Exhibit 99.2
October 14, 1994
American Union Bank
2784 Morris Avenue
Union, New Jersey 07083-4840
Gentlemen:
Valley National Bancorp ("Valley") proposes to acquire
all of the outstanding shares of common stock of American Union
Bank ("American") in accordance with the following terms and
conditions:
1. Each holder of American common stock, $5.00 par value
("American Common Stock"), will receive for each share of American
Common Stock held .50 shares (the "Exchange Ratio") of Valley
common stock, no par value ("Valley Stock"). The Exchange Ratio
shall be appropriately adjusted for stock splits, stock dividends
and similar capital changes occurring with respect to Valley Stock
prior to the closing. No fractional shares of Valley Stock will be
issued, and cash will be paid in lieu of fractional interests.
2. American represents that there are 549,970 shares of
American Common Stock outstanding and no options or rights have
been granted to purchase American Common Stock. American shall not
sell or issue, or agree to sell or issue, any shares of American
Common Stock after the date hereof (except as provided herein) and
shall terminate its current offering of American Common Stock or
suspend the offering until this letter of intent is terminated or
the parties enter into a definitive written agreement (at which
time the offering would be terminated).
3. The acquisition will take the form of a tax-free
merger of American into Valley National Bank (the "Bank") with the
Bank as the survivor (the "Merger").
4. American represents that there are no employment
contracts nor any severance agreements between American and any
other person. American represents that it has no stock plans,
pension, profit sharing or retirement plans or similar plans for
officers, directors or employees.
5. American and Valley will consult with each other
before issuing any press release or otherwise making any public
statements with respect to the provisions of this letter of intent
and the Merger contemplated hereby, and will not issue any such
press release or make any such public statement prior to such
consultation, except as may be otherwise required by law or
regulation or as to which the party releasing such information has
used its best efforts to discuss with the other party in advance.
6. It will be a condition of closing for Valley under
the definitive agreement that the transaction will be treated as a
pooling-of-interests for accounting purposes. All affiliates of
American will agree to sign a standard affiliates letter for a
pooling-of-interests transaction.
7. Upon acceptance of this proposal, American and Valley
shall proceed promptly to negotiate in good faith a definitive
merger agreement embodying the terms hereof and containing, among
other provisions, representations, warranties and covenants
mutually satisfactory to the parties and customary conditions to
the obligations of each party to consummate the transaction. Among
the other provisions of the definitive agreement will be customary
provisions in which Valley agrees to indemnify the directors and
officers of American after consummation of the Merger. The
obligations of the parties hereto to enter into the Merger
contemplated hereby is subject to the execution of the mutually
acceptable definitive agreement and the approval of the definitive
agreement by the respective Board of Directors of each party. The
consummation of the Merger shall be conditioned upon American
receiving from a financial advisor selected by American's Board of
Directors a written opinion substantially to the effect that the
terms of the transactions contemplated hereby are fair to the
holders of the American Common Stock from a financial point of
view, the approval by the stockholders of American, the receipt of
appropriate governmental approvals, consents or waivers, including
those of the New Jersey Department of Banking.
8. Valley will endeavor to continue the employment of
the officers and employees of American to the maximum extent
possible. If Valley is unable to continue the employment of any
officer or employee of American, the parties will mutually agree
upon a severance policy for such employees.
9. Valley and American shall have the right to commence
due diligence during normal business hours following the execution
of this letter agreement pursuant to a mutually acceptable
confidentiality agreement. The parties acknowledge that they have
not commenced their due diligence as of the date hereof. The
parties may continue their due diligence during normal business
hours after execution of the definitive merger agreement for the
purpose of assuring themselves that representations and warranties
in the definitive agreement were correct and that covenants and
conditions set forth in the agreement have been complied with.
10. The consummation of the Merger shall be targeted for
early in the first quarter of 1995 and it must occur not later than
April 30, 1995, unless extended by mutual agreement of the parties.
11. In the event of the termination of this letter of
intent or, after execution of the definitive merger agreement,
termination of such agreement other than by reason of the willful
default of the terminating party, each party will be responsible
for its own fees and costs and neither party will be liable to the
other party or its shareholders in connection with the transaction
or its termination.
12. Valley has informed American that it will not enter
into this letter without American granting valley an option on its
shares. Consequently, simultaneously with the acceptance of this
proposal, American agrees to issue to Valley an option to purchase
180,000 shares of the authorized and unissued American Common Stock
at an option price of $10.00 per share and on the other terms and
conditions set forth in the form of option agreement annexed
hereto. In the event no definitive agreement is entered into, then
the option to purchase shall expire three months from the date
hereof unless a Triggering Event (as defined in the Option
Agreement) has occurred.
13. Valley agrees that for so long as active
negotiations with respect to the Merger are continuing, it will
not, directly or indirectly, through corporations, partnerships or
other entities or groups controlled by it or otherwise, alone or
with others, purchase any additional securities of American or
make, or disclose to any party any plan or intent to make, any
proposal to acquire any securities or assets of American, other
than pursuant to this letter or with the consent of American.
If the foregoing is acceptable to you, will you kindly so
indicate by signing, dating and returning the enclosed counterpart
of this letter.
Very truly yours,
VALLEY NATIONAL BANCORP
VALLEY NATIONAL BANK
By:
Gerald H. Lipkin
Chairman and
Chief Executive Officer
AGREED AND ACCEPTED:
AMERICAN UNION BANK
By:
Alan Turtletaub, Chairman
Dated: October 14, 1994