Contract

Execution Copy

THIS STOCK OPTION AGREEMENT (“Agreement”) dated as of November 9, 2004, is by and between Valley National Bancorp, a New Jersey corporation and registered bank holding company (“Valley”), Valley National Bank, a national banking association and a wholly-owned subsidiary of Valley (“VNB”), and NorCrown Bank, a commercial bank organized under the laws of the State of New Jersey (“NorCrown”).

BACKGROUND

WHEREAS, Valley, VNB, NorCrown and The NorCrown Trust, the holder of over 99% of the outstanding common stock of NorCrown (the “Trust”), as of the date hereof, are prepared to execute a definitive agreement and plan of merger (the “Merger Agreement”) pursuant to which NorCrown will be merged with and into VNB (the “Merger”); and

WHEREAS, Valley has advised NorCrown that it will not execute the Merger Agreement unless NorCrown executes this Agreement; and

WHEREAS, the Board of Directors of NorCrown has determined that the Merger Agreement provides substantial benefits to the shareholders of NorCrown; and

WHEREAS, as an inducement to Valley to enter into the Merger Agreement and in consideration for such entry, NorCrown desires to grant to Valley an option to purchase authorized but unissued shares of common stock of NorCrown 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, Valley and NorCrown, intending to be legally bound hereby, agree:

1. Grant of Option. NorCrown hereby grants to Valley an option to purchase 1,049,949 shares of common stock, $2.00 par value per share, of NorCrown (the “Common Stock”) at a price of $20.00 per share (as the same may be reduced in accordance with Section 5b hereof, 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), Valley may exercise the Option, in whole or in part, at any time or from time to time, subject to the terms and conditions set forth herein and the termination provisions of Section 19 of this Agreement.

The term “Triggering Event” means the occurrence of any of the following events:

a. 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 Valley or an affiliate of Valley (a “third party”) acquires beneficial ownership (as such term is defined in Rule 13d-3 as promulgated under the Exchange Act) of at least 5% of the then outstanding shares of Common Stock, provided, however, that the continuing ownership by a person or group which as of the date hereof owns more than 5% of the outstanding Common Stock shall not constitute a Triggering Event; or

b. A third party enters into a letter of intent or an agreement, whether oral or written, with NorCrown or the Trust pursuant to which such third party or any affiliate of such third party would (i) merge or consolidate, or enter into any similar transaction, with NorCrown, (ii) acquire all or a significant portion of the assets or liabilities of NorCrown, or (iii) acquire beneficial ownership of securities representing, or the right to acquire beneficial ownership or to vote securities representing, 5% or more of the then outstanding shares of Common Stock; or

c. A third party makes a filing with any bank, thrift or financial holding company regulatory authorities with respect to or publicly announces a bona fide proposal (a “Proposal”) for (i) any merger with, consolidation with or acquisition of all or a significant portion of all the assets or liabilities of, NorCrown or any other business combination involving NorCrown, 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, 5% or more of the outstanding shares of Common Stock, and in either case thereafter, if (i) such Proposal has not been Publicly Withdrawn (as such term is hereinafter defined) no later than the earlier of (A) 10 days after the public announcement and (B) a date which is 10 days prior to the Closing Date (as such term is defined in the Merger Agreement), and (ii) the holders of a majority of the NorCrown common stock do not vote to reject the Proposal no later than the earlier of (A) 30 days after the public announcement, and (B) a date which is 10 days prior to the Closing Date (as such term is defined in the Merger Agreement); or

d. A third party makes a bona fide Proposal and thereafter, but before such Proposal has been Publicly Withdrawn, NorCrown or the Trust willfully or intentionally 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 Valley; or

e. After the execution of this Agreement, NorCrown, the Trust or any of its directors, senior executive officers, investment bankers or other person with actual or apparent authority to speak for the Board of Directors, willfully or intentionally takes any material direct or indirect action inviting, encouraging or soliciting any proposal (other than from Valley or an affiliate of Valley) 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 NorCrown, 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 10% of the assets or liabilities of NorCrown. The term “significant number” means 10% of the outstanding shares of Common Stock.

Solely for purposes of Section 5b hereof, the date of a “Triggering Event” under clause (a) above is the date the third party first acquires beneficial ownership of at least 5% of the then outstanding shares of Common Stock; the date of a “Triggering Event” under clause (b) above is the date of entry into the letter of intent or agreement; the date of a “Triggering Event” under clause (c) above is the earlier of the date of the filing (if any) with a bank, thrift or financial holding company regulatory authority with respect to the Proposal or the date of public announcement of the Proposal; the date of a “Triggering Event” under clause (d) above is the date the third party first makes the Proposal; and the date of a “Triggering Event” under clause (e) above is the first date on which a material direct or indirect action referred to therein is taken.

“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 NorCrown or in soliciting or inducing any other person (other than Valley 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 NorCrown to issue the shares of Common Stock covered by the Option (the “Option Shares”) or Valley 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.

NorCrown shall notify Valley promptly in writing of the occurrence of any Triggering Event known to it, it being understood that the giving of such notice by NorCrown shall not be a condition to the right of Valley to exercise the Option. NorCrown will not take any action which would have the effect of preventing or disabling NorCrown from delivering the Option Shares to Valley upon exercise of the Option or otherwise performing its obligations under this Agreement, except to the extent required by applicable securities and banking laws and regulations.

In the event Valley wishes to exercise the Option, Valley shall send a written notice to NorCrown (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 between two and ten business days inclusive from the Notice 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) Valley will make payment to NorCrown of the aggregate price for the Option Shares so purchased by wire transfer of immediately available funds to an account designated by NorCrown; (b) NorCrown will deliver to Valley 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 NorCrown, registered in the name of Valley or its designee, in such denominations as were specified by Valley in its notice of exercise; and (c) Valley shall pay any transfer or other taxes required by reason of the issuance of the Option Shares so purchased.

4. Registration Rights. Upon or after the occurrence of a Triggering Event and upon receipt of a written request from Valley, NorCrown shall, if necessary for the resale of the Option or the Option Shares by Valley, 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 Valley shall specify in its request, and NorCrown 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 Valley shall in no event have the right to have more than one such registration statement become effective, and provided further that NorCrown shall not be required to prepare and file any such registration statement in connection with any proposed sale with respect to which counsel to NorCrown delivers to NorCrown and to Valley (which is reasonably acceptable to Valley) its opinion to the effect that no such filing is required under applicable laws and regulations with respect to such sale or disposition or any subsequent sale or disposition; provided further, however, that NorCrown may delay any registration of Option Shares above for a period not exceeding 90 days in the event that NorCrown shall in good faith determine that any such registration would adversely effect an on-going offering of securities by NorCrown for cash. Valley shall provide all information reasonable requested by NorCrown for inclusion in any registration statement to be filed hereunder.

In connection with such filing, NorCrown shall use its best efforts to cause to be delivered to Valley such certificates, opinions, accountant’s letters and other documents as Valley 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 NorCrown 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 NorCrown and blue sky fees and expenses shall be paid by NorCrown. Underwriting discounts and commissions to brokers and dealers relating to the Option or Option Shares, fees and disbursements of counsel to Valley and any other expenses incurred by Valley in connection with such registration shall be borne by Valley. In connection with such filing, NorCrown shall indemnify and hold harmless Valley against any losses, claims, damages or liabilities, joint or several, to which Valley 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 NorCrown will reimburse Valley for any legal or other expense reasonably incurred by Valley in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that NorCrown 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 or 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 Valley specifically for use in the preparation thereof with respect to information about the selling stockholders or the plan of distribution. Valley will indemnify and hold harmless NorCrown 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 Valley for use in the preparation of such preliminary or final registration statement or such amendment or supplement thereto with respect to information about the selling stockholders or the plan of distribution; and Valley will reimburse NorCrown for any legal or other expense reasonably incurred by NorCrown in connection with investigating or defending any such loss, claim, damage, liability or action. Notwithstanding anything to the contrary herein, no indemnifying party shall be liable for any settlement effected without its prior written consent.

5. Adjustments 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 NorCrown with another entity, or any sale of all or substantially all of the assets of NorCrown, 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, with regard to a consolidation, merger or similar transaction, or any sale of all or substantially all of the assets of NorCrown, 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 Valley and NorCrown will use its reasonable 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, but not limited to, in the event Valley is the holder hereof, approval of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the New Jersey Department of Banking or the Securities and Exchange Commission, and NorCrown 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 NorCrown. NorCrown hereby represents and warrants to Valley as follows:

a. Due Authorization. NorCrown 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 NorCrown.

b. Authorized Shares. NorCrown 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 Bylaws of NorCrown or any agreement, instrument, judgment, decree or order applicable to NorCrown.

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, Valley shall have the right to seek money damages against NorCrown 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. Valley 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 VNB or another affiliate of Valley, until the occurrence of a Triggering Event. Valley represents that it is acquiring the Option for Valley’s own account and not with a view to or for sale in connection with any distribution of the Option or the Option Shares. After the occurrence of a Triggering Event, Valley may sell, assign, pledge, or otherwise transfer its rights and obligations hereunder, in whole or in part, to any person, subject to compliance with applicable law.

11. Amendment of Agreement. Upon 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, or delivered by overnight delivery service, or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties as follows:

If to Valley
				Valley National Bancorp
				0000 Xxxxxx Xxxx
				Xxxxx, Xxx Xxxxxx 00000
				Attn.: Xxxxxx X. Xxxxxx Chairman, President and Chief Executive Officer

With a copy to:
				Pitney Xxxxxx LLP
				000 Xxxxxx Xxxxx Xxxxxxx Xxxx, XX 00000-0000
				Attn.: Xxxxxx X. Xxxxx, Esq.

If to NorCrown:
				NorCrown Bank
				00 Xxxx Xx. Xxxxxxxx Xxxxxx
				Xxxxxxxxxx, Xxx Xxxxxx 00000
				Attn.: Xxxxxx Xxxxxxxxx, President and Chief Executive Officer

With a copy to:
				Xxxxx & Xxxxxx, PC
				Xxx Xxxxxx Xxxxx
				Xxxx Xxxxxx, XX 00000
				Attn.: Xxxxx Xxxxxx, Esq. (as counsel to the Board of Directors of NorCrown)


				and Xxxxx Cummis Xxxxxxx & Xxxxx P.C.
				The Legal Center Xxx Xxxxxxxxxx Xxxxx
				Xxxxxx, Xxx Xxxxxx 00000
				Attn.: Xxxxxx X. Xxxxx, Esq. (as counsel to NorCrown)

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 (a) compliance with any of the covenants of the other party contained in this Agreement and/or (b) 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.

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; provided further, that if the holder has given notice of exercise of the option and the exercise is awaiting any necessary regulatory approval after the holder has acted reasonably to obtain such approval this Agreement shall not terminate until the approvals have been granted and reasonable time to consummate has elapsed, or the approvals are denied.

IN WITNESS WHEREOF, each of the parties hereto, pursuant to resolutions adopted by its Board of Directors, has caused this Stock Option Agreement to be executed by its duly authorized officer, all as of the day and year first above written.

VALLEY NATIONAL BANCORP

By:  XXXXXX X. XXXXXX
——————————————
         Xxxxxx X. Xxxxxx
         Chairman, President and
         Chief Executive Officer

NORCROWN BANK

By:  XXXXXX XXXXXXXXX
——————————————
         Xxxxxx Xxxxxxxxx
         President

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