SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported) - June 13, 1995
GARDEN STATE BANCSHARES, INC.
(Exact Name of Registrant as Specified in Charter)
NEW JERSEY
(State or Other Jurisdiction of Incorporation)
0-13108 22-2549534
(Commission File Number) (IRS Employer Identification No.)
2290 West County Line Road, Jackson, New Jersey 08527
(Address of Principal Executive Offices)
(908) 905-2200
(Registrant's Telephone Number)
<PAGE>
Item 5. Other Events
On June 14, 1995 Garden State BancShares, Inc. ("GSB")
announced that it has signed a definitive merger agreement with The
Summit Bancorporation ("Summit"), pursuant to which GSB will be
acquired in a tax-free, stock-for-stock merger. Pursuant to the
merger, each of the outstanding shares of GSB common stock will be
exchanged for 1.08 shares of Summit common stock. GSB will be
merged into Summit and GSB's wholly-owned subsidiary, Garden State
Bank will be merged with Summit's wholly-owned subsidiary, Summit
Bank. Additionally, GSB has the option, and is expected, to
declare common dividends between June 13, 1995 and closing
equivalent to what GSB shareholders would have received if the
merger had closed on June 13, 1995.
The acquisition is conditioned upon necessary bank
regulatory approvals, the approval of GSB's shareholders, the
receipt by GSB of updated fairness opinions from its financial
advisor, Advest, Inc. on a date shortly before mailing the proxy
statement to GSB shareholders in connection with the transaction
and at the closing of the transaction, and other customary
conditions. The parties anticipate that the merger will be
consummated in the last quarter of 1995.
In connection with the merger agreement GSB also granted
Summit an option to acquire 752,770 shares of GSB common stock at
$15.75 per share under certain circumstances.
GSB is a bank holding company whose principal operating
subsidiary is Garden State Bank, a state-chartered commercial bank.
The corporate headquarters of GSB and the main office of Garden
State Bank are located at 2290 West County Line Road, Jackson, New
Jersey 08527. Garden State Bank is a commercial bank which
operates nine retail branches, eight of which are in Ocean County
and one in Monmouth County, New Jersey. As of March 31, 1995, GSB
had total assets of $316 million.
Summit is a $5.5 billion asset bank holding company with
90 retail banking offices in Bergen, Essex, Hunterdon, Mercer,
Middlesex, Monmouth, Ocean, Somerset, Union and Warren Counties in
New Jersey.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) Exhibits
2(a) Merger Agreement, dated June 13, 1995, between The
Summit Bancorporation and United Counties Bancorporation.
2(b) Stock Option Agreement, dated June 13, 1995,
between The Summit Bancorporation and Garden State
BancShares, Inc.
99 Joint Press Release of The Summit Bancorporation
and Garden State BancShares, Inc. dated June 14, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
GARDEN STATE BANCSHARES, INC.
Dated : June 27, 1995 By: THEODORE D. BESSLER
___________________
Theodore D. Bessler,
President and Chief
Executive Officer
<PAGE>
EXHIBIT INDEX
PAGE
Exhibit 2(a) Merger Agreement, dated June 13, 1995,
between The Summit Bancorporation and
Garden State BancShares, Inc.
Exhibit 2(b) Stock Option Agreement, dated June 13,
1995, between The Summit Bancorporation
and Garden State BancShares, Inc.
Exhibit 99 Joint Press Release of The Summit
Bancorporation and Garden State
BancShares, Inc. dated June 14, 1995
Exhibit 2(a) Merger Agreement, dated June 13, 1995,
between The Summit Bancorporation and
Garden State BancShares, Inc.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 13,
1995 ("Agreement"), is among THE SUMMIT BANCORPORATION, a New
Jersey corporation and registered bank holding company ("Summit"),
SUMMIT BANK, a bank chartered under the laws of the State of New
Jersey ("Summit Bank"), GARDEN STATE BANCSHARES, INC., a New Jersey
corporation and registered bank holding company ("Garden State")
and GARDEN STATE BANK, a bank chartered under the laws of the State
of New Jersey (the "Bank").
Summit desires to acquire Garden State and Garden State's
Board of Directors has determined, based upon the terms and
conditions hereinafter set forth, that the acquisition is in the
best interests of Garden State and its stockholders. The
acquisition will be accomplished by merging Garden State into
Summit with Summit as the surviving corporation and, at the same
time, merging Summit Bank into the Bank with the Bank as the
surviving bank, and Garden State shareholders receiving the
consideration hereinafter set forth. The Boards of Directors of
Garden State, Summit, the Bank and Summit Bank have duly adopted
and approved this Agreement and the Board of Directors of Garden
State has directed that it be submitted to its shareholders for
approval.
As a condition precedent to entering into this Agreement,
Summit has required that Garden State grant it an option on 752,770
shares of Garden State's authorized but unissued shares and, as a
consequence, Garden State and Summit have simultaneously entered
into a Stock Option Agreement, dated the date hereof (the "Summit
Stock Option").
Accordingly, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. THE MERGER. Subject to the terms and conditions of
this Agreement, at the Effective Time (as hereafter defined),
Garden State shall be merged with and into Summit (the "Merger") in
accordance with the New Jersey Business Corporation Act and Summit
shall be the surviving corporation (the "Surviving Corporation").
Immediately following the Effective Time, Summit Bank shall be
merged with and into the Bank as provided in Section 1.7 hereof.
1.2. EFFECT OF THE MERGER. At the Effective Time (as
hereafter defined), the Surviving Corporation shall be considered
the same business and corporate entity as each of Garden State and
Summit and thereupon and thereafter, all the property, rights,
powers and franchises of each of Garden State and Summit shall vest
in the Surviving Corporation and the Surviving Corporation shall be
subject to and be deemed to have assumed all of the debts,
liabilities, obligations and duties of each of Garden State and
Summit and shall have succeeded to all of each of their
relationships, fiduciary or otherwise, as fully and to the same
extent as if such property rights, privileges, powers, franchises,
debts, obligations, duties and relationships had been originally
acquired, incurred or entered into by the Surviving Corporation.
1.3. CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Summit as it exists immediately prior to the
Effective Time shall not be amended by the Merger, but shall
continue as the certificate of incorporation of the Surviving
Corporation until otherwise amended as provided by law.
1.4. BYLAWS. The bylaws of Summit as they exist
immediately prior to the Effective Date shall continue as the by-
laws of the Surviving Corporation until otherwise amended as
provided by law.
1.5. DIRECTORS AND OFFICERS. The directors and officers
of Summit as of the Effective Time shall continue as the directors
and officers of the Surviving Corporation until changed as provided
by Summit's certificate of incorporation and bylaws.
1.6. EFFECTIVE TIME AND CLOSING. The Merger shall
become effective (and be consummated) upon the filing of a
certificate of merger with the Secretary of State of the State of
New Jersey. The term "Effective Time" shall mean the date and time
when the Certificate of Merger is so filed. A closing (the
"Closing") shall take place prior to the Effective Time at 10:00
a.m., on a date to be specified by the parties, which is at least
10 business days, but no more than 30 business days, following the
receipt of all necessary regulatory and governmental approvals and
consents and the expiration of all statutory waiting periods in
respect thereof and the satisfaction or waiver of the conditions to
the consummation of the Merger specified in Article VI hereof
(other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing), at the
office of Bourne, Noll & Kenyon, or at such other place, time or
date as Summit and Garden State may mutually agree upon.
Immediately following the Closing, a Certificate of Merger shall be
filed with the New Jersey Secretary of State.
1.7. THE BANK MERGER. Immediately following the
Effective Time, Summit Bank shall be merged with and into the Bank
(the "Bank Merger") in accordance with the provisions of the New
Jersey Banking Act of 1948, as amended, and the Bank shall be the
surviving bank (the "Surviving Bank"). Upon the consummation of
the Bank Merger, the separate existence of Summit Bank shall cease
and the Surviving Bank shall be considered the same business and
corporate entity as each of the Bank and Summit Bank and all of the
property, rights, powers and franchises of each of the Bank and
Summit Bank shall vest in the Surviving Bank and the Surviving Bank
shall be deemed to have assumed all of the debts, liabilities,
obligations and duties of each of the Bank and Summit Bank and
shall have succeeded to all of each of their relationships,
fiduciary or otherwise, as fully and to the same extent as if such
property rights, privileges, powers, franchises, debts,
obligations, duties and relationships had been originally acquired,
incurred or entered into by the Surviving Bank. Upon the
consummation of the Bank Merger, the articles of association and
by-laws of Summit Bank shall become the articles of association and
by-laws of the Surviving Bank and the officers and directors of
Summit Bank shall be the officers and directors of the Surviving
Bank with such additions from the officers of the Bank as Summit
Bank's Board of Directors shall specify. In connection with the
execution of this Agreement, the Bank and Summit Bank shall execute
and deliver a separate merger agreement (the "Bank Merger
Agreement") in the form of Appendix A, annexed hereto, for delivery
to the FDIC (as hereafter defined) and the Commissioner (as
hereafter defined) for approval of the Bank Merger.
ARTICLE II
CONVERSION OF GARDEN STATE SHARES
2.1. CONVERSION OF GARDEN STATE SHARES AND OPTIONS.
Each share of common stock, no par value, of Garden State ("Garden
State Common Stock"), issued and outstanding immediately prior to
the Effective Time, and each validly outstanding option to purchase
Garden State Common Stock, shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted,
paid or cancelled as follows:
(a) GARDEN STATE COMMON STOCK. Each share of Garden
State Common Stock shall be converted into and represent the right
to receive 1.08 (the "Exchange Ratio") shares of Summit's common
stock, no par value ("Summit Common Stock"), subject to adjustments
as set forth in this subsection 2.1(a).
(i) The Exchange Ratio and the Average Closing
Price (as hereafter defined) shall be appropriately adjusted for
any stock split, stock dividend, stock combination,
reclassification or similar transaction ("Capital Change") effected
by Summit with respect to Summit Common Stock between the date
hereof and the Effective Date. The parties shall mutually agree
upon such adjustment in writing or, if unable to agree, shall
arbitrate the dispute, using a mutually agreed upon arbitrator
whose decision shall be final and non-appealable.
(ii) No fractional shares of Summit Common Stock
will be issued, and in lieu thereof, each holder of Garden State
Common Stock who would otherwise be entitled to a fractional
interest will receive an amount in cash determined by multiplying
such fractional interest by the Average Closing Price (as hereafter
defined).
(iii) The "Average Closing Price" shall mean the
average price of Summit Common Stock calculated based upon the
closing price during the first 20 of the 25 consecutive trading
days immediately preceding the Closing. The Average Closing Price
shall be determined by (x) first, recording the closing price (the
"Daily Price") of Summit Common Stock reported on the NASDAQ
National Market System and published in THE WALL STREET JOURNAL
during the first 20 of the 25 consecutive trading days immediately
preceding the Closing; and (y) second, computing the average of the
Daily Prices in the 20 day period.
(iv) The Exchange Ratio may be adjusted upward by
Summit as specified in Section 7.1(h) of this Agreement.
(b) GARDEN STATE STOCK OPTIONS. At the Effective Time,
each outstanding option to purchase Garden State Common Stock (a
"Garden State Option") granted under the Stock Option Plans of
Garden State (the "Garden State Option Plans") shall be converted,
at the election of the holder of such Garden State Option (an
"optionee"), as follows:
(i) into an option to purchase Summit Common Stock,
wherein (x) the right to purchase shares of Garden State Common
Stock pursuant to the Garden State Option shall be converted into
the right to purchase that same number of shares of Summit Common
Stock multiplied by the Exchange Ratio, (y) the option exercise
price per share of Summit Common Stock shall be the previous option
exercise price per share of the Garden State Common Stock divided
by the Exchange Ratio and (z) in all other material respects the
option shall be subject to the same terms and conditions as
governed the Garden State Option on which it was based, including
without limitation the remaining length of time within which the
option may be exercised; or
(ii) if the Garden State Option is fully exercisable
at the Closing, into the right to receive immediately after the
Effective Time a number of whole shares of Summit Common Stock
equal to the positive number (or zero, if the result is negative)
determined by (x) subtracting (i) the aggregate exercise price for
the Garden State Option from (ii) the product determined by
multiplying (A) the number of shares of Garden State Common Stock
covered by the Garden State Option, times (B) the Exchange Ratio,
times (C) the Average Closing Price, and (y) dividing the resulting
number by the Average Closing Price. No fractional shares of
Summit Common Stock shall be issued pursuant to this Section
2.1(b)(ii), and in lieu thereof, each optionee who would otherwise
be entitled to a fractional interest will receive an amount in cash
determined by multiplying such fractional interest by the Average
Closing Price.
2.2. EXCHANGE OF SHARES.
(a) Garden State and Summit shall appoint, at Summit's
option, either Summit Bank's Trust Department, or Summit's then
existing transfer agent as the exchange agent (the "Exchange
Agent") for purposes of effecting the conversion of Garden State
Common Stock and the Garden State Options. As soon as practicable
after the Effective Time, the Exchange Agent shall mail to each
holder of record (a "Record Holder") of a certificate or
certificates which, immediately prior to the Effective Time
represented outstanding shares of Garden State Common Stock (the
"Certificates"), a mutually agreed upon letter of transmittal
(which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Exchange Agent), and instructions for
use in effecting the surrender of the Certificates in exchange for
Summit Common Stock (and cash in lieu of fractional shares) as
provided in Section 2.1. Upon surrender of a Certificate for
exchange and cancellation to the Exchange Agent, together with such
letter of transmittal, duly executed, the Record Holder shall be
entitled to promptly receive in exchange for such Certificate the
consideration as provided in Section 2.1 hereof and the
Certificates so surrendered shall be cancelled. The Exchange Agent
shall not be obligated to deliver or cause to be delivered to any
Record Holder the consideration to which such Record Holder would
otherwise be entitled until such Record Holder surrenders the
Certificate for exchange or, in default thereof, an appropriate
Affidavit of Loss and Indemnity Agreement and/or a bond as may be
reasonably required in each case by Summit. Notwithstanding the
time of surrender of the Certificates, Record Holders shall be
deemed shareholders of Summit for all purposes from the Effective
Time, except that Summit shall withhold the payment of dividends
from any Record Holder until such Record Holder effects the
exchange of Certificates for Summit Common Stock. (Such Record
Holder shall receive such withheld dividends, without interest,
upon effecting the share exchange.) Ten days prior to Closing,
Summit shall distribute option election forms to each optionee with
respect to outstanding Garden State Options and, upon receipt from
the optionee of a properly completed option election, shall after
the Effective Time distribute to the optionee Summit Common Stock
or an amendment to the option grant evidencing the conversion of
the grant to an option to purchase Summit Common Stock in
accordance with Section 2.1 hereof.
(b) After the Effective Time, there shall be no
transfers on the stock transfer books of Garden State of the shares
of Garden State Common Stock which were outstanding immediately
prior to the Effective Time and, if any Certificates representing
such shares are presented for transfer, they shall be cancelled and
exchanged for the Merger consideration.
(c) If payment of the consideration pursuant to Section
2.1 hereof is to be made in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it
shall be a condition of such payment that the Certificate so
surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form
for transfer, and that the person requesting such payment shall pay
to the Exchange Agent in advance any transfer or other taxes
required by reason of the payment to a person other than that of
the registered holder of the Certificate surrendered, or required
for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
2.3. SUMMIT SHARES. The shares of Summit Common Stock
outstanding at the Effective Time shall not be affected by the
Merger, but along with the additional shares of Summit Common Stock
to be issued as provided in Section 2.1 hereof, shall become the
outstanding common stock of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GARDEN STATE
References herein to "Garden State Disclosure Schedule"
shall mean all of the disclosure schedules required by this Article
III, dated as of the date hereof and referenced to the specific
sections and subsections of Article III of this Agreement, which
have been delivered on the date hereof by Garden State to Summit.
Garden State hereby represents and warrants to Summit as follows:
3.1. CORPORATE ORGANIZATION.
(a) Garden State is a corporation duly organized,
validly existing and in good standing under the laws of the State
of New Jersey. Garden State has the corporate power and authority
to own or lease all of its properties and assets and to carry on
its business as it is now being conducted and is duly licensed or
qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the business,
operations, assets or financial condition of Garden State on a
consolidated basis. Garden State is registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended
("BHCA").
(b) Each of the Subsidiaries of Garden State are listed
in the Garden State Disclosure Schedule. The term "Subsidiary",
when used in this Agreement with respect to Garden State, means any
corporation, joint venture, association, partnership, trust or
other entity in which Garden State has, directly or indirectly, at
least a 25% beneficial interest, acts as a general partner or
otherwise has a beneficial controlling interest. Each Subsidiary
of Garden State is duly organized, validly existing and in good
standing under the laws of its state of incorporation. The Bank is
a New Jersey bank whose deposits are insured by the Bank Insurance
Fund of the Federal Deposit Insurance Corporation ("FDIC") to the
fullest extent permitted by law. Each Subsidiary of Garden State
has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now
being conducted and is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material
adverse effect on the business, operations, assets or financial
condition of Garden State and its Subsidiaries. The Garden State
Disclosure Schedule sets forth true and complete copies of the
Certificate of Incorporation and Bylaws of Garden State and each
Garden State Subsidiary as in effect on the date hereof. Except as
set forth in the Disclosure Schedule, Garden State does not own or
control, directly or indirectly, any equity interest in any
corporation, company, association, partnership, joint venture or
other entity and owns no real estate, except real estate used for
its banking premises.
3.2. CAPITALIZATION. The authorized capital stock of
Garden State consists of 4,088,091 shares of Garden State Common
Stock and 1,000,000 shares of preferred stock ("Garden State
Preferred Stock"). As of May 31, 1995, there were 3,043,658 shares
of Garden State Common Stock issued and outstanding and no shares
issued and held in the treasury. There are no shares of Garden
State Preferred Stock issued or outstanding. As of May 31, 1995,
there were 72,855 shares of Garden State Common Stock issuable upon
exercise of outstanding Garden State Options granted to officers
and employees of the Bank pursuant to the Garden State Option Plan.
The Garden State Disclosure Schedule sets forth true and complete
copies of the Garden State Option Plans and of each outstanding
Garden State Option. All issued and outstanding shares of Garden
State Common Stock, and all issued and outstanding shares of
capital stock of each Garden State Subsidiary, have been duly
authorized and validly issued, are fully paid, and nonassessable.
The authorized capital stock of the Bank consists of 1,000,000
shares of common stock, $5.00 par value. All of the outstanding
shares of capital stock of each Garden State Subsidiary are owned
by Garden State and are free and clear of any liens, encumbrances,
charges, restrictions or rights of third parties. Except for the
Garden State Options and the Summit Stock Option, neither Garden
State nor any Garden State Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, rights,
commitments or agreements of any character calling for the
transfer, purchase or issuance of any shares of capital stock of
Garden State or any Garden State Subsidiary or any securities
representing the right to purchase or otherwise receive any shares
of such capital stock or any securities convertible into or
representing the right to purchase or subscribe for any such
shares, and there are no agreements or understandings with respect
to voting of any such shares.
3.3. AUTHORITY; NO VIOLATION.
(a) Subject to the approval of this Agreement and the
transactions contemplated hereby by the stockholders of Garden
State, and subject to the parties obtaining all necessary
regulatory approvals, Garden State and the Bank have full corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with
the terms hereof. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been
duly and validly approved by the Boards of Directors of Garden
State and the Bank in accordance with their respective Certificates
of Incorporation and applicable laws and regulations. The
execution and delivery of the Bank Merger Agreement has been duly
and validly approved by the Board of Directors of the Bank in
accordance with the Certificate of Incorporation of the Bank and
applicable laws and regulations. Except for the approvals
described in paragraph (b) below, no other corporate proceedings on
the part of Garden State or the Bank are necessary to consummate
the transactions contemplated hereby (except for the approval by
Garden State of the Bank Merger Agreement). This Agreement has
been duly and validly executed and delivered by Garden State and
the Bank, and constitutes valid and binding obligations of Garden
State and the Bank, enforceable against Garden State and the Bank
in accordance with its terms.
(b) Neither the execution and delivery of this Agreement
by Garden State and the Bank, nor the consummation by Garden State
and the Bank of the transactions contemplated hereby in accordance
with the terms hereof, or compliance by Garden State and the Bank
with any of the terms or provisions hereof, will (i) violate any
provision of Garden State's or the Bank's Certificate of
Incorporation or other governing instrument or Bylaws,
(ii) assuming that the consents and approvals set forth below are
duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable
to Garden State or the Bank or any of their respective properties
or assets, or (iii) except as set forth in the Garden State
Disclosure Schedule, violate, conflict with, result in a breach of
any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default)
under, result in the termination of, accelerate the performance
required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective
properties or assets of Garden State or the Bank under, any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Garden State or the Bank is a
party, or by which either or both of them or any of their
respective properties or assets may be bound or affected except,
with respect to (ii) and (iii) above, such as individually and in
the aggregate will not have a material adverse effect on the
business, operations, assets or financial condition of Garden State
and its Subsidiaries on a consolidated basis, and which will not
prevent or delay the consummation of the transactions contemplated
hereby. Except for consents and approvals of or filings or
registrations with or notices to the FDIC, the Commissioner of
Banking of the State of New Jersey (the "Commissioner"), the Board
of Governors of the Federal Reserve System ("FRB"), the Securities
and Exchange Commission ("SEC"), applicable state securities
commissions, the Secretary of State of the State of New Jersey, and
the stockholders of Garden State, no consents or approvals of or
filings or registrations with or notices to any third party or any
public body or authority are necessary on behalf of Garden State or
the Bank in connection with (x) the execution and delivery by
Garden State and the Bank of this Agreement and (y) the
consummation by Garden State and the Bank of transactions
contemplated hereby and (z) the execution and delivery by the Bank
of the Bank Merger Agreement and the consummation by the Bank of
the transactions contemplated thereby.
3.4. FINANCIAL STATEMENTS.
(a) The Garden State Disclosure Schedule sets forth
copies of the consolidated statements of condition of Garden State
as of December 31, 1990, 1991, 1992, 1993 and 1994, and the related
consolidated statements of income, stockholders' equity and cash
flows for the periods ended December 31 in each of the five years
1990 through 1994, in each case accompanied by the audit report of
KPMG Peat Marwick LLP, independent public accountants with respect
to Garden State, and the unaudited consolidated statements of
condition and related consolidated statements of income,
stockholders' equity and cash flows of Garden State for the periods
ended March 31, 1994 and March 31, 1995, as filed with the SEC on
Form 10-Q (collectively, the "Garden State Financial Statements").
The Garden State Financial Statements (including the related notes)
have been prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, and
fairly present the consolidated financial condition of Garden State
and its Subsidiaries as of the respective dates set forth therein,
and the related consolidated statements of income, stockholders'
equity and cash flows fairly present the results of the
consolidated operations, stockholders' equity and cash flows of
Garden State and its Subsidiaries for the respective periods set
forth therein.
(b) The books and records of Garden State and its
Subsidiaries have been and are being maintained in material
compliance with applicable legal and accounting requirements, and
reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the Garden State Financial Statements
(including the notes thereto), as of March 31, 1995 neither Garden
State nor any of its Subsidiaries had any liabilities, whether
absolute, accrued, contingent or otherwise material to the
business, operations, assets or financial condition of Garden State
or any of its Subsidiaries. Since March 31, 1995 and to the date
hereof, neither Garden State nor any of its Subsidiaries have
incurred any liabilities except in the ordinary course of business
and consistent with prudent banking practice, except as
specifically contemplated by this Agreement.
3.5. BROKER'S AND OTHER FEES. Neither Garden State nor
any of its Subsidiaries nor any of their respective directors or
officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in
connection with any of the transactions contemplated by this
Agreement, except for Advest, Inc. ("Advest"). There are no fees
(other than time charges billed at usual and customary rates)
payable to any consultants, including lawyers and accountants, in
connection with this transaction or which would be triggered by
consummation of this transaction or the termination of the services
of such consultants by Garden State or any of its Subsidiaries
other than fees which will be payable by Garden State to Advest for
its fairness opinion. Copies of the agreements with Advest are set
forth in the Garden State Disclosure Schedule.
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) There has not been any material adverse change in
the business, operations, assets or financial condition of Garden
State and its Subsidiaries on a consolidated basis since March 31,
1995 and to the best of Garden State's knowledge, no facts or
conditions exist which Garden State believes will cause or is
likely to cause such a material adverse change in the future.
(b) Except as set forth in the Garden State Disclosure
Schedule, neither Garden State nor any of its Subsidiaries has
taken or permitted any of the actions set forth in Section 5.2
hereof between March 31, 1995 and the date hereof and Garden State
and the Garden State Subsidiaries have conducted their business
only in the ordinary course, consistent with past practice.
3.7. LEGAL PROCEEDINGS. Except as disclosed in the
Garden State Disclosure Schedule, neither Garden State nor any of
its Subsidiaries nor any of the directors or officers of Garden
State or of its Subsidiaries, in such person's capacity as a
director or officer, is a party to any, and there are no pending
or, to the best of Garden State's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or
governmental investigations of any nature against Garden State, any
of its Subsidiaries or any director or officer of any such entity
in such person's capacity as a director or officer. Except as
disclosed in the Garden State Disclosure Schedule, neither Garden
State nor any of its Subsidiaries nor any of the directors or
officers of Garden State or of its Subsidiaries, in such person's
capacity as a director or officer, is a party to any order,
judgment or decree entered against Garden State or any Garden State
Subsidiary or any of the directors or officers of Garden State or
of its Subsidiaries, in such person's capacity as a director or
officer, in any lawsuit or proceeding.
3.8. TAXES AND TAX RETURNS.
(a) Garden State and each Garden State Subsidiary have
timely filed (and until the Effective Time will so file) all
returns, declarations, reports, information returns and statements
("Returns") required to be filed by them in respect of any federal,
state and local taxes (including withholding taxes, penalties or
other payments required) and each has duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other
than taxes or other charges which are being contested in good faith
(and disclosed to Summit in writing). Garden State and each Garden
State Subsidiary have established (and until the Effective Time
will establish) on their books and records reserves that are
adequate for the payment of all federal, state and local taxes not
yet due and payable, but are incurred in respect of Garden State or
any Garden State Subsidiary through such date. The federal income
tax returns of Garden State and its Subsidiaries have not been
examined by the Internal Revenue Service (the "IRS"). The federal
income tax returns of Garden State and its Subsidiaries for those
years as to which the applicable statute of limitations has expired
are closed to examination due to the expiration of the applicable
statute of limitations. Except as set forth in the Garden State
Disclosure Schedule, the applicable state income tax returns of
Garden State and its Subsidiaries have been examined by the
applicable authorities (or are closed to examination due to the
expiration of the statute of limitations) and no deficiencies were
asserted as a result of such examinations which have not been
resolved and paid in full. To the best knowledge of Garden State,
there are no audits or other administrative or court proceedings
presently pending nor any other disputes pending, or claims
asserted for, taxes or assessments upon Garden State or any of its
Subsidiaries, nor has Garden State or any of its Subsidiaries given
any currently outstanding waivers or comparable consents regarding
the application of the statute of limitations with respect to any
taxes or tax Returns.
(b) Except as set forth in the Garden State Disclosure
Schedule, neither Garden State nor any of its Subsidiaries (i) has
requested any extension of time within which to file any tax Return
which Return has not since been filed, (ii) is a party to any
agreement providing for the allocation or sharing of taxes, (iii)
is required to include in income any adjustment pursuant to Section
481(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), by reason of a voluntary change in accounting method
initiated by Garden State or any Garden State Subsidiary (nor does
Garden State have any knowledge that the IRS has proposed any such
adjustment or change of accounting method) or (iv) has filed a
consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply.
3.9. EMPLOYEE BENEFIT PLANS.
(a) Except as disclosed in the Garden State Disclosure
Schedule, neither Garden State nor any of its Subsidiaries
maintains or contributes to any "employee pension benefit plan",
within the meaning of Section 3(2)(A) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (the "Garden
State Pension Plans"), "employee welfare benefit plan", within the
meaning of Section 3(1) of ERISA (the "Garden State Welfare
Plans"), stock option plan, stock purchase plan, deferred
compensation plan, severance plan, bonus plan, employment agreement
or other similar plan, program or arrangement. Neither Garden
State nor any of its Subsidiaries has, since September 2, 1974,
contributed to any "Multiemployer Plan", within the meaning of
Sections 3(37) and 4001(a)(3) of ERISA.
(b) Garden State has delivered to Summit a complete and
accurate copy of each of the following with respect to each of the
Garden State Pension Plans and Garden State Welfare Plans: (1)
plan document, summary plan description, and summary of material
modifications (if not available, a detailed description of the
foregoing); (ii) trust agreement or insurance contract, if any;
(iii) most recent IRS determination letter, if any; (iv) most
recent actuarial report, if any; and (v) most recent annual report
on Form 5500.
(c) The present value of all accrued benefits under each
of the Garden State Pension Plans subject to Title IV of ERISA,
based upon the actuarial assumptions used for purposes of the most
recent actuarial valuation prepared by such Pension Plan's actuary,
did not exceed the then current value of the assets of such plans
allocable to such accrued benefits.
(d) During the last five years, the Pension Benefit
Guaranty Corporation has not asserted any claim for liability
against Garden State or any of its Subsidiaries which has not been
paid in full.
(e) All premiums (and interest charges and penalties for
late payment, if applicable) due to the Pension Benefit Guaranty
Corporation (the "PBGC") with respect to each Garden State Pension
Plan have been paid. All contributions required to be made to each
Garden State Pension Plan under the terms thereof, ERISA or other
applicable law have been timely made, and all amounts properly
accrued to date as liabilities of Garden State and its Subsidiaries
which have not been paid have been properly recorded on the books
of Garden State and its Subsidiaries.
(f) Each of the Garden State Pension Plans, the Garden
State Welfare Plans and each other plan and arrangement identified
on the Garden State Disclosure Schedule has been operated in
compliance in all material respects with the provisions of ERISA,
the Code, all regulations, rulings and announcements promulgated or
issued thereunder, and all other applicable governmental laws and
regulations. Furthermore, the IRS has issued a favorable
determination letter with respect to each of the Garden State
Pension Plans and, except as disclosed in the Garden State
Disclosure Schedule, Garden State is not aware of any fact or
circumstance which would disqualify either plan, that could not be
retroactively corrected (in accordance with the procedures of the
IRS).
(g) To the best knowledge of Garden State, no non-exempt
prohibited transaction, within the meaning of Section 4975 of the
Code or 406 of ERISA, has occurred with respect to any of the
Garden State Welfare Plans or Garden State Pension Plans.
(h) No Garden State Pension Plan or any trust created
thereunder has been terminated, nor have there been any "reportable
events", within the meaning of Section 4034(b) of ERISA, with
respect to any of the Garden State Pension Plans.
(i) No "accumulated funding deficiency", within the
meaning of Section 412 of the Code, has been incurred with respect
to any of the Garden State Pension Plans.
(j) Except as disclosed in the Garden State Disclosure
Schedule, there are no pending, or, to the best knowledge of Garden
State, threatened or anticipated claims (other than routine claims
for benefits) by, on behalf of or against any of the Garden State
Pension Plans or the Garden State Welfare Plans, any trusts related
thereto or any other plan or arrangement identified in the Garden
State Disclosure Schedule.
(k) Except as disclosed in the Garden State Disclosure
Schedule, no Garden State Pension or Welfare Plan provides medical
or death benefits (whether or not insured) beyond an employee's
retirement or other termination of service, other than (i) coverage
mandated by law, or (ii) death benefits under any Garden State
Pension Plan.
(l) Except as disclosed in the Garden State Disclosure
Schedule, there are no material unfunded benefits obligations which
are not covered by insurance or accounted for by reserves shown on
the financial statements and established under generally accepted
accounting principles, or otherwise noted on such financial
statements.
(m) With respect to each Garden State Pension and
Welfare Plan that is funded wholly or partially through an
insurance policy, there will be no liability of Garden State or any
Garden State Subsidiary as of the Effective Time under any such
insurance policy or ancillary agreement with respect to such
insurance policy in the nature of a retroactive rate adjustment,
loss sharing arrangement or other actual or contingent liability
arising wholly or partially out of events occurring prior to the
Effective Time.
(n) Except as set forth in the employment agreements and
the severance plan contained in the Garden State Disclosure
Schedule or hereafter agreed to by Summit in writing, the
consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee of Garden State
or any Garden State Subsidiary to severance pay or any similar
payment, or (ii) accelerate the time of payment, vesting, or
increase the amount, of any compensation due to any current
employee or former employee under any Garden State Pension or
Welfare Plan.
3.10. REPORTS.
(a) Garden State has made available to Summit (or, with
respect to documents filed subsequent to the date of this
Agreement, will make available to Summit) a true and complete copy
of each report, schedule, registration statement and definitive
proxy statement filed by Garden State with the SEC since January 1,
1990 (such documents, as amended since the time of their filing,
being referred to herein as the "Garden State SEC Documents"),
which are all the documents (other than preliminary material) that
Garden State was required to file with the SEC since such date. As
of their respective dates, the Garden State SEC Documents complied
or will comply in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act") or
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Garden State SEC Documents, and none
of the Garden State SEC Documents contained or will contain any
untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading; provided that disclosures as
of a later date shall be deemed to modify disclosures as of an
earlier date. The financial statements of Garden State included in
the Garden State SEC Documents filed and to be filed subsequent to
March 31, 1995 comply and will comply in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been and will be
prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in
the case of unaudited statements, as permitted by Form 10-Q of the
SEC) and fairly present and will fairly present (subject, in the
case of the unaudited statements, to recurring audit adjustments
normal in nature and amount) the consolidated financial position of
Garden State as at the dates thereof and the consolidated results
of its operations and cash flows or changes in financial position
for the periods then ended.
(b) Garden State and the Bank have, since January 1,
1990, duly filed with the FDIC and the FRB in correct form the
monthly, quarterly and annual reports required to be filed under
applicable laws and regulations, and Garden State promptly will
deliver or make available to Summit accurate and complete copies of
such reports. The Garden State Disclosure Schedule lists all
examinations of Garden State or the Bank conducted by either the
New Jersey Department of Banking, FDIC or the FRB since January 1,
1990 and the dates of any responses thereto submitted by Garden
State or the Bank.
3.11. GARDEN STATE AND BANK INFORMATION. The
information relating to Garden State and the Bank to be contained
in the Proxy Statement/Prospectus (as defined in Section 5.6(a)
hereof) to be delivered to stockholders of Garden State in
connection with the solicitation of their approval of this
Agreement and the transactions contemplated hereby, as of the date
the Proxy Statement/Prospectus is mailed to stockholders of Garden
State, and up to and including the date of the meeting of
stockholders to which such Proxy Statement/Prospectus relates, will
not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
3.12. COMPLIANCE WITH APPLICABLE LAW.
(a) GENERAL. Except as set forth in the Garden State
Disclosure Schedule, each of Garden State and the Garden State
Subsidiaries hold all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of its business
under and pursuant to each, and has complied with and is not in
default in any respect under any, applicable law, statute, order,
rule, regulation, policy and/or guideline of any federal, state or
local governmental authority relating to Garden State or the Bank
(other than where such defaults or non-compliances will not, alone
or in the aggregate, result in a material adverse effect on the
business, operations, assets or financial condition of Garden State
and its Subsidiaries on a consolidated basis) and Garden State has
not received notice of violation of, and does not know of any
violations of, any of the above.
(b) CRA. Except as disclosed in the Garden State
Disclosure Schedule, neither Garden State nor the Bank has (i)
received within the preceding 24 months a rating pursuant to the
requirements of the Federal Community Reinvestment Act of 1977, as
amended (12 U.S.C. Sections 2901-2907) of either "needs to improve" or
"substantial noncompliance" pursuant to 12 U.S.C. Sections 2906(b)(2)(C)
and (D), nor has either of them been advised that such a rating is
forthcoming, respectively, indicating that the Bank does not have
an acceptable record of meeting the credit needs of its entire
community, including low-and moderate-income neighborhoods,
consistent with the safe and sound operation of such institution,
nor (ii) has an application submitted by Garden State or the Bank
to the appropriate federal regulatory agency, which application
involves an assessment of the performance of Garden State or the
Bank in meeting the credit needs of its community or communities,
not been approved or has been delayed because of an unacceptable
record in meeting such credit needs.
3.13. CERTAIN CONTRACTS.
(a) Except as disclosed in the Garden State Disclosure
Schedule under this Section or Section 3.5, (i) neither Garden
State nor any Garden State Subsidiary is a party to or bound by any
contract or understanding (whether written or oral) with respect to
the employment or termination of any present or former officers,
employees, directors or consultants. The Garden State Disclosure
Schedule sets forth true and correct copies of all employment
agreements or termination agreements with officers, employees,
directors, or consultants to which Garden State or any Garden State
Subsidiary is a party.
(b) Except as disclosed in the Garden State Disclosure
Schedule, (i) as of the date of this Agreement, neither Garden
State nor any Garden State Subsidiary is a party to or bound by any
commitment, agreement or other instrument which is material to the
business operations, assets or financial condition of Garden State
and its Subsidiaries on a consolidated basis, (ii) no commitment,
agreement or other instrument to which Garden State or any Garden
State Subsidiary is a party or by which any of them is bound limits
the freedom of Garden State or any Garden State Subsidiary to
compete in any line of business or with any person, and (iii)
neither Garden State nor any Garden State Subsidiary is a party to
any collective bargaining agreement.
(c) Except as disclosed in the Garden State Disclosure
Schedule, neither Garden State nor any Garden State Subsidiary nor,
to the best knowledge of Garden State, any other party thereto, is
in default in any material respect under any material lease,
contract, mortgage, promissory note, deed of trust, loan or other
commitment or arrangement.
3.14. PROPERTIES AND INSURANCE.
(a) Garden State and its Subsidiaries have good and, as
to owned real property, marketable title to all material assets and
properties, whether real or personal, tangible or intangible,
reflected in Garden State's consolidated balance sheet as of March
31, 1995, or owned and acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of for
fair value in the ordinary course of business since March 31,
1995), subject to no encumbrances, liens, mortgages, security
interests or pledges, except (i) those items that secure
liabilities that are reflected in such balance sheet or the notes
thereto or incurred in the ordinary course of business after the
date of such balance sheet, (ii) statutory liens for amounts not
yet delinquent or which are being contested in good faith, (iii)
such encumbrances, liens, mortgages, security interests, pledges
and title imperfections that are not in the aggregate material to
the business, operations, assets, and financial condition of Garden
State and its Subsidiaries taken as a whole and (iv) with respect
to owned real property, title imperfections noted in title reports.
Garden State and its Subsidiaries as lessees have the right under
valid and subsisting leases to occupy, use, possess and control all
property leased by them in all material respects as presently
occupied, used, possessed and controlled by them.
(b) The Garden State Disclosure Schedule lists all
policies of insurance covering business operations and all
insurable properties and assets of Garden State and its
Subsidiaries showing all risks insured against, in each case under
valid, binding and enforceable policies or bonds, with such amounts
and such deductibles as are specified. As of the date hereof,
neither Garden State nor any of its Subsidiaries has received any
notice of cancellation or notice of a material amendment of any
such insurance policy or bond or is in default under such policy or
bond, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion. All pending
material claims under such policies or bonds are disclosed in the
Garden State Disclosure Schedule.
3.15. MINUTE BOOKS. The minute books of Garden State
and its Subsidiaries contain accurate records of all meetings and
other corporate action held of their respective stockholders and
Boards of Directors (including committees of their respective
Boards of Directors).
3.16. ENVIRONMENTAL MATTERS. Except as disclosed in the
Garden State Disclosure Schedule, neither Garden State nor any of
its Subsidiaries has received any written notice, citation, claim,
assessment, proposed assessment or demand for abatement alleging
that Garden State or any of its Subsidiaries (either directly or as
a successor-in-interest in connection with the enforcement of
remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or
clean-up of any condition material to the business, operations,
assets or financial condition of Garden State or its Subsidiaries.
Except as disclosed in the Garden State Disclosure Schedule, Garden
State has no knowledge that any toxic or hazardous substances or
materials have been emitted, generated, disposed of or stored on
any property owned or leased by Garden State or any of its
Subsidiaries in any manner that violates or, after the lapse of
time may violate, any presently existing federal, state or local
law or regulation governing or pertaining to such substances and
materials.
3.17. LOAN PORTFOLIO; RESERVES. With respect to each
loan owned by Garden State or its Subsidiaries in whole or in part,
the files maintained by Garden State or such Subsidiary with
respect to such loan completely and accurately reflect the
transactions relating to such loan in all material respects. As of
the date hereof, the reserve for loan and lease losses in the
Garden State Financial Statements for the period ending March 31,
1995 in the opinion of management of Garden State is adequate based
upon past loan loss experiences and potential losses in the current
portfolio to cover all known or anticipated loan losses.
3.18. NO PARACHUTE PAYMENTS. No officer, director,
employee or agent (or former officer, director, employee or agent)
of Garden State or any Garden State Subsidiary is entitled now, or
will or may be entitled to as a consequence of this Agreement or
the Merger, to any payment or benefit from Garden State, a Garden
State Subsidiary, Summit or Summit Bank which if paid or provided
would constitute an "excess parachute payment", as defined in
Section 280G of the Code or regulations promulgated thereunder.
3.19 DISCLOSURE. There are no facts concerning the
business, operations, assets or financial condition of Garden State
or its Subsidiaries which have not been disclosed to Summit which
could have a material adverse effect on the business, operations or
financial condition of Garden State or its Subsidiaries on a
consolidated basis. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements herein not misleading.
3.20 AGREEMENTS WITH BANK REGULATORS. Except as set
forth in the Garden State Disclosure Schedule, neither Garden State
nor any of its Subsidiaries is a party (or has been a party) to any
written agreement or memorandum of understanding with, or party to
any commitment letter or similar undertaking to, or is subject to
any order or directive by, any Federal or state Governmental Entity
charged with the supervision or regulation of savings and loan
associations, savings banks, banks, savings and loan holding
companies or bank holding companies or engaged in insurance of
savings bank or bank deposits ("Bank Regulators"), nor has Garden
State or any of its subsidiaries been advised by any Bank Regulator
that it is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order,
directive, written agreement, memorandum of understanding,
commitment letter or similar undertakings. Garden State knows of
no reason why any regulatory approvals required for the
consummation of the Merger or the Bank Merger should not be
obtained without the imposition of any pre- or post- Merger
condition or restriction upon Summit, Garden State or any of their
respective Subsidiaries which would materially adversely impact the
economic, business or financial benefits of the transactions
contemplated by this Agreement so as to render inadvisable, in the
reasonable judgment of the Board of Directors of Summit, the
consummation of the Merger (a "Burdensome Condition").
3.21 OWNERSHIP OF SUMMIT COMMON STOCK. Except as set
forth in the Garden State Disclosure Schedule, as of the date
hereof, neither Garden State nor any of its Subsidiaries
beneficially owns, directly or indirectly, or are parties to any
agreement, arrangement or understanding for the purpose of
beneficially acquiring, holding, voting or disposing of, any of the
outstanding shares of the capital stock of Summit entitled to vote
generally in the election of directors.
3.22 INVESTMENT SECURITIES. The Garden State Disclosure
Schedule sets forth the book and market value as of May 31, 1995 of
the investment securities, mortgage-backed securities and
securities held for sale of Garden State and its Subsidiaries as of
such date. The Garden State Disclosure Schedule sets forth an
investment securities report which includes security descriptions,
CUSIP or Agency Pool numbers, current pool face values, book
values, coupon rates, market values, book yields and weighted
average coupons, in each case as of May 31, 1995.
3.23 DERIVATIVE TRANSACTIONS. Since December 31, 1991,
neither Garden State nor any of its Subsidiaries has engaged in
transactions in or involving forwards, futures, options on futures,
swaps or other similar derivative instruments except (i) as agent
on the order and for the account of others, or (ii) as principal
for purposes of hedging interest rate risk on U.S.
dollar-denominated securities and other financial instruments.
None of the counterparties to any contract or agreement with
respect to any such instrument is in default with respect to such
contract or agreement and no such contract or agreement, were it to
be a loan or other extension of credit by Garden State or any of
its Subsidiaries, would be classified as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss",
"Classified", "Criticized", "Credit Risk Assets", "Concerned
Loans", or words of similar import. As of the date hereof, the
financial position of Garden State and its Subsidiaries on a
consolidated basis under or with respect to each such instrument
has been reflected in the books and records of Garden State and its
Subsidiaries in accordance with generally accepted accounting
principles consistently applied.
3.24 FAIRNESS OPINION. Garden State has received an
opinion from Advest to the effect that, in its opinion, the
consideration to be paid to stockholders of Garden State hereunder
is fair to such stockholders from a financial point of view.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SUMMIT
References herein to the "Summit Disclosure Schedule"
shall mean all of the disclosure schedules required by this Article
IV, dated as of the date hereof and referenced to the specific
sections and subsections of Article IV of this Agreement, which
have been delivered on the date hereof by Summit to Garden State.
Summit hereby represents and warrants to Garden State as follows:
4.1. CORPORATE ORGANIZATION.
(a) Summit is a corporation duly organized and validly
existing and in good standing under the laws of the State of New
Jersey. Summit has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or
location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure
to be so licensed, qualified or in good standing would not have a
material adverse effect on the business, operations, assets or
financial condition of Summit or its Subsidiaries (defined below).
Summit is registered as a bank holding company under the BHCA.
(b) Each of the Subsidiaries of Summit are listed in the
Summit Disclosure Schedule. The term "Subsidiary" when used in
this Agreement with reference to Summit, means any corporation,
joint venture, association, partnership, trust or other entity in
which Summit has, directly or indirectly, at least a 50% interest
or acts as a general partner. Each Subsidiary of Summit is duly
organized and validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Summit Bank is a bank
chartered under the laws of New Jersey whose deposits are insured
by the Bank Insurance Fund of the FDIC to the fullest extent
permitted by law. Each Subsidiary of Summit has the corporate
power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted
and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or
in good standing would not have a material adverse effect on the
business, operations, assets or financial condition of Summit and
its Subsidiaries.
4.2. CAPITALIZATION. (a) The authorized capital stock
of Summit consists of 50,000,000 shares of Summit Common Stock and
12,000,000 shares, no par value, of preferred stock (the "Summit
Preferred Stock"). As of May 31, 1995, (A) 33,642,538 shares of
Summit Common Stock were issued and outstanding, and 504,000 shares
of Adjustable Rate Cumulative Preferred Stock, no par value (the
"Cumulative Preferred Stock"), were issued and outstanding, (B) no
shares of Summit Common Stock were reserved for issuance except
that 1,879,648 shares of Summit Common Stock were reserved for
issuance pursuant to Summit's Employee Stock Purchase Plan dated
March 21, 1989 and its Stock Incentive Plans, as amended, and its
obligations under the Crestmont Financial Corp. Stock Compensation
Plan and 2,655,265 shares of Summit Common Stock were reserved for
issuance pursuant to Summit's Dividend Reinvestment and Stock
Purchase Plan (the "Summit Stock Plans"), (C) no shares of Summit
Preferred Stock were reserved for issuance except that 250,000
shares of Summit Series B Junior Participating Preferred Stock, no
par value (the "Summit Series B Preferred Stock"), were reserved
for issuance upon exercise of the rights (the "Summit Rights")
distributed to the holders of Summit Common Stock pursuant to the
Summit Rights Agreement, dated as of January 16, 1990, (the "Summit
Rights Agreement") and (D) no shares of Summit Common Stock were
held by Summit in its treasury or by its Subsidiaries except as set
forth below. In May, 1995 Summit's Board of Directors authorized
the purchase of up to 7% of the outstanding shares of Summit Common
Stock, or approximately 2.3 million shares of Summit Common Stock
(the "Repurchase Authorization"). As of May 31, 1995, Summit had
acquired approximately 84,000 shares of Summit Common Stock
pursuant to the Repurchase Authorization, which shares are held in
treasury by Summit.
(b) As of the date hereof, except for the Cumulative
Preferred Stock and except as set forth in this Agreement, the
Summit Stock Plans, the Summit Rights Agreement, the Summit 1995
Stock Incentive Plan and 1995 Directors Stock Option Plan, and
except in accordance with the Agreement and Plan of Merger between
Summit and Crestmont Financial Corp dated as of February 22, 1994,
neither Summit nor any of its Subsidiaries has or is bound by any
outstanding options, warrants, calls, rights, convertible
securities, commitments or agreements of any character obligating
Summit or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, any additional shares of
capital stock of Summit or of any of its Subsidiaries or obligating
Summit or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, right, convertible security,
commitment or agreement. As of the date hereof, except for the
Repurchase Authorization, there are no outstanding contractual
obligations of Summit or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of Summit
or any of its Subsidiaries.
(c) Since May 31, 1995, to and including the date of this
Agreement, no additional shares of Summit Common Stock have been
issued except in connection with exercises of options granted under
the Summit Stock Plans, the Summit 1995 Stock Incentive Plan and
1995 Directors Stock Option Plan. All issued and outstanding
shares of Summit Common Stock, and all issued and outstanding
shares of capital stock of Summit's Subsidiaries, have been duly
authorized and validly issued, are fully paid, nonassessable and
free of preemptive rights, and are free and clear of all liens,
encumbrances, charges, restrictions or rights of third parties.
All of the outstanding shares of capital stock of Summit's
Subsidiaries are owned by Summit free and clear of any liens,
encumbrances, charges, restrictions or rights of third parties.
4.3. AUTHORITY; NO VIOLATION.
(a) Summit and Summit Bank have full corporate power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly approved by the Board of Directors of Summit and Summit
Bank. No other corporate proceedings on the part of Summit and
Summit Bank are necessary to consummate the transactions
contemplated hereby (except for the approval by Summit of the Bank
Merger Agreement). This Agreement has been duly and validly
executed and delivered by Summit and Summit Bank and constitutes a
valid and binding obligation of Summit and Summit Bank, enforceable
against Summit and Summit Bank in accordance with its terms.
(b) Neither the execution or delivery of this Agreement
nor the consummation by Summit and Summit Bank of the transactions
contemplated hereby in accordance with the terms hereof, will (i)
violate any provision of the Certificate of Incorporation or Bylaws
of Summit or Summit Bank, (ii) assuming that the consents and
approvals set forth below are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Summit or Summit Bank or any of their
respective properties or assets, or (iii) violate, conflict with,
result in a breach of any provision of, constitute a default (or an
event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation
of any lien, security interest, charge or other encumbrance upon
any of the properties or assets of Summit or Summit Bank under, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Summit or Summit Bank is a party,
or by which Summit or Summit Bank or any of their properties or
assets may be bound or affected, except, with respect to (ii) and
(iii) above, such as in the aggregate will not have a material
adverse effect on the business, operations, assets or financial
condition of Summit and Summit's Subsidiaries on a consolidated
basis, or the ability of Summit and Summit Bank to consummate the
transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the
FDIC, the Commissioner, the FRB, the Secretary of State of New
Jersey, the SEC, or applicable state securities bureaus or
commissions, no consents or approvals of or filings or
registrations with or notices to any third party or any public body
or authority are necessary on behalf of Summit or Summit Bank in
connection with (a) the execution and delivery by Summit or Summit
Bank of this Agreement, (b) the consummation by Summit of the
Merger and the other transactions contemplated hereby and (c) the
execution and delivery by Summit Bank of the Bank Merger Agreement
and the consummation by Summit Bank of the Bank Merger and other
transactions contemplated thereby. To the best of Summit's
knowledge, no fact or condition exists which Summit has reason to
believe will prevent it or Summit Bank from obtaining the
aforementioned consents and approvals.
4.4. FINANCIAL STATEMENTS.
(a) Summit has previously delivered to Garden State
copies of the consolidated statements of financial condition of
Summit as of December 31, 19990, 1991, 1992, 1993 and 1994, the
related consolidated statements of income, changes in stockholders'
equity and of cash flows for the periods ended December 31 in each
of the three fiscal years 1990 through 1994, in each case
accompanied by the audit report of KPMG Peat Marwick LLP,
independent public accountants with respect to Summit, and the
unaudited consolidated statements of condition of Summit as of
March 31, 1995 and the related unaudited consolidated statements of
income, changes in stockholders' equity and cash flows for the
three months then ended as reported in Summit's Quarterly Reports
on Form 10-Q, filed with the SEC under the Exchange Act
(collectively, the "Summit Financial Statements"). The Summit
Financial Statements (including the related notes), have been
prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, and
fairly present the consolidated financial position of Summit as of
the respective dates set forth therein, and the related
consolidated statements of income, changes in stockholders' equity
and of cash flows (including the related notes, where applicable)
fairly present the results of the consolidated operations and
changes in stockholders' equity and of cash flows of Summit for the
respective fiscal periods set forth therein.
(b) The books and records of Summit have been and are
being maintained in material compliance with applicable legal and
accounting requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the Summit Financial Statements (including the
notes thereto), as of March 31, 1995 neither Summit nor any of its
Subsidiaries had or has, as the case may be, any obligation or
liability, whether absolute, accrued, contingent or otherwise,
material to the business, operations, assets or financial condition
of Summit or any of its Subsidiaries. Since March 31, 1995,
neither Summit nor any of its Subsidiaries have incurred any
liabilities, except in the ordinary course of business and
consistent with prudent banking practice.
4.5. BROKERAGE FEES. Except for fees to be paid to
Keefe, Bruyette & Woods, Inc., neither Summit nor Summit Bank nor
any of their respective directors or officers has employed any
broker or finder or incurred any liability for any broker's or
finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement.
4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. There has
not been any material adverse change in the business, operations,
assets or financial condition of Summit and Summit's Subsidiaries
on a consolidated basis since March 31, 1995 and to the best of
Summit's knowledge, no fact or condition exists which Summit
believes will cause or is likely to cause such a material adverse
change in the future.
4.7. SUMMIT INFORMATION. The information relating to
Summit, this Agreement and the transactions contemplated hereby in
the Registration Statement and Proxy Statement/Prospectus (as
defined in Section 5.6(a) hereof), as of the date of the mailing of
the Proxy Statement/Prospectus, and up to and including the date of
the meeting of stockholders of Garden State to which such Proxy
Statement/Prospectus relates, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.8. SUMMIT COMMON STOCK. At the Effective Time, the
Summit Common Stock to be issued pursuant to the terms of Section
2.1, when so issued, shall be duly authorized, validly issued,
fully paid, and non-assessable, free of preemptive rights and free
and clear of all liens, encumbrances or restrictions created by or
through Summit, with no personal liability attaching to the
ownership thereof.
4.9. LEGAL PROCEEDINGS. Except as disclosed in the
Summit Disclosure Schedule, neither Summit nor its Subsidiaries is
a party to any, and there are no material pending or, to the best
of Summit's knowledge, threatened, legal, administrative, arbitral
or other proceedings, claims, actions or governmental
investigations of any nature against Summit or any of its
Subsidiaries which, if decided adversely to Summit, or any of its
Subsidiaries, would have a material adverse effect on the business,
operations, assets or financial condition of Summit and its
Subsidiaries on a consolidated basis. Except as disclosed in the
Summit Disclosure Schedule, neither Summit nor any of Summit's
Subsidiaries is a party to any order, judgment or decree entered
against Summit or any such Subsidiary in any lawsuit or proceeding
which would have a material adverse effect on the business,
operations, assets or financial condition of Summit and its
Subsidiaries on a consolidated basis.
4.10. TAXES AND TAX RETURNS. Summit and its
Subsidiaries have duly filed (and until the Effective Time will so
file) all Returns required to be filed by them in respect of any
federal, state and local taxes (including withholding taxes,
penalties or other payments required) and have duly paid (and until
the Effective Time will so pay) all such taxes due and payable,
other than taxes or other charges which are being contested in good
faith. Summit and its Subsidiaries have established (and until the
Effective Time will establish) on their books and records reserves
that are adequate for the payment of all federal, state and local
taxes not yet due and payable, but are incurred in respect of
Summit and its Subsidiaries through such date. No deficiencies
exist or have been asserted based upon the federal income tax
returns of Summit and Summit Bank.
4.11. EMPLOYEE BENEFIT PLANS.
(a) Summit and its Subsidiaries maintain or contribute
to certain "employee pension benefit plans" (the "Summit Pension
Plans"), as such term is defined in Section 3 of ERISA, and
"employee welfare benefit plans" (the "Summit Welfare Plans"), as
such term is defined in Section 3 of ERISA. Since September 2,
1974, neither Summit nor its Subsidiaries have contributed to any
"Multiemployer Plan", as such term is defined in Section 3(37) of
ERISA.
(b) Each of the Summit Pension Plans and each of the
Summit Welfare Plans has been operated in compliance in all
material respects with the provisions of ERISA, the Code, all
regulations, rulings and announcements promulgated or issued
thereunder, and all other applicable governmental laws and
regulations.
4.12. REPORTS.
(a) Each communication mailed by Summit to its
stockholders since January 1, 1990, and each annual, quarterly or
special report, proxy statement or communication, as of its date,
complied in all material respects with all applicable statutes,
rules and regulations enforced or promulgated by the applicable
regulatory agency and did not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made,
not misleading; provided that disclosures as of a later date shall
be deemed to modify disclosures as of an earlier date.
(b) Summit and Summit Bank have, since January 1, 1990,
duly filed with the FDIC and the FRB in correct form the monthly,
quarterly and annual reports required to be filed under applicable
laws and regulations, and Summit, upon written request from Garden
State, promptly will deliver or make available to Garden State
accurate and complete copies of such reports.
4.13. COMPLIANCE WITH APPLICABLE LAW. Summit and its
Subsidiaries hold all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to each, and has complied with and is
not in default in any respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any federal,
state or local governmental authority relating to Summit and its
Subsidiaries (other than where such default or non-compliance will
not result in a material adverse effect on the business,
operations, assets or financial condition of Summit and its
Subsidiaries on a consolidated basis).
4.14. PROPERTIES AND INSURANCE.
(a) Summit and its Subsidiaries have good and, as to
owned real property, marketable title to all material assets and
properties, whether real or personal, tangible or intangible,
reflected in Summit's consolidated balance sheet as of December 31,
1994, or owned and acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of for
fair value in the ordinary course of business since December 31,
1994). Summit and its Subsidiaries as lessees have the right under
valid and subsisting leases to occupy, use, possess and control all
property leased by them in all material respects as presently
occupied, used, possessed and controlled by them.
(b) The business operations and all insurable properties
and assets of Summit and its Subsidiaries are insured for their
benefit against all risks which, in the reasonable judgment of the
management of Summit should be insured against, in each case under
valid, binding and enforceable policies or bonds, with such
deductibles and against such risks and losses as are in the opinion
of the management of Summit adequate for the business engaged in by
Summit and its Subsidiaries.
4.15. MINUTE BOOKS. The minute books of Summit and its
Subsidiaries contain accurate records of all meetings and other
corporate action held of their respective stockholders and Boards
of Directors (including committees of their respective Boards of
Directors).
4.16. ENVIRONMENTAL MATTERS. Except as disclosed in the
Summit Disclosure Schedule, neither Summit nor any of its
Subsidiaries has received any written notice, citation, claim,
assessment, proposed assessment or demand for abatement alleging
that Summit or any of its Subsidiaries (either directly or as a
successor-in-interest in connection with the enforcement of
remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or
clean-up of any condition material to the business, operations,
assets or financial condition of Summit or its Subsidiaries.
Except as disclosed in the Summit Disclosure Schedule, Summit has
no knowledge that any toxic or hazardous substances or materials
have been emitted, generated, disposed of or stored on any property
owned or leased by Summit or any of its Subsidiaries in any manner
that violates or, after the lapse of time may violate, any
presently existing federal, state or local law or regulation
governing or pertaining to such substances and materials, the
violation of which would have a material adverse effect on the
business, operations, assets or financial condition of Summit and
its Subsidiaries on a consolidated basis.
4.17. LOAN PORTFOLIO; RESERVES. With respect to each
loan owned by Summit or its Subsidiaries in whole or in part, the
files maintained by Summit or such Subsidiary with respect to such
loan completely and accurately reflect the transactions relating to
such loan in all material respects. As of the date hereof, the
reserve for loan and lease losses in the Summit Financial
Statements for the period ending March 31, 1995, in the opinion of
management of Summit is adequate based upon past loan loss
experiences and potential losses in the current portfolio to cover
all known or anticipated loan losses.
4.18. DISCLOSURES. Except for other acquisition
transactions which Summit may not yet have publicly disclosed,
there are no material facts concerning the business, operations,
assets or financial condition of Summit which could have a material
adverse effect on the business, operations or financial condition
of Summit which have not been disclosed to Garden State directly or
indirectly by access to any filing by Summit under the Exchange
Act. No representation or warranty contained in Article IV of this
Agreement contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements herein
not misleading.
ARTICLE V
COVENANTS OF THE PARTIES
5.1. CONDUCT OF THE BUSINESS OF GARDEN STATE. During
the period from the date of this Agreement to the Effective Time,
Garden State shall, and shall cause each of its Subsidiaries to,
conduct its respective business and engage in transactions
permitted hereunder only in the ordinary course and consistent with
prudent banking practice and past business practices of Garden
State, except with the prior written consent of Summit, which
consent will not be unreasonably withheld. Garden State also shall
use its best efforts to (i) preserve its business organization and
that of each Garden State Subsidiary intact, (ii) keep available to
itself the present services of its employees and those of its
Subsidiaries, provided that neither Garden State nor any of its
Subsidiaries shall be required to take any unreasonable or
extraordinary act or any action which would conflict with any other
term of this Agreement, and (iii) preserve for itself and Summit
the goodwill of its customers and those of its Subsidiaries and
others with whom business relationships exist.
5.2. NEGATIVE COVENANTS AND DIVIDEND COVENANTS.
(a) Garden State agrees that from the date hereof to the
Effective Time, except as otherwise approved by Summit in writing
or as permitted or required by this Agreement, it will not, nor
will it permit any of its Subsidiaries to:
(i) change its Certificate of Incorporation or Bylaws or
any similar governing documents in any manner;
(ii) except for the issuance of Garden State Common
Stock pursuant to the present terms of the outstanding Garden State
Options and the Summit Stock Option, change the number of shares of
its authorized or issued common or preferred stock or issue or
grant any option, warrant, call, commitment, subscription, right to
purchase or agreement of any character relating to the authorized
or issued capital stock of Garden State or any Garden State
Subsidiary or any securities convertible into shares of such stock,
or split, combine or reclassify any shares of its capital stock, or
declare, set aside or pay any dividend, or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock, or redeem or otherwise acquire any
shares of such capital stock; provided, however, from the date
hereof to the Effective Time, Garden State may declare, set aside
or pay cash dividends per share of Garden State Common Stock
equivalent to the cash dividends per share declared, set aside or
paid by Summit during such period multiplied by the Exchange Ratio.
(iii) grant any severance or termination pay (other than
pursuant to policies of Garden State in effect on the date hereof
and disclosed to Summit in the Garden State Disclosure Schedule or
as agreed to by Summit in writing) to, or enter into or amend any
employment agreement with, any of its directors, officers or
employees; adopt any new employee benefit plan or arrangement of
any type or amend any such existing benefit plan or arrangement; or
award any increase in compensation or benefits to its directors,
officers or employees except with respect to salary increases in
the ordinary course of business and consistent with past practices
and policies and except that Garden State may pay bonuses to its
officers in the fourth quarter of 1995 or the first quarter of 1996
in an amount not to exceed the amount set forth in the Garden State
Disclosure Schedule as the maximum amount which will be accrued for
bonuses with respect to 1995 following accrual practices consistent
with those currently in effect (the "Annual Bonus Maximum").
(iv) sell or dispose of any substantial amount of
assets; incur any significant liabilities other than in the
ordinary course of business consistent with past practices and
policies;
(v) make any capital expenditures outside of the
ordinary course of business other than pursuant to binding
commitments existing on the date hereof and other than expenditures
necessary to maintain existing assets in good repair;
(vi) file any applications or make any contract with
respect to branching or site location or relocation;
(vii) agree to acquire in any manner whatsoever (other
than to realize upon collateral for a defaulted loan) any business
or entity or a substantial amount of the assets of any business or
entity;
(viii) make any material change in its accounting
methods or practices, other than changes required in accordance
with generally accepted accounting principles;
(ix) take any action that is intended or may reasonably
be expected to result in any of its representations and warranties
set forth in this Agreement being or becoming untrue in any
material respect, or in any of the conditions to the Merger set
forth in Article VI not being satisfied, or in violation of any
provision of this Agreement, except, in every case, as may be
required by applicable law;
(x) take or cause to be taken any action which is
intended, or may reasonably be expected, to result in
disqualification of the Merger as a "pooling of interests" for
accounting purposes, provided, however, that nothing in this
paragraph (x) shall limit the ability of Summit to exercise its
rights under the Option Agreement;
(xi) take any action to grant "dissenters" rights except
as required by applicable law;
(xii) incur any indebtedness otherwise than in the
ordinary course of business;
(xiii) except pursuant to commitments in effect on the
date hereof, make any loan (other than an extension of, renewal of,
or substitution for, an existing loan which extension, substitution
or renewal does not increase the aggregate amount of credit
extended) (a "new loan") or any commitment to make a new loan, to
any of its officers, directors, or stockholders owning more than 5%
of the issued and outstanding Garden State Common Stock (or any
person or business entity controlled by or affiliated with such
officers, directors, or stockholders) other than in the ordinary
course of business;
(xiv) make any new loan, or increase the aggregate
amount of credit extended, to a borrower or group of affiliated
borrowers, or purchase any security, or make any other investment,
or commitment to do any of the foregoing, in an amount in excess of
$500,000, other than (A) pursuant to commitments in effect on the
date hereof and described in the Garden State Disclosure Schedule,
(B) in connection with liquidity management transactions entered
into in the ordinary course of business, or (C) with respect to the
purchase of securities or other obligations issued (or fully
guaranteed as to principal and interest) by the United States of
America or any agency thereof or which are rated "AAA" (or rating
equivalent thereto) by a nationally recognized bond rating agency
(as to (C) above, in each case securities purchased shall not have
unexpired terms as of the date of purchase in excess of five years,
except with respect to fixed rate mortgage-backed securities
covered by (C) above, as to which average maturities shall not
exceed four years, and adjustable rate securities covered by (C)
above, as to which average maturities shall not exceed six years);
(xv) sell or otherwise dispose of or encumber any shares
of capital stock of any Garden State Subsidiary;
(xvi) fail to keep in full force and effect insurance
and bonds at least equal in scope and amount of coverage of
insurance and bonds now carried;
(xvii) fail to notify Summit promptly of its receipt of
any letter, notice or other communication, whether written or oral,
from any governmental entity advising Garden State that it is
contemplating issuing, requiring, or requesting any agreement,
memorandum of understanding, or similar undertaking, order or
directive of the type referenced in Section 3.20 hereof;
(xviii) fail to use its best efforts to remain in
compliance with any capital or other operating requirement of any
regulatory agency to which it is subject;
(xix) fail to promptly notify Summit of (A) the
commencement or threat of any audit, action, or proceeding
involving any material amount of taxes against either Garden State
or any Subsidiary, or (B) the receipt of Garden State or any
Subsidiary of any deficiency or audit notices or reports in respect
of any material deficiencies asserted by any Federal, state, local
or other tax authorities.
(xx) agree to the extension of any statute or
limitations for making any assessments with respect to taxes,
except for extension granted in good faith in connection with
attempts to resolve existing disputes with taxing authorities;
(xxi) fail to use reasonable efforts to maintain and
keep its properties in as good repair and condition as at present,
except for depreciation due to ordinary wear and tear;
(xxii) fail to perform in all material respects all
obligations required to be performed by each of Garden State and
any Subsidiary under all material contracts, leases, and documents
relating to or affecting its assets, properties, and business,
except where such failure to perform, individually and in the
aggregate, would not have a material adverse effect on Garden State
and its Subsidiaries, taken as a whole; or
(xxiii) agree to do any of the foregoing.
5.3. NO SOLICITATION. Garden State and the Bank shall
not, directly or indirectly, encourage or solicit or hold
discussions or negotiations with, or provide any information to,
any person, entity or group (other than Summit) concerning any
merger or sale of shares of capital stock or sale of substantial
assets or liabilities not in the ordinary course of business, or
similar transactions involving Garden State or the Bank (an
"Acquisition Transaction"). Notwithstanding the foregoing, Garden
State may enter into discussions or negotiations or provide
information in connection with an unsolicited possible Acquisition
Transaction if the Board of Directors of Garden State, after
consulting with counsel, determines that such discussions or
negotiations should be commenced in the exercise of its fiduciary
responsibilities or such information should be furnished in the
exercise of its fiduciary responsibilities. Garden State will
promptly communicate to Summit the terms of any proposal, whether
written or oral, which it may receive in respect of any Acquisition
Transaction and the fact that it is having discussions or
negotiations with, or supplying information to, a third party in
connection with a possible Acquisition Transaction.
5.4. CURRENT INFORMATION. During the period from the
date of this Agreement to the Effective Time, Garden State will
cause one or more of its designated representatives to confer on a
monthly or more frequent basis with representatives of Summit
regarding Garden State's business, operations, properties, assets
and financial condition and matters relating to the completion of
the transactions contemplated herein. Without limiting the
foregoing, and also subject to the restrictions set forth in
paragraphs (xiii) and (xiv) of Section 5.2, prior to granting any
loan or extension of credit by renewal or otherwise, Garden State
will send to Summit a description (i.e., a copy of the loan
offering) for each new loan or extension of credit, and each
renewal of an existing loan or extension of credit, in excess of
$500,000. As soon as reasonably available, but in no event more
than 45 days after the end of each fiscal quarter (other than the
last fiscal quarter of each fiscal year) ending after the date of
this Agreement, Garden State will deliver to Summit, and Summit
will deliver to Garden State, their respective bank call reports
filed with the FDIC and Garden State's quarterly reports on Form
10-Q as filed with the SEC under the Exchange Act, and Summit will
deliver to Garden State Summit's quarterly reports on Form 10-Q, as
filed with the SEC under the Exchange Act. As soon as reasonably
available, but in no event more than 90 days after the end of each
fiscal year, Garden State will deliver to Summit and Summit will
deliver to Garden State their respective audited Annual Reports, in
each case as filed on Form 10-K with the SEC under the Exchange
Act.
5.5. ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.
(a) Garden State and the Bank shall permit Summit and
its representatives, and Summit and Summit Bank shall permit Garden
State and its representatives, reasonable access to their
respective properties, and shall disclose and make available to
Summit and its representatives or Garden State and its
representatives as the case may be, all books, papers and records
relating to their respective assets, stock ownership, properties,
operations, obligations and liabilities, including, but not limited
to, all books of account (including the general ledger), tax
records, minute books of directors' and stockholders' meetings,
organizational documents, bylaws, material contracts and
agreements, filings with any regulatory authority, independent
auditors' work papers (subject to the receipt by such auditors of
a standard access representation letter), litigation files, plans
affecting employees, and any other business activities or prospects
in which Summit and its representatives or Garden State and its
representatives may have a reasonable interest. Neither party
shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the
rights of any customer or would contravene any law, rule,
regulation, order or judgment. The parties will use their best
efforts to obtain waivers of any such restriction and in any event
make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence
apply.
(b) All information furnished by the parties hereto
previously in connection with transactions contemplated by this
Agreement or pursuant hereto shall be used solely for the purpose
of evaluating the Merger contemplated hereby and shall be treated
as the sole property of the party delivering the information until
consummation of the Merger contemplated hereby and, if such Merger
shall not occur, each party and each party's advisors shall return
to the other party all documents or other materials containing,
reflecting or referring to such information, will not retain any
copies of such information, shall use its best efforts to keep
confidential all such information, and shall not directly or
indirectly use such information for any competitive or other
commercial purposes. In the event that the Merger contemplated
hereby does not occur, all documents, notes and other writings
prepared by a party hereto or its advisors based on information
furnished by the other party shall be promptly destroyed. The
obligation to keep such information confidential shall continue for
five years from the date the proposed Merger is abandoned but shall
not apply to (i) any information which (A) the party receiving the
information can establish by convincing evidence was already in its
possession prior to the disclosure thereof to it by the other
party; (B) was then generally known to the public; (C) became known
to the public through no fault of the party receiving such
information; or (D) was disclosed to the party receiving such
information by a third party not bound by an obligation of
confidentiality; or (ii) disclosures pursuant to a legal
requirement or in accordance with an order of a court of competent
jurisdiction.
5.6. REGULATORY MATTERS.
(a) For the purposes of holding the meeting of Garden
State stockholders referred to in Section 5.7 hereof and
registering or otherwise qualifying under applicable federal and
state securities laws Summit Common Stock to be issued to Record
Holders and optionees in connection with the Merger, the parties
hereto shall cooperate in the preparation and filing by Summit of
a Registration Statement with the SEC which shall include an
appropriate proxy statement and prospectus satisfying all
applicable requirements of applicable state and federal laws,
including the Securities Act, the Exchange Act and applicable state
securities laws and the rules and regulations thereunder. (Such
proxy statement and prospectus in the form mailed by Garden State
to the Garden State shareholders and optionees together with any
and all amendments or supplements thereto, is herein referred to as
the "Proxy Statement/Prospectus" and the various documents to be
filed by Summit under the Securities Act with the SEC to register
for sale the Summit Common Stock to be issued to Record Holders and
optionees, including the Proxy Statement/Prospectus, are referred
to herein as the "Registration Statement").
(b) Summit shall furnish information concerning Summit
as is necessary in order to cause the Proxy Statement/Prospectus,
insofar as it relates to Summit, to comply with Section 5.6(a)
hereof. Summit agrees promptly to advise Garden State if at any
time prior to the Garden State shareholder meeting referred to in
Section 5.7 hereof, any information provided by Summit in the Proxy
Statement/Prospectus becomes incorrect or incomplete in any
material respect and to provide Garden State with the information
needed to correct such inaccuracy or omission. Summit shall
furnish Garden State with such supplemental information as may be
necessary in order to cause the Proxy Statement/Prospectus, insofar
as it relates to Summit, to comply with Section 5.6(a) after the
mailing thereof to Garden State shareholders.
(c) Garden State shall furnish Summit with such
information concerning Garden State and the Bank as is necessary in
order to cause the Proxy Statement/Prospectus, insofar as it
relates to such corporations, to comply with Section 5.6(a) hereof.
Garden State agrees promptly to advise Summit if, at any time prior
to the Garden State shareholder's meeting referred to in Section
5.6(a) hereof, information provided by Garden State in the Proxy
Statement/Prospectus becomes incorrect or incomplete in any
material respect and to provide Summit with the information needed
to correct such inaccuracy or omission. Garden State shall furnish
Summit with such supplemental information as may be necessary in
order to cause the Proxy Statement/Prospectus, insofar as it
relates to Garden State and the Bank, to comply with Section 5.6(a)
after the mailing thereof to Garden State shareholders.
(d) Summit shall as promptly as practicable make such
filings as are necessary in connection with the offering of the
Summit Common Stock with applicable state securities agencies and
shall use all reasonable efforts to qualify the offering of the
Summit Common Stock under applicable state securities laws at the
earliest practicable date. Garden State shall promptly furnish
Summit with such information regarding the Garden State
shareholders as Summit requires to enable it to determine what
filings are required hereunder. Garden State authorizes Summit to
utilize in such filings the information concerning Garden State and
the Bank provided to Summit in connection with, or contained in,
the Proxy Statement/Prospectus. Summit shall furnish Garden State
with copies of all such filings and keep Garden State advised of
the status thereof. Summit and Garden State shall as promptly as
practicable file the Registration Statement containing the Proxy
Statement/Prospectus with the SEC, and each of Summit and Garden
State shall promptly notify the other of all communications, oral
or written, with the SEC concerning the Registration Statement and
the Proxy Statement/Prospectus.
(e) Summit shall cause the Summit Common Stock to be
issued in connection with the Merger to be included for quotation
on the NASDAQ - National Market System or, if the outstanding
Summit Common Stock is then listed on a national securities
exchange, to be approved for listing on such exchange.
(f) The parties hereto will cooperate with each other
and use their best efforts to prepare all necessary documentation,
to effect all necessary filings and to obtain all necessary
permits, consents, waivers, approvals and authorizations of all
third parties and governmental bodies necessary to consummate the
transactions contemplated by this Agreement as soon as possible,
including, without limitation, those required by the FDIC and the
Commissioner and the FRB. The parties shall each have the right to
review in advance all information relating to the other, as the
case may be, and any of their respective subsidiaries, which
appears in any filing made with, or written material submitted to,
any third party or governmental body in connection with the
transactions contemplated by this Agreement. Summit and Summit
Bank shall cause at least a draft of their respective applications
to the FRB and an actual application to the FDIC and the
Commissioner to be filed within 60 days of the date hereof, so long
as Garden State and the Bank provide all information necessary to
complete the application within 30 days of the date hereof.
(g) Each of the parties will promptly furnish each other
with copies of written communications received by them or any of
their respective subsidiaries from, or delivered by any of the
foregoing to, any governmental body in respect of the transactions
contemplated hereby.
5.7. APPROVAL OF STOCKHOLDERS. Garden State will (a)
take all steps necessary duly to call, give notice of, convene and
hold a meeting of the stockholders of Garden State as soon as
reasonably practicable for the purpose of securing the approval by
such stockholders of this Agreement, (b) subject to the fiduciary
obligations of its directors and officers, recommend to the
stockholders of Garden State the approval of this Agreement and the
transactions contemplated hereby and use its best efforts to
obtain, as promptly as practicable, such approvals, and (c)
cooperate and consult with Summit with respect to each of the
foregoing matters.
5.8. FURTHER ASSURANCES. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use its best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to satisfy the
conditions to Closing and to consummate and make effective the
transactions contemplated by this Agreement, including, without
limitation, using reasonable efforts to lift or rescind any
injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions
contemplated by this Agreement and using its best efforts to
prevent the breach of any representation, warranty, covenant or
agreement of such party contained or referred to in this Agreement
and to promptly remedy the same. Nothing in this section shall be
construed to require any party to participate in any threatened or
actual legal, administrative or other proceedings (other than
proceedings, actions or investigations to which it is otherwise a
party or subject or threatened to be made a party or subject) in
connection with consummation of the transactions contemplated by
this Agreement unless such party shall consent in advance and in
writing to such participation and the other party agrees to
reimburse and indemnify such party for and against any and all
costs and damages related thereto.
5.9. PUBLIC ANNOUNCEMENTS. The parties hereto shall
cooperate with each other in the development and distribution of
all news releases and other public disclosures with respect to this
Agreement or any of the transactions contemplated hereby, except as
may be otherwise required by law or regulation or as to which the
party releasing such information has used its best efforts to
discuss with the other party in advance.
5.10. FAILURE TO FULFILL CONDITIONS. In the event that
Summit or Garden State determines that a material condition to its
obligation to consummate the transactions contemplated hereby
cannot be fulfilled on or prior to June 30, 1996 and that it will
not waive that condition, it will promptly notify the other party.
Except for any acquisition or merger discussions Summit may enter
into with other parties, Garden State and Summit will promptly
inform the other of any facts applicable to Garden State or Summit,
respectively, or their respective directors or officers, that would
be likely to prevent or materially delay approval of the Merger by
any governmental authority or which would otherwise prevent or
materially delay completion of the Merger.
5.11. DISCLOSURE SUPPLEMENTS. From time to time prior
to the Effective Time, each party hereto will promptly supplement
or amend (by written notice to the other) its respective Disclosure
Schedules delivered pursuant hereto with respect to any matter
hereafter arising which, if existing, occurring or known at the
date of this Agreement, would have been required to be set forth or
described in such Schedules or which is necessary to correct any
information in such Schedules which has been rendered materially
inaccurate thereby. For the purpose of determining satisfaction of
the conditions set forth in Article VI, no supplement or amendment
to such Schedules shall correct or cure any warranty which was
untrue when made, but supplements or amendments may be used to
disclose subsequent facts or events to maintain the truthfulness of
any warranty.
5.12. INDEMNIFICATION.
(a) INDEMNIFICATION. From and after the Effective Time,
Summit agrees to indemnify and advance costs and expenses
(including reasonable attorney's fees, disbursements and expenses)
and hold harmless each present and former director and officer of
Garden State or its Subsidiaries determined as of the Effective
Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, settlements or liabilities (collectively, "Costs")
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising after the Effective Time and out of or
pertaining to matters existing or occurring at or prior to the
Effective Time, including without limitation, the authorization of
this Agreement and the transactions contemplated hereby, whether
asserted or claimed prior to, at or after the Effective Time, to
the fullest extent that Garden State would have been permitted
under New Jersey law and its certificate of incorporation or by-
laws in effect on the date hereof to indemnify such person (and
also advance expenses as incurred to the fullest extent permitted
under applicable law provided the person to whom expenses are
advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to
indemnification); provided that any determination required by law
to be made with respect to whether an officer's or director's
conduct complies with the standards set forth under New Jersey law
and Garden State's certificate of incorporation and by-laws shall
be made by independent counsel selected jointly by Summit and the
Indemnified Party.
(b) PROCEDURE. In the event of any claim, action, suit,
proceeding or investigation in which indemnification pursuant to
Section 5.12 (a) is sought (whether arising before or after the
Effective Time) other than such as is described in the Garden State
Disclosure Schedule, (i) Summit shall have the right to assume the
defense thereof and Summit shall not be liable to any Indemnified
Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Summit elects
not to assume such defense or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest
between Summit and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and Summit shall pay the
reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements there for are received; provided,
however, that Summit shall be obligated pursuant to this paragraph
(b) to pay for only one firm of counsel for all Indemnified Parties
in any jurisdiction unless the use of one counsel for such
Indemnified Parties would present such counsel with a conflict of
interest, (ii) the Indemnified Parties will cooperate in the
defense of any such matter unless counsel for the Indemnified
Parties advises that there are issues which raise conflicts of
interest making such cooperation inadvisable and (iii) Summit shall
not be liable for any settlement effected without its prior written
consent which shall not be unreasonably withheld; and provided
further that Summit shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have
become final and nonappealable, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited
by applicable law. If a court of competent jurisdiction determines
that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law, then Summit
shall provide indemnification to the maximum extent and in such
manner as is permissible under applicable law. If such indemnity
is completely unavailable with respect to any Indemnified Party,
Summit and the Indemnified Party shall contribute to the amount
payable in such proportion as is appropriate to reflect relative
faults and benefits.
(c) INSURANCE. For a period of six years following the
Effective Time, Summit will provide to the persons who served as
directors or officers of Garden State or any Garden State
Subsidiary, including the Bank, 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. Such coverage may be provided by means of an
extended reporting period endorsement to the policy presently
issued to Garden State by the present carrier for Garden State, or
by such other means which shall provide substantially equivalent
coverage to such persons.
5.13. OFFICER CONTRACTS; EMPLOYMENT MATTERS.
(a) OFFICER'S CONTRACTS. As of the Effective Time,
Summit and Summit Bank, jointly and severally, shall specifically
acknowledge, accept and assume the employment contracts contained
in the Garden State Disclosure Schedule and agree to a calculation
prepared by Garden State specifying the amount of the benefits
payable under such contracts; provided, however, that nothing
contained herein shall obligate Summit to continue the employment
of any party to any such employment contract.
(b) EMPLOYEE BENEFITS. The employee benefit plans,
arrangements and related policies of Garden State and the Bank
shall initially be unaffected by the Merger. Following the Merger,
Summit will review such plans, arrangements and policies with a
view towards consolidating the same to the extent feasible and
economical. To the extent former employees of Garden State or the
Bank become participants in a plan of Summit or Summit Bank, they
will be given past service credit for eligibility, participation,
and vesting purposes, but not for benefit accrual purposes. For
purposes of benefit accrual, credited service under each Summit
plan will commence within twelve months following the Merger.
Employees of Garden State or the Bank immediately prior to the
Effective Time, who will become employees of Summit or Summit Bank,
will receive compensation and benefit packages no less favorable,
in the aggregate, than the compensation and benefit packages to
which they were entitled immediately prior to the Effective Time.
Notwithstanding the foregoing, the benefits under pension benefit
plans to which such employees are entitled after the Effective Time
shall be limited to those benefits accruing under the applicable
Summit plans. Employees of Garden State and the Bank immediately
prior to the Effective Time who will become employees of Summit or
Summit Bank and are involuntarily terminated within one year
thereafter, will receive severance benefits at least as favorable
as those provided in the severance plan contained in the Garden
State Disclosure Schedule.
5.14. POOLING AND TAX-FREE REORGANIZATION TREATMENT.
Neither Summit nor Garden State shall intentionally take, fail to
take or cause to be taken or not be taken, any action within its
control, whether before or after the Effective Time, which would
disqualify the Merger as a "pooling of interests" for accounting
purposes or as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1968, as amended.
5.15 GARDEN STATE OPTION PLAN. From and after the
Effective Time, each Garden State Option which is converted to an
option to purchase Summit Common Stock under Section 2.1(b)(i)
shall be administered, operated and interpreted by a committee
comprised of members of the Board of Directors of Summit appointed
by the Board of Directors of Summit. Summit shall reserve for
issuance the number of shares of Summit Common Stock necessary to
satisfy Summit's obligations. As soon as practicable following the
Effective Time, but in no event more than 30 days following the
Effective Time, Summit shall also register under the Securities Act
on Form S-8 all of the shares authorized for issuance under the
Garden State Options so converted.
5.16. AFFILIATES.
(a) Promptly, but in any event within two weeks, after
the execution and delivery of this Agreement, (i) Garden State
shall deliver to Summit (x) a letter identifying all persons who,
to the knowledge of Garden State, may be deemed to be affiliates of
Garden State under Rule 145 of the Securities Act, including
without limitation all directors and executive officers of Garden
State and (y) a letter identifying all persons who, to the
knowledge of Garden State, may be deemed to be affiliates of Garden
State as that term (affiliate) is used for purposes of qualifying
for "pooling of interests" accounting treatment; and (ii) Summit
shall identify to Garden State all persons who, to the knowledge of
Summit, may be deemed affiliates of Summit as that term
(affiliates) is used for purposes of qualifying for "pooling of
interests" accounting treatment.
(b) Each person who may be deemed an affiliate of Garden
State (under either Rule 415 of the Securities Act or the
accounting treatment rules) shall execute a letter substantially in
the form of Exhibit 5.16-1 hereto agreeing to be bound by the
restrictions of Rule 145, as set forth in Exhibit 5.16-1 and
agreeing to be bound by the rules which permit the Merger to be
treated as a pooling of interests for accounting purposes. In
addition, Summit shall cause its affiliates (as that term is used
for purposes of qualifying for pooling of interests) to execute a
letter within two weeks of the date hereof, in the form of Exhibit
5.16-2, in which such persons agree to be bound by the rules which
permit the Merger to be treated as a pooling of interests for
accounting treatment.
(c) Summit agrees to publish financial results covering
at least 30 days of combined operations of Summit and Garden State
as soon as practicable after consummation of the Merger.
5.17. COMPLIANCE WITH THE INDUSTRIAL SITE RECOVERY ACT.
Garden State, at its sole cost and expense, shall obtain prior to
the Effective Time, either: (a) a Letter of Non-Applicability
("LNA") from the New Jersey Department of Environmental Protection
("NJDEP") stating that none of the facilities located in New Jersey
owned or operated by Garden State or any Garden State Subsidiary
(each, a "Facility") is an "industrial establishment," as such term
is defined under the Industrial Site Recovery Act ("ISRA"); (b) a
Remediation Agreement issued by the NJDEP pursuant to ISRA
authorizing the consummation of the transactions contemplated by
this Agreement; or (c) a Negative Declaration approval, Remedial
Action Workplan approval, No Further Action letter or other
document or documents issued by the NJDEP advising that the
requirements of ISRA have been satisfied with respect to each
Facility subject to ISRA. In the event Garden State obtains a
Remediation Agreement, Garden State will post or have posted an
appropriate Remediation Funding Source or will have obtained the
NJDEP's approval to self-guaranty any Remediation Funding Source
required under any such Remediation Agreement.
ARTICLE VI
CLOSING CONDITIONS
6.1. CONDITIONS OF EACH PARTY'S OBLIGATIONS UNDER THIS
AGREEMENT. The respective obligations of each party under this
Agreement to consummate the Merger shall be subject to the
satisfaction, or, where permissible under applicable law, waiver at
or prior to the Effective Time of the following conditions:
(a) APPROVAL OF GARDEN STATE STOCKHOLDERS; SEC
REGISTRATION; NASDAQ OR NATIONAL SECURITIES EXCHANGE. This
Agreement and the transactions contemplated hereby shall have been
approved by the requisite vote of the stockholders of Garden State.
The Registration Statement shall have been declared effective by
the SEC and shall not be subject to a stop order or any threatened
stop order, and the issuance of the Summit Common Stock shall have
been qualified in every state where such qualification is required
under the applicable state securities laws. The Summit Common
Stock to be issued in connection with the Merger, including Summit
Common Stock to be issued for the Garden State Options, shall have
been included for quotation on the NASDAQ - National Market System
or, if the outstanding Summit Common Stock is then listed on a
national securities exchange, shall have been approved for listing
on such exchange.
(b) REGULATORY FILINGS. All necessary regulatory or
governmental approvals and consents (including without limitation
any required approval of the FDIC or the Commissioner and any
approval or waiver required by the FRB) required to consummate the
transactions contemplated hereby shall have been obtained without
any Burdensome Condition. All conditions required to be satisfied
prior to the Effective Time by the terms of such approvals and
consents shall have been satisfied; and all statutory waiting
periods in respect thereof shall have expired.
(c) SUITS AND PROCEEDINGS. No order, judgment or decree
shall be outstanding against a party hereto or a third party that
would have the effect of preventing completion of the Merger; no
suit, action or other proceeding shall be pending or threatened by
any governmental body in which it is sought to restrain or prohibit
the Merger or the Bank Merger; and no suit, action or other
proceeding shall be pending before any court or governmental agency
in which it is sought to restrain or prohibit the Merger or the
Bank Merger or obtain other substantial monetary or other relief
against one or more parties hereto in connection with this
Agreement and which Summit or Garden State determines in good
faith, based upon the advice of their respective counsel, makes it
inadvisable to proceed with the Merger because any such suit,
action or proceeding has a significant potential to be resolved in
such a way as to deprive the party electing not to proceed of any
of the material benefits to it of the Merger or the Bank Merger.
(d) TAX FREE EXCHANGE. Summit and Garden State shall
have received an opinion, satisfactory to Summit and Garden State,
of Bourne, Noll & Kenyon, counsel for Summit, to the effect that
the transactions contemplated hereby will result in a
reorganization (as defined in Section 368(a) of the Code), and
accordingly no gain or loss will be recognized for federal income
tax purposes to Summit, Garden State, Summit Bank or the Bank or to
the shareholders of Garden State who exchange their shares of
Garden State for Summit Common Stock (except to the extent that
cash is received in lieu of fractional shares of Summit Common
Stock).
(e) POOLING OF INTERESTS. The Merger shall be qualified
to be treated by Summit as a pooling-of-interests for accounting
purposes.
6.2. CONDITIONS TO THE OBLIGATIONS OF SUMMIT UNDER THIS
AGREEMENT. The obligations of Summit under this Agreement shall be
further subject to the satisfaction or waiver, at or prior to the
Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS OF GARDEN STATE AND BANK. The representations and
warranties of Garden State contained in this Agreement shall be
true and correct in all material respects on the Closing Date as
though made on and as of the Closing Date. Garden State shall have
performed in all material respects the agreements, covenants and
obligations necessary to be performed by it prior to the Closing
Date. With respect to any representation or warranty which as of
the Closing Date has required a supplement or amendment to the
Garden State Disclosure Schedule to render such representation or
warranty true and correct as of the Closing Date, the
representation and warranty shall be deemed true and correct as of
the Closing Date only if (i) the information contained in the
supplement or amendment to the Disclosure Schedule related to
events occurring following the execution of this Agreement and (ii)
the facts disclosed in such supplement or amendment would not
either alone, or together with any other supplements or amendments
to the Garden State Disclosure Schedule, materially adversely
affect the representation as to which the supplement or amendment
relates.
(b) CONSENTS. Summit shall have received the written
consents of any person whose consent to the transactions
contemplated hereby is required under the applicable instrument.
(c) OPINION OF COUNSEL. Summit shall have received an
opinion of counsel to Garden State, dated the date of the Closing,
in form and substance reasonably satisfactory to Summit, covering
the matters set forth on Schedule 6.2 hereto and any other matters
reasonably requested by Summit.
(d) BANK ACTION. The Bank shall have taken all
necessary corporate action to effectuate the Bank Merger
immediately following the Effective Time.
(e) CERTIFICATES. Garden State shall have furnished
Summit with such certificates of its officers or other documents to
evidence fulfillment of the conditions set forth in this Section
6.2 as Summit may reasonably request.
6.3. CONDITIONS TO THE OBLIGATIONS OF GARDEN STATE UNDER
THIS AGREEMENT. The obligations of Garden State under this
Agreement shall be further subject to the satisfaction or waiver,
at or prior to the Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS OF SUMMIT. The representations and warranties of
Summit contained in this Agreement shall be true and correct in all
material respects on the Closing Date as though made on and as of
the Closing Date. Summit shall have performed in all material
respects, the agreements, covenants and obligations to be performed
by it prior to the Closing Date. With respect to any
representation or warranty which as of the Closing Date has
required a supplement or amendment to the Summit Disclosure
Schedule to render such representation or warranty true and correct
as of the Closing Date, the representation and warranty shall be
deemed true and correct as of the Closing Date only if (i) the
information contained in the supplement or amendment to the
Disclosure Schedule related to events occurring following the
execution of this Agreement and (ii) the facts disclosed in such
supplement or amendment would not either alone, or together with
any other supplements or amendments to the Summit Disclosure
Schedule, materially adversely affect the representation as to
which the supplement or amendment relates.
(b) OPINION OF COUNSEL TO SUMMIT. Garden State shall
have received an opinion of counsel to Summit, dated the date of
the Closing, in form and substance reasonably satisfactory to
Garden State, covering the matters set forth on Schedule 6.3
hereto.
(c) FAIRNESS OPINION. Garden State shall have received
an update of the opinion from Advest referred to in Section 3.24,
to the effect that, in its opinion, the consideration to be paid to
stockholders of Garden State hereunder is fair to such stockholders
from a financial point of view, without adverse change to such
opinion, (i) as of a date not more than three days prior to the
date the Proxy Statement/Prospectus is mailed to Garden State's
stockholders, and (ii) as of the Closing.
(d) EMPLOYMENT AGREEMENTS. Summit shall have taken all
action necessary under Section 5.13 (a) to assume in writing and to
honor the employment agreements of Garden State set forth in the
Disclosure Schedule.
(e) INSURANCE. Garden State shall have received
evidence, reasonably satisfactory to it, that Summit shall have
obtained the insurance referred to in Section 5.12 (c).
(f) CERTIFICATES. Summit shall have furnished Garden
State with such certificates of its officers or others and such
other documents to evidence fulfillment of the conditions set forth
in this Section 6.3 as Garden State may reasonably request.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1. TERMINATION. This Agreement may be terminated
prior to the Effective Time, whether before or after approval of
this Agreement by the stockholders of Garden State:
(a) By mutual written consent of the parties hereto.
(b) By Summit or Garden State (i) if the Effective Time
shall not have occurred on or prior to June 30, 1996 or (ii) if a
vote of the stockholders of Garden State is taken and such
stockholders fail to approve this Agreement at the meeting (or any
adjournment thereof) held for such purpose, unless in each case the
failure of such occurrence shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe its
agreements set forth herein to be performed or observed by such
party (or the directors of Garden State) at or before the Effective
Time.
(c) By Summit or Garden State upon written notice to the
other if any application for regulatory or governmental approval
necessary to consummate the Merger and the other transactions
contemplated hereby shall have been denied or withdrawn at the
request or recommendation of the applicable regulatory agency or
governmental authority or by Summit upon written notice to Garden
State if any such application is approved with conditions which
materially impair the value of Garden State and the Bank, taken as
a whole, to Summit.
(d) By Summit if there shall have occurred a material
adverse change in the business, operations, assets, or financial
condition of Garden State or the Bank from that disclosed by Garden
State on the date of this Agreement.
(e) By Garden State, if there shall have occurred a
material adverse change in the business, operations, assets or
financial condition of Summit or Summit Bank from that disclosed by
Summit on the date of this Agreement.
(f) By Summit or Garden State if any condition to
Closing specified under Article VI hereof applicable to such party
cannot reasonably be met after giving the other party a reasonable
opportunity to cure any such condition.
(g) By Garden State if the Average Closing Price is less
than $16.00.
(h) By Garden State if (A) the Average Closing Price is
less than $17.00 and (B) Summit has not delivered a written notice
to Garden State unilaterally agreeing to increase the Exchange
Ratio such that the value (measured by the Average Closing Price)
of the number of shares of Summit Common Stock to be exchanged for
one share of Garden State Common stock in the Merger, based on the
new Exchange Ratio, is at least as high as the value would have
been if the Exchange Ratio were unchanged and the Average Closing
Price were $17.00.
7.2. EFFECT OF TERMINATION. In the event of the
termination and abandonment of this Agreement by either Summit or
Garden State pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect, without any liability on
the part of any party or its officers, directors or stockholders.
Nothing contained herein, however, shall relieve any party from any
liability for any breach of this Agreement.
7.3. AMENDMENT. This Agreement may be amended by mutual
action taken by the parties hereto at any time before or after
adoption of this Agreement by the stockholders of Garden State but,
after any such adoption, no amendment shall be made which reduces
or changes the amount or form of the consideration to be delivered
to the shareholders of Garden State without the approval of such
stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of Summit and Garden State.
7.4. EXTENSION; WAIVER. The parties may, at any time
prior to the Effective Time of the Merger, (i) extend the time for
the performance of any of the obligations or other acts of the
other parties hereto; (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant thereto; or (iii) waive compliance with any of
the agreements or conditions contained herein. Any agreement on
the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party against which the waiver is sought to be
enforced.
ARTICLE VIII
MISCELLANEOUS
8.1. EXPENSES. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby (including legal, accounting and investment banking fees and
expenses) shall be borne by the party incurring such costs and
expenses.
8.2. NOTICES. All notices or other communications which
are required or permitted hereunder shall be in writing and
sufficient if delivered personally or sent by telecopier with
confirming copy sent the same day by registered or certified mail,
postage prepaid, as follows:
(a) If to Summit, to:
The Summit Bancorporation
One Main Street, Second Floor
Chatham, New Jersey 07928
Attn.: Robert G. Cox
President and Chief Executive Officer
Telecopier No. (201) 701-2520
Copy to:
Bourne, Noll & Kenyon
382 Springfield Avenue
Summit, New Jersey 07901
Attn: Charles R. Berman, Esq.
Telecopier No. (908) 277-6808
(b) If to Garden State, to:
Garden State BancShares, Inc.
2290 West County Line Road
Jackson, New Jersey 08527
Attn: Theodore D. Bessler,
President and Chief Executive Officer
Telecopier No. (908) 905-2339
Copy to:
Pitney, Hardin, Kipp & Szuch
Delivery:
200 Campus Drive
Florham Park, New Jersey 07932
Mail:
P.O. Box 1945
Morristown, New Jersey 07962-1945
Attn.: Ronald H. Janis, Esq.
Telecopier No. (201) 966-1550
or such other addresses as shall be furnished in writing by any
party, and any such notice or communications shall be deemed to
have been given as of the date so delivered or telecopied and
mailed.
8.3. PARTIES IN INTEREST. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns. No
assignment of this Agreement may be made except upon the written
consent of the other parties hereto. Nothing in this Agreement is
intended to confer, expressly or by implication, upon any other
person any rights or remedies under or by reason of this Agreement,
except for the present and former directors and officers of Garden
State or its Subsidiaries referred to in Section 5.12 hereof, who
shall be entitled to the benefits of such Section 5.12.
8.4. ENTIRE AGREEMENT. This Agreement, which includes
the Disclosure Schedules hereto and the other documents, agreements
and instruments executed and delivered pursuant to or in connection
with this Agreement, contains the entire Agreement between the
parties hereto with respect to the transactions contemplated by
this Agreement and supersedes all prior negotiations, arrangements
or understandings, written or oral, with respect thereto, including
the Letter of Intent.
8.5. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and
the same agreement and each of which shall be deemed an original.
8.6. GOVERNING LAW. This Agreement shall be governed by
the laws of the State of New Jersey, without giving effect to the
principles of conflicts of laws thereof.
8.7. DESCRIPTIVE HEADINGS. The descriptive headings of
this Agreement are for convenience only and shall not control or
affect the meaning or construction of any provision of this
Agreement.
IN WITNESS WHEREOF, Summit, Summit Bank, the Bank and
Garden State have caused this Agreement to be executed by their
duly authorized officers as of the day and year first above
written.
ATTEST: THE SUMMIT BANCORPORATION
By: JOHN T. KUNTZ By: ROBERT G. COX
___________________________ ______________________________
John T. Kuntz, Secretary Robert G. Cox, President
and Chief Executive Officer
ATTEST: GARDEN STATE BANCSHARES, INC.
By: LISA M. MACQUAIDE By: THEODORE D. BESSLER
____________________________ _______________________________
Lisa M. MacQuaide, Secretary Theodore D. Bessler, President
and Chief Executive Officer
ATTEST: SUMMIT BANK
By: JOHN T. KUNTZ By: ROBERT G. COX
____________________________ ______________________________
John T. Kuntz, Secretary Robert G. Cox, President
and Chief Executive Officer
ATTEST: GARDEN STATE BANK
By: LISA M. MACQUAIDE By: THEODORE D. BESSLER
____________________________ ______________________________
Lisa M. MacQuaide, Secretary Theodore D. Bessler, President
and Chief Executive Officer
CERTIFICATE OF GARDEN STATE DIRECTORS
Reference is made to the Agreement and Plan of Merger,
dated June 13, 1995 (the "Agreement"), among The Summit
Bancorporation, Summit Bank, Garden State BancShares, Inc. and
Garden State Bank. Capitalized terms used herein have the meanings
given to them in the Agreement.
Each of the following persons, being all of the directors
of Garden State, agrees to vote or cause to be voted all shares of
Garden State Common Stock which are held by such person, or over
which such person exercises full voting control, in favor of the
Merger.
THEODORE D. BESSLER
_________________________________
Theodore D. Bessler
PETER BOYARIN
_________________________________
Peter Boyarin
H. GEORGE BUCKWALD
__________________________________
H. George Buckwald
LEE A. HARRIS
__________________________________
Lee A. Harris
MICHAEL E. LEVIN
__________________________________
Michael E. Levin
MATTHEW LINDENBAUM
__________________________________
Matthew Lindenbaum
ARNOLD D. MOHEL
__________________________________
Arnold D. Mohel
RONALD P. VOGEL
__________________________________
Ronald P. Vogel
HERBERT WISHNICK
__________________________________
Herbert Wishnick
Dated: June 13, 1995
EXHIBIT A
AGREEMENT TO MERGE BETWEEN
SUMMIT BANK
AND
GARDEN STATE BANK
UNDER THE CHARTER OF SUMMIT BANK,
UNDER THE TITLE OF GARDEN STATE BANK
SUBSIDIARY AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of June ___, 1995, among SUMMIT BANK,
("Summit Bank"), a New Jersey banking corporation and a wholly
owned subsidiary of The Summit Bancorporation, a New Jersey
corporation ("Parent"), and GARDEN STATE BANK ("Garden State
Bank"), a New Jersey banking corporation and a wholly owned
subsidiary of Garden State Bancshares, Inc., a New Jersey
corporation ("GSB"). Summit Bank is located at 367 Springfield
Avenue, Summit, New Jersey, with capital of $___________, divided
into __________ shares of common stock, each of par value $4.50 per
share ("Summit Bank Common Stock"), capital surplus of $__________
and undivided profits, including capital reserves, of $___________,
as of December 31, 1994. Garden State Bank is located at 2290 West
County Line Road, Jackson, New Jersey, with capital of $___________
divided into ____ shares of common stock, each of $____ par value
("Garden State Bank Common Stock"), capital surplus of $__________
and undivided profits, including capital reserves, of $__________,
as of December 31, 1994.
WHEREAS, the Boards of Directors of Parent and GSB have
approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the business combination
transaction set forth in the Agreement and Plan of Merger, dated as
of June ___, 1995 (the "Parent Merger Agreement"), by and between
Parent and GSB, pursuant to which GSB will merge with and into
Parent (the "Parent Merger"); and
WHEREAS, not less than a majority of each of the Boards
of Directors of Summit Bank and Garden State Bank have approved,
and deem it advisable to consummate, the subsidiary merger provided
for herein (the "Subsidiary Merger") and in the Parent Merger
Agreement, in accordance with the provisions of applicable law.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth herein and in the Parent Merger Agreement, and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 EFFECTIVE TIME OF THE SUBSIDIARY MERGER. Subject to
the provisions of this Agreement, the Subsidiary Merger shall
become effective in accordance with the terms of the articles of
merger (the "Articles of Merger") which shall be filed with the
Banking Department of the State of New Jersey (the "Banking
Department") on the Closing Date (as defined in Section 1.4 of the
Parent Merger Agreement"). The term "Subsidiary Merger Effective
Time" shall be the date and time when the Subsidiary Merger becomes
effective, as set forth in the Articles of Merger with respect to
the Subsidiary Merger to be filed with the Banking Department.
1.2 CLOSING. Notwithstanding anything to the contrary
contained in the Parent Merger Agreement, the closing of the
Subsidiary Merger will take place immediately subsequent to the
Parent Merger on the date and at the location specified in the
Parent Merger Agreement with respect to the Parent Merger or at
such other time, date or place as may be agreed to by the parties
hereto (the "Closing Date").
1.3. EFFECT OF THE SUBSIDIARY MERGER. (a) At the
Subsidiary Merger Effective Time, (i) the separate existence of
Summit Bank shall cease and Summit Bank shall be merged with and
into Garden State Bank (Garden State Bank is sometimes referred to
as herein as the "Surviving Bank"), (ii) the Articles of
Incorporation of Summit Bank as in effect immediately prior to the
Subsidiary Merger Effective Time shall be the Articles of
Incorporation of the Surviving Bank until duly amended in
accordance with applicable law, and the name of the Surviving Bank
shall be Summit Bank, (iii) the Bylaws of Summit Bank as in effect
immediately prior to the Subsidiary Merger Effective Time shall be
the Bylaws of the Surviving Bank, (iv) the main office and branch
offices of Summit Bank established and authorized immediately prior
to the Subsidiary Merger Effective Time shall become established
and authorized branch offices of Garden State Bank and (v) the
directors and officers of Summit Bank immediately prior to the
Subsidiary Merger Effective Time shall be the directors and
officers of the Surviving Bank, each to hold office in accordance
with the Articles of Incorporation and Bylaws of the Surviving Bank
until their respective successors are duly elected or appointed and
qualified.
(b) At and after the Subsidiary Merger Effective
Time, the Subsidiary Merger shall have all the effects set forth in
N.J.S.A. 17:9A-139 and, in connection therewith, all assets of
Summit Bank and Garden State Bank as they exist at the Subsidiary
Merger Effective Time shall pass to and vest in the Surviving Bank
without any conveyance or other transfer. The Surviving Bank shall
be responsible for all liabilities and obligations of every kind
and description of each of Garden State Bank and Summit Bank
existing as of the Subsidiary Merger Effective Time, whether
matured or unmatured, accrued, absolute, contingent or otherwise,
and whether or not reflected or reserved against on balance sheets,
books of account or records of Garden State Bank or Summit Bank.
(c) The business of the Surviving Bank shall be
that of a New Jersey banking corporation, which shall be conducted
as its main office referred to in Section 1.4 below and its
established and authorized branch offices.
1.4 HEADQUARTERS. The headquarters or main office of
the Surviving Bank shall be at 367 Springfield Avenue, Summit, New
Jersey.
ARTICLE II
EFFECT OF THE SUBSIDIARY MERGER ON THE CAPITAL
OF THE CONSTITUENT BANKS; EXCHANGE OF CERTIFICATES
2.1 EFFECT ON SUMMIT BANK CAPITAL STOCK. At the
Subsidiary Merger Effective Time, by virtue of the Subsidiary
Merger and without any action on the part of the holder of any
shares of Summit Bank Common Stock, all shares of Summit Bank
Common Stock (other than shares of Summit Bank Common Stock that
are owned by Summit Bank as treasury stock) shall become and be
converted into the right to receive that number of shares of common
stock, no par value of Garden State Bank as shall in the aggregate
have a fair market value equal to the fair market value of the
shares of Summit Bank Common Stock being exchanged at the
Subsidiary Merger Effective Time. All shares of Summit Bank Common
Stock that are owned by Summit Bank as treasury stock shall
automatically be cancelled and retired and shall cease to exist and
no stock of Garden State Bank or other consideration shall be
delivered in exchange therefor.
2.2 GARDEN STATE BANK COMMON STOCK. The shares of
Garden State Bank Common Stock issued and outstanding immediately
prior to the Subsidiary Merger Effective Time shall remain
outstanding and unchanged after the Subsidiary Merger.
2.3 CAPITAL OF SURVIVING BANK. The amount of capital
stock of the Surviving Bank immediately following the Subsidiary
Merger Effective Time shall be $___________, divided into
__________ shares of common stock, each of $____ par value, and
immediately following the Subsidiary Merger Effective Time, the
Surviving Bank shall have a surplus of $__________ and undivided
profits, including capital reserves, which, when combined with the
capital and surplus, will be equal to the combined capital
structures of Garden State Bank and Summit Bank referred to in the
preamble of this Agreement, adjusted, however, for normal earnings
and expenses between December 31, 1994 and the Subsidiary Merger
Effective Time.
ARTICLE III
COVENANTS
3.1 COVENANTS OF SUMMIT BANK AND GARDEN STATE BANK.
During the period from the date of this Agreement and continuing
until the Subsidiary Merger Effective Time, each of the parties
hereto agrees to observe and perform all agreements and covenants
of Parent and GSB in the Parent Merger Agreement that pertain or
are applicable to Summit Bank and Garden State Bank, respectively.
Each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, subject to and in
accordance with the applicable provisions of the Parent Merger
Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
SUBSIDIARY MERGER. The respective obligations of each party to
effect the Subsidiary Merger shall be subject to the satisfaction
prior to the Closing Date of the following conditions:
(a) SATISFACTION OF CONDITIONS. Each condition to
consummation of the Parent Merger contained in the Parent Merger
Agreement shall have been satisfied (or waived by the party or
parties entitled to assert such condition), and each party shall
have received a certificate from the other party to the effect that
all of the conditions to its obligation to consummate the Parent
Merger contained in the Parent Merger Agreement have been satisfied
or waived.
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No
order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Subsidiary Merger shall be in
effect. No statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal the
consummation of the Subsidiary Merger.
(c) STOCKHOLDER APPROVALS. This Agreement and the
transactions contemplated hereby shall have been duly approved,
ratified and confirmed in accordance with applicable law and the
respective charter or articles of association and by-laws of Garden
State Bank and Summit Bank by the affirmative vote of the
stockholders of Garden State Bank and Summit Bank, such vote
adopted at a meeting of each such sole stockholder or by each such
stockholder's written consent in lieu thereof.
(d) OTHER APPROVALS. Other than the filings and
approvals provided for by Section 1.1, all requisite regulatory
approvals relating to the Subsidiary Merger shall have been filed,
occurred or been obtained and shall continue to be in full force
and effect. In addition, all consents, approvals and permits of
and notices to non-governmental third parties that are necessary to
consummate the Subsidiary Merger shall have been filed, occurred or
been obtained and shall continue to be in full force and effect.
ARTICLE V
TERMINATION AND AMENDMENT
5.1 TERMINATION. This Agreement shall be terminated
immediately and without any action on the part of Garden State Bank
or Summit Bank upon any termination of the Parent Merger Agreement.
This Agreement may be terminated at any time prior to the
Subsidiary Merger Effective Time by mutual consent of Summit Bank
and Garden State Bank in a written instrument, if the Board of
Directors of each so determines by a vote of a majority of the
members of its entire board.
5.2 EFFECT OF TERMINATION. In the event of termination
of this Agreement as provided in Section 5.1, this Agreement shall
forthwith become void and there shall be no liability or obligation
under this Agreement on the part of Summit Bank, Garden State Bank
or their respective officers, directors or affiliates.
5.3 AMENDMENT. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective
Boards of Directors. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties
hereto.
ARTICLE VI
GENERAL PROVISIONS
6.1 DEFINITIONS. All capitalized terms which are used
but not defined herein shall have the meanings set forth in the
Parent Merger Agreement.
6.2 NONSURVIVAL OF AGREEMENTS. None of the agreements
in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time, except to the extent
set forth in the Parent Merger Agreement.
6.3 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (with confirmation) or mailed by
registered or certified mail (return receipt requested) to Summit
Bank or Garden State Bank, respectively, at the addresses for
notices to Parent or GSB, respectively, as set forth in the Parent
Merger Agreement, with copies to the persons referred to therein.
6.4 COUNTERPARTS. This Agreement may be adopted,
certified and executed in separate counterparts, each of which
shall be considered one and the same agreement and shall become
effective when all counterparts have been signed by each of the
parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
6.5 ENTIRE AGREEMENT. Except as otherwise set forth in
this Agreement or the Parent Merger Agreement (including the
documents and the instruments referred to herein or therein), this
Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
6.6 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of New Jersey
without regard to any applicable conflicts of law.
6.7 BINDING EFFECT. This Agreement is intended to be
binding on any successors of the parties.
6.8 ASSIGNMENT. Except as provided herein, neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of
the other party.
IN WITNESS WHEREOF, Summit Bank and Garden State Bank
have caused this Agreement to be signed by their duly authorized
officers, under the respective seal of such entities, all as of the
date first above written.
ATTEST SUMMIT BANK
________________________ By:__________________________
John F. Kuntz, Robert G. Cox,
Secretary President
ATTEST GARDEN STATE BANK
________________________ By:__________________________
Theodore D. Bessler
Secretary President and Chief
Executive Officer
SCHEDULE 5.16-1
GARDEN STATE AFFILIATE LETTER
June 13, 1995
THE SUMMIT BANCORPORATION
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of Garden State BancShares, Inc., a
New Jersey corporation (the "Company") with and into The Summit
Bancorporation, a New Jersey corporation ("Summit"), pursuant to
the Agreement and Plan of Merger dated as of June 13, 1995 (the
"Agreement") among the Company, Summit, Garden State Bank and
Summit Bank. I currently own shares of the Company's common stock,
no par value ("Garden State Common Stock"). As a result of the
Merger, I will receive shares of Summit's common stock, no par
value ("Summit Common Stock") in exchange for my Garden State
Common Stock. In addition, to the extent I own options to acquire
Garden State Common Stock, those options will be converted in the
Merger into Summit Common Stock or options to acquire Summit Common
Stock.
I have been advised that as of the date of this letter I
may be deemed to be an "affiliate" of the Company, as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the rules and regulations (the "Regulations")
promulgated under the Securities Act of 1933, as amended (the
"Act") by the Securities and Exchange Commission (the "Commission")
and as the term "affiliate" is used for purposes of the
Commission's rules and regulations applicable to the determination
of whether a merger can be accounted for as a "pooling of
interests" as specified in the Commission's Accounting Series
Release 135, as amended by Staff Accounting Bulletins Nos. 65 and
76 ("ASR 135").
I represent to and covenant with Summit that:
A. TRANSFER RESTRICTIONS PRIOR TO MERGER CONSUMMATION.
During the period beginning on the date hereof and ending 30 days
prior to the consummation of the Merger, I shall not sell, transfer
or otherwise dispose of ("transfer") any Garden State Common Stock
owned by me, and I shall not permit any relative who shares my
home, or any person or entity who or which I control, from
transferring any Garden State Common Stock owned by such person or
entity, without notifying Summit in advance of the proposed
transfer and giving Summit a reasonable opportunity to object to
the transfer before it is consummated. Summit, upon advice of its
independent public accountants, may instruct me not to make or
permit the transfer because it may interfere with the "pooling of
interests" treatment of the Merger. I shall abide by any such
instructions.
B. POST-CONSUMMATION TRANSFER RESTRICTIONS. During the
period beginning 30 days prior to the consummation of the Merger
and ending immediately after financial results covering at least 30
days of post-Merger combined operations have been published by
Summit by means of the filing of a Form 10-Q or Form 8-K under the
Securities Exchange Act of 1934, the issuance of a quarterly
earnings report, or any other public issuance which satisfies the
requirements of ASR 135, I shall not transfer any Garden State
Common Stock owned by me, or otherwise reduce my risk (as such term
is defined by ASR 135) with respect to such Garden State Common
Stock, and I shall not permit any relative who shares my home, or
any person or entity who or which I control, to transfer any Garden
State Common Stock owned by such person or entity, or otherwise
reduce such person or entity's risk (as such term is defined by ASR
135) with respect to such Garden State Common Stock. For Purposes
of this paragraph, "Garden State Common Stock" includes the Summit
Common Stock into which the Garden State Common Stock or Options is
converted.
C. NEED FOR REGISTRATION OR EXEMPTION IN CONNECTION
WITH TRANSFERS. I have been advised that the issuance of Summit
Common Stock to me pursuant to the Merger will be registered with
the Commission under the Act on a Registration Statement on Form
S-4. However, I have also been advised that, since I may be deemed
to be an affiliate of the Company at the time the Merger is
submitted for a vote of the Company's stockholders, any transfer by
me of Summit Common Stock received by me in the Merger is
restricted under Rule 145 promulgated by the Commission under the
Act. I may not transfer Summit Common Stock received by me or by
any relative who shares my home or by any person or entity who or
which I control, unless (i) such transfer is registered under the
Act, (ii) such transfer is made in conformity with the volume and
other limitations of Rule 145 promulgated by the Commission under
the Act, or (iii) in the opinion of counsel reasonably acceptable
to Summit, such transfer is otherwise exempt from registration
under the Act.
D. STOP TRANSFER INSTRUCTIONS; LEGEND ON CERTIFICATES.
I also understand that stop transfer instructions will be given to
Summit's transfer agents with respect to the Summit Securities and
that there will be placed on the certificates of the Summit
Securities issued to me or to any relative who shares my home or to
any person or entity who or which I control, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT
DATED JUNE 13, 1995 BETWEEN THE REGISTERED HOLDER HEREOF AND THE
SUMMIT BANCORPORATION, A COPY OF WHICH IS AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICE OF THE SUMMIT BANCORPORATION."
E. CONSULTATION WITH COUNSEL. I have carefully read
this letter and the Agreement and discussed the requirements of
such documents and other applicable limitations upon my ability to
transfer Summit Common Stock to the extent I felt necessary with my
counsel or counsel for the Company.
Execution of this letter is not an admission on my part
that I am an "affiliate" of the Company as described in the second
paragraph of this letter, or a waiver of any rights I may have to
object to any claim that I am such an affiliate on or after the
date of this letter. This letter shall terminate concurrently with
any termination of the Agreement in accordance with its terms.
Very truly yours,
______________________________
Name:
Accepted this ____ day of
June, 1995 by
THE SUMMIT BANCORPORATION
By:____________________________
Name:
Title:
SCHEDULE 5.16-2
SUMMIT AFFILIATE LETTER
June __, 1995
THE SUMMIT BANCORPORATION
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of Garden State BancShares, Inc., a
New Jersey corporation ("Garden State") with and into The Summit
Bancorporation, a New Jersey corporation ("Summit"), pursuant to
the Agreement and Plan of Merger dated as of June __, 1995 (the
"Agreement") among Summit, Garden State, Summit Bank and Garden
State Bank. I currently own shares of Summit's common stock, no
par value ("Summit Common Stock").
I have been advised that as of the date of this letter I
may be deemed to be an "affiliate" of Summit, as the term
"affiliate" is used for purposes of the rules and regulations of
the Securities and Exchange Commission (the "Commission")
applicable to the determination of whether a merger can be
accounted for as a "pooling of interests" as specified in the
Commission's Accounting Series Release 135, as amended by Staff
Accounting Bulletins Nos. 65 and 76 ("ASR 135").
I represent and covenant with Summit and Garden State
that:
A. TRANSFER RESTRICTIONS PRIOR TO MERGER CONSUMMATION.
During the period beginning on the date hereof and ending 30 days
prior to the consummation of the Merger, I shall not sell, transfer
or otherwise dispose of ("transfer") any Summit Common Stock owned
by me, and I shall not permit any relative who shares my home, or
any person or entity who or which I control, from transferring any
Summit Common Stock owned by such person or entity, without
notifying Summit in advance of the proposed transfer and giving
Summit a reasonable opportunity to object to the transfer before it
is consummated. Summit, upon advice of its independent public
accountants, may instruct me not to make or permit the transfer
because it may interfere with the "pooling of interests" treatment
of the Merger. I shall abide by any such instructions.
B. POST-CONSUMMATION TRANSFER RESTRICTIONS. During the
period beginning 30 days prior to the consummation of the Merger
and ending immediately after financial results covering at least 30
days of post-Merger combined operations have been published by
Summit by means of filing of a Form 10-Q or Form 8-K under the
Securities Exchange Act of 1934, the issuance of a quarterly
earnings report, or any other public issuance which satisfies the
requirements of ASR 135, I shall not transfer any Summit Common
Stock owned by me, and I shall not permit any relative who shares
my home, or any person or entity who or which I control, to
transfer any Summit Common Stock owned by such person or entity.
C. CONSULTATION WITH COUNSEL. I have carefully read
this letter and the Agreement and discussed the requirements of
such documents and other applicable limitations upon my ability to
transfer Summit Common Stock to the extent I felt necessary with my
counsel or counsel for Summit.
Execution of this letter is not an admission on my part
that I am an "affiliate" of Summit as described in the second
paragraph of this letter, or a waiver of any rights I may have to
object to any claim that I am such an affiliate on or after the
date of this letter. This letter shall terminate concurrently with
any termination of the Agreement in accordance with its terms.
Very truly yours,
_____________________________
Name:
Accepted this ___ day of
June, 1995 by
THE SUMMIT BANCORPORATION
By:___________________________
Name:
Title:
SCHEDULE 6.2
FORM OF OPINION OF COUNSEL TO
GARDEN STATE TO BE DELIVERED TO
SUMMIT AT THE EFFECTIVE TIME
(Capitalized terms used herein and not otherwise defined have the
meanings given them in the Agreement)
(a) Garden State is a corporation validly existing and
in good standing under the laws of the State of New Jersey. Garden
State has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as described
in the Proxy Statement/Prospectus on page __ under the caption
_________________. Garden State is registered as a bank holding
company under the BHCA.
(b) Each Subsidiary of Garden State listed as such in
the Garden State Disclosure Schedule is validly existing and in
good standing under the laws of the jurisdiction of its
incorporation. The Bank is a bank chartered under the laws of the
State of New Jersey. The Bank has the corporate power and
authority to own or lease all of its properties and assets and to
carry on its business as described in the Proxy
Statement/Prospectus on page __ under the caption
_________________.
(c) The authorized capital stock of Garden State
consists of ___________ shares of common stock, no par value per
share ("Garden State Common Stock"), of which we understand ______
shares are issued and outstanding. Except for any Garden State
Common Stock issuable upon exercise of outstanding Garden State
Options granted pursuant to the Garden State Option Plan and the
Summit Stock Option, we are not aware of any outstanding
subscription rights, options, conversion rights, warrants or other
agreements or commitments of any nature whatsoever (either firm or
conditional) obligating Garden State to issue, deliver or sell,
cause to be issued, delivered or sold, or restricting Garden State
from selling any additional Garden State Common Stock or obligating
Garden State to grant, extend or enter into any such agreement or
commitment. All of the outstanding shares of capital stock of each
Subsidiary of Garden State listed as such in the Garden State
Disclosure Schedule have been validly authorized and issued and we
are not aware of any liens, claims, equities, restrictions or
encumbrances created by Garden State on Garden State's ownership
thereof.
(d) The Agreement has been duly authorized, executed and
delivered by Garden State and the Bank and constitutes the valid
and binding obligations of Garden State and the Bank, respectively,
enforceable in accordance with its terms, except that the
enforceability of the obligations of Garden State and the Bank may
be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, or other laws heretofore or hereafter
enacted relating to or affecting the enforcement of creditors'
rights generally and by principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law). In addition, certain remedial and other provisions of the
Agreement may be limited by implied covenants of good faith, fair
dealing, and commercially reasonable conduct, by judicial
discretion, in the instance of equitable remedies, and by
applicable public policies and laws.
(e) The execution and delivery of the Agreement and the
Bank Merger Agreement and the consummation of the transactions
contemplated thereby will not (i) conflict with or violate any
provision of or result in the breach of any provision of the
respective certificates of incorporation or by-laws of Garden State
or the Bank; (ii) conflict with or violate in any material respect,
or result in a material breach or violation of the terms or
provisions of, or constitute a default under, or result in (whether
upon or after the giving of notice or lapse of time or both) any
material obligation under, any indenture, mortgage, deed of trust
or loan agreement or any other agreement, instrument, judgment,
order, arbitration award or decree of which we are aware and to
which Garden State or the Bank is a party or by which Garden State
or the Bank is bound; or (iii) cause Garden State or the Bank to
violate any law, rule or regulation applicable to Garden State or
the Bank: except with respect to (ii) and (iii) above, such as in
the aggregate will not have a material adverse effect on the
ability of Garden State and the Bank to consummate the transactions
contemplated by the Agreement.
(f) All actions of the directors and stockholders of
Garden State and of the Bank required by law, or by the respective
certificates of incorporation or by-laws of Garden State or the
Bank, to be taken by Garden State or the Bank to authorize the
execution, delivery and performance of the Agreement and
consummation of the Merger have been duly taken.
(g) Assuming that there has been due authorization of
the Merger by all necessary corporate and governmental proceedings
on the part of Garden State and that Garden State has taken all
action required to be taken by it prior to the Effective Time, upon
the appropriate filing of the Certificate of Merger in respect of
the Merger with the New Jersey Secretary of State in accordance
with Section 1.6 of the Agreement, the Merger will become effective
at the time of such filing, and upon effectiveness of the Merger
each share of Garden State Common Stock will be converted as
provided in Article II of the Agreement.
(h) No approvals, authorizations, consents or other
actions or filings under federal law or applicable state law
("Approvals") are required to be obtained by Garden State or the
Bank in order to permit the execution and delivery of the Agreement
by Summit and the Bank and the performance by Garden State and the
Bank of the transactions contemplated thereby other than [list
Approvals which have been obtained], which have been obtained,
Approvals or consents required to be obtained by Summit or Summit
Bank, and Approvals not required or necessary to be obtained on the
date hereof.
(i) We are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Proxy Statement/Prospectus and make no
representation that we have independently verified the accuracy,
completeness or fairness of such statements, but, without in any
way limiting the generality of the foregoing, based upon our
examination of the Proxy Statement/Prospectus (i) the Proxy
Statement/Prospectus (except for financial statements and other
tabular financial information, and other financial and statistical
data and information, as to which we express no opinion) complies
as to form in all material respects with the 1933 Act and the
applicable laws and regulations thereunder, (ii) no facts have come
to our attention that caused us to believe that (except for
financial statements and other tabular financial information, as to
which we do not express any belief) the Proxy Statement/Prospectus
on the date of the mailing thereof and on the date of the meeting
of stockholders of Garden State at which the Agreement was
approved, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(j) Except as set forth in the Garden State Disclosure
Schedule, and other than ordinary routine litigation incidental to
the business of Garden State or its Subsidiaries, we are not aware
of any material action, suit or proceeding or investigation pending
or threatened against or affecting the business, operations,
property or financial condition of Garden State or any of its
Subsidiaries, at law or in equity, in any court or before any
Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, except those
which, if decided adversely to Garden State or any of its
Subsidiaries, would not have a material adverse effect on Garden
State and its Subsidiaries, taken as a whole; provided, however, we
are not counsel to Garden State or its Subsidiaries in certain
litigation and with respect to any such litigation we are relying
upon the representation and warranty of Garden State made in
Section 3.7 of the Agreement with respect to material litigation.
* * * * * * *
In rendering their opinion, counsel to Garden State (A)
may, to the extent they deem proper and so specify in their
opinion, rely upon the opinion of other counsel as to matters
involving the application of laws of any jurisdiction other than
the United States or the State of New Jersey, or may exclude from
their opinion the substance included in the opinions of other
counsel given directly to Garden State and (B) may rely, as to
matters of fact, on certificates of responsible officers of Garden
State, the Bank, or other Subsidiaries of Garden State and public
officials; provided copies of any such opinions or certificates are
delivered to Garden State together with the opinion to be rendered
hereunder by counsel to Garden State. Counsel to Garden State may
assume that any agreement is the valid and binding obligation of
any parties to such agreement other than Garden State and the Bank.
As to matters of fact, counsel to Garden State may also rely upon
the representations and warranties made by Garden State to Garden
State in the Agreement as though such representations and
warranties were made directly to counsel. Counsel to Garden State
may also rely upon the genuineness of signatures and the
authenticity of copies.
SCHEDULE 6.3
FORM OF OPINION OF COUNSEL TO
SUMMIT TO BE DELIVERED TO
GARDEN STATE AT THE EFFECTIVE TIME
(Capitalized terms used herein and not otherwise defined have the
meanings given them in the Agreement)
(a) Summit is a corporation validly existing and in good
standing under the laws of the State of New Jersey. Summit has the
corporate power and authority to own or lease all of its properties
and assets and to carry on its business as described in the Proxy
Statement/Prospectus on page __ under the caption
_________________. Summit is registered as a bank holding company
under the BHCA.
(b) Each Subsidiary of Summit listed as such in the
Summit Disclosure Schedule is validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Summit
Bank is a bank chartered under the laws of the State of New Jersey.
Summit Bank has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as
described in the Proxy Statement/Prospectus on page __ under the
caption _________________.
(c) The authorized capital stock of Summit consists of
___________ shares of common stock, ____ par value per share
("Summit Common Stock"), of which we understand ______ shares are
issued and outstanding. Except for any Summit Common Stock
issuable upon exercise of outstanding stock options and stock
appreciation rights granted pursuant to the Summit Option Plan, we
are not aware of any outstanding subscription rights, options,
conversion rights, warrants or other agreements or commitments of
any nature whatsoever (either firm or conditional) obligating
Summit to issue, deliver or sell, cause to be issued, delivered or
sold, or restricting Summit from selling any additional Summit
Common Stock or obligating Summit to grant, extend or enter into
any such agreement or commitment [except as may be provided in any
acquisition agreement Summit may enter into after the date of
execution of the Agreement]. All of the outstanding shares of
capital stock of each Subsidiary of Summit listed as such in the
Summit Disclosure Schedule have been validly authorized and issued
and we are not aware of any liens, claims, equities, restrictions
or encumbrances created by Summit on Summit's ownership thereof.
The Summit Common Stock to be issued in connection with the Merger
in accordance with Article II of the Agreement, when so issued in
accordance therewith, will be duly authorized, validly issued,
fully paid and non-assessable, free of preemptive rights and free
and clear of all liens, encumbrances or restrictions created by
Summit.
(d) The Agreement has been duly authorized, executed and
delivered by Summit and Summit Bank and constitutes the valid and
binding obligations of Summit and Summit Bank, respectively,
enforceable in accordance with its terms, except that the
enforceability of the obligations of Summit and Summit Bank may be
limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, or other laws heretofore or hereafter
enacted relating to or affecting the enforcement of creditors'
rights generally and by principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law). In addition, certain remedial and other provisions of the
Agreement may be limited by implied covenants of good faith, fair
dealing, and commercially reasonable conduct, by judicial
discretion, in the instance of equitable remedies, and by
applicable public policies and laws.
(e) The execution and delivery of the Agreement and the
Bank Merger Agreement and the consummation of the transactions
contemplated thereby will not (i) conflict with or violate any
provision of or result in the breach of any provision of the
respective certificates of incorporation or by-laws of Summit or
Summit Bank; (ii) conflict with or violate in any material respect,
or result in a material breach or violation of the terms or
provisions of, or constitute a default under, or result in (whether
upon or after the giving of notice or lapse of time or both) any
material obligation under, any indenture, mortgage, deed of trust
or loan agreement or any other agreement, instrument, judgment,
order, arbitration award or decree of which we are aware and to
which Summit or Summit Bank is a party or by which Summit or Summit
Bank is bound; or (iii) cause Summit or Summit Bank to violate any
law, rule or regulation applicable to Summit or Summit Bank: except
with respect to (ii) and (iii) above, such as in the aggregate will
not have a material adverse effect on the ability of Summit and
Summit Bank to consummate the transactions contemplated by the
Agreement.
(f) All actions of the directors and stockholders of
Summit and of Summit Bank required by law, or by the respective
certificates of incorporation or by-laws of Summit or Summit Bank,
to be taken by Summit or Summit Bank to authorize the execution,
delivery and performance of the Agreement and consummation of the
Merger have been duly taken.
(g) Assuming that there has been due authorization of
the Merger by all necessary corporate and governmental proceedings
on the part of Garden State and that Garden State has taken all
action required to be taken by it prior to the Effective Time, upon
the appropriate filing of the Certificate of Merger in respect of
the Merger with the New Jersey Secretary of State in accordance
with Section 1.6 of the Agreement, the Merger will become effective
at the time of such filing, and upon effectiveness of the Merger
each share of Garden State Common Stock will be converted as
provided in Article II of the Agreement.
(h) No approvals, authorizations, consents or other
actions or filings under federal law or applicable state law
("Approvals") are required to be obtained by Summit or Summit Bank
in order to permit the execution and delivery of the Agreement by
Summit and Summit Bank and the performance by Summit and Summit
Bank of the transactions contemplated thereby other than [list
Approvals which have been obtained], which have been obtained,
Approvals or consents required to be obtained by Garden State or
the Bank, and Approvals not required or necessary to be obtained on
the date hereof.
(i) We are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Proxy Statement/Prospectus and make no
representation that we have independently verified the accuracy,
completeness or fairness of such statements, but, without in any
way limiting the generality of the foregoing, based upon our
examination of the Proxy Statement/Prospectus (i) the Proxy
Statement/Prospectus (except for financial statements and other
tabular financial information, and other financial and statistical
data and information, as to which we express no opinion) complies
as to form in all material respects with the 1933 Act and the
applicable laws and regulations thereunder, (ii) no facts have come
to our attention that caused us to believe that (except for
financial statements and other tabular financial information, as to
which we do not express any belief) the Proxy Statement/Prospectus
on the date of the mailing thereof and on the date of the meeting
of stockholders of Garden State at which the Agreement was
approved, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(j) Except as set forth in the Summit Disclosure
Schedule, and other than ordinary routine litigation incidental to
the business of Summit or its Subsidiaries, we are not aware of any
material action, suit or proceeding or investigation pending or
threatened against or affecting the business, operations, property
or financial condition of Summit or any of its Subsidiaries, at law
or in equity, in any court or before any Federal, state, municipal
or other governmental department, commission, board, bureau, agency
or instrumentality, except those which, if decided adversely to
Summit or any of its Subsidiaries, would not have a material
adverse effect on Summit and its Subsidiaries, taken as a whole.
(k) The Registration Statement has been declared
effective by the SEC under the 1933 Act and we are not aware that
any stop order suspending the effectiveness has been issued under
the 1933 Act or proceedings therefor initiated or threatened by the
SEC.
* * * * * * *
In rendering their opinion, counsel to Summit (A) may,
to the extent they deem proper and so specify in their opinion,
rely upon the opinion of other counsel as to matters involving the
application of laws of any jurisdiction other than the United
States or the State of New Jersey, or may exclude from their
opinion the substance included in the opinions of other counsel
given directly to Garden State and (B) may rely, as to matters of
fact, on certificates of responsible officers of Summit, Summit
Bank, or other Subsidiaries of Summit and public officials;
provided copies of any such opinions or certificates are delivered
to Garden State together with the opinion to be rendered hereunder
by counsel to Summit. Counsel to Summit may assume that any
agreement is the valid and binding obligation of any parties to
such agreement other than Summit. As to matters of fact, counsel
to Summit may also rely upon the representations and warranties
made by Summit to Garden State in the Agreement as though such
representations and warranties were made directly to counsel.
Counsel to Summit may also rely upon the genuineness of signatures
and the authenticity of copies.
Exhibit 2(b) Stock Option Agreement, dated June 13, 1995,
between The Summit Bancorporation and Garden State
BancShares, Inc.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated June 13,
1995, is by and between THE SUMMIT BANCORPORATION, a New Jersey
corporation and registered bank holding company ("Summit"), and
Garden State BancShares, Inc. a New Jersey corporation ("Garden
State") and registered bank holding company for Garden State Bank
("Bank").
BACKGROUND
1. Summit, Garden State, the Bank and Summit Bank
("Summit Bank"), a wholly-owned subsidiary of Summit, as of the
date hereof, have executed an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which Summit will acquire Garden
State through a merger of Garden State with and into Summit (the
"Merger").
2. As an inducement required by Summit to enter into
the Merger Agreement, Garden State has agreed to grant to Summit an
option to purchase authorized but unissued shares of common stock
of Garden State in an amount and on the terms and conditions
hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger
Agreement, Summit and Garden State, intending to be legally bound
hereby, agree:
1. GRANT OF OPTION. Garden State hereby grants to
Summit the option to purchase 752,770 shares (the "Option Shares")
of common stock, no par value (the "Common Stock") of Garden State
at an exercise price of $15.75 per share (the "Option Price"), on
the terms and conditions set forth herein (the "Option").
2. EXERCISE OF OPTION. The Option shall not be
exercisable until the occurrence of a Triggering Event (as such
term is hereinafter defined). Upon or after the occurrence of a
Triggering Event (as such term is hereinafter defined), Summit may
exercise the Option, in whole or in part, at any time or from time
to time in accordance with the terms and conditions hereof.
The term "Triggering Event" means the occurrence of any
of the following events:
A person or group (as such terms are defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations thereunder) other than Summit or an
affiliate of Summit:
a. acquires beneficial ownership (as such term is
defined in Rule 13d-3 as promulgated under the Exchange Act) of at
least 20% of the then outstanding shares of Common Stock;
b. enters into a written letter of intent or an
agreement with Garden State pursuant to which such person or any
affiliate of such person would (i) merge or consolidate or enter
into any similar transaction with Garden State, (ii) acquire all or
a significant portion of the assets or liabilities of Garden State
or (iii) acquire beneficial ownership of securities representing,
or the right to acquire beneficial ownership or to vote securities
representing, 20% or more of the then outstanding shares of Common
Stock;
c. makes a filing with any bank or thrift
regulatory authority or publicly announces a bona fide proposal (a
"Proposal") for (i) any merger, consolidation or acquisition of all
or a significant portion of all the assets or liabilities of
Garden State or any other business combination involving Garden
State, or (ii) a transaction involving the transfer of beneficial
ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 20% or
more of the outstanding shares of Common Stock, and thereafter, if
such Proposal has not been Publicly Withdrawn (as such term is
hereinafter defined) at least 15 days prior to the meeting of
stockholders of Garden State called to vote on the Merger and
Garden State stockholders fail to approve the Merger by the vote
required by applicable law at the meeting of stockholders called
for such purpose; or
d. makes a bona fide Proposal and thereafter, but
before such Proposal has been Publicly Withdrawn, Garden State
willfully takes any action in any manner which would materially
interfere with its desire or ability to consummate the Merger or
would materially reduce the value of the Merger to Summit.
The term "Triggering Event" also means the taking of any
direct or indirect action by Garden State or any of its directors,
officers or agents to invite, encourage or solicit any proposal
which has as its purpose a tender offer for the shares of Common
Stock, a merger, consolidation, plan of exchange, plan of
acquisition or reorganization of Garden State, or a sale of shares
of Common Stock or any significant portion of Garden State's assets
or liabilities.
The term "significant portion" means 25% of the assets or
liabilities of Garden State.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the
Proposal coupled with a public announcement of no further interest
in pursuing such Proposal or in acquiring any controlling influence
over Garden State or in soliciting or inducing any other person
(other than Summit or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be
exercised at any time (i) in the absence of any required
governmental or regulatory approval or consent necessary for Garden
State to issue the Option Shares or Summit to exercise the Option
or prior to the expiration or termination of any waiting period
required by law, or (ii) so long as any injunction or other order,
decree or ruling issued by any federal or state court of competent
jurisdiction is in effect which prohibits the sale or delivery of
the Option Shares.
Garden State shall notify Summit promptly in writing of
the occurrence of any Triggering Event known to it, it being
understood that the giving of such notice by Garden State shall not
be a condition to the right of Summit to exercise the Option.
Garden State will not take any action which would have the effect
of preventing or disabling Garden State from delivering the Option
Shares to Summit upon exercise of the Option or otherwise
performing its obligations under this Agreement.
In the event Summit wishes to exercise the Option, Summit
shall send a written notice to Garden State (the date of which is
hereinafter referred to as the "Notice Date") specifying the total
number of Option Shares it wishes to purchase and a place and date
for the closing of such a purchase (a "Closing"); provided,
however, that a Closing shall not occur prior to two days after the
later of receipt of any necessary regulatory approvals and the
expiration of any legally required notice or waiting period, if
any.
3. MERGER, CONSOLIDATION, ETC. (a) In case prior to
the termination of this Agreement (1) Garden State shall
consolidate with or merge into any Person, other than Summit or one
of its Affiliates, and Garden State shall not be the continuing or
surviving corporation of such consolidation or merger, (2) any
Person, other than Summit or one of its Affiliates, shall merge
into Garden State and Garden State shall be the continuing or
surviving corporation, but, in connection with such merger, the
then outstanding 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 Common Stock after such
merger shall represent less than 50% of the outstanding shares and
share equivalents of the merged company, or (3) Garden State shall
sell or otherwise transfer all or substantially all of its assets
to any Person, other than Summit or one of its Affiliates, then,
and in each such case, the agreement governing such transaction
shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into and exchangeable for
an option (the "Substitute Option"), at the election of the Holder,
of either (i) the Acquiring Corporation or (ii) any Person which
controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean either
(i) the continuing or surviving corporation of a consolidation or
merger with Garden State (if other than Garden State), (ii) Garden
State in a merger in which Garden State is the continuing or
surviving person, or (iii) the transferee of all or substantially
all of Garden State's assets, as applicable.
(ii) "Affiliate" shall have the meaning ascribed to
such term in Rule 12b-2 promulgated under the Exchange Act.
(iii) "Assigned Value" shall mean the Market/Offer
Price, as defined below; provided, however, that in the event of a
sale of all or substantially all of Garden State's assets, the
Assigned Value shall mean the sum of the price paid in such sale
for such assets and the current market value of the remaining
assets of Garden State as determined by the Valuation Expert (less
the book value of the remaining liabilities), divided by the number
of shares of Common Stock of Garden State outstanding at the time
of such sale.
(iv) "Average Price" shall mean the average closing
price of a share of Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the
shares of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided, that if Garden State is
the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by the
Person merging into Garden State or by any company which controls
such Person, as the Holder may elect.
(v) "Holder" shall mean a holder of the Option
evidenced by this Agreement.
(vi) "Market/Offer Price" shall mean the highest of
(a) the price per share of Common Stock at which a tender offer or
exchange offer therefor has been consummated by any person (other
than Summit or any of its Affiliates), if, upon consummation of
such offer, the offeror had beneficial ownership of 20% or more of
the Common Stock then outstanding (exclusive of shares issuable
upon the exercise of the Option), (b) the consideration per share
of Common Stock to be paid by any third party pursuant to an
agreement with Garden State, and (c) the highest closing sales
price for Common Stock within the six-month period immediately
preceding the consolidation, merger or sale in question. The value
of any non-cash consideration under clause (a) or (b) above shall
be the amount determined by the Valuation Expert.
(vii) A "Person" shall mean any individual, firm,
corporation or other entity and include as well any syndicate or
group deemed to be a "person" pursuant to Section 13(e)(3) of the
Exchange Act.
(viii) "Substitute Common Stock" shall mean the
common stock issuable by the issuer of the Substitute Option.
(ix) "Valuation Expert" shall mean a nationally
recognized investment banking firm selected by the Holder (or by a
majority in interest of the Holders if there shall be more than one
Holder) and reasonably acceptable to Garden State.
(c) Except as otherwise provided herein, the Substitute
Option shall 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 the Holder. The issuer of the
Substitute Option shall also enter into an agreement with the then
Holder or Holders of the Substitute Option in substantially the
same form as this Agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to (i) the
Assigned Value multiplied by the number of shares of Common Stock
for which the Option is then exercisable, divided by (ii) the
Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall be equal to the Option Price
multiplied by a fraction of which the numerator is the number of
shares of Common Stock for which the Option is then exercisable and
the denominator is the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9% of the number of shares of Substitute Common Stock
outstanding prior to exercise of the Substitute Option.
(f) Garden State shall not enter into any transaction
described in paragraph (a) of this Section 3 unless the Acquiring
Corporation and any Person which controls the Acquiring Corporation
assumes in writing all the obligations of Garden State hereunder.
4. PAYMENT AND DELIVERY OF CERTIFICATES. At any
Closing hereunder (a) Summit will make payment to Garden State of
the aggregate price for the Option Shares so purchased by wire
transfer of immediately available funds to an account designated by
Garden State, (b) Garden State will deliver to Summit a stock
certificate or certificates representing the number of Option
Shares so purchased, free and clear of all liens, claims, charges
and encumbrances of any kind or nature whatsoever created by or
through Garden State, registered in the name of Summit or its
designee, in such denominations as were specified by Summit in its
notice of exercise and bearing a legend as set forth below and (c)
Summit shall pay any transfer or other taxes required by reason of
the issuance of the Option Shares so purchased.
Unless a registration statement is filed and declared
effective under Section 5 hereof, a legend will be placed on each
stock certificate evidencing Option Shares issued pursuant to this
Agreement, which legend will read substantially as follows:
The shares of stock evidenced by this certificate have
not been registered for sale under the Securities Act of 1933 (the
"1933 Act"). These shares may not be sold, transferred or
otherwise disposed of unless a registration statement with respect
to the sale of such shares has been filed under the 1933 Act and
declared effective or, in the opinion of counsel reasonably
acceptable to Garden State BancShares, Inc., said transfer would be
exempt from registration under the provisions of the 1933 Act and
the regulations promulgated thereunder.
5. REGISTRATION RIGHTS. Upon or after the occurrence
of a Triggering Event and upon receipt of a written request from
Summit, Garden State shall promptly prepare and file a registration
statement with the Securities and Exchange Commission, covering the
Option and such number of Option Shares as Summit shall specify in
its request, and Garden State shall use its best efforts to cause
such registration statement to be declared effective and remain
current in order to permit the sale or other disposition of the
Option and the Option Shares, provided that Summit shall in no
event have the right to have more than one such registration
statement become effective and Garden State shall not be required
to maintain the effectiveness of such registration statement for
more than 180 days.
In connection with such filing, Garden State shall use
its best efforts to cause to be delivered to Summit such
certificates, opinions, accountant's letters and other documents as
Summit shall reasonably request and as are customarily provided in
connection with registrations of securities under the Securities
Act of 1933, as amended. All expenses incurred by Garden State in
complying with the provisions of this Section 5, including without
limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel for Garden State and blue sky
fees and expenses shall be paid by Garden State. Underwriting
discounts and commissions to brokers and dealers relating to the
Option Shares, fees and disbursements of counsel to Summit and any
other expenses incurred by Summit in connection with such
registration shall be borne by Summit. In connection with such
filing, Garden State shall indemnify and hold harmless Summit
against any losses, claims, damages or liabilities, joint or
several, to which Summit may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement with
respect to Garden State or alleged untrue statement with respect to
Garden State of any material fact with respect to Garden State
contained in any preliminary or final registration statement or any
amendment or supplement thereto, or arise out of a material fact
with respect to Garden State required to be stated therein or
necessary to make the statements therein with respect to Garden
State not misleading; and Garden State will reimburse Summit for
any legal or other expense reasonably incurred by Summit in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that Garden State
will not be liable in any case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement of omission or alleged
omission made in such preliminary or final registration statement
or such amendment or supplement thereto in reliance upon and in
conformity with written information furnished by or on behalf of
Summit specifically for use in the preparation thereof. Summit
will indemnify and hold harmless Garden State to the same extent as
set forth in the immediately preceding sentence but only with
reference to written information specifically furnished by or on
behalf of Summit for use in the preparation of such preliminary or
final registration statement or such amendment or supplement
thereto; and Summit will reimburse Garden State for any legal or
other expense reasonably incurred by Garden State in connection
with investigating or defending any such loss, claim, damage,
liability or action.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the
event of any change in the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
conversions, exchanges of shares or the like, then the number and
kind of Option Shares and the Option Price shall be appropriately
adjusted.
In the event any capital reorganization or
reclassification of the Common Stock, or any consolidation, merger
or similar transaction of Garden State with another entity, or in
the event any sale of all or substantially all of the assets of
Garden State shall be effected in such a way that the holders of
Common Stock shall be entitled to receive stock, securities or
assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provisions (in form reasonably
satisfactory to the holder hereof) shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive upon
the basis and upon the terms and conditions specified herein and in
lieu of the Common Stock immediately theretofore purchasable and
receivable upon exercise of the rights represented by the Option,
such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore purchasable and receivable
upon exercise of the rights represented by the Option had such
reorganization, reclassification, consolidation, merger or sale not
taken place; provided, however, that if such transaction results in
the holders of Common Stock receiving only cash, the holder hereof
shall be paid the difference between the Option Price and such cash
consideration without the need to exercise the Option.
7. FILINGS AND CONSENTS. Each of Summit and Garden
State will use its best efforts to make all filings with, and to
obtain consents of, all third parties and governmental authorities
necessary to the consummation of the transactions contemplated by
this Agreement.
Exercise of the Option herein provided shall be subject
to compliance with all applicable laws including, in the event
Summit is the holder hereof, approval of the Board of Governors of
the Federal Reserve System and Garden State agrees to cooperate
with and furnish to the holder hereof such information and
documents as may be reasonably required to secure such approvals.
8. REPRESENTATIONS AND WARRANTIES OF GARDEN STATE.
Garden State hereby represents and warrants to Summit as follows:
a. DUE AUTHORIZATION. Garden State has full
corporate power and authority to execute, deliver and perform this
Agreement and all corporate action necessary for execution,
delivery and performance of this Agreement has been duly taken by
Garden State.
b. AUTHORIZED SHARES. Garden State has taken and,
as long as the Option is outstanding, will take all necessary
corporate action to authorize and reserve for issuance all shares
of Common Stock that may be issued pursuant to any exercise of the
Option.
c. NO CONFLICTS. Neither the execution and
delivery of this Agreement nor consummation of the transactions
contemplated hereby (assuming all appropriate regulatory approvals)
will violate or result in any violation or default of or be in
conflict with or constitute a default under any term of the
certificate of incorporation or by-laws of Garden State or, to its
knowledge, any agreement, instrument, judgment, decree, statute,
rule or order applicable to Garden State.
9. SPECIFIC PERFORMANCE. The parties hereto
acknowledge that damages would be an inadequate remedy for a breach
of this Agreement and that the obligations of the parties hereto
shall be specifically enforceable. Notwithstanding the foregoing,
Summit shall have the right to seek money damages against Garden
State for a breach of this Agreement.
10. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of
them with respect to the subject matter hereof.
11. ASSIGNMENT OR TRANSFER. Summit may not sell, assign
or otherwise transfer its rights and obligations hereunder, in
whole or in part, to any person or group of persons other than to
an affiliate of Summit. Summit represents that it is acquiring the
Option for Summit's own account and not with a view to or for sale
in connection with any distribution of the Option. Summit is aware
that presently neither the Option nor the Option Shares are being
offered by a registration statement filed with, and declared
effective by, the Securities and Exchange Commission, but instead
are being offered in reliance upon the exemption from the
registration requirements pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
12. AMENDMENT OF AGREEMENT. By mutual consent of the
parties hereto, this Agreement may be amended in writing at any
time, for the purpose of facilitating performance hereunder or to
comply with any applicable regulation of any governmental authority
or any applicable order of any court or for any other purpose.
13. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
14. NOTICES. All notices or other communications which
are required or permitted hereunder shall be in writing and
sufficient if delivered personally or sent by telecopier with
confirming copy sent the same day by registered or certified mail,
postage prepaid, as follows:
(a) If to Summit, to:
The Summit Bancorporation
One Main Street, Second Floor
Chatham, New Jersey 07928
Attn.: Robert G. Cox
President and Chief Executive Officer
Telecopier No. (201) 701-2520
Copy to:
Bourne, Noll & Kenyon
382 Springfield Avenue
Summit, New Jersey 07901
Attn: Charles R. Berman, Esq.
Telecopier No. (908) 277-6808
(b) If to Garden State, to:
Garden State BancShares, Inc.
2290 West County Line Road
Jackson, New Jersey 08527
Attn: Theodore D. Bessler,
President and Chief Executive Officer
Telecopier No. (908) 905-2339
Copy to:
Pitney, Hardin, Kipp & Szuch
Delivery:
200 Campus Drive
Florham Park, New Jersey 07932
Mail:
P.O. Box 1945
Morristown, New Jersey 07962-1945
Attn.: Ronald H. Janis, Esq.
Telecopier No. (201) 966-1550
or such other addresses as shall be furnished in writing by any
party, and any such notice or communications shall be deemed to
have been given as of the date so delivered or telecopied and
mailed.
15. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New
Jersey.
16. CAPTIONS. The captions in the Agreement are
inserted for convenience and reference purposes, and shall not
limit or otherwise affect any of the terms or provisions hereof.
17. WAIVERS AND EXTENSIONS. The parties hereto may, by
mutual consent, extend the time for performance of any of the
obligations or acts of either party hereto. Each party may waive
(i) compliance with any of the covenants of the other party
contained in this Agreement and/or (ii) the other party's
performance of any of its obligations set forth in this Agreement.
18. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto,
and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement, except as provided
in Section 11 permitting Summit to assign its rights and
obligations hereunder only to an affiliate of Summit.
19. 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.
20. TERMINATION. The Option granted hereby, to the
extent not previously exercised, shall terminate upon the earliest
of (i) 12 months after the first occurrence of a Triggering Event,
(ii) consummation of the Merger, (iii) the termination of the
Merger Agreement in accordance with the terms thereof prior to the
occurrence of a Triggering Event (other than if terminated by
Summit pursuant to Section 7.1(f) thereof due to a failure by
Garden State to fulfill a condition contained in Section 6.2(a)
thereof), (iv) 12 months after the termination of the Merger
Agreement for any reason, provided that the Option shall not
terminate pursuant to this clause (iv) in the event that a
Triggering Event shall have occurred prior to the expiration of
such 12-month period and instead shall terminate in accordance with
clause (i) hereof.
IN WITNESS WHEREOF, each of the parties hereto, pursuant
to resolutions adopted by its Board of Directors, has caused this
Agreement to be executed by its duly authorized officer, all as of
the day and year first above written.
GARDEN STATE BANCSHARES, INC.
By: THEODORE D. BESSLER
______________________________
Theodore D. Bessler
President and
Chief Executive Officer
THE SUMMIT BANCORPORATION
By: ROBERT G. COX
______________________________
Robert G. Cox
President and
Chief Executive Officer
Exhibit 99 Joint Press Release of The Summit Bancorporation and
Garden State BancShares, Inc. dated June 14, 1995
NEWS RELEASE
For Information Contact: John R. Feeney, Senior Executive Vice
President and Chief Financial Officer
(201) 701-2510
William S. Burns, Vice President,
Investor Relations
(201) 701-2581
Lori Friedman, Vice President,
Public Relations
(201) 701-2638
FOR IMMEDIATE RELEASE
THE SUMMIT BANCORPORATION AND GARDEN STATE BANCSHARES, INC.
SIGN DEFINITIVE MERGER AGREEMENT
Chatham and Jackson, New Jersey (June 14, 1995) -- The Summit
Bancorporation (SUMMIT) (NASDAQ: SUBN) and Garden State BancShares,
Inc. (Garden State) (NASDAQ: GRDN) announced today that they have
entered into a definitive agreement for SUMMIT to acquire Garden
State in a tax-free exchange of stock. The agreement contemplates
that each share of Garden State common stock will be exchanged for
1.08 shares of SUMMIT common stock. Based on SUMMIT's stock price
of $20.75 as of June 13, 1995, this transaction is valued at
approximately $67 million, or $22.41 for each Garde State share.
Garden State had approximately 3.0 million common shares
outstanding on March 31, 1995.
Garden State Bank, a wholly-owned subsidiary of Garden State,
had $316 million in assets at March 31, 1995 and 9 retail branch
locations, 8 of which are in Ocean County and 1 in Monmouth County.
Summit Bank, the $5.5 billion commercial banking subsidiary of
SUMMIT, currently has 19 offices in Ocean and 11 in Monmouth.
As a result of the proposed transaction, Garden State Bank and
Summit Bank will be merged. SUMMIT expects the transaction to be
completed by the fourth quarter of 1995 and to be accretive to
earnings per share early in 1996.
The acquisition reinforces SUMMIT's competitive position in
Ocean County, moving it from a fifth position 8% deposit share, to
a strong number two position, with an approximately 12% deposit
share. Commenting on the transaction, SUMMIT's Chief Executive
Officer, Robert G. Cox, said, "In-market acquisitions of quality
institutions like Garden State are important to our strategy of
increasing franchise value by improving our competitive position in
key markets. Over the past two decades, Ocean County's population
growth has been the fastest in New Jersey. SUMMIT has a long
history of serving the businesses and residents of this region and
we look forward to serving an expanded customer base."
Theodore D. Bessler, President and Chief Executive Officer of
Garden State, said "We are pleased to join forces with SUMMIT, a
highly respected bank holding company. The exchange for SUMMIT
stock will provide Garden State shareholders with greatly increased
liquidity. Our customers will benefit from a vast array of
products and services, as well as access to 90 SUMMIT offices in 11
counties."
The merger is subject to approval by Garden State
shareholders, and by the appropriate state and federal banking
authorities. The transaction is expected to be accounted for as a
pooling of interests. In a related action, Garden State has
granted an option to SUMMIT to purchase up to 19.9% of Garden
State's common stock, exercisable under certain circumstances.
Additionally, Garden State has the option, and is expected, to
declare common dividends between June 13, 1995 and closing
equivalent to what Garden State shareholders would have received if
the merger had closed on June 13, 1995. SUMMIT's most recent
common dividend was $.21 per share payable June 15, 1995 to
shareholders of record on May 23, 1995.
The Summit Bancorporation is a $5.5 billion bank holding
company whose principal subsidiary, Summit Bank, was chartered in
1891. Summit Bank operates 90 retain banking offices in Bergen,
Essex, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean,
Somerset, Union and Warren Counties, and is a member of the Federal
Deposit Insurance Corporation (FDIC). Summit Bank provides a full
range of banking services including commercial banking, retail
consumer banking, private banking and asset management services.
The Summit Bancorporation and Summit Bank also operate specialized
financial service affiliates: The Summit Mortgage Company and
Beechwood Insurance Agency, Inc.
