<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported) - December 7, 1994
HUBCO, INC.
(Exact Name of Registrant as Specified in Charter)
NEW JERSEY
(State or Other Jurisdiction of Incorporation)
1-10699 22-2405746
(Commission File Number)(IRS Employer Identification No.)
3100 Bergenline Avenue, Union City, New Jersey 07087
(Address of Principal Executive Offices)
(201) 348-2300
(Registrant's Telephone Number)
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Item 5. Other Events.
1. On December 7, 1994 HUBCO Inc. ("HUBCO"),
through its subsidiary, Hudson United Bank (the "Bank"),
acquired Shoppers Charge Accounts Co.
("Shoppers") of Jersey City, New Jersey for
approximately $16.3 million in cash.
The Shoppers transaction is being accounted for under the
purchase method of accounting. The Bank recorded
approximately $63.4 million in assets and $46.9 million
in liabilities as a result of this acquisition. The
difference reflects the shareholders' equity of Shoppers
($13.2 million) and the tax impacted purchase accounting
adjustments of $3.3 million. HUBCO estimates that no
goodwill will arise from the Shoppers transaction.
Shoppers is among the twenty largest third party private
label retail credit card companies in the United States.
Private label revolving credit cards issued on behalf of
retail stores by third party firms accounted for
approximately one-third of outstandings on all retail
credit cards at year-end 1992. Shoppers' credit
operating system can also be used by the Bank to manage
a traditional credit card portfolio.
Shoppers will become a division of the Bank, and
Thomas R. Nelson, Chief Operating Officer of Shoppers,
will remain with the Bank with overall responsibility for
the operations of the Shoppers division.
<PAGE>
Item 7 - Exhibits
10 Stock Purchase Agreement dated as of December 7, 1994
by and among Hudson United Bank, Bernard Eichenbaum,
David Leff and Shoppers Charge Accounts Co.
99 Press Release dated December 7, 1994
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, HUBCO, Inc. has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
HUBCO, Inc.
Dated : December 7, 1994 By: KENNETH T. NEILSON
Kenneth T. Neilson
President and
Chief Executive Officer
Exhibit 10 - Stock Purchase Agreement dated as of December 7, 1994
by and among Hudson United Bank, Bernard Eichenbaum,
David Leff and Shoppers Charge Accounts Co.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of the 7th day of
December, 1994 (this "Agreement"), is by and among HUDSON UNITED
BANK, a New Jersey chartered commercial banking corporation having
its principal office at 3100 Bergenline Avenue, Union City, New
Jersey 07087 ("Buyer"); BERNARD EICHENBAUM and DAVID LEFF, having
addresses shown in Exhibit A attached hereto ("Sellers"); and
SHOPPERS CHARGE ACCOUNTS CO., a New Jersey corporation having its
principal office at 574 Summit Avenue, Jersey City, New Jersey
07306 (the "Company").
WITNESSETH:
WHEREAS, Sellers are the owners of all of the issued and
outstanding voting shares of capital stock of the Company, consist-
ing of 500,000 shares of Class B common voting stock, par value
$0.10 per share (collectively, the "Shares"); and
WHEREAS, each Seller owns 250,000 of the Shares; and
WHEREAS, Sellers desire to sell, and Buyer desires to
purchase, all of the Shares; and
WHEREAS, the Company is in the business of providing
retail merchants with customized revolving charge plans and pur-
chasing installment receivables from merchants at a discount (the
"Business");
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants and agreements contained herein, the parties
hereto do hereby agree as follows:
1.Sale and Purchase of Shares. Upon the terms and
subject to the conditions contained herein, Sellers shall sell,
convey, transfer and assign to Buyer, on the Closing Date (as
defined in Section 7), and Buyer shall purchase from Sellers, for
the consideration herein provided, all of the Shares, free and
clear of any lien or encumbrance.
2.Purchase Price and Payment. The aggregate purchase
price (the "Purchase Price") to be paid to Sellers by Buyer for the
Shares shall be Sixteen Million Fifteen Thousand Dollars
($16,015,000), payable as provided in Section 7 hereof. Each
Seller shall receive fifty percent (50%) of the Purchase Price.
3. Representations and Warranties of Sellers and the
Company. Sellers and the Company, jointly and severally, hereby
represent and warrant to Buyer as follows:
3.1 Corporate Organization, Etc.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of New Jersey. The Company is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the
nature of the business conducted by it or the character or location
of the property and assets owned, leased or operated by it makes
such licensing or qualification necessary.
(b) The Company does not own, directly or indirect-
ly, any shares of capital stock, bonds, securities or any equity or
other proprietary interest in any corporation, partnership, joint
venture or other legal entity.
(c) The Company has all the requisite corporate
power and authority and is entitled to operate the Business as
presently conducted by it, and to own, lease or operate its prop-
erties, in each case in the places where such Business is now
conducted and where such properties are now owned, leased or
operated. The Company is duly qualified and properly licensed to
conduct the Business with respect to retail installment sales in
accordance with N.J.S.A. 17:16C-1 et seq. at its principal office
located at 574 Summit Avenue, Jersey City, New Jersey 07306 (the
"Principal Office"), and there is, to the best of the Company's
knowledge, no present threat of any judicial or administrative
order, and there is no pending judicial or administrative order or
any request, for the supervision, cancellation or transfer of any
such license or any pending challenge thereto, except in each case
as set on Schedule 3.1 of the Disclosure Schedule dated the date
hereof and initialed by the President of the Company (the "Disclo-
sure Schedule").
3.2 Capitalization.
(a) The authorized capital stock of the Company
consists of (i) 800,000 shares of Class "B" voting stock, par value
$0.10 per share (the "Voting Stock"), of which 500,000 shares are
issued and outstanding; (ii) 200,000 shares of Class "A" non-voting
stock, par value $0.10 per share (the "Non-Voting Stock"), of which
8,000 are issued and outstanding and (iii) 125,000 shares of 8%
cumulative dividend Preferred Stock, par value $10.00 per share, of
which none are issued or outstanding. The Shares constitute all of
the issued and outstanding shares of Voting Stock of the Company,
have been duly authorized and validly issued, are fully paid and
nonassessable and are owned of record and beneficially by Sellers.
All of the issued and outstanding shares of capital stock of the
Company (other than the Shares) are owned of record, and to the
best knowledge of Sellers beneficially, by the other shareholders
of the Company in the individual amounts set forth in Exhibit A
attached hereto. Each Seller has good and marketable title to
250,000 Shares free and clear of any lien, claim, option, charge,
security interest, defect in title or other encumbrance (a "Lien"),
or agreement granting to any person or firm, corporation or other
entity (a "Person") any interest in or right to acquire from
Sellers at any time, or upon the happening of any stated event, any
of the Shares, except as set forth in Schedule 3.2 to the Disclo-
sure Schedule. Except as set forth in Schedule 3.2 to the Disclo-
sure Schedule, (i) there are no outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments, conversion rights
or other agreements or arrangements of any character or nature
whatsoever pursuant to which the Company is or may be obligated to
issue shares of its capital stock, and the Company has no obliga-
tion to repurchase any of its outstanding shares of capital stock,
and (ii) there are no agreements or understandings with respect to
voting of any such shares.
(b) There are no restrictions or limitations (other
than limitations imposed on the Company by this Agreement or those
imposed by tax, corporate or other applicable law) on the payment
of dividends on the capital stock of the Company, whether by con-
tract, agreement, understanding, or otherwise.
3.3 Authority; No Violation.
(a) The Company has full corporate power and
authority to enter into this Agreement and any related agreements
referred to herein and to carry out the transactions contemplated
hereby and thereby, and all corporate and other proceedings
required to be taken by the Company to authorize the execution,
delivery and performance of this Agreement and related agreements,
instruments and other documents relating hereto have been properly
taken.
(b) Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any provision of the Certificate of Incor-
poration or By-laws of the Company, (ii) contravene or constitute
a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or permit the termination
or acceleration of, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or
assets of the Company under, any agreement or instrument (other
than the agreements with banks set forth in Schedule 3.3 to the
Disclosure Schedule) to which the Company is a party or by which
the Company is bound, (iii) contravene any law, governmental regu-
lation, or order, judgment or decree of any court or arbitration or
other tribunal binding upon the Company, or (iv) contravene any
law, governmental regulation, or order, judgment or decree of any
court or arbitration or other tribunal binding upon any of the
Sellers.
(c) This Agreement and related agreements referred
to herein to which any of them is a party have been duly autho-
rized, executed and delivered by Sellers and/or the Company, as the
case may be, and each constitutes, and all other instruments re-
quired hereby to be executed and delivered to Buyer by Sellers or
the Company constitute, or when executed and delivered will consti-
tute, legal, valid and binding obligations of Sellers and the Com-
pany enforceable in accordance with their respective terms.
(d) Except for the expiration or early termination
of applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), no consents
or approvals of or filings or registrations with or notices to any
third party or any public body or authority are necessary in con-
nection with (i) the execution and delivery by the Company or any
of Sellers of this Agreement and (ii) the consummation by the
Company or any of Sellers of the transactions contemplated hereby,
except such as are listed in Schedule 3.3 to the Disclosure
Schedule. The applicable waiting periods under the HSR Act have
been terminated.
3.4 Financial Statements.
(a) The audited balance sheets of the Company at
December 25, 1992 and December 31, 1993, and the related statements
of current and retained earnings and cash flows for the years ended
December 25, 1992 and December 31, 1993, in each case accompanied
by the audit report of Irvings & Rubin, C.P.A., P.C., independent
public accountants with respect to the Company, copies of which
have heretofore been delivered to Buyer and a duplicate copy of
which is included in Schedule 3.4 to the Disclosure Schedule (the
"Annual Financials") fairly present the assets, liabilities,
financial condition and results of operations of the Company as of
the dates and for the periods indicated, in accordance with
generally accepted accounting principles ("GAAP"), consistently
applied during the periods involved.
(b) The unaudited balance sheet of the Company as
of September 30, 1994 and the related statements of current and
retained earnings and cash flows for the nine months then ended,
which have been previously furnished to Buyer and a duplicate copy
of which is included in Schedule 3.4 to the Disclosure Schedule
have been prepared without audit. These financial statements,
subject to the following sentences of this Section 3.4(b), fairly
present the assets, liabilities, financial condition and results of
operations of the Company as of September 30, 1994 and for the nine
months then ended. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted, although the disclosures
are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the
financial statements and the notes thereto included in the finan-
cial statements referred to in Section 3.4(a) hereof. These finan-
cial statements reflect all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial
position and results of operations for the nine month period ended
September 30, 1994. The results of operations for the nine month
period ended September 30, 1994 are not necessarily indicative of
the results for the full year. The financial statements referred
to in this Section 3.4(b) and the Annual Financials are hereinafter
sometimes referred to collectively as the "Financial Statements".
(c) Management of the Company reasonably believes
that the Allowance for Losses established at September 30, 1994 was
sufficient as of that date and, except due to an increase, if any,
in the overall volume of the Company's receivables portfolio,
remains sufficient to cover future losses in the Company's receiv-
ables portfolio.
(d) The books and records of the Company are being
maintained in a manner sufficient to enable the preparation of
financial statements which fairly present the assets, liabilities,
financial condition and results of operations of the Company.
(e) Except as and to the extent reflected, dis-
closed or reserved against in the Financial Statements and subject
to the qualifications in Section 3.4(b) relating to such financial
statements, as of September 30, 1994 the Company had no liabili-
ties, whether absolute, accrued, contingent or otherwise, material
to the Business or the operations, assets or financial condition of
the Company which were required by GAAP (consistently applied) to
be disclosed in the Company's financial statements as of September
30, 1994.
3.5 Legal Proceedings.
(a) Except as disclosed in Schedule 3.5 to the
Disclosure Schedule, there are no lawsuits pending, or to the best
of the Company's knowledge threatened, to which the Company is or
may become a party other than lawsuits which would not, individu-
ally or in the aggregate, have a material and adverse effect on the
assets, business, financial condition or results of operations of
the Company. There are no governmental proceedings or investiga-
tions pending or threatened against the Company, and the Company
has not been charged with a violation of, or threatened with a
charge of a violation of, any provision of any federal or state law
or regulation relating to any aspect of the Business or any other
activity of the Company, except as disclosed in Schedule 3.5 to the
Disclosure Schedule. Except as disclosed in Schedule 3.5 to the
Disclosure Schedule, the Company is not subject to any order,
judgment or decree entered in any lawsuit or proceeding to which
the Company is or was a party or by which any of its properties is
bound.
(b) There are no judgments, decrees or orders
enjoining the Company in respect of, or the effect of which is to
prohibit, any business practice or the acquisition of any property
or the conduct of business by the Company in any area which could
have a material and adverse effect on the assets, business, finan-
cial condition or results of operations of the Company, or which
would prevent the Company from engaging in the Business with
merchants located in any jurisdiction, or which would prevent or
hinder the consummation of the transactions contemplated by this
Agreement, provided that to the extent this representation covers
judgments, decrees or orders in any lawsuit or proceeding to which
the Company is not and was not a party, this representation is
limited to the best knowledge of Sellers.
3.6 Absence of Certain Changes or Events.
(a) Except as set forth in Schedule 3.6 to the
Disclosure Schedule, there has not been any material adverse change
in the business, operations, assets or financial condition of the
Company since June 30, 1994 and, to the best of the Company's
knowledge, no facts or condition exists which the Company believes
will cause such a material adverse change in the future.
(b) Except as set forth in Schedule 3.6 to the
Disclosure Schedule, the Company has not taken or permitted any of
the actions set forth in Section 5(a) hereof between June 30, 1994
and the date hereof and, except for (i) execution of a Memorandum
of Intent dated October 6, 1994 with Buyer (the "Memorandum of
Intent") and execution of this Agreement, and (ii) actions expres-
sly contemplated by this Agreement, the Company has since June 30,
1994 conducted its business only in the ordinary course, consistent
with past practice.
3.7 Taxes and Tax Returns.
(a) The Company has duly filed (and until the Clos-
ing Date will so file) all returns, declarations, reports, informa-
tion returns and statements ("Returns") required to be filed by it
in respect of any federal, state and local taxes (including with-
holding taxes, penalties or other payments required) and has duly
paid (and until the Closing Date will so pay) all such taxes prior
to the date after which any interest or penalties would apply,
other than taxes or other charges which are being contested in good
faith (and disclosed to Buyer in writing). The Company has estab-
lished (and until the Closing Date will establish) on its books and
records reserves that are adequate for the payment of all federal,
state and local taxes not yet due and payable, but are incurred in
respect of the Company through such date. Schedule 3.7 to the
Disclosure Schedule identifies the federal income tax returns of
the Company for any period ending on or after December 1, 1988
which have been examined by the Internal Revenue Service (the
"IRS"). Schedule 3.7 to the Disclosure Schedule identifies the
applicable state income tax returns of the Company for any period
ending on or after December 1, 1988 which have been examined by the
applicable authorities. No deficiencies were asserted as a result
of such federal or state examinations which have not been resolved
and paid in full. To the best knowledge of the Company, there are
no audits (except for the currently pending audit of the Company's
1992 federal income tax return) or other administrative or court
proceedings presently pending nor any other disputes pending with
respect to, or claims asserted for, taxes or assessments upon the
Company, nor has the Company 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 Schedule 3.7 to the
Disclosure Schedule, the Company (i) has not requested any exten-
sion of time within which to file any Return which Return has not
since been filed, (ii) is not a party to any agreement providing
for the allocation or sharing of taxes, (iii) is not required to
include in income any adjustment pursuant to Section 481(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), by reason
of a voluntary change in accounting method initiated by the Company
(nor does the Company have any knowledge that the IRS has proposed
any such adjustment or change of accounting method) and (iv) has
not filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply.
3.8 Employee Benefit Plans.
(a) Except as disclosed in Schedule 3.8 to the
Disclosure Schedule, the Company (i) does not maintain or contrib-
ute to any "employee pension benefit plan" (the "Company Pension
Plans"), within the meaning of Section 3(2)(A) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
"employee welfare benefit plan" within the meaning of Section 3(1)
of ERISA (the "the Company Welfare Plans"), stock option plan,
stock purchase plan, deferred compensation plan, severance plan,
bonus plan, phantom stock plan or agreement, employment agreement
or other similar plan, program or arrangement and (ii) has not,
since September 2, 1974, contributed to any "Multiemployer Plan",
as such term is defined in Section 3(37) of ERISA.
(b) Except as disclosed in Schedule 3.8 to the
Disclosure Schedule, the Company has heretofore delivered to Buyer
a complete and accurate copy of each of the following with respect
to each of the Company Pension Plans and the Company Welfare Plans,
if any: (i) plan document, summary plan description, and summary of
material modifications (if not available, a detailed description of
the foregoing); (ii) trust agreement or insurance contract, if any;
(iii) most recent IRS determination letter, if any; (iv) most
recent actuarial report, if any; and (v) most recent annual report
on Form 5500.
(c) Except as disclosed in Schedule 3.8 to the Dis-
closure Schedule, the present value of all accrued benefits under
each of the Company 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 the Company Pension
Plan's actuary, did not exceed the then current value of the assets
of such plans allocable to such accrued benefits.
(d) During the last five years, the Pension Benefit
Guaranty Corporation ("PBGC") has not asserted any claim for
liability against the Company or any of its Subsidiaries which has
not been paid in full.
(e) All premiums (and interest charges and penal-
ties for late payment, if applicable) due to the PBGC with respect
to each the Company Pension Plan have been paid. Except as dis-
closed in Schedule 3.8 to the Disclosure Schedule, with respect to
the Company's defined benefit plan, all contributions required to
be made to each the Company 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 the Company
which have not been paid have been properly recorded on the books
of the Company.
(f) Except as disclosed in Schedule 3.8 to the
Disclosure Schedule, each of the Company Pension Plans, the Company
Welfare Plans and each other plan and arrangement identified on
Schedule 3.8 to the Disclosure Schedule has been operated in
compliance with the provisions of ERISA, the Code, all regulations,
rulings and announcements promulgated or issued thereunder, and all
other applicable governmental laws and regulations. The IRS has
issued a favorable determination letter with respect to each
Company Pension Plan, except that the Company has duly requested,
but has not yet received, an IRS determination letter with respect
to the Shoppers Charge Accounts Defined Contribution Plan and Trust
(the "Defined Contribution Plan"). Except as disclosed in Schedule
3.8 to the Disclosure Schedule, the Company is not aware of any
fact or circumstance which would disqualify any plan, that could
not be retroactively corrected (in accordance with the procedures
of the IRS).
(g) To the best knowledge of the Company, 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 Company Welfare Plans or the Company Pension Plans.
(h) Except as disclosed in Schedule 3.8 to the
Disclosure Schedule, with respect to the Company's defined benefit
plan, no Company 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 Company Pension Plans.
(i) Except as disclosed in Schedule 3.8 to the
Disclosure Schedule, with respect to the Company's defined benefit
plan, no "accumulated funding deficiency", within the meaning of
Section 412 of the Code, has been incurred with respect to any of
the Company Pension Plans.
(j) There are no pending or, to the best knowledge
of the Company, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the
Company Pension Plans or the Company Welfare Plans, any trusts
created thereunder or any other plan or arrangement identified in
Schedule 3.8 to the Disclosure Schedule.
(k) Except as disclosed in Schedule 3.8 to the
Disclosure Schedule, no Company Pension Plan or Company 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 Company Pension Plan.
(l) Except with respect to customary health, life
and disability benefits or other benefits disclosed in Schedule 3.8
to the Disclosure Schedule, there are no unfunded benefit obliga-
tions which are not accounted for by reserves shown on the finan-
cial statements and established under GAAP or otherwise noted on
such financial statements.
(m) With respect to each Company Pension Plan and
Company Welfare Plan that is funded wholly or partially through an
insurance policy, there will be no liability of the Company as of
the Closing Date under any such insurance policy or ancillary
agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of
events occurring prior to the Closing Date.
(n) Except as set forth in Schedule 3.8 to the
Disclosure Schedule or as agreed to by Buyer in writing either
pursuant to this Agreement or otherwise, the consummation of the
transactions contemplated by this Agreement will not (i) entitle
any current or former employee of the Company to severance pay,
unemployment compensation or any similar payment, (ii) accelerate
the time of payment, vesting, or increase the amount, of any
compensation due to any current employee or former employee under
any Company Pension Plan or Company Welfare Plan, or (iii) result
in payments not deductible by reason of Section 280G of the Code.
3.9 Other Employee Matters. The Company is in compli-
ance in all material respects with all laws and regulations
respecting employment and employment practices (including without
limitation employment discrimination laws, rules and regulations
and laws, rules and regulations defining unfair labor practices),
terms and conditions of employment, wages and hours, and there are
no union representation questions, and no arbitration proceedings
regarding labor agreements, pending or, to the knowledge of the
Company, threatened against the Company and no collective bargain-
ing agreement has been entered into or is presently being negotiat-
ed between the Company and any union.
3.10 Certain Contracts.
(a) Except for plans referenced in Section 3.8
hereof, and except as set forth in Schedule 3.10 to the Disclosure
Schedule, (i) the Company is not a party to or bound by any written
contract or understanding (whether written or oral) with respect to
the employment of any officers, employees, directors or consult-
ants, and (ii) the consummation of the transactions contemplated by
this Agreement will not result in any payment (whether of severance
pay or otherwise) becoming due from the Company to any officer,
employee, director or consultant thereof. The Company has hereto-
fore delivered to Buyer complete and accurate copies of all sever-
ance or employment agreements with officers, directors, employees,
agents or consultants to which the Company is a party.
(b) Except as disclosed in Schedule 3.10 to the
Disclosure Schedule and except for loan agreements made and loan
commitments issued in the ordinary course of business, (i) as of
the date of this Agreement, the Company is not a party to or bound
by any commitment, agreement or other instrument which is material
to the business, operations, assets or financial condition of the
Company (but in no event shall a contract for less than $50,000 a
year be deemed material under this paragraph) (ii) no commitment,
agreement or other instrument to which the Company is a party or by
which it is bound limits the freedom of the Company to compete in
any line of business or with any person, and (iii) the Company is
not a party to any collective bargaining agreement.
(c) Except as disclosed in Schedule 3.10 to the
Disclosure Schedule, neither the Company nor, to the best knowledge
of the Company, 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 the Company is or will be the creditor) or
arrangement, except for defaults which individually or in the
aggregate would not have a material adverse effect on the business,
operations, assets or financial condition of the Company.
(d) A complete and accurate list of the Company's
full recourse dealer reserves at September 30, 1994 has been
furnished by the Company to Buyer. Such list is referenced in
Schedule 3.10 to the Disclosure Schedule.
(e) Schedule 3.10 to the Disclosure Schedule sets
forth a complete and accurate list of all outstanding indebtedness
of any of Sellers or any of their affiliates due or to become due
to the Company.
3.11 Properties and Insurance.
(a) The Company has good title to all material
assets and properties, whether real or personal, tangible or
intangible, reflected in the Company's balance sheet as of
September 30, 1994, 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
September 30, 1994), subject to no encumbrances, liens, mortgages,
security interests or pledges, except (i) those items that secure
liabilities that are reflected in said balance sheet or the notes
thereto or to the Financial Statements or that secure liabilities
incurred in the ordinary course of business after September 30,
1994, (ii) statutory liens for amounts not yet delinquent or which
are being contested in good faith, and (iii) such encumbrances,
liens, mortgages, security interests, pledges and title imperfec-
tions that are not in the aggregate material to the business,
operations, assets, and financial condition of the Company. The
Company does not own any real property. Except as affected by the
transactions contemplated hereby (including transactions pursuant
to Section 5(h) hereof), the Company as lessee has the right under
valid and subsisting leases to occupy, use, possess and control all
real property leased by the Company in all material respects as
presently occupied, used, possessed and controlled by the Company.
(b) Schedule 3.11 of the Disclosure Schedule
contains a complete and accurate list of all policies of liability,
theft, fidelity, property damage and other forms of insurance which
cover the Company (specifying the insurer, amount of coverage,
annual premium, type of insurance, policy number and any pending
material claims thereunder). Each of said policies is outstanding
and duly in force and all premiums with respect to such policies
are currently paid. As of the date hereof, the Company has not
received any notice of cancellation or notice of a material amend-
ment of any such insurance policy or bond and, to the best of its
knowledge, is not in default under any such policy or bond, no
coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion.
3.12 Minute Books. The minute books of the Company
contain accurate records of all meetings and other corporate action
held of the stockholders and Board of Directors (including commit-
tees of the Board of Directors), except where the failure to so
maintain such records would not have a material adverse effect on
the business, operations, assets or financial condition of the
Company.
3.13 Environmental Matters. Except as disclosed in
Schedule 3.13 to the Disclosure Schedule, the Company has not
received any written notice, citation, claim, assessment, proposed
assessment or demand for abatement alleging that the Company
(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 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 the
Company. Except as disclosed in Schedule 3.13 to the Disclosure
Schedule, the Company has no actual knowledge that any toxic or
hazardous substances or materials have been emitted, generated,
disposed of or stored on any property currently owned or leased by
the Company, or owned or leased by the Company in the three years
prior to the date of this Agreement, in any manner that violated
any applicable 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, oper-
ations, assets or financial condition of the Company. Any sales or
transfers by the Company of property which was owned or leased by
the Company which was subject to the provisions of the Industrial
Site Recovery Act, N.J.S.A. 13:1K-6, et seq. as amended ("ISRA"),
were made in compliance with all applicable provisions of ISRA.
3.14 Compliance with Applicable Law.
(a) Except as set forth in Schedule 3.14 to the
Disclosure Schedule, the Company holds all material licenses,
franchises, permits and authorizations necessary for the lawful
conduct of its business and since January 1, 1992 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 the
Company (other than where such default or noncompliance will not
result in a material adverse effect on the business, operations,
assets or financial condition of the Company) and the Company has
not received notice of violation of, and does not know of any
violations of, any of the above.
(b) Except as set forth in Schedule 3.14 to the
Disclosure Schedule, to the best knowledge of the Company (i) each
retail installment sales agreement, as amended from time to time
including by the Stuffer (as defined in Section 6(e) hereof),
covering the Installment Contracts Receivables of the Company as
shown on its books and records, and all other related documents,
are in full force and effect and are valid and binding obligations
of the obligors thereon, enforceable in accordance with their terms
except as enforcement against the obligors thereon may be limited
by (x) applicable bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors rights generally or (y) the
availability of injunctive relief or the remedy of specific perfor-
mance generally, or (z) defenses, in individual cases, to the pay-
ment of such receivables due to fraud or forgery by a party other
than the Company, lack of legal competence of the account debtor,
court orders in matrimonial proceedings, merchandise complaints or
other similar defenses, provided that nothing in this clause (i)
shall be deemed to limit the representation and warranty contained
in Section 3.4(c) hereof, and (ii) the form, terms and execution
thereof are in compliance with all applicable federal, state and
local laws and any regulations thereunder (including without limi-
tation consumer finance laws and regulations). This representation
and warranty is not intended to address the financial capability of
individual account debtors.
3.15 Broker's and Other Fees. No broker, finder or
other intermediary is involved on behalf of the Company or Sellers
in the stock purchase transaction contemplated hereby. It is
understood that each party will indemnify the other as set forth in
Section 11 arising from any third party claims for any brokerage,
finder's or intermediary's fees. 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
the transactions contemplated hereby or which would be triggered by
consummation of such transactions or the termination of the serv-
ices of such consultants by the Company.
3.16 Disclosure. No representation or warranty by the
Company or any Seller contained in this Agreement or any written
statement or certificate furnished or to be furnished pursuant
hereto contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to
make the statements herein or therein contained not misleading, and
the Company has disclosed to Buyer all material adverse facts known
to it relating to the Business as conducted by it and the Company's
condition (financial, commercial or otherwise), liabilities,
assets, business and prospects. The representations and warranties
contained in this Section 3 shall not be affected or be waived by
reason of the fact that Buyer and/or its representatives conducted
investigations with respect to the Company or knew or should have
known that any such representation or warranty is or might be
inaccurate in any respect. Any disclosure made in any item of the
Disclosure Schedule or any of the Financial Statements shall be
deemed made for purposes of all other applicable items of the
Disclosure Schedule.
THE ABOVE REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY
CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES BY
SELLERS AND THE COMPANY TO BUYER IN CONNECTION WITH THE TRANS-
ACTIONS CONTEMPLATED HEREBY AND BUYER UNDERSTANDS, ACKNOWLEDGES AND
AGREES THAT ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR
NATURE (INCLUDING, BUT NOT LIMITED TO, ANY RELATING TO THE FUTURE
OR HISTORICAL FINANCIAL CONDITION, RESULTS OF OPERATIONS, ASSETS OR
LIABILITIES OF THE COMPANY) ARE SPECIFICALLY DISCLAIMED.
4. Representations and Warranties of Buyer. Buyer
represents and warrants to Sellers as follows:
(a) Buyer is a banking corporation duly organized
and validly existing under the laws of the State of New Jersey.
(b) This Agreement has been duly authorized,
executed and delivered on behalf of Buyer and constitutes, and all
other instruments required hereby to be executed and delivered to
Sellers and the Company by Buyer constitute, or when executed and
delivered will constitute, legal, valid and binding obligations of
Buyer enforceable according to their terms.
(c) The consummation of the transactions contem-
plated hereby will not (i) violate any provision of the Certificate
of Incorporation or By-laws of Buyer, or (ii) contravene any law,
governmental regulation, or order, judgment or decree of any court
or arbitration or other tribunal binding upon Buyer or by which it
is bound.
(d) Except for the expiration or early termination
of applicable waiting periods under the HSR Act and for approval by
the New Jersey Banking Commissioner to permit Buyer to acquire an
operating subsidiary, no consents or approvals of or filings or
registrations with or notices to any third party or any public body
or authority are necessary in connection with (i) the execution and
delivery of this Agreement by Buyer and (ii) the consummation by
Buyer of the transactions contemplated hereby. The applicable
waiting periods under the HSR have been terminated and such
approval of the New Jersey Banking Commissioner has been obtained.
(e) Buyer is acquiring the Stock for investment
only and not with a view to the distribution thereof.
(f) No broker, finder or other intermediary is
involved on behalf of Buyer in the stock purchase transaction con-
templated hereby. It is understood that each party will indemnify
the other as set forth in Section 11 arising from any third party
claims for any brokerage, finder's or intermediary's fees.
5. Covenants of Sellers and the Company.
(a) Operation of Business. Except as otherwise
contemplated by this Agreement, Sellers and the Company covenant
and agree with Buyer that from and after the date of this Agreement
until the Closing Date, the Business shall continue to be operated
in the ordinary course consistent with prior practice and Sellers
and the Company will each use their reasonable efforts to preserve
the business and organization of the Company intact, to keep avail-
able to Buyer the services of the present officers and employees of
the Company (except, after the Closing Date, for the Sellers) and
to preserve for the benefit of Buyer the goodwill of their cus-
tomers, dealers and retailers and others having business relations
with the Company, including, without limitation, the maintenance of
all of its contractual and other rights with respect to such Per-
sons. Without limiting the generality of the foregoing, from and
after the date of this Agreement until the Closing Date, without
the prior written approval of Buyer the Company shall not, and none
of Sellers shall authorize or permit the Company to:
(i) amend or otherwise change the Certifi-
cate of Incorporation or By-laws of the Company;
(ii) issue, sell, or grant any options or
make any other agreements with respect to any shares of capital
stock or any other securities of the Company;
(iii) incur any additional debt, liability or
obligation, other than in the ordinary course of business, or issue
any guarantee of any debt, liability or obligation of any Person,
provided that the Company may extend or replace its existing credit
arrangements on substantially the same terms as such existing
arrangements (other than duration), but only if the Company has the
right to repay all such extended or new indebtedness without
penalty or premium on not more than thirty (30) days' notice;
(iv) mortgage, pledge, or subject to any lien
any of its properties or assets, except for receivables generated
in the ordinary course of business;
(v) enter into or amend any agreement, con-
tract or commitment or engage in any transaction or activity, other
than in the ordinary course of business;
(vi) sell or otherwise dispose of, or pur-
chase or otherwise acquire, any assets or properties, other than in
the ordinary course of business;
(vii) merge or consolidate with any Person or
acquire, except in the ordinary course of collection, assets con-
stituting all or substantially all of the business or assets of any
Person;
(viii) waive any rights, other than in the
ordinary course of business;
(ix) make any material alteration in the
manner of keeping the Company's books, accounts or records, or in
the accounting practices therein reflected; or
(x) commit to any of the foregoing.
(b) Required Approvals. From the date hereof
until the Closing Date, Sellers shall cooperate, and shall cause
the Company to cooperate, with Buyer in applying for and otherwise
attempting to obtain any and all governmental or other regulatory
approvals required to enable Buyer to consummate the transaction
contemplated herein, including, without limitation, providing to
Buyer such information as is required with respect thereto.
(c) Satisfaction of Conditions. From the date of
this Agreement until the Closing Date, Sellers shall use their
reasonable efforts to obtain satisfaction of the conditions set
forth in Section 8 as soon as practicable.
(d) Notice of Changes. Sellers shall give Buyer
prompt written notice of any material change in any of the informa-
tion contained in the representations and warranties made in
Section 3 hereof or in the Disclosure Schedule which occurs prior
to the Closing.
(e) No Disposition of Shares. Without the prior
written consent of Buyer, none of Sellers will sell, transfer,
endorse, pledge or otherwise encumber or dispose of (or agree to
encumber or dispose of) any of the Shares, except for sale to Buyer
pursuant to this Agreement.
(f) Company Cars. Schedule 5(f) to the Disclosure
Schedule lists the three Company cars used by Sellers and the book
values thereof as of the date hereof. At the Closing, Sellers
shall purchase these cars for such book value, by delivery to Buyer
at the Closing of promissory notes in the aggregate principal
amount of such book value, which notes shall mature on the same
date as the Promissory Notes.
(g) Repayment of Indebtedness. Sellers and their
affiliates will repay, simultaneously with the maturity of the
Promissory Notes issued pursuant to Section 7 hereof, all out-
standing indebtedness of any of them due or to become due to the
Company including without limitation all such indebtedness set
forth in Schedule 3.10 to the Disclosure Schedule.
(h) Building Lease Matters. With respect to the
existing lease agreement, a complete and accurate copy of which has
been furnished by the Company to Buyer (the "Lease"), pursuant to
which the Company occupies its Principal Office at 574 Summit
Avenue, Jersey City, New Jersey, the Sellers will use their best
efforts to cause (i) the Company's landlord, 574 Summit Avenue
Associates, to find a replacement tenant as soon as practicable
after the Closing such that the Company would be able to vacate the
premises without continuing liability effective on such specific
date as shall be selected by Buyer by written notice to Sellers, or
as soon as possible thereafter, provided that Sellers shall not be
obligated to attempt to cause such landlord to accept a replacement
tenant on financial terms which are less advantageous overall to
such landlord than those applicable to the remaining term of the
current lease (it being understood that the Company shall remain
liable on the Lease until the end of the term thereof or, if
earlier, at such time as a replacement tenant's term commences),
(ii) all subtenants of the Company (as listed in Schedule 5(h) to
the Disclosure Schedule) to become direct tenants of the Company's
landlord at or before the Closing or as soon as possible thereaf-
ter, and release the Company from all claims or obligations as sub-
landlord (and, if such release is not obtained prior to the Clos-
ing, Sellers shall indemnify the Company against all Losses (as
that term is defined in Section 11(a) hereof) arising out of the
Company's having been sub-landlord), and (iii) the Company's land-
lord to modify the existing lease with the Company with a corres-
ponding reduction in the Company's rent and amount of space
resulting from subtenants becoming direct tenants of 574 Summit
Avenue Associates. All documentation to accomplish the matters
contemplated in clauses (ii) and (iii) of this Section 5(h) shall
be reviewed by Buyer in advance and shall not be used if not
reasonably satisfactory to Buyer.
(i) Equipment Lease Matters. As used herein, the
"Law Firm Equipment" means the equipment listed on Schedule 5(i) to
the Disclosure Schedule, such equipment being now leased from
BELCO, a partnership owned by Sellers ("Belco"), to the Company
and, in turn, subleased by the Company to the law firm of
Eichenbaum, Kantrowitz, Leff & Gulko (the "Law Firm"). Effective
at the Closing, the Company and Sellers shall cause the following
to occur: (1) Belco will sell to the Company all of the equipment
which it currently leases to the Company, other than the Law Firm
Equipment, for a purchase price equal to the balance due on Belco's
loan from Buyer; (2) Belco will pay off in full its note to Buyer,
it being understood that Buyer will deliver to Belco its note to
Buyer marked paid and appropriate UCC-3 termination statements and
that Buyer will waive any applicable prepayment fees; and (3)
Belco, the Company and the Law Firm will modify the equipment lease
to substitute the Law Firm for the Company as lessor and to remove
all equipment, other than the Law Firm Equipment, from such lease.
(j) Split Dollar Life Insurance. At or as soon as
practicable after the Closing (but in any event on or prior to the
maturity of the Promissory Notes), the Company shall assign to each
Seller all of its rights and interests in the life insurance
policies on the lives of such Seller identified on Schedule 5(j) to
the Disclosure Schedule. Simultaneously with such assignment,
Sellers shall deliver their separate promissory notes dated as of
the Closing Date (and substantially in the form of Exhibit B
attached hereto, with appropriate changes in parties) to the
Company in an amount equal to the "split dollar" obligation owed by
such Seller to the Company as of the Closing Date, which notes
shall mature on the same date as the Promissory Notes. The Company
shall not be obligated to pay any premiums on such policies,
whether or not such premiums are due before or after the Closing
Date.
(k) Office Furnishings. At the Closing, Sellers
shall purchase their office furnishings for $1.00, it being under-
stood that such furnishings have no significant value.
(l) Termination of Agreements. Upon the Closing and
without further action on the part of any party thereto, (i) the
Stock Purchase Agreement dated April 1, 1991, among David Leff,
Bernard Eichenbaum and the Company and (ii) all bonus, profit
sharing or other compensation agreements or commitments (including
without limitation with respect to their death or disability)
between either of them and the Company shall be deemed terminated
and shall be of no further force or effect.
6. Covenants of Buyer.
(a) Required Approvals. Buyer shall proceed
diligently and in good faith to secure any and all governmental and
other regulatory approvals required to enable Buyer to consummate
the transactions contemplated herein and operate the business of
the Company.
(b) Satisfaction of Conditions. From the date of
this Agreement until the Closing Date, Buyer shall use its reason-
able efforts to obtain satisfaction of the conditions set forth in
Section 9 as soon as practicable.
(c) IRS Audits. After the Closing, Buyer shall
permit an accounting representative of Sellers to reasonably parti-
cipate in any examinations of the Company by the Internal Revenue
Service regarding periods prior to the Closing.
(d) Bonuses and Contributions. Buyer shall cause
the Company to pay, for the Company's 1994 fiscal year, (i) amounts
due in accordance with the Company's compensation and incentive
program for L. Alkin and F. Hilliard, as amended December 28, 1993,
which is detailed in Schedule 6(d) to the Disclosure Schedule; (ii)
a contribution of Fifty-Five Thousand dollars ($55,000) to the
Defined Contribution Plan; and (iii) bonuses to those of the
Company's executives listed on Exhibit C attached hereto in the
amounts set forth opposite each person's name on such Exhibit, in
the aggregate amount of Eighty Thousand Dollars ($80,000).
(e) Stuffer. It is understood that the Company
has commenced the distribution of a "Truth-in-Lending" statement as
a "stuffer" included with its normal monthly statements to its
credit card account debtors, a copy of which stuffer is attached as
Schedule 6(e) to the Disclosure Schedule (the "Stuffer"). To the
extent such distribution is not completed prior to the Closing,
Buyer shall cause the Company to complete the distribution of the
Stuffer as soon as practicable.
(f) Notice of Changes. Buyer shall give Sellers
prompt written notice of any material change in any of the informa-
tion contained in the representations and warranties made in
Section 4 hereof which occurs prior to the Closing.
(g) Reimbursement of Expenses. Buyer shall cause
the Company to reimburse Sellers, in accordance with the Company's
regular procedures applicable to all of its executives, for reason-
able telephone, travel and entertainment expenses incurred by
Sellers prior to the Closing; provided that no reimbursement shall
be made for expenses relating to the transactions contemplated by
this Agreement.
(h) Release of Guarantees. Buyer shall cause all
outstanding bank indebtedness of the Company listed on Schedule 3.3
to the Disclosure Schedule to be paid in full at the Closing, shall
use all reasonable efforts to cause all personal guarantees made by
Sellers of such indebtedness to be released, and shall deliver to
Sellers documentation evidencing such release as soon as practica-
ble after the Closing. Buyer covenants that it will not permit the
Company to incur any indebtedness that would be subject to any of
such guarantees that have not been released. Buyer shall indemnify
Sellers against any Losses arising out of Buyer's breach of this
Section 6(h).
7. Closing.
(a) The closing of the purchase and sale of the
Shares as contemplated by this Agreement (the "Closing") shall take
place at the offices of Pitney, Hardin, Kipp & Szuch, 200 Campus
Drive, Florham Park, New Jersey, on December 7, 1994, or subject to
the termination provisions of Section 12, such later date as shall
be required for all of the conditions to the parties' obligations
to consummate the transactions contemplated hereby to be fulfilled
or waived, or on such other date or at such other place as the
parties hereto may agree (the date of the Closing being referred to
herein as the "Closing Date").
(b) At the Closing, Buyer shall deliver to each
Seller a promissory note, substantially in the form of Exhibit B
attached hereto (collectively, the "Promissory Notes"), each of the
two Promissory Notes being in the principal amount of 50% of the
aggregate Purchase Price. Such Promissory Notes will (i) mature on
January 4, 1995, (ii) bear interest at the rate paid by Hudson
United Bank as of the Closing Date on its money market accounts,
(iii) not be subject to setoff; (iv) provide for payment of a
portion of the proceeds of the Promissory Notes into escrow in
accordance with the provisions of Section 11 hereof, (v) not be
subject to prepayment and (vi) be unsecured.
(c) At the Closing, Sellers shall deliver to Buyer
a certificate or certificates for the Shares, duly endorsed for
transfer or accompanied by separate assignments.
(d) At the Closing, the Company shall deliver or
make available to Buyer (i) all minute books, stock record books,
transfer ledgers and corporate seal, checkbooks and all checking
account materials, together with all books, accounts and documents
relating to the Company, and (ii) executed resignations dated the
Closing Date of each of the directors of the Company.
8. Conditions Precedent to Obligation of Buyer. The
obligation of Buyer to proceed with the Closing contemplated hereby
is subject to the satisfaction at or prior to the Closing of all of
the following conditions, any one or more of which may be waived,
in whole or in part, by Buyer:
(a) Sellers and the Company shall have performed
and observed all covenants, agreements and conditions contained
herein to be performed or observed by each of them prior to or on
the Closing Date.
(b) The representations and warranties set forth
in Section 3 hereof shall be true and correct in all material
respects on and as of the Closing Date as if such representations
and warranties were made on and as of the Closing Date.
(c) Buyer shall have received a certificate, dated
the Closing Date, of the Chairman and President of the Company
certifying as to the matters set forth in Sections 8(a) and 8(b)
and in the form of Exhibit D attached hereto.
(d) Buyer shall have received an opinion of
counsel to Sellers, dated the Closing Date, covering the matters
set forth in Exhibit E attached hereto and otherwise in form and
substance reasonably satisfactory to Buyer.
(e) Buyer shall have received all required con-
sents, authorizations or approvals from federal, state and other
governmental or other regulatory agencies and no such consent,
authorization or approval shall have been revoked; provided,
however, that if any such consent, authorization or approval is
qualified or conditioned in any manner which materially and
adversely affects the economic bargain reflected herein, this
condition may be deemed unfulfilled.
(f) Any waiting period under the HSR Act applica-
ble to the transactions contemplated hereby shall have expired or
been terminated.
(g) [intentionally omitted]
(h) Buyer shall, simultaneously with the Closing,
have purchased from the holders thereof all of the issued and
outstanding shares of Class A non-voting common stock of the
Company.
(i) Effective as of the Closing Date, each
director of the Company shall have tendered their resignations as
such.
(j) As of the Closing Date, Buyer shall have
entered into a Consulting, Non-Disclosure and Non-Competition
Agreements, in the form attached hereto as Exhibit F, with each of
Sellers.
(k) Consummation by Buyer of the transactions
contemplated hereby shall not violate any order or decree of any
court or governmental body having competent jurisdiction or any law
or regulation applicable to Buyer.
(l) Effective as of the Closing Date, Buyer, the
Company, Sellers and the other parties thereto shall have entered
into an agreement substantially in the form of Exhibit G attached
hereto relating to pension plan matters (the "Pension Side
Letter").
(m) Except as specifically set forth on the
Disclosure Schedule, there shall have been no material adverse
change since September 30, 1994 in the Company's condition
(financial, commercial or otherwise), assets, business or pros-
pects.
9. Conditions Precedent to Obligations of Sellers.
The obligations of Sellers to proceed with the Closing contemplated
hereby are subject to the satisfaction at or prior to the Closing
of the following conditions, any one or more of which may be
waived, in whole or in part, by Sellers:
(a) Buyer shall have performed and observed all
covenants, agreements and conditions hereof to be performed or
observed by it prior to the Closing Date.
(b) The representations and warranties set forth
in Section 4 hereof shall be true and correct in all material
respects on and as of the Closing Date as if such representations
and warranties were made on and as of the Closing Date.
(c) Sellers shall have received a certificate,
dated the Closing Date, of an executive officer of Buyer certifying
as to the matters set forth in Sections 9(a) and (b) and in the
form of Exhibit H attached hereto.
(d) Sellers shall have received an opinion of
counsel to Buyer dated the Closing Date, covering the matters set
forth in Exhibit I attached hereto and otherwise in form and
substance reasonably satisfactory to Sellers.
(e) Any waiting period under the HSR Act applica-
ble to the transactions contemplated hereby shall have expired or
been terminated.
(f) Consummation by Sellers of the transactions
contemplated hereby shall not violate any order or decree of any
court or governmental body having jurisdiction or any law or
regulation applicable to Sellers.
(g) All financing to the Company from the Com-
pany's bank lenders shall have been paid in full.
10. Covenant Not to Compete.
(a) Each of Sellers hereby agrees that, except as
otherwise expressly consented to or approved in writing by the
Buyer, upon the Closing and for a period of three (3) years after
the Closing Date, he shall not, directly or indirectly, alone or
acting as an employee, owner, partner, consultant, advisor,
creditor, investor, principal or agent of any corporation or other
business entity (including not-for-profit entities), whether or not
with compensation, with respect to any business or businesses (A)
conducted by the Company on the date hereof or at any time during
the employment of such Seller by the Company or (B) planned by
Sellers prior to the Closing Date and conducted by the Company
within three years after the Closing Date (collectively, the
"Businesses"):
(i) Engage, in any state or equivalent
thereof, in the United States of America or Canada (including their
respective territories), in any venture or activity in competition
with any aspect of any of the Businesses;
(ii) Solicit any past, present or future
customers of the Company or any of its affiliates for business in
any way relating to any aspect of any of the Businesses;
(iii) Request, directly or indirectly, that
any customers of the Company or any of its affiliates, or other
persons sharing a business relationship with the Company or any of
its affiliates pertaining to the Business, curtail or cancel their
business with the Company or any of its affiliates pertaining to
the Business, or that any of such customers otherwise take action
which might be to the material disadvantage of the Company or any
of its affiliates in connection with the conduct of the Business;
or
(iv) Induce or actively attempt to influence
any other employee or consultant of the Company or any of its
affiliates to terminate his or her employment or consultancy with
the Company or any of its affiliates.
(b) If any Seller violates any of the restrictions
contained in Section 10(a), the restrictive period applicable to
such Seller provided for in such Section shall be increased by the
period of time from the commencement of any such violation until
the time such violation shall be cured by such Seller to the
satisfaction of the Company.
(c) In the event that either the length of time or
the geographical area set forth in Section 10(a) is deemed too
restrictive in any court proceeding, the court may reduce such
restrictions to those which it deems reasonable under the circum-
stances.
(d) The obligations expressed in this Section 10
shall be in addition to any other obligations imposed upon any
Seller with respect to the Company or Buyer or by any other agree-
ment between such Seller and the Company or Buyer or by the laws of
the State of New Jersey or elsewhere.
(e) Nothing in this Section 10, whether express or
implied, shall prevent any Seller from being a holder for the pur-
poses of investment only of marketable securities then being quoted
on a recognized national stock exchange or traded on the National
Market System of the National Association of Securities Dealers
Automated Quotation System.
(f) Nothing in this Section 10 shall prevent Mr.
Leff from continuing to serve as a member of the Board of Directors
of Provident Savings Bank.
(g) Nothing in this Section 10 shall prevent Mr.
Leff or the Law Firm from rendering traditional legal advice to
competitors of the Company, such as handling collection matters and
giving legal advice on consumer credit laws. It is understood that
Mr. Leff is a partner of the Law Firm and that Mr. Eichenbaum
performs services for the Law Firm in a non-legal capacity.
11. Indemnification and Escrow.
(a) Indemnity from Sellers. Each of Sellers
hereby agrees, jointly and severally, to indemnify, defend and hold
Buyer, its direct and indirect parent, subsidiary and affiliated
companies, and their respective successors and assigns, harmless
from, against and in respect of any and all losses, judgments,
settlements, claims, fines, penalties, liabilities, damages, costs
or expenses (including attorneys' fees) (collectively, "Losses")
asserted against or incurred or sustained by Buyer or such other
Persons arising out of, or resulting from, in whole or in part:
(i) any breach of any warranty or misrepre-
sentation by the Company or Sellers, or the non-performance of any
covenant, agreement or obligation to be performed on the part of
any of them, under this Agreement or in any certificate, document,
agreement or instrument delivered to Buyer hereunder or thereunder;
(ii) any failure of the Company to have, and
any expiration or failure to timely renew, any retail installment
sales license or any license necessary to conduct any part of the
Company's business as conducted on the date hereof;
(iii) any breach by the Law Firm of its obliga-
tions under the Pension Side Letter;
(iv) indemnification obligations of Sellers
pursuant to Section 5(h) hereof, if any;
(v) claims or actions by third parties
(including, without limitation, account debtors, merchants, em-
ployees, former employees and governmental entities) arising from
any violation of law (including any violation of rules and regula-
tions) by the Company or Sellers prior to the Closing, whether or
not disclosed to Buyer, including, without limitation, any viola-
tion of truth-in-lending laws or other consumer credit or protec-
tion laws, and any employment or workplace discrimination or
harassment;
(vi) not in limitation of the foregoing, any
failure of the Stuffer to comply with any law (including rules and
regulations); and
(vii) any and all reasonable costs, fees and
expenses (including attorneys' fees) incident to any of the fore-
going or incurred in investigating or attempting to avoid the same
or to oppose the imposition thereof, or in enforcing this indem-
nity.
(b) Indemnity from Buyer. Buyer hereby agrees to
indemnify, defend and hold Sellers, and their respective successors
and assigns, harmless from, against and in respect of any and all
Losses asserted against or incurred or sustained by any of them
arising out of, or resulting from, in whole or in part:
(i) any breach of any warranty or misrepre-
sentation by Buyer, or the non-performance of any covenant, agree-
ment or obligation to be performed by Buyer under this Agreement or
in any certificate, document, agreement or instrument delivered to
Sellers hereunder;
(ii) any breach by Buyer's parent, Hubco,
Inc., of its obligations under the Pension Side Letter;
(iii) indemnification obligations of Buyer
pursuant to Section 6(h), if any; and
(iv) any and all reasonable costs, fees and
expenses (including attorneys' fees) incident to any of the fore-
going or incurred in investigating or attempting to avoid the same
or to oppose the imposition thereof, or in enforcing this indem-
nity.
(c) Notice and Opportunity to Defend. Promptly
after the receipt by any party hereto entitled to indemnification
hereunder (the "Indemnified Party") of notice of any claim or the
commencement of any action or proceeding by a third party, the
Indemnified Party will, if a claim with respect thereto is to be
made against one or more other parties hereto (the "Indemnifying
Persons") pursuant to Sections 11(a) or 11(b), as the case may be,
give each of them (if they are then in existence) written notice of
such claim or the commencement of such action or proceeding, pro-
vided that failure of the Indemnified Party to give reasonably
prompt notice of any claim or claims shall not release, waive or
otherwise affect the obligations under this Section 11 of the
Indemnifying Persons with respect thereto except to the extent that
they can demonstrate actual loss or prejudice as a result of such
failure. Unless the Indemnified Party reasonably believes that the
Indemnifying Persons will be unable or not required to fully indem-
nify the Indemnified Party for any such claim, action or proceed-
ing, the Indemnifying Persons or any of them may elect to defend
against such claim or defend such action or proceeding, including,
but not limited to, settling such claim or action or proceeding on
such terms as the Indemnifying Persons may deem appropriate), at
their sole cost and expense, and in such event the Indemnified
Party shall, at its sole expense, have the right to participate in
(but not control) the defense through counsel chosen by the Indem-
nified Party. So long as the Indemnifying Persons (i) are in good
faith so defending, or (ii) are not given the opportunity to so
defend pursuant to the preceding sentence, as the case may be, the
Indemnified Party shall not compromise or settle any such claim
without the prior written consent of each of them, which consent
shall not be unreasonably withheld or delayed. If the Indemnifying
Persons cannot or do not so elect to defend or do not continue to
do so in good faith in accordance with the terms of this Section
11(c), the Indemnified Party may defend such claim or defend such
action or proceeding in such manner as the Indemnified Party may
deem appropriate, including, but not limited to, settling such
claim or action or proceeding (after giving notice of the same to
each of the Indemnifying Persons) on such terms as the Indemnified
Party may deem appropriate (provided, that if the Indemnifying
Persons were not given an opportunity to defend the claim, action
or proceeding, the Indemnified Party shall not settle such claim,
action or proceeding without the prior written consent of the
Indemnifying Persons, which consent shall not be unreasonably
withheld), and the Indemnifying Persons will promptly indemnify the
Indemnified Party in accordance with the provisions of Sections
11(a) or 11(b), as the case may be.
(d) Limitations Regarding Indemnity. Notwith-
standing anything to the contrary contained in this Agreement, (i)
no Indemnified Party shall have any claim for indemnification under
this Agreement unless and until the aggregate of all such claims by
such Indemnified Party and all of its affiliates exceeds $200,000,
at which time such Indemnified Party shall be entitled to indemni-
fication for the aggregate of all such claims in excess of such
amount, and (ii) Sellers, jointly and severally, shall not be
liable for more than a total of Three Million Dollars ($3,000,000)
(inclusive of amounts in the escrow fund contemplated in Section
11(i) hereof) for any claims under this Section 11; provided, how-
ever, that the limitations in clauses (i) and (ii) of this sentence
will not be applicable to (A) Sellers' indemnification obligation
pursuant to Section 5(h) hereof, (B) Buyer's indemnification obli-
gation pursuant to Section 6(h) hereof or (C) any breach of the
representation and warranty contained in Section 3.2(a) hereof or
any Losses arising out of any claims by the insurance companies or
beneficiaries of the insurance policies relating to the actions
contemplated in Section 5(j) hereof; further provided, that the
limitation in clause (i) of this sentence shall be reduced to
$100,000 in the case of claims by Buyer arising out of alleged
violations of the Truth In Lending Act by reason of disclosures by
the Company of annual percentage rates prior to the date hereof,
and to the extent such $100,000 is utilized it shall count against
the $200,000 amount set forth above.
(e) Insured Losses. The liability of an indemni-
fying person hereunder shall be reduced by an amount equal to the
net proceeds of insurance or any other third party credit, allow-
ance or payment reasonably expected to offset or reduce, or to
provide reimbursement of or indemnification for, any damage, loss,
obligation, liability, claim, action, cause of action, cost or
expense incurred by an indemnified party for which indemnification
is required hereunder. No such insurance company or other third
party shall acquire any right, by subrogation or otherwise, against
the indemnifying person based upon any alleged breach of any agree-
ment, representation, warranty or covenant of the indemnifying
person contained in or made pursuant to this Agreement.
(f) Survival. The representations and warranties
contained in Sections 3 and 4 hereof shall survive the Closing for
a period of two years, at which time such representations and
warranties shall expire and be terminated and extinguished. Not-
withstanding the foregoing, (i) the termination of the survival of
any representation or warranty shall not affect the right of any
party to seek indemnification under any written claim for indemni-
fication delivered to another party prior to the termination of the
survival of such representation or warranty, (ii) with respect to
any indemnity for breach of any representation or warranty relating
to Taxes, such survival shall extend in addition until the running
of any applicable statute of limitations and (iii) nothing in this
Agreement shall limit the duration of the indemnities provided for
in clauses (ii) through (vi) of Section 11 (a) hereof or clauses
(ii) and (iii) of Section 11(b) hereof.
(g) Brokerage or Finder's Fees. Buyer, on the one
hand, and Sellers, on the other, shall indemnify and hold the other
harmless from any claim by any third party for brokerage or
finder's fees arising out of the transactions contemplated here-
under based upon any action or communication, or alleged action or
communication, by the indemnifying party or any of his or its
agents or representatives.
(h) Set-Off. Sellers and Buyer may set off
amounts owed by any of them to the other(s) against any amounts
owed pursuant to the provisions of this Section 11, except that
Buyer may not make any set-off against the Promissory Notes.
(i) Escrow. At the Closing, Sellers, Buyer and
Buyer, as escrow agent (the "Escrow Agent"), shall enter into an
Escrow Agreement substantially in the form of Exhibit J attached
hereto. Pursuant to the Escrow Agreement, simultaneously with the
payoff of the Promissory Notes, Sellers shall deposit with the
Escrow Agent the sum of Two Million Dollars ($2,000,000), which
amount shall be the initial component of the Escrow Fund (as
defined in such Escrow Agreement), by authorizing bank transfers
into the Escrow Account from the payoff funds. The Escrow Agree-
ment shall provide for the release of up to $1,000,000 after 18
months and up to the remainder after three years.
12. Termination.
(a) Termination Generally. This Agreement may be
terminated at any time prior to the Closing by any one of the
following methods:
(i) Mutual Consent. By the Company and
Buyer mutually agreeing in writing to terminate this Agreement; or
(ii) By Buyer. By Buyer in writing if any
of the conditions provided in Section 8 hereof has not been ful-
filled, and has not been waived, by January 31, 1995; or if any of
the following has occurred: appointment of a receiver or liqui-
dator for the Company or any of its properties or the filing of any
petition by or against the Company seeking adjudication of the
Company as a bankrupt or insolvent (which petition is not vacated
or stayed within sixty (60) days) or the making of any assignment
for the benefit of creditors of the Company or admission by the
Company in writing of its inability to pay its debts as they mature
or the institution of any proceeding for the purpose of effecting
an arrangement or composition with creditors or any reorganization
of the Company under any federal or state law relating to bank-
ruptcy or the relief of debtors; or
(iii) By the Company or either Seller. By
the Company or either Seller in writing if any of the conditions
provided in Section 9 hereof has not been fulfilled, and has not
been waived, by January 31, 1995; or if any of the following has
occurred: appointment of a receiver or liquidator for Buyer or any
of its properties or the filing of any petition by or against Buyer
seeking adjudication of Buyer as a bankrupt or insolvent (which
petition is not vacated or stayed within sixty (60) days) or the
making of any assignment for the benefit of creditors of Buyer or
admission by Buyer in writing of its inability to pay its debts as
they mature or the institution of any proceeding for the purpose of
effecting an arrangement or composition with creditors or any
reorganization of Buyer under any federal or state law relating to
bankruptcy or the relief of debtors; or
(iv) Violation. By the Company or by Buyer
if consummation of the transactions contemplated hereby would
violate any nonappealable final order, decree or judgment of any
court or governmental body having competent jurisdiction.
Any party desiring to terminate this Agreement pursuant
to either clause (ii), (iii) or (iv) of this Section 12(a) shall
give notice of such termination to the other party.
(b) Effect of Termination. In the event this
Agreement is terminated in accordance with Section 12(a), no party
to this Agreement shall have any obligation or liability of any
nature whatsoever (including without limitation any right to
specific performance) to any other party hereto except as specifi-
cally set forth in this Agreement. The provisions of Sections 13,
24 and 25 shall survive any termination hereof.
13. Transaction Expenses. Whether or not the trans-
actions contemplated hereby are consummated, all legal and other
costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid and borne by the
party incurring such expenses, it being understood that all fees
and disbursements of Williams, Caliri, Miller & Otley, P.A., and
the Law Firm in connection with the transactions contemplated by
this Agreement shall be paid by Sellers and not by the Company.
14. Confidentiality.
(a) Disclosures prior to the Closing shall be
governed in accordance to the terms of the Confidentiality Agree-
ment dated August 16, 1994 between the Company and Buyer's parent,
Hubco, Inc. (the "Confidentiality Agreement").
(b) Each Seller hereby agrees not to, directly or
indirectly without the express written authority of Buyer, unless
required by law or directed by applicable legal authority having
jurisdiction over such Seller, disclose to or use for the benefit
of any person, corporation or other entity, or himself or herself,
(i) any trade, technical, operational, management or other secrets,
any dealer, retailer or customer lists or other confidential or
secret data, or any other proprietary, confidential or secret
information of the Company or (ii) any confidential information
concerning any of the financial arrangements, financial positions,
competitive status, dealer or customer matters, internal organiza-
tion matters, technical capabilities, or other business affairs of
or relating to the Company. Each Seller acknowledges that all of
the foregoing constitutes proprietary information, which is the
exclusive property of the Company.
(c) Notwithstanding the foregoing, information
shall not be deemed confidential or secret for purposes of Section
14(b) hereof if (i) such information is or becomes known generally
to the public other than by any Seller's breach of the terms of
this Agreement or (ii) is made known to the disclosing Seller by a
third party entitled to disclose such information (without any
restriction on the confidentiality or use of such information) to
the disclosing Seller.
15. Notices. Any notice or other communication pro-
vided for herein or given hereunder to a party hereto shall be in
writing and shall be deemed to have been duly given (i) when
personally delivered by a party hereto or by messenger or express
courier, (ii) when delivered via telex or telecopier (and immedi-
ately confirmed by mail) or (iii) three (3) business days after
having been mailed by first class registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to Mr. Eichenbaum: Mr. Bernard Eichenbaum
6725 Woodbridge Drive
Boca Raton, Florida 33434
with a copy to: Eichenbaum, Kantrowitz, Leff
& Gulko
574 Summit Avenue
Jersey City, New Jersey 07306
Fax No.: 201/656-1427
and to: Williams, Caliri, Miller
& Otley, P.A.
1428 Route 23
Wayne, New Jersey 07470
Attn: Richard S. Miller, Esq.
Fax No.: 201/694-0302
If to Mr. Leff: Mr. David Leff
The Envoy, Apartment 1803
2480 Presidential Way
West Palm Beach, Florida 33401
with a copy to: Eichenbaum, Kantrowitz, Leff
& Gulko
574 Summit Avenue
Jersey City, New Jersey 07306
Fax No.: 201/656-1427
and to: Williams, Caliri, Miller
& Otley, P.A.
1428 Route 23
Wayne, New Jersey 07470
Attn: Richard S. Miller, Esq.
Fax No.: 201/694-0302
If to the Company: Mr. Bernard Eichenbaum
Mr. David Leff
c/o Shoppers Charge Accounts Co.
574 Summit Avenue
Jersey City, New Jersey 07306
Fax No.: 201/656-1427
with a copy to: Williams, Caliri, Miller
& Otley, P.A.
1428 Route 23
Wayne, New Jersey 07470
Attn: Richard S. Miller, Esq.
Fax No.: 201/694-0302
If to Buyer: Mr. Kenneth T. Neilson
President
Hudson United Bank
3100 Bergenline Avenue
Union City, New Jersey 07087
Fax No.: 201/348-3493
with a copy to: Mail to:
Pitney, Hardin, Kipp & Szuch
P.O. Box 1945
Morristown, New Jersey 07962-
1945
Attn: Henry Nelson Massey, Esq.
Fax No.: 201/966-1550
Deliver to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932
Attn: Henry Nelson Massey, Esq.
Fax No.: 201/966-1550
or to such other addresses as the parties shall specify in writing.
16. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, and
their respective successors, representatives and assigns, but shall
not (except with respect to the payments provided for in Section
6(d) hereof) be construed to provide any benefits to third parties.
Neither party may assign its rights or delegate its duties here-
under without the prior written consent of the other party; pro-
vided, however, that Buyer may assign its rights hereunder to a
subsidiary, affiliate, or related party, in which event Hudson
United Bank shall remain liable hereunder and, when issued, under
the Promissory Notes, and "Buyer" shall be deemed to refer to
Hudson United Bank and to such assignee, jointly and severally.
17. Integration. This Agreement sets forth the entire
agreement between the parties hereto regarding the subject matter
hereof and supersedes any prior agreements, whether oral or
written, entered into by the parties hereto regarding the purchase
and sale of the Shares, provided that the Confidentiality Agreement
shall remain in effect until the Closing.
18. Cooperation. The Buyer, Company and Sellers shall
cooperate and shall take such further action and shall execute and
deliver such further documents as may reasonably be requested by
any other party in order to carry out the provisions and purposes
of this Agreement.
19. Waiver. No failure on the part of any party hereto
to exercise any power, right, privilege or remedy hereunder, and no
delay on the part of any party hereto in exercising any power,
right, privilege or remedy hereunder, shall operate as a waiver
thereof; and no single or partial exercise of any such power,
right, privilege or remedy shall preclude any other or further
exercise thereof or of any other power, right, privilege or remedy.
20. Amendments. This Agreement may not be amended,
modified, altered or supplemented except by means of an agreement
or other instrument executed on behalf of all of the parties
hereto.
21. Severability. Any term or provision of this Agree-
ment which is invalid or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement,
or affecting the validity or enforceability of any of the terms or
provisions of this Agreement, in any other jurisdiction.
22. Captions; References. The captions herein are
inserted for convenience of reference only and shall be ignored in
the construction or interpretation hereof. Unless otherwise
indicated, references to Sections are to sections of this Agree-
ment.
23. Counterparts. This Agreement may be executed in
several counterparts, each of which shall constitute an original
and all of which, when taken together, shall constitute one agree-
ment.
24. Governing Law. This Agreement has been entered
into in the State of New Jersey and all questions relating to its
validity, construction, performance or enforcement shall be
governed by the laws of that State.
25. Jurisdiction. Each of the parties hereto hereby
(i) consents to personal jurisdiction over it or him by any federal
or state court in the State of New Jersey in any action brought in
connection herewith; (ii) waives any objection to venue in any such
action; and (iii) agrees that mailing, in the manner provided in
Section 15 hereof, of a Summons and Complaint to the party against
whom such action is being brought in any such action will consti-
tute due and personal service upon such party.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
HUDSON UNITED BANK
By:
Kenneth T. Neilson
President & Chief Executive
Officer
BERNARD EICHENBAUM
DAVID LEFF
SHOPPERS CHARGE ACCOUNTS CO.
By:
Name:
Title:
Exhibit 99 - Press Release dated December 7, 1994
FOR IMMEDIATE RELEASE
December 7, 1994
HUBCO, INC. COMPLETES ACQUISITION OF SHOPPER CHARGE ACCOUNTS CO.
Union City, New Jersey, December 7, 1994 -- HUBCO, Inc.
(NASDAQ; HUBC) today announced that its subsidiary, Hudson United
Bank acquired Shoppers Charge Accounts Co. of Jersey City, New
Jersey for approximately $16.3 million in cash.
Shoppers Charge is the twelfth largest, third party private
label retail credit card company in the United States as of
December 31, 1992. Private-label revolving credit cards issued on
behalf of retail stores accounted for 27.9% of outstandings on all
retail credit cards at year-end 1993, according to the 1995 Edition
of Credit Card News. Shoppers has a sophisticated credit card
operating system which will also be used by Hudson United to manage
a traditional credit card portfolio.
"We are very excited about this acquisition and the many
opportunities that it brings", stated Kenneth T. Neilson, President
and Chief Executive Officer of HUBCO. "Shoppers has a 50-plus year
history of providing financial services to the retail community.
The synergies of our respective operations will ensure that both
become stronger as a result of this acquisition."
Shoppers will become a division of Hudson United Bank, and
Thomas R. Nelson, Chief Operating Officer, will remain with Hudson
United Bank as President of the Division having overall
responsibility for the Shoppers division operations.
HUBCO, Inc., with assets of $1.4 billion, owns Hudson United
Bank with 45 branches throughout Northern New Jersey and HUB
Financial Services, Inc. which provides computer services and
Imaged Check Processing Services. The acquisition of Shoppers is
HUBCO's ninth acquisition in its past four years and its first
non-bank acquisition.
