STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated December 17,
1998, is by and between Valley National Bancorp, a New Jersey corporation and
registered bank holding company ("Valley"), and Ramapo Financial Corporation a
New Jersey corporation and registered bank holding company ("Ramapo") for The
Ramapo Bank (the "Bank").
BACKGROUND
1. Valley, Ramapo, 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 Ramapo through a merger of Ramapo 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, Ramapo 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 Ramapo,
intending to be legally bound hereby, agree:
1. Grant of Option. Ramapo hereby grants to Valley the option
to purchase up to 1,608,159 shares (the "Option Shares") of Ramapo's common
stock, $1.00 par value ("Common Stock") at an exercise price of $7.50 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.
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 Ramapo pursuant to which such person or any
affiliate of such person would (i) merge or consolidate, or enter into any
similar transaction with Ramapo or the Bank, (ii) acquire all or a significant
portion of the assets or liabilities of Ramapo 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 Ramapo or any other business combination involving
Ramapo 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 Ramapo called to vote on the Merger and Ramapo
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, Ramapo (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 Ramapo or any of its directors, executive officers,
investment bankers or other persons with actual or apparent authority to speak
for the Ramapo 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 Ramapo 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 Ramapo or the Bank.
The term "significant portion" means 15% of the assets or
liabilities of Ramapo.
"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 Ramapo 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 Ramapo 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.
Ramapo 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 Ramapo shall not be a condition to the right of Valley
to exercise the Option. Ramapo will not take any action which would have the
effect of preventing or disabling Ramapo 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 Ramapo (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 Ramapo of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by Ramapo, (b) Ramapo 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 Ramapo, 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 December 17, 1998, between the registered holder hereof and Ramapo
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
Ramapo and will be provided to the holder hereof without charge upon
receipt by Ramapo 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 Ramapo a copy of a
letter from the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Ramapo, 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 Ramapo; 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, Ramapo 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 Ramapo 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 Ramapo 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
Ramapo.
In connection with such filing, Ramapo 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 Ramapo 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 Ramapo and blue sky fees and expenses shall be paid by Ramapo.
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, Ramapo 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 Ramapo or alleged untrue statement
with respect to Ramapo of any material fact with respect to Ramapo contained in
any preliminary or final registration statement or any amendment or supplement
thereto, or arise out of a material fact with respect to Ramapo required to be
stated therein or necessary to make the statements therein with respect to
Ramapo not misleading; and Ramapo 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 Ramapo 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 Ramapo 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 Ramapo for any legal
or other expense reasonably incurred by Ramapo 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 Ramapo
with another entity, or in the event any sale of all or substantially all of the
assets of Ramapo 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 Ramapo 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
Ramapo 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. Ramapo. Ramapo hereby represents and warrants to
Valley as follows:
i. Due Authorization. Ramapo 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 Ramapo.
ii. Authorized Shares. Ramapo 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 Ramapo or, to its knowledge, any agreement,
instrument, judgment, decree, statute, rule or order applicable to
Ramapo.
iv. Binding Obligation. This Agreement has
been duly and validly executed by Ramapo and represents a valid and
binding obligation of Ramapo enforceable against Ramapo in accordance
with its terms.
b. Valley. Valley hereby represents and warrants to
Ramapo 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.
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 Ramapo 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
1455 Valley Road
Wayne, New Jersey 07474
Attn.: Gerald H. Lipkin
Chairman and Chief Executive Officer
Telecopier No. (973) 305-0024
Copy to:
Pitney, Hardin, Kipp & Szuch
Attn.: Ronald H. Janis, Esq.
Delivery:
200 Campus Drive
Florham Park, New Jersey 07932
Mail:
P.O. Box 1945
Morristown, New Jersey 07962-1945
Telecopier No. (973) 966-1550
If to Ramapo, to:
Ramapo Financial Corporation
64 Mountain View Boulevard
Wayne, New Jersey 07470
Attn.: Mortimer J. O'Shea, President
Telecopier No. (973) 305-4089
Copy to:
Williams, Caliri, Miller & Otley
Attn.: Richard S. Miller, Esq.
Delivery:
1428 Route 23
Wayne, New Jersey 07470
Mail:
P.O. Box 995
Wayne, New Jersey 07474-0995
Telecopier No. (973) 694-0302
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 the later of
one month after the consummation of the transaction constituting the Triggering
Event or 18 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.
RAMAPO FINANCIAL CORPORATION
By: MORTIMER J. O'SHEA
------------------------------------
Mortimer J. O'Shea, President and
Chief Executive Officer
VALLEY NATIONAL BANCORP
By: GERALD H. LIPKIN
---------------------------------------
Gerald H. Lipkin, Chairman, President
and Chief Executive Officer