As filed with the Securities and Exchange Commission on May 3, 1996
Registration No. 333-01829
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
AMENDMENT NUMBER 1 TO FORM S-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
----------------------
HUBCO, INC.
(Exact name of registrant as specified in its charter)
----------------------
New Jersey
(State or other Jurisdiction of Incorporation of Organization)
----------------------
6711
(Primary Standard Industrial Classification Code Number)
----------------------
22-2405746
(I.R.S. Employer Identification No.)
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
(201) 236-2200
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Kenneth T. Neilson,
President and Chief Executive Officer
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
(201) 236-2200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------
Please send copies of all communications to:
RONALD H. JANIS, ESQ. PETER H. EHRENBERG, ESQ.
MICHAEL W. ZELENTY, ESQ. Lowenstein, Sandler, Kohl,
Pitney, Hardin, Kipp & Szuch Fisher & Boylan
P.O. Box 1945 65 Livingston Avenue
Morristown, New Jersey 07962 Roseland, New Jersey 07068
(201) 966-6300 (201) 992-8700
<PAGE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At
the Effective Date of the Merger, as defined in the Agreement and Plan of Merger
dated February 5, 1996 (the "Agreement"), between the Registrant and Lafayette
American Bank and Trust Company, attached as Appendix A to the Joint Proxy
Statement-Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. |_|
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
===============================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
CROSS REFERENCE SHEET
Item 1. Cross Reference Sheet.
Pursuant to Item 501 of Regulation S-K, this cross-reference sheet
shows the location in the Joint Proxy Statement-Prospectus (the "Proxy
Statement") of responses to Items 1 through 19 of Part I of Form S-4:
Item Caption Location or Heading
No. ------- in Prospectus/Proxy Statement
---- -----------------------------
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus ...............Facing Page of Registration
Statement; Cross Reference Sheet;
Cover Page of Proxy Statement
2. Inside Front and Outside Back
Cover Pages of Prospectus.............. AVAILABLE INFORMATION;
INFORMATION DELIVERED AND
INCORPORATED BY REFERENCE; TABLE
OF CONTENTS
3. Risk Factors, Ratio of
Earnings to Fixed Charges
and Other Information
Introduction (S-K 503)..................SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS
(a).....................................SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- The
Companies
(b).....................................SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- The
Companies
(c).....................................SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- The
Merger
(d).....................................SELECTED CONSOLIDATED
FINANCIAL DATA OF HUBCO;
SELECTED CONSOLIDATED
FINANCIAL DATA OF LAFAYETTE
(e).....................................SUMMARY PRO FORMA FINANCIAL
INFORMATION; PRO FORMA FINANCIAL
INFORMATION
<PAGE>
Item Caption Location or Heading
No. ------- in Prospectus/Proxy Statement
---- -----------------------------
(f).....................................ACTUAL AND PRO FORMA PER
SHARE DATA
(g).....................................MARKET PRICE AND DIVIDEND
MATTERS
(h).....................................SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- The
Meetings
(i).....................................SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- The
Merger
(j).....................................SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- The
Merger
(k).....................................SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- The
Merger
4. Terms of the Transaction
(a).....................................THE PROPOSED MERGER;
DESCRIPTION OF HUBCO
CAPITAL STOCK; COMPARISON
OF THE RIGHTS OF
SHAREHOLDERS OF LAFAYETTE
AND HUBCO
(b)......................................THE PROPOSED MERGER -
Opinions of Financial Advisors
(c)......................................THE PROPOSED MERGER
(Introductory Paragraph)
5. Pro Forma Financial Information SUMMARY PRO FORMA FINANCIAL
INFORMATION; PRO FORMA FINANCIAL
INFORMATION
6. Material Contacts with the
Company Being Acquired...................THE PROPOSED MERGER --
Interests of Certain Persons in
the Merger; -- Conditions to the
Merger
7. Additional Information
Required for Reoffering
by Persons and Parties
Deemed to be Underwriters................NOT APPLICABLE
8. Interests of Named Experts and
Counsel..................................LEGAL OPINION
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities..............................NOT APPLICABLE
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to
S-3 Registrants..........................NOT APPLICABLE
11. Incorporation of Certain Information
by Reference.............................INFORMATION DELIVERED AND
INCORPORATED BY REFERENCE
12. Information with Respect to
S-2 or S-3 Registrants...................NOT APPLICABLE
13. Incorporation of Certain Information
by Reference.............................NOT APPLICABLE
14. Information with Respect to Registrants
other than S-3 or S-2 Registrants........NOT APPLICABLE
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to
S-3 Companies............................NOT APPLICABLE
16. Information with Respect
to S-2 or S-3 Companies..................NOT APPLICABLE
17. Information with Respect
to Companies Other than
S-2 or S-3 Companies.....................CERTAIN INFORMATION REGARDING
LAFAYETTE; MARKET PRICE AND
DIVIDEND MATTERS; SELECTED
CONSOLIDATED FINANCIAL DATA OF
LAFAYETTE; FINANCIAL STATEMENTS
OF LAFAYETTE
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies,
Consents or Authorizations
are to be Solicited.......................SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- The
Meetings; Cover Page of
Prospectus; SHAREHOLDER
PROPOSALS; THE PROPOSED MERGER --
Dissenters' Rights of Appraisal;
-- Interests of Certain Persons
in the Merger; HUBCO MEETING;
LAFAYETTE MEETING; RIGHTS OF
DISSENTING LAFAYETTE
SHAREHOLDERS; ELECTION OF
HUBCO DIRECTORS; ELECTION OF
LAFAYETTE DIRECTORS
19. Information if Proxies,
Consents or Authorizations
Are Not to be Solicited
in an Exchange Offer......................NOT APPLICABLE
<PAGE>
LAFAYETTE AMERICAN BANK AND TRUST COMPANY
To Our Shareholders:
The Annual Meeting of Shareholders (the "LAFAYETTE MEETING") of
Lafayette American Bank and Trust Company ("LAFAYETTE") will be held on Monday,
June 10, 1996 at 11:00 a.m. at Shore and Country Club, Gregory Point, Norwalk,
Connecticut. In addition to the election of directors, you will be asked to
consider and approve an Agreement and Plan of Merger between Lafayette and
HUBCO, Inc. ("HUBCO"), under which an interim bank subsidiary of HUBCO will be
merged with and into Lafayette (the "MERGER"). Pursuant to the Merger,
shareholders of Lafayette will receive 0.588 of a share of HUBCO's common stock,
no par value ("HUBCO COMMON STOCK"), for each share of Lafayette's common stock,
no par value, held by them, subject to adjustment in certain circumstances, as
more fully described in the accompanying Joint Proxy Statement-Prospectus and
its annexes.
Just as Lafayette's shareholders will be voting upon the Merger at the
Lafayette Meeting, HUBCO's shareholders will be voting upon a proposal to
approve the issuance of shares of HUBCO Common Stock as consideration in the
proposed Merger at a meeting on June 11, 1996. Accordingly, the attached Joint
Proxy Statement-Prospectus is a joint proxy statement to be sent to shareholders
of both Lafayette and HUBCO, as well as a prospectus for the HUBCO securities to
be issued in the Merger. The Joint Proxy Statement-Prospectus describes the
material features of the Merger, the agreement between the parties, the details
of the exchange and other information about the parties to the Merger.
Consummation of the Merger is subject to certain conditions, including
approval of the Merger by the affirmative vote of the holders of two-thirds of
Lafayette's outstanding shares of Common Stock. A failure to vote your shares
will have the same effect as a vote against the Merger. Whether or not you are
planning to attend the meeting, it is important that your shares be represented.
Please complete, sign and date the enclosed proxy and mail it at your earliest
convenience in the return envelope provided.
Sincerely,
May __, 1996 ROBERT B. GOLDSTEIN
President and Chief Executive Officer
DONALD P. CALCAGNINI
Chairman of the Board
<PAGE>
LAFAYETTE AMERICAN BANK AND TRUST COMPANY
1087 Broad Street
Bridgeport, Connecticut 06604
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 10, 1996
-------------------------------
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"LAFAYETTE MEETING") of Lafayette American Bank and Trust Company ("LAFAYETTE")
will be held at Shore and Country Club, Gregory Point, Norwalk, Connecticut on
Monday, June 10, 1996 at 11:00 a.m., for the purpose of considering and voting
upon the following matters:
1. A proposal to approve an Agreement and Plan of Merger, dated
February 5, 1996 (the "MERGER AGREEMENT"), between Lafayette and HUBCO,
Inc. ("HUBCO"), under which an interim bank subsidiary of HUBCO will be
merged with and into Lafayette and shareholders of Lafayette will
receive 0.588 of a share of HUBCO common stock, no par value, for each
share of Lafayette common stock, no par value, held by them, subject to
adjustment in certain circumstances, as more fully described in the
accompanying Proxy Statement and its annexes.
2. Election of the five persons named in the accompanying Proxy
Statement to serve as directors of Lafayette for the terms specified in
the Proxy Statement.
3. Such other business as may properly come before the Lafayette
Meeting or any adjournment thereof.
By Order of the Board of Directors,
MARILYN W. ALDERMAN
Secretary
Bridgeport, Connecticut
May __, 1996
THE ATTACHED JOINT PROXY STATEMENT-PROSPECTUS, AND THE ENCLOSED 1995
ANNUAL REPORT OF LAFAYETTE, SHOULD BE READ CAREFULLY. SHAREHOLDERS ARE URGED TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. YOU MAY
REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED BY GIVING WRITTEN NOTICE OF
REVOCATION TO LAFAYETTE PRIOR TO THE LAFAYETTE MEETING, OR, IF YOU ATTEND THE
LAFAYETTE MEETING, YOU MAY REVOKE YOUR PROXY ONLY BY GIVING WRITTEN NOTICE OF
REVOCATION TO THE SECRETARY OF THE LAFAYETTE MEETING.
IMPORTANT--PLEASE MAIL YOUR PROXY PROMPTLY
<PAGE>
HUBCO, INC.
To Our Shareholders:
The Annual Meeting of Shareholders (the "HUBCO Meeting") of HUBCO, Inc.
("HUBCO") will be held on June 11, 1996 at 11:00 a.m. at the Sheraton
Crossroads, Crossroad Corporate Center, Route 17 North, Mahwah, New Jersey
07495. In addition to the election of directors and a proposal to amend the
Certificate of Incorporation of HUBCO to increase the authorized common and
preferred stock of HUBCO, you will be asked to consider and approve the issuance
of HUBCO's common stock, no par value ("HUBCO COMMON STOCK"), as consideration
under an Agreement and Plan of Merger between Lafayette American Bank and Trust
Company ("LAFAYETTE") and HUBCO, under which an interim bank subsidiary of HUBCO
will be merged with and into Lafayette (the "MERGER"). Pursuant to the Merger,
shareholders of Lafayette will receive 0.588 of a share of HUBCO Common Stock
for each share of Lafayette's common stock, no par value, held by them, subject
to adjustment in certain circumstances, and as more fully described in the
accompanying Proxy Statement-Prospectus and its annexes.
Shareholders of Lafayette will consider the Merger at a meeting on June
10, 1996. The Lafayette Board of Directors has approved the Merger and has
recommended it to Lafayette's shareholders.
Attached is a Notice of Annual Meeting of HUBCO and a Joint Proxy
Statement of HUBCO and Lafayette which also is a prospectus of HUBCO for the
shares of HUBCO Common Stock to be issued in the Merger. The Joint Proxy
Statement-Prospectus describes the material features of the Merger, the
agreement between the parties, the details of the exchange and other information
about the parties to the Merger.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ISSUANCE OF THE HUBCO COMMON STOCK
IN CONNECTION WITH THE MERGER. YOUR BOARD ALSO UNANIMOUSLY RECOMMENDS A VOTE FOR
THE AMENDMENT TO INCREASE THE AUTHORIZED COMMON AND PREFERRED STOCK AND FOR ITS
NOMINEES FOR DIRECTOR.
Consummation of the Merger is subject to certain conditions, including
approval of the issuance of the HUBCO Common Stock by the affirmative vote of at
least a majority of the shares of HUBCO Common Stock voting at the HUBCO
Meeting, whether in person or by proxy. Election of directors is by the vote of
a plurality of the shares represented at the HUBCO Meeting. The proposed
amendment to the certificate of incorporation of HUBCO to increase the
authorized common and preferred stock also requires the affirmative vote of at
least a majority of the shares of HUBCO Common Stock voting at the HUBCO
Meeting. Whether or not you are planning to attend the meeting, it is important
that your shares be represented. Please complete, sign and date the enclosed
proxy and mail it at your earliest convenience in the return envelope provided.
Sincerely,
KENNETH T. NEILSON
President and Chief Executive Officer
May __, 1996
<PAGE>
HUBCO, INC.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 11, 1996
-------------------------------
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"HUBCO MEETING") of HUBCO, Inc. ("HUBCO") will be held at the Sheraton
Crossroads, Crossroad Corporate Center, Route 17 North, Mahwah, New Jersey 07495
on June 11, 1996 at 11:00 a.m., for the purpose of considering and voting upon
the following matters:
1. A proposal to approve the issuance of HUBCO Common Stock as
consideration in the proposed acquisition of Lafayette American Bank
and Trust Company ("LAFAYETTE") pursuant to an Agreement and Plan of
Merger, dated February 5, 1996 (the "MERGER AGREEMENT") between
Lafayette and HUBCO, under which an interim bank subsidiary of HUBCO
will be merged with and into Lafayette and shareholders of Lafayette
will receive 0.588 of a share of HUBCO's common stock, no par value
("HUBCO COMMON STOCK"), for each share of Lafayette's common stock, no
par value, held by them, subject to adjustment in certain
circumstances, as more fully described in the accompanying Proxy
Statement and its annexes.
2. Election of the three persons named in the accompanying Proxy
Statement to serve as directors of HUBCO for the terms specified in the
Proxy Statement.
3. A proposal to amend the Certificate of Incorporation of HUBCO to
increase the authorized HUBCO Common Stock to 50,000,000 shares and to
increase the authorized preferred stock to 10,000,000 shares.
4. Such other business as may properly come before the HUBCO Meeting or
any adjournment thereof.
By Order of the Board of Directors
D. LYNN VAN BORKULO-NUZZO
Executive Vice President and
Corporate Secretary
Mahwah, New Jersey
May __, 1996
THE ATTACHED JOINT PROXY STATEMENT-PROSPECTUS, AND THE ENCLOSED 1995
ANNUAL REPORT OF HUBCO, SHOULD BE READ CAREFULLY. SHAREHOLDERS ARE URGED TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. YOU MAY
REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED BY GIVING WRITTEN NOTICE OF
REVOCATION TO HUBCO PRIOR TO THE HUBCO MEETING, OR, IF YOU ATTEND THE HUBCO
MEETING, YOU MAY REVOKE YOUR PROXY ONLY BY GIVING WRITTEN NOTICE OF REVOCATION
TO THE SECRETARY OF THE HUBCO MEETING.
IMPORTANT--PLEASE MAIL YOUR PROXY PROMPTLY
<PAGE>
LAFAYETTE AMERICAN BANK AND TRUST COMPANY
PROXY STATEMENT
for
Annual Meeting of Shareholders
of Lafayette American Bank and Trust Company
to be held on
June 10, 1996
------------------------------------------
HUBCO, INC.
PROXY STATEMENT
for
Annual Meeting of Shareholders
of HUBCO, Inc.
to be held on
June 11, 1996
------------------------------------------
HUBCO, INC.
PROSPECTUS
for
Common Stock of HUBCO, Inc.
and Warrants to Purchase Common Stock
to be issued in connection with
the Merger of Lafayette
American Bank and Trust
Company with a
wholly-owned subsidiary
of HUBCO, Inc.
------------------------------------------
This Joint Proxy Statement-Prospectus (sometimes referred to as this
"PROXY STATEMENT") is first being furnished to the shareholders of Lafayette
American Bank and Trust Company ("LAFAYETTE") on or about May __, 1996 in
connection with the solicitation of proxies by the Board of Directors of
Lafayette to be used at the Annual Meeting of its shareholders (the "LAFAYETTE
MEETING") to be held on Monday, June 10, 1996. The purposes of the Lafayette
Meeting are to elect Lafayette directors and to consider and vote upon an
Agreement and Plan of Merger, dated February 5, 1996 (the "MERGER AGREEMENT"),
between Lafayette and HUBCO, Inc. ("HUBCO"), pursuant to which an interim bank
subsidiary of HUBCO ("MERGER SUB") will be merged with and into Lafayette. In
connection with the Merger, each share of Lafayette common stock, no par value
(the "LAFAYETTE COMMON STOCK"), issued and outstanding immediately prior to the
Effective Time (as hereinafter defined), will be exchanged for 0.588 of a share
(the "EXCHANGE RATIO") of HUBCO common stock, no par value (the "HUBCO COMMON
STOCK"), subject to adjustment in certain circumstances, as more fully described
in this Proxy Statement. A COPY OF THE MERGER AGREEMENT IS ATTACHED AS APPENDIX
A TO THIS PROXY STATEMENT.
<PAGE>
This Proxy Statement is also first being furnished to the shareholders
of HUBCO on or about May ___, 1996 in connection with the solicitation of
proxies by the Board of Directors of HUBCO to be used at the Annual Meeting of
its shareholders (the "HUBCO MEETING") to be held on Tuesday, June 11, 1996. The
purposes of the HUBCO Meeting are to elect directors, to consider and vote upon
the issuance of HUBCO Common Stock in connection with the Merger Agreement, and
to consider and vote on an amendment to the HUBCO Certificate of Incorporation
(the "HUBCO CERTIFICATE") to increase HUBCO's authorized common stock and
preferred stock.
In accordance with the terms of the Merger Agreement, upon approval of
the Merger Agreement by the shareholders of Lafayette and the approval of the
issuance of the HUBCO Common Stock by the shareholders of HUBCO, receipt of all
requisite regulatory approvals, and the satisfaction or waiver of all other
conditions, Merger Sub will be merged with and into Lafayette (the "MERGER").
Lafayette will be the surviving entity in the Merger and will operate thereafter
as a wholly owned subsidiary of HUBCO. In connection with the Merger, each share
of Lafayette Common Stock issued and outstanding immediately prior to the
Effective Time will be exchanged for 0.588 of a share of HUBCO Common Stock,
subject to certain adjustments more fully described in this Proxy Statement. In
addition, (i) each vested option to purchase Lafayette Common Stock pursuant to
Lafayette's existing stock option plans will be converted into the right to
receive shares of HUBCO Common Stock with a value equal to the difference
between the option exercise price and the value of the HUBCO Common Stock, (ii)
each unvested Lafayette stock option will be converted into a like stock option
to purchase HUBCO Common Stock, and (iii) each Lafayette Common Stock Purchase
Warrant will be converted into a like Warrant to purchase HUBCO Common Stock,
all as more fully described in this Proxy Statement.
HUBCO has filed a Registration Statement pursuant to the Securities Act
of 1933, as amended (the "SECURITIES ACT"), covering the shares of HUBCO Common
Stock and Warrants to purchase HUBCO Common Stock which will be issued in
connection with the Merger. In addition to constituting the Proxy Statement for
the Lafayette Meeting and the HUBCO Meeting (together, the "MEETINGS"), this
document constitutes a Prospectus of HUBCO with respect to the HUBCO Common
Stock and HUBCO Warrants to be issued if the Merger is consummated.
Lafayette stock certificates and warrant agreements should not be
returned to Lafayette with the enclosed proxy and should not be forwarded to
HUBCO until after receipt of a letter of transmittal which will be provided to
Lafayette shareholders and Warrant holders upon consummation of the Merger.
This Proxy Statement does not serve as a prospectus to cover any
resales of shares of HUBCO Common Stock to be received by shareholders of
Lafayette upon consummation of the Merger. Affiliates of Lafayette will be
subject to restrictions on their ability to resell the HUBCO Common Stock
received by them in the Merger. See "THE PROPOSED MERGER -- Resale
Considerations with Respect to the HUBCO Common Stock."
ALL INFORMATION AND STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE
HEREIN WITH RESPECT TO LAFAYETTE WERE SUPPLIED BY LAFAYETTE. ALL INFORMATION AND
STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE HEREIN WITH RESPECT TO HUBCO
WERE SUPPLIED BY HUBCO.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT-PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF HUBCO COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT-PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS JOINT PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE
REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO SELL, TO ANY PERSON IN ANY JURISDICTION IN WHICH IT WOULD BE
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS JOINT
PROXY STATEMENT-PROSPECTUS AT ANY TIME, NOR ANY DISTRIBUTION OF SHARES OF HUBCO
COMMON STOCK, SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
The date of this Joint Proxy Statement-Prospectus is May __, 1996.
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION........................................................
INFORMATION DELIVERED AND INCORPORATED BY REFERENCE..........................
SUMMARY OF JOINT PROXY STATEMENT-PROSPECTUS..................................
General.............................................................
The Meetings........................................................
The Companies ......................................................
The Merger..........................................................
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO................................
SELECTED CONSOLIDATED FINANCIAL DATA OF LAFAYETTE............................
SELECTED CONSOLIDATED FINANCIAL DATA OF HOMETOWN.............................
MARKET PRICE AND DIVIDEND MATTERS............................................
Market Price and Dividend History...................................
Limitations on Dividends Under the Merger Agreement.................
Dividend Limitations on HUBCO.......................................
SUMMARY PRO FORMA FINANCIAL INFORMATION......................................
ACTUAL AND PRO FORMA PER SHARE DATA..........................................
INTRODUCTION ................................................................
CERTAIN INFORMATION REGARDING HUBCO .........................................
General.............................................................
Recent Developments.................................................
CERTAIN INFORMATION REGARDING LAFAYETTE......................................
General.............................................................
HUBCO MEETING ...............................................................
Purpose of HUBCO Meeting............................................
Vote Required; Shares Entitled to Vote at HUBCO Meeting.............
Solicitation, Voting and Revocation of Proxies at HUBCO Meeting.....
LAFAYETTE MEETING ...........................................................
Purpose of Lafayette Meeting........................................
Vote Required; Shares Entitled to Vote at Lafayette Meeting.........
Solicitation, Voting and Revocation of Proxies at Lafayette Meeting.
I. THE PROPOSED MERGER AND RELATED MATTERS .................................
THE PROPOSED MERGER..........................................................
General Description.................................................
Consideration ......................................................
Conversion of Lafayette Stock Options...............................
Cash in Lieu of Fractional Shares ..................................
Conversion of Lafayette Warrants....................................
Dissenters' Rights of Appraisal.....................................
Background of and Reasons for the Merger............................
Interests of Certain Persons in the Merger .........................
Opinions of Financial Advisors......................................
Resale Considerations with Respect to the HUBCO Common Stock........
Conditions to the Merger............................................
Conduct of Business Pending the Merger..............................
Customary Representations, Warranties and Covenants.................
Regulatory Approvals................................................
Management and Operations After the Merger..........................
<PAGE>
Exchange of Certificates, Issuance of Shares for Options............
Effective Time; Amendments; Termination ............................
Accounting Treatment of the Merger..................................
Federal Income Tax Consequences ....................................
Stock Option for Shares of Lafayette Common Stock...................
PRO FORMA FINANCIAL INFORMATION..............................................
RIGHTS OF DISSENTING LAFAYETTE SHAREHOLDERS .................................
DESCRIPTION OF HUBCO CAPITAL STOCK...........................................
General ............................................................
Description of HUBCO Common Stock...................................
COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF LAFAYETTE AND HUBCO..............
General ............................................................
Voting Requirements.................................................
Preferred Stock ....................................................
Classified Board of Directors ......................................
Rights of Dissenting Shareholders...................................
Shareholder Consent to Corporate Action.............................
Dividends ..........................................................
By-laws.............................................................
Preemptive Rights...................................................
Shareholder Protection Legislation..................................
II. ELECTION OF HUBCO DIRECTORS ...........................................
DIRECTOR NOMINEE INFORMATION.................................................
Board of Directors' Meetings; Committees of the HUBCO Board.........
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS.....................
EXECUTIVE COMPENSATION.......................................................
General.............................................................
Summary Compensation Table..........................................
Stock Grant Table...................................................
Stock Exercise Table................................................
Employment Contracts, Termination of Employment and
Change-in-Control Agreements....................................
Pension Plans.......................................................
Directors' Compensation.............................................
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION................
PERFORMANCE GRAPH............................................................
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION..................
Certain Transactions With Management................................
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934............
RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 2...............................
III. AMENDMENT TO CERTIFICATE OF INCORPORATION INCREASING THE
NUMBER OF COMMON AND PREFERRED SHARES AUTHORIZED TO BE ISSUED................
General......................................................................
Purpose of the Proposal......................................................
Possible Adverse Effects of the Proposal.....................................
Possible Anti-Takeover Effects of the Proposal...............................
RECOMMENDATION AND VOTE REQUIRED FOR ADOPTION OF PROPOSAL 3..................
IV. ELECTION OF LAFAYETTE DIRECTORS .......................................
DIRECTOR NOMINEE INFORMATION.................................................
<PAGE>
Board of Directors' Meetings; Committees of the Board...............
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS.....................
EXECUTIVE COMPENSATION.......................................................
General.............................................................
Summary Compensation Table..........................................
Stock Options.......................................................
Stock Grant Table...................................................
Stock Exercise Table................................................
Employment Contracts, Termination of Employment and
Change-in-Control Agreements..................................
Employee Benefit Plans..............................................
Directors' Compensation.............................................
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION................
PERFORMANCE GRAPH............................................................
PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.....................
Certain Transactions with Management.........................................
Indebtedness of Management...................................................
TERMINATED REGULATORY ORDER..................................................
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934............
RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 4...............................
SHAREHOLDER PROPOSALS........................................................
LEGAL OPINION................................................................
EXPERTS......................................................................
SUBSEQUENT FILINGS INCORPORATED BY REFERENCE.................................
APPENDIX A Agreement and Plan of Merger between HUBCO and Lafayette
APPENDIX B Stock Option Agreement between Lafayette and HUBCO
APPENDIX C Fairness Opinion of Goldman, Sachs & Co.
APPENDIX D Fairness Opinion of Keefe, Bruyette & Woods
APPENDIX E Sections 36a-125(h) and 33-374 of the General Statutes of
Connecticut
APPENDIX F Proposed Amendment to the Certificate of Incorporation of
HUBCO to Increase its Authorized Common and Preferred Stock
<PAGE>
AVAILABLE INFORMATION
HUBCO is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "COMMISSION"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's Regional Offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such materials can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, HUBCO Common Stock, no par value ("HUBCO COMMON STOCK"), is
listed on The Nasdaq Stock Market, and certain material as to HUBCO can be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Lafayette is also subject to the information requirements of the
Exchange Act and in accordance therewith files reports, proxy statements and
other information with the Federal Deposit Insurance Corporation (the "FDIC").
Such reports, proxy statements and other information with respect to Lafayette
can be inspected and copied at the public reference facilities maintained by the
FDIC at 1776 F Street, N.W., Room F-640, Washington, D.C. 20006. Copies of such
materials can be obtained from the Registration and Disclosure Section of the
FDIC at 1776 F Street, N.W., Washington, D.C. 20006, at prescribed rates and may
be examined at the Federal Reserve Bank of Boston, Bank Examination Department
T-21, 600 Atlantic Avenue, Boston, Massachusetts 02106. In addition, Lafayette
Common Stock, no par value ("LAFAYETTE COMMON STOCK"), is listed on The Nasdaq
Stock Market, and certain material as to Lafayette can be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
HUBCO has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act (together with all amendments and supplements
thereto, the "REGISTRATION STATEMENT"), with respect to the securities being
offered by this Joint Proxy Statement-Prospectus. As permitted by the rules and
regulations of the Commission, this Joint Proxy Statement-Prospectus omits
certain information, exhibits and undertakings contained in the Registration
Statement. For further information with respect to HUBCO and the securities
offered hereby, reference is made to the Registration Statement, including the
exhibits thereto.
Statements contained in this Joint Proxy Statement-Prospectus or in any
document incorporated by reference herein, as to the contents of any document
referred to herein or therein, are not necessarily complete, and in each
instance reference is made to the copy of such document filed as an exhibit to
the Registration Statement or such other document, each such statement being
qualified in all respects by such reference.
INFORMATION DELIVERED AND INCORPORATED BY REFERENCE
A copy of HUBCO's Annual Report to Shareholders for the year ended
December 31, 1995 ("HUBCO's 1995 ANNUAL REPORT") accompanies each copy of this
Joint Proxy Statement-Prospectus delivered to shareholders of HUBCO. A copy of
Lafayette's Annual Report to Shareholders for the year ended December 31, 1995
("LAFAYETTE'S 1995 ANNUAL REPORT") accompanies each copy of this Joint Proxy
Statement-Prospectus delivered to shareholders of Lafayette. SHAREHOLDERS OR
WARRANT HOLDERS OF LAFAYETTE WHO DESIRE A COPY OF HUBCO'S 1995 ANNUAL REPORT MAY
REQUEST A COPY BY MAIL OR TELEPHONE BY CONTACTING THE OFFICES OF THE CORPORATE
SECRETARY, D. LYNN VAN BORKULO-NUZZO, ESQ., HUBCO, INC., 1000 MACARTHUR
BOULEVARD, MAHWAH, NEW JERSEY 07430 (201-236-2640).
The following documents, or the portions thereof indicated, filed by
HUBCO with the Commission are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31,
1995, as amended by Form 10-K/A filed April 30, 1996
("HUBCO'S 10-K").
2. Current Reports on Form 8-K filed with the Commission on
January 16, February 20, March 6, March 7, and May 2, 1996
and on Form 8-K/A filed with the Commission on March 18,
1996.
3. Those portions of HUBCO's 1995 Annual Report incorporated by
reference into HUBCO's 10-K.
4. Form 8-A filed by HUBCO to register its Common and Preferred
Stock pursuant to Section 12(g) of the Exchange Act.
<PAGE>
The following documents, or portions thereof indicated, initially filed
by Lafayette with the FDIC and subsequently filed by HUBCO with the Commission
are incorporated herein by reference:
5. Annual Report on Form F-2 for the year ended December 31,
1995, as amended by an amendment dated April 26, 1996. The
Form F-2 and the amendment are included as Exhibit 13(a) and
13(d), respectively, to this Registration Statement.
6. Current Reports on Form F-3 filed with the FDIC on February
9, 1996 and February 16, 1996 and included as Exhibits 13(b)
and 13(c), respectively, to this Registration Statement.
The following document, initially filed by Hometown Bancorporation,
Inc. ("HOMETOWN") with the Commission, is incorporated herein by reference:
7. Annual Report on Form 10-K for the year ended December 31,
1995.
All documents filed by HUBCO, Lafayette or Hometown pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the earlier of (i) the date of the last to be held of the
Meetings or (ii) the termination of the Merger Agreement, are hereby
incorporated by reference into this Proxy Statement and shall be deemed a part
hereof from the date of filing of such documents. Documents filed by Lafayette
or Hometown subsequent to the date hereof and incorporated herein by reference
shall also be filed by HUBCO on Forms 8-K.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS (NOT INCLUDING EXHIBITS
THERETO, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THE INFORMATION INCORPORATED HEREIN), AS WELL AS ADDITIONAL COPIES OF HUBCO'S
1995 ANNUAL REPORT AND LAFAYETTE'S 1995 ANNUAL REPORT, ARE AVAILABLE FREE OF
CHARGE TO ANY SHAREHOLDER OF HUBCO OR LAFAYETTE, INCLUDING ANY BENEFICIAL OWNER,
UPON WRITTEN OR ORAL REQUEST TO THE OFFICE OF THE HUBCO CORPORATE SECRETARY, D.
LYNN VAN BORKULO-NUZZO, ESQ., HUBCO, INC., 1000 MACARTHUR BOULEVARD, MAHWAH, NEW
JERSEY 07430. RESPONSES TO ANY SUCH REQUEST WILL BE MADE WITHIN ONE BUSINESS DAY
BY SENDING THE REQUESTED DOCUMENTS BY FIRST CLASS MAIL OR OTHER EQUALLY PROMPT
MEANS. IN ORDER TO INSURE TIMELY DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE
MEETINGS TO WHICH THIS PROXY STATEMENT RELATES, ANY REQUEST SHOULD BE MADE BY
ONE CALENDAR WEEK PRIOR TO THE RESPECTIVE MEETINGS (I.E., BY JUNE 3, 1996 FOR
THE LAFAYETTE MEETING AND BY JUNE 4, 1996 FOR THE HUBCO MEETING).
<PAGE>
SUMMARY OF JOINT PROXY STATEMENT-PROSPECTUS
The following is a summary of certain information regarding the matters
to be considered at the Meetings. This summary is necessarily incomplete and is
qualified by the more detailed information contained elsewhere in this Proxy
Statement. Shareholders of Lafayette and HUBCO should read carefully the details
of this Proxy Statement.
GENERAL
This Proxy Statement solicits, on behalf of the Board of Directors (the
"LAFAYETTE BOARD") of Lafayette American Bank and Trust Company ("LAFAYETTE"),
the approval of the holders of shares of common stock of Lafayette, no par value
per share ("LAFAYETTE COMMON STOCK"), of the Agreement and Plan of Merger, dated
February 5, 1996 (the "Merger Agreement"), between Lafayette and HUBCO, Inc.
("HUBCO"). This Proxy Statement also solicits, on behalf of the Board of
Directors of HUBCO (the "HUBCO BOARD"), the approval of the issuance of the
shares of HUBCO Common Stock as consideration in the Merger Agreement by the
holders of shares of HUBCO Common Stock. Pursuant to the Merger Agreement, an
interim bank subsidiary of HUBCO ("MERGER SUB") will be merged with and into
Lafayette (the "MERGER"). In the Merger, each outstanding share of Lafayette
Common Stock, except for Excluded Shares (as defined below), will be converted
into the right to receive 0.588 of a share of HUBCO Common Stock, subject to
adjustment in certain circumstances and as more fully described elsewhere
herein. See "THE PROPOSED MERGER."
In addition, this Proxy Statement solicits, on behalf of the HUBCO
Board, proxies from the holders of HUBCO Common Stock in favor of the election
of three persons to serve as directors of HUBCO for three-year terms and in
favor of a proposal to amend the Certificate of Incorporation of HUBCO (the
"HUBCO CERTIFICATE") to increase HUBCO's authorized common stock to 50 million
shares and preferred stock to 10 million shares, and solicits on behalf of the
Lafayette Board, proxies from the holders of Lafayette Common Stock in favor of
the election of five persons to serve as directors of Lafayette for three year
terms. See "HUBCO MEETING" and "LAFAYETTE MEETING."
THE MEETINGS
THE HUBCO MEETING
TIME, DATE, PLACE AND PURPOSE. The Annual Meeting of Shareholders of
HUBCO (the "HUBCO MEETING") will be held on Tuesday, June 11, 1996 at 11:00 a.m.
local time, at the Sheraton Crossroads, Crossroad Corporate Center, Route 17
North, Mahwah, New Jersey 07495. At the HUBCO Meeting, holders of HUBCO Common
Stock will be asked to approve the issuance of HUBCO Common Stock pursuant to
the Merger, to elect three persons to serve as directors of HUBCO and to approve
the increase in authorized HUBCO Common Stock and preferred stock. See "HUBCO
MEETING" and "THE PROPOSED MERGER."
RECORD DATE, QUORUM, VOTE REQUIRED. Only holders of record of HUBCO
Common Stock at the close of business on April 19, 1996 (the "HUBCO RECORD
DATE") are entitled to notice of and to vote at the HUBCO Meeting. At such date,
there were 13,629,415 shares of HUBCO Common Stock outstanding held by
approximately 2,542 holders of record. The presence, either in person or by
proxy, of the holders of a majority of the outstanding shares of HUBCO Common
Stock is necessary to constitute a quorum at the HUBCO Meeting. Approval of the
issuance of HUBCO Common Stock pursuant to the Merger and the amendment to the
HUBCO Certificate requires the affirmative vote of at least a majority of the
shares of HUBCO Common Stock voting at the HUBCO Meeting, whether in person or
by proxy. As of February 29, 1996, HUBCO directors, executive officers and their
affiliates held, in the aggregate, 7.35% of the outstanding shares entitled to
vote on the issuance of HUBCO Common Stock pursuant to the Merger. Election of
directors is by the vote of a plurality of the shares represented at the
meeting. See "HUBCO MEETING."
<PAGE>
RECOMMENDATIONS OF THE HUBCO BOARD. The HUBCO Board has unanimously
approved the Merger Agreement and recommends that the shareholders of HUBCO vote
FOR the issuance of HUBCO Common Stock pursuant to the Merger, FOR management's
nominees as directors of HUBCO and FOR the proposed amendment to the HUBCO
Certificate to increase HUBCO's authorized stock.
THE LAFAYETTE MEETING
TIME, DATE, PLACE AND PURPOSE OF LAFAYETTE MEETING. The Annual Meeting
of Shareholders of Lafayette (the "LAFAYETTE MEETING") will be held on Monday,
June 10, 1996 at 11:00 a.m. local time, at Shore and Country Club, Gregory
Point, Norwalk, Connecticut. At the Lafayette Meeting, holders of shares of
Lafayette Common Stock will be asked to approve the Merger Agreement and elect
five persons to serve as directors of Lafayette for a term of three years.
See "LAFAYETTE MEETING" and "THE PROPOSED MERGER."
RECORD DATE, QUORUM, VOTE REQUIRED AT THE LAFAYETTE MEETING. Only
holders of record of Lafayette Common Stock at the close of business on April
15, 1996 (the "LAFAYETTE RECORD DATE") are entitled to notice of and to vote at
the Lafayette Meeting. At such date, there were 10,006,529 shares of Lafayette
Common Stock outstanding held by approximately 2,050 holders of record. The
presence, either in person or by proxy, of the holders of a majority of the
outstanding shares of Lafayette Common Stock is necessary to constitute a quorum
at the Lafayette Meeting. Approval of the Merger requires the affirmative vote
of two-thirds of the outstanding shares of Lafayette Common Stock. As of
February 29, 1996, Lafayette directors, executive officers and their affiliates
held, in the aggregate, 13.4% of the outstanding shares entitled to vote on the
Merger. HUBCO owns approximately 4.9% of Lafayette Common Stock. Election of
directors is by the vote of a majority of the shares represented at the
meeting. See "LAFAYETTE MEETING."
RECOMMENDATIONS OF THE LAFAYETTE BOARD. The Lafayette Board has
approved the Merger by a vote of 12 to 1 and recommends that shareholders of
Lafayette vote FOR the Merger and FOR management's nominees for directors of
Lafayette. In voting against the Merger, Director Betram Frankenberger expressed
concerns regarding certain procedural issues, Board representation matters and
certain termination provisions of the Merger Agreement.
<PAGE>
THE COMPANIES
HUBCO
HUBCO is a bank holding company whose principal operating subsidiary is
Hudson United Bank ("HUB"), a New Jersey-chartered commercial bank. HUBCO's
corporate headquarters are located at 1000 MacArthur Boulevard, Mahwah, New
Jersey 07430. HUB's corporate headquarters are located at 3100 Bergenline
Avenue, Union City, New Jersey 07087. The telephone number of HUBCO and HUB is
(201) 236-2200. HUB is a full-service commercial bank which primarily serves
small and mid-sized businesses and consumers through over 60 branches in
Northern New Jersey. As of December 31, 1995, HUBCO had consolidated assets of
$1.6 billion, consolidated deposits of $1.4 billion and consolidated
stockholders' equity of $130 million. Based on assets as of December 31, 1995,
HUBCO was the sixth largest commercial banking company headquartered in New
Jersey. HUBCO's strategy is to enhance profitability and build market share
through both internal growth and acquisitions. Since October, 1990, HUBCO has
added over 45 branches and approximately $1 billion in assets through 13
acquisitions of financial institutions in both government-assisted and private
transactions. HUBCO EXPECTS TO CONTINUE ITS ACQUISITION STRATEGY, AND HAS
RECENTLY ENTERED INTO AN AGREEMENT TO ACQUIRE ANOTHER CONNECTICUT FINANCIAL
INSTITUTION. ON APRIL 28, 1996, HUBCO, HUDSON UNITED BANK, HOMETOWN
BANCORPORATION, INC. ("HOMETOWN") AND HOMETOWN'S SUBSIDIARY, THE BANK OF DARIEN,
ENTERED INTO AN AGREEMENT AND PLAN OF MERGER (THE "HOMETOWN MERGER AGREEMENT"),
PURSUANT TO WHICH HOMETOWN IS TO MERGE WITH HUBCO (THE "HOMETOWN MERGER") AND
EACH OUTSTANDING SHARE OF HOMETOWN'S COMMON STOCK IS TO BE CONVERTED INTO THE
RIGHT TO RECEIVE $17.75 IN CASH FROM HUBCO. HOMETOWN, A BANK HOLDING COMPANY
WITH TWO OFFICES IN CONNECTICUT, HAD APPROXIMATELY $229 MILLION IN ASSETS AS OF
DECEMBER 31, 1995. LAFAYETTE HAS CONSENTED TO THE HOMETOWN MERGER. CERTAIN
FINANCIAL INFORMATION REGARDING HOMETOWN IS INCLUDED HEREIN AND INCORPORATED
HEREIN BY REFERENCE. See "CERTAIN INFORMATION REGARDING HUBCO"; "AVAILABLE
INFORMATION"; "INFORMATION DELIVERED AND INCORPORATED BY REFERENCE"; and
"SELECTED CONSOLIDATED FINANCIAL DATA OF HOMETOWN."
LAFAYETTE
Lafayette is a Connecticut-chartered commercial bank which commenced
banking operations in 1965. Lafayette's corporate headquarters are located at
1087 Broad Street, Bridgeport, Connecticut 06604. The telephone number of
Lafayette is (203) 336-6200. Lafayette is a full service commercial and consumer
bank which serves small-to-medium sized business firms as well as individuals.
It operates 19 banking offices located mainly in Fairfield and New Haven
counties in Connecticut. As of December 31, 1995, Lafayette had consolidated
assets of $735.4 million, consolidated deposits of $636.3 million and
consolidated stockholders' equity of $59.5 million. Based on assets as of
December 31, 1995, Lafayette was the largest commercial bank headquartered in
Connecticut. See "CERTAIN INFORMATION REGARDING LAFAYETTE", "AVAILABLE
INFORMATION", AND "INFORMATION DELIVERED AND INCORPORATED BY REFERENCE."
THE MERGER
DESCRIPTION OF THE MERGER
At the time the Merger becomes effective (the "EFFECTIVE TIME"), Merger
Sub will be merged into Lafayette, with Lafayette as the surviving entity and a
wholly-owned subsidiary of HUBCO. See "THE PROPOSED MERGER -- General
Description". A COPY OF THE MERGER AGREEMENT IS ATTACHED AS APPENDIX A TO THIS
PROXY STATEMENT.
<PAGE>
CONSIDERATION
In the Merger, each outstanding share of Lafayette Common Stock, except
for (i) Lafayette treasury shares, (ii) shares of Lafayette Common Stock as to
which dissenters' rights have been validly exercised ("DISSENTING SHARES")
pursuant to the provisions of the Banking Law of Connecticut (the "CBL"), and
(iii) shares held by HUBCO or any of its subsidiaries (other than shares held as
trustee or in a fiduciary capacity and shares held as collateral or in lieu of a
debt previously contracted) (the shares referred to in clauses (i), (ii) and
(iii) above are collectively referred to as the "EXCLUDED SHARES"), will be
converted into the right to receive 0.588 of a share of HUBCO Common Stock. The
Exchange Ratio is subject to adjustments in certain circumstances, as more fully
described in this Proxy Statement. See "THE PROPOSED MERGER -- Consideration".
CONVERSION OF LAFAYETTE STOCK OPTIONS
In the Merger, each outstanding option to purchase shares of Lafayette
Common Stock (a "LAFAYETTE OPTION") granted under Lafayette's existing stock
option plans which is or will be by virtue of the Merger vested ("VESTED
LAFAYETTE OPTIONS") will be assigned a value (the "OPTION VALUE") equal to (a)
the "Median Pre-Closing Price" of HUBCO Common Stock (a term defined in the
Merger Agreement generally as the median closing price of HUBCO Common Stock
during the first 20 of the last 25 trading days prior to the closing of the
Merger), multiplied by the Exchange Ratio (b) minus the stated exercise price
for the Lafayette Option, (c) such difference then being multiplied by the
number of shares of Lafayette Common Stock for which the option may be
exercised. At the Effective Time, each Vested Lafayette Option will be converted
into that number of shares of HUBCO Common Stock equal to the Option Value
divided by the Median Pre-Closing Price of HUBCO Common Stock, as more fully
described elsewhere in this Proxy Statement.
Each outstanding Lafayette Option which is not vested before or by
virtue of the Merger ("UNVESTED LAFAYETTE OPTIONS") will be converted into and
become, pursuant to the Merger Agreement, an option to purchase HUBCO Common
Stock. Each such Unvested Lafayette Option which represented the right to
purchase one share of Lafayette Common Stock shall be converted at the Effective
Time into the right to purchase 0.588 (or such other fraction as the Exchange
Ratio may be adjusted to) of a share of HUBCO Common Stock for the same purchase
price and otherwise will remain subject to the same terms and conditions as was
the prior Lafayette Option. The Common Stock issuable pursuant to the exercise
of the new HUBCO Options will be registered by HUBCO on a Form S-8 under the
Securities Act of 1933, as amended (the "SECURITIES ACT"). See "THE PROPOSED
MERGER--Conversion of Lafayette Stock Options".
CONVERSION OF LAFAYETTE WARRANTS
At the Effective Time, each outstanding Lafayette Common Stock Purchase
Warrant (a "LAFAYETTE WARRANT") will be converted automatically into a like
warrant to purchase for the same purchase price that number of shares of HUBCO
Common Stock which equals the number of shares of Lafayette Common Stock which
may be purchased under the Lafayette Warrant, multiplied by the Exchange Ratio.
See "THE PROPOSED MERGER -- Conversion of Lafayette Warrants" and "--Federal
Income Tax Consequences".
CASH IN LIEU OF FRACTIONAL SHARES
No fractional shares of HUBCO Common Stock will be issued in exchange
for either Lafayette Common Stock or Vested Lafayette Options. Instead, holders
of such stock or options will receive cash equal to the fractional share
interest multiplied by the Median Pre-Closing Price of HUBCO Common Stock,
without interest. All shares of HUBCO Common Stock to be issued to each
Lafayette shareholder or option holder will be aggregated to constitute as many
whole shares as possible before determining such person's fractional share
interest. See "THE PROPOSED MERGER--Cash in Lieu of Fractional Shares".
<PAGE>
DISSENTERS' RIGHTS OF APPRAISAL
UNDER THE CBL, LAFAYETTE SHAREHOLDERS ARE ENTITLED TO DISSENTERS'
RIGHTS OF APPRAISAL IN CONNECTION WITH THE MERGER. HUBCO shareholders will not
be entitled to appraisal rights in connection with the Merger. SEE "RIGHTS OF
DISSENTING LAFAYETTE SHAREHOLDERS" AND APPENDIX E TO THIS PROXY STATEMENT, WHICH
SET FORTH THE STEPS TO BE TAKEN BY A LAFAYETTE SHAREHOLDER WHO WISHES TO
EXERCISE THE RIGHT TO DISSENT.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is conditioned upon the receipt of an opinion of counsel to
HUBCO to the effect that the Merger will qualify as a tax-free reorganization as
defined in Section 368 of the Internal Revenue Code of 1986, as amended (the
"CODE"). See "THE PROPOSED MERGER -- Federal Income Tax Consequences."
ACCOUNTING TREATMENT OF THE MERGER
The Merger is expected to be accounted for as a pooling of interests
for financial reporting purposes and is conditioned upon the receipt of a letter
from HUBCO's independent accountants that the Merger will be so treated. Under
the pooling of interests method of accounting, Lafayette's historical basis of
assets, liabilities and shareholders' equity will be retained by HUBCO as the
surviving entity and the combined entity's consolidated financial statements
will be restated retroactively to reflect the combined financial condition,
results of operations and cash flows as if HUBCO and Lafayette had been combined
for all periods presented. See "PRO FORMA COMBINED FINANCIAL INFORMATION" and
"THE PROPOSED MERGER -- Accounting Treatment of the Merger."
REQUIRED REGULATORY APPROVALS
Consummation of the Merger is subject to prior receipt of the approval
of the Commissioner (the "COMMISSIONER") of the Connecticut Department of
Banking (the "CTDOB"), the FDIC and the Board of Governors of the Federal
Reserve System (the "FRB"). Applications for these approvals have been filed and
HUBCO and Lafayette anticipate receiving such approvals. However, there can be
no assurance that the approvals will be granted, that they will be granted on a
timely basis, or that they will be granted without conditions unacceptable to
HUBCO or Lafayette. See "THE PROPOSED MERGER -- Regulatory Approvals".
CONDITIONS TO THE MERGER
Consummation of the Merger is contingent upon a number of conditions,
including the receipt of necessary regulatory approvals; the approval of the
Merger by the requisite vote of the shareholders of both Lafayette and HUBCO; an
opinion of Pitney, Hardin, Kipp & Szuch, counsel to HUBCO, that the Merger will
result in a tax-free reorganization; and a letter from HUBCO's independent
accountants that the Merger will be accounted for as a pooling of interests. The
obligation of HUBCO to consummate the Merger is also conditioned on, among other
things, receipt of consent from each holder of a Vested Lafayette Option
outstanding at the Closing Date to the conversion of such person's Vested
Lafayette Option in the manner described in this Proxy Statement (see "THE
PROPOSED MERGER -- Conversion of Lafayette Stock Options"). The obligation of
Lafayette to consummate the Merger is also conditioned on, among other things,
the appointment by the HUBCO Board of three nominees, designated by Lafayette
and reasonably acceptable to HUBCO, to the HUBCO Board, effective at the
Effective Time; and written acknowledgment, acceptance and assumption by HUBCO
of existing employment agreements between Lafayette and certain of its officers.
See "THE PROPOSED MERGER -- Regulatory Approvals"; and "-- Conditions to the
Merger."
<PAGE>
SPECIAL COVENANT
Pursuant to the Merger Agreement, HUBCO has agreed that without the
prior written consent of Lafayette, it will not between February 5, 1996 and the
Effective Time (i) enter into a definitive acquisition agreement to acquire one
or more financial institutions, the effect of which will be that HUBCO's pro
forma book value will be diluted by more than 10% or its pro forma tangible book
value will be diluted by more than 15%, or (ii) agree to an acquisition which
will result in (A) HUBCO's current directors constituting less than a majority
of the surviving corporation's Board of Directors, (B) the current chief
executive officer of HUBCO, Kenneth T. Neilson, not continuing as chief
executive officer, or (C) HUBCO's owning a company without a headquarters and a
substantial majority of its offices in New Jersey, New York or Connecticut.
Lafayette has consented to the Hometown Merger. See "THE PROPOSED
MERGER--Conduct of Business Pending the Merger".
TERMINATION RIGHTS
The Merger Agreement may be terminated by either Lafayette or HUBCO if,
among other reasons, the Effective Time has not occurred by December 31, 1996.
In addition, the Board of Directors of Lafayette may terminate the Merger
Agreement if (i) the HUBCO Common Stock Average Price (as defined below) on the
Determination Date (as defined below) is less than $18.25, or if (ii) both (x)
the HUBCO Common Stock Average Price on the Determination Date is less than
$19.25 and (y) the number obtained by dividing the HUBCO Common Stock Average
Price on the Determination Date by the HUBCO Common Stock Closing Price on the
Starting Date (as defined below) is less than the number obtained by dividing
the Index Price (as defined below) on the Determination Date by the Index Price
on the Starting Date and subtracting .075 from the quotient. If the conditions
in either (i) or (ii) above exist (a "TERMINATION EVENT") and the Lafayette
Board elects to terminate the Merger Agreement, such termination will not occur
if HUBCO elects to increase the Exchange Ratio to a number calculated pursuant
to the Merger Agreement. The "DETERMINATION DATE" is the date on which FRB
approval of the Merger is received. The "STARTING DATE" is February 7, 1996, the
day after public announcement of the Merger Agreement. The "HUBCO COMMON STOCK
AVERAGE PRICE" is the average of the closing prices of HUBCO Common Stock during
the 20 consecutive trading days ending on the Determination Date. The "INDEX
PRICE" is the average of the closing prices of a selected group of bank holding
company common stocks. For a more complete description of the foregoing
termination rights, and for a description of other termination rights available
to Lafayette and HUBCO, see "THE PROPOSED MERGER -- Effective Time; Amendments;
Termination"; and "--Conditions to the Merger".
EFFECTIVE TIME
A closing under the Merger Agreement (the "CLOSING") will occur 10 days
after receipt of all necessary approvals and consents and the satisfaction or
waiver of the other conditions to consummation of the Merger, or on another day
mutually agreed to by HUBCO and Lafayette. The Effective Time is the date and
time specified in a certificate executed by HUBCO and Lafayette and filed with
the Commissioner. The Effective Time is dependent upon satisfaction of all
conditions precedent, some of which are not under the control of HUBCO and/or
Lafayette. See "THE PROPOSED MERGER--Effective Time; Amendments; Termination";
and "-- Regulatory Approvals".
FAIRNESS OPINIONS
The Lafayette Board has retained Keefe, Bruyette & Woods ("KBW") to
evaluate the terms of the Merger. KBW has delivered a written opinion to the
Lafayette Board to the effect that the consideration to be received by the
Lafayette shareholders pursuant to the Merger Agreement is, as of the date of
such opinion, fair to Lafayette shareholders from a financial point of view.
HOLDERS OF LAFAYETTE COMMON STOCK ARE URGED TO, AND SHOULD, READ SUCH OPINION IN
ITS ENTIRETY. For information concerning the matters reviewed, assumptions made
and factors considered by KBW, see "THE PROPOSED MERGER -- Opinions of Financial
Advisors" and Appendix D to this Proxy Statement, which sets forth KBW's
fairness opinion in its entirety.
<PAGE>
Goldman, Sachs & Co. ("GOLDMAN SACHS") has delivered its written
opinion to the HUBCO Board that, as of February 5, 1996, the Exchange Ratio
pursuant to the Merger Agreement was fair to HUBCO. The full text of the written
opinion of Goldman Sachs, which sets forth assumptions made, matters considered
and limitations on the review undertaken in connection with the opinion, is
attached hereto as Appendix C and is incorporated herein by reference. HOLDERS
OF HUBCO COMMON STOCK ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS
ENTIRETY. SEE "THE PROPOSED MERGER -- Opinions of Financial Advisors -- HUBCO's
Financial Advisor".
STOCK OPTION TO HUBCO FOR LAFAYETTE SHARES
HUBCO and Lafayette entered into a Stock Option Agreement dated
February 5, 1996 (the "STOCK OPTION AGREEMENT") in connection with the
negotiation by HUBCO and Lafayette of the Merger Agreement. Pursuant to the
Stock Option Agreement, Lafayette has granted to HUBCO an option (the "OPTION"),
exercisable only under certain limited and specifically defined circumstances,
to purchase up to 2,400,000 authorized but unissued shares of Lafayette Common
Stock, representing upon issuance approximately 19.3% of the shares of Lafayette
Common Stock, for an exercise price of $10.75 per share. HUBCO does not have any
voting rights with respect to the shares of Lafayette Common Stock subject to
the Option prior to exercise of the Option.
The Stock Option Agreement is attached to this Proxy Statement as
Appendix B hereto. In the event that certain specifically enumerated "Triggering
Events" occur and the Merger is not consummated, HUBCO would recognize a gain on
the sale of the shares of Lafayette Common Stock received pursuant to the
exercise of the Option if such shares of Lafayette Common Stock were sold at
prices exceeding $10.75 per share. The ability of HUBCO to exercise the Option
and to cause up to an additional 2,400,000 shares of Lafayette Common Stock to
be issued may be considered a deterrent to other potential acquisitions of
control of Lafayette, as it is likely to increase the cost of an acquisition of
all of the shares of Lafayette Common Stock which would then be outstanding. The
exercise of the option by HUBCO may also make pooling of interests accounting
treatment unavailable to a subsequent acquiror. See "THE PROPOSED MERGER --
Stock Option for Shares of Lafayette Common Stock."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Five executive officers of Lafayette have employment agreements or
severance arrangements under which such officers have the right to substantial
payments as a consequence of the Merger if their employment is terminated by the
company or by the officer under certain circumstances. Lafayette, with HUBCO's
consent, has also agreed that certain officers and other key employees may
receive stay-on bonuses to assure their continuation with Lafayette through the
Effective Time and for a period of time thereafter. See "CERTAIN INFORMATION
ABOUT HUBCO--Recent Developments". HUBCO has also engaged in discussions
concerning arrangements that may be made to assure the continued employment of
Robert Goldstein, President and CEO of Lafayette, after the Merger. New
employment arrangements for Mr. Goldstein and possibly other officers may be
entered into after consummation of the Merger.
Certain executive officers of Lafayette have stock options which will
become vested by virtue of the Merger. For information regarding the treatment
of Vested Lafayette Options, see "THE PROPOSED MERGER--Conversion of Lafayette
Stock Options".
In addition to the foregoing, the Merger Agreement requires HUBCO to
indemnify each director, officer, employee or agent of Lafayette or any of its
subsidiaries to the fullest extent permitted under applicable law and
Lafayette's Certificate of Incorporation and By-laws, with respect to any claims
made against such person because he or she is or was serving in such capacity.
The Merger Agreement also requires HUBCO to provide Lafayette's officers and
directors with directors' and officers' liability insurance for at least six
years after the Effective Time. See "THE PROPOSED MERGER -- Interests of Certain
Persons in the Merger."
<PAGE>
DIFFERENCES IN SHAREHOLDERS' RIGHTS
Lafayette is a commercial bank organized under the CBL and HUBCO is a
business corporation incorporated under the New Jersey Business Corporation Act
(the "NJBCA"). The rights of Lafayette shareholders are currently governed by
the CBL and Lafayette's certificate of incorporation and by-laws. At the
Effective Time, each Lafayette shareholder will become a shareholder of HUBCO.
The rights of HUBCO shareholders are governed by the NJBCA and HUBCO's
certificate of incorporation and by-laws. The CBL and the NJBCA, and the rights
of shareholders thereunder, differ with respect to voting requirements and
various other matters. In addition, the New Jersey Shareholders Protection Act,
which is part of the NJBCA and has no counterpart in the CBL, prohibits certain
transactions involving an "interested shareholder" and a "resident domestic
corporation." See "COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF LAFAYETTE AND
HUBCO."
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1995 1994 1993 1992 1991
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
EARNINGS SUMMARY:
Interest income $120,711 $ 103,353 $ 86,550 $ 88,296 $ 76,887
Interest expense 39,609 32,257 27,511 35,361 38,844
------ ------ ------ ------ ------
Net interest income 81,102 71,096 59,039 52,935 38,043
Provision for possible
loan losses 4,200 3,550 4,874 7,432 3,672
------ ------ ------ ------ ------
Net interest income after
provision for possible
loan losses 76,902 67,546 54,165 45,503 34,371
Other income 17,791 11,828 10,579 10,717 7,570
Other expenses 60,164 51,050 42,313 46,612 33,017
------ ------ ------ ------ ------
Income before income taxes 34,529 28,324 22,431 9,608 8,924
Income tax provision 10,845 10,892 8,560 637 2,646
------ ------ ------ ------ ------
Net income $23,684 $ 17,432 $ 13,871 $ 8,971 $ 6,278
======= ======== ======== ======= =======
PER SHARE DATA:
Weighted average common
shares outstanding 13,251 13,098 13,109 11,881 10,177
Net income per share $ 1.79 $ 1.33 $ 1.06 $ 0.76 $ 0.62
Cash dividend per
common share 0.60 0.36 0.31 0.27 0.22
BALANCE SHEET SUMMARY:
Securities held to
maturity $265,703 $562,567 $499,479 $397,722 $198,843
Securities available
for sale 300,721 111,604 56,816 15,430 -
Loans (1) 853,984 862,384 663,588 666,141 641,949
Total assets 1,613,194 1,709,384 1,363,674 1,233,910 981,297
Deposits 1,425,001 1,491,544 1,213,336 1,111,681 887,425
Stockholders' equity 129,966 115,551 97,654 87,585 61,154
PERFORMANCE RATIOS:
Return on average
assets 1.46% 1.11% 1.07% 0.74% 0.69%
Return on average
equity 19.49 16.57 14.95 11.90 10.66
Dividend payout 33.52 20.29 23.63 29.14 38.90
Average equity
to average assets 7.49 6.69 7.16 6.20 6.49
Net interest margin 5.46 4.96 4.99 4.88 4.73
ASSET QUALITY RATIOS:
Allowance for possible
loan losses to total
loans (1) 1.99 1.92 2.13 1.70 1.43
Allowance for possible
loan losses to
non-performing loans (2) 103.75 82.02 80.99 64.42 82.70
Non-performing loans to
total loans (1)(2) 1.91 2.34 2.63 2.65 1.73
Non-performing assets to
total loans, plus
other real estate (1)(2) 2.42 3.30 4.04 4.49 3.60
Net charge-offs to
average loans 0.45 0.80 0.38 1.09 0.53
</TABLE>
- --------
(1) Total loans are net of unearned income and deferred loan fees and before the
allowance for possible loan losses.
(2) Non-performing loans and non-performing
assets do not include loans past due 90 days or more and still accruing.
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF LAFAYETTE
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
EARNINGS SUMMARY:
Interest income $ 52,423 $ 42,583 $ 41,415 $ 54,253 $ 66,543
Interest expense 20,981 13,759 15,434 22,167 36,573
------ ------ ------ ------ ------
Net interest income 31,442 28,824 25,981 32,086 29,970
Provision for possible
loan losses 3,190 3,325 23,500 16,208 13,963
------ ------ ------ ------ ------
Net interest income after
provision for possible
loan losses 28,252 25,499 2,481 15,878 16,007
Other income 6,078 6,337 8,306 9,597 12,861
Other expenses 26,230 28,423 36,789 33,036 29,657
------ ------ ------ ------ ------
Income (loss) before income
taxes and cumulative effect
of change in accounting
principle 8,100 3,413 (26,002) (7,561) (789)
Provision (benefit) for
income taxes (10,827) (2,724) 16 260 94
-------- ------- ------- ------ ------
Income (loss) before
cumulative effect of
change in accounting
principle 18,927 6,137 (26,018) (7,821) (883)
Cumulative effect of change
in accounting
principle (1) -- -- (3,118) -- --
------ ------ ------ ------ ------
Net income (loss) $ 18,927 $ 6,137 $ (29,136) $ (7,821) $ (883)
=========== ========== ========== ========== ==========
PER SHARE DATA:
Weighted average common
shares outstanding:
Primary 10,235,953 8,870,266 1,750,458 1,750,458 1,750,458
Fully diluted 10,269,618 8,870,266 1,750,458 1,750,458 1,750,458
Income (loss) before
cumulative effect of
change in accounting
principle (1):
Primary $ 1.85 $ .69 $ (14.86) $ (4.47) $ (.50)
Fully diluted 1.84 .69 (14.86) (4.47) (.50)
Net income (loss):
Primary 1.85 .69 (16.64) (4.47) (.50)
Fully diluted 1.84 .69 (16.64) (4.47) (.50)
Cash dividends
declared .05 -- -- -- --
BALANCE SHEET SUMMARY:
Securities held to
maturity $ 27,854 $ 109,736 $ 57,504 $ 34,965 $ 164,725
Securities available
for sale 113,615 65,466 66,528 -- --
Securities held for
sale -- -- -- 96,231 --
Loans (3) 518,046 435,756 409,030 475,574 523,837
Total assets 735,405 673,751 599,494 662,463 759,354
Deposits 636,343 570,409 551,850 603,170 662,988
Stockholders' equity 59,509 37,870 2,541 30,958 37,209
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------
1995 1994 1993 1992 1991
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
PERFORMANCE RATIOS:
Return on average
assets 2.71% .98% (4.53)% (1.09)% (.12)%
Return on average
equity 39.60 19.86 (117.06) (23.57) (2.18)
Dividend payout 2.64 -- -- -- --
Average equity
to average assets 6.84 4.93 3.87 4.64 5.41
Net interest margin (2) 4.92 5.00 4.36 4.89 4.45
ASSET QUALITY RATIOS:
Allowance for possible
loan losses to total
loans(3) 1.65 2.21 3.75 3.48 2.71
<PAGE>
Allowance for possible
loan losses to
non-performing loans (4) 110.07% 80.51% 34.29% 38.16% 30.45%
Non-performing loans to
total loans (3)(4) 1.50 2.75 10.95 9.11 8.91
Non-performing assets to
total loans, plus
other real estate and
assets for sale(3)(4) 2.53 4.28 12.32 10.90 10.22
Net charge-offs to
average total loans .92 2.49 3.93 2.77 1.74
</TABLE>
<PAGE>
- --------
(1) Represents the effect of a change in accounting method for
purchased mortgage servicing rights.
(2) Represents net interest income, computed on a tax equivalent basis, as a
percentage of average interest earning assets.
(3) Total loans are net of unearned income and deferred loan fees and before
the allowance for possible loan losses.
(4) Non-performing loans and non-performing assets do not include accruing
loans past due 90 days or more.
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF HOMETOWN
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ------------- ------------ -----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Total interest income $15,080 $12,702 $11,304 $11,097 $9,445
Total interest expense 7,668 5,813 4,995 5,236 5,281
------------ ------------ ------------- ------------ -----------
Net interest income 7,412 6,889 6,309 5,861 4,164
Provision for loan losses 75 75 360 1,258 800
Provision for losses on other real
estate owned 95 290 60 212 145
------------ ------------ ------------- ------------ -----------
Other operating income 1,420 1,397 1,820 1,534 812
Other operating expenses 6,856 6,279 5,670 5,046 4,204
------------ ------------ ------------- ------------ -----------
Net income (loss) before taxes,
extraordinary credit and 1,806 1,642 2,039 879 (173)
cumulative effect of an accounting
change
Provision for federal and state
income taxes 497 593 800 274 -
------------ ------------ ------------- ------------ -----------
Net income (loss) before
extraordinary credit and 1,309 1,049 1,239 605 (173)
cumulative effect of an accounting
change
Extraordinary credit
- - - 256 -
Cumulative effect of an accounting
change - FAS 109 - - 1,125 - -
Net income (loss) $1,309 $1,049 $2,364 $861 $(173)
============ ============ ============= ============ ===========
Per Share Data:
Before extraordinary credit and an accounting change:
Net income (loss) $.75 $.60 $.72 $.37 $(.11)
After extraordinary credit and an
accounting change
Net income (loss) $.75 $.60 $1.38 $.53 $(.11)
Stockholders' equity $9.60 $7.16 $8.46 $7.08 $6.69
Average common shares outstanding 1,752,523 1,750,988 1,708,207 1,629,710 1,597,194
Common shares outstanding 1,706,446 1,680,096 1,659,141 1,598,251 1,597,231
Year End Balance Sheet Data:
Total assets $229,220 $213,991 $201,352 $187,235 $118,902
Loans, net 103,407 74,940 85,461 85,322 60,786
Investments held-to-maturity 15,100 46,273 40,060 79,869 47,727
Investments available-for-sale 93,696 76,854 54,016 - -
Total deposits 178,000 182,731 159,641 154,721 107,617
Total stockholders' equity 16,818 12,537 14,454 11,545 10,682
Financial Ratios:
Net income (loss) before extraordinary credit and an accounting change to
average:
Total assets 0.60% 0.49% 0.65% 0.38% (0.16)%
Stockholders' equity 8.50% 6.91% 9.06% 5.40% (1.63)%
Net income (loss) after extraordinary
credit and an accounting change to
average:
Total assets 0.60% 0.49% 1.24% 0.54% (0.16)%
Stockholders' equity 8.50% 6.91% 17.28% 57.68% (1.63)%
Year End:
Gross loans to total assets 46.37% 36.42% 44.25% 47.23% 51.12%
Gross loans to deposits 59.71% 42.66% 55.81% 57.16% 56.48%
Risk-based capital to assets 16.37% 15.46% 14.10% 12.07% 14.37%
Primary capital to total assets 8.60% 8.50% 8.75% 7.70% 10.36%
Tier one capital to assets 15.10% 13.44% 11.76% 9.37% 8.98%
Average stockholders' equity to average 7.05% 7.15% 7.16% 6.98% 9.82%
total assets
Nonperforming assets to total assets 0.91% 0.87% 1.42% 2.86% 4.72%
Nonperforming loans to gross loans 1.39% 1.09% 1.78% 3.38% 4.51%
</TABLE>
<PAGE>
MARKET PRICE AND DIVIDEND MATTERS
MARKET PRICE AND DIVIDEND HISTORY
HUBCO Common Stock and Lafayette Common Stock are quoted on the Nasdaq National
Market (formerly known as the "NASDAQ/NMS") under the symbols "HUBC" and "LABK,"
respectively. The following tables set forth, for the periods indicated, the
high and low closing prices per share of HUBCO Common Stock and Lafayette Common
Stock, as reported by The Nasdaq Stock Market ("NASDAQ"), and quarterly
dividends per share.
All stock prices shown in the tables below have been rounded to the nearest cent
and all stock prices and dividends shown in the tables below have been adjusted
for the 3-for-2 stock split (the "Stock Split") paid January 14, 1995 to record
holders of HUBCO Common Stock on January 3, 1995 and the 1-for-2 reverse stock
split (the "REVERSE STOCK SPLIT") effected on May 31, 1994 by Lafayette.
<TABLE>
<CAPTION>
EQUIVALENT
MARKET MARKET PRO FORMA
PRICE PER SHARE PRICE PER SHARE MARKET PRICE PER SHARE
OF HUBCO OF LAFAYETTE OF LAFAYETTE
COMMON STOCK COMMON STOCK COMMON STOCK(1)
------------ ------------ ---------------
HIGH LOW HIGH LOW HIGH LOW
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
1994:
First Quarter ............ $15.83 $13.42 $ 8.50 $ 5.25 $ 9.31 $ 7.89
Second Quarter............ 15.00 13.33 6.75 5.13 8.82 7.84
Third Quarter ............ 15.17 13.13 6.88 5.50 8.92 7.72
Fourth Quarter............ 15.00 12.50 6.50 5.25 8.82 7.35
1995:
First Quarter ............ 17.38 14.67 8.00 5.75 10.22 8.63
Second Quarter............ 18.00 15.50 8.50 7.69 10.58 9.11
Third Quarter ............ 21.13 17.25 9.75 8.25 12.42 10.14
Fourth Quarter............ 22.13 19.25 9.50 8.75 13.01 11.32
1996:
First Quarter............. 22.75 18.38 11.63 8.88 13.38 10.81
Second Quarter (through
May __, 1996)........ ______ _____ _____ _____ _____ _____
</TABLE>
- -------------
(1)Equivalent pro forma market price per share of Lafayette Common Stock
represents the high and low closing prices per share of HUBCO Common Stock,
multiplied by the 0.588 Exchange Ratio.
<TABLE>
<CAPTION>
EQUIVALENT
PRO FORMA CASH
HUBCO LAFAYETTE DIVIDEND PER SHARE
DIVIDENDS DIVIDENDS OF LAFAYETTE
PER SHARE PER SHARE COMMON STOCK (1)
--------- ----------- ------------------
<S> <C> <C> <C>
1994
First Quarter.........................$.08 $-- $.05
Second Quarter........................ .08 -- .05
Third Quarter......................... .10 -- .06
Fourth Quarter........................ .10 -- .06
1995
First Quarter......................... .15 -- .09
Second Quarter........................ .15 -- .09
Third Quarter......................... .15 -- .09
Fourth Quarter........................ .15 .05 .09
1996
First Quarter......................... .17 .05 .10
Second Quarter (through May __, 1996.. .17 .10 .17
</TABLE>
- --------
(1) Equivalent pro forma cash dividends paid per share of Lafayette Common
Stock represents HUBCO historical dividend rates per share, multiplied
by the 0.588 Exchange Ratio, rounded to the nearest cent. The current
annualized dividend rate per share of HUBCO Common Stock, based upon
the most recently declared quarterly dividend rate of $.17 per share of
HUBCO Common Stock payable on March 1, June 1, September 2 and December
1, would be $.68. On an equivalent pro forma basis, such current
annualized HUBCO dividend per share of Lafayette Common Stock would be
$.40, based on the 0.588 Exchange Ratio, rounded to the nearest cent.
No assurance can be given as to future HUBCO dividend rates. Future
HUBCO dividends are dependent upon the earnings and financial condition
of HUBCO, as well as government regulations and policies and other
factors.
The following table presents for (i) February 5, 1996, the last full
trading day before public announcement of the signing of the Merger Agreement,
and (ii) May __, 1996, a date shortly prior to the mailing of this Proxy
Statement, the reported closing price per share of HUBCO Common Stock and
Lafayette Common Stock on Nasdaq and the equivalent price per share of Lafayette
Common Stock computed by multiplying the closing price of HUBCO Common Stock on
each of the dates specified by the Exchange Ratio of 0.588.
<TABLE>
<CAPTION>
Equivalent
Price Per Share
HUBCO LAFAYETTE OF LAFAYETTE
COMMON STOCK COMMON STOCK COMMON STOCK
------------ ------------ ------------
<S> <C> <C> <C>
February 5, 1996......... $ 22.50 $ 10.75 $ 13.23
May __, 1996 ......... _______ _______ _______
</TABLE>
<PAGE>
NO ASSURANCE CAN BE GIVEN AS TO WHAT THE MARKET PRICE OF HUBCO COMMON
STOCK WILL BE IF AND WHEN THE MERGER IS CONSUMMATED. BECAUSE THE EXCHANGE RATIO
IS FIXED AND BECAUSE THE MARKET PRICE OF HUBCO COMMON STOCK IS SUBJECT TO
FLUCTUATION, THE VALUE OF THE HUBCO COMMON STOCK THAT HOLDERS OF LAFAYETTE
COMMON STOCK WILL RECEIVE IN THE MERGER MAY INCREASE OR DECREASE PRIOR TO AND
FOLLOWING THE MERGER. HUBCO AND LAFAYETTE SHAREHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE HUBCO COMMON STOCK AND THE LAFAYETTE COMMON
STOCK. IN ADDITION, PAST DIVIDENDS PAID IN RESPECT OF HUBCO COMMON STOCK AND
LAFAYETTE COMMON STOCK ARE NOT NECESSARILY INDICATIVE OF FUTURE DIVIDENDS WHICH
MAY BE DECLARED AND PAID. NO ASSURANCE CAN BE GIVEN CONCERNING DIVIDENDS TO BE
DECLARED AND PAID IN RESPECT OF HUBCO COMMON STOCK OR LAFAYETTE COMMON STOCK
BEFORE OR AFTER THE EFFECTIVE TIME.
LIMITATIONS ON DIVIDENDS UNDER THE MERGER AGREEMENT
The Merger Agreement prohibits Lafayette from declaring, setting aside
or paying any dividend or other distribution in respect of its capital stock,
except that Lafayette may pay regular quarterly cash dividends equivalent to the
dividends of HUBCO (i.e., an amount determined by multiplying HUBCO's dividends
by the Exchange Ratio) on the same payment dates as HUBCO, which means that
Lafayette is expected to pay a dividend of $.10 per share, as of June 1, and if
the Merger has not been consummated or terminated, September 1 and December 1.
Previously, Lafayette declared and paid a quarterly cash dividend of $.05 per
share on February 16, 1996 to shareholders of record on February 5, 1996.
DIVIDEND LIMITATIONS ON HUBCO
The holders of HUBCO Common Stock are entitled to receive dividends
when and if declared by HUBCO's Board of Directors out of funds legally
available therefor. HUBCO has paid regular cash dividends since its inception in
1982. The primary source for HUBCO's dividends is dividends from HUB to HUBCO,
the payment of which is regulated. Under the New Jersey Banking Act of 1948, as
amended (the "NJBA"), HUB may pay dividends only out of retained earnings, and
only out of surplus to the extent that surplus exceeds 50% of stated capital.
The FDIC has the authority to prohibit a state-chartered bank from engaging in
conduct which, in the FDIC's opinion, constitutes an unsafe or unsound banking
practice. Under certain circumstances, the FDIC could claim that the payment of
a dividend or other distribution by a bank to its sole shareholder constitutes
an unsafe or unsound practice.
<PAGE>
SUMMARY PRO FORMA FINANCIAL INFORMATION
The following tables present certain unaudited combined condensed
financial information from the Pro Forma Unaudited Combined Condensed Statements
of Income for the years ended December 31, 1995, 1994 and 1993, and the Pro
Forma Unaudited Combined Condensed Balance Sheet at December 31, 1995. The
HUBCO, Growth and Lafayette pro forma combined financial information gives
effect to HUBCO's proposed acquisition of Lafayette and HUBCO's recently
completed acquisition of Growth Financial Corp. ("GROWTH") in transactions
accounted for as a pooling of interests, as if such transactions had been
consummated for statement of income purposes on the first day of the applicable
periods and for balance sheet purposes on December 31, 1995. The HUBCO, Growth,
Lafayette and Hometown pro forma combined financial information gives effect to
the Lafayette and Growth acquisitions, as described above, and also gives effect
to HUBCO's proposed acquisition of Hometown reflected as a purchase effective as
of January 1, 1995 for statement of income purposes and on December 31, 1995 for
balance sheet purposes. See "PRO FORMA FINANCIAL INFORMATION". The pro forma
information is based on the historical financial statements of HUBCO, Lafayette
and Growth and Hometown's historical financial statements as of December 31,
1995. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE". The pro forma
financial information assumes an Exchange Ratio of .588 shares of HUBCO Common
Stock for each share of Lafayette Common Stock outstanding.
The summary unaudited pro forma information should be read in
conjunction with the Pro Forma Financial Information and the related notes
thereto presented elsewhere in this Proxy Statement and the consolidated
financial statements and related notes incorporated by reference in this Proxy
Statement. The pro forma information is not necessarily indicative of the
results of operations which would have been achieved had the above transactions
been consummated as of the beginning of the periods for which such data are
presented and should not be construed as being representative of future periods.
Included in 1995 and 1994 earnings for Lafayette of $18,927,000 and $6,137,000,
respectively, was $11,935,000 and $3,439,000, respectively, of deferred income
tax benefits, primarily attributable to the recognition of Lafayette's net
operating loss carryforwards. As of December 31, 1995, substantially all of
Lafayette's deferred income tax benefits had been recognized for financial
statement reporting purposes. While Lafayette's net income for 1995 and 1994
were positively impacted by the deferred income tax benefits, net income for
Lafayette in the future will not enjoy the same benefits. As a result, the
budgeted net income of Lafayette for 1996 is substantially less than Lafayette's
net income for 1995. For information about Lafayette's budgeted net income, see
"CERTAIN INFORMATION ABOUT HUBCO--Recent Developments".
Because the Hometown Merger is being accounted for using the purchase
method of accounting (which does not require the restatement of HUBCO's
financial statements), Hometown's historical consolidated statements of income
and the Hometown Merger are not reflected in the pro forma unaudited combined
condensed statements of income for the years ended December 31, 1994 and 1993.
<TABLE>
<CAPTION>
HUBCO, GROWTH AND LAFAYETTE PRO FORMA UNAUDITED COMBINED FINANCIAL INFORMATION
(In thousands, except per share data)
For the Years Ended December 31,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
RESULTS OF OPERATIONS:
Net interest income before provision for possible
loan $118,513 $105,218 $88,732
losses..............................................................
Provision for possible loan losses........................... 8,015 7,509 29,027
Net interest income after provision for possible
loan 110,498 97,709 59,705
losses..............................................................
Income (loss) before income 43,255 32,857 (3,519)
taxes...................................
Income (loss ) before cumulative effect of change in 42,810 24,689 (11,835)
accounting principle............................................................
Earnings (loss) per common share before cumulative effect of
change in accounting principle:
$2.14 $1.24 $(.59)
Primary.............................................................
Fully 2.11 1.23 (.59)
diluted.....................................................
</TABLE>
As of
December 31,
1995
----
BALANCE SHEET:
Total $2,460,589
assets........................................................
Total 2,171,603
deposits....................................................
Total stockholders' equity................................. 187,605
Book value per common share........................ 9.41
<PAGE>
HUBCO, GROWTH, LAFAYETTE AND HOMETOWN PRO FORMA UNAUDITED COMBINED
FINANCIAL INFORMATION
(in thousands, except per share data)
FOR THE YEAR ENDED
RESULTS OF OPERATIONS: DECEMBER 31, 1995
Net interest income before provision for possible loan losses $124,174
Provision for possible loan loss 8,090
Net interest income after provision for possible loan losses 116,084
Income before income taxes 41,680
Net income 41,407
Earnings per common share:
Primary $2.07
Fully diluted $2.04
AS OF
DECEMBER 31, 1995
Balance Sheet:
Total assets $2,672,551
Total deposits 2,349,603
Total stockholders' equity 187,605
Book value per common share $9.41
ACTUAL AND PRO FORMA PER SHARE DATA
The following table sets forth per share data relating to dividends,
net income and book value of HUBCO Common Stock and Lafayette Common Stock, both
on an actual (historical) basis and on a pro forma combined basis, as adjusted
for the Stock Split and the Reverse Stock Split. The actual per share data have
been derived from the consolidated financial statements of HUBCO and Lafayette
incorporated by reference herein. See "INFORMATION DELIVERED AND INCORPORATED BY
REFERENCE".
The pro forma dividend and book value per share data for the year ended
December 31, 1995 and the pro forma net income per share data for the years
ended December 31, 1995, 1994 and 1993 have been derived from the pro forma
combined condensed financial statements of HUBCO and Lafayette, giving effect to
HUBCO's acquisition of Growth (the "GROWTH MERGER"), and giving effect to the
Merger, accounted for as a pooling of interests. Pro forma per share amounts
have been determined based on the assumptions set forth in the pro forma
combined condensed unaudited financial statements presented elsewhere herein.
The actual, pro forma and pro forma equivalent per share data included
in the table below should be read in conjunction with the financial statements
of HUBCO and Lafayette incorporated by reference herein and the pro forma
<PAGE>
combined condensed financial statements of HUBCO, Lafayette and Growth presented
elsewhere herein. See "INFORMATION DELIVERED AND INCORPORATED BY REFERENCE" and
"PRO FORMA FINANCIAL INFORMATION." The pro forma data presented below is not
necessarily indicative of the results that would actually have been attained if
the Merger had been consummated as of the first day of the periods described
below or results that may be attained in the future. The data does not reflect
the share repurchases, one-time merger charges or cost savings anticipated by
HUBCO. Included in 1995 and 1994 earnings for Lafayette of $18,927,000 and
$6,137,000, respectively, was $11,935,000 and $3,439,000, respectively, of
deferred income tax benefits, primarily attributable to the recognition of
Lafayette's net operating loss carryforwards. As of December 31, 1995,
substantially all of Lafayette's deferred income tax benefits had been
recognized for financial statement reporting purposes. While Lafayette's net
income for 1995 and 1994 were positively impacted by the deferred income tax
benefits, net income for Lafayette in the future will not enjoy the same
benefits. As a result, the budgeted net income of Lafayette for 1996 is
substantially less than Lafayette's net income for 1995. For information about
Lafayette's budgeted net income, see "CERTAIN INFORMATION ABOUT HUBCO--Recent
Developments".
<TABLE>
<CAPTION>
For the Year Ended
December 31,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CASH DIVIDENDS DECLARED PER COMMON SHARE:
HUBCO - Actual(1) $ .60 $ .36 $ .31
Lafayette - Actual(1) .05 .-- .--
Lafayette - pro forma equivalent .35 .21 .18
NET INCOME (LOSS) PER COMMON SHARE:
HUBCO - Actual:
Primary 1.82 1.36 1.06
Fully diluted 1.79 1.33 1.06
Lafayette - Actual:
Primary 1.85 .69 (16.64)
Fully diluted 1.84 .69 (16.64)
HUBCO, Growth and Lafayette, pro forma:
Primary(2) 2.14 1.24 ( .59)
Fully diluted 2.11 1.23 ( .59)
Lafayette, pro forma equivalent(3):
Primary 1.26 .73 ( .35)
Fully diluted 1.24 .72 ( .35)
</TABLE>
As of December 31,
1995
-----------------
NET BOOK VALUE PER COMMON SHARE:
HUBCO - Actual $9.92
Lafayette - Actual 5.95
HUBCO, Growth and Lafayette, pro forma(4) 9.41
Lafayette, pro forma equivalent 5.53
<PAGE>
(1) For information regarding HUBCO's and Lafayette's dividends, and
the market price of HUBCO and Lafayette Common Stock, see "MARKET
PRICE AND DIVIDEND DATA."
(2) Represents primary net income per share before cumulative effect of
change in accounting principle on a pro forma combined basis. Such
amounts have been determined by dividing such amounts by the sum of (i)
the weighted average number of shares of HUBCO Common Stock outstanding
during each period, (ii) 1,234,500 shares of HUBCO Common Stock issued
pursuant to the Growth Merger, (iii) 5,760,500 shares of HUBCO Common
Stock assumed to be issued pursuant to the Merger and (iv) 48,000
common share equivalents applicable to the warrants for 72,321 shares
of HUBCO Common Stock issued in the Merger for the 122,995 Lafayette
Warrants.
(3) The Lafayette pro forma equivalent net income per common share for the
year ended December 31, 1995, giving effect to the Hometown Merger, is
$1.22 primary and $1.20 fully diluted.
(4) Represents the pro forma combined net book value of HUBCO and Lafayette
attributable to common shares, divided by the sum of (i) the number of
shares of HUBCO Common Stock outstanding, (ii) 1,234,500 shares of
HUBCO Common Stock issued pursuant to the Growth Merger and (iii)
5,590,000 shares of HUBCO Common Stock assumed to be issued pursuant to
the Merger.
<PAGE>
INTRODUCTION
This Proxy Statement solicits, on behalf of the Lafayette Board, the
approval of the Merger Agreement by the holders of shares of Lafayette Common
Stock. This Proxy Statement also solicits, on behalf of the HUBCO Board, the
approval of the issuance of HUBCO Common Stock as consideration pursuant to the
Merger Agreement by the holders of shares of HUBCO Common Stock. Pursuant to the
Merger Agreement, the Merger Sub will be merged with and into Lafayette. In the
Merger, each outstanding share of Lafayette Common Stock, except for Excluded
Shares, will be converted into the right to receive 0.588 of a share of HUBCO
Common Stock, subject to adjustment in certain circumstances. See "THE PROPOSED
MERGER."
In addition, this Proxy Statement solicits, on behalf of the HUBCO
Board, proxies of the holders of HUBCO Common Stock in favor of the election of
three persons to serve as directors of HUBCO and approval of a proposal to amend
the HUBCO Certificate to increase HUBCO's authorized stock, and on behalf of the
Lafayette Board, proxies of the holders of Lafayette Common Stock in favor of
the election of five persons to serve as directors of Lafayette for a three year
term. See "HUBCO MEETING" and "LAFAYETTE MEETING."
All information and statements contained or incorporated by reference
herein with respect to Lafayette were supplied by Lafayette and all information
and statements contained or incorporated by reference herein with respect to
HUBCO were supplied by HUBCO.
CERTAIN INFORMATION REGARDING HUBCO
GENERAL
HUBCO is a bank holding company whose principal operating subsidiary is
Hudson United Bank, a New Jersey-chartered commercial bank ("HUB"). HUBCO's
corporate headquarters are located at 1000 MacArthur Boulevard, Mahwah, New
Jersey 07430. HUB's corporate headquarters are located at 3100 Bergenline
Avenue, Union City, New Jersey 07087. The telephone number of HUBCO and HUB is
(201) 236-2200. HUB is a full service commercial bank which primarily serves
small and mid-sized businesses and consumers through over 60 branches in
Northern New Jersey. As of December 31, 1995, HUBCO had consolidated assets of
$1.6 billion, consolidated deposits of $1.4 billion and consolidated
stockholders' equity of $130 million. Based on assets as of December 31, 1995,
HUBCO was among the six largest commercial banking companies headquartered in
New Jersey. HUBCO's strategy is to enhance profitability and build market share
through both internal growth and acquisitions. Since October, 1990, HUBCO has
added over 45 branches and approximately $1 billion in assets through 13
acquisitions of financial institutions in both government-assisted and private
transactions. For additional information, see "AVAILABLE INFORMATION" and
"INFORMATION DELIVERED AND INCORPORATED BY REFERENCE."
HUBCO is continually evaluating acquisition opportunities and
frequently conducts discussions, certain financial analyses and sometimes
diligence activities in connection with possible acquisitions. As a result,
acquisition discussions and, in some cases, negotiations frequently take place
and future acquisitions involving cash, debt or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore some dilution of HUBCO's book value and net income
per common share may occur in connection with any future transactions. See "PRO
FORMA FINANCIAL INFORMATION".
RECENT DEVELOPMENTS
FIRST QUARTER EARNINGS
HUBCO reported on April 11, 1996 that it earned $6,547,000 or $.47 per
share compared with $5,726,000 or $.39 per share during the comparable quarter
last year, representing a 21% increase in earnings per share.
<PAGE>
HUBCO's first quarter's earnings of $6,547,000 resulted in a return on
average assets of 1.52% and a return on average equity of 18.94%. HUBCO
amortizes acquisition costs including goodwill and core deposit intangibles
rapidly (generally over a five year period) and as a result these non-cash
charges totaled $.11 per share for the first quarter of 1996.
HUBCO's net interest margin for the first quarter of 1996 was 5.18%
versus 5.35% for the comparable quarter last year. Other income, excluding
security gains, for the first quarter of 1996 increased 12% to $4,180,000 from
$3,733,000 in the first quarter of 1995. The increase in other income arose
primarily from merchant discounts on Shoppers Charge Accounts Co. and fees for
international services and trust services.
HUBCO's overhead expenses during the first quarter of 1996 decreased as
a result of various initiatives to $13,627,000 from $16,413,000 in last year's
first quarter. HUBCO's efficiency ratio (a ratio of overhead expense to
recurring tax equivalent income) was 55.35% for the first quarter of 1996.
HUBCO's total non-performing assets of $26,055,000 (1.50% of assets)
were down from $27,085,000 a year ago, but up from $23,904,000 at year end 1995.
The increase is primarily in the mortgage area and HUBCO believes that the value
of the underlying property generally exceeds the loan balance. The Allowance for
Possible Loan Losses totaled $18,708,000 which covered 95% of HUBCO's
non-performing loans (58% of which are first mortgage loans) as of March 31,
1996. The Allowance also represents 1.97% of the loan portfolio at March 31,
1996.
HUBCO's stockholders' equity was $131,663,000 at March 31, 1996.
Capital ratios were: Tier I Risk-Based Capital Ratio of 11.56%, Total Risk-Based
Capital Ratio of 15.24% and a Leverage Capital Ratio of 6.96%.
RECENT ACQUISITIONS
On January 12, 1996, HUBCO consummated its previously announced
acquisition of Growth Financial Corp. ("GROWTH"). Growth was a one-bank holding
company with approximately $128 million in assets as of December 31, 1995 and
three offices in Morris and Somerset Counties, New Jersey.
On February 29, 1996, HUBCO consummated its previously announced
acquisition of three branches with approximately $61 million in assets from
CrossLands Savings Bank. HUBCO paid a premium of approximately $3.0 million for
the deposits.
On April 28, 1996, HUBCO, Hudson United Bank, Hometown and The Bank of
Darien entered the Hometown Merger Agreement. In the Hometown Merger, each
outstanding share of Hometown's common stock is to be converted into the right
to receive $17.75 in cash from HUBCO. Hometown, a bank holding company with two
offices in Connecticut, had approximately $229 million in assets as of December
31, 1995. Lafayette has consented to the Hometown Merger. Certain financial
information regarding Hometown is included herein and incorporated herein by
reference.
ESTIMATED ONE-TIME CHARGES, COST SAVINGS, EARNINGS IMPACT
HUBCO announced on March 5, 1996 that it estimated that the Merger will
result in one-time charges for Merger-related costs and restructuring charges of
$8.5 million on an after tax basis. The amounts included in the charges are
subject to change prior to the Effective Time. 1
In addition, HUBCO has reviewed with Lafayette various cost saving
possibilities and plans and HUBCO estimates that the Merger will permit pre-tax
cost savings of $9.0 million annually, representing about 34% of Lafayette's
non-interest expenses. HUBCO anticipates that it will be able to implement these
cost savings by September, 1996 if, as currently anticipated, the transaction
closes at approximately the end of the second quarter. 2
<PAGE>
HUBCO expects to purchase or expects that Lafayette will repurchase up
to 1,000,000 shares of the outstanding Lafayette Common Stock prior to the
Effective Time, subject to the limitations of the pooling of interests
accounting treatment of the Merger. As of March 10, 1996, HUBCO had purchased
500,000 shares of Lafayette Common Stock. 3
HUBCO also estimates that as a consequence of the Merger its earnings
for 1996 will be diluted by 1% from the analysts' consensus estimate of HUBCO's
1996 earnings of $2.00 per share. This estimate of core earnings dilution
excludes the effect of the one-time Merger charges and includes the effect of
the Lafayette share repurchases. Similarly, using the budgeted earnings
estimates of Lafayette, the anticipated cost savings and the consensus analysts'
estimate of HUBCO's earnings for 1997, HUBCO estimates that the Merger will
result in accretion of 6% over the analysts' consensus estimates of $2.18 per
share for HUBCO's earnings for 1997. The core earnings estimates for 1996 or
1997 do not assume any financial benefits which HUBCO may be able to realize by
the delivery of HUBCO's broader product line in the new Connecticut market area.
While HUBCO anticipates some positive effect from this revenue enhancement
aspect of the Merger, it is unable to specify such benefits with sufficient
assurance to take them into account in the estimates.
As with any earnings estimates, there are various factors both within
and beyond HUBCO's control that could influence HUBCO's actual earnings results
for 1996 and 1997, including but not limited to economic factors, Lafayette's
ability to meet its budgeted earnings, other acquisitions by HUBCO,
unanticipated costs or expenses, and other factors. These estimates did not when
announced, and do not now, take into account the Hometown Merger, which was
announced on April 29, 1996. Also, the estimates were prepared prior to
announcement of first quarter 1996 results by HUBCO and Lafayette. Lafayette's
announced first quarter 1996 earnings were $.08 per share, while Lafayette's
budgeted first quarter earnings were $.16 per share and did not reflect merger
related expenses. HUBCO management continues to believe that the forecast, taken
as a whole, is valid. However, actual results could differ materially. 4
Set forth below are charts with respect to the anticipated one-time
charges, the cost savings and earning estimates.
- ---------------
1 The statements concerning one-time charges and Table One below setting
out the components of the charges are forward looking statements under
the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). The
correctness of the estimate depends upon a number of factors and the
amount of the actual charge incurred may vary from the estimate. While
HUBCO has developed these estimated charges after considering what it
believes to be all relevant factors and including all currently known
amounts, the actual amount of the restructuring charge may vary,
depending upon a number of factors, including but not limited to the
timing of the Closing, HUBCO's ability to retain and work with the
officers of Lafayette who have employment or severance contracts, as
well as those who do not, economic conditions, the resolution of
various contractual contingencies with third parties and other factors.
2 The statements concerning cost savings and Table Two below setting out
the components of the savings are forward looking statements under the
PSLRA. The correctness of the estimate depends upon a number of factors
including but not limited to the ability to effectively centralize
loan, credit, finance and data processing functions without substantial
cost increases, the ability to terminate certain leases, the reduction
of certain FDIC assessment costs, economic conditions and other
factors. The amount of the cost savings may vary from the estimates.
<PAGE>
3 The statement about purchases and repurchases of Lafayette shares is a
forward looking statement under the PSLRA. The ability of HUBCO and
Lafayette to purchase Lafayette shares prior to Closing depends upon a
number of factors, including but not limited to the availability and
price of the shares, the tax-free nature of the Merger, the pooling of
interests accounting treatment of the Merger, HUBCO's repurchases of
its own shares and the extent and timing of regulatory approval and
other factors. HUBCO and Lafayette may not be able to purchase the
anticipated number of Lafayette shares.
4 The estimates of book value dilution, recovery of such dilution and
estimated earnings for HUBCO and Lafayette for 1996 and 1997, as well
as Tables Three and Four below, which provide the basis for the
calculations, are forward looking statements under the PSLRA. The
ability of HUBCO to realize the core earnings is subject to a number of
factors, including but not limited to those set forth in the text. As a
result, the actual results of HUBCO could differ materially from the
estimates set forth.
TABLE ONE
ONE-TIME MERGER RELATED AND
RESTRUCTURING CHARGES
(In Millions)
Acquisition Restructuring
Costs Costs
----------- --------------
Investment banker fees $2.9
Legal and accounting fees .5
Facilities lease terminations $1.9
Data processing 1.5
Severance payments 1.2
Stay bonuses 1.3
Employment agreements 2.6
---------------------
Pre-Tax Total $3.4 $8.5
---------------------
After-Tax Total $3.4 $5.1
=====================
<PAGE>
TABLE TWO
ESTIMATED COST SAVINGS OF
HUBCO/LAFAYETTE MERGER
(In Millions)
Annualized Anticipated
Amount Implementation Date
------ -------------------
Centralization of:
- Loan and deposit operations $1.6
- Credit functions .6
- Finance .6
- Data processing 2.1
- Other support staff .6
5.5 (9/96)
Lease terminations 1.4 (7/96)
Directors fees, audit fees, legal
fees, marketing and consulting
expense 1.3 (7/96)
Other, including FDIC insurance .8 (7/96)
--
Total Cost Savings (Pre-Tax) $9.0
====
<TABLE>
<CAPTION>
TABLE THREE
ANALYSTS' CONSENSUS EARNINGS
FORECAST FOR HUBCO
AND LAFAYETTE BUDGET FORECAST
(In Millions, Except Per Share Amounts)
1Q96 2Q96 3Q96 4Q96 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Analysts' consensus
earnings forecasts
for HUBCO $6.4 $6.5 $6.9 $7.4 $27.2 $29.6
Per Share $ .47 $ .48 $ .51 $ .54 $ 2.00 $ 2.18
Lafayette* $1.6 $1.9 $2.1 $2.2 $7.8 $ 8.6
Per Lafayette Share $ .16 $ .19 $ .21 $ .24 $ .80 N/A
Per HUBCO Share $ .27 $ .32 $ .36 $ .41 $1.36 N/A
</TABLE>
* Based upon Lafayette's internal budget. Per HUBCO Share amount
reflects the Lafayette per share amount multiplied by the Exchange Ratio of .588
per share of HUBCO Common Stock for each share of Lafayette Common Stock.
<PAGE>
TABLE FOUR
CORE EARNINGS FORECASTS
(In Millions, Except Per Share Amounts)
1996 1997
---- ----
$mm EPS $mm EPS
--- --- --- ---
HUBCO-Analysts'
Consensus $27.2* $2.00* $29.6* $2.18*
Lafayette-Budget
Projections 7.8 8.6
Expense Efficiencies
Estimates (after tax) 2.4 5.4
--- ---
Total $37.4** $1.98** $43.6 $2.31**
===== ===== ===== =====
(Dilution) Accretion (1)% 6%
==== ==
* Analysts' Consensus Projections
** Includes impact of Lafayette share repurchases and excludes impact of
one-time merger related charges.
CERTAIN INFORMATION REGARDING LAFAYETTE
GENERAL
Lafayette is a Connecticut-chartered commercial bank which commenced
banking operations in 1965. Lafayette's corporate headquarters are located at
1087 Broad Street, Bridgeport, Connecticut 06604. The telephone number of
Lafayette is (203) 336-6200. Lafayette is a full service commercial and consumer
bank which serves small-to-medium sized business firms as well as individuals.
It operates 19 banking offices located mainly in Fairfield and New Haven
counties in Connecticut. As of December 31, 1995, Lafayette had consolidated
assets of $735.4 million, consolidated deposits of $636.3 million and
consolidated stockholders' equity of $59.5 million. Based on assets as of
December 31, 1995, Lafayette was the largest commercial bank headquartered in
Connecticut. See "AVAILABLE INFORMATION" and "INFORMATION DELIVERED AND
INCORPORATED BY REFERENCE."
RECENT DEVELOPMENTS
On April 24, 1996, Lafayette reported that it earned $790,000 or $.08
per common share for the first quarter of 1996, compared with net income of
$2,148,000 or $.21 per common share for the same period last year. Operating
results for the first quarter of 1996 were impacted by $771,000 of merger
related costs compared with earnings in the first quarter of 1995 which included
$1,205,000 of deferred income tax benefits, attributable to the recognition of
Lafayette's net operating loss carryforwards, and securities gains of $528,000.
No deferred income tax benefits or security gains were recorded in the first
quarter of 1996.
Total assets as of March 31, 1996 were $729,650,000, up 7% from
$682,771,000 on March 31, 1995 reflecting the Bank's growth strategy. Net loans
increased 20% to $516,552,000 at the end of the first quarter of 1996 from
$429,993,000 one year earlier. Total deposits as of March 31, 1996 were
$633,157,000, up 12% from $566,046,000 one year ago.
<PAGE>
Shareholders' equity at the end of the first quarter of 1996 was
$59,536,000 or $5.95 per common share. Lafayette's capital ratios were: Tier 1
Risk-Based Capital Ratio of 9.43%, Total Risk-Based Capital Ratio of 10.72% and
Tier 1 Leverage Capital Ratio of 6.95%.
Lafayette's net interest margin for the first quarter of 1996 was
5.03%, comparable to 5.02% for the same period of the prior year, while its
efficiency ratio (exclusive of merger related charges in 1996) improved from
75.42% in the first quarter of the prior year to 62.02% for the first quarter of
1996.
Lafayette's total non-performing assets of $12,430,000 (1.70% of total
assets) at March 31, 1996 were down from $17,044,000 one year ago and
$13,239,000 as of December 31, 1995. As of March 31, 1996, the reserve for
possible loan losses totaled $9,079,000, which represented 114% of Lafayette's
non-performing loans and 1.73% of the total loan portfolio.
HUBCO MEETING
PURPOSE OF HUBCO MEETING
At the HUBCO Meeting, the HUBCO shareholders will consider and vote on
a proposal to approve the issuance of HUBCO Common Stock in connection with the
Merger and on the election of three persons to serve as directors of HUBCO for
three-year terms and thereafter until their successors shall have been duly
elected and shall have qualified. The approval of such issuance by the holders
of HUBCO Common Stock is one of a number of conditions to the consummation of
the Merger. The listing rules for The Nasdaq Stock Market, on which HUBCO Common
Stock is traded, require shareholder approval for the issuance of Common Stock
in connection with any acquisition in which the listed company will issue a
number of shares of its common stock equal to or greater than 20% of its
outstanding shares. Shareholder approval by HUBCO was made a condition of the
Merger based upon this consideration and to insure that HUBCO's shareholders had
the opportunity to consider this substantial acquisition. Shareholders of HUBCO
will also be asked to consider and approve an amendment to the HUBCO Certificate
to increase the authorized common and preferred stock of HUBCO. Approval of such
amendment is not a condition to the consummation of the Merger. See "THE
PROPOSED MERGER AND RELATED MATTERS", "ELECTION OF HUBCO DIRECTORS" and
"AMENDMENT TO CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF COMMON AND
PREFERRED SHARES AUTHORIZED TO BE ISSUED."
THE BOARD OF DIRECTORS OF HUBCO HAS UNANIMOUSLY APPROVED THE MERGER AND
RECOMMENDS THAT THE SHAREHOLDERS OF HUBCO VOTE FOR THE ISSUANCE OF HUBCO COMMON
STOCK IN CONNECTION WITH THE MERGER, FOR MANAGEMENT'S NOMINEES FOR DIRECTORS OF
HUBCO AND FOR THE AMENDMENT TO THE HUBCO CERTIFICATE INCREASING THE AUTHORIZED
STOCK.
VOTE REQUIRED; SHARES ENTITLED TO VOTE AT HUBCO MEETING
Only holders of record of HUBCO Common Stock at the close of business
on April 19, 1996 are entitled to notice of and to vote at the HUBCO Meeting.
The number of shares of HUBCO Common Stock issued, outstanding and entitled to
vote at the close of business on the HUBCO Record Date was 13,629,415. The
issuance of HUBCO Common Stock in connection with the Merger and the amendment
to the HUBCO Certificate to increase the authorized stock must be approved by
the affirmative vote at the HUBCO Meeting, either in person or by proxy, of the
holders of at least a majority of the votes cast at the meeting. Election of
HUBCO directors is by the vote of a plurality of the shares represented at the
HUBCO Meeting. Under applicable state law and the HUBCO Certificate and HUBCO
Bylaws, abstentions and broker non-votes will be counted for purposes of
establishing a quorum but otherwise will not count at the HUBCO Meeting.
<PAGE>
SOLICITATION, VOTING AND REVOCATION OF PROXIES AT HUBCO MEETING
The enclosed HUBCO proxy is designed to permit each HUBCO shareholder
of record to vote on all matters to come before the HUBCO Meeting. This proxy is
solicited by the HUBCO Board. Any proxy may be revoked at any time before its
exercise by giving written notice of revocation to the Secretary of HUBCO, D.
Lynn Van Borkulo-Nuzzo, at 1000 MacArthur Boulevard, Mahwah, New Jersey 07430. A
subsequently dated and duly executed proxy, if properly presented, will revoke a
prior proxy. Any HUBCO shareholder entitled to vote who has previously executed
a proxy may attend the HUBCO Meeting and vote in person, provided he has filed a
written notice of revocation of such proxy with the Secretary of the Meeting
prior to the voting of such proxy. Where a shareholder specifies a choice in the
form of proxy with respect to a matter being voted upon, the shares represented
by the proxy will be voted in accordance with such specification. If no such
specification is made on a properly executed proxy, the shares will be voted in
favor of the issuance of HUBCO Common Stock in connection with the Merger, in
favor of management's nominees for directors of HUBCO and in favor of the
proposed amendment to the HUBCO Certificate.
The cost of soliciting proxies for the HUBCO Meeting will be borne by
HUBCO. In addition to the use of the mails, proxies may be solicited personally,
by telephone or telegram, and by directors, officers and employees of HUBCO and
HUB acting without additional compensation. Arrangements may also be made with
brokers, dealers, nominees and other custodians for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and such persons may be reimbursed by HUBCO for reasonable
out-of-pocket expenses.
LAFAYETTE MEETING
PURPOSE OF LAFAYETTE MEETING
At the Lafayette Meeting, the Lafayette shareholders will consider and
vote on a proposal to approve the Merger and on the election of five persons to
serve as directors of Lafayette until the expiration of their terms and
thereafter until their successors shall have been duly elected and shall have
qualified. If the Merger is consummated, it is contemplated that at the
Effective Time, five of Lafayette's 14 directors will resign. See "THE PROPOSED
MERGER AND RELATED MATTERS" and "ELECTION OF LAFAYETTE DIRECTORS".
THE BOARD OF DIRECTORS OF LAFAYETTE HAS APPROVED THE MERGER BY A VOTE
OF 12 TO 1 AND RECOMMENDS THAT THE SHAREHOLDERS OF LAFAYETTE VOTE FOR THE MERGER
AND FOR MANAGEMENT'S NOMINEES FOR DIRECTORS OF LAFAYETTE. In voting against the
Merger, Director Bertram Frankenberger expressed concerns regarding certain
procedural issues, Board representation matters and certain termination
provisions of the Merger Agreement.
VOTE REQUIRED; SHARES ENTITLED TO VOTE AT LAFAYETTE MEETING
Only holders of record of Lafayette Common Stock at the close of
business on April 15, 1996 (the "Lafayette Record Date") are entitled to notice
of and to vote at the Lafayette Meeting. The number of shares of Lafayette
Common Stock outstanding and entitled to vote at the close of business on the
Lafayette Record Date was 10,006,529. The Merger must be approved by the
affirmative vote of two-thirds of the outstanding Lafayette Common Stock.
Election of Lafayette directors is by the vote of a majority of the shares
represented at the Lafayette Meeting. Under applicable Connecticut law and
Lafayette's Certificate of Incorporation and Bylaws, all outstanding shares of
Lafayette Common Stock present in person or represented by proxy at the
Lafayette Meeting (including, without limitation, abstentions and broker
non-votes) will be counted for purposes of establishing a quorum, but such
abstentions and broker non-votes will not count at the Lafayette Meeting for
purposes of the election of directors and will have the same effect as a
negative vote for purposes of the vote on the Merger.
<PAGE>
SOLICITATION, VOTING AND REVOCATION OF PROXIES AT LAFAYETTE MEETING
The enclosed Lafayette proxy is designed to permit each Lafayette
shareholder of record to vote on all matters to come before the Lafayette
Meeting. This proxy is solicited by the Board of Directors of Lafayette. Any
proxy may be revoked at any time before its exercise by giving written notice of
revocation to the Secretary of Lafayette, Marilyn W. Alderman, at Lafayette's
executive offices, 2992 Dixwell Avenue, Hamden, Connecticut 06518. A
subsequently dated and duly executed proxy, if properly presented, will revoke a
prior proxy. Any Lafayette shareholder entitled to vote who has previously
executed a proxy may attend the Lafayette Meeting and vote in person, provided
he has filed a written notice of revocation of such proxy with the Secretary of
the Meeting prior to the voting of such proxy. Where a shareholder specifies a
choice in the form of proxy with respect to a matter being voted upon, the
shares represented by the proxy will be voted in accordance with such
specification. If no such specification is made on a duly executed proxy, the
shares will be voted FOR the Merger and FOR management's nominees for directors
of Lafayette.
Shares held by the various benefit plans established by Lafayette will
be voted as follows: (i) all shares held by the Lafayette American Bank and
Trust Company Cash Balance Plan and Trust will be voted by the Plan trustee who
has, pursuant to the terms of the Plan, sole discretion to vote the shares; and
(ii) shares held by the Lafayette American Bank and Trust Company Employees'
Savings and Profit Sharing Plan and Trust will be voted by the individual Plan
participant to whose Plan accounts such shares have been allocated, provided
that the Plan trustee may vote any shares that are not voted by participants.
The cost of soliciting proxies for the Lafayette Meeting will be borne
by Lafayette. Lafayette will use the mails to solicit proxies and, in addition
to the use of the mails, proxies may be solicited personally, by telephone or
telegram. MacKenzie Partners, Inc. will assist in the solicitation of proxies by
Lafayette for a fee not to exceed $5,000, plus reasonable out-of-pocket costs
and expenses. Directors, officers and employees of Lafayette acting without
additional compensation may also solicit proxies personally or by telephone.
Arrangements may also be made with brokers, dealers, nominees and other
custodians for the forwarding of solicitation material to the beneficial owners
of stock held of record by such persons, and such persons may be reimbursed by
Lafayette for reasonable out-of-pocket expenses.
<PAGE>
I. THE PROPOSED MERGER AND RELATED MATTERS
THE PROPOSED MERGER
A COPY OF THE MERGER AGREEMENT IS ATTACHED AS APPENDIX A TO THIS PROXY
STATEMENT AND IS INCORPORATED BY REFERENCE HEREIN. DESCRIPTIONS OF THE MERGER
AND THE MERGER AGREEMENT ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE
MERGER AGREEMENT.
GENERAL DESCRIPTION
The Merger Agreement provides that, at the Effective Time, Merger Sub
will be merged into Lafayette, with Lafayette as the surviving bank (the
"SURVIVING BANK"). The separate identity and existence of Merger Sub will cease
upon consummation of the Merger and all property, rights, powers and franchises
of each of Merger Sub and Lafayette will vest in the Surviving Bank, which will
thereafter operate as a wholly-owned subsidiary of HUBCO.
CONSIDERATION
At the Effective Time, each share of Lafayette Common Stock outstanding
immediately prior to the Effective Time, except for (i) Lafayette treasury
shares, (ii) Dissenting Shares, and (iii) shares held by HUBCO or any of its
subsidiaries (other than shares held as trustee or in a fiduciary capacity and
shares held as collateral or in lieu of a debt previously contracted) will be
converted into the right to receive 0.588 of a share of HUBCO Common Stock. The
Exchange Ratio is subject to adjustment to take into account any stock split,
stock dividend, stock combination, reclassification or similar transaction by
HUBCO with respect to the HUBCO Common Stock occurring subsequent to February 5,
1996. The Exchange Ratio may also be subject to adjustment in connection with
provisions relating to the termination of the Merger Agreement. See "--Effective
Time; Amendments; Termination".
CONVERSION OF LAFAYETTE STOCK OPTIONS
In the Merger, each outstanding option to purchase shares of Lafayette
Common Stock (a "LAFAYETTE OPTION") granted under Lafayette's existing stock
option plan which is or will be by virtue of the Merger vested ("VESTED
LAFAYETTE OPTIONS") will be assigned a value (the "OPTION VALUE") equal to (a)
the "Median Pre-Closing Price" of HUBCO Common Stock (as defined below)
multiplied by the Exchange Ratio (b) minus the stated exercise price for the
Lafayette Option, (c) such difference then being multiplied by the number of
shares of Lafayette Common Stock for which the option may be exercised. At the
Effective Time, each Vested Lafayette Option will be converted into that number
of shares of HUBCO Common Stock equal to the Option Value divided by the Median
Pre-Closing Price of HUBCO Common Stock.
The Merger Agreement defines the "MEDIAN PRE-CLOSING PRICE" of HUBCO
Common Stock as the Median Price, calculated based upon the Closing Price of
HUBCO Common Stock during the first 20 of the 25 consecutive trading days
immediately preceding the date of the closing of the Merger. The "CLOSING PRICE"
is defined as the closing price of HUBCO Common Stock, as supplied by Nasdaq and
published in The Wall Street Journal, during the first 20 of the 25 consecutive
trading days immediately preceding the date of the closing of the Merger. The
"MEDIAN PRICE" is determined by taking the price halfway between the Closing
Prices left after discarding the nine lowest and nine highest Closing Prices in
the 20-day period. A trading date is defined as a day for which a Closing Price
is so supplied and published.
Each outstanding Lafayette Option which is not vested before or by
virtue of the Merger ("UNVESTED LAFAYETTE OPTIONS") will be converted into and
become pursuant to the Merger Agreement an option to purchase HUBCO Common
Stock. Each such Unvested Lafayette Option which represented the right to
<PAGE>
purchase one share of Lafayette Common Stock shall be converted at the Effective
Time into the right to purchase 0.588 (or such other fraction as the Exchange
Ratio may be adjusted to) shares of HUBCO Common Stock for the same purchase
price and otherwise will remain subject to the same terms and conditions as was
the prior Lafayette Option. The Common Stock issuable pursuant to the exercise
of the new HUBCO Options will be registered by HUBCO on a Form S-8 under the
Securities Act. Lafayette currently has options outstanding under two stock
option plans, the 1984 Incentive Stock Option Plan ("1984 PLAN") and the 1994
Stock Option Plan ("1994 PLAN"). As of December 31, 1995, Lafayette had 11,250
options outstanding under the 1984 Plan, 209,167 options outstanding under the
1994 Plan and 250,000 options outstanding pursuant to a stock option granted to
Mr. Goldstein. See "ELECTION OF LAFAYETTE DIRECTORS-EXECUTIVE
COMPENSATION--Stock Options".
CASH IN LIEU OF FRACTIONAL SHARES
No fractional shares of HUBCO Common Stock will be issued in exchange
for either Lafayette Common Stock or Lafayette Options. Instead, holders of such
stock or options will receive cash equal to the fractional share interest
multiplied by the Median Pre-Closing Price of HUBCO Common Stock (as defined
above), without interest. All shares of HUBCO Common Stock to be issued to each
Lafayette shareholder or option holder will be aggregated to constitute as many
whole shares as possible before determining such person's fractional share
interest.
CONVERSION OF LAFAYETTE WARRANTS
The Lafayette Warrants were issued February 24, 1994 pursuant to a
Standby Purchase Agreement dated as of November 15, 1993 and are evidenced by
warrant agreements. At the Effective Time, each outstanding Lafayette Warrant
will be converted automatically into a like warrant to purchase for the same
purchase price that number of shares of HUBCO Common Stock which equals the
number of shares of Lafayette Common Stock which may be purchased under the
Lafayette Warrant, multiplied by the Exchange Ratio. Pursuant to the terms of
the Warrants, the HUBCO Warrants issued in exchange will be immediately
exercisable and transferable. The holders of the Warrants will recognize taxable
gain upon the conversion. See "--Federal Income Tax Consequences".
DISSENTERS' RIGHTS OF APPRAISAL
Holders of HUBCO Common Stock do not have dissenters' appraisal rights
in connection with the Merger.
Holders of Lafayette Common Stock who follow the procedures specified
in Section 36a-125(h) of the CBL and 33-374 of the Connecticut General Statutes
will be entitled to the rights and remedies of dissenting shareholders. Pursuant
to Section 36a-125(h), Lafayette shareholders have the right to dissent from the
Merger and to obtain payment of the fair value of their shares of Lafayette
Common Stock if the Merger is consummated. Necessary procedural steps are set
forth in Sections 36a-125(h) and 33-374 of the Connecticut General Statutes. See
"RIGHTS OF DISSENTING LAFAYETTE SHAREHOLDERS".
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER
The 1990's has been a period of rapid change in the banking industry,
characterized by accelerating, consolidation, intensifying competition from
domestic and foreign banks and from non-bank financial service organizations,
and increasing requirements for investments in technology in order to meet
customer needs on an efficient, competitive basis. During this period, the
management of HUBCO has invested in technology and undertaken a series of
acquisitions in order to enhance its long-term profitability in the face of
changing industry conditions. During the same period, management of Lafayette
dealt with a large volume of non-performing assets, reducing those assets to
more manageable levels and sought to enhance profitability, after dealing with
those problems, by growing as a local community bank.
The Merger is a strategic alliance between Lafayette, a Connecticut
headquartered commercial bank, and HUBCO, which has, until now, focused its
acquisitions within New Jersey.
<PAGE>
REASONS FOR THE MERGER
LAFAYETTE'S REASONS
Calendar year 1994 was a watershed year for Lafayette. After several
years in which Lafayette and its predecessors recorded substantial losses
resulting primarily from troubled loans, Lafayette reported profits in each
quarter of 1994 (and has continued to do so in each quarter thereafter). On
February 24, 1994, Lafayette consummated a rights offering which resulted in a
capital infusion of approximately $34 million before expenses. That capital
infusion, together with Lafayette's profitable operations, enabled Lafayette to
meet an FDIC directive (reflected in a Cease and Desist Order which subsequently
has been terminated) to attain a leverage capital ratio of at least 6% by
September 30, 1994.
As profitable operations continued and as Lafayette built a cushion
above the 6% leverage ratio established as a minimum leverage requirement for
Lafayette, management of Lafayette focused upon approaches for growing
Lafayette's asset base in 1995. Without compromising underwriting standards or
over-paying for deposits and other funding sources, Lafayette was able to
increase its loans and total assets by $82.3 million and $61.7 million,
respectively, from December 31, 1994 to December 31, 1995. During 1995, the
Lafayette Board and management of Lafayette concluded that such internal growth
could and should be supplemented by acquisitions within Lafayette's market area.
Lafayette retained an investment banker with the express purpose of seeking to
expand Lafayette's banking franchise through acquisitions in Connecticut. Given
the expense involved in hostile transactions, Lafayette's primary focus was upon
Connecticut financial institutions that would be willing to negotiate business
combinations on mutually satisfactory terms.
Despite several attempts to negotiate business combinations with
Connecticut institutions in 1995, Lafayette's management was unable to make
substantial progress in negotiating such transactions with potential merger
partners. By year-end, management was of the view that it would be difficult to
grow Lafayette's asset size by in-market acquisitions.
In December of 1995, a representative of Arthur Andersen LLP (which
serves as independent auditors to both Hubco and Lafayette) suggested to
Lafayette's executive management that they meet with HUBCO's management to
determine whether a business combination could be structured that would provide
value to Lafayette's shareholders while at the same time enable Lafayette to
continue operating as an autonomous banking institution. On January 4, 1996,
Kenneth Neilson, the President and Chief Executive Officer of HUBCO, met with
Robert Goldstein, the President and Chief Executive Officer of Lafayette, to
explore the possibility of such a transaction. At that meeting, Messrs. Neilson
and Goldstein agreed to execute confidentiality agreements to enable an exchange
of basic information regarding each other's financial institution.
Messrs. Neilson and Goldstein met again on January 18, 1996, at which
point Mr. Neilson toured a number of Lafayette's branch offices. The two
executive officers also reviewed with Arthur Andersen LLP certain issues
relating to pooling of interests accounting treatment and due diligence. After
the meeting, Mr. Goldstein reviewed the points that he had discussed with both
Donald Calcagnini, the Chairman of the Lafayette Board, and John Eggemeyer of
Belle Plaine Partners, Inc., Lafayette's financial advisor ("BELLE PLAINE"). On
January 22, 1996, Messrs. Neilson and Goldstein met again, this time being
joined by Mr. Calcagnini and HUBCO's Chief Financial Officer, Richard Linhart.
At this meeting, the parties discussed valuation issues and the potential
benefits arising from a business combination.
Lafayette's Executive Committee and Board of Directors met on January
25, 1996 to review the status of the discussions between Lafayette and HUBCO.
Robert Goldstein and Donald Calcagnini described the meetings that had been held
since early January. John Eggemeyer provided background information regarding
HUBCO and reviewed with the Board alternative business strategies. The Board
authorized management to continue negotiations with HUBCO.
On January 26, 1996, HUBCO's counsel provided Lafayette with draft
copies of the Merger Agreement and Stock Option Agreement. These draft
agreements were the subject of an all day negotiating session on January 29,
1996. Lafayette was represented at that meeting by Mr. Calcagnini, Mr.
Goldstein, Phillip Mucha (Lafayette's chief financial officer), Mr. Eggemeyer
and counsel. HUBCO was represented at that meeting by Mr. Neilson and counsel.
At that meeting, various modifications to the draft agreements were proposed and
negotiated. Subsequent to that meeting (and continuing through February 4,
1996), numerous telephone conversations were conducted among the parties in
order to resolve open issues, including the precise amount of the Exchange
Ratio, Lafayette's rights to terminate the Merger Agreement in the event of a
reduction in the market price of HUBCO's Common Stock, HUBCO's ability to
increase the Exchange Ratio as a means of avoiding such termination, Lafayette's
concerns regarding the Option Agreement and HUBCO's ability to negotiate other
business combinations prior to the Effective Time. At the same time that these
issues were being negotiated, several drafts of the Merger Agreement and Stock
Option Agreement were circulated and negotiated and the parties continued their
due diligence efforts.
On February 5, 1996, the Boards of Directors of HUBCO and Lafayette
each met to review the agreements circulated during the prior week.
Presentations were made at Lafayette's meeting by management, Mr. Eggemeyer,
counsel, a representative of Arthur Andersen LLP and a representative of KBW.
Such presentations included a summary of the negotiations that had transpired
since the last meeting of the Lafayette Board, a review of the results of
management's due diligence investigations, an analysis of the Merger Agreement
and Stock Option Agreement, a review of business issues pertaining to the
proposed combination and a presentation by KBW in which KBW advised the
Lafayette Board that in its opinion, the Exchange Ratio was fair to Lafayette's
shareholders from a financial point of view.
From the perspective of the Lafayette Board, the Merger presents
Lafayette's shareholders with the opportunity of realizing the benefits of
Lafayette's relatively recent turn-around. While the alternative of remaining
fully independent was attractive to the Lafayette Board, the Board concluded
that the full independence approach presented greater risks to Lafayette's
shareholders, since no assurance can be given that Lafayette will continue to
perform as well as it has performed in recent years. Ultimately, the Lafayette
Board determined that shareholder value would be maximized by consummation of
the Merger. In making this determination, the Lafayette Board focused upon
HUBCO's record of performance and its concentration upon the same retail and
middle market franchises that Lafayette has targeted as its primary market.
Given HUBCO's commitment to community banking, the Lafayette Board concluded
that the Merger should enable the combined enterprise to attain economies of
scale, a broadened geographic market and customer base and an expansion of
services without sacrificing the personalized service that Lafayette seeks to
offer in competing with larger regional and money center banks.
HUBCO'S REASONS
HUBCO entered into the Merger Agreement with Lafayette as part of
HUBCO's ongoing strategy of growth through acquisitions.
HUBCO's acquisition strategy consists of identifying financial
institutions with business philosophies that are similar to HUBCO's, which
operate in markets that are geographically within or close to those of HUBCO,
and which provide an ability to enhance earnings per share over an acceptable
period after the acquisition, while providing acceptable rates of return.
Acquisitions are also evaluated in terms of asset quality, interest rate risk,
core deposit base stability, potential operating efficiencies and management
abilities.
<PAGE>
In the view of the HUBCO Board, the Merger constitutes an acquisition
that is in line with HUBCO's strategy and provides a complement to its existing
franchise. Upon completion of the Merger, HUBCO will have a network of 19 branch
banking offices through southeastern Connecticut, which is demographically
similar to and geographically neighbors the northern New Jersey market of HUBCO.
The HUBCO Board believes that Lafayette's earnings capacity will be enhanced as
a result of the Merger--through cost savings from HUBCO's provision of
back-office and support services to Lafayette, HUBCO's ability to offer expanded
services to Lafayette customers and HUBCO's financial strength--thereby
positively contributing to HUBCO's earnings. See, "CERTAIN INFORMATION ABOUT
HUBCO--Recent Developments".
Both the Lafayette Board and the HUBCO Board approved the proposed
Merger after the market closed on February 5, 1996, subject to completion of the
applicable documentation. The Merger Agreement and the Stock Option Agreement
were executed, and the transaction was publicly announced, on February 6, 1996,
prior to the opening of the market.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the Board of Directors and management of Lafayette
may be deemed to have certain interests in the Merger in addition to their
interests generally as stockholders of Lafayette. All of such additional
interests are described below, to the extent material, and except as described
below such persons have, to the best knowledge of Lafayette, no material
interest in the Merger apart from those of stockholders generally. The Lafayette
Board of Directors was aware of these interests of its directors and officers
and considered them, among other matters, in approving the Merger Agreement and
the transactions contemplated thereby.
INDEMNIFICATION AND BOARD MEMBERSHIP
The Merger Agreement provides that three nominees designated by
Lafayette and acceptable to HUBCO, will be duly appointed by the Board of
Directors of HUBCO to HUBCO's Board, effective at the Effective Time. In
addition, at least nine directors of Lafayette will continue to serve as
directors of Lafayette after the Merger. Such persons would continue to receive
compensation as directors after the Merger.
In addition to the foregoing, the Merger Agreement requires HUBCO to
indemnify, defend and hold harmless each person who is, has been, or becomes
prior to the Effective Time, a director, officer, employee or agent of Lafayette
or any subsidiary of Lafayette or who serves or has served at the request of
Lafayette in any capacity with any other entity (collectively , the
"Indemnitees"), to the fullest extent permitted under applicable law or
Lafayette's Certificate of Incorporation and By-laws, with respect to any claims
made against such person because he or she is or was a director, officer,
employee or agent of Lafayette or any subsidiary of Lafayette or who serves or
has served at the request of Lafayette in any capacity with any other entity.
The Merger Agreement also requires HUBCO to cover Lafayette's officers and
directors under either Lafayette's existing directors' and officers' liability
insurance policy or a rider to HUBCO's then current policy for a period of at
least six years after the Effective Time.
EMPLOYMENT AGREEMENTS, SEVERANCE AGREEMENTS, OPTION ACCELERATION AND BONUSES
Prior to the execution of the Merger Agreement, five executive officers
of Lafayette were parties to employment or severance agreements under which such
officers have the right to substantial payments as a consequence of the Merger
if their employment is terminated by the company or the officer under certain
circumstances. See "ELECTION OF LAFAYETTE DIRECTORS", "EXECUTIVE
COMPENSATION--Employment Contracts, Termination of Employment and
Change-in-Control Agreements". The employment agreements for Robert B.
Goldstein, Donald P. Calcagnini, Phillip J. Mucha and Amanda V. Perkins (the
"Lafayette Officers") also provide for reimbursement for excise taxes payable
<PAGE>
(if any) as a result of benefits received upon a Change in Control (as defined).
Such reimbursement is designed to put the officers in the same position as they
would have been if such excise tax had not been imposed. All or a portion of
these costs may not be deductible by HUBCO or Lafayette for federal income tax
purposes. The severance agreement with Mr. Klieback provides for a reduction of
his payments to avoid such excise taxes. If, pursuant to the provisions in the
applicable employment agreement or severance agreements, payments were required
to be made to Messrs. Goldstein, Calcagnini, Mucha, Perkins, and Klieback, and
assuming the Effective Time is June 30, 1996, the estimated amounts of such
payments (and for these purposes disregarding the reimbursement for, or
reduction to avoid, any excise tax) would be $1,187,030, $544,180, $418,600,
$387,205 and $339,000, respectively. The estimated amount of such payments to
the Lafayette Officers and Mr. Klieback as a group would be $2,876,015. The
approval of the Merger Agreement and the closing of the Merger will be a Change
in Control for purposes of the agreements.
Furthermore, stock option grants to various executive officers include
provisions which accelerate the vesting of the options under a
change-in-control, as defined in the stock options. The Merger will constitute a
change-in-control which will accelerate those options. See "ELECTION OF
LAFAYETTE DIRECTORS--EXECUTIVE COMPENSATION--Stock Options" and "--Conversion of
Lafayette Stock Options".
As part of the Merger Agreement, Lafayette was given the right (but not
the obligation) to pay stay-on bonuses for officers of Lafayette, to encourage
them to stay on through the Merger and for a period of time thereafter. HUBCO
has estimated that Lafayette and HUBCO will incur $1.3 million for such stay-on
bonuses to all officers and employees of Lafayette. See "CERTAIN INFORMATION
REGARDING HUBCO--Recent Developments". All of the executive officers of
Lafayette, including its most highly compensated executives, are expected to
receive substantial stay-on bonuses in connection with the Merger.
HUBCO has also engaged in discussions concerning arrangements that may
be made to assure the continued employment of Robert Goldstein, President and
CEO of Lafayette, after the Merger. New employment arrangements for Mr.
Goldstein and other officers may be entered into after consummation of the
Merger.
OPINIONS OF FINANCIAL ADVISORS
LAFAYETTE'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated as of January 30, 1996 (the "KBW
ENGAGEMENT LETTER"), Lafayette retained KBW to render a fairness opinion to
Lafayette in connection with a possible business combination between Lafayette
and HUBCO.
KBW is a nationally recognized investment banking firm and, as part of
its investment banking business, is continually engaged in the valuation of
bank, bank holding company and thrift institution securities in connection with
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for various other
purposes. As specialists in the securities of banking companies, KBW has
experience in, and knowledge of, the valuation of banking enterprises. KBW was
selected by Lafayette on the basis of its qualifications, its previous
experience in similar transactions and its reputation in the banking and
investment communities. KBW has acted for the Lafayette Board in rendering its
fairness opinion and will receive a fee from Lafayette for its services.
<PAGE>
In the ordinary course of its business as a broker-dealer, KBW may,
from time to time, purchase securities from, and sell securities to, Lafayette
and HUBCO, and as a market maker in securities, KBW may from time to time have a
long or short position in, and buy or sell, equity securities of Lafayette and
HUBCO for its own account and for the accounts of its customers. To the extent
that KBW has any such position as of the date of the fairness opinion attached
as Annex D hereto, it has been disclosed to Lafayette.
At the February 5, 1996 special meeting of the Lafayette Board, KBW
rendered its oral opinion to the Lafayette Board to the effect that, as of such
date, the Exchange Ratio was fair to the stockholders of Lafayette from a
financial point of view. KBW has also delivered a written opinion to the
Lafayette Board dated as of the date of this Proxy Statement to the effect that,
as of such date, the Exchange Ratio was fair to the shareholders of Lafayette
from a financial point of view.
THE FULL TEXT OF KBW'S OPINION IS ATTACHED AS APPENDIX D TO THIS PROXY
STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. THE DESCRIPTION OF THE
OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO ANNEX D.
LAFAYETTE SHAREHOLDERS ARE URGED TO READ THE OPINION IN ITS ENTIRETY FOR A
DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND
QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY KBW IN CONNECTION
THEREWITH.
KBW's opinion is directed only to the Exchange Ratio and does not
constitute a recommendation to any Lafayette shareholder as to how such
shareholder should vote at the Lafayette Meeting.
In connection with its opinion, KBW reviewed, analyzed and relied upon
the following material relating to the financial and operating condition of
Lafayette and HUBCO: (i) the Merger Agreement; (ii) Annual Reports to
Shareholders for the three years ended December 31, 1994 for Lafayette and
HUBCO; (iii) certain interim reports to shareholders of Lafayette and HUBCO and
Quarterly Reports on Form 10-Q of Lafayette and HUBCO and certain other
communications from Lafayette and HUBCO to their respective shareholders; (iv)
other financial information concerning the businesses and operations of
Lafayette and HUBCO furnished to KBW by Lafayette and HUBCO for the purpose of
KBW's analysis, including certain internal financial analyses and forecasts for
Lafayette and HUBCO prepared by senior management of Lafayette and HUBCO; (v)
certain publicly available information concerning the trading of, and the
trading market for, Lafayette Common Stock and HUBCO Common Stock; and (vi)
certain publicly available information with respect to banking companies and the
nature and terms of certain other transactions that KBW considered relevant to
its inquiry. Additionally, in connection with its written opinion attached as
Annex D to this Proxy Statement, KBW reviewed a draft of this Proxy Statement in
substantially the form hereof. KBW also held discussions with senior management
of Lafayette and HUBCO concerning their past and current operations, financial
condition and prospects, as well as the results of regulatory examinations. KBW
also considered such financial and other factors as it deemed appropriate under
the circumstances and took into account its assessment of general economic,
market and financial conditions and its experience in similar transactions, as
well as its experience in securities valuation and its knowledge of banks, bank
holding companies and thrift institutions generally. KBW's opinion was
necessarily based upon conditions as they existed and could be evaluated on the
date thereof and the information made available to KBW through the date thereof.
In conducting its review and arriving at its opinion, KBW relied upon
and assumed the accuracy and completeness of all of the financial and other
information provided to it or publicly available, and KBW did not attempt to
verify such information independently. KBW relied upon the managements of
Lafayette and HUBCO as to the reasonableness and achievability of the financial
and operating forecasts (the assumptions and bases therefor) provided to KBW and
assumed that such forecasts reflected the best available estimates and judgments
of such managements and that such forecasts will be realized in the amounts and
in the time periods estimated by such managements. KBW also assumed, without
independent verification, that the aggregate allowances for loan losses for
Lafayette and HUBCO are adequate to cover such losses. KBW did not make or
obtain any evaluations or appraisals of the property of Lafayette or HUBCO, nor
did KBW examine any individual loan credit files. KBW was informed by Lafayette,
and assumed for purposes of its opinion, that the Merger would be accounted for
as a pooling of interests under generally accepted accounting principles.
<PAGE>
Prior to rendering the written opinion attached as Appendix D to this
Proxy Statement, KBW reviewed with the Lafayette Board financial aspects of the
proposed Merger and rendered an oral opinion as to the fairness of the Exchange
Ratio to the Lafayette Board on February 5, 1996. Set forth below is a summary
of the material factors considered by and valuation methodologies presented by
KBW to the Lafayette Board on February 5, 1996 and utilized by KBW in connection
with rendering its opinion as to the fairness, from a financial point of view,
of the Exchange Ratio to Lafayette's Shareholders.
ANALYSIS OF THE HUBCO OFFER. KBW reviewed certain historical financial
information for Lafayette and HUBCO (pro forma for pending acquisitions) and
calculated the imputed value of the HUBCO offer to holders of Lafayette Common
Stock. KBW calculated the multiple which the Exchange Ratio represents, based on
an assumed per share purchase price of $13.00, when compared to December 31,
1995 stated fully diluted book value of $5.77, and its 1996 earnings estimate of
$.76 per share. Based on these assumptions, the price to stated fully diluted
book value multiple was 2.25 times, and the price to the 1996 earnings estimate
per share multiple was 17.10 times.
SELECTED PEER GROUP ANALYSIS. KBW compared the financial performance
and market performance of Lafayette, HUBCO, and the pro forma institution based
on various financial measures of earnings performance, operating efficiency,
capital adequacy and asset quality and various measures of market performance,
including market/book values, price to earnings and dividend yields to those of
a group of comparable companies. For purposes of such analysis, the financial
information used by KBW for Lafayette and HUBCO was as of and for the quarter
ended December 31, 1995. For all other companies in the analysis data was as of
and for the quarter ended September 30, 1995. Market price information was as of
February 4, 1996. The companies in the peer group had total assets ranging from
approximately $2.5 billion to $250 million, and included Trust Company of New
Jersey, BSB Bancorp, United National Bancorp, Merchants New York Bancorp,
Evergreen Bancorp, Arrow Financial Corporation, Sterling Bancorp, Hudson
Chartered Bancorp, BMJ Financial Corp, CNB Financial, Interchange Financial,
Broad National Bancorp, Westport Bancorp, and New Milford Bank & Trust.
KBW's analysis showed the following concerning the financial
performance of Lafayette, HUBCO and the pro forma institution: that the return
on equity on an annualized basis (assuming normalized earnings reflecting full
taxation for Lafayette) was 8.17%, 17.10% and 16.74%, respectively, compared
with an average of 14.78% for the peer group; that return on assets (assuming
normalized earnings reflecting full taxation for Lafayette) on an annualized
basis was .66%, 1.36%, 1.31%, respectively, compared with an average of 1.23%
for the group; that net interest margin on an annualized basis was 4.92%, 5.25%,
5.15%, respectively, compared with an average of 4.88%; that the efficiency
ratio on an annualized basis was 67.40%, 61.45%, and 63.67%, respectively,
compared with an average of 60.44%; that the equity to assets ratio was
8.09%,7.94%, and 7.83%, respectively, compared to an average of 8.33%; that the
tangible equity to assets ratio was 8.09%, 7.34%, and 7.40%, respectively,
compared to an average of 7.93%; that the ratio of net charge offs to average
loans was .92%, .45%, and .55%, respectively, compared to an average of .62%;
that the ratio of non-performing assets to total assets was 1.80%, 1.28%, and
1.43%, respectively, compared to an average of 1.42%; and that the ratio of loan
loss reserve to non-performing assets was 65%, 79%, and 74%, respectively
compared to an average of 112%.
KBW's analysis further showed, among other things, the following
concerning the market performance of Lafayette, HUBCO, and the pro forma
institution: that the price to earnings multiple based on 1996 estimated
earnings was 15.28, 11.19, and 13.98 times, respectively, compared to an average
of 11.08 times; that the price to book value multiple was 2.00, 2.26, and 2.34
times compared to an average of 1.55 times; and that the dividend yield was
1.82%, 3.04%, and 3.04%, respectively, compared to an average of 2.77%.
ANALYSIS OF SELECTED MERGER TRANSACTIONS. KBW reviewed certain
financial data related to a set of recent comparable bank acquisitions with
aggregate transaction values approximately between $40 million and $500 million
which included the following transactions (identified by acquirer/acquiree):
CFX/Safety Fund, BT Financial Corp/Moxham Bank Corp, Dime SB
Williamsburg/Conestoga Bancorp, Peoples Heritage/Bank of New Hampshire, Bank of
Boston/Boston Bancorp, Republic New York/Brooklyn Bancorp, North Fork
Bancorp/Extebank, UJB Financial/Flemington National Bank, Reliance
Bancorp/Sunrise Bancorp, ALBANK/Marble Financial Corp, Summit Bancorp/Garden
State BancShares, Meridian Bancorp/United Counties, Independence Community/Bay
Ridge Bancorp, Crestar Financial/Loyola Capital Corp, Bank of New York/Putnam
Trust Co., PNC Bancorp/Chemical NJ Holdings, Valley National Bancorp/Lakeland
First Financial, UJB Financial/Bancorp NJ, and Staten Island SB/Gateway Bancorp.
<PAGE>
KBW calculated averages and medians (measured on February 4, 1996) for
the premium to the target's earnings (trailing 12 months) for all deals
(including both banks and thrifts), all bank deals and all thrift deals: Average
premium to earnings were 18x, 20x, and 16x, respectively. Median premium to
earnings were: 16x, 20x and 15x, respectively, compared with a multiple of 29x
(normalized earnings) associated with the HUBCO proposal; an average premium to
the target's stated book value of 183%, 211%, and 155% for all deals, all banks,
and all thrifts, respectively, and a median premium to target stated book value
of 167% , 213% and 148%, respectively compared with a multiple of 225%
associated with the HUBCO proposal.
No company or transaction used as a comparison in the above analysis is
identical to Lafayette, HUBCO or the Merger. Accordingly, an analysis of the
results of the foregoing is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of the companies to which they are being compared.
AFFORDABILITY ANALYSIS. KBW compared the financial ability of HUBCO to
acquire Lafayette relative to a selected group of other bank holding companies
including First Union, Fleet Financial Group, Bank of Boston, Bank of New York,
and Summit Bancorporation, as measured by earnings per share ("EPS") dilution.
The analysis was based on 1996 earnings estimates, market price data as of
February 2, 1996 and financial data as of December 31, 1995. Using a range of
per share bid prices of $12.00 to $15.00, KBW calculated pro forma EPS dilution.
KBW's analysis showed that at the HUBCO offer price of $13.00 per share (based
on the February 2, 1995 HUBCO closing price), the EPS dilution excluding any
cost savings or revenue enhancements, incurred by HUBCO would be approximately
10.0% compared to .4% - 1.59% for the selected group. The pre-tax earnings
created by additional cost savings or revenue enhancements required by HUBCO to
eliminate such dilution is approximately $4.78 million compared to $4.75 - $7.16
million for the selected group.
CONTRIBUTION ANALYSIS. KBW analyzed the relative contribution of each
of Lafayette and HUBCO to certain balance sheet and income statement items,
including assets, deposits, shareholders' equity and estimated earnings. The
contribution analysis showed that under the HUBCO proposal, Lafayette would
contribute approximately 29% of the combined assets, 29% of the combined
deposits, 30% of the combined shareholders' equity and 21% of the estimated 1996
earnings of the two companies (before cost savings).
PRO FORMA EPS AND BOOK VALUE PER SHARE. KBW analyzed the pro forma
earnings per share and book value per share of the combined company assuming an
exchange ratio of 0.588 shares of HUBCO Common Stock for each share of Lafayette
Common Stock. Based on the 1996 EPS estimates of $.76 and $2.00 for Lafayette
and HUBCO, respectively, the combined company's pro forma EPS is estimated at
$1.80 for 1996 excluding cost savings which represents 10 % dilution to HUBCO,
and pro forma EPS of $2.05 including cost savings which represent 2.2% accretion
to HUBCO.
DISCOUNTED CASH FLOW ANALYSIS. KBW estimated the present value of the
future streams of after-tax cash flows of Lafayette as a stand-alone,
independent entity through the year 2000 and then a subsequent sale to a larger
financial institution. The analysis was based on several assumptions, including
an earnings per share estimate of $.76 in 1996. A terminal value was calculated
for 2000 by multiplying Lafayette's projected 2000 earnings by a price/earnings
multiple of 8.00 - 14.00 times trailing earnings. The terminal valuation and the
estimated earnings were discounted at a rate of 8 - 18%, producing present
values of $6.16 - $13.43. KBW compared these values to the potential value
provided to Lafayette shareholders in the Merger.
<PAGE>
The discounted cash flow analysis was based upon varying assumptions
concerning earnings growth rates, dividend rates and terminal values, which
assumptions are themselves based upon many factors and assumptions many of which
are beyond the control of Lafayette and HUBCO. As indicated below, this analysis
is not necessarily indicative of actual values or actual future results and does
not purport to reflect the prices at which any security may trade at the present
time or any time in the future.
The summary contained herein provides a description of the material
analyses prepared by KBW in connection with the rendering of its opinion. The
summary set forth above does not purport to be a complete description of the
analyses performed by KBW in connection with the rendering of its opinion. The
preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary description. KBW believes that its analyses and the summary
set forth above must be considered as a whole and that selecting portions of its
analyses without considering all analyses, or selecting part of the above
summary, without considering all factors and analyses, would create an
incomplete view of the processes underlying the analyses set forth in KBW's
presentations and opinion. The ranges of valuations resulting from any
particular analysis described above should not be taken to be KBW's view of the
actual value of Lafayette and HUBCO. The fact that any specific analysis has
been referred to in the summary above is not meant to indicate that such
analysis was given greater weight than any other analyses.
In performing its analyses, KBW made numerous assumptions with respect
to industry performance, general business and economic conditions and other
matters, many of which are beyond the control of Lafayette and HUBCO. The
analyses performed by KBW are not necessarily indicative of actual values or
actual future results which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of KBW's
analysis of the fairness, from a financial point of view, of the Exchange Ratio
and were provided to the Lafayette Board in connection with the delivery of
KBW's opinion. The analyses do not purport to be appraisals or to reflect the
prices at which a company actually might be sold or the prices at which any
securities may trade at the present time or at any time in the future. In
addition, as described above, KBW's opinion, along with its presentation to the
Lafayette Board, was just one of many factors taken into consideration by the
Lafayette Board in approving the Merger Agreement.
Pursuant to the KBW Engagement Letter, Lafayette has agreed to pay KBW
a cash fee of $50,000 upon the execution of its fairness opinion, an additional
$100,000 upon the mailing of this Proxy Statement, and an additional $100,000
upon the consummation of the transaction. Lafayette has agreed to reimburse KBW
for its reasonable out-of-pocket expenses, including attorney's fees, and to
indemnify KBW against certain liabilities, including certain liabilities under
the federal securities laws.
HUBCO'S FINANCIAL ADVISOR
Goldman Sachs delivered its written opinion to the HUBCO Board that, as
of February 5, 1996, the Exchange Ratio pursuant to the Merger Agreement is fair
to HUBCO.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED FEBRUARY 5,
1996, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS
APPENDIX C TO THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE.
SHAREHOLDERS OF HUBCO ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS
ENTIRETY.
In connection with its opinion, Goldman Sachs reviewed, among other
things, (i) the Merger Agreement; (ii) Annual Reports to Shareholders and Annual
Reports on Form 10-K of HUBCO and Lafayette for the five fiscal years ended
December 31, 1994; (iii) certain interim reports to shareholders and Quarterly
Reports on Form 10-Q of HUBCO and Lafayette; (iv) certain other communications
from HUBCO and Lafayette to their respective shareholders; and (v) certain
internal financial analyses and forecasts for HUBCO and Lafayette prepared by
their respective managements. Goldman Sachs also held discussions with members
of the senior management of HUBCO and Lafayette regarding their past and current
business operations, regulatory relationships, financial condition and future
prospects of their respective companies. In addition, Goldman Sachs reviewed the
reported price and trading activity for the HUBCO Common Stock and Lafayette
Common Stock, compared certain financial and stock market information for HUBCO
and Lafayette with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the banking industry and performed such other
studies and analyses as Goldman Sachs considered appropriate.
Goldman Sachs relied without independent verification upon the accuracy
and completeness of all of the financial and other information reviewed by it
for purposes of its opinion. In that regard, Goldman Sachs assumed, with the
consent of the HUBCO Board, that the financial forecasts, including, without
limitation, cost savings projected by HUBCO to result from the Merger, were
reasonably prepared on a basis reflecting the best currently available judgments
and estimates of HUBCO and that such forecasts would be realized in the amount
and at the times contemplated thereby. Goldman Sachs is not an expert in the
evaluation of loan portfolios for purposes of assessing the adequacy of the
allowances for losses with respect thereto and assumed, with the consent of the
HUBCO Board, that such allowances for each of HUBCO and Lafayette are adequate
to cover all such losses. In addition, Goldman Sachs did not review individual
credit files nor make an independent evaluation or appraisal of the assets and
liabilities of HUBCO or Lafayette or any of their respective subsidiaries and
Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman
Sachs assumed with the consent of the HUBCO Board that the Merger will be
accounted for as a pooling of interests under generally accepted accounting
principles.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its written opinion to the HUBCO
Board dated February 5, 1996.
(i) ANALYSIS OF PURCHASE PRICE. Goldman Sachs calculated
various financial multiples based upon the stock consideration to be
paid in the Merger. Based on the number of shares and options of
Lafayette Common Stock outstanding as of December 31, 1995 and the
closing price of the HUBCO Common Stock on February 2, 1996 of $22.375,
Goldman Sachs calculated that the price per share of Lafayette Common
Stock to be paid in the Merger was $13.16. The multiples of the stock
consideration for EPS were as follows: 28.6x, 14.3x, 16.9x and 13.2x,
for 1995 (assuming a normalized tax rate for Lafayette of 41.5% in
1995), estimated 1996 (based on Institutional Broker Estimate System
("IBES") median estimates) and estimated 1996 and 1997 (based on
management of HUBCO estimates), respectively. IBES is a data service
which monitors and publishes a compilation of earnings estimates
produced by selected research analysts on companies of interest to
investors.
In addition, Goldman Sachs analyzed the consideration to be
paid to holders of shares of Lafayette Common Stock pursuant to the
Merger Agreement in relation to various information of Lafayette. Such
analysis indicated that the price per share of Lafayette Common Stock
to be paid pursuant to the Merger Agreement represented a premium of:
(i) 19.6%, based on the $11.00 closing price of the Lafayette Common
Stock on February 2, 1996; (ii) 221.2% based on the book value of
Lafayette as of December 31, 1995; (iii) 221.2% based on the tangible
book value of Lafayette as of December 31, 1995; and (iv) 12.6% based
on core deposits of Lafayette as of December 31, 1995.
(ii) SELECTED TRANSACTIONS ANALYSIS. Goldman Sachs analyzed
certain information relating to bank transactions involving
acquisitions over $100 million in Maine, Vermont, New Hampshire, New
York, Massachusetts, Connecticut, Rhode Island, New Jersey and
Pennsylvania since 1992 (the "SELECTED TRANSACTIONS"). Such analysis
indicated that for the Selected Transactions aggregate consideration as
a multiple of latest twelve months EPS had a median multiple of 15.3x,
and as a multiple of tangible book value had a median multiple of
2.15x. In addition, such analysis indicated that for the Selected
Transactions, the median core deposits premium was 11.7%.
<PAGE>
(iii) PRO FORMA MERGER ANALYSIS. Goldman Sachs prepared pro
forma analyses of the financial impact of the Merger. For purposes of
this analysis, Goldman Sachs assumed: (a) a price of $22.375 per share
of HUBCO Common Stock; (b) a price of $11.00 per share of Lafayette
Common Stock; (c) 6.15 million shares of HUBCO Common Stock (including
cash-out options) would be issued in the Merger; (d) $8.4 million in
pre-tax cost savings, representing 32% of Lafayette's 1995 non-interest
expenses phased-in 50% in 1996 and 100% in 1997; (e) a $9.4 million
after tax restructuring charge and (f) an Exchange Ratio of 0.588.
Using earnings estimates for (a) HUBCO prepared by the management of
HUBCO, and (b) Lafayette (i) prepared by the management of Lafayette
and (ii) provided by IBES, for 1996 and 1997, Goldman Sachs compared
the EPS of the HUBCO Common Stock, on a stand alone basis, to the EPS
of the common stock of the combined company on a pro forma basis. Based
on such analyses, the proposed transaction would be dilutive to the
shareholders of HUBCO on an estimated earnings per share basis in 1996
(using both earnings estimates for Lafayette) and would be accretive to
the shareholders of HUBCO on an estimated earnings per share basis in
1997 (using both earnings estimates for Lafayette).
(iv) SELECTED COMPANIES ANALYSIS. Goldman Sachs reviewed and
compared certain financial information relating to HUBCO and Lafayette
to corresponding financial information, ratios and public market
multiples for publicly traded banking corporations that for purposes of
analysis were divided into two categories: (i) a Lafayette peer group;
and (ii) a HUBCO peer group. The Lafayette peer group consisted of the
following publicly traded banking corporations: Arrow Financial
Corporation, B.M.J. Financial Corp., Bank of New Hampshire Corporation,
BSB Bancorp, Inc., BT Financial Corporation, Community Bank System,
Inc., Evergreen Bancorp, Inc., NBT Bancorp Inc., Omega Financial
Corporation, Suffolk Bancorp, United National Bancorp and U.S. Bancorp,
Inc. (the "LAFAYETTE PEER GROUP"). The HUBCO peer group consisted of
the following publicly traded banking corporations: Broad National
Bancorporation, Interchange Financial Services Corporation, The Trust
Company of New Jersey, United National Bancorp and Valley National
Bancorp (the "HUBCO PEER GROUP", and together with the Lafayette Peer
Group, the "SELECTED COMPANIES"). The Selected Companies were chosen
because they are publicly-traded companies with operations, geographic
location and/or size that for purposes of analysis may be considered
similar to Lafayette and HUBCO, as the case may be. Goldman Sachs
calculated and compared various financial multiples and ratios. The
multiples of Lafayette were calculated using a price of $11.00 per
share of Lafayette Common Stock and the multiples of HUBCO were
calculated using a price of $22.38 per share of HUBCO Common Stock. The
multiples and ratios for Lafayette and HUBCO were based on information
provided by management of Lafayette and HUBCO, respectively. For
purposes of the following analysis, all financial data (other than for
HUBCO and Lafayette) is at or for the twelve months ended September 30,
1995 and market data is as of February 2, 1996. Financial data for
HUBCO and Lafayette is as of December 31, 1995. Earnings estimates for
the Selected Companies are from IBES as of January 24, 1996.
Goldman Sachs considered price/earnings ratios for the
Selected Companies. With respect to the Lafayette Peer Group: (i)
estimated 1996 price/earnings ratios ranged from a low of 8.6x to a
high of 13.9x, with a median of 11.1x, as compared to 12.0x for
Lafayette; and (ii) estimated 1997 price/earnings ratios ranged from a
low of 7.8x to a high of 12.7x, with a median of 10.1x, as compared to
10.8x for Lafayette. With respect to the HUBCO Peer Group: (i)
estimated 1996 price/earnings ratios ranged from a low of 9.2x to a
high of 12.0x, with a median of 9.9x, as compared to 11.2x for HUBCO;
and (ii) estimated 1997 price/earnings ratios ranged from a low of 6.2x
to a high of 11.1x, with a median of 8.9x, as compared to 10.2x for
HUBCO.
Goldman Sachs also considered for the Selected Companies the
ratio of Non-Performing Assets to Loans plus Other Real Estate Owned.
With respect to the Lafayette Peer Group, such ratios ranged from a low
of 0.25% to a high of 3.69%, with a median of 1.37%, as compared to
2.57% for Lafayette. With respect to the HUBCO Peer Group such ratios
ranged from a low of 1.10% to a high of 8.31%, with a median of 2.20%,
as compared to 2.47% for HUBCO. In addition, Goldman Sachs considered
for the Selected Companies the ratio of Reserves to Non-Performing
Loans. With respect to the Lafayette Peer Group, such ratios ranged
from a low of 117% to a high of 872%, with a median of 204%, as
compared to 110% for Lafayette. With respect to the HUBCO Peer Group
such ratios ranged from a low of 58% to a high of 222%, with a median
of 75%, as compared to 104% for HUBCO.
<PAGE>
Goldman Sachs also considered price to book value per share
multiples and price to tangible book value per share multiples for the
Selected Companies. With respect to the Lafayette Peer Group, the price
to book value per share multiples ranged from a low of 1.2x to a high
of 2.0x, with a median of 1.4x, as compared to 1.8x for Lafayette, and
the price to tangible book value per share multiples ranged from a low
of 1.3x to a high of 2.0x, with a median of 1.6x, as compared to 1.8x
for Lafayette. With respect to the HUBCO Peer Group, the price to book
value per share multiples ranged from a low of 1.2x to a high of 2.3x,
with a median of 1.6x, as compared to 2.3x for HUBCO, and the price to
tangible book value per share multiples ranged from a low of 1.2x to a
high of 2.4x, with a median of 1.9x, as compared to 2.4x for HUBCO.
(v) Historical Stock Trading Analysis. Goldman Sachs reviewed
the historical trading prices and volumes for the Lafayette Common
Stock and the HUBCO Common Stock. Goldman Sachs also compared the daily
indexed stock price for the Lafayette Common Stock and the HUBCO Common
Stock against the S&P Regional Bank Index and a Peer Group Composite
Index for the period beginning February 2, 1995 and ended February 2,
1996. The S&P Regional Bank Index is comprised of the following
companies: Banc One Corporation, Bank of Boston Corporation, The Bank
of New York Company, Inc., Barnett Banks, Inc., Boatmen's Bancshares,
Inc., Comerica Incorporated, CoreStates Financial Corp., First Bank
System, Inc., First Interstate Bancorp, First Union Corporation, Fleet
Financial Group, Inc., KeyCorp, Mellon Bank Corporation, National City
Bancshares, Inc., NationsBank Corporation, Norwest Corporation, PNC
Bank Corp., Republic New York Corporation, Suntrust Banks, Inc., U.S.
Bancorp, Wachovia Corporation and Wells Fargo & Company. The Peer Group
Composite Index consisted of the following companies: Arrow Financial
Corporation, B.M.J. Financial Corp., BSB Bancorp, Inc., BT Financial
Corporation, Community Bank System, Inc., Evergreen Bancorp, Inc., NBT
Bancorp Inc., Omega Financial Corporation, Suffolk Bancorp, United
National Bancorp and U.S. Bancorp, Inc. This comparison indicated that
from the period beginning February 2, 1995 and ended February 2, 1996,
the Lafayette Common Stock outperformed each of the HUBCO Common Stock,
the S&P Regional Bank Index and the Peer Group Composite Index. During
that same time period, the HUBCO Common Stock traded in line with the
S&P Regional Bank Index and the Peer Group Composite Index.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is identical to HUBCO or
Lafayette or the contemplated transaction. The analyses were prepared solely for
purposes of Goldman Sachs' providing its opinion as to the fairness of the
Exchange Ratio pursuant to the Merger Agreement to the HUBCO Board and do not
purport to be appraisals or necessarily reflect the prices at which businesses
or securities actually may be sold. Analyses based upon forecasts of future
results are not necessarily indicative of actual future results, which may be
significantly more or less favorable than suggested by such analyses. Because
such analyses are inherently subject to uncertainty, being based upon numerous
factors or events beyond the control of the parties or their respective
advisors, none of HUBCO, Lafayette, Goldman Sachs or any other person assumes
responsibility if future results are materially different from those forecast.
As described above, Goldman Sachs' opinion to the HUBCO Board was one
of many factors taken into consideration by the HUBCO Board in making its
determination to approve the Merger Agreement. The foregoing summary does not
purport to be a complete description of the analysis performed by Goldman Sachs
and is qualified by reference to the written opinion of Goldman Sachs set forth
in Appendix C hereto.
<PAGE>
Goldman Sachs, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. HUBCO
selected Goldman Sachs because it is a nationally recognized investment banking
firm that has substantial experience in transactions similar to the Merger.
Goldman Sachs is familiar with HUBCO having provided certain investment banking
services to HUBCO from time to time. Goldman Sachs has provided certain
investment banking services to Lafayette from time to time. Goldman Sachs is a
full service securities firm and in the course of its trading activities it may
from time to time effect transactions and hold positions in securities of HUBCO
and Lafayette.
Pursuant to a letter agreement dated February 1, 1996 (the "GOLDMAN
SACHS ENGAGEMENT LETTER"), HUBCO engaged Goldman Sachs to undertake a study to
enable it to render an opinion with respect to the Exchange Ratio. Pursuant to
the terms of the Goldman Sachs Engagement Letter, HUBCO has agreed to pay
Goldman Sachs upon delivery of its opinion a fee of $200,000. HUBCO has agreed
to reimburse Goldman Sachs for its reasonable out-of-pocket expenses, including
attorney's fees, and to indemnify Goldman Sachs against certain liabilities,
including certain liabilities under the federal securities laws.
RESALE CONSIDERATIONS WITH RESPECT TO THE HUBCO COMMON STOCK
The shares of HUBCO Common Stock that will be issued if the Merger is
consummated have been registered under the Securities Act and will be freely
transferable, except for shares received by persons, including directors and
executive officers of Lafayette, who may be deemed to be "affiliates" of
Lafayette under Rule 145 promulgated under the Securities Act. An "AFFILIATE" of
an issuer is defined generally as a person who "controls" the issuer. Directors,
executive officers and 10% shareholders may be deemed to control the issuer.
Affiliates may not sell their shares of HUBCO Common Stock acquired pursuant to
the Merger, except pursuant to an effective registration statement under the
Securities Act covering the HUBCO Common Stock or in compliance with Rule 145 or
another applicable exemption from the registration requirements of the
Securities Act.
Persons who may be deemed to be "affiliates" of Lafayette have
delivered letters to HUBCO in which they have agreed to certain restrictions on
their ability to sell, transfer or otherwise dispose of ("TRANSFER") any
Lafayette Common Stock owned by them and any HUBCO Common Stock acquired by them
in the Merger. Pursuant to the accounting rules governing a pooling of
interests, such persons have agreed not to transfer the shares during the period
beginning 30 days prior to the Effective Time and ending on the date on which
financial results covering at least 30 days of post-merger combined operations
of HUBCO and Lafayette have been published or filed by HUBCO. Also, in
connection with the pooling of interests rules, such persons have agreed not to
transfer their Lafayette Common Stock in the period prior to 30 days before the
Effective Time without giving HUBCO advance notice and an opportunity to object
if the transfer would interfere with pooling of interests accounting for the
Merger. Pursuant to Rule 145, such persons have also agreed to refrain from
transferring HUBCO Common Stock acquired by them in the Merger, except in
compliance with certain restrictions imposed by Rule 145. Certificates
representing the shares of HUBCO Common Stock acquired by each such person
pursuant to the Merger will bear a legend reflecting that the shares are
restricted in accordance with the letter signed by such person and may not be
transferred except in compliance with such restrictions.
Persons who may be deemed "affiliates" of HUBCO have also delivered
letters to HUBCO in which they have agreed not to transfer HUBCO Common Stock
beneficially owned by them in violation of the pooling of interests restrictions
set forth above with respect to Lafayette.
<PAGE>
CONDITIONS TO THE MERGER
The obligation of each party to consummate the Merger is subject to
satisfaction or waiver of certain conditions, including (i) approval of the
Merger by the affirmative vote of two-thirds of the outstanding Lafayette Common
Stock and approval of the issuance of HUBCO Common Stock in connection with the
Merger by the affirmative vote of a majority of the shares of HUBCO Common Stock
voting at the HUBCO Meeting, whether in person or by proxy; (ii) the receipt of
all consents, approvals and authorizations of all necessary federal and state
government authorities and expiration of all required waiting periods, necessary
for the consummation of the Merger (see "--Regulatory Approvals"); (iii) the
effectiveness of the registration statement covering the shares of HUBCO Common
Stock to be issued to Lafayette shareholders; (iv) the absence of any litigation
that would restrain or prohibit the consummation of the Merger; (v)
qualification of the Merger to be treated by HUBCO as a pooling of interests for
accounting purposes; and (vi) receipt by the parties of an opinion of Pitney,
Hardin, Kipp & Szuch to the effect that the exchange of Lafayette Common Stock
for HUBCO Common Stock is a tax-free reorganization within the meaning of
Section 368 of the Code. See "--Federal Income Tax Consequences".
The obligation of HUBCO to consummate the Merger is also conditioned
on, among other things, (i) the continued accuracy in all material respects of
the representations and warranties of Lafayette contained in the Merger
Agreement; (ii) the performance by Lafayette, in all material respects, of all
its obligations under the Merger Agreement; and (iii) receipt of consent from
each holder of a Vested Lafayette Option outstanding at the Closing Date to the
conversion of such person's Vested Lafayette Option in the manner described in
this Proxy Statement. See "-- Conversion of Lafayette Stock Options".
The obligation of Lafayette to consummate the Merger is also
conditioned on, among other things, (i) the continued accuracy in all material
respects of the representations and warranties of HUBCO contained in the Merger
Agreement; (ii) the performance by HUBCO, in all material respects, of all its
obligations under the Merger Agreement; (iii) the appointment by the HUBCO Board
of three nominees, designated by Lafayette and reasonably acceptable to HUBCO,
to the HUBCO Board, effective at the Effective Time; and (iv) written
acknowledgment, acceptance and assumption by HUBCO of existing employment,
severance and other compensation agreements between Lafayette and its officers
and directors.
CONDUCT OF BUSINESS PENDING THE MERGER
The Merger Agreement requires Lafayette to conduct its business and
engage in transactions permitted under the Merger Agreement prior to the
Effective Time only in the ordinary course of business consistent with prudent
banking practices, except as permitted under the Merger Agreement or with the
written consent of HUBCO. Under the Merger Agreement, Lafayette has agreed not
to take certain actions without the prior written consent of HUBCO or unless
permitted by the Merger Agreement, including, among other things, the following:
(a) change the number of shares of its authorized or issued capital stock or
issue or grant any option, warrant, call, commitment, subscription, right to
purchase or agreement of any character relating to the authorized or issued
capital stock of Lafayette, or any securities convertible into shares of such
stock, or split, combine or reclassify any shares of its capital stock, or
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
except the equivalent quarterly cash dividend of $.10 per share described under
"MARKET PRICE AND DIVIDEND MATTERS--Limitations on Dividends Under the Merger
Agreement"; (b) grant any severance or termination pay (other than pursuant to
policies or contracts of Lafayette in effect on the date of the Merger Agreement
and disclosed to HUBCO) to, or enter into or amend any employment or severance
agreement with, any of its directors, officers or employees; (c) adopt any new
employee benefit plan or arrangement of any type, or award any increase in
compensation or benefits to its directors, officers or employees or pay any
stay-on bonuses, except as set forth under "Interests of Certain Persons in the
Merger" and employee and officer increases in the ordinary course of business
and consistent with past practices and policies; (d) sell or dispose of any
substantial amount of assets or voluntarily incur any significant liabilities
other than in the ordinary course of business consistent with past practices and
policies or in response to substantial financial demands upon the business of
<PAGE>
Lafayette; (e) make any capital expenditures other than capital expenditures
disclosed to HUBCO prior to the Merger Agreement, or which are either pursuant
to binding commitments existing on the date of the Merger Agreement or necessary
to maintain existing assets in good repair; (f) except as disclosed to HUBCO
prior to the Merger Agreement, file any applications or make any contracts with
respect to branching or site location or relocation; (g) agree to acquire in any
manner whatsoever (other than to realize upon collateral for a defaulted loan)
any business or entity; (h) make any material change in its accounting methods
or practices, other than changes required in accordance with generally accepted
accounting principles; (i) take any action that would result in any of
Lafayette's representations or warranties being untrue at the Effective Time in
any material respect; (j) change any provision of the Certificate of
Incorporation or By-laws of Lafayette; or (k) agree to do any of the foregoing.
Under the Merger Agreement, Lafayette cannot, directly or indirectly,
encourage or solicit or hold discussions or negotiations with, or provide any
information to, any person, entity or group (other than HUBCO) concerning any
merger, sale of shares or sale of substantial assets or liabilities not in the
ordinary course of business or similar transactions (an "Acquisition
Transaction"); provided, however, that notwithstanding the foregoing, Lafayette
may enter into discussions or negotiations or provide any information in
connection with an unsolicited possible Acquisition Transaction if the Board of
Directors of Lafayette, after consulting with counsel, determines in the
exercise of its fiduciary responsibilities that such discussions or negotiations
should be commenced or such information should be furnished. Lafayette has
agreed to promptly communicate to HUBCO the material terms of any proposal,
whether written or oral, which it may receive with respect to any such
Acquisition Transaction, and the fact that it is having discussions or
negotiations with a third party about an Acquisition Transaction.
As part of the Merger Agreement, HUBCO agreed that prior to the
Effective Time it will not without Lafayette's prior written consent, (i) enter
into a definitive acquisition agreement to acquire one or more financial
institutions if HUBCO's pro forma book value is diluted by more than 10% or its
pro forma tangible book value is diluted by more than 15%, or (ii) agree to an
acquisition which will result in (a) HUBCO's current directors constituting less
than a majority of the surviving corporation's Board of Directors, or (b) the
current chief executive officer of HUBCO, Kenneth T. Neilson, not continuing as
chief executive officer, or (c) the ownership of a company without a
headquarters and a substantial majority of its offices in New Jersey, New York
or Connecticut (any of the foregoing are referred to herein as a "SIGNIFICANT
ACQUISITION"). HUBCO may enter into acquisitions that are not Significant
Acquisitions without the consent of Lafayette. Lafayette may have the right to
terminate the Merger Agreement if it believes that there has been a material
adverse change in HUBCO's financial condition as a result of acquisitions which
are not Significant Acquisitions. The Board of Directors of Lafayette has
approved the proposed Hometown Merger.
CUSTOMARY REPRESENTATIONS, WARRANTIES AND COVENANTS
The Merger Agreement contains customary mutual representations and
warranties, as well as covenants, relating to, among other things, (a) corporate
organization and similar corporate matters; (b) the capital structures of each
of HUBCO and Lafayette; (c) authorization, execution, delivery, performance and
enforceability of the Merger Agreement and related matters; (d) documents filed
by each of HUBCO and Lafayette with the Commission and the FDIC, respectively,
and the accuracy of information contained therein; (e) the accuracy of
information supplied by each of HUBCO and Lafayette in connection with the
Registration Statement and this Proxy Statement; (f) compliance with applicable
laws; (g) the absence of material litigation; (h) filing of tax returns and
payment of taxes; (i) matters relating to certain material contracts; (j)
director and officer contracts and retirement and other employee plans and
matters relating to the Employee Retirement Income Security Act of 1974, as
amended; (k) insurance matters; (l) certain bank regulatory matters; (m) absence
of certain material changes or events from September 30, 1995; (n) the absence
of actions that would prevent there being a tax-free reorganization or the use
of the "pooling of interests" method to account for the Merger; (o) title to
properties; (p) the adequacy of loan loss reserves; (q) environmental
compliance; (r) brokers' and finders' fees; and (s) cooperation on applications
and filings.
<PAGE>
REGULATORY APPROVALS
Consummation of the Merger is subject, among other things, to prior
receipt of all necessary regulatory approvals. Consummation of the Merger
requires the approval of the Commissioner under the CBL, the FDIC under the Bank
Merger Act (the "Bank Merger Act") and the Board of Governors of the Federal
Reserve System (the "FRB") under Regulation Y promulgated under the Bank Holding
Company Act of 1956, as amended (the "BHCA"). Approval by the Commissioner, the
FDIC or the FRB does not constitute an endorsement of the Merger or a
determination by any such regulator that the terms of the Merger are fair to the
shareholders of either Lafayette or HUBCO. Applications for approval were filed
on March 19, 1996 with the Commissioner, on March 25, 1996 with the FDIC and on
April 15, 1996 with the FRB. While HUBCO and Lafayette anticipate receiving all
such approvals, there can be no assurance that they will be granted, or that
they will be granted on a timely basis or that they will be granted without
conditions unacceptable to HUBCO or Lafayette.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
At the Effective Time, as a result of the Merger, Merger Sub will be
merged into Lafayette, with Lafayette as the Surviving Bank. Lafayette will
thereafter operate as a wholly-owned subsidiary of HUBCO. The location of the
principal office of Lafayette will remain unchanged -- 1087 Broad Street,
Bridgeport, Connecticut 06604. The branch offices of Lafayette will continue to
serve as branch offices of Lafayette. Although many support functions will be
centralized at HUBCO, Lafayette is expected to retain a management team led by
Robert B. Goldstein, as President and Chief Executive Officer. HUBCO anticipates
that following the Merger, it will enter into new or supplemental arrangements
to assure the continued employment of Mr. Goldstein and other officers.
After the Merger, certain cost savings are anticipated. See "CERTAIN
INFORMATION REGARDING HUBCO--Recent Developments".
EXCHANGE OF CERTIFICATES, ISSUANCE OF SHARES FOR OPTIONS
At the Effective Time, holders of certificates formerly representing
shares of Lafayette Common Stock will cease to have any rights as Lafayette
shareholders and their certificates automatically will represent the shares of
HUBCO Common Stock into which their shares of Lafayette Common Stock will have
been converted by the Merger. As soon as practicable after the Effective Time,
HUBCO will send written instructions and a letter of transmittal to each holder
of Lafayette Common Stock, indicating the method for exchanging such holder's
stock certificates for the certificates representing those shares of HUBCO
Common Stock into which such holder's shares of Lafayette Common Stock have been
exchanged. HOLDERS OF LAFAYETTE COMMON STOCK SHOULD NOT SEND IN THEIR STOCK
CERTIFICATES UNTIL THEY RECEIVE INSTRUCTIONS FROM HUBCO.
Each share of HUBCO Common Stock for which shares of Lafayette Common
Stock and Vested Lafayette Options are exchanged will be deemed to have been
issued at the Effective Time. Accordingly, Lafayette shareholders who receive
HUBCO Common Stock in the Merger will be entitled to receive any dividend or
other distribution which may be payable to holders of record of HUBCO Common
Stock as of dates on or after the Effective Time. However, no dividend or other
distribution will actually be paid with respect to any shares of HUBCO Common
Stock until the certificate or certificates formerly representing shares of
Lafayette Common Stock have been surrendered, at which time any accrued
dividends and other distributions on such shares of HUBCO Common Stock will be
paid without interest. See "--Consideration".
Holders of outstanding certificates for Lafayette Common Stock, upon
proper surrender of such certificates to HUBCO, will receive, promptly after the
Effective Time, a certificate representing the full number of shares of HUBCO
Common Stock into which the shares of Lafayette Common Stock previously
represented by the surrendered certificates have been converted. At the time of
issuance of the new stock certificate, each shareholder so entitled will receive
a check for the amount of the fractional share interest, if any, to which the
shareholder may be entitled.
<PAGE>
Holders of Vested Lafayette Options, will receive, promptly after the
Effective Time, a certificate representing the full number of shares of HUBCO
Common Stock, into which the Vested Lafayette Options have been converted. At
the time of issuance of the stock certificates, each holder of a Vested
Lafayette Option will receive a check for the amount of the fractional share of
interest, if any, to which the holder of the Vested Option may be entitled.
Immediately following the Closing HUBCO will provide holders of
Unvested Lafayette Options with a means to exchange their existing option grant
agreements for new grant agreements covering HUBCO Common Stock.
HUBCO will also communicate with holders of Warrants concerning their
Warrant Agreements for HUBCO Common Stock.
EFFECTIVE TIME; AMENDMENTS; TERMINATION
The Closing will occur 10 days after receipt of all necessary approvals
and consents, the expiration of all waiting periods and the satisfaction or
waiver of the other conditions to consummation of the Merger, or on another day
mutually agreed to by HUBCO and Lafayette. At the Closing, documents required to
satisfy the conditions to the Merger of the respective parties will be
exchanged. In connection with the Closing, a Certificate of Merger will be
executed by HUBCO and Lafayette and filed with the Commissioner. The Effective
Time will be the date and time specified in the Certificate. The Effective Time
is dependent upon satisfaction of all conditions precedent, some of which are
not under the control of HUBCO and/or Lafayette. See "-- Conditions to the
Merger" and "--Regulatory Approvals".
The Merger Agreement may be amended, modified or supplemented with
respect to any of its terms by the mutual consent of HUBCO and Lafayette at any
time prior to the Effective Time. However, after approval of the Merger
Agreement by the shareholders of Lafayette, no amendment can be made which
reduces the amount or changes the form of consideration to be delivered to the
shareholders of Lafayette without the approval of such shareholders.
The Merger Agreement may be terminated by the mutual consent of
Lafayette and HUBCO. The Merger Agreement may also be terminated by Lafayette or
HUBCO (i) if the Merger does not close on or before December 31, 1996 unless the
failure to close is due to the failure of the party seeking to terminate to
perform or observe its covenants in the Merger Agreement; (ii) if a vote of the
stockholders of Lafayette to approve the Merger Agreement, or the stockholders
of HUBCO to approve the issuance of the HUBCO Common Stock, is taken and the
stockholders of either Lafayette or HUBCO fail to approve such action at their
respective shareholder meetings; or (iii) if any regulatory approvals necessary
to consummate the transaction are not provided or if an approval is given with
conditions which materially impair the value of Lafayette to HUBCO (but then
only by HUBCO).
HUBCO may terminate the Merger Agreement if there has been a material
adverse change in the business, operations, assets or financial condition of
Lafayette from that disclosed by Lafayette to HUBCO in its Quarterly Report on
Form F-4 for the nine months ended September 30, 1995, or Lafayette breaches in
a material respect any representation, warranty or covenant under the Merger
Agreement and does not cure such breach within 30 days after receipt by
Lafayette of a notice of breach. Lafayette may terminate the Merger Agreement if
there has been a material adverse change in the business, operations, assets or
financial condition of HUBCO from that disclosed by HUBCO in its Quarterly
Report on Form 10-Q for the nine months ended September 30, 1995, or HUBCO
breaches in a material respect any representation, warranty or covenant under
the Merger Agreement and does not cure such breach within 30 days after receipt
by HUBCO of a notice of breach. HUBCO may also terminate the Merger Agreement if
the conditions to HUBCO's obligations to close are not satisfied and Lafayette
may terminate the Merger Agreement if the conditions for Lafayette to close are
not satisfied.
<PAGE>
Lafayette may terminate the Merger Agreement unilaterally if it
exercises its fiduciary responsibilities in connection with another acquisition
proposal. Such event will likely result in a Triggering Event under the Stock
Option Agreement. See "--Stock Option for Shares of Lafayette Common Stock."
In addition, the Merger Agreement may be terminated by Lafayette , if
either:
(i) both (a) the HUBCO Common Stock Average Price on the
Determination Date (i.e., the average closing price of HUBCO Common
Stock for the 20 consecutive trading days ending on the date the FRB
approves the Merger) is less than $19.25 and (b) the number obtained by
dividing the HUBCO Common Stock Average Price on the Determination Date
by the HUBCO Common Stock closing price on February 7, 1996, $20.25
(the "HUBCO Ratio"), is less than the number obtained by dividing the
closing price per share of the common stocks of the Index Group on the
Determination Date by $27.94 (being the average closing price per share
of the common stocks of the Index Group on February 7, 1996) and
subtracting .075 from such latter number (after such subtraction, the
"Index Group Ratio"); or
(ii) the HUBCO Common Stock Average Price on the Determination
Date is less than $18.25.
provided, however, that the Merger Agreement would not be so terminated if
Lafayette provides notice of termination in accordance with this paragraph and
HUBCO then elects, at its sole option, to increase the Exchange Ratio as set
forth in the Merger Agreement and as illustrated below. There can be no
assurance that Lafayette would exercise its right to terminate the Merger
Agreement if the conditions in either (i) or (ii) above (a "Termination Event")
exists and if Lafayette does elect to so terminate the Merger Agreement, there
can be no assurance that HUBCO will elect to increase the Exchange Ratio as
provided in the Merger Agreement and as illustrated below.
Certain possible effects of the above provisions on the Exchange Ratio
may be illustrated by the following four scenarios:
(1) If the HUBCO Common Stock Average Price on the
Determination Date (i.e., the FRB approval date) is not less than
$19.25, there would be no Termination Event and no adjustment to the
Exchange Ratio.
(2) If the HUBCO Common Stock Average Price on the
Determination Date is less than $19.25 and greater than $18.25, but the
HUBCO Ratio is equal to or greater than the Index Group Ratio, there
would be no Termination Event and no adjustment to the Exchange Ratio.
(3) If the HUBCO Common Stock Average Price on the
Determination Date is less than $19.25 and the HUBCO Ratio (i.e.,
generally the percentage decline in HUBCO's stock price) is less than
the Index Group Ratio (i.e., generally the percentage change in the
average peer group common stock price less 7.5%), there would be a
Termination Event and Lafayette could elect to terminate the Merger
Agreement; provided that HUBCO could, at its sole option, override such
termination by electing to increase the Exchange Ratio to equal the
lesser of (i) a quotient (rounded to four decimals) the numerator of
which is $19.25 multiplied by the existing Exchange Ratio and the
denominator of which is the HUBCO Common Stock Average Price on the
Determination Date, or (ii) a quotient (rounded to four decimals), the
numerator of which is the Index Group Ratio multiplied by the existing
Exchange Ratio and the denominator of which is the HUBCO Ratio.
(4) If the HUBCO Common Stock Average Price on the
Determination Date is less than $18.25, there would be a Termination
Event and Lafayette could elect to terminate the Merger Agreement,
provided that HUBCO could, at its sole option, override such
termination by electing to increase the Exchange Ratio to equal the
quotient (rounded to four decimals) the numerator of which is $18.25
multiplied by the existing Exchange Ratio and the denominator of which
is the HUBCO Common Stock Average Price on the Determination Date.
<PAGE>
If there would be a Termination Event described in both paragraphs(3) and
(4) above, Lafayette could elect which Termination Event to assert. The above
scenarios are for illustrative purposes only and are not intended to, and do
not, reflect the value of the HUBCO Common Stock that may actually be received
by holders of Lafayette Common Stock in the Merger, nor do they reflect all
possible termination/increased Exchange Ratio scenarios.
Lafayette stockholders should be aware that the HUBCO Common Stock
Average Price on the Determination Date on which the occurrence of a Termination
Event and the subsequent increase, if any, in the Exchange Ratio may be
determined, will be based on the average of the closing prices of HUBCO Common
Stock during a 20-day period ending on the day the FRB approves the transaction.
Accordingly, because the market price of HUBCO Common Stock between the FRB
approval date and the Effective Time, as well as on the date certificates
representing shares of HUBCO Common Stock are delivered in exchange for shares
of Lafayette Common Stock following consummation of the Merger, will fluctuate
and possibly decline, the value of the HUBCO Common Stock actually received by
holders of Lafayette Common Stock may be more or less than (i) the HUBCO Common
Stock Average Price on the FRB approval date, or (ii) the value of the HUBCO
Common Stock on the Effective Date resulting from the Exchange Ratio or any
possible adjustment to the Exchange Ratio as illustrated above.
The Index Group consists of 11 bank holding companies selected by HUBCO
and Lafayette to reflect general changes in comparable companies. The 11
companies are: Chittenden Corp. (CNDN); Citizen BancShares (CICS); Community
Bank Systems (CBSI); Commerce Bank Corp. (COBA); First Western Bancorp (FWBI);
Fulton Financial (FULT); North Fork Bancorp (NFB); Provident Bancorp., Inc.
(PRBK); S & T Bancorp (STBA); Trust Co. Bancorp (TRST); and Valley National
Bancorp (VLY). If HUBCO or any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between February 6, 1996
and the FRB approval date, the prices of HUBCO Common Stock or such other common
stocks shall be appropriately adjusted for all purposes, including determining
whether there is a Termination Event or determining any possible increase in the
Exchange Ratio as illustrated above (and, in the case of any such transaction by
HUBCO, the Exchange Ratio also shall be appropriately adjusted). In the event
the common stock of any such company ceases to be publicly traded or there has
been an announcement of a proposal for the acquisition or sale of such company,
such company will be removed from the Index Group.
It is not possible to know whether a Termination Event will occur until
after the FRB approval date. The Lafayette Board has made no decision as to
whether it would exercise its right to terminate the Merger Agreement if there
is a Termination Event. In considering whether to exercise its termination right
in such situation, the Lafayette Board would, consistent with its fiduciary
duties, take into account all relevant facts and circumstances that exist at
such time and would consult with its financial advisors and legal counsel.
Approval of the Merger Agreement by the stockholders of Lafayette at the
Lafayette Meeting will confer on the Lafayette Board the power, consistent with
its fiduciary duties, to elect to consummate the Merger in the event of a
Termination Event whether or not there is any increase in the Exchange Ratio and
without any further action by, or resolicitation of, the stockholders of
Lafayette. If Lafayette elects to exercise its termination right, Lafayette must
give HUBCO prompt notice of that decision during a ten-day period beginning on
the FRB approval date, but the Lafayette Board may withdraw such notice, at its
sole option, at any time during such ten-day period. During a seven-day period
commencing with receipt of such notice, HUBCO has the option, in its sole
discretion, to increase the Exchange Ratio in the manner set forth in the Merger
Agreement and as illustrated above and thereby avoid such termination of the
Merger Agreement. HUBCO is under no obligation to increase the Exchange Ratio,
and there can be no assurance that HUBCO would elect to increase the Exchange
Ratio if Lafayette were to exercise its right to terminate the Merger Agreement
as set forth above. Any such decision would be made by HUBCO in light of the
circumstances existing at the time HUBCO has the opportunity to make such an
election. If HUBCO elects to increase the Exchange Ratio as set forth in the
Merger Agreement and as illustrated above, it must give Lafayette notice of that
election within seven days after receipt of the notice of termination from
Lafayette and notice of the increased Exchange Ratio, in which case no
termination of the Merger Agreement would occur as a result of a Termination
Event.
<PAGE>
The foregoing discussion is qualified in its entirety by reference to
the applicable provisions in the Merger Agreement (a copy of which is set forth
as APPENDIX A to this Proxy Statement/Prospectus) relating to a possible
increase of the Exchange Ratio as the result of a Termination Event.
In the event of a termination, each party will retain all rights and
remedies it may have at law or equity under the Merger Agreement. Upon a
termination of the Merger Agreement, the transactions contemplated thereby will
be abandoned without further action by any party and each party will bear its
own expenses. However, Lafayette has agreed to reimburse HUBCO for certain
expenses incurred by HUBCO in connection with the Merger Agreement if HUBCO
enters into an acquisition agreement, which is not a Significant Acquisition,
and Lafayette terminates the Merger Agreement because it believes the
acquisition has a material adverse effect on HUBCO.
ACCOUNTING TREATMENT OF THE MERGER
The Merger is expected to be accounted for by HUBCO under the pooling
of interests method of accounting in accordance with generally accepted
accounting principles. The Merger is conditioned upon the receipt by HUBCO of a
letter from its independent public accountants, Arthur Andersen LLP, that the
Merger will be so treated. As required by generally accepted accounting
principles, under pooling of interests accounting, as of the Effective Time the
assets and liabilities of Lafayette would be added to those of HUBCO at their
recorded book values and the stockholders' equity accounts of HUBCO and
Lafayette would be combined on HUBCO's consolidated balance sheet. On a pooling
of interests accounting basis, income and other financial statements of HUBCO
issued after consummation of the Merger would be restated retroactively to
reflect the consolidated combined financial position and results of operations
of HUBCO and Lafayette as if the Merger had taken place prior to the periods
covered by such financial statements. The pro forma financial information
contained in this Proxy Statement has been prepared using the pooling of
interests accounting basis to account for the Merger. See "PRO FORMA FINANCIAL
INFORMATION."
FEDERAL INCOME TAX CONSEQUENCES
THE FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR
GENERAL INFORMATION ONLY. IT MAY NOT BE APPLICABLE TO CERTAIN CLASSES OF
TAXPAYERS, INCLUDING INSURANCE COMPANIES, SECURITIES DEALERS, FINANCIAL
INSTITUTIONS, FOREIGN PERSONS AND PERSONS WHO ACQUIRED SHARES OF LAFAYETTE
COMMON STOCK PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR RIGHTS OR
OTHERWISE AS COMPENSATION. LAFAYETTE SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISERS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER,
INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL AND OTHER TAX
LAWS.
GENERAL. It is intended that the Merger will be treated as a tax-free
reorganization as defined in Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code
and that, accordingly, no gain or loss will be recognized by HUBCO, Merger Sub
or Lafayette or by the shareholders of Lafayette upon the exchange of their
shares of Lafayette Common Stock solely for shares of HUBCO Common Stock
pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in HUBCO Common Stock). Counsel to HUBCO is required,
as a condition of Closing, to provide an opinion to HUBCO and to Lafayette, with
respect to the matter covered by the foregoing sentence. With respect to this
Proxy Statement, Pitney, Hardin, Kipp & Szuch, counsel to HUBCO, has provided an
opinion that, based upon the circumstances as they presently exist, it expects
to be able to render the required opinion.
CONSEQUENCES OF RECEIPT OF CASH IN LIEU OF FRACTIONAL SHARES. Cash
received by a Lafayette shareholder in lieu of any fractional share interest
will be treated as having been received as a payment in exchange for such
fractional share interest, and, provided the fractional share would have
constituted a capital asset in the hands of such shareholder, the shareholder
should in general recognize capital gain or loss in an amount equal to the
difference between the amount of cash received and the portion of the adjusted
basis in Lafayette Common Stock allocable to the fractional share interest.
<PAGE>
BASIS OF HUBCO COMMON STOCK. The basis of HUBCO Common Stock received
by a Lafayette shareholder who receives solely HUBCO Common Stock will be the
same as the basis of such shareholder's Lafayette Common Stock surrendered in
exchange therefor.
HOLDING PERIOD. The holding period of shares of HUBCO Common Stock
received in the Merger by holders of Lafayette Common Stock will include the
period during which such shares of Lafayette Common Stock surrendered in
exchange therefor were held by the holder thereof, provided such shares of
Lafayette Common Stock were held as capital assets.
HOLDERS OF LAFAYETTE OPTIONS. HOLDERS OF VESTED LAFAYETTE OPTIONS WILL
RECEIVE HUBCO COMMON STOCK AND CASH IN LIEU OF FRACTIONAL SHARES IN CANCELLATION
OF THEIR VESTED LAFAYETTE OPTIONS. SUCH PERSONS WILL BE TREATED AS HAVING
RECEIVED COMPENSATION TAXABLE AS ORDINARY INCOME IN AN AMOUNT EQUAL TO THE SUM
OF THE CASH AND THE VALUE OF THE HUBCO COMMON STOCK RECEIVED BY THEM IN EXCHANGE
FOR THEIR VESTED LAFAYETTE OPTIONS. HOLDERS OF VESTED LAFAYETTE OPTIONS WILL BE
REQUIRED TO DEPOSIT AN AMOUNT FOR WITHHOLDING TAXES WITH HUBCO UPON RECEIPT OF
THE HUBCO COMMON STOCK. Holders of Unvested Lafayette Options will receive like
options to purchase HUBCO Common Stock and will not be subject to tax on the
conversion of their Unvested Lafayette Options.
HOLDERS OF LAFAYETTE WARRANTS. Holders of Lafayette Warrants will
receive like Warrants to purchase HUBCO Common Stock, except that, pursuant to
the terms of the Warrants, the HUBCO Warrants will be immediately exercisable
and transferable. THE HOLDERS OF WARRANTS WILL AT THE EFFECTIVE TIME RECOGNIZE
GAIN (OR LOSS) FOR FEDERAL INCOME TAX PURPOSES MEASURED BY THE DIFFERENCE
BETWEEN THEIR TAX BASIS IN THE WARRANTS AND THE MARKET VALUE OF THE WARRANTS AT
THE EFFECTIVE TIME. HUBCO MAY BE REQUIRED TO FILE A FORM 1099 WITH THE INTERNAL
REVENUE SERVICE TO REPORT THE GROSS PROCEEDS OF THIS EXCHANGE. THE GAIN (OR
LOSS) WILL BE CHARACTERIZED AS CAPITAL GAIN (OR LOSS) OR AS ORDINARY INCOME (OR
LOSS) DEPENDING UPON WHETHER THE HOLDER HOLDS THE WARRANTS AS A CAPITAL ASSET.
CONSEQUENCES TO DISSENTING LAFAYETTE SHAREHOLDERS. Lafayette
shareholders who perfect their dissenters' rights will receive only cash for
their shares of Lafayette Common Stock and should in general recognize capital
gain or loss equal to the difference, if any, between the amount of cash
received and the shareholder's basis in the Lafayette Common Stock surrendered
therefor. The gain or loss will be characterized as a capital gain or loss if
(a) the holder's shares of Lafayette Common Stock are held as capital assets and
(b) the holder receives cash with respect to all shares of Lafayette Common
Stock which the holder owns actually and constructively (pursuant to the
attribution rules of Section 318 of the Code). If a shareholder is not
considered as having disposed of all his stock by reason of the attribution
rules, the distribution of cash may be determined to have the "effect of the
distribution of a dividend," in which case the distribution will be taxed as a
dividend. The determination is made on a shareholder-by-shareholder basis.
STOCK OPTION FOR SHARES OF LAFAYETTE COMMON STOCK
HUBCO and Lafayette entered into the Stock Option Agreement in
connection with the execution of the Merger Agreement. Pursuant to the Stock
Option Agreement, Lafayette has granted to HUBCO an option (the "OPTION") to
purchase up to 2,400,000 authorized but unissued shares of Lafayette Common
Stock, representing upon issuance approximately 19.3% of the shares of Lafayette
Common Stock, at a price of $10.75 per share. HUBCO does not have any voting
rights with respect to shares of Lafayette Common Stock subject to the Option
prior to exercise of the Option. The Stock Option Agreement is set forth in
Appendix B hereto.
<PAGE>
In the event that certain specifically enumerated "Triggering Events"
occur, as defined below, including but not limited to the acquisition of
beneficial ownership of at least 20% of the outstanding Lafayette shares by a
person or group other than HUBCO or an affiliate of HUBCO, HUBCO may exercise
the Option in whole or in part. The ability of HUBCO to exercise the Option and
to cause up to an additional 2,400,000 shares of Lafayette Common Stock to be
issued may be considered a deterrent to other potential acquisitions of control
of Lafayette because it is likely to increase the cost of an acquisition of all
of the shares of Lafayette Common Stock that would be outstanding. The exercise
of the Option by HUBCO may make "pooling of interests" accounting treatment
unavailable to a subsequent acquiror of Lafayette. In the event that a
Triggering Event occurs and the Merger is not consummated, HUBCO would recognize
a gain on the sale of the shares of Lafayette Common Stock received pursuant to
the exercise of the Option if such shares of Lafayette Common Stock were sold at
prices exceeding $10.75 per share.
Upon or after the occurrence of certain "Triggering Events" (as
hereinafter defined), the Option may be exercised by HUBCO in whole or in part.
The term "TRIGGERING EVENT" is defined to mean the occurrence of any of the
following events: a person or group, as such terms are defined in the Exchange
Act and the rules and regulations thereunder, other than HUBCO or an affiliate
of HUBCO: (a) acquires beneficial ownership (as such term is defined in Rule
13d-3 promulgated under the Exchange Act) of at least 20% of the then
outstanding shares of Lafayette Common Stock; (b) enters into a letter of intent
or an agreement with Lafayette pursuant to which such person would (i) merge or
consolidate, or enter into any similar transaction, with Lafayette, (ii) acquire
all or a significant portion of the assets or liabilities of Lafayette, or (iii)
acquire beneficial ownership of securities representing, or the right to acquire
the beneficial ownership or to vote securities representing, 20% or more of the
then outstanding shares of Lafayette Common Stock; or (c) makes a filing with
any bank or thrift regulatory authorities or publicly announces a bona fide
proposal for: (i) any merger with, consolidation with or acquisition of all or a
significant portion of all the assets or liabilities of Lafayette or any other
business combination involving Lafayette, or (ii) a transaction involving the
transfer of beneficial ownership of securities representing, or the right to
acquire beneficial ownership or to vote securities representing, 20% or more of
the outstanding shares of Lafayette Common Stock (a "PROPOSAL"), and thereafter,
if such Proposal has not been publicly withdrawn (as defined in the Stock Option
Agreement) at least 15 days prior to the Lafayette Meeting called to vote on the
Merger and Lafayette's shareholders fail to approve the Merger by the vote
required by applicable law at the Lafayette Meeting; or (d) makes a bona fide
Proposal and thereafter, but before such Proposal has been publicly withdrawn,
Lafayette willfully takes any action in any manner that would materially
interfere with its ability to consummate the Merger or materially reduce the
value of the transaction to HUBCO. The definition of "TRIGGERING EVENT" also
means the taking of any material direct or indirect action by Lafayette or any
of its directors, officers or agents with the intention of inviting, encouraging
or soliciting any proposal which has as its purpose a tender offer for the
shares of Lafayette Common Stock, a merger, consolidation, plan of exchange,
plan of acquisition or reorganization of Lafayette, or a sale of a significant
number of shares of Lafayette Common Stock or any significant portion of its
assets or liabilities. Under the Stock Option Agreement, a "SIGNIFICANT PORTION"
means 25% of the assets or liabilities of Lafayette. The term "SIGNIFICANT
NUMBER" means 10% of the outstanding Lafayette Common Stock. "Publicly
withdrawn" for purposes of the Stock Option Agreement means an unconditional
bona fide withdrawal of the Proposal coupled with a public announcement of no
further interest in pursuing such Proposal or acquiring any controlling
influence over Lafayette or in soliciting or inducing any other person (other
than HUBCO or any affiliate) to do so.
HUBCO may not sell, assign or otherwise transfer its rights and
obligations under the Stock Option Agreement in whole or in part to any person
or any group of persons other than to an affiliate of HUBCO, except upon or
after the occurrence of a Triggering Event. Lafayette is not obligated to issue
shares of Lafayette Common Stock upon exercise of the Option (i) in the absence
of any required governmental or regulatory approval or consent necessary for
Lafayette to issue the Lafayette Common Stock subject to the Option or HUBCO to
exercise the Option or prior to the expiration or termination of any waiting
period required by law, or (ii) so long as any injunction or other order, decree
or ruling issued by any federal or state court of competent jurisdiction is in
effect which prohibits the sale or delivery of the Lafayette Common Stock
subject to the Option.
Solely for purposes of Section 36a-184 of the CBL, the Option is not
considered effective unless and until it is approved by the Commissioner. Under
certain circumstances, if the Commissioner fails to approve the exercise of the
Option, a Triggering Event has occurred and Lafayette is acquired by a third
party, Lafayette must pay HUBCO a termination fee of $5,000,000 in lieu of the
Option.
<PAGE>
PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
OF HUBCO, LAFAYETTE AND HOMETOWN
The following pro forma unaudited combined condensed balance sheet
combines the historical consolidated balance sheets of HUBCO and Lafayette
giving effect to the Merger which will be accounted for as a pooling of
interests, as if the Merger had been effective on December 31, 1995, and the
historical consolidated balance sheet of Hometown as of December 31, 1995,
giving effect to the Hometown Merger which will be accounted for as a purchase,
effective December 31, 1995, and also takes into account HUBCO's recently
completed acquisition of Growth Financial Corp. (the "GROWTH MERGER") which was
consummated on January 12, 1996 and was accounted for as a pooling of interests.
The information set forth below should be read in conjunction with the
historical consolidated financial statements of HUBCO, Lafayette and Hometown,
including their respective notes thereto, which are incorporated by reference in
this Proxy Statement (see "Incorporation of Certain Documents by Reference"),
and in conjunction with the condensed consolidated historical financial
information, including the notes thereto, appearing elsewhere in this Proxy
Statement. The effect of the estimated $8.5 million (after tax) restructuring
charge expected to be taken in connection with the Merger has been reflected in
the pro forma combined balance sheets; however, since the proposed restructuring
charge is nonrecurring, it has not been reflected in the pro forma combined
statements of income. The pro forma financial data do not give effect to the
anticipated cost savings in connection with the Merger. The pro forma financial
data are not necessarily indicative of the actual financial position that would
have occurred had the Merger been consummated on December 31, 1995 or that may
be obtained in the future.
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Balance Sheet
AS OF DECEMBER 31, 1995 (IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS HUBCO/
------ Growth
Pro Forma
Combined
Pro Forma
HUBCO Growth Adjustment
------------ --------- ---------- ----------
<S> <C> <C> <C> <C>
Cash and due from banks $ 85,670 $ 4,913 $ - $ 90,583
Federal funds sold 46,700 3,000 49,700
Securities available for sale 300,721 14,002 (1,444) 313,279
Securities held to maturity 265,703 - 265,703
Loans 853,984 101,940 955,924
Less Allowance for loan losses (16,951) (1,738) (18,689)
------------ --------- ---------- ----------
837,033 100,202 937,235
------------ --------- ---------- ----------
Other assets 69,795 5,578 75,373
Intangibles, net of amortization 7,572 7,572
------------ --------- ---------- ----------
Total Assets $ 1,613,194 $ 127,695 $ (1,444) $1,739,445
============ ========= ========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
-----------------------------
Deposits:
Non-interest bearing $ 310,588 $ 19,232 $ - $ 329,820
Interest bearing 1,114,413 91,027 1,205,440
----------- --------- --------- ----------
Total deposits 1,425,001 110,259 1,535,260
----------- --------- --------- ----------
Borrowings 21,654 - 21,654
Other liabilities 11,573 3,601 15,174
----------- --------- --------- ----------
Total Liabilities 1,458,228 113,860 1,572,088
Subordinated debt 25,000 - 25,000
Stockholders' Equity
Preferred stock - - -
Common stock 23,372 1,773 422 25,567
Additional paid in capital 49,741 15,141 (1,866) 63,016
Retained earnings 55,716 (2,976) 52,740
Other 1,137 (103) 1,034
----------- --------- --------- ----------
Total Stockholders' Equity 129,966 13,835 (1,444) 142,357
----------- --------- --------- ----------
Total Liabilities and
Stockholders Equity $1,613,194 $127,695 $(1,444) $1,739,445
----------- --------- --------- ----------
Common shares outstanding 13,106 14,340
Book value per common share $ 9.92 $ 9.93
</TABLE>
Pro forma Unaudited Combined Condensed Balance Sheet
AS OF DECEMBER 31, 1995 (IN THOUSANDS, EXCEPT PER SHARE DATA)
(CONTINUED)
<TABLE>
<CAPTION>
ASSETS HUBCO/
------ Growth/
Pro Forma Lafayette Pro Forma
Lafayette Adjustment Pro Forma Pro Forma Combined
Combined Hometown Adjustments
--------- ---------- -------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Cash and due from banks $ 42,195 $ - $ 132,778 $ 9,891 $(1,020) $ 141,649
Federal funds sold - (8,500) 41,200 - - 41,200
Securities available for sale 113,615 (5,761) 421,133 93,696 (32,000) 482,829
Securities held to maturity 27,854 293,557 15,100 (500) 308,157
Loans 518,046 1,473,970 106,290 - 1,580,260
Less Allowance for loan losses (8,562) (27,251) (2,883) - (30,134)
--------- ---------- -------------- ---------- ---------- ------------
509,484 - 1,446,719 103,407 - 1,550,126
--------- ---------- -------------- ---------- ---------- ------------
Other assets 42,257 117,630 6,868 - 124,498
Intangibles, net of amortization - 7,572 258 16,262 24,092
--------- ---------- -------------- ---------- ---------- ------------
Total Assets $ 735,405 $ (14,261) $2,460,589 $229,220 $(17,258) $2,672,551
========= ========== ============== ========== ========== ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
-----------------------------
Deposits:
Non-interest bearing $ 147,687 $ - $ 477,507 26,064 $ - $503,571
Interest bearing 488,656 - 1,694,096 151,936 - 1,846,032
--------- ---------- -------------- ---------- ---------- ------------
Total deposits 636,343 - 2,171,603 178,000 - 2,349,603
--------- ---------- -------------- ---------- ---------- ------------
Borrowings 33,595 55,249 32,116 (1,410) 85,955
Other liabilities 5,958 21,132 2,286 970 24,388
--------- ---------- -------------- ---------- ---------- ------------
Total Liabilities 675,896 - 2,247,984 212,402 (440) 2,459,946
Subordinated debt - 25,000 - - 25,000
Stockholders' Equity
Preferred stock - - - - -
Common stock 200 10,043 35,810 1,833 (1,833) 35,810
Additional paid in capital 50,213 (15,804) 97,425 14,123 (14,123) 97,425
Retained earnings 9,148 (8,500) 53,388 1,784 (1,784) 53,388
Other (52) 982 (922) 922 982
--------- ---------- -------------- ---------- ---------- ------------
Total Stockholders' Equity 59,509 (14,261) 187,605 16,818 (16,818) 187,605
--------- ---------- -------------- ---------- ---------- ------------
Total Liabilities and
Stockholders Equity $ 735,405 $(14,261) $2,460,589 $229,220 $(17,258) $2,672,551
--------- ---------- -------------- ---------- ---------- ------------
Common shares outstanding 19,930
19,930
Book value per common share $ 9.41 $ 9.41
</TABLE>
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
OF HUBCO, LAFAYETTE AND HOMETOWN
The following pro forma unaudited combined condensed statements of
income combined the historical consolidated statements of income of HUBCO,
Lafayette and Hometown giving effect to the Merger which will be accounted for
as a pooling of interests, as if the Merger had occurred on the first day of the
applicable periods indicated herein, after giving effect to the pro forma
adjustments described in the notes to the pro forma combined financial
statements and also takes into account HUBCO's recently completed acquisition of
Growth which was accounted for as a pooling of interests. Because the Hometown
acquisition is being accounted for using the purchase method of accounting
(which does not require the restatement of HUBCO's financial statements),
Hometown's historical consolidated statements of income and the Hometown
acquisition are not reflected in the pro forma combined condensed statements of
income for the years ended December 31, 1994 and 1993. The pro forma combined
condensed statement of income for December 31, 1995 was prepared on the
assumption that the Hometown Merger had been effected as of January 1, 1995. The
information set forth below should be read in conjunction with the condensed
consolidated historical and other pro forma financial information, including the
notes thereto, incorporated by reference or appearing elsewhere in this Proxy
Statement. The effect of the estimated $8.5 million (after tax) restructuring
charge expected to be taken in connection with the Merger has been reflected in
the pro forma combined balance sheet; however, since the proposed restructuring
charge is nonrecurring, it has not been reflected in the pro forma combined
statements of income. The pro forma financial data do not give effect to the
anticipated cost savings in connection with the Merger. The pro forma financial
data are not necessarily indicative of the results that actually would have
occurred had the Merger been consummated on the dates indicated or that may be
obtained in the future.
Included in 1995 and 1994 earnings for Lafayette of $18,927,000 and
$6,137,000, respectively, was $11,935,000 and $3,439,000, respectively, of
deferred income tax benefits, primarily attributable to the recognition of
Lafayette's net operating loss carryforwards. As of December 31, 1995,
substantially all of Lafayette's deferred income tax benefits had been
recognized for financial statement reporting purposes. While Lafayette's net
income for 1995 and 1994 were positively impacted by the deferred income tax
benefits, net income for Lafayette in the future will not enjoy the same
benefits. As a result, the budgeted net income of Lafayette for 1996 is
substantially less than Lafayette's net income for 1995. For information about
Lafayette's budgeted net income, see "CERTAIN INFORMATION REGARDING
HUBCO--Recent Developments".
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands, except per share data)
HUBCO/
HUBCO/ Growth/
Growth Lafayette
HUBCO Growth Pro Forma Lafayette Pro Forma
Combined Combined
------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Interest on loans $ 80,503 $ 8,437 $ 88,940 $ 41,947 $ 130,887
Interest on securities 39,065 1,185 40,250 10,313 50,563
Other interest income 1,143 170 1,313 163 1,476
------------ ----------- ---------- ---------- -----------
Total interest income 120,711 9,792 130,503 52,423 182,926
------------ ----------- ---------- ---------- -----------
Interest on deposits 35,557 3,821 39,378 17,189 56,567
Interest on borrowings 4,052 2 4,054 3,792 7,846
------------ ----------- ---------- ---------- -----------
Total Interest Expense 39,609 3,823 43,432 20,981 64,413
------------ ----------- ---------- ---------- -----------
Net Interest Income 81,102 5,969 87,071 31,442 118,513
Provision for possible loan losses 4,200 625 4,825 3,190 8,015
Non-interest income 17,791 351 18,142 6,078 24,220
Non-interest expense 60,164 5,069 65,233 26,230 91,463
------------ ----------- ---------- ---------- -----------
Income before income taxes 34,529 626 35,155 8,100 43,255
Income tax provision (benefit) 10,845 427 11,272 (10,827) 445
============ =========== ========== ========== ===========
Net Income $ 23,684 $ 199 $ 23,883 $ 18,927 $ 42,810
============ =========== ========== ========== ===========
Earnings per common share:
Primary $ 1.82 $ 1.67 $ 2.14
Fully Diluted $ 1.79 $ 1.65 $ 2.11
Weighted Average Shares
Outstanding:
Primary 12,743 13,977 19,786
Fully Diluted 13,251 14,485 20,294
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands, except per share data)
(CONTINUED)
Pro Forma
Hometown Adjustments Pro Forma
Combined
---------- ----------- ----------
<S> <C> <C> <C>
Interest on loans $7,625 $ - $138,512
Interest on securities 7,269 (1,820) 56,012
Other interest income 186 - 1,662
---------- ----------- ----------
Total interest income 15,080 (1,820) 196,186
---------- ----------- ----------
Interest on deposits 6,171 62,738
Interest on borrowings 1,497 (69) 9,274
---------- ----------- ----------
Total Interest Expense 7,668 (69) 72,012
---------- ----------- ----------
Net Interest Income 7,412 (1,751) 124,174
Provision for possible loan losses 75 - 8,090
Non-interest income 1,420 - 25,640
Non-interest expense 6,951 1,626 100,040
---------- ----------- ----------
Income before income taxes 1,806 (3,377) 41,684
Income tax provision (benefit) 497 (665) 277
========== =========== ==========
Net Income $ 1,309 $(2,712) $ 41,407
========== =========== ==========
Earnings per common share:
Primary $ 2.14 $ 2.07
Fully Diluted $ 2.11 $ 2.04
Weighted Average Shares
Outstanding:
Primary 19,786 19,786
Fully Diluted 20,294 20,294
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(In thousands, except per share data)
HUBCO/
Growth
Pro Forma Pro Forma
HUBCO Growth Combined Lafayette Combined
--------------- --------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Interest on loans $ 62,031 $ 6,697 $ 68,728 $ 34,136 $ 102,864
Interest on securities 39,958 810 40,768 8,236 49,004
Other interest income 1,364 152 1,516 211 1,727
--------------- --------------- --------------- -------------- ----------------
Total interest income 103,353 7,659 111,012 42,583 153,595
--------------- --------------- --------------- -------------- ----------------
Interest on deposits 29,268 2,352 31,620 11,790 43,410
Interest on borrowings 2,989 9 2,998 1,969 4,967
--------------- --------------- --------------- -------------- ----------------
Total Interest Expense 32,257 2,361 34,618 13,759 48,377
--------------- --------------- --------------- -------------- ----------------
Net Interest Income 71,096 5,298 76,394 28,824 105,218
Provision for possible loan losses 3,550 634 4,184 3,325 7,509
Non-interest income 11,828 327 12,155 6,337 18,492
Non-interest expense 51,050 3,871 54,921 28,423 83,344
--------------- --------------- --------------- -------------- ----------------
Income before income taxes 28,324 1,120 29,444 3,413 32,857
Income tax provision (benefit) 10,892 - 10,892 (2,724) 8,168
=============== =============== =============== ============== ================
Net Income $ 17,432 $ 1,120 $ 18,552 $ 6,137 $ 24,689
=============== =============== =============== ============== ================
Earnings per common share:
Primary $ 1.36 $ 1.32 $ 1.24
Fully Diluted $ 1.33 $ 1.29 $ 1.23
Weighted Average Shares
Outstanding:
Primary 12,496 13,730 19,539
Fully Diluted 13,098 14,332 20,141
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(In thousands, except per share data)
HUBCO/
Growth Pro
Forma Combined Pro Forma
HUBCO Growth Lafayette Combined
--------------- --------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Interest on loans $ 56,140 $ 4,472 $ 60,612 $ 34,798 $ 95,410
Interest on securities 28,734 1,219 29,953 6,306 36,259
Other interest income 1,676 163 1,839 311 2,150
--------------- --------------- --------------- -------------- ----------------
Total interest income 86,550 5,854 92,404 41,415 133,819
--------------- --------------- --------------- -------------- ----------------
Interest on deposits 26,604 2,142 28,746 13,809 42,555
Interest on borrowings 907 - 907 1,625 2,532
--------------- --------------- --------------- -------------- ----------------
Total Interest Expense 27,511 2,142 29,653 15,434 45,087
--------------- --------------- --------------- -------------- ----------------
Net Interest Income 59,039 3,712 62,751 25,981 88,732
Provision for possible loan losses 4,874 653 5,527 23,500 29,027
Non-interest income 10,579 302 10,881 8,306 19,187
Non-interest expense 42,313 3,309 45,622 36,789 82,411
--------------- --------------- --------------- -------------- ----------------
Income (loss) before 22,431 52 22,483 (26,002) (3,519)
income taxes
Income tax provision (benefit) 8,560 (260) 8,300 16 8,316
--------------- --------------- --------------- -------------- ----------------
--------------- --------------- --------------- -------------- ----------------
Income (loss) before cumulative
effect of change in accounting
principle 13,871 312 14,183 (26,018) (11,835)
Cumulative effect of change in
accounting principle - - - (3,118) (3,118)
--------------- --------------- --------------- -------------- ----------------
=============== =============== =============== ============== ================
Net Income (loss) $ 13,871 $ 312 $ 14,183 $(29,136) $(14,953)
=============== =============== =============== ============== ================
Earnings (loss) per share before
cumulative effect of change in
accounting principle:
Primary $ 1.06 $ .99 $ (.59)
Fully Diluted $ 1.06 $ .99 $ (.59)
Earnings (loss) per share after
cumulative effect of change in
accounting principle:
Primary $ 1.06 $ .99 $ (.74)
Fully Diluted $ 1.06 $ .99 $ (.74)
Weighted Average Shares
Outstanding:
Primary 13,109 14,343 20,152
Fully Diluted 13,109 14,343 20,152
</TABLE>
<PAGE>
NOTES TO PRO FORMA FINANCIAL INFORMATION
(1) Pro forma financial information assumes that both the Growth Merger and
the Merger were consummated as of the beginning of each of the periods
indicated and that the Hometown Merger was consummated as of January 1,
1995. Because the Hometown Merger is being accounted for using the
purchase method of accounting (which does not require the restatement
of HUBCO's financial statements), Hometown's historical consolidated
statements of income and the Hometown Merger are not reflected in the
pro forma unaudited combined condensed statements of income for the
years ended December 31, 1994 and 1993. The pro forma information
presented is not necessarily indicative of the results of operations or
the combined financial position that would have resulted had the
mergers been consummated at the beginning of the applicable periods
indicated, nor is it necessarily indicative of the results of
operations in future periods or the future financial position of the
combined entities.
(2) It is assumed that the Merger will be accounted for on a pooling of
interests accounting basis, and, accordingly, the related pro forma
adjustments herein reflect, where applicable, an exchange ratio of .588
shares of HUBCO Common Stock for each of the 10,006,529 shares of
Lafayette Common Stock which were outstanding at December 31, 1995.
The pro forma financial information presented herein gives effect to
the cancellation of 294,000 shares of HUBCO Common Stock. This
adjustment is the result of HUBCO's ownership as of March 10, 1996, of
500,000 shares of Lafayette Common Stock at a cost of $5,760,938. The
pro forma financial information presented herein does not give effect
to the possible purchase by HUBCO or repurchase by Lafayette of up to
another approximately 500,000 shares of Lafayette Common Stock prior to
consummation of the Merger, which would be undertaken only if such
transaction would not violate the pooling of interests accounting rules
expected to be followed for the Merger. See "CERTAIN INFORMATION
REGARDING HUBCO--Recent Developments".
As a result, the pro forma information was adjusted for the Merger by
the (i) addition of 5,883,839 shares of HUBCO Common Stock with a
stated value of $1.778 per share, amounting to $10,461,466; (ii)
elimination of 10,006,529 shares of Lafayette Common Stock with a
stated value of $.02 per share, amounting to $200,131; (iii)
cancellation of 294,000 shares of HUBCO Common Stock amounting to
$522,732; (iv) addition of 170,678 shares of HUBCO Common Stock
amounting to $303,465 in exchange for 470,000 shares representing
Lafayette's total outstanding stock options; and (v) recording of the
remaining net amount of $15,804,000 as a reduction of additional paid
in capital at December 31, 1995.
The effect of the estimated $8.5 million (after tax) restructuring
charge expected to be taken in connection with the Merger has been
reflected in the pro forma combined balance sheet as a reduction to
Federal Funds Sold and a reduction to retained earnings. The charge has
not been reflected in the pro forma combined statement of income since
it is non-recurring. The pro forma financial information does not give
effect to the anticipated cost savings in connection with the Merger.
<PAGE>
(3) The pro forma financial information presented herein reflects: (i) a
total cash purchase price for Hometown of $31.6 million. Cash on hand
of $1.0 million and the proceeds received upon disposition of
approximately $32.0 million of securities available for sale will be
utilized to fund the purchase price. The excess funds resulting from
the sale of these securities will be used to reduce short-term
borrowings; (ii) a fair value adjustment of $500,000 established for
investment securities held to maturity. Investment securities held to
maturity were valued at their estimated fair value as of December 31,
1995. The resulting adjustment is being amortized into interest income
over the remaining life of the portfolio as of that date, so as to
produce a constant yield to maturity; (iii) a net deferred tax benefit
of $200,000 on purchase accounting adjustments; (iv) elimination of
Hometown's existing intangible and establishment of a new intangible
estimated at approximately $16.5 million. The resulting intangible
assets are expected to be amortized on an aggregate estimated life of
10 years; (v) accruals were established for termination benefits and
other benefits under employment contracts of $710,000 and other
transaction costs and professional fees of $460,000; (vi) elimination
of Hometown's existing capital pursuant to the purchase accounting
method for business combinations; (vii) the book value of Hometown's
loans and deposits are deemed to approximate estimated fair value at
December 31, 1995 and therefore no fair value adjustment is necessary.
(4) On January 12, 1996, HUBCO completed its purchase of Growth Financial
Corp. with assets of $127.7 million, for 1.2 million shares of HUBCO
Common Stock valued at approximately $27 million, in a transaction
accounted for as a pooling of interest. The pro forma financials
presented herein reflect the effect of this acquisition. The pro forma
financial information does not give effect to the acquisition of three
branches with $61 million in deposits from CrossLands Savings Bank on
February 28, 1996 for a premium of $3.0 million, resulting in the
addition of approximately $3.0 million of goodwill on HUBCO's
consolidated balance sheet. Those assets do not represent the
acquisition of a business and are not material to HUBCO.
(5) Earnings per share data has been computed based on the combined
historical net income applicable to common stockholders of HUBCO,
Lafayette and Growth, using the historical weighted average shares
outstanding of HUBCO Common Stock and the weighted average outstanding
shares, adjusted to equivalent shares of HUBCO Common Stock, as of the
earliest applicable period presented.
Primary and fully diluted weighted average shares outstanding also
includes the addition of 48,000 common share equivalents applicable to
the 72,321 HUBCO warrants issued in the Merger for the 122,995
Lafayette Warrants outstanding.
(6) Certain insignificant reclassifications have been included herein to
conform statement presentations.
<PAGE>
RIGHTS OF DISSENTING LAFAYETTE SHAREHOLDERS
Holders of HUBCO Common Stock do not have dissenters' appraisal rights
in connection with the Merger.
Holders of Lafayette Common Stock who follow the procedures specified
in Section 36a-125(h) of the CBL and 33-374 of the Connecticut General Statutes
will be entitled to the rights and remedies of dissenting shareholders. Pursuant
to Section 36a-125(h), Lafayette shareholders have the right to dissent from the
Merger and to obtain payment of the fair value of their shares of Lafayette
Common Stock if the Merger is consummated. Necessary procedural steps are set
forth in Sections 36-125(h) and 33-374 of the Connecticut General Statutes.
SHAREHOLDERS OF LAFAYETTE WHO CONTEMPLATE EXERCISING THEIR RIGHT TO
DISSENT ARE URGED TO READ CAREFULLY THE APPLICABLE PROVISIONS OF SECTIONS
36A-125(H) OF THE CBL AND 33-374 OF THE CONNECTICUT GENERAL STATUTES, WHICH ARE
ATTACHED AS APPENDIX E TO THIS PROXY STATEMENT (COLLECTIVELY, THE "DISSENTERS'
STATUTES").
The following is a summary of the steps to be taken if the right to
dissent is to be exercised. This summary is qualified in its entirety by the
full text of Appendix E to this Proxy Statement. Each step must be taken in the
indicated order and in strict compliance with the applicable provisions of the
Dissenters' Statutes in order to perfect dissenters' appraisal rights. Any
deviation from such steps may result in the forfeiture of dissenters' appraisal
rights. For purposes of this discussion, the term "Lafayette" refers, where
applicable, to the entity resulting from consummation of the Merger.
Any holder of Lafayette Common Stock who wishes to dissent from the
Merger and obtain payment of the fair value of such holder's shares must, prior
to the Lafayette Meeting, (i) file written notice of such holder's objection to
the Merger with the Secretary of Lafayette, Marilyn W. Alderman, Lafayette
American Bank and Trust Company, 2992 Dixwell Avenue, Hamden, Connecticut 06518
and (ii) refrain from voting such holder's shares in favor of approval of the
Merger. Merely voting against or abstaining from voting on the Merger will not
constitute an adequate written objection required to be filed by a dissenting
shareholder.
If the Merger is approved at the Lafayette Meeting, any Lafayette
shareholder who wishes to exercise dissenters' appraisal rights (and who
properly objected to the Merger) must file with the Secretary of Lafayette, at
the above-mentioned address, a written demand for payment of the fair value of
such holder's shares within 10 days after the date of the Lafayette Meeting.
Such demand must state the number of shares of Lafayette Common Stock held by
the shareholder making the demand. Upon filing the written demand, the
shareholder will cease to have any of the rights of a Lafayette shareholder,
except the right to be paid the fair value of such holder's shares and such
other rights as are granted under the Dissenters' Statutes. Withdrawal of any
such demand will require the consent of Lafayette.
Not later than 10 days after the later of receipt by Lafayette of
proper written demand of a Lafayette shareholder to be paid fair value for such
holder's shares or the Effective Time, Lafayette must mail to each such holder
that has properly exercised dissenters' appraisal rights under the Dissenters'
Statutes (a "DISSENTING HOLDER") a written offer to pay for such holder's shares
at a specified price deemed by Lafayette to be the fair value of such holder's
shares as of the day prior to the date of this Proxy Statement, excluding any
appreciation resulting from the Merger.
Not later than 20 days after filing the written demand for payment of
the fair value of his or her shares, a dissenting holder must submit the
certificate(s) representing such holder's shares to the Secretary of Lafayette,
at the above-mentioned address, for placement of an appropriate legend/notation
thereon. FAILURE BY A DISSENTING HOLDER TO SUBMIT SUCH HOLDER'S CERTIFICATE(S)
FOR SUCH NOTATION MAY RESULT IN THE LOSS OF SUCH HOLDER'S DISSENTERS' APPRAISAL
RIGHTS.
If Lafayette and any dissenting holder agree in writing on the price to
be paid for such holder's shares, Lafayette will make payment for the agreed
upon price upon the surrender by the dissenting holder of the certificate(s)
representing such shares, duly endorsed for transfer.
At any time during the period of 60 days after the date on which
Lafayette is required to make the offer to pay, Lafayette, or any dissenting
holder who has not accepted Lafayette's offer, may, in the name of Lafayette,
institute a special court proceeding to determine the fair value of the
dissenting holders' shares. The court will assess the costs and expenses of such
proceeding against Lafayette, but it may assess all or any part of such costs
and expenses against any or all dissenting holders who are part of such
proceeding if the court finds that such dissenting holders' actions in failing
to accept the offer were not in good faith.
<PAGE>
DESCRIPTION OF HUBCO CAPITAL STOCK
GENERAL
The authorized capital stock of HUBCO presently consists of 25 million
shares of HUBCO Common Stock and 4.5 million shares of preferred stock. If the
amendment to the HUBCO Certificate is approved, the authorized capital stock of
HUBCO will consist of 50 million shares of HUBCO Common Stock and 10 million
shares of preferred stock. As of December 31, 1995, 13,145,059 shares of HUBCO
Common Stock were issued, 13,105,627 shares of HUBCO Common Stock were
outstanding, and no shares of HUBCO preferred stock were outstanding. Of the
authorized but unissued shares of HUBCO Common Stock, 236,750 shares are
reserved for issuance under HUBCO's Restricted Stock Plan, 750,000 shares are
reserved for issuance pursuant to HUBCO's 1995 Stock Option Plan and 21,700
shares are reserved for issuance pursuant to the option granted to Robert F.
Mangano in connection with the acquisition of Urban National Bank.
Under the terms of HUBCO's Certificate of Incorporation, the Board of
Directors has authority at any time (i) to divide any or all of the authorized
but unissued shares of preferred stock into series and determine the
designations, number of shares, relative rights, preferences and limitations of
any such series and (ii) to increase the number of shares of any such series
previously determined by it and to decrease such previously determined number of
shares to a number not less than that of the shares of such series then
outstanding. HUBCO Series A Preferred Stock was issued pursuant to such
authority in connection with HUBCO's acquisition of Washington Bancorp, Inc.
("WASHINGTON") on July 1, 1994; no HUBCO Series A Preferred Stock remains
outstanding as of December 31, 1995.
DESCRIPTION OF HUBCO COMMON STOCK
THE FOLLOWING DESCRIPTION OF THE HUBCO COMMON STOCK SETS FORTH CERTAIN
GENERAL TERMS OF THE HUBCO COMMON STOCK. FOR AN ADDITIONAL DESCRIPTION RELATING
TO THE HUBCO COMMON STOCK, SEE "COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF
LAFAYETTE AND HUBCO."
DIVIDEND RIGHTS
The holders of HUBCO Common Stock are entitled to receive dividends,
when, as and if declared by the Board of Directors of HUBCO out of funds legally
available therefore subject to the preferential dividend rights of any preferred
stock that may be outstanding. The only statutory limitation is that such
dividends may not be paid when HUBCO is insolvent. Because funds for the payment
of dividends by HUBCO come primarily from the earnings of HUBCO's bank
subsidiary, as a practical matter, restrictions on the ability of HUB to pay
dividends act as restrictions on the amount of funds available for the payment
of dividends by HUBCO.
As a New Jersey chartered commercial bank, HUB is subject to the
restrictions on the payment of dividends contained in the NJBA. Under the NJBA,
HUB may pay dividends only out of retained earnings, and out of surplus to the
extent that surplus exceeds 50% of stated capital. Under the Financial
Institutions Supervisory Act, the FDIC has the authority to prohibit a
state-chartered bank from engaging in conduct which, in the FDIC's opinion,
constitutes an unsafe or unsound banking practice. Under certain circumstances,
the FDIC could claim that the payment of a dividend or other distribution by HUB
to HUBCO constitutes an unsafe or unsound practice.
HUBCO is also subject to certain FRB policies which may, in certain
circumstances, limit its ability to pay dividends. The FRB policies require,
among other things, that a bank holding company maintain a minimum capital base.
The FRB would most likely seek to prohibit any dividend payment which would
reduce a holding company's capital below these minimum amounts.
<PAGE>
At December 31, 1995, HUB had $107.5 million available for the payment
of dividends to HUBCO. At December 31, 1995, HUBCO had $65.0 million available
for shareholder dividends, the payment of which would not reduce any of its
capital ratios below the minimum regulatory requirements.
VOTING RIGHTS
At meetings of shareholders, holders of HUBCO Common Stock are entitled
to one vote per share. The quorum for shareholders' meetings is a majority of
the outstanding shares entitled to vote represented in person or by proxy.
Except as indicated below, all actions and authorizations to be taken or given
by shareholders require the approval of a majority of the votes cast by holders
of HUBCO Common Stock at a meeting at which a quorum is present.
The Board of Directors is divided into three classes of directors, each
class being as nearly equal in number of directors as possible. Approximately
one-third of the entire Board of Directors is elected each year and the
directors serve for terms of up to three years, and, in all cases, until their
respective successors are duly elected and qualified.
The exact number of directors and the number constituting each class is
fixed from time to time by resolution adopted by a majority of the entire Board
of Directors. Shareholders may remove any director from office for cause. The
affirmative vote of at least three-quarters of the shares of HUBCO entitled to
vote thereon is required to amend or repeal the provisions of HUBCO's
Certificate of Incorporation relating to the classification of the Board of
Directors and the removal of directors.
HUBCO's Certificate of Incorporation contains a "minimum price"
provision. In the event a "related person" (defined in the Certificate of
Incorporation to include persons who, together with their affiliate, own 10% or
more of HUBCO's Common Stock) proposes to enter into a Business Combination (as
defined in the Certificate of Incorporation) with HUBCO, the proposed
transaction will require the affirmative vote of at least three-quarters of the
outstanding shares entitled to vote on the transaction, unless either (i) the
proposed transaction is first approved by a majority of HUBCO's Board of
Directors, or (ii) the shareholders of HUBCO are offered consideration in an
amount equal to or in excess of an amount determined in accordance with a
formula contained in the Certificate of Incorporation. If either of these tests
are met, the proposed transaction need only be approved by the vote otherwise
required by law, the Certificate of Incorporation and any agreement with a
national securities exchange.
LIQUIDATION RIGHTS
In the event of liquidation, holders of HUBCO Common Stock are entitled
to receive ratably any assets distributed to shareholders, except that if shares
of preferred stock of HUBCO are outstanding at the time of liquidation, such
shares of preferred stock may have prior rights upon liquidation.
ASSESSMENT AND REDEMPTION
All outstanding shares of HUBCO Common Stock are fully paid and
nonassessable. HUBCO Common Stock is not redeemable at the option of the issuer
or the holders thereof.
PREEMPTIVE AND CONVERSION RIGHTS
Holders of HUBCO Common Stock do not have conversion rights or
preemptive rights with respect to any securities of HUBCO.
<PAGE>
OTHER MATTERS
HUBCO can (except in connection with certain business combinations)
issue new shares of authorized but unissued Common Stock or preferred stock
without shareholder approval.
COMPARISON OF THE RIGHTS OF SHAREHOLDERS
OF LAFAYETTE AND HUBCO
GENERAL
Lafayette is a Connecticut bank incorporated under the CBL and HUBCO is
a business corporation incorporated in New Jersey under the NJBCA. The rights of
Lafayette shareholders are currently governed by Connecticut banking law and, to
the extent incorporated by such banking law, Connecticut corporate law. At the
Effective Time, each Lafayette shareholder will become a shareholder of HUBCO
and the rights of shareholders of HUBCO are governed by New Jersey corporate
law. The following is a comparison of certain provisions of New Jersey corporate
law and Connecticut law and the respective certificates of incorporation and
by-laws of each of Lafayette and HUBCO. This summary does not purport to be
complete and is qualified in its entirety by reference to the CBL, the
Connecticut Stock Corporation Act (the "CCA") and the NJBCA, which statutes may
change from time to time, and the respective certificates of incorporation and
by-laws of HUBCO and Lafayette, which also may be changed.
IN PARTICULAR, EFFECTIVE JANUARY 1, 1997, THE CCA WILL BE REPEALED AND
REPLACED BY THE CONNECTICUT BUSINESS CORPORATION ACT (THE "CBCA"), WHICH
REPRESENTS A SUBSTANTIAL REWRITING AND RECODIFICATION OF CONNECTICUT CORPORATE
LAW. THE FOLLOWING SUMMARY DOES NOT REFLECT THE EFFECT THAT THE ENACTMENT OF THE
CBCA MAY HAVE UPON THE RIGHTS OF LAFAYETTE SHAREHOLDERS.
VOTING REQUIREMENTS
Under the New Jersey Business Corporation Act, unless a greater vote is
specified in the certificate of incorporation, any amendment to a New Jersey
corporation's certificate of incorporation, the voluntary dissolution of the
corporation, or the sale or other disposition of all or substantially all of its
assets other than in the ordinary course of business or the merger or
consolidation of the corporation with another corporation, requires in each case
the affirmative vote of a majority of the votes cast by shareholders of the
corporation entitled to vote thereon. The HUBCO Certificate contains a "minimum
price" provision which requires the affirmative vote of 75% of the outstanding
shares entitled to vote on certain transactions involving "related persons"
unless the proposed transaction is either first approved by a majority of the
HUBCO Board or the shareholders of HUBCO are offered consideration in an amount
equal to or in excess of an amount determined in accordance with a formula
contained in the HUBCO Certificate. (See "DESCRIPTION OF HUBCO CAPITAL STOCK --
Description of HUBCO Common Stock -- Voting Rights.")
Applicable Connecticut law provides that a capital stock Connecticut
bank having at least one hundred shareholders of record may have its certificate
of incorporation amended by adoption of an amendment to such certificate by its
board of directors and by the affirmative vote of a majority of the voting power
of shares, or of each class of shares, entitled to vote thereon. Such law also
provides that the voluntary dissolution, sale or disposition of all or
substantially all assets other than in the ordinary course of business, or
merger or consolidation, of a capital stock Connecticut bank generally requires,
in each case, the approval of the bank's board of directors and the affirmative
vote of at least two-thirds of the voting power of shares, or of each class of
shares, entitled to vote thereon. The proportional shareholder vote required by
such law for approval of the foregoing transactions may, within limits, be
varied by the bank's certificate of incorporation; however, Lafayette's
Certificate of Incorporation presently contains no such variations.
<PAGE>
All shareholder voting rights of Lafayette presently are vested in the
holders of Lafayette Common Stock. All shareholder voting rights of HUBCO
presently are vested in the holders of the HUBCO Common Stock.
PREFERRED STOCK
The authorized capital stock of HUBCO includes 4.5 million shares of
preferred stock. If the amendment to the HUBCO Certificate is approved, the
authorized capital stock of HUBCO will consist of 50 million shares of HUBCO
Common Stock and 10 million shares of preferred stock. As of December 31, 1995,
13,145,059 shares of HUBCO Common Stock were issued, 13,105,627 shares of HUBCO
Common Stock were outstanding, and no shares of HUBCO preferred stock were
outstanding. Under the terms of the HUBCO Certificate, the HUBCO Board has
authority at any time to divide any or all of the authorized but unissued shares
of preferred stock into series, determine the designations, number of shares,
relative rights, preferences, and limitations of any such series and authorize
the issuance of such series. (See "DESCRIPTION OF HUBCO CAPITAL STOCK --
General.")
The authorized capital stock of Lafayette includes 275,000 shares of
preferred stock. As of December 31, 1995, no shares of Lafayette preferred stock
were outstanding. Under the terms of Lafayette's Certificate of Incorporation,
the Board of Directors has the authority at any time to issue any or all of the
then authorized but unissued shares of preferred stock in one or more series
and, with respect to each such series, to establish the number of shares to be
included and to fix the designations, voting powers, preferences, rights,
qualifications, limitations and restrictions.
CLASSIFIED BOARD OF DIRECTORS
The NJBCA permits a New Jersey corporation to provide for a classified
board. HUBCO currently has a classified Board of Directors. The Board is divided
into three classes, with one class of directors generally elected for a
three-year term at each annual meeting.
Applicable Connecticut law permits a capital stock Connecticut bank to
provide for the classification of directors in its certificate of incorporation.
Lafayette's Certificate of Incorporation contains such a provision and divides
the Lafayette Board into three classes, to be as nearly equal in number of
directors as possible, and with one class of directors generally elected for a
three-year term at each annual meeting.
RIGHTS OF DISSENTING SHAREHOLDERS
Shareholders of a New Jersey corporation who dissent from a merger,
consolidation, sale of all or substantially all of the corporation's assets or
certain other corporate transactions are generally entitled to appraisal rights.
No statutory right of appraisal exists, however, where the stock of the New
Jersey corporation is (i) listed on a national securities exchange, (ii) is held
of record by not less than 1,000 holders, or (iii) where the consideration to be
received pursuant to the merger, consolidation or sale consists of cash or
securities or other obligations which, after the transaction, will be listed on
a national securities exchange or held of record by not less than 1,000 holders.
HUBCO's shares are presently held by more than 1,000 holders.
Generally, shareholders of a capital stock Connecticut bank who dissent
from a merger or consolidation of the bank are entitled to appraisal rights. The
shareholders of Lafayette have statutory rights of appraisal with respect to the
Merger. See "RIGHTS OF DISSENTING LAFAYETTE SHAREHOLDERS."
SHAREHOLDER CONSENT TO CORPORATE ACTION
Except as otherwise provided by the certificate of incorporation (and
the HUBCO Certificate presently is silent on this issue), the NJBCA permits any
action required or permitted to be taken at any meeting of a corporation's
<PAGE>
shareholders, other than the annual election of directors, to be taken without a
meeting upon the written consent of shareholders who would have been entitled to
cast the minimum number of votes necessary to authorize such action at a meeting
of shareholders at which all shareholders entitled to vote were present and
voting. The annual election of directors, if not conducted at a shareholders'
meeting, may only be effected by unanimous written consent. Under the NJBCA, a
shareholder vote on a plan of merger or consolidation, if not conducted at a
shareholders' meeting, may only be effected by either: (i) unanimous written
consent of all shareholders entitled to vote on the issue with advance notice to
any other shareholders, or (ii) written consent of shareholders who would have
been entitled to cast the minimum number of votes necessary to authorize such
action at a meeting, together with advance notice to all other shareholders.
Lafayette's Certificate of Incorporation provides that no action shall
be taken by shareholders of Lafayette except at an annual or special meeting of
such shareholders.
DIVIDENDS
The Banking Act provides that a New Jersey state chartered bank may
declare and pay dividends on its outstanding stock so long as, following the
payment of such dividend, the capital stock of the bank will be unimpaired and
the bank will have a surplus of not less than 50% of its capital stock or, if
not, the payment of such dividend will not reduce the surplus of the bank.
Unless there are other restrictions contained in its certificate of
incorporation (and the HUBCO Certificate presently contains none), the NJBCA
generally provides that a New Jersey corporation may declare and pay dividends
on its outstanding stock so long as the corporation is not insolvent and would
not become insolvent as a consequence of the dividend payment. Because funds for
the payment of dividends by HUBCO come primarily from the earnings of HUBCO's
bank subsidiary, as a practical matter, restrictions on the ability of HUB to
pay dividends act as restrictions on the amount of funds available for the
payment of dividends by HUBCO. At December 31, 1995, HUBCO had approximately
$65.0 million available for shareholder dividends. For a description of the
regulatory restrictions on dividend payments by HUB, see "DESCRIPTION OF HUBCO
CAPITAL STOCK -- Description of HUBCO Common Stock -- Dividend Rights."
Under applicable Connecticut law, the amount of cash dividends that
Lafayette may declare in any calendar year is limited to the current year's "net
profits" and the prior two years' retained "net profits," as defined. During the
third quarter of 1995, Lafayette recorded a transfer of $13.0 million from its
capital surplus account to its retained earnings account. Such transfer
eliminated Lafayette's accumulated deficit as of June 30, 1995 and certain
technical requirements regarding dividend payments which apply while an
accumulated deficit exists. Minimum regulatory capital thresholds and other
general bank regulatory requirements also serve as constraints upon Lafayette's
ability to pay dividends. See "ELECTION OF LAFAYETTE DIRECTORS -- Terminated
Regulatory Order."
BY-LAWS
Under the NJBCA, the board of directors of a New Jersey corporation has
the power to adopt, amend, or repeal the corporation's by-laws, unless such
powers are reserved in the certificate of incorporation to the shareholders
(which the HUBCO Certificate presently does not do).
Under applicable Connecticut law and Lafayette's Certificate of
Incorporation and By-Laws, Lafayette's By-Laws may be amended or repealed and
new by-laws may be adopted (subject to limited exceptions) by either the vote of
a majority of the Lafayette Board or the vote of two-thirds of the outstanding
shares of Lafayette entitled to vote thereon.
<PAGE>
PREEMPTIVE RIGHTS
Under the NJBCA, shareholders of New Jersey corporations have only such
preemptive rights as may be provided in the certificate of incorporation. The
HUBCO Certificate does not provide shareholders with preemptive rights.
Under applicable Connecticut law, shareholders of a capital stock
Connecticut bank have certain specified preemptive rights unless the same are
expanded, limited or denied by the bank's certificate of incorporation.
Lafayette's Certificate of Incorporation denies preemptive rights to
shareholders in all situations other than where expressly and specifically
approved by the Lafayette Board.
SHAREHOLDER PROTECTION LEGISLATION
The New Jersey Shareholders Protection Act (the "NJSPA") limits certain
transactions involving an "interested shareholder" and a "resident domestic
corporation." An "interested shareholder" is one that is directly or indirectly
a beneficial owner of 10% or more of the voting power of the outstanding voting
stock of a resident domestic corporation. The NJSPA prohibits certain business
combinations between an interested shareholder and a resident domestic
corporation for a period of five years after the date the interested shareholder
acquired its stock, unless the business combination was approved by the resident
domestic corporation's board of directors prior to the interested shareholder's
stock acquisition date. After the five-year period expires, the prohibition on
certain business combinations continues unless the combination is approved by
the affirmative vote of two-thirds of the voting stock not beneficially owned by
the interested shareholder, the combination is approved by the board prior to
the interested shareholder's stock acquisition date or certain fair price
provisions are satisfied.
Under applicable Connecticut law, certain "business combinations"
between a "resident domestic corporation" and an "interested shareholder" are
prohibited. An "interested shareholder" is any person that is the beneficial
owner, directly or indirectly, of 10% or more of the voting power of the
outstanding shares of a resident domestic corporation or is an "affiliate" or
"associate" (as such terms are defined in the statute) of a resident domestic
corporation and, at any time within the previous five years, has been a
beneficial owner of 10% of the voting shares of such corporation. Such business
combinations are prohibited for a period of five years from the date on which
the shareholder became an interested shareholder of the resident domestic
corporation in question, unless such combination was approved both by the board
of directors of such resident domestic corporation and by a majority of such
corporation's nonemployee directors (of which there shall be at least two),
prior to the date on which the interested shareholder first became an interested
shareholder under the applicable definition. Lafayette's Certificate of
Incorporation specifically provides that "business combinations" between
Lafayette and any interested shareholder of Lafayette shall be governed by the
provisions of Connecticut law described above.
Applicable Connecticut law also contains so-called "fair price"
provisions that prohibit certain business combinations between a target
corporation and an "interested shareholder", being defined for these purposes as
a person, other than the target corporation or any of its subsidiaries, that (i)
is the beneficial owner, directly or indirectly, of 10% or more of the voting
power of the outstanding shares of voting stock of the target corporation or
(ii) is an affiliate of the target corporation and at any time within the
two-year period immediately prior to the date in question was the beneficial
owner, directly or indirectly, of 10% or more of the voting power of the then
outstanding shares of voting stock of the target corporation. Under such
provisions, the board of directors of the target corporation can approve a
business combination at any time prior to the time the interested shareholder
first became an interested shareholder. In the absence of such pre-approval,
however, the proposed business combination must first be approved by the board
of directors of the target corporation and, unless complex fair price and other
conditions are met, thereafter, by the affirmative vote of a specified super
majority of shareholders of the target corporation, i.e., 80% of the voting
power of shares of the target corporation and two-thirds of the voting power of
shares other than those held by the interested shareholder and his affiliates
and associates.
<PAGE>
II. ELECTION OF HUBCO DIRECTORS
DIRECTOR NOMINEE INFORMATION
HUBCO's Certificate of Incorporation and By-laws authorize a minimum of
5 and a maximum of 25 directors, but leave the exact number to be fixed by
resolution of the HUBCO Board of Directors. The HUBCO Board is presently
comprised of 10 members and, by Resolution of the HUBCO Board, the number of
HUBCO Directors will be 9 effective upon the date of the Meeting.
Pursuant to the HUBCO Certificate of Incorporation, the directors of
HUBCO are divided into three classes and each class is elected to serve for a
staggered three-year term.
Messrs. McBride, Malcolm and Schierloh are each being nominated for a
three-year term extending to the 1999 Annual Meeting. If, for any reason, any of
the nominees become unavailable for election, the proxy solicited by the HUBCO
Board will be voted for a substitute nominee selected by the HUBCO Board. The
HUBCO 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 the HUBCO Meeting and certain information about each of them are
set forth in the tables below. Years of service on the HUBCO Board includes
prior service on the Board of Directors of HUB prior to the formation of the
holding company.
<TABLE>
<CAPTION>
TABLE I--NOMINEES FOR 1996 ANNUAL MEETING
NAME, AGE &
POSITION WITH PRINCIPAL OCCUPATION DIRECTOR TERM
HUBCO DURING PAST FIVE YEARS SINCE EXPIRING
- ------------------ -------------------------------------------- ----------- ----------
<S> <C> <C> <C>
James E. Schierloh, Chairman of the Board of HUBCO and HUB since 1972 1999
66, September 1990; formerly self-employed
Chairman Certified Public Accountant.
W. Peter McBride, 50 President of McBride Enterprises, Inc. and 1995 1999
President of Urban Farms, Inc. (real estate
development and investment companies)
Bryant Malcolm, 61 President, B.D. Malcolm Company, Inc. 1995 1999
(general contractors)
</TABLE>
<TABLE>
<CAPTION>
TABLE II--DIRECTORS WHOSE TERMS CONTINUE
BEYOND THIS ANNUAL MEETING
NAME, AGE &
POSITION WITH PRINCIPAL OCCUPATION DIRECTOR TERM
HUBCO DURING PAST FIVE YEARS SINCE EXPIRING
- ------------------ -------------------------------------------- ----------- ----------
<S> <C> <C> <C>
Robert J. Burke, 62 President and Chief Operating Officer, Union 1979 1997
Dry Dock and Repair Co., Hoboken, N.J. (ship
repair facility).
Joan David, Substitute Teacher, Board of Cooperative 1994 1998
57 Educational Services of Rockland County
(1989 to present).
Thomas R. Farley, 69 Retired February 1995, formerly a Partner in 1994 1997
the law firm of Farley & Isles (1980 - 1995).
Kenneth T. Neilson, President and CEO of HUBCO and HUB. 1989 1998
47, President & CEO
Charles F.X. Poggi, President and Chief Operating Officer, The 1973 1997
65 Poggi Press (general printing business).
Sister Grace Frances Chairperson, Franciscan Health System of 1979 1998
Strauber, 68 N.J. (1991 - 1993), Member (1991 - present);
Administrative Post on the Leadership Team for the U.S.
region of the Franciscan Sisters of the Poor (1993 -
present); Management Consultant, Health System, Inc.,
Brooklyn, N.Y., Franciscan Sisters of the Poor (1986 -
present).
</TABLE>
<PAGE>
No director of HUBCO is also a director of any other company registered
pursuant to Section 12 of the Exchange Act or subject to the requirements of
Section 15(d) of the Exchange Act or any company registered as an investment
company under the Investment Company Act of 1940.
During the past year Mr. Henry G. Hugelheim retired from the HUBCO
Board due to ill health. Mr. Edwin Wachtel retired upon relocation to Florida.
Effective upon the date of the HUBCO Meeting, Mr. Harry J. Leber will retire
having attained the mandatory retirement age.
BOARD OF DIRECTORS' MEETINGS; COMMITTEES OF THE HUBCO BOARD
The HUBCO Board held 8 board meetings during 1995 and 26 board
committee meetings. The HUBCO Board holds regularly-scheduled meetings each
quarter and special meetings as circumstances require. At present, all of the
directors of HUBCO also serve as directors of HUB.
HUBCO has a standing Audit Committee of the Board of Directors. This
committee arranges for HUB's directors' examinations through its independent
public accountants, reviews and evaluates the recommendations of the directors'
examiners, receives all reports of examination of HUBCO and HUB by bank
regulatory agencies, analyzes such regulatory reports, and reports to HUB's
Board the results of its analysis of the regulatory reports. This committee also
receives reports directly from HUBCO's internal auditing department and
recommends any action to be taken in connection therewith. The Audit Committee
met seven times during 1995. During 1995, Sr. Grace Frances Strauber served as
Chairperson of the Audit Committee. The other HUBCO member of the Audit
Committee is Mr. Farley. Messrs. Joseph Pfeiffer and Joseph A. Tighe, Directors
of HUB, also serve on the Audit Committee.
During 1995, HUBCO established a Nominating Committee consisting of
Messrs. McBride, Neilson, Poggi and Schierloh. The committee will consider
recommendations from shareholders received sufficiently in advance of the
mailing of the proxy statement for the annual meeting. The committee reviews
qualifications of and recommends to the Board as potential candidates for
election as directors business people from within the community served by HUB
who are willing to commit time and dedicate effort to the success of HUBCO and
HUB. During 1995, the committee met one time.
<PAGE>
HUBCO also created its Compensation Committee during 1995. The members
are Mrs. David and Messrs. Burke, McBride and Poggi. The committee met five
times during 1995. The Compensation Committee replaced the former Personnel
Committee of HUB. During 1995, the Personnel Committee met one time. The
Personnel Committee consisted of Mrs. David, Sister Grace Francis Strauber and
Messrs. Burke and Poggi.
During 1995, no incumbent director of HUBCO attended fewer than 75% of
the total meetings of the HUBCO Board and meetings of committees of the HUBCO
Board on which such director served.
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table furnishes information known by HUBCO as to the
beneficial owners of more than 5% of HUBCO Common Stock as of December 31, 1995.
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT OF CLASS
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP
- -------------------------- ------------------------ ----------------
FMR Corp.; Fidelity 672,170 (1) 5.13
Management & Research
Company; Edward C. Johnson
3d and Abigail P. Johnson,
82 Devonshire Street,
Boston, MA 02109
- ------------------
NOTES:
(1) Fidelity Management & Research Company ("Fidelity"), 82 Devonshire
Street, Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR
Corp. and an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is the beneficial owner of 495,220
shares or 3.78% of the outstanding shares of HUBCO Common Stock as a
result of acting as investment adviser to various investment companies
registered under the Investment Company Act of 1940.
Fidelity Management Trust Company, 82 Devonshire Street, Boston,
Massachusetts 02109, a wholly-owned subsidiary of FMR Corp. is the
beneficial owner of 176,950 shares or 1.35% of the outstanding shares
of HUBCO Common Stock as a result of serving as investment manager of
certain institutional accounts.
HUBCO obtained all information set forth herein with respect to
Fidelity's, FMR Corp's, Mr. Johnson's and Ms. Johnson's beneficial
ownership from a Schedule 13G filing made by them on February 14, 1996.
The following table sets forth information concerning the beneficial
ownership of HUBCO Common Stock as of March 19, 1996, by each executive officer
of HUBCO for whom individual information is required to be set forth in this
Proxy Statement pursuant to the rules of the Commission (the "HUBCO Named
Officers"), by each director, and by all directors and executive officers as a
group.
<PAGE>
NO. OF COMMON SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
------------------------ --------------------- ----------
Robert J. Burke 73,096 (2) .52%
Joan David 154,174 (3) 1.10%
Thomas R. Farley 42,721 (4) .31%
Richard Linhart 4,000 (5) .03%
Bryant Malcolm 17,937 (6) .13%
Robert Mangano 34,772 (7) .25%
W. Peter McBride 3,906 .03%
Kenneth T. Neilson 237,804 (8) 1.70%
Charles F. X. Poggi 212,653 1.52%
James E. Schierloh 81,047 (9) .58%
Thomas Shara 89,373 (10) .64%
Sister Grace Frances Strauber 994 .01%
D. Lynn Van Borkulo-Nuzzo 73,680 (11) .53%
Directors and Executive Officers of
HUBCO as a group (13 persons) 1,026,157 (12) 7.35%
- -------------
NOTES:
(1) 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 HUBCO dividend reinvestment plan.
(2) Of this total, 12,505 shares are held by Mr. Burke's wife, and 22,500
are held by Union Dry Dock & Repair Co. Mr. Burke disclaims beneficial
ownership of the shares held by his wife.
(3) Of this total 9,715 are held in an IRA and 27,843 are held by Mrs.
David and Mr. Lawrence David as trustees for The David Foundation.
(4) Of this total, 1,125 shares are held by Mr. Farley's wife. Mr. Farley
disclaims beneficial ownership of the shares owned by his wife.
(5) Of this total, 4,000 shares represent vested options.
(6) Of this total, 889 shares are held by Mr. Malcolm's wife. Mr. Malcolm
disclaims beneficial ownership of the shares held by his wife.
(7) Of this total, 21,700 shares represent vested options.
(8) Of this total, 20,746 shares are held in Mr. Neilson's account in
HUBCO's 401(k) plan, which he directs, 23,250 shares are held for Mr.
Neilson under HUBCO's restricted stock plan, 3,589 shares are held in
an IRA, 2,550 shares are held by Mr. Neilson's wife, and 135,000 shares
represent vested options. 14,496 shares are held for minor children.
Mr. Neilson disclaims beneficial ownership of the shares owned by his
wife.
<PAGE>
(9) Of this total, 4,936 shares are held by Mr. Schierloh's wife
individually, and 13,500 shares are held for Mr. Schierloh under
HUBCO's restricted stock plan.
(10) Of this total, 12,554 shares are held in Mr. Shara's account in HUBCO's
401(k) plan, which he directs, 11,782 shares are held for Mr. Shara
under HUBCO's restricted stock plan, and 52,500 shares represent vested
options.
(11) Of this total, 10,460 shares are held in Ms. Van Borkulo-Nuzzo's
account in HUBCO's 401(k) plan, which she directs, 7,882 shares are
held for Ms. Van Borkulo-Nuzzo under HUBCO's restricted stock plan, and
52,500 shares represent vested options.
(12) Of this total, 43,760 shares are held in HUBCO's 401(k) plans for
specified individuals, 42,914 shares are held for executive officers
under HUBCO's restricted stock plan, and 265,700 shares represent
vested options. Excluded from the shares reported in the Table are
39,600 shares held by HUB's Trust Department as trustee for HUB's two
pension plans. These additional shares held by HUB's Trust Department
are not reported as beneficially owned by HUBCO's directors or
executive officers, although by virtue of the officers' and directors'
service on HUB'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 Commission. The letters in parentheses above each column heading
are the letters designated by the Commission for such columns, and are provided
to make inter-company comparisons easier.
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation earned in the past
three years for services performed in all capacities for HUBCO and its
subsidiaries with respect to the HUBCO Named Officers.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
(a) (b) (c) (d) (f) (g) (l)
NAME RESTRICTED SECURITIES ALL OTHER
AND PRINCIPAL STOCK UNDERLYING COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) AWARD(S)(1)($) OPTIONS/SARS # (2) ($)
- ------------------- ---- ---------- ---------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth T. Neilson, 1995 250,000 250,000 -0- (3) -0- 7,446
President and CEO 1994 250,000 250,000 217,000(4) 135,000 4,500
HUBCO & HUB 1993 250,000 187,500 92,250(5) n/a 7,500
D. Lynn Van 1995 145,000 72,500 -0- (6) -0- 7,446
Borkulo-Nuzzo, 1994 130,000 67,000(7) 20,750(8) 52,500 3,443
Executive Vice 1993 100,000 53,000 38,500(9) n/a 3,000
President and
Corporate Secretary
HUBCO & HUB
Richard Linhart, 1995 36,250(10) 10,000(11) -0- 20,000 192
Executive Vice 1994 n/a n/a n/a n/a n/a
President and Chief 1993 n/a n/a n/a n/a n/a
Financial Officer
HUBCO & HUB
Robert Mangano, 1995 173,280(12) 30,000(13) -0- 32,550 3,962
Executive Vice 1994 n/a n/a n/a n/a n/a
President-Branch 1993 n/a n/a n/a n/a n/a
Administration HUB
Thomas Shara, 1995 145,000 72,500(14) -0- -0- 7,014
Executive Vice 1994 135,000 69,500(15) 51,875(16) 52,500 5,210
President-Senior 1993 124,000 62,000 38,500(17) -0- 4,754
Lending Officer
HUB
</TABLE>
- --------------
NOTES:
(1) The dollar amounts listed represent the number of shares of restricted
stock granted, multiplied by the fair market value of each 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. The number of shares reflected
in the footnotes below have been adjusted for the 3 for 2 stock split
effected January 15, 1995.
(2) All amounts in this column represent employer contributions to 401(k) plans
on behalf of the HUBCO Named Officers and premiums for life insurance in
excess of $50,000.
<PAGE>
(3) At December 31, 1995, Mr. Neilson held a total of 23,250 shares of
restricted stock with an aggregate value of $309,250. None of these shares
were awarded in 1995.
(4) Includes 3,000 shares awarded on June 16, 1994 to vest on June 16, 1996 and
13,500 shares awarded on November 14, 1994 to vest on November 14, 1996.
(5) Includes 4,500 shares awarded on June 9, 1993 to vest on June 9, 1996 and
2,250 shares awarded on December 13, 1993 to vest on December 13, 1996.
(6) At December 31, 1995, Ms. Van Borkulo-Nuzzo held a total of 7,882 shares of
restricted stock with an aggregate value of $83,440. None of these shares
were awarded in 1995.
(7) Of this amount, $2,000 represents a special performance bonus paid in
connection with specific projects.
(8) Includes 1,500 shares awarded on June 16, 1994 to vest on June 16, 1996.
(9) Includes 3,000 shares awarded on June 9, 1993 to vest on June 9, 1996.
(10) This amount is from the date of hire on October 2, 1995 through December
31, 1995. Mr. Linhart's annualized compensation would have been $145,000.
(11) This amount represents a special performance bonus paid in connection with
specific projects
(12) Of this total, $85,780 represents the amount paid by Urban National Bank
("Urban") for the period of January 1, 1995 through June 30, 1995 and
$87,500 represents the amount paid by HUB for the period July 1, 1995
through December 31, 1995.
(13) This amount represents a bonus paid by Urban.
(14) Of this amount, $500 represents a special performance bonus paid in
connection with specific projects.
(15) Of this amount, $2,000 represents a special performance bonus paid in
connection with specific projects.
(16) Includes 3,750 shares awarded on June 16, 1994 to vest on June 16, 1996.
(17) Includes 3,000 shares awarded on June 9, 1993 to vest on June 9, 1996.
STOCK GRANT TABLE
The following table provides certain information about options awarded
to HUBCO Named Officers in the last fiscal year. HUBCO does not utilize stock
appreciation rights ("SARs") in its compensation package, although the
Commission rules require that SARs be reflected in Table headings.
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE VALUE($)(1)
---- ----------- ----------- ------------ ---------- -----------
(a) (b) (c) (d) (e) (f)
<S> <C> <C> <C> <C> <C>
Richard I. Linhart 20,000(2) 21.84 19.625 12/12/04 114,740
Robert Mangano 10,850(3) 11.85 4.608(3) 6/1/02 142,591
21,700(3) 23.70 4.147(3) 9/13/03 295,185
</TABLE>
- -----------------
NOTES:
(1) The Black-Scholes option pricing model was chosen to estimate the grant
date present value of the options set forth in this table. HUBCO's use
of this model should not be construed as an endorsement of its accuracy
at valuing options. All stock option valuation models, including the
Black-Scholes model, require a prediction about the future movement of
the stock price. The following assumptions were made for purposes of
calculating the grant date present value:
<TABLE>
<CAPTION>
Interest
Days to Expiration Volatility Dividend Yield Rate
<S> <C> <C> <C> <C>
Richard Linhart 2,557 29.80% 3.46% 6.10%
Robert Mangano (10,850) 2,557 29.18% 3.83% 6.22%
(21,700) 2,922 29.18% 3.83% 6.30%
</TABLE>
In addition, the present value calculated pursuant to the Black-Scholes
model was discounted at 5% per vesting year under risk of forfeiture to
the extent applicable. The real value of the options in this table
depends upon the actual performance of HUBCO Common Stock during the
applicable period.
(2) Mr. Linhart's options vest one-seventh per year over seven years.
(3) These non-qualified options were issued by HUBCO in connection with
HUBCO's acquisition of Urban in 1995 to replace earlier awards
originally granted several years ago to Mr. Mangano by Urban. The terms
of the HUBCO option awards are those established by Urban when the
awards originally were made. These options were fully vested at the
time HUBCO issued them.
STOCK EXERCISE TABLE
The following table is intended to show options exercised during the
last fiscal year and the value of unexercised options held at year-end 1995 by
the HUBCO Named Officers. HUBCO does not use SARs as part of its compensation
package.
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SAR AT OPTIONS/SARS AT
FY-END(#) FY-END ($)(1)
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ -------------- ---------------
<S> <C> <C> <C> <C>
Kenneth T. Neilson -0- -0- 67,500/67,500 627,412/627,413
D. Lynn Van -0- -0- 7,500/45,000 69,713/418,275
Borkulo-Nuzzo
Richard I. Linhart -0- -0- 0/20,000 0/50,000
Robert Mangano(2) -0- -0- 32,550/-0- 580,182/0
Thomas Shara -0- -0- 7,500/45,000 69,713/418,275
</TABLE>
- -----------------
NOTES:
(1) Options are "in the money" if the fair market value of the underlying
security exceeds the exercise price of the option at year end.
(2) Mr. Mangano's options were issued by HUBCO as part of the acquisition of
Urban and replaced grants made by Urban.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
HUBCO and HUB 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 HUBCO Board. For 1996, Mr. Neilson's annual base salary is
$325,000. If HUBCO 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 until the expiration of the agreement.
After a change-in-control, if Mr. Neilson's employment is terminated by HUBCO
(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 highest W-2 compensation in
effect during the three years preceding the termination or resignation in a lump
sum. The employment agreement, as amended, will expire on the date of HUBCO's
1998 annual meeting.
<PAGE>
HUBCO and HUB jointly have entered into Change-in-Control Employment
Agreements with each of Ms. Van Borkulo-Nuzzo, Mr. Linhart and Mr. Shara. After
a change-in-control (as defined in the Agreements), if the executive's
employment is terminated by HUBCO or HUB (except for cause or as a result of
death or disability), or if HUBCO or HUB changes the executive's title,
position, duties or responsibilities, and the executive resigns as a result of
the change, the executive is entitled to receive a lump sum payment equal to the
executive's highest W-2 compensation in effect during the three years preceding
the termination or resignation. Each agreement will expire on December 31, 1998
unless a change-in-control occurs prior to that date.
Upon the merger of Urban into HUB, Mr. Mangano, Executive Vice
President of HUB (formerly President of Urban) entered into an Employment
Agreement with HUBCO and HUB as of July 1, 1995. The contract is for a term of 3
years, expiring June 30, 1998, and provides Mr. Mangano with a base salary of
$175,000 per year, 4 weeks vacation per year, country club membership, use of a
company car and such other benefits and perquisites as other senior officers may
be entitled to receive. Upon a termination by HUBCO of Mr. Mangano other than
for cause (as defined in the Agreement) or if Mr. Mangano terminates his
employment for "good reason" (as defined in the Agreement), which includes a
change-in-control of HUBCO, Mr. Mangano will receive 36 months' salary reduced
by the number of months elapsing since July 1, 1995, but in any event, not less
then 24 months' salary. In addition, Mr. Mangano would receive "Special
Retirement Benefits" including full vesting in all pension, savings, retirement
and other benefit plans and an additional 36 months of credited service. If an
excise tax under the provisions of Section 280G of the Internal Revenue Code is
imposed on Mr. Mangano by virtue of such compensation, HUBCO will pay Mr.
Mangano an additional amount that is generally intended to cover the excise tax
payable by Mr. Mangano plus the additional federal and state taxes due on that
amount.
Under HUBCO'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 HUBCO or its subsidiaries
during the Restricted Period for any reason, his or her shares may be forfeited
to HUBCO. Upon the occurrence of a change in control of HUBCO, every Restricted
Period then in existence of five years or less will automatically expire.
Under the HUBCO, Inc. 1995 Stock Option Plan, options are granted with
a term not to exceed ten years from the grant date. Each option is granted with
a vesting schedule as determined by the Stock Committee. In the event of a
change in control, as defined in the Plan, any option which has not, as of the
date of the change in control, become exercisable, becomes fully vested.
PENSION PLANS
PENSION PLANS. HUBCO 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 HUBCO and its designated
subsidiaries. The Board has authorized the consolidation of these plans into one
plan; this consolidation is expected to be finalized during the second quarter
of 1996.
BASE PLAN. The Base Plan covers any employee of HUBCO or it
subsidiaries 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 HUBCO Named
Officers is the sum of (i) 1.25% of the employee's base year-end compensation
during the year he or she joins the Base Plan multiplied by the number of years
of service with HUBCO or HUB prior to joining the Base Plan; plus (ii) 1.25% of
the employee's base year-end compensation during each year of a participant's
service after joining the Base Plan. Retirement benefits normally commence when
an employee reaches age 65.
<PAGE>
NON-BARGAINING RETIREMENT PLAN. The Non-Bargaining Retirement Plan
provides additional retirement benefits for non-bargaining employees of HUBCO
and its subsidiaries. It covers each non-bargaining employee 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 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 Non-Bargaining
Retirement 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 are shown each year under the heading "Salary" in the Summary
Compensation Table in this Proxy Statement are covered.
The table below 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, 1995 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. Mr. Neilson has approximately 12 years of
credited service under the pension plans as of January 1, 1996 and, at age 65,
would have 30 years of credited service. Ms. Van Borkulo-Nuzzo has approximately
29 years of credited service under the pension plans as of January 1, 1996, and,
at age 65, would have approximately 48 years of credited service. Mr. Shara has
approximately 14 years of credited service under the pension plans as of January
1, 1996 and, at age 65, would have approximately 42 years of credited service.
Neither Mr. Linhart nor Mr. Mangano had any credited service in the
pension plans as of January 1, 1996. At age 65, their anticipated credited
service would be approximately 13 years and 15 years respectively.
PENSION PLAN TABLE
YEARS OF SERVICE
SALARY 15 20 25 30 35
------ -- -- -- -- --
$125,000 $ 26,181 $ 34,907 $ 43,634 $ 52,361 $ 61,088
$150,000 $ 31,806 $ 42,407 $ 53,009 $ 63,611 $ 74,213
For the current plan year, the compensation for computing benefits
under the pension plans cannot exceed $150,000, which is indexed for inflation
as limited by Congress.
The HUBCO Board has authorized the purchase of a supplemental benefit
in the form of Corporate Owned Life Insurance to offset the effect of the IRS
imposed limitations on pension benefits for Mr. Neilson.
<PAGE>
DIRECTORS' COMPENSATION
The HUBCO Board has established directors' retainer and fees effective
January 1, 1995 as follows:
(1) Chairman's Retainer $26,000
Chairman of Audit Committee, Retainer $ 5,000
Chairman of Personnel Committee, Retainer $ 5,000
(2) Annual Director's Retainer $12,000
(3) HUBCO, HUB and subsidiary Board Meetings $ 500
(4) Committee Meetings $ 400
The President and CEO does not receive any retainer or Board fees.
RETIREMENT. Non-employee directors with at least 36 months of service
upon retirement will receive a retirement benefit each year for life (but not to
exceed 10 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 service as a
director (not to exceed 10 years). At present, the maximum benefit payable per
director is $12,000 per year for 10 years.
DEFERRED COMPENSATION. The HUBCO Board adopted a nonqualified Deferred
Compensation Plan for directors covering the retainer and committee fees
effective January 1, 1995. Participation is optional. Interest is paid on
deferred fees at the highest rate paid by HUB on passbook savings. The
provisions of the Deferred Compensation Plan are designed to comply with certain
rulings of the Internal Revenue Service under which the deferred amounts are not
taxed until received. Under the Deferred Compensation Plan, the directors who
elect to defer their fees will receive the fees over time after they retire.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation payable to executive officers of HUBCO and of HUB is
determined by the Compensation Committee, except that restricted stock awards
and stock option grants are determined by HUBCO's Stock Committee (the "Stock
Committee") and bonuses are based upon parameters established by the full HUBCO
Board. All actions of the Compensation Committee are subject to review and
ratification by the Boards of Directors of HUBCO and HUB. Thus, this report is
being issued over the names of all the directors of HUBCO and is concurred in by
all members of the relevant committees.
The Committee members are: Compensation Committee: Charles F.X. Poggi
(Chairman), Robert Burke, Joan David and W. Peter McBride; Stock Committee:
Robert Burke (Chairman), Sister Grace Frances Strauber and Bryant Malcolm.
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, or under the Exchange Act, except to the extent
that HUBCO specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
EXECUTIVE COMPENSATION POLICY
HUBCO's policy is to compensate its executives fairly and adequately
for the responsibility assume, for the success and direction of HUBCO, for the
effort expended in discharging that responsibility, and for the results achieved
directly or indirectly from each executive's performance. "Fair and adequate
compensation" is established after careful review of:
1. HUBCO's earnings;
2. HUBCO's performance as compared to other companies of similar
size and market area; and
3. Comparison of what the market demands for compensation of
similarly situated experienced executives.
<PAGE>
Total compensation takes into consideration a mix of base salary,
bonus, perquisites, restricted stock awards and stock options. The particular
mix is established in order to competitively attract competent professionals,
retain those professionals, and reward extraordinary achievement.
The Compensation Committee also considers net income for the year and
earnings per share of HUBCO Common Stock before finalizing officer increases for
the coming year.
Based upon its current levels of compensation, HUBCO is not affected by
the provisions of the Code which limit the deductibility to a company of
compensation in excess of $1 million paid to any of its top five executives.
Since the grant of options under the 1995 Stock Option Plan may, in subsequent
years, result in total compensation to an officer in excess of $1 million, the
1995 Stock Option Plan has been designed so that compensation payable under the
Option Plan conforms to the Code requirements and will be deductible by HUBCO.
In certain instances, compensation decisions take into account
contractual commitments assumed by or agreed to by HUBCO as a result of an
acquisition.
BASE SALARY
Subject to HUBCO Board review and ratification, the responsibility for
establishing base salary for executives is delegated to the Compensation
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. Superior performance is
expected of all executive officers.
To establish salary, the following criteria are 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 HUBCO resulting in availability of
funds for payment of salary expense.
5. Competitive level of salary to attract and retain qualified
and experienced executives.
ANNUAL BONUSES
Each year the HUBCO Board establishes the parameters for the award of
bonuses. The current parameters involve HUBCO's performance specifically related
to return on equity and minimum loan loss reserve levels.
Under the bonus program the bonus pool may not exceed 10% of after tax
profits of HUBCO and the creation of the bonus pool may not 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 under the program. 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 or her in order to be personally eligible.
<PAGE>
RESTRICTED STOCK
The responsibility for establishing restricted stock awards is
delegated to the Stock Committee.
Twice annually the Stock Committee meets to evaluate meritorious
performance of all officers and employees for consideration to receive
restricted stock awards.
The Stock Committee makes awards based upon the following criteria:
1. Position of the officer or employee in HUBCO and/or HUB.
2. The benefit which HUBCO or HUB has derived as a result of the
efforts of the award candidate under consideration.
3. HUBCO's desire to encourage long term employment of the award
candidate.
STOCK OPTIONS
The 1995 Stock Option Plan was approved by HUBCO's shareholders at the
1995 Annual Meeting.
The responsibility for recommending awards of stock options to the full
HUBCO Board rests with the Stock Committee.
The Stock Committee makes recommendations for awards based upon the
following criteria:
1. Position of the officer or employee in HUBCO and/or HUB.
2. The benefit which HUBCO or HUB has derived as a result of the
efforts of the award candidate under consideration.
3. HUBCO'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 HUBCO
Board may approve from time to time are determined and awarded pursuant to
evaluation under the same criteria used to establish base salary or, in certain
circumstances pursuant to contractual commitments assumed by or agreed to by
HUBCO as a result of an acquisition.
* * * * *
HUBCO has long believed that a strong, explicit link should exist
between executive compensation and the value delivered to shareholders. The
bonus program, restricted stock awards and stock option awards all provide
competitive compensation which increase based on HUBCO's performance. Since each
bonus is based on a direct, explicit link to HUBCO's performance, it is directly
and explicitly linked to the value received by shareholders. HUBCO's
profitability inures to the benefit of shareholders, and is a direct result of
the direction established by management. The general compensation philosophy is
that base salary for executives should place compensation at the twenty-fifth
percentile of the peer group but that total compensation (including bonus,
restricted stock and options) should place compensation over the seventy-fifth
percentile in line with HUBCO's performance.
<PAGE>
In 1995 the committees responsible for the various components of
executive compensation utilized two salary surveys to establish executive
compensation. The first report, "N.J. Bankers' Salary Survey", prepared by KPMG
Peat Marwick, identified compensation in institutions in the $1 to $3 billion
category in the New York, New Jersey, Pennsylvania tri-state area. The second
survey, conducted by Wyatt Data Services, entitled "Financial Institutions
Benchmark Compensation Report", was nationwide for the financial industry.
Mr. Neilson, the President of HUBCO, did not receive an increase in
base pay for 1993, 1994, or 1995 but received an increase of $75,000 effective
for 1996. He is eligible for bonuses equal to 100% of his base salary. Mr.
Neilson's base salary is $325,000. The HUBCO Board believes that this package
represents fair compensation in view of HUBCO's 1995 performance and peer group
comparisons.
For 1995, Mr. Schierloh, Chairman of HUBCO, received a base salary of
$36,000 and was eligible for a 50% bonus. In addition, he was paid a quarterly
retainer of $6,500 as director and Chairman. Mr. Schierloh is retiring as
Chairman after the HUBCO Meeting although he will continue as a director of
HUBCO. The HUBCO Board has elected Mr. Neilson as Chairman effective immediately
following the HUBCO Meeting.
THE BOARD OF DIRECTORS OF HUBCO
Robert J. Burke
Joan David
Thomas R. Farley
Harry J. Leber
Bryant Malcolm
W. Peter McBride
Kenneth T. Neilson
Charles F.X. Poggi
James E. Schierloh
Sister Grace Frances Strauber
PERFORMANCE GRAPH
The following graph compares the cumulative total return on a
hypothetical $100 investment made at the close of business on December 31, 1990
in: (a) HUBCO 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.
[The graph which will appear in the printed version of this document will have
the plot points indicated below.]
<PAGE>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
HUBCO Inc. 100 196.50 400.76 562.90 567.54 879.82
S&P 500 Index 100 130.47 140.41 154.56 156.60 215.45
Peer Group 100 176.12 292.00 317.65 335.97 583.07
Three of HUBCO's "peer group" have been acquired. While their
performance is included in the above graph, it should be noted that the fact of
acquisition has, in all likelihood, resulted in improved investment results for
those institutions which were acquired.
PEER GROUP POPULATION:
Commerce Bancorp Inc. N.J.
First Fidelity Bancorporation
Midlantic Corp.
Summit Bancorporation
Trust Co. N.J. Jersey City - Name change from Trustcompany Bancorporation
Summit Bancorp - Name change from UJB Financial Corp.
Valley National Bancorp
Prepared from data supplied by Standard & Poor's Compustat Services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above under the caption "Board Compensation Committee Report
on Executive Compensation," various aspects of the compensation of the HUBCO
Named Officers are determined by the Compensation Committee and the Stock
Committee. The Compensation Committee members are: Charles F.X. Poggi
(Chairman), Robert Burke, Joan David and W. Peter McBride. The Stock Committee
members are: Robert Burke (Chairman), Sister Grace Frances Strauber and Bryant
D. Malcolm.
Mr. Schierloh and Mr. Neilson, each of whom serves on the Board of
Directors of both HUBCO and HUB, are officers of HUBCO and HUB. Each of Messrs.
Schierloh and Neilson absented themselves from all discussions, and abstained
from all voting, on 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 HUBCO
and HUB, and who is the Chairman of the Compensation Committee and is involved
in setting executive compensation, is President of Poggi Press, a general
printing company. During 1995, Poggi Press was paid $343,145.51 for printing
work for HUBCO and its subsidiaries. Management believes the terms and
conditions of this transaction to be equivalent to terms available from an
independent third party.
W. Peter McBride, a Director of HUBCO and HUB serves on the
Compensation Committee. Various companies with which Mr. McBride is affiliated
have business relationships with HUBCO or HUB. The Franklin Lakes office of HUB
(obtained through merger with Urban) is leased from Urban Farms Shopping Center,
Inc., a New Jersey corporation of which W. Peter McBride is the President and a
shareholder. The lease was originally executed in 1979 and extended on November
1, 1994 to December 31, 1999. Contiguous space is also leased from Urban Farms
Shopping Center, Inc. for the term February 1, 1993 to January 31, 1996.
Management believes the terms and conditions of these leases to be equivalent to
terms available from an independent third party. The annual aggregate lease
payments through December 31, 1995 were $75,365.61. Urban Farms, Inc., a
<PAGE>
McBride-owned company, does landscape work for HUB. In 1995, $7,600.81 was paid
for such services. Albert P. Schmidt Construction Co., a McBride-owned company,
does renovations and repairs at 1000 MacArthur Blvd., Mahwah, New Jersey. In
1995, $319,078.58 was paid for such services. Independent Electric Co. does
subcontracting work at 1000 MacArthur Blvd., Mahwah. Any amounts due to this
subcontractor were included in amounts paid to Albert P. Schmidt Construction
Co. reflected above. F.A. McBride Co. does heating and air conditioning work at
various locations previously a part of Urban. In 1995, this company was paid
$49,911.62 for such services. Urban Planing and Engineering Associates, a
McBride-owned company, was paid $600.00 by HUB in 1995 for excavation work at
the Ringwood office which was formerly a part of Urban.
CERTAIN TRANSACTIONS WITH MANAGEMENT
HUB 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 10% 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. HUB's
directors, executive officers and their associates did not during 1995 or during
1996 through the date of this Proxy Statement borrow from HUB an amount in
excess of 10% of HUB's equity capital for any one director or executive officers
(together with their associates) or an amount in excess of 20% of HUB's equity
capital for all directors and executive officers and their associates as a
group.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires HUBCO's directors, principal
officers, and persons who own more than 10% of HUBCO's equity securities to file
with the Commission initial reports of ownership and reports of changes in
ownership of such securities. To HUBCO's knowledge, based solely on a review of
the copies of such reports furnished to it, during the fiscal year ended
December 31, 1995, Section 16(a) filing requirements with respect to HUBCO's
equity securities were complied with.
RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 2
HUBCO directors will be elected by a plurality of the votes cast at the
HUBCO Meeting, whether in person or by proxy. THE HUBCO BOARD UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE NOMINATED SLATE OF DIRECTORS INCLUDED IN PROPOSAL 2.
<PAGE>
III. AMENDMENT TO CERTIFICATE OF INCORPORATION
INCREASING THE NUMBER OF COMMON AND PREFERRED SHARES
AUTHORIZED TO BE ISSUED
GENERAL
On March 19, 1996, the HUBCO Board unanimously approved an amendment
(the "Amendment") to paragraph (A) of Article V of the HUBCO Certificate of
Incorporation to increase the authorized capital stock of HUBCO to 60 million
shares from the presently authorized 29.5 million shares, including an increase
in the authorized HUBCO Common Stock to 50 million shares from the presently
authorized 25 million shares and an increase in the authorized preferred stock
of HUBCO to 10 million shares from the presently authorized 4.5 million shares.
As of April 19, 1996, 13,629,415 shares of HUBCO Common Stock were
issued and outstanding. Of the authorized but unissued shares of HUBCO Common
Stock, (i) 236,750 were reserved for issuance under HUBCO's Restricted Stock
Plan, (ii) 750,000 shares (less 257,770 shares issued under the Restricted Stock
Plan since December 1, 1994) were reserved for issuance under HUBCO'S 1995 Stock
Option Plan, (iii) 21,700 shares were reserved for issuance in conjunction with
options granted to Robert F. Mangano in connection with the acquisition of
Urban, and (iv) 5,808,500 shares were reserved for issuance in conjunction with
the proposed acquisition of Lafayette pursuant to the Merger Agreement (all of
the foregoing are hereinafter referred to as "RESERVED SHARES"). HUBCO has
4,500,000 authorized shares of preferred stock. HUBCO Series A Preferred Stock
was issued in connection with HUBCO's acquisition of Washington Bancorp, Inc. on
July 1, 1994, but those shares were called for redemption. No preferred stock is
presently outstanding. HUBCO has repurchased 760,000 shares of HUBCO Common
Stock 713,534 of which it holds as treasury shares and which it intends to use
in lieu of unissued Reserved Shares for the purposes specified above.
The purpose of the Amendment is to maximize HUBCO's ability to expand
its capital base. The full text of the proposed Amendment is attached to this
Proxy Statement as Appendix F. The following description of the Amendment is
qualified in its entirety by reference to Appendix F.
Purpose of the Proposal
Except for the Reserved Shares, HUBCO has no specific agreements,
commitments or plans at this time for the sale or other use of additional shares
of common or preferred stock. The HUBCO Board believes that the proposed
authorization to issue more common or preferred stock may assist in achieving
future acquisitions and in meeting its corporate needs. If the issuance of
shares is deemed advisable in connection with raising additional capital, or
future acquisitions, having the authority to issue the additional shares would
avoid the time, delay and expense of a special shareholders' meeting to
authorize the issuance of common or preferred stock. No further action or
authorization by HUBCO's shareholders would be necessary prior to issuance of
such stock, except as may be required for a particular transaction by applicable
law or regulation, including but not limited to, the listing regulations of the
National Association of Securities Dealers, Inc., which may require approval
under certain circumstances.
One circumstance which could cause HUBCO to issue shares in the
foreseeable future is the need for additional capital in acquisitions of
financial institutions. Since 1990, HUBCO and HUB have been actively involved in
acquiring financial institutions. In the past, many of HUBCO's acquisitions
involved the issuance of shares of common or preferred stock to the shareholders
of the acquired institutions. In addition, the acquisition of a significant
amount of assets for cash could reduce the leverage ratio of HUBCO and HUB.
Thus, HUBCO may raise capital following a proposed acquisition to maintain
compliance with regulatory capital requirements and provide a cushion of
additional capital. Because the acquisition process is often fast-paced, complex
and unpredictable, HUBCO cannot predict when and if stock issuance to target
shareholders or for capital-raising purposes will be deemed appropriate by
management or will be required as a commitment in connection with a specific
acquisition. HUBCO currently believes that if securities are issued to target
shareholders, HUBCO would most likely use common stock but may also issue
preferred stock.
<PAGE>
The additional shares of HUBCO Common Stock to be authorized by the
proposed Amendment will be identical to the shares of HUBCO Common Stock now
authorized and outstanding, and the Amendment will not affect the terms and
rights of the holders of those shares.
The additional shares of preferred stock will increase the number of
authorized preferred shares, all of which are "blank check" shares. "Blank
Check" preferred stock is preferred stock that may be issued with such terms and
conditions as the HUBCO Board determines at the time of issuance.
POSSIBLE ADVERSE EFFECTS OF THE PROPOSAL
The issuance of the additional common or preferred stock may have
certain effects upon the holders of HUBCO Common Stock. Holders of HUBCO Common
Stock will not have preemptive rights with respect to the common or preferred
stock. The issuance of further HUBCO Common Stock would increase the number of
shares of HUBCO Common Stock outstanding, thereby diluting percentage ownership
of existing shareholders. The issuance of more common or preferred stock could
possibly dilute book value per share or earnings per share for the then existing
holders of HUBCO Common Stock.
POSSIBLE ANTI-TAKEOVER EFFECTS OF THE PROPOSAL
The authorization or issuance of common stock or blank check preferred
stock may be viewed as being an "anti-takeover" device. In the event of a
proposed merger, tender offer or other attempt to gain control of HUBCO which
the HUBCO Board does not believe to be in the best interests of HUBCO or its
shareholders, the HUBCO Board could issue additional common or preferred stock
that could make any such takeover attempt more difficult to complete. Except for
the Reserved Shares, the HUBCO Board has no specific plans to issue any common
or preferred stock and does not intend to issue any common or preferred stock
except on terms that the HUBCO Board deems to be in the best interest of HUBCO
and its shareholders.
RECOMMENDATION AND VOTE REQUIRED FOR ADOPTION OF PROPOSAL 3
In accordance with the New Jersey Business Corporation Act and HUBCO's
Certificate of Incorporation, the affirmative vote of a majority of those shares
of common stock voting on this proposal is required to adopt the Amendment. THE
BOARD OF DIRECTORS OF HUBCO UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 3.
<PAGE>
IV. ELECTION OF LAFAYETTE DIRECTORS
DIRECTOR NOMINEE INFORMATION
Lafayette's By-laws authorize a minimum of 4 and a maximum of 24
directors but leave the exact number to be fixed by resolution of the Board of
Directors (the "LAFAYETTE BOARD"). The Lafayette Board has fixed the number of
directors at 14.
Pursuant to the Articles of Incorporation, the directors of Lafayette
are divided into three classes and each class is elected to serve for a
staggered three-year term.
Ms. Bynoe and Messrs. McNeil, Montesi, Tagliatela and Tatigian are each
being nominated for a three-year term extending to the 1999 Annual Meeting. If,
for any reason, any of the nominees becomes 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 Lafayette 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 and the directors whose terms
extend beyond the Lafayette Meeting, and certain information about each of them
as of the Lafayette Record Date, are set forth in the tables below.
<TABLE>
<CAPTION>
TABLE I--NOMINEES FOR 1996 ANNUAL MEETING
NAME, AGE &
POSITION WITH PRINCIPAL OCCUPATION DIRECTOR TERM
LAFAYETTE DURING PAST FIVE YEARS SINCE EXPIRING
- --------------- ---------------------- ----- --------
<S> <C> <C>
Linda Walker Bynoe, President and Chief Operating Officer, for 1994 1999
43 more than five years, Telemat Ltd. (a
private investment, project management and
financial services firm); Vice President,
Capital Markets Department of Morgan
Stanley & Co. (investment banking firm),
1978 to 1989; Director of American Odyssey
Funds, Inc. (a mutual fund) since April
1993; Director of Walden Residential
Properties, Inc. (a REIT) since February,
1994.
Roderick C. McNeil President, for more than five years, McNeil 1993 1999
III, 54 Brothers, Inc. (construction hauler);
Director, 1987 to February 1994, Lafayette
American Bancorp., Inc. ("Bancorp");
Director, 1969 to March 1993, Lafayette
Bank and Trust Company ("Lafayette Bank");
Director, 1984 to 1988, Lafayette Bancorp,
Inc. ("Lafayette Bancorp").
Enzo R. Montesi, 68 President, for more than five years,
Montesi Motors, Inc. (auto dealership); 1993 1999
Director, May 1993 to February 1994,
Bancorp; Director, 1975 to March 1993,
American National Bank ("American");
Director, 1985 to 1988, American Bancorp,
Inc. ("American Bancorp").
Louis F. President, for more than five years, 1993 1999
Tagliatela, 76 Franklin Construction Co., Inc.
(construction company-development);
Director, 1987 to February 1994, Bancorp;
Director, 1965 to March 1993, American;
Director, 1985 to 1988, American Bancorp.
John H. Tatigian, Senior Vice President, for more than five 1993 1999
Jr., 59 years, Peter Paul/Hershey (confection
company); Director, 1987 to February 1994,
Bancorp; Director, 1965 to March 1993,
American; Director, 1985 to 1988, American
Bancorp.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE II--DIRECTORS WHOSE TERMS CONTINUE
BEYOND THIS ANNUAL MEETING
NAME, AGE &
POSITION WITH PRINCIPAL OCCUPATION DIRECTOR TERM
LAFAYETTE DURING PAST FIVE YEARS SINCE EXPIRING
- --------------- ---------------------- ----- --------
<S> <C> <C> <C>
Steven Bangert, 39 Chairman and Chief Executive Officer of 1993 1998
Colorado Business Bankshares, Inc. (a bank
holding company) (formerly known as
Equitable Bankshares of Colorado, Inc.),
September 1994 to present; Chairman and
Director of River Valley Bank, FSB of
Weslaco, Texas (a federal savings bank),
January 1994 to present; and Vice Chairman
and Director, 1991 to January 1994;
Director of River Valley Holdings, Inc. (a
thrift holding company), 1991 to January
1995; President of Western Capital
Holdings, Inc. (a bank holding company),
August 1993 to present and Director 1991 to
present; President of Hawthorne Financial
Group, Inc. (an investment company), 1993
to present; Vice Chairman of River Valley
Savings Bank, FSB of Peoria, Illinois (a
federal savings bank)., 1987 to January
1995.
Donald P. Chairman of the Board of Directors of 1993 1997
Calcagnini, 60, Lafayette since March 1993; Chief Executive
Chairman of the Officer of Lafayette from March 1993 to
Board April 1994; Chairman of the Board of
Directors, March 1992 to February 1994,
President, 1986 to 1992, and Chief
Executive Officer, 1986 to February 1994,
Bancorp; Chairman of the Board of Directors
and President, 1965 to March 1993,
American; Chairman of the Board of
Directors and President, 1985 to 1988,
American Bancorp.
Bertram Director, for more than five years, 1993 1997
Frankenberger, Jr., Sheffield Management Company and Sheffield
63 Investments, Inc. (advisor to Blanchard
Group of Funds from July 1986-July 1995);
consultant and private investor; Director,
1987 to February 1994, Bancorp; Director,
1985 to March 1993, American; Director,
1985 to 1988, American Bancorp.
Gary R. Ginsberg, 62 Attorney, Ginsberg & Palumbo, P.C. (senior 1993 1997
attorney in law firm); Attorney, for more
than five years, Gary R. Ginsberg, P.C.;
Co-Chairman of the Board of Directors, 1986
to March 1992, Vice Chairman of the Board
of Directors, 1992 to December 1993, and
Director, December 1993 to February 1994,
Bancorp; Director, 1985 to March 1993,
American; Director, 1985 to 1988, American
Bancorp.
Robert B. President since December 1993, Chief 1993 1998
Goldstein, 55, Executive Officer since April, 1994, Chief
President & CEO Operating Officer, December 1993 to April,
1994, Lafayette; Vice Chairman, National
Community Banks, Inc. (a bank holding
company), West Paterson, N.J., January 1992
to November 1993 (bank holding company);
President and Chief Operating Officer of
Crossland Savings Bank, Brooklyn, N.Y.,
1991 to January 1992; Executive Officer of
First Interstate Bank of Texas N.A., 1985
to 1991.
Donald W. Harrison, Consultant, for more than five years, 1993 1998
70 Connecticut Distributors, Inc. (wholesale
liquor distributor); Director, 1990 to
February 1994, Bancorp; Director, 1965 to
March 1993, Lafayette Bank; Director, 1984
to 1988, Lafayette Bancorp.
Leonard R. Meyers, President, for more than five years, 1993 1998
61 Connecticut Jai Alai, Inc. (jai alai
fronton); Director, 1987 to February 1994,
Bancorp; Director, 1965 to March 1993,
Lafayette Bank; Director, 1988 to 1991,
Lafayette Bank Corp. Investment; Director,
1984 to 1988, Lafayette Bancorp.
Leif H. Olsen, 70 President for more than five years, Leif H. 1995 1997
Olsen Investments, Inc. (an economic
consulting and investment management firm);
Director of Interpublic Group of Companies,
Inc., 1972 to present; Director of Atlantic
Mutual Insurance Company, 1973 to present;
Director of Bank of New York Hamilton
Funds, 1992 to present; Director of Capital
Markets Assurance Corporation, 1994 to
present; Director of the DeKalb Fund
sponsored by Dime Savings Bank, 1992 to
December 1995; Director of Mechanics and
Farmers Savings Bank, FSB of Bridgeport,
Connecticut, 1989 to 1991.
John W. Rose, 46 President of McAllen Capital Partners, Inc. 1993 1998
(an investment adviser), 1992 to present;
Executive Vice President of FNB Corporation
of Hermitage, Pennsylvania (bank holding
company), April, 1995 to present; Director
of Bucktail Bank & Trust, January 1996 to
present; Director of Monarch Bancorp,
August 1995 to present; Director of First
County Bank, December 1995 to present;
Director of River Valley Bank, FSB of
Weslaco, Texas, 1992 to present; Director
of Life Line Shelters, Inc., June 1991 to
present; Senior Vice President of River
Valley Savings Bank, FSB of Peoria,
Illinois, 1992 to January 1994; President
of Livingston & Company, Southwest,
L.P.(venture capital firm), 1988 to 1992;
Senior Vice President of ABN Lasalle North
America (bank holding Company), 1984 to
1988.
</TABLE>
<PAGE>
Except for the following, no director of Lafayette is also a director
of any other company registered pursuant to Section 12 of the Exchange Act or
subject to the requirements of Section 15(d) of the Exchange Act or any company
registered as an investment company under the Investment Company Act of 1940.
Mr. Olsen is also a director of Capital Markets Assurance Corporation and
Interpublic Group of Companies, Inc.; Ms. Bynoe is a director of Walden
Residential Properties, Inc.; and Mr. Rose is a director of Monarch Bancorp and
FNB Corporation.
BOARD OF DIRECTORS' MEETINGS; COMMITTEES OF THE BOARD
The Board of Directors of Lafayette held 12 meetings during 1995. The
Board of Directors generally holds regularly-scheduled meetings each month and
special meetings as circumstances require.
Lafayette has a standing Audit Committee of the Board of Directors. The
Audit Committee monitors the internal controls of Lafayette and the objectivity
of its financial reporting. It meets with appropriate bank financial personnel,
its internal auditor and independent public accountants in connection with these
reviews. It also evaluates the performance of external firms engaged to perform
the internal audit function for Lafayette (currently Arthur Andersen LLP). The
Audit Committee recommends to the Board of Directors the appointment of
independent public accountants to serve as auditors for the following year in
examining Lafayette's accounts. Both the internal auditor and the independent
public accountants meet alone with the Audit Committee and have free access to
the Audit Committee at any time. The Audit Committee met 4 times during 1995.
During 1995, John W. Rose served as Chairperson of the Audit Committee. The
other members of the Audit Committee are Ms. Bynoe and Messrs. Meyers and
Tagliatela.
Lafayette currently does not have a nominating committee. The various
elements of compensation for the executive officers of Lafayette are set by the
Personnel Committee, which consists of John H. Tatigan, Jr. (Chairman), Donald
W. Harrison and Louis F. Tagliatela. The Personnel Committee establishes
personnel policies and reviews the performance of all officers of Lafayette. The
Personnel Committee recommends to the Board of Directors the levels of
compensation and other benefits paid or to be paid to Lafayette's officers.
During 1995, the Personnel Committee met four times.
During 1995, no director of Lafayette attended fewer than 75% of the
total meetings of the Board of Directors of Lafayette and meetings of committees
of Lafayette's Board on which such director served.
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information concerning the beneficial
ownership of Lafayette Common Stock as of February 29, 1996, by each executive
officer of Lafayette for whom individual information is required to be set forth
in this Proxy Statement (the "LAFAYETTE NAMED OFFICERS"), by each director and
by all directors and executive officers as a group.
<PAGE>
NO. OF COMMON SHARES PERCENT
NAME OF DIRECTOR OR EXECUTIVE OFFICER BENEFICIALLY OWNED(1) OF CLASS
------------------------------------- --------------------- --------
Steven Bangert 100,000 1.0%
Linda Walker Bynoe 10,800 *
Donald P. Calcagnini 186,559(2) 1.9
Bertram Frankenberger, Jr. 65,937(3) *
Gary R. Ginsberg 108,603(4) 1.1
Robert B. Goldstein 234,769(5) 2.3
Donald W. Harrison 63,420(6) *
Roderick C. McNeil III 109,223(7) 1.1
Leonard R. Meyers 26,751(8) *
Enzo R. Montesi 109,896(9) 1.1
Phillip J. Mucha 12,661(10) *
Leif H. Olsen - -
Raymond J. Peach 30,731(11) *
Amanda V. Perkins 8,333 *
John W. Rose 55,000 *
Louis F. Tagliatela 179,990(12) 1.8
John H. Tatigian, Jr. 54,477(13) *
All directors and executive
officers as a group (18 persons) 1,371,414 13.4
- -------------------
* Indicates ownership of less than 1% of the class.
- -----------
NOTES:
(1) 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 or not
yet issued 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 directly of record and beneficially by the
named person, with sole voting and investment power. Included in the
number of shares listed as "beneficially" owned are the following
shares of Lafayette Common Stock that the specified persons had the
right to acquire on or before April 29, 1996 through the exercise of
stock options: Mr. Calcagnini (32,500), Mr. Goldstein (166,666), Mr.
Mucha (8,375), Mr. Peach (6,500), Ms. Perkins (8,333) and the Directors
and executive officers as a group (228,874). None of the Bank's
non-employee Directors owns any stock options.
(2) Includes 125,546 shares held jointly with Mrs. Calcagnini.
(3) Includes (i) 4,541 shares held in trust by Mrs. Frankenberger for the
couple's grandchildren as to which beneficial ownership is disclaimed
by Mr. Frankenberger and (ii) 41,834 shares held in an Individual
Retirement Account.
(4) Includes (i) 1,030 shares held in the name of Mr. Ginsberg's
granddaughter's trust and (ii) 56,057 shares owned by Mrs. Ginsberg, as
to which beneficial ownership is disclaimed by Mr. Ginsberg.
<PAGE>
(5) Includes (i) 65,000 shares held jointly with Mrs. Goldstein and (ii)
2,106 shares owned by Mrs. Goldstein.
(6) Includes 31,164 shares owned by Mrs. Harrison, as to which beneficial
ownership is disclaimed by Mr. Harrison.
(7) Includes (i) 22,019 shares held by the Roderick C. McNeil II Marital
Trust, (ii) 25,887 shares held by McNeil Brothers, Inc., (iii) 211
shares owned by Mrs. McNeil, as to which beneficial ownership is
disclaimed by Mr. McNeil, (iv) 10,210 shares held in the name of Mr.
McNeil's children, (v) 3,886 shares held in Mr. McNeil's Individual
Retirement Account, and (vi) 10,050 shares held in the name of Mr.
McNeil's mother.
(8) Includes (i) 542 shares held by Mr. and Mrs. Meyers as Trustees, (ii)
109 shares owned by Mrs. Meyers, as to which beneficial ownership is
disclaimed by Mr. Meyers, (iii) 531 shares held in Mr. Meyers'
Individual Retirement Account, and (iv) 433 shares held in Mrs. Meyers'
Individual Retirement Account, as to which beneficial ownership is
disclaimed by Mr. Meyers.
(9) Includes (i) 3,482 shares owned by Mrs. Montesi, (ii) 63,777 shares
held jointly with Mrs. Montesi, (iii) 2,423 shares held in trust for
Mr. Montesi's children, (iv) 11,230 shares held in the Montesi Motors
Inc. Pension and Profit Sharing Plan, and (v) 25,568 shares held in the
name of En-Lou Realty Company, a partnership for which Mr. Montesi is
agent and which is comprised of various trusts for the respective
benefit of Mr.
Montesi's children and wife.
(10) Includes 4,000 shares held jointly with Mrs. Mucha.
(11) Includes (i) 6,063 shares held jointly with Mrs. Peach and (ii) 515
shares owned individually by Mrs. Peach.
(12) Includes (i) 13,898 shares held jointly with Mrs. Tagliatela, (ii)
8,658 shares held by Mr. Tagliatela's children, (iii) 5,770 shares held
in the name of a company controlled by Mr. Tagliatela, (iv) 142,527
shares held in the name of LPS Investment Partnership, a partnership
including Mr. Tagliatela's children as partners, and (v) 8,522 shares
held in the name of The Mary A. Tagliatela Spray Trust.
(13) Includes 34,090 shares held in an Individual Retirement Account.
The following table furnishes information known by Lafayette as to the
beneficial owners of more than five percent of Lafayette Common Stock as of
December 31, 1995.
Percent
Name and Address of Beneficial Owner Number of Shares of Class
------------------------------------ ---------------- --------
Keefe Managers, Inc. 809,500 8.1%
375 Park Avenue
New York, New York 10152
Heine Securities Corporation 573,513 5.7%
51 JFK Parkway
Short Hills, New Jersey 07078
<PAGE>
EXECUTIVE COMPENSATION
GENERAL
Executive compensation is described below in the tabular format
mandated by the Commission. The letters in parentheses above each column heading
are the letters designated by the Commission for such columns, and are provided
to make inter-company comparisons easier.
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation earned in the past
three years for services performed in all capacities for Lafayette with respect
to the Lafayette Named Officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------
(a) (b) (c) (d) (g) (i)
NAME SECURITIES ALL OTHER
AND PRINCIPAL UNDERLYING COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS # ($)(E)(F)
-------- ---- ------------ ------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Donald P. 1995 182,013 - 27,787
Calcagnini, Chairman 1994 180,211 37,500 52,944
1993 168,643 - 42,034
Robert B. Goldstein, 1995 233,320 132,500(A) - 6,536
President and CEO 1994 202,885 150,000(B) 250,000 5,683
1993 20,000(D) - -
Raymond J. Peach 1995 121,652 15,000(A) 7,500 20,395
Executive Vice 1994 112,882 12,000 15,179
President/Director 1993 106,212 - 20,160
of Business Banking
Phillip J. Mucha 1995 115,031 20,000(A) 7,500 2,955
Executive Vice 1994 114,808 16,600(C) 12,000 2,192
President and Chief 1993 113,402 - - -
Financial Officer
Amanda V. Perkins 1995 107,216 15,000(A) - 692
Executive Vice 1994 104,053 35,000(B) 25,000 949
President/Chief 1993 18,962(D) - -
Credit Policy Officer
</TABLE>
- ------------
NOTES:
(A) Bonus paid in 1996 for services rendered during 1995.
(B) Bonus paid in 1995 for services rendered during 1994.
(C) Includes $12,000 bonus paid in 1995 for services rendered during 1994.
(D) Amount shown for 1993 reflects less than a full year of compensation
for Mr. Goldstein and Ms. Perkins, whose employment by Lafayette
commenced on November 11, 1993 and December 13, 1993, respectively, at
annual salaries of $200,000 and $103,000, respectively. Ms. Perkins'
amount includes a hiring bonus of $15,000.
(E) While each officer's annual compensation includes the incremental cost
to Lafayette for certain executive perquisite programs, such
perquisites do not exceed the lesser of $50,000 or 10% of such
officer's salary and bonus and, accordingly, are not reflected in the
table presented above.
(F) Amounts reported in this column for 1995 are comprised of the
following items:
<PAGE>
<TABLE>
<CAPTION>
ACCRUAL FOR ACCRUAL FOR LONG-TERM VALUE OF
MATCH-SAVINGS DEFERRED POST-RETIREMENT DISABILITY SPLIT-DOLLAR
PLAN COMPENSATION MEDICAL BENEFITS POLICY PREMIUM LIFE INSURANCE
---- ------------ ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Donald P. Calcagnini $3,080 $8,739 $10,020 $4,513 $1,435
Robert B. Goldstein 3,106 ---- ---- 3,430 ----
Raymond J. Peach 1,384 17,860 ---- 3,726 ----
Phillip J. Mucha 1,858 ---- ---- 1,097 ----
Amanda V. Perkins ---- ---- ---- 692 ----
</TABLE>
The amounts set forth in the column "Match-Savings Plan" represent
Lafayette's matching contributions under the Lafayette American Bank and Trust
Company Employees' Savings and Profit Sharing Plan and Trust. The amounts set
forth in the column "Accrued for Deferred Compensation" represent Lafayette's
expense under the Management Plan. The amounts set forth in the column "Accrual
for Post-Retirement Medical Benefits" represent Lafayette's expense under the
agreement with Mr. Calcagnini for post-termination health care coverage.
STOCK OPTIONS
In addition to 250,000 stock options granted to Mr. Goldstein,
Lafayette currently has options outstanding under two stock option plans. These
plans and certain option activity are described below.
1984 INCENTIVE STOCK OPTION PLAN. Under the 1984 Incentive Stock Option
Plan (the "1984 PLAN"), options were granted at exercise prices which were not
less than the fair market value of the shares on the date that the options were
granted. No option granted under the 1984 Plan could be exercised more than five
years after the grant and no option could be granted more than ten years after
the April 1984 adoption of the 1984 Plan by the shareholders. Thus, options may
no longer be granted under the 1984 Plan.
1994 STOCK OPTION PLAN. The 1994 Stock Option Plan (the "1994 Plan")
was adopted by Lafayette's shareholders in May 1994, and provides for the grant
of non-statutory stock options and "incentive stock options" within the meaning
of Section 422 of the Code. The determination of whether a particular option
granted under the 1994 Plan is an incentive option or a non-statutory option is
made by the Personnel Committee at the time of grant. All options granted in
1995 were non-statutory options. No option may be granted pursuant to the 1994
Plan after April 18, 2004, ten years after the date on which the 1994 Plan was
initially adopted by the Board of Directors. No incentive options may be
exercised more than ten years after the date of grant. Incentive options granted
to 10% shareholders may only be exercised for a period of five years after the
grant date. Although the 1994 Plan does not limit the term of non-statutory
options, all options reflected in the table below (all of which are
non-statutory) have a term that expires 10 years after their respective grant
dates. All options granted in 1995 were granted at an exercise price of $5.00
per share, a price below the then current market price. In contrast, the
exercise price of an incentive option cannot be less than the "fair market
value" of a share of Common Stock on the date of grant. The 1994 Plan provides
that each option shall become exercisable at such time or times and in such
amount or amounts during its term as the Personnel Committee may determine at
the time of grant. Certain options granted pursuant to the 1994 Plan were
subject to provisions that result in full vesting upon a change in control (such
as the Merger).
STOCK GRANT TABLE
The following table provides certain information about options awarded
to Lafayette Named Officers in the last fiscal year. Lafayette does not use SARs
in its compensation package.
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
NAME UNDERLYING GRANTED TO EXERCISE GRANT DATE
---- OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION PRESENT
GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE VALUE($)(1)
----------- ----------- ------------ ---------- ------------
(a) (b) (c) (d) (e) (f)
<S> <C> <C> <C> <C> <C>
Phillip J. Mucha 7,500(2) 13.39% $5.00 7/26/05 54,278
Raymond J. Peach 7,500(2) 13.39 5.00 7/26/05 54,278
</TABLE>
- ------------------
NOTES:
(1) In accordance with FDIC rules, the Black-Scholes option pricing model
was chosen to estimate the grant date present value of the options set
forth in this table. Lafayette's use of this model should not be
construed as an endorsement of its accuracy at valuing options. All
stock option valuation models, including the Black-Scholes model,
require a prediction about the future movement of the stock price. The
following assumptions were made for purposes of calculating the grant
date present value: an option term of 10 years, volatility at 24.30%,
no dividend yield, and an interest rate at 6.63%. In addition, the
present value calculated pursuant to the Black-Scholes model was
discounted at 5% per vesting year under risk of forfeiture. The real
value of the options in this table depends upon the actual performance
of the Common Stock during the applicable period.
(2) These options vest over 32 months and become exercisable at the rate of
2,500 options on each of April 1, 1996, 1997 and 1998.
STOCK EXERCISE TABLE
The following table is intended to show options exercised during the
last fiscal year and the value of unexercised options held at year-end 1995 by
the Lafayette Named Officers.
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SAR at Options/SARs at
FY-End(#) FY-End ($)(2)
--------- -------------
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- ---- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Robert B. Goldstein(1) - - 166,666/83,334 708,331/354,169
Donald P. Calcagnini - - 20,000/25,000 53,125/106,250
Phillip J. Mucha - - 1,875/21,375 6,094/88,969
Raymond J. Peach - - -0-/19,500 -0-/82,875
Amanda V. Perkins 8,333 32,808 8,333/8,334 35,415/35,420
</TABLE>
- ----------------
NOTES:
(1) Does not include 10,000 unexercisable options in the name of Mrs.
Goldstein.
(2) Options are "in the money" if the fair market value of the underlying
security exceeds the exercise price of the option at year end. The
value is based upon the closing price of Lafayette Common Stock at
December 31, 1995 of $9.25.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
Lafayette has from time to time entered into or assumed existing
employment agreements with executive officers. Presently, Lafayette is party to
employment agreements with Donald P. Calcagnini, Robert B. Goldstein, Phillip J.
Mucha and Amanda V. Perkins. Each such agreement has certain unique terms and
conditions, which are described below. However, Lafayette's agreement with
Messrs. Calcagnini, Goldstein and Mucha and Ms. Perkins all have the following
features in common. Each such executive officer is entitled (i) to the use of an
automobile at Lafayette's expense, (ii) to all rights, benefits and privileges
of all employees of Lafayette under any retirement, pension, profit sharing,
insurance, major medical, hospital, group life insurance or other plans in
existence or adopted at any time during the term of such officer's employment
agreement, and (iii) to a severance payment equal to 2.99 times the respective
executive officer's annual salary and any bonus awarded during the prior year,
plus reimbursement for any excise taxes payable as a result of such severance
payment in the event that the respective executive officer is terminated or
terminates his or her employment within a specified period before or after an
actual or proposed Change-in-Control Event (as defined in each agreement). In
addition, Lafayette's agreements with Messrs. Calcagnini, Goldstein and Ms.
Perkins also entitle each such person to reimbursement for membership fees and
annual dues with respect to certain clubs.
<PAGE>
The following are brief summaries of the more specific terms of
Lafayette's employment agreements with Messrs. Calcagnini and Goldstein and Ms.
Perkins, as well as the terms of Lafayette's employment agreement with Mr.
Mucha.
Donald P. Calcagnini entered into an employment agreement with
Lafayette, dated as of April 25, 1994 (the "CALCAGNINI AGREEMENT"), which
superseded all prior employment agreements between Mr. Calcagnini and Lafayette
or any of its predecessors. Pursuant to the terms of the Calcagnini Agreement,
Mr. Calcagnini will be employed for an initial term which expires on April 24,
1997. Unless the Calcagnini Agreement is terminated, the term will automatically
extend for successive one year periods. The Calcagnini Agreement provides that
Mr. Calcagnini will serve as Chairman of the Board of Directors at a base salary
of $182,000 per annum. Commencing with the year ended April 24, 1995, the
Executive Committee of the Board of Directors will determine whether Mr.
Calcagnini is entitled to a bonus. Pursuant to the Calcagnini Agreement, Mr.
Calcagnini received an option to purchase a total of 37,500 shares of the
Lafayette Common Stock at an exercise price of $5.00 per share. A total of
12,500 shares vest on each of April 24, 1995, April 24, 1996 and April 24, 1997.
All of the options will become fully vested in the event of a Change-in-Control
Event (as defined), a termination by Lafayette without cause or a termination by
Mr. Calcagnini for "Good Reason" (which includes failure by Lafayette to make
any required payment under the Calcagnini Agreement, relocation of Lafayette's
principal offices and the occurrence of a Change-in-Control Event). The options
expire 10 years after the date of grant. During the term of the Calcagnini
Agreement, Lafayette also will, at its expense, name Mr. Calcagnini's estate as
a beneficiary for one half of the proceeds on a split dollar life insurance
policy currently maintained by Lafayette in the face amount of $1 million. In
addition, pursuant to letter agreement dated June 15, 1994 between Lafayette and
Mr. Calcagnini, Lafayette will provide, at its own expense, subject to certain
cost limitations, additional hospitalization, health and medical reimbursement
coverage to Mr. Calcagnini and his wife, both during and after termination of
his employment with Lafayette.
As of December 1993, Robert B. Goldstein began to serve as President
and Chief Operating Officer and a director of Lafayette. On February 24, 1994,
Lafayette entered into an employment agreement with Mr. Goldstein, which was
amended on October 28, 1994 (the "GOLDSTEIN AGREEMENT"). The Goldstein Agreement
provides for an initial term ending on December 31, 1996 at an annual base
salary of $200,000 through November 18, 1994, $230,000 from November 19, 1994 to
November 18, 1995, and thereafter an amount (presently $264,500) equal to the
previous year's salary as adjusted on a yearly basis by a cost of living factor.
Unless the Goldstein Agreement is terminated, the term will automatically extend
for successive one year periods. The Goldstein Agreement also provides for a
bonus of between $50,000 and $150,000 in the first year, which bonus equaled
$150,000. For each subsequent period, Mr. Goldstein's bonus will equal up to 50%
of the base salary for such period. Mr. Goldstein received an option to purchase
250,000 shares of Lafayette Common Stock, vesting in three equal annual
installments commencing in December 1994, and exercisable through February 24,
2004, at $5.00 per share. All such options will vest immediately upon a
Change-in-Control Event (as defined), a termination by Lafayette without cause
or a termination by Mr. Goldstein for Good Reason (as defined). The Goldstein
Agreement provided that Mr. Goldstein was entitled to reimbursement for certain
expenses attendant to moving to Connecticut.
Amanda V. Perkins and Lafayette entered into an employment agreement
dated as of December 20, 1994 (the "PERKINS AGREEMENT"), which provides that Ms.
Perkins will serve as Senior Vice President and Chief Credit Policy Officer of
Lafayette. The Perkins Agreement provides for an initial term ending on December
31, 1996 at an annual base salary of $103,000 through December 31, 1994 and
thereafter at an annual salary (presently $114,500) equal to the previous year's
salary as adjusted on a yearly basis by a cost of living factor. Unless the
Perkins Agreement is terminated, the term will automatically extend for
successive one year periods. The Perkins Agreement provides that the Executive
Committee will conduct an annual incentive bonus review, and the amount of any
bonus will be set at the discretion of the Executive Committee. Ms. Perkins also
received an option to purchase 25,000 shares of Lafayette Common Stock, vesting
in three equal annual installments commencing in December 1994, and exercisable
through May 24, 2004, at $5.00 per share. All such options will vest immediately
upon a Change-in-Control Event (as defined).
<PAGE>
Phillip J. Mucha entered into an employment agreement with Lafayette,
dated as of March 23, 1995 (the "MUCHA AGREEMENT"), which supersedes all prior
employment agreements between Mr. Mucha and Lafayette or any of its
predecessors, except with respect to stock options granted to Mr. Mucha as
described below. The Mucha Agreement provides that Mr. Mucha will serve as
Senior Vice President and Chief Financial Officer of Lafayette for an initial
term ending on December 31, 1996 at an annual base salary of $115,000. Unless
the Mucha Agreement is terminated, the term will automatically extend for
successive one year periods. The Mucha Agreement provides that the Executive
Committee will conduct an annual incentive bonus review, and the amount of any
bonus will be set at the discretion of the Executive Committee. Mr. Mucha
previously was granted options to purchase 3,750 shares of Lafayette Common
Stock, vesting in six equal annual installments commencing in September 1993 and
exercisable through August 31, 1999, at $6.00 per share.
Lafayette has also entered into an employee severance pay agreement
with Kenneth M. Klieback, Executive Vice President-Support Services Division,
which provides for a lump sum severance payment to be made to Mr. Klieback in
the event that his employment is terminated by the Company or him under certain
circumstances within 12 months after a merger, business combination or
divestiture involving Lafayette. The lump sum payment, which is due on the date
of cessation of Mr. Klieback's employment, would be equal to three times his
regular annual compensation, not including bonuses or extraordinary items, but
subject to reduction in certain circumstances so as to avoid excise tax
obligations. If Mr. Klieback is employed by Lafayette for more than 12 months
following such an event, the severance pay obligation will cease entirely.
EMPLOYEE BENEFIT PLANS
Employee benefit plans that were in place for the benefit of the
employees of Lafayette, its predecessors and Lafayette's former parent, Bancorp,
at the time of the reorganization and merger of Bancorp with and into Lafayette
in February 1994 have been continued and assumed by Lafayette. Lafayette's
employee benefit programs currently are as follows:
CASH BALANCE PLAN AND TRUST. Lafayette maintains a non-contributory
defined benefit plan (the "BENEFIT PLAN") that is intended to qualify under
Section 401(a) of the Code. Upon effectiveness of the merger of Bancorp with and
into Lafayette, Lafayette became the Benefit Plan sponsor and the Benefit Plan
was renamed the "Lafayette American Bank and Trust Company Cash Balance Plan and
Trust." Employees (subject to certain limitations) may participate after they
have completed one year of service (generally, any 12 month period beginning on
their date of employment or anniversary thereof during which they have completed
1,000 hours of service) and have attained age 21. Past service credited under
the prior version of the Benefit Plan is counted for eligibility, vesting and
benefit accrual purposes. A participant is fully vested in his or her benefits
after five years of service (for this purpose, a year of service is generally
any calendar year during which a participant has completed 1,000 hours of
service) or, if earlier, retirement at age 65 or termination of employment
because of death or total and permanent disability.
A participant's benefit is his or her actuarially calculated accrued
lump sum benefit as of December 31, 1989 (using a prior benefit formula), plus a
benefit calculated pursuant to the current Benefit Plan formula, which provides
the benefit for all service on or after January 1, 1990. The current benefit
formula provides a benefit that is the actuarial equivalent of the amount
credited to a bookkeeping account maintained under the Benefit Plan for each
participant. For each Plan Year (calendar year) in which a participant has
completed at least 1,000 hours of service, the participant's account is credited
with a percentage of the participant's annual compensation (up to $150,000 of
compensation, for Plan Years beginning on or after January 1, 1994), determined
as follows:
<PAGE>
Years of Service
(as of first day of Plan year) Percentage
------------------------------ ----------
Less than 5 4
5 or more, but less than 10 5
10 or more, but less than 15 6
15 or more 7
Each participant's account is also increased monthly, until benefits
begin, by an amount equal to one twelfth of a percentage of the participant's
account balance as of the beginning of the Plan Year. That percentage is equal
to the greater of (i) 4% or (ii) the average of the rates for five-year U.S.
Treasury notes for each week ending in December of the preceding year. Benefits
at retirement can be paid either as a monthly annuity, with a variety of
optional payment forms, or as a lump sum. Benefits are payable in the event of
death, total and permanent disability, retirement, or termination of employment
for other reasons after vesting. The form and commencement date of benefit
payments depend upon the event giving rise to the payments, the amount of
benefit, and any allowable election by the participant. If a participant becomes
disabled, dies or retires, he or she (or his or her beneficiary) will begin
receiving benefits as soon as practicable. No participant's accrued benefit is
less than his or her accrued benefit as of December 31, 1990.
The following table sets forth the annual benefit based on a payment
option of a level single life annuity that the Lafayette Named Officers might
expect to be paid if they remain employed until age 65. As of December 31, 1995,
such persons had the following credited years of service: Mr. Calcagnini, 6
years; Mr. Goldstein, 2 years; Mr. Mucha, 3 years; Mr. Peach, 6 years; Ms.
Perkins, 2 years. Annual contributions for Messrs. Calcagnini and Peach began in
1990 and do not reflect their respective employment with Bancorp, however,
determination of annual contribution percentages for such individuals do reflect
prior years of service with Bancorp in accordance with the Benefit Plan.
Projected Annual
Benefit Payable
Officer At Age 65
------- ----------------
Donald P. Calcagnini $17,139
Robert B. Goldstein 9,075
Phillip J. Mucha 21,794
Raymond J. Peach 13,978
Amanda V. Perkins 33,502
The pension contribution is determined on an annual basis by
Lafayette's pension actuary. Lafayette's funding policy is to contribute
annually amounts at least equal to the minimum contributions required under the
Employee Retirement Income Security Act of 1974, as amended. Pension expense
amounted to $181,512 for the year ended December 31, 1995.
SAVINGS AND PROFIT SHARING PLAN AND TRUST. Lafayette sponsors a savings
and profit sharing plan (the "SAVINGS PLAN"), which is intended to qualify under
Sections 401(a) and 401(k) of the Code, covering all employees who have worked
at least 1,000 hours of service during a 12 month period beginning on their date
of hire or any anniversary thereof, and who have attained age 21. Upon the
effectiveness of the merger of Bancorp with and into Lafayette, Lafayette became
the Savings Plan sponsor, and the Savings Plan was renamed the "Lafayette
American Bank and Trust Company Employees' Savings and Profit Sharing Plan and
Trust".
<PAGE>
The purpose of the Savings Plan is to provide additional retirement
benefits to employees. The Savings Plan has a discretionary profit sharing
feature pursuant to which Lafayette may make contributions out of its net
profits. No profit sharing contributions were made for 1995. The Savings Plan
also allows participants, in effect, to make pre-tax contributions pursuant to
salary reduction agreements. Participants may contribute up to 10% of their
pre-tax earnings, up to a maximum dollar limit determined annually by the IRS.
For 1995, this limit was $9,240.
Lafayette matches as an employer contribution a percentage of
participants' contributions to the Savings Plan. Lafayette's matching
contribution formula is determined annually by Lafayette's Board of Directors.
Lafayette currently matches employee salary reduction contributions at the rate
of 50 cents per dollar on contributions up to the first 2% of the employee's
compensation (before reduction) and 25 cents per dollar on contributions up to
the next 4% of the employee's compensation. Employee contributions in excess of
6% of the employee's compensation are not matched by Lafayette.
Employee contributions vest immediately, while Lafayette's matching
contributions vest only after 5 years of service (for this purpose, a year of
service is any calendar year) with at least 1,000 hours worked each year. All
matching contributions are made by Lafayette in the form of shares of Lafayette
Common Stock purchased in the open market. Payment of a participant's vested
account balance is made in a lump sum following death, total and permanent
disability, retirement after age 65, or termination of employment for other
reasons. The date of benefit payment depends upon the event giving rise to the
payment, the amount of payment, and any allowable election by the participant.
Participants have a choice of six investment options in which they can
invest their contributions. Changes to investment elections may be made
quarterly, and increases to deferral percentages may be made once per calendar
year.
Shares of Lafayette Common Stock purchased in the open market are held
in trust for the benefit of participants. Total contributions made to the
Savings Plan by participants were approximately $348,000, and total
contributions made to the Savings Plan by Lafayette were approximately $87,000
(with stock purchases of approximately 41,221 shares), for the year ended
December 31, 1995.
Savings Plan loans secured by a participant's account balance are
available to any Savings Plan participant on a non-discriminatory basis. The
minimum amount for which a loan can be requested is $500; the maximum amount
available is generally the lesser of 50% of a participant's vested account
balance or $50,000 (reduced by the highest outstanding loan balance during the
one-year period before the loan).
SENIOR MANAGEMENT DEFERRED COMPENSATION PLAN. In 1987, American
established a deferred compensation plan for senior management which has been
assumed by Lafayette (the "Management Plan"). Five of the officers initially
covered under the Management Plan are currently employed by Lafayette, including
Messrs. Calcagnini and Peach. The Management Plan consists of individual
agreements, as amended, for each of the officers. Four of the five agreements
provide for a benefit amount which is payable upon retirement at or after age
65, upon attaining the age of 65 following termination of employment for any
reason other than retirement or death, or upon death before retirement or total
disability. Retirement, disability and severance benefits are payable over a
period of 15 years from commencement of payment, and death benefits are payable
over a period of 10 years from commencement of payment. Benefits are payable at
a reduced rate if a participant elects to commence receiving benefits between
the ages of 60 and 64. The fifth agreement, as amended, provides that the
employee is fully vested in his benefit upon termination of employment for any
reason. Such benefit is payable in one lump sum, unless he elects to receive it
instead in the form of an insured annuity. The annual retirement benefit for Mr.
Calcagnini pursuant to the Management Plan is $85,000 less an amount equal to
the annual benefit provided by converting the balance vested in Mr. Calcagnini's
account in the Benefit Plan upon his retirement into an annuity paying fixed
monthly benefits for life, 100% of which monthly benefits would be payable to
Mr. Calcagnini's surviving spouse for life. The annual retirement benefit for
Mr. Peach pursuant to the Management Plan is $52,000, less an amount equal to
annual benefits provided by converting the balance vested in Mr. Peach's account
in the Benefit Plan upon his retirement into a fifteen year certain annuity with
full survivor rights. Lafayette is the beneficiary and sole owner of life
insurance policies on the lives of the eight original participating bank
officers. The Management Plan is structured with the objective that insurance
proceeds to be received by Lafayette, together with earnings thereon, will
ultimately repay Lafayette in full for any payments to be made under this plan.
Net expenses under the Management Plan for the year ended December 31, 1995 was
$1,493.
<PAGE>
HEALTH CARE COVERAGE. In 1994, Lafayette entered into an agreement with
Mr. Calcagnini which provides medical and health insurance and medical
reimbursement coverage to Mr. Calcagnini and his wife from the date of Mr.
Calcagnini's termination until the date of his death, subject to certain cost
limitations. From the date of Mr. Calcagnini's termination until the date of his
65th birthday, the maximum aggregate expense to Lafayette under this agreement
is $42,789. From the date of Mr. Calcagnini's 65th birthday until the date of
his death, the maximum aggregate expense to Lafayette is $184,799.
PERFORMANCE PLUS INCENTIVE PLAN. In 1995, Lafayette established the
Performance Plus Incentive Plan (the "Performance Plan"). Under the terms of the
Performance Plan, employees designated by the Personnel Committee are eligible
to receive awards if goals established for both Lafayette and the individuals
are achieved. Awards (if any) may be in the form of merit raises, cash bonuses,
stock options (which would be granted under Lafayette's 1994 Stock Option Plan)
and/or a combination of the foregoing. There were no awards payable under the
Performance Plan for 1995.
DIRECTORS' COMPENSATION
During 1995, each director of Lafayette (except Messrs. Calcagnini and
Goldstein) received fees, in addition to an annual retainer of $7,500, for
services as a director. Such fees are $450 per Board of Directors meeting
attended. In addition, all directors, except Messrs. Calcagnini and Goldstein,
are paid for attending meetings of committees of the Board of Directors. With
the exception of the Executive Committee, the fees paid for attending committee
meetings are $200 per meeting plus $100 per month for the committee chairman.
Executive Committee members receive a fee of $2,000 per month. Additionally,
out-of-state directors are entitled to reimbursement for reasonable travel and
lodging expenses related to their meeting attendance.
Directors' Deferred Compensation Plan. Lafayette established a deferred
compensation plan for its directors, consisting of individual agreements with
each director. Under the plan, in prior years, a portion of the annual
directors' fees payable to them by Lafayette was deferred. The amount of the
deferrals under such agreements ranged from $5,000 to $37,500 for each director
per year. The directors are not currently taxed on the amount of the deferred
compensation. Commencing on each director's normal retirement date (age 65 for
contract purposes) or death, the director or his or her estate or named
beneficiaries will be paid annual compensation for a period of ten years. The
amount of payment will vary, depending on the age of the director at the time
the plan commenced and the amount of the annual deferral. Lafayette has
purchased life insurance policies on the lives of its directors, the aggregate
annual premiums for which are paid out of Lafayette's general assets. Lafayette
is the beneficiary and sole owner of the life insurance policies on the lives of
the directors. The plan is structured with the objective that insurance
proceeds, together with earnings thereon, will ultimately repay Lafayette in
full for any payments to be made to the directors under the plan. Lafayette also
established non-contributory defined benefit retirement income plans covering
certain directors, with related individual supplemental compensation agreements
which reduced the amount of deferred compensation benefits otherwise payable
under the plans. The aggregate retirement plan expense was $169,853 and the
aggregate net deferred compensation plan expense was $103,446 for the year ended
December 31, 1995.
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation payable to Lafayette's executive officers is
determined by the Personnel Committee. The Personnel Committee establishes
personnel policies and reviews the performance of all officers of Lafayette. The
Personnel Committee reviews and recommends to the Lafayette Board the levels of
compensation and other benefits paid or to be paid to Lafayette's officers.
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, or under the Exchange Act, except to the extent
that Lafayette specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
EXECUTIVE COMPENSATION POLICY
The Personnel Committee (the "COMMITTEE") recommends to the full Board
of Directors the salaries of Lafayette's executive officers and other key
management employees and administers Lafayette's Incentive Stock Option Plan.
The Committee's executive compensation program is designed to meet the
following objectives:
* To connect the interests of the executives' compensation
program with overall corporate performance and increases in
shareholder value by tying a portion of their total
compensation to meeting specific short-term and long-term
performance goals of Lafayette.
* To provide a balanced total compensation package that
recognizes the individual contributions of the executives and
the overall results of Lafayette.
Periodically, the Committee conducts a full review of Lafayette's
executive compensation program. This review includes analyzing market survey
data prepared by an independent consulting firm comparing Lafayette's salary
ranges with a peer group composed of banks ranging in size from $500 million to
$2 billion in assets.
The Committee's policies with respect to each of the elements of the
executive compensation program are discussed below. In addition, while the
elements of compensation described below are considered separately, the
Committee considers the total compensation package afforded by Lafayette to each
executive, including perquisites, insurance and other benefits.
BASE SALARY
Base salaries for executive officers are determined by evaluating the
responsibilities of the position, qualifications, and experience of the
individual, and by reference to the competitive marketplace for comparable
positions at other similar sized banks. This is necessary to attract and retain
quality talent which is critical to both the short term and long range success
of Lafayette.
Salary reviews are conducted every 12 months and salary adjustments are
made based upon the performance of the company and of each executive officer.
Base salaries for executive officers and all other salaried employees are set
within salary ranges established for the position as determined through periodic
competitive salary surveys.
<PAGE>
ANNUAL DISCRETIONARY BONUS
Lafayette's executive officers, as well as other key managerial
employees, are eligible for an annual discretionary bonus award under a plan
administered by the Committee. Individual short-term (annual) performance
objectives are established at the beginning of each year. For the senior
executive officers, the corporate performance measures for award payments are
based on financial measures including income, return on assets, return on equity
and management of certain administrative costs. For executive officers other
than the Chief Executive Officer, a balance is struck between overall corporate
performance and the performance of the specific areas under each executive
officer's direct control. This balance supports the accomplishment of overall
objectives and rewards individual contributions by each executive officer.
STOCK OPTIONS
The Committee is responsible for recommending awards of stock options
to the full Board.
These awards are intended to maintain a sharp focus on the achievements
of long term results, and also to more closely align the interests of the
executive to the interests of the shareholders.
Stock options can also be used as a retention device for key
individuals due to the vesting restrictions imposed.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR 1995
Robert B. Goldstein, the President and CEO, received an increase in
base pay for 1995 of $34,500. He also received a bonus of $132,500 in 1996 for
services rendered during 1995, which was based on Lafayette's improved
performance, including improved operating ratios, loan growth, increased income
and the expansion of Lafayette through new branch openings in strategic markets.
THE PERSONNEL COMMITTEE OF THE BOARD OF DIRECTORS OF LAFAYETTE
John H. Tatigian, Jr., Chairman
Donald W. Harrison
Louis F. Tagliatela
PERFORMANCE GRAPH
The following chart compares the cumulative total return on a
hypothetical $100 investment made at the close of business on December 31, 1990
in: (a) Lafayette's Common Stock; (b) CRSP (Center for Research in Securities
Prices at the University of Chicago) Total Return Index for the Nasdaq Stock
Market (U.S. Companies); and (c) CRSP Total Return Index for Nasdaq Bank Stocks.
The information in the chart is calculated assuming that all dividends are
reinvested during the relevant periods. The chart 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.
[The graph which will appear in the printed version of this document will have
the plot points indicated below.]
<PAGE>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Nasdaq Stock Market (U.S.) 100 161 187 215 210 296
Nasdaq Bank Stocks 100 164 239 272 271 404
Lafayette 100 93 100 100 80 133
PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Personnel Committee are John H. Tatigian, Jr.,
Chairman, Donald W. Harrison and Louis F. Tagliatela. No member of the Personnel
Committee is, or has been, an officer of Lafayette. The only members of the
Board who are officers of Lafayette are Messrs. Calcagnini and Goldstein.
CERTAIN TRANSACTIONS WITH MANAGEMENT
Director Louis F.Tagliatela owns a 66% interest in a partnership that
entered into a lease on October 1, 1992 with Lafayette at a fair market rental
for its operations center premises in Hamden, Connecticut (approximately 26,400
square feet). The remaining 34% partnership interest is owned by members of Mr.
Tagliatela's immediate family. This lease was a two year net lease at an annual
rental of $218,962 ($8.30 per square foot), with options to renew. At the
expiration of the lease term, Lafayette entered into a net lease extension
commencing October 1, 1994 covering 28,825 square feet at a fair market rental.
The term of the lease is for five years at an annual rental of $172,950 ($6.00
per square foot) for the first two years and $249,336 ($8.65 per square foot)
for the last three years, with no renewal options.
Director Bertram Frankenberger, Jr. owns a 3.33% interest in a
partnership that entered into a sale and leaseback transaction in 1972 (before
he became a director) with respect to Lafayette's 2992 Dixwell Avenue branch
office in Hamden, Connecticut (approximately 11,500 square feet). In 1972, in
order to enhance its liquidity, Lafayette sold to the partnership the real
estate used for this branch office and leased the property back under a 25-year
net lease of $62,500 per year ($5.43 per square foot). The rental was
established by an independent real estate expert at that time. Lafayette has the
option to renew the lease for three additional 10-year terms at a fair market
rental, and has an option to purchase the property at fair market value at the
end of the initial lease term or any renewal term.
Neither of the directors involved in the above-described leases
participated in the vote by Lafayette's Board of Directors to approve any such
leases. Management believes that these leases are on similar terms and
conditions than that which would have been available at the time from unrelated
parties. Lafayette and its predecessors have followed a policy of primarily
leasing their banking premises in order to conserve liquidity and to keep their
assets free to support banking growth.
During 1995, the law firm of Ginsberg and Palumbo, P.C., of which
Director Gary R. Ginsberg is the senior attorney, received fee compensation for
legal services performed on behalf of Lafayette, paid at the law firm's usual
and customary billing rates, which were understood by Lafayette to be comparable
to the rates charged by other law firms in Lafayette's business area for similar
services. For 1995, the law firm of Ginsberg and Palumbo, P.C. was paid $112,118
for these services. Some such fees were paid in connection with foreclosures,
loan workouts and loan collection efforts, and are partially recoverable from
debtors as their debts are repaid or judgments against them are satisfied.
<PAGE>
INDEBTEDNESS OF MANAGEMENT
Lafayette's directors and principal officers as a group (who, together
with their associates, during the period from January 1, 1995 to January 31,
1996, borrowed from Lafayette an aggregate amount in excess of 20% of
Lafayette's equity capital) had, in the aggregate, $8,544,760 of credit
extensions from Lafayette as of January 1, 1995 (which amount represents the
highest amount of credit outstanding, as a percentage of equity capital, to such
group during the period from January 1, 1995 to January 31, 1996).
Lafayette has had, and expects to have in the future, banking
transactions in the ordinary course of its business with directors, officers and
shareholders holding more than 5% of the outstanding Common Stock, and their
associates, on substantially the same terms, including interest rates and
collateral on loans, as those prevailing at the same time for comparable
transactions with other, unrelated parties. The banking transactions with such
directors, officers and principal shareholders did not, at the time they were
entered into, involve more than the usual risk of collectability or present
other unfavorable features. If and when loans to directors, officers or
principal shareholders develop collectability or other problems, Lafayette deals
with such borrowers in the same manner as it does with its other borrowers on
loans presenting similar problems.
On November 25, 1988, Lafayette approved a $1,000,000 unsecured credit
line to Director Gary R. Ginsberg. The line of credit carried an interest rate
of Lafayette's prime. The interest rate was subsequently increased on April 17,
1990 to Lafayette's prime plus 1/2%. Mr. Ginsberg secured the note on August 23,
1990 with the assignment of his partnership interest in a real estate venture.
During 1994, the note was further secured by a third mortgage on a commercial
building, a pledge of Lafayette Common Stock and the assignment of a term life
insurance policy. The outstanding balance on the loan was classified as a
substandard asset by Lafayette as of June 30, 1993. As of January 31, 1996, the
outstanding balance of the Note of $842,494 was classified by Lafayette as
substandard. All payments have been and continue to be made in accordance with
the loan's terms.
TERMINATED REGULATORY ORDER
During the second quarter of 1995, the Connecticut Department of
Banking (the "CT DOB") and the FDIC concluded concurrent examinations of
Lafayette after which Lafayette was notified by the FDIC that the FDIC and CT
DOB were in agreement that the June 25, 1992 Stipulation and Consent to a Cease
and Desist Order (the "FDIC Order") under which Lafayette had been operating,
should be terminated upon their receipt of an acceptable Board of Directors'
resolution. In compliance with their request, on July 26, 1995, the Lafayette
Board of Directors adopted a resolution which included, among other matters, a
commitment that Lafayette maintain a Tier 1 leverage capital ratio at a minimum
of 6%. On July 31, 1995, the FDIC terminated the FDIC Order.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires Lafayette's directors,
principal officers, and persons who own more than 10% of Lafayette's equity
securities to file with the FDIC initial reports of ownership and reports of
changes in ownership of such securities. Directors, principal officers and
greater-than-ten-percent shareholders are required by FDIC regulations to
furnish Lafayette with copies of all Section 16(a) reports filed by them.
To Lafayette's knowledge, based solely on a review of the copies of
such reports furnished to it, during the fiscal year ended December 31, 1995,
Section 16(a) filing requirements applicable to its directors, principal
officers and greater-than-ten-percent shareholders with respect to Lafayette's
equity securities were complied with, except as follows: (i) Mr. Bangert failed
to report on a timely basis the sale of 10,000 shares of Lafayette Common Stock;
(ii) Mr. Harrison failed to report on a timely basis the sales of 10,000 and
5,000 shares of Lafayette Common Stock, respectively; (iii) Mr. Rose failed to
report on a timely basis the sale of 60,000 shares of Lafayette Common Stock;
and (iv) Mr. Olsen failed to file on a timely basis his initial statement of
beneficial ownership of Lafayette Common Stock upon becoming a director of
Lafayette. Each of the foregoing filings were made with the FDIC as soon as the
respective failures to file were discovered.
<PAGE>
RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 4
Lafayette directors will be elected by a majority of the votes cast at
the Annual Meeting, whether in person or by proxy. THE LAFAYETTE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINATED SLATE OF DIRECTORS INCLUDED IN
PROPOSAL 4.
SHAREHOLDER PROPOSALS
Any proposal which a HUBCO shareholder wishes to have included in the
proxy solicitation materials of HUBCO to be used in connection with the 1997
Annual Meeting must be presented to HUBCO no later than November 30, 1996.
Any proposal which a Lafayette shareholder wishes to have included in
the proxy materials of Lafayette if Lafayette has a 1997 Annual Meeting must be
presented to Lafayette no later than November 30, 1996.
LEGAL OPINION
Certain legal matters relating to the issuance of the shares of HUBCO
Common Stock offered hereby will be passed upon by Pitney, Hardin, Kipp & Szuch,
counsel to HUBCO. Attorneys in the law firm of Pitney, Hardin, Kipp & Szuch,
beneficially owned 1,992 shares of HUBCO Common Stock as of April 26, 1996.
EXPERTS
The consolidated financial statements of Lafayette as of December 31,
1995 and 1994 and for each of the years in the three year period ended December
31, 1995 incorporated herein by reference have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.
The consolidated financial statements of HUBCO as of December 31, 1995
and 1994 and for each of the years in the three year period ended December 31,
1995, incorporated by reference herein, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports.
Arthur Andersen LLP will have a representative at both the Lafayette
Meeting and the HUBCO Meeting who will have an opportunity to make a statement
if such representative desires, and who will be available to respond to
appropriate questions.
The consolidated financial statements of Hometown, as of December 31,
1995 and 1994 and for each of the years in the three year period ended December
31, 1995, incorporated by reference herein, have been audited by Price
Waterhouse LLP, independent public accountants, as indicated in their report
with respect thereto, and are incorporated by reference herein in reliance upon
the authority of said firm as experts in giving said report.
SUBSEQUENT FILINGS INCORPORATED BY REFERENCE
All documents filed by HUBCO or Lafayette pursuant to Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act subsequent to the date hereof and prior
to the earlier of (i) the date of the last to be held of the Meetings or (ii)
the termination of the Merger Agreement, are hereby incorporated by reference
into this Proxy Statement and shall be deemed a part hereof from the date of
filing of such documents.
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BETWEEN HUBCO AND LAFAYETTE
DATED FEBRUARY 5, 1996
THIS AGREEMENT AND PLAN OF MERGER, dated as of February
5, 1996 ("Agreement"), between HUBCO, INC. ("HUBCO"), a New
Jersey corporation and registered bank holding company, and
LAFAYETTE AMERICAN BANK AND TRUST COMPANY, a commercial bank
organized under the laws of Connecticut ("Lafayette").
WHEREAS, the respective Boards of Directors of HUBCO
and Lafayette, by the requisite vote required under applicable
law, have each determined that it is in the best interests of
HUBCO and Lafayette and their respective stockholders for HUBCO
to acquire Lafayette (i) by HUBCO organizing an interim
commercial bank under the laws of Connecticut ("Merger Sub") and
(ii) merging Merger Sub with and into Lafayette upon the terms
and subject to the conditions set forth herein;
WHEREAS, the respective Boards of Directors of HUBCO
and Lafayette, by the requisite vote required under applicable
law, have each approved this Agreement upon the terms and subject
to the conditions set forth herein;
WHEREAS, the Boards of Directors of Lafayette and HUBCO
have directed that this Agreement be submitted to HUBCO's and
Lafayette's shareholders for approval;
WHEREAS, upon the demand of and as an inducement for
HUBCO to enter into this transaction, Lafayette has entered into
a Stock Option Agreement, dated as of the date hereof (the "HUBCO
Stock Option");
NOW, THEREFORE, intending to be legally bound, the
parties hereto hereby agree as follows:
ARTICLE I - THE MERGER
1.1. THE MERGER. Subject to the terms and conditions
of this Agreement, at the Effective Time (as hereinafter
defined), Merger Sub shall be merged with and into Lafayette (the
"Merger") in accordance with Section 36a-125 of the Banking Law
of Connecticut (the "Connecticut Banking Act") and Lafayette
shall be the surviving bank (the "Surviving Corporation"), the
name of which shall continue to be Lafayette American Bank and
Trust Company. Exhibit 1 to this Agreement lists (i) the
locations of the main office of and branch offices of Lafayette
which shall be the main office and branch offices of the
Surviving Corporation; and (ii) the amount of the capital stock,
the number of shares, the par value and the amount of surplus of
the Surviving Corporation which shall be the same amounts as
Lafayette.
1.2. EFFECT OF THE MERGER. At the Effective Time, the
Surviving Corporation shall be considered the same business and
corporate entity as each of the Merger Sub and Lafayette and
thereupon and thereafter, all the property, rights, privileges,
powers and franchises of each of the Merger Sub and Lafayette
shall vest in the Surviving Corporation and the Surviving
Corporation shall be subject to and be deemed to have assumed all
of the debts, liabilities, obligations and duties of each of the
Merger Sub and Lafayette and shall have succeeded to all of each
of their relationships, as fully and to the same extent as if
such property, rights, privileges, powers, franchises, debts,
liabilities, obligations, duties and relationships had been
originally acquired, incurred or entered into by the Surviving
Corporation. In addition, any reference to either of the Merger
Sub or Lafayette in any contract or document, whether executed or
taking effect before or after the Effective Time, shall be
considered a reference to the Surviving Corporation if not
inconsistent with the other provisions of the contract or
document; and any pending action or other judicial proceeding to
which either of the Merger Sub or Lafayette is a party, shall not
be deemed to have abated or to have discontinued by reason of the
Merger, but may be prosecuted to final judgment, order or decree
in the same manner as if the Merger had not been made, or the
Surviving Corporation may be substituted as a party to such
action or proceeding, and any judgment, order or decree may be
rendered for or against it that might have been rendered for or
against either of the Merger Sub or Lafayette as if the Merger
had not occurred.
1.3. CERTIFICATE OF INCORPORATION. As of the
Effective Time, the certificate of incorporation of Lafayette as
it exists at the Effective Time shall be the certificate of
incorporation of the Surviving Corporation and shall not be
amended by this Agreement or the Merger but may be amended as
provided by law thereafter.
1.4. BY-LAWS. As of the Effective Time, the By-laws
of Lafayette shall be the By-laws of the Surviving Corporation
until otherwise amended as provided by law.
1.5. DIRECTORS AND OFFICERS. There shall be not more
than fifteen or less than twelve directors of the Surviving
Corporation as of the Effective Time. As of the Effective Time,
the directors of the Surviving Corporation shall consist of three
officers of HUBCO selected by HUBCO and not fewer than nine
directors of Lafayette nominated by Lafayette and acceptable to
HUBCO. As of the Effective Time, the officers of Lafayette shall
become the officers of the Surviving Corporation, subject to any
changes which HUBCO shall specify on or before the Closing.
1.6. EFFECTIVE TIME AND CLOSING. The Merger shall
become effective (and be consummated) upon the date specified in
a certificate executed by HUBCO and Lafayette filed with the
Connecticut Secretary of State after the approval of the
Connecticut Commissioner of Banking (the "Commissioner").
Lafayette shall not unreasonably withhold its approval of the
Effective Time, which shall be consistent with this section. A
closing (the "Closing") shall take place prior to the Effective
Time at 10:00 a.m., 10 days (or the first business day
thereafter) following the receipt of all necessary regulatory and
governmental approvals and consents and the expiration of all
statutory waiting periods in respect thereof and the satisfaction
or waiver of all of the conditions to the consummation of the
Merger specified in Article VI hereof (other than the delivery of
certificates, opinions and other instruments and documents to be
delivered at the Closing), at the offices of Pitney, Hardin, Kipp
& Szuch, 200 Campus Drive, Florham Park, New Jersey, or at such
other place, time or date as HUBCO and Lafayette may mutually
agree upon. The certificate filed with the Secretary of State
shall specify as the Effective Time of the Merger a date,
immediately following the Closing, agreed to by HUBCO and
Lafayette. Following the execution of this Agreement, HUBCO and
Lafayette shall, if required or advised to do so by applicable
regulatory authorities, execute and deliver a simplified or
supplemental merger agreement, both in form and substance
reasonably satisfactory to the parties hereto and consistent with
the terms hereof, for delivery to the Secretary of State and the
Commissioner in connection with the approval of the Merger by the
regulatory authorities.
1.7. ASSURANCE BY HUBCO. HUBCO shall provide the
Commissioner with such assurances as the Commissioner reasonably
shall require that after the Effective Time, Lafayette will
comply with applicable minimum capital requirements.
ARTICLE II - CONVERSION OF LAFAYETTE SHARES AND OPTIONS
2.1. CONVERSION OF LAFAYETTE COMMON STOCK. Each share
of common stock, no par value, of Lafayette ("Lafayette Common
Stock"), issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares as defined in
Section 2.4) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted as
follows:
(a) EXCHANGE RATIO. Subject to the provisions of this
Section 2.1, each share of Lafayette Common Stock issued and
outstanding immediately prior to the Effective Time (excluding
any treasury shares, shares held by HUBCO and Dissenting Shares)
shall be converted at the Effective Time into the right to
receive 0.5880 of a share (the "Exchange Ratio") of common stock,
no par value, of HUBCO ("HUBCO Common Stock").
(b) CANCELLATION OF LAFAYETTE CERTIFICATES. After the
Effective Time, all such shares of Lafayette Common Stock (other
than those cancelled pursuant to Section 2.1(d)) shall no longer
be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each certificate previously
evidencing any such shares (other than Dissenting Shares and
those cancelled pursuant to Section 2.1(d)) shall thereafter
represent the right to receive the Merger Consideration (as
defined in Section 2.2(b)). The holders of such certificates
previously evidencing such shares of Lafayette Common Stock
outstanding immediately prior to the Effective Time shall cease
to have any rights with respect to such shares of Lafayette
Common Stock except as otherwise provided herein or by law. Such
certificates previously evidencing such shares of Lafayette
Common Stock (other than Dissenting Shares and those cancelled
pursuant to Section 2.1(d)) shall be exchanged for certificates
evidencing shares of HUBCO Common Stock issued pursuant to this
Article II, upon the surrender of such certificates in accordance
with this Article II. No fractional shares of HUBCO Common Stock
shall be issued, and, in lieu thereof, a cash payment shall be
made pursuant to Section 2.2(e).
(c) CAPITAL CHANGES. If between the date hereof and
the Effective Time the outstanding shares of HUBCO Common Stock
shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, stock split,
reclassification, recapitalization, merger, combination or
exchange of shares, the Exchange Ratio and the definition of
Closing Price (as set forth in Section 2.2(e)) shall be
correspondingly adjusted to reflect such stock dividend, stock
split, reclassification, recapitalization, merger, combination or
exchange of shares.
(d) TREASURY SHARES. All shares of Lafayette Common
Stock held by Lafayette in its treasury or owned by HUBCO or
Hudson United Bank (the "Bank") (other than shares held as
trustee or in a fiduciary capacity and shares held as collateral
on or in lieu of a debt previously contracted) immediately prior
to the Effective Time shall be cancelled.
2.2. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, HUBCO
shall deposit, or shall cause to be deposited, with a bank or
trust company designated by HUBCO (the "Exchange Agent"), which
may be Hudson United Bank, Trust Department, for the benefit of
the holders of shares of Lafayette Common Stock, for exchange in
accordance with this Article II, through the Exchange Agent,
certificates evidencing shares of HUBCO Common Stock and cash in
such amount such that the Exchange Agent possesses such number of
shares of HUBCO Common Stock and such amount of cash as are
required to provide all of the consideration required to be
exchanged by HUBCO pursuant to the provisions of this Article II
(such certificates for shares of HUBCO Common Stock, together
with any dividends or distributions with respect thereto, and
cash being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions,
deliver the HUBCO Common Stock and cash out of the Exchange Fund
in accordance with Section 2.1. Except as contemplated by
Section 2.2(f) hereof, the Exchange Fund shall not be used for
any other purpose.
(b) EXCHANGE PROCEDURES. As soon as reasonably
practicable either before or after the Effective Time, Earth will
instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the
Effective Time evidenced outstanding shares of Lafayette Common
Stock (other than Dissenting Shares) (the "Certificates"), (i) a
letter of transmittal (the form and substance of which is
reasonably agreed to by HUBCO and Lafayette prior to the
Effective Time and which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the
Exchange Agent and which shall have such other provisions as
HUBCO may reasonably specify) and (ii) instructions for effecting
the surrender of the Certificates in exchange for certificates
evidencing shares of HUBCO Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor (A) certificates evidencing that
number of whole shares of HUBCO Common Stock which such holder
has the right to receive in respect of the shares of Lafayette
Common Stock formerly evidenced by such Certificate in accordance
with Section 2.1 and (B) cash in lieu of fractional shares of
HUBCO Common Stock to which such holder may be entitled pursuant
to Section 2.2(e) (the shares of HUBCO Common Stock and cash
described in clauses (A) and (B) being collectively, the "Merger
Consideration") and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership
of shares of Lafayette Common Stock which is not registered in
the transfer records of Lafayette, a certificate evidencing the
proper number of shares of HUBCO Common Stock and/or cash may be
issued and/or paid in accordance with this Article II to a
transferee if the Certificate evidencing such shares of Lafayette
Common Stock is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.2,
each Certificate shall be deemed at any time after the Effective
Time to evidence only the right to receive upon such surrender
the Merger Consideration. HUBCO shall establish appropriate
procedures that will enable holders of unexchanged stock
certificates of Lafayette's predecessors (which certificates
represent shares of, or the right to receive shares of, Lafayette
Common Stock) to directly exchange such certificates for the
Merger Consideration.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES
OF HUBCO COMMON STOCK. No dividends or other distributions
declared or made after the Effective Time with respect to HUBCO
Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect
to the shares of HUBCO Common Stock evidenced thereby, and no
other part of the Merger Consideration shall be paid to any such
holder, until the holder of such Certificate shall surrender such
Certificate (or a suitable affidavit of loss and customary bond).
Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the holder of the
certificates evidencing shares of HUBCO Common Stock issued in
exchange therefor, without interest, (i) promptly, the amount of
any cash payable with respect to a fractional share of HUBCO
Common Stock to which such holder may have been entitled pursuant
to Section 2.2(e) and the amount of dividends or other
distributions with a record date on or after the Effective Time
theretofore paid with respect to such shares of HUBCO Common
Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions, with a record date on or after
the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such shares of
HUBCO Common Stock.
(d) NO FURTHER RIGHTS IN LAFAYETTE COMMON STOCK. All
shares of HUBCO Common Stock issued and cash paid upon conversion
of the shares of Lafayette Common Stock in accordance with the
terms hereof shall be deemed to have been issued or paid in full
satisfaction of all rights pertaining to such shares of Lafayette
Common Stock.
(e) NO FRACTIONAL SHARES. No certificates or scrip
evidencing fractional shares of HUBCO Common Stock shall be
issued upon the surrender for exchange of Certificates and such
fractional share interests will not entitle the owner thereof to
vote or to any rights of a stockholder of HUBCO. Cash shall be
paid in lieu of fractional shares of HUBCO Common Stock, based
upon the Median Pre-Closing Price (as hereinafter defined) of
HUBCO Common Stock.
The "Median Pre-Closing Price" of HUBCO Common Stock
shall mean the Median Price (as hereinafter defined) calculated
based upon the Closing Price (as hereinafter defined) of HUBCO
Common Stock during the first 20 of the 25 consecutive trading
days immediately preceding the date of the Closing. The "Closing
Price" shall mean the closing price of HUBCO Common Stock as
supplied by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") and published in THE WALL
STREET JOURNAL during the first 20 of the 25 consecutive trading
days immediately preceding the date of the Closing. The Median
Price shall be determined by taking the price half-way between
the Closing Prices left after discarding the 9 lowest and 9
highest Closing Prices in the 20 day period. A trading day shall
mean a day for which a Closing Price is so supplied and
published.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the holders of
Lafayette Common Stock for two years after the Effective Time
shall be delivered to HUBCO, upon demand, and any holders of
Lafayette Common Stock who have not theretofore complied with
this Article II shall thereafter look only to HUBCO for the
Merger Consideration, dividends and distributions to which they
are entitled.
(g) NO LIABILITY. Neither HUBCO nor the Bank shall be
liable to any holder of shares of Lafayette Common Stock for any
such shares of HUBCO Common Stock or cash (or dividends or
distributions with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
(h) WITHHOLDING RIGHTS. HUBCO shall be entitled to
deduct and withhold, or cause the Exchange Agent to deduct and
withhold, from funds provided by the holder or from the
consideration otherwise payable pursuant to this Agreement to any
holder of Lafayette Stock Options (as defined in Section 3.2),
the minimum amounts (if any) that HUBCO is required to deduct and
withhold with respect to the making of such payment under the
Code (as defined in Section 3.8), or any provision of state,
local or foreign tax law. To the extent that amounts are so
withheld by HUBCO, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of
the Lafayette Stock Options in respect of which such deduction
and withholding was made by HUBCO.
2.3. STOCK TRANSFER BOOKS. At the Effective Time, the
stock transfer books of Lafayette shall be closed and there shall
be no further registration of transfers of shares of Lafayette
Common Stock thereafter on the records of Lafayette. On or after
the Effective Time, any Certificates presented to the Exchange
Agent or HUBCO for transfer shall be converted into the Merger
Consideration.
2.4. DISSENTING SHARES. Notwithstanding anything in
this Agreement to the contrary, any holder of Lafayette Common
Stock shall have the right to dissent in the manner provided in
the Connecticut Banking Act, and if all necessary requirements of
the Connecticut Banking Act are met, such shares shall be
entitled to payment in cash from Lafayette of the fair value of
such shares as determined in accordance with the Connecticut
Banking Act. All shares of Lafayette Common Stock as to which
the holder thereof properly exercises dissenters' rights in
accordance with the Connecticut Banking Act shall constitute
"Dissenting Shares" unless and until such rights are waived by
the party initially seeking to exercise such rights.
2.5. MERGER SUB COMMON STOCK. The shares of common
stock of the Merger Sub outstanding immediately prior to the
Effective Time shall be converted by the Merger into the number
of shares of the Surviving Corporation which shall equal the
number of shares of Lafayette Common Stock outstanding at the
Effective Time.
2.6 LAFAYETTE STOCK OPTIONS.
(a) VESTED OPTIONS. To the extent permitted under the
Lafayette Stock Option Plans (as defined in Section 3.2),
Lafayette shall cause all Stock Options (as defined in Section
3.2), which, as of the Effective Time, would be vested (a "Vested
Stock Option"), to be terminated at the Effective Time unless the
holder consents to the provisions hereof. At the Effective Time,
each outstanding Vested Stock Option shall be converted into
HUBCO Common Stock in accordance with the following formula:
(i) Each outstanding Vested Stock Option shall
be valued on the basis of the Median Pre-Closing Price of
HUBCO Common Stock (as defined in Section 2.2(e)) multiplied
by the Exchange Ratio and subtracting the stated exercise
price for each Vested Stock Option from the product
therefrom (the "Option Value"), and
(ii) Each holder of Vested Stock Options shall
receive at the Effective Time, a number of shares of HUBCO
Common Stock equal to the aggregate Option Value for all of
such holder's Vested Stock Options, divided by the Median
Pre-Closing Price of HUBCO Common Stock.
(iii) Cash shall be paid in lieu of fractional
shares, based upon the Median Pre-Closing Price of HUBCO
Common Stock.
(b) UNVESTED OPTIONS. Each Stock Option not fully
vested at the Effective Time (an "Unvested Stock Option") shall
be converted into an option to purchase HUBCO Common Stock,
wherein (i) the right to purchase shares of Lafayette Common
Stock pursuant to the Unvested Stock Option shall be converted
into the right to purchase that same number of shares of HUBCO
Common Stock multiplied by the Exchange Ratio, (ii) the option
exercise price per share of HUBCO Common Stock shall be the
previous option exercise price per share of the Lafayette Common
Stock divided by the Exchange Ratio, and (iii) in all other
material respects the option shall be subject to the same terms
and conditions as governed the Unvested Stock Option on which it
was based, including the length of time within which the option
may be exercised (which shall not be extended) and for all
Unvested Stock Options, such adjustments shall be and are
intended to be effected in a manner which is consistent with
Section 424(a) of the Code (as defined in Section 3.2). Shares
of HUBCO Common Stock issuable upon exercise of Unvested Stock
Options shall be covered by an effective registration statement
on Form S-8.
2.7. LAFAYETTE WARRANTS. Each Lafayette Warrant (as
defined in Section 3.2) which evidences the right to purchase a
number of shares of Lafayette Common Stock and which is
outstanding at the Effective Time automatically shall be
converted, without further action on the part of the holder, into
a like warrant to purchase for the same aggregate purchase price
that number of shares of HUBCO Common Stock which equals the
number of shares of Lafayette Common Stock which may be purchased
under the Lafayette Warrant multiplied by the Exchange Ratio
(each an "HUBCO Warrant") and such HUBCO Warrant shall, in
conformity with Section 3 of the Lafayette Warrant, thereafter be
subject to the same terms and conditions as specified in the
Lafayette Warrant, except that such HUBCO Warrant shall be
immediately exercisable. Prior to the Closing, HUBCO shall
comply with the provisions of Section 3.2 of the Lafayette
Warrant and Lafayette shall comply with the provisions of Section
1.5(b) of the Lafayette Warrant. Following the Effective Time,
any transferee of the Warrant Certificate shall receive in
exchange for any old Warrant Certificate a new HUBCO Warrant
Certificate evidencing the right to purchase HUBCO Common Stock.
Unless requested by a holder of an outstanding Lafayette Warrant,
HUBCO shall not be required to issue new Certificates evidencing
the Warrant to purchase HUBCO Common Stock but the old Lafayette
Warrant certificates shall continue to evidence such rights until
exchanged, transferred or exercised.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF LAFAYETTE
References herein to the "Lafayette Disclosure
Schedule" shall mean all of the disclosure schedules required by
this Article III, dated as of the date hereof and referenced to
the specific sections and subsections of Article III of this
Agreement, which have been delivered on the date hereof by
Lafayette to HUBCO. Lafayette hereby represents and warrants to
HUBCO as follows:
3.1. CORPORATE ORGANIZATION.
(a) Lafayette is a banking corporation duly organized,
validly existing and in good standing under the laws of the State
of Connecticut. Lafayette has the corporate power and authority
to own or lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly licensed
or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the
business, operations, assets or financial condition of Lafayette.
Lafayette is a state-chartered commercial bank whose deposits are
insured by the Bank Insurance Fund of the Federal Deposit
Insurance Corporation ("FDIC") to the fullest extent permitted by
law. The Lafayette Disclosure Schedule sets forth true and
complete copies of the Certificate of Incorporation and By-laws
of Lafayette, as in effect on the date hereof.
(b) Except as set forth in Lafayette Disclosure
Schedule, Lafayette has no Subsidiaries. When used with
reference to Lafayette, the term "Subsidiary" means any
corporation, partnership, joint venture or other legal entity in
which Lafayette, directly or indirectly, owns at least a 50
percent stock or other equity interest or for which Lafayette,
directly or indirectly, acts as a general partner. Each
Subsidiary is a corporation incorporated under the laws of the
State of Connecticut. Each subsidiary has the corporate power
and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is
duly licensed or qualified to do business and is in good standing
in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material
adverse effect on the business, operations, assets or financial
condition of Lafayette and its Subsidiaries, taken as a whole.
The Lafayette Disclosure Schedule sets forth true and complete
copies of the certificate of incorporation and by-laws of each
Subsidiary as in effect on the date hereof.
3.2. CAPITALIZATION. The authorized capital stock of
Lafayette consists of 15,000,000 shares of Lafayette Common
Stock, no par value, and 275,000 shares of Preferred Stock, par
value $1.00 per share. As of the date hereof, there are
10,006,529 shares of Lafayette Common Stock issued and
outstanding (excluding 7,000 shares held in treasury). All
issued and outstanding shares of Lafayette Common Stock have been
duly authorized and validly issued, are fully paid and non-
assessable and free of preemptive rights. No shares of Lafayette
Preferred Stock have been issued. Except for 11,250 shares
issuable upon exercise of outstanding stock options granted under
the 1984 Incentive Stock Option Plan, 209,167 shares issuable
upon exercise of outstanding options granted under the 1994
Incentive Stock Option Plan and 250,000 shares issuable upon
exercise of stock options granted to Robert Goldstein pursuant to
his employment agreement with Lafayette (collectively all of such
options are referred to herein as "Stock Options" and the plans
or terms under which they are granted are referred to herein as
the "Lafayette Stock Option Plans") and except for 122,980 shares
issuable upon exercise of the Common Stock Purchase Warrants (the
"Lafayette Warrants") issued February 24, 1994 pursuant to a
Standby Purchase Agreement, dated as of November 15, 1993, and
evidenced by Warrant Certificates (the "Warrant Certificates"),
as of the date hereof there are no shares of Lafayette Common
Stock issuable upon the exercise of outstanding stock options or
otherwise, and except for the Stock Options, the Lafayette
Warrants and the HUBCO Stock Option, Lafayette has not granted
and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character
calling for the transfer, purchase, subscription or issuance of
any shares of capital stock of Lafayette or any securities
representing the right to purchase, subscribe or otherwise
receive any shares of such capital stock or any securities
convertible into any such shares, and there are no agreements or
understandings with respect to voting of any such shares. All
outstanding shares of capital stock of Lafayette's Subsidiaries,
have been duly authorized and validly issued, are fully paid,
non-assessable and free of preemptive rights, and are owned by
Lafayette free and clear of all liens, encumbrances, charges,
restrictions or rights of third parties. True and correct copies
of each Stock Option grant, each Stock Option Plan and each
Lafayette Warrant are set forth in the Lafayette Disclosure
Schedule.
3.3. AUTHORITY; NO VIOLATION.
(a) Subject to the approval of this Agreement and the
transactions contemplated hereby by the stockholders of
Lafayette, the receipt of all necessary governmental approvals,
and the consent of any Vested Stock Option holder necessary to
exchange their option as provided in Section 2.6(a), Lafayette
has the full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Lafayette in accordance
with the Certificate of Incorporation of Lafayette and applicable
laws and regulations. Except for such approval, no other
corporate proceedings on the part of Lafayette are necessary to
consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Lafayette and
constitutes the valid and binding obligation of Lafayette,
enforceable against Lafayette in accordance with its terms.
(b) Neither the execution and delivery of this
Agreement by Lafayette, nor the consummation by Lafayette of the
transactions contemplated hereby in accordance with the terms
hereof, or compliance by Lafayette with any of the terms or
provisions hereof, will (i) violate any provision of Lafayette's
Certificate of Incorporation or By-laws, (ii) assuming that the
consents and approvals set forth below are duly obtained, violate
any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Lafayette or any of its
properties or assets or those of any Subsidiary, or (iii) except
as set forth in the Lafayette Disclosure Schedule, violate,
conflict with, result in a breach of any provision of, constitute
a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the
termination of, accelerate the performance required by, or result
in the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of Lafayette or
its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to
which Lafayette is a party, or by which it or any of its
properties or assets may be bound or affected, except, with
respect to (ii) and (iii) above, such as individually or in the
aggregate will not have a material adverse effect on the
business, operations, assets or financial condition of Lafayette
and which will not prevent or delay the consummation of the
transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to or
required by the FDIC, the Commissioner, the Connecticut
Department of Banking (the "Department"), the Connecticut
Department of Environmental Protection ("DEP"), state blue sky
authorities or other applicable governmental authorities, the
stockholders of Lafayette, the holders of Lafayette Warrants and
the holders of Stock Options, no consents or approvals of or
filings or registrations with or notices to any third party or
any public body or authority are necessary on behalf of Lafayette
or its Subsidiaries in connection with (x) the execution and
delivery by Lafayette of this Agreement and (y) the consummation
by Lafayette of the Merger and the other transactions
contemplated hereby, except (i) such as are listed in the
Lafayette Disclosure Schedule and (ii) such as individually or in
the aggregate will not (if not obtained) have a material adverse
effect on the business, operations, assets or financial condition
of Lafayette and its Subsidiaries taken as a whole or prevent or
delay the consummation of the transactions contemplated hereby.
To the best of Lafayette's knowledge, no fact or condition exists
which Lafayette has reason to believe will prevent it from
obtaining the aforementioned consents and approvals.
3.4. FINANCIAL STATEMENTS.
(a) The Lafayette Disclosure Schedule sets forth
copies of the consolidated statements of condition of Lafayette
as of December 31, 1994 and 1993, the related statements of
operations, changes in shareholders' equity and cash flows for
the periods ended December 31, in each of the three fiscal years
1992 through 1994, accompanied by the audit report (which report
includes explanatory paragraphs relating to certain regulatory
matters) of Arthur Andersen LLP, independent public accountants
with respect to Lafayette, and the unaudited consolidated
statement of condition of Lafayette as of September 30, 1995 and
the related unaudited statements of income and cash flows for the
nine months then ended as reported in Lafayette's Quarterly
Report on Form F-4, filed with the FDIC (collectively, the
"Lafayette Financial Statements"). The Lafayette Financial
Statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved (except as may
be indicated therein or in the notes thereto and except for the
omission of notes from interim financial statements), and fairly
present the financial position of Lafayette as of the respective
dates set forth therein, and the related statements of
operations, changes in shareholders' equity and cash flows fairly
present the results of operations, changes in stockholders'
equity and cash flows of Lafayette for the respective fiscal
periods set forth therein.
(b) The books and records of Lafayette and its
Subsidiaries are being maintained in material compliance with
applicable legal and accounting requirements, and reflect only
actual transactions.
(c) Except as and to the extent reflected, disclosed
or reserved against in Lafayette Financial Statements (including
the notes thereto) or as specified in any of the Lafayette
Disclosure Schedules, as of September 30, 1995, neither Lafayette
nor any of its Subsidiaries had any liabilities, whether
absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of Lafayette
and its Subsidiaries taken as a whole which were required by GAAP
(consistently applied) to be disclosed in Lafayette's
consolidated statement of condition or the notes thereto as of
September 30, 1995. Since September 30, 1995, Lafayette has not
incurred any liabilities except in the ordinary course of
business and consistent with prudent banking practice, except as
related to the transactions contemplated by this Agreement or as
set forth in the Lafayette Disclosure Schedule.
3.5. BROKER'S AND OTHER FEES. Except for Belle Plaine
Partners, LLC ("Belle Plaine") or as set forth in the Lafayette
Disclosure Schedule, neither Lafayette (or its Subsidiaries) nor
any of its directors or officers has employed any broker or
finder or incurred any liability for any broker's or finder's
fees or commissions in connection with any of the transactions
contemplated by this Agreement. The agreements with Belle Plaine
are set forth in the Lafayette Disclosure Schedule. Except as
set forth in the Lafayette Disclosure Schedule, there are no fees
(other than time charges billed at usual and customary rates)
payable to any consultants, including lawyers and accountants, in
connection with this transaction or which would be triggered by
consummation of this transaction or the termination of the
services of such consultants by Lafayette.
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth in the Lafayette Disclosure
Schedule, there has not been any material adverse change in the
business, operations, assets or financial condition of Lafayette
or its Subsidiaries since September 30, 1995 and to the best of
Lafayette's knowledge, no facts or condition exists which
Lafayette believes will cause such a material adverse change in
the future.
(b) Except as set forth in the Lafayette Disclosure
Schedule, (i) each of Lafayette and its Subsidiaries has not
taken or permitted any of the actions set forth in Section 5.2
hereof between September 30, 1995 and the date hereof, and (ii)
except for execution of this Agreement, the HUBCO Stock Option,
and the agreements described in Section 3.5, each of Lafayette
and its Subsidiaries has conducted its business only in the
ordinary course, consistent with past practice since September
30, 1995.
3.7. LEGAL PROCEEDINGS. Except as disclosed in the
Lafayette Disclosure Schedule, and except for ordinary routine
litigation incidental to the business of Lafayette, each of
Lafayette and its Subsidiaries is not a party to any, and there
are no pending or, to the best of Lafayette's knowledge,
threatened legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature
against Lafayette or its Subsidiaries which, if decided adversely
to Lafayette or its Subsidiaries, are reasonably likely to have a
material adverse effect on the business, operations, assets or
financial condition of Lafayette and its Subsidiaries taken as a
whole. Except as disclosed in the Lafayette Disclosure Schedule,
neither Lafayette or its Subsidiaries is a party to any order,
judgment or decree entered in any lawsuit or proceeding.
3.8. TAXES AND TAX RETURNS.
(a) Each of Lafayette and its Subsidiaries has duly
filed (and until the Effective Time will so file) all returns,
declarations, reports, information returns and statements
("Returns") required to be filed by it in respect of any federal,
state and local taxes (including withholding taxes, penalties or
other payments required) and has duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other
than taxes or other charges which are being contested in good
faith (and disclosed to HUBCO in writing) or against which
reserves have been established. Lafayette has established (and
until the Effective Time will establish) on its consolidated
books and records reserves that are adequate for the payment of
all federal, state and local taxes not yet due and payable, but
are incurred in respect of Lafayette and its Subsidiaries through
such date. The Lafayette Disclosure Schedule identifies the
federal income tax returns of Lafayette which have been examined
by the Internal Revenue Service (the "IRS") within the past six
years. Except as set forth in the Lafayette Disclosure Schedule,
no deficiencies were asserted as a result of such examinations
which have not been resolved and paid in full. The Lafayette
Disclosure Schedule identifies the applicable state income tax
returns of Lafayette which have been examined by the applicable
authorities within the past six years. No deficiencies were
asserted as a result of such examinations which have not been
resolved and paid in full. To the best knowledge of Lafayette,
there are no audits or other administrative or court proceedings
presently pending nor any other disputes pending with respect to,
or claims asserted for, taxes or assessments upon Lafayette or
its Subsidiaries, nor, except as set forth in the Lafayette
Disclosure Schedule, has Lafayette or its Subsidiaries given any
currently outstanding waivers or comparable consents regarding
the application of the statute of limitations with respect to any
taxes or Returns.
(b) Neither Lafayette nor its Subsidiaries (i) except
as set forth in the Lafayette Disclosure Schedule, has requested
any extension of time within which to file any Return which
Return has not since been filed, (ii) is a party to any agreement
providing for the allocation or sharing of taxes, (iii) is
required to include in income any adjustment pursuant to Section
481(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), by reason of a voluntary change in accounting method
initiated by Lafayette (nor does Lafayette have any knowledge
that the IRS has proposed any such adjustment or change of
accounting method) or (iv) has filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
(c) From January 1, 1992 until the date hereof, to the
best of Lafayette's knowledge, there has been no "ownership
change" of Lafayette as defined in Section 382(g) of the Code.
3.9. DIRECTOR, OFFICER AND EMPLOYEE BENEFIT PLANS.
(a) Except for plans disclosed in any of the Lafayette
Disclosure Schedules and Stock Option Plans referenced elsewhere
herein, neither Lafayette or its Subsidiaries maintains or
contributes to any "employee pension benefit plan" (the
"Lafayette Pension Plans"), within the meaning of Section 3(2)(A)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA (the "Lafayette Welfare Plans"),
stock option plan, stock purchase plan (other than the Dividend
Reinvestment and Stock Purchase Plan referenced in the Lafayette
Disclosure Schedule for Section 3.6 hereof), deferred
compensation plan, severance plan, bonus plan, employment
agreement or other similar plan, program or arrangement.
Lafayette has not, since September 2, 1974, contributed to any
"Multiemployer Plan", as such term is defined in Section 3(37) of
ERISA.
(b) Except as disclosed in the Lafayette Disclosure
Schedule, Lafayette has delivered to HUBCO in Lafayette's
Disclosure Schedule a complete and accurate copy of each of the
following with respect to each of the Lafayette Pension Plans and
Lafayette Welfare Plans, if any: (1) plan document, summary plan
description, and summary of material modifications (if not
available, a detailed description of the foregoing); (ii) trust
agreement or insurance contract, if any; (iii) most recent IRS
determination letter, if any; (iv) most recent actuarial report,
if any; and (v) most recent annual report on Form 5500.
(c) The present value of all accrued benefits, both
vested and non-vested, under each of the Lafayette Pension Plans
subject to Title IV of ERISA, based upon the actuarial
assumptions used for funding purposes in the most recent
actuarial valuation prepared by such Lafayette Pension Plan's
actuary, did not exceed the then current value of the assets of
such plans allocable to such accrued benefits. The actuarial
assumptions then utilized for such plans were reasonable and
appropriate as of the last valuation date and reflect then
current market conditions.
(d) During the last six years, the Pension Benefit
Guaranty Corporation ("PBGC") has not asserted any claim for
liability against Lafayette or any of its Subsidiaries which has
not been paid in full.
(e) All premiums (and interest charges and penalties
for late payment, if applicable) due to the PBGC with respect to
each Lafayette Pension Plan have been paid. All contributions
required to be made to each Lafayette Pension Plan under the
terms thereof, ERISA or other applicable law have been timely
made, and all amounts properly accrued to date as liabilities of
Lafayette which have not been paid have been properly recorded on
the books of Lafayette.
(f) Except as disclosed in the Lafayette Disclosure
Schedule, each of the Lafayette Pension Plans, Lafayette Welfare
Plans and each other employee benefit plan and arrangement
identified on the Lafayette Disclosure Schedule has, since
January 1, 1990, been operated in compliance in all material
respects with any applicable provisions of ERISA, the Code, all
regulations, rulings and announcements promulgated or issued
thereunder, and all other applicable governmental laws and
regulations. Furthermore, if Lafayette maintains any Lafayette
Pension Plan, Lafayette has received a favorable determination
letter from the IRS which takes into account the Tax Reform Act
of 1986 and, except as set forth in the Lafayette Disclosure
Schedule, subsequent legislation and, except as disclosed in the
Lafayette Disclosure Schedule, Lafayette is not aware of any fact
or circumstance which would disqualify any plan.
(g) To the best knowledge of Lafayette, no non-exempt
prohibited transaction, within the meaning of Section 4975 of the
Code or Section 406 of ERISA, has occurred with respect to any of
Lafayette Welfare Plans or Lafayette Pension Plans.
(h) No Lafayette Pension Plan or any trust created
thereunder has been terminated, nor have there been any
"reportable events" (notice of which has not been waived by the
PBGC), within the meaning of Section 4034(b) of ERISA, with
respect to any of the Lafayette Pension Plans.
(i) No "accumulated funding deficiency", within the
meaning of Section 412 of the Code, has been incurred with
respect to any of the Lafayette Pension Plans.
(j) There are no material pending or, to the best
knowledge of Lafayette, material threatened claims (other than
routine claims for benefits) by, on behalf of or against any of
the Lafayette Pension Plans or Lafayette Welfare Plans, any
trusts created thereunder or any other plan or arrangement
identified in the Lafayette Disclosure Schedule.
(k) Except as disclosed in the Lafayette Disclosure
Schedule and in the employment agreement with Donald Calcagnini,
no Lafayette Pension Plan or Lafayette Welfare Plan provides
medical or death benefits (whether or not insured) beyond an
employee's retirement or other termination of service, other than
(i) coverage mandated by law, or (ii) death benefits under any
Lafayette Pension Plan.
(l) Except with respect to customary health, life and
disability benefits or as disclosed in the Lafayette Disclosure
Schedule, there are no unfunded benefit obligations which are not
accounted for by reserves shown on the Lafayette Financial
Statements and established under GAAP or otherwise noted on such
Financial Statements.
(m) With respect to each Lafayette Pension Plan and
Lafayette Welfare Plan that is funded wholly or partially through
an insurance policy, there will be no liability of Lafayette or
its Subsidiaries as of the Effective Time under any such
insurance policy or ancillary agreement with respect to such
insurance policy in the nature of a retroactive rate adjustment,
loss sharing arrangement or other actual or contingent liability
arising wholly or partially out of events occurring prior to the
Effective Time.
(n) Except for benefits due pursuant to the employment
agreements included within the Lafayette Disclosure Schedule and
as set forth in the Lafayette Disclosure Schedule or as agreed to
by HUBCO in writing either pursuant to this Agreement or
otherwise, the consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former
employee of Lafayette or its Subsidiaries to severance pay,
unemployment compensation or any similar payment or (ii)
accelerate the time of payment, vesting, or increase the amount,
of any compensation or benefits due to any current employee or
former employee under any Lafayette Pension Plan or Lafayette
Welfare Plan.
(o) Except for the Lafayette Pension Plans and
Lafayette Welfare Plans, and except as set forth on the Lafayette
Disclosure Schedule, Lafayette has no deferred compensation
agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee
of Lafayette or any Subsidiary or any predecessor. The Lafayette
Disclosure Schedule sets forth (i) true and complete copies of
the agreements, understandings or obligations listed with respect
to each such current or former director, officer or employee, and
(ii) the most recent actuarial or other calculation of the
present value of such payments or benefits.
(p) Except as set forth on the Lafayette Disclosure
Schedule, Lafayette maintains or otherwise pays for no life
insurance policies (other than group term life policies on
employees) with respect to any director, officer or employee.
The Lafayette Disclosure Schedule lists each such insurance
policy and any agreement with a party other than the insurer with
respect to the payment, funding or assignment of such policy.
Except as set forth in the Lafayette Disclosure Schedule, to the
best of Lafayette's knowledge, neither Lafayette nor any
Lafayette Pension Plan or Lafayette Welfare Plan own any
individual or group insurance policies issued by an insurer which
has been found to be insolvent or is in rehabilitation pursuant
to a state proceeding.
3.10. REPORTS.
(a) The Lafayette Disclosure Schedule lists, and
Lafayette has previously delivered to HUBCO a complete copy of,
each communication (other than general advertising materials and
press releases) mailed by Lafayette to its stockholders as a
class since November 1, 1993, and each such communication, as of
its date, complied in all material respects with all applicable
statutes, rules and regulations and did not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under
which they were made, not misleading; provided that information
as of a later date shall be deemed to modify information as of an
earlier date.
(b) Lafayette has, since November 1, 1993, duly filed
with the FDIC in form which was correct in all material respects
the monthly, quarterly and annual financial reports required to
be filed under applicable laws and regulations (provided that
information as of a later date shall be deemed to modify
information as of an earlier date), and, subject to permission
from such regulatory authorities, Lafayette promptly will deliver
or make available to HUBCO accurate and complete copies of such
reports. The Lafayette Disclosure Schedule lists all
examinations of Lafayette conducted by either the Department or
the FDIC since January 1, 1993 and the dates of any responses
thereto submitted by Lafayette.
3.11. LAFAYETTE INFORMATION. The information relating
to Lafayette or its Subsidiaries to be contained in the Proxy
Statement/Prospectus (as defined in Section 5.6(a) hereof) to be
delivered to stockholders of Lafayette in connection with the
solicitation of their approval of the Merger and to be delivered
to the stockholders of HUBCO in connection with their approval of
the issuance of HUBCO Common Stock in connection with the Merger,
as of the date the Proxy Statement/Prospectus is mailed to
stockholders of Lafayette and HUBCO, and up to and including the
date of the meeting of stockholders to which such Proxy
Statement/Prospectus relates, will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
3.12. COMPLIANCE WITH APPLICABLE LAW.
(a) Since February 28, 1994, Lafayette has filed all
reports that it was required to file with the FDIC under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), all
of which complied in all material respects with all applicable
requirements of the 1934 Act and the rules and regulations
adopted thereunder. As of their respective dates, each such
report and each registration statement, proxy statement, form or
other document filed by Lafayette with the FDIC, including
without limitation, any financial statements or schedules
included therein, did not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not
misleading, provided that information as of a later date shall be
deemed to modify information as of an earlier date. Since
February 28, 1994, Lafayette and its Subsidiaries have duly filed
all material forms, reports and documents which they were
required to file with each other agency charged with regulating
any aspect of their business.
(b) Except as set forth in Lafayette Disclosure
Schedule for Section 3.7 hereof, each of Lafayette and its
Subsidiaries holds all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their business
and since January 1, 1993 has complied with and is not in default
in any respect under any applicable law, statute, order, rule,
regulation, policy and/or guideline of any federal, state or
local governmental authority relating to Lafayette (including
without limitation consumer, community and fair lending laws)
(other than where such default or noncompliance will not result
in a material adverse effect on the business, operations, assets
or financial condition of Lafayette) and Lafayette has not
received notice of violation of, and does not know of any
violations of, any of the above.
3.13. CERTAIN CONTRACTS.
(a) Except under plans referenced in Section 3.2 or
3.9 hereof, contracts described in Section 3.5 hereof,
arrangements described in Section 5.12 hereof and plans
referenced in the Lafayette Disclosure Schedule, (i) Lafayette
and its Subsidiaries is not a party to or bound by any written
contract or understanding (whether written or oral) with respect
to the employment of any officers, employees, directors or
consultants, and (ii) the consummation of the transactions
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional acts or events) result in any
payment (whether of severance pay or otherwise) becoming due from
Lafayette and its Subsidiaries to any officer, employee, director
or consultant thereof. The Lafayette Disclosure Schedule (either
in reference to this Section 3.13 or in reference to Sections 3.2
or 3.9 hereof) sets forth true and correct copies of any
severance or employment agreements with officers, directors,
employees, agents or consultants to which Lafayette and its
Subsidiaries is a party.
(b) Except as disclosed in the Lafayette Disclosure
Schedule and except for loan agreements made and loan commitments
issued in the ordinary course of business, (i) as of the date of
this Agreement, Lafayette and its Subsidiaries is not a party to
or bound by any commitment, agreement or other instrument which
is material to the business, operations, assets or financial
condition of Lafayette and its Subsidiaries as a whole (but in no
event shall a contract for less than $100,000 a year be deemed
material under this paragraph), (ii) no commitment, agreement or
other instrument to which Lafayette and its Subsidiaries is a
party or by which it is bound limits the freedom of Lafayette or
its Subsidiaries to compete in any line of business or with any
person, and (iii) Lafayette is not a party to any collective
bargaining agreement.
(c) Neither Lafayette (including its Subsidiaries)
nor, to the best knowledge of Lafayette, any other party thereto,
is in default in any material respect under any material lease,
contract, mortgage, promissory note, deed of trust, loan or other
commitment (except those under which Lafayette is or will be the
creditor) or arrangement, except for defaults which individually
or in the aggregate would not have a material adverse effect on
the business, operations, assets or financial condition of
Lafayette.
3.14. PROPERTIES AND INSURANCE.
(a) Lafayette and its Subsidiaries has good and, as to
owned real property, marketable title to all material assets and
properties, whether real or personal, tangible or intangible,
reflected in Lafayette's statement of condition as of September
30, 1995, or owned and acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of for
fair value in the ordinary course of business since September 30,
1995), subject to no encumbrances, liens, mortgages, security
interests or pledges, except (i) those items that secure
liabilities that are reflected in said statement of condition or
the notes thereto or that secure liabilities incurred in the
ordinary course of business after the date of such statement of
condition, (ii) statutory liens for amounts not yet delinquent or
which are being contested in good faith, (iii) such encumbrances,
liens, mortgages, security interests, pledges and title
imperfections that are not in the aggregate material to the
business, operations, assets, and financial condition of
Lafayette and (iv) with respect to owned real property, title
imperfections noted in title reports delivered to HUBCO promptly
after the date hereof. Except as affected by the transactions
contemplated hereby, Lafayette and its Subsidiaries as lessee has
the right under valid and subsisting leases to occupy, use,
possess and control all real property leased by Lafayette in all
material respects as presently occupied, used, possessed and
controlled by Lafayette and its Subsidiaries.
(b) The business operations and all insurable
properties and assets of Lafayette and its Subsidiaries are
insured for its benefit against all risks which, in the
reasonable judgment of the management of Lafayette, should be
insured against, in each case under policies or bonds issued by
insurers of recognized responsibility, in such amounts with such
deductibles and against such risks and losses as are in the
opinion of the management of Lafayette adequate for the business
engaged in by Lafayette. As of the date hereof, Lafayette has
not received any notice of cancellation or notice of a material
amendment of any such insurance policy or bond and, to the best
of its knowledge, is not in default under any such policy or
bond, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion. The
Lafayette Disclosure Schedule sets forth in summary form a list
of all insurance policies of Lafayette and its Subsidiaries.
3.15. MINUTE BOOKS. The minute books of Lafayette and
its Subsidiaries contain accurate records of all meetings and
other corporate action held of the stockholders and Board of
Directors (including committees of the Board of Directors) held
since January 1, 1990, except where the failure to so maintain
such records would not have a material adverse effect on the
business, operations, assets or financial condition of Lafayette
and its Subsidiaries taken as a whole.
3.16. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the Lafayette Disclosure
Schedule, Lafayette and its Subsidiaries have not received any
written notice, citation, claim, assessment, proposed assessment
or demand for abatement alleging that Lafayette or its
Subsidiaries (either directly or, as a trustee or fiduciary, or
as a successor-in-interest in connection with the enforcement of
remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or
cleanup of any condition resulting from the violation of any law,
ordinance or other governmental regulation regarding
environmental matters which correction or cleanup would be
material to the business, operations, assets or financial
condition of Lafayette. Except as disclosed in the Lafayette
Disclosure Schedule, Lafayette has no knowledge that any toxic or
hazardous substances or materials have been emitted, generated,
disposed of or stored on any Properties (as hereinafter defined)
in any manner that violates any presently existing federal, state
or local law or regulation governing or pertaining to any toxic
or hazardous substances and materials, the violation of which
would have a material adverse effect on the business, operations,
or assets or financial condition of Lafayette.
(b) Lafayette has no knowledge that any of the
Properties has been operated in any manner in the three years
prior to the date of this Agreement that violated any applicable
federal, state or local law or regulation governing or pertaining
to such substances and materials, the violation of which would
have a material adverse effect on the business, operations,
assets or financial condition of Lafayette and its Subsidiaries
taken as a whole.
(c) Except as set forth on the Lafayette Disclosure
Schedule, (i) Lafayette has no knowledge that any of the real
property owned or leased by Lafayette or its Subsidiaries, as
OREO or otherwise, or owned or controlled by Lafayette or its
Subsidiaries as a trustee or fiduciary (the "Properties"), meets
the statutory criteria of an "Establishment" as that term is
defined pursuant to the Connecticut Transfer of Establishments
Act, P.A. 95-183 (the "Connecticut Transfer Act"), and (ii) to
the best of Lafayette's knowledge, Lafayette, its Subsidiaries
and any and all of their tenants or subtenants have all necessary
permits and have filed all necessary registrations material to
permit the operation of the Properties in the manner in which the
operations are currently conducted under all applicable federal,
state or local environmental laws, excepting only those permits
and registrations the absence of which would not have a material
adverse effect upon the operations requiring the permit or
registration.
(d) Except as set forth in the Lafayette Disclosure
Schedule, to the knowledge of Lafayette, there are no underground
storage tanks on, in or under any of the Properties and no
underground storage tanks have been closed or removed from any of
the Properties while the property was owned, operated or
controlled by Lafayette or its Subsidiaries.
3.17. RESERVES. As of September 30, 1995, the
allowance for possible loan losses in the Lafayette Financial
Statements was adequate based upon all factors required to be
considered by Lafayette at that time in determining the amount of
such allowance. Except as set forth in the Lafayette Disclosure
Schedule, the methodology used to compute the allowance for
possible loan losses complies in all material respects with all
applicable policies of the FDIC and the Department. As of
September 30, 1995, the valuation allowance for OREO properties
in the Lafayette Financial Statements was adequate based upon all
factors required to be considered by Lafayette at that time in
determining the amount of such allowance.
3.18. NO PARACHUTE PAYMENTS. Except as set forth in
the Lafayette Disclosure Schedule and except for benefits
resulting from the acceleration of Stock Options, no officer,
director, employee or agent (or former officer, director,
employee or agent) of Lafayette is entitled now, or will or may
be entitled to as a consequence of this Agreement or the Merger,
to any payment or benefit from Lafayette, HUBCO or the Bank which
if paid or provided would constitute an "excess parachute
payment", as defined in Section 280G of the Code or regulations
promulgated thereunder.
3.19. AGREEMENTS WITH BANK REGULATORS. Except as set
forth in Lafayette Disclosure Schedule, neither Lafayette or any
of its Subsidiaries is a party to any commitment letter, board
resolution submitted to a regulatory authority or similar
undertaking to, or is subject to any order or directive by, or is
a recipient of any extraordinary supervisory letter from, any
court, governmental authority or other regulatory or
administrative agency or commission, domestic or foreign
("Governmental Entity") which restricts materially the conduct of
its business, or in any manner relates to its capital adequacy,
its credit or reserve policies or its management, nor has
Lafayette been advised by any Governmental Entity that it is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission. Lafayette is
not required by Section 32 of the Federal Deposit Insurance Act
to give prior notice to a Federal banking agency of the proposed
addition of an individual to its board of directors or the
employment of an individual as a senior executive officer.
3.20. DISCLOSURE. No representation or warranty
contained in Article III of this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements herein not misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUBCO
References herein to the "HUBCO Disclosure Schedule"
shall mean all of the disclosure schedules required by this
Article IV, dated as of the date hereof and referenced to the
specific sections and subsections of Article IV of this
Agreement, which have been delivered on the date hereof by HUBCO
to Lafayette. HUBCO hereby represents and warrants to Lafayette
as follows:
4.1. CORPORATE ORGANIZATION.
(a) HUBCO is a corporation duly organized and validly
existing and in good standing under the laws of the State of New
Jersey. HUBCO has the corporate power and authority to own or
lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the
business, operations, assets or financial condition of HUBCO or
its subsidiaries (defined below), taken as a whole. HUBCO is
registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended.
(b) Each of the Subsidiaries of HUBCO are listed in
the HUBCO Disclosure Schedule. The term "Subsidiary", when used
with reference to HUBCO, means any corporation, partnership,
joint venture or other legal entity in which HUBCO directly or
indirectly, owns at least a 50 percent stock or other equity
interest or for which HUBCO, directly or indirectly, acts as a
general partner. Each Subsidiary of HUBCO is duly organized and
validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Bank is a state-chartered
commercial bank whose deposits are insured by the FDIC to the
fullest extent permitted by law. Each Subsidiary has the
corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now
being conducted and is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the nature
of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such
licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing would not have a
material adverse effect on the business, operations, assets or
financial condition of HUBCO and its subsidiaries, taken as a
whole. The HUBCO Disclosure Schedule sets forth true and
complete copies of the certificate of incorporation and by-laws
of HUBCO as in effect on the date hereof.
4.2. CAPITALIZATION. The authorized capital stock of
HUBCO consists solely of 25,000,000 shares of HUBCO Common Stock
and 4,500,000 shares of preferred stock ("HUBCO Authorized
Preferred Stock"). As of January 15, 1996, there were 13,105,627
shares of HUBCO Common Stock issued and outstanding, excluding
39,432 shares of treasury stock. Since such date, and from time
to time hereafter, HUBCO may sell or repurchase shares of HUBCO
Common Stock subject to the covenant in Section 5.18. There are
no shares of HUBCO Authorized Preferred Stock outstanding.
Except for shares issuable under the HUBCO 1995 Stock Option Plan
(the "HUBCO Stock Option Plan"), there are no shares of HUBCO
Common Stock issuable upon the exercise of outstanding stock
options or otherwise. All issued and outstanding shares of HUBCO
Common Stock, and all issued and outstanding shares of capital
stock of HUBCO's Subsidiaries, have been duly authorized and
validly issued, are fully paid, nonassessable and free of
preemptive rights, and are free and clear of all liens,
encumbrances, charges, restrictions or rights of third parties.
All of the outstanding shares of capital stock of HUBCO's
Subsidiaries are owned by HUBCO free and clear of any liens,
encumbrances, charges, restrictions or rights of third parties.
Except for the shares issuable under the HUBCO Stock Option Plan,
neither HUBCO nor HUBCO's Subsidiaries has granted or is bound by
any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the
transfer, purchase or issuance of any shares of capital stock of
HUBCO or HUBCO's Subsidiaries or any securities representing the
right to purchase, subscribe or otherwise receive any shares of
such capital stock or any securities convertible into any such
shares, and there are no agreements or understandings with
respect to voting of any such shares. Neither HUBCO nor any of
HUBCO's Subsidiaries is, as of the date hereof, the owner of any
shares of Lafayette Common Stock.
4.3. AUTHORITY; NO VIOLATION.
(a) HUBCO has the full corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of HUBCO in
accordance with its certificate of incorporation and applicable
laws and regulations. Except for the approval of the issuance of
the HUBCO Common Stock pursuant to the Merger by the requisite
vote of HUBCO's shareholders and the creation of Merger Sub, no
other corporate proceedings on the part of HUBCO are necessary to
consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by HUBCO and
constitutes the valid and binding obligations of HUBCO,
enforceable against HUBCO in accordance with its terms.
(b) Neither the execution or delivery of this
Agreement by HUBCO, nor the consummation by HUBCO of the
transactions contemplated hereby in accordance with the terms
hereof or compliance by HUBCO with any of the terms or provisions
hereof will (i) violate any provision of the Certificate of
Incorporation or By-laws of HUBCO, (ii) assuming that the
consents and approvals set forth below are duly obtained, violate
any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to HUBCO or any of its
respective properties or assets, or (iii) violate, conflict with,
result in a breach of any provision of, constitute a default (or
an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation
of any lien, security interest, charge or other encumbrance upon
any of the respective properties or assets of HUBCO under any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which HUBCO is a party, or by which
HUBCO or any of its properties or assets may be bound or
affected, except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a material adverse
effect on the business, operations, assets or financial condition
of HUBCO and HUBCO's Subsidiaries, taken as a whole, and which
will not prevent or delay the consummation of the transactions
contemplated hereby. Except for consents and approvals of or
filings or registrations with or notices to the Board of
Governors of the Federal Reserve System ("FRB"), the
Commissioner, the Department, the Securities and Exchange
Commission ("SEC"), state blue sky authorities or other
applicable governmental authorities, no consents or approvals of
or filings or registrations with or notices to any third party or
any public body or authority are necessary on behalf of HUBCO in
connection with (x) the execution and delivery by HUBCO of this
Agreement, and (y) the consummation by HUBCO and Lafayette of the
Merger and the other transactions contemplated hereby except such
as are listed in the HUBCO Disclosure Schedule or in the
aggregate will not (if not obtained) have a material adverse
effect on the business, operations, assets or financial condition
of HUBCO. To the best of HUBCO's knowledge, no fact or condition
exists which HUBCO has reason to believe will prevent it from
obtaining the aforementioned consents and approvals.
4.4. FINANCIAL STATEMENTS.
(a) The HUBCO Disclosure Schedule sets forth copies of
the consolidated statements of financial condition of HUBCO as of
December 31, 1994 and 1993, the related consolidated statements
of income, changes in stockholders' equity and cash flows for the
periods ended December 31, in each of the three fiscal years 1992
through 1994, in each case accompanied by the audit report of
Arthur Andersen LLP, independent public accountants with respect
to HUBCO, and the unaudited consolidated statement of condition
of HUBCO as of September 30, 1995 and the related unaudited
consolidated statements of income and cash flows for the nine
months ended September 30, 1995 and 1994, as reported in HUBCO's
Quarterly Report on Form 10-Q, filed with the SEC under the 1934
Act (collectively, the "HUBCO Financial Statements"). The HUBCO
Financial Statements (including the related notes) have been
prepared in accordance with GAAP consistently applied during the
periods involved (except as may be indicated therein or in the
notes thereto), and fairly present the consolidated financial
position of HUBCO as of the respective dates set forth therein,
and the related consolidated statements of income, changes in
stockholders' equity and cash flows (including the related notes,
where applicable) fairly present the consolidated results of
operations, changes in stockholders' equity and cash flows of
HUBCO for the respective fiscal periods set forth therein.
(b) The books and records of HUBCO and the Bank are
being maintained in material compliance with applicable legal and
accounting requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed
or reserved against in the HUBCO Financial Statements (including
the notes thereto), as of September 30, 1995 neither HUBCO nor
any of its subsidiaries had any obligation or liability, whether
absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of HUBCO or
any of its Subsidiaries which were required by GAAP (consistently
applied) to be disclosed in HUBCO's consolidated statement of
condition as of September 30, 1995 or the notes thereto. Except
for the acquisition of Growth Financial Corp. and other proposed
acquisitions by HUBCO since September 30, 1995 reflected in any
Form 8-K filed by HUBCO with the SEC, neither HUBCO nor any of
its Subsidiaries have incurred any liabilities since September
30, 1995, except in the ordinary course of business and
consistent with prudent banking practice.
4.5. BROKERAGE FEES. Neither HUBCO nor any of its
directors or officers has employed any broker or finder or
incurred any liability for any broker's or finder's fees or
commissions in connection with any of the transactions
contemplated by this Agreement.
4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. There has
not been any material adverse change in the business, operations,
assets or financial condition of HUBCO and HUBCO's Subsidiaries
taken as a whole since September 30, 1995 and to the best of
HUBCO's knowledge, no facts or condition exists which HUBCO
believes will cause such a material adverse change in the future.
4.7. LEGAL PROCEEDINGS. Except for ordinary routine
litigation incidental to the business of HUBCO or its
Subsidiaries, neither HUBCO nor any of its Subsidiaries is a
party to any, and there are no pending or, to the best of HUBCO's
knowledge, threatened legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of
any nature against HUBCO or any of its Subsidiaries which, if
decided adversely to HUBCO or its Subsidiaries, would have a
material adverse effect on the business, operations, assets or
financial condition of HUBCO or its Subsidiaries. Except as
disclosed in the HUBCO Disclosure Schedule, neither HUBCO nor
HUBCO's Subsidiaries is a party to any order, judgment or decree
entered in any lawsuit or proceeding which is material to HUBCO
or its Subsidiaries.
4.8. COMPLIANCE WITH APPLICABLE LAW.
(a) Since January 1, 1993, HUBCO has filed all reports
that it was required to file with the SEC under the 1934 Act, all
of which complied in all material respects with all applicable
requirements of the 1934 Act and the rules and regulations
adopted thereunder. As of their respective dates, each such
report and each registration statement, proxy statement, form or
other document filed by HUBCO with the SEC, including without
limitation, any financial statements or schedules included
therein, did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to
modify information as of an earlier date. Since January 1, 1993,
HUBCO and the Bank have duly filed all material forms, reports
and documents which they were required to file with each agency
charged with regulating any aspect of their business.
(b) Except as set forth in the HUBCO Disclosure
Schedule, each of HUBCO and HUBCO's Subsidiaries holds all
material licenses, franchises, permits and authorizations
necessary for the lawful conduct of its business, and has
complied with and is not in default in any respect under any
applicable law, statute, order, rule, regulation, policy and/or
guideline of any federal, state or local governmental authority
relating to HUBCO or HUBCO's Subsidiaries (including without
limitation consumer, community and fair lending laws) (other than
where such default or noncompliance will not result in a material
adverse effect on the business, operations, assets or financial
condition of HUBCO and HUBCO's Subsidiaries taken as a whole) and
HUBCO has not received notice of violation of, and does not know
of any violations of, any of the above.
4.9. HUBCO INFORMATION. The information relating to
HUBCO and its Subsidiaries (including, without limitation,
information regarding other transactions which HUBCO is required
to disclose), this Agreement and the transactions contemplated
hereby in the Registration Statement and Proxy
Statement/Prospectus (as defined in Section 5.6(a) hereof), as of
the date of the mailing of the Proxy Statement/Prospectus, and up
to and including the date of the meeting of stockholders of
Lafayette and HUBCO to which such Proxy Statement/Prospectus
relates, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Registration Statement shall comply as to form in all material
respects with the provisions of the Securities Act of 1933, as
amended (the "1933 Act"), the 1934 Act and the rules and
regulations promulgated thereunder.
4.10. FUNDING AND CAPITAL ADEQUACY. At the Effective
Time, after giving pro forma effect to the Merger and any other
acquisition which HUBCO or its Subsidiaries have agreed to
consummate, HUBCO will have sufficient capital to satisfy all
applicable regulatory capital requirements.
4.11. HUBCO COMMON STOCK. At the Effective Time, the
HUBCO Common Stock issued hereunder will be duly authorized and
validly issued, fully paid, nonassessable, free of preemptive
rights and free and clear of all liens, encumbrances or
restrictions created by or through HUBCO, with no personal
liability attaching to the ownership thereof. The HUBCO Common
Stock to be issued pursuant to the Merger (including the shares
issued pursuant to Section 2.6 and shares issued upon the
exercise of HUBCO Warrants) will be registered under the 1933 Act
and issued in accordance with all applicable state and federal
laws, rules and regulations.
4.12. TAXES AND TAX RETURNS.
(a) HUBCO and HUBCO's Subsidiaries have duly filed all
Returns required to be filed by them in respect of any federal,
state and local taxes (including withholding taxes, penalties or
other payments required) and have duly paid all such taxes due
and payable, other than taxes or other charges which are being
contested in good faith (and disclosed to Lafayette in writing).
HUBCO and HUBCO's Subsidiaries have established on their books
and records reserves that are adequate for the payment of all
federal, state and local taxes not yet due and payable, but are
incurred in respect of HUBCO or the Bank through such date. The
HUBCO Disclosure Schedule identifies the federal income tax
returns of HUBCO and HUBCO's Subsidiaries which have been
examined by the IRS within the past six years. No deficiencies
were asserted as a result of such examinations which have not
been resolved and paid in full. The HUBCO Disclosure Schedule
identifies the applicable state income tax returns of HUBCO and
HUBCO's Subsidiaries which have been examined by the applicable
authorities. No deficiencies were asserted as a result of such
examinations which have not been resolved and paid in full. To
the best knowledge of HUBCO, there are no audits or other
administrative or court proceedings presently pending nor any
other disputes pending with respect to, or claims asserted for,
taxes or assessments upon HUBCO or HUBCO's Subsidiaries, nor has
HUBCO or HUBCO's Subsidiaries given any currently outstanding
waivers or comparable consents regarding the application of the
statute of limitations with respect to any taxes or Returns.
(b) Except as set forth in the HUBCO Disclosure
Schedule, neither HUBCO nor any Subsidiary of HUBCO (i) has
requested any extension of time within which to file any Return
which Return has not since been filed, (ii) is a party to any
agreement providing for the allocation or sharing of taxes with
third parties, (iii) is required to include in income any
adjustment pursuant to Section 481(a) of the Code, by reason of a
voluntary change in accounting method initiated by HUBCO (nor
does HUBCO have any knowledge that the IRS has proposed any such
adjustment or change of accounting method) or (iv) has filed a
consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply.
4.13. EMPLOYEE BENEFIT PLANS.
(a) Except as disclosed in the HUBCO Disclosure
Schedule and the HUBCO Stock Option Plan, neither HUBCO or its
Subsidiaries maintains or contributes to any "employee pension
benefit plan" (the "HUBCO Pension Plans"), within the meaning of
Section 3(2)(A) of ERISA, "employee welfare benefit plan" within
the meaning of Section 3(1) of ERISA (the "HUBCO Welfare Plans"),
stock option plan, stock purchase plan, deferred compensation
plan, severance plan, bonus plan, employment agreement or other
similar plan, program or arrangement. HUBCO has not, since
September 2, 1974, contributed to any "Multiemployer Plan", as
such term is defined in Section 3(37) of ERISA.
(b) The present value of all accrued benefits, both
vested and non-vested, under each of HUBCO's Pension Plans
subject to Title IV of ERISA, based upon the actuarial
assumptions used for funding purposes in the most recent
actuarial valuation prepared by such HUBCO Pension Plan's
actuary, did not exceed the then current value of the assets of
such plans allocable to such accrued benefits. The actuarial
assumptions then utilized for such plans were reasonable and
appropriate as of the last valuation date and reflect then
current market conditions.
(c) During the last six years, the PBGC has not
asserted any claim for liability against HUBCO or any of its
Subsidiaries which has not been paid in full.
(d) All premiums (and interest charges and penalties
for late payment, if applicable) due to the PBGC with respect to
each HUBCO Pension Plan have been paid. All contributions
required to be made to each HUBCO Pension Plan under the terms
thereof, ERISA or other applicable law have been timely made, and
all amounts properly accrued to date as liabilities of HUBCO
which have not been paid have been properly recorded on the books
of HUBCO.
(e) Except as disclosed in the HUBCO Disclosure
Schedule, each of the HUBCO Pension Plans, HUBCO Welfare Plans
and each other employee benefit plan and arrangement identified
on the HUBCO Disclosure Schedule has, since January 1, 1990, been
operated in compliance in all material respects with any
applicable provisions of ERISA, the Code, all regulations,
rulings and announcements promulgated or issued thereunder, and
all other applicable governmental laws and regulations.
Furthermore, if HUBCO maintains any HUBCO Pension Plan, HUBCO has
received a favorable determination letter from the IRS which
takes into account the Tax Reform Act of 1986 and subsequent
legislation and, except as disclosed in the HUBCO Disclosure
Schedule, HUBCO is not aware of any fact or circumstance which
would disqualify any plan.
(f) To the best knowledge of HUBCO, no non-exempt
prohibited transaction, within the meaning of Section 4975 of the
Code or Section 406 of ERISA, has occurred with respect to any of
the HUBCO Welfare Plans or HUBCO Pension Plans.
(g) No HUBCO Pension Plan or any trust created
thereunder has been terminated, nor have there been any
"reportable events" (notice of which has not been waived by the
PBGC), within the meaning of Section 4034(b) of ERISA, with
respect to any of the HUBCO Pension Plans.
(h) No "accumulated funding deficiency", within the
meaning of Section 412 of the Code, has been incurred with
respect to any of the HUBCO Pension Plans.
(i) There are no material pending or, to the best
knowledge of HUBCO, material threatened claims (other than
routine claims for benefits) by, on behalf of, or against any of
the HUBCO Pension Plans or HUBCO Welfare Plans, any trusts
created thereunder or any other plan or arrangement identified in
the HUBCO Disclosure Schedule.
(j) Except with respect to customary health, life and
disability benefits or as disclosed in the HUBCO Disclosure
Schedule, there are no unfunded benefit obligations which are not
accounted for by reserves shown on the HUBCO Financial Statements
and established under GAAP or otherwise noted on such Financial
Statements.
(k) With respect to each HUBCO Pension Plan and HUBCO
Welfare Plan that is funded wholly or partially through an
insurance policy, there will be no liability of HUBCO or its
Subsidiaries as of the Effective Time under any such insurance
policy or ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate adjustment, loss
sharing arrangement or other actual or contingent liability
arising wholly or partially out of events occurring prior to the
Effective Time.
4.14. CONTRACTS. Except as disclosed in the HUBCO
Disclosure Schedule, neither HUBCO nor its Subsidiaries, or to
the best knowledge of HUBCO, any party thereto, is in default in
any material respect under any material lease, contract,
mortgage, promissory note, deed of trust, loan or other
commitment (except those under which the Bank is or will be the
creditor) or arrangement, except for defaults which individually
or in the aggregate would not have a material adverse effect on
the business, operations, assets or financial condition of HUBCO
and the Bank, taken as a whole.
4.15. PROPERTIES AND INSURANCE.
(a) HUBCO and the Bank have good and, as to owned real
property, marketable title to all material assets and properties,
whether real or personal, tangible or intangible, reflected in
HUBCO's consolidated balance sheet as of September 30, 1995, or
owned and acquired subsequent thereto (except to the extent that
such assets and properties have been disposed of for fair value
in the ordinary course of business since September 30, 1995),
subject to no encumbrances, liens, mortgages, security interests
or pledges, except (i) those items that secure liabilities that
are reflected in said balance sheet or the notes thereto or that
secure liabilities incurred in the ordinary course of business
after the date of such balance sheet, (ii) statutory liens for
amounts not yet delinquent or which are being contested in good
faith, (iii) such encumbrances, liens, mortgages, security
interests, pledges and title imperfections that are not in the
aggregate material to the business, operations, assets, and
financial condition of HUBCO and the Bank taken as a whole and
(iv) with respect to owned real property, title imperfections
noted in title reports. Except as disclosed in the HUBCO
Disclosure Schedule, HUBCO and the Bank as lessees have the right
under valid and subsisting leases to occupy, use, possess and
control all property leased by HUBCO or the Bank in all material
respects as presently occupied, used, possessed and controlled by
HUBCO and the Bank.
(b) The business operations and all insurable
properties and assets of HUBCO and the Bank are insured for their
benefit against all risks which, in the reasonable judgment of
the management of HUBCO, should be insured against, in each case
under policies or bonds issued by insurers of recognized
responsibility, in such amounts with such deductibles and against
such risks and losses as are in the opinion of the management of
HUBCO adequate for the business engaged in by HUBCO and the Bank.
As of the date hereof, neither HUBCO nor the Bank has received
any notice of cancellation or notice of a material amendment of
any such insurance policy or bond or is in default under any such
policy or bond, no coverage thereunder is being disputed and all
material claims thereunder have been filed in a timely fashion.
4.16. ENVIRONMENTAL MATTERS. Except as disclosed in
the HUBCO Disclosure Schedule, neither HUBCO nor the Bank has
received any written notice, citation, claim, assessment,
proposed assessment or demand for abatement alleging that HUBCO,
the Bank or any other Subsidiary of HUBCO (either directly, or as
a trustee or fiduciary, or as a successor-in-interest in
connection with the enforcement of remedies to realize the value
of properties serving as collateral for outstanding loans) is
responsible for the correction or cleanup of any condition
resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters which
correction or cleanup would be material to the business,
operations, assets or financial condition of HUBCO and the Bank
taken as a whole. Except as disclosed in the HUBCO Disclosure
Schedule, HUBCO has no knowledge that any toxic or hazardous
substances or materials have been emitted, generated, disposed of
or stored on any property currently owned or leased by HUBCO or
the Bank or any other Subsidiary in any manner that violates any
presently existing federal, state or local law or regulation
governing or pertaining to such substances and materials, the
violation of which would have a material adverse effect on the
business, operations, assets or financial condition of HUBCO and
the Bank, taken as a whole.
4.17. RESERVES. As of September 30, 1995, the
allowance for possible loan losses in the HUBCO Financial
Statements was adequate based upon all factors required to be
considered by HUBCO at that time in determining the amount of
such allowance. The methodology used to compute the allowance
for possible loan losses complies in all material respects with
all applicable FDIC and New Jersey Department of Banking
policies. As of September 30, 1995, the valuation allowance for
OREO properties in the HUBCO Financial Statements was adequate
based upon all factors required to be considered by HUBCO at that
time in determining the amount of such allowance.
4.18. AGREEMENTS WITH BANK REGULATORS. Neither HUBCO
nor the Bank is a party to any agreement or memorandum of
understanding with, or a party to any commitment letter, board
resolution submitted to a regulatory authority or similar
undertaking to, or is subject to any order or directive by, or is
a recipient of any extraordinary supervisory letter from, any
Government Entity which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its
credit or reserve policies or its management, except for those
the existence of which has been disclosed in writing to Lafayette
by HUBCO prior to the date of this Agreement, nor has HUBCO been
advised by any Governmental Entity that it is contemplating
issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar submission, except as disclosed in
writing to Lafayette by HUBCO prior to the date of this
Agreement. Neither HUBCO nor the Bank is required by Section 32
of the Federal Deposit Insurance Act to give prior notice to a
Federal banking agency of the proposed addition of an individual
to its board of directors or the employment of an individual as a
senior executive officer, except as disclosed in writing to
Lafayette by HUBCO prior to the date of this Agreement.
4.19. DISCLOSURES. No representation or warranty
contained in Article IV of this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements herein not misleading.
ARTICLE V - COVENANTS OF THE PARTIES
5.1. CONDUCT OF THE BUSINESS OF LAFAYETTE . During
the period from the date of this Agreement to the Effective Time,
Lafayette shall conduct its business only in the ordinary course
and consistent with prudent banking practice, except for
transactions permitted hereunder or with the prior written
consent of HUBCO, which consent will not be unreasonably
withheld. Lafayette also shall use all reasonable efforts to (i)
preserve its business organization intact, (ii) keep available to
itself the present services of its employees and (iii) preserve
for itself and HUBCO the goodwill of its customers and others
with whom business relationships exist.
5.2. NEGATIVE COVENANTS.
(a) Lafayette agrees that from the date hereof to the
Effective Time, except as otherwise approved by HUBCO in writing
or as permitted or required by this Agreement, neither it or its
Subsidiaries will:
(i) change any provision of its Certificate of
Incorporation or By-laws or any similar governing documents
of Lafayette;
(ii) change the number of shares of its
authorized or issued capital stock (other than upon the
issuance of Lafayette Common Stock upon exercise of Stock
Options or Lafayette Warrants) or issue or grant any
subscription, option, warrant, call, commitment, right to
purchase or agreement of any character relating to the
authorized or issued capital stock of Lafayette or any
securities convertible into shares of such stock, or split,
combine or reclassify any shares of its capital stock, or
declare, set aside or pay any dividend, or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock;
PROVIDED, HOWEVER, from the date hereof to the Effective
Time, Lafayette may declare, set aside or pay cash dividends
per share of Lafayette Common Stock equivalent to the cash
dividends per share (I.E., at the same rate as that paid by
HUBCO multiplied by the Exchange Ratio) declared, set aside
or paid by HUBCO during such period, except that commencing
with the June 1, 1996 dividend Lafayette shall pay such
dividends on March 1, June 1, September 1, and December 1 of
each year and shall use the same record date as that used by
HUBCO; AND PROVIDED FURTHER that Lafayette may continue to
operate its Dividend Reinvestment and Stock Purchase Plan,
in the manner described in Lafayette's prospectus relating
thereto, only in respect of the dividend paid and cash
contributions made through February 15, 1996 and thereafter
the Plan shall cease.
(iii) grant any severance or termination pay
(other than pursuant to policies or contracts of Lafayette
in effect on the date hereof or disclosed to HUBCO pursuant
hereto) to, or enter into or amend any employment or
severance agreement with, any of its directors, officers or
employees, except as specified in Lafayette Disclosure
Schedule; adopt or approve any new employee benefit plan or
arrangement of any type or amend any existing employee
benefit plan or arrangement of any type; or award any
increase in compensation or benefits to its directors,
officers or employees except with respect to employee and
officer increases in the ordinary course of business and
consistent with past practices and policies and the stay-on
bonuses set forth in the Lafayette Disclosure Schedule;
(iv) sell or dispose of any substantial amount of
assets or voluntarily incur any significant liabilities
other than in the ordinary course of business consistent
with past practices and policies or in response to
substantial financial demands upon the business of
Lafayette;
(v) except as set forth in Lafayette Disclosure
Schedule, make any capital expenditures other than pursuant
to binding commitments existing on the date hereof,
expenditures described in business plans or budgets
furnished to HUBCO prior to the date hereof and other than
expenditures necessary to maintain existing assets in good
repair;
(vi) except as set forth in Lafayette Disclosure
Schedule, file any applications or make any contract with
respect to branching or site location or relocation;
(vii) agree to acquire in any manner whatsoever
(other than to realize upon collateral for a defaulted loan)
any business or entity;
(viii) make any material change in its accounting
methods or practices, other than changes required in
accordance with generally accepted accounting principles;
(ix) take any action that would result in any of
its representations and warranties contained in Article III
of this Agreement not being true and correct in any material
respect at the Effective Time or that would cause any of its
conditions to Closing not to be satisfied; or
(x) agree to do any of the foregoing.
5.3. NO SOLICITATION. Lafayette shall not, directly
or indirectly, encourage or solicit or hold discussions or
negotiations with, or provide any information to, any person,
entity or group (other than HUBCO) concerning any merger or sale
of shares of capital stock or sale of substantial assets or
liabilities not in the ordinary course of business, or similar
transactions involving Lafayette (an "Acquisition Transaction").
Notwithstanding the foregoing, Lafayette may enter into
discussions or negotiations or provide information in connection
with an unsolicited possible Acquisition Transaction if the Board
of Directors of Lafayette, after consulting with counsel,
determines in the exercise of its fiduciary responsibilities that
such discussions or negotiations should be commenced or such
information should be furnished. Lafayette will promptly
communicate to HUBCO the material terms of any proposal, whether
written or oral, which it may receive in respect of any such
Acquisition Transaction and the fact that it is having
discussions or negotiations with a third party about an
Acquisition Transaction.
5.4. CURRENT INFORMATION. During the period from the
date of this Agreement to the Effective Time, each of Lafayette
and HUBCO will cause one or more of its designated
representatives to confer with representatives of the other party
on a monthly or more frequent basis regarding its business,
operations, properties, assets and financial condition and
matters relating to the completion of the transactions
contemplated herein. On a monthly basis, Lafayette agrees to
provide HUBCO, and HUBCO agrees to provide Lafayette, with
internally prepared profit and loss statements no later than 15
days after the close of each calendar month. As soon as
reasonably available, but in no event more than 45 days after the
end of each fiscal quarter (other than the last fiscal quarter of
each fiscal year) ending on or after March 31, 1996, Lafayette
will deliver to HUBCO and HUBCO will deliver to Lafayette their
respective quarterly reports. As soon as reasonably available,
but in no event more than 90 days after the end of each calendar
year, Lafayette will deliver to HUBCO and HUBCO will deliver to
Lafayette their respective Annual Reports.
5.5. ACCESS TO PROPERTIES AND RECORDS;
CONFIDENTIALITY.
(a) Lafayette shall permit HUBCO and its
representatives, and HUBCO and the Bank shall permit Lafayette
and its representatives, reasonable access to their respective
properties, and shall disclose and make available to HUBCO and
its representatives, or Lafayette and its representatives, as the
case may be, all books, papers and records relating to its
assets, stock ownership, properties, operations, obligations and
liabilities, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of
directors' and stockholders' meetings, organizational documents,
by-laws, material contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files,
plans affecting employees, and any other business activities or
prospects in which HUBCO and its representatives, or Lafayette
and its representatives, may have a reasonable interest. Neither
party shall be required to provide access to or to disclose
information where such access or disclosure would violate or
prejudice the rights of any customer, would contravene any law,
rule, regulation, order or judgment or would waive any privilege.
The parties will use their best efforts to obtain waivers of any
such restriction (other than waivers of the attorney-client
privilege) and in any event make appropriate substitute
disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply. Notwithstanding
the foregoing, Lafayette acknowledges that HUBCO may be involved
in discussions concerning other potential acquisitions and HUBCO
shall not be obligated to disclose such information to Lafayette
except as provided in Section 5.8 hereof.
(b) All information furnished by the parties hereto
previously in connection with transactions contemplated by this
Agreement or pursuant hereto shall be used solely for the purpose
of evaluating the Merger contemplated hereby and shall be treated
as the sole property of the party delivering the information
until consummation of the Merger contemplated hereby and, if such
Merger shall not occur, each party and each party's advisors
shall return to the other party all documents or other materials
containing, reflecting or referring to such information, will not
retain any copies of such information, shall use its best efforts
to keep confidential all such information, and shall not directly
or indirectly use such information for any competitive or other
commercial purposes. In the event that the Merger contemplated
hereby does not occur, all documents, notes and other writings
prepared by a party hereto or its advisors based on information
furnished by the other party shall be promptly destroyed. The
obligation to keep such information confidential shall continue
for five years from the date the proposed Merger is abandoned but
shall not apply to (i) any information which (A) the party
receiving the information can establish by convincing evidence
was already in its possession prior to the disclosure thereof to
it by the other party; (B) was then generally known to the
public; (C) became known to the public through no fault of the
party receiving such information; or (D) was disclosed to the
party receiving such information by a third party not bound by an
obligation of confidentiality; or (ii) disclosures pursuant to a
legal requirement or in accordance with an order of a court of
competent jurisdiction.
5.6. REGULATORY MATTERS.
(a) For the purposes of holding the Stockholders'
Meetings referred to in Section 5.7 hereof and qualifying under
applicable federal and state securities laws the HUBCO Common
Stock to be issued to Lafayette stockholders in connection with
the Merger, the parties hereto shall cooperate in the preparation
and filing by HUBCO or Lafayette (as applicable) of a
Registration Statement with the SEC and a proxy statement with
the FDIC which shall include an appropriate joint proxy statement
and prospectus satisfying all applicable requirements of
applicable state and federal laws, including the 1933 Act, the
1934 Act and applicable state securities laws and the rules and
regulations thereunder, and the rules and regulations of the FDIC
and SEC (such proxy statement and prospectus in the form mailed
by Lafayette and HUBCO to their respective shareholders together
with any and all amendments or supplements thereto, being herein
referred to as the "Proxy Statement/Prospectus" and the various
documents to be filed by HUBCO under the 1933 Act with the SEC to
register the HUBCO Common Stock for sale, including the Proxy
Statement/Prospectus, are referred to herein as the "Registration
Statement").
(b) HUBCO shall furnish Lafayette with such
information concerning HUBCO and its Subsidiaries (including,
without limitation, information regarding other transactions
which HUBCO is required to disclose) as is necessary in order to
cause the Proxy Statement/Prospectus, insofar as it relates to
such corporations, to comply with Section 5.6(a) hereof. HUBCO
agrees promptly to advise Lafayette if at any time prior to
HUBCO's or Lafayette's shareholders meeting referred to in
Section 5.7 hereof, any information provided by HUBCO in the
Proxy Statement/Prospectus becomes incorrect or incomplete in
any material respect and to provide Lafayette with the
information needed to correct such inaccuracy or omission. HUBCO
shall furnish Lafayette with such supplemental information as may
be necessary in order to cause the Proxy Statement/Prospectus,
insofar as it relates to HUBCO and its subsidiaries, to comply
with Section 5.6(a) after the mailing thereof to Lafayette
shareholders.
(c) Lafayette shall furnish HUBCO with such
information concerning Lafayette as is necessary in order to
cause the Proxy Statement/Prospectus, insofar as it relates to
Lafayette, to comply with Section 5.6(a) hereof. Lafayette
agrees promptly to advise HUBCO if at any time prior to HUBCO's
or Lafayette's shareholders meeting referred to in Section 5.6(a)
hereof, any information provided by Lafayette in the Proxy
Statement/Prospectus becomes incorrect or incomplete in any
material respect and to provide HUBCO with the information needed
to correct such inaccuracy or omission. Lafayette shall furnish
HUBCO with such supplemental information as may be necessary in
order to cause the Proxy Statement/Prospectus, insofar as it
relates to Lafayette, to comply with Section 5.6(a) after the
mailing thereof to Lafayette shareholders.
(d) HUBCO shall as promptly as practicable make such
filings as are necessary in connection with the offering of the
HUBCO Common Stock with applicable state securities agencies and
shall use all reasonable efforts to qualify the offering of such
stock under applicable state securities laws at the earliest
practicable date. Lafayette shall promptly furnish HUBCO with
such information regarding Lafayette shareholders as HUBCO
requires to enable it to determine what filings are required
hereunder. Lafayette authorizes HUBCO to utilize in such filings
the information concerning Lafayette provided to HUBCO in
connection with, or contained in, the Proxy Statement/Prospectus.
HUBCO shall furnish Lafayette's counsel with copies of all such
filings and keep Lafayette advised of the status thereof. HUBCO
shall as promptly as practicable file the Registration Statement
containing the Proxy Statement/Prospectus with the SEC, Lafayette
shall as promptly as practicable file the Proxy
Statement/Prospectus with the FDIC, and each of HUBCO and
Lafayette shall promptly notify the other of all communications,
oral or written, with the SEC and the FDIC concerning the
Registration Statement and the Proxy Statement/Prospectus.
(e) HUBCO shall cause the HUBCO Common Stock issuable
pursuant to the Merger (including, without limitation, shares
issuable pursuant to Section 2.6 and upon exercise of HUBCO
Warrants) to be listed on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") System at the Effective
Time.
(f) The parties hereto will cooperate with each other
and use their reasonable efforts to prepare all necessary
documentation, to effect all necessary filings and to obtain all
necessary permits, consents, approvals and authorizations of all
third parties and governmental bodies necessary to consummate the
transactions contemplated by this Agreement as soon as possible,
including, without limitation, those required by the FRB, the
FDIC and the Department and those required to form the Merger Sub
and perform the Merger. The parties shall each have the right to
review in advance (and shall do so promptly) all proposed filings
with, including all information relating to the other, as the
case may be, and any of their respective Subsidiaries, if any,
which appears in any filing made with, or written material
submitted to, any third party or governmental body in connection
with the transactions contemplated by this Agreement.
(g) Each of the parties will promptly furnish each
other with copies of written communications received by them or
any of their respective Subsidiaries, if any, from, or delivered
by any of the foregoing to, any governmental body in respect of
the transactions contemplated hereby with respect to the Merger.
(h) Lafayette acknowledges that HUBCO is in or may be
in the process of acquiring other banks and financial
institutions and that in connection with such acquisitions,
information concerning Lafayette may be required to be included
in the registration statements, if any, for the sale of
securities of HUBCO or in SEC reports in connection with such
acquisitions. Lafayette acknowledges that, except as set forth
in Section 5.8(b) hereof, prior to the public disclosure of any
such acquisition HUBCO shall be under no obligation to disclose
to Lafayette its acquisition plans or proposals formulated
subsequent to the date hereof. Lafayette agrees to provide HUBCO
with any information, certificates, documents or other materials
about Lafayette as are reasonably necessary to be included in
such other SEC reports or registration statements, including
registration statements which may be filed by HUBCO prior to the
Effective Time. Lafayette shall use its reasonable efforts to
cause its attorneys and accountants to provide HUBCO and any
underwriters for HUBCO with any consents, comfort letters,
opinion letters, reports or information which are necessary to
complete the registration statements and applications or any such
acquisition or issuance of securities. HUBCO shall reimburse
Lafayette for expenses thus incurred by Lafayette should this
transaction be terminated for any reason other than Section
7.1(h). HUBCO shall not file with the SEC any registration
statement or amendment thereto or supplement thereof containing
information regarding Lafayette unless Lafayette shall have
consented to such filing. Lafayette shall not unreasonably delay
or withhold any such consent.
(i) The parties shall use all reasonable efforts to
cause the filings with the SEC and FDIC of the Proxy
Statement/Prospectus, and all regulatory filings with the
Commissioner and the FRB, to be made by April 2, 1996.
5.7. APPROVAL OF STOCKHOLDERS. Lafayette and HUBCO
each will (a) take all steps necessary duly to call, give notice
of, convene and hold a meeting of its stockholders (the
"Stockholders' Meeting") for the purpose of securing the approval
of stockholders of this Agreement in the case of Lafayette and
the issuance of HUBCO Common Stock in the case of HUBCO, (b)
subject to the qualification set forth in Section 5.3 hereof with
respect to Lafayette and the right of Lafayette not to make a
recommendation or to withdraw a recommendation if its investment
banker withdraws its fairness opinion prior to the Stockholders'
Meeting, recommend to their respective stockholders the approval
by Lafayette shareholders of this Agreement and the transactions
contemplated hereby and the approval of HUBCO shareholders of the
issuance of HUBCO Common Stock hereunder and use its reasonable
efforts to obtain, as promptly as practicable, such approvals,
and (c) cooperate and consult with each other with respect to
each of the foregoing matters.
5.8. FURTHER ASSURANCES.
(a) Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to satisfy the conditions to
Closing and to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated by
this Agreement and using its reasonable efforts to prevent the
breach of any representation, warranty, covenant or agreement of
such party contained or referred to in this Agreement and to
promptly remedy the same. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such
necessary action. Nothing in this section shall be construed to
require any party to participate in any threatened or actual
legal, administrative or other proceedings (other than
proceedings, actions or investigations to which it is a party or
subject or threatened to be made a party or subject) in
connection with consummation of the transactions contemplated by
this Agreement unless such party shall consent in advance and in
writing to such participation and the other party agrees to
reimburse and indemnify such party for and against any and all
costs and damages related thereto.
(b) Except as set forth in the paragraph below, HUBCO
agrees that from the date hereof to the Effective Time, except as
otherwise approved by Lafayette in writing or as permitted or
required by this Agreement, it will not, nor will it permit its
Subsidiaries to take any action that would result in any of its
representations and warranties contained in Article IV of this
Agreement not being true and correct in any material respect at
the Effective Time or that would cause any of its conditions to
Closing not to be satisfied.
Notwithstanding anything in this section or elsewhere
in this Agreement, HUBCO and its Subsidiaries may enter into one
or more definitive acquisition agreements to acquire another
bank, thrift or financial institution or the assets and/or
liabilities of such an institution (each of which is a "HUBCO
Acquisition") prior to the Effective Time without the prior
written consent of Lafayette if, and only if, upon the
consummation of the acquisition or merger, (i) HUBCO's Board of
Directors continues to constitute a majority of the continuing
Board of Directors of the surviving company (disregarding the
effect of this Merger); (ii) Kenneth T. Neilson continues to
serve as the Chief Executive Officer of the surviving company;
(iii) the acquisition or merger involves the acquisition or
merger with a financial company which has its headquarters and a
substantial majority of its offices in New Jersey, New York or
Connecticut; and (iv) HUBCO's pro forma book value is diluted by
10% or less and HUBCO's pro forma tangible book value is diluted
by 15% or less as a result of the HUBCO Acquisition or a series
of HUBCO Acquisitions entered into after the date hereof and
before the Effective Time. If HUBCO enters into a definitive
agreement for any HUBCO Acquisition which does not require the
prior written consent of Lafayette, and such HUBCO Acquisition
constitutes, in the reasonable opinion of a majority of the
entire Lafayette Board of Directors, a material adverse change in
the business, operations, assets or financial condition of HUBCO
and its Subsidiaries taken as a whole, as specified under Section
7.1(e)(i) of this Agreement, then such action shall entitle
Lafayette to terminate this Agreement pursuant to Section
7.1(e)(i). In the event of any termination of this Agreement
under the prior sentence, Lafayette shall reimburse HUBCO for its
legal, accounting and advisory expenses incurred by HUBCO
hereunder. For purposes of the warranties and representations
set forth in Article IV hereof, the entity being acquired in an
HUBCO Acquisition shall not be deemed to be a subsidiary or
otherwise a part of HUBCO until the consummation of such HUBCO
Acquisition.
5.9. PUBLIC ANNOUNCEMENTS. HUBCO and Lafayette shall
cooperate with each other in the development and distribution of
all news releases and other public filings and disclosures with
respect to this Agreement or the Merger transaction contemplated
hereby, and HUBCO and Lafayette agree that unless approved
mutually by them IN ADVANCE, they will not issue any press
release or written statement for general circulation relating
primarily to the transaction contemplated hereby, except as may
be otherwise required by law or regulation in the opinion of
counsel.
5.10. FAILURE TO FULFILL CONDITIONS. In the event
that HUBCO or Lafayette determines that a material condition to
its obligation to consummate the transactions contemplated hereby
cannot be fulfilled on or prior to December 31, 1996 and that it
will not waive that condition, it will promptly notify the other
party. Except for any acquisition or merger discussions HUBCO
may enter into with other parties, Lafayette and HUBCO will
promptly inform the other of any facts applicable to Lafayette or
HUBCO, respectively, or their respective directors or officers,
that would be likely to prevent or materially delay approval of
the Merger by any governmental authority or which would otherwise
prevent or materially delay completion of the Merger.
5.11. INDEMNIFICATION AND INSURANCE.
(a) For a period of six years after the Effective
Time, HUBCO shall indemnify, defend and hold harmless each person
who is now, or has been at any time prior to the date hereof or
who becomes prior to the Effective Time, a director, officer,
employee or agent of Lafayette or any Subsidiary of Lafayette or
serves or has served at the request of Lafayette in any capacity
with any other person (collectively, the "Indemnitees") against
any and all claims, damages, liabilities, losses, costs, charges,
expenses (including, without limitation, reasonable costs of
investigation, and the reasonable fees and disbursements of legal
counsel and other advisers and experts as incurred), judgments,
fines, penalties and amounts paid in settlement, asserted
against, incurred by or imposed upon any Indemnitee by reason of
the fact that he or she is or was a director, officer, employee
or agent of Lafayette or any subsidiary of Lafayette or serves or
has served at the request of Lafayette in any capacity with any
other person, (i) in connection with, arising out of or relating
to any threatened, pending or completed claim, action, suit or
proceeding (whether civil, criminal, administrative or
investigative), including, without limitation, any and all
claims, actions, suits, proceedings or investigations by or on
behalf of or in the right of or against Lafayette, or by any
present or former shareholder of Lafayette (collectively,
"Claims"), including, without limitation, any Claim which is
based upon, arises out of or in any way relates to the Merger,
the Proxy Statement/Prospectus mailed to Lafayette's stockholders
to vote on the Merger, this Agreement, any of the transactions
contemplated by this Agreement, the Indemnitee's service as a
member of Lafayette's Board of Directors or any committee of
Lafayette's Board of Directors, the events leading up to the
execution of this Agreement, any statement, recommendation or
solicitation made in connection therewith or related thereto and
any breach of any duty in connection with any of the foregoing,
and (ii) in connection with, arising out of or relating to the
enforcement of the obligations of HUBCO set forth in this Section
5.11, in each case to the fullest extent permitted under any of
(a) any applicable law (including without limitation, N.J.S.A.
14A:3-5(8)), (b) Lafayette's Certificate of Incorporation or (c)
its By-Laws (and HUBCO shall also advance expenses as incurred to
the fullest extent permitted under any thereof).
(b) From and after the Effective Time, HUBCO shall
assume and honor any obligation of Lafayette immediately prior to
the Effective Time with respect to the indemnification of the
Indemnitees arising out of Lafayette's Certificate of
Incorporation or By-Laws as if such obligations were pursuant to
a contract or arrangement between HUBCO and such Indemnitees.
(c) In the event HUBCO or any of its successors or
assigns (i) reorganizes or consolidates with or merges into or
enters into another business combination transaction with any
other person or entity and is not the resulting, continuing or
surviving corporation or entity of such consolidation, merger or
transaction, or (ii) liquidates, dissolves or transfers all or
substantially all of its properties and assets to any person or
entity, then, and in each such case, proper provision shall be
made so that the successors and assigns of HUBCO assume the
obligations set forth in this Section 5.11.
(d) HUBCO shall have Lafayette's officers and
directors covered under either Lafayette's existing officers' and
directors' liability insurance policy or a rider to HUBCO's then
current officers' and directors' liability insurance ("D&O
Insurance") policy for periods of at least six years after the
Effective Time. However, HUBCO only shall be required to insure
such persons upon terms and for coverages substantially similar
to Lafayette's existing D&O insurance.
(e) Any Indemnitee wishing to claim indemnification
under Section 5.11, upon learning of any such claim, action, suit
or proceeding, shall promptly notify HUBCO thereof, but the
failure to so notify shall not relieve HUBCO of any liability it
may have to such Indemnitee if such failure does not materially
prejudice HUBCO. In the event of any such claim, action, suit or
proceeding (whether arising before or after the Effective Time)
as to which indemnification under this Section 5.11 is
applicable, (a) HUBCO shall have the right to assume the defense
thereof and HUBCO shall not be liable to such Indemnitees for any
legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnitees in connection with the
defense thereof, except that if HUBCO elects not to assume such
defense or counsel for the Indemnitees advises that there are
issues which raise conflicts of interest between HUBCO and the
Indemnitees, the Indemnitees may retain counsel satisfactory to
them, and HUBCO shall pay the reasonable fees and expenses of
such counsel for the Indemnitees as statements therefor are
received; PROVIDED HOWEVER, that HUBCO shall be obligated
pursuant to this paragraph (e) to pay for only one firm of
counsel for all Indemnitees in any jurisdiction with respect to a
matter unless the use of one counsel for such Indemnitees would
present such counsel with a conflict of interest that is not
waived and (b) the Indemnitees will cooperate in the defense of
any such matter. HUBCO shall not be liable for settlement of any
claim, action or proceeding hereunder unless such settlement is
effected with its prior written consent; PROVIDED HOWEVER, that
HUBCO shall not have any obligation hereunder to any Indemnitee
when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and
nonappealable, that the indemnification of such Indemnitee in the
manner contemplated hereby is prohibited by applicable law or
public policy.
5.12. EMPLOYEE MATTERS.
(a) Following consummation of the Merger, to the
extent practical HUBCO will seek to retain the existing employees
of Lafayette in their same or similar positions (but this
paragraph shall not apply to any employee with a contract).
(b) To the extent any officer or employee of Lafayette
is terminated following consummation of the Merger, such officer
or employee shall be covered by HUBCO's severance policy as
described in the HUBCO Disclosure Schedule with respect to
retrenchment or reduction in force and be given credit under such
policy for their years of service with Lafayette, provided,
however, no officer or employee with a written contract of
employment shall be entitled to any additional severance pay
beyond that to which he or she is entitled pursuant to such
contract.
(c) Following consummation of the Merger, HUBCO
intends to make available to all employees and officers of
Lafayette coverage under the benefit plans generally available to
HUBCO's employees and officers (including pension and health and
hospitalization) on the terms and conditions available to HUBCO's
employees and officers. For purposes of determining eligibility
to participate in such plans, eligibility for benefit forms and
subsidies and vesting of benefits under such plans (including,
but not limited to, any pension, severance, 401(K), vacation and
sick pay), HUBCO shall give effect to years of service with
Lafayette or its Subsidiaries, as the case may be, as if they
were with HUBCO or its Subsidiaries. Additionally, for purposes
of calculation of benefits under vacation, medical, sick leave
and disability plans with respect to such employees and officers
of Lafayette, HUBCO shall give effect to years of service with
Lafayette or its Subsidiaries, as the case may be, as if they
were with HUBCO or its Subsidiaries. No employee of Lafayette
who becomes an employee of HUBCO and who was covered by
Lafayette's medical insurance plans shall be excluded from
coverage under HUBCO's medical insurance plan (for such employee
or any other covered person) and no medical conditions of such
employee or covered person shall be excluded from coverage on the
basis of a pre-existing condition unless the employee or covered
person was excluded from coverage or such medical condition was
excluded from coverage under Lafayette's medical insurance plans.
5.13. DISCLOSURE SUPPLEMENTS. From time to time prior
to the Effective Time, each party hereto will promptly supplement
or amend (by written notice to the other) its respective
Disclosure Schedule delivered pursuant hereto with respect to any
matter hereafter arising which, if existing, occurring or known
at the date of this Agreement, would have been required to be set
forth or described in such Disclosure Schedule or which is
necessary to correct any information in such Disclosure Schedule
which has been rendered materially inaccurate thereby. For the
purpose of determining satisfaction of the conditions set forth
in Article VI, no supplement or amendment to such Disclosure
Schedule shall correct or cure any warranty which was untrue when
made, but shall enable the disclosure of subsequent facts or
events to maintain the truthfulness of any warranty.
5.14. EXPENSES OF LAFAYETTE.
(a) For planning purposes Lafayette shall within 15
days from the date hereof, provide HUBCO with its estimated
budget of transaction-related expenses reasonably anticipated to
be payable by Lafayette in connection with this transaction.
Lafayette shall promptly notify HUBCO if or when it determines
that it will expect to exceed its budget; PROVIDED, HOWEVER, that
HUBCO acknowledges that Lafayette shall not be deemed to have
breached this Agreement by virtue of its exceeding such budget.
(b) Promptly after the execution of this Agreement,
Lafayette shall ask all of its attorneys and other professionals
to render current and correct invoices for all unbilled time and
disbursements. Lafayette shall accrue and/or pay all of such
amounts as soon as possible.
(c) Lafayette shall advise HUBCO monthly of all out-
of-pocket expenses which Lafayette has incurred in connection
with this transaction. Lafayette shall mutually agree with HUBCO
about printing arrangements for the Proxy Statement/Prospectus
before entering into any binding contract for such expenses.
5.15. COMPLIANCE WITH ANTITRUST LAWS. Each of HUBCO
and Lafayette shall use its best efforts to resolve such
objections, if any, which may be asserted with respect to the
Merger under antitrust laws, including, without limitation, the
Hart-Scott-Rodino Act. In the event a suit is threatened or
instituted challenging the Merger as violative of antitrust laws,
each of HUBCO and Lafayette shall use its best efforts to avoid
the filing of, resist or resolve such suit. HUBCO and Lafayette
shall use their best efforts to take such action as may be
required: (a) by the Antitrust Division of the Department of
Justice or the Federal Trade Commission in order to resolve such
objections as either of them may have to the Merger under
antitrust laws, or (b) by any federal or state court of the
United States, in any suit brought by a private party or
governmental entity challenging the Merger as violative of
antitrust laws, in order to avoid the entry of, or to effect the
dissolution of, any injunction, temporary restraining order, or
other order which has the effect of preventing the consummation
of the Merger. Best efforts shall include, but not be limited
to, the proffer by HUBCO of its willingness to accept an order
agreeing to the divestiture, or the holding separate, of any
assets of HUBCO or Lafayette, except to the extent that any such
divestitures or holding separate arrangement would have a
material adverse effect on HUBCO. The entry by a court, in any
suit brought by a private party or governmental entity
challenging the Merger as violative of antitrust laws, of an
order or decree permitting the Merger, but requiring that any of
the businesses, product lines or assets of HUBCO or Lafayette be
divested or held separate thereafter shall not be deemed a
failure to satisfy the conditions specified in Section 6.1 hereof
except to the extent that any divestitures or holding separate
arrangement would have a material adverse effect on HUBCO and
HUBCO shall not have voluntarily consented to such divestitures
or holding separate arrangements. For the purposes of this
Section 5.15, the divestiture or the holding separate of a branch
of the Bank or Lafayette with less than $20 million in assets
shall not be considered to have a material adverse effect on
HUBCO.
5.16. COMFORT LETTERS. HUBCO shall cause Arthur
Andersen LLP, its independent public accountants, to deliver to
Lafayette, and Lafayette shall cause Arthur Andersen LLP, its
independent public accountants, to deliver to HUBCO and to its
officers and directors who sign the Registration Statement for
this transaction, a short-form "comfort letter" or "agreed upon
procedures" letter, dated the date of the mailing of the Proxy
Statement/Prospectus for the Stockholders Meeting of Lafayette,
in the form customarily issued by such accountants at such time
in transactions of this type.
5.17. AFFILIATES. Promptly, but in any event within
two weeks, after the execution and delivery of this Agreement,
Lafayette shall deliver to HUBCO (a) a letter identifying all
persons who, to the knowledge of Lafayette, may be deemed to be
affiliates of Lafayette under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without
limitation, all directors and executive officers of Lafayette and
(b) copies of letter agreements, each substantially in the form
of Exhibit 5.17, executed by each such person so identified as an
affiliate of Lafayette agreeing to comply with Rule 145 and to
refrain from transferring shares as required by the pooling-of-
interests accounting rules. Within two weeks after the date
hereof, HUBCO shall cause its directors and executive officers to
enter into letter agreements in the form of Exhibit 5.17-2 with
HUBCO concerning the pooling-of-interests accounting rules.
HUBCO hereby agrees to publish, or file a Form 8-K, Form 10-K or
Form 10-Q containing financial results covering at least 30 days
of post-Merger combined operations of HUBCO and Lafayette as soon
as practicable (but in no event later than 30 days) following the
close of the first calendar month ending 30 days after the
Effective Time, in form and substance sufficient to remove the
restrictions set forth in paragraph "B" of Exhibit 5.17.
5.18. POOLING AND TAX-FREE REORGANIZATION TREATMENT.
Prior to the date hereof, neither HUBCO or Lafayette has taken
any action or failed to take any action which would disqualify
the Merger for pooling of interests accounting treatment. Before
the Effective Time, neither HUBCO nor Lafayette shall
intentionally take, fail to take, or cause to be taken or not
taken any action within its control, which would disqualify the
Merger as a "pooling-of-interests" for accounting purposes or as
a "reorganization" within the meaning of Section 368(a) of the
Code. HUBCO shall organize Merger Sub as a first-tier subsidiary
of HUBCO. Subsequent to the Effective Time, HUBCO shall not take
and shall cause the Surviving Corporation not to take any action
within their control that would disqualify the Merger as such a
"reorganization" under the Code.
ARTICLE VI - CLOSING CONDITIONS
6.1. CONDITIONS OF EACH PARTY'S OBLIGATIONS UNDER THIS
AGREEMENT. The respective obligations of each party under this
Agreement to consummate the Merger shall be subject to the
satisfaction, or, where permissible under applicable law, waiver
at or prior to the Effective Time of the following conditions:
(a) APPROVAL OF LAFAYETTE STOCKHOLDERS; SEC
REGISTRATION. This Agreement and the transactions contemplated
hereby shall have been approved by the requisite vote of the
stockholders of Lafayette and the issuance of the HUBCO Common
Stock (including without limitation the shares issuable pursuant
to Section 2.6 hereof and upon exercise of the HUBCO Warrants)
pursuant to this Agreement shall have been approved by the
requisite vote of the stockholders of HUBCO. The Lafayette Proxy
Statement/Prospectus shall have been cleared for distribution by
the FDIC. The HUBCO Registration Statement and Proxy
Statement/Prospectus shall have been declared effective by the
SEC and shall not be subject to a stop order or any threatened
stop order, and the issuance of the HUBCO Common Stock (including
without limitation the shares issuable pursuant to Section 2.6
hereof and upon exercise of the HUBCO Warrants) shall have been
qualified in every state where such qualification is required
under the applicable state securities laws.
(b) REGULATORY FILINGS. All necessary regulatory or
governmental approvals and consents (including without limitation
any required approval of the FRB, the Department and the FDIC)
required to consummate the transactions contemplated hereby shall
have been obtained without any term or condition which would
materially impair the value of Lafayette to HUBCO. All
conditions required to be satisfied prior to the Effective Time
by the terms of such approvals and consents shall have been
satisfied; and all statutory waiting periods in respect thereof
(including the Bank Merger Act and, if applicable, the Hart-
Scott-Rodino waiting period) shall have expired.
(c) SUITS AND PROCEEDINGS. No order, judgment or
decree shall be outstanding against a party hereto or a third
party that would have the effect of preventing completion of the
Merger; no suit, action or other proceeding shall be pending or
threatened by any governmental body in which it is sought to
restrain or prohibit the Merger; and no suit, action or other
proceeding shall be pending before any court or governmental
agency in which it is sought to restrain or prohibit the Merger
or obtain other substantial monetary or other relief against one
or more parties hereto in connection with this Agreement and
which HUBCO or Lafayette determines in good faith, based upon
the advice of their respective counsel, makes it inadvisable to
proceed with the Merger because any such suit, action or
proceeding has a significant potential to be resolved in such a
way as to deprive the party electing not to proceed of any of the
material benefits to it of the Merger.
(d) TAX OPINION. HUBCO and Lafayette shall each have
received an opinion, dated as of the Effective Time, of Pitney,
Hardin, Kipp & Szuch, reasonably satisfactory in form and
substance to Lafayette and its counsel Lowenstein, Sandler, Kohl,
Fisher & Boylan and to HUBCO, based upon representation letters
reasonably required by Pitney, Hardin, Kipp & Szuch, dated on or
about the date of such opinion, and such other facts and
representations as counsel may reasonably deem relevant, to the
effect that
(i) the Merger will be treated for federal income tax
purposes as a reorganization qualifying under the
provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code; (ii) no gain or loss will be recognized by
Lafayette; (iii) no gain or loss shall be recognized
upon the exchange of Lafayette Common Stock solely for
HUBCO Common Stock; (iv) the basis of any HUBCO Common
Stock received in exchange for Lafayette Common Stock
shall equal the basis of the recipient's Lafayette
Common Stock surrendered on the exchange, reduced by
the amount of cash received, if any, on the exchange,
and increased by the amount of the gain recognized, if
any, on the exchange (whether characterized as dividend
or capital gain income); and (v) the holding period for
any HUBCO Common Stock received in exchange for
Lafayette Common Stock will include the period during
which Lafayette Common Stock surrendered on the
exchange was held, provided such stock was held as a
capital asset on the date of the exchange.
(e) POOLING OF INTERESTS. HUBCO shall have received a
letter, dated the Closing Date, from its accountants, Arthur
Andersen LLP, reasonably satisfactory to HUBCO and Lafayette, to
the effect that the Merger shall be qualified to be treated by
HUBCO as a pooling-of-interests for accounting purposes.
6.2. CONDITIONS TO THE OBLIGATIONS OF HUBCO UNDER THIS
AGREEMENT. The obligations of HUBCO under this Agreement shall
be further subject to the satisfaction or waiver, at or prior to
the Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS OF LAFAYETTE. Except for those representations which
are made as of a particular date, the representations and
warranties of Lafayette contained in this Agreement shall be true
and correct in all material respects on the date of the Closing
("Closing Date") as though made on and as of the Closing Date.
Lafayette shall have performed in all material respects the
agreements, covenants and obligations to be performed by it prior
to the Closing Date. With respect to any representation or
warranty which as of the Closing Date has required a supplement
or amendment to Lafayette Disclosure Schedule to render such
representation or warranty true and correct in all material
respects as of the Closing Date, the representation and warranty
shall be deemed true and correct as of the Closing Date only if
(i) the information contained in the supplement or amendment to
Lafayette Disclosure Schedule related to events occurring
following the execution of this Agreement and (ii) the facts
disclosed in such supplement or amendment would not either alone,
or together with any other supplements or amendments to Lafayette
Disclosure Schedule, materially adversely affect the
representation as to which the supplement or amendment relates.
(b) OPINION OF COUNSEL TO LAFAYETTE. HUBCO shall have
received an opinion of counsel to Lafayette, dated the Closing
Date, in form and substance reasonably satisfactory to HUBCO,
covering matters customarily covered in opinions of counsel in
transactions of this type.
(c) CONSENT OF HOLDERS OF STOCK OPTIONS. Each holder
of a Vested Stock Option whose Vested Stock Option is outstanding
at the Closing shall consent to the conversion and cancellation
of his Vested Stock Options for the consideration set forth
herein in Section 2.6(a).
(d) CONNECTICUT DEP COMPLIANCE. With respect to any
Properties which are Establishments under the Connecticut
Transfer Act, prior to the Closing Lafayette shall have delivered
to HUBCO a Form in form and content acceptable to the Connecticut
DEP and prior to the Closing shall have fully accrued on
Lafayette's books and disclosed to HUBCO the entire anticipated
costs associated with any requested or reasonably anticipated
clean-up.
(e) RESIGNATIONS AND ELECTIONS. HUBCO shall have
received from any person who will not continue as a director of
the Surviving Corporation under Section 1.5 a written
resignation, effective at the Effective Time, in form and
substance acceptable to HUBCO; provided, however, that no such
resignation shall result in any person's forfeiting any benefits
under any contractual arrangement. Lafayette shall have taken
action, acceptable to HUBCO, to elect HUBCO's nominees as
directors at the Effective Time, as provided in Section 1.5.
(f) NO OWNERSHIP CHANGE. From January 1, 1992 until
the date upon which this Agreement is publicly announced, there
has been no "ownership change" of Lafayette as defined in Section
382(g) of the Code.
(g) CERTIFICATES. Lafayette shall have furnished
HUBCO with such certificates of its officers or other documents
to evidence fulfillment of the conditions set forth in this
Section 6.2 as HUBCO may reasonably request.
6.3. CONDITIONS TO THE OBLIGATIONS OF LAFAYETTE UNDER
THIS AGREEMENT. The obligations of Lafayette under this
Agreement shall be further subject to the satisfaction or waiver,
at or prior to the Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS OF HUBCO. Except for those representations which are
made as of a particular date, the representations and warranties
of HUBCO contained in this Agreement shall be true and correct in
all material respects on the Closing Date as though made on and
as of the Closing Date. HUBCO and the Bank shall have performed
in all material respects, the agreements, covenants and
obligations to be performed by it prior to the Closing Date.
With respect to any representation or warranty which as of the
Closing Date has required a supplement or amendment to the HUBCO
Disclosure Schedule to render such representation or warranty
true and correct in all material respects as of the Closing Date,
the representation and warranty shall be deemed true and correct
as of the Closing Date only if (i) the information contained in
the supplement or amendment to the HUBCO Disclosure Schedule
related to events occurring following the execution of this
Agreement and (ii) the facts disclosed in such supplement or
amendment would not either alone, or together with any other
supplements or amendments to the HUBCO Disclosure Schedule,
materially adversely affect the representation as to which the
supplement or amendment relates.
(b) OPINION OF COUNSEL TO HUBCO. Lafayette shall have
received an opinion of counsel to HUBCO, dated the Closing Date,
in form and substance reasonably satisfactory to Lafayette ,
covering matters customarily covered in opinions of counsel in
transactions of this type.
(c) FAIRNESS OPINION. Lafayette shall have received
an updated opinion from Keefe, Bruyette & Woods, dated as of the
date the Proxy Statement/Prospectus is mailed to Lafayette's
stockholders (and, if it shall become necessary to resolicit
proxies thereafter, the date of any substantive amendment to the
Proxy Statement/Prospectus), to the effect that, in its opinion,
the Merger Consideration to be received by the holders of
Lafayette Common Stock is fair to the stockholders of Lafayette
from a financial point of view ("Fairness Opinion").
(d) CERTAIN CONTRACTS. HUBCO shall have specifically
acknowledged, accepted and assumed (in a document in form and
substance reasonably satisfactory to Lafayette) any written
employment, severance and other compensation contracts between
Lafayette and its officers and directors (including former
officers and directors) contained in the Lafayette Disclosure
Schedules in a writing delivered to the officers and directors
covered thereby, unless the employment contract is terminated or,
if applicable, the employment of the officer by Lafayette is
terminated for any reason prior to the Closing.
(e) DIRECTORS. Three nominees, designated by
Lafayette and acceptable to HUBCO, shall be duly appointed by the
Board of Directors of HUBCO to HUBCO's Board of Directors,
effective at the Effective Time.
(f) CERTIFICATES. HUBCO shall have furnished
Lafayette with such certificates of its officers or others and
such other documents to evidence fulfillment of the conditions
set forth in this Section 6.3 as Lafayette may reasonably
request.
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1. TERMINATION. This Agreement may be terminated
prior to the Effective Time, whether before or after approval of
this Agreement by the stockholders of Lafayette:
(a) by mutual written consent of the parties hereto;
(b) (i) by Lafayette or HUBCO if the Effective Time
shall not have occurred on or prior to December 31, 1996 unless
the failure of such occurrence shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe
its agreements set forth herein to be performed or observed by
such party at or before the Effective Time, or (ii) by HUBCO or
Lafayette if a vote of the stockholders of Lafayette to approve
this Agreement, or the stockholders of HUBCO to approve the
issuance of HUBCO Common Stock under this Agreement, is taken and
the stockholders of either Lafayette or HUBCO fail to approve
such action at the meeting (or any adjournment thereof) held for
such purpose;
(c) by HUBCO or Lafayette upon written notice to the
other if any application for regulatory or governmental approval
necessary to consummate the Merger and the other transactions
contemplated hereby shall have been denied or withdrawn at the
request or recommendation of the applicable regulatory agency or
governmental authority or by HUBCO upon written notice to
Lafayette if any such application is approved with conditions
which materially impair the value of Lafayette to HUBCO;
(d) by HUBCO if (i) there shall have occurred a
material adverse change in the business, operations, assets, or
financial condition of Lafayette and its Subsidiaries taken as a
whole from that disclosed by Lafayette in Lafayette's Quarterly
Report on Form F-4 for the nine months ended September 30, 1995;
or (ii) there was a material breach in any representation,
warranty, covenant, agreement or obligation of Lafayette
hereunder and such breach shall not have been remedied within 30
days after receipt by Lafayette of notice in writing from HUBCO
to Lafayette specifying the nature of such breach and requesting
that it be remedied;
(e) by Lafayette, if (i) there shall have occurred a
material adverse change in the business, operations, assets or
financial condition of HUBCO and its Subsidiaries taken as a
whole from that disclosed by HUBCO in HUBCO's Quarterly Report on
Form 10-Q for the nine months ended September 30, 1995; or (ii)
there was a material breach in any representation, warranty,
covenant, agreement or obligation of HUBCO hereunder and such
breach shall not have been remedied within 30 days after receipt
by HUBCO of notice in writing from Lafayette specifying the
nature of such breach and requesting that it be remedied;
(f) by HUBCO if the conditions set forth in Section
6.2 are not satisfied;
(g) by Lafayette if the conditions set forth in
Section 6.3 are not satisfied;
(h) by Lafayette, if Lafayette's Board of Directors
shall have approved an Acquisition Transaction after determining,
upon advice of counsel, that such approval was necessary in the
exercise of its fiduciary obligations under applicable laws; and
(i) by Lafayette, if (either before or after its
approval by the stockholders of Lafayette) its Board of Directors
so determines by a vote of a majority of the members of its
entire Board, at any time during the ten-day period commencing
with the Determination Date, if either (x) both of the following
conditions are satisfied:
(1) the HUBCO Common Stock Average Price on the
Determination Date shall be less than $19.25; and
(2) (i) the number obtained by dividing the HUBCO
Common Stock Average Price on such Determination Date by the
Starting Date Closing Price (the "HUBCO Ratio") shall be
less than (ii) the number obtained by dividing the Index
Price on the Determination Date by the Index Price on the
Starting Date and subtracting .075 from the quotient in this
clause (2)(ii) (such number being referred to herein as the
"Index Ratio");
or (y) the HUBCO Common Stock Average Price on the Determination
Date of shares of HUBCO Common Stock shall be less than $18.25.
Notwithstanding the foregoing, if Lafayette elects to exercise
its termination right pursuant either to clause (x) or (y) of
this subsection (i), it shall give prompt written notice to HUBCO
(which notice shall specifically reference which of clause (x) or
(y) is applicable (provided that such notice of election to
terminate may be withdrawn at any time within the aforementioned
ten-day period)). During the seven-day period commencing with
its receipt of such notice, HUBCO shall have the option, in the
case of a failure to fulfill any condition in clause (x), of
increasing the consideration to be received by the holders of
Lafayette Common Stock hereunder by increasing the Exchange Ratio
to equal the lesser of (i) a number (rounded to four decimals)
equal to a quotient, the numerator of which is $19.25 multiplied
by the Exchange Ratio (as then in effect) and the denominator of
which is the HUBCO Common Stock Average Price, and (ii) a number
equal to a quotient, the numerator of which is the Index Ratio
multiplied by the Exchange Ratio (as then in effect) and the
denominator of which is the HUBCO Ratio. During such seven-day
period, HUBCO shall have the option, in the case of a failure to
fulfill clause (y), of increasing the consideration to be
received by holders of Lafayette Common Stock hereunder by
increasing the Exchange Ratio to equal a number (rounded to four
decimals) equal to a quotient, the numerator of which is $18.25
multiplied by the Exchange Ratio (as then in effect) and the
denominator of which is the HUBCO Common Stock Average Price. If
HUBCO makes an election contemplated by the two preceding
sentences, within such seven-day period, it shall give prompt
written notice to Lafayette of such election and the revised
Exchange Ratio, whereupon no termination shall have occurred
pursuant to this subsection (i) and this Agreement shall remain
in effect in accordance with its terms (except as the Exchange
Ratio shall have been so modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer
to the Exchange Ratio as adjusted pursuant to this subsection
(i).
For purposes of this subsection (i), the following
terms shall have the meanings indicated:
"HUBCO Common Stock Average Price" means the average of
the daily closing sales prices of HUBCO Common Stock as reported
on the NASDAQ National Market System (as reported in THE WALL
STREET JOURNAL or, if not reported thereby, another authoritative
source as chosen by HUBCO) for the 20 consecutive full trading
days in which such shares are quoted on the NASDAQ National
Market ending at the close of trading on the Determination Date.
"Determination Date" means the date on which the
approval of the FRB required for consummation of the Merger shall
be received.
"Index Group" means the 11 bank holding companies
listed below, the common stock of all of which shall be publicly
traded and as to which there shall not have been a publicly
announced proposal since the Starting Date and before the
Determination Date for any such company to be acquired. In the
event that the common stock of any such company ceases to be
publicly traded or a proposal to acquire any such company is
announced after the Starting Date and before the Determination
Date, such company will be removed from the Index Group. The 11
bank holding companies are as follows:
BANK HOLDING COMPANIES
Chittenden Corp. (CNDN)
Citizen BancShares (CICS)
Community Bank Systems (CBSI)
Commerce Bank Corp. (COBA)
First Western Bancorp (FWBI)
Fulton Financial (FULT)
North Fork Bancorp (NFB)
Provident Bancorp., Inc. (PRBK)
S & T Bancorp (STBA)
Trust Co. Bancorp (TRST)
Valley National Bancorp (VLY)
"Index Price" on a given date means the average of the
closing prices of the companies composing the Index Group.
"Starting Date" means the first NASDAQ trading day
immediately following the date of the first public announcement
of the entry into this Agreement.
If any company belonging to the Index Group or HUBCO
declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or
similar transaction between the Starting Date and the
Determination Date, the prices for such company or HUBCO shall be
appropriately adjusted for the purposes of applying this
subsection (i).
7.2. EFFECT OF TERMINATION. In the event of the
termination and abandonment of this Agreement by either HUBCO or
Lafayette pursuant to Section 7.1, this Agreement (other than
Section 5.5(b), the third from the last sentence of Section
5.6(h), the second from the last sentence of Section 5.8(b), this
Section 7.2 and Section 8.1) shall forthwith become void and have
no effect, without any liability on the part of any party or its
officers, directors or stockholders. Nothing contained herein,
however, shall relieve any party from any liability for any
breach of this Agreement.
7.3. AMENDMENT. This Agreement may be amended by
action taken by the parties hereto at any time before or after
adoption of this Agreement by the stockholders of Lafayette but,
after any such adoption, no amendment shall be made which reduces
the amount or changes the form of the consideration to be
delivered to the stockholders of Lafayette without the approval
of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of all the parties
hereto.
7.4. EXTENSION; WAIVER. The parties may, at any time
prior to the Effective Time of the Merger, (i) extend the time
for the performance of any of the obligations or other acts of
the other parties hereto; (ii) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant thereto; or (iii) waive compliance
with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party against which the waiver
is sought to be enforced.
ARTICLE VIII - MISCELLANEOUS
8.1. EXPENSES.
(a) Subject to Section 5.6(h) and Section 5.8(b)
hereof, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby (including
legal, accounting and investment banking fees and expenses) shall
be borne by the party incurring such costs and expenses.
(b) Notwithstanding any provision in this Agreement to
the contrary, in the event that either of the parties shall
willfully default in its obligations hereunder, the non-
defaulting party may pursue any remedy available at law or in
equity to enforce its rights and shall be paid by the willfully
defaulting party for all damages, costs and expenses, including
without limitation legal, accounting, investment banking and
printing expenses, incurred or suffered by the non-defaulting
party in connection herewith or in the enforcement of its rights
hereunder if such non-defaulting party prevails.
8.2. SURVIVAL. Except for the provisions of Article
II, Section 5.8, Section 5.11, Section 5.17 and the last sentence
of Section 5.18 hereof, the respective representations,
warranties, covenants and agreements of the parties to this
Agreement shall not survive the Effective Time, but shall
terminate as of the Effective Time.
8.3. NOTICES. All notices or other communications
which are required or permitted hereunder shall be in writing and
sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, as follows:
(a) If to HUBCO, to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430_
Attn.: Mr.Kenneth T. Neilson, President and
Chief Executive Officer
Copy to:
Ronald H. Janis, Esq.
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
(b) If to Lafayette, to:
Lafayette American Bank and Trust Company
2321 Whitney Avenue
Hamden, Connecticut 06518
Attn.: Mr. Robert B. Goldstein, President and
Chief Executive Officer
Copy to:
Peter H. Ehrenberg, Esq.
Lowenstein, Sandler, Kohl, Fisher & Boylan
65 Livingston Avenue
Roseland, New Jersey 07068
or such other addresses as shall be furnished in writing by any
party, and any such notice or communications shall be deemed to
have been given as of the date so mailed.
8.4. PARTIES IN INTEREST. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns. Nothing in this
Agreement is intended to confer, expressly or by implication,
upon any other person any rights or remedies under or by reason
of this Agreement, except for the Indemnitees covered by Section
5.11 hereof.
8.5. ENTIRE AGREEMENT. This Agreement, which includes
the Disclosure Schedules hereto and the other documents,
agreements and instruments executed and delivered pursuant to or
in connection with this Agreement, contains the entire Agreement
between the parties hereto with respect to the transactions
contemplated by this Agreement and supersedes all prior
negotiations, arrangements or understandings, written or oral,
with respect thereto.
8.6. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement and each of which shall be deemed an
original.
8.7. GOVERNING LAW. This Agreement shall be governed
by the laws of the State of New Jersey, without giving effect to
the principles of conflicts of laws thereof.
8.8. DESCRIPTIVE HEADINGS. The descriptive headings
of this Agreement are for convenience only and shall not control
or affect the meaning or construction of any provision of this
Agreement.
8.9. KNOWLEDGE. Representations made herein which are
qualified by the phrase to the best of Lafayette's knowledge or
similar phrases, refer as of the date hereof to the best
knowledge of the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer and the Comptroller of
Lafayette and thereafter refer to the best knowledge of any
senior officer of Lafayette or its Subsidiaries. Representations
made herein which are qualified by the phrase to the best of
HUBCO's knowledge or similar phrases, refer as of the date hereof
to the best of the knowledge of the President and Chief Executive
Officer, the Executive Vice President/Legal and the Chief
Financial Officer of HUBCO and thereafter refer to the best
knowledge of any senior officer of HUBCO or its Subsidiaries.
IN WITNESS WHEREOF, HUBCO and LAFAYETTE, pursuant to
resolutions adopted by its Board of Directors, have caused this
Agreement and Plan of Merger to be executed by their duly
authorized officers as of the day and year first above written.
HUBCO, INC.
By: /s/ KENNETH T. NEILSON
------------------------------
Kenneth T. Neilson,
President and Chief Executive
Officer
LAFAYETTE AMERICAN BANK AND TRUST
COMPANY
By: /s/ ROBERT B. GOLDSTEIN
------------------------------
Robert B. Goldstein,
President and Chief Executive
Officer
<PAGE>
APPENDIX B
STOCK OPTION AGREEMENT
BETWEEN LAFAYETTE AND HUBCO
DATED FEBRUARY 5, 1996
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of
February 5, 1996, is by and between HUBCO, Inc., a New Jersey
corporation and registered bank holding company ("HUBCO"), and
Lafayette American Bank and Trust Company, a commercial bank
organized under the laws of Connecticut ("Lafayette").
BACKGROUND
----------
1. HUBCO and Lafayette, as of the date hereof, are
prepared to execute a definitive agreement and plan of merger
(the "Merger Agreement") pursuant to which HUBCO will acquire
Lafayette through a merger of Lafayette with and into an interim
Connecticut-chartered commercial bank (the "Merger").
2. HUBCO has advised Lafayette that it will not
execute the Merger Agreement unless Lafayette executes this
Agreement.
3. The Board of Directors of Lafayette has determined
that the Merger Agreement provides substantial benefits to the
shareholders of Lafayette.
4. As an inducement to HUBCO to enter into the Merger
Agreement and in consideration for such entry, Lafayette desires
to grant to HUBCO an option to purchase authorized but unissued
shares of common stock of Lafayette in an amount and on the terms
and conditions hereinafter set forth.
AGREEMENT
---------
In consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger
Agreement, HUBCO and Lafayette, intending to be legally bound
hereby, agree:
1. GRANT OF OPTION. Lafayette hereby grants to HUBCO
the option to purchase 2,400,000 shares of common stock, no par
value, of Lafayette (the "Common Stock") at a price of $10.75 per
share (the "Option Price"), on the terms and conditions set forth
herein (the "Option").
2. EXERCISE OF OPTION. This Option shall not be
exercisable until the occurrence of a Triggering Event (as such
term is hereinafter defined). Upon or after the occurrence of a
Triggering Event (as such term is hereinafter defined), HUBCO may
exercise the Option, in whole or in part, at any time or from
time to time, subject to the termination provisions of Section 19
of this Agreement and subject to Section 20 of this Agreement.
The term "Triggering Event" means the occurrence of any
of the following events:
A person or group (as such terms are defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations thereunder) other than HUBCO or an
affiliate of HUBCO:
a. acquires beneficial ownership (as such term
is defined in Rule 13d-3 as promulgated under the Exchange Act)
of at least 20% of the then outstanding shares of Common Stock;
or
b. enters into a letter of intent or an
agreement, whether oral or written, with Lafayette pursuant to
which such person or any affiliate of such person would (i) merge
or consolidate, or enter into any similar transaction, with
Lafayette, (ii) acquire all or a significant portion of the
assets or liabilities of Lafayette, or (iii) acquire beneficial
ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 20% or
more of the then outstanding shares of Common Stock; or
c. makes a filing with any bank or thrift
regulatory authorities or publicly announces a bona fide proposal
(a "Proposal") for (i) any merger with, consolidation with or
acquisition of all or a significant portion of all the assets or
liabilities of, Lafayette or any other business combination
involving Lafayette, or (ii) a transaction involving the transfer
of beneficial ownership of securities representing, or the right
to acquire beneficial ownership or to vote securities
representing, 20% or more of the outstanding shares of Common
Stock, and thereafter, if such Proposal has not been Publicly
Withdrawn (as such term is hereinafter defined) at least 15 days
prior to the meeting of stockholders of Lafayette called to vote
on the Merger and Lafayette's stockholders fail to approve the
Merger by the vote required by applicable law at the meeting of
stockholders called for such purpose; or
d. makes a bona fide Proposal and thereafter,
but before such Proposal has been Publicly Withdrawn, Lafayette
willfully takes any action in any manner which would materially
interfere with its ability to consummate the Merger or materially
reduce the value of the transaction to HUBCO.
The term "Triggering Event" also means the taking of
any material direct or indirect action by Lafayette or any of its
directors, officers or agents with the intention of inviting,
encouraging or soliciting any proposal which has as its purpose a
tender offer for the shares of Common Stock, a merger,
consolidation, plan of exchange, plan of acquisition or
reorganization of Lafayette, or a sale of a significant number of
shares of Common Stock or any significant portion of its assets
or liabilities.
The term "significant portion" means 25% of the assets
or liabilities of Lafayette. The term "significant number" means
10% of the outstanding shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and
(d) above, shall mean an unconditional bona fide withdrawal of
the Proposal coupled with a public announcement of no further
interest in pursuing such Proposal or in acquiring any
controlling influence over Lafayette or in soliciting or inducing
any other person (other than HUBCO or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be
exercised at any time (i) in the absence of any required
governmental or regulatory approval or consent necessary for
Lafayette to issue the shares of Common Stock covered by the
Option (the "Option Shares") or HUBCO to exercise the Option or
prior to the expiration or termination of any waiting period
required by law, or (ii) so long as any injunction or other
order, decree or ruling issued by any federal or state court of
competent jurisdiction is in effect which prohibits the sale or
delivery of the Option Shares.
Lafayette shall notify HUBCO promptly in writing of the
occurrence of any Triggering Event known to it, it being
understood that the giving of such notice by Lafayette shall not
be a condition to the right of HUBCO to exercise the Option.
Lafayette will not take any action which would have the effect of
preventing or disabling Lafayette from delivering the Option
Shares to HUBCO upon exercise of the Option or otherwise
performing its obligations under this Agreement.
In the event HUBCO wishes to exercise the Option, HUBCO
shall send a written notice to Lafayette (the date of which is
hereinafter referred to as the "Notice Date") specifying the
total number of Option Shares it wishes to purchase and a place
and date for the closing of such a purchase (a "Closing");
PROVIDED, HOWEVER, that a Closing shall not occur prior to two
days after the later of receipt of any necessary regulatory
approvals and the expiration of any legally required notice or
waiting period, if any.
3. PAYMENT AND DELIVERY OF CERTIFICATES. At any
Closing hereunder (a) HUBCO will make payment to Lafayette of the
aggregate price for the Option Shares so purchased by wire
transfer of immediately available funds to an account designated
by Lafayette; (b) Lafayette will deliver to HUBCO a stock
certificate or certificates representing the number of Option
Shares so purchased, free and clear of all liens, claims, charges
and encumbrances of any kind or nature whatsoever created by or
through Lafayette, registered in the name of HUBCO or its
designee, in such denominations as were specified by HUBCO in its
notice of exercise and, if necessary, bearing a legend as set
forth below; and (c) HUBCO shall pay any transfer or other taxes
required by reason of the issuance of the Option Shares so
purchased.
If required under applicable federal securities laws, a
legend will be placed on each stock certificate evidencing Option
Shares issued pursuant to this Agreement, which legend will read
substantially as follows:
The shares of stock evidenced by this certificate have
not been registered for sale under the Securities Act of
1933 (the "1933 Act"). These shares may not be sold,
transferred or otherwise disposed of unless a registration
statement with respect to the sale of such shares has been
filed under the 1933 Act and declared effective or, in the
opinion of counsel reasonably acceptable to Lafayette
American Bank and Trust Company, said transfer would be
exempt from registration under the provisions of the 1933
Act and the regulations promulgated thereunder.
No such legend shall be required if a registration statement is
filed and declared effective under Section 4 hereof.
4. REGISTRATION RIGHTS. Upon or after the occurrence
of a Triggering Event and upon receipt of a written request from
HUBCO, Lafayette shall, if necessary for the resale of the Option
or the Option Shares by HUBCO, prepare and file a registration
statement with the Securities and Exchange Commission, the
Federal Deposit Insurance Corporation and any state securities
bureau covering the Option and such number of Option Shares as
HUBCO shall specify in its request, and Lafayette shall use its
best efforts to cause such registration statement to be declared
effective in order to permit the sale or other disposition of the
Option and the Option Shares, provided that HUBCO shall in no
event have the right to have more than one such registration
statement become effective.
In connection with such filing, Lafayette shall use its
best efforts to cause to be delivered to HUBCO such certificates,
opinions, accountant's letters and other documents as HUBCO shall
reasonably request and as are customarily provided in connection
with registrations of securities under the Securities Act of
1933, as amended. All expenses incurred by Lafayette in
complying with the provisions of this Section 4, including
without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for Lafayette and
blue sky fees and expenses shall be paid by Lafayette.
Underwriting discounts and commissions to brokers and dealers
relating to the Option Shares, fees and disbursements of counsel
to HUBCO and any other expenses incurred by HUBCO in connection
with such registration shall be borne by HUBCO. In connection
with such filing, Lafayette shall indemnify and hold harmless
HUBCO against any losses, claims, damages or liabilities, joint
or several, to which HUBCO may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
preliminary or final registration statement or any amendment or
supplement thereto, or arise out of a material fact required to
be stated therein or necessary to make the statements herein not
misleading; and Lafayette will reimburse HUBCO for any legal or
other expense reasonably incurred by HUBCO in connection with
investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that Lafayette will not
be liable in any case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement of omission or alleged
omission made in such preliminary or final registration statement
or such amendment or supplement thereto in reliance upon and in
conformity with written information furnished by or on behalf of
HUBCO specifically for use in the preparation thereof. HUBCO
will indemnify and hold harmless Lafayette to the same extent as
set forth in the immediately preceding sentence but only with
reference to written information specifically furnished by or on
behalf of HUBCO for use in the preparation of such preliminary or
final registration statement or such amendment or supplement
thereto; and HUBCO will reimburse Lafayette for any legal or
other expense reasonably incurred by Lafayette in connection with
investigating or defending any such loss, claim, damage,
liability or action.
5. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the
event of any change in the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
conversions, exchanges of shares or the like, then the number and
kind of Option Shares and the Option Price shall be appropriately
adjusted.
In the event any capital reorganization or
reclassification of the Common Stock, or any consolidation,
merger or similar transaction of Lafayette with another entity,
or any sale of all or substantially all of the assets of
Lafayette, shall be effected in such a way that the holders of
Common Stock shall be entitled to receive stock, securities or
assets with respect to or in exchange for Common Stock, then, as
a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions (in
form reasonably satisfactory to the holder hereof) shall be made
whereby the holder hereof shall thereafter have the right to
purchase and receive upon the basis and upon the terms and
conditions specified herein and in lieu of the Common Stock
immediately theretofore purchasable and receivable upon exercise
of the rights represented by this Option, such shares of stock,
securities or assets as may be issued or payable with respect to
or in exchange for the number of shares of Common Stock
immediately theretofore purchasable and receivable upon exercise
of the rights represented by this Option had such reorganization,
reclassification, consolidation, merger or sale not taken place;
PROVIDED, HOWEVER, that if such transaction results in the
holders of Common Stock receiving only cash, the holder hereof
shall be paid the difference between the Option Price and such
cash consideration without the need to exercise the Option.
6. FILINGS AND CONSENTS. Each of HUBCO and Lafayette
will use its best efforts to make all filings with, and to obtain
consents of, all third parties and governmental authorities
necessary to the consummation of the transactions contemplated by
this Agreement.
Exercise of the Option herein provided shall be subject
to compliance with all applicable laws including, in the event
HUBCO is the holder hereof, approval of the Board of Governors of
the Federal Reserve System, the Federal Deposit Insurance
Corporation and the Connecticut Department of Banking, and
Lafayette agrees to cooperate with and furnish to the holder
hereof such information and documents as may be reasonably
required to secure such approvals.
7. REPRESENTATIONS AND WARRANTIES OF LAFAYETTE.
Lafayette hereby represents and warrants to HUBCO as follows:
a. DUE AUTHORIZATION. Lafayette has full
corporate power and authority to execute, deliver and perform
this Agreement and all corporate action necessary for execution,
delivery and performance of this Agreement has been duly taken by
Lafayette.
b. AUTHORIZED SHARES. Lafayette has taken and,
as long as the Option is outstanding, will take all necessary
corporate action to authorize and reserve for issuance all shares
of Common Stock that may be issued pursuant to any exercise of
the Option.
c. NO CONFLICTS. Neither the execution and
delivery of this Agreement nor consummation of the transactions
contemplated hereby (assuming all appropriate regulatory
approvals) will violate or result in any violation or default of
or be in conflict with or constitute a default under any term of
the Certificate of Incorporation or By-laws of Lafayette or any
agreement, instrument, judgment, decree, statute, rule or order
applicable to Lafayette.
8. SPECIFIC PERFORMANCE. The parties hereto
acknowledge that damages would be an inadequate remedy for a
breach of this Agreement and that the obligations of the parties
hereto shall be specifically enforceable. Notwithstanding the
foregoing, HUBCO shall have the right to seek money damages
against Lafayette for a breach of this Agreement.
9. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof.
10. ASSIGNMENT OR TRANSFER. HUBCO may not sell,
assign or otherwise transfer its rights and obligations
hereunder, in whole or in part, to any person or group of persons
other than to an affiliate of HUBCO, except upon or after the
occurrence of a Triggering Event. HUBCO represents that it is
acquiring the Option for HUBCO's own account and not with a view
to or for sale in connection with any distribution of the Option
or the Option Shares. HUBCO shall have the right to assign this
Agreement to any party it selects after the occurrence of a
Triggering Event.
11. AMENDMENT OF AGREEMENT. Upon mutual consent of
the parties hereto, this Agreement may be amended in writing at
any time, for the purpose of facilitating performance hereunder
or to comply with any applicable regulation of any governmental
authority or any applicable order of any court or for any other
purpose.
12. VALIDITY. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
13. NOTICES. All notices, requests, consents and
other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given when
delivered personally, by express service, cable, telegram or
telex, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
If to HUBCO:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attn.: Mr. Kenneth T. Neilson, President and
Chief Executive Officer
With a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
P.O. Box 1945
Morristown, New Jersey 07962-1945
Attn.: Ronald H. Janis, Esq.
If to Lafayette:
Lafayette American Bank and Trust Company
2321 Whitney Avenue
Hamden, Connecticut 06518
Attn.: Mr. Robert B. Goldstein, President and
Chief Executive Officer
With a copy to:
Lowenstein, Sandler, Kohl, Fisher & Boylan
65 Livingston Avenue
Roseland, New Jersey 07068
Attn.: Peter H. Ehrenberg, Esq.
or to such other address as the person to whom notice is to be
given may have previously furnished to the others in writing in
the manner set forth above (provided that notice of any change of
address shall be effective only upon receipt thereof).
14. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey.
15. CAPTIONS. The captions in the Agreement are
inserted for convenience and reference purposes, and shall not
limit or otherwise affect any of the terms or provisions hereof.
16. WAIVERS AND EXTENSIONS. The parties hereto may,
by mutual consent, extend the time for performance of any of the
obligations or acts of either party hereto. Each party may waive
(a) compliance with any of the covenants of the other party
contained in this Agreement and/or (b) the other party's
performance of any of its obligations set forth in this
Agreement.
17. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement,
except as provided in Section 10 permitting HUBCO to assign its
rights and obligations hereunder.
18. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same
agreement.
19. TERMINATION. This Agreement shall terminate upon
either the termination of the Merger Agreement as provided
therein or the consummation of the transactions contemplated by
the Merger Agreement; PROVIDED, HOWEVER, that if termination of
the Merger Agreement occurs after the occurrence of a Triggering
Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 18 months following the date of the
termination of the Merger Agreement or the consummation of any
proposed transactions which constitute the Triggering Event.
20. EFFECTIVENESS AND TERMINATION FEE. Solely for the
purposes of the Connecticut Banking Laws, Section 36a-184, this
Agreement shall not be considered effective until and unless it
is submitted to and approved by the Commissioner of the
Connecticut Department of Banking (the "Commissioner").
Lafayette shall pay HUBCO a termination fee of $5,000,000 (the
"Termination Fee"), forthwith on demand, in lieu of all its other
rights hereunder, if each of the following conditions are met:
(a) the Option never becomes effective due to a failure by the
Commissioner to make a determination that the Option may be
exercised, after a request for approval by HUBCO to do so is
submitted by HUBCO to the Commissioner, and either the
Commissioner makes a determination that the Option may not be
exercised or a period of five months elapses from the date the
request is submitted by HUBCO; (b) a Triggering Event has
occurred, which would allow HUBCO to exercise the Option; and (c)
Lafayette is merged or acquired by another financial institution
within 18 months following the Triggering Event. In the event
that HUBCO is due the Termination Fee hereunder and Lafayette
fails to pay such Fee on demand by HUBCO, Lafayette shall in
addition reimburse HUBCO for the legal fees and expenses
incurred by HUBCO in seeking to enforce and in collecting the
Termination Fee.
IN WITNESS WHEREOF, each of the parties hereto,
pursuant to resolutions adopted by its Board of Directors, has
caused this Stock Option Agreement to be executed by its duly
authorized officer, all as of the day and year first above
written.
LAFAYETTE AMERICAN BANK AND TRUST
COMPANY
By: /s/ ROBERT B. GOLDSTEIN
-----------------------------
Robert B. Goldstein,
President & Chief Executive
Officer
HUBCO, INC.
By: /s/ KENNETH T. NEILSON
-----------------------------
Kenneth T. Neilson,
President & Chief Executive
Officer
<PAGE>
APPENDIX C
GOLDMAN, SACHS & CO.
February 5, 1996
Board of Directors
HUBCO, Inc.
1000 MacArthur Blvd.
Mahwah, NJ 07430
Gentlemen and Mesdames:
You have requested our opinion as to the fairness to HUBCO, Inc. (the
"Company") of the exchange ratio of 0.588 shares (the "Exchange Ratio") of
common stock, no par value, of the Company (the "Shares") to be paid by the
Company for each share of common stock, no par value, of Lafayette American
Bank and Trust Company ("Lafayette") pursuant to the merger (the "Merger")
contemplated by the Agreement and Plan of Merger dated February 5, 1996
between Lafayette and the Company (the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. We are familiar with the Company having provided certain
investment banking services to the Company from time to time. We also have
provided certain investment banking services to Lafayette from time to time.
Goldman, Sachs & Co. is a full service securities firm and in the course of
its trading activities it may from time to time effect transactions and hold
positions in securities of the Company and Lafayette.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of
the Company and Lafayette for the five fiscal years ended December 31, 1994;
certain interim reports to stockholders and Quarterly Reports on Form 10-Q of
the Company and Lafayette; certain other communications from the Company and
Lafayette to their respective stockholders; and certain internal financial
analyses and forecasts for the Company and Lafayette prepared by their
respective managements. We also have held discussions with members of the
senior management of the Company and Lafayette regarding their past and
current business operations, regulatory relationships, financial condition
and future prospects of their respective companies. In addition, we have
reviewed the reported price and trading activity for the Shares and
Lafayette's Common Stock, compared certain financial and stock market
information for the Company and Lafayette with similar information for
certain other companies the securities of which are publicly traded, reviewed
the financial terms of certain recent business combinations in the banking
industry and performed such other studies and analyses as we considered
appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In that regard, we have assumed, with your
consent, that the financial forecasts, including, without limitation, cost
savings projected by the Company to result from the Merger, have been
reasonably prepared on a basis reflecting the best currently available
judgments and estimates of the Company and that such forecasts will be
realized in the amount and at the times contemplated thereby. We are not
experts in the evaluation of loan portfolios for purposes of assessing the
adequacy of the allowances for losses with respect thereto and have assumed,
with your consent, that such allowances for each of the Company and Lafayette
are adequate to cover all such losses. In addition, we have not reviewed
individual credit files nor have we made an independent evaluation or
appraisal of the assets and liabilities of the Company or Lafayette or any of
their respective subsidiaries and we have not been furnished with any such
evaluation or appraisal. We have assumed with your consent that the Merger
will be accounted for as a pooling of interests under generally accepted
accounting principles.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the
Exchange Ratio pursuant to the Agreement is fair to the Company.
Very truly yours,
GOLDMAN, SACHS & CO.
<PAGE>
APPENDIX D
KEEFE, BRUYETTE & WOODS, INC.
May 3, 1996
Board of Directors
Lafayette American Bank & Trust Company
1087 Broad Street
Bridgeport, CT 06604
Gentlemen:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the shareholders of Lafayette American
Bank & Trust Company ("Lafayette") of the exchange ratio in the proposed
merger (the "Merger") of Lafayette with and into HUBCO, Inc. ("HUBCO"),
pursuant to the Agreement and Plan of Merger dated as of February 5, 1996
between Lafayette and HUBCO (the "Agreement"). Under the terms of the
Merger, each outstanding share of common stock of Lafayette will be exchanged
for .5880 shares of common stock of HUBCO (the "Exchange Ratio"). It is our
understanding that the Merger will be structured as a pooling-of-interest
accounting transaction under generally accepted accounting principles.
Keefe, Bruyette & Woods, Inc. as part of its investment banking
business, is continually engaged in the valuation of banking businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate
and other purposes. As specialists in the securities of banking companies, we
have experience in, and knowledge of, the valuation of banking enterprises.
In the ordinary course of our business as a broker-dealer, we may, from time
to time, purchase securities from, and sell securities to, Lafayette and
HUBCO and as a market maker in securities we may from time to time have a
long or short position in, and buy or sell, debt or equity securities of
Lafayette and HUBCO for our own account and for the accounts of our
customers. To the extent we have any such position as of the date of this
opinion it has been disclosed to Lafayette. We have acted for the
Board of Directors of Lafayette in rendering this fairness opinion and
will receive a fee from Lafayette for our services.
In connection with this opinion, we have reviewed, among other things,
the Agreement; the Registration Statement on Form S-4, including the Proxy
Statement-Prospectus relating to the Meeting of Lafayette Stockholders at
which holders of the Shares will be asked to approve the Merger; Annual
Reports to Stockholders of HUBCO and Lafayette for the three years ended
December 31, 1995; certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of Lafayette and HUBCO, and certain internal financial
analyses and forecasts for Lafayette prepared by management. We also have
held discussions with members of the senior management of Lafayette and HUBCO
regarding the past and current business operations, regulatory relationships,
financial condition and future prospects of their respective companies. In
addition, we have compared certain financial and stock market information for
Lafayette and HUBCO with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of
certain recent business combinations in the banking industry and performed
such other studies and analyses as we considered appropriate.
In conducting our review and arriving at our opinion, we have relied
upon and assumed the accuracy and completeness of all of the financial and
other information provided to us or publicly available and we have not
assumed any responsibility for independently verifying any of such
information. We have relied upon the management of Lafayette as to the
reasonableness and achievability of the financial and operating forecasts and
projections (and the assumptions and bases therefor) provided to us, and we
have assumed that such forecasts and projections reflect the best currently
available estimates and judgments of Lafayette and that such forecasts and
projections will be realized in the amounts and in the time periods currently
estimated by such management. We have also assumed that the aggregate
allowances for loan losses for Lafayette and HUBCO are adequate to cover such
losses. In rendering our opinion, we have not made or obtained any
evaluations or appraisals of the property of Lafayette or HUBCO, nor have we
examined any individual credit files.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following:
(i) the historical and current financial position and results of operations
of Lafayette and HUBCO; (ii) the assets and liabilities of Lafayette and
HUBCO; and (iii) the nature and terms of certain other merger transactions
involving banks and bank holding companies. We have also taken into account
our assessment of general economic, market and financial conditions and our
experience in other transactions, as well as our experience in securities
valuation and our knowledge of the banking industry generally. Our opinion
is necessarily based upon conditions as they exist and can be evaluated on
the date hereof and the information made available to us through the date
hereof.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the exchange ratio in the Merger is fair, from a financial
point of view, to the Common Stockholders of Lafayette.
Very truly yours,
KEEFE, BRUYETTE & WOODS, INC.
<PAGE>
APPENDIX E
SECTIONS 36a-125(h) AND 33-374 OF
THE GENERAL STATUTES OF CONNECTICUT
SEC. 36A-125. MERGER AND CONSOLIDATION OF CONNECTICUT BANKS
(h) Upon the effectiveness of the agreement of merger or consolidation,
the shareholders, if any, of the constituent banks, except to the extent that
they have received cash, property or other securities of the resulting bank
or shares or other securities of any other corporation in exchange for or
upon conversion of their shares, shall be shareholders of the resulting bank.
Unless such agreement otherwise provides, the resulting bank may require each
shareholder to surrender such shareholder's certificates of stock in the
constituent bank and in that event no shareholder, until such surrender of
that shareholder's certificates, shall be entitled to receive a certificate
of stock of the resulting bank or to vote thereon or to collect dividends
declared thereon, or to receive cash, property or other securities of the
resulting bank, or shares or other securities of any other corporation. Any
shareholder of any of such constituent banks who, on or before the date of
such meeting of shareholders of the constituent bank of which that
shareholder holds shares, gave written notice to the secretary of the
constituent bank of objection thereto may, provided none of that
shareholder's shares shall have been voted in favor of the merger or
consolidation, require the constituent bank to purchase that shareholder's
shares at fair value by delivering to the secretary of such constituent bank
a demand to that effect in writing within ten days after the date of such
meeting. Any such demand shall comply with the requirements of section 33-
374 and, after the delivery of such demand, it shall be deemed for all
purposes to have been delivered pursuant to section 33-374, and the effect of
such demand and the rights and obligations of the objecting shareholders and
the bank shall be determined in accordance with section 33-374. The stock of
the resulting bank up to an amount of the combined stock of the constituent
banks shall be exempt from any franchise tax.
SEC. 33-374. PROCEDURE FOR OBJECTING SHAREHOLDER
(a) As used in this section, the term (1) "corporation" includes, if
the context so indicates, the successor, surviving or new corporation which
acquires the property of a predecessor corporation upon a sale of assets for
securities, merger or consolidation; (2) "the date on which the exchange was
effective" means the date on which the corporation first actually consummated
an exchange of shares or, if it reserved the right to postpone the operation
or effectiveness of all acceptances of its offer of exchange, the date on
which it declared the acceptance operative or effective; (3) "sale of assets
for securities" means a sale of assets entitling objecting shareholders to be
paid the value of shares pursuant to subsection (d) of section 33-373;
(4) "shares" of a shareholder means those shares owned by him as to which he
is entitled to be paid the value pursuant to the provisions of section
33-373.
(b) Any shareholder designated in section 33-373 as having the right to
be paid the value of shares as provided in this section may elect to exercise
such right by giving notice to the corporation, in writing, objecting to the
proposed corporate transaction giving rise to such right. (1) In the case of
a shareholder so designated in subsections (a), (c) and (d) of section 33-373
such notice shall be delivered to the corporation prior to the meeting of
shareholders called for the purpose of voting on such transactions, or at
such meeting prior to voting on such transaction, or prior to the time action
taken by consents as provided in section 33-330 shall become effective. If
such transaction is approved, any such shareholders so notifying the
corporation, provided none of his shares shall have been voted in favor
thereof, may require the corporation to purchase his shares at fair value by
delivering to the corporation a demand to that effect in writing, within ten
days after the date on which the vote was taken or action taken by consents
as provided in section 33-330 became effective. (2) In the case of a
shareholder so designated in subsection (b) of section 33-373, such notice
shall be delivered to the corporation within fifteen days after the date of
mailing the offer. If an exchange is effected with any shareholder, any such
shareholder so notifying the corporation, provided none of his shares shall
have been so exchanged, may require the corporation to purchase his shares at
fair value by delivering to the corporation a demand to that effect in
writing, within ten days after the date on which the exchange was effective
if the corporation shall give notice of such date to such shareholder or
within sixty days after delivering the written notice to the corporation,
whichever is the earlier. (3) A shareholder so designated in subsection (e)
of section 33-373 may require the corporation to purchase his shares at fair
value by delivering such notice to the corporation within fifteen days after
the date of mailing the distribution or any notice thereof from the
corporation, whichever is earlier, accompanied by a demand to that effect in
writing, provided such shareholder shall not have accepted such distribution.
(4) In the case of a shareholder so designated in subsection (c) of section
33-373, where a merger has been effected as provided in section 33-370, such
notice shall be delivered to the corporation within fifteen days after the
date of mailing the plan of merger, and be accompanied by a demand in writing
that the corporation purchase his shares at fair value.
(c) Any demand to purchase shares under subsection (b) of this section
shall state the number and classes of shares of the shareholder making the
demand. Except as provided in subsection (i) of this section, any
shareholder making such demand shall thereafter be entitled only to payment
as in this section provided and shall not be entitled to vote, to receive
dividends or to exercise any other rights of a shareholder in respect of such
shares. No such demand may be withdrawn unless the corporation consents
thereto. Any shareholder failing to make demand as provided in subsection
(b) of this section shall be bound by the corporate transaction involved in
accordance with its terms.
(d) At any time after the receipt of a notice by a shareholder
objecting to the proposed corporate transaction giving rise to rights under
this section, but not later than ten days after receipt of a demand to
purchase shares or ten days after the corporate transaction is effective,
whichever is later, the corporation shall make a written offer, to each
shareholder who makes demand as provided in this section, to pay for his
shares at a specified price deemed by such corporation to be the fair value
thereof as of the day prior to the date on which notice of the proposed
corporate transaction was mailed, exclusive of any element of value arising
from the expectation or accomplishment of such corporate transaction.
(e) Within twenty days after demanding the purchase of his shares, each
shareholder so demanding shall submit the certificate or certificates
representing his shares to the corporation for notation thereon that such
demand has been made. His failure to do so shall, at the option of the
corporation, terminate his rights under this section unless a court of
competent jurisdiction, for good and sufficient cause shown, otherwise
directs. If shares represented by a certificate on which notation has been
so made are transferred, each new certificate issued therefor shall bear
similar notation, together with the name of the shareholder of such shares
who made such demand, and a transferee of such shares shall acquire by such
transfer no rights in the corporation other than those which such shareholder
had after making such demand.
(f) If the corporation and any shareholder making a demand to purchase
shares under subsection (b) of this section agree in writing as to the value
of the shares, the corporation shall pay such shareholder such value upon and
concurrently with the surrender to the corporation of the certificate or
certificates representing such shares duly endorsed for transfer. If the
corporation defaults in or refuses to make such payment, such shareholder may
file a petition in the superior court for the judicial district where the
principal office of the corporation is located, praying that judgment be
entered for such amount, and such shareholder shall be entitled to judgment
for such amount. If any such shareholder should be a party to a proceeding
under subsection (g) of this section, the court in such proceeding shall upon
motion of either the corporation or such shareholder dismiss the proceeding
with respect to such shareholder.
(g) At any time during the period of sixty days after the date the
corporation is obliged to make an offer under subsection (d) of this section,
the corporation, or any shareholder who has made a demand to purchase shares
under subsection (b) of this section and who has not accepted the offer made
by the corporation and acting in the name of the corporation, may file a
petition in the superior court for the judicial district where its principal
office is located, or before any judge thereof, praying that the value of the
shares of such shareholders be found and determined. All shareholders making
demand under subsection (b) of this section who have not accepted the offer
made by the corporation, wherever residing, shall be made parties to the
proceeding as an action against their shares quasi in rem. A copy of the
petition shall be served on each such shareholder who is a resident of this
state and shall be served by registered or certified mail on each such
shareholder who is a nonresident. Service on nonresidents shall also be made
by publication as provided by law. The jurisdiction of the court shall be
plenary and exclusive. All shareholders who are parties to the proceeding
shall be entitled to judgment against the corporation for the amount of the
fair value of their shares as of the day prior to the date on which notice of
the proposed corporate transaction was mailed, exclusive of any element of
value arising from the expectation or accomplishment of such corporate
transaction. The court may, if it so elects, appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of
fair value. The appraisers shall have such power and authority as shall be
specified in the order of their appointment or an amendment thereof. The
court shall by its judgment determine the fair value of the shares of the
shareholders entitled to payment therefor and shall direct the payment of
such value, together with interest, if any, as hereinafter provided, to the
shareholders entitled thereto. The judgment may include an allowance for
interest at such rate as the court may find to be fair and equitable in all
the circumstances, from the date notice of the proposed corporate transaction
was mailed to the date of payment. The costs and expenses of any such
proceeding shall be determined by the court and shall be assessed against the
corporation, but all or any part of such costs and expenses may be
apportioned and assessed as the court may deem equitable against any or all
shareholders who are parties to the proceeding to whom the corporation has
made an offer to pay for the shares if the court finds that the action of
such shareholders in failing to accept such offer was arbitrary or vexatious
or not in good faith. Such expenses shall include reasonable compensation
for and reasonable expenses of the appraisers, but shall exclude the fees and
expenses of counsel for and experts employed by any party; but if the fair
value of the shares as determined materially exceeds the amount which the
corporation offered to pay therefor, or if no offer was made, the court in
its discretion may award to any shareholder who is a party to the proceeding
such sum as the court may determine to be reasonable compensation to any
expert or experts employed by the shareholder in the proceeding.
(h) Any judgment entered under subsection (f) or (g) of this section
shall be enforceable as other decrees of the superior court may be enforced
and shall be payable only upon and concurrently with the surrender to the
corporation of the certificate or certificates representing the shares for
which payment is due, duly endorsed for transfer. Upon payment of any such
judgment, the shareholder shall cease to have any interest in such shares.
The liability to pay for shares or to pay damages imposed by this section on
a corporation extends to the successor corporation which acquires the assets
of the predecessor, whether by merger, consolidation or sale of assets for
securities. Shares acquired by a corporation pursuant to payment of the
agreed value therefor or to payment of the judgment entered therefor, as in
this section provided, may be held and disposed of by such corporation as in
the case of other treasury shares, unless in the case of a merger or
consolidation the plan of merger or consolidation otherwise provides.
(i) If a demand to purchase shares under subsection (b) of this section
is withdrawn upon consent, or if the proposed corporate action is abandoned
or rescinded or the shareholders revoke the authority to effect such action,
or if no demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section, or if a
court of competent jurisdiction determines that such shareholder is not
entitled to the relief provided by this section, then the right of such
shareholder to be paid the fair value of his shares shall cease and his
status as a shareholder shall thereupon be restored.
<PAGE>
APPENDIX F
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
OF HUBCO, INC. TO INCREASE ITS
AUTHORIZED COMMON AND PREFERRED STOCK
The following is proposed to become Paragraph (A) of Article V of
HUBCO's Certificate of Incorporation. The language to be deleted is shown
[in brackets].
"(A) The total authorized stock of the Corporation shall be 60,000,000
[29,500,000] shares, consisting of 50,000,000 [25,000,000] shares of
common stock and 10,000,000 [4,500,000] shares of Preferred Stock, which
may be issued in one or more classes or series. The shares of common
stock shall constitute a single class and shall be without nominal or
par value. The shares of Preferred Stock of each class or series shall
be without nominal or par value, except that the amendment authorizing
the initial issuance of any class or series adopted by the Board of
Directors, as provided herein, may provide that shares of any class or
series shall have a specific par value per share, in which event all of
the shares of such class or series shall have the par value so specified."
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
(i) Limitation of Liability of Directors and Officers. Section
14A:2-7(3) of the New Jersey Business Corporation Act permits a corporation to
provide in its Certificate of Incorporation that a director or officer shall not
be personally liable to the corporation or its shareholders for breach of any
duty owed to the corporation or its shareholders, except that such provision
shall not relieve a director or officer from liability for any breach of duty
based upon an act or omission (a) in breach of such persons' duty of loyalty to
the corporation or its shareholders, (b) not in good faith or involving a
knowing violation of law or (c) resulting in receipt by such person of any
improper personal benefit. HUBCO's Certificate of Incorporation includes
limitations on the liability of officers and directors to the fullest extent
permitted by New Jersey law.
(ii) Indemnification of Directors, Officers, Employees and Agents.
Under Article X of its Certificate of Incorporation, HUBCO must, to the fullest
extent permitted by law, indemnify its directors, officers, employees and
agents. Section 14A:3-5 of the New Jersey Business Corporation Act provides that
a corporation may indemnify its directors, officers, employees and agents
against judgments, fines, penalties, amounts paid in settlement and expenses,
including attorneys' fees, resulting from various types of legal actions or
proceedings if the actions of the party being indemnified meet the standards of
conduct specified therein. Determinations concerning whether or not the
applicable standard of conduct has been met can be made by (a) a disinterested
majority of the Board of Directors, (b) independent legal counsel, or (c) an
affirmative vote of a majority of shares held by the shareholders. No
indemnification is permitted to be made to or on behalf of a corporate director,
officer, employee or agent if a judgment or other final adjudication adverse to
such person establishes that his acts or omissions (A) were in breach of his
duty of loyalty to the corporation or its shareholders, (B) were not in good
faith or involved a knowing violation of law or (C) resulted in receipt by such
person of an improper personal benefit.
(iii) Insurance. HUBCO's directors and officers are insured against
losses arising from any claim against them such as wrongful acts or omissions,
subject to certain limitations.
Item 21.
A. Exhibits
Exhibit
Number Description
- ------ -----------
2(a) Agreement and Plan of Merger, dated February 5, 1996, between HUBCO,
Inc. ("HUBCO") and Lafayette American Bank and Trust Company
("Lafayette") (included as Appendix A to the Proxy Statement).
2(b) Stock Option Agreement, dated February 5, 1996, between HUBCO and
Lafayette (included as Appendix B to the Proxy Statement).
5 Opinion of Pitney, Hardin, Kipp & Szuch as to the legality of the
securities to be registered.
8 Opinion of Pitney, Hardin, Kipp & Szuch as to certain tax consequences
of the Merger.
13(a) Annual Report of Lafayette on Form F-2 for the year ended December 31,
1995.
13(b) Current Report of Lafayette on Form F-3 filed with the FDIC on February
9, 1996.
13(c) Current Report of Lafayette on Form F-3 filed with the FDIC on February
16, 1996.
13(d) Amendment dated April 26, 1996 to Annual Report of Lafayette on Form
F-2 for the year ended December 31, 1995.
23(a) Consent of Arthur Andersen LLP.
23(b) Consent of Arthur Andersen LLP.
23(c) Consent of Goldman, Sachs & Co.
23(d) Consent of Keefe, Bruyette & Woods.
23(e) Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibits 5 and 8
hereto).
23(f) Consent of Price Waterhouse LLP.
24 Powers of Attorney of directors of HUBCO, in favor of Kenneth T. Neilson.
99(a) Form of Proxy Card to be utilized by the Board of Directors of HUBCO.
99(b) Form of Proxy Card to be utilized by the Board of Directors of Lafayette.
B. Financial Schedules
All schedules have been omitted because they are not applicable or the
required information is included in the financial statements or notes thereto or
incorporated by reference therein.
C. Reports, Opinions or Appraisals
Form of Fairness Opinion of Goldman, Sachs & Co. is included as
Appendix C to Proxy Statement-Prospectus.
Form of Fairness Opinion of Keefe, Bruyette & Woods is included as
Appendix D to Proxy Statement-Prospectus.
Item 22. Undertakings
- ----------------------
1. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
2. The undersigned registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
3. The registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph 2 immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a) (3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
4. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
5. The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
6. Subject to appropriate interpretation, the undersigned
registrant hereby undertakes to supply by means of a post-effective amendment
all information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the registration
statement when it becomes effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Township of Mahwah, State of New Jersey, on the 1st day
of May, 1996.
HUBCO, Inc.
By:KENNETH T. NEILSON
-------------------
Kenneth T. Neilson,
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
JAMES E. SCHIERLOH* Chairman of the Board and May 1, 1996
(James E. Schierloh) Director
KENNETH T. NEILSON President and Director (Chief May 1, 1996
(Kenneth T. Neilson) Executive Officer)
ROBERT J. BURKE* Director May 1, 1996
(Robert J. Burke)
JOAN DAVID* Director May 1, 1996
(Joan David)
THOMAS R. FARLEY*
(Thomas R. Farley) Director May 1, 1996
BRYANT MALCOLM*
(Bryant Malcolm) Director May 1, 1996
W. PETER MCBRIDE* Director May 1, 1996
(W. Peter McBride)
HARRY J. LEBER* Director May 1, 1996
(Harry J. Leber)
CHARLES F.X. POGGI* Director May 1, 1996
(Charles F.X. Poggi)
SR. GRACE FRANCES STRAUBER* Director May 1, 1996
(Sister Grace Frances Strauber)
RICHARD LINHART* Treasurer and Chief Financial May 1, 1996
(Richard Linhart) Officer (Principal Financial
Officer)
CHRISTINA L. MAIER* Assistant Treasurer (Principal May 1, 1996
(Christina L. Maier) Accounting Officer)
* By Kenneth T. Neilson, as attorney-in-fact
<PAGE>
INDEX TO EXHIBITS
Exhibit Description Page
Number ----------- ----
- ------
2(a) Agreement and Plan of Merger, dated February 5, 1996, *
between HUBCO, Inc. ("HUBCO") and Lafayette American Bank
and Trust Company ("Lafayette") (included as Appendix A to
the Proxy Statement).
2(b) Stock Option Agreement, dated February 5, 1996, between *
HUBCO and Lafayette (included as Appendix B to the Proxy
Statement).
5 Opinion of Pitney, Hardin, Kipp & Szuch as to the legality *
of the securities to be registered.
8 Opinion of Pitney, Hardin, Kipp & Szuch as to certain tax *
consequences of the Merger.
13(a) Annual Report of Lafayette on Form F-2 for the year ended *
December 31, 1995.
13(b) Current Report of Lafayette on Form F-3 filed with the FDIC *
on February 9, 1996.
13(c) Current Report of Lafayette on Form F-3 filed with the FDIC *
on February 16, 1996.
13(d) Amendment dated April 26, 1996 to Annual Report of Lafayette
on Form F-2 for the year ended December 31, 1995.
23(a) Consent of Arthur Andersen LLP.
23(b) Consent of Arthur Andersen LLP.
23(c) Consent of Goldman, Sachs & Co.
23(d) Consent of Keefe, Bruyette & Woods.
23(e) Consent of Pitney, Hardin, Kipp & Szuch (included in *
Exhibits 5 and 8 hereto).
23(f) Consent of Price Waterhouse LLP
24 Powers of Attorney of directors of HUBCO, in favor of
Kenneth T. Neilson.
99(a) Form of Proxy Card to be utilized by the Board of Directors
of HUBCO.
99(b) Form of Proxy Card to be utilized by the Board of Directors
of Lafayette.
- ---------------------------------
* Previously filed.
EXHIBIT 13(d)
FEDERAL DEPOSIT INSURANCE CORPORATION
Washington, D.C. 20006
FORM F-2, Amendment No. 1
Amending Form F-2 to add Items 4, 9
and 10 and to revise page 10.
-----------------------------------
Annual Report Under Section 13 of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995 FDIC Certificate Number 19353
----------------- -----
Lafayette American Bank and Trust Company
---------------------------------------------------
(Exact name of bank as specified in its charter)
Connecticut 06-0795235
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1087 Broad Street, Bridgeport, Connecticut 06604
- -------------------------------------------------------------------------------
(Address of principal office) (Zip code)
Bank's telephone number, including area code (203) 336-6200
---------------
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, no par value
--------------------------
(Title of class)
Nasdaq National Market
-------------------------------------------
(Name of each exchange on which registered)
Indicate by check mark if the Bank, as a "small business issuer" as defined
under 17 CFR 240.12b-2, is providing alternative disclosures as permitted for
small business issuers in this Form F-2. { }
Indicate by check mark if disclosure of delinquent filers pursuant to Item 10 is
not contained herein, and will not be contained, to the best of Bank's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form F-2 or any amendment to this Form F-2.{ }
Indicate by check mark whether the Bank (1) has filed all reports required to be
filed by Section 13 of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Bank was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
The aggregate market value of the voting common stock held by nonaffiliates of
the Bank was $103,043,872 on March 5, 1996. On that date, 10,006,529 shares of
Bank common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE>
Revised Page 10
- ---------------
<TABLE>
<CAPTION>
Maturity
----------------------------------------------
After One Year After Five Years
But Within Five But Within Ten
Within One Year Years Years After Ten Years
--------------- --------------- ---------------- ---------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ------ ------ -----
(dollars in thousands)
Available for Sale:
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury............ $1,501 3.95% $ 2,019 5.13% $ - - % $ - - %
U.S. Government agencies. - - 14,935 5.99 - - - -
Mortgage-backed
securities (1)......... - - 12,273 5.37 12,086 5.56 61,999 6.64
Obligations of states
and political
subdivisions........... - - - - - - 125 3.50
Other debt securities.... 250 8.50 5,007 5.56 150 6.75 - -
Marketable equity
securities............. - - - - - - 3,290 .88
------ ------- ------- -------
Total................ $1,751 4.60 $34,234 5.66 $12,236 5.57 $65,414 6.34
====== ======= ======= =======
Held to Maturity:
- -----------------
Mortgage-backed
securities............. $ - - % $ 1,431 9.00% $ 5,830 6.00% $20,593 6.99%
====== ======= ====== =======
<FN>
(1) Based upon final maturity of the individual loans in the
mortgage-backed pools.
</FN>
</TABLE>
[All other information in this document is included within
the Proxy Statement - Prospectus which is part of the
Registration Statement to which this document is an Exhibit.]
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To HUBCO, Inc.
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 of our report dated January
11, 1996 (except with respect to the matters discussed in Note 20, as to which
the date is February 6, 1996) incorporated by reference in the Company's Form
10-K and to all references to our Firm included in or made a part of this
Registration Statement.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
April 29, 1996
EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To HUBCO, Inc.
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 of our report dated January
17, 1996 (except with respect to the matters discussed in Note 1, as to which
the date is February 6, 1996) with respect to the consolidated financial
statements of Lafayette American Bank and Trust Company (the Company) included
in the Company's 1995 Form F-2 and to all references to our firm included in or
made a part of this Registration Statement.
ARTHUR ANDERSEN LLP
New York, New York
April 29, 1996
EXHIBIT 23(c)
May 1, 1996
Board of Directors
HUBCO, Inc.
1000 MacArthur Blvd.
Mahwah, NJ 07430
Re: Registration Statement of HUBCO, Inc. relating to
HUBCO, Inc. common stock being registered in
connection with the merger with
Lafayette American Bank and Trust Company
-----------------------------------------
Gentlemen and Mesdames:
Attached is our opinion letter dated February 5, 1996 with
respect to the fairness to HUBCO, Inc. (the "Company") of the exchange ratio of
0.588 shares (the "Exchange Ratio") of common stock, no par value, of the
Company (the "Shares") to be paid by the Company for each share of common stock,
no par value, of Lafayette American Bank and Trust Company ("Lafayette")
pursuant to the merger (the "Merger") contemplated by the Agreement and Plan of
Merger dated February 5, 1996 between Lafayette and the Company (the
"Agreement").
The foregoing opinion letter is solely for the information and
assistance of the Board of Directors of the Company in connection with its
consideration of the transaction contemplated therein and is not to be used,
circulated, quoted or otherwise referred to for any other purpose, nor is it to
be filed with, included in or referred to in whole or in part in any
registration statement, proxy statement or any other document, except in
accordance with our prior written consent.
In that regard, we hereby consent to the reference to the
opinion of our Firm under the captions, "SUMMARY OF JOINT PROXY STATEMENT
PROSPECTUS -- The Merger - Fairness Opinions" and "THE PROPOSED MERGER -
Opinions of Financial Advisors" and to the inclusion of the foregoing opinion in
the Joint Proxy Statement included in the above-mentioned Registration
Statement. In giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
GOLDMAN, SACHS & CO.
EXHIBIT 23(d)
CONSENT OF KEEFE, BRUYETTE & WOODS, INC.
The opinion letter of our Firm regarding the proposed merger of Hubco,
Inc. (the "Company") and Lafayette American Bank & Trust Company is solely for
the information and assistance of the Board of Directors of the Company in
connection with its consideration of the transaction contemplated therein, does
not constitute a recommendation to any holder of shares as to how such a holder
should vote at the Special Meeting of Shareholders of the Company and is not to
be used, circulated, quoted or otherwise referred to for any other purpose, nor
is to be filed with, included in or referred to in whole or in part in any
registration statement, proxy statement or any other document, except in
accordance with our prior written consent.
In this regard, we hereby consent to the inclusion of the opinion of
our Firm to be dated as of the date of the Proxy Statement and Prospectus in the
Registration Statement on Form S-4 of Lafayette American Bank & Trust Company
and to all references to our Firm in or made apart of such Registration
Statement. In giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 of the rules and regulations of Securities and Exchange
Commission thereunder.
KEEFE, BRUYETTE & WOODS, INC.
New York, NY
May 1, 1996
EXHIBIT 23(f)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 (No. 333-01829) of
HUBCO, Inc. of our report dated January 25, 1996, which appears on page 45 of
Hometown Bancorporation, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1995. We also consent to the reference to us under the heading
"Experts" is such Prospectus.
PRICE WATERHOUSE L.L.P.
New York, New York
May 1, 1996
EXHIBIT 24
HUBCO, INC.
POWER OF ATTORNEY
FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Kenneth T. Neilson, his
attorney-in-fact, with power of substitution, for him in any and all capacities,
to sign any and all amendments (whether pre- or post-effective), to this
Registration Statement on Form S-4 of HUBCO, Inc. (SEC File No. 333-01829) and
to file the same with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in fact, or his substitute or substitutes, may
do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
JAMES E. SCHIERLOH Chairman of the Board and March 19, 1996
(James E. Schierloh) Director
KENNETH T. NEILSON President and Director March 19, 1996
(Kenneth T. Neilson) (Chief Executive Officer)
ROBERT J. BURKE
(Robert J. Burke) Director March 19, 1996
JOAN DAVID
(Joan David) Director March 19, 1996
THOMAS R. FARLEY
(Thomas R. Farley) Director March 19, 1996
BRYANT MALCOLM
(Bryant Malcolm) Director March 19, 1996
W. PETER MCBRIDE
(W. Peter McBride) Director March 19, 1996
HARRY J. LEBER
(Harry J. Leber) Director March 19, 1996
CHARLES F.X. POGGI
(Charles F.X. Poggi) Director March 19, 1996
SR. GRACE FRANCES STRAUBER
(Sister Grace Frances Strauber) Director March 19, 1996
RICHARD LINHART Treasurer and Chief Financial March 19, 1996
(Richard Linhart) Officer (Principal Financial
Officer)
CHRISTINA L. MAIER Assistant Treasurer (Principal March 19, 1996
(Christina L. Maier) Accounting Officer)
EXHIBIT 99(a)
HUBCO, INC.
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
JUNE 11, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HUBCO, INC.
The undersigned hereby appoints JOAN DAVID, THOMAS R. FARLEY
and KENNETH T. NEILSON 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 the Sheraton Crossroads, Crossroad Corporate Center, Route 17 North,
Mahwah, New Jersey 07495, on Tuesday, June 11, 1996 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 issuance of HUBCO Common Stock as consideration in connection
with the Agreement and Plan of Merger, and FOR the amendment to the Certificate
of Incorporation to increase the authorized stock.
(continued on reverse side)
<PAGE>
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
The Board of Directors recommends a vote FOR approval of the issuance of HUBCO
Common Stock in connection with the Agreement and Plan of Merger and FOR the
Board of Directors' nominees and FOR approval of the proposal to amend HUBCO's
Certificate of Incorporation.
1. Approval of the issuance of HUBCO Common Stock in connection with the
Agreement and Plan of Merger with Lafayette American Bank and Trust Company.
FOR ________ AGAINST ________ ABSTAIN _______
2. Election of Directors
Nominees: W. Peter McBride, Bryant Malcolm, James E. Schierloh
FOR _______ WITHHELD _______
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:
- -------------------------------------------------------------------------------
3. Approval of the Amendment to the Certificate of Incorporation to
increase the authorized Common Stock to 50,000,000 shares and the
authorized preferred stock to 10,000,000.
FOR ________ AGAINST ________ ABSTAIN _______
4. Such other business as may properly come before the Meeting.
SIGNATURE____________________DATE __________________________ DATE____________
SIGNATURE IF HELD JOINTLY
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.
EXHIBIT 99(b)
LAFAYETTE AMERICAN BANK AND TRUST COMPANY
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
JUNE 10, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
LAFAYETTE AMERICAN BANK AND TRUST COMPANY
The undersigned hereby appoints DONALD P. CALCAGNINI and
PHILLIP J. MUCHA, and each of them, as Proxy, each with full power of
substitution, to vote all of the stock of Lafayette American Bank and Trust
Company ("Lafayette") standing in the undersigned's name at the Annual Meeting
of Shareholders of Lafayette to be held on Monday, June 10, 1996 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 and FOR
approval of the Agreement and Plan of Merger.
(continue on reverse side)
<PAGE>
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
The Board of Directors recommends a vote FOR the Board of Directors' nominees
and FOR approval of the Agreement and Plan of Merger.
1. Approval of the Agreement and Plan of Merger with HUBCO, Inc.
FOR ________ AGAINST __________ ABSTAIN _______
2. Election of the Board's nominees for Director:
FOR the nominees listed below (except as marked to the
contrary below) __________
WITHHOLD AUTHORITY to vote for the nominees listed below __________
Nominees: Linda Walker Bynoe, Roderick C. McNeil III, Enzo R. Montesi, Louis F.
Tagliatela, and John H. Tatigian, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee
listed above, write the nominee's name in the space
provided below:
- -------------------------------------------------------------------------------
3. Such other business as may properly come before the Meeting.
SIGNATURE DATE ,1996 SIGNATURE DATE ,1996
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.
