SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
HUBCO, INC.
(Name of Registrant as Specified in its Charter)
HUBCO, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of security to which transaction applies:
_____________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
_____________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
_____________________________________________________________
2) Form, Schedule or Registration Statement No.:
_____________________________________________________________
3) Filing Party:
_____________________________________________________________
4) Date Filed:
_____________________________________________________________
<PAGE>
HUBCO, INC.
3100 Bergenline Avenue
Union City, New Jersey 07087
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 22, 1994
Notice is hereby given that the Annual Meeting of Shareholders
of HUBCO, Inc (the "Corporation") will be held at Schuetzen Park,
3167 Kennedy Boulevard, North Bergen, New Jersey, 07047 on Tuesday,
March 22, 1994 at 11:00 a.m. for the purpose of considering and
voting upon the following matters:
(i) The election of the three persons named in the
accompanying Proxy Statement to serve as directors of the
Corporation for the terms specified in the Proxy
Statement.
(ii) Approval of the 1993 Stock Option Program for the
Statewide Division which provides for options to purchase
up to 223,611 shares of the Corporation's common stock to
be issued to certain employees, advisory board members
and directors of the Corporation or any of its
subsidiaries who were previously associated with
Statewide Savings Bank, S.L.A., as more fully set forth
in the Proxy Statement.
(iii) Approval of the Recognition and Retention Plan for the
Statewide Division of Hudson United Bank, which provides
for the issuance of up to 111,806 shares of the
Corporation's common stock for the benefit of certain
employees, advisory board members and directors of the
Corporation or any of its subsidiaries who were
previously associated with Statewide Savings Bank,
S.L.A., as more fully set forth in the Proxy Statement.
(iv) Such other business as may properly come before the
Meeting.
Shareholders of record at the close of business on February
18, 1994 are entitled to notice of and to vote at the meeting.
Whether or not you contemplate attending the meeting, please
execute the enclosed proxy and return it to the Corporation. You
may revoke your proxy at any time prior to the exercise of the
proxy by delivering to the Corporation a later-dated proxy or by
delivering a written notice of revocation to the Corporation.
By Order of the Board of Directors
D. LYNN VAN BORKULO-NUZZO
Vice President and Secretary
March 1, 1994
IMPORTANT--PLEASE MAIL YOUR PROXY PROMPTLY<PAGE>
HUBCO, Inc.
3100 Bergenline Avenue
Union City, New Jersey 07087
____________________________
PROXY STATEMENT
DATED MARCH 1, 1994
GENERAL PROXY STATEMENT INFORMATION
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of HUBCO, Inc (the
"Corporation" or "HUBCO") of proxies for use at the Annual Meeting
of Shareholders of the Corporation to be held at Schuetzen Park,
3167 Kennedy Boulevard, North Bergen, New Jersey, 07047, on
Tuesday, March 22, 1994, at 11:00 a.m. local time. The business
expected to be voted upon at the Annual Meeting is (a) the election
of the three persons named in this proxy statement to serve as
directors for the terms specified herein; (b) approval of the 1993
Stock Option Program for the Statewide Division (the "Program"),
which provides for options to purchase up to 223,611 shares of the
Corporation's common stock to be issued to certain employees,
advisory board members and directors of the Corporation or any of
its subsidiaries; and (c) approval of the Recognition and Retention
Plan for the Statewide Division of Hudson United Bank (the "RRP"),
which provides for issuance of up to 111,806 shares of the
Corporation's common stock for the benefit of certain employees,
advisory board members and directors of the Corporation or any of
its subsidiaries. The Program and the RRP are hereinafter
collectively referred to as the "Plans". This proxy statement is
first being mailed to shareholders on approximately March 1, 1994.
The Corporation has entered into an agreement providing for
the acquisition of Statewide Savings Bank, S.L.A. ("Statewide
Savings") by the Corporation in a merger conversion transaction
(the "Merger Conversion"). Statewide Savings is presently a mutual
savings association without stock ownership. As part of the Merger
Conversion, the Corporation has agreed to provide certain benefits
to Statewide Savings' directors, officers and employees. Pursuant
to such agreement, the Board of Directors has approved both the
Program and the RRP. Each of the Program and the RRP will become
effective as of the effective date of the Merger Conversion. The
Program and the RRP are being presented to the shareholders of the
Corporation for their approval in order to (i) obtain favorable
treatment under Section 16(b) of the Securities Exchange Act of
1934 (the "Act"); and (ii) ensure continued listing of the
Corporation's Common Stock on the National Association of
Securities Dealers Automated Quotation ("NASDAQ") National Market
System. Failure to obtain shareholder approval will not affect the
validity of either the Program or the RRP and the right to receive
grants under either plan. Failure to obtain shareholder approval
may, however, prevent the grantees under the Plans from receiving
favorable treatment under Section 16(b) of the Act and may result
in the delisting of the Corporation's Common Stock from the NASDAQ
National Market System. The Merger Conversion is presently
awaiting Regulatory approval and Shareholder approval is being
sought for the Plans in advance of such approval.
Outstanding Securities and Voting Rights
The record date for determining shareholders entitled to
notice of, and to vote at, the Annual Meeting is February 18, 1994.
Only shareholders of record as of that date will be entitled to
notice of, and to vote at, the Annual Meeting.
On the record date, 6,490,580 shares of common stock, without
par value, were outstanding and eligible to be voted at the Annual
Meeting. Each share of common stock is entitled to one vote per
share. At the Annual Meeting, inspectors of election will tabulate
both ballots cast by shareholders present and voting in person, and
votes cast by proxy. Under applicable state law and the
Corporation's certificate of incorporation and bylaws, abstentions
and broker non-votes are counted for purposes of establishing a
quorum but otherwise do not count. Generally, the approval of a
specified percentage of shares voted at a shareholder meeting is
required to approve a proposal and thus abstentions and broker non-
votes have no effect on the outcome of a vote. Directors will be
elected by a plurality of the votes cast at the Annual Meeting.
Approval of the Program and the approval of the RRP require the
affirmative vote of a majority of those shares present or
represented at the annual meeting and entitled to vote. Where
state law or the Corporation's certificate of incorporation or
bylaws require that the matter voted upon be approved by a
specified percentage of the outstanding shares, then abstentions
and broker non-votes have the same effect as negative votes.
All shares represented by valid proxies received pursuant to
this solicitation will be voted in favor of the three nominees
named in this Proxy Statement, the approval of the Program and the
approval of the RRP, unless the shareholder specifies a different
choice by means of his proxy or revokes the proxy prior to the time
it is exercised. Should any other matters properly come before the
Annual Meeting, the persons named as proxies will vote upon such
matters in their discretion.
Revocability of Proxies
Any shareholder giving a proxy has the right to attend and to
vote at the Annual Meeting in person. A proxy may be revoked prior
to the Annual Meeting by filing a later-dated proxy or a written
revocation if it is sent to the Secretary of the Corporation, D.
Lynn Van Borkulo-Nuzzo, at 3100 Bergenline Avenue, Union City, New
Jersey, 07087, and is received by the Corporation in advance of the
Annual Meeting. A proxy may be revoked at the Annual Meeting by
filing a later-dated proxy or a written notice of revocation with
the Secretary of the Meeting prior to the voting of such proxy.
Solicitation of Proxies
This proxy solicitation is being made by the Board of
Directors of the Corporation and the cost of the solicitation will
be borne by the Corporation. In addition to the use of the mails,
proxies may be solicited personally or by telephone or telegraph by
officers, directors and employees of the Corporation and Hudson
United Bank, the Corporation's wholly-owned subsidiary, who will
not be specially compensated for such solicitation activities.
Arrangements may be made with brokerage houses and other
custodians, nominees and fiduciaries for forwarding solicitation
materials to the beneficial owners of shares held of record by such
persons, and the Corporation will reimburse such persons for their
reasonable expenses incurred in forwarding the materials.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Corporation's certificate of incorporation and its bylaws
authorize a minimum of 5 and a maximum of 25 directors but leave
the exact number to be fixed by resolution of the Board of
Directors. The Board has fixed the number of directors at 8.
Pursuant to the Certificate of Incorporation, the directors of
the Corporation are divided into three classes and each class is
elected to serve for staggered three-year terms.
Messrs. Burke and Poggi are each being nominated for a
three-year term extending to the 1997 Annual Meeting. Mr. Neilson
is being nominated for a one-year term extending to the 1995 Annual
Meeting. This is to balance the number of Directors in the
staggered classes. If, for any reason, any of the nominees become
unavailable for election, the proxy solicited by the Board of
Directors will be voted for a substitute nominee selected by the
Board of Directors. The Board has no reason to believe that any of
the named nominees is not available or will not serve if elected.
The names of the nominees for election, the directors whose
terms extend beyond this Annual Meeting and certain information
about each of them are set forth in the tables below. Years of
service on the Board of Directors includes prior service on the
Board of Directors of Hudson United Bank. During 1993, three
directors, Messrs. Clark, Goldstein and McClave, retired from the
Board of Directors. The Corporation wishes to express its deep
gratitude to these gentlemen for their service to the Corporation
and the Bank.
<PAGE>
<TABLE>
Table I--Nominees for 1994 Annual Meeting
<CAPTION>
Name, Age and
Position with Principal Occupation Director Term
Corporation During Past Five Years Since Expiring
<S> <C> <C> <C>
Robert J. President and Chief 1979 1997
Burke, 60 Operating Officer,
Union Dry Dock and
Repair Co., Hoboken, N.J.
(ship repair facility).
Kenneth T. President and CEO of the 1989 1995
Neilson, 45, Corporation and the
President and CEO Bank.
Charles F.X. President and Chief 1973 1997
Poggi, 63 Operating Officer, The
Poggi Press (general
printing business).
/TABLE
<PAGE>
<TABLE>
Table II--Directors Whose Terms Continue
Beyond This Annual Meeting
<CAPTION>
Name, Age and
Position with Principal Occupation Director Term
Corporation During Past Five Years Since Expiring
<S> <C> <C> <C>
Henry G. Retired. 1972 1996
Hugelheim, 86
Harry J. Retired. 1965 1996
Leber, 77
James E. Chairman of the Board 1972 1996
Schierloh, 64, of the Corporation and
Chairman the Bank since September
1990; formerly self-
employed Certified Public
Accountant.
Sister Grace Chairperson, Franciscan 1979 1995
Frances Health System of N.J.
Strauber, 66 (1991-present); Director,
St. Louis Senior Center,
Brooklyn, N.Y. (1989-1991);
Management Consultant,
Health System, Inc.,
Brooklyn, N.Y., Franciscan
Sisters of the Poor (1986-
present).
Edwin Wachtel, President, Europe Craft, 1986 1996
62 Inc. (manufacturers of
"Members Only" apparel)
(1961-1987 and 1991 -
present); Chairman, GW
Investors Corp. (private
investment company)
(1987-1991)
</TABLE>
No director of the Corporation is also a director of any other
company registered pursuant to Section 12 of the Securities
Exchange Act of 1934 or subject to the requirements of Section
15(d) of such Act or any company registered as an investment
company under the Investment Company Act of 1940.
Board of Directors' Meetings; Committees of the Board
The Board of Directors of the Corporation held 14 meetings
during 1993. The Board of Directors holds regularly-scheduled
meetings each quarter and special meetings as circumstances
require. All of the directors of the Corporation also serve as
directors of the Corporation's principal wholly-owned subsidiary,
Hudson United Bank (the "Bank").
The Corporation has a standing audit committee of the Board of
Directors. This committee arranges for the Bank's directors'
examinations through its independent certified public accountant,
reviews and evaluates the recommendations of the directors'
examinations, receives all reports of examination of the
Corporation and the Bank by bank regulatory agencies, analyzes such
regulatory reports, and reports to the Bank's Board the results of
its analysis of the regulatory reports. This committee also
receives reports directly from the Corporation's internal auditing
department and recommends any action to be taken in connection
therewith. The audit committee met five times during 1993. During
1993, Mr. Clark served as Chairman of the Audit Committee. Mr.
Clark retired from the Board effective December 31, 1993. A new
Chairman is expected to be appointed after the Annual Meeting. The
other members of the Audit Committee are Mr. Poggi and Sister
Strauber, and Thomas Farley, who is a director of the Bank.
The Corporation currently does not have a standing
compensation or nominating committee. As detailed more fully under
the caption "Board Compensation Committee Report on Executive
Compensation", the various elements of compensation for the
executive officers of the Corporation and the Bank are set by the
Corporation's Restricted Stock Committee and the Bank's Salary and
Personnel Committee.
During 1993, no Director of the Corporation attended fewer
than 80% of the total meetings of the Board of Directors of the
Corporation and meetings of committees of the Corporation's Board
on which such Director served except Messrs. Leber and Wachtel and
Sister Strauber who attended 57%, 55%, and 52.6%, respectively.
STOCK OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
The following table furnishes information known by the
Corporation as to the beneficial owners of more than five percent
of the Company's common stock, without par value, as of December
31, 1993.
<PAGE>
<TABLE>
<CAPTION>
Amount
and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner Ownership Class
<S> <C> <C>
FMR Corp.; Fidelity 595,800 <F1> 8.59
Management & Research
Company; and Edward C.
Johnson 3d
82 Devonshire Street
Boston, MA 02109
Valenzuela Capital 399,000 5.77
Management, Inc.
1270 Avenue of the
Americas, 12th Floor
New York, New York 10026
NOTE:
<FN>
<F1> Fidelity Management & Research Company ("Fidelity") is
beneficial owner of these shares as a result of acting as
investment adviser to several investment companies. Fidelity
is the wholly-owned subsidiary of FMR Corp. Mr. Johnson is
the Chairman and owner of 34% of the outstanding voting stock
of FMR Corp. Fidelity has sole power to direct the
disposition of these shares, but has no voting power with
respect to these shares. The Corporation obtained all
information with respect to Fidelity's, FMR Corp.'s and Mr.
Johnson's beneficial ownership from a Schedule 13G filing made
by them on February 14, 1993.
</TABLE>
The following table sets forth information concerning the
beneficial ownership of the Corporation's common stock, without par
value, as of December 31, 1993, by each executive officer of the
Corporation for whom individual information is required to be set
forth in this Proxy Statement pursuant to the rules of the
Securities and Exchange Commission (the "Named Officers"), by each
director, and by all directors and executive officers as a group.
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percent
Name of Beneficial Owner Beneficially Owned<F1> of Class
<S> <C> <C>
Robert J. Burke 31,176 <F2> .45
Henry G. Hugelheim 109,754 <F3> 1.58
Harry J. Leber 21,947 <F4> .32
Christina L. Maier 11,483 <F5> .17
Kenneth T. Neilson 52,730 <F6> .76
Charles F. X. Poggi 147,305 2.12
James E. Schierloh 50,708 <F7> .73
Sister Grace Frances Strauber 617 .01
D. Lynn Van Borkulo-Nuzzo 7,901 <F8> .11
Edwin Wachtel 47,306 <F9> .68
Directors and Executive
Officers of the Corporation
as a group (10 persons) 480,522 <F10> 6.93
________________________________
<FN>
<F1> Beneficially owned shares include shares over which the named
person exercises either sole or shared voting power or sole or
shared investment power. It also includes shares owned (i) by a
spouse, minor children or by relatives sharing the same home, (ii)
by entities owned or controlled by the named person, and (iii) by
other persons if the named person has the right to acquire such
shares within 60 days by the exercise of any right or option.
Unless otherwise noted, all shares are owned of record and
beneficially by the named person, either directly or through the
dividend reinvestment plan.
<F2> Of this total, 7,807 shares are held by Mr. Burke's wife and
718 are held in an IRA. Mr. Burke disclaims beneficial ownership
of the shares held by his wife.
<F3> Of this total, 4,911 shares are held in a revocable trust over
which Mr. Hugelheim retains control during his life.
<F4> Of this total, 2,803 shares are held in a retirement plan, of
which Mr. Leber is a trustee and beneficiary.
<F5> Of this total, 3,442 are held in Mrs. Maier's 401(k) plan,
which she directs and, 3,309 are held for Mrs. Maier under the
Corporation's restricted stock plan.
<F6> Of this total, 12,209 shares are held in Mr. Neilson's 401(k)
plan, which he directs, 10,880 shares are held for Mr. Neilson
under the Corporation's restricted stock plan, 2,310 shares are
held in an IRA and 1,639 shares are held by Mr. Neilson's wife.
Mr. Neilson disclaims beneficial ownership of the shares owned by
his wife.
<F7> Of this total, 3,291 shares are held by Mr. Schierloh's wife
individually, 4,027 shares are held in trust for Mr. Schierloh's
mother under a trust for which Mr. Schierloh is a trustee and a
beneficiary, and 5,000 shares are held for Mr. Schierloh under the
Corporation's restricted stock plan.
<F8> Of this total, 1,768 shares are held in Ms. Van Borkulo-
Nuzzo's 401(k) plan, which she directs, and 5,465 shares are held
for Ms. Van Borkulo-Nuzzo under the Corporation's restricted stock
plan.
<F9> Of this total, 655 shares are held in a general partnership of
which Mr. Wachtel is a partner.
<F10> Of this total, 17,419 shares are held in the Corporation's
401(k) plans for specified individuals and 25,374 shares are held
for executive officers under the Corporation's restricted stock
plan.
</TABLE>
In addition to the shares reported in the Table, the Bank's
Trust Department holds 26,400 shares as trustee for the Bank's two
pension plans. These additional shares held by the Bank's Trust
Department are not reported as beneficially owned by the
Corporation's directors or executive officers, although by virtue
of the officers' and directors' service on the Bank's Trust
Committee, it may be asserted that the directors and officers have
beneficial ownership of such shares. The directors and executive
officers disclaim beneficial ownership of such shares.
EXECUTIVE COMPENSATION
General
Executive compensation is described below in the tabular
format mandated by the SEC. The letters in parentheses above each
column heading are the letters designated by the SEC for such
columns, and are provided to make inter-company comparisons easier.
The absence of any column designated by the SEC means that no
compensation was paid or earned which would be required to be
described in such column.
Summary Compensation Table
The following table summarizes all compensation earned in the
past three years for services performed in all capacities for the
Corporation and its subsidiaries with respect to the Named
Officers. Pursuant to rules of the Securities and Exchange
Commission, the "All Other Compensation" category has been
calculated for 1992 and 1993 only.
<TABLE>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
<CAPTION>
(a) (b) (c) (d) (f) (i)
<S> <C> <C> <C> <C> <C>
Restricted All Other
Name and Principal Stock Compen-
Position Year Salary Bonus Award(s)<F2> sation <F3>
($) ($)<F1> ($) ($)
Kenneth T. Neilson, 1993 250,000 187,500 92,250 <F4> 7,500
President and CEO 1992 178,364 175,000 79,025 <F5> 5,351
1991 175,000 87,500 53,375 <F6> --
James E. Schierloh, 1993 107,000 53,500 46,125 <F7> 2,140
Chairman 1992 76,442 75,000 34,063 <F8> 1,529
1991 75,000 37,500 22,875 <F9> --
D. Lynn Van 1993 100,000 53,000 38,500 <F10> 3,000
Borkulo-Nuzzo, Vice 1992 91,731 49,000<F11> 19,500 <F12> 2,750
President and 1991 84,851 34,437<F13> 18,750 <F14> --
Corporate Secretary
Christina L. 1993 66,110 16,500 19,250 <F15> 1,980
Maier, Assistant 1992 61,154 15,000 13,000 <F16> 1,833
Treasurer 1991 57,000 15,250 7,031 <F17> --
<FN>
NOTES:
<F1> In August 1990, the Board adopted a bonus plan to provide for
bonus payments to non-bargaining employees based upon the
Corporation's performance, departmental performance, and the
individual employee's performance. The first bonuses awarded under
the plan were for services rendered during 1991. See "Board of
Directors Report to Shareholders on Executive Compensation" for
additional information.
<F2> The dollar amounts listed represent the number of shares of
restricted stock granted, multiplied by the fair market value of a
share of stock on the date of the grant. Dividends are paid on all
shares of restricted stock. Cash dividends are paid directly to
the officer holding the restricted stock. Stock dividends are
added to the restricted stock and are subject to the same
restrictions. Restricted stock has been awarded with various
vesting schedules described below.
<F3> All amounts in this column represent employer contributions to
401(k) plans on behalf of the Named Officers.
<F4> At December 31, 1993, Mr. Neilson held a total of 10,880
shares of restricted stock with an aggregate value of $242,080 of
which 3,000 shares were awarded on 6/9/93 to vest on 6/9/96 and
1,500 shares were awarded on 12/13/93 to vest on 12/13/96.
<F5> 5,800 shares awarded on 10/2/92 to vest on 10/2/97.
<F6> 7,000 shares were awarded on 11/21/91 and vested 11/21/93.
<F7> At December 31, 1993, Mr. Schierloh held a total of 5,000
shares of restricted stock with an aggregate value of $111,250 of
which 1,500 shares were awarded on 6/9/93 to vest on 6/9/96 and 750
shares were awarded on 12/13/93 to vest on 12/13/96.
<F8> 2,500 shares awarded on 10/2/92 to vest on 10/2/97.
<F9> 3,000 shares were awarded on 11/21/91 and vested on 11/21/93.
<F10> At December 31, 1993, Ms. Van Borkulo-Nuzzo held a total of
5,465 shares of restricted stock with an aggregate value of
$121,596 of which 2,000 shares were awarded on 6/9/93 to vest on
6/9/96.
<F11> Of this amount, $4,000 represents a special performance
bonus paid in connection with specific projects.
<F12> 1,500 shares were awarded on 5/5/92 to vest on 5/5/97.
<F13> Of this amount, $2,000 represents a special performance
bonus paid in connection with specific projects.
<F14> 2,000 shares were awarded on 10/21/91, 500 shares vested on
10/21/93, 500 shares to vest on 10/21/94, 500 shares to vest on
10/21/95 and 500 shares to vest on 10/21/96.
<F15> At December 31, 1993, Mrs. Maier held a total of 3,309
shares of restricted stock with an aggregate value of $73,625 of
which 1,000 shares were awarded on 6/9/93 to vest on 6/9/98.
<F16> 1,000 shares awarded on 5/5/92 to vest on 10/5/95.
<F17> 750 shares awarded on 10/21/91 of which 250 shares vested on
10/21/93, 250 shares to vest on 10/21/94 and 250 shares to vest on
10/21/95.
</TABLE>
Employment Contracts, Termination of Employment and Change-in-
Control Arrangements
The Corporation and the Bank jointly entered into an
employment agreement with Mr. Neilson upon his appointment as
President in 1989. The agreement continues Mr. Neilson's salary as
in effect on September 5, 1989 and provides annual increases to be
decided by the Board. For 1994, Mr. Neilson's annual base salary
is $250,000. If the Corporation changes Mr. Neilson's title to a
lesser position, reduces his compensation, forces him to relocate,
or materially alters his duties, responsibilities or authority, Mr.
Neilson can resign and continue to receive his compensation under
the agreement. After a change-in-control (as defined in the
agreement), if Mr. Neilson's employment is terminated by the
Corporation (except for cause or as a result of his death or
disability), or if Mr. Neilson resigns for any reason whatsoever
after giving 60 days' notice of his intent to do so, he is entitled
to receive two times his annual salary in a lump sum. The
employment agreement, as amended, will expire on the date of the
Corporation's 1995 annual meeting.
On September 3, 1993, Mr. Schierloh's 3 year employment
agreement expired. By mutual agreement, it was not renewed.
Ms. Van Borkulo-Nuzzo, First Senior Vice President and
Secretary of the Bank and Vice President and Secretary of the
Corporation, entered into a Change-in-Control and Employment
Agreement dated May 24, 1990 with the Corporation and the Bank,
jointly. After a change-in-control (as defined in the Agreement),
if Ms. Van Borkulo-Nuzzo's employment is terminated by the
Corporation or the Bank (except for cause or as a result of death
or disability), or if the Corporation or the Bank changes her
title, position, duties or responsibilities, and she resigns as a
result of the change, she is entitled to receive a lump sum payment
equal to one times her highest annual base salary in effect during
the three years preceding the termination or resignation. As
amended, the agreement will expire on October 26, 1995.
Under the Corporation's restricted stock plan, each share of
stock awarded is subject to a "Restricted Period" of from two to
ten years, as determined by the committee administering the plan
when it awards the shares. Effective upon the date of grant, the
officer or employee is entitled to all the rights of a shareholder
with respect to the shares, including dividend and voting rights.
However, if a share recipient leaves the employment of the
Corporation or its subsidiaries during the Restricted Period for
any reason, his or her shares may be forfeited and returned to the
Corporation. Upon the occurrence of a change in control of the
Corporation (as defined in the restricted stock plan), every
Restricted Period currently in existence of five years or less will
automatically expire.
Except as described above, there are no employment contracts
or termination of employment or change-in-control arrangements
between the Corporation and any Named Officer.
<PAGE>
Pension Plans
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Years of Service
<S> <C> <C> <C> <C> <C>
Remuneration 15 20 25 30 35
$125,000 $ 26,415 $ 35,220 $ 44,025 $ 52,830 $ 61,635
$150,000 $ 32,040 $ 42,720 $ 53,400 $ 64,080 $ 74,760
$175,000 $ 37,665 $ 50,220 $ 62,775 $ 75,330 $ 87,885
$200,000 $ 43,290 $ 57,720 $ 72,150 $ 86,580 $101,010
$225,000 $ 48,915 $ 65,220 $ 81,525 $ 97,830 $114,135
$250,000<F1> $ 51,354 $ 68,472 $ 85,590 $102,708 $115,641<F2>
$300,000<F1> $ 51,354 $ 68,472 $ 85,590 $102,708 $115,641<F2>
<FN>
NOTES:
<F1> For the current plan year, the compensation for computing
benefits under the pension plan cannot exceed $235,840, which
is indexed for inflation. For the next plan year, Congress
has limited covered compensation to $150,000 per year.
<F2> Under current law, the maximum benefits are limited to
$115,641 per year, indexed for inflation.
</TABLE>
Pension Plans. The Corporation has two non-contributory,
defined benefit pension plans: The Employees' Retirement Plan of
HUBCO, Inc. (the "Base Plan") and the Retirement Plan for Non-
Bargaining Employees of HUBCO, Inc. (the "Non-Bargaining Retirement
Plan"), both of which apply to employees of the Corporation and the
Bank.
Base Plan. The Base Plan covers any employee of the
Corporation or the Bank who works over 1,000 hours per year, is
over age 20 1/2 and has completed 6 months of service. The annual
retirement benefit for the Named Officers is the sum of (i) 1.25%
of the employee's base year-end compensation during the year he
joins the Base Plan multiplied by the number of years of service
with the Corporation or the Bank prior to joining the Plan; plus
(ii) 1.25% of the employee's base year-end compensation during each
year of a participant's service after joining the Plan.
Retirement benefits normally commence when an employee reaches age
65.
Non-Bargaining Retirement Plan. The Non-Bargaining Retirement
Plan provides additional retirement benefits for non-bargaining
employees of the Corporation and the Bank. It covers each non--
bargaining employee who works over 1,000 hours per year, is over
age 201/2 and has completed 6 months of service. The annual
retirement benefit for covered employees is calculated by taking 1%
of an employee's base average annual earnings (determined by
averaging the highest five continuous years of credited service,
excluding the last year of service) multiplied by the years of
credited service under the Plan, adding 1/2% of an employee's base
average annual earnings in excess of the average Social Security
Wage Base (calculated based upon the year of birth) multiplied by
the years of credited service and subtracting the pension benefit
the employee will receive from the Base Plan. Retirement benefits
normally commence when an employee reaches age 65. The
Non-Bargaining Retirement Plan also provides for disability pension
benefits.
In each of the above plans, compensation in the form of a
bonus is excluded from benefit calculations. Thus, for each Named
Officer, only the amounts which would be shown each year under the
heading "Salary" in the Summary Compensation Table in this Proxy
Statement are covered.
The table above shows an employee's estimated annual
retirement benefits from both pension plans, assuming retirement at
age 65 for an individual reaching such age before January 1, 1994
and assuming a straight life annuity benefit, for the specified
compensation levels and years of service. The benefits listed in
the table are not subject to any deduction for social security or
other offset amounts. Mrs. Maier has approximately 14 years of
credited service under the pension plans as of January 1, 1994,
and, at age 65, would have approximately 39 years of credited
service. Mr. Neilson has approximately 10 years of credited
service under the pension plans as of January 1, 1994 and, at age
65, would have 30 years of credited service. Ms. Van Borkulo-Nuzzo
has approximately 27 years of credited service under the pension
plans as of January 1, 1994, and, at age 65, would have
approximately 48 years of credited service. Mr. Schierloh does not
participate in this plan.
Directors' Compensation
The Corporation does not pay directors for their services as
directors of the Corporation. Rather, director fees are paid only
for service as directors of the Bank or HUB Financial Services
(another subsidiary of the Corporation) to directors other than the
President. The director fees consist of a $6,000 annual retainer
and meeting fees. The meeting fees for the year are usually
established at the first meeting of the Board of Directors of the
Corporation following the annual meeting of shareholders and in
March 1993 were set at $400 per board meeting and $300 for each
committee meeting, except that fees for committee meetings which
are contiguous to another board meeting and last less than one hour
were set at $200 per meeting. The Chairman of the Bank's Personnel
Committee, currently Mr. Poggi, receives an additional $5,000
annual retainer. Mr. Schierloh, as Chairman, receives a retainer
of $6,500 per quarter commencing 1/1/94.
1993 Stock Option Plan for Non-Employee Directors. The 1993 Stock
Option Plan for Non-Employee Directors (the "Non-Employee Directors
Plan") is an alternative retirement plan adopted for non-employee
directors who do not receive a pension from either the Corporation
or the Bank. A non-employee director must make a written election
to be covered by the Non-Employee Directors Plan. Each non-
employee director who makes an election to participate in the Non-
Employee Directors Plan will be granted, on the date following each
annual meeting of shareholders subsequent to the date of the
election, an option to purchase 500 shares of Common Stock,
provided that such non-employee director is a director as of that
date and has not withdrawn his or her election to participate. All
options granted under the Non-Employee Directors Plan have terms of
ten years, subject to earlier termination as provided in the Non-
Employee Directors Plan. The options are granted at an exercise
price equal to the fair market value of the Common Stock on the
business day preceding the date of grant. The Non-Employee
Directors Plan authorizes the Corporation to issue up to 100,000
shares of Common Stock pursuant to the options. All current
directors of the Corporation and the Bank, except Mr. Neilson, are
eligible to participate in the Non-Employee Directors Plan. During
1993, the following directors received options to purchase 500
shares (plus 50 shares to adjust for the stock dividend paid
6/1/93) of Common Stock pursuant to the Non-Employee Directors
Plan: Robert J. Burke, Charles F.X. Poggi and Edwin Wachtel.
Those non-employee directors who do not elect to participate
in the Non-Employee Directors Plan are eligible for retirement
benefits under an alternative arrangement. Under the alternative
arrangement, each eligible non-employee director with at least 36
months of service upon retirement will receive a retirement benefit
each year for life (but not to exceed ten years) equal to 10% of
the director's retainer in effect at the date of his or her
retirement, multiplied by the number of years of such person's
service as a director (not to exceed ten years). At present, the
maximum benefit per director is $6,000 per year for ten years.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The compensation payable to the Corporation's executive
officers (who are also executive officers of the Bank) is
determined by the Salary and Personnel Committee of the Bank (the
"Personnel Committee"), except that restricted stock awards are
determined by the Corporation's Restricted Stock Committee (the
"Stock Committee") and bonuses are based upon parameters
established by the full Board of Directors of the Corporation and
the Bank. All actions of the Personnel Committee are subject to
review and ratification by the full Boards of Directors of the
Corporation and the Bank. Thus, this report is being issued over
the names of all the directors of the Corporation and is concurred
in by all members of the relevant committees.
The Committee members are: Personnel Committee: Charles F.X.
Poggi (Chairman), Robert Burke, Joan David, Edwin Wachtel, Sr.
Grace Frances Strauber; Stock Committee: Charles F.X. Poggi
(Chairman), Robert Burke and Edwin Wachtel.
This report shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, or
under the Securities Exchange Act of 1934, except to the extent
that the Corporation specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
EXECUTIVE COMPENSATION POLICY
The Corporation's policy is to compensate its executives
fairly and adequately for the responsibility assumed by them for
the success and direction of the Corporation, the effort expended
in discharging that responsibility and the results achieved
directly or indirectly from each executive's performance. "Fair
and adequate compensation" is established after careful review of:
1. The Corporation's earnings;
2. The Corporation's performance as compared to other companies
of similar size, market area; and
3. Comparison of what the market demands for compensation of
similarly situated experienced executives.
Total compensation takes into consideration a mix of base
salary, bonus, perquisites and restricted stock awards. The
particular mix is established in order to competitively attract
competent professionals, hold those professionals, and reward
extraordinary achievement.
The committee also considers net income for the year and
earnings per share of HUBCO's stock before finalizing officer
increases for the coming year.
Based upon its current levels of compensation, the Corporation
is not affected by the new provisions of the Internal Revenue Code
which limits the deductibility to a company of compensation in
excess of $1 million paid to any of its top five executives. Thus,
the Corporation has no policy as to that subject.
Base Salary
Subject to Board review and ratification, the responsibility
for establishing base salary is delegated to the Personnel
Committee.
Salary is minimum compensation for any particular position and
is not tied to any performance formula or standard. However, that
is not to say that poor performance will not result in termination.
Acceptable performance is expected of all executive officers as a
minimum standard.
To establish salary, the following criteria is used:
1. Position description.
2. Direct responsibility assumed.
3. Comparative studies of peer group compensation. Special
weight is given to local factors as opposed to national
averages.
4. Earnings performance of the Corporation resulting in
availability of funds for payment of salary expense.
5. Competitive level of salary to be maintained to attract and
retain qualified and experienced executives.
Annual Bonuses
Each year the Board establishes the parameters for the award
of a bonus. The current parameters involve the Bank's performance
specifically related to return on equity and meeting loan loss
reserve levels.
It is the Board's policy that the bonus pool will not exceed
10% of after tax profits and in no event may the bonus pool cause
the year-end results to fall below the targeted return on equity or
the loan loss reserve to fall below the targeted loan loss reserve
percentage. If the targeted results are not achieved, no bonuses
will be paid. Even if the targeted level is achieved, each
department must meet its budget in order to be eligible for a bonus
and each employee must achieve key goals established for him in
order to be personally eligible.
Restricted Stock
The responsibility for establishing restricted stock awards is
delegated to the Restricted Stock Committee.
Twice annually the Restricted Stock Committee meets to
evaluate meritorious performance of all officers and employees for
consideration to receive restricted stock awards.
The Restricted Stock Committee makes awards based upon the
following criteria:
1. Position of the officer or employee in the Corporation.
2. The benefit which the Corporation has derived as a result of
the efforts of the award candidate under consideration.
3. The Corporation's desire to encourage long term employment of
the award candidate.
Perquisites
Perks, such as company automobiles and their related expenses,
country club memberships, auxiliary insurance benefits and other
perks which the Board may approve from time to time are determined
and awarded pursuant to evaluation under the same criteria used to
establish base salary.
* * * * *
The Corporation has long believed that a strong, explicit link
should exist between executive compensation and the value delivered
to shareholders. The bonus program and the restricted stock awards
both provide competitive compensation while mirroring the
Corporation's performance. Since the bonus is based on a direct,
explicit link to the Corporation's performance, it is directly and
explicitly linked to the value received by shareholders. The
Corporation's profitability inures to the benefit of shareholders,
and is a direct result of the direction established by management.
In 1993, the committees responsible for the various components
of executive compensation utilized three salary surveys and an
independent consulting firm to establish executive compensation.
One survey conducted by L.R. Weber, identified compensation to
executives of financial institutions of approximately $1 billion in
assets located in New York, New Jersey and Pennsylvania. Another
report "N.J. Bankers' Salary Survey" prepared by Peat Marwick
identified compensation in institutions of approximately $1
billion, but in New Jersey only. The final survey conducted by
Cole Surveys was nationwide for the financial industry. An outside
consulting firm, Hogg Robinson, conducted an in-house evaluation of
executive compensation and the appropriateness and competitive
aspects of our present compensation mix. The Personnel Committee
determined that base compensation for its executive officers should
be at least as much as the twenty-fifth percentile of other
institutions of similar size, and further determined that greater
weight should be given to the pay scales of comparable institutions
in Northern New Jersey.
Because Mr. Neilson, the President of the Corporation, had not
received an increase in base pay for 1991 or 1992, and had a salary
significantly less than twenty-fifth percentile of peer group
analysis, he was awarded a bonus for 1992 equal to 100% of his base
salary. Beginning January 1993, Mr. Neilson's base salary was set
at $250,000. He did not receive an increase in base salary for the
year 1994, but was awarded a bonus equal to 75% of his 1993 base
salary and is eligible for a 100% bonus at the end of 1994 provided
the performance goals established by the Board are achieved. The
Board believes that this award represents fair compensation, in
view of the Corporation's 1993 performance and peer group
comparison.
Commencing January 1, 1994, Mr. Schierloh, Chairman of the
Corporation, will receive a base salary of $75,000 and will be
eligible for a 50% bonus. In addition, he will be paid a quarterly
retainer of $6,500 as Director and Chairman beginning January 1,
1994.
THE BOARD OF DIRECTORS OF THE CORPORATION
Robert J. Burke
Henry G. Hugelheim
Harry J. Leber
Kenneth T. Neilson
Charles F.X. Poggi
James E. Schierloh
Sister Grace Frances Strauber
Edwin Wachtel
PERFORMANCE GRAPH
The following graph compares the cumulative total return on a
hypothetical $100 investment made at the close of business on
December 31, 1988 in: (a) the Corporation's common stock; (b) the
Standard & Poor's ("S&P") 500 Index; and (c) an index of peer group
performance. The graph is calculated assuming that all dividends
are reinvested during the relevant periods. The graph shows how a
$100 investment would increase or decrease in value over time,
based on dividends (stock or cash) and increases or decreases in
the market price of the stock.
<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED HUBCO, INC. S&P PEER GROUP
<S> <C> <C> <C>
12/31/88 100 100 100
12/31/89 73.49 131.69 92.34
12/31/90 45.96 127.60 46.91
12/31/91 90.30 166.47 78.80
12/31/92 184.16 179.15 130.17
12/31/93 258.66 197.21 144.48
</TABLE>
Peer Group Population:
Central Jersey Bancorporation
Citizens First Bancorp, Inc., - N.J.
Commerce Bancorp, Inc., N.J.
Constellation Bancorp
First Fidelity Bancorporation
Midlantic Corp.
Summit Bancorporation
Trust Co., N.J.
UJB Financial Corp.
United Counties Bancorp
Valley National Bancorp
Prepared for data supplied by Standard & Poor's Compustat services.
_____________________
* A graph representing the above table appears in the printed
version of this Proxy Statement.
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Schierloh and Mr. Neilson, each of whom serves on the
Board of Directors of both the Corporation and the Bank, are
officers of the Corporation and the Bank. Each of Messrs.
Schierloh and Neilson absented themselves from all discussions, and
abstained from all voting, of the Boards on which they served, with
respect to their own compensation.
Charles F.X. Poggi, who serves on the Board of Directors of
both the Corporation and the Bank, and who is the Chairman of each
of the committees involved in setting executive compensation, is
President of Poggi Press, a general printing company. During 1993,
Poggi Press was paid $180,596 for printing work for the Corporation
and its subsidiaries.
Certain Transactions with Management
The Bank has made in the past and, assuming continued
satisfaction of generally applicable credit standards, expects to
continue to make loans to directors, executive officers and their
associates (i.e. corporations or organizations for which they serve
as officers or directors or in which they have beneficial ownership
interests of ten percent or more). These loans have all been made
in the ordinary course of the banking business on substantially the
same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
persons and do not involve more than the normal risk of
collectability or present other unfavorable features.
Recommendation and Vote Required on Proposal 1
Directors will be elected by a plurality of the votes cast at
the Annual Meeting, whether in person or by proxy. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINATED SLATE
OF DIRECTORS INCLUDED IN PROPOSAL 1.
PROPOSAL 2 -- APPROVAL OF 1993 STOCK OPTION PROGRAM
FOR STATEWIDE DIVISION
The Board of Directors has approved for submission to the
Corporation's shareholders the HUBCO, Inc. 1993 Stock Option
Program for the Statewide Division (the "Program") set forth as
Exhibit A to this Proxy Statement. The objective of the Program is
to advance the interests of the Corporation and its shareholders by
providing the key employees, directors and advisory board members
of the Corporation or Hudson United Bank (the "Bank") who were
previously associated with Statewide Savings and upon whose
judgment, initiative and effort the integration of Statewide
Savings into the Bank largely depends, with an additional incentive
to contribute to the success of the Corporation as well as to
attract and retain superior new personnel for positions of
substantial responsibility with the Statewide Division of the Bank.
For the purposes of the Program, the former offices of Statewide
Savings will be considered the Statewide Division of the Bank after
the Merger Conversion.
The Board of Directors approval of the Program is
consistent with the Corporation's agreement with Statewide Savings
in conjunction with the Merger Conversion to provide certain
benefits to Statewide Savings' directors and certain of its
officers and employees. The Program will become effective as of the
effective date of the Merger Conversion. The Program is being
presented to the shareholders of the Corporation for their approval
to (i) obtain favorable treatment under Section 16(b) of the Act;
and (ii) ensure continued listing of the Corporation's Common Stock
on the NASDAQ National Market System. Failure to obtain
shareholder approval will not affect the validity of the Program
and the right to earn awards under the Program. Failure to obtain
shareholder approval may, however, prevent optionees under the
Program from receiving favorable treatment under Section 16(b) of
the Act and may result in the delisting of the Corporation's Common
Stock from the NASDAQ National Market System.
Elements of the Program
The Program is comprised of two parts: (i) the Incentive Stock
Option Plan (the "Incentive Plan") and (ii) the Compensatory Stock
Option Plan (the "Compensatory Plan") (the Incentive Plan and the
Compensatory Plan, collectively, the "Plans"). It is anticipated
that all grants under the Program will be made pursuant to the
Compensatory Plan. No grants under the Incentive Plan are
currently anticipated. All shares authorized under the Plan will
be awarded to eligible recipients under the Compensatory Plan upon
consummation of the Merger Conversion.
Administration
The Plans will be administered by a committee designated by
the Board of Directors (the "Committee") from among members of the
Board of Directors. The Committee will have sole authority in its
discretion to determine the Employees (hereinafter defined) to whom
options will be granted, the number of shares subject to any option
under the Plans and any other terms and conditions of the options.
The Committee is also charged with the responsibility of
interpreting the Plans and making all administrative determinations
thereunder.
Shares Subject to the Program
All options granted under the Program are for shares of the
Corporation's common stock ("Common Stock"). The Corporation may
issue up to 223,611 shares of the Corporation's Common Stock
pursuant to the Plans, but in no event more than the number of
shares that represent ten percent (10%) of the total number of
shares of the Common Stock issued in the Merger Conversion.
Currently, it is anticipated that the Corporation will issue
1,944,444 shares of Common Stock in the Merger Conversion. Thus,
194,444 shares of Common Stock is expected to be available under
the Program. The number and price of shares available under the
Program will be adjusted equitably for stock splits, stock
dividends, and other capital changes.
Eligibility
Only Employees of the Statewide Division are eligible for
selection by the Committee to participate in the Incentive Plan.
Employees of the Statewide Division, as well as any Directors or
Advisory Board Members of the Bank are eligible to participate in
the Compensatory Plan.
The following words have the meanings set forth below:
1. An "Employee" means (i) any person who, at the
effective date of the Merger Conversion (the "Effective Date")
becomes an employee of the Bank and prior to the Effective Date was
an employee of Statewide Savings and (ii) any person who becomes an
employee of the Statewide Division after the Effective Date, but
was not employed by the Corporation or the Bank prior to the
Effective Date.
2. A "Director" means a person who was a member of the
Board of Directors of Statewide Savings immediately prior to the
Effective Date who becomes a member of the Board of Directors of
the Bank as of the Effective Date. The term "Director" does not
include persons who are also Advisory Board Members (hereinafter
defined), members of the Board of Directors of the Corporation or
an Employee.
3. An "Advisory Board Member" means a person who was a
member of the Board of Directors of Statewide Savings immediately
prior to the Effective Date who becomes a member of the Advisory
Board of the Statewide Division of the Bank as of the Effective
Date.
There are nine directors of Statewide Savings who are expected
to participate in the Compensatory Plan. It is anticipated that at
least three officers of Statewide Savings will also participate in
the Compensatory Plan.
Termination and Amendment
The Program will terminate no later than February 15, 1999.
The Committee may at any time terminate or amend the Program.
However, no amendment may: (a) impair an optionee's rights or
obligations under any option granted under the Program prior to
such amendment or termination; (b) increase the maximum aggregate
number of shares that may be distributed under the Program; (c)
change the minimum purchase price for shares to be purchased upon
exercise of the options; or (d) permit the granting of an option to
anyone other than an Employee, Director or Advisory Board Member.
Non-Transferability
Options granted pursuant to the Program may not be
transferred, assigned, pledged or hypothecated by the optionee.
INCENTIVE STOCK OPTION PLAN
The terms and conditions of options granted under the
Incentive Plan may differ from one another as the Committee shall,
in its discretion, determine, as long as all options granted under
the Incentive Plan satisfy the requirements of the Incentive Plan.
The Corporation intends that options granted under the provisions
of the Incentive Plan will qualify and will be identified as
"incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code").
Duration of Options
Each option granted under the Incentive Plan expires on the
date determined by the Committee, but in no event later than ten
years from the date on which the option is granted, except that any
Employee who owns more than ten percent of the combined voting
power of all classes of stock of the Corporation must exercise any
options within five years from the date of grant.
If an optionee's service to the Corporation terminates for any
reason other than death or disability, his or her options will be
exercisable for a period of three months following termination. In
the event of death or disability, all options held by the optionee
will be exercisable for one year following the date of the
optionee's death or cessation of employment due to disability. In
the event of termination for cause, all rights under the optionee's
options will expire upon termination of employment or service.
Purchase Price
The purchase price for shares acquired under any options under
the Incentive Plan will not be less than the fair market value of
the shares at the time of the grant of the option. For any
employee who owns more than ten percent of the combined voting
power of all classes of stock of the Corporation, the purchase
price shall not be less than 110% of the fair market value at the
time of the grant of the option.
THE COMPENSATORY PLAN
The terms and conditions of options granted under the Program
may differ from one another as the Committee shall, in its
discretion, determine, as long as all options granted under the
Program satisfy the requirements of the Program.
Duration of Options
All options granted are fully vested when granted and last for
ten (10) years and one day.
If an optionee's service to the Corporation terminates for any
reason other than death or disability, his or her options are
exercisable only as to those shares which were immediately
purchasable by the optionee at the date of termination of service
and only for a period of one year following termination. If the
optionee's service to the Corporation is terminated due to death or
disability, all options held by such optionee are exercisable by
the optionee or his or her legal representatives or beneficiaries
for one year following the date of the optionee's death or
cessation of employment or service due to disability. If the
optionee is terminated for cause, all rights under the optionee's
options expires upon such termination of employment or service.
Purchase Price
All options granted under the Compensatory Plan at the time of
the Merger Conversion will be exercisable at a price equal to the
price per share which eligible depositors of Statewide Savings may
subscribe for shares in the Merger Conversion. Such price is
expected to be $18.00 per share.
Grants of Options
The Corporation anticipates that of the 194,444 shares
expected to be granted upon exercise of options received under the
Compensatory Plan, 19,444 or 10%, will be granted to each of the 9
directors of Statewide Savings, and that the remaining 19,444 or
10% will be awarded to other senior management of Statewide
Savings. Under the Compensatory Plan, no shares may be granted to
the Corporation's current directors, officers and employees.
Pursuant to recent Congressional hearings and the Federal
Deposit Insurance Corporation's ("FDIC's") interim rule with
respect to mutual-to-stock conversions, it is expected that the
FDIC will be reviewing the grant of stock options to officers and
directors of Statewide Savings in connection with the conversion.
The FDIC has stated that it will pay particular attention to the
compensation packages offered to directors and management.
Although the Board of Directors believes that the awards
anticipated under the Compensatory Plan are fair and in the best
interest of the Corporation, such awards may be modified following
the review by the FDIC.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the Federal income tax
consequences of transactions under the Program based on Federal
income tax laws in effect on February 1, 1994. This summary is not
intended to be exhaustive and does not describe state or local tax
consequences.
Incentive Plan
No taxable income generally is realized by an optionee for
Federal income tax purposes upon either the grant or the exercise
of an incentive stock option.
The optionee generally will realize taxable income only upon
the sale of the shares acquired pursuant to the option and the
taxable income may constitute either a capital gain or ordinary
income, as explained below. The exercise of an incentive stock
option will give rise to an item of tax preference that may result
in an alternative minimum tax liability for the optionee.
Generally, if the optionee holds the shares acquired upon exercise
of the option for at least the two years after the date of grant
and one year after the exercise of the option, then (1) upon sale
of such shares, any amount realized in excess of the option price
will be taxed to the optionee as a long-term capital gain and any
loss sustained will be a long-term capital loss, and (2) no
deduction will be allowed to the optionee's employer for Federal
income tax purposes.
If shares acquired by the optionee are disposed of prior to
the expiration of either holding period described above, generally
(1) the optionee will realize ordinary income in the year of
disposition in an amount equal to the excess of the fair market
value of such shares at the time of exercise over the option price
paid for such shares, and (2) the optionee's employer will be
entitled to deduct the amount of income taxed to the optionee for
Federal income tax purposes if it complies with withholding
requirements and if the amount represents ordinary and necessary
business expense. Any further gain (or loss) realized by the
optionee will be taxed as a short-term or long-term capital gain
(or loss), as the case may be, and will not result in any deduction
by the employer.
As noted above, the exercise of an incentive stock option
could subject the optionee to the alternative minimum tax. The
application of the alternative minimum tax to any particular
optionee depends upon the particular facts and circumstances which
exist with respect to the optionee in the year of exercise.
However, as a general rule, the amount by which the fair market
value of the stock on the date of exercise of an option exceeds the
exercise price of the option will constitute an item of "tax
preference" for purposes of the alternative minimum tax. As such,
this item will enter into the tax base on which the alternative
minimum tax is computed, and may therefore cause the alternative
minimum tax to become applicable in a given year.
Compensatory Plan
The options granted under the Compensatory Plan will be
treated as "nonstatutory options" for federal income tax purposes.
The grant of a nonstatutory option which has no readily
ascertainable fair market value at the time it is granted is not
taxable to the recipient of the option for federal income tax
purposes at the time the option is granted. The options granted
under the Compensatory Plan should be considered as having no
readily ascertainable fair market value at the time of grant
because they are neither tradeable on an established market nor
transferrable by the recipient.
The recipient of a nonstatutory option realizes compensation
taxable as ordinary income at the time the option is exercised.
The amount of such compensation is equal to the amount by which the
fair market value of the stock acquired upon exercise of the option
exceeds the amount required to be paid for such stock. The stock
acquired upon exercise of the option has an adjusted basis in the
hands of the recipient equal to its fair market value taken into
account in determining the recipient's compensation and a holding
period commencing on the date the stock is acquired by the
recipient. At the time the stock is subsequently sold or otherwise
disposed of by the recipient, the recipient will recognize a
taxable capital gain or loss measured by the difference between the
adjusted basis of the stock at the time it is disposed of and the
amount realized in connection with the transaction. At the time
the compensation income is realized by the recipient of the
option, the Corporation is entitled to an income tax deduction in
the amount of the compensation income, provided applicable rules
pertaining to tax withholding are satisfied and the compensation
represents an ordinary and necessary business expense of the
Corporation.
Under current law, ordinary income and short-term capital
gains are taxable at a maximum rate of 39.6% for federal income tax
purpose. Long-term capital gains, to the extent they exceed
capital losses in any year, are taxable at a maximum rate of 28%.
Capital losses recognized in any year may be used without
limitation to offset capital gains recognized in such year and also
may be applied against ordinary income to the extent of $3,000
($1,500 for married taxpayers filing separately) in any year.
Recommendation and Vote Required for Adoption of Proposal 2
The affirmative vote of a majority of the Corporation's common
stock voted at the Annual Meeting, whether in person or by proxy,
is required to adopt the Program. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 2.
PROPOSAL 3 -- APPROVAL OF RECOGNITION AND RETENTION PLAN FOR
THE STATEWIDE DIVISION OF HUDSON UNITED BANK
The Board of Directors has approved for submission to the
Corporation's shareholders the HUBCO, Inc. Recognition and
Retention Plan for the Statewide Division of Hudson United Bank
(the "RRP") set forth as Exhibit B to this Proxy Statement. The
objective of the RRP is to retain the services, dedication and
loyalty of certain former employees and directors of Statewide
Savings who may become employees of the Corporation or the Bank or
directors or advisory board members of the Bank.
The RRP is being presented to the shareholders of the
Corporation for their approval in order to (i) obtain favorable
treatment under Section 16(b) of the Act; and (ii) ensure continued
listing of the Corporation's Common Stock on the NASDAQ National
Market System. Failure to obtain shareholder approval will not
affect the validity of the RRP and the right to receive grants
under the RRP. Failure to obtain shareholder approval may,
however, prevent grantees under the RRP from receiving favorable
treatment under Section 16(b) of the Act and may result in the
delisting of the Corporation's Common Stock from the NASDAQ
National Market System.
Administration
The RRP will be administered by a committee designated by the
Board of Directors (the "RRP Committee") from among disinterested
members of the Board of Directors of the Bank (the "Bank Board").
The RRP Committee has the authority to determine which of the RRP
Employees (hereinafter defined) will be granted a Plan Share Award
and the number of shares covered by each award.
Contributions / Plan Share Reserve
The Bank will contribute to a trust to be established pursuant
to the RRP (the "Trust") an amount sufficient to purchase up to
111,806 shares of Common Stock. Upon the Merger Conversion, the
RRP provides that the trustee for the Trust (the "Trustee") is to
invest all of the Trust's assets exclusively in Common Stock except
as provided in the RRP; provided, however, that the Trust shall not
invest in more than five percent of the shares of Common Stock
issued by the Corporation in the Merger Conversion. Such shares of
Common Stock purchased by the Trust will constitute the "Plan Share
Reserve". Currently, it is anticipated that 1,944,444 shares of
Common Stock will be issued by the Corporation in the Merger
Conversion. Thus, it is anticipated that 97,222 will be available
for grant under the RRP. Upon the allocation of Plan Share Awards
under the RRP, or the decision of the RRP Committee to return
shares of Common Stock held in the Plan Share Reserve ("Plan
Shares") to the Bank, the Plan Share Reserve will be reduced by
such number of shares allocated or returned. Any shares allocated
but not earned because of a forfeiture by the recipient as provided
in the RRP will be added to the Plan Share Reserve. The RRP
Committee may, with the approval of the Bank Board, or if so
directed by the Bank Board, return all Common Stock in the Plan
Share Reserve to the Corporation at any time.
Eligibility
The following persons are eligible to participate in the RRP:
1. An " RRP Employee" which means any person who was employed
by Statewide Savings immediately prior to the effective date of the
Merger Conversion (the "Effective Date") and who after the
Effective Date is employed by the Statewide Division or an
affiliate of the Bank. The term "RRP Employee" includes employees
who are officers, but does not include any Advisory Board Members
or Directors (as such terms are hereinafter defined).
2. A "Director".
3. An "Advisory Board Member".
There are nine directors of Statewide Savings who are expected
to participate in the RRP. It is anticipated that at least three
officers of Statewide Savings will also participate in the RRP.
Allocations
The RRP provides that each Advisory Board Member and Director
will be granted a Plan Share Award of a fixed number of shares (the
"Fixed Award"). These persons are the current Directors of
Statewide. Certain RRP Employees, as determined by the RRP
Committee, will be granted Plan Share Awards and the number of
shares of Common Stock covered by each Plan Share Award.
The Corporation anticipates that of the 97,222 shares of
Common Stock to be granted under the RRP, 9,722, or 10%, will be
granted to each of the 9 directors of Statewide Savings, and that
the remaining 9,722 shares, or 10% will be granted to other senior
management of Statewide Savings. Under the RRP, no awards may be
made to the Corporation's current directors, officers and
employees.
Pursuant to recent Congressional hearings and the FDIC's
interim rule with respect to mutual-to-stock conversions, it is
expected that the FDIC will be reviewing the grant of restricted
stock to officers and directors of Statewide Savings in connection
with the conversion. The FDIC has stated that it will pay
particular attention to the compensation packages offered to
directors and management. Although the Board of Directors believes
that the awards anticipated under the RRP are fair and in the best
interest of the Corporation, such awards may be modified following
the review by the FDIC.
Vesting
Unless specifically stated to the contrary at the time a Plan
Share Award is granted, the Recipient will receive 33-1/3% per year
of the aggregate number of shares covered by his or her Plan Share
Award. The first 33-1/3% will be earned immediately upon the
effective date of the grant of the Plan Share Award. Subsequent
portions will be earned at the end of each full twelve months of
consecutive employment with or service to the Bank or its
affiliate.
If employment or service of a Recipient is terminated prior to
the second anniversary of the date of grant of a Plan Share Award
for reasons other than death, disability or retirement, the
Recipient forfeits his or her right to earn any Plan Shares which
have not vested prior to such date.
If employment or service of a Recipient is terminated due to
death, disability or retirement, all Plan Shares subject to his or
her Plan Share Award is vested as of his or her last day of
employment with or service to the Bank or its affiliate. If,
however, the Recipient's Service terminates due to normal
retirement within one year of the date of the Merger Conversion, he
or she may not dispose of the vested shares for a one year period
following the Merger Conversion.
In the case of an RRP Employee, Advisory Board Member or
Director who is discharged from the Bank or an affiliate for cause,
or who is discovered after termination of employment or service to
have engaged in conduct that would have justified termination for
cause, the RRP Committee may immediately revoke, rescind and
terminate a Plan Share Award, to the extent Plan Shares have not
been delivered thereunder to the Recipient, whether or not yet
vested.
Distribution of Plan Shares
The RRP provides that Plan Shares will be distributed to the
Recipient as soon as practicable after they are vested. All Plan
Shares, together with shares representing stock dividends, will be
distributed in the form of Common Stock. One share of Common Stock
will be given for each Plan Share vested and payable. Any
fractional shares, cash dividends and earnings thereon, if any,
will be made in cash.
Voting of Plan Shares
After a Plan Share Award is granted, the Recipient is entitled
to direct the Trustee as to the voting of the Plan Shares which are
covered by his or her Plan Share Award and which have not vested
and been distributed to him or her, subject to rules and procedures
adopted by the RRP Committee for this purpose. All shares of
Common Stock held by the Trust as to which recipients are not
entitled to direct, or have not directed, the voting will be voted
by the Trustee in the same proportion as the Plan Shares which have
been awarded and voted.
Non-Transferability
Plan Share Awards granted pursuant to the RRP may not be
transferred, assigned, pledged or hypothecated by the Recipient.
The Trust
The Trustee will hold, administer, and make distributions from
the Trust in accordance with the provisions of the RRP and Trust
and the applicable rules and procedures established by the RRP
Committee pursuant to the RRP. The Trustee will have complete
authority and discretion with respect to the management, control
and investment of the Trust.
Records and Accounts
The Trustee will maintain accurate and detailed records and
accounts of all transactions of the Trust, which shall be available
at all reasonable times for inspection by any legally entitled
person or entity to the extent required by applicable law, or any
other person determined by the RRP Committee.
Earnings and Expenses
All earnings, gains and losses with respect to Trust assets
will be allocated to bookkeeping accounts for Recipients or to the
general account of the Trust, depending on the nature and
allocation of the assets generating such earnings, gains and
losses. All costs and expenses incurred in the operation and
administration of RRP, including those incurred by the Trustee,
will be paid by the Bank.
Indemnification
The Bank will indemnify, defend and hold the Trustee harmless
against all claims, expenses and liabilities arising in connection
with the Trustee's powers and its duties under the RRP, unless the
same is due to its gross negligence or willful misconduct.
Amendment and Termination
The Bank Board may at any time amend or terminate the RRP and
Trust. The Bank Board may also return to the Bank all or any part
of the shares of Common Stock held in the Plan Share Reserve.
However, such termination of the Trust may not affect a Recipient's
right to receive shares of Common Stock covered in any Plan Share
Award previously granted and to the distribution of Common Stock
relating to such right.
The RRP provides that the RRP shall remain in effect until the
earlier of (1) 5 years from the Effective Date, (2) termination by
the Bank Board, or (3) the distribution of all assets of the Trust.
Federal Income Tax Consequences Under the RRP
The following is a brief summary of the Federal income tax
consequences of transactions under the RRP based on Federal income
tax laws in effect on February 1, 1994. This summary is not
intended to be exhaustive and does not describe state or local tax
consequences.
As a general rule, a transfer of property to any person in
connection with the performance of services is compensation taxable
to the recipient for federal income tax purposes at ordinary income
rates. The taxable compensation is realized by the person at the
time the property is first transferable by the recipient or is no
longer subject to a substantial risk of forfeiture. The amount of
the recipient's taxable income is equal to the fair market value of
the property received in excess of the amount (if any) paid for the
property, determined at the time the receipt of the property
becomes taxable to the recipient. Property is deemed to be subject
to a substantial risk of forfeiture if a person's rights to full
enjoyment of the property are conditioned on the future performance
of substantial services by any person.
Pursuant to the foregoing rules, the granting of a Plan Share
Award to a Recipient is not taxable to the Recipient, except to the
extent, and until, the shares comprising the award are vested. At
the time the shares are vested, the Recipient realizes compensation
taxable as ordinary income equal to the fair market value of the
vested stock, determined as of the date it vests. The stock which
has vested has an adjusted basis in the hands of the Recipient
equal to its fair market value taken into account in determining
the Recipient's compensation income and a holding period which
commences on the date the stock vests. At the time the stock is
subsequently sold or otherwise disposed of by the Recipient, the
Recipient will recognize a taxable capital gain or loss measured by
the difference between the adjusted basis of the stock at the time
it is disposed of and the amount realized in connection with the
transaction. At the time the compensation income is realized by
the Recipient, the Corporation is entitled to an income tax
deduction in the amount of the compensation income, provided
applicable rules pertaining to tax withholding are satisfied and
the compensation represents an ordinary and necessary business
expense of the Corporation.
Under current law, ordinary income and short-term capital
gains are taxable at a maximum rate of 39.6% for federal income tax
purposes. Long-term capital gains, to the extent they exceed
capital losses in any year, are taxable at a maximum rate of 28%.
Capital losses recognized in any year may be used without
limitation to offset capital gains recognized in such year and also
may be applied against ordinary income to the extent of $3,000
($1,500 for married taxpayers filing separately) in any year.
Recommendation and Vote Required for Adoption of Proposal 3
The affirmative vote of a majority of the Corporation's common
stock voted at the Annual Meeting, whether in person or by proxy,
is required to adopt the RRP. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" PROPOSAL 3.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co. ("Arthur Andersen") has served as the
Corporation's independent auditors since March 1991. Arthur
Andersen has been appointed to audit the books and records of the
Corporation for 1993. Selection of the Corporation's independent
public accountants for the 1994 fiscal year will be made by the
Board subsequent to the Annual Meeting.
Arthur Andersen has advised the Corporation that one or more
of its representatives will be present at the Annual Meeting of
Shareholders to make a statement, if desired, and to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be included in the Corporation's
1995 proxy material must be received by the Secretary of the
Corporation no later than November 1, 1994.
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any other matters which
may come before the Annual Meeting. However, in the event such
other matters come before the meeting, it is the intention of the
persons named in the proxy to vote on any such matters in
accordance with the recommendation of the Board of Directors.
Shareholders are urged to sign the enclosed proxy, which is
solicited on behalf of the Board of Directors, and return it to the
Corporation in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
James E. Schierloh, Chairman of the Board
Kenneth T. Neilson, President and CEO
Union City, New Jersey
March 1, 1994
A copy of the Corporation's annual report on Form 10-K (without
exhibits) filed with the Securities and Exchange Commission will be
furnished to any shareholder upon written request addressed to D.
Lynn Van Borkulo-Nuzzo, Vice President and Secretary, HUBCO, Inc.,
3100 Bergenline Avenue, Union City, New Jersey 07087.
<PAGE>
EXHIBIT A TO THE
PROXY STATEMENT
HUBCO, INC.
1993 STOCK OPTION PROGRAM
FOR STATEWIDE DIVISION
1. Purpose. The purpose of this Program is to advance the
interests of the Company and its shareholders by providing the key
Employees, Directors and Advisory Board Members of the Company or
the Bank who were previously associated with Statewide Savings
Bank, S.L.A. and upon whose judgment, initiative and effort the
integration of Statewide Savings Bank, S.L.A. into the Bank largely
depends, with an additional incentive to faithfully and diligently
perform their assigned responsibilities as well as to attract and
retain superior new personnel for positions of substantial
responsibility with the Statewide Division.
2. Definitions. The following words and phrases when used
in this Program with an initial capital letter, unless the context
indicates otherwise, shall have the meanings set forth below.
Wherever appropriate, the masculine pronoun shall include the
feminine pronoun and the singular shall include the plural. The
Program shall be administered, construed, governed and amended in
accordance with the following terms as herein defined.
2.1 "Advisory Board" means the Advisory Board of
Directors of the Statewide Division.
2.2 "Advisory Board Member" means a person who was a
member of the Board of Directors of Statewide Savings Bank, S.L.A.
immediately prior to the Effective Date, as defined herein, who
becomes a member of the Advisory Board of the Statewide Division of
Hudson United Bank as of the Effective Date. The term "Advisory
Board Member" does not include persons who are also members of the
Board of Directors of the Company or the Bank or an Employee.
2.3 "Affiliate" means: (i) a member of a controlled
group of corporations of which the Company is a member or (ii) an
unincorporated trade or business which is under common control with
the Company as determined in accordance with Section 414(c) of the
Code and the regulations issued thereunder. For purposes hereof,
a "controlled group of corporations" shall mean a controlled group
of corporations as defined in Section 1563(a) of the Code
determined without regard to Section 1563(a)(4) and (e)(3)(C).
2.4 "Bank" means Hudson United Bank.
2.5 "Bank Board" means the Board of Directors of the
Bank.
2.6 "Beneficiary" means the person or persons designated
by a Recipient to receive any benefits payable under the Plan in
the event of such Recipient's death. Such person or persons shall
be designated in writing on forms provided for this purpose by the
Committee and may be changed from time to time by similar written
notice to the Committee. In the absence of a written designation,
the Beneficiary shall be the Recipient's surviving spouse, if any
or if none, his estate.
2.7 "Board" means the Board of Directors of the Company.
2.8 "Change in Control of the Company" means the
occurrence of any of the following events: (i) as a result of a
tender offer, merger, consolidation, sale of assets, plan of
acquisition, plan of exchange, business combination or contested
election, or any combination of the foregoing (a "Transaction"),
the persons who were directors of the Company immediately before
the Transaction cease to constitute a majority of the Board of
Directors of the Company or of any successor to the Company; or
(ii) if the Company is merged or consolidated with or into another
corporation, or the Company, its outstanding shares, or its assets
is acquired, directly or indirectly, by another corporation,
partnership, person or entity, and as a result of such merger,
consolidation or acquisition, less than 60% of the outstanding
voting securities of the surviving or resulting corporation or the
acquiring corporation (partnership, person or entity) shall be
owned in the aggregate by the former shareholders of the Company.
2.9 "Code" means the Internal Revenue Code of 1986, as
amended.
2.10 "Committee" means the Program Committee of the Board
which shall consist solely of non-employee directors, all of whom
are "disinterested directors" as that term is defined under Rule
16b-3 under the Exchange Act, promulgated by the Securities and
Exchange Commission.
2.11 "Common Stock" means shares of the common stock, no
par value, of the Company.
2.12 "Company" shall mean HUBCO, Inc.
2.13 "Compensatory Plan" means the HUBCO, Inc.
Compensatory Stock Option Plan.
2.14 "Director" means a person who was a member of the
Board of Directors of Statewide Savings Bank, S.L.A. immediately
prior to the Effective Date, as defined herein, who becomes a
member of the Bank Board as of the Effective Date. The term
"Director" does not include persons who are also Advisory Board
Members, members of the Board of Directors of the Company or an
Employee.
2.15 "Disability" means the permanent and total
disability by reason of mental or physical infirmity, or both, of
an Employee to perform the work customarily assigned to him.
Additionally, a medical doctor selected or approved by the Board
must advise the Committee that it is either not possible to
determine when such Disability will terminate or that it appears
probable that such Disability will be permanent during the
remainder of said participant's lifetime.
2.16 "Effective Date" means the effective date of the
Merger Conversion.
2.17 "Employee" means (i) any person who, at the
Effective Date, becomes an employee of the Bank and prior to the
Effective Date was an employee of Statewide Savings Bank, S.L.A.
and (ii) any person who becomes an employee of the Statewide
Division after the Effective Date, but was not employed by the
Company or the Bank prior to the Effective Date. Employee shall
include Employees who are officers, but such term shall not include
any Advisory Board Members or Directors.
2.18 "Exchange Act" means the Securities Exchange Act of
1934, as amended.
2.19 "Incentive Plan" means the HUBCO, Inc. Incentive
Stock Option Plan, which is Plan I of this Program.
2.20 "Merger Conversion" means the conversion of
Statewide Savings Bank, S.L.A. from the mutual to the stock form of
organization and the acquisition of Statewide Savings Bank, S.L.A.
by the Company through merger with and into the Bank.
2.21 "Optionee" means an Employee, Advisory Board Member
or Director to whom an option has been granted under the Program.
2.22 "Program" means the HUBCO, Inc. 1993 Stock Option
Program for Statewide Division.
2.23 "Statewide Division" shall mean the Statewide
Division of Hudson United Bank.
2.24 "Retirement" with respect to an Employee means
termination of employment which constitutes retirement under any
tax qualified plan maintained by the Bank or an Affiliate or the
attainment of age 65. "Retirement" with respect to an Advisory
Board Member means the termination of service after ten (10) years
of service on the board of directors of Statewide Savings Bank,
S.L.A. and/or the Advisory Board and having been elected to such
directorship(s) for at least four (4) terms. "Retirement" with
respect to a Director means the termination of service after ten
(10) years of service on the board of directors of Statewide
Savings Bank, S.L.A. and/or the Board and having been elected to
such directorship(s) for at least four (4) terms.
2.25 "Termination for Cause" means termination because of
a material loss to the Company, Bank or an Affiliate caused by the
Optionee's personal dishonesty, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to
perform stated duties or the willful violation of any law, rule or
regulation or final cease-and-desist order.
3. Elements of the Program. In order to maintain
flexibility in the award of stock benefits, the Program is
comprised of two parts. The first part is the Incentive Plan. The
second part is the Compensatory Plan. Copies of the Incentive Plan
and Compensatory Plan are attached hereto as Part I and Part II
respectively and are collectively referred to herein as the
"Plans". The Incentive Plan provides for stock options which are
intended to be incentive stock options, qualified under Section 422
of the Internal Revenue Code of 1986, as amended. The Compensatory
Plan provides for stock options which are not so qualified. The
grant of an option under one of the Plans shall not be construed to
prohibit the grant of an option under any of the other Plans.
4. Applicability of General Provisions. Unless any Plan
specifically indicates to the contrary, all Plans shall be subject
to all of the provisions of the Program set forth below.
5. Administration. The Program shall be administered by the
Committee. No member of the Committee shall be eligible for grants
hereunder. Any action of the Committee shall be taken by majority
vote or the unanimous written consent of the members of the
Committee. No member of the Committee or the Board shall be liable
for any action or determination made in good faith with respect to
the Program or to any option granted thereunder. If a member of
the Committee or the Board is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of anything done or not done by him in
such capacity under or with respect to the Program, the Company
shall indemnify such member against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in the best interests of the Company and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful.
6. Authority of the Committee. Subject to the other
provisions of this Program, and with a view to effecting its
purpose, the Committee shall have sole authority in its absolute
discretion: (a) to construe and interpret the Program; (b) to
define the terms used herein; (c) to prescribe, amend and rescind
rules and regulations relating to the Program; (d) to determine the
Employees to whom options shall be granted under the Program; (e)
to determine the time or times at which options shall be granted
under the Program; (f) to determine the number of shares subject to
any option under the Program and the option price, and the duration
of each option, and any other terms and conditions of options; (g)
to terminate the Program; and (h) to make any other determinations
necessary or advisable for the administration of the Program and to
do everything necessary or appropriate to administer the Program.
All decisions, determinations and interpretations made by the
Committee shall be binding and conclusive on all participants in
the Program and on their legal representatives, heirs and
beneficiaries.
7. Maximum Number of Shares Subject to the Program. The
maximum aggregate number of shares of the Company's Common Stock
available pursuant to the Plans, subject to adjustment as provided
in Section 10 hereof, shall be equal to the number of shares that
represent ten percent (10%) of the total number of shares of the
Common Stock issued in the Merger Conversion. If any of the
options granted under this Program expire or terminate for any
reason before they have been exercised in full, the unpurchased
shares subject to those expired or terminated options shall again
be available for the purposes of the Program.
8. Eligibility and Participation. Only Employees of the
Statewide Division, whether or not officers or directors of the
Bank or of an Affiliate, shall be eligible for selection by the
Committee to participate in Plan I of the Program. Employees and
officers of the Statewide Division, as well as any Directors or
Advisory Board Members of the Bank, shall be eligible to
participate in Plan II of the Program.
9. Effective Date and Term of Program. This Program is
effective as of the Effective Date of the Merger Conversion.
Following the Merger Conversion, the Program shall be presented to
shareholders of the Company for ratification for purposes of: (a)
obtaining favorable treatment under Section 16(b) of the Exchange
Act; (b) obtaining preferential tax treatment for options granted
under the Incentive Plan, and (c) maintaining listing on the
National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System; provided, however, that the
failure to obtain shareholder ratification will not affect the
validity of the Plan and the Plan Share Awards thereunder.
The Program shall continue in effect for a term of five (5)
years after this Program is adopted by the Board unless sooner
terminated under Section 6 hereof.
10. Adjustments for Capital Changes. If the shares of Common
Stock as a whole are increased, decreased, changed into or
exchanged for a different number or kind of shares or securities
through merger, consolidation, combination, exchange of shares,
other reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, an appropriate and
proportionate adjustment shall be made in the maximum number and
kind of shares as to which options may be granted under this
Program. A corresponding adjustment changing the number or kind of
shares allocated to unexercised options or portions thereof, which
shall have been granted prior to any such change, shall likewise be
made. Any such adjustment in outstanding options shall be made
without change in the aggregate purchase price applicable to the
unexercised portion of the option but with a corresponding
adjustment in the price for each share or other unit of any
security covered by the option. In making any adjustment pursuant
to this Section 10, fractional shares may be disregarded.
11. Termination and Amendment of Program. The Program shall
terminate no later than five (5) years from the date the Program is
adopted by the Board. No options shall be granted under the
Program after that date. Subject to the limitations contained in
Section 12, the Committee may at any time amend or revise the terms
of the Program, including the form and substance of the option
agreements to be used hereunder; provided, however, that no
amendment or revision shall (a) increase the maximum aggregate
number of shares that may be sold or distributed pursuant to
options granted under this Program, except as required under
Section 6; (b) change the minimum purchase price for shares under
Section 4 of Plans I and II; (c) increase the maximum term
established under the Plans for any option; or (d) permit the
granting of an option to anyone other than as provided in Section
8.
12. Prior Rights and Obligations. No amendment, suspension
or termination of the Program shall, without the consent of the
Optionee who has received an option, alter or impair any of that
Optionee's rights or obligations under any option granted under the
Program prior to such amendment, suspension or termination.
13. Privileges of Stock Ownership. Notwithstanding the
exercise of any options granted pursuant to the terms of this
Program, no Optionee shall have any of the rights or privileges of
a stockholder of the Company in respect of any shares of stock
issuable upon the exercise of his or her option until certificates
representing the shares have been issued and delivered. No shares
shall be required to be issued and delivered upon exercise of any
option unless and until all of the requirements of law and of all
regulatory agencies having jurisdiction over the issuance and
delivery of the securities shall have been fully complied with. No
adjustment shall be made for dividends or any other distributions
for which the record date is prior to the date on which such stock
certificate is issued.
14. Reservation of Shares of Common Stock. The Company,
during the term of this Program, will at all times reserve and keep
available such number of shares of its Common Stock as shall be
sufficient to satisfy the requirements of the Program. In
addition, the Company will from time to time, as is necessary to
accomplish the purposes of this Program, seek to obtain from any
regulatory agency having jurisdiction any requisite authority in
order to issue and sell shares of Common Stock hereunder. The
inability of the Company to obtain from any regulatory agency
having jurisdiction the authority deemed by the Company's counsel
to be necessary to the lawful issuance and sale of any shares of
its stock hereunder shall relieve the Company of any liability in
respect of the non-issuance or sale of the stock as to which the
requisite authority shall not have been obtained.
15. Tax Withholding. The exercise of any option granted
under the Program is subject to the condition that, if at any time
the Company shall determine, in its discretion, that the
satisfaction of withholding tax or other withholding liabilities
under any state or federal law is necessary or desirable as a
condition of, or in any connection with, such exercise or the
delivery or purchase of shares pursuant thereto; then in such
event, the exercise of the option shall not be effective unless
such withholding tax or other withholding liabilities shall have
been satisfied in a manner acceptable to the Company.
16. Employment Rights. Nothing in the Program or in any
option shall confer upon any Employee, Advisory Board Member or
Director any right to continued employment by or service to the
Bank or an Affiliate or limit in any way the right of the Bank or
an Affiliate at any time to terminate or alter the terms of that
employment or service.
<PAGE>
PLAN I
HUBCO, INC.
INCENTIVE STOCK OPTION PLAN
Section 1. Purpose. The purpose of this Incentive Plan is
to promote the growth and general prosperity of the Company by
permitting the Company to grant options to purchase shares of its
Common Stock. The Incentive Plan is designed to help attract and
retain superior personnel for positions of responsibility with the
Statewide Division and to provide key Employees of the Statewide
Division with an additional incentive to contribute to the success
of the Company. The Company intends that options granted pursuant
to the provisions of the Incentive Plan will qualify and will be
identified as "incentive stock options" within the meaning of
Section 422 of the Code. This Incentive Plan is Part I of the
Program. Unless any provision herein indicates to the contrary,
this Incentive Plan shall be subject to all of the terms and
conditions of the Program.
Section 2. Option Terms and Conditions. The terms and
conditions of options granted under the Incentive Plan may differ
from one another as the Committee shall, in its discretion,
determine, as long as all options granted under the Incentive Plan
satisfy the requirements of the Incentive Plan.
Section 3. Duration of Options. Each option and all
rights thereunder granted pursuant to the terms of the Incentive
Plan shall expire on the date determined by the Committee, but in
no event shall any option granted under the Incentive Plan expire
later than ten (10) years from the date on which the option is
granted, except that any Employee who owns more than ten percent
(10%) of the combined voting power of all classes of stock of the
Company must exercise any options within five (5) years from the
date of grant. In addition, each option shall be subject to early
termination as provided in the Incentive Plan.
Section 4. Purchase Price. The purchase price for shares
acquired under any option hereunder shall not be less than the fair
market value of the shares at the time of the grant of the option;
except that for any employee who owns more than ten percent (10%)
of the combined voting power of all classes of stock of the Company
the purchase price shall not be less than one hundred and ten
percent (110%) of fair market value. Fair market value shall be
determined by the Committee on the basis of such factors as it
deems appropriate, provided, however, that fair market value shall
be determined without regard to any restriction other than a
restriction which, by its terms, will never lapse, and further
provided, that if at the time the determination of fair market
value is made, those shares are admitted to trading on a national
securities exchange for which sale prices are regularly reported,
the fair market value of those shares shall not be less than the
mean of the high and low asked or closing sales prices reported for
the Common Stock on that exchange on the day or most recent trading
day preceding the date on which the option is granted. For
purposes of this Section 4, the term "national securities exchange"
shall include the National Association Securities Dealers Automated
Quotation System and the over-the-counter market.
Section 5. Maximum Amount of Options in Any Calendar Year.
The aggregate fair market value (determined as of the time the
option is granted) of the Common Stock with respect to which
incentive stock options, as defined in Code Section 422(b), are
exercisable for the first time by any employee during any calendar
year (under the terms of this Program and all such programs of the
Company, Bank or an Affiliate) shall not exceed $100,000.
Section 6. Exercise of Options. Each option shall be
exercisable in one or more installments during its term, and the
right to exercise shall be cumulative as determined by the
Committee. No option may be exercised for a fraction of a share of
Common Stock. The purchase price of any shares purchased shall be
paid in full in cash or by check payable to the order of the
Company or by shares of Common Stock, if permitted by the
Committee, or by a combination of cash, check or shares of Common
Stock, at the time of exercise of the option, provided that the
form(s) of payment allowed the employee shall be established when
the option is granted. If any portion of the purchase price is
paid in shares of Common Stock, those shares shall be tendered at
their then fair market value as determined by the Committee in
accordance with Section 4 of this Incentive Plan.
Section 7. Acceleration of Right of Exercise.
Notwithstanding the first sentence of Section 6 of this Incentive
Plan or the terms of any grant agreement, in the event of a Change
in Control of the Company, any option granted pursuant to the terms
of the Incentive Plan shall become immediately exercisable with
respect to the full number of shares subject to that option.
Section 8. Written Notice Required. Any option granted
pursuant to the terms of the Incentive Plan shall be exercised by
written notice of that exercise given to the Company at its
principal office by the Optionee accompanied by full payment for
the shares with respect to which the option is exercised.
Section 9. Compliance With Securities Laws. Shares of
Common Stock shall not be issued with respect to any option granted
under the Incentive Plan unless the exercise of that option and the
issuance and delivery of those shares pursuant to that exercise
shall comply with all relevant provisions of state and federal law
including, without limitation, the Securities Act of 1933, as
amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then
be listed, and shall be further subject to the approval of counsel
for the Company with respect to such compliance. The Committee may
also require an Optionee to furnish evidence satisfactory to the
Company, including a written and signed representation letter and
consent to be bound by any transfer restriction imposed by law,
legend, condition or otherwise, that the shares are being purchased
only for investment and without any present intention to sell or
distribute the shares in violation of any state or federal law,
rule or regulation. Further, each Optionee shall consent to the
imposition of a legend on the shares of Common Stock subject to his
or her option restricting their transferability as required by law
or by this Section 9.
Section 10. Employment Rights of Optionee. Nothing in the
Plan or in any option shall confer upon any Optionee any right to
continued employment or service by the Bank or an Affiliate, or
limit in any way the right of the Bank or an Affiliate at any time
to terminate or alter the terms of that employment or service.
Section 11. Option Rights Upon Termination of Employment.
Upon the termination of an Optionee's employment or service for any
reason other than death or Disability, his or her options shall be
exercisable only as to those shares which were immediately
purchasable by the Optionee at the date of termination of
employment or service and only for a period of three (3) months
following termination, unless either the option or the Incentive
Plan otherwise provides for earlier termination of the option. In
the event of Termination for Cause all rights under the Optionee's
options shall expire upon termination of employment or service.
Section 12. Option Rights Upon Death or Disability. In the
event of death or Disability of any Optionee, all options held by
such Optionee, whether or not exercisable at such time, shall be
exercisable by the Optionee or the Optionee's legal representatives
or beneficiaries for one (1) year following the date of the
Optionee's death or cessation of employment or service due to
Disability, unless either the option or the Incentive Plan
otherwise provides for earlier termination of the option.
Section 13. Options Not Transferable. Options granted
pursuant to the terms of the Incentive Plan may not be sold,
pledged, assigned or transferred in any manner otherwise than by
will or the laws of descent or distribution and may be exercised
during the lifetime of an Optionee only by that Optionee.
Section 14. Adjustments to Number and Purchase Price of
Optioned Shares. All options granted pursuant to the terms of this
Incentive Plan shall be adjusted in the manner prescribed by
Section 10 of the Program.
<PAGE>
PLAN II
HUBCO, INC.
COMPENSATORY STOCK OPTION PLAN
Section 1. Purpose. The purpose of this Compensatory Plan
is to permit the Company to grant options to purchase shares of its
Common Stock to selected key Employees of the Statewide Division
and, to the limited extent provided herein, to certain Advisory
Board Members and Directors of the Bank. The Compensatory Plan is
designed to help attract and retain superior personnel for
positions of substantial responsibility with the Bank and to
provide key Employees, Advisory Board Members and Directors with an
additional incentive to contribute to the success of the Company.
Any option granted pursuant to this Compensatory Plan shall be
clearly and specifically designated as not being an incentive stock
option, as defined in Section 422 of the Code. This Compensatory
Plan is Part II of the Program. Unless any provision herein
indicates to the contrary, this Compensatory Plan shall be subject
to all the terms and conditions of the Program.
Section 2. Option Terms and Conditions. The terms and
conditions of options granted under this Compensatory Plan may
differ from one another as the Committee shall, in its discretion,
determine, as long as all options granted under the Compensatory
Plan satisfy the requirements of the Compensatory Plan.
Section 3. Duration of Options. Each option and all
rights thereunder granted pursuant to the terms of this
Compensatory Plan shall expire on the date determined by the
Committee, but in no event shall any option granted under the
Compensatory Plan expire later than ten (10) years and one (1)
month from the date on which the option is granted. In addition,
each option shall be subject to early termination as provided in
the Compensatory Plan.
Section 4. Purchase Price. The purchase price for shares
acquired pursuant to the exercise, in whole or in part, of any
option granted under this Compensatory Plan shall be set forth in
the grant agreement, provided that all options granted hereunder at
the time of the Merger Conversion shall be at the same price per
share which eligible depositors of Statewide Savings Bank, S.L.A.
may subscribe for shares in the Merger Conversion. Each option
granted after the Merger Conversion shall be for a price not less
than 80% of the fair market value of the shares at the time of the
grant of the option, as determined by the Committee at the time of
grant on the basis of such factors as they deem appropriate.
Section 5. Exercise of Options. Each option may be
exercisable in one or more installments during its term as
determined by the Committee, except that any option granted at the
time of the Merger Conversion shall be fully exercisable
immediately and not in installments. No option may be exercised
for a fraction of a share of Common Stock. The purchase price of
any shares purchased shall be paid in full in cash or by check
payable to the order of the Company or by shares of Common Stock,
if permitted by the Committee, or by a combination of cash, check
or shares of Common Stock, at the time of exercise of the option,
provided that the form(s) of payment allowed the employee shall be
established when the option is granted. If any portion of the
purchase price is paid in shares of Common Stock, those shares
shall be tendered at their then fair market value as determined by
the Committee.
Section 6. Acceleration of Right of Exercise of
Installments. Notwithstanding the first sentence of Section 5 of
this Compensatory Plan, in the event of a Change in Control of the
Company any option granted pursuant to the terms of the
Compensatory Plan shall become immediately exercisable.
Section 7. Written Notice Required. Any option granted
pursuant to the terms of the Compensatory Plan shall be exercised
by written notice of the exercise given to the Company at its
principal office by the Optionee accompanied by full payment for
the shares with respect to which the option is exercised.
Section 8. Compliance With Securities Laws. Shares of
Common Stock shall not be issued with respect to any option granted
under the Compensatory Plan unless the exercise of that option and
the issuance and delivery of those shares pursuant to that exercise
shall comply with all relevant provisions of state and federal law
including, without limitation, the Securities Act of 1933, as
amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then
be listed, and shall be further subject to the approval of counsel
for the Company with respect to such compliance. The Committee may
also require an Optionee to furnish evidence satisfactory to the
Company, including a written and signed representation letter and
consent to be bound by any transfer restriction imposed by law,
legend, condition or otherwise, that the shares are being purchased
only for investment and without any present intention to sell or
distribute the shares in violation of any state or federal law,
rule or regulation. Further, each Optionee shall consent to the
imposition of a legend on the shares of Common Stock subject to his
or her option restricting their transferability as required by law
or by this Section 8.
Section 9. Employment Rights of Optionee. Nothing in the
Plan or in any option shall confer upon any Optionee any right to
continued employment or service by the Bank or an Affiliate, or
limit in any way the right of the Bank or an Affiliate at any time
to terminate or alter the terms of that employment or service.
Section 10. Option Rights Upon Termination of Employment.
Upon the termination of an Optionee's employment or service for any
reason other than death or Disability, his or her options shall be
exercisable only as to those shares which were immediately
purchasable by the Optionee at the date of termination of
employment or service and only for a period of one year following
termination, unless the grant agreement otherwise provides for
earlier termination of the option. In the event of Termination for
Cause all rights under the Optionee's options shall expire upon
termination of employment or service.
Section 11. Option Rights Upon Death or Disability. In the
event of death or Disability of any Optionee, all options held by
such Optionee, whether or not exercisable at such time, shall be
exercisable by the Optionee or the Optionee's legal representatives
or beneficiaries for one (1) year following the date of the
Optionee's death or cessation of employment or service due to
Disability, unless the grant agreement otherwise provides for
earlier termination of the option.
Section 12. Options Not Transferable. Options granted
pursuant to the terms of the Compensatory Plan may not be sold,
pledged, assigned or transferred in any manner otherwise than by
will or the laws of descent or distribution and may be exercised
during the lifetime of an Optionee only by that Optionee.
Section 13. Adjustments to Number and Purchase Price of
Optioned Shares. All options granted pursuant to the terms of this
Compensatory Plan shall be adjusted in the manner prescribed by
Section 10 of the Program.
<PAGE>
EXHIBIT B TO THE
PROXY STATEMENT
HUBCO, INC.
RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT
FOR THE
STATEWIDE DIVISION OF
HUDSON UNITED BANK
ARTICLE I
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 The Company hereby establishes the Recognition and
Retention Plan (the "Plan") and Trust (the "Trust") for the
Statewide Division of Hudson United Bank upon the terms and
conditions hereinafter stated in this Recognition and Retention
Plan and Trust Agreement (the "Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold
the Trust assets existing on the date of this Agreement and all
additions and accretions thereto upon the terms and conditions
hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to retain the services,
dedication and loyalty of employees, officers, Advisory Board
Members of the Statewide Division and Directors, as defined herein,
by providing such persons with a proprietary interest in the
Company as compensation for their contributions to the Bank and its
Affiliates and as an incentive to make such contributions and to
promote the Bank's growth and profitability in the future.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Plan with an
initial capital letter, unless the context indicates otherwise,
shall have the meanings set forth below. Wherever appropriate, the
masculine pronoun shall include the feminine pronoun and the
singular shall include the plural.
3.01 "Advisory Board" means the Advisory Board of Directors of
the Statewide Division.
3.02 "Advisory Board Member" means a person who was a member
of the Board of Directors of Statewide Savings Bank, S.L.A.
immediately prior to the Effective Date, as defined herein, who
becomes a member of the Advisory Board of the Statewide Division of
Hudson United Bank as of the Effective Date. The term "Advisory
Board Member" does not include persons who are also members of the
Board of Directors of the Company or the Bank or an Employee.
3.03 "Affiliate" means the Company and those subsidiaries of
the Bank or Company which, with the consent of the Board, agree to
participate in this Plan.
3.04 "Bank" means Hudson United Bank.
3.05 "Beneficiary" means the person or persons designated by
a Recipient to receive any benefits payable under the Plan in the
event of such Recipient's death. Such person or persons shall be
designated in writing on forms provided for this purpose by the
Committee and may be changed from time to time by similar written
notice to the Committee. In the absence of a written designation,
the Beneficiary shall be the Recipient's surviving spouse, if any
or if none, his estate.
3.06 "Board" means the Board of Directors of the Bank.
3.07 "Committee" means the Plan Committee of the Board which
shall consist solely of non-employee directors, all of whom are
"disinterested directors" as that term is defined under Rule 16b-3
under the Securities Exchange Act of 1934, as amended, promulgated
by the Securities and Exchange Commission.
3.08 "Common Stock" means shares of the common stock, no par
value, of the Company.
3.09 "Company" shall mean HUBCO, Inc.
3.10 "Director" means a person who was a member of the Board
of Directors of Statewide Savings Bank, S.L.A. immediately prior to
the Effective Date, as defined herein, who becomes a member of the
Board as of the Effective Date. The term "Director" does not
include persons who are also Advisory Board Members, members of the
Board of Directors of the Company or an Employee.
3.11 "Disability" means the permanent and total disability by
reason of mental or physical infirmity, or both, of an employee to
perform the work customarily assigned to him. Additionally, a
medical doctor selected or approved by the Board of Directors must
advise the Committee that it is either not possible to determine
when such Disability will terminate or that it appears probable
that such Disability will be permanent during the remainder of said
participant's lifetime.
3.12 "Employee" means any person who was employed by Statewide
Savings Bank, S.L.A. immediately prior to the Effective Date and
who after the Effective Date is employed by the Statewide Division
or an Affiliate, including officers, but such term shall not
include any Advisory Board Members or Directors.
3.13 "Merger Conversion" means the conversion of Statewide
Savings Bank, S.L.A. from the mutual to the stock form of
organization and the acquisition of Statewide Savings Bank, S.L.A.
by the Company through merger with and into the Bank.
3.14 "Statewide Division" shall mean the Statewide Division of
Hudson United Bank.
3.15 "Plan Share Award" means a right granted under this Plan
to earn Plan Shares.
3.16 "Plan Shares" means shares of Common Stock held in the
Trust and issued or issuable to a Recipient pursuant to the Plan.
3.17 "Plan Share Reserve" means the shares of Common Stock
held by the Trustee pursuant to Sections 5.03 and 5.04.
3.18 "Recipient" means an Employee, Advisory Board Member or
Director who receives a Plan Share Award under the Plan.
3.19 "Retirement" with respect to an Employee means
termination of employment which constitutes retirement under any
tax qualified plan maintained by the Bank or by reaching age 65.
"Retirement" with respect to an Advisory Board Member means the
termination of service after ten (10) years of service on the board
of directors of Statewide Savings Bank, S.L.A. and/or the Advisory
Board. "Retirement" with respect to a Director means the
termination of service after ten (10) years of service on the board
of directors of Statewide Savings Bank, S.L.A. and/or the Board.
3.20 "Trustee" means that person or persons and entity or
entities nominated by the Committee and approved by the Board
pursuant to Sections 4.01 and 4.02 to hold legal title to any of
the Plan assets for the purposes set forth herein.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered
and interpreted by the Committee, which shall have all of the
powers allocated to it in this and other Sections of the Plan. The
interpretation and construction by the Committee of any provisions
of the Plan or of any Plan Share Award granted hereunder shall be
final and binding. With respect to Plan Share Awards granted to
Advisory Board Members and Directors, the Plan shall be
administered by the Committee in accordance with its terms. The
Committee shall act by vote or written consent of a majority of its
members. Subject to the express provisions and limitations of the
Plan, the Committee may adopt such rules, regulations and
procedures as it deems appropriate for the conduct of its affairs.
The Committee shall report its actions and decisions with respect
to the Plan to the Board at appropriate times, but in no event less
than one time per calendar year. The Committee shall recommend to
the Board one or more persons or entities to act as Trustee in
accordance with the provisions of this Plan and Trust and the terms
of Article VIII hereof.
4.02 Role of the Board. The members of the Committee and the
Trustee shall be appointed or approved by, and will serve at the
pleasure of, the Board. The Board may in its discretion from time
to time remove members from, or add members to, the Committee, and
may remove, replace or add Trustees. The Board shall have all of
the powers allocated to it in this and other Sections of the Plan.
4.03 Limitation on Liability. No member of the Board or the
Committee or the Trustee shall be liable for any determination made
in good faith with respect to the Plan or any Plan Shares or Plan
Share Awards granted under it. If a member of the Board or the
Committee or any Trustee is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of anything done or not done by him in
such capacity under or with respect to the Plan, the Bank shall
indemnify such member against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in the best interests of the Bank and its Affiliates
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Bank shall
contribute to the Trust an amount sufficient to purchase five (5)
percent of the amount of shares of Common Stock issued by the
Company in connection with the Merger Conversion. No contributions
by Employees, Advisory Board Members or Directors shall be
permitted.
5.02 Initial Investment. Any amounts held by the Trust prior
to the Merger Conversion shall be invested by the Trustee in such
interest-bearing account or accounts at the Bank as the Trustee
shall determine to be appropriate.
5.03 Investment of Trust Assets Upon the Conversion; Creation
of Plan Share Reserve. Upon the Merger Conversion, the Trustee
shall invest all of the Trust's assets exclusively in Common Stock
except as otherwise provided below; provided, however, that the
Trust shall not invest in more than five percent of the shares of
Common Stock issued by the Company in the Merger Conversion, which
shall constitute the "Plan Share Reserve." Any earnings received
with respect to Common Stock held in the Reserve shall be held in
an interest-bearing account. Any earnings received with respect to
Common Stock subject to a Plan Share Award shall be held in an
interest-bearing account on behalf of the individual Recipient.
5.04 Effect of Allocations, Returns and Forfeitures Upon Plan
Share Reserves. Upon the allocation of Plan Share Awards under
Section 6.02, or the decision of the Committee to return Plan
Shares to the Bank, the Plan Share Reserve shall be reduced by the
number of Shares subject to the Awards so allocated or returned.
Any Shares subject to an Award which may not be earned because of
a forfeiture by the Recipient pursuant to Section 7.01 shall be
returned (added) to the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Employees of the Bank and its Affiliates,
Advisory Board Members and Directors are eligible to receive Plan
Share Awards.
6.02 Allocations.
(a) Each Advisory Board Member and Director serving in
such capacity as of the date of the Merger Conversion shall be
granted a Plan Share Award of a number of Shares to be determined
by the Company's Board of Directors (the "Fixed Award"). The
Committee may determine which of the Employees referenced in
Section 6.01 above will be granted Plan Share Awards and the number
of Shares covered by each Award, provided, however, that the number
of Shares covered by such Awards may not exceed the number of
Shares in the Plan Share Reserve immediately prior to the grant of
such Awards, and provided further, that in no event shall any
Awards be made which will violate the Charter, Bylaws or Plan of
Merger Conversion of Statewide Savings Bank, S.L.A. or any
applicable federal or state law or regulation. In the event Plan
Shares are forfeited for any reason, such shares shall remain in
the Plan Share Reserve until used to satisfy subsequent Awards or
until the termination of the Plan. At that time, any such shares
shall be returned to the Bank.
6.03 Form of Allocation. The Recipients shall be notified in
writing of the grant of a Plan Share Award. Such notice shall
include the number of Plan Shares covered by the Award, and the
terms upon which the Plan Shares subject to the Award may be
earned. The Committee shall maintain records as to all grants of
Plan Share Awards under the Plan.
6.04 Allocations Not Required. Notwithstanding anything to
the contrary in Sections 6.01 and 6.02, no Employee shall have any
right or entitlement to receive a Plan Share Award hereunder, such
Awards being at the total discretion of the Board, nor shall the
salaried Employees as a group have such a right. No Advisory Board
Member or Director shall have any right or entitlement to receive
a Plan Share Award hereunder, except as provided in Section 6.02
hereof. The Committee may, with the approval of the Board, or if
so directed by the Board, may return all Common Stock in the Plan
Share Reserve to the Company at any time.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning Plan Shares, Forfeitures
(a) General Rules. Unless the Committee shall
specifically state to the contrary with respect to grants to
Employees, at the time a Plan Share Award is granted, Plan Shares
subject to an Award shall be earned by an Employee Recipient and by
an Advisory Board Member or Director at the rate of thirty-three
and one-third percent (33-l/3%) per year of the aggregate number of
Shares covered by the Award. The first portion of Shares to vest
for a Recipient shall vest immediately upon the effective date of
the grant of the Award and thereafter subsequent portions shall
vest at the end of each full twelve months of consecutive
employment with the Bank or an Affiliate or service in the case of
an Advisory Board Member or Director. If the employment (or
service as an Advisory Board Member or Director) of a Recipient is
terminated prior to the second anniversary of the date of grant of
an Award for any reason (except as specifically provided in
Subsections (b) and (c) below), the Recipient shall forfeit the
right to earn any Shares subject to the Award which have not
theretofore been earned, except as the Board or Committee shall
otherwise agree.
In determining the number of Plan Shares which are earned,
fractional shares shall be rounded down to the nearest whole
number, provided that such fractional shares shall be aggregated
and earned, on the last anniversary in which the Plan Share Award
vests.
(b) Exception for Terminations Due to Death, Disability
and Retirement. Notwithstanding the general rule contained in
Section 7.01(a) above, all Plan Shares subject to a Plan Share
Award held by a Recipient whose employment with the Bank or an
Affiliate (or service as an Advisory Board Member or Director)
terminates due to death, Disability or Retirement, shall be deemed
earned as of the Recipient's last day of employment with the Bank
or an Affiliate (or service as an Advisory Board Member or
Director). Provided, however, that if the Recipient's service
terminates due to normal retirement within one year of the date of
the Merger Conversion, the shares earned by the Recipient may not
be disposed of by the Recipient for the one-year period following
the Merger Conversion.
(c) Exception for Terminations After a Change in
Control. Notwithstanding the general rule contained in Section
7.01(a) above, all Plan Shares subject to a Plan Share Award held
by a Recipient whose employment with the Company or service on the
Advisory Board or Board terminates following a Change in Control of
the Company, shall be deemed earned as of the Recipient's last day
of employment with the Bank or an Affiliate (or service as an
Advisory Board Member or Director). For purposes of this Plan, a
"Change in Control" of the Company shall mean the occurrence of any
of the following events: (i) as a result of a tender offer, merger,
consolidation, sale of assets, plan of acquisition, plan of
exchange, business combination or contested election, or any
combination of the foregoing (a "Transaction"), the persons who
were directors of the Company immediately before the Transaction
respectively cease to constitute a majority of the Board of
Directors of the Company or of any successor to the Company; or
(ii) if the Company is merged or consolidated with or into another
corporation, or the Company, its outstanding shares, or its assets
is acquired, directly or indirectly, by another corporation,
partnership, person or entity, and as a result of such merger,
consolidation or acquisition, less than 60% of the outstanding
voting securities of the surviving or resulting corporation or the
acquiring corporation (partnership, person or entity) shall be
owned in the aggregate by the former shareholders of the Company.
(d) Revocation for Misconduct. Notwithstanding anything
hereinafter to the contrary, the Committee may by resolution
immediately revoke, rescind and terminate any Plan Share Award, or
portion thereof, previously awarded under this Plan, to the extent
Plan Shares have not been delivered thereunder to the Recipient,
whether or not yet earned, in the case of an Employee, Advisory
Board Member or Director who is discharged from the Bank or an
Affiliate for cause (as hereinafter defined), or who is discovered
after termination of employment or service to have engaged in
conduct that would have justified termination for cause. "Cause"
is defined as personal dishonesty, willful misconduct, any breach
of fiduciary duty involving personal profit, intentional failure to
perform stated duties, or the willful violation of any law, rule or
regulation (other than traffic violations or similar offenses)
which results in a material loss to the Bank or a final cease and
desist order against the Bank.
7.02 Accrual of Dividends. Whenever Plan Shares are paid to
a Recipient or Beneficiary under Section 7.03, such Recipient or
Beneficiary shall also be entitled to receive, with respect to each
Plan Share paid, an amount attributable to any cash dividends and
a number of shares of Common Stock equal to any stock dividends,
declared and paid with respect to a share of Common Stock between
the date the relevant Plan Share Award was granted and the date the
Plan Shares are being distributed. There shall also be distributed
an appropriate amount of net earnings, if any, of the Trust with
respect to any dividends so paid out.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions; General Rule. Plan Shares
shall be distributed to the Recipient or his Beneficiary, as the
case may be, as soon as practicable after they have been earned.
(b) Form of Distributions. All Plan Shares, together
with any shares representing stock dividends, shall be distributed
in the form of Common Stock. One share of Common Stock shall be
given for each Plan Share earned and payable. Any fractional
shares may be paid out in cash at the fair market value at the time
of distribution. Payments representing accumulated cash dividends
(and earnings thereon, if any) shall be made in cash.
(c) Withholding. The Trustee shall withhold from any
payment or distribution made under this Plan sufficient amounts of
cash or shares of Common Stock to cover any applicable withholding
and employment taxes, and if the amount of such payment is
insufficient, the Trustee shall require the Recipient or
Beneficiary to pay to the Trustee the amount required to be
withheld as a condition of delivering the Plan Shares. The Trustee
shall pay over to the Bank or Affiliate which employs or employed
such Recipient any such amount withheld from or paid by the
Recipient or Beneficiary.
7.04 Voting of Plan Shares. After a Plan Share Award has been
granted, the Recipient shall be entitled to direct the Trustee as
to the voting of the Plan Shares which are covered by the Plan
Share Award and which have not yet been earned and distributed to
him pursuant to Section 7.03, subject to rules and procedures
adopted by the Committee for this purpose. All shares of Common
Stock held by the Trust as to which Recipients are not entitled to
direct, or have not directed, the voting, shall be voted by the
Trustee in the same proportion as Plan Shares which have been
awarded and voted.
ARTICLE VIII
TRUST
8.01 Trust. The Trustee shall receive, hold, administer,
invest and make distributions and disbursements from the Trust in
accordance with the provisions of the Plan and Trust and the
applicable directions, rules, regulations, procedures and policies
established by the Committee pursuant to the Plan.
8.02 Management of Trust. It is the intent of this Plan and
Trust that, subject to the provisions of this Plan, the Trustee
shall have complete authority and discretion with respect to the
management, control and investment of the Trust, and that the
Trustee shall invest all assets of the Trust, except those
attributable to cash dividends paid with respect to Plan Shares, in
Common Stock to the fullest extent practicable, and except to the
extent that the Trustee determines that the holding of monies in
cash or cash equivalents is necessary to meet the obligation of the
Trust. In performing its duties, the Trustee shall have the power
to do all things and execute such instruments as may be deemed
necessary or proper, including the following powers:
(a) To invest up to one hundred percent (100%) of all
Trust assets in Common Stock without regard to any law now or
hereafter in force limiting investments for the Trustee or other
fiduciaries. The investment authorized herein constitutes the only
investment of the Trust, and in making such investment, the Trustee
is authorized to purchase Common Stock from the Company or an
Affiliate or from any other source, and such Common Stock so
purchased may be outstanding, newly issued, or Treasury shares.
(b) To invest any Trust assets not otherwise invested in
accordance with (a) above in such deposit accounts, and
certificates of deposit (including those issued by the Bank),
obligations of the United States government or its agencies or such
other investments as shall be considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any
property at any time held or acquired by the Trust.
(d) To hold cash without interest in such amounts as may
be in the opinion of the Trustee reasonable for the proper
operation of the Plan and Trust.
(e) To employ brokers, agents, custodians, consultants
and accountants.
(f) To hire counsel upon approval of the Bank to render
advice with respect to their rights, duties and obligations
hereunder, and such other legal services or representation as they
may deem desirable.
(g) To hold funds and securities representing the
amounts to be distributed to a Recipient or his Beneficiary as a
consequence of a dispute as to the disposition thereof, whether in
a segregated account or held in common with other assets of the
Trust.
Notwithstanding anything herein contained to the contrary, the
Trustee shall not be required to make any inventory, appraisal or
settlement or report to any court, or to secure any order of court
for the exercise of any power herein contained, or give bond.
8.03 Records and Accounts. The Trustee shall maintain
accurate and detailed records and accounts of all transactions of
the Trust, which shall be available at all reasonable times for
inspection by any legally entitled person or entity to the extent
required by applicable law, or any other person determined by the
Committee.
8.04 Earnings. All earnings, gains and losses with respect to
Trust assets shall be allocated, in accordance with a reasonable
procedure adopted by the Committee, to bookkeeping accounts for
Recipients or to the general account of the Trust, depending on the
nature and allocation of the assets generating such earnings, gains
and losses. In particular, any earnings on cash dividends received
with respect to shares of Common Stock shall be allocated to
accounts for Recipients, if such shares are the subject of
outstanding Plan Share Awards, or, otherwise to the Plan Share
Reserve.
8.05 Expenses. All costs and expenses incurred in the
operation and administration of this Plan, including those incurred
by the Trustee, shall be borne by the Bank.
8.06 Indemnification. The Bank shall indemnify, defend and
hold the Trustee harmless against all claims, expenses and
liabilities arising out of or related to the exercise of the
Trustee's powers and the discharge of its duties hereunder, unless
the same shall be due to its gross negligence or willful
misconduct.
ARTICLE IX
MISCELLANEOUS
9.01 Adjustments for Capital Changes. In the event of any
change in the outstanding shares of Common Stock of the Company by
reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of
shares, or other similar corporate change, or other increase or
decrease in such shares effected without receipt or payment of
consideration by the Company, the Committee, if necessary, shall
adjust the aggregate number of Plan Shares available for issuance
pursuant to the Plan and shall adjust the number of shares to which
any Plan Share Award relates to prevent dilution or enlargement of
the rights granted to the Recipient under the Plan.
9.02 Amendment and Termination Plan. The Board may, by
resolution, at any time amend or terminate the Plan and Trust. The
power to amend or terminate shall include the power to direct the
Trustee to return to the Bank all or any part of the shares of
Common Stock held in the Plan Share Reserve. However, the
termination of the Trust shall not affect a Recipient's right to
earn Plan Share Awards and to the distribution of Common Stock
relating thereto, including earnings thereon, in accordance with
the terms of this Plan and the grant by the Committee or Board.
9.03 Nontransferable. Plan Share Awards and rights to Plan
Shares shall not be transferable by a Recipient, and during the
lifetime of the Recipient, Plan Shares may only be earned by and
paid to the Recipient who was notified in writing of the Award by
the Committee pursuant to Section 6.03.
9.04 Employment Rights. Neither the Plan nor any grant of a
Plan Share Award or Plan Shares hereunder nor any action taken by
the Trustee, the Committee or the Board in connection with the Plan
shall create any right on the part of any Employee to continue in
the employ or Advisory Board Member or Director to continue in the
service of the Bank or an Affiliate thereof, or the Company.
9.05 Voting and Dividend Rights. No Recipient shall have any
voting or dividend rights or other rights of a shareholder in
respect of any Plan Shares covered by a Plan Share Award, except as
expressly provided in Sections 7.02 and 7.04 above, prior to the
time said Plan Shares are actually distributed to him.
9.06 Governing Law. The Plan and Trust shall be governed by
the laws of the State of New Jersey.
9.07 Effective Date. This Plan is effective as of the
effective date of the Merger Conversion. The Plan shall be
presented to shareholders of the Company for ratification for
purposes of (i) obtaining favorable treatment under Section 16(b)
of the Securities Exchange Act of 1934; and (ii) maintaining
listing on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System; provided, however,
that the failure to obtain shareholder ratification will not affect
the validity of the Plan and the Plan Share Awards thereunder.
9.08 Term of Plan. This Plan shall remain in effect until the
earlier of (1) 5 years from the Effective Date, (2) termination by
the Board, or (3) the distribution of all assets of the Trust.
Termination of the Plan shall not affect any Plan Share Awards
previously granted, and such Awards shall remain valid and in
effect until they have been earned and paid, or by their terms
expire or are forfeited.
<PAGE>
HUBCO, INC.
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
Tuesday, March 22, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HUBCO, INC.
The undersigned hereby appoints HARRY J. LEBER, Sr. GRACE
FRANCES STRAUBER and EDWIN WACHTEL and each of them, as Proxy, each
with full power of substitution, to vote all of the stock of HUBCO,
Inc. standing in the undersigned's name at the Annual Meeting of
Shareholders of HUBCO, Inc., to be held at Schuetzen Park, 3167
Kennedy Boulevard, North Bergen, N.J. 07047 on Tuesday, March 22,
1994 at 11:00 a.m., and at any adjournment thereof. The
undersigned hereby revokes any and all proxies heretofore given
with respect to such meeting.
This proxy will be voted as specified herein. If no choice is
specified, the proxy will be voted FOR the Board of Directors'
nominees, FOR approval of the 1993 Stock Option Program for the
Statewide Division and FOR approval of Recognition and Retention
Plan for the Statewide Division of Hudson United Bank.
(continued on reverse side)
<PAGE>
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
1. Election of FOR WITHHELD
Directors [ ] [ ]
Nominees 3 Yr. Term: Robert J. Burke, Charles F.X. Poggi
Nominee 1 Yr. Term: Kenneth T. Neilson
For, except vote withheld from the following nominee(s). To
withhold authority to vote for any nominee(s) write that
name(s) on the line below:
2. Approval of the 1993 Stock FOR AGAINST ABSTAIN
Option Program or the [ ] [ ] [ ]
Statewide Division.
3. Approval of the Recognition
and Retention Plan for the [ ] [ ] [ ]
Statewide Division.
SIGNATURE(S) ________________________________ DATE_______________
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such.
