<PAGE>
As filed with the Securities and Exchange Commission on January 13, 1997
Registration No. 333-16557
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------
AMENDMENT No. 1 to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------
SUMMIT BANCORP.
(Exact name of registrant as specified in its charter)
------
<TABLE>
<S> <C> <C>
New Jersey 6711 22-1903313
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation ororganization) Classification Code Number) Identification Number)
</TABLE>
301 Carnegie Center, P.O. Box 2066
Princeton, New Jersey 08543-2066
(609) 987-3200
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
------
Richard F. Ober, Jr., Esq.
Executive Vice President, General Counsel and Secretary
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:
Wesley S. Williams, Jr., Esq.
Covington & Burling
1201 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
------
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 B.M.J. Financial Corp. into Registrant as
described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box [ ]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
==============================================================================
<PAGE>
SUMMIT BANCORP.
Cross-Reference Sheet for
Registration Statement on Form S-4 and Prospectus
<TABLE>
<CAPTION>
Item
Number Caption in Form S-4 Caption in Proxy Statement-Prospectus
---------- ----------------------- ------------------------------------------
<S> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration
Statement and Outside Front Cover
Page of Prospectus .............. Facing Page of Registration Statement; Cross
Reference Sheet; Outside Front Cover Page of
Prospectus.
2. Inside Front and Outside Back
Cover Pages of Prospectus ....... Incorporation of Certain Documents by
Reference; Available Information; Table of
Contents.
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information ..................... Incorporation of Certain Documents by
Reference; Summary; Introduction; Selected
Financial Data.
4. Terms of the Transaction ........ Summary; Introduction; The Merger; Description
of Summit Capital Stock; Description of B.M.J.
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 .. Incorporation of Certain Documents by
Registrants 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>
<CAPTION>
Item
Number Caption in Form S-4 Caption in Proxy Statement-Prospectus
---------- ----------------------- ------------------------------------------
<S> <C> <C>
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Companies ....................... Incorporation of Certain Documents by
Reference; B.M.J. Financial Corp.; Description
of B.M.J. Capital Stock.
16. Information with Respect to S-2
or S-3 Companies ................ Not Applicable
17. Information with Respect to
Companies other than S-2 or S-3
Companies ...................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents
or Authorizations are to be
solicited ....................... Incorporation of Certain Documents by
Reference; Summary; Introduction; B.M.J.
Special Meeting; The Merger; Summit Bancorp.;
B.M.J. Financial Corp.; Shareholder Proposals.
19. Information if Proxies, Consents
of Authorizations are not to be
solicited or in an Exchange Offer Not Applicable
</TABLE>
<PAGE>
LOGO
January 13, 1997
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
B.M.J. Financial Corp. ("B.M.J.") to be held in the Nottingham Ballroom at
the Nottingham Fire Company, located at 200 Mercer Street, Hamilton Square,
New Jersey on February 18, 1997 at 10:00 a.m., Eastern Time (the "Special
Meeting").
At the Special Meeting, shareholders will vote on a proposal to approve
the Agreement and Plan of Merger, dated August 28, 1996 (the "Merger
Agreement"), between B.M.J. and Summit Bancorp. ("Summit") under which B.M.J.
will be merged with and into Summit. Upon consummation of the Merger, the
outstanding shares of B.M.J. Common Stock held by each shareholder will be
converted into the right to receive whole shares of Summit Common Stock and
cash in lieu of any fractional shares of Summit Common Stock, (subject to
certain anti-dilution adjustments), based on an exchange ratio of Summit
Common Stock to B.M.J. Common Stock of .56, 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
B.M.J.'s shareholders and approval of the Merger by various regulatory
authorities. Approval of the Merger Agreement requires the affirmative vote
of a majority of the shares cast and entitled to vote at the Special Meeting.
At the Special Meeting, you will also be asked to consider and vote upon in
advance an adjournment of the Special Meeting which may be necessary to
solicit additional proxies to approve the Merger Agreement.
THE BOARD OF DIRECTORS OF B.M.J. HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF B.M.J. VOTE FOR
APPROVAL OF THE MERGER AGREEMENT AND FOR THE PROPOSAL TO APPROVE AN
ADJOURNMENT OF THE SPECIAL 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 Special 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 Special Meeting.
Sincerely,
/s/ Edwin W. Townsend
------------------------------
Edwin W. Townsend
Chairman of the Board
<PAGE>
B.M.J. FINANCIAL CORP.
243 ROUTE 130
BORDENTOWN, NEW JERSEY 08505-1001
(609) 298-5500
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 18, 1997
A Special Meeting of Shareholders (the "Special Meeting") of B.M.J.
Financial Corp. ("B.M.J."), will be held in the Nottingham Ballroom at the
Nottingham Fire Company, located at 200 Mercer Street, Hamilton Square, New
Jersey, on February 18, 1997, at 10:00 a.m., Eastern Time, for the purpose of
considering and voting upon the following matters:
1. A proposal to approve the Agreement and Plan of Merger, dated
August 28, 1996 (the "Merger Agreement"), between B.M.J. and
Summit Bancorp. ("Summit"), pursuant to which B.M.J. will be
merged with and into Summit and shareholders of B.M.J. will
receive whole shares of Summit Common Stock, $1.20 par value, and
cash in lieu of any fractional shares of Summit Common Stock, for
all shares of B.M.J. Common Stock, $1.00 par value, held by them,
based on an exchange ratio of Summit Common Stock to B.M.J.
Common Stock of .56, all as more fully described in the
accompanying Proxy Statement-Prospectus;
2. A proposal to approve in advance an adjournment of the Special
Meeting if insufficient shares are present to constitute a quorum
or to approve the Merger Agreement, in order to permit further
solicitation of proxies by the Board of Directors of B.M.J. (the
"Adjournment Proposal"); and,
3. Such other matters as may properly come before the Special
Meeting or any adjournments or postponements thereof.
A Proxy Card and a Proxy Statement-Prospectus for the Special Meeting are
enclosed.
Any action may be taken on any of the foregoing proposals at the Special
Meeting on the date specified above or on any dates to which by original or
later adjournment the Special Meeting may be adjourned. Shareholders of
record at the close of business on December 31, 1996, are the shareholders
entitled to vote at the Special Meeting and any adjournments thereof.
By order of the Board of Directors
/s/ Donald W. James
------------------------------
Donald W. James
Secretary
Bordentown, New Jersey
January 13, 1997
- ------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL 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
SPECIAL MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN
MAY BE REVOKED BY YOU IN WRITING ANY TIME PRIOR TO THE EXERCISE THEREOF.
- ------------------------------------------------------------------------------
<PAGE>
LOGO LOGO
PROXY STATEMENT PROSPECTUS
B.M.J. FINANCIAL CORP. SUMMIT BANCORP.
243 ROUTE 130 301 CARNEGIE CENTER
BORDENTOWN, NEW JERSEY 08505-1001 PRINCETON, NEW JERSEY 08543-2066
(609) 298-5500 (609) 987-3200
4,387,124 SHARES OF COMMON STOCK (PAR VALUE $1.20 PER SHARE)
This Proxy Statement-Prospectus is being furnished to the holders of
common stock, $1.00 par value ("B.M.J. Common"), of B.M.J. Financial Corp., a
New Jersey corporation and registered bank holding company ("B.M.J."), in
connection with the solicitation of proxies by the Board of Directors of
B.M.J. ("B.M.J. Board") for use at the Special Meeting of Shareholders of
B.M.J. to be held in the Nottingham Ballroom at the Nottingham Fire Company,
200 Mercer Street, Hamilton Square, New Jersey at 10:00 a.m., Eastern Time,
on February 18, 1997 and at any adjournments thereof ("Special Meeting").
This Proxy Statement-Prospectus relates to up to 4,387,124 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 B.M.J. with and into
Summit pursuant to an Agreement and Plan of Merger, dated August 28, 1996
("Merger Agreement"). In the Merger, shares of B.M.J. 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 of Summit Common to B.M.J. Common of .56
(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").
This Proxy Statement-Prospectus constitutes (1) the Proxy Statement of
B.M.J. relating to the solicitation of proxies by the B.M.J. Board for use at
the Special 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 and (b) a proposal to approve in advance an adjournment
of the Special Meeting in order to permit further solicitation of proxies by
B.M.J. if insufficient shares are present at the Special 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 (collectively, the "Required
Approvals") of the shareholders of B.M.J., the Board of Governors of the
Federal Reserve System ("Federal Reserve Board") 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 B.M.J.
Common is traded on the Nasdaq Stock Market-National Market System
("Nasdaq"). The closing sale prices of Summit Common and B.M.J. Common were
$38.88 and $14.00, respectively, on August 28, 1996 (the last trading day
prior to the public announcement of the Merger), and were $43.75 and $24.50,
respectively, on January 8, 1997.
All information contained in this Proxy Statement-Prospectus with respect
to Summit has been supplied by Summit and all information with respect to
B.M.J. has been supplied by B.M.J.
<PAGE>
The Proxy Statement-Prospectus is first being mailed to B.M.J.
shareholders on or about January 16, 1997.
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 B.M.J. or in the information set forth herein since the date of this Proxy
Statement- Prospectus.
The date of this Proxy Statement-Prospectus is January 13, 1997.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
---------
<S> <C>
INDEX OF DEFINED TERMS ................................................ (iii)
AVAILABLE INFORMATION ................................................. (iv)
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ....................... (v)
SUMMARY ............................................................... 1
The Companies ....................................................... 1
B.M.J. Special Meeting .............................................. 1
Stock Held by B.M.J. Affiliates ..................................... 2
The Merger .......................................................... 2
Market Prices and Dividends ......................................... 5
Recent Developments ................................................. 6
Summary of Comparative and Pro Forma Per Share Financial Information 7
INTRODUCTION .......................................................... 8
SPECIAL MEETING ....................................................... 8
Record Date; Vote Required; Revocability of Proxies ................. 8
SELECTED FINANCIAL DATA ............................................... 10
MARKET PRICE AND DIVIDEND MATTERS ..................................... 12
Market Price and Dividend History ................................... 12
Coordination and Determination of Dividends Under Merger Agreement .. 13
Dividend Limitations ................................................ 13
PROPOSAL I -- THE MERGER .............................................. 14
General ............................................................. 14
Closing and Effective Time .......................................... 14
Conversion of B.M.J. Common ......................................... 14
Exchange of B.M.J. Certificates ..................................... 15
Conversion of Stock Award Plan Options .............................. 15
Recommendation of B.M.J. Board ...................................... 16
Background .......................................................... 16
Reasons for the Merger .............................................. 17
Opinion of B.M.J.'s Financial Advisor ............................... 18
Stock Option Agreement .............................................. 23
Regulatory Approvals ................................................ 24
Interests of Certain Persons in the Merger .......................... 25
The Merger Agreement ................................................ 27
Charter and By-Laws of Surviving Corporation ........................ 28
Board of Directors and Officers of Surviving Corporation ............ 28
No Dissenters Rights ................................................ 28
New York Stock Exchange Listing ..................................... 28
Accounting Treatment ................................................ 29
Certain Federal Income Tax Consequences of the Merger ............... 29
Resale of Summit Common ............................................. 30
Differences in Shareholder Rights ................................... 30
SUMMIT BANCORP. ....................................................... 34
Description of Business ............................................. 34
Recent Developments ................................................. 35
DESCRIPTION OF SUMMIT CAPITAL STOCK ................................... 35
Common Stock ........................................................ 35
Shareholder Rights Plan ............................................. 36
B.M.J. FINANCIAL CORP. ................................................ 37
Description of Business ............................................. 37
DESCRIPTION OF B.M.J. CAPITAL STOCK ................................... 37
PROPOSAL II -- ADJOURNMENT OF SPECIAL MEETING ......................... 38
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
---------
<S> <C>
SHAREHOLDER PROPOSALS ................................................. 38
LEGAL MATTERS ......................................................... 38
EXPERTS ............................................................... 38
AGREEMENT AND PLAN OF MERGER (w/o exhibits) ..................... Appendix A
OPINION OF BEAR, STEARNS & CO. INC. .............................. Appendix B
B.M.J. FINANCIAL CORP. STOCK OPTION AGREEMENT .................... Appendix C
</TABLE>
ii
<PAGE>
INDEX OF DEFINED TERMS
(INDEX OF CAPITALIZED TERMS DEFINED IN THIS PROXY STATEMENT-PROSPECTUS)
<TABLE>
<CAPTION>
PAGE IN Page in
DEFINED TERM PROSPECTUS Defined Term Prospectus
- ------------ ----------- ------------- -----------
<S> <C> <C> <C>
Acquiring Person.........................36 Merger...................................Cover
Acquisition Proposal.....................27 Merger Agreement.........................Cover
Acquisition Transaction .................23 Merger Consideration ....................Cover
Adjournment Proposal .................Cover Merger Option Agreement .....................4
Bear Stearns..............................3 Mid-Atlantic Mergers........................21
Bear Stearns Fairness Opinion............18 Mid-Atlantic Well Capitalized Mergers ......21
BHC Act .................................24 Mid-Jersey...................................1
B.M.J.................................Cover Nasdaq...................................Cover
B.M.J. Board..........................Cover Nationwide Merger ..........................21
B.M.J. Common.........................Cover Nationwide Well Capitalized Mergers.........21
B.M.J. Common Certificates................2 New Award Plan Option........................2
B.M.J. Dividend Plan......................9 New Jersey Commissioner of Banking.......Cover
B.M.J. Mid-Atlantic Peer Group...........20 New Jersey Mergers .........................20
B.M.J. Nationwide Peer Group ............20 New Jersey Well Capitalized Mergers.........20
B.M.J. New Jersey Peer Group ............20 NJBA........................................25
B.M.J. Option ............................4 NYSE ....................................Cover
B.M.J. Savings Plan ......................9 Original Award Plan Option...................2
B.M.J. Stock Award Plans .................2 Per Share Calculation.......................18
Cash in Lieu Amount ..................Cover Purchase Event..............................24
Central Jersey ...........................6 Record Date..................................1
Certificate of Merger.....................2 Registration Rights.........................24
Closing .................................14 Registration Statement....................(iv)
Closing Date ............................14 Required Approvals.......................Cover
Closing Notice...........................14 Rights......................................36
Code .....................................3 Rights Plan.................................36
Commission ............................(iv) Securities Act............................(iv)
Counsel .................................29 Series B Preferred ..........................6
Distribution Date .......................36 Series C Preferred ..........................6
Effective Time ...........................2 Service ....................................30
EPS......................................20 Special Meeting .........................Cover
Exchange Act...........................(iv) Substitute Option ..........................24
Exchange Agent ...........................2 Summit...................................Cover
Exchange Ratio........................Cover Summit Common............................Cover
Executive Committee......................16 Summit Common Certificate....................2
Extension Event..........................23 Summit Peer Group .........................19
Federal Reserve Board.................Cover Summit Preferred............................35
LTM EPS .................................20 Summit Series R Preferred...................36
Surviving Corporation.......................14
</TABLE>
iii
<PAGE>
AVAILABLE INFORMATION
Summit and B.M.J. are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information
with the Securities and Exchange Commission ("Commission") relating to their
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 B.M.J. 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 B.M.J. 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. B.M.J. Common is listed on Nasdaq and reports, proxy
statements and other information concerning B.M.J. 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.
iv
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference into and made a part of this
Proxy Statement-Prospectus the following documents filed by 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 Reports on Form 10-Q
for the fiscal quarters ended March 31, 1996, June 30, 1996 and September 30,
1996; (3) the current reports on Form 8-K dated March 1, 1996 (as amended by
Form 8-K/A), March 31, 1996, April 11, 1996, May 22, 1996, July 16, 1996,
August 28, 1996, October 16, 1996 and December 10, 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 B.M.J. (File No.
0-13440) with the Commission: (1) the Annual Report on Form 10-K for the
fiscal year ended December 31, 1995; (2) the Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 1996, June 30, 1996, September 30,
1996 and (3) the Current Report on Form 8-K dated September 16, 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.
All documents filed by Summit and B.M.J. 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 Special 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 herein. Summit and B.M.J. 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 B.M.J. should be directed to
Donald W. James, Secretary, B.M.J. Financial Corp., 243 Route 130,
Bordentown, New Jersey 08505, (telephone (609) 291-2841). In order to ensure
timely delivery of documents prior to the Special Meeting, any request should
be made by February 10, 1997.
v
<PAGE>
SUMMARY
The following constitutes a brief summary for the convenience of the
shareholders of B.M.J. 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. B.M.J. 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 355 banking
offices located in New Jersey and eastern Pennsylvania as of September 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, fiduciary, investment
management, investment advisory, custodial, correspondent and treasury
services and insurance and nondeposit investment products and services. In
addition, Summit owns subsidiaries that are engaged in discount brokerage,
commercial finance lending, lease financing and reinsuring credit life and
disability insurance policies related to consumer loans made by the bank
subsidiaries.
B.M.J. FINANCIAL CORP.
B.M.J. Financial Corp., a New Jersey corporation and registered bank
holding company with its principal executive offices at 243 Route 130,
Bordentown, New Jersey, through its wholly-owned subsidiary bank, The Bank of
Mid-Jersey ("Mid-Jersey"), operated, as of September 30, 1996, 22 banking
offices located in New Jersey. Its telephone number is (609) 298-5500.
Mid-Jersey is engaged in a general banking business. It provides a broad
range of commercial banking, retail banking, real estate lending and other
financial services.
B.M.J. SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE
The Special Meeting will be held on February 18, 1997 at 10:00 a.m. (local
time), in the Nottingham Ballroom at the Nottingham Fire Company, 200 Mercer
Street, Hamilton Square, New Jersey, to consider and vote upon (1) a proposal
to approve the Merger Agreement and the transactions contemplated thereby,
and (2) a proposal to approve the Adjournment Proposal. A copy of the Merger
Agreement is attached hereto as Appendix A.
RECORD DATE; VOTE REQUIRED
The record date ("Record Date") for determining B.M.J. shareholders
entitled to notice of and to vote at the Special Meeting is December 31,
1996. The presence, in person or by proxy, of at least a majority of the
7,520,608 shares of B.M.J. Common outstanding on the Record Date is necessary
to constitute a quorum at the Special Meeting. Assuming a quorum is present,
an affirmative vote of a majority of the votes cast by the holders of shares
entitled to vote at the Special Meeting is necessary to approve the Merger
Agreement and the Adjournment Proposal. In the event a quorum is not present
or there are insufficient votes to approve any proposal, the Special 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 B.M.J. Board.
1
<PAGE>
STOCK HELD BY B.M.J. AFFILIATES
The directors and executive officers of B.M.J. and their affiliates
beneficially owned, as of the Record Date, 698,003 shares of B.M.J. Common
(assuming the exercise of all options to purchase B.M.J. Common held by such
persons and outstanding on such date), representing 9.28% of the outstanding
shares of B.M.J. Common. The directors and executive officers of B.M.J. have
indicated that they intend to vote their shares of B.M.J. Common in favor of
the proposal to approve the Merger Agreement.
Summit beneficially owns 334,000 shares of B.M.J. Common, which represents
4.4% of the outstanding shares of B.M.J. Common, and intends to vote these
shares in favor of the proposal to approve the Merger Agreement.
Also, by virtue of holding the B.M.J. Option (as defined herein), Summit
could be deemed to be the beneficial owner of an additional 1,490,000 shares
of B.M.J. Common. Combined, the 334,000 shares beneficially owned and the
1,490,000 shares deemed beneficially owned by Summit represent 20.24% of
B.M.J. Common outstanding on the Record Date (assuming, for purposes of
calculating this percentage, that the shares represented by the B.M.J. Option
were issued and outstanding on such date). However, the B.M.J. Option is not
presently exercisable and the B.M.J. Common represented thereby has not been
issued, is not outstanding and cannot be voted.
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 following the closing of the Merger. If
the Merger is approved by B.M.J. 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 first
calendar quarter of 1997. At the Effective Time, B.M.J. will be merged with
and into Summit. See "THE MERGER-Closing and Effective Time."
CONVERSION OF B.M.J. COMMON
At the Effective Time, outstanding shares of B.M.J. Common, other than
shares of B.M.J. Common beneficially owned by Summit or a subsidiary of
Summit (other than shares of B.M.J. Common held as a result of debts
previously contracted), if any, and shares held in the treasury of B.M.J., if
any, will be converted into and represent the right to receive the Merger
Consideration. Within 10 days of the Effective Time and the receipt of a
final shareholder list from B.M.J. by First Chicago Trust Company of New
York, or another entity reasonably satisfactory to B.M.J., acting as the
exchange agent for the Merger ("Exchange Agent"), each holder of B.M.J.
Common will be sent by the Exchange Agent information regarding, and
materials to be used in, the exchange of B.M.J. Common for Summit Common.
Within 10 days of the later to occur of the receipt of a final shareholder
list from B.M.J. by the Exchange Agent or the receipt by the Exchange Agent
of complete exchange materials from a shareholder, a shareholder will be sent
in exchange for all certificates representing their B.M.J. Common ("B.M.J.
Common Certificates"), a certificate representing the whole shares of Summit
Common into which their B.M.J. Common has been converted ("Summit Common
Certificate") and, to the extent entitled thereto, a check representing the
Cash In Lieu Amount.
CONVERSION OF B.M.J. DIRECTOR AND EMPLOYEE STOCK OPTIONS
Each stock option relating to B.M.J. Common ("Original Award Plan Option")
outstanding at the Effective Time and granted to a director or employee
pursuant to the B.M.J. Director Stock Option Plan, the B.M.J. 1994 Employee
Stock Option Plan or B.M.J. Executive Long Term Incentive Plan,
(collectively, the "B.M.J. Stock Award Plans"), whether or not exercisable
immediately prior to the Effective Time, will be converted automatically at
the Effective Time into an exercisable option to purchase Summit Common ("New
Award Plan Option"). Subject to the adjustment described below, the New Award
Plan
2
<PAGE>
Option will continue to be governed by the terms of the B.M.J. Stock Award
Plan under which the corresponding Original Award Plan Option was granted and
the stock option agreement by which it was evidenced, including terms and
provisions administering exercises. The number of shares of Summit Common
subject to the New Award Plan Options and the exercise price of the New Award
Plan Options will be adjusted as provided in the Merger Agreement based on the
Exchange Ratio. See "THE MERGER- Conversion of Stock Award Plan Options."
RECOMMENDATION OF B.M.J. BOARD
The B.M.J. Board unanimously recommends that B.M.J. shareholders vote to
approve the Merger Agreement and the Adjournment Proposal. See "THE
MERGER-Recommendation of B.M.J. Board."
OPINION OF B.M.J.'S FINANCIAL ADVISOR
B.M.J. engaged Bear, Stearns & Co. Inc. ("Bear Stearns") to act as
financial advisor in connection with any acquisition of or by B.M.J. and to
render its opinion to the B.M.J. Board as to whether the Exchange Ratio is
fair, from a financial point of view, to the shareholders of B.M.J. Bear
Stearns has delivered to B.M.J. an opinion dated as of the date of this Proxy
Statement-Prospectus stating that, as of such date, based on the review and
assumptions and subject to the limitations described therein, the Exchange
Ratio is fair, from a financial point of view, to B.M.J.'s shareholders. A
copy of Bear Stearns' opinion is attached as Appendix B to this Proxy
Statement-Prospectus and should be read in its entirety. See "THE
MERGER-Opinion of B.M.J.'s Financial Advisor."
DISSENTERS' RIGHTS
Under the New Jersey Business Corporation Act, there are no dissenters'
rights of appraisal available to holders of B.M.J. 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 pooling-of-interests. See "THE MERGER-Accounting Treatment."
FEDERAL INCOME TAX CONSEQUENCES
Thompson Coburn, Summit's special 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 B.M.J. and certain shareholders of B.M.J., 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 B.M.J.
shareholders who exchange their shares of B.M.J. Common solely for shares of
Summit Common in the Merger, except with respect to any Cash In Lieu Amount
received. Each B.M.J. 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,
approvals by the Federal Reserve Board and the New Jersey Commissioner of
Banking, both of which have been received, on December 6, 1996 and December
18, 1996, respectively. See "THE MERGER-Regulatory Approvals."
3
<PAGE>
CONDITIONS OF THE MERGER
Consummation of the Merger is additionally subject, among other things, to
(i) the approval of the Merger Agreement by the requisite vote of B.M.J.'s
shareholders; (ii) the expiration of any waiting period required in
connection with a regulatory approval; (iii) effectiveness of the
registration statement; (iv) receipt by Summit and B.M.J. of the opinion of
Thompson Coburn as to certain federal income tax consequences of the Merger;
(v) the listing on the NYSE subject to official notice of issuance of the
Summit Common to be issued in the Merger; (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
B.M.J. 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 the B.M.J. Board. The Merger Agreement may also be terminated by
either the Summit Board or the B.M.J. Board if the conditions precedent to,
respectively, Summit's or B.M.J.'s obligations to close under the Merger
Agreement have not been met. Further, the Merger Agreement may be terminated
by either the Summit Board or the B.M.J. Board if (i) the shareholders of
B.M.J. have failed to approve the Merger; (ii) a material breach by the other
party 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); or (iii) the
Closing is not consummated on or before June 30, 1997.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Directors and executive officers of B.M.J. have interests in the Merger
that are in addition to their interests as shareholders of B.M.J. These
interests include: (1) the indemnification of directors and executive
officers of B.M.J. against certain claims that may arise after the Effective
Time based on services provided to B.M.J. or any subsidiary of B.M.J. 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 B.M.J. directors and executive
officers against such claims; (3) the conversion of all Original Award Plan
Options held by directors and executive officers of B.M.J. into New Award
Plan Options, with adjustments to the exercise price and number of shares
subject thereto based on the Exchange Ratio, and the immediate
exercisability, pursuant to the terms of the B.M.J. Stock Award Plans and
stock option agreements, of all New Award Plan Options, whether or not any
Original Award Plan Options were unexercisable immediately prior to the
Effective Time; and (4) a resolution of the B.M.J. Board, adopted January 15,
1987, which provides each executive officer with "a guarantee of one year's
employment and severance pay of one month's salary for each year of service
as a Vice President or above with the B.M.J. Financial Corp." 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 B.M.J. 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 B.M.J. 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, B.M.J. (as issuer) entered into the B.M.J. Stock Option
Agreement (the "Merger Option Agreement") with Summit (as grantee), dated as
of August 29, 1996. The Merger Option Agreement is set forth in Appendix C to
this Proxy Statement-Prospectus.
Pursuant to the Merger Option Agreement, B.M.J. granted to Summit an
irrevocable option (the "B.M.J. Option"), exercisable under certain limited
and specifically defined circumstances, none of which,
4
<PAGE>
to the best of Summit's and B.M.J.'s knowledge, has occurred as of the date
hereof, to purchase up to 1,490,000 shares of B.M.J. Common at a price per
share equal to the last sale price of B.M.J. Common on Nasdaq on the trading
day immediately preceding the date of the Merger Agreement.
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 B.M.J. 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".
B.M.J. Common is listed and traded on Nasdaq under the symbol "BMJF". 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 B.M.J. Common and
dividends declared per share on Summit Common and B.M.J. Common.
<TABLE>
<CAPTION>
Summit Common B.M.J. Common
---------------------------------- --------------------------------
Sale Price Sale Price
-------------------- ------------------
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 $ 9.25 $ 6.50 --
1994 ....................... 29.25 22.50 0.94 13.00 8.00 --
1995 ....................... 37.25 24.13 1.19 16.75 10.75 $ 0.225
1996 ....................... 45.13 32.63 1.36 25.00 12.75 0.575
1997 (through January 8,
1997) ..................... 44.13 42.75 -- 25.00 22.75 --
</TABLE>
The following table presents (rounded to the nearest cent) for August 28,
1996, (the last full trading day prior to the public announcement of the
execution of the Merger Agreement), and as of January 8, 1997 the last sale
price of a share of Summit Common, the last sale price of a share of B.M.J.
Common and the pro forma equivalent in Summit Common of a share of B.M.J.
Common computed by multiplying the last sale price of Summit Common on each
of the dates specified in the table by the Exchange Ratio of .56.
<TABLE>
<CAPTION>
Pro Forma B.M.J.
Summit B.M.J. Equivalent
-------- -------- ----------------
<S> <C> <C> <C>
August 28, 1996 $38.88 $14.00 $21.77
January 8, 1997 43.75 24.50 24.50
</TABLE>
No assurance can be given as to what the market price of Summit Common
will be if and when the Merger is consummated. Because the Exchange Ratio is
fixed and because the market price of Summit Common is subject to
fluctuation, the value of the shares of Summit Common that holders of B.M.J.
Common will receive in the Merger may increase or decrease prior to and
following the Merger. B.M.J. SHAREHOLDERS ARE ADVISED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR SUMMIT COMMON AND B.M.J. COMMON. In addition, past
dividends paid in respect of Summit Common and B.M.J. Common are not
necessarily indicative of future dividends that may be declared and paid. No
assurance can be given concerning dividends to be declared and paid in
respect of Summit Common and B.M.J. Common before or after the Effective
Time. See "MARKET PRICE AND DIVIDEND MATTERS."
5
<PAGE>
The following table presents, as of January 13, 1997, the current
annualized dividend rate for a share of Summit Common, for a share of B.M.J.
Common, and (rounded to the nearest cent) for the pro forma equivalent in
Summit Common of a share of B.M.J. Common computed by multiplying the
annualized dividend rate of a share of Summit Common by the Exchange Ratio of
.56.
<TABLE>
<CAPTION>
Pro Forma B.M.J.
Summit B.M.J. Equivalent
-------- -------- ----------------
<S> <C> <C> <C>
January 13,
1997 ......... $1.44 $.80 $.81
</TABLE>
RECENT DEVELOPMENTS
On December 7, 1996 Summit completed its acquisition of Central Jersey
Financial Corporation, a New Jersey corporation and savings and loan holding
company ("Central Jersey"). As of September 30, 1996 Central Jersey had $465
million in assets and through its subsidiary, Central Jersey Savings Bank,
operated six community branches.
On December 15, 1996 Summit redeemed all outstanding shares of its
Adjustable Rate Cumulative Preferred Stock, Series B ($50 stated value)
("Series B Preferred") and Adjustable Rate Cumulative Preferred Stock, Series
C ($25 stated value) ("Series C Preferred") at redemption prices of $50.375
and $25.00, respectively. At December 15, 1996, there were 600,166 shares of
Series B Preferred and 504,481 shares of Series C Preferred outstanding.
6
<PAGE>
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 B.M.J.; (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 B.M.J. Such financial information is
computed on a pro forma equivalent basis with respect to a share of B.M.J.
Common by multiplying the pro forma combined amount (giving effect to the
Merger) by the Exchange Ratio of .56. The pro forma information does not
reflect anticipated cost savings expected to be realized from the Merger. The
unaudited pro forma information does not purport to be indicative of the
combined financial position or results of operations of future periods.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
------------------ -----------------------------
1996 1995 1995 1994 1993
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net Income (Loss) Per Share
Historical:
Summit (1)(2) ............... $1.56 $2.04 $2.77 $1.80 $ 1.57
B.M.J. (fully diluted) (3) .. 0.88 0.74 1.07 1.60 (0.13)
Pro Forma Combined (2)(3)(4):
Summit and B.M.J. ........... 1.56 2.01 2.74 1.85 1.49
Pro Forma B.M.J. Equivalent(3):
Summit and B.M.J. ........... 0.87 1.13 1.53 1.04 0.83
Dividends per Share
Historical:
Summit ...................... $1.00 $0.87 $1.19 $0.94 $ 0.69
B.M.J. ...................... 0.375 0.15 0.225 -- --
Pro Forma Combined (4)(5):
Summit and B.M.J. ........... 1.00 0.87 1.19 0.94 0.69
Pro Forma B.M.J. Equivalent:
Summit and B.M.J. ........... 0.56 0.49 0.67 0.53 0.39
</TABLE>
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Book Value per Share
Historical:
Summit ................... $19.59 $19.89
B.M.J. ................... 8.83 8.62
Pro Forma Combined (4)(6):
Summit and B.M.J. ........ 19.27 19.68
Pro Forma B.M.J. Equivalent:
Summit and B.M.J. ........ 10.79 11.02
</TABLE>
<PAGE>
- ------
1.) In the first quarter of 1996, restructuring charges totaling $110.7
million ($70.0 million, or $.75 per common share, after tax) were
recorded for merger-related expenses for The Summit Bancorporation, The
Flemington National Bank and Trust Company and Garden State Bancshares,
Inc. Also included in the restructuring charges were branch-related
expenses recorded in conjunction with an announced agreement to open 70
in-store supermarket branches. During the third quarter of 1996 Summit
recorded a one-time special assessment in conjunction with legislation
passed to recapitalize the Savings Association Insurance Fund (SAIF) on
September 30, 1996. The assessment amounted to $11.1 million ($6.7
million, or $.07 per common share, after tax).
2.) Summit and pro forma combined net income per common share were computed
based on net income less preferred dividends divided by the weighted
average average number of shares during the periods presented. Common
stock equivalents are not included in the calculation as they have no
material dilutive effect.
3.) B.M.J.'s operating results for 1994 include a $4.9 million ($.62 per
share), credit to income from the reversal of previously established tax
valuation reserves plus recognition of state deferred tax assets and
alternative minimum tax credits.
4.) The pro forma combined per share financial information does not include
the impact of Summit's acquisition of Central Jersey. At September 30,
1996, Central Jersey had total assets of $464.5 million. This
transaction, accounted for as a purchase, closed on December 7, 1996. The
impact of this acquisition is not material to the pro forma combined per
share financial information.
5.) Pro forma amounts assume that Summit would have declared cash dividends
per share equal to its historical cash dividends per share declared.
6.) Gives effect to the Merger as if it had occurred at the end of the
period. The September 30, 1996 pro forma combined book value per share
also includes the anticipated merger-related charges, but does not
reflect the estimated expense savings and revenue enhancements
anticipated from the Merger.
7
<PAGE>
INTRODUCTION
This Proxy Statement-Prospectus is being furnished to B.M.J. shareholders
as of the Record Date in connection with the solicitation of proxies by the
B.M.J. Board for use at the Special Meeting to be held on February 18, 1997
or any adjournments thereof, in the Nottingham Ballroom at the Nottingham
Fire Company, 200 Mercer Street, Hamilton Square, New Jersey, at 10:00 a.m.,
Eastern Time. The purpose of the Special Meeting is to consider and vote upon
(i) a proposal to approve the Merger Agreement and the transactions
contemplated thereby, and (ii) a proposal to approve the Adjournment
Proposal.
The Board of Directors of B.M.J. has approved the Merger Agreement and
unanimously recommends that B.M.J. shareholders vote FOR its approval. The
Board of Directors of B.M.J. also recommends that B.M.J. shareholders vote
FOR approval of the Adjournment Proposal.
SPECIAL MEETING
RECORD DATE; VOTE REQUIRED; REVOCABILITY OF PROXIES
The securities to be voted at the Special Meeting consist of shares of
B.M.J. Common, with each share entitling its owner to one vote on each
proposal and on all other matters properly brought before the Special
Meeting. B.M.J. had no other class of voting securities entitled to vote on
the Merger Agreement or the Adjournment Proposal outstanding at the close of
business on the Record Date. There were 1857 holders of record of B.M.J.
Common and 7,520,608 shares of B.M.J. Common outstanding and eligible to be
voted at the Special 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 January 16, 1997.
The presence at the Special Meeting, in person or by proxy, of the holders
of at least a majority of the shares of B.M.J. Common outstanding on the
Record Date will constitute a quorum for the transaction of business. By
checking the appropriate box on the proxy card provided by the B.M.J. 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 B.M.J.'s Certificate of Incorporation and By-Laws, the
approval of the Merger Agreement and the Adjournment Proposal require the
affirmative vote of a majority of the votes cast by the holders of shares
entitled to vote thereon at the Special Meeting, provided a quorum is
present, without regard to abstentions or broker non-votes as described
below. 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 approval of the Adjournment Proposal on the proxy
card. The Special 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 B.M.J. 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 B.M.J. 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 Special Meeting will be postponed or adjourned for
the purpose of allowing additional time for obtaining additional proxies or
votes, and, at any subsequent reconvening of the Special Meeting, all proxies
will be voted in the same manner as such proxies would have been voted at the
original convening of the Special Meeting (except for any proxies which have
theretofore effectively been revoked or withdrawn). As to other matters that
may properly come before the Special Meeting, unless otherwise provided in
the Certificate of Incorporation or By-laws of B.M.J. or by statute, the
affirmative vote of a majority of votes cast on a matter at the Special
Meeting is required to approve the 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
8
<PAGE>
NYSE rules), to the extent they may be provided by brokers, will not be
counted as votes "for" or "against" for purposes of determining the number of
votes cast and will not 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" for purposes of determining the number of votes cast.
If the enclosed form of proxy is properly executed and returned to B.M.J.
in time to be voted at the Special 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 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 in favor of the Adjournment Proposal. Should
any other matter properly come before the Special 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, the B.M.J. Board does not know of any matters
other than those referred to in the Notice of Special Meeting of Shareholders
to be presented for action at the Special 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 Special Meeting and all adjournments thereof. Prior to
the Special Meeting a proxy may be revoked by filing a written revocation or
a duly executed proxy bearing a later date with the Secretary of B.M.J.,
Donald W. James. During the Special Meeting a proxy may be revoked by filing
a written revocation or a duly executed proxy bearing a later date with the
secretary of the Special Meeting prior to the close of voting. A proxy will
not be voted if a shareholder attends the Special Meeting and votes in
person.
If a B.M.J. shareholder is participating in B.M.J.'s Dividend Reinvestment
and Stock Purchase Plan (the "B.M.J. Dividend Plan"), such shareholder will
receive a single proxy covering both the shares of B.M.J. Common held by the
B.M.J. shareholder in certificate form and the shares of B.M.J. Common held
on behalf of such shareholder by the B.M.J. Dividend Plan Administrator in
such shareholder's B.M.J. Dividend Plan account. If a proxy is not returned,
shares of B.M.J. Common represented by the proxy, including any held under
the B.M.J. Dividend Plan, will not be voted.
Employees who hold B.M.J. Common through participation in B.M.J.'s
Deferred Savings Plan ("B.M.J. Savings Plan") will receive a separate card
for use in providing voting instructions to the Trustee of the B.M.J. Savings
Plan. Full shares held by the B.M.J. Savings Plan will be voted by the
Trustee in accordance with the instructions received from participants. The
Trustee will not vote any participants' shares with respect to which
instructions have not been received.
If a person holding B.M.J. Common in street name wishes to vote such
B.M.J. Common at the Special Meeting, the person must obtain from the nominee
holding the B.M.J. Common in street name a properly executed "legal proxy"
identifying the individual as a B.M.J. shareholder, authorizing the B.M.J.
shareholder to act on behalf of the nominee at the Special Meeting and
identifying the number of shares with respect to which the authorization is
granted.
The cost of soliciting proxies will be borne by B.M.J. In addition to use
of the mails, proxies may be solicited personally or by telephone, telecopier
or telegraph by officers, directors or employees of B.M.J., who will not be
specially compensated for such solicitation activities. Arrangements will
also be made by B.M.J. 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. B.M.J. has retained D.F. King & Co., Inc., a proxy soliciting
firm, to assist in the solicitation of proxies, at a fee of $4,500 plus fees
for direct telephone solicitations, if authorized, and reimbursement of
certain out-of-pocket costs.
9
<PAGE>
SELECTED FINANCIAL DATA
The tables below set forth selected historical financial information for
Summit and B.M.J. for each of the five years in the period ended December 31,
1995 and the nine month periods ended September 30, 1996 and 1995. Such
information has been derived from and should be read in conjunction with the
consolidated financial statements of Summit and B.M.J., 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 B.M.J., which are incorporated by
reference in this Proxy Statement-Prospectus. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE". The selected historical financial information for
Summit and B.M.J. for the nine month periods ended September 30, 1996 and
1995 reflect, in the opinion of the managements of Summit and B.M.J.,
respectively, all adjustments (comprising only normal recurring accruals)
necessary for a fair presentation of the consolidated operating results and
financial position of Summit and B.M.J. for such interim periods. Results for
the interim periods are not necessarily indicative of results for the full
year or any other period.
The table setting forth selected pro forma combined financial information
gives effect to the Merger under the pooling-of-interests method of
accounting. For a description of the pooling-of-interests accounting method
with respect to the Merger, see "THE MERGER--Accounting Treatment." The pro
forma financial information is prepared based on the Exchange Ratio in the
Merger of 0.56 shares of Summit Common for each share of B.M.J. Common. The
pro forma condensed combined financial information does not purport to be
indicative of the combined financial position or results of operations for
future periods or indicative of the results that actually would have been
realized had the entities been a single entity during the periods reflected
in the table.
SUMMIT BANCORP.
SUMMARY OF SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
At or For the Period Ended
September 30, At or For the Year Ended December 31,
--------------------------- ---------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest income ............ $ 1,160,312 $ 1,114,564 $ 1,495,617 $ 1,302,800 $ 1,236,658 $ 1,341,504 $ 1,562,393
Interest expense ........... 477,289 467,884 626,376 475,973 456,797 594,757 882,605
Net interest income ........ 683,023 646,680 869,241 826,827 779,861 746,747 679,788
Provision for loan losses .. 46,500 52,350 71,850 91,995 112,885 165,553 192,417
Securities gains ........... 2,514 6,815 8,606 2,232 9,579 19,195 13,366
Net income ................. 147,103 177,714 242,870 154,550 133,142 90,275 46,496
Net income per share ....... 1.56 2.04 2.77 1.80 1.57 1.13 0.60
Cash dividends declared per
share ..................... 1.00 0.87 1.19 0.94 0.69 0.60 0.60
Average common shares
outstanding ............... 93,304 86,141 86,674 84,381 82,712 77,499 72,496
Balance Sheet Data:
Total assets ............... $22,388,229 $21,149,787 $21,536,935 $20,894,815 $19,139,498 $19,204,120 $18,636,270
Securities ................. 5,718,024 5,714,550 5,483,782 5,958,121 5,499,597 5,219,940 4,698,365
Loans ...................... 14,817,455 13,730,520 14,019,574 13,105,179 11,881,426 11,972,053 12,145,189
Total deposits ............. 18,309,952 17,513,124 17,955,103 16,977,109 16,164,226 16,462,089 15,790,487
Long-term debt ............. 391,777 475,530 424,862 544,936 467,501 364,762 270,044
Shareholders' equity ....... 1,837,852 1,745,997 1,802,316 1,533,717 1,456,527 1,356,744 1,173,160
Book value per common share 19.59 19.36 19.89 17.45 16.89 15.93 15.35
</TABLE>
10
<PAGE>
B.M.J. FINANCIAL CORP.
SUMMARY OF SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
At or For the Period
Ended
September 30, At or For the Year Ended December 31,
---------------------- ----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest income ..................... $ 35,497 $ 30,634 $ 41,603 $ 38,444 $ 41,389 $ 52,579 $ 70,556
Interest expense .................... 12,729 9,612 13,368 10,222 13,540 22,101 40,642
Net interest income ................. 22,768 21,022 28,235 28,222 27,849 30,478 29,914
Provision for loan losses ........... 95 -- (2,000) -- 840 12,217 18,596
Securities gains .................... -- -- -- -- 690 3,155 1,084
Net income (loss) ................... 6,783 5,722 8,314 12,507 (890) (6,963) (6,717)
Net income (loss) per share (1) ..... 0.88 0.74 1.07 1.60 (0.13) (1.63) (1.60)
Cash dividends declared per share ... 0.375 0.15 0.225 -- -- -- 0.30
Average common shares outstanding (1) 7,705 7,911 7,910 7,884 6,920 4,271 4,199
Balance Sheet Data:
Total assets ........................ $655,222 $565,939 $588,710 $538,432 $625,302 $653,556 $778,126
Securities .......................... 175,836 107,344 147,123 121,895 168,002 173,307 183,265
Loans ............................... 436,420 381,207 399,364 357,415 386,478 420,152 542,596
Total deposits ...................... 537,190 478,242 485,011 463,574 566,875 606,043 725,282
Long-term debt ...................... 12,347 3,740 8,686 2,700 4,813 4,880 4,880
Shareholders' equity ................ 66,322 63,133 65,622 58,346 45,398 32,500 38,688
Book value per common share ......... 8.83 8.30 8.62 7.68 6.01 7.45 9.15
</TABLE>
SUMMIT AND B.M.J. PRO FORMA COMBINED
SUMMARY OF SELECTED FINANCIAL DATA (2)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
At or For the Period Ended
September 30, At or For the Year Ended December 31,
--------------------------- ---------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest income ............ $ 1,195,809 $ 1,145,198 $ 1,537,220 $ 1,341,244 $ 1,278,047 $ 1,394,083 $ 1,632,949
Interest expense ........... 490,018 477,496 639,744 486,195 470,337 616,858 923,247
Net interest income ........ 705,791 667,702 897,476 855,049 807,710 777,225 709,702
Provision for loan losses .. 46,595 52,350 69,850 91,995 113,725 177,770 211,013
Securities gains ........... 2,514 6,815 8,606 2,232 10,269 22,350 14,450
Net income ................. 153,886 183,436 251,184 167,057 132,252 83,312 39,779
Net income per share (3) ... 1.56 2.01 2.74 1.85 1.49 1.00 0.49
Cash dividends declared per
share ..................... 1.00 0.87 1.19 0.94 0.69 0.60 0.60
Average common shares
outstanding ............... 97,363 90,240 90,770 88,516 86,584 79,891 74,847
Balance Sheet Data (4):
Total assets ............... $23,036,019 $21,711,094 $22,121,249 $21,430,519 $19,764,600 $19,857,676 $19,414,396
Investment securities ...... 5,886,428 5,817,262 5,626,509 6,077,288 5,667,399 5,393,247 4,881,630
Loans ...................... 15,253,875 14,111,727 14,418,938 13,462,594 12,267,904 12,392,205 12,687,785
Total deposits ............. 18,847,142 17,991,366 18,440,114 17,440,683 16,731,101 17,068,132 16,515,769
Long-term debt ............. 404,124 479,270 433,548 547,636 472,314 369,642 274,924
Shareholders' equity ....... 1,885,586 1,804,990 1,863,952 1,589,462 1,501,723 1,389,244 1,211,848
Book value per common share 19.27 19.14 19.68 17.27 16.60 15.85 15.38
</TABLE>
<PAGE>
- ------
1.) Net income per share and average common shares outstanding assume full
dilution.
2.) The selected pro forma combined financial information does not include
the impact of Summit's acquisition of Central Jersey. At September 30,
1996, Central Jersey had total assets of $464.5 million. This
transaction, accounted for as a purchase, closed on December 7, 1996. The
impact of this acquisition is not material to the pro forma combined
financial information.
3.) Pro forma combined net income per common share was computed based on pro
forma combined net income less preferred dividends divided by the
weighted average number of shares outstanding during the period. Common
stock equivalents are not included in the pro forma calculation as they
are not material.
4.) Balance sheet data as of September 30, 1996 give effect for anticipated
expenses and merger-related charges relating to the Merger but do not
reflect estimated expense savings and revenue enhancements anticipated to
result from the Merger.
11
<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 B.M.J. Common is listed and traded on the Nasdaq under the
symbol "BMJF". The following table sets forth, for the periods indicated, the
high and low sale prices of a share of Summit Common and B.M.J. Common, as
reported in published financial sources, and quarterly dividends declared per
share of Summit Common and B.M.J. Common.
Where necessary, sale prices shown in the table below have been rounded to
the nearest cent. All sale prices and dividends shown below with respect to
B.M.J. Common have been adjusted for stock splits and stock dividends
declared per share.
<TABLE>
<CAPTION>
Summit Common B.M.J. Common
---------------------------------- ----------------------------------
Sale Prices Sale Prices
-------------------- ----------- --------------------
Dividends Dividends
High Low Per Share High Low Per Share
-------- -------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
1993
First Quarter ........ $29.38 $22.50 $ 0.16 $ 9.25 $ 6.75 --
Second Quarter ....... 29.25 21.63 0.16 8.25 6.50 --
Third Quarter ........ 33.25 24.25 0.16 8.75 6.75 --
Fourth Quarter ....... 30.25 23.38 0.21 9.00 7.75 --
1994
First Quarter ........ 28.63 23.50 0.21 10.25 8.00 --
Second Quarter ....... 29.25 25.50 0.21 11.75 9.25 --
Third Quarter ........ 29.13 26.13 0.26 13.00 11.00 --
Fourth Quarter ....... 27.13 22.50 0.26 12.25 9.75 --
1995
First Quarter ........ 28.75 24.13 0.29 13.50 10.75 $ 0.05
Second Quarter ....... 30.75 27.13 0.29 13.63 12.25 0.05
Third Quarter ........ 37.25 30.00 0.29 16.75 13.00 0.05
Fourth Quarter ....... 35.75 31.50 0.32 16.38 13.75 0.075
1996
First Quarter ........ 40.13 34.38 0.32 14.25 12.88 0.075
Second Quarter ....... 39.50 34.00 0.32 13.75 12.75 0.10
Third Quarter ........ 41.13 32.63 0.36 22.25 13.13 0.20
Fourth Quarter ....... 45.13 39.50 0.36 25.00 21.75 0.20
1997
First Quarter
(through January 8,
1997) ............... 44.13 42.75 -- 25.00 22.75 --
</TABLE>
On August 28, 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 $38.88 and the last sale price of a share of
B.M.J. Common was $14.00. On January 8, 1997, the last sale price of Summit
Common was $43.75 and the last sale price of B.M.J. Common was $24.50. B.M.J.
shareholders are urged to obtain current market quotations.
No assurance can be given as to what the market price of Summit Common
will be if and when the Merger is consummated. Because the Exchange Ratio is
fixed and because the market price of Summit Common is subject to
fluctuation, the value of the shares of Summit Common that holders of B.M.J.
Common will receive in the Merger may increase or decrease prior to and
following the Merger. B.M.J.
12
<PAGE>
SHAREHOLDERS ARE ADVISED TO OBTAIN CURRENT MARKET QUOTATIONS FOR SUMMIT
COMMON AND B.M.J. COMMON. In addition, past dividends paid in respect of
Summit Common and B.M.J. 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
B.M.J. Common before or after the Effective Time.
COORDINATION AND DETERMINATION OF DIVIDENDS UNDER MERGER AGREEMENT
In order to ensure that B.M.J. shareholders would be paid at least one but
no more than one regular dividend in the calendar quarter in which the Merger
is consummated, B.M.J. agreed to coordinate with Summit the declaration of
any dividends and the setting of any dividend record or payment dates. Under
the Merger Agreement, B.M.J. may declare a quarterly dividend up to $.10 per
share or an amount equal to the quarterly dividend rate 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 September 30, 1996, the
amount that would have been available on that date for dividend payments to
holders of Summit Common was approximately $280.4 million.
13
<PAGE>
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 B.M.J. with and into
Summit, with Summit being the surviving corporation ("Surviving
Corporation"). Upon consummation of the Merger, each outstanding share of
B.M.J. Common other than (i) shares of B.M.J. Common beneficially owned by
Summit or a subsidiary of Summit (other than shares held as a result of debts
previously contracted), if any, and (ii) shares of B.M.J. Common held in the
treasury of B.M.J., 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 and assuming
all conditions to closing have been satisfied or waived, the closing of the
Merger ("Closing") will be held on the date designated by Summit on at least
five business days notice ("Closing Notice") given to B.M.J. The date for the
Closing designated by Summit may not be later than 45 business days after the
last to occur of the following: (1) 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
judgement of Summit and B.M.J., to the consummation of the transactions
contemplated by the Merger Agreement or such prior date as Summit and B.M.J.
shall elect, whether or not such proceedings have been brought to a
conclusion; or (2) the date on which all Required Approvals are received and
any required waiting periods have expired.
If the Merger Agreement is approved by the requisite vote of B.M.J.
shareholders, all other conditions of the Merger are satisfied or waived and
the Closing is held, the Merger will become effective at the date and time
specified in the Certificate of Merger which is required by the Merger
Agreement to be filed with the Office of the Secretary of State of the State
of New Jersey no later than one business day following the date on which the
closing of the Merger occurs ("Closing Date"). If the Merger Agreement is
approved by B.M.J. shareholders on the scheduled date of the Special Meeting,
subject to the satisfaction or waiver of certain other conditions described
herein, it is presently contemplated that the Effective Time will occur
during the first calendar quarter of 1997. The Merger Agreement may be
terminated by either party if, among other things, the Closing fails to occur
on or before June 30, 1997, but a party may not exercise this right if the
failure to close is due solely to that party's failure to perform or observe
agreements required by the Merger Agreement to be performed or observed by it
on or before the Closing Date. See "THE MERGER -- The Merger Agreement --
Conditions to the Merger; Termination."
CONVERSION OF B.M.J. COMMON
Upon consummation of the Merger, the outstanding shares of B.M.J. Common
held at the Effective Time by each shareholder of B.M.J. at the Effective
Time, other than shares of Summit Common beneficially owned by Summit or a
subsidiary of Summit (other than shares held as a result of debts previously
contracted), if any, and shares of B.M.J. Common held in the treasury of
B.M.J., if any, will be converted into Summit Common at the Summit Common to
B.M.J. Common Exchange Ratio of .56 and represent the right of the particular
shareholder to receive the whole shares of Summit Common resulting from the
conversion and, in lieu of any fractional share of Summit Common resulting
from the conversion, a Cash in Lieu Amount equal to the fraction of a whole
share represented by the fractional share multiplied by the closing price of
a share of Summit Common on the NYSE-Composite Transactions List on the last
trading prior to the Effective Time. The Exchange Ratio is subject to
appropriate adjustments in the event that, from the date of the Merger
Agreement to the Effective Time, the outstanding shares of 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.
14
<PAGE>
EXCHANGE OF B.M.J. CERTIFICATES
Prior to the Effective Time, Summit will appoint First Chicago Trust
Company of New York or another entity reasonably satisfactory to B.M.J. 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 B.M.J. Common as of
the Effective Time, Summit will cause the Exchange Agent to send to each
B.M.J. shareholder a letter of transmittal and instructions for exchanging
their B.M.J. Certificates for a Summit Certificate and, if entitled thereto,
a check representing a Cash In Lieu Amount.
To effect a proper surrender and exchange of B.M.J. Certificates, all
B.M.J. Certificates held by a particular B.M.J. shareholder must be
surrendered to the Exchange Agent by such shareholder with properly executed
and completed letters of transmittal. Until a B.M.J. shareholder has properly
surrendered B.M.J. Certificates, Summit may, at its option, refuse to pay to
such holder dividends or other distributions, if any, payable to holders of
Summit Common; provided, however, that, upon proper surrender and exchange of
B.M.J. Certificates, there will be paid to such holders the amount, without
interest, of dividends and other distributions, if any, which became payable
prior thereto but which were not paid. No transfer of B.M.J. Common will be
effected on the stock transfer books of B.M.J. 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 B.M.J.
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 B.M.J. Certificate is surrendered for the same B.M.J.
shareholder account, the number of whole shares of Summit Common for which a
Summit Certificate will be issued to the owner of such account pursuant to
the Merger Agreement will be computed on the basis of the aggregate number of
shares of B.M.J. Common represented by the B.M.J. Certificates so
surrendered.
B.M.J. shareholders should not surrender their B.M.J. Certificates for
exchange until a letter of transmittal, instructions and other exchange
materials are received from the Exchange Agent. However, B.M.J. shareholders
are urged to notify Registrar and Transfer Company now, at (908) 272-8511 if
their B.M.J. Certificates are lost, stolen, destroyed or not properly
registered, in order to begin the process of issuing replacement B.M.J.
Certificates.
CONVERSION OF STOCK AWARD PLAN OPTIONS
Each Original Award Plan Option granted pursuant to the B.M.J. Stock Award
Plans which is outstanding and unexercised at the Effective Time, whether or
not exercisable immediately prior to the Effective Time, will be converted
automatically at the Effective Time into an exercisable New Award Plan
Option. Subject to the adjustment described below, each New Award Plan Option
will continue to be governed by the terms of the B.M.J. Stock Award Plan
under which the corresponding Original Award Plan Option was granted and the
stock option agreement by which it was evidenced, including terms and
provisions administering exercises. In each case, (i) the number of shares of
Summit Common subject to the New Award Plan Option will be equal to the
number of shares of Summit Common which would have been issued in the Merger
if the shares of B.M.J. Common subject to that option were issued and
outstanding immediately prior to the Effective Time, rounded down to the next
lower full share, and (ii) the exercise price per share of Summit Common
subject to the New Award Plan Option will be equal to the exercise price per
share of B.M.J. Common subject to the Original Award Plan Option so converted
divided by the Exchange Ratio.
Within 30 days after the receipt by Summit of an accurate and complete
list of all holders of B.M.J. options, Summit will issue to each holder of
New Award Plan Options, upon receipt and cancellation of all agreements under
which Original Award Plan Options were issued to such holder, appropriate
instruments confirming the
15
<PAGE>
conversion described above; provided, however, that Summit will not be
obligated to issue such confirming instruments or any shares of Summit Common
issuable upon exercise of a New Award Plan Option until the shares of Summit
Common issuable upon exercise of the New Award Plan Options have been
registered with the Commission and authorized for listing on the NYSE and for
sale by any appropriate state securities regulators, which Summit will use
its best efforts to effect within 30 days after B.M.J. shall have delivered
to Summit the above mentioned option-holder list.
RECOMMENDATION OF B.M.J. BOARD
THE MERGER AGREEMENT HAS BEEN APPROVED BY THE B.M.J. BOARD. THE B.M.J.
BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF B.M.J.
SHAREHOLDERS. THE B.M.J. BOARD UNANIMOUSLY RECOMMENDS THAT B.M.J.
SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT.
BACKGROUND
The Board of Directors of B.M.J. has observed the consolidation taking
place among banks and thrift institutions in the nation in general, and in
New Jersey in particular, over the past two years. Over this same period, the
level and nature of bank and thrift institution merger and acquisition
activity in New Jersey significantly impacted the banking marketplace and the
competitive environment in which B.M.J. operates. In 1995, for example,
fifteen transactions were announced regarding the acquisition of banks and
thrift institutions in New Jersey involving the acquisition of over $58
billion in total assets. The Board of Directors of B.M.J. observed further
the merger premiums being paid by acquirers and assessed the impact of
consolidation of B.M.J.'s marketplace and its competitive position.
The Board of Directors periodically evaluates the strategic and
competitive position of B.M.J., its near-term and longer-term business
prospects, its management resources and performance, and the strategic
options and opportunities available to B.M.J. In light of its changing
marketplace and competitive position, B.M.J. retained Bear Stearns in May
1995 to assist it in a review of the operations and financial position of the
company and to advise the B.M.J. Board on how it might best attempt to
maximize shareholder value.
In June, 1995 representatives from Bear Stearns recommended to the
Executive Committee of B.M.J.'s Board of Directors (the "Executive
Committee") that an appropriate business combination could be the best way to
maximize shareholder value and otherwise enable the B.M.J. Board to fulfill
its fiduciary obligations. The Executive Committee subsequently discussed
several strategic alternatives with the full B.M.J. Board, including various
forms of business combination. The Board of Directors reviewed B.M.J.
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 B.M.J.'s shareholders could receive more
value through a merger than they would receive if B.M.J. remained as an
independent institution, even if management were able to meet its goals for
operating the company independently.
Upon review of the Bear Stearns analysis presented in June, 1995, 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,
the Board of Directors of B.M.J. decided to take steps to address these
challenges while enhancing shareholder value. After discussing the issue at
some length, the B.M.J. Board unanimously agreed that some form of business
combination indeed might be the best way to maximize shareholder value and
otherwise enable the B.M.J. Board to successfully fulfill its fiduciary
obligations.
Accordingly, on June 21, 1995 the B.M.J. Board authorized management and
the Executive Committee to explore potential business combinations as well as
other alternatives such as remaining independent or pursuing acquisitions by
B.M.J. B.M.J.'s Board of Directors considered some of the advantages that
could be derived from a business combination, including greater shareholder
liquidity, increased market recognition, additional product offerings and
consolidation of administrative functions. Over the course of the summer and
early fall of 1995 Bear Stearns contacted a number of financial institutions
which it believed might have an interest in a business combination with
B.M.J., and confidential information was exchanged and potential business
combinations were
16
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explored with at least six institutions, including Summit, but never brought
to successful conclusion, oftentimes because a potential acquiror of B.M.J.
was itself acquired before a business combination with B.M.J. could be agreed
to, or a potential acquiror was involved in another business combination and
was not willing to explore a business combination with B.M.J. at that time.
After several failed attempts to conclude some form of business combination,
in January, 1996 the B.M.J. Board decided to return to the course of
remaining independent for the foreseeable future, without foreclosing the
opportunity to participate in the right business combination if, contrary to
then current expectations, one were to appear feasible at some later point.
The Summit offer is the result of discussions that Edwin W. Townsend,
Chairman of B.M.J.'s Board of Directors, and Jerome Walther, a member of
B.M.J.'s Board of Directors' Executive Committee, had with representatives of
Summit in July and August of 1996, in response to Summit's initiative in
early July. Mr. Townsend later reviewed this matter with the other members of
the Executive Committee (Messrs. Elias, Kohn and Monaghan) in mid to late
August. During several days in late August, representatives of B.M.J. and
Summit and their financial and legal advisors engaged in negotiations
concerning the terms of a transaction and a proposed definitive merger
agreement.
Towards the end of August, the B.M.J. Board, together with Bear Stearns
and B.M.J.'s legal counsel, Covington & Burling, met to discuss the proposed
definitive merger agreement. At that meeting, Bear Stearns gave the B.M.J.
Board its opinion that the consideration to be received by the shareholders
of B.M.J. from Summit was fair from a financial point of view. After
extensive discussion, the B.M.J. Board voted to approve the Merger Agreement.
REASONS FOR THE MERGER
B.M.J. The B.M.J. Board believes that the Merger is in the best interests
of B.M.J. and its shareholders. Accordingly, the B.M.J. Board has unanimously
adopted the Merger Agreement. The B.M.J. Board therefore unanimously
recommends that B.M.J. shareholders vote "For" the approval of the Merger
Agreement.
In reaching its determination that the Merger is in the best interest of
B.M.J. and its shareholders, the B.M.J. Board considered a number of factors
both from a short-term and long-term perspective, including, without
limitation, the following:
(i) B.M.J. Board's familiarity with and review of B.M.J.'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 B.M.J.
shareholders inherent in the Merger, including the Merger
Consideration, an 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;
(iv) the limited opportunities for growth and leveraging of B.M.J.'s
capital, and the opportunity for B.M.J. shareholders to participate
in the future growth of Summit;
(v) the ability to generate an acceptable return on equity without taking
undue risk;
(vi) B.M.J. Board's review, based in part on presentations by Bear Stearns
and the due diligence reviews by the Executive Committee, as well as
its financial and legal advisors, of the business, operations,
financial condition, earnings and prospects of Summit;
(vii) the advice of Bear Stearns that a business combination with, and the
acquisition proposal by, Summit were fair to B.M.J. shareholders from
a financial point of view;
(viii) B.M.J. Board's evaluation of the risks associated with consummation
of the Merger, including, among other, 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 transaction to Summit;
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(ix) 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 are not met at Closing; and
(x) the expectation that the Merger will generally be a tax-free
transaction to B.M.J. and its shareholders. See "THE MERGER --
Certain Federal Income Tax Consequences.
In view of the variety of factors considered in connection with its
evaluation of the Merger, the B.M.J. 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 B.M.J. BOARD UNANIMOUSLY RECOMMENDS THAT B.M.J. SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE MERGER AGREEMENT.
Summit. The Summit Board believes the Merger will enhance Summit's retail
franchise and competitive position in key market areas.
OPINION OF B.M.J.'S FINANCIAL ADVISOR
B.M.J. retained Bear Stearns by letter agreement dated May 2, 1995, to act
as financial advisor in connection with any acquisition of B.M.J. and to
render its opinion to the B.M.J. Board as to the fairness of such a
transaction, from a financial point of view, to the shareholders of B.M.J.
Bear Stearns is an internationally recognized investment banking firm and was
selected by B.M.J. because of Bear Stearns' experience and expertise in
mergers and acquisitions and in investment banking and its knowledge of the
banking industry, and because of Bear Stearns' familiarity with B.M.J.'s
business arising out of its prior role as investment banker to B.M.J. No
limitations were imposed by the B.M.J. Board or B.M.J. upon Bear Stearns with
respect to the investigations made or the procedures followed by it in
rendering its opinion. On August 28, 1996, Bear Stearns advised B.M.J.'s
Board of Directors that the Exchange Ratio was fair, from a financial point
of view, to the shareholders of B.M.J. Bear Stearns confirmed its opinion in
writing as of the date of this Proxy Statement-Prospectus (such opinion, as
updated on the date hereof, being referred to herein as the "Bear Stearns
Fairness Opinion").
The full text of the Bear Stearns Fairness Opinion dated the date hereof,
which sets forth certain assumptions made, matters considered, and
limitations on the reviews undertaken, is attached hereto as Appendix B and
is incorporated herein by reference, and should be read in its entirety in
connection with this Proxy Statement-Prospectus. The summary of the Bear
Stearns Fairness Opinion set forth herein is qualified in its entirety by
reference to the opinion.
The Bear Stearns Fairness Opinion is directed only to the fairness of the
Exchange Ratio, from a financial point of view, to B.M.J.'s shareholders and
does not constitute a recommendation to any B.M.J. shareholder as to how such
shareholder should vote at the B.M.J. Meeting.
Although Bear Stearns evaluated the financial terms of the Merger, Bear
Stearns did not recommend the specific consideration to be paid to the B.M.J.
shareholders. The consideration to be received by the B.M.J. shareholders was
determined by negotiations between representatives of B.M.J. and Summit. Each
holder of B.M.J. Common Stock will receive .56 shares of Summit Common Stock
for each share of B.M.J. Common Stock. Based upon Summit's closing stock
price of $38.25 on August 27, 1996, the last trading day prior to the
presentation to B.M.J.'s Board of Directors, Bear Stearns calculated an
acquisition price per share of B.M.J. Common Stock of $21.42 (the "Per Share
Calculation").
In connection with its rendering of its opinion, Bear Stearns, among other
things: (i) reviewed the Proxy Statement-Prospectus in substantially the form
to be sent to shareholders, including a copy of the Merger Agreement; (ii)
reviewed B.M.J.'s Annual Reports to Shareholders and Annual Reports on Form
10-K for the fiscal years ended December 31, 1993 through 1995, and its
Quarterly Reports on Form 10-Q for the periods ended March 31, June 30, and
September 30, 1996; (iii) reviewed Summit's Annual Report to Shareholders and
Annual Report on Form 10-K for the fiscal year ended December 31, 1995 and
its Quarterly Reports on Form 10-Q for the periods ended March 31, June 30,
and September 30, 1996; (iv) reviewed certain operating and financial
information, including projections, provided to Bear Stearns by management
relating to B.M.J.'s business and prospects; (v) reviewed certain operating
and financial information provided to Bear Stearns by management
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relating to Summit's business and prospects; (vi) met with certain members of
B.M.J.'s and Summit's senior management to discuss its operations, historical
financial statements and future prospects; (vii) visited B.M.J.'s facilities
in Bordentown, New Jersey and Summit's facilities in Princeton, New Jersey;
(viii) reviewed the historical prices and trading volumes of the common
shares of B.M.J. and Summit; (ix) reviewed publicly available financial data
and stock market performance data of companies which Bear Stearns deemed
generally comparable to B.M.J. and Summit; (x) reviewed the terms of recent
acquisitions of companies which Bear Stearns deemed generally comparable to
the Merger; and (xi) conducted such other studies, analyses, inquiries and
investigations as Bear Stearns deemed appropriate.
In conducting its review and arriving at and updating the Bear Stearns
Fairness Opinion, Bear Stearns relied upon and assumed the accuracy and
completeness of the financial and other information regarding B.M.J. and
Summit provided to Bear Stearns by B.M.J. and Summit or publicly available,
and Bear Stearns did not independently verify such information. With respect
to B.M.J.'s projected financial results, Bear Stearns assumed that such
results have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of B.M.J. as to the
expected future performance of B.M.J. Bear Stearns did not assume any
responsibility for the information or projections provided to Bear Stearns
and further relied upon the assurances of the managements of B.M.J. and
Summit that they were unaware of any facts that would make the information or
projections provided to Bear Stearns incomplete or misleading. In arriving at
its opinion, Bear Stearns did not perform or obtain any independent appraisal
of the assets of B.M.J. or Summit.
The following is a summary of the analyses performed by Bear Stearns in
connection with its opinion rendered on August 28, 1996 (which are
substantially the same types of analyses performed by Bear Stearns in
connection with the updated Bear Stearns Fairness Opinion):
Financial Statement Review of Summit: Bear Stearns reviewed Summit's
Annual Report to Shareholders and Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 and Quarterly Reports on Form 10-Q for the
periods ended March 31, and June 30, 1996, and calculated growth rates for
various balance sheet and income statement line items. Net income before
extraordinary items increased 37.4% from the year ended December 31, 1992 to
December 31, 1993, 26.0% from the year ended December 31, 1993 to December
31, 1994, and 55.4% from the year ended December 31, 1994 to December 31,
1995. For the six months ended June 30, 1996, net income before extraordinary
items increased by 25.6% as compared to the six months ended June 30, 1995.
Return on average assets increased from 0.70% for the year ended December 31,
1993 to 1.16% for the year ended December 31, 1995.
Review of Companies Comparable to Summit: Bear Stearns performed an
analysis of Summit's financial performance and stock market trading data by
comparing the stock price to book value, stock price to tangible book value,
stock price to latest twelve months earnings per share ("LTM EPS"), and stock
price to estimated 1996 earnings per share ("EPS") (based on First Call and
IBES estimates) of Summit to sixteen publicly traded commercial banks with
total assets between $15 billion and $40 billion (the "Summit Peer Group").
The Summit Peer Group included: AmSouth Bancorporation; BanPonce
Corporation; Crestar Financial Corporation; Comerica Incorporated; First Bank
System, Inc., Fifth Third Bancorp; First of America Bank Corporation; Firstar
Corporation; Huntington Bancshares Incorporated; Mercantile Bancorporation
Inc.; Northern Trust Corporation; Regions Financial Corporation; Southern
National Corporation; SouthTrust Corporation; UnionBanCal Corporation; and
U.S. Bancorp.
Bear Stearns compared the multiples of stock price to book value, stock
price to tangible book value, stock price to LTM EPS, and stock price to
estimated 1996 EPS of Summit to the respective medians of these multiples for
the Summit Peer Group. Using closing stock prices from August 27, 1996, and
financial statements as of June 30, 1996, Bear Stearns calculated (i) a stock
price to book value multiple for Summit of 1.97 times, as compared to a
median of 2.00 times for the Summit Peer Group, (ii) a stock price to
tangible book multiple of 2.10 times for Summit as compared to a median of
2.13 times for the Summit Peer Group, (iii) a stock price to LTM EPS multiple
for Summit of 12.8 times (excluding a restructuring charge incurred in the
first quarter of 1996) as compared to a median of 12.4 times for the Summit
Peer Group, and (iv) a stock price to estimated 1996 EPS multiple of 11.7
times for Summit as compared to a median of 11.7 times for the Summit Peer
Group.
Review of Companies Comparable to B.M.J.: Bear Stearns performed an
analysis of B.M.J.'s financial performance and stock market trading data by
comparing the stock price to book value, stock price to tangible
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book value, stock price to latest twelve months earnings per share ("LTM
EPS"), and stock price to estimated 1996 earnings per share ("EPS") (based on
projections from B.M.J. management) of B.M.J. to the following three peer
groups: (i) seven banks in New Jersey with total assets between $300 million
and $1.5 billion (the "B.M.J. New Jersey Peer Group"), (ii) 28 Mid-Atlantic
banks with total assets between $400 million and $1.1 billion (the "B.M.J.
Mid-Atlantic Peer Group"), and (iii) 32 nationwide banks with total assets
between $400 million and $1.1 billion, return on average assets before
extraordinary items of greater than 1.25%, and a ratio of tangible equity to
assets of greater than 9% (the "B.M.J. Nationwide Peer Group").
The B.M.J. New Jersey Peer Group included: United National Bancorp; Broad
National Bancorporation; Interchange Financial Services Corporation; Vista
Bancorp, Inc.; Yardville National Bancorp; Center Bancorp, Inc.; and
Independence Bancorp, Inc.
The B.M.J. Mid-Atlantic Peer Group included: Commercial Bank of New York;
Merchants New York Bancorp, Inc.; Omega Financial Corporation; United
National Bancorp; Harleysville National Corporation; JeffBanks, Inc.;
Evergreen Bancorp, Inc.; Sandy Spring Bancorp, Inc.; Mason-Dixon Bancshares,
Inc.; Suffolk Bancorp; Sterling Bancorp; F & M Bancorp; Southwest National
Corporation; FCNB Corp; Arrow Financial Corporation; Hudson Chartered
Bancorp, Inc.; Keystone Heritage Group, Inc.; CNB Financial Corp.; Tompkins
County Trustco, Inc.; State Bancorp, Inc.; Broad National Bancorporation;
First United Corporation; Interchange Financial Services Corporation; Vista
Bancorp, Inc.; Yardville National Bancorp; Center Bancorp, Inc.; First of
Long Island Corporation; and FNB Rochester Corp.
The B.M.J. Nationwide Peer Group included: Omega Financial Corporation;
National City Bancshares, Inc.; Harleysville National Corporation; Farmers
Capital Bank Corporation; CBT Corporation; Simmons First National
Corporation; National City Bancorporation; Old Second Bancorp, Inc.;
Southwest National Corporation; Arrow Financial Corporation; First Merchants
Corporation; Shoreline Financial Corporation; Horizon Bancorp, Inc.; Keystone
Heritage Group, Inc.; Tompkins County Trustco, Inc.; ArgentBank; Washington
Trust Bancorp, Inc.; West Coast Bancorp; Allied Bankshares, Inc.; First
Charter Corporation; Citi-Bancshares, Inc.; First-Knox Banc Corp.; First
United Corporation; BancFirst Ohio Corp.; Union Bankshares Corporation; Bank
of Granite Corporation; Mountain Parks Financial Corp.; Pacific Bank, N.A.;
Cass Commercial Corporation; First State Corporation; First of Long Island
Corporation; and Northern States Financial Corporation.
Bear Stearns compared the multiples of stock price to book value, stock
price to tangible book value, stock price to LTM EPS, and stock price to
estimated 1996 EPS of B.M.J. to the respective medians of these multiples for
the B.M.J. New Jersey Peer Group, the B.M.J. Mid-Atlantic Peer Group, and the
B.M.J. Nationwide Peer Group. Using closing stock prices from August 27, 1996
and financial statements as of June 30, 1996, Bear Stearns calculated (i) a
stock price to book value multiple for B.M.J. of 1.55 times, as compared to a
median of 1.36 times for the B.M.J. New Jersey Peer Group, 1.49 times for the
B.M.J. Mid-Atlantic Peer Group. and 1.61 times for the B.M.J. Nationwide Peer
Group, (ii) a stock price to tangible book value multiple of 1.59 times for
B.M.J., as compared to a median of 1.44 times for the B.M.J. New Jersey Peer
Group, 1.55 times for the B.M.J. Mid-Atlantic Peer Group, and 1.64 times for
the B.M.J. Nationwide Peer Group, (iii) a stock price to LTM EPS multiple for
B.M.J. of 10.6 times (12.3 times after adjusting for non-recurring items), as
compared to a median of 10.3 times for the B.M.J. New Jersey Peer Group, 11.7
times for the B.M.J. Mid-Atlantic Peer Group, and 12.4 times for the B.M.J.
Nationwide Peer Group, and (iv) a stock price to estimated 1996 EPS for
B.M.J. of 10.7 times (based on projections from B.M.J. management), as
compared to a median of 10.0 times for the B.M.J. New Jersey Peer Group, 10.7
times for the B.M.J. Mid-Atlantic Peer Group, and 12.1 times for the B.M.J.
Nationwide Peer Group.
Review of Mergers Comparable to the Merger: Bear Stearns performed an
analysis of the Per Share Consideration offered to the B.M.J. shareholders in
the Merger by comparing the multiples represented by such consideration to
the book value, tangible book value, LTM EPS, premium over tangible book
value to core deposits, and premium over market value two weeks before the
merger announcement for B.M.J. to the respective multiples of the per share
consideration received by shareholders in the following six subsets of
publicly announced commercial bank acquisitions: (i) seventeen transactions
valued at over $10 million since January 1, 1995 in which the seller was
located in New Jersey (the "New Jersey Mergers"), (ii) four transactions
valued at over $10 million since January 1, 1995 in which the seller was
located in New Jersey and had a ratio of tangible equity to tangible assets
of greater than 9% (the "New Jersey Well Capitalized Mergers"), (iii)
seventeen transactions
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since January 1, 1995 in which the seller was located in a Mid-Atlantic state
and the transaction value was between $25 million and $300 million (the
"Mid-Atlantic Mergers"), (iv) four transactions since January 1, 1995 in
which the seller was located in a Mid-Atlantic state and had a ratio of
tangible assets to tangible equity of greater than 9% and the transaction
value was between $25 million and $300 million (the "Mid-Atlantic Well
Capitalized Mergers"), (v) fourteen nationwide transactions since January 1,
1995 valued between $100 million and $200 million (the "Nationwide Mergers"),
and(vi) three nationwide transactions since January 1, 1995 valued between
$100 million and $200 million in which the seller had a ratio of tangible
equity to tangible assets of greater than 9% (the "Nationwide Well
Capitalized Mergers").
The New Jersey Mergers included (acquiror/acquiree): Susquehanna
Bancshares, Inc./Farmers Banc Corporation; Susquehanna Bancshares,
Inc./Atcorp Inc.; Collective Bancorp, Inc./Continental Bancorporation;
Trenton Savings Bank, MHC/Burlington County Bank; Fleet Financial Group,
Inc./National Westminster Bancorp; Fulton Financial Corporation/Gloucester
County Bancshares, Inc.; Sovereign Bancorp/West Jersey Bancshares Inc; UJB
Financial Corp./Summit Bancorporation; Hubco, Inc./Growth Financial Corp; UJB
Financial Corp./Flemington National Bank & Trust; PNC Bank Corp./Midlantic
Corporation; First Union Corporation/First Fidelity Bancorporation; Summit
Bancorporation/Garden State Bancshares, Inc.; Meridian Bancorp, Inc./United
Counties Bancorporation; PNC Bank Corp./Chemical New Jersey Holdings; Hubco,
Inc./Urban National Bank; and United National Bancorp/New Era Bank.
The New Jersey Well Capitalized Mergers included (acquiror/acquiree):
Susquehanna Bancshares, Inc./Farmers Banc Corporation; Hubco, Inc./Growth
Financial Corp; PNC Bank Corp./Midlantic Corp; and Meridian Bancorp/United
Counties Bancorporation.
The Mid-Atlantic Mergers included (acquiror/acquiree): Hubco,
Inc./Westport Bancorp. Inc.; Prime Bancorp, Inc./First Sterling Bancorp,
Inc.; Collective Bancorp, Inc./Continental Bancorporation.; Hubco,
Inc./Hometown Bancorporation, Inc.; F&M National Corporation/Allegiance Banc
Corporation; Hubco, Inc./Lafayette American Bank and Trust Company; BT
Financial Corporation/Moxham Bank Corporation; Fulton Financial
Corporation/Gloucester County Bancshares, Inc.; North Fork Bancorporation,
Inc./Extebank; Hubco, Inc./Growth Financial Corp; BT Financial
Corporation/Huntington National Bank of Pennsylvania; UJB Financial
Corp./Flemington National Bank & Trust; Keystone Financial, Inc./National
American Bancorp, Inc.; Summit Bancorporation/Garden State Bancshares, Inc.;
Bank of New York Company, Inc./Putnam Trust Company; Hubco, Inc./Urban
National Bank; and Staten Island Savings Bank/Gateway Bancorp, Inc.
The Mid-Atlantic Well Capitalized Mergers included (acquiror/acquiree):
Hubco, Inc./Growth Financial Corp; BT Financial Corporation/Huntington
National Bank of Pennsylvania; Keystone Financial, Inc./National American
Bancorp, Inc.; and Staten Island Savings Bank/Gateway Bancorp, Inc.
The Nationwide Mergers included (acquiror/acquiree): Community First
Bankshares, Inc./Mountain Parks Financial Corporation; Regions Financial
Corporation/Allied Bankshares, Inc.; Taylor Investment Group/Cole Taylor
Bank; ABN-AMRO Holding NV/Comerica Bank of Illinois; Hubco, Inc./Lafayette
American Bank and Trust Company; Fort Wayne National Corporation/Valley
Financial Services, Inc.; Peoples Heritage Financial Group/Bank of New
Hampshire Corporation; Washington Mutual Inc./Western Bank; Huntington Banc-
shares Incorporated/Peoples Bank of Lakeland; Union Planters
Corporation/Capital Bancorporation, Inc.; Norwest Corporation/State National
Bank; First Commerce Corporation/Central Corporation; Comerica
Incorporated/Metrobank; and Bank of New York Company, Inc./Putnam Trust
Company.
The Nationwide Well Capitalized Mergers included (acquiror/acquiree):
Regions Financial Corporation/Allied Bankshares, Inc.; ABN-AMRO Holding
NV/Comerica Bank of Illinois; and Huntington Bancshares Incorporated/Peoples
Bank of Lakeland.
Bear Stearns compared the multiples of the Per Share Consideration to
B.M.J.'s book value, tangible book value, LTM EPS, premium over tangible book
value to core deposits, and premium to the market value two weeks prior to
the merger announcement to the respective medians of these multiples for the
six transaction groups defined above. Bear Stearns calculated (i) an
acquisition price to book value multiple for the Merger of 2.46 times, as
compared to a median of 2.08 times for the New Jersey Mergers, 1.90 times for
the New Jersey Well Capitalized Mergers, 2.16 times for the Mid-Atlantic
Mergers, 1.80 times for the Mid-Atlantic Well Capitalized Mergers, 2.13 times
for the Nationwide Mergers, and 2.01 times for the Nationwide Well
Capitalized
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Mergers, (ii) an acquisition price to tangible book value multiple for the
Merger of 2.52 times, as compared to a median of 2.14 times for the New
Jersey Mergers, 1.90 times for the New Jersey Well Capitalized Mergers, 2.16
times for the Mid-Atlantic Mergers, 1.80 times for the Mid-Atlantic Well
Capitalized Mergers, 2.22 times for the Nationwide Mergers, and 2.12 times
for the Nationwide Well Capitalized Mergers, (iii) an acquisition price to
LTM EPS multiple for the Merger of 16.9 times (19.5 times after adjusting LTM
EPS for non-recurring items), as compared to a median of 17.2 times for the
New Jersey Mergers, 15.5 times for the New Jersey Well Capitalized Mergers,
19.3 times for the Mid-Atlantic Mergers, 18.4 times for the Mid-Atlantic Well
Capitalized Mergers, 14.9 times for the Nationwide Mergers, and 16.6 times
for the Nationwide Well Capitalized Mergers, (iv) a premium over tangible
book value to core deposits for the Merger of 19.8%, as compared to a median
of 12.5% for the New Jersey Mergers, 13.3% for the New Jersey Well
Capitalized Mergers, 12.9% for the Mid-Atlantic Mergers, 14.4% for the
Mid-Atlantic Well Capitalized Mergers, 13.0% for the Nationwide Mergers, and
19.0% for the Nationwide Well Capitalized Mergers, and (v) a premium to
market value two weeks before the merger announcement for the Merger of 57%,
as compared to a median of 31% for the New Jersey Mergers, 31% for the New
Jersey Well Capitalized Mergers, 30% for the Mid-Atlantic Mergers, 17% for
the Mid-Atlantic Well Capitalized Mergers, and 30% for the Nationwide
Mergers.
Stock Price Review: Bear Stearns reviewed the stock price and volume
history of Summit from January 2, 1995 to August 26, 1996. Bear Stearns
compared the trading prices of Summit Common Stock versus the S&P Regional
Bank Index and an index comprised of the Summit Peer Group from January 2,
1995 to August 27, 1996. Bear Stearns also compared the trading prices of
B.M.J. Common Stock versus the S&P Regional Bank Index and an index comprised
of the B.M.J. New Jersey Peer Group for the same time period. The S&P
Regional Bank Index included 22 major regional banks.
Review of Relative Contribution: Bear Stearns determined the relative
contribution of B.M.J. to Summit after giving pro forma effect to the Merger.
Bear Stearns determined that B.M.J. shareholders would receive approximately
4.2% of pro forma ownership (on a fully diluted basis) of the combined
company, while B.M.J. would contribute to the combined company approximately
2.8% of the assets, approximately 3.4% of the tangible equity, approximately
3.3% of the total equity, approximately 2.8% of the total deposits,
approximately 3.5% of LTM net income, and approximately 2.9% of 1997
estimated net income.
Bear Stearns' opinion on August 28, 1996, and the updated Bear Stearns
Fairness Opinion were based solely upon the information available to it and
economic, market, and other conditions as they existed as of the dates of
such opinions; events occurring thereafter could materially affect the
assumptions used in preparing the opinions.
In connection with rendering its opinion on August 28, 1996, and the
updated Bear Stearns Fairness Opinion, Bear Stearns performed a variety of
financial analyses. The evaluation of the fairness, from a financial point of
view, is a subjective one based on the experience and judgment of Bear
Stearns, and not merely the result of mathematical analysis of financial
data. Accordingly, Bear Stearns believes that its analyses must be considered
as a whole and that considering portions of such analyses or certain of the
factors considered by Bear Stearns without considering all such analyses and
factors could create an incomplete view of the process underlying the
opinion. In its analyses, Bear Stearns made numerous assumptions with respect
to business, market, monetary and economic conditions, industry performance,
business and economic conditions and other matters, many of which are beyond
Bear Stearns', B.M.J.'s and Summit's control. Any estimates contained in Bear
Stearns' analyses are not necessarily indicative of future results or actual
values, which may be significantly more or less favorable than such
estimates. No company or transaction used in the above analyses as a
comparison is identical to B.M.J., 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 public trading value of the companies to which they are
being compared. The analyses performed by Bear Stearns are not necessarily
indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses. Such
analyses were prepared solely as part of Bear Stearns' analysis of the
fairness of the Merger to B.M.J. shareholders. The analyses do not purport to
be appraisals or to reflect the prices at which a company might actually be
sold or the prices at which any securities may trade at the present time or
at any time in the future.
Based upon these analyses, Bear Stearns has delivered its opinion that the
Exchange Ratio is fair, from a financial point of view, to the shareholders
of B.M.J.
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Fees: In a letter agreement dated May 2, 1995, B.M.J. retained Bear
Stearns to act as financial advisor in connection with any acquisition of
B.M.J. or any acquisition by B.M.J. If the Merger is consummated, then B.M.J.
shall pay Bear Stearns, immediately upon such consummation, a cash fee equal
to 1.00% of the total consideration paid by Summit (against which any opinion
fee or advisory fee paid will be credited). Pursuant to such letter
agreement, B.M.J. paid Bear Stearns annual fees of $20,000 beginning on May
2, 1995 and $250,000 at the time Bear Stearns informed the B.M.J. Board that
Bear Stearns was prepared to render the opinion. While the payment of all or
a significant portion of fees related to financial advisory services provided
in connection with arm's-length merger and other business combination
transactions upon consummation of such transactions, as is the case with the
Merger, might be viewed as giving such financial advisors a financial
interest in the successful completion of such transactions, such compensation
arrangements are standard and customary for transactions of the size and type
of the Merger. In addition, B.M.J. has agreed to reimburse Bear Stearns for
its reasonable out-of-pocket costs and expenses incurred in connection with
the services rendered to B.M.J. pursuant to this letter agreement; these fees
not to exceed more than $10,000 without the prior consent of B.M.J. B.M.J.
also agreed to pay all reasonable fees and expenses of counsel retained by
Bear Stearns, given the prior consent of B.M.J., such consent not to be
unreasonably withheld. Pursuant to this letter agreement, B.M.J. has agreed
to indemnify Bear Stearns, its affiliates and their respective partners,
directors, officers, agents, consultants and employees and controlling
persons against certain expenses and 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, B.M.J. (as issuer) entered into the Merger Option Agreement
with Summit (as grantee). Pursuant to the Merger Option Agreement, B.M.J.
granted the B.M.J. Option to Summit. The B.M.J. Option is an option to
purchase 1,490,000 shares of B.M.J. Common at a price per share equal to the
last sale price of the B.M.J. Common on the Nasdaq National Market the
trading day immediately preceding the date of the Merger Agreement,
exercisable as described below. The purchase of any shares of B.M.J. Common
pursuant to the B.M.J. 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 B.M.J. to terminate the
Merger Agreement, Summit may exercise the B.M.J. 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 B.M.J. 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 breach thereof by B.M.J. which has not been cured or is
not capable of being cured within the time allotted); 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 upon a breach by B.M.J. (unless the
breach by B.M.J. 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) B.M.J., 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 B.M.J. or any
of its banking subsidiaries, (b) the purchase, lease, or other acquisition
of 10 percent or more of the aggregate value of the assets or deposits of
B.M.J. or any of its banking subsidiaries, (c) the purchase or other
acquisition of securities representing 10 percent or more of the voting
power of B.M.J. or any of its banking subsidiaries or (d) any
substantially similar transaction, in each case except as otherwise
permitted by the Merger Option Agreement;
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(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 B.M.J. or any of its banking subsidiaries;
(3) any third party making a bona fide proposal to B.M.J. 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 B.M.J. or any
of its banking subsidiaries);
(4) after a proposal by a third party to B.M.J. or its shareholders to
engage in an Acquisition Transaction, B.M.J. 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) any Purchase Event (as defined below).
The term "Purchase Event" shall mean either of the following events or
transactions:
(1) any person other than Summit or a subsidiary of Summit acquiring
beneficial ownership of 25 percent or more of the aggregate voting power
of B.M.J. or any of its banking subsidiaries, except as otherwise
permitted by the Merger Option Agreement; or
(2) failure of the shareholders of B.M.J. to approve the Merger
Agreement, failure of the B.M.J. Board of Directors to call a meeting for
consideration of the Merger or cancellation of such a meeting, or B.M.J.'s
Board of Directors shall have withdrawn or modified in a manner adverse to
the consummation of the Merger the recommendation of B.M.J.'s Board with
respect to the Merger Agreement, in each case after an Extension Event; or
(3) 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 B.M.J. Option (or shares issued
pursuant to the exercise thereof) must be repurchased, or converted into, or
exchanged for, an option of another corporation or B.M.J. (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 B.M.J. Option. The terms of such Substitute Option
and Registration Rights are set forth in the Merger Option Agreement.
The Merger Option Agreement and the B.M.J. 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 B.M.J. prior to the Merger.
To the knowledge of Summit and B.M.J., no event giving rise to the right
to exercise the B.M.J. Option has occurred as of the date of this Proxy
Statement-Prospectus.
A copy of the Merger Option Agreement is 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 B.M.J. 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 the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). The BHC Act
provides that the Federal Reserve Board may not approve any transaction (1)
that would result in a monopoly, or that would be in furtherance of any
combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States, or (2) the effect of
which in any section of the country may be substantially to lessen
competition, or to tend to create a monopoly, or that in any other manner
would be in restraint of trade, unless the Federal Reserve Board finds that
the anticompetitive effects of the proposed transaction are clearly
outweighed in the public interest by the probable effect of the transaction
in meeting the convenience and needs of the communities to be served. In
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conducting its review of any application for approval, the Federal Reserve
Board is required to consider the financial and managerial resources and
future prospects of the company or companies and the banks concerned, and the
convenience and needs of the communities to be served. Under the BHC Act as
interpreted by the Federal Reserve Board and the courts, the Federal Reserve
Board may deny any application if it determines that the financial or
managerial resources of the acquiring bank holding company are inadequate.
The acquisition by Summit of 5% or more of B.M.J.'s voting stock is subject
to the same approval. The BHC Act provides that a transaction approved by the
Federal Reserve Board may not be consummated for 30 days after such approval
or, if certain conditions are met, a shorter period, but in no event less
than 15 calendar days after the date of approval. During such period, the
Justice Department may commence legal action challenging the transaction
under the antitrust laws. If, however, the Justice Department does not
commence legal action during the specified waiting period, it may not
challenge the transaction thereafter except in an action commenced under
Section 2 of the Sherman Antitrust Act. Satisfactory financial condition,
particularly with regard to capital adequacy, and satisfactory Community
Reinvestment Act ratings generally are prerequisites to obtaining Federal
Reserve Board approval to make acquisitions. All of Summit's subsidiary banks
are currently rated "satisfactory" or better under the Community Reinvestment
Act.
An application with respect to the Merger was 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 protesters if the Federal Reserve Bank
decides such a 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 expired on or about November
25, 1996 and the application was approved by the Federal Reserve Board on
December 6, 1996.
The Merger is also subject to approval by the New Jersey Commissioner of
Banking under the New Jersey Banking Act of 1948, as amended (the "NJBA").
Under the NJBA, in considering whether to approve an application for an
acquisition, the New Jersey Commissioner of Banking is to consider whether
the acquisition may: (1) be detrimental to the safety and soundness of the
New Jersey bank or New Jersey bank holding company to be acquired; (2) result
in an undue concentration of resources or a substantial reduction of
competition in New Jersey; or (3) have a significantly adverse impact on the
convenience and needs of the community or communities in New Jersey that are
served by the New Jersey bank or New Jersey bank holding company. Notice of
the application must be published and an opportunity for public comment must
be provided. The New Jersey Commissioner of Banking is required to make a
determination whether to approve an application within 60 days after receipt
(or, if later, 30 days after the receipt of requested additional information
or conclusion of public hearing, if one is held). An application with respect
to the Merger was filed by Summit with the New Jersey Commissioner of Banking
on October 21, 1996 and was approved on December 18, 1996.
B.M.J. 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 B.M.J.
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 B.M.J. have interests in the Merger
that are in addition to their interests as B.M.J. shareholders. These
interests are described in more detail below.
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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 B.M.J. or any subsidiary of B.M.J. 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 B.M.J. or any
subsidiary of B.M.J. on or before the Effective Time insurance against
liabilities and claims (and related expenses) made against them resulting
from their service 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 ("Comparable Coverage");
provided that in no event is Summit required to expend more than 200% of the
amount expended by B.M.J. prior to the execution of the Merger Agreement for
its coverage ("Coverage Amount"). Summit has agreed to use its best efforts
to obtain as much comparable insurance as is available for the Coverage
Amount if it is unable to maintain or obtain Comparable Coverage. B.M.J. must
renew any existing insurance or purchase any "discovery period" insurance
provided for under existing insurance at Summit's request.
CHANGE OF CONTROL AND SEVERANCE POLICY
B.M.J.'s and Mid-Jersey's respective Boards of Directors have each
approved a policy whereby, upon the merger or sale of B.M.J. or Mid-Jersey,
all full-time officers serving as a Vice President or above of the acquired
entity receive "a guarantee of one year's employment and severance pay of one
month's salary for each year of service as a Vice President or above" of that
entity, subject to the satisfactory performance of the officer. Under the
respective policies full-time officers will be given credit for past service
as a Vice President or above with any subsidiary of B.M.J.
B.M.J. STOCK OPTION PLANS
As described under "THE MERGER -- Conversion of Stock Award Plan Options,"
Original Award Plan Options outstanding at the Effective Time will be
automatically converted into New Award Plan Options, subject to the terms of
the particular B.M.J. Stock Award Plan and stock option agreement pursuant to
which the Original Award Plan Option was granted ("grant agreements"),
including terms and provisions administering exercises. The number of shares
covered by the New Award Plan Options and the exercise price thereof will be
set by, respectively, multiplying the number of shares covered by, and
dividing the exercise price of, the Original Award Plan Option by, the
Exchange Ratio. Pursuant to the terms of the B.M.J. Stock Award Plans and
grant agreements, all New Award Plan Options are immediately exercisable
whether or not the converted Original Award Plan Option represented thereby
was exercisable.
The following table sets forth certain information relating to Original
Award Plan Options held by Messrs. Elias, Tremblay and Reardon and all
directors and executive officers of B.M.J. as a group as follows: (i) the
number of Original Award Plan Options held by such persons; (ii) the number
of Original Award Plan Options held by such persons that are currently
exercisable; (iii) the number of unexercisable Original Award Plan Options
held by such persons that will be converted into exercisable New Award Plan
Options at the Effective Time; (iv) the weighted average exercise price for
currently exercisable Original Award Plan Options; (v) the weighted average
exercise price for unexercisable Original Award Plan Options that will be
converted into exercisable New Award Plan Options at the Effective Time; and
(vi) the aggregate net unrealized value of all Original Award Plan Options
based on the number of shares of Summit Common covered by, and the exercise
price of, the New Award Plan Options into which the Original Award Plan
Options are convertible and using the last sale price of a share of Summit
Common on December 31, 1996 of $43.75 as the market price for purposes of the
calculation.
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<TABLE>
<CAPTION>
Weighted Weighted
Options Average Average Exercise Aggregate
Exercisable Exercise Price Price of Options Net
Options in Connection of Options Exercisable in Unrealized
Options Currently with the Currently Connection with Value of
Held Exercisable Merger Exercisable the Merger Options
--------- ------------- --------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Elmer J. Elias .................... 8,750 -0- 8,750 -- $13.29 $ 98,047
John F. Tremblay .................. 63,750 32,576 31,174 $7.27 $13.04 $ 918,612
Joseph M. Reardon ................. 40,150 22,377 17,773 $8.75 $12.93 $ 558,084
Directors & Executive Officers as a
Group (9 Persons in Total). ...... 226,477 107,169 119,308 $8.42 $12.99 $3,102,218
</TABLE>
THE MERGER AGREEMENT
AMENDMENT
B.M.J. and Summit may jointly amend the Merger Agreement at any time;
provided, however, that, after the Special Meeting, no amendment may reduce
the amount of, or change the form of consideration to be received by B.M.J.
shareholders unless such modification is submitted to a vote of B.M.J.
shareholders.
B.M.J. COVENANTS
Pursuant to the Merger Agreement, B.M.J. has covenanted, among other
things, that, until termination of the Merger Agreement, B.M.J. will advise
Summit of any material adverse change in B.M.J.'s business and of certain
other circumstances, and the business of B.M.J. and its subsidiaries will be
carried on 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, B.M.J. will not declare or pay
any dividend other than a quarterly cash dividend at a rate up to $.10 per
share or the product of the quarterly 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.
B.M.J. also has agreed that, until termination of the Merger Agreement or
the Effective Time, neither B.M.J. nor any of its subsidiaries nor any of the
officers or directors of B.M.J. or its subsidiaries shall, and that B.M.J.
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 B.M.J.
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 or provide any nonpublic
information or authorize or enter into any agreement or agreement in
principle concerning, or recommend, endorse or otherwise facilitate any
effort or attempt to induce or implement any Acquisition Proposal (as defined
below); provided, however, that the Board of Directors of B.M.J. may furnish
or cause to be furnished nonpublic information and may participate in
discussions to the extent legally required for the discharge by the B.M.J.
Board of its fiduciary duties, as advised by written opinion of B.M.J.
counsel. "Acquisition Proposal" is defined as any offer, including an
exchange offer or tender offer, or proposal concerning a merger,
consolidation, business combination or takeover transaction involving B.M.J.
or any of its subsidiaries, or the acquisition of any assets or any
securities of B.M.J. or any of its subsidiaries. In addition, B.M.J. has
agreed to notify Summit, by telephone call 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 B.M.J. or any of its subsidiaries or assets by
another party and to deliver as soon as possible by facsimile transmission to
such Summit officer a copy of any document relating thereto promptly after
any such document is received by B.M.J.
In order to ensure that B.M.J. shareholders would be paid at least one,
but no more than one, dividend in each calendar quarter between the date of
the Merger Agreement and the Effective Time, B.M.J. agreed in the Merger
Agreement to coordinate with Summit the declaration of any dividends and the
setting of any dividend record or payment dates.
SUMMIT COVENANTS
Pursuant to the Merger Agreement, Summit has covenanted, among other
things, that, until termination of the Merger Agreement, Summit will advise
B.M.J. of any material adverse change in Summit's business and certain other
circumstances.
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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 B.M.J. Common; (2) receipt
of all required regulatory approvals by Summit and B.M.J. without
restrictions or limitations, that, in the reasonable opinion of Summit or
B.M.J., 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 B.M.J. of an opinion from Thomson
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 absence
of material litigation; (7) the absence of regulatory agreements relating to
the parties; (8) the delivery of officers' certificates by B.M.J. and Summit;
and (9) 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 shareholder and regulatory approvals.
Either party may terminate the Merger Agreement if (1) B.M.J.
Shareholders, in a vote on the Merger Agreement at a meeting held for such
purpose, 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 date for Closing designated by Summit in the Closing
Notice, all the conditions precedent to such parties' obligations to close
are not met, or (4) the Closing is not consummated on or before June 30,
1997, provided, however, that a party does not have the termination right
described by this clause (4) if the failure to close by June 30, 1997 is due
to its failure to perform or observe an agreement which the Merger Agreement
requires it to perform or observe by the Closing Date. In addition, the
parties may terminate the Merger Agreement at any time by mutual agreement.
EXPENSES
Should either party terminate the Merger Agreement because the other party
has materially breached a warranty, representation or covenant or because the
other party has not met its conditions of closing, then the terminating party
shall be reimbursed by the defaulting party for the terminating 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. In the event
that the Merger Agreement is terminated by either party other than under
circumstances described in the immediately preceding sentence, each party is
mutually released and discharged from liability to the other party or to any
third party thereunder, and no party is liable to any other party for any
costs or expenses incurred in connection with the Merger Agreement, except
that each party is responsible for one-half of 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 and the
NYSE.
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 Restated 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 B.M.J. 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.
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ACCOUNTING TREATMENT
It is anticipated that the Merger, when consummated, will be accounted for
as a pooling-of-interests. Under this method of accounting, the historical
book values of the assets, liabilities and shareholders' equity of B.M.J., as
reported on its Consolidated Balance Sheet, will be carried over onto the
Consolidated Balance Sheet of Summit and no goodwill or other intangible
assets will be created. Summit will include on its Consolidated Statement of
Income the consolidated results of operations of B.M.J. for the entire fiscal
year in which the consummation of the Merger occurs.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion is based upon an opinion of Thompson Coburn,
special 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 B.M.J. 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 B.M.J. 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 B.M.J.
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
B.M.J. Common pursuant to the exercise of employee stock options or otherwise
as compensation, and persons who hold their B.M.J. 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 B.M.J. 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
B.M.J. Common are held as capital assets (within the meaning of Section 1221
of the Code) at the Effective Time.
B.M.J. 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) B.M.J. shareholders will recognize no gain or loss as a result of
the exchange of their B.M.J. Common solely for shares of Summit Common
pursuant to the Merger, except with respect to Cash in Lieu Amounts with
regard to fractional shares, if any, as discussed below.
(2) The aggregate adjusted tax basis of the shares of Summit Common
received by each B.M.J. 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 B.M.J. Common surrendered.
(3) The holding period of the shares of Summit Common received by each
B.M.J. 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 B.M.J. Common exchanged
therefor.
(4) A B.M.J. 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, B.M.J., and certain shareholders of B.M.J. 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. Any such change, which may or may not be
retroactive, could alter the tax consequences discussed herein. The
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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 B.M.J. 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 B.M.J. SHAREHOLDERS AND DOES NOT TAKE INTO ACCOUNT
THE PARTICULAR FACTS AND CIRCUMSTANCES OF EACH B.M.J. SHAREHOLDER'S TAX
STATUS AND ATTRIBUTES. AS A RESULT, THE FEDERAL INCOME TAX CONSEQUENCES
ADDRESSED IN THE FOREGOING DISCUSSIONS MAY NOT APPLY TO EACH B.M.J.
SHAREHOLDER. ACCORDINGLY, EACH B.M.J. 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 B.M.J. 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 B.M.J. for purposes of Rule 145 under the Securities
Act as of the date of Special 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 B.M.J. generally include
individuals or entities that control, are controlled by or are under common
control with B.M.J. and may include certain officers and directors of B.M.J.
as well as principal shareholders of B.M.J.
B.M.J. agreed in the Merger Agreement to use its best efforts to cause
each director, executive officer and other person deemed in the opinion of
B.M.J.'s counsel to be affiliates of B.M.J. to enter into an agreement with
Summit providing that such persons agree to be bound by the restrictions of
Rule 145.
DIFFERENCES IN SHAREHOLDERS' RIGHTS
Because Summit and B.M.J. 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 B.M.J. shareholders described below that
are contained in the Certificate of Incorporation or By-Laws of B.M.J. 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 B.M.J. 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 B.M.J. shareholders but only after becoming Summit shareholders.
The following is a summary explanation of the material differences between
the rights of shareholders of B.M.J. and the rights of shareholders of
Summit. This summary is qualified in its entirety by reference to the
governing documents of B.M.J. and Summit referred to above.
CLASSIFIED BOARD AND RELATED PROVISIONS
B.M.J. The Certificate of Incorporation and By-Laws of B.M.J. divide the
B.M.J. Board into three classes, as nearly equal in number as possible, with
each class of directors serving a staggered term of three years. The By-laws
of B.M.J. provide that the B.M.J. Board shall consist of not less than five
nor more than twenty-five directors. Directors are elected by a plurality of
votes cast. Presently, there are three directors in Class A, four directors
in Class B and four directors in Class C.
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
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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. Directors are elected by a
plurality of votes cast by shares entitled to vote. 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. The effect of these provisions is to make it difficult for persons
other than those negotiating directly with the Summit Board to acquire seats
on the Summit Board and obtain control of Summit.
MEETINGS AND CONSENTS
B.M.J. B.M.J.'s By-Laws provide that a special meeting of shareholders may
be called by the Chairman of the Board, a majority of the Board of Directors
or a majority of outstanding shares entitled to vote. Under the B.M.J.
By-Laws, actions required or permitted to be taken at a meeting of
shareholders may be taken by consent of shareholders without a meeting in
accordance with applicable state corporation law. Under the New Jersey
Business Corporation Act, except as otherwise provided in a company's
certificate of incorporation, 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
unanimous consent is required for mergers, consolidations, sales of
substantially all of the assets and the election of directors.
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, subject to the rights of holders of any series of
Preferred Stock or other class or series of stock having preference over the
Summit Common as to dividends or upon liquidation, all actions by the
shareholders of Summit be taken exclusively 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.
EVALUATION OF BUSINESS COMBINATIONS AND SHAREHOLDER RIGHTS PLAN
Evaluation of Offers. The Certificate of Incorporation of B.M.J. provides
that the Board of Directors may oppose a tender offer or other offer for the
company's securities, whether such offer is in cash or in securities of a
corporation and that, in considering whether to oppose an offer, may (but is
not legally obligated to) consider any pertinent issue including, but not
limited to: (a) whether the offer is acceptable based upon historical and
present operating results and the financial condition of B.M.J. and its
subsidiaries and their future prospects; (b) whether a more favorable offer
could be obtained for the B.M.J. (or its subsidiaries) securities or assets
in the future; (c) the social, economic or any other material impact which an
acquisition of the equity securities of B.M.J., or substantially all of its
assets, would have upon the employees, depositors and customers of B.M.J. and
its subsidiaries and the communities which they serve; (d) the reputation and
business practices of the offeror and its management and affiliates as they
would affect the employees, depositors and customers of B.M.J. and its
subsidiaries and the future value of the B.M.J. stock; (e) the value of the
securities, if any, which the offeror is offering in exchange for the B.M.J.
(or its subsidiaries), securities or assets, based on an analysis of the
worth of B.M.J. or of its subsidiaries as compared to the offeror corporation
or other entity whose securities
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are being offered; and (f) any antitrust or other legal or regulatory issues
raised by the offer. Further, if the B.M.J. Board of Directors determines
that an offer should be rejected, it may take any lawful action to accomplish
this purpose, including, but not limited to, any or all of the following: (a)
advising shareholders not to accept the offer; (b) litigation against the
offeror; (c) filing complaints with any governmental and regulatory
authorities; (d) acquiring the corporation's securities; (e) selling or
otherwise issuing authorized but unissued securities or treasury stock or
granting options with respect thereto; (f) acquiring a company to create an
antitrust or other regulatory problem for the offeror and (g) obtaining a
more favorable offer from another individual or entity. 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.
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 value 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.
B.M.J. has not adopted a shareholder rights plan.
NOMINATIONS TO THE BOARD, SHAREHOLDER PROPOSALS AND CONDUCT OF MEETING
B.M.J. Pursuant to B.M.J.'s Certificate of Incorporation, nominations for
election to the Board of Directors may be made by the Board of Directors or
by any shareholder of any outstanding class of capital stock entitled to vote
for the election of directors. B.M.J. shareholders may nominate directors for
election by providing written notice to B.M.J.'s President delivered or
mailed not less than thirty (30) days prior to the meeting (unless less than
30 days notice of the meeting is given, in which case such nomination must be
mailed or delivered not later than seven days following the notice). The
B.M.J. Chairman shall disregard any shareholder nomination to the B.M.J.
Board which is not made in accordance with the Certificate of Incorporation.
Holders of B.M.J. Common may not cumulate their votes in elections 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 sharehold-
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ers 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 anniversary of the preceding year's 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
B.M.J. The B.M.J. Certificate of Incorporation provides that shareholders
of B.M.J. entitled to vote thereon shall have the power to amend the
Certificate of Incorporation by the affirmative vote of shareholders entitled
to cast at least three-fourths of the vote which all shareholders are
entitled to cast thereon, at any regular or special meeting, duly convened
after notice to the shareholders of such purpose. Pursuant to B.M.J.'s
By-Laws, a majority of the Board of Directors may make, alter and repeal the
By-Laws; however, By-Laws made by the Board may be altered and repealed, and
new By-Laws made by the shareholders entitled to cast at least three-fourths
of the votes which all shareholders are entitled to cast thereon, at any
regular or special meeting called for such purpose.
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
B.M.J. Under the B.M.J. Certificate of Incorporation, the Board of
Directors, or any individual director, may be removed for cause by the
affirmative vote of the holders of two-thirds of the votes which all
shareholders are entitled to cast for the election of directors.
Summit. The Summit Restated Certificate of Incorporation contains no
specific provisions with respect to removal of directors (other than for
directors elected by Preferred Shareholders). Under the New Jersey Business
Corporation Act, with respect to a classified board, directors may be removed
by shareholders for cause only, by the affirmative vote of the majority of
votes cast by the holders entitled to vote thereon.
AUTHORIZED SHARES
B.M.J. B.M.J. has 25,000,000 authorized shares of common stock, $1.00 par
value. As of September 30, 1996, there were 7,508,069 shares of B.M.J. Common
outstanding. B.M.J.'s Certificate of Incorporation does not provide for
preemptive rights or cumulative voting to attach to the ownership of B.M.J.
Common. B.M.J. has no authorized preferred stock.
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 September 30, 1996, there were
91,627,998 shares of Summit Common, 600,166 shares of Summit Series B
Preferred and 504,481 shares of Summit Series C Preferred outstanding and
1,000,000 shares of Summit Series R Preferred created in Summit's Restated
Certificate of Incorporation for issuance under the Shareholder Rights Plan
of Summit. On December 15, 1996, Summit redeemed all of the outstanding
Series B and Series C Preferred. 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 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.
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INDEMNIFICATION; LIMITATION OF LIABILITY
B.M.J. Article VII of B.M.J.'s By-Laws provides that B.M.J. shall
indemnify each director or officer to the fullest extent permitted by law
against "expenses" and "liabilities" in connection with a "proceeding", as
such terms are defined in the New Jersey Business Corporation Act, and
permits the B.M.J. Board, by resolution, to similarly indemnify "corporate
agents" for expenses and liabilities incurred in connection with services
rendered for or at the request of B.M.J. The By-Laws also provide for advance
of expenses and purchase of insurance for corporate agents. Article IX of
B.M.J.'s Certificate of Incorporation provides that a director or officer of
B.M.J. shall not be personally liable to B.M.J. or its shareholders for
damages for breach of any duty owed to B.M.J. or its shareholders, except
that such article 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. Article IX also
provides for further elimination or limitation of liability to the fullest
extent to which the New Jersey Business Corporation Act may permit if
amended.
Summit. Summit's By-Laws provide that corporate agents (which term
includes directors, officers and employees) 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
and that Summit may maintain insurance for corporate agents against
liabilities and expenses. Summit's Restated Certificate of Incorporation
contains provisions substantially similar to those in B.M.J.'s Certificate of
Incorporation respecting the personal liability of directors.
SUMMIT BANCORP.
DESCRIPTION OF BUSINESS
Summit commenced operations 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 September 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 87% of Summit's total consolidated assets at September 30,
1996. Summit's non-bank subsidiaries engage primarily in discount brokerage,
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 355 banking offices located in major trade
centers and suburban areas in New Jersey and Pennsylvania as of September 30,
1996. The following table lists, as of September 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 Principal No. of Banking
Total Assets
Offices Offices (1) Total Deposits
--------------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Summit Bank, Hackensack, NJ 289 $19,506,697 $16,175,753
Summit Bank, Bethlehem, PA 66 2,758,965 2,139,812
</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 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 limita
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tions 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. Each bank, as a state-chartered bank, may declare a
dividend only if, after payment thereof, its capital would be unimpaired and
its remaining surplus would equal 50 percent of its capital (New Jersey) or
100 percent of its capital (Pennsylvania). At September 30, 1996, the total
undistributed net assets of Summit's subsidiary banks were $1.7 billion of
which $280.4 million was available under the most restrictive limitations for
the payment of dividends to Summit.
RECENT DEVELOPMENTS
On December 7, 1996, Summit completed its acquisition of Central Jersey
Financial Corporation, a New Jersey savings and loan holding company. As of
September 30, 1996 Central Jersey had $465 million in assets and through its
subsidiary, Central Jersey Savings Bank, operated six community branches.
On December 15, 1996, Summit redeemed all outstanding shares of its Series
B Preferred and Series C Preferred at redemption prices of $50.375 and
$25.00, respectively. At December 15, 1996, there were 600,166 shares of
Series B Preferred and 504,481 shares of Series C Preferred outstanding.
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"). As of September 30, 1996, there were 91,627,998 shares of Summit
Common outstanding and 1,000,000 shares of Summit Series R Preferred
designated in Summit's Restated Certificate of Incorporation and reserved for
issuance under the Summit Rights Plan (as defined herein). On the date of
this Proxy Statement -- Prospectus there were no shares of Summit Preferred
outstanding. 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 such a vote is
required for a particular transaction by applicable law or stock exchange
rules, including rules of the NYSE, on which the Summit Common is 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 the New Jersey Business
Corporation Act, Summit's Restated Certificate of Incorporation and Summit's
Rights Plan.
COMMON STOCK
The rights of holders of Summit Common are subject to the preferences as
to dividends and liquidation rights and other prior rights, if any, of any
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 represented 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
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the ownership of Summit Common and no personal liability is imposed on the
holders thereof by reason of the ownership of such shares. First Chicago
Trust Company of New York is the transfer agent, dividend disbursing agent
and registrar for the Summit Common. Summit Bank (Hackensack, NJ) is the
co-transfer agent.
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 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 there 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.
B.M.J. FINANCIAL CORP.
DESCRIPTION OF BUSINESS
B.M.J. is a bank holding company incorporated in New Jersey and registered
under the Bank Holding Company Act of 1956, as amended. B.M.J. commenced
business in 1984 when it acquired Mid-Jersey, a New Jersey banking
corporation organized in 1851. B.M.J.'s principal business offices are
located at 243 Route 130, Bordentown, New Jersey and its telephone number is
(609) 298-5500.
B.M.J. conducts its operations through 22 banking offices located in the
central and southern New Jersey counties of Burlington, Mercer, Somerset and
Ocean. Mid-Jersey conducts a general banking and trust business embracing the
customary deposit, lending and trust functions of a commercial bank in the
state of New Jersey.
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Commercial banking involves accepting demand, time and savings deposits and
making business, consumer, personal, construction and permanent mortgage
loans. Through its trust department, Mid-Jersey renders services as trustee,
executor, administrator, guardian, managing agent, custodian and investment
advisor and it engages in other personal and corporate fiduciary activities
authorized by law. Mid-Jersey has a wholly-owned subsidiary, Hopkinson Corp.,
a New Jersey corporation, which was formed for the purpose of holding and
marketing repossessed properties.
DESCRIPTION OF B.M.J. CAPITAL STOCK
COMMON STOCK
B.M.J. is presently authorized to issue 25,000,000 shares of B.M.J.
Common. As of September 30, 1996, there were 7,508,069 shares of B.M.J.
Common outstanding.
Dividends. The holders of B.M.J. Common are entitled to receive and share
equally in such dividends as may be declared by the B.M.J. Board out of funds
legally available therefor.
Voting Rights. The holders of B.M.J. Common elect the B.M.J. Board and act
on such other matters as are required to be presented to them under the New
Jersey Business Corporation Act, B.M.J.'s Certificate of Incorporation or as
are otherwise presented to them by the B.M.J. Board. Each holder of B.M.J.
Common is entitled to one vote per share. Holders of B.M.J. Common may not
cumulate votes. Directors of B.M.J. are elected by a plurality of votes cast.
Preemptive Rights. Holders of B.M.J. Common are not entitled to preemptive
rights with respect to any shares that may be issued.
PROPOSAL II -- ADJOURNMENT OF SPECIAL MEETING
In the event there are not sufficient votes to constitute a quorum or to
approve the Merger Agreement at the time of the Special Meeting, the Merger
Agreement could not be approved unless the Special Meeting were adjourned in
order to permit further solicitation of proxies. In order to allow proxies
that have been received by B.M.J. at the time of the Special Meeting to be
voted for such adjournment, if necessary, B.M.J. has submitted the question
of adjournment under the circumstances to its shareholders as a separate
matter for their consideration. A majority of the shares represented and
voting at the Special Meeting is required in order to approve any such
adjournment. The Board of Directors of B.M.J. 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 Special
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 Special Meeting.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in B.M.J.'s proxy materials for
B.M.J.'s Annual Meeting of Shareholders in the event that the Merger is not
consummated prior to such meeting, any shareholder proposal to take action at
such meeting would have been required to be received at B.M.J.'s main office
at 243 Route 130, Bordentown, New Jersey 08816, not later than November 22,
1996. Any such proposals shall be subject to the requirements of the proxy
rules adopted under the Exchange Act.
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 23,911 shares of Summit Common
and options to purchase 72,186 shares of Summit Common at a weighted average
exercise price of $20.50. Certain federal tax matters will be passed upon for
Summit and B.M.J. by Thompson Coburn, Saint Louis, Missouri. Certain legal
matters will be passed upon for B.M.J. by Covington & Burling, Washington,
D.C.
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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 Peak Marwick LLP, independent certified
public accountants, incorporated by referenced 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 postemployment benefits in 1994 and to a change in the method of
accounting for income taxes in 1993.
The consolidated balance sheets of B.M.J. Financial Corp. and subsidiaries
(the "Company") as of December 31, 1994 and 1995 and the consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1995, incorporated by reference
in this prospectus, have been incorporated herein in reliance on the report,
which has been incorporated by reference in the Company's Annual Report on
Form 10-K and includes an explanatory paragraph relating to the Company
changing its method of accounting for loan loss reserves effective January 1,
1995, its method of accounting for securities effective January 1, 1994 and
its method of accounting for income taxes effective January 1, 1993, of
Coopers & Lybrand L.L.P., independent accountants, given in the authority of
that firm as experts in accounting and auditing.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated August 28, 1996, between Summit
Bancorp., a New Jersey business corporation ("Summit"), and B.M.J. Financial
Corp., a New Jersey business corporation ("BMJ").
W I T N E S S E T H :
WHEREAS, the respective boards of directors of Summit and BMJ deem it
advisable and in the best interests of their respective shareholders to merge
BMJ into Summit ("Merger") pursuant to the laws of the State of New Jersey
and this Agreement and Plan of Merger ("Agreement");
WHEREAS, the Board of Directors of Summit and BMJ have each determined
that the Merger and the other transactions contemplated hereby are consistent
with, and in furtherance of, their respective business strategies and goals;
WHEREAS, to effectuate the Merger, the parties hereby adopt a plan of
reorganization in accordance with the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended ( "Code");
WHEREAS, Summit and BMJ intend on the date after the date of this
Agreement and in consideration of this Agreement to enter into the Stock
Option Agreement ("Option Agreement") attached hereto as Exhibit A; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
other terms and conditions of the Merger.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Option
Agreement, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I.
GENERAL PROVISIONS
Section 1.01. The Merger.
(a) Upon the terms and subject to the conditions contained in this
Agreement, at the Effective Time (as defined at Section 1.06), BMJ shall be
merged with and into Summit pursuant to and in accordance with the provisions
of, and with the effect provided in, the New Jersey Business Corporation Act,
as amended ("New Jersey Act") (Summit as the surviving corporation being
hereinafter sometimes referred to as the "Surviving Corporation").
Section 1.02. Capital Stock of Summit. All shares of the capital stock of
Summit outstanding immediately prior to the Effective Time shall be
unaffected by the Merger and shall remain outstanding immediately thereafter.
Section 1.03. Terms of Conversion of BMJ Capital Stock.
(a) At the Effective Time, by virtue of the Merger and without any action
on the part of any shareholder of BMJ:
(1) All shares of the Common Stock, par value $1.00 per share, of BMJ
("BMJ Stock") which immediately prior to the Effective Time are either
owned beneficially by Summit or a subsidiary of Summit (other than BMJ
Stock held in a fiduciary capacity or as a result of debts previously
contracted), if any, or held in the treasury of BMJ, if any, shall be
canceled and retired and no cash, securities or other consideration
shall be paid or delivered under this Agreement in exchange for such
BMJ Stock; and
(2) Subject to Sections 1.03(a)(1) and 1.08, each share of BMJ Stock
outstanding immediately prior to the Effective Time shall be converted
in accordance with the New Jersey Act into .56 shares (the Exchange
Ratio ) of the Common Stock, par value $1.20 per share, of Summit
("Summit Stock").
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(b) In the event that, from the date hereof to the Effective Time, the
outstanding Summit Stock shall have been increased, decreased, changed into
or exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or there occur other like changes in the
outstanding shares of Summit Stock, the Exchange Ratio and, if necessary, the
form and amount of Summit capital stock issuable in the Merger in exchange
for BMJ Stock shall be appropriately adjusted so that BMJ shareholders who
are entitled to receive Summit Stock pursuant to the provisions hereof shall
be entitled to receive such number of shares of Summit Stock or other stock
as they would have received if the Effective Time had occurred prior to the
happening of such event.
Section 1.04. Reservation of Summit Stock; Issuance of Shares Pursuant to
the Merger. Summit shall reserve and make available for issuance to holders
of BMJ Stock in connection with the Merger, on the terms and subject to the
conditions of this Agreement, sufficient shares of Summit Stock (which
shares, when issued and delivered, will be duly authorized, legally and
validly issued, fully paid and non-assessable and subject to no preemptive
rights). The shares of Summit Stock to be issued in accordance with this
Agreement are sometimes referred to herein as the "Shares". Upon the terms
and subject to the conditions of this Agreement, including the conversion of
BMJ Stock according to the Exchange Ratio, Summit shall issue the Shares upon
the effectiveness of the Merger to BMJ Shareholders (as defined in Section
1.07).
Section 1.05. Exchange Agent Arrangements. Prior to the Effective Time,
Summit shall appoint First Chicago Trust Company of New York, or another
entity reasonably satisfactory to BMJ, as the exchange agent ("Exchange
Agent") responsible for exchanging, in connection with and upon consummation
of the Merger and subject to Sections 1.03 and 1.08, certificates
representing whole shares of Summit Stock ("Summit Certificates" ) and cash
in lieu of fractional shares of Summit Stock for certificates representing
shares of BMJ Stock ("BMJ Certificates") and Summit shall deliver to the
Exchange Agent sufficient Summit Certificates and cash as shall be required
to satisfy Summit s obligations to BMJ Shareholders under the last sentence
of Section 1.07 (c), at the time such obligations arise.
Section 1.06. Effective Time. The Merger shall be effective at the hour
and on the date ("Effective Time") specified in the Certificate of Merger of
Summit and BMJ required by this Agreement to be filed with the Secretary of
State of the State of New Jersey in accordance with Section 14A:10-4.1 of the
New Jersey Act ("Certificate of Merger"). Summit shall file the Certificate
of Merger as promptly as practicable following the Closing (as defined at
Section 9.01) but in no event later than one business day following the
Closing Date (as defined at Section 9.01).
Section 1.07. Exchange of BMJ Certificates.
(a) After the Effective Time, each BMJ Shareholder (except Summit to the
extent provided in Section 1.03), upon surrender of all BMJ Certificates to
the Exchange Agent, shall be entitled to receive in exchange therefor a
Summit Certificate representing the number of whole shares of Summit Stock
such BMJ Shareholder is entitled, pursuant to the conversion effected by
Section 1.03 and the terms of Section 1.08, to receive and the cash payment
(by check) such BMJ Shareholder may be entitled, pursuant to Section 1.08, to
receive in lieu of a fractional share of Summit Stock. Until so surrendered,
outstanding BMJ Certificates held by each BMJ Shareholder, other than BMJ
Stock not converted pursuant to Section 1.03, shall be deemed for all
purposes (other than as provided below with respect to unsurrendered BMJ
Certificates and Summit's right to refuse payment of dividends or other
distributions, if any, in respect of Summit Stock) to represent the number of
whole shares of Summit Stock into which the shares of BMJ Stock have been
converted and the right to receive cash in lieu of fractional shares of
Summit Stock, if any, all as provided in Section 1.08. Until so surrendered,
Summit may, at its option, refuse to pay to the holders of the unsurrendered
BMJ Certificates dividends or other distributions, if any, payable to holders
of Summit Stock; provided, however, that upon the surrender and exchange of
BMJ Certificates following a dividend or other distribution by Summit there
shall be paid to such BMJ Shareholders the amount, without interest, of
dividends and other distributions, if any, which became payable prior thereto
but which were not paid.
(b) Holders of BMJ Certificates as of the Effective Time shall cease to
be, and shall have no further rights as, shareholders of BMJ.
(c) As promptly as practicable, but in no event more than 10 days, after
the Exchange Agent receives an accurate and complete list of all holders of
record of outstanding BMJ Stock as of the Effective Time ("BMJ
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Shareholders") (including the address and social security number of and the
number of shares of BMJ Stock held by each BMJ Shareholder) from BMJ ("Final
Shareholder List"), Summit shall cause the Exchange Agent to send to each BMJ
Shareholder instructions and transmittal materials for use in surrendering
and exchanging BMJ Certificates for the Merger Consideration (as defined in
Section 1.08 below). If BMJ Certificates are properly presented to the
Exchange Agent (with proper presentation including satisfaction of all
requirements of the letter of transmittal), Summit shall as soon as
practicable, but in no event more than 10 days, after the later to occur of
such presentment or the receipt by the Exchange Agent of an accurate and
complete Final Shareholder List from BMJ cause the Exchange Agent to cancel
and exchange BMJ Certificates for Summit Certificates and Cash In Lieu
Amounts (as defined in Section 1.08 below), if any.
(d) At and after the Effective Time there shall be no transfers on the
stock transfer books of BMJ of the shares of BMJ Stock which were outstanding
immediately prior to the Effective Time.
Section 1.08. Fractional Shares. All BMJ Stock held in the aggregate by
each BMJ Shareholder shall be multiplied by the Exchange Ratio to determine
the number of shares of Summit Stock each such BMJ Shareholder is entitled to
receive in the Merger. Each BMJ Shareholder shall be entitled to receive a
Summit Certificate for the number of whole shares of Summit Stock resulting
from such multiplication and cash in lieu of any fractional share of Summit
Stock resulting from such multiplication in an amount ("Cash In Lieu Amount")
determined by multiplying the fractional share interest to which such BMJ
Shareholder would otherwise be entitled by the closing price of one share of
Summit Stock on the New York Stock Exchange-Composite Transactions List, on
the last trading day prior to the Effective Time. The Shares and any Cash In
Lieu Amounts payable in the Merger are sometimes collectively referred to
herein as the "Merger Consideration".
Section 1.09. Restated Certificate of Incorporation and By-Laws. The
Restated Certificate of Incorporation of Summit in force immediately prior to
the Effective Time shall be the Restated Certificate of Incorporation of the
Surviving Corporation, except as duly amended thereafter and except to the
extent such is deemed by law to be affected by the Certificate of Merger. The
By-Laws of Summit in force immediately prior to the Effective Time shall be
the By-Laws of the Surviving Corporation, except as duly amended thereafter.
Section 1.10. Board of Directors and Officers. The Board of Directors of
the Surviving Corporation shall consist of the members of the Board of
Directors of Summit at the Effective Time. The officers of the Surviving
Corporation shall consist of the officers of Summit at the Effective Time.
Such directors and officers shall serve as such for the terms prescribed in
the Restated Certificate of Incorporation and By-Laws of Summit, or otherwise
as provided by law or until their earlier deaths, resignation or removal.
Section 1.11. BMJ Stock Options.
(a) At the Effective Time, each BMJ Option (as defined below) shall be
deemed to constitute, and shall automatically be converted in accordance with
the Exchange Ratio into, stock options relating to Summit Stock ("Summit
Options") and each Summit Option shall be administered in accordance with the
terms and conditions provided for in the BMJ Option Plan under which the
corresponding BMJ Option was granted and the stock option agreement by which
it was evidenced, including terms and provisions regarding exercisability.
The number of shares of Summit Stock covered by each Summit Option shall be
the number of shares of Summit Stock which would have been issued in the
Merger if the shares of BMJ Stock subject to the corresponding BMJ Option
were issued and outstanding immediately prior to the Effective Time;
provided, however, that the number of shares of Summit Stock that may be
purchased upon exercise of a Summit Option shall not include any fractional
share interest but shall be rounded down to the next lower full share. The
exercise price per share of Summit Stock subject to a Summit Option shall
equal the exercise price per share of BMJ Stock subject to the corresponding
BMJ Option so converted divided by the Exchange Ratio, rounded to the fourth
decimal place (subject to any adjustments provided for in this Agreement).
Within 30 days after the receipt by Summit of an accurate and complete list
of all holders of BMJ Options (including the address and social security
number of each such holder and a description of the BMJ Options held by such
holder specifying at a minimum the plan under which issued, type (incentive
or nonqualified), grant date, expiration date, exercise price and the number
of shares of BMJ Stock subject thereto) ("Final Option List"), Summit shall
issue to the holders of such BMJ Options appropriate instruments confirming
the rights of such holders with respect to Summit Stock, on the terms and
conditions provided by this Section 1.11, upon surrender of the outstanding
instruments representing
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such BMJ Options; provided, however, that Summit shall not be obligated to
issue any such confirming instruments which relate to the issuance of Summit
Stock, or issue any shares of Summit Stock, until such time as the shares of
Summit Stock issuable upon exercise of Summit Options shall have been
registered with the Securities and Exchange Commission (the "SEC") pursuant
to an effective registration statement and authorized for listing on the New
York Stock Exchange and for sale by any appropriate state securities
regulators, which Summit shall use its best efforts to effect within 30 days
after BMJ shall have delivered to Summit the Final Option List. Summit shall
use its best efforts to maintain the effectiveness of such registration
statement (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as the Summit Options remain outstanding. At
or prior to the Effective Time, Summit shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Summit
Stock for delivery upon exercise of Summit Options.
(b) For purposes of this Section 1.11, "BMJ Option" is hereby defined to
mean a stock option for BMJ Stock outstanding on the date hereof granted
under the BMJ Director Stock Option Plan, BMJ 1994 Employee Stock Option Plan
or BMJ Executive Long-Term Incentive Plan ("BMJ Option Plans") and not
subsequently exercised, terminated or expired prior to the Effective Time.
Section 1.12. Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of BMJ acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of BMJ or otherwise, all such deeds, bills of sale, assignments
and assurances and to take, in the name and on behalf of BMJ, all such other
actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
Section 1.13. Unclaimed Merger Consideration. If, upon the expiration of
one year following the Effective Time, Merger Consideration remains with the
Exchange Agent due to the failure of BMJ Shareholders to surrender and
exchange BMJ Certificates for Merger Consideration, Summit may, at its
election, continue to retain the Exchange Agent for purposes of the surrender
and exchange of BMJ Certificates or take possession of such unclaimed Merger
Consideration, in which such latter case, BMJ Shareholders who have
theretofore failed to surrender and exchange BMJ Certificates shall
thereafter look only to Summit for payment of the Merger Consideration and
the unpaid dividends and distributions on the Summit Stock constituting some
or all of the Merger Consideration, without any interest thereon.
Notwithstanding the foregoing, none of Summit, BMJ, the Exchange Agent or any
other person shall be liable to any former holder of shares of BMJ Stock for
any property properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
Section 1.14. Lost BMJ Certificates. In the event any BMJ Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such BMJ Certificate to be lost, stolen or
destroyed and the posting by such person of a bond in such amount as Summit
may determine is reasonably necessary as indemnity against any claim that may
be made against it with respect to such BMJ Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed BMJ Certificate the
Merger Consideration deliverable in respect thereof pursuant to this
Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF BMJ
BMJ represents and warrants to Summit as follows:
Section 2.01. Organization, Capital Stock.
(a) Each of BMJ and its nonbank subsidiaries, including the nonbank
subsidiaries of bank subsidiaries (the term "subsidiary", as used in this
Agreement, shall mean any corporation or other organization of which 25% or
more of the shares or other interests having by their terms ordinary voting
power to elect a majority of the Board of Directors or other group performing
similar functions with respect to such corporation or other organization
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is directly or indirectly owned), all of which are listed, together with
their respective states of incorporation and direct and indirect beneficial
owners, on BMJ Schedule 2.01(a), is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation, qualified to transact business under the laws of all
jurisdictions where the failure to be so qualified would be likely to have a
material adverse effect on (i) the business, results of operations, assets or
financial condition of BMJ and its subsidiaries on a consolidated basis, or
(ii) the ability of BMJ to perform its obligations under, and to consummate
the transactions contemplated by, this Agreement ("BMJ Material Adverse
Effect or BMJ Material Adverse Change"). However, an BMJ Material Adverse
Effect or BMJ Material Adverse Change will not include a change resulting
from a change in law, rule, regulation or generally accepted or regulatory
accounting principles, or from any other matter affecting banking
institutions or their holding companies generally. Each of BMJ and its
nonbank subsidiaries has all corporate power and authority and all material
licenses, franchises, certificates, permits and other governmental
authorizations which are legally required to own and lease its properties and
assets, to occupy its premises and to engage in its business and activities
as presently engaged in, and each has complied in all material respects with
all applicable laws, regulations and orders.
(b) BMJ is registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended ("BHCA").
(c) BMJ or one of its subsidiaries is the holder and beneficial owner of
all of the outstanding capital stock of all of BMJ's direct and indirect
nonbank subsidiaries.
(d) (1) The authorized capital stock of BMJ consists of 25,000,000 shares
of Common Stock, par value $1.00 per share, and as of the date hereof
7,506,462 shares of BMJ Stock were issued and outstanding and 178,000 shares
of BMJ Stock were held in the Treasury of BMJ. All issued and outstanding
shares of the capital stock of BMJ and of each of its nonbank subsidiaries
have been fully paid, were duly authorized and validly issued, are
non-assessable and have been issued pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
or an appropriate exemption from registration under the Securities Act and
were not issued in violation of the preemptive rights of any shareholder.
Except as set forth in this Section 2.01(d), except for director and employee
stock options outstanding under the BMJ Option Plans and except for BMJ Stock
issuable in connection with the BMJ Option Plans and the BMJ Dividend
Reinvestment and Stock Purchase Plan ("BMJ Dividend Plan"), there are no
Equity Securities of BMJ or any nonbank subsidiary of BMJ outstanding, in
existence, the subject of an agreement or reserved for issuance.
(2) "Equity Securities" of an issuer means (i) the capital stock or other
equity securities of such issuer, options, warrants, scrip, interests in,
rights (including preemptive rights) to subscribe to, purchase or acquire,
calls on or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any
capital stock, shares of any other equity security or shares of any security
or right convertible into or exchangeable for the capital stock or other
equity security of such issuer, and (ii) contracts, commitments, obligations,
agreements, understandings or arrangements entitling anyone to acquire from
the issuer, or by which such issuer is or may become bound to issue, shares
of capital stock, shares of any other equity security or shares of any
security or right convertible into or exchangeable for the capital stock or
other equity security of such issuer.
(3) There are no plans of BMJ providing for the granting of BMJ Stock,
stock options, stock appreciation rights or other securities, derivative
securities or stock-based cash rights to any person other than the BMJ Option
Plans. The BMJ Option Plans, including all amendments thereto, have been duly
approved by the shareholders of BMJ in compliance with any applicable laws or
applicable regulations of governmental or self-regulatory authorities.
Copies of the BMJ Option Plans, including all amendments thereto, have been
previously provided to Summit. All information relating to outstanding grants
and awards under the BMJ Option Plans, including director and employee stock
options and stock appreciation rights ("SARs"), if any, not contained in the
BMJ Option Plans (including without limitation date of grant, expiration
date, plan under which granted, type (if option, whether nonqualified or
incentive; if SAR, whether or not granted in tandem with an option and, if
so, the type of tandem option), exercise price, number of shares subject
thereto), is set forth in BMJ Schedule 2.01(d).
(e) BMJ owns no bank subsidiary other than the Bank of Mid-Jersey ("Bank")
("bank" is hereby defined to include commercial banks, savings banks, private
banks, trust companies, savings and loan associations,
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building and loan associations and similar institutions receiving deposits
and making loans). Bank is a bank duly organized, validly existing, and in
good standing under the laws of the State of New Jersey, qualified to
transact business under the laws of all jurisdictions where the failure to be
so qualified would be likely to have an BMJ Material Adverse Effect. Bank is
duly authorized to conduct all activities and exercise all powers of a
commercial bank and trust company as contemplated by applicable laws of the
State of New Jersey, is an insured bank as defined in the Federal Deposit
Insurance Act, and has all corporate power and authority and all material
licenses, franchises, certificates, permits and other governmental
authorizations which are legally required to own and lease its properties and
assets, to occupy its premises, and to engage in its business and activities
as presently engaged in, and has complied in all material respects with all
applicable laws, regulations and orders.
(f) The authorized and outstanding capital stock of Bank is as set forth
on BMJ Schedule 2.01(f). BMJ is the holder and beneficial owner of all shares
of the issued and outstanding capital stock of Bank. All issued and
outstanding shares of the capital stock of Bank have been fully paid, were
duly authorized and validly issued, are non-assessable, and were not issued
in violation of the preemptive rights of any shareholder. All Equity
Securities of Bank outstanding, in existence, the subject of an agreement or
reserved for issuance are described in all material respects on BMJ Schedule
2.01(f).
(g) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by BMJ or a subsidiary of BMJ are held free and clear of
any claims, liens, encumbrances or security interests.
Section 2.02. Financial Statements. The financial statements and schedules
contained or incorporated in (a) BMJ's annual report to shareholders for the
fiscal year ended December 31, 1995, (b) BMJ's annual report on Form 10-K
filed pursuant to the Securities Exchange Act of 1934, as amended ("Exchange
Act") for the fiscal year ended December 31, 1995 and (c) BMJ's quarterly
reports on Form 10-Q filed pursuant to the Exchange Act for the fiscal
quarters ended March 31, 1996 and June 30, 1996 (the "BMJ Financial
Statements") are true and correct in all material respects as of their
respective dates and each fairly presents (subject, in the case of unaudited
statements, to recurring audit adjustments normal in nature and amount), in
accordance with generally accepted accounting principles, the consolidated
statements of condition, income, changes in stockholders' equity and cash
flows of BMJ and its subsidiaries at its respective date and for the period
to which it relates, except as may otherwise be described therein. The BMJ
Financial Statements do not, as of the dates thereof, include any material
asset or omit any material liability, absolute or contingent, or other fact,
the inclusion or omission of which renders the BMJ Financial Statements, in
light of the circumstances under which they were made, misleading in any
respect.
Section 2.03. No Conflicts. BMJ and each of its subsidiaries is not in,
and has received no notice of, violation or breach of, or default under, nor
will the execution, delivery and performance of this Agreement by BMJ, or the
consummation of the transactions contemplated hereby including the Merger by
BMJ upon the terms provided herein (assuming receipt of the Required
Consents, as that term is defined in Section 4.01), violate, conflict with,
result in the breach of, constitute a default under, give rise to a claim or
right of termination, cancellation, revocation of, or acceleration under, or
result in the creation or imposition of any lien, charge or encumbrance upon
any of the material rights, permits, licenses, assets or properties of BMJ or
any of its subsidiaries or upon any of the Equity Securities of BMJ or any of
its subsidiaries, or constitute an event which could, with the lapse of time,
action or inaction by BMJ or any of its subsidiaries or a third party, or the
giving of notice and failure to cure, result in any of the foregoing, under
any of the terms, conditions or provisions, as the case may be, of:
(a) the Certificate of Incorporation or the By-Laws of BMJ or any of its
subsidiaries;
(b) any applicable law, statute, rule, ruling, determination, ordinance or
regulation of or agreement with any governmental or regulatory authority;
(c) any judgment, order, writ, award, injunction or decree of any court or
other governmental authority; or
(d) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement or other instrument;
to which BMJ or any of its subsidiaries is a party or by which BMJ or any of
its subsidiaries or any of their assets or properties are bound or committed,
the consequences of which individually or in the aggregate would be likely to
result in a BMJ Material Adverse Change, or enable any person to enjoin the
transactions contemplated hereby.
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Section 2.04. Absence of Undisclosed Liabilities. BMJ and its subsidiaries
have no liabilities, whether contingent or absolute, direct or indirect,
matured or unmatured (including but not limited to liabilities for federal,
state and local taxes, penalties, assessments, lawsuits or claims against BMJ
or any of its subsidiaries), and no loss contingency (as defined in Statement
of Financial Accounting Standards No. 5), other than (a) those reflected in
the BMJ Financial Statements or disclosed in the notes thereto, (b)
commitments made by BMJ or any of its subsidiaries in the ordinary course of
its business which are not in the aggregate material to BMJ and its
subsidiaries, taken as a whole, and (c) liabilities arising in the ordinary
course of its business since December 31, 1995, which are not in the
aggregate material to BMJ and its subsidiaries, taken as a whole. Other than
as reported in the Forms 10-Q of BMJ referred to in Section 2.02, neither BMJ
nor any of its subsidiaries has, since December 31, 1995, become obligated on
any debt due in more than one year from the date of this Agreement in excess
of $250,000, other than intra-corporate debt and deposits received,
repurchase agreements and borrowings from the Federal Reserve Bank of New
York or the Federal Home Loan Bank of New York entered into in the ordinary
course of business.
Section 2.05. Absence of Litigation; Agreements with Bank Regulators.
There is no outstanding order, injunction or decree of any court or
governmental or self-regulatory body against or affecting BMJ or its
subsidiaries which materially and adversely affects BMJ and its subsidiaries,
taken as a whole, and there are no actions, arbitrations, claims, charges,
suits, investigations or proceedings (formal or informal) material to BMJ and
its subsidiaries, taken as a whole, pending or, to BMJ's knowledge,
threatened, against or involving BMJ or any of its subsidiaries or their
officers or directors (in their capacity as such) in law or equity or before
any court, panel or governmental agency, except as disclosed in the Forms
10-K and 10-Q of BMJ referred to in Section 2.02. Neither Bank nor BMJ is a
party to any agreement or memorandum of understanding with, or is a party to
any commitment letter to, or has submitted a board of directors resolution or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, any governmental or
regulatory authority which restricts materially the conduct of its business,
or in any manner relates to material statutory or regulatory noncompliance
discovered in any regulatory examinations, its capital adequacy, its credit
or reserve policies or its management. Neither Bank nor BMJ has been advised
by any governmental or regulatory authority that it is contemplating issuing
or requesting (or is considering the appropriateness of issuing or
requesting) any of the foregoing. Neither Bank nor BMJ has failed to resolve
to the satisfaction of the applicable regulatory agency any significant
deficiencies cited by any such agency in its most recent examinations of each
aspect of Bank's and BMJ's business.
Section 2.06. Brokers' Fees. BMJ has entered into this Agreement with
Summit as a result of direct negotiations without the assistance or efforts
of any finder, broker, financial advisor or investment banker, other than
Bear, Stearns & Co. Inc. ("Bear Stearns"). BMJ Schedule 2.06 consists of true
and complete copies of all agreements between BMJ and Bear Stearns with
respect to the transactions contemplated by this Agreement.
Section 2.07. Material Filings. At the time of filing, all filings made by
BMJ and its subsidiaries after December 31, 1989 with the SEC and the
appropriate bank regulatory authorities do not or did not contain any untrue
statement of a material fact and do not or did not omit to state any material
fact required to be stated herein or therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. To the extent such filings were subject to the
Securities Act or Exchange Act, such filings complied in all material
respects with the Securities Act or Exchange Act, as appropriate, and all
applicable rules and regulations thereunder of the SEC. BMJ has since
December 31, 1992 timely made all filings required by the Securities Act and
the Exchange Act.
Section 2.08. Corporate Action. Assuming due execution and delivery by
Summit, and subject to the requisite approval by the shareholders of BMJ of
this Agreement, the Merger and the other transactions contemplated hereby in
accordance with BMJ's Certificate of Incorporation and the New Jersey Act at
a meeting of such holders to be duly called and held, BMJ has the corporate
power and is duly authorized by all necessary corporate action to execute,
deliver and perform this Agreement. The Board of Directors of BMJ has taken
all action required by law, its Certificate of Incorporation, its By-Laws or
otherwise (i) to authorize the execution and delivery of this Agreement and
(ii) for shareholders of BMJ to approve this Agreement and the transactions
contemplated hereby including the Merger by a simple majority of the votes
cast at the meeting held in accordance with Section 4.03. This Agreement is a
valid and binding agreement of BMJ enforceable in accordance with its
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terms except as such enforcement may be limited by applicable principles of
equity, and by bankruptcy, insolvency, fraudulent transfer, moratorium or
other similar laws of general applicability presently or hereafter in effect
affecting the enforcement of creditors' rights generally and banks the
deposits of which are insured by the Federal Deposit Insurance Corporation.
The Board of Directors of BMJ in authorizing the execution of this Agreement
has determined to recommend to the shareholders of BMJ the approval of this
Agreement, the Merger and the other transactions contemplated hereby.
Section 2.09. Absence of Changes. There has not been, since December 31,
1995, any BMJ Material Adverse Change except as may be reported in the Forms
10-Q of BMJ referred to in Section 2.02. Except as may be reported in said
Forms 10-Q of BMJ, neither BMJ nor any of its subsidiaries has since December
31, 1995: (a) (i) declared, set aside or paid any dividend or other
distribution in respect of its capital stock, other than dividends from
subsidiaries to BMJ or other subsidiaries of BMJ and an ordinary cash
dividend of $0.10 per share per fiscal quarter, or, (ii) directly or
indirectly, purchased, redeemed or otherwise acquired any shares of such
stock held by persons other than BMJ and its subsidiaries, other than the
redemption by BMJ of its 7.5% Convertible Notes, due July 15, 1996, and
related conversion into BMJ Stock; (b) incurred current liabilities since
that date other than in the ordinary course of business; (c) sold, exchanged
or otherwise disposed of any of their assets except in the ordinary course of
business; (d) made any officers salary increase or wage increase not
consistent with past practices, entered into any employment, consulting,
severance or change of control contract with any present or former director,
officer or salaried employee, or instituted any employee or director welfare,
bonus, stock option, profit-sharing, retirement, severance or other benefit
plan or arrangement or modified any of the foregoing so as to increase its
obligations thereunder in any material respect; (e) suffered any taking by
condemnation or eminent domain or other damage, destruction or loss in excess
of $50,000, whether or not covered by insurance, adversely affecting its
business, property or assets, or waived any rights of value in excess of
$50,000; (f) entered into transactions other than in the ordinary course of
business which in the aggregate exceeded $250,000; or (g) acquired assets or
capital stock of another company of whatsoever amount, except in a fiduciary
capacity or in the course of securing or collecting loans or leases.
Section 2.10. Allowance for Loan and Lease Losses. At December 31, 1995
and thereafter the allowances for loan and lease losses of BMJ and its
subsidiaries were and are adequate in all material respects to provide for
all losses on loans and leases outstanding and, to the best of BMJ's
knowledge, the loan and lease portfolios of BMJ in excess of such allowances
are collectible in the ordinary course of business. BMJ Schedule 2.10
constitutes a list of all loans and leases made by BMJ or any of its
subsidiaries that have been "classified" as to quality by any internal or
external auditor, accountant or examiner, and such list is accurate and
complete in all material respects.
Section 2.11. Taxes and Tax Returns. Neither BMJ nor any of its
subsidiaries has at any time filed a consent pursuant to Section 341(f) of
the Code or consented to have the provisions of Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as such term is defined
in Section 341(f)(4) of the Code) owned by BMJ or any of its subsidiaries.
None of the property being acquired by Summit or its subsidiaries in the
Merger is property which Summit or its subsidiaries will be required to treat
as being owned by any other person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986 or is
"tax-exempt use property" within the meaning of Section 168(h)(1) of the
Code. All amounts required to be withheld have been withheld from employees
by BMJ and each of its subsidiaries for all periods in compliance with the
tax, social security, unemployment and other applicable withholding
provisions of applicable federal, state and local law. Proper and accurate
federal, state and local returns have been timely filed by BMJ and each of
its subsidiaries for all periods for which returns were due, including with
respect to employee income tax withholding, social security, unemployment and
other applicable taxes, and the amounts shown thereon to be due and payable
have been paid in full or adequate provision therefor has been included on
the books of BMJ or its appropriate subsidiary. Neither BMJ nor any of its
subsidiaries is required to file tax returns with any state other than the
State of New Jersey. Provision has been made on the books of BMJ or its
appropriate subsidiary for all unpaid taxes, whether or not disputed, that
may become due and payable by BMJ or any of its subsidiaries in future
periods in respect of transactions, sales or services previously occurring or
performed. The Internal Revenue Service ("IRS") has audited the consolidated
federal income tax returns of BMJ for all taxable years ended on or prior to
1993 and the State of New Jersey has audited the New Jersey income tax
returns of BMJ and its subsidiaries for all tax-
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able years ended on or prior to 1993. Neither BMJ nor any of its subsidiaries
is subject to an audit or review of its tax returns by any state other than
the State of New Jersey. BMJ is not and has not been a United States real
property holding corporation as defined in Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code. Neither BMJ nor any of its subsidiaries is currently a party to any tax
sharing or similar agreement with any third party. There are no material
matters, assessments, notices of deficiency, demands for taxes, proceedings,
audits or proposed deficiencies pending or, to BMJ's knowledge, threatened
against BMJ or any of its subsidiaries and there have been no waivers of
statutes of limitations or agreements related to assessments or collection in
respect of any federal, state or local taxes. Neither BMJ nor any of its
subsidiaries has agreed to or is required to make any adjustment pursuant to
Section 481(a) of the Code by reason of a change in accounting method
initiated by BMJ or any of its subsidiaries, and neither BMJ nor any of its
subsidiaries has any knowledge that the IRS has proposed any such adjustment
or change in accounting method. BMJ and its subsidiaries have complied in all
material respects with all requirements relating to information reporting and
withholding (including back-up withholding) and other requirements relating
to the reporting of interest, dividends and other reportable payments under
the Code and state and local tax laws and the regulations promulgated
thereunder and other requirements relating to reporting under federal law
including record keeping and reporting on monetary instruments transactions.
Section 2.12. Properties. BMJ has, directly or through its subsidiaries,
good and marketable title to all of its properties and assets, tangible and
intangible, including those reflected in the most recent consolidated balance
sheet included in the BMJ Financial Statements (except individual properties
and assets disposed of since that date in the ordinary course of business),
which properties and assets are not subject to any mortgage, pledge, lien,
charge or encumbrance other than as reflected in the BMJ Financial Statements
or which in the aggregate do not materially adversely affect or impair the
operation of BMJ and its subsidiaries taken as a whole. BMJ and each of its
subsidiaries enjoys peaceful and undisturbed possession under all material
leases under which it or any of its subsidiaries is the lessee, where the
failure to enjoy such peaceful and undisturbed possession would be likely to
have a BMJ Material Adverse Effect, and none of such leases contains any
unusual or burdensome provision which would be likely to materially and
adversely affect or impair the operations of BMJ and its subsidiaries taken
as a whole.
Section 2.13. Condition of Properties; Insurance. All real and tangible
personal properties owned by BMJ or any of its subsidiaries or used by BMJ or
any of its subsidiaries in its business are in a good state of maintenance
and repair, are in good operating condition, subject to normal wear and tear,
conform in all material respects to all applicable ordinances, regulations
and zoning laws, and are adequate for the business conducted by BMJ or such
subsidiary subject to exceptions which are not, in the aggregate, material to
BMJ and its subsidiaries, taken as a whole. BMJ and each of its subsidiaries
maintains insurance (with companies which, to the best of BMJ's knowledge,
are authorized to do business in New Jersey) against loss relating to such
properties in amounts which are customary, usual and prudent for corporations
or banks, as the case may be, of their size. Such policies are in full force
and effect and are carried in an amount and form and are otherwise adequate
to protect BMJ and each of its subsidiaries from any adverse loss resulting
from risks and liabilities reasonably foreseeable at the date hereof, and are
disclosed on BMJ Schedule 2.13. All material claims thereunder have been
filed in a due and timely fashion. Since January 1 1991, neither BMJ nor any
of its subsidiaries has ever been refused insurance for which it has applied
or had any policy of insurance terminated (other than at its request).
Section 2.14. Contracts.
(a) Except as set forth in BMJ Schedule 2.14(a), neither BMJ nor any of
its subsidiaries is a party to and neither they nor any of their assets are
bound by any written or oral lease or license with respect to any property,
real or personal, as tenant or licensee involving an annual consideration in
excess of $50,000.
(b) Except as set forth in BMJ Schedule 2.14(b), neither BMJ nor any of
its subsidiaries is a party to and neither they nor any of their assets is
bound by any written or oral: (i) employment or severance contract
(including, without limitation, any collective bargaining contract or union
agreement) which is not terminable without penalty by BMJ or a subsidiary, as
appropriate, on 60 days or less notice; (ii) contract or commitment for
capital expenditures in excess of $75,000 in the aggregate for any one
project or in excess of $250,000 in the aggregate for all projects; (iii)
contract or commitment whether or not made in the ordinary course of business
for the purchase of materials or supplies or for the performance of services
involving consideration in
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excess of $50,000 (including advertising and consulting agreements, data
processing agreements, and retainer agreements with attorneys, accountants,
actuaries, or other professionals); (iv) contract or option to purchase or
sell any real or personal property other than OREO property involving
consideration in excess of $75,000; or (v) other contracts material to the
business of BMJ and its subsidiaries taken as a whole and not made in the
ordinary course of business.
(c) Neither BMJ nor any of its subsidiaries is a party to or otherwise
bound by any contract, agreement, plan, lease, license, commitment or
undertaking which, in the reasonable opinion of management of BMJ, is
materially adverse, onerous, or harmful to any aspect of the business of BMJ
and its subsidiaries taken as a whole.
Section 2.15. Pension and Benefit Plans.
(a) Neither BMJ nor any of its subsidiaries maintains an employee pension
benefit plan, within the meaning of Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or has made any
contributions to any such employee pension benefit plan, except employee
pension benefit plans listed in BMJ Schedule 2.15(a) (individually a "BMJ
Plan" and collectively the "BMJ Plans"). In its present form each BMJ Plan
complies in all material respects with all applicable requirements under
ERISA and the Code. Each BMJ Plan and the trust created thereunder is
qualified and exempt under Sections 401(a) and 501(a) of the Code, and BMJ or
the subsidiary whose employees are covered by such BMJ Plan has received from
the IRS a determination letter to that effect. No event has occurred and
there has been no omission or failure to act which would adversely affect
such qualification or exemption. Each BMJ Plan has been administered and
communicated to the participants and beneficiaries in all material respects
in accordance with its terms and ERISA. No employee or agent of BMJ or any
subsidiary whose employees are covered by a BMJ Plan has engaged in any
action or failed to act in such manner that, as a result of such action or
failure, (i) the IRS could revoke, or refuse to issue (as the case may be), a
favorable determination as to such BMJ Plan's qualification and the
associated trust's exemption or impose any liability or penalty under the
Code, or (ii) a participant or beneficiary or a nonparticipating employee has
been denied benefits properly due or to become due under such BMJ Plan or has
been misled as to his or her rights under such BMJ Plan. No BMJ Plan is
subject to Section 412 of the Code or Title IV of ERISA. No person has
engaged in any prohibited transaction involving any BMJ Plan or associated
trust within the meaning of Section 406 of ERISA or Section 4975 of the Code.
There are no pending or threatened claims (other than routine claims for
benefits) against the BMJ Plans or any fiduciary thereof which would subject
BMJ or any of its subsidiaries to a material liability. All reports, filings,
returns and disclosures and other communications which have been required to
be made to the participants and beneficiaries, other employees, the Pension
Benefit Guaranty Corporation ("PBGC"), the SEC, the IRS, the U.S. Department
of Labor or any other governmental agency pursuant to the Code, ERISA, or
other applicable statute or regulation have been made in a timely manner and
all such reports, communications, filings, returns and disclosures were true
and correct in all material respects. No liability has been, or is likely to
be, incurred on account of delinquent or incomplete compliance or failure to
comply with such requirements. "ERISA Affiliate" where used in this Agreement
means any trade or business (whether or not incorporated) which is a member
of a group of which BMJ is a member and which is under common control within
the meaning of Section 414 of the Code. There are no unfunded benefit or
pension plans or arrangements, or any individual agreements whether qualified
or not, to which BMJ or any of its subsidiaries or ERISA Affiliates has any
obligation to contribute. There has been no change in control of any BMJ Plan
since the last effective date of any such change of control disclosed to
Summit in Schedule 2.15(a).
(b) All bonus, deferred compensation, profit-sharing, retirement, pension,
stock option, stock award and stock purchase plans and all other employee
benefit plans, including medical, major medical, disability, life insurance
or dental plans covering employees generally maintained by BMJ or any of its
subsidiaries other than the BMJ Plans with an annual cost in excess of
$25,000 (collectively "Benefit Plans") are listed in BMJ Schedule 2.15(b)
(unless already listed in BMJ Schedule 2.15(a) and comply in all material
respects with all applicable requirements imposed by the Securities Act, the
Exchange Act, ERISA, the Code, and all applicable rules and regulations
thereunder. The Benefit Plans have been administered and communicated to the
participants and beneficiaries in all material respects in accordance with
their terms and ERISA, and no employee or agent of BMJ or any of its
subsidiaries has engaged in any action or failed to act in such manner that,
as a result of such
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action or failure: (i) the IRS could revoke, or refuse to issue, a favorable
determination as to a Benefit Plan's qualification and any associated trust's
exemption or impose any liability or penalty under the Code; or (ii) a
participant or beneficiary or a nonparticipating employee has been denied
benefits properly due or to become due under the Benefit Plans or has been
misled as to their rights under the Benefit Plans. There are no pending or
threatened claims (other than routine claims for benefits) against the
Benefit Plans which would subject BMJ or any of its subsidiaries to
liability. Any trust which is intended to be tax-exempt has received a
determination letter from the IRS to that effect and no event has occurred
which would adversely affect such exemption. All reports, filings, returns
and disclosures required to be made to the participants and beneficiaries,
other employees of BMJ or any of its subsidiaries, the PBGC, the SEC, the
IRS, the U.S. Department of Labor and any other governmental agency pursuant
to the Code, ERISA, or other applicable statute or regulation, if any, have
been made in a timely manner and all such reports, filings, returns and
disclosures were true and correct in all material respects. No material
liability has been, or is likely to be, incurred on account of delinquent or
incomplete compliance or failure to comply with such requirements.
Section 2.16. Fidelity Bonds. Since at least January 1, 1991, BMJ and each
of its subsidiaries has continuously maintained fidelity bonds insuring them
against acts of dishonesty in such amounts as are customary, usual and
prudent for organizations of its size and business. All material claims
thereunder have been filed in a due and timely fashion. Since January 1,
1991, the aggregate amount of all claims under such bonds has not exceeded
the policy limits of such bonds (excluding, except in the case of excess
coverage, a deductible amount of not more than $50,000) and neither BMJ nor
any of its subsidiaries is aware of any facts which would form the basis of a
claim or claims under such bonds aggregating in excess of the applicable
deductible amounts under such bonds. Neither BMJ nor any of its subsidiaries
has reason to believe that its respective fidelity coverage will not be
renewed by its carrier on substantially the same terms as the existing
coverage, except for possible premium increases unrelated to BMJ's and its
subsidiaries' past claim experience.
Section 2.17. Labor Matters. Hours worked by and payment made to employees
of BMJ and each of its subsidiaries have not been in violation of the Fair
Labor Standards Act or any applicable law dealing with such matters; and all
payments due from BMJ and each of its subsidiaries on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of BMJ or its appropriate subsidiary. BMJ is in compliance with all
other laws and regulations relating to the employment of labor, including all
such laws and regulations relating to collective bargaining, discrimination,
civil rights, safety and health, plant closing (including the Worker
Adjustment Retraining and Notification Act), workers' compensation and the
collection and payment of withholding and Social Security and similar taxes.
No labor dispute, strike or other work stoppage has occurred and is
continuing or is to its knowledge threatened with respect to BMJ or any of
its subsidiaries. Since December 31, 1992, no employee of BMJ or any of its
subsidiaries has been terminated, suspended, disciplined or dismissed under
circumstances that are reasonably likely to result in a material liability.
No employees of BMJ or any of its subsidiaries are unionized nor has such
union representation been requested by any group of employees or any other
person within the last two years. There are no organizing activities
involving BMJ pending with, or, to the knowledge of BMJ, threatened by, any
labor organization or group of employees of BMJ.
Section 2.18. Books and Records. The minute books of BMJ and each of its
subsidiaries contain complete and accurate records of and fairly reflect all
actions taken at all meetings and accurately reflect all other corporate
action of the shareholders and the boards of directors and each committee
thereof. The books and records of BMJ and each of its subsidiaries fairly and
accurately reflect the transactions to which BMJ and each of its subsidiaries
is or has been a party or by which their properties are subject or bound, and
such books and records have been properly kept and maintained.
Section 2.19. Concentrations of Credit. Except as previously disclosed in
the June 30, 1996 BMJ Board of Directors Report previously delivered to
Summit or set forth in BMJ Schedule 2.19, no customer or affiliated group of
customers (i) is owed by BMJ or any subsidiary of BMJ an aggregate amount in
excess of $4,500,000 (including deposits, other debts and contingent
liabilities) or (ii) owes to BMJ or any of its subsidiaries an aggregate
amount in excess of $4,500,000 (including loans and other debts, guarantees
of debts of third parties, and other contingent liabilities).
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Section 2.20. Trademarks and Copyrights. Neither BMJ nor any of its
subsidiaries has received notice or otherwise knows that the manner in which
BMJ or any of its subsidiaries conducts its business including its current
use of any material trademark, trade name, service mark or copyright violates
asserted rights of others in any trademark, trade name, service mark,
copyright or other proprietary right.
Section 2.21. Equity Interests. Neither BMJ nor any of its subsidiaries
owns, directly or indirectly, except for the equity interest of BMJ in Bank
and of BMJ and Bank in the nonbank subsidiaries of BMJ listed on BMJ Schedule
2.01(a), any equity interest, other than by virtue of a security interest
securing an obligation not presently in default, in any bank, corporation,
partnership or other entity, except: (a) in a fiduciary capacity; or (b) an
interest valued at less than $25,000 acquired in connection with a debt
previously contracted.
Section 2.22. Environmental Matters.
(a) Except as may be disclosed in the Forms 10-K and 10-Q of BMJ referred
to in Section 2.02 hereof:
(1) No Hazardous Substances (as hereinafter defined) have been stored,
treated, dumped, spilled, disposed, discharged, released or deposited
at, under or on (1) any property now owned, occupied, leased or held
or managed in a representative or fiduciary capacity ("Present
Property") by BMJ or any of its subsidiaries, (2) any property
previously owned, occupied, leased or held or managed in a
representative or fiduciary capacity ("Former Property") by BMJ or any
of its subsidiaries during the time of such previous ownership,
occupancy, lease; holding or management or (3) any Participation
Facility (as hereinafter defined) during the time that BMJ or any of
its subsidiaries participated in the management of, or may be deemed
to be or to have been an owner or operator of, such Participation
Facility;
(2) Neither BMJ nor any of its subsidiaries has disposed of, or arranged
for the disposal of, Hazardous Substances from any Present Property,
Former Property or Participation Facility, and no owner or operator of
a Participation Facility disposed of, or arranged for the disposal of,
Hazardous Substances from a Participation Facility during the time
that BMJ or any of its subsidiaries participated in the management of,
or may be deemed to be or to have been an owner or operator of, such
Participation Facility;
(3) No Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any Loan
Property (as hereinafter defined), nor is there, with respect to any
such Loan Property, any violation of environmental law which could
materially adversely affect the value of such Loan Property to an
extent which could prevent or delay BMJ or any of its subsidiaries
from recovering the full value of its loan in the event of a
foreclosure on such Loan Property.
(b) Neither BMJ nor any subsidiary (i) is aware of any investigations
contemplated, pending or completed by any environmental regulatory authority
with respect to any Present Property, Former Property, Loan Property or
Participation Facility, (ii) has received any information requests from any
environmental regulatory authority, or (iii) been named as a potentially
responsible or liable party in any Superfund, Resource Conservation and
Recovery Act, Toxic Substances Control Act or Clean Water Act proceeding or
other equivalent state or federal proceeding.
(c) As used in this Agreement, (a) "Participation Facility" shall mean any
property or facility of which the relevant person or entity (i) has at any
time participated in the management or (ii) may be deemed to be or to have
been an owner or operator, (b) "Loan Property" shall mean any real property
in which the relevant person or entity holds a security interest in an amount
greater than $30,000 and (c) "Hazardous Substances" shall mean (i) any
flammable substances, explosives, radioactive materials, hazardous materials,
hazardous substances, hazardous wastes, toxic substances, pollutants,
contaminants and any related materials or substances specified in any
applicable Federal or state law or regulation relating to pollution or
protection of human health or the environment (including, without limitation,
ambient or indoor air, surface water, groundwater, land surface or subsurface
strata) and (ii) friable asbestos, polychlorinated biphenyls, urea
formaldehyde, and petroleum and petroleum-containing products and wastes.
It shall be considered material for all purposes of this Agreement if the
cost of taking all remedial or other corrective actions and measures (as
required by applicable law, as recommended or suggested by phase two
investigation reports or as may be prudent in light of serious life, health
or safety concerns) with respect to mat-
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ters required to be disclosed pursuant to this Section 2.22 but not so
disclosed, is in the aggregate in excess of $2,000,000, as reasonably
estimated by an environmental expert retained for such purpose by Summit at
its sole expense, or if the cost of such actions and measures cannot be so
reasonably estimated by such expert to be such amount or less with any
reasonable degree of certainty.
Section 2.23. Accounting, Tax and Regulatory Matters. Neither BMJ nor any
of its subsidiaries has taken or agreed to take any action or has any
knowledge of any fact or circumstance that would (i) prevent the transactions
contemplated hereby from qualifying (A) for pooling-of-interest accounting
treatment, or (B) as a reorganization within the meaning of Section 368 of
the Code, or (ii) materially impede or delay receipt of any approval referred
to in Section 4.01 or the consummation of the transactions contemplated by
this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SUMMIT
Summit represents and warrants to BMJ as follows:
Section 3.01. Organization, Capital Stock.
(a) Summit is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey with authorized capital
stock consisting of 130,000,000 shares of Common Stock, each of par value
$1.20 with attached rights issued pursuant to the Summit Shareholder Rights
Plan, of which 93,725,953 shares were issued and outstanding as of July 31,
1996 and 4,000,000 shares of Preferred Stock, each without par value, of
which 600,166 shares of Series B Adjustable Rate Cumulative Preferred Stock
($50 stated value) and 504,481 shares of Series C Adjustable Rate Cumulative
Preferred Stock ($25 stated value) were issued and outstanding and 1,000,000
shares of Series R Preferred Stock were reserved for issuance as of July 31,
1996.
(b) Summit is qualified to transact business in and is in good standing
under the laws of all jurisdictions where the failure to be so qualified
would have a material adverse effect on (i) the business, results of
operations, assets or financial condition of Summit and its subsidiaries on a
consolidated basis, or (ii) the ability of Summit to perform its obligations
under, and to consummate the transactions contemplated by, this Agreement (a
"Summit Material Adverse Effect or Summit Material Adverse Change"). However,
a Summit Material Adverse Effect or Summit Material Adverse Change will not
include a change resulting from a change in law, rule, regulation or
generally accepted or regulatory accounting principles, or from any other
matter affecting financial institutions or their holding companies generally.
The bank subsidiaries of Summit are duly organized, validly existing and in
good standing under the laws of their jurisdiction of organization. Summit
and its bank subsidiaries have all corporate power and authority and all
material licenses, franchises, certificates, permits and other governmental
authorizations which are legally required to own and lease their respective
properties, occupy their respective premises, and to engage in their
respective businesses and activities as presently engaged in. Summit is duly
registered as a bank holding company under the BHCA.
(c) All issued shares of the capital stock of Summit and of each of its
bank subsidiaries have been fully paid, were duly authorized and validly
issued, are non-assessable, have been issued pursuant to an effective
registration statement under the Securities Act or an appropriate exemption
from registration under the Securities Act and were not issued in violation
of the preemptive rights of any shareholder. Summit or one of its
subsidiaries is the holder and beneficial owner of all of the issued and
outstanding Equity Securities of its bank subsidiaries. There are no Equity
Securities of Summit outstanding, in existence, the subject of an agreement,
or reserved for issuance, except as set forth at Section 3.01(a) and except
for Summit Stock issuable upon the exercise of employee stock options granted
under stock option plans of Summit, Summit Stock issuable pursuant to
Summit's Dividend Reinvestment and Stock Purchase Plan, Savings Incentive
Plan and 1993 Incentive Stock and Option Plan and the Agreement and Plan of
Merger, dated May 22, 1996, between Summit and Central Jersey Financial
Corporation ("CJFC Merger Agreement") and Series R Preferred Stock issuable
pursuant to the Summit Shareholder Rights Plan.
(d) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by Summit or a subsidiary of Summit are held free and
clear of any claims, liens, encumbrances or security interests.
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Section 3.02. Financial Statements. The financial statements and schedules
contained or incorporated in Summit's (a) annual report to shareholders for
the fiscal year ended December 31, 1995, (b) annual report on Form 10-K
pursuant to the Exchange Act for the fiscal year ended December 31, 1995 and
(c) quarterly reports on Form 10-Q pursuant to the Exchange Act for the
fiscal quarters ended March 31, 1996 and June 30, 1996 (the "Summit Financial
Statements") are true and correct in all material respects as of their
respective dates and each fairly presents, in accordance with generally
accepted accounting principles consistently applied, the consolidated balance
sheets, statements of income, statements of shareholders' equity and
statements of cash flows of Summit and its subsidiaries at its respective
date and for the period to which it relates. Except as may otherwise be
described therein or in the related notes or in accountants' reports thereon,
the Summit Financial Statements were prepared in accordance with generally
accepted accounting principles consistently applied. The Summit Financial
Statements do not, as of the dates thereof, include any material asset or
omit any material liability, absolute or contingent, or other fact, the
inclusion or omission of which renders the Summit Financial Statements, in
light of the circumstances under which they were made, misleading in any
respect.
Section 3.03. No Conflicts. Summit is not in, and has received no notice
of, violation or breach of, or default under, nor will the execution,
delivery and performance of this Agreement by Summit, or the consummation of
the Merger by Summit upon the terms and conditions provided herein (assuming
receipt of the Required Consents), violate, conflict with, result in the
breach of, constitute a default under, give rise to a claim or right of
termination, cancellation, revocation of, or acceleration under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
rights, permits, licenses, assets or properties material to Summit and its
subsidiaries, taken as a whole, or upon any of the capital stock of Summit,
or constitute an event which could, with the lapse of time, action or
inaction by Summit, or a third party, or the giving of notice and failure to
cure, result in any of the foregoing, under any of the terms, conditions or
provisions, as the case may be, of:
(a) the Restated Certificate of Incorporation or the By-Laws of Summit;
(b) any law, statute, rule, ruling, determination, ordinance, or
regulation of any governmental or regulatory authority;
(c) any judgment, order, writ, award, injunction, or decree of any court
or other governmental authority; or
(d) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement, or other instrument; to
which Summit is a party or by which Summit or any of its assets or properties
are bound or committed, the consequences of which would be a Summit Material
Adverse Change, or enable any person to enjoin the transactions contemplated
hereby.
Section 3.04. Absence of Litigation, Agreements with Bank Regulators.
There is no outstanding order, injunction, or decree of any court or
governmental or self-regulatory body against or affecting Summit or its
subsidiaries which materially and adversely affects Summit and its
subsidiaries, taken as a whole, and there are no actions, arbitrations,
claims, charges, suits, investigations or proceedings (formal or informal)
material to Summit and its subsidiaries, taken as a whole, pending or, to
Summit's knowledge, threatened, against or involving Summit or their officers
or directors (in their capacity as such) in law or equity or before any
court, panel or governmental agency, except as may be disclosed in the Forms
10-K and 10-Q of Summit referred to in Section 3.02. Neither Summit nor any
bank subsidiary of Summit is a party to any agreement or memorandum of
understanding with, or is a party to any commitment letter to, or has
submitted a board of directors resolution or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, any governmental or regulatory authority which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or reserve policies or its management.
Neither Summit nor any bank subsidiary of Summit, has been advised by any
governmental or regulatory authority that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting)
any of the foregoing. Summit and the bank subsidiaries of Summit have
resolved to the satisfaction of the applicable regulatory agency any
significant deficiencies cited by any such agency in its most recent
examinations of each aspect of Summit or such bank subsidiary's business
except for examinations, if any, received within the 30 days prior to the
date hereof.
Section 3.05. Material Information. At the time of filing, all filings
made by Summit and its subsidiaries after December 31, 1989 with the SEC and
appropriate bank regulatory authorities do not contain any untrue
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statement of a material fact and do not omit to state any material fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading. To the extent such filings were subject to the
Securities Act or Exchange Act, such filings complied in all material
respects with the Securities Act or Exchange Act, as appropriate, and all
applicable rules and regulations thereunder of the SEC. Summit has since
December 31, 1992 timely made all filings required by the Securities Act and
the Exchange Act.
Section 3.06. Corporate Action. Assuming due execution and delivery by
BMJ, Summit has the corporate power and is duly authorized by all necessary
corporate action to execute, deliver, and perform this Agreement. The Board
of Directors of Summit has taken all action required by law or by the
Restated Certificate of Incorporation or By-Laws of Summit or otherwise to
authorize the execution and delivery of this Agreement. Approval by the
shareholders of Summit of this Agreement, the Merger or the transactions
contemplated by this Agreement are not required by applicable law. This
Agreement is a valid and binding agreement of Summit enforceable in
accordance with its terms except as such enforcement may be limited by
applicable principles of equity, and by bankruptcy, insolvency, moratorium or
other similar laws presently or hereafter in effect affecting the enforcement
of creditors' rights generally and banks the deposits of which are insured by
the Federal Deposit Insurance Corporation.
Section 3.07. Absence of Changes. Except as disclosed in the Summit
Financial Statements, there has not been, since December 31, 1995, any Summit
Material Adverse Change and there is no matter or fact which may result in
any such Summit Material Adverse Change in the future.
Section 3.08. Non-bank Subsidiaries. The non-bank subsidiaries of Summit
did not, taken in the aggregate, constitute a "significant subsidiary" of
Summit, as that term is defined in Rule 1-02(v) of Regulation S-X of the SEC
(17 CFR Section210.1-02(v), at December 31, 1995.
Section 3.09. Absence of Undisclosed Liabilities. The Summit Financial
Statements are prepared on an accrual basis and reflect all known assets and
liabilities. There are no material undisclosed liabilities, whether
contingent or absolute, direct or indirect..
Section 3.10. Environmental Matters.
(a) Except as may be disclosed in the Forms 10-K and 10-Q of Summit
referred to in Section 3.02 hereof:
(1) no Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any (i)
Present Property of Summit or a subsidiary, (ii) Former Property of
Summit or a subsidiary during the time of previous ownership,
occupancy or lease, or (iii) Participation Facility during the time
that Summit or a subsidiary participated in the management of, or may
be deemed to be or to have been an owner or operator of, such
facility, where such storage, treatment, dumping, spilling, disposing,
discharging, releasing, or depositing would have a material adverse
effect on Summit and its subsidiaries, taken as a whole;
(2) neither Summit nor any subsidiary has disposed of or arranged for the
disposal of Hazardous Substances from any Present Property, Former
Property or Participation Facility, and no owner or operator of a
Participation Facility disposed of, or arranged for the disposal of,
Hazardous Substances from a Participation Facility during the time
that Summit or any subsidiary participated in the management of, or
may be deemed to be or to have been an owner or operator of such
Participation Facility, where such disposal or arranging for disposal
would have a material adverse effect on Summit and its subsidiaries,
taken as a whole;
(3) no Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any Loan
Property, nor is there with respect to any Loan Property any violation
of an environmental law, where such storage, treatment, dumping,
spilling, disposing, discharging, releasing, depositing or violation
would have a material adverse effect on Summit and its subsidiaries,
taken as a whole.
(b) Neither Summit nor any subsidiary (i) is aware of any investigations
contemplated, pending or completed by any environmental regulatory authority
with respect to any Present Property, Former Property, Loan
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Property or Participation Facility which would result in a Summit Material
Adverse Change, (ii) has received any information requests from any
environmental regulatory authority with respect to a matter which would
result in a Summit Material Adverse Change, or (iii) been named as a
potentially responsible or liable party in any Superfund, Resource
Conservation and Recovery Act, Toxic Substances Control Act or Clean Water
Act proceeding or other equivalent state or federal proceeding which would
result in a Summit Material Adverse Change.
ARTICLE IV.
COVENANTS OF BMJ
BMJ hereby covenants and agrees with Summit that:
Section 4.01. Preparation of Registration Statement and Applications for
Required Consents. BMJ will cooperate with Summit in the preparation of a
Registration Statement on Form S-4 (the "Registration Statement") to be filed
with the SEC under the Securities Act for the registration of the offering of
Summit Stock to be issued in connection with the Merger and the proxy
statement-prospectus constituting part of the Registration Statement
("Proxy-Prospectus") that will be used by BMJ to solicit shareholders of BMJ
for approval of the Merger. In connection therewith, BMJ will furnish all
financial or other information, including using best efforts to obtain
customary consents, certificates, opinions of counsel and other items
concerning BMJ reasonably deemed necessary by counsel to Summit for the
filing or preparation for filing under the Securities Act and the Exchange
Act of the Registration Statement (including the proxy statement portion
thereof). BMJ will cooperate with Summit and provide such information as may
be advisable in obtaining an order of effectiveness for the Registration
Statement, appropriate permits or approvals under state securities and "blue
sky" laws, the required approval under the BHCA of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board"), the listing of the
Shares on the New York Stock Exchange (subject to official notice of
issuance) and any other governmental or regulatory consents or approvals or
the taking of any other governmental or regulatory action necessary to
consummate the Merger without a material adverse effect on the business,
results of operations, assets or financial condition of the Surviving
Corporation and its subsidiaries, taken as a whole (the "Required Consents").
Summit, reasonably in advance of making such filings, will provide BMJ and
its counsel a reasonable opportunity to comment on such filings and
regulatory applications and will give due consideration to any comments of
BMJ and its counsel before making any such filing or application; and Summit
will provide BMJ and its counsel with copies of all such filings and
applications at the time filed if such filings and applications are made at
any time before the Effective Time. BMJ covenants and agrees that all
information furnished by BMJ for inclusion in the Registration Statement, the
Proxy-Prospectus, all applications to appropriate regulatory agencies for
approval of the Merger, and all information furnished by BMJ to Summit
pursuant to this Agreement or in connection with obtaining Required Consents,
will comply in all material respects with the provisions of applicable law,
including the Securities Act and the Exchange Act and the rules and
regulations of the SEC thereunder, and will not contain any untrue statement
of a material fact and will not omit to state any material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. BMJ
will furnish to Bear Stearns such information as Bear Stearns may reasonably
request for purposes of the opinion referred to in Section 8.07.
Section 4.02. Notice of Adverse Changes. BMJ will promptly advise Summit
in writing of (a) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of BMJ contained
in this Agreement or the BMJ Schedules or the materials furnished pursuant to
the Post-Signing Disclosure List (as defined in Section 4.09), if made on or
as of the date of such event or the Closing Date, untrue or inaccurate in any
material respect, (b) any BMJ Material Adverse Change, (c) any inability or
perceived inability of BMJ to perform or comply with the terms or conditions
of this Agreement, (d) the institution or threat of institution of litigation
or administrative proceedings involving BMJ or any of its subsidiaries or
assets, which, if determined adversely to BMJ or any of its subsidiaries,
would have a material adverse effect upon BMJ and its subsidiaries taken as a
whole or the ability of the parties to timely consummate the Merger and the
related transactions, (e) any governmental complaint, investigation, hearing,
or communication indicating that such litigation or administrative proceeding
is contemplated, (f) any written notice of, or other communication relating
to, a default or event which, with notice or lapse of time or both, would
become a default, received by BMJ or
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a subsidiary subsequent to the date hereof and prior to the Effective Time,
under any agreement, indenture or instrument to which BMJ or a subsidiary is
a party or is subject and which is material to the business, operation or
condition (financial or otherwise) of BMJ and its subsidiaries taken as a
whole, and (g) any written notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement including the
Merger. BMJ agrees that the delivery of such notice shall not constitute a
waiver by Summit of any of the provisions of Articles VI or VII.
Section 4.03. Meeting of Shareholders. BMJ will call a meeting of its
shareholders for the purpose of voting upon this Agreement, the Merger and
the transactions contemplated hereby to be held as promptly as practicable
and, in connection therewith, will comply with the New Jersey Act and the
Exchange Act and all regulations promulgated thereunder governing shareholder
meetings and proxy solicitations. In connection with such meeting, BMJ shall
mail the Proxy-Prospectus to its shareholders and use, unless in the written
opinion of counsel such action would be a breach of the fiduciary duties by
the directors under applicable law, its best efforts to obtain shareholder
approval of this Agreement, the Merger and the transactions contemplated
hereby.
Section 4.04. Copies of Filings. Without limiting the provisions of
Section 4.01, BMJ will deliver to Summit, at least twenty-four hours prior to
an anticipated date of filing or distribution, all documents to be filed with
the SEC or any bank regulatory authority or to be distributed in any manner
to the shareholders of BMJ or the public.
Section 4.05. No Material Transactions. Until the Effective Time, BMJ will
not and will not allow any of its subsidiaries to, without the prior written
consent of Summit:
(a) pay (or make a declaration which creates an obligation to pay) any
cash dividends, other than dividends from subsidiaries of BMJ to BMJ or other
subsidiaries of BMJ except that BMJ may declare, set aside and pay a dividend
of $0.10 per quarter or the dividend most recently (as of such date) declared
by Summit multiplied by the Exchange Ratio;
(b) declare or distribute any stock dividend or authorize or effect a
stock split;
(c) merge with, consolidate with, or sell any material asset to any other
corporation, bank, or person (except for mergers of subsidiaries of BMJ into
other subsidiaries of BMJ) or enter into any other transaction not in the
ordinary course of business;
(d) incur any liability or obligation other than intracompany obligations,
make or agree to make any commitment or disbursement, acquire or dispose or
agree to acquire or dispose of any property or asset (tangible or
intangible), make or agree to make any contract or agreement or engage or
agree to engage in any other transaction, except transactions in the ordinary
course of business or other transactions involving not more than $100,000;
(e) subject any of its properties or assets to any lien, claim, charge,
option or encumbrance, except in the ordinary course of business and for
amounts not material in the aggregate to BMJ and its subsidiaries taken as a
whole;
(f) (i) pay any employee cash bonuses, other than (x) bonuses for 1996
performance under and in accordance with the formulas provided in the BMJ
Short-Term Incentive Plan, which shall be paid in February of 1997 and shall
be paid only to employees who continue to be employees of BMJ or a subsidiary
on such payment date, and (y) "stay bonuses" to be paid on the earlier to
occur of (A) the merger of Bank with Summit Bank or (B) six months after the
Closing Date, to employees designated by the Board of Directors of BMJ (after
consultation with Summit) who continue to be employees of BMJ or a subsidiary
or affiliate on such payment date and execute a release of claims against
Summit and its affiliates, provided, that the sum of (x) and (y) not shall
exceed $450,000 in the aggregate, or (ii) increase or enter into any
agreement to increase the rate of compensation of any employee on the date
hereof which is not consistent with past practices and policies and which
when considered with all such increases or agreements to increase constitutes
an average annualized rate not exceeding four percent (4%);
(g) except as provided in Section 4.05(f), create, adopt or modify any
employment, termination or severance arrangement or any pension or profit
sharing plan, bonus, deferred compensation, death benefit, retirement
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or other employee or director benefit or welfare plan of whatsoever nature,
or change the level of benefits under any such arrangement or plan, or
increase any severance or termination pay benefit or any other fringe
benefit, or make, increase or amend in any manner any grant or award under
any compensation plan, including stock incentive and stock option plans;
(h) distribute, issue, sell or grant any of its Equity Securities, any
stock appreciation rights, derivative securities or stock-based cash rights
except pursuant to the terms of the BMJ Dividend Plan and pursuant to the
exercise of director and employee stock options under the BMJ Option Plans;
(i) except in a fiduciary capacity, purchase, redeem, retire, repurchase,
or exchange, or otherwise acquire or dispose of, directly or indirectly, any
of its Equity Securities, whether pursuant to the terms of such Equity
Securities or otherwise, or enter into any agreement providing for any of the
foregoing transactions;
(j) amend its Certificate of Incorporation or By-Laws;
(k) modify, amend or cancel any of its existing borrowings other than
intra-corporate borrowings and borrowings of federal funds from correspondent
banks and the Federal Reserve Bank of New York or the Federal Home Loan Bank
of New York or enter into any contract, agreement, lease or understanding, or
any contracts, agreements, leases or understandings other than those in the
ordinary course of business or which do not involve the creation of any
material obligation or release of any material right of BMJ or any of its
subsidiaries, taken as a whole;
(l) create, or accelerate the exercisability of, any stock appreciation
rights or options or the release of any restrictions on stock issued under
the BMJ Benefit Plans;
(m) make any employer contribution to a BMJ Plan or a Benefit Plan which
under the terms of the particular plan is voluntary and within the sole
discretion of BMJ to make, except matching employer contributions made in
accordance with plan terms in effect on the date hereof;
(n) make any determination or take any action, by its Compensation
Committee or otherwise, under or with respect to any BMJ Option Plan other
than routine administration of outstanding awards thereunder;
(o) amend or exercise any discretion to change the current terms of the
BMJ Dividend Plan or issue any BMJ Stock under the BMJ Dividend Plan at a
discount.
Section 4.06. Operation of Business in Ordinary Course. BMJ, on behalf of
itself and its subsidiaries, covenants and agrees that from and after the
date hereof and until the Effective Time, it and its subsidiaries: (a) will
carry on their business substantially in the same manner as heretofore and
will not institute any unusual or novel methods of management or operation of
their properties or business and will maintain such in their customary
manner; (b) will use their best efforts to continue in effect their present
insurance coverage on all properties, assets, business and personnel; (c)
will use their best efforts to preserve their business organization intact,
preserve their present relationships with customers, suppliers, and others
having business dealings with them, and keep available their present
employees, provided, however, that BMJ or any of its subsidiaries may
terminate any employee for unsatisfactory performance or other reasonable
business purpose, and provided further, however, that BMJ will notify and
consult with Summit prior to terminating any of the five highest paid
employees of BMJ; (d) will use their best efforts to continue to maintain
fidelity bonds insuring BMJ and its subsidiaries against acts of dishonesty
by each of their employees in such amounts (not less than present coverage)
as are customary, usual and prudent for corporations or banks, as the case
may be, of their size; (e) will not do anything or fail to do anything which
will cause a breach of or default under any representation, warranty or
covenant of BMJ or any contract, agreement, commitment or obligation to which
they or any one of them is a party or by which they or any of their assets or
properties may be bound or committed if the consequence of such, individually
or in the aggregate, would be likely to have a material adverse effect on BMJ
and its subsidiaries taken as a whole; and (f) will not change their methods
of accounting in effect at December 31, 1995, or change any of their methods
of reporting income and deductions for Federal income tax purposes from those
employed in the preparation of their Federal income tax returns for the
taxable year ending December 31, 1995, except as required by changes in laws,
regulations or generally accepted accounting principles or changes that are
to a preferable accounting method, and approved in writing by BMJ's
independent certified public accountants.
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Section 4.07. Further Actions. BMJ will: (a) execute and deliver such
instruments and take such other actions as Summit may reasonably require to
carry out the intent of this Agreement; (b) use all reasonable efforts to
obtain consents of all third parties and governmental bodies necessary or
reasonably desirable for the consummation of the transactions contemplated by
this Agreement; (c) diligently support this Agreement in any proceeding
before any regulatory authority whose approval of any of the transactions
contemplated hereby is required or reasonably desirable or before any court
in which litigation in respect thereof is pending; and (d) use its best
efforts so that the other conditions precedent to the obligations of Summit
set forth in Articles VI and VII hereof are satisfied.
Section 4.08. Cooperation. Until the Effective Time, BMJ will give to
Summit and to its representatives, including its accountants, KPMG Peat
Marwick LLP, and its legal counsel, full access during normal business hours
to all of its property, documents, contracts and records relevant to this
Agreement and the Merger, will provide such information with respect to its
business affairs and properties as Summit from time to time may reasonably
request, and will cause its managerial employees, and will use its best
efforts to cause its counsel and independent certified public accountants, to
be available on reasonable request to answer questions of Summit's
representatives covering the business and affairs of BMJ or any of its
subsidiaries.
Section 4.09. Copies of Documents. As promptly as practicable, but not
later than 45 days after the date hereof, BMJ will furnish to or make
available to Summit all the documents, contracts, agreements, papers, and
writings referred to in the BMJ Schedules or called for by the list attached
hereto as Exhibit B (the "Post-Signing Disclosure List").
Section 4.10. Applicable Laws. BMJ and its subsidiaries will use their
best efforts to comply promptly with all requirements which federal or state
law may impose on BMJ or any of its subsidiaries with respect to the Merger
and will promptly cooperate with and furnish information to Summit in
connection with any such requirements imposed upon Summit or on any of its
subsidiaries in connection with the Merger.
Section 4.11. Agreements of Affiliated Shareholders. BMJ agrees to furnish
to Summit, not later than 10 business days prior to the date of mailing of
the Proxy-Prospectus, a list of all persons who, in the opinion of Covington
& Burling, special counsel to BMJ, are affiliates of BMJ for the purposes of
Rule 145 under the Securities Act (a "BMJ Affiliate") and shall use its best
efforts to cause each BMJ Affiliate to enter into, prior to the date of
mailing of the Proxy-Prospectus, an agreement, satisfactory in form and
substance to Summit, substantially in the form of Exhibit C hereto, and
effective prior to such date (an "Affiliate Agreement").
Section 4.12. Loans and Leases to Affiliates. All loans and leases
hereafter made by BMJ or any of its subsidiaries to any of its present or
former directors or executive officers or their respective related interests
shall be made only in the ordinary course of business and on the same terms
and at the same interest rates as those prevailing for comparable
transactions with others and shall not involve more than the normal risk of
repayment or present other unfavorable features.
Section 4.13. Confidentiality. All information furnished by Summit to BMJ
or its representatives pursuant hereto shall be treated as the sole property
of Summit and, if the Merger shall not occur, BMJ and its representatives
shall return to Summit all of such written information and all documents,
notes, summaries or other materials containing, reflecting or referring to,
or derived from, such information, except that any such confidential
information or notes or abstracts therefrom presented to the Board of
Directors of BMJ or any committee thereof for the purpose of considering this
Agreement, the Merger and the related transactions may be kept and maintained
by BMJ with other records of Board, and Board committee, meetings subject to
a continuing obligation of confidentiality. BMJ shall, and shall use its best
efforts to cause its representatives to, keep confidential all such
information, and shall not directly or indirectly use such information for
any competitive or other commercial purposes. The obligation to keep such
information confidential shall continue for five years from the date the
proposed Merger is abandoned and shall not apply to: (i) any information
which (x) was legally in BMJ's possession prior to the disclosure thereof by
Summit, (y) was then generally known to the public, or (z) was disclosed to
BMJ by a third party not bound by an obligation of confidentiality; or (ii)
disclosures made as required by law. It is further agreed that if, in the
absence of a protective order or the receipt of a waiver hereunder, BMJ is
nonetheless, in the written opinion of its outside counsel, compelled to
disclose information con-
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cerning Summit to any tribunal or governmental body or agency or else stand
liable for contempt or suffer other censure or penalty, BMJ may disclose such
information to such tribunal or governmental body or agency without liability
hereunder and shall so notify Summit. This Section 4.13 shall survive any
termination of this Agreement.
Section 4.14. Dividends. BMJ will coordinate with Summit the declaration
of any dividends and the record and payment dates thereof so that the holders
of BMJ Stock will not be paid two dividends for a single calendar quarter
with respect to their shares of BMJ Stock and any shares of Summit Stock they
become entitled to receive in the Merger or fail to be paid one dividend in
each calendar quarter between the date hereof and the Effective Time. BMJ
will notify Summit at least five business days prior to any proposed dividend
declaration date.
Section 4.15. Acquisition Proposals. BMJ agrees that neither BMJ nor any
of its subsidiaries nor any of the respective officers and directors of BMJ
or its subsidiaries shall, and BMJ shall direct and use its best effort to
cause its employees, affiliates, agents and representatives (including,
without limitation, any investment banker, broker, financial or investment
advisor, attorney or accountant retained by BMJ or any of its subsidiaries)
not to, initiate, solicit or encourage, directly or indirectly, any
inquiries, proposals or offers with respect to, or engage in any negotiations
or discussions with any person, provide any nonpublic information, or
authorize or enter into any agreement or agreement in principle concerning,
or recommend, endorse or otherwise facilitate any effort or attempt to induce
or implement any Acquisition Proposal (as defined below); provided however,
that the Board of Directors of BMJ may furnish or cause to be furnished
nonpublic information and may participate in such discussions directly or
through its representatives concerning an Acquisition Proposal, if such Board
of Directors has determined, after having consulted with and received the
written opinion of outside counsel to the effect, that the failure to provide
such nonpublic information or participate in such discussions would cause the
members of such Board of Directors to breach their fiduciary duties under
applicable laws. "Acquisition Proposal" is hereby defined to be any offer,
including an exchange offer or tender offer, or proposal concerning a merger,
consolidation, or other business combination or takeover transaction
involving BMJ or any of its subsidiaries or the acquisition of any assets
(otherwise than as permitted by Section 4.05) or securities of BMJ or any of
its subsidiaries. BMJ will immediately cease and cause to be terminated any
existing activities, discussion or negotiations with any parties conducted
heretofore with respect to any of the foregoing. BMJ will take the necessary
steps to inform the individuals or entities referred to in the first sentence
hereof of the obligations undertaken in this Section. In addition, BMJ will
notify Summit by telephone to its chief executive officer or general counsel
promptly upon receipt of any communication with respect to a proposed
Acquisition Proposal with another person or receipt of a request for
information from any governmental or regulatory authority with respect to a
proposed acquisition of BMJ or any of its subsidiaries or assets by another
party, and will immediately deliver as soon as possible by facsimile
transmission, receipt acknowledged, to the Summit officer notified as
required above a copy of any document relating thereto promptly after any
such document is received by BMJ.
Section 4.16 Tax Opinion Certificates. BMJ shall execute and deliver to
Thompson Coburn any tax opinion certificate reasonably required by Thompson
Coburn in connection with the issuance of the Tax Opinions (as defined at
Section 6.03), dated as of the date of effectiveness of the Registration
Statement and as of the Closing Date, and BMJ shall cause each of its
executive officers, directors and holders of five percent (5%) or more of
outstanding BMJ Stock (including shares beneficially held) to execute and
deliver to Thompson Coburn any tax opinion certificate reasonably required by
Thompson Coburn in connection with the issuance of one or more of the Tax
Opinions, dated as of the date of effectiveness of the Registration Statement
and as of the Closing Date.
Section 4.17 Best Efforts to Ensure Pooling. BMJ agrees to use, and agrees
to cause each of its subsidiaries to use, its and their best efforts to cause
the Merger to qualify for pooling-of-interests accounting treatment.
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ARTICLE V.
COVENANTS OF SUMMIT
Summit hereby covenants and agrees with BMJ that:
Section 5.01. Approvals and Registrations. Based on such assistance of and
cooperation BMJ as Summit shall reasonably request, Summit will use its best
efforts to prepare and file (a) with the SEC, the Registration Statement, (b)
with the Federal Reserve Board, an application for approval of the Merger,
and (c) with the New York Stock Exchange, an application for the listing of
the shares of Summit Stock issuable upon the Merger, subject to official
notice of issuance, except that Summit shall have no obligation to file a new
registration statement or a post-effective amendment to the Registration
Statement covering any reoffering of Summit Stock by BMJ Affiliates. Summit
covenants and agrees that all information furnished by Summit for inclusion
in the Registration Statement, the Proxy-Prospectus, and all applications and
submissions for the Required Consents will comply in all material respects
with the provisions of applicable law, including the Securities Act and the
Exchange Act and the rules and regulations of the SEC and the Federal Reserve
Board and will not contain any untrue statement of a material fact and will
not omit to state any material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. Summit will furnish
to Bear Stearns, investment bankers advising BMJ, such information as they
may reasonably request for purposes of the opinion referred to in Section
8.07.
Section 5.02. Notice of Adverse Changes. Summit will promptly advise BMJ
in writing of (a) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of Summit
contained in this Agreement or the Summit Schedules, if made on or as of the
date of such event or the Closing Date, untrue or inaccurate in any material
respect, (b) any Summit Material Adverse Change, (c) any inability or
perceived inability of Summit to perform or comply with the terms or
conditions of this Agreement, (d) the institution or threat of institution of
material litigation or administrative proceeding involving Summit or its
assets which, if determined adversely to Summit, would have a material
adverse effect on Summit and its subsidiaries taken as a whole or the Merger,
(e) any governmental complaint, investigation, or hearing or communication
indicating that such litigation or administrative proceeding is contemplated,
(f) any written notice of, or other communication relating to, a default or
event which, with notice or lapse of time or both, would become a default,
received by Summit subsequent to the date hereof and prior to the Effective
Time, under any agreement, indenture or instrument to which Summit is a party
or is subject and which is material to the business, operation or condition
(financial or otherwise) of Summit and its subsidiaries taken as a whole, and
(g) any written notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement including the Merger. Summit
agrees that the delivery of such notice shall not constitute a waiver by BMJ
of any of the provisions of Articles VI or VIII.
Section 5.03. Copies of Filings. Summit shall promptly provide to BMJ and
its counsel copies of the applications filed with the Federal Reserve Board
and all reports filed by it with the SEC on Forms 10-Q, 8-K and 10-K.
Section 5.04. Further Actions. Summit will: (a) execute and deliver such
instruments and take such other actions as BMJ may reasonably require to
carry out the intent of this Agreement; (b) use all reasonable efforts to
obtain consents of all third parties and governmental bodies necessary or
reasonably desirable for the consummation of the transactions contemplated by
this Agreement; (c) diligently support this Agreement in any proceeding
before any regulatory authority whose approval of any of the transactions
contemplated hereby is required or reasonably desirable or before any court
in which litigation in respect thereof is pending; and (d) use its best
efforts so that the other conditions precedent to the obligations of BMJ set
forth in Articles VI and VIII hereof are satisfied.
Section 5.05. Applicable Laws. Summit will use its best efforts to comply
promptly with all requirements which federal or state law may impose on
Summit with respect to the Merger and will promptly cooperate with and
furnish information to BMJ in connection with any such requirements imposed
upon BMJ or on any of its subsidiaries in connection with the Merger.
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Section 5.06. Unpaid BMJ Dividends. By virtue of the Merger and without
further action on anyone's part, Summit shall assume the obligation of BMJ to
pay dividends, if any, on BMJ Stock which have a record date prior to the
Effective Time but which are not payable until after the Effective Time.
Section 5.07. Cooperation. Until the Effective Time, Summit will provide
such information with respect to its business affairs and properties as BMJ
from time to time may reasonably request, and will cause its managerial
employees, counsel and independent certified public accountants to be
available on reasonable request to answer questions of BMJ's representatives
covering the business and affairs of Summit or any of its subsidiaries.
Section 5.08. Confidentiality. All information furnished by BMJ to Summit
or its representatives pursuant hereto shall be treated as the sole property
of BMJ and, if the Merger shall not occur, Summit and its representatives
shall return to BMJ all of such written information and all documents, notes,
summaries or other materials containing, reflecting or referring to, or
derived from, such information, except that any such confidential information
or notes or abstracts therefrom presented to the Board of Directors of Summit
or any committee thereof for the purpose of considering this Agreement, the
Merger and the related transactions may be kept and maintained by Summit with
other records of Board, and Board committee, meetings subject to a continuing
obligation of confidentiality. Summit shall, and shall use its best efforts,
to cause its representatives to, keep confidential all such information, and
shall not directly or indirectly use such information for any competitive or
other commercial purposes. The obligation to keep such information
confidential shall continue for five years from the date the proposed Merger
is abandoned and shall not apply to: (i) any information which (x) was
legally in Summit's possession prior to the disclosure thereof by BMJ, (y)
was then generally known to the public, or (z) was disclosed to Summit by a
third party not bound by an obligation of confidentiality; or (ii)
disclosures made as required by law. It is further agreed that if, in the
absence of a protective order or the receipt of a waiver hereunder, Summit is
nonetheless, in the written opinion of its counsel, compelled to disclose
information concerning BMJ to any tribunal or governmental body or agency or
else stand liable for contempt or suffer other censure or penalty, Summit may
disclose such information to such tribunal or governmental body or agency
without liability hereunder and shall so notify BMJ in advance to the extent
practicable. This Section 5.08 shall survive any termination of this
Agreement.
Section 5.09. Further Transactions. Summit continually evaluates possible
acquisitions and may prior to the Effective Time enter into one or more
agreements providing for, and may consummate the acquisition by it of another
bank, association, bank holding company, savings and loan holding company or
other company (or the assets thereof) for consideration that may include
Summit Stock. In addition, prior to the Effective Time, Summit may, depending
on market conditions and other factors, otherwise determine to issue
equity-linked or other securities for financing purposes. Notwithstanding the
foregoing, Summit will not take any such action that would (i) prevent the
transactions and contemplated hereby from qualifying as a reorganization
within the meaning of Section 368 of the Code or (ii) materially impede or
delay receipt of any Required Consent or the consummation of the transactions
contemplated by this Agreement for more than 60 days.
Section 5.10. Indemnification.
(a) Summit shall indemnify, and advance expenses in matters that may be
subject to indemnification to, persons who served as directors and officers
of BMJ or any subsidiary of BMJ on or before the Effective Time with respect
to liabilities and claims (and related expenses, including fees and
disbursements of counsel) made against them resulting from their service as
such prior to the Effective Time in accordance with and subject to the
requirements and other provisions of the Restated Certificate of
Incorporation and By-Laws of Summit in effect on the date of this Agreement
and applicable provisions of law to the same extent as Summit is obliged
thereunder to indemnify and advance expenses to its own directors and
officers with respect to liabilities and claims made against them resulting
from their service for Summit.
(b) For a period of six (6) years after the Effective Time, Summit will
use its best efforts to provide to the persons who served as directors or
officers of BMJ or any subsidiary of BMJ on or before the Effective Time
insurance against liabilities and claims (and related expenses) made against
them resulting from their service as such prior to the Effective Time
comparable in coverage to that provided by Summit to its own directors and
officers, but, if not available on commercially reasonable terms, then
coverage substantially similar in all mate-
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rial respects to the insurance coverage provided to them in such capacities
at the date hereof; provided, however, that in no event shall Summit be
required to expend more than 200% of the current amount expended by BMJ (the
Insurance Amount ) to maintain or procure insurance coverage pursuant hereto,
and, further provided, that if Summit is unable to maintain or obtain the
insurance called for by this Section 5.10, Summit shall use its best efforts
to obtain as much comparable insurance as is available for the Insurance
Amount. BMJ shall renew any existing insurance or purchase any discovery
period insurance provided for thereunder at Summit s request.
(c) This Section 5.10 shall be construed as an agreement as to which the
directors and officers of BMJ referred to herein are intended to be third
party beneficiaries and shall be enforceable by the such persons and their
heirs and representatives.
Section 5.11. Employee Matters.
(a) After the Effective Time, Summit may in its discretion maintain,
terminate, merge or dispose of (i) the BMJ Plans, (ii) the Benefit Plans, and
(iii) any and all other medical, major medical, disability, life insurance,
accidental death and dismemberment insurance, dental, vision care, or other
health or welfare plan maintained by BMJ (the "Health or Welfare Plans");
provided, however, that any action taken by Summit shall comply with ERISA
and any other applicable laws, including laws regarding the preservation of
employee pension benefit plan benefits and, provided further, that if Summit
maintains a plan available to all its employees generally which is similar in
benefits, character or nature to, or which covers risks similar to those
covered by, a BMJ Plan, a Benefit Plan or a Health or Welfare Plan available
to all BMJ employees generally, then, if such BMJ plan is terminated by
Summit or is otherwise rendered inactive by Summit, Summit shall offer to the
former employees of BMJ affected by such plan termination or cessation of
activity the opportunity to participate in the similar plan of Summit without
being subject to any exclusions due to pre-existing conditions and such
employees shall be given credit for years of service with BMJ for purposes of
eligibility, vesting and benefit accrual purposes, except benefit accruals
under the Summit Retirement Plan, Summit supplemental employee retirement
plans and Summit severance plans.
(b) After the Effective Time, BMJ employees shall not be entitled to
participate automatically in benefits plans, programs or arrangements of
Summit not maintained by Summit for its employees generally, including
without limitation bonus plans, stock option plans, stock award plans,
severance plans and reduction in force plans, but shall be allowed to
participate if and only if selected for participation by the persons
authorized by the terms of such plans to select participants.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE RESPECTIVE OBLIGATIONS OF SUMMIT AND BMJ
The respective obligations of Summit and BMJ under this Agreement to
consummate the Merger are subject to the satisfaction of all the following
conditions, compliance with which or the occurrence of which may only be
waived in whole or in part in writing by Summit and BMJ in accordance with
Section 10.09:
Section 6.01. Receipt of Required Consents. Summit and BMJ shall have
received the Required Consents; the Required Consents shall not, in the
reasonable opinion of Summit or BMJ, contain restrictions or limitations
which would materially adversely affect the financial condition of Summit
after consummation of the Merger; the Required Consents and the transactions
contemplated hereby shall not on the Closing Date be contested by any federal
or state governmental authority; and on the Closing Date the Required
Consents needed for the Merger shall have been obtained and shall not have
been withdrawn or suspended.
Section 6.02. Effective Registration Statement. The Registration Statement
shall have been declared effective by the SEC; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and remain
in effect on the Closing Date; and no proceeding for that purpose shall have
been initiated or, to the knowledge of Summit or BMJ, shall be contemplated
or threatened by the SEC on the Closing Date.
Section 6.03. Tax Matters. At the time of effectiveness of the
Registration Statement and at the Closing Date, Summit and BMJ shall have
received from Thompson Coburn an opinion (the "Tax Opinion"), reasonably
satisfactory in form and substance to them, to the effect that (a) the Merger
will constitute a tax-free reorganization within the meaning of Section 368
of the Code, (b) except with respect to fractional share interests, hold-
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ers of BMJ Stock who receive solely Summit Stock in the Merger will not
recognize gain or loss for federal income tax purposes, (c) the basis of such
Summit Stock (including any fractional share for which cash is received) will
equal the basis of the BMJ Stock for which it is exchanged and (d) the
holding period of such Summit Stock (including any fractional share for which
cash is received) will include the holding period of the BMJ Stock for which
it is exchanged, assuming that such BMJ Stock is a capital asset in the hands
of the holder thereof at the Effective Time.
In addition, no condition or set of facts or circumstances shall exist at the
Closing Date which will either (x) preclude any of the parties to this
Agreement from satisfying the terms or conditions of, or assumptions made in,
the Tax Opinions, as the case may be, or (y) result in any of the factual
assumptions contained in the Tax Opinions being untrue.
Section 6.04. Absence of Litigation. At the Closing Date, no investigation
by any state or federal agency, and no action, suit, arbitration or
proceeding before any court, state or federal agency, panel or governmental
or regulatory body or authority, shall have been instituted or threatened
against Summit or any of its subsidiaries, or BMJ or any of its subsidiaries,
that is material to the Merger or to the financial condition of Summit and
its subsidiaries taken as a whole or BMJ and its subsidiaries taken as a
whole, as the case may be. At the Closing Date, no order, decree, judgment,
or regulation shall have been entered or law or regulation adopted by any
such agency, panel, body or authority which enjoined or has a material
adverse effect upon the Merger or on the financial condition of Summit and
its subsidiaries taken as a whole or BMJ and its subsidiaries taken as a
whole, as the case may be.
Section 6.05. NYSE Listing. At the Closing Date, the shares of Summit
Stock to be issued in the Merger shall have been listed on the New York Stock
Exchange, subject to official notice of issuance.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SUMMIT
The obligation of Summit to consummate the Merger is subject to the
satisfaction of all of the following conditions, compliance with which or the
occurrence of which may be waived in whole or in part by Summit in writing in
accordance with Section 10.09:
Section 7.01. No Adverse Changes. During the period from December 31, 1995
to the Closing Date there shall not have been any BMJ Material Adverse
Change, and BMJ and its subsidiaries shall have not sustained any material
loss or damage to their properties, whether or not insured, which materially
affects the ability of BMJ and its subsidiaries, taken as a whole, to conduct
their business.
Section 7.02. Representations and Covenants. Except with respect to
matters resulting from transactions specifically contemplated by this
Agreement, all representations and warranties made by BMJ in this Agreement
and the BMJ Schedules and the material furnished pursuant to the Post-Signing
Disclosure List shall be true and correct in all material respects on the
date of this Agreement, and in all material respects on the Closing Date with
the same force and effect as if such representations and warranties were made
on the Closing Date. BMJ shall have complied in all material respects with
all covenants and agreements contained herein to be performed by BMJ on or
before the Closing Date.
Section 7.03. Secretary's Certificate. BMJ shall have furnished to Summit
a certificate dated the Closing Date to which shall be attached copies of all
resolutions adopted or minutes of actions taken by the Board of Directors
(including committees thereof) and shareholders of BMJ relating to this
Agreement, the Option Agreement and the Merger and related transactions,
which such certificate shall be signed by the Secretary of BMJ and certify to
the satisfaction of the condition set forth in Section 7.09 and the trueness,
correctness, completeness and continuing effectiveness of all resolutions and
actions contained or referenced in the aforementioned attachments.
Section 7.04. Officer's Certificate. BMJ shall have furnished to Summit a
certificate signed by the President of BMJ, dated the Closing Date,
certifying to the satisfaction of the conditions set forth at Sections 6.01,
6.02 (last clause), 6.03 (last paragraph) and Section 6.04, as they relate to
BMJ, and at Sections 7.01, 7.02, 7.07, 7.10 and 7.13.
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Section 7.05. Opinion of BMJ's Counsel. Summit shall have received an
opinion of counsel to BMJ, dated the Closing Date and reasonably satisfactory
in form and substance to counsel for Summit, substantially to the effect
provided in Exhibit D.
Section 7.06. Approvals of Legal Counsel. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated
by this Agreement or incidental thereto and all related legal matters shall
be reasonably satisfactory to counsel to Summit, and such counsel shall have
been furnished with certified copies of actions and proceedings and such
other documents and instruments as they shall have reasonably requested.
Section 7.07. Consents to BMJ Contracts. All consents, approvals or
waivers, in form and substance reasonably satisfactory to Summit, required to
be obtained in connection with the Merger from other parties to each
mortgage, note, lease, permit, franchise, loan or other agreement or contract
to which BMJ or any of its subsidiaries is a party or by which they or any of
their assets or properties may be bound or committed, which contract is
material to the business, franchises, operations, assets or financial
condition (financial or otherwise) of BMJ and its subsidiaries on a
consolidated basis, shall have been obtained.
Section 7.08. FIRPTA Affidavit. BMJ shall have delivered to Summit an
affidavit of an executive officer of BMJ stating, under penalties of perjury,
that BMJ is not and has not been a United States real property holding
company (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code.
Section 7.09. Shareholder Approval. The shareholders of BMJ, at the
meeting contemplated by this Agreement, shall have authorized and approved
the Merger and this Agreement and all transactions contemplated by this
Agreement as and to the extent required by all applicable laws and
regulations and the provisions of BMJ s Certificate of Incorporation and
By-Laws.
Section 7.10. Absence of Regulatory Agreements. Neither BMJ nor any BMJ
subsidiary shall be a party to any agreement or memorandum of understanding
with, or commitment letter to, or board of directors resolution submitted to
or similar undertaking made to, or be subject to any order or directive by,
or be a recipient of any extraordinary supervisory letter from, any
governmental or regulatory authority which restricts materially the conduct
of its respective business or has a material adverse effect upon the Merger
or upon the financial condition of Bank or BMJ and its subsidiaries taken as
a whole, and neither BMJ nor Bank shall have been advised by any governmental
or regulatory authority that such authority is contemplating issuing or
requesting, or considering the appropriateness of issuing or requesting, any
of the foregoing.
Section 7.11. [omitted]
Section 7.12. Affiliate Agreements. Each person who is a BMJ Affiliate
shall have delivered to Summit an executed Affiliate Agreement.
Section 7.13. [omitted]
The receipt of the documents required by this Article VII by Summit shall in
no way constitute a waiver by Summit of any of the provisions of or its
rights under this Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF BMJ
The obligation of BMJ to consummate the Merger is subject to the
satisfaction of all of the following conditions, compliance with which or the
occurrence of which may be waived in whole or in part by BMJ in writing in
accordance with Section 10.09:
Section 8.01. No Adverse Changes. During the period from December 31, 1995
to the Closing Date there shall not have been any Summit Material Adverse
Change, and Summit and its subsidiaries shall not have sustained any material
loss or damage to their properties, whether or not insured, which materially
affects the ability of Summit and its subsidiaries, taken as a whole, to
conduct their business.
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Section 8.02. Representations and Covenants. Except with respect to
matters resulting from transactions specifically contemplated by this
Agreement, all representations and warranties made by Summit in this
Agreement shall be true and correct in all material respects on the date of
this Agreement and, in all material respects, on the Closing Date with the
same force and effect as if such representations and warranties were made on
the Closing Date. Summit shall have complied in all material respects with
all covenants and agreements contained herein or therein to be performed by
Summit on or before the Closing Date. The entry by Summit after the date
hereof into any agreement to acquire any company or other entity, the
issuance of up to $1 billion of debt or equity or a combination of debt and
equity in public or private offerings, and the issuance of Series R Preferred
Stock pursuant to Summit's Shareholder Rights Plan, the redemption or
repurchase by Summit of its Common Stock, Series B Adjustable Rate Cumulative
Preferred Stock, Series C Adjustable Rate Cumulative Preferred Stock, the
Rights attached to Summit Common Stock or the Series R Preferred Stock
issuable pursuant to Summit's Shareholder Rights Plan, and any transactions
reasonably necessary or appropriate in connection therewith, are specifically
permitted by this Agreement.
Section 8.03. Secretary's Certificate. Summit shall have furnished to BMJ
a certificate dated the Closing Date to which shall be attached copies of all
resolutions adopted or minutes of actions taken by the Board of Directors
(including committees thereof) of Summit relating to this Agreement, the
Merger Agreement and the Merger and related transactions, which such
certificate shall be signed by the Secretary of Summit and certify to the
trueness, correctness, completeness and continuing effectiveness of all
resolutions and actions contained or referenced in the aforementioned
attachments.
Section 8.04. Officer's Certificate. Summit shall have furnished to BMJ a
certificate signed by the Chairman, Vice Chairman, President or an Executive
Vice President of Summit, dated the Closing Date, certifying to the
satisfaction of the conditions set forth at Sections 6.01 and 6.02, the last
paragraph of Section 6.03, and Sections 6.04 and 6.05, as they relate to
Summit, and Sections 8.01, 8.02 and 8.08.
Section 8.05. Opinion of Summit Counsel. BMJ shall have received an
opinion of the General Counsel of Summit, dated the Closing Date and
reasonably satisfactory in form and substance to counsel for BMJ,
substantially to the effect provided in Exhibit E.
Section 8.06. Approvals of Legal Counsel. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated
by this Agreement or incidental thereto and all related legal matters shall
be reasonably satisfactory to counsel to BMJ, and such counsel shall have
been furnished with certified copies of actions and proceedings and such
other documents and instruments as they shall have reasonably requested.
Section 8.07. Fairness Opinion. The Proxy-Prospectus shall have contained
the favorable signed opinion of Bear Stearns, dated the date of the
Proxy-Prospectus or a date not more than five business days prior thereto,
regarding the fairness from a financial point of view of the consideration to
be received by the shareholders of BMJ in the Merger.
Section 8.08. Absence of Regulatory Agreements. Neither Summit nor any of
its bank subsidiaries shall be a party to any agreement or memorandum of
understanding with, or commitment letter to, or board of directors resolution
submitted to or similar undertaking made to, or be subject to any order or
directive by, or be a recipient of any extraordinary supervisory letter from,
any governmental or regulatory authority which restricts materially the
conduct of Summit's business or has a material adverse effect upon the Merger
or upon the financial condition of Summit and its subsidiaries taken as a
whole, and neither Summit nor any of its bank subsidiaries shall have been
advised by any governmental or regulatory authority that such authority is
contemplating issuing or requesting, or considering the appropriateness of
issuing or requesting, any of the foregoing.
Section 8.09. BMJ Shareholder Approval. The shareholders of BMJ, at the
meeting contemplated by this Agreement, shall have authorized and approved
the Merger and this Agreement and all transactions contemplated by this
Agreement as and to the extent required by all applicable laws and
regulations and the provisions of BMJ's Certificate of Incorporation and
By-Laws.
The receipt of the documents required by this Article VIII by BMJ shall in no
way constitute a waiver by BMJ of any of the provisions of or its rights
under this Agreement.
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ARTICLE IX
CLOSING; TERMINATION RIGHTS
Section 9.01. Closing. Unless a different place and time are agreed to by
the parties hereto, the closing of the Merger (the "Closing") shall take
place on a date determined by Summit on at least five business days notice
(the "Closing Notice") given to BMJ, at the office of Summit, 301 Carnegie
Center, Princeton, New Jersey, commencing at 10:00 a.m., which date shall not
be later than 45 business days after the last to occur of the following:
(a) the date of the approval of the Merger by the shareholders of BMJ in
accordance with Section 7.09;
(b) if the transactions contemplated by this Agreement are being contested
in any legal proceeding, the date that such proceeding has been brought to a
conclusion favorable, in the judgment of Summit and BMJ, to the consummation
of the transactions contemplated herein or such prior date as Summit and BMJ
shall elect, whether or not such proceeding has been brought to a conclusion;
or
(c) the date of receipt of the last of the Required Consents (and the
expiration of any required waiting period required by statute or incorporated
into such Required Consents);
such date is sometimes referred to herein as the "Closing Date". At the
Closing, the parties will exchange certificates, legal opinions and other
documents for the purpose of determining whether the conditions precedent to
the obligations of the parties set forth herein have been satisfied or
waived. After all such conditions have been satisfied or waived, Summit shall
cause the Certificate of Merger to be filed with the New Jersey Secretary of
State in accordance with Section 1.06. All proceedings to be taken and all
documents to be executed and delivered by all parties at the Closing shall be
deemed so taken, executed and delivered simultaneously, and no proceedings
shall be deemed taken or any documents executed or delivered until all have
been taken, executed or delivered.
Section 9.02. Termination Rights.
(a) The Boards of Directors of BMJ and Summit may terminate this Agreement
by mutual consent at any time prior to the Effective Time. In addition, if
either party shall refuse to close because, on the date on which the Closing
must be held as determined by Section 9.01, all the conditions precedent to
its obligation to close under Article VI shall not have been met, the Board
of Directors of such party may terminate this Agreement by giving written
notice of such termination to the other party. Furthermore, the Board of
Directors of either party may terminate this Agreement in the event that:
(i) the shareholders of BMJ at the meeting of shareholders contemplated by
Section 4.03, called for the purpose of approving the Merger, this
Agreement and the transactions contemplated by this Agreement, upon
voting, shall have failed to approve the Merger, this Agreement and
the transactions contemplated hereby by the requisite vote, or
(ii) a material breach of a warranty or representation or covenant made by
the other party shall have occurred and such breach has not been
cured, or is not capable of being cured, within 30 days after written
notice of the existence thereof shall have been given to the other
party (provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement
contained herein);
(iii) BMJ's investment banker is unable to deliver to BMJ by January 31,
1997 the opinion required by Section 8.07; or
(iv) the Closing is not consummated on or before June 30, 1997, unless the
failure of such occurrence shall be due solely to the failure of the
party seeking to terminate this Agreement to perform or observe its
agreements set forth in this Agreement required to be performed or
observed by such party on or before the Closing Date.
(b) If either party shall refuse to close because, on the date on which
the Closing must be held as determined by Section 9.01, all the conditions to
its obligation to close (other than a condition set forth in Article VI)
shall not have been met (other than a failure of the condition set forth at
Section 7.09 or 8.09 due to the circum-
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stances set forth in Section 9.02(a)(i) hereof or a failure of the condition
set forth at Section 8.07 due to the circumstances set forth at Section
9.02(a)(iii) hereof), the Board of Directors of such party may terminate this
Agreement by giving written notice of such termination to the other party.
(c) Upon a termination of this Agreement pursuant to this Section 9.02
hereof:
(i) the obligations of the parties under this Agreement (except for those
under this Section 9.02 and Sections 4.13 and 5.08) shall terminate
and be of no further force or effect and each party shall be mutually
released and discharged from liability to the other party or to any
third parties hereunder, and
(ii) no party shall be liable to any other party for any costs or expenses
paid or incurred in connection herewith by such other party, except
that expenses incurred in connection with printing the Proxy-
Prospectus and the Registration Statement, and the filing fees of
regulatory authorities or self-regulatory organizations, shall be
borne equally by Summit and BMJ; provided, however, that: (A) if BMJ
terminates this Agreement pursuant to Section 9.02(a)(ii) or Section
9.02(b), Summit shall reimburse BMJ for its out-of-pocket expenses
reasonably incurred in connection with this Agreement, including
counsel fees and the printing and filing fees referred to above, but
excluding any brokers', finders' or investment bankers' fees; and (B)
if Summit terminates this Agreement pursuant to Section 9.02(a)(ii),
Section 9.02(b) or Section 9.02(d), BMJ shall reimburse Summit for
its out-of-pocket expenses reasonably incurred in connection with
this Agreement, including counsel fees and the printing and filing
fees referred to above, but excluding any brokers', finders' or
investment bankers' fees.
(d) The Board of Directors of Summit may terminate this Agreement if BMJ
does not execute and deliver the Option Agreement by the day immediately
following the date hereof.
(e) Notwithstanding any termination of this Agreement, (i) BMJ shall
indemnify and hold Summit harmless from and against any claim by any broker
or finder asserting a right to brokerage commissions or finders' fees as a
result of any action allegedly taken by or understanding allegedly reached
with BMJ and (ii) Summit shall indemnify and hold BMJ harmless from and
against any claim by any broker or finder asserting a right to brokerage
commissions or finders' fees as a result of any action allegedly taken by or
understanding allegedly reached with Summit.
(f) Except as provided otherwise herein in the event of a termination of
this Agreement, BMJ and its subsidiaries shall bear their own expenses
incident to preparing, entering into and carrying out this Agreement and to
consummating the Merger, provided, however, that Summit shall pay all
printing expenses and filing fees associated with the Registration Statement,
the Proxy- Prospectus and regulatory applications.
ARTICLE X
MISCELLANEOUS
Section 10.01. Press Releases. At all times until the Closing Date or the
termination of this Agreement, each party shall promptly advise and consult
with the other prior to issuing, or permitting any of its subsidiaries,
directors, officers, employees or agents to issue, any press release or other
information to the press or any third party with respect to this Agreement or
the transactions contemplated hereby.
Section 10.02. Article and Section Headings. Article and section headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Section 10.03. Entire Agreement; Amendments. This Agreement, the BMJ
Schedules, and the Exhibits hereto and the Option Agreement to be entered
into by the parties hereto constitute the entire agreement between the
parties pertaining to the subject matter hereof and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with
the subject matter hereof except as specifically set forth herein or therein.
No supplement, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the party to be bound thereby (or in
the case of a termination occurring pursuant to Section 9.02 hereof by the
party exercising a right to terminate this Agreement). No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision
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hereof or thereof (whether or not similar), nor shall any waiver constitute a
continuing waiver unless otherwise expressly provided in the instrument
granting such waiver. The parties hereto may amend or modify this Agreement
in such manner as may be agreed upon by a written instrument executed by the
parties, except that, after the meeting described in Section 7.09 hereof, no
such amendment or modification shall reduce the amount of, or change the
forms of consideration to be received by the shareholders of BMJ contemplated
by this Agreement, unless such modification is submitted to a vote of the
shareholders of BMJ.
Section 10.04. Survival of Representations, Warranties and Covenants. No
investigation made by the parties hereto made heretofore or hereafter shall
affect the representations and warranties of the parties which are contained
herein and each such representation and warranty shall survive such
investigation. None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time, except for those representations,
covenants and agreements contained herein and therein which by their terms
apply in whole or in part after the Effective Time.
Section 10.05. Notices. Any notice or other communication required or
permitted hereunder shall be in writing, and shall be deemed to have been
given, unless otherwise specified in a particular provision of this
Agreement, if placed in the mail, registered or certified, postage prepaid,
or if delivered personally or by courier, receipt requested, or by facsimile
transmission, receipt acknowledged addressed as follows:
Summit:
Summit Bancorp.
Attn: John G. Collins
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3422
Facsimile No.: 609-987-3435
With a copy to:
Richard F. Ober, Jr., Esq.
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3430
Facsimile No.: 609-987-3435
BMJ:
B.M.J. Financial Corp.
243 Route 130
P.O. Box 1001
Bordentown, NJ 08505-1001
Attention: Elmer J. Elias
Telephone No.: 609-291-5117
Facsimile No.: 609-298-1270
With a copy to:
Wesley S. Williams Jr., Esq.
Covington & Burling
Suite 1155A
1201 Pennsylvania Avenue, NW
Washington, DC 20004
Telephone No.: 202-662-5628
Facsimile No.: 202-778-5628
or to such other address as such party may designate by notice to the others,
which change of address shall be deemed to have been given upon receipt.
A notice or other communication hereunder shall be deemed delivered (i) if
mailed by certified or registered mail to the proper address, with adequate
postage prepaid, on the fifth business day following posting or (ii) if
delivered by other means, when received by the party to whom it is directed.
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Section 10.06. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New
Jersey, without giving effect to the provisions, policies or principles
thereof relating to choice or conflict of laws.
Section 10.07. Counterparts. This Agreement is being executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
agreement.
Section 10.08. Binding Effect. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Section 10.09. Extensions; Waivers and Consents. Either party hereto, by
written instrument signed by its Chairman, Vice Chairman, President, or Chief
Financial Officer, may extend the time for the performance of any of the
obligations of the other party hereto, and may waive, at any time before or
after approval of this Agreement and the transactions contemplated hereby by
the shareholders of BMJ, subject to the provisions of Section 10.03 hereof:
(i) any inaccuracies of the other party in the representations and warranties
in this Agreement or any other document delivered pursuant hereto or thereto;
(ii) compliance with any of the covenants or agreements of the other party
contained in this Agreement; (iii) the performance (including performance to
the satisfaction of a party or its counsel) by the other party of any of its
obligations hereunder or thereunder; and (iv) the satisfaction of any
conditions to the obligations of the waiving party hereunder or thereunder.
Any consent or approval of a party hereunder shall be effective only if
signed by the Chairman, Vice Chairman, President or Chief Financial Officer
of such party. Subject to Section 10.03, no such instrument, consent or
approval may modify the form or amount of consideration to be received by the
shareholders of BMJ.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in counterparts by their duly authorized officers as of the date first above
written.
SUMMIT BANCORP.
By: /s/ Robert G. Cox
------------------------------
Robert G. Cox
President
B.M.J. FINANCIAL CORP.
By: /s/ Edwin W. Townsend
------------------------------
Edwin W. Townsend
Chairman of the Board
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Appendix B
BEAR STEARNS
BEAR, STEARNS & CO. INC.
245 PARK AVENUE
NEW YORK, NEW YORK 10167
January 13, 1997
The Board of Directors
B.M.J. Financial Corp.
234 Route 130
Bordentown, NJ 08505
Gentlemen:
We understand that B.M.J. Financial Corp. ("BMJ") and Summit Bancorp
("Summit") have entered into an Agreement and Plan of Merger dated August 28,
1996 (the "Agreement") pursuant to which BMJ will merge with and into Summit
(the "Transaction"). Upon consummation of the Transaction, each share of BMJ
common stock will be converted into 0.56 shares of Summit common stock. You
have provided us with the proxy statement/prospectus which includes the
Merger Agreement in substantially the form to be sent to the shareholders of
BMJ (the "Proxy Statement"). We understand the transaction will require
approval of the shareholders of BMJ.
You have asked us to render our opinion as to whether the Exchange Ratio is
fair, from a financial point of view, to the shareholders of BMJ.
In the course of our analyses for rendering this opinion, we have:
1. reviewed the Proxy Statement;
2. reviewed BMJ's Annual Reports to Shareholders and Annual Reports on
Form 10-K for the fiscal years ended December 31, 1993 through 1995,
and its Quarterly Reports on Form 10-Q for the periods ended March
31, June 30, and September 30, 1996;
3. reviewed Summit's Annual Report to Shareholders and Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, and its
Quarterly Reports on Form 10-Q for the periods ended March 31, June
30, and September 30, 1996;
4. reviewed certain operating and financial information, including
projections, provided to us by management relating to BMJ's business
and prospects;
5. reviewed certain operating and financial information provided to us
by management relating to Summit's business and prospects;
6. met with certain members of BMJ's and Summit's senior management to
discuss its operations, historical financial statements and future
prospects;
7. visited BMJ's facilities in Bordentown, New Jersey and Summit's
facilities in Princeton, New Jersey;
8. reviewed the historical prices and trading volumes of the common
shares of BMJ and Summit;
9. reviewed publicly available financial data and stock market
performance data of companies which we deemed generally comparable to
BMJ and Summit;
10. reviewed the terms of recent acquisitions of companies which we
deemed generally comparable to the Transaction; and
11. conducted such other studies, analyses, inquiries and investigations
as we deemed appropriate.
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In the course of our review, we have relied upon and assumed the accuracy and
completeness of the financial and other information provided to us by BMJ and
Summit. With respect to BMJ's projected financial results, we have assumed
that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgements of the management of BMJ as to
its expected future performance. We have not assumed any responsiblity for
the information or projections provided to us and we have further relied upon
the assurances of the management of BMJ and Summit that they are unaware of
any facts that would make the information or projections provided to us
incomplete or misleading. In arriving at our opinion, we have not performed
or obtained any independent appraisal of the assets of BMJ and Summit. Our
opinion is necessarily based on economic, market and other conditions, and
the information made available to us, as of the date hereof.
Based on the foregoing, it is our opinion that the Exchange Ratio is fair,
from a financial point of view, to the shareholders of BMJ.
We have acted as financial advisor to BMJ in connection with the Transaction
and will receive a fee for such services, payment of a significant portion of
which is contingent upon the consummation of the Transaction.
The opinion has been prepared for use by the Board of Directors and does not
constitute a recommendation to the shareholders of BMJ as to how such holders
should vote with respect to the Transaction.
Very truly yours,
BEAR, STEARNS & CO. INC.
By: /s/ Steve Begleiter
------------------------
Managing Director
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APPENDIX C
B.M.J. FINANCIAL CORP. STOCK OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED BY THIS AGREEMENT IS SUBJECT TO RESALE
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
STOCK OPTION AGREEMENT, dated as of the 29th day of August, 1996 (this
Agreement ), between Summit Bancorp., a New Jersey corporation ( Grantee ),
and B.M.J. Financial Corp., a New Jersey corporation ( Issuer ).
WITNESSETH:
WHEREAS, Grantee and Issuer have on a date prior to the date hereof,
entered into an Agreement and Plan of Merger, dated as of the 28th day of
August, 1996 (the "Merger Agreement"). (Capitalized terms used in this
Agreement and not defined herein but defined in the Merger Agreement shall
have the meanings assigned thereto in the Merger Agreement); and
WHEREAS, as a condition and inducement to Grantee s entering into the
Merger Agreement, and in consideration therefor, Grantee has required that
Issuer agree, and Issuer has agreed, to grant Grantee the Option (as defined
below);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties
hereto agree as follows:
SECTION 1. Grant of Option. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 1,490,000 fully paid and nonassessable shares of the
common stock, par value $1.00 per share, of Issuer ("Common Stock") at a
price per share equal to the last sale price on the trading day immediately
preceding the date of the Merger Agreement of a share of Common Stock on the
NASDAQ National Market (such price, as adjusted as hereinafter provided, the
"Option Price"). The number of shares of Common Stock that may be received
upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth. In no event shall the number of shares of
Common Stock for which this Option is exercisable exceed 19.9% of the number
of shares of Common Stock then issued and outstanding (without consideration
of any shares of Common Stock subject to or issued pursuant to the Option).
SECTION 2. Exercise of Option. (a) Grantee may exercise the Option, in
whole or part, at any time and from time to time following the occurrence of
a Purchase Event (as defined below); provided that the Option shall terminate
and be of no further force and effect upon the earliest to occur of (i) the
time immediately prior to the Effective Time, (ii) the termination of the
Merger Agreement in accordance with the terms thereof prior to the occurrence
of an Extension Event, other than a termination of the Merger Agreement by
the Grantee pursuant to Section 9.02(a)(ii) thereof, or (iii) 12 months after
the termination of the Merger Agreement following the occurrence of an
Extension Event (as defined below), other than a termination of the Merger
Agreement by the Grantee pursuant to Section 9.02(a)(ii) thereof (if the
breach by Issuer giving rise to such right of termination is volitional), or
the termination of the Merger Agreement by Grantee pursuant to Section
9.02(a)(ii) thereof (unless the breach by Issuer giving rise to such right of
termination is non- volitional), and provided further, that any purchase of
Common Stock upon exercise of the Option shall be subject to applicable law,
and provided further, that the Option may not be exercised, nor may Grantee
require Issuer to repurchase the Option (as set forth in Section 7 hereof),
if, at the time of exercise or repurchase, Grantee is in material breach of
any material covenant or obligation contained in the Merger Agreement and, if
the Merger Agreement has not terminated prior thereto, such breach would
entitle Issuer to terminate the Merger Agreement. The events described in
clauses (i) - (iii) in the preceding sentence are hereinafter collectively
referred to as Exercise Termination Events. As provided in Section 8, the
rights set forth therein shall terminate upon an Exercise Termination Event
and, as provided in Sections 6 and 7 hereof, the rights to deliver requests
pursuant to Sections 6 or 7 shall terminate 12 months after an Exercise
Termination Event, subject, in each such case, to the provisions of Section
9.
(b) The term "Extension Event" shall mean any of the following events or
transactions occurring without the Grantee s prior written consent after the
date hereof:
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(i) Issuer or any of its subsidiaries (each an "Issuer Subsidiary"),
shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term person for
purposes of this Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations thereunder, including
but not limited to a group of related family members and any entity in
which they own all of the beneficial interest) other than Grantee or any
of its subsidiaries (each a "Grantee Subsidiary") or the Board of
Directors of Issuer shall have recommended that the shareholders of Issuer
approve or accept any Acquisition Transaction with any person other than
Grantee or any Grantee Subsidiary. For purposes of this Agreement,
Acquisition Transaction shall mean (w) a merger or consolidation, or any
similar transaction, involving Issuer or any of Issuer s banking
subsidiaries ("Bank Subsidiaries"), (x) a purchase, lease or other
acquisition of 10% or more of the aggregate value of the assets or
deposits of Issuer or any Bank Subsidiary, (y) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of
Issuer or a Bank Subsidiary, or (z) any substantially similar transaction,
provided, however, that in no event shall (i) any merger, consolidation or
similar transaction involving Issuer or any Bank Subsidiary in which the
voting securities of Issuer outstanding immediately prior thereto continue
to represent (either by remaining outstanding or being converted into
voting securities of the surviving entity of any such transaction) at
least 75% of the combined voting power of the voting securities of the
Issuer or the surviving entity outstanding after the consummation of such
merger, consolidation, or similar transaction, or (ii) any internal merger
or consolidation involving only Issuer and/or Issuer Subsidiaries, be
deemed to be an Acquisition Transaction, provided that any such
transaction is not entered into in violation of the terms of the Merger
Agreement;
(ii) Any person (other than Grantee or any Grantee Subsidiary) shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of securities representing 10% or more of the aggregate voting
power of Issuer or any Bank Subsidiary (the term beneficial ownership for
purposes of this Agreement having the meaning assigned thereto in Section
13(d) of the Exchange Act, and the rules and regulations thereunder);
(iii) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its shareholders, by public
announcement or written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction (including,
without limitation, any situation in which any person other than Grantee
or any Grantee Subsidiary shall have commenced (as such term is defined in
Rule 14d-2 under the Exchange Act), or shall have filed a registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to, a tender offer or exchange offer to purchase any
shares of Common Stock such that, upon consummation of such offer, such
person would own or control securities representing 10% or more of the
aggregate voting power of Issuer or any Bank Subsidiary);
(iv) After any person other than Grantee or any Grantee Subsidiary has
made or disclosed an intention to make a proposal to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement
and (y) shall not have been cured prior to the Notice Date (as defined
below);
(v) Any person other than Grantee or any Grantee Subsidiary shall have
filed an application with, or given a notice to, whether in draft or final
form, the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other governmental authority or regulatory or
administrative agency or commission, domestic or foreign (each, a
"Governmental Authority"), for approval to engage in an Acquisition
Transaction; or
(vi) any Purchase Event (as defined below).
(c) The term "Purchase Event" shall mean any of the following events or
transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or any Grantee
Subsidiary of beneficial ownership of securities representing 25% or more
of the aggregate voting power of Issuer or any Bank Subsidiary;
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(ii) the holders of Common Stock shall not have approved the Merger
Agreement at the meeting of such shareholders held for the purpose of
voting on the Merger Agreement, such meeting shall not have been called by
the Board of Directors of Issuer in accordance with Section 4.03 of the
Merger Agreement or held or shall have been canceled prior to termination
of the Merger Agreement or Issuer s Board of Directors shall have
withdrawn or modified in a manner adverse to the consummation of the
Merger the recommendation of Issuer s Board of Directors with respect to
the Merger Agreement, in each case after an Extension Event;
(iii) The occurrence of an Extension Event described in Section 2(b)(i)
except that the percentage referred to in clauses (x) and (y) shall be
25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Extension Event or Purchase Event; provided however, that the giving of
such notice by Issuer shall not be a condition to the right of Grantee to
exercise the Option.
(e) In the event that Grantee is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares of Common Stock it will purchase pursuant to such exercise, (ii) a
place and date not earlier than three business days nor later than 90
business days from the Notice Date for the closing of such purchase (the
"Closing Date") and (iii) that the proposed exercise of the Option shall be
revocable by Grantee in the event that the transaction constituting a
Purchase Event that gives rise to such written notice shall not have been
consummated prior to exercise of the Option; provided that if prior
notification to or approval of the Federal Reserve Board or any other
Governmental Authority is required in connection with such purchase, Grantee
shall promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run from the later of (x) the date on
which any required notification periods have expired or been terminated and
(y) the date on which such approvals have been obtained and any requisite
waiting period or periods shall have expired. For purposes of Section 2(a),
any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto. Grantee shall have the right to revoke its proposed
exercise of the Option in the event that the transaction constituting a
Purchase Event that gives rise to such right to exercise shall not have been
consummated prior to exercise of the Option, pursuant to the statement of
such right in the written notice exercising the Option as provided in clause
2(e)(iii) above.
(f) At the closing referred to in Section 2(e), Grantee shall surrender
this Agreement (and the Option granted hereby) to Issuer and pay to Issuer
the Option Price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by wire transfer to a
bank account designated by Issuer; provided, however, that failure or refusal
of Issuer to designate such a bank account shall not preclude Grantee from
exercising the Option.
(g) At such closing, simultaneously with the delivery of the Option Price
in immediately available funds as provided in Section 2(f), Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Common Stock purchased by Grantee and, if the Option should be
exercised in part only, a new Option Agreement granting a new Option
evidencing the rights of Grantee thereof to purchase the balance of the
shares of Common Stock purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder shall
be endorsed with a restrictive legend substantially as follows:
"The transfer of the shares represented by this certificate is subject to
resale restrictions arising under the Securities Act of 1933, as amended,
and to certain provisions of an agreement between Summit Bancorp. and
B.M.J. Financial Corp. ("Issuer") dated as of the 29th day of August,
1996. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if Grantee shall
have delivered to Issuer a copy of a letter from the staff of the Securities
and Exchange Commission (the "SEC"), or an opinion of counsel, in form and
substance satisfactory to Issuer, to the effect that such legend is not
required for
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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. Section18a and regulations promulgated thereunder and (y) in the
event, under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"), or the Change in Bank Control Act of 1978, as amended, or any state
banking law, prior approval of or notice to the Federal Reserve Board or to
any other Governmental Authority is necessary before the Option may be
exercised, cooperating with Grantee in preparing such applications or notices
and providing such information to the Federal Reserve Board and each other
Governmental Authority as they may require) in order to permit Grantee to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) to take all action provided herein to protect
the rights of Grantee against dilution.
SECTION 4. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of
Issuer, for other agreements providing for Options of different denominations
entitling the holder thereof to purchase, on the same terms and subject to
the same conditions as are set forth herein, in the aggregate the same number
of shares of Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any agreements and related options for which
this Agreement (and the Option granted hereby) may be exchanged. Upon receipt
by Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft
or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
SECTION 5. Adjustment upon Change of Capitalization. The number of shares
of Common Stock purchasable upon the exercise of the Option shall be subject
to adjustment from time to time as follows:
(a) Subject to the last sentence of Section 1, in the event of any change
in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or the like, the type and number of shares of Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision
shall be made so that, in the event that any additional shares of Common
Stock are to be issued or otherwise to become outstanding as a result of any
such change (other than pursuant to an exercise of the Option), the number of
shares of Common Stock that remain subject to the Option
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shall be increased so that, after such issuance and together with shares of
Common Stock previously issued pursuant to the exercise of the Option (as
adjusted on account of any of the foregoing changes in the Common Stock), it
equals 19.9% of the number of shares of Common Stock then issued and
outstanding (without consideration of any shares of Common Stock subject to
or issued pursuant to the Option).
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Common Stock purchasable after the
adjustment. In no event shall the Option Price be adjusted to less than the
par value of the Common Stock to be issued at such Option Price.
(c) It is intended by the parties hereto that the adjustments provided by
this Section 5 shall fully preserve the economic benefits of this Agreement
for Grantee.
SECTION 6. Registration Rights.
(a) Demand Registration Rights. After the occurrence of a Purchase Event
that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee (whether on its own behalf or on behalf of any subsequent
holder of the Option (or part thereof) delivered prior to an Exercise
Termination Event or at the request of a holder from time to time of any of
the shares of Common Stock issued pursuant hereto (an "Owner") delivered no
later than 12 months after an Exercise Termination Event, promptly prepare,
file and keep current a shelf registration statement under the Securities Act
covering this Option and any shares issued and issuable pursuant to the
Option (the "Option Shares") and shall use its best efforts to cause such
registration statement to become effective and remain current and to qualify
this Option or any such Option Shares or other securities for sale under any
applicable state securities laws in order to permit the sale or other
disposition of this Option or any Option Shares in accordance with any plan
of disposition requested by Grantee; provided, however, that Issuer may
postpone filing a registration statement relating to a registration request
by Grantee under this Section 6 for a period of time (not in excess of 90
days) if in its judgment such filing would require the disclosure of material
information that Issuer has a bona fide business purpose for preserving as
confidential. Issuer will use its best efforts to cause such registration
statement first to become effective as soon as practicable after the filing
thereof and then to remain effective for such period not in excess of 180
days from the day such registration statement first becomes effective, or
such shorter time as may be necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations.
Grantee and Owners shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be filed hereunder. In
connection with any such registration, Issuer and Grantee and Owners shall
provide representations, warranties, and other agreements customarily given
in connection with such registrations. If requested by any Grantee in
connection with such registration, Issuer and Grantee and Owners shall become
a party to any underwriting agreement relating to the sale of Option rights
or Option Shares, but only to the extent of obligating themselves in respect
of representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements. Notwithstanding the foregoing, if
Grantee revokes any exercise notice or fails to exercise any Option with
respect to any exercise notice pursuant to Section 2(e), Issuer shall not be
obligated to continue any registration process with respect to the sale of
Option Shares.
(b) Additional Persons With Registration Rights. Upon receiving any
request under this Section 6 from any Grantee, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same,
postage prepaid, to the address of record of the persons entitled to receive
such copies. Notwithstanding anything to the contrary contained herein, in no
event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more
than one Grantee as a result of any assignment or division of this Agreement.
(c) Expenses. Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and
expenses of counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option rights or Option Shares
are being registered, printing expenses and the costs of special audits or
"cold comfort" letters, expenses of underwriters, excluding discounts and
commissions but including liabil-
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ity insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to this Section 6 (including the related
offerings and sales by Grantee and Owners) and all other qualifications,
notification or exemptions pursuant to Section 6.
(d) Indemnification. In connection with any registration under this
Section 6, Issuer hereby indemnifies the Grantee, and each officer, director
and controlling person of Grantee, any Owner, and each underwriter thereof,
including each person, if any who controls such holder or underwriter within
the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged
untrue, statement contained in any registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission, or alleged
omission, to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
such expenses, losses, claims, damages or liabilities of such indemnified
party are caused by any untrue statement or alleged untrue statement that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Grantee, Owner, or by such underwriter, as the case may
be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by Issuer in any
such registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance upon,
and in conformity with, information furnished in writing to Issuer by such
Grantee, Owner, or such underwriter, as the case may be, expressly for such
use.
Promptly upon receipt by a party indemnified under this Section 6(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 6(d), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not relieve it of
any liability which it may otherwise have to any indemnified party under this
Section 6(d). In case notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying party
shall be entitled to participate in and, to the extent it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
of such action at its own expense, with counsel chosen by it and reasonably
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party
unless (i) the indemnifying party agrees to pay the same, (ii) the
indemnifying party fails to assume the defense of such action with counsel
satisfactory to the indemnified party, or (iii) the indemnified party has
been advised by counsel that one or more legal defenses may be available to
the indemnifying party that may be contrary to the interests of the
indemnified party. No indemnifying party shall be liable for the fees and
expenses of more than one separate counsel for all indemnified parties or for
any settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this Section 6(d) is unavailable to
a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to
be indemnified, shall contribute to the amount paid or payable by such party
to be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
fault of Issuer, the Grantee, any Owner and the underwriters in connection
with the statements or omissions which resulted in such expenses, losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the
expenses, losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim;
provided, however, that in no case shall any Grantee or Owner be responsible,
in the aggregate, for any amount in excess of the net offering proceeds
attributable to its Option rights and Option Shares included in the offering.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any Grantee or Owner to indemnify shall be several and not
joint with other Grantees or Owners.
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(e) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit
the expeditious sale at any time of any Option Shares by the Owner thereof in
accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144A. Issuer shall at its expense provide the Owner with any information
necessary in connection with the completion and filing of any reports or
forms required to be filed by Owner under the Securities Act or the Exchange
Act, or pursuant to any state securities laws or the rules of any stock
exchange.
SECTION 7. Repurchase at the Option of Grantee or Owner. (a) Upon the
occurrence of a Repurchase Event (as defined below), (i) at the request (the
date of such request being the "Request Date") of Grantee, delivered prior to
an Exercise Termination Event, Issuer (or any successor thereto) shall
repurchase the Option from Grantee at a price (the "Option Repurchase Price")
equal to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which
this Option may then be exercised and (ii) at the request (the date of such
request being the "Request Date") of an Owner), delivered within 12 months of
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 9), Issuer shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price (the "Option
Share Repurchase Price") equal to the market/offer price multiplied by the
number of Option Shares so designated. The term "market/offer price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made after the date hereof and on
or prior to the Request Date, (ii) the price per share of Common Stock paid
or to be paid by any third party pursuant to an agreement with Issuer
(whether by way of a merger, consolidation or otherwise), (iii) the highest
last sale price for shares of Common Stock within the 90-day period ending on
the Request Date quoted on the NASDAQ National Market (as reported by The
Wall Street Journal, or, if not reported thereby, another authoritative
source), (iv) in the event of a sale of all or substantially all of Issuer s
assets, the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as determined by a
nationally-recognized independent investment banking firm selected by Grantee
or the Owner, as the case may be, divided by the number of shares of Common
Stock outstanding at the time of such sale. In determining the market/offer
price, the value of consideration other than cash shall be determined by a
nationally- recognized independent investment banking firm selected by
Grantee or the Owner, as the case may be, whose determination shall be
conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee
or the Owner, as the case may be, elects to require Issuer to repurchase the
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within the later to
occur of (x) five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the time that is immediately prior to the
occurrence of a Repurchase Event, Issuer shall deliver or cause to be
delivered to Grantee the Option Repurchase Price or to the Owner the Option
Share Repurchase Price therefor or the portion thereof that Issuer is not
then prohibited from so delivering under applicable law and regulation.
(c) Issuer hereby undertakes to use its reasonable efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law or regulation, from repurchasing the Option and/or the Option
Shares in full, Issuer shall promptly so notify Grantee and/or the Owner and
thereafter deliver or cause to be delivered, from time to time, to Grantee
and/or the Owner, as appropriate, the portion of the Option Repurchase Price
and the Option Share Repurchase Price, respectively, that it is no longer
prohibited from delivering, within five business days after the date on which
Issuer is no longer so prohibited; provided, however, that if Issuer at any
time after delivery of a notice of repurchase pursuant to Section 7(b) is
prohibited under applicable law or regulation, from delivering to Grantee
and/or the Owner, as appropriate, the Option Repurchase Price or the Option
Share Repurchase Price, respectively, in full or in any substantial part,
Grantee or the Owner, as appropriate, may revoke its notice of repurchase of
the Option or the Option Shares either in whole or in part whereupon, in the
case of a revocation in part, Issuer shall promptly (i) deliver to Grantee
and/or the Owner, as appropriate, that portion of the Option Purchase Price
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or the Option Share Repurchase Price that Issuer is not prohibited from
delivering after taking into account any such revocation and (ii) deliver, as
appropriate, either (A) to Grantee, a new Agreement evidencing the right of
Grantee to purchase that number of shares of Common Stock equal to the number
of shares of Common Stock purchasable immediately prior to the delivery of
the notice of repurchase less the number of shares of Common Stock covered by
the portion of the Option repurchased or (B) to the Owner, a certificate for
the number of Option Shares covered by the revocation.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or
similar transaction involving Issuer or any Bank Subsidiary or any purchase,
lease or other acquisition of all or a substantial portion of the assets of
Issuer or any Bank Subsidiary, other than any such transaction which would
not constitute an Acquisition Transaction pursuant to the proviso to Section
2(b)(i) hereof or (ii) upon the acquisition by any person of beneficial
ownership of securities representing 50% or more of the aggregate voting
power of Issuer or any Bank Subsidiary, provided that no such event shall
constitute a Repurchase Event unless an Extension Event shall have occurred
prior to an Exercise Termination Event. The parties hereto agree that Issuer
s obligations to repurchase the Option or Option Shares under this Section 7
shall not terminate upon the occurrence of an Exercise Termination Event if
an Extension Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
(e) Issuer shall not enter into any agreement with any party (other than
Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other party thereto assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole
discretion, to require such other party to perform such obligations.
SECTION 8. Substitute Option in the Event of Corporate Change. (a) In the
event that prior to an Exercise Termination Event, Issuer shall enter into an
agreement (i) to consolidate or merge with any person, other than Grantee or
a Grantee Subsidiary, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than Grantee or a Grantee Subsidiary, to merge into Issuer and Issuer shall
be the continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after
such merger represent less than 50% of the aggregate voting power of the
merged company, or (iii) to sell or otherwise transfer all or substantially
all of its assets to any person, other than Grantee or a Grantee Subsidiary,
then, and in each such case, the agreement governing such transaction shall
make proper provision so that the Option shall, upon the consummation of such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election
of Grantee, of either (x) the Acquiring Corporation (as defined below) or (y)
any person that controls the Acquiring Corporation (the Acquiring Corporation
and any such controlling person being hereinafter referred to as the
Substitute Option Issuer)
(b) The Substitute Option shall be exercisable for such number of shares
of the Substitute Common Stock (as is hereinafter defined) as is equal to the
market/offer price (as defined in Section 7) multiplied by the number of
shares of the Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as is hereinafter defined). The exercise price
of the Substitute Option per share of the Substitute Common Stock (the
"Substitute Purchase Price") shall then be equal to the Option Price
multiplied by a fraction in which the numerator is the number of shares of
the Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee, provided further that
the terms of the Substitute Option shall include (by way of example and not
limitation) provisions for the repurchase of the Substitute Option and
Substitute Common Stock by the Substitute Option Issuer on the same terms and
conditions as provided in Section 7.
(d) The following terms have the meanings indicated:
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(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or any substantial part
of the Issuer s assets (or the assets of Issuer Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Average Price" shall mean the average last sale price of a share
of the Substitute Common Stock (as reported by The Wall Street Journal or,
if not reported therein, by another authoritative source) for the one year
immediately preceding the consolidation, merger or sale in question, but
in no event higher than the last sale price of the shares of the
Substitute Common Stock on the day preceding such consolidation, merger or
sale; provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by Issuer, the person merging into Issuer or by any company which
controls or is controlled by such person, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to the exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (e), the Substitute Option Issuer shall make
a cash payment to Grantee equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in the clause (e). This difference in value shall be determined by
a nationally recognized investment banking firm selected by Grantee and the
Substitute Option Issuer.
SECTION 9. Extension of Time for Regulatory Approvals. Notwithstanding
Sections 2(e), 6, 7 and 11, if Grantee has given the notice referred to in
one or more of such Sections, the exercise of the rights specified in any
such Section shall be extended (a) if the exercise of such rights is
prohibited due to any injunction, order or similar restraint issued by a
court or Governmental Authority of competent jurisdiction, to the extent
necessary for such injunction, order or restraint to either have been
dissolved or become permanent and no longer subject to appeal, (b) if the
exercise of such rights requires obtaining regulatory approvals, to the
extent necessary to obtain all regulatory approvals for the exercise of such
rights, and (c) to the extent necessary to avoid liability under Section
16(b) of the Securities Exchange Act by reason of such exercise; provided
that in no event shall any closing date occur more than 18 months after the
related Notice Date, and, if the closing date shall not have occurred within
such period due to the failure to dissolve any such injunction, order or
restraint or to obtain any required approval from the Federal Reserve Board
or any other Governmental Authority despite the reasonable efforts of Issuer
or the Substitute Option Issuer, as the case may be, to obtain such
approvals, the exercise of the Option shall be deemed to have been rescinded
as of the related Notice Date. In the event (a) Grantee receives official
notice that an approval of the Federal Reserve Board or any other
Governmental Authority required for the purchase and sale of the Option
Shares will not be issued or granted or (b) a closing date has not occurred
within 18 months after the related Notice Date due to the failure to obtain
any such required approval, Grantee shall be entitled to exercise the Option
in connection with the resale of the Option Shares pursuant to a registration
statement as provided in Section 6. Nothing contained in this Agreement shall
restrict Grantee from specifying alternative exercising of rights pursuant to
Sections 2(e), 6, 7 and 11 hereof in the event that the exercising of any
such rights shall not have occurred due to the failure to obtain any required
approval referred to in this Section 9.
SECTION 10. Issuer Warranties. Issuer hereby represents and warrants to
Grantee as follows:
(a) Issuer has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer
are necessary to authorize this Agreement or to consummate the transactions
so contemplated. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Issuer, enforceable against
Issuer in accordance with its terms, except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
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other similar laws affecting the enforcement of creditors rights generally
and institutions the deposits of which are insured by the Federal Deposit
Insurance Corporation and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock
at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued, fully
paid, nonassessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
(c) Upon receipt of the necessary regulatory approvals as contemplated by
this Agreement, the execution, delivery and performance of this Agreement
does not or will not, and the consummation by Issuer of any of the
transactions contemplated hereby will not, constitute or result in (i) a
breach or violation of, or a default under, its certificate of incorporation
or by-laws, or the comparable governing instruments of any of its
subsidiaries, or (ii) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its subsidiaries is
subject, that would in any case give any other person the ability to prevent
or enjoin Issuer s performance under this Agreement in any material respect.
SECTION 11. Assignment of Option by Grantee. (a) Neither of the parties
hereto may assign any of its rights or delegate any of its obligations under
this Agreement or the Option created hereunder to any other person without
the express written consent of the other party, except that Grantee may
assign this Agreement to a wholly owned subsidiary of Grantee and Grantee may
assign its rights hereunder in whole or in part after the occurrence of a
Purchase Event; provided, however, that until the date 15 days following the
date at which the Federal Reserve Board approves an application by Grantee
under the BHC Act to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no
one party acquires the right to purchase securities representing in excess of
2% of the aggregate voting power of Issuer, (iii) an assignment to a single
party (e.g., a broker or investment banker) for the purpose of conducting a
widely dispersed public distribution on Grantee s behalf, or (iv) any other
manner approved by the Federal Reserve Board. Grantee will pay any reasonable
out- of-pocket costs and expenses of Issuer in connection with any such
assignment. The term "Grantee" as used in this Agreement shall also be deemed
to refer to Grantee s permitted assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
"The transfer of the option represented by this assignment and the related
option agreement is subject to resale restrictions arising under the
Securities Act of 1933, as amended and to certain provisions of an
agreement between Summit Bancorp. and B.M.J. Financial Corp. ("Issuer")
dated as of the 29th day of August, 1996. A copy of such agreement is on
file at the principal office of Issuer and will be provided to any
permitted assignee of the Option without change upon receipt by Issuer of
a written request therefor."
It is understood and agreed that (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel, in form and substance satisfactory to Issuer, to the effect that
such legend is not required for purposes of the Securities Act; (ii) the
reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute assignments without such reference if the
Option has been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such assignments shall bear any other legend as may be required by
law.
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SECTION 12. Application for Regulatory Approval. If Grantee is entitled to
exercise the Option and has sent a notice to Issuer pursuant to Section 2(e),
each of Grantee and Issuer will use its reasonable efforts to make all
filings with, and to obtain consents of, all third parties and the Federal
Reserve Board and other Governmental Authorities necessary to the
consummation of the transactions contemplated by this Agreement, including,
without limitation, making application for listing or quotation, as the case
may be, of the shares of Common Stock issuable hereunder on the NASDAQ
National Market and applying to the Federal Reserve Board under the BHC Act
and to state banking authorities for approval to acquire the shares issuable
hereunder.
SECTION 13. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by
either party hereto and that the obligations of the parties shall hereto be
enforceable by either party hereto through injunctive or other equitable
relief. Both parties further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such equitable
relief and that this provision is without prejudice to any other rights that
the parties hereto may have for any failure to perform this Agreement.
SECTION 14. Separability of Provisions. If any term, provision, covenant
or restriction contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and
effect, and shall in no way be affected, impaired or invalidated. If for any
reason such court or regulatory agency determines that Grantee is not
permitted to acquire, or Issuer is not permitted to repurchase, pursuant to
Section 7, the full number of shares of Common Stock provided in Section 1
(as adjusted pursuant hereto), it is the express intention of Issuer to allow
Grantee to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
SECTION 15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when
delivered in person, by cable, telegram, telecopy or telex, or by registered
or certified mail (postage prepaid, return receipt requested) at the
respective addresses of the parties set forth in the Merger Agreement.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
SECTION 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 18. Expenses. Except as otherwise expressly provided herein, each
of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
SECTION 19. Entire Agreement; No Third-Party Beneficiaries. Except as
otherwise expressly provided herein or in the Merger Agreement, this
Agreement contains the entire agreement between the parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereof, written or oral. The terms and
conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto, any Owners, and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly
provided herein.
SECTION 20. Merger Agreement. Nothing contained in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
SECTION 21. Majority in Interest. In the event that any selection or
determination is to be made by Grantee or the Owner hereunder and at the time
of such selection or determination there is more than one Grantee or Owner,
such selection shall be made by a majority in interest of such Grantees or
Owners.
SECTION 22. Further Assurances. In the event of any exercise of the Option
by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
C-11
<PAGE>
SECTION 23. No Rights as Shareholder. Except to the extent Grantee
exercises the Option, Grantee shall have no rights to vote or receive
dividends or have any other rights as a shareholder with respect to shares of
Common Stock covered hereby.
SECTION 24. Grantee Representation. The Option and any Option Shares or
other securities acquired by Grantee upon exercise of the Option are not
being, and will not be, as the case may be, acquired with a view to the
public distribution thereof in the United States except as provided for in
Sections 6 and 11 hereof and neither the Option nor any Option Shares or
other securities acquired by Grantee upon exercise of the Option will be
transferred or otherwise disposed of by Grantee except in a transaction
registered or exempt from registration under the Securities Act.
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
SUMMIT BANCORP.
By: /s/ Robert G. Cox
-----------------------------------
Robert G. Cox
President
B.M.J. FINANCIAL CORP.
By: /s/ Edwin W. Townsend
-----------------------------------
Edwin W. Townsend
Chairman of the Board
C-12
<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.:
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 officers 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 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 anytime 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 act (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, provisions 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.
(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
consolida
II-2
<PAGE>
tion 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, judgements, 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 interest 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 against 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 $40,000,000 in the aggregate.
II-3
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
This Registration Statement includes the following exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
--------------- -------------------------------------------------------------------------------------------------
<S> <C>
2 Agreement and Plan of Merger dated August 28, 1996 between B.M.J. 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 August 28, 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).
4 Rights Agreement, dated as of August 16, 1989, by and between Summit Bancorp. (under the former name
UJB Financial Corp.) and First Chicago Trust Company of New York, as Rights Agent (incorporated by
reference to Exhibit 2 to the Registration Statement on Form 8-A, filed August 28, 1989).
5 Opinion of Richard F. Ober, Jr., Esq. regarding legality of securities being issued.
8 Opinion of Thompson Coburn regarding tax matters.
10 B.M.J. Financial Corp. Stock Option Agreement - included as Appendix C to the Proxy Statement-Prospectus
included in 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(a) Power of Attorney of T. Joseph Semrod, Robert G. Cox, John R. Haggerty, William J. Healy, Robert L.
Boyle, James C. Brady, Jr., John G. Collins, T.J. Dermot Dunphy, Anne Evans Esterbrook, Elinor J. Ferdon,
Francis J. Mertz, George L. Miles, Jr., Henry S. Patterson II, Raymond D. Silverstein, Orin R. Smith,
and Joseph M. Tabak - included on the signature page of the original filing.
(b) Power of Attorney of S. Rodgers Benjamin, Fred G. Harvey, John R. Howell, Thomas D. Sayles, Jr. and
Douglas G. Watson.
99(a) Form of B.M.J. Proxy
(b) Opinion of Bear, Stearns & Co. Inc. - included as Appendix B to the Proxy Statement- Prospectus included
in this Registration Statement.
(c) Consent of Bear, Stearns & Co. Inc.
</TABLE>
(b) Financial Statement Schedules
All financial statement schedules either are not required or are included
in the notes to the financial statements incorporated by reference herein.
II-4
<PAGE>
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement.
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) of this section do
not apply if the registration statement is on Form S-3, Form S-8 or Form
F-3 and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post- effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions set forth in
response to Item 20 hereof, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained
in documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Amendment No. 1 to Registration Statement No. 333-16557 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 10th of January,
1997.
SUMMIT BANCORP.
By: *
----------------------------
T. Joseph Semrod
Chairman of the Board of
Directors
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement No. 333-16557 has been signed below on the
10th day of January, 1997 by the following persons in the capacities
indicated.
<TABLE>
<CAPTION>
Signatures Titles
------------------------- --------------------------------------------
<S> <C>
*
------------------------ Chairman of the Board of Directors
T. Joseph Semrod (Chief Executive Officer)
* President and Director
------------------------
Robert G. Cox
* Senior Executive Vice President-Finance
------------------------ (Principal Financial Officer)
John R. Haggerty
/s/ William J. Healy Executive Vice President and Comptroller
------------------------ (Principal Accounting Officer)
William J. Healy
* Director
------------------------
S. Rodgers Benjamin
* Director
------------------------
Robert L. Boyle
* Director
------------------------
James C. Brady, Jr.
* Director
------------------------
John G. Collins
* Director
------------------------
T.J. Dermot Dunphy
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Signatures Titles
------------------------- --------------------------------------------
<S> <C>
* Director
------------------------
Anne Evans Estabrook
* Director
------------------------
Elinor J. Ferdon
* Director
------------------------
Fred G. Harvey
* Director
------------------------
John R. Howell
* Director
------------------------
Francis J. Mertz
* Director
------------------------
George L. Miles, Jr.
* Director
------------------------
Henry S. Patterson II
* Director
------------------------
Thomas D. Sayles, Jr.
* Director
------------------------
Raymond Silverstein
* Director
------------------------
Orin R. Smith
* Director
------------------------
Joseph M. Tabak
* Director
------------------------
Douglas G. Watson
*William J. Healy, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
executed by such persons, filed with the Securities and Exchange Commission.
/s/ William J. Healy
------------------------
William J. Healy
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
--------------- ---------------------------------------------------------------------------------------------
<S> <C>
2 Agreement and Plan of Merger dated August 28, 1996 between B.M.J. 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 August 28, 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).
4 Rights Agreement, dated as of August 16, 1989, by and between Summit Bancorp. (under the former
name UJB Financial Corp.) and First Chicago Trust Company of New York, as Rights Agent (incorporated
by reference to Exhibit 2 to the Registration Statement on Form 8-A, filed August 28, 1989).
5 Opinion of Richard F. Ober, Jr., Esq. regarding legality of securities being issued.
8 Opinion of Thompson Coburn regarding tax matters.
10 B.M.J. Financial Corp. Stock Option Agreement - included as Appendix C to the Proxy Statement-Prospectus
included in 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(a) Power of Attorney of T. Joseph Semrod, Robert G. Cox, John R. Haggerty, William J. Healy, Robert
L. Boyle, James C. Brady, Jr., John G. Collins, T.J. Dermot Dunphy, Anne Evans Estabrook, Elinor
J. Ferdon, Francis J. Mertz, George L. Miles, Jr., Henry S. Patterson II, Raymond Silverstein,
Orin R. Smith and Joseph M. Tabak - included on the signature page of the original filing.
(b) Power of Attorney of S. Rodgers Benjamin, Fred G. Harvey, John R. Howell, Thomas D. Sayles, Jr.
and Douglas G. Watson.
99(a) Form of B.M.J. Proxy
(b) Opinion of Bear, Stearns & Co. Inc.- included as Appendix B to the Proxy Statement- Prospectus
included in this Registration Statement.
(c) Consent of Bear, Stearns & Co. Inc.
</TABLE>
(b) Financial Statement Schedules
All financial statement schedules either are not required or are included
in the notes to the financial statements incorporated by reference herein.
II-8
<PAGE>
[LETTERHEAD OF SUMMIT BANCORP]
January 8, 1997
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543
Re: Registration Statement on Form S-4 of Summit Bancorp. Relating to Shares of
Summit Bancorp. Common Stock Issuable in Connection with the Merger of
B.M.J. Financial Corp. with and into Summit Bancorp.
Gentlemen:
This opinion is given in connection with Registration Statement No. 333-16557
on Form S-4 (the "Registration Statement") filed by Summit Bancorp. (the
"Company") with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, with respect to up to 4,387,124 shares of the Company's
Stock, par value $1.20 per share (the "Common Shares"), to be issued to
shareholders of B.M.J. Financial Corp. ("B.M.J.") in connection with the merger
of B.M.J. with and into the Company (the "Merger") pursuant to an Agreement and
Plan of Merger dated August 28, 1996 (the "Merger Agreement").
I have acted as counsel for the Company in connection with the filing of the
Registration Statement. In so acting, I have made such investigation, including
the examination of originals or copies, certified or otherwise identified to
my satisfaction, of such corporate documents and instruments as I have deemed
relevant and necessary as a basis for the opinion hereinafter set forth. In
connection therewith I have assumed the genuineness of all signatures and the
authenticity of all documents submittd to me as originals and the conformity
to original documents of all documents submitted to me as certitied or
photostatic copies. As to questions of fact material to such opinion, I have
relied upon representations of officers or representatives of the Company.
Based upon the foregoing and assuming that (i) the Merger Agreement is duly
approved by the requisite vote of the shareholders of B.M.J. and (ii) that a
Certificate of Merger complying with the Merger Agreement and meeting all
applicable requirements of the New Jersey Business Corporation Act is duly
executed and filed in accordance with the New Jersey Business Corporation Act,
I am of the opinion that the Common Shares registered under the Registration
Statement and to be issued in accordance with the Merger Agreement upon the
effectiveness of the Merger in exchange for outstanding shares of the Common
Stock, $1.00 par value, of B.M.J. will be validly issued, fully paid and
nonassessable.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement. I further consent to any and all references to me in the Proxy
Statement-Prospectus which is part of said Registration Statement.
Very truly yours,
/s/ Richard F. Ober, Jr.
- -------------------------
Richard F. Ober, Jr.
<PAGE>
January 13, 1997
Board of Directors
B.M.J. Financial Corp.
243 Route 130
Bordentown, New Jersey 08505
Ladies and Gentlemen:
You have requested our opinion with regard to certain federal income
tax consequences of the proposed merger (the "Merger") of B.M.J. Financial Corp.
("B.M.J.") with and into Summit Bancorp. ("Summit").
In connection with the preparation of our opinion, we have examined and
have relied upon the following,
(i) The Agreement and Plan of Merger between Summit and B.M.J. dated
August 28, 1996, including the schedules and exhibits thereto (the
"Merger Agreement");
(ii) Summit's Registration Statement on Form S-4, including the Proxy
Statement/Prospectus contained therein, filed with the Securities
and Exchange Commission on November 21, 1996, as supplemented and
amended to the date hereof (the "Registration Statement");
(iii) The representations and undertaking of Summit substantially in
the form of Exhibit A hereto;
(iv) The representations and undertakings of B.M.J. and certain holders
of B.M.J. common stock, par value $1.00 per share ("B.M.J. Common
Stock"), substantially in the forms of Exhibit B and Exhibit C hereto;
and
(v) The Shareholder Rights Plan between Summit (formerly UJB Financial
Corp.) and First Chicago Trust Company of New York, as Rights Agent,
dated as of August 16, 1989,
Our opinion is based solely upon applicable law and the factual
information and undertakings contained in the above-mentioned documents. In
rendering our opinion, we have assumed the accuracy of all information and the
performance of all undertakings contained in each of such documents. We also
have assumed the authenticity of all original documents, the conformity of all
copies to the original documents, and the genuineness of all signatures. We have
not attempted to verify independently the accuracy of any information in any
such document, and we have assumed
<PAGE>
B.M.J. Financial Corporation
January 13, 1997
Page 2
that such documents accurately and completely get forth all material facts
relevant to this opinion. All of our assumptions were made with your consent.
If any fact or assumption described herein or below is incorrect, any or all of
the federal income tax consequences described herein may be inapplicable.
OPINION
Subject to the foregoing, to the conditions and limitations expressed
elsewhere herein, and assuming that the Merger is consummated in accordance with
the Merger Agreement, we are of the opinion that for federal income tax
purposes;
1. The Merger will constitute a reorganization within the meaning of
sections 368(a)(1) of the Internal Revenue Code of 1986, as amended to the date
hereof (the "Code").
2. Each shareholder of B.M.J. who exchanges, in the Merger, shares of
B.M.J. Common Stock solely for shares of Summit common stock, par value $1.20
per share ("Summit Common Stock");
a) will recognize no gain or loss as a result of the exchange,
except with regard to cash received in lieu of a fractional share, as
discussed below (Code section 354(a)(1));
b) will have an aggregate basis for the shares of Summit
Common Stock received (including any fractional share of Summit Common
Stock deemed to be received, as described in paragraph 3, below) equal
to the aggregate adjusted tax basis of the shares of B.M.J. Common
Stock surrendered (Code section 358(a)(1)); and
c) will have a holding period for the shares of Summit
Common Stock received (including any fractional share of Summit
Common Stock deemed to be received, as described in paragraph 3,
below) which includes the period during which the shares of B.M.J.
Common Stock surrendered were held, provided that the shares of B.M.J.
Common Stock surrendered were capital assets in the hands of such
holder at the time of the Merger (Code section 1223(l)).
3. Each shareholder of B.M.J. who receives, in the Merger, cash in lieu
of a fractional share of Summit Common Stock will be treated as if the
fractional share had been received in the Merger and then redeemed by Summit.
Provided that the shares of B.M.J. Common Stock surrendered were capital assets
in the hands of such holder at the time of the Merger, 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
basis in the shares of Summit Common Stock allocable to the fractional share
(Code sections 1001 and 1222; Rev. Rul. 66-365, 1966-2 C.B. 116; Rev. Proc.
77-41, 1977-2 C.B. 574).
* * * * * * * * * * * *
<PAGE>
B.M.J. Financial Corporation
January 13, 1997
Page 3
We express no opinion with regard to: (1) the federal income tax
consequences of the Merger not addressed expressly by this opinion, including
without limitation, (i) the tax consequences, if any, to those shareholders of
B.M.J. who acquired shares of B.M.J. Common Stock pursuant to the exercise of
employee stock options or otherwise as compensation, and (ii) the tax
consequences to special classes of shareholders, if any, including without
limitation, foreign persons, insurance companies, tax-exempt entities,
retirement plans, and dealers in securities; and (2) federal, state, local, or
foreign taxes (or any other federal, state, local, or foreign laws) not
specifically referred to and discussed herein. Further, our opinion is based
upon the Code, Treasury Regulations proposed or promulgated thereunder, and
administrative interpretations and judicial precedents relating thereto, all of
which are subject to change at any time, possibly with retroactive effect, and
we assume no obligation to advise you of any subsequent change thereto. If there
is any change in the applicable law or regulations, or if there is any new
administrative or judicial interpretation of the applicable law or regulations,
any or all of the federal income tax consequences described herein may become
inapplicable.
The foregoing opinion reflects our legal judgment solely on the issues
presented and discussed herein. This opinion has no official status or binding
effect of any kind. Accordingly, we cannot assure you that the Internal Revenue
Service or any court of competent jurisdiction will agree with this opinion.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to all references made to this letter and to this
firm in the Registration Statement.
Very truly yours,
/s/ Thompson Coburn
<PAGE>
Exhibit 23.(A)
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 post-employment benefits in 1994 and a
change in the method of accounting for income taxes in 1993.
/s/ KPMG Peat Marwick LLP
-----------------------------------
KPMG Peat Marwick LLP
Short Hills, New Jersey
January 9, 1997
<PAGE>
Exhibit 23.(B)
Consent of Independent Accountants
We consent to the incorporation by reference in the registration statement of
Summit Bancorp. on Form S-4 (Registration No. 333-16557) of our report on B.M.J.
Financial Corp. (the "Company"), which includes an explanatory paragraph
relating to the change in the method of accounting for loan loss reserves
effective January 1, 1995, the method of accounting for securities effective
January 1, 1994 and the method of accounting for income taxes effective January
1, 1993, dated January 22, 1996 on our audits of the consolidated financial
statements of the Company as of December 31, 1995 and 1994 and for each of the
years in the three year period ended December 31, 1995 which report is
incorporated by reference in the Company's Annual Report on Form 10-K. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
--------------------------------
Coopers & Lybrand L.L.P.
New York, New York
January 9, 1997
<PAGE>
Exhibit 24.(B)
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Amendment No. 1 to Registration Statement No. 333-16557 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 10th of January,
1997.
SUMMIT BANCORP.
By:
----------------------------
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'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 vitrue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement No. 333-16557 has been signed below on the
10th day of January, 1997 by the following persons in the capacities
indicated.
<TABLE>
<CAPTION>
Signatures Titles
------------------------- --------------------------------------------
<S> <C>
------------------------ Chairman of the Board of Directors
T. Joseph Semrod (Chief Executive Officer)
President and Director
------------------------
Robert G. Cox
Senior Executive Vice President-Finance
------------------------ (Principal Financial Officer)
John R. Haggerty
Executive Vice President and Comptroller
------------------------ (Principal Accounting Officer)
William J. Healy
/s/ S. Rodgers Benjamin Director
------------------------
S. Rodgers Benjamin
Director
------------------------
Robert L. Boyle
Director
------------------------
James C. Brady, Jr.
Director
------------------------
John G. Collins
Director
------------------------
T.J. Dermot Dunphy
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signatures Titles
------------------------- --------------------------------------------
<S> <C>
Director
------------------------
Anne Evans Estabrook
Director
------------------------
Elinor J. Ferdon
/s/ Fred G. Harvey Director
------------------------
Fred G. Harvey
/s/ John R. Howell Director
------------------------
John R. Howell
Director
------------------------
Francis J. Mertz
Director
------------------------
George L. Miles, Jr.
Director
------------------------
Henry S. Patterson II
/s/ Thomas D. Sayles, Jr. Director
------------------------
Thomas D. Sayles, Jr.
Director
------------------------
Raymond Silverstein
Director
------------------------
Orin R. Smith
Director
------------------------
Joseph M. Tabak
/s/ Douglas G. Watson Director
------------------------
Douglas G. Watson
</TABLE>
<PAGE>
REVOCABLE PROXY
B.M.J. FINANCIAL CORP.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
SPECIAL MEETING OF SHAREHOLDERS
February 18, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF B.M.J. FINANCIAL
CORP. The undersigned, a shareholder of B.M.J. FINANCIAL CORP. ("B.M.J.") hereby
constitutes and appoints Frank N. Elliott, Frank M. Monaghan and Edwin W.
Townsend and each of them acting individually as the attorney and proxy of the
undersigned, with full power of substitution, for and in the name and stead of
the undersigned to attend the Special Meeting of Shareholders of B.M.J. to be
held on February 18, 1997 at 10:00 a.m. at the Nottingham Fire Company, 200
Mercer Street, Hamilton, New Jersey, and any adjournment or postponement
thereof, to vote all shares which the undersigned would be entitled to cast if
personally present, upon such business as may properly come before the meeting,
including the following items, as set forth in the notice of meeting and Proxy
Statement Prospectus.
1. A proposal to approve an Agreement
and Plan of Merger between B.M.J.
and Summit Bancorp, as more fully
described in the accompanying Proxy For Against Abstain
Statement--Prospectus. [ ] [ ] [ ]
2. A proposal to approve in advance an
adjournment of the Special Meeting,
as more fully described in the
accompanying Proxy Statement For Against Abstain
--Prospectus. [ ] [ ] [ ]
3. To transact such other business as
may properly come before the meeting.
This card, when properly executed, will be voted in the manner you direct.
If no direction is made, the shares will be voted FOR Proposals One and Two. The
undersigned hereby revokes all previous proxies for such meeting, and hereby
acknowledges receipt of the notice of the meeting and the Proxy Statement --
Prospectus furnished herewith.
---------------------------
Please be sure to sign and date | Date |
this Proxy in the box below. | |
-------------------------------------------------|---------------------------|
| |
| |
|_______Stockholder sign above ________Co-holder (if any) sign above__________|
* Detach above card, sign, date and mail in postage paid envelope provided. *
B.M.J. FINANCIAL CORP.
- -------------------------------------------------------------------------------
NOTE: If shares are registered in more than one name, all owners should sign. If
signing in a fiduciary or representative capacity, please give full title
and attach evidence of authority. Corporations please sign with full
corporate name by a duly authorized officer and affix the corporate seal.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- -------------------------------------------------------------------------------
<PAGE>
Consent of Bear, Stearns & Co. Inc.
We hereby consent to the inclusion in the Proxy Statement - Prospectus forming
part of this Registration Statement on Form S-4 of Summit Bancorp. of our
opinion attached as Appendix B thereto and to the reference to such opinion and
to our firm therein. In giving such consent, we do not admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 and the rules and regulations of the Securities and
Exchange Commission issued thereunder.
Bear, Stearns & Co. Inc.
By: /s/ Steve Begleiter
-----------------------------------
Steve Begleiter
Senior Managing Director
Dated: January 13, 1997
