Agreement And Plan Of Merger

AGREEMENT AND PLAN OF MERGER


AGREEMENT AND PLAN OF MERGER dated May 22, 1996, between Summit Bancorp., a New Jersey business corporation ("Summit"), and Central Jersey Financial Corporation, a New Jersey business corporation ("Central Jersey").


W I T N E S S E T H :


WHEREAS, the respective boards of directors of Summit and Central Jersey deem it advisable and in the best interests of their respective shareholders to merge Central Jersey into Summit ("Merger") pursuant to the laws of the State of New Jersey and this Agreement and Plan of Merger ("Agreement");


WHEREAS, the Board of Directors of Summit and Central Jersey have each determined that the Merger and the other transactions contemplated hereby are consistent with, and in furtherance of, their respective business strategies and goals;


WHEREAS, to effectuate the Merger, the parties hereby adopt a plan of reorganization in accordance with the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended ("Code");


WHEREAS, Summit and Central Jersey intend on the date after the date of this Agreement and in consideration of this Agreement to enter into the Stock Option Agreement ("Option Agreement") attached hereto as Exhibit A; and


WHEREAS, the parties desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe certain other terms and conditions of the Merger.


NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein and in the Option Agreement, the parties hereto, intending to be legally bound, agree as follows:


ARTICLE I.


GENERAL PROVISIONS


Section 1.01. The Merger.


(a) Upon the terms and subject to the conditions contained in this Agreement, at the Effective Time (as defined at Section 1.06), Central Jersey shall be merged with and into Summit pursuant to and in accordance with the provisions of, and with the effect provided in, the New Jersey Business Corporation Act, as amended ("New Jersey Act") (Summit as the surviving corporation being hereinafter sometimes referred to as the "Surviving Corporation").


Section 1.02. Capital Stock of Summit. All shares of the capital stock of Summit outstanding immediately prior to the Effective Time shall be unaffected by the Merger and shall remain outstanding immediately thereafter.


Section 1.03. Terms of Conversion of Central Jersey Capital Stock.


(a) At the Effective Time, by virtue of the Merger and without any action on the part of any shareholder of Central Jersey:


(1) All shares of the Common Stock, no par value, of Central Jersey
("Central Jersey Stock") which immediately prior to the Effective
Time are either owned beneficially by Summit or a subsidiary of
Summit (other than Central Jersey Stock held in a fiduciary capacity
or as a result of debts previously contracted), if any, or held in
the treasury of Central Jersey, if any, shall be canceled and retired
and no cash, securities or other consideration shall be paid or
delivered under this Agreement in exchange for such Central Jersey
Stock; and


(2) Subject to Sections 1.03(a)(1), 1.03(a)(3) and 1.08, each share of
Central Jersey Stock outstanding immediately prior to the Effective
Time shall be converted at the Exchange Ratio (as determined in
accordance with this Section 1.03(a)(2)) into the Common Stock, par
value $1.20 per share, of Summit ("Summit Stock"). In the event the
Average Price (as defined in Section 1.03(b) below) is:


(i) equal to or greater than $32.57, the Exchange Ratio shall be
.875 shares of Summit Stock for each share of Central Jersey
Stock; or


(ii) less than $32.57 but equal to or greater than $28.75, the Board
of Directors of Central Jersey shall have the right, exercisable
only until 11:59 p.m. on the third business day following the
Determination Date (as defined in Section 9.01), to terminate
this Agreement by giving Summit notice of such termination,
referring to this Section 1.03(a)(2)(ii), and this Agreement
shall be terminated pursuant to such notice, effective as of
11:59 p.m. on the third business day following receipt of such
notice by Summit, unless Summit shall, prior to 11:59 p.m. on
the third business day following receipt of such termination
notice, send notice to Central Jersey agreeing that the Exchange
Ratio shall be equal to the quotient obtained by dividing $28.50
by the Average Price, whereupon the Exchange Ratio shall be such
number (rounded to the fourth decimal place) of shares of Summit
Stock for each share of Central Jersey Stock.


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(3) In the event the Average Price is less than $28.75, the Board of
Directors of Central Jersey 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 1.03(a)(3), and
this Agreement shall be terminated pursuant to such notice, effective
upon receipt of such notice by Summit.


(b) For purposes of this Agreement:


(1) "Average Price" means the average (rounded to the nearest penny) of
the closing prices of a share of Summit Stock on the New York Stock
Exchange - Composite Transactions Tape for the 10 consecutive trading
days ending on the Determination Date as reported in The Wall Street
Journal, or if not reported therein, as reported in an authoritative
source mutually agreeable to Summit and Central Jersey.


(2) "business day" shall mean a calendar day other than a Saturday, a
Sunday or the weekdays that member banks of the Federal Reserve Board
(as defined at Section 4.01) are permitted to close pursuant to
regulations of the Federal Reserve Board.


(c) 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 occurs other like changes in the outstanding shares of Summit Stock, the Exchange Ratio and, if necessary, the form and amount of Summit capital stock issuable in the Merger in exchange for Central Jersey Stock shall be appropriately adjusted so that Central Jersey shareholders who are entitled to receive Summit Stock pursuant to the provisions hereof shall be entitled to receive such number of shares of Summit Stock or other stock as they would have received if the Effective Time had occurred prior to the happening of such event.


Section 1.04. Reservation of Summit Stock; Issuance of Shares Pursuant to the Merger. Summit shall reserve and make available for issuance to holders of Central Jersey Stock in connection with the Merger, on the terms and subject to the conditions of this Agreement, sufficient shares of Summit Stock (which shares, when issued and delivered, will be duly authorized, legally and validly issued, fully paid and non-assessable and subject to no preemptive rights). The shares of Summit Stock to be issued in accordance with this Agreement are sometimes referred to herein as the "Shares". Upon the terms and subject to the conditions of this Agreement, including the conversion of Central Jersey Stock according to the Exchange Ratio, Summit shall issue the Shares upon the effectiveness of the Merger to Central Jersey Shareholders (as defined in Section 1.07).


Section 1.05. Exchange Agent Arrangements. Prior to the Effective Time, Summit shall appoint First Chicago Trust Company of New York, or another entity reasonably satisfactory to Central Jersey, as the exchange agent ("Exchange Agent") responsible for exchanging, in connection with and upon consummation of the Merger and subject to Sections 1.03 and 1.08, certificates


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representing whole shares of Summit Stock ("Summit Certificates") and cash in lieu of fractional shares of Summit Stock for certificates representing shares of Central Jersey Stock ("Central Jersey Certificates") and, upon the effectiveness of the Merger, Summit shall deliver to the Exchange Agent sufficient Summit Certificates and cash as shall be required to satisfy Summit's obligations to Central Jersey Shareholders hereunder.


Section 1.06. Effective Time. The Merger shall be effective at the hour and on the date ("Effective Time") specified in the Certificate of Merger of Summit and Central Jersey required by this Agreement to be filed with the Secretary of State of the State of New Jersey in accordance with Section 14A:10-4.1 of the New Jersey Act ("Certificate of Merger"). Summit shall file the Certificate of Merger as promptly as practicable following the Closing (as defined at Section 9.01) but in no event later than one business day following the Closing Date (as defined at Section 9.01).


Section 1.07. Exchange of Central Jersey Certificates.


(a) After the Effective Time, each Central Jersey Shareholder (except Summit to the extent provided in Section 1.03), upon surrender of all Central Jersey Certificates to the Exchange Agent, shall be entitled to receive in exchange therefor a Summit Certificate representing the number of whole shares of Summit Stock such Central Jersey Shareholder is entitled to receive pursuant to the conversion effected by Section 1.03 and the terms of Section 1.08 and the cash payment (by check) such Central Jersey Shareholder may be entitled, pursuant to Section 1.08, to receive in lieu of a fractional share of Summit Stock. Until so surrendered, outstanding Central Jersey Certificates held by each Central Jersey Shareholder, other than Central Jersey Stock not converted pursuant to Section 1.03, shall be deemed for all purposes (other than as provided below with respect to unsurrendered Central Jersey Certificates and Summit's right to refuse payment of dividends or other distributions, if any, in respect of Summit Stock) to represent the number of whole shares of Summit Stock into which the shares of Central Jersey Stock have been converted and the right to receive cash in lieu of fractional shares of Summit Stock, if any, all as provided in Section 1.08. Until so surrendered, Summit may, at its option, refuse to pay to the holders of the unsurrendered Central Jersey Certificates dividends or other distributions, if any, payable to holders of Summit Stock; provided, however, that upon the surrender and exchange of Central Jersey Certificates following a dividend or other distribution by Summit there shall be paid to such Central Jersey Shareholders the amount, without interest, of dividends and other distributions, if any, which became payable prior thereto but which were not paid.


(b) Holders of Central Jersey Certificates as of the Effective Time shall cease to be, and shall have no further rights as, shareholders of Central Jersey.


(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 Central Jersey Stock as of the Effective Time ("Central Jersey Shareholders") (including the address and social security number of and the number of shares of Central Jersey Stock held by each Central Jersey Shareholder) from Central Jersey ("Final Shareholder List"), Summit shall cause the Exchange Agent


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to send to each Central Jersey Shareholder instructions and transmittal materials for use in surrendering and exchanging Central Jersey Certificates for the Merger Consideration (as defined in Section 1.08 below). If Central Jersey 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 Central Jersey cause the Exchange Agent to cancel and exchange Central Jersey Certificates for Summit Certificates and Cash In Lieu Amounts (as defined in Section 1.08 below), if any.


(d) At and after the Effective Time there shall be no transfers on the stock transfer books of Central Jersey of the shares of Central Jersey Stock which were outstanding immediately prior to the Effective Time.


Section 1.08. Fractional Shares. All Central Jersey Stock held in the aggregate by each Central Jersey Shareholder shall be multiplied by the Exchange Ratio to determine the number of shares of Summit Stock each such Central Jersey Shareholder is entitled to receive in the Merger. Each Central Jersey Shareholder shall be entitled to receive a Summit Certificate for the number of whole shares of Summit Stock resulting from such multiplication and cash in lieu of any fractional share of Summit Stock resulting from such multiplication in an amount ("Cash In Lieu Amount") determined by multiplying the fractional share interest to which such Central Jersey Shareholder would otherwise be entitled by the Average Price. The Shares and any Cash In Lieu Amounts payable in the Merger are sometimes collectively referred to herein as the "Merger Consideration".


Section 1.09. Restated Certificate of Incorporation and By-Laws. The Restated Certificate of Incorporation of Summit in force immediately prior to the Effective Time shall be the Restated Certificate of Incorporation of the Surviving Corporation, except as duly amended thereafter and except to the extent such is affected by the Certificate of Merger. The By-Laws of Summit in force immediately prior to the Effective Time shall be the By-Laws of the Surviving Corporation, except as duly amended thereafter.


Section 1.10. Board of Directors and Officers. The Board of Directors of the Surviving Corporation shall consist of the members of the Board of Directors of Summit at the Effective Time. The officers of the Surviving Corporation shall consist of the officers of Summit at the Effective Time. Such directors and officers shall serve as such for the terms prescribed in the Restated Certificate of Incorporation and By-Laws of Summit, or otherwise as provided by law or until their earlier deaths, resignation or removal.


Section 1.11. Central Jersey Stock Options.


(a) At the Effective Time, each holder of a Central Jersey Option (as defined below) shall be entitled to receive, in exchange for such Central Jersey Options, at the election of such holder, either:


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(i) cash equal to the Cash Value (as defined below) of the particular
Central Jersey Option ("Cash Amount"); or


(ii) (A) the whole shares of Summit Stock obtained by dividing the Cash
Value of the particular Central Jersey Option by the Market Price of
a share of Summit Stock, and (B) cash in lieu of any fractional
share of Summit Stock resulting from such division determined by
multiplying such fractional share amount by the Market Price of a
share of Summit Stock (collectively, the "Stock Consideration").


Holders of Central Jersey Options shall deliver to Summit at the Closing (as defined at Section 9.01) an election to receive under this Section 1.11 either a Cash Amount or the Stock Consideration with respect to all Central Jersey Options held by such holder and holders failing to deliver such an election at the Closing shall be deemed to have elected to receive the Cash Amount with respect to all Central Jersey Options held by such holder. Summit shall send, no later than ten business days following the Effective Time, to each holder of a Central Jersey Option, as appropriate, (i) a check representing the aggregate Cash Value such holder may be entitled to receive pursuant to this Section 1.11, or (ii) a certificate representing the aggregate whole shares of Summit Stock such holder may be entitled to receive pursuant to this Section 1.11 and a check representing any cash such holder may be entitled to receive pursuant to this Section 1.11 in lieu of a fractional share of Summit Stock; provided, however, that with respect to individuals holding more than one Central Jersey Option the aggregate whole shares of Summit Stock such holder is entitled to receive shall be determined by adding together the Cash Values of all such Central Jersey Options and dividing the resultant sum by the Market Price of a share of Summit Stock and cash such holder is entitled to receive shall be determined by multiplying the fractional share interest resulting from such division by the Market Price of a share of Summit Stock. The Central Jersey Options which become subject to this Section 1.11 shall be deemed terminated as of the Closing Date (as defined at Section 9.01) and Central Jersey shall not on or after the Closing Date issue Central Jersey Stock upon any attempted exercise of such Central Jersey Option. Central Jersey shall deliver to Summit at Closing a list of all Central Jersey Options (including the address and social security number of each holder thereof and the Central Jersey Options held by such holder broken down by plan, type (incentive or nonqualified), grant date, expiration date, exercise price and the number of shares of Central Jersey Stock subject thereto).


(b) For purposes of this Section 1.11:


(1) "Central Jersey Option" is hereby defined to mean a stock option for Central Jersey Stock outstanding on the date hereof granted under the Central Jersey 1993 Stock Option and Incentive Plan or Central Jersey Non-Employee Director Stock Option Plan ("Central Jersey Option Plans") or pursuant to Section 4.05(g), and not subsequently exercised, terminated or expired prior to the Closing Date.


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(2) "Cash Value" of a Central Jersey Option is hereby defined to be the amount obtained by multiplying (A) the number of Summit Equivalent Shares (as defined below) represented by the particular Central Jersey Option, times (B) the difference obtained by subtracting the Summit Equivalent Exercise Price (as defined below) of the particular Central Jersey Option from the Market Price (as defined below) of a share of Summit Stock;


(3) "Market Price" of a share of Summit Stock is hereby defined to mean the last sale price of a share of Summit Stock on the last trading day immediately preceeding the Closing Date as reported on the New York Stock Exchange--Composite Transactions List (by The Wall Street Journal or, in the event of its unavailability, by any other authoritative source agreeable to Summit and Central Jersey).


(4) "Summit Equivalent Shares" is hereby defined to mean the number obtained by multiplying the number of shares of Central Jersey Stock covered by a particular Central Jersey Option times the Exchange Ratio.


(5) "Summit Equivalent Exercise Price" is hereby defined to mean the number obtained by dividing the exercise price of the particular Central Jersey Option by the Exchange Ratio.


Section 1.12. Additional Actions. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of Central Jersey acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of Central Jersey or otherwise, all such deeds, bills of sale, assignments and assurances and to take, in the name and on behalf of Central Jersey, 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 13. Unclaimed Merger Consideration. If, upon the expiration of one year following the Effective Time, Merger Consideration remains with the Exchange Agent due to the failure of Central Jersey Shareholders to surrender and exchange Central Jersey Certificates for Merger Consideration, Summit may, at its election, continue to retain the Exchange Agent for purposes of the surrender and exchange of Central Jersey Certificates or take possession of such unclaimed Merger Consideration, in which such latter case, Central Jersey Shareholders who have theretofore failed to surrender and exchange Central Jersey Certificates shall thereafter look only to Summit for payment of the Merger Consideration and the unpaid dividends and distributions on the Summit Stock constituting some or all of the Merger Consideration, without any interest thereon. Notwithstanding the foregoing, none of Summit, Central Jersey, the Exchange Agent or any other person shall be liable to any former holder of shares of Central Jersey Stock for any property properly


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delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.


Section 14. Lost Central Jersey Certificates. In the event any Central Jersey Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Central Jersey Certificate to be lost, stolen or destroyed and, if required by Summit, the posting by such person of a bond in such amount as Summit may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such Central Jersey Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Central Jersey Certificate the Merger Consideration deliverable in respect thereof pursuant to this Agreement.


Section 15. Liquidation Account. The liquidation account established by Central Jersey pursuant to the plan of conversion adopted in connection with its conversion from mutual to stock form shall, to the extent required by applicable law, continue to be maintained after the Effective Time for the benefit of those persons and entities who were savings account holders of Central Jersey on March 31, 1984, and who continue from time to time to have rights therein.


ARTICLE II.


REPRESENTATIONS AND WARRANTIES OF CENTRAL JERSEY


Central Jersey represents and warrants to Summit as follows:


Section 2.01. Organization, Capital Stock.


(a) Each of Central Jersey and its nonbank subsidiaries, including the nonbank subsidiaries of bank subsidiaries (the term "subsidiary", as used in this Agreement, shall mean any corporation or other organization of which 25% or more of the shares or other interests having by their terms ordinary voting power to elect a majority of the Board of Directors or other group performing similar functions with respect to such corporation or other organization is directly or indirectly owned), all of which are listed, together with their respective states of incorporation, on Central Jersey Schedule 2.01(a), is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, qualified to transact business in under the laws of all jurisdictions where the failure to be so qualified would be likely to have a material adverse effect on (i) the business, results of operations, assets or financial condition of Central Jersey and its subsidiaries on a consolidated basis, or (ii) the ability of Central Jersey to perform its obligations under, and to consummate the transactions contemplated by, this Agreement (a "Central Jersey Material Adverse Change"). However, a Central Jersey Material Adverse Change will not include a change resulting from a change in law, rule, regulation or generally accepted or regulatory accounting principles, or from any other matter affecting banking institutions or their holding companies generally. Each of Central Jersey and its 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


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lease its properties, 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) Central Jersey is registered as a unitary savings and loan holding company under the Home Owners' Loan Act of 1933 ("HOLA").


(c) Central Jersey or one of its subsidiaries is the holder and beneficial owner of all of the outstanding capital stock of all of Central Jersey's direct and indirect nonbank subsidiaries.


(d) (1) The authorized capital stock of Central Jersey consists of 25,000,000 shares of Common Stock, each of no par value, and 15,000,000 shares, each of no par value, of Preferred Stock, and as of the date hereof there were issued and outstanding 2,668,269 shares of the Common Stock of Central Jersey and no shares of the Preferred Stock of Central Jersey.


(2) All issued and outstanding shares of the capital stock of Central Jersey and of each of its nonbank subsidiaries have been fully paid, were duly authorized and validly issued, are non-assessable and have been issued pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") or an appropriate exemption from registration under the Securities Act and were not issued in violation of the preemptive rights of any shareholder.


(3) Except as set forth above in this Section 2.01(d) or in Section 2.01(a), except for director and employee stock options outstanding under the Central Jersey Option Plans and except for Central Jersey Stock issuable in connection with the Central Jersey Option Plans, there are no other Equity Securities of Central Jersey or any subsidiary of Central Jersey outstanding, in existence, the subject of an agreement or reserved for issuance.


(4) "Equity Securities" of an issuer means capital stock or other equity securities of such issuer, options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into, shares of any capital stock or other Equity Securities of such issuer, or contracts, commitments, understandings or arrangements by which such issuer is or may become bound to issue additional shares of its capital stock or other Equity Securities of such issuer, or options, warrants, scrip or rights to purchase, acquire, subscribe to, calls on or commitments for any shares of its capital stock or other Equity Securities.


(5) There are no plans of Central Jersey providing for the granting of stock options, stock appreciation rights or other securities or derivative securities to directors or employees other than the Central Jersey Option Plans. The Central Jersey Option Plans, including all amendments thereto, have been approved by the shareholders of Central Jersey in accordance with the shareholder approval requirements of the Code and Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Copies of the Central Jersey Option Plans, including all amendments thereto, have been previously provided ...