STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated May 29, 1998,
is by and between Valley National Bancorp, a New Jersey corporation and
registered bank holding company ("Valley"), and Xxxxx Bancorp, Inc. a Delaware
corporation ("Wayne") and registered unitary savings and loan holding company
for Xxxxx Savings Bank, F.S.B. (the "Bank").
BACKGROUND
1. Valley, Wayne, the Bank and Valley National Bank ("Valley
Bank"), a wholly-owned subsidiary of Valley, as of the date hereof, are prepared
to execute an Agreement and Plan of Merger (the "Merger Agreement") pursuant to
which Valley will acquire Wayne through a merger of Wayne with and into Valley
(the "Merger").
2. As an inducement to Valley to enter into the Merger
Agreement and in consideration for such entry and negotiation, Wayne has agreed
to grant to Valley the Option.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, Valley and Wayne,
intending to be legally bound hereby, agree:
1. Grant of Option. Wayne hereby grants to Valley the option
to purchase up to 400,000 shares (the "Option Shares") of Wayne's common stock,
$0.01 par value ("Common Stock") at an exercise price of $24.50 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), 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. This
Option may not be exercised if (i) Valley shall have willfully and materially
breached a material covenant or agreement contained in the Merger Agreement such
that Wayne shall have the right unilaterally to terminate the Merger Agreement
pursuant to the terms thereof, (ii) prior to the occurrence of any Triggering
Event, Wayne shall have given Valley written notice of such breach, specifically
referencing this Section 2, and (iii) Valley shall not have cured such breach
prior to exercising the Option.
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 Valley or an affiliate of Valley:
a. acquires beneficial ownership (as such term is
defined in Rule 13d-3 as promulgated under the Exchange Act) of at least 15% 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 15% of the outstanding Common Stock shall not constitute a Triggering
Event;
b. enters into a letter of intent or an agreement,
whether oral or written, with Wayne pursuant to which such person or any
affiliate of such person would (i) merge or consolidate, or enter into any
similar transaction with Wayne or the Bank, (ii) acquire all or a significant
portion of the assets or liabilities of Wayne or the Bank, or (iii) acquire
beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing 15% 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 Wayne or any other business combination involving
Wayne 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, 15% 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 Wayne called to vote on the Merger and Wayne
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, Wayne (i) willfully takes any
action in any manner which would materially interfere with its ability to
consummate the Merger or (ii) willfully takes any action in any manner (other
than actions taken in the ordinary course of business) which would materially
reduce the value of the Merger to Valley .
The term "Triggering Event" also means the taking of any
direct or indirect action by Wayne or any of its directors, executive officers,
investment bankers or other persons with actual or apparent authority to speak
for the Wayne Board of Directors, 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 Wayne or the Bank, or a sale of shares of Common Stock or stock of the Bank,
or any significant portion of the assets or liabilities of Wayne or the Bank.
The term "significant portion" means 15% of the assets or
liabilities of Wayne.
"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 Wayne or in soliciting or inducing
any other person (other than Valley or any affiliate of Valley) 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 Wayne to issue 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.
Wayne 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 Wayne shall not be a condition to the right of Valley
to exercise the Option. Wayne will not take any action which would have the
effect of preventing or disabling Wayne from delivering the Option Shares to
Valley upon exercise of the Option or otherwise performing its obligations under
this Agreement.
In the event Valley wishes to exercise the Option, Valley
shall send a written notice to Wayne (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
business days nor later than 20 business 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 Wayne of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by Wayne, (b) Wayne 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 Wayne, registered in the name of
Valley or its designee, in such denominations as were specified by Valley in its
notice of exercise and bearing a legend as set forth below and (c) Valley shall
pay any transfer or other taxes required by reason of the issuance of the Option
Shares so purchased.
Unless a registration statement is filed and declared
effective under Section 4 hereof, 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 transfer of shares represented by this certificate
is subject to certain provisions of an agreement, dated as of May 29,
1998, between the registered holder hereof and Wayne and to resale
restrictions arising under the Securities Act of 1933, as amended. A
copy of such agreement is on file at the principal office of Wayne and
will be provided to the holder hereof without charge upon receipt by
Wayne of a written request therefore."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended (the "1933 Act")
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if Valley shall have delivered to Wayne a copy of a
letter from the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Wayne, to the effect that such legend is
not required for purposes of the 1933 Act; (ii) the reference to the provisions
of this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the opinion
of counsel to Wayne; and (iii) the legend shall be removed in its entirety if
the conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
4. Registration Rights. Upon or after the occurrence of a
Triggering Event and upon receipt of a written request from Valley, Wayne shall
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 Wayne 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 (it being understood and agreed that Valley will use reasonable efforts
to effect any such sale or other disposition on a widely distributed basis),
provided that Valley shall in no event have the right to have more than one such
registration statement become effective and further provided that Wayne shall
have the right to delay for up to six months such registration if the Option
Shares can and will be registered in connection with the filing of a
Registration Statement on Form S-4 (or a successor form) by any person acquiring
Wayne.
In connection with such filing, Wayne 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 Wayne 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 Wayne and blue sky fees and expenses shall be paid by Wayne.
Underwriting discounts and commissions to brokers and dealers relating to the
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, Wayne 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 with respect to Wayne or alleged untrue statement with
respect to Wayne of any material fact with respect to Wayne contained in any
preliminary or final registration statement or any amendment or supplement
thereto, or arise out of a material fact with respect to Wayne required to be
stated therein or necessary to make the statements therein with respect to Wayne
not misleading; and Wayne 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 Wayne
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 concerning Valley or its
plans or intentions. Valley will indemnify and hold harmless Wayne 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 concerning Valley or its plans or intentions for use in the preparation
of such preliminary or final registration statement or such amendment or
supplement thereto; and Valley will reimburse Wayne for any legal or other
expense reasonably incurred by Wayne 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. 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 Wayne
with another entity, or in the event any sale of all or substantially all of the
assets of Wayne 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 Valley and Wayne 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 Valley is the holder
hereof, approval of the Board of Governors of the Federal Reserve System and
Wayne 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 the Parties.
a. Wayne. Wayne hereby represents and warrants to Valley as
follows:
i. Due Authorization. Wayne 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 Xxxxx.
ii. Authorized Shares. Wayne 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.
iii. 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 Wayne or, to its
knowledge, any agreement, instrument, judgment, decree, statute, rule or order
applicable to Wayne.
b. Valley. Valley hereby represents and warrants to Wayne as
follows:
i. Due Authorization. Valley has full corporate power
and authority to execute and deliver this Agreement and, subject to any
approvals or consents referred to herein, to consummate the transactions
contemplated hereby.
ii. Requisite Corporate Action. The execution and
delivery of this Agreement have been authorized by all requisite corporate
action by Valley, and no other corporate proceedings are necessary therefor.
iii. Binding Obligation. This Agreement has been duly
and validly executed and delivered by Valley and represents a valid and legally
binding obligation of Valley, enforceable against Valley in accordance with its
terms.
iv. No Distribution. Any Wayne Common Stock or other
securities acquired by Valley upon exercise of the Option 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.
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 Wayne 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 an affiliate of Valley. 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. Valley
is aware that presently neither the Option nor the Option Shares are being
offered by a registration statement filed with, and declared effective by, the
Securities and Exchange Commission, but instead are being offered in reliance
upon the exemption from the registration requirements pursuant to Section 4(2)
of the Securities Act of 1933, as amended.
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 Valley, to:
Valley National Bancorp
0000 Xxxxxx Xxxx
Xxxxx, Xxx Xxxxxx 00000
Attn.: Xxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
Telecopier No. (000) 000-0000
Copy to:
Pitney, Xxxxxx, Xxxx & Xxxxx
Attn.: Xxxxxx X. Xxxxx, Esq.
Delivery:
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Mail:
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Telecopier No. (000) 000-0000
If to Wayne, to:
Wayne Bancorp, Inc.
0000 Xxxxxxx Xxxxxxxx
Xxxxx, Xxx Xxxxxx
Attn.: Xxxxxxx X'Xxxxxxx, President
Telecopier No. (000) 000-0000
Copy to:
Xxxxxxx, Spidi, Sloane & Xxxxx, P.C.
One Franklin Square
0000 X Xxxxxx, X.X., Xxxxx 000X
Xxxxxxxxxx, X.X. 00000
Attn.: Xxxxxxx Xxxxx, Esq.
Telecopier No. (000) 000-0000
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 Valley to assign its
rights and obligations hereunder only to an affiliate of Valley.
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. The Option granted hereby, to the extent not
previously exercised, 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, this
Agreement and the Option granted hereby shall not terminate until 15 months
following the date of the termination of the Merger Agreement.
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.
XXXXX BANCORP, INC.
XXXXXX X. XXXX, III
By: ______________________________
Xxxxxx X. Xxxx, III, Chairman and
Chief Executive Officer
VALLEY NATIONAL BANCORP
XXXXXX X. XXXXXX
By: ______________________________
Xxxxxx X. Xxxxxx, Chairman, President
and Chief Executive Officer
