetings
subject to a continuing obligation of confidentiality. Summit shall, and shall
use its best efforts, to cause its representatives to, keep confidential all
such information, and shall not directly or indirectly use such information for
any competitive or other commercial purposes. The obligation to keep such
information confidential shall continue for five years from the date the
proposed Merger is abandoned and shall not apply to: (i) any information which
(x) was legally in Summit's possession prior to the disclosure thereof by
Central Jersey, (y) was then generally known to the public, or (z) was disclosed
to Summit by a third party not bound by an obligation of confidentiality; or
(ii) disclosures made as required by law. It is further agreed that if, in the
absence of a protective order or the receipt of a waiver hereunder, Summit is
nonetheless, in the written opinion of its counsel, compelled to disclose
information concerning Central Jersey to any tribunal or governmental body or
agency or else stand liable for contempt or suffer other censure or penalty,
Summit may disclose such information to such tribunal or governmental body or
agency without liability hereunder and shall so notify Central Jersey in advance
to the extent practicable. This Section 5.08 shall survive any termination of
this Agreement.
Section 5.09. FURTHER TRANSACTIONS. Summit continually evaluates possible
acquisitions and may prior to the Effective Time enter into one or more
agreements providing for, and may consummate the acquisition by it of another
bank, association, bank holding company, savings and loan holding company or
other company (or the assets thereof) for consideration that may include Summit
Stock. In addition, prior to the Effective Time, Summit may, depending on market
conditions and other factors, otherwise determine to issue equity-linked or
other securities for financing purposes. Notwithstanding the foregoing, Summit
will not take any action that would (i) prevent the transactions and
contemplated hereby from qualifying as a reorganization within the meaning of
Section 368 of the Code or (ii) materially impede or delay receipt of any
Required Consent or the consummation of the transactions contemplated by this
Agreement.
Section 5.10. INDEMNIFICATION.
(a) Summit shall indemnify, and advance expenses in matters that may be
subject to indemnification to, persons who served as directors and officers of
Central Jersey or any subsidiary of Central Jersey on or before the Effective
Time with respect to liabilities and claims (and related expenses, including
fees and disbursements of counsel) made against them resulting from their
service as such prior to the Effective Time in accordance with and subject to
the requirements and other provisions of the Restated Certificate of
Incorporation and By-Laws of Summit in effect on the date of this Agreement and
applicable provisions of law to the same extent as Summit is obliged thereunder
to indemnify and advance expenses to its own directors and officers with respect
to liabilities and claims made against them resulting from their service for
Summit.
(b) For a period of six (6) years after the Effective Time, Summit will use
its best efforts to provide to the persons who served as directors or officers
of Central Jersey or any subsidiary of Central Jersey on or before the Effective
Time insurance against liabilities and claims (and related expenses) made
against them resulting from their service as such prior to the Effective Time
comparable in coverage to that provided by Summit to its own directors and
officers, but, if not available on commercially reasonable terms, then coverage
substantially similar in all material respects to the insurance coverage
provided to them in such capacities at the date hereof; provided, however, that
in no event shall Summit be required to expend more than 200% of the current
amount expended by Central Jersey (the "Insurance Amount") to maintain or
procure insurance coverage pursuant hereto, and, further provided, that if
Summit is unable to maintain or obtain the insurance called for by this Section
5.10, Summit shall use its best efforts to obtain as much comparable insurance
as is available for the Insurance Amount. Central Jersey shall renew any
existing insurance or purchase any "discovery period" insurance provided for
thereunder at Summit's request.
(c) This Section 5.10 shall be construed as an agreement as to which the
directors and officers of Central Jersey referred to herein are intended to be
third party beneficiaries and shall be enforceable by the such persons and their
heirs and representatives.
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(d) If Summit or any of its successors or assigns (i) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) shall transfer all or substantially all of its properties and assets to
any individual, corporation or other entity, then in each such case, Summit or
such successor or assign shall take such actions as shall be necessary for the
successors or assigns of Summit to assume the obligations set forth in this
Section 5.10.
Section 5.11. EMPLOYEE MATTERS.
(a) After the Effective Time, Summit may in its discretion maintain,
terminate, merge or dispose of (i) the Central Jersey Plans, (ii) the Benefit
Plans, and (iii) all other medical, major medical, disability, life insurance,
accidental death and dismemberment insurance, dental, vision care, or other
health or welfare plan maintained by Central Jersey (the "Health or Welfare
Plans"); provided, however, that any action taken by Summit shall comply with
ERISA and other applicable laws, including laws regarding the preservation of
employee pension benefit plan benefits and, provided further, that if Summit
maintains a plan available to all its employees generally which is similar in
benefits, character or nature to, or which covers risks similar to those covered
by, a Central Jersey Plan, a Benefit Plan or a Health or Welfare Plan available
to all Central Jersey employees generally, then, if such Central Jersey plan is
terminated by Summit or is otherwise rendered inactive by Summit, Summit shall
offer to the former employees of Central Jersey affected by such plan
termination or cessation of activity the opportunity to participate in the
similar plan of Summit without being subject to any exclusions due to
pre-existing conditions and such employees shall be given credit for years of
service with Central Jersey for purposes of eligibility, vesting and benefit
accrual purposes, except benefit accruals under the Summit Retirement Plan,
Summit supplemental employee retirement plans and Summit severance plans.
(b) After the Effective Time, Central Jersey employees shall not be
entitled to participate automatically in benefits plans, programs or
arrangements of Summit not maintained by Summit for its employees generally,
including without limitation bonus plans, stock option plans, stock award plans,
severance plans and reduction in force plans, but shall be allowed to
participate if and only if selected for participation by the persons authorized
by the terms of such plans to select participants.
(c) Following the Effective Time, Summit shall assume the obligations of
Central Jersey with respect to the following agreements, policies or plans
existing prior to the date hereof which have been disclosed in the Central
Jersey Schedules: (i) employment agreements and (ii) severance pay plan, but
excluding from the coverage of this clause (ii) persons party to employment
agreements covered by clause (i).
(d) If Summit or any of its successors or assigns (i) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) shall transfer all or substantially all of its properties and assets to
any individual, corporation or other entity, then in each such case, Summit or
such successor or assign shall take such actions as shall be necessary for the
successors or assigns of Summit to assume the obligations set forth in this
Section 5.11.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE RESPECTIVE OBLIGATIONS OF SUMMIT
AND CENTRAL JERSEY
The respective obligations of Summit and Central Jersey under this
Agreement to consummate the Merger are subject to the satisfaction of all the
following conditions, compliance with which or the occurrence of which may only
be waived in whole or in part in writing by Summit and Central Jersey in
accordance with Section 10.09:
Section 6.01. RECEIPT OF REQUIRED CONSENTS. Summit and Central Jersey shall
have received the Required Consents; the Required Consents shall not, in the
reasonable opinion of Summit or Central Jersey, contain restrictions or
limitations which would materially adversely affect the financial condition of
Summit after consummation of the Merger; the Required Consents and the
transactions contemplated hereby shall not on the Closing Date be contested by
any federal or state governmental authority; and on the Closing Date the
Required Consents needed for the Merger shall have been obtained and shall not
have been withdrawn or suspended.
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Section 6.02. EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
shall have been declared effective by the SEC; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and remain in
effect on the Closing Date; and no proceeding for that purpose shall have been
initiated or, to the knowledge of Summit or Central Jersey, shall be
contemplated or threatened by the SEC on the Closing Date.
Section 6.03. TAX MATTERS. At the time of effectiveness of the Registration
Statement and at the Closing Date, each of Summit and Central Jersey shall have
received from Thompson & Coburn an opinion (the "Tax Opinion"), reasonably
satisfactory in form and substance to them, to the effect that (a) the Merger
will constitute a tax-free reorganization within the meaning of Section 368 of
the Code, (b) except with respect to fractional share interests, holders of
Central Jersey Stock who receive solely Summit Stock in the Merger will not
recognize gain or loss for federal income tax purposes, (c) the basis of such
Summit Stock (including any fractional share for which cash is received) will
equal the basis of the Central Jersey Stock for which it is exchanged and (d)
the holding period of such Summit Stock (including any fractional share for
which cash is received) will include the holding period of the Central Jersey
Stock for which it is exchanged, assuming that such Central Jersey Stock is a
capital asset in the hands of the holder thereof at the Effective Time.
In addition, no condition or set of facts or circumstances shall exist at
the Closing Date which will either (x) preclude any of the parties to this
Agreement from satisfying the terms or conditions of, or assumptions made in,
the Tax Opinions, as the case may be, or (y) result in any of the factual
assumptions contained in the Tax Opinions being untrue.
Section 6.04. ABSENCE OF LITIGATION. At the Closing Date, no investigation
by any state or federal agency, and no action, suit, arbitration or proceeding
before any court, state or federal agency, panel or governmental or regulatory
body or authority, shall have been instituted or threatened against Summit or
any of its subsidiaries, or Central Jersey or any of its subsidiaries, that is
material to the Merger or to the financial condition of Summit and its
subsidiaries taken as a whole or Central Jersey and its subsidiaries taken as a
whole, as the case may be. At the Closing Date, no order, decree, judgment, or
regulation shall have been entered or law or regulation adopted by any such
agency, panel, body or authority which enjoined or has a material adverse effect
upon the Merger or on the financial condition of Summit and its subsidiaries
taken as a whole or Central Jersey and its subsidiaries taken as a whole, as the
case may be.
Section 6.05. NYSE LISTING. At the Closing Date, the shares of Summit Stock
to be issued in the Merger shall have been listed on the New York Stock Exchange
subject to official notice of issuance.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SUMMIT
The obligation of Summit to consummate the Merger is subject to the
satisfaction of all of the following conditions, compliance with which or the
occurrence of which may be waived in whole or in part by Summit in writing in
accordance with Section 10.09:
Section 7.01. NO ADVERSE CHANGES. During the period from March 31, 1995 to
the Closing Date there shall not have been any Central Jersey Material Adverse
Change, and Central Jersey and its subsidiaries shall have not sustained any
material loss or damage to their properties, whether or not insured, which
materially affects the ability of Central Jersey and its subsidiaries, taken as
a whole, to conduct their business.
Section 7.02. REPRESENTATIONS AND COVENANTS. Except with respect to matters
resulting from transactions specifically contemplated by this Agreement, all
representations and warranties made by Central Jersey in this Agreement and the
Central Jersey Schedules and the material furnished pursuant to the Post-Signing
Disclosure List shall be true and correct in all material respects on the date
of this Agreement, and in all material respects on the Closing Date with the
same force and effect as if such representations and warranties were made on the
Closing Date. Central Jersey shall have complied in all material respects with
all covenants and agreements contained herein to be performed by Central Jersey
on or before the Closing Date.
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Section 7.03. SECRETARY'S CERTIFICATE. Central Jersey shall have furnished
to Summit a certificate dated the Closing Date to which shall be attached copies
of all resolutions adopted or minutes of actions taken by the Board of Directors
(including committees thereof) and shareholders of Central Jersey relating to
this Agreement, the Merger Agreement and the Merger and related transactions, a
copy of which resolutions shall be attached to such certificate, which such
certificate shall be signed by the Secretary of Central Jersey and certify to
the satisfaction of the condition set forth in Section 7.09 and the trueness,
correctness, completeness and continuing effectiveness of all resolutions and
actions contained or referenced in the aforementioned attachments.
Section 7.04. OFFICER'S CERTIFICATE. Central Jersey shall have furnished to
Summit a certificate signed by the President of Central Jersey, dated the
Closing Date, certifying to the satisfaction of the conditions set forth at
Sections 6.01, 6.02 (last clause), 6.03 (last paragraph) and Section 6.04, as
they relate to Central Jersey, and at Sections 7.01, 7.02, 7.07 and 7.10.
Section 7.05. OPINION OF CENTRAL JERSEY'S COUNSEL. Summit shall have
received an opinion of counsel to Central Jersey, dated the Closing Date and
reasonably satisfactory in form and substance to counsel for Summit,
substantially to the effect provided in Exhibit D.
Section 7.06. APPROVALS OF LEGAL COUNSEL. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all related legal matters shall be
reasonably satisfactory to counsel to Summit, and such counsel shall have been
furnished with certified copies of actions and proceedings and such other
documents and instruments as they shall have reasonably requested.
Section 7.07. CONSENTS TO CENTRAL JERSEY CONTRACTS. All consents, approvals
or waivers, in form and substance reasonably satisfactory to Summit, required to
be obtained in connection with the Merger from other parties to each mortgage,
note, lease, permit, franchise, loan or other agreement, or contract to which
Central Jersey or any of its subsidiaries is a party or by which they or any of
their assets or properties may be bound or committed, which contract is material
to the business, franchises, operations, assets or financial condition
(financial or otherwise) of Central Jersey and its subsidiaries on a
consolidated basis, shall have been obtained.
Section 7.08. FIRPTA AFFIDAVIT. Central Jersey shall have delivered to
Summit an affidavit of an executive officer of Central Jersey stating, under
penalties of perjury, that Central Jersey is not and has not been a United
States real property holding company (as defined in Section 897(c)(2) of the
Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
Section 7.09. SHAREHOLDER APPROVAL. The shareholders of Central Jersey, at
the meeting contemplated by this Agreement, shall have authorized and approved
the Merger and this Agreement and all transactions contemplated by this
Agreement as and to the extent required by all applicable laws and regulations
and the provisions of Central Jersey's Certificate of Incorporation and ByLaws.
Section 7.10. ABSENCE OF REGULATORY AGREEMENTS. Neither Central Jersey nor
any Central Jersey subsidiary shall be a party to any agreement or memorandum of
understanding with, or commitment letter to, or board of directors resolution
submitted to or similar undertaking made to, or be subject to any order or
directive by, or be a recipient of any extraordinary supervisory letter from,
any governmental or regulatory authority which restricts materially the conduct
of its respective business or has a material adverse effect upon the Merger or
upon the financial condition of Bank or Central Jersey and its subsidiaries
taken as a whole, and neither Central Jersey nor Bank shall have been advised by
any governmental or regulatory authority that such authority is contemplating
issuing or requesting, or considering the appropriateness of issuing or
requesting, any of the foregoing.
The receipt of the documents required by this Article VII by Summit shall
in no way constitute a waiver by Summit of any of the provisions of or its
rights under this Agreement.
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ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF CENTRAL JERSEY
The obligation of Central Jersey to consummate the Merger is subject to the
satisfaction of all of the following conditions, compliance with which or the
occurrence of which may be waived in whole or in part by Central Jersey in
writing in accordance with Section 10.09:
Section 8.01. NO ADVERSE CHANGES. During the period from December 31, 1995
to the Closing Date there shall not have been any Summit Material Adverse
Change, and Summit and its subsidiaries shall not have sustained any material
loss or damage to their properties, whether or not insured, which materially
affects the ability of Summit and its subsidiaries, taken as a whole, to conduct
their business.
Section 8.02. REPRESENTATIONS AND COVENANTS. Except with respect to matters
resulting from transactions specifically contemplated by this Agreement, all
representations and warranties made by Summit in this Agreement shall be true
and correct in all material respects on the date of this Agreement and, in all
material respects, on the Closing Date with the same force and effect as if such
representations and warranties were made on the Closing Date. Summit shall have
complied in all material respects with all covenants and agreements contained
herein or therein to be performed by Summit on or before the Closing Date. The
entry by Summit after the date hereof into any agreement to acquire any company
or other entity, the issuance of up to $1 billion of debt or equity or a
combination of debt and equity, and the issuance of Series R Preferred Stock
pursuant to Summit's Shareholder Rights Plan, the redemption or repurchase by
Summit of its Common Stock, Series B Adjustable Rate Cumulative Preferred Stock,
Series C Adjustable Rate Cumulative Preferred Stock, the Rights attached to
Summit Common Stock or the Series R Preferred Stock issuable pursuant to
Summit's Shareholder Rights Plan, and any transactions reasonably necessary or
appropriate in connection therewith, are specifically permitted by this
Agreement.
Section 8.03. SECRETARY'S CERTIFICATE. Summit shall have furnished to
Central Jersey a certificate dated the Closing Date to which shall be attached
copies of all resolutions adopted or minutes of actions taken by the Board of
Directors (including committees thereof) and shareholders of Summit relating to
this Agreement, the Merger Agreement and the Merger and related transactions, a
copy of which resolutions shall be attached to such certificate, which such
certificate shall be signed by the Secretary of Summit and certify to the
trueness, correctness, completeness and continuing effectiveness of all
resolutions and actions contained or referenced in the aforementioned
attachments.
Section 8.04. OFFICER'S CERTIFICATE. Summit shall have furnished to Central
Jersey a certificate signed by the Chairman, Vice Chairman, President or an
Executive Vice President of Summit, dated the Closing Date, certifying to the
satisfaction of the conditions set forth at Sections 6.01 and 6.02, the last
paragraph of Section 6.03, and Sections 6.04 and 6.05, as they relate to Summit,
and Sections 8.01, 8.02 and 8.08.
Section 8.05. OPINIONS OF SUMMIT COUNSEL. Central Jersey shall have
received an opinion of the General Counsel for Summit, dated the Closing Date
and reasonably satisfactory in form and substance to counsel for Central Jersey,
substantially to the effect provided in Exhibit E.
Section 8.06. APPROVALS OF LEGAL COUNSEL. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all related legal matters shall be
reasonably satisfactory to counsel to Central Jersey, and such counsel shall
have been furnished with certified copies of actions and proceedings and such
other documents and instruments as they shall have reasonably requested.
Section 8.07. FAIRNESS OPINION. The Proxy-Prospectus shall have contained
the favorable signed opinion of Advest, dated the date of the Proxy-Prospectus
or a date not more than five business days prior thereto, regarding the fairness
from a financial point of view of the consideration to be received by the
shareholders of Central Jersey in the Merger.
Section 8.08. ABSENCE OF REGULATORY AGREEMENTS. Neither Summit nor any of
its bank subsidiaries shall be a party to any agreement or memorandum of
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understanding with, or commitment letter to, or board of directors resolution
submitted to or similar undertaking made to, or be subject to any order or
directive by, or be a recipient of any extraordinary supervisory letter from,
any governmental or regulatory authority which restricts materially the conduct
of Summit's business or has a material adverse effect upon the Merger or upon
the financial condition of Summit and its subsidiaries taken as a whole, and
neither Summit nor any of its bank subsidiaries shall have been advised by any
governmental or regulatory authority that such authority is contemplating
issuing or requesting, or considering the appropriateness of issuing or
requesting, any of the foregoing.
Section 8.09. CENTRAL JERSEY SHAREHOLDER APPROVAL. The shareholders of
Central Jersey, at the meeting contemplated by this Agreement, shall have
authorized and approved the Merger and this Agreement and all transactions
contemplated by this Agreement as and to the extent required by all applicable
laws and regulations and the provisions of Central Jersey's Certificate of
Incorporation and ByLaws.
The receipt of the documents required by this Article VIII by Central
Jersey shall in no way constitute a waiver by Central Jersey of any of the
provisions of or its rights under this Agreement.
ARTICLE IX
CLOSING; TERMINATION RIGHTS
Section 9.01. CLOSING. Unless a different place and time are agreed to by
the parties hereto, the closing of the Merger (the "Closing") shall take place
on a date determined by Summit on at least five business days notice (the
"Closing Notice") given to Central Jersey, at the office of Summit, 301 Carnegie
Center, Princeton, New Jersey, commencing at 10:00 a.m., which date shall not be
later than 30 days after the last to occur of the following:
(a) the date of the approval of the Merger by the shareholders of Central
Jersey in accordance with Section 7.09;
(b) if the transactions contemplated by this Agreement are being contested
in any legal proceeding, the date that such proceeding has been brought to a
conclusion favorable, in the judgment of Summit and Central Jersey, to the
consummation of the transactions contemplated herein or such prior date as
Summit and Central Jersey shall elect, whether or not such proceeding has been
brought to a conclusion; or
(c) the date of receipt of the last of the Required Consents (and the
expiration of any required waiting period required by statute or incorporated
into such Required Consents);
Such date is sometimes referred to herein as the "Closing Date". In the
Closing Notice, Summit shall specify the "Determination Date" for purposes of
determining the Average Price, which date shall not be more than ten business
days prior to the Closing Date. At the Closing, the parties will exchange
certificates, legal opinions and other documents for the purpose of determining
whether the conditions precedent to the obligations of the parties set forth
herein have been satisfied or waived. After all such conditions have been
satisfied or waived, Summit shall cause the Certificate of Merger to be filed
with the New Jersey Secretary of State in accordance with Section 1.06. All
proceedings to be taken and all documents to be executed and delivered by all
parties at the Closing shall be deemed so taken, executed and delivered
simultaneously, and no proceedings shall be deemed taken or any documents
executed or delivered until all have been taken, executed or delivered.
Section 9.02. TERMINATION RIGHTS.
(a) The Boards of Directors of Central Jersey and Summit may terminate this
Agreement by mutual consent at any time prior to the Effective Time. In
addition, if either party shall refuse to close because, on the date on which
the Closing must be held as determined by Section 9.01, all the conditions
precedent to its obligation to close under Article VI shall not have been met,
the Board of Directors of such party may terminate this Agreement by giving
written notice of such termination to the other party. Furthermore, the Board of
Directors of either party may terminate this Agreement in the event that:
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(i) the shareholders of Central Jersey at the meeting of shareholders
contemplated by Section 4.03, called for the purpose of approving the
Merger, this Agreement and the transactions contemplated by this Agreement,
upon voting, shall have failed to approve the Merger, this Agreement and
the transactions contemplated hereby by the requisite vote, or
(ii) a material breach of a warranty or representation or covenant
made by the other party shall have occurred and such breach has not been
cured, or is not capable of being cured, within 30 days after written
notice of the existence thereof shall have been given to the other party
(provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein);
(iii) Central Jersey's investment banker is unable to deliver to
Central Jersey by September 30, 1996 the opinion required by Section
8.07; or
(iv) the Closing is not consummated on or before March 31, 1997, unless
the failure of such occurrence shall be due solely to the failure of the
party seeking to terminate this Agreement to perform or observe its
agreements set forth in this Agreement required to be performed or observed
by such party on or before the Closing Date.
(b) If either party shall refuse to close because, on the date on which the
Closing must be held as determined by Section 9.01, all the conditions to its
obligation to close (other than a condition set forth in Article VI) shall not
have been met (other than a failure of the condition set forth at Section 7.09
or 8.07 due to the circumstances set forth in Section 9.02(a)(i) hereof or a
failure of the condition set forth at Section 8.07 due to the circumstances set
forth at Section 9.02(a)(iii) hereof), the Board of Directors of such party may
terminate this Agreement by giving written notice of such termination to the
other party.
(c) Upon a termination of this Agreement pursuant to this Section 9.02 or
Sections 1.03(a)(2) or 1.03(a)(3) hereof:
(i) the obligations of the parties under this Agreement (except for
those under this Section 9.02 and Sections 4.13 and 5.08) shall terminate
and be of no further force or effect and each party shall be mutually
released and discharged from liability to the other party or to any third
parties hereunder, and
(ii) no party shall be liable to any other party for any costs or
expenses paid or incurred in connection herewith by such other party,
except that expenses incurred in connection with printing the Proxy
Statement and the Registration Statement, and the filing fees of regulatory
authorities or self-regulatory organizations, shall be borne equally by
Summit and Central Jersey; provided, however, that: (A) if Central Jersey
terminates this Agreement pursuant to Section 9.02(a)(ii) or Section
9.02(b), Summit shall reimburse Central Jersey for its out-of-pocket
expenses reasonably incurred in connection with this Agreement, including
counsel fees and the printing and filing fees referred to above, but
excluding any brokers', finders' or investment bankers' fees; and (B) if
Summit terminates this Agreement pursuant to Section 9.02(a)(ii), Section
9.02(b) or Section 9.02(d), Central Jersey shall reimburse Summit for its
out-of-pocket expenses reasonably incurred in connection with this
Agreement, including counsel fees and the printing and filing fees referred
to above, but excluding any brokers', finders' or investment bankers' fees.
(d) The Board of Directors of Summit may terminate this Agreement if
Central Jersey does not execute and deliver the Option Agreement by the day
immediately following the date hereof.
(e) Notwithstanding any termination of this Agreement, (i) Central Jersey
shall indemnify and hold Summit harmless from and against any claim by any
broker or finder asserting a right to brokerage commissions or finders' fees as
a result of any action allegedly taken by or understanding allegedly reached
with Central Jersey and (ii) Summit shall indemnify and hold Central Jersey
harmless from and against any claim by any broker or finder asserting a right to
brokerage commissions or finders' fees as a result of any action allegedly taken
by or understanding allegedly reached with Summit.
(f) Except as provided otherwise herein in the event of a termination of
this Agreement, Central Jersey and its subsidiaries shall bear their own
expenses incident to preparing, entering into and carrying out this Agreement
and to consummating the Merger, provided, however, that Summit shall pay all
printing expenses and filing fees associated with the Registration Statement,
the Proxy-Prospectus and regulatory applications.
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ARTICLE X
MISCELLANEOUS
Section 10.01. PRESS RELEASES. At all times until the Closing Date or the
termination of this Agreement, each party shall promptly advise and consult with
the other prior to issuing, or permitting any of its subsidiaries, directors,
officers, employees or agents to issue, any press release or other information
to the press or any third party with respect to this Agreement, or the
transactions contemplated hereby.
Section 10.02. ARTICLE AND SECTION HEADINGS. Article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 10.03. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the Central
Jersey Schedules, and the Exhibits hereto constitute the entire agreement
between the parties pertaining to the subject matter hereof and supersede all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as specifically set forth
herein or therein. No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby (or in the case of a termination occurring pursuant to Section 9.02
hereof by the party exercising a right to terminate this Agreement). No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof or thereof (whether or not similar), nor
shall any waiver constitute a continuing waiver unless otherwise expressly
provided in the instrument granting such waiver. The parties hereto may amend or
modify this Agreement in such manner as may be agreed upon by a written
instrument executed by the parties, except that, after the meeting described in
Section 7.09 hereof, no such amendment or modification shall reduce the amount
of, or change the forms of consideration to be received by the shareholders of
Central Jersey contemplated by this Agreement, unless such modification is
submitted to a vote of the shareholders of Central Jersey.
Section 10.04. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. No
investigation made by the parties hereto made heretofore or hereafter shall
affect the representations and warranties of the parties which are contained
herein and each such representation and warranty shall survive such
investigation. None of the representations, warranties, covenants and agreements
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time, except for those representations, covenants
and agreements contained herein and therein which by their terms apply in whole
or in part after the Effective Time.
Section 10.05. NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing, and shall be deemed to have been given,
unless otherwise specified in a particular provision of this Agreement, if
placed in the mail, registered or certified, postage prepaid, or if delivered
personally or by courier, receipt requested, or by facsimile transmission,
receipt acknowledged addressed as follows:
Summit: Summit Bancorp.
Attn: John G. Collins
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066Telephone No.: 609-987-3422
Facsimile No.: 609-98-3435
With a copy to: Richard F. Ober, Jr., Esq.
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066Telephone No.: 609-987-3430
Facsimile No.: 609-987-3435
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Central Jersey: Central Jersey Financial Corporation
591 Cranbury Road
East Brunswick, New Jersey 08816
Attention: Mrs. L. Doris Fritsch, President
Telephone No.: 908-254-6600
Facsimile No.: 908-254-5364
With a copy to: John J. Spidi, Esq.
Malizia, Spidi, Sloane & Fisch, P.C.
1301 K Street, N.W., Suite 700 East
Washington, DC 20005
Telephone No.: 202-434-4660
Facsimile No.: 202-434-4661
or to such other address as such party may designate by notice to the others,
which change of address shall be deemed to have been given upon receipt.
A notice or other communication hereunder shall be deemed delivered (i) if
mailed by certified or registered mail to the proper address, with adequate
postage prepaid, on the fifth business day following posting or (ii) if
delivered by other means, when received by the party to whom it is directed.
Section 10.06. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey,
without giving effect to the provisions, policies or principles thereof relating
to choice or conflict of laws.
Section 10.07. COUNTERPARTS. This Agreement is being executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Section 10.08. BINDING EFFECT. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Section 10.09. EXTENSIONS; WAIVERS AND CONSENTS. Either party hereto, by
written instrument signed by its Chairman, Vice Chairman, President, or Chief
Financial Officer, may extend the time for the performance of any of the
obligations of the other party hereto, and may waive, at any time before or
after approval of this Agreement and the transactions contemplated hereby by the
shareholders of Bank, subject to the provisions of Section 10.03 hereof: (i) any
inaccuracies of the other party in the representations and warranties in this
Agreement or any other document delivered pursuant hereto or thereto; (ii)
compliance with any of the covenants or agreements of the other party contained
in this Agreement; (iii) the performance (including performance to the
satisfaction of a party or its counsel) by the other party of any of its
obligations hereunder or thereunder; and (iv) the satisfaction of any conditions
to the obligations of the waiving party hereunder or thereunder. Any consent or
approval of a party hereunder shall be effective only if signed by the Chairman,
Vice Chairman, President or Chief Financial Officer of such party. Subject to
Section 10.03, no such instrument, consent or approval may modify the form or
amount of consideration to be received by the shareholders of Central Jersey.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in counterparts by their duly authorized officers as of the date first above
written.
SUMMIT BANCORP.
By: /s/ JOHN G. COLLINS
---------------------------------------
John G. Collins
Vice Chairman of the Board
CENTRAL JERSEY FINANCIAL CORPORATION
By: /s/ L. DORIS FRITSCH
---------------------------------------
L. Doris Fritsch
President
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AMENDMENT NO. 1
TO THE
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1, dated August 20, 1996, to the Agreement and Plan of
Merger, dated May 22, 1996, between Summit Bancorp., a New Jersey business
corporation ("Summit"), and Central Jersey Financial Corporation, a New Jersey
business corporation ("Central Jersey").
W I T N E S S E T H:
WHEREAS, on May 22, 1996, Summit and Central Jersey entered into the
Agreement and Plan of Merger providing, among, other things, for the merger of
Central Jersey into Summit and the exchange of outstanding shares of Central
Jersey common stock for shares of Summit common stock at the exchange ratio
determined in accordance with the Agreement and Plan of Merger; and
WHEREAS, both Summit and Central Jersey deem it advisable and in their
respective best interests to clarify certain procedures relevant to the
determination of the aforedescribed exchange ratio.
NOW, THEREFORE, in consideration of the mutual convenants contained herein
and intending to be legally bound, the parties hereto agree as follows:
1. Section 1.03(a)(2) of the Agreement and Plan of Merger dated May 22, 1996
between Central Jersey Financial Corporation and Summit Bancorp. ("Merger
Agreement") is amended in its entirety to read as follows:
(2) Subject to Sections 1.03(a)(1) and 1.08, each shares of Central Jersey
Stock outstanding immediately prior to the Effective Time shall be
converted into the Common Stock, par value $1.20 per share, of Summit
("Summit Stock") at the Exchange Ratio determined in accordance with
the following:
(i) In the event the Average Price (as defined in Section 1.03(b)
below) is equal to or greater than $32.57, the Exchange Ratio
shall be .875 shares of Summit Stock for each share of Central
Jersey Stock,
(ii) In the event the Average Price is less than $32.57 but equal to
or greater than $28.75, the Exchange Ratio shall be equal to the
quotient obtained by dividing $28.50 by the Average Price,
whereupon the Exchange Ratio shall be such number (rounded to the
fourth decimal place) of shares of Summit Stock for each share of
Central Jersey Stock.
(iii)In the event the Average Price is less than $28.75, the Exchange
Ratio shall be .9913 shares of Summit Stock for each share of
Central Jersey Stock; provided, however, that, in such event and
notwithstanding the foregoing, the Board of Directors of Central
Jersey shall have the right, exercisable only until 11:59 p.m. on
the third business day following the later to occur of the
Determination Date (as defined in Section 9.01) or the date that
Central Jersey receives the Closing Notice (as defined in Section
9.01), to terminate this Agreement by giving Summit notice of
such termination, referring to this proviso in Section
1.03(a)(2)(iii), and this Agreement shall be terminated pursuant
to such notice, effective upon receipt of such notice by Summit.
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2. Section 1.03(a)(3) of the Merger Agreement is hereby amended by deleting it
in its entirety.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be
executed by their duly authorized officers as of the dated first above written.
SUMMIT BANCORP.
By
-------------------------------------
John G. Collins
Vice Chairman of the Board
CENTRAL JERSEY FINANCIAL CORPORATION
By
-------------------------------------
L. Doris Fritsch
President
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APPENDIX B
August ____, 1996
Board of Directors
Central Jersey Financial Corporation
591 Cranbury Road
East Brunswick, New Jersey 08816
Members of the Board:
Central Jersey Financial Corporation ("Central Jersey") and Summit Bancorp.
("Summit") entered into an Agreement and Plan of Merger dated as of May 22, 1996
(the "Agreement"), pursuant to which Central Jersey will be merged into Summit
in a merger transaction (the "Merger").
The Agreement provides that each outstanding share of Central Jersey common
stock, no par value, will be converted into .875 shares of Summit common stock,
par value $1.20 per share, (the "Exchange Ratio"), subject to adjustments under
certain circumstances. In addition, Central Jersey has the right to declare, set
aside and pay cash dividends per share on Central Jersey common stock equivalent
in amount to the cash dividends per share declared by Summit multiplied by the
Exchange Ratio up until the Effective Time (the "Equivalent Rate Dividend"). The
terms and conditions of the proposed transaction are described in more detail in
the Agreement. The Agreement is expected to be considered by the shareholders of
Central Jersey at a shareholders' meeting and consummated shortly after the
receipt of shareholder and state and federal regulatory approvals.
In connection with executing the Agreement, Central Jersey entered into a
Stock Option Agreement (the "Option Agreement") dated May 23, 1996, pursuant to
which Central Jersey granted Summit an option to acquire up to 530,986 shares of
Central Jersey common stock at a price of $27 per share, exercisable upon the
occurence of certain events specificed in the Option Agreement.
You have asked us whether, in our opinion, the Exchange Ratio is fair, from
a financial point of view, to the shareholders of Central Jersey.
In arriving at the opinion set forth below, we have, among other things:
reviewed the Proxy Statement--Prospectus dated August ____, 1996, reviewed the
Agreement and the exhibits and schedules thereto; reviewed the Option Agreement;
reviewed the Annual Reports on Form 10- K for Summit for the three fiscal years
ended December 31, 1995, as well as unaudited financial information for the
quarter and six months ended June 30, 1996; reviewed the Annual Reports on Form
10-K for Central Jersey for the three years ended March 31, 1996, as well as
unaudited financial information for the quarter ended June 30, 1996; reviewed
certain financial information as filed with federal banking agencies for the
three years ended December 31, 1995, as well as the six months ended June 30,
1996, for each of Central Jersey and Summit; reviewed comparative financial and
operating data on the banking industry and certain institutions which were
deemed to be comparable to the companies; reviewed the historical market prices
and trading activity for the common stocks of each of Central Jersey and Summit
and compared them with certain publicly-traded companies which were deemed to be
comparable to each company; considered the beneficial financial impact to the
shareholders of Central Jersey of the Equivalent Rate Dividend; reviewed certain
thrift mergers and acquisitions on a state, regional and nationwide basis for
institutions which were deemed to be comparable to Central Jersey and compared
the proposed consideration with the financial terms of certain other mergers and
acquisitions which were deemed relevant; conducted discussions with members of
senior management of Central Jersey and conducted limited discussions with
members of senior management of Summit concerning the financial condition,
business and prospects of each respective company; and reviewed such other
financial information, studies and analyses and performed such other
investigations and took into account such other matters as we deemed necessary.
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In preparing this opinion we have assumed and relied on the accuracy and
completeness of all financial and other information reviewed by us for the
purposes of this opinion, and we have not independently verified such
information nor we have undertaken an independent evaluation of the assets or
liabilities of Central Jersey or Summit. Advest has been retained by the Board
of Directors of Central Jersey to act as financial advisor toCentral Jersey with
respect to the Merger and will receive a fee for its services including a fee
for this opinion. This opinion is necessarily based upon circumstances and
conditions as they exist and can be evaluated by us as of the date of this
letter. Our opinion is directed to the Board of Directors of Central Jersey and
does not constitute a recommendation of any kind to any shareholder of Central
Jersey as to how such shareholder should vote at the shareholders' meeting to be
held in connection with the Merger. We have assumed for purposes of this opinion
that there has been no material change in the financial condition of either
Central Jersey or Summit from that existing on June 30, 1996.
In reliance upon and subject to the foregoing, it is our opinion that, as
of the date hereof, the Exchange Ratio is fair, from a financial point of view,
to the stockholders of Central Jersey.
Very truly yours,
Advest, Inc.
By:_____________________
Michael T. Mayes
Managing Director
and Group Head
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APPENDIX C
CENTRAL JERSEY FINANCIAL CORPORATION 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 23rd day of May, 1996 (this
"Agreement"), between Summit Bancorp., a New Jersey corporation ("Grantee"), and
Central Jersey Financial Corporation, 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 22nd day of May,
1996 (the "Merger Agreement"). (Capitalized terms used in this Agreement and not
defined herein but defined in the Merger Agreement shall have the meanings
assigned thereto in the Merger Agreement); and
WHEREAS, as a condition and inducement to Grantee's entering into the
Merger Agreement and in consideration therefor, Grantee has required that Issuer
agree, and Issuer has agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
Section 1. GRANT OF OPTION. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 530,986 fully paid and nonassessable shares of the common
stock, no par value, of Issuer ("Common Stock") at a price equal to $27.00 per
share (such price, as adjusted as hereinafter provided, the "Option Price"). The
number of shares of Common Stock that may be received upon the exercise of the
Option and the Option Price are subject to adjustment as herein set forth. In no
event shall the number of shares of Common Stock for which this Option is
exercisable exceed 19.9% of the number of shares of Common Stock then issued and
outstanding (without consideration of any shares of Common Stock subject to or
issued pursuant to the Option).
Section 2. EXERCISE OF OPTION.
(a) Grantee may exercise the Option, in whole or part, at any time and from
time to time following the occurrence of a Purchase Event (as defined below);
provided that the Option shall terminate and be of no further force and effect
upon the earliest to occur of (i) the time immediately prior to the Effective
Time, (ii) the termination of the Merger Agreement in accordance with the terms
thereof prior to the occurrence of an Extension Event, other than a termination
of the Merger Agreement by the Grantee pursuant to Section 9.02(a)(ii) thereof,
or (iii) 12 months after the termination of the Merger Agreement following the
occurrence of an Extension Event (as defined below), or the termination of the
Merger Agreement by Grantee pursuant to Section 9.02(c)(ii) thereof, 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, if, at the time of exercise, Grantee is in material breach of
any material covenant or obligation contained in the Merger Agreement and, if
the Merger Agreement has not terminated prior thereto, such breach would entitle
Issuer to terminate the Merger Agreement. The events described in clauses
(i)--(iii) in the preceding sentence are hereinafter collectively referred to as
Exercise Termination Events. As provided in Section 7, the rights set forth
therein shall terminate upon an Exercise Termination Event and, as provided in
Section 6 hereof, the rights to deliver requests pursuant to Section 6 shall
terminate 12 months after an Exercise Termination Event, subject, in such case,
to the provisions of Section 8.
(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
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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
75% of the combined voting power of the voting securities of the Issuer or
the surviving entity outstanding after the consummation of such merger,
consolidation, or similar transaction, or (ii) any internal merger or
consolidation involving only Issuer and/or Issuer Subsidiaries, be deemed
to be an Acquisition Transaction, provided that any such transaction is not
entered into in violation of the terms of the Merger Agreement;
(ii) Any person (other than Grantee or any Grantee Subsidiary) shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of securities representing 10% or more of the aggregate voting
power of Issuer or any Bank Subsidiary (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto in Section
13(d) of the 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"), the Office of Thrift Supervision of the Department of
Treasury ("OTS") 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 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).
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(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 40 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,
OTS or any other Governmental Authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run from the later of (x)
the date on which any required notification periods have expired or been
terminated and (y) the date on which such approvals have been obtained and any
requisite waiting period or periods shall have expired. For purposes of Section
2(a), any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto. Grantee shall have the right to revoke its proposed exercise
of the Option in the event that the transaction constituting a Purchase Event
that gives rise to such right to exercise shall not have been consummated prior
to exercise of the Option, pursuant to the statement of such right in the
written notice exercising the Option as provided in clause 2(e)(iii) above.
(f) At the closing referred to in Section 2(e), Grantee shall surrender
this Agreement (and the Option granted hereby) to Issuer and pay to Issuer the
Option Price for the shares of Common Stock purchased pursuant to the exercise
of the Option in immediately available funds by wire transfer to a bank account
designated by Issuer; provided, however, that failure or refusal of Issuer to
designate such a bank account shall not preclude Grantee from exercising the
Option.
(g) At such closing, simultaneously with the delivery of the Option Price
in immediately available funds as provided in Section 2(f), Issuer shall deliver
to Grantee a certificate or certificates representing the number of shares of
Common Stock purchased by Grantee and, if the Option should be exercised in part
only, a new Option Agreement granting a new Option evidencing the rights of
Grantee thereof to purchase the balance of the shares of Common Stock
purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder shall be
endorsed with a restrictive legend substantially as follows:
"The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended, and to certain provisions of an agreement between Summit Bancorp.
and Central Jersey Financial Corporation ("Issuer") dated as of the 23rd
day of May, 1996. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof without charge
upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if Grantee shall
have delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission (the "SEC"), or an opinion of counsel, in form and substance
satisfactory to Issuer and its counsel, to the effect that such legend is not
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required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of the written notice of
exercise of the Option provided for in Section 2(e) and the tender of the
Option Price on the Closing Date in immediately available funds, Grantee
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books
of Issuer shall then be closed or that certificates representing such
shares of Common Stock shall not then actually be delivered to Grantee.
Issuer shall pay all expenses and any and all United States federal, state
and local taxes and other charges that may be payable in connection with
the preparation, issue and delivery of stock certificates under this
Section 2 in the name of Grantee or its nominee.
Section 3. RESERVATION OF SHARES. Issuer agrees: (i) that it shall at all
times until the termination of this Agreement have reserved for issuance upon
the exercise of the Option that number of authorized shares of Common Stock
equal to the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, all of which shares will, upon issuance pursuant
hereto, be duly authorized, validly issued, fully paid, nonassessable, and
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. ss. 18a and regulations promulgated
thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as
amended (the "BHC Act"), the Home Owners' Loan Act of 1933 ("HOLA") or the
Change in Bank Control Act of 1978, as amended, or any state banking law, prior
approval of or notice to the Federal Reserve Board or to any other Governmental
Authority is necessary before the Option may be exercised, cooperating with
Grantee in preparing such applications or notices and providing such information
to the Federal Reserve Board and each other Governmental Authority as they may
require) in order to permit Grantee to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto; and (iv) to take
all action provided herein to protect the rights of Grantee against dilution.
Section 4. DIVISION OF OPTION. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any agreements and related options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
Section 5. ADJUSTMENT UPON CHANGE OF CAPITALIZATION. The number of shares
of Common Stock purchasable upon the exercise of the Option shall be subject to
adjustment from time to time as follows:
(a) Subject to the last sentence of Section 1, in the event of any change
in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
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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 such Exercise Termination Event,
promptly prepare, file and keep current a registration statement under the
Securities Act relating to a delayed or continuous offering (as contemplated by
Rule 415 of the SEC under the Securites Act) (a "shelf registration") covering
this Option and any shares issued and issuable pursuant to the Option (the
"Option Shares") and shall use its best efforts to cause such registration
statement to become effective and remain current and to qualify this Option or
any such Option Shares or other securities for sale under any applicable state
securities laws in order to permit the sale or other disposition of this Option
or any Option Shares in accordance with any plan of disposition requested by
Grantee; provided, however, that Issuer may postpone filing a registration
statement relating to a registration request by Grantee under this Section 6 for
a period of time (not in excess of 90 days) if in its judgment such filing would
require the disclosure of material information that Issuer has a bona fide
business purpose for preserving as confidential. Issuer will use its best
efforts to cause such registration statement first to become effective as soon
as practicable after the filing thereof and then to remain effective for such
period not in excess of 180 days from the day such registration statement first
becomes effective, or such shorter time as may be necessary to effect such sales
or other dispositions. Grantee shall 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.
(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 one registration 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; provided, however, that
such registration shall be a shelf registration as provided above.
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(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) in connection
with the 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.
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
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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.
Section 7. SUBSTITUTE OPTION IN THE EVENT OF CORPORATE CHANGE.
(a) In the event that prior to an Exercise Termination Event, Issuer shall
enter into an agreement (i) to consolidate or merge with any person, other than
Grantee or a Grantee Subsidiary, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than Grantee or a Grantee Subsidiary, to merge into Issuer and Issuer shall be
the continuing or surviving corporation, but, in connection with such merger,
the then outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other person or cash or any other property
or the then outstanding shares of Common Stock shall after such merger represent
less than 50% of the aggregate voting power of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any person,
other than Grantee or a Grantee Subsidiary, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Grantee, of either (x) the Acquiring
Corporation (as defined below) or (y) any person that controls the Acquiring
Corporation (the Acquiring Corporation and any such controlling person being
hereinafter referred to as the Substitute Option Issuer)
(b) The Substitute Option shall be exercisable for such number of shares of
the Substitute Common Stock (as is hereinafter defined) as is equal to the
market/offer price (as defined below) 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. The
term "market/offer price" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof and on or prior to the Request Date, (ii) the price per
share of Common Stock paid or to be paid by any third party pursuant to an
agreement with Issuer (whether by way of a merger, consolidation or otherwise),
(iii) the highest last sale price for shares of Common Stock within the 90-day
period ending on the Request Date quoted on the Nasdaq National Market (as
reported by The Wall Street Journal, or, if not reported thereby, another
authoritative source), (iv) in the event of a sale of all or substantially all
of Issuer's assets, the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of Issuer as determined by a
nationally-recognized independent investment banking firm selected by Grantee or
the Owner, as the case may be, divided by the number of shares of Common Stock
outstanding at the time of such sale. In determining the market/offer price, the
value of consideration other than cash shall be determined by a
nationally-recognized independent investment banking firm selected by Grantee or
the Owner, as the case may be, whose determination shall be conclusive and
binding on all parties.
(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.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
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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 8. EXTENSION OF TIME FOR REGULATORY APPROVALs. Notwithstanding
Sections 2(e), 6 and 10 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 12
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, OTS 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 12
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 and 10, 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 8.
Section 9. 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 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 executed and delivered by, and constitutes a valid and
binding obligation of, Issuer, enforceable against Issuer in accordance with its
terms, except as enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and institutions the deposits of
which are insured by the Federal Deposit Insurance Corporation and except that
the availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
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(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 10. 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 or the OTS approves an application by Grantee under
HOLA 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 or OTS. Grantee will pay any reasonable out-of-pocket
costs and expenses of Issuer in connection with any such assignment. The term
"Grantee" as used in this Agreement shall also be deemed to refer to Grantee's
permitted assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
"The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising under
the Securities Act of 1933, as amended and to certain provisions of an
agreement between Summit Bancorp. and Central Jersey Financial Corporation
("Issuer") dated as of the 23rd day of May, 1996. A copy of such agreement
is on file at the principal office of Issuer and will be provided to any
permitted assignee of the Option without change upon receipt by Issuer of a
written request therefor."
It is understood and agreed that (i) the reference to the resale
restrictions of the Securities Act in the above legend shall be removed by
delivery of substitute assignments without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel, in form and substance satisfactory to Issuer and its counsel, 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.
C-9
<PAGE>
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, the OTS 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, the OTS
under HOLA and to state banking authorities for approval to acquire the shares
issuable hereunder.
Section 13. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties shall hereto be enforceable
by either party hereto through injunctive or other equitable relief. Both
parties further agree to waive any requirement for the securing or posting of
any bond in connection with the obtaining of any such equitable relief and that
this provision is without prejudice to any other rights that the parties hereto
may have for any failure to perform this Agreement.
Section 14. SEPARABILITY OF PROVISIONS. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated. If for any reason such
court or regulatory agency determines that Grantee is not permitted to acquire,
or Issuer is not permitted to repurchase, pursuant to Section 7, the full number
of shares of Common Stock provided in Section 1 (as adjusted pursuant hereto),
it is the express intention of Issuer to allow Grantee to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible, without
any amendment or modification hereof.
Section 15. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
Section 16. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
Section 17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 18. EXPENSES. Except as otherwise expressly provided herein, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
Section 19. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. Except as
otherwise expressly provided herein or in the Merger Agreement, this Agreement
contains the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto 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.
C-10
<PAGE>
Section 22. FURTHER ASSURANCES. In the event of any exercise of the Option
by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
Section 23. NO RIGHTS AS SHAREHOLDER. Except to the extent Grantee
exercises the Option, Grantee shall have no rights to vote or receive dividends
or have any other rights as a shareholder with respect to shares of Common Stock
covered hereby.
Section 24. GRANTEE REPRESENTATION. The Option and any Option Shares or
other securities acquired by Grantee upon exercise of the Option are not being,
and will not be, as the case may be, acquired with a view to the public
distribution thereof in the United States except as provided for in Sections 6
and 11 hereof and neither the Option nor any Option Shares or other securities
acquired by Grantee upon exercise of the Option will be transferred or otherwise
disposed of by Grantee except in a transaction registered or exempt from
registration under the Securities Act.
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
Summit Bancorp.
By /s/ John G. Collins
---------------------------------
John G. Collins
VICE CHAIRMAN OF THE BOARD
Central Jersey Financial Corporation
BY /S/ L. DORIS FRITSCH
---------------------------------
L. Doris Fritsch
PRESIDENT
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<PAGE>
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 Summit Bancorp. 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 shall be selected by the Board of
Directors and paid by the Corporation. If it is so determined that the
claimant is entitled to indemnification, payment to the claimant shall be
made within 20 days after such determination.
II-1
<PAGE>
(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 in representing either the
Corporation or the claimant in an action to determine the
claimant's rights under this By-Law.
II-2
<PAGE>
(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 Summit'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.
Summit carries officers' and directors' liability insurance policies which
provide coverage afainst judgments, settlements and legal costs incurred because
of actual or asserted acts of such officers and directors of Summit 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:
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2 Agreemant and Plan of Merger dated May 22, 1996 between
Central Jersey 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 C to the Proxy Statement-Prospectus
included in this Registration Statement and Exhibits B
through E thereto incorporated by reference to Exhibit
(2) to the Current Report on Form 8-K of Summit, dated
May 22, 1996).
3(a) Restated Certificate of Incorporation of Summit, as
restated March 1, 1996 (incorporated by reference to
Exhibit (3)A. on Form 10-K for the year ending December
31, 1995).
(b) By-Laws of Summit as amended through October 18, 1995
(incorporated by reference to Exhibit (3)B. on Form 10-K
for the year ending December 31, 1995).
* 5 Opinion of Richard F. Ober, Jr., Esq. regarding legality
of securities being issued.
* 8 Opinion of Thompson Coburn, regarding tax matters.
10 Central Jersey Financial Corporation Stock Option
Agreement - included as Appendix C to the Proxy
Statement-Prospectus included with this Registration
Statement.
23(a) Consent of KPMG Peat Marwick LLP
(b) Consent of Coopers & Lybrand LLP
* (c) Consent of Richard F. Ober, Jr., Esq.--included in his
opinion filed as Exhibit 5 to this Registration
Statement.
* (d) Consent of Thompson Coburn--included in its opinion
filed as Exhibit 8 to this Registration Statement.
24 Power of Attorney--included on the signature page.
99(a) Form of Central Jersey Proxy
(b) Opinion of Advest, Inc.--included as Appendix B to the
Proxy Statement-Prospectus included in this Registration
Statement.
* (c) Consent of Advest, Inc.
* To be filed by amendment.
(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 3(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.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement 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 6th of August, 1996.
SUMMIT BANCORP.
By: /s/ T. JOSEPH SEMROD
---------------------------------------
T. Joseph Semrod
Chairman of the Board of Directors
KNOW ALL PEOPLE BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints T. Joseph Semrod, Robert G. Cox, John R.
Haggerty, William J. Healy and Richard F. Ober, Jr., and each of them, the
undersigned's true lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do, or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 6th day of August, 1996 by
the following persons in the capacities indicated.
SIGNATURES TITLES
---------- ------
/s/ T. Joseph Semrod Chairman of the Board of Directors
- ---------------------------------
T. Joseph Semrod (Chief Executive Officer)
/s/ Robert G. Cox President and Director
- ---------------------------------
Robert G. Cox
/s/ John R. Haggerty Senior Executive Vice President-Finance
- ----------------------------------
John R. Haggerty (Principal Financial Officer)
/s/ William J. Healy Executive Vice President and Comptroller
- ----------------------------------
William J. Healy (Principal Accounting Officer)
/s/ S. Rodgers Benjamin Director
- ----------------------------------
S. Rodgers Benjamin
/s/ Robert L. Boyle Director
- ----------------------------------
Robert L. Boyle
/s/ James C. Brady, Jr. Director
- ----------------------------------
James C. Brady, Jr.
/s/ John G. Collins Director
- ----------------------------------
John G. Collins
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<PAGE>
SIGNATURES TITLES
---------- ------
/s/ T.J. Dermot Dunphy Director
- ----------------------------------
T.J. Dermot Dunphy
/s/ Anne Evans Estabrook Director
- ----------------------------------
Anne Evans Estabrook
/s/ Elinor J. Ferdon Director
- ----------------------------------
Elinor J. Ferdon
/s/ Fred G. Harvey Director
- ----------------------------------
Fred G. Harvey
/s/ John R. Howell Director
- ----------------------------------
John R. Howell
/s/ Francis J. Mertz Director
- ----------------------------------
Francis J. Mertz
/s/ George L. Miles, Jr. Director
- ----------------------------------
George L. Miles, Jr.
/s/ Henry S. Patterson II Director
- ----------------------------------
Henry S. Patterson II
/s/ Thomas D. Sayles, Jr. Director
- ----------------------------------
Thomas D. Sayles, Jr.
/s/ Raymond Silverstein Director
- ----------------------------------
Raymond Silverstein
/s/ Orin R. Smith Director
- ----------------------------------
Orin R. Smith
/s/ Joseph M. Tabak Director
- ----------------------------------
Joseph M. Tabak
/s/ Douglas G. Watson Director
- ----------------------------------
Douglas G. Watson
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2 Agreemant and Plan of Merger dated May 22, 1996 between
Central Jersey 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 C to the Proxy Statement-Prospectus
included in this Registration Statement and Exhibits B
through E thereto incorporated by reference to Exhibit
(2) to the Current Report on Form 8-K of Summit, dated
May 22, 1996).
3(a) Restated Certificate of Incorporation of Summit, as
restated March 1, 1996 (incorporated by reference to
Exhibit (3)A. on Form 10-K for the year ending December
31, 1995).
(b) By-Laws of Summit as amended through October 18, 1995
(incorporated by reference to Exhibit (3)B. on Form 10-K
for the year ending December 31, 1995).
* 5 Opinion of Richard F. Ober, Jr., Esq. regarding
legality of securities being issued.
* 8 Opinion of Thompson Coburn, regarding tax matters.
10 Central Jersey Financial Corporation Stock Option
Agreement--included as Appendix C to the Proxy
Statement-Prospectus included with this Registration
Statement.
23(a) Consent of KPMG Peat Marwick LLP
(b) Consent of Coopers & Lybrand LLP
* (c) Consent of Richard F. Ober, Jr., Esq.--included in
his opinion filed as Exhibit 5 to this Registration
Statement.
* (d) Consent of Thompson Coburn--included in its opinion
filed as Exhibit 8 to this Registration Statement.
24 Power of Attorney--included on the signature page.
99(a) Form Of Central Jersey Proxy
(b) Opinion of Advest, Inc.--included as Appendix B to the
Proxy Statement-Prospectus included in this Registration
Statement.
* (c) Consent of Advest, Inc.
* To be filed by amendment.
(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-8
AUDITORS' CONSENT
Board of Directors
Summit Bancorp:
We consent to the use of our report relating to the combined consolidated
financial statements of Summit Bancorp and subsidiaries dated January 16, 1996,
except as to the first and fourth paragraphs of Note 2, which are as of March 1,
1996, incorporated herein by reference, and to the reference to our Firm under
the heading "Experts" in the registration statement/proxy statement-prospectus.
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.
/s/ KPMG Peat Marwick LLP
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KPMG Peat Marwick LLP
Short Hills, New Jersey
August 2, 1996
| Coopers | Coopers & Lybrand L.L.P.
| &Lybrand | a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4
(File No. 333- ) of our report dated May 23, 1996, on our audits of the
consolidated financial statements of financial condition of Central Jersey
Financial Corporation and subsidiary as of March 31, 1996 and 1995 and the
related consolidated statements of operations, stockholders equity and cash flow
for each of the years in the three-year period ended March 31, 1996. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand LLP
New York, New York
August 5, 1996
CENTRAL JERSEY FINANCIAL CORPORATION
591 Cranbury Road
East Brunswick, New Jersey 08816
(908) 254-6600
ANNUAL MEETING OF STOCKHOLDERS
__________ ____, 1996
The undersigned hereby appoints Domenick Carratello, James J. Kelly and
Robert V. Noreika and each of them, with full powers of substitution, to act as
attorneys and proxies for the undersigned, to vote all shares of Common Stock of
Central Jersey Financial Corporation (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders, to be held at the East
Brunswick Chateau, 678 Cranbury Road, East Brunswick, New Jersey, on ________,
________, 1996, at ____:____.m., and at any and all adjournments thereof, as
follows:
1. A proposal to approve an Agreement and Plan of Merger, dated May 22,
1996 between the Company and Summit Bancorp. ("Summit"), under which the Company
will be merged with and into Summit and shareholders of the Company will receive
Summit common stock, $1.20 par value, and cash in lieu of fractional shares for
Company common stock, no par value, held by them, subject to adjustment in
certain circumstances, as more fully described in the accompanying proxy
statement.
VOTE VOTE
FOR AGAINST ABSTAIN
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[ ] [ ] [ ]
2. The election as a director of all nominees listed below for three-year terms
(except as marked below to the contrary).
Domenick Carratello VOTE VOTE
John J. Doherty FOR WITHHELD
Arthur E. Fritsch, Jr. ----- --------
Robert V. Noreika
[ ] [ ]
INSTRUCTIONS: To withhold your vote for any individual nominee, insert that
nominee's name on the line provided below.
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3. A proposal to approve in advance an adjournment of the Annual Meeting if
insufficient shares are present to constitute a quorum or to approve the
Agreement and Plan of Merger, in order to permit further solicitation of proxies
by the Board of Directors of Central Jersey, as more fully described in the
accompanying proxy statement.
VOTE VOTE
FOR AGAINST ABSTAIN
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[ ] [ ] [ ]
4. In their discretion, such attorneys and proxies are authorized to vote on any
other business that may properly come before the Meeting or any adjournments
thereof.
The Board of Directors recommends a vote "FOR" the above listed propositions.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1, 2 AND 3. IF ANY OTHER BUSINESS IS PRESENTED
AT THE 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 MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournments thereof and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no further
force and effect.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of Notice of the Meeting and Proxy Statement-Prospectus
dated __________, 1996.
Dated: _____________ Check box if planning to attend Meeting [ ]
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PRINT NAME OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
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PRINT NAME OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in which this Proxy
Card was mailed. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held jointly, each holder
should sign.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE
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