<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
dated as of June 9, 2008
by and among
SUMMIT FINANCIAL GROUP, INC.
AND
GREATER ATLANTIC FINANCIAL CORP.
AND
SFG II, INC.
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Table of Contents
Page
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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
2.03
Indentures, Guarantees and Common
Securities....................................................8
ARTICLE III The Bank
Merger......................................................................................8
3.01
The Bank
Merger.................................................................................8
3.02
Effective Date and Effective
Time...............................................................9
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............................................................................11
4.05
Options........................................................................................12
4.06
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.........................................................................34
7.04
Press
Releases.................................................................................35
7.05
Access;
Information............................................................................35
7.06
Acquisition
Proposals..........................................................................36
7.07
Takeover
Laws..................................................................................36
7.08
Funding of Loan Loss Allowance and Payment of
Expenses.........................................36
7.09
Certain
Policies...............................................................................36
7.10
Regulatory
Applications........................................................................37
7.11
Indemnification................................................................................37
7.12
Benefit
Plans..................................................................................38
7.13
Notification of Certain
Matters................................................................38
7.14
Contractual Rights of Current
Employees........................................................39
7.15
GAFC Trust Preferred
Securities................................................................39
7.16
Transition.....................................................................................39
7.17
Compliance with Regulatory Authority
Order.....................................................39
7.18
Compliance with
Laws...........................................................................40
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ARTICLE VIII
Conditions to Consummation of the
Merger...........................................................40
8.01
Conditions to Each Party's Obligation to Effect the
Merger.....................................40
8.02
Conditions to Obligation of
GAFC...............................................................41
8.03
Conditions to Obligation of
Summit.............................................................41
ARTICLE IX
Termination..........................................................................................43
9.01
Termination....................................................................................43
9.02
Effect of Termination and
Abandonment..........................................................44
9.03
Fees and
Expenses..............................................................................44
ARTICLE X
Miscellaneous.........................................................................................45
10.01
Survival.......................................................................................45
10.02
Waiver;
Amendment..............................................................................45
10.03
Counterparts...................................................................................45
10.04
Governing
Law..................................................................................45
10.05
Expenses.......................................................................................45
10.06
Notices........................................................................................45
10.07
Entire Understanding; No Third Party
Beneficiaries.............................................46
10.08
Interpretation;
Effect.........................................................................46
ii
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION, dated as of June 9, 2008
(this "Agreement"), by and among GREATER ATLANTIC FINANCIAL CORP.
("GAFC"),
SUMMIT FINANCIAL GROUP, INC. ("Summit") and SFG II, INC. ("Merger
Sub").
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
principal
place of business in Moorefield, West Virginia.
C. Merger Sub. Merger Sub is a West Virginia corporation, having
its
principal place of business in Moorefield, West Virginia.
D. 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.
E. Board Action. The respective Boards of Directors of each of
Summit,
GAFC and Merger Sub 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(b).
"Agreement" means this Agreement, as amended or modified from time
to
time in accordance with Section 10.02.
<PAGE>
"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).
"Bank Merger Effective Date" has the meaning set forth in Section
3.02.
"Benchmark Equity" has the meaning set forth in Section
4.01(b).
"Cease and Desist Order" means the Order to Cease and Desist
(together
with the accompanying Stipulation and Consent to Issuance of Order
to Cease and
Desist) effective April 25, 2008, by and between GAB and the Office
of Thrift
Supervision.
"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 4.06.
"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.
2
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"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended.
"ERISA Affiliate" has the meaning set forth in Section
6.03(m)(ii).
"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 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 Capital Trust I, a second tier business
trust
subsidiary of GAFC.
"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.
3
<PAGE>
"Indenture" shall mean the Trust Indenture executed by GAFC in
connection with the issuance of the GAFC Trust Preferred
Securities.
"IRS" has the meaning set forth in Section 6.03(m).
"Indemnified Party" has the meaning set forth in Section
7.11(a).
"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" has the meaning set forth in the preamble to this
Agreement.
"Monthly Losses" shall have the meaning set forth in Section
4.01(b).
"NASDAQ" means The NASDAQ Stock Market, Inc.'s Capital Market.
4
<PAGE>
"Net Additional Loan Losses" shall have the meaning set forth
in
Section 4.01(b)(iii).
"New Certificates" has the meaning set forth in Section
4.04(a).
"Non-Performing Loans" shall have the meaning set forth in
Section
8.03(h).
"Old Certificates" has the meaning set forth in Section
4.04(a).
"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.
"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.
"Specific Reserve Reductions" shall mean the amount by which GAFC
may
appropriately reduce the allowance for loan losses specifically
allocated to an
extension of credit (and thereby take a negative provision to the
allowance for
loan losses) as a result of the amount of principal actually
received by GAFC on
such extension of credit.
5
<PAGE>
"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.
"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.
6
<PAGE>
"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.
"WVBCA" shall mean the West Virginia Business Corporation Act,
as
amended.
ARTICLE II
The Merger
2.01 The Merger. (a) Prior to the Effective Time, Summit shall take
any
and all action necessary 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 West Virginia
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), (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.
(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 offices of the Secretaries of State of the State of
Delaware and
the State of West Virginia a certificate of merger in accordance
with Section
252 of the DGCL and articles of merger in accordance with Section
31D-11-1106 of
the WVBCA or such later date and time as may be set forth in such
certificate of
merger and articles of merger. The Merger shall have the effects
prescribed in
the DGCL and the WVBCA.
(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.
7
<PAGE>
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 writing. The time
on the
Effective Date when the Merger shall become effective is referred
to as the
"Effective Time."
(b) 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.
2.03 Indentures, Guarantees and Common Securities. At Closing,
as
further consideration for the Merger: Summit shall assume (i) the
obligations of
GAFC under the Indenture (including the conversion rights of the
debenture
holders set forth in Section 4.4 of the Indenture) pursuant to a
supplemental
indenture in form and substance reasonably satisfactory to Summit,
GAFC and
Wilmington Trust Company (each, a "Supplemental Indenture") and
(ii) the
obligations of GAFC under each of the Guarantees pursuant to a
supplemental
guarantee in form and substance reasonably satisfactory to Summit
and GAFC.
ARTICLE III
The Bank Merger
3.01 The Bank Merger. (a) 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, (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.
(b) 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 Section 31D-11-1106 of the WVBCA 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 WVBCA.
8
<PAGE>
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 as Summit may determine in
its sole
discretion.
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) Merger Consideration. Subject to adjustment as set forth in
Section
--------------------
4.01(b), 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(b), the number of shares of Summit Stock
(the "Merger
Consideration") equal to $4.00, 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"). In no
event shall the Exchange Ratio exceed 0.328625.
(b) Adjustment to
Merger Consideration for Decrease in GAFC's
---------------------------------------------------------
Shareholders' Equity and for Net Additional Loan Losses.
-------------------------------------------------------
(i) If as of the
Effective Date, GAFC's Shareholders' Equity, as
adjusted to exclude (a) accumulated other comprehensive income or
loss, and (b)
the effect of removing the benefit of the net operating loss carry
forwards from
the net deferred tax assets (the "Adjusted Shareholders' Equity"),
is less than
$4,213,617 (the "Benchmark Equity") determined in accordance with
GAAP fairly
applied, 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.
(ii) For purposes of this Section 4.01(b), the Adjusted
Shareholders'
Equity shall be increased by: (x) Monthly Losses incurred after
March 31, 2008
and prior to September 1, 2008, and (y) fees paid or accrued to
Sandler O'Neill
and Partners, LP, and to Muldoon Murphy & Aguggia LLP or
Kilpatrick Stockton LLP
after March 31, 2008, up to $150,000. "Monthly Losses" shall mean
GAFC's actual
monthly operating losses calculated in accordance with GAAP fairly
applied, up
to $250,000.
9
<PAGE>
(iii) On the Effective Date, GAFC shall have complied with Section
7.08
of this Agreement with respect to GAFC's allowance for loan losses.
If Summit's
due diligence results in a determination by Summit prior to the
Effective Date
that additional provisions should be made to GAFC's allowance for
loan losses to
meet the requirements of the preceding sentence, then the Merger
Consideration
will be reduced dollar for dollar by the amount determined by
Summit with the
reasonable agreement of GAFC (the "Net Additional Loan Losses"). In
calculating
the amount of the Merger Consideration reduction, Summit and GAFC
agree that
Specific Reserve Reductions may be used to offset losses from other
loans to
determine the amount of provisions needed to the allowance for loan
losses.
(iv) If Summit and GAFC cannot agree as to the amount of the
Net
Additional Loan Losses, then GAFC may, at its option, sell the
loans that Summit
determines require additional provisions to a third party, provided
that the
sale is (x) without recourse and (y) requires the third party
purchaser to
assume all collection and servicing costs. If the book value of the
loan sold
exceeds the purchase price of the loan sold, such excess will be
deemed a Net
Additional Loan Loss and the Merger Consideration will be reduced
one dollar for
every dollar of the amount of the Net Additional Loan Loss. If GAFC
cannot sell
the loans that Summit determines require additional provisions for
loan losses,
then Summit's determination of any Net Additional Loan Losses with
respect to
such loans shall be conclusive and binding on the parties, with the
concurrence
of GAFC's independent accountants.
(c) 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.
(d) 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.
(e) 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.
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.
10
4.04 Exchange Procedures.
(a) 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") and (ii) 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.
(b) 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 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, 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 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 (iii) any payment required by
Section
2.02(b), and the Old Certificates so surrendered shall forthwith be
cancelled.
(c) 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.
(d) 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 4.04. After becoming so entitled in accordance with
this Section
4.04, 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.
11
<PAGE>
(e) 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.
(f) 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
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 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 4.04 of the Old Certificates
that, immediately
prior to the Effective Time, evidenced such shares.
12
<PAGE>
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:
(a) 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.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
13
<PAGE>
(f) Dispositions. Except as Previously Disclosed, sell,
transfer,
mortgage, encumber or 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.
(g) 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.
(h) 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.
(i) Accounting Methods. Implement or adopt any change in its
accounting
principles, practices or methods, other than as may be required by
GAAP.
(j) 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.
(k) 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.
(l) 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.
(m) 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, including,
but not
limited to implementation of any leverage strategies; (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.
14
<PAGE>
(n) Indebtedness. Incur any indebtedness for borrowed money other
than
in the ordinary course of business.
(o) 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.
(p) 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:
(a) 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.
(b) Extraordinary Dividends. Make, declare, pay or set aside
for
payment any extraordinary dividend.
(c) 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.
(d) 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
15
<PAGE>
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 and Summit's
representations,
warranties and covenants contained in this Agreement are qualified
by reference
to the respective 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 or GAFC, as the case
may be.
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 May 31, 2008, 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 May 31, 2008, 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).
16
<PAGE>
(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 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 May 31, 2008.
(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. Except as disclosed in
-----------------------------------
Schedule 6.03(f), (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 of the State of Delaware pursuant to the DGCL,
the filing of
17
<PAGE>
articles of merger with the Secretary of State of the State of West
Virginia
pursuant to the WVBCA, 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).
(ii) 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,
2005, 2006
and 2007, 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, 2004, 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.
18
<PAGE>
(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, 2007. 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.
(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, 2005. 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, 2004, (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 A
