STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of November
12, 1996, is by and between United National Bancorp, a New Jersey corporation
and registered bank holding company ("United"), and Xxxxxxxxxx Bank, a
commercial bank organized under the laws of New Jersey ("Xxxxxxxxxx").
BACKGROUND
1. United, United National Bank ("UNB"), and Xxxxxxxxxx, as of the date
hereof, have executed a definitive agreement and plan of merger (the "Merger
Agreement") pursuant to which United will acquire Xxxxxxxxxx through a merger of
Xxxxxxxxxx with and into UNB (the "Merger").
2. As an inducement to United to enter into the Merger Agreement and in
consideration for such entry, Xxxxxxxxxx desires to grant to United an option to
purchase authorized but unissued shares of common stock of Xxxxxxxxxx in an
amount and on the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, United and Xxxxxxxxxx,
intending to be legally bound hereby, agree:
1. Grant of Option. Xxxxxxxxxx hereby grants to United the option to
purchase 133,000 shares of common stock, $5.00 par value (the "Common Stock") of
Xxxxxxxxxx at a price of $14.00 per share (the "Option Price"), on the terms and
conditions set forth herein (the "Option").
2. Exercise of Option. This Option shall not be exercisable until the
occurrence of a Triggering Event (as such term is hereinafter defined). Upon or
after the occurrence of a Triggering Event (as such term is hereinafter
defined), United may exercise the Option, in whole or in part, at any time or
from time to time.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
thereunder) other than United or an affiliate of United:
a. acquires beneficial ownership (as such term is defined in Rule 13d-3
as promulgated under the Exchange Act) of at least 10% of the then outstanding
shares of Common Stock;
b. enters into a letter of intent or an agreement, whether oral or
written, with Xxxxxxxxxx pursuant to which such person or any affiliate of such
person would (i) merge or consolidate, or enter into any similar transaction
with Xxxxxxxxxx, (ii) acquire all or a significant portion of the assets or
liabilities of Xxxxxxxxxx, or (iii) acquire beneficial ownership of securities
representing, or the right to acquire beneficial ownership or to vote securities
representing 10% or more of the then outstanding shares of Common Stock;
c. makes a filing with any bank or thrift regulatory authorities or
publicly announces a bona fide proposal (a "Proposal") for (i) any merger,
consolidation or acquisition of all or a significant portion of all the assets
or liabilities of Xxxxxxxxxx or any other business combination involving
Xxxxxxxxxx, or (ii) a transaction involving the transfer of beneficial ownership
of securities representing, or the right to acquire beneficial ownership or to
vote securities representing, 10% or more of the outstanding shares of Common
Stock, and thereafter, if such Proposal has not been Publicly Withdrawn (as such
term is hereinafter defined) at least 15 days prior to the meeting of
stockholders of Xxxxxxxxxx called to vote on the Merger and Xxxxxxxxxx'
stockholders fail to approve the Merger by the vote required by applicable law
at the meeting of stockholders called for such purpose;
d. makes a bona fide Proposal and thereafter, but before such Proposal
has been Publicly Withdrawn, Xxxxxxxxxx willfully takes any action in any manner
which would materially interfere with its desire or ability to enter into a
definitive Merger Agreement or its ability to consummate the Merger or
materially reduce the value of the transaction to United; or
e. which is the holder of more than 5% of the Common Stock solicits
proxies in opposition to approval of the Merger.
Provided, however, that for these purposes the Board of Directors of
Xxxxxxxxxx shall not be considered to be a "group" merely because of their
service on the Board and their ownership of Common Stock and no action by the
estate or heirs of any director who deceases after October 1, 1996, shall
constitute a Triggering Event. The term "Triggering Event" also means the taking
of any direct or indirect action by Xxxxxxxxxx or any of its directors, officers
or agents to invite, encourage or solicit any proposal which has as its purpose
a tender offer for the shares of Xxxxxxxxxx Common Stock, a merger,
consolidation, plan of exchange, plan of acquisition or reorganization of
Xxxxxxxxxx, or a sale of shares of Xxxxxxxxxx Common Stock or any significant
portion of its assets or liabilities.
The term "significant portion" means 10% of the assets or liabilities
of Xxxxxxxxxx.
"Publicly Withdrawn", for purposes of clauses (c) and (d) above, shall
mean an unconditional bona fide withdrawal of the Proposal coupled with a public
announcement of no further interest in pursuing such Proposal or in acquiring
any controlling influence over Xxxxxxxxxx or in soliciting or inducing any other
person (other than United or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be exercised at any
time (i) in the absence of any required governmental or regulatory approval or
consent necessary for Xxxxxxxxxx to issue the Option Shares or United to
exercise the Option or prior to the expiration or termination of any waiting
period required by law, or (ii) so long as any injunction or other order, decree
or ruling issued by any federal or state court of competent jurisdiction is in
effect which prohibits the sale or delivery of the Option Shares.
Xxxxxxxxxx shall notify United promptly in writing of the occurrence of
any Triggering Event known to it, it being understood that the giving of such
notice by Xxxxxxxxxx shall not be a condition to the right of United to exercise
the Option. Xxxxxxxxxx will not take any action which would have the effect of
preventing or disabling Xxxxxxxxxx from delivering the Option Shares to United
upon exercise of the Option or otherwise performing its obligations under this
Agreement.
In the event United wishes to exercise the Option, United shall send a
written notice to Xxxxxxxxxx (the date of which is hereinafter referred to as
the "Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date for the closing of such a purchase (a "Closing");
provided, however, that a Closing shall not occur prior to two days after the
later of receipt of any necessary regulatory approvals and the expiration of any
legally required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any Closing hereunder (a)
United will make payment to Xxxxxxxxxx of the aggregate price for the Option
Shares so purchased by wire transfer of immediately available funds to an
account designated by Xxxxxxxxxx, (b) Xxxxxxxxxx will deliver to United a stock
certificate or certificates representing the number of Option Shares so
purchased, free and clear of all liens, claims, charges and encumbrances of any
kind or nature whatsoever created by or through Xxxxxxxxxx, registered in the
name of United or its designee, in such denominations as were specified by
United in its notice of exercise and, if necessary, bearing a legend as set
forth below and (c) United shall pay any transfer or other taxes required by
reason of the issuance of the Option Shares so purchased.
If required under applicable federal securities laws, a legend will be
placed on each stock certificate evidencing Option Shares issued pursuant to
this Agreement, which legend will read substantially as follows:
The shares of stock evidenced by this certificate have not been
registered for sale under the Securities Act of 1933 (the "1933 Act").
These shares may not be sold, transferred or otherwise disposed of
unless a registration statement with respect to the sale of such shares
has been filed under the 1933 Act and declared effective or, in the
opinion of counsel reasonably acceptable to Xxxxxxxxxx, said transfer
would be exempt from registration under the provisions of the 1933 Act
and the regulations promulgated thereunder.
No such legend shall be required if a registration statement is filed and
declared effective under Section 4 hereof.
4. Registration Rights. Upon or after the occurrence of a Triggering
Event and upon receipt of a written request from United, Xxxxxxxxxx shall, if
necessary for the resale of the Option or the Option Shares by United, prepare
and file a registration statement with the Securities and Exchange Commission,
the Federal Deposit Insurance Corporation and any state securities bureau,
covering the Option and such number of Option Shares as United shall specify in
its request, and Xxxxxxxxxx shall use its best efforts to cause such
registration statement to be declared effective in order to permit the sale or
other disposition of the Option and the Option Shares, provided that United
shall in no event have the right to have more than one such registration
statement become effective.
In connection with such filing, Xxxxxxxxxx shall use its best efforts
to cause to be delivered to United such certificates, opinions, accountant's
letters and other documents as United shall reasonably request and as are
customarily provided in connection with registrations of securities under the
Securities Act of 1933, as amended. All expenses incurred by Xxxxxxxxxx in
complying with the provisions of this Section 4, including without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for Xxxxxxxxxx and blue sky fees and expenses shall be paid by
Xxxxxxxxxx. Underwriting discounts and commissions to brokers and dealers
relating to the Option Shares, fees and disbursements of counsel to United and
any other expenses incurred by United in connection with such registration shall
be borne by United. In connection with such filing, Xxxxxxxxxx shall indemnify
and hold harmless United against any losses, claims, damages or liabilities,
joint or several, to which United may become subject, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any preliminary or final registration statement or any
amendment or supplement thereto, or arise out of a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
Xxxxxxxxxx will reimburse United for any legal or other expense reasonably
incurred by United in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Xxxxxxxxxx will not
be liable in any case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement of omission or alleged omission made in such preliminary or final
registration statement or such amendment or supplement thereto in reliance upon
and in conformity with written information furnished by or on behalf of United
specifically for use in the preparation thereof. United will indemnify and hold
harmless Xxxxxxxxxx to the same extent as set forth in the immediately preceding
sentence but only with reference to written information specifically furnished
by or on behalf of United for use in the preparation of such preliminary or
final registration statement or such amendment or supplement thereto; and United
will reimburse Xxxxxxxxxx for any legal or other expense reasonably incurred by
Xxxxxxxxxx in connection with investigating or defending any such loss, claim,
damage, liability or action.
5. Adjustment Upon Changes in Capitalization. In the event of any
change in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, conversions, exchanges of shares or the like,
then the number and kind of Option Shares and the Option Price shall be
appropriately adjusted.
In the event any capital reorganization or reclassification of the
Common Stock, or any consolidation, merger or similar transaction of Xxxxxxxxxx
with another entity, or in the event any sale of all or substantially all of the
assets of Xxxxxxxxxx shall be effected in such a way that the holders of Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provisions
(in form reasonably satisfactory to the holder hereof) shall be made whereby the
holder hereof shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions specified herein and in lieu of the
Common Stock immediately theretofore purchasable and receivable upon exercise of
the rights represented by this Option, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for the number
of shares of Common Stock immediately theretofore purchasable and receivable
upon exercise of the rights represented by this Option had such reorganization,
reclassification, consolidation, merger or sale not taken place; provided,
however, that if such transaction results in the holders of Common Stock
receiving only cash, the holder hereof shall be paid the difference between the
Option Price and such cash consideration without the need to exercise the
Option.
6. Filings and Consents. Each of United and Xxxxxxxxxx will use its
best efforts to make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to compliance
with all applicable laws including, in the event United is the holder hereof,
approval of the Board of Governors of the Federal Reserve System and Xxxxxxxxxx
agrees to cooperate with and furnish to the holder hereof such information and
documents as may be reasonably required to secure such approvals.
7. Representations and Warranties of Xxxxxxxxxx. Xxxxxxxxxx hereby
represents and warrants to United as follows:
a. Due Authorization. Xxxxxxxxxx has full corporate power and
authority to execute, deliver and perform this Agreement and all corporate
action necessary for execution, delivery and performance of this Agreement has
been duly taken by Xxxxxxxxxx.
b. Authorized Shares. Xxxxxxxxxx has taken and, as long as the
Option is outstanding, will take all necessary corporate action to authorize and
reserve for issuance all shares of Common Stock that may be issued pursuant to
any exercise of the Option.
c. No Conflicts. Neither the execution and delivery of this
Agreement nor consummation of the transactions contemplated hereby (assuming all
appropriate regulatory approvals) will violate or result in any violation or
default of or be in conflict with or constitute a default under any term of the
certificate of incorporation or by-laws of Xxxxxxxxxx or any agreement,
instrument, judgment, decree, statute, rule or order applicable to Xxxxxxxxxx.
8. Specific Performance. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement and that the
obligations of the parties hereto shall be specifically enforceable.
Notwithstanding the foregoing, United shall have the right to seek money damages
against Xxxxxxxxxx for a breach of this Agreement.
9. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties or any of them with respect to the subject matter hereof.
10. Assignment or Transfer. United may not sell, assign or otherwise
transfer its rights and obligations hereunder, in whole or in part, to any
person or group of persons other than to an affiliate of United, except upon or
after the occurrence of a Triggering Event. United represents that it is
acquiring the Option for United's own account and not with a view to or for sale
in connection with any distribution of the Option or the Option Shares. United
shall have the right to assign this Agreement to any party it selects after the
occurrence of a Triggering Event.
11. Amendment of Agreement. By mutual consent of the parties hereto,
this Agreement may be amended in writing at any time, for the purpose of
facilitating performance hereunder or to comply with any applicable regulation
of any governmental authority or any applicable order of any court or for any
other purpose.
12. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
13. Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered personally, by express service, cable, telegram
or telex, or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
If to United:
United National Bancorp
0000 Xxxxx 00 Xxxx
P.O. Box 6000
Bridgewater, New Jersey 08807-0010
Attn.: Xxxxxx X. Xxxxxx, Chairman, President and CEO
With a copy to:
Pitney, Xxxxxx, Xxxx & Xxxxx
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attn.: Xxxxxx X. Xxxxx, Esq.
If to Xxxxxxxxxx:
Xxxxxxxxxx Bank
000 Xxxxxxx Xxxx
Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxx X. Xxxxxxxxxx,
President and CEO
With a copy to:
Xxxxxx, XxXxxxxxxx & Xxxxxx
721 Route 202-206
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxxx Xxxxxxxx, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are inserted for
convenience and reference purposes, and shall not limit or otherwise affect any
of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may, by mutual consent,
extend the time for performance of any of the obligations or acts of either
party hereto. Each party may waive (i) compliance with any of the covenants of
the other party contained in this Agreement and/or (ii) the other party's
performance of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement, except
as provided in Section 10 permitting United to assign its rights and obligations
hereunder.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
19. Termination. This Agreement shall terminate upon either the
termination of the Merger Agreement as provided therein or the consummation of
the transactions contemplated by the Merger Agreement; provided, however, that
if termination of the Merger Agreement occurs after the occurrence of a
Triggering Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 18 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Agreement to be
executed by its duly authorized officer, all as of the day and year first above
written.
XXXXXXXXXX BANK
By: /S/ XXXX X. XXXXXXXXXX
----------------------
Xxxx X. Xxxxxxxxxx,
President & CEO
UNITED NATIONAL BANCORP
By: /S/ XXXXXX X. XXXXXX
-----------------------
Xxxxxx X. Xxxxxx,
Chairman, President & CEO
