Exhibit 10.4
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Option Agreement") dated December 7, 1998,
between Lakeland Bancorp, Inc., a New Jersey corporation ("Acquiror"), and High
Point Financial Corp., a New Jersey corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Board of Directors of Acquiror and the Board of Directors
of the Company have approved an Agreement and Plan of Merger dated as of the
date of this Agreement (the "Merger Agreement") providing for the merger of the
Company with and into the Acquiror;
WHEREAS, as a condition to the Acquiror's entering into the Merger
Agreement, the Acquiror has required that the Company agree, and the Company has
agreed, to grant to the Acquiror the option set forth herein to purchase
authorized but unissued shares of the Company's Common Stock;
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. Definitions.
Capitalized terms used but not defined herein shall have the same
meanings as in the Merger Agreement.
2. Grant of Option.
Subject to the terms and conditions set forth herein, the Company
hereby grants to the Acquiror an option (the "Option") to purchase up to 772,243
authorized and unissued shares of the Company's Common Stock (the "Option
Shares") at a price per share equal to $13.25 (the "Purchase Price") payable in
cash as provided in Section 4 hereof.
3. Exercise of Option.
(a) The Acquiror may exercise the Option, in whole or in part, at any
time or from time to time if a Purchase Event (as defined below) shall have
occurred and the Merger Agreement shall have been terminated; provided, however,
that to the extent the Option shall not have been exercised, it shall terminate
and be of no further force and effect upon the earliest to occur of:
(i) the Effective Time of the Merger;
(ii) 5:00 p.m. New York City time on the date which is 270 days
following the occurrence of a Purchase Event; and
(iii) (x) the termination of the Merger Agreement in accordance
with its terms (other than (A) pursuant to Section 7.1.11 thereof or (B)
pursuant to Section 7.1.3 thereof if at the Company Meeting (including any
adjournment or postponement thereof) the requisite vote of the Company's
stockholders to approve the Merger and the transactions contemplated hereby
shall not have been obtained, and at the time of such failure by the
Company's stockholders to so approve the Merger there is a publicly
announced or disclosed Competing Transaction with respect to the Company or
there has been a Competing Transaction Filing or (C) by the Company
pursuant to Section 7.1.9 thereof if at the time of such termination a
third party has contacted the Company concerning a possible Competing
Transaction) prior to the occurrence of a Purchase Event, or (y) 5:00 p.m.
New York City time on the date which is one year following the termination
of the Merger Agreement pursuant to Section 7.1.3 thereof or Section 7.1.9
thereof if no Purchase Event has occurred pursuant to clause (b)(ii) below;
and provided, further, that if the Option cannot be exercised before its date of
termination as a result of any injunction, order or similar restraint issued by
a court of competent jurisdiction or failure to receive the approval of any
Governmental Authority, the Option shall expire on the 10th business day after
such injunction, order or restraint shall have been dissolved or such approval
shall have been obtained or when such injunction, order or restraint shall have
become permanent and no longer subject to appeal, as the case may be but in no
event later than 18 months after the occurrence of a Purchase Event.
(b) As used herein, a "Purchase Event" shall mean any of the following
events:
(i) The Board of Directors of the Company shall have withdrawn,
modified or changed the Company Board Recommendation in a manner adverse to
the Acquiror, or if the Board of Directors of the Company shall have
refused to affirm the Company Board Recommendation as promptly as
practicable (but in any case within 10 business days) after receipt of any
written request from the Acquiror which request was made on a reasonable
basis (other than any withdrawal of, or change in, or failure to reaffirm
such Company Board Recommendation in connection with the Company's
termination of the Merger Agreement pursuant to Section 7.1.5 or Section
7.1.9 of such Merger Agreement);
(ii) (A) if at the Company Meeting (including any adjournment or
postponement thereof) the requisite vote of the Company's stockholders to
approve the Merger and the transactions contemplated hereby shall not have
been obtained, and at the time of such failure by the Company's
stockholders to so approve the Merger (x) there is a publicly announced or
disclosed Competing Transaction with respect to the Company involving a
third party or (y) a third party shall have filed an application or notice
with the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or
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other governmental authority or regulatory or administrative agency or
commission, domestic or foreign (each a "Governmental Authority"), for
approval to engage in a Competing or (B) if at the time the Company
terminates the Merger Agreement pursuant to Section 7.1.9 of such Merger
Agreement, a third party has contacted the Company concerning a possible
Competing Transaction and (in the event either A(x) or A(y) or B occurs)
within twelve months after termination of the Merger Agreement, the Company
shall enter into a letter of intent, agreement-in-principle, business
combination or merger agreement or other similar agreement for a Competing
Transaction or a Competing Transaction is consummated in each case with
such third party or a bank, bank holding company or other financial
institution or any of their respective affiliates;
(iii) if the Company shall have breached in any material respect
any of its representations, warranties or obligations under this Agreement;
or
(iv) if the Merger Agreement shall have been terminated by the
Company pursuant to Sections 5.1.2 and 7.1.11 of the Merger Agreement.
(c) As used herein, the terms "Beneficial Ownership", "Beneficial
Owner" and "Beneficially Own" shall have the meanings ascribed to them in Rule
13d-3 under the 1934 Act. As used herein, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the 1934 Act.
(d) In the event the Acquiror wishes to exercise the Option, it shall
deliver to the Company a written notice (the date of receipt of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than two business days nor later than 60 calendar days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided that
if the closing of the purchase and sale pursuant to the Option (the "Closing")
cannot be consummated by reason of any applicable judgment, decree, order, law
or regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and, provided further that, without
limiting the foregoing, if prior notification to or approval of the Federal
Reserve Board or any other Governmental Authority is required in connection with
such purchase, the Acquiror and, if applicable, the Company shall promptly file
the required notice or application for approval and shall expeditiously process
the same (and the Company shall cooperate with the Acquiror in the filing of any
such notice or application and the obtaining of any such approval), and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which, as the case may be, (i) any required
notification period has expired or been terminated or (ii) such approval has
been obtained, and in either event, any requisite waiting period has passed.
(e) In the event (i) the Acquiror receives official notice that an
approval of any Governmental Authority required for the purchase of Option
Shares would not be issued or granted or (ii) a Closing Date shall not have
occurred within 18 months after the related Notice Date due to the failure to
obtain any such required approval, the Acquiror shall be entitled to
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exercise its right as set forth in Section 7 or, to the extent legally
permitted, to exercise the Option in connection with the resale of the Company's
Common Stock or other securities pursuant to a registration statement as
provided in Section 9. The provisions of this Section 3 and Section 6 shall
apply with appropriate adjustments to any such exercise.
4. Payment and Delivery of Certificates.
(a) At the Closing, the Acquiror shall pay to the Company the
aggregate Purchase Price for the shares of the Company's Common Stock purchased
pursuant to the exercise of the Option in immediately available funds by wire
transfer to a bank account designated not later than one business day prior to
the Closing Date by the Company.
(b) At such Closing, simultaneously with the delivery of cash as
provided in Section 4(a), the Company shall deliver to the Acquiror a
certificate or certificates representing the number of shares of the Company's
Common Stock purchased by the Acquiror, registered in the name of the Acquiror
or a nominee designated in writing by the Acquiror, which shares shall be fully
paid and non-assessable and free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever.
(c) If at the time of issuance of any shares of the Company's Common
Stock pursuant to any exercise of the Option, the Company shall have issued any
share purchase rights or similar securities to holders of the Company's Common
Stock, then each such share of the Company's Common Stock shall also represent
rights with terms substantially the same as and at least as favorable to the
Acquiror as those issued to other holders of the Company's Common Stock.
(d) Certificates for the Company's Common Stock delivered at any
Closing hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
"The shares represented by this certificate are subject to certain
provisions of an agreement between the registered holder hereof and High
Point Financial Corp., a copy of which is on file at the principal office
of High Point Financial Corp., and to resale restrictions arising under
the Securities Act of 1933, as amended, and any applicable state
securities laws. A copy of such agreement will be provided to the holder
hereof without charge upon receipt by High Point Financial Corp. of a
written request therefor."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend in connection with a transfer
or sale if (i) the Company has been furnished with an opinion of counsel,
reasonably satisfactory to counsel for the Company, that such transfer or sale
will not violate the 1933 Act or applicable securities laws of any state or (ii)
such transfer or sale shall have been registered and qualified pursuant to the
1933 Act and any applicable state securities laws.
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5. Authorization, etc.
(a) The Company hereby represents and warrants to the Acquiror that:
(i) the Company has full corporate authority to execute and
deliver this Option Agreement and to consummate the transactions
contemplated hereby;
(ii) such execution, delivery and consummation have been
authorized by the Board of Directors of the Company, and no other corporate
proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly executed
and delivered by the Company and represents a valid and legally binding
obligation of the Company, enforceable against the Company in accordance
with its terms; and
(iv) the Company has taken all necessary corporate action to
authorize and reserve and permit it to issue and, at all times from the
date hereof through the date of the exercise in full or the expiration or
termination of the Option, shall have reserved for issuance upon exercise
of the Option, 772,243 shares of the Company's Common Stock (subject to
adjustment as provided herein), all of which, upon issuance in accordance
with the terms of this Option Agreement, shall be duly authorized, validly
issued, fully paid and nonassessable, and shall be delivered free and clear
of all claims, liens, encumbrances and security interests and not subject
to any preemptive rights of any shareholder of the Company.
(b) The Acquiror hereby represents and warrants to the Company that:
(i) the Acquiror has full corporate authority to execute and
deliver this Option Agreement and to consummate the transactions
contemplated hereby;
(ii) such execution, delivery and consummation have been
authorized by all requisite corporate action by the Acquiror, and no other
corporate proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly executed
and delivered by the Acquiror and represents a valid and legally binding
obligation of the Acquiror, enforceable against the Acquiror in accordance
with its terms; and
(iv) any shares of the Company's Common Stock acquired by the
Acquiror upon exercise of the Option will be acquired for its own account
and will not be taken with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in compliance with
the 1933 Act.
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6. Adjustment upon Changes in Capitalization.
In the event of any change in the Company's Common Stock by reason of
stock dividends, split-ups, recapitalizations or the like, the type and number
of shares subject to the Option, and the purchase price per share, as the case
may be, shall be adjusted appropriately. In the event that any additional
shares of the Company's Common Stock are issued after the date of this Option
Agreement (other than pursuant to an event described in the preceding sentence
or pursuant to this Option Agreement or options granted under employee benefit
plans), the number of shares of the Company's Common Stock subject to the Option
shall be adjusted so that, after such issuance, when aggregated with other
shares of the Company's Common Stock owned by the Acquiror and its affiliates,
it equals 24.9% of the number of shares of the Company's Common Stock then
issued and outstanding (assuming all shares subject to the Option have been
issued).
7. Repurchase.
(a) At the request of the Acquiror, at any time from and after the
occurrence of a Purchase Event and ending 180 days immediately thereafter (the
"Acquiror Repurchase Period"), the Company (or any successor entity thereof)
shall repurchase the Option from the Acquiror together with all (but not less
than all) shares of the Company's Common Stock purchased by the Acquiror
pursuant to the Option with respect to which the Acquiror then has Beneficial
Ownership, at a price (when calculated on a per share basis, the "Per Share
Repurchase Price") equal to the sum of:
(i) the difference between (A) the "Market/Tender Offer Price"
for shares of the Company's Common Stock (defined as the higher of (x) the
highest price per share at which a tender or exchange offer has been made
for shares of the Company's Common Stock or (y) the highest closing price
per share of the Company's Common Stock as reported by Nasdaq for any day
within that portion of the Acquiror Repurchase Period which precedes the
date the Acquiror gives notice of the required repurchase under this
Section 7) and (B) the Purchase Price (subject to adjustment as provided in
Section 6), multiplied by the number of shares of the Company's Common
Stock with respect to which the Option has not been exercised, but only if
such Market/Tender Offer Price is greater than such Purchase Price;
(ii) the Purchase Price paid by the Acquiror for any shares of
the Company's Common Stock acquired pursuant to the Option; and
(iii) the difference between the Market/Tender Offer Price and
the Purchase Price paid by the Acquiror for any shares of the Company's
Common Stock purchased pursuant to the exercise of the Option, multiplied
by the number of shares so purchased, but only if such Market/Tender Offer
Price is greater than such Purchase Price.
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(b) In the event the Acquiror exercises its rights under this Section
7, the Company shall, within 10 business days thereafter, pay the required
amount to the Acquiror by wire transfer of immediately available funds to an
account designated by the Acquiror and the Acquiror shall surrender to the
Company the Option and the certificates evidencing the shares of the Company's
Common Stock purchased pursuant to the Option with respect to which the Acquiror
then has Beneficial Ownership.
(c) In determining the Market/Tender Offer Price, the value of any
consideration other than cash shall be determined by an independent nationally
recognized investment banking firm selected by the Acquiror.
8. Repurchase at Option of the Company.
Except to the extent that the Acquiror shall have previously exercised
its rights under Section 7, at the request of the Company during the six-month
period commencing 180 days following the first occurrence of a Purchase Event,
the Company may repurchase from the Acquiror, and the Acquiror shall sell to the
Company, all (but not less than all) of the Company's Common Stock acquired by
the Acquiror pursuant to the Option (to the extent that the Acquiror has
Beneficial Ownership of such shares at the time of such repurchase) at a price
per share equal to the greatest of (i) 110% of the Market/Tender Offer Price per
share (calculated in the manner set forth in Section 7(a)(i) hereof but
utilizing the period beginning on the occurrence of a Purchase Event and ending
on the date the Company exercises its repurchase right pursuant to this Section
8), (ii) the Per Share Repurchase Price or (iii) the sum of (A) the aggregate
Purchase Price of the shares so repurchased plus (B) interest on the aggregate
Purchase Price paid for the shares so repurchased from the date of purchase by
the Acquiror to the date of repurchase at the highest rate of interest announced
by Citibank, N.A. as its prime or base lending or reference rate during such
period, less any dividends received on the shares so repurchased, which sum
shall be divided by the number of shares of the Company's Common Stock to be
repurchased by the Company. Any repurchase under this Section 8 shall be
consummated in accordance with Section 7(b).
9. Registration Rights.
At any time after a Closing, the Company shall, if requested by any
holder or Beneficial Owner of shares of the Company's Common Stock issued upon
exercise of the Option (each a "Holder"), as expeditiously as possible file a
registration statement on a form for general use under the 1933 Act if necessary
in order to permit the sale or other disposition of the shares of the Company's
Common Stock that have been acquired upon exercise of the Option in accordance
with the intended method of sale or other disposition requested by any such
Holder. Each such Holder shall provide all information reasonably requested by
the Company for inclusion in any registration statement to be filed hereunder.
The Company shall use its best efforts to cause such registration statement
first to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sales or other
dispositions. The registration effected under this Section 9 shall be at the
Company's expense except for
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underwriting commissions and the fees and disbursements of such Holders' counsel
attributable to the registration of shares of the Company's Common Stock. In no
event shall the Company be required to effect more than one registration
hereunder. The filing of any registration statement required hereunder may be
delayed for such period of time (not to exceed 90 days) as may reasonably be
required to facilitate any public distribution by the Company of the Company's
Common Stock, if a special audit of the Company would otherwise be required in
connection therewith or for such period of time during which the Company is in
possession of material information concerning it, its business affairs or a
material transaction in each case the public disclosure of which could have a
material adverse effect on the Company or significantly disrupt such material
transaction. If requested by any such Holder in connection with such
registration, the Company shall become a party to any underwriting agreement
relating to the sale of such shares on terms and including obligations and
indemnities which are customary for parties similarly situated. Upon receiving
any request for registration under this Section 9 from any Holder, the Company
agrees to send a copy thereof to any other person known to the Company to be
entitled to registration rights under this Section 9, in each case by promptly
mailing the same, postage prepaid, to the address of record of the persons
entitled to receive such copies.
10. Listing.
If the Company's Common Stock or any other securities to be acquired
upon exercise of the Option are then quoted on Nasdaq or listed on any national
securities exchange, the Company, upon the request of the Acquiror, will
promptly file an application to have the shares of the Company's Common Stock or
other securities to be acquired upon exercise of the Option quoted on Nasdaq or
listed on such exchange and will use its best efforts to obtain approval of such
applications as soon as practicable.
11. Severability.
Any term, provision, covenant or restriction contained in this Option
Agreement held by a court or other Governmental Authority of competent
jurisdiction to be invalid, void or unenforceable, shall be ineffective to the
extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this Option
Agreement nor the validity or enforceability thereof in any other jurisdiction
shall be affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Option Agreement that is so found to be so broad
as to be unenforceable shall be interpreted to be as broad as is enforceable.
12. Miscellaneous.
(a) Expenses. Each of the parties hereto shall pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel, except as otherwise
provided herein.
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(b) Entire Agreement. This Option Agreement, the Merger Agreement
(including the Schedules and Appendices attached thereto) and the
Confidentiality Agreement constitute the entire agreement among the parties and
supersede all prior agreements and understandings by or among the parties,
written and oral, with respect to the subject matter hereof and thereof.
(c) Successors; No Third Party Beneficiaries. The terms and
conditions of this Option Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Option Agreement, except as expressly provided herein.
(d) Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered in
accordance with Section 8.7 of the Merger Agreement (which is incorporated
herein by reference).
(e) Counterparts. This Option Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but both such counterparts together shall constitute but one
agreement.
(f) Further Assurances. In the event of any exercise of the Option by
the Acquiror, the Company and the Acquiror shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(g) Specific Performance. The parties hereto agree that if for any
reason the Acquiror or the Company shall have failed to perform its obligations
under this Option Agreement, then either party hereto seeking to enforce this
Option Agreement against such non-performing party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that either
party hereto may have against the other party hereto for any failure to perform
its obligations under this Option Agreement.
(h) Governing Law. This Option Agreement shall be governed by the
laws of the State of New Jersey. All actions and proceedings arising out of or
relating to this Option Agreement shall be heard and determined in any New
Jersey state court or in any federal court sitting in New Jersey.
(i) Consent to Jurisdiction; Venue.
(x) Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the state courts of New Jersey and to the
jurisdiction of the United States District Court for the District of New
Jersey, for the purpose of any action or proceeding
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arising out of or relating to this Option Agreement and each of the parties
hereto irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any New Jersey state
court or in any federal court sitting in New Jersey. Each of the parties
hereto agrees that a final judgment in any action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(y) Each of the parties hereto irrevocably consents to the
service of any summons and complaint and any other process in any other
action or proceeding relating hereto, on behalf of itself or its property,
by the personal delivery of copies of such process to such party. Nothing
in this Section 11(i) shall affect the right of any party hereto to serve
legal process in any other manner permitted by law.
(j) Regulatory Approvals; Section 16(b). If, in connection with the
exercise of the Option under Section 3, prior notification to or approval of the
Federal Reserve Board or any other Governmental Authority is required, then each
of the parties will use its reasonable efforts to make all filings with, and to
obtain the consent of, all third parties and Governmental Authorities necessary
to the consummation of the transactions contemplated by this Option Agreement,
including, without limitation, applying to the Federal Reserve Board under the
Bank Holding Company Act and to state banking authorities for approval to
acquire the shares issuable hereunder. Periods of time that otherwise would run
pursuant hereto (if any) shall run instead from the date on which any such
required notification period has expired or been terminated or such approval has
been obtained, and in either event, any requisite waiting period shall have
passed. Periods of time that otherwise would run pursuant to Sections 3, 7 or 8
shall also be extended to the extent necessary to avoid liability under Section
16(b) of the 1934 Act.
(k) Waiver and Amendment. Any provision of this Option Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Option Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Option Agreement as of the date first written above.
LAKELAND BANCORP, INC.
By:
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Name: Xxxx X. Xxxxxxxxxx
Title: President
HIGH POINT FINANCIAL CORP.
By:
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Name: Xxxxxxx X. Xxxxxxxxx
Title: President
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