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1
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION DATED APRIL 12, 2007
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AGREEMENT AND PLAN OF REORGANIZATION
dated as of April 12, 2007
by and between
SUMMIT FINANCIAL GROUP, INC.
AND
GREATER ATLANTIC FINANCIAL CORP.
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TABLE OF CONTENTS
PAGE
ARTICLE I Certain
Definitions..............................................1
1.01
Certain Definitions.......................................1
ARTICLE II The
Merger......................................................7
2.01
The Merger................................................7
2.02
Effective Date and Effective Time.........................7
ARTICLE III The Bank
Merger................................................8
3.01
The Bank Merger...........................................8
3.02
Effective Date and Effective Time.........................8
ARTICLE IV
Consideration; Exchange
Procedures..............................9
4.01
Merger Consideration......................................9
4.02
Rights as Stockholders; Stock Transfers..................10
4.03
Fractional Shares........................................10
4.04
Exchange Procedures......................................10
4.05
Options..................................................12
4.06
Warrants.................................................12
4.07
Dissenters' Rights.......................................12
ARTICLE V Actions
Pending the Effective Time..............................13
5.01
Forebearances of GAFC....................................13
5.02
Forebearances of Summit..................................15
ARTICLE VI
Representations and
Warranties.................................15
6.01
Disclosure Schedules.....................................15
6.02
Standard.................................................16
6.03
Representations and Warranties of GAFC...................16
6.04
Representations and Warranties of Summit.................25
ARTICLE VII
Covenants.....................................................33
7.01
Reasonable Best Efforts..................................33
7.02
Stockholder Approval.....................................33
7.03
Registration Statement...................................33
7.04 Press
Releases...........................................34
7.05
Access; Information......................................34
7.06
Acquisition Proposals....................................35
7.07
Affiliate Agreements.....................................35
7.08
Takeover Laws............................................35
7.09
Certain Policies.........................................35
7.10
Regulatory Applications..................................36
7.11
Indemnification..........................................36
7.12
Benefit Plans............................................37
7.13
Notification of Certain Matters..........................38
7.14
Current Public Information...............................38
7.15
Contractual Rights of Current Employees..................38
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7.16
GAFC Trust Preferred Securities.............................38
7.17
Transition..................................................38
ARTICLE VIII
Conditions to Consummation of the
Merger........................39
8.01
Conditions to Each Party's Obligation to Effect the Merger..39
8.02
Conditions to
Obligation of GAFC............................40
8.03
Conditions to Obligation of Summit..........................40
ARTICLE IX
Termination.......................................................41
9.01
Termination.................................................41
9.02
Effect of Termination and Abandonment.......................42
9.03
Fees and Expenses...........................................42
ARTICLE X
Miscellaneous......................................................43
10.01
Survival....................................................43
10.02
Waiver; Amendment...........................................43
10.03
Counterparts................................................43
10.04
Governing Law...............................................43
10.05
Expenses....................................................43
10.06
Notices.....................................................43
10.07
Entire Understanding; No Third Party Beneficiaries..........44
10.08
Interpretation; Effect......................................44
ANNEX A.
FORM OF SUPPLEMENT FOR MERGER SUB ACCESSION
TO
MERGER AGREEMENT
EXHIBIT A.
FORM OF GAFC AFFILIATE LETTER
ii
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AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 12,
2007 (this "Agreement"), by and between GREATER ATLANTIC FINANCIAL
CORP.
("GAFC") and SUMMIT FINANCIAL GROUP, INC. ("Summit").
RECITALS
A. GAFC. GAFC is a Delaware corporation, having its principal
----
place of business in Reston, Virginia.
B. Summit. Summit is a West Virginia corporation, having its
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principal place of business in Charleston, West Virginia.
C. Intentions of the Parties. It is the intention of the
-------------------------
parties to this Agreement that the business combination
contemplated hereby be
treated as a "reorganization" under Section 368 of the Internal
Revenue Code of
1986, as amended.
D. Board Action. The respective Boards of Directors of each of
------------
Summit and GAFC have determined that it is advisable and in the
best interests
of their respective companies and their stockholders to consummate
the strategic
business combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, representations, warranties and agreements
contained herein
the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this
Agreement with the meanings set forth below:
"ACQUISITION PROPOSAL" means any tender or exchange offer,
proposal for a merger, consolidation or other business combination
involving
GAFC or any of its Subsidiaries or any proposal or offer to acquire
in any
manner a substantial equity interest in, or a substantial portion
of the assets
or deposits of, GAFC or any of its Subsidiaries, other than the
transactions
contemplated by this Agreement.
"ADJUSTED SHAREHOLDERS' EQUITY" has the meaning set forth in
Section 4.01(c).
"ADJUSTMENT DATE" has the meaning set forth in Section
4.01(c).
"AGREEMENT" means this Agreement, as amended or modified from
time to time in accordance with Section 10.02.
"AVERAGE CLOSING PRICE" has the meaning set forth in Section
4.01(a).
"BANK MERGER" has the meaning set forth in Section 3.01(a).
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"BANK MERGER EFFECTIVE DATE" has the meaning set forth in
Section 3.02.
"BENCHMARK EQUITY" has the meaning set forth in Section
4.01(c).
"CASH CONSIDERATION" has the meaning set forth in Section
4.01(a)
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPENSATION AND BENEFIT PLANS" has the meaning set forth in
Section 6.03(m).
"CONSULTANTS" has the meaning set forth in Section 6.03(m).
"CORE DEPOSITS" means all deposits (as defined in 12 U.S.C.
Section 1813(1)) of GAFC shown on the books and records of GAB,
including but
not limited to all interest posted thereon accrued but unpaid
interest and both
collected and uncollected funds (including overdrawn accounts),
together with
GAB's rights and responsibilities under any customer agreement
evidencing or
relating thereto, but excluding (i) deposit accounts associated
with a public
body, including but not limited to any municipal, county, state or
federal
government, and (ii) brokered deposits and (iii) wholesale
deposits, but
including corporate sweep accounts.
"COSTS" has the meaning set forth in Section 7.11(a).
"DIRECTORS" has the meaning set forth in Section 6.03(m).
"DISCLOSURE SCHEDULE" has the meaning set forth in Section
6.01.
"DISSENTERS' SHARES" has the meaning set forth in Section
4.07.
"DGCL" means the Delaware General Corporation Law, as amended.
"DOL" means the United States Department of Labor.
"EFFECTIVE DATE" has the meaning set forth in Section 2.02(a).
"EFFECTIVE TIME" means the effective time of the Merger, as
provided for in Section 2.02(a).
"EMPLOYEES" has the meaning set forth in Section 6.03(m).
"ENVIRONMENTAL LAWS" means all applicable local, state and
federal environmental, health and safety laws and regulations,
including,
without limitation, the Resource Conservation and Recovery Act,
the
Comprehensive Environmental Response, Compensation, and Liability
Act, the Clean
Water Act, the Federal Clean Air Act, and the Occupational Safety
and Health
Act, each as amended, regulations promulgated thereunder, and
state
counterparts.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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"ERISA AFFILIATE" has the meaning set forth in Section
6.03(m)(i).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Sections
4.04(a).
"EXCHANGE FUND" has the meaning set forth in Section 4.04(a).
"EXCHANGE RATIO" has the meaning set forth in Section 4.01(a).
"GAB" means Greater Atlantic Bank, a federally-chartered
savings bank.
"GAAP" Means generally accepted accounting principles in the
United States.
"GAFC" has the meaning set forth in the preamble to this
Agreement.
"GAFC AFFILIATE" has the meaning set forth in Section 7.07(a).
"GAFC BOARD" means the Board of Directors of GAFC.
"GAFC BY-LAWS" means the By-laws of GAFC, as amended.
"GAFC CERTIFICATE" means the Certificate of Incorporation of
GAFC, as amended.
"GAFC COMMON STOCK" means the common stock, par value $0.01
per share, of GAFC.
"GAFC MEETING" has the meaning set forth in Section 7.02.
"GAFC STOCK OPTION" has the meaning set forth in Section 4.05.
"GAFC STOCK PLANS" has the meaning set forth in Section 4.05.
"GAFC TRUST PREFERRED SECURITIES" means preferred shares of
stock issued by Greater Atlantic Financial Corporation Capital
Trust I, a second
tier business trust subsidiary of GAFC.
"GAFC WARRANT" has the meaning set forth in Section 4.06.
"GOVERNMENTAL AUTHORITY" means any court, administrative
agency or commission or other federal, state or local governmental
authority or
instrumentality.
"GUARANTEE" shall mean the Guarantee executed by GAFC in
connection with the issuance of the GAFC Trust Preferred
Securities.
"INDENTURE"
shall mean the Trust Indenture executed by GAFC in
connection with the issuance of the GAFC Trust Preferred
Securities.
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"IRS" has the meaning set forth in Section 6.03(m).
"INDEMNIFIED PARTY" has the meaning set forth in Section
7.11(a).
"INSURANCE AMOUNT" has the meaning set forth in Section
7.11(b).
"LIEN" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance,
"MATERIAL ADVERSE EFFECT" means, with respect to Summit or
GAFC, any effect that (i) is material and adverse to the financial
position,
results of operations or business of Summit and its Subsidiaries
taken as a
whole or GAFC and its Subsidiaries taken as a whole, respectively,
or (ii) would
materially impair the ability of either Summit or GAFC to perform
its
obligations under this Agreement or otherwise materially threaten
or materially
impede the consummation of the Merger and the other transactions
contemplated by
this Agreement; provided, however, that Material Adverse Effect
shall not be
deemed to include the impact of (a) changes in banking and similar
laws of
general applicability or interpretations thereof by courts or
governmental
authorities, except to the extent such changes have a
disproportionate impact on
Summit or GAFC, as the case may be, relative to the overall effects
on the
banking industry, (b) changes in generally accepted accounting
principles or
regulatory accounting requirements applicable to banks and their
holding
companies generally, except to the extent changes have a
disproportionate impact
on Summit or GAFC, as the case may be, relative to the overall
effect on the
banking industry, (c) any modifications or changes to valuation
policies and
practices in connection with the Merger or restructuring charges
taken in
connection with the Merger, in each case in accordance with
generally accepted
accounting principles, (d) actions and omissions of Summit or GAFC
taken with
the prior written consent of the other in contemplation of the
transactions
contemplated hereby, (e) changes in economic conditions affecting
financial
institutions generally, including, without limitation, changes in
market
interest rates or the projected future interest rate environment,
except to the
extent that such changes have a disproportionate impact on Summit
or GAFC, as
the case may be, relative to the overall effect on the banking
industry or (f)
direct effects of compliance with this Agreement on the financial
condition and
operating performance of the parties, including, without
limitation, expenses
incurred by the parties in consummating the transactions
contemplated by this
Agreement.
"MERGER" has the
meaning set forth in Section 2.01(b).
"MERGER CONSIDERATION" has the meaning set forth in Section
4.01(a).
"MERGER SUB" means a Delaware corporation, and/or one or more
other corporations or limited liability companies to be organized
under the
corporate laws of the State of Delaware by Summit prior to the
Effective Time.
"NASDAQ" means The NASDAQ Stock Market, Inc.'s Capital Market.
"NEW CERTIFICATE" has the meaning set forth in Section
4.04(a).
"OLD CERTIFICATE" has the meaning set forth in Section
4.04(a).
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"Pasadena Branch" means the branch banking office owned by
GAFC and located in Pasadena, Maryland.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" has the meaning set forth in Section 6.03(m).
"PERSON" means any individual, bank, corporation, limited
liability company, partnership, association, joint-stock company,
business trust
or unincorporated organization.
"PREVIOUSLY DISCLOSED" by a party shall mean information set
forth in its Disclosure Schedule or in Summit's or GAFC's SEC
Documents.
"PROXY STATEMENT" has the meaning set forth in Section
7.03(a).
"REGISTRATION STATEMENT" has the meaning set forth in Section
7.03(a).
"REGULATORY AUTHORITIES" has the meaning set forth in Section
6.03(i).
"RIGHTS" means, with respect to any Person, securities or
obligations convertible into or exercisable or exchangeable for, or
giving any
person any right to subscribe for or acquire, or any options, calls
or
commitments relating to, or any stock appreciation right or other
instrument the
value of which is determined in whole or in part by reference to
the market
price or value of, shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SECRETARY OF STATE" means the Secretary of State of the State
of Delaware.
"SECTION 9.03(A) FEE" has the meaning set forth in Section
9.03(a). "SECTION 9.03(B) FEE" has the meaning set forth in
Section 9.03(b).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"SHAREHOLDERS' EQUITY" means the total shareholders equity
presented on GAFC's balance sheet as of a given date as calculated
according to
GAAP.
"STOCK CONSIDERATION" has the meaning set forth in Section
4.01(a).
"STOCK OPTION CONSIDERATION" has the meaning set forth in
Section 4.05.
"SUBSIDIARY" and "SIGNIFICANT SUBSIDIARY" have the meanings
ascribed to them in Rule 1-02 Section 210.1-(2)(w) of Regulation
S-X of the SEC.
"SURVIVING CORPORATION" has the meaning set forth in Section
2.01(b).
"SUMMIT" has the meaning set forth in the preamble to this
Agreement.
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"SUMMIT BANK" means Summit Community Bank, a commercial bank
chartered under the laws of the State of West Virginia.
"SUMMIT BOARD" means the Board of Directors of Summit.
"SUMMIT COMMON STOCK" means the common stock, par value $2.50
per share, of Summit.
"SUMMIT COMPENSATION AND BENEFIT PLANS" has the meaning set
forth in Section 6.04(k)(i).
"SUMMIT CONSULTANTS" has the meaning set forth in Section
6.04(k)(i).
"SUMMIT DIRECTORS" has the meaning set forth in Section
6.04(k)(i).
"SUMMIT EMPLOYEES" has the meaning set forth in Section
6.04(k)(i).
"SUMMIT ERISA AFFILIATE" has the meaning set forth in Section
6.04(k)(iii).
"SUMMIT ERISA AFFILIATE PLAN" has the meaning set forth in
Section 6.04(k)(iii).
"SUMMIT PENSION PLAN" has the meaning set forth in Section
6.04(k)(ii).
"SUMMIT'S SEC DOCUMENTS" has the meaning set forth in Section
6.04(g).
"SUPERIOR PROPOSAL" has the meaning set forth in Section
9.01(f).
"TAKEOVER LAWS" has the meaning set forth in Section 6.03(o).
"TAX" and "TAXES" means all federal, state, local or foreign
taxes, charges, fees, levies or other assessments, however
denominated,
including, without limitation, all net income, gross income, gains,
gross
receipts, sales, use, ad valorem, goods and services, capital,
production,
transfer, franchise, windfall profits, license, withholding,
payroll,
employment, disability, employer health, excise, estimated,
severance, stamp,
occupation, property, environmental, unemployment or other taxes,
custom duties,
fees, assessments or charges of any kind whatsoever, together with
any interest
and any penalties, additions to tax or additional amounts imposed
by any taxing
authority whether arising before, on or after the Effective
Date.
"TAX RETURNS" means any return, amended return or other report
(including elections, declarations, disclosures, schedules,
estimates and
information returns) required to be filed with respect to any
Tax.
"TREASURY STOCK" shall mean shares of GAFC Common Stock held
by GAFC or any of its Subsidiaries in each case other than in a
fiduciary
capacity or as a result of debts previously contracted in good
faith.
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ARTICLE II
THE MERGER
2.01 THE MERGER. (a) Prior to the Effective Time, Summit shall
take any and all action necessary (i) duly to organize the Merger
Sub for the
purpose of consummating the Merger; (ii) to cause Merger Sub to
become a party
to this Agreement, to be evidenced by the execution by the Merger
Sub of a
supplement to this Agreement in substantially the form of Annex A
and delivery
thereof to GAFC; and (iii) to cause Merger Sub to take all actions
necessary or
proper to comply with the obligations of Summit and such Merger Sub
to
consummate the transactions contemplated hereby.
(b) At the Effective Time, GAFC shall merge with and into
Merger Sub (the "MERGER"), the separate corporate existence of GAFC
shall cease
and Merger Sub shall survive and continue to exist as a Delaware
corporation
(Merger Sub, as the surviving corporation in the Merger, sometimes
being
referred to herein as the "SURVIVING CORPORATION"). Summit may at
any time prior
to the Effective Time change the method of effecting the
combination with GAFC
(including, without limitation, the provisions of this Article II
other than
sub-sections (i), (ii), (iii) and (iv) hereof) if and to the extent
it deems
such change to be necessary, appropriate or desirable; provided,
however, that
no such change shall (i) cause the approval of the stockholders of
Summit to be
required as a condition to the Merger, (ii) alter or change the
amount or kind
of Merger Consideration (as hereinafter defined), or the relative
proportions of
cash and Summit Common Stock included therein, (iii) adversely
affect the tax
treatment of GAFC's stockholders as a result of receiving the
Merger
Consideration or (iv) materially impede or delay consummation of
the
transactions contemplated by this Agreement; and provided further,
that Summit
shall provide GAFC prior written notice of such change and the
reasons
therefore. Immediately following the Merger, Surviving Corporation
shall merge
with and into Summit, the separate corporate existence of the
Merger Sub shall
cease and Summit shall survive and continue to exist as a West
Virginia
corporation.
(c) Subject to the satisfaction or waiver of the conditions
set forth in Article VIII, the Merger shall become effective upon
the occurrence
of the filing in the office of the Secretary of State of a
certificate of merger
in accordance with Section 252 of the DGCL or such later date and
time as may be
set forth in such certificate of merger. The Merger shall have the
effects
prescribed in the DGCL.
(d) The Certificate of Incorporation of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the
Certificate of
Incorporation of the Surviving Corporation until thereafter amended
in
accordance with applicable law.
2.02 EFFECTIVE DATE AND EFFECTIVE TIME. (a) Subject to the
satisfaction or waiver of the conditions set forth in Article VIII,
the parties
shall cause the effective date of the Merger (the "EFFECTIVE DATE")
to occur on
(i) the fifth business day to occur after the last of the
conditions set forth
in Article VIII shall have been satisfied or waived in accordance
with the terms
of this Agreement, other than those conditions that by their nature
are to be
satisfied at the closing of the Merger (or, at the election of
Summit, on the
last business day of the month in which such fifth business day
occurs), or (ii)
such other date to which the parties may agree in
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writing. The time on the Effective Date when the Merger shall
become effective
is referred to as the "EFFECTIVE TIME."
(e) Notwithstanding any other provision in this Agreement to
the contrary, if Summit shall exercise its right to delay the
Effective Date
pursuant to Section 2.02(a), and a record date for any dividend or
other
distribution in respect of the Summit Common Stock is taken during
the period of
such delay such that the GAFC stockholders will not be entitled to
participate
in such dividend, each stockholder of GAFC shall be entitled to
receive, upon
surrender of the Old Certificates and compliance with the other
provisions of
Article IV, a payment equal to the amount and kind of dividend or
other
distribution that such holder would have received had such holder
been a holder
of record of the shares of Summit Common Stock issuable to such
holder in the
Merger on the record date for such dividend or other
distribution.
ARTICLE III
THE BANK MERGER
3.01 THE BANK MERGER. (a) Immediately after the Effective
Time, GAB, a wholly-owned subsidiary of GAFC, shall merge with and
into Summit
Bank, a wholly-owned subsidiary of Summit (the "BANK MERGER"), the
separate
existence of GAB shall cease and Summit Bank shall survive and
continue to exist
as a state chartered banking corporation. Summit may at any time
prior to the
Effective Time, change the method of effecting the combination with
GAB
(including without limitation the provisions of this Article III
other than
sub-sections (i), (ii) and (iii) hereof) if and to the extent it
deems such
changes necessary, appropriate or desirable; provided, however that
no such
change shall (i) alter or change the amount or kind of Merger
Consideration, or
the relative proportions of cash and Summit Common Stock included
therein, (ii)
adversely affect the tax treatment of GAFC's stockholders as a
result of
receiving the Merger Consideration or (iii) materially impede or
delay
consummation of the transactions contemplated by this Agreement,
and provided
further, that Summit shall provide GAFC with prior written notice
of such change
and the reasons therefore.
(a) Subject to the satisfaction or waiver of the conditions
set forth in Article VIII, the Bank Merger shall become effective
upon the
occurrence of the filing in the Office of the Secretary of State of
West
Virginia of articles of merger in accordance with the laws of the
West Virginia
or such later date and time as may be set forth in such articles
and the
issuance of a certificate of merger by the Secretary of State of
West Virginia.
The Bank Merger shall have the effects prescribed in the West
Virginia General
Corporation Act.
3.02 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the
satisfaction or waiver of the conditions set forth in Article VIII,
the parties
shall cause the effective date of the Bank Merger (the "BANK MERGER
EFFECTIVE
DATE") to occur on the Effective Date or such later date to which
the parties
may agree in writing.
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ARTICLE IV
CONSIDERATION; EXCHANGE PROCEDURES
4.01 MERGER CONSIDERATION. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the
Merger and
without any action on the part of any Person:
(a) Stock Consideration and Cash Consideration. Each holder of
a share of GAFC Common Stock (other than GAFC or its subsidiaries
or Summit and
its subsidiaries, except for shares held by them in a fiduciary
capacity, and
Dissenters' Shares) shall receive in respect thereof, subject to
the limitations
set forth in this Agreement and any adjustment pursuant to Section
4.01 (c), (i)
the number of shares of Summit Stock (the "STOCK CONSIDERATION")
equal to $3.22,
divided by the average closing price (the "AVERAGE CLOSING PRICE")
of Summit
Common Stock reported on the NASDAQ for the twenty (20) trading
days prior to
the Closing (the "EXCHANGE RATIO") and (ii) $1.38 in cash without
interest (the
"CASH CONSIDERATION"). The Cash Consideration and the Stock
Consideration are
sometimes referred to herein collectively as the "MERGER
CONSIDERATION."
(b) Stock Collar. If the Average Closing Price is less than
$17.82, then the Exchange Ratio shall be seventy percent of the
Merger
Consideration divided by $17.82. If the Average Closing Price is
greater than
$24.10 then the Exchange Ratio will be seventy percent of the
Merger
Consideration divided by $24.10.
(c) Adjustment to Merger Consideration for Decrease or
Increase in GAFC's Shareholder's Equity. If, as of the end of the
month in which
the sale of the Pasadena Branch is consummated (the "Adjustment
Date"), GAFC's
Shareholders' Equity adjusted to exclude (i) accumulated other
comprehensive
income or loss, (ii) Merger restructuring charges and/or
Merger-related expenses
incurred at the request of Summit on or prior to the Adjustment
Date, and (iii)
employee severance charges incurred by GAB on or prior to the
Adjustment Date
(excluding any charges relating to employee terminations for
"cause" as defined
in GAB's Employee Severance Compensation Plan (the "Adjusted
Shareholder's
Equity") is:
(i) less than Six Million Seven Hundred Thousand
Dollars ($6,700,000) (the "BENCHMARK EQUITY"), then
the aggregate value of the Merger Consideration shall be reduced
one dollar for
every dollar by which the Adjusted Shareholders' Equity is less
than the
Benchmark Equity; or
(ii) more than the Benchmark Equity, then the
aggregate value of the Merger Consideration shall be
increased one dollar for every dollar by which the Adjusted
Shareholders' Equity
exceeds the Benchmark Equity, but only to the extent that the
amount by which
the Adjusted Shareholders' Equity exceeds the Benchmark Equity is
attributable
to the sale of the Pasadena Branch after deducting all Taxes, if
any, due and
payable with the Tax Returns filed by GAFC for the tax year in
which such sale
is consummated.
If the aggregate value of the Merger Consideration shall be
adjusted pursuant to this Section 4.01(c), then the Stock
Consideration and the
Cash Consideration constituting the Merger Consideration, as so
adjusted, shall
be paid in the same proportion as the Stock Consideration and the
Cash
Consideration would have been paid pursuant to Section 4.01(a)
without any
adjustment pursuant to this Section 4.01(c).
(d) Outstanding Summit Stock. Each share of Summit Common
Stock issued and outstanding immediately prior to the Effective
Time shall
remain issued and outstanding and unaffected by the Merger.
(e) Treasury Shares. Each share of GAFC Common Stock held as
Treasury Stock immediately prior to the Effective Time shall be
canceled and
retired at the Effective Time and no consideration shall be issued
in exchange
therefore.
(f) Merger Sub. Each share of capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time
shall remain
outstanding and unaffected by the merger, and no consideration
shall be issued
in exchange therefore.
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4.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective
Time, holders of GAFC Common Stock shall cease to be, and shall
have no rights
as, stockholders of GAFC, other than to receive the Merger
Consideration and any
dividend or other distribution with respect to such GAFC Common
Stock with a
record date occurring prior to the Effective Time, the payment, if
any, in lieu
of certain dividends on Summit Common Stock provided for in Section
2.02(b), and
the consideration provided under this Article IV. After the
Effective Time,
there shall be no transfers on the stock transfer books of GAFC or
the Surviving
Corporation of shares of GAFC Common Stock.
4.03 FRACTIONAL SHARES. Notwithstanding any other provision
hereof, no fractional shares of Summit Common Stock and no
certificates or scrip
therefore, or other evidence of ownership thereof, will be issued
in the Merger;
instead, Summit shall pay to each holder of GAFC Common Stock who
would
otherwise be entitled to a fractional share of Summit Common Stock
(after taking
into account all Old Certificates registered in the name of such
holder) an
amount in cash (without interest) determined by multiplying such
fraction by the
closing price of Summit Common Stock as reported by NASDAQ
reporting system (as
reported in the WALL STREET JOURNAL) on the Effective Date.
4.04
EXCHANGE PROCEDURES.
(b) At or prior to the Effective Time, Summit shall deposit,
or shall cause to be deposited, with Registrar and Transfer Company
or a bank or
trust company designated by Summit and reasonably satisfactory to
GAFC (the
"EXCHANGE AGENT"), for the benefit of the holders of certificates
formerly
representing shares of GAFC Common Stock ("OLD CERTIFICATES"), for
exchange in
accordance with this Article IV, (i) certificates representing the
shares of
Summit Common Stock ("NEW CERTIFICATES"), (ii) an amount of cash
necessary to
pay the cash portion of the Merger Consideration and any payments
required by
Section 2.02(b) and (iii) an amount of cash necessary for payments
required by
Section 4.03 (the "EXCHANGE FUND"). The Exchange Fund will be
distributed in
accordance with the Exchange Agent's normal and customary
procedures established
in connection with merger transactions.
(c) As soon as practicable after the Effective Time, and in no
event later than five business days thereafter, Summit shall cause
the Exchange
Agent to mail to each holder of
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<PAGE> 15
record of one or more Old Certificates a letter of transmittal
(which shall
specify that delivery shall be effected, and risk of loss and title
to the Old
Certificates shall pass, only upon delivery of the Old Certificates
to the
Exchange Agent) and instructions for use in effecting the surrender
of the Old
Certificates in exchange for New Certificates, if any, that the
holders of the
Old Certificates are entitled to receive pursuant to Article IV,
and the cash,
if any, that the holders of the Old Certificates are entitled to
receive
pursuant to Article IV, any cash in lieu of fractional shares into
which the
shares of GAFC Common Stock represented by the Old Certificates
shall have been
converted pursuant to this Agreement and any payment required
pursuant to
Section 2.02(b) of this Agreement. Upon proper surrender of an Old
Certificate
for exchange and cancellation to the Exchange Agent, together with
such properly
completed letter of transmittal, duly executed, the holder of such
Old
Certificates shall be entitled to receive in exchange therefore (i)
a New
Certificate representing that number of whole shares of Summit
Common Stock that
such holder has the right to receive pursuant to Article IV, if
any, (ii) a
check representing the amount of the cash that such holder is
entitled to
receive pursuant to Article IV, if any, (iii) a check representing
the amount of
any cash in lieu of fractional shares which such holder has the
right to receive
in respect of the Old Certificates surrendered pursuant to the
provisions of
this Article IV, and (iv) any payment required by Section 2.02(b),
and the Old
Certificates so surrendered shall forthwith be cancelled.
(d) Neither the Exchange Agent, if any, nor any party hereto
shall be liable to any former holder of GAFC Common Stock for any
amount
properly delivered to a public official pursuant to applicable
abandoned
property, escheat or similar laws.
(e) No dividends or other distributions with respect to Summit
Common Stock with a record date occurring after the Effective Time
shall be paid
to the holder of any unsurrendered Old Certificate representing
shares of GAFC
Common Stock converted in the Merger into the right to receive
shares of such
Summit Common Stock until the holder thereof shall be entitled to
receive New
Certificates in exchange therefore in accordance with the
procedures set forth
in this Section 4.05. After becoming so entitled in accordance with
this Section
4.05, the record holder thereof also shall be entitled to receive
any such
dividends or other distributions by the Exchange Agent, without any
interest
thereon, which theretofore had become payable with respect to
shares of Summit
Common Stock such holder had the right to receive upon surrender of
the Old
Certificates.
(f) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of GAFC for twelve months after the Effective Time
shall be
paid to Summit. Any stockholders of GAFC who have not theretofore
complied with
this Article IV shall thereafter look only to Summit for payment of
the Merger
Consideration, cash in lieu of any fractional shares and unpaid
dividends and
distributions on Summit Common Stock deliverable in respect of each
share of
GAFC Common Stock such stockholder holds as determined pursuant to
this
Agreement, in each case, without any interest thereon.
(g) In the event any Old Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the person
claiming such Old Certificate to be lost, stolen or destroyed and,
if reasonably
required by Summit or the Exchange Agent, 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
Old
11
<PAGE> 16
Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or
destroyed Old Certificate the Merger Consideration deliverable in
respect
thereof pursuant to this Agreement.
4.05 OPTIONS. At the Effective Time, each outstanding option
(each, a "GAFC STOCK OPTION") to purchase shares of GAFC Common
Stock under any
and all plans of GAFC under which stock options have been granted
and are
outstanding (collectively, the "GAFC STOCK PLANS") shall vest and
holders of
GAFC Stock Options shall be entitled to receive cash in an amount
equal to the
difference between the value of (a) the Merger Consideration and
(b) the
applicable exercise price (rounded to the nearest cent) for each
outstanding
GAFC Stock Option (the "STOCK OPTION CONSIDERATION"). At or prior
to the
Effective Time, GAFC shall use its reasonable best efforts,
including using its
reasonable best efforts to obtain any necessary consents from
optionees, with
respect to the GAFC Stock Plans to permit Summit to pay the Stock
Option
Consideration pursuant to this Section. At the Effective Time,
Summit shall have
no obligation to make any additional grants or awards under the
GAFC Stock
Plans.
4.06 WARRANTS. At the Effective Time, each outstanding warrant
(each, a "GAFC WARRANT ") to purchase shares of GAFC Common Stock
under any and
all plans of GAFC under which warrants have been granted and are
outstanding
(collectively, the "GAFC WARRANTS ") shall vest and holders of GAFC
Warrants
shall be entitled to receive cash in an amount equal to the
difference between
the value of (a) the Merger Consideration and (b) the applicable
exercise price
(rounded to the nearest cent) for each outstanding GAFC Warrant
(the "WARRANT
CONSIDERATION"). At or prior to the Effective Time, GAFC shall use
its
reasonable best efforts, including using its reasonable best
efforts to obtain
any necessary consents from optionees, with respect to the GAFC
Stock Plans to
permit Summit to pay the Warrant Consideration pursuant to this
Section. At the
Effective Time, Summit shall have shall have no obligation to make
any
additional grants or awards under the GAFC Warrants.
4.07 DISSENTERS' RIGHTS. Notwithstanding any other provision
of this Agreement to the contrary, shares of GAFC Common Stock that
are
outstanding immediately prior to the Effective Time and which are
held by
stockholders who shall have not voted in favor of the Merger or
consented
thereto in writing and who properly shall have demanded appraisal
for such
shares in accordance with the DGCL (collectively, the "DISSENTERS'
SHARES")
shall not be converted into or represent the right to receive the
Merger
Consideration. Such stockholders instead shall be entitled to
receive payment of
the appraised value of such shares held by them in accordance with
the
provisions of the DGCL, except that all Dissenters' Shares held by
stockholders
who shall have failed to perfect or who effectively shall have
withdrawn or
otherwise lost their rights to appraisal of such shares under the
DGCL shall
thereupon be deemed to have been converted into and to have become
exchangeable,
as of the Effective Time, for the right to receive, without any
interest
thereon, the Merger Consideration upon surrender in the manner
provided in
Section 4.05 of the Old Certificates that, immediately prior to the
Effective
Time, evidenced such shares.
12
<PAGE> 17
ARTICLE V
ACTIONS PENDING THE EFFECTIVE TIME
5.01 FOREBEARANCES OF GAFC. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement
or Previously
Disclosed, without the prior written consent of Summit, GAFC will
not, and will
cause each of its Subsidiaries not to:
(h) ORDINARY COURSE. Conduct the business of GAFC and its
Subsidiaries other than in the ordinary and usual course or fail to
use
reasonable efforts to preserve intact their business organizations
and assets
and maintain their rights, franchises and existing relations with
customers,
suppliers, employees and business associates, or take any action
reasonably
likely to have an adverse affect upon GAFC's ability to perform any
of its
material obligations under this Agreement.
(i) CAPITAL STOCK. Other than pursuant to Rights Previously
Disclosed and outstanding on the date hereof, (i) issue, sell or
otherwise
permit to become outstanding, or authorize the creation of, any
additional
shares of GAFC Common Stock or any Rights, (ii) enter into any
agreement with
respect to the foregoing, or (iii) permit any additional shares of
GAFC Common
Stock to become subject to new grants of employee or director stock
options,
other Rights or similar stock-based employee rights.
(j) DIVIDENDS, ETC. (a) Make, declare, pay or set aside for
payment any dividend on or in respect of, or declare or make any
distribution on
any shares of GAFC Common Stock, or (b) directly or indirectly
adjust, split,
combine, redeem, reclassify, purchase or otherwise acquire, any
shares of its
capital stock.
(k) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or
amend or renew any employment, consulting, severance or similar
agreements or
arrangements with any director, officer or employee of GAFC or its
Subsidiaries,
or grant any salary or wage increase or increase any employee
benefit (including
incentive or bonus payments), except (i) for normal individual
payments of
incentives and bonuses to employees in the ordinary course of
business
consistent with past practice, not to exceed $10,000 in the
aggregate, (ii) for
normal individual payments of incentives and bonuses to employees
under GAB's
branch incentive plan, not to exceed $30,000 per quarter in the
aggregate, (iii)
for normal individual increases in compensation to employees in the
ordinary
course of business consistent with past practice, (iv) for other
changes that
are required by applicable law, (v) to satisfy Previously Disclosed
contractual
obligations existing as of the date hereof, or (vi) for grants of
awards to
newly hired employees consistent with past practice.
(l) BENEFIT PLANS. Enter into, establish, adopt or amend
(except (i) as may be required by applicable law or (ii) to satisfy
Previously
Disclosed contractual obligations existing as of the date hereof)
any pension,
retirement, stock option, stock purchase, savings, profit sharing,
deferred
compensation, consulting, bonus, group insurance or other employee
benefit,
incentive or welfare contract, plan or arrangement, or any trust
agreement (or
similar arrangement) related thereto, in respect of any director,
officer or
employee of GAFC or its Subsidiaries, or take any action to
accelerate the
vesting or exercisability of stock options, restricted stock or
other
compensation or benefits payable thereunder.
(m) DISPOSITIONS. Except as Previously Disclosed or in
connection with the consummation of the sale of the Pasadena
Branch, sell,
transfer, mortgage, encumber or
13
<PAGE> 18
otherwise dispose of or discontinue any of its assets, deposits,
business or
properties except in the ordinary course of business and in a
transaction that
is not material to it and its Subsidiaries taken as a whole.
(n) ACQUISITIONS. Except as Previously Disclosed, acquire
(other than by way of foreclosures or acquisitions of control in a
bona fide
fiduciary capacity or in satisfaction of debts previously
contracted in good
faith, in each case in the ordinary and usual course of business
consistent with
past practice) all or any portion of, the assets, business,
deposits or
properties of any other entity.
(o) GOVERNING DOCUMENTS. Amend the GAFC Certificate, GAFC
By-laws or the certificate of incorporation or by-laws (or similar
governing
documents) of any of GAFC's Subsidiaries.
(p) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be
required by
generally accepted accounting principles.
(q) CONTRACTS. Except in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract (as
defined in Section 6.03(k)) or amend or modify in any material
respect any of
its existing material contracts.
(r) CLAIMS. Except in the ordinary course of business
consistent with past practice, settle any claim, action or
proceeding, except
for any claim, action or proceeding which does not involve
precedent for other
material claims, actions or proceedings and which involve solely
money damages
in an amount, individually or in the aggregate for all such
settlements, that is
not material to GAFC and its Subsidiaries, taken as a whole.
(s) ADVERSE ACTIONS. (a) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede
the Merger from
qualifying as a reorganization within the meaning of Section 368 of
the Code; or
(b) knowingly take any action that is intended or is reasonably
likely to result
in (i) any of its representations and warranties set forth in this
Agreement
being or becoming untrue, subject to the standard set forth in
Section 6.02, at
any time at or prior to the Effective Time, (ii) any of the
conditions to the
Merger set forth in Article VIII not being satisfied or (iii) a
material
violation of any provision of this Agreement except, in each case,
as may be
required by applicable law or regulation.
(t) RISK MANAGEMENT. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its
interest rate and
other risk management policies, procedures or practices; (ii) fail
to follow its
existing policies or practices with respect to managing its
exposure to interest
rate and other risk; or (iii) fail to use commercially reasonable
means to avoid
any material increase in its aggregate exposure to interest rate
risk.
(u)
INDEBTEDNESS. Incur any indebtedness for borrowed money
other than in the ordinary course of business.
14
<PAGE> 19
(v) LOANS. Make any loans in a principal amount in excess of
$750,000, or make any loans outside of the District of Columbia,
Delaware,
Maryland, Pennsylvania, Virginia and West Virginia.
(w) COMMITMENTS. Agree or commit to do any of the foregoing.
5.02 FOREBEARANCES OF SUMMIT. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement,
without the
prior written consent of GAFC, Summit will not, and will cause each
of its
Subsidiaries not to:
(x) ORDINARY COURSE. Conduct the business of Summit and its
Subsidiaries other than in the ordinary and usual course or fail to
use
reasonable efforts to preserve intact their business organizations
and assets
and maintain their rights, franchises and existing relations with
customers,
suppliers, employees and business associates, or take any action
reasonably
likely to have an adverse effect upon Summit's ability to perform
any of its
material obligations under this Agreement.
(y) EXTRAORDINARY DIVIDENDS. Make, declare, pay or set aside
for payment any extraordinary dividend.
(z) ADVERSE ACTIONS. (a) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede
the Merger from
qualifying as a reorganization within the meaning of Section 368 of
the Code; or
(b) knowingly take any action that is intended or is reasonably
likely to result
in (i) any of its representations and warranties set forth in this
Agreement
being or becoming untrue, subject to the standard set forth in
Section 6.02, at
any time at or prior to the Effective Time, (ii) any of the
conditions to the
Merger set forth in Article VIII not being satisfied or (iii) a
material
violation of any provision of this Agreement except, in each case,
as may be
required by applicable law or regulation; provided.
(aa) COMMITMENTS. Agree or commit to do any of the foregoing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 DISCLOSURE SCHEDULES. On or prior to the date hereof,
Summit has delivered to GAFC a schedule and GAFC has delivered to
Summit a
schedule (respectively, its "DISCLOSURE SCHEDULE") setting forth,
among other
things, items the disclosure of which is necessary or appropriate
either in
response to an express disclosure requirement contained in a
provision hereof or
as an exception to one or more representations or warranties
contained in
Section 6.03 or 6.04 or to one or more of its covenants contained
in Article V;
provided, that (a) no such item is required to be set forth in a
Disclosure
Schedule as an exception to a representation or warranty if its
absence could
not be reasonably likely to result in the related representation or
warranty
being deemed untrue or incorrect under the standard established by
Section 6.02,
and (b) the mere inclusion of an item in a Disclosure Schedule as
an exception
to a representation or warranty shall not be deemed an admission by
a party that
such item represents a material exception or fact, event or
circumstance or that
such item is reasonably likely to result in a Material Adverse
Effect on the
party making the representation. All of GAFC's
15
<PAGE> 20
representations, warranties and covenants contained in this
Agreement are
qualified by reference to the Disclosure Schedule and none thereof
shall be
deemed to be untrue or breached as a result of effects arising
solely from
actions taken in compliance with a written request of Summit.
6.02 STANDARD. No representation or warranty of GAFC or Summit
contained in Section 6.03 or 6.04 shall be deemed untrue or
incorrect, and no
party hereto shall be deemed to have breached a representation or
warranty, as a
consequence of the existence of any fact, event or circumstance
unless such
fact, circumstance or event, individually or taken together with
all other
facts, events or circumstances inconsistent with any representation
or warranty
contained in Section 6.03 or 6.04 has had or is reasonably likely
to have a
Material Adverse Effect. For purposes of this Agreement,
"knowledge" shall mean
(i) with respect to Summit, actual knowledge of H. Charles Maddy,
III, and
Robert S. Tissue, and (ii) with respect to GAFC, actual knowledge
of Carroll E.
Amos, Edward C. Allen, David E. Ritter, Robert W. Neff and Gary L.
Hobert.
6.03 REPRESENTATIONS AND WARRANTIES OF GAFC. Subject to
Sections 6.01 and 6.02 and except as Previously Disclosed, GAFC
hereby
represents and warrants to Summit:
(a) Organization and Standing. GAFC is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of
the State of
Delaware. GAFC is duly qualified to do business and is in good
standing in the
Commonwealth of Virginia and in any foreign jurisdictions where its
ownership or
leasing of property or assets or the conduct of its business
requires it to be
so qualified.
(b) Capitalization. As of March 31, 2007, the authorized
--------------
capital stock of GAFC consists of (i) 10,000,000 shares of GAFC
Common Stock, of
which 3,024,220 shares were outstanding and no shares were held in
treasury, and
(ii) 2,500,000 shares of preferred stock, $0.01 par value, none of
which are
issued and outstanding or held in treasury as of the date hereof.
As of the date
hereof, except pursuant to the terms of options, stock, and
warrants issued
pursuant to the GAFC Stock and/or Warrant Plans, GAFC does not have
and is not
bound by any outstanding subscriptions, options, warrants, calls,
commitments or
agreements of any character calling for the purchase or issuance of
any shares
of GAFC Common Stock or any other equity securities of GAFC or any
of its
Subsidiaries or any securities representing the right to purchase
or otherwise
receive any shares of GAFC Common Stock or other equity securities
of GAFC or
any of its Subsidiaries. As of March 31, 2007, GAFC has 340,171
shares of GAFC
Common Stock (with a weighted average strike price of $6.94 per
share) which are
issuable and reserved for issuance upon the exercise of GAFC Stock
Options and
GAFC Warrants. The outstanding shares of GAFC Common Stock have
been duly
authorized and are validly issued and outstanding, fully paid and
nonassessable,
and subject to no preemptive rights (and were not issued in
violation of any
preemptive rights).
(c) Subsidiaries. (i) GAFC has Previously Disclosed a list of
------------
all of its Subsidiaries together with the jurisdiction of
organization of each
such Subsidiary. (A) GAFC owns, directly or indirectly, all the
issued and
outstanding equity securities of each of its Subsidiaries, (B) no
equity
securities of any of its Subsidiaries are or may become required to
be issued
(other than to it or its wholly-owned Subsidiaries) by reason of
any Right or
otherwise, (C) there are no contracts, commitments, understandings
or
arrangements by which any of such
16
<PAGE> 21
Subsidiaries is or may be bound to sell or otherwise transfer any
equity
securities of any such Subsidiaries (other than to it or its
wholly-owned
Subsidiaries), (D) there are no contracts, commitments,
understandings, or
arrangements relating to its rights to vote or to dispose of such
securities and
(E) all the equity securities of each Subsidiary held by GAFC or
its
Subsidiaries are fully paid and nonassessable and are owned by GAFC
or its
Subsidiaries free and clear of any Liens.
(ii) GAFC has Previously Disclosed a list of all
equity securities, or similar interests of any Person
or any interest in a partnership or joint venture of any kind,
other than its
Subsidiaries, that it beneficially owns, directly or indirectly, as
of March 28,
2007.
(iii) Each of GAFC's Subsidiaries has been duly
organized and is validly existing in good standing under
the laws of the jurisdiction of its organization, and is duly
qualified to do
business and in good standing in the jurisdictions where its
ownership or
leasing of property or the conduct of its business requires it to
be so
qualified.
(d) Corporate Power. Each of GAFC and its Subsidiaries has the
---------------
corporate power and authority to carry on its business as it is now
being
conducted and to own all its properties and assets; and GAFC has
the corporate
power and authority to execute, deliver and perform its obligations
under this
Agreement and to consummate the transactions contemplated
hereby.
(e) Corporate Authority. Subject to receipt of the requisite
-------------------
approval of this Agreement (including the agreement of merger set
forth herein)
by the holders of a majority of the outstanding shares of GAFC
Common Stock
entitled to vote thereon (which is the only vote of GAFC
stockholders required
thereon), the execution and delivery of this Agreement and the
transactions
contemplated hereby have been authorized by all necessary corporate
action of
GAFC and the GAFC Board. Assuming due authorization, execution and
delivery by
Summit, this Agreement is a valid and legally binding obligation of
GAFC,
enforceable in accordance with its terms (except as enforceability
may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium,
fraudulent transfer and similar laws of general applicability
relating to or
affecting creditors' rights or by general equity principles). The
GAFC Board of
Directors has received the written opinion of Sandler O'Neill &
Partners, L.P.
to the effect that as of the date hereof the consideration to be
received by the
holders of GAFC Common Stock in the Merger is fair to the holders
of GAFC Common
Stock from a financial point of view.
(f) Consents and Approvals; No Defaults. (i) No consents or
-----------------------------------
approvals of, or filings or registrations with, any Governmental
Authority or
with any third party are required to be made or obtained by GAFC or
any of its
Subsidiaries in connection with the execution, delivery or
performance by GAFC
of this Agreement or to consummate the Merger except for (A)
filings of
applications or notices with federal and state banking and
insurance authorities
and (B) the filing of a certificate of merger with the Secretary of
State
pursuant to the DGCL and the issuance of a certificate of merger in
connection
therewith. As of the date hereof, GAFC is not aware of any reason
why the
approvals set forth in Section 8.01(b) will not be received without
the
imposition of a condition, restriction or requirement of the type
described in
Section 8.01(b).
17
<PAGE> 22
(i)
Subject to receipt of the regulatory approvals referred to
in the preceding paragraph, and expiration of related waiting
periods, the
execution, delivery and performance of this Agreement and the
consummation of
the transactions contemplated hereby do not and will not (A)
constitute a breach
or violation of, or a default under, or give rise to any Lien, any
acceleration
of remedies or any right of termination under, any law, rule or
regulation or
any judgment, decree, order, governmental permit or license, or any
agreement,
indenture or instrument of GAFC or of any of its Subsidiaries or to
which GAFC
or any of its Subsidiaries or properties is subject or bound, (B)
constitute a
breach or violation of, or a default under, the GAFC Certificate or
the GAFC
By-Laws, or (C) require any consent or approval under any such law,
rule,
regulation, judgment, decree, order, governmental permit or license
or any
agreement, indenture or instrument.
(g) Financial Reports; Absence of Certain Changes or Events.
(i) GAFC's Annual Report on Form 10-K for the fiscal years ended
September 30,
2004, 2005 and 2006, and all other reports, registration
statements, definitive
proxy statements or information statements filed or to be filed by
it or any of
its Subsidiaries subsequent to September 30, 2003, under the
Securities Act or
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act in the
form filed or
to be filed (collectively "GAFC'S SEC DOCUMENTS"), as of the date
filed, (A) as
to form complied or will comply in all material respects with the
applicable
requirements under the Securities Act or the Exchange Act, as the
case may be,
and (B) did not and will not contain any untrue statement of a
material fact or
omit to state a material fact required to be stated therein or
necessary to make
the statements therein, in light of the circumstances under which
they were
made, not misleading; and each of the balance sheets or statements
of condition
of GAFC contained in or incorporated by reference into any of
GAFC's SEC
Documents (including the related notes and schedules thereto)
fairly presents,
or will fairly present, the financial position of GAFC and its
Subsidiaries as
of its date, and each of the statements of income or results of
operations and
changes in stockholders' equity and cash flows or equivalent
statements of GAFC
in any of GAFC's SEC Documents (including any related notes and
schedules
thereto) fairly presents, or will fairly present, the results of
operations,
changes in stockholders' equity and cash flows, as the case may be,
of GAFC and
its Subsidiaries for the periods to which they relate, and in each
case were
prepared in accordance with generally accepted accounting
principles
consistently applied during the periods involved, except in each
case as may be
noted therein, and subject to normal year-end audit adjustments in
the case of
unaudited statements.
(ii) GAFC's Disclosure Schedule lists, and GAFC has delivered
or previously made available to Summit, copies of the documentation
creating or
governing all securitization transactions and "off-balance sheet
arrangements"
(as defined in Item 303(c) of Regulation S-K) effected by GAFC or
its
Subsidiaries, since September 30, 2006. BDO Siedman, LLP, which has
expressed
its opinion with respect to the financial statements of GAFC and
its
Subsidiaries (including the related notes) included in the GAFC SEC
Documents is
and has been throughout the periods covered by such financial
statements (A) a
registered public accounting firm (as defined in Section 2(a)(12)
of the
Sarbanes-Oxley Act of 2002, (B) "independent" with respect to GAFC
within the
meaning of Regulation S-X and C in compliance with subsection (g)
through (l) of
Section 10A of the Exchange Act and the related rules of the SEC
and the Public
Accounting Oversight Board.
18
<PAGE> 23
(iii) Except as disclosed on Disclosure Schedule 6.03(g), GAFC
has on a timely basis filed all forms, reports and documents
required to be
filed by it with the SEC since September 30, 2004. GAFC's
Disclosure Schedule
lists, and, except to the extent available in full without
redaction on the
SEC's web site through the Electronic Data Gathering, Analysis and
Retrieval
System ("EDGAR") two days prior to the date of this Agreement, GAFC
has
delivered or previously made available to Summit copies in the form
filed with
the SEC of (A) GAFC's Annual Reports on Form 10-K for each fiscal
year of the
Company beginning since September 30, 2003, (B) it Quarterly
Reports on form
10-Q for each of the first three fiscal quarters in each of the
fiscal years of
the GAFC referred to in clause (A) above, (C) all proxy statements
relating to
GAFC's meetings of stockholders (whether annual or special) held,
and all
information statements relating to stockholder consents since the
beginning of
the first fiscal year referred to in clause above, (D) all
certifications and
statements required by (x) the SEC's Order dated June 27, 2002,
pursuant to
Section 21(a)(1) of the Exchange Act (File No. 4-460), (y) Rule
13a-14 or 15d-14
under the Exchange Act or (z) 18 U.S.C. ss.1350 (Section 906 of
the
Sarbanes-Oxley Act of 2002) with respect to any report referred to
above, (E)
all other forms, reports, registration statements and other
documents (other
than preliminary materials if the corresponding definitive
materials have been
provided to Summit pursuant to this Section 6.03(g)(iii), filed by
GAFC with the
SEC since the beginning of the first fiscal year referred above,
and (E) all
comment letters received by GAFC from the Staff of the SEC since
December 31,
2004, and all responses to such comment letters by or on behalf of
GAFC.
(iv) Except as Previously Disclosed, GAFC maintains disclosure
controls and procedures required by Rule 13a-15 or 15d-15 under the
Exchange
Act; such controls and procedures are effective to ensure that all
material
information concerning GAFC and its subsidiaries is made known on a
timely basis
to the individuals responsible for the preparation of the Company's
filings with
the SEC and other public disclosure documents. GAFC's Disclosure
Schedule lists,
and GAFC has delivered to Summit copies of, all written
descriptions of, and all
policies, manuals and other documents promulgating, such disclosure
controls and
procedures. To GAFC's knowledge, each director and executive
officer of GAFC has
filed with the SEC on a timely basis all statements required by
Section 16(a) of
the Exchange Act and the rules and regulations thereunder since
September 30,
2004. As used in this Section 6.03(q), the term "file" shall be
broadly
construed to include any manner in which a document or information
is furnished,
supplied or otherwise made available to the SEC.
(v) Since September 30, 2006, GAFC and its Subsidiaries have not
incurred any
liability other than in the ordinary course of business consistent
with past
practice or for legal, accounting, and financial advisory fees and
out-of-pocket
expenses in connection with the transactions contemplated by this
Agreement.
(vi) Since September 30, 2006, (A) GAFC and its Subsidiaries
have conducted their respective businesses in the ordinary and
usual course
consistent with past practice (excluding matters related to this
Agreement and
the transactions contemplated hereby) and (B) no event has occurred
or
circumstance arisen that, individually or taken together with all
other facts,
circumstances and events (described in any paragraph of Section
6.03 or
otherwise), is reasonably likely to have a Material Adverse Effect
with respect
to GAFC.
19
<PAGE> 24
(h) Litigation. No litigation, claim or other proceeding
----------
before any court or Governmental Authority is pending against GAFC
or any of its
Subsidiaries and, to GAFC's knowledge, no such litigation, claim or
other
proceeding has been threatened.
(i) Regulatory Matters. (i) Neith
