SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported) - September 13, 1996
VALLEY NATIONAL BANCORP
(Exact Name of Registrant as Specified in Charter)
NEW JERSEY
(State or Other Jurisdiction of Incorporation)
0-11179 22-2477875
(Commission File Number) (IRS Employer Identification No.)
1455 Valley Road, Wayne, New Jersey 07470
(Address of Principal Executive Offices)
(201) 305-8800
(Registrant's Telephone Number)
<PAGE>
Item 5 - Other Events
On September 13, 1996, Valley National Bancorp ("Valley") entered into an
Agreement and Plan of Merger (the "Merger Agreement") to acquire Midland
Bancorporation, Inc. ("Midland"), the holding company for Midland Bank, a $405
million, 13-branch bank headquartered in Paramus, New Jersey. The acquisition is
structured as a tax-free merger to be accounted for as a pooling-of-interests.
Under the Merger Agreement, the shareholders of Midland will receive 30 shares
of Valley Common Stock ("Valley Stock") for each of the 125,294 outstanding
shares of the common stock of Midland, resulting in the issuance of 3,758,820
shares of Valley Stock, or approximately ten percent of Valley's outstanding
shares. Under the Merger Agreement, Midland immediately will increase its
dividend to provide its shareholders with dividends equivalent to those that
will be received by the Midland shareholders when they become Valley
shareholders. Also, in connection with the Agreement, Midland granted Valley an
option to acquire 35,000 shares of Midland's authorized but unissued common
stock at a price of $301.00 per share, subject to certain adjustments and
certain circumstances. Consummation of the acquisition is subject to certain
customary conditions, including shareholder and bank regulatory approval.
The foregoing description of the Merger Agreement and the option are qualified
in their entirety by reference to the Merger Agreement and the Stock Option
Agreement which are annexed as exhibits to this Form 8-K.
On September 17, 1996, Valley's Board of Directors rescinded its previously
announced repurchase program after 770,860 shares of Valley common stock had
been repurchased. 229,140 shares had not yet been repurchased under the
authorization. Rescinding the remaining authorization was undertaken, in
connection with Valley's acquisition of Midland, to comply with certain of the
pooling-of-interests accounting rules as recently interpreted by the Securities
and Exchange Commission.
In connection with the acquisition of Midland, Valley provided to stock analysts
certain information about potential cost savings and revenue enhancements which
information was provided as a supplement to the Press Release issued September
13, 1996 (the "Press Release") regarding the merger between Valley and Midland
and as support for Valley's views expressed in the Press Release. The
information provided to the analysts is annexed as an exhibit to this Form 8-K.
The information should be read in conjunction with the Press Release and, when
released, the Form S-4 filed by Valley in connection with Midland meeting of
shareholders, as well as the information about Midland contained in the Form
S-4. The materials include forward-looking statements with respect to
anticipated cost savings, anticipated revenue enhancements and the anticipated
earnings impact from Valley's acquisition of Midland. Each of these is a
forward-looking statement, as that term is used in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements do not
constitute historical facts and involve risks and uncertainties, including, but
not limited to, the possibility that the anticipated cost savings from Midland
could be less than stated, revenue enhancements might not be realized, other
elements of the income statement of Midland could be adversely impacted by the
acquisition, expenses arising from the acquisition will include certain one-time
charges which, in the period immediately following the acquisition may adversely
impact Valley's income, Valley may incur unanticipated costs and additional
expenses due to the Midland acquisition, as well as the possibility that
expenses and income could be adversely affected by general economic conditions
or adverse changes in the interest rate environment. Actual results may differ
materially from the estimates and projections.
Item 7 - Exhibits
(1) Press release, dated September 13, 1996
(2) Agreement and Plan of Merger, dated September 13, 1996, among
Valley National Bancorp, Valley National Bank, Midland Bancorporation, Inc. and
Midland Bank
(3) Stock Option Agreement, dated September 13, 1996, between Valley
National Bancorp and Midland Bancorporation, Inc.
(4) Press release, dated September 18, 1996
(5) Supplemental Materials provided to Stock Analysts in connection
with the Press Release dated September 13, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VALLEY NATIONAL BANCORP
Dated: September 20, 1996 By: /S/ ALAN ESKOW
---------------------
Alan Eskow,
Senior Vice President
<PAGE>
EXHIBIT INDEX
(1) Press release, dated September 13, 1996
(2) Agreement and Plan of Merger, dated September 13, 1996, among
Valley National Bancorp, Valley National Bank, Midland Bancorporation, Inc. and
Midland Bank
(3) Stock Option Agreement, dated September 13, 1996, between Valley
National Bancorp and Midland Bancorporation, Inc.
(4) Press release, dated September 18, 1996
(5) Supplemental Materials provided to Stock Analysts in connection
with the Press Release dated September 13, 1996
Exhibit (1)
NEWS RELEASE
FOR: Valley National Bancorp Contact: Alan Eskow
1455 Valley Road (201) 305-4003
Wayne, NJ 47474 Jack Blackin
(201) 305-4058
For Immediate Release: September 13, 1996
VALLEY NATIONAL BANCORP AND MIDLAND BANCORPORATION, INC.
ANNOUNCE PLANS TO MERGE
WAYNE, NJ -- Valley National Bancorp (NYSE:VLY) and Midland Bancorporation, Inc.
(OTC:MDLB) jointly announced today that they have signed a definitive merger
agreement by which Valley will acquire Midland, the holding company for Midland
Bank, a $405 million, thirteen-branch bank headquartered in Paramus, New Jersey.
The merger is "in-market" and will expand Valley's presence in affluent Bergen
County to 30 offices.
Pursuant to the agreement, Midland will be merged into Valley. The acquisition
of Midland will be a tax-free merger accounted for as a pooling in which each of
the 125,294 outstanding shares of Midland common stock will be exchanged for 30
shares of Valley common stock. Midland's shares are closely held and trading in
Midland's stock is very limited. At June 30, 1996, Midland had $33.9 million of
shareholders equity. In connection with the execution of the merger agreement,
Midland also granted Valley an option to acquire 35,000 shares of Midland's
authorized but unissued common stock. Midland dividends will be increased to
reflect the new equivalent exchange ratio and Midland has declared an extra
$5.50 dividend, payable to its shareholders on 10/1/96 in addition to its
previously declared $2.00 dividend, payable 9/17/96.
"Midland represents the type of organization that Valley seeks to join in
expanding its franchise," said Gerald H. Lipkin, Chairman, President and CEO of
Valley. Mr. Lipkin further noted, "The merger with Midland is consistent with
Valley's strategy of growth within Northern New Jersey through acquisitions of
other strong financial institutions. We believe the "in-market" nature of this
acquisition, coupled with Midland's relatively high non-interest expenses,
should enable Valley to generate significant cost savings within a brief period.
Valley's goal in acquisitions is to price transactions so that they are
accretive to Valley's per share earnings within the first year of combined
operations."
Lipkin added, "Midland has a relatively large commercial loan base and has shown
improved earnings performance in each of the last five years. Midland's offices
are located in the central section of densely populated Bergen County where
Valley has long sought to increase its presence."
Robert Meyer, President and Chief Executive Officer of Midland, indicated that
"the proposed affiliation with Valley will bring together two great banking
institutions creating a much stronger franchise and market presence in Bergen
County. We believe that this transaction will position Midland for the future."
With the combination of the franchises, Midland will be able to provide expanded
banking services to its customers such as trust services, cash management
services, an expanded base of branch locations and extended hour customer
service department.
Mr. Meyer will join Valley's senior management team following the merger. In
addition, Walter H. Jones III, Chairman of the Board of Midland, and Graham O.
Jones, Director, will join Valley's Board of Directors following the merger.
The acquisition is conditioned upon necessary bank regulatory approvals, the
approval of Midland's shareholders and other customary conditions. The parties
anticipate that the merger will be consummated in the first quarter of next
year.
Valley National Bank, the principal subsidiary of Valley National Bancorp,
currently has $4.6 billion in assets and operates 80 branches in 58 communities
in Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Somerset, Sussex, Union
and Warren counties.
Exhibit (2)
AGREEMENT AND PLAN OF MERGER
DATED SEPTEMBER 13, 1996
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 13,
1996 ("Agreement"), is among Valley National Bancorp, a New Jersey corporation
and registered bank holding company ("Valley"), Valley National Bank, a national
banking association ("VNB"), Midland Bancorporation, Inc., a New Jersey
corporation and registered bank holding company ("Midland") and Midland Bank, a
bank chartered under the laws of New Jersey (the "Bank").
WHEREAS, Valley desires to acquire Midland and Midland's Board
of Directors has determined, based upon the terms and conditions hereinafter set
forth, that the acquisition is in the best interests of Midland and its
stockholders. The acquisition will be accomplished by merging Midland into
Valley with Valley as the surviving corporation and, at the same time, merging
the Bank into VNB with VNB as the surviving bank, and Midland shareholders
receiving the consideration hereinafter set forth. The Boards of Directors of
Midland, Valley, the Bank and VNB have duly adopted and approved this Agreement
and the Board of Directors of Midland has directed that it be submitted to its
shareholders for approval.
WHEREAS, as a condition precedent to entering into this
Agreement, Valley has required that Midland grant it an option to purchase
35,000 shares of Midland's authorized but unissued common stock and, as a
consequence, Valley and Midland have entered into a Stock Option Agreement,
dated the date hereof (the "Valley Stock Option").
NOW, THEREFORE, intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereafter defined), Midland shall be merged
with and into Valley (the "Merger") in accordance with the New Jersey Business
Corporation Act and Valley shall be the surviving corporation (the "Surviving
Corporation"). Immediately following the Effective Time, the Bank shall be
merged with and into VNB as provided in Section 1.7 hereof.
1.2. Effect of the Merger. At the Effective Time (as hereafter
defined), the Surviving Corporation shall be considered the same business and
corporate entity as each of Midland and Valley and thereupon and thereafter, all
the property, rights, powers and franchises of each of Midland and Valley shall
vest in the Surviving Corporation and the Surviving Corporation shall be subject
to and be deemed to have assumed all of the debts, liabilities, obligations and
duties of each of Midland and Valley and shall have succeeded to all of each of
their relationships, fiduciary or otherwise, as fully and to the same extent as
if such property rights, privileges, powers, franchises, debts, obligations,
duties and relationships had been originally acquired, incurred or entered into
by the Surviving Corporation.
1.3. Certificate of Incorporation. The certificate of
incorporation of Valley as it exists immediately prior to the Effective Time
shall not be amended by the Merger, but shall continue as the certificate of
incorporation of the Surviving Corporation until otherwise amended as provided
by law.
1.4. Bylaws. The bylaws of Valley as they exist immediately
prior to the Effective Date shall continue as the by-laws of the Surviving
Corporation until otherwise amended as provided by law.
1.5. Directors and Officers. The directors and officers of
Valley as of the Effective Time shall continue as the directors and officers of
the Surviving Corporation with the additions provided for in Section 5.15
hereof.
1.6. Effective Time and Closing. The Merger shall become
effective (and be consummated) upon the effective time specified in the
certificate of merger (the "Certificate of Merger") filed with the New Jersey
Secretary of State. The term "Effective Time" shall mean the date and time when
the Certificate of Merger as so filed becomes effective. A closing (the
"Closing") shall take place prior to the Effective Time at 10:00 a.m., February
28, 1997, or, if later than February 28, 1997, on the tenth business day
following the receipt of all necessary regulatory and governmental approvals and
consents and the expiration of all statutory waiting periods in respect thereof
and the satisfaction or waiver of the conditions to the consummation of the
Merger specified in Article VI hereof (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing), at
Valley's main office, or at such other place, time or date as Valley and Midland
may mutually agree upon. Immediately following the Closing, the Certificate of
Merger shall be filed with the New Jersey Secretary of State and it shall become
effective at the opening of business on the next business day.
1.7. The Bank Merger. Immediately following the Effective
Time, the Bank shall be merged with and into VNB (the "Bank Merger") in
accordance with the provisions of the National Bank Act and the New Jersey
Banking Act of 1948, as amended, and VNB shall be the surviving bank (the
"Surviving Bank"). Upon the consummation of the Bank Merger, the separate
existence of the Bank shall cease and the Surviving Bank shall be considered the
same business and corporate entity as each of the Bank and VNB and all of the
property, rights, powers and franchises of each of the Bank and VNB shall vest
in the Surviving Bank and the Surviving Bank shall be deemed to have assumed all
of the debts, liabilities, obligations and duties of each of the Bank and VNB
and shall have succeeded to all of each of their relationships, fiduciary or
otherwise, as fully and to the same extent as if such property rights,
privileges, powers, franchises, debts, obligations, duties and relationships had
been originally acquired, incurred or entered into by the Surviving Bank. Upon
the consummation of the Bank Merger, the articles of association and bylaws of
VNB shall become the articles of association and bylaws of the Surviving Bank
and the officers, employees and directors of VNB and the officers and employees
of the Bank shall be the officers, employees and directors of the Surviving Bank
with such additions from the directors of Midland as specified herein. In
connection with the execution of this Agreement, the Bank and VNB shall execute
and deliver a separate merger agreement (the "Bank Merger Agreement") in the
form of Appendix A, annexed hereto, for delivery to the OCC (as hereafter
defined) and the Commissioner (as hereafter defined) for approval of the Bank
Merger.
ARTICLE II CONVERSION OF MIDLAND SHARES
2.1. Conversion of Midland Shares and Options. Each share of
common stock, $15.00 par value, of Midland ("Midland Common Stock"), issued and
outstanding immediately prior to the Effective Time other than Excluded Shares
(as defined in Section 2.4 hereof), and each validly outstanding option to
purchase Midland Common Stock, shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted, paid or canceled as
follows:
(a) Midland Common Stock. Each share of Midland Common Stock
shall be converted into and represent the right to receive 30.00 (the "Exchange
Ratio") shares of Valley's common stock, no par value ("Valley Common Stock"),
subject to adjustments as set forth in this subsection 2.1(a).
(i) The Exchange Ratio and the Average Closing Price (as
hereafter defined) shall be appropriately adjusted for any stock split, stock
dividend, stock combination, reclassification or similar transaction ("Capital
Change") effected by Valley with respect to Valley Common Stock between the date
hereof and the Effective Time. The parties shall mutually agree upon such
adjustment in writing or, if unable to agree, shall arbitrate the dispute, using
a mutually agreed upon arbitrator whose decision shall be final and
non-appealable.
(ii) No fractional shares of Valley Common Stock will be
issued, and in lieu thereof, each holder of Midland Common Stock who would
otherwise be entitled to a fractional interest will receive an amount in cash
determined by multiplying such fractional interest by the Average Closing Price
(as hereafter defined).
(iii) The "Average Closing Price" shall mean the average price
of Valley Common Stock calculated based upon the closing price during the first
10 of the 15 consecutive trading days immediately preceding the Closing. The
Average Closing Price shall be determined by (x) first, recording the closing
price (the "Daily Price") of Valley Common Stock reported on the New York Stock
Exchange and published in The Wall Street Journal during the first 10 of the 15
consecutive trading days immediately preceding the Closing; and (y) second,
computing the average of the Daily Prices in the 10 day period.
(b) Midland Stock Options. At the Effective Time, each
outstanding option to purchase Midland Common Stock (a "Midland Option") granted
under the Stock Option Plans of Midland (the "Midland Option Plans") shall be
converted, at the election of the holder of such Midland Option (an "optionee"),
as follows:
(i) into an option to purchase Valley Common Stock, wherein
(x) the right to purchase shares of Midland Common Stock pursuant to the Midland
Option shall be converted into the right to purchase that same number of shares
of Valley Common Stock multiplied by the Exchange Ratio, (y) the option exercise
price per share of Valley Common Stock shall be the previous option exercise
price per share of the Midland Common Stock divided by the Exchange Ratio and
(z) in all other material respects the option shall be subject to the same terms
and conditions as governed the Midland Option on which it was based, including
the length of time within which the option may be exercised and for any options
which are "incentive stock options" (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), the adjustments shall be and are
intended to be effected in a manner which is consistent with Section 424(a) of
the Code; or
(ii) if the Midland Option is fully vested at the Closing,
into the right to receive immediately after the Effective Time a number of whole
shares of Valley Common Stock equal to {(x) the amount determined by multiplying
(A) the number of shares of Midland Common Stock covered by the Midland Option,
times (B) the Exchange Ratio, times (C) the Average Closing Price, minus (y) the
aggregate exercise price for the Midland Option} (z) divided by the Average
Closing Price. No fractional shares of Valley Common Stock shall be issued
pursuant to this Section 2.1(b)(ii), and in lieu thereof, each optionee who
would otherwise be entitled to a fractional interest will receive an amount in
cash determined by multiplying such fractional interest by the Average Closing
Price.
2.2. Exchange of Shares.
(a) Midland and Valley hereby appoint Valley National Bank,
Trust Department (the "Exchange Agent") as the Exchange Agent for purposes of
effecting the conversion of Midland Common Stock and Midland Options. As soon as
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record (a "Record Holder") of a certificate or certificates which,
immediately prior to the Effective Time represented outstanding shares of
Midland Common Stock (the "Certificates"), a mutually agreed upon letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent), and instructions for use in effecting the
surrender of the Certificates in exchange for Valley Common Stock (and cash in
lieu of fractional shares) as provided in Section 2.1 hereof.
(b) Upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, the Record Holder shall be entitled to promptly receive in
exchange for such Certificate the consideration as provided in Section 2.1
hereof and the Certificates so surrendered shall be canceled. The Exchange Agent
shall not be obligated to deliver or cause to be delivered to any Record Holder
the consideration to which such Record Holder would otherwise be entitled until
such Record Holder surrenders the Certificate for exchange or, in default
thereof, an appropriate Affidavit of Loss and Indemnity Agreement and/or a bond
as may be reasonably required in each case by Valley. Notwithstanding the time
of surrender of the Certificates, Record Holders shall be deemed shareholders of
Valley for all purposes from the Effective Time, except that Valley shall
withhold the payment of dividends from any Record Holder until such Record
Holder effects the exchange of Certificates for Valley Common Stock. (Such
Record Holder shall receive such withheld dividends, without interest, upon
effecting the share exchange.)
(c) After the Effective Time, there shall be no transfers on
the stock transfer books of Midland of the shares of Midland Common Stock which
were outstanding immediately prior to the Effective Time and, if any
Certificates representing such shares are presented for transfer, they shall be
canceled and exchanged for the consideration as provided in Section 2.1 hereof.
(d) If payment of the consideration pursuant to Section 2.1
hereof is to be made in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of such
payment that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such payment shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason of the
payment to a person other than that of the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(e) With respect to each outstanding Midland Option the
Exchange Agent shall, 10 days prior to Closing, distribute option election forms
to each optionee and, upon receipt from the optionee of a properly completed
option election, shall after the Effective Time distribute to the optionee
Valley Common Stock or an amendment to the option grant evidencing the
conversion of the grant to an option to purchase Valley Common Stock in
accordance with Section 2.1 hereof.
2.3. No Dissenters' Rights. Consistent with the provisions of
the New Jersey Business Corporation Act, no shareholder of Midland shall have
the right to dissent with respect to the Merger.
2.4. Excluded Shares. Each share of Midland Common Stock (i)
which is held by Midland as treasury stock or (ii) which is held by Bank or any
other direct or indirect subsidiary of Bank (except as trustee or in a fiduciary
capacity) or (iii) which is held by Valley, shall be canceled and retired at the
Effective Time.
2.5. Valley Shares. The shares of Valley Common Stock
outstanding at the Effective Time shall not be affected by the Merger, but along
with the additional shares of Valley Common Stock to be issued as provided in
Section 2.1 hereof, shall become the outstanding common stock of the Surviving
Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MIDLAND
References herein to "Midland Disclosure Schedule" shall mean
all of the disclosure schedules required by this Article III, dated as of the
date hereof and referenced to the specific sections and subsections of Article
III of this Agreement, which have been delivered on the date hereof by Midland
to Valley. Midland hereby represents and warrants to Valley as follows:
3.1. Corporate Organization.
(a) Midland is a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey. Midland has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on the business, operations, assets or financial
condition of Midland on a consolidated basis. Midland is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended ("BHCA").
(b) Each of the Subsidiaries of Midland are listed in the
Midland Disclosure Schedule. The term "Subsidiary", when used in this Agreement
with respect to Midland, means any corporation, joint venture, association,
partnership, trust or other entity in which Midland has, directly or indirectly
at least a 50% interest or acts as a general partner. Each Subsidiary of Midland
is duly organized, validly existing and in good standing under the laws of its
state of incorporation. The Bank is a New Jersey commercial bank whose deposits
are insured by the Bank Insurance Fund of the Federal Deposit Insurance
Corporation ("FDIC") to the fullest extent permitted by law. Each Subsidiary of
Midland has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a material adverse effect on the business, operations, assets or
financial condition of Midland and its Subsidiaries. The Midland Disclosure
Schedule sets forth true and complete copies of the Certificate of Incorporation
and Bylaws of Midland and each Midland Subsidiary as in effect on the date
hereof. Except as set forth in the Midland Disclosure Schedule, Midland does not
own or control, directly or indirectly, any equity interest in any corporation,
company, association, partnership, joint venture or other entity and owns no
real estate, except (i) residential real estate acquired through foreclosure or
deed in lieu of foreclosure in each individual instance with a fair market value
less than $500,000 and (ii) real estate used for its banking premises.
3.2. Capitalization. The authorized capital stock of Midland
consists solely of 300,000 shares of Midland Common Stock. As of June 30, 1996,
there were 125,294 shares of Midland Common Stock issued and outstanding, net of
3,926 shares issued and held in the treasury. As of August 31, 1996, there were
10,150 shares of Midland Common Stock issuable upon exercise of outstanding
Midland Options (the "Option Shares") granted to, officers of the Bank pursuant
to the Midland Option Plan. The Midland Disclosure Schedule sets forth true and
complete copies of the Midland Option Plans and of each outstanding Midland
Option. All issued and outstanding shares of Midland Common Stock, and all
issued and outstanding shares of capital stock of each Midland Subsidiary, have
been duly authorized and validly issued, are fully paid, and nonassessable. The
authorized capital stock of the Bank consists of 331,125 shares of common stock,
$5.00 par value. All of the outstanding shares of capital stock of each Midland
Subsidiary are owned by Midland and are free and clear of any liens,
encumbrances, charges, restrictions or rights of third parties. Except for the
Midland Options and the Valley Stock Option, neither Midland nor any Midland
Subsidiary has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the transfer,
purchase or issuance of any shares of capital stock of Midland or any Midland
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of such capital stock or any securities convertible into or
representing the right to purchase or subscribe for any such shares, and there
are no agreements or understandings with respect to voting of any such shares.
3.3. Authority; No Violation.
(a) Subject to the approval of this Agreement and the
transactions contemplated hereby by the shareholders of Midland, and subject to
the parties obtaining all necessary regulatory approvals, Midland and the Bank
have full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby in accordance with the
terms hereof. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly approved by
the Board of Directors of each of Midland and the Bank. The execution and
delivery of the Bank Merger Agreement has been duly and validly approved by the
Board of Directors of the Bank. Except for the approvals described in paragraph
(b) below, no other corporate proceedings on the part of Midland or the Bank are
necessary to consummate the transactions contemplated hereby (except for the
approval by Midland of the Bank Merger Agreement). This Agreement has been duly
and validly executed and delivered by Midland and the Bank, and constitutes
valid and binding obligations of Midland and the Bank, enforceable against
Midland and the Bank in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
Midland and the Bank, nor the consummation by Midland and the Bank of the
transactions contemplated hereby in accordance with the terms hereof, or
compliance by Midland and the Bank with any of the terms or provisions hereof,
will (i) violate any provision of Midland's or the Bank's Certificate of
Incorporation or other governing instrument or Bylaws, (ii) assuming that the
consents and approvals set forth below are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Midland or the Bank or any of their respective properties or
assets, or (iii) except as set forth in the Midland Disclosure Schedule,
violate, conflict with, result in a breach of any provisions of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of Midland or the Bank under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which Midland or the Bank is a party, or by
which either or both of them or any of their respective properties or assets may
be bound or affected except, with respect to (ii) and (iii) above, such as
individually and in the aggregate will not have a material adverse effect on the
business, operations, assets or financial condition of Midland and its
Subsidiaries on a consolidated basis, and which will not prevent or delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the Comptroller of
the Currency ("OCC"), the Commissioner of Banking of the State of New Jersey
(the "Commissioner"), the Board of Governors of the Federal Reserve System
("FRB"), the Securities and Exchange Commission ("SEC"), applicable state
securities bureaus or commissions, the New Jersey Secretary of State, and the
shareholders of Midland, no consents or approvals of or filings or registrations
with or notices to any third party or any public body or authority are necessary
on behalf of Midland or the Bank in connection with (x) the execution and
delivery by Midland and the Bank of this Agreement and (y) the consummation by
Midland and the Bank of the transactions contemplated hereby and (z) the
execution and delivery by the Bank of the Bank Merger Agreement and the
consummation by the Bank of the transactions contemplated thereby.
3.4. Financial Statements.
(a) The Midland Disclosure Schedule sets forth copies of the
consolidated statements of condition of Midland as of December 31, 1993, 1994
and 1995, and the related consolidated statements of income, stockholders'
equity and cash flows for the periods ended December 31 in each of the three
years 1993 through 1995, in each case accompanied by the audit report of KPMG
Peat Marwick, LLP, independent public accountants with respect to Midland, and
the unaudited consolidated statements of condition and related consolidated
statements of income, stockholders' equity and cash flows of Midland for the six
months ended June 30, 1996 (collectively, the "Midland Financial Statements").
The Midland Financial Statements (including the related notes) have been
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, and fairly present the
consolidated financial condition of Midland as of the respective dates set forth
therein, and the related consolidated statements of income, stockholders' equity
and cash flows fairly present the results of the consolidated operations,
stockholders' equity and cash flows of Midland for the respective periods set
forth therein.
(b) The books and records of Midland and its Subsidiaries have
been and are being maintained in material compliance with applicable legal and
accounting requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the Midland Financial Statements (including the notes
thereto), as of June 30, 1996 neither Midland nor any of its Subsidiaries had
any material liabilities, whether absolute, accrued, contingent or otherwise
material to the business, operations, assets or financial condition of Midland
or any of its Subsidiaries. Since June 30, 1996 and to the date hereof, neither
Midland nor any of its Subsidiaries have incurred any material liabilities
except in the ordinary course of business and consistent with prudent banking
practice, except as specifically contemplated by this Agreement.
3.5. Brokerage Fees. Neither Midland nor any of its
Subsidiaries nor any of their respective directors or officers has employed any
broker or finder or incurred any liability for any broker's or finder's fees or
commissions in connection with any of the transactions contemplated by this
Agreement. Midland has employed Capital Consultants of Princeton, Inc. ("Capital
Consultants") to render a fairness opinion on its behalf. There are no fees
(other than time charges billed at usual and customary rates) payable to any
consultants, including lawyers and accountants, in connection with this
transaction or which would be triggered by consummation of this transaction or
the termination of the services of such consultants by Midland or any of its
Subsidiaries other than fees which will be payable by Midland to Capital
Consultants for its fairness opinion. Copies of Midland's agreements with
Capital Consultants are set forth in the Midland Disclosure Schedule.
3.6. Absence of Certain Changes or Events.
(a) There has not been any material adverse change in the
business, operations, assets or financial condition of Midland and its
Subsidiaries on a consolidated basis since June 30, 1996 and to Midland's
knowledge, no facts or conditions exist which Midland believes will cause or is
likely to cause such a material adverse change in the future.
(b) Except as set forth in the Midland Disclosure Schedule,
neither Midland nor any of its Subsidiaries has taken or permitted any of the
actions set forth in Section 5.2 hereof between June 30, 1996 and the date
hereof and Midland and the Midland Subsidiaries have conducted their business
only in the ordinary course, consistent with past practice.
3.7. Legal Proceedings. Except as disclosed in the Midland
Disclosure Schedule, neither Midland nor any of its Subsidiaries is a party to
any, and there are no pending or, to Midland's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature against Midland or any of its Subsidiaries. Except
as disclosed in the Midland Disclosure Schedule, neither Midland nor any of its
Subsidiaries is a party to any order, judgment or decree entered against Midland
or any Midland Subsidiary in any lawsuit or proceeding.
3.8. Taxes and Tax Returns.
(a) To its knowledge, Midland and each Midland Subsidiary have
duly filed (and until the Effective Time will so file) all returns,
declarations, reports, information returns and statements ("Returns") required
to be filed by them in respect of any federal, state and local taxes (including
withholding taxes, penalties or other payments required) and each has duly paid
(and until the Effective Time will so pay) all such taxes due and payable, other
than taxes or other charges which are being contested in good faith (and
disclosed to Valley in writing). Midland and each Midland Subsidiary have
established (and until the Effective Time will establish) on their books and
records reserves for the payment of all federal, state and local taxes not yet
due and payable, but incurred in respect of Midland or any Midland Subsidiary
through such date, which reserves are, to the knowledge of Midland, adequate for
such purposes. Except as set forth in the Midland Disclosure Schedule, the
federal income tax returns of Midland and its Subsidiaries have been examined by
the Internal Revenue Service (the "IRS") (or are closed to examination due to
the expiration of the applicable statute of limitations) and no deficiencies
were asserted as a result of such examinations which have not been resolved and
paid in full. Except as set forth in the Midland Disclosure Schedule, the
applicable state income tax returns of Midland and its Subsidiaries have been
examined by the applicable authorities (or are closed to examination due to the
expiration of the statute of limitations) and no deficiencies were asserted as a
result of such examinations which have not been resolved and paid in full. To
the knowledge of Midland, there are no audits or other administrative or court
proceedings presently pending nor any other disputes pending, or claims asserted
for, taxes or assessments upon Midland or any of its Subsidiaries, nor has
Midland or any of its Subsidiaries given any currently outstanding waivers or
comparable consents regarding the application of the statute of limitations with
respect to any taxes or Returns.
(b) Except as set forth in the Midland Disclosure Schedule,
neither Midland nor any of its Subsidiaries (i) has requested any extension of
time within which to file any tax Return which Return has not since been filed,
(ii) is a party to any agreement providing for the allocation or sharing of
taxes, (iii) is required to include in income any adjustment pursuant to Section
481(a) of the Code, by reason of a voluntary change in accounting method
initiated by Midland or any Midland Subsidiary (nor does Midland have any
knowledge that the IRS has proposed any such adjustment or change of accounting
method) or (iv) has filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply.
3.9. Employee Benefit Plans. Except as disclosed in the
Midland Disclosure Schedule:
(a) Neither Midland nor any of its Subsidiaries maintains or
contributes to any "employee pension benefit plan", within the meaning of
Section 3(2)(A) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (the "Midland Pension Plans"), "employee welfare benefit
plan", within the meaning of Section 3(1) of ERISA (the "Midland Welfare
Plans"), stock option plan, stock purchase plan, deferred compensation plan,
severance plan, bonus plan, employment agreement or other similar plan, program
or arrangement. Neither Midland nor any of its Subsidiaries has, since September
2, 1974, contributed to any "Multiemployer Plan", within the meaning of Sections
3(37) and 4001(a)(3) of ERISA.
(b) Midland has delivered to Valley in the Midland Disclosure
Schedule a complete and accurate copy of each of the following with respect to
each of the Midland Pension Plans and Midland Welfare Plans: (i) plan document,
summary plan description, and summary of material modifications (if not
available, a detailed description of the foregoing); (ii) trust agreement or
insurance contract, if any; (iii) most recent IRS determination letter, if any;
(iv) most recent actuarial report, if any; and (v) most recent annual report on
Form 5500.
(c) The present value of all accrued benefits under each of
the Midland Pension Plans subject to Title IV of ERISA, based upon the actuarial
assumptions used for purposes of the most recent actuarial valuation prepared by
such Pension Plan's actuary, did not exceed the then current value of the assets
of such plans allocable to such accrued benefits.
(d) During the last five years, the Pension Benefit Guaranty
Corporation (the "PBGC") has not asserted any claim for liability against
Midland or any of its Subsidiaries which has not been paid in full.
(e) All premiums (and interest charges and penalties for late
payment, if applicable) due to the PBGC with respect to each Midland Pension
Plan have been paid. All contributions required to be made to each Midland
Pension Plan under the terms thereof, ERISA or other applicable law have been
timely made, and all amounts properly accrued to date as liabilities of Midland
and its Subsidiaries which have not been paid have been properly recorded on the
books of Midland and its Subsidiaries.
(f) To the knowledge of Midland, each of the Midland Pension
Plans, the Midland Welfare Plans and each other plan and arrangement identified
on the Midland Disclosure Schedule has been operated in compliance in all
material respects with the provisions of ERISA, the Code, all regulations,
rulings and announcements promulgated or issued thereunder, and all other
applicable governmental laws and regulations. Furthermore, the IRS has issued a
favorable determination letter with respect to each of the Midland Pension Plans
and Midland is not aware of any fact or circumstance which would disqualify any
such plan, that could not be retroactively corrected (in accordance with the
procedures of the IRS).
(g) To the knowledge of Midland, within the past two plan
years no non-exempt prohibited transaction, within the meaning of Section 4975
of the Code or Section 406 of ERISA, has occurred with respect to any of the
Midland Welfare Plans or Midland Pension Plans.
(h) No Midland Pension Plan or any trust created thereunder
has been terminated, nor have there been any "reportable events", within the
meaning of Section 4034(b) of ERISA, with respect to any of the Midland Pension
Plans.
(i) To the knowledge of Midland, no "accumulated funding
deficiency", within the meaning of Section 412 of the Code, has been incurred
with respect to any of the Midland Pension Plans.
(j) There are no pending, or, to the knowledge of Midland,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Midland Pension Plans or the Midland Welfare
Plans, any trusts related thereto or any other plan or arrangement identified in
the Midland Disclosure Schedule.
(k) No Midland Pension or Welfare Plan provides medical or
death benefits (whether or not insured) beyond an employee's retirement or other
termination of service, other than (i) coverage mandated by law, or (ii) death
benefits under any Midland Pension Plan.
(l) Except with respect to customary health, life and
disability benefits or as disclosed in the Midland Disclosure Schedule, there
are no unfunded benefits obligations which are not accounted for by reserves
shown on the Midland Financial Statements and established under GAAP, or
otherwise noted on such financial statements.
(m) With respect to each Midland Pension and Welfare Plan that
is funded wholly or partially through an insurance policy, there will be no
liability of Midland or any Midland Subsidiary as of the Effective Time under
any such insurance policy or ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events occurring prior to the Effective Time.
(n) Except as hereafter agreed to by Valley in writing or as
disclosed on the Midland Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee of Midland or any Midland Subsidiary to severance pay or any
similar payment, or (ii) accelerate the time of payment, accelerate the vesting,
or increase the amount, of any compensation due to any current employee or
former employee under any Midland Pension Plan or Midland Welfare Plan.
3.10. Reports.
(a) Each communication mailed by Midland to its stockholders
since January 1, 1993, and each annual, quarterly or special report, proxy
statement or communication, as of its date, complied in all material respects
with all applicable statutes, rules and regulations enforced or promulgated by
the applicable regulatory agency and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided that
disclosures as of a later date shall be deemed to modify disclosures as of an
earlier date.
(b) Midland and the Bank have, since January 1, 1993, duly
filed with the FDIC and the FRB in correct form in all material respects the
monthly, quarterly and annual reports required to be filed under applicable laws
and regulations, and Midland promptly will deliver or make available to Valley
accurate and complete copies of such reports. The Midland Disclosure Schedule
lists all examinations of Midland or the Bank conducted by either the New Jersey
Department of Banking, FDIC or the FRB since January 1, 1993 and the dates of
any responses thereto submitted by Midland or the Bank.
3.11. Midland and Bank Information. The information relating
to Midland and the Bank to be contained in the Proxy Statement/Prospectus (as
defined in Section 5.6(a) hereof) to be delivered to stockholders of Midland in
connection with the solicitation of their approval of this Agreement and the
transactions contemplated hereby, as of the date the Proxy Statement/Prospectus
is mailed to stockholders of Midland, and up to and including the date of the
meeting of stockholders to which such Proxy Statement/Prospectus relates, will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
3.12. Compliance with Applicable Law.
(a) General. Except as set forth in the Midland Disclosure
Schedule, each of Midland and the Midland Subsidiaries hold all material
licenses, franchises, permits and authorizations necessary for the lawful
conduct of its business under and pursuant to each, and has complied with and is
not in default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any federal, state or local governmental
authority relating to Midland or the Bank (other than where such defaults or
non-compliances will not, alone or in the aggregate, result in a material
adverse effect on the business, operations, assets or financial condition of
Midland and its Subsidiaries on a consolidated basis) and Midland has not
received notice of violation of, and does not know of any violations of, any of
the above.
(b) CRA. Without limiting the foregoing, to its knowledge the
Bank has complied in all material respects with the Community Reinvestment Act
("CRA") and Midland has no reason to believe that any person or group would
object to the consummation of this Merger due to the CRA performance of or
rating of the Bank. Except as listed on the Midland Disclosure Schedule to the
knowledge of the Bank, no person or group has adversely commented upon the
Bank's CRA performance.
3.13. Certain Contracts.
(a) Except as disclosed in the Midland Disclosure Schedule
under this Section or Section 3.5, (i) neither Midland nor any Midland
Subsidiary is a party to or bound by any contract or understanding (whether
written or oral) with respect to the employment or termination of any present or
former officers, employees, directors or consultants. The Midland Disclosure
Schedule sets forth true and correct copies of all employment agreements or
termination agreements with officers, employees, directors, or consultants to
which Midland or any Midland Subsidiary is a party.
(b) Except as disclosed in the Midland Disclosure Schedule,
(i) as of the date of this Agreement, neither Midland nor any Midland Subsidiary
is a party to or bound by any commitment, agreement or other instrument which
contemplates the payment by Midland or any Midland Subsidiary of amounts in
excess of $100,000, or which has a term extending beyond March 1, 1997 and
cannot be terminated by Midland or its subsidiary without consent of the other
party thereto, (ii) no commitment, agreement or other instrument to which
Midland or any Midland Subsidiary is a party or by which any of them is bound
limits the freedom of Midland or any Midland Subsidiary to compete in any line
of business or with any person, and (iii) neither Midland nor any Midland
Subsidiary is a party to any collective bargaining agreement.
(c) Except as disclosed in the Midland Disclosure Schedule,
neither Midland nor any Midland Subsidiary nor, to the knowledge of Midland, any
other party thereto, is in default in any material respect under any material
lease, contract, mortgage, promissory note, deed of trust, loan or other
commitment or arrangement.
3.14. Properties and Insurance.
(a) Midland and its Subsidiaries have good and, as to owned
real property, marketable title to all material assets and properties, whether
real or personal, tangible or intangible, reflected in Midland's consolidated
balance sheet as of June 30, 1996, or owned and acquired subsequent thereto
(except to the extent that such assets and properties have been disposed of for
fair value in the ordinary course of business since June 30, 1996), subject to
no encumbrances, liens, mortgages, security interests or pledges, except (i)
those items that secure liabilities that are reflected in such balance sheet or
the notes thereto or incurred in the ordinary course of business after the date
of such balance sheet, (ii) statutory liens for amounts not yet delinquent or
which are being contested in good faith, (iii) such encumbrances, liens,
mortgages, security interests, pledges and title imperfections that are not in
the aggregate material to the business, operations, assets, and financial
condition of Midland and its Subsidiaries taken as a whole and (iv) with respect
to owned real property, title imperfections noted in title reports delivered to
Valley prior to the date hereof. Midland and its Subsidiaries as lessees have
the right under valid and subsisting leases to occupy, use, possess and control
all property leased by them in all material respects as presently occupied,
used, possessed and controlled by them.
(b) The Midland Disclosure Schedule lists all policies of
insurance covering business operations and all insurable properties and assets
of Midland and its Subsidiaries showing all risks insured against, in each case
under valid, binding and enforceable policies or bonds, with such amounts and
such deductibles as are specified. As of the date hereof, neither Midland nor
any of its Subsidiaries has received any notice of cancellation or notice of a
material amendment of any such insurance policy or bond or is in default under
such policy or bond, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion.
3.15. Minute Books. The minute books of Midland and its
Subsidiaries contain records that are accurate in all material respects of all
meetings and other corporate action held of their respective stockholders and
Boards of Directors (including committees of their respective Boards of
Directors).
3.16. Environmental Matters. Except as disclosed in the
Midland Disclosure Schedule, neither Midland nor any of its Subsidiaries has
received any written notice, citation, claim, assessment, proposed assessment or
demand for abatement alleging that Midland or any of its Subsidiaries (either
directly or as a successor-in-interest in connection with the enforcement of
remedies to realize the value of properties serving as collateral for
outstanding loans) is responsible for the correction or clean-up of any
condition material to the business, operations, assets or financial condition of
Midland or its Subsidiaries. Except as disclosed in the Midland Disclosure
Schedule, Midland has no knowledge that any toxic or hazardous substances or
materials have been emitted, generated, disposed of or stored on any property
owned or leased by Midland or any of its Subsidiaries in any manner that
violates or, after the lapse of time may violate, any presently existing
federal, state or local law or regulation governing or pertaining to such
substances and materials.
3.17. Reserves. As of the date hereof, the reserve for loan
and lease losses in the Midland Financial Statements is, to Midland's knowledge,
adequate based upon past loan loss experiences and potential losses in the
current portfolio to cover all known or anticipated loan losses.
3.18. No Parachute Payments. No officer, director, employee or
agent (or former officer, director, employee or agent) of Midland or any Midland
Subsidiary is entitled now, or will or may be entitled to as a consequence of
this Agreement or the Merger, to any payment or benefit from Midland, a Midland
Subsidiary, Valley or VNB which if paid or provided would constitute an "excess
parachute payment", as defined in Section 280G of the Code or regulations
promulgated thereunder.
3.19. Disclosure. There are no material facts concerning the
business, operations, assets or financial condition of Midland or its
Subsidiaries which could have a material adverse effect on the business,
operations or financial condition of Midland or its Subsidiaries on a
consolidated basis which have not been disclosed to Valley directly. The
representations and warranties contained in Article III of this Agreement are
accurate in all material respects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VALLEY
References herein to the "Valley Disclosure Schedule" shall
mean all of the disclosure schedules required by this Article IV, dated as of
the date hereof and referenced to the specific sections and subsections of
Article IV of this Agreement, which have been delivered on the date hereof by
Valley to Midland. Valley hereby represents and warrants to Midland as follows:
4.1. Corporate Organization.
(a) Valley is a corporation duly organized and validly
existing and in good standing under the laws of the State of New Jersey. Valley
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on the business, operations, assets or financial
condition of Valley or its Subsidiaries (defined below). Valley is registered as
a bank holding company under the BHCA.
(b) Each of the Subsidiaries of Valley are listed in the
Valley Disclosure Schedule. The term "Subsidiary" when used in this Agreement
with reference to Valley, means any corporation, joint venture, association,
partnership, trust or other entity in which Valley has, directly or indirectly,
at least a 50% interest or acts as a general partner. Each Subsidiary of Valley
is duly organized and validly existing and in good standing under the laws of
the jurisdiction of its incorporation. VNB is a national bank whose deposits are
insured by the Bank Insurance Fund of the FDIC to the fullest extent permitted
by law. Each Subsidiary of Valley has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business as it is
now being conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a material adverse effect on the business,
operations, assets or financial condition of Valley and its Subsidiaries.
4.2. Capitalization. The authorized capital stock of Valley
consists solely of 75,000,000 shares of Valley Common Stock. As of August 31,
1996, there were 36,364,799 shares of Valley Common Stock issued and outstanding
net of treasury stock, and 314,888 treasury shares. Since such date, and from
time to time hereafter, Valley may repurchase shares of its Common Stock. Since
August 31, 1996, to and including the date of this Agreement, no additional
shares of Valley Common Stock have been issued except in connection with
exercises of options granted under the Long-Term Stock Incentive Plan of Valley
(the "Valley Option Plan") or grants of restricted stock under the Valley Option
Plan. As of August 31, 1996, except for: (a) 544,808 shares of Valley Common
Stock issuable upon exercise of outstanding stock options and stock appreciation
rights granted pursuant to the Valley Option Plan, and (b) 11,369 shares of
Valley Common Stock issuable upon exercise of outstanding stock options granted
to a consultant for Valley, there were no shares of Valley Common Stock issuable
upon the exercise of outstanding stock options or otherwise. All issued and
outstanding shares of Valley Common Stock, and all issued and outstanding shares
of capital stock of Valley's Subsidiaries, have been duly authorized and validly
issued, are fully paid, nonassessable and free of preemptive rights, and are
free and clear of all liens, encumbrances, charges, restrictions or rights of
third parties. All of the outstanding shares of capital stock of Valley's
Subsidiaries are owned by Valley free and clear of any liens, encumbrances,
charges, restrictions or rights of third parties. Except for the options and
stock appreciation rights referred to above under the Valley Option Plan,
neither Valley nor any of Valley's Subsidiaries has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of Valley or Valley's Subsidiaries or any securities representing
the right to otherwise receive any shares of such capital stock or any
securities convertible into or representing the right to purchase or subscribe
for any such shares, and there are no agreements or understandings with respect
to voting of any such shares.
4.3. Authority; No Violation.
(a) Valley and VNB have full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. Valley has a sufficient
number of authorized but unissued shares of Valley Common Stock to pay the
consideration for the Merger set forth in Section 2.1 of this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of each of Valley and VNB. The execution and delivery of the
Bank Merger Agreement has been duly and validly approved by the Board of
Directors of VNB. No other corporate proceedings on the part of Valley and VNB
are necessary to consummate the transactions contemplated hereby (except for the
approval by Valley of the Bank Merger Agreement). This Agreement has been duly
and validly executed and delivered by Valley and VNB and constitutes a valid and
binding obligation of Valley and VNB, enforceable against Valley and VNB in
accordance with its terms.
(b) Neither the execution or delivery of this Agreement nor
the consummation by Valley and VNB of the transactions contemplated hereby in
accordance with the terms hereof, will (i) violate any provision of the
Certificate of Incorporation or Bylaws of Valley or the Articles of Association
or Bylaws of VNB, (ii) assuming that the consents and approvals set forth below
are duly obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Valley or VNB or any
of their respective properties or assets, or (iii) violate, conflict with,
result in a breach of any provision of, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, result
in the termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of Valley or VNB under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Valley or VNB is a
party, or by which Valley or VNB or any of their properties or assets may be
bound or affected, except, with respect to (ii) and (iii) above, such as in the
aggregate will not have a material adverse effect on the business, operations,
assets or financial condition of Valley and Valley's Subsidiaries on a
consolidated basis, or the ability of Valley and VNB to consummate the
transactions contemplated hereby. Except for consents and approvals of or
filings or registrations with or notices to the OCC, the Commissioner, the FRB,
the New Jersey Secretary of State, the SEC, or applicable state securities
bureaus or commissions, no consents or approvals of or filings or registrations
with or notices to any third party or any public body or authority are necessary
on behalf of Valley or VNB in connection with (a) the execution and delivery by
Valley or VNB of this Agreement, (b) the consummation by Valley of the Merger
and the other transactions contemplated hereby and (c) the execution and
delivery by VNB of the Bank Merger Agreement and the consummation by VNB of the
Bank Merger and other transactions contemplated thereby. To Valley's knowledge,
no fact or condition exists which Valley has reason to believe will prevent it
or VNB from obtaining the aforementioned consents and approvals.
4.4. Financial Statements.
(a) Valley has previously delivered to Midland copies of the
consolidated statements of financial condition of Valley as of December 31,
1993, 1994 and 1995, the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended December 31 in each
of the three fiscal years 1993 through 1995, in each case accompanied by the
audit report of KPMG Peat Marwick LLP, independent public accountants with
respect to Valley, and the unaudited consolidated statements of condition of
Valley as of June 30, 1996 and the related unaudited consolidated statements of
income, changes in stockholders' equity and cash flows for the six months then
ended as reported in Valley's Quarterly Reports on Form 10-Q, filed with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act")
(collectively, the "Valley Financial Statements"). The Valley Financial
Statements (including the related notes), have been prepared in accordance with
generally accepted accounting principles consistently applied during the periods
involved, and fairly present the consolidated financial position of Valley as of
the respective dates set forth therein, and the related consolidated statements
of income, changes in stockholders' equity and of cash flows (including the
related notes, where applicable) fairly present the results of the consolidated
operations and changes in stockholders' equity and of cash flows of Valley for
the respective fiscal periods set forth therein.
(b) The books and records of Valley and its subsidiaries have
been and are being maintained in material compliance with applicable legal and
accounting requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the Valley Financial Statements (including the notes
thereto), as of June 30, 1996 neither Valley nor any of its Subsidiaries had or
has, as the case may be, any material obligation or liability, whether absolute,
accrued, contingent or otherwise, material to the business, operations, assets
or financial condition of Valley or any of its Subsidiaries. Since June 30,
1996, neither Valley nor any of its Subsidiaries have incurred any material
liabilities, except in the ordinary course of business and consistent with
prudent banking practice.
4.5. Brokerage Fees. Except for fees to be paid to MG
Advisors, Inc., neither Valley nor VNB nor any of their respective directors or
officers has employed any broker or finder or incurred any liability for any
broker's or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement.
4.6. Absence of Certain Changes or Events. There has not been
any material adverse change in the business, operations, assets or financial
condition of Valley and Valley's Subsidiaries on a consolidated basis since June
30, 1996 and to Valley's knowledge, no fact or condition exists which Valley
believes will cause or is likely to cause such a material adverse change in the
future.
4.7. Valley Information. The information relating to Valley
and its subsidiaries, this Agreement and the transactions contemplated hereby in
the Registration Statement and Proxy Statement/Prospectus (as defined in Section
5.6(a) hereof), as of the date of the mailing of the Proxy Statement/Prospectus,
and up to and including the date of the meeting of stockholders of Midland to
which such Proxy Statement/Prospectus relates, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
4.8. Capital Adequacy. At the Effective Time, after taking
into effect the Merger and the transactions contemplated hereunder, Valley will
have sufficient capital to satisfy all applicable regulatory capital
requirements.
4.9. Valley Common Stock. At the Effective Time, the Valley
Common Stock to be issued pursuant to the terms of Section 2.1, when so issued,
shall be duly authorized, validly issued, fully paid, and non-assessable, free
of preemptive rights and free and clear of all liens, encumbrances or
restrictions created by or through Valley, with no personal liability attaching
to the ownership thereof.
4.10. Legal Proceedings. Except as disclosed in the Valley
Disclosure Schedule, neither Valley nor its Subsidiaries is a party to any, and
there are no pending or, to Valley's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature against Valley or any of its Subsidiaries which, if
decided adversely to Valley, or any of its Subsidiaries, would have a material
adverse effect on the business, operations, assets or financial condition of
Valley and its Subsidiaries on a consolidated basis. Except as disclosed in the
Valley Disclosure Schedule, neither Valley nor any of Valley's Subsidiaries is a
party to any order, judgment or decree entered against Valley or any such
Subsidiary in any lawsuit or proceeding which would have a material adverse
effect on the business, operations, assets or financial condition of Valley and
its Subsidiaries on a consolidated basis.
4.11. Taxes and Tax Returns. To the knowledge of Valley,
Valley and its Subsidiaries have duly filed (and until the Effective Time will
so file) all Returns required to be filed by them in respect of any federal,
state and local taxes (including withholding taxes, penalties or other payments
required) and have duly paid (and until the Effective Time will so pay) all such
taxes due and payable, other than taxes or other charges which are being
contested in good faith. Valley and its Subsidiaries have established (and until
the Effective Time will establish) on their books and records reserves for the
payment of all federal, state and local taxes not yet due and payable, but
incurred in respect of Valley and its Subsidiaries through such date, which
reserves are, to the knowledge of Valley, adequate for such purposes. No
deficiencies exist or have been asserted based upon the federal income tax
returns of Valley and VNB.
4.12. Employee Benefit Plans.
(a) Valley and its Subsidiaries maintain or contribute to
certain "employee pension benefit plans" (the "Valley Pension Plans"), as such
term is defined in Section 3 of ERISA, and "employee welfare benefit plans" (the
"Valley Welfare Plans"), as such term is defined in Section 3 of ERISA. Since
September 2, 1974, neither Valley nor its Subsidiaries have contributed to any
"Multiemployer Plan", as such term is defined in Section 3(37) of ERISA.
(b) Except as set forth in Valley Disclosure Schedule, to the
knowledge of Valley, each of the Valley Pension Plans and each of the Valley
Welfare Plans has been operated in compliance in all material respects with the
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder, and all other applicable governmental laws and
regulations.
(c) To the knowledge of Valley, no "accumulated funding
deficiency" within the meaning of Section 412 of the Code has been incurred with
respect to any of the Valley Pension Plans.
(d) Except with respect to customary health, life and
disability benefits or as disclosed on the Valley Disclosure Schedule, there are
no unfunded benefit obligations which are not accounted for by reserves shown on
the financial statements of Valley and established under GAAP or otherwise noted
on such financial statements.
4.13. Reports.
(a) Each communication mailed by Valley to its stockholders
since January 1, 1993, and each annual, quarterly or special report, proxy
statement or communication, as of its date, complied in all material respects
with all applicable statutes, rules and regulations enforced or promulgated by
the applicable regulatory agency and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided that
disclosures as of a later date shall be deemed to modify disclosures as of an
earlier date.
(b) Valley and VNB have, since January 1, 1993, duly filed
with the OCC and the FRB in correct form in all material respects the monthly,
quarterly and annual reports required to be filed under applicable laws and
regulations, and Valley, upon written request from Midland, promptly will
deliver or make available to Midland accurate and complete copies of such
reports. The Valley Disclosure Schedule lists the dates of all examinations of
Valley or VNB conducted by either the OCC, the FRB or the FDIC since January 1,
1993, and the dates of any responses thereto submitted by Valley or VNB.
4.14. Compliance with Applicable Law. Valley and its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and has complied with and is not in default in any respect
under any, applicable law, statute, order, rule, regulation, policy and/or
guideline of any federal, state or local governmental authority relating to
Valley and its Subsidiaries (other than where such default or non-compliance
will not result in a material adverse effect on the business, operations, assets
or financial condition of Valley and its Subsidiaries on a consolidated basis)
and Valley has not received notice of violations of, and does not know of any
violations of, any of the above. Without limiting the foregoing, to its
knowledge VNB has complied in all material respects with the CRA and Valley has
no reason to believe that any person or group would object to the consummation
of the Merger due to the CRA performance or rating of VNB. To the knowledge of
Valley, except as listed on the Valley Disclosure Schedule, no person or group
has adversely commented upon VNB's CRA performance.
4.15. Properties and Insurance.
(a) Valley and its Subsidiaries have good and, as to owned
real property, marketable title to all material assets and properties, whether
real or personal, tangible or intangible, reflected in Valley's consolidated
balance sheet as of June 30, 1996, or owned and acquired subsequent thereto
(except to the extent that such assets and properties have been disposed of for
fair value in the ordinary course of business since June 30, 1996), subject to
no encumbrances, liens, mortgages, security interests or pledges, except (i)
those items that secure liabilities that are reflected in such balance sheet or
the notes thereto or incurred in the ordinary course of business after the date
of such balance sheet, (ii) statutory liens for amounts not yet delinquent or
which are being contested in good faith, (iii) such encumbrances, liens,
mortgages, security interests, pledges and title imperfections that are not in
the aggregate material to the business, operations, assets, and financial
condition of Valley and its subsidiaries taken as a whole and (iv) with respect
to owned real property, title imperfections noted in title reports delivered to
Midland prior to the date hereof. Valley and its Subsidiaries as lessees have
the right under valid and subsisting leases to occupy, use, possess and control
all property leased by them in all material respects as presently occupied,
used, possessed and controlled by them.
(b) The business operations and all insurable properties and
assets of Valley and its Subsidiaries are insured for their benefit against all
risks which, in the reasonable judgment of the management of Valley should be
insured against, in each case under valid, binding and enforceable policies or
bonds, with such deductibles and against such risks and losses as are in the
opinion of the management of Valley adequate for the business engaged in by
Valley and its Subsidiaries. As of the date hereof, neither Valley nor any of
its Subsidiaries has received any notice of cancellation or notice of a material
amendment of any such insurance policy or bond or is in default under such
policy or bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion.
4.16. Minute Books. The minute books of Valley and its
Subsidiaries contain records that are accurate in all material respects of all
meetings and other corporate action held of their respective stockholders and
Boards of Directors (including committees of their respective Boards of
Directors).
4.17. Environmental Matters. Except as disclosed in the Valley
Disclosure Schedule, neither Valley nor any of its Subsidiaries has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that Valley or any of its Subsidiaries (either directly or as
a successor-in-interest in connection with the enforcement of remedies to
realize the value of properties serving as collateral for outstanding loans) is
responsible for the correction or clean-up of any condition material to the
business, operations, assets or financial condition of Valley or its
Subsidiaries. Except as disclosed in the Valley Disclosure Schedule, Valley has
no knowledge that any toxic or hazardous substances or materials have been
emitted, generated, disposed of or stored on any property owned or leased by
Valley or any of its Subsidiaries in any manner that violates or, after the
lapse of time may violate, any presently existing federal, state or local law or
regulation governing or pertaining to such substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of Valley and its Subsidiaries on a
consolidated basis.
4.18. Reserves. As of the date hereof, the reserve for loan
and lease losses in the Valley Financial Statements is, to Valley's knowledge,
adequate based upon past loan loss experiences and potential losses in the
current portfolio to cover all known or anticipated loan losses.
4.19. Disclosures. Except for other acquisition transactions
which Valley may not yet have publicly disclosed, there are no material facts
concerning the business, operations, assets or financial condition of Valley
which could have a material adverse effect on the business, operations or
financial condition of Valley which have not been disclosed to Midland directly
or indirectly by access to any filing by Valley under the 1934 Act. The
representations and warranties contained in Article IV of this Agreement are
accurate in all material respects.
ARTICLE V
COVENANTS OF THE PARTIES
5.1. Conduct of the Business of Midland. During the period
from the date of this Agreement to the Effective Time, Midland shall, and shall
cause each of its Subsidiaries to, conduct its respective business and engage in
transactions permitted hereunder only in the ordinary course and consistent with
prudent banking practice, except with the prior written consent of Valley, which
consent will not be unreasonably withheld. Midland also shall use its best
efforts to (i) preserve its business organization and that of each Midland
Subsidiary intact, (ii) keep available to itself the present services of its
employees and those of its Subsidiaries, provided that neither Midland nor any
of its Subsidiaries shall be required to take any unreasonable or extraordinary
act or any action which would conflict with any other term of this Agreement,
and (iii) preserve for itself and Valley the goodwill of its customers and those
of its Subsidiaries and others with whom business relationships exist.
5.2. Negative Covenants and Dividend Covenants.
(a) Midland agrees that from the date hereof to the Effective
Time, except as otherwise approved by Valley in writing or as permitted or
required by this Agreement, it will not, nor will it permit any of its
Subsidiaries to:
(i) change any provision of its Certificate of Incorporation
or Bylaws or any similar governing documents;
(ii) except for the issuance of Midland Common Stock pursuant
to the present terms of the outstanding Midland Options and the Valley Stock
Option, change the number of shares of its authorized or issued common or
preferred stock or issue or grant any option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating to the
authorized or issued capital stock of Midland or any Midland Subsidiary or any
securities convertible into shares of such stock, or split, combine or
reclassify any shares of its capital stock, or redeem or otherwise acquire any
shares of such capital stock, or declare, set aside or pay any dividend, or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock; provided, however, from the date
hereof to the Effective Time, Midland may declare, set aside or pay cash
dividends per share of Midland Common Stock equivalent to the cash dividends per
share declared, set aside or paid by Valley during such period multiplied by the
Exchange Ratio, and such dividends by Midland shall conform to the record dates
and payment dates as used by Valley;
(iii) grant any severance or termination pay (other than
pursuant to policies of Midland in effect on the date hereof and disclosed to
Valley in the Midland Disclosure Schedule or as agreed to by Valley in writing)
to, or enter into or amend any employment agreement with, any of its directors,
officers or employees, adopt any new employee benefit plan or arrangement of any
type or amend any such existing benefit plan or arrangement; or award any
increase in compensation or benefits to its directors, officers or employees
(including by any change in the "Target Value" as defined in Midland's Long-Term
Incentive Plan, which Target Value is currently $10.00); provided, however,
Midland and the Bank may continue to award regular and customary pay increases
in compensation to its non-officer employees and may award and pay bonuses to
its officers as set forth in a written schedule previously delivered to Valley
if such bonuses are fully accrued on its books for 1996;
(iv) sell or dispose of any substantial amount of assets or
incur any significant liabilities other than in the ordinary course of business
consistent with past practices and policies;
(v) make any capital expenditures in excess of $100,000 other
than pursuant to binding commitments existing on the date hereof, expenditures
necessary to maintain existing assets in good repair and expenditures to
renovate or relocate the Bank's branch located at the Bergen Mall in Paramus,
New Jersey;
(vi) file any applications or make any contract with respect
to branching or site location or relocation.
(vii) agree to acquire in any manner whatsoever (other than to
foreclose on collateral for a defaulted loan) any business or entity;
(viii) make any material change in its accounting methods or
practices, other than changes required in accordance with generally accepted
accounting principles;
(ix) take any action that would result in any of the
representations and warranties contained in Article III of this Agreement not
being true and correct in any material respect at the Effective Time; or
(x) agree to do any of the foregoing.
(b) Valley agrees that from the date hereof to the Effective
Time, except as otherwise approved by Midland in writing or as permitted or
required by this Agreement, it will not, nor will it permit any of it
Subsidiaries to:
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or that may
result in any condition, agreement or covenant set forth in this Agreement not
being satisfied;
(ii) take or cause to be taken any action which would
disqualify the Merger as a tax free reorganization under Section 368 of the
Code;
(iii) consolidate with or merge with any other person or
entity in which Valley is not the surviving entity, or convey, transfer or lease
its properties and assets substantially as an entirety to any person or entity
unless such person or entity shall expressly assume the obligations of Valley
under this Agreement; or
(iv) authorize or enter into any agreement or commitment to do
any of the foregoing.
5.3. No Solicitation. Midland and the Bank shall not, directly
or indirectly, encourage or solicit or hold discussions or negotiations with, or
provide any information to, any person, entity or group (other than Valley)
concerning any merger or sale of shares of capital stock or sale of substantial
assets or liabilities not in the ordinary course of business, or similar
transactions involving Midland or the Bank (an "Acquisition Transaction").
Midland will promptly communicate to Valley the terms of any proposal, whether
written or oral, which it may receive in respect of any Acquisition Transaction.
5.4. Current Information. During the period from the date of
this Agreement to the Effective Time, Midland will cause one or more of its
designated representatives to confer on a monthly or more frequent basis with
representatives of Valley regarding Midland's business, operations, properties,
assets and financial condition and matters relating to the completion of the
transactions contemplated herein. Without limiting the foregoing, Midland will
send to Valley a monthly list of each new loan or extension of credit, and each
renewal of an existing loan or extension of credit, in excess of $500,000, made
during such month, and provide Valley with a copy of the loan offering for any
such loan, extension of credit, or renewal upon request. As soon as reasonably
available, but in no event more than 45 days after the end of each fiscal
quarter (other than the last fiscal quarter of each fiscal year) ending after
the date of this Agreement, Midland will deliver to Valley the Bank's call
reports filed with the Commissioner and FDIC and Midland's quarterly reports as
filed with the FRB and/or delivered to its shareholders, and Valley will deliver
to Midland Valley's quarterly reports on Form 10-Q, as filed with the SEC under
the 1934 Act, and VNB's call reports filed with the OCC and the FDIC. As soon as
reasonably available, but in no event more than 80 days after the end of each
fiscal year, Midland will deliver to Valley and Valley will deliver to Midland
their respective audited Annual Reports, in the case of Valley as filed on Form
10-K with the SEC under the 1934 Act.
5.5. Access to Properties and Records; Confidentiality.
(a) Midland and the Bank shall permit Valley and its
representatives, and Valley and VNB shall permit Midland and its
representatives, accompanied by an officer of the respective party, reasonable
access to their respective properties, and shall disclose and make available to
Valley and its representatives or Midland and its representatives as the case
may be, all books, papers and records relating to their respective assets, stock
ownership, properties, operations, obligations and liabilities, including, but
not limited to, all books of account (including the general ledger), tax
records, minute books of directors' and stockholders' meetings, organizational
documents, bylaws, material contracts and agreements, filings with any
regulatory authority, independent auditors' work papers (subject to the receipt
by such auditors of a standard access representation letter), litigation files,
plans affecting employees, and any other business activities or prospects in
which Valley and its representatives or Midland and its representatives may have
a reasonable interest. Neither party shall be required to provide access to or
to disclose information where such access or disclosure would violate or
prejudice the rights of any customer or would contravene any law, rule,
regulation, order or judgment. The parties will use their best efforts to obtain
waivers of any such restriction and in any event make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply. Midland acknowledges that Valley may be involved in
discussions concerning other potential acquisitions and Valley shall not be
obligated to disclose such information to Midland except as such information is
publicly disclosed by Valley.
(b) All information furnished by the parties hereto previously
in connection with transactions contemplated by this Agreement or pursuant
hereto shall be used solely for the purpose of evaluating the Merger
contemplated hereby and shall be treated as the sole property of the party
delivering the information until consummation of the Merger contemplated hereby
and, if such Merger shall not occur, each party and each party's advisors shall
return to the other party all documents or other materials containing,
reflecting or referring to such information, will not retain any copies of such
information, shall use its best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. In the event that the Merger
contemplated hereby is abandoned, all documents, notes and other writings
prepared by a party hereto or its advisors based on information furnished by the
other party shall be promptly destroyed. The obligation to keep such information
confidential shall continue for five years from the date the proposed Merger is
abandoned but shall not apply to (i) any information which (A) the party
receiving the information can establish by convincing evidence was already in
its possession prior to the disclosure thereof to it by the other party; (B) was
then generally known to the public; (C) became known to the public through no
fault of the party receiving such information; or (D) was disclosed to the party
receiving such information by a third party not bound by an obligation of
confidentiality; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction.
(c) Without limiting the rights provided under Section 5.5(a),
each of Valley and Midland shall have the right to conduct a full and complete
acquisition audit and to perform such due diligence as it deems appropriate,
using its own officers and employees or third parties, for purposes of
determining whether there is a material breach of any representation or warranty
hereunder or a material adverse change in the business or financial condition of
the other party. Such acquisition audit or due diligence shall not be limited or
restricted by virtue of any audit or due diligence performed before the date
hereof or for any other reason, but shall not unduly interfere with the business
of the other party.
5.6. Regulatory Matters.
(a) For the purposes of holding the meeting of Midland
shareholders referred to in Section 5.7 hereof and registering or otherwise
qualifying under applicable federal and state securities laws Valley Common
Stock to be issued to Record Holders and optionees in connection with the
Merger, the parties hereto shall cooperate in the preparation and filing by
Valley of a Registration Statement with the SEC which shall include an
appropriate proxy statement and prospectus satisfying all applicable
requirements of applicable state and federal laws, including the Securities Act
of 1933, as amended (the "1933 Act"), the 1934 Act and applicable state
securities laws and the rules and regulations thereunder. (Such proxy statement
and prospectus in the form mailed by Midland to the Midland shareholders and
optionees together with any and all amendments or supplements thereto, is herein
referred to as the "Proxy Statement/Prospectus" and the various documents to be
filed by Valley under the 1933 Act with the SEC to register for sale the Valley
Common Stock to be issued to Record Holders and optionees, including the Proxy
Statement/Prospectus, are referred to herein as the "Registration Statement").
(b) Valley shall furnish information concerning Valley as is necessary in order
to cause the Proxy Statement/Prospectus, insofar as it relates to Valley, to
comply with Section 5.6(a) hereof. Valley agrees promptly to advise Midland if
at any time prior to the Midland shareholder meeting referred to in Section 5.7
hereof, any information provided by Valley in the Proxy Statement/Prospectus
becomes incorrect or incomplete in any material respect and to provide Midland
with the information needed to correct such inaccuracy or omission. Valley shall
furnish Midland with such supplemental information as may be necessary in order
to cause the Proxy Statement/Prospectus, insofar as it relates to Valley, to
comply with Section 5.6(a) after the mailing thereof to Midland shareholders.
(c) Midland shall furnish Valley with such information
concerning Midland and the Bank as is necessary in order to cause the Proxy
Statement/Prospectus, insofar as it relates to such corporations, to comply with
Section 5.6(a) hereof. Midland agrees promptly to advise Valley if, at any time
prior to the Midland shareholder's meeting referred to in Section 5.6(a) hereof,
information provided by Midland in the Proxy Statement/Prospectus becomes
incorrect or incomplete in any material respect and to provide Valley with the
information needed to correct such inaccuracy or omission. Midland shall furnish
Valley with such supplemental information as may be necessary in order to cause
the Proxy Statement/Prospectus, insofar as it relates to Midland and the Bank,
to comply with Section 5.6(a) after the mailing thereof to Midland shareholders.
(d) Valley shall as promptly as practicable, at its sole
expense, make such filings as are necessary in connection with the offering of
the Valley Common Stock with applicable state securities agencies and shall use
all reasonable efforts to qualify the offering of the Valley Common Stock under
applicable state securities laws at the earliest practicable date. Midland shall
promptly furnish Valley with such information regarding the Midland shareholders
as Valley requires to enable it to determine what filings are required
hereunder. Midland authorizes Valley to utilize in such filings the information
concerning Midland and the Bank provided to Valley in connection with, or
contained in, the Proxy Statement/ Prospectus. Valley shall furnish Midland with
copies of all such filings and keep Midland advised of the status thereof.
Valley and Midland shall as promptly as practicable file the Registration
Statement containing the Proxy Statement/Prospectus with the SEC, and each of
Valley and Midland shall promptly notify the other of all communications, oral
or written, with the SEC concerning the Registration Statement and the Proxy
Statement/Prospectus.
(e) Valley shall cause the Valley Common Stock to be issued in
connection with the Merger to be listed on the New York Stock Exchange.
(f) The parties hereto will cooperate with each other and use
their best efforts to prepare all necessary documentation, to effect all
necessary filings and to obtain all necessary permits, consents, waivers,
approvals and authorizations of all third parties and governmental bodies
necessary to consummate the transactions contemplated by this Agreement as soon
as possible, including, without limitation, those required by the OCC and the
FRB. The parties shall each have the right to review in advance all information
relating to the other, as the case may be, and any of their respective
subsidiaries, which appears in any filing made with, or written material
submitted to, any third party or governmental body in connection with the
transactions contemplated by this Agreement. Valley and VNB shall cause at least
a draft of their respective applications to the FRB and an actual application to
the OCC to be filed within 60 days of the date hereof, so long as Midland and
the Bank provide all information necessary to complete the application within 45
days of the date hereof.
(g) Each of the parties will promptly furnish each other with
copies of written communications received by them or any of their respective
subsidiaries from, or delivered by any of the foregoing to, any governmental
body in respect of the transactions contemplated hereby.
5.7. Approval of Shareholders. Midland will (a) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
shareholders of Midland as soon as reasonably practicable for the purpose of
securing the approval by such shareholders of this Agreement, (b) recommend to
the shareholders of Midland the approval of this Agreement and the transactions
contemplated hereby and use its best efforts to obtain, as promptly as
practicable, such approvals, and (c) cooperate and consult with Valley with
respect to each of the foregoing matters. In connection therewith, Midland will
use reasonable efforts to cause each director of Midland to agree, and Norwood
Associates II will agree, (i) to vote in favor of the Merger, and (ii) take such
action as is necessary or is reasonably required by Valley to consummate the
Merger.
5.8. Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions to Closing and to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated by this Agreement and using its best efforts to
prevent the breach of any representation, warranty, covenant or agreement of
such party contained or referred to in this Agreement and to promptly remedy the
same. Nothing in this section shall be construed to require any party to
participate in any threatened or actual legal, administrative or other
proceedings (other than proceedings, actions or investigations to which it is
otherwise a party or subject or threatened to be made a party or subject) in
connection with consummation of the transactions contemplated by this Agreement
unless such party shall consent in advance and in writing to such participation
and the other party agrees to reimburse and indemnify such party for and against
any and all costs and damages related thereto.
5.9. Public Announcements. The parties hereto shall cooperate
with each other in the development and distribution of all news releases and
other public disclosures with respect to this Agreement or any of the
transactions contemplated hereby, 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.
5.10. Failure to Fulfill Conditions. In the event that Valley
or Midland determines that a material condition to its obligation to consummate
the transactions contemplated hereby cannot be fulfilled on or prior to April
30, 1997 and that it will not waive that condition, it will promptly notify the
other party. Except for any acquisition or merger discussions Valley may enter
into with other parties, Midland and Valley will promptly inform the other of
any facts applicable to Midland or Valley, respectively, or their respective
directors or officers, that would be likely to prevent or materially delay
approval of the Merger by any governmental authority or which would otherwise
prevent or materially delay completion of the Merger.
5.11. Disclosure Supplements. From time to time prior to the
Effective Time, each party hereto will promptly supplement or amend (by written
notice to the other) its respective Disclosure Schedules delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Schedules or which is necessary to correct any
information in such Schedules which has been rendered materially inaccurate
thereby. For the purpose of determining satisfaction of the conditions set forth
in Article VI, no supplement or amendment to such Schedules shall correct or
cure any warranty which was untrue when made, but supplements or amendments may
be used to disclose subsequent facts or events to maintain the truthfulness of
any warranty.
5.12. Printing Arrangements. Valley, in reasonable
consultation with Midland, shall make all arrangements with respect to the
printing and mailing of the Proxy Statement/Prospectus.
5.13. Closing. The parties hereto shall cooperate and use
reasonable efforts to try to cause the Effective Time to occur on March 1, 1997.
5.14. Indemnification. After the Effective Time, to the extent
permitted by applicable law, and the Certificate of Incorporation or Articles of
Association, Valley agrees that it will, or will cause VNB to, provide to the
directors and officers of Midland and the Bank indemnification equivalent to
that provided by the Certificate of Incorporation and Bylaws of each of Midland
and the Bank with respect to acts or omissions occurring prior to the Effective
Time, including without limitation, the authorization of this Agreement and the
transactions contemplated hereby, for a period of six years from the Effective
Time, or in the case of matters occurring prior to the Effective Time which have
not been resolved prior to the sixth anniversary of the Effective Time, until
such matters are finally resolved. To the extent permitted by applicable law,
and the Certificate of Incorporation or Articles of Association, Valley or VNB
(as applicable) shall advance expenses in connection with the foregoing
indemnification.
5.15. New Valley Directors; Officers.
(a) Directors. As of the Effective Time, Valley and VNB each
shall cause its respective Board of Directors to take action to appoint at the
Effective Time Walter H. Jones III and Graham O. Jones to the Board of Directors
of Valley and VNB, respectively.
(b) Officers. As of the Effective Time, VNB shall appoint
Robert M. Meyer, Midland's Chief Executive Officer, as a member of VNB's senior
management and Valley shall assume in writing Mr. Meyer's employment contract, a
copy of which is included in the Midland Disclosure Schedule.
5.16. Employment Matters. Valley intends, to the extent
practical, to continue the employment of all officers and employees of the Bank,
at the same location, with the same or equivalent salary and benefits. Valley
intends, to the extent practical, to have all Midland employees participate in
the benefits and opportunities available to all Valley employees.
5.17. Pooling and Tax-Free Reorganization Treatment. Neither
Valley nor Midland shall intentionally take, fail to take or cause to be taken
or not be taken, any action within its control, whether before or after the
Effective Time, which would disqualify the Merger as a "pooling of interests"
for accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code.
5.18. Midland Option Plan. From and after the Effective Time,
each Midland Option which is converted to an option to purchase Valley Common
Stock under Section 2.1(b)(i) shall be administered, operated and interpreted by
a committee comprised of members of the Board of Directors of Valley appointed
by the Board of Directors of Valley. Valley shall reserve for issuance the
number of shares of Valley Common Stock necessary to satisfy Valley's
obligations. Valley shall also register, if not previously registered pursuant
to the 1933 Act, the shares authorized for issuance under the Midland Options so
converted.
5.19. Affiliates.
(a) Promptly, but in any event within 30 days, after the
execution and delivery of this Agreement, (i) Midland shall deliver to Valley
(x) a letter identifying all persons who, to the knowledge of Midland, may be
deemed to be affiliates of Midland under Rule 145 of the 1933 Act, including
without limitation all directors and executive officers of Midland and (y) a
letter identifying all persons who, to the knowledge of Midland, may be deemed
to be affiliates of Midland as that term (affiliate) is used for purposes of
qualifying for pooling-of-interests accounting treatment; and (ii) Valley shall
identify to Midland all persons who, to the knowledge of Valley, may be deemed
affiliates of Valley as that term (affiliates) is used for purposes of
qualifying for pooling-of-interests accounting treatment.
(b) Midland shall cause each director of Midland to, and
Midland shall use its best efforts to cause each executive officer of Midland
and each other person who may be deemed an affiliate of Midland (under either
Rule 145 of the 1933 Act or the accounting treatment rules) to, execute and
deliver to Valley within 30 days after the execution and delivery of this
Agreement, a letter substantially in the form of Exhibit 5.19 hereto agreeing to
be bound by the restrictions of Rule 145 and agreeing to be bound by the rules
which permit the Merger to be treated as a pooling of interests for accounting
purposes. In addition, Valley shall cause each director and executive officer of
Valley to, and Valley shall use its best efforts to cause each other person who
may be deemed an affiliate of Valley (as that term is used for purposes of
qualifying for pooling of interests) to, execute and deliver to Valley within 30
days after the execution and delivery of this Agreement, a letter in which such
persons agree to be bound by the rules which permit the Merger to be treated as
a pooling of interests for accounting treatment.
(c) Valley agrees to publish financial results covering at
least 30 days of combined operations of Valley and Midland as soon as
practicable after consummation of the Merger.
5.20. Compliance with the Industrial Site Recovery Act.
Midland, at its sole cost and expense, shall use its best efforts to obtain
prior to the Effective Time, with respect to each facility located in New Jersey
owned or operated by Midland or any Midland Subsidiary (each, a "Facility"),
either: (a) a Letter of Non-Applicability ("LNA") from the New Jersey Department
of Environmental Protection ("NJDEP") stating that the Facility is not an
"industrial establishment," as such term is defined under the Industrial Site
Recovery Act ("ISRA"); (b) a Remediation Agreement issued by the NJDEP pursuant
to ISRA authorizing the consummation of the transactions contemplated by this
Agreement; (c) a Negative Declaration approval, Remedial Action Workplan
approval, No Further Action letter or other document or documents issued by the
NJDEP advising that the requirements of ISRA have been satisfied with respect to
the Facility; or (d) an opinion addressed to Valley from New Jersey legal
counsel reasonably acceptable to Valley to the effect that ISRA has been
complied with, or is inapplicable, with respect to the Facility. In the event
Midland obtains a Remediation Agreement, Midland will post or have posted an
appropriate Remediation Funding Source or will have obtained the NJDEP's
approval to self-guaranty any Remediation Funding Source required under any such
Remediation Agreement.
ARTICLE VI
CLOSING CONDITIONS
6.1. Conditions of Each Party's Obligations Under this
Agreement. The respective obligations of each party under this Agreement to
consummate the Merger shall be subject to the satisfaction, or, where
permissible under applicable law, waiver at or prior to the Effective Time of
the following conditions:
(a) Approval of Midland Shareholders; SEC Registration. This
Agreement and the transactions contemplated hereby shall have been approved by
the requisite vote of the shareholders of Midland. The Registration Statement
shall have been declared effective by the SEC and shall not be subject to a stop
order or any threatened stop order, and the issuance of the Valley Common Stock
shall have been qualified in every state where such qualification is required
under the applicable state securities laws. The Valley Common Stock to be issued
in connection with the Merger, including Valley Common Stock to be issued for
the Midland Options, shall have been approved for listing on the New York Stock
Exchange.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the OCC and any approval or waiver required by the FRB) required to
consummate the transactions contemplated hereby shall have been obtained without
any term or condition which would materially impair the value of Midland and the
Bank, taken as a whole, to Valley. All conditions required to be satisfied prior
to the Effective Time by the terms of such approvals and consents shall have
been satisfied; and all statutory waiting periods in respect thereof shall have
expired.
(c) Suits and Proceedings. No order, judgment or decree shall
be outstanding against a party hereto or a third party that would have the
effect of preventing completion of the Merger; no suit, action or other
proceeding shall be pending or threatened by any governmental body in which it
is sought to restrain or prohibit the Merger or the Bank Merger; and no suit,
action or other proceeding shall be pending before any court or governmental
agency in which it is sought to restrain or prohibit the Merger or the Bank
Merger or obtain other substantial monetary or other relief against one or more
parties hereto in connection with this Agreement and which Valley or Midland
determines in good faith, based upon the advice of their respective counsel,
makes it inadvisable to proceed with the Merger because any such suit, action or
proceeding has a significant potential to be resolved in such a way as to
deprive the party electing not to proceed of any of the material benefits to it
of the Merger or the Bank Merger.
(d) Tax Free Exchange. Valley and Midland shall have received
an opinion, satisfactory to Valley and Midland, of Pitney, Hardin, Kipp & Szuch,
counsel for Valley, to the effect that the transactions contemplated hereby will
result in a reorganization (as defined in Section 368(a) of the Code), and
accordingly no gain or loss will be recognized for federal income tax purposes
to Valley, Midland, VNB or the Bank or to the shareholders of Midland who
exchange their shares of Midland for Valley Common Stock (except to the extent
that cash is received in lieu of fractional shares of Valley Common Stock).
(e) Pooling of Interests. The Merger shall be qualified to be
treated by Valley as a pooling-of-interests for accounting purposes and Valley
shall have received a letter from KPMG Peat Marwick LLP to the effect that the
Merger will qualify for pooling-of-interests accounting treatment if closed and
consummated in accordance with the Agreement.
6.2. Conditions to the Obligations of Valley Under this
Agreement. The obligations of Valley under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of Obligations
of Midland and Bank. The representations and warranties of Midland contained in
this Agreement shall be true and correct in all material respects on the Closing
Date as though made on and as of the Closing Date. Midland shall have performed
in all material respects the agreements, covenants and obligations necessary to
be performed by it prior to the Closing Date. With respect to any representation
or warranty which as of the Closing Date has required a supplement or amendment
to the Midland Disclosure Schedule to render such representation or warranty
true and correct as of the Closing Date, the representation and warranty shall
be deemed true and correct as of the Closing Date only if (i) the information
contained in the supplement or amendment to the Disclosure Schedule related to
events occurring following the execution of this Agreement and (ii) the facts
disclosed in such supplement or amendment would not either alone, or together
with any other supplements or amendments to the Midland Disclosure Schedule,
materially adversely effect the representation as to which the supplement or
amendment relates.
(b) Consents. Valley shall have received the written consents
of any person whose consent to the transactions contemplated hereby is required
under the applicable instrument.
(c) Opinion of Counsel. Valley shall have received an opinion
of counsel to Midland, dated the date of the Closing, in form and substance
reasonably satisfactory to Valley, covering the matters set forth on Schedule
6.2 hereto and any other matters reasonably requested by Valley.
(d) Bank Action. The Bank shall have taken all necessary
corporate action to effectuate the Bank Merger immediately following the
Effective Time.
(e) Certificates. Midland shall have furnished Valley with
such certificates of its officers or other documents to evidence fulfillment of
the conditions set forth in this Section 6.2 as Valley may reasonably request.
(f) Environmental Law Compliance. Midland shall have obtained,
with respect to each Facility, an LNA, a Remediation Agreement, a Negative
Declaration approval, a Remedial Action Workplan approval (in which event
Midland will post or have posted an appropriate Remediation Funding Source or
will have obtained the NJDEP's approval to self-guaranty any Remediation Funding
Source required under any such Remediation Agreement), a No Further Action
letter or other document or documents issued by the NJDEP advising that the
requirements of ISRA have been satisfied with respect to the Facility or an
opinion of the type referred to in Section 5.20(d) hereof.
6.3. Conditions to the Obligations of Midland Under this
Agreement. The obligations of Midland under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of Obligations
of Valley. The representations and warranties of Valley contained in this
Agreement shall be true and correct in all material respects on the Closing Date
as though made on and as of the Closing Date. Valley shall have performed in all
material respects, the agreements, covenants and obligations to be performed by
it prior to the Closing Date. With respect to any representation or warranty
which as of the Closing Date has required a supplement or amendment to the
Valley Disclosure Schedule to render such representation or warranty true and
correct as of the Closing Date, the representation and warranty shall be deemed
true and correct as of the Closing Date only if (i) the information contained in
the supplement or amendment to the Disclosure Schedule related to events
occurring following the execution of this Agreement and (ii) the facts disclosed
in such supplement or amendment would not either alone, or together with any
other supplements or amendments to the Valley Disclosure Schedule, materially
adversely effect the representation as to which the supplement or amendment
relates.
(b) Opinion of Counsel to Valley. Midland shall have received
an opinion of counsel to Valley, dated the date of the Closing, in form and
substance reasonably satisfactory to Midland, covering the matters set forth on
Schedule 6.3 hereto and any other matter reasonably requested by Midland.
(c) Fairness Opinion. Midland shall have received an opinion
from Capital Consultants as of the date of this Agreement and the date the Proxy
Statement/Prospectus is mailed to Midland's stockholders, to the effect that, in
its opinion, the consideration to be paid to stockholders of Midland hereunder
is fair to such stockholders from a financial point of view.
(d) Midland Directors and Officers. Valley and VNB each shall
have taken all action necessary to appoint Walter H. Jones III and Graham O.
Jones to its Board of Directors as specified in Section 5.15, VNB shall have
appointed Robert M. Meyer as a member of senior management of VNB and Valley
shall have assumed in writing the contract of Robert M. Meyer, all as provided
in Section 5.15.
(e) Certificates. Valley shall have furnished Midland with
such certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 6.3 as Midland may
reasonably request.
(f) VNB Action. VNB shall have taken all necessary corporate
action to effectuate the Bank Merger immediately following the Effective Time.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated prior to
the Effective Time, whether before or after approval of this Agreement by the
stockholders of Midland:
(a) By mutual written consent of the parties hereto.
(b) By Valley or Midland (i) if the Effective Time shall not
have occurred on or prior to April 30, 1997 or (ii) if a vote of the
stockholders of Midland is taken and such stockholders fail to approve this
Agreement at the meeting (or any adjournment thereof) held for such purpose,
unless in each case the failure of such occurrence shall be due to the failure
of the party seeking to terminate this Agreement to perform or observe its
agreements set forth herein to be performed or observed by such party (or, in
the case of Midland, to be performed or observed by the directors of Midland) at
or before the Effective Time.
(c) By Valley or Midland upon written notice to the other if
any application for regulatory or governmental approval necessary to consummate
the Merger and the other transactions contemplated hereby shall have been denied
or withdrawn at the request or recommendation of the applicable regulatory
agency or governmental authority or by Valley upon written notice to Midland if
any such application is approved with conditions which materially impair the
value of Midland and the Bank, taken as a whole, to Valley.
(d) By Valley if (i) there shall have occurred a material
adverse change in the business, operations, assets, or financial condition of
Midland or the Bank, taken as a whole, from that disclosed by Midland on the
date of this Agreement; or (ii) if at the Closing the stockholders equity of
Midland (prepared in accordance with GAAP consistently applied during the
periods involved, except that (A) intangibles and all merger related charges
which are anticipated to be expensed at the Effective Time shall be deducted
from stockholders equity, (B) the amount of dividends paid by Midland after the
date hereof in excess of the amount of dividends paid by Midland during the same
period a year ago shall be added to stockholders equity and (C) stockholders
equity shall be calculated without taking into account any changes (positive or
negative) in unrealized gain or loss on securities available for sale or
securities held in a trading account between June 30, 1996 and the Closing) is
less than the stockholders equity of Midland (less intangibles) reported in
Financial Statements for the period ended June 30, 1996; or (iii) there was a
material breach in any representation, warranty, covenant, agreement or
obligation of Midland hereunder.
(e) By Midland, if (i) there shall have occurred a material
adverse change in the business, operations, assets or financial condition of
Valley or VNB from that disclosed by Valley on the date of this Agreement; or
(ii) there was a material breach in any representation, warranty, covenant,
agreement or obligation of Valley hereunder.
(f) By Valley or Midland if any condition to Closing specified
under Article VI hereof applicable to such party cannot reasonably be met after
giving the other party a reasonable opportunity to cure any such condition.
(g) By Midland if (A) the Average Closing Price is less than
$19.50 and (B) Valley has not delivered a written notice to Midland unilaterally
agreeing to increase the Exchange Ratio such that the value (measured by the
Average Closing Price) of the number of shares of Valley Common Stock to be
exchanged for one share of Midland Common Stock in the Merger, based on the new
Exchange Ratio, is at least as high as the value would have been if the Exchange
Ratio were unchanged and the Average Closing Price were $19.50.
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either Valley or Midland pursuant to
Section 7.1, this Agreement shall forthwith become void and have no effect,
without any liability on the part of any party or its officers, directors or
stockholders, except that Sections 5.5(b) and 8.1 hereof shall have continuing
effect as set forth therein. Nothing contained herein, however, shall relieve
any party from any liability for any breach of this Agreement.
7.3. Amendment. This Agreement may be amended by mutual action
taken by the parties hereto at any time before or after adoption of this
Agreement by the stockholders of Midland but, after any such adoption, no
amendment shall be made which reduces or changes the amount or form of the
consideration to be delivered to the shareholders of Midland without the
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of Valley and Midland.
7.4. Extension; Waiver. The parties may, at any time prior to
the Effective Time of the Merger, (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party against which the waiver is
sought to be enforced.
ARTICLE VIII
MISCELLANEOUS
8.1. Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby (including legal,
accounting and investment banking fees and expenses) shall be borne by the party
incurring such costs and expenses, except that the cost of printing and mailing
the Proxy Statement/Prospectus shall be borne equally by the parties hereto if
the transaction is terminated.
8.2. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by telecopier with confirming copy sent the same day by
registered or certified mail, postage prepaid, as follows:
(a) If to Valley, to:
Valley National Bancorp
1445 Valley Road
Wayne, New Jersey 07474-0558
Attn.: Gerald H. Lipkin
Chairman and Chief Executive Officer
Telecopier No. (201) 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. (201) 966-1550
(b) If to Midland, to:
Midland Bancorporation, Inc.
80 East Ridgewood Avenue
Paramus, New Jersey 07652-3661
Attn.: Robert M. Meyer
President and Chief Executive Officer
Telecopier No. (201) 599-0785
Copy to:
Herbert H. Davis III
Rothgerber, Appel, Powers & Johnson LLP
One Tabor Center, Suite 3000
1200 Seventeenth Street
Denver, Colorado 80202
Telecopier No. 303-623-9222
or such other addresses as shall be furnished in writing by
any party, and any such notice or communications shall be deemed to have been
given as of the date so delivered or telecopied and mailed.
8.3. Parties in Interest. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement, except for the indemnitees
covered by Section 5.14 hereof. No assignment of this Agreement may be made
except upon the written consent of the other parties hereto.
8.4. Entire Agreement. This Agreement, the Disclosure
Schedules hereto and the other documents, agreements and instruments executed
and delivered pursuant to or in connection with this Agreement, contains the
entire agreement between the parties hereto with respect to the transactions
contemplated by this Agreement and supersedes all prior negotiations,
arrangements or understandings, written or oral, with respect thereto. If any
provision of this Agreement is found invalid, it shall be considered deleted and
shall not invalidate the remaining provisions.
8.5. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
8.6. Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey, without giving effect to the principles of
conflicts of laws thereof.
8.7. Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
8.8. Survival. All representations, warranties and, except to
the extent specifically provided otherwise herein, agreements and covenants,
other than those agreements and covenants set forth in Sections 5.14 and 5.18
which shall survive the Merger, shall terminate as of the Effective Time.
8.9. Knowledge. Representations made herein which are
qualified by the phrase to the best of Midland's knowledge or similar phrases
refer as of the date hereof to the best knowledge of the Chief Executive Officer
and the Chief Lending Officer of Midland and thereafter refer to the best
knowledge of any senior officer of Midland or any Midland subsidiary.
Representations made herein which are qualified by the phrase to the best of
Valley's knowledge or similar phrases refer as of the date hereof to the best
knowledge of the President and Chief Executive Officer, the Executive Vice
President/Legal and the Chief Financial Officer of Valley and thereafter refer
to the best knowledge of any senior officer of Valley or any Valley subsidiary.
IN WITNESS WHEREOF, Valley, VNB, the Bank and Midland have
caused this Agreement to be executed by their duly authorized officers as of the
day and year first above written.
ATTEST: VALLEY NATIONAL BANCORP
By:
- --------------------------
, Secretary Gerald H. Lipkin, Chairman, President
and Chief Executive Officer
ATTEST: MIDLAND BANCORPORATION, INC.
- -------------------------- By:
, Secretary Robert M. Meyer, President
and Chief Executive Officer
ATTEST: VALLEY NATIONAL BANK
- -------------------------- By:
, Cashier Gerald H. Lipkin, Chairman, President
and Chief Executive Officer
ATTEST: MIDLAND BANK
- -------------------------- By:
, Secretary Robert M. Meyer, President
and Chief Executive Officer
<PAGE>
CERTIFICATE OF NORWOOD ASSOCIATES II
Reference is made to the Agreement and Plan of Merger, dated
as of September 13, 1996 (the "Agreement"), among Valley National Bancorp,
Valley National Bank, Inc. Midland Bancorporation, Inc. and Midland Bank.
Capitalized terms used herein have the meanings given to them in the Agreement.
Each of the following persons, being all of the owners of
Norwood Associates II, agrees to vote or cause to be voted all shares of Midland
Common Stock which are held by such person, or over which such person exercises
full voting control, in favor of the Merger.
/s/--------------------------
/s/--------------------------
/s/--------------------------
/s/--------------------------
/s/--------------------------
/s/--------------------------
/s/--------------------------
/s/--------------------------
<PAGE>
EXHIBIT A
AGREEMENT TO MERGE BETWEEN
VALLEY NATIONAL BANK
AND
MIDLAND BANK
UNDER THE CHARTER OF VALLEY NATIONAL BANK,
UNDER THE TITLE OF VALLEY NATIONAL BANK
THIS AGREEMENT made between Valley National Bank (hereinafter
referred to as "VNB"), a national banking association organized under the laws
of the United States, being located at 615 Main Avenue, Passaic, County of
Passaic, in the State of New Jersey, with a capital of $------------ divided
into ------------ shares of common stock, each of $5.00 par value, $------------
of surplus, and undivided profits of $------------, as of June 30, 1996, and
Midland Bank (hereinafter referred to as "Midland"), a commercial bank organized
under the laws of the State of New Jersey, being located at -------------------,
County of Bergen, in the State of New Jersey, with a capital of $------------,
divided into -------- shares of common stock, each of $------ par value, surplus
of $-----------, and undivided profits of $---------, as of June 30, 1996, each
acting pursuant to a resolution of its board of directors, adopted by the vote
of a majority of its directors, pursuant to the authority given by and in
accordance with the provisions of the Act of November 7, 1918, as amended (12
U.S.C. Section 215(a)), and the New Jersey Banking Act of 1948, as amended,
witnesseth as follows:
Section 1. Midland shall be merged into VNB under the charter
of VNB.
Section 2. The name of the receiving association (hereinafter
referred to as the "association") shall be Valley National Bank.
Section 3. The business of the association shall be that of a
national banking association. This business shall be conducted by the
association at its main office which shall be located at 615 Main Avenue,
Passaic, New Jersey, and at its legally established branches.
Section 4. The amount of capital stock of the association
shall be $--------------, divided into ------------ shares of common stock, each
of $5.00 par value, and at the time merger shall become effective, the
association shall have a surplus of $------------, and undivided profits,
including capital reserves, which when combined with the capital and surplus
will be equal to the combined capital structures of the merging banks as stated
in the preamble of this Agreement, adjusted however, for normal earnings and
expenses between June 30, 1996, and the effective time of the merger.
Section 5. All assets of each of the merging banks, as they
exist at the effective time of the merger, shall pass to and vest in the
association without any conveyance or other transfer. The association shall be
responsible for all of the liabilities of every kind and description, including
liabilities arising from the operation of their respective trust departments, of
each of the merging banks existing as of the effective time of the merger. After
the effective time of the merger, VNB will continue to maintain the Midland
liquidation account established by Midland upon its conversion to the stock form
of organization for the benefit of eligible account holders on the same basis as
immediately prior to the effective time of the merger, and Midland's liquidation
account for the benefit of eligible account holder shall automatically be deemed
assumed by VNB, as of the effective time of the merger, on the same basis as it
existed immediately prior to the effective time of the merger.
Section 6. Midland shall contribute to the association its
capital set forth in the preamble, adjusted, however, for normal earnings,
expenses and dividends between June 30, 1996, and the effective time of the
merger.
VNB shall have on hand at the effective time of the merger its
capital as set forth in the preamble, adjusted, however, for normal earnings,
expenses and dividends between June 30, 1996 and the effective date of the
merger.
Section 7. The shareholder of VNB shall retain its rights in
the capital stock presently outstanding, which shall immediately and
automatically become ------------ shares of common stock of the association,
each with $5.00 par value, and the shareholder of Midland in exchange for the
excess acceptable assets contributed by its bank to the association shall be
entitled to receive ----------- shares of common stock of the association, each
with $5.00 par value.
Section 8. Neither of the banks shall declare nor pay any
dividend to its shareholder between the date of this Agreement and the time at
which the merger shall become effective, nor dispose of any of its assets in any
other manner except in the ordinary course of business consistent with prudent
banking practice. Provided, however, that VNB shall be entitled to pay dividends
to its parent without restriction and Midland may pay dividends consistent with
past practice (but increased in order to allow equivalent dividends to be paid
by Midland in accordance with the Merger Agreement (as defined below)), in each
case, so long as the payment of such dividend shall thereby not cause a breach
of any representation, covenant, agreement or condition to which such party is
subject under the Agreement and Plan of Merger, dated as of September 13, 1996,
among Valley National Bancorp, Midland Bancorporation, Inc., VNB and Midland
(the "Merger Agreement").
Section 9. The present board of directors of VNB shall serve
as the board of directors of the association until the next annual meeting or
until such time as their successors have been elected and have qualified.
Section 10. Effective as of the time this merger shall become
effective as specified in the merger approval to be issued by the Comptroller of
the Currency, the articles of association of the resulting bank shall read in
their entirety as set forth in Schedule 1 annexed hereto.
Section 11. This Agreement shall be terminated automatically
if the Merger Agreement is terminated as provided in the Merger Agreement.
Section 12. This Agreement shall be ratified and confirmed by
the affirmative vote of the shareholders of each of the merging banks owning at
least two-thirds of its capital stock outstanding, at a meeting to be held on
the call of the directors; and the merger shall become effective at the time
specified in the merger approval to be issued by the Comptroller of the Currency
of the United States.
Section 13. Each of the representations, warranties and
covenants of the parties hereto shall terminate as of the effective time of the
merger, other than the second paragraph of Section 5 hereof which shall survive
the effective time of the merger.
Section 14. This Agreement may be executed in any number of
counterparts, and each counterpart shall constitute an original instrument, but
all such separate counterparts shall constitute only one and the same
instrument.
Section 15. Except as governed by federal law, the validity,
construction and enforceability of this Agreement shall be governed in all
respects by the laws of the State of New Jersey without regard to its conflicts
of laws or rules.
WITNESS, the signatures and seals of the merging banks this
_____ day of September, 1996, each set by its president or a vice president and
attested to by its cashier or secretary, pursuant to a resolution of its board
of directors, acting by a majority.
ATTEST: VALLEY NATIONAL BANK
- ---------------------- By:------------------------------------
, Cashier Gerald H. Lipkin, Chairman, President
and Chief Executive Officer
ATTEST: MIDLAND BANK
- --------------------- By:------------------------------------
, Secretary Robert M. Meyer, President
and Chief Executive Officer
<PAGE>
STATE OF NEW JERSEY )
: ss.
COUNTY OF PASSAIC )
On this ------ day of September, 1996, before me, a Notary
Public for this state and county, personally came Gerald H. Lipkin, as Chairman
and Chief Executive Officer, and ----------- --------------------------, as
Cashier of VALLEY NATIONAL BANK, and each of his/her capacity acknowledged this
instrument to the act and deed of the association and the seal affixed to it to
be its seal.
WITNESS my official seal and signature this day and year.
----------------------------
(Seal of Notary)
<PAGE>
STATE OF NEW JERSEY )
:ss.
COUNTY OF BERGEN )
On this ----- day of September, 1996, before me, a Notary
Public for this state and county, personally came -----------------------, as
President and Chief Executive Officer, and -----------
- -------------------------, as Secretary of MIDLAND BANK, and each of his/her
capacity acknowledged this instrument to the act and deed of the association and
the seal affixed to it to be its seal.
WITNESS my official seal and signature this day and year.
----------------------------
(Seal of Notary)
<PAGE>
Schedule 1
ARTICLES OF ASSOCIATION
OF
VALLEY NATIONAL BANK1
NAME
FIRST. The title of the Association shall be "Valley National
Bank".
MAIN OFFICE
SECOND. The main office of the Association shall be in the
City of Passaic, County of Passaic, State of New Jersey. The general business of
the Association shall be conducted at its main office and its branches.
DIRECTORS
THIRD. The Board of Directors of this Association shall
consist of not less than five nor more than twenty-five directors the exact
number to be fixed and determined from time to time by resolution of a majority
of the full Board of Directors or by resolution of the shareholders at any
annual or special meeting thereof. Each director shall own $1,000 equity
interest in this Association or in a company which as control of the
Association. The amount of the equity interest shall meet this requirement if it
conforms to the requirements of 12 U.S.C. 72, as amended on March 31, 1980, or
as amended from time to time thereafter. Any vacancy in the Board of Directors
may be filled by action of the Board of Directors.
ANNUAL MEETING OF SHAREHOLDERS
FOURTH. There shall be an annual meeting of the shareholders,
the purpose of which shall be the election of Directors and the transaction of
whatever other business may be brought before the meeting. The meeting shall be
held at the main office of the Association or any other convenient place as the
Board of Directors may designate, on the date of each year specified therefor in
the By-laws, but if no election is held on that day, it may be held on any
subsequent day according to such lawful rules as may be prescribed by the Board
of Directors.
Nominations for election to the Board of Directors may be made
by the Board of Directors or by any stockholder of any outstanding class of
capital stock of the Association entitled to vote for election of directors.
Nominations other than those made by or on behalf of the existing management of
the Association, shall be made in writing and shall be delivered or mailed to
the President of the Association and to the Comptroller of the Currency,
Washington, D.C., not less than 14 days nor more than 50 days prior to any
meeting of stockholders called for the election of directors; provided, however,
that if less than 21 days' notice of the meeting is given to shareholders, such
nominations shall be mailed or delivered to the President of the Association and
to the Comptroller of the Currency not later than the close of business on the
seventh day following the day on which the notice of meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the Association that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the Association owned by the
notifying shareholder. Nominations not made in accordance herewith may be
disregarded by the Chairman of the meeting, in his discretion, and upon his
instructions the vote tellers may disregard all votes cast for each such
nominee.
CAPITAL
FIFTH. The authorized amount of capital stock of this
Association shall be ------------- shares of common stock of the par value of
five dollars ($5.00) each; but said capital stock may be increased or decreased
from time to time, in accordance with the provisions of the laws of the United
States.
No holder of shares of the capital stock of any class of the
Association shall have any pre-emptive or preferential right of subscription to
(i) any shares of any class of stock of the Association, whether now or
hereafter authorized, or (ii) to any obligations convertible into stock of the
Association, or (iii) to any right of subscription to any of the foregoing;
except any of the foregoing rights which the Board of Directors, in its sole
discretion may from time to time determine and at such price as the Board of
Directors may from time to time fix.
The Association, at any time and from time to time, may
authorize and issue debt obligations, whether or not subordinated, without the
approval of the shareholders.
OFFICERS
SIXTH. The Board of Directors shall appoint one of its members
President of this Association, who shall be Chairman of the Board, unless the
Board appoints another director to be the Chairman. The Board of Directors shall
have the power to appoint one or more Vice Presidents; and to appoint a Cashier
and such other officers and employees as may be required to transact the
business of this Association.
The Board of Directors shall have the power to define the
duties of the officers and employees of the Association; to fix the salaries to
be paid to them; to dismiss them; to require bonds from them and to fix the
penalty thereof; to regulate the manner in which any increase of the capital of
the Association shall be made; to manage and administer the business and affairs
of the Association; to make all By-Laws that it may be lawful for them to make;
and generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
CHANGE OF MAIN OFFICE; BRANCHES
SEVENTH. The Board of Directors shall have the power, without
shareholder approval, to change the location of the main office to any other
authorized branch location within the limits of the City of Passaic and to
establish or change the location of any branch or branches of the Association.
Any change in the location of the main office to another authorized branch
location within the City of Passaic shall be effected upon written notice to the
Comptroller of the Currency. Any change in the location of the Main Office,
except to an authorized branch location within the City of Passaic, shall
require both the approval of the Comptroller of the Currency and the approval of
shareholders owning two-thirds of the stock of the Association and any such
change shall be to a place not more than 30 miles from the city limits of the
City of Passaic.
EXISTENCE
EIGHTH. The corporate existence of this Association shall
continue until terminated in accordance with the laws of the United States.
SPECIAL MEETINGS OF SHAREHOLDERS; NOTICE OF MEETINGS
NINTH. The Board of Directors of this Association, or any one
or more shareholders owning, in the aggregate, not less than ten percent of the
stock of this Association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place, and purpose of every annual and special meeting of the
shareholders shall be given by first-class mail, postage prepaid, mailed at
least ten days prior to the date of such meeting to each shareholder of record
at his address as shown upon the books of this Association.
INDEMNIFICATION
TENTH. Any person, his heirs, executors or administrators, may
be indemnified or reimbursed by the Association for liability and reasonable
expenses, including amounts paid in settlement or in satisfaction of judgments
or as fines and/or penalties, actually incurred in connection with any action,
suit or proceeding, civil or criminal, to which he or they shall be involved or
threatened to be involved, as a party, or otherwise, by reason of his being or
having been a director, officer, or employee of the Association or of any firm,
corporation or organization which he served in any such capacity at the request
of the Association. Provided, however, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit or proceeding as to
which he shall finally be adjudged to have been guilty of or liable for gross
negligence, willful misconduct or criminal acts in the performance of his duties
to the Association; and, provided further, that no person shall be so
indemnified or reimbursed in relation to any matter in such action, suit, or
proceeding which has been made the subject of a compromise settlement except
with: (i) the approval of a court of competent jurisdiction or; (ii) the holders
of record of a majority of the outstanding voting shares of the Association; or
(iii) the Board of Directors acting by vote of directors not parties to the same
or substantially the same action, suit, or proceeding, constituting a majority
of the whole number of directors. The foregoing right of indemnification or
reimbursement shall not be exclusive of other rights to which such persons, his
heirs, executors or administrators, may be entitled as a matter of law.
The Association may, upon the affirmative vote of a majority
of its Board of Directors, purchase insurance for the purpose of indemnifying
its directors, officers and other employees to the extent that such
indemnifications are allowed in the preceding paragraph. Such insurance may, but
need not, be for the benefit of all directors, officers or employees.
AMENDMENTS
ELEVENTH. These Articles of Association may be amended at any
regular or special meeting of the shareholders by the affirmative vote of the
holders of a majority of the stock of this Association, unless the vote of the
holders of a greater amount of stock is required by law, and in that case by the
vote of the holders of such greater amount.
Exhibit (3)
STOCK OPTION AGREEMENT
DATED SEPTEMBER 13, 1996
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated September 13,
1996, is by and between Valley National Bancorp, a New Jersey corporation and
registered bank holding company ("Valley"), and Midland Bancorporation, Inc. a
New Jersey corporation ("Midland") and registered bank holding company for
Midland Bank ("Bank").
BACKGROUND
1. Valley, Midland, the Bank and Valley Bank ("Valley 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 Midland through a merger of Midland 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, Midland has
agreed to grant to Valley an option to purchase authorized but unissued shares
of common stock of Midland 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 Midland,
intending to be legally bound hereby, agree:
1. Grant of Option. Midland hereby grants to Valley the option
to purchase 35,000 shares (the "Option Shares") of Midland's common stock,
$15.00 par value ("Common Stock") at an exercise price of $301.00 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 in accordance with the terms and conditions
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; provided, however, that the continuing
ownership by a person or group which as of the date hereof owns more than 20% of
the outstanding Common Stock shall not constitute a Triggering Event;
b. enters into a written letter of intent or an agreement
with Midland pursuant to which such person or any affiliate of such person would
(i) merge or consolidate, or enter into any similar transaction with Midland or
Midland Bank, (ii) acquire all or a significant portion of the assets or
liabilities of Midland or Midland Bank, 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 Midland or any other business combination involving
Midland or Midland 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, 20% 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 Midland called to vote on the Merger and
Midland 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, Midland willfully takes any action in
any manner which would materially interfere with its ability to consummate the
Merger or materially reduce the value of the Merger to Valley.
The term "Triggering Event" also means the taking of any
direct or indirect action by Midland 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 Common Stock, a merger, consolidation, plan of exchange,
plan of acquisition or reorganization of Midland or Midland Bank, or a sale of
shares of Common Stock or stock of Midland Bank or any significant portion of
the assets or liabilities of Midland or Midland Bank.
The term "significant portion" means 20% of the assets or
liabilities of Midland.
"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 Midland 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 Midland 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.
Midland 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 Midland shall not be a condition to the right of Valley
to exercise the Option. Midland will not take any action which would have the
effect of preventing or disabling Midland 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 Midland (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.
3. Payment and Delivery of Certificates. At any Closing
hereunder (a) Valley will make payment to Midland of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by Midland, (b) Midland 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 Midland, 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 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 Midland Bancorporation,
Inc., 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, Midland
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 Midland 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 further provided that Midland 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 Midland.
In connection with such filing, Midland 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 Midland 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 Midland and blue sky fees and expenses shall be paid by Valley.
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, Midland 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 Midland or alleged untrue statement
with respect to Midland of any material fact with respect to Midland contained
in any preliminary or final registration statement or any amendment or
supplement thereto, or arise out of a material fact with respect to Midland
required to be stated therein or necessary to make the statements therein with
respect to Midland not misleading; and Midland 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 Midland 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 specifically for use in the preparation
thereof. Valley will indemnify and hold harmless Midland 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 Midland for any legal
or other expense reasonably incurred by Midland 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 reclassification of
the Common Stock, or any consolidation, merger or similar transaction of Midland
with another entity, or in the event any sale of all or substantially all of the
assets of Midland 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 Midland 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
Midland 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 Midland. Midland hereby
represents and warrants to Valley as follows:
a. Due Authorization. Midland 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 Midland.
b. Authorized Shares. Midland 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 Midland or, to its
knowledge, any agreement, instrument, judgment, decree, statute, rule or order
applicable to Midland.
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 Midland 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
1445 Valley Road
Wayne, New Jersey 07474-0558
Attn.: Gerald H. Lipkin
Chairman and Chief Executive Officer
Telecopier No. (201) 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. (201) 966-1550
If to Midland, to:
Midland Bancorporation, Inc.
80 East Ridgewood Avenue
Paramus, New Jersey 07653
Attn.: Robert M. Meyer
President and Chief Executive Officer
Telecopier No. (201) 599-0785
Copy to:
Herbert H. Davis III
Rothgerber, Appel, Powers & Johnson LLP
One Tabor Center, Suite 3000
1200 Seventeenth Street
Denver, Colorado 80202
Telecopier No. 303-623-9222
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 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.
MIDLAND BANCORPORATION, INC.
By: /S/ ROBERT M. MEYER
-------------------------------
Robert M. Meyer, President and
Chief Executive Officer
VALLEY NATIONAL BANCORP
By: /S/ GERALD H. LIPKIN
-------------------------------
Gerald H. Lipkin, Chairman, President
and Chief Executive Officer
Exhibit (4)
NEWS RELEASE
FOR: Valley National Bancorp Contact: Alan Eskow
1455 Valley Road (201) 305-4003
Wayne, NJ 47474
For Immediate Release: September 18, 1996
WAYNE, NJ -- The Board of Directors of Valley National Bancorp previously
authorized on February 21, 1996, the repurchase of up to 1,000,000 shares of the
company's outstanding stock. Repurchased shares as of September 17, 1996
amounted to 770,860 of which 314,888 are treasury shares and 229,140 shares have
not been repurchased as of this date. The Board rescinded on September 17, 1996
the authorization for the Company to repurchase the 229,140 shares remaining.
Exhibit (5)
SUPPLEMENTAL MATERIALS
(THESE MATERIALS ARE DATED SEPTEMBER 18, 1996,
HAVE NOT BEEN REVISED SINCE THAT DATE, AND
VALLEY IS NOT OBLIGATED TO UPDATE THESE
MATERIALS IN LIGHT OF SUBSEQUENT DEVELOPMENTS.)
The attached information is being provided as a supplement to the Press Release
issued September 13, 1996 regarding the merger between Valley National Bancorp
and Midland Bancorporation, Inc.
This information should be read in conjunction with the press release and when
released the Form S-4 filed by Valley in connection with Midland Bancorporation,
as well as the information about Midland Bancorporation contained in the S-4.
The following materials include forward-looking statements with respect to
anticipated cost savings, anticipated revenue enhancements and the anticipated
earnings impact from Valley National Bancorp's planned acquisition of Midland
Bancorporation. Each of these is a forward-looking statement, as that term is
used in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements do not constitute historical facts and involve risks
and uncertainties, including, but not limited to, the possibility that the
anticipated cost savings from Midland could be less than stated, revenue
enhancements might not be realized, other elements of the income statement of
Midland could be adversely impacted by the acquisition, expenses arising from
the acquisition will include certain one-time charges which, in the period
immediately following the acquisition may adversely impact Valley's income,
Valley may incur unanticipated costs and additional expenses due to the Midland
acquisition, as well as the possibility that expenses and income could be
adversely affected by general economic conditions or adverse changes in the
interest rate environment. Actual results may differ materially from the
following estimates and projections.
STRATEGIC IMPORTANCE TO VALLEY
Midland's branches are all in Bergen County, NJ, one of the most
affluent and densely populated areas in the United States
In-market transaction with substantial cost savings
No duplication of branch locations - Bergen County branch
locations increase from 17 to 30
Midland is an excellent franchise with 28% non-interest bearing
deposits and a net interest margin at 5.4%
Midland Bank has high non-interest expense totaling $15 million
annually
Transaction becomes accretive to Valley's income with
approximately $3.2 million, after tax, in cost savings or income
enhancements. Additional cost savings or income enhancements have
been identified.
COST SAVINGS
Midland operates with an efficiency ratio of 66% and non-interest expenses of
approximately $15 million annually. The following are some of the expected cost
savings and income enhancements resulting from the transaction within one year
following consummation:
Midland Bank/Valley National Bank Estimated Cost Savings
Marketing and Public Relations $ 450,000
Insurance 200,000
Professional Services 300,000
Directors Fees 125,000
* Data Processing & Bookkeeping 2,000,000
Examinations 120,000
* Non-Data Processing & Bookkeeping
Salary Savings (15%) 1,200,000
Other Expenses 400,000
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Total $4,795,000
Income Enhancements
Investment Account (average maturity
18 mos. - average yield under 5.25%) 2,000,000
* Includes consolidation of staff at Valley and Midland
