Exhibit 99.3
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated
November 9, 1994, is by and between Valley National Bancorp, a New
Jersey corporation and registered bank holding company ("Valley"),
and American Union Bank, a New Jersey banking corporation ("Ameri-
can").
BACKGROUND
1. Valley, American and Valley National Bank (the
"Bank"), a wholly-owned subsidiary of Valley, as of the date
hereof, have executed an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Valley will acquire American through
a merger of American with and into the Bank (the "Merger").
2. As an inducement to Valley and the Bank to enter into
the Merger Agreement and in consideration for such entry, American
desires to grant to Valley an option to purchase authorized but
unissued shares of common stock of American 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 American, intending to be legally bound
hereby, agree:
1. Grant of Option. American hereby grants to Valley
the option (the "Option") to purchase 180,000 shares (as the same
may be adjusted pursuant hereto, the "Option Shares") of American
common stock, $5.00 par value (the "Common Stock"), at a price of
$10.00 per share (as the same may be adjusted pursuant hereto, the
"Option Price"), on the terms and conditions set forth herein.
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 and in accordance with the terms hereof.
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 20% of the then outstanding shares of Common Stock;
b. enters into a letter of intent or an agreement,
whether oral or written, with American pursuant to which such
person or any affiliate of such person would (i) merge or consoli-
date, or enter into any similar transaction with American, (ii)
acquire all or a significant portion of the assets or liabilities
of American, 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 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
American or any other business combination involving American, 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 hereinaf-
ter defined) at least 15 days prior to the meeting of stockholders
of American called to vote on the Merger and American' 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, American
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 Valley; or
e. which is the holder of more than 5% of the
Common Stock solicits proxies in opposition to approval of the
Merger.
The term "Triggering Event" also means the taking of any
direct or indirect action by American 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 the
Common Stock, a merger, consolidation, plan of exchange, plan of
acquisition or reorganization of American, or a sale of shares of
the Common Stock or any significant portion of American's assets or
liabilities.
The term "significant portion" means 25% of the assets or
liabilities of American.
"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 American 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 governmen-
tal or regulatory approval or consent necessary for American 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 jurisdic-
tion is in effect which prohibits the sale or delivery of the
Option Shares.
American 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 American shall not be a condition
to the right of Valley to exercise the Option. American will not
take any action which would have the effect of preventing or
disabling American 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 American (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.
Promptly following the Notice Date, American shall mail
to its shareholders who have preemptive rights with respect to the
Common Stock a notice, in form and substance approved by Valley
(the "Shareholder Notice"), which shall afford each such sharehold-
er the right to purchase such shareholder's pro rata share of the
Option Shares at a per share purchase price equal to the lesser of
the Option Price or the book value per share of Common Stock as of
the then most recent fiscal year end of American. Such right to
purchase Option Shares shall be in full satisfaction of each
American shareholder's preemptive rights. The Closing shall be
delayed for such time as is reasonably necessary to arrange for
mailing the Shareholder Notice and to permit the American share-
holders an opportunity to exercise such right to purchase Option
Shares. The number of Option Shares available for purchase by
Valley pursuant to the Option automatically shall be reduced by the
aggregate number of shares purchased by the American shareholders
in exercise of the above-described rights.
3. Payment and Delivery of Certificates. At any Closing
hereunder (a) Valley will make payment to American of the aggregate
price for the Option Shares so purchased by wire transfer of
immediately available funds to an account designated by American,
(b) American 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 American,
registered in the name of Valley or its designee, in such denomina-
tions 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 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 American Union Bank, said transfer would be
exempt from registration under the provisions of the 1933
Act and the regulations promulgated thereunder.
4. Registration Rights. Upon or after the occurrence of
a Triggering Event and upon receipt of a written request from
Valley, American shall prepare and file a registration statement
with the Securities and Exchange Commission, covering the Option
and such number of Option Shares as Valley shall specify in its
request, and American 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.
In connection with such filing, American 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 American in complying with
the provisions of this Section 4, including without limitation, all
registration and filing fees, printing expenses, fees and disburse-
ments of counsel for American and blue sky fees and expenses shall
be paid by American. 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, American 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 American 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 American 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 Valley specifical-
ly for use in the preparation thereof. Valley will indemnify and
hold harmless American 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; and Valley will
reimburse American for any legal or other expense reasonably
incurred by American 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 reclassifica-
tion of the Common Stock, or any consolidation, merger or similar
transaction of American with another entity, or in the event any
sale of all or substantially all of the assets of American 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, Consents and Compliance with Law. Each of
Valley and American 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. American 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 American. American
hereby represents and warrants to Valley as follows:
a. Due Authorization. American 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 American.
b. Authorized Shares. American 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 American or any
agreement, instrument, judgment, decree, statute, rule or order
applicable to American.
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 American 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, except upon or after 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. 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. Valley 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 Valley:
Valley National Bancorp
1445 Valley Road
Wayne, New Jersey 07470
Attn.: Gerald H. Lipkin
Chairman and Chief Executive Officer
With a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
P.O. Box 1945
Morristown, New Jersey 07962-1945
Attn.: Ronald H. Janis, Esq.
If to American:
American Union Bank
2784 Morris Avenue
Union, New Jersey 07083
Attn.: Alan Turtletaub,
Chairman
With a copy to:
Sills, Cummis, Zuckerman, Radin,
Tischman, Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
Attn.: Steven Radin, 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 perfor-
mance 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 obliga-
tions 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, this
Agreement shall not terminate until the later of 12 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.
ATTEST: AMERICAN UNION BANK
________________________ By:___________________________
, Secretary Alan Turtletaub,
Chairman
ATTEST: VALLEY NATIONAL BANCORP
________________________ By:___________________________
, Secretary Gerald H. Lipkin,
Chairman & Chief
Executive Officer