AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 5,
2000 (this "Agreement"), is among Valley National Bancorp, a New Jersey
corporation and registered bank holding company ("Valley"), Valley National
Bank, a national banking association ("VNB"), Merchants New York Bancorp, Inc.,
a Delaware corporation and registered bank holding company ("Merchants") and The
Merchants Bank of New York, a New York state-chartered commercial bank (the
"Bank").
RECITALS
Valley desires to acquire Merchants and Merchants' Board of
Directors has determined, based upon the terms and conditions hereinafter set
forth, that the acquisition is in the best interests of Merchants and its
stockholders. The acquisition will be accomplished by merging Merchants 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 Merchants stockholders
receiving the consideration hereinafter set forth. The Boards of Directors of
Merchants, Valley, the Bank and VNB have duly adopted and approved this
Agreement and the respective Boards of Directors of Valley and Merchants each
has directed that it be submitted to its stockholders for approval.
As a condition precedent to entering into this Agreement,
Valley has required that Merchants grant it an option to purchase certain
authorized but unissued shares of Merchants common stock and, as a consequence,
Valley and Merchants 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), Merchants shall be
merged with and into Valley (the "Merger") in accordance with the Delaware
General Corporation Law (the "DGCL") and the New Jersey Business Corporation Act
("NJBCA") 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, the
Surviving Corporation shall be considered the same business and corporate entity
as each of Valley and Merchants and thereupon and thereafter, all the property,
rights, privileges, powers and franchises of each of Valley and Merchants 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 Valley and Merchants and shall have succeeded to all of each
of their relationships, as fully and to the same extent as if such property,
rights, privileges, powers, franchises, debts, liabilities, obligations, duties
and relationships had been originally acquired, incurred or entered into by the
Surviving Corporation. In addition, any reference to either of Valley or
Merchants in any contract or document, whether executed or taking effect before
or after the Effective Time, shall be considered a reference to the Surviving
Corporation if not inconsistent with the other provisions of the contract or
document; and any pending action or other judicial proceeding to which either of
Valley or Merchants is a party shall not be deemed to have abated or to have
discontinued by reason of the Merger, but may be prosecuted to final judgment,
order or decree in the same manner as if the Merger had not occurred; or the
Surviving Corporation may be substituted as a party to such action or
proceeding, and any judgment, order or decree may be rendered for or against it
that might have been rendered for or against either of Valley or Merchants if
the Merger had not occurred.
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 addition provided for in Section 5.20
hereof.
1.6 Closing Date, Closing and Effective Time. Unless a
different date, time and/or place are agreed to by the parties hereto, the
closing of the Merger (the "Closing") shall take place at 10:00 a.m., at the
offices of Valley, 1455 Valley Road, Wayne, New Jersey, on a date (the "Closing
Date") which shall be within ten business days 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 all 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), with the exact date
determined by Valley upon written notice to Merchants (the "Closing Notice").
Simultaneous with or immediately following the Closing, Valley and Merchants
shall cause to be filed certificates of merger, in form and substance
satisfactory to Valley and Merchants, with the Secretary of State of the State
of New Jersey (the "New Jersey Certificate of Merger") and with the Secretary of
State of the State of Delaware (the "Delaware Certificate of Merger"). The New
Jersey Certificate of Merger and the Delaware Certificate of Merger shall
specify as the "Effective Time" of the Merger a date and time following the
Closing agreed to by Valley and Merchants (which date and time the parties
currently anticipate will be the close of business on the Closing Date). In the
event the parties fail to specify the date and time in the merger certificates,
the Merger shall become effective upon (and the "Effective Time" shall be) the
later of the filing of the New Jersey Certificate of Merger and the Delaware
Certificate of Merger.
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, to the extent
applicable, New York Banking Law (the "NY Banking Law") and the regulations of
the New York Department of Banking (the "Department"), 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, privileges, 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, the officers and employees of VNB and the officers
and employees of the Bank shall be the officers and employees of the Surviving
Bank with such additions as officers as the Board of Directors of VNB shall
determine, and the directors of VNB shall be the directors of the Surviving
Bank, with, in the case of directors, the additions provided for in Section 5.20
hereof. 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 substantially the form of Exhibit A, annexed hereto, for delivery
to the Office of the Comptroller of the Currency ("OCC") and the Department for
approval of the Bank Merger.
ARTICLE II
CONVERSION OF MERCHANTS COMMON STOCK AND OPTIONS
Each share of common stock, $.001 par value per share, of
Merchants ("Merchants Common Stock"), issued and outstanding immediately prior
to the Effective Time, and each option to purchase shares of Merchants Common
Stock validly issued pursuant to the Merchants Employee Stock Option Plan (the
"Merchants Employee Option Plan") and outstanding immediately prior to the
Effective Time (each a "Merchants Option" and collectively, the "Merchants
Options") shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted or cancelled at the Effective Time in
accordance with this Article II.
2.1 Conversion of Merchants Common Stock; Exchange Ratio; Cash
in Lieu of Fractional Shares. Each share of Merchants Common Stock issued and
outstanding immediately prior to the Effective Time, other than shares to be
cancelled pursuant to Section 2.4 hereof, shall be converted into the right to
receive .7634 (the "Exchange Ratio") shares of Common Stock, no par value, of
Valley ("Valley Common Stock"), subject to adjustment as set forth in Section
2.6 below. No fractional shares of Valley Common Stock will be issued, and in
lieu thereof, each holder of Merchants 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 Pre-Closing Price of Valley
Common Stock. "Average Pre-Closing Price of Valley Common Stock" means the
average of the Closing Prices of Valley Common Stock for the ten consecutive
full trading days in which such shares are quoted on the New York Stock Exchange
(the "NYSE") ending with (and including) the Determination Date. "Closing Price"
of Valley Common Stock means the daily closing sales price of such stock as
reported on the NYSE (as reported in The Wall Street Journal or, if not reported
thereby, another authoritative source as chosen by Valley). "Determination Date"
means the date five business days prior to the Closing.
2.2. Exchange of Shares.
(a) Merchants and Valley hereby appoint American
Stock Transfer and Trust Company as the exchange agent (the "Exchange Agent")
for purposes of effecting the conversion of Merchants Common Stock and Merchants
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 Merchants 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 Certificates 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 Certificates 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 Certificates 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 stockholders 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 Merchants of the shares of Merchants
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
Certificates surrendered in exchange therefor is registered, it shall be a
condition of such payment that the Certificates 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 Certificates 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 Merchants Option
Valley shall, after the Effective Time, distribute to the Optionee an amendment
to the option grant evidencing the conversion of the grant to an option to
purchase Valley Common Stock in accordance with Section 2.7 hereof.
2.3. No Dissenters' Rights. Consistent with the provisions of
the DGCL, no stockholder of Merchants shall have appraisal rights with respect
to the Merger.
2.4. Cancelled Shares. Each share of Merchants Common Stock
(i) which is held by Merchants as treasury stock or (ii) which is held by the
Bank or any other direct or indirect subsidiary of the 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.
2.6 Anti-Dilution Adjustments. The Exchange Ratio and the
Average Pre-Closing Price of Valley Common Stock 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.
2.7. Merchants Stock Options. At the Effective Time, each
outstanding Merchants Option granted to an eligible individual (an "Optionee")
under the Merchants Employee Option Plan shall be converted into an option to
purchase Valley Common Stock (a "Stock Option"), wherein (x) the right to
purchase shares of Merchants Common Stock pursuant to the Merchants 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 Merchants 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 Merchants 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. Shares of Valley Common Stock issuable upon exercise of Stock Options
shall be covered by an effective registration statement on Form S-8, and Valley
shall file a registration statement on Form S-8 covering such shares as soon as
practicable after the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MERCHANTS
References herein to "Merchants 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
Merchants to Valley or will be delivered pursuant to Section 5.11(a) by
Merchants to Valley. Disclosure of an item in one section of the Merchants
Disclosure Schedule will be considered disclosure for purposes of all sections
thereof, except where this Agreement specifies that the item must be referenced
in a particular section of the Merchants Disclosure Schedule. Merchants hereby
represents and warrants to Valley as follows:
3.1. Corporate Organization.
(a) Merchants is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Merchants
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 Merchants on a consolidated basis. Merchants is registered as a
bank holding company under the Bank Holding Company Act of 1956, as amended (the
"BHCA").
(b) All of the Subsidiaries of Merchants are listed in the
Merchants Disclosure Schedule. The term "Subsidiary", when used in this
Agreement with respect to Merchants, means any corporation, joint venture,
association, partnership, trust or other entity in which Merchants has, directly
or indirectly at least a 50% interest or acts as a general partner. Each
Subsidiary of Merchants is duly organized, validly existing and in good standing
under the laws of its state of incorporation. The Bank is a commercial bank
chartered under the laws of the State of New York whose deposits are insured by
Bank Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation
("FDIC") to the fullest extent permitted by law. Each Subsidiary of Merchants
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 Merchants and its Subsidiaries on a consolidated basis. The
Merchants Disclosure Schedule sets forth true and complete copies of the
Certificates of Incorporation or Charter, as the case may be, and Bylaws of
Merchants and each Merchants Subsidiary as in effect on the date hereof. Except
as set forth in the Merchants Disclosure Schedule, Merchants 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 Merchants consists of
40,000,000 shares of Merchants Common Stock. As of the date hereof, there were
19,978,664 shares of Merchants Common Stock issued and outstanding, and
1,333,176 shares issued and held in the treasury. As of the date hereof, there
were 127,162 shares of Merchants Common Stock issuable upon exercise of
outstanding Merchants Options (the "Option Shares") granted to directors,
officers and employees of Merchants or the Bank pursuant to the Merchants
Employee Option Plan. The Merchants Disclosure Schedule sets forth (i) all
options which may be exercised for issuance of Merchants Common Stock and the
terms upon which the options may be exercised, and (ii) true and complete copies
of each of the Merchants Employee Option Plan and a specimen of each form of
agreement pursuant to which any outstanding stock option was granted, including
a list of each outstanding stock option issued pursuant thereto. All issued and
outstanding shares of Merchants Common Stock, and all issued and outstanding
shares of capital stock of each Merchants Subsidiary, have been duly authorized
and validly issued, are fully paid, and nonassessable. The authorized capital
stock of the Bank consists of 4,729,546 shares of common stock, $1.40 par value.
As of the date hereof, there were 2,482,172 shares of Bank common stock
outstanding. All of the outstanding shares of capital stock of each Merchants
Subsidiary are owned by Merchants and are free and clear of any liens,
encumbrances, charges, restrictions or rights of third parties. Except for the
Merchants Options and the Valley Stock Option, neither Merchants nor any
Merchants 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 Merchants or
any Merchants 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 stockholders of Merchants, and subject
to the parties obtaining all necessary regulatory approvals, Merchants 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 Merchants 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
Merchants or the Bank are necessary to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Merchants and the Bank, and constitutes valid and binding obligations of
Merchants and the Bank, enforceable against Merchants and the Bank in accordance
with its terms.
(b) Neither the execution and delivery of this Agreement by
Merchants and the Bank, nor the consummation by Merchants and the Bank of the
transactions contemplated hereby in accordance with the terms hereof, or
compliance by Merchants and the Bank with any of the terms or provisions hereof,
will (i) violate any provision of Merchants' or the Bank's Certificates of
Incorporation 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 Merchants or the Bank
or any of their respective properties or assets, or (iii) except as set forth in
the Merchants 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 Merchants 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 Merchants
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 Merchants 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 OCC, the Department, the Board of Governors of the Federal
Reserve System ("FRB"), the Securities and Exchange Commission ("SEC"),
applicable state securities bureaus or commissions, the Delaware Secretary of
State and the stockholders of Merchants, 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 Merchants or the Bank in connection with
(x) the execution and delivery by Merchants and the Bank of this Agreement and
(y) the consummation by Merchants 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) Merchants' Annual Reports on Form 10-K filed with the SEC
under the Securities and Exchange Act of 1934, as amended (the "1934 Act") and
available on the SEC's EDGAR system set forth the consolidated statements of
condition of Merchants as of December 31, 1999, 1998 and 1997, and the related
consolidated statements of income, stockholders' equity and cash flows for the
periods ended December 31 in each of the three years 1997 through 1999, in each
case accompanied by the audit report of KPMG LLP, independent public accountants
with respect to Merchants, and Merchants' Quarterly Reports on Form 10-Q filed
with the SEC under the 1934 Act and available on the SEC's EDGAR system set
forth the unaudited consolidated statements of condition of Merchants as of June
30, 2000 and related unaudited consolidated statements of income, changes in
stockholders' equity and cash flows for the six months then ended (collectively,
the "Merchants Financial Statements"). The Merchants 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 Merchants
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
Merchants for the respective periods set forth therein.
(b) The books and records of Merchants 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 Merchants Financial Statements (including the notes
thereto), as of June 30, 2000 neither Merchants nor any of its Subsidiaries had
any liabilities, whether absolute, accrued, contingent or otherwise material to
the business, operations, assets or financial condition of Merchants or any of
its Subsidiaries. Since June 30, 2000 and to the date hereof, neither Merchants
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; Financial Advisor; Fairness Opinion.
Other than CIBC World Markets Corp. (the "Broker"), neither Merchants 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. Copies of Merchants' agreements with the Broker are set forth in the
Merchants Disclosure Schedule. The Broker has delivered to Merchants its written
opinion with respect to the fairness, from a financial point of view, of the
Exchange Ratio to the shareholders of Merchants in the Merger. Other than
pursuant to the agreement with Broker, 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 Merchants or any of its Subsidiaries.
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 Merchants and its
Subsidiaries on a consolidated basis since June 30, 2000 and to Merchants'
knowledge, no facts or conditions exist which Merchants believes will cause or
is likely to cause such a material adverse change in the future.
(b) Except as set forth in the Merchants Disclosure Schedule,
neither Merchants nor any of its Subsidiaries has taken or permitted any of the
actions set forth in Section 5.2 hereof between June 30, 2000 and the date
hereof and Merchants and the Merchants Subsidiaries have conducted their
business only in the ordinary course, consistent with past practice.
3.7. Legal Proceedings. Except as disclosed in the Merchants
Disclosure Schedule, neither Merchants nor any of its Subsidiaries is a party to
any, and there are no pending or, to Merchants' knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature against Merchants or any of its Subsidiaries.
Except as disclosed in the Merchants Disclosure Schedule, neither Merchants nor
any of its Subsidiaries is a party to any order, judgment or decree entered
against Merchants or any Merchants Subsidiary in any lawsuit or proceeding.
3.8. Taxes and Tax Returns.
(a) Merchants and each Merchants 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 except as set forth in the Merchants
Disclosure Schedule, each has duly paid (and until the Effective Time will so
pay) all such taxes shown as due on such returns, other than taxes or other
charges which are being contested in good faith (and disclosed to Valley in
writing). Merchants and each Merchants 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 Merchants or any Merchants Subsidiary through such date,
which reserves are adequate for such purposes. To the knowledge of Merchants,
except as set forth in the Merchants Disclosure Schedule, the federal income tax
returns of Merchants 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. To
the knowledge of Merchants, except as set forth in the Merchants Disclosure
Schedule, the applicable state income and local tax returns of Merchants 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 Merchants, 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 Merchants or
any of its Subsidiaries, nor except as set forth in the Merchants Disclosure
Schedule, has Merchants 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 Merchants Disclosure Schedule,
neither Merchants 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 Merchants or any Merchants Subsidiary (nor does Merchants 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.
(a) Except as disclosed in the Merchants Disclosure Schedule,
neither Merchants 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
"Merchants Pension Plans"), "employee welfare benefit plan", within the meaning
of Section 3(1) of ERISA (the "Merchants 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
Merchants 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) Merchants has delivered to Valley in the Merchants
Disclosure Schedule a complete and accurate copy of each of the following with
respect to each of the Merchants Pension Plans and Merchants 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, if any.
(c) The present value of all accrued benefits both vested and
non-vested under each of the Merchants 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 Merchants Pension Plan's actuary, did not
exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the best of Merchants' knowledge, the actuarial assumptions
then utilized for such plans were reasonable and appropriate as of the last
valuation date and reflect then current market conditions.
(d) During the last six years, the Pension Benefit Guaranty
Corporation (the "PBGC") has not asserted any claim for liability against
Merchants 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 Merchants Pension
Plan have been paid. All contributions required to be made to each Merchants
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
Merchants and its Subsidiaries which have not been paid have been properly
recorded on the books of Merchants and its Subsidiaries.
(f) Except as disclosed on the Merchants Disclosure Schedule,
each of the Merchants Pension Plans, the Merchants Welfare Plans and each other
plan and arrangement identified on the Merchants Disclosure Schedule has been
operated in compliance in all material respects with the applicable 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, which takes
into account the Tax Reform Act of 1986 and subsequent legislation, with respect
to each of the Merchants Pension Plans and Merchants 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 Merchants, 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 Merchants Welfare Plans or
Merchants Pension Plans.
(h) No Merchants 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 Merchants
Pension Plans.
(i) No "accumulated funding deficiency", within the meaning of
Section 412 of the Code, has been incurred with respect to any of the Merchants
Pension Plans.
(j) There are no pending, or, to the knowledge of Merchants,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Merchants Pension Plans or the Merchants Welfare
Plans, any trusts related thereto or any other plan or arrangement identified in
the Merchants Disclosure Schedule.
(k) Except as disclosed in the Merchants Disclosure Schedule,
no Merchants 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
Merchants Pension Plan.
(l) Except with respect to customary health, life and
disability benefits or as disclosed in the Merchants Disclosure Schedule, there
are no unfunded benefits obligations which are not accounted for by reserves
shown on the Merchants Financial Statements and established under GAAP, or
otherwise noted on such financial statements.
(m) Except as disclosed in the Merchants Disclosure Schedule,
with respect to each Merchants Pension and Welfare Plan that is funded wholly or
partially through an insurance policy, there will be no liability of Merchants
or any Merchants 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 or at the Effective Time.
(n) Except as may hereafter be expressly agreed to by Valley
in writing or as disclosed on the Merchants Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee of Merchants or any Merchants Subsidiary
to severance pay, unemployment compensation or any similar payment, or (ii)
accelerate the time of payment, accelerate the vesting, or increase the amount,
of any compensation or benefits due to any current employee or former employee
under any Merchants Pension Plan or Merchants Welfare Plan.
(o) Except for the Merchants Pension Plans and the Merchants
Welfare Plans, and except as set forth on the Merchants Disclosure Schedule,
Merchants has no deferred compensation agreements, understandings or obligations
for payments or benefits to any current or former director, officer or employee
of Merchants or any Merchants Subsidiary or any predecessor of any thereof. The
Merchants Disclosure Schedule sets forth (or lists, if previously delivered to
Valley with respect to such items and any supplemental retirement plan or
arrangement): (i) true and complete copies of the deferred compensation
agreements, understandings or obligations with respect to each such current or
former director, officer or employee, and (ii) the most recent actuarial or
other calculation of the present value of such payments or benefits.
(p) Except as set forth in the Merchants Disclosure Schedule,
Merchants does not maintain or otherwise pay for life insurance policies (other
than group term life policies on employees) with respect to any director,
officer or employee. The Merchants Disclosure Schedule lists each such insurance
policy and any agreement with a party other than the insurer with respect to the
payment, funding or assignment of such policy. To the best of Merchants'
knowledge, neither Merchants nor any Merchants Pension Plan or Merchants Welfare
Plan owns any individual or group insurance policies issued by an insurer which
has been found to be insolvent or is in rehabilitation pursuant to a state
proceeding.
(q) Except as set forth in the Merchants Disclosure Schedule,
Merchants does not maintain any retirement plan for directors. The Merchants
Disclosure Schedule sets forth the complete documentation and actuarial
evaluation of any such plan.
3.10. Reports.
(a) The Merchants Disclosure Schedule lists, and as to item
(i) below Merchants has previously delivered or made available to Valley a
complete copy of, each (i) final registration statement, prospectus, annual,
quarterly or special report and definitive proxy statement filed by Merchants
since January 1, 1997 pursuant to the Securities Act of 1933, as amended (the
"1933 Act"), or the 1934 Act and (ii) communication (other than general
advertising materials, press releases and dividend checks) mailed by Merchants
to its shareholders as a class since January 1, 1997.
(b) Since January 1, 1997 (i) Merchants has filed all reports
that it was required to file with the SEC under the 1934 Act, and (ii) Merchants
and the Bank each has duly filed all material forms, reports and documents which
they were required to file with each agency charged with regulating any aspect
of their business, in each case in form which was correct in all material
respects, and, subject to permission from such regulatory authorities, Merchants
promptly will deliver or make available to Valley accurate and complete copies
of such reports. As of their respective dates, each such form, report, or
document referred to in either of clauses (i) or (ii) above, and each final
registration statement, prospectus, annual, quarterly or special report,
definitive proxy statement or communication referred to in either of clauses (i)
or (ii) of paragraph (a) above, as of its date, complied in all material
respects with all applicable statutes, rules and regulations 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 information contained in any such document as of a
later date shall be deemed to modify information as of an earlier date.
(c) The Merchants Disclosure Schedule lists the dates of all
examinations of Merchants or the Bank conducted by the FRB or either the
Department or the FDIC since January 1, 1997 and the dates of any responses
thereto submitted by Merchants or the Bank.
3.11. Merchants and Bank Information. The information relating
to Merchants, the Bank and the Merchants Subsidiaries, this Agreement and the
transactions contemplated hereby to be contained in the Joint Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof) to be delivered to
stockholders of Merchants and stockholders of Valley in connection with their
approval of the Merger, as of the date the Joint Proxy Statement-Prospectus is
mailed to stockholders of Merchants and Valley, and up to and including the date
of the meetings of stockholders to which such Joint 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. The Joint Proxy
Statement-Prospectus shall comply as to form in all material respects with the
provisions of the 1934 Act and the rules and regulations promulgated thereunder.
3.12. Compliance with Applicable Law.
(a) Except as set forth in the Merchants Disclosure Schedule,
each of Merchants and the Merchants Subsidiaries holds all 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 Merchants or any of its Subsidiaries, including, without limitation,
consumer, community and fair lending laws (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
Merchants and its Subsidiaries on a consolidated basis) and Merchants has not
received notice of violation of, and does not know of any violations of, any of
the above.
(b) Without limiting the foregoing, to its knowledge (i) the
Bank has complied in all material respects with the Community Reinvestment Act
("CRA") and (ii) no 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 Merchants 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 Merchants Disclosure Schedule
under this Section, Section 3.5 or Section 3.9, (i) neither Merchants nor any
Merchants 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 and (ii) the
consummation of the transactions contemplated by this Agreement will not (either
alone or upon the occurrence of any additional acts or events) result in any
payment (whether of severance pay or otherwise) becoming due from Merchants or
any Merchants Subsidiary to any officer, employee, director or consultant
thereof. The Merchants Disclosure Schedule sets forth true and correct copies of
all employment agreements or termination agreements with officers, employees,
directors, or consultants to which Merchants or any Merchants Subsidiary is a
party.
(b) Except as disclosed in the Merchants Disclosure Schedule
and except for loan commitments, loan agreements and loan instruments entered
into or issued in the ordinary course of business, (i) as of the date of this
Agreement, neither Merchants nor any Merchants Subsidiary is a party to or bound
by any commitment, agreement or other instrument which is material to the
business, operations, assets or financial condition of Merchants and the
Merchants Subsidiaries taken as a whole, (ii) no commitment, agreement or other
instrument to which Merchants or any Merchants Subsidiary is a party or by which
any of them is bound limits the freedom of Merchants or any Merchants Subsidiary
to compete in any line of business or with any person, and (iii) neither
Merchants nor any Merchants Subsidiary is a party to any collective bargaining
agreement.
(c) Except as disclosed in the Merchants Disclosure Schedule,
neither Merchants nor any Merchants Subsidiary or, to the best knowledge of
Merchants, 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 (except those under which Bank is or will be the creditor) or
arrangement.
3.14. Properties and Insurance.
(a) Merchants 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 Merchants' consolidated
balance sheet as of June 30, 2000, 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, 2000), 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 Merchants 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. Merchants 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. The Merchants Disclosure
Schedule lists all leases pursuant to which Merchants or any Merchants
Subsidiary occupies any real property and for each such lease lists annual base
rentals, annual add-ons for taxes, maintenance and the like, the annual
increases to the end of the lease, the expiration date and any option terms.
(b) The Merchants Disclosure Schedule lists all policies of
insurance covering business operations and all insurable properties and assets
of Merchants 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 Merchants
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 Merchants 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 set forth in the
Merchants Disclosure Schedule:
(a) Neither Merchants nor any Merchants Subsidiary has
received any written notice, citation, claim, assessment, proposed assessment or
demand for abatement alleging that Merchants or such Merchants Subsidiary
(either directly or as a trustee or fiduciary, 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 cleanup of any condition resulting from the violation of any law, ordinance
or other governmental regulation regarding environmental matters, which
correction or cleanup would be material to the business, operations, assets or
financial condition of Merchants and the Merchants Subsidiaries taken as a
whole. Merchants has no knowledge that any toxic or hazardous substances or
materials have been emitted, generated, disposed of or stored on any real
property owned or leased by Merchants or any Merchants Subsidiary, as OREO or
otherwise, or owned or controlled by Merchants or any Merchants Subsidiary as a
trustee or fiduciary (collectively, "Properties"), in any manner that violates
or, after the lapse of time will violate, any presently existing federal, state
or local law or regulation governing or pertaining to such substances and
materials.
(b) Merchants has no knowledge that any of the Properties has
been operated in any manner in the three years prior to the date of this
Agreement that violated any applicable federal, state or local law or regulation
governing or pertaining to toxic or hazardous substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of Merchants and the Merchants
Subsidiaries taken as a whole.
(c) To the knowledge of Merchants, except as set forth in the
Merchants Disclosure Schedule, there are no underground storage tanks on, in or
under any of the Properties and no underground storage tanks have been closed or
removed from any of the Properties while the property was owned, operated or
controlled by Merchants or any Merchants Subsidiary.
3.17. Reserves. As of the date hereof, the reserve for loan
and lease losses in the Merchants Financial Statements is 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 Excess Parachute Payments. No officer, director,
employee or agent (or former officer, director, employee or agent) of Merchants
or any Merchants Subsidiary is entitled now, or will or may be entitled to as a
consequence of this Agreement, the Merger or the Bank Merger, to any payment or
benefit from Merchants, a Merchants 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. Agreements with Bank Regulators. Neither Merchants nor
any Merchants Subsidiary is a party to any agreement or memorandum of
understanding with, or a party to any commitment letter, board resolution
submitted to a regulatory authority or similar undertaking to, or is subject to
any order or directive by, or is a recipient of any extraordinary supervisory
letter from, any court, governmental authority or other regulatory or
administrative agency or commission, domestic or foreign ("Governmental Entity")
which restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, its credit or reserve policies or its management,
except for those the existence of which has been disclosed in writing to Valley
by Merchants prior to the date of this Agreement, nor has Merchants been advised
by any Governmental Entity that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission, except as disclosed in writing
to Valley by Merchants prior to the date of this Agreement. Neither Merchants
nor any Merchants Subsidiary is required by Section 32 of the Federal Deposit
Insurance Act to give prior notice to a Federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer, except as disclosed in writing to
Valley by Merchants prior to the date of this Agreement.
3.20. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
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 Merchants or will be delivered pursuant to Section 5.11(a) by Valley
to Merchants. Disclosure of an item in one section of the Valley Disclosure
Schedule will be considered disclosure for purposes of all sections thereof,
except where this Agreement specifies that the item must be referenced in a
particular section of the Valley Disclosure Schedule. Valley hereby represents
and warrants to Merchants 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 and its Subsidiaries (as defined below) on a consolidated
basis. Valley is registered as a bank holding company under the BHCA.
(b) All 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 BIF 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 on a consolidated basis.
4.2. Capitalization. The authorized capital stock of Valley
consists solely of 108,527,344 shares of Valley Common Stock and 30,000,000
shares of preferred stock, no par value per share (the "Valley Preferred
Stock"), which may be divided into classes and into series within any class as
determined by the Board of Directors. As of June 30, 2000, there were 60,433,231
shares of Valley Common Stock issued and outstanding net of treasury stock, and
182,746 treasury shares and no shares of Preferred Stock outstanding. Since June
30, 2000, to and including the date of this Agreement, no additional shares of
Valley Common Stock have been issued except in connection with the consummation
of the acquisition of Hallmark Capital Management, Inc. on July 6, 2000 and
exercises of options granted under the Long-Term Stock Incentive Plan of Valley
(the "Valley Option Plan") or grants under the Valley Option Plan or grants or
options under any option or stock plan assumed by Valley in connection with any
other acquisition (the "Acquired Stock Plans"). As of June 30, 2000, except for:
(a) 1,878,545 shares of Valley Common Stock issuable upon exercise of
outstanding stock options and stock appreciation rights granted pursuant to the
Valley Option Plan or the Acquired Stock Plans, and (b) 16,452 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 as listed in the Valley
Disclosure Schedule. 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) Subject to the approval of this Agreement and the
transactions contemplated hereby by the stockholders of Valley, 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
Article II 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. Except for the approvals described in
paragraph (b) below, no other corporate proceedings on the part of Valley and
VNB are necessary to consummate the transactions contemplated hereby. 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 Department, the FRB,
the New Jersey Secretary of State, the SEC, or applicable state securities
bureaus or commissions and the stockholders of Valley, 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.
4.4. Financial Statements.
(a) Valley's Annual Reports on Form 10-K filed with the SEC
under the 1934 Act and available on the SEC's EDGAR system set forth the
consolidated statements of condition of Valley as of December 31, 1999, 1998 and
1997, and the related consolidated statements of income, stockholders' equity
and cash flows for the periods ended December 31 in each of the three years 1997
through 1999, in each case accompanied by the audit report of KPMG LLP,
independent public accountants with respect to Valley, and Valley's Quarterly
Reports on Form 10-Q filed with the SEC under the 1934 Act and available on the
SEC's EDGAR system set forth the unaudited consolidated statements of condition
of Valley as of June 30, 2000 and related unaudited consolidated statements of
income, changes in stockholders' equity and cash flows for the six months then
ended (collectively, the "Valley Financial Statements"). The Valley Financial
Statements (including the related notes), have been prepared in accordance with
GAAP 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, 2000 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,
2000, 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, except as specifically contemplated by this Agreement.
4.5. Brokerage Fees; Financial Advisor; Fairness Opinion.
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. Sandler
O'Neill & Partners, L.P. has delivered to Valley its written opinion with
respect to the fairness from a financial point of view, of the Exchange Ratio to
the shareholders of Valley in the Merger.
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, 2000 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 to
be contained in the Registration Statement and Joint Proxy Statement-Prospectus
(as defined in Section 5.6(a) hereof), as of the date of the mailing of the
Joint Proxy Statement-Prospectus to stockholders of Merchants and Valley, and up
to and including the date of the meetings of stockholders to which such Joint
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. The Registration Statement shall comply as to form in all material
respects with the provisions of the 1933 Act, the 1934 Act and the rules and
regulations promulgated thereunder.
4.8. Capital Adequacy. As of the date of this Agreement Valley
has, and 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. As of the date hereof, Valley has
available and reserved shares of Valley Common Stock sufficient for issuance
pursuant to the Merger and upon the exercise of Stock Options subsequent
thereto. The Valley Common Stock to be issued hereunder pursuant to the Merger,
and upon exercise of the Stock Options, when so issued, will be duly authorized
and validly issued, fully paid, nonassessable, 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. The
Valley Common Stock to be issued hereunder pursuant to the Merger, and upon
exercise of the Stock Options, when so issued, will be registered under the 1933
Act and issued in accordance with all applicable state and federal laws, rules
and regulations, and will be approved or listed for trading on the NYSE.
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.
(a) Valley and each Valley Subsidiary 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 except as set forth in the Valley
Disclosure Schedule, each has duly paid (and until the Effective Time will so
pay) all such taxes shown as due on such returns, other than taxes or other
charges which are being contested in good faith (and disclosed to Merchants in
writing). Valley and each Valley 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 Valley or any Valley Subsidiary through such date, which
reserves are adequate for such purposes. To the knowledge of Valley, except as
set forth in the Valley Disclosure Schedule, the federal income tax returns of
Valley and its Subsidiaries have been examined by 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. To the knowledge of Valley, except as set forth
in the Valley Disclosure Schedule, the applicable state income and local tax
returns of Valley 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
Valley, 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 Valley or any of its Subsidiaries, nor except as set forth
in the Valley Disclosure Schedule, has Valley 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 Valley Disclosure Schedule,
neither Valley 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 Valley or any Valley Subsidiary (nor does Valley 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.
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) Valley has delivered to Merchants in the Valley Disclosure
Schedule a complete and accurate copy of each of the summary plan description
with respect to each of the Valley Pension Plans and Valley Welfare Plans.
(c) The present value of all accrued benefits both vested and
non-vested under each of the Valley 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 Valley Pension Plan's actuary, did not
exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the best of Valley's knowledge, the actuarial assumptions
then utilized for such plans were reasonable and appropriate as of the last
valuation date and reflect then current market conditions.
(d) During the last six years, the PBGC has not asserted any
claim for liability against Valley 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 Valley Pension Plan
have been paid. All contributions required to be made to each Valley 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 Valley and its
Subsidiaries which have not been paid have been properly recorded on the books
of Valley and its Subsidiaries.
(f) Except as disclosed on the Valley Disclosure Schedule,
each of the Valley Pension Plans and the Valley Welfare Plans has been operated
in compliance in all material respects with the applicable 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, which takes
into account the Tax Reform Act of 1986 and subsequent legislation, with respect
to each of the Valley Pension Plans and Valley 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 Valley, 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 Valley Welfare Plans or Valley
Pension Plans.
(h) No Valley 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 Valley Pension Plans.
(i) 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.
(j) There are no pending, or, to the knowledge of Valley,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Valley Pension Plans or the Valley Welfare
Plans, any trusts related thereto or any other plan or arrangement identified in
the Valley Disclosure Schedule.
(k) Except as set forth in the Valley Disclosure Schedule,
Valley does not maintain any retirement plan for directors.
(l) 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, 1997, 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. The Valley Disclosure Schedule lists all SEC 1933 Act filings by
Valley that currently are subject to review.
(b) Valley and VNB have, since January 1, 1997, duly filed
with the OCC and, where applicable, 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 Valley, upon written request from
Merchants, promptly will deliver or make available to Merchants 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, 1997.
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 (i) VNB has complied in all material respects with the CRA and (ii) no
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, 2000, 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, 2000), 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 which are noted in the most recent
title reports with respect to such property. 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. Agreements with Bank Regulators. Neither Valley nor any
Valley Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution submitted to a
regulatory authority or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any Governmental Entity which restricts materially the conduct of its business,
or in any manner relates to its capital adequacy, its credit or reserve policies
or its management, nor has Valley been advised by any Governmental Entity that
it is contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission, except as disclosed in writing to Merchants by Valley prior to the
date of this Agreement. Neither VNB nor any Valley Subsidiary is required by
Section 32 of the Federal Deposit Insurance Act to give prior notice to a
Federal banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer,
except as disclosed in writing to Merchants by Valley prior to the date of this
Agreement.
4.20. Disclosures. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE V
COVENANTS OF THE PARTIES
5.1. Conduct of the Business of Merchants. During the period
from the date of this Agreement to the Effective Time, Merchants 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. Merchants also shall
use its best efforts to (i) preserve its business organization and that of each
Merchants Subsidiary intact, (ii) keep available to itself the present services
of its employees and those of its Subsidiaries, provided that neither Merchants
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) Merchants 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 Merchants Common Stock
pursuant to the present terms of the outstanding Merchants Options and
the Valley Stock Option and as disclosed in the Merchants Disclosure
Schedule, 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
Merchants or any Merchants 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, other than its regular
quarterly dividend of $0.125;
(iii) grant any severance or termination pay (other than
pursuant to policies of Merchants in effect on the date hereof and
disclosed in the Merchants 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,
except for increases in compensation to officers (other than those
entering into the Non-Competition Agreements referenced in Section
5.15) and employees in the usual and ordinary course of business, not
to exceed 5%;
(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 and
expenditures necessary to maintain existing assets in good repair and
expenditures described in business plans or budgets previously
furnished to Valley, except as set forth in Section 5.2 of the
Merchants Disclosure Schedule;
(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 GAAP;
(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 that would cause any of its conditions to Closing not
to be satisfied; 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 Merchants in writing or as permitted or
required by this Agreement, it will not, nor will it permit any of its
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 Article IV of this Agreement not being true and correct in any
material respect at the Effective Time or that would cause any of its
conditions to Closing not to be satisfied;
(ii) 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
(iii) authorize or enter into any agreement or commitment to
do any of the foregoing.
5.3. No Solicitation. So long as this Agreement remains in
effect, neither Merchants nor the Bank shall, 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 Merchants
or the Bank (an "Acquisition Transaction"). Notwithstanding the foregoing,
Merchants may enter into discussions or negotiations or provide information in
connection with an unsolicited possible Acquisition Transaction if the Board of
Directors of Merchants, after consulting with counsel, determines in the
exercise of its fiduciary responsibilities that such discussions or negotiations
should be commenced or such information should be furnished. Merchants shall
promptly communicate to Valley the terms of any proposal, whether written or
oral, which it may receive in respect of any such Acquisition Transaction and
the fact that it is having discussions or negotiations with a third party about
an Acquisition Transaction.
5.4. Current Information. During the period from the date of
this Agreement to the Effective Time, Merchants will cause one or more of its
designated representatives to confer on a monthly or more frequent basis with
representatives of Valley regarding Merchants' business, operations, properties,
assets and financial condition and matters relating to the completion of the
transactions contemplated herein. Without limiting the foregoing, Merchants 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 $250,000, 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 and prior to the Effective Time, Merchants will
deliver to Valley the Bank's call reports filed with the Department and FDIC and
Merchants' quarterly reports on Form 10-Q as filed with the SEC under the 1934
Act, and Valley will deliver to Merchants 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 90 days after the end of each fiscal year ending after the date of this
Agreement and prior to the Effective Time, Merchants will deliver to Valley and
Valley will deliver to Merchants their respective Annual Reports, in each case
as filed on Form 10-K with the SEC under the 1934 Act.
5.5. Access to Properties and Records; Confidentiality.
(a) Merchants and the Bank shall permit Valley and its
representatives, and Valley and VNB shall permit Merchants 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 Merchants 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 Merchants 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. Merchants acknowledges that Valley may be involved in
discussions concerning potential acquisitions of other banks and
financial-related institutions and Valley shall not be obligated to disclose
such information to Merchants 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 Merchants, for a period of 45 calendar days following the
date of this Agreement, 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 Shareholders Meetings (as
referred to in Section 5.7 hereof), and qualifying under applicable federal and
state securities laws the Valley Common Stock to be issued to Merchants
shareholders in connection with the Merger, the parties hereto shall cooperate
in the preparation and filing by Valley with the SEC of a Registration Statement
including a joint proxy statement and prospectus satisfying all applicable
requirements of applicable state and federal laws, including 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 Merchants
and Valley to their respective shareholders together with any and all amendments
or supplements thereto, being herein referred to as the "Joint Proxy
Statement-Prospectus" and the various documents to be filed by Valley under the
1933 Act with the SEC to register the Valley Common Stock for sale, including
the Joint Proxy Statement-Prospectus, are referred to herein as the
"Registration Statement").
(b) Valley shall furnish Merchants with such information
concerning Valley and its Subsidiaries (including, without limitation,
information regarding other transactions which Valley is required to disclose)
as is necessary in order to cause the Joint Proxy Statement-Prospectus, insofar
as it relates to such corporations, to comply with Section 5.6(a) hereof. Valley
agrees promptly to advise Merchants if at any time prior to the Shareholders'
Meetings any information provided by Valley in the Joint Proxy
Statement-Prospectus becomes incorrect or incomplete in any material respect and
promptly to provide Merchants with the information needed to correct such
inaccuracy or omission. Valley shall promptly furnish Merchants with such
supplemental information as may be necessary in order to cause the Joint Proxy
Statement-Prospectus, insofar as it relates to Valley and the Valley
Subsidiaries, to comply with Section 5.6(a) after the mailing thereof to the
parties' respective shareholders.
(c) Merchants shall furnish Valley with such information
concerning Merchants as is necessary in order to cause the Joint Proxy
Statement-Prospectus, insofar as it relates to Merchants, to comply with Section
5.6(a) hereof. Merchants agrees promptly to advise Valley if at any time prior
to the Shareholders' Meetings, any information provided by Merchants in the
Joint Proxy Statement-Prospectus becomes incorrect or incomplete in any material
respect and promptly to provide Valley with the information needed to correct
such inaccuracy or omission. Merchants shall promptly furnish Valley with such
supplemental information as may be necessary in order to cause the Joint Proxy
Statement-Prospectus, insofar as it relates to Merchants and the Bank to comply
with Section 5.6(a) after the mailing thereof to the parties' respective
shareholders.
(d) Valley shall as promptly as practicable 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 such stock under applicable state securities laws at the
earliest practicable date. Merchants shall promptly furnish Valley with such
information regarding the Merchants shareholders as Valley requires to enable it
to determine what filings are required hereunder. Merchants authorizes Valley to
utilize in such filings the information concerning Merchants and the Bank
provided to Valley in connection with, or contained in, the Joint Proxy
Statement-Prospectus. Valley shall furnish Merchants' counsel with copies of all
such filings and keep Merchants advised of the status thereof. Valley and
Merchants shall as promptly as practicable file the Registration Statement
containing the Joint Proxy Statement-Prospectus with the SEC, and each of Valley
and Merchants shall promptly notify the other of all communications, oral or
written, with the SEC concerning the Registration Statement and the Joint Proxy
Statement-Prospectus.
(e) Valley shall cause the Valley Common Stock issuable
pursuant to the Merger to be listed on the NYSE at the Effective Time. Valley
shall cause the Valley Common Stock which shall be issuable pursuant to exercise
of Stock Options to be accepted for listing on the NYSE when issued.
(f) The parties hereto will cooperate with each other and use
their reasonable best efforts to prepare all necessary documentation, to effect
all necessary filings and to obtain all necessary permits, consents, approvals
and authorizations of all third parties and Governmental Entities necessary to
consummate the transactions contemplated by this Agreement as soon as possible,
including, without limitation, those required by the OCC, the FRB, the
Department, and the FDIC. Without limiting the foregoing, the parties shall use
reasonable business efforts to file for approval or waiver by the appropriate
bank regulatory agencies within 40 days after the date hereof. The parties shall
each have the right to review in advance (and shall do so promptly) all filings
with, including 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 Entity in
connection with the transactions contemplated by this Agreement.
(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
Entity in respect of the transactions contemplated hereby.
(h) Merchants acknowledges that Valley is in or may be in the
process of acquiring other banks and financial-related institutions and that in
connection with such acquisitions, information concerning Merchants may be
required to be included in the registration statements, if any, for the sale of
securities of Valley or in SEC reports in connection with such acquisitions.
Merchants agrees to provide Valley with any information, certificates, documents
or other materials about Merchants as are reasonably necessary to be included in
such other SEC reports or registration statements, including registration
statements which may be filed by Valley prior to the Effective Time. Merchants
shall use its reasonable efforts to cause its attorneys and accountants to
provide Valley and any underwriters for Valley with any consents, comfort
letters, opinion letters, reports or information which are necessary to complete
the registration statements and applications for any such acquisition or
issuance of securities. Valley shall reimburse Merchants for reasonable expenses
thus incurred by Merchants should this transaction be terminated for any reason.
Valley shall not file with the SEC any registration statement or amendment
thereto or supplement thereof containing information regarding Merchants unless
Merchants shall have consented in writing to such filing, which consent shall
not be unreasonably delayed or withheld.
(i) Between the date of this Agreement and the Effective Time,
Merchants shall cooperate with Valley to reasonably conform Merchants' policies
and procedures regarding applicable regulatory matters, to those of Valley as
Valley may reasonably identify to Merchants from time to time.
5.7. Approval of Shareholders.
(a) Merchants will (i) take all steps necessary duly to call,
give notice of, convene and hold a meeting of the shareholders of Merchants (the
"Merchants Shareholders Meeting") for the purpose of securing the approval of
shareholders of this Agreement, (ii) subject to the qualification set forth in
Section 5.3 hereof and the right not to make a recommendation or to withdraw a
recommendation if Merchants' Board of Directors, after consulting with counsel,
determines in the exercise of its fiduciary duties that such recommendation
should not be made or should be withdrawn, recommend to the shareholders of
Merchants the approval of this Agreement and the transactions contemplated
hereby and use its reasonable best efforts to obtain, as promptly as
practicable, such approval, and (iii) cooperate and consult with Valley with
respect to each of the foregoing matters. The directors of Merchants in their
capacity as shareholders have agreed, by signing a certificate to that effect,
to vote in favor of the Agreement.
(b) Valley will (i) take all steps necessary duly to call,
give notice of, convene and hold a meeting of the shareholders of Valley (the
"Valley Shareholders Meeting") for the purpose of securing the approval of
shareholders of this Agreement, (ii) recommend to the shareholders of Valley,
subject to any fiduciary duties it determines it may have after consulting with
counsel, the approval of this Agreement and the transactions contemplated hereby
and use its reasonable best efforts to obtain, as promptly as practicable, such
approval, and (iii) cooperate and consult with Merchants with respect to each of
the foregoing matters.
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. Valley and Merchants will cooperate to take the necessary actions to cure
appropriate tainted treasury shares so that the Merger meets the treasury stock
condition for pooling-of-interests accounting. Valley shall determine whether it
or Merchants or both shall take such action. 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, distribution and filing with governmental
agencies as required under applicable law, 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 Merchants determines that a material condition to its obligation to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to April 30, 2001 (the "Cutoff Date") 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, Merchants and Valley will
promptly inform the other of any facts applicable to Merchants 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. If the disclosure contained in any such supplement (i) relates to
events occurring before execution of this Agreement or (ii) alone or together
with other supplements or amendments materially adversely affects the
representation to which the amendment or supplement relates, the party receiving
the amendment or supplement may determine not to accept it as a modification of
the relevant representation. Notice of such determination, if made, shall be
given by the receiving party to the other party not later than 15 days after it
received the disclosure in question. If such notice is not timely given, or if
the disclosure in question did not contain any matter of the nature specified in
clause (i) or (ii) of the second preceding sentence, the relevant representation
shall be deemed modified by the disclosure in the amendment or supplement with
the same effect as though that disclosure had been included in the relevant
Disclosure Schedule as furnished prior to execution of this Agreement.
5.12 Transaction Expenses of Merchants.
(a) For planning purposes, Merchants shall, within 30 days
from the date hereof, provide Valley with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by Merchants
in connection with this transaction based on facts and circumstances currently
known, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. Merchants shall promptly notify Valley if or
when it determines that it will expect to exceed its budget. Prior to signing
this Agreement, Merchants has disclosed to Valley the method by which the fees
of its investment bankers and counsel in connection with this transaction are to
be determined, and has disclosed to Valley the fees of its counsel in connection
with this transaction through a recent date.
(b) Promptly, but in any event within 30 days, after the
execution of this Agreement, Merchants shall ask all of its attorneys and other
professionals to render current and correct invoices for all unbilled time and
disbursements. Merchants shall accrue and/or pay all of such amounts as soon as
possible.
(c) Merchants shall cause its professionals to render monthly
invoices within 30 days after the end of each month. Merchants shall notify
Valley monthly of all out-of-pocket expenses which Merchants has incurred in
connection with this transaction.
(d) Valley, in reasonable consultation with Merchants, shall
make all arrangements with respect to the printing and mailing of the Joint
Proxy Statement-Prospectus.
5.13. Closing. The parties hereto shall cooperate and use
reasonable efforts to try to cause the Effective Time to occur between January
15 and January 31, 2001.
5.14. Indemnification. After the Effective Time, to the extent
permitted by applicable law and/or 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 Merchants and the Bank indemnification 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/or
the Certificate of Incorporation or Articles of Association, Valley or VNB (as
applicable) shall advance expenses in connection with the foregoing
indemnification.
5.15. Employment Matters and Other Post-Closing Items.
(a) Following consummation of the Merger, Valley will honor
the existing written employment and pension benefit agreements with officers and
employees of Merchants and the Bank that exist on the date hereof, which are
included in Section 5.15(a) of the Merchants Disclosure Schedule (as the same
are modified by those agreements between Valley and each of Spencer B. Witty,
James G. Lawrence, William J. Cardew and Eric W. Gould (the "Non-Competition
Agreements") entered into on the date hereof).
(b) Valley intends, to the extent practical, to continue the
employment of all officers and employees of the Bank, at or near the same
location, with the same or equivalent salary and benefits.
(c) Following the consummation of the Merger and for one year
thereafter, VNB shall, to the extent not duplicative of other severance
benefits, pay one week of severance for each year of service completed while
employed by Merchants and/or the Bank, with a maximum benefit of 26 weeks and a
minimum of four (4) weeks.
(d) Before or following consummation of the Merger, Valley
will decide whether to continue each of the Bank and/or Merchants' pension and
welfare plans for the benefit of employees of the Bank and Merchants, or to have
such employees become covered under a Valley Pension and Welfare Plan. If Valley
decides to cover Bank and Merchants employees under a Valley Pension and Welfare
Plan, such employees will receive credit for prior years of service with the
Bank and/or Merchants for purposes of determining eligibility to participate,
and vesting, if applicable (but not for the accrual of benefits under Valley's
pension plan). No prior existing condition limitation shall be imposed with
respect to any medical coverage plan as a result of the Merger and Merchants and
Bank employees shall get credit for any deductibles already paid under existing
plans for the year in which the Merger occurs.
(e) Merchants and the Bank may continue to administer such
bonus programs and arrangements as are disclosed pursuant to this Agreement
through the Effective Time, provided that bonuses shall be paid only to the
extent they have been previously accrued and their payment will not cause
Merchants' earnings to fall below budgeted amounts.
(f) Valley shall create a New York advisory board and
following the Closing the directors of Merchants who are not on the Valley Board
of Directors shall be invited to become members of the advisory board, along
with other prominent customers and associates of Merchants selected by Valley.
(g) Valley shall honor the existing director retirement plan
of Merchants contained in the Merchants Disclosure Schedule.
(h) After the Closing, Valley shall operate the branches of
Bank using the name of the Bank and noting that it is a division of VNB.
(i) Valley and Merchants shall cooperate with each other
before the Closing to designate those Merchants officers who after the Closing
will receive three year cliff vesting stock options and restricted stock under
the Valley Option Plan and other benefits appropriate to retain the officers of
Merchants.
5.16. Pooling and Tax-Free Reorganization Treatment. Neither
Valley nor Merchants shall intentionally take, fail to take or cause to be taken
or not taken, any action within its control, 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.
5.17. Merchants Option Plan. From and after the Effective
Time, each Merchants Option which is converted to an option to purchase Valley
Common Stock under Section 2.1(b) 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 Merchants
Options so converted.
5.18. Affiliates.
(a) Promptly, but in any event within 14 days, after the
execution and delivery of this Agreement, (i) Merchants shall deliver to Valley
(x) a letter identifying all persons who, to the knowledge of Merchants, may be
deemed to be affiliates of Merchants under Rule 145 of the 1933 Act, including
without limitation all directors and executive officers of Merchants and (y) a
letter identifying all persons who, to the knowledge of Merchants, may be deemed
to be affiliates of Merchants as that term (affiliate) is used for purposes of
qualifying for pooling-of-interests accounting treatment; and (ii) Valley shall
identify to Merchants 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) Merchants shall cause each director of Merchants to, and
Merchants shall use its best efforts to cause each executive officer of
Merchants and each other person who may be deemed an affiliate of Merchants
(under either Rule 145 of the 1933 Act or the accounting treatment rules) to,
execute and deliver to Valley within 14 days after the execution and delivery of
this Agreement, a letter substantially in the form of Exhibit 5.18 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 14 days after the execution and delivery of this Agreement, a
letter substantially in the form of Exhibit 5.18.1 hereto 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.
5.19. Bank Policies and Bank Mergers. Notwithstanding that
Merchants believes that it has established all reserves and taken all provisions
for possible loan losses required by GAAP and applicable laws, rules and
regulations, Merchants recognizes that Valley may have adopted different loan,
accrual and reserve policies (including loan classifications and levels of
reserves for possible loan losses). From and after the date of this Agreement to
the Effective Time and in order to formulate the plan of integration for the
Bank Mergers, Merchants and Valley shall consult and cooperate with each other
with respect to (i) conforming to the extent appropriate, based upon such
consultation, Merchants' loan, accrual and reserve policies and Merchants' other
policies and procedures regarding applicable regulatory matters, including
without limitation Federal Reserve, the Bank Secrecy Act and FDIC matters, to
those policies of Valley as Valley may reasonably identify to Merchants from
time to time, (ii) new extensions of credit by the Bank where the aggregate
exposure exceeds $5,000,000, and (iii) conforming, based upon such consultation,
the composition of the investment portfolio and overall asset/liability
management position of Merchants and the Bank to the extent appropriate;
provided that any required change in Merchants' practices in connection with the
matters described in clause (i) or (iii) above need not be effected (A) more
than five days prior to the Effective Time and (B) unless and until all
necessary regulatory, governmental and shareholder approvals and consents have
been received, all statutory waiting periods in respect thereof have expired,
Valley agrees in writing that all conditions precedent to the Closing have
occurred (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing), and Valley has
provided the Closing Notice. No accrual or reserve made by Merchants or any
Merchants Subsidiary pursuant to this subsection, or any litigation or
regulatory proceeding arising out of any such accrual or reserve, shall
constitute or be deemed to be a breach or violation of any representation,
warranty, covenant, condition or other provision of this Agreement or to
constitute a termination event within the meaning of Section 7.1(d) or Section
7.1(f) hereof.
5.20. New Valley Directors. As of the Effective Time, Valley
shall cause its Board of Directors and the VNB Board of Directors to take action
to appoint Spencer B. Witty, Robinson Markel and Charles Baum to the Board of
Directors of Valley and Spencer B. Witty to the Board of Directors of VNB,
respectively, at the Effective Time.
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 Stockholders; SEC Registration. This Agreement
and the transactions contemplated hereby shall have been approved by the
requisite vote of the stockholders of Merchants and the stockholders of Valley.
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 Merchants 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 Merchants 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. Both VNB and the Bank shall have taken all necessary action to
consummate the Bank Merger immediately after the Effective Time.
(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 or the Bank 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 Merchants 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 Merchants shall have
received an opinion, satisfactory to Valley and Merchants, of Pitney, Hardin,
Kipp & Szuch LLP, 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, Merchants, VNB or the Bank or to the
stockholders of Merchants who exchange their shares of Merchants 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 LLP to the effect that based upon a
review of this Agreement and the facts and circumstances known to it, the Merger
shall be qualified to be treated by Valley as a pooling-of-interests for
accounting purposes.
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 Merchants and Bank. The representations and warranties of Merchants 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. Merchants 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 been the subject of
a supplement or amendment to the Merchants Disclosure Schedule, that
representation or warranty shall be deemed modified by the disclosure contained
in such supplement or amendment only under the circumstances set forth in
Section 5.11.
(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 Merchants, 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) Fairness Opinion. Valley shall have received from Sandler
O'Neill & Partners, L.P. an updated opinion as of the date of the Joint Proxy
Statement-Prospectus with respect to the fairness from a financial point of view
of the Exchange Ratio to the stockholders of Valley in the Merger.
(e) Non-Competition Agreements. All of the directors or
officers of Merchants identified in Section 5.15(a) as having executed the
Non-Competition Agreements shall continue to be employed by Merchants (unless
their employment was terminated due to death or disability) and none of them
shall have notified either Merchants or Valley of his intention to voluntarily
terminate his employment with Valley following the Closing.
(f) Certificates. Merchants 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.
6.3. Conditions to the Obligations of Merchants Under this
Agreement. The obligations of Merchants 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 been the subject of a supplement or amendment
to the Valley Disclosure Schedule, that representation or warranty shall be
deemed modified by the disclosure contained in such supplement or amendment only
under the circumstances set forth in Section 5.11.
(b) Opinion of Counsel to Valley. Merchants shall have
received an opinion of counsel to Valley, dated the date of the Closing, in form
and substance reasonably satisfactory to Merchants, covering the matters set
forth on Schedule 6.3 hereto and any other matter reasonably requested by
Merchants.
(c) Fairness Opinion. Merchants shall have received an updated
opinion from CIBC World Markets Corp., as of the date of the Joint Proxy
Statement-Prospectus with respect to the fairness, from a financial point of
view, of the Exchange Ratio to the shareholders of Merchants in the Merger.
(d) Certificates. Valley shall have furnished Merchants 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 Merchants may
reasonably request.
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 Merchants, based upon any of the following:
(a) By mutual written consent of the parties hereto.
(b) By Valley or Merchants (i) if the Effective Time shall not
have occurred on or prior to the Cutoff Date or (ii) if a vote of the
stockholders of Merchants or Valley is taken and the stockholders of either
company 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 Merchants, to be performed or
observed by the directors of Merchants) at or before the Effective Time.
(c) By Valley or Merchants 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 Merchants
if any such application is approved with conditions which materially impair the
value of Merchants 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
Merchants or the Bank, taken as a whole, from that disclosed by Merchants on the
date of this Agreement; or (ii) there was a material breach in any
representation, warranty, covenant, agreement or obligation of Merchants
hereunder.
(e) By Merchants, 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 Merchants if any condition to Closing
specified under Article VI hereof applicable to such party cannot reasonably be
met on or before the Cutoff Date after giving the other party a reasonable
opportunity to cure any such condition.
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either Valley or Merchants 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 willful 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 Merchants 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 stockholders of Merchants without the
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of Valley and Merchants.
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 Joint 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
1455 Valley Road
Wayne, New Jersey 07470
Attn.: Gerald H. Lipkin
Chairman and Chief Executive Officer
Telecopier No. (973) 305-0024
Copy to:
Pitney, Hardin, Kipp & Szuch LLP
Attn.: Ronald H. Janis, Esq.
Delivery:
--------
200 Campus Drive
Florham Park, New Jersey 07932
Mail:
----
P.O. Box 1945
Morristown, New Jersey 07962-1945
Telecopier No. (973) 966-1550
(b) If to Merchants, to:
Merchants New York Bancorp, Inc.
275 Madison Avenue
New York, New York 10022
Attn.: William J. Cardew,
Vice Chairman and Chief Financial Officer
Telecopier No. (212) 973-6663
Copy to:
Rosenman & Colin LLP
Attn.: Robinson Markel, Esq.
575 Madison Avenue
New York, New York 10022-2585
Telecopier No. (212) 940-8776
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 Valley, Merchants, the Bank and VNB, and their
respective successors. 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 rights conferred upon indemnitees
pursuant to Section 5.14 hereof.
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 among 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 Section
5.16 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 knowledge of Merchants, to the best of Merchants'
knowledge or similar phrases refer as of the date hereof to the best knowledge
of the Chairman of the Board, the President and Chief Executive Officer, the
Vice Chairman and Chief Operating Officer, and the Senior Vice President and
Treasurer of Merchants and thereafter refer to the best knowledge of any senior
officer of Merchants or any Merchants subsidiary. Representations made herein
which are qualified by the phrase to the knowledge of Valley, 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.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, Valley, VNB, the Bank and Merchants 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
ALAN D. ESKOW GERALD H. LIPKIN
------------------------------------ By:-----------------------------
Alan D. Eskow, Senior Vice President Gerald H. Lipkin
Chairman, President and
Chief Executive Officer
ATTEST: MERCHANTS NEW YORK BANCORP, INC.
ERIC W. GOULD SPENCER B. WITTY
------------------------------------ By:-----------------------------
Eric W. Gould, Senior Vice President Spencer B. Witty
Chairman of the Board
and
JAMES G. LAWRENCE
By:-----------------------------
James G. Lawrence
President and Chief
Executive Officer
ATTEST: VALLEY NATIONAL BANK
ALAN D. ESKOW GERALD H. LIPKIN
------------------------------------ By:-----------------------------
Alan D. Eskow, Senior Vice President Gerald H. Lipkin, Chairman,
President and Chief
Executive Officer
ATTEST: THE MERCHANTS BANK OF NEW YORK
ERIC W. GOULD SPENCER B. WITTY
------------------------------------ By:-----------------------------
Eric W. Gould, Senior Vice President Spencer B. Witty
Chairman of the Board
and
JAMES G. LAWRENCE
By:-----------------------------
James G. Lawrence
President and Chief
Executive Officer
<PAGE>
CERTIFICATE OF THE DIRECTORS OF
MERCHANTS NEW YORK BANCORP, INC. AND
THE MERCHANTS BANK OF NEW YORK
Reference is made to the Agreement and Plan of Merger, dated
as of September 5, 2000 (the "Agreement"), among Valley National Bancorp, Valley
National Bank, Merchants New York Bancorp, Inc. and The Merchants Bank of New
York. Capitalized terms used herein have the meanings given to them in the
Agreement.
Each of the following persons, being all of the directors of
Merchants and the Bank, intends to vote or cause to be voted, at a special
meeting of stockholders called to adopt the Agreement, all shares of Merchants
Common Stock which are held by such person, or over which such person exercises
sole voting power, or over which such person shares voting power exclusively
with other individuals who are signing this certificate, in favor of adoption of
the Agreement.
ALAN MIRKEN CHARLES J. BAUM
--------------------------------- -----------------------------------
MITCHELL J. NELSON JAMES G. LAWRENCE
--------------------------------- -----------------------------------
ERIC W. GOULD PAUL MEYROWITZ
--------------------------------- -----------------------------------
ROBINSON MARKEL WILLIAM J. CARDEW
--------------------------------- -----------------------------------
MARCIA TOLEDAN RUDOLF H. HERTZ
--------------------------------- -----------------------------------
SPENCER B. WITTY LEONARD SCHLUSSEL
--------------------------------- -----------------------------------
CHARLES I. SILBERMAN
--------------------------------- -----------------------------------
<PAGE>
EXHIBIT A
AGREEMENT TO MERGE BETWEEN
VALLEY NATIONAL BANK
AND
THE MERCHANTS BANK OF NEW YORK
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 Street, Passaic, New Jersey,
with a capital of $17,960,310 divided into 3,592,062 shares of common stock,
each of $5.00 par value, $83,738,452 of surplus, and undivided profits of
$371,396,236, as of June 30, 2000, and The Merchants Bank of New York
(hereinafter referred to as "TMB"), a state-chartered commercial bank organized
under the laws of New York, being located at _________________________________,
County of ________, in the State of New York, with a capital of $____________,
divided into ________ shares of common stock, each of $______ par value, surplus
of $___________, and undivided profits of $_________, as of September 30, ____,
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 York Banking Law, as amended, witnesseth as
follows:
Section 1. TMB 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 Street,
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 the 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 September 30, ____, 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.
Section 6. TMB shall contribute to the Association its capital
set forth in the preamble, adjusted, however, for normal earnings, expenses and
dividends between June 30, 2000, 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, 2000 and the effective date of the
merger.
Section 7. The stockholder 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 stockholder of TMB 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 stockholder 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 TMB may pay dividends to its parent,
consistent with past practice, so long as the payment of such dividends shall
thereby not cause a breach of any representation, covenant, agreement or
condition to which the Bank is subject under the Agreement and Plan of Merger,
dated as of September 5, 2000 among Valley National Bancorp, Merchants New York
Bancorp, Inc., VNB and TMB (the "Merger Agreement").
Section 9. The present board of directors of VNB (with the
addition of _____________) 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 Office of the
Comptroller of the Currency (the "OCC"), 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 stockholders 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 OCC.
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 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 ___________, 2000, each set by its chairman, 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:----------------------------
Alan D. Eskow, Controller Gerald H. Lipkin, Chairman,
President and Chief
Executive Officer
ATTEST: THE MERCHANTS BANK OF NEW YORK
----------------------------------- By:----------------------------
____________, Senior Vice President Spencer B. Witty
Chairman of the Board
and
By:----------------------------
James G. Lawrence
President and Chief
Executive Officer
<PAGE>
STATE OF NEW JERSEY )
: ss.
COUNTY OF ________________)
On this _____ day of _____________, ____, before me, a Notary
Public for this state and county, personally came Gerald H. Lipkin, as Chairman
and Chief Executive Officer, and Alan D. Eskow, as Controller of Valley National
Bank, and each of his 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)
STATE OF NEW YORK )
:ss.
COUNTY OF ________________)
On this _____ day of ____________, ____, before me, a Notary
Public for this state and county, personally came __________________, as
Chairman of the Board, __________________, as President and Chief Executive
Officer, and _____________________, as Secretary of The Merchants Bank of New
York, and each of his/her capacity acknowledged this instrument to the act and
deed of the corporation 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 BANK 1
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 has 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 STOCKHOLDERS
FOURTH. There shall be an annual meeting of the stockholders,
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.
1 As will be in effect after the merger
<PAGE>
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 stockholders.
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
stockholders 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.
<PAGE>
EXHIBIT 5.18
MERCHANTS AFFILIATE LETTER
__________, 2000
Valley National Bancorp
1455 Valley Road
Wayne, New Jersey 07470
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of Merchants New York Bancorp, Inc., a New Jersey
corporation (the "Company") with and into Valley National Bancorp, a New Jersey
corporation ("Valley"), pursuant to the Agreement and Plan of Merger dated as of
September 5, 2000 (the "Agreement") among the Company, Valley, The Merchants
Bank of New York and Valley National Bank. I currently own shares of the
Company's common stock, par value $.001 per share ("Merchants Common Stock"). As
a result of the Merger, I will receive shares of Valley's common stock, no par
value ("Valley Common Stock") in exchange for my Merchants Common Stock. In
addition, to the extent I own options to acquire Merchants Common Stock, those
options will be converted in the Merger into options to acquire Valley Common
Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of the Company, as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations promulgated under the Securities Act of 1933, as amended (the "Act")
by the Securities and Exchange Commission (the "Commission") and as the term
"affiliate" is used for purposes of the Commission's rules and regulations
applicable to the determination of whether a merger can be accounted for as a
"pooling of interests" as specified in the Commission's Accounting Series
Release 135, as amended by Staff Accounting Bulletins Nos. 65 and 76 ("ASR
135").
I represent to and covenant with Valley that:
A. Transfer Restrictions Prior to Merger Consummation. During
the period beginning on the date hereof and ending 30 days prior to the
consummation of the Merger, I shall not sell, transfer or otherwise dispose of
("transfer") any Merchants Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity whom or which I control,
from transferring any Merchants Common Stock owned by such person or entity,
without notifying Valley in advance of the proposed transfer and giving Valley a
reasonable opportunity to object to the transfer before it is consummated.
Valley, upon advice of its independent public accountants, may instruct me not
to make or permit the transfer because it may interfere with the "pooling of
interests" treatment of the Merger. I shall abide by any such instructions.
B. Post-Consummation Transfer Restrictions. During the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by Valley by means of the filing of a Form 10-Q
or Form 8-K under the Securities Exchange Act of 1934, as amended, the issuance
of a quarterly earnings report, or any other public issuance which satisfies the
requirements of ASR 135, I shall not transfer any Merchants Common Stock owned
by me, and I shall not permit any relative who shares my home, or any person or
entity whom or which I control, to transfer any Merchants Common Stock owned by
such person or entity. For purposes of this paragraph, "Merchants Common Stock"
includes the Valley Common Stock into which the Merchants Common Stock or
Options is converted.
C. Need for Registration or Exemption in Connection with
Transfers. I have been advised that the issuance of Valley Common Stock to me
pursuant to the Merger will be registered with the Commission under the Act on a
Registration Statement on Form S-4. However, I have also been advised that,
since I may be deemed to be an affiliate of the Company at the time the Merger
is submitted for a vote of the Company's stockholders, any transfer by me of
Valley Common Stock received by me in the Merger is restricted under Rule 145
promulgated by the Commission under the Act. I may not transfer Valley Common
Stock received by me or by any relative who shares my home or by any person or
entity whom or which I control, unless (i) such transfer is registered under the
Act, (ii) such transfer is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Act, or (iii) in
the opinion of counsel reasonably acceptable to Valley, such transfer is
otherwise exempt from registration under the Act.
D. Stop Transfer Instructions; Legend on Certificates. I also
understand that stop transfer instructions will be given to Valley's transfer
agents with respect to the Valley Common Stock and that there will be placed on
the certificates of the Valley Common Stock issued to me or to any relative who
shares my home or to any person or entity whom or which I control, or any
substitutions therefor, a legend stating in substance:
Such legend and the stock transfer restrictions shall be
removed as soon as permissible under Rule 145.
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED SEPTEMBER 5, 2000 BETWEEN THE
REGISTERED HOLDER HEREOF AND Valley National Bancorp, A COPY OF WHICH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICE OF Valley National Bancorp."
E. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer Valley Common Stock to
the extent I felt necessary with my counsel or counsel for the Company.
[The following paragraph will be included in letters from
persons beneficially owning more than 1,000,000 shares of Merchants Common
Stock:]
By countersigning this letter, Valley covenants that it will
provide me with "piggyback registration rights" with respect to any secondary
offering for the account of a person or persons other than Valley, which
offering is registered by Valley by filing a Form S-3 or its equivalent during
the one-year period following closing of the Merger. These registration rights
shall be on customary terms and conditions, including terms and conditions with
respect to indemnification and payment of expenses.
Execution of this letter is not an admission on my part that I
am an "affiliate" of the Company as described in the second paragraph of this
letter, or a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter. This letter shall
terminate concurrently with any termination of the Agreement in accordance with
its terms.
Very truly yours,
Name: (Sign)
(Print)
Accepted this ____ day of
_______________, ________ by
VALLEY NATIONAL BANCORP
By: ________
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT 5.18.1
VALLEY AFFILIATE LETTER
_______, 2000
Valley National Bancorp
1455 Valley Road
Wayne, New Jersey 07470
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of Merchants New York Bancorp, Inc., a New Jersey
corporation ("Merchants") with and into Valley National Bancorp, a New Jersey
corporation ("Valley"), pursuant to the Agreement and Plan of Merger dated as of
September 5, 2000 (the "Agreement") among Valley, Merchants, Valley National
Bank and The Merchants Bank of New York. I currently own shares of Valley's
common stock, no par value ("Valley Common Stock").
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of Valley, as the term "affiliate" is used for
purposes of the rules and regulations of the Securities and Exchange Commission
(the "Commission") applicable to the determination of whether a merger can be
accounted for as a "pooling of interests" as specified in the Commission's
Accounting Series Release 135, as amended by Staff Accounting Bulletins Nos. 65
and 76 ("ASR 135").
I represent to and covenant with Valley and Merchants that:
A. Transfer Restrictions Prior to Merger Consummation. During
the period beginning on the date hereof and ending 30 days prior to the
consummation of the Merger, I shall not sell, transfer or otherwise dispose of
("transfer") any Valley Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity whom or which I control,
from transferring any Valley Common Stock owned by such person or entity,
without notifying Valley in advance of the proposed transfer and giving Valley a
reasonable opportunity to object to the transfer before it is consummated.
Valley, upon advice of its independent public accountants, may instruct me not
to make or permit the transfer because it may interfere with the "pooling of
interests" treatment of the Merger. I shall abide by any such instructions.
B. Post-Consummation Transfer Restrictions. During the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by Valley by means of filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, the issuance of a quarterly
earnings report, or any other public issuance which satisfies the requirements
of ASR 135, I shall not transfer any Valley Common Stock owned by me, and I
shall not permit any relative who shares my home, or any person or entity whom
or which I control, to transfer any Valley Common Stock owned by such person or
entity.
C. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer Valley Common Stock to
the extent I felt necessary with my counsel or counsel for Valley.
Execution of this letter is not an admission on my part that I
am an "affiliate" of Valley as described in the second paragraph of this letter,
or a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-----------------------------
Name: (Sign)
(Print)
Accepted this ___ day of
____________, ____ by
VALLEY NATIONAL BANCORP
By: ___________________________
Name:
Title:
<PAGE>
SCHEDULE 6.2
FORM OF OPINION OF COUNSEL TO
MERCHANTS TO BE DELIVERED TO
VALLEY AT THE EFFECTIVE TIME
(Capitalized terms used herein and not otherwise defined have the meanings
given them in the Agreement)
(a) Merchants is a corporation validly existing and in good
standing under the laws of the State of New Jersey. Merchants has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as described in the Joint Proxy Statement-Prospectus on
page __ under the caption _________________. Merchants is registered as a bank
holding company under the BHCA.
(b) Each Subsidiary of Merchants listed as such in the
Merchants Disclosure Schedule is validly existing and in good standing under the
laws of the jurisdiction of its incorporation. The Bank is a state-chartered
commercial bank under the laws of the State of New York. The Bank has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as described in the Joint Proxy
Statement-Prospectus on page __ under the caption _________________.
(c) The authorized capital stock of Merchants consists of
_______________ shares of Merchants Common Stock. Except for any Merchants
Common Stock issuable upon exercise of outstanding Merchants Options granted
pursuant to the Merchants Employee Option Plan and the Valley Stock Option, we
have not become aware (through our representation of Merchants in connection
therewith or in the course of our representation of Merchants in connection with
the Agreement, or through Merchants' representations to us in the attached
certificate) of any outstanding subscription rights, options, conversion rights,
warrants or other agreements or commitments of any nature whatsoever (either
firm or conditional) obligating Merchants to issue, deliver or sell, cause to be
issued, delivered or sold, or restricting Merchants from selling any additional
Merchants Common Stock or obligating Merchants to grant, extend or enter into
any such agreement or commitment.
(d) The Agreement has been authorized, executed and delivered
by Merchants and the Bank and constitutes the valid and binding obligations of
Merchants and the Bank, respectively, enforceable in accordance with its terms,
except that the enforceability of the obligations of Merchants and the Bank may
be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, or laws affecting bank holding companies or institutions the
deposits of which are insured by the FDIC or other laws heretofore or hereafter
enacted relating to or affecting the enforcement of creditors' rights generally
and by principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). In addition, certain remedial
and other provisions of the Agreement may be limited by implied covenants of
good faith, fair dealing, and commercially reasonable conduct, by judicial
discretion, in the instance of equitable remedies, and by applicable public
policies and laws.
(e) The execution and delivery of the Agreement and the Bank
Merger Agreement and the consummation of the transactions contemplated thereby
will not (i) violate any provision of or result in the breach of any provision
of the respective certificates of incorporation or by-laws of Merchants or the
Bank; (ii) conflict with or violate in any material respect, or result in a
material breach or violation of the terms or provisions of, or constitute a
default under, or result in (whether upon or after the giving of notice or lapse
of time or both) any material obligation under, any indenture, mortgage, deed of
trust or loan agreement or any other agreement, instrument, judgment, order,
arbitration award or decree of which we are aware (through our representation of
Merchants in connection therewith or in the course of our representation of
Merchants in connection with the Agreement, or through Merchants'
representations to us in the attached certificate) and to which Merchants or the
Bank is a party or by which Merchants or the Bank is bound; or (iii) cause
Merchants or the Bank to violate any law, rule or regulation applicable to
Merchants or the Bank: except with respect to (ii) and (iii) above, such as in
the aggregate will not have a material adverse effect on the ability of
Merchants and the Bank to consummate the transactions contemplated by the
Agreement.
(f) All actions of the directors and stockholders of Merchants
and of the Bank required by Delaware law, federal banking law or New York law,
or by the respective certificate of incorporation or by-laws of Merchants or the
Bank, to be taken by Merchants or the Bank to authorize the execution, delivery
and performance of the Agreement and consummation of the Merger have been taken.
(g) No approvals, authorizations, consents or other actions or
filings under Delaware law, federal banking law or New York law ("Approvals")
are required to be obtained by Merchants or the Bank in order to permit the
execution and delivery of the Agreement by Merchants and the Bank and the
performance by Merchants and the Bank of the transactions contemplated thereby
without violation of such laws other than those Approvals which have been
obtained or those Approvals or consents required to be obtained by Valley or
VNB, or Approvals not required or necessary to be obtained on the date hereof in
order to permit such execution, delivery and performance without violation of
such laws.
(h) Except as set forth in the Merchants Disclosure Schedule
or in Merchants' certificate addressed to us and attached hereto, and other than
ordinary routine litigation incidental to the business of Merchants or its
Subsidiaries, we are not aware of any material action, suit or proceeding or
investigation pending or threatened in writing against or affecting the
business, operations, property or financial condition of Merchants or any of its
Subsidiaries, at law or in equity, in any court or before any Federal, state,
municipal or other governmental Department, commission, board, bureau, agency or
instrumentality, except those which, if decided adversely to Merchants or any of
its Subsidiaries, would not have a material adverse effect on Merchants and its
Subsidiaries, taken as a whole; provided, however, we are not counsel to
Merchants or its Subsidiaries in any litigation and with respect to litigation
we are relying upon the representation and warranty of Merchants made in Section
3.7 of the Agreement with respect to material litigation and on Merchants'
certificate addressed to us and attached hereto.
* * * * * * *
We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements and information
contained in the Joint Proxy Statement-Prospectus and make no representation
that we have independently verified the accuracy, completeness or fairness of
such statements and information, but, without in any way limiting the generality
of the foregoing, based upon our review of the Joint Proxy Statement-Prospectus
(i) the Joint Proxy Statement-Prospectus (except for financial statements and
other tabular financial information, and other financial and statistical data
and information, as to which we express no opinion) complies as to form in all
material respects with the 1934 Act and the applicable laws and regulations
thereunder, (ii) no facts have come to our attention that caused us to believe
that (except for financial statements and other tabular financial information,
as to which we do not express any belief) the Joint Proxy Statement-Prospectus
on the date of the mailing thereof and on the date of the meeting of
stockholders of Merchants at which the Agreement was approved, contained any
untrue statement of a material fact with respect to Merchants or omitted to
state a material fact with respect to Merchants necessary in order to make the
statements therein with respect to Merchants, in light of the circumstances
under which they were made, not misleading.
* * * * * * *
In rendering their opinion, counsel to Merchants (A) may, to
the extent they deem proper and so specify in their opinion, rely upon the
opinion of other counsel as to matters involving the application of laws of any
jurisdiction other than the United States, or may exclude from their opinion the
substance included in the opinions of other counsel given directly to Valley and
(B) may rely, as to matters of fact, on certificates of responsible officers of
Merchants, the Bank, or other Subsidiaries of Valley and public officials;
provided copies of any such opinions or certificates are delivered to Merchants
together with the opinion to be rendered hereunder by counsel to Merchants.
Counsel to Merchants may assume that any agreement is the valid and binding
obligation of any parties to such agreement other than Merchants and the Bank.
As to matters of fact, counsel to Merchants may also rely upon the
representations and warranties made by Merchants to Valley in the Agreement as
though such representations and warranties were made directly to counsel.
Counsel to Merchants may also rely upon the genuineness of signatures and the
authenticity of copies.
<PAGE>
SCHEDULE 6.3
FORM OF OPINION OF COUNSEL TO
VALLEY TO BE DELIVERED TO
MERCHANTS AT THE EFFECTIVE TIME
(Capitalized terms used herein and not otherwise defined have the meanings
given them in the Agreement)
(a) Valley is a corporation 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 described in the Joint Proxy Statement-Prospectus on
page __ under the caption _________________. Valley is registered as a bank
holding company under the BHCA.
(b) Each Subsidiary of Valley listed as such in the Valley
Disclosure Schedule is validly existing and in good standing under the laws of
the jurisdiction of its incorporation. VNB is a national banking association
chartered under the laws of the United States. VNB has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as described in the Joint Proxy Statement-Prospectus on page __ under
the caption _________________.
(c) The authorized capital stock of Valley consists of
___________ shares of common stock, no par value per share ("Valley Common
Stock"). Except for any Valley Common Stock issuable upon exercise of
outstanding stock options and stock appreciation rights granted pursuant to the
Valley Option Plan, we have not become aware (through our representation of
Valley in connection therewith or in the course of our representation of Valley
in connection with the Agreement, or through Valley's representations to us in
the attached certificate) of any outstanding subscription rights, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever (either firm or conditional) obligating Valley to issue, deliver or
sell, cause to be issued, delivered or sold, or restricting Valley from selling
any additional Valley Common Stock or obligating Valley to grant, extend or
enter into any such agreement or commitment except as may be provided in any
acquisition agreement Valley may enter into after the date of execution of the
Agreement. The Valley Common Stock to be issued in connection with the Merger in
accordance with Article II of the Agreement, when so issued in accordance
therewith, will 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 Valley.
(d) The Agreement has been authorized, executed and delivered
by Valley and VNB and constitutes the valid and binding obligations of Valley
and VNB, respectively, enforceable in accordance with its terms, except that the
enforceability of the obligations of Valley and VNB may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, or
laws affecting institutions the deposits of which are insured by the FDIC or
other laws heretofore or hereafter enacted relating to or affecting the
enforcement of creditors' rights generally and by principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). In addition, certain remedial and other provisions of the
Agreement may be limited by implied covenants of good faith, fair dealing, and
commercially reasonable conduct, by judicial discretion, in the instance of
equitable remedies, and by applicable public policies and laws.
(e) The execution and delivery of the Agreement and the Bank
Merger Agreement and the consummation of the transactions contemplated thereby
will not (i) violate any provision of or result in the breach of any provision
of the respective certificates of incorporation or by-laws of Valley or VNB;
(ii) conflict with or violate in any material respect, or result in a material
breach or violation of the terms or provisions of, or constitute a default
under, or result in (whether upon or after the giving of notice or lapse of time
or both) any material obligation under, any indenture, mortgage, deed of trust
or loan agreement or any other agreement, instrument, judgment, order,
arbitration award or decree of which we are aware (through our representation of
Valley in connection therewith or in the course of our representation of Valley
in connection with the Agreement, or through Valley's representations to us in
the attached certificate) and to which Valley or VNB is a party or by which
Valley or VNB is bound; or (iii) cause Valley or VNB to violate any law, rule or
regulation applicable to Valley or VNB: except with respect to (ii) and (iii)
above, such as in the aggregate will not have a material adverse effect on the
ability of Valley and VNB to consummate the transactions contemplated by the
Agreement.
(f) All actions of the directors and stockholders of Valley
and of VNB required by federal banking law, New York law or New Jersey law, or
by the respective certificates of incorporation or by-laws of Valley or VNB, to
be taken by Valley or VNB to authorize the execution, delivery and performance
of the Agreement and consummation of the Merger have been taken.
(g) Assuming that there has been due authorization of the
Merger by all necessary corporate and governmental proceedings on the part of
Merchants and that Merchants has taken all action required to be taken by it
prior to the Effective Time, upon the appropriate filing of the Certificates of
Merger in respect of the Merger with the Delaware and New Jersey Secretary of
State in accordance with Section 1.6 of the Agreement, the Merger will become
effective at the time of such filings, and upon effectiveness of the Merger each
share of Merchants Common Stock will be converted as provided in Article II of
the Agreement.
(h) No approvals, authorizations, consents or other actions or
filings under federal banking law, Delaware law, New York law or New Jersey law
("Approvals") are required to be obtained by Valley or VNB in order to permit
the execution and delivery of the Agreement by Valley and VNB and the
performance by Valley and VNB of the transactions contemplated thereby without
violation of such laws other than those Approvals which have been obtained or
those Approvals or consents required to be obtained by Merchants or the Bank,
and Approvals not required or necessary to be obtained on the date hereof in
order to permit such execution, delivery and performance without violation of
such laws.
(i) Except as set forth in the Valley Disclosure Schedule or
in Valley's certificate addressed to us and attached hereto, and other than
ordinary routine litigation incidental to the business of Valley or its
Subsidiaries, we are not aware of any material action, suit or proceeding or
investigation pending or threatened in writing against or affecting the
business, operations, property or financial condition of Valley or any of its
Subsidiaries, at law or in equity, in any court or before any Federal, state,
municipal or other governmental Department, commission, board, bureau, agency or
instrumentality, except those which, if decided adversely to Valley or any of
its Subsidiaries, would not have a material adverse effect on Valley and its
Subsidiaries, taken as a whole; provided, however, we are not counsel to Valley
or its Subsidiaries in certain litigation and with respect to any such
litigation we are relying upon the representation and warranty of Valley made in
Section 4.10 of the Agreement with respect to material litigation and on
Valley's certificate addressed to us and attached hereto.
(j) The Registration Statement has been declared effective by
the SEC under the 1933 Act and we are not aware that any stop order suspending
the effectiveness has been issued under the 1933 Act or proceedings therefor
initiated or threatened by the SEC.
* * * * * * *
We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements and information
contained in the Joint Proxy Statement-Prospectus and make no representation
that we have independently verified the accuracy, completeness or fairness of
such statements and information, but, without in any way limiting the generality
of the foregoing, based upon our review of the Joint Proxy Statement-Prospectus
(i) the Joint Proxy Statement-Prospectus (except for financial statements and
other tabular financial information, and other financial and statistical data
and information, as to which we express no opinion) complies as to form in all
material respects with the 1933 Act and the applicable laws and regulations
thereunder, (ii) no facts have come to our attention that caused us to believe
that (except for financial statements and other tabular financial information,
as to which we do not express any belief) the Joint Proxy Statement-Prospectus
on the date of the mailing thereof and on the date of the meeting of
stockholders of Merchants at which the Agreement was approved, contained any
untrue statement of a material fact with respect to Valley or omitted to state a
material fact with respect to Valley necessary in order to make the statements
therein with respect to Valley, in light of the circumstances under which they
were made, not misleading.
* * * * * * *
In rendering their opinion, counsel to Valley (A) may, to the
extent they deem proper and so specify in their opinion, rely upon the opinion
of other counsel as to matters involving the application of laws of any
jurisdiction other than the United States or the State of New Jersey, or may
exclude from their opinion the substance included in the opinions of other
counsel given directly to Merchants and (B) may rely, as to matters of fact, on
certificates of responsible officers of Valley, VNB, or other Subsidiaries of
Valley and public officials; provided copies of any such opinions or
certificates are delivered to Merchants together with the opinion to be rendered
hereunder by counsel to Valley. Counsel to Valley may assume that any agreement
is the valid and binding obligation of any parties to such agreement other than
Valley and VNB. As to matters of fact, counsel to Valley may also rely upon the
representations and warranties made by Valley to Merchants in the Agreement as
though such representations and warranties were made directly to counsel.
Counsel to Valley may also rely upon the genuineness of signatures and the
authenticity of copies.
