STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") dated September
22, 1998, is by and between United National Bancorp, a New Jersey corporation
and registered bank holding company ("United"), and Raritan Bancorp Inc., a
Delaware corporation ("Raritan").
BACKGROUND
1. United, United National Bank ("UNB"), Raritan and The
Raritan Savings Bank (the "Bank"), as of the date hereof, have executed a
definitive agreement and plan of merger (the "Merger Agreement") pursuant to
which United will acquire Raritan through a merger of Raritan with and into
United (the "Merger").
2. During the negotiation of the Merger Agreement, United and
UNB advised Raritan that they would not execute the Merger Agreement unless
Raritan executed this Agreement.
3. As an inducement to United to enter into the Merger
Agreement and in consideration for such entry, Raritan has agreed to grant to
United an option to purchase authorized but unissued shares of common stock of
Raritan 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 Raritan,
intending to be legally bound hereby, agree:
1. Grant of Option. Raritan hereby grants to United the option
to purchase 470,000 shares of the common stock, $.01 par value (the "Common
Stock"), of Raritan at a price of $26.00 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, subject to the termination provisions of Section
19 of this Agreement.
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 20% of the then
outstanding shares of Common Stock;
b. enters into a letter of intent or an agreement, whether
oral or written, with Raritan pursuant to which such person or any affiliate of
such person would (i) merge or consolidate, or enter into any similar
transaction, with Raritan or the Bank, (ii) acquire all or a significant portion
of the assets or liabilities of Raritan or the Bank, or (iii) acquire beneficial
ownership of securities representing, or the right to acquire beneficial
ownership or to vote securities representing 20% or more of the then outstanding
shares of Common Stock;
c. makes a filing with any bank or thrift regulatory authority
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 Raritan or the Bank or any other business combination
involving Raritan or the Bank, 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, 20% 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 Raritan called to vote on the Merger and
Raritan' stockholders fail to approve the Merger by the vote required by
applicable law at the meeting of stockholders called for such purpose; or
d. makes a bona fide Proposal and thereafter, but before such
Proposal has been Publicly Withdrawn, Raritan willfully takes any action in any
manner which would materially interfere with its ability to consummate the
Merger or materially reduce the value of the transaction to United.
The term "Triggering Event" also means the taking of any
material direct or indirect action by Raritan or any of its directors, officers
or agents, with the formal or informal approval or acquiescence of the Raritan
Board of Directors, with the intention of inviting, encouraging or soliciting
any proposal which has as its purpose a tender offer for the shares of Common
Stock, a merger, consolidation, plan of exchange, plan of acquisition or
reorganization of Raritan, or a sale of a significant number of shares of Common
Stock or any significant portion of its assets or liabilities.
The term "significant portion" means 25% of the assets or
liabilities of Raritan. The term "significant number" means 20% of the
outstanding shares of Raritan.
"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 Raritan or the Bank 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 Raritan to issue the shares of Common Stock
covered by the Option (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.
Raritan 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 Raritan shall not be a condition to the right of United
to exercise the Option. Raritan will not take any action which would have the
effect of preventing or disabling Raritan 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 after a
Triggering Event has occurred and prior to the termination of this Agreement,
United shall send a written notice to Raritan (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 (not less than three days after such
notice is sent to Raritan) 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 Raritan of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by Raritan, (b) Raritan 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 Raritan, 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 Raritan Bancorp Inc., 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, Raritan
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 and any state securities bureau covering the Option and such number
of Option Shares as United shall specify in its request, and Raritan 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, Raritan 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 Raritan 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 Raritan and blue sky fees and expenses shall be paid by Raritan.
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, Raritan 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 Raritan
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 Raritan 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 Raritan 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 Raritan for any legal or other expense reasonably incurred by
Raritan 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 Raritan
with another entity, or in the event any sale of all or substantially all of the
assets of Raritan 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 Raritan 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
Raritan 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 Raritan. Raritan hereby
represents and warrants to United as follows:
a. Due Authorization. Raritan has full corporate power
and authority to execute, deliver and perform this Agreement and all corporate
action necessary for the execution, delivery and performance of this Agreement
has been duly taken by Raritan.
b. Authorized Shares. Raritan 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 Raritan or any agreement,
instrument, judgment, decree, statute, rule or order applicable to Raritan.
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 Raritan 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
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:
(a) If to United, to:
United National Bancorp
0000 Xxxxx 00 Xxxx, P.O. Box 6000
Bridgewater, New Jersey 08807-0010
Attn.: Xxxxxx X. Xxxxxx, Chairman,
President and Chief Executive Officer
With a copy to:
Pitney, Xxxxxx, Xxxx & Xxxxx
Attn.: Xxxxxxx X. Xxxxxxx, Esq.
By Hand: 000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
By Mail: X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
(b) If to Raritan, to:
Raritan Bancorp Inc.
000 Xxxxx 00
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxxx X. Rus, Chairman,
President and Chief Executive Officer
With a copy to:
Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx PC
0000 Xxxxxxxxx Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000
Attn.: Xxxx X. Xxxxxx
or such other addresses as shall be furnished in writing by
any party, and any such notice or communications shall be deemed to have been
given as of the date so delivered or telecopied and mailed.
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.
RARITAN BANCORP INC.
XXXXX X. RUS
By:------------------------------------------
Xxxxx X. Rus
Chairman, President and Chief
Financial Officer
UNITED NATIONAL BANCORP
XXXXXX X. XXXXXX
By:------------------------------------------
Xxxxxx X. Xxxxxx
Chairman, President and Chief
Financial Officer
