===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
---------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- --------------------------
Commission File Number: 1-6451
--------------
SUMMIT BANCORP.
----------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-1903313
- ----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 Carnegie Center, P.O. Box 2066, Princeton, New Jersey 08543-2066
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(609) 987-3200
- ----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- ----------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
[X] Yes [ ] No
As of April 30, 1998 there were 177,528,405 shares of common stock,
$.80 par value, outstanding.
============================================================================
<PAGE>
SUMMIT BANCORP
FORM 10-Q
INDEX
Page No.
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1998, December 31, 1997 and
March 31, 1997 2
Consolidated Statements of Income -
Three Months Ended March 31, 1998 and 1997 3
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 4
Consolidated Statements of Shareholders' Equity -
Three Months Ended March 31, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 20
Part II. Other Information.
Item 1. Legal Proceedings 22
Item 2. Changes in Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 23
Item 4. Submission of Matters to a Vote of Security Holders 23
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
Signature 25
Exhibit Index 26
<PAGE>
<TABLE>
Summit Bancorp and Subsidiaries
Consolidated Balance Sheets
Unaudited
(In thousands)
<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
------------ ------------ ------------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 1,242,254 $ 1,173,118 $ 1,034,857
Federal funds sold and securities purchased
under agreements to resell 101,096 4,460 243,395
Interest-bearing deposits with banks 6,852 14,072 13,457
Securities:
Trading account securities 26,913 35,216 33,806
Securities available for sale 5,375,723 5,074,896 3,366,770
Securities held to maturity 3,898,724 4,157,543 5,196,227
------------ ------------ ------------
Total securities 9,301,360 9,267,655 8,596,803
------------ ------------ ------------
Loans (net of unearned discount):
Commercial 6,440,091 6,253,740 5,617,522
Commercial mortgage 2,809,233 2,703,793 2,797,531
Residential mortgage 5,770,620 5,671,200 6,025,610
Consumer 4,251,983 4,259,633 3,935,491
------------ ------------ ------------
Total loans 19,271,927 18,888,366 18,376,154
Less: Allowance for loan losses 301,264 296,494 290,471
------------ ------------ ------------
Net loans 18,970,663 18,591,872 18,085,683
Premises and equipment 244,406 244,913 242,459
Goodwill and other intangibles 183,897 188,620 184,039
Accrued interest receivable 179,685 175,170 170,609
Due from customers on acceptances 16,511 15,814 17,915
Other assets 307,966 288,478 318,633
------------ ------------ ------------
Total Assets $ 30,554,690 $ 29,964,172 $ 28,907,850
============ ============ ============
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing demand deposits $ 4,680,917 $ 4,530,690 $ 4,324,714
Interest-bearing deposits:
Savings and time deposits 16,681,913 16,914,485 17,166,431
Commercial certificates of deposits
$100,000 and over 852,795 884,261 839,437
------------ ------------ ------------
Total deposits 22,215,625 22,329,436 22,330,582
Other borrowed funds 3,629,944 3,397,953 2,948,117
Accrued expenses and other liabilities 324,949 290,197 301,980
Accrued interest payable 77,702 71,602 75,497
Bank acceptances outstanding 16,511 15,814 17,915
Long-term debt 1,588,592 1,246,750 835,744
------------ ------------ ------------
Total liabilities 27,853,323 27,351,752 26,509,835
------------ ------------ ------------
Shareholders' equity:
Common stock par value $ .80:
Authorized 390,000 shares;
issued and outstanding 177,528 at
March 31, 1998; 176,590
at December 31, 1997 and
174,906 at March 31, 1997 142,022 141,272 139,925
Surplus 1,010,444 987,281 959,255
Retained earnings 1,531,659 1,467,193 1,314,548
Employee stock ownership plan obligation (3,932) (4,201) (5,008)
Accumulated other comprehensive
income, net of tax 21,174 20,875 (10,705)
------------ ------------ ------------
Total shareholders' equity 2,701,367 2,612,420 2,398,015
------------ ------------ ------------
Total Liabilities and Shareholders' Equity$ 30,554,690 $ 29,964,172 $ 28,907,850
============ ============ ============
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
2
<PAGE>
<TABLE>
Summit Bancorp and Subsidiaries
Consolidated Statements of Income
Unaudited
(In thousands, except per share data)
<CAPTION>
Three Months Ended
March 31,
------------------------
1998 1997
----------- -----------
<S> <C> <C>
Interest Income
Loans $ 380,309 $ 365,230
Securities:
Trading account securities 554 373
Securities available for sale 85,022 49,250
Securities held to maturity 62,606 85,035
----------- -----------
Total securities 148,182 134,658
Federal funds sold and securities
purchased under agreements to resell 407 1,253
Deposits with banks 431 173
----------- -----------
Total interest income 529,329 501,314
----------- -----------
Interest Expense
Savings and time deposits 156,868 157,260
Commercial certificates of deposit
$100,000 and over 12,257 11,054
Borrowed funds, including long-term debt 71,046 52,985
----------- -----------
Total interest expense 240,171 221,299
----------- -----------
Net interest income 289,158 280,015
Provision for loan losses 15,000 15,510
----------- -----------
Net interest income after
provision for loan losses 274,158 264,505
----------- -----------
Non-Interest Income
Service charges on deposit accounts 30,284 28,233
Service and loan fee income 12,914 11,335
Trust and investment services income 13,444 11,328
Securities gains 1,426 1,431
Other 19,843 17,073
----------- -----------
Total non-interest income 77,911 69,400
----------- -----------
Non-Interest Expenses
Salaries 76,493 70,559
Pension and other employee benefits 26,618 25,120
Furniture and equipment 20,367 18,259
Occupancy, net 18,500 18,431
Communications 9,532 8,765
Merger-related charges - 26,500
Other 38,534 39,308
----------- -----------
Total non-interest expenses 190,044 206,942
----------- -----------
Income before income taxes 162,025 126,963
Federal and state income taxes 49,608 44,481
----------- -----------
Net Income $ 112,417 $ 82,482
=========== ===========
Net Income per Common Share:
Basic $ 0.64 $ 0.47
=========== ===========
Diluted 0.63 0.47
=========== ===========
Average Common Shares Outstanding:
Basic 176,933 174,377
=========== ===========
Diluted 179,251 176,706
=========== ===========
</TABLE>
[FN]
See accompanying Notes to Consolidated Financial Statements.
</FN>
3
<PAGE>
<TABLE>
Summit Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
Unaudited
(In thousands)
<CAPTION>
Three Months Ended
March 31,
--------------------------
Operating activities 1998 1997
----------- -----------
<S> <C> <C>
Net income $ 112,417 $ 82,482
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses and other real estate owned 15,120 15,923
Depreciation, amortization and accretion, net 17,811 25,311
Merger-related charges - 26,500
Gains on sales of securities (1,426) (1,431)
Gains on sales of mortgages held for sale (2,315) (1,715)
Gains on sales of other real estate owned (1,949) (673)
Proceeds from sales of other real estate owned 6,445 5,190
Proceeds from sales of mortgages held for sale 143,703 107,949
Originations of mortgages held for sale (198,210) (81,135)
Net decrease (increase) in trading account securities 8,303 (7,371)
Net increase in accrued interest receivable and other assets (27,033) (5,465)
Net increase in accrued interest payable, accrued
expenses and other liabilities 41,307 14,042
----------- -----------
Net cash provided by operating activities 114,173 179,607
----------- -----------
Investing activities
Purchases of securities held to maturity (266,619) (75,503)
Purchases of securities available for sale (952,693) (726,778)
Proceeds from maturities of securities held to maturity 510,588 181,264
Proceeds from maturities of securities available for sale 483,576 208,958
Proceeds from sales of securities available for sale 184,266 264,882
Net increase in Federal funds sold,
securities purchased under agreements to resell
and interest-bearing deposits with banks (89,416) (68,690)
Net increase in loans (338,957) (277,807)
Purchases of premises and equipment, net (12,214) (2,345)
----------- -----------
Net cash used in investing activities (481,469) (496,019)
----------- -----------
Financing activities
Net decrease in deposits (113,811) (149,419)
Net increase in short-term borrowings 231,991 16,044
Principal payments on long-term debt (164,487) (26,226)
Proceeds from issuance of long-term debt 506,535 154,500
Dividends paid (47,709) (38,952)
Proceeds from issuance of common stock under dividend
reinvestment and other stock plans 23,913 11,519
----------- -----------
Net cash provided by (used in) financing activities 436,432 (32,534)
----------- -----------
Increase (decrease) in cash and due from banks 69,136 (348,946)
Beginning cash balance of acquired entities - 56,296
Cash and due from banks at beginning of period 1,173,118 1,327,507
----------- -----------
Cash and due from banks at end of period $ 1,242,254 $ 1,034,857
=========== ===========
Supplemental disclosure of cash flow information
Cash paid:
Interest payments $ 234,071 $ 206,091
Income tax payments 915 17,381
Noncash investing activities:
Net transfer of securities from held to maturity to
available for sale resulting from acquisitions - 91,787
Net transfer of loans to other real estate owned 1,711 3,719
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
Summit Bancorp and Subsidiaries
Consolidated Statements of Shareholders' Equity
Unaudited
(In thousands)
<CAPTION>
Accum. Other Total
Common Retained ESOP Comprehensive Shareholders'
Stock Surplus Earnings Obligation Income Equity
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 134,637 $ 918,411 $1,237,892 $(5,816) $ 5,714 $ 2,290,838
Adjustment for the pooling
of a company with
a different fiscal year end (158) (4,771) 9,288 539 1,832 6,730
-------------------------------------------------------------------------
Adjusted beginning balance 134,479 913,640 1,247,180 (5,277) 7,546 2,297,568
Balances at beginning
of period of immaterial
pooled acquisition (6,047 shares) 4,837 34,705 25,562 - (278) 64,826
Comprehensive income:
Net income - - 82,482 - - 82,482
Unrealized loss on securities
available for sale, net of tax - - - - (17,973) (17,973)
---------------
Total comprehensive income 64,509
Cash dividend declared on common stock - - (40,676) - - (40,676)
Common stock issued:
Dividend reinvestment
and other stock plans
(155 shares) 124 4,554 - - - 4,678
Exercise of stock options,
net (605 shares) 485 6,356 - - - 6,841
ESOP Debt Repayment - - - 269 - 269
-------------------------------------------------------------------------
Balance, March 31, 1997 $ 139,925 $ 959,255 $1,314,548 $(5,008) $ (10,705) $ 2,398,015
========== =========== =========== ======== =========== ===============
Balance, December 31, 1997 $ 141,272 $ 987,281 $1,467,193 $(4,201) $ 20,875 $ 2,612,420
Comprehensive income:
Net income - - 112,417 - - 112,417
Unrealized gain on securities
available for sale, net of tax - - - - 299 299
---------------
Total comprehensive income 112,716
Cash dividends declared on common stock - - (47,951) - - (47,951)
Common stock issued:
Dividend reinvestment
and other stock plans
(328 shares) 262 16,161 - - - 16,423
Exercise of stock options,
net (610 shares) 488 7,002 - - - 7,490
ESOP Debt repayment - - - 269 - 269
-------------------------------------------------------------------------
Balance, March 31, 1998 $ 142,022 $ 1,010,444 $1,531,659 $(3,932) $ 21,174 $ 2,701,367
========== =========== =========== ======== =========== ===============
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
5
<PAGE>
Summit Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1.) Basis of Presentation
The accompanying financial statements reflect, in the
opinion of management, all normal recurring adjustments
necessary to present fairly the consolidated financial
position of Summit Bancorp and subsidiaries (the
"Company"), the consolidated results of operations,
changes in shareholders' equity and changes in cash flows.
All significant intercompany accounts and transactions
have been eliminated in consolidation. In all material
respects, the financial statements presented comply with
the current reporting requirements of supervisory
authorities. Certain prior period amounts have been
reclassified to conform to the financial statement
presentation of 1998. For additional information and
disclosures required under generally accepted accounting
principles, reference is made to the Company's 1997 Annual
Report on Form 10-K.
Prior period financial statements have been restated to
include the accounts and results of operations for all
material acquisitions accounted for as
pooling-of-interests combinations. On August 20, 1997, the
Board of Directors of the Company ("Board") approved a
three-for-two common stock split payable on September 24,
1997. All share data has been retroactively adjusted to
reflect the common stock split.
The Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," on January 1, 1998. The Statement defines total
comprehensive income as all changes in equity during a
period from transactions and other events and
circumstances from nonowner sources. Other comprehensive
income includes revenues, expenses, gains and losses that,
under generally accepted accounting principles are
included in comprehensive income but excluded from net
income. The Company's other comprehensive income is
generally comprised of unrealized gains and losses on
securities available for sale. Disclosure of comprehensive
income for the 1998 and 1997 periods is presented in the
accompanying Consolidated Statements of Shareholders'
Equity.
2.) Acquisitions and Restructuring Charges
On August 1, 1997, the Company completed the acquisition of
Collective Bancorp, Inc. ("Collective"). This acquisition
was accounted for as a pooling of interests and all
financial information, prior to the acquisition date, has
been restated to reflect the combined financial
information. Merger-related charges of $56.5 million
($37.1 million after tax) were recorded at the time of the
acquisition.
On March 1, 1997, the Company completed the acquisition of
B.M.J. Financial Corp. ("BMJ"). This acquisition was
accounted for as a pooling of interests, and was recorded
as an adjustment to shareholders' equity as of January 1,
1997, without restating the
6
<PAGE>
consolidated financial statements for 1996 and prior years.
Merger-related charges of $26.5 million ($16.7 million after tax) were
recorded at the time of the acquisition.
On December 12, 1997 the Company acquired Corporate
Dynamics, an employee benefits consulting firm, and
Philadelphia Benefits Corp., a group health insurance
agency, with the issuance of 495,000 shares of common
stock. These acquisitions were accounted for as purchases,
and Corporate Dynamics' and Philadelphia Benefits Corp.'s
results of operations have been included since acquisition
date.
3.) Net Income per Common Share
The Company calculates net income per common share in
accordance with SFAS No. 128, "Earnings per Share." Basic
net income per common share is calculated by dividing net
income by the weighted average common shares outstanding
during the period. Diluted net income per common share is
computed similar to that of basic net income per common
share, except that the denominator is increased to include
the number of additional common shares that would have
been outstanding if all potentially dilutive common
shares, principally stock options, were issued during the
reporting period.
<TABLE>
<CAPTION>
(In thousands, except per share data)
- --------------------------------------------------------------------------
Three months ended March 31, 1998 1997
- --------------------------------------------------------------------------
<S> <C> <C>
Net Income $112,417 $82,482
==========================================================================
Basic weighted-average
common shares outstanding 176,933 174,377
Plus: Common stock equivalents 2,318 2,329
- -------------------------------------------------------------------------
Diluted weighted-average
common shares outstanding 179,251 176,706
Net income per common share:
Basic $0.64 $0.47
Diluted 0.63 0.47
- -------------------------------------------------------------------------
</TABLE>
4.) Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related information." SFAS No. 131
establishes standards and disclosure requirements for the
way companies report information about operating segments,
including related product information. Operating segments
are defined based upon the way management organizes
segments for making operations decisions and evaluating
performance. Information such as segment net earnings,
appropriate revenues and expense items and certain balance
sheet items are required to be presented, and such amounts
are required to be reconciled to the Company's combined
financial information. SFAS No. 131 is effective for
financial statements issued for annual periods ending
after December 15, 1998, and interim periods beginning in
1999. The Company will adopt SFAS No. 131 as required, at
December 31, 1998.
7
<PAGE>
In February 1998, the FASB issued SFAS No. 132, "Employers'
Disclosures About Pensions and Other Postretirement
Benefits." This Statement standardizes the disclosure
requirements for pension and other postretirement benefits
by requiring additional information that will facilitate
financial analysis, and eliminating certain disclosures
that are considered no longer useful. SFAS No. 132
supersedes the disclosure requirements in SFAS Nos. 87, 88
and 106. This Statement is effective for fiscal years
beginning after December 15, 1997. Restatement of
disclosure for comparative purposes is required unless the
information is not readily available. SFAS No. 132 will
be adopted as required, at December 31, 1998.
5.) Subsequent Events
On April 15, 1998 the Board approved an 11.1 percent
increase in the quarterly cash dividend on the Company's
stock from $0.27 to $0.30 per common share. The dividend
is payable on August 3, 1998, to shareholders of record
July 9, 1998.
The Board also authorized the repurchase from time to time
of up to five percent of the Company's outstanding common
stock. This action is designed to help the Company to
continue to effectively manage its capital. The Company
commenced purchases under its repurchase program at the
end of April 1998.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- -----------------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
----------------------------------------------
Summit Bancorp is a bank holding company located in Princeton,
New Jersey. The Company owns two bank subsidiaries
and several active non-bank subsidiaries. The Company's
bank subsidiaries provide a broad range of retail, commercial
and private banking services as well as trust and
investment services through a line of business approach to
individuals, businesses, not-for-profit organizations,
government entities and other financial institutions.
These services are provided through an extensive branch
network, including supermarket branches and private
banking facilities, as well as through automated teller
machines and personal computers.
FINANCIAL CONDITION
Total assets at March 31, 1998, were $30.6 billion, an
increase of $590.5 million or 2.0 percent from year-end
1997, which can generally be attributed to an increase in
the loan portfolio.
Securities held to maturity at March 31, 1998, were $3.9
billion and were mainly comprised of $2.8 billion of U.S.
Government and Federal agency securities, $175.6 million
of state and political subdivision securities and $890.7
million of other securities, predominately corporate
collateralized mortgage obligations ("CMOs"). These
securities decreased $258.8 million or 6.2 percent from
year-end 1997. This decrease primarily resulted from
$510.6 million of maturities, including principal
repayments on CMOs. This decrease was partially offset by
$266.6 million in purchases. At March 31, 1998, the
aggregate market value of the held to maturity portfolio
was $3.9 billion. The aggregate market value at December
31, 1997, was $4.2 billion.
At March 31, 1998, securities available for sale amounted
to $5.4 billion and were predominately comprised of U.S.
Government and Federal agency securities. These
securities increased $300.8 million or 5.9 percent from
year-end 1997 primarily as cash flows from securities held
to maturity were reinvested in securities available for
sale. For the first three months of 1998, $952.7 million
of securities available for sale were purchased, partially
offset by maturities of $483.6 million and sales of $182.8
million.
At March 31,1998, total loans amounted to $19.3 billion and
increased $383.6 million or 2.0 percent from year-end
1997. Commercial loans increased $186.4 million or 3.0
percent as compared to December 31,1997. The increase in
commercial loans was primarily related to growth in real
estate, large corporate and asset based lending.
Commercial mortgage loans increased $105.4 million or 3.9
percent, and residential mortgage loans increased $99.4
million or 1.8 percent from December 31, 1997.
During the quarter, deposits continued to be impacted by
the investors desire for higher-yielding investment
alternatives such as mutual funds, annuities and the stock
market. Total deposits were $22.2 billion at March 31,
1998, a decrease of $113.8 million
9
<PAGE>
or 0.5 percent from December 31, 1997. Demand deposits increased
$150.2 million or 3.3 percent from year-end 1997 to $4.7 billion.
Savings and time deposits at $16.7 billion decreased
$232.6 million or 1.4 percent from December 31, 1997.
Commercial certificates of deposit $100,000 and over were
$852.8 million, representing a decrease of $31.5 million
or 3.6 percent compared to December 31, 1997.
Other borrowed funds at March 31, 1998, increased $232.0
million or 6.8 percent from December 31, 1997, to $3.6
billion. The increase in borrowed funds can be attributed
to increases in short-term Federal Home Loan Bank advances
and Federal funds purchased, partially offset by a
decrease in short-term repurchase agreements.
Long-term debt at March 31, 1998, increased $341.8 million,
or 27.4 percent from December 31, 1997 to $1.6 billion.
The increase in long-term debt was principally the result of the
increase in long-term repurchase agreements of $425.0
million, partially offset by a $82.4 million decrease in
long-term borrowings from the Federal Home Loan Bank. The
increases in borrowings were generally used to fund the
growth in the loan portfolio and to replace the reduction
in deposits. Included in long-term debt at each of the
periods presented, is $150.0 million of 8.40 percent
pass-through securities. These securities qualify for Tier
I Capital.
Total shareholders' equity increased $88.9 million or 3.4
percent from December 31, 1997, to $2.7 billion. Included
in stockholders' equity at March 31, 1998, was accumulated
other comprehensive income, net of tax, amounting to $21.2
million, compared to $20.9 million at year-end 1997.
Comprehensive income is comprised principally of
unrealized gains on the available for sale portfolio.
The Company's capital ratios for March 31, 1998, as
compared to select prior periods and regulatory
requirements, are shown in the following table. The
Company's bank subsidiaries also met the well capitalized
requirements for each of the periods presented.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31, Minimum
Required Well
Selected Capital
Ratios: 1998 1997 1997 Capital Capitalized
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity to assets 8.84% 8.72% 8.30% - -
Leverage ratio 8.88 8.76 8.41 3.00% 5.00%
Tier I capital 12.63 12.64 12.41 4.00 6.00
Total risk-based
capital 14.78 14.83 14.84 8.00 10.00
- ---------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Non-Performing Assets
Non-performing assets include non-performing loans and
other real estate owned ("OREO") and are shown in the
following table as of the dates indicated.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Non-Performing Assets
(In thousands) Mar. 31, Dec. 31 Mar. 31
1998 1997 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Non-performing loans:
Commercial and industrial $39,934 $42,644 $ 49,024
Construction and development 3,397 4,453 28,252
Commercial mortgage 32,552 37,993 48,307
- ---------------------------------------------------------------------------
Non-performing loans 75,883 85,090 125,583
OREO, net 11,329 14,249 27,596
- ---------------------------------------------------------------------------
Non-performing assets $87,212 $99,339 $153,179
Loans, not included above,
past due 90 days
or more (1) $58,494 $48,609 $74,807
- ---------------------------------------------------------------------------
Non-performing loans
to total loans 0.39% 0.45% 0.68%
Non-performing assets
to total loans and
OREO 0.45 0.53 0.83
- ---------------------------------------------------------------------------
</TABLE>
[FN]
(1) Primarily residential mortgage and consumer loans, well secured
and in the process of collection.
</FN>
The average balance of non-performing loans for the three
months ended March 31, 1998, was $81.4 million. Interest
income received on non-performing loans amounted to $0.6
million for the three months ended March 31, 1998.
Allowance for Loan Losses
A standardized process has been established to assess the
adequacy of the allowance for loan losses and to identify
the risks inherent in the loan portfolio. This process
incorporates credit reviews and gives consideration to
areas of exposure such as concentrations of credit,
economic and industry conditions, trends in delinquencies
and collections, collateral coverage, and the composition
of the performing and non-performing loan portfolios. The
allowance for loan losses is maintained at a level that
management believes to be adequate to absorb anticipated
loan losses. The unallocated portion of the allowance for
loan losses, in excess of specific and general reserves,
was $175.7 million at March 31, 1998, compared to $166.8
million at December 31, 1997.
11
Transactions in the allowance for loan losses for the three
months ended March 31, 1998 and 1997 and selected loan
loss ratios for the dates indicated are shown in the
following tables:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Allowance for Loan Losses
(In thousands) 1998 1997
- -------------------------------------------------------------------------
<S> <C> <C>
Balance, beginning of period $ 296,494 $ 280,611
Acquisition adjustments, net - 9,994
Provision charged to
operating expenses 15,000 15,510
- -------------------------------------------------------------------------
311,494 306,115
- -------------------------------------------------------------------------
Loans charged off:
Commercial and industrial 8,666 8,134
Construction and development 356 724
Commercial mortgage 260 4,276
Residential mortgage 319 1,034
Consumer 9,332 7,490
- -------------------------------------------------------------------------
Total loans charged off 18,933 21,658
- -------------------------------------------------------------------------
Recoveries:
Commercial and industrial 4,649 2,626
Construction and development 1,798 183
Commercial mortgage 287 753
Residential mortgage 274 492
Consumer 1,695 1,960
- -------------------------------------------------------------------------
Total recoveries 8,703 6,014
- -------------------------------------------------------------------------
Net charge offs 10,230 15,644
- -------------------------------------------------------------------------
Balance, end of period $ 301,264 $ 290,471
=========================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
1998 1997 1997
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Net charge offs to average loans:
Quarter-to-date 0.22% 0.25% 0.35%
Year-to-date 0.22 0.29 0.35
Allowance for loan losses to:
Total loans 1.56 1.57 1.58
Non-performing loans 397.01 348.45 231.30
Non-performing assets 345.44 298.47 189.63
- -------------------------------------------------------------------------
</TABLE>
12
<TABLE>
Summit Bancorp and Subsidiaries
Consolidated Average Balance Sheets with Resultant Interest and Rates
Unaudited
(Tax-equivalent basis, dollars in thousands)
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
-------------------------------- -----------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning-assets:
Federal funds sold and
securities purchased
under agreements to resell $ 29,187 $ 407 5.66 % $ 105,100 $ 1,253 4.84 %
Interest-bearing deposits with banks 27,065 431 6.46 12,485 173 5.62
Securities:
Trading account securities 33,123 582 7.13 32,146 374 4.72
Securities available for sale 5,365,951 85,643 6.38 3,177,151 49,739 6.26
Securities held to maturity 3,969,789 63,911 6.44 5,341,922 86,753 6.50
----------- --------- ------ ----------- --------- ------
Total securities 9,368,863 150,136 6.41 8,551,219 136,866 6.40
----------- --------- ------ ----------- --------- ------
Loans:
Commercial 6,196,306 128,546 8.41 5,418,387 113,339 8.48
Commercial mortgage 2,769,941 59,136 8.54 2,800,389 60,446 8.63
Residential mortgage 5,722,445 104,786 7.32 6,048,907 112,307 7.43
Consumer 4,268,694 89,067 8.46 3,861,689 80,499 8.45
----------- --------- ------ ----------- --------- ------
Total loans 18,957,386 381,535 8.16 18,129,372 366,591 8.20
----------- --------- ------ ----------- --------- ------
Total interest-earning assets 28,382,501 532,509 7.61 26,798,176 504,883 7.64
----------- --------- ------ ----------- --------- ------
Non-interest earning assets:
Cash and due from banks 1,029,500 1,129,914
Allowance for loan losses (302,071) (295,794)
Other assets 946,746 904,934
----------- -----------
Total non-interest earning assets 1,674,175 1,739,054
----------- -----------
Total Assets $30,056,676 $28,537,230
=========== ===========
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Savings deposits $ 9,538,374 61,552 2.62 $ 9,638,361 62,090 2.61
Time deposits 7,257,262 95,316 5.33 7,510,008 95,170 5.14
Commercial certificates of deposit
$100,000 and over 917,949 12,257 5.42 850,774 11,054 5.27
----------- --------- ------ ----------- --------- ------
Total interest-bearing deposits 17,713,585 169,125 3.87 17,999,143 168,314 3.79
----------- --------- ------ ----------- --------- ------
Other borrowed funds 3,485,830 46,788 5.44 3,051,263 41,086 5.46
Long-term debt 1,517,256 24,258 6.40 715,438 11,899 6.65
----------- --------- ------ ----------- --------- ------
Total interest-bearing liabilities 22,716,671 240,171 4.29 21,765,844 221,299 4.12
----------- --------- ------ ----------- --------- ------
Non-interest bearing liabilities:
Demand deposits 4,292,821 4,040,039
Other liabilities 373,417 333,922
----------- -----------
Total non-interest
bearing liabilities 4,666,238 4,373,961
Shareholders' Equity 2,673,767 2,397,425
----------- -----------
Total Liabilities and
Shareholders' Equity $30,056,676 $28,537,230
=========== ===========
--------- ---------
Net interest income (tax-equivalent basis) 292,338 3.32 % 283,584 3.52 %
--------- ====== --------- ======
Tax-equivalent basis adjustment
(based on a Federal income
tax rate of 35%) (3,180) (3,569)
--------- ---------
Net interest income $ 289,158 $ 280,015
========= =========
Net interest income as
as a percent of interest
earning assets (tax-equivalent basis) 4.18 % 4.29 %
====== ======
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
13
<PAGE>
RESULTS OF OPERATIONS
First quarter net income for 1998, before merger-related
charges, was $112.4 million or $0.64 per basic share, an
increase of 13.4 percent over $99.2 million the prior
year. Net income per diluted share, before merger-related
charges, was $0.63, up 12.5 percent from $0.56 in the
first quarter of 1997. For the first quarter of 1998 net
income was $112.4 million or $0.64 per basic share
compared to net income of $82.5 million or $0.47 per basic
share, after merger-related charges, for the first quarter
of 1997. The merger-related charge of $26.5 million
($16.7 million after tax) was recorded with the March 31,
1997 B.M.J. Financial Corp. acquisition.
Key performance indicators are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
(In thousands, except per share)
Three months ended March 31, 1998 1997
- --------------------------------------------------------------------
<S> <C> <C>
Before merger-related charges
Net income $112,417 $99,162
Net income per share:
Basic $ 0.64 $ 0.57
Diluted 0.63 0.56
Dividends per share 0.27 0.24
Return on:
Average assets 1.52% 1.41%
Average common equity 17.05 16.77
Efficiency ratio 51.69 50.70
After merger-related charges
Net income $112,417 $82,482
Net income per share:
Basic $ 0.64 $ 0.47
Diluted 0.63 0.47
Return on:
Average assets 1.52% 1.17%
Average common equity 17.05 13.95
- ------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Net Interest Income
Interest income on a tax-equivalent basis was $532.5
million for the three months ended March 31, 1998, an
increase of $27.6 million, or 5.5 percent, compared to a
year ago. Interest-earning assets averaged $28.4 billion,
an increase of $1.6 billion, or 5.9 percent compared to
the prior year period. The increase in interest-earning
assets contributed $33.4 million to the increase in
tax-equivalent interest income, partially offset by a
decline of $5.8 million due to the reduction in the yield
on interest-earning assets. While the average balance of
interest-earning assets increased over the period, the
rate earned on the overall balance decreased 3 basis
points from 7.64 percent in 1997 to 7.61 percent in 1998.
The decrease was generally the result of maturing assets
being reinvested in a lower rate environment.
The rate/volume table below presents an analysis of the
impact on interest income and expense resulting from
changes in average volumes and rates over the periods.
Changes that are not due to volume or rate variances have
been allocated proportionally to both, based on their
relative absolute values.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Rate/Volume Table
Amount of Increase(Decrease)
Three months ended March 31, 1998 versus 1997
Due to change in:
(Tax-equivalent basis, in millions) Volume Rate Total
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Interest Income
Loans:
Commercial $ 21.6 $ (6.3) $ 15.3
Commercial mortgage (0.7) (0.6) (1.3)
Residential mortgage (6.0) (1.5) (7.5)
Consumer 8.5 0.1 8.6
- ----------------------------------------------------------------------------
Total loans 23.4 (8.3) 15.1
Securities held to maturity (22.1) (0.8) (22.9)
Securities available for sale 34.9 1.0 35.9
Other interest-earning assets (2.8) 2.3 (0.5)
- ----------------------------------------------------------------------------
Total interest income 33.4 (5.8) 27.6
- ----------------------------------------------------------------------------
Interest Expense
Deposits:
Savings deposits (1.8) 1.3 (0.5)
Time deposits (13.5) 13.7 0.2
Commercial certificates of
deposits > $100 M 0.9 0.3 1.2
- ----------------------------------------------------------------------------
Total deposits (14.4) 15.3 0.9
Other interest-bearing
liabilities 17.5 0.5 18.0
- ----------------------------------------------------------------------------
Total interest expense 3.1 15.8 18.9
- ---------------------------------------------------------------------------
Net interest income $ 30.3 $ (21.6) $ 8.7
=============================================================================
</TABLE>
Interest expense increased $18.9 million, or 8.5 percent,
for the three months ended March 31, 1998, compared to the
same period in 1997. The increase in the rate paid for
interest-bearing liabilities contributed $15.8 million to
the increase in interest expense. The
15
<PAGE>
increase in the rate paid on interest-bearing liabilities
was largely attributable to the increase in the average
rate paid on time deposits, from 5.14 percent in the 1997
period to 5.33 percent in 1998 as a result of a change in
mix. The remaining $3.1 million increase in interest
expense was attributable to an increase in interest-bearing
liabilities. Interest-bearing liabilities averaged $22.7
billion, an increase of $950.8 million, or 4.4 percent,
from the prior year period.
Net interest income on a tax-equivalent basis was $292.3
million for the three months ended March 31, 1998, an
increase of $8.7 million, or 3.1 percent, compared to the
same period in 1997.
The net interest spread percentage on a tax-equivalent
basis (the difference between the rate earned on average
interest-earning assets and the rate paid on average
interest bearing liabilities) was 3.32 percent for the
quarter ended March 31, 1998, compared to 3.52 percent for
the prior year period. Net interest margin (net interest
income on a tax-equivalent basis as a percentage of
average interest-earning assets) was 4.18 percent during
the first quarter of 1998 compared to 4.29 percent during
the same period in 1997. The decline in net interest
spread and net interest margin can primarily be attributed
to an increase in short-term funding costs, including time
deposits, reflecting higher market rates.
Non-Interest Income
Non-interest income categories for the three months ended
March 31, 1998, and 1997, are shown in the following
table:
<TABLE>
<CAPTION>
(In millions)
----------------------------------------------------------------------
1998 1997 Increase(Decrease)
Amount Percent
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Service charges on deposit
accounts $30.3 $28.2 $2.1 7.3%
Service and loan fee income 12.9 11.3 1.6 13.9
Trust and investment services
income 13.4 11.4 2.0 18.7
Other 19.9 17.1 2.8 16.2
--------------------------------------------------------------------------
Total non-interest operating
income 76.5 68.0 8.5 12.5
Securities gains 1.4 1.4 - -
-------------------------------------------------------------------------
Total non-interest income $77.9 $69.4 $8.5 12.3%
---------------------------------------------------------------------------
</TABLE>
The increase in income from service charges on deposits in
the first quarter of 1998 was primarily the result of the
increase in rate and a change in the method used to assess
charges for nonsufficient funds.
The increase in service and loan fee income for the first
quarter of 1998 was primarily due to increased originations and
sales of mortgage loans.
16
<PAGE>
The increase in trust and investment services fees for the
first quarter of 1998 was generally due to increases in
asset management advisory fees and fees from sales of
proprietary and third party mutual funds.
The increase in other non-interest income was largely
attributable to increased insurance fees generated by
Corporate Dynamics and Philadelphia Benefits Corp., the
recently acquired insurance subsidiaries, discussed in the
accompanying Notes to Consolidated Financial Statements.
Non-Interest Expenses
Non-interest expense categories for the three months ended
March 31, 1998, and 1997, are shown in the following
table:
<TABLE>
<CAPTION>
(In millions)
- -------------------------------------------------------------------------
1998 1997 Increase(Decrease)
Amount Percent
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salaries $ 76.5 $ 70.6 $ 5.9 8.4%
Pension and other
employee benefits 26.6 25.1 1.5 6.0
Furniture and equipment 20.4 18.3 2.1 11.5
Occupancy, net 18.5 18.4 0.1 0.4
Communications 9.5 8.8 0.7 8.8
Other 38.5 39.2 (0.7) (2.0)
- -------------------------------------------------------------------------
Total non-interest
operating expenses 190.0 180.4 9.6 5.3
Merger-related charges - 26.5 (26.5) (100.0)
- -------------------------------------------------------------------------
Total non-interest
expenses $190.0 $206.9 $(16.9) (8.2)%
=========================================================================
</TABLE>
Non-interest expenses for the first three months of 1997
included merger-related restructuring charges of $26.5
million. Excluding these merger-related charges,
non-interest expenses increased $9.6 million, or 5.3
percent for the first three months of 1998 when compared
to the prior year period.
Salaries expense for the first quarter of 1998 was $76.5
million, which increased $5.9 million, or 8.4 percent from
the prior year period. Salaries expense for the first
quarter of 1998 reflect a higher employee base and
increased incentive compensation linked to sales efforts.
For the first quarter of 1998, pension and other employee
benefits increased $1.5 million, or 6.0 percent, as
compared to the first quarter of 1997. The increase in
benefits is commensurate with the increase in salaries
expense.
Furniture and equipment expenses rose $2.1 million, or 11.5
percent, in the first quarter of 1998 when compared with
the first quarter of 1997. This is primarily due to the
increases in the rental and leasing expenses associated
with computer equipment.
Other expenses, which did not vary materially from period
to period, were largely comprised of legal and
professional fees of $6.5 million, advertising and public
relations expenses of $5.9 million and amortization of
goodwill and intangibles of $4.7 million.
17
<PAGE>
Federal and state income taxes for the first quarter of
1998 were $49.6 million, representing an increase of $5.1
million, or 11.5 percent from the comparable period last
year. While the provision for income tax increased in 1998
from 1997, the effective tax rate decreased from 35.0
percent in 1997 to 30.6 percent in 1998. The decrease in
the effective tax rate was the result of the
implementation of business strategies, including the
realignment of corporate entities. The lower effective tax
rate is expected to continue throughout the remainder of
the year.
LIQUIDITY
Liquidity is the ability to meet the borrowing needs and
deposit withdrawal requirements of customers and support
asset growth. Principal sources of liquidity are deposit
generation, access to purchased funds, maturities and
repayments of loans and investment securities and interest
and fee income.
The consolidated statements of cash flows present the
change in cash and due from banks from operating,
investing and financing activities. During the first three
months of 1998, net cash provided by operating activities
totaled $114.2 million. Contributing to net cash provided
by operating activities were the results of operations,
plus noncash expenses, and proceeds from the sales of
mortgages held for sale. Partially offsetting the
contributions to operating cash were funds used to
originate mortgage loans held for sale and noncash
revenues.
Net cash used in investing activities totaled $481.5. For
the three months ended March 31, 1998, net cash used in
transactions involving the investment portfolios totaled
$40.9 million, while the growth in the loan portfolio used
$339.0 million.
Scheduled maturities and anticipated principal repayments
of the held to maturity portfolio will approximate $1.2
billion throughout the balance of 1998. In addition, the
securities available for sale portfolio is another source
of liquidity. These sources can also be used to meet the
funding needs during periods of loan growth.
Net cash provided by financing activities totaled $436.4
million. During the first three months of 1998, borrowings
increased $574.0 million. This increase was partially
offset by the decrease in total deposits of $113.8 million
and the payment of dividends on the Company's common
stock.
Liquidity is also available through additional lines of
credit and the ability to incur additional debt. The
banking subsidiaries have established lines of credit with
the Federal Reserve Bank and the Federal Home Loan Bank of
New York and other correspondent banks which further
support and enhance liquidity.
Liquidity is also important at the Parent Company in order
to provide funds for operations and to pay dividends to
shareholders. Parent Company cash requirements are met
18
<PAGE>
primarily through management fees and dividends from its
subsidiaries, the issuance of short and long-term debt and
the exercise of stock options. The amount of dividends
that can be assessed to the bank subsidiaries is subject
to certain regulatory restrictions.
19
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
- -------------------------------------------------------
MARKET RISK.
------------
Due to the nature of the Company's business, market risk is
primarily interest rate risk. Interest rate risk is the
impact that changes in interest rates have on future
earnings. The principal objective in managing interest
rate risk is to maximize net interest income within the
acceptable levels of risk that have been previously
established by policy. This risk can be reduced by various
strategies, including the administration of liability
costs, the reinvestment of asset maturities and the use of
off-balance sheet financial instruments. The Company has
limited or no market risks associated with foreign
currencies, commodities or other marketable instruments.
Interest rate risk is monitored through the use of
simulation modeling techniques which apply alternative
interest rate scenarios to periodic forecasts of future
business activity and estimate the related impact on net
interest income. The use of simulation modeling assists
management in its continuing efforts to achieve earnings
growth in varying interest rate environments.
Key assumptions in the model include anticipated
prepayments on mortgage-related instruments, contractual
cash flow and maturities of all financial instruments
including derivatives, anticipated future business
activity, deposit sensitivity and changes in market
conditions. Selected core deposit rates are held constant
based on the results of analysis of historical rate
movements.
These assumptions are inherently uncertain, and as a
result, these models cannot precisely estimate the impact
that higher or lower rate environments will have on net
interest income. Actual results will differ from simulated
results due to timing, magnitude and frequency of interest
rate changes, changes in market conditions as well as
changes in management's strategies.
Based on the results of the interest simulation model as of
March 31, 1998, if interest rates increase or decrease 100
basis points from current rates in an immediate and
parallel shock over a twelve month period, the Company
would expect an increase of $15.0 million in net interest
income and a decrease of $13.0 million in net interest
income, respectively. The results of the interest
simulation model as of March 31, 1998, do not represent a
material change from the amounts previously reported as of
December 31, 1997.
Interest rate risk management efforts also involve the use
of certain derivative financial instruments for the
purpose of stabilizing net interest income in a changing
interest rate environment. At March 31, 1998, the
derivative financial instruments portfolio consisted
primarily of interest rate swaps, caps and floors with
notional values of $428.0 million, $450.0 million and
$430.0 million, respectively. These derivatives resulted
in a net interest income reduction of $0.5 million for the
first three months of 1998. The cost to terminate these
contracts at March 31, 1998, would have been $0.2 million.
20
<PAGE>
LOOKING AHEAD
This report contains certain forward-looking statements,
either expressed or implied, which are provided to assist
the reader to understand anticipated future financial
performance. These forward-looking statements involve
certain risks, uncertainties, estimates and assumptions
made by management.
Factors that may cause actual results to differ from those
results expressed or implied include, but are not limited
to, the interest rate environment and the overall economy,
the ability of customers to repay their obligations, the
adequacy of the allowance for loan losses, the progress of
integrating acquired financial institutions, competition
and technological changes. Although management has taken
certain steps to mitigate the negative effect of the above
mentioned items, significant unfavorable changes could
severely impact the assumptions used and have an adverse
affect on profitability.
21
<PAGE>
PART II. OTHER INFORMATION
- ----------------------------
ITEM 1. LEGAL PROCEEDINGS.
- --------------------------
Management does not believe that the ultimate disposition
of the litigation discussed below will have a material
adverse effect on the financial position and results of
operation of the Company and its subsidiaries, taken as a
whole.
1. Annette Loatman on behalf of herself and all others
similarly situated v. United Jersey Bank, U.S. District
Court for the District of New Jersey, Civil Action No.
95CV05258 (JBS), filed on October 4, 1995, Robert M.
Gundle, III, on behalf of himself and all others similarly
situated v. Summit Bank, successor in interest to United
Jersey Bank, U.S. District Court for the District of New
Jersey, Civil Action No. 96-4477 (JBS), filed on October
14, 1996, and Annette Loatman, on behalf of herself and
all others similarly situated v. United Jersey Bank,
Superior Court of New Jersey, Camden County, Docket No.
L-3527-96 ("the State Action"), filed April 24, 1996,
dismissed without prejudice pending the outcome of the
federal actions on December 9, 1996, and reinstated
October 15, 1997 with Robert M. Gundle, III as an
additional named plaintiff. Reported on Form 10-K for the
period ended December 31, 1997.
On March 20, 1998, the Superior Court of New Jersey granted
the plaintiffs' motion for class certification. On April
6, 1998, the Bank filed a motion for leave to appeal from
the order granting class certification.
2. Daniel Iverson, Lawrence Cohen and Terri Cohen, on
behalf of themselves and all others similarly situated v.
Collective Bank, a federally chartered savings bank
organized under the laws of the United States of America
(improperly named as Collective Bancorp, Inc., a Delaware
corporation), on behalf of itself and all others similarly
situated. Superior Court of New Jersey, Atlantic County,
Docket No. ATL-L-2578-95, filed on July 26, 1995. Reported
on Form 10-K for the period ended December 31, 1997.
On March 16, 1998, the Bank filed its appellate brief and
appendix. Oral argument of the appeal is scheduled for May
19, 1998.
3. Noel Hassett, on behalf of himself and all others
similarly situated v. Summit Bank. Superior Court of New
Jersey, Essex County, Docket No. ESX-L-11224-97, filed on
October 3, 1997. Reported on Form 10-K for the period
ended December 31, 1997.
The parties have agreed that all proceedings in this matter
will be stayed until completion of the appeals in the
Iverson matter.
ITEM 2. CHANGES IN SECURITIES.
- ------------------------------
Not applicable.
22
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
- ----------------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
- ---------------------------------------------------
HOLDERS.
--------
The annual meeting of the shareholders of Summit Bancorp.
was held April 17, 1998. The following is a brief
description of each matter voted on at the meeting.
PROPOSAL 1 - ELECTION OF DIRECTORS
- ----------------------------------
The following directors were nominated for election to the
Board of Directors as Class II Directors for a three year
term: John G. Collins, Anne Evans Estabrook, George L.
Miles, Jr., Raymond Silverstein and Orin Smith. Thomas H.
Hamilton and William R. Miller were nominated for election
as Class I and Class III Directors, respectively, for a
two year and one year term, respectively.
PROPOSAL 2 - INDEPENDENT ACCOUNTANTS
- ------------------------------------
Shareholders were presented with a proposal to ratify the
selection of KPMG Peat Marwick LLP, independent certified
public accountants, to audit the consolidated financial
statements of Summit Bancorp. and its subsidiaries for the
year ending December 31, 1998.
The results of the voting at the annual meeting were as
follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
SHARES
- -------------------------------------------------------------------------
PROPOSAL FOR WITHHELD
- -------------------------------------------------------------------------
1 - Election of Directors
<S> <C> <C> <C>
John G. Collins 151,473,119 1,567,389
Anne Evans Estabrook 151,481,719 1,558,789
Thomas H. Hamilton 151,440,419 1,600,089
George L. Miles, Jr. 151,346,630 1,693,878
William R. Miller 151,276,176 1,764,332
Raymond Silverstein 151,231,233 1,809,275
Orin Smith 151,455,062 1,585,446
- --------------------------------------------------------------------------
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------
2-Independent Accountants 151,651,157 754,886 634,465
- --------------------------------------------------------------------------
</TABLE>
23
<PAGE>
ITEM 5. OTHER INFORMATION.
- --------------------------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- -----------------------------------------
(a) Exhibits
--------
Exhibit No. Description
----------- -----------
*(10) C (vi) Amendment dated April 17, 1998, to Summit
Bancorp. 1993 Incentive Stock and
Option Plan.
*(10) D (iii) Compensation Committee Consent dated
February 18, 1998, (incorporated by reference
to Exhibit (10) C (v) on Form 10-K for the
year-ended December 31, 1997)
*(10) D (iv) Amendment dated April 17, 1998, to UJB Financial Corp.
1990 Stock Option Plan (incorporated by reference to
Exhibit (10)C(vi) on Form 10-Q for the quarter ended
March 31, 1998).
*(10) EE (i) Form of Termination Agreement between Summit
Bancorp. and each of T. Joseph Semrod, John
Collins, John R. Howell, John R. Haggerty,
Larry L. Betsinger, Alfred M. D'Augusta, John
R. Feeney, William J. Healy, Dorinda Jenkins-
Glover, Sabry J. Mackoul, Joseph A. Micali,
Jr., Richard F. Ober, Jr., Dennis Porterfield,
Alan N. Posencheg, Edmund C. Weiss, William J.
Wolverton.
*(10) FF (i) Summit Bancorp. Executive Severance Plan, as
amended through October 15, 1997.
*(10) LL (v) Compensation Committee Consent dated February
18, 1998, (incorporated by reference to Exhibit
(10) C (v) on Form 10-K for the year- ended
December 31, 1997)
*(10) LL (vi) Amendment dated April 17, 1998, to United
Jersey Banks 1987 Stock Option Plan (incorporated
by reference to Exhibit (10)C(vi) on Form
10-Q for the quarter ended March 31, 1998).
(27) Summit Bancorp. financial data schedule -
March 31, 1998
* Management contract or compensatory plan or
arrangement.
(b) Reports on Form 8-K
None.
24
<PAGE>
SIGNATURE
----------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
SUMMIT BANCORP.
--------------
Registrant
DATE: May 14, 1998 BY: /s/ WILLIAM J. HEALY
-------------------
William J. Healy
Executive Vice President and Comptroller
(Duly Authorized Officer and Chief Accounting Officer)
25
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
*(10) C (vi) Amendment dated April 17, 1998, to Summit
Bancorp. 1993 Incentive Stock and
Option Plan.
*(10) D (iii) Compensation Committee Consent dated
February 18, 1998, (incorporated by reference
to Exhibit (10) C (v) on Form 10-K for the
year-ended December 31, 1997)
*(10) D (iv) Amendment dated April 17, 1998, to UJB Financial
Corp. 1990 Stock Option Plan (incorporated by
reference to Exhibit (10)C(vi) on Form 10-Q for
the quarter ended March 31 1998).
*(10) EE (i) Form of Termination Agreement between Summit
Bancorp. and each of T. Joseph Semrod, John
Collins, John R. Howell, John R. Haggerty,
Larry L. Betsinger, Alfred M. D'Augusta, John
R. Feeney, William J. Healy, Dorinda Jenkins-
Glover, Sabry J. Mackoul, Joseph A. Micali,
Jr., Richard F. Ober, Jr., Dennis Porterfield,
Alan N. Posencheg, Edmund C. Weiss, William J.
Wolverton.
*(10) FF (i) Summit Bancorp. Executive Severance Plan, as
amended through October 15, 1997.
*(10) LL (v) Compensation Committee Consent dated February
18, 1998, (incorporated by reference to Exhibit
(10) C (v) on Form 10-K for the year- ended
December 31, 1997)
*(10) LL (vi) Amendment dated April 17, 1998, to United
Jersey Banks 1987 Stock Option Plan (incorporated
by reference to Exhibit (10)C(vi) on Form
10-Q for the quarter ended March 31, 1998).
(27 Summit Bancorp. financial data schedule -
March 31, 1998
* Management contract or compensatory plan or
arrangement.
26
Exhibit (10)C(vi)
SUMMIT BANCORP.
BOARD OF DIRECTORS MEETING
April 17, 1998
STOCK PLAN AMENDMENTS
WHEREAS, the Corporation's 1987 Stock Option Plan (the "1987 Plan"),
1990 Stock Option Plan (the "1990 Plan") and 1993 Incentive Stock and
Option Plan (the "1993 Plan" and together with the 1987 Plan and 1990
Plan, the "Stock Plans") contain substantially similar definitions
for "change in control".
WHEREAS, the Corporation has entered into Termination Agreements
effective as of October 15, 1997 with certain executive officers of the
Corporation (the "Termination Agreements) which contain a definition for
"change in control" that differs from those contained in the Stock Plans.
WHEREAS, the Board has determined that the definitions for "change in
control" contained in the Stock Plans should be revised to conform to the
definition for "change in control" contained in the Termination Agreements.
WHEREAS, for the purposes of administrative efficiency the Board has
determined that the amendment provisions contained in the 1987 Plan and 1990
Plan should be revised to conform to those contained in the 1993 Plan.
NOW THEREFORE BE IT, RESOLVED, that the definitions for "change in
control" set forth in the second paragraph of Article XIII of the
1987 Plan following the first sentence thereof, the second paragraph
of Article XIII of the 1990 Plan following the first sentence thereof
and Section 7 of the 1993 Plan are each amended in their entirety to
read as follows:
For all purposes under the Plan, a "change in control" of the Company shall
be deemed to occur (i) upon a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A or Item 1(a) of Form 8-K promulgated under the Exchange Act;
or (ii) if any "person" (including as such term is used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act, but excluding the Company and its
subsidiaries or an employee benefit plan of the Company (or any fiduciary
thereof) or a corporation controlled by the Company's shareholders in
substantially the same character and proportions as their ownership of
stock of the Company, or an underwriter temporarily holding securities
pursuant to an offering of such securities) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing
twenty-five percent (25%) or more of the combined voting power of the
Company's outstanding securities then entitled to vote for the election of
directors; or (iii) if during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least a majority thereof
(excluding, for purposes of this calculation, any director who dies during
such period); or (iv) if the Company shall meet the delisting criteria of
the New York Stock Exchange or any successor exchange in respect of the
number of publicly-held shares or the number of shareholders holding one
hundred (100) shares or more; or (v) if the Board of Directors shall
approve the sale of all or substantially all of the assets of the Company;
or (vi) if the Board of Directors shall approve any merger, consolidation,
issuance of securities or purchase of assets, the result of which would be
the occurrence of any event described in clause (i), (ii), (iii) or (iv)
above or that the shareholders of the Company receive or retain stock having
less than 65% combined voting power of the Company resulting from such
transaction in substantially the same proportions as their prior ownership
of the Company
FURTHER RESOLVED, that the second sentence of Article XIX of the 1987
Plan and the second sentence of Article XIX of the 1990 Plan are each
hereby amended to provide in their entity as follows:
"The Board of Directors or the Committee, as the case may be, shall be
authorized to amend (i) the Plan and (ii) the Options granted thereunder to
permit the Incentive Options granted thereunder to qualify as incentive
stock options within the meaning of Section 422A of the Code."
Exhibit (10) EE (i)
TERMINATION AGREEMENT
THIS AGREEMENT dated and entered into effective
and as of the 15th day of October, 1997, by and between
Summit Bancorp., a New Jersey corporation (the "Company"),
and ______________________________, residing at
______________________________, _____________, __________
___________ (the "Executive").
W I T N E S S E T H:
WHEREAS, should the Company receive a proposal
from a third person, whether solicited by the Company or
unsolicited, concerning a possible business combination with
or the acquisition of a substantial share of the equity or
voting securities of, the Company, the Board of Directors of
the Company (the "Board") has deemed it imperative that it
and the Company be able to rely on the Executive to
continue to serve in the Executive's position, and that the
Board and the Company be able to receive and rely upon the
Executive's advice, if they request it, as to the best
interests of the Company and its shareholders, without
concern that the Executive might be distracted by the
personal uncertainties and risks that such a proposal might
otherwise create; and
WHEREAS, the Company desires to enhance executive
morale and its ability to retain existing management; and
WHEREAS, the Company desires to reward the
Executive for the Executive's valuable, dedicated service
to the Company or one or more of its subsidiary
corporations (each, a "Subsidiary") should the Executive's
service be terminated under circumstances hereinafter
described; and
WHEREAS, the Board therefore considers it in the
best interests of the Company and its shareholders for the
Company to enter into Termination Agreements, in form
similar to this Agreement, with certain key executive
officers of the Company and one or more of its
Subsidiaries; and
WHEREAS, the Executive is presently the duly
elected and acting [insert title of executive] of
[insert Company or name of Subsidiary] and is a key
executive with whom the Company has been authorized by the
Board to enter into this Agreement;
NOW, THEREFORE, to assure the Company of the
Executive's continued dedication and the availability of
the Executive's advice and counsel in the event of any such
proposal, to induce the Executive to remain in the employ
of the Company or a Subsidiary, and to reward the Executive
for the Executive's valuable, dedicated service to the
Company or a Subsidiary should the Executive's service be
terminated under circumstances hereinafter described, and
for other good and valuable consideration, the receipt and
adequacy whereof each party acknowledges, the Company and
the Executive agree as follows:
1. OPERATION, EFFECTIVE DATE, AND TERM OF AGREEMENT.
(a) This Agreement is effective and binding on
both parties as of the date hereof. Notwithstanding its
present effectiveness, the provisions of paragraphs 3 and 4
of this Agreement shall become operative only when, as and
if there has been a "Change in Control" of the Company.
For purposes of this Agreement, a "Change in Control" of
the Company shall be deemed to occur (i) upon a Change in
Control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A
or Item 1a of Form 8-K promulgated under the Securities
Exchange Act of 1934 ("Exchange Act"); or (ii) if any
"person" (including as such term is used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act, but excluding
the Company and its Subsidiaries or an employee benefit
plan of the Company (or any fiduciary thereof) or a
corporation controlled by the Company's shareholders in
substantially the same character and proportions as their
ownership of stock of the Company, or an underwriter
temporarily holding securities pursuant to an offering of
such securities) is or becomes the beneficial owner,
directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the
combined voting power of the Company's outstanding
securities then entitled to vote for the election of
directors; or (iii) if during any period of two (2)
consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to
constitute at least a majority thereof (excluding, for
purposes of this calculation, any director who dies during
such period); or (iv) if the Company shall meet the
delisting criteria of the New York Stock Exchange or any
successor exchange in respect of the number of
publicly-held shares or the number of shareholders holding
one hundred (100) shares or more; or (v) if the Board shall
approve the sale of all or substantially all of the assets
of the Company; or (vi) if the Board shall approve any merger,
consolidation, issuance of securities or purchase of
assets, the result of which would be the occurrence of any
event described in clause (i), (ii), (iii) or (iv) above or
that the shareholders of the Company receive or retain
stock having less than 65% combined voting power of the
company resulting from such transaction in substantially
the same proportions as their prior ownership of the
Company.
(b) The Company shall be obligated to make the
payments referred to in paragraphs 3 and 4 hereof
following, and the provisions of paragraph 2 hereof shall
apply to, a Change in Control of the Company only if such
Change in Control shall have occurred prior to, or as a
result of efforts designed to attain such and known to the
parties hereto to have commenced prior to, the earliest to
occur of the Executive's death, Disability (as hereinafter
defined), Normal Retirement Date (as hereinafter defined)
or the fifth anniversary of the date hereof; provided,
however, that commencing on the fifth anniversary of the
date hereof and each annual anniversary of such day
thereafter (such day and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"),
the term of this Agreement shall automatically be extended
for one additional year unless at the Renewal Date the
Executive is no longer employed by the Company or a
Subsidiary or has reached the Executive's Normal Retirement
Date or at least twelve (12) months prior to the next
Renewal Date (and prior to a Change in Control of the
Company), the Company shall have given notice to the
Executive that it does not wish to extend the term of this
Agreement; provided, further, however, if a Change in
Control of the Company shall have occurred during the term
of this Agreement, this Agreement shall continue in effect
for a period of not less than thirty-six (36) months beyond
the month in which each such Change in Control of the
Company occurred, and thereafter solely to the extent
necessary for the Executive to enforce the obligations of
the Company or Subsidiary employing Executive incurred
prior thereto.
2. EMPLOYMENT OF EXECUTIVE.
Nothing herein shall affect any right which the
Executive or the Company or a Subsidiary may otherwise have
to terminate the Executive's employment by the Company or a
Subsidiary at any time in any lawful manner, subject always
to the Company's providing to the Executive the payments
and benefits specified in paragraphs 3 and 4 of this
Agreement to the extent hereinbelow provided.
In the event any person commences a tender or
exchange offer, circulates a proxy statement to the
Company's shareholders or takes other steps designed to
effect a Change in Control of the Company as defined in
paragraph 1 of this Agreement, the Executive agrees that
before the Executive's Normal Retirement Date the Executive
will not voluntarily leave the employ of the Company or a
Subsidiary, and will continue to perform the Executive's
regular duties and to render the services specified in the
recitals of this Agreement, until such person has abandoned
or terminated that person's efforts to effect a Change in
Control or until a Change in Control has occurred. Should
the Executive voluntarily terminate the Executive's
employment before any such effort to effect a Change in
Control of the Company has commenced, or after any such
effort has been abandoned or terminated without effecting a
Change in Control and no other such effort is then being
undertaken by any other person, this Agreement shall lapse
and be of no further force or effect.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) If any of the events described in paragraph 1
hereof constituting a Change in Control of the Company
shall have occurred, the Executive shall be entitled to the
benefits provided in paragraph 4 hereof upon the subsequent
termination of the Executive's employment within the
applicable period set forth in paragraph 4 hereof following
such Change in Control unless such termination is (i) due
to the Executive's death after the Window Period referred
to below or Retirement (as hereinafter defined)(other than
Early Retirement during the Window Period, as hereinafter
defined); or (ii) by the Company or a Subsidiary by reason
of the Executive's Disability or for Cause (as hereinafter
defined); or (iii) by the Executive other than for Good
Reason (as hereinafter defined).
(b) If following a Change in Control the
Executive's employment is terminated by reason of the
Executive's death after the Window Period, Retirement
(other than Early Retirement during the Window Period) or
Disability, the Executive shall be entitled to death,
retirement or disability benefits, as the case may be, from
the Company no less favorable than those benefits to which
the Executive would have been entitled had the death,
Retirement or termination for Disability occurred during
the six (6) month period prior to the Change in Control.
If prior to any such termination for Disability, the
Executive fails to perform the Executive's duties as a
result of incapacity due to physical or mental illness, the
Executive shall continue to receive the Executive's Base
Salary (as hereinafter defined), less any benefits as may
be available to the Executive under the Company's or
Subsidiary's disability plans, until the Executive's
employment is terminated for Disability.
(c) If the Executive's employment shall be
terminated by the Company or a Subsidiary for Cause or by
the Executive other than for Good Reason, the Company shall
pay (subject to any applicable payroll or other taxes
required to be withheld) to the Executive the Executive's
Base Salary through the Date of Termination (as hereinafter
defined), and the Company or a Subsidiary shall have no
further obligations to the Executive under this Agreement.
This paragraph 3(c) shall not apply to a termination of
the Executive's employment by the Company or a Subsidiary
by reason of Death, Retirement or Disability.
(d) For purposes of this Agreement:
(i) "Disability" shall mean the Executive's
incapacity to perform the Executive's duties with the
Company or Subsidiary on a full-time basis for one hundred
eighty (180) consecutive days due to physical or mental
illness such that the Executive shall have become qualified
to receive benefits under the Company's or a Subsidiary's
long-term disability plans applicable to the Executive.
Any question as to the existence of Disability upon which
the Executive and the Company or Subsidiary cannot agree
shall be determined by a qualified independent physician
selected by the Company or Subsidiary employing the
Executive or its insurers and acceptable to the Executive
or an adult member of the Executive's immediate family,
which acceptance shall not be unreasonably withheld. The
Executive shall be obligated to submit to such medical
examinations as may be necessary to determine whether
Disability exists.
(ii) "Retirement" shall mean that the Executive
shall have reached the normal retirement date provided in
the Company's or Subsidiary's defined benefit retirement
plans applicable to such Executive (the "Normal Retirement
Date") or that the Executive shall have taken early
retirement (as defined in such retirement plans) and shall
no longer be employed by the Company or a Subsidiary
("Early Retirement").
(iii) "Cause" shall mean:
(A) the willful commission by the Executive
of an illegal act or other act of willful misconduct that
causes or will probably cause substantial economic damage
to the Company or a Subsidiary or substantial injury to the
business reputation of the Company or a Subsidiary;
(B) the commission by the Executive of an
act of fraud in the performance of such Executive's duties
on behalf of the Company or a Subsidiary;
(C) the continuing willful failure of the
Executive to perform the duties of such Executive to the
Company or a Subsidiary (other than any such failure
resulting from the Executive's incapacity due to physical
or mental illness) after written notice thereof (specifying
the particulars thereof in reasonable detail) and a
reasonable opportunity to be heard and cure such failure
are given to the Executive by the Compensation Committee of
the Board; or
(D) the final order of a federal or state
regulatory agency or a court of competent jurisdiction
requiring the termination of the Executive's employment
with the Company or a Subsidiary.
(iv) "Good Reason" shall mean, excluding for this
purpose an isolated, insubstantial and inadvertent action
or failure to act, which is not in bad faith and which is
remedied by the Company or applicable Subsidiary promptly
after receipt of notice thereof given by the Executive:
(A) Without the Executive's express written
consent, the assignment by the Company or a Subsidiary to
the Executive of duties which (i) are materially different
or require travel significantly more time consuming or
extensive than the Executive's duties or business travel
obligations immediately prior to the Change in Control, or
(ii) result, without the Executive's express written
consent, in either a significant reduction in the
Executive's authority and responsibility as a senior
executive of the Company or Subsidiary employing the
Executive when compared to the highest level of authority
and responsibility assigned to the Executive at any time
during the six (6) month period prior to the Change in
Control, or, (iii) the removal of the Executive from, or
any failure to reappoint or reelect the Executive to, the
highest title held since the date six (6) months before the
Change in Control, except in connection with a termination
of the Executive's employment by the Company or a
Subsidiary for Cause (including during the pendency of any
Dispute), during any period of incapacity due to physical
or mental illness, or by reason of the Executive's death,
Disability or Retirement;
(B) A reduction by the Company or a
Subsidiary of the Executive's Base Salary, or the failure
to grant increases in the Executive's Base Salary on a
basis at least substantially comparable to those granted to
other executives of the Company or a Subsidiary of
comparable title, salary grade and performance ratings made
in good faith;
(C) Requiring the Executive to be based
anywhere other than an executive office of the Company or a
Subsidiary located in New Jersey or Pennsylvania within
twenty-five (25) geographic (not road) miles of the
location of the Executive's office prior to the Change in
Control, except for required travel on the Company's or a
Subsidiary's business to an extent substantially consistent
with the Executive's present business travel obligations,
without the Executive's express written consent, or in the
event of any relocation of the Executive with the
Executive's express written consent, the failure by the
Company or a Subsidiary to pay (or reimburse the Executive
for) all reasonable moving expenses by the Executive
relating to a change of principal residence in connection
with such relocation and to indemnify the Executive against
any loss realized in the sale of the Executive's principal
residence in connection with any such change of residence,
all to the effect that the Executive shall incur no loss on
an after tax basis;
(D) The failure by the Company or a
Subsidiary to continue to provide the Executive with
substantially the same welfare benefits and perquisites,
including participation on a comparable basis in the
Company's or a Subsidiary's retirement plans, Incentive
Bonus Plan (cash bonus plan), Savings Incentive Plan,
Incentive Stock and Option Plans, Executive Severance Plan
and other plans in which executives of the Company or a
Subsidiary of comparable title and salary grade
participate, as were provided to the Executive in the
twelve (12) months immediately prior to such Change in
Control of the Company, or with a package of welfare
benefits and perquisites, that, though one or more of such
benefits or perquisites may vary from those set forth
above, is substantially comparable in all material respects
to such welfare benefits and perquisites, taken as a whole;
(E) The failure of the Company to obtain the
express written assumption of and agreement to perform this
Agreement by any successor as contemplated in subparagraph
6(c) hereof;
(F) A termination of employment by the
Executive for any reason other than Disability or
Retirement on or after Executive's Normal Retirement Date
during the thirty (30) day period immediately following the
first anniversary of a Change in Control of the Company
defined in subparagraphs 1(a)(i), (ii) (iii) or (iv) or the
consummation of a transaction described in subparagraphs
1(a)(v) or (vi) (such thirty (30) day period being referred
to herein as the "Window Period").
(G) The giving by the Company or applicable
Subsidiary of a notice that participation by the Executive
in the Company's Executive Severance Plan or that the
Executive's Termination Agreement would not be renewed;
(H) The filing by the Company of a petition
for bankruptcy or similar insolvency of the Company or the
filing by any other party of such a petition which is not
dismissed within sixty (60) days; or
(I) Any failure by the Company or applicable
Subsidiary to comply with any provision of this Agreement
with respect to Executive.
(v) "Dispute" shall mean (A) in the case of
termination of employment of the Executive with the Company
or a Subsidiary by the Company or a Subsidiary for
Disability or Cause, that the Executive challenges the
existence of Disability or Cause and (B) in the case of
termination of employment of an Executive with the Company
or a Subsidiary by the Executive for Good Reason, that the
Company or a Subsidiary challenges the existence of Good
Reason.
(vi) "Base Salary" shall mean the amount
determined by multiplying the Executive's highest
semi-monthly or other periodic rate of base pay paid to the
Executive at any time during the period commencing twelve
(12) months prior to the Change of Control and ending on
the date of Notice of Termination by the number of pay
periods per year. The following items are not part of base
pay, as used herein: reimbursed expenses, any amount paid
on account of overtime or holiday work, payments on account
of insurance premiums or other contributions made to other
welfare or benefit plans, and any year-end or other
bonuses, commissions and gifts.
(vii) "Bonus Amount" means the highest annual
cash incentive bonus earned by the Executive from the
Company or a Subsidiary during the last three (3) completed
fiscal years of the Company immediately preceding the
Executive's Date of Termination (annualized in the event
the Executive was not employed by the Company or a
Subsidiary for the whole of any such fiscal year).
For purposes of this subparagraph (d), no act, or
failure to act, on the Executive's part shall be considered
"willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief
that the Executive's action or omission was in the best
interests of the Company or a Subsidiary.
(e) Any purported termination of employment by
the Company or a Subsidiary or by the Executive shall be
communicated by written Notice of Termination to the other
party. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice given by the Executive or
the Company or a Subsidiary, as the case may be, which
shall indicate the specific provision of this Agreement
applicable to such termination and shall set forth in
reasonable detail the facts and circumstances claimed to
provide a basis for determination of any payments under
this Agreement. The Executive shall not be entitled to
give a Notice of Termination that the Executive is
terminating the Executive's employment with the Company or
a Subsidiary for Good Reason more than six (6) months
following the occurrence of the event alleged to constitute
Good Reason.
(f) For purposes of this Agreement, except as
provided below, the "Date of Termination" shall mean the
date specified in a Notice of Termination, which shall be
not more than ninety (90) days after such Notice of
Termination is given. The Date of Termination of a
proposed Termination for Disability shall be at least
thirty (30) days after the giving of the Notice of
Termination.
If within thirty (30) days after any Notice of
Termination is given, the party who receives such Notice of
Termination notifies the other party that a Dispute exists,
the Date of Termination shall be the date on which the
Dispute is finally determined, either by mutual written
agreement of the parties, or by a final judgment, order or
decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been
perfected); provided that the Date of Termination shall be
extended by a notice of Dispute only if such notice is
given in good faith and the party giving such notice
pursues the resolution of such Dispute with reasonable
diligence and provided further that pending the resolution
of any such Dispute, the Company or a Subsidiary shall
continue to pay the Executive the same Base Salary and to
provide the Executive with the same or substantially
comparable employee benefits and perquisites, including
participation in the Company's or a Subsidiary's retirement
plans, Savings Incentive Plan, Incentive Bonus Plan,
Incentive Stock and Option Plans and Executive Severance
Plan that the Executive was paid and provided at any time
during the period commencing twelve (12) months prior to
the Change of Control and ending on the date of Notice of
Termination
Should it ultimately be determined that a challenged
termination by the Company or a Subsidiary by reason of the
Executive's Disability or for Cause was justified, or that
a challenged termination by the Executive for Good Reason
was not justified, then the Executive shall promptly pay
the Company or a Subsidiary (as the case may be) an amount
equal to all sums paid by the Company or a Subsidiary to
the Executive from the date of termination specified in the
Notice of Termination until final resolution of the Dispute
pursuant hereto, with interest at the base rate charged
from time to time by Summit Bank, New Jersey, all options,
rights and restricted stock granted to the Executive during
such period shall be canceled or returned to the Company or
Subsidiary, and, to the extent permitted by law, no service
as an employee shall be credited to the Executive for such
period for pension purposes. The Executive shall not be
obligated to pay to the Company or a Subsidiary the cost of
providing the Executive with employee benefits and
perquisites for such period (which cost for purposes of
health plans means the applicable premium under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended) unless the final judgment, order or decree of a
court resolving the Dispute determines that the Executive
acted in bad faith in giving a notice of Dispute.
Should it ultimately be determined that a challenged
termination by the Company or a Subsidiary by reason of the
Executive's Disability or for Cause was not justified, or
that a challenged termination by the Executive for Good
Reason was justified, then the Executive shall be entitled
to retain all sums paid to the Executive pending resolution
of the Dispute and shall be entitled to receive, in
addition, the payments and other benefits provided for in
paragraph 4 hereof.
4. PAYMENTS AND BENEFITS UPON TERMINATION.
If within three (3) years after a Change in
Control of the Company, there occurs a termination of
employment of the Executive with the Company or a
Subsidiary, other than a termination of employment which is
(i) due to the Executive's death after the Window Period or
Retirement other than Early Retirement during the Window
Period; or (ii) by the Company or a Subsidiary by reason of
the Executive's Disability or for Cause; or (iii) by the
Executive other than for Good Reason, then, and expressly
on the condition that the Company or Subsidiary employing
the Executive receive on the Date of Termination a Release,
Covenant Not to Sue, Non-Disclosure and Non-Solicitation
Agreement executed by the Executive (or the Executive's
legal representative, in the event of the death or
Disability of the Executive), in the form set forth in
Exhibit A to this Agreement (the "Release Agreement"), and
that such Release Agreement be effective:
(a) The Company or a Subsidiary will pay to the
Executive as compensation for services rendered, promptly
following the effective date of the Release Agreement, a
lump sum cash amount (subject to any applicable payroll or
other taxes required to be withheld computed at the rate
for supplemental payments) equal to (X) the sum of (i)
three (3) times the Executive's Base Salary, plus (ii)
three (3) times the Executive's Bonus Amount, less (Y) the
aggregate lump sum cash severance amount in respect of base
salary and bonus pursuant to subparagraphs 5(a)(i) and (v)
of the Company's Executive Severance Plan (or any successor
provision) payable to the Executive upon termination of
employment, delivery by the Executive of the Release,
Covenant Not to Sue, Non-Disclosure and Non-Solicitation
Agreement referred to therein, and the expiration of all
periods during which the Executive may revoke any release
of claims in such agreement.
(b) The Executive will be entitled to receive
"Special Retirement Benefits" as provided herein, so that
the total retirement benefits the Executive receives from
the Company will approximate the total retirement benefits
the Executive would have received under all defined benefit
retirement plans (which may include non-qualified,
supplemental and excess benefits retirement plans but shall
not include severance plans) and other employment contracts
of the Company and its Subsidiaries in which the Executive
participates were the Executive fully vested under such
retirement plans and entitled to all benefits payable under
such other employment contracts and had the Executive
continued in the employ of the Company or a Subsidiary for
one hundred twenty (120) months following the Date of
Termination or until the Executive's Normal Retirement
Date, if earlier (provided that such additional period
shall be inclusive of and shall not be in addition to any
period of service credited under any severance plan of the
Company or a Subsidiary). The benefits specified in this
subparagraph will include all ancillary benefits, such as
early retirement and survivor rights. The amount payable
to the Executive or the Executive's beneficiaries under
this subparagraph shall equal the excess of (1) the
retirement benefits that would be paid to the Executive or
the Executive's beneficiaries, under all retirement plans
and other employment contracts of the Company and its
Subsidiaries in which the Executive participates if (A) the
Executive were fully vested under such plans and entitled
to all benefits payable under such other employment
contracts, (B) the one hundred twenty (120) month period
(or the period until the Executive's Normal Retirement
Date, if less) following the Date of Termination were added
to the Executive's credited service under such plans and
contracts, (C) the terms of such plans and the policies and
procedures by which such plans were administered were those
most favorable to the Executive which were in effect at any
time during the period commencing twelve (12) months prior
to the Change of Control and ending on the date of Notice
of Termination, and (D) the Executive's highest average
annual base salary as defined under such retirement plans
and other employment contracts and any cash bonus which
under the terms of such plan or contract is used to
calculate benefits thereunder were calculated as if the
Executive had been employed by the Company or a Subsidiary
for a one hundred and twenty (120) month period (or the
period until the Executive's Normal Retirement Date, if
earlier) following the Date of Termination and had the
Executive's salary and cash bonus during such period been
equal to the Executive's Base Salary and Bonus Amount; over
(2) the retirement benefits that are payable to the
Executive or the Executive's beneficiaries under all
retirement plans and other employment contracts of the
Company and its Subsidiary in which the Executive
participates. These Special Retirement Benefits are
provided on an unfunded basis, are not intended to meet the
qualification requirements of Section 401 of the Internal
Revenue Code of 1986, as amended (the "Code"), and shall be
payable solely from the general assets of the Company.
These Special Retirement Benefits shall be payable at the
times and in the manner provided in the applicable
retirement plans and other employment contracts to which
they relate, or at the election of the Executive they shall
be paid in a lump sum actuarial equivalent utilizing the
actuarial assumptions of the defined benefit pension plan
applicable to the Executive.
(c)(i) As used herein, "Welfare Plans" shall
mean the medical, dental, vision, life, dependent life,
personal accident, employee banking services, and
educational matching gift plans of the Company or a
Subsidiary in which the Executive was participating at the
Date of Termination, and shall not include disability,
tuition reimbursement, medical and dependent care spending
plans, and business travel accident plans. The Executive
will remain an active participant in all Welfare Plans with
the Executive's Base Salary used as the basis for
determining the level of benefits, for a period of thirty-
six (36) months after the Date of Termination or until the
Participant's Normal Retirement Date, if earlier; provided,
however, that if employee contributions are generally
required by any such plan the Executive pays to the Company
or Subsidiary an amount equal to the required contribution,
if any, which such plans provide are to be made by
employees of status and seniority comparable to the status
and seniority of the Executive at the Date of Termination,
which amounts shall be paid by the Executive at the time or
times required by such plans for employee contributions,
and further provided, that the benefits provided shall be
reduced by any benefits provided under post-retirement
benefit programs (such as retiree life insurance) of the
Company or a Subsidiary. In the event applicable law or
the terms of any such Welfare Plan do not permit continued
participation by the Executive, then the Company or a
Subsidiary will arrange to provide the Executive with
benefits substantially similar to and no less favorable
than the benefits the Executive was entitled to receive
under such Welfare Plan at any time during the period
commencing twelve (12) months prior to the Change of
Control and ending on the date of Notice of Termination for
a period terminating thirty-six (36) months after the Date
of Termination; provided, however, that if employee
contributions are generally required by any such plan the
Executive pays to the Company or Subsidiary an amount equal
to the required contribution, if any, which such plans
provide are to be made by employees of status and seniority
comparable to the status and seniority of the Executive at
the Date of Termination, which amounts shall be paid by the
Executive at the time or times required by such plans for
employee contributions.
(ii) In lieu of continued participation in
the Company or a Subsidiary's disability plans, in the
event that the Executive becomes disabled during the period
of participation in Welfare Plans provided for herein, as
determined by approval for disability benefits under the
federal Social Security program, the Company or Subsidiary
shall make direct payments to the Executive commencing upon
termination of participation in the Welfare Plans hereunder
and under any Severance Plan and during the continuation of
such disability, as determined under the federal Social
Security program of the amounts and for the periods the
Executive would have received benefits under the Company or
Subsidiary's long-term disability plan (after taking into
account any offsets to income under such plan) as if the
Executive had qualified for long-term disability payments
under the Company or Subsidiary's long-term disability plan
immediately prior to the Date of Termination.
(iii) The continuation of welfare benefits
provided by this subparagraph 4(c) shall be inclusive of
any period of welfare benefits continuation provided by any
severance plan or other contract of the Company or a
Subsidiary, it being the intention of the parties that the
Executive shall receive continuation of welfare benefits
for the longest period provided by any severance plan or
contract and this Agreement, not the sum of the periods
provided in various severance plans and contracts and this
Agreement.
(iv) If any benefits provided hereunder are
provided outside of a Welfare Plan and would have been tax-
exempt or tax-favored to the Executive if provided under a
Welfare Plan, the Company or Subsidiary shall make
additional payments to the Executive in reimbursement of
taxes in order to put the Executive in the same after tax
position as if the benefits had been provided under a
Welfare Plan.
(v) In the event the Executive becomes
employed with another employer and becomes eligible to
receive welfare benefits under plans provided by such
employer, the welfare benefits provided hereunder shall be
secondary to those provided under such other plans.
(vi) After the Date of Termination the
Executive may also participate in those post-retirement
benefit programs under which the Executive meets the
qualifications, which qualifications may include
contributions by the Executive and appropriate elections at
the Date of Termination.
5. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) In the event that any payment or benefit
received or to be received by the Executive pursuant to the
terms of this Agreement (the "Contract Payments") or of any
other plan, arrangement or agreement of the Company (or any
affiliate) ("Other Payments" and, together with the
Contract Payments, the "Payments") would, in the opinion of
independent tax counsel selected by the Company and
reasonably acceptable to the Executive ("Tax Counsel"), be
subject to the excise tax (the "Excise Tax") imposed by
section 4999 of the Code (in whole or in part), as
determined as provided below, then, unless subparagraph
5(e) below is applicable, the Company shall pay to the
Executive, at the time specified in subparagraph 5(b)
hereof, an additional amount (the "Offset Payment") such
that the net amount retained by the Executive, after
deduction of the Excise Tax on the Payments and any
federal, state and local income tax and Excise Tax upon the
payment provided for by this subparagraph 5(a), and any
interest, penalties or additions to tax payable by the
Executive with respect thereto, shall be equal to the total
present value of the Contract Payments and Other Payments
at the time such Payments are to be made. For purposes of
determining whether any of the Payments will be subject to
the Excise Tax and the amounts of such Excise Tax, (1) the
total amount of the Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the
Code, and all "excess parachute payments" within the
meaning of section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax, except to the extent that, in
the opinion of Tax Counsel, a Payment (in whole or in part)
does not constitute a "parachute payment" within the
meaning of section 280G(b)(2) of the Code, or such "excess
parachute payments" (in whole or in part) are not subject
to the Excise Tax, (2) the amount of the Payments that
shall be treated as subject to the Excise Tax shall be
equal to the lesser of (A) the total amount of the Payments
or (B) the amount of "excess parachute payments" within the
meaning of section 280G(b)(1) of the Code (after applying
clause (1) hereof), and (3) the value of any noncash
benefits or any deferred payment or benefit shall be
determined by Tax Counsel in accordance with the principles
of sections 280G(d)(3) and (4) of the Code. For purposes
of determining the amount of the Offset Payment, the
Executive shall be deemed to pay federal income taxes at
the highest marginal rates of federal income taxation
applicable to individuals in the calendar year in which the
Offset Payment is to be made and state and local income
taxes at the highest marginal rates of taxation applicable
to individuals as are in effect in the state and locality
of the Executive's residence in the calendar year in which
the Offset Payment is to be made, net of the maximum
reduction in federal income taxes that can be obtained from
deduction of such state and local taxes, taking into
account any limitations applicable to individuals subject
to federal income tax at the highest marginal rates.
(b) The Offset Payments provided for in
subparagraph 5(a) hereof shall be made upon the earlier of
(i) the payment to the Executive of any Contract Payment or
Other Payment or (ii) the imposition upon the Executive or
payment by the Executive of any Excise Tax.
(c) If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding or the opinion of Tax Counsel that the Excise
Tax is less than the amount taken into account under
subparagraph 5(a) hereof, the Executive shall repay to the
Company within five days of the Executive's receipt of
notice of such final determination or opinion the portion
of the Offset Payment attributable to such reduction (plus
the portion of the Offset Payment attributable to the
Excise Tax and federal, state and local income tax imposed
on the Offset Payment being repaid by the Executive if such
repayment results in a reduction in Excise Tax or a
federal, state and local income tax deduction) plus any
interest received by the Executive from the taxing
authorities on the amount of such repayment. If it is
established pursuant to a final determination of a court or
an Internal Revenue Service proceeding or the opinion of
Tax Counsel that the Excise Tax exceeds the amount taken
into account hereunder (including by reason of any payment
the existence or amount of which cannot be determined at
the time of the Offset Payment), the Company shall make an
additional Offset Payment in respect of such excess within
five days of the Company's receipt of notice of such final
determination or opinion.
(d) In the event of any change in, or further
interpretation of, sections 280G or 4999 of the Code and
the regulations promulgated thereunder subsequent to a
Change in Control, the Executive shall be entitled, by
written notice to the Company, to request an opinion of Tax
Counsel regarding the application of such change to any of
the foregoing, and the Company shall use its best efforts
to cause such opinion to be rendered as promptly as
practicable. All fees and expenses of Tax Counsel incurred
in connection with this Agreement shall be borne by the
Company.
(e) If in the opinion of Tax Counsel the Company
would not be required to make an Offset Payment if the
Payments to the Executive that would be treated as
"parachute payments" under Section 280G of the Code were
reduced by up to $50,000, then the amounts payable to the
Executive under this Agreement shall be reduced (but not
below zero) to the maximum amount that could be paid to the
Executive without giving rise to the Excise Tax (the "Safe
Harbor Cap") and no Offset Payment shall be required to be
made to the Executive. The reduction of the amounts
payable under this Agreement, if applicable, shall be made
by reducing first the payments under paragraph 4(a) above,
unless an alternative method of reduction is elected by the
Executive. For purposes of reducing the Payments to the
Safe Harbor Cap, only amounts payable under this Agreement
(and no other Payments) shall be reduced. If the reduction
of the amounts payable hereunder by an amount not exceeding
$50,000 would not result in a reduction of the Payments to
the Safe Harbor Cap, no amounts payable under this
Agreement shall be reduced pursuant to this provision.
6. GENERAL.
(a) The Company or a Subsidiary shall pay
promptly as incurred the Executive's reasonable attorney's
fees and expenses incurred in good faith by the Executive
as a result of any dispute (regardless of the outcome
thereof) with the Company or a Subsidiary or any other
party regarding the validity or enforceability of, or
liability under, any provision of this Agreement or the act
of any party thereunder or any guarantee of performance
thereof and pay prejudgment interest on any delayed payment
to the Executive calculated at the Summit Bank, New Jersey
base rate of interest in effect from time to time from the
date that payment should have been made under this
Agreement; provided, however, that the Executive shall not
have been found by the court to have acted in bad faith.
Any finding of bad faith must be final with the time to
appeal therefrom having expired and no appeal having been
perfected.
(b) The Company's obligation to pay the Executive
(or the Executive's dependents, beneficiaries or estate)
the compensation and to make the arrangements provided
herein shall be absolute and unconditional and shall not be
affected by any circumstance, including, without
limitation, any setoff, counterclaim, recoupment, defense
or other right which the Company may have against the
Executive or anyone else. All amounts payable by the
Company hereunder shall be paid without notice or demand.
Except as expressly provided herein, the Company waives
all rights which it may now have or may hereafter have
conferred upon it, by statute or otherwise, to terminate,
cancel or rescind this Agreement in whole or in part.
Except as provided in paragraphs 3(f) and 5(c) herein,
each and every payment made hereunder by the Company shall
be final and the Company will not seek to recover for any
reason all or any part of such payment from the Executive
or any person entitled thereto. The Executive shall not be
required to mitigate the amount of any payment provided for
in this Agreement by seeking other employment or otherwise.
(c) The Company will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by written
agreement to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such
succession had taken place.
As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 6 or
which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(d) This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the
Executive should die while any amounts would still be
payable to the Executive hereunder if the Executive had
continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms
of this Agreement to the Executive's devisee, legatee or
other designee or, if there be no such designee, to the
Executive's estate. The obligations of the Executive
hereunder shall not be assignable by the Executive.
(e) The Executive's rights under this Agreement
shall be non-transferable except by will or by the laws of
descent and distribution and except insofar as applicable
law may otherwise require. Subject to the foregoing, no
right, benefit or interest hereunder shall be subject to
anticipation, alienation, sale, assignment, encumbrance,
charge, pledge, hypothecation or set-off in respect of any
claim, debt or obligation, or to execution, attachment,
levy or similar process, or assignment by operation of law,
and any attempt, voluntary or involuntary, to effect any
such action shall, to the full extent permitted by law, be
null, void and of no effect.
7. NOTICE.
For the purposes of this Agreement, notices and
all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered
mail, return receipt requested, postage prepaid, or if
delivered personally or by courier, receipt requested, or
by facsimile transmission, receipt acknowledged, addressed
as follows:
If to the Executive:
If to the Company:
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
Attention: Secretary to the Board
or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing, signed by the Executive
and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No assurances or
representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the law
of the State of New Jersey.
9. FINANCING.
All amounts due and benefits provided under this
Agreement shall constitute general obligations of the
Company or Subsidiary employing the Executive in accordance
with the terms of this Agreement. The Executive shall have
only an unsecured right to payment thereof out of the
general assets of the Company or such Subsidiary.
Notwithstanding the foregoing, the Company or such
Subsidiary may, by agreement with one or more trustees to
be selected by the Company or such Subsidiary, create a
trust on such terms as the Company or such Subsidiary shall
determine to make payments to the Executive in accordance
with the terms of this Agreement.
10. VALIDITY.
The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement,
which shall remain in full force and effect. Any provision
in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or
unenforceability without invalidating or affecting the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other
jurisdiction.
11. SUPERSEDEAS.
While this Agreement is in addition to and not in lieu
of any other plan providing for payments to or benefits for
the Executive or any agreement now existing or which
hereafter may be entered into between the Company and the
Executive, this Agreement supersedes all prior agreements
and understandings of the parties hereto with respect to
the Company's severance obligations to the Executive and
any other similar payments to the Executive due upon
termination of employment other than those agreements and
understandings contained in the Company's Executive
Severance Plan or specifically provided for in any
employment contract between the Company and the Executive.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date set forth above.
SUMMIT BANCORP. EXECUTIVE
By:
Name:
Title:
<PAGE>
EXHIBIT A
RELEASE, COVENANT NOT TO SUE,
NON-DISCLOSURE AND NON-SOLICITATION
AGREEMENT
This RELEASE, COVENANT NOT TO SUE, NON-DISCLOSURE AND NON-
SOLICITATION AGREEMENT (the "AGREEMENT") dated as of_________ among (1)
______________("Executive"), and (2) Summit Bancorp. and all parent and
subsidiary corporations, partnerships and other entities and affiliates
controlled by, controlling or under common control with Summit Bancorp.
(together with any predecessor and successor entities hereinafter being
collectively referred to as "SUB") sets forth the agreements of the parties
hereto with regard to the matters set forth herein:
1. Background. Executive is an Executive of SUB and a party to a
Participation Agreement last amended October 15, 1997 pursuant to which
Executive participates in SUB's Executive Severance Plan and a Termination
Agreement last amended October 15, 1997 (the Plan and these Agreements
together being collectively referred to as the "Contracts"). Any
capitalized terms used but not defined herein shall have the meaning set
forth in the applicable Contract.
a. A Change of Control [has/has NOT] occurred [on (date)]. If a
Change of Control has NOT occurred, Executive is not entitled to
any benefits under the Termination Agreement.
b. Executive's employment with SUB will or has terminated on
______________, which shall be the Date of Termination for purposes
of the Contracts, notwithstanding any failure to adhere to the
provisions for giving a Notice of Termination and the method of
determining the Date of Termination set forth in the Contracts, any
such failures being hereby waived by the parties.
c. This termination shall constitute a termination "[for cause/
disability /retirement /other than for cause /by mutual agreement]"
for purposes of any stock options and restricted stock which
Executive holds, and the Termination Date shall be the termination
date for the purposes of such options. Attached hereto as Appendix
A is a list of all outstanding SUB options held by Executive on the
date hereof.
2. Payment. Executive shall receive within two business days following the
EFFECTIVE DATE (as defined in paragraph 7 hereof) $_____________, the gross
amount due to Executive under the Contracts, which shall be paid to
Executive as $_________________ by check or deposit in Executive's bank
account, with the balance withheld in respect of federal, state and local
taxes and benefits contributions, which Executive acknowledges represents
all amounts currently due Executive under the Contracts. Executive
acknowledges and agrees that Executive is not entitled to any severance
payments under any other severance program of SUB, the Contracts
being intended to substitute for any such other severance program. SUB
continues to be obligated to provide certain welfare and pension benefits
and perquisites, as more fully set forth in the Contracts.
3. Restrictive Covenants. In consideration of the payments to Executive as
specified in paragraph 2 above, Executive agrees as follows:
a. Non-Solicitation of SUB Customers. For a period of two (2)
years from the date hereof, Executive will not actively solicit
or induce any person, corporation, or other entity that is a customer
of SUB to become a customer of any other person, firm, corporation, or
other entity which directly or indirectly competes with SUB, or approach
any such person, firm, corporation, or other entity for such purpose or
authorize or knowingly approve the taking of such actions by other persons,
without the prior written consent of SUB. This shall not be deemed to
prohibit (i) responding to requests for service initiated by customers of
SUB, (ii) solicitation of the public at large through television, radio,
newspapers, magazines, newsletters or Internet home pages, or (iii)
resolicitation by the competitor of persons, firms, corporations or other
entities who were customers of both SUB and the competitor on the date
hereof for those services provided to the customer by the competitor on
the date hereof.
b. Non-Solicitation of SUB Employees. For a period of five (5)
years from the date hereof, Executive will not solicit or induce
any person who is an employee of SUB or was such at any time within
three months prior to the date hereof to become employed by any
other person, firm or corporation or approach any such employee
for such purpose or authorize or knowingly approve the taking of
such actions by other persons, without the prior
written consent of SUB.
c. Non-Disclosure of Proprietary Information. Executive
acknowledges that during the course of Executive's employment
with SUB Executive received, obtained or became aware of or had
access to proprietary information, lists and records of customers
and trade secrets which are the property of SUB and which are not
known by competitors or generally by the public ("Proprietary
Information") and recognizes such Proprietary Information to be
valuable and unique assets of SUB. For purposes of this subparagraph:
(i) Proprietary Information is deemed to include, without limitation,
(A) marketing materials, marketing manuals, policy manuals, procedure
manuals, policy and procedure manuals, operating manuals and procedures
and product documentation, (B) all information about pricing, products,
procedures, practices, business methods, systems, plans, strategies or
personnel of SUB, (C) circumstances surrounding the relationships with,
knowledge of, or information about the customers, clients, and accounts
of SUB, including but not limited to the identity of current active
customers or prospects who have been contacted by SUB, the expiration
dates and other terms of loans or deposit or other banking relationships,
details or special product provisions or special combinations of products,
or special prices, and (D) all other information about SUB which has not
been disclosed in documents filed with the U.S. Securities and Exchange
Commission or otherwise publicly disseminated by SUB, whether or not
that information is recorded and notwithstanding the method of
recordation, if any; and (ii) Proprietary Information is deemed to
exclude all information legally in the public domain.
Executive agrees to hold the Proprietary Information in the strictest
confidence and agrees not to use or disclose any Proprietary Information,
directly or indirectly, at any time for any purpose, without the prior
written consent of SUB or to use for Executive's benefit or the benefit of
any person, firm, corporation or other entity (other than SUB), any
Proprietary Information, and to use Executive's best efforts to prevent
such prohibited use or disclosure by any other persons. Executive has
returned all Proprietary Information in Executive's possession or control to
SUB.
d. Cooperation, No Detrimental Actions. Executive will cooperate
with SUB in enforcing its claims against customers and former customers
of SUB, including appearing as a witness for SUB in court or administrative
proceedings, subject to reasonable reimbursement for Executive's time and
expenses. Executive will not take actions or make disparaging statements
which are detrimental to SUB or the RELEASEES, as defined in paragraph 5
below.
e. Remedies. Executive hereby acknowledges that Executive's duties and
responsibilities under this paragraph 3 are unique and extraordinary and
that irreparable injury may result to SUB in the event of a breach of the
terms and conditions of this paragraph 3, which may be difficult to
ascertain, and that the award of damages would not be adequate relief to SUB
and the RELEASEES. Executive therefore agrees that in the event of
Executive's breach of any of the terms or conditions of this paragraph 3,
SUB shall have the right, without posting any bond or other security, to
preliminary and permanent injunctive relief as well as damages and an equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other
rights or remedies in law or equity to which SUB may be entitled against
Executive. The covenants of Executive in paragraphs 3a, 3b, 3c and 3d of
this Agreement shall each be construed as an agreement independent of any
other provision in this AGREEMENT, and the existence of any claim or cause
of action of Executive against SUB, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by SUB of
paragraphs 3a, 3b, 3c and 3d.
f. Enforcement. If at the time of the enforcement of subparagraphs
3a, 3b, 3c, 3d or 3e above a court shall hold that the period or scope
of the provisions thereof are unreasonable under the circumstances then
existing, the parties hereby agree that the maximum period or scope under the
circumstances shall be substituted for the period or scope stated in those
subparagraphs.
4. Short-Swing Securities Profits. Executive acknowledges that Executive
will remain subject to the short-swing liability provisions of Section 16
of the federal Securities Exchange Act of 1934 for six months following
termination of employment.
5. Release. In consideration of the payments to Executive as specified in
paragraph 2 above, Executive grants SUB a RELEASE of only all claims, both
known and unknown, that Executive may have that relate to the termination
of Executive's employment (hereafter a "WRONGFUL TERMINATION CLAIM"). The
Executive and SUB agree that a WRONGFUL TERMINATION CLAIM, specifically and
without limitation, does not include claims:
a. for indemnification as a corporate agent of SUB against claims
by third parties;
b. under employee benefit plans, including supplemental employee
retirement plans, maintained by SUB or any of the predecessor organizations
thereof, including but not limited to rights under any workers compensation
program, Section 502(a) of the Employee Retirement Income Security Act, as
amended, 29 U.S.C. Par. 1001 et seq., and under the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA");
c. arising out of enforcement of the Contracts or this Agreement by
Executive; or
d. constituting cross-claims against SUB as a result of claims
brought by unaffiliated third parties against Executive based on
Executive's service as an executive of SUB.
The statutes which could form the basis for a WRONGFUL TERMINATION CLAIM
include, but are not limited to, Title VII of the Civil Rights Act of 1964,
as amended, 42 U.S.C. Par. 1971 et seq.; the Age Discrimination in Employment
Act of 1967, as amended, 29 U.S.C. Par. 621 et seq.; Section 510 of the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. Par.
1001 et seq.; the Americans With Disabilities Act, as amended, 42 U.S.C.
Par.12101 et seq.; the Older Workers Benefit Protection Act, as amended, 29
U.S.C. Par.621 et seq.; the Civil Rights Act of 1866, as amended, 42 U.S.C.
Par.1981 et seq.; the New Jersey Law Against Discrimination, as amended,
N.J.S.A. 10:5- 1 et seq.; the New Jersey Conscientious Employee Protection
Act, as amended, N.J.S.A. 34:19-1 et seq.; the New York Human Rights Law,
Executive Law Par.290 et seq.; the Pennsylvania Human Relations Act, as
amended, 43 P.S. Par.951 et seq.; and the Pennsylvania Whistleblower Law,
as amended, 43 P.S. Par.1421 et seq. The common law (non-statutory)
theories under which a WRONGFUL TERMINATION CLAIM could be made include,
but are not limited to, breach of an express employment contract, breach of
a contract implied from a personnel handbook or manual, or commission of a
civil wrong (known as a
"tort") resulting in Executive's termination, or for alleged violation of
the public policy of the United States or any state. Granting a RELEASE of
any WRONGFUL TERMINATION CLAIM pursuant to this AGREEMENT means that on
behalf of Executive and all who succeed to Executive's rights and
responsibilities, Executive releases and gives up only any and all
WRONGFUL TERMINATION CLAIMS that Executive may have against SUB, and any of
its subsidiaries, affiliates or divisions, and all of their directors,
officers, representatives, shareholders, agents, employees, and all who
succeed to their rights and responsibilities (collectively referred to
as "RELEASEES"). With respect to any charges filed concerning events or
actions relating to a WRONGFUL TERMINATION CLAIM that occurred on or before
the date of this AGREEMENT or Executive's Termination Date (whichever is
later), Executive waives and releases any right that Executive may have to
recover in any lawsuit or proceeding brought by Executive or by an
administrative agency on Executive's behalf against the RELEASEES.
6. Covenant Not to Sue. Executive covenants not to sue the RELEASEES over
any WRONGFUL TERMINATION CLAIM. Such a covenant not to sue the RELEASEES
means that Executive represents that Executive has not through the date of
execution of this Agreement filed a WRONGFUL TERMINATION CLAIM, charge or
lawsuit with any court or government agency against the RELEASEES, and that
Executive will not file such a lawsuit subsequent to execution of this
Agreement. Executive also waives any right to become, and promises not to
become, a member of any class in a case in which WRONGFUL TERMINATION CLAIMS
are asserted against any of the RELEASEES.
7. Review Period. Executive acknowledges that Executive has up to 21 days
to review this AGREEMENT, and was advised to review it with an attorney of
Executive's choice. Executive also acknowledges that Executive was further
advised that Executive has seven days after Executive signs this AGREEMENT
to revoke it by notifying SUB in writing, of such revocation as set forth
under Notices below. This AGREEMENT shall become effective on the tenth (10th)
day following its execution by Executive (the "EFFECTIVE DATE"), unless
revoked in accordance with the preceding sentence.
8. Revocation of Authority. Executive agrees and acknowledges that as of
the Termination Date Executive shall no longer be empowered to bind SUB
in any agreement, whether verbal or written, and that Executive shall have no
authority to execute any documents, deeds, leases, or other contracts on
behalf of SUB. To the extent not effected by termination of Executive under
the Contracts, Executive resigns from all offices and positions with SUB.
9. Successors and Assigns. All rights and duties of SUB under this
Agreement shall be binding on and inure to the benefit of SUB, its
successors and assigns. All rights of Executive hereunder shall be
binding upon and inure to the benefit of Executive's personal or legal
representatives.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally with receipt acknowledged or sent by registered or
certified mail, postage prepaid or by reputable national overnight delivery
service, to the addresses shown below, unless changed by notices given as
herein provided, except that notice of change of address only shall be
effective upon actual receipt:
If to SUB, to:
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
Attention: Executive Vice President of
Human Resources
With a copy to:
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
Attention: General Counsel
If to the Executive, to:
With a copy to:
11. Covenant Not to Challenge Enforceability. Both Executive and SUB
understand that this AGREEMENT is final and binding when executed by both
parties, subject to paragraph 7 above, and both agree not to thereafter
challenge its enforceability.
12. Applicable Law. This AGREEMENT shall be deemed to have been made within
the State of New Jersey, and it shall be interpreted, construed, and
enforced in accordance with the law of the State of New Jersey, and before
the Courts of the State of New Jersey.
13. Amendments, Modifications, Waivers. This AGREEMENT cannot be amended or
modified except by a written document signed by both SUB and Executive and
no provision can be waived except by a written document signed by the
waiving party.
14. By signing this AGREEMENT, Executive acknowledges:
a. EXECUTIVE HAS READ THIS AGREEMENT COMPLETELY.
b. EXECUTIVE HAS HAD AN OPPORTUNITY TO CONSIDER THE TERMS OF
THIS AGREEMENT.
c. EXECUTIVE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY
OF EXECUTIVE'S CHOOSING PRIOR TO EXECUTING THIS AGREEMENT.
d. EXECUTIVE KNOWS THAT EXECUTIVE MAY BE GIVING UP
IMPORTANT LEGAL RIGHTS BY SIGNING THIS AGREEMENT.
e. EXECUTIVE UNDERSTANDS AND MEANS EVERYTHING THAT
EXECUTIVE HAS SAID IN THIS AGREEMENT, AND EXECUTIVE AGREES TO ALL ITS
TERMS.
f. EXECUTIVE IS NOT RELYING ON SUB OR ANY REPRESENTATIVE OF
SUB TO EXPLAIN THIS AGREEMENT AND RELEASE TO EXECUTIVE. EXECUTIVE
HAS HAD AN OPPORTUNITY TO CONSULT AN ATTORNEY OR OTHER ADVISOR TO
EXPLAIN THIS AGREEMENT AND ITS CONSEQUENCES TO EXECUTIVE BEFORE
EXECUTIVE SIGNED IT, AND EXECUTIVE HAS AVAILED HIMSELF OR HERSELF OF
THIS OPPORTUNITY TO WHATEVER EXTENT EXECUTIVE DESIRED.
g. EXECUTIVE HAS SIGNED THIS AGREEMENT VOLUNTARILY AND
ENTIRELY OF EXECUTIVE'S OWN FREE WILL, WITHOUT ANY PRESSURE FROM
SUB OR ANY REPRESENTATIVE OF SUB, OR ANYONE ELSE.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
this Agreement has been executed as of the day and year first above written.
ATTEST: SUMMIT BANCORP.
__________________________________ By: ____________________________________
Secretary Executive Vice President
____________________________________
EXECUTIVE
____________________________________
(Social Security Number)
STATE OF NEW JERSEY:
COUNTY OF _______________________:
I certify that on this _______ day of ____________, _______ personally
came before me _______________(Executive), who, being duly sworn,
acknowledged under oath to my satisfaction that such person is named in
and personally executed the foregoing Receipt and Release as such person's
voluntary act and deed, for the purposes set forth therein.
IN WITNESS WHEREOF, I have set my hand this ____ day of _____________,
______.
By:___________________________________
Notary Public of the State of New Jersey
My Commission expires __________________
Exhibit (10) FF (i)
SUMMIT BANCORP.
EXECUTIVE SEVERANCE PLAN
(as Amended through October 15, 1997)
1. PURPOSES
The purposes of the Summit Bancorp. Executive Severance Plan
(the "Plan") are (a) to enhance executive morale, (b) to enhance
the ability of Summit Bancorp. (formerly known as UJB Financial
Corp. and United Jersey Banks) (the "Company") to retain
existing management and, if needed, to attract new executives,
(c) to reward eligible executives for their valuable, dedicated
service to the Company or one or more of its subsidiary
corporations (each, a "Subsidiary") with reasonable compensation
in the event of their termination of employment with the Company
or a Subsidiary, and (d) by providing generally applicable terms
of severance, to avoid the legal expense and reduce management
time associated with terminations.
2. EFFECTIVE DATE
This amendment and restatement of the Plan is effective as
of October 15, 1997 and will determine the eligibility for
benefits of all executives who are selected to participate in
the Plan (the "Participants") and who are terminated on or after
such date.
3. ADMINISTRATION
The Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors of the Company (the
"Board"), consisting of three or more directors having full
authority to act in the matter, all of whom are Disinterested
Persons. For purposes of this section, a Disinterested Person
shall mean a person who, at the time action is taken, and within
the one (1) year period prior thereto, is not, and has not been,
an employee of the Company.
The Committee shall have the power to interpret and construe
the Plan and other powers and duties as set forth in the Plan,
and any such interpretation and construction of any provisions
of this Plan shall be final. The Committee shall report any
actions taken to the Board at the next meeting of the Board
following such Committee action.
4. PARTICIPATION
The Committee shall from time to time select the
Participants from among those key executives who are determined
by the Committee to be rewarded for their valuable, dedicated
service to the Company or a Subsidiary. The Company shall
provide each Participant with a letter (a "Participation
Letter") evidencing the Participant's participation in the Plan
and setting forth the payments and benefits to which the
Participant may become entitled and containing such other terms,
provisions and conditions not inconsistent with the Plan,
including but not limited to provisions for the extension or
renewal of such agreement, as shall be determined by the
Committee.
Without limiting the foregoing, it is an express condition
to a Participant's entitlement to the payments of amounts and
the provision of benefits provided for by paragraph 5(a) hereof
that the Company receive on the Date of Termination (as
hereinafter defined) a Release, Covenant Not to Sue,
Non-Disclosure and Non- Solicitation Agreement executed by the
Participant, or the Participant's legal representative, in the
event of the death or Disability of the Participant, in the form
set forth in Exhibit A to this Plan ("Release Agreement"), and
that such Release Agreement be effective. The Participation
Letter shall clearly set forth this requirement and provide that
a Participant's participation is also conditioned on the
Participant's acknowledgment of the terms of the Participation
Letter by delivery to the Company of a counterpart thereof
signed by the Participant to evidence such acknowledgment.
Any purported termination of employment by the Company or a
Subsidiary or by the Participant shall be communicated by
written Notice of Termination to the other party. For purposes
of this Plan, a "Notice of Termination" shall mean a notice
given by a Participant or the Company or a Subsidiary, as the
case may be, which shall indicate the specific provision of this
Plan applicable to such termination and shall set forth in
reasonable detail the facts and circumstances claimed to provide
a basis for determination of any payments under this Plan. A
Participant shall not be entitled to give a Notice of
Termination that the Participant is terminating the
Participant's employment with the Company or a Subsidiary for
Good Reason (as hereinafter defined) more than six (6) months
following the occurrence of the event alleged to constitute Good
Reason.
A Participant shall cease to be a Participant in the Plan
upon the earliest to occur of the Date of Termination (as
hereinafter defined), the Participant's Retirement (as
hereinafter defined) and the date set forth in the Participation
Letter as provided therein.
For purposes of this Plan, except as provided below, the
"Date of Termination" shall mean the date specified in a Notice
of Termination, which shall be not more than ninety (90) days
after such Notice of Termination is given. The Date of
Termination of a proposed Termination for Disability (as
hereafter defined), shall be at least thirty (30) days after the
giving of the Notice of Termination.
If, within thirty (30) days after any Notice of Termination
is given, the party who receives such Notice of Termination
notifies the other party that a Dispute (as hereinafter defined)
exists, the Date of Termination shall be the date on which the
Dispute is finally determined, either by mutual written
agreement of the parties or by a final judgment, order or decree
of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected);
provided that the Date of Termination shall be extended by a
notice of Dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such
Dispute with reasonable diligence and provided further that
pending the resolution of any such Dispute, the Company or a
Subsidiary shall continue to pay the Participant the same Base
Salary (as hereinafter defined) and to provide the Participant
with the same or substantially comparable employee benefits and
perquisites, including participation in the Company's or a
Subsidiary's retirement plans and Savings Incentive Plan (but
excluding the Incentive Bonus Plan (cash bonus plan), Incentive
Stock and Option Plans, and other plans not available to
employees generally), that the Participant was paid and provided
in the twelve (12) months immediately prior to the giving of the
Notice of Termination. For purposes of this Plan, a Dispute
shall mean (i) in the case of termination of employment of a
Participant with the Company or a Subsidiary by the Company or a
Subsidiary for Disability or Cause (as hereinafter defined),
that the Participant challenges the existence of Disability or
Cause and (ii) in the case of termination of employment of a
Participant with the Company or a Subsidiary by the Participant
for Good Reason, that the Company or such Subsidiary challenges
the existence of Good Reason.
Should it ultimately be determined that a challenged
termination by the Company or a Subsidiary by reason of the
Participant's Disability or for Cause was justified, or that a
challenged termination by the Participant for Good Reason was
not justified, then (1) the Participant shall promptly pay to
the Company or a Subsidiary (as the case may be) an amount equal
to all sums paid by the Company or a Subsidiary to the
Participant from the date of termination specified in the Notice
of Termination until final resolution of the Dispute pursuant
hereto, with interest at the base rate charged from time to time
by Summit Bank, New Jersey, and (2) to the extent permitted by
law, no service as an employee shall be credited to the
Participant for such period for pension purposes. The
Participant shall not be obligated to repay to the Company or a
Subsidiary the cost of providing the Participant with employee
benefits and perquisites for such period (which cost for
purposes of health plans means the applicable premium under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended) unless the final judgment, order or decree of a court
resolving the Dispute determines that the Participant acted in
bad faith in giving a notice of Dispute.
Should it be ultimately determined that a challenged
termination by the Company or a Subsidiary by reason of the
Participant's Disability or for Cause was not justified, or that
a challenged termination by the Participant for Good Reason was
justified, then the Participant shall be entitled to retain all
sums paid to the Participant pending resolution of the Dispute
and shall be entitled to receive,in addition, the payments and
other benefits provided for in paragraph 5 hereof.
5. PAYMENTS AND BENEFITS UPON TERMINATION OF EMPLOYMENT
(a) In the event of a termination of employment of a
Participant with the Company or a Subsidiary, other than a
termination of employment which is (i) due to the Participant's
death or Retirement; or (ii) by the Company or a Subsidiary by
reason of the Participant's Disability or for Cause; or (iii) by
the Participant other than for Good Reason, the Participant
shall be entitled, subject to compliance with paragraph 7
hereof, as compensation for services rendered (subject to any
applicable payroll or other taxes required to be withheld),
until the expiration of the applicable period set forth below;
to:
(i) receive, promptly following the effective date of
the Release Agreement, a lump sum cash amount equal to two (2)
times the Participant's Base Salary;
(ii) receive, promptly following the effective date of
the Release Agreement, but only if the Participant participates
in the Savings Investment Plan (i.e., a 401(k) plan) immediately
preceding the Date of Termination, a lump sum cash amount equal
to the aggregate amount of matching contributions that the
Company or a Subsidiary would have been required to contribute
under such plan for the account of the Participant, assuming the
Participant had contributed the maximum amount allowable by law
to such plan during a period of twenty-four (24) months after
the Date of Termination.
(iii)(A) remain an active participant in all Welfare
Plans (as used herein, "Welfare Plans" shall mean the medical,
dental, vision, life, dependent life, personal accident,
employee banking services, and educational matching gift plans
of the Company or a Subsidiary in which the Participant was
participating at the Date of Termination, and shall not include
disability, tuition reimbursement, medical and dependent care
spending plans, and business travel accident plans) with the
Participant's Base Salary used as the basis for determining the
level of benefits, for a period of twenty-four (24) months after
the Date of Termination or until the Participant's Normal
Retirement Date (as hereinafter defined), if earlier; provided,
however, that if employee contributions are generally required
by any such plan the Participant pays to the Company or
Subsidiary an amount equal to the required contribution, if any,
which such plans provide are to be made by employees of status
and seniority comparable to the status and seniority of the
Participant at the Date of Termination, which amounts shall be
paid by the Participant at the time or times required by such
plans for employee contributions, and further provided, that the
benefits provided shall be reduced by any benefits provided
under post-retirement benefit programs (such as retiree life
insurance) of the Company or a Subsidiary. In the event
applicable law or the terms of any such Welfare Plan do not
permit continued participation by the Participant, then the
Company or a Subsidiary will arrange to provide the Participant
with benefits substantially similar to and no less favorable
than the benefits the Participant was entitled to receive under
such Welfare Plan immediately prior to the giving of the Notice
of Termination for a period terminating twenty-four (24) months
after the Date of Termination; provided, however, that if
employee contributions are generally required by any such plan
the Participant pays to the Company or Subsidiary an amount
equal to the required contribution, if any, which such plans
provide are to be made by employees of status and seniority
comparable to the status and seniority of the Participant at the
Date of Termination, which amounts shall be paid by the
Participant at the time or times required by such plans for
employee contributions.
(B) In lieu of continued participation in the
Company or a Subsidiary's disability plans, in the event that
the Participant becomes disabled during the period of
participation in Welfare Plans provided for herein, as
determined by approval for disability benefits under the federal
Social Security program, the Company or Subsidiary shall make
direct payments to the Participant commencing upon termination
of participation in the Welfare Plans hereunder and under any
Termination Agreement and during the continuation of such
disability, as determined under the federal Social Security
program of the amounts and for the periods the Participant would
have received benefits under the Company or Subsidiary's long-
term disability plan (after taking into account any offsets to
income under such plan) as if the Participant had qualified for
long-term disability payments under the Company or Subsidiary's
long- term disability plan immediately prior to the Date of
Termination.
(C) If any benefits provided hereunder are
provided outside of a Welfare Plan and would have been
tax-exempt or tax-favored to the Participant if provided under a
Welfare Plan, the Company or Subsidiary shall make additional
payments to the Participant in reimbursement of taxes in order
to put the Participant in the same after tax position as if the
benefits had been provided under a Welfare Plan.
(D) In the event the Participant becomes employed
with another employer and becomes eligible to receive welfare
benefits under plans provided by such employer, the welfare
benefits provided hereunder shall be secondary to those provided
under such other plans.
(E) After the Date of Termination the Participant
may also participate in those post-retirement benefit programs
under which the Participant meets the qualifications, which
qualifications may include contributions by the Participant and
appropriate elections at the Date of Termination;
(iv) receive, promptly following the effective date of
the Release Agreement, any awards previously made to the
Participant under the Company's Incentive Bonus Plan or
comparable plan, or any successor plan, for any year of
employment prior to the year which includes the Date of
Termination, payment of which had not been made prior to the
Date of Termination, and any accrued vacation or other paid time
off;
(v) receive, promptly following the effective date of
the Release Agreement, a lump sum cash amount equal to two (2)
times the Participant's Bonus Amount (as hereinafter defined);
(vi) receive "Special Retirement Benefits" as provided
herein, so that the total retirement benefits the Participant
receives from the Company will approximate the total retirement
benefits the Participant would have received under all defined
benefit retirement plans (which may include non-qualified,
supplemental and excess benefits retirement plans but shall not
include severance plans) and other employment contracts of the
Company and its Subsidiaries in which the Participant
participates were the Participant fully vested under such
retirement plans and entitled to all benefits payable under such
other employment contracts and had the Participant continued in
the employ of the Company or a Subsidiary for twenty-four (24)
months following the Date of Termination or until the
Participant's Normal Retirement Date, if earlier. The benefits
specified in this subparagraph will include all ancillary
benefits, such as early retirement and survivor rights. The
amount payable to the Participant or the Participant's
beneficiaries under this subparagraph shall equal the excess of
(1) the retirement benefits that would be paid to the
Participant or the Participant's beneficiaries, under all
retirement plans and other employment contracts of the Company
and its Subsidiaries in which the Participant participates if
(A) the Participant were fully vested under such plans and
entitled to all benefits payable under such other employment
contracts, (B) the twenty-four (24) month period (or the period
until the Participant's Normal Retirement Date, if less)
following the Date of Termination were added to the
Participant's credited service under such plans and contracts,
(C) the terms of such plans and the policies and procedures by
which such plans were administered were those most favorable to
the Participant which were in effect at any time during the
period commencing twelve (12) months prior to the Change of
Control and ending on the date of Notice of Termination, and (D)
the Participant's highest average annual base salary as defined
under such retirement plans and other employment contracts and
any cash bonus which under the terms of such plan or contract is
used to calculate benefits thereunder were calculated as if the
Participant had been employed by the Company or a Subsidiary for
a twenty-four (24) month period (or the period until the
Participant's Normal Retirement Date, if earlier) following the
Date of Termination and had the Participant's salary and cash
bonus during such period been equal to the Participant's Base
Salary and Bonus Amount; over (2) the retirement benefits that
are payable to the Participant or the Participant's
beneficiaries under all retirement plans and other employment
contracts of the Company and its Subsidiary in which the
Participant participates. These Special Retirement Benefits are
provided on an unfunded basis, are not intended to meet the
qualification requirements of Section 401 of the Internal
Revenue Code of 1986, as amended (the "Code"), and shall be
payable solely from the general assets of the Company. These
Special Retirement Benefits shall be payable at the times and in
the manner provided in the applicable retirement plans and other
employment contracts to which they relate, or at the election of
the Participant they shall be paid in a lump sum actuarial
equivalent utilizing the actuarial assumptions of the defined
benefit pension plan applicable to the Participant;
(vii) continued provision of perquisites, such as tax
preparation services, use of any automobile and club memberships
provided by the Company or a Subsidiary, in all cases for a
period of twelve (12) months following the Date of Termination,
provided that any personal expenses incurred by the Participant
in connection with such club memberships shall be paid by the
Participant. Club dues shall not be considered a personal
expense. The Participant may elect to have any or all of such
club memberships transferred to the Participant during or upon
the expiration of such twelve (12) month period, and the Company
or such Subsidiary shall assign and transfer to the Participant
without charge the rights to any amounts which would be
recoverable upon the termination of all such club memberships
which the Participant has elected to be transferred to the
Participant, such as a bond or shares; and
(viii) senior executive level outplacement services, at
least comparable to what is being provided to senior executives
on the date hereof, for a period of up to two years.
Notwithstanding the foregoing, if the Participant's Date of
Termination is within two (2) years of the normal retirement
date provided in the Company's or Subsidiary's defined benefit
retirement plan applicable to the Participant ( the "Normal
Retirement Date"), the sums provided for in subparagraphs
5(a)(i), (ii), and (v) shall be multiplied by a fraction
("Adjustment Fraction"), the numerator of which is equal to the
number of full months from the Date of Termination to the Normal
Retirement Date, and the denominator of which is equal to 24.
(b) In the event of termination of employment of a
Participant with the Company or a Subsidiary due to the
Participant's death, Retirement or Disability, the Participant
shall be entitled to a cash bonus for the portion of the fiscal
year in which death, Retirement or Disability occurs equal to a
pro rata (determined by dividing the number of days elapsed in
such fiscal year to such Death, Retirement or Disability by 365
or 366, as applicable) portion of the Bonus Amount, and such
death, retirement or disability benefits, as the case may be, as
are provided in the Company's or a Subsidiary's plans covering
such Participant on such events and the Company or a Subsidiary
shall have no further obligation to the Participant under this
Plan.
(c) In the event of termination of employment of a
Participant with the Company or a Subsidiary by the Company or a
Subsidiary for Cause or by the Participant other than for Good
Reason, the Participant shall be entitled (subject to any
applicable payroll or other taxes required to be withheld), to
receive the Participant's Base Salary through the Date of
Termination and the Company or a Subsidiary shall have no
further obligation to the Participant under this Plan. This
paragraph 5(c) shall not apply to a termination of employment by
reason of Death, Retirement or Disability.
6. DEFINITIONS
For purposes of the Plan:
(a) Base Salary shall mean the amount determined by
multiplying the Participant's highest semi-monthly or other
periodic rate of base pay paid to the Participant during the
twelve-month period immediately prior to the giving of the
Notice of Termination by the number of pay periods per year.
The following items are not part of base pay, as used herein:
reimbursed expenses, any amount paid on account of overtime or
holiday work, payments on account of insurance premiums or other
contributions made to other welfare or benefit plans, and any
year-end or other bonuses, commissions and gifts.
(b) Bonus Amount means the highest annual cash incentive
bonus earned by the Participant from the Company or a Subsidiary
during the last three (3) completed fiscal years of the Company
immediately preceding the Participant's Date of Termination
(annualized in the event the Participant was not employed by the
Company or a Subsidiary for the whole of any such fiscal year).
(c) Cause shall mean:
(i) the willful commission by the Participant of an
illegal act or other act of willful misconduct that causes or
will probably cause substantial economic damage to the Company
or a Subsidiary or substantial injury to the business reputation
of the Company or a Subsidiary;
(ii) the commission by the Participant of an act of
fraud in the performance of such Participant's duties on behalf
of the Company or a Subsidiary;
(iii) the continuing willful failure of the
Participant to perform the duties of such Participant to the
Company or a Subsidiary (other than any such failure resulting
from the Participant's incapacity due to physical or mental
illness) after written notice thereof (specifying the
particulars thereof in reasonable detail) and a reasonable
opportunity to be heard and cure such failure are given to the
Participant by the Committee; or
(iv) the final order of a federal or state regulatory
agency or a court of competent jurisdiction requiring the
termination of the Participant's employment with the Company or
a Subsidiary.
No act, or failure to act, on the Participant's part shall be
considered "willful" unless done or omitted to be done by the
Participant not in good faith and without reasonable belief that
the Participant's action or omission was in the best interests
of the Company or a Subsidiary.
(d) Good Reason shall mean, excluding for this purpose an
isolated insubstantial and inadvertent action or failure to act,
which is not in bad faith and which is remedied by the Company
or applicable Subsidiary promptly after receipt of notice
thereof given by the Participant:
(i) Without the Participant's express written consent,
the assignment by the Company or a Subsidiary to the Participant
of duties which are inconsistent with the Participant's then
title and salary grade or a significant reduction in the
Participant's authority and responsibility as a senior executive
or the removal of the Participant from, or any failure to
reappoint or reelect the Participant to, the title of Executive
Vice President or above, except in connection with a termination
of the Participant's employment by the Company or a Subsidiary
for Cause (including during the pendency of any Dispute), during
any period of incapacity due to physical or mental illness, or
by reason of the Participant's death, Disability or Retirement;
(ii) A reduction by the Company or a Subsidiary of the
Participant's Base Salary, or the failure to grant increases in
the Participant's Base Salary on a basis at least substantially
comparable to those granted to other executives of the Company
or a Subsidiary of comparable title, salary grade and
performance ratings made in good faith;
(iii) Requiring the Participant to be based anywhere
other than an executive office of the Company or a Subsidiary
located in New Jersey or Pennsylvania within sixty (60)
geographic (not road) miles of 301 Carnegie Center, West Windsor
Township, New Jersey, except for required travel on the
Company's or a Subsidiary's business to an extent substantially
consistent with the Participant's present business travel
obligations, without the Participant's express written consent;
or in the event of any relocation of the Participant with the
Participant's express written consent, the failure by the
Company or a Subsidiary to pay (or reimburse the Participant
for) all reasonable moving expenses by the Participant relating
to a change of principal residence in connection with such
relocation and to indemnify the Participant against any loss
realized in the sale of the Participant's principal residence in
connection with any such change of residence, all to the effect
that the Participant shall incur no loss on an after tax basis;
(iv) The failure by the Company or a Subsidiary to
continue to provide the Participant with substantially the same
welfare benefits and perquisites, including participation on a
comparable basis in the Company's or a Subsidiary's retirement
plans, Incentive Bonus Plan (cash bonus plan), Savings Incentive
Plan, Incentive Stock and Option Plans, and other plans in which
executives of the Company or a Subsidiary of comparable title
and salary grade participate, as are presently provided to the
Participant, or with a package of welfare benefits and
perquisites, that, though one or more of such benefits or
perquisites may vary from those set forth above, is
substantially comparable in all material respects to such
welfare benefits and perquisites, taken as a whole; provided,
however, that a reduction, amendment or elimination of any
benefit, perquisite or plan shall not be Good Reason if
applicable to all executives of comparable title, salary grade
and performance ratings made in good faith;
(v) The giving by the Company or applicable Subsidiary
of a notice that participation by the Participant in the
Company's Executive Severance Plan or the Participant's
Termination Agreement would not be renewed;
(vi) The filing by the Company of a petition for
bankruptcy or similar insolvency of the Company or the filing by
any other party of such a petition which is not dismissed within
sixty (60) days; or
(vii) Any failure by the Company or applicable
Subsidiary to comply with any of the provisions of this Plan
with respect to the Participant.
(e) Disability shall mean the Participant's incapacity to
perform Participant's duties with the Company or Subsidiary on a
full-time basis for one hundred eighty (180) consecutive days
due to physical or mental illness such that the Participant
shall have become qualified to receive benefits under the
Company's or a Subsidiary's long-term disability plans
applicable to the Participant. Any question as to the existence
of Disability upon which Participant and the Company or
Subsidiary cannot agree shall be determined by a qualified
independent physician selected by the Company or Subsidiary
employing the Participant or its insurers and acceptable to the
Participant or an adult member of the Participant's immediate
family, which acceptance shall not be unreasonably withheld.
Participant shall be obligated to submit to such medical
examinations as may be necessary to determine whether Disability
exists.
(f) Retirement shall mean that the Participant shall have
reached the Participant's Normal Retirement Date or that the
Participant shall have taken early retirement (as defined in the
Company's or Subsidiary's defined benefit retirement plan
applicable to the Participant) and shall no longer be employed
by the Company or a Subsidiary.
7. RELEASE OF CLAIMS BY PARTICIPANT
The payment of all amounts and provision of all benefits
provided for by paragraph 5(a) shall be conditioned on the
execution by the Participant and delivery to the Company or
applicable Subsidiary of a Release Agreement and the
effectiveness of such Release Agreement not later than
twenty-one (21) calendar days after the Date of Termination.
8. FINANCING
All amounts due and benefits provided under the Plan shall
constitute general obligations of the Company or Subsidiary
employing the Participant in accordance with the terms of the
Plan. A Participant shall have only an unsecured right to
payment thereof out of the general assets of the Company or such
Subsidiary. Notwithstanding the foregoing, the Company or such
Subsidiary may, by agreement with one or more trustees to be
selected by the Company or such Subsidiary, create a trust on
such terms as the Company or such Subsidiary shall determine to
make payments to Participants in accordance with the terms of
the Plan.
9. TERMINATION AND AMENDMENT OF THE PLAN
The Board shall have the power at any time, in its
discretion, to amend, in whole or in part, or terminate the
Plan, except that no amendment or termination shall impair or
abridge the obligations of the Company or a Subsidiary or the
rights of the Participants under any Participation Letters
previously delivered pursuant to the Plan. Any amendment or
termination of the Plan shall be adopted by the Board, by
resolution of the Board at a regular meeting of the Board or
special meeting called for such purpose or by unanimous written
consent.
10. BENEFIT OF PLAN
The Plan shall be binding upon and shall inure to the
benefit of the Participant, the Participant's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees, and the Company, its
Subsidiaries and their respective Successors. The term
"Successor" shall mean any person, firm, corporation or other
business entity that, at any time, whether by merger,
acquisition or otherwise, acquires all or substantially all of
the stock, assets or business of the Company or a Subsidiary, as
the case may be. If the Participant should die while any
amounts would still be payable to the Participant hereunder if
the Participant had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Participant's devisee, legatee or
other designee or, if there be no such designee, to the
Participant's estate.
11. NON-ASSIGNABILITY
Each Participant's rights under this Plan shall be non-
transferable except by will or by the laws of descent and
distribution and except insofar as applicable law may otherwise
require. Subject to the foregoing, no right, benefit or
interest hereunder shall be subject to anticipation, alienation,
sale, assignment, encumbrance, charge, pledge, hypothecation or
set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by
operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall, to the full extent permitted by
law, be null, void and of no effect.
12. EFFECT OF OTHER PLANS
Except as provided in paragraph 5, (a) nothing in the Plan
shall affect the level of benefits provided to or received by
any Participant (or the Participant's estate or beneficiaries)
as part of any employee benefit plan of the Company or a
Subsidiary and (b) the Plan shall not be construed to affect in
any way a Participant's rights and obligations under any other
plan maintained by the Company or a Subsidiary on behalf of
employees or any other contract between the Company or a
Subsidiary and the Participant.
The Participant shall not be required to mitigate the amount
of any payment under the Plan by seeking employment or
otherwise, and there shall be no right of setoff or
counterclaim, in respect of any claim, debt or obligation,
against any payments to the Participant, the Participant's
dependents, beneficiaries or estate provided for in the Plan.
13. TERMINATION OF EMPLOYMENT
Nothing in the Plan shall be deemed to entitle a Participant
to continued employment with the Company or a Subsidiary, and
the rights of the Company or a Subsidiary to terminate the
employment of a Participant in any lawful manner shall continue
as fully as though this Plan were not in effect.
14. SEVERABILITY
In the event that any provision or portion of the Plan shall
be determined to be invalid or unenforceable for any reason, the
remaining provisions and portions of the Plan shall be
unaffected thereby and shall remain in full force and effect to
the fullest extent permitted by law.
15. LEGAL COSTS
The Company or a Subsidiary shall pay promptly as incurred
the Participant's reasonable attorney's fees and expenses
incurred in good faith by the Participant as a result of any
dispute (regardless of the outcome thereof) with the Company or
a Subsidiary or any other party regarding the validity or
enforceability of, or liability under, any provision of this
Plan or the act of any party thereunder or any guarantee of
performance thereof and pay prejudgment interest on any delayed
payment to the Participant calculated at the Summit Bank, New
Jersey base rate of interest in effect from time to time from
the date that payment should have been made under the Plan;
provided, however, that the Participant shall not have been
found by the court to have acted in bad faith. Any finding of
bad faith must be final with the time to appeal therefrom having
expired and no appeal having been perfected.
16. GOVERNING LAW
All questions pertaining to the construction, regulation,
validity and effect of the provisions of the Plan shall be
determined in accordance with the laws of the State of New
Jersey.
17. OTHER IMPORTANT INFORMATION
1. Plan Sponsor:
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
Telephone No.: 609-987-3200
EIN: 22-1903313
(Plan I.D. #506)
2. Plan Administrator and Agent for Service of Legal Process:
Compensation Committee
The Compensation Committee is appointed by the Board of
Directors of Summit Bancorp.
Agent for Service of Legal Process:
General Counsel
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
3. Type of Plan - Executive Severance Plan
4. Type of Administration - Employer administered
5. Plan Trustee: Not Applicable
6. Plan Year
The Plan year is January 1-December 31
7. ERISA Rights
As a Participant in the Plan you are entitled to
certain rights and protections under the Employee Retirement
Income Security Act of 1974 (ERISA). ERISA provides that all
Plan Participants shall be entitled to:
Examine, without charge, at the Plan
Administrator's office and at other locations, all Plan
documents, including insurance contracts and copies of all
documents filed by the Plan with the U.S. Department of Labor,
such as annual reports and plan descriptions.
Obtain copies of all Plan documents and other Plan
information upon written request to the Plan Administrator. The
Administrator may make a reasonable charge for the copies.
In addition to creating rights for Plan
Participants, ERISA imposes duties upon the people who are
responsible for the operation of the employee benefit plan. The
people who operate your Plan, called "fiduciaries", have a legal
duty to do so prudently and in the interest of you and the other
Plan Participants and beneficiaries.
No one, including your employer or any other
person, may discriminate against you in any way to prevent you
from obtaining a severance benefit or exercising your rights
under ERISA.
If your claim for a severance benefit is denied in
whole or part you must receive a written explanation of the
reason for the denial. You have the right to have the Plan
Administrator review and reconsider your claim.
Under ERISA, there are steps you can take to
enforce the above rights:
For instance, if you request materials from
the Plan Administrator and do not receive them within
30 days, you may file suit in a federal court. In
such a case, the court may require the Plan
Administrator to provide the materials and pay you up
to $100 a day until you receive the materials, unless
the materials were not sent because of reasons beyond
the control of the Administrator.
If you have a claim for benefits which is
denied or ignored, in whole or in part, you may file
suit in a state or federal court.
If it should happen that plan fiduciaries
misuse the plan's money, or if you are discriminated
against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you
may file suit in federal court.
The court will decide who should pay court costs
and legal fees. If you are successful the court may order the
person you have sued to pay these costs and fees. If you lose,
the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous.
If you have any questions about your Plan, you
should contact the Plan Administrator. If you have any
questions about this statement or about your rights under ERISA,
you should contact the nearest area office of the U.S.
Labor-Management Services Administration, Department of Labor.
<PAGE>
EXHIBIT A
RELEASE, COVENANT NOT TO SUE,
NON-DISCLOSURE AND NON-SOLICITATION
AGREEMENT
This RELEASE, COVENANT NOT TO SUE, NON-DISCLOSURE AND NON-
SOLICITATION AGREEMENT (the "AGREEMENT") dated as of_________ among (1)
______________("Executive"), and (2) Summit Bancorp. and all parent and
subsidiary corporations, partnerships and other entities and affiliates
controlled by, controlling or under common control with Summit Bancorp.
(together with any predecessor and successor entities hereinafter being
collectively referred to as "SUB") sets forth the agreements of the parties
hereto with regard to the matters set forth herein:
1. Background. Executive is an Executive of SUB and a party to a
Participation Agreement last amended October 15, 1997 pursuant to which
Executive participates in SUB's Executive Severance Plan and a Termination
Agreement last amended October 15, 1997 (the Plan and these Agreements
together being collectively referred to as the "Contracts"). Any
capitalized terms used but not defined herein shall have the meaning set
forth in the applicable Contract.
a. A Change of Control [has/has NOT] occurred [on (date)]. If a
Change of Control has NOT occurred, Executive is not entitled to any
benefits under the Termination Agreement.
b. Executive's employment with SUB will or has terminated on
______________, which shall be the Date of Termination for purposes of the
Contracts, notwithstanding any failure to adhere to the provisions for
giving a Notice of Termination and the method of determining the Date of
Termination set forth in the Contracts, any such failures being hereby
waived by the parties.
c. This termination shall constitute a termination "[for cause/
disability /retirement /other than for cause /by mutual agreement]" for
purposes of any stock options and restricted stock which Executive holds,
and the Termination Date shall be the termination date for the purposes of
such options. Attached hereto as Appendix A is a list of all outstanding SUB
options held by Executive on the date hereof.
2. Payment. Executive shall receive within two business days following the
EFFECTIVE DATE (as defined in paragraph 7 hereof) $_____________, the gross
amount due to Executive under the Contracts, which shall be paid to
Executive as $_________________ by check or deposit in Executive's bank
account, with the balance withheld in respect of federal, state and local
taxes and benefits contributions, which Executive acknowledges represents
all amounts currently due Executive under the Contracts. Executive
acknowledges and agrees that Executive is not entitled to any severance
payments under any other severance program of SUB, the Contracts
being intended to substitute for any such other severance program. SUB
continues to be obligated to provide certain welfare and pension benefits
and perquisites, as more fully set forth in the Contracts.
3. Restrictive Covenants. In consideration of the payments to Executive as
specified in paragraph 2 above, Executive agrees as follows:
a. Non-Solicitation of SUB Customers. For a period of two (2)
years from the date hereof, Executive will not actively solicit or
induce any person, corporation, or other entity that is a customer
of SUB to become a customer of any other person, firm, corporation, or
other entity which directly or indirectly competes with SUB, or approach
any such person, firm, corporation, or other entity for such purpose or
authorize or knowingly approve the taking of such actions by other persons,
without the prior written consent of SUB. This shall not be deemed to
prohibit (i) responding to requests for service initiated by customers of
SUB, (ii) solicitation of the public at large through television, radio,
newspapers, magazines, newsletters or Internet home pages, or (iii)
resolicitation by the competitor of persons, firms, corporations or other
entities who were customers of both SUB and the competitor on the date
hereof for those services provided to the customer by the competitor on
the date hereof.
b. Non-Solicitation of SUB Employees. For a period of five (5)
years from the date hereof, Executive will not solicit or induce any person
who is an employee of SUB or was such at any time within three months prior
to the date hereof to become employed by any other person, firm or
corporation or approach any such employee for such purpose or authorize or
knowingly approve the taking of such actions by other persons, without the
prior written consent of SUB.
c. Non-Disclosure of Proprietary Information. Executive
acknowledges that during the course of Executive's employment with SUB
Executive received, obtained or became aware of or had access to proprietary
information, lists and records of customers and trade secrets which are the
property of SUB and which are not known by competitors or generally by the
public ("Proprietary Information") and recognizes such Proprietary
Information to be valuable and unique assets of SUB. For purposes of this
subparagraph: (i) Proprietary Information is deemed to include, without
limitation, (A) marketing materials, marketing manuals, policy manuals,
procedure manuals, policy and procedure manuals, operating manuals and
procedures and product documentation, (B) all information about pricing,
products, procedures, practices, business methods, systems, plans,
strategies or personnel of SUB, (C) circumstances surrounding the
relationships with, knowledge of, or information about the customers,
clients, and accounts of SUB, including but not limited to the identity of
current active customers or prospects who have been contacted by SUB, the
expiration dates and other terms of loans or deposit or other banking
relationships, details or special product provisions or special combinations
of products, or special prices, and (D) all other information about SUB
which has not been disclosed in documents filed with the U.S. Securities
and Exchange Commission or otherwise publicly disseminated by SUB, whether
or not that information is recorded and notwithstanding the method of
recordation, if any; and (ii) Proprietary Information is deemed to exclude
all information legally in the public domain.
Executive agrees to hold the Proprietary Information in the strictest
confidence and agrees not to use or disclose any Proprietary Information,
directly or indirectly, at any time for any purpose, without the prior
written consent of SUB or to use for Executive's benefit or the benefit of
any person, firm, corporation or other entity (other than SUB), any
Proprietary Information, and to use Executive's best efforts to prevent
such prohibited use or disclosure by any other persons. Executive has
returned all Proprietary Information in Executive's possession or control to
SUB.
d. Cooperation, No Detrimental Actions. Executive will cooperate
with SUB in enforcing its claims against customers and former customers of
SUB, including appearing as a witness for SUB in court or administrative
proceedings, subject to reasonable reimbursement for Executive's time and
expenses. Executive will not take actions or make disparaging statements
which are detrimental to SUB or the RELEASEES, as defined in paragraph 5
below.
e. Remedies. Executive hereby acknowledges that Executive's duties and
responsibilities under this paragraph 3 are unique and extraordinary and
that irreparable injury may result to SUB in the event of a breach of the
terms and conditions of this paragraph 3, which may be difficult to
ascertain, and that the award of damages would not be adequate relief to SUB
and the RELEASEES. Executive therefore agrees that in the event of
Executive's breach of any of the terms or conditions of this paragraph 3,
SUB shall have the right, without posting any bond or other security, to
preliminary and permanent injunctive relief as well as damages and an equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other
rights or remedies in law or equity to which SUB may be entitled against
Executive. The covenants of Executive in paragraphs 3a, 3b, 3c and 3d of
this Agreement shall each be construed as an agreement independent of any
other provision in this AGREEMENT, and the existence of any claim or cause
of action of Executive against SUB, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by SUB of
paragraphs 3a, 3b, 3c and 3d.
f. Enforcement. If at the time of the enforcement of subparagraphs
3a, 3b, 3c, 3d or 3e above a court shall hold that the period or scope
of the provisions thereof are unreasonable under the circumstances then
existing, the parties hereby agree that the maximum period or scope
under the circumstances shall be substituted for the period or scope
stated in those subparagraphs.
4. Short-Swing Securities Profits. Executive acknowledges that Executive
will remain subject to the short-swing liability provisions of Section 16
of the federal Securities Exchange Act of 1934 for six months following
termination of employment.
5. Release. In consideration of the payments to Executive as specified in
paragraph 2 above, Executive grants SUB a RELEASE of only all claims, both
known and unknown, that Executive may have that relate to the termination
of Executive's employment (hereafter a "WRONGFUL TERMINATION CLAIM"). The
Executive and SUB agree that a WRONGFUL TERMINATION CLAIM, specifically and
without limitation, does not include claims:
a. for indemnification as a corporate agent of SUB against claims
by third parties;
b. under employee benefit plans, including supplemental employee
retirement plans, maintained by SUB or any of the predecessor organizations
thereof, including but not limited to rights under any workers compensation
program, Section 502(a) of the Employee Retirement Income Security Act, as
amended, 29 U.S.C. Par. 1001 et seq., and under the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA");
c. arising out of enforcement of the Contracts or this Agreement by
Executive; or
d. constituting cross-claims against SUB as a result of claims
brought by unaffiliated third parties against Executive based on Executive's
service as an executive of SUB.
The statutes which could form the basis for a WRONGFUL TERMINATION CLAIM
include, but are not limited to, Title VII of the Civil Rights Act of 1964,
as amended, 42 U.S.C. Par. 1971 et seq.; the Age Discrimination in Employment
Act of 1967, as amended, 29 U.S.C. Par. 621 et seq.; Section 510 of the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.
Par. 1001 et seq.;
the Americans With Disabilities Act, as amended, 42 U.S.C. Par. 12101
et seq.; the Older Workers Benefit Protection Act, as amended, 29 U.S.C.
Par. 621 et seq.; the Civil Rights Act of 1866, as amended, 42 U.S.C. Par.
1981 et seq.;
the New Jersey Law Against Discrimination, as amended, N.J.S.A. 10:5- 1 et
seq.; the New Jersey Conscientious Employee Protection Act, as amended,
N.J.S.A. 34:19-1 et seq.; the New York Human Rights Law, Executive Law Par.
290 et seq.; the Pennsylvania Human Relations Act, as amended, 43 P.S. Par.
951 et seq.; and the Pennsylvania Whistleblower Law, as amended, 43 P.S.
Par. 1421 et seq.
The common law (non-statutory) theories under which a WRONGFUL
TERMINATION CLAIM could be made include, but are not limited to, breach of
an express employment contract, breach of a contract implied from a
personnel handbook or manual, or commission of a civil wrong (known as a
"tort") resulting in Executive's termination, or for alleged violation of
the public policy of the United States or any state. Granting a RELEASE of
any WRONGFUL TERMINATION CLAIM pursuant to this AGREEMENT means that on
behalf of Executive and all who succeed to Executive's rights and
responsibilities, Executive releases and gives up only any and all
WRONGFUL TERMINATION CLAIMS that Executive may have against SUB, and any of
its subsidiaries, affiliates or divisions, and all of their directors,
officers, representatives, shareholders, agents, employees, and all who
succeed to their rights and responsibilities (collectively referred to
as "RELEASEES"). With respect to any charges filed concerning events or
actions relating to a WRONGFUL TERMINATION CLAIM that occurred on or before
the date of this AGREEMENT or Executive's Termination Date (whichever is
later), Executive waives and releases any right that Executive may have to
recover in any lawsuit or proceeding brought by Executive or by an
administrative agency on Executive's behalf against the RELEASEES.
6. Covenant Not to Sue. Executive covenants not to sue the RELEASEES over
any WRONGFUL TERMINATION CLAIM. Such a covenant not to sue the RELEASEES
means that Executive represents that Executive has not through the date of
execution of this Agreement filed a WRONGFUL TERMINATION CLAIM, charge or
lawsuit with any court or government agency against the RELEASEES, and that
Executive will not file such a lawsuit subsequent to execution of this
Agreement. Executive also waives any right to become, and promises not to
become, a member of any class in a case in which WRONGFUL TERMINATION CLAIMS
are asserted against any of the RELEASEES.
7. Review Period. Executive acknowledges that Executive has up to 21 days
to review this AGREEMENT, and was advised to review it with an attorney of
Executive's choice. Executive also acknowledges that Executive was further
advised that Executive has seven days after Executive signs this AGREEMENT
to revoke it by notifying SUB in writing, of such revocation as set forth
under Notices below. This AGREEMENT shall become effective on the tenth
(10th) day following its execution by Executive (the "EFFECTIVE DATE"),
unless revoked in accordance with the preceding sentence.
8. Revocation of Authority. Executive agrees and acknowledges that as of
the Termination Date Executive shall no longer be empowered to bind SUB in
any agreement, whether verbal or written, and that Executive shall have no
authority to execute any documents, deeds, leases, or other contracts on
behalf of SUB. To the extent not effected by termination of Executive under
the Contracts, Executive resigns from all offices and positions with SUB.
9. Successors and Assigns. All rights and duties of SUB under this
Agreement shall be binding on and inure to the benefit of SUB, its
successors and assigns. All rights of Executive hereunder shall be binding
upon and inure to the benefit of Executive's personal or legal
representatives.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally with receipt acknowledged or sent by registered or
certified mail, postage prepaid or by reputable national overnight delivery
service, to the addresses shown below, unless changed by notices given as
herein provided, except that notice of change of address only shall be
effective upon actual receipt:
If to SUB, to:
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
Attention: Executive Vice President of
Human Resources
With a copy to:
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
Attention: General Counsel
If to the Executive, to:
With a copy to:
11. Covenant Not to Challenge Enforceability. Both Executive and SUB
understand that this AGREEMENT is final and binding when executed by both
parties, subject to paragraph 7 above, and both agree not to thereafter
challenge its enforceability.
12. Applicable Law. This AGREEMENT shall be deemed to have been made within
the State of New Jersey, and it shall be interpreted, construed, and
enforced in accordance with the law of the State of New Jersey, and before
the Courts of the State of New Jersey.
13. Amendments, Modifications, Waivers. This AGREEMENT cannot be amended or
modified except by a written document signed by both SUB and Executive and
no provision can be waived except by a written document signed by the
waiving party.
14. By signing this AGREEMENT, Executive acknowledges:
a. EXECUTIVE HAS READ THIS AGREEMENT COMPLETELY.
b. EXECUTIVE HAS HAD AN OPPORTUNITY TO CONSIDER THE TERMS OF
THIS AGREEMENT.
c. EXECUTIVE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY
OF EXECUTIVE'S CHOOSING PRIOR TO EXECUTING THIS AGREEMENT.
d. EXECUTIVE KNOWS THAT EXECUTIVE MAY BE GIVING UP
IMPORTANT LEGAL RIGHTS BY SIGNING THIS AGREEMENT.
e. EXECUTIVE UNDERSTANDS AND MEANS EVERYTHING THAT
EXECUTIVE HAS SAID IN THIS AGREEMENT, AND EXECUTIVE AGREES TO ALL ITS
TERMS.
f. EXECUTIVE IS NOT RELYING ON SUB OR ANY REPRESENTATIVE OF
SUB TO EXPLAIN THIS AGREEMENT AND RELEASE TO EXECUTIVE. EXECUTIVE
HAS HAD AN OPPORTUNITY TO CONSULT AN ATTORNEY OR OTHER ADVISOR TO
EXPLAIN THIS AGREEMENT AND ITS CONSEQUENCES TO EXECUTIVE BEFORE
EXECUTIVE SIGNED IT, AND EXECUTIVE HAS AVAILED HIMSELF OR HERSELF OF
THIS OPPORTUNITY TO WHATEVER EXTENT EXECUTIVE DESIRED.
g. EXECUTIVE HAS SIGNED THIS AGREEMENT VOLUNTARILY AND
ENTIRELY OF EXECUTIVE'S OWN FREE WILL, WITHOUT ANY PRESSURE FROM
SUB OR ANY REPRESENTATIVE OF SUB, OR ANYONE ELSE.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
this Agreement has been executed as of the day and year first above written.
ATTEST: SUMMIT BANCORP.
__________________________________ By: ____________________________________
Secretary Executive Vice President
____________________________________
EXECUTIVE
____________________________________
(Social Security Number)
STATE OF NEW JERSEY:
COUNTY OF _______________________:
I certify that on this _______ day of ____________, _______
personally came before me _______________(Executive), who, being
duly sworn, acknowledged under oath to my satisfaction that such person
is named in and personally executed the foregoing Receipt and Release as
such person's voluntary act and deed, for the purposes set forth therein.
IN WITNESS WHEREOF, I have set my hand this ____ day of _____________,
______.
By:___________________________________
Notary Public of the State of New Jersey
My Commission expires __________________
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MARCH 31, 1998 10-Q FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,242,254
<INT-BEARING-DEPOSITS> 6,852
<FED-FUNDS-SOLD> 101,096
<TRADING-ASSETS> 26,913
<INVESTMENTS-HELD-FOR-SALE> 5,375,723
<INVESTMENTS-CARRYING> 3,989,724
<INVESTMENTS-MARKET> 3,904,610
<LOANS> 19,271,927
<ALLOWANCE> 301,264
<TOTAL-ASSETS> 30,554,690
<DEPOSITS> 22,215,625
<SHORT-TERM> 3,629,944
<LIABILITIES-OTHER> 324,949
<LONG-TERM> 1,588,592
0
0
<COMMON> 142,022
<OTHER-SE> 2,559,345
<TOTAL-LIABILITIES-AND-EQUITY> 30,554,690
<INTEREST-LOAN> 380,309
<INTEREST-INVEST> 148,182
<INTEREST-OTHER> 838
<INTEREST-TOTAL> 529,329
<INTEREST-DEPOSIT> 169,125
<INTEREST-EXPENSE> 240,171
<INTEREST-INCOME-NET> 289,158
<LOAN-LOSSES> 15,000
<SECURITIES-GAINS> 1,426
<EXPENSE-OTHER> 190,044
<INCOME-PRETAX> 162,025
<INCOME-PRE-EXTRAORDINARY> 112,417
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,417
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0.63
<YIELD-ACTUAL> 4.18
<LOANS-NON> 75,883
<LOANS-PAST> 58,494
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 5,886
<ALLOWANCE-OPEN> 296,494
<CHARGE-OFFS> 18,933
<RECOVERIES> 8,703
<ALLOWANCE-CLOSE> 301,264
<ALLOWANCE-DOMESTIC> 125,607
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 175,657
</TABLE>
