As filed with the Securities and Exchange Commission on January 28, 2000
Registration No. 333- 93515
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------
Amendment No. 1 to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
SUMMIT BANCORP.
(Exact name of registrant as specified in its charter)
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New Jersey 6711 22-1903313
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
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301 CARNEGIE CENTER, P.O. BOX 2066
PRINCETON, NEW JERSEY 08543-2066
(609) 987-3200
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-------------------
RICHARD F. OBER, JR., ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
301 CARNEGIE CENTER, P.O. BOX 2066
PRINCETON, NEW JERSEY 08543-2066
(609) 987-3430
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
-------------------
COPY TO:
STANFORD N. GOLDMAN, JR., ESQ.
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY & POPEO, PC
ONE FINANCIAL CENTER
BOSTON, MA 02111
(617) 348-1708
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement and
upon consummation of the merger of NMBT Corp. into Registrant as described
herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box [ ].
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
The Boards of Directors of Summit Bancorp. and NMBT Corp. have agreed upon
a merger combining NMBT Corp. and Summit. We cannot complete the merger unless
the shareholders of NMBT Corp. approve it. A special meeting of shareholders of
NMBT Corp. will be held on March 7, 2000 at the Candlewood Valley Country Club,
401 Danbury Rd., New Milford, Connecticut at 10:00 a.m., local time, to vote on
this merger. Summit shareholders do not have to approve the merger.
Under the terms of the merger agreement, which was signed October 3, 1999,
NMBT Corp. will merge into Summit and Summit will be the surviving corporation.
If the merger is completed, the exchange ratio, or the number of shares of
Summit common stock, together with an equal number of preferred stock purchase
rights under Summit's shareholder rights plan, you will receive for each share
of NMBT Corp. common stock you own, will be determined based upon the average
closing price of a share of Summit common stock for a ten-day period ending on a
date to be determined, which is expected to be between five to ten business days
prior to the closing of the merger.The exchange ratio will not be lower than
.7024 and will not be higher than .9503, subject to any adjustments for stock
splits, stock dividends or similar transactions.
Cash will be paid instead of fractional shares.
On January 24, 2000, Summit common stock, which is traded on the New York
Stock Exchange under the symbol "SUB", closed at $27.88 per share and NMBT Corp.
common stock, which is traded on the Nasdaq Small Cap Market under the trading
symbol "NMBT", closed at $24.63 per share. If the merger is completed, NMBT
Corp. common stock will no longer be traded on Nasdaq.
This Proxy Statement-Prospectus gives you detailed information about the
merger we are proposing and it includes our merger agreement as an appendix. It
is a proxy statement that NMBT Corp. is using to solicit proxies for use at the
NMBT Corp. special shareholder meeting. It is also a prospectus relating to
Summit's issuance of up to 2,948,741 shares of Summit common stock, and the
associated preferred stock purchase rights, in connection with the merger.
This Proxy Statement-Prospectus also includes a formal Notice of Special
Meeting of Stockholders. A proxy card and return envelope are enclosed to
facilitate your voting if you can not attend the meeting. Also enclosed is NMBT
Corp.'s Annual Report to Shareholders for the year ended December 31, 1998 and
Quarterly Report on Form 10-Q for the quarter ended September 30, 1999. You are
encouraged to read these documents carefully before deciding how to vote your
shares. YOUR VOTE IS VERY IMPORTANT. Please mail your proxy promptly.
The NMBT Corp. Board of Directors unanimously recommends that you vote
"FOR" approval of the merger.
Information in this Proxy Statement - Prospectus about Summit has been
supplied by Summit and information about NMBT Corp. has been supplied by NMBT
Corp.
-----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROXY STATEMENT-PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OF SUMMIT BEING OFFERED THROUGH THIS DOCUMENT ARE NOT
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS
ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENTAL AGENCY.
This Proxy Statement-Prospectus is dated January 28, 2000 and was first
mailed to NMBT Corp. shareholders on or about February 3, 2000.
<PAGE>
NMBT CORP
55 MAIN STREET
NEW MILFORD, CT 06776-2400
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 7, 2000 AT 10:00 A.M.
TO OUR STOCKHOLDERS:
A Special Meeting of Stockholders of NMBT Corp. ("Special Meeting"), will
be held at 10:00 a.m., on March 7, 2000, at the Candlewood Valley Country Club,
401 Danbury Rd., New Milford, Connecticut, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated October 3, 1999 (the "Merger
Agreement") between NMBT Corp. and Summit Bancorp. and the
transactions contemplated thereby, including the merger of NMBT
Corp. into Summit (the "Merger"), pursuant to which shares of
NMBT Corp. common stock will be converted into the right to
receive whole shares of Summit common stock and cash in lieu of
fractional shares based upon an exchange ratio to be determined
after the Special Meeting, as more fully described in the
accompanying Proxy Statement-Prospectus;
2. A proposal to approve in advance of voting on the Merger
Agreement an adjournment of the Special Meeting in the event
there are not sufficient votes to constitute a quorum or to
approve the Merger Agreement at the scheduled time of the
Special Meeting, in order to permit further solicitation of
proxies; and
3. To transact such other business as may properly come before the
Special Meeting.
Stockholders of record as of the close of business on January 24, 2000 are
entitled to notice of and to vote at the Special Meeting. All stockholders are
cordially invited to attend the meeting.
THE NMBT CORP. BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE MERGER
AGREEMENT AND THE TRANSACTION CONTEMPLATED THEREBY AND "FOR" APPROVAL OF THE
PROPOSAL REGARDING ADJOURNMENT.
Holders of NMBT Corp. common stock will have the right to be paid the "fair
value" of all shares owned by the stockholder by exercising dissenters rights in
connection with the Merger. See "THE MERGER--Dissenters Rights" in, and Appendix
D to the accompanying Proxy Statement-Prospectus for a description of the
procedures which a stockholder must follow in order to exercise dissenters
rights.
By Order of the Board of Directors
NMBT CORP
/s/ Jay C. Lent
------------------------------
Jay C. Lent
Secretary
New Milford, Connecticut
January 28, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL THE PROXY CARD IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE
SPECIAL MEETING. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY
GIVEN MAY BE REVOKED BY YOU IN WRITING AT ANY TIME BEFORE THE PROXY IS VOTED AT
THE MEETING.
<PAGE>
FINDING IMPORTANT INFORMATION
This Proxy Statement-Prospectus contains important information about our
companies and the merger that you should read and consider carefully before you
vote your shares. The principal sections of this document are located at the
pages referenced in the Table of Contents below. Some of the documents related
to the merger are included as appendices to this document. In addition, we have
incorporated important business and financial information about our companies
from documents filed with the Securities and Exchange Commission that have not
been included in or delivered with this document.
Information that is incorporated by reference in this document is available
to you without charge upon your written or oral request. You can obtain
documents incorporated by reference in this document, excluding exhibits, by
requesting them in writing or by telephone from the appropriate company at the
following addresses:
SUMMIT BANCORP. NMBT Corp.
Attention: Corporate Secretary Attention: Corporate Secretary
301 Carnegie Center 55 Main Street
Princeton, NJ 08543 New Milford, CT 06776-2400
Telephone: (609) 987-3442 Telephone: (860) 355-1171
We will mail to you any incorporated documents you request by first class
mail, or another equally prompt means, within one business day after we receive
your request. In order to ensure timely delivery of these documents to you, we
must receive your request by February 29, 2000. See "WHERE YOU CAN FIND MORE
INFORMATION" on page 55 for more information about the documents incorporated by
reference in this Proxy Statement-Prospectus.
TABLE OF CONTENTS
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Page
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SUMMARY ..................................... 1
General ................................. 1
The Companies ........................... 1
NMBT Corp. Special Meeting .............. 2
The Merger .............................. 2
Recent Developments ..................... 5
Market Prices and Dividends ............. 6
CAUTIONARY STATEMENT REGARDING
FORWARD LOOKING INFORMATION ............... 8
INTRODUCTION ................................ 9
SPECIAL MEETING ............................. 9
Record Date ............................. 9
Quorum and Vote Required ................ 9
Voting of Proxies ....................... 9
How to Revoke a Proxy ................... 10
Solicitation of Proxies ................. 10
Stock Held by NMBT Directors and Others.. 11
SELECTED FINANCIAL DATA ..................... 12
COMPARATIVE AND PRO FORMA
PER SHARE FINANCIAL
INFORMATION .............................. 14
MARKET PRICE AND DIVIDEND
MATTERS ................................... 15
Market Price and Dividend History ....... 15
Coordination and Determination of
Dividends Under Merger Agreement ...... 15
Dividend Limitations .................... 16
PROPOSAL I-- APPROVAL OF THE
MERGER AGREEMENT .......................... 16
THE MERGER .................................. 16
General ................................. 16
Closing and Effective Time .............. 16
Exchange Ratio .......................... 17
Exchange of NMBT Certificates ........... 18
Conversion of NMBT Stock Options ........ 18
Recommendation of NMBT Board ............ 19
Background .............................. 19
Reasons for the Merger .................. 21
Opinion of NMBT's Financial Advisor ..... 22
Stock Option Agreement .................. 26
Regulatory Approvals .................... 28
Interests of Certain Persons
in the Merger ......................... 29
The Merger Agreement .................... 31
Dissenters Rights ....................... 34
New York Stock Exchange Listing ......... 35
Accounting Treatment .................... 35
Certain Federal Income Tax
Consequences of the Merger ............ 36
Resale of Summit Common ................. 37
Differences in Shareholders' Rights ..... 37
SUMMIT BANCORP .............................. 50
Description of Business ................. 50
Recent Developments ..................... 50
DESCRIPTION OF SUMMIT
CAPITAL STOCK ............................. 51
Common Stock ............................ 51
Shareholder Rights Plan ................. 51
</TABLE>
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Page
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NMBT Corp. ................................. 52
Description of Business ................ 52
Recent Developments .................... 52
DESCRIPTION OF NMBT CORP.
CAPITAL STOCK ............................ 53
General ................................ 53
PROPOSAL II-- ADJOURNMENT OF SPECIAL
MEETING .................................... 54
SHAREHOLDER PROPOSALS ...................... 54
OTHER MATTERS .............................. 54
LEGAL MATTERS .............................. 54
EXPERTS .................................... 55
WHERE YOU CAN FIND MORE
INFORMATION .............................. 55
MERGER AGREEMENT
(without exhibits) ....................... Appendix A
OPINION OF ADVEST, INC ..................... Appendix B
NMBT CORP STOCK OPTION
AGREEMENT ................................ Appendix C
DELAWARE STATUTORY
PROVISIONS RELATING TO
DISSENTERS RIGHTS ........................ Appendix D
</TABLE>
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT. IT DOES
NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. WE URGE YOU TO READ
CAREFULLY THIS ENTIRE DOCUMENT AND THE DOCUMENTS WE HAVE REFERRED YOU TO IN
ORDER TO FULLY UNDERSTAND THE MERGER. GENERALLY, EACH OF THE HEADINGS IN THIS
SUMMARY IS FOLLOWED BY A REFERENCE TO OTHER PAGES OF THIS DOCUMENT WHERE YOU CAN
READ MORE ABOUT THAT PARTICULAR TOPIC. SEE "WHERE YOU CAN FIND MORE INFORMATION"
TO FIND OUT HOW YOU CAN OBTAIN MORE INFORMATION ABOUT SUMMIT AND NMBT CORP. (P.
55).
GENERAL
We are proposing a merger of NMBT Corp. into Summit. In the merger, you
will receive shares of Summit common stock and associated preferred stock
purchase rights in exchange for each share of NMBT Corp. common stock you own,
plus cash instead of any fractional share. If the merger is completed, the
exchange ratio, or the number of shares of Summit common stock you will receive
for each share of NMBT Corp. common stock you own, will be determined by the
average closing price of a share of Summit common stock as reported on the New
York Stock Exchange composite tape for a ten-day trading period on which one
share of Summit common stock is traded, ending on a date to be determined, which
is expected to be between five to ten business days prior to the closing of the
merger. The exchange ratio will not be lower than .7024 and will not be higher
than .9503, subject to possible adjustments for stock splits, stock dividends
and similar transactions. Cash will be paid instead of fractional shares. Summit
common stock is listed on the New York Stock Exchange and NMBT Corp. common
stock is listed on the Nasdaq Small Cap Market. For information on the
historical market price of and dividends paid on Summit common stock and NMBT
Corp. common stock see page 15. We encourage you to obtain current quotations
for Summit and NMBT Corp. common stock. If the merger is completed, NMBT Corp.
common stock will no longer be listed on Nasdaq.
THE COMPANIES (SEE PAGES 50 AND 52)
SUMMIT BANCORP. Summit Bancorp. is a New Jersey corporation and a
registered bank holding company with principal executive offices located at 301
Carnegie Center, Princeton, New Jersey. Summit's subsidiary banks, Summit Bank
(New Jersey), Summit Bank (Pennsylvania), and Summit Bank (Connecticut),
operated 484 banking offices located in New Jersey, eastern Pennsylvania and
southwestern Connecticut as of September 30, 1999. Summit's telephone number is
(609) 987-3200. Summit's subsidiary banks are engaged in a general banking
business, offering the following services and products:
o demand and interest bearing deposit accounts;
o asset management accounts;
o business, real estate, personal and installment loans; and
o lease financing, fiduciary, investment management, investment
advisory, custodial, correspondent, capital markets, financial
advisory, money desk and treasury services.
In addition, Summit owns subsidiaries that are engaged in:
o securities products and services;
o life, health, property and casualty insurance products and services;
o venture capital investment;
o commercial finance lending, lease financing and asset based lending; o
letter of credit issuance;
o data processing; and
o reinsuring credit life and disability insurance policies related to
consumer loans made by the bank subsidiaries.
NMBT. NMBT Corp. was formed in 1997 and is the registered bank holding
company for NMBT, a wholly owned subsidiary. NMBT is a state-chartered bank and
trust company founded in 1975. NMBT is NMBT Corp.'s only subsidiary. NMBT
Corp.'s corporate headquarters is located at 55 Main Street, New Milford,
Connecticut and its phone number is 860-355-1171.
<PAGE>
NMBT operates primarily as a full-service community financial institution.
NMBT offers a wide range of consumer and commercial services to individuals and
businesses in western Connecticut. These services include checking accounts,
N.O.W. accounts, regular savings accounts, money market accounts, retirement
accounts, savings certificates, commercial demand deposit accounts and cash
management. NMBT's lending activities include residential and commercial real
estate loans, home equity loans and lines of credit, consumer loans, secured and
unsecured commercial loans, letters of credit and both consumer and commercial
credit card services.
NMBT CORP. SPECIAL MEETING (SEE PAGE 9)
TIME, DATE, PLACE AND PURPOSE. (SEE PAGE 9) NMBT corp. will hold a special
meeting of its shareholders on March 7, 2000 at 10:00 a.m., local time, at the
Candlewood Valley Country Club, 401 Danbury Rd., New Milford, Connecticut 06776.
At the meeting you will vote on (1) the merger and (2) adjournment of the
special meeting, if necessary to obtain a quorum or to obtain additional votes
in favor of the merger.
RECORD DATE, QUORUM AND VOTE REQUIRED. (SEE PAGE 9) You can vote at the
NMBT Corp. special meeting if you owned shares of NMBT Corp. common stock at the
close of business on January 24, 2000. A majority of the outstanding shares of
NMBT Corp. common stock on January 24, 2000 must be present, in person or by
proxy, to constitute a quorum at the special meeting. The merger will be
approved if a majority of the shares of NMBT Corp. common stock outstanding on
January 24, 2000 is voted for approval of the merger. If a quorum is not present
or there are not sufficient votes to approve the merger, the special meeting may
be adjourned in order to permit further solicitation of proxies by NMBT Corp.'s
board of directors if a majority of the shares of NMBT Corp. common stock voted
at the meeting is voted for adjournment.
The directors and executive officers of NMBT Corp. have agreed in writing
to vote their shares of NMBT Corp. common stock in favor of the merger. If these
executive officers and directors exercised all presently exercisable options to
purchase NMBT Corp. common stock, they would own approximately 21.65% of the
outstanding shares of NMBT Corp. common stock.
THE MERGER (SEE PAGE 16)
ANTICIPATED EFFECTIVE DATE OF THE MERGER. (SEE PAGE 17) If the merger is
approved by NMBT Corp.'s stockholders and all the conditions to closing are
satisfied or waived:
o we will file certificates of merger with the State of New Jersey and
State of Delaware which will specify the date and time at which the
merger will become effective; and
o we currently expect that the merger will become effective during the
first calendar quarter of 2000. A copy of the merger agreement is
attached as Appendix A to this Proxy Statement-Prospectus.
EXCHANGE RATIO. (SEE PAGE 17) The number of shares of Summit common stock
that you will receive in exchange for your NMBT Corp. common stock has not been
fixed and under the merger agreement cannot be fixed until after the NMBT Corp.
shareholders have approved the merger agreement.
The exchange ratio will be determined by the "Summit Price". The "Summit
Price" is defined in the merger agreement as the average of the closing prices
of a share of Summit common stock on the New York Stock Exchange Composite
Transactions List for the ten consecutive full trading days on which one share
of Summit common stock is traded ending on the "Determination Date". The merger
agreement provides for an automatic Determination Date seven business days prior
to a closing date that will be set for 45 business days after all required
shareholder and government approvals are received and any legal challenges to
the merger are resolved, but also permits Summit to select an earlier closing
date and to designate a "Determination Date" in the notice of the closing date
sent to NMBT Corp. by Summit, which notice, unless otherwise agreed to by Summit
and NMBT Corp., is required to be sent at least 5 business days prior to the
date designated for closing. The Determination Date may not be more than 10
business days prior to the closing date. Accordingly, if Summit decides to set a
closing date earlier than the 45th business
2
<PAGE>
day after all required approvals have been received, Summit can select a
Determination Date which is between 5 to 10 business days prior to the closing
date selected by Summit. In this event, Summit may consider, among other
factors, the trading prices of Summit common stock in selecting the
Determination Date. The number of shares of Summit common stock that you receive
in exchange for your NMBT Corp. common stock will be based upon the following
formula:
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"SUMMIT PRICE" AS OF
THE "DETERMINATION DATE" EXCHANGE RATIO
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Greater than $37.01563 .................................................. 0.7024
Equal to or less than $37.01563 and equal to or greater than $27.35938 .. $26.00 divided by the Summit Price
Less than $27.35938 ..................................................... 0.9503
</TABLE>
You will be required to vote on the merger agreement prior to knowing the
exchange ratio. In addition, it is possible that by virtue of Summit's right to
select the Determination Date, Summit could choose a pricing period after the
date of the NMBT Corp. special meeting, which includes the NMBT Corp. special
meeting date, or which includes up to 5 days prior to the NMBT Corp. special
meeting.
CONVERSION OF NMBT CORP. STOCK OPTIONS. (SEE PAGE 19) In the merger, each
outstanding option to buy NMBT Corp. common stock under NMBT Corp.'s stock
option plans will automatically be converted into an option to purchase Summit
common stock. The exercise price per share and the number of shares of Summit
common stock subject to each converted option will be determined as provided in
the merger agreement based on the exchange ratio. In addition, for 30 days after
the merger becomes effective, holders of NMBT Corp. stock options will have the
right to receive, instead of exercising their options, a cash payment equal to
the difference between the exercise price of the option and the Summit Price.
RECOMMENDATION AND REASONS OF NMBT CORP. BOARD OF DIRECTORS. (SEE PAGES 19
AND 21) NMBT Corp.'s board of directors unanimously recommends that NMBT Corp.
shareholders vote to approve the merger and the proposal to adjourn the meeting
if necessary.
NMBT Corp.'s board of directors has concluded that the proposed merger is
in the best interest of NMBT Corp., its shareholders, employees and customers,
and the communities which NMBT serves. The NMBT Corp. board considered a number
of important factors, some of which are listed below:
o the economic condition of NMBT Corp. and its current and prospective
operating environment;
o the economic condition of Summit and its current and prospective
operating environment; and
o the premium offered by Summit for NMBT Corp.'s common stock in terms
of market price and other recognized financial ratios.
OPINION OF NMBT CORP.'S FINANCIAL ADVISOR. (SEE PAGE 22) In deciding to
approve the merger agreement, NMBT Corp.'s board of directors engaged Advest,
Inc. to act as financial advisor to NMBT Corp. and to give its opinion to the
NMBT Corp. board as to whether the exchange ratio is fair, from a financial
point of view, to the shareholders of NMBT Corp.
Advest has delivered to the NMBT Corp.'s board opinions dated as of October
2, 1999 and as of the date of this Proxy Statement-Prospectus stating that, as
of these dates, and subject to the limitations described in the opinions, the
exchange ratio is fair, from a financial point of view, to NMBT Corp.'s
shareholders. If the merger is completed, Advest will be paid a fee equal to
.80% of the total consideration payable by Summit in the merger for its advice
and the fairness opinion. We have attached Advest's opinion as of the date
hereof as Appendix B to this Proxy Statement-Prospectus. You should read it in
its entirety.
DISSENTERS RIGHTS. (SEE PAGE 34) Under Delaware law, which governs the
rights of NMBT Corp. shareholders, you will have the right to dissent from the
merger, in which event you will be entitled to receive the "fair value" of your
shares of NMBT Corp. common stock by complying with the specific dissenters
rights procedures under Delaware law which are described in this Proxy
Statement-Prospectus. The dissenters rights provisions of the Delaware General
Corporation Law are attached as Appendix D to this Proxy Statement-Prospectus.
3
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES. (SEE PAGE 36) In general, you will not
recognize any gain or loss for federal income tax purposes as a result of the
exchange of shares of NMBT Corp. for shares of Summit in the merger, except for
gain or loss arising from cash received instead of fractional shares or if you
exercise dissenters rights. We have conditioned the merger on our receipt of a
legal opinion that the federal income tax treatment for NMBT Corp. shareholders
who exchange their shares of NMBT Corp. common stock for Summit common stock
will be as we have discussed in this document.
ACCOUNTING TREATMENT. (SEE PAGE 35) Summit expects to account for the
merger under the purchase method of accounting. Under the purchase method of
accounting, the amount by which the purchase price paid by Summit exceeds the
fair value of the net assets acquired will be treated as goodwill. Intangible
assets, including goodwill, recorded in the transaction will be amortized over a
period not to exceed 20 years.
REGULATORY APPROVALS. (SEE PAGE 27) The Board of Governors of the Federal
Reserve System and the Commissioner of Banking of the State of Connecticut must
approve the acquisition of NMBT Corp. by Summit. The Federal Reserve Board
approved the transaction on December 30, 1999 and the Connecticut Commisioner of
Banking approved the transaction on January 24, 2000.
CONDITIONS TO THE MERGER. (SEE PAGE 32) The completion of the merger
depends on a number of conditions being satisfied or waived. Some of these
conditions include:
o approval of the merger by NMBT Corp.'s shareholders; and
o approval of the merger by the regulatory authorities mentioned in the
preceding paragraph without burdensome demands, and the expiration of
any waiting period following such approval.
There are other normal and customary conditions to completion of the
merger, including receipt of legal opinions, the New York Stock Exchange's
indication that the shares of Summit common stock to be issued in the merger
will be listed on the Exchange, and the receipt of the opinion of Thompson
Coburn, special tax counsel to Summit, as to certain federal income tax
consequences of the merger.
The merger agreement provides that conditions to the merger, other than
NMBT Corp. shareholder approval and receipt of required regulatory approvals,
may be waived by the company for whose benefit the condition was included.
TERMINATION OF THE MERGER AGREEMENT. (SEE PAGE 32) The companies may agree
to terminate the merger agreement at any time without completing the merger.
Generally, either Summit or NMBT Corp., without the consent of the other, may
terminate the merger agreement if any of the following occurs:
o the shareholders of NMBT Corp. do not approve the merger;
o the other party materially breaches a warranty, representation or
covenant and does not cure the breach or the breach cannot be cured
within 30 days of notice; or
o the merger is not completed by the later of July 1, 2000 or 45
business days after the last required approval or resolution of any
legal challenges to the merger, if the approval or resolution occurred
prior to August 1, 2000.
Generally, the company seeking to terminate cannot itself be in breach of
the merger agreement so as to allow the other party to terminate.
The merger agreement provides that NMBT Corp. may terminate the merger
agreement if the Summit Price ending on the Determination Date is below $26.39
and the Summit Price has declined more than 15% than the relative change in the
stock prices of 14 selected bank holding companies since the time the companies
agreed to merge.
Summit may terminate the merger agreement if NMBT Corp.'s board of
directors fails to recommend approval of the merger or withdraws, modifies or
changes, or votes to withdraw, modify or change its recommendation for approval
of the merger agreement, or if the cost of environmental matters exceeds the
threshold set forth in the merger agreement.
4
<PAGE>
OTHER INTERESTS OF NMBT CORP. OFFICERS AND DIRECTORS IN THE MERGER. (SEE
PAGE 29) Some directors and executive officers of NMBT Corp. have interests in
the merger that are different from, or in addition to, your interest as a
shareholder of NMBT Corp. These interests arise from provisions in the merger
agreement, the rights of NMBT Corp. officers and directors under NMBT Corp.'s
Bylaws, and the rights of some NMBT Corp. officers under benefit plans
maintained by NMBT Corp. and separate agreements with NMBT Corp. and Summit, and
include the following:
o the merger agreement contains indemnification arrangements for
officers and directors of NMBT Corp., and Summit has agreed to
purchase directors' and officers' liability insurance for a six-year
period following the merger;
o options to purchase 391,000 shares of NMBT Corp. common stock held by
NMBT Corp. executive officers and directors will automatically become
options to acquire shares of Summit common stock, adjusted for the
exchange ratio in the merger agreement;
o Michael D. Carrigan, Jay C. Lent and Peter R. Maher, executive
officers of NMBT Corp., have employment agreements with NMBT Corp.
which provide for severance payments (based upon their compensation
through December 31, 1999) of approximately $610,207 to Mr.Carrigan,
$324,894 to Mr. Lent, and $273,264 to Mr. Maher if their employment is
terminated under specified circumstances after the merger; and
o Summit has agreed to appoint five members of the NMBT Corp. board of
directors to the board of directors of Summit Bank (CT) upon the
merger of NMBT into Summit Bank (CT).
NMBT Corp.'s board of directors considered these interests when it approved
the merger agreement.
DIFFERENCE IN SHAREHOLDERS' RIGHTS. (SEE PAGE 37) The rights of NMBT Corp.
stockholders, which are determined by Delaware corporation law and NMBT Corp.'s
Restated Certificate of Incorporation and Bylaws differ from the rights of
Summit shareholders, which are determined by New Jersey corporation law and
Summit's Restated Certificate of Incorporation and By-Laws. Some of the
differences in shareholders' rights are due to differences between the
corporation laws of Delaware, the state of NMBT Corp.'s incorporation, and the
corporation law of New Jersey, the state of Summit's incorporation. The
remaining differences in shareholders' rights are due to differences between
NMBT Corp.'s Restated Certificate of Incorporation and Bylaws and Summit's
Restated Certificate of Incorporation and By-Laws. Upon completion of the merger
your rights as a shareholder of Summit will be governed by New Jersey
corporation law and Summit's Restated Certificate of Incorporation and By-laws.
OPTION AGREEMENT. (SEE PAGE 26) As a condition to its offer to acquire NMBT
Corp., Summit required that NMBT Corp. grant Summit a stock option that allows
Summit to buy up to 531,043 shares of NMBT Corp.'s common stock at an exercise
price of $18.87 per share. Summit may exercise this option if and when events
relating to the potential acquisition of NMBT Corp. by someone other than Summit
occur. As of the date of this document, we do not believe that any event of this
nature has occurred. The option agreement is intended to increase the likelihood
the merger will be completed and may be expected to discourage persons who, now
or prior to completion of the merger, may be interested in acquiring NMBT Corp.
from considering or proposing such an acquisition. A copy of the stock option
agreement is attached as Appendix C to this Proxy Statement-Prospectus.
RECENT DEVELOPMENTS. (SEE PAGES 50 AND 53) On January 19, 2000 Summit
reported net income for the year ended December 31, 1999 of $442.6 million as
compared with $465.8 million for the year ended December 31, 1998. Net income
per diluted share for 1999 was $2.54 as compared with $2.63 for 1998. Net income
for 1999 reflected an additional provision for loan losses of $60 million
pretax, or $.20 per diluted share, recorded in the third quarter and a
restructuring charge of $27.9 million pretax, or $.10 per diluted share,
recorded in the fourth quarter associated with Summit's business realignment.
Summit's total assets at December 31, 1999 were $36.4 billion as compared with
$33.1 billion at December 31, 1998.
On January 19, 2000 NMBT Corp. reported net income for the year ended
December 31, 1999 of $3.6 million as compared with net income of $3.2 million
for the year ended December 31, 1998. Net income per diluted share for 1999 was
$1.31 as compared with $1.15 for 1998. NMBT's total assets at December 31, 1999
were $403.1 million as compared with $380.5 million at December 31, 1998.
5
<PAGE>
MARKET PRICES AND DIVIDENDS (SEE PAGE 14)
Summit common stock is listed and traded on the New York Stock Exchange
under the symbol "SUB". NMBT Corp. common stock is included on the Nasdaq Small
Cap Market under the symbol "NMBT". The following table presents for the periods
indicated, rounded to the nearest full cent, the high and low sale prices of a
share of Summit common stock and NMBT Corp. common stock and quarterly dividends
declared per share on Summit common stock and NMBT Corp. common stock.
All sale prices and dividends shown below for Summit common stock have been
adjusted for the 3-for-2 stock split paid on September 24, 1997.
<TABLE>
<CAPTION>
SUMMIT COMMON STOCK NMBT COMMON STOCK
---------------------------------- --------------------------------
SALE PRICE SALE PRICE
--------------------- --------------------
DIVIDENDS DIVIDENDS
CALENDAR YEAR HIGH LOW PER SHARE HIGH LOW PER SHARE
- ------------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
1997 ........................................ $53.38 $28.50 $1.02 $21.25 $11.00 $0.21
1998 ........................................ 53.88 30.75 1.17 21.25 14.75 0.35
1999 ........................................ 44.50 28.50 1.29 25.00 13.25 0.53(2)
2000 (through January 24, 2000) ............. 30.75 27.31 (1) 24.75 23.25 0.23(2)
</TABLE>
(1) Any dividend declared by the Summit board of directors during the first
quarter has historically been declared at its regularly scheduled February
board meeting.
(2) Includes $0.13 per share attributable to the equivalency dividend permitted
by the merger agreement.
6
<PAGE>
The table below presents, rounded to the nearest full cent, the following
prices for Summit common stock and NMBT common stock:
o the closing price on October 1, 1999, which was the last full trading
day prior to the public announcement of the execution of the merger
agreement, and
o the closing price on , January 24, 2000 (the most recent practicable
date prior to the date of this Proxy Statement - Prospectus).
Also set forth below for each of these dates is the pro forma equivalent in
Summit common stock of a share of NMBT Corp. common stock computed by
multiplying the applicable price of Summit common stock by an assumed exchange
ratio that was fixed by assuming, for purposes of the exchange ratio criteria
set forth in the merger agreement, that the date set forth in the first column
was the date on which the exchange ratio was determined and that the average
price of Summit common stock during the ten-day period used to determine the
exchange ratio was the last sale price of Summit common stock on that date. The
pro forma equivalents are provided for illustration purposes only. Neither of
the pro forma equivalents are intended to represent the actual pro forma
equivalent that will be applicable to the merger because the actual exchange
ratio in the merger will not be calculated until after the special meeting.
<TABLE>
<CAPTION>
PRO FORMA NMBT CORP. EXCHANGE
SUMMIT NMBT CORP. EQUIVALENT RATIO (1)
------- ---------- ------------------- ---------
<S> <C> <C> <C> <C>
October 1, 1999 ....... $32.19 $16.00 $26.00 0.8077
January 24, 2000 ...... 27.88 24.63 26.00 0.9327
</TABLE>
ON THE DATE THAT THE MERGER IS COMPLETED AND ON THE DATE YOU RECEIVE SUMMIT
COMMON STOCK CERTIFICATES IN EXCHANGE FOR YOUR NMBT CORP. CERTIFICATES, THE
PRICE OF A SHARE OF SUMMIT COMMON STOCK, AND THE PRO FORMA NMBT CORP. EQUIVALENT
MAY BE DIFFERENT FROM THOSE SET FORTH ABOVE. YOU SHOULD OBTAIN CURRENT PRICE
QUOTATIONS. IN ADDITION, THE TIMING AND AMOUNT OF FUTURE DIVIDENDS DECLARED ON
SUMMIT COMMON STOCK WILL BE SET AT THE DISCRETION OF SUMMIT'S BOARD OF DIRECTORS
AND WILL BE DETERMINED AFTER CONSIDERATION OF VARIOUS FACTORS, INCLUDING,
WITHOUT LIMITATION, THE EARNINGS AND FINANCIAL CONDITION OF SUMMIT AND ITS
SUBSIDIARIES.
The following table presents, as of January 24, 2000, the current
annualized dividend rate for a share of Summit common stock, for a share of NMBT
Corp. common stock, and rounded to the nearest full cent, for the pro forma
equivalent in Summit common stock of a share of NMBT Corp. common stock computed
by multiplying the annualized dividend rate of a share of Summit common stock by
the lowest, highest and mid-point exchange ratio described below.
<TABLE>
<CAPTION>
Pro Forma NMBT Corp. Exchange
Summit NMBT Corp. Equivalent Ratio (1)
------ ---------- ------------------- ---------
<S> <C> <C> <C> <C>
January 24, 2000 .......... $1.32 $0.40(2) $0.93 0.7024
1.07 0.8077
1.25 0.9503
</TABLE>
(1) The listed exchange ratios have been furnished for illustration purposes
only. The exchange ratio has not been fixed, will not be fixed until after the
special meeting, and may, when fixed as provided for in the merger agreement,
differ from the exchange ratios set forth above. The exchange ratios set forth
above would be applicable in the following situations:
Summit Price
as of
Exchange Ratio Determination Date
-------------- ----------------------
0.7024 .......................... Greater than $37.01563
0.8077 .......................... $32.19
0.9503 .......................... Less than $27.35938
The merger agreement provides that for Summit Prices on the Determination
Date of between $37.01563 and $27.35938, the exchange ratio would vary from
0.7024 to 0.9503 (based on the formula of $26.00 divided by the Summit Price).
The exchange ratio of 0.8077 applies only if the Summit Price on the
Determination Date is exactly $32.19, the mid-point between $37.01563 and
$27.35938.
(2) Excludes $0.53 per share attributable to the equivalency dividend permitted
under the merger agreement.
7
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Each of us makes forward-looking statements in this Proxy
Statement-Prospectus, and in our public documents to which we refer, that are
subject to risks and uncertainties. These forward-looking statements include
information about possible or assumed future results of our operations or the
performance of the combined company after the merger and the impact of "Year
2000" compliance issues. Also, when we use any of the words "believes,"
"expects," "anticipates," "estimates" or similar expressions we are making
forward-looking statements.
These forward-looking statements are intended to qualify for the safe
harbor provided by the Private Securities Litigation Reform Act of 1995. While
each of us believes that its forward-looking statements are reasonable, you
should not place undue reliance on any forward-looking statements, which speak
only as of the date made. You should understand that the following important
factors, in addition to those discussed elsewhere in this Proxy
Statement-Prospectus and in our public documents to which we refer, could affect
the future results and performance of each of us and the combined company. This
could cause those results to differ materially from those expressed in our
forward-looking statements. Factors that might cause such a difference include
the following;
o deposit attrition, customer loss or revenue loss following the merger
may be greater than expected;
o expected cost savings from the merger may not be fully realized or
realized within the expected time frame;
o difficulties in integrating our businesses may be greater than
expected;
o competition among depository and other financial institutions may
increase significantly;
o inflation and changes in the interest rate environment may reduce our
margins;
o general economic or business conditions, either nationally or in the
combined company's market areas, may be less favorable than expected;
o adverse changes may occur in the securities markets;
o legislative or regulatory changes may adversely affect our business;
o our ability to enter new markets successfully and capitalize on growth
opportunities may be more difficult than expected; and
o technological changes, including "Year 2000" data systems compliance
issues, may be more difficult, time consuming or expensive than we
expect.
8
<PAGE>
INTRODUCTION
We are providing this Proxy Statement-Prospectus to shareholders of NMBT
Corp. ("NMBT") in connection with the solicitation of proxies by the board of
directors of NMBT for the special meeting of shareholders of NMBT to be held on
March 7, 2000 at the Candlewood Valley Country Club, 401 Danbury Rd., New
Milford, Connecticut at 10:00 a.m., local time, or any adjournments thereof. At
the special meeting, the shareholders of NMBT will vote upon (i) a proposal to
approve the Agreement and Plan of Merger dated October 3, 1999 between Summit
and NMBT, and (ii) a proposal to approve in advance of voting on the merger
agreement an adjournment of the special meeting in order to permit further
solicitation of proxies by NMBT if insufficient shares are present at the
special meeting to constitute a quorum or to approve the merger agreement.
Shareholders of NMBT are entitled to exercise dissenters rights with respect to
the merger agreement. See "THE MERGER -- Dissenters Rights."
NMBT'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT NMBT SHAREHOLDERS VOTE FOR ITS APPROVAL. NMBT'S
BOARD ALSO RECOMMENDS THAT NMBT SHAREHOLDERS VOTE FOR APPROVAL OF THE
ADJOURNMENT PROPOSAL.
SPECIAL MEETING
RECORD DATE
The record date for determining the NMBT shareholders entitled to vote on
the merger at the special meeting is January 24, 2000. Only the holders of
record of NMBT common stock as of the close of business on that date are
entitled to vote at the special meeting. Each share of NMBT common stock
entitles the holder to one vote on each proposal and on all other matters
properly brought before the special meeting. NMBT had no other class of
outstanding voting securities entitled to vote on the merger agreement or the
adjournment proposal at the close of business on the record date. As of the
record date, there were approximately 1,728 holders of record of NMBT common
stock and 2,699,958 shares of NMBT common stock outstanding and eligible to be
voted at the special meeting.
QUORUM AND VOTE REQUIRED
Generally, in order to conduct business at a shareholders meeting a quorum
must be present. A majority of the shares of NMBT common stock entitled to vote,
whether present in person or represented by proxy, will constitute a quorum for
the transaction of business at the special meeting. By checking the appropriate
box on the proxy card provided by NMBT's board of directors, you may vote "FOR"
approval of the merger agreement, vote "AGAINST" approval of the merger
agreement or "ABSTAIN" from voting. You have similar choices with regard to the
adjournment proposal. Under the Delaware General Corporation Law (the "DGCL"),
the law under which NMBT was formed, the affirmative vote of the majority of the
outstanding shares entitled to vote on the merger is required to approve the
merger agreement and the affirmative vote of a majority of the shares present in
person or represented by proxy at the special meeting is required to approve the
adjournment proposal. Under NMBT's Restated Certificate of Incorporation, the
approval of the merger agreement requires only the affirmative vote of a
majority of the outstanding shares entitled to vote on the merger because the
merger agreement has been approved by at least two-thirds of the members of
NMBT's board of directors. Therefore, the higher shareholder approval
requirements for certain business combinations which have not been so approved
by NMBT's board of directors, or which do not satisfy other conditions set forth
in NMBT's Restated Certificate of Incorporation, are not applicable to the
merger.
VOTING OF PROXIES
Shares represented by a proxy will be voted at the special meeting as
specified in the proxy.
PROXIES WITHOUT VOTING INSTRUCTIONS. Proxies that are properly signed and
dated but which do not contain voting instructions will be voted for approval of
the merger and the adjournment proposal. Proxies voted against the merger which
do not contain voting instructions on the adjournment proposal will abstain from
voting on the adjournment proposal.
ABSTENTIONS. NMBT will count a properly executed proxy marked "ABSTAIN" for
purposes of determining whether there is a quorum and for purposes of
determining the number of shares represented and entitled to vote at the
meeting. Because the affirmative vote of a majority of the shares outstanding
and entitled to vote is required for approval of the merger and the affirmative
vote of a majority of shares present and entitled to vote is required for
9
<PAGE>
approval of the adjournment proposal, if you mark your proxy "ABSTAIN" it will
have the effect of a vote against approval of the merger agreement and against
approval of the adjournment proposal.
BROKER NON-VOTES. If your shares are held by your broker, your broker will
vote your shares for you only if you provide instructions to your broker on how
to vote your shares. You should follow the directions provided by your broker
regarding how to instruct your broker to vote your shares. In accordance with
the rules of the New York Stock Exchange, your broker cannot vote your shares of
NMBT common stock without specific instructions from you. Because the
affirmative vote of a majority of the shares outstanding and entitled to vote is
required to approve the merger, if you do not instruct your broker how to vote
it will have the effect of a vote against approval of the merger agreement. If
you do not instruct your broker how to vote it will have no effect on approval
of the adjournment proposal.
OTHER MATTERS. If you sign the proxy card, you grant authority to the
holders of the proxy to vote in their discretion on any other matters that may
properly come before the special meeting or any adjournment or postponements
thereof. NMBT's management does not presently know of any other matters to be
brought before the special meeting. As to other matters that may properly come
before the special meeting, unless otherwise provided in NMBT's Restated
Certificate of Incorporation or Bylaws or by statute, the matter will be
approved if a majority of the votes cast are in favor of the matter.
If a quorum is not present, or if fewer shares of NMBT common stock are
voted in favor of approval of the merger agreement than the number required for
approval, NMBT currently expects that, if a majority of the shares voted, in
person or by proxy, with respect to the adjournment proposal have been voted in
favor of that proposal, the special meeting will be postponed or adjourned for
the purpose of allowing additional time for obtaining additional proxies or
votes. At any subsequent reconvening of the special meeting all proxies will be
voted in the same manner as such proxies would have been voted at the original
convening of the special meeting (except for any proxies which have effectively
been revoked or withdrawn).
HOW TO VOTE SHARES HELD THROUGH BROKERS. If you hold NMBT common stock in
the name of a broker or other custodian and wish to vote those shares in person
at the special meeting, you must obtain from the nominee holding the NMBT common
stock in the nominees' name a properly executed "legal proxy" identifying you as
a NMBT shareholder, authorizing you to act on behalf of the nominee at the
special meeting and identifying the number of shares with respect to which the
authorization is granted.
HOW TO REVOKE A PROXY
Granting a proxy on the enclosed proxy card will not prevent you from
voting in person at the NMBT special meeting or otherwise revoking your proxy.
You may revoke a proxy at any time prior to the special meeting by delivering a
properly signed revocation or a proxy bearing a later date, to Jay C. Lent,
Secretary of NMBT, 55 Main Street, New Milford, Connecticut, 06776-2400 or by
giving written notice of revocation in person at NMBT's special meeting prior to
any vote being taken or appearing in person and voting at the special meeting.
SOLICITATION OF PROXIES
NMBT will bear the cost of soliciting proxies. In addition to solicitation
by mail, NMBT's directors, officers or employees may solicit proxies from
shareholders by telephone, in person or by other means. These persons will not
receive additional compensation, although they will be reimbursed for the
reasonable, out-of-pocket expenses they incur in connection with this
solicitation. NMBT will also make arrangements with brokerage firms,
fiduciaries, and other custodians who hold shares of record to forward
solicitation materials to the beneficial owners of those shares. NMBT will
reimburse those brokerage firms, fiduciaries, and other custodians for their
reasonable out-of-pocket expenses in connection with this solicitation.
ChaseMellon Consulting Services, a proxy soliciting firm, will assist in the
solicitation of proxies for a fee of $5,500 plus fees for direct telephone
solicitations, if authorized, and reimbursement of reasonable out-of-pocket
costs. Summit will pay the expenses incurred for the printing and mailing of
this Proxy Statement-Prospectus and related filing fees.
10
<PAGE>
STOCK HELD BY NMBT DIRECTORS AND OTHERS
The directors and executive officers of NMBT and certain persons who may be
deemed to be affiliates of NMBT beneficially owned, as of January 24, 2000,
669,300 shares of NMBT common stock, assuming they exercised all currently
exercisable options to purchase NMBT common stock. This figure represents 21.65%
of the outstanding shares of NMBT common stock after exercise of those options.
Each of the directors and executive officers of NMBT has entered into an
agreement with Summit to vote all of their shares of NMBT common stock in favor
of the proposal to approve the merger.
Summit beneficially owns 1,000 shares of NMBT common stock, which
represents less than 1% of the outstanding shares of NMBT common stock, and
intends to vote these shares in favor of the proposal to approve the merger and
the proposal to adjourn the special meeting, if necessary. In addition, NMBT has
granted Summit a stock option that allows Summit to acquire up to 531,043 shares
of NMBT common stock. This option is not currently exercisable and the NMBT
common stock represented by the option has not been issued and cannot currently
be voted.
11
<PAGE>
SELECTED FINANCIAL DATA
The following tables present selected historical financial information for
Summit and NMBT for each of the five years in the period ended December 31,
1998, and the nine-month periods ended September 30, 1999, and 1998. This
information is provided to aid your financial analysis of the merger. We derived
this information from the consolidated financial statements of Summit and NMBT,
including the respective notes to those financial statements, contained in the
Form 10-Ks and Form 10-Qs of Summit and NMBT filed with the Securities and
Exchange Commission and the Form F-2s and F-4s filed by NMBT with the FDIC, some
of which are incorporated by reference in this Proxy Statement-Prospectus or
have been delivered along with this document. See "WHERE YOU CAN FIND MORE
INFORMATION." The unaudited selected historical financial information for Summit
and NMBT for the nine-month periods ended September 30, 1999, and 1998 reflects,
in the opinion of the managements of Summit and NMBT, respectively, all
adjustments, comprising only normal recurring accruals, necessary for a fair
presentation of the consolidated operating results and financial position of
Summit and NMBT for these interim periods. Results for the interim periods are
not necessarily indicative of results for the full year or any other period.
SUMMIT BANCORP.
SUMMARY OF SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
(unaudited) Year Ended December 31,
------------------------ -------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Interest income ................... $ 1,730,474 $ 1,619,762 $ 2,175,212 $ 2,064,706 $ 1,906,996 $ 1,831,934 $ 1,572,370
Interest expense .................. 795,231 743,731 1,001,406 919,617 853,707 822,232 599,732
Net interest income ............... 935,243 876,031 1,173,806 1,145,089 1,053,289 1,009,702 972,638
Provision for loan losses ......... 109,500 51,000 66,000 59,100 64,034 72,090 94,347
Noninterest income excluding
securities gains ................ 291,728 255,672 343,581 296,248 256,180 226,657 212,772
Securities gains .................. 7,055 4,440 6,646 5,637 3,862 8,595 4,954
Noninterest expense ............... 624,610 577,738 782,807 816,691 815,591 705,459 758,355
Net income ........................ 332,697 348,755 465,819 370,965 283,675 300,412 213,917
Net income per diluted share ...... 1.91 1.96 2.63 2.09 1.67 1.87 1.36
Cash dividends
declared per share .............. 0.96 0.87 1.17 1.02 0.90 0.79 0.63
Average diluted common shares
outstanding ..................... 174,423 177,505 177,043 177,459 168,788 159,249 155,520
BALANCE SHEET DATA (AT PERIOD END):
Total assets ...................... $36,163,338 $31,852,214 $33,101,314 $29,964,172 $27,767,271 $26,647,452 $25,484,073
Securities ........................ 11,151,693 9,806,968 9,999,304 9,267,655 8,320,520 8,026,968 8,445,936
Loans ............................. 22,736,054 20,300,663 21,126,577 18,888,366 17,386,059 16,413,222 15,048,579
Deposits .......................... 24,351,165 22,146,853 23,145,128 22,329,436 21,629,531 21,232,926 19,981,071
Long-term debt .................... 3,970,698 2,401,826 3,572,710 1,246,750 695,793 431,754 552,736
Shareholders' equity .............. 2,851,148 2,627,974 2,722,427 2,612,420 2,290,838 2,130,108 1,813,445
Book value per common share ....... 16.31 15.19 15.67 14.79 13.61 13.04 11.40
</TABLE>
12
<PAGE>
NMBT CORP.
SUMMARY OF SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED) YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Interest income ................... $ 18,377 $ 18,091 $ 24,190 $ 22,709 $ 20,300 $ 18,463 $ 14,797
Interest expense .................. 7,305 7,568 10,120 9,220 7,994 7,084 4,757
Net interest income ............... 11,072 10,523 14,070 13,489 12,306 11,379 10,040
Provision for loan losses ......... 207 341 371 582 390 160 240
Noninterest income
excluding securities gains ...... 1,772 1,912 2,667 1,991 1,640 1,275 1,154
Securities gains .................. 3 51 51 -- -- -- 60
Noninterest expense ............... 8,473 8,396 11,282 10,110 10,385 9,798 9,336
Net income ........................ 2,786 2,332 3,217 2,898 2,792 2,159 1,339
Net income per diluted share ...... 1.01 0.83 1.15 1.05 1.04 0.83 0.53
Cash dividends declared per
share ........................... 0.30 0.26 0.35 0.21 0.17 0.13 --
Average diluted common shares
outstanding ..................... 2,756 2,811 2,799 2,752 2,684 2,590 2,530
BALANCE SHEET DATA (AT PERIOD END):
Total assets ...................... $391,875 $370,200 $380,481 $336,566 $305,545 $269,176 $252,485
Securities ........................ 116,615 110,898 116,690 84,005 63,761 40,206 38,859
Loans ............................. 244,687 234,571 229,945 223,909 211,686 198,158 190,911
Deposits .......................... 311,519 299,789 311,623 285,595 266,161 247,067 225,758
Long-term debt .................... 48,859 39,535 37,672 23,145 14,564 -- --
Stockholders' equity .............. 28,806 28,232 28,688 25,330 22,565 20,157 17,546
Book value per common share ....... 10.79 10.68 10.77 9.69 8.72 7.87 6.93
</TABLE>
13
<PAGE>
COMPARATIVE AND PRO FORMA PER SHARE FINANCIAL INFORMATION
The per share data below shows the net income, dividends and book value per
share for Summit and NMBT on an historical basis and on a pro forma basis. We
derived the pro forma combined data by combining historical consolidated
financial information of Summit and NMBT using the purchase method of accounting
for business combinations. We derived the pro forma NMBT equivalent data by
multiplying the Summit pro forma data by the exchange ratios assumed in the pro
forma computation. As previously discussed, the exchange ratio has not been
fixed and will not be fixed until after the special meeting. The actual exchange
ratio may differ from the exchange ratios used in the following table.
The pro forma information does not reflect cost savings anticipated to be
realized from the merger. The purchase accounting adjustments used for the
purpose of calculating the pro forma combined results are subject to final
determination, based upon estimates and other evaluations of fair value, at the
effective time of the merger. Therefore, the pro forma amounts reflected in the
pro forma per share financial information may differ from the amounts ultimately
determined. The unaudited pro forma information is not necessarily indicative of
the combined financial position or results of operations of future periods.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ ------------------
<S> <C> <C>
NET INCOME PER DILUTED SHARE
Historical:
Summit ...................................... $ 1.91 $ 2.63
NMBT ........................................ 1.01 1.15
Pro Forma Combined at exchange ratio of:
0.7024 .................................... 1.90 2.62
0.8077 .................................... 1.90 2.62
0.9503 .................................... 1.90 2.62
Pro Forma NMBT Equivalent at exchange ratio of:
0.7024 .................................... 1.34 1.84
0.8077 .................................... 1.54 2.12
0.9503 .................................... 1.81 2.49
DIVIDENDS PER SHARE
Historical:
Summit ...................................... $ 0.96 $ 1.17
NMBT ........................................ 0.30 0.35
Pro Forma Combined at exchange ratio of:
0.7024 .................................... 0.96 1.17
0.8077 .................................... 0.96 1.17
0.9503 .................................... 0.96 1.17
Pro Forma NMBT Equivalent at exchange ratio of:
0.7024 .................................... 0.67 0.82
0.8077 .................................... 0.78 0.95
0.9503 .................................... 0.91 1.11
BOOK VALUE PER SHARE
Historical:
Summit ...................................... 16.31 15.67
NMBT ........................................ 10.79 10.77
Pro Forma Combined at exchange ratio of:
0.7024 .................................... 16.53 15.67
0.8077 .................................... 16.51 15.67
0.9503 .................................... 16.47 15.67
Pro Forma NMBT Equivalent at exchange ratio of:
0.7024 .................................... 11.61 11.01
0.8077 .................................... 13.34 12.66
0.9503 .................................... 15.65 14.89
</TABLE>
14
<PAGE>
MARKET PRICE AND DIVIDEND MATTERS
MARKET PRICE AND DIVIDEND HISTORY
Summit common stock, including associated preferred stock purchase rights,
is listed and traded on the New York Stock Exchange and is quoted under the
symbol "SUB." NMBT common stock is listed and traded on the Nasdaq Small Cap
Market and is quoted under the symbol "NMBT." The following table sets forth,
for the periods indicated, the high and low sale prices as reported in published
financial sources, and quarterly dividends declared per share of Summit common
stock and NMBT common stock.
Where necessary, sale prices shown in the table below have been rounded to
the nearest full cent. All sale prices and dividends shown below for Summit
common stock have been adjusted for the 3-for-2 stock split paid on September
24, 1997.
<TABLE>
<CAPTION>
SUMMIT COMMON NMBT COMMON
---------------------------- -------------------------------
SALES PRICE SALES PRICE
---------------- ----------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDEND
------ ----- --------- ------ ----- ---------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter .............. $33.33 $28.50 $0.24 $12.50 $11.00 $0.05
Second Quarter ............. 35.08 28.58 0.24 15.50 11.25 0.05
Third Quarter .............. 45.31 33.58 0.27 19.38 15.00 0.055
Fourth Quarter ............. 53.38 38.38 0.27 21.25 16.25 0.055
1998
First Quarter .............. 53.88 45.88 0.27 21.00 17.00 0.08
Second Quarter ............. 53.50 44.75 0.30 21.25 18.00 0.09
Third Quarter .............. 49.44 32.75 0.30 21.00 18.75 0.09
Fourth Quarter ............. 45.00 30.75 0.30 19.63 14.75 0.09
1999
First Quarter .............. 44.50 37.06 0.30 17.25 13.88 0.10
Second Quarter ............. 44.00 37.38 0.33 16.50 13.25 0.10
Third Quarter .............. 42.56 30.63 0.33 17.50 13.69 0.10
Fourth Quarter ............. 35.50 28.50 0.33 18.38 18.13 0.23(2)
2000
First Quarter
(through January 24, 2000) 30.75 27.31 (1) 24.75 23.25 0.23(2)
</TABLE>
(1) Any dividend declared by the Summit board of directors during the first
quarter has historically been declared at its regularly scheduled February
board meeting.
(2) Includes $0.13 attributable to the equivalency dividend permitted by the
merger agreement.
On October 1, 1999, which was the last full trading day prior to the public
announcement of the signing of the merger agreement, the last sale price of a
share of Summit common stock was $32.19 and the last sale price of a share of
NMBT common stock was $16.00. On January 24, 2000, the last sale price of Summit
common stock was $27.88 and the last sale price of NMBT common stock was $24.63.
ON THE DATE THE MERGER IS COMPLETED AND ON THE DATE YOU RECEIVE A SUMMIT
STOCK CERTIFICATE IN EXCHANGE FOR YOUR NMBT CERTIFICATE(S), THE PRICE OF A SHARE
OF SUMMIT COMMON STOCK MAY DIFFER FROM THOSE SET FORTH ABOVE. NMBT SHAREHOLDERS
SHOULD OBTAIN CURRENT PRICE QUOTATIONS. IN ADDITION, PAST DIVIDENDS PAID ON
SUMMIT COMMON STOCK AND NMBT COMMON STOCK ARE NOT NECESSARILY INDICATIVE OF
FUTURE DIVIDENDS WHICH MAY BE PAID. NO ASSURANCE CAN BE GIVEN CONCERNING
DIVIDENDS TO BE DECLARED AND PAID ON SUMMIT COMMON STOCK AND NMBT COMMON STOCK
BEFORE OR AFTER THE MERGER. THE TIMING AND AMOUNT OF FUTURE DIVIDENDS DECLARED
ON SUMMIT COMMON STOCK WILL BE SET AT THE DISCRETION OF SUMMIT'S BOARD OF
DIRECTORS AND WILL DEPEND ON VARIOUS FACTORS, INCLUDING, WITHOUT LIMITATION, THE
EARNINGS AND FINANCIAL CONDITION OF SUMMIT AND ITS SUBSIDIARIES.
15
<PAGE>
COORDINATION AND DETERMINATION OF DIVIDENDS UNDER MERGER AGREEMENT
In order to ensure that NMBT shareholders are paid no more, and no less,
than one regular dividend in each calendar quarter until the merger is
consummated, NMBT has agreed to coordinate with Summit the declaration of any
dividends and the setting of any dividend record or payment dates. Under the
merger agreement, NMBT may declare a quarterly dividend equal to Summit's
dividend rate multiplied by 0.7024. In addition, if the actual exchange ratio
for the merger is greater than 0.7024, NMBT shareholders will be entitled to
receive a cash payment per share of NMBT stock held at the effective time of the
merger equal to the difference between the dividends that would have been paid
if the higher exchange ratio had been applied and the dividends actually paid by
NMBT.
DIVIDEND LIMITATIONS
Summit's primary source of funds to pay dividends to its shareholders is
provided by dividends from its subsidiary banks. Summit's bank subsidiaries are
restricted by law in the amount of dividends they may pay to Summit. In
addition, some debt agreements restrict the amount of dividends Summit may pay
to its shareholders. At September 30, 1999, Summit's subsidiary banks had
approximately $59.1 million available, under the most restrictive limitations,
for the payment of dividends to Summit.
Similarly, NMBT's primary source of funds to pay dividends to its
shareholders is provided by dividends from its bank subsidiary ("NMBT Bank").
NMBT Bank is also restricted by law in the amount of dividends that it may
declare and pay to NMBT.
PROPOSAL I-- APPROVAL OF THE MERGER AGREEMENT
THE MERGER
The discussion in this Proxy Statement-Prospectus of the merger and the
description of the principal terms and conditions of the merger agreement and
the merger are subject to and qualified in their entirety by reference to the
merger agreement. A copy of the merger agreement is attached hereto as Appendix
A and is incorporated herein by reference.
GENERAL
The merger agreement provides for the acquisition of NMBT by Summit,
pursuant to the merger of NMBT with and into Summit or a wholly owned subsidiary
of Summit or the merger of a wholly owned subsidiary of Summit with and into
NMBT, as determined by Summit. Summit has decided to merge NMBT into Summit,
with Summit as the surviving corporation in the merger.
Upon consummation of the merger, each outstanding share of NMBT common
stock other than (1) shares of NMBT common stock beneficially owned by Summit or
a subsidiary of Summit, other than shares held in a fiduciary capacity or as a
result of foreclosures or debts previously contracted, if any, (2) shares of
NMBT common stock beneficially owned by NMBT or a subsidiary of NMBT, other than
shares of NMBT common stock held in a fiduciary capacity or as a result of
forfeitures or debts previously contracted, if any, and (3) shares of NMBT
common stock held in the treasury of NMBT, if any, will be converted into and
represent the right to receive whole shares of Summit common stock and cash
instead of fractional shares resulting from the conversion based upon an
exchange ratio to be determined, adjusted if necessary in accordance with
certain anti-dilution provisions described below. The cash paid for each
fractional share resulting from the conversion will be an amount equal to the
fractional share multiplied by the closing price of a share of Summit common
stock on the New York Stock Exchange Composite Transactions List on the last
trading day ending prior to the effective time of the merger. The exchange ratio
is subject to appropriate adjustments if, from the date of the merger agreement
to the effective time of the merger, the outstanding shares of Summit common
stock are increased, decreased, changed into or exchanged for a different number
or kind of shares or securities through merger, recapitalization,
reclassification, stock dividend, stock split or reverse stock split or other
similar changes. Except in the case of adjustment to prevent dilution, the
exchange ratio will not be lower than 0.7024 and will not be higher than 0.9503.
Summit expects to repurchase in the open market the number of shares of Summit
common stock equal to the approximate number of shares to be issued in the
merger or reissue previously acquired shares held in treasury, depending on
market conditions or other factors.
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<PAGE>
CLOSING AND EFFECTIVE TIME
The merger agreement provides that, unless Summit designates an earlier
date and gives NMBT at least five business days notice of the new date, we will
hold the closing of the merger 45 business days after the last to occur of the
following (the "Scheduled Date"):
o if the transactions contemplated by the merger agreement are being
contested in any legal proceedings, the date that all such proceedings
have been brought to a conclusion favorable, in the judgment of Summit
and NMBT, to the consummation of the transactions contemplated by the
merger agreement or any prior date as Summit and NMBT shall elect,
whether or not those proceedings have been brought to a conclusion; or
o the date on which the approvals of NMBT's shareholders, the Board of
Governors of the Federal Reserve System and the Connecticut Banking
Commissioner have been received and any required waiting periods have
expired.
If NMBT shareholders approve the merger agreement by the required vote, all
other conditions of the merger are satisfied or waived and the closing is held
on the date set for closing, the merger will become effective at the date and
time specified in the certificates of merger required to be filed with the
Secretary of State of the states of New Jersey and Delaware following the
closing date. If NMBT shareholders approve the merger agreement on the scheduled
date of the special meeting, subject to the satisfaction or waiver of certain
other conditions described herein, we presently expect that the merger will
become effective during the first calendar quarter of 2000. Either party may
terminate the merger agreement if, among other things, the closing fails to
occur on or before the later of July 1, 2000 or 45 business days after the last
required approval or resolution of any legal challenges to the merger or
determination to close despite a legal challenge, if the approval, resolution or
determination occurred on or before August 1, 2000, the NMBT shareholders do not
approve the merger agreement at the meeting of shareholders called for that
purpose or a party materially breaches a warranty, representation or covenant
and does not cure the breach within 30 days; however, a party may not exercise
this right if the failure to close is due solely to that party's failure to
perform or observe agreements required by the merger agreement to be performed
or observed by it on or before the closing date. Summit's board of directors and
NMBT's board of directors each also has the right to terminate the merger
agreement under certain circumstances. See "THE MERGER -- The Merger Agreement
- -- Conditions to the Merger; Termination."
EXCHANGE RATIO
In the Merger, your shares of NMBT common stock will be converted into and
represent the right to receive Summit common stock and cash instead of
fractional shares. However, the exchange ratio, and the date as of which the
exchange ratio will be determined, have not been fixed and will not be fixed
until a date after the special meeting. Once the Determination Date has been
fixed, the exchange ratio will be determined as follows, based on the average of
the closing prices of a share of Summit common stock as reported on the
NYSE-Composite Transactions List for the ten consecutive full trading day on
which a share of Summit common stock is traded, ending on the Determination Date
(the "Summit Price"):
(1) If the Summit Price is greater than $37.01563, the exchange ratio will
be 0.7024.
(2) If the Summit Price is equal to or less than $37.01563 and equal to or
greater than $27.35938, the exchange ratio will be equal to the
quotient obtained by dividing $26.00 by the Summit Price.
(3) If the Summit Price is less than $27.35938, the exchange ratio will be
0.9503.
The "Determination Date" will be the date which is seven business days
prior to the 45th business day after the receipt of all required approvals and
the resolution of any legal challenges to the merger or determination to close
despite a legal challenge or, alternatively, the date designated by Summit,
along with the closing date, in the closing notice sent by Summit to NMBT.
However, the merger agreement does not permit the closing notice to be sent to
NMBT by Summit until (i) NMBT shareholders have approved the merger, (ii) all
required regulatory approvals have been received and applicable waiting periods
have expired and (iii) any litigation contesting the merger has been resolved to
the satisfaction of Summit and NMBT or Summit and NMBT agree to close the merger
despite the existence of litigation. Consequently, under the merger agreement,
it is not possible for the Determination Date to be designated, or the exchange
ratio to be fixed, prior to the approval by NMBT shareholders of the merger. You
will,
17
<PAGE>
therefore, be required to vote on the proposal to approve the merger agreement
prior to the determination of the exchange ratio.
The Merger Agreement provides that if Summit designates a closing date
prior to the 45th business day after the receipt of all required approvals and
resolutions of legal challenges, Summit must send the closing notice not less
than five business days in advance of the Closing Date designated by Summit in
the closing notice or a shorter period as agreed to in writing by NMBT, and
Summit must designate one of the business days in the ten business day period
immediately preceding the closing date as the Determination Date. Due to the
range of dates which could be designated by Summit as the Determination Date, it
is possible that Summit could select a pricing period (by virtue of its
selection of a Determination Date) which includes the date of the NMBT special
meeting and up to five of the business days immediately before that date.
The Exchange Ratio is also subject to appropriate adjustments in the event
that, from the date of the merger agreement to the effective time of the merger,
the outstanding shares of Summit common stock are increased, decreased, changed
into or exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock split
or reverse stock split or other similar changes.
EXCHANGE OF NMBT CERTIFICATES
Prior to the effective time of the merger, Summit will appoint First
Chicago Trust Company of New York, a division of Equiserve or another entity
reasonably satisfactory to NMBT as the exchange agent for the merger. As
promptly as practicable after the effective time, but in no event more than ten
days after the exchange agent receives an accurate and complete list of all
holders of record of outstanding NMBT common stock as of the effective time of
the merger, Summit will cause the exchange agent to send to each NMBT
shareholder a letter of transmittal and instructions for exchanging his or her
NMBT common stock certificate(s) for a certificate representing the number of
whole shares of Summit common stock and, if applicable, a check for the
fractional share amount and any additional dividend payment to which he or she
is entitled.
To effect a proper surrender and exchange of NMBT stock certificates, you
must surrender to the exchange agent all of your NMBT stock certificates along
with properly executed and completed letters of transmittal. Until you have
properly surrendered your NMBT stock certificate(s), Summit may, at its option,
refuse to pay to you dividends or other distributions, if any, payable to
holders of Summit common stock. However, upon proper surrender and exchange of
your NMBT stock certificate(s), Summit will pay to you the amount, without
interest, of dividends and other distributions, if any, to which you were
entitled but were not paid. No transfer of NMBT common stock will be made on the
stock transfer books of NMBT at and after the effective time of the merger.
The exchange agent shall have reasonable discretion to determine whether
letters of transmittal have been properly completed and executed and to
disregard immaterial defects, and any good faith decisions of Summit regarding
any matters as may be referred to it by the exchange agent shall be binding and
conclusive.
Summit will not issue stock certificates or scrip certificates for
fractions of shares of Summit common stock and NMBT shareholders who would
otherwise be entitled to receive fractions of shares of Summit common stock will
have none of the rights with respect to any fractions of shares, including,
without limitation, the right to receive dividends, that a holder of a full
share of Summit common stock would possess in respect of a full share. Instead,
these NMBT shareholders will receive cash for their fractions of shares.
If a NMBT shareholder surrenders more than one NMBT stock certificate,
Summit will issue to that NMBT shareholder a single Summit stock certificate
representing the total number of whole shares of Summit common stock to which
that owner is entitled pursuant to the merger agreement based on the total
number of shares of NMBT common stock represented by all NMBT stock certificates
surrendered by that NMBT shareholder.
YOU SHOULD NOT SURRENDER YOUR NMBT STOCK CERTIFICATES FOR EXCHANGE UNTIL
YOU RECEIVE A LETTER OF TRANSMITTAL, INSTRUCTIONS AND OTHER EXCHANGE MATERIALS
FROM THE EXCHANGE AGENT. HOWEVER, YOU ARE URGED TO NOTIFY CHASEMELLON
SHAREHOLDER SERVICES, LLC , NMBT'S TRANSFER AGENT, NOW AT (800) 288-9541 IF YOUR
NMBT STOCK CERTIFICATES ARE LOST, STOLEN, DESTROYED OR NOT PROPERLY REGISTERED,
IN ORDER TO BEGIN THE PROCESS OF OBTAINING REPLACEMENT NMBT STOCK CERTIFICATES.
18
<PAGE>
CONVERSION OF NMBT STOCK OPTIONS
Each stock option relating to NMBT common stock granted pursuant to the New
Milford Bank & Trust Company 1988 Non-Statutory Stock Option Plan and the New
Milford Bank & Trust Company 1994 Nonqualified Stock Option Plan which is
outstanding and unexercised at the effective time of the merger, will be
converted automatically at the effective time of the merger into an option to
purchase Summit common stock. Subject to the adjustments in exercise price per
share and number of shares and the two additional revisions, described below,
each converted option will continue to be governed by the terms of the
applicable NMBT stock option plan and the stock option agreement by which it was
evidenced, including terms and provisions as to exercises. In each case:
o the number of shares of Summit common stock subject to the converted
option will be equal to the number of shares of Summit common stock
which would have been issued in the merger if the shares of NMBT
common stock subject to that option were issued and outstanding
immediately prior to the effective time, rounded down to the next
lower full share; and
o the exercise price per share of Summit common stock subject to the
converted option will be equal to the aggregate exercise price that
would have been payable upon exercise in full of the NMBT stock option
divided by the number of shares of Summit common stock which may be
acquired upon exercise of the converted option.
o converted options held by any NMBT employee whose employment with
Summit is terminated within one year of the effective time of the
merger, other than a termination for cause, will continue to be
exercisable until the later of (1) the option exercise termination
date provided for in the NMBT option or (2) the first anniversary date
of the effective date of the merger; however, in no case may the
converted option be exercised after the option expiration date.
o for 30 days following the effective time of the merger, holders of
converted options may elect to receive a cash payment instead of
exercising their option. The cash payment will be equal to the
difference between the converted option exercise price and the Summit
Price.
After the effective time of the merger and within 45 days after Summit
receives an accurate and complete list of all holders of NMBT stock options,
Summit will issue to each holder of converted options, upon surrender of all
agreements under which NMBT stock options were issued to the holder, appropriate
instruments confirming the conversion described above. However, Summit will have
no obligation to issue confirming instruments or any shares of Summit common
stock issuable upon exercise of a converted option until the shares of Summit
common stock issuable upon exercise of the converted options have been
registered with the Securities and Exchange Commission, authorized for listing
on the New York Stock Exchange and authorized for sale by any appropriate state
securities regulators. Summit will use its best efforts to effect these
registrations, listings and authorizations within 45 days after NMBT delivers to
Summit the above mentioned optionholder list.
RECOMMENDATION OF NMBT BOARD
THE MERGER AGREEMENT HAS BEEN UNANIMOUSLY APPROVED BY NMBT'S BOARD OF
DIRECTORS. NMBT'S BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF NMBT SHAREHOLDERS. NMBT'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT NMBT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO APPROVE THE MERGER AGREEMENT.
BACKGROUND
From time to time, NMBT's board of directors, with the assistance of NMBT
management, its financial advisor and its legal counsel, has evaluated various
strategic alternatives, including growth by internal expansion, purchase of
other financial institutions and acquisition of NMBT by another financial
institution. In the spring of 1999, acting upon the instructions of NMBT's board
of directors, NMBT's management was again directed to consider and advise the
board on strategic alternatives. As in the past, NMBT's financial advisor,
Advest, Inc. ("Advest"), was engaged to assist NMBT's board and management.
In mid July, 1999, John R. Feeney, Executive Vice President of Summit,
telephoned Michael D. Carrigan, President and a director of NMBT, and requested
a meeting to discuss a potential business combination between NMBT and Summit.
After consulting with Louis Funk, Jr., Chairman of the NMBT board of directors
and a director
19
<PAGE>
of NMBT, Mr. Carrigan, Mr. Funk, and Robert W.X. Martin, a director, met with
Mr. Feeney and Frederick Afragola, Chairman of Summit Bank (CT), on July 27,
1999. During the meeting, Mr. Feeney expressed Summit's interest in acquiring
NMBT.
Shortly thereafter, Messrs. Funk and Carrigan met informally with two
members of another financial institution's board of directors, who expressed the
interest of their institution to acquire NMBT.
On August 4, 1999, a special meeting of NMBT's board of directors was held
for the specific purpose of reviewing NMBT's strategic business alternatives,
and in particular, of evaluating the verbal expressions of interest received
from Summit and the other financial institution. Also present at the meeting
were representatives of NMBT's special legal counsel, Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C. ("Mintz Levin"), and NMBT's financial advisor,
Advest. After an extended discussion, NMBT's board of directors arrived at a
consensus that the sale of NMBT at that time may not be in the best interest of
NMBT shareholders, but given the current and prospective highly competitive
banking environment in the primary markets served by NMBT and the anticipated
change in the accounting treatment for business combinations, and the possible
moderating effect of that change upon the consideration to be received upon a
sale of a financial institution, the NMBT board of directors instructed
management to more fully explore the level of interest, if any, which selected
institutions, including Summit, may have to acquire NMBT. The NMBT board of
directors concluded that a wider range of potential suitors should be
approached, and instructed Advest to contact two additional financial
institutions which the NMBT board of directors determined should have the
resources and interest to acquire NMBT. Mr. Carrigan was instructed to contact
the financial institution whose representatives had met with Messrs. Funk and
Carrigan in July. Advest was instructed to directly contact Summit, and to
request that its level of interest be expressed in writing and to communicate
with the two other identified potential suitors.
On August 13, 1999, and again on August 23, 1999, Mr. Carrigan and Jay C.
Lent, Executive Vice President and Chief Financial Officer of NMBT, met with the
chief executive officer of the other financial institution which had previously
expressed an interest in acquiring NMBT to discuss specific elements, including
pricing parameters, of a possible combination between such institution and NMBT.
At the same time, Advest approached Summit and initiated contacts with the two
other designated potential suitors.
Advest advised NMBT's board of directors, at a special meeting held on
September 8, 1999, of the expressions of interest received as of that date,
including initial pricing information. Two institutions, including Summit, had
submitted written expressions of interest, and a third had provided an oral
expression. The fourth institution requested an additional week to evaluate its
level of interest, and to determine whether it would submit an expression of
interest. Advest distributed a written financial analysis of the four potential
suitors and a comparison of the three proposals received. The NMBT board of
directors concurred that the price level offered by Summit was within an
acceptable range and authorized management to allow Summit to proceed with its
on-site due diligence review. In addition, the NMBT board of directors granted
the week deferral requested by the fourth institution and deferred further
communication with the other two potential suitors.
On September 10, 1999, Advest received a written expression of interest
from the fourth institution and on September 14, 1999 representatives of NMBT's
management and Advest, including Messrs. Carrigan and Lent, met with
representatives of the fourth potential suitor.
At its regularly scheduled meeting on September 15, 1999, the NMBT board of
directors reviewed, with representatives of Advest, the initial proposal
received from Summit and management's discussion with, and the expression of
interest of, the fourth potential suitor. During the next several days, Summit
performed its on-site due diligence review. Subsequently, the fourth institution
conveyed a second expression of interest, including an increased price proposal.
On September 22, 1999, NMBT's board of directors held a special meeting.
Robert Cox, President of Summit, and Mr. Feeney made a presentation to the NMBT
directors. Messrs. Cox and Feeney defined and discussed Summit's overall
business philosophy, target markets, future plans, recent trends in the price of
its common stock, status of non-performing assets, anticipated transition
procedures, and other matters. After Messrs. Cox and Feeney departed,
representatives of Advest reviewed with the NMBT board of directors the four
proposals received to date. Particular focus was placed on the evaluation of
each potential suitor's stock since each suitor had proposed a stock-for-stock
transaction.
20
<PAGE>
A special meeting of NMBT's board of directors was held on September 27,
1999. A representative of Advest reported that he had been advised that the due
diligence review conducted by Summit had proceeded well, and that Summit had
expressed an interest to proceed at the per share price level initially
communicated by Summit. During the discussions, it was noted that:
o the Summit proposed per share price range was the highest received;
o the directors were impressed with Summit's long-term potential;
o Summit's offer, as represented by the exchange ratio formula, would be
a substantial premium to the current per share market price for NMBT
common stock; and
o considering various factors, including those mentioned above and the
liquidity of Summit stock, Summit's management philosophy, the
prospects for NMBT on a stand-alone basis, Summit's willingness to
grant an equivalent dividend during the period between announcement
and closing and Summit's agreement to a reasonable ceiling and floor
on the exchange ratio, the Summit offer appeared to be in the best
interests of NMBT shareholders.
Further, the directors concluded that, based upon Summit's experience in
acquiring community banks, including community banks in Connecticut, NMBT's
customers would be well served by Summit. The directors then discussed certain
additional business issues which they concluded should be reflected in the
definitive agreement.
On September 30, 1999, a copy of the initial draft of the definitive merger
agreement was distributed to each director for review. A special NMBT board of
director's meeting was held on Saturday, October 2, 1999. Also present at the
meeting were representatives of Mintz Levin and Advest. A representative of
Mintz Levin distributed a binder containing recent drafts of the definitive
merger agreement and other ancillary acquisition documents and reviewed with the
directors, as had been done previously, their fiduciary responsibilities and
reviewed separately the definitive merger agreement, the stock option agreement,
and the affiliate agreements, as well as the responsibilities of NMBT and the
NMBT board of directors with respect to certain trading and disclosure matters.
A representative of Advest provided a written comparative analysis of the Summit
offer, and advised the NMBT board of directors that Advest was prepared to
render a fairness opinion with respect to the Summit offer. The NMBT board of
directors scheduled another special meeting for the evening of Sunday, October
3, 1999, thus providing the directors time to reflect upon the discussion held
during the October 2, 1999, meeting.
At the October 3, 1999, meeting, held via telephone conference, there was
further discussion regarding the terms set forth in the definitive agreement,
after which, the NMBT board of directors unanimously approved the definitive
merger agreement and stock option agreement.
REASONS FOR THE MERGER
NMBT. NMBT's board of directors has approved the merger agreement and the
transactions provided for by the merger agreement and determined that the merger
is fair to, and in the best interests of, NMBT and its shareholders. The NMBT
board of directors therefore recommends that holders of NMBT common stock vote
to approve and adopt the merger agreement and the transactions contemplated by
the merger agreement.
The NMBT board of directors believes that the merger will enable holders of
NMBT common stock to realize increased value due to the premium over market
price per share of NMBT common stock, as represented by the exchange ratio
formula. The NMBT board of directors also believes that the merger may enable
NMBT's shareholders to participate in opportunities for appreciation of Summit
common stock. See "-Background" and "-Opinion of NMBT's Financial Advisor." In
reaching its decision to approve the merger agreement, the NMBT board of
directors consulted with Mintz Levin, regarding the legal terms of the merger
and the board's fiduciary obligations in its consideration of the proposed
merger, with Advest regarding the financial aspects and fairness of the proposed
merger and with management of NMBT. Without assigning any relative or specific
weight, the NMBT board of directors considered the following material factors,
many of which are subjective in nature, both from a short-term and long-term
perspective:
(i) the NMBT board of director's familiarity with, and review of
Summit's business, financial condition, results of operations and
prospects, including, but not limited to, its potential growth,
development, profitability and the business risks associated
therewith;
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<PAGE>
(ii) the current and prospective environment in which NMBT operates,
including national and local economic conditions, the highly
competitive environment for financial institutions generally, the
increased regulatory burden on financial institutions, and the trend
toward consolidation in the financial services industry;
(iii) the potential for appreciation in market value of NMBT common stock
on both a short- and long-term basis, as a stand-alone entity, in
comparison to the exchange ratio formula;
(iv) information about Summit derived from publicly available data as
well as other financial data provided by Summit and discussions with
Summit management concerning the business, financial conditions,
results of operations and asset quality of Summit;
(v) the competitive position and future growth prospects of Summit
following the merger;
(vi) the presentations of Advest regarding the merger and the opinion of
Advest that as of the date of the merger agreement, the merger
consideration was fair, from a financial point of view, to the
holders of NMBT common stock (see "-Opinion of NMBT's Financial
Advisor");
(vii) the financial terms and other conditions of the merger agreement;
(viii) the effect on NMBT's employees and market area of the merger with
Summit, including potential employee retention and stay bonuses; and
(ix) the expectation that Summit will continue to provide quality
services to the communities and customers served by NMBT and
Summit's capacity, as a larger institution with a larger capital
base, to provide a wider range of services and enhanced access to
credit to such customers and communities.
SUMMIT. Summit's board of directors believes the merger will enhance
Summit's retail franchise and competitive position in key market areas.
OPINION OF NMBT'S FINANCIAL ADVISOR
Advest has acted as financial advisor to NMBT in connection with the
merger. As part of its engagement, Advest delivered its written opinion dated
October 2, 1999 to NMBT's board of directors at the October 2, 1999 NMBT board
of directors meeting. Advest's opinion stated that, as of October 2, 1999, the
exchange ratio was fair from a financial point of view to the holders of NMBT
common stock. Again, as part of its engagement, Advest delivered an updated
written opinion. Advest's updated opinion states that as of the date of this
Proxy Statement-Prospectus, the exchange ratio is fair from a financial point of
view to the holders of NMBT common stock. Except as discussed herein, no
limitations were imposed by NMBT's board of directors upon Advest with respect
to investigations made or the procedures followed by Advest in rendering its
opinion.
THE FULL TEXT OF THE WRITTEN OPINION BY ADVEST, DATED THE DATE OF THIS
PROXY STATEMENT-PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS
CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS
ATTACHED AS APPENDIX B TO THIS PROXY STATEMENT-PROSPECTUS. NMBT SHAREHOLDERS ARE
URGED TO READ THIS OPINION CAREFULLY AND IN ITS ENTIRETY. ADVEST'S OPINION IS
DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE EXCHANGE
RATIO TO THE HOLDERS OF NMBT COMMON STOCK, HAS BEEN PROVIDED TO NMBT'S BOARD OF
DIRECTORS IN CONNECTION WITH ITS EVALUATION OF THE MERGER, DOES NOT ADDRESS THE
MERITS OF THE UNDERLYING DECISION BY NMBT TO ENGAGE IN THE MERGER, AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY NMBT SHAREHOLDER AS TO HOW THE SHAREHOLDER
SHOULD VOTE. THE SUMMARY OF THE OPINION OF ADVEST SET FORTH IN THIS PROXY
STATEMENT-PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF THE OPINION.
In arriving at its opinion, Advest among other things:
o Reviewed and analyzed certain publicly available financial statements
for NMBT and Summit and financial information made available to Advest
by the management of NMBT and Summit;
o Analyzed certain internal financial statements, including financial
projections and other financial and operating data prepared by the
management of NMBT;
o Discussed the past, present and future operations, financial condition
and prospects of NMBT and Summit with the management of NMBT and
Summit, respectively;
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o Reviewed the stock price performance and trading activity of NMBT
common stock and Summit common stock;
o Compared the financial performance and condition of NMBT and Summit
with that of certain other comparable publicly traded companies;
o Reviewed and discussed with the management of NMBT and Summit the
strategic objectives of the merger and certain other benefits of the
merger;
o Reviewed the financial terms, to the extent publicly available, of
certain merger and acquisition transactions comparable, in whole or in
part, to the merger;
o Reviewed the pro forma impact of the merger and the contribution of
NMBT and Summit to the new pro forma combined entity on the basis of a
number of key financial categories in relation to pro forma ownership;
o Reviewed the merger agreement and the stock option agreement; and
o Performed such other analyses and investigations as Advest deemed
appropriate.
In rendering its opinion, Advest assumed and relied upon, without
independent verification, the accuracy and completeness of all of the financial
and other information reviewed by it for the purposes of providing its opinion,
and did not assume any responsibility for independent verification of the
information. Advest did not assume any responsibility for independent valuation
and appraisal of the assets and liabilities of NMBT. With respect to financial
projections, Advest assumed that they were reasonably prepared by the management
of NMBT on bases reflecting the best currently available estimates and judgments
of the future financial performance of NMBT. Advest expresses no view as to the
reasonableness of the projections provided or the assumptions on which they were
based. Advest also assumed that the merger would be consummated in accordance
with the terms of the merger agreement without material waiver or modification.
Advest's opinion dated October 2, 1999, and its opinion dated the date of this
Proxy Statement-Prospectus are based upon economic, market and other conditions
as they existed and could be evaluated on October 2, 1999, and the date of this
Proxy Statement-Prospectus, respectively. The forecasts or projections furnished
to Advest for NMBT were prepared by the management of NMBT. As a matter of
policy, NMBT does not publicly disclose internal management forecasts,
projections or estimates of the type furnished to Advest in connection with its
analysis of the merger, and such forecasts, projections and estimates were not
prepared with a view towards public disclosure. These forecasts, projections and
estimates were based on numerous variables and assumptions which are inherently
uncertain and which may not be within the control of management, including,
without limitation, general economic, regulatory and competitive conditions.
Accordingly, actual results could vary materially from those set forth in the
forecasts, projections and estimates provided by the management of NMBT. The
following is a summary of the material analyses conducted by Advest in updating
its opinion as of the date hereof from its opinion dated October 2, 1999.
Similar written analyses were prepared and presented by Advest to NMBT's board
of directors at its meeting held on October 2, 1999.
COMPARABLE PUBLIC COMPANY ANALYSES. Advest reviewed certain financial,
operating and stock market performance data of 12 publicly traded banks and bank
holding companies headquartered in the Northeast region of the United States,
each with assets between $200 million and $900 million as of and for the twelve
months ending September 30, 1999 (the "NMBT Peer Companies"). Advest analyzed
the relative performance and value of NMBT by comparing certain publicly
available financial data of NMBT with that of the NMBT Peer Companies, including
ratios of tangible equity to assets, total risk based capital ratios, return on
average assets, return on average equity and market price to estimated earnings
per share in 1999 and market price to book value. The operating data for NMBT
and the NMBT Peer Companies were as of or for the twelve month period ended
September 30, 1999. Stock prices for the NMBT~Peer Companies were as of the
market close on January 21, 2000. The stock price for NMBT is as of the market
close on October 1, 1999. The analyses yielded the following comparison of the
medians for the NMBT Peer Companies with NMBT, respectively:
o Tangible equity to assets ratios of 8.5% and 7.3%;
o Total risk based capital ratios of 14.4% and 14.4%;
o Return on average asset ratios of 1.2% and 1.0%;
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o Return on average equity ratios of 13.5% and 13.1%;
o Market price to estimated earnings per share in 1999 of 12.3x and
12.1x; and
o Market price to book value multiples of 148% and 151%.
Advest performed similar analyses with respect to Summit. Advest reviewed
and compared certain financial, operating and stock market performance data of
Summit with 10 publicly traded bank holding companies in the United States, each
with assets between $25 billion and $45 billion as of and for the twelve months
ending December 31, 1999, except for one company whose financial and operating
data was as of September 30, 1999 (the "Summit Peer Companies"). Advest analyzed
the relative performance and value of Summit by comparing certain publicly
available financial data of Summit with that of the Summit Peer Companies,
including ratios of tangible equity to assets, return on average assets, return
on average equity, market price to earnings per share in 1999 and estimated
earnings per share in 2000 and market price to book value. The operating and
financial data for Summit was as of and for the twelve month period ended
December 31, 1999, excluding non-recurring after-tax charges of $17.1 million.
All stock prices were as of the market close on January 21, 2000. The analyses
yielded the following comparison of the medians for the Summit Peer Companies
with Summit, respectively:
o Tangible equity to assets ratios of 6.0% and 6.4%;
o Return on average asset ratios of 1.4% and 1.3%;
o Return on average equity ratios of 17.0% and 16.2%;
o Market price to earnings per share in 1999 of 11.2x and 10.7x;
o Market price to estimated earnings per share in 2000 of 10.4x and
9.3x; and
o Market price to book value multiples of 216% and 174%.
COMPARABLE TRANSACTIONS ANALYSES. Advest reviewed the consideration paid or
proposed to be paid in other transactions in 1998,1999 and through January 21,
2000 involving banks and bank holding companies. Specifically, Advest analyzed
56 transactions in the Connecticut, New York, New Jersey and Pennsylvania region
involving banking companies (the "Regional Transactions") and 122 transactions
nationwide with deal values between $35 and $100 million (the "Comparable
Transactions"). In reviewing the Regional and Comparable Transactions, Advest
examined the multiples of price paid relative to previous twelve-month earnings,
price-to-book value, and the thirty trading day market premium. These analyses
yielded the following comparison of the medians for the Regional Transactions
with the merger, respectively:
o Price to earnings for the last twelve months of 26.9 x and 21.3x;
o Price to book value ratios of 274% and 246%;
o Price to tangible book value ratios of 280% and 247%; and
o Price to seller common stock price before announcement of transaction
of 137% and 163%.
These analyses yielded the following comparison of the medians for the
Comparable Transactions with the merger, respectively:
o Price to earnings for the last twelve months of 21.9 x and 21.3x;
o Price to book value ratios of 286% and 246%;
o Price to tangible book value ratios of 301% and 247%; and
o Price to seller common stock price before announcement of transaction
of 139% and 163%.
STOCK TRADING HISTORY. Advest reviewed the performance of the weekly stock
prices and trading volume of the NMBT common stock during the period from
December 27, 1996 through October 1, 1999 and Summit common stock during the
period from December 27, 1996 through January 21, 2000. Advest compared the per
share stock price activity of NMBT common stock to the NMBT Peer Companies and
major bank stock indexes and compared the per share market price activity of
Summit common stock to the Summit Peer Companies and the same major bank stock
indexes.
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PRO FORMA MERGER ANALYSES. Advest estimated the impact of the proposed
merger on Summit's projected fully diluted estimated earnings per share for
2000. Advest based its analysis on equity analysts' consensus estimates for
Summit, conversations it conducted with the management of Summit, NMBT
management's projected future earnings for 2000 and conversations it conducted
with NMBT management. Based on this information and the terms of the proposed
merger, Advest concluded that, for Summit, the merger could have an
insignificant dilutive effect (before taking into account various cost savings
and revenue enhancements which could be accomplished upon consolidation of
NMBT's and Summit's operations) on estimated fully diluted earnings per share in
2000. Advest also calculated that the merger could have an insignificant
accretive effect on Summit's earnings per share in 2000 if pre-tax cost savings
and revenue enhancements estimated by NMBT could be achieved. Separately, Advest
also determined that the merger would have an accretive effect on NMBT's
dividend per share of approximately 204%, based on Summit's and NMBT's then
current dividend payments and Summit's January 21, 2000 market price of $28.25.
CONTRIBUTION ANALYSIS. Based on Summit's January 21, 2000 market price of
$28.25, NMBT would receive an exchange ratio of .9204 shares for each NMBT
share. NMBT's shareholders would own approximately 1.44% of the pro forma shares
outstanding, while it would contribute 1.10%, 1.11%, 1.22% and 1.02% of pro
forma assets, loans, deposits and equity, respectively. Based on analysts'
consensus earnings estimates for Summit and internal company earnings estimates
for NMBT, NMBT's earnings contribution in 2000 would be 0.88% of pro forma
earnings.
DIVIDEND DISCOUNT ANALYSIS. Advest performed an analysis to calculate a
range of present values per share of NMBT common stock assuming NMBT continued
to operate as a stand-alone entity. The range was determined by adding (i) the
present value of the estimated future dividend stream that NMBT could generate
over the period beginning January 1, 2000 and ending on December 31, 2003, and
(ii) the present value of the estimated terminal value of NMBT common stock on
December 31, 2003. To determine a projected dividend stream, Advest assumed (i)
an increase in assets of approximately 8% each year for 2000 through 2003; (ii)
an increase in net income of 9% to 16% annually for 2000 through 2003; and (iii)
a dividend payout ratio of 30% each year for 2000 through 2003. The estimated
terminal values were based upon a range of price-to-earnings and price-to-book
value multiples consistent with the range of price-to-earnings and price-to-book
value multiples at which similarly-sized banking institutions located in the
United States have traded in 1998-1999 (12 times to 16 times previous twelve
month earnings per share and 1.6 times to 2.0 times book value per share) and a
range of discount rates of 12% to 15%. Applying the foregoing multiples,
discount rate and assumptions, Advest determined that the fully diluted value
per share of NMBT common stock ranged from approximately $15.70 to $22.63 based
on the price-to-earnings multiple assumptions and $16.31 to $22.17 based on the
price-to-book value multiple assumptions.
In arriving at its opinion, Advest performed a variety of financial
analyses, the material portions of which are summarized above. The summary set
forth above does not purport to be a complete description of the analyses
performed by Advest or of Advest's presentation to NMBT's board of directors.
The preparation of a fairness opinion is a complex analytical process involving
various determinations as to the most appropriate and relevant methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, a fairness opinion is not necessarily susceptible
to partial analysis or summary description. In arriving at its opinion, Advest
did not attribute any particular weight to any analysis or factor considered by
it, but rather made qualitative judgments as to the significance and relevance
of each analysis and factor. Accordingly, Advest believes that its analyses must
be considered as a whole and that selecting portions of the analyses and the
factors considered by it, without considering all the analyses and factors,
could create an incomplete view of the process underlying its analyses set forth
in its opinion. With regard to the Comparable Public Company Analyses and the
Regional and Comparable Transactions Analyses summarized above, Advest selected
comparable public companies on the basis of various factors; however no public
company or transaction utilized as a comparison is identical to NMBT, Summit or
the merger. Accordingly, an analysis of the foregoing is not mathematical;
rather, it involves complex considerations and judgments concerning differences
in financial and operating characteristics of the comparable companies and other
factors that could affect the acquisition or public trading value of the
comparable companies and transactions to which NMBT, Summit and the merger are
being compared.
Advest's opinion does not imply any conclusion as to the likely trading
range for Summit common stock following consummation of the merger, and does not
address NMBT's underlying business decision to effect the merger. In performing
its analyses, Advest made numerous assumptions with respect to industry
performance, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of NMBT and Summit. Any
estimates contained in such analyses are not necessarily indicative of actual
past or future
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results or values, which may be significantly more or less than such estimates.
Actual values will depend upon several factors, including changes in interest
rates, dividend rates, market conditions, general economic conditions and other
factors that generally influence the price of securities.
Advest is a nationally recognized investment banking firm and was selected
by NMBT based on Advest's experience and expertise. Advest regularly engages in
evaluation of bank and bank holding company securities in connection with
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for various other
purposes. In the ordinary course of its business, Advest may effect
transactions, for its own account or for the account of customers, and hold at
any time a long or short position in securities of NMBT or Summit. Advest agreed
to act as financial advisor to NMBT in connection with the merger. NMBT paid
Advest $100,000 upon execution of the merger agreement and $100,000 upon the
rendering of the opinion. NMBT has also agreed to pay Advest, a transaction fee
of 0.80% of the aggregate consideration paid or payable by Summit (which
includes Summit shares issuable or cash payable upon the exercise or retirement
of converted NMBT stock options and the dividend equivalency permitted under the
merger agreement) upon consummation of the merger, which will be determined as
of the closing date. The $100,000 paid upon execution of the merger agreement
and the $100,000 paid upon rendering the opinion are to be credited against the
transaction fee of 0.80% of the aggregate consideration. NMBT has agreed to
reimburse Advest for its reasonable out-of-pocket expenses, including travel,
outside legal fees and related charges, and to indemnify Advest and related
persons against certain liabilities, including certain liabilities under the
federal securities laws, from and arising out of or based upon Advest's
engagement on its behalf.
STOCK OPTION AGREEMENT
As an inducement and condition to Summit's willingness to enter into the
merger agreement, NMBT entered into the NMBT Corp. Stock Option Agreement dated
as of October 4, 1999 with Summit. The following discussion highlights selected
information from the stock option agreement but may not contain all the
information which is important to you. To understand the stock option agreement
fully you should read carefully the entire document which is included as
Appendix C hereto.
Pursuant to the stock option agreement, NMBT granted to Summit an
irrevocable option, exercisable under limited and specifically defined
circumstances, none of which, to the best of Summit's and NMBT's knowledge, has
occurred as of the date hereof, to purchase up to 531,043 shares of NMBT common
stock at a price of $18.87 per share.
If Summit is in breach of any material covenant or obligation contained in
the merger agreement and, if the merger agreement has not been terminated prior
thereto, that breach would entitle NMBT to terminate the merger agreement,
Summit will not be permitted to exercise the option. Otherwise, Summit, as long
as the option has not yet terminated, may exercise the option, in whole or in
part, at any time and from time to time following the occurrence of a Purchase
Event, as defined below. The option will terminate upon the earliest to occur of
certain events, including:
o the time immediately prior to the effective time of the merger;
o termination of the merger agreement prior to the occurrence of an
Extension Event, as defined below, other than a termination by Summit
resulting from (1) a material breach of the merger agreement by NMBT
which has not been cured or is not capable of being cured within the
time allotted, (2) nonsatisfaction of a condition to Summit's
obligation to close the merger, other than failure to obtain
shareholder approval of the merger agreement or failure to obtain the
fairness opinion of Advest, or (3) the NMBT board of directors'
failure to recommend, or its withdrawal of or modification or change
to, or its vote to withdraw, modify or change, its recommendation to
NMBT shareholders to approve the merger agreement; or
o 12 months after the termination of the merger agreement following the
occurrence of an Extension Event, as defined below, or the termination
of the merger agreement by Summit upon (1) a material breach by NMBT
which has not been cured or is not capable of being cured within the
time allotted, (2) nonsatisfaction of a condition to Summit's
obligation to close the merger, other than failure to obtain NMBT
shareholder approval of the merger agreement or failure to obtain the
fairness opinion of Advest, or (3) the NMBT board of direc-
tors' failure to recommend, or its withdrawal or modification or
change to, or its vote to withdraw, modify or change, its
recommendation to NMBT shareholders to approve the merger agreement or
option agreement.
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The term "Extension Event" shall mean the occurrence of some events without
Summit's prior written consent, including:
o NMBT, NMBT's board of directors or any of NMBT's subsidiaries taking
some actions (each an "Acquisition Transaction"), including
recommending to shareholders the approval of, or entering into an
agreement with any third party to effect, (1) a merger, consolidation
or similar transaction involving NMBT or any of its banking
subsidiaries, (2) the purchase, lease, or other acquisition of ten
percent or more of the aggregate value of the assets or deposits of
NMBT or any of its banking subsidiaries, (3) the purchase or other
acquisition of securities representing ten percent or more of the
voting power of NMBT or any of its banking subsidiaries or (4) any
substantially similar transaction, in each case except as otherwise
permitted by the merger agreement or option agreement;
o any third party's acquiring beneficial ownership, or the right to
acquire beneficial ownership, of ten percent or more of the aggregate
voting power of NMBT or any of its banking subsidiaries;
o any third party's making a bona fide proposal to NMBT or its
shareholders, by public announcement or written communication that is
or becomes publicly disclosed, to engage in an Acquisition
Transaction, including the commencement of a tender offer or exchange
offer to purchase ten percent or more of the aggregate voting power of
NMBT or any of its banking subsidiaries;
o after a proposal by a third party to NMBT or its shareholders to
engage in an Acquisition Transaction, NMBT breaches, without curing
within the time allotted, any representation or covenant in the merger
agreement which would entitle Summit to terminate the merger
agreement;
o any third party's filing an application with any federal or state bank
regulatory authority for approval to engage in an Acquisition
Transaction; or
o the failure of the NMBT board of directors to call a meeting of NMBT
shareholders to approve the merger agreement, or the failure to hold
or cancellation of a shareholders meeting, or the NMBT board of
directors withdrawal or adverse modification of its unanimous
recommendation of the merger or a prospective announcement of a
withdrawal or modification of its unanimous recommendation. o any
Purchase Event, as defined below, other than that described in the 2nd
bullet below.
The term "Purchase Event" shall mean any of the following events or
transactions:
o any person's, other than Summit or a subsidiary of Summit, acquiring
beneficial ownership of 25 percent or more of the aggregate voting
power of NMBT or any of its banking subsidiaries, except as otherwise
permitted by the merger agreement or option agreement;
o the NMBT shareholders do not approve the merger at the shareholders
meeting or NMBT's board of directors does not call a shareholder's
meeting for consideration of the merger or a shareholder's meeting is
not held or is canceled or if NMBT's board of directors withdraws or
modifies in a manner adverse to the consummation of the merger its
recommendation of the merger or has made an advance announcement of a
withdrawal or modification, in each case after an Extension Event
other than the Extension Event described in the next to last bullet
under the definition of Extension Event above; or
o the occurrence of an Extension Event described in the first bullet
under the definition of "Extension Event" above, except that the
percentage referred to in clauses (2) and (3) thereof shall be 25
percent.
Upon the occurrence of certain events set forth in the stock option
agreement, at the election of Summit, the option, or shares issued pursuant to
the exercise thereof, must be repurchased by NMBT or converted into, or
exchanged for, an option of another corporation or NMBT. In addition, the stock
option agreement grants certain registration rights to Summit with respect to
the shares represented by the option. The terms of these repurchase, substitute
option and registration rights are set forth in the stock option agreement.
The stock option agreement and option are intended to increase the
likelihood that the merger will be consummated according to the terms set forth
in the merger agreement and may be expected to discourage offers by third
parties to acquire NMBT prior to the merger. To the knowledge of Summit and
NMBT, no event giving rise to the right to exercise the option has occurred as
of the date of this Proxy Statement-Prospectus.
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REGULATORY APPROVALS
The merger is subject to approval by the Federal Reserve Board under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). The BHC Act
provides that the Federal Reserve Board may not approve any transaction (1) that
would result in a monopoly, or that would be in furtherance of any combination
or conspiracy to monopolize or to attempt to monopolize the business of banking
in any part of the United States, or (2) the effect of which in any section of
the country may be substantially to lessen competition, or to tend to create a
monopoly, or that in any other manner would be in restraint of trade, unless the
Federal Reserve Board finds that the anti-competitive effects of the proposed
transaction are clearly outweighed in the public interest by the probable effect
of the transaction in meeting the convenience and needs of the communities to be
served. In conducting its review of any application for approval, the Federal
Reserve Board is required to consider the financial and managerial resources and
future prospects of the company or companies and the banks concerned, and the
convenience and needs of the communities to be served. Under the BHC Act, as
interpreted by the Federal Reserve Board and the courts, the Federal Reserve
Board may deny any application if it determines that the financial or managerial
resources of the acquiring bank holding company are inadequate. The acquisition
by Summit of 5% or more of NMBT's voting stock is subject to the same
requirement for approval. Summit filed an application for the merger with the
Federal Reserve Board on November 22, 1999 and the Federal Reserve Board
approved the merger on December 30, 1999.
The BHC Act provides that a transaction approved by the Federal Reserve
Board may not be consummated for 30 days after the approval is received or, if
certain conditions are met, a shorter period, but, in the absence of an
emergency, not less than 15 calendar days after the date of approval. During
this period, the U.S. Department of Justice may commence legal action
challenging the transaction under the antitrust laws. If, however, the U.S.
Department of Justice does not commence legal action during the specified
waiting period, it may not challenge the transaction thereafter except in an
action commenced under Section 2 of the Sherman Antitrust Act. Satisfactory
financial condition, particularly with regard to capital adequacy, and
satisfactory Community Reinvestment Act ratings generally are prerequisites to
obtaining Federal Reserve Board approval to make acquisitions. All of Summit's
subsidiary banks are currently rated "satisfactory" or better under the
Community Reinvestment Act.
The acquisition of NMBT by Summit and NMBT Bank by Summit Bank (CT) is also
subject to the approval by the Connecticut Commissioner of Banking under the
Banking Law of Connecticut (the "BLC"). Under the BLC, the Connecticut
Commissioner of Banking, in considering such acquisition, is to consider whether
the acquisition is reasonably expected to produce benefits to the public and
whether such benefits clearly outweigh possible adverse effects, including, but
not limited to, an undue concentration of resources and decreased or unfair
competition. The Connecticut Commissioner of Banking may not approve the
acquisition without considering whether: (i) the investment and lending policies
of NMBT Bank and Summit Bank (CT) prior to the merger and Summit Bank (CT) after
the merger will be consistent with safe and sound banking practices and will
benefit the state; (ii) the services or proposed services of Summit Bank (CT)
after the merger will be consistent with safe and sound banking practices and
will benefit the economy of the state; (iii) the acquisition of NMBT Bank by
Summit Bank (CT) will not substantially lessen competition in the banking
industry in the state and (iv) Summit Bank (CT)and NMBT Bank will have
sufficient capital to ensure and will ensure that Summit Bank (CT) will comply
with applicable minimum capital requirements and will have sufficient managerial
resources to operate Summit Bank (CT) in a safe and sound manner. In addition,
the Connecticut Commissioner of Banking may not approve the acquisition of NMBT
Bank by Summit Bank (CT) (and indirectly by Summit) unless the Commissioner
finds that Summit Bank (CT) and NMBT Bank have a record of compliance with the
Community Reinvestment Act of 1977 and Connecticut community reinvestment and
consumer protection banking laws and that following the acquisition of NMBT Bank
by Summit Bank (CT) (and indirectly by Summit), NMBT Bank will provide adequate
services to meet the banking needs of all community residents, including low
income residents and moderate income residents. An application for approval of
the acquisition of NMBT and NMBT Bank by Summit and Summit Bank (CT),
respectively, was filed with the Connecticut Commissioner of Banking on November
22, 1999 and was approved on January 24, 2000.
The merger of NMBT Bank with Summit Bank (CT) after the initial acquisition
of NMBT by Summit also requires the prior approval of the FDIC under the federal
Bank Merger Act (the "BMA"). The BMA applies competitive, financial, managerial,
community reinvestment and public service standards similar to those described
above with respect to the BHC Act. Summit Bank (CT) and NMBT Bank filed an
application with the FDIC on November 22, 1999 and on January 6, 2000, the FDIC
approved the merger of NMBT Bank with Summit Bank (CT).
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NMBT shareholders should be aware that regulatory approvals of the merger
may be based upon different considerations than those that would be important to
shareholders in determining whether or not to approve the merger. Any regulatory
approvals should in no event be construed by a NMBT shareholder as a
recommendation by any regulatory agency with respect to the merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Directors and executive officers of NMBT have certain interests in the
merger that are different from and in addition to their interests as NMBT
shareholders. These interests are described in more detail below.
INDEMNIFICATION
In the merger agreement, Summit has agreed to indemnify and to advance
expenses in matters that may be subject to indemnification to persons who served
as directors and officers of NMBT or any subsidiary of NMBT on or before the
effective time of the merger with respect to liabilities and claims, and related
expenses including fees and disbursements of counsel, made against them
resulting from their service as directors or officers prior to the effective
time of the merger. Summit further agreed that this indemnification and
advancement of expenses would be made in accordance with and subject to the
requirements and other provisions of Summit's Restated Certificate of
Incorporation and By-Laws and NMBT's Restated Certificate of Incorporation and
Bylaws or the certificate of incorporation and bylaws of the applicable
subsidiary of NMBT, as in effect on the date the parties signed the merger
agreement and to the extent permitted by law.
In the merger agreement, Summit also agreed that, subject to NMBT's
covenant to take all action necessary to preserve its rights under its
directors' and officers' liability insurance policies with respect to matters
occurring prior to the effective time of the merger, for a period of six years
after the effective time of the merger, Summit would use its best efforts to
provide, to the persons who served as directors or officers of NMBT or any
subsidiary of NMBT on or before the effective time of the merger, insurance
against liabilities and claims, and related expenses made against them resulting
from their service prior to the effective time of the merger. This insurance
would be comparable in coverage to that provided by Summit to its own directors
and officers, but, if not available on commercially reasonable terms, the
coverage would be substantially similar in all material respects to the
insurance coverage provided to these individuals in these capacities on the date
of the merger agreement. However, in no event is Summit required to expend more
than 200% of the current amount expended by NMBT on an annual basis prior to the
execution of the merger agreement to maintain that coverage. Summit has agreed
to use its best efforts to obtain as much comparable insurance as is available
for the coverage amount if it is unable to maintain or obtain comparable
coverage. NMBT must renew any existing insurance or purchase any "discovery
period" insurance provided for under existing insurance at Summit's request.
BOARD OF DIRECTORS AND OFFICERS OF SUMMIT AND SUMMIT BANK (CONNECTICUT)
The members of the Summit board of directors and the executive officers of
Summit immediately prior to the effective time of the merger will continue to be
the members of the Summit board of directors and executive officers of Summit at
the effective time of the merger.
Summit has agreed that upon the merger of NMBT Bank with Summit Bank (CT),
Summit will cause to be elected to the board of directors of the surviving bank
five persons who are then existing members of the NMBT board of directors.
EMPLOYMENT AGREEMENTS
NMBT has employment agreements with Messrs. Carrigan, Lent and Maher. Their
annual salary for the period ending December 31, 1999 is $170,000, $133,900 and
$113,900, respectively. The employment agreements provide for a term of one year
expiring December 31, 1996, 1999 and 1999, respectively. The agreements also
provide for one-year extensions unless terminated in accordance with the terms
contained therein. Any increases in salary paid during extension periods are
determined at the discretion of the NMBT board of directors.
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Mr. Carrigan's agreement provides for the payment of cash severance equal
to three times his average annual gross income (excluding stock option
exercises) for the previous five years, less one dollar, upon his voluntary
termination for "good reason" (as defined in the agreement) or involuntary
termination other than for "cause" (as defined in the agreement) within twelve
months following a "change of control" (as defined in the agreement). If
employment is terminated for cause or if Mr. Carrigan voluntarily terminates his
employment other than in connection with a change in control, Mr. Carrigan would
be entitled to receive compensation only through the date of termination. If his
employment is terminated for any reason other than for cause, disability, death
or a change in control, then Mr. Carrigan would be entitled to be paid the
greater of (i) his salary for the months remaining in the term (as defined in
the agreement) of employment, (ii) an amount equal to his current monthly salary
multiplied by the number of years (not to exceed twelve) of his employment, or
(iii) his salary for six months.
The agreements for Messrs. Lent and Maher, while substantially similar in
form to Mr. Carrigan's, provide for the payment of cash severance equal to two
times their average annual gross income (excluding stock option exercises) for
the previous five years, less one dollar, upon their voluntary termination for
good reason (as defined in the agreement) or involuntary termination within
twelve months following a "change of control" (as defined in the agreement).
The merger will constitute a "change of control" under each of the
above-mentioned agreements. If Messrs. Carrigan, Lent or Maher were to receive
payments under their agreements with NMBT based upon their compensation through
December 31, 1999, the estimated amounts of the payments would be $610,207 to
Mr. Carrigan; $324,894 to Mr. Lent and $273,264 to Mr. Maher.
Summit has agreed to assume NMBT's obligations under these employment
agreements and to pay the severance amounts provided for in the agreements upon
the earlier of a termination of the executive's employment with Summit or the
first anniversary of the effective time of the merger if the executive has
remained employed by Summit through that time, subject to the condition that the
executive has remained employed by Summit at Summit's request for up to three
months following the merger of NMBT Bank with Summit Bank (CT) and assisted
Summit in the consolidation of the two banks.
NMBT STOCK OPTION PLANS
As described under "THE MERGER -- Conversion of NMBT Stock Options," NMBT
stock options outstanding at the effective time of the merger will be
automatically converted into Summit stock options, subject to the terms of the
NMBT option plan and grant agreement governing the NMBT stock options, including
terms and provisions governing exercises. The number of shares covered by a
converted option will be set by multiplying the number of shares covered by the
NMBT option by the exchange ratio. The exercise price per share of converted
option will be equal to the aggregate exercise price that would have been
payable upon exercise in full of the NMBT option divided by the number of shares
of Summit that may be acquired upon exercise of the converted option.
In addition, the merger agreement provides for two additional revisions to
NMBT options:
o converted options held by an NMBT employee whose employment with
Summit is terminated within one year of the effective time of the
merger, other than for cause, will continue to be exercisable until
the later of (1) the option exercise termination date provided for in
the NMBT option or (2) the first anniversary date of the effective
date of the merger; however, in no case may the converted option be
exercised after the option expiration date;
o for 30 days following the effective time of the merger, holders of
converted options may elect to receive a cash payment instead of
exercising their option. The cash payment will be equal to the
difference between the converted option exercise price and the Summit
Price.
The following table sets forth certain information relating to NMBT options
held by Michael D. Carrigan, Jay C. Lent and Peter R. Maher, and all directors
and executive officers of NMBT as a group as follows:
o the number of NMBT options held by such persons;
o the weighted average exercise price for NMBT options;
o the aggregate net unrealized value of NMBT options based on the number
of shares of Summit common stock covered by, and the exercise price
of, the Summit options into which the NMBT options are convertible and
using the last sale price of a share of Summit common stock on January
24, 2000 of $27.88 as the market price for purposes of the
calculation.
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<TABLE>
<CAPTION>
AGGREGATE
WEIGHTED NET
AVERAGE UNREALIZED
OPTIONS EXERCISE PRICE VALUE OF
HELD(1) OF OPTIONS OPTIONS
------- -------------- -----------
<S> <C> <C> <C>
Michael D. Carrigan ............ 120,000 $ 7.7969 $2,184,365
Jay C. Lent .................... 50,000 5.8750 1,006,229
Peter R. Maher ................. 40,000 6.8438 766,236
Executive Officers and Directors
as a Group (12 Persons total) 391,000 11.6519 5,610,092
</TABLE>
(1) All options held by the listed executive officers and directors are
currently exercisable.
STAY BONUSES
The merger agreement permits NMBT, after the closing date of the merger, to
pay "stay bonuses" of up to $175,000 in the aggregate to employees of NMBT
designated by NMBT, after consultation with Summit, who ~continue to be
employees of NMBT on such payment date and who execute a release of claims
against Summit and its affiliates.
INCENTIVE PLAN PAYMENTS
The merger agreement authorizes NMBT to pay NMBT employees up to $242,000
in bonus compensation for services rendered in 1999, in accordance with NMBT's
customary practice.
SEVERANCE PAY PROVISION
Under the merger agreement, the NMBT severance plan shall remain in effect
following the merger. The NMBT plan generally provides for eligible employees to
receive a payment equal to two weeks base pay multiplied by the employee's years
of service, up to a maximum of 20 weeks base pay.
THE MERGER AGREEMENT
The following discussion highlights selected information from the merger
agreement but may not contain all of the information that is important to you.
To understand the merger agreement fully you should read carefully the entire
document which is included as Appendix A hereto.
AMENDMENT
NMBT and Summit may jointly amend the merger agreement at any time.
However, after the special meeting, no amendment may reduce the amount, or
change the form, of consideration to be received by NMBT shareholders unless the
modification is submitted to a vote of NMBT shareholders.
NMBT COVENANTS
Pursuant to the merger agreement, NMBT has agreed, among other things,
that, until the effective time of the merger or termination of the merger
agreement, NMBT will advise Summit of any material adverse change in NMBT's
business and of certain other circumstances, and the business of NMBT and its
subsidiaries will be carried on substantially in the same manner as prior to the
execution of the merger agreement. Furthermore, until the effective time of the
merger or termination of the merger agreement, without the prior written consent
of Summit, NMBT will not declare or pay any dividend other than a quarterly cash
dividend at a rate equal to the then existing Summit dividend rate multiplied by
0.7024, and will refrain from taking some other actions, including certain
actions relating to changes in its capital stock, the incurrence of liabilities,
the making of certain expenditures, the relinquishment of certain rights, the
amendment of its Restated Certificate of Incorporation and Bylaws and the
issuance of capital stock.
In order to ensure that NMBT shareholders would be paid no more than one
dividend in each calendar quarter between the date of the merger agreement and
the effective time of the merger, NMBT agreed in the merger agree-
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ment to coordinate with Summit the declaration of any dividends and the setting
of any dividend record or payment dates.
NMBT also has agreed that, until termination of the merger agreement or the
effective time of the merger, neither NMBT nor any of its subsidiaries nor any
of the officers or directors of NMBT or its subsidiaries shall, and NMBT shall
direct and use its best efforts to cause its employees, agents, affiliates and
representatives (including investment bankers, brokers, financial or investment
advisors, attorneys or accountants retained by NMBT or any of its subsidiaries)
not to, initiate, solicit or encourage, directly or indirectly, any inquiries,
proposals or offers with respect to, or engage in any negotiations or
discussions with any person or provide any non-public information or authorize
or enter into any agreement or agreement in principle concerning, or recommend,
endorse or otherwise facilitate any effort or attempt to induce or implement any
"Acquisition Proposal". The merger agreement defines "Acquisition Proposal" as
any offer, including an exchange offer or tender offer, or proposal concerning a
merger, consolidation, business combination or takeover transaction involving
NMBT or any of its subsidiaries, or the acquisition of any assets (other than
those permitted under the merger agreement) or any securities of NMBT or any of
its subsidiaries. The NMBT board of directors may furnish or cause to be
furnished non-public information directly or through its representatives
concerning an Acquisition Proposal if the NMBT board of directors, after having
consulted with outside counsel and been advised of its legal rights, has
determined that the failure to provide the non-public information would cause
the members of the board of directors to breach their fiduciary duties under
applicable laws, and, provided further, that NMBT shall first obtain a
confidentiality agreement in customary form and containing at least the
confidentiality provisions set forth in the merger agreement. Further, NMBT
agreed to immediately cease any activities, discussions, or negotiations with
any parties conducted prior to execution of the merger agreement with respect to
an Acquisition Proposal. In addition, NMBT has agreed to notify Summit, by
telephone call to its chief executive officer or general counsel, promptly upon
receipt of any communication with respect to an Acquisition Proposal with
another person or receipt of a request for information from any governmental or
regulatory authority with respect to a proposed acquisition of NMBT or any of
its subsidiaries or assets by another party and to deliver as soon as possible
by facsimile transmission to that Summit officer a copy of any document relating
thereto promptly after any such document is received by NMBT.
The merger agreement obligates NMBT to disclose to Summit information
regarding environmental conditions affecting (1) any property now or previously
owned, occupied, leased or held or managed in a representative or fiduciary
capacity, (2) any property or facility of which NMBT has at any time
participated in the management or may be deemed to be or to have been an owner
or operator, and (3) any real property in which NMBT holds a security interest
in an amount greater than $50,000. The merger agreement provides Summit with
certain environmental investigative rights prior to the effective time of the
merger with respect to real property owned, leased or operated by NMBT on or
after the date of the merger agreement.
SUMMIT COVENANTS
Pursuant to the merger agreement, Summit has agreed, among other things,
that, until the effective time of the merger or termination of the merger
agreement, Summit will advise NMBT of any material adverse change in Summit's
business and certain other circumstances.
CONDITIONS TO THE MERGER; TERMINATION
The obligations of both parties to consummate the merger are subject to the
satisfaction of certain conditions ~including:
o Approval of the merger agreement by the requisite vote of the
shareholders of NMBT;
o Receipt of all required regulatory approvals by Summit and NMBT
without restrictions or limitations, that, in the reasonable opinion
of Summit, would materially adversely affect the financial condition
of Summit following the consummation of the merger, and the expiration
of any waiting periods required by such approvals;
o Continued effectiveness of the registration statement on Form S-4
filed by Summit with the Securities and Exchange Commission for the
purpose of registering the shares of Summit common stock that Summit
will issue in the merger;
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o The receipt by Summit and NMBT of an opinion from Thompson Coburn as
to certain federal income tax consequences of the merger;
o The New York Stock Exchange's indication that the shares of Summit
common stock to be issued in the merger will be listed on the New York
Stock Exchange, subject to official notice of issuance;
o The absence of material litigation;
o The absence of regulatory agreements relating to the parties;
o The delivery of officers' certificates by NMBT and Summit; and
o Other customary conditions described in the merger agreement.
Any of these conditions may be waived by the party for whose benefit the
condition was included. However, the merger will not be consummated without the
receipt of the requisite shareholder and regulatory approvals. Either party may
terminate the merger agreement if:
o NMBT shareholders, in a vote on the merger agreement at the special
meeting, fail to approve the merger agreement by the required vote;
o The other party materially breaches a warranty, representation or
covenant and that breach is not ~cured or capable of being cured
within 30 days of the giving of written notice thereof, provided that
the terminating party is not in material breach of any representation,
warranty, covenant or other agreement;
o On the designated closing date of the merger all the conditions
precedent to one party's obligations to close are not met due to the
other party's material breach; or
o The merger closing is not consummated on or before the later of (1)
July 1, 2000; provided, however, that a party does not have the
termination right described by this clause if the failure to close by
July 1, 2000 is due to its material breach or its failure to fulfill a
condition to the completion of the merger, or, (2) the 45th business
day after the last to occur of NMBT shareholder approval, receipt of
all required regulatory approvals or resolution of any legal
challenges to the merger or a determination by Summit and NMBT to
proceed regardless of whether the proceeding has been brought to a
conclusion (the "Scheduled Date"), if the last required event for
setting the Scheduled Date has occurred on or before August 1, 2000.
In addition, the parties may terminate the merger agreement at any time by
mutual agreement. Summit's board of directors may terminate the merger agreement
if NMBT's board of directors modifies its recommendation of the merger agreement
or withdraws its recommendation, or if the cost of taking necessary remedial and
other corrective actions and measures associated with certain environmental
matters exceeds $1,000,000 in the aggregate, or that cost is unascertainable but
cannot be reasonably estimated to be less than $1,000,000.
The merger agreement provides that NMBT's board of directors may terminate
the merger agreement if both of the following circumstances exist:
o The average of the closing prices of Summit common stock on the New
York Stock Exchange Composite Transactions List for the ten
consecutive full trading days ending on the Determination Date, as
defined below, (the "Summit Price") is less than $26.39, and
o The amount obtained by dividing the Summit Price by $32.1875 is more
than 15% less than the amount obtained by dividing the Determination
Date Index Price by the Starting Date Index Price, as such terms are
defined below.
In order to terminate the merger agreement pursuant to this provision, NMBT
must give notice to Summit by 11:59 P.M. on the third business day following the
Determination Date. For purposes of this NMBT right of termination, the terms
referenced above are defined as follows:
o "Determination Date" means the date which is seven business days prior
to the Scheduled Date or an earlier date which is not more than ten
days before the closing date and is specifically designated by Summit
in the closing notice as the Determination Date.
o "Index Group" means 14 bank holding companies designated in the merger
agreement, the common stocks of all of which must be publicly traded
and as to which there has not been made, since October 1, 1999 and
prior
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<PAGE>
to the Determination Date, a public announcement of a proposal for
such company to be acquired or for such company to acquire another
company or companies in transactions with a value exceeding 25% of the
acquiror's market capitalization. Any such company or companies which
does not satisfy any of the foregoing requirements shall be removed
from the Index Group. Appropriate adjustments shall be made for stock
splits, stock dividends or similar transactions occurring between
October 1, 1999 and the Determination Date.
o "Determination Date Index Price" means the average of the closing
prices of the common stock of the companies comprising the Index Group
on the New York Stock Exchange Composite Transactions List for the ten
consecutive full trading days ending on the Determination Date.
o "Starting Date Index Price" means the average of the closing prices of
the common stock of the companies comprising the Index Group on the
New York Stock Exchange Composite Transactions List on October 1,
1999.
The "Determination Date" will not occur until after the special meeting and
you will therefore not know until after that time whether this termination right
was exercisable or exercised.
EXPENSES
If (1) either party terminates the merger agreement because the other party
has materially breached a warranty, representation or covenant or because the
other party has not met its conditions of closing, or (2) Summit terminates
because NMBT's board of directors modifies its recommendation of the merger
agreement or withdraws its recommendation, or votes to withdraw, modify or
change its recommendation or its intention to make the recommendation, or
because of the environmental contingency referred to above, then the terminating
party shall be reimbursed by the defaulting party for the terminating party's
out-of-pocket expenses reasonably incurred in connection with the merger
agreement, including counsel fees, printing fees and filing fees, but excluding
any brokers', finders' or investment bankers' fees. If the merger agreement is
terminated by either party other than under circumstances described in the
immediately preceding sentence, each party is mutually released and discharged
from liability to the other party or to any third party thereunder, and no party
is liable to any other party for any costs or expenses incurred in connection
with the merger agreement, except that each party is responsible for one-half of
the expenses incurred in connection with the printing of this Proxy
Statement-Prospectus and the Registration Statement and the filing fees with the
Securities and Exchange Commission, the Federal Reserve Board, the Connecticut
Department of Banking and the New York Stock Exchange. Each party has agreed to
indemnify the other for claims for brokerage commissions and finders' fees.
DISSENTERS' RIGHTS
Under Section 262 of the DGCL, if you exercise appraisal rights in
connection with the merger, your shares of NMBT will not be converted into the
right to receive shares of Summit common stock but instead will be converted
into the right to receive the "fair value" of your NMBT shares as determined
under the DGCL.
The following is a summary of the material provisions of section 262 of the
DGCL and is not intended to be a complete statement of the provisions. You
should carefully read the full text of section 262 of the DGCL, a copy of which
is attached hereto as Appendix D and is incorporated herein by reference.
If the merger is approved by the required vote of NMBT's shareholders, you
must take the following actions to exercise your rights of appraisal:
o file written notice with NMBT of an intention to exercise rights to
appraisal of your shares prior to the NMBT special meeting;
o do not vote in favor of the merger;
o continuously hold your shares of NMBT through the effective time of
the merger, and
o within 20 days after the mailing of notice by Summit of the effective
time of the merger, make a written demand on Summit for the "fair
value" of your NMBT common stock, stating the number and class of
shares for which you are demanding payment.
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If you follow all of the above-stated conditions, the fair value of your
shares of NMBT common stock will be determined by the Delaware Court of
Chancery, exclusive of any element of value arising from the merger.
Within 10 days after the effective date of the merger, Summit, as the
surviving corporation, will notify each holder of NMBT common stock who has
complied with the conditions set forth above that the merger has become
effective. Within 120 days after the effective date of the merger, Summit or any
holder of NMBT common stock who has complied with the applicable procedures of
the DGCL, may file a petition in the Delaware Court of Chancery for the
appraisal of the fair value of the shares of NMBT common stock held by NMBT
shareholders who have exercised dissenters rights. Since, at this time, Summit
has not decided whether it will file a petition for appraisal if appraisal
rights are exercised, a dissenting shareholder who desires that a petition be
filed should file a petition unless otherwise notified that Summit or another
dissenting shareholder has filed a petition for appraisal. A holder may, within
60 days of the effective date of the merger, withdraw his or her demand for
appraisal. Within 120 days of the effective time of the merger, the holders of
dissenting shares are entitled, upon written request, to receive from Summit a
statement setting forth the aggregate number of shares with respect to which
demands for appraisals have been received.
If you demand the appraisal and purchase of your shares under Section 262
but fail to perfect, or effectively withdraw or lose the right to such purchase,
your shares will be converted into a right to receive shares of Summit common
stock in accordance with the terms of the merger agreement. Dissenting shares
lose their status as dissenting shares if, among other things:
o the merger is abandoned;
o you transfer your NMBT shares prior to submission for the required
endorsement;
o you fail to make a timely written demand for appraisal;
o you vote in favor of the merger;
o neither Summit nor you file a complaint or intervene in a pending
action within 120 days after mailing of the approval notice; or
o you deliver to Summit, as the surviving corporation, a written
withdrawal of your demand for appraisal of the dissenting shares and
acceptance of the merger, either within 60 days after the effective
date of the merger or thereafter with written approval of Summit.
Failure to follow the steps required by section 262 of the DGCL for
perfecting appraisal rights may result in the loss of appraisal rights, in which
event you will only be entitled to receive the consideration provided for by the
merger agreement. In view of the complexity of the provisions of section 262 of
the DGCL, NMBT shareholders who are considering objecting to the merger should
consult their own legal advisors.
Any NMBT shareholder who properly exercises dissenters rights will
recognize taxable gain or loss for federal income tax purposes upon receipt of
the cash payment in an amount equal to the difference between the amount of cash
received and his or her adjusted tax basis in the NMBT common stock.
NEW YORK STOCK EXCHANGE LISTING
Summit has agreed in the merger agreement to use its best efforts to cause
the shares of Summit common stock to be issued to NMBT shareholders in the
merger to be listed on the New York Stock Exchange. The New York Stock
Exchange's indication that the necessary shares of Summit common stock are to be
listed on the New York Stock Exchange, subject to official notice of issuance,
is a condition to the completion of the merger.
ACCOUNTING TREATMENT
Summit expects to account for the merger under the purchase method of
accounting. Under the purchase method of accounting, the amount by which the
purchase price paid by Summit exceeds the fair value of the net assets acquired
will be treated as goodwill. Intangible assets, including goodwill, recorded in
the transaction will be amortized over a period not to exceed 20 years.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion is based upon an opinion of Thompson Coburn,
special counsel to Summit, and except as otherwise indicated, reflects Thompson
Coburn's opinion. The discussion is a summary of the material United States
federal income tax consequences of the merger to NMBT shareholders and is not a
complete analysis or listing of all potential tax considerations or consequences
relevant to a decision whether to vote for the approval of the merger agreement.
The discussion does not address all aspects of federal income taxation that may
be applicable to NMBT shareholders in light of their status or personal
investment circumstances, nor does it address the federal income tax
consequences of the merger that are applicable to NMBT shareholders subject to
special federal income tax treatment including, without limitation, foreign
persons, insurance companies, tax-exempt entities, retirement plans, dealers in
securities, persons who acquired their NMBT common stock pursuant to the
exercise of employee stock options or otherwise as compensation, and persons who
hold their NMBT common stock as part of a "straddle," "hedge" or "conversion
transaction." In addition, the discussion does not address the effect of any
applicable state, local or foreign tax laws, or the effect of any federal tax
laws other than those pertaining to the federal income tax. As a result, you are
urged to consult with your own tax advisor to determine the specific tax
consequences of the merger to you. The discussion assumes that shares of NMBT
common stock are held as capital assets (within the meaning of Section 1221 of
the Internal Revenue Code) at the effective time of the merger.
NMBT and Summit have received an opinion from Thompson Coburn, to the
effect that, assuming the merger occurs in accordance with the merger agreement,
the merger will constitute a "reorganization" for federal income tax purposes
under Section 368(a)(1) of the Internal Revenue Code, with the following federal
income tax consequences:
o You will recognize no gain or loss as a result of the exchange of your
NMBT common stock solely for shares of Summit common stock pursuant to
the merger, except with respect to cash received instead of fractional
shares, if any, as discussed below.
o The aggregate adjusted tax basis of the shares of Summit common stock
you receive in the merger, including any fractional share of Summit
common stock deemed to be received, as described in bullet 4 below,
will be equal to the aggregate adjusted tax basis of the shares of
NMBT common stock surrendered.
o The holding period of the shares of Summit common stock you receive in
the merger, including any fractional share of Summit common stock
deemed to be received, as described in bullet 4 below, will include
the holding period of the shares of NMBT common stock surrendered.
o If you receive cash instead of a fractional share of Summit common
stock, you will be treated as if the fractional share had been
received and then redeemed by Summit in return for the amount of cash
that you received. You will recognize capital gain or loss equal to
the difference between the amount of cash received and the portion of
your adjusted tax basis in the shares of Summit common stock allocable
to the fractional share.
The opinion of Thompson Coburn is subject to the conditions and customary
assumptions that are stated in the opinion, and relies upon various
representations made by Summit and NMBT. If any of these representations or
assumptions is inaccurate, the tax consequences of the merger could differ from
those described in this section. The opinion of Thompson Coburn is also based
upon the Internal Revenue Code, regulations proposed or promulgated thereunder,
judicial precedent, and current administrative rulings and practice, all of
which are subject to change. Any such change, which may or may not be
retroactive, could alter the tax consequences discussed in this section. The
receipt of the opinion of Thompson Coburn again as of the closing date of the
merger is a condition to the completion of the merger. An opinion of counsel,
unlike a private letter ruling from the Internal Revenue Service, has no binding
effect. The Internal Revenue Service could take a position contrary to the
opinion of Thompson Coburn and, if the matter were litigated, a court may reach
a decision contrary to the opinion. Neither Summit nor NMBT has requested an
advance ruling as to the federal income tax consequences of the merger, and the
Internal Revenue Service is not expected to issue such a ruling.
THE FOREGOING IS A SUMMARY OF THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER TO CERTAIN NMBT SHAREHOLDERS AND DOES NOT TAKE INTO ACCOUNT THE
PARTICULAR FACTS AND CIRCUMSTANCES OF EACH NMBT SHAREHOLDER'S TAX STATUS AND
ATTRIBUTES. AS A RESULT, THE FEDERAL INCOME TAX CONSEQUENCES ADDRESSED IN THIS
DISCUSSION MAY NOT APPLY TO YOU. ACCORDINGLY, YOU SHOULD CONSULT WITH YOUR OWN
TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN FEDERAL AND OTHER TAX LAWS.
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RESALE OF SUMMIT COMMON
The shares of Summit common stock into which your shares of NMBT common
stock are converted at the effective time of the merger will be freely
transferable under the Securities Act of 1933 as amended, unless you are deemed
to be an "affiliate" of NMBT for purposes of Rule 145 under the Securities Act
as of the date of the special meeting. Affiliates of NMBT may not sell their
shares of Summit common stock acquired in connection with the merger except
pursuant to an effective registration statement under the Securities Act
covering the resale of those shares, or in compliance with Rule 145 under the
Securities Act or another applicable exemption from the registration
requirements of the Securities Act. Persons who may be deemed to be affiliates
of NMBT generally include individuals or entities that control, are controlled
by or are under common control with NMBT and may include executive officers and
directors of NMBT as well as principal shareholders of NMBT.
NMBT agreed in the merger agreement to use its best efforts to cause each
director, executive officer and other person deemed in the opinion of NMBT's
counsel to be affiliates of NMBT to enter into an agreement with Summit
providing that such persons agree to be bound by the restrictions of Rule 145.
DIFFERENCES IN SHAREHOLDERS RIGHTS
Summit is incorporated in the State of New Jersey and NMBT is incorporated in
the state of Delaware. If the merger is consummated, holders of NMBT common
stock will become holders of Summit common stock, and the rights of former NMBT
shareholders will be governed by the NJBCA and Summit's Restated Certificate of
Incorporation and By-Laws. The rights of NMBT stockholders under the DGCL and
NMBT's Restated Certificate of Incorporation and By-Laws differ in certain
significant respects from the rights of Summit shareholders under The NJBCA and
Summit's Restated Certificate of Incorporation and By-Laws. These differences
are summarized in the table below.
<TABLE>
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CAPITAL STOCK: Summit's Restated Certificate of NMBT's Restated Certificate of
Incorporation authorizes the Incorporation authorizes the
issuance of 390,000,000 shares of issuance of 8,000,000 shares of
common stock and 6,000,000 shares common stock and 2,000,000 shares
of preferred stock, no par value. of preferred stock, par value $.01
As of September 30, 1999, there per share. NMBT's board of
were approximately 174,766,133 directors has the power to set the
shares of Summit common stock rights, preferences, privileges and
outstanding and 2,744,256 shares designations with respect to each
of Summit common stock held in class or series of preferred stock
treasury and 2,000,000 shares of and to issue preferred stock
Summit Series S preferred stock without shareholder approval. As of
reserved for issuance under September 30, 1999, there were
Summit's shareholder rights plan. 2,668,558 shares of NMBT common
Summit's Restated Certificate of stock outstanding and no shares of
Incorporation and the NJBCA NMBT preferred stock outstanding.
authorize Summit's board of
directors to amend Summit's
Restated Certificate of
Incorporation without shareholder
concurrence to divide the
authorized shares of preferred
stock into series, to determine the
designations and the number of
shares of any series, and to
determine the relative voting,
dividend, conversion, redemption,
liquidation and other rights,
preferences and limitations of the
authorized shares of preferred
stock.
- -----------------------------------------------------------------------------------------------
NUMBER OF Summit's Restated Certificate of NMBT's Restated Certificate of
DIRECTORS: Incorporation provides that Incorporation and Bylaws provide
Summit's board of directors shall that NMBT's board of directors
consist of not less than five and shall consist of not less than five
not more than forty persons. nor more than twelve directors.
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ELECTION OF Summit's Restated Certificate of NMBT's Restated Certificate of
DIRECTORS AND Incorporation divides Summit's Incorporation divides NMBT's board
CLASSIFIED BOARD board of directors into three of directors into three classes,
OF DIRECTORS: classes, with each class of with each class serving a term of
directors serving a staggered term three years. Directors are elected
of three years. Each class of by receiving the highest number of
directors must consist, as nearly votes cast, even if not a majority.
as possible, of one-third of the Presently there are nine directors
number of directors constituting of NMBT.
the entire Summit board of
directors. Directors are elected by
receiving the highest number of
votes cast by shares entitled to
vote, even if not a majority.
Presently there are seven directors
in Class I, six directors in Class
II and six directors in Class III.
Summit's Restated Certificate of
Incorporation further requires that
resolutions increasing the number
of directors be approved by (i) 80%
of directors holding office or (ii)
80% of the shares of capital stock
of Summit entitled to vote
generally in the election of
directors, voting as a single
class.
Summit's Restated Certificate of
Incorporation also provides that
the affirmative vote of the holders
of 80% or more of the combined
voting shares of Summit, voting as
a single class, is required to
amend, repeal or take any action
inconsistent with the classified
board of directors or the
requirement for an 80% affirmative
vote to approve any increase in the
number of directors. The effect of
the classified board and related
provisions is to make it difficult
for persons other than those
negotiating directly with Summit's
board of directors to acquire seats
on Summit's board of directors and
obtain control of Summit.
- -----------------------------------------------------------------------------------------------
REMOVAL OF Summit's Restated Certificate of Under NMBT's Restated Certificate
DIRECTORS Incorporation contains no specific of Incorporation, a director may be
provisions with respect to removal removed for cause by the
of directors, other than for affirmative vote of 75% of the
directors elected by preferred entire board of directors (assuming
shareholders. Under the NJBCA, no vacancies) or by the affirmative
directors on a classified board may vote of 75% of the outstanding
only be removed by shareholders for shares other than certain 10%
cause, by the affirmative vote of shareholders, if any. NMBT
the majority of voting directors may be removed without
shareholders. cause only by the affirmative vote
of 75% of the entire board of
directors (assuming no vacancies).
- -----------------------------------------------------------------------------------------------
SHAREHOLDER Summit has in effect a shareholder NMBT has not adopted a shareholders
RIGHTS PLANS rights plan which provides that rights plan.
holders of shares of Summit common
stock possess one preferred stock
purchase right for each share of
- -----------------------------------------------------------------------------------------------
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38
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SUMMIT SHAREHOLDER RIGHTS NMBT SHAREHOLDER RIGHTS
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Summit common stock held by them.
Each preferred stock purchase right
entitles the holder to buy, as of
the close of business on the tenth
day following the occurrence of
certain takeover-related events,
one one-hundredth (1/100) of a
share of a series of preferred
stock, designated the Series S
preferred stock, at $164 per one
one-hundredth share. Each full
share of the Series S preferred
stock has rights per share equal to
100 times the rights of Summit
common stock with respect to
voting, dividends and distributions
upon liquidation or merger, and
entitles the holder to an
additional preferential dividend.
Upon the occurrence of certain
events, holders of the preferred
stock purchase rights become
entitled to purchase either shares
of the Series S preferred stock or,
if the right was not previously
exercised, a number of shares of
the acquiring person equal in
market value to approximately twice
the exercise price of the preferred
stock purchase right. Summit's
board of directors has the power to
redeem the preferred stock purchase
rights at any time prior to the
close of business on the tenth day
after a public announcement that a
person or group has acquired
beneficial ownership of 15% or more
of Summit's voting stock, upon the
majority vote of the board of
directors. In addition, the Summit
board of directors may exchange the
stock purchase rights for shares of
Summit common stock under certain
circumstances.
- -------------------------------------------------------------------------------------------------
NOMINATIONS TO Summit's By-Laws contain provisions that: NMBT's Bylaws provide that any
THE BOARD, o Establish rules governing shareholder wishing to nominate a
SHAREHOLDER nominations for director and candidate for election to NMBT's
PROPOSALS AND shareholder proposals made at board of directors must give
CONDUCT OF meetings of shareholders and, in written notice of the nomination
MEETING: general, authorize the chairman of delivered to the Secretary of NMBT
an annual meeting to determine not less than 60 days nor more than
whether nominations and shareholder 90 days prior to the meeting.
proposals have been made at least However, if less than 30 days
80 days in advance of the notice or prior public disclosure
anniversary of the preceding year's of the meeting is given or made to
annual meeting or otherwise comply shareholders, the notice from the
with the requirements of the shareholder, to be timely, must be
By-Laws, and received no later than the seventh
day following NMBT's notice or
o Establish rules governing public disclosure.
nominations for directors made at
special meetings of shareholders
and authorize the chairman of a
special meeting to determine
whether nominations have been made
at least 70 days prior to the
special meeting or the
- -------------------------------------------------------------------------------------------------
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<S> <C> <C>
tenth day following the day on
which public announcement of the
special meeting is first made or
otherwise comply with the
requirements of the By-Laws.
- ------------------------------------------------------------------------------------------------------
SHAREHOLDER Under Summit's By-Laws, except as The DGCL provides that a special
MEETINGS otherwise provided by law, special meeting may be called by the board
meetings may be called only by the of directors or by such person or
Chairman, Vice Chairman, President persons as are authorized by the
or majority of the entire Summit certificate of incorporation or
board of directors. In addition, bylaws. NMBT's Restated Certificate
under the NJBCA holders of not less of Incorporation provides that a
than 10% of a corporation's voting special meeting of shareholders may
stock may apply to the New Jersey be called only by a majority of
Superior Court for an order NMBT's board of directors unless
directing a special meeting of otherwise required by law.
shareholders to be held.
- -----------------------------------------------------------------------------------------------------
STOCKHOLDER Summit's Restated Certificate of NMBT's Restated Certificate of
ACTION BY Incorporation requires that, Incorporation prohibits shareholder
WRITTEN subject to the rights of holders of action by written consent. Unless
CONSENT: any series of Summit's preferred otherwise prohibited by the
stock or other class or series of corporation's certificate of
stock having preference over the incorporation, the DGCL permits
Summit common stock as to dividends action by less than unanimous
or upon liquidation, all actions by written consent.
the shareholders of Summit must be
taken exclusively at a duly called
annual or special meeting of
Summit's shareholders or with the
board of directors' approval by the
unanimous, but not less than
unanimous, written consent of the
shareholders. Unless otherwise
provided in a corporation's
certificate of incorporation, the
NJBCA permits action by less than
unanimous written consent, other
than for the election of directors,
which requires unanimous written
consent.
- -----------------------------------------------------------------------------------------------------
VOTE REQUIRED Summit's Restated Certificate of Under the DGCL, unless the
FOR CHARTER AND Incorporation requires that certain certificate of incorporation
BY-LAW provisions relating to increases in requires a greater vote, a proposed
AMENDMENTS: the number of directors, which amendment to a corporation's
number may also be increased by the certificate of incorporation may be
board of directors, changes to the approved by a majority of the
classified board provision and outstanding shares entitled to vote
changes to the provision requiring on the proposed amendment. Under
that actions by shareholders be NMBT's Restated Certificate of
effected at an annual or special Incorporation, certain amendments
meeting or by unanimous written require the approval of two-thirds
consent, receive the affirmative of the outstanding shares entitled
vote of holders of 80% of the to vote in the election of
combined voting shares of Summit, directors and a majority of shares
voting as a single class. held by shareholders holding less
Otherwise, pursuant to the NJBCA, than ten percent of the company's
Summit's Restated Certificate of stock. These include the following:
Incorporation may be amended, in
general, after board approval, by o amendments relating to indemnification;
the affirmative vote of a majority o amendments relating to authorized NMBT
of the votes cast. powers and its board of directors;
- -----------------------------------------------------------------------------------------------------
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40
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SUMMIT SHAREHOLDER RIGHTS NMBT SHAREHOLDER RIGHTS
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<S> <C> <C>
Under NJBCA, the power to adopt, o amendments relating to meetings of
amend and repeal by-laws of a shareholders;
corporation is vested in the board
of directors unless such power is o amendments relating to stock repurchase
reserved to the shareholders in the from certain 10% shareholders;
certificate of incorporation.
However, any by-laws made by the o amendment provisions.
board of directors may be amended
and repealed and new by-laws In addition, the provisions
adopted by the shareholders and the relating to business combinations
shareholders may prescribe in the may not be amended without the
by-laws that the board may not approval of 80% of the voting
amend or repeal by-laws approved by shares and a majority of
shareholders. Summit's By-Laws stockholders holding less than ten
provide for amendments upon percent of the NMBT common stock
two-thirds vote of the board of unless recommended by two-thirds of
directors. the NMBT board of directors and a
majority of directors continuing in
office, in which case a majority of
less than 10% shareholders is
required.
NMBT's Restated Certificate of
Incorporation gives the power to
amend its bylaws to the NMBT board
of directors, subject to the right
of shareholders to adopt, amend or
repeal bylaws made by the board of
directors.
NMBT's Bylaws provide for amendments
by two-thirds vote of the NMBT board
of directors or majority vote of
shareholders except for amendments
relating to the following
provisions, which require the
affirmative vote of two-thirds of
the shareholders, other than 10%
shareholders, if any:
o special meetings;
- ------------------------------------------------------------------------------------------------------
SUPERMAJORITY With the exception of a sale of all Under NMBT's Restated Certificate
VOTE ON CERTAIN Summit's property in the of Incorporation, the affirmative
TRANSACTIONS entirety, Summit's Restated vote of two-thirds of all voting
Certificate of Incorporation does shares is necessary to engage in
not contain any supermajority any transaction, the effect of
voting provisions with respect to which is to combine the
mergers or similar change of corporation's assets and business
control transactions. with that of another corporation
that is the beneficial owner of
5% or more of the outstanding
shares of NMBT stock eligible to
vote in the election of the board
of directors. The majority vote
of the shareholders other than
the 5% holder is also required.
Two-thirds shareholder approval
is not necessary, however, if the
combination is approved by
two-thirds of the board of
directors prior to the time the
other corporation became a
beneficial owner of 5% or more of
the shares of NMBT stock eligible
to vote in the election of the
board of directors.
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41
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SUMMIT SHAREHOLDER RIGHTS NMBT SHAREHOLDER RIGHTS
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<S> <C> <C>
Under NMBT's Restated Certificate
of Incorporation, the affirmative
vote of 80% of all voting shares
is necessary to engage in any
transaction, the effect of which
is to combine the corporation's
assets and business with that of
another corporation that is the
beneficial owner of 5% or more of
the outstanding shares of NMBT
stock eligible to vote in the
election of the board of
directors. The majority vote of
all shares other than those held
by the 5% shareholder is also
required. Eighty percent
shareholder approval is not
necessary, however, if (a) the
combination is approved by a
majority of the board of
directors prior to the time the
other corporation became a
beneficial owner of 5% or more of
the shares of NMBT stock eligible
to vote in the election of the
board of directors, or (b) the
terms of the transaction meet
certain "fair price" and
procedural requirements.
- ------------------------------------------------------------------------------------------------------
INDEMNIFICATION; Under the NJBCA, a corporation may The DGCL generally permits a
LIMITATION OF indemnify any person who is or was corporation to indemnify its
LIABILITY a director, officer, trustee, directors and officers against
employee or agent of the expenses, judgments, fines and
corporation, or is or was serving amounts paid in settlement
at the request of the corporation actually and reasonably incurred
as a director, officer, trustee, in connection with a third-party
employee or agent of another action, other than a derivative
corporation, partnership, joint action, and against expenses
venture, sole proprietorship, trust actually and reasonably incurred
or other enterprise, against his or in the defense or settlement of a
her reasonable expenses, including derivative action, provided that
counsel fees, in connection with there is a determination that the
any pending, threatened or individual acted in good faith
completed proceeding by or in the and in a manner reasonably
right of the corporation to procure believed to be in or not opposed
a judgment in its favor which to the best interests of the
involves the person by reason of corporation. Such determination
his or her corporate agent status, shall be made, in the case of an
if he or she acted in good faith individual who is a director or
and in a manner he or she officer at the time of such
reasonably believed to be in or not determination:
opposed to the best interests of
the corporation. However, a o by a majority of the
corporation may not indemnify a disinterested directors, even
person who has been adjudged to be though less than a quorum;
liable to the corporation, unless,
and only to the extent that the o by a committee of such
Superior Court of New Jersey or the directors designated by a
court in which the proceeding was majority vote of such directors,
brought determines that, despite even though less than a quorum;
the adjudication of liability but
in view of all the circumstances of o by independent legal counsel,
the case, the person is fairly and regardless of whether a quorum of
reasonably entitled to indemnity for disinterested directors exists; or
those expenses that the court shall
deem proper. In connection with o by a majority vote of the
any other proceeding, a corporation shareholders, at a meeting at
may indemnify the person against which a quorum is present.
his or her reasonable expenses and
liabilities in connection with any such
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<S> <C> <C>
proceeding if he or she acted in Without court approval, however, no
good faith and in a manner he or indemnification may be made in
she reasonably believed to be in or respect of any derivative action in
not opposed to the best interests which such individual is adjudged
of the corporation, and, with liable to the corporation.
respect to any criminal proceeding,
he or she had no reasonable cause The DGCL requires indemnification
to believe his or her conduct was of directors and officers for
unlawful. The NJBCA requires that a expenses relating to a successful
corporation indemnify these persons defense on the merits or otherwise
against expenses to the extent the of a derivative or third-party
person has been successful on the action.
merits or otherwise in any of the
foregoing proceedings or in the NMBT's Restated Certificate of
defense of any claim, issue or Incorporation provides that NMBT
matter and provides that a court shall have the power of
may order such indemnification. indemnification provided under the
DGCL.
Summit's By-Laws provide that
corporate agents, which term The DGCL provides that a
includes directors, officers and corporation's certificate of
employees, of Summit shall be incorporation may include a
indemnified and held harmless by provision limiting the personal
Summit to the fullest extent liability of a director to the
authorized by the laws of the State corporation or its shareholders for
of New Jersey against expenses and monetary damages for breach of
liabilities arising in connection fiduciary duty as a director.
with actions performed by the However, no such provision can
corporate agent on behalf of eliminate or limit the liability of
Summit. Summit's By-Laws permit it a director for:
to maintain insurance for corporate
agents against liabilities and o any breach of the director's duty
expenses. of loyalty to the corporation or
its shareholders;
The NJBCA further provides that the
certificate of incorporation may o acts or omissions not in good
contain provisions which limit the faith or that involve intentional
personal liability of directors and misconduct or a knowing violation
officers, in whole or in part, to of the law;
the corporation or its shareholders
for damages for breach of any duty o violation of certain provisions
owed to the corporation or its of the DGCL;
shareholders, except for acts or
omissions: o any transaction from which the
director derived an improper
o in breach of the director's or personal benefit; or
officer's duty of loyalty to the
corporation or its shareholders, o any act or omission prior to the
adoption of such a provision in the
o not in good faith or involving a certificate of incorporation.
knowing violation of law, or NMBT's Restated Certificate of
Incorporation provides that to the
o resulting in receipt by the extent allowed by the DGCL the
person of an improper personal directors of NMBT shall not be
benefit. personally liable in an amount that
is less than or equal to the amount
Summit's Restated Certificate of of compensation received by the
Incorporation contains a provision director during the year of the
of this nature. breach.
With respect to the foregoing
provisions, the NJBCA provides that
the duty of loyalty is breached by
an act or omission known or
believed by a director or officer
to be contrary to the best
interests of the corporation or its
shareholders in connection with
matters in which the director or
officer has a material conflict of
interest.
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DISSENTERS Under the NJBCA, unless the Under the DGCL, shareholders of a
RIGHTS: certificate of incorporation constituent corporation in a merger
otherwise provides, a dissenting or consolidation have the right to
shareholder of a New Jersey demand and receive payment of the
corporation that is a party to a fair value of their stock in a
consolidation, or that is not the merger or consolidation. However,
surviving corporation in a merger, except as otherwise provided by the
or that is the surviving DGCL, shareholders do not have
corporation in a merger requiring appraisal rights in a merger or
shareholder approval, has appraisal consolidation if, among other
rights with respect to any shares things, their shares are:
other than:
o shares listed on a national o listed on a national securities
securities exchange or held of exchange or designated as a
record by not less that 1,000 national market system security on
holders; an inter-dealer quotation system by
the National Association of
o shares in exchange for which, Securities Dealers, Inc.; or
pursuant to the plan of merger or
consolidation, the shareholder will o held of record by more than 2,000
receive cash and/or securities shareholders; and, in each case,
which will be listed on a national the consideration such shareholders
securities exchange or held of receive for their shares in a
record by not less than 1,000 merger or consolidation consists
holders. solely of:
Summit's Restated Certificate of o shares of stock of the corporation
Incorporation contains nothing surviving or resulting from such
which provides otherwise. merger or consolidation;
Under the NJBCA, unless the o shares of stock of any other
certificate of incorporation corporation that at the effective
provides otherwise, a dissenting date of the merger or consolidation
shareholder in a New Jersey will be either listed on a national
corporation has appraisal rights in securities exchange, or designated
the case of any sale, lease, as a national market system
exchange or other disposition of security on an inter-dealer
all or substantially all of the quotation system by the NASD or
assets of the corporation not in held of record by more than 2,000
the usual or regular course of shareholders;
business as conducted by the
corporation except with respect to o cash in lieu of fractional shares
(1) shares listed on a national of the corporations described in
securities exchange or held of the two immediately preceding
record by not less than 1,000 bullet points; or
holders, (2) a transaction pursuant
to a plan of dissolution of the o any combination of shares of
corporation which provides for the stock and cash in lieu of
distribution of substantially all fractional shares described in the
of its net assets to shareholders three immediately preceding bullet
according to their interests within points.
one year, where the transaction is
wholly for cash and/or securities The DGCL does not provide for
which will be listed on a national appraisal rights in connection with
securities exchange or held of dispositions of assets unless the
record by not less than 1,000 corporation's certificate of
holders, or (3) a sale pursuant to incorporation provides otherwise.
court order. This rule does not NMBT's Restated Certificate of
apply to certain transfers of Incorporation does not provide for
assets of a wholly owned subsidiary appraisal rights in these
caused by its parent corporation. circumstances.
- ------------------------------------------------------------------------------------------------------
CLASS VOTING ON Under the NJBCA, any class or The DGCL provides that any class or
MERGER AN series of shares shall be entitled series of shares shall be entitled
CONSOLIDATION to vote as a class if the plan of to vote as a class or series upon a
merger or consolidation contains proposed amendment to the certificate
any provisions that, if contained of incorporation, whether
in a
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proposed charter amendment, would pursuant to a plan of merger or
entitle the class or series to vote consolidation or otherwise, if such
as a class on the amendment. amendments make certain changes to
the class or series that adversely
affect the rights of the holders of
shares of that class or series.
- ------------------------------------------------------------------------------------------------------
SHAREHOLDER While shareholder approval of a The DGCL has a similar provision
APPROVALS OF merger or consolidation is but the percentage threshold is 20%
MERGERS AND generally required under both the rather than 40% and is with
CONSOLIDATION NJBCA and the DGCL, the NJBCA reference to common stock rather
provides that, unless otherwise than voting or participating stock.
provided in the corporation's
certificate of incorporation, Under the DGCL, unless otherwise
approval of the shareholders of a provided in the corporation's
surviving corporation in a merger certificate of incorporation, a
is not required if (1) the plan of merger requiring shareholder
merger does not make an amendment approval must be approved by a
of the certificate of incorporation majority of the outstanding shares
of the surviving corporation that entitled to vote on the merger.
would otherwise require shareholder
approval, (2) the shares
outstanding immediately before the
effectiveness of the merger are not
changed by the merger, and (3) the
number of voting or participating
shares outstanding after the
merger, after giving effect to the
merger, including shares issuable
upon conversion of other securities
or upon exercise of rights or
warrants issued pursuant to the
merger, will not exceed by more
than 40% the number of voting and
participating shares, as the case
may be, of the surviving
corporation outstanding immediately
prior to the merger.
Under the NJBCA, unless otherwise
provided in the corporation's
certificate or articles of
incorporation, a merger requiring
shareholder approval must be
approved by the majority of the
votes cast by shareholders entitled
to vote on the merger.
The NJBCA requires the approval of
two-thirds of the voting stock of a
corporation not beneficially owned
by an "interested shareholder" for
some business combinations between
the corporation and the interested
shareholder.
- ------------------------------------------------------------------------------------------------------
SHAREHOLDER Under the NJBCA, a sale of all or The DGCL also requires board and
APPROVAL OF substantially all of a corporation's shareholder approval for a sale of
ASSET SALES assets outside the regular course of substantially all of a corporation's
business requires the approval of the assets, with a majority of the
board of directors and the outstanding shares entitled to vote
affirmative vote of a majority of required to approve the sale.
the votes cast by shareholders
entitled to vote on the question.
Summit's Restated Certificate of
Incorporation provides
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that Summit's board of directors
may sell all the rights, franchises
and property of Summit as an
entirety with the approval of
two-thirds of the outstanding
shares.
- ------------------------------------------------------------------------------------------------------
PROHIBITION ON Summit's Restated Certificate of NMBT's Restated Certificate of
PAYMENT OF Incorporation does not contain a Incorporation requires, under
GREENMAIL "green-mail" provision. certain circumstances, the
affirmative vote of holders of
not less than a majority of the
outstanding shares of capital
stock, voting together as a
class, but excluding any stock
owned by a holder, directly or
indirectly, of 3% or more of the
class of the securities to be
acquired, before it may,
directly or indirectly, purchase
any of its equity securities
from a holder, directly or
indirectly, of 3% or more of the
class of the securities to be
acquired who has beneficially
owned such security less than
two years prior to the date of
the purchase. No such vote is
required, however, if NMBT makes
a transfer or exchange offer to
a holder, directly or
indirectly, of 3% or more of the
class of the securities to be
acquired and to all other
shareholders on the same terms
and conditions and in compliance
with the federal securities
laws. Summit's Restated
Certificate of Incorporation
does not contain a similar
provision.
- ------------------------------------------------------------------------------------------------------
DE FACTO Under the NJBCA, shareholders have The DGCL does not contain a
MERGER the same voting and dissenters comparable provision.
rights as if they were shareholders
of a surviving corporation in a
merger, if (1) voting shares
outstanding or issuable after the
transaction exceed by more than 40%
of the voting shares outstanding
before the transaction or (2)
shares entitled to participate
without limitation in distributions
outstanding or issuable after the
transaction exceed by more than 40%
the shares outstanding before the
transaction.
- ------------------------------------------------------------------------------------------------------
SHAREHOLDERS The NJBCA contains certain DGCL does not contain a comparable
DERIVATIVE provisions that have the effect of provision.
ACTIONS discouraging derivative actions.
Specifically, the NJBCA authorizes
the court having jurisdiction over
the action to award reasonable
expenses and attorney's fees to the
successful defendants in a
derivative action upon a finding
that the action was brought without
reasonable cause. In addition, the
corporation may require the
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</TABLE>
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<TABLE>
<CAPTION>
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SUMMIT SHAREHOLDER RIGHTS NMBT SHAREHOLDER RIGHTS
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<S> <C> <C>
plaintiff or plaintiffs to give
security for the reasonable
expenses, including attorneys'
fees, that may be incurred by the
corporation or by other named
defendants for which the
corporation may become legally
liable if plaintiff or plaintiffs
are holders of less than 5% of the
outstanding shares of any class or
series of such corporation, or
voting trust certificates for any
series or class, unless the shares
or trust certificates so held have
a market value in excess of
$25,000.
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SOURCE OF Under the NJBCA, dividends may not The DGCL generally provides that a
DIVIDENDS be paid if, after giving effect to corporation, subject to any
the dividend, either (1) the restrictions contained in its
corporation would be unable to pay certificate of incorporation, may
its debts as they become due in the declare and pay dividends out of
ordinary course of its business or surplus or, when no surplus exists,
(2) the corporation's total assets out of net profits for the fiscal
would be less than its total year in which the dividend is
liabilities. declared and/or the preceding
fiscal year. Dividends may not be
paid out of net profits if the
capital of the corporation is less
than the amount of capital
represented by the issued and
outstanding stock of all classes
having a preference upon the
distribution of assets.
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INSPECTION OF Under the NJBCA, a shareholder of Under the DGCL, any shareholder may
BOOKS AND record for at least 6 months inspect the company's stock ledger,
RECORDS immediately preceding his demand, a list of its shareholders and its
or any holder, or a person other books and records for any
authorized on behalf of a holder, proper purpose reasonably related
of at least 5% of the outstanding to such person's interest as a
shares of any class or series shall shareholder. A list of shareholders
have the right to examine for any is to be open to the examination of
proper purpose the minutes of the any shareholder, for any purpose
proceedings of shareholders and germane to a meeting of
record of shareholders. shareholders, during ordinary
Furthermore, upon establishing a business hours, for a period of at
proper purpose and receiving a least 10 days prior to such
court order a shareholder may meeting. The list is also to be
examine the books and records of produced and kept at the place of
account, minutes and records of the meeting during the entire
shareholders of a corporation. meeting, and may be inspected by
any shareholder who is present.
The NJBCA provides for shareholder
rights to inspect a shareholder
list at a shareholders' meeting
similar to those provided by the
DGCL.
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ANTI-TAKEOVER New Jersey has adopted a type of In general, the DGCL prohibits an
STATUTES anti-takeover statute known as a interested shareholder of a
"business combination" statute. Delaware corporation (generally
Subject to numerous qualifications defined as a person who owns 15% or
and exceptions, the statute more of a corporation's outstanding
prohibits an interested stockholder voting stock) from engaging in a
of a corporation from effecting a business combination with that
business combination with the corporation for three years
corporation for a period of five following the date such person
years after the person becomes an became an interested shareholder.
interested stockholder unless the The three-year moratorium is not
corporation's board shall have applicable when:
approved the
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<TABLE>
<CAPTION>
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SUMMIT SHAREHOLDER RIGHTS NMBT SHAREHOLDER RIGHTS
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<S> <C> <C>
transaction prior to the o prior to the date the shareholder
stockholder becoming an interested became an interested shareholder,
stockholder, and, in addition, at the board of directors of the
any time, a business combination corporation approved either the
may only be effected if: business combination or the
transaction that resulted in the
o the transaction was approved by shareholder becoming an interested
the corporation's board of shareholder,
directors prior to the stockholder
becoming an interested stockholder; o upon consummation of the
transaction which resulted in the
o the transaction receives the shareholder becoming an interested
approval of two-thirds of the shareholder, such interested
voting stock of the corporation not shareholder owned at least 85% of
beneficially owned by the the outstanding voting stock of the
interested stockholder; or corporation (excluding shares owned
by directors who are also officers
o the transaction meets certain of the corporation and by certain
minimum financial terms. employee stock plans), or
An "interested stockholder" is o on or subsequent to the date that
defined to include any beneficial the shareholder becomes an
owner of 10% or more of the voting interested shareholder, the
power of the outstanding voting business combination is approved by
stock of the corporation and any the board of directors of the
affiliate or associate of the corporation and by the affirmative
interested stockholder who within vote at a meeting of shareholders
the prior five-year period has at of at least two-thirds of the
any time owned 10% or more of the outstanding voting stock entitled
voting power. to vote thereon, excluding shares
owned by the interested
The term "business combination" is shareholder.
defined broadly to include, among
other tranactions: These restrictions of the
DGCL generally do not apply to
o the merger or consolidation of business combinations with an
the corporation with the interested interested shareholder that are
stockholder or any corporation that proposed subsequent to the public
after the merger or consolidation announcement of, and prior to the
would be an affiliate or associate consummation or abandonment of,
of the interested stockholder; certain mergers, sales of 50% or
more of a corporation's assets or
o the sale, lease, exchange, tender offers for 50% or more of a
mortgage, pledge, transfer or other corporation's voting stock.
disposition to an interested
stockholder or any affiliate or The DGCL contains no "other
associate of the interested constituency" provision.
stockholder of 10% or more of the
corporation's assets, or
o the issuance or transfer to an
interested stockholder or any
affiliate or associate of the
interested stockholder of 5% or
more of the aggregate market value
of the stock of the corporation.
The effect of the statute is to
protect post-acquisition minority
shareholders from mergers in which
they will be "frozen out" after the
merger, by prohibiting transactions
in which an acquiror could favor
itself at the expense of minority
stockholders. The New Jersey
statute does not apply to New
Jersey corporations that do not
have either their
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</TABLE>
48
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<TABLE>
<CAPTION>
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SUMMIT SHAREHOLDER RIGHTS NMBT SHAREHOLDER RIGHTS
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<S> <C> <C>
principal executive offices or
significant business operations
located in New Jersey. Under the
NJBCA, a director of a New Jersey
corporation, in discharging his or
her duties to the corporation, and
in determining what he or she
reasonably believes to be in the
best interest of the corporation
may, in addition to considering the
effects of any action on
shareholders, consider any of the
following.
o the effects of the action on the
corporation's employees, suppliers,
creditors and customers;
o the effects of the action on the
community in which the corporation
operates; and
o the long-term as well as the
short-term interest of the
corporation and its shareholders,
including the possibility that
these interests may best be served
by the continued independence of
the corporation.
Determinations resulting in the
rejection of a proposal or offer to
acquire the corporation are
specifically covered by this
provision of the NJBCA.
</TABLE>
49
<PAGE>
SUMMIT BANCORP.
DESCRIPTION OF BUSINESS
Summit commenced operations on October 1, 1970 as a bank holding
company registered under the BHC Act. Summit owns three bank subsidiaries and
several active non-bank subsidiaries. At September 30, 1999, Summit had total
consolidated assets of $36.1 billion on the basis of which it ranked as the
largest New Jersey-based bank holding company.
Summit's bank subsidiaries engage in a general banking business.
Summit Bank (New Jersey) is Summit's largest bank subsidiary, accounting for
approximately 85.7% of Summit's total consolidated assets at September 30, 1999.
Summit's non-bank subsidiaries engage primarily in securities products and
services, life, health, property and casualty insurance products and services,
venture capital investment, commercial finance lending, lease financing,
asset-based lending, letter of credit issuance, data processing and reinsuring
credit life and disability insurance policies related to consumer loans made by
the bank subsidiaries.
As of September 30, 1999, Summit's bank subsidiaries operated 484
banking offices located in major trade centers and suburban areas in New Jersey,
eastern Pennsylvania and southwestern Connecticut. The following table lists, as
of September 30, 1999, each bank subsidiary, the number of its banking offices
and, in thousands of dollars, its total assets and deposits. All of Summit's
bank subsidiaries are state banks and both the New Jersey and Pennsylvania
subsidiaries are members of the Federal Reserve System.
<TABLE>
<CAPTION>
NO. OF BANKING
OFFICES TOTAL ASSETS (1) TOTAL DEPOSITS (1)
LOCATION OF PRINCIPAL OFFICES (IN THOUSANDS) (IN THOUSANDS) (IN THOUSANDS)
- ------------------------- ------------- --------------- ----------------
<S> <C> <C> <C>
Summit Bank, (New Jersey)........................ 366 $30,979,496 $20,969,964
Summit Bank, (Pennsylvania)...................... 105 4,162,130 2,810,205
Summit Bank, (Connecticut)....................... 13 892,729 581,581
</TABLE>
- -----------
(1) Not adjusted to exclude interbank deposits or other transactions among the
subsidiaries.
Summit is a legal entity separate and distinct from its subsidiaries.
There are various legal limitations on the extent to which a bank subsidiary may
finance or otherwise supply funds to Summit or its nonbank subsidiaries. Under
federal law, no bank subsidiary may, subject to limited exceptions, make loans
or extensions of credit to, or investments in the securities of Summit or its
non-bank subsidiaries or take their securities as collateral for loans to any
borrower. Each bank subsidiary is also subject to collateral security
requirements for any loans or extensions of credit permitted by such exceptions.
In addition, bank regulatory limitations exist on the availability of
subsidiary bank undistributed net assets for the payment of dividends to Summit
without the prior approval of the bank regulatory authorities. The Federal
Reserve Act, which affects both Summit Bank (New Jersey) and Summit Bank
(Pennsylvania), restricts the payment of dividends in any calendar year to the
net profit of the current year combined with retained net profits of the
preceding two years. Summit Bank (Connecticut), as a Connecticut chartered bank,
is subject to a similar restriction. Further, Summit Bank (New Jersey), as a New
Jersey state-chartered bank, may declare a dividend only if, after payment, its
capital stock would be unimpaired and its surplus would equal at least 50
percent of its capital stock or its surplus would not be reduced. Summit Bank
(Pennsylvania), as a Pennsylvania-chartered bank, may declare and pay a dividend
only out of accumulated net earnings and only if it has surplus at least equal
to its capital and its surplus would not be reduced by payment of the proposed
dividend. In addition, under the Federal Deposit Insurance Corporation
Improvement Act all institutions are prohibited from paying dividends if after
doing so an institution would be undercapitalized. Summit may not pay dividends
to its shareholders if after paying any dividends it would be unable to pay its
debts as they become due in the usual course of business or its total assets
would be less than its total liabilities. At September 30, 1999, the total
undistributed net assets of Summit's subsidiary banks were $2.8 billion of which
$59.1 million was available under the most restrictive limitations for the
payment of dividends to Summit.
RECENT DEVELOPMENTS
On December 31, 1999, Summit entered into a definitive agreement to acquire
Meeker Sharkey Financial Group, Inc., an insurance brokerage firm which offers
an array of property/casualty products, group health benefits, and retirement
plan services. Summit will issue shares of its common stock to effect the
acquisition. Summit expects to repur-
50
<PAGE>
chase in the open market the number of shares of Summit common stock required to
complete the transaction or reissue shares held in treasury, depending on market
conditions or other factors.
On January 19, 2000, Summit reported net income for the year ended
December 31, 1999 of $442.6 million as compared with $465.8 million for the year
ended December 31, 1998. Net income per diluted share for 1999 was $2.54 as
compared with $2.63 for 1998. Net income for 1999 reflected an additional
provision for loan losses of $60 million pretax, or $.20 per diluted share,
recorded in the third quarter and a restructuring charge of $27.9 million
pretax, or $.10 per diluted share, recorded in the fourth quarter, associated
with Summit's business realignment. Summit's total assets at December 31, 1999
were $36.4 billion as compared with $33.1 billion at December 31, 1998.
DESCRIPTION OF SUMMIT CAPITAL STOCK
Summit is presently authorized to issue 390,000,000 shares of common
stock and 6,000,000 shares of preferred stock, without par value. As of
September 30, 1999, there were approximately 174,766,133 shares of Summit common
stock outstanding, 2,744,256 shares of Summit common stock held in treasury,
2,000,000 shares of Summit Series S preferred stock designated in Summit's
Restated Certificate of Incorporation and reserved for issuance under the Summit
shareholder rights plan described below, and no shares of Summit preferred stock
outstanding. Pursuant to the NJBCA, Summit's board of directors has authority to
set the terms and conditions of the authorized but unissued Summit preferred
stock. Summit may issue any authorized Summit common stock and Summit preferred
stock without further shareholder vote, unless a shareholder vote is required
for a particular transaction by applicable law or New York Stock Exchange rules.
Summit common stock is presently listed on the New York Stock Exchange. The
issuance of additional Summit common stock or Summit preferred stock, including
Summit preferred stock that might be convertible into Summit common stock, may,
among other things, affect the earnings per share applicable to existing Summit
common stock and the equity and voting rights of existing holders of Summit
common stock.
The following summary is not a complete description of all provisions
relating to Summit capital stock and is subject in all respects to the
applicable provisions of the NJBCA, Summit's Restated Certificate of
Incorporation and Summit's shareholder rights plan.
COMMON STOCK
The rights of holders of Summit common stock are subject to the
preferences as to dividends and liquidation rights and other prior rights, if
any, of any class or series of Summit preferred stock that may be issued. The
holders of Summit common stock are entitled to one vote for each share with
respect to all matters voted upon by shareholders, including the election of
directors, and are entitled to receive dividends when, as and if declared by
Summit's board of directors out of funds of Summit legally available for the
payment of dividends. Shares of Summit common stock do not have cumulative
voting rights. Accordingly, at any annual meeting of Summit shareholders, or at
any special meeting of shareholders where an election of directors is conducted,
the holders of 50 percent plus one of the shares represented at the meeting,
provided a quorum is present, can fill all positions on Summit's board of
directors that are up for election at that meeting if they so choose. In that
event, the holders of the remaining shares will not be able to fill any
positions on the board up for election at that meeting. Summit has a classified
board of directors, under which approximately one-third of the directors are
elected each year.
In the event of the liquidation of Summit, holders of Summit common
stock are entitled to share pro rata in the distribution of Summit's assets
available for common shareholders. All shares of Summit common stock are fully
paid and nonassessable. No preemptive rights attach to the ownership of Summit
common stock and no personal liability is imposed on the holders of common stock
by reason of the ownership of those shares. First Chicago Trust Company of New
York, a division of Equiserve is the transfer agent, dividend disbursing agent
and registrar for the Summit common stock. Summit Bank (New Jersey) is the
co-transfer agent.
SHAREHOLDER RIGHTS PLANS
In June, 1999, Summit adopted a shareholder rights plan under which preferred
stock purchase rights ("Rights") attached to Summit common stock outstanding as
of the close of business on August 16, 1999. The shareholder rights plan adopted
in June, 1999 replaced Summit's shareholder rights plan adopted in August, 1989,
which expired August 16, 1999. Holders of shares of Summit common stock issued
subsequent to August 16, 1999
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<PAGE>
receive the Rights with their shares. Except as indicated below, each Right
entitles the registered holder to purchase from Summit one one-hundredth (1/100)
of a share of a series of Summit preferred stock, designated the Series S
preferred stock ("Summit Series S Preferred"). The Rights expire on August 31,
2009, and are subject to redemption and amendment in certain circumstances. The
Rights trade automatically with shares of Summit common stock and become
exercisable only under certain circumstances as described below.
The Rights are not currently exercisable. In general, the Rights will
become exercisable upon the earlier to occur of the following: (1) ten days
following a public announcement that a person or group has acquired beneficial
ownership of 15% or more of the Summit common stock outstanding at that time or
voting securities of Summit representing 15% or more of the total voting power
of Summit (such person or group becoming an "Acquiring Person", as defined in
the rights plan) or (2) ten business days, or such later date as Summit's board
of directors may determine, after the commencement of a tender offer or exchange
offer that would result in a person or group beneficially owning 15% or more of
the outstanding Summit common stock or voting securities representing 15% or
more of the total voting power of Summit.
Generally, in the event the Rights become exercisable by virtue of a
person or group becoming an Acquiring Person, other than pursuant to an offer
for all outstanding shares of Summit common stock and other voting securities
that Summit's board of directors determines to be fair to shareholders and
otherwise in the best interests of Summit, each Right, other than Rights owned
by the Acquiring Person, will entitle the holder to receive, upon exercise of
the Right and payment of the exercise price, Summit Series S Preferred having a
value equal to two times the exercise price of the Right.
In the event that the Rights become exercisable and Summit is
acquired in a merger or other business combination, or 50% or more of Summit's
assets or earning power is transferred in one or a series of transactions, each
Right will entitle the holder to receive, upon the exercise of the Right, common
stock of the acquiror having a value equal to two times the exercise price of
the Right.
The provisions contained in Summit's Restated Certificate of
Incorporation relating to the Series S preferred stock may not be amended in a
manner which adversely affects the holders of Series S preferred stock without
the affirmative vote of the holders of two-thirds of the outstanding shares of
Series S preferred stock.
The combination of prohibitive dilution of the Acquiring Person's
share values and the power of Summit's board of directors to redeem the Rights
is intended to encourage potential acquiring persons to negotiate with Summit's
board of directors with respect to the terms of any acquisition or business
combination and, to the extent possible, discourage or defeat partial or
two-tiered acquisition proposals.
The foregoing description of the rights plan is not complete and is
qualified in its entirety by reference to the terms of the rights plan, which
are more fully described in Summit's Registration Statement on Form 8-A filed
with the Securities and Exchange Commission on July 27, 1999.
NMBT CORP.
DESCRIPTION OF BUSINESS
NMBT was formed in 1997 and is the registered bank holding company
for NMBT Bank, a wholly owned subsidiary. NMBT Bank is a state-chartered bank
and trust company founded in 1975. NMBT Bank is NMBT's only subsidiary. NMBT's
corporate headquarters is located at 55 Main Street, New Milford, Connecticut
06776-2400 (phone number: 860-355-1171).
NMBT Bank operates primarily as a full-service community financial
institution. NMBT Bank offers a wide range of consumer and commercial services
to individuals and businesses in western Connecticut. These services include
checking accounts, N.O.W. accounts, regular savings accounts, money market
accounts, retirement accounts, savings certificates, commercial demand deposit
accounts and cash management. NMBT Bank's lending activities include residential
and commercial real estate loans, home equity loans and lines of credit,
consumer loans, secured and unsecured commercial loans, letters of credit and
both consumer and commercial credit card services.
NMBT Bank serves its market through a network of ten full-service
banking offices located in New Milford, Kent, Bridgewater, New Fairfield,
Southbury and Danbury. Additionally, NMBT Bank has automated teller
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<PAGE>
machines (ATMs) at all office locations, inside New Milford Hospital and inside
two grocery stores in Danbury and Southbury providing customers with convenient
24-hour access to their accounts. NMBT Bank's primary service area includes the
towns of New Milford, Kent, Bridgewater, New Fairfield, Southbury and Danbury;
its secondary service area includes the towns of Bethel, Brookfield, Middlebury,
Newtown, Oxford, Roxbury, Sherman, Warren, Washington and Woodbury.
NMBT Bank's primary regulator is the State of Connecticut Department
of Banking and NMBT's primary regulator is the Federal Reserve Bank. NMBT Bank
is authorized to transact general banking business pursuant to the powers set
forth in the Connecticut General Statutes.
NMBT has no subsidiaries or operations other than conventional
banking operations.
RECENT DEVELOPMENTS
On January 19, 2000, NMBT Corp. reported net income for the year
ended December 31, 1999 of $3.6 million as compared with $3.2 million for the
year ended December 31, 1998. Net income per diluted share for 1999 was $1.31 as
compared with $1.15 for 1998. NMBT's total assets at December 31, 1999 were
$403.1 million as compared with $380.5 million at December 31, 1998.
DESCRIPTION OF NMBT CAPITAL STOCK
GENERAL
NMBT is authorized to issue 8,000,000 shares of common stock, and
2,000,000 shares of preferred stock. As of September 30, 1999, 2,668,558 shares
of NMBT common stock were issued and outstanding. No shares of NMBT preferred
stock are currently issued or outstanding.
The following summary does not purport to be complete and is subject
in all respects to the applicable provisions of the DGCL, and NMBT's Amended and
Restated Certificate of Incorporation and Bylaws.
Authorized but unissued shares of NMBT capital stock may be used for
various purposes, including stock splits and dividends, potential acquisitions,
public offerings, stock option and employee stock plans and dividend
reinvestment plans. Authorized but unissued shares of capital stock, or
securities convertible into or exchangeable for such capital stock, could also
be issued by the board of directors in a manner that could make a change in
control more difficult. Under certain circumstances, such shares could be sold
privately to purchasers who might support the board of directors in opposing a
takeover bid that it determines not to be in the best interest of the
shareholders.
Each holder of NMBT common stock is entitled to one vote for each
share held. The shares of common stock do not have cumulative voting rights.
Holders of NMBT common stock do not have preemptive rights to subscribe for or
purchase shares of any class of capital stock now or hereafter authorized or
securities convertible into shares of any class of capital stock.
Holders of NMBT's common stock are entitled to receive dividends
when, as and if declared by the board of directors. Dividends may be declared
and paid only out of funds legally available therefore. In the event of
liquidation of NMBT, holders of NMBT common stock are entitled to share pro rata
in the net assets of NMBT remaining after payment of all amounts due creditors.
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PROPOSAL II -- ADJOURNMENT OF SPECIAL MEETING
In the event there are not sufficient votes to constitute a quorum
for the special meeting or to approve the merger agreement at the time of the
special meeting, the merger agreement could not be approved unless the special
meeting was adjourned in order to permit further solicitation of proxies. In
order to allow proxies that have been received by NMBT at the time of the
special meeting to be voted for adjournment under these circumstances, NMBT has
submitted the question of adjournment to its shareholders as a separate matter
for their consideration. In order to approve any adjournment a majority of the
shares entitled to vote must be cast in favor of Proposal 2.
NMBT's board of directors recommends that shareholders vote their
proxies FOR the adjournment proposal so that their proxies may be used for
purposes of adjourning the special meeting under the circumstances described in
the preceding paragraph.
Properly executed proxies will be voted in favor of adjournment
unless otherwise indicated thereon. However, proxies voting AGAINST the merger
agreement will not be voted in favor of the adjournment proposal unless the
shareholder has voted FOR approval of the adjournment proposal on the proxy
card.
SHAREHOLDER PROPOSALS
NMBT shareholders will not be entitled to submit proposals for
consideration at the special meeting except to the extent the proposals relate
directly to the matters to come before the special meeting as set forth in this
Proxy Statement-Prospectus. If the merger is not approved at the special meeting
and NMBT subsequently holds its annual meeting for 2000, NMBT shareholders will
be entitled to submit proposals on matters appropriate for shareholder action
consistent with regulations of the Securities and Exchange Commission and NMBT's
Bylaws. No date has been set for NMBT's 2000 annual meeting of shareholders.
Summit's By-Laws provide that shareholder proposals which do not
appear in the proxy statement may be considered at a meeting of shareholders
only if written notice of the proposal is received by the Secretary of Summit
not less than 80 and not more than 100 days before the anniversary of the
preceding year's annual meeting. However, if the date of the annual meeting is
more than 30 days before or more than 60 days after that anniversary date, the
notice of a shareholder proposal, to be timely, must be received by the
Secretary not later than the close of business on the later of the 80th day
prior to the annual meeting or the tenth day following the day on which public
announcement of the meeting date is first made. Any notice of a shareholder
proposal by a shareholder to the Secretary of Summit must be accompanied by:
o the name and address of the shareholder who intends to present the
proposal for a vote;
o a representation that the shareholder is a holder of record of
shares entitled to vote at the meeting;
o a description of all agreements, arrangements or understandings
between the shareholder and any other shareholder relating to the
proposal to be voted on and any financial or contractual interest
of either shareholder in the outcome of the vote; and
o all other information regarding the proposal to be voted on and
the shareholder intending to present the proposal for a vote as
would be required to be included in a proxy statement soliciting
the vote of shareholders in respect of the proposal pursuant to
the proxy rules of the Securities and Exchange Commission.
Summit's board of directors will consider and include in Summit's
proxy statement for the 2000 annual meeting of Summit shareholders proposals
which meet the regulations of the Securities and Exchange Commission and New
Jersey law and which comply with Summit's By-laws. In order to be eligible for
inclusion, proposals were required to be addressed to Summit's Secretary and
must have been received on or before November 9, 1999.
OTHER MATTERS
NMBT's board of directors is not aware of any business to come before the
special meeting other than those matters described in this Proxy
Statement-Prospectus. However, if any other matters should properly come before
the special meeting, the proxy holders intend to vote on those matters in
accordance with their reasonable business judgment.
LEGAL MATTERS
The legality of the Summit common stock offered by this Proxy
Statement-Prospectus will be passed upon for Summit by Richard F. Ober, Jr.,
Esq., Executive Vice President, General Counsel and Secretary of Summit. Mr.
Ober
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<PAGE>
owns 47,738 shares of Summit common stock and options to purchase 132,034 shares
of Summit common stock at a weighted average exercise price of $22.11. Certain
federal tax matters will be passed upon for Summit and NMBT by Thompson Coburn,
St. Louis, Missouri. Certain legal matters will be passed upon for NMBT by
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, Boston, Massachusetts.
EXPERTS
The consolidated financial statements of Summit Bancorp. and
subsidiaries as of December 31, 1998 and 1997 and for each of the years in the
three-year period ended December 31, 1998, included in Summit's Annual Report on
Form 10-K, incorporated by reference herein and in the Registration Statement on
Form S-4 ("Registration Statement"), have been incorporated by reference herein
and in the Registration Statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by referenced herein, and
upon the authority of KPMG LLP as experts in accounting and auditing.
The consolidated financial statements of NMBT Corp., and subsidiaries
as of December 31, 1998 and 1997 incorporated in this Proxy Statement-Prospectus
by reference from NMBT's Annual Report on Form 10-K for the year ended December
31, 1998, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Summit has filed with the Securities and Exchange Commission under
the Securities Act the Registration Statement which registers the distribution
to NMBT shareholders of the shares of Summit common stock to be issued in
connection with the merger. The Registration Statement, including the attached
exhibits and schedules, contains additional relevant information about Summit
and Summit common stock. The rules and regulations of the Securities and
Exchange Commission allow us to omit certain information included in the
Registration Statement from this Proxy Statement-Prospectus.
In addition, both Summit and NMBT file reports, proxy statements and
other information with the Securities and Exchange Commission under the Exchange
Act. You may read and copy this information at the following locations of the
Securities and Exchange Commission:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the
Public Reference Section of the Securities and Exchange Commission, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.
The Securities and Exchange Commission also maintains an Internet
world wide web site that contains reports, proxy statements and other
information about issuers, like Summit and NMBT, who file electronically with
the Securities and Exchange Commission. The address of that site is
http://www.sec.gov.
You can also inspect reports, proxy statements and other information
about Summit at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005 and reports, proxy statements and other information about
NMBT at the offices of the Nasdaq, 1735 K Street, N.W., Washington, D.C. 20006.
The Securities and Exchange Commission allows Summit and NMBT to
"incorporate by reference" information into this Proxy Statement-Prospectus.
This means that we can disclose important information to you by referring you to
another document filed separately with the Securities and Exchange Commission.
The information incorporated by reference is considered to be a part of this
Proxy Statement-Prospectus, except for any information that is superseded by
information that is included directly in this document.
This Proxy Statement-Prospectus incorporates by reference the
documents listed below that Summit and NMBT have previously filed with the
Securities and Exchange Commission. They contain important information about our
companies and their financial condition.
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<TABLE>
<CAPTION>
SUMMIT SEC FILINGS PERIOD
- ------------------ ------
<S> <C>
Annual Report on Form 10-K................................... Year ended December 31, 1998
Reports on Form 8-K ......................................... Reports dated April 27, 1999 and
June 16, 1999
Quarterly Report on Form 10-Q and
Amendment No. 1 to Quarterly Report on
Form 10-Q (Form 10-Q/A) .................................. Quarter ended March 31, 1999
Quarterly Reports on Form 10-Q ........................... Quarters ended June 30, 1999 and
September 30, 1999
</TABLE>
The description of Summit common stock set forth in the Summit
Registration Statement on Form 10 filed pursuant to Section 12(b) of the
Exchange Act dated August 31, 1970, including any amendment or report filed with
the Securities and Exchange Commission for the purpose of updating such
description.
The description of Summit Preferred Stock Purchase Rights set forth
in the Summit registration statement filed under Section 12 of the Exchange Act
on Form 8-A on July 27, 1999, including any amendment or report filed with the
Securities and Exchange Commission for the purpose of updating such description.
NMBT SEC FILINGS PERIOD
- ----------------- ------
Annual Report on Form 10-K ........... Year ended December 31, 1998
Reports on Form 8-K .................. Report dated October 3, 1999
Quarterly Reports on Form 10-Q ....... Quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999
The following information from NMBT's Annual Report on Form10-K for
the fiscal year ended Decemebr 31, 1998 is specifically incorporated by
reference into this Proxy Statement Prospects:
PAGE IN NMBT 10-K OR ANNUAL REPORT
SEC REGULATION S-K ITEM TO SHAREHOLDERS ("ARS")
- ------------------------- ----------------------------------
Item 101(b - Financial Information
about Industry Segments................. Not applicable
Item 101(c)1)(i) - Narrative description
of business-principal products ......... 10-K--pg. 2
Item 101(d) - Financial Information
about foreign and domestic operations
and export sales ....................... Not applicable
Item 201 - Market Price and Dividends on
Common Equity and Related Stockholder
Matters ................................ ARS--pgs. 19, 20, 35 and 39
Item 301 - Selected Financial Data ........ ARS--pg. 9
Item 302 - Supplemental Financial Data .... ARS--pg. 39
Item 303 - Management Discussion and
Analysis of Financial Condition and
Results of Operations ................... ARS--pgs. 10-20
Item 304 - Charges In and Disagreements
with Accountants on Accounting and
Financial Disclosure ................... No applicable
The description of NMBT common stock set forth in the NMBT
Registration Statement on Form 8-A filed pursuant to Section 12 of the Exchange
Act on November 25, 1997, including any amendment or report filed with the
Securities and Exchange Commission for the purpose of updating such description.
Summit and NMBT incorporate by reference additional documents that
either company may file with the Securities and Exchange Commission between the
date of this Proxy Statement-Prospectus and the date of the special meeting. The
documents include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and current reports on Form 8-K, as well as proxy
statements.
You can obtain any of the documents incorporated by reference in this
document through Summit or NMBT, as the case may be, or from the Securities and
Exchange Commission through the Securities and Exchange Commission's web site at
the address described above. Documents incorporated by reference are available
from the companies without charge, excluding any exhibits to those documents
unless the exhibit is specifically incorporated
56
<PAGE>
by reference as an exhibit in this Proxy Statement-Prospectus. You can obtain
documents incorporated by reference in this Proxy Statement-Prospectus by
requesting them in writing or by telephone from the appropriate company at the
following addresses:
SUMMIT BANCORP. NMBT CORP.
Attention: Corporate Secretary Attention: Corporate Secretary
301 Carnegie Center 55 Main Street
Princeton, NJ 08543 New Milford, CT 06776
Telephone: (609) 987-3442 Telephone: (860) 355-1171
If you would like to request documents, please do so by February 29,
2000 to receive them before the special meeting. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, within one business day after we receive your request.
We have not authorized anyone to give any information or make any
representation about the merger or our companies that is different from, or in
addition to, that contained in this Proxy Statement-Prospectus or in any of the
materials that we have incorporated into this document. Therefore, if anyone
does give you information of this sort, you should not rely on it. If you are in
a jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
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<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated October 3, 1999 between Summit
Bancorp., a New Jersey business corporation ("Summit"), and NMBT CORP, a
Delaware corporation ("NMBT").
W I T N E S S E T H :
WHEREAS, the respective boards of directors of Summit and NMBT deem it
advisable and in the best interests of their respective shareholders to adopt a
plan of reorganization in accordance with the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended ( "Code") providing for the
acquisition of NMBT by Summit on the terms and conditions provided for in this
Agreement and Plan of Merger ("Agreement");
WHEREAS, the Board of Directors of Summit and NMBT have each determined
that the reorganization contemplated by this Agreement ("Reorganization") is
consistent with, and in furtherance of, their respective business strategies and
goals;
WHEREAS, Summit and NMBT intend on the day after the date of this
Agreement and in consideration of this Agreement to enter into the Stock Option
Agreement ("Option Agreement") attached hereto as Exhibit B; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Reorganization and also to prescribe
certain other terms and conditions of the Reorganization.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Option
Agreement, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I.
GENERAL PROVISIONS
Section 1.01. The Reorganization.
(a) Upon the terms and subject to the conditions contained in this
Agreement, at the Effective Time (as defined at Section 1.06), the
Reorganization shall be effected as follows:
(1) NMBT shall be merged with and into Summit pursuant to and in
accordance with the provisions of, and with the effect provided in, the New
Jersey Business Corporation Act, as amended ("New Jersey Act") and the Delaware
General Corporation Law, as amended ("Delaware Law"); or
(2) NMBT shall be merged into a wholly owned subsidiary of Summit
or a wholly owned subsidiary of Summit shall be merged into NMBT, in either case
pursuant to and in accordance with the provisions of, and with the effect
provided in, the corporate laws of the jurisdiction of incorporation of each of
the constituent corporations in such merger ("Applicable Corporation Laws").
(b) Summit shall prior to the Effective Time elect the method for
carrying out the Reorganization from among those methods set forth at Section
1.01(a) ("Reorganization Election")
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and following an election of the Reorganization method provided for at Section
1.01(a)(2) Summit shall (i) cause the wholly owned subsidiary of Summit
designated as the constituent corporation in the Reorganization ("Designated
Summit Subsidiary") to approve, execute and deliver this Agreement in accordance
with all Applicable Corporation Laws, (ii) cause this Agreement to be approved
by the sole shareholder of the Designated Summit Subsidiary, (iii) attach as
Exhibit A to this Agreement (A) any additional terms and conditions to this
Agreement required by Applicable Corporation Laws to effect the Reorganization
and other transactions contemplated by this Agreement, (B) the terms and
conditions of any agreement or plan of merger required by Applicable Corporation
Laws, (C) the date and time that the merger shall be effective or the mechanism
for determining the date and time that the merger shall be effective and (D)
such other terms and conditions as Summit shall determine in its discretion to
be desirable and not contrary to this Agreement or Applicable Corporation Laws
regarding the corporate governance of the corporation surviving the merger
contemplated by Section 1.01(a), including without limitation terms and
conditions governing certificates or articles of incorporation and amendments
thereto or restatements thereof, by-laws of the corporation surviving the merger
and amendments thereto, and directors and officers of the corporation surviving
the merger; provided, however, that no provision of Exhibit A shall (x) alter or
change the amount or kind of consideration to be received by NMBT Shareholders
(as defined at Section 1.07(c) below) as provided for in this Agreement on the
date hereof, (y) adversely affect the tax treatment of the Reorganization
Consideration (as defined in Section 1.03(a)(2) below) to be received by NMBT
Shareholders or (z) materially impede or delay consummation of the transactions
contemplated by this Agreement and (iv) cause the Designated Summit Subsidiary
to take all actions appropriate to accomplish the Reorganization and the other
transactions contemplated by this Agreement. Exhibit A as so constituted shall
constitute a part of this Agreement as fully as if attached hereto on the date
hereof without separate execution by Summit or NMBT.
Section 1.02. Capital Stock of Summit. All shares of the capital stock of
Summit issued or issued and outstanding immediately prior to the Effective Time,
including the Common Stock, par value $.80 per share, of Summit and the rights
attached thereto ("Summit Rights") pursuant to the Rights Agreement dated as of
June 16, 1999 between Summit and First Chicago Trust Company of New York, as
Rights Agent ("Summit Rights Agreement") (references to "Summit Stock" herein
shall mean the Common Stock of Summit with Summit Rights attached thereto),
shall be unaffected by the Reorganization and shall remain issued or issued and
outstanding, as the case may be, immediately thereafter.
Section 1.03. Terms of Conversion of NMBT Capital Stock.
(a) At the Effective Time, by virtue of the Reorganization and without
any action on the part of any shareholder of NMBT:
(1) All shares of the Common Stock, par value $0.01 per share, of
NMBT ("NMBT Stock") which immediately prior to the Effective Time are
beneficially owned either directly, or indirectly through a bank, broker or
other nominee, by Summit or a subsidiary of Summit or NMBT or a subsidiary of
NMBT (other than NMBT Stock held as a result of foreclosures or debts previously
contracted and NMBT Stock held in fiduciary, discretionary and custodial
accounts and other representative capacities), if any, or held in the treasury
of NMBT, if any, shall be canceled and retired and no cash, securities or other
consideration shall be payable or paid or delivered under this Agreement in
exchange for such NMBT Stock; and
(2) Subject to Section 1.03(a)(1), outstanding shares of NMBT
Stock held as of the
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Effective Time by each NMBT Shareholder shall be converted in accordance with
the New Jersey Act and the Delaware Law into the right to receive whole shares
of Summit Stock and cash in lieu of fractional shares of Summit Stock as
follows: the aggregate number of shares of NMBT Stock held by each NMBT
Shareholder shall be multiplied by the Exchange Ratio (as defined at Section
1.03(c) below) and (i) a NMBT Shareholder shall become entitled to receive whole
shares of Summit Stock pursuant to this Section 1.03(a)(2) equal in number to
the whole number which results from the foregoing multiplication, and (ii) an
NMBT Shareholder shall become entitled to receive cash pursuant to this Section
1.03(a)(2) in lieu of a fractional share of Summit Stock, if any, equal in
amount to the product obtained by multiplying the fraction, if any, which
results from the foregoing multiplication by the closing price of one share of
Summit Stock on the New York Stock Exchange ("NYSE") Composite Transactions List
(as reported in The Wall Street Journal or, in the absence thereof, as reported
by another authoritative source mutually agreed upon by NMBT and Summit) on the
last trading day ending prior to the Effective Time ("Cash In Lieu Amount").
(The shares of Summit Stock issuable in accordance with this Section 1.03(a)(2)
are sometimes referred to herein as the "Shares"). (The Shares and any Cash In
Lieu Amounts payable in the Reorganization, both adjusted as and if necessary in
accordance with Section 1.03(b), are sometimes collectively referred to herein
as the "Reorganization Consideration").
(b) In the event that, from the date hereof to the Effective Time, the
outstanding Summit Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or there occur other like changes in the outstanding shares
of Summit Stock ("Capital Change"), the Exchange Ratio and, if necessary, the
form and amount of Summit capital stock issuable in the Reorganization in
exchange for NMBT Stock shall be appropriately adjusted to give effect to the
Capital Change.
(c) The "Exchange Ratio" is hereby defined to be the number determined in
accordance with the following provisions of this Section 1.03(c):
(A) If the Summit Price (as defined at Section 9.02(e)(ii)
below) is greater than $37.01563, the Exchange Ratio shall
be 0.7024;
(B) If the Summit Price is equal to or greater than $27.35938
and equal to or less than $37.01563, the Exchange Ratio
shall be equal to the quotient obtained by dividing $26.00
by the Summit Price; and
(C) If the Summit Price is less than $27.35938, the Exchange
Ratio shall be 0.9503.
Section 1.04. Reservation of Summit Stock; Issuance of Shares Pursuant to
the Reorganization. Summit shall reserve and make available for issuance to
holders of NMBT Stock in connection with the Reorganization, on the terms and
subject to the conditions of this Agreement, sufficient shares of Summit Stock
to effect the conversion contemplated by Section 1.03 and related terms of this
Agreement, which shares, when issued and delivered, will be duly authorized,
legally and validly issued, fully paid and non-assessable and subject to no
preemptive rights. Upon the terms and subject to the conditions of this
Agreement, particularly Sections 1.03 and 1.07, Summit shall issue the Shares
after the Effective Time to NMBT Shareholders.
Section 1.05. Exchange Agent Arrangements. Prior to the Effective Time,
Summit shall
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appoint Equiserve - First Chicago Trust Division, or another entity reasonably
satisfactory to NMBT, as the exchange agent ("Exchange Agent") responsible for
exchanging, in connection with and upon consummation of the Reorganization and
subject to Sections 1.03 and 1.07, certificates representing whole shares of
Summit Stock ("Summit Certificates") and Cash In Lieu Amounts for certificates
representing shares of NMBT Stock ("NMBT Certificates") and Summit shall deliver
to the Exchange Agent sufficient Summit Certificates and cash as shall be
required to satisfy Summit's obligations to NMBT Shareholders under Section
1.07(c), prior to the time such obligations arise.
Section 1.06. Effective Time. In the event that pursuant to the
Reorganization Election Summit elects the Reorganization method provided for at
Section 1.01(a)(1), the "Effective Time" of the Reorganization shall be the hour
and the date specified in the certificate of merger of Summit and NMBT filed
with the Secretary of State of the State of New Jersey in accordance with
Section 14A:10-4.1 of the New Jersey Act ("NJ Certificate") and the certificate
of merger of Summit and NMBT filed with the Secretary of State of the State of
Delaware ("Delaware Certificate") filed in accordance with Section 252 of the
Delaware Law, which such hour and date shall be identical in both the NJ
Certificate and the Delaware Certificate. In the event that pursuant to the
Reorganization Election Summit elects the Reorganization method provided for at
Section 1.01(a)(2), the "Effective Time" of the Reorganization shall be the date
and time specified in Exhibit A or determined in accordance with Exhibit A.
Section 1.07. Exchange of NMBT Certificates.
(a) After the Effective Time and subject to Section 1.07(c) below, each
NMBT Shareholder (except as provided otherwise in Section 1.03(a)(1) above),
upon surrender to the Exchange Agent of all NMBT Certificates registered to the
NMBT Shareholder, shall be entitled to receive in exchange therefor a Summit
Certificate representing the number of whole shares of Summit Stock such NMBT
Shareholder becomes entitled to receive pursuant to Section 1.03(a)(2) and the
Cash In Lieu Amount, payable by check, such NMBT Shareholder may become entitled
to receive pursuant to Section 1.03(a)(2). Until so surrendered, outstanding
NMBT Certificates held by each NMBT Shareholder, other than NMBT Certificates
governed by Section 1.03(a)(1), shall be deemed for all purposes (other than as
provided below with respect to unsurrendered NMBT Certificates and Summit's
right to refuse payment of dividends or other distributions, if any, in respect
of Summit Stock) to represent only the right to receive the number of whole
shares of Summit Stock and the Cash In Lieu Amount, if any, without interest,
determined in accordance with Section 1.03(a)(2). Until so surrendered, Summit
may, at its option, refuse to pay to the holders of the unsurrendered NMBT
Certificates dividends or other distributions, if any, on Summit Stock declared
after the Effective Time; provided, however, that upon the surrender and
exchange of NMBT Certificates following a dividend or other distribution on
Summit Stock there shall be paid to such NMBT Shareholders the amount, without
interest, of dividends and other distributions, if any, which became payable
prior to such surrender and exchange but which were not paid.
(b) Holders of NMBT Certificates as of the Effective Time shall cease to
be, and shall have no further rights as, shareholders of NMBT.
(c) As promptly as practicable, but in no event more than 10 days, after
the Exchange Agent receives an accurate and complete list of all holders of
record of outstanding NMBT Stock as of the Effective Time ("NMBT Shareholders")
(including the address and social security number of and the number of shares of
NMBT Stock held by each NMBT Shareholder) from NMBT ("Final Shareholder List"),
Summit shall cause the Exchange Agent to send to each NMBT Shareholder
instructions and transmittal materials for use in surrendering and exchanging
NMBT Certificates for
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the Reorganization Consideration. If NMBT Certificates are properly presented to
the Exchange Agent (with proper presentation including satisfaction of all
requirements of the letter of transmittal), Summit shall as soon as practicable,
but in no event more than 10 days, after the later to occur of such presentment
or the receipt by the Exchange Agent of an accurate and complete Final
Shareholder List from NMBT cause the Exchange Agent to cancel and exchange NMBT
Certificates for Summit Certificates and Cash In Lieu Amounts, if any; provided,
however, that if the Exchange Agent, in order to satisfy its obligations under
the Code with respect to the reporting of dividend income to former shareholders
of NMBT, must suspend the exchange process provided for in the second sentence
of this Section 1.07(c) in order to preserve and report the required reporting
information, the 10-day exchange requirement shall be extended 5 business days
for exchanges being processed by the Exchange Agent at the commencement of, or
which are received during, the period of the suspension.
(d) At and after the Effective Time there shall be no transfers on the
stock transfer books of NMBT of the shares of NMBT Stock which were outstanding
immediately prior to the Effective Time.
Section 1.08. Restated Certificate of Incorporation and By-Laws. In the
event that pursuant to the Reorganization Election Summit elects the
Reorganization method provided for at Section 1.01(a)(1): the Restated
Certificate of Incorporation of Summit in effect immediately prior to the
Effective Time shall be the Restated Certificate of Incorporation of the
corporation surviving the Reorganization ("Surviving Corporation"), except as
duly amended thereafter and except to the extent such is deemed by law to be
affected by the NJ Certificate; and the By-Laws of Summit in effect immediately
prior to the Effective Time shall be the By-Laws of the Surviving Corporation,
except as duly amended thereafter. In the event that pursuant to the
Reorganization Election Summit elects the Reorganization method provided for at
Section 1.01(a)(2), the certificate or articles of incorporation and by-laws of
the Surviving Corporation shall be as set forth in Exhibit A.
Section 1.09. Board of Directors and Officers. In the event that pursuant
to the Reorganization Election Summit elects the Reorganization method provided
for at Section 1.01(a)(1): the Board of Directors of the Surviving Corporation
shall consist of the members of the Board of Directors of Summit at the
Effective Time; the officers of the Surviving Corporation shall consist of the
officers of Summit at the Effective Time; and such directors and officers shall
serve as such for the terms prescribed in the Restated Certificate of
Incorporation and By-Laws of Summit, or as otherwise provided by law or until
their earlier deaths, resignation or removal. In the event that pursuant to the
Reorganization Election Summit elects the Reorganization method provided for at
Section 1.01(a)(2), the members of the Board of Directors and the officers of
the Surviving Corporation shall be as set forth in Exhibit A.
Section 1.10. NMBT Stock Options.
(a) At the Effective Time, each NMBT Option (as defined in Section
1.10(b) below) shall be deemed to constitute, and shall automatically be
converted on the terms set forth in this Section 1.10 into, options to purchase
Summit Stock ("Converted Options") and each Converted Option (i) shall
immediately vest to the extent the related NMBT Option was vested or as provided
in the NMBT Stock Compensation Plan (as defined at Section 2.01(d)(3) below)
under which the related NMBT Option was granted and in the stock option
agreement by which it was evidenced, and (ii) shall be administered in all
material respects in accordance with the terms and conditions provided for in
the NMBT Stock Compensation Plan under which the related NMBT Option was granted
and in the stock option agreement by which it was evidenced; provided, however,
that the following two
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revisions shall be made: (A) Converted Options held by any Converted Option
holder whose employment with Summit terminates within one year of the Effective
Time, other than due to a termination by Summit for cause, shall remain
exercisable until the later to occur of the exercisability termination date
provided for in the particular Converted Option or the first anniversary of the
Effective Date; provided further, however, that no Converted Option may be
exercised beyond the expiration date of the particular Converted Option; and (B)
Converted Option holders shall have the right, exercisable only for 30 days
following the Effective Time, in lieu of exercising all Converted Options then
outstanding, to elect to receive from Summit, with respect to all outstanding
Converted Options then held by such holders, a cash lump sum representing the
aggregate difference between the exercise price of their Converted Options and
the Summit Price. The number of shares of Summit Stock which may be purchased
upon exercise of a particular Converted Option shall be the number of shares of
NMBT Stock which would have been issuable upon exercise in full of the related
NMBT Option multiplied by the Exchange Ratio and rounded down to the nearest
whole number ("Converted Number"). The exercise price per share of Summit Stock
purchasable upon exercise of a Converted Option shall equal the aggregate
exercise price that would have been payable upon an exercise in full of the
related NMBT Option divided by the Converted Number and rounded up to the
nearest ten-thousandth of a dollar. In the event a Capital Change shall occur
prior to the Effective Time, an appropriate adjustment shall be made to the
terms of the NMBT Options at the time of the foregoing conversion so that
Converted Options give effect to the Capital Change. Within 45 days after the
receipt by Summit of an accurate and complete list of all holders of NMBT
Options, all information about the NMBT Options and the holders thereof
(including the address and social security number of each such holder and a
description of the NMBT Options held by such holder specifying, at a minimum,
the plan under which issued, type (incentive or nonqualified), grant date,
expiration date, exercise price and the number of shares of NMBT Stock subject
thereto) and copies of each form of option agreement, warrant agreement or
letter agreement entered into between NMBT and a holder of a NMBT Option (all of
the foregoing being collectively referred to as the "Final Option List and
Materials"), Summit shall issue to the holders of such NMBT Options appropriate
instruments confirming the rights of such holders with respect to Summit Stock,
on the terms and conditions provided by this Section 1.10, upon surrender of the
outstanding instruments representing such NMBT Options; provided, however, that
Summit shall not be obligated to issue any such confirming instruments which
relate to the issuance of Summit Stock, or issue any shares of Summit Stock,
until such time as the shares of Summit Stock issuable upon exercise of
Converted Options shall have been registered with the Securities and Exchange
Commission (the "SEC") pursuant to an effective registration statement and
authorized for listing on the NYSE and for sale by any appropriate state
securities regulators, which such registrations and authorizations Summit shall
use its best efforts to effect within 45 days after NMBT shall have delivered to
Summit the Final Option List and Materials. Summit shall use its best efforts to
maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as any Converted Options remain outstanding. Summit shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of Summit
Stock for delivery upon exercise of Converted Options. Notwithstanding anything
in the foregoing to the contrary, NMBT Options intended to qualify as "incentive
stock options" under the Code shall be converted into Converted Options in a
manner consistent with the preservation of such qualification under the Code.
(b) For purposes of this Section 1.10, "NMBT Option" is hereby defined to
mean an option relating to the purchase of NMBT Stock, and any rights
appurtenant thereto including Equity Based Rights (as defined at Section
2.01(d)(2) below), granted under a NMBT Stock Compensation Plan (as defined at
Section 2.01(d)(3) below), outstanding both on the date hereof and at the
Effective Time.
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Section 1.11. Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of NMBT acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Reorganization or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of NMBT or otherwise, all such deeds, bills of sale, assignments
and assurances and to take, in the name and on behalf of NMBT, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.12. Unclaimed Reorganization Consideration. If, upon the
expiration of one year following the Effective Time, Reorganization
Consideration remains with the Exchange Agent due to the failure of NMBT
Shareholders to surrender and exchange NMBT Certificates for Reorganization
Consideration, Summit may, at its election, continue to retain the Exchange
Agent for purposes of the surrender and exchange of NMBT Certificates or take
possession of such unclaimed Reorganization Consideration, in which such latter
case, NMBT Shareholders who have theretofore failed to surrender and exchange
NMBT Certificates shall thereafter look only to Summit for payment of the
Reorganization Consideration and the unpaid dividends and distributions on
Summit Stock declared after the Effective Time, without any interest thereon.
Notwithstanding the foregoing, none of Summit, NMBT, the Exchange Agent or any
other person shall be liable to any former holder of shares of NMBT Stock for
any property properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
Section 1.13. Lost NMBT Certificates. In the event any NMBT Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such NMBT Certificate to be lost, stolen or
destroyed and the posting by such person of a personal, nonsurety bond in such
amount as Summit may determine is reasonably necessary as indemnity against any
claim that may be made against it with respect to such NMBT Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed NMBT
Certificate the Reorganization Consideration deliverable in respect thereof
pursuant to this Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF NMBT
NMBT represents and warrants to Summit as follows (where an item required
to be disclosed on a NMBT Schedule is required to be disclosed on one or more
additional NMBT Schedules, or where a copy of an item required to be attached to
a NMBT Schedule is required to be attached to one or more additional NMBT
Schedules, such disclosure or copy need not be provided on more than one NMBT
Schedule provided the NMBT Schedules with respect to which the disclosure or
copy is required but not provided contain a cross reference to the location of
the required disclosure or copy in the NMBT Schedules which is clear and
unambiguous):
Section 2.01. Organization, Capital Stock.
(a) Each of NMBT and its nonbank subsidiaries, if any, including any
nonbank subsidiaries of Bank (as defined at Section 2.01(e) below), if any (the
term "subsidiary", as used in this Agreement, shall mean any corporation or
other organization of which 10% or more of the shares
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or other interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or other group performing similar functions
with respect to such corporation or other organization is directly or indirectly
owned by NMBT or a "subsidiary" of NMBT; the term "indirect" ownership means
ownership through a succession of one or more other subsidiaries), all of which
are listed, together with their respective states of incorporation and direct
and indirect beneficial owners, on NMBT Schedule 2.01(a), is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, qualified to transact business under the laws of all
jurisdictions where it transacts business, except where the failure to be so
qualified is not reasonably be expected to have a material adverse effect on (i)
the business, results of operations, assets or financial condition of NMBT and
its subsidiaries on a consolidated basis, or (ii) the ability of NMBT to perform
its obligations under, and to consummate the transactions contemplated by, this
Agreement ("NMBT Material Adverse Effect"). However, a NMBT Material Adverse
Effect or NMBT Material Adverse Change (as defined at Section 2.03 below) will
not include a change resulting from a change in law, rule, regulation, generally
accepted or regulatory accounting principle or other matter affecting banking
institutions or their holding companies generally or from charges or expenses
incident to the Reorganization. Each of NMBT and its nonbank subsidiaries has
all corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease its properties and assets, to occupy its premises and
to engage in its business and activities as presently engaged in, and each has
complied in all material respects with all applicable laws, regulations and
orders.
(b) NMBT is registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended ("BHCA").
(c) NMBT or one of its subsidiaries is the holder and beneficial owner of
all of the outstanding capital stock of all of NMBT's direct and indirect
nonbank subsidiaries.
(d) (1) The authorized capital stock of NMBT consists of 8,000,000 shares
of Common Stock, par value $0.01 per share, of which 2,668,558 shares are issued
and outstanding as of the date hereof, and 2,000,000 shares of Serial Preferred
Stock, par value $0.01 per share, of which no shares are issued or outstanding
as of the date hereof. All issued and outstanding shares of the capital stock of
NMBT and of each of its nonbank subsidiaries have been fully paid, were duly
authorized and validly issued, are nonassessable and have been issued pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act") or an appropriate exemption from registration
under the Securities Act and were not issued in violation of the preemptive
rights of any shareholder.
(2) Except as set forth in Section 2.01(d)(1), all Equity
Securities (as defined at Section 2.01(d)(4) below) of NMBT and its nonbank
subsidiaries outstanding, in existence, the subject of an agreement or reserved
for issuance ("Current Equity Securities"), and all rights or entitlements
appurtenant to, based upon, derived from or valued based on the performance or
value of Equity Securities of NMBT outstanding, in existence, the subject of an
agreement or reserved for issuance ("Equity Based Rights") are listed on NMBT
Schedule 2.01(d)(2) and all significant information relating to such Current
Equity Securities (other than Common Stock) and Equity Based Rights is listed on
NMBT Schedule 2.01(d)(2) including without limitation, where applicable, name of
holder, address and relationship to NMBT if not an employee of NMBT or a
subsidiary, date of grant, award or issuance, expiration dates, vesting dates,
the NMBT Stock Plan (as defined in Section 2.01(d)(3) below) under which
granted, awarded or issued, any intended qualification or nonqualification or
other status under the Code, those Current Equity Securities or Equity Based
Rights granted in
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tandem with other Current Equity Securities or Equity Based Rights, exercise
price, number of shares, valuation formula and performance goals. All Current
Equity Securities have been (to the extent such is capital stock or similar
equity interest) fully paid, were duly authorized and validly issued, are (to
the extent such is capital stock or similar equity interest) nonassessable and
have been issued pursuant to an effective registration statement under the
Securities Act or an appropriate exemption from registration under the
Securities Act and were not issued in violation of the preemptive rights of any
shareholder.
(3) All agreements, contracts, plans and arrangements, whether
oral or written or formal or informal, pursuant to which Current Equity
Securities or Equity Based Rights were granted, awarded or issued or which
provide for the granting, awarding or issuance of Equity Securities or Equity
Based Rights or are relevant in any fashion to Current Equity Securities or
Equity Based Rights ("NMBT Stock Plan") are listed on NMBT Schedule 2.01(d)(3).
All NMBT Stock Plans constituting a compensatory contract, plan or arrangement
("NMBT Stock Compensation Plan"), including all amendments thereto, are
separately identified on NMBT Schedule 2.01(d)(3) and have been duly approved by
the shareholders of NMBT where required by applicable law.
(4) "Equity Securities" of an issuer means (i) the capital stock
or other equity securities or equity interests of such issuer, (ii) options,
warrants, scrip, interests in, rights (including preemptive rights) to subscribe
to, purchase or acquire, calls on or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
capital stock or other equity securities or equity interests or any security or
right convertible into or exchangeable for the capital stock or other equity
security or equity interests of such issuer, and (iii) contracts, commitments,
obligations, agreements, understandings or arrangements entitling anyone to
acquire from the issuer, or by which such issuer is or may become bound to
issue, capital stock or other equity security or equity interest or any security
or right convertible into or exchangeable for the capital stock or other equity
security or equity interest of such issuer.
(e) NMBT CORP owns a bank subsidiary named "NMBT" ("Bank"). NMBT CORP
owns no bank subsidiary other than Bank ("bank" is hereby defined to include
commercial banks, savings banks, private banks, trust companies, savings and
loan associations, building and loan associations and similar institutions
receiving deposits and making loans). Bank is a bank duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
organization and is qualified to transact business under the laws of all
jurisdictions where it transacts business, except where the failure to be so
qualified is not reasonably be expected to have a NMBT Material Adverse Effect.
Bank is duly authorized to conduct all activities and exercise all powers of a
commercial bank contemplated by the laws of its jurisdiction of organization.
Bank is an insured bank as defined in the Federal Deposit Insurance Act, and has
all corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease its properties and assets, to occupy its premises, and
to engage in its business and activities as presently engaged in, and has
complied in all material respects with all applicable laws, regulations and
orders.
(f) The authorized and outstanding capital stock of Bank is as set forth
on NMBT Schedule 2.01(f). NMBT is the holder and beneficial owner of all of the
issued and outstanding Equity Securities of Bank. All issued and outstanding
shares of the capital stock of Bank have been fully paid, were duly authorized
and validly issued, are non-assessable, and were not issued in violation of the
preemptive rights of any shareholder. All Equity Securities of Bank outstanding,
in existence, the subject of an agreement or reserved for issuance are described
in all material respects on NMBT Schedule 2.01(f).
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(g) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by NMBT or a subsidiary of NMBT are held free and clear of
any claims, liens, encumbrances or security interests.
Section 2.02. Financial Statements. The financial statements (and related
notes and schedules thereto) contained in or incorporated by reference into
NMBT's (a) annual report to shareholders for the fiscal year ended December 31,
1998, (b) annual report on Form 10-K filed pursuant to the Securities Exchange
Act of 1934, as amended ("Exchange Act") for the fiscal year ended December 31,
1998 and (c) quarterly reports on Form 10-Q filed pursuant to the Exchange Act
for the fiscal quarters ended March 31, 1999 and June 30, 1999 (the "NMBT
Financial Statements") are true and correct in all material respects as of their
respective dates and each fairly presents (subject, in the case of unaudited
statements, to recurring audit adjustments normal in nature and amount), in
accordance with generally accepted accounting principles, the consolidated
statements of condition, income, changes in stockholders' equity and cash flows
of NMBT and its subsidiaries at its respective date and for the period to which
it relates, except as may otherwise be described therein and except that, in the
case of unaudited statements, no consolidated statements of changes in
stockholders' equity are included. The NMBT Financial Statements do not, as of
the dates thereof, include any material asset or omit any material liability,
absolute or contingent, or other fact, the inclusion or omission of which
renders the NMBT Financial Statements, in light of the circumstances under which
they were made, misleading in any respect.
Section 2.03. No Conflicts. Except as set forth on NMBT Schedule 2.03,
NMBT and each of its subsidiaries is not in violation or breach of or default
under, and has received no notice of violation, breach, revocation or threatened
or contemplated revocation of or default or denial of approval under, nor will
the execution, delivery and performance of this Agreement by NMBT, or the
consummation of the transactions contemplated hereby including the
Reorganization by NMBT upon the terms provided herein (assuming receipt of the
Required Consents, as that term is defined in Section 4.01), violate, conflict
with, result in the breach of, constitute a default under, give rise to a claim
or right of termination, cancellation, revocation of, or acceleration under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
of the material rights, permits, licenses, assets or properties of NMBT or any
of its subsidiaries or upon any of the Equity Securities of NMBT or any of its
subsidiaries, or constitute an event which could, with the lapse of time, action
or inaction by NMBT or any of its subsidiaries or a third party, or the giving
of notice and failure to cure, result in any of the foregoing, under any of the
terms, conditions or provisions, as the case may be, of:
(i) the certificate or articles of incorporation or articles of
association, as appropriate, or by-laws of NMBT or any of its
subsidiaries;
(ii) any applicable law, statute, rule, ruling, determination,
ordinance or regulation of or agreement with any governmental or
regulatory authority;
(iii) any judgment, order, writ, award, injunction or decree of any
court or other governmental authority; or
(iv) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement or other
instrument;
to which NMBT or any of its subsidiaries is a party or by which NMBT or any of
its subsidiaries or any of their assets or properties are bound or committed,
the consequences of which individually or
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in the aggregate could reasonably be expected to result in a material adverse
change in the business, results of operations, assets or financial condition of
NMBT and its subsidiaries, on a consolidated basis, from that reflected in the
NMBT Financial Statements as of and for the six months ended June 30, 1999
("NMBT Material Adverse Change"), or enable any person to enjoin the
transactions contemplated hereby.
Section 2.04. Absence of Undisclosed Liabilities. NMBT and its
subsidiaries have no liabilities, whether contingent or absolute, direct or
indirect, matured or unmatured (including but not limited to liabilities for
federal, state and local taxes, penalties, assessments, lawsuits or claims
against NMBT or any of its subsidiaries), and no loss contingency (as defined in
Statement of Financial Accounting Standards No. 5), other than (a) those
reflected in the NMBT Financial Statements or disclosed in the notes thereto,
(b) commitments made by NMBT or any of its subsidiaries in the ordinary course
of its business which are not in the aggregate material to NMBT and its
subsidiaries, on a consolidated basis, and (c) liabilities arising in the
ordinary course of its business since June 30, 1999, which are not in the
aggregate material to NMBT and its subsidiaries, on a consolidated basis. Other
than as may be set forth on NMBT Schedule 2.04, neither NMBT nor any of its
subsidiaries has, since June 30, 1999, become obligated on any debt due in more
than one year from the date of this Agreement in excess of $100,000, other than
intra-corporate debt and deposits received, repurchase agreements and borrowings
from the Federal Home Loan Bank of Boston entered into in the ordinary course of
business.
Section 2.05. Absence of Litigation; Agreements with Bank Regulators.
There is no outstanding order, injunction or decree of any court or governmental
or self-regulatory body against or affecting NMBT or any of its subsidiaries
which materially and adversely affects NMBT and its subsidiaries, on a
consolidated basis, and there are no actions, arbitrations, claims, charges,
suits, investigations or proceedings (formal or informal) material to NMBT and
its subsidiaries, on a consolidated basis, pending or, to NMBT's knowledge,
threatened, against or involving NMBT or any of its subsidiaries or their
officers or directors (in their capacity as such) in law or equity or before any
court, panel or governmental agency, except as may be disclosed in the Forms
10-K and 10-Q of NMBT referred to in Section 2.02. Neither NMBT nor any
subsidiary of NMBT is a party to any agreement or memorandum of understanding
with, or is a party to any commitment letter to, or has submitted a board of
directors resolution or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any governmental or regulatory authority which restricts materially the conduct
of its business, or in any manner relates to material statutory or regulatory
noncompliance discovered in any regulatory examinations, its capital adequacy,
its credit or reserve policies or its management. Neither NMBT nor any
subsidiary of NMBT has been advised by any governmental or regulatory authority
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any of the foregoing. Neither NMBT nor
any subsidiary of NMBT has failed to resolve to the satisfaction of the
applicable regulatory agency any significant deficiencies cited by any such
agency in its most recently completed examination of each aspect of NMBT's or a
NMBT subsidiary's business nor has NMBT or any subsidiary of NMBT been advised
of any significant deficiencies by any such agency in connection with any
current examination of either NMBT or a subsidiary of NMBT by any such agency.
Section 2.06. Brokers' Fees. NMBT has entered into this Agreement with
Summit as a result of direct negotiations without the assistance or efforts of
any finder, broker, financial advisor or investment banker, other than Advest,
Inc. ("Advest"). NMBT Schedule 2.06 consists of true and complete copies of all
agreements between NMBT and Advest with respect to the transactions contemplated
by this Agreement or similar transactions.
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Section 2.07. Regulatory Filings. All filings made by NMBT and its
subsidiaries after December 31, 1995 with the SEC and the appropriate bank
regulatory authorities did not contain any untrue statement of a material fact
and did not omit to state any material fact required to be stated herein or
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. To the extent such
filings were subject to the Securities Act or Exchange Act, such filings
complied in all material respects with the Securities Act or Exchange Act, as
appropriate, and all applicable rules and regulations thereunder of the SEC or
the Federal bank regulatory agency having securities regulatory jurisdiction, as
appropriate. Each of the financial statements (including related notes and
schedules thereto) contained in or incorporated by reference into such filings
are true and correct in all material respects as of their respective dates and
each fairly presents (subject, in the case of unaudited statements, to recurring
audit adjustments normal in nature and amount), in accordance with generally
accepted accounting principles, the consolidated statements of condition,
income, changes in stockholders' equity and cash flows of NMBT and its
subsidiaries at its respective date or for the period to which it relates,
except as may otherwise be described therein and except that, in the case of
unaudited statements, no consolidated statements of changes in stockholders'
equity are included. NMBT and its subsidiaries have since December 31, 1995, to
the extent legally required, timely made all filings required by the Securities
Act and the Exchange Act, Federal and state banking laws and regulations and the
rules and regulations of the NASD and any other self-regulatory organization,
and have paid all fees and assessments due and payable in connection therewith.
Section 2.08. Corporate Action. Assuming due execution and delivery by
Summit, and subject to the requisite approval by the shareholders of NMBT of
this Agreement, the Reorganization and the other transactions contemplated
hereby in accordance with NMBT's Amended and Restated Certificate Incorporation
and the Delaware Law at a meeting of such holders to be duly called and held,
NMBT has the corporate power and is duly authorized by all necessary corporate
action to execute, deliver and perform this Agreement. The Board of Directors of
NMBT has taken all action required by law, its Amended and Restated Certificate
Incorporation, its By-Laws or otherwise (i) to authorize the execution and
delivery of this Agreement and (ii) for shareholders of NMBT to approve this
Agreement and the transactions contemplated hereby including the Reorganization
by a simple majority of the shares entitled to vote at the meeting held in
accordance with Section 4.03. Assuming due execution and delivery by and the
enforceability against Summit of this Agreement, this Agreement is a valid and
binding agreement of NMBT enforceable in accordance with its terms except as
such enforcement may be limited by applicable principles of equity, and by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
laws of general applicability presently or hereafter in effect affecting the
enforcement of creditors' rights generally or institutions the deposits of which
are insured by the Federal Deposit Insurance Corporation, or the affiliates of
such institutions. The Board of Directors of NMBT in authorizing the execution
of this Agreement has determined to recommend to the shareholders of NMBT the
approval of this Agreement, the Reorganization and the other transactions
contemplated hereby, subject to the proviso appearing in the last sentence of
Section 4.03 hereof.
Section 2.09. Absence of Changes. There has not been, since June 30,
1999, any NMBT Material Adverse Change. Except as may be set forth in NMBT
Schedule 2.09, neither NMBT nor any of its subsidiaries has since June 30, 1999:
(a) (i) declared, set aside or paid any dividend or other distribution in
respect of its Equity Securities, other than dividends from subsidiaries to NMBT
or other subsidiaries of NMBT, an ordinary cash dividend to NMBT shareholders of
$0.10 per share or less per fiscal quarter and the dividends provided for
herein, or, (ii) directly or indirectly purchased, redeemed or otherwise
acquired any shares of any Equity Securities; (b) incurred current liabilities
since that date other than in the ordinary course of business; (c) sold,
exchanged or
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otherwise disposed of any of their assets except in the ordinary course of
business; (d) made any officers' salary increase or wage increase not consistent
with past practices, entered into any employment, consulting, severance or
change of control contract with any present or former director, officer or
salaried employee, or instituted any employee or director welfare, bonus, stock
option, profit-sharing, retirement, severance or other benefit plan or
arrangement or modified any of the foregoing so as to increase its obligations
thereunder in any material respect; (e) suffered any taking by condemnation or
eminent domain or other damage, destruction or loss in excess of $50,000,
whether or not covered by insurance, adversely affecting its business, property
or assets, or waived any rights of value in excess of $50,000; (f) entered into
transactions other than in the ordinary course of business which in the
aggregate exceeded $100,000; or (g) acquired assets or capital stock of another
company of whatsoever amount, except in a fiduciary capacity or in the course of
securing or collecting loans or leases.
Section 2.10. Allowance for Credit Losses. At June 30, 1999 and
thereafter the allowances for credit losses of NMBT and its subsidiaries were
and are adequate in all material respects to provide for all losses on loans and
leases outstanding and, to the best of NMBT's knowledge, the loan and lease
portfolios of NMBT in excess of such allowances are collectible in the ordinary
course of business. NMBT Schedule 2.10 constitutes a list of all loans and
leases made by NMBT or any of its subsidiaries that have been "classified" as to
quality by any internal or external auditor, accountant or examiner, and such
list is accurate and complete in all material respects.
Section 2.11. Taxes and Tax Returns. Neither NMBT nor any of its
subsidiaries has at any time filed a consent pursuant to Section 341(f) of the
Code or consented to have the provisions of Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by NMBT or any of its subsidiaries. None of the
property being acquired by Summit or its subsidiaries in the Reorganization is
property which Summit or its subsidiaries will be required to treat as being
owned by any other person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within
the meaning of Section 168(h)(1) of the Code. All amounts required to be
withheld have been withheld from employees by NMBT and each of its subsidiaries
for all periods in compliance with the tax, social security, unemployment and
other applicable withholding provisions of applicable federal, state and local
law. All federal, state and local returns (as defined below) required to be
filed have been timely filed by NMBT and each of its subsidiaries for all
periods for which returns were due, including with respect to employee income
tax withholding, social security, unemployment and other applicable taxes (as
defined below), are accurate, and the amounts shown thereon to be due and
payable, as well as any interest, additions, and penalties due with respect to
completed and settled examinations or concluded litigation relating to NMBT or
any of its subsidiaries, have been paid in full or adequate provision therefor
has been included on the books of NMBT or its appropriate subsidiary. Other than
franchise tax returns filed by NMBT with the State of Delaware, neither NMBT nor
any of its subsidiaries is required to file tax returns with any state other
than the State of Connecticut. Provision has been made on the books of NMBT or
its appropriate subsidiary for all unpaid taxes, whether or not disputed, that
may become due and payable by NMBT or any of its subsidiaries in future periods
in respect of transactions, sales or services occurring or performed prior to
the date of this Agreement. Neither the Internal Revenue Service ("IRS") nor the
State of Connecticut has audited any income tax returns of NMBT or its
subsidiaries. Neither NMBT nor any of its subsidiaries is subject to an audit or
review of its tax returns by any state other than the State of Connecticut. NMBT
is not and has not been a United States real property holding corporation as
defined in Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code. Neither NMBT nor any of its
subsidiaries is currently a party
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to any tax sharing or similar agreement with any third party. There are no
material matters, claims, assessments, examinations, notices of deficiency,
demands for taxes, refund litigation, proceedings, audits or proposed
deficiencies pending or, to NMBT's knowledge, threatened against NMBT or any of
its subsidiaries, including a claim or assessment by any authority in a
jurisdiction where NMBT or any of its subsidiaries do not file tax returns and
NMBT or any such subsidiary is subject to taxation, and there have been no
waivers of statutes of limitations or agreements related to assessments or
collection in respect of any federal, state or local taxes. Neither NMBT nor any
of its subsidiaries has agreed to or is required to make any adjustment pursuant
to Section 481(a) of the Code by reason of a change in accounting method
initiated by NMBT or any of its subsidiaries, and neither NMBT nor any of its
subsidiaries has any knowledge that the IRS has proposed any such adjustment or
change in accounting method. NMBT and its subsidiaries have complied in all
material respects with all requirements relating to information reporting,
including tax identification number reporting, and withholding (including
back-up withholding) and other requirements relating to the reporting of
interest, dividends and other reportable payments under the Code and state and
local tax laws and the regulations promulgated thereunder and other requirements
relating to reporting under federal law including record keeping and reporting
on monetary instruments transactions.
For purposes of this Agreement, "taxes" shall mean all taxes, charges,
fees, levies, penalties or other assessments imposed by any United States
Federal, state, local, or foreign taxing authority, including, but not limited
to, income, excise, property, sales, transfer, franchise, payroll, withholding,
social security or other taxes, including any interest, penalties or additions
attributable thereto; and "return" shall mean any return, report, information
return or other documents (including any related or supporting information) with
respect to taxes.
Section 2.12. Properties. NMBT has, directly or through its subsidiaries,
good and marketable title to all of its properties and assets, tangible and
intangible, including those reflected in the NMBT Financial Statements (except
individual properties and assets disposed of since June 30, 1999 in the ordinary
course of business), which properties and assets are not subject to any
mortgage, pledge, lien, charge or encumbrance other than as reflected in the
NMBT Financial Statements or which in the aggregate do not materially adversely
affect or impair the operation of NMBT and its subsidiaries on a consolidated
basis. NMBT and each of its subsidiaries enjoys peaceful and undisturbed
possession under all material leases under which it is the lessee, where the
failure to enjoy such peaceful and undisturbed possession would be likely to
have a NMBT Material Adverse Effect, and none of such leases contains any
unusual or burdensome provision which would be likely to materially and
adversely affect or impair the operations of NMBT and its subsidiaries, on a
consolidated basis.
Section 2.13. Condition of Properties; Insurance. All real and tangible
personal properties owned or leased by NMBT or any of its subsidiaries are in a
good state of maintenance and repair, are in good operating condition, subject
to normal wear and tear, conform (as to owned properties only) in all material
respects to all applicable ordinances, regulations and zoning laws, and are
adequate for the business conducted by NMBT or such subsidiary subject to
exceptions which are not, in the aggregate, material to NMBT and its
subsidiaries, on a consolidated basis. NMBT and each of its subsidiaries
maintains insurance (with companies which, to the best of NMBT's knowledge, are
approved by all appropriate state insurance regulators to sell such insurance
where purchased by NMBT) against loss relating to such properties and such other
risks as companies engaged in similar business located in Connecticut, would, in
accordance with good business practice, be customarily insured in amounts which
are customary, usual and prudent for corporations or banks, as the case may be,
of their size. Such policies are in full force and effect and are carried
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in an amount and form and are otherwise adequate to protect NMBT and each of its
subsidiaries from any adverse loss resulting from risks and liabilities
reasonably foreseeable at the date hereof, and are disclosed on NMBT Schedule
2.13. All material claims thereunder have been filed in a due and timely
fashion. Since December 31, 1994, neither NMBT nor any of its subsidiaries has
been refused insurance for which it has applied or had any policy of insurance
terminated (other than at its request) nor has NMBT or any subsidiary received
notice from any insurance carrier that (i) such insurance will be canceled or
that coverage thereunder will be reduced or eliminated or (ii) premium costs
with respect to such insurance will be increased, other than premium increases
in the ordinary course of business applicable on their terms to all insureds.
Section 2.14. Contracts.
(a) Except as set forth in NMBT Schedule 2.14(a), neither NMBT nor any of
its subsidiaries is a party to and neither they nor any of their assets are
bound by any written or oral lease or license with respect to any property, real
or personal, as tenant or licensee involving an annual consideration in excess
of $50,000.
(b) Except as set forth in NMBT Schedule 2.14(b), neither NMBT nor any of
its subsidiaries is a party to and neither they nor any of their assets are
bound by any written or oral: (i) employment or severance contract (including,
without limitation, any NMBT bargaining contract or union agreement) or other
agreement with any director or any officer or other employee of NMBT or any
subsidiary, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving NMBT or any
of its subsidiaries of the nature contemplated by this Agreement which is not
terminable without penalty by NMBT or a subsidiary, as appropriate, on 60 days
or less notice; (ii) contract or commitment for capital expenditures in excess
of $50,000 for any one project or in excess of $100,000 in the aggregate for all
projects; (iii) contract or commitment whether for the purchase of materials or
supplies or for the performance of services involving consideration in excess of
$50,000 (including advertising and consulting agreements, data processing
agreements, and retainer agreements with attorneys, accountants, actuaries, or
other professionals); (iv) contract or option to purchase or sell any real or
personal property, other than to sell OREO property, involving consideration in
excess of $50,000; (v) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan, stock purchase plan, or any
other non-qualified compensation plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement, (vi) agreement containing
covenants that limit the ability of NMBT or any of its subsidiaries to compete
in any line of business or with any person, or that involve any restriction on
the geographic area in which or method by which NMBT (including any successor
thereof) or any of its subsidiaries may carry on its business (other than as may
be required by law or any regulatory agency), (vii) agreement which by its terms
limits the payment of dividends by NMBT or any of its subsidiaries, (viii)
contract (other than this Agreement) limiting the freedom of NMBT or its
subsidiaries to engage in any type of banking or bank-related business
permissible under law; (ix) contract, plan or arrangement which provides for
payments of benefits payable to any participant therein or party thereto, and
which might render any portion of any such payments or benefits subject to
disallowance of deduction therefor as a result of the application of Section
280G of the Code or (x) any other contract material to the business of NMBT and
its subsidiaries, on a consolidated basis, and not made in the ordinary course
of business.
(c) Neither NMBT nor any of its subsidiaries is a party to or otherwise
bound by any contract, agreement, plan, lease, license, commitment or
undertaking which, in the reasonable
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opinion of management of NMBT, is materially adverse, onerous, or harmful to any
aspect of the business of NMBT and its subsidiaries, on a consolidated basis.
Section 2.15. Pension and Benefit Plans.
(a) Neither NMBT nor any of its subsidiaries maintains an employee
pension benefit plan, within the meaning of Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or has made any
contributions to any such employee pension benefit plan maintained after
December 31, 1995, except employee pension benefit plans listed in NMBT Schedule
2.15(a) (individually a "NMBT Pension Plan" and collectively the "NMBT Pension
Plans"). In its present form each NMBT Pension Plan complies in all material
respects with all applicable requirements under ERISA and the Code (except for
amendments, if any, required by legislative or regulatory changes but for which
the applicable remedial amendment period has not yet expired). Each NMBT Pension
Plan which is intended to be qualified and exempt under Sections 401(a) and
501(a) of the Code, and the trust created thereunder, are so qualified and
exempt and NMBT or the subsidiary whose employees are covered by such NMBT
Pension Plan has received from the IRS a determination letter or opinion letter
to that effect and such determination letter or opinion letter may still be
relied on. No event has occurred and there has been no omission or failure to
act which would adversely affect such qualification or exemption (other than the
failure of NMBT or a NMBT subsidiary, or prototype plan sponsors, if applicable,
to adopt amendments, if any, required by legislative or regulatory changes but
for which the applicable remedial amendment period has not yet expired). Each
NMBT Pension Plan has been administered and communicated to the participants and
beneficiaries in accordance with its terms and ERISA, except for defects,
failures or omissions in administration or operation that could not reasonably
be expected to result in a material adverse effect. No employee or agent of NMBT
or any subsidiary whose employees are covered by a NMBT Pension Plan has engaged
in any action or failed to act in such manner that, as a result of such action
or failure, (i) the IRS could revoke, or refuse to issue (as the case may be), a
favorable determination as to such NMBT Pension Plan's qualification and the
associated trust's exemption (other than the failure to adopt amendments, if
any, required by legislative or regulatory changes but for which the applicable
remedial amendment period has not yet expired) or impose any material liability
or material penalty under the Code, or (ii) a participant or beneficiary or a
nonparticipating employee has been denied benefits properly due under such NMBT
Pension Plan in a manner that could reasonably be expected to result in a
material liability being imposed on NMBT or any NMBT subsidiary. No NMBT Pension
Plan is currently or has at any time after December 31, 1995 been subject to
Section 412 of the Code or Title IV of ERISA. To NMBT's knowledge, no person has
engaged in any prohibited transaction involving any NMBT Pension Plan or
associated trust within the meaning of Section 406 of ERISA or Section 4975 of
the Code. There are no pending, or to NMBT's knowledge, threatened claims (other
than routine claims for benefits) against the NMBT Pension Plans or any
fiduciary thereof which would subject NMBT or any of its subsidiaries to a
material liability. All reports, filings, returns and disclosures and other
communications relating to any NMBT Pension Plan which have been required to be
made to the participants and beneficiaries, the SEC, the IRS, the U.S.
Department of Labor or any other governmental agency pursuant to the Code,
ERISA, or other applicable statute or regulation have been made in a timely
manner and all such reports, communications, filings, returns and disclosures
were true and correct in all material respects. "ERISA Affiliate" where used in
this Agreement means any trade or business (whether or not incorporated) which
is a member of a group of which NMBT is a member and which is under common
control within the meaning of Section 414 of the Code. Neither NMBT nor any of
its subsidiaries has any material liability under ERISA or the Code as a result
of its being a member of a group described in Sections 414(b), (c), (m) or (o)
of the Code.
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There are no unfunded benefit or pension plans or arrangements, or any
individual agreements whether qualified or not, to which NMBT or any of its
subsidiaries or ERISA Affiliates has any obligation to contribute. No NMBT
Pension Plan is a "multiemployer plan" as that term is defined in Section 3(37)
of ERISA. There has been no change in control of any NMBT Pension Plan.
(b) All bonus, deferred compensation, profit-sharing, retirement,
pension, stock option, stock award and stock purchase plans and all other
employee benefit, health and welfare plans, arrangements or agreements,
including without limitation the NMBT Stock Compensation Plans and medical,
major medical, disability, life insurance or dental plans covering employees
generally, other than the NMBT Pension Plans, maintained by NMBT or any of its
subsidiaries with an annual cost in excess of $50,000 (collectively "NMBT
Benefit Plans") are listed in NMBT Schedule 2.15(b) (unless already listed in
NMBT Schedule 2.15(a) or NMBT Schedule 2.01(d)(3)) and comply in all material
respects with all applicable requirements imposed by the Securities Act, the
Exchange Act, ERISA, the Code, and all applicable rules and regulations
thereunder. The NMBT Benefit Plans have been administered and communicated to
the participants and beneficiaries in accordance with their terms and ERISA,
except for defects, failures or omissions in administration or operations that
could not reasonably be expected to result in a material adverse effect. No
employee or agent of NMBT or any of its subsidiaries has engaged in any action
or failed to act in such manner that, as a result of such action or failure, a
participant or beneficiary or a nonparticipating employee has been denied
benefits properly due under the NMBT Benefit Plans in a manner that could
reasonably be expected to result in a material liability being imposed on NMBT
or any NMBT subsidiary. There are no pending, or to NMBT's knowledge, threatened
claims (other than routine claims for benefits) against the NMBT Benefit Plans
which would subject NMBT or any of its subsidiaries to a material liability. Any
trust which is intended to be tax-exempt has received a determination letter
from the IRS to that effect and no event has occurred which would adversely
affect such exemption. All reports, filings, returns and disclosures relating to
the NMBT Benefit Plans required to be made to the participants and
beneficiaries, the SEC, the IRS, the U.S. Department of Labor and any other
governmental agency pursuant to the Code, ERISA, or other applicable statute or
regulation, if any, have been made in a timely manner and all such reports,
filings, returns and disclosures were true and correct in all material respects.
(c) There is no pending or, to NMBT's knowledge, threatened litigation,
administrative action or proceeding relating to any NMBT Benefit Plan or NMBT
Pension Plan. There has been no announcement or commitment by NMBT or any
subsidiary of NMBT to create an additional NMBT Benefit Plan or NMBT Pension
Plan, or to amend a NMBT Benefit Plan or NMBT Pension Plan, except for
amendments required by applicable law, which would materially increase the cost
of such NMBT Benefit Plan or NMBT Pension Plan. Except for any plans or
amendments expressly described on NMBT Schedule 2.01(d)(3), NMBT Schedule
2.15(a) or NMBT Schedule 2.15(b), NMBT and its subsidiaries do not have any
obligations for post-retirement or post-employment benefits under any NMBT
Benefit Plan (exclusive of any coverage mandated by the Consolidated Omnibus
Reconciliation Act of 1986 ("COBRA") or any similar state law that cannot be
amended or terminated upon more than sixty (60) days' notice without incurring
any liability thereunder. NMBT Schedule 2.15(c) consists of the following with
respect to each NMBT Benefit Plan and NMBT Pension Plan, to the extent
applicable: (A) the most recent annual report on the applicable form of the Form
5500 series filed with the IRS with all the attachments filed, (B) such NMBT
Benefit Plan or NMBT Pension Plan, including all amendments thereto, (C) each
trust agreement and insurance contract relating to such plan, including
amendments thereto, (D) the most recent summary plan description for such plan,
including amendments thereto, if the plan is subject to Title I of ERISA, and
(E) the most recent determination letter issued by the IRS if such plan is
qualified under Section 401(a) of the Code.
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Section 2.16. Fidelity Bonds. Since December 31, 1992, NMBT and each of
its subsidiaries has continuously maintained fidelity bonds insuring them
against acts of dishonesty in such amounts as are customary, usual and prudent
for organizations of its size and business. All material claims thereunder have
been filed in a due and timely fashion. Since December 31, 1992, the aggregate
amount of all claims under such bonds has not exceeded the policy limits of such
bonds (excluding, except in the case of excess coverage, an amount equal to the
deductible in effect with respect to the claim, which such deductible did not
exceed $150,000) and neither NMBT nor any of its subsidiaries is aware of any
facts which would form the basis of a claim or claims under such bonds
aggregating in excess of the applicable deductible amounts under such bonds.
Neither NMBT nor any of its subsidiaries has reason to believe that its
respective fidelity coverage will not be renewed by its carrier on substantially
the same terms as the existing coverage, except for possible premium increases
unrelated to NMBT's and its subsidiaries' past claim experience.
Section 2.17. Labor Matters. Hours worked by and payment made to
employees of NMBT and each of its subsidiaries have not been in violation of the
Fair Labor Standards Act or any applicable law dealing with such matters; and
all payments due from NMBT and each of its subsidiaries on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of NMBT or its appropriate subsidiary. NMBT is in compliance in all
material respects with all other laws and regulations relating to the employment
of labor, including all such laws and regulations relating to NMBT bargaining,
discrimination, civil rights, safety and health, plant closing (including the
Worker Adjustment Retraining and Notification Act), workers' compensation and
the collection and payment of withholding and Social Security and similar taxes.
No labor dispute, strike or other work stoppage has occurred and is continuing
or is to its knowledge threatened with respect to NMBT or any of its
subsidiaries. Since December 31, 1994, no employee of NMBT or any of its
subsidiaries has been terminated, suspended, disciplined or dismissed under
circumstances which could constitute a material claim, suit, action, complaint
or proceeding likely to result in a material liability. No employees of NMBT or
any of its subsidiaries are unionized nor has union representation been
requested by any group of employees or any other person within the last two
years. There are no organizing activities involving NMBT pending with, or, to
the knowledge of NMBT, threatened by, any labor organization or group of
employees of NMBT.
Section 2.18. Books and Records. The minute books of NMBT and each of its
subsidiaries contain complete and accurate records of and fairly reflect all
actions taken at all meetings of the shareholders and of the boards of directors
and committees thereof and accurately reflect all other corporate action of the
shareholders and the boards of directors and each committee thereof. The books
and records of NMBT and each of its subsidiaries fairly and accurately reflect
the transactions to which NMBT and each of its subsidiaries is or has been a
party or by which their properties are subject or bound, and such books and
records have been properly kept and maintained.
Section 2.19. Concentrations of Credit. No customer or affiliated group
of customers (a) is owed by NMBT or any subsidiary of NMBT an aggregate amount
equal to more than 5% of the shareholders' equity of NMBT or such subsidiary
(including deposits, other debts and contingent liabilities) or (b) owes to NMBT
or any of its subsidiaries an aggregate amount equal to more than 5% of the
shareholders' equity of NMBT or such subsidiary (including loans and other
debts, guarantees of debts of third parties, and other contingent liabilities).
Section 2.20. Trademarks and Copyrights. Neither NMBT nor any of its
subsidiaries has received information that the manner in which NMBT or any of
its subsidiaries conducts its business including its current use of any material
trademark, trade name, service mark or copyright could be in violation of the
asserted rights of others in any trademark, trade name, service mark, copyright
or
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other proprietary right.
Section 2.21. Equity Interests. Neither NMBT nor any of its subsidiaries
owns, directly or indirectly, except for the equity interests of NMBT in Bank
and the equity interests disclosed on NMBT Schedule 2.01(a), any equity
interest, other than by virtue of a security interest securing an obligation not
presently in default, in any bank, corporation, partnership or other entity,
except: (a) in a fiduciary capacity; or (b) an interest valued at less than
$25,000 acquired in connection with a foreclosure or debt previously contracted.
None of the investments reflected in the consolidated balance sheet of NMBT as
of June 30, 1999, and none of such investments made by it or any of its
subsidiaries since June 30, 1999, is subject to any restriction (contractual or
statutory), other than applicable securities laws, that would materially impair
the ability of the entity holding such investment freely to dispose of such
investment at any time, except to the extent any such investments are pledged in
the ordinary course of business (including in connection with hedging
arrangements or programs or reverse repurchase arrangements) consistent with
prudent banking practice to secure obligations of NMBT or any of its
subsidiaries.
Section 2.22. Environmental Matters.
(a) Except as disclosed on NMBT Schedule 2.22 or as may be disclosed in
the Forms 10-K and 10-Q of NMBT referred to in Section 2.02 hereof:
(1) To NMBT's actual knowledge, and except in compliance with
applicable law, no Hazardous Substances (as hereinafter defined) have been
stored, treated, dumped, spilled, disposed, discharged, released or deposited
at, under or on (1) any property now owned, occupied, leased or held or managed
in a representative or fiduciary capacity ("Present Property") by NMBT or any of
its subsidiaries, (2) any property previously owned, occupied, leased or held or
managed in a representative or fiduciary capacity ("Former Property") by NMBT or
any of its subsidiaries during the time of such previous ownership, occupancy,
lease; holding or management or (3) any Participation Facility (as hereinafter
defined) during the time that NMBT or any of its subsidiaries participated in
the management of, or may be deemed to be or to have been an owner or operator
of, such Participation Facility;
(2) Except in compliance with applicable law, neither NMBT nor any
of its subsidiaries has disposed of, or arranged for the disposal of, Hazardous
Substances from any Present Property, Former Property or Participation Facility,
and to NMBT's actual knowledge, and except in compliance with applicable law, no
owner or operator of a Participation Facility disposed of, or arranged for the
disposal of, Hazardous Substances from a Participation Facility during the time
that NMBT or any of its subsidiaries participated in the management of, or may
be deemed to be or to have been an owner or operator of, such Participation
Facility;
(3) To NMBT's actual knowledge, no Hazardous Substances have been
stored, treated, dumped, spilled, disposed, discharged, released or deposited
at, under or on any Loan Property (as hereinafter defined), nor is there, with
respect to any such Loan Property, any violation of environmental law which
could materially adversely affect the value of such Loan Property to an extent
which could prevent or delay NMBT or any of its subsidiaries from recovering the
full value of its loan in the event of a foreclosure on such Loan Property.
(b) Neither NMBT nor any subsidiary (i) is aware of any investigations
contemplated, pending or completed by any environmental regulatory authority
with respect to any Present Property, Former Property, Loan Property or
Participation Facility, (ii) has received any information
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requests from any environmental regulatory authority, or (iii) been named as a
potentially responsible or liable party in any Superfund, Resource Conservation
and Recovery Act, Toxic Substances Control Act or Clean Water Act proceeding or
other equivalent state or federal proceeding.
(c) As used in this Agreement, (a) "Participation Facility" shall mean
any property or facility of which the relevant person or entity (i) has at any
time participated in the management or (ii) may be deemed to be or to have been
an owner or operator, (b) "Loan Property" shall mean any real property in which
the relevant person or entity holds a security interest in an amount greater
than $50,000 and (c) "Hazardous Substances" shall mean (i) any flammable
substances, explosives, radioactive materials, hazardous materials, hazardous
substances, hazardous wastes, toxic substances, pollutants or contaminants
defined as such in any applicable Federal or state law or regulation relating to
pollution or protection of human health or the environment (including, without
limitation, ambient or indoor air, surface water, groundwater, land surface or
subsurface strata) and (ii) friable asbestos, polychlorinated biphenyls, urea
formaldehyde, and petroleum and petroleum-containing products and wastes.
Section 2.23. Accounting, Tax and Regulatory Matters. Neither NMBT nor
any of its subsidiaries has taken or agreed to take any action or has any
knowledge of any fact or circumstance that would (i) prevent the transactions
contemplated hereby from qualifying as a reorganization within the meaning of
Section 368(a) of the Code, or (ii) materially impede or delay receipt of any
approval referred to in Section 4.01 or the consummation of the transactions
contemplated by this Agreement.
Section 2.24. Interest of Management and Affiliates.
(a) All loans presently on the books of NMBT or any of its subsidiaries
to present or former directors or executive officers of NMBT or any subsidiary
of NMBT, or their associates, or any members of their immediate families, have
been made in the ordinary course of business and on the same terms and interest
rates as those prevailing for comparable transactions with others and do not
involve more than the normal risk of repayment or present other unfavorable
features.
(b) Except as set forth and described in NMBT Schedule 2.24(b), no
present or former officer or director of NMBT or any of its subsidiaries or any
Associated Person (as defined in Section 2.24(d) below):
(1) has any interest in any property, real or personal, tangible
or intangible, used in or pertaining to the business of NMBT or any of its
subsidiaries except for the normal rights of a shareholder;
(2) has an agreement, understanding, contract, commitment or
pending transaction relating to the purchase, sale or lease of real or personal
property, goods, materials, supplies or services, whether or not in the ordinary
course of business, with NMBT or any of its subsidiaries ("Insider Agreements");
(3) has received from NMBT or any of its subsidiaries any
commitment, whether written or oral, to lend any funds to any such person;
(4) is owed any amounts by NMBT or any of its subsidiaries except
for deposits taken in the ordinary course of business and amounts due for normal
compensation or reimbursement of expenses incurred in furtherance of the
business of such person's employer and reimbursable
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according to a policy of NMBT or such subsidiary, as appropriate, as in effect
immediately prior to the date hereof ("Insider Indebtedness").
(c) The consummation of the transactions contemplated hereby will not
(either alone, or upon the occurrence of any act or event, the lapse of time, or
the giving of notice and failure to cure) result in any payment (severance or
other) or provision of a benefit becoming due from NMBT or any of its
subsidiaries or any successor or assign thereof to any director, officer or
employee of NMBT or any of its subsidiaries or any successor or assign of such
subsidiary, other than payments and benefits due under the contracts and
agreements set forth in NMBT Schedule 2.14(a).
(d) "Associated Person" means (i) any holder of 10% of more of the
outstanding shares of NMBT Stock, (ii) any associate (as "associate" is defined
at Rule 14a-1(a) of the SEC) or relative ("relative" for purposes of this
Section 2.24 is defined as any person having a family relationship with the
subject person, as family relationship is defined in the Instruction to
Paragraph 401(d) of Regulation S-K of the SEC) of a present or former director
or executive officer of NMBT or any of its subsidiaries, (iii) any entity
controlled, directly or indirectly, individually or in the aggregate, by any
present or former director or executive officer of NMBT or any of its
subsidiaries or any relative or associate of any of such persons and (iv) any
entity 25% or more or the equity interests of which are owned individually or in
the aggregate by any present or former director or executive officer of NMBT or
any of its subsidiaries or any relative or associate of any of such persons.
Section 2.25 Registration Obligations. Neither the NMBT nor any of its
subsidiaries is under any contractual obligation, contingent or otherwise, to
register any of its securities under the Securities Act.
Section 2.26 Corporate Documents. The articles or certificate of
incorporation and by-laws, as amended to date, of NMBT and of each of its
subsidiaries previously provided to Summit constitute true and complete copies
of all articles or certificates of incorporation and by-laws, as amended to
date, which are currently in full force and effect for NMBT and of each of its
subsidiaries.
Section 2.27 Community Reinvestment Act Compliance. NMBT and its
subsidiaries are in substantial compliance with the applicable provisions of the
Community Reinvestment Act of 1977 and the regulations promulgated thereunder,
and received a CRA rating of at least satisfactory as of their last completed
examination. As of the date of this Agreement, NMBT has not been advised of the
existence of any fact or circumstance or set of facts or circumstances which, if
true, would cause NMBT or any subsidiary to fail to be in substantial compliance
with such provisions.
Section 2.28 Business of NMBT. Since June 30, 1999, NMBT has conducted
its business only in the ordinary course. For purposes of the foregoing, NMBT
has not, since June 30, 1999, controlled expenses through (i) elimination of
employee benefits, (ii) deferral of routine maintenance of real property or
leased premises, (iii) elimination of reserves where the liability related to
such reserve has remained, (iv) reduction of capital improvements from previous
levels, (v) failure to depreciate capital assets in accordance with past
practice or to eliminate capital assets which are no longer used in the business
of NMBT, (vi) capitalized loan production expenses other than in accordance with
Statement of Financial Accounting Standard No. 91, or (vii) extraordinary
reduction or deferral of ordinary or necessary expenses.
Section 2.29 Interest Rate Risk Management Instruments.
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(a) Set forth on NMBT Schedule 2.29(a) is a list as of the date hereof of
all interest rate swaps, caps, floors and option agreements, and other interest
rate risk management arrangements to which NMBT or any of its subsidiaries is a
party or by which any of their properties or assets may be bound.
(b) All such interest rate swaps, caps, floors and option agreements and
other interest rate risk management arrangements to which NMBT or any of its
subsidiaries is a party or by which any of their properties or assets may be
bound were entered into the ordinary course of business and, in accordance with
prudent banking practice and applicable rules, regulations and policies of
regulatory authorities and with counterparties believed, at the time entered
into and at the date of this Agreement, to be financially responsible and are
legal, valid and binding obligations of NMBT or a subsidiary and are in full
force and effect. NMBT and each of its subsidiaries has duly performed in all
material respects all of its obligations thereunder to the extent that such
obligations to perform have accrued, and there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
Section 2.30. Takeover Laws; Dissenters' Rights. NMBT has taken all
action required to be taken by it in order to exempt this Agreement, the Option
Agreement and the transactions contemplated by each from, and this Agreement,
the Option Agreement and the transactions contemplated by each are exempt from,
the requirements of any "moratorium", "control share", "fair price", "affiliate
transaction", "control transaction", business combination" or other antitakeover
(i) laws and regulations of the State of Delaware, or (ii) provisions in the
Amended and Restated Certificate of Incorporation or By-Laws of NMBT. Holders of
NMBT Stock do not have dissenters' or appraisal rights in connection with the
execution of this Agreement or the consummation of any of the transactions
contemplated hereby.
Section 2.31. Year 2000 Compliant. To the best knowledge of NMBT, all
material computer software and hardware owned or licensed by NMBT or any of its
subsidiaries is, or NMBT has taken all required steps to be, Year 2000
compliant, which, for purposes of this Agreement, shall mean that the data
outside the range 1900-1999 will be correctly processed in any level of computer
hardware or software including, but not limited to, microcode, firmware,
applications programs, files and databases. All material computer software owned
or licensed by NMBT is, or NMBT has taken steps (including obtaining warranties
from the vendors thereof in respect of compliance) to ensure that all such
computer software will be, designed to be used prior to, during and after the
calendar year 2000 AD and such software will operate during each such time
period, without error relating to date data, specifically including any error
relating to, or the product of, date data that represents or references
different centuries or more than one century.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SUMMIT
Summit represents and warrants to NMBT as follows:
Section 3.01. Organization, Capital Stock.
(a) Summit is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey with authorized capital stock
consisting of (i) 390,000,000 shares of Common Stock, par value $.80 per share,
with the Summit Rights attached thereto pursuant to the Rights Agreement, of
which 177,061,084 shares were issued and outstanding as of August 1, 1999
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and (ii) 6,000,000 shares of Preferred Stock, each without par value, of which
no shares are issued and outstanding and 1,500,000 shares of Series R Preferred
Stock are reserved for issuance as of the date hereof
(b) Summit is qualified to transact business in and is in good standing
under the laws of all jurisdictions where the failure to be so qualified could
reasonably be expected to have a material adverse effect on (i) the business,
results of operations, assets or financial condition of Summit and its
subsidiaries on a consolidated basis, or (ii) the ability of Summit to perform
its obligations under, and to consummate the transactions contemplated by, this
Agreement (a "Summit Material Adverse Effect"). However, a Summit Material
Adverse Effect or Summit Material Adverse Change (as defined at Section 3.03)
will not include a change resulting from a change in law, rule, regulation,
generally accepted or regulatory accounting principle or other matter affecting
financial institutions or their holding companies generally or from charges or
expenses incident to the Reorganization. The bank subsidiaries of Summit are
duly organized, validly existing and in good standing under the laws of their
jurisdiction of organization. Summit and its bank subsidiaries have all
corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease their respective properties, occupy their respective
premises, and to engage in their respective businesses and activities as
presently engaged in, except where the failure of such would not have a Summit
Material Adverse Effect. Summit and its bank subsidiaries have each complied
with all applicable laws, regulations and orders except where the failure to so
comply would not have a Summit Material Adverse Effect. Summit is duly
registered as a bank holding company under the BHCA.
(c) All issued shares of the capital stock of Summit and of each of its
bank subsidiaries have been fully paid, were duly authorized and validly issued,
are non-assessable, have been issued pursuant to an effective registration
statement under the Securities Act or an appropriate exemption from registration
under the Securities Act and were not issued in violation of the preemptive
rights of any shareholder. Summit or one of its subsidiaries is the holder and
beneficial owner of all of the issued and outstanding Equity Securities of its
bank subsidiaries. There are no Equity Securities of Summit outstanding, in
existence, the subject of an agreement, or reserved for issuance, except as set
forth at Section 3.01(a) and except for Summit Stock issuable upon the exercise
of employee stock options granted under stock option plans of Summit, Summit
Stock issuable pursuant to Summit's Dividend Reinvestment and Stock Purchase
Plan, Savings Incentive Plan, 1993 Incentive Stock and Option Plan, 1999
Non-Executive Option Plan and Series R Preferred Stock issuable pursuant to the
Summit Rights Agreement.
(d) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by Summit or a subsidiary of Summit are held free and clear
of any claims, liens, encumbrances or security interests.
(e) Each bank subsidiary of Summit is duly authorized to conduct all
activities and exercise all powers of a commercial bank or savings bank
contemplated by the laws of its jurisdiction of organization. Each such bank
subsidiary is an insured bank as defined in the Federal Deposit Insurance Act.
Section 3.02. Financial Statements. The financial statements (and related
notes and schedules thereto) contained in or incorporated by reference into
Summit's (a) annual report to shareholders for the fiscal year ended December
31, 1998, (b) annual report on Form 10-K pursuant to the Exchange Act for the
fiscal year ended December 31, 1998 and (c) quarterly reports on Form 10-Q filed
pursuant to the Exchange Act for the fiscal quarters ended March 31, 1999 and
June 30,
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1998 (the "Summit Financial Statements") are true and correct in all material
respects as of their respective dates and each fairly presents (subject, in the
case of unaudited statements, to recurring audit adjustments normal in nature
and amount), in accordance with generally accepted accounting principles
consistently applied, the consolidated balance sheets, statements of income,
statements of shareholders' equity and statements of cash flows of Summit and
its subsidiaries at its respective date or for the period to which it relates,
except as may otherwise be described therein and except that, in the case of
unaudited statements, no consolidated statements of changes in stockholders'
equity are included. The Summit Financial Statements do not, as of the dates
thereof, include any material asset or omit any material liability, absolute or
contingent, or other fact, the inclusion or omission of which renders the Summit
Financial Statements, in light of the circumstances under which they were made,
misleading in any respect.
Section 3.03. No Conflicts. Summit is not in violation or breach of or
default under, and has received no notice of violation, breach, revocation or
threatened or contemplated revocation of or default or denial of approval under,
nor will the execution, delivery and performance of this Agreement by Summit, or
the consummation of the Reorganization by Summit upon the terms and conditions
provided herein (assuming receipt of the Required Consents), violate, conflict
with, result in the breach of, constitute a default under, give rise to a claim
or right of termination, cancellation, revocation of, or acceleration under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
rights, permits, licenses, assets or properties material to Summit and its
subsidiaries, on a consolidated basis, or upon any of the capital stock of
Summit, or constitute an event which could, with the lapse of time, action or
inaction by Summit, or a third party, or the giving of notice and failure to
cure, result in any of the foregoing, under any of the terms, conditions or
provisions, as the case may be, of:
(i) the Restated Certificate of Incorporation or the By-Laws of Summit;
(ii) any law, statute, rule, ruling, determination, ordinance, or
regulation of any governmental or regulatory authority;
(iii) any judgment, order, writ, award, injunction, or decree of any
court or other governmental authority; or
(iv) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement, or other
instrument;
to which Summit is a party or by which Summit or any of its assets or properties
are bound or committed, the consequences of which would be a material adverse
change in the business, results of operations, assets or financial condition of
Summit and its subsidiaries, on a consolidated basis, from that reflected in the
Summit Financial Statements as of and for the six months ended June 30, 1999 (a
"Summit Material Adverse Change"), or enable any person to enjoin the
transactions contemplated hereby.
Section 3.04. Absence of Litigation, Agreements with Bank Regulators.
There is no outstanding order, injunction, or decree of any court or
governmental or self-regulatory body against or affecting Summit or its
subsidiaries which materially and adversely affects Summit and its subsidiaries,
on a consolidated basis, and there are no actions, arbitrations, claims,
charges, suits, investigations or proceedings (formal or informal) material to
Summit and its subsidiaries, on a consolidated basis, pending or, to Summit's
knowledge, threatened, against or involving Summit or their officers or
directors (in their capacity as such) in law or equity or before any court,
panel or
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governmental agency, except as may be disclosed in the Forms 10-K and 10-Q of
Summit referred to in Section 3.02. Neither Summit nor any bank subsidiary of
Summit is a party to any agreement or memorandum of understanding with, or is a
party to any commitment letter to, or has submitted a board of directors
resolution or similar undertaking to, or is subject to any order or directive
by, or is a recipient of any extraordinary supervisory letter from, any
governmental or regulatory authority which restricts materially the conduct of
its business, or in any manner relates to its capital adequacy, its credit or
reserve policies or its management. Neither Summit nor any bank subsidiary of
Summit, has been advised by any governmental or regulatory authority that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any of the foregoing. Summit and the bank subsidiaries of
Summit have resolved to the satisfaction of the applicable regulatory agency any
significant deficiencies cited by any such agency in its most recent
examinations of each aspect of Summit or such bank subsidiary's business except
for examinations, if any, received within the 30 days prior to the date hereof.
Section 3.05. Regulatory Filings. At the time of filing, all filings made
by Summit and its subsidiaries after December 31, 1995 with the SEC and
appropriate bank regulatory authorities did not contain any untrue statement of
a material fact and did not omit to state any material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. To the extent such filings were subject to the Securities Act or
Exchange Act, such filings complied in all material respects with the Securities
Act or Exchange Act, as appropriate, and all applicable rules and regulations
thereunder of the SEC. Summit has since December 31, 1995 timely made all
filings required by the Securities Act and the Exchange Act, as appropriate, and
all applicable rules and regulations thereunder of the SEC or the Federal bank
regulatory agency having securities regulatory jurisdiction, as appropriate.
Each of the financial statements (including related notes and schedules thereto)
contained in or incorporated by reference into such filings are true and correct
in all material respects as of their respective dates and each fairly presents
(subject, in the case of unaudited statements, to recurring audit adjustments
normal in nature and amount), in accordance with generally accepted accounting
principles, the consolidated statements of condition, income, changes in
stockholders' equity and cash flows of Summit and its subsidiaries at its
respective date and for the period to which it relates, except as may otherwise
be described therein and except that in the case of unaudited statements, no
consolidated statements of changes in stockholders equity is included.
Section 3.06. Corporate Action.
(a) Assuming due execution and delivery by NMBT, Summit has the corporate
power and is duly authorized by all necessary corporate action to execute,
deliver, and perform this Agreement. The Board of Directors of Summit has taken
all action required by law or by the Restated Certificate of Incorporation or
By-Laws of Summit or otherwise to authorize the execution and delivery of this
Agreement. Approval by the shareholders of Summit of this Agreement, the
Reorganization or the transactions contemplated by this Agreement is not
required by applicable law. Assuming due execution and delivery by and the
enforceability against NMBT of this Agreement, this Agreement is a valid and
binding agreement of Summit enforceable in accordance with its terms except as
such enforcement may be limited by applicable principles of equity, and by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
laws of general applicability presently or hereafter in effect affecting the
enforcement of creditors' rights generally or institutions the deposits of which
are insured by the Federal Deposit Insurance Corporation, or the affiliates of
such institutions.
(b) In the event that pursuant to the Reorganization Election Summit
elects the Reorganization
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method provided for at Section 1.01(a)(2), the Designated Summit Subsidiary will
prior to Closing (i) have the corporate power and be duly authorized by all
necessary corporation action to execute, deliver and perform this Agreement and
(ii) the Board of Directors and sole shareholder of the Designated Summit
Subsidiary will have taken all action required by law, its certificate or
articles of incorporation and by-laws and otherwise to authorize the execution
and delivery of this Agreement and to approve this Agreement and the
transactions contemplated hereby including the Reorganization. Assuming due
execution and delivery by and the enforceability against each of the other
parties hereto, this Agreement will be a valid and binding agreement of the
Designated Summit Subsidiary enforceable in accordance with its terms except as
such enforcement may be limited by applicable principles of equity, and by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
laws of general applicability presently or hereafter in effect affecting the
enforcement of creditors' rights generally or institutions, the deposits of
which are insured by the Federal Deposit Insurance Corporation, or the
affiliates of such institutions.
Section 3.07. Absence of Changes. There has not been, since June 30,
1999, any Summit Material Adverse Change and there is no matter or fact known to
Summit which may result in any such Summit Material Adverse Change in the
future.
Section 3.08 Absence of Undisclosed Liabilities. There are no
liabilities, whether contingent or absolute, direct or indirect, or loss
contingencies (as defined in Statement of Financial Accounting Standards No. 5)
other than (a) disclosed in the Summit Financial Statements or disclosed in the
notes thereto, (b) commitments made by Summit or any of its subsidiaries in the
ordinary course of its business which are not in the aggregate material to
Summit and its subsidiaries, on a consolidated basis, and (c) liabilities
arising in the ordinary course of its business since June 30, 1999 which are not
in the aggregate material to Summit and its subsidiaries, on a consolidated
basis.
Section 3.09. Allowance for Credit Losses. At June 30, 1999 and
thereafter, the allowances for credit losses of Summit and its subsidiaries are
adequate in all material respects to provide for all losses on loans and leases
outstanding, and to the best of Summit's knowledge, the loan and lease
portfolios of Summit and its subsidiaries in excess of such allowances are
collectible in the ordinary course of business.
Section 3.10. Accounting, Tax and Regulatory Matters. Neither Summit nor
any of its subsidiaries has taken or agreed to take any action or has any
knowledge of any fact or circumstance that would (i) prevent the transactions
contemplated hereby from qualifying as a reorganization within the meaning of
Section 368(a) the Code, or (ii) materially impede or delay receipt of any
approval referred to in Section 4.01 or the consummation of the transactions
contemplated by this Agreement.
Section 3.11. Community Reinvestment Act Compliance. Summit and its
subsidiaries are in substantial compliance with the applicable provisions of the
Community Reinvestment Act of 1977 and the regulations promulgated thereunder,
and received a CRA rating of at least satisfactory as of their last completed
examination. As of the date of this Agreement, Summit and its subsidiaries have
not been advised of the existence of any fact or circumstance or set of facts or
circumstances which, if true, would cause Summit or any bank subsidiary to fail
to be in substantial compliance with such provisions.
Section 3.12. Year 2000 Compliant. To the best knowledge of Summit, all
computer software and hardware owned or licensed by Summit or any of its
subsidiaries is, or Summit has
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taken or is taking all required steps to be, Year 2000 compliant, which, for
purposes of this Agreement, shall mean that the data outside the range 1900-1999
will be correctly processed in any level of computer hardware or software
including, but not limited to, microcode, firmware, applications programs, files
and databases, except where the failure to be so compliant would not have a
Summit Material Adverse Effect. All computer software owned or licensed by
Summit is, or Summit has taken steps or is taking steps (including obtaining
warranties from the vendors thereof in respect of compliance) to ensure that all
computer software will be designed to be used prior to, during and after the
calendar year 2000 AD and that such software will operate during each such time
period, without error relating to date data, specifically including any error
relating to, or the product of, date data that represents or references
different centuries or more than one century, except where the failure to be so
designed or to so operate would not have a Summit Material Adverse Effect.
ARTICLE IV.
COVENANTS OF NMBT
NMBT hereby covenants and agrees with Summit that:
Section 4.01. Preparation of Registration Statement and Applications for
Required Consents. NMBT will cooperate with Summit in the preparation of a
Registration Statement on Form S-4 (the "Registration Statement") to be filed
with the SEC under the Securities Act for the registration of the offering of
Summit Stock to be issued as Reorganization Consideration and the proxy
statement-prospectus constituting part of the Registration Statement
("Proxy-Prospectus") that will be used by NMBT to solicit shareholders of NMBT
for approval of the Reorganization. In connection therewith, NMBT will furnish
all financial or other information, including using best efforts to obtain
customary consents, certificates, opinions of counsel and other items concerning
NMBT, deemed necessary by counsel to Summit for the filing or preparation for
filing under the Securities Act and the Exchange Act of the Registration
Statement (including the Proxy-Prospectus). NMBT will cooperate with Summit and
provide such information as may be advisable in obtaining an order of
effectiveness for the Registration Statement, appropriate permits or approvals
under state securities and "blue sky" laws, the required approval under the BHCA
of the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") and any other governmental or regulatory consents or approvals or the
taking of any other governmental or regulatory action necessary to consummate
the Reorganization that would not have a Summit Material Adverse Effect
following the Reorganization (the "Required Consents"). Summit, reasonably in
advance of making such filings, will provide NMBT and its counsel a reasonable
opportunity to comment on such filings and regulatory applications and will give
due consideration to any comments of NMBT and its counsel before making any such
filing or application, and Summit will provide NMBT and its counsel with copies
of all such filings and applications at the time filed if such filings and
applications are made at any time before the Effective Time. NMBT covenants and
agrees that all information furnished by NMBT for inclusion in the Registration
Statement, the Proxy-Prospectus, and all applications to appropriate regulatory
agencies for approval of the Reorganization will comply in all material respects
with the provisions of applicable law, including the Securities Act and the
Exchange Act and the rules and regulations of the SEC thereunder, and together
with all information furnished by NMBT to Summit pursuant to this Agreement or
in connection with obtaining Required Consents will not contain any untrue
statement of a material fact and will not omit to state any material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. NMBT will furnish to Advest such information about NMBT reasonably
available to it as Advest may reasonably request for purposes
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of the opinion referred to in Section 8.07.
Section 4.02. Notice of Adverse Changes. NMBT will promptly advise Summit
in writing of (a) any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of NMBT contained in this
Agreement or the NMBT Schedules or the materials furnished pursuant to the
Post-Signing Document List (as defined in Section 4.09), if made on or as of the
date of such event or the Closing Date, untrue or inaccurate in any material
respect, (b) any NMBT Material Adverse Change, (c) any inability or perceived
inability of NMBT to perform or comply with the terms or conditions of this
Agreement, (d) the institution or threat of institution of litigation or
administrative proceedings involving NMBT or any of its subsidiaries or assets,
which, if determined adversely to NMBT or any of its subsidiaries, would have a
NMBT Material Adverse Effect or an adverse material effect on the ability of the
parties to timely consummate the Reorganization and the related transactions,
(e) any governmental complaint, investigation, hearing, or communication
indicating that such litigation or administrative proceeding is contemplated,
(f) any written notice of, or other communication relating to, a default or
event which, with notice or lapse of time or both, would become a default,
received by NMBT or a subsidiary subsequent to the date hereof and prior to the
Effective Time, under any agreement, indenture or instrument to which NMBT or a
subsidiary is a party or is subject and which is material to the business,
operation or condition (financial or otherwise) of NMBT and its subsidiaries on
a consolidated basis, and (g) any written notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement including the
Reorganization. NMBT agrees that the delivery of such notice shall not
constitute a waiver by Summit of any of the provisions of Articles VI or VII.
Section 4.03. Meeting of Shareholders. NMBT will call a meeting of its
shareholders for the purpose of voting upon this Agreement, the Reorganization
and the transactions contemplated hereby. The meeting of shareholders
contemplated by this Section 4.03 will be held as promptly as practicable and,
in connection therewith, will comply with the Delaware Law and the Exchange Act
and all regulations promulgated thereunder governing shareholder meetings and
proxy solicitations. In connection with such meeting, NMBT shall mail the
Proxy-Prospectus to NMBT shareholders and use its best efforts to obtain
shareholder approval of this Agreement, the Reorganization and the transactions
contemplated hereby; provided, however, that no director of NMBT shall be
obligated to take an action under this Section 4.03 in such person's capacity as
a director if such person has been advised in writing by counsel that such
action is contrary to the fiduciary duty owed as a director.
Section 4.04. Copies of Filings. Without limiting the provisions of
Section 4.01, NMBT will deliver to Summit, at least 48 hours prior to an
anticipated date of filing or distribution or as soon thereafter as practicable,
all documents to be filed with the SEC or any bank regulatory authority or to be
distributed in any manner to the shareholders of NMBT or to the news media or to
the public, other than the press releases and other information subject to
Section 10.01.
Section 4.05. No Material Transactions. Until the Effective Time, NMBT
will not and will not allow any of its subsidiaries to, without the prior
written consent of Summit:
(a) pay (or make a declaration which creates an obligation to pay) any
cash dividends, other than dividends from subsidiaries of NMBT to NMBT or other
subsidiaries of NMBT except that NMBT may declare, set aside and pay dividends
with record dates and payment dates set in accordance with NMBT's customary and
established current practice and, with respect to individual
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dividends, at a rate at the time of declaration equal to the rate most recently
declared by Summit multiplied by 0.7024;
(b) declare or distribute any stock dividend or authorize or effect a
stock split;
(c) merge with, consolidate with, or sell any material asset to any other
corporation, bank, or person (except for mergers of subsidiaries of NMBT into
other subsidiaries of NMBT) or enter into any other transaction not in the
ordinary course of the banking business;
(d) incur any liability or obligation other than intracompany
obligations, make or agree to make any commitment or disbursement, acquire or
dispose or agree to acquire or dispose of any property or asset (tangible or
intangible), make or agree to make any contract or agreement or engage or agree
to engage in any other transaction, except (i) transactions in the ordinary
course of business, (ii) transactions not in the ordinary course of business
involving not more than $50,000, and (iii) costs and expenses incurred in
connection with the Reorganization and other transactions contemplated by this
Agreement;
(e) subject any of its properties or assets to any lien, claim, charge,
option or encumbrance, except in the ordinary course of business and for amounts
not material in the aggregate to NMBT and its subsidiaries, on a consolidated
basis;
(f) except as permitted by Schedule 4.05(f), pay any employee bonuses or
increase or enter into any agreement to increase the rate of compensation of any
employee at the date hereof which is not consistent with past practices and
policies and which when considered with all such increases or agreements to
increase constitutes an average annualized rate not exceeding four percent (4%);
(g) create, adopt or modify any employment, termination, severance
pension, supplemental pension, profit sharing, bonus, deferred compensation,
death benefit, retirement, stock option, stock award, stock purchase or other
employee or director benefit or welfare plan, arrangement or agreement of
whatsoever nature, including without limitation the NMBT Pension Plans and the
NMBT Benefit Plans (collectively, "NMBT Plans"), or change the level of
benefits, reduce eligibility, performance or participation standards, increase
any payment or benefit under any NMBT Plan;
(h) distribute, issue, sell, award, grant, permit to become outstanding
or enter into any agreement respecting any Equity Securities or any Equity Based
Rights except pursuant to the Option Agreement or pursuant to the exercise of
director and employee stock options and warrants granted prior to the date
hereof under the NMBT Stock Compensation Plans and exercisable and outstanding
under the terms of a NMBT Stock Compensation Plan at the date of such exercise;
(i) except in a fiduciary capacity, purchase, redeem, retire, repurchase,
or exchange, or otherwise acquire or dispose of, directly or indirectly, any of
its Equity Securities or Equity Based Rights, whether pursuant to the terms of
such Equity Securities or Equity Based Rights or otherwise, or enter into any
agreement providing for any of the foregoing transactions;
(j) amend its certificate or articles of incorporation or articles of
association, as appropriate, charter or by-laws;
(k) modify, amend or cancel any of its existing material borrowings other
than intra-corporate
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borrowings and borrowings of federal funds from correspondent banks and the
Federal Home Loan Bank of Boston or enter into any contract, agreement, lease or
understanding, or any contracts, agreements, leases or understandings other than
those in the ordinary course of business or which do not involve the creation of
any material obligation or release of any material right of NMBT or any of its
subsidiaries, on a consolidated basis;
(l) create, amend, increase, enhance, accelerate the exercisability of,
or release or waive any forfeitures, terminations or expirations of or
restrictions on any rights, awards, benefits, entitlements, options or warrants
under the NMBT Plans including Equity Securities and Equity Based Rights
outstanding ;
(m) except as permitted by Schedule 4.05(m), make any employer
contribution to a NMBT Plan which under the terms of the particular plan is
voluntary and within the discretion of NMBT to make;
(n) make any determination or take any action, discretionary or
otherwise, under or with respect to any NMBT Plan other than routine
administration in accordance with past precedent;
(o) notwithstanding any other provision of this Agreement, enter into or
amend, renew, extend, give any notice or consent with respect to, waive any
provision under, or accept any new fees, rates or other costs or charges of
whatsoever nature, schedule, exhibit or other attachment under (whether through
an action or inaction) any Insider Agreement or any agreement, understanding,
contract, commitment or transaction relating to any Insider Indebtedness, except
to the extent permitted by Section 4.12 or disclosed in NMBT Schedule 2.24(b);
(p) other than in the ordinary course of business and in compliance with
applicable laws and regulations, enter into, increase or renew any loan or
credit commitment (including standby letters of credit) to any executive officer
or director of NMBT or any of its subsidiaries, any holder of 10% of more of the
outstanding shares of NMBT Stock, or any entity controlled, directly or
indirectly, by any of the foregoing or engage in any transaction with any of the
foregoing which is of the type or nature sought to be regulated in 12 U.S.C.
ss.371c and 12 U.S.C. ss.371c-1. For purposes of this Section 4.05(p), "control"
shall have the meaning associated with that term under 12 U.S.C. ss.371c; or
(q) take or fail to take any discretionary action provided for under the
terms of any plan or agreement affecting one or more directors or employees or
any affiliates of such where the effect of such act or failure to act is or
would be to give or confer a right or benefit not existing on the date hereof.
Section 4.06. Operation of Business in Ordinary Course. NMBT, on behalf
of itself and its subsidiaries, covenants and agrees that from and after the
date hereof and until the Effective Time, it and its subsidiaries: (a) will
carry on their business substantially in the same manner as heretofore and will
not institute any unusual or novel methods of management or operation of their
properties or business and will maintain such in their customary manner; (b)
will use their best efforts to continue in effect their present insurance
coverage on all properties, assets, business and personnel; (c) will use their
best efforts to preserve their business organization intact, preserve their
present relationships with customers, suppliers, and others having business
dealings with them, and keep available their present employees, provided,
however, that NMBT or any of its subsidiaries may terminate any employee for
unsatisfactory performance or other reasonable business purpose, and provided
further, however, that NMBT will notify and consult with Summit prior to
terminating any
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of the five highest paid employees of NMBT; (d) will use their best efforts to
continue to maintain fidelity bonds insuring NMBT and its subsidiaries against
acts of dishonesty by each of their employees in such amounts (not less than
present coverage) as are customary, usual and prudent for corporations or banks,
as the case may be, of their size; and (e) will not change their methods of
accounting in effect at June 30, 1999, or change any of their methods of
reporting income and deductions for Federal income tax purposes from those
employed in the preparation of their Federal income tax returns for the taxable
year ended December 31, 1998, except as required by changes in laws, regulations
or generally accepted accounting principles or changes that are to a preferable
accounting method, and approved in writing by NMBT's independent certified
public accountants.
Section 4.07. Further Actions. NMBT will: (a) execute and deliver such
instruments and take such other actions as Summit may reasonably require to
carry out the intent of this Agreement; (b) use all reasonable efforts to obtain
consents of all third parties and governmental bodies necessary or reasonably
desirable for the consummation of the transactions contemplated by this
Agreement; (c) diligently support this Agreement in any proceeding before any
regulatory authority whose approval of any of the transactions contemplated
hereby is required or reasonably desirable or before any court in which
litigation in respect thereof is pending; and (d) use its best efforts so that
the other conditions precedent to the obligations of Summit set forth in
Articles VI and VII hereof are satisfied.
Section 4.08. Cooperation. Until the Effective Time, NMBT will give to
Summit and to its representatives, including its accountants, KPMG Peat Marwick
LLP, and its legal counsel, full access during normal business hours to all of
its property, documents, contracts and records relevant to this Agreement and
the Reorganization, will provide such information with respect to its business
affairs and properties as Summit from time to time may reasonably request, and
will cause its managerial employees, and will use its best efforts to cause its
counsel and independent certified public accountants, to be available on
reasonable request to answer questions of Summit's representatives covering the
business and affairs of NMBT or any of its subsidiaries.
Section 4.09. Copies of Documents. As promptly as practicable, but not
later than 30 days after the date hereof, NMBT will furnish to or make available
to Summit all the documents, contracts, agreements, papers, and writings
referred to in the NMBT Schedules or called for by the list attached hereto as
Exhibit C (the "Post-Signing Document List").
Section 4.10. Applicable Laws. NMBT and its subsidiaries will use their
best efforts to comply promptly with all requirements which federal or state law
may impose on NMBT or any of its subsidiaries with respect to the Reorganization
and will promptly cooperate with and furnish information to Summit in connection
with any such requirements imposed upon Summit or on any of its subsidiaries in
connection with the Reorganization.
Section 4.11. Agreements of Affiliated Shareholders. NMBT agrees to
furnish to Summit, not later than 10 business days prior to the date of mailing
of the Proxy-Prospectus, a writing setting forth the names of those persons
(which will include all individual and beneficial ownership of NMBT Stock by
such persons and also identifies the manner in which all such beneficially owned
shares of NMBT Stock are registered on the stock record books of NMBT) who in
the written opinion of counsel to NMBT (which opinion need not be furnished to
Summit), constitute all the affiliates of NMBT for the purposes of Rule 145
under the Securities Act (an "NMBT Affiliate"). NMBT agrees to use its best
efforts (i) to cause each NMBT Affiliate to enter into an agreement effective
upon the execution thereof, satisfactory in form and substance to Summit and (y)
substantially in the form of Exhibit D-1 with respect to Affiliates who are
directors or officers of
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NMBT or a subsidiary of NMBT, or (z) substantially in the form of Exhibit D-2
with respect to Affiliates who are not directors or officers of NMBT or a
subsidiary of NMBT (an "Affiliate Agreement"), and (ii) to furnish such
Affiliate Agreements to Summit no later than 5 business days prior to the date
of mailing of the Proxy-Prospectus.
Section 4.12. Loans and Leases to Affiliates. All loans and leases
hereafter made by NMBT or any of its subsidiaries to any of its present or
former directors or executive officers or their respective related interests
shall be made only in the ordinary course of business and on the same terms and
at the same interest rates as those prevailing for comparable transactions with
others and shall not involve more than the normal risk of repayment or present
other unfavorable features.
Section 4.13. Confidentiality. All information furnished by Summit to
NMBT or its representatives pursuant hereto shall be treated as the sole
property of Summit and, if the Reorganization shall not occur, NMBT and its
representatives shall return to Summit all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information, except that any such
confidential information or notes or abstracts therefrom presented to the Board
of Directors of NMBT or any committee thereof for the purpose of considering
this Agreement, the Reorganization and the related transactions may be kept and
maintained by NMBT with other records of Board, and Board committee, meetings
subject to a continuing obligation of confidentiality. NMBT shall, and shall use
its best efforts to cause its representatives to, keep confidential all such
information, and shall not directly or indirectly use such information for any
purposes other than the performance of this Agreement. The obligation to keep
such information confidential shall continue for five years from the date the
proposed Reorganization is abandoned and shall not apply to: (i) any information
which (x) was legally in NMBT's possession prior to the disclosure thereof by
Summit, (y) was then generally known to the public, or (z) was disclosed to NMBT
by a third party not bound by an obligation of confidentiality; or (ii)
disclosures made as required by law. It is further agreed that if, in the
absence of a protective order or the receipt of a waiver hereunder, NMBT is
nonetheless, in the written opinion of its outside counsel, compelled to
disclose information concerning Summit to any tribunal or governmental body or
agency or else stand liable for contempt or suffer other censure or penalty,
NMBT may disclose such information to such tribunal or governmental body or
agency without liability hereunder and shall so notify Summit in advance to the
extent practicable. This Section 4.13 shall survive any termination of this
Agreement.
Section 4.14. Dividends. NMBT will coordinate with Summit the declaration
of any dividends and the record and payment dates thereof so that the holders of
NMBT Stock will not be paid two dividends for a single calendar quarter with
respect to their shares of NMBT Stock and any shares of Summit Stock they become
entitled to receive in the Reorganization or fail to be paid one dividend in
each calendar quarter between the date hereof and the Effective Time. NMBT will
notify Summit at least five business days prior to any proposed dividend
declaration date.
Section 4.15. Acquisition Proposals. NMBT agrees that neither NMBT nor
any of its subsidiaries nor any of the respective officers and directors of NMBT
or its subsidiaries shall, and NMBT shall direct and use its best effort to
cause its employees, affiliates, agents and representatives (including, without
limitation, any investment banker, broker, financial or investment advisor,
attorney or accountant retained by NMBT or any of its subsidiaries) not to,
initiate, solicit or encourage, directly or indirectly, any inquiries, proposals
or offers with respect to, or engage in any negotiations or discussions with any
person, provide any nonpublic information, or authorize or enter into any
agreement or agreement in principle concerning, or recommend, endorse or
otherwise facilitate any effort or attempt to induce or implement, any
Acquisition Proposal (as defined below);
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provided however, that the Board of Directors of NMBT may furnish or cause to be
furnished nonpublic information directly or through its representatives
concerning an Acquisition Proposal, if such Board of Directors has determined,
after having consulted with outside counsel and been advised of its legal rights
to the effect, that the failure to provide such nonpublic information would
cause the members of such Board of Directors to breach their fiduciary duties
under applicable laws, and, provided, further, that NMBT shall first obtain a
confidentiality agreement in customary form and containing at least the
confidentiality provisions set forth at Sections 4.13 and 5.08. "Acquisition
Proposal" is hereby defined to be any offer, including an exchange offer or
tender offer, or proposal concerning a merger, consolidation, or other business
combination or takeover transaction involving NMBT or any of its subsidiaries or
the acquisition of any assets (otherwise than as permitted by Section 4.05) or
securities of NMBT or any of its subsidiaries. NMBT will immediately cease and
cause to be terminated any existing activities, discussion or negotiations with
any parties conducted heretofore with respect to any of the foregoing. NMBT will
take the necessary steps to inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section. In
addition, NMBT will notify Summit by telephone to its chief executive officer or
general counsel promptly upon receipt of any communication with respect to a
proposed Acquisition Proposal with another person or receipt of a request for
information from any governmental or regulatory authority with respect to a
proposed acquisition of NMBT or any of its subsidiaries or assets by another
party, and will immediately deliver as soon as possible by facsimile
transmission, receipt acknowledged, to the Summit officer notified as required
above a copy of any document relating thereto promptly after any such document
is received by NMBT.
Section 4.16 Tax Opinion Certificates. NMBT shall execute and deliver to
Thompson Coburn any tax opinion certificate reasonably required by Thompson
Coburn in connection with the issuance of the Tax Opinions (as defined at
Section 6.03), dated as of the date of effectiveness of the Registration
Statement and as of the Closing Date (and as of the date the Closing occurs if
different than the Closing Date), and NMBT shall use its best efforts to cause
each of its executive officers, directors and holders of five percent (5%) or
more of outstanding NMBT Stock (including shares beneficially held) to execute
and deliver to Thompson Coburn any tax opinion certificate reasonably required
by Thompson Coburn in connection with the issuance of one or more of the Tax
Opinions, dated as of the date of effectiveness of the Registration Statement
and as of the Closing Date (and as of the date the Closing occurs if different
than the Closing Date).
Section 4.17. Directors' and Officers' Insurance. NMBT and each of its
subsidiaries has taken or will take all requisite action (including, without
limitation, the making of claims and the giving of notices) pursuant to its
directors' and officers' liability insurance policy or policies ("D&O
Insurance") in order to preserve all rights thereunder with respect to all
matters (other than matters arising in connection with this Agreement and the
transactions contemplated hereby) occurring prior to the Effective Time that are
known to NMBT. NMBT shall renew any existing D&O Insurance or purchase any
"discovery period" D&O Insurance provided for thereunder at Summit's request.
Section 4.18. Conforming Entries.
(a) Notwithstanding that NMBT believes that NMBT and its subsidiaries
have established reserves and taken all provisions for possible loan and lease
losses required by generally accepted accounting principles and applicable laws,
rules and regulations, NMBT recognizes that Summit may have adopted different
loan, accrual and reserve policies (including loan classification and levels of
reserves for possible loan and lease losses). From and after the date of this
Agreement, NMBT and Summit shall consult and cooperate with each other with
respect to conforming the loan, accrual and reserve policies of NMBT and its
subsidiaries to those policies of Summit, as specified in each case
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in writing to NMBT, based upon such consultation and as hereinafter provided.
(b) In addition, from and after the date of this Agreement, NMBT and
Summit shall consult and cooperate with each other with respect to determining
appropriate accruals, reserves and charges for NMBT to establish and take in
respect of excess equipment write-off or write-down of various assets and other
appropriate charges and accounting adjustments taking into account the parties'
business plan following the Reorganization, as specified in each case in writing
to NMBT, based upon such consultation and as hereinafter provided.
(c) NMBT and Summit shall consult and cooperate with each other with
respect to determining the amount and the timing for recognizing for financial
accounting purposes NMBT's expenses of the Reorganization and the restructuring
charges, if any, related to or to be incurred in connection with the
Reorganization.
(d) With respect to clauses (a) through (c) of this Section 4.18, (i) it
is the objective of NMBT and Summit that such reserves, accruals, charges and
divestitures, if any, to be taken shall be consistent with generally accepted
accounting principles, and (ii) NMBT shall not be obligated to make a particular
conforming entry (A) effecting financial statements as at or for periods ending
December 31, 1999 or earlier, or (B) if the particular entry is not capable of
being reversed upon a termination of this Agreement or if the entry would have a
material adverse effect on NMBT.
Section 4.19 Cooperation with Policies and Procedures. NMBT, prior to the
Effective Time, shall (i) consult and cooperate with Summit regarding the
implementation of those policies and procedures established by Summit for its
governance and that of its subsidiaries and not otherwise referenced in Section
4.18 of this Agreement, including, without limitation, policies and procedures
pertaining to the accounting, asset/liability management, audit, credit, human
resources, treasury and legal functions, and (ii) at the reasonable request of
Summit, conform NMBT's existing policies and procedures in respect thereof,
provided that NMBT shall not be required to conform a policy or procedure (y) if
such would cause NMBT or any of its subsidiaries to be in violation of any law,
rule, regulation or requirement of any governmental regulatory authority having
jurisdiction over NMBT or any of its subsidiaries affected thereby, or (z) if
such conforming change is not capable of being reversed upon a termination of
this Agreement or if the change would have a material adverse effect on NMBT's
financial statements.
Section 4.20 Environmental Reports. NMBT shall disclose to Summit all
matters of the types described in Section 2.22 hereof which NMBT would have been
required to disclose to Summit on the date hereof if known to NMBT on the date
hereof, as such become known to NMBT between the date hereof and the Effective
Time. In addition, Summit may at its expense perform, or cause to be performed,
a phase one environmental investigation, an asbestos survey, or both of the
foregoing, (i) within 90 days following the date of this Agreement, on all real
property owned, leased or operated by NMBT or any of its subsidiaries as of the
date of this Agreement (but excluding space in retail or similar establishments
leased by NMBT for automatic teller machines or leased bank branch facilities
where the space leased by NMBT comprises less than 20% of the total space leased
to all tenants of such property), and (ii) within 15 days after being notified
by NMBT of the acquisition or lease of any real property by it or its
subsidiaries after the date of this Agreement, on the real property so acquired
or leased (but excluding space in retail or similar establishments leased by
NMBT for automatic teller machines or leased bank branch facilities where the
space leased by NMBT comprises less than 20% of the total space leased to all
tenants of such property). If the results of a phase one investigation (whether
requested by NMBT or Summit) indicate, in the reasonable opinion of Summit, that
additional investigation is warranted, Summit may at its expense,
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within 15 days after receipt of the particular phase one report, perform or
cause to be performed a phase two investigation on the property or properties
deemed by Summit to warrant such additional study or notify NMBT and an
environmental consulting firm within 15 days after the receipt of the particular
phase one report that the environmental consulting firm should promptly commence
a phase two investigation. If the cost of taking all remedial or other
corrective actions and measures (as required by applicable law, as reasonably
recommended by phase one or phase two investigation reports (without regard to
who requested such reports) or as may be prudent in light of serious life,
health or safety concerns), if any, is in the aggregate in excess of $1,000,000,
as reasonably estimated by an environmental expert retained for such purpose by
Summit at its sole expense, or if the cost of such actions and measures cannot
be so reasonably estimated by such expert to be such amount or less with any
reasonable degree of certainty, Summit shall have the right pursuant to Section
9.02(d)(3) of this Agreement to terminate this Agreement.
Section 4.21 [Reserved]
Section 4.22. Dividend Equivalency. In the event the number determined
pursuant to Section 1.03(c) to be the Exchange Ratio is greater than the
multiplier set forth at Section 4.05(a), shareholders of record of NMBT at the
Effective Time shall become entitled to receive a cash payment per share of NMBT
Stock held by them at the Effective Time equal in amount to the difference
between (i) the dividends per share NMBT would be able to pay pursuant to
Section 4.05(a) if the multiplier stated therein were such number, and (ii) the
dividends per share actually paid by NMBT pursuant to Section 4.05(a). Any
payment which NMBT shareholders may become entitled to receive pursuant to this
Section 4.22 shall be distributed by Summit simultaneously with the distribution
of the Reorganization Consideration provided for in Article I.
ARTICLE V.
COVENANTS OF SUMMIT
Summit hereby covenants and agrees with NMBT that:
Section 5.01. Approvals and Registrations. Based on such assistance and
cooperation of NMBT as Summit shall reasonably request, Summit will use its best
efforts to prepare and file (a) with the SEC, the Registration Statement, (b)
with the Federal Reserve Board, an application for approval of the
Reorganization, and (c) with the NYSE, an application for the listing of the
shares of Summit Stock issuable upon the Reorganization, subject to official
notice of issuance, and (d) with any state regulatory authority having
jurisdiction over the Reorganization, applications for such consents or
approvals as may be required for consummation of the transactions contemplated
by this Agreement, except that Summit shall have no obligation to file a new
registration statement or a post-effective amendment to the Registration
Statement covering any reoffering of Summit Stock by NMBT Affiliates. Summit
covenants and agrees that all information furnished by Summit for inclusion in
the Registration Statement, the Proxy-Prospectus, and all applications and
submissions for the Required Consents will comply in all material respects with
the provisions of applicable law, including the Securities Act and the Exchange
Act and the rules and regulations of the SEC and the Federal Reserve Board and
will not contain any untrue statement of a material fact and will not omit to
state any material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. Summit will use its reasonable best efforts to seek
the effectiveness of the Registration Statement. Summit will
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furnish to Advest such information about Summit reasonably available to it as
Advest may reasonably request for purposes of the opinion referred to in Section
8.07.
Section 5.02. Notice of Adverse Changes. Summit will promptly advise NMBT
in writing of (a) any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of Summit contained in this
Agreement or the Summit Schedules, if made on or as of the date of such event or
the Closing Date, untrue or inaccurate in any material respect, (b) any Summit
Material Adverse Change, (c) any inability or perceived inability of Summit to
perform or comply with the terms or conditions of this Agreement, (d) the
institution or threat of institution of litigation or administrative proceeding
involving Summit or its assets which, if determined adversely to Summit, would
have a Summit Material Adverse Effect or a material adverse effect on the
Reorganization, (e) any governmental complaint, investigation, or hearing or
communication indicating that such litigation or administrative proceeding is
contemplated, (f) any written notice of, or other communication relating to, a
default or event which, with notice or lapse of time or both, would become a
default, received by Summit subsequent to the date hereof and prior to the
Effective Time, under any agreement, indenture or instrument to which Summit is
a party or is subject and which is material to the business, operation or
condition (financial or otherwise) of Summit and its subsidiaries on a
consolidated basis, and (g) any written notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement including the
Reorganization. Summit agrees that the delivery of such notice shall not
constitute a waiver by NMBT of any of the provisions of Articles VI or VIII.
Section 5.03. Copies of Filings. Summit shall promptly provide to NMBT
and its counsel copies of the application filed with the Federal Reserve Board,
all reports filed by it with the SEC on Forms 10-Q, 8-K and 10-K and all
documents to be distributed in any manner to the shareholders of Summit.
Section 5.04. Further Actions. Summit will: (a) execute and deliver such
instruments and take such other actions as NMBT may reasonably require to carry
out the intent of this Agreement; (b) use all reasonable efforts to obtain
consents of all third parties and governmental bodies necessary or reasonably
desirable for the consummation of the transactions contemplated by this
Agreement; (c) diligently support this Agreement in any proceeding before any
regulatory authority whose approval of any of the transactions contemplated
hereby is required or reasonably desirable or before any court in which
litigation in respect thereof is pending; and (d) use its best efforts so that
the other conditions precedent to the obligations of NMBT set forth in Articles
VI and VIII hereof are satisfied.
Section 5.05. Applicable Laws. Summit will use its best efforts to comply
promptly with all requirements which federal or state law may impose on Summit
with respect to the Reorganization and will promptly cooperate with and furnish
information to NMBT in connection with any such requirements imposed upon NMBT
or on any of its subsidiaries in connection with the Reorganization.
Section 5.06. Unpaid NMBT Dividends. By virtue of the Reorganization and
without further action on anyone's part, Summit shall assume the obligation of
NMBT to pay dividends, if any, on NMBT Stock which have a record date prior to
the Effective Time but which are not payable until after the Effective Time.
Section 5.07. Cooperation. Until the Effective Time, Summit will provide
such information
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with respect to its business affairs and properties as NMBT from time to time
may reasonably request, and will cause its managerial employees, counsel and
independent certified public accountants to be available on reasonable request
to answer questions of NMBT's representatives covering the business and affairs
of Summit or any of its subsidiaries.
Section 5.08. Confidentiality. All information furnished by NMBT to
Summit or its representatives pursuant hereto shall be treated as the sole
property of NMBT and, if the Reorganization shall not occur, Summit and its
representatives shall return to NMBT all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information, except that any such
confidential information or notes or abstracts therefrom presented to the Board
of Directors of Summit or any committee thereof for the purpose of considering
this Agreement, the Reorganization and the related transactions may be kept and
maintained by Summit with other records of Board, and Board committee, meetings
subject to a continuing obligation of confidentiality. Summit shall, and shall
use its best efforts, to cause its representatives to, keep confidential all
such information, and shall not directly or indirectly use such information for
any purposes other than the performance of this Agreement. The obligation to
keep such information confidential shall continue for five years from the date
the proposed Reorganization is abandoned and shall not apply to: (i) any
information which (x) was legally in Summit's possession prior to the disclosure
thereof by NMBT, (y) was then generally known to the public, or (z) was
disclosed to Summit by a third party not bound by an obligation of
confidentiality; or (ii) disclosures made as required by law. It is further
agreed that if, in the absence of a protective order or the receipt of a waiver
hereunder, Summit is nonetheless, in the written opinion of its counsel,
compelled to disclose information concerning NMBT to any tribunal or
governmental body or agency or else stand liable for contempt or suffer other
censure or penalty, Summit may disclose such information to such tribunal or
governmental body or agency without liability hereunder and shall so notify NMBT
in advance to the extent practicable. This Section 5.08 shall survive any
termination of this Agreement.
Section 5.09. Further Transactions. Summit continually evaluates possible
acquisitions and may prior to the Effective Time enter into one or more
agreements providing for, and may consummate the acquisition by it of another
bank, association, bank holding company, savings and loan holding company or
other company (or the assets thereof) for consideration that may include Summit
Stock. In addition, prior to the Effective Time, Summit may, depending on market
conditions and other factors, otherwise determine to issue Equity Securities or
other securities for financing purposes. Notwithstanding the foregoing, Summit
will not take any such action that would (i) prevent the transactions
contemplated hereby from qualifying as a reorganization within the meaning of
Section 368(a) of the Code or (ii) materially impede or delay receipt of any
Required Consent or the consummation of the transactions contemplated by this
Agreement for more than 60 days.
Section 5.10. Indemnification.
(a) Summit shall indemnify persons who served as directors and officers
of NMBT or any subsidiary of NMBT on or before the Effective Time with respect
to liabilities and claims (and related expenses, including fees and
disbursements of counsel) made against them resulting from their service as such
prior to the Effective Time in accordance with and subject to the requirements
and other provisions of the Restated Certificate of Incorporation and By-Laws of
Summit and the certificate or articles of incorporation and by-laws of NMBT or
the applicable subsidiary of NMBT, all as in effect on the date of this
Agreement and to the extent permitted by law, and Summit shall advance expenses
in matters that may be subject to indemnification in accordance with its
Restated
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Certificate of Incorporation and By-Laws in effect on the date of this Agreement
and any applicable provisions of law.
(b) Subject to NMBT's obligation set forth at Section 4.17: For a period
of six (6) years after the Effective Time, Summit will use its best efforts to
provide to the persons who served as directors or officers of NMBT or any
subsidiary of NMBT on or before the Effective Time insurance against liabilities
and claims (and related expenses) made against them resulting from their service
as such prior to the Effective Time comparable in coverage to that provided by
Summit to its own directors and officers, but, if not available on commercially
reasonable terms, then coverage substantially similar in all material respects
to the insurance coverage provided to them in such capacities at the date
hereof; provided, however, that in no event shall Summit be required to expend
more than 200% of the current amount expended by NMBT on an annual basis (the
"Insurance Amount") to maintain or procure insurance coverage pursuant hereto,
and, further provided, that if Summit is unable to maintain or obtain the
insurance called for by this Section 5.10, Summit shall use its best efforts to
obtain as much comparable insurance as is available for the Insurance Amount.
(c) This Section 5.10 shall be construed as an agreement as to which the
directors and officers of NMBT and its subsidiaries referred to herein are
intended to be third party beneficiaries and shall be enforceable by the such
persons and their heirs and representatives.
Section 5.11. Employee Matters.
(a) After the Effective Time, Summit may in its discretion maintain,
terminate, merge or dispose of the NMBT Plans; provided, however, that any
action taken by Summit shall comply with ERISA and any other applicable laws,
including laws regarding the preservation of employee pension benefit plan
benefits and, provided further, that if Summit maintains a defined contribution
plan, defined benefit plan or health and welfare plan available to all its
employees generally which is similar to a NMBT Plan which is, respectively, a
defined contribution plan, defined benefit plan or health and welfare plan
available to all NMBT employees generally, then, if such NMBT Plan is terminated
by Summit or is otherwise rendered inactive by Summit, Summit shall offer to the
former employees of NMBT affected by such plan termination or cessation of
activity the opportunity to participate in the similar plan of Summit.
(b) Summit assumes all obligations under deferred compensation plans of
NMBT but shall have the right to terminate such plans following the Effective
Time with respect to future compensation deferrals.
(c) Summit agrees that the severance plan of NMBT shall remain in effect
following the Effective Time notwithstanding the provisions of Section 5.11 and
shall apply according to its terms to persons employed by NMBT at the Effective
Time.
Section 5.12. Tax Opinion Certificates. Summit shall execute and deliver
to Thompson Coburn any tax opinion certificate reasonably required by Thompson
Coburn in connection with the issuance of the Tax Opinions, dated as of the date
of effectiveness of the Registration Statement and as of the Closing Date (and
as of the date the Closing occurs if different than the Closing Date).
Section 5.13. Additional Tax Opinion. NMBT shall be entitled to seek a
tax opinion satisfactory to it in form and content from legal counsel of its
choice in addition to the Tax Opinion, but receipt of such tax opinion shall not
be a condition to NMBT's closing of the Reorganization or to any other
obligation of NMBT hereunder.
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ARTICLE VI.
CONDITIONS PRECEDENT TO THE RESPECTIVE OBLIGATIONS OF
SUMMIT AND NMBT
The respective obligations of Summit and NMBT under this Agreement to
consummate the Reorganization are subject to the simultaneous satisfaction of
all the following conditions, compliance with which or the occurrence of which
may only be waived in whole or in part in writing by Summit and NMBT in
accordance with Section 10.09:
Section 6.01. Receipt of Required Consents. Summit and NMBT shall have
received the Required Consents; the Required Consents shall not, in the
reasonable opinion of Summit, contain restrictions or limitations which would
materially adversely affect the financial condition of Summit after consummation
of the Reorganization; the Required Consents and the transactions contemplated
hereby shall not be contested by any federal or state governmental authority;
and the Required Consents needed for the Reorganization shall have been obtained
and shall not have been withdrawn or suspended.
Section 6.02. Effective Registration Statement. The Registration
Statement shall have been declared effective by the SEC; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and remain in effect; and no proceeding for that purpose shall have been
initiated or, to the knowledge of Summit or NMBT, shall be contemplated or
threatened by the SEC.
Section 6.03. Tax Matters. At the time of effectiveness of the
Registration Statement and at the Closing Date (and at the date the Closing
occurs if different than the Closing Date), Summit and NMBT shall have received
from Thompson Coburn an opinion (the "Tax Opinion"), substantially in the form
of Exhibit E to the effect that (a) the Reorganization will constitute a
tax-free reorganization within the meaning of Section 368(a) of the Code, (b)
except with respect to fractional share interests, holders of NMBT Stock who
receive solely Summit Stock in the Reorganization will not recognize gain or
loss for federal income tax purposes, (c) the basis of such Summit Stock
(including any fractional share for which cash is received) will equal the basis
of the NMBT Stock for which it is exchanged and (d) the holding period of such
Summit Stock (including any fractional share for which cash is received) will
include the holding period of the NMBT Stock for which it is exchanged, assuming
that such NMBT Stock is a capital asset in the hands of the holder thereof at
the Effective Time.
In addition, no condition or set of facts or circumstances shall exist which
will either (y) preclude any of the parties to this Agreement from satisfying
the terms or conditions of, or assumptions made in, the Tax Opinion, as the case
may be, or (z) result in any of the factual assumptions contained in the Tax
Opinion being untrue.
Section 6.04. Absence of Litigation. No investigation by any state or
federal agency, and no action, suit, arbitration or proceeding before any court,
state or federal agency, panel or governmental or regulatory body or authority,
shall have been instituted or threatened against Summit or any of its
subsidiaries, or NMBT or any of its subsidiaries, that is material to the
Reorganization or to the financial condition of Summit and its subsidiaries on a
consolidated basis or NMBT and its subsidiaries on a consolidated basis, as the
case may be. No order, decree, judgment, or regulation shall have been entered
or law or regulation adopted by any such agency, panel, body or authority which
enjoined or has a material adverse effect upon the Reorganization or
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on the financial condition of Summit and its subsidiaries on a consolidated
basis or NMBT and its subsidiaries on a consolidated basis, as the case may be.
Section 6.05. NYSE Listing. The NYSE shall have indicated that the shares
of Summit Stock to be issued in the Reorganization are to be listed on the NYSE,
subject to official notice of issuance.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SUMMIT
The obligation of Summit to consummate the Reorganization is subject to
the simultaneous satisfaction of all of the following conditions, compliance
with which or the occurrence of which may be waived in whole or in part by
Summit in writing in accordance with Section 10.09:
Section 7.01. No Adverse Changes. There shall not have occurred at any
time after June 30, 1999 any NMBT Material Adverse Change or any material loss
or damage to the properties of NMBT or any of its subsidiaries, whether or not
insured, which materially affects the ability of NMBT and its subsidiaries, on a
consolidated basis, to conduct their business.
Section 7.02. Representations and Covenants. Except with respect to (i)
matters resulting from transactions specifically contemplated by this Agreement,
(ii) matters resulting from transactions or actions permitted or required by
this Agreement, and (iii) changes resulting from a change in law, rule,
regulation, generally accepted or regulatory accounting principle or other
matter affecting banking institutions or their holding companies generally or
from charges or expenses incident to the Reorganization: all representations and
warranties made by NMBT in this Agreement and the NMBT Schedules and the
material furnished pursuant to the Post-Signing Document List shall be true and
correct in all material respects on the date of this Agreement and on the date
the Closing occurs with the same force and effect as if such representations and
warranties were being made on such date. NMBT shall have complied in all
material respects with all covenants and agreements contained herein to be
performed by NMBT.
Section 7.03. Secretary's Certificate. NMBT shall have furnished to
Summit a certificate dated the date the Closing occurs to which shall be
attached copies of all resolutions adopted or minutes of actions taken by the
Board of Directors (including committees thereof) and shareholders of NMBT
relating to this Agreement, the Option Agreement and the Reorganization and
related transactions, which such certificate shall be signed by the Secretary of
NMBT and certify to the satisfaction of the condition set forth in Section 7.09
and the truth, correctness, completeness and continuing effectiveness of all
resolutions and actions contained or referenced in the aforementioned
attachments.
Section 7.04. Officer's Certificate. NMBT shall have furnished to Summit
a certificate signed by the Chief Executive Officer of NMBT, dated the date the
Closing occurs, certifying to the satisfaction of the conditions set forth at
Sections 6.01, 6.02 (last clause), 6.03 (last paragraph) and Section 6.04, as
they relate to NMBT, and at Sections 7.01, 7.02, 7.07 and 7.10.
Section 7.05. Opinion of NMBT's Counsel. Summit shall have received an
opinion of counsel to NMBT, dated the date the Closing occurs and reasonably
satisfactory in form and substance to counsel for Summit.
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Section 7.06. [Reserved].
Section 7.07. Consents to NMBT Contracts. All consents, approvals or
waivers, in form and substance reasonably satisfactory to Summit, required to be
obtained in connection with the Reorganization from other parties to each
mortgage, note, lease, permit, franchise, loan or other agreement or contract to
which NMBT or any of its subsidiaries is a party or by which they or any of
their assets or properties may be bound or committed, which contract is material
to the business, franchises, operations, assets or condition (financial or
otherwise) of NMBT and its subsidiaries on a consolidated basis, shall have been
obtained.
Section 7.08. FIRPTA Affidavit. NMBT shall have delivered to Summit an
affidavit of an executive officer of NMBT dated the date the Closing occurs
stating, under penalties of perjury, that NMBT is not and has not been a United
States real property holding company (as defined in Section 897(c)(2) of the
Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
Section 7.09. Shareholder Approval. The shareholders of NMBT, at the
meeting contemplated by this Agreement, shall have authorized and approved the
Reorganization and this Agreement and all transactions contemplated by this
Agreement as and to the extent required by all applicable laws and regulations
and the provisions of NMBT's Amended and Restated Certificate of Incorporation
and By-Laws.
Section 7.10. Absence of Regulatory Agreements. Neither NMBT nor any NMBT
subsidiary shall be a party to any agreement or memorandum of understanding
with, or commitment letter to, or board of directors resolution submitted to or
similar undertaking made to, or be subject to any order or directive by, or be a
recipient of any extraordinary supervisory letter from, any governmental or
regulatory authority which restricts materially the conduct of its respective
business or has a material adverse effect upon the Reorganization or upon the
financial condition of Bank or of NMBT and its subsidiaries on a consolidated
basis, and neither NMBT nor Bank shall have been advised by any governmental or
regulatory authority that such authority is contemplating issuing or requesting,
or considering the appropriateness of issuing or requesting, any of the
foregoing.
The receipt of the documents required by this Article VII by Summit shall in no
way constitute a waiver by Summit of any of the provisions of or its rights
under this Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF NMBT
The obligation of NMBT to consummate the Reorganization is subject to the
simultaneous satisfaction of all of the following conditions, compliance with
which or the occurrence of which may be waived in whole or in part by NMBT in
writing in accordance with Section 10.09:
Section 8.01. No Adverse Changes. There shall not have occurred at any
time after June 30, 1999 any Summit Material Adverse Change or any material loss
or damage to the properties of Summit or its subsidiaries, whether or not
insured, which materially affects the ability of Summit and its subsidiaries, on
a consolidated basis, to conduct their business.
Section 8.02. Representations and Covenants. Except with respect to (i)
matters resulting from transactions specifically contemplated by this Agreement,
(ii) transactions or actions permitted or required by this Agreement, (iii)
changes resulting from a change in law, rule, regulation,
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generally accepted or regulatory accounting principle or other matter affecting
banking institutions or their holding companies generally or from charges or
expenses incident to the Reorganization: all representations and warranties made
by Summit in this Agreement and in the Summit Schedules shall be true and
correct in all material respects on the date of this Agreement and on the date
the Closing occurs with the same force and effect as if such representations and
warranties were made on such date and Summit shall have complied in all material
respects with all covenants and agreements contained herein or therein to be
performed by Summit; provided, however, that no representation, warranty or
covenant of Summit shall be construed to limit or prohibit any business or
financing activities of Summit including by way of illustration and not
limitation, the entry by Summit after the date hereof into any agreement to
acquire any assets or any company or other entity, the issuance of any debt or
equity securities in public or private offerings, the issuance of Series R
Preferred Stock pursuant to the Summit Rights Agreement, the redemption or
repurchase by Summit of its capital stock, the Summit Rights or the Series R
Preferred Stock issuable pursuant to the Summit Rights Agreement, and any
transactions reasonably necessary or appropriate in connection therewith, and no
such business or financing activity shall constitute a breach of any
representation, warranty or covenant of Summit; provided further, however, that
Summit agrees that it will not permit any such transaction to cause any
unreasonable delay in the consummation of the Reorganization.
Section 8.03. Secretary's Certificate.
(a) Summit shall have furnished to NMBT a certificate dated the date the
Closing occurs to which shall be attached copies of all resolutions adopted or
minutes of actions taken by the Board of Directors (including committees
thereof) of Summit relating to this Agreement, the Option Agreement and the
Reorganization and related transactions, which such certificate shall be signed
by the Secretary of Summit and certify to the truth, correctness, completeness
and continuing effectiveness of all resolutions and actions contained or
referenced in the aforementioned attachments.
(b) In the event that pursuant to the Reorganization Election Summit
elects the Reorganization method provided for at Section 1.01(a)(2), the
Designated Summit Subsidiary shall have furnished to NMBT a certificate dated
the date the Closing occurs to which shall be attached copies of all resolutions
adopted or minutes of actions taken by the Board of Directors (including
committees thereof) and shareholders of the Designated Summit Subsidiary
relating to this Agreement, the Reorganization and related transactions, which
such certificate shall be signed by the Secretary of the Designated Summit
Subsidiary and certify to the satisfaction of the condition set forth at Section
8.09 applicable to the Designated Summit Subsidiary and to the truth,
correctness, completeness and continuing effectiveness of all resolutions and
actions contained or referenced in the aforementioned attachments.
Section 8.04. Officer's Certificate. Summit shall have furnished to NMBT
a certificate signed by the Chairman, Vice Chairman, President or an Executive
Vice President of Summit, dated the date the Closing occurs, certifying to the
satisfaction of the conditions set forth at Sections 6.01 and 6.02, the last
paragraph of Section 6.03, and Sections 6.04 and 6.05, as they relate to Summit,
and Sections 8.01, 8.02 and 8.08.
Section 8.05. Opinion of Summit Counsel. NMBT shall have received an
opinion of the General Counsel of Summit, dated the date the Closing occurs and
reasonably satisfactory in form and substance to counsel for NMBT.
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Section 8.06. [Reserved]
Section 8.07. Fairness Opinion. The Proxy-Prospectus shall have contained
the favorable signed opinion of Advest, dated the date of the Proxy-Prospectus
or a date not more than five business days prior thereto, regarding the fairness
from a financial point of view of the Exchange Ratio to the shareholders of NMBT
in the Reorganization.
Section 8.08. Absence of Regulatory Agreements. Neither Summit nor any of
its bank subsidiaries shall be a party to any agreement or memorandum of
understanding with, or commitment letter to, or board of directors resolution
submitted to or similar undertaking made to, or be subject to any order or
directive by, or be a recipient of any extraordinary supervisory letter from,
any governmental or regulatory authority which restricts materially the conduct
of Summit's business or has a material adverse effect upon the Reorganization or
upon the financial condition of Summit and its subsidiaries on a consolidated
basis, and neither Summit nor any of its bank subsidiaries shall have been
advised by any governmental or regulatory authority that such authority is
contemplating issuing or requesting, or considering the appropriateness of
issuing or requesting, any of the foregoing.
Section 8.09. NMBT Shareholder Approval. The shareholders of NMBT, at the
meeting contemplated by this Agreement, shall have authorized and approved the
Reorganization and this Agreement and all transactions contemplated by this
Agreement as and to the extent required by all applicable laws and regulations
and the provisions of NMBT's Amended and Restated Certificate Incorporation and
By-laws and in the event that pursuant to the Reorganization Election Summit
elects the Reorganization method provided for at Section 1.01(a)(2) the sole
shareholder of the Designated Summit Subsidiary shall have authorized and
approved the Reorganization and this Agreement and all transactions contemplated
by this Agreement as and to the extent required by all applicable laws and
regulations and the provisions of the Designated Summit Subsidiary's certificate
or articles of incorporation and by-laws.
The receipt of the documents required by this Article VIII by NMBT shall in no
way constitute a waiver by NMBT of any of the provisions of or its rights under
this Agreement.
ARTICLE IX
CLOSING; TERMINATION RIGHTS
Section 9.01. Closing. The closing of the Reorganization (the "Closing")
shall take place on the date which is 45 business days after the last to occur
of the following ("Scheduled Date"), unless Summit shall designate a date for
the Closing which is prior to the Scheduled Date in a writing ("Closing Notice")
designating a Determination Date in accordance with Section 9.02(e)(i) below and
delivered to NMBT at least five (5) business days prior to the date designated
therein for Closing, or unless prior to the Scheduled Date the parties agree to
a different date:
(i) the date of the approval of the Reorganization by the
shareholders of NMBT in accordance with Section 7.09;
(ii) if the transactions contemplated by this Agreement are being
contested in any legal proceeding, the date that such proceeding
has been brought to a conclusion favorable, in the judgment of
Summit and NMBT, to the consummation of the transactions
contemplated herein or such prior date as Summit and NMBT shall
elect, whether or not
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such proceeding has been brought to a conclusion; or
(iii) the date of receipt of the last of the Required Consents or the
date that all waiting periods required by statute or
incorporated into such Required Consents have expired;
and the date of Closing determined in accordance with the foregoing provisions
is referred to herein as the "Closing Date". The Closing shall take place at the
office of Summit, 301 Carnegie Center, Princeton, New Jersey, commencing at
10:00 a.m. on the date the Closing is held, unless the parties agree to a
different place or commencement time. At the Closing, the parties will exchange
certificates, legal opinions and other documents for the purpose of determining
whether the conditions precedent to the obligations of the parties set forth
herein have been satisfied or waived. In the event that pursuant to the
Reorganization Election Summit elected the Reorganization method provided for at
Section 1.01(a)(1), Summit shall, after all such conditions to Closing have been
satisfied or waived, cause the NJ Certificate to be filed with the Secretary of
State of the State of New Jersey and the Delaware Certificate to be filed with
the Secretary of State of the State of Delaware. In the event that pursuant to
the Reorganization Election Summit elected the Reorganization method provided
for at Section 1.01(a)(2), Summit shall, after all such conditions to Closing
have been satisfied or waived, cause the appropriate certificate of merger,
articles of merger, or both to be filed with the proper state jurisdictional
authorities to effect the Reorganization intended by this Agreement. All
proceedings to be taken and all documents to be executed and delivered by all
parties at the Closing shall be deemed so taken, executed and delivered
simultaneously, and no proceedings shall be deemed taken or any documents
executed or delivered until all have been taken, executed or delivered.
Section 9.02. Termination Rights.
(a) The Board of Directors of NMBT or Summit may terminate this Agreement
in the event that:
(1) the shareholders of NMBT at the meeting of shareholders
contemplated by Section 4.03, called for the purpose of approving the
Reorganization, this Agreement and the transactions contemplated by this
Agreement, upon voting, shall have failed to approve the Reorganization, this
Agreement and the transactions contemplated hereby by the requisite vote;
(2) a material breach of a warranty, representation, covenant or
agreement made by the other party in this Agreement shall have occurred and such
breach has not been cured, or is not capable of being cured, within 30 days
after written notice of the existence thereof shall have been given to the other
party (a "Material Breach") (provided that the terminating party is not then in
Material Breach of this Agreement);
(3) NMBT's investment banker is unable to deliver to NMBT by
January 31, 2000 the opinion required by Section 8.07; or
(4) the Closing is not consummated on or before the later of (i)
July 1, 2000, unless the failure of such occurrence shall be due solely to a
Material Breach by the party seeking to terminate this Agreement or the failure
of such party to fulfill a condition to Closing provided for herein, or (ii) the
Scheduled Date, if the last event required to occur pursuant to the first
sentence of Section 9.01 for the setting of the Scheduled Date shall have
occurred on or before August 1, 2000.
(b) If either party shall refuse to close on the Closing Date because all
the conditions to its
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obligation to close set forth in Article VI shall not have been met, the parties
shall conduct the Closing as promptly as practicable after all such conditions
have been satisfied. In the event the failure of such a condition is due to one
or more Material Breaches, the Board of Directors of a party not in Material
Breach may, during the period any such Material Breach remains uncured,
terminate this Agreement by giving written notice of such termination to the
other party.
(c) If either party shall refuse to close on the Closing Date because all
the conditions to its obligation to close set forth in Article VII or VIII shall
not have been met (other than a failure of the condition set forth at Section
7.09 or 8.09 due to the circumstances set forth in Section 9.02(a)(1) hereof or
a failure of the condition set forth at Section 8.07 due to the circumstances
set forth at Section 9.02(a)(3) hereof): (i) the parties shall conduct the
Closing as promptly as practicable after all such conditions have been
satisfied, and (ii) the Board of Directors of such party may, during the period
the failed condition continues, terminate this Agreement by giving written
notice of such termination to the other party unless such party itself has
failed to satisfy a condition to the other party's Closing obligation or is in
Material Breach.
(d) The Board of Directors of Summit may terminate this Agreement:
(1) at any time if NMBT does not execute and deliver the Option
Agreement by the day immediately following the date hereof;
(2) at any time prior to the meeting of NMBT shareholders
contemplated by Section 4.03, if the Board of Directors of NMBT fails to
recommend approval of this Agreement and the Reorganization and other
transactions contemplated hereby in the Proxy-Prospectus ("Recommendation") or
withdraws, modifies or changes, or votes to withdraw, modify or change, its
Recommendation or its intention to make the Recommendation as represented and
warranted at Section 2.08; and
(3) as provided at Section 4.20.
(e) In the event the Summit Price is less than $26.39 and the quotient
obtained by dividing the Summit Price by $32.1875 is more than .15 less than the
quotient obtained by dividing the Determination Date Index Price (as defined at
(iii) below) by the Starting Date Index Price (as defined at (iv) below), the
Board of Directors of NMBT shall have the right, exercisable only until 11:59
p.m. on the third business day following the Determination Date to terminate
this Agreement by giving Summit notice of such termination, referring to this
Section 9.02(e), and this Agreement shall be terminated provided Summit receives
such notice prior to the time and day set forth above in this Section 9.02(e).
For purposes of this Section 9.02(e):
(i) "Determination Date" means the date which is seven business days
prior to the Scheduled Date or, if Summit delivers a Closing
Notice to Bank pursuant to Section 9.01, the date specifically
designated by Summit as the Determination Date in such Closing
Notice, which date shall be not more than ten business days prior
to the Closing Date.
(ii) "Summit Price" means the average of the closing prices of a share
of Summit Stock on the NYSE Composite Transactions List (as
reported in The Wall Street Journal or, in the absence thereof, as
reported by another authoritative source mutually agreed upon by
NMBT and Summit) for the 10 consecutive full trading days, ending
on the
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Determination Date, on which one share of Summit Stock is traded.
(iii) "Determination Date Index Price" means the average of the closing
prices of the common stock of the companies in the Index Group (as
defined at (v) below) on the NYSE Composite Transactions List (as
reported in The Wall Street Journal or, in the absence thereof, as
reported by another authoritative source mutually agreed upon by
NMBT and Summit) for the 10 consecutive full trading days ending
on the Determination Date.
(iv) "Starting Date Index Price" means the average of the closing
prices on the Starting Date (as defined at (vi) below) of the
common stock of the companies in the Index Group on the NYSE
Composite Transactions List (as reported in The Wall Street
Journal) as of the Determination Date.
(v) "Index Group" means the bank holding companies listed below;
provided, however, that if between the Starting Date and the
Determination Date the common stock of any such company ceases to
be publicly traded, an announcement is made of a proposal for such
company to be acquired or an announcement is made of a proposal by
such company to acquire another company or companies in
transactions with a value exceeding 25% of such acquiror's market
capitalization as of the Starting Date, then, in such event, for
purposes of calculating the Index Price in all cases, such company
will be removed from the Index Group. If any company in the Index
Group or Summit declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the Starting
Date and the Determination Date, the closing price of the common
stock of such company or Summit, as the case may be, on the
Starting Date shall be appropriately adjusted for the purposes of
applying this Section 9.02(e). The bank holding companies in the
Index Group are as follows:
Bank Holding Companies
AmSouth Bancorp
BB&T Corporation
Comerica Incorporated
Fifth Third Bancorp
Huntington Bancshares, Inc.
Keystone Financial, Inc.
North Fork Bancorporation, Inc.
Northern Trust Corporation
Old Kent Financial Corporation
Regions Financial Corporation
SouthTrust Corporation
Union Planters Corp.
Wilmington Trust Corporation
Zions Bancorp
(vi) "Starting Date" means the date of the last trading day ending before
the public announcement of the execution of this Agreement.
Section 9.03. Effects of a Termination; Certain Expenses.
(a) Upon a termination of this Agreement pursuant to this Section 9.02
hereof:
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(1) the obligations of the parties under this Agreement (except
for those under this Section 9.03 and Sections 4.13 and 5.08) shall terminate
and be of no further force or effect and each party shall be mutually released
and discharged from liability to the other party or to any third parties
hereunder, and
(2) no party shall be liable to any other party for any costs or
expenses paid or incurred in connection herewith by such other party, except
that expenses incurred in connection with printing the Proxy-Prospectus and the
Registration Statement, and the filing fees of regulatory authorities or
self-regulatory organizations, shall be borne equally by Summit and NMBT;
provided, however, that: (A) if NMBT terminates this Agreement pursuant to
Section 9.02(a)(2) or Section 9.02(c), Summit shall reimburse NMBT for its
out-of-pocket expenses reasonably incurred in connection with this Agreement,
including counsel fees and the printing and filing fees referred to above, but
excluding any brokers', finders' or investment bankers' fees; and (B) if Summit
terminates this Agreement pursuant to Section 9.02(a)(2), Section 9.02(c) or
Section 9.02(d), NMBT shall reimburse Summit for its out-of-pocket expenses
reasonably incurred in connection with this Agreement, including counsel fees
and the printing and filing fees referred to above, but excluding any brokers',
finders' or investment bankers' fees.
(b) Notwithstanding any termination of this Agreement, (i) NMBT shall
indemnify and hold Summit harmless from and against any claim by any broker or
finder asserting a right to brokerage commissions or finders' fees as a result
of any action allegedly taken by or understanding allegedly reached with NMBT
and (ii) Summit shall indemnify and hold NMBT harmless from and against any
claim by any broker or finder asserting a right to brokerage commissions or
finders' fees as a result of any action allegedly taken by or understanding
allegedly reached with Summit.
(c) Except as provided otherwise herein in the event of a termination of
this Agreement, NMBT and its subsidiaries shall bear their own expenses incident
to preparing, entering into and carrying out this Agreement and to consummating
the Reorganization, provided, however, that Summit shall pay all printing
expenses and filing fees associated with the Registration Statement, the
Proxy-Prospectus and regulatory applications.
ARTICLE X
MISCELLANEOUS
Section 10.01. Press Releases. At all times until the Closing Date or the
termination of this Agreement, each party shall promptly advise and consult with
the other prior to issuing, or permitting any of its subsidiaries, directors,
officers, employees or agents to issue, any press release or other information
to the press or any third party with respect to this Agreement or the
transactions contemplated hereby.
Section 10.02. Article and Section Headings. Article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 10.03. Entire Agreement; Amendments. This Agreement, the NMBT
Schedules and the Exhibits hereto and the Option Agreement to be entered into by
the parties hereto constitute the entire agreement between the parties
pertaining to the subject matter hereof and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the
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parties in connection with the subject matter hereof except as specifically set
forth herein or therein. No supplement, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby (or in the case of a termination occurring pursuant to Section
9.02 hereof by the party exercising a right to terminate this Agreement). No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof or thereof (whether or not
similar), nor shall any waiver constitute a continuing waiver unless otherwise
expressly provided in the instrument granting such waiver. The parties hereto
may amend or modify this Agreement in such manner as may be agreed upon by a
written instrument executed by the parties, except that, after the meeting
described in Section 7.09 hereof, no such amendment or modification shall reduce
the amount of, or change the forms of consideration to be received by the
shareholders of NMBT contemplated by this Agreement, unless such modification is
submitted to a vote of the shareholders of NMBT.
Section 10.04. Survival of Representations, Warranties and Covenants. No
investigation made by the parties hereto made heretofore or hereafter shall
affect the representations and warranties of the parties which are contained
herein and each such representation and warranty shall survive such
investigation. None of the representations, warranties, covenants and agreements
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time, except for those representations, covenants
and agreements contained herein and therein which by their terms apply in whole
or in part after the Effective Time.
Section 10.05. Notices. Any notice or other communication required or
permitted hereunder shall be in writing, and shall be deemed to have been given,
unless otherwise specified in a particular provision of this Agreement, if
placed in the mail, registered or certified, postage prepaid, or if delivered
personally or by courier, receipt requested, or by facsimile transmission,
receipt acknowledged addressed as follows:
Summit: Summit Bancorp.
Attn: John G. Collins
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3422
Facsimile No.: 609-987-3435
With a copy to: Richard F. Ober, Jr., Esq.
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3430
Facsimile No.: 609-987-3435
NMBT: NMBT CORP
Attention: Michael D. Carrigan
55 Main Street
New Milford, Connecticut 06716
Telephone No.: 860-350-0180
Facsimile No.: 860-355-3489
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With a copy to: Stanford N. Goldman, Jr., Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, PC
One Financial Center
Boston, Massachusetts 02111
Telephone No.: 617-348-1708
Facsimile No.: 617-542-2241
or to such other address as such party may designate by notice to the others,
which change of address shall be deemed to have been given upon receipt.
A notice or other communication hereunder shall be deemed delivered (i)
if mailed by certified or registered mail to the proper address, with adequate
postage prepaid, on the fifth business day following posting, (ii) if hand
delivered, when received by the person to whom directed, (iii) if delivered by
overnight courier, on the next business day following shipment, or (iv) if
delivered via facsimile, on the business day transmitted.
Section 10.06. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey,
without giving effect to the provisions, policies or principles thereof relating
to choice or conflict of laws.
Section 10.07. Counterparts. This Agreement is being executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Section 10.08. Binding Effect. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Section 10.09. Extensions; Waivers and Consents. Either party hereto, by
written instrument signed by its Chairman, Vice Chairman, President, or Chief
Financial Officer, may extend the time for the performance of any of the
obligations of the other party hereto, and may waive, at any time before or
after approval of this Agreement and the transactions contemplated hereby by the
shareholders of NMBT, subject to the provisions of Section 10.03 hereof: (i) any
inaccuracies of the other party in the representations and warranties in this
Agreement or any other document delivered pursuant hereto or thereto; (ii)
compliance with any of the covenants or agreements of the other party contained
in this Agreement; (iii) the performance (including performance to the
satisfaction of a party or its counsel) by the other party of any of its
obligations hereunder or thereunder; and (iv) the satisfaction of any conditions
to the obligations of the waiving party hereunder or thereunder. Any consent or
approval of a party hereunder shall be effective only if signed by the Chairman,
Vice Chairman, President or Chief Financial Officer of such party.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in counterparts by their duly authorized officers as of the date first above
written.
SUMMIT BANCORP.
By: /s/ John G. Collins
John G. Collins
Vice Chairman
NMBT CORP
By: /s/ Michael D. Carrigan
Michael D. Carrigan
President and Chief Executive Officer
In the event that pursuant to the Reorganization Election Summit elects the
Reorganization method provided for at Section 1.01(a)(2), the Designated Summit
Subsidiary indicated below agrees to be legally bound by all terms of this
Agreement and Plan of Merger as if an original party hereto.
Designated Summit Subsidiary: ___________________________________
By __________________________________
Name: _______________________________
Title:_________________________________
Date: ________________________________
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[ADVEST LETTERHEAD]
APPENDIX B
JANUARY 28, 2000
Board of Directors
NMBT Corp
55 Main Street
New Milford, Connecticut 06776
Members of the Board:
NMBT Corp ("NMBT") and Summit Bancorp ("Summit") have entered into an
Agreement and Plan of Merger dated October 3, 1999 (the "Agreement"), pursuant
to which NMBT will merge with Summit in a manner as described in the Agreement.
The Agreement provides that each outstanding share of NMBT common stock issued
and outstanding at the Effective Time (as defined in the Agreement) will be
converted into the right to receive whole shares of Summit Stock (as defined in
the Agreement) and cash in lieu of fractional shares of Summit Stock based upon
the Exchange Ratio determined as follows:
(i) if the Summit Price (as defined in the Agreement) is greater
than $37.0156, the Exchange Ratio shall be .7024;
(ii) if the Summit Price is equal to or greater than $27.3594 and
equal to or less than $37.0156, the Exchange Ratio shall be
equal to the quotient obtained by dividing $26.00 by the Summit
Price; and
(iii) if the Summit Price is less than $27.3594, the Exchange Ratio
shall be .9503.
The terms and conditions of the proposed transaction are described in
further detail in the Agreement. The Agreement is expected to be considered by
the shareholders of NMBT at a shareholders meeting and the Merger consummated
shortly after the receipt of shareholder, state and federal regulatory
approvals.
You have asked us whether, in our opinion, the Exchange Ratio is
fair, from a financial point of view, to the shareholders of NMBT.
In arriving at the opinion set forth below, we have, among other
things: reviewed the Agreement dated October 3, 1999, and the exhibits and
schedules thereto; reviewed the Stock Option Agreement dated October 4, 1999
between NMBT and Summit; reviewed the Annual Reports on Form 10-K for NMBT and
Summit for the years ended December 31, 1998, 1997, and 1996; reviewed the year
end December 31, 1999 earnings releases for NMBT and Summit; reviewed the
Quarterly Reports on Form 10-Q for NMBT and Summit for the periods ended
September 30, 1999, June 30, 1999 and March 31, 1999; reviewed certain financial
analyses and forecasts of NMBT which were prepared by management of NMBT;
reviewed comparative financial and operating data on the banking industry and
certain institutions which we deemed to be comparable to each of NMBT and
Summit; reviewed the historical market prices and trading activity for the
common stock of each of NMBT and Summit relative to other publicly traded
companies which we deemed to be comparable to each company; reviewed the
contribution of NMBT and Summit to the new proforma combined entity on the basis
of a number of key financial categories in relation to proforma ownership;
reviewed the proforma impact of the merger; reviewed the present value of NMBT's
business plan; reviewed certain bank mergers and acquisitions on a regional and
nationwide basis for institutions which we deemed to be comparable to NMBT and
compared the proposed consideration with the consideration paid in such other
mergers and acquisitions; considered the financial effect of the Summit
equivalent dividends to be paid by NMBT to its shareholders during the period
beginning from the date of the Agreement to the Effective Time; conducted
limited discussions with members of senior management of each of NMBT and Summit
concerning the financial condition, business and prospects of each respective
company; and reviewed such other financial studies and analyses and performed
such other investigations and took into account such other matters as we deemed
necessary.
In performing our review and preparing this opinion, we have assumed
and relied upon the accuracy and completeness of all financial and other
information reviewed by us for purposes of this opinion, and we have not
independently verified such information nor have we undertaken an independent
evaluation of the assets and liabilities of NMBT or Summit. Advest has been
retained by the Board of Directors of NMBT to act as financial advisor to NMBT
with respect to the Merger and will receive a fee for its services including a
fee for this opinion. In the past we have also performed certain other
investment banking services for NMBT and have received compensation for such
services.
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This opinion is necessarily based upon circumstances and conditions
as they exist and can be evaluated by us as of the date of this letter. Our
opinion is directed to the Board of Directors of NMBT and does not constitute a
recommendation of any kind to any shareholder of NMBT as to how such shareholder
should vote at the shareholders' meeting to be held in connection with the
merger. We have assumed for purposes of this opinion that there has been no
material change in the financial condition of either NMBT or Summit from that
reflected in the Form 10-Q for the quarter and nine months ended September 30,
1999 filed with the Securities and Exchange Commission for each respective
company.
In reliance upon and subject to the foregoing, it is our opinion
that, as of the date hereof, the Exchange Ratio is fair, from a financial point
of view, to the shareholders of NMBT.
Advest will consent to a description and inclusion of this opinion in
documents issued with regard to this transaction and to references to Advest in
such documents, provided that any such description and references are reasonably
acceptable to Advest. Except as otherwise provided above, this opinion is solely
for the use and benefit of the Company and shall not be disclosed publicly or
made available to third parties without the prior approval of Advest, which
approval shall not be unreasonably withheld.
Very truly yours,
Advest, Inc.
By: /S/ Stephen J. Gilhooly
-----------------------------
Stephen J. Gilhooly
Director
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APPENDIX C
NMBT CORP STOCK OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED BY THIS AGREEMENT IS SUBJECT TO RESALE
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
STOCK OPTION AGREEMENT, dated as of the 4th day of October, 1999 (this
"Agreement"), between Summit Bancorp., a New Jersey corporation ("Grantee"), and
NMBT CORP, a Delaware corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have on a date prior to the date hereof,
entered into an Agreement and Plan of Merger, dated as of the 3rd day of
October, 1999 (the "Merger Agreement"). (Capitalized terms used in this
Agreement and not defined herein but defined in the Merger Agreement shall have
the meanings assigned thereto in the Merger Agreement); and
WHEREAS, as a condition and inducement to Grantee's entering into the
Merger Agreement and in consideration therefor, Grantee has required that Issuer
agree, and Issuer has agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
SECTION 1. Grant of Option. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 531,043 fully paid and nonassessable shares of the common
stock, par value $.01 per share, of Issuer ("Common Stock") at a price equal to
$18.87 (such price, as adjusted as hereinafter provided, the "Option Price").
The number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein set forth.
In no event shall the number of shares of Common Stock for which this Option is
exercisable exceed 19.9% of the number of shares of Common Stock then issued and
outstanding (without consideration of any shares of Common Stock subject to or
issued pursuant to the Option).
SECTION 2. Exercise of Option. (a) Grantee may exercise the Option, in
whole or part, at any time and from time to time following the occurrence of a
Purchase Event (as defined below); provided that the Option shall terminate and
be of no further force and effect upon the earliest to occur of (i) the time
immediately prior to the Effective Time, (ii) a termination of the Merger
Agreement in accordance with the terms thereof prior to the occurrence of an
Extension Event, other than a termination of the Merger Agreement by the Grantee
pursuant to Section 9.02(a)(2), Section 9.02(c) or Section 9.02(d)(2) thereof,
or (iii) 12 months after a termination of the Merger Agreement following the
occurrence of an Extension Event (as defined below) or after a termination of
the Merger Agreement by Grantee pursuant to Section 9.02(a)(2), Section 9.02(c)
or Section 9.02(d)(2) thereof, and provided further, that any purchase of Common
Stock upon exercise of the Option shall be subject to applicable law, and
provided further, that the Option may not be exercised, nor may Grantee require
Issuer to repurchase the Option (as set forth in Section 7 hereof), if, at the
time of exercise or repurchase, Grantee is in material breach of any material
covenant or obligation contained in the Merger Agreement and, if the Merger
Agreement has not terminated prior thereto, such breach would entitle Issuer to
terminate the Merger Agreement. The events described in clauses (i) - (iii) in
the preceding sentence are hereinafter collectively referred to as Exercise
Termination Events. As provided in Section 8, the rights set forth therein shall
terminate upon an Exercise Termination Event and, as provided in Sections 6 and
7 hereof, the rights to deliver requests pursuant to Sections 6 or 7 shall
terminate 12 months after an Exercise Termination Event, subject, in such case,
to the provisions of Section 9.
(b) The term "Extension Event" shall mean any of the following events
or transactions occurring without the Grantee's prior written consent after the
date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer
Subsidiary"), shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for purposes
of this Agreement having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Securities
Exchange Act"), and the rules and regulations thereunder) other than Grantee or
any of its subsidiaries (each a "Grantee Subsidiary") or the Board of Directors
of Issuer shall have recommended that the shareholders of Issuer approve or
accept any Acquisition Transaction with any person other than Grantee or any
Grantee
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Subsidiary. For purposes of this Agreement, "Acquisition Transaction" shall mean
(w) a merger or consolidation, or any similar transaction, involving Issuer or
any of Issuer's banking subsidiaries ("Bank Subsidiaries"), (x) a purchase,
lease or other acquisition of 10% or more of the aggregate value of the assets
or deposits of Issuer or any Bank Subsidiary, (y) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of Issuer
or a Bank Subsidiary, or (z) any substantially similar transaction, provided,
however, that in no event shall (i) any merger, consolidation or similar
transaction involving Issuer or any Bank Subsidiary in which the voting
securities of Issuer outstanding immediately prior thereto continue to represent
(either by remaining outstanding or being converted into voting securities of
the surviving entity of any such transaction) at least 75% of the combined
voting power of the voting securities of the Issuer or the surviving entity
outstanding after the consummation of such merger, consolidation, or similar
transaction, or (ii) any internal merger or consolidation involving only Issuer
and/or Issuer Subsidiaries, be deemed to be an Acquisition Transaction, provided
that any such transaction is not entered into in violation of the terms of the
Merger Agreement;
(ii) Any person (other than Grantee or any Grantee Subsidiary)
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of securities representing 10% or more of the aggregate voting power
of Issuer or any Bank Subsidiary (the term "beneficial ownership" for purposes
of this Agreement having the meaning assigned thereto in Section 13(d) of the
Securities Exchange Act, and the rules and regulations thereunder);
(iii) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders, by public
announcement or written communication that is or becomes the subject of public
disclosure, to engage in an Acquisition Transaction (including, without
limitation, any situation in which any person other than Grantee or any Grantee
Subsidiary shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to, a tender offer
or exchange offer to purchase any shares of Common Stock such that, upon
consummation of such offer, such person would own or control securities
representing 10% or more of the aggregate voting power of Issuer or any Bank
Subsidiary);
(iv) After any person other than Grantee or any Grantee
Subsidiary has made or disclosed an intention to make a proposal to Issuer or
its shareholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and such
breach (x) would entitle Grantee to terminate the Merger Agreement and (y) shall
not have been cured prior to the Notice Date (as defined below);
(v) Any person other than Grantee or any Grantee Subsidiary
shall have filed an application with, or given a notice to, whether in draft or
final form, the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other governmental authority or regulatory or administrative
agency or commission, domestic or foreign (each, a "Governmental Authority"),
for approval to engage in an Acquisition Transaction;
(vi) A meeting of shareholders shall not have been called by
the Board of Directors of Issuer in accordance with Section 4.03 of the Merger
Agreement or held or shall have been canceled, or Issuer's Board of Directors
shall have withdrawn or modified in a manner adverse to the consummation of the
Merger its unanimous recommendation of the Merger or made an announcement
prospectively with respect to such a withdrawal or modification; or
(vii) any Purchase Event (as defined below), other than events
described at Section 2(c)(iii).
(c) The term "Purchase Event" shall mean either of the following events
or transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or any
Grantee Subsidiary of beneficial ownership of securities representing 25% or
more of the aggregate voting power of Issuer or any Bank Subsidiary;
(ii) An occurrence of the event described in Section 2(b)(i),
except that for purposes of determining whether the event described in Section
2(b)(i) has occurred for purposes of this subsection (ii) the percentage
referred to in clauses (x) and (y) of the definition of Acquisition Transaction
which is incorporated into said Section 2(b)(i) shall be 25%; or
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(iii) the holders of Common Stock shall not have approved the
Merger Agreement at the meeting of such shareholders held for the purpose of
voting on the Merger Agreement, such meeting shall not have been called by the
Board of Directors of Issuer in accordance with Section 4.03 of the Merger
Agreement or held or shall have been canceled, or Issuer's Board of Directors
shall have withdrawn or modified in a manner adverse to the consummation of the
Merger its unanimous recommendation of the Merger or made an announcement
prospectively with respect to such a withdrawal or modification; in each case
after an Extension Event other than any event described at Section 2 (b)(vi)
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Extension Event or Purchase Event; provided however, that the giving of
such notice by Issuer shall not be a condition to the right of Grantee to
exercise the Option.
(e) In the event that Grantee is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares of
Common Stock it will purchase pursuant to such exercise, (ii) a place and date
not earlier than three business days nor later than 90 business days from the
Notice Date for the closing of such purchase (the "Closing Date") and (iii) that
the proposed exercise of the Option shall be revocable by Grantee in the event
that the transaction constituting a Purchase Event that gives rise to such
written notice shall not have been consummated prior to exercise of the Option;
provided that if prior notification to or approval of the Federal Reserve Board
or any other Governmental Authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run from the later of (x)
the date on which any required notification periods have expired or been
terminated and (y) the date on which such approvals have been obtained and any
requisite waiting period or periods shall have expired. For purposes of Section
2(a), any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto. Grantee shall have the right to revoke its proposed exercise
of the Option in the event that the transaction constituting a Purchase Event
that gives rise to such right to exercise shall not have been consummated prior
to exercise of the Option, pursuant to the statement of such right in the
written notice exercising the Option as provided in clause 2(e)(iii) above.
(f) At the closing referred to in Section 2(e), Grantee shall surrender
this Agreement (and the Option granted hereby) to Issuer and pay to Issuer the
aggregate Option Price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by wire transfer to a bank
account designated by Issuer; provided, however, that failure or refusal of
Issuer to designate such a bank account shall not preclude Grantee from
exercising the Option.
(g) At such closing, simultaneously with the delivery of the aggregate
Option Price in immediately available funds as provided in Section 2(f), Issuer
shall deliver to Grantee a certificate or certificates representing the number
of shares of Common Stock purchased by Grantee and, if the Option should be
exercised in part only, a new Option Agreement granting a new Option evidencing
the rights of Grantee thereof to purchase the balance of the shares of Common
Stock purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder
shall be endorsed with a restrictive legend substantially as follows:
"The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended, and to certain provisions of an agreement between Summit
Bancorp. and NMBT CORP ("Issuer") dated as of the 4th day of October,
1999. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC"), or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety
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if the conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by Grantee to Issuer of the written notice of
exercise of the Option provided for in Section 2(e) and the tender of the
aggregate Option Price on the Closing Date in immediately available funds,
Grantee shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then actually be delivered to Grantee. Issuer shall pay
all expenses and any and all United States federal, state and local taxes and
other charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of Grantee or
its nominee.
SECTION 3. Reservation of Shares. Issuer agrees: (i) that it shall at
all times until the termination of this Agreement have reserved for issuance
upon the exercise of the Option that number of authorized shares of Common Stock
equal to the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, all of which shares will, upon issuance pursuant
hereto, be duly authorized, validly issued, fully paid, nonassessable, and
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate or articles of incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to time
be required (including (x) complying with all premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. ss. 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHC Act"), or the Change in Bank Control Act of 1978,
as amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any other Governmental Authority is necessary before the
Option may be exercised, cooperating with Grantee in preparing such applications
or notices and providing such information to the Federal Reserve Board and each
other Governmental Authority as they may require) in order to permit Grantee to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) to take all action provided herein to protect
the rights of Grantee against dilution.
SECTION 4. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any agreements and related options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
SECTION 5. Adjustment upon Change of Capitalization. The number of
shares of Common Stock purchasable upon the exercise of the Option shall be
subject to adjustment from time to time as follows:
(a) Subject to the last sentence of Section 1, in the event of any
change in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise to become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding (without consideration of any shares of Common
Stock subject to or issued pursuant to the Option).
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
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of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment. In no event
shall the Option Price be adjusted to less than the par value of the Common
Stock to be issued at such Option Price.
(c) It is intended by the parties hereto that the adjustments provided
by this Section 5 shall fully preserve the economic benefits of this Agreement
for Grantee.
SECTION 6. Registration Rights.
(a) Demand Registration Rights. After the occurrence of a Purchase
Event that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee (whether on its own behalf or on behalf of any subsequent
holder of the Option (or part thereof) delivered prior to an Exercise
Termination Event or at the request of a holder of any of the shares of Common
Stock issued pursuant hereto) delivered no later than 12 months after an
Exercise Termination Event, promptly prepare, file and keep current a
registration statement on such form as is available and the Issuer is eligible
to use under the Securities Act relating to a delayed or continuous offering (as
contemplated by Rule 415 of the SEC under the Securities Act or any successor
rule or regulation) (a "shelf registration") covering this Option and any shares
issued and issuable pursuant to the Option (the "Option Shares") and shall use
its best efforts to cause such registration statement to become effective and
remain current and to qualify this Option or any such Option Shares or other
securities for sale under any applicable state securities laws in order to
permit the sale or other disposition of this Option or any Option Shares in
accordance with any plan of disposition requested by Grantee; provided, however,
that Issuer may postpone filing a registration statement relating to a
registration request by Grantee under this Section 6 for a period of time (not
in excess of 90 days) if in its judgment such filing would require the
disclosure of material information that Issuer has a bona fide business purpose
for preserving as confidential. Issuer will use its best efforts to cause such
registration statement first to become effective as soon as practicable after
the filing thereof and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective, or
such shorter time as may be necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations.
Grantee shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. In connection
with any such registration, Issuer and Grantee shall provide each other with
representations, warranties, and other agreements customarily given in
connection with such registrations. If requested by any Grantee in connection
with such registration, Issuer and Grantee shall become a party to any
underwriting agreement relating to the sale of Option Shares, but only to the
extent of obligating themselves in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements. Notwithstanding the foregoing, if Grantee revokes any exercise
notice or fails to exercise any Option with respect to any exercise notice
pursuant to Section 2(e), Issuer shall not be obligated to continue any
registration process with respect to the sale of Option Shares.
(b) Additional Persons With Registration Rights. Upon receiving any
request under this Section 6 from any Grantee, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
(c) Expenses. Except where applicable state law prohibits such
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including the
fees and expenses of counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being registered,
printing expenses and the costs of special audits or "cold comfort" letters,
expenses of underwriters, excluding discounts and commissions but including
liability insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to this Section 6 (including the related
offerings and sales by holders of Option Shares) and all other qualifications,
notification or exemptions pursuant to Section 6.
(d) Indemnification. In connection with any registration under this
Section 6, Issuer hereby indemnifies the Grantee, and each officer, director and
controlling person of Grantee, and each underwriter thereof, including each
person, if any who controls such holder or underwriter within the meaning of
Section 15 of the Securities Act, against all expenses, losses, claims, damages
and liabilities caused by any untrue, or alleged untrue, statement contained in
any registration
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statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Grantee, or by such underwriter, as the case may be, for all
such expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement, that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such underwriter,
as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 6(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 6(d), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 6(d). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably satisfactory
to such indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party that
may be contrary to the interests of the indemnified party. No indemnifying party
shall be liable for the fees and expenses of more than one separate counsel for
all indemnified parties or for any settlement entered into without its consent,
which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 6(d) is unavailable
to a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to be indemnified
as a result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of Issuer, the
Grantee and the underwriters in connection with the statements or omissions
which resulted in such expenses, losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall any Grantee be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Any obligation by any Grantee
to indemnify shall be several and not joint with other Grantees.
(e) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Grantee thereof in
accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144A. Issuer shall at its expense provide the Grantee with any information
necessary in connection with the completion and filing of any reports or forms
required to be filed by Grantee under the Securities Act or the Exchange Act, or
required pursuant to any state securities laws or the rules of any stock
exchange.
SECTION 7. Repurchase at the Option of Grantee or Owner. (a) Upon the
occurrence of a Repurchase Event (as defined below), (i) at the request (the
date of such request being the "Request Date") of Grantee, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from Grantee at a price (the "Option Repurchase Price") equal to the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which this Option may then
be exercised and (ii) at the request (the date
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of such request being the "Request Date") of the owner of Option Shares from
time to time (the "Owner"), delivered within 12 months of the occurrence of a
Repurchase Event (or such later period as provided in Section 9), Issuer shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated. The
term "market/offer price" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof and on or prior to the Request Date, (ii) the price per
share of Common Stock paid or to be paid by any third party pursuant to an
agreement with Issuer (whether by way of a merger, consolidation or otherwise),
(iii) the highest last sale price for shares of Common Stock within the 90-day
period ending on the Request Date quoted on the Nasdaq National Market (as
reported by The Wall Street Journal, or, if not reported thereby, another
authoritative source), (iv) in the event of a sale of all or substantially all
of Issuer's assets, the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of Issuer as determined by a
nationally-recognized independent investment banking firm selected by Grantee or
the Owner, as the case may be, divided by the number of shares of Common Stock
outstanding at the time of such sale. In determining the market/offer price, the
value of consideration other than cash shall be determined by a
nationally-recognized independent investment banking firm selected by Grantee or
the Owner, as the case may be, whose determination shall be conclusive and
binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within the later to occur of (x) five
business days after the surrender of the Option and/or certificates representing
Option Shares and the receipt of such notice or notices relating thereto and (y)
the time that is immediately prior to the occurrence of a Repurchase Event,
Issuer shall deliver or cause to be delivered to Grantee the Option Repurchase
Price or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited from so delivering under applicable
law and regulation.
(c) Issuer hereby undertakes to use its reasonable efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law or regulation, from repurchasing the Option and/or the Option
Shares in full, Issuer shall promptly so notify Grantee and/or the Owner and
thereafter deliver or cause to be delivered, from time to time, to Grantee
and/or the Owner, as appropriate, the portion of the Option Repurchase Price and
the Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to Section 7(b) is prohibited under
applicable law or regulation, from delivering to Grantee and/or the Owner, as
appropriate, the Option Repurchase Price or the Option Share Repurchase Price,
respectively, in full or in any substantial part, Grantee or the Owner, as
appropriate, may revoke its notice of repurchase of the Option or the Option
Shares either in whole or in part whereupon, in the case of a revocation in
part, Issuer shall promptly (i) deliver to Grantee and/or the Owner, as
appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering after taking into
account any such revocation and (ii) deliver, as appropriate, either (A) to
Grantee, a new Agreement evidencing the right of Grantee to purchase that number
of shares of Common Stock equal to the number of shares of Common Stock
purchasable immediately prior to the delivery of the notice of repurchase less
the number of shares of Common Stock covered by the portion of the Option
repurchased or (B) to the Owner, a certificate for the number of Option Shares
covered by the revocation.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed
to have occurred (i) upon the consummation of any Acquisition Transaction
involving Issuer or any Bank Subsidiary or (ii) upon the acquisition by any
person of beneficial ownership of securities representing 25% or more of the
aggregate voting power of Issuer or any Bank Subsidiary, provided that no such
event shall constitute a Repurchase Event unless an Extension Event shall have
occurred prior to an Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option Shares under this
Section 7 shall not terminate upon the occurrence of an Exercise Termination
Event if an Extension Event shall have occurred prior to the occurrence of an
Exercise Termination Event.
(e) Issuer shall not enter into any agreement with any party (other
than Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other party thereto assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole discretion,
to require such other party to perform such obligations.
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SECTION 8. Substitute Option in the Event of Corporate Change. (a) In
the event that prior to an Exercise Termination Event, Issuer shall enter into
an agreement (i) to consolidate or merge with any person, other than Grantee or
a Grantee Subsidiary, and shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger represent less
than 50% of the aggregate voting power of the merged company, or (iii) to sell
or otherwise transfer all or substantially all of its assets to any person,
other than Grantee or a Grantee Subsidiary, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Grantee, of either (x) the Acquiring
Corporation (as defined below) or (y) any person that controls the Acquiring
Corporation (the Acquiring Corporation and any such controlling person being
hereinafter referred to as the Substitute Option Issuer)
(b) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as is hereinafter defined) as is equal to
the market/offer price (as defined in Section 7) multiplied by the number of
shares of the Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as is hereinafter defined) The exercise price of
the Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Option Price multiplied by a
fraction in which the numerator is the number of shares of the Common Stock for
which the Option was theretofore exercisable and the denominator is the number
of shares of Substitute Common Stock for which the Substitute Option is
exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee, provided further that the terms of
the Substitute Option shall include (by way of example and not limitation)
provisions for the repurchase of the Substitute Option and Substitute Common
Stock by the Substitute Option Issuer on the same terms and conditions as
provided in Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the transferee of all or any
substantial part of the Issuer's assets (or the assets of Issuer
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Average Price" shall mean the average last sale price
of a share of the Substitute Common Stock (as reported by The Wall
Street Journal or, if not reported therein, by another authoritative
source) for the one year immediately preceding the consolidation,
merger or sale in question, but in no event higher than the last sale
price of the shares of the Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the
issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls or is controlled
by such person, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to the exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for this clause (e), the Substitute Option Issuer shall make a cash payment
to Grantee equal to the excess of (i) the value of the Substitute Option without
giving effect to the limitation in this clause (e) over (ii) the value of the
Substitute Option after giving effect to the limitation in the clause (e). This
difference in value shall be determined by a nationally recognized investment
banking firm selected by Grantee and the Substitute Option Issuer.
SECTION 9. Extension of Time for Regulatory Approvals. Notwithstanding
Sections 2(e), 6, 7 and 11, if
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Grantee has given the notice referred to in one or more of such Sections, the
exercise of the rights specified in any such Section shall be extended (a) if
the exercise of such rights requires obtaining regulatory approvals, to the
extent necessary to obtain all regulatory approvals for the exercise of such
rights, and (b) to the extent necessary to avoid liability under Section 16(b)
of the Securities Exchange Act by reason of such exercise; provided that in no
event shall any closing date occur more than 18 months after the related Notice
Date, and, if the closing date shall not have occurred within such period due to
the failure to obtain any required approval by the Federal Reserve Board or any
other Governmental Authority despite the reasonable efforts of Issuer or the
Substitute Option Issuer, as the case may be, to obtain such approvals, the
exercise of the Option shall be deemed to have been rescinded as of the related
Notice Date. In the event (a) Grantee receives official notice that an approval
of the Federal Reserve Board or any other Governmental Authority required for
the purchase and sale of the Option Shares will not be issued or granted or (b)
a closing date has not occurred within 18 months after the related Notice Date
due to the failure to obtain any such required approval, Grantee shall be
entitled to exercise the Option in connection with the resale of the Option
Shares pursuant to a registration statement as provided in Section 6. Nothing
contained in this Agreement shall restrict Grantee from specifying alternative
exercising of rights pursuant to Sections 2(e), 6, 7 and 11, hereof in the event
that the exercising of any such rights shall not have occurred due to the
failure to obtain any required approval referred to in this Section 9.
SECTION 10. Issuer Warranties. Issuer hereby represents and warrants to
Grantee as follows:
(a) Issuer has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Issuer, enforceable against
Issuer in accordance with its terms, except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforcement of creditors' rights generally and
institutions the deposits of which are insured by the Federal Deposit Insurance
Corporation and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding may be brought.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(c) Upon receipt of the necessary regulatory approvals as contemplated
by this Agreement, the execution, delivery and performance of this Agreement
does not or will not, and the consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of, or a default under, its certificate or articles of incorporation or by-laws,
or the comparable governing instruments of any of its subsidiaries, or (ii) a
breach or violation of, or a default under, any agreement, lease, contract,
note, mortgage, indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time or both)
or under any law, rule, ordinance or regulation or judgment, decree, order,
award or governmental or non-governmental permit or license to which it or any
of its subsidiaries is subject, that would in any case give any other person the
ability to prevent or enjoin Issuer's performance under this Agreement in any
material respect.
SECTION 11. Assignment of Option by Grantee. (a) Neither of the parties
hereto may assign any of its rights or delegate any of its obligations under
this Agreement or the Option created hereunder to any other person without the
express written consent of the other party, except that Grantee may assign this
Agreement or any of its rights hereunder in whole or in part (i) at any time to
a subsidiary of Grantee, and (ii) after the occurrence of a Purchase Event to
any Person; provided, however, that until the date 15 days following the date at
which the Federal Reserve Board approves an application by Grantee under the BHC
Act to acquire the shares of Common Stock subject to the Option, Grantee may not
assign its rights under the Option except in (A) a widely dispersed public
distribution, (B) a private placement in which no one party acquires the right
to purchase securities representing in excess of 2% of the aggregate voting
power of Issuer, (C) an assignment to a single party (e.g., a broker or
investment banker) for the purpose of conducting a widely dispersed public
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distribution on Grantee's behalf, or (D) any other manner approved by the
Federal Reserve Board. Grantee will pay any reasonable out-of-pocket costs and
expenses of Issuer in connection with any such assignment. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
"The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising
under the Securities Act of 1933, as amended and to certain provisions
of an agreement between Summit Bancorp. and NMBT CORP ("Issuer") dated
as of the 4th day of October, 1999. A copy of such agreement is on file
at the principal office of Issuer and will be provided to any permitted
assignee of the Option without change upon receipt by Issuer of a
written request therefor."
It is understood and agreed that (i) the reference to the resale restrictions of
the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel,
in form and substance satisfactory to Issuer, to the effect that such legend is
not required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery of
substitute assignments without such reference if the Option has been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such assignments shall
bear any other legend as may be required by law.
SECTION 12. Application for Regulatory Approval. If Grantee is entitled
to exercise the Option and has sent a notice to Issuer pursuant to Section 2(e),
each of Grantee and Issuer will use its reasonable efforts to make all filings
with, and to obtain consents of, all third parties and the Federal Reserve Board
and other Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
making application for listing or quotation, as the case may be, of the shares
of Common Stock issuable hereunder on the NASDAQ National Market System and
applying to the Federal Reserve Board under the BHC Act and to state banking
authorities for approval to acquire the shares issuable hereunder.
SECTION 13. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties shall hereto be enforceable
by either party hereto through injunctive or other equitable relief. Both
parties further agree to waive any requirement for the securing or posting of
any bond in connection with the obtaining of any such equitable relief and that
this provision is without prejudice to any other rights that the parties hereto
may have for any failure to perform this Agreement.
SECTION 14. Separability of Provisions. If any term, provision,
covenant or restriction contained in this Agreement is held by a court or a
federal or state regulatory agency of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated. If for any reason such
court or regulatory agency determines that Grantee is not permitted to acquire,
or Issuer is not permitted to repurchase, pursuant to Section 7, the full number
of shares of Common Stock provided in Section 1 (as adjusted pursuant hereto),
it is the express intention of Issuer to allow Grantee to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible, without
any amendment or modification hereof.
SECTION 15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
SECTION 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
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SECTION 18. Expenses. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
SECTION 19. Entire Agreement; No Third-Party Beneficiaries. Except as
otherwise expressly provided herein or in the Merger Agreement, this Agreement
contains the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20. Merger Agreement. Nothing contained in this Agreement shall
be deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
SECTION 21. Majority in Interest. In the event that any selection or
determination is to be made by Grantee or the Owner hereunder and at the time of
such selection or determination there is more than one Grantee or Owner, such
selection shall be made by a majority in interest of such Grantees or Owners.
SECTION 22. Further Assurances. In the event of any exercise of the
Option by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
SECTION 23. No Rights as Shareholder. Except to the extent Grantee
exercises the Option, Grantee shall have no rights to vote or receive dividends
or have any other rights as a shareholder with respect to shares of Common Stock
covered hereby.
SECTION 24. Grantee Representation. The Option and any Option Shares or
other securities acquired by Grantee upon exercise of the Option are not being,
and will not be, as the case may be, acquired with a view to the public
distribution thereof in the United States except as provided for in Sections 6
and 11 hereof and neither the Option nor any Option Shares or other securities
acquired by Grantee upon exercise of the Option will be transferred or otherwise
disposed of by Grantee except in a transaction registered or exempt from
registration under the Securities Act.
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IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
Summit Bancorp.
By /s/ John G. Collins
John G. Collins
Vice Chairman
NMBT CORP
By /s/ Michael D. Carrigan
Michael D. Carrigan
President & Chief Executive Officer
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APPENDIX D
APPRAISAL RIGHTS
DELAWARE GENERAL CORPORATION LAW
SECTION 262
DELAWARE GENERAL CORPORATION LAW
262 Appraisal Rights--(a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec. 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation: the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or
consolidation to be effected pursuant to sec. 251 (other than a
merger effected pursuant to sec. 251(g) of this title), sec. 252,
sec. 254, sec. 257, sec. 258, sec. 263 or sec. 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of
stock, which stock, or depository receipts in respect thereof,
at the record date fixed to determine the stockholders entitled
to receive notice of and to vote at the meeting of stockholders
to act upon the agreement of merger or consolidation, were
either (i) listed on a national securities exchange or
designated as a national market system security on an
interdealer quotation system by the National Association of
Securities Dealers, Inc. or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights
shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for
its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of sec. 251 of this
title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of
any class or series of stock of a constituent corporation if the
holders thereof are required by the terms of an agreement of
merger or consolidation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
secs. 251, 252, 254, 257, 258, 263 and 264 of this title to
accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in
respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository
receipts at the effective date of the merger or consolidation
will be either listed on a national securities exchange or
designated as a national market system security on an
interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b.
of this paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs
a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under sec. 253 of this
title is not owned by the parent corporation immediately prior
to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
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(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares
of any class or series of its stock as a result of an amendment to
its certificate of incorporation, any merger or consolidation in
which the corporation is a constituent corporation or the sale of all
or substantially all of the assets of the corporation. If the
certificate of incorporation contains such a provision, the
procedures of this section, including those set forth in subsections
(d) and (e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20
days prior to the meeting, shall notify each of its stockholders
who was such on the record date for such meeting with respect to
shares for which appraisal rights are available pursuant to
subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent
corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of
(1)such stockholder's shares shall deliver to the corporation,
before the taking of the vote on the merger or consolidation, a
written demand for appraisal of (1)such stockholder's shares.
Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of (1)such
stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective
date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of
the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to sec.228
or sec.253 of this title, each constituent corporation, either
before the effective date of the merger or consolidation or
within ten days thereafter, shall notify each of the holders of
any class or series of stock of such constituent corporation who
are entitled to appraisal rights of the approval of the merger
or consolidation and that appraisal rights are available for any
or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy
of this section; provided that, if the notice is given on or
after the effective date of the merger or consolidation, such
notice shall be given by the surviving or resulting corporation
to all such holders of any class or series of stock of a
constituent corporation that are entitled to appraisal rights.
Such notice may, and, if given on or after the effective date of
the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice, demand
in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the
merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date
of the merger or consolidation notifying each of the holders of
any class or series of stock of such constituent corporation
that are entitled to appraisal rights of the effective date of
the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders
on or within 10 days after such effective date; provided,
however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the
secretary or assistant secretary or of the transfer agent of the
corporation that is required to give either notice that such
notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice
is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date
shall be such effective date. If no record date is fixed and the
notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day
on which the notice is given.
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(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any
stockholder who has complied with subsections (a) and (d) hereof and
who is otherwise entitled to appraisal rights, may file a petition in
the Court of Chancery demanding a determination of the value of the
stock of all such stockholders. Notwithstanding the foregoing, at any
time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw
(1)such stockholder's demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the
effective date of the merger or consolidation, any stockholder who
has complied with the requirements of subsections (a) and (d) hereof,
upon written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the consolidation
a statement setting forth the aggregate number of shares not voted in
favor of the merger or consolidation and with respect to which
demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after(1) such stockholder's written
request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d)
hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting
corporation, which shall within 20 days after such service file in
the office of the Register in Chancery in which the petition was
filed a duly verified list containing the names and addresses of all
stockholders who have demanded payment for their shares and with whom
agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall
be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time
and place fixed for the hearing of such petition by registered or
certified mail to the surviving or resulting corporation and to the
stockholders shown on the list at the addresses therein stated. Such
notice shall also be given by 1 or more publications at least 1 week
before the day of the hearing, in a newspaper of general circulation
published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders
who have demanded an appraisal for their shares and who hold stock
represented by certificates to submit their certificates of stock to
the Register in Chancery for notation thereon of the pendency of the
appraisal proceedings; and if any stockholder fails to comply with
such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value
exclusive of any element of value arising from the accomplishment or
expectation of the merger or consolidation, together with a fair rate
of interest, if any, to be paid upon the amount determined to be the
fair value. In determining such fair value, the Court shall take into
account all relevant factors. In determinating the fair rate of
interest, the Court may consider all relevant factors, including the
rate of interest which the surviving or resulting corporation would
have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, permit
discovery or other pretrial proceedings and may proceed to trial upon
the appraisal prior to the final determination of the stockholder
entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such
stockholder's certificates of stock to the Register in Chancery, if
such is required, may participate fully in all proceedings until it
is finally determined that (1)such stockholder is not entitled to
appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be
simple or compound, as the Court may direct. Payment shall be so made
to each such stockholder, in the case of holders of uncertificated
stock forthwith, and the case of holders of shares represented by
certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be
enforced as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a corporation of
this State or of any state.
D-3
<PAGE>
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances.
Upon application of a stockholder, the Court may order all or a
portion of the expenses incurred by any stockholder in connection
with the appraisal proceeding, including, without limitation,
reasonable attorney's fees and the fees and expenses of experts, to
be charged pro rata against the value of all the shares entitled to
an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in
subsection (d) of this section shall be entitled to vote such stock
for any purpose or to receive payment of dividends or other
distributions on the stock (except dividends or other distributions
payable to stockholders of record at a date which is prior to the
effective date of the merger or consolidation); provided, however,
that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written
withdrawal of such stockholder's demand for an appraisal and an
acceptance of the merger or consolidation, either within 60 days
after the effective date of the merger or consolidation as provided
in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an
appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may
be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had
they assented to the merger or consolidation shall have the status of
authorized and unissued shares of the surviving or resulting
corporation.
D-4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
With respect to the indemnification of directors and officers, Section 5
of Article IX of the By-Laws of Summit Bancorp. provides
Section 5. INDEMNIFICATION AND INSURANCE (a) Each person who was or is
made a party or is threatened to be made a party to or is involved in any
proceeding, by reason of the fact that he or she is or was a corporate agent of
the Corporation, whether the basis of such proceeding is alleged action in an
official capacity as a corporate agent or in any other capacity while serving as
a corporate agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the laws of the State of New Jersey as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expenses and liabilities in connection
therewith, and such indemnification shall continue as to a person who has ceased
to be a corporate agent and shall inure to the benefit of such corporate agent's
heirs, executors, administrators and other legal representatives; PROVIDED,
HOWEVER, that except as provided in Section 5(c) of this By-Law, the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors. The right to
indemnification conferred in this By-Law shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition, such advances
to be paid by the Corporation within 20 days after the receipt by the
Corporation of a statement or statements from the claimant requesting such
advance or advances from time to time; PROVIDED, HOWEVER, that the advancement
of counsel fees to a claimant other than a claimant who is or was a director or
Executive Vice President or higher ranking officer of the Corporation shall be
made only when the Board of Directors or the General Counsel of the Corporation
determines that arrangements for counsel are satisfactory to the Corporation;
and PROVIDED, FURTHER, that if the laws of the State of New Jersey so require,
the payment of such expenses incurred by a corporate agent in such corporate
agent's capacity as a corporate agent (and not in any other capacity in which
service was or is rendered by such person while a corporate agent, including,
without limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding shall be made only upon delivery to the Corporation
of an undertaking by or on behalf of such corporate agent to repay all amounts
so advanced if it shall ultimately be determined that such corporate agent is
not entitled to be indemnified under this By-Law or otherwise.
(b) To obtain indemnification under this By-Law, a claimant shall submit
to the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to the claimant and is
reasonably necessary to determine whether and to what extent the claimant is
entitled to indemnification. Upon written request by a claimant for
indemnification pursuant to the first sentence of this Section 5(b), a
determination, if required by applicable law, with respect to the claimant's
entitlement thereto shall be made as follows: (1) if requested by a claimant who
is or was a director or Executive Vice President or higher ranking officer of
this Corporation, by independent counsel (as hereinafter defined) in a written
opinion to the Board of Directors, a copy of which shall be delivered to the
claimant; or (2) if the claimant is not a person described in Section 5(b)(1),
or is such a person and if no request is made by such a claimant for a
determination by independent counsel, (A) by the Board of Directors by a
majority vote of a quorum consisting of disinterested directors (as hereinafter
defined), or (B) if a quorum of the Board of Directors consisting of
disinterested directors is not obtainable or, even if obtainable, such quorum of
disinterested directors so directs, by independent counsel in a written opinion
to the Board of Directors, a copy of which shall be delivered to the claimant.
In the event the determination of entitlement to indemnification is to be made
by independent counsel at the request of the claimant, the independent counsel
shall be selected by the Board of Directors and paid by the Corporation. If it
is so determined that the claimant is entitled to indemnification, payment to
the claimant shall be made within 20 days after such determination.
(c) If a claim under Section 5(a) of this By-Law is not paid in full by
the Corporation within thirty days after a written claim pursuant to Section
5(b) of this By-Law has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole
II-1
<PAGE>
or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim, including attorney's fees. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standard of conduct which makes
it permissible under the laws of the State of New Jersey for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors or independent counsel) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because the claimant has met the
applicable standard of conduct set forth in the laws of the State of New Jersey,
nor an actual determination by the Corporation (including its Board of Directors
or independent counsel) that the claimant has not met such applicable standard
of conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(d) If a determination shall have been made pursuant to Section 5(b) of
this By-Law that the claimant is entitled to indemnification, the Corporation
shall be bound by such determination in any judicial proceeding commenced
pursuant to Section 5(c) of this By-Law.
(e) The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
By-Law shall not be exclusive of any other rights which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-Laws, agreement, vote of shareholders or disinterested
directors or otherwise. No repeal or modification of this By-Law shall in any
way diminish or adversely affect the rights of any corporate agent of the
Corporation hereunder in respect of any occurrence or matter arising prior to
any such repeal or modification.
(f) The Corporation may maintain insurance, at its expense, to protect
itself and any corporate agent of the Corporation or other enterprise against
any expense or liability, whether or not the Corporation would have the power to
indemnify such person against such expense or liability under the laws of the
State of New Jersey.
(g) If any provision or provisions of this By-Law shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (1) the validity,
legality and enforceability of the remaining provisions of this By-Law
(including, without limitation, each portion of any section of this By-Law
containing any such provision held to be invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (2) to the fullest
extent possible, the provisions of this By-Law (including, without limitation,
each such portion of any section of this By-Law containing any such provision
held to be invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
(h) For purposes of this By-Law:
(1) "disinterested director" means a director of the Corporation who
is not and was not a party to or otherwise involved in the matter in
respect of which indemnification is sought by the claimant.
(2) "independent counsel" means a law firm, a member of a law firm, or
an independent practitioner that is experienced in matters of corporation
law and shall include any person who, under the applicable standards of
professional conduct then prevailing, would not have a conflict of
interest in representing either the Corporation or the claimant in an
action to determine the claimant's rights under this By-Law.
(3) "corporate agent" means any person who is or was a director,
officer, employee or agent of the Corporation or of any constituent
corporation absorbed by the Corporation in an consolidation or merger and
any person who is or was a director, officer, trustee, employee or agent
of any subsidiary of the Corporation or of any other enterprise, serving
as such at the request of this Corporation, or of any such constituent
corporation, or the legal representative of any such director, officer,
trustee, employee or agent;
(4) "other enterprise" means any domestic or foreign corporation,
other than the Corporation, and any partnership, joint venture, sole
proprietorship, trust or other enterprise, whether or not for profit,
served by a corporate agent;
(5) "expenses" means reasonable costs, disbursements and counsel fees;
(6) "liabilities" means amounts paid or incurred in satisfaction of
settlements, judgments, fines and penalties;
II-2
<PAGE>
(7) "proceeding" means any pending, threatened or completed civil,
criminal, administrative, legislative, investigative or arbitrative
action, suit or proceeding, and any appeal therein and any inquiry or
investigation which could lead to such action, suit or proceeding; and
(8) References to "other enterprises" include employee benefit plans;
references to "fines" include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the
request of the indemnifying corporation" include any service as a
corporate agent which imposes duties on, or involves services by, the
corporate agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and
in a manner the person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation."
(i) Any notice, request or other communication required or permitted to be
given to the Corporation under this By-Law shall be in writing and either
delivered in person or sent by facsimile, telex, telegram, overnight mail or
courier service, or certified or registered mail, postage prepaid, return
receipt requested, to the Secretary of the Corporation and shall be effective
only upon receipt by the Secretary.
(j) This By-Law shall be implemented and construed to provide any
corporate agent described above who is found to have acted in good faith and in
a manner such person reasonably believed to be in or not opposed to the best
interests of the Corporation the maximum indemnification, advancement of
expenses, and reimbursement for liabilities and expenses allowed by law.
Such provision is consistent with Section 14A:3-5 of the Business
Corporation Act of the State of New Jersey, the state of Summit's incorporation,
which permits the indemnification of officers and directors, under certain
circumstances and subject to specified limitations, against liability which any
officer or director may incur in such capacity.
Article 7 of Summit's Restated Certificate of Incorporation provides that:
Except to the extent prohibited by law, no Director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owned to the Corporation or its shareholders
provided that a Director or officer shall not be relieved from liability for any
breach of duty based upon an act or omission (a) in breach of such persons duty
of loyalty to the Corporation or its shareholders, (b) not in good faith or
involving a knowing violation of law or (c) resulting in receipt of an improper
personal benefit. Neither the amendment or repeal of this Article 7, nor the
adoption of any provision of this Restated Certificate of Incorporation
inconsistent with this Article 7, nor the adoption of any provision of this
Restated Certificate of Incorporation inconsistent with this Article 7, shall
eliminate or reduce the effect of this Article 7 in respect of any matter which
occurred, or any cause of action, suit or claim which but for this Article 7
would have accrued or arisen, prior to such amendment, repeal or adoption.
Summit carries officers' and directors' liability insurance policies which
provide coverage against judgments, settlements and legal costs incurred because
of actual or asserted acts or omissions of such officers and directors of Summit
arising out of their duties as such, subject to certain exceptions, including,
but not limited to, damages based upon illegal personal profits or adjudicated
dishonesty of the person seeking indemnification. The policies provide coverage
of $50,000,000 in the aggregate.
II-3
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
This Registration Statement includes the following exhibits:
EXHIBIT NO. DESCRIPTION
- ---------- ----------
2 Agreement and Plan of Merger dated October 3, 1999 between NMBT
Corp and Summit. (Included without exhibits as Appendix A to the
Proxy Statement-Prospectus included in this Registration
Statement; with Exhibit B thereto included as Appendix C to the
Proxy Statement-Prospectus included in this Registration
Statement and Exhibits C-E thereto incorporated by reference to
Exhibit 10(a) to the Schedule 13D filed by Summit with respect
to NMBT Corp Common Stock (File No. 0-23419) dated October 4,
1999).
3(a) Restated Certificate of Incorporation of Summit, as restated
August 16, 1999 (incorporated by reference to Exhibit (3)A on
Form 10-Q for the quarter ended June 30, 1999).
(b) By-Laws of Summit as amended through October 18, 1995
(incorporated by reference to Exhibit (2)B on Form 10-K for the
year ending December 31, 1995).
4 Rights Agreement, dated as of June 16, 1999, by and between
Summit Bancorp. and First Chicago Trust Company of New York, as
Rights Agent (incorporated by reference to Exhibit 4.1 to the
Summit Bancorp. Form 8-K, dated June 16, 1999).
5 Opinion of Richard F. Ober, Jr., Esq. regarding legality of
securities being issued.
8 Opinion of Thompson Coburn, regarding tax matters.
23(a) Consent of KPMG LLP.
(b) Consent of Deloitte & Touche LLP.
(c) Consent of Richard F. Ober, Jr., Esq. -- included in his opinion
filed as Exhibit 5 to this Registration Statement.
(d) Consent of Thompson Coburn -- included in its opinion filed as
Exhibit 8 to this Registration Statement.
*24 Power of Attorney -- included on the signature page of the
original filing.
99(a) Form of NMBT proxy.
(b) Opinion of Advest, Inc. -- Included as Appendix B to the Proxy
Statement-Prospectus included in this Registration Statement.
(c) Consent of Advest, Inc.
* Previously filed.
(B) FINANCIAL STATEMENT SCHEDULES.
All financial statement schedules either are not required or are included
in the notes to the financial statements incorporated by reference herein.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
<PAGE>
(b) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) of
this section do not apply if the registration statement is on
Form S-3, Form S-8 or Form F-3, and the information required
to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions set forth in response to
Item 20 hereof, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of West Windsor and the
State of New Jersey on this 27th day of January, 2000.
SUMMIT BANCORP.
By: *
-----------------------------
T. Joseph Semrod
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 27th day of January, 2000 by
the following persons in the capacities indicated.
SIGNATURES TITLES
- ---------- ------
*
- -------------------- Chairman of the Board
T. Joseph Semrod of Directors (Chief Executive Officer)
* President and Director
- --------------------
Robert G. Cox
*
- -------------------- Executive Vice President - Finance
William J. Healy (Principal Financial Officer)
*
- -------------------- Senior Vice President and Comptroller
Paul V. Stahlin (Principal Accounting Officer)
* Director
- -------------------
Robert L. Boyle
* Director
- -------------------
James C. Brady
* Director
- -------------------
John G. Collins
* Director
- -------------------
T.J. Dermot Dunphy
II-6
<PAGE>
SIGNATURES TITLES
- ---------- ------
*
- ------------------------ Director
Anne Evans Estabrook
*
- ------------------------ Director
Elinor J. Ferdon
*
- ------------------------ Director
William M. Freeman
*
- ------------------------ Director
Thomas H. Hamilton
*
- ------------------------ Director
Fred G. Harvey
*
- ------------------------ Director
Arthur J. Kania
*
- ------------------------ Director
Francis J. Mertz
*
- ------------------------ Director
George L. Miles, Jr.
*
- ------------------------ Director
William R. Miller
*
- ------------------------ Director
Raymond Silverstein
*
- ------------------------ Director
Orin R. Smith
*
- ------------------------ Director
Joseph M. Tabak
*
- ------------------------ Director
Douglas G. Watson
* Richard F. Ober, Jr., by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
executed by such person, filed with the Securities and Exchange Commission.
/s/ Richard F. Ober, Jr.
- --------------------
Richard F. Ober, Jr.
II-7
<PAGE>
EXHIBIT NO. DESCRIPTION
- ---------- ----------
2 Agreement and Plan of Merger dated October 3, 1999 between NMBT
Corp and Summit. (Included without exhibits as Appendix A to the
Proxy Statement-Prospectus included in this Registration
Statement; with Exhibit B thereto included as Appendix C to the
Proxy Statement-Prospectus included in this Registration
Statement and Exhibits C-E thereto incorporated by reference to
Exhibit 10(a) to the Schedule 13D filed by Summit with respect
to NMBT Corp Common Stock (File No. 0-23419) dated October 4,
1999).
3(a) Restated Certificate of Incorporation of Summit, as restated
August 16, 1999 (incorporated by reference to Exhibit (3)A on
Form 10-Q for the quarter ended June 30, 1999).
(b) By-Laws of Summit as amended through October 18, 1995
(incorporated by reference to Exhibit (2)B on Form 10-K for the
year ending December 31, 1995).
4 Rights Agreement, dated as of June 16, 1999, by and between
Summit Bancorp. and First Chicago Trust Company of New York, as
Rights Agent (incorporated by reference to Exhibit 4.1 to the
Summit Bancorp. Form 8-K, dated June 16, 1999).
5 Opinion of Richard F. Ober, Jr., Esq. regarding legality of
securities being issued.
8 Opinion of Thompson Coburn, regarding tax matters.
23(a) Consent of KPMG LLP.
(b) Consent of Deloitte & Touche LLP.
(c) Consent of Richard F. Ober, Jr., Esq. -- included in his opinion
filed as Exhibit 5 to this Registration Statement.
(d) Consent of Thompson Coburn -- included in its opinion filed as
Exhibit 8 to this Registration Statement.
*24 Power of Attorney -- included on the signature page of the
original filing.
99(a) Form of NMBT proxy.
(b) Opinion of Advest, Inc. -- Included as Appendix B to the Proxy
Statement-Prospectus included in this Registration Statement.
(c) Consent of Advest, Inc.
* Previously filed.
January 24, 2000
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543
Re: Registration Statement on Form S-4 of Summit Bancorp. Relating to Shares of
Summit Bancorp. Common Stock Issuable in Connection with the Merger of NMBT
Corp. with and into Summit Bancorp.
Gentlemen:
This opinion is given in connection with Registration Statement No. 333-93515 on
Form S-4 (the "Registration Statement") filed by Summit Bancorp. (the "Company")
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, with respect to up to 2,948,741 shares of the Company's Common Stock,
par value $.80 per share (the "Common Shares"), to be issued to shareholders of
NMBT Corp. ("NMBT") in connection with the merger of NMBT with and into the
Company (the "Merger"), pursuant to an Agreement and Plan of Merger dated
October 3, 1999 (the "Merger Agreement").
I have acted as counsel for the Company in connection with the filing of the
Registration Statement. In so acting, I have made such investigation, including
the examination of originals or copies, certified or otherwise identified to my
satisfaction, of such corporate documents and instruments as I have deemed
relevant and necessary as a basis for the opinion hereinafter set forth. In
connection therewith I have assumed the genuineness of all signatures and the
authenticity of all documents submitted to me as originals and the conformity to
original documents of all documents submitted to me as certified or photostatic
copies. As to questions of fact material to such opinion, I have relied upon
representations of officers or representatives of the Company.
Based upon the foregoing and assuming that (i) the Merger Agreement is duly
approved by the requisite vote of the shareholders of NMBT, (ii) that
Certificates of Merger complying with the Merger Agreement and meeting all
applicable requirements of the New Jersey Business Corporation Act and the
Delaware General Corporation Law are duly executed and filed in accordance with
such statutes, I am of the opinion that the Common Shares registered under the
Registration Statement and to be issued in accordance with the Merger Agreement
upon the effectiveness of the Merger in exchange for outstanding shares of the
Common Stock, $.01 par value, of NMBT will be validly issued, fully paid and
nonassessable.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement. I further consent to any and all references to me in the Proxy
Statement-Prospectus which is part of said Registration Statement.
Very truly yours,
/s/ Richard F. Ober, Jr.
------------------------
Richard F. Ober, Jr.
[On Thompson Coburn, LLP letterhead]
January 28, 2000
Board of Directors Board of Directors
NMBT CORP Summit Bancorp.
55 Main Street 301 Carnegie Center
New Milford, Connecticut Princeton, New Jersey
Ladies and Gentlemen:
You have requested our opinion with regard to certain federal
income tax consequences of the proposed merger (the "Merger") of NMBT CORP
("NMBT") with and into Summit Bancorp. ("Summit").
In connection with the preparation of our opinion, we have
examined and have relied upon the following:
(i) The Agreement and Plan of Merger between Summit and NMBT
dated October 3, 1999, including the schedules and exhibits
thereto (the "Agreement"), and the "Reorganization Election"
(as the quoted term is defined in the Agreement);
(ii) Summit's Registration Statement on Form S-4, including
the Proxy Statement/Prospectus contained therein, filed with
the Securities and Exchange Commission on December 23, 1999,
as supplemented and amended to the date hereof (the
"Registration Statement");
(iii) The representations and undertaking of Summit
substantially in the form of Exhibit A hereto;
(iv) The representations and undertakings of NMBT
substantially in the form of Exhibit B hereto; and
(v) The Shareholder Rights Plan between Summit and First
Chicago Trust Company of New York, as rights agent, dated as
of June 16, 1999 (collectively, the "Rights Agreements").
<PAGE>
NMBT Corp.
Summit Bancorp.
January 28, 2000
Page 2
Our opinion is based solely upon applicable law and the
factual information and undertakings contained in the above-mentioned documents.
In rendering our opinion, we have assumed the accuracy of all information and
the performance of all undertakings contained in each of such documents, and we
have assumed that all representations made to the knowledge of any person or
entity or with similar qualification will be true and correct as if made without
such qualification. We also have assumed the authenticity of all original
documents, the conformity of all copies to the original documents, and the
genuineness of all signatures. We have not attempted to verify independently the
accuracy of any information in any such document, and we have assumed that such
documents accurately and completely set forth all material facts relevant to
this opinion. All of our assumptions were made with your consent. If any fact or
assumption described herein or below is incorrect, any or all of the federal
income tax consequences described herein may be inapplicable.
OPINION
Subject to the foregoing, to the conditions and limitations
expressed elsewhere herein, and assuming that the Merger is consummated in
accordance with the Agreement, we are of the opinion that for federal income tax
purposes:
1. The Merger will constitute a reorganization within the
meaning of section 368(a)(1) of the Internal Revenue Code of 1986, as amended to
the date hereof (the "Code"). Each of Summit and NMBT will be a "party to a
reorganization" within the meaning of Section 368(b) of the Code.
2. Each shareholder of NMBT who exchanges, in the Merger,
shares of NMBT common stock, par value $0.01 per share ("NMBT Common Stock")
solely for shares of Summit common stock, par value $0.80 per share, including
the rights associated therewith under the Rights Agreements ("Summit Common
Stock"):
a) will recognize no gain or loss as a result of the
exchange, except with regard to cash received in lieu of a
fractional share, as discussed below (Code section 354(a)(1));
b) will have an aggregate basis for the shares of
Summit Common Stock received (including any fractional share
of Summit Common Stock deemed to be received, as described in
paragraph 3, below) equal to the aggregate adjusted tax basis
of the shares of NMBT Common Stock surrendered (Code section
358(a)(1)); and
c) will have a holding period for the shares of
Summit Common Stock received (including any fractional share
of Summit Common Stock deemed to be
<PAGE>
NMBT Corp.
Summit Bancorp.
January 28, 2000
Page 3
received, as described in paragraph 3, below) which includes
the holding period of the shares of NMBT Common Stock
surrendered, provided that the shares of NMBT Common Stock
surrendered are held as capital assets at the time of the
Merger (Code section 1223(1)).
3. Each shareholder of NMBT who receives, in the Merger, cash
in lieu of a fractional share of Summit Common Stock will be treated as if the
fractional share had been received in the Merger and then redeemed by Summit.
Provided that the shares of NMBT Common Stock surrendered are held as capital
assets at the time of the Merger, the receipt of such cash will cause the
recipient to recognize capital gain or loss, equal to the difference between the
amount of cash received and the portion of such holder's basis in the shares of
Summit Common Stock allocable to the fractional share (Code sections 1001 and
1222; Rev. Rul. 66-365, 1966-2 C.B. 116; Rev. Proc. 77-41, 1977-2 C.B. 574).
* * * * * * * * * * * *
We express no opinion with regard to: (1) the federal income
tax consequences of the Merger not addressed expressly by this opinion,
including without limitation, (i) the tax consequences, if any, to those
shareholders of NMBT who acquired shares of NMBT Common Stock pursuant to the
exercise of employee stock options or otherwise as compensation, and (ii) the
tax consequences to special classes of shareholders, if any, including without
limitation, foreign persons, insurance companies, tax-exempt entities,
retirement plans, and dealers in securities; and (2) federal, state, local, or
foreign taxes (or any other federal, state, local, or foreign laws) not
specifically referred to and discussed herein. Further, our opinion is based
upon the Code, Treasury Regulations proposed or promulgated thereunder, and
administrative interpretations and judicial precedents relating thereto, all of
which are subject to change at any time, possibly with retroactive effect, and
we assume no obligation to advise you of any subsequent change thereto. If there
is any change in the applicable law or regulations, or if there is any new
administrative or judicial interpretation of the applicable law or regulations,
any or all of the federal income tax consequences described herein may become
inapplicable.
The foregoing opinion reflects our legal judgment solely on
the issues presented and discussed herein. This opinion has no official status
or binding effect of any kind. Accordingly, we cannot assure you that the
Internal Revenue Service or any court of competent jurisdiction will agree with
this opinion.
We hereby consent to the filing of this letter as an exhibit
to the Registration Statement and to all references made to this letter and to
this firm in the Registration Statement.
Very truly yours,
/s/ Thompson Coburn
-------------------
Thompson Coburn
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Summit Bancorp:
We consent to the use of our report dated January 19, 1999 relating to the
consolidated balance sheets of Summit Bancorp and subsidiaries as of December
31, 1998 and 1997 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1998, which report appears in the December 31, 1998
Annual Report on Form 10-K of Summit Bancorp, incorporated by reference in the
Registration Statement on form S-4 of Summit Bancorp. We also consent to the
reference to our Firm under the caption "Experts"
/s/ KPMG LLP
Short Hills, New Jersey
January 26, 2000
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-93515 of Summit Bancorp. on Form S-4 of our
report dated January 21, 1999, appearing in and incorporated by reference in the
Annual Report on Form 10-K of NMBT CORP for the year ended December 31, 1998 and
to the reference to us under the heading "Experts" in the Proxy
Statement-Prospectus, which is part of this Registration Statement.
/s/Deloitte & Touche, LLP
Stamford, Connecticut
January 28, 2000
NMBT CORP
55 Main Street
New Milford, Connecticut, 06776-2400
THIS PROXY IS SOLICITATED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JAY C. LENT, and DEBORAH L. FISH, or
either of them, the true and lawful attorneys for the undersigned, with power of
substitution to each, to vote all the shares of stock of NMBT CORP (the
"Company") standing in the name of the undersigned on the books of the Company
as of the Record Date, January 24, 2000, at the Special Meeting of the
Stockholders to be held at Candlewood Valley Country Club, New Milford,
Connecticut, on Tuesday, March 7, 2000 at 10:00 a.m., or at any adjournment or
adjournments thereof, with all the power the undersigned would possess if
personally present, in respect to the following matters as more fully described
in the accompanying Prospectus to Stockholders.
This proxy will be voted as directed by the stockholder on the reverse side
of this proxy card.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR"
PROPOSALS 1 AND 2 AND IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE
BOARD OF DIRECTORS AS TO OTHER MATTERS PROPERLY BROUGHT BEFORE THE SPECIAL
MEETING OR ANY ADJOURNMENT THEREOF. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR
TO THE MEETING BY WRITTEN NOTICE TO THE COMPANY, OR MAY BE WITHDRAWN AND YOU MAY
VOTE IN PERSON SHOULD YOU ATTEND THE ANNUAL MEETING.
See Reverse Side
<PAGE>
/ / PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
XXXX
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ITEMS 1 AND 2.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. To approve and adopt the Agreement / / / / / /
and Plan of Merger, dated October 3,
1999, between Summit Bancorp. and
NMBT Corp. and the transactions
contemplated thereby, including the
merger of NMBT Corp. with and into
Summit Bancorp.
2. To approve an adjournment of the / / / / / /
Special Meeting in advance of voting
on the Merger Agreement in the event
there are not sufficient votes to
constitute a quorum or to approve
the Merger Agreement at the
scheduled time, in order to permit
further solicitation of proxies.
3. To transact such other business as
may properly be brought before the
Special Meeting or any adjournments
thereof.
Please check here if you plan on / /
attending the special meeting.
- --------------------------------------------------------------------------------
Please sign exactly as name appears hereon. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If more
than one name is shown, including the case of joint tenants, each party should
sign. Proxies executed by a corporation or partnership should be signed in the
corporate or partnership name by a duly authorized officer or partner.
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope.
2000
- --------------------------------------------------------------------------------
(Signature) (title) Date
- --------------------------------------------------------------------------------
(Signature if held jointly)
ADVEST, INC.
A Subsidiary of The Advest Group Inc. INVESTMENT BANKING
Serving Investors Since 1898 One Rockefeller Plaza
New York, NY 10020
Tel: (212) 584-4270
Fax: (212) 584-4292
Consent of Advest, Inc.
We hereby consent to the inclusion of its fairness opinion and a summary thereof
in the Registration Statement on Form S-4 of Summit Bancorp ("Summit") relating
to the proposed merger of NMBT Corp ("NMBT") into Summit, of our opinion,
appearing as Appendix B to the Proxy Statement/Prospectus which is part of the
Registration Statement, and to the reference of our firm name therein. In giving
such consent, we do not thereby admit that we come within the category of person
whose consent is required under Section 7 or Section 11 of the Securities Act of
1933, as amended, or the rules and regulations adopted by the Securities and
Exchange Commission thereunder, nor do we admit that we are experts with respect
to any part of such Registration Statement within the meaning of the term
"experts" as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities Exchange Commission thereunder.
Very truly yours,
ADVEST, INC.
By: /s/ Stephen Gilhooly
--------------------
Stephen Gilhooly
Director
New York, NY
January 28, 2000
