EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

By and Among

INVESTORS SAVINGS BANK,

INVESTORS BANCORP, INC.,

INVESTORS BANCORP, MHC

And

SUMMIT FEDERAL SAVINGS BANK,

SUMMIT FEDERAL BANKSHARES, INC.,

SUMMIT FEDERAL BANKSHARES, MHC

Dated as of August 3, 2007

 
 

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TABLE OF CONTENTS

ARTICLE I
CERTAIN DEFINITIONS

ARTICLE I
2
 
Section 1.01 Definitions
2
   
ARTICLE II
7
 
Section 2.01 Effects of Merger; Surviving Institutions.
7
 
Section 2.02 Effect on Outstanding Shares of Investors Bancorp Common Stock.
8
 
Section 2.03 Additional Director.
8
   
ARTICLE III
8
 
Section 3.01 Organization
9
 
Section 3.02 Capitalization
10
 
Section 3.03 Authority; No Violation
10
 
Section 3.04 Consents
11
 
Section 3.05 Summit Regulatory Reports and Financial Statements
11
 
Section 3.06 Taxes
12
 
Section 3.07 No Material Adverse Effect
12
 
Section 3.08 Contracts
12
 
Section 3.09 Ownership of Property; Insurance Coverage.
14
 
Section 3.10 Legal Proceedings.
15
 
Section 3.11 Compliance With Applicable Law
15
 
Section 3.12 ERISA.
16
 
Section 3.13 Brokers, Finders and Financial Advisors
18
 
Section 3.14 Environmental Matters
18
 
Section 3.15 Loan Portfolio.
19
 
Section 3.16 [Intentionally left blank]
20
 
Section 3.17 Related Party Transactions
20
 
Section 3.18 Deposits
20
 
Section 3.19 Derivative Transactions
20
   
ARTICLE IV
21
 
Section 4.01 Organization
21
 
Section 4.02 Capitalization
22
 
Section 4.03 Authority; No Violation
22
 
Section 4.04 Consents
23
 
Section 4.05 Investors Financial Statements
23
 
Section 4.06 Material Adverse Effect
24
 
Section 4.07 Legal Proceedings
24
 
Section 4.08 Compliance With Applicable Law
24
 
Section 4.09 Investors Benefit Plans
25
 
Section 4.10 Securities Documents
26

 
 
 
 

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Section 4.11 Environmental Matters
26
 
Section 4.12 Loan Portfolio
27
   
ARTICLE V
27
   
COVENANTS OF THE PARTIES
27
 
Section 5.01 Conduct of the Business of Summit
27
 
Section 5.02 Access; Confidentiality
30
 
Section 5.03 Regulatory Matters and Consents
31
 
Section 5.04 Taking of Necessary Action
32
 
Section 5.05 Certain Agreements
32
 
Section 5.06 Duty to Advise; Duty to Update the Summit Disclosure Schedules
33
 
Section 5.07 Conduct of Investors’ Business
34
 
Section 5.08 Board and Committee Minutes
34
 
Section 5.09 Undertakings by the Parties
34
 
Section 5.10 Employee and Termination Benefits; Directors and Management
36
 
Section 5.11 Duty to Advise; Duty to Update the Investors Disclosure Schedules
39
 
Section 5.12 Summit Savings Branches.
39
   
ARTICLE VI
40
   
CONDITIONS
40
 
Section 6.01 Conditions to the Obligations of Both Parties Under this Agreement
40
 
Section 6.02 Conditions to the Obligations of Summit Under this Agreement
40
 
Section 6.03 Conditions to the Obligations of Investors Under this Agreement
41
   
ARTICLE VII
42
 
Section 7.01 Termination
42
 
Section 7.02 Effect of Termination
43
 
Section 8.01 Expenses
43
 
Section 8.02 Non-Survival of Representations and Warranties
43
 
Section 8.03 Amendment, Extension and Waiver
43
 
Section 8.04 Entire Agreement; No Third Party Beneficiaries
44
 
Section 8.05 No Assignment
44
 
Section 8.06 Notices
44
 
Section 8.07 Captions
45
 
Section 8.08 Counterparts
45
 
Section 8.09 Severability
45
 
Section 8.10 Governing Law
45
 
Section 8.11 Specific Performance
46
 
Section 8.11 Interpretation
46

Exhibit A
Form of Merger Agreement Relating to the Bank Merger

Exhibit B
Form of Merger Agreement Relating to the MHC Merger

 
 

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of August 3,
2007, is by and between (i) Investors Savings Bank, a New Jersey savings bank
(“Investors Bank”), Investors Bancorp, Inc., a Delaware corporation (“Investors
Bancorp”), Investors Bancorp, MHC, a New Jersey mutual holding company
(“Investors MHC”), and (ii) Summit Federal Savings Bank, a Federal savings bank
(“Summit Savings”), Summit Federal Bankshares, Inc., a Federal corporation
(“Summit Bankshares”), and Summit Federal Bankshares, MHC, a Federal mutual
holding company (“Summit MHC”). Each of Investors Bank, Investors Bancorp,
Investors MHC, Summit Savings, Summit Bankshares and Summit MHC is sometimes
individually referred to herein as a “party,” and Investors Bank, Investors
Bancorp, Investors MHC, Summit Savings, Summit Bankshares and Summit MHC are
collectively sometimes referred to as the “parties.”
 
RECITALS

1. Investors MHC owns a majority of the issued and outstanding capital stock of
Investors Bancorp, which owns all of the issued outstanding capital stock of
Investors Bank. Each of Investors Bank, Investors Bancorp and Investors MHC has
its principal offices located in Short Hills, New Jersey.
 
2. Summit MHC owns all of the issued and outstanding capital stock of Summit
Bankshares, which owns all of the issued and outstanding capital stock of Summit
Savings. Each of Summit Savings, Summit Bankshares and Summit MHC has its
principal offices located in Summit, New Jersey.
 
3. The Board of Directors of each party deems it advisable and in its best
interests, including with respect to Investors, the depositors of Investors Bank
and the stockholders of Investors Bancorp, and with respect to Summit Savings,
the members of Summit MHC, for Summit MHC to merge with and into Investors MHC
with Investors MHC as the surviving entity, for Summit Bankshares to merge with
and into Investors Bancorp (or a wholly-owned subsidiary of Investors Bancorp),
with Investors Bancorp as the surviving entity, and for Summit Savings to merge
with and into Investors Bank with Investors Bank as the surviving entity, all
pursuant to the terms, conditions and procedures set forth in this Agreement.
 
4. The parties desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the transactions
contemplated by this Agreement; and
 
5. In consideration of the premises and of the mutual representations,
warranties and covenants herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
 

 
 

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ARTICLE I
CERTAIN DEFINITIONS

 
Section 1.01 Definitions
 
Except as otherwise provided herein, as used in this Agreement, the following
terms shall have the indicated meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
 
“Affiliate” means, with respect to any Person, any Person who directly, or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with such Person and, without limiting the generality
of the foregoing, includes any executive officer or director of such Person and
any Affiliate of such executive officer or director.
 
“Agreement” means this agreement, and any amendment or supplement hereto, which
constitutes a “plan of merger” between the Investors Parties and the Summit
Parties.
 
“Applications” means the applications to be filed with the appropriate
Regulatory Authorities requesting approval or nonobjection of the transactions
described in this Agreement.
 
“Banking Act” means the New Jersey Banking Act of 1948, as amended.
 
“Bank Merger” means the merger of Summit Savings with and into Investors Bank
with Investors Bank as the surviving entity. The Bank Merger shall follow the
MHC Merger and the Mid-Tier Merger.
 
“Bank Merger Effective Date” means the date as of which the OTS endorses the
articles of combination as to the Bank Merger, or such other date specified in
the endorsement of the articles of combination by the OTS, or if as of the Bank
Merger Effective Date Investors Bank is a New Jersey chartered savings bank, the
date that the Certificate evidencing stockholder approval of the Bank Merger is
filed with the Department.

“Board of Directors” means the Board of Directors of Summit MHC, Summit
Bankshares, Summit Savings, Investors Bancorp, Investors Bank or Investors MHC,
as applicable.
 
“Closing Date” means the date determined by Investors, in consultation with and
upon no less than five (5) days prior written notice to Summit Bankshares, but
in no event later than fifteen (15) business days after the last condition
precedent pursuant to this Agreement has been fulfilled or waived (including the
expiration of any applicable waiting period), or such other date as to which the
parties shall mutually agree.
 
“Commissioner” means the Commissioner of Banking and Insurance of the State of
New Jersey, and includes the Department as appropriate.
 
“Department” means the New Jersey Department of Banking and Insurance.
 

 
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“DGCL” means the Delaware General Corporation Law.
 
“Environmental Law” means any Federal or state law, statute, rule, regulation,
code, judgment, common law or agreement with any Federal or state governmental
authority, and any decree, injunction or order entered with or by any
governmental authority that is binding upon Summit relating to (i) the
protection, preservation or restoration of the environment (including air,
surface water, groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), (ii) human health or
safety, or (iii) exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of, Hazardous Material, in each case as amended and now in effect.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated from time to time thereunder.
 
“FDIA” means the Federal Deposit Insurance Act, as amended.
 
“FDIC” means the Federal Deposit Insurance Corporation.
 
“FHLB” means the Federal Home Loan Bank.
 
“GAAP” means generally accepted accounting principles as in effect at the
relevant date and consistently applied.
 
“Hazardous Material” means any substance (whether solid, liquid or gas) that is
detrimental to human health or safety or to the environment and currently
listed, defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law, whether by type
or by quantity, including any material containing any such substance as a
component. Hazardous Material includes, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance, oil or petroleum, or any derivative or
by-product thereof, radon, radioactive material, friable asbestos-containing
material, urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
 
“HOLA” the Home Owners’ Loan Act.
 
“Investors” means the Investors Parties and/or any direct or indirect Subsidiary
of such entities.
 
“Investors Bank” means Investors Savings Bank, a New Jersey chartered, stock
savings bank, having its principal place of business located at 101 JFK Parkway,
Short Hills, New Jersey, and as appropriate shall include Investors Savings Bank
as a federal savings bank if Investors Bank converts to a federal savings bank
charter.
 

 
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“Investors Bancorp” means Investors Bancorp, Inc., a Delaware corporation having
its principal place of business located at 101 JFK Parkway, Short Hills, New
Jersey.
 
“Investors MHC” means Investors Bancorp, MHC, a New Jersey chartered mutual
holding company having its principal place of business located at 101 JFK
Parkway, Short Hills, New Jersey, and as appropriate shall include Investors
Bancorp, MHC as a federally chartered mutual holding company following either
the conversion of Investors Savings to a federal savings bank or the election by
Investors Savings under Section 10(l) of the HOLA to be treated as a savings
association for purposes of holding company regulation.
 
“Investors Disclosure Schedules” means the Disclosure Schedules delivered by
Investors to Summit pursuant to Article III of this Agreement.
 
“Investors Financials” means (i) the audited consolidated financial statements
of Investors Bancorp as of June 30, 2006 and 2005 and for the three years ended
June 30, 2006, including the notes thereto, included in Securities Documents
filed by Investors Bancorp, and (ii) the unaudited interim consolidated
financial statements of Investors Bancorp as of each calendar quarter following
June 30, 2006 included in Securities Documents filed by Investors Bancorp.
 
“Investors Parties” means Investors Bank, Investors Bancorp and Investors MHC.
 
“Investors Subsidiary” means any corporation, 50% or more of the capital stock
of which is owned, either directly or indirectly, by Investors Bancorp, and
includes Investors Bank, except that it does not include any corporation the
stock of which is held in the ordinary course of the lending activities of
Investors Bank.
 
“IRC” means the Internal Revenue Code of 1986, as amended.
 
“IRS” means the Internal Revenue Service.
 
“Knowledge” as used with respect to a Party (including references to such Party
being aware of a particular matter) means those facts that are known or should
have been known by the executive officers and directors of such Party, and
includes any facts, matters or circumstances set forth in any written notice
from any Bank Regulator or any other material written notice received by that
Party.
 
“Material Adverse Effect” shall mean, with respect to Investors or Summit, any
adverse effect on its assets, financial condition or results of operations which
is material to its assets, financial condition or results of operations on a
consolidated basis, except for any material adverse effect caused by (i) any
change in the value of the assets resulting from a change in interest rates
generally, (ii) any individual or combination of changes occurring after the
date hereof in any Federal or state law, rule or regulation or in GAAP, which
change(s) affect(s) financial institutions and/or their holding companies
generally, or (iii) expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
 

 
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“Member Proxy Statement” means the proxy statement, if any, together with any
supplements thereto, transmitted by Summit Savings and/or Summit MHC to the
members of Summit MHC in connection with any membership vote that may be
required by the OTS with respect to the transactions contemplated by this
Agreement.
 
“Mergers” shall mean collectively the Bank Merger, the MHC Merger and the
Mid-Tier Merger, and any other mergers by interim corporate entities necessary
to effectuate the transactions contemplated by this Agreement.
 
“MHC Merger” means the merger of Summit MHC with and into Investors MHC, with
Investors MHC as the surviving entity.
 
“Mid-Tier Merger” means the merger of Summit Bankshares with and into Investors
Bancorp (or a wholly-owned subsidiary of Investors Bancorp) with Investors
Bancorp as the surviving entity, which shall follow the MHC Merger.
 
“Mid-Tier Merger Effective Time” shall mean the date and time upon which the
certificate of merger is filed with the Delaware Officer of the Secretary of
State, or as otherwise stated in the certificate of merger, in accordance with
the DGCL.
 
“OTS” means the Office of Thrift Supervision.
 
“Participation Facility” shall have the meaning given to such term in Section
3.14(b) of this Agreement.
 
“Person” means any individual, corporation, partnership, joint venture,
association, trust or “group” (as that term is defined under the Exchange Act).
 
“Regulatory Agreement” has the meaning given to that term in Section 3.11(b) of
this Agreement.
 
“Regulatory Authority” or “Regulatory Authorities” means any agency or
department of any Federal or state government having supervisory jurisdiction
over the parties and the transactions contemplated by this Agreement, including
without limitation the OTS and its staff, and unless Investors Bank converts to
an OTS chartered institution on or before the Merger Effective Date, shall
include the FDIC and the Commissioner.
 
“Right” means any warrant, option, right, convertible security or other capital
stock equivalent that obligates an entity to issue its securities.
 
“SEC” means the Securities and Exchange Commission.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated from time to time thereunder.
 

 
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“Securities Documents” means all registration statements, schedules, statements,
forms, reports, proxy material, and other documents required to be filed under
the Securities Laws.
 
“Securities Laws” means the Securities Act and the Exchange Act and the rules
and regulations promulgated from time to time thereunder.
 
“Subsidiary” means any corporation, 50% or more of the capital stock of which is
owned, either directly or indirectly, by another entity, except any corporation
the stock of which is held as security by either Investors Bank or Summit
Savings, as the case may be, in the ordinary course of their lending activities.
 
“Summit” means the Summit Parties and/or any direct or indirect Subsidiary of
such entities.
 
“Summit Bankshares” means Summit Federal Bankshares, Inc., a Federal corporation
having its principal place of business located at 393 Springfield Avenue,
Summit, New Jersey 07901.
 
“Summit Bankshares Common Stock” means the common stock of Summit Bankshares
described in Section 3.02(a).
 
“Summit Disclosure Schedules” means the Disclosure Schedules delivered by Summit
to Investors pursuant to Article III of this Agreement.
 
“Summit Employee Plan” has the meaning given to that term in Section 3.12 of
this Agreement.
 
“Summit Financials” means (i) the audited consolidated financial statements of
Summit Bankshares as of December 31, 2006 and 2005 and for the three years ended
December 31, 2006, including the notes thereto, and (ii) the unaudited interim
consolidated financial statements of Summit Bankshares as of each calendar
quarter following December 31, 2006.
 
“Summit MHC” means Summit Federal Bankshares, MHC, a Federal mutual holding
company having its principal place of business located at 393 Springfield
Avenue, Summit, New Jersey 07901.
 
“Summit Parties” means Summit Savings, Summit Bankshares and Summit MHC.
 
“Summit Regulatory Reports” means the Thrift Financial Reports of Summit Savings
and accompanying schedules, as filed with the OTS, for each calendar quarter
beginning with the quarter ended December 31, 2006, through the Closing Date,
and all Annual, Quarterly and Current Reports filed on Form H- (b) 11 with the
OTS by Summit Bankshares and Summit MHC from December 31, 2006 through the
Closing Date.

 
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“Summit Savings” means Summit Federal Savings Bank, a federally chartered
savings bank having its principal place of business located at 393 Springfield
Avenue, Summit, New Jersey 07901.
 
“Summit Subsidiary” means any corporation, 50% or more of the capital stock of
which is owned, either directly or indirectly, by Summit Bankshares, and
includes Summit Savings, except that it does not include any corporation the
stock of which is held in the ordinary course of the lending activities of
Summit Savings.
 

ARTICLE II
THE MERGER AND RELATED MATTERS

Section 2.01 Effects of Merger; Surviving Institutions.
 
The Mergers will be effected as follows:
 
(a) The Bank Merger. Summit Savings shall merge with and into Investors Bank
with Investors Bank as the surviving entity pursuant to the merger agreement
substantially in the form of Exhibit A hereto. The separate existence of Summit
Savings shall cease, and all of the property (real, personal and mixed), rights,
powers and duties and obligations of Summit Savings shall be transferred to and
assumed by Investors Bank as the surviving entity in the Bank Merger, without
further act or deed, all in accordance with the HOLA, and regulations of the
OTS, and if applicable the Banking Act. As a result of the Bank Merger, each
holder of a deposit account in Summit Savings as of the Merger Effective Date
shall have the same rights and privileges in Investors Bank as if the deposit
account had been established at Investors Bank, and all deposit accounts
established at Summit Savings prior to the Merger Effective Date shall confer on
a depositor the same rights and privileges in Investors Bank as if such deposit
account had been established at Investors Bank on the date established at Summit
Savings, including without limitation for purposes of any subscription rights in
any future conversion of Investors MHC to stock form.
 
(b) The MHC Merger. Summit MHC shall merge with and into Investors MHC with
Investors MHC as the surviving entity pursuant to the merger agreement
substantially in the form of Exhibit B hereto. The separate existence of Summit
MHC shall cease, and all of the property (real, personal and mixed), rights,
powers and duties and obligations of Summit MHC shall be transferred to and
assumed by Investors MHC as the surviving entity in the MHC Merger, without
further act or deed, all in accordance with the HOLA, and regulations of the
OTS. As a result of the MHC Merger, each holder of a deposit account in Summit
Savings as of the Merger Effective Date shall have the same rights and
privileges in Investors MHC as if such deposit account had been established at
Investors Bank, and all deposit accounts established at Summit Savings prior to
the Merger Effective Date shall confer on a depositor the same rights and
privileges in Investors MHC as if such deposit account had been established at
Investors Bank on the date established at Summit Savings, including without
limitation for purposes of any subscription rights in any future conversion of
Investors MHC to stock form.
 

 
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(c) The Mid-Tier Merger. Summit Bankshares shall merge with and into Investors
Bancorp, or a to-be-formed, wholly owned subsidiary thereof, with Investors
Bancorp (or its wholly-owned subsidiary) as the surviving entity pursuant to
this Agreement. The separate existence of Summit Bankshares shall cease, and all
of the property (real, personal and mixed), rights, powers and duties and
obligations of Summit Bankshares shall be transferred to and assumed by
Investors Bancorp (or its wholly-owned subsidiary) as the surviving entity in
the Mid-Tier Merger, without further act or deed, all in accordance with the
DGCL and/or the HOLA, and regulations of the OTS, as applicable.
 
(d) Modification of Structure. Notwithstanding any provision of this Agreement
to the contrary, Investors Bancorp may, subject to the filing of all necessary
applications and the receipt of all required regulatory approvals, modify the
structure of the transactions described in this Section 2.01, and the parties
shall enter into such alternative transactions, so long as (i) there are no
adverse tax consequences to any of the stockholders of Summit Bankshares or
member of Summit MHC as a result of such modification, and (ii) such
modification will not materially delay or jeopardize receipt of any required
regulatory approvals required under Section 6.01.
 
Section 2.02 Effect on Outstanding Shares of Investors Bancorp Common Stock.
 
At and after the Mid-Tier Merger Effective Time, each share of Investors Bancorp
Common Stock issued and outstanding immediately prior to the Effective Time
shall remain an issued and outstanding share of common stock of Investors
Bancorp and shall not be affected by the Merger, and each share of Investors
Bank Common Stock issued and outstanding immediately prior to the Mid-Tier
Effective Time shall remain an issued and outstanding share of Common Stock of
Investors Bank and shall not be affected by the Merger.
 
Section 2.03 Additional Director.
 
As of the Bank Merger Effective Date, Richard Petroski shall be appointed to the
Board of Directors of Investors MHC, Investors Bancorp, and Investors Bank. Mr.
Petroski will be eligible to participate in the benefit plans as set forth in
Investors Disclosure Schedule 2.03. Following Mr. Petroski’s retirement from
these Boards of Directors, William V. Cosgrove will be appointed to the Board of
Directors of Investors MHC, Investors Bancorp and Investors Bank.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUMMIT

Summit represents and warrants to Investors that the statements contained in
this Article III are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article III), except as set forth in the Summit Disclosure
Schedules delivered to Investors on the date hereof, and except as to any
representation or warranty which relates to a specific date. Summit has made a
good faith effort to ensure that the disclosure on each schedule of the Summit
Disclosure Schedules corresponds to the section reference herein. However, for
purposes of the Summit Disclosure Schedules, any item disclosed on any schedule
therein is deemed to be fully disclosed with respect to all schedules under
which such item may be relevant.

 
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Section 3.01 Organization
 
(a) Summit MHC is a Federal mutual holding company organized, validly existing
and in good standing under the laws of the United States, and is duly registered
as a savings and loan holding company under the HOLA. Summit MHC has full power
and authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on Summit. Summit MHC has
no subsidiary other than Summit Bankshares and Summit Savings.
 
(b) Summit Bankshares is a Federal corporation organized, validly existing and
in good standing under the laws of the United States, and is duly registered as
a savings and loan holding company under the HOLA. Summit Bankshares has the
full corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a Material Adverse Effect
on Summit. Other than shares of capital stock in Summit Savings and its
subsidiaries, as identified below (collectively, the “Summit Subsidiaries”),
Summit Bankshares does not own or control, directly or indirectly, or have the
right to acquire directly or indirectly, an equity interest in any corporation,
company, association, partnership, joint venture or other entity.
 
(c) Summit Savings is a Federal savings bank organized, validly existing and in
good standing under the laws of the United States. Summit Savings is the only
Summit Subsidiary. The deposits of Summit Savings are insured by the FDIC to the
fullest extent permitted by law, and all premiums and assessments required to be
paid in connection therewith have been paid when due by Summit Savings.
 
(d) Summit Savings is a member in good standing of the FHLB of New York and owns
the requisite amount of stock therein.
 
(e) The respective minute books of Summit MHC, Summit Bankshares and Summit
Savings accurately records, in all material respects, all material corporate
actions of their respective stockholders and boards of directors (including
committees) through the date of this Agreement.
 
(f) Prior to the date of this Agreement, Summit has made available to Investors
true and correct copies of the charters and bylaws of Summit Savings, Summit
Bankshares and Summit MHC.
 

 
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Section 3.02 Capitalization
 
(a)  The authorized capital stock of Summit Bankshares consists of ten million
(10,000,000) shares of common stock, $0.10 par value (“Summit Bankshares Common
Stock”), and one million (1,000,000) shares of Preferred Stock, $0.10 par value
(the “Summit Preferred Stock”). There are one hundred (100) shares of Summit
Bankshares Common Stock outstanding, validly issued, fully paid and
nonassessable and free of preemptive rights, all of which are held by Summit
MHC. There are no shares of Summit Bankshares Preferred Stock issued and
outstanding. There are no shares of Summit Bankshares Common Stock held by
Summit Bankshares as treasury stock. Neither Summit Bankshares nor any Summit
Subsidiary has or is bound by any Right of any character relating to the
purchase, sale, issuance or voting of, or right to receive dividends or other
distributions on, any shares of Summit Bankshares Common Stock, or any other
security of Summit Bankshares or any Summit Subsidiary, or any securities
representing the right to vote, purchase or otherwise receive any shares of
Summit Bankshares Common Stock or any other security of Summit Bankshares.
 
(b)  Summit MHC owns all of the issued and outstanding shares of Summit
Bankshares Common Stock, free and clear of any lien or encumbrance. Except for
shares of Summit Bankshares Common Stock (and any equity interests that may be
attributed to Summit MHC due to its ownership of Summit Bankshares Common
Stock), Summit MHC does not possess, directly or indirectly, any equity interest
in any corporation.
 
(c)  The authorized capital stock of Summit Savings consists of ten million
(10,000,000) shares of common stock, $0.10 par value, and one million
(1,000,000) shares of Preferred Stock, $0.10 par value. There are one hundred
(100) shares of Summit Savings common stock outstanding, all of which are
validly issued, fully paid and nonassessable and free of preemptive rights, and
all of which are owned by Summit Bankshares free and clear of any liens,
encumbrances, charges, restrictions or rights of third parties of any kind
whatsoever.
 
Section 3.03 Authority; No Violation
 
(a) Summit has full power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Summit and the completion by Summit of the
transactions contemplated hereby have been duly and validly approved by the
requisite vote of each Board of Directors of the Summit Parties, by Summit MHC
as the sole stockholder of Summit Bankshares and by Summit Bankshares as the
sole stockholder of Summit Savings, and, except for any required approval from
the members of Summit MHC, no other proceedings on the part of the Summit
Parties are necessary to complete the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Summit and,
subject, if required, to the approval of the members of Summit MHC and the
receipt of the required approvals of the Regulatory Authorities, constitutes the
valid and binding obligations of Summit, enforceable against Summit in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally, and as to Summit Savings,
the conservatorship or receivership provisions of the FDIA, and subject, as to
enforceability, to general principles of equity.
 

 
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(b) Subject to the receipt of approvals from the Regulatory Authorities and the
compliance by Summit and Investors with any conditions contained therein,
 
(A) the execution and delivery of this Agreement by Summit,
 
(B) the consummation of the transactions contemplated hereby, and
 
(C) compliance by Summit with any of the terms or provisions hereof,
 
will not: (i) conflict with or result in a material breach of any provision of
the charters or bylaws of any of the Summit Parties or the certificate of
incorporation of any Summit Subsidiary; (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Summit Parties or any of the properties or assets of the
Summit Parties; or (iii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of Summit under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other investment or obligation to which
Summit is a party, or by which they or any of their respective properties or
assets may be bound or affected, except in the case of clause (iii) above, for
violations which, individually or in the aggregate, would not have a Material
Adverse Effect on Summit.
 
Section 3.04 Consents
 
Except for the consents, waivers, approvals, filings and registrations from or
with the Regulatory Authorities and compliance with any conditions contained
therein, and the approval, if required, of the members of Summit MHC, no
consents, waivers or approvals of, or filings or registrations with, any public
body or governmental authority are necessary, and, to the best knowledge of
Summit, no consents, waivers or approvals of, or filings or registrations with,
any other third parties are necessary, in connection with (a) the execution and
delivery of this Agreement by Summit, and (b) the completion by Summit of the
transactions described in this Agreement.

Section 3.05 Summit Regulatory Reports and Financial Statements 
 
(a) Summit has previously made available to Investors the Summit Regulatory
Reports. The Summit Regulatory Reports have been, or will be, prepared in all
material respects in accordance with applicable regulatory accounting principles
and practices throughout the periods covered by such statements, and fairly
present, or will fairly present in all material respects, the consolidated
financial position, results of operations and changes in stockholders’ equity of
each of the Summit Parties as of and for the periods ended on the dates thereof,
in accordance with applicable regulatory accounting principles applied on a
consistent basis.

(b) Summit has previously made available to Investors the Summit Financials. The
Summit Financials (including the related notes where applicable) fairly present
in each case in all material respects (subject in the case of the unaudited
interim statements to normal year-end adjustments), the consolidated financial
condition, results of operations and cash flows of Summit Bankshares as of and
for the respective periods ending on the dates thereof and have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
except as indicated therein.
 

 
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(c) At the date of each balance sheet included in the Summit Financials or the
Summit Regulatory Reports, Summit did not have, and will not have, any
liabilities, obligations or loss contingencies of any nature (whether absolute,
accrued, contingent or otherwise) of a type required to be reflected in such
Summit Financials or Summit Regulatory Reports or in the footnotes thereto which
are not fully reflected or reserved against therein or fully disclosed in a
footnote thereto, except for liabilities, obligations and loss contingencies
that are not material individually or in the aggregate or which are incurred in
the ordinary course of business, consistent with past practice, and except for
liabilities, obligations and loss contingencies that are within the subject
matter of a specific representation and warranty herein and subject, in the case
of any unaudited statements, to normal, recurring audit adjustments and the
absence of footnotes.
 
Section 3.06 Taxes 
 
Summit Bankshares and the Summit Subsidiaries are members of the same affiliated
group within the meaning of IRC Section 1504(a). Summit has duly filed all
Federal, state and material local tax returns required to be filed by or with
respect to it on or prior to the date hereof (all such returns being accurate
and correct in all material respects) and has duly paid or has made provisions
for the payment of, all material Federal, state and local taxes which have been
incurred by or are due or claimed to be due from Summit by any taxing authority
or pursuant to any written tax sharing agreement on or prior to the date hereof
other than taxes or other charges which (i) are not delinquent, (ii) are being
contested in good faith, or (iii) have not yet been fully determined. As of the
date of this Agreement, there is no audit examination, deficiency assessment,
tax investigation or refund litigation with respect to any taxes of Summit, and
no claim has been made by any authority in a jurisdiction where Summit does not
file tax returns that Summit is subject to taxation in that jurisdiction. Summit
has not executed an extension or waiver of any statute of limitations on the
assessment or collection of any material tax due that is currently in effect.
Summit has withheld and paid all taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor or stockholder, and Summit has timely complied with all
applicable information reporting requirements under Part III, Subchapter A of
Chapter 61 of the IRC and similar applicable state and local information
reporting requirements.

Section 3.07 No Material Adverse Effect
 
Summit has not suffered any Material Adverse Effect since December 31, 2006.

Section 3.08 Contracts
 
(a) Except as set forth in Summit Disclosure Schedule 3.08(a), Summit is not a
party to or subject to:
 

 
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(i) any employment, consulting or severance contract or material arrangement
with any past or present officer, director or employee of Summit except for “at
will” arrangements;
 
(ii) any plan, material arrangement or contract providing for bonuses, pensions,
options, deferred compensation, retirement payments, profit sharing or similar
material arrangements for or with any past or present officers, directors or
employees of Summit;
 
(iii) any collective bargaining agreement with any labor union relating to
employees of Summit;
 
(iv) any agreement which by its terms limits the payment of dividends by Summit
Savings or Summit Bankshares;
 
(v) any instrument evidencing or related to material indebtedness for borrowed
money whether directly or indirectly, by way of purchase money obligation,
conditional sale, lease purchase, guaranty or otherwise, in respect of which
Summit is an obligor to any person, which instrument evidences or relates to
indebtedness other than deposits, repurchase agreements, bankers’ acceptances,
advances from the FHLB of New York, and “treasury tax and loan” accounts
established in the ordinary course of business and transactions in “Federal
funds” or which contains financial covenants or other restrictions (other than
those relating to the payment of principal and interest when due) which would be
applicable on or after the Closing Date to Investors; or
 
(vi) any contract (other than this Agreement) limiting the freedom, in any
material respect, of Summit to engage in any type of banking or bank-related
business in which Summit is permitted to engage under applicable law as of the
date of this Agreement.
 
(b) True and correct copies of agreements, plans, contracts, arrangements and
instruments referred to in Section 3.08(a), have been made available to
Investors on or before the date hereof, are listed in and attached to Summit
Disclosure Schedule 3.08(a) and are in full force and effect on the date hereof,
and Summit (nor, to the knowledge of Summit, any other party to any such
contract, plan, arrangement or instrument) has not materially breached any
provision of, or is in default in any respect under any term of, any such
contract, plan, arrangement or instrument. Except as set forth in the Summit
Disclosure Schedule 3.08(b), no party to any material contract, plan,
arrangement or instrument will have the right to terminate any or all of the
provisions of any such contract, plan, arrangement or instrument as a result of
the execution of, and the transactions contemplated by, this Agreement. None of
the employees (including officers) of Summit possesses the right to terminate
his/her employment and receive or be paid (or cause Summit to accrue on his/her
behalf) benefits solely as a result of the execution of this Agreement or the
consummation of the transactions contemplated hereby. No plan, contract,
employment agreement, termination agreement, or similar agreement or arrangement
to which Summit is a party or under which Summit may be liable contains
provisions which permit any employee or independent contractor to terminate it
without cause and continue to accrue future benefits thereunder. Except as set
forth in Summit Disclosure Schedule 3.08(b), no such agreement, plan, contract,
or arrangement provides for acceleration in the vesting of benefits or payments
due thereunder upon the occurrence of a change in ownership or control of Summit
or upon the occurrence of a subsequent event.
 

 
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Section 3.09 Ownership of Property; Insurance Coverage.
 
(a) Summit has good and, as to real property, marketable title to all material
assets and properties owned by Summit in the conduct of its business, whether
such assets and properties are real or personal, tangible or intangible,
including assets and property reflected in the balance sheets contained in the
Summit Regulatory Reports and in the Summit Financials or acquired subsequent
thereto (except to the extent that such assets and properties have been disposed
of in the ordinary course of business, since the date of such balance sheets),
subject to no material encumbrances, liens, mortgages, security interests or
pledges, except (i) those items which secure liabilities for public or statutory
obligations or any discount with, borrowing from or other obligations to the
FHLB of New York, inter-bank credit facilities, or any transaction by Summit
acting in a fiduciary capacity, and (ii) statutory liens for amounts not yet
delinquent or which are being contested in good faith. Summit, as lessee, has
the right under valid and subsisting leases of real and personal properties used
by Summit in the conduct of its businesses to occupy or use all such properties
as presently occupied and used by each of them. Except as disclosed in Summit
Disclosure Schedule 3.09(a), such existing leases and commitments to lease
constitute operating leases for both tax and financial accounting purposes and
the lease expense and minimum rental commitments with respect to such leases and
lease commitments are as disclosed in the notes to the Summit Financials.
 
(b) With respect to all material agreements pursuant to which Summit has
purchased securities subject to an agreement to resell, if any, Summit has a
lien or security interest (which to the knowledge of Summit is a valid,
perfected first lien) in the securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.
 
(c) Summit currently maintains insurance considered by Summit to be reasonable
for its operations, in accordance with good business practice. Summit has not
received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no material claims pending under such policies of
insurance and no notices have been given by Summit under such policies. All such
insurance is valid and enforceable and in full force and effect, and within the
last three years Summit has received each type of insurance coverage for which
it has applied and during such periods has not been denied indemnification for
any material claims submitted under any of its insurance policies. Summit
Disclosure Schedule 3.09(c) identifies all policies of insurance maintained by
Summit.
 

 
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Section 3.10 Legal Proceedings. 
 
Except as disclosed in Summit Disclosure Schedule 3.10, Summit is not a party to
any, and there are no pending or, to the best of the knowledge of Summit,
threatened legal, administrative, arbitration or other proceedings, actions or
governmental investigations of any nature (i) against Summit, (ii) to which the
assets of Summit are or may be subject, (iii) challenging the validity or
propriety of any of the transactions contemplated by this Agreement, or (iv)
which could adversely affect the ability of Summit to perform under this
Agreement, except for any proceedings, claims, actions, investigations or
inquiries referred to in clauses (i) or (ii) which, if adversely determined,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Summit.
 
Section 3.11 Compliance With Applicable Law
 
(a) Each Summit Party holds all licenses, franchises, permits and authorizations
necessary for the lawful conduct of its businesses under, and has complied in
all material respects with, applicable laws, statutes, orders, rules or
regulations of any Federal, state or local governmental authority relating to
it, other than where such failure to hold or such noncompliance will neither
result in a limitation in any material respect on the conduct of its business
nor otherwise have a Material Adverse Effect on Summit. Each Summit Party,
directly or indirectly, owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
copyrights and any applications therefor, technology, know-how and tangible or
intangible proprietary information or material that are material to the business
of Summit.
 
(b)  Each Summit Party is in substantial compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable to it, its properties, assets and
deposits, its business, and its conduct of business and its relationship with
its employees, including, without limitation, the Equal Credit Opportunity Act,
the Fair Housing Act, the Community Reinvestment Act of 1977, the Home Mortgage
Disclosure Act and all other applicable fair lending laws and other laws
relating to discriminatory business practices. The most recent regulatory rating
given to Summit Savings as to compliance with the Community Reinvestment Act
(“CRA”) is satisfactory or better.

(c) Without limiting the foregoing, Summit Savings and each of Summit Subsidiary
is operating in compliance with: (i) the federal Bank Secrecy Act, as amended,
(the “USA Patriot Act”), and the regulations promulgated thereunder, any order
issued with respect to anti-money laundering by the U.S Department of the
Treasury’s Office of Foreign Assets Control, or any other applicable anti-money
laundering law, statute, rule or regulation, and (ii) applicable privacy or
customer information requirements contained in any federal or state privacy laws
and regulations, including, without limitation, in Title V of the
Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder. The board
of directors of Summit Savings and each of its Subsidiaries that qualifies as a
“financial institution” under applicable anti-money laundering laws has (x)
adopted and implemented an anti-money laundering program that contains adequate
and appropriate customer identification certification procedures that has not
been deemed ineffective by any Regulatory Authority and that meets the
requirements of Section 352 of the USA Patriot Act and the regulations
thereunder, and (y) during the past three years, implemented such anti-money
laundering mechanisms and kept and filed all material reports and other
necessary material documents as required by, and otherwise complied with,
applicable anti-money laundering laws.

 
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(d) Summit has not received any notification or communication from any
Regulatory Authority (i) asserting that Summit is not in material compliance
with any of the statutes, regulations or ordinances that such Regulatory
Authority enforces; (ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to Summit; (iii) requiring or
threatening to require Summit, or indicating that Summit may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement with any Federal or state governmental agency or authority
which is charged with the supervision or regulation of banks or engages in the
insurance of bank deposits restricting or limiting, or purporting to restrict or
limit, in any material respect the operations of Summit, including without
limitation any restriction on the payment of dividends; or (iv) directing,
restricting or limiting, or purporting to direct, restrict or limit, in any
material manner the operations of Summit, including without limitation any
restriction on the payment of dividends (any such notice, communication,
memorandum, agreement or order described in this sentence is hereinafter
referred to as a “Regulatory Agreement”). Summit has not consented to or entered
into any currently effective Regulatory Agreement. The most recent regulatory
rating given to Summit Savings as to compliance with the Community Reinvestment
Act (“CRA”) is satisfactory or better.
 
Section 3.12 ERISA.
 
(a) Summit Disclosure Schedule 3.12(a) contains a complete and accurate list of
all pension, retirement, stock option, stock purchase, stock ownership, savings,
stock appreciation right, profit sharing, deferred compensation, consulting,
bonus, group insurance, severance and other benefit plans, contracts, agreements
and arrangements, including, but not limited to, “employee benefit plans,” as
defined in Section 3(3) of ERISA, incentive and welfare policies, contracts,
plans and arrangements and all trust agreements related thereto with respect to
any present or former directors, officers or other employees of Summit
(hereinafter collectively referred to as the “Summit Employee Plans” and
individually as a “Summit Employee Plan”). If such plan, contract, agreement or
arrangement is funded through a trust or third party funding vehicle, such as an
insurance contract, the Summit Disclosure Schedule 3.12 (a) includes such trust
or other funding arrangement.
 
(b) Each of the Summit Employee Plans complies in all material respects with all
applicable requirements of ERISA, the IRC and other applicable laws; and there
has occurred no “prohibited transaction” (as defined in Section 406 of ERISA or
Section 4975 of the IRC) for which no statutory exemption exists under Section
408(b) of ERISA or Section 4975(d) of the IRC or for which no administrative
exemption has been granted under Section 408(a) of ERISA.
 

 
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(c) Except as set forth in Summit Disclosure Schedule 3.12(c), no liability,
other than PBGC premiums arising in the ordinary course of business, has been or
is expected by Summit to be incurred with respect to any Summit Employee Plan
which is a defined benefit plan subject to Title IV of ERISA (“Summit Defined
Benefit Plan”), or with respect to any “single-employer plan” (as defined in
Section 4001(a) of ERISA) currently or formerly maintained by Summit or any
entity which is considered one employer with Summit under Section 4001(b)(1) of
ERISA or Section 414 of the IRC (an “ERISA Affiliate”) (such plan hereinafter
referred to as an “ERISA Affiliate Plan”). To the Knowledge of Summit, except as
set forth in Summit Disclosure Schedule 3.12(c), no Summit Defined Benefit Plan
had an “accumulated funding deficiency” (as defined in Section 302 of ERISA),
whether or not waived, as of the last day of the end of the most recent plan
year ending prior to the date hereof. Except as set forth in Summit Disclosure
Schedule 3.12(c), the fair market value of the assets of each Summit Defined
Benefit Plan exceeds the present value of the benefits guaranteed under Section
4022 of ERISA under such Summit Defined Benefit Plan as of the end of the most
recent plan year with respect to the respective Summit Defined Benefit Plan
ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such Summit Defined
Benefit Plan as of the date hereof; and no notice of a “reportable event” (as
defined in Section 4043 of ERISA) for which the 30-day reporting requirement has
not been waived has been required to be filed for any Summit Defined Benefit
Plan within the 12-month period ending on the date hereof. Except as set forth
in Summit Disclosure Schedule 3.12(c), Summit has not provided, nor is required
to provide, security to any Summit Defined Benefit Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
IRC or has taken any action, or omitted to take any action, that has resulted,
or would reasonably be expected to result in the imposition of a lien under
Section 412(n) of the IRC or pursuant to ERISA. To the Knowledge of Summit, and
except as set forth in Summit Disclosure Schedule.3.12(c), there is no pending
investigation or enforcement action by any Bank Regulator with respect to any
Employee Plan or any ERISA Affiliate Plan.
 
(d) Each Summit Employee Plan that is an “employee pension benefit plan” (as
defined in Section 3(2) of ERISA) and which is intended to be qualified under
Section 401(a) of the IRC (a “Qualified Plan”) has received a favorable
determination letter from the IRS, and Summit is not aware of any circumstances
likely to result in revocation of any such favorable determination letter. There
is no pending or, to the knowledge of Summit, threatened litigation,
administrative action or proceeding relating to any Summit Employee Plan. There
has been no announcement or commitment by Summit to create an additional Summit
Employee Plan, or to amend any Summit Employee Plan, except for amendments
required by applicable law; and, except as specifically identified in Summit
Disclosure Schedules, Summit does not have any obligations for post-retirement
or post-employment benefits under any Summit Employee Plan that cannot be
amended or terminated upon 60 days’ notice or less without incurring any
liability thereunder, except for coverage required by Part 6 of Title I of ERISA
or Section 4980B of the IRC, or similar state laws, the cost of which is borne
by the insured individuals. With respect to each Summit Employee Plan, Summit
has supplied to Investors a true and correct copy of (A) the annual report on
the applicable form of the Form 5500 series filed with the IRS for the most
recent three plan years, if required to be filed, (B) such Summit Employee Plan,
including amendments thereto, (C) each trust agreement, insurance contract or
other funding arrangement relating to such Summit Employee Plan, including
amendments thereto, (D) the most recent summary plan description and summary of
material modifications thereto for such Summit Employee Plan, if the Summit
Employee Plan is subject to Title I of ERISA, and (E) the most recent
determination letter issued by the IRS if such Employee Plan is a Qualified
Plan. All accrued contributions and other payments required to be made by Summit
or Summit Savings to any Summit Employee Plan through the date hereof, have been
made or reserves adequate for such purposes, as of the date hereof, have been
set aside therefore and reflected in Summit consolidated financial statements to
the extent required by GAAP, and Summit has expensed and accrued as a liability
the present value of future benefits under each Summit Employee Plan for
financial reporting purposes to the extent required by GAAP. Summit has no
commitment to create any additional Summit Employee Plan except as may be
contemplated herein, or to materially modify, change or renew any existing
Summit Employee Plan (any modification or change that increases the cost of such
plans would be deemed material), except as required to maintain the qualified
status thereof or as otherwise may be required by law.
 

 
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(e) No compensation payable by Summit to any of its employees under any Summit
Employee Plan (including by reason of the transactions contemplated hereby) will
be subject to disallowance under Section 162(m) of the IRC.
 
(f) Except as set forth on Summit Disclosure Schedule 3.12(f), Summit does not
have any liability for any post-retirement health, medical or similar benefit of
any kind whatsoever, except as required by statute or regulation. With respect
to any benefit set forth on Summit Disclosure Schedule 3.12(f), such schedule
identifies the method of funding and the funded status of such benefit.
 
(g) All Summit Employee Plans that are group health plans have been operated in
compliance with the group health plan continuation requirements of Section 4980B
of the IRC and Sections 601-609 of ERISA and with the certification of prior
coverage and other requirements of Sections 701-702 and 711-713 of ERISA.
 
Section 3.13 Brokers, Finders and Financial Advisors
 
Except as set forth in Summit Disclosure Schedule 3.13, neither Summit, nor any
of its officers, directors, employees or agents, has engaged or retained any
broker, finder or financial advisor in connection with the transactions
contemplated by this Agreement, or incurred any liability or commitment for any
fees or commissions to any such person in connection with the transactions
contemplated by this Agreement, which has not been reflected in the Summit
Financials.
 
Section 3.14 Environmental Matters
 
(a) To the Knowledge of Summit, neither the conduct nor operation of their
business nor any condition of any property currently or previously owned or
operated by any Summit Party or any Summit Subsidiary (including, without
limitation, in a fiduciary or agency capacity), or on which any of them holds a
lien, results or resulted in a violation of any Environmental Laws that is
reasonably likely to impose a material liability (including a material
remediation obligation) upon any Summit Party or any of Summit Subsidiary. To
the Knowledge of Summit, no condition has existed or event has occurred with
respect to any of them or any such property that, with notice or the passage of
time, or both, is reasonably likely to result in any material liability to any
Summit Party or any Summit Subsidiary by reason of any Environmental Laws. No
Summit Party nor any Summit Subsidiary has received any written notice from any
Person that any Summit Party or any Summit Subsidiary or the operation or
condition of any property ever owned, operated, or held as collateral or in a
fiduciary capacity by any of them is currently in violation of or otherwise are
alleged to have financial exposure under any Environmental Laws or relating to
Hazardous Materials (including, but not limited to, responsibility (or potential
responsibility) for the cleanup or other remediation of any Hazardous Materials
at, on, beneath, or originating from any such property) for which a material
liability is reasonably likely to be imposed upon any Summit Party or any Summit
Subsidiary.
 

 
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(b) There is no suit, claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending or, to Summit’s Knowledge,
threatened, before any court, governmental agency or other forum against any
Summit Party or any Summit Subsidiary (x) for alleged noncompliance (including
by any predecessor) with, or liability under, any Environmental Law or (y)
relating to the presence of or release into the environment of any Hazardous
Materials, whether or not occurring at or on a site owned, leased or operated by
any of the Summit Parties or any Summit Subsidiary.
 
Section 3.15 Loan Portfolio.
 
(a) Except as set forth in Summit Disclosure Schedule 3.15, Summit is not a
party to any written or oral loan agreement, note or borrowing arrangement
(including, without limitation, leases and credit enhancements) (collectively,
“Loans”) the unpaid principal balance of which exceeds $50,000 and as to which
the obligor is, as of the date of this Agreement, over 90 days delinquent in
payment of principal or interest. To the knowledge of Summit, all of the Loans
originated and held currently and at the Merger Effective Date by Summit, and
any other Loans purchased and held currently and at the Merger Effective Date by
Summit, were solicited, originated and exist, and will exist at the Merger
Effective Date, in material compliance with all applicable loan policies and
procedures of Summit. Summit Disclosure Schedule 3.15 sets forth as of March 31,
2007, (i) all of the Loans that as of the date of this Agreement are classified
by Summit as “Other Loans Specially Mentioned”, “Special Mention”,
“Substandard”, “Doubtful”, “Loss”, “Classified”, “Criticized”, “Watch list” or
words of similar import, together with the principal amount of and accrued and
unpaid interest on each such Loan and the identity of the obligor thereunder,
and (ii) by category of Loan (i.e., commercial, consumer, etc.), all of the
other Loans of Summit that as of the date of this Agreement are classified as
such, together with the aggregate principal amount of such Loans by category, it
being understood that no representation is being made that the OTS would agree
with the loan classifications contained in Summit Disclosure Schedule 3.15.
Summit shall promptly inform Investors in writing of any Loan the original
principal balance of which exceeds $50,000 that becomes classified in the manner
described in this Section 3.15, or any Loan the classification of which is
materially and adversely changed at any time after the date of this Agreement.
The information with respect to the Loans furnished to Investors by Summit is
true and complete in all material respects.

(b) The allowance for possible losses reflected in the audited statement of
condition of Summit Savings at December 31, 2006 was, and the allowance for
possible losses shown on the balance sheets of Summit Savings for periods ending
after December 31, 2006 as reflected in the Regulatory Reports have been and
will be adequate, as of the dates thereof, under GAAP.
 

 
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Section 3.16 [Intentionally left blank]
 
Section 3.17 Related Party Transactions
 
Except as disclosed in Summit Disclosure Schedule 3.17, Summit is not a party to
any transaction (including any loan or other credit accommodation but excluding
deposit transactions in the ordinary course of business) with an Affiliate.
Except as disclosed in Summit Disclosure Schedule 3.17, all such transactions
(a) were made in the ordinary course of business, (b) were made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other Persons, and (c) did not involve
more than the normal risk of collectability or present other unfavorable
features. No loan or credit accommodation to an Affiliate is presently in
default or, during the three-year period prior to the date of this Agreement,
has been in default or has been restructured, modified or extended. Summit has
not been notified that principal and interest with respect to any such loan or
other credit accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation is inappropriate.
 
Section 3.18 Deposits
 
None of the deposits of Summit is a “brokered” deposit as defined in 12 U.S.C.
Section 1831f(g).
 
Section 3.19 Derivative Transactions
 
Summit has not entered into any future or option contracts, exchange rate swaps,
caps or floors, or other interest rate or exchange rate risk management
instruments or arrangements.
 

 
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTORS

Investors represents and warrants to Summit that the statements contained in
this Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article IV), except as set forth in the Investors Disclosure
Schedules delivered by Investors on the date hereof, and except as to any
representation or warranty that relates to a specific date. Investors has made a
good faith effort to ensure that the disclosure on each schedule of the
Investors Disclosure Schedules corresponds to the section referenced herein.
However, for purposes of the Investors Disclosure Schedules, any item disclosed
on any schedule therein is deemed to be fully disclosed with respect to all
schedules under which such item may be relevant.
 
Section 4.01 Organization
 
(a) Investors MHC is a mutual holding company organized, validly existing and in
good standing under the laws of New Jersey, and is duly registered as a bank
holding company. Investors MHC has full power and authority to carry on its
business as now conducted and is duly licensed or qualified to do business in
the states of the United States and foreign jurisdictions where its ownership or
leasing of property or the conduct of its business requires such qualification,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Investors MHC.
 
(b) Investors Bancorp is a corporation organized, validly existing and in good
standing under the laws of Delaware, and is duly registered as a bank holding
company. Investors Bancorp has the full corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing would not have a Material Adverse
Effect on Investors Bancorp.
 
(c) Investors Bank is a savings bank organized, validly existing and in good
standing under the laws of the State of New Jersey. The deposits of Investors
Bank are insured by the FDIC to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have been
paid when due by Investors Bank. Each Investors Subsidiary is identified in
exhibits to Investors Bancorp’s Form 10-K for the fiscal year ended June 30,
2006, filed with the SEC, and is a corporation organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization.
 
(d) Investors Bank is a member in good standing of the FHLB of New York and owns
the requisite amount of stock therein.
 

 
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(e) Prior to the date of this Agreement, Investors has made available to Summit
true and correct copies of the certificates of incorporation and bylaws of
Investors MHC, Investors Bancorp, and Investors Bank.
 
Section 4.02 Capitalization
 
(a)  The authorized capital stock of Investors Bancorp consists of 200,000,000
shares of common stock, $0.01 par value (“Investors Bancorp Common Stock”), and
50,000,000 shares of Preferred Stock, $0.01 par value (the “Investors Bancorp
Preferred Stock”). There are 110,835,952 shares of Investors Bancorp Common
Stock outstanding, validly issued, fully paid and nonassessable and free of
preemptive rights. There are no shares of Investors Bancorp Preferred Stock
issued and outstanding. There are 5,439,736 shares of Investors Bancorp Common
Stock held by Investors Bancorp as treasury stock. Neither Investors Bancorp nor
any Investors Subsidiary has or is bound by any Right of any character relating
to the purchase, sale, issuance or voting of, or right to receive dividends or
other distributions on, any shares of Investors Bancorp Common Stock, or any
other security of Investors Bancorp or any Investors Subsidiary, or any
securities representing the right to vote, purchase or otherwise receive any
shares of Investors Bancorp Common Stock or any other security of Investors
Bancorp, other than as set forth in the Investors Disclosure Schedule 4.02(a).
 
(b)  Investors MHC owns 63,099,781 shares of Investors Bancorp Common Stock,
free and clear of any lien or encumbrance. Except as disclosed in Investors
Disclosure Schedule 4.02(b) and except for shares of Investors Bancorp Common
Stock (and any equity interests that may be attributed to Investors MHC due to
its ownership of Investors Bancorp Common Stock), Investors MHC does not
possess, directly or indirectly, any equity interest in any corporation.
 
(c) The authorized capital stock of Investors Bank consists of five million
(5,000,000) shares of common stock, $2.00 par value, and no shares of Preferred
Stock. There are two-hundred fifty thousand (250,000) shares of Investors Bank
common stock outstanding, all of which are validly issued, fully paid and
nonassessable and free of preemptive rights, and all of which are owned by
Investors Bancorp free and clear of any liens, encumbrances, charges,
restrictions or rights of third parties of any kind whatsoever.
 
 Section 4.03 Authority; No Violation
 
(a) Investors has full power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Investors and the completion by Investors of the
transactions contemplated hereby have been duly and validly approved by the
requisite vote of each Board of Directors of the Investors Parties, and by
Investors Bancorp in its capacity as sole stockholder of Investors Bank, and no
other corporate proceedings on the part of Investors are necessary to complete
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Investors and, subject to receipt of the required
approvals of Regulatory Authorities described in Section 4.03 hereof,
constitutes the valid and binding obligation of Investors, enforceable against
Investors in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally.
 

 
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(b) Subject to the receipt of approvals from the Regulatory Authorities and the
compliance by Summit and Investors with any conditions contained therein,
 
(A) the execution and delivery of this Agreement by Investors,
 
(B) the consummation of the transactions contemplated hereby, and
 
(C) compliance by Investors with any of the terms or provisions hereof,
 
will not: (i) conflict with or result in a breach of any provision of the
certificate of incorporation or bylaws of Investors MHC or Investors Bancorp, or
the certificate of incorporation or bylaws of Investors Bank or any Investors
Subsidiary; (ii) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Investors or any
Investors Subsidiary or any of their respective properties or assets; or (iii)
violate, conflict with, result in a breach of any provisions of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default), under, result in the termination of, accelerate the
performance required by, or result in a right of termination or acceleration or
the creation of any lien, security interest, charge or other encumbrance upon
any of the properties or assets of Investors under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other investment or obligation to which Investors is a
party, or by which it or any of its properties or assets may be bound or
affected, except in the case of clause (iii) above, for violations which
individually or in the aggregate would not have a Material Adverse Effect on
Investors.
 
Section 4.04 Consents
 
Except for consents, waivers, approvals, filings and registrations from or with
the Regulatory Authorities, and compliance with any conditions contained
therein, and the approval of this Agreement, if necessary, by the members of
Summit MHC, no consents, waivers or approvals of, or filings or registrations
with, any public body or governmental authority are necessary, and no consents,
waivers or approvals of, or filings or registrations with, any third parties are
necessary in connection with (a) the execution and delivery of this Agreement by
Investors, and (b) the completion by Investors of the transactions contemplated
hereby.
 
Section 4.05 Investors Financial Statements 
 
(a) Investors Bancorp has previously made available to Summit the Investors
Financials. The Investors Financials (including the related notes where
applicable) fairly present in each case in all material respects (subject in the
case of the unaudited interim statements to normal year-end adjustments), the
consolidated financial condition, results of operations and cash flows of
Investors Bancorp as of and for the respective periods ending on the dates
thereof and have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved, except as indicated therein, or in the case
of unaudited statements, as permitted by Form 10-Q.
 

 
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(b) At the date of each balance sheet included in the Investors Financials,
Investors did not have, and will not have, any liabilities, obligations or loss
contingencies of any nature (whether absolute, accrued, contingent or otherwise)
of a type required to be reflected in such Investors Financials or in the
footnotes thereto which are not fully reflected or reserved against therein or
fully disclosed in a footnote thereto, except for liabilities, obligations and
loss contingencies that are not material individually or in the aggregate or
which are incurred in the ordinary course of business, consistent with past
practice, and except for liabilities, obligations and loss contingencies that
are within the subject matter of a specific representation and warranty herein
and subject, in the case of any unaudited statements, to normal, recurring audit
adjustments and the absence of footnotes.
 
Section 4.06 Material Adverse Effect
 
Investors has not suffered any Material Adverse Effect since December 31, 2006.
 
Section 4.07 Legal Proceedings
 
Investors is not a party to any, and there are no pending or, to the best of
Investors’ knowledge, threatened legal, administrative, arbitration or other
proceedings, actions or governmental investigations of any nature (i) against
Investors, (ii) to which Investors’ assets are or may be subject, (iii)
challenging the validity or propriety of any of the transactions contemplated by
this Agreement, or (iv) which could adversely affect the ability of Investors to
perform under this Agreement, except for any proceedings, claims, actions,
investigations or inquiries referred to in clauses (i) or (ii) which, if
adversely determined, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Investors.
 
Section 4.08 Compliance With Applicable Law
 
(a) Each Investors Party holds all licenses, franchises, permits and
authorizations necessary for the lawful conduct of its businesses under, and has
complied in all material respects with, applicable laws, statutes, orders, rules
or regulations of any Federal, state or local governmental authority relating to
it, other than where such failure to hold or such noncompliance will neither
result in a limitation in any material respect on the conduct of its businesses
nor otherwise have a Material Adverse Effect on Investors.
 
(b) Each Investors Party is in substantial compliance with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable to it, its properties, assets and
deposits, its business, and its conduct of business and its relationship with
its employees, including, without limitation, the Equal Credit Opportunity Act,
the Fair Housing Act, the Community Reinvestment Act of 1977, the Home Mortgage
Disclosure Act and all other applicable fair lending laws and other laws
relating to discriminatory business practices. The most recent regulatory rating
given to Investors Bank as to compliance with the Community Reinvestment Act
(“CRA”) is satisfactory or better.

 
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(c)  Without limiting the foregoing, Investors Bank and each Investors
Subsidiary is operating in compliance with: (i) the “USA Patriot Act, and the
regulations promulgated thereunder, any order issued with respect to anti-money
laundering by the U.S Department of the Treasury’s Office of Foreign Assets
Control, or any other applicable anti-money laundering law, statute, rule or
regulation, and (ii) applicable privacy or customer information requirements
contained in any federal or state privacy laws and regulations, including,
without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and
regulations promulgated thereunder. The board of directors of Investors Bank and
each of its Subsidiaries that qualifies as a “financial institution” under
applicable anti-money laundering laws has (x) adopted and implemented an
anti-money laundering program that contains adequate and appropriate customer
identification certification procedures that has not been deemed ineffective by
any Regulatory Authority and that meets the requirements of Section 352 of the
USA Patriot Act and the regulations thereunder, and (y) during the past three
years, implemented such anti-money laundering mechanisms and kept and filed all
material reports and other necessary material documents as required by, and
otherwise complied with, applicable anti-money laundering laws.

(d)  Investors has not received any notification or communication from any
Regulatory Authority: (i) asserting that Investors is not in compliance with any
of the statutes, regulations or ordinances that such Regulatory Authority
enforces; (ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to Investors; (iii) requiring or
threatening to require Investors, or indicating that Investors may be required,
to enter into a cease and desist order, agreement or memorandum of understanding
or any other agreement restricting or limiting, or purporting to restrict or
limit, in any manner the operations of Investors; or (iv) directing, restricting
or limiting, or purporting to direct, restrict or limit, in any manner the
operations of Investors, including without limitation any restriction on the
payment of dividends (any such notice, communication, memorandum, agreement or
order described in this sentence is hereinafter referred to as a “Regulatory
Agreement”). Investors has not consented to or entered into any currently
effective Regulatory Agreement.
 
Section 4.09 Investors Benefit Plans
 
(a)  Investors has made available to Summit a complete and accurate list of all
pension, retirement, group insurance, and other employee benefit plans and
arrangements, including, but not limited to, “employee benefit plans,” as
defined in Section 3(3) of ERISA, incentive and welfare policies, contracts,
plans and arrangements with respect to any present employees of Investors
(hereinafter collectively referred to as the “Investors Employee Plans” and
individually as a “Investors Employee Plan”). Each of the Investors Employee
Plans complies in all material respects with all applicable requirements of
ERISA, the IRC and other applicable laws.
 
(b)  No Investors Employee Plan which is subject to Title IV of ERISA (each such
plan shall be referred to herein as an “Investors Pension Plan”) had an
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
or not waived, as of the last day of the end of the most recent plan year ending
prior to the date hereof; and, except as disclosed in Investors Bancorp, Inc.’s
Form 10-K for the Year Ended June 30, 2006 the fair market value of the assets
of each Investors Pension Plan exceeds the present value of the “benefit
liabilities” (as defined in Section 4001(a)(16) of ERISA) under such Investors
Pension Plan as of the end of the most recent plan year with respect to the
respective Investors Pension Plan ending prior to the date hereof, calculated on
the basis of the actuarial assumptions used in the most recent actuarial
valuation for such Investors Pension Plan as of the date hereof; and no notice
of a “reportable event” (as defined in Section 4043 of ERISA) for which the
30-day reporting requirement has not been waived has been required to be filed
for any Investors Pension Plan within the 12-month period ending on the date
hereof.
 

 
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(c)  Each Investors Employee Plan that is an “employee pension benefit plan” (as
defined in Section 3(2) of ERISA) and which is intended to be qualified under
Section 401(a) of the IRC has received a favorable determination letter from the
IRS, and Investors is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no pending or,
to Investors’ knowledge, threatened litigation, administrative action or
proceeding relating to any Investors Employee Plan.
 
Section 4.10 Securities Documents
 
Investors Bancorp has made available to Summit copies of its (i) annual reports
on Form 10-K for the years ended June 30, 2006 and 2005, (ii) a quarterly report
on Form 10-Q for the quarters ended March 31, 2007, and (iii) proxy materials
used in connection with its most recent meeting of stockholders (the
availability of the preceding documents will be assumed if such documents are
filed on EDGAR). Such reports and such proxy materials, at the time filed, did
not contain any untrue statements of a material fact or omit to state any
material fact necessary in order to make the statements therein not misleading.
 
Section 4.11 Environmental Matters
 
(a) To the Knowledge of Investors, neither the conduct nor operation of their
business nor any condition of any property currently or previously owned or
operated by any Investors Party or any Investors Subsidiary (including, without
limitation, in a fiduciary or agency capacity), or on which any of them holds a
lien, results or resulted in a violation of any Environmental Laws that is
reasonably likely to impose a material liability (including a material
remediation obligation) upon any Investors Party or any of Investors Subsidiary.
To the Knowledge of Investors, no condition has existed or event has occurred
with respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in any material
liability to any Investors Party or any Investors Subsidiary by reason of any
Environmental Laws. No Investors Party nor any Investors Subsidiary has received
any written notice from any Person that any Investors Party or any Investors
Subsidiary or the operation or condition of any property ever owned, operated,
or held as collateral or in a fiduciary capacity by any of them are currently in
violation of or otherwise are alleged to have financial exposure under any
Environmental Laws or relating to Hazardous Materials (including, but not
limited to, responsibility (or potential responsibility) for the cleanup or
other remediation of any Hazardous Materials at, on, beneath, or originating
from any such property) for which a material liability is reasonably likely to
be imposed upon any Investors Party or any Investors Subsidiary.
 
(b) There is no suit, claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending or, to Investors’ Knowledge,
threatened, before any court, governmental agency or other forum against any
Investors Party or any Investors Subsidiary (x) for alleged noncompliance
(including by any predecessor) with, or liability under, any Environmental Law
or (y) relating to the presence of or release into the environment of any
Hazardous Materials, whether or not occurring at or on a site owned, leased or
operated by any of the Investors Parties or any Investors Subsidiary.
 

 
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Section 4.12 Loan Portfolio
 
To the knowledge of Investors, all of the Loans originated and held currently
and at the Merger Effective Date by Investors Bank, and any other Loans
purchased and held currently and at the Merger Effective Date by Investors Bank,
were solicited, originated and exist, and will exist at the Merger Effective
Date, in material compliance with all applicable loan policies and procedures of
Investors. The allowance for possible losses reflected in the audited statement
of condition of Investors Savings at June 30, 2006 was, and the allowance for
possible losses shown on the balance sheets of Investors Savings for periods
ending after June 30, 2006 as reflected in the Regulatory Reports have been and
will be adequate, as of the dates thereof, under GAAP.

ARTICLE V
COVENANTS OF THE PARTIES

Section 5.01 Conduct of the Business of Summit
 
(a) From the date of this Agreement to the Closing Date, Summit will conduct its
business and engage in transactions, including extensions of credit, only in the
ordinary course and consistent with past practice and policies in existence on
the date hereof, except as otherwise required or contemplated by this Agreement
or with the written consent of Investors Bank. Summit will use its reasonable
good faith efforts to (i) preserve its business organizations intact, (ii)
maintain good relationships with its employees, and (iii) preserve the goodwill
of its customers and others with whom business relationships exist. From the
date hereof to the Closing Date, except as otherwise consented to or approved by
Investors in writing (which approval will not be unreasonably delayed or
withheld) or as contemplated or required by this Agreement, no Summit Party
will:
 
(i) amend or change any provision of its certificate of incorporation, charter,
or bylaws;
 
(ii) change the number of authorized or issued shares of its capital stock or
issue or grant any Right or agreement of any character relating to its
authorized or issued capital stock or any securities convertible into shares of
such stock, or split, combine or reclassify any shares of capital stock, or
declare, set aside or pay any dividend or other distribution in respect of
capital stock or redeem or otherwise acquire any shares of capital stock, except
that;
 

 
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(iii) except as permitted by this Agreement, grant or agree to pay any bonus,
severance or termination payment to, enter into or amend, or take any action
(other than executing this Agreement) that would trigger obligations under, any
employment agreement, severance agreement, supplemental executive agreement, or
similar agreement or arrangement with any of its directors, officers or
employees, or increase in any manner the compensation or fringe benefits of any
employee, officer or director, except for salary increases in the ordinary
course of business consistent with past practice or as may be required pursuant
to legally binding commitments existing on the date hereof set forth in Summit
Disclosure Schedules 3.08 and 3.12;
 
(iv) enter into or, except as may be required by law or permitted by the terms
of this Agreement, modify any pension, retirement, stock option, stock purchase,
stock appreciation right, stock grant, savings, profit sharing, deferred
compensation, supplemental retirement, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement related thereto, in respect of any of its directors,
officers or employees; or make any contributions to any defined contribution or
defined benefit plan not in the ordinary course of business consistent with past
practice; or materially amend any Summit Employee Plan other than amendments
that are required by law to be made prior to the Merger Effective Date, or
amendments required by the terms of this Agreement;
 
(v) merge or consolidate Summit with any other corporation; sell or lease all or
any substantial portion of the assets or business of Summit; make any
acquisition of all or any substantial portion of the business or assets of any
other person, firm, association, corporation or business organization other than
in connection with foreclosures, settlements in lieu of foreclosure, troubled
loan or debt restructuring, or the collection of any loan or credit arrangement
between Summit and any other person; enter into a purchase and assumption
transaction with respect to deposits and liabilities; permit the revocation or
surrender by Summit of its certificate of authority to maintain, or file an
application for the relocation of, any existing branch office, or file an
application for a certificate of authority to establish a new branch office;
 
(vi) sell or otherwise dispose of the capital stock of Summit or sell or
otherwise dispose of any asset of Summit other than in the ordinary course of
business consistent with past practice; subject any asset of Summit to any lien,
pledge, security interest or other encumbrance (other than in connection with
deposits, repurchase agreements, bankers acceptances, FHLB of New York advances,
“treasury tax and loan” accounts established in the ordinary course of business
and transactions in “Federal funds” and the satisfaction of legal requirements
in the exercise of trust powers) other than in the ordinary course of business
consistent with past practice; incur any indebtedness for borrowed money (or
guarantee any indebtedness for borrowed money), except in the ordinary course of
business consistent with past practice;
 
(vii) take any action which would result in any of the representations and
warranties of Summit set forth in Article III of this Agreement becoming untrue
as of any date after the date hereof (except as to any representation or
warranty which specifically relates to an earlier date) or in any of the
conditions set forth in Article VI hereof not being satisfied, except in each
case as may be required by applicable law;
 

 
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(viii) change any method, practice or principle of accounting, except as may be
required from time to time by GAAP (without regard to any optional early
adoption date) or any Regulatory Authority responsible for regulating Summit;
 
(ix) waive, release, grant or transfer any material rights of value or modify or
change in any material respect any existing material agreement or indebtedness
to which Summit is a party, other than in the ordinary course of business,
consistent with past practice;
 
(x) purchase any security for its investment portfolio not rated “A” or higher
by either Standard & Poor’s Corporation or Moody’s Investor Services, Inc, or
with a remaining term to maturity of more than five (5) years;
 
(xi) make any new loan or other credit facility commitment (including without
limitation, lines of credit and letters of credit) to any borrower or group of
affiliated borrowers that is inconsistent with existing lending policies and
past practices;
 
(xii) enter into, renew, extend or modify any other transaction with any
Affiliate;
 
(xiii) enter into any futures contract, option, interest rate caps, interest
rate floors, interest rate exchange agreement or other agreement or, except in
the ordinary course of business and consistent with past practice, take any
other action for purposes of hedging the exposure of its interest-earning assets
and interest-bearing liabilities to changes in market rates of interest;
 
(xiv) except for the execution of, and as otherwise provided in or contemplated
by, this Agreement, take any action that would give rise to a right of payment
to any individual under any employment agreement, or take any action that would
give rise to a right of payment to any individual under any Summit Employee
Plan;
 
(xv) make any change in policies with regard to the extension of credit, the
establishment of reserves with respect to the possible loss thereon or the
charge off of losses incurred thereon, investment, asset/liability management or
other material banking policies in any material respect except as may be
required by changes in applicable law or regulations or in GAAP or by applicable
regulatory authorities;
 
(xvi) make any capital expenditures in excess of $25,000 individually or $50,000
in the aggregate, other than pursuant to binding commitments existing on the
date hereof and other than expenditures necessary to maintain existing assets in
good repair;
 

 
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(xvii) purchase or otherwise acquire, or sell or otherwise dispose of, any
assets or incur any liabilities other than in the ordinary course of business
consistent with past practices and policies;
 
(xviii) incur any non-deposit liability in excess of $500,000 other than in the
ordinary course of business consistent with past practice; or
 
(xix) agree to do any of the foregoing.
 
(b) For purposes of this Section 5.01, unless provided for in a business plan,
budget or similar document delivered to Investors prior to the date of this
Agreement, it shall not be considered in the ordinary course of business for
Summit to do any of the following: (i) make any sale, assignment, transfer,
pledge, hypothecation or other disposition of any assets having a book or market
value, whichever is greater, in the aggregate in excess of $500,000, other than
pledges of assets to secure government deposits, to exercise trust powers, sales
of assets received in satisfaction of debts previously contracted in the normal
course of business, issuance of loans, sales of previously purchased government
guaranteed loans, or transactions in the investment securities portfolio by
Summit or repurchase agreements made, in each case, in the ordinary course of
business consistent with past practice; or (ii) undertake or enter any lease,
contract or other commitment for its account, other than in the normal course of
providing credit to customers as part of its banking business, involving a
payment by Summit of more than $25,000 annually, or containing a material
financial commitment and extending beyond 12 months from the date hereof.
 
Section 5.02 Access; Confidentiality
 
(a) Summit shall permit Investors and its representatives reasonable access to
its properties and make available to them all books, papers and records relating
to the assets, properties, operations, obligations and liabilities of Summit,
including, but not limited to, all books of account (including the general
ledger), tax records, minute books of meetings of boards of directors (and any
committees thereof) (other than minutes of any confidential discussion of this
Agreement and the transactions contemplated hereby), and stockholders,
organizational documents, bylaws, material contracts and agreements, filings
with any regulatory authority, accountants’ work papers, litigation files, plans
affecting employees, and any other business activities or prospects in which
Investors may have a reasonable interest (provided that Summit shall not be
required to provide access to any information that would violate its
attorney-client privilege or any employee or customer privacy policies, laws or
regulations). Summit shall make its respective officers, employees and agents
and authorized representatives (including counsel and independent public
accountants) available to confer with Investors and its representatives. Summit
Savings shall provide in a timely manner to Investors Bank’s officer in charge
of retail banking copies of current rate sheets for all deposit and loan
products. Summit shall permit Investors, at its expense, to cause a “Phase I
Environmental Audit” and a “Phase II Environmental Audit” to be performed at any
physical location owned or occupied by Summit.
 

 
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(b) Investors agrees to conduct such investigations and discussions hereunder in
a manner so as not to interfere unreasonably with normal operations and customer
and employee relationships of the other party.
 
(c) In addition to the access permitted by subparagraph (a) above, from the date
of this Agreement through the Closing Date, Summit shall permit employees of
Investors Bank reasonable access to information relating to problem loans, loan
restructurings and loan work-outs of Summit Savings.
 
Section 5.03 Regulatory Matters and Consents
 
(a) Investors will, in consultation with Summit, prepare all Applications
(including the Member Proxy Statement, if required) and make all filings for,
and use its best efforts to obtain as promptly as practicable after the date
hereof, all necessary permits, consents, approvals, waivers and authorizations
of all Regulatory Authorities or other Persons necessary or advisable to
consummate the transactions contemplated by this Agreement. Investors will
provide Summit copies of all Applications prior to filing for the purpose of
enabling Summit to review and comment on the same. The parties shall cooperate
with each other with respect to the preparation of any required Member Proxy
Statement.
 
(b) Summit will furnish Investors with all information concerning Summit as may
be necessary or advisable in connection with any Application or filing made by
or on behalf of Investors to any Regulatory Authority in connection with the
transactions contemplated by this Agreement.
 
(c) Investors and Summit will promptly furnish the other with copies of all
material written communications to, or received by them from any Regulatory
Authority regarding the transactions contemplated hereby, except for information
filed by either party that is designated confidential.
 
(d) Investors will use its best efforts to obtain all necessary regulatory
approvals to effectuate the transactions contemplated by this Agreement and
related exhibits and appendices.
 
(e) Summit will use its best efforts to cooperate with Investors to obtain all
necessary regulatory approvals to effectuate the transactions contemplated by
this Agreement and related exhibits and appendices.
 
(f) The parties agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Regulatory Authorities. Investors will furnish Summit Bankshares and
its counsel with copies of all Applications prior to filing with any Regulatory
Authority and provide Summit Bankshares a reasonable opportunity to provide
changes to such Applications, and copies of all Applications filed by Investors.
 
(g) Summit and Investors will cooperate with each other in the foregoing matters
and will furnish the responsible party with all information concerning it and
its subsidiaries as may be necessary or advisable in connection with any
Application or filing made by or on behalf of Investors or Summit to any
Regulatory Authority in connection with the transactions contemplated by this
Agreement, and such information will be accurate and complete in all material
respects. In connection therewith, each party will provide certificates and
other documents reasonably requested by the other.
 

 
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Section 5.04 Taking of Necessary Action
 
Investors and Summit shall each use its best efforts in good faith to:
 
(i) furnish such information as may be required in connection with the
preparation of the documents referred to in Section 5.03 of this Agreement; and
 
(ii) take or cause to be taken all action necessary or desirable on its part
using its best efforts so as to permit completion of the Merger and the
transactions contemplated by this Agreement, including, without limitation;
 
(A) obtaining the consent or approval of each individual, partnership,
corporation, association or other business or professional entity whose consent
or approval is required for consummation of the transactions contemplated hereby
(including assignment of leases without any material change in terms), provided
that Summit shall not agree to make any payments or modifications to agreements
in connection therewith without the prior written consent of Investors; and
 
(B)  requesting the delivery of appropriate opinions, consents and letters from
its counsel and independent auditors. No party hereto shall take, or cause, or
to the best of its ability permit to be taken, any action that would
substantially impair the prospects of completing the Mergers pursuant to this
Agreement; provided that nothing herein contained shall preclude Investors or
Summit from exercising its rights under this Agreement.
 
Section 5.05 Certain Agreements
 
(a) For a period of six years from the Bank Merger Effective Date, and to the
fullest extent permitted by law, Investors agrees to indemnify, defend and hold
harmless each present and former director and officer of each Summit Party (the
“Indemnified Parties”) against all losses, claims, damages, costs, expenses
(including reasonable attorneys’ fees and expenses), liabilities, judgments or
amounts paid in settlement (with the approval of Investors, which approval shall
not be unreasonably withheld) or in connection with any claim, action, suit,
proceeding or investigation arising out of matters existing or occurring at or
prior to the Bank Merger Effective Date (a “Claim”) in which an Indemnified
Party is, or is threatened to be made, a party or a witness based in whole or in
part on, or arising in whole or in part out of, the fact that such person is or
was a director or officer of a Summit Party, regardless of whether such Claim is
asserted or claimed prior to, at or after the Closing Date, to the fullest
extent to which directors and officers of Summit are entitled under Federal law,
or any Summit charter and bylaws, or other applicable law as in effect on the
date hereof (and Investors shall pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
maximum extent permissible by law, or Summit’ charters and bylaws; provided,
that the person to whom expenses are advanced provides an undertaking to repay
such expenses if it is ultimately determined by a Regulatory Authority or by a
court of competent jurisdiction that such person is not entitled to
indemnification). All rights to indemnification in respect of a Claim asserted
or made within the period described in the preceding sentence shall continue
until the final disposition of such Claim.
 

 
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(b) Any Indemnified Party wishing to claim indemnification under Section 5.05,
upon learning of any Claim, shall promptly notify Investors, but the failure to
so notify shall not relieve Investors of any liability it may have to such
Indemnified Party except to the extent that such failure materially prejudices
Investors. In the event of any Claim, (i) Investors shall have the right to
assume the defense thereof (with counsel reasonably satisfactory to the
Indemnified Party) and shall not be liable to the Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof, except that, if
Investors elects not to assume such defense or counsel for the Indemnified Party
advises that there are issues which raise conflicts of interest between
Investors and the Indemnified Party, the Indemnified Party may retain counsel
satisfactory to them, and Investors shall pay all reasonable fees and expenses
of such counsel for the Indemnified Party promptly as statements therefor are
received, provided further that Investors shall in all cases be obligated
pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (ii) the Indemnified Parties will cooperate in the defense
of any such Claim and (iii) Investors shall not be liable for any settlement
effected without its prior written consent (which consent shall not unreasonably
be withheld).
 
(c) In the event Investors or any of its successors or assigns (i) consolidates
with or merges into any other Person and shall not continue or survive such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any Person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Investors assume the obligations set forth in this Section 5.05.
 
(d) The provisions of this Section 5.05 are intended to be for the benefit of,
and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives. Investors will consider the purchase of a “tail” policy on the
current directors’ and officers’ insurance policy maintained by Summit.
 
Section 5.06 Duty to Advise; Duty to Update the Summit Disclosure Schedules
 
Summit shall promptly advise Investors of any change or event having a Material
Adverse Effect on Summit or which Summit believes would or would be reasonably
likely to cause or constitute a material breach of any of its representations,
warranties or covenants set forth herein. Summit shall update the Summit
Disclosure Schedules as promptly as practicable after the occurrence of an event
or fact that, if such event or fact had occurred prior to the date of this
Agreement, would have been disclosed in the Summit Disclosure Schedules. The
delivery of such updated Summit Disclosure Schedule shall not relieve Summit
from any breach or violation of this Agreement and shall not have any effect for
the purposes of determining the satisfaction of the condition set forth in
Sections 6.03(c) hereof.
 

 
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Section 5.07 Conduct of Investors’ Business
 
(a) From the date of this Agreement to the Closing Date, Investors will use its
best efforts to preserve its business organizations intact, maintain good
relationships with employees, and preserve for itself the goodwill of customers
of Investors. From the date of this Agreement to the Closing Date, Investors
will not
 
(i) amend its charter or bylaws in any manner inconsistent with the prompt and
timely consummation of the transactions contemplated by this Agreement;
 
(ii) take any action that would result in any of the representations and
warranties of Investors set forth in Article IV of this Agreement becoming
untrue as of any date after the date hereof or in any of the conditions set
forth in Article VI hereof not being satisfied, except in each case as may be
required by applicable law;
 
(iii) take any action that would or is reasonably likely to adversely affect or
materially delay the receipt of the necessary approvals from the Regulatory
Authorities;
 
(iv) take action that would or is reasonably likely to materially and adversely
affect Investors’ ability to perform its covenants and agreements under this
Agreement;
 
(v) take any action that would result in any of the conditions to the
transactions contemplated by this Agreement not being satisfied; or
 
(vi) agree to do any of the foregoing.
 
Section 5.08 Board and Committee Minutes
 
The Summit Parties shall each provide to Investors, within ten (10) days after
any meeting of their respective Board of Directors, or any committee thereof, or
any senior management committee, a copy of the minutes of such meeting, except
that with respect to any meeting held within ten (10) days of the Closing Date,
such minutes shall be provided to each party prior to the Closing Date. Summit
may exclude from the minutes matters (i) relating to merger negotiations, or
(ii) relating to discussions of Summit of possible breaches of this Agreement by
Investors.
 
Section 5.09 Undertakings by the Parties
 
(a) From and after the date of this Agreement:
 
(i) Outside Service Bureau Contracts. If requested to do so by Investors, Summit
Savings shall use its best efforts to obtain an extension of any contract with
an outside service bureau or other vendor of services to Summit Savings, on
terms and conditions mutually acceptable to Summit Savings and Investors Bank;
 

 
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(ii) Board Meetings. Each of the Summit Parties shall permit a representative of
Investors to attend meetings of their Boards of Directors or the Executive
Committees thereof (provided that they shall not be required to permit the
Investors representative to remain present during any confidential discussion of
the Agreement and the transactions contemplated thereby);
 
(iii) List of Nonperforming Assets. Summit Savings shall provide Investors Bank,
within twenty (20) days of the end of each calendar month, a written list of
nonperforming assets (the term “nonperforming assets,” for purposes of this
subsection, means (i) loans that are “troubled debt restructuring” as defined in
Statement of Financial Accounting Standards No. 15, “Accounting by Debtors and
Creditors for Troubled Debt Restructuring,” (ii) loans on nonaccrual, (iii) real
estate owned, (iv) all loans ninety (90) days or more past due as of the end of
such month and (v) and impaired loans); and
 
(iv) Reserves and Merger-Related Costs. On or before the Merger Effective Date,
and at the request of Investors, Summit Savings shall establish such additional
accruals and reserves as may be necessary to conform the accounting reserve
practices and methods (including credit loss practices and methods) of Summit
Savings to those of Investors Bank (as such practices and methods are to be
applied to Investors Bank from and after the Closing Date) and Investors Bank’s
plans with respect to the conduct of the business of Summit Savings following
the Mergers and otherwise to reflect expenses related to the Mergers and costs
incurred by Summit Savings, provided, however, that no accrual or reserve made
by Summit Savings or any Summit Subsidiary pursuant to this subsection, or any
litigation or regulatory proceeding arising out of any such accrual or reserve,
shall constitute or be deemed to be a breach or violation of any representation,
warranty, covenant, condition or other provision of this Agreement or constitute
a termination event within the meaning of Section 7.01(b) hereof.
 
(v)  Members Meeting. If required by the OTS, Summit MHC shall submit this
Agreement and/or the Mergers contemplated herein to its members for approval,
and the Board of Directors of Summit MHC shall recommend approval of this
Agreement to the members of Summit MHC.
 
(b) From and after the date of this Agreement, Investors and Summit shall each:
 
(i) Filings and Approvals. Cooperate with the other in the preparation and
filing, as soon as practicable, of (A) the Applications, (B) any required Member
Proxy Statement, (C) all other documents necessary to obtain any other approvals
and consents required to effect the completion of the Merger and the
transactions contemplated by this Agreement, and (D) all other documents
contemplated by this Agreement;
 
(ii) Public Announcements. Cooperate and cause their respective officers,
directors, employees and agents to cooperate in good faith, consistent with
their respective legal obligations, in the preparation and distribution of, and
agree upon the form and substance of, any press release related to this
Agreement and the transactions contemplated hereby, and any other public
disclosures related thereto, including without limitation communications to
stockholders, internal announcements and customer disclosures, but nothing
contained herein shall prohibit either party from making any disclosure which
its counsel deems necessary, provided that the disclosing party notifies the
other party reasonably in advance of the timing and contents of such disclosure;
 

 
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(iii) Maintenance of Insurance. Maintain insurance in such amounts as are
reasonable to cover such risks as are customary in relation to the character and
location of its properties and the nature of its business;
 
(iv) Maintenance of Books and Records. Maintain books of account and records in
accordance with GAAP applied on a basis consistent with those principles used in
preparing the financial statements heretofore delivered; and
 
(v) Taxes. File all Federal, state, and local tax returns required to be filed
by them on or before the date such returns are due (including any extensions)
and pay all taxes shown to be due on such returns on or before the date such
payment is due.
 
Section 5.10 Employee and Termination Benefits; Directors and Management
 
(a) Employees and Employee Benefits. Except as otherwise provided in this
Section 5.10, as of or after the Bank Merger Effective Date, and at Investors’
election and subject to the requirements of the IRC and ERISA, the Summit
Employee Plans may continue to be maintained separately, consolidated, or
terminated, provided that if any Summit Employee Plan is terminated, Continuing
Employees (as defined below) who were participants in such Summit Employee Plan
shall be eligible to participate in any Investors Employee Plan of a similar
character (to the extent that one exists) without any gap in coverage. Investors
may request that Summit terminate or freeze any Summit Employee Plan that is a
tax-qualified plan under Section 401(a) of the IRC, effective as of the Closing
Date, by notice in writing issued to Summit no later than ninety (90) days, in
the case of a defined benefit pension plan, and no later than thirty (30) days,
in the case of a defined contribution plan, prior to the Closing Date. Summit
employees who are participants in such Summit Employee Plan(s) and who continue
employment with Investors (“Continuing Employees”) shall receive credit for
service with Summit Savings for purposes of eligibility and vesting
determination but not for benefit accrual purposes in any Investors Employee
Plan for which such persons are eligible. It is the intention of Investors to
permit Continuing Employees to participate in the Investors Employee Plans that
are tax-qualified plans immediately following the Closing Date, however, nothing
herein shall be construed to require Continuing Employees to receive a benefit
accrual or contribution under a Summit Employee Plan and an Investors Employee
Plan of the same type in for same year if such Summit Employee Plan has not been
terminated. In the event of termination of any Summit Employee Plan that is
tax-qualified under Section 401(a) of the IRC, Summit, prior to the Bank Merger
Effective Date, or Investors, after the Bank Merger Effective Date, shall as
soon as practicable apply for a favorable determination letter from the IRS with
respect to such termination and shall not distribute the accrued benefit or
account balances under such Summit Employee Plan, other than those distributions
required by law, until receipt of such favorable determination letter. If the
Summit qualified defined benefit pension plan is amended, frozen, terminated or
otherwise curtailed (collectively, a "modification"), the right of each
participant who has attained age 55 on or before the Closing Date to early
retirement benefits under that plan, including specifically the subsidized early
retirement benefit available to participants at or after age 60, shall be
preserved as if such modification had not occurred. For purposes of determining
the participant's eligibility for such early retirement benefits under the
Summit pension plan, the participant shall receive credit for employment by
Investors after the Closing Date, and the participant's age shall be determined
as of his or her termination of employment by Investors, it being the intention
of the parties that the participant may "grow in" to the subsidized early
retirement benefit whether or not the pension plan is modified.
 

 
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(b) In the event of any termination or consolidation of any Summit health,
disability or life insurance plan with any Investors health, disability or life
insurance plan, Investors shall make available to Continuing Employees and their
dependents employer-provided health, disability or life insurance coverage on
the same basis as it provides such coverage to Investors employees. Unless a
Continuing Employee affirmatively terminates coverage under a Summit health,
disability or life insurance plan prior to the time that such Continuing
Employee becomes eligible to participate in the Investors health, disability or
life insurance plan, no coverage of any of the Continuing Employees or their
dependents shall terminate under any of the Summit health, disability or life
insurance plans prior to the time such Continuing Employees and their dependents
become eligible to participate in the health, disability or life insurance
plans, programs and benefits common to all employees of Investors and their
dependents. Preexisting conditions will be subject to the provisions provided
under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).
A Continuing Employee’s service with Summit Savings shall also apply for
purposes of satisfying any waiting periods, actively-at-work requirements, and
evidence of insurability requirements. Continuing Employees who become covered
under a Investors health plan shall be required to satisfy the deductible
limitations of the Investors health plan for the plan year in which coverage
commences, without offset for deductibles satisfied under the Summit health
plan, except to the extent Summit or such Continuing Employee shall provide
substantiation in a form satisfactory to Investors, of the dollar amount of such
deductibles that have been satisfied for such Continuing Employees. In the event
of a termination or consolidation of any Summit health plan, terminated Summit
employees and qualified beneficiaries will have the right to continued coverage
under group health plans of Investors in accordance with IRC Section 4980B(f)
and ERISA Sections 601-609, consistent with the provisions of subsection (c)
below. In the event of a termination of or consolidation of any Summit health
plan with any Investors health plan, Continuing Employees will be required to
seek reimbursement of claims arising prior to the Merger Effective Date from the
Summit health plan and shall not be entitled to seek reimbursement of claims
arising prior to the Bank Merger Effective Date from the Investors health plan.
 
(c)  Except as specifically set forth in this Section 5.10(e), nothing contained
in this Agreement shall be construed to grant a contract of employment to any
employee of Summit who becomes an employee of Investors. Following the Bank
Merger Effective Date, it is the intention of Investors Bank to retain all
Summit Savings employees at no less than their salaries in effect as of the date
of this Agreement, with adjustments in positions and title to reflect the
Mergers. Any Summit employee whose employment is terminated involuntarily (other
than for cause) within one year of the Bank Merger Effective Date shall receive
a lump sum severance payment from Summit Savings or Investors equal to two weeks
pay at the rate then in effect, for each full year of employment with Summit
Savings, up to a maximum of twelve weeks. Such Summit employees will have the
right to continued health coverage under group health plans of Investors in
accordance with IRC Section 4980B(f) and ERISA Sections 601-609.
 

 
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(d) Effective as of the Closing Date, Investors Savings shall establish the
Summit, New Jersey Advisory Board (the “Advisory Board”). Each person who serves
on the Board of Directors of Summit Savings (except for the director who will
join the Investors Boards of Directors pursuant to Section 2.03 of this
Agreement) or is a Director Emeritus of Summit Savings both on the date of this
Agreement and immediately prior to the Bank Merger Effective Date, shall be
appointed to the Advisory Board effective immediately following the Bank Merger
Effective Date. The Advisory Board shall meet quarterly, and each advisory board
member shall receive an annual advisory board fee of $24,000. The Advisory Board
shall be continued for a period of at least one year, although it is the intent
of Investors Bank to maintain the Advisory Board for a five-year period.
 
(e) Investors Bancorp or Investors Bank will offer an employment agreement to
William V. Cosgrove substantially in the form attached to Investors Disclosure
Schedule 5.10(e). Investors Bank will offer Change in Control Agreements to the
following Summit Savings employees: Janice Brody, Lisa James, Eric Benson and
Anabella Portee. Such agreements shall be substantially in the form attached to
Investors Disclosure Schedule 5.10(e).
 
(f) Investors and Summit Savings shall honor all obligations of Summit to Ms.
Janice Brody and to Messrs. Cosgrove, and Petroski under the Summit Supplemental
Executive Retirement Plan, a copy of which is attached to Summit Disclosure
Schedule 5.10(f). Each executive currently participating in the Summit
Supplemental Executive Retirement Plan shall receive an annual benefit equal to
the amount, and at the time, set forth in Summit Disclosure Schedule 5.10(f).
Such annual benefit shall be paid to each such executive officer, and to his or
her beneficiary in the event of his or her death, pursuant to the applicable
provisions of the Summit Supplemental Retirement Plan in effect on the Bank
Merger Effective Date. The Summit Supplemental Executive Retirement Plan shall
be amended, prior to the Bank Merger Effective Date, to comply with Section 409A
of the IRC, provided however, that any such amendment that would alter the time
or form of benefit payments, must be approved in advance by Investors.
 
(g) Investors and Summit Savings shall honor all obligations under the Summit
Federal Savings Bank Directors Retirement Plan, a copy of which plan is attached
to Summit Disclosure Schedule 5.10(g). Each Director currently participating in
the Summit Federal Savings Bank Directors Retirement Plan (except for Mr.
Cosgrove) shall receive an annual benefit equal to the amount, and at the time,
set forth in Summit Disclosure Schedule 5.10(g). Directors Emeritus do not
qualify for benefits under the Summit Federal Savings Bank Directors Retirement
Plan. Such annual benefit shall be paid to each Director, and to his or her
beneficiary in the event of his or her death, pursuant to the applicable
provisions of the Directors Retirement Plan in effect on the Bank Merger
Effective Date.

 
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(h) The President of Summit Savings shall be entitled to select employees of
Summit Savings, other than the President, whose continued employment through the
date that is 30 days following the Bank Merger Effective Date shall be deemed to
be necessary by the President of Summit Savings for the continued successful
operation of the business of Summit Savings through the Bank Merger Effective
Date and for the transition period immediately thereafter. Those Summit Savings
employees selected by the President of Summit Savings shall be entitled to share
in a retention bonus, the aggregate amount of which shall not exceed $476,396
and the maximum amount to any one individual shall not exceed $50,000.

(i) Until the Bank Merger Effective Date, Summit shall be liable for all
obligations for continued health coverage pursuant to Section 4980B of the IRC
and Sections 601 through 609 of ERISA (“COBRA”) with respect to each Summit
Savings qualifying beneficiary (as defined in COBRA) who incurs a qualifying
event (as defined in COBRA) before the Bank Merger Effective Date. Investors
shall be liable for (i) all obligations for continued health coverage under
COBRA with respect to each Summit Savings qualified beneficiary (as defined in
COBRA) who incurs a qualifying event (as defined in COBRA) from and after the
Bank Merger Effective Date, and (ii) for continued health coverage under COBRA
from and after the Bank Merger Effective Date for each Summit Savings qualified
beneficiary who incurs a qualifying event before the Bank Merger Effective Date.

Section 5.11 Duty to Advise; Duty to Update the Investors Disclosure Schedules
 
Investors shall promptly advise Summit of any change or event having a Material
Adverse Effect on Investors or which Investors believes would or would be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants set forth herein. Investors shall
update the Investors Disclosure Schedules as promptly as practicable after the
occurrence of an event or fact that, if such event or fact had occurred prior to
the date of this Agreement, would have been disclosed in the Investors
Disclosure Schedules. The delivery of such updated Investors Disclosure Schedule
shall not relieve Investors from any breach or violation of this Agreement and
shall not have any effect for the purposes of determining the satisfaction of
the condition set forth in Sections 6.02(c) hereof.
 
Section 5.12 Summit Savings Branches.
 
It is the intention of Investors Bank to retain all Summit Savings branches
following the Mergers, with a view toward increasing customer access and
improving the quality of service.
 

 
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ARTICLE VI
CONDITIONS

Section 6.01 Conditions to the Obligations of Both Parties Under this Agreement
 
The respective obligations of each Party under this Agreement shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions,
none of which may be waived:

(a) Injunctions. None of the Parties hereto shall be subject to any order,
decree or injunction of a court or agency of competent jurisdiction, and no
statute, rule or regulation shall have been enacted, entered, promulgated,
interpreted, applied or enforced by any Regulatory Authority, that enjoins or
prohibits the consummation of the transactions contemplated by this Agreement;

(b) Regulatory Approvals. . The Mergers shall have received all required
approvals of Regulatory Authorities, and all notice and waiting periods required
thereunder shall have expired or been terminated;

(c) Approval of the Members of Summit MHC. This Agreement and the transactions
contemplated hereby, shall have been approved, to the extent required by the
Regulatory Authorities, by the members of Summit MHC by such vote as is
required;

(d) Tax Opinion. On the basis of facts, representation and assumptions which
shall be consistent with the state of facts existing at the Closing Date, the
Parties shall have received an opinion of Luse Gorman Pomerenk & Schick, P.C.
substantially to the effect that, for Federal income tax purposes each of the
Mergers when consummated in accordance with the terms hereof, either will
constitute a reorganization within the meaning of Section 368(a) of the Code or
will be treated as part of a reorganization within the meaning of Section 368(a)
of the Code, and there will be no adverse tax consequences to the Parties or
their depositors or stockholders;

Section 6.02 Conditions to the Obligations of Summit Under this Agreement
 
The obligations of Summit under this Agreement shall be subject to satisfaction
at or prior to the Closing Date of each of the following conditions, unless
waived by Summit pursuant to Section 8.03 hereof:
 
(a) Corporate Proceedings. All action required to be taken by, or on the part
of, Investors to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated by this
Agreement, shall have been duly and validly taken by Investors, and Summit shall
have received certified copies of the resolutions evidencing such
authorizations;
 

 
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(b) Covenants. The obligations and covenants of Investors required by this
Agreement to be performed by Investors at or prior to the Closing Date shall
have been duly performed and complied with in all material respects;
 
(c) Representations and Warranties. Each of the representations and warranties
of Investors in this Agreement which is qualified as to materiality shall be
true and correct, and each such representation or warranty that is not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement, and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date;
 
(d) Approvals of Regulatory Authorities. The Mergers shall have received all
required approvals of Regulatory Authorities without the imposition of any
condition requiring a material change in Sections 2.01(b), 2.03 or 5.10 of this
Agreement;
 
(e) No Material Adverse Effect. Since December 31, 2006, there shall not have
occurred any Material Adverse Effect with respect to Investors Bancorp;
 
(f) Officer’s Certificate. Investors shall have delivered to Summit Savings a
certificate, dated the Closing Date and signed, without personal liability, by
its chairman of the board or president, to the effect that the conditions set
forth in subsections (a) through (e) of this Section 6.02 have been satisfied,
to the best knowledge of the officer executing the same;
 
Section 6.03 Conditions to the Obligations of Investors Under this Agreement
 
The obligations of Investors hereunder shall be subject to satisfaction at or
prior to the Closing Date of each of the following conditions, unless waived by
Investors pursuant to Section 8.03 hereof:
 
(a) Corporate Proceedings. All action required to be taken by, or on the part
of, Summit to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated by this
Agreement, shall have been duly and validly taken by Summit and Investors shall
have received certified copies of the resolutions evidencing such
authorizations;
 
(b) Covenants. The obligations and covenants of Summit required by this
Agreement to be performed at or prior to the Closing Date shall have been duly
performed and complied with in all material respects;
 
(c) Representations and Warranties. Each of the representations and warranties
of Summit in this Agreement which is qualified as to materiality shall be true
and correct, and each such representation or warranty that is not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement, and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date.
 
(d) Approvals of Regulatory Authorities. The Merger shall have received all
required approvals of Regulatory Authorities without the imposition of any
conditions adversely affecting in a material respect the economic benefit
Investors reasonably expects to accrue in the transaction, excluding standard
conditions that are normally imposed by the Regulatory Authorities in merger
transactions;
 

 
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(e) No Material Adverse Effect. Since December 31, 2006, there shall not have
occurred any Material Adverse Effect with respect to Summit MHC, Summit
Bankshares and/or Summit Savings; and
 
(f) Officer’s Certificate. Summit shall have delivered to Investors a
certificate, dated the Closing Date and signed, without personal liability, by
the chairman of the board or president of each, to the effect that the
conditions set forth in subsections (a) through (e) of this Section 6.03 have
been satisfied, to the best knowledge of the officer executing the same.
 
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT

Section 7.01 Termination
 
This Agreement may be terminated on or at any time prior to the Closing Date:
 
(a) By the mutual written consent of the parties hereto;
 
(b) By either Investors, or Summit acting individually:
 
(i) if there shall have been a material breach of any representation, warranty,
covenant or other obligation of the other party and the breach cannot be, or
shall not have been, remedied within thirty (30) days after receipt by such
other party of notice in writing specifying the nature of such breach and
requesting that it be remedied;
 
(ii) if the Closing Date shall not have occurred on or before June 30, 2008,
unless the failure of such occurrence shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe its obligations set
forth in this Agreement required to be performed or observed by such party on or
before the Closing Date; provided, however, the parties shall in good faith
agree to extend such deadline for a period of an additional sixty (60) days
thereafter in the event that such parties determine that it is reasonably likely
that such Closing Date will in fact occur during such extension period.
 
(iii) if either party has been informed in writing by a Regulatory Authority
whose approval or consent has been requested that such approval or consent is
denied, or is granted subject to any change that adversely affects in a material
respect the economic benefit that either Party reasonably expects to accrue in
the transactions unless the failure of such occurrence shall be due to the
failure of the Party seeking to terminate this Agreement to perform or observe
its agreements set forth herein required to be performed or observed by such
party on or before the Closing Date; and
 

 
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(iv) if any approval of the members of Summit MHC required for the consummation
of the Mergers shall not have been obtained by reason of the failure to obtain
the required vote at a duly held meeting of members, or at any adjournment or
postponement thereof.
 
Section 7.02 Effect of Termination
 
Except as otherwise provided in this Agreement, if this Agreement is terminated
pursuant to Section 7.01 hereof, this Agreement shall forthwith become void
(other than the confidentiality provisions of Section 5.02(a) and Sections 8.01,
8.02, 8.04, 8.06, 8.10 and 8.11 hereof, which shall remain in full force and
effect), and there shall be no further liability on the part of Investors or
Summit to the other, except that no party shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement.
 
ARTICLE VIII
MISCELLANEOUS

Section 8.01 Expenses
 
Except as provided herein, each party hereto shall bear and pay all costs and
expenses incurred by it in connection with the transactions contemplated hereby,
including fees and expenses of its own financial consultants, accountants and
counsel.
 
Section 8.02 Non-Survival of Representations and Warranties
 
All representations, warranties and, except to the extent specifically provided
otherwise herein, agreements and covenants shall terminate on the Closing Date,
other than those covenants set forth in Sections 2.03, 5.05 and 5.10, which will
survive the Merger.
 
Section 8.03 Amendment, Extension and Waiver
 
Subject to applicable law, at any time prior to the consummation of the
transactions contemplated by this Agreement, the parties may (a) amend this
Agreement, (b) extend the time for the performance of any of the obligations or
other acts of either party hereto, (c) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (d) waive compliance with any of the agreements or
conditions contained in Articles V and VI hereof or otherwise. This Agreement
may not be amended except by an instrument in writing authorized by the
respective Boards of Directors and signed by duly authorized officers on behalf
of the parties hereto. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed by a duly authorized officer on behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
 

 
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Section 8.04 Entire Agreement; No Third Party Beneficiaries
 
(a) Except as set forth in this Agreement, this Agreement, including the
documents and other writings referred to herein or delivered pursuant hereto,
contains the entire agreement and understanding of the parties with respect to
its subject matter. Except as set forth in this Agreement, this Agreement
supersedes all prior arrangements and understandings between the parties, both
written and oral, with respect to its subject matter.
 
(b) This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors; provided, however, that nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the Parties hereto and their respective successors, any rights, remedies,
obligations or liabilities other than as otherwise provided pursuant to Sections
2.03, 5.05 and 5.10(d)-(h).
 
Section 8.05 No Assignment
 
Neither party hereto may assign any of its rights or obligations hereunder to
any other person, without the prior written consent of the other party hereto.
 
Section 8.06 Notices
 
All notices or other communications hereunder shall be in writing and shall be
deemed given if delivered personally, mailed by prepaid registered or certified
mail (return receipt requested), or sent by telecopy, addressed as follows:
 
(a) If to Investors to:

Investors Bancorp, Inc.
101 JFK Parkway
Short Hills, New Jersey 07078
Attn: Robert M. Cashill
President and CEO
Fax: (973) 924-5192

with a copy to:

Luse Gorman Pomerenk & Schick
5335 Wisconsin Avenue, NW
Washington, DC 20016
Attn:       John J. Gorman, Esq.
Eric Luse, Esq.
Fax: (202) 362-2902

 
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(b) If to Summit to:

Summit Federal Bankshares, Inc.
393 Springfield Avenue
Summit, New Jersey 07901
Attn: William V. Cosgrove
President and Chief Executive Officer
Fax: (908) 273-3209

with a copy to:

McCarter & English, LLP
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Attn: Michael M. Horn, Esq.
Fax: (973) 624-7070

Section 8.07 Captions
 
The captions contained in this Agreement are for reference purposes only and are
not part of this Agreement.
 
Section 8.08 Counterparts
 
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
 
Section 8.09 Severability
 
If any provision of this Agreement or the application thereof to any person or
circumstance shall be invalid or unenforceable to any extent, the remainder of
this Agreement and the application of such provisions to other persons or
circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law. If however, any provision of this Agreement is
held invalid by a court of competent jurisdiction, then the parties hereto shall
in good faith amend this Agreement to include an alternative provision that
accomplishes a result that is as substantially similar to the result originally
intended as possible.
 
Section 8.10 Governing Law
 
This Agreement shall be governed by and construed in accordance with the
domestic internal law (including the law of conflicts of law) of the State of
Delaware, the state of incorporation of Investors Bancorp, except to the extent
that Federal law shall be deemed to preempt such State law.
 

 
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Section 8.11 Specific Performance
 
The parties hereto agree that irreparable damage would occur in the event that
the provisions contained in this Agreement were not performed in accordance with
its specific terms or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions thereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
 
Section 8.11 Interpretation 
 
The table of contents, index and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”. The phrases “the date of this Agreement”, “the
date hereof” and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to the date set forth in the Recitals to this
Agreement. The Parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.

 
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized officers as of the day and year first above written.

 
INVESTORS SAVINGS BANK
     
/s/ Robert M. Cashill
 
By: Robert M. Cashill, President
         
INVESTORS BANCORP, INC.
     
/s/ Robert M. Cashill
 
By: Robert M. Cashill, President
         
INVESTORS BANCORP, MHC
     
/s/ Robert M. Cashill
 
By: Robert M. Cashill, President
             
SUMMIT FEDERAL SAVINGS BANK
     
/s/ William V. Cosgrove
 
By: William V. Cosgrove, President
             
SUMMIT FEDERAL BANKSHARES, INC.
     
/s/ William V. Cosgrove
 
By: William V. Cosgrove, President
             
SUMMIT FEDERAL BANKSHARES, MHC
     
/s/ William V. Cosgrove
 
By: William V. Cosgrove, President

 
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