AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated February 17, 1999 between Summit
Bancorp., a New Jersey business corporation ("Summit"), and Prime Bancorp, Inc.,
a Pennsylvania business corporation ("Prime").
W I T N E S S E T H :
WHEREAS, the respective boards of directors of Summit and Prime deem it
advisable and in the best interests of their respective shareholders to adopt a
plan of reorganization in accordance with the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended ( "Code") providing for the
acquisition of Prime by Summit on the terms and conditions provided for in this
Agreement and Plan of Merger ("Agreement");
WHEREAS, the Board of Directors of Summit and Prime have each determined
that the reorganization contemplated by this Agreement ("Reorganization") is
consistent with, and in furtherance of, their respective business strategies and
goals;
WHEREAS, Summit and Prime intend on the day after the date of this
Agreement and in consideration of this Agreement to enter into the Stock Option
Agreement ("Option Agreement") attached hereto as Exhibit B; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Reorganization and also to prescribe
certain other terms and conditions of the Reorganization.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Option
Agreement, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I.
GENERAL PROVISIONS
Section 1.01.The Reorganization.
(a) Upon the terms and subject to the conditions contained in this
Agreement, at the Effective Time (as defined at Section 1.06), the
Reorganization shall be effected as follows:
(1) Prime shall be merged with and into Summit pursuant to and in
accordance with the provisions of, and with the effect provided in, the New
Jersey Business Corporation Act, as amended ("New Jersey Act") and the
Pennsylvania Business Corporation Law, as amended ("Pennsylvania Law"); or
(2) Prime shall be merged into a wholly owned subsidiary of Summit
or a wholly owned subsidiary of Summit shall be merged into Prime, in either
case pursuant to and in accordance with the provisions of, and with the effect
provided in, the corporate laws of the jurisdiction of incorporation of each of
the constituent corporations in such merger ("Applicable Corporation Laws").
(b) Summit shall prior to the Effective Time elect the method for
carrying out the Reorganization from among those methods set forth at Section
1.01(a) ("Reorganization Election") and following an election of the
Reorganization method provided for at Section 1.01(a)(2) Summit shall (i) cause
the wholly owned subsidiary of Summit designated as the constituent corporation
in the Reorganization ("Designated Summit Subsidiary") to approve, execute and
deliver this Agreement in accordance with all Applicable Corporation Laws, (ii)
cause this Agreement to be approved by the sole shareholder of the Designated
Summit Subsidiary, (iii) attach as Exhibit A to this Agreement (A) any
additional terms and conditions to this Agreement required by Applicable
Corporation Laws to effect the Reorganization and other transactions
contemplated by this Agreement, (B) the terms and conditions of any agreement or
plan of merger required by Applicable Corporation Laws, (C) the date and time
that the merger shall be effective or the mechanism for determining the date and
time that the merger shall be effective and (D) such other terms and conditions
as Summit shall determine in its discretion to be desirable and not contrary to
this Agreement or Applicable Corporation Laws regarding the corporate governance
of the corporation surviving the merger contemplated by Section 1.01(a),
including without limitation terms and conditions governing certificates or
articles of incorporation and amendments thereto or restatements thereof,
by-laws of the corporation surviving the merger and amendments thereto, and
directors and officers of the corporation surviving the merger; provided,
however, that no provision of Exhibit A shall (x) alter or change the amount or
kind of consideration to be received by Prime Shareholders (as defined at
Section 1.07(c) below) as provided for in this Agreement, (y) adversely affect
the tax treatment of the Reorganization Consideration (as defined in Section
1.03(a)(2) below) to be received by Prime Shareholders or (z) materially impede
or delay consummation of the transactions contemplated by this Agreement and
(iv) cause the Designated Summit Subsidiary to take all actions appropriate to
accomplish the Reorganization and the other transactions contemplated by this
Agreement. Exhibit A as so constituted shall constitute a part of this Agreement
as fully as if attached hereto on the date hereof without separate execution by
Summit or Prime.
Section 0.00.Xxxxxxx Stock of Summit. All shares of the capital stock of
Summit issued or issued and outstanding immediately prior to the Effective Time,
including the Common Stock, par value $.80 per share, of Summit and the rights
attached thereto ("Summit Rights") pursuant to the Rights Agreement dated as of
August 16, 1989 between Summit and First Chicago Trust Company of New York, as
Rights Agent ("Summit Rights Agreement") (references to "Summit Stock" herein
shall mean the Common Stock of Summit with Summit Rights attached thereto),
shall be unaffected by the Reorganization and shall remain issued or issued and
outstanding, as the case may be, immediately thereafter.
Section 1.03.Terms of Conversion of Prime Capital Stock.
(a) At the Effective Time, by virtue of the Reorganization and without
any action on the part of any shareholder of Prime:
(1) All shares of the Common Stock, par value $1.00 per share, of
Prime ("Prime Stock") which immediately prior to the Effective Time are
beneficially owned either directly, or indirectly through a bank, broker or
other nominee, by Summit or a subsidiary of Summit or Prime or a subsidiary of
Prime (other than Prime Stock held as a result of foreclosures or debts
previously contracted and Prime Stock held in trust, managed, custodial or other
nominee accounts or held by mutual funds for which Prime or any subsidiary of
Prime acts as investment advisor), if any, or held in the treasury of Prime, if
any, shall be canceled and retired and no cash, securities or other
consideration shall be payable or paid or delivered under this Agreement in
exchange for such Prime Stock; and
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(2) Subject to Section 1.03(a)(1), outstanding shares of Prime
Stock held as of the Effective Time by each Prime Shareholder shall be converted
in accordance with the New Jersey Act and the Pennsylvania Law into the right to
receive whole shares of Summit Stock and cash in lieu of fractional shares of
Summit Stock as follows: the aggregate number of shares of Prime Stock held by
each Prime Shareholder shall be multiplied by the Exchange Ratio (as defined at
Section 1.03(c) below) and (i) a Prime Shareholder shall become entitled to
receive whole shares of Summit Stock pursuant to this Section 1.03(a)(2) equal
in number to the whole number which results from the foregoing multiplication,
and (ii) a Prime Shareholder shall become entitled to receive cash pursuant to
this Section 1.03(a)(2) in lieu of a fractional share of Summit Stock, if any,
equal in amount to the product obtained by multiplying the fraction, if any,
which results from the foregoing multiplication by the closing price of one
share of Summit Stock on the New York Stock Exchange ("NYSE") Composite
Transactions List (as reported in The Wall Street Journal or, in the absence
thereof, as reported by another authoritative source mutually agreed upon by
Prime and Summit) on the last trading day ending prior to the Effective Time
("Cash In Lieu Amount"). (The shares of Summit Stock issuable in accordance with
this Section 1.03(a)(2) are sometimes referred to herein as the "Shares"). (The
Shares and any Cash In Lieu Amounts payable in the Reorganization, both adjusted
as and if necessary in accordance with Section 1.03(b), are sometimes
collectively referred to herein as the "Reorganization Consideration").
(b) In the event that, from the date hereof to the Effective Time, the
outstanding Summit Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or there occur other like changes in the outstanding shares
of Summit Stock ("Capital Change"), the Exchange Ratio and, if necessary, the
form and amount of Summit capital stock issuable in the Reorganization in
exchange for Prime Stock shall be appropriately adjusted to give effect to the
Capital Change.
(c) The "Exchange Ratio" is hereby defined to be six hundred seventy-five
thousandths (.675).
(d) Summit agrees that any Summit Rights issued pursuant to the Summit
Rights Agreement shall be issued with respect to each share of Summit Stock
issued pursuant to the terms hereof under the terms of such Summit Rights
Agreement prior to the Effective Time, as well as to take all action necessary
or advisable to enable the holder of each such share of Summit Stock to obtain
the benefit of such Summit Rights Agreement notwithstanding their prior
distribution, including, without limitation, amendment of the Summit Rights
Agreement.
Section 1.04.Reservation of Summit Stock; Issuance of Shares Pursuant to
the Reorganization. Summit shall reserve and make available for issuance to
holders of Prime Stock in connection with the Reorganization, on the terms and
subject to the conditions of this Agreement, sufficient shares of Summit Stock
to effect the conversion contemplated by Section 1.03 and related terms of this
Agreement, which shares, when issued and delivered, will be duly authorized,
legally and validly issued, fully paid and non-assessable and subject to no
preemptive rights. Upon the terms and subject to the conditions of this
Agreement, particularly Sections 1.03 and 1.07, Summit shall issue the Shares
after the Effective Time to Prime Shareholders.
Section 0.00.Xxxxxxxx Agent Arrangements. Prior to the Effective Time,
Summit shall appoint Equiserve First Chicago Trust Division, or another entity
reasonably satisfactory to Prime, as the exchange agent ("Exchange Agent")
responsible for exchanging, in connection with and upon consummation of the
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Reorganization and subject to Sections 1.03 and 1.07, certificates representing
whole shares of Summit Stock ("Summit Certificates") and Cash In Lieu Amounts
for certificates representing shares of Prime Stock ("Prime Certificates") and
Summit shall deliver to the Exchange Agent sufficient Summit Certificates and
cash as shall be required to satisfy Summit's obligations to Prime Shareholders
under Section 1.07(c), prior to the time such obligations arise.
Section 1.06.Effective Time. In the event that pursuant to the
Reorganization Election Summit elects the Reorganization method provided for at
Section 1.01(a)(1), the "Effective Time" of the Reorganization shall be the hour
and the date specified in the certificate of merger of Summit and Prime filed
with the Secretary of State of the State of New Jersey in accordance with
Section 14A:10-4.1 of the New Jersey Act ("NJ Certificate") and the articles of
merger filed with the Department of State of the Commonwealth of Pennsylvania
("Pennsylvania Articles") in accordance with Section 1927 of the Pennsylvania
Law, which such hour and date shall be identical in both the NJ Certificate and
the Pennsylvania Articles. In the event that pursuant to the Reorganization
Election Summit elects the Reorganization method provided for at Section
1.01(a)(2), the "Effective Time" of the Reorganization shall be the date and
time specified in Exhibit A or determined in accordance with Exhibit A.
Section 0.00.Xxxxxxxx of Prime Certificates.
(a) After the Effective Time and subject to Section 1.07(c) below, each
Prime Shareholder (except as provided otherwise in Section 1.03(a)(1) above),
upon surrender to the Exchange Agent of all Prime Certificates registered to the
Prime Shareholder, shall be entitled to receive in exchange therefor a Summit
Certificate representing the number of whole shares of Summit Stock such Prime
Shareholder becomes entitled to receive pursuant to Section 1.03(a)(2) and the
Cash In Lieu Amount, payable by check, such Prime Shareholder may become
entitled to receive pursuant to Section 1.03(a)(2). Until so surrendered,
outstanding Prime Certificates held by each Prime Shareholder, other than Prime
Certificates governed by Section 1.03(a)(1), shall be deemed for all purposes
(other than as provided below with respect to unsurrendered Prime Certificates
and Summit's right to refuse payment of dividends or other distributions, if
any, in respect of Summit Stock) to represent only the right to receive the
number of whole shares of Summit Stock and the Cash In Lieu Amount, if any,
without interest, determined in accordance with Section 1.03(a)(2). Until so
surrendered, Summit may, at its option, refuse to pay to the holders of the
unsurrendered Prime Certificates dividends or other distributions, if any, on
Summit Stock declared after the Effective Time; provided, however, that upon the
surrender and exchange of Prime Certificates following a dividend or other
distribution on Summit Stock there shall be paid to such Prime Shareholders the
amount, without interest, of dividends and other distributions, if any, which
became payable prior to such surrender and exchange but which were not paid.
(b) Holders of Prime Certificates as of the Effective Time shall cease to
be, and shall have no further rights as, shareholders of Prime.
(c) As promptly as practicable, but in no event more than 10 days, after
the Exchange Agent receives an accurate and complete list of all holders of
record of outstanding Prime Stock as of the Effective Time ("Prime
Shareholders") (including the address and social security number of and the
number of shares of Prime Stock held by each Prime Shareholder) from Prime
("Final Shareholder List"), Summit shall cause the Exchange Agent to send to
each Prime Shareholder instructions and transmittal materials for use in
surrendering and exchanging Prime Certificates for the Reorganization
Consideration. Summit shall consult with Prime with respect to the form and
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content of the transmittal instructions and materials and incorporate reasonable
suggestions. If Prime Certificates are properly presented to the Exchange Agent
(with proper presentation including satisfaction of all requirements of the
letter of transmittal), Summit shall as soon as practicable, but in no event
more than 10 days, after the later to occur of such presentment or the receipt
by the Exchange Agent of an accurate and complete Final Shareholder List from
Prime cause the Exchange Agent to cancel and exchange Prime Certificates for
Summit Certificates and Cash In Lieu Amounts, if any; provided, however, that if
the Exchange Agent, in order to satisfy its obligations under the Code with
respect to the reporting of dividend income to former shareholders of Prime,
must suspend the exchange process provided for in the second sentence of this
Section 1.07(c) in order to preserve and report the required reporting
information, the 10-day exchange requirement shall be extended 5 business days
for exchanges being processed by the Exchange Agent at the commencement of, or
which are received during, the period of the suspension.
(d) At and after the Effective Time there shall be no transfers on the
stock transfer books of Prime of the shares of Prime Stock which were
outstanding immediately prior to the Effective Time.
Section 1.08.Restated Certificate of Incorporation and By-Laws. In the
event that pursuant to the Reorganization Election Summit elects the
Reorganization method provided for at Section 1.01(a)(1): the Restated
Certificate of Incorporation of Summit in effect immediately prior to the
Effective Time shall be the Restated Certificate of Incorporation of the
corporation surviving the Reorganization ("Surviving Corporation"), except as
duly amended thereafter and except to the extent such is deemed by law to be
affected by the NJ Certificate; and the By-Laws of Summit in effect immediately
prior to the Effective Time shall be the By-Laws of the Surviving Corporation,
except as duly amended thereafter. In the event that pursuant to the
Reorganization Election Summit elects the Reorganization method provided for at
Section 1.01(a)(2), the certificate or articles of incorporation and by-laws of
the Surviving Corporation shall be as set forth in Exhibit A.
Section 1.09.Board of Directors and Officers. In the event that pursuant
to the Reorganization Election Summit elects the Reorganization method provided
for at Section 1.01(a)(1): the Board of Directors of the Surviving Corporation
shall consist of the members of the Board of Directors of Summit at the
Effective Time; the officers of the Surviving Corporation shall consist of the
officers of Summit at the Effective Time; and such directors and officers shall
serve as such for the terms prescribed in the Restated Certificate of
Incorporation and By-Laws of Summit, or as otherwise provided by law or until
their earlier deaths, resignation or removal. In the event that pursuant to the
Reorganization Election Summit elects the Reorganization method provided for at
Section 1.01(a)(2), the members of the Board of Directors and the officers of
the Surviving Corporation shall be as set forth in Exhibit A.
Section 0.00.Xxxxx Stock Options.
(a) At the Effective Time, each Prime Option (as defined in Section
1.10(b) below) shall be deemed to constitute, and shall automatically be
converted on the terms set forth in this Section 1.10 into, options to purchase
Summit Stock and a corresponding number of Summit Rights in the event of the
prior distribution contemplated by Section 1.03(d) ("Converted Options") and
each Converted Option (i) shall immediately vest to the extent the related Prime
Option was vested or as provided in the Prime Stock Compensation Plan (as
defined at Section 2.01(d)(3) below) under which the related Prime Option was
granted and in the stock option agreement by which it was evidenced, and (ii)
shall be administered in all material respects in accordance with the terms and
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conditions provided for in the Prime Stock Compensation Plan under which the
related Prime Option was granted and in the stock option agreement by which it
was evidenced. The number of shares of Summit Stock which may be purchased upon
exercise of a particular Converted Option shall be the number of shares of Prime
Stock which would have been issuable upon exercise in full of the related Prime
Option multiplied by the Exchange Ratio and rounded down to the nearest whole
number ("Converted Number"). The exercise price per share of Summit Stock
purchasable upon exercise of a Converted Option shall equal the aggregate
exercise price that would have been payable upon an exercise in full of the
related Prime Option divided by the Converted Number and rounded up to the
nearest ten-thousandth of a dollar. In the event a Capital Change shall occur
prior to the Effective Time, an appropriate adjustment shall be made to the
terms of the Prime Options at the time of the foregoing conversion so that
Converted Options give effect to the Capital Change. Within 45 days after the
receipt by Summit of an accurate and complete list of all holders of Prime
Options, all information about the Prime Options and the holders thereof
(including the address and social security number of each such holder and a
description of the Prime Options held by such holder specifying, at a minimum,
the plan under which issued, type (incentive or nonqualified), grant date,
expiration date, exercise price and the number of shares of Prime Stock subject
thereto) and copies of each form of option agreement, warrant agreement or
letter agreement entered into between Prime and a holder of a Prime Option (all
of the foregoing being collectively referred to as the "Final Option List and
Materials"), Summit shall issue to the holders of such Prime Options appropriate
instruments confirming the rights of such holders with respect to Summit Stock,
on the terms and conditions provided by this Section 1.10, upon surrender of the
outstanding instruments representing such Prime Options; provided, however, that
Summit shall not be obligated to issue any such confirming instruments which
relate to the issuance of Summit Stock, or issue any shares of Summit Stock,
until such time as the shares of Summit Stock issuable upon exercise of
Converted Options shall have been registered with the Securities and Exchange
Commission (the "SEC") pursuant to an effective registration statement and
authorized for listing on the NYSE and for sale by any appropriate state
securities regulators, which such registrations and authorizations Summit shall
use its best efforts to effect within 45 days after Prime shall have delivered
to Summit the Final Option List and Materials, and Summit knows of no reason why
it will not be able to do so. Summit shall use its best efforts to maintain the
effectiveness of such registration statement (and maintain the current status of
the prospectus or prospectuses contained therein) for so long as any Converted
Options remain outstanding. Summit shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Summit Stock for delivery
upon exercise of Converted Options. Notwithstanding anything in the foregoing to
the contrary, Prime Options intended to qualify as "incentive stock options"
under the Code shall be converted into Converted Options in a manner consistent
with the preservation of such qualification under the Code.
(b) For purposes of this Section 1.10, "Prime Option" is hereby defined
to mean an option relating to the purchase of Prime Stock, and any rights
appurtenant thereto including Equity Based Rights (as defined at Section
2.01(d)(2) below), granted under a Prime Stock Compensation Plan (as defined at
Section 2.01(d)(3) below), outstanding both on the date hereof and at the
Effective Time.
Section 1.11. Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Prime acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Reorganization
or otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
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and on behalf of Prime or otherwise, all such deeds, bills of sale, assignments
and assurances and to take, in the name and on behalf of Prime, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.12.Unclaimed Reorganization Consideration. If, upon the
expiration of one year following the Effective Time, Reorganization
Consideration remains with the Exchange Agent due to the failure of Prime
Shareholders to surrender and exchange Prime Certificates for Reorganization
Consideration, Summit may, at its election, continue to retain the Exchange
Agent for purposes of the surrender and exchange of Prime Certificates or take
possession of such unclaimed Reorganization Consideration, in which such latter
case, Prime Shareholders who have theretofore failed to surrender and exchange
Prime Certificates shall thereafter look only to Summit for payment of the
Reorganization Consideration and the unpaid dividends and distributions on
Summit Stock declared after the Effective Time, without any interest thereon.
Notwithstanding the foregoing, none of Summit, Prime, the Exchange Agent or any
other person shall be liable to any former holder of shares of Prime Stock for
any property properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
Section 1.13.Lost Prime Certificates. In the event any Prime Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Prime Certificate to be lost, stolen or
destroyed and the posting by such person of a personal, nonsurety bond in such
amount as Summit may determine is reasonably necessary as indemnity against any
claim that may be made against it with respect to such Prime Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed Prime
Certificate the Reorganization Consideration deliverable in respect thereof
pursuant to this Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF PRIME
Prime represents and warrants to Summit as follows (where an item
required to be disclosed on a Prime Schedule is required to be disclosed on one
or more additional Prime Schedules, or where a copy of an item required to be
attached to a Prime Schedule is required to be attached to one or more
additional Prime Schedules, such disclosure or copy need not be provided on more
than one Prime Schedule provided the Prime Schedules with respect to which the
disclosure or copy is required but not provided contain a cross reference to the
location of the required disclosure or copy in the Prime Schedules which is
clear and unambiguous):
Section 2.01.Organization, Capital Stock.
(a) Each of Prime and its nonbank subsidiaries, including the nonbank
subsidiaries of Bank (as defined in Section 2.01(e) (the term "subsidiary", as
used in this Agreement, shall mean any corporation or other organization of
which 10% or more of the shares or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or other
group performing similar functions with respect to such corporation or other
organization is directly or indirectly owned by Prime or a "subsidiary" of
Prime; the term "indirect" ownership means ownership through a succession of one
or more other subsidiaries), all of which are listed, together with their
respective states of incorporation and direct and indirect beneficial owners, on
Prime Schedule 2.01(a), is a corporation duly organized, validly subsisting and
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in good standing under the laws of the state of its incorporation, qualified to
transact business under the laws of all jurisdictions where it does business
except where the failure to be so qualified could not reasonably be expected to
have a material adverse effect on (i) the business, results of operations,
assets or financial condition of Prime and its subsidiaries on a consolidated
basis, or (ii) the ability of Prime to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement ("Prime Material
Adverse Effect"). However, a Prime Material Adverse Effect or Prime Material
Adverse Change (as defined at Section 2.03 below) will not include a change
resulting from a change in law, rule, regulation, generally accepted or
regulatory accounting principle or other matter affecting banking institutions
or their holding companies generally or from charges or expenses incident to the
Reorganization. Each of Prime and its nonbank subsidiaries has all corporate
power and authority and all material licenses, franchises, certificates, permits
and other governmental authorizations which are legally required to own and
lease its properties and assets, to occupy its premises and to engage in its
business and activities as presently engaged in, and each has complied in all
material respects with all applicable laws, regulations and orders.
(b) Prime is registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended ("BHCA").
(c) Prime or one of its subsidiaries is the holder and beneficial owner
of all of the outstanding capital stock of all of Prime's direct and indirect
nonbank subsidiaries.
(d) (1) The authorized capital stock of Prime consists of 13,000,000
shares of Common Stock, par value $1.00 per share, of which 10,984,833 shares
are issued and outstanding as of the date hereof, and 2,000,000 shares of
Preferred Stock, par value $1.00 per share, of which no shares are issued or
outstanding. All issued and outstanding shares of the capital stock of Prime and
of each of its nonbank subsidiaries have been fully paid, were duly authorized
and validly issued, are nonassessable and have been issued pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act") or to the best of Prime's knowledge an appropriate
exemption from registration under the Securities Act and were not issued in
violation of the preemptive rights of any shareholder.
(2) Except as set forth in Section 2.01(d)(1), all Equity
Securities (as defined at Section 2.01(d)(4) below) of Prime and its nonbank
subsidiaries outstanding, in existence, the subject of an agreement or reserved
for issuance ("Current Equity Securities"), and all rights or entitlements
appurtenant to, based upon, derived from or valued based on the performance or
value of Equity Securities of Prime outstanding, in existence, the subject of an
agreement or reserved for issuance ("Equity Based Rights") are listed on Prime
Schedule 2.01(d)(2) and all significant information relating to such Current
Equity Securities (other than Common Stock) and Equity Based Rights is listed on
Prime Schedule 2.01(d)(2) including without limitation, where applicable, name
of holder, address and relationship to Prime if not an employee of Prime or a
subsidiary, date of grant, award or issuance, expiration dates, vesting dates,
the Prime Stock Plan (as defined in Section 2.01(d)(3) below) under which
granted, awarded or issued, any intended qualification or nonqualification or
other status under the Code, those Current Equity Securities or Equity Based
Rights granted in tandem with other Current Equity Securities or Equity Based
Rights, exercise price, number of shares, valuation formula and performance
goals. All Current Equity Securities have been (to the extent such is capital
stock or similar equity interest) fully paid, were duly authorized and validly
issued, are (to the extent such is capital stock or similar equity interest)
nonassessable and have been issued pursuant to an effective registration
statement under the Securities Act or to the best of Prime's knowledge an
appropriate exemption from registration under the Securities Act and were not
issued in violation of the preemptive rights of any shareholder.
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(3) All agreements, contracts, plans and arrangements, whether
oral or written or formal or informal, pursuant to which Current Equity
Securities or Equity Based Rights were granted, awarded or issued or which
provide for the granting, awarding or issuance of Equity Securities or Equity
Based Rights or are relevant in any fashion to Current Equity Securities or
Equity Based Rights ("Prime Stock Plan") are listed in Prime Schedule
2.01(d)(3). All Prime Stock Plans constituting a compensatory contract, plan or
arrangement ("Prime Stock Compensation Plan"), including all amendments thereto,
are separately identified on Prime Schedule 2.01(d)(3) and except as disclosed
thereon have been duly approved by the shareholders of Prime and such approvals
have been obtained in compliance with all applicable laws and with all
applicable regulations of governmental or self-regulatory authorities.
(4) "Equity Securities" of an issuer means (i) the capital stock
or other equity securities or equity interests of such issuer, (ii) options,
warrants, scrip, interests in, rights (including preemptive rights) to subscribe
to, purchase or acquire, calls on or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
capital stock or other equity securities or equity interests or any security or
right convertible into or exchangeable for the capital stock or other equity
security or equity interests of such issuer, and (iii) contracts, commitments,
obligations, agreements, understandings or arrangements entitling anyone to
acquire from the issuer, or by which such issuer is or may become bound to
issue, capital stock or other equity security or equity interest or any security
or right convertible into or exchangeable for the capital stock or other equity
security or equity interest of such issuer.
(e) Prime owns no bank subsidiary other than the Prime Bank ("Bank").
("bank" is hereby defined to include commercial banks, savings banks, private
banks, trust companies, savings and loan associations, building and loan
associations and similar institutions receiving deposits and making loans). Bank
is a bank duly organized, validly subsisting, and in good standing under the
laws of the jurisdiction of its organization and is qualified to transact
business under the laws of all jurisdictions where the failure to be so
qualified would be likely to have a Prime Material Adverse Effect. Bank is duly
authorized to conduct all activities and exercise all powers of a commercial
bank contemplated by the laws of its jurisdiction of organization. Bank is an
insured bank as defined in the Federal Deposit Insurance Act, and has all
corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease its properties and assets, to occupy its premises, and
to engage in its business and activities as presently engaged in, and has
complied in all material respects with all applicable laws, regulations and
orders.
(f) The authorized and outstanding capital stock of Bank is as set forth
on Prime Schedule 2.01(f). Prime is the holder and beneficial owner of all of
the issued and outstanding Equity Securities of Bank. All issued and outstanding
shares of the capital stock of Bank have been fully paid, were duly authorized
and validly issued, are non-assessable, and were not issued in violation of the
preemptive rights of any shareholder. All Equity Securities of Bank outstanding,
in existence, the subject of an agreement or reserved for issuance are described
in all material respects on Prime Schedule 2.01(f).
(g) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by Prime or a subsidiary of Prime are held free and clear of
any claims, liens, encumbrances or security interests.
Section 0.00.Xxxxxxxxx Statements. The financial statements (and related
notes and schedules thereto) contained in or incorporated by reference into
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Prime's (a) annual report to shareholders for the fiscal year ended December 31,
1997, (b) annual report on Form 10-K filed pursuant to the Securities Exchange
Act of 1934, as amended ("Exchange Act") for the fiscal year ended December 31,
1997 and (c) quarterly reports on Form 10-Q filed pursuant to the Exchange Act
for the fiscal quarters ended March 31, 1998, June 30, 1998 and September 30,
1998 and the financial statements (and related notes and schedules thereto)
contained in Prime's draft annual report to shareholders for the fiscal year
ended December 31, 1998 attached hereto as Prime Schedule 2.02 (all of the
foregoing financial statements being collectively referred to as the "Prime
Financial Statements") are true and correct in all material respects as of their
respective dates and each fairly presents in all material respects (subject, in
the case of unaudited statements, to recurring audit adjustments normal in
nature and amount), in accordance with generally accepted accounting principles,
the consolidated statements of condition, income, changes in stockholders'
equity and cash flows of Prime and its subsidiaries at its respective date and
for the period to which it relates, except as may otherwise be described therein
and except that, in the case of unaudited statements, no consolidated statements
of changes in stockholders' equity are included. The Prime Financial Statements
do not, as of the dates thereof, include any material asset or omit any material
liability, absolute or contingent, or other fact, the inclusion or omission of
which renders the Prime Financial Statements, in light of the circumstances
under which they were made, misleading in any respect.
Section 0.00.Xx Conflicts. Except as set forth on Prime Schedule 2.03,
Prime and each of its subsidiaries is not in violation or breach of or default
under, and has received no notice of violation, breach, revocation or threatened
or contemplated revocation of or default or denial of approval under, nor will
the execution, delivery and performance of this Agreement by Prime, or the
consummation of the transactions contemplated hereby including the
Reorganization by Prime upon the terms provided herein (assuming receipt of the
Required Consents, as that term is defined in Section 4.01), violate, conflict
with, result in the breach of, constitute a default under, give rise to a claim
or right of termination, cancellation, revocation of, or acceleration under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
of the material rights, permits, licenses, assets or properties of Prime or any
of its subsidiaries or upon any of the Equity Securities of Prime or any of its
subsidiaries, or constitute an event which could, with the lapse of time, action
or inaction by Prime or any of its subsidiaries or a third party, or the giving
of notice and failure to cure, result in any of the foregoing, under any of the
terms, conditions or provisions, as the case may be, of:
(i) the certificate or articles of incorporation or articles of
association, as appropriate, or by-laws of Prime or any of its
subsidiaries;
(ii) any applicable law, statute, rule, ruling, determination,
ordinance or regulation of or agreement with any governmental or
regulatory authority;
(iii) any judgment, order, writ, award, injunction or decree of any
court or other governmental authority; or
(iv) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement or other
instrument;
to which Prime or any of its subsidiaries is a party or by which Prime or any of
its subsidiaries or any of their assets or properties are bound or committed,
the consequences of which individually or in the aggregate would result in a
material adverse change in the business, results of operations, assets or
financial condition of Prime and its subsidiaries, on a consolidated basis, from
that reflected in the Prime Financial Statements as of and for the year ended
10
December 31, 1998 ("Prime Material Adverse Change"), or enable any person to
enjoin the transactions contemplated hereby.
Section 2.04.Absence of Undisclosed Liabilities. Except as set forth on
Schedule 2.04, Prime and its subsidiaries have no liabilities, whether
contingent or absolute, direct or indirect, matured or unmatured (including but
not limited to liabilities for federal, state and local taxes, penalties,
assessments, lawsuits or claims against Prime or any of its subsidiaries), and
no loss contingency (as defined in Statement of Financial Accounting Standards
No. 5), other than (a) those reflected in the Prime Financial Statements or
disclosed in the notes thereto, (b) commitments made by Prime or any of its
subsidiaries in the ordinary course of its business, and (c) liabilities arising
in the ordinary course of its business since December 31, 1998, which are not in
the aggregate material to Prime and its subsidiaries, on a consolidated basis.
Other than as may be set forth on Prime Schedule 2.04, neither Prime nor any of
its subsidiaries has, since December 31, 1998, become obligated on any debt due
in more than one year from the date of this Agreement in excess of $100,000,
other than intra-corporate debt and deposits received, repurchase agreements and
borrowings from the Federal Home Loan Bank of Pittsburgh entered into in the
ordinary course of business.
Section 2.05.Absence of Litigation; Agreements with Bank Regulators.
There is no outstanding order, injunction or decree of any court or governmental
or self-regulatory body against or affecting Prime or any of its subsidiaries
which materially and adversely affects Prime and its subsidiaries, on a
consolidated basis, and there are no actions, arbitrations, claims, charges,
suits, investigations or proceedings (formal or informal) material to Prime and
its subsidiaries, on a consolidated basis, pending or, to the best of Prime's
knowledge, threatened, against or involving Prime or any of its subsidiaries or
their officers or directors (in their capacity as such) in law or equity or
before any court, panel or governmental agency, except as may be disclosed in
the Forms 10-K and 10-Q of Prime referred to in Section 2.02 or set forth in
Prime Schedule 2.05. Except as set forth on Prime Schedule 2.05, neither Prime
nor any subsidiary of Prime is a party to any agreement or memorandum of
understanding with, or is a party to any commitment letter to, or has submitted
a board of directors resolution or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary supervisory letter
from, any governmental or regulatory authority which restricts materially the
conduct of its business, or in any manner relates to material statutory or
regulatory noncompliance discovered in any regulatory examinations, its capital
adequacy, its credit or reserve policies or its management. Except as set forth
on Prime Schedule 2.05, neither Prime nor any subsidiary of Prime has been
advised by any governmental or regulatory authority that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any of the foregoing. Neither Prime nor any subsidiary of Prime has
failed to resolve to the satisfaction of the applicable regulatory agency any
significant deficiencies cited by any such agency in its most recently completed
examination of each aspect of Prime's or a Prime subsidiary's business nor has
Prime or any subsidiary of Prime been advised of any significant deficiencies by
any such agency in connection with any current examination of either Prime or a
subsidiary of Prime by any such agency.
Section 2.06.Brokers' Fees. Prime has entered into this Agreement with
Summit as a result of direct negotiations without the assistance or efforts of
any finder, broker, financial advisor or investment banker, other than Xxx-Xxxx,
Xxxxxx Inc. ("Xxx-Xxxx"). Prime Schedule 2.06 consists of true and complete
copies of all agreements between Prime and Xxx-Xxxx with respect to the
transactions contemplated by this Agreement or similar transactions.
11
Section 2.07.Regulatory Filings. All filings made by Prime and its
subsidiaries after December 31, 1995 with the SEC and the appropriate bank
regulatory authorities did not at the time of filing contain any untrue
statement of a material fact and did not omit to state any material fact
required to be stated herein or therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. To the extent such filings were subject to the Securities Act or
Exchange Act, such filings complied in all material respects with the Securities
Act or Exchange Act, as appropriate, and all applicable rules and regulations
thereunder of the SEC or the Federal bank regulatory agency having securities
regulatory jurisdiction, as appropriate. Each of the financial statements
(including related notes and schedules thereto) contained in or incorporated by
reference into such filings are true and correct in all material respects as of
their respective dates and each fairly presents (subject, in the case of
unaudited statements, to recurring audit adjustments normal in nature and
amount), in accordance with generally accepted accounting principles, the
consolidated statements of condition, income, changes in stockholders' equity
and cash flows of Prime and its subsidiaries at its respective date or for the
period to which it relates, except as may otherwise be described therein and
except that, in the case of unaudited statements, no consolidated statements of
changes in stockholders' equity are included. Except as set forth on Prime
Schedule 2.07, Prime and its subsidiaries have since December 31, 1995, to the
extent legally required, timely made all filings required by the Securities Act
and the Exchange Act, Federal and state banking laws and regulations and the
rules and regulations of the NASD and any other self-regulatory organization,
and have paid all fees and assessments due and payable in connection therewith.
Section 2.08.Corporate Action. Assuming due execution and delivery by
Summit, and subject to the requisite approval by the shareholders of Prime of
this Agreement, the Reorganization and the other transactions contemplated
hereby in accordance with Prime's Articles of Incorporation and the Pennsylvania
Law at a meeting of such holders to be duly called and held, Prime has the
corporate power and is duly authorized by all necessary corporate action to
execute, deliver and perform this Agreement. The Board of Directors of Prime has
taken all action required by law, its Articles of Incorporation, its By-Laws or
otherwise (i) to authorize the execution and delivery of this Agreement and (ii)
for shareholders of Prime to approve this Agreement and the transactions
contemplated hereby including the Reorganization by a simple majority of the
shares entitled to vote at the meeting held in accordance with Section 4.03.
Assuming due execution and delivery by and the enforceability against Summit of
this Agreement, this Agreement is a valid and binding agreement of Prime
enforceable in accordance with its terms except as such enforcement may be
limited by applicable principles of equity, and by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other laws of general
applicability presently or hereafter in effect affecting the enforcement of
creditors' rights generally or institutions the deposits of which are insured by
the Federal Deposit Insurance Corporation, or the affiliates of such
institutions. The Board of Directors of Prime in authorizing the execution of
this Agreement has determined to recommend to the shareholders of Prime the
approval of this Agreement, the Reorganization and the other transactions
contemplated hereby.
Section 2.09.Absence of Changes. There has not been, since December 31,
1998, any Prime Material Adverse Change except as may be set forth in Prime
Schedule 2.09. Except as may be set forth in Prime Schedule 2.09, neither Prime
nor any of its subsidiaries has since December 31, 1998: (a) (i) declared, set
aside or paid any dividend or other distribution in respect of its Equity
Securities, other than dividends from subsidiaries to Prime or other
subsidiaries of Prime, and an ordinary cash dividend to Prime shareholders of
$0.11 per share or less per fiscal quarter, or, (ii) directly or indirectly
purchased, redeemed or otherwise acquired any shares of any Equity Securities;
(b) incurred current liabilities since that date other than in the ordinary
12
course of business; (c) sold, exchanged or otherwise disposed of any of their
assets except in the ordinary course of business; (d) made any officers' salary
increase or wage increase not consistent with past practices, entered into any
employment, consulting, severance or change of control contract with any present
or former director, officer or salaried employee, or instituted any employee or
director welfare, bonus, stock option, profit-sharing, retirement, severance or
other benefit plan or arrangement or modified any of the foregoing so as to
increase its obligations thereunder in any material respect; (e) suffered any
taking by condemnation or eminent domain or other damage, destruction or loss in
excess of $75,000, whether or not covered by insurance, adversely affecting its
business, property or assets, or waived any rights of value in excess of
$75,000; (f) entered into transactions other than in the ordinary course of
business which in the aggregate exceeded $150,000; or (g) acquired assets or
capital stock of another company of whatsoever amount, except in a fiduciary
capacity or in the course of securing or collecting loans or leases.
Section 2.10.Allowance for Credit Losses. At December 31, 1998 and
thereafter the allowances for credit losses of Prime and its subsidiaries were
and are adequate in all material respects to provide for all losses on loans and
leases outstanding and, to the best of Prime's knowledge, the loan and lease
portfolios of Prime in excess of such allowances are collectible in the ordinary
course of business. Prime Schedule 2.10 constitutes a list of all loans and
leases made by Prime or any of its subsidiaries that have been "classified" as
to quality by any internal or external auditor, accountant or examiner, and such
list is accurate and complete in all material respects.
Section 2.11. Taxes and Tax Returns. Subject to the exceptions set forth
on Prime Schedule 2.11:
Neither Prime nor any of its subsidiaries has at any time filed a consent
pursuant to Section 341(f) of the Code or consented to have the provisions of
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by Prime or any
of its subsidiaries. None of the property being acquired by Summit or its
subsidiaries in the Reorganization is property which Summit or its subsidiaries
will be required to treat as being owned by any other person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986
or is "tax-exempt use property" within the meaning of Section 168(h)(1) of the
Code. All amounts required to be withheld have been withheld from employees by
Prime and each of its subsidiaries for all periods in compliance with the tax,
social security, unemployment and other applicable withholding provisions of
applicable federal, state and local law. All federal, state and local returns
(as defined below) required to be filed have been timely filed by Prime and each
of its subsidiaries for all periods for which returns were due, including with
respect to employee income tax withholding, social security, unemployment and
other applicable taxes (as defined below), are accurate, and the amounts shown
thereon to be due and payable, as well as any interest, additions, and penalties
due with respect to completed and settled examinations or concluded litigation
relating to Prime or any of its subsidiaries, have been paid in full or adequate
provision therefor has been included on the books of Prime or its appropriate
subsidiary. Neither Prime nor any of its subsidiaries is required to file tax
returns with any state other than the Commonwealth of Pennsylvania. Provision
has been made on the books of Prime or its appropriate subsidiary for all unpaid
taxes, whether or not disputed, that may become due and payable by Prime or any
of its subsidiaries in future periods in respect of transactions, sales or
services occurring or performed prior to the date of this Agreement. The
Internal Revenue Service ("IRS") has never audited the consolidated federal
income tax returns of Prime and the Commonwealth of Pennsylvania has never
audited the Pennsylvania income tax returns of Prime and its subsidiaries.
13
Neither Prime nor any of its subsidiaries is subject to an audit or review of
its tax returns by any state other than the Commonwealth of Pennsylvania or the
State of Delaware. Neither Prime nor any of its subsidiaries is currently a
party to any tax sharing or similar agreement with any third party. There are no
material matters, claims, assessments, examinations, notices of deficiency,
demands for taxes, refund litigation, proceedings, audits or proposed
deficiencies pending or, to the best of Prime's knowledge, threatened against
Prime or any of its subsidiaries, including a claim or assessment by any
authority in a jurisdiction where Prime or any of its subsidiaries do not file
tax returns and Prime or any such subsidiary is subject to taxation, and there
have been no waivers of statutes of limitations or agreements related to
assessments or collection in respect of any federal, state or local taxes.
Neither Prime nor any of its subsidiaries has agreed to or is required to make
any adjustment pursuant to Section 481(a) of the Code by reason of a change in
accounting method initiated by Prime or any of its subsidiaries, and neither
Prime nor any of its subsidiaries has any knowledge that the IRS has proposed
any such adjustment or change in accounting method. Prime and its subsidiaries
have complied in all material respects with all requirements relating to
information reporting, including tax identification number reporting, and
withholding (including back-up withholding) and other requirements relating to
the reporting of interest, dividends and other reportable payments under the
Code and state and local tax laws and the regulations promulgated thereunder and
other requirements relating to reporting under federal law including record
keeping and reporting on monetary instruments transactions.
For purposes of this Agreement, "taxes" shall mean all taxes, charges,
fees, levies, penalties or other assessments imposed by any United States
Federal, state, local, or foreign taxing authority, including, but not limited
to, income, excise, property, sales, transfer, franchise, payroll, withholding,
social security or other taxes, including any interest, penalties or additions
attributable thereto; and "return" shall mean any return, report, information
return or other documents (including any related or supporting information) with
respect to taxes.
Section 2.12.Properties. Except as set forth in Prime Schedule 2.12,
Prime has, directly or through its subsidiaries, good and marketable title to
all of its properties and assets, tangible and intangible, including those
reflected in the Prime Financial Statements (except individual properties and
assets disposed of since December 31, 1998 in the ordinary course of business),
which properties and assets are not subject to any mortgage, pledge, lien,
charge or encumbrance other than as reflected in the Prime Financial Statements
or which in the aggregate do not materially adversely affect or impair the
operation of Prime and its subsidiaries on a consolidated basis. Prime and each
of its subsidiaries enjoys peaceful and undisturbed possession under all
material leases under which it is the lessee, where the failure to enjoy such
peaceful and undisturbed possession would be likely to have a Prime Material
Adverse Effect, and none of such leases contains any unusual or burdensome
provision which would be likely to materially and adversely affect or impair the
operations of Prime and its subsidiaries, on a consolidated basis.
Section 2.13.Condition of Properties; Insurance. All real and tangible
personal properties owned or leased by Prime or any of its subsidiaries are in a
good state of maintenance and repair, are in good operating condition, subject
to normal wear and tear, conform (as to owned properties only) in all material
respects to all applicable ordinances, regulations and zoning laws, and are
adequate for the business conducted by Prime or such subsidiary subject to
exceptions which are not, in the aggregate, material to Prime and its
subsidiaries, on a consolidated basis. Prime and each of its subsidiaries
maintains insurance (with companies which, to the best of Prime's knowledge, are
approved by all appropriate state insurance regulators to sell such insurance
where purchased by Prime) against loss relating to such properties and to the
best of Prime's knowledge such other risks as companies engaged in similar
14
business located in Pennsylvania, would, in accordance with good business
practice, be customarily insured in amounts which are customary, usual and
prudent for corporations or banks, as the case may be, of their size. Such
policies are in full force and effect and are carried in an amount and form and
are otherwise adequate to protect Prime and each of its subsidiaries from any
adverse loss resulting from risks and liabilities reasonably foreseeable at the
date hereof, and are disclosed on Prime Schedule 2.13. All material claims
thereunder have been filed in a due and timely fashion. Since December 31, 1994,
neither Prime nor any of its subsidiaries has been refused insurance for which
it has applied or had any policy of insurance terminated (other than at its
request) nor has Prime or any subsidiary received notice from any insurance
carrier that (i) such insurance will be canceled or that coverage thereunder
will be reduced or eliminated or (ii) premium costs with respect to such
insurance will be increased, other than premium increases in the ordinary course
of business applicable on their terms to all insureds.
Section 2.14.Contracts.
(a) Except as set forth in Prime Schedule 2.14(a), neither Prime nor any
of its subsidiaries is a party to and neither they nor any of their assets are
bound by any written or oral lease or license with respect to any property, real
or personal, as tenant or licensee involving an annual consideration in excess
of $75,000.
(b) Except as set forth in, and, in Prime Schedule 2.03 or Prime Schedule
2.14(b), neither Prime nor any of its subsidiaries is a party to and neither
they nor any of their assets are bound by any written or oral: (i) employment or
severance contract (including, without limitation, any Prime bargaining contract
or union agreement) or other agreement with any director or any officer or other
employee of Prime or any subsidiary, the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a transaction
involving Prime or any of its subsidiaries of the nature contemplated by this
Agreement which is not terminable without penalty by Prime or a subsidiary, as
appropriate, on 60 days or less notice; (ii) contract or commitment for capital
expenditures in excess of $75,000 for any one project or in excess of $150,000
in the aggregate for all projects; (iii) contract or commitment whether for the
purchase of materials or supplies or for the performance of services involving
consideration in excess of $75,000 (including advertising and consulting
agreements, data processing agreements, and retainer agreements with attorneys,
accountants, actuaries, or other professionals); (iv) contract or option to
purchase or sell any real or personal property, other than to sell OREO
property, involving consideration in excess of $75,000; (v) agreement or plan,
including any stock option plan, stock appreciation rights plan, restricted
stock plan, stock purchase plan, or any other non-qualified compensation plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement, (vi) agreement containing covenants that limit the ability of Prime
or any of its subsidiaries to compete in any line of business or with any
person, or that involve any restriction on the geographic area in which or
method by which Prime (including any successor thereof) or any of its
subsidiaries may carry on its business (other than as may be required by law or
any regulatory agency), (vii) agreement which by its terms limits the payment of
dividends by Prime or any of its subsidiaries, (viii) contract (other than this
Agreement) limiting the freedom of Prime or its subsidiaries to engage in any
type of banking or bank-related business permissible under law; (ix) contract,
plan or arrangement which provides for payments of benefits payable to any
participant therein or party thereto, and which might render any portion of any
such payments or benefits subject to disallowance of deduction therefor as a
result of the application of Section 280G of the Code or (x) any other contract
15
material to the business of Prime and its subsidiaries, on a consolidated basis,
and not made in the ordinary course of business.
(c) Neither Prime nor any of its subsidiaries is a party to or otherwise
bound by any contract, agreement, plan, lease, license, commitment or
undertaking which, in the reasonable opinion of management of Prime, is
materially adverse, onerous, or harmful to any aspect of the business of Prime
and its subsidiaries, on a consolidated basis.
Section 2.15.Pension and Benefit Plans.
(a) Neither Prime nor any of its subsidiaries maintains an employee
pension benefit plan, within the meaning of Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or has made any
contributions to any such employee pension benefit plan maintained after
December 31, 1995, except employee pension benefit plans listed in Prime
Schedule 2.15(a) (individually a "Prime Pension Plan" and collectively the
"Prime Pension Plans"). In its present form each Prime Pension Plan complies in
all material respects with all applicable requirements under ERISA and the Code.
Each Prime Pension Plan and the trust created thereunder which is intended to be
qualified and exempt under Sections 401(a) and 501(a) of the Code is so
qualified and exempt, and Prime or the subsidiary whose employees are covered by
such Prime Pension Plan has received from the IRS a determination letter to that
effect and such determination letter may still be relied on. No event has
occurred and there has been no omission or failure to act which would adversely
affect such qualification or exemption. Each Prime Pension Plan has been
administered and communicated to the participants and beneficiaries in all
material respects in accordance with its terms and ERISA. No employee or agent
of Prime or any subsidiary whose employees are covered by a Prime Pension Plan
has engaged in any action or failed to act in such manner that, as a result of
such action or failure, (i) the IRS could revoke, or refuse to issue (as the
case may be), a favorable determination as to such Prime Pension Plan's
qualification and the associated trust's exemption or impose any liability or
penalty under the Code, or (ii) a participant or beneficiary or a
nonparticipating employee has been denied benefits properly due or to become due
under such Prime Pension Plan or has been misled as to his or her rights under
such Prime Pension Plan. No Prime Pension Plan is subject to Section 412 of the
Code or Title IV of ERISA. Except as set forth on Prime Schedule 2.15(c), no
person has engaged in any prohibited transaction involving any Prime Pension
Plan or associated trust within the meaning of Section 406 of ERISA or Section
4975 of the Code. There are no pending or threatened claims (other than routine
claims for benefits) against the Prime Pension Plans or any fiduciary thereof
which would subject Prime or any of its subsidiaries to a material liability.
All reports, filings, returns and disclosures and other communications which
have been required to be made to the participants and beneficiaries, other
employees, the Pension Benefit Guaranty Corporation ("PBGC"), the SEC, the IRS,
the U.S. Department of Labor or any other governmental agency pursuant to the
Code, ERISA, or other applicable statute or regulation have been made in a
timely manner and all such reports, communications, filings, returns and
disclosures were true and correct in all material respects. No liability has
been, or is likely to be, incurred on account of delinquent or incomplete
compliance or failure to comply with such requirements. "ERISA Affiliate" where
used in this Agreement means any trade or business (whether or not incorporated)
which is a member of a group of which Prime is a member and which is under
common control within the meaning of Section 414 of the Code. Neither Prime nor
any of its subsidiaries has any material liability under ERISA or the Code as a
result of its being a member of a group described in Sections 414(b), (c), (m)
or (o) of the Code. Except as set forth in Prime Schedule 2.15(a), there are no
unfunded benefit or pension plans or arrangements, or any individual agreements
whether qualified or not, to which Prime or any of its subsidiaries or ERISA
Affiliates has any obligation to contribute and the present value of all
benefits vested and all benefits accrued under each Prime Pension Plan which is
16
subject to Title IV of ERISA did not, in each case, as of the last applicable
annual valuation date, exceed the value of the assets of the Prime Pension Plan
allocable to such vested or accrued benefits. No Prime Pension Plan or any trust
created thereunder has been terminated, nor has there been any "reportable
events" with respect to any Prime Pension Plan, as that term is defined in
Section 4043 of ERISA since December 31, 1992. No Prime Pension Plan or any
trust created thereunder has incurred any "accumulated funding deficiency" as
such term is defined in Section 302 of ERISA (whether or not waived). No Prime
Pension Plan is a "multiemployer plan" as that term is defined in Section 3(37)
of ERISA. There has been no change in control of any Prime Pension Plan.
(b) All bonus, deferred compensation, profit-sharing, retirement,
pension, stock option, stock award and stock purchase plans and all other
employee benefit, health and welfare plans, arrangements or agreements,
including without limitation the Prime Stock Compensation Plans and medical,
major medical, disability, life insurance or dental plans covering employees
generally, other than the Prime Pension Plans, maintained by Prime or any of its
subsidiaries with an annual cost in excess of $75,000 (collectively "Prime
Benefit Plans") are listed in Prime Schedule 2.15(b) (unless already listed in
Prime Schedule 2.15(a) or Prime Schedule 2.01(d)(3)) and comply in all material
respects with all applicable requirements imposed by the Securities Act, the
Exchange Act, ERISA, the Code, and all applicable rules and regulations
thereunder. The Prime Benefit Plans have been administered and communicated to
the participants and beneficiaries in all material respects in accordance with
their terms and ERISA, as applicable, and no employee or agent of Prime or any
of its subsidiaries has engaged in any action or failed to act in such manner
that, as a result of such action or failure: (i) the IRS could revoke, or refuse
to issue, a favorable determination as to a Prime Benefit Plan's qualification
and any associated trust's exemption or impose any liability or penalty under
the Code; or (ii) a participant or beneficiary or a nonparticipating employee
has been denied benefits properly due or to become due under the Prime Benefit
Plans or has been misled as to their rights under the Prime Benefit Plans. There
are no pending or threatened claims (other than routine claims for benefits)
against the Prime Benefit Plans which would subject Prime or any of its
subsidiaries to liability. Any trust which is intended to be tax-exempt has
received a determination letter from the IRS to that effect and no event has
occurred which would adversely affect such exemption. All reports, filings,
returns and disclosures required to be made to the participants and
beneficiaries, other employees of Prime or any of its subsidiaries, the PBGC,
the SEC, the IRS, the U.S. Department of Labor and any other governmental agency
pursuant to the Code, ERISA, or other applicable statute or regulation, if any,
have been made in a timely manner and all such reports, filings, returns and
disclosures were true and correct in all material respects. No material
liability has been, or is likely to be, incurred on account of delinquent or
incomplete compliance or failure to comply with such requirements.
(c) There is no pending or, to the best of Prime's knowledge, threatened
litigation, administrative action or proceeding relating to any Prime Benefit
Plan or Prime Pension Plan. There has been no announcement or commitment by
Prime or any subsidiary of Prime to create an additional Prime Benefit Plan or
Prime Pension Plan, or to amend a Prime Benefit Plan or Prime Pension Plan,
except for amendments required by applicable law, which may materially increase
the cost of such Prime Benefit Plan or Prime Pension Plan and, except for any
plans or amendments expressly described on Prime Schedule 2.01(d)(3), Prime
Schedule 2.15(a) or Prime Schedule 2.15(b), Prime and its subsidiaries do not
have any obligations for post-retirement or post-employment benefits under any
Prime Benefit Plan (exclusive of any coverage mandated by the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") that cannot be amended or
terminated upon more than sixty (60) days' notice without incurring any
liability thereunder. Disclosed on Prime Schedule 2.15(c) with respect to each
Prime Benefit Plan and Prime Pension Plan, to the extent applicable, is (A) the
most recent annual report on the applicable form of the Form 5500 series filed
17
with the IRS with all the attachments filed, (B) such Prime Benefit Plan or
Prime Pension Plan, including all amendments thereto, (C) each trust agreement
and insurance contract relating to such plan, including amendments thereto, (D)
the most recent summary plan description for such plan, including amendments
thereto, if the plan is subject to Title I of ERISA, (E) the most recent
actuarial report or valuation if such plan is a pension plan and (F) the most
recent determination letter issued by the IRS if such plan is qualified under
Section 401(a) of the Code.
Section 0.00.Xxxxxxxx Bonds. Since December 31, 1995, Prime and each of
its subsidiaries has continuously maintained fidelity bonds insuring them
against acts of dishonesty in such amounts as are customary, usual and prudent
for organizations of its size and business. All material claims thereunder have
been filed in a timely fashion. Since December 31, 1992, there has been no
individual claim under such bonds in excess of $1 million and since December 31,
1995 the aggregate amount of all claims under such bonds has not exceeded the
policy limits of such bonds (excluding, except in the case of excess coverage, a
deductible amount of not more than $100,000), neither Prime nor any of its
subsidiaries is aware of any facts which would form the basis of a claim or
claims under such bonds aggregating in excess of the applicable deductible
amounts under such bonds, the cost of which has not been reserved or expensed in
the Prime Financial Statements, and aggregate deductible amounts both incurred
and reserved or expensed since December 31, 1995 have not exceeded $1 million.
Neither Prime nor any of its subsidiaries has reason to believe that its
respective fidelity coverage will not be renewed by its carrier on substantially
the same terms as the existing coverage, except for possible premium increases
unrelated to Prime's and its subsidiaries' past claim experience.
Section 2.17.Labor Matters. Hours worked by and payment made to employees
of Prime and each of its subsidiaries have not been in violation of the Fair
Labor Standards Act or any applicable law dealing with such matters; and all
payments due from Prime and each of its subsidiaries on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of Prime or its appropriate subsidiary. Prime is in compliance in all
material respects with all other laws and regulations relating to the employment
of labor, including all such laws and regulations relating to Prime bargaining,
discrimination, civil rights, safety and health, plant closing (including the
Worker Adjustment Retraining and Notification Act), workers' compensation and
the collection and payment of withholding and Social Security and similar taxes.
No labor dispute, strike or other work stoppage has occurred and is continuing
or is to its knowledge threatened with respect to Prime or any of its
subsidiaries. Since December 31, 1994, no employee of Prime or any of its
subsidiaries has been terminated, suspended, disciplined or dismissed under
circumstances which could constitute a material claim, suit, action, complaint
or proceeding likely to result in a material liability. No employees of Prime or
any of its subsidiaries are unionized nor has union representation been
requested by any group of employees or any other person within the last two
years. There are no organizing activities involving Prime pending with, or, to
the knowledge of Prime, threatened by, any labor organization or group of
employees of Prime.
Section 2.18.Books and Records. The minute books of Prime and each of its
subsidiaries contain complete and accurate records of and fairly reflect all
actions taken at all meetings of the shareholders and of the boards of directors
and committees thereof and accurately reflect all other corporate action of the
shareholders and the boards of directors and each committee thereof. The books
and records of Prime and each of its subsidiaries fairly and accurately reflect
the transactions to which Prime and each of its subsidiaries is or has been a
party or by which their properties are subject or bound, and such books and
records have been properly kept and maintained.
18
Section 2.19.Concentrations of Credit. No customer or affiliated group
(as defined by applicable banking laws and regulations) of customers (a) is owed
by Prime or any subsidiary of Prime an aggregate amount equal to more than 10%
of the shareholders' equity of Prime or such subsidiary (including deposits,
other debts and contingent liabilities) or (b) owes to Prime or any of its
subsidiaries an aggregate amount equal to more than 10% of the shareholders'
equity of Prime or such subsidiary (including loans and other debts, guarantees
of debts of third parties, and other contingent liabilities) other than as set
forth in Prime Schedule 2.19.
Section 2.20.Trademarks and Copyrights. Neither Prime nor any of its
subsidiaries has received written notice that the manner in which Prime or any
of its subsidiaries conducts its business including its current use of any
material trademark, trade name, service xxxx or copyright violates asserted
rights of others in any trademark, trade name, service xxxx, copyright or other
proprietary right.
Section 2.21.Equity Interests. Neither Prime nor any of its subsidiaries
owns, directly or indirectly, except for the equity interests of Prime in Bank
and the equity interests disclosed on Prime Schedule 2.01(a) and Prime Schedule
2.21, any equity interest, other than by virtue of a security interest securing
an obligation not presently in default, in any bank, corporation, partnership or
other entity, except: (a) in a fiduciary capacity; or (b) an interest valued at
less than $35,000 acquired in connection with a foreclosure or debt previously
contracted. None of the investments reflected in the consolidated balance sheet
of Prime as of December 31, 1998, and none of such investments made by it or any
of its subsidiaries since December 31, 1998, is subject to any restriction
(contractual or statutory), other than applicable securities laws, that would
materially impair the ability of the entity holding such investment freely to
dispose of such investment at any time, except to the extent any such
investments are pledged in the ordinary course of business (including in
connection with hedging arrangements or programs or reverse repurchase
arrangements) consistent with prudent banking practice to secure obligations of
Prime or any of its subsidiaries.
Section 2.22.Environmental Matters.
(a) Except as disclosed on Prime Schedule 2.22 or as may be disclosed in
the Forms 10-K and 10-Q of Prime referred to in Section 2.02 hereof:
(1) To Prime's actual knowledge, no Hazardous Substances (as
hereinafter defined) have been stored, treated, dumped, spilled, disposed,
discharged, released or deposited at, under or on (1) any property now owned,
occupied, leased or held or managed in a representative or fiduciary capacity
("Present Property") by Prime or any of its subsidiaries, (2) any property
previously owned, occupied, leased or held or managed in a representative or
fiduciary capacity ("Former Property") by Prime or any of its subsidiaries
during the time of such previous ownership, occupancy, lease; holding or
management or (3) any Participation Facility (as hereinafter defined) during the
time that Prime or any of its subsidiaries participated in the management of, or
may be deemed to be or to have been an owner or operator of, such Participation
Facility;
(2) Neither Prime nor any of its subsidiaries has disposed of, or
arranged for the disposal of, Hazardous Substances from any Present Property,
Former Property or Participation Facility, and no owner or operator of a
Participation Facility disposed of, or arranged for the disposal of, Hazardous
Substances from a Participation Facility during the time that Prime or any of
its subsidiaries participated in the management of, or may be deemed to be or to
have been an owner or operator of, such Participation Facility;
19
(3) To Prime's actual knowledge (with Summit waiving any duty of
inquiry, if applicable), other than loans to known gasoline service stations and
loans to industrial enterprises where the storage of Hazardous Substances occurs
in the normal course of business or is generally permitted by applicable laws,
no Hazardous Substances have been stored, treated, dumped, spilled, disposed,
discharged, released or deposited at, under or on any Loan Property (as
hereinafter defined), nor is there, with respect to any such Loan Property, any
violation of environmental law which could materially adversely affect the value
of such Loan Property to an extent which could prevent or delay Prime or any of
its subsidiaries from recovering the full value of its loan in the event of a
foreclosure on such Loan Property.
(b) Except as disclosed on Prime Schedule 2.22, neither Prime nor any
subsidiary (i) is aware of any investigations contemplated, pending or completed
by any environmental regulatory authority with respect to any Present Property,
Former Property, Loan Property or Participation Facility, (ii) has received any
information requests from any environmental regulatory authority, or (iii) has
been named as a potentially responsible or liable party in any Superfund,
Resource Conservation and Recovery Act, Toxic Substances Control Act or Clean
Water Act proceeding or other equivalent state or federal proceeding.
(c) As used in this Agreement, (a) "Participation Facility" shall mean
any property or facility of which the relevant person or entity (i) has at any
time participated in the management or (ii) may be deemed to be or to have been
an owner or operator, (b) "Loan Property" shall mean any real property in which
the relevant person or entity holds a security interest in an amount greater
than $50,000 and (c) "Hazardous Substances" shall mean (i) any flammable
substances, explosives, radioactive materials, hazardous materials, hazardous
substances, hazardous wastes, toxic substances, pollutants, contaminants and any
related materials or substances specified in any applicable Federal or state law
or regulation relating to pollution or protection of human health or the
environment (including, without limitation, ambient or indoor air, surface
water, groundwater, land surface or subsurface strata) and (ii) friable
asbestos, polychlorinated biphenyls, urea formaldehyde, and petroleum and
petroleum-containing products and wastes.
Section 2.23.Accounting, Tax and Regulatory Matters. Neither Prime nor
any of its subsidiaries has taken or agreed to take any action or has any
knowledge of any fact or circumstance that would (i) prevent the transactions
contemplated hereby from qualifying (A) for pooling-of-interest accounting
treatment, or (B) as a reorganization within the meaning of Section 368(a) of
the Code, or (ii) materially impede or delay receipt of any approval referred to
in Section 4.01 or the consummation of the transactions contemplated by this
Agreement.
Section 2.24.Interest of Management and Affiliates.
(a) All loans presently on the books of Prime or any of its subsidiaries
to present or former directors or executive officers of Prime or any subsidiary
of Prime, or their associates, or any members of their immediate families, have
been made in the ordinary course of business and on the same terms and interest
rates as those prevailing for comparable transactions with others and do not
involve more than the normal risk of repayment or present other unfavorable
features.
(b) Except as set forth and described in Prime Schedule 2.24(b), no
present or former officer or director of Prime or any of its subsidiaries or any
Associated Person (as defined in Section 2.24(d) below):
20
(1) has any interest in any property, real or personal, tangible
or intangible, used in or pertaining to the business of Prime or any of its
subsidiaries except for the normal rights of a shareholder;
(2) has an agreement, understanding, contract, commitment or
pending transaction relating to the purchase, sale or lease of real or personal
property, goods, materials, supplies or services, whether or not in the ordinary
course of business, with Prime or any of its subsidiaries ("Insider
Agreements");
(3) has received from Prime or any of its subsidiaries any
commitment, whether written or oral, to lend any funds to any such person;
(4) is owed any amounts by Prime or any of its subsidiaries except
for deposits taken in the ordinary course of business and amounts due for normal
compensation or reimbursement of expenses incurred in furtherance of the
business of such person's employer and reimbursable according to a policy of
Prime or such subsidiary, as appropriate, as in effect immediately prior to the
date hereof ("Insider Indebtedness").
(c) Except as set forth in Prime Schedule 2.24(c), the consummation of
the transactions contemplated hereby will not (either alone, or upon the
occurrence of any act or event, the lapse of time, or the giving of notice and
failure to cure) result in any payment (severance or other) or provision of a
benefit becoming due from Prime or any of its subsidiaries or any successor or
assign thereof to any director, officer or employee of Prime or any of its
subsidiaries or any successor or assign of such subsidiary, other than payments
and benefits due under the contracts and agreements set forth in Prime Schedule
2.14(b).
(d) "Associated Person" means (i) any holder of 10% of more of the
outstanding shares of Prime Stock, (ii) any associate (as "associate" is defined
at Rule 14a-1(a) of the SEC) or relative ("relative" for purposes of this
Section 2.24 is defined as any person having a family relationship with the
subject person, as family relationship is defined in the Instruction to
Paragraph 401(d) of Regulation S-K of the SEC) of a present or former director
or executive officer of Prime or any of its subsidiaries, (iii) any entity
controlled, directly or indirectly, individually or in the aggregate, by any
present or former director or executive officer of Prime or any of its
subsidiaries or any relative or associate of any of such persons and (iv) any
entity 25% or more or the equity interests of which are owned individually or in
the aggregate by any present or former director or executive officer of Prime or
any of its subsidiaries or any relative or associate of any of such persons.
Section 2.25 Registration Obligations. Neither the Prime nor any of its
subsidiaries is under any contractual obligation, contingent or otherwise, to
register any of its securities under the Securities Act.
Section 2.26 Corporate Documents. Prime has previously provided Summit
with true and complete copies of the articles or certificate of incorporation
and by-laws, as amended to date, which are currently in full force and effect,
of Prime and of each of its subsidiaries.
Section 2.27 Community Reinvestment Act Compliance. Prime and its
subsidiaries are in substantial compliance with the applicable provisions of the
Community Reinvestment Act of 1977 and the regulations promulgated thereunder,
and received a CRA rating of at least satisfactory as of their last completed
examination. As of the date of this Agreement, Prime has not been advised of the
21
existence of any fact or circumstance or set of facts or circumstances which, if
true, would cause Prime or any subsidiary to fail to be in substantial
compliance with such provisions.
Section 2.28 Business of Prime. Since December 31, 1998, Prime has
conducted its business only in the ordinary course. For purposes of the
foregoing, Prime has not, since December 31, 1998, controlled expenses through
(i) elimination of employee benefits, (ii) deferral of routine maintenance of
real property or leased premises, (iii) elimination of reserves where the
liability related to such reserve has remained, (iv) reduction of capital
improvements from previous levels, (v) failure to depreciate capital assets in
accordance with past practice or to eliminate capital assets which are no longer
used in the business of Prime, (vi) capitalized loan production expenses other
than in accordance with Statement of Financial Accounting Standard No. 91, or
(vii) extraordinary reduction or deferral of ordinary or necessary expenses.
Section 2.29 Interest Rate Risk Management Instruments.
(a) Set forth on Prime Schedule 2.29(a) is a list as of the date hereof
of all interest rate swaps, caps, floors and option agreements, and other
interest rate risk management arrangements to which Prime or any of its
subsidiaries is a party or by which any of their properties or assets may be
bound.
(b) All such interest rate swaps, caps, floors and option agreements and
other interest rate risk management arrangements to which Prime or any of its
subsidiaries is a party or by which any of their properties or assets may be
bound were entered into the ordinary course of business and, in accordance with
prudent banking practice and applicable rules, regulations and policies of
regulatory authorities and with counterparties believed, at the time entered
into and at the date of this Agreement, to be financially responsible and are
legal, valid and binding obligations of Prime or a subsidiary and are in full
force and effect. Prime and each of its subsidiaries has duly performed in all
material respects all of its obligations thereunder to the extent that such
obligations to perform have accrued, and there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
Section 2.30.Takeover Laws; Dissenters' Rights. Prime has taken all
action required to be taken by it in order to exempt this Agreement, the Option
Agreement and the transactions contemplated by each from, and this Agreement,
the Option Agreement and the transactions contemplated by each are exempt from,
the requirements of any "moratorium", "control share", "fair price", "affiliate
transaction", "control transaction", business combination" or other antitakeover
laws and regulations of the Commonwealth of Pennsylvania, including, without
limitation, Chapter 25 of the Pennsylvania Law except Subchapter F, which is
applicable.
Section 2.31.Year 2000 Compliant. To the best knowledge of Prime, all
computer software and hardware owned or licensed by Prime or any of its
subsidiaries is, or Prime has taken or is taking all required steps to be, Year
2000 compliant, which, for purposes of this Agreement, shall mean that the data
outside the range 1900-1999 will be correctly processed in any level of computer
hardware or software including, but not limited to, microcode, firmware,
applications programs, files and databases. All computer software owned or
licensed by Prime is, or Prime has taken steps or is taking steps (including
obtaining warranties from the vendors thereof in respect of compliance) to
ensure that all computer software will be, designed to be used prior to, during
and after the calendar year 2000 AD and such software will operate during each
such time period, without error relating to date data, specifically including
any error relating to, or the product of, date data that represents or
references different centuries or more than one century.
22
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SUMMIT
Summit represents and warrants to Prime as follows:
Section 3.01.Organization, Capital Stock.
(a) Summit is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey with authorized capital stock
consisting of (i) 390,000,000 shares of Common Stock, par value $.80 per share,
with the Summit Rights attached thereto pursuant to the Rights Agreement, of
which 173,756,531 shares were issued and outstanding as of December 31, 1998 and
(ii) 6,000,000 shares of Preferred Stock, each without par value, of which no
shares are issued and outstanding and 1,500,000 shares of Series R Preferred
Stock are reserved for issuance as of the date hereof
(b) Summit is qualified to transact business in and is in good standing
under the laws of all jurisdictions where the failure to be so qualified could
reasonably be expected to have a material adverse effect on (i) the business,
results of operations, assets or financial condition of Summit and its
subsidiaries on a consolidated basis, or (ii) the ability of Summit to perform
its obligations under, and to consummate the transactions contemplated by, this
Agreement (a "Summit Material Adverse Effect"). However, a Summit Material
Adverse Effect or Summit Material Adverse Change (as defined at Section 3.03)
will not include a change resulting from a change in law, rule, regulation,
generally accepted or regulatory accounting principle or other matter affecting
financial institutions or their holding companies generally or from charges or
expenses incident to the Reorganization. The bank subsidiaries of Summit are
duly organized, validly existing and in good standing under the laws of their
jurisdiction of organization. Summit and its bank subsidiaries have all
corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease their respective properties, occupy their respective
premises, and to engage in their respective businesses and activities as
presently engaged in and each has complied with all applicable laws, regulations
and orders except where the failure to comply would not constitute a Summit
Material Adverse Effect. Summit is duly registered as a bank holding company
under the BHCA.
(c) All issued shares of the capital stock of Summit and of each of its
bank subsidiaries have been fully paid, were duly authorized and validly issued,
are non-assessable, have been issued pursuant to an effective registration
statement under the Securities Act or to the best of Summit's knowledge an
appropriate exemption from registration under the Securities Act and were not
issued in violation of the preemptive rights of any shareholder. Summit or one
of its subsidiaries is the holder and beneficial owner of all of the issued and
outstanding Equity Securities of its bank subsidiaries. There are no Equity
Securities of Summit outstanding, in existence, the subject of an agreement, or
reserved for issuance, except as set forth at Section 3.01(a) and except for
Summit Stock issuable upon the exercise of employee stock options granted under
stock option plans of Summit, Summit Stock issuable pursuant to Summit's
Dividend Reinvestment and Stock Purchase Plan, Savings Incentive Plan and 1993
Incentive Stock and Option Plan and Series R Preferred Stock issuable pursuant
to the Summit Rights Agreement.
(d) All Equity Securities of its direct and indirect subsidiaries
23
beneficially owned by Summit or a subsidiary of Summit are held free and clear
of any claims, liens, encumbrances or security interests.
(e) Each bank subsidiary of Summit is duly authorized to conduct all
activities and exercise all powers of a commercial bank or savings bank
contemplated by the laws of its jurisdiction of organization. Each such bank
subsidiary is an insured bank as defined in the Federal Deposit Insurance Act.
Section 0.00.Xxxxxxxxx Statements. The financial statements (and related
notes and schedules thereto) contained in or incorporated by reference into
Summit's (a) annual report to shareholders for the fiscal year ended December
31, 1997, (b) annual report on Form 10-K pursuant to the Exchange Act for the
fiscal year ended December 31, 1997 and (c) quarterly reports on Form 10-Q filed
pursuant to the Exchange Act for the fiscal quarters ended March 31, 1998, June
30, 1998 and September 30, 1998 (the "Summit Financial Statements") are true and
correct in all material respects as of their respective dates and each fairly
presents in all material respects (subject, in the case of unaudited statements,
to recurring audit adjustments normal in nature and amount), in accordance with
generally accepted accounting principles consistently applied, the consolidated
balance sheets, statements of income, statements of shareholders' equity and
statements of cash flows of Summit and its subsidiaries at its respective date
or for the period to which it relates, except as may otherwise be described
therein and except that, in the case of unaudited statements, no consolidated
statements of changes in stockholders' equity are included. The Summit Financial
Statements do not, as of the dates thereof, include any material asset or omit
any material liability, absolute or contingent, or other fact, the inclusion or
omission of which renders the Summit Financial Statements, in light of the
circumstances under which they were made, misleading in any respect.
Section 0.00.Xx Conflicts. Summit is not in violation or breach of or
default under, and has received no notice of violation, breach, revocation or
threatened or contemplated revocation of or default or denial of approval under,
nor will the execution, delivery and performance of this Agreement by Summit, or
the consummation of the Reorganization by Summit upon the terms and conditions
provided herein (assuming receipt of the Required Consents), violate, conflict
with, result in the breach of, constitute a default under, give rise to a claim
or right of termination, cancellation, revocation of, or acceleration under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
rights, permits, licenses, assets or properties material to Summit and its
subsidiaries, on a consolidated basis, or upon any of the capital stock of
Summit, or constitute an event which could, with the lapse of time, action or
inaction by Summit, or a third party, or the giving of notice and failure to
cure, result in any of the foregoing, under any of the terms, conditions or
provisions, as the case may be, of:
(i) the Restated Certificate of Incorporation or the By-Laws of
Summit;
(ii) any law, statute, rule, ruling, determination, ordinance, or
regulation of any governmental or regulatory authority;
(iii) any judgment, order, writ, award, injunction, or decree of any
court or other governmental authority; or
(iv) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement, or other
instrument;
24
to which Summit is a party or by which Summit or any of its assets or properties
are bound or committed, the consequences of which would be a material adverse
change in the business, results of operations, assets or financial condition of
Summit and its subsidiaries, on a consolidated basis, from that reflected in the
Summit Financial Statements as of and for the nine months ended September 30,
1998 (a "Summit Material Adverse Change"), or enable any person to enjoin the
transactions contemplated hereby.
Section 3.04.Absence of Litigation, Agreements with Bank Regulators.
There is no outstanding order, injunction, or decree of any court or
governmental or self-regulatory body against or affecting Summit or its
subsidiaries which materially and adversely affects Summit and its subsidiaries,
on a consolidated basis, and there are no actions, arbitrations, claims,
charges, suits, investigations or proceedings (formal or informal) material to
Summit and its subsidiaries, on a consolidated basis, pending or, to Summit's
knowledge, threatened, against or involving Summit or their officers or
directors (in their capacity as such) in law or equity or before any court,
panel or governmental agency, except as may be disclosed in the Forms 10-K and
10-Q of Summit referred to in Section 3.02. Neither Summit nor any bank
subsidiary of Summit is a party to any agreement or memorandum of understanding
with, or is a party to any commitment letter to, or has submitted a board of
directors resolution or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any governmental or regulatory authority which restricts materially the conduct
of its business, or in any manner relates to its capital adequacy, its credit or
reserve policies or its management. Neither Summit nor any bank subsidiary of
Summit, has been advised by any governmental or regulatory authority that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any of the foregoing. Summit and the bank subsidiaries of
Summit have resolved to the satisfaction of the applicable regulatory agency any
significant deficiencies cited by any such agency in its most recent
examinations of each aspect of Summit or such bank subsidiary's business except
for examinations, if any, received within the 30 days prior to the date hereof
[as to which Summit has not been advised of any significant deficiencies].
Section 3.05.Regulatory Filings. At the time of filing, all filings made
by Summit and its subsidiaries after December 31, 1995 with the SEC and
appropriate bank regulatory authorities did not contain any untrue statement of
a material fact and did not omit to state any material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. To the extent such filings were subject to the Securities Act or
Exchange Act, such filings complied in all material respects with the Securities
Act or Exchange Act, as appropriate, and all applicable rules and regulations
thereunder of the SEC. Summit has since December 31, 1995 timely made all
filings required by the Securities Act and the Exchange Act, as appropriate, and
all applicable rules and regulations thereunder of the SEC or the Federal bank
regulatory agency having securities regulatory jurisdiction, as appropriate.
Each of the financial statements (including related notes and schedules thereto)
contained in or incorporated by reference into such filings are true and correct
in all material respects as of their respective dates and each fairly presents
(subject, in the case of unaudited statements, to recurring audit adjustments
normal in nature and amount), in accordance with generally accepted accounting
principles, the consolidated statements of condition, income, changes in
stockholders' equity and cash flows of Summit and its subsidiaries at its
respective date and for the period to which it relates, except as may otherwise
be described therein and except that in the case of unaudited statements, no
consolidated statements of changes in stockholders equity is included.
Section 3.06.Corporate Action.
25
(a) Assuming due execution and delivery by Prime, Summit has the
corporate power and is duly authorized by all necessary corporate action to
execute, deliver, and perform this Agreement. The Board of Directors of Summit
has taken all action required by law or by the Restated Certificate of
Incorporation or By-Laws of Summit or otherwise to authorize the execution and
delivery of this Agreement. Approval by the shareholders of Summit of this
Agreement, the Reorganization or the transactions contemplated by this Agreement
is not required by applicable law. Assuming due execution and delivery by and
the enforceability against Prime of this Agreement, this Agreement is a valid
and binding agreement of Summit enforceable in accordance with its terms except
as such enforcement may be limited by applicable principles of equity, and by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
laws of general applicability presently or hereafter in effect affecting the
enforcement of creditors' rights generally or institutions the deposits of which
are insured by the Federal Deposit Insurance Corporation, or the affiliates of
such institutions.
(b) In the event that pursuant to the Reorganization Election Summit
elects the Reorganization method provided for at Section 1.01(a)(2), the
Designated Summit Subsidiary will prior to Closing (i) have the corporate power
and be duly authorized by all necessary corporation action to execute, deliver
and perform this Agreement and (ii) the Board of Directors and sole shareholder
of the Designated Summit Subsidiary will have taken all action required by law,
its certificate or articles of incorporation and by-laws and otherwise to
authorize the execution and delivery of this Agreement and to approve this
Agreement and the transactions contemplated hereby including the Reorganization.
Assuming due execution and delivery by and the enforceability against each of
the other parties hereto, this Agreement will be a valid and binding agreement
of the Designated Summit Subsidiary enforceable in accordance with its terms
except as such enforcement may be limited by applicable principles of equity,
and by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
or other laws of general applicability presently or hereafter in effect
affecting the enforcement of creditors' rights generally or institutions, the
deposits of which are insured by the Federal Deposit Insurance Corporation, or
the affiliates of such institutions.
Section 3.07.Absence of Changes. There has not been, since September 30,
1998, any Summit Material Adverse Change and there is no matter or fact known to
Summit which may result in any such Summit Material Adverse Change in the
future.
Section 3.08 Absence of Undisclosed Liabilities. There are no
liabilities, whether contingent or absolute, direct or indirect, or loss
contingencies (as defined in Statement of Financial Accounting Standards No. 5)
other than (a) disclosed in the Summit Financial Statements or disclosed in the
notes thereto, (b) commitments made by Summit or any of its subsidiaries in the
ordinary course of its business which are not in the aggregate material to
Summit and its subsidiaries, on a consolidated basis, and (c) liabilities
arising in the ordinary course of its business since September 30, 1998 which
are not in the aggregate material to Summit and its subsidiaries, on a
consolidated basis.
Section 3.09.Allowance for Credit Losses. At September 30, 1998 and
thereafter, the allowances for credit losses of Summit and its subsidiaries are
adequate in all material respects to provide for all losses on loans and leases
outstanding, and to the best of Summit's knowledge, the loan and lease
portfolios of Summit and its subsidiaries in excess of such allowances are
collectible in the ordinary course of business.
Section 3.10. Accounting, Tax and Regulatory Matters. Neither Summit nor
any of its subsidiaries has taken or agreed to take any action or has any
26
knowledge of any fact or circumstance that would (i) prevent the transactions
contemplated hereby from qualifying as a reorganization within the meaning of
Section 368(a) the Code, or (ii) materially impede or delay receipt of any
approval referred to in Section 4.01 or the consummation of the transactions
contemplated by this Agreement.
Section 3.11. Community Reinvestment Act Compliance. Summit and its
subsidiaries are in substantial compliance with the applicable provisions of the
Community Reinvestment Act of 1977 and the regulations promulgated thereunder,
and received a CRA rating of at least satisfactory as of their last completed
examination. As of the date of this Agreement, Summit and its subsidiaries have
not been advised of the existence of any fact or circumstance or set of facts or
circumstances which, if true, would cause Summit or any bank subsidiary to fail
to be in substantial compliance with such provisions.
Section 3.12.Year 2000 Compliant. To the best knowledge of Summit, all
computer software and hardware owned or licensed by Summit or any of its
subsidiaries is, or Summit has taken or is taking all required steps to be, Year
2000 compliant, which, for purposes of this Agreement, shall mean that the data
outside the range 1900-1999 will be correctly processed in any level of computer
hardware or software including, but not limited to, microcode, firmware,
applications programs, files and databases, except where the failure to be so
compliant would not have a Summit Material Adverse Effect. All computer software
owned or licensed by Summit is, or Summit has taken steps or is taking steps
(including obtaining warranties from the vendors thereof in respect of
compliance) to ensure that all computer software will be designed to be used
prior to, during and after the calendar year 2000 AD and that such software will
operate during each such time period, without error relating to date data,
specifically including any error relating to, or the product of, date data that
represents or references different centuries or more than one century, except
where the failure to be so designed or to so operate would not have a Summit
Material Adverse Effect.
Section 3.13.Beneficial Ownership of Prime Stock. Summit is the
beneficial owner of 106,700 shares of Prime Stock on the date hereof.
ARTICLE IV.
COVENANTS OF PRIME
Prime hereby covenants and agrees with Summit that:
Section 4.01.Preparation of Registration Statement and Applications for
Required Consents. Prime will cooperate with Summit in the preparation of a
Registration Statement on Form S-4 (the "Registration Statement") to be filed
with the SEC under the Securities Act for the registration of the offering of
Summit Stock to be issued as Reorganization Consideration and the proxy
statement-prospectus constituting part of the Registration Statement
("Proxy-Prospectus") that will be used by Prime to solicit shareholders of Prime
for approval of the Reorganization. In connection therewith, Prime will furnish
all financial or other information, including using reasonable best efforts to
obtain customary consents, certificates, opinions of counsel and other items
concerning Prime, deemed reasonably necessary by counsel to Summit for the
filing or preparation for filing under the Securities Act and the Exchange Act
of the Registration Statement (including the Proxy-Prospectus). Prime will
cooperate with Summit and provide such information as may be advisable and
reasonably available to Prime in obtaining an order of effectiveness for the
Registration Statement, appropriate permits or approvals under state securities
and "blue sky" laws, the required approval under the BHCA of the Board of
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Governors of the Federal Reserve System (the "Federal Reserve Board") and any
other governmental or regulatory consents or approvals or the taking of any
other governmental or regulatory action necessary to consummate the
Reorganization that would not have a Summit Material Adverse Effect following
the Reorganization (the "Required Consents"). Summit, reasonably in advance of
making such filings, will provide Prime and its counsel a reasonable opportunity
to comment on such filings and regulatory applications and will give due
consideration to any comments of Prime and its counsel before making any such
filing or application, and Summit will provide Prime and its counsel with copies
of all such filings and applications at the time filed if such filings and
applications are made at any time before the Effective Time. Prime covenants and
agrees that all information furnished in writing by Prime expressly for
inclusion in the Registration Statement, the Proxy-Prospectus, and all
applications to appropriate regulatory agencies for approval of the
Reorganization will comply in all material respects with the provisions of
applicable law, including the Securities Act and the Exchange Act and the rules
and regulations of the SEC thereunder, and together with all information
furnished in writing by Prime to Summit in connection with obtaining Required
Consents will not contain any untrue statement of a material fact and will not
omit to state any material fact required to be stated therein or necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading. Prime will furnish to Xxx-Xxxx such information
about Prime reasonably available to it as Xxx-Xxxx may reasonably request for
purposes of the opinion referred to in Section 8.07.
Section 4.02.Notice of Adverse Changes. Prime will promptly advise Summit
in writing of (a) any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of Prime contained in this
Agreement or the Prime Schedules or the materials furnished pursuant to the
Post-Signing Document List (as defined in Section 4.09), if made on or as of the
date of such event or the Closing Date, untrue or inaccurate in any material
respect, (b) any Prime Material Adverse Change, (c) any inability or perceived
inability of Prime to perform or comply with the terms or conditions of this
Agreement, (d) the institution or threat of institution of litigation or
administrative proceedings involving Prime or any of its subsidiaries or assets,
which, if determined adversely to Prime or any of its subsidiaries, would have a
Prime Material Adverse Effect or an adverse material effect on the ability of
the parties to timely consummate the Reorganization and the related
transactions, (e) any governmental complaint, investigation, hearing, or
communication indicating that such litigation or administrative proceeding is
contemplated, (f) any written notice of, or other communication relating to, a
default or event which, with notice or lapse of time or both, would become a
default, received by Prime or a subsidiary subsequent to the date hereof and
prior to the Effective Time, under any agreement, indenture or instrument to
which Prime or a subsidiary is a party or is subject and which is material to
the business, operation or condition (financial or otherwise) of Prime and its
subsidiaries on a consolidated basis, and (g) any written notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement including the Reorganization. Prime agrees that the delivery of such
notice shall not constitute a waiver by Summit of any of the provisions of
Articles VI or VII.
Section 4.03.Meeting of Shareholders. Prime will call a meeting of its
shareholders for the purpose of voting upon this Agreement, the Reorganization
and the transactions contemplated hereby. The meeting of Prime shareholders
contemplated by this Section 4.03 will be held as promptly as practicable and,
in connection therewith, will comply with the Pennsylvania Law and the Exchange
Act and all regulations promulgated thereunder governing shareholder meetings
and proxy solicitations. In connection with such meeting, Prime shall mail the
Proxy-Prospectus to Prime shareholders and use its reasonable best efforts to
obtain shareholder approval of this Agreement, the Reorganization and the
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transactions contemplated hereby; provided, however, that no director of Prime
shall be obligated to take any action under this Section 4.03 in such person's
capacity as a director which such person reasonably believes on the advice of
counsel to be contrary to his fiduciary duty as a director.
Section 4.04.Copies of Filings. Without limiting the provisions of
Section 4.01, Prime will deliver to Summit, at least 48 hours prior to an
anticipated date of filing or distribution or as soon thereafter as practicable,
all documents to be filed with the SEC or any bank regulatory authority or to be
distributed in any manner to the shareholders of Prime or to the news media or
to the public, other than the press releases and other information subject to
Section 10.01.
Section 0.00.Xx Material Transactions. Until the Effective Time, Prime
will not and will not allow any of its subsidiaries to, without the prior
written consent of Summit:
(a) pay (or make a declaration which creates an obligation to pay) any
cash dividends, other than dividends from subsidiaries of Prime to Prime or
other subsidiaries of Prime except that Prime may declare, set aside and pay a
dividend of $0.11 per share of Prime Stock per quarter; provided, however, if
the Effective Time has not occurred by November 30, 1999, Prime shall be
permitted to increase the amount of its quarterly dividend to $.13 per share of
Prime Stock per quarter;
(b) declare or distribute any stock dividend or authorize or effect a
stock split;
(c) merge with, consolidate with, or sell any material asset to any other
corporation, bank, or person (except for mergers of subsidiaries of Prime into
other subsidiaries of Prime) or enter into any other transaction not in the
ordinary course of the banking business;
(d) except as set forth on Prime Schedule 4.05(d), incur any liability or
obligation other than intracompany obligations, make or agree to make any
commitment or disbursement, acquire or dispose or agree to acquire or dispose of
any property or asset (tangible or intangible), make or agree to make any
contract or agreement or engage or agree to engage in any other transaction,
except (i) transactions in the ordinary course of business or other transactions
involving not more than $75,000, and (ii) costs and expenses incurred in
connection with the Reorganization and other transactions contemplated by this
Agreement;
(e) subject any of its properties or assets to any lien, claim, charge,
option or encumbrance, except in the ordinary course of business and for amounts
not material in the aggregate to Prime and its subsidiaries, on a consolidated
basis;
(f) except as set forth in Prime Schedule 4.05(f), pay any employee
bonuses or increase or enter into any agreement to increase the rate of
compensation of any employee at the date hereof which is not consistent with
past practices and policies and which when considered with all such increases or
agreements to increase constitutes an average annualized rate not exceeding four
percent (4%);
(g) except as set forth in Prime Schedule 4.05(g), create, adopt or
modify any employment, termination, severance pension, supplemental pension,
profit sharing, bonus, deferred compensation, death benefit, retirement, stock
option, stock award, stock purchase or other employee or director benefit or
welfare plan, arrangement or agreement of whatsoever nature, including without
limitation the Prime Pension Plans and the Prime Benefit Plans (collectively,
"Prime Plans"), or change the level of benefits, reduce eligibility, performance
29
or participation standards, increase any payment or benefit under any Prime
Plan;
(h) distribute, issue, sell, award, grant, permit to become outstanding
or enter into any agreement respecting any Equity Securities or any Equity Based
Rights except pursuant to the Option Agreement, the Prime Bancorp, Inc.
Directors Deferred Compensation Plan or the exercise of director and employee
stock options and warrants granted prior to the date hereof under the Prime
Stock Compensation Plans and exercisable and outstanding under the terms of a
Prime Stock Compensation Plan at the date of such exercise;
(i) except in a fiduciary capacity, purchase, redeem, retire, repurchase,
or exchange, or otherwise acquire or dispose of, directly or indirectly, any of
its Equity Securities or Equity Based Rights, whether pursuant to the terms of
such Equity Securities or Equity Based Rights or otherwise, or enter into any
agreement providing for any of the foregoing transactions;
(j) amend its certificate or articles of incorporation or articles of
association, as appropriate, charter or by-laws;
(k) modify, amend or cancel any of its existing borrowings other than in
the ordinary course of business and other than intra-corporate borrowings and
borrowings of federal funds from correspondent banks and the Federal Home Loan
Bank of Pittsburgh or enter into any contract, agreement, lease or
understanding, or any contracts, agreements, leases or understandings other than
those in the ordinary course of business or which do not involve the creation of
any material obligation or release of any material right of Prime or any of its
subsidiaries, on a consolidated basis;
(l) create, amend, increase, enhance, accelerate the exercisability of,
or release or waive any forfeitures, terminations or expirations of or
restrictions on any rights, awards, benefits, entitlements, options or warrants
under the Prime Plans including Equity Securities and Equity Based Rights
outstanding ;
(m) make any employer contribution to a Prime Plan which under the terms
of the particular plan is voluntary and within the discretion of Prime to make,
other than regular contributions to Prime's 401(k) Plan and except as provided
for in Prime Schedule 4.05(m);
(n) make any determination or take any action, discretionary or
otherwise, under or with respect to any Prime Plan other than routine
administration in accordance with past precedent;
(o) notwithstanding any other provision of this Agreement, enter into or
amend, renew, extend, give any notice or consent with respect to, waive any
provision under, or accept any new fees, rates or other costs or charges of
whatsoever nature, schedule, exhibit or other attachment under (whether through
an action or inaction) any Insider Agreement or any agreement, understanding,
contract, commitment or transaction relating to any Insider Indebtedness, except
to the extent permitted by Section 4.12 or disclosed in Prime Schedule 2.24(b);
(p) other than in the ordinary course of business and in compliance with
applicable laws and regulations, enter into, increase or renew any loan or
credit commitment (including standby letters of credit) to any executive officer
or director of Prime or any of its subsidiaries, any holder of 10% of more of
the outstanding shares of Prime Stock, or any entity controlled, directly or
indirectly, by any of the foregoing or engage in any transaction with any of the
foregoing which is of the type or nature sought to be regulated in 12 U.S.C.
30
ss.371c and 12 U.S.C. ss.371c-1. For purposes of this Section 4.05(p), "control"
shall have the meaning associated with that term under 12 U.S.C. ss.371c; or
(q) take or fail to take any discretionary action provided for under the
terms of any plan or agreement affecting one or more directors or employees or
any affiliates of such where the effect of such act or failure to act is or
would be to give or confer a right or benefit not existing on the date hereof.
Section 4.06.Operation of Business in Ordinary Course. Prime, on behalf
of itself and its subsidiaries, covenants and agrees that from and after the
date hereof and until the Effective Time, it and its subsidiaries: (a) will
carry on their business substantially in the same manner as heretofore and will
not institute any unusual or novel methods of management or operation of their
properties or business and will maintain such in their customary manner; (b)
will use their best efforts to continue in effect their present insurance
coverage on all properties, assets, business and personnel; (c) will use their
best efforts to preserve their business organization intact, preserve their
present relationships with customers, suppliers, and others having business
dealings with them, and keep available their present employees, provided,
however, that Prime or any of its subsidiaries may terminate any employee for
unsatisfactory performance or other reasonable business purpose, and provided
further, however, that Prime will notify and consult with Summit prior to
terminating any of the five highest paid employees of Prime; (d) will use their
best efforts to continue to maintain fidelity bonds insuring Prime and its
subsidiaries against acts of dishonesty by each of their employees in such
amounts (not less than present coverage) as are customary, usual and prudent for
corporations or banks, as the case may be, of their size; and (e) will not
change their methods of accounting in effect at December 31, 1998, or change any
of their methods of reporting income and deductions for Federal income tax
purposes from those employed in the preparation of their Federal income tax
returns for the taxable year ended December 31, 1998, except as required by
changes in laws, regulations or generally accepted accounting principles or
changes that are to a preferable accounting method, and approved in writing by
Prime's independent certified public accountants.
Section 4.07.Further Actions. Prime will: (a) execute and deliver such
instruments and take such other actions as Summit may reasonably require to
carry out the intent of this Agreement; (b) use its reasonable best efforts to
obtain consents of all third parties and governmental bodies necessary or
reasonably desirable for the consummation of the transactions contemplated by
this Agreement; (c) diligently support this Agreement in any proceeding before
any regulatory authority whose approval of any of the transactions contemplated
hereby is required or reasonably desirable or before any court in which
litigation in respect thereof is pending; and (d) use its reasonable best
efforts so that the other conditions precedent to the obligations of Summit set
forth in Articles VI and VII hereof are satisfied.
Section 4.08.Cooperation. Until the Effective Time, Prime will give to
Summit and to its representatives, including its accountants, KPMG Peat Marwick
LLP, and its legal counsel, full access during normal business hours to all of
its property, documents, contracts and records relevant to this Agreement and
the Reorganization, will provide such information with respect to its business
affairs and properties as Summit from time to time may reasonably request, and
will cause its managerial employees, and will use its reasonable best efforts to
cause its counsel and independent certified public accountants, to be available
on reasonable request to answer questions of Summit's representatives covering
the business and affairs of Prime or any of its subsidiaries.
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Section 4.09.Copies of Documents. As promptly as practicable, but not
later than 30 days after the date hereof, Prime will furnish to or make
available to Summit all the documents, contracts, agreements, papers, and
writings referred to in the Prime Schedules or called for by the list attached
hereto as Exhibit C (the "Post-Signing Document List"), except where prohibited
by law.
Section 4.10.Applicable Laws. Prime and its subsidiaries will use their
reasonable best efforts to comply promptly with all requirements which federal
or state law may impose on Prime or any of its subsidiaries with respect to the
Reorganization and will promptly cooperate with and furnish information to
Summit in connection with any such requirements imposed upon Summit or on any of
its subsidiaries in connection with the Reorganization.
Section 4.11.Agreements of Affiliated Shareholders. Prime agrees to
furnish to Summit, not later than 10 business days prior to the date of mailing
of the Proxy-Prospectus, a writing setting forth the names of those persons
(which will include all individual and beneficial ownership of Prime Stock by
such persons and also identifies the manner in which all such beneficially owned
shares of Prime Stock are registered on the stock record books of Prime) who in
the written opinion of counsel to Prime (which opinion need not be furnished to
Summit), constitute all the affiliates of Prime for the purposes of Rule 145
under the Securities Act (an "Prime Affiliate"). Prime agrees to use its
reasonable best efforts (i) to cause each Prime Affiliate to enter into an
agreement effective upon the execution thereof, satisfactory in form and
substance to Summit and (y) substantially in the form of Exhibit D-1 with
respect to Affiliates who are directors or officers of Prime or a subsidiary of
Prime, or (z) substantially in the form of Exhibit D-2 with respect to
Affiliates who are not directors or officers of Prime or a subsidiary of Prime
(an "Affiliate Agreement"), and (ii) to furnish such Affiliate Agreements to
Summit no later than 5 business days prior to the date of mailing of the
Proxy-Prospectus.
Section 0.00.Xxxxx and Leases to Affiliates. All loans and leases
hereafter made by Prime or any of its subsidiaries to any of its present or
former directors or executive officers or their respective related interests
shall be made only in the ordinary course of business and on the same terms and
at the same interest rates as those prevailing for comparable transactions with
others and shall not involve more than the normal risk of repayment or present
other unfavorable features.
Section 4.13.Confidentiality. All information furnished by Summit to
Prime or its representatives pursuant hereto shall be treated as the sole
property of Summit and, if the Reorganization shall not occur, Prime and its
representatives shall return to Summit all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information, except that any such
confidential information or notes or abstracts therefrom presented to the Board
of Directors of Prime or any committee thereof for the purpose of considering
this Agreement, the Reorganization and the related transactions may be kept and
maintained by Prime with other records of Board, and Board committee, meetings
subject to a continuing obligation of confidentiality. Prime shall, and shall
use its reasonable best efforts to cause its representatives to, keep
confidential all such information, and shall not directly or indirectly use such
information for any purposes other than the performance of this Agreement. The
obligation to keep such information confidential shall continue for five years
from the date the proposed Reorganization is abandoned and shall not apply to:
(i) any information which (x) was legally in Prime's possession prior to the
disclosure thereof by Summit, (y) was then generally known to the public, or (z)
was disclosed to Prime by a third party not bound by an obligation of
confidentiality; or (ii) disclosures made as required by law. It is further
agreed that if, in the absence of a protective order or the receipt of a waiver
hereunder, Prime is nonetheless, in the written opinion of its outside counsel,
32
compelled to disclose information concerning Summit to any tribunal or
governmental body or agency or else stand liable for contempt or suffer other
censure or penalty, Prime may disclose such information to such tribunal or
governmental body or agency without liability hereunder and shall so notify
Summit in advance to the extent practicable. This Section 4.13 shall survive any
termination of this Agreement.
Section 4.14.Dividends. Prime will coordinate with Summit the declaration
of any dividends and the record and payment dates thereof so that the holders of
Prime Stock will not be paid two dividends for a single calendar quarter with
respect to their shares of Prime Stock and any shares of Summit Stock they
become entitled to receive in the Reorganization or fail to be paid one dividend
in each calendar quarter between the date hereof and the Effective Time. Prime
will notify Summit at least five business days prior to any proposed dividend
declaration date.
Section 4.15.Acquisition Proposals. Prime agrees that neither Prime nor
any of its subsidiaries nor any of the respective officers and directors of
Prime or its subsidiaries shall, and Prime shall direct and use its best effort
to cause its employees, affiliates, agents and representatives (including,
without limitation, any investment banker, broker, financial or investment
advisor, attorney or accountant retained by Prime or any of its subsidiaries)
not to, initiate, solicit or encourage, directly or indirectly, any inquiries,
proposals or offers with respect to, or engage in any negotiations or
discussions with any person, provide any nonpublic information, or authorize or
enter into any agreement or agreement in principle concerning, or recommend,
endorse or otherwise facilitate any effort or attempt to induce or implement,
any Acquisition Proposal (as defined below). "Acquisition Proposal" is hereby
defined to be any offer, including an exchange offer or tender offer, or
proposal concerning a merger, consolidation, or other business combination or
takeover transaction involving Prime or any of its subsidiaries or the
acquisition of any assets (otherwise than as permitted by Section 4.05) or
securities of Prime or any of its subsidiaries. Prime will immediately cease and
cause to be terminated any existing activities, discussion or negotiations with
any parties conducted heretofore with respect to any of the foregoing. Prime
will take the necessary steps to inform the individuals or entities referred to
in the first sentence hereof of the obligations undertaken in this Section. In
addition, Prime will notify Summit by telephone to its chief executive officer
or general counsel promptly upon receipt of any communication with respect to a
proposed Acquisition Proposal with another person or receipt of a request for
information from any governmental or regulatory authority with respect to a
proposed acquisition of Prime or any of its subsidiaries or assets by another
party, and will immediately deliver as soon as possible by facsimile
transmission, receipt acknowledged, to the Summit officer notified as required
above a copy of any document relating thereto promptly after any such document
is received by Prime.
Section 4.16 Tax Opinion Certificates. Prime shall execute and deliver to
Xxxxxxxx Xxxxxx any tax opinion certificate reasonably required by Xxxxxxxx
Xxxxxx in connection with the issuance of the Tax Opinions (as defined at
Section 6.03), dated as of the date of effectiveness of the Registration
Statement and as of the Closing Date (and as of the date the Closing occurs if
different than the Closing Date), and Prime shall use its reasonable best
efforts to cause each of its executive officers, directors and holders of five
percent (5%) or more of outstanding Prime Stock (including shares beneficially
held) to execute and deliver to Xxxxxxxx Xxxxxx any tax opinion certificate
reasonably required by Xxxxxxxx Xxxxxx in connection with the issuance of one or
more of the Tax Opinions, dated as of the date of effectiveness of the
Registration Statement and as of the Closing Date (and as of the date the
Closing occurs if different than the Closing Date).
Section 4.17.Directors' and Officers' Insurance. Prime and each of its
33
subsidiaries has taken or will take all requisite action (including, without
limitation, the making of claims and the giving of notices) pursuant to its
directors' and officers' liability insurance policy or policies ("D&O
Insurance") in order to preserve all rights thereunder with respect to all
matters (other than matters arising in connection with this Agreement and the
transactions contemplated hereby) occurring prior to the Effective Time that are
known to Prime. Prime shall renew any existing D&O Insurance or purchase any
"discovery period" D&O Insurance provided for thereunder at Summit's request.
Section 4.18.Conforming Entries.
(a) Notwithstanding that Prime believes that Prime and its subsidiaries
have established reserves and taken all provisions for possible loan and lease
losses required by generally accepted accounting principles and applicable laws,
rules and regulations, Prime recognizes that Summit may have adopted different
loan, accrual and reserve policies (including loan classification and levels of
reserves for possible loan and lease losses). From and after the date of this
Agreement, Prime and Summit shall consult and cooperate with each other with
respect to conforming the loan, accrual and reserve policies of Prime and its
subsidiaries to those policies of Summit, as specified in each case in writing
to Prime, based upon such consultation and as hereinafter provided.
(b) In addition, from and after the date of this Agreement, Prime and
Summit shall consult and cooperate with each other with respect to determining
appropriate accruals, reserves and charges for Prime to establish and take in
respect of excess equipment write-off or write-down of various assets and other
appropriate charges and accounting adjustments taking into account the parties'
business plan following the Reorganization, as specified in each case in writing
to Prime, based upon such consultation and as hereinafter provided.
(c) Prime and Summit shall consult and cooperate with each other with
respect to determining the amount and the timing for recognizing for financial
accounting purposes Prime's expenses of the Reorganization and the restructuring
charges, if any, related to or to be incurred in connection with the
Reorganization.
(d) With respect to clauses (a) through (c) of this Section 4.18, (i) it
is the objective of Prime and Summit that such reserves, accruals, charges and
divestitures, if any, to be taken shall be consistent with generally accepted
accounting principles, and (ii) Prime shall not be obligated to make a
particular conforming entry if the particular entry is not capable of being
reversed upon a termination of this Agreement or if the entry would have a
material adverse effect on Prime.
Section 4.19 Cooperation with Policies and Procedures. Prime, prior to
the Effective Time, shall (i) consult and cooperate with Summit regarding the
implementation of those policies and procedures established by Summit for its
governance and that of its subsidiaries and not otherwise referenced in Section
4.18 of this Agreement, including, without limitation, policies and procedures
pertaining to the accounting, asset/liability management, audit, credit, human
resources, treasury and legal functions, and (ii) at the reasonable request of
Summit, conform Prime's existing policies and procedures in respect thereof,
provided that Prime shall not be required to conform a policy or procedure (y)
if such would cause Prime or any of its subsidiaries to be in violation of any
law, rule, regulation or requirement of any governmental regulatory authority
having jurisdiction over Prime or any of its subsidiaries affected thereby, or
(z) if such conforming change is not capable of being reversed upon a
termination of this Agreement or if the change would have a material adverse
effect on Prime.
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Section 4.20 Environmental Reports. Prime shall disclose to Summit all
matters of the types described in Section 2.22 hereof which Prime would have
been required to disclose to Summit on the date hereof if known to Prime on the
date hereof, as such become known to Prime between the date hereof and the
Effective Time. In addition, Summit may at its expense perform, or cause to be
performed, a phase one environmental investigation, an asbestos survey, or both
of the foregoing, (i) within 90 days following the date of this Agreement, on
all real property owned, leased or operated by Prime or any of its subsidiaries
as of the date of this Agreement (but excluding space in retail or similar
establishments leased by Prime for automatic teller machines or leased bank
branch facilities where the space leased by Prime comprises less than 20% of the
total space leased to all tenants of such property), and (ii) within 15 days
after being notified by Prime of the acquisition or lease of any real property
by it or its subsidiaries after the date of this Agreement, on the real property
so acquired or leased (but excluding space in retail or similar establishments
leased by Prime for automatic teller machines or leased bank branch facilities
where the space leased by Prime comprises less than 20% of the total space
leased to all tenants of such property). If the results of a phase one
investigation (whether requested by Prime or Summit) indicate, in the reasonable
opinion of Summit, that additional investigation is warranted, Summit may at its
expense, within 15 days after receipt of the particular phase one report,
perform or cause to be performed a phase two investigation on the property or
properties deemed by Summit to warrant such additional study or notify Prime and
an environmental consulting firm within 15 days after the receipt of the
particular phase one report that the environmental consulting firm should
promptly commence a phase two investigation. If the cost of taking all remedial
or other corrective actions and measures (as required by applicable law, as
recommended or suggested by phase one or phase two investigation reports
(without regard to who requested such reports) or as may be prudent in light of
serious life, health or safety concerns), if any, is in the aggregate in excess
of $3,000,000, as reasonably estimated by an environmental expert retained for
such purpose by Summit at its sole expense, or if the cost of such actions and
measures cannot be so reasonably estimated by such expert to be such amount or
less with any reasonable degree of certainty, Summit shall have the right
pursuant to Section 9.02(d)(3) of this Agreement to terminate this Agreement.
Section 4.21 Best Efforts to Ensure Pooling. Prime agrees to use, and
agrees to cause each of its subsidiaries to use, its and their best efforts to
cause the Reorganization to qualify for pooling-of-interests accounting
treatment.
ARTICLE V.
COVENANTS OF SUMMIT
Summit hereby covenants and agrees with Prime that:
Section 5.01.Approvals and Registrations. Based on such assistance and
cooperation of Prime as Summit shall reasonably request, Summit will use its
reasonable best efforts to prepare and file (a) with the SEC, the Registration
Statement, (b) with the Federal Reserve Board, an application for approval of
the Reorganization, and (c) with the NYSE, an application for the listing of the
shares of Summit Stock issuable upon the Reorganization, subject to official
notice of issuance, and (d) with any state regulatory authority having
jurisdiction over the Reorganization, applications for such consents or
approvals as may be required for consummation of the transactions contemplated
by this Agreement, except that Summit shall have no obligation to file a new
registration statement or a post-effective amendment to the Registration
Statement covering any reoffering of Summit Stock by Prime Affiliates. Summit
covenants and agrees that all information furnished by Summit for inclusion in
35
the Registration Statement, the Proxy-Prospectus, and all applications and
submissions for the Required Consents will comply in all material respects with
the provisions of applicable law, including the Securities Act and the Exchange
Act and the rules and regulations of the SEC and the Federal Reserve Board and
will not contain any untrue statement of a material fact and will not omit to
state any material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. Summit will use its reasonable best efforts to seek
the effectiveness of the Registration Statement. Summit will furnish to Xxx-Xxxx
such information about Summit reasonably available to it as Xxx-Xxxx may
reasonably request for purposes of the opinion referred to in Section 8.07.
Section 5.02.Notice of Adverse Changes. Summit will promptly advise Prime
in writing of (a) any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of Summit contained in this
Agreement or the Summit Schedules, if made on or as of the date of such event or
the Closing Date, untrue or inaccurate in any material respect, (b) any Summit
Material Adverse Change, (c) any inability or perceived inability of Summit to
perform or comply with the terms or conditions of this Agreement, (d) the
institution or threat of institution of litigation or administrative proceeding
involving Summit or its assets which, if determined adversely to Summit, would
have a Summit Material Adverse Effect or a material adverse effect on the
parties' ability to consummate the Reorganization, (e) any governmental
complaint, investigation, or hearing or communication indicating that such
litigation or administrative proceeding is contemplated, (f) any written notice
of, or other communication relating to, a default or event which, with notice or
lapse of time or both, would become a default, received by Summit subsequent to
the date hereof and prior to the Effective Time, under any agreement, indenture
or instrument to which Summit is a party or is subject and which is material to
the business, operation or condition (financial or otherwise) of Summit and its
subsidiaries on a consolidated basis, and (g) any written notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement including the Reorganization. Summit agrees that the delivery of such
notice shall not constitute a waiver by Prime of any of the provisions of
Articles VI or VIII.
Section 5.03.Copies of Filings. Summit shall promptly provide to Prime
and its counsel copies of the application filed with the Federal Reserve Board,
all reports filed by it with the SEC on Forms 10-Q, 8-K and 10-K and all
documents to be distributed in any manner to the shareholders of Summit.
Section 5.04.Further Actions. Summit will: (a) execute and deliver such
instruments and take such other actions as Prime may reasonably require to carry
out the intent of this Agreement; (b) use its reasonable best efforts to obtain
consents of all third parties and governmental bodies necessary or reasonably
desirable for the consummation of the transactions contemplated by this
Agreement; (c) diligently support this Agreement in any proceeding before any
regulatory authority whose approval of any of the transactions contemplated
hereby is required or reasonably desirable or before any court in which
litigation in respect thereof is pending; and (d) use its reasonable best
efforts so that the other conditions precedent to the obligations of Prime set
forth in Articles VI and VIII hereof are satisfied.
Section 5.05.Applicable Laws. Summit will use its reasonable best efforts
to comply promptly with all requirements which federal or state law may impose
on Summit with respect to the Reorganization and will promptly cooperate with
and furnish information to Prime in connection with any such requirements
imposed upon Prime or on any of its subsidiaries in connection with the
36
Reorganization.
Section 5.06.Unpaid Prime Dividends. By virtue of the Reorganization and
without further action on anyone's part, Summit shall assume the obligation of
Prime to pay dividends, if any, on Prime Stock which have a record date prior to
the Effective Time but which are not payable until after the Effective Time.
Section 5.07.Cooperation. Until the Effective Time, Summit will provide
such information with respect to its business affairs and properties as Prime
from time to time may reasonably request, and will cause its managerial
employees, counsel and independent certified public accountants to be available
on reasonable request to answer questions of Prime's representatives covering
the business and affairs of Summit or any of its subsidiaries.
Section 5.08.Confidentiality. All information furnished by Prime to
Summit or its representatives pursuant hereto shall be treated as the sole
property of Prime and, if the Reorganization shall not occur, Summit and its
representatives shall return to Prime all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information, except that any such
confidential information or notes or abstracts therefrom presented to the Board
of Directors of Summit or any committee thereof for the purpose of considering
this Agreement, the Reorganization and the related transactions may be kept and
maintained by Summit with other records of Board, and Board committee, meetings
subject to a continuing obligation of confidentiality. Summit shall, and shall
use its reasonable best efforts, to cause its representatives to, keep
confidential all such information, and shall not directly or indirectly use such
information for any purposes other than the performance of this Agreement. The
obligation to keep such information confidential shall continue for five years
from the date the proposed Reorganization is abandoned and shall not apply to:
(i) any information which (x) was legally in Summit's possession prior to the
disclosure thereof by Prime, (y) was then generally known to the public, or (z)
was disclosed to Summit by a third party not bound by an obligation of
confidentiality; or (ii) disclosures made as required by law. It is further
agreed that if, in the absence of a protective order or the receipt of a waiver
hereunder, Summit is nonetheless, in the written opinion of its counsel,
compelled to disclose information concerning Prime to any tribunal or
governmental body or agency or else stand liable for contempt or suffer other
censure or penalty, Summit may disclose such information to such tribunal or
governmental body or agency without liability hereunder and shall so notify
Prime in advance to the extent practicable. This Section 5.08 shall survive any
termination of this Agreement.
Section 5.09.Further Transactions. Summit continually evaluates possible
acquisitions and may prior to the Effective Time enter into one or more
agreements providing for, and may consummate the acquisition by it of another
bank, association, bank holding company, savings and loan holding company or
other company (or the assets thereof) for consideration that may include Summit
Stock. In addition, prior to the Effective Time, Summit may, depending on market
conditions and other factors, otherwise determine to issue Equity Securities or
other securities for financing purposes. Notwithstanding the foregoing, Summit
will not take any such action that would (i) prevent the transactions
contemplated hereby from qualifying as a reorganization within the meaning of
Section 368(a) of the Code or (ii) materially impede or delay receipt of any
Required Consent or the consummation of the transactions contemplated by this
Agreement for more than 60 days.
Section 5.10.Indemnification.
37
(a) Summit shall indemnify persons who served as directors and officers
of Prime or any subsidiary of Prime on or before the Effective Time with respect
to liabilities and claims (and related expenses, including fees and
disbursements of counsel) made against them resulting from their service as such
prior to the Effective Time in accordance with and subject to the requirements
and other provisions of the Restated Certificate of Incorporation and By-Laws of
Summit and the certificate or articles of incorporation and by-laws of Prime or
the applicable subsidiary of Prime, all as in effect on the date of this
Agreement and to the extent permitted by law, and Summit shall advance expenses
in matters that may be subject to indemnification in accordance with its
Restated Certificate of Incorporation and By-Laws in effect on the date of this
Agreement and any applicable provisions of law.
(b) Subject to Prime's obligation set forth at Section 4.17: For a period
of six (6) years after the Effective Time, Summit will use its reasonable best
efforts to provide to the persons who served as directors or officers of Prime
or any subsidiary of Prime on or before the Effective Time insurance against
liabilities and claims (and related expenses) made against them resulting from
their service as such prior to the Effective Time comparable in coverage to that
provided by Summit to its own directors and officers, but, if not available on
commercially reasonable terms, then coverage substantially similar in all
material respects to the insurance coverage provided to them in such capacities
at the date hereof; provided, however, that in no event shall Summit be required
to expend more than 200% of the current amount expended by Prime on an annual
basis (the "Insurance Amount") to maintain or procure insurance coverage
pursuant hereto, and, further provided, that if Summit is unable to maintain or
obtain the insurance called for by this Section 5.10, Summit shall use its
reasonable best efforts to obtain as much comparable insurance as is available
for the Insurance Amount.
(c) This Section 5.10 shall be construed as an agreement as to which the
directors and officers of Prime and its subsidiaries referred to herein are
intended to be third party beneficiaries and shall be enforceable by the such
persons and their heirs and representatives. Summit's obligations under this
Section 5.10 shall survive the Effective Time.
Section 5.11.Employee Matters. After the Effective Time, Summit may in
its discretion maintain, terminate, merge or dispose of the Prime Plans;
provided, however, that any action taken by Summit shall comply with ERISA and
any other applicable laws, including laws regarding the preservation of employee
pension benefit plan benefits and, provided further, that if Summit maintains a
defined contribution plan, defined benefit plan or health and welfare plan
available to all its employees generally which is similar to a Prime Plan which
is, respectively, a defined contribution plan, defined benefit plan or health
and welfare plan available to all Prime employees generally, then, if such Prime
Plan is terminated by Summit or is otherwise rendered inactive by Summit, Summit
shall offer to the former employees of Prime affected by such plan termination
or cessation of activity the opportunity to participate in the similar plan of
Summit.
Section 0.00.Xxx Opinion Certificates. Summit shall execute and deliver
to Xxxxxxxx Xxxxxx any tax opinion certificate reasonably required by Xxxxxxxx
Xxxxxx in connection with the issuance of the Tax Opinions, dated as of the date
of effectiveness of the Registration Statement and as of the Closing Date (and
as of the date the Closing occurs if different than the Closing Date).
ARTICLE VI.
CONDITIONS PRECEDENT TO THE RESPECTIVE OBLIGATIONS OF
38
SUMMIT AND PRIME
The respective obligations of Summit and Prime under this Agreement to
consummate the Reorganization are subject to the simultaneous satisfaction of
all the following conditions, compliance with which or the occurrence of which
may only be waived in whole or in part in writing by Summit and Prime in
accordance with Section 10.09:
Section 6.01.Receipt of Required Consents. Summit and Prime shall have
received the Required Consents; the Required Consents shall not, in the
reasonable opinion of Summit, contain restrictions or limitations which would
materially adversely affect the financial condition of Summit after consummation
of the Reorganization; the Required Consents and the transactions contemplated
hereby shall not be contested by any federal or state governmental authority;
and the Required Consents needed for the Reorganization shall have been obtained
and shall not have been withdrawn or suspended.
Section 6.02.Effective Registration Statement. The Registration Statement
shall have been declared effective by the SEC; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and remain in
effect; and no proceeding for that purpose shall have been initiated or, to the
knowledge of Summit or Prime, shall be contemplated or threatened by the SEC.
Section 0.00.Xxx Matters. At the time of effectiveness of the
Registration Statement and at the Closing Date (and at the date the Closing
occurs if different than the Closing Date), Summit and Prime shall have received
from Xxxxxxxx Xxxxxx an opinion addressed to Prime, Summit and all shareholders
of Prime (the "Tax Opinion"), reasonably satisfactory in form and substance to
Prime and Summit, to the effect that (a) the Reorganization will constitute a
tax-free reorganization within the meaning of Section 368(a) of the Code, (b)
except with respect to fractional share interests, holders of Prime Stock who
receive solely Summit Stock in the Reorganization will not recognize gain or
loss for federal income tax purposes, (c) the basis of such Summit Stock
(including any fractional share for which cash is received) will equal the basis
of the Prime Stock for which it is exchanged and (d) the holding period of such
Summit Stock (including any fractional share for which cash is received) will
include the holding period of the Prime Stock for which it is exchanged,
assuming that such Prime Stock is a capital asset in the hands of the holder
thereof at the Effective Time.
In addition, no condition or set of facts or circumstances shall exist
which will either (y) preclude any of the parties to this Agreement from
satisfying the terms or conditions of, or assumptions made in, the Tax Opinion,
as the case may be, or (z) result in any of the factual assumptions contained in
the Tax Opinion being untrue.
Section 6.04.Absence of Litigation. No investigation by any state or
federal agency, and no action, suit, arbitration or proceeding before any court,
state or federal agency, panel or governmental or regulatory body or authority,
shall have been instituted or threatened against Summit or any of its
subsidiaries, or Prime or any of its subsidiaries, that is material to the
Reorganization or to the financial condition of Summit and its subsidiaries on a
consolidated basis or Prime and its subsidiaries on a consolidated basis, as the
case may be. No order, decree, judgment, or regulation shall have been entered
or law or regulation adopted by any such agency, panel, body or authority which
enjoined or has a material adverse effect upon the Reorganization or on the
financial condition of Summit and its subsidiaries on a consolidated basis or
39
Prime and its subsidiaries on a consolidated basis, as the case may be.
Section 6.05.NYSE Listing. The NYSE shall have indicated that the shares
of Summit Stock to be issued in the Reorganization are to be listed on the NYSE,
subject to official notice of issuance.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SUMMIT
The obligation of Summit to consummate the Reorganization is subject to
the simultaneous satisfaction of all of the following conditions, compliance
with which or the occurrence of which may be waived in whole or in part by
Summit in writing in accordance with Section 10.09:
Section 0.00.Xx Adverse Changes. There shall not have occurred at any
time after December 31, 1998 any Prime Material Adverse Change or any material
loss or damage to the properties of Prime or any of its subsidiaries, whether or
not insured, which materially affects the ability of Prime and its subsidiaries,
on a consolidated basis, to conduct their business.
Section 7.02.Representations and Covenants. Except with respect to
matters resulting from transactions specifically contemplated by this Agreement,
changes resulting from a change in law, rule, regulation, generally accepted or
regulatory accounting principle or other matter affecting banking institutions
or their holding companies generally or from charges or expenses incident to the
Reorganization, all representations and warranties made by Prime in this
Agreement and the Prime Schedules and the material furnished pursuant to the
Post-Signing Document List shall be true and correct in all material respects on
the date of this Agreement and on the date the Closing occurs with the same
force and effect as if such representations and warranties were being made on
such date. Prime shall have complied in all material respects with all covenants
and agreements contained herein to be performed by Prime.
Section 7.03.Secretary's/Assistant Secretary's Certificate. Prime shall
have furnished to Summit a certificate dated the date the Closing occurs to
which shall be attached copies of all resolutions adopted or minutes of actions
taken by the Board of Directors (including committees thereof) and shareholders
of Prime relating to this Agreement, the Option Agreement and the Reorganization
and related transactions, which such certificate shall be signed by the
Secretary or an Assistant Secretary of Prime and certify to the satisfaction of
the condition set forth in Section 7.09 and the truth, correctness, completeness
and continuing effectiveness of all resolutions and actions contained or
referenced in the aforementioned attachments.
Section 7.04.Officer's Certificate. Prime shall have furnished to Summit
a certificate signed by the Chief Executive Officer of Prime, dated the date the
Closing occurs, certifying to the satisfaction of the conditions set forth at
Sections 6.01, 6.02 (last clause), 6.03 (last paragraph) and Section 6.04, as
they relate to Prime, and at Sections 7.01, 7.02, 7.07 and 7.10.
Section 7.05.Opinion of Prime's Counsel. Summit shall have received an
opinion of Stradley, Ronon, Xxxxxxx & Young, LLP or Blank, Rome, Xxxxxxx &
XxXxxxxx, LLP, counsel to Prime, dated the date the Closing occurs and
reasonably satisfactory in form and substance to counsel for Summit,
substantially to the effect provided in Exhibit E.
40
Section 7.06.Approvals of Legal Counsel. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all related legal matters shall be
reasonably satisfactory to counsel to Summit, and such counsel shall have been
furnished with certified copies of actions and proceedings and such other
documents and instruments as they shall have reasonably requested.
Section 7.07.Consents to Prime Contracts. All consents, approvals or
waivers, in form and substance reasonably satisfactory to Summit, required to be
obtained in connection with the Reorganization from other parties to each
mortgage, note, lease, permit, franchise, loan or other agreement or contract to
which Prime or any of its subsidiaries is a party or by which they or any of
their assets or properties may be bound or committed, which contract is material
to the business, franchises, operations, assets or condition (financial or
otherwise) of Prime and its subsidiaries on a consolidated basis, shall have
been obtained.
Section 7.08.FIRPTA Affidavit. Prime shall have delivered to Summit an
affidavit of an executive officer of Prime dated the date the Closing occurs
stating, under penalties of perjury, that Prime is not and has not been a United
States real property holding company (as defined in Section 897(c)(2) of the
Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
Section 7.09.Shareholder Approval. The shareholders of Prime, at the
meeting contemplated by this Agreement, shall have authorized and approved the
Reorganization and this Agreement and all transactions contemplated by this
Agreement as and to the extent required by all applicable laws and regulations
and the provisions of Prime's Articles of Incorporation and By-Laws.
Section 7.10.Absence of Regulatory Agreements. Neither Prime nor Bank
shall be a party to any agreement or memorandum of understanding with, or
commitment letter to, or board of directors resolution submitted to or similar
undertaking made to, or be subject to any order or directive by, or be a
recipient of any extraordinary supervisory letter from, any governmental or
regulatory authority which restricts materially the conduct of its respective
business or has a material adverse effect upon the Reorganization or upon the
financial condition of Bank or of Prime and its subsidiaries on a consolidated
basis, and neither Prime nor Bank shall have been advised by any governmental or
regulatory authority that such authority is contemplating issuing or requesting,
or considering the appropriateness of issuing or requesting, any of the
foregoing.
Section 7.11.Affiliate Agreements. In the event Summit shall elect to
account for the Reorganization on a pooling-of-interest basis, Prime shall use
its best efforts to have a sufficient number of Prime Affiliates execute and
deliver Affiliate Agreements to Summit such that, in the reasonable opinion of
Summit based on consultation with its independent accounting firm, the
Reorganization may be accounted for on a pooling-of-interests basis.
The receipt of the documents required by this Article VII by Summit shall in no
way constitute a waiver by Summit of any of the provisions of or its rights
under this Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF PRIME
The obligation of Prime to consummate the Reorganization is subject to
the simultaneous satisfaction of all of the following conditions, compliance
41
with which or the occurrence of which may be waived in whole or in part by Prime
in writing in accordance with Section 10.09:
Section 0.00.Xx Adverse Changes. There shall not have occurred at any
time after September 30, 1998 any Summit Material Adverse Change or any material
loss or damage to the properties of Summit or its subsidiaries, whether or not
insured, which materially affects the ability of Summit and its subsidiaries, on
a consolidated basis, to conduct their business.
Section 8.02.Representations and Covenants. Except with respect to
matters resulting from transactions specifically contemplated by this Agreement,
all representations and warranties made by Summit in this Agreement and in the
Summit Schedules shall be true and correct in all material respects on the date
of this Agreement and on the date the Closing occurs with the same force and
effect as if such representations and warranties were made on such date and
Summit shall have complied in all material respects with all covenants and
agreements contained herein or therein to be performed by Summit; provided,
however, that no representation, warranty or covenant of Summit shall be
construed to limit or prohibit any business or financing activities of Summit
including by way of illustration and not limitation, the entry by Summit after
the date hereof into any agreement to acquire any assets or any company or other
entity, the issuance of any debt or equity securities in public or private
offerings, the issuance of Series R Preferred Stock pursuant to the Summit
Rights Agreement, the redemption or repurchase by Summit of its capital stock,
the Summit Rights or the Series R Preferred Stock issuable pursuant to the
Summit Rights Agreement, and any transactions reasonably necessary or
appropriate in connection therewith, and no such business or financing activity
shall constitute a breach of any representation, warranty or covenant of Summit;
provided further, however, that Summit agrees that it will not permit any such
transaction to cause any delay in the consummation of the Reorganization in
excess of 60 days.
Section 8.03.Secretary's Certificate.
(a) Summit shall have furnished to Prime a certificate dated the date the
Closing occurs to which shall be attached copies of all resolutions adopted or
minutes of actions taken by the Board of Directors (including committees
thereof) of Summit relating to this Agreement, the Option Agreement and the
Reorganization and related transactions, which such certificate shall be signed
by the Secretary of Summit and certify to the truth, correctness, completeness
and continuing effectiveness of all resolutions and actions contained or
referenced in the aforementioned attachments.
(b) In the event that pursuant to the Reorganization Election Summit
elects the Reorganization method provided for at Section 1.01(a)(2), the
Designated Summit Subsidiary shall have furnished to Prime a certificate dated
the date the Closing occurs to which shall be attached copies of all resolutions
adopted or minutes of actions taken by the Board of Directors and shareholders
(including committees thereof) of the Designated Summit Subsidiary relating to
this Agreement, the Reorganization and related transactions, which such
certificate shall be signed by the Secretary of the Designated Summit Subsidiary
and certify to satisfaction of the condition set forth at Section 8.09
applicable to the Designated Summit Subsidiary and to the truth, correctness,
completeness and continuing effectiveness of all resolutions and actions
contained or referenced in the aforementioned attachments.
Section 8.04.Officer's Certificate. Summit shall have furnished to Prime
a certificate signed by the Chairman, Vice Chairman, President or an Executive
Vice President of Summit, dated the date the Closing occurs, certifying to the
satisfaction of the conditions set forth at Sections 6.01 and 6.02, the last
paragraph of Section 6.03, and Sections 6.04 and 6.05, as they relate to Summit,
and Sections 8.01, 8.02, 8.08 and 8.11.
42
Section 8.05.Opinion of Summit Counsel. Prime shall have received an
opinion of the General Counsel of Summit, dated the date the Closing occurs and
reasonably satisfactory in form and substance to counsel for Prime,
substantially to the effect provided in Exhibit F.
Section 8.06.Approvals of Legal Counsel. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all related legal matters shall be
reasonably satisfactory to counsel to Prime, and such counsel shall have been
furnished with certified copies of actions and proceedings and such other
documents and instruments as they shall have reasonably requested.
Section 8.07.Fairness Opinion. The Proxy-Prospectus shall have contained
the favorable signed opinion of Xxx-Xxxx, dated the date of the Proxy-Prospectus
or a date not more than five business days prior thereto, regarding the fairness
from a financial point of view of the Exchange Ratio to the shareholders of
Prime in the Reorganization.
Section 8.08.Absence of Regulatory Agreements. Neither Summit nor any of
its bank subsidiaries shall be a party to any agreement or memorandum of
understanding with, or commitment letter to, or board of directors resolution
submitted to or similar undertaking made to, or be subject to any order or
directive by, or be a recipient of any extraordinary supervisory letter from,
any governmental or regulatory authority which restricts materially the conduct
of Summit's business or has a material adverse effect upon the Reorganization or
upon the financial condition of Summit and its subsidiaries on a consolidated
basis, and neither Summit nor any of its bank subsidiaries shall have been
advised by any governmental or regulatory authority that such authority is
contemplating issuing or requesting, or considering the appropriateness of
issuing or requesting, any of the foregoing.
Section 0.00.Xxxxx Shareholder Approval. The shareholders of Prime, at
the meeting contemplated by this Agreement, shall have authorized and approved
the Reorganization and this Agreement and all transactions contemplated by this
Agreement as and to the extent required by all applicable laws and regulations
and the provisions of Prime's Articles of Incorporation and By-laws and in the
event that pursuant to the Reorganization Election Summit elects the
Reorganization method provided for at Section 1.01(a)(2) the sole shareholder of
the Designated Summit Subsidiary shall have authorized and approved the
Reorganization and this Agreement and all transactions contemplated by this
Agreement as and to the extent required by all applicable laws and regulations
and the provisions of the Designated Summit Subsidiary's certificate or articles
of incorporation and by-laws.
Section 8.10.Severance/Termination Agreements. Summit and Xxxxx X. Xxxxx
shall each have executed a participation letter for the Summit Bancorp.
Executive Severance Plan in the form attached hereto as Exhibit G-1 and a
termination agreement in the form attached hereto as Exhibit G-2, provided that
at the Effective Time Xx.
Xxxxx is able to serve as an executive officer of Bank.
Section 8.11.Consents to Summit Contracts. All consents, approvals or
waivers required to be obtained in connection with the Reorganization from other
parties to each mortgage, note, lease, permit, franchise, loan or other
agreement or contract to which Summit is a party or by which its assets or
properties may be bound or committed, which contract is material to the
business, franchises, operations, assets or condition (financial or otherwise)
of Summit and its subsidiaries on a consolidated basis, shall have been
obtained.
The receipt of the documents required by this Article VIII by Prime shall in no
43
way constitute a waiver by Prime of any of the provisions of or its rights under
this Agreement.
ARTICLE IX
CLOSING; TERMINATION RIGHTS
Section 9.01.Closing. The closing of the Reorganization (the "Closing")
shall take place on the date which is 45 business days after the last to occur
of the following ("Scheduled Date"), unless Summit shall designate a date for
the Closing which is prior to the Scheduled Date in a writing ("Closing Notice")
designating a Determination Date in accordance with Section 9.02(e)(i) below
delivered to Prime at least five (5) business days prior to the date designated
therein for Closing, or unless prior to the Scheduled Date the parties agree to
a different date:
(i) the date of the approval of the Reorganization by the shareholders
of Prime in accordance with Section 7.09;
(ii) if the transactions contemplated by this Agreement are being
contested in any legal proceeding, the date that such proceeding
has been brought to a conclusion favorable, in the judgment of
Summit and Prime, to the consummation of the transactions
contemplated herein or such prior date as Summit and Prime shall
elect, whether or not such proceeding has been brought to a
conclusion; or
(iii) the date of receipt of the last of the Required Consents or the
date that all waiting periods required by statute or incorporated
into such Required Consents have expired;
and the date of Closing determined in accordance with the foregoing provisions
is referred to herein as the "Closing Date". The Closing shall take place at the
office of Summit, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx, commencing at
10:00 a.m. on the date the Closing is held, unless the parties agree to a
different place or commencement time. At the Closing, the parties will exchange
certificates, legal opinions and other documents for the purpose of determining
whether the conditions precedent to the obligations of the parties set forth
herein have been satisfied or waived. In the event that pursuant to the
Reorganization Election Summit elected the Reorganization method provided for at
Section 1.01(a)(1), Summit shall, after all such conditions to Closing have been
satisfied or waived, cause the NJ Certificate to be filed with the Secretary of
State of the State of New Jersey and the Pennsylvania Articles to be filed with
the Department of State of the Commonwealth of Pennsylvania. In the event that
pursuant to the Reorganization Election Summit elected the Reorganization method
provided for at Section 1.01(a)(2), Summit shall, after all such conditions to
Closing have been satisfied or waived, cause the appropriate certificate of
merger, articles of merger, or both to be filed with the proper state
jurisdictional authorities to effect the Reorganization intended by this
Agreement. All proceedings to be taken and all documents to be executed and
delivered by all parties at the Closing shall be deemed so taken, executed and
delivered simultaneously, and no proceedings shall be deemed taken or any
documents executed or delivered until all have been taken, executed or
delivered.
Section 9.02.Termination Rights.
(a) The Board of Directors of Prime or Summit may terminate this
Agreement in the event that:
(1) the shareholders of Prime at the meeting of shareholders
44
contemplated by Section 4.03, called for the purpose of approving the
Reorganization, this Agreement and the transactions contemplated by this
Agreement, upon voting, shall have failed to approve the Reorganization, this
Agreement and the transactions contemplated hereby by the requisite vote;
(2) a material breach of a warranty, representation, covenant or
agreement made by the other party in this Agreement shall have occurred and such
breach has not been cured, or is not capable of being cured, within 30 days
after written notice of the existence thereof shall have been given to the other
party (a "Material Breach") (provided that the terminating party is not then in
Material Breach of this Agreement);
(3) Prime's investment banker is unable to deliver the opinion
required by Section 8.07 to Prime by the day which is three business days prior
to the date the Registration Statement is declared effective by the SEC; or
(4) the Closing is not consummated on or before the later of (i)
January 3, 2000, unless the failure of such occurrence shall be due solely to a
Material Breach by the party seeking to terminate this Agreement or the failure
of such party to fulfill a condition to Closing provided for herein, or (ii) the
Scheduled Date, if the last event required to occur pursuant to the first
sentence of Section 9.01 for the setting of the Scheduled Date shall have
occurred on or before January 3, 2000.
(b) If either party shall refuse to close on the Closing Date because all
the conditions to its obligation to close set forth in Article VI shall not have
been met, the parties shall conduct the Closing as promptly as practicable after
all such conditions have been satisfied. In the event the failure of such a
condition is due to one or more Material Breaches, the Board of Directors of a
party not in Material Breach may, during the period any such Material Breach
remains uncured, terminate this Agreement by giving written notice of such
termination to the other party.
(c) If either party shall refuse to close on the Closing Date because all
the conditions to its obligation to close set forth in Article VII or VIII shall
not have been met (other than a failure of the condition set forth at Section
7.09 or 8.09 due to the circumstances set forth in Section 9.02(a)(1) hereof or
a failure of the condition set forth at Section 8.07 due to the circumstances
set forth at Section 9.02(a)(3) hereof): (i) the parties shall conduct the
Closing as promptly as practicable after all such conditions have been
satisfied, and (ii) the Board of Directors of such party may, during the period
the failed condition continues, terminate this Agreement by giving written
notice of such termination to the other party unless such party itself has
failed to satisfy a condition to the other party's Closing obligation or is in
Material Breach.
(d) The Board of Directors of Summit may terminate this Agreement:
(1) at any time if Prime does not execute and deliver the Option
Agreement by the day immediately following the date hereof;
(2) at any time prior to the meeting of Prime shareholders
contemplated by Section 4.03, if the Board of Directors of Prime fails to
recommend approval of this Agreement and the Reorganization and other
transactions contemplated hereby in the Proxy-Prospectus ("Recommendation") or
withdraws, modifies or changes, or votes to withdraw, modify or change, its
Recommendation or its intention to make the Recommendation as represented and
warranted at Section 2.08; and
(3) as provided at Section 4.20.
45
(e) In the event the Summit Price is less than $32.68125 and the quotient
obtained by dividing the Summit Price by $39.375 is more than .17 less than the
quotient obtained by dividing the Determination Date Index Price (as defined at
(iii) below) by the Starting Date Index Price (as defined at (iv) below), the
Board of Directors of Prime shall have the right, exercisable only until 11:59
p.m. on the third business day following the Determination Date to terminate
this Agreement by giving Summit notice of such termination, referring to this
Section 9.02(e), and this Agreement shall be terminated provided Summit receives
such notice prior to the time and day set forth above in this Section 9.02(e).
For purposes of this Section 9.02(e):
(i) "Determination Date" means the date that the last approval of the
Reorganization and the transactions contemplated hereby required
of a bank regulatory agency is received from the applicable bank
regulatory agency.
(ii) "Summit Price" means the average of the closing prices of a share
of Summit Stock on the NYSE Composite Transactions List (as
reported in The Wall Street Journal or, in the absence thereof, as
reported by another authoritative source mutually agreed upon by
Prime and Summit) for the 10 consecutive full trading days, ending
on the Determination Date, on which one share of Summit Stock is
traded.
(iii) "Determination Date Index Price" means the average of the closing
prices of the common stock of the companies in the Index Group (as
defined at (v) below) on the NYSE Composite Transactions List (as
reported in The Wall Street Journal or, in the absence thereof, as
reported by another authoritative source mutually agreed upon by
Prime and Summit) for the 10 consecutive full trading days ending
on the Determination Date.
(iv) "Starting Date Index Price" means the average of the closing
prices on the Starting Date (as defined at (vi) below) of the
common stock of the companies in the Index Group on the NYSE
Composite Transactions List (as reported in The Wall Street
Journal) as of the Determination Date.
(v) "Index Group" means the bank holding companies listed below;
provided, however, that if between the Starting Date and the
Determination Date the common stock of any such company ceases to
be publicly traded, an announcement is made of a proposal for such
company to be acquired or an announcement is made of a proposal by
such company to acquire another company or companies in
transactions with a value exceeding 25% of such acquiror's market
capitalization as of the Starting Date, then, in such event, for
purposes of calculating the Index Price in all cases, such company
will be removed from the Index Group. If any company in the Index
Group or Summit declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the Starting
Date and the Determination Date, the closing price of the common
stock of such company or Summit, as the case may be, on the
Starting Date shall be appropriately adjusted for the purposes of
applying this Section 9.02(e). The bank holding companies in the
Index Group are as follows:
Bank Holding Companies
AmSouth Bancorp
BB&T Corporation
Comerica Incorporated
Fifth Third Bancorp
First Security Corp.
46
Huntington Bancshares, Inc.
Keystone Financial, Inc.
Xxxxxxxx & Xxxxxx Corporation
Mercantile Bancorp
Mellon Bank Corporation
Old Kent Financial Corporation
Regions Financial Corporation
SouthTrust Corporation
Star Banc Corporation
Union Planters Corp.
Wilmington Trust Corporation
(vi) "Starting Date" means the date of the last trading day ending before
the public announcement of the execution of this Agreement.
Section 9.03.Effects of a Termination; Certain Expenses.
(a) Upon a termination of this Agreement pursuant to this Section 9.02
hereof:
(1) the obligations of the parties under this Agreement (except
for those under this Section 9.03 and Sections 4.13 and 5.08) shall terminate
and be of no further force or effect and each party shall be mutually released
and discharged from liability to the other party or to any third parties
hereunder, and
(2) no party shall be liable to any other party for any costs or
expenses paid or incurred in connection herewith by such other party, except
that expenses incurred in connection with printing the Proxy-Prospectus and the
Registration Statement, and the filing fees of regulatory authorities or
self-regulatory organizations, shall be borne equally by Summit and Prime;
provided, however, that: (A) if Prime terminates this Agreement pursuant to
Section 9.02(a)(2) or Section 9.02(c), Summit shall reimburse Prime for its
out-of-pocket expenses reasonably incurred in connection with this Agreement,
including counsel fees and the printing and filing fees referred to above, but
excluding any brokers', finders' or investment bankers' fees; and (B) if Summit
terminates this Agreement pursuant to Section 9.02(a)(2), Section 9.02(c) or
Section 9.02(d), Prime shall reimburse Summit for its out-of-pocket expenses
reasonably incurred in connection with this Agreement, including counsel fees
and the printing and filing fees referred to above, but excluding any brokers',
finders' or investment bankers' fees.
(b) Notwithstanding any termination of this Agreement, (i) Prime shall
indemnify and hold Summit harmless from and against any claim by any broker or
finder asserting a right to brokerage commissions or finders' fees as a result
of any action allegedly taken by or understanding allegedly reached with Prime
and (ii) Summit shall indemnify and hold Prime harmless from and against any
claim by any broker or finder asserting a right to brokerage commissions or
finders' fees as a result of any action allegedly taken by or understanding
allegedly reached with Summit.
(c) Except as provided otherwise herein in the event of a termination of
this Agreement, Prime and its subsidiaries shall bear their own expenses
incident to preparing, entering into and carrying out this Agreement and to
consummating the Reorganization, provided, however, that Summit shall pay all
printing expenses and filing fees associated with the Registration Statement,
the Proxy-Prospectus and regulatory applications.
47
ARTICLE X
MISCELLANEOUS
Section 10.01. Press Releases. At all times until the Closing Date or the
termination of this Agreement, each party shall promptly advise and consult with
the other prior to issuing, or permitting any of its subsidiaries, directors,
officers, employees or agents to issue, any press release or other information
to the press or any third party with respect to this Agreement or the
transactions contemplated hereby.
Section 10.02. Article and Section Headings. Article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 10.03. Entire Agreement; Amendments. This Agreement, the Prime
Schedules and the Exhibits hereto and the Option Agreement to be entered into by
the parties hereto constitute the entire agreement between the parties
pertaining to the subject matter hereof and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth herein or therein. No
supplement, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the party to be bound thereby (or in the
case of a termination occurring pursuant to Section 9.02 hereof by the party
exercising a right to terminate this Agreement). No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof or thereof (whether or not similar), nor shall any waiver
constitute a continuing waiver unless otherwise expressly provided in the
instrument granting such waiver. The parties hereto may amend or modify this
Agreement in such manner as may be agreed upon by a written instrument executed
by the parties, except that, after the meeting described in Section 7.09 hereof,
no such amendment or modification shall reduce the amount of, or change the
forms of consideration to be received by the shareholders of Prime contemplated
by this Agreement, unless such modification is submitted to a vote of the
shareholders of Prime.
Section 10.04. Survival of Representations, Warranties and Covenants. No
investigation made by the parties hereto made heretofore or hereafter shall
affect the representations and warranties of the parties which are contained
herein and each such representation and warranty shall survive such
investigation. None of the representations, warranties, covenants and agreements
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time, except for those representations, covenants
and agreements contained herein and therein which by their terms apply in whole
or in part after the Effective Time.
Section 10.05. Notices. Any notice or other communication required or
permitted hereunder shall be in writing, and shall be deemed to have been given,
unless otherwise specified in a particular provision of this Agreement, if
placed in the mail, registered or certified, postage prepaid, or if delivered
personally or by courier, receipt requested, or by facsimile transmission,
receipt acknowledged addressed as follows:
Summit: Summit Bancorp.
Attn: Xxxx X. Xxxxxxx
000 Xxxxxxxx Xxxxxx, X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Telephone No.: 000-000-0000
48
Facsimile No.: 000-000-0000
With a copy to: Xxxxxxx X. Xxxx, Xx., Esq.
Summit Bancorp.
000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Prime: Prime Bancorp, Inc.
0000 Xxxxxx Xxxxx Xxxx
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
With a copy to: Xxxxx X. Xxxxxxxx, Esq.
Stradley, Ronon, Xxxxxxx & Xxxxx, LLP
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
and Xxxx Xxxxx, Esq.
Blank, Rome, Xxxxxxx & XxXxxxxx, LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
or to such other address as such party may designate by notice to the others,
which change of address shall be deemed to have been given upon receipt.
A notice or other communication hereunder shall be deemed delivered (i)
if mailed by certified or registered mail to the proper address, with adequate
postage prepaid, on the fifth business day following posting, (ii) if hand
delivered, when received by the person to whom directed, (iii) if delivered by
overnight courier, on the next business day following shipment, or (iv) if
delivered via facsimile, on the business day transmitted.
Section 10.06. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey,
without giving effect to the provisions, policies or principles thereof relating
to choice or conflict of laws.
Section 10.07. Counterparts. This Agreement is being executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Section 10.08. Binding Effect. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
49
Section 10.09. Extensions; Waivers and Consents. Either party hereto, by
written instrument signed by its Chairman, Vice Chairman, President, or Chief
Financial Officer, may extend the time for the performance of any of the
obligations of the other party hereto, and may waive, at any time before or
after approval of this Agreement and the transactions contemplated hereby by the
shareholders of Prime, subject to the provisions of Section 10.03 hereof: (i)
any inaccuracies of the other party in the representations and warranties in
this Agreement or any other document delivered pursuant hereto or thereto; (ii)
compliance with any of the covenants or agreements of the other party contained
in this Agreement; (iii) the performance (including performance to the
satisfaction of a party or its counsel) by the other party of any of its
obligations hereunder or thereunder; and (iv) the satisfaction of any conditions
to the obligations of the waiving party hereunder or thereunder. Any consent or
approval of a party hereunder shall be effective only if signed by the Chairman,
Vice Chairman, President or Chief Financial Officer of such party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in counterparts by their duly authorized officers as of the date first above
written.
SUMMIT BANCORP.
By:___________________
Xxxx X. Xxxxxxx
Vice Chairman
PRIME BANCORP, INC.
By:___________________
Xxxxx X. Xxxxx
President and Chief Executive Officer
In the event that pursuant to the Reorganization Election Summit elects the
Reorganization method provided for at Section 1.01(a)(2), the Designated Summit
Subsidiary indicated below agrees to be legally bound by all terms of this
Agreement and Plan of Merger as if an original party hereto.
Designated Summit Subsidiary: ________________________________
By: ________________________________
Name: ________________________________
Title: ________________________________
Date: ________________________________
50
EXHIBIT A
[RESERVED FOR ADDITIONAL TERMS PURSUANT TO SECTION 1.01(b)]
Exhibit B
An executed copy of Exhibit B is filed herewith as Exhibit 10 (b) to
this Schedule 13D.
EXHIBIT C
POST-SIGNING DOCUMENT LIST
INSTRUCTIONS
1. Copies of documents rather than originals should be delivered.
2. The requested information and documents should be provided by Prime
Bancorp, Inc. ("Prime") and by all subsidiaries of Prime unless an item
refers by name to a specific entity, in which case the information and
documents may be furnished solely by the named entity. References to "the
Corporation" means Prime and each of its subsidiaries.
3. The information and documents should be provided separately by each
entity. Please do not mix information or documents from one entity with
that of another. Please clearly segregate materials when delivering them
to Summit.
4. Please xxxx each item of information and each document furnished pursuant
to this List in the upper right corner with the letter and number of the
item in this List to which it corresponds.
5. Send all information and documentation requested herein to the attention
of Xxxxxx X. Xxxxxxxx, Senior Vice President and Group Counsel, Summit
Bancorp., 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000.
6. To the extent you believe an item of information or document was
furnished pursuant to a Prime Schedule under the Merger Agreement between
Prime and Summit, please indicate all such items of information and
documents on a list, cross-referencing the item from this List to the
appropriate Prime Schedule.
1
A. LEGAL
1. Original Certificate or Articles of Incorporation or Articles of
Association, as appropriate, certified by Secretary.
2. All Amendments to Certificate or Articles of Incorporation or Articles
of Association, as appropriate, certified by Secretary.
3. Current By-Laws and any Amendments certified by Secretary.
4. Copies of Annual Reports to Shareholders (6 years).
* 5. Original Minute Books containing all minutes of Shareholder,
Director and Committee meetings.
* 6. Original Stock Certificate Records.
7. (Reserved)
8. List of any outstanding options, warrants, presently exercisable
rights, buyout arrangements, voting trusts, or liens affecting the
Corporation's stock, with copies of pertinent documentation and
details of any such arrangements.
9. Documentation of all long-term (over one year) indebtedness or credit
lines of the Corporation including guarantees and other contingent
liabilities in excess of $50,000.
10. List of all officers, directors, and holder of 1% or more of stock of
the Corporation showing:
a) Full name.
b) Titles.
c) Number of Shares of Stock held.
* 11. List of all shareholders with addresses and holdings.
12. Address and description of each office and whether building is owned
or leased.
13. As to any land and buildings owned, provide most recent available
accounting or tax schedules reflecting any of the following: the
original cost, date of acquisition, age of building, depreciation
rates used and allowed by the Internal Revenue Service, depreciation
reserve, net book value, and property and other taxes currently being
paid for each building. To the extent available, provide copies of:
title papers, title insurance policies, abstracts, title opinions,
appraisals, surveys and all agreements relating to or affecting the
real property. List mortgages, and, to the extent available,
encumbrances and liens of all kinds.
14. List of real estate acquired as salvage on uncollected loans and
"other real estate owned" - address and date acquired, loan value,
most recent appraised value.
15. List all facilities financed with tax-exempt financing. Specify
whether the facility is owned or leased and, if leased, the percentage
of space in the facility under lease. Please provide all documentation
relating to the tax-exempt financing and all documents relating to the
facility currently in force or in effect.
16. Leases for current premises, whether as tenant or landlord, and any
prior premises for which the Corporation retains liabilities. List of
any directors or officers with whom the Corporation has a lease.
* Not to be delivered; to be made available for examination on site.
2
17. Leases for all leased equipment with annual rentals over $50,000,
including, but not limited to:
a) Alarm system
b) Telephone system
c) Computers
d) Office equipment
18. All maintenance contracts with annual costs exceeding $50,000,
including but not limited to:
a) Equipment
b) Cleaning
19. All contracts with advertising agencies and contracts or commitments
for media.
20. All agreements, registrations or other filings relating to trademarks,
trade names, copyrights, licenses, patents or other proprietary
rights, including books or articles authorized by officers and other
employees.
21. Agreements for the purchase of materials or supplies involving
payments in excess of $50,000 per year or for more than one year.
22. Agreements for the performance of services involving payments in
excess of $50,000 per year or for more than one year related to the
business, including but not limited to:
a) Messenger Service
b) Mortgage Servicing
c) Data Processing
d) BankCard Servicing
e) Automated Teller Machines Networks
f) Insurance, annuities, mutual fund or securities sales or
brokerage
g) Credit Life & A & H
23. All contracts or commitments for capital expenditures involving
payments in excess of $50,000.
24. All contracts or options to purchase or sell any real or personal
property.
25. All contracts, agreements, consultant arrangements, retainers, or
written or oral commitments (other than those relating to normal
customer transactions) currently in effect not listed above in
Insurance or Personnel Lists, including but not limited to lawyers,
accountants, actuaries, insurance agents or brokers involving payments
in excess of $50,000 per year or for more than one year.
26. List of all lawsuits, claims, proceedings or arbitrations involving
customers, federal or state government agencies, departments or
bureaus, insurance carries or others affecting the Corporation or its
officers and employees, whether current or past but not yet
conclusively terminated or barred by the statue of limitations,
whether as plaintiff, defendant or third party, providing:
a) a full statement of the issues involved,
b) nature of the litigation
c) amount involved or maximum total liability or recovery
involved,
d) court or other body where matter is to be heard, docket
number and date of last filing.
e) last available reply to accountants or opinion of counsel as
to the probable outcome of such litigation,
f) availability of insurance coverage, if any.
3
NOTE: The following may be excluded:
(i) Actions by the Corporation to collect loans made in the
ordinary course of business where the principal amount is
less than $50,000 and there are no counterclaims.
(ii) Actions against the Corporation
(A) for personal injuries where there is adequate
insurance coverage and the claim is less than $50,000.
Provide a list reflecting the aggregate exposure for
deductibles under insurance policies for claims of
$50,000 or less. (B) for losses due to alleged check
processing errors (forged signatures, stop payment
missed, etc.) where the alleged loss is less than $2,500
per claimant.
27. All filings with Comptroller of the Currency, Federal Reserve Board,
Federal Financial Institutions Examination Counsel, FDIC, Office of
Thrift Supervision, and all other regulatory agencies (including but
not limited to Forms FFIEC-003 and FFIEC-004, F-2, F-3, F-4 and F-20,
FDIC insurance premium reports, and Call Reports with all supplements,
for all interim and full-year periods from 1/l/96 to date).
28. All written policies and procedures governing operation of business
including loan policies.
29. All pricing schedules made available to customers for service charges,
etc. and product brochures in effect currently and for last two years.
30. All advertising materials used in the last two years.
31. All standard purchasing forms.
32. All agreements with competitors.
33. List of all relationships between (i) Prime and (ii) Summit and its
officers, directors and affiliates, including without limitation:
a) Loans; and
b) Purchases or sales of products or services (except from
public utility companies).
34. Director and officer Questionnaires for directors and executive
officers for last 2 years.
35. Any covenants not to compete affecting officers or employees of Prime
36. CRA public file. 37.CRA Small Business Data (3 years) 38. BSA
Compliance Program
39. Most recent Consumer Affairs Examination Report
40. Insider loan compliance procedures.
41. List of insiders (Regulation O).
42. List of related interests (as defined in Regulation O).
43. Correspondent bank list (as defined in Regulation O).
44. Reports of executive officer indebtedness in excess of $100,000.
45. Records relating to insider overdrafts.
46. Copy of Home Mortgage Disclosure Statements (Regulation C) for 3
years.
47. All filings by the Corporation with the SEC for the period specified
below, including but not limited to:
Registration Statements - 6 years
Proxy Statements - 6 years
Statements under Section 16(a) of the Securities Exchange Act
of 1934 - 1 year
Reports on Forms 10-K, 10-Q and 8-K - 3 years
4
SEC Forms 13G, 13D and MSD - 3 years
Other - 3 years
including all Exhibits and Amendments to the foregoing.
48. List of any unregistered sales of securities (including private
placements) in the last 6 years and applicable exemptions and opinions
of counsel.
49. All applications to and filings with the NASD in the last 3 years,
other than those supplied in response to item A.47.
5
B. PERSONNEL
1. Corporation's Table of organization.
* 2. List of all officers and directors of the Corporation, showing:
a) Full name.
b) Titles.
c) Date of birth.
d) Current salary, bonus and other compensation, and method
of calculation and payment.
e) Salary, bonus and other compensation for 1997, 1998 and to
date.
f) Date of first employment and any gaps in service.
3. All employment contracts.
4. All pension and retirement plans and IRS rulings and opinions of
counsel thereon.
5. All bonus plans.
6. All deferred compensation plans.
7. All profit-sharing plans and IRS rulings and opinions of counsel
thereon.
8. All stock option plans.
9. All dividend reinvestment plans and stock purchase plans.
10. All annuity plans.
11. All stock award plans.
12. All actuarial and trustees reports for pension, profit-sharing and
other benefit plans for 3 years.
13. Summaries of separate payment arrangements for terminated or retired
employees.
14. Summaries of strategies regarding healthcare:
- cost management
- employee contributions
15. Statements of Investment Policy and summaries of investment strategies
for Pension, 401(k), and Profit Sharing Plans, etc.
16. Loan Agreements and special trust agreements for leveraged benefits
(e.g. ESOP, etc.)
17. Consulting or servicing agreements, for consulting services and
outsourced services.
18. List of all employee benefits in force, with copies of all relevant
documentation, including plan documents, trust agreements, funding
arrangements, summary plan descriptions benefits or policy manuals,
insurance policies, etc., and a schedule or agents or brokers,
expiration date, premiums paid and claims made during the last three
years, including but not limited to:
a) Pension, bonus, profit-sharing, stock option, stock
purchase and annuity plans.
b) Medical plans i.e., Blue Cross-Blue Shield, Major
Medical, Health Maintenance organizations, commercial
health insurance policies.
c) Dental plans.
d) Vacation policy.
e) Education reimbursement policy.
f) Short-term disability.
g) Long-term disability.
h) Sick day policy.
i) Emergency leave policy.
j) Grievance policy.
k) Employee discount policy.
6
1) Life insurance.
m) Business travel accident insurance.
n) Personal accidental death and disability insurance.
o) Salary continuation program.
p) Retirement policy.
q) AD&D
r) Dependent Life
s) Spending Accounts
t) Employee Assistance Policy
u) Adoption Policy
v) Work/life initiatives
w) Employee referral policy
* 14. List of unemployment compensation claims and results for 3 prior
years and current year.
15. All hiring procedures and policies, including methods of solicitation
of applicants, media or agencies used, nepotism policy, etc.
16. Information regarding who prepares payroll and all contracts regarding
payroll preparation.
17. Informal pension, consulting, or benefits continuance arrangements
with retired employees.
* Not to be delivered; to be made available for examination on site.
7
C. INSURANCE
1. Copies of all Liability Insurance Contracts and applications and
insurance company audits for current and three prior years, including
but not limited to:
a) Comprehensive General Liability.
b) Auto Liability.
c) Umbrella Liability.
d) Worker's Compensation.
2. List of paid and open Liability claims for current and 6 prior years,
indicating:
a) Type of claim and whether open or closed.
b) Amount of loss or claim (paid and incurred).
c) Date of occurrence.
d) Description of occurrence.
3. List of self-insured or non-insured risk program.
4. Any written safety programs.
* 5. Copies of latest loss prevention inspections and reports on all
liability, fire/loss prevention, worker's compensation exposures.
6. Copies of OSHA Summary Accident Reports for current and 3 prior years,
along with citations, fines assessed and cost of compliance.
7. Complete copies of all property insurance policies for current and 3
prior years including:
a) Bank Real and Personal Property, Fire & Extended Coverage,
All-Risk Coverage including Flood & Earthquake.
b) Boiler and Machinery.
c) Mortgage Properties/Forced Placed/Foreclosed/Other Real
Estate Owned.
d) Trust Properties.
e) Aircraft and/or Watercraft Coverages
8. List of all paid and open Property losses for current and 6 prior
years, indicating:
a) Type of claims and whether open or closed.
b) Amount of loss or claim (paid and incurred)
c) Date of loss.
d) Description of loss.
e) Address where loss occurred, Bank location/mortgage
property/OREO/Trust
9. Copies of latest fire/loss prevention inspection reports.
10. Complete copies of all other insurance coverages with applications and
loss history for current and 3 years prior
a) Fidelity Bond and Computer Crime Coverages (6 year history).
b) Directors & Officers Liability.
c) Professional Liability, i.e. Bankers Professional, Trust
Errors & Omissions, EDP Errors & Omissions, Insurance Agents
Errors & Omissions, etc.
d) Mail Insurance.
e) Loss Instrument Bonds.
f) Miscellaneous Bonds, i.e. Performance, Maintenance,
Securities Transfer Agents (STAMP).
g) Mortgage Impairment/Errors & Omissions Coverage
8
h) Kidnap/Xxxxxx
i) ERISA/Pension Trust/Fiduciary Coverage
10. Description of Risk Management Information System
11. List of Insurance Agent & Broker contracts.
12. Summaries of litigation involving general liability coverage.
* Not to be delivered; to be made available for examination on site.
9
D. ACCOUNTING AND TAX
1. Access to 1997, 1998 and 1999 general ledger.
2. Federal tax returns of Corporation for 4 years.
3. State sales, use, income and personal property tax returns for 4
years.
4. Certified balance sheets and income statements of Prime for 4 prior
years, and most recent period available, including accountant's
reports.
* 5. All audit reports of IRS in last 4 years.
6. All audit reports of state taxing authorities in last 4 years.
7. List setting forth status of all open tax returns, noting status of
each years return, i.e., whether liability settled, not yet determined
or in controversy. Status of all claims for refund.
8. List of all bank accounts in other banks with:
a) copy of most recent statement and reconciliation to
general ledger.
b) copy of bank account resolution.
c) copy of current signature cards.
9. List of all loans to Corporation officers, directors, employees, and
members of their families currently outstanding or made during the
past three years, including cash advances or payments or personal
expenses not reimbursed within 30 days in excess of $1,000, including
the following information:
a) Loan date.
b) Amount.
c) Term.
d) Interest rate.
e) Highest outstanding balance.
f) Current balance.
g) Has the loan been in default and is it currently in
default? If yes, details.
* 10. Verification of current payment of all estimated tax for Prime,
withholding and FICA for employees.
11. List all commissions or other payments made to obtain business.
12. List of all contingent liabilities and assets, whether recorded or
unrecorded in excess of $50,000.
13. Schedule showing date and amount of each dividend paid since 1/l/96.
14. List of loan commitments greater than $50,000.
15. List of bank obligations other than deposits and deposit liabilities
greater than $50,000.
16. List of transactions over past 2 years greater than $25,000 with
officers, directors and employees.
17. List of bankruptcy accounts.
* Not to be delivered; to be made available for examination on site.
10
E. AUDIT
1. Management letters issued by independent CPA for prior year.
2. Internal Audit Reports for 1 year
F. CREDIT RISK MANAGEMENT (To the extent it is not practicable to deliver
may be made available on site)
1. Most recent Federal and State safety and soundness exam
2. All latest Board approved Loan Policies and Risk Management Policies
including Appraisal, Real Estate, OREO, and all Lines of Business.
3. Lending Philosophy - copy of the companies culture statement
4. Concentrations - standards and specialties such as Healthcare, etc.
supported by latest quarterly reporting
5. Last Quarterly Portfolio Stratification and Trend Analysis
6. Loan Grading Methodology and Stratification
7. Financial Statement requirements for underwriting
8. Credit Investigation and Analysis process
9. Credit Underwriting process and standards
- Credit files - composition and structure
10. Documentation process and standards
a) Fee philosophy
b) House documents and dollar threshold
c) Insurance standards
11. Participation/Syndication - copy of latest quarterly report
a) Shared National Credits
b) HLT Reports
12. Problem Asset Management Standards
a) Identification
b) Notification
c) Assignment
d) Management (LMS System) Watchlist
e) Approval
f) Reporting requirements
g) Delinquency - copy of latest quarterly report
h) Non-Performing Assets - copy of latest quarterly report
- NPL's by size
- NPL's by type
i) Accrued interest on NPL
j) Budget for NPA's
k) List of TDR's
l) Charge offs/Recoveries - copy of latest quarterly report
m) ALLR - methodology and copy of latest report
11
n) Listing of Loans 90 days past due - copy of latest
quarterly report broken down by product/line of business.
13. Off Balance Sheet Activities - copy of latest quarterly report
14. International Activities - Sovereign Risk
15. Domestic and Foreign Bank (Reg F) - copy of latest Board reporting
16. Residential Mortgage - loan standards, commitments and outstandings
17. Installment - loan standards, commitments and outstandings
- Dealerships - commitments and outstandings, copy of latest
quarterly report
18. Corporate Finance standards, commitments and outstandings
19. FDICIA 304 - copy of latest Board reporting
20. Reg O - copy of latest Board reporting
21. Approval Process and Authorities for Lending Authority
22. Environmental Standards
23. Appraisal
a) Copy of approved appraisal listing
b) Process for Commercial and Residential Appraisals
- Pending litigation involving valuation issues
24. Real Estate Standards
25. Personal Property - copy of standards
26. Hold Limits - copy of standards
27. Outside Counsel methodology and process
28. Privity Standards
29. SIC Reports and Methodology - copy of latest quarterly reporting
30. Counterparty Risk - latest assessment of risk profile
31. Leasing - standards, outstandings and commitments and copy of latest
quarterly report
32. Large Corporation standards, outstandings and commitments latest
quarterly report
33. Correspondent Banking standards, outstandings and commitments and copy
of latest quarterly report
34. Asset Based Lending standards, outstandings and commitments and copy
of latest quarterly report
35. Exception to Policy - process and copy of latest report and
methodology
36. OREO Accounting process and copy of latest quarterly report
12
EXHIBIT D-1
Name of Affiliate:__________________
Summit Bancorp.
301 Carnegie Center
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000
Gentlemen:
This letter agreement is being entered into pursuant to the terms of
the Agreement and Plan of Merger, dated February 17, 1999 (the "Merger
Agreement"), between Summit Bancorp. ("Summit") and Prime Bancorp, Inc
("Prime"), which provides, among other things, for the merger of Prime with and
into Summit (the "Merger") and the conversion at the Exchange Ratio provided for
in the Merger Agreement of shares of the common stock, par value $.01 per share,
of Prime ("Prime Common Stock") outstanding at the Effective Time (as defined in
the Merger Agreement) held in the aggregate by each Prime Shareholder into whole
shares of the Common Stock, par value $.80 per share, of Summit (the "Summit
Common Stock") and cash in lieu of a fractional share of Summit Common Stock.
Shares of Prime Common Stock owned on the date hereof or at any time
hereafter solely, jointly or in a custodial or other representative capacity by
me, by a minor child of mine, by a relative sharing the same household as me, or
by an entity (for example, trusts, estates, partnerships, corporations,
charitable organizations, foundations) I control, whether such shares are owned
directly (of record) or indirectly (through a bank, broker or other nominee),
and any other shares of Prime Common Stock over which I or such other persons or
entities hold investment or voting powers, either alone or with others, are
referred to collectively herein as the "Prime Shares". Shares of Summit Common
Stock to be received in exchange for the Prime Shares are referred to
collectively herein as the "Summit Shares".
I have been advised that, in the opinion of counsel, I may be deemed to
be, at the time the Merger is submitted for a vote of the shareholders of Prime
an "affiliate" of Prime as that term is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the Rules and Regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Act") and that the Merger Agreement requires that
persons so characterized make the representations, warranties, covenants and
agreements set forth below as a condition to Summit closing the Merger.
Capitalized terms used herein but not specifically defined herein shall
have the meaning ascribed to them in the Merger Agreement.
In consideration of the premises, I represent, warrant, covenant and
agree as follows:
A. I will not make or permit any sale, transfer or other disposition of
the Summit Shares, or make or permit any offer to sell, transfer or otherwise
dispose of the Summit Shares, in violation of the Act or the Rules and
Regulations.
B. I have been advised that the issuance of the Summit Shares pursuant
to the Merger has been registered with the SEC pursuant to a registration
statement under the Act. However, I have also been advised that a distribution
of the Summit Shares has not been registered under the Act and that, because I
may be deemed to be, at the time the Merger is submitted for a vote of the
shareholders of Prime, an "affiliate" of Prime, I may not make or permit any
sale, transfer or other disposition of any of such Summit Shares unless and
until (i) an offer and sale of such Summit Shares has been registered under the
Act, (ii) such disposition of such Summit Shares is made in conformity with Rule
145 under the Act, or (iii) an exemption from registration, in the written
opinion of counsel acceptable to Summit, is available with respect to such
disposition of such Summit Shares. In the event of a transfer of Summit Shares
permitted by this Agreement, I agree that I will obtain, and deliver to you a
copy of, an agreement substantially similar to this agreement from each
transferee of the Summit Shares who, in the written opinion of counsel
acceptable to Summit, may not under the Act dispose of the Summit Shares so
transferred without registration under the Act.
C. I understand that Summit is under no obligation to register the
sale, transfer or other disposition of the Summit Shares or to take any other
action necessary in order to make compliance with an exemption from registration
available.
D. I understand that stop transfer instructions may be given to
Summit's transfer agent with respect to the Summit Shares and that there may be
placed on the certificates for such Summit Shares, 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 not be sold, transferred, or otherwise disposed of unless
pursuant to (i) an effective registration statement under the
Securities Act of 1933, (ii) Rule 145 or (iii) an exemption from
registration under the said Act which is available in the opinion
of counsel acceptable to Summit Bancorp.
The legend set forth above and any similar legend placed on any share
certificate issued upon the transfer of any of the Summit Shares will be removed
by delivery of substitute certificates without such legend if the undersigned,
or any person who acquired, directly or indirectly, such Summit Shares, shall
have delivered to Summit a copy of a letter from the staff of the SEC, or a
written opinion of counsel acceptable to Summit, to the effect that the
restrictions on sale, transfer or other disposition referred to in this letter
are no longer necessary under the Act or otherwise in order to effect such sale,
transfer or other disposition pursuant to law.
2
E. I will vote all of the Prime Shares I now own of record or have
voting control with respect to or hereafter acquire, in favor of the Merger at
the meeting of shareholders of Prime to be called for the purpose of approving
the Merger (the "Meeting"). In addition, I will not vote any of my Prime Shares
in favor of any other merger or sale of all or substantially all the assets of
Prime to any person other than Summit or its affiliates until the termination of
the Merger Agreement or abandonment of the Merger by the mutual agreement of
Prime and Summit, whichever comes first, nor will I transfer my Prime Shares
unless the transferee, prior to such transfer, executes a voting agreement with
respect to the transferred shares substantially to the effect of this agreement
and satisfactory to Summit.
F. By reason of my knowledge and experience in financial and business
matters and in my capacity as a director and/or executive officer of a financial
institution, I believe myself capable of evaluating the merits and risks of the
potential investment in Summit Common Stock contemplated by the Merger
Agreement. I further acknowledge having reviewed the Merger Agreement and its
attachments and that reports, proxy statements and other information with
respect to Summit filed with the Securities and Exchange Commission (the
"Commission") were, prior to my execution of this agreement, available for
inspection and copying at the Offices of the Commission and that Summit
delivered the following such documents to Prime:
(a) Summit's Annual Report on Form 10-K for the year ended December
31, 1997; and
(b) Summit's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 June 30, 1998 and September 30, 1998.
G. Summit agrees, by accepting this letter, (a) that for a period of
two years after the Effective Time (or such shorter period as may be permitted
by amendments to Rule 145) and thereafter until three months after I have ceased
to be an affiliate of Summit and so long as Summit has equity securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, Summit will make available with respect to itself "adequate current
public information" as defined in paragraph (c) of Rule 144 of the Rules and
Regulations under the Act.
I have carefully read this letter and, to the extent I felt
necessary, discussed with my counsel the requirements of this letter and its
impact upon the ability to dispose of the Prime Shares and the Summit Shares.
Accepted this __ day of _______, 199__ Very truly yours,
by Summit Bancorp.
By: Signature
Name:
Title: Printed Name
Dated as of _____, 199__
3
EXHIBIT D-2
Name of Affiliate:_________________
Summit Bancorp.
301 Carnegie Center
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000
Gentlemen:
This letter agreement is being entered into pursuant to the terms of
the Agreement and Plan of Merger, dated February 17, 1999 (the "Merger
Agreement"), between Summit Bancorp. ("Summit") and Prime Bancorp, Inc
("Prime"), which provides, among other things, for the merger of Prime with and
into Summit (the "Merger") and the conversion at the Exchange Ratio provided for
in the Merger Agreement of shares of the common stock, par value $.01 per share,
of Prime ("Prime Common Stock") outstanding at the Effective Time (as defined in
the Merger Agreement) held in the aggregate by each Prime Shareholder into whole
shares of the Common Stock, par value $.80 per share, of Summit (the "Summit
Common Stock") and cash in lieu of a fractional share of Summit Common Stock.
Shares of Prime Common Stock owned on the date hereof or at any time
hereafter solely, jointly or in a custodial or other representative capacity by
me, by a minor child of mine, by a relative sharing the same household as me, or
by an entity (for example, trusts, estates, partnerships, corporations,
charitable organizations, foundations) I control, whether such shares are owned
directly (of record) or indirectly (through a bank, broker or other nominee),
and any other shares of Prime Common Stock over which I or such other persons or
entities hold investment or voting powers, either alone or with others, are
referred to collectively herein as the "Prime Shares". Shares of Summit Common
Stock to be received in exchange for the Prime Shares are referred to
collectively herein as the "Summit Shares".
I have been advised that, in the opinion of counsel, I may be deemed to
be, at the time the Merger is submitted for a vote of the shareholders of Prime,
an "affiliate" of Prime as that term is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the Rules and Regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Act") and that the Merger Agreement requires that
persons so characterized make the representations, warranties, covenants and
agreements set forth below as a condition to Summit closing the Merger.
Capitalized terms used herein but not specifically defined herein shall
have the meaning ascribed to them in the Merger Agreement.
In consideration of the premises, I represent, warrant, covenant and
agree as follows:
A. I will not make or permit any sale, transfer or other disposition of
the Summit Shares, or make or permit any offer to sell, transfer or otherwise
dispose of the Summit Shares, in violation of the Act or the Rules and
Regulations.
B. I have been advised that the issuance of the Summit Shares pursuant
to the Merger has been registered with the SEC pursuant to a registration
statement under the Act. However, I have also been advised that a distribution
of the Summit Shares has not been registered under the Act and that, because I
may be deemed to be, at the time the Merger is submitted for a vote of the
shareholders of Prime, an "affiliate" of Prime, I may not make or permit any
sale, transfer or other disposition of any of such Summit Shares unless and
until (i) an offer and sale of such Summit Shares has been registered under the
Act, (ii) such disposition of such Summit Shares is made in conformity with Rule
145 under the Act, or (iii) an exemption from registration, in the written
opinion of counsel acceptable to Summit, is available with respect to such
disposition of such Summit Shares. In the event of a transfer of Summit Shares
permitted by this Agreement, I agree that I will obtain, and deliver to you a
copy of, an agreement substantially similar to this agreement from each
transferee of the Summit Shares who, in the written opinion of counsel
acceptable to Summit, may not under the Act dispose of the Summit Shares so
transferred without registration under the Act.
C. I understand that Summit is under no obligation to register the
sale, transfer or other disposition of the Summit Shares or to take any other
action necessary in order to make compliance with an exemption from registration
available.
D. I understand that stop transfer instructions may be given to
Summit's transfer agent with respect to the Summit Shares and that there may be
placed on the certificates for such Summit Shares, 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 not be sold, transferred, or otherwise disposed of unless
pursuant to (i) an effective registration statement under the
Securities Act of 1933, (ii) Rule 145 or (iii) an exemption from
registration under the said Act which is available in the opinion
of counsel acceptable to Summit Bancorp.
The legend set forth above and any similar legend placed on any share
certificate issued upon the transfer of any of the Summit Shares will be removed
by delivery of substitute certificates without such legend if the undersigned,
or any person who acquired, directly or indirectly, such Summit Shares, shall
have delivered to Summit a copy of a letter from the staff of the SEC, or a
written opinion of counsel acceptable to Summit, to the effect that the
restrictions on sale, transfer or other disposition referred to in this letter
are no longer necessary under the Act or otherwise in order to effect such sale,
transfer or other disposition pursuant to law.
2
E. Summit agrees, by accepting this letter, (a) that for a period of
two years after the Effective Time (or such shorter period as may be permitted
by amendments to Rule 145) and thereafter until three months after I have ceased
to be an affiliate of Summit and so long as Summit has equity securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, Summit will make available with respect to itself "adequate current
public information" as defined in paragraph (c) of Rule 144 of the Rules and
Regulations under the Act.
I have carefully read this letter and, to the extent I felt
necessary, discussed with my counsel the requirements of this letter and its
impact upon the ability to dispose of the Prime Shares and the Summit Shares.
Accepted this __ day of _____, 199__ Very truly yours,
by Summit Bancorp.
By: Signature
Name:
Title: Printed Name
Dated as of ________, 199__
3
EXHIBIT E
FORM OF OPINION OF Prime COUNSEL
PURSUANT TO SECTION 7.05
Summit Bancorp.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Gentlemen:
This opinion is rendered to you pursuant to Section 7.05 of the Agreement and
Plan of Merger, dated February __, 1999 (the "Merger Agreement"), between Prime
Bancorp, Inc. ("Prime" or the "Company") and Summit Bancorp. ("Summit"), which
Merger Agreement provides, among other things, for the merger (the "Merger") of
Prime with and into Summit, the merger of a wholly-owned subsidiary of Summit
into Prime or the merger of Prime into a wholly-owned subsidiary of Summit, and
the issuance, in accordance with the Exchange Ratio provided for in the Merger
Agreement, of whole shares of the Common Stock, par value $ .80 per share, of
Summit (the "Summit Common Stock") and cash in lieu of fractional shares of
Summit Common Stock in exchange for outstanding shares of the Common Stock, $.01
par value, of Prime (the "Prime Common Stock"). In consideration of the Merger
Agreement, Prime and Summit entered into a Stock Option Agreement dated February
__, 1999 pursuant to which, among other things, Prime granted Summit a stock
option with respect to shares of Prime Common Stock (the "Option Agreement").
Capitalized terms used but not defined herein shall have the same meanings
herein as ascribed to them in the Merger Agreement.
We have acted as counsel to the Company in connection with the preparation,
authorization, execution and delivery of the Merger Agreement and the Option
Agreement and the consummation of the transactions contemplated by the Merger
Agreement, including the preparation of the registration statement, as amended
(the "Registration Statement"), under the Securities Act of 1933, as amended
(the "Securities Act"), on Form S-4 of Summit (No. 333-_______), and the proxy
statement of Prime included in the Registration Statement (the "Prime Proxy
Statement").
In so acting, we have made inquiries of certain of the officers and
representatives of the Company and its subsidiaries with respect to various
matters contained in the Merger Agreement, the Option Agreement and the
Registration Statement, and have examined and relied upon originals, certified
or photostatic or facsimile copies of the Merger Agreement, the Option Agreement
and such corporate records, agreements, documents and other instruments, and
such certificates or the comparable documents of public officials and of such
directors, officers and representatives of the Company and its subsidiaries as
we have deemed relevant and necessary as a basis for the opinions hereinafter
set forth.
In such examination, we have assumed, without independent verification, the
genuineness and authenticity of all signatures, the authenticity of all
documents submitted to us as originals, the legal capacity of all natural
persons and the conformity to original documents of documents submitted to us as
certified or facsimile or photostatic copies and the authenticity of the
originals of facsimile or photostatic copies. As to all questions of fact
material to this opinion that have not been independently established, we have
relied upon certificates or comparable documents of officers and representatives
of the Company and upon the representations and warranties of the Company
contained in the Merger Agreement. We have also assumed, without independent
verification, the due authorization, execution, and delivery (other than the due
authorization, execution and delivery by the Company) of all documents, the due
authorization, execution and delivery of which are prerequisites to the
effectiveness of such documents, and that such documents constitute legal, valid
and binding obligations of the parties thereto (other than the Company).
Based on the foregoing, and subject to the qualifications stated herein, we are
of the opinion that:
1. The Company has been duly organized and is validly existing as a corporation
in good standing under the laws of the Commonwealth of Pennsylvania and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted, as described in the
Registration Statement.
2. The Company is duly qualified to transact business as a foreign corporation
and is in good standing in each jurisdiction where the failure to be so
qualified cannot be cured and such failure would have a material adverse effect
on the business, operations or financial condition of the Company and its
subsidiaries taken as a whole.
3. The Company is registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended.
4. The authorized capital stock of Prime consists of xx,xxx,xxx shares of Common
Stock, each of $.01 par value, and x,xxx,xxx shares of Preferred Stock, $.01 par
value, and as of the date of the Merger Agreement xx,xxx,xxx shares of Prime
Common Stock and ____ shares of Prime Preferred Stock were issued and
outstanding, ________ shares of Prime Common Stock were held in the treasury of
Prime, _______ shares of Prime Preferred Stock were reserved for issuance under
the Prime Bancorp, Inc. Shareholder Rights Plan and ________ shares of Prime
Common Stock were reserved for issuance in connection with the Prime Stock
Plans. All of the outstanding shares of capital stock of the Company are duly
authorized, validly issued, and non-assessable, with no personal liability
attaching to the ownership thereof, except as the owners thereof may be liable
by reason of their own conduct or acts or under general equity principles, and
have not been issued in violation of any preemptive rights. Since the date of
the Merger Agreement, to the best of our knowledge, no Equity Securities of
Prime have been issued except for the stock option granted to Summit in the
Option Agreement and the Prime Common Stock reserved for issuance as of such
date which may have been issued in connection with the Prime Stock Plans. Except
as set forth above in this paragraph 4 and except for the Option Agreement,
director and employee stock options outstanding under the Prime Stock Plans,
Prime Common Stock issuable in connection with the Prime Stock Plans, and Prime
Preferred Stock issuable under the Prime Shareholder Rights Plan, to the best of
our knowledge, there are no other Equity Securities of Prime outstanding, in
existence, the subject of an agreement or reserved for issuance.
5. Prime Bank ("Bank") has been duly incorporated and is validly existing as a
banking corporation in good standing under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its businesses as now being
conducted, as described in the Registration Statement. Each other subsidiary of
the Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its jurisdiction of organization and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted, as described in the
Registration Statement.
2
6. Bank is an insured depository institution under the Federal Deposit Insurance
Act, as amended.
7. All the outstanding capital stock of Bank and each subsidiary of the Company
has been duly authorized and validly issued and is fully paid and
non-assessable, with no personal liability attached to the ownership thereof,
except as the owners thereof may be liable by reason of their own conduct or
acts or under general equity principle, has not been issued in violation of any
preemptive rights, and, as of the date hereof, to the best of our knowledge, no
options covering capital stock of any subsidiary of the Company, warrants to
purchase or contracts to issue capital stock of any subsidiary of the Company,
or any other contracts, rights (including preemptive rights), commitments or
convertible securities entitling anyone to acquire from the Company or any
subsidiary of the Company or obligating any of them to issue any capital stock,
or securities convertible into or exchangeable for any shares of capital stock
thereof, are outstanding, in existence, or the subject of an agreement. The
Company owns all the capital stock of Bank and each subsidiary of the Company
free and clear of any perfected security interest and, to the best of our
knowledge, any other security interest, lien, claim, limitation on voting
rights, option, or other encumbrance.
8. To the best of our knowledge, there are no outstanding contractual
obligations of the Company or any subsidiary to repurchase, redeem, or otherwise
acquire any outstanding shares of capital stock or other ownership interests of
any subsidiary of the Company or to provide funds or to make any investment (in
the form of a loan, capital contribution or otherwise), in any subsidiary or any
other entity.
9. The Company has the corporate power and authority to enter into the Merger
Agreement and the Option Agreement and to carry out the transactions
contemplated thereby; the Merger Agreement and the Option Agreement have been
validly authorized, executed and delivered by the Company; the consummation of
the transactions contemplated by the Merger Agreement, including the Merger, and
the Option Agreement have each been duly authorized by all necessary corporate
action on the part of the Company and its shareholders and (assuming the due
authorization, execution and delivery thereof by Summit) the Merger Agreement
and the Option Agreement each constitute a valid and binding agreement of the
Company.
10. The execution and delivery of the Merger Agreement and the Option Agreement
and the performance thereof by the Company and the consummation of the Merger
did not and will not violate, fail to comply with, conflict with, give rise to
rights under, result in the breach of, or constitute a default under, give rise
to a claim or right of termination, cancellation, revocation of or acceleration
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the rights, permits licenses, assets or properties
material to the Company and its subsidiaries taken as a whole, or any of its
subsidiaries, or upon any of the capital stock of the Company or any of its
subsidiaries, or constitute an event that could, with the lapse of time, action
or inaction by the Company or any of its subsidiaries or a third party, or the
giving of notice and failure to cure, result in any of the foregoing, under any
of the terms, conditions or provisions, as the case may be, of: (a) the
Certificate of Incorporation, By-laws or Shareholder Rights Plan of the Company,
(b) any Federal law of the United States of America or any law of the
Commonwealth of Pennsylvania, (c) to the best of our knowledge, any rule,
ruling, determination, ordinance or regulation of or agreement with any
governmental or regulatory authority, (d) to the best of our knowledge, any
judgment, order, writ, award, injunction or decree of any court or governmental
authority issued in any proceeding to which the Company or any of its
subsidiaries is or was a party or by which the Company or any of its
subsidiaries or any of their assets or properties are bound or committed, or (e)
to the best of our knowledge, any material note, bond, mortgage, indenture,
3
lease, policy of insurance or indemnity, license, contract, agreement or other
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of its subsidiaries or any of their assets or properties are
bound or committed, other than any such violations, conflicts, breaches,
defaults or accelerations the consequences of which do not or will not, in the
aggregate, have a material adverse effect on the business, operations or
financial condition of the Company and its subsidiaries, taken as a whole, or
enable any person to enjoin the transactions contemplated by the Merger
Agreement. No consent, approval, waiver, license or authorization or other
action by or filing with any Federal or Pennsylvania governmental authority is
required in connection with the execution and delivery by the Company of the
Merger Agreement or Option Agreement or the consummation by the Company of the
transactions contemplated thereby, including the Merger, except for (i) the
filing of an appropriate Certificate of Merger as provided in the Merger
Agreement, (ii) such filings and other actions as may be required by Federal or
state securities laws and the rules and regulations thereunder (to which we are
not opining), and (iii) those already obtained.
11. To the best of our knowledge, there is no litigation, proceeding or
governmental investigation pending or overtly threatened against the Company
that relates to any of the transactions contemplated by the Merger Agreement or
is material to the financial condition of Prime and its subsidiaries, taken as a
whole.
12. To the best of our knowledge, there are no persons who may be deemed to be
affiliates of the Company for purposes of Rule 145 under the Securities Act who
may receive shares of Summit Common Stock in the Merger and who are not named in
the opinion delivered to the Company pursuant to Section 4.11 of the Merger
Agreement.
13. The Prime Proxy Statement (except for the financial statements and the notes
thereto, the financial statement schedules and the other financial, statistical
and accounting data included, incorporated by reference or deemed incorporated
by reference in the Prime Proxy Statement, as to which we express no opinion),
but only insofar as the Company and its business, the Merger Agreement and the
transactions contemplated thereby, including the Merger, and the Option
Agreements are described in the Prime Proxy Statement, complies as to form in
all material respects with the requirements of the Securities Act and the rules
and regulations thereunder and the documents incorporated by reference in the
Registration Statement pursuant to Part I.C. of Form S-4 under the Securities
Act (except for the financial statements and the notes thereto and the financial
statement schedules and other financial, statistical and accounting data
included, incorporated by reference or deemed incorporated by reference, as to
which we express no opinion) when filed with the Securities and Exchange
Commission complied as to form in all material respects with the Securities
Exchange Act of 1934, as amended, and the applicable rules and regulations
thereunder.
We have participated in conferences with officers and other representatives of
the Company and Summit, representatives of the independent public accountants
for the Company and Summit and counsel for Summit, at which conferences the
contents of the Registration Statement and the Prime Proxy Statement and related
matters were discussed, and, although we have not independently verified and are
not passing upon and assume no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the Prime
Proxy Statement, no facts have come to our attention that lead us to believe
that the Registration Statement, on the effective date thereof, insofar as the
Company and its business, the Merger Agreement and the transactions contemplated
thereby, including the Merger, and the Option Agreement are described therein,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading or that the Prime Proxy Statement, on the date thereof or on the date
4
hereof, insofar as the Company and its business, the Merger Agreement and the
transactions contemplated thereby, including the Merger, and the Option
Agreement are described therein, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading (it being
understood that we express no view with respect to the financial statements and
related notes, the financial statement schedules and the other financial,
statistical and accounting data included, incorporated by reference or deemed
incorporated by reference in the Registration Statement or the Prime Proxy
Statement).
Please be advised that, where any statement is stated herein as being "to the
best of our knowledge" the statement refers to actual knowledge (or knowledge
based upon the above-referenced certificates) and conscious awareness of facts
or other information of the primary lawyer group of this firm which was actively
involved in the transactions contemplated in the Merger Agreement, in the
preparation of the documents involved and this opinion letter. We have not
independently verified the accuracy of such statement but intend to advise you
that in the course of our representation as counsel to the Company and, in
particular, our participation in the preparation, authorization, execution and
delivery of the Merger Agreement and the Option Agreement and in the preparation
of the Registration Statement and the Prime Proxy Statement, nothing has come to
our attention that leads us to believe, and we do not believe, that the matter
is other than as stated therein. In addition, please be advised that our opinion
with respect to the valid and binding nature of the Merger Agreement and the
Option Agreement is subject to applicable bankruptcy, insolvency, merger,
moratorium, fraudulent conveyance, fraudulent transfer and other laws presently
or hereafter in effect affecting the enforcement of creditors' rights and
remedies generally or institutions the deposits of which are insured by the
Federal Deposit Insurance Corporation (the "FDIC"), and the affiliates of such
institutions, and by equitable principles limiting the right to obtain specific
performance or other similar equitable relief (regardless of whether such
enforceability is considered in a proceedings in equity or at law) the
discretion of a court in ordering specific performance or other equitable
remedies, and to general principles of equity (regardless of whether questioned
in a proceeding at law or in equity).
The opinions herein are limited to the Federal laws of the United States and the
corporate and banking laws of the Commonwealth of Pennsylvania and we express no
opinion as to the effect on any matter covered by this opinion of the laws of
any other jurisdiction.
This opinion is being furnished to, and is solely for the benefit of, Summit and
is not to be quoted, used, circulated, published or disseminated, otherwise
referred to in any documents, filed with any governmental agency, entity or
person, or relied upon by any agency, entity or person other than Summit,
without our prior written consent.
Very truly yours,
5
EXHIBIT F
OPINION OF SUMMIT COUNSEL
PURSUANT TO SECTION 8.05
Prime Bancorp, Inc.
0000 Xxxxxx Xxxxx Xxxx
Xxxx Xxxxxxxxxx, XX 00000
Gentlemen:
This opinion is rendered to you pursuant to Section 8.05 of the Agreement
and Plan of Merger, dated February __, 1999, (the "Merger Agreement"), between
Prime Bancorp, Inc. ("Prime") and Summit Bancorp. ("Summit" or the "Company"),
which Merger Agreement provides, among other things, for the merger (the
"Merger") of Prime with and into Summit, the merger of Prime into a wholly-owned
subsidiary of Summit or the merger of a wholly-owned subsidiary of Summit into
Prime and the issuance, in accordance with the Exchange Ratio provided for in
the Merger Agreement, of whole shares of the Common Stock, par value $.80 per
share, of Summit (the "Summit Common Stock") and cash lieu of fractional shares
of Summit Common Stock in exchange for outstanding shares of the Common Stock,
$1.00 par value, of Prime (the "Prime Common Stock"). In consideration of the
Merger Agreement, Prime and Summit entered into a Stock Option Agreement dated
February __, 1999 pursuant to which, among other things, Prime granted Summit a
stock option with respect to shares of Prime Common Stock (the "Option
Agreement").
Capitalized terms used but not defined herein shall have the same
meanings herein as ascribed to them in the Merger Agreement. As used herein, it
is intended that "material" be determined with reference to Summit and its
subsidiaries considered as one enterprise.
I am Executive Vice President, General Counsel and Secretary of the
Company and have served as counsel to the Company and in connection with the
preparation, authorization, execution and delivery of the Merger Agreement, the
Option Agreement and the consummation of the transactions contemplated thereby,
including the preparation of the registration statement, as amended, under the
Securities Act of 1933, as amended (the "Securities Act"), on Form S-4 of Summit
(No. 333-xxxx), and the prospectus of Summit included therein (the registration
statement, together with the prospectus of Summit included therein, is referred
to as the "Registration Statement").
In so acting, I have made inquiries of certain of the officers and
representatives of the Company and its subsidiaries with respect to various
matters contained in the Merger Agreement, the Option Agreement and the
Registration Statement, and have examined and relied upon originals, certified
or photostatic or facsimile copies of the Merger Agreement, the Option Agreement
and such corporate records, agreements, documents and other instruments, and
such certificates or comparable documents of the public officials and of such
directors, officers and representatives of the Company and its subsidiaries as I
have deemed relevant and necessary as a basis for the opinions hereinafter set
forth.
In such examination I have assumed, without independent verification, the
genuineness and authenticity of all signatures, the authenticity of all
documents submitted to me as originals, the legal capacity of all natural
persons and the conformity to original documents of documents submitted to me as
certified or facsimile or photostatic copies and the authenticity of the
originals of facsimile or photostatic copies. As to all questions of fact
material to this opinion that have not been independently established, I have
relied upon certificates or comparable documents of officers and representatives
of the Company and upon the representations and warranties of the Company
contained in the Merger Agreement. I have also assumed, without independent
verification, the due authorization, execution and delivery (other than due
authorization, execution and delivery by the Company) of all documents, the due
authorization, execution and delivery of which are prerequisites to the
effectiveness of such documents, and that such documents constitute legal, valid
and binding obligations of the parties thereto (other than the Company).
Based on the foregoing and subject to the qualifications stated herein,
I am of the opinion that:
1. Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of New Jersey and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, as described in
the Registration Statement.
2. The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction where the failure to be
so qualified cannot be cured and such failure would have a material adverse
effect on the Company and its subsidiaries taken as a whole.
3. The Company is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended.
4. The authorized capital stock of the Company consists of 6,000,000
shares of Preferred Stock, without par value, and 390,000,000 shares of Common
Stock, par value $.80 per share, and, as of January 31, 1999 xxx,xxx,xxx shares
of Summit Common Stock were issued and outstanding and 1,500,000 shares of
Series R Preferred Stock were reserved for issuance pursuant to Summit's
Shareholder Rights Plan. All of the outstanding shares of capital stock of the
Company are duly authorized, validly issued, and non-assessable, with no
personal liability attaching to the ownership thereof, except as the owners
thereof may be liable by reason of their own conduct or acts or under general
equity principles, and have not been issued in violation of any preemptive
rights.
5. Each of the bank subsidiaries of Summit has been duly incorporated and
is validly existing as a bank in good standing under the laws of the state of
its incorporation and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, as described in the Registration Statement.
6. Each of the bank subsidiaries of Summit is an insured depository
institution under the Federal Deposit Insurance Act, as amended.
7. All the issued and outstanding capital stock of each of the bank
subsidiaries of Summit has been duly and validly issued and is fully paid and
nonassessable and, to the best of my knowledge, the Company owns, directly or
indirectly, all such capital stock, and other Equity Securities of each of
Summit's bank subsidiaries. Such stock is owned free and clear of any perfected
security interest and, to the best of my knowledge, any other security interest.
8. The Company has the corporate power and authority to enter into the
Merger Agreement and the Option Agreement and to carry out the transactions
contemplated thereby; the Merger Agreement and the Option Agreement have been
validly authorized, executed and delivered by the Company; the consummation of
the transactions contemplated by the Merger Agreement, including the Merger, and
the Option Agreement have each been duly authorized by all necessary corporate
action on the part of the Company and (assuming the due authorization, execution
2
and delivery thereof by Prime) the Merger Agreement and the Option Agreement
each constitute the valid and binding agreement of the Company. In the event
Summit elects to effect the Merger as a merger pursuant to Section 1.01(a)(2),
upon the due and valid approval of the Merger Agreement by the Board of
Directors and sole shareholder of the Designated Summit Subsidiary and its
execution and delivery, assuming due execution and delivery by each of the other
parties hereto, the Merger Agreement will be a valid and binding agreement of
the Designated Summit Subsidiary enforceable in accordance with its terms except
as such enforcement may be limited by applicable principles of equity, and by
bankruptcy, insolvency, merger, fraudulent transfer, moratorium or other laws of
general applicability presently or hereafter in effect affecting the enforcement
of creditors' rights generally or institutions, the deposits of which are
insured by the Federal Deposit Insurance Corporation, or the affiliates of such
institutions.
9. The execution and delivery of the Merger Agreement and the Option
Agreement and the performance thereof by the Company and the consummation of the
Merger did not and will not violate, fail to comply with, conflict with, give
rise to rights under, result in the breach of, or constitute a default under,
give rise to a claim or right of termination, cancellation, revocation of or
acceleration under, or result in the creation or imposition of any lien, charge
or encumbrance upon any rights, permits, licenses, assets or properties material
to the Company and its subsidiaries, taken as a whole, or upon any of the
capital stock of the Company or constitute an event that could, with the lapse
of time, action or inaction by the Company or a third party, or the giving of
notice and failure to cure, result in any of the foregoing, under any of the
terms, conditions or provisions, as the case may be, of: (a) the Restated
Certificate of Incorporation, By-Laws or Shareholder Rights Plan of the Company
(b) any Federal law of the United States of America or any law of the State of
New Jersey or the Commonwealth of Pennsylvania, (c) to the best of my knowledge,
any rule, ruling, determination, ordinance or regulation of or agreement with
any governmental or regulatory authority, (d) to the best of my knowledge, any
judgment, order, writ, award, injunction or decree of any court or governmental
authority issued in any proceeding to which the Company is a party or by which
the Company or any of their assets or properties are bound or committed, or (e)
to the best of my knowledge, any material note, bond, mortgage, indenture,
lease, policy of insurance or indemnity, license, contract, agreement or other
instrument to which the Company is a party or by which either of them or any of
their assets or properties are bound or committed, other than any such
violations, conflicts, breaches, defaults or accelerations the consequences of
which do not or will not, in the aggregate, have a material adverse effect on
the Company and its subsidiaries, taken as a whole, or enable any person to
enjoin the transactions contemplated by the Merger Agreement or the Option
Agreement. No consent, approval, waiver, license or authorization or other
action by or filing with any Federal or New Jersey or Pennsylvania governmental
authority is required in connection with the execution and delivery by the
Company of the Merger Agreement or Option Agreement or the consummation by the
Company of the transactions contemplated thereby, including the Merger, except
for (i) the filing of an appropriate Certificate of Merger as provided by the
Merger Agreement, (ii) such filings and other actions as may be required by
Federal or state securities laws and the rules and regulations thereunder, and
(iii) those already obtained.
10. The Summit Common Stock to be issued pursuant to the Merger Agreement
has been duly authorized for issuance pursuant to the Merger Agreement and, when
issued and delivered by the Company pursuant to the Merger Agreement, will be
validly issued, fully paid and nonassessable. The issuance of the Summit Common
Stock under the Merger Agreement is not subject to any preemptive rights under
the Company's Restated Certificate of Incorporation or By-Laws or, to the best
of my knowledge, any agreement by which the Company is bound.
11. The Registration Statement is effective under the Securities Act and,
to the best of my knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act or proceedings
3
therefor initiated or threatened by the Securities and Exchange Commission.
12. The Registration Statement (except for the financial statements and
the notes thereto, the financial statement schedules and the other financial,
statistical and accounting data included, incorporated by reference or deemed
incorporated by reference in the Registration Statement, as to which I express
no opinion) but only insofar as the Company and its business and the Merger
Agreement, the Option Agreement and the transactions contemplated thereby,
including the Merger, are described therein, comply as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations thereunder. The documents filed by Summit with the Securities and
Exchange Commission (the "Commission") and incorporated by reference in the
Registration Statement pursuant to Part I.B. of Form S-4 under the Securities
Act (except for the financial statements and the notes thereto and the financial
statement schedules and other financial, statistical and accounting data
included, incorporated by reference or deemed incorporated by reference, as to
which I express no opinion) when filed with the Commission complied as to form
in all material respects with the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
I or members of my staff have participated in conferences with officers
and other representatives of the Company and Prime, representatives of the
independent public accountants for the Company and Prime and counsel for Prime,
at which conferences the contents of the Registration Statement and related
matters were discussed, and, although I have not independently verified and am
not passing upon and assume no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement, no facts
have come to my attention (either directly or indirectly after inquiries
directed to members of my staff) that lead me to believe that the Registration
Statement, on the effective date thereof contained, or on the date hereof
contains, insofar as the Company and its business and the Merger Agreement, the
Option Agreement and the transactions contemplated thereby, including the
Merger, are described therein, an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading (it being understood that I express no view with
respect to the financial statements and related notes, the financial statement
schedules and the other financial, statistical and accounting data included,
incorporated by reference or deemed incorporated by reference in the
Registration Statement).
Please be advised that, where any statement is stated herein as being "to
the best of my knowledge," the statement refers to my actual knowledge (or
knowledge based upon the above-referenced certificates) and my conscious
awareness of facts or other information. I have not independently verified the
accuracy of such statement but intend to advise you that in the course of my
duties as Executive Vice President, General Counsel and Secretary of the Company
and, in particular, my participation in the preparation, authorization,
execution and delivery of the Merger Agreement and the Option Agreement and in
the preparation (together with members of my staff) of the Registration
Statement, nothing has come to my attention (with respect to the Registration
Statement, either directly or indirectly after inquiries directed to my staff)
that leads me to believe, and I do not believe, that the matter is other than as
stated herein. In addition, please be advised that my opinion with respect to
the valid and binding nature of the Merger Agreement and the Option Agreement is
subject to applicable bankruptcy, insolvency, merger, moratorium, fraudulent
conveyance, fraudulent transfer and other laws presently or hereafter in effect
affecting the enforcement of creditors' rights and remedies generally or
institutions the deposits of which are insured by the Federal Deposit Insurance
Corporation, and the affiliates of such institutions, and by equitable
principles limiting the right to obtain specific performance or other similar
equitable relief (regardless of whether such enforceability is considered in a
proceeding in equity or at law), the discretion of a court in ordering specific
4
performance or other equitable remedies, and to general principles of equity
(regardless of whether questioned in a proceeding at law or in equity).
The opinions herein are limited to the Federal laws of the United States
and the corporate and banking laws of the State of New Jersey and the
Commonwealth of Pennsylvania, and I express no opinion as to the effect on any
matter covered by this opinion of the laws of any other jurisdiction.
This opinion is not to be quoted or otherwise referred to in any
documents or filed with any governmental agency, entity or person or relied upon
by any agency, entity or person other than the addressee, without my prior
written consent.
Very truly yours,
5
EXHIBIT G-1
PARTICIPATION LETTER
Xxxxx X. Xxxxx
Re: Executive Severance Plan and Termination Agreement
Dear Xx. Xxxxx:
On October 15, 1997, the Board of Directors of Summit Bancorp. (the
"Company") amended and restated the Summit Bancorp. Executive Severance Plan (as
amended, the "Plan"). A copy of the Plan, reflecting all amendments, is attached
hereto and made a part hereof as if fully set forth in this letter. Unless the
context otherwise requires or unless otherwise defined in this letter,
capitalized terms used in this letter have the meanings assigned to them in the
Plan.
The Committee, as a matter of separate inducement and not in lieu of
any salary or other compensation for services, has selected you to participate
in the Plan, subject to the terms and conditions of the Plan and this letter.
This letter constitutes your Participation Letter under the Plan.
Your participation in the Plan commences as of the effective date and
time of the merger of Prime Bancorp, Inc. into Summit Bancorp ("Effective
Time"). You cease to be a Participant in the Plan upon the earliest to occur of
(i) October 15, 2002 (the "Expiration Date"), (ii) the Date of Termination, and
(iii) your Retirement. The Expiration Date will be automatically extended for an
additional year (each such anniversary being the new Expiration Date) unless at
least 90 calendar days prior to the then Expiration Date, the Company notifies
you that the then Expiration Date will not be extended (it being understood that
the automatic extension operates in successive years so long as no notice is
given).
The payments and benefits to which you as a Participant in the Plan may
become entitled will be determined under the Plan. It is an express condition to
your entitlement to the payments of amounts and the provision of benefits
provided for by paragraph 5(a) of the Plan that the Company receive on the Date
of Termination a Release, Covenant Not to Xxx, Non-Disclosure and
Non-Solicitation Agreement executed by you, or your legal representative (in the
event of your death or Disability) in the form set forth in Exhibit A to the
Plan, and that such Agreement be effective.
The following special provisions ("Letter Amendments") supplement,
amend and supersede the provisions of the Plan, as applied to you:
A. At the Effective Time, your titles shall be as Chairman of the Board
and Chief Executive Officer of Summit Bank (PA) and Senior Executive
Vice President of Summit Bancorp. Your duties shall be those as
assigned to you from time to time by the Boards of Directors of the
Company and Summit Bank (PA) and the Chairman of the Board and
President of the Company and as are appropriate to the position of
Chairman of the Board and Chief Executive Officer of a bank subsidiary
of a publicly held bank holding company. Your base salary shall be not
less than $345,000, and your annual cash bonus shall be not less than
$120,750. Your Welfare Plans and perquisites shall be the welfare plans
and perquisites provided to you by Prime Bancorp, Inc. as of the
Effective Time until the sooner of the integration of the welfare plans
and benefits of Prime Bancorp, Inc. with those of the Company or one
year from the Effective Time, after which they shall be the Welfare
Plans and perquisites provided to a Senior Executive Vice President of
the Company.
B. During the period from the Effective Time until the end of the
Window Month, as defined below, Section 6(d) of the Plan is amended to
delete the word "or" at the end of subparagraph 6(d)(vii), to delete
the period at the end of subparagraph 6(d)(vii) and insert "; or" in
its place, and to add the following subparagraph 6(d)(viii):
(viii) A termination of employment by the Participant for
any reason other than Disability or Retirement on or
after Participant's Normal Retirement Date during the
calendar month which is the nineteenth full calendar
month following the Effective Date (such calendar
month being referred to herein as the "Window
Month").
This Paragraph B of this Participation Letter shall be null and void
and of no effect commencing at the end of the Window Month.
C. During the period from the Effective Time until the end of the
Window Month, subparagraph 5(a)(v) of the Plan shall be null and void
and subparagraph 5(a)(i) shall be revised to read as follows:
(i) receive, promptly following the effective date of the
Release Agreement, a lump sum cash amount equal to 2.99
times Participant's Base Salary and Bonus Amount,
provided, however, that in the event that any of the
lump sum cash amount and all other payments and
benefits received or to be received by the Participant
from the Company or any affiliate or under any plan,
arrangement or agreement of or maintained by the
Company or any affiliate, in the opinion of independent
tax counsel to the Company, would be subject to the
excise tax (the "Excise Tax") imposed by Section 4999
of the Code (as hereafter defined), then the lump sum
cash amount shall be reduced to the largest amount as
will result in none of such payments and benefits being
subject to the Excise Tax. The determination of any
reduction in the lump sum cash amount shall be made by
independent tax counsel to the Company in consultation
with the independent certified public accountants of
the Company.
This Paragraph C of this Participation Letter shall be null and void
and of no effect commencing at the end of the Window Month, and the
original subparagraphs 5(a)(i) and 5(a)(v) shall be reinstated.
2
D. Subparagraph 6(d)(iii) is amended by replacing the words "301
Xxxxxxxx Xxxxxx, Xxxx Xxxxxxx Xxxxxxxx, Xxx Xxxxxx" with "7411 Valley
Green Road, Fort Washington, Pennsylvania."
E. Paragraph 3a of the Release, Covenant Not to Xxx, Non-Disclosure and
Non-Solicitation Agreement, which is Exhibit A to the Plan and Exhibit
A to the Termination Agreement between the Company and you which is
also effective as of the Effective Time, shall be null and void and
paragraph 3a of Exhibit A to both documents shall read as follows:
a. Non-Competition with SUB. The parties recognize that Executive is
an important officer of SUB, that his reputation and business and
personal relationships are of significant benefit to SUB, and a
consideration in the price paid to acquire the bank holding
company of which Executive was Chief Executive Officer, and that
he has access to information about SUB's plans and projections as
well as other confidential information. The parties further agree
that SUB is in direct competition with certain banks and bank
holding companies and thrift institutions and their affiliates
and the Executive agrees that, for a period of two (2) years from
the date hereof, he will not accept employment or serve in any
capacity with any bank, savings bank or savings and loan
association the deposits or accounts or shares of which are
insured by the Federal Deposit Insurance Corporation or credit
union the deposits or accounts or shares of which are insured by
the National Credit Union Administration or any holding company
for such bank, savings bank, savings and loan association or
credit union or other entity controlling, controlled by or under
common control with such financial institution at a principal
place of employment within 25 miles of any office of SUB or any
entity controlling, controlled by or under common control with
SUB open to the public at the time of this Agreement.
For purposes of this letter and the Plan, notices and all
communications provided for in this letter or the Plan shall be in writing and
shall be treated as having been duly given when delivered or mailed by United
States certified mail, return receipt requested, postage prepaid, addressed as
follows: (i) if to you, your address indicated on the first page of this letter;
(ii) if to the Company or the Subsidiary, Summit Bancorp., 301 Carnegie Center,
X.X. Xxx 0000, Xxxxxxxxx, Xxx Xxxxxx 00000-0000, Attention: Corporate Secretary;
or (iii) to such other address as either party may have furnished to the other
in writing in accordance with this paragraph, except that notices of change of
address shall be effective only upon receipt.
All questions pertaining to the construction, regulation, validity and
effect of the provisions hereof will be determined in accordance with the law of
the State of New Jersey regardless of the law that might otherwise govern under
applicable New Jersey principles of conflict of laws.
Your participation in the Plan is conditioned on your acknowledgment of
the terms of this letter. You also agree that this letter and your participation
in the Plan supersedes all prior participation letters and understandings
relating to severance benefits payable by the Company or the Subsidiary under
severance plans of the Company and its Subsidiaries, and all such prior letters
and understandings shall be null and void except for your Termination Agreement,
dated as of the date of merger of Prime Bancorp, Inc. into Summit Bancorp. You
agree that this letter and your participation in the Plan supersedes your
3
Employment Agreement with Prime Bancorp, Inc. dated December __, 1995 other than
the terms of such agreement relating to your stock options, and any other
agreements and understandings relating to employment contracts with or severance
benefits payable by Prime Bancorp, Inc. or Prime Bank and that such Employment
Agreement, except as aforesaid, and any other such agreements and understandings
shall be null and void. Please sign the enclosed copy of this letter and deliver
it to the Company in order to evidence such acknowledgment and agreement.
Sincerely,
SUMMIT BANCORP.
By: _________________________
Xxxxxxx X. Xxxx, Xx., Secretary
Acknowledged and Agreed:
_____________________________________
Xxxxx X. Xxxxx
Dated:_______________________________
4
SUMMIT BANCORP.
EXECUTIVE SEVERANCE PLAN
(as Amended through October 15, 1997)
1. PURPOSES
The purposes of the Summit Bancorp. Executive Severance Plan (the
"Plan") are (a) to enhance executive morale, (b) to enhance the ability of
Summit Bancorp. (formerly known as UJB Financial Corp. and United Jersey Banks)
(the "Company") to retain existing management and, if needed, to attract new
executives, (c) to reward eligible executives for their valuable, dedicated
service to the Company or one or more of its subsidiary corporations (each, a
"Subsidiary") with reasonable compensation in the event of their termination of
employment with the Company or a Subsidiary, and (d) by providing generally
applicable terms of severance, to avoid the legal expense and reduce management
time associated with terminations.
2. EFFECTIVE DATE
This amendment and restatement of the Plan is effective as of October
15, 1997 and will determine the eligibility for benefits of all executives who
are selected to participate in the Plan (the "Participants") and who are
terminated on or after such date.
3. ADMINISTRATION
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"), consisting
of three or more directors having full authority to act in the matter, all of
whom are Disinterested Persons. For purposes of this section, a Disinterested
Person shall mean a person who, at the time action is taken, and within the one
(1) year period prior thereto, is not, and has not been, an employee of the
Company.
The Committee shall have the power to interpret and construe the Plan
and other powers and duties as set forth in the Plan, and any such
interpretation and construction of any provisions of this Plan shall be final.
The Committee shall report any actions taken to the Board at the next meeting of
the Board following such Committee action.
5
4. PARTICIPATION
The Committee shall from time to time select the Participants from
among those key executives who are determined by the Committee to be rewarded
for their valuable, dedicated service to the Company or a Subsidiary. The
Company shall provide each Participant with a letter (a "Participation Letter")
evidencing the Participant's participation in the Plan and setting forth the
payments and benefits to which the Participant may become entitled and
containing such other terms, provisions and conditions not inconsistent with the
Plan, including but not limited to provisions for the extension or renewal of
such agreement, as shall be determined by the Committee.
Without limiting the foregoing, it is an express condition to a
Participant's entitlement to the payments of amounts and the provision of
benefits provided for by paragraph 5(a) hereof that the Company receive on the
Date of Termination (as hereinafter defined) a Release, Covenant Not to Xxx,
Non-Disclosure and Non-Solicitation Agreement executed by the Participant, or
the Participant's legal representative, in the event of the death or Disability
of the Participant, in the form set forth in Exhibit A to this Plan ("Release
Agreement"), and that such Release Agreement be effective. The Participation
Letter shall clearly set forth this requirement and provide that a Participant's
participation is also conditioned on the Participant's acknowledgment of the
terms of the Participation Letter by delivery to the Company of a counterpart
thereof signed by the Participant to evidence such acknowledgment.
Any purported termination of employment by the Company or a Subsidiary
or by the Participant shall be communicated by written Notice of Termination to
the other party. For purposes of this Plan, a "Notice of Termination" shall mean
a notice given by a Participant or the Company or a Subsidiary, as the case may
be, which shall indicate the specific provision of this Plan applicable to such
termination and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for determination of any payments under this Plan. A
Participant shall not be entitled to give a Notice of Termination that the
Participant is terminating the Participant's employment with the Company or a
Subsidiary for Good Reason (as hereinafter defined) more than six (6) months
following the occurrence of the event alleged to constitute Good Reason.
A Participant shall cease to be a Participant in the Plan upon the
earliest to occur of the Date of Termination (as hereinafter defined), the
Participant's Retirement (as hereinafter defined) and the date set forth in the
Participation Letter as provided therein.
For purposes of this Plan, except as provided below, the "Date of
Termination" shall mean the date specified in a Notice of Termination, which
shall be not more than ninety (90) days after such Notice of Termination is
6
given. The Date of Termination of a proposed Termination for Disability (as
hereafter defined), shall be at least thirty (30) days after the giving of the
Notice of Termination.
If, within thirty (30) days after any Notice of Termination is given,
the party who receives such Notice of Termination notifies the other party that
a Dispute (as hereinafter defined) exists, the Date of Termination shall be the
date on which the Dispute is finally determined, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected); provided that the Date of Termination shall be
extended by a notice of Dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such Dispute with
reasonable diligence and provided further that pending the resolution of any
such Dispute, the Company or a Subsidiary shall continue to pay the Participant
the same Base Salary (as hereinafter defined) and to provide the Participant
with the same or substantially comparable employee benefits and perquisites,
including participation in the Company's or a Subsidiary's retirement plans and
Savings Incentive Plan (but excluding the Incentive Bonus Plan (cash bonus
plan), Incentive Stock and Option Plans, and other plans not available to
employees generally), that the Participant was paid and provided in the twelve
(12) months immediately prior to the giving of the Notice of Termination. For
purposes of this Plan, a Dispute shall mean (i) in the case of termination of
employment of a Participant with the Company or a Subsidiary by the Company or a
Subsidiary for Disability or Cause (as hereinafter defined), that the
Participant challenges the existence of Disability or Cause and (ii) in the case
of termination of employment of a Participant with the Company or a Subsidiary
by the Participant for Good Reason, that the Company or such Subsidiary
challenges the existence of Good Reason.
Should it ultimately be determined that a challenged termination by the
Company or a Subsidiary by reason of the Participant's Disability or for Cause
was justified, or that a challenged termination by the Participant for Good
Reason was not justified, then (1) the Participant shall promptly pay to the
Company or a Subsidiary (as the case may be) an amount equal to all sums paid by
the Company or a Subsidiary to the Participant from the date of termination
specified in the Notice of Termination until final resolution of the Dispute
pursuant hereto, with interest at the base rate charged from time to time by
Summit Bank, New Jersey, and (2) to the extent permitted by law, no service as
an employee shall be credited to the Participant for such period for pension
purposes. The Participant shall not be obligated to repay to the Company or a
Subsidiary the cost of providing the Participant with employee benefits and
perquisites for such period (which cost for purposes of health plans means the
applicable premium under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended) unless the final judgment, order or decree of a court
resolving the Dispute determines that the Participant acted in bad faith in
giving a notice of Dispute.
7
Should it be ultimately determined that a challenged termination by the
Company or a Subsidiary by reason of the Participant's Disability or for Cause
was not justified, or that a challenged termination by the Participant for Good
Reason was justified, then the Participant shall be entitled to retain all sums
paid to the Participant pending resolution of the Dispute and shall be entitled
to receive, in addition, the payments and other benefits provided for in
paragraph 5 hereof.
5. PAYMENTS AND BENEFITS UPON TERMINATION OF EMPLOYMENT
(a) In the event of a termination of employment of a Participant with the
Company or a Subsidiary, other than a termination of employment which is (i) due
to the Participant's death or Retirement; or (ii) by the Company or a Subsidiary
by reason of the Participant's Disability or for Cause; or (iii) by the
Participant other than for Good Reason, the Participant shall be entitled,
subject to compliance with paragraph 7 hereof, as compensation for services
rendered (subject to any applicable payroll or other taxes required to be
withheld), until the expiration of the applicable period set forth below; to:
(i) receive, promptly following the effective date of the Release
Agreement, a lump sum cash amount equal to two (2) times the
Participant's Base Salary;
(ii) receive, promptly following the effective date of the Release
Agreement, but only if the Participant participates in the
Savings Investment Plan (i.e., a 401(k) plan) immediately
preceding the Date of Termination, a lump sum cash amount equal
to the aggregate amount of matching contributions that the
Company or a Subsidiary would have been required to contribute
under such plan for the account of the Participant, assuming the
Participant had contributed the maximum amount allowable by law
to such plan during a period of twenty-four (24) months after the
Date of Termination.
(iii)(A) remain an active participant in all Welfare Plans (as used
herein, "Welfare Plans" shall mean the medical, dental, vision,
life, dependent life, personal accident, employee banking
services, and educational matching gift plans of the Company or a
Subsidiary in which the Participant was participating at the Date
of Termination, and shall not include disability, tuition
reimbursement, medical and dependent care spending plans, and
business travel accident plans) with the Participant's Base
Salary used as the basis for determining the level of benefits,
8
for a period of twenty-four (24) months after the Date of
Termination or until the Participant's Normal Retirement Date (as
hereinafter defined), if earlier; provided, however, that if
employee contributions are generally required by any such plan
the Participant pays to the Company or Subsidiary an amount equal
to the required contribution, if any, which such plans provide
are to be made by employees of status and seniority comparable to
the status and seniority of the Participant at the Date of
Termination, which amounts shall be paid by the Participant at
the time or times required by such plans for employee
contributions, and further provided, that the benefits provided
shall be reduced by any benefits provided under post-retirement
benefit programs (such as retiree life insurance) of the Company
or a Subsidiary. In the event applicable law or the terms of any
such Welfare Plan do not permit continued participation by the
Participant, then the Company or a Subsidiary will arrange to
provide the Participant with benefits substantially similar to
and no less favorable than the benefits the Participant was
entitled to receive under such Welfare Plan immediately prior to
the giving of the Notice of Termination for a period terminating
twenty-four (24) months after the Date of Termination; provided,
however, that if employee contributions are generally required by
any such plan the Participant pays to the Company or Subsidiary
an amount equal to the required contribution, if any, which such
plans provide are to be made by employees of status and seniority
comparable to the status and seniority of the Participant at the
Date of Termination, which amounts shall be paid by the
Participant at the time or times required by such plans for
employee contributions.
(B) In lieu of continued participation in the Company or a
Subsidiary's disability plans, in the event that the Participant
becomes disabled during the period of participation in Welfare
Plans provided for herein, as determined by approval for
disability benefits under the federal Social Security program,
the Company or Subsidiary shall make direct payments to the
Participant commencing upon termination of participation in the
Welfare Plans hereunder and under any Termination Agreement and
during the continuation of such disability, as determined under
the federal Social Security program of the amounts and for the
periods the Participant would have received benefits under the
Company or Subsidiary's long-term disability plan (after taking
into account any offsets to income under such plan) as if the
Participant had qualified for long-term disability payments under
9
the Company or Subsidiary's long-term disability plan immediately
prior to the Date of Termination.
(C) If any benefits provided hereunder are provided outside of a
Welfare Plan and would have been tax-exempt or tax-favored to the
Participant if provided under a Welfare Plan, the Company or
Subsidiary shall make additional payments to the Participant in
reimbursement of taxes in order to put the Participant in the
same after tax position as if the benefits had been provided
under a Welfare Plan.
(D) In the event the Participant becomes employed with another
employer and becomes eligible to receive welfare benefits under
plans provided by such employer, the welfare benefits provided
hereunder shall be secondary to those provided under such other
plans.
(E) After the Date of Termination the Participant may also
participate in those post-retirement benefit programs under which
the Participant meets the qualifications, which qualifications
may include contributions by the Participant and appropriate
elections at the Date of Termination;
(iv) receive, promptly following the effective date of the Release
Agreement, any awards previously made to the Participant under
the Company's Incentive Bonus Plan or comparable plan, or any
successor plan, for any year of employment prior to the year
which includes the Date of Termination, payment of which had not
been made prior to the Date of Termination, and any accrued
vacation or other paid time off;
(v) receive, promptly following the effective date of the Release
Agreement, a lump sum cash amount equal to two (2) times the
Participant's Bonus Amount (as hereinafter defined);
(vi) receive "Special Retirement Benefits" as provided herein, so that
the total retirement benefits the Participant receives from the
Company will approximate the total retirement benefits the
Participant would have received under all defined benefit
retirement plans (which may include non-qualified, supplemental
and excess benefits retirement plans but shall not include
severance plans) and other employment contracts of the Company
and its Subsidiaries in which the Participant participates were
the Participant fully vested under such retirement plans and
entitled to all benefits payable under such other employment
contracts and had the Participant continued in the employ of the
Company or a Subsidiary for twenty-four (24) months following the
10
Date of Termination or until the Participant's Normal Retirement
Date, if earlier. The benefits specified in this subparagraph
will include all ancillary benefits, such as early retirement and
survivor rights. The amount payable to the Participant or the
Participant's beneficiaries under this subparagraph shall equal
the excess of (1) the retirement benefits that would be paid to
the Participant or the Participant's beneficiaries, under all
retirement plans and other employment contracts of the Company
and its Subsidiaries in which the Participant participates if (A)
the Participant were fully vested under such plans and entitled
to all benefits payable under such other employment contracts,
(B) the twenty-four (24) month period (or the period until the
Participant's Normal Retirement Date, if less) following the Date
of Termination were added to the Participant's credited service
under such plans and contracts, (C) the terms of such plans and
the policies and procedures by which such plans were administered
were those most favorable to the Participant which were in effect
at any time during the period commencing twelve (12) months prior
to the Change of Control and ending on the date of Notice of
Termination, and (D) the Participant's highest average annual
base salary as defined under such retirement plans and other
employment contracts and any cash bonus which under the terms of
such plan or contract is used to calculate benefits thereunder
were calculated as if the Participant had been employed by the
Company or a Subsidiary for a twenty-four (24) month period (or
the period until the Participant's Normal Retirement Date, if
earlier) following the Date of Termination and had the
Participant's salary and cash bonus during such period been equal
to the Participant's Base Salary and Bonus Amount; over (2) the
retirement benefits that are payable to the Participant or the
Participant's beneficiaries under all retirement plans and other
employment contracts of the Company and its Subsidiary in which
the Participant participates. These Special Retirement Benefits
are provided on an unfunded basis, are not intended to meet the
qualification requirements of Section 401 of the Internal Revenue
Code of 1986, as amended (the "Code"), and shall be payable
solely from the general assets of the Company. These Special
Retirement Benefits shall be payable at the times and in the
manner provided in the applicable retirement plans and other
11
employment contracts to which they relate, or at the election of
the Participant they shall be paid in a lump sum actuarial
equivalent utilizing the actuarial assumptions of the defined
benefit pension plan applicable to the Participant;
(vii)continued provision of perquisites, such as tax preparation
services, use of any automobile and club memberships provided by
the Company or a Subsidiary, in all cases for a period of twelve
(12) months following the Date of Termination, provided that any
personal expenses incurred by the Participant in connection with
such club memberships shall be paid by the Participant. Club dues
shall not be considered a personal expense. The Participant may
elect to have any or all of such club memberships transferred to
the Participant during or upon the expiration of such twelve (12)
month period, and the Company or such Subsidiary shall assign and
transfer to the Participant without charge the rights to any
amounts which would be recoverable upon the termination of all
such club memberships which the Participant has elected to be
transferred to the Participant, such as a bond or shares; and
(viii)senior executive level outplacement services, at least
comparable to what is being provided to senior executives on the
date hereof, for a period of up to two years.
Notwithstanding the foregoing, if the Participant's Date of Termination is
within two (2) years of the normal retirement date provided in the Company's or
Subsidiary's defined benefit retirement plan applicable to the Participant ( the
"Normal Retirement Date"), the sums provided for in subparagraphs 5(a)(i), (ii),
and (v) shall be multiplied by a fraction ("Adjustment Fraction"), the numerator
of which is equal to the number of full months from the Date of Termination to
the Normal Retirement Date, and the denominator of which is equal to 24.
(b) In the event of termination of employment of a Participant with the
Company or a Subsidiary due to the Participant's death, Retirement or
Disability, the Participant shall be entitled to a cash bonus for the portion of
the fiscal year in which death, Retirement or Disability occurs equal to a pro
rata (determined by dividing the number of days elapsed in such fiscal year to
such Death, Retirement or Disability by 365 or 366, as applicable) portion of
the Bonus Amount, and such death, retirement or disability benefits, as the case
may be, as are provided in the Company's or a Subsidiary's plans covering such
Participant on such events and the Company or a Subsidiary shall have no further
obligation to the Participant under this Plan.
12
(c) In the event of termination of employment of a Participant with the
Company or a Subsidiary by the Company or a Subsidiary for Cause or by the
Participant other than for Good Reason, the Participant shall be entitled
(subject to any applicable payroll or other taxes required to be withheld), to
receive the Participant's Base Salary through the Date of Termination and the
Company or a Subsidiary shall have no further obligation to the Participant
under this Plan. This paragraph 5(c) shall not apply to a termination of
employment by reason of Death, Retirement or Disability.
6. DEFINITIONS
For purposes of the Plan:
(a) Base Salary shall mean the amount determined by multiplying the
Participant's highest semi-monthly or other periodic rate of base pay paid to
the Participant during the twelve-month period immediately prior to the giving
of the Notice of Termination by the number of pay periods per year. The
following items are not part of base pay, as used herein: reimbursed expenses,
any amount paid on account of overtime or holiday work, payments on account of
insurance premiums or other contributions made to other welfare or benefit
plans, and any year-end or other bonuses, commissions and gifts.
(b) Bonus Amount means the highest annual cash incentive bonus earned by the
Participant from the Company or a Subsidiary during the last three (3) completed
fiscal years of the Company immediately preceding the Participant's Date of
Termination (annualized in the event the Participant was not employed by the
Company or a Subsidiary for the whole of any such fiscal year).
(c) Cause shall mean:
(i) the willful commission by the Participant of an illegal act or
other act of willful misconduct that causes or will probably
cause substantial economic damage to the Company or a Subsidiary
or substantial injury to the business reputation of the Company
or a Subsidiary;
(ii) the commission by the Participant of an act of fraud in the
performance of such Participant's duties on behalf of the Company
or a Subsidiary;
(iii)the continuing willful failure of the Participant to perform the
duties of such Participant to the Company or a Subsidiary (other
than any such failure resulting from the Participant's incapacity
13
due to physical or mental illness) after written notice thereof
(specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to be heard and cure such failure are
given to the Participant by the Committee; or
(iv) the final order of a federal or state regulatory agency or a
court of competent jurisdiction requiring the termination of the
Participant's employment with the Company or a Subsidiary.
No act, or failure to act, on the Participant's part shall be considered
"willful" unless done or omitted to be done by the Participant not in good faith
and without reasonable belief that the Participant's action or omission was in
the best interests of the Company or a Subsidiary.
(d) Good Reason shall mean, excluding for this purpose an isolated
insubstantial and inadvertent action or failure to act, which is not in bad
faith and which is remedied by the Company or applicable Subsidiary promptly
after receipt of notice thereof given by the Participant:
(i) Without the Participant's express written consent, the assignment
by the Company or a Subsidiary to the Participant of duties which
are inconsistent with the Participant's then title and salary
grade or a significant reduction in the Participant's authority
and responsibility as a senior executive or the removal of the
Participant from, or any failure to reappoint or reelect the
Participant to, the title of Executive Vice President or above,
except in connection with a termination of the Participant's
employment by the Company or a Subsidiary for Cause (including
during the pendency of any Dispute), during any period of
incapacity due to physical or mental illness, or by reason of the
Participant's death, Disability or Retirement;
(ii) A reduction by the Company or a Subsidiary of the Participant's
Base Salary, or the failure to grant increases in the
Participant's Base Salary on a basis at least substantially
comparable to those granted to other executives of the Company or
a Subsidiary of comparable title, salary grade and performance
ratings made in good faith;
(iii)Requiring the Participant to be based anywhere other than an
executive office of the Company or a Subsidiary located in New
Jersey or Pennsylvania within sixty (60) geographic (not road)
miles of 000 Xxxxxxxx Xxxxxx, Xxxx Xxxxxxx Township, New Jersey,
14
except for required travel on the Company's or a Subsidiary's
business to an extent substantially consistent with the
Participant's present business travel obligations, without the
Participant's express written consent; or in the event of any
relocation of the Participant with the Participant's express
written consent, the failure by the Company or a Subsidiary to
pay (or reimburse the Participant for) all reasonable moving
expenses by the Participant relating to a change of principal
residence in connection with such relocation and to indemnify the
Participant against any loss realized in the sale of the
Participant's principal residence in connection with any such
change of residence, all to the effect that the Participant shall
incur no loss on an after tax basis;
(iv) The failure by the Company or a Subsidiary to continue to provide
the Participant with substantially the same welfare benefits and
perquisites, including participation on a comparable basis in the
Company's or a Subsidiary's retirement plans, Incentive Bonus
Plan (cash bonus plan), Savings Incentive Plan, Incentive Stock
and Option Plans, and other plans in which executives of the
Company or a Subsidiary of comparable title and salary grade
participate, as are presently provided to the Participant, or
with a package of welfare benefits and perquisites, that, though
one or more of such benefits or perquisites may vary from those
set forth above, is substantially comparable in all material
respects to such welfare benefits and perquisites, taken as a
whole; provided, however, that a reduction, amendment or
elimination of any benefit, perquisite or plan shall not be Good
Reason if applicable to all executives of comparable title,
salary grade and performance ratings made in good faith;
(v) The giving by the Company or applicable Subsidiary of a notice
that participation by the Participant in the Company's Executive
Severance Plan or the Participant's Termination Agreement would
not be renewed;
(vi) The filing by the Company of a petition for bankruptcy or similar
insolvency of the Company or the filing by any other party of
such a petition which is not dismissed within sixty (60) days; or
(vii)Any failure by the Company or applicable Subsidiary to comply
with any of the provisions of this Plan with respect to the
Participant.
15
(e) Disability shall mean the Participant's incapacity to perform
Participant's duties with the Company or Subsidiary on a full-time basis for one
hundred eighty (180) consecutive days due to physical or mental illness such
that the Participant shall have become qualified to receive benefits under the
Company's or a Subsidiary's long-term disability plans applicable to the
Participant. Any question as to the existence of Disability upon which
Participant and the Company or Subsidiary cannot agree shall be determined by a
qualified independent physician selected by the Company or Subsidiary employing
the Participant or its insurers and acceptable to the Participant or an adult
member of the Participant's immediate family, which acceptance shall not be
unreasonably withheld. Participant shall be obligated to submit to such medical
examinations as may be necessary to determine whether Disability exists.
(f) Retirement shall mean that the Participant shall have reached the
Participant's Normal Retirement Date or that the Participant shall have taken
early retirement (as defined in the Company's or Subsidiary's defined benefit
retirement plan applicable to the Participant) and shall no longer be employed
by the Company or a Subsidiary.
7. RELEASE OF CLAIMS BY PARTICIPANT
The payment of all amounts and provision of all benefits provided for
by paragraph 5(a) shall be conditioned on the execution by the Participant and
delivery to the Company or applicable Subsidiary of a Release Agreement and the
effectiveness of such Release Agreement not later than twenty-one (21) calendar
days after the Date of Termination.
8. FINANCING
All amounts due and benefits provided under the Plan shall constitute
general obligations of the Company or Subsidiary employing the Participant in
accordance with the terms of the Plan. A Participant shall have only an
unsecured right to payment thereof out of the general assets of the Company or
such Subsidiary. Notwithstanding the foregoing, the Company or such Subsidiary
may, by agreement with one or more trustees to be selected by the Company or
such Subsidiary, create a trust on such terms as the Company or such Subsidiary
shall determine to make payments to Participants in accordance with the terms of
the Plan.
9. TERMINATION AND AMENDMENT OF THE PLAN
The Board shall have the power at any time, in its discretion, to
amend, in whole or in part, or terminate the Plan, except that no amendment or
termination shall impair or abridge the obligations of the Company or a
16
Subsidiary or the rights of the Participants under any Participation Letters
previously delivered pursuant to the Plan. Any amendment or termination of the
Plan shall be adopted by the Board, by resolution of the Board at a regular
meeting of the Board or special meeting called for such purpose or by unanimous
written consent.
10. BENEFIT OF PLAN
The Plan shall be binding upon and shall inure to the benefit of the
Participant, the Participant's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees, and the
Company, its Subsidiaries and their respective Successors. The term "Successor"
shall mean any person, firm, corporation or other business entity that, at any
time, whether by merger, acquisition or otherwise, acquires all or substantially
all of the stock, assets or business of the Company or a Subsidiary, as the case
may be. If the Participant should die while any amounts would still be payable
to the Participant hereunder if the Participant had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Participant's devisee, legatee or other designee
or, if there be no such designee, to the Participant's estate.
11. NON-ASSIGNABILITY
Each Participant's rights under this Plan shall be non-transferable
except by will or by the laws of descent and distribution and except insofar as
applicable law may otherwise require. Subject to the foregoing, no right,
benefit or interest hereunder shall be subject to anticipation, alienation,
sale, assignment, encumbrance, charge, pledge, hypothecation or set-off in
respect of any claim, debt or obligation, or to execution, attachment, levy or
similar process, or assignment by operation of law, and any attempt, voluntary
or involuntary, to effect any such action shall, to the full extent permitted by
law, be null, void and of no effect.
12. EFFECT OF OTHER PLANS
Except as provided in paragraph 5, (a) nothing in the Plan shall affect
the level of benefits provided to or received by any Participant (or the
Participant's estate or beneficiaries) as part of any employee benefit plan of
the Company or a Subsidiary and (b) the Plan shall not be construed to affect in
any way a Participant's rights and obligations under any other plan maintained
by the Company or a Subsidiary on behalf of employees or any other contract
between the Company or a Subsidiary and the Participant.
The Participant shall not be required to mitigate the amount of any
payment under the Plan by seeking employment or otherwise, and there shall be no
17
right of setoff or counterclaim, in respect of any claim, debt or obligation,
against any payments to the Participant, the Participant's dependents,
beneficiaries or estate provided for in the Plan.
13. TERMINATION OF EMPLOYMENT
Nothing in the Plan shall be deemed to entitle a Participant to
continued employment with the Company or a Subsidiary, and the rights of the
Company or a Subsidiary to terminate the employment of a Participant in any
lawful manner shall continue as fully as though this Plan were not in effect.
14. SEVERABILITY
In the event that any provision or portion of the Plan shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of the Plan shall be unaffected thereby and shall remain
in full force and effect to the fullest extent permitted by law.
15. LEGAL COSTS
The Company or a Subsidiary shall pay promptly as incurred the
Participant's reasonable attorney's fees and expenses incurred in good faith by
the Participant as a result of any dispute (regardless of the outcome thereof)
with the Company or a Subsidiary or any other party regarding the validity or
enforceability of, or liability under, any provision of this Plan or the act of
any party thereunder or any guarantee of performance thereof and pay prejudgment
interest on any delayed payment to the Participant calculated at the Summit
Bank, New Jersey base rate of interest in effect from time to time from the date
that payment should have been made under the Plan; provided, however, that the
Participant shall not have been found by the court to have acted in bad faith.
Any finding of bad faith must be final with the time to appeal therefrom having
expired and no appeal having been perfected.
16. GOVERNING LAW
All questions pertaining to the construction, regulation, validity and
effect of the provisions of the Plan shall be determined in accordance with the
laws of the State of New Jersey.
17. OTHER IMPORTANT INFORMATION
1. Plan Sponsor:
Summit Bancorp.
18
301 Carnegie Center
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Telephone No.: 000-000-0000
EIN: 00-0000000
(Plan I.D. #506)
2. Plan Administrator and Agent for Service of Legal Process:
Compensation Committee
The Compensation Committee is appointed by the Board of
Directors of Summit Bancorp.
Agent for Service of Legal Process:
General Counsel
Summit Bancorp.
000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
3. Type of Plan - Executive Severance Plan
4. Type of Administration - Employer administered
5. Plan Trustee: Not Applicable
6. Plan Year
The Plan year is January 1-December 31
7. ERISA Rights
As a Participant in the Plan you are entitled to certain
rights and protections under the Employee Retirement Income Security
Act of 1974 (ERISA). ERISA provides that all Plan Participants shall be
entitled to:
Examine, without charge, at the Plan Administrator's office
and at other locations, all Plan documents, including insurance
19
contracts and copies of all documents filed by the Plan with the U.S.
Department of Labor, such as annual reports and plan descriptions.
Obtain copies of all Plan documents and other Plan information
upon written request to the Plan Administrator. The Administrator may
make a reasonable charge for the copies.
In addition to creating rights for Plan Participants, ERISA
imposes duties upon the people who are responsible for the operation of
the employee benefit plan. The people who operate your Plan, called
"fiduciaries", have a legal duty to do so prudently and in the interest
of you and the other Plan Participants and beneficiaries.
No one, including your employer or any other person, may
discriminate against you in any way to prevent you from obtaining a
severance benefit or exercising your rights under ERISA.
If your claim for a severance benefit is denied in whole or
part you must receive a written explanation of the reason for the
denial. You have the right to have the Plan Administrator review and
reconsider your claim.
20
Under ERISA, there are steps you can take to enforce the above
rights:
For instance, if you request materials from the Plan
Administrator and do not receive them within 30 days, you may
file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and
pay you up to $100 a day until you receive the materials,
unless the materials were not sent because of reasons beyond
the control of the Administrator.
If you have a claim for benefits which is denied or ignored,
in whole or in part, you may file suit in a state or federal
court.
If it should happen that plan fiduciaries misuse the plan's
money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in federal court.
The court will decide who should pay court costs and legal
fees. If you are successful the court may order the person you have
sued to pay these costs and fees. If you lose, the court may order you
to pay these costs and fees, for example, if it finds your claim is
frivolous.
If you have any questions about your Plan, you should contact
the Plan Administrator. If you have any questions about this statement
or about your rights under ERISA, you should contact the nearest area
office of the U.S. Labor-Management Services Administration, Department
of Labor.
21
EXHIBIT A
RELEASE, COVENANT NOT TO XXX,
NON-DISCLOSURE AND NON-SOLICITATION
AGREEMENT
This RELEASE, COVENANT NOT TO XXX, NON-DISCLOSURE AND NON-SOLICITATION
AGREEMENT (the "AGREEMENT") dated as of_________ among (1)
______________("Executive"), and (2) Summit Bancorp. and all parent and
subsidiary corporations, partnerships and other entities and affiliates
controlled by, controlling or under common control with Summit Bancorp.
(together with any predecessor and successor entities hereinafter being
collectively referred to as "SUB") sets forth the agreements of the parties
hereto with regard to the matters set forth herein:
18. Background. Executive is an Executive of SUB and a party to a
Participation Agreement last amended by a Participation Letter dated
______________ pursuant to which Executive participates in SUB's
Executive Severance Plan and a Termination Agreement last amended by a
Participation Letter dated ________________ (the Plan and these
Agreements together being collectively referred to as the "Contracts").
Any capitalized terms used but not defined herein shall have the
meaning set forth in the applicable Contract.
a. Change of Control [has/has NOT] occurred [on (date)]. If a Change
of Control has NOT occurred, Executive is not entitled to any
benefits under the Termination Agreement.
b. Executive's employment with SUB will or has terminated on
______________, which shall be the Date of Termination for
purposes of the Contracts, notwithstanding any failure to adhere
to the provisions for giving a Notice of Termination and the
method of determining the Date of Termination set forth in the
Contracts, any such failures being hereby waived by the parties.
c. This termination shall constitute a termination "[for cause/
disability /retirement /other than for cause /by mutual
agreement]" for purposes of any stock options and restricted
stock which Executive holds, and the Termination Date shall be
the termination date for the purposes of such options. Attached
hereto as Appendix A is a list of all outstanding SUB options
held by Executive on the date hereof.
22
19. Payment. Executive shall receive within two business days following the
EFFECTIVE DATE (as defined in paragraph 7 hereof) $_____________, the
gross amount due to Executive under the Contracts, which shall be paid
to Executive as $_________________ by check or deposit in Executive's
bank account, with the balance withheld in respect of federal, state
and local taxes and benefits contributions, which Executive
acknowledges represents all amounts currently due Executive under the
Contracts. Executive acknowledges and agrees that Executive is not
entitled to any severance payments under any other severance program of
SUB, the Contracts being intended to substitute for any such other
severance program. SUB continues to be obligated to provide certain
welfare and pension benefits and perquisites, as more fully set forth
in the Contracts.
20. Restrictive Covenants. In consideration of the payments to Executive as
specified in paragraph 2 above, Executive agrees as follows:
a. Non-Competition with SUB. The parties recognize that Executive is
an important officer of SUB, that his reputation and business and
personal relationships are of significant benefit to SUB, and a
consideration in the price paid to acquire the bank holding
company of which Executive was Chief Executive Officer, and that
he has access to information about SUB's plans and projections as
well as other confidential information. The parties further agree
that SUB is in direct competition with certain banks and bank
holding companies and thrift institutions and their affiliates
and the Executive agrees that, for a period of two (2) years from
the date hereof, he will not accept employment or serve in any
capacity with any bank, savings bank or savings and loan
association the deposits or accounts or shares of which are
insured by the Federal Deposit Insurance Corporation or credit
union the deposits or accounts or shares of which are insured by
the National Credit Union Administration or any holding company
for such bank, savings bank, savings and loan association or
credit union or other entity controlling, controlled by or under
common control with such financial institution at a principal
place of employment within 25 miles of any office of SUB or any
entity controlling, controlled by or under common control with
SUB open to the public at the time of this Agreement.
b. Non-Solicitation of SUB Employees. For a period of five (5) years
from the date hereof, Executive will not solicit or induce any
person who is an employee of SUB or was such at any time within
three months prior to the date hereof to become employed by any
other person, firm or corporation or approach any such employee
for such purpose or authorize or knowingly approve the taking of
23
such actions by other persons, without the prior written consent
of SUB.
c. Non-Disclosure of Proprietary Information. Executive acknowledges
that during the course of Executive's employment with SUB
Executive received, obtained or became aware of or had access to
proprietary information, lists and records of customers and trade
secrets which are the property of SUB and which are not known by
competitors or generally by the public ("Proprietary
Information") and recognizes such Proprietary Information to be
valuable and unique assets of SUB. For purposes of this
subparagraph: (i) Proprietary Information is deemed to include,
without limitation, (A) marketing materials, marketing manuals,
policy manuals, procedure manuals, policy and procedure manuals,
operating manuals and procedures and product documentation, (B)
all information about pricing, products, procedures, practices,
business methods, systems, plans, strategies or personnel of SUB,
(C) circumstances surrounding the relationships with, knowledge
of, or information about the customers, clients, and accounts of
SUB, including but not limited to the identity of current active
customers or prospects who have been contacted by SUB, the
expiration dates and other terms of loans or deposit or other
banking relationships, details or special product provisions or
special combinations of products, or special prices, and (D) all
other information about SUB which has not been disclosed in
documents filed with the U.S. Securities and Exchange Commission
or otherwise publicly disseminated by SUB, whether or not that
information is recorded and notwithstanding the method of
recordation, if any; and (ii) Proprietary Information is deemed
to exclude all information legally in the public domain.
Executive agrees to hold the Proprietary Information in the
strictest confidence and agrees not to use or disclose any
Proprietary Information, directly or indirectly, at any time for
any purpose, without the prior written consent of SUB or to use
for Executive's benefit or the benefit of any person, firm,
corporation or other entity (other than SUB), any Proprietary
Information, and to use Executive's best efforts to prevent such
prohibited use or disclosure by any other persons. Executive has
returned all Proprietary Information in Executive's possession or
control to SUB.
d. Cooperation, No Detrimental Actions. Executive will cooperate
with SUB in enforcing its claims against customers and former
customers of SUB, including appearing as a witness for SUB in
court or administrative proceedings, subject to reasonable
reimbursement for Executive's time and expenses. Executive will
not take actions or make disparaging statements which are
24
detrimental to SUB or the RELEASEES, as defined in paragraph 5
below.
e. Remedies. Executive hereby acknowledges that Executive's duties
and responsibilities under this paragraph 3 are unique and
extraordinary and that irreparable injury may result to SUB in
the event of a breach of the terms and conditions of this
paragraph 3, which may be difficult to ascertain, and that the
award of damages would not be adequate relief to SUB and the
RELEASEES. Executive therefore agrees that in the event of
Executive's breach of any of the terms or conditions of this
paragraph 3, SUB shall have the right, without posting any bond
or other security, to preliminary and permanent injunctive relief
as well as damages and an equitable accounting of all earnings,
profits and other benefits arising from such violation, which
rights shall be cumulative and in addition to any other rights or
remedies in law or equity to which SUB may be entitled against
Executive. The covenants of Executive in paragraphs 3a, 3b, 3c
and 3d of this Agreement shall each be construed as an agreement
independent of any other provision in this AGREEMENT, and the
existence of any claim or cause of action of Executive against
SUB, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by SUB of paragraphs 3a,
3b, 3c and 3d.
f. Enforcement. If at the time of the enforcement of subparagraphs
3a, 3b, 3c, 3d or 3e above a court shall hold that the period or
scope of the provisions thereof are unreasonable under the
circumstances then existing, the parties hereby agree that the
maximum period or scope under the circumstances shall be
substituted for the period or scope stated in those
subparagraphs.
21. Short-Swing Securities Profits. Executive acknowledges that Executive
will remain subject to the short-swing liability provisions of Section
16 of the federal Securities Exchange Act of 1934 for six months
following termination of employment.
22. Release. In consideration of the payments to Executive as specified in
paragraph 2 above, Executive grants SUB a RELEASE of only all claims,
both known and unknown, that Executive may have that relate to the
termination of Executive's employment (hereafter a "WRONGFUL
TERMINATION CLAIM"). The Executive and SUB agree that a WRONGFUL
TERMINATION CLAIM, specifically and without limitation, does not
include claims:
25
a. for indemnification as a corporate agent of SUB against claims by
third parties;
b. under employee benefit plans, including supplemental employee
retirement plans, maintained by SUB or any of the predecessor
organizations thereof, including but not limited to rights under
any workers compensation program, Section 502(a) of the Employee
Retirement Income Security Act, as amended, 29 U.S.C. ss.1001 et
seq., and under the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA");
c. arising out of enforcement of the Contracts or this Agreement by
Executive; or
d. constituting cross-claims against SUB as a result of claims
brought by unaffiliated third parties against Executive based on
Executive's service as an executive of SUB.
The statutes which could form the basis for a WRONGFUL TERMINATION
CLAIM include, but are not limited to, Title VII of the Civil Rights
Act of 1964, as amended, 42 U.S.C. ss.1971 et seq.; the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C. ss.621
et seq.; Section 510 of the Employee Retirement Income Security Act of
1974, as amended, 29 U.S.C. ss.1001 et seq.; the Americans With
Disabilities Act, as amended, 42 U.S.C. ss.12101 et seq.; the Older
Workers Benefit Protection Act, as amended, 29 U.S.C. ss.621 et seq.;
the Civil Rights Act of 1866, as amended, 42 U.S.C. ss.1981 et seq.;
the New Jersey Law Against Discrimination, as amended, N.J.S.A. 10:5-1
et seq.; the New Jersey Conscientious Employee Protection Act, as
amended, N.J.S.A. 34:19-1 et seq.; the New York Human Rights Law,
Executive Law ss.290 et seq.; the Pennsylvania Human Relations Act, as
amended, 43 P.S. ss.951 et seq.; and the Pennsylvania Whistleblower
Law, as amended, 43 P.S. ss.1421 et seq. The common law (non-statutory)
theories under which a WRONGFUL TERMINATION CLAIM could be made
include, but are not limited to, breach of an express employment
contract, breach of a contract implied from a personnel handbook or
manual, or commission of a civil wrong (known as a "tort") resulting in
Executive's termination, or for alleged violation of the public policy
of the United States or any state. Granting a RELEASE of any WRONGFUL
TERMINATION CLAIM pursuant to this AGREEMENT means that on behalf of
Executive and all who succeed to Executive's rights and
responsibilities, Executive releases and gives up only any and all
WRONGFUL TERMINATION CLAIMS that Executive may have against SUB, and
any of its subsidiaries, affiliates or divisions, and all of their
directors, officers, representatives, shareholders, agents, employees,
and all who succeed to their rights and responsibilities (collectively
26
referred to as "RELEASEES"). With respect to any charges filed
concerning events or actions relating to a WRONGFUL TERMINATION CLAIM
that occurred on or before the date of this AGREEMENT or Executive's
Termination Date (whichever is later), Executive waives and releases
any right that Executive may have to recover in any lawsuit or
proceeding brought by Executive or by an administrative agency on
Executive's behalf against the RELEASEES.
23. Covenant Not to Xxx. Executive covenants not to xxx the RELEASEES over
any WRONGFUL TERMINATION CLAIM. Such a covenant not to xxx the
RELEASEES means that Executive represents that Executive has not
through the date of execution of this Agreement filed a WRONGFUL
TERMINATION CLAIM, charge or lawsuit with any court or government
agency against the RELEASEES, and that Executive will not file such a
lawsuit subsequent to execution of this Agreement. Executive also
waives any right to become, and promises not to become, a member of any
class in a case in which WRONGFUL TERMINATION CLAIMS are asserted
against any of the RELEASEES.
24. Review Period. Executive acknowledges that Executive has up to 21 days
to review this AGREEMENT, and was advised to review it with an attorney
of Executive's choice. Executive also acknowledges that Executive was
further advised that Executive has seven days after Executive signs
this AGREEMENT to revoke it by notifying SUB in writing, of such
revocation as set forth under Notices below. This AGREEMENT shall
become effective on the tenth (10th) day following its execution by
Executive (the "EFFECTIVE DATE"), unless revoked in accordance with the
preceding sentence.
25. Revocation of Authority. Executive agrees and acknowledges that as of
the Termination Date Executive shall no longer be empowered to bind SUB
in any agreement, whether verbal or written, and that Executive shall
have no authority to execute any documents, deeds, leases, or other
contracts on behalf of SUB. To the extent not effected by termination
of Executive under the Contracts, Executive resigns from all offices
and positions with SUB.
26. Successors and Assigns. All rights and duties of SUB under this
Agreement shall be binding on and inure to the benefit of SUB, its
successors and assigns. All rights of Executive hereunder shall be
binding upon and inure to the benefit of Executive's personal or legal
representatives.
27
27. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally with receipt acknowledged or sent by
registered or certified mail, postage prepaid or by reputable national
overnight delivery service, to the addresses shown below, unless
changed by notices given as herein provided, except that notice of
change of address only shall be effective upon actual receipt:
If to SUB, to:
Summit Bancorp.
000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Executive Vice President
of Human Resources
With a copy to:
Summit Bancorp.
000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
If to the Executive, to:
With a copy to:
28. Covenant Not to Challenge Enforceability. Both Executive and SUB
understand that this AGREEMENT is final and binding when executed by
both parties, subject to paragraph 7 above, and both agree not to
thereafter challenge its enforceability.
29. Applicable Law. This AGREEMENT shall be deemed to have been made within
the State of New Jersey, and it shall be interpreted, construed, and
enforced in accordance with the law of the State of New Jersey, and
before the Courts of the State of New Jersey.
28
30. Amendments, Modifications, Waivers. This AGREEMENT cannot be amended or
modified except by a written document signed by both SUB and Executive
and no provision can be waived except by a written document signed by
the waiving party.
31. By signing this AGREEMENT, Executive acknowledges:
a. EXECUTIVE HAS READ THIS AGREEMENT COMPLETELY.
b. EXECUTIVE HAS HAD AN OPPORTUNITY TO CONSIDER THE TERMS OF THIS
AGREEMENT.
c. EXECUTIVE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY OF
EXECUTIVE'S CHOOSING PRIOR TO EXECUTING THIS AGREEMENT.
d. EXECUTIVE KNOWS THAT EXECUTIVE MAY BE GIVING UP IMPORTANT LEGAL
RIGHTS BY SIGNING THIS AGREEMENT.
e. EXECUTIVE UNDERSTANDS AND MEANS EVERYTHING THAT EXECUTIVE HAS
SAID IN THIS AGREEMENT, AND EXECUTIVE AGREES TO ALL ITS TERMS.
f. EXECUTIVE IS NOT RELYING ON SUB OR ANY REPRESENTATIVE OF SUB TO
EXPLAIN THIS AGREEMENT AND RELEASE TO EXECUTIVE. EXECUTIVE HAS
HAD AN OPPORTUNITY TO CONSULT AN ATTORNEY OR OTHER ADVISOR TO
EXPLAIN THIS AGREEMENT AND ITS CONSEQUENCES TO EXECUTIVE BEFORE
EXECUTIVE SIGNED IT, AND EXECUTIVE HAS AVAILED HIMSELF OR HERSELF
OF THIS OPPORTUNITY TO WHATEVER EXTENT EXECUTIVE DESIRED.
g. EXECUTIVE HAS SIGNED THIS AGREEMENT VOLUNTARILY AND ENTIRELY OF
EXECUTIVE'S OWN FREE WILL, WITHOUT ANY PRESSURE FROM SUB OR ANY
REPRESENTATIVE OF SUB, OR ANYONE ELSE.
29
IN WITNESS WHEREOF, and intending to be legally bound hereby,
this Agreement has been executed as of the day and year first above written.
ATTEST: SUMMIT BANCORP.
__________________________________ By: ____________________________________
Secretary Executive Vice President
____________________________________
EXECUTIVE
____________________________________
(Social Security Number)
STATE OF NEW JERSEY:
COUNTY OF _______________________:
I certify that on this _______ day of ____________, _______ personally
came before me _______________(Executive), who, being duly sworn, acknowledged
under oath to my satisfaction that such person is named in and personally
executed the foregoing Receipt and Release as such person's voluntary act and
deed, for the purposes set forth therein.
IN WITNESS WHEREOF, I have set my hand this ____ day of _____________,
______.
By: ___________________________________
Notary Public of the State of New Jersey
My Commission expires __________________
30
EXHIBIT G-2
TERMINATION AGREEMENT
THIS AGREEMENT dated and entered into effective and as of the
merger of Prime Bancorp, Inc. into Summit Bancorp., by and between Summit
Bancorp., a New Jersey corporation (the "Company"), and Xxxxx X. Xxxxx, residing
at (the "Executive").
W I T N E S S E T H:
WHEREAS, should the Company receive a proposal from a third
person, whether solicited by the Company or unsolicited, concerning a possible
business combination with or the acquisition of a substantial share of the
equity or voting securities of, the Company, the Board of Directors of the
Company (the "Board") has deemed it imperative that it and the Company be able
to rely on the Executive to continue to serve in the Executive's position, and
that the Board and the Company be able to receive and rely upon the Executive's
advice, if they request it, as to the best interests of the Company and its
shareholders, without concern that the Executive might be distracted by the
personal uncertainties and risks that such a proposal might otherwise create;
and
WHEREAS, the Company desires to enhance executive morale and
its ability to retain existing management; and
WHEREAS, the Company desires to reward the Executive for the
Executive's valuable, dedicated service to the Company or one or more of its
subsidiary corporations (each, a "Subsidiary") should the Executive's service be
terminated under circumstances hereinafter described; and
WHEREAS, the Board therefore considers it in the best
interests of the Company and its shareholders for the Company to enter into
Termination Agreements, in form similar to this Agreement, with certain key
executive officers of the Company and one or more of its Subsidiaries; and
WHEREAS, the Executive is presently the duly elected and
acting Chairman of the Board and Chief Executive Officer of Summit Bank PA and
is a key executive with whom the Company has been authorized by the Board to
enter into this Agreement;
NOW, THEREFORE, to assure the Company of the Executive's
continued dedication and the availability of the Executive's advice and counsel
in the event of any such proposal, to induce the Executive to remain in the
employ of the Company or a Subsidiary, and to reward the Executive for the
Executive's valuable, dedicated service to the Company or a Subsidiary should
the Executive's service be terminated under circumstances hereinafter described,
and for other good and valuable consideration, the receipt and adequacy whereof
each party acknowledges, the Company and the Executive agree as follows:
1. OPERATION, EFFECTIVE DATE, AND TERM OF AGREEMENT.
(a) This Agreement is effective and binding on both parties as
of the date hereof. Notwithstanding its present effectiveness, the provisions of
paragraphs 3 and 4 of this Agreement shall become operative only when, as and if
there has been a "Change in Control" of the Company. For purposes of this
Agreement, a "Change in Control" of the Company shall be deemed to occur (i)
upon a Change in Control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A or Item 1a of Form 8-K
promulgated under the Securities Exchange Act of 1934 ("Exchange Act"); or (ii)
if any "person" (including as such term is used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act, but excluding the Company and its Subsidiaries or
an employee benefit plan of the Company (or any fiduciary thereof) or a
corporation controlled by the Company's shareholders in substantially the same
character and proportions as their ownership of stock of the Company, or an
underwriter temporarily holding securities pursuant to an offering of such
securities) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing twenty-five percent (25%) or more of the
combined voting power of the Company's outstanding securities then entitled to
vote for the election of directors; or (iii) if during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority thereof
(excluding, for purposes of this calculation, any director who dies during such
period); or (iv) if the Company shall meet the delisting criteria of the New
York Stock Exchange or any successor exchange in respect of the number of
publicly-held shares or the number of shareholders holding one hundred (100)
shares or more; or (v) if the Board shall approve the sale of all or
substantially all of the assets of the Company; or (vi) if the Board shall
approve any merger, consolidation, issuance of securities or purchase of assets,
the result of which would be the occurrence of any event described in clause
(i), (ii), (iii) or (iv) above or that the shareholders of the Company receive
or retain stock having less than 65% combined voting power of the company
resulting from such transaction in substantially the same proportions as their
prior ownership of the Company.
(b) The Company shall be obligated to make the payments
referred to in paragraphs 3 and 4 hereof following, and the provisions of
paragraph 2 hereof shall apply to, a Change in Control of the Company only if
such Change in Control shall have occurred prior to, or as a result of efforts
designed to attain such and known to the parties hereto to have commenced prior
to, the earliest to occur of the Executive's death, Disability (as hereinafter
defined), Normal Retirement Date (as hereinafter defined) or the 15th day of
October, 2002; provided, however, that commencing on the 15th day of October,
2002 and each annual anniversary of such day thereafter (such day and each
annual anniversary thereof shall be hereinafter referred to as the "Renewal
Date"), the term of this Agreement shall automatically be extended for one
additional year unless at the Renewal Date the Executive is no longer employed
by the Company or a Subsidiary or has reached the Executive's Normal Retirement
Date or at least twelve (12) months prior to the next Renewal Date (and prior to
a Change in Control of the Company), the Company shall have given notice to the
Executive that it does not wish to extend the term of this Agreement; provided,
further, however, if a Change in Control of the Company shall have occurred
-2-
during the term of this Agreement, this Agreement shall continue in effect for a
period of not less than thirty-six (36) months beyond the month in which each
such Change in Control of the Company occurred, and thereafter solely to the
extent necessary for the Executive to enforce the obligations of the Company or
Subsidiary employing Executive incurred prior thereto.
2. EMPLOYMENT OF EXECUTIVE.
Nothing herein shall affect any right which the Executive or
the Company or a Subsidiary may otherwise have to terminate the Executive's
employment by the Company or a Subsidiary at any time in any lawful manner,
subject always to the Company's providing to the Executive the payments and
benefits specified in paragraphs 3 and 4 of this Agreement to the extent
hereinbelow provided.
In the event any person commences a tender or exchange offer,
circulates a proxy statement to the Company's shareholders or takes other steps
designed to effect a Change in Control of the Company as defined in paragraph 1
of this Agreement, the Executive agrees that before the Executive's Normal
Retirement Date the Executive will not voluntarily leave the employ of the
Company or a Subsidiary, and will continue to perform the Executive's regular
duties and to render the services specified in the recitals of this Agreement,
until such person has abandoned or terminated that person's efforts to effect a
Change in Control or until a Change in Control has occurred. Should the
Executive voluntarily terminate the Executive's employment before any such
effort to effect a Change in Control of the Company has commenced, or after any
such effort has been abandoned or terminated without effecting a Change in
Control and no other such effort is then being undertaken by any other person,
this Agreement shall lapse and be of no further force or effect.
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) If any of the events described in paragraph 1 hereof
constituting a Change in Control of the Company shall have occurred, the
Executive shall be entitled to the benefits provided in paragraph 4 hereof upon
the subsequent termination of the Executive's employment within the applicable
period set forth in paragraph 4 hereof following such Change in Control unless
such termination is (i) due to the Executive's death after the Window Period
referred to below or Retirement (as hereinafter defined)(other than Early
Retirement during the Window Period, as hereinafter defined); or (ii) by the
Company or a Subsidiary by reason of the Executive's Disability or for Cause (as
hereinafter defined); or (iii) by the Executive other than for Good Reason (as
hereinafter defined).
(b) If following a Change in Control the Executive's
employment is terminated by reason of the Executive's death after the Window
Period, Retirement (other than Early Retirement during the Window Period) or
Disability, the Executive shall be entitled to death, retirement or disability
benefits, as the case may be, from the Company no less favorable than those
benefits to which the Executive would have been entitled had the death,
Retirement or termination for Disability occurred during the six (6) month
period prior to the Change in Control. If prior to any such termination for
-3-
Disability, the Executive fails to perform the Executive's duties as a result of
incapacity due to physical or mental illness, the Executive shall continue to
receive the Executive's Base Salary (as hereinafter defined), less any benefits
as may be available to the Executive under the Company's or Subsidiary's
disability plans, until the Executive's employment is terminated for Disability.
(c) If following a Change in Control the Executive's
employment shall be terminated by the Company or a Subsidiary for Cause or by
the Executive other than for Good Reason, the Company shall pay (subject to any
applicable payroll or other taxes required to be withheld) to the Executive the
Executive's Base Salary through the Date of Termination (as hereinafter
defined), and the Company or a Subsidiary shall have no further obligations to
the Executive under this Agreement. This paragraph 3(c) shall not apply to a
termination of the Executive's employment by the Company or a Subsidiary by
reason of Death, Retirement or Disability.
(d) For purposes of this Agreement:
(i) "Disability" shall mean the Executive's incapacity to
perform the Executive's duties with the Company or
Subsidiary on a full-time basis for one hundred eighty
(180) consecutive days due to physical or mental
illness such that the Executive shall have become
qualified to receive benefits under the Company's or a
Subsidiary's long-term disability plans applicable to
the Executive. Any question as to the existence of
Disability upon which the Executive and the Company or
Subsidiary cannot agree shall be determined by a
qualified independent physician selected by the Company
or Subsidiary employing the Executive or its insurers
and acceptable to the Executive or an adult member of
the Executive's immediate family, which acceptance
shall not be unreasonably withheld. The Executive shall
be obligated to submit to such medical examinations as
may be necessary to determine whether Disability
exists.
(ii) "Retirement" shall mean that the Executive shall have
reached the normal retirement date provided in the
Company's or Subsidiary's defined benefit retirement
plans applicable to such Executive (the "Normal
Retirement Date") or that the Executive shall have
taken early retirement (as defined in such retirement
plans) and shall no longer be employed by the Company
or a Subsidiary ("Early Retirement").
(iii) "Cause" shall mean:
(A) the willful commission by the Executive of an illegal
act or other act of willful misconduct that causes or
will probably cause substantial economic damage to the
Company or a Subsidiary or substantial injury to the
business reputation of the Company or a Subsidiary;
-4-
(B) the commission by the Executive of an act of fraud in
the performance of such Executive's duties on behalf of
the Company or a Subsidiary;
(C) the continuing willful failure of the Executive to
perform the duties of such Executive to the Company or
a Subsidiary (other than any such failure resulting
from the Executive's incapacity due to physical or
mental illness) after written notice thereof
(specifying the particulars thereof in reasonable
detail) and a reasonable opportunity to be heard and
cure such failure are given to the Executive by the
Compensation Committee of the Board; or
(D) the final order of a federal or state regulatory agency
or a court of competent jurisdiction requiring the
termination of the Executive's employment with the
Company or a Subsidiary.
(iv) "Good Reason" shall mean, excluding for this purpose an
isolated, insubstantial and inadvertent action or
failure to act, which is not in bad faith and which is
remedied by the Company or applicable Subsidiary
promptly after receipt of notice thereof given by the
Executive:
(A) Without the Executive's express written consent, the
assignment by the Company or a Subsidiary to the
Executive of duties which (i) are materially different
or require travel significantly more time consuming or
extensive than the Executive's duties or business
travel obligations immediately prior to the Change in
Control, or (ii) result, without the Executive's
express written consent, in either a significant
reduction in the Executive's authority and
responsibility as a senior executive of the Company or
Subsidiary employing the Executive when compared to the
highest level of authority and responsibility assigned
to the Executive at any time during the six (6) month
period prior to the Change in Control, or, (iii) the
removal of the Executive from, or any failure to
reappoint or reelect the Executive to, the highest
title held since the date six (6) months before the
Change in Control, except in connection with a
termination of the Executive's employment by the
Company or a Subsidiary for Cause (including during the
pendency of any Dispute), during any period of
incapacity due to physical or mental illness, or by
reason of the Executive's death, Disability or
Retirement;
(B) A reduction by the Company or a Subsidiary of the
Executive's Base Salary, or the failure to grant
increases in the Executive's Base Salary on a basis at
least substantially comparable to those granted to
other executives of the Company or a Subsidiary of
comparable title, salary grade and performance ratings
made in good faith;
-5-
(C) Requiring the Executive to be based anywhere other than
an executive office of the Company or a Subsidiary
located in New Jersey or Pennsylvania within
twenty-five (25) geographic (not road) miles of the
location of the Executive's office prior to the Change
in Control, except for required travel on the Company's
or a Subsidiary's business to an extent substantially
consistent with the Executive's present business travel
obligations, without the Executive's express written
consent, or in the event of any relocation of the
Executive with the Executive's express written consent,
the failure by the Company or a Subsidiary to pay (or
reimburse the Executive for) all reasonable moving
expenses by the Executive relating to a change of
principal residence in connection with such relocation
and to indemnify the Executive against any loss
realized in the sale of the Executive's principal
residence in connection with any such change of
residence, all to the effect that the Executive shall
incur no loss on an after tax basis;
(D) The failure by the Company or a Subsidiary to continue
to provide the Executive with substantially the same
welfare benefits and perquisites, including
participation on a comparable basis in the Company's or
a Subsidiary's retirement plans, Incentive Bonus Plan
(cash bonus plan), Savings Incentive Plan, Incentive
Stock and Option Plans, Executive Severance Plan and
other plans in which executives of the Company or a
Subsidiary of comparable title and salary grade
participate, as were provided to the Executive in the
twelve (12) months immediately prior to such Change in
Control of the Company, or with a package of welfare
benefits and perquisites, that, though one or more of
such benefits or perquisites may vary from those set
forth above, is substantially comparable in all
material respects to such welfare benefits and
perquisites, taken as a whole;
(E) The failure of the Company to obtain the express
written assumption of and agreement to perform this
Agreement by any successor as contemplated in
subparagraph 6(c) hereof;
(F) A termination of employment by the Executive for any
reason other than Disability or Retirement on or after
Executive's Normal Retirement Date during the thirty
(30) day period immediately following the first
anniversary of a Change in Control of the Company
defined in subparagraphs 1(a)(i), (ii) (iii) or (iv) or
the consummation of a transaction described in
subparagraphs 1(a)(v) or (vi) (such thirty (30) day
period being referred to herein as the "Window
Period").
(G) The giving by the Company or applicable Subsidiary of a
notice that participation by the Executive in the
Company's Executive Severance Plan or that the
Executive's Termination Agreement would not be renewed;
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(H) The filing by the Company of a petition for bankruptcy
or similar insolvency of the Company or the filing by
any other party of such a petition which is not
dismissed within sixty (60) days; or
(I) Any failure by the Company or applicable Subsidiary to
comply with any provision of this Agreement with
respect to Executive.
(v) "Dispute" shall mean (A) in the case of termination of employment
of the Executive with the Company or a Subsidiary by the Company
or a Subsidiary for Disability or Cause, that the Executive
challenges the existence of Disability or Cause and (B) in the
case of termination of employment of an Executive with the
Company or a Subsidiary by the Executive for Good Reason, that
the Company or a Subsidiary challenges the existence of Good
Reason.
(vi) "Base Salary" shall mean the amount determined by multiplying the
Executive's highest semi-monthly or other periodic rate of base
pay paid to the Executive at any time during the period
commencing twelve (12) months prior to the Change of Control and
ending on the date of Notice of Termination by the number of pay
periods per year. The following items are not part of base pay,
as used herein: reimbursed expenses, any amount paid on account
of overtime or holiday work, payments on account of insurance
premiums or other contributions made to other welfare or benefit
plans, and any year-end or other bonuses, commissions and gifts.
(vii)"Bonus Amount" means the highest annual cash incentive bonus
earned by the Executive from the Company or a Subsidiary during
the last three (3) completed fiscal years of the Company
immediately preceding the Executive's Date of Termination
(annualized in the event the Executive was not employed by the
Company or a Subsidiary for the whole of any such fiscal year).
For purposes of this subparagraph (d), no act, or failure to
act, on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that the Executive's action or omission was in the best interests of the
Company or a Subsidiary.
(e) Any purported termination of employment by the Company or
a Subsidiary or by the Executive shall be communicated by written Notice of
Termination to the other party. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice given by the Executive or the Company or a
Subsidiary, as the case may be, which shall indicate the specific provision of
this Agreement applicable to such termination and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for determination
of any payments under this Agreement. The Executive shall not be entitled to
give a Notice of Termination that the Executive is terminating the Executive's
employment with the Company or a Subsidiary for Good Reason more than six (6)
months following the occurrence of the event alleged to constitute Good Reason.
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(f) For purposes of this Agreement, except as provided below,
the "Date of Termination" shall mean the date specified in a Notice of
Termination, which shall be not more than ninety (90) days after such Notice of
Termination is given. The Date of Termination of a proposed Termination for
Disability shall be at least thirty (30) days after the giving of the Notice of
Termination.
If within thirty (30) days after any Notice of Termination is given,
the party who receives such Notice of Termination notifies the other party that
a Dispute exists, the Date of Termination shall be the date on which the Dispute
is finally determined, either by mutual written agreement of the parties, or by
a final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected);
provided that the Date of Termination shall be extended by a notice of Dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such Dispute with reasonable diligence and provided
further that pending the resolution of any such Dispute, the Company or a
Subsidiary shall continue to pay the Executive the same Base Salary and to
provide the Executive with the same or substantially comparable employee
benefits and perquisites, including participation in the Company's or a
Subsidiary's retirement plans, Savings Incentive Plan, Incentive Bonus Plan,
Incentive Stock and Option Plans and Executive Severance Plan that the Executive
was paid and provided at any time during the period commencing twelve (12)
months prior to the Change of Control and ending on the date of Notice of
Termination
Should it ultimately be determined that a challenged termination by the
Company or a Subsidiary by reason of the Executive's Disability or for Cause was
justified, or that a challenged termination by the Executive for Good Reason was
not justified, then the Executive shall promptly pay the Company or a Subsidiary
(as the case may be) an amount equal to all sums paid by the Company or a
Subsidiary to the Executive from the date of termination specified in the Notice
of Termination until final resolution of the Dispute pursuant hereto, with
interest at the base rate charged from time to time by Summit Bank, New Jersey,
all options, rights and restricted stock granted to the Executive during such
period shall be canceled or returned to the Company or Subsidiary, and, to the
extent permitted by law, no service as an employee shall be credited to the
Executive for such period for pension purposes. The Executive shall not be
obligated to pay to the Company or a Subsidiary the cost of providing the
Executive with employee benefits and perquisites for such period (which cost for
purposes of health plans means the applicable premium under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended) unless the final
judgment, order or decree of a court resolving the Dispute determines that the
Executive acted in bad faith in giving a notice of Dispute.
Should it ultimately be determined that a challenged termination by the
Company or a Subsidiary by reason of the Executive's Disability or for Cause was
not justified, or that a challenged termination by the Executive for Good Reason
was justified, then the Executive shall be entitled to retain all sums paid to
the Executive pending resolution of the Dispute and shall be entitled to
receive, in addition, the payments and other benefits provided for in paragraph
4 hereof.
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4. PAYMENTS AND BENEFITS UPON TERMINATION.
If within three (3) years after a Change in Control of the
Company, there occurs a termination of employment of the Executive with the
Company or a Subsidiary, other than a termination of employment which is (i) due
to the Executive's death after the Window Period or Retirement other than Early
Retirement during the Window Period; or (ii) by the Company or a Subsidiary by
reason of the Executive's Disability or for Cause; or (iii) by the Executive
other than for Good Reason, then, and expressly on the condition that the
Company or Subsidiary employing the Executive receive on the Date of Termination
a Release, Covenant Not to Xxx, Non-Disclosure and Non-Solicitation Agreement
executed by the Executive (or the Executive's legal representative, in the event
of the death or Disability of the Executive), in the form set forth in Exhibit A
to this Agreement (the "Release Agreement"), and that such Release Agreement be
effective:
(a) The Company or a Subsidiary will pay to the Executive as
compensation for services rendered, promptly following the effective date of the
Release Agreement, a lump sum cash amount (subject to any applicable payroll or
other taxes required to be withheld computed at the rate for supplemental
payments) equal to (X) the sum of (i) three (3) times the Executive's Base
Salary, plus (ii) three (3) times the Executive's Bonus Amount, less (Y) the
aggregate lump sum cash severance amount in respect of base salary and bonus
pursuant to subparagraphs 5(a)(i) and (v) of the Company's Executive Severance
Plan (or any successor provision) payable to the Executive upon termination of
employment, delivery by the Executive of the Release, Covenant Not to Xxx,
Non-Disclosure and Non-Solicitation Agreement referred to therein, and the
expiration of all periods during which the Executive may revoke any release of
claims in such agreement.
(b) The Executive will be entitled to receive "Special
Retirement Benefits" as provided herein, so that the total retirement benefits
the Executive receives from the Company will approximate the total retirement
benefits the Executive would have received under all defined benefit retirement
plans (which may include non-qualified, supplemental and excess benefits
retirement plans but shall not include severance plans) and other employment
contracts of the Company and its Subsidiaries in which the Executive
participates were the Executive fully vested under such retirement plans and
entitled to all benefits payable under such other employment contracts and had
the Executive continued in the employ of the Company or a Subsidiary for one
hundred twenty (120) months following the Date of Termination or until the
Executive's Normal Retirement Date, if earlier (provided that such additional
period shall be inclusive of and shall not be in addition to any period of
service credited under any severance plan of the Company or a Subsidiary). The
benefits specified in this subparagraph will include all ancillary benefits,
such as early retirement and survivor rights. The amount payable to the
Executive or the Executive's beneficiaries under this subparagraph shall equal
the excess of (1) the retirement benefits that would be paid to the Executive or
the Executive's beneficiaries, under all retirement plans and other employment
contracts of the Company and its Subsidiaries in which the Executive
participates if (A) the Executive were fully vested under such plans and
entitled to all benefits payable under such other employment contracts, (B) the
one hundred twenty (120) month period (or the period until the Executive's
Normal Retirement Date, if less) following the Date of Termination were added to
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the Executive's credited service under such plans and contracts, (C) the terms
of such plans and the policies and procedures by which such plans were
administered were those most favorable to the Executive which were in effect at
any time during the period commencing twelve (12) months prior to the Change of
Control and ending on the date of Notice of Termination, and (D) the Executive's
highest average annual base salary as defined under such retirement plans and
other employment contracts and any cash bonus which under the terms of such plan
or contract is used to calculate benefits thereunder were calculated as if the
Executive had been employed by the Company or a Subsidiary for a one hundred and
twenty (120) month period (or the period until the Executive's Normal Retirement
Date, if earlier) following the Date of Termination and had the Executive's
salary and cash bonus during such period been equal to the Executive's Base
Salary and Bonus Amount; over (2) the retirement benefits that are payable to
the Executive or the Executive's beneficiaries under all retirement plans and
other employment contracts of the Company and its Subsidiary in which the
Executive participates. These Special Retirement Benefits are provided on an
unfunded basis, are not intended to meet the qualification requirements of
Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"), and
shall be payable solely from the general assets of the Company. These Special
Retirement Benefits shall be payable at the times and in the manner provided in
the applicable retirement plans and other employment contracts to which they
relate, or at the election of the Executive they shall be paid in a lump sum
actuarial equivalent utilizing the actuarial assumptions of the defined benefit
pension plan applicable to the Executive.
(c)(i) As used herein, "Welfare Plans" shall mean the medical,
dental, vision, life, dependent life, personal accident, employee banking
services, and educational matching gift plans of the Company or a Subsidiary in
which the Executive was participating at the Date of Termination, and shall not
include disability, tuition reimbursement, medical and dependent care spending
plans, and business travel accident plans. The Executive will remain an active
participant in all Welfare Plans with the Executive's Base Salary used as the
basis for determining the level of benefits, for a period of thirty-six (36)
months after the Date of Termination or until the Participant's Normal
Retirement Date, if earlier; provided, however, that if employee contributions
are generally required by any such plan the Executive pays to the Company or
Subsidiary an amount equal to the required contribution, if any, which such
plans provide are to be made by employees of status and seniority comparable to
the status and seniority of the Executive at the Date of Termination, which
amounts shall be paid by the Executive at the time or times required by such
plans for employee contributions, and further provided, that the benefits
provided shall be reduced by any benefits provided under post-retirement benefit
programs (such as retiree life insurance) of the Company or a Subsidiary. In the
event applicable law or the terms of any such Welfare Plan do not permit
continued participation by the Executive, then the Company or a Subsidiary will
arrange to provide the Executive with benefits substantially similar to and no
less favorable than the benefits the Executive was entitled to receive under
such Welfare Plan at any time during the period commencing twelve (12) months
prior to the Change of Control and ending on the date of Notice of Termination
for a period terminating thirty-six (36) months after the Date of Termination;
provided, however, that if employee contributions are generally required by any
such plan the Executive pays to the Company or Subsidiary an amount equal to the
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required contribution, if any, which such plans provide are to be made by
employees of status and seniority comparable to the status and seniority of the
Executive at the Date of Termination, which amounts shall be paid by the
Executive at the time or times required by such plans for employee
contributions.
(ii) In lieu of continued participation in the Company or a
Subsidiary's disability plans, in the event that the Executive becomes disabled
during the period of participation in Welfare Plans provided for herein, as
determined by approval for disability benefits under the federal Social Security
program, the Company or Subsidiary shall make direct payments to the Executive
commencing upon termination of participation in the Welfare Plans hereunder and
under any Severance Plan and during the continuation of such disability, as
determined under the federal Social Security program of the amounts and for the
periods the Executive would have received benefits under the Company or
Subsidiary's long-term disability plan (after taking into account any offsets to
income under such plan) as if the Executive had qualified for long-term
disability payments under the Company or Subsidiary's long-term disability plan
immediately prior to the Date of Termination.
(iii) The continuation of welfare benefits provided by this
subparagraph 4(c) shall be inclusive of any period of welfare benefits
continuation provided by any severance plan or other contract of the Company or
a Subsidiary, it being the intention of the parties that the Executive shall
receive continuation of welfare benefits for the longest period provided by any
severance plan or contract and this Agreement, not the sum of the periods
provided in various severance plans and contracts and this Agreement.
(iv) If any benefits provided hereunder are provided outside
of a Welfare Plan and would have been tax-exempt or tax-favored to the Executive
if provided under a Welfare Plan, the Company or Subsidiary shall make
additional payments to the Executive in reimbursement of taxes in order to put
the Executive in the same after tax position as if the benefits had been
provided under a Welfare Plan.
(v) In the event the Executive becomes employed with
another employer and becomes eligible
to receive welfare benefits under plans provided by such employer, the welfare
benefits provided hereunder shall be secondary to those provided under such
other plans.
(vi) After the Date of Termination the Executive may also
participate in those post-retirement benefit programs under which the Executive
meets the qualifications, which qualifications may include contributions by the
Executive and appropriate elections at the Date of Termination.
5. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) In the event that any payment or benefit received or to be received
by the Executive pursuant to the terms of this Agreement (the "Contract
Payments") or of any other plan, arrangement or agreement of the Company (or any
affiliate) ("Other Payments" and, together with the Contract Payments, the
"Payments") would, in the opinion of independent tax counsel selected by the
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Company and reasonably acceptable to the Executive ("Tax Counsel"), be subject
to the excise tax (the "Excise Tax") imposed by section 4999 of the Code (in
whole or in part), as determined as provided below, then, unless subparagraph
5(e) below is applicable, the Company shall pay to the Executive, at the time
specified in subparagraph 5(b) hereof, an additional amount (the "Offset
Payment") such that the net amount retained by the Executive, after deduction of
the Excise Tax on the Payments and any federal, state and local income tax and
Excise Tax upon the payment provided for by this subparagraph 5(a), and any
interest, penalties or additions to tax payable by the Executive with respect
thereto, shall be equal to the total present value of the Contract Payments and
Other Payments at the time such Payments are to be made. For purposes of
determining whether any of the Payments will be subject to the Excise Tax and
the amounts of such Excise Tax, (1) the total amount of the Payments shall be
treated as "parachute payments" within the meaning of section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to
the extent that, in the opinion of Tax Counsel, a Payment (in whole or in part)
does not constitute a "parachute payment" within the meaning of section
280G(b)(2) of the Code, or such "excess parachute payments" (in whole or in
part) are not subject to the Excise Tax, (2) the amount of the Payments that
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Payments or (B) the amount of "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code (after applying
clause (1) hereof), and (3) the value of any noncash benefits or any deferred
payment or benefit shall be determined by Tax Counsel in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Offset Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rates of federal income
taxation applicable to individuals in the calendar year in which the Offset
Payment is to be made and state and local income taxes at the highest marginal
rates of taxation applicable to individuals as are in effect in the state and
locality of the Executive's residence in the calendar year in which the Offset
Payment is to be made, net of the maximum reduction in federal income taxes that
can be obtained from deduction of such state and local taxes, taking into
account any limitations applicable to individuals subject to federal income tax
at the highest marginal rates.
(b) The Offset Payments provided for in subparagraph 5(a) hereof shall
be made upon the earlier of (i) the payment to the Executive of any Contract
Payment or Other Payment or (ii) the imposition upon the Executive or payment by
the Executive of any Excise Tax.
(c) If it is established pursuant to a final determination of a court
or an Internal Revenue Service proceeding or the opinion of Tax Counsel that the
Excise Tax is less than the amount taken into account under subparagraph 5(a)
hereof, the Executive shall repay to the Company within five days of the
Executive's receipt of notice of such final determination or opinion the portion
of the Offset Payment attributable to such reduction (plus the portion of the
Offset Payment attributable to the Excise Tax and federal, state and local
income tax imposed on the Offset Payment being repaid by the Executive if such
repayment results in a reduction in Excise Tax or a federal, state and local
income tax deduction) plus any interest received by the Executive from the
taxing authorities on the amount of such repayment. If it is established
pursuant to a final determination of a court or an Internal Revenue Service
proceeding or the opinion of Tax Counsel that the Excise Tax exceeds the amount
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taken into account hereunder (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Offset Payment), the
Company shall make an additional Offset Payment in respect of such excess within
five days of the Company's receipt of notice of such final determination or
opinion.
(d) In the event of any change in, or further interpretation of,
sections 280G or 4999 of the Code and the regulations promulgated thereunder
subsequent to a Change in Control, the Executive shall be entitled, by written
notice to the Company, to request an opinion of Tax Counsel regarding the
application of such change to any of the foregoing, and the Company shall use
its best efforts to cause such opinion to be rendered as promptly as
practicable. All fees and expenses of Tax Counsel incurred in connection with
this Agreement shall be borne by the Company.
(e) If in the opinion of Tax Counsel the Company would not be required
to make an Offset Payment if the Payments to the Executive that would be treated
as "parachute payments" under Section 280G of the Code were reduced by up to
$50,000, then the amounts payable to the Executive under this Agreement shall be
reduced (but not below zero) to the maximum amount that could be paid to the
Executive without giving rise to the Excise Tax (the "Safe Harbor Cap") and no
Offset Payment shall be required to be made to the Executive. The reduction of
the amounts payable under this Agreement, if applicable, shall be made by
reducing first the payments under paragraph 4(a) above, unless an alternative
method of reduction is elected by the Executive. For purposes of reducing the
Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and
no other Payments) shall be reduced. If the reduction of the amounts payable
hereunder by an amount not exceeding $50,000 would not result in a reduction of
the Payments to the Safe Harbor Cap, no amounts payable under this Agreement
shall be reduced pursuant to this provision.
6. GENERAL.
(a) The Company or a Subsidiary shall pay promptly as incurred the
Executive's reasonable attorney's fees and expenses incurred in good faith by
the Executive as a result of any dispute (regardless of the outcome thereof)
with the Company or a Subsidiary or any other party regarding the validity or
enforceability of, or liability under, any provision of this Agreement or the
act of any party thereunder or any guarantee of performance thereof and pay
prejudgment interest on any delayed payment to the Executive calculated at the
Summit Bank, New Jersey base rate of interest in effect from time to time from
the date that payment should have been made under this Agreement; provided,
however, that the Executive shall not have been found by the court to have acted
in bad faith. Any finding of bad faith must be final with the time to appeal
therefrom having expired and no appeal having been perfected.
(b) The Company's obligation to pay the Executive (or the Executive's
dependents, beneficiaries or estate) the compensation and to make the
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arrangements provided herein shall be absolute and unconditional and shall not
be affected by any circumstance, including, without limitation, any set off,
counterclaim, recoupment, defense or other right which the Company may have
against the Executive or anyone else. All amounts payable by the Company
hereunder shall be paid without notice or demand. Except as expressly provided
herein, the Company waives all rights which it may now have or may hereafter
have conferred upon it, by statute or otherwise, to terminate, cancel or rescind
this Agreement in whole or in part. Except as provided in paragraphs 3(f) and
5(c) herein, each and every payment made hereunder by the Company shall be final
and the Company will not seek to recover for any reason all or any part of such
payment from the Executive or any person entitled thereto. The Executive shall
not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by written agreement to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
paragraph 6 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(d) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to the Executive hereunder if the
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designee or, if there be no such designee,
to the Executive's estate. The obligations of the Executive hereunder shall not
be assignable by the Executive.
(e) The Executive's rights under this Agreement shall be
non-transferable except by will or by the laws of descent and distribution and
except insofar as applicable law may otherwise require. Subject to the
foregoing, no right, benefit or interest hereunder shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall,
to the full extent permitted by law, be null, void and of no effect.
7. NOTICE.
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, or if delivered
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personally or by courier, receipt requested, or by facsimile transmission,
receipt acknowledged, addressed as follows:
If to the Executive:
Xxxxx X. Xxxxx
If to the Company:
Summit Bancorp.
301 Carnegie Center
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Secretary to the Board
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing, signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No assurances or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the law of
the State of New Jersey.
9. FINANCING.
All amounts due and benefits provided under this Agreement shall
constitute general obligations of the Company or Subsidiary employing the
Executive in accordance with the terms of this Agreement. The Executive shall
have only an unsecured right to payment thereof out of the general assets of the
Company or such Subsidiary. Notwithstanding the foregoing, the Company or such
Subsidiary may, by agreement with one or more trustees to be selected by the
Company or such Subsidiary, create a trust on such terms as the Company or such
Subsidiary shall determine to make payments to the Executive in accordance with
the terms of this Agreement.
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10. VALIDITY.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect. Any provision in this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating or affecting the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
11. SUPERSEDEAS.
While this Agreement is in addition to and not in lieu of any other
plan providing for payments to or benefits for the Executive or any agreement
now existing or which hereafter may be entered into between the Company and the
Executive, this Agreement supersedes all prior agreements and understandings of
the parties hereto with respect to the Company's severance obligations to the
Executive and any other similar payments to the Executive due upon termination
of employment other than those agreements and understandings contained in the
Company's Executive Severance Plan or specifically provided for in any
employment contract between the Company and the Executive. This agreement
supersedes the Employment Agreement between Prime Bancorp, Inc. and Executive
dated December __, 1995 other than the terms of such agreement relating to your
stock options, and any other agreements and understandings relating to the
employment contracts with or severance benefits payable by Prime Bancorp, Inc.
or Prime Bank, which, except as aforesaid, are hereby cancelled and null and
void as of the effective date of this Agreement. The merger of Prime Bancorp,
Inc. with the Company does not constitute a Change in Control for the purposes
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date set forth above.
SUMMIT BANCORP. EXECUTIVE
By: ______________________________ _____________________________
Xxxxxxx X. Xxxx, Xx., Secretary Xxxxx X. Xxxxx
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