As filed with the Securities and Exchange Commission on September 18, 1996
REGISTRATION NO. 333-10761
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4/A
AMENDMENT NO. 1 TO
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 or 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
Chairman, 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. STUART G. STEIN, ESQ.
MICHAEL W. ZELENTY, ESQ. Hogan & Hartson L.L.P.
Pitney, Hardin, Kipp & Szuch Columbia Square
P.O. Box 1945 555 Thirteenth Street, N.W.
Morristown, New Jersey 07962 Washington, D.C. 20004-1109
(201) 966-6300 (202) 637-8575
<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 June 21, 1996 (the "MERGER AGREEMENT"), by and among HUBCO, Inc.
("HUBCO"), Westport Bancorp, Inc. ("WESTPORT") and The Westport Bank & Trust
Company, attached as Appendix A to the 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. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
======================================================================================================
<S> <C> <C> <C> <C>
Title of each class Proposed maximum Proposed Maximum
of securities to be Amount to be offering price per aggregate offering Amount of
registered registered* unit price registration fee
---------- ----------- ---- ----- ----------------
Common Stock, No 108,595 $20.16** $2,189,279** $754.92
Par Value Shares
Common Stock, No 3,423,587 $19.77*** $67,675,557*** $23,336.40****
Par Value Shares
Series B Convertible 39,600 $637.50*** $25,245,000*** $8,705.17****
Preferred Stock, Shares
$100 Stated Value
======================================================================================================
Total Fee $32,796.49
Previously Paid $32,041.57****
Paid with this S-4/A $ 754.92
======================================================================================================
</TABLE>
* The shares of HUBCO Common Stock being registered and included in this number
include shares of HUBCO Common Stock issuable either (i) in the Merger in
exchange for shares of Westport Common Stock issued prior to the Merger upon
conversion of Westport Series A Convertible Preferred Stock, or (ii) after the
Merger upon conversion of shares of HUBCO Series B Convertible Preferred Stock
issued in the Merger in exchange for Westport Series A Convertible Preferred
Stock. The shares of HUBCO Common Stock registered and included in this number
also include shares of HUBCO Common Stock issuable either (i) in the Merger in
exchange for shares of Westport Common Stock issued prior to the Merger upon
exercise of Westport stock options or (ii) after the Merger upon exercise of
HUBCO stock options issued in the Merger in exchange for Westport stock options.
The Registrant also registers hereby such additional shares of its common stock
as may be issuable in the Merger pursuant to the anti-dilution provisions of the
Merger Agreement.
** Estimated solely for purposes of calculating the registration fee on the
additional shares of Common Stock being registered on this Form S-4/A pursuant
to Rule 457(f) under the Securities Act, based on the exchange ratio of 0.3225
and the last reported sales price ($6.50) for Westport Common Stock as of
September 13, 1996.
*** Estimated solely for the purpose of calculating the registration fee for the
initial filing on Form S-4 pursuant to Rule 457(f) under the Securities Act
based, as to the Common Stock, on the exchange ratio of 0.3225 and the last
reported sales price ($6.375) for Westport Common Stock as of August 19, 1996,
and as to the Preferred Stock, the number of shares of Westport Common Stock
into which each share of Westport Preferred Stock is convertible (100), and the
last reported sales price ($6.375) for Westport Common Stock as of August 19,
1996.
**** Previously paid.
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>
[LOGO]
September 18, 1996
To the Shareholders of Westport Bancorp, Inc.:
You are cordially invited to attend a special meeting of shareholders
(the "MEETING") of Westport Bancorp, Inc. ("WESTPORT") to be held at Westport
Bancorp, Inc., 87 Post Road East, Westport, Connecticut 06880 on Thursday,
October 24, 1996 at 4:00 p.m.
At the Meeting, you will be asked to approve an Agreement and Plan of
Merger, dated June 21, 1996 (the "MERGER AGREEMENT"), by and among HUBCO, Inc.
("HUBCO"), Westport and The Westport Bank & Trust Company, a copy of which is
included as Appendix A to the accompanying Proxy Statement-Prospectus. As more
fully described in the Proxy Statement-Prospectus, the Merger Agreement provides
for Westport to be acquired by HUBCO through a merger of Westport with and into
HUBCO (the "MERGER"). As part of the Merger, each outstanding share of Westport
common stock, par value $.01 per share ("WESTPORT COMMON STOCK"), will be
converted into 0.3225 of a share of HUBCO common stock and each outstanding
share of Series A Convertible Preferred Stock of Westport, par value $.01 per
share ("WESTPORT PREFERRED STOCK"), will be converted into the right to receive
one share of a newly created series of HUBCO convertible preferred stock in a
tax free exchange, plus cash to be paid in lieu of fractional shares.
Approval of the Merger Agreement requires the affirmative vote, in
person or by proxy, of at least two-thirds of the outstanding shares of Westport
Common Stock and Westport Preferred Stock, voting together as a single class.
The Board of Directors has fixed the close of business on September 5, 1996 (the
"RECORD DATE") as the record date for the determination of shareholders entitled
to notice of and to vote at the Meeting. As of the Record Date, the directors
and executive officers of Westport and its affiliates beneficially owned
(excluding shares which could be acquired upon the exercise of options) an
aggregate of 2,384,028 shares of Westport Common Stock (39.3) and 26,000 shares
of Westport Preferred Stock (65.7%). The Westport directors have agreed to vote
the shares of Westport Common Stock and Westport Preferred Stock that they
beneficially own in favor of the Merger Agreement. Each share of Westport Common
Stock will entitle its holder to one vote and each share of Westport Preferred
Stock will entitle its holder to 100 votes.
Consummation of the Merger is subject to certain conditions, including
approval of the Merger Agreement and the transactions contemplated thereby by
the requisite vote of the shareholders of Westport and the receipt of certain
regulatory approvals.
Ostrowski & Company, Inc., Westport's financial advisor in connection
with the Merger, has delivered its written opinion to Westport's Board of
Directors that, as of the June 20, 1996 (the date preceding the date on which
Merger Agreement was executed and delivered), the terms of the Merger Agreement
were fair to the shareholders of Westport from a financial point of view.
The written opinion of Ostrowski & Company, Inc., updated as of September 18,
1996, is reproduced in full as Appendix B to the accompanying Proxy
Statement-Prospectus.
Your Board of Directors has determined that the Merger is in the best
interests of Westport and its shareholders and has unanimously approved the
Merger Agreement. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE MERGER AGREEMENT.
You are urged to read the Proxy Statement-Prospectus, which provides
you with a description of the terms of the Merger. IT IS VERY IMPORTANT THAT
YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, YOU ARE REQUESTED TO COMPLETE, DATE AND SIGN THE PROXY CARD AND RETURN
IT AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE PAID ENVELOPE. Failure to return
a properly executed proxy card or to vote at the Meeting will have the same
effect as a vote against the Merger Agreement.
Sincerely,
Michael H. Flynn David A. Rosow
President and Chief Executive Officer Chairman of the Board
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 24, 1996
To the Shareholders of Westport Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the
"MEETING") of Westport Bancorp, Inc. ("WESTPORT") will be held on Thursday,
October 24, 1996, at 4:00 p.m., at Westport Bancorp, Inc., 87 Post Road East,
Westport, Connecticut 06880, for the following purposes:
(1) To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated June 21, 1996 (the "MERGER
AGREEMENT"), by and among HUBCO, Inc. ("HUBCO"), Westport and
The Westport Bank & Trust Company, which is included as
Appendix A to the accompanying Proxy Statement-Prospectus. As
more fully described in the Proxy Statement-Prospectus, the
Merger Agreement provides for Westport to be acquired by HUBCO
through a merger of Westport with and into HUBCO (the
"MERGER"). As part of the Merger, each outstanding share of
Westport common stock, par value $.01 per share ("WESTPORT
COMMON STOCK"), will be converted into 0.3225 of a share of
HUBCO common stock and each outstanding share of Series A
Convertible Preferred Stock of Westport, par value $.01 per
share ("WESTPORT PREFERRED STOCK"), will be converted into the
right to receive one share of a newly created series of HUBCO
convertible preferred stock in a tax free exchange, plus cash
to be paid in lieu of fractional shares; and
(2) To transact such other business as may properly come before
the Meeting or any adjournment or postponement thereof.
If the Merger Agreement is approved, adopted and consummated, each
holder of Westport Preferred Stock will have the right to dissent and demand
payment of the fair value of his shares. This right is contingent upon strict
compliance with the procedures set forth in the applicable statute. The full
text of this statute is included as Appendix C to the accompanying Proxy
Statement-Prospectus.
The Board of Directors has fixed the close of business on September 5,
1996 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting. Only shareholders of record at the close of
business on September 5, 1996 will be entitled to notice of and to vote at the
Meeting or any adjournment or postponement thereof. The holders of Westport
Common Stock and Westport Preferred Stock are entitled to vote at the Meeting or
at any adjournment or postponement thereof. Each share of Westport Common Stock
will entitle its holder to one vote and each share of Westport Preferred Stock
will entitle its holder to 100 votes.
All shareholders are urged to attend the Meeting in person. IT IS
IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU PLAN
TO BE PRESENT IN PERSON AT THE MEETING, PLEASE DATE, SIGN AND COMPLETE THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES. If you decide to attend the Meeting, you may
revoke your proxy and vote your shares in person.
Westport, Connecticut
September 18, 1996
By Order of the Board of Directors
John J. Henchy
Secretary
THE BOARD OF DIRECTORS OF WESTPORT UNANIMOUSLY RECOMMENDS THAT ITS SHAREHOLDERS
VOTE TO APPROVE THE MERGER AGREEMENT.
<PAGE>
WESTPORT BANCORP, INC HUBCO, INC.
PROXY STATEMENT PROSPECTUS
For Special Meeting of Shareholders For Common Stock and Series B
of Westport Bancorp, Inc. Convertible Preferred Stock
to be held on October 24, 1996 to be issued by HUBCO, Inc. in
connection with the
merger of Westport Bancorp, Inc.
with and into HUBCO, Inc.
This Proxy Statement-Prospectus (sometimes referred to as this "PROXY
STATEMENT") is first being furnished to the shareholders of Westport Bancorp,
Inc. ("WESTPORT") on or about September 19, 1996 in connection with the
solicitation of proxies by the Board of Directors of Westport to be used at the
Special Meeting of its shareholders (the "MEETING") to be held on Thursday,
October 24, 1996. The purpose of the Meeting is for holders of Westport common
stock, $.01 par value per share ("WESTPORT COMMON STOCK"), and holders of
Westport Series A Convertible Preferred Stock, $.01 par value per share
("WESTPORT PREFERRED STOCK"), to consider and vote upon an Agreement and Plan of
Merger, dated June 21, 1996 (the "MERGER AGREEMENT"), by and among HUBCO, Inc.
("HUBCO"), Westport and The Westport Bank & Trust Company ("WBTC"). In
accordance with the terms of the Merger Agreement, upon approval of the Merger
Agreement by the shareholders of Westport, receipt of all requisite regulatory
approvals, and the satisfaction or waiver of all other conditions, Westport will
be merged with and into HUBCO, with HUBCO as the surviving entity in the Merger.
WBTC simultaneously will be merged with and into Lafayette American Bank and
Trust Company ("LAFAYETTE"), HUBCO's principal Connecticut bank subsidiary (the
"BANK MERGER"). In connection with the Merger, each share of Westport Common
Stock will be converted into the right to receive 0.3225 shares (the "EXCHANGE
RATIO") of HUBCO common stock, no par value ("HUBCO COMMON STOCK"), and each
share of Westport Preferred Stock will be converted into the right to receive
one share of a newly created HUBCO Series B Convertible Preferred Stock ("NEW
HUBCO PREFERRED STOCK") having substantially identical terms as the Westport
Preferred Stock, in each case subject to adjustment in certain circumstances, as
more fully described in this Proxy Statement. In addition, (i) each holder of
one or more vested options to purchase a share of Westport Common Stock pursuant
to Westport's existing stock option plans and agreements will be asked to agree
to convert each such vested option into the right to receive one or more shares
of HUBCO Common Stock with a value (as determined pursuant to the Merger
Agreement) equal to the difference between the per share option exercise price
and the product of the Exchange Ratio multiplied by the value (as so determined)
of one share of HUBCO Common Stock (Westport stock options which are to be so
converted into HUBCO Common Stock are referred to herein as "CONVERTING STOCK
OPTIONS"); and (ii) each Westport stock option which is not a Converting Stock
Option (referred to herein as a "CONTINUING STOCK OPTION"), will be converted
into a like stock option to purchase HUBCO Common Stock, all as more fully
described in this Proxy Statement. A COPY OF THE MERGER AGREEMENT IS ATTACHED AS
APPENDIX A TO 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 (including shares issuable upon the exercise or conversion of stock
options) and New HUBCO Preferred Stock (together, the "HUBCO STOCK") which will
be issued in connection with the Merger. In addition to constituting the Proxy
Statement for the Meeting, this document constitutes a Prospectus of HUBCO with
respect to the HUBCO Stock to be issued if the Merger is consummated.
Certificates representing Westport stock or options (together,
"WESTPORT SECURITIES") should NOT be returned to Westport with the enclosed
proxy and should not be forwarded to HUBCO until after receipt of a letter of
transmittal which will be provided to holders of Westport Securities following
consummation of the Merger.
This Proxy Statement does not serve as a prospectus to cover any
resales of HUBCO Stock to be received by holders of Westport Securities upon
consummation of the Merger. Affiliates of Westport will be subject to
restrictions on their ability to resell the HUBCO Stock received by them in the
Merger. See "THE PROPOSED MERGER -- Resale Considerations with Respect to the
HUBCO Stock".
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 PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
ALL INFORMATION AND STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE
HEREIN WITH RESPECT TO WESTPORT WERE SUPPLIED BY WESTPORT. ALL INFORMATION AND
STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE HEREIN WITH RESPECT TO HUBCO
WERE SUPPLIED BY HUBCO.
THE SECURITIES 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 (THE "FDIC") OR ANY OTHER GOVERNMENTAL
AGENCY.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED.
THIS 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 PROXY
STATEMENT-PROSPECTUS AT ANY TIME, NOR ANY DISTRIBUTION OF SHARES OF HUBCO 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 Proxy Statement-Prospectus is September 18, 1996.
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION........................................................4
INFORMATION DELIVERED AND INCORPORATED BY REFERENCE..........................4
SUMMARY OF PROXY STATEMENT-PROSPECTUS........................................6
General..................................................................6
The Meeting..............................................................6
The Companies ...........................................................7
The Merger...............................................................8
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO...............................12
SELECTED CONSOLIDATED FINANCIAL DATA OF WESTPORT............................14
SELECTED CONSOLIDATED FINANCIAL DATA OF LAFAYETTE...........................16
MARKET PRICE AND DIVIDEND MATTERS...........................................18
Market Price and Dividend History.......................................18
Limitations on Dividends Under the Merger Agreement.....................20
Dividend Limitations on HUBCO...........................................20
SUMMARY PRO FORMA FINANCIAL INFORMATION.....................................21
ACTUAL AND PRO FORMA PER SHARE DATA.........................................22
INTRODUCTION ...............................................................24
CERTAIN INFORMATION REGARDING HUBCO ........................................24
General.................................................................24
Recent Developments.....................................................25
CERTAIN INFORMATION REGARDING WESTPORT......................................25
THE MEETING ................................................................25
Purpose of the Meeting..................................................25
Record Date; Voting Rights; Proxies.....................................26
Solicitation of Proxies.................................................27
Quorum..................................................................27
Required Vote...........................................................27
THE PROPOSED MERGER.........................................................28
General Description.....................................................28
Consideration ..........................................................28
Conversion of Westport Stock Options....................................29
Westport Warrants.......................................................29
Cash in Lieu of Fractional Shares ......................................29
Dissenters' Rights of Appraisal.........................................30
Background of and Reasons for the Merger................................30
Interests of Certain Persons in the Merger .............................33
Opinion of Financial Advisor............................................36
Resale Considerations with Respect to the HUBCO Stock...................39
Conditions to the Merger................................................40
Conduct of Business Pending the Merger..................................40
Customary Representations, Warranties and Covenants.....................41
Regulatory Approvals....................................................41
Management and Operations After the Merger..............................42
Exchange of Certificates, Issuance of Shares for Options................42
Effective Time; Amendments; Termination ................................42
Accounting Treatment of the Merger......................................45
Federal Income Tax Consequences ........................................46
PRO FORMA FINANCIAL INFORMATION.............................................47
RIGHTS OF DISSENTING WESTPORT SHAREHOLDERS .................................56
DESCRIPTION OF HUBCO CAPITAL STOCK..........................................58
General ................................................................58
Description of New HUBCO Preferred Stock................................58
Description of HUBCO Common Stock.......................................60
<PAGE>
COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF WESTPORT AND HUBCO..............62
General ................................................................62
Voting Requirements.....................................................62
Cumulative Voting.......................................................63
Classified Board of Directors ..........................................63
Rights of Dissenting Shareholders.......................................63
Shareholder Consent to Corporate Action.................................64
Dividends ..............................................................64
By-laws.................................................................64
Preemptive Rights.......................................................65
Transactions Involving Officers and Directors...........................65
Limitations of Liability of Directors or Officers.......................65
Shareholder Protection Legislation......................................65
Capital Stock ..........................................................66
SHAREHOLDER PROPOSALS.......................................................67
OTHER MATTERS...............................................................67
LEGAL OPINION...............................................................67
EXPERTS.....................................................................67
APPENDIX A Agreement and Plan of Merger by and among HUBCO,
Westport and WBTC...............................................A-1
APPENDIX B Fairness Opinion of Ostrowski & Company, Inc....................B-1
APPENDIX C Section 262 of the Delaware General Corporation Law.............C-1
APPENDIX D Exhibit 2.1(a) to the Merger Agreement -
Terms of the New HUBCO Preferred Stock .........................D-1
<PAGE>
AVAILABLE INFORMATION
HUBCO and Westport are each subject to the information requirements of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and in
accordance therewith file 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
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, 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. The Commission maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission (such as HUBCO and Westport). The address of
the Commission's web site is http://www.sec.gov. In addition, HUBCO Common Stock
and Westport Common Stock are each listed on The Nasdaq Stock Market, and
certain material as to HUBCO and Westport 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 Proxy Statement-Prospectus. As permitted by the rules and
regulations of the Commission, this 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 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 Westport's Amendment No. 1 to Annual Report on Form 10-K for
the year ended December 31, 1995 on Form 10-K/A ("WESTPORT'S 10-K") and
Westport's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996
("WESTPORT'S SECOND QUARTER 10-Q") accompany each copy of this Proxy
Statement-Prospectus delivered to holders of Westport Securities.
The following documents, or portions thereof indicated, initially filed
by Lafayette, an entity recently acquired by HUBCO, with the FDIC and
subsequently filed by HUBCO with the Commission, are incorporated herein by
reference:
1. 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 Exhibits 13(a) and
13(d), respectively, to HUBCO's registration statement on Form
S-4 (File No. 333-01829), amended by Form S-4/A.
2. 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 HUBCO's registration statement on
Form S-4 (File No. 333-01829), amended by Form S-4/A.
Certain other information with respect to Lafayette is included in
HUBCO filings with the Commission under the Exchange Act which are listed below
and are incorporated herein by reference.
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 29, 1996 ("HUBCO'S
10-K").
2. Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996 and June 30, 1996.
3. Current Reports on Form 8-K filed with the Commission on
January 16, 1996, February 20, 1996, March 6, 1996, March 7,
1996, as amended by Form 8-K/A filed with the Commission on
March 18, 1996, May 2, 1996, May 8, 1996, July 2, 1996, July
16, 1996, as amended by Form 8-K/A filed with the Commission
on August 17, 1996 (which Form 8-K, as amended, includes
Lafayette financial statements for periods ended June 30,
1996), August 15, 1996, August 22, 1996, August 22, 1996
(separate filing), September 12, 1996 and September 18, 1996.
4. Form 8-A filed by HUBCO to register its Common and Preferred
Stock pursuant to Section 12(g) of the Exchange Act.
The following documents, or portions thereof, filed by Westport with
the Commission are incorporated herein by reference:
1. Westport's 10-K.
2. Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996 and June 30, 1996.
3. Current Report on Form 8-K filed with the Commission on July
3, 1996.
All documents filed by HUBCO 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 Meeting 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 Westport with the Commission subsequent to the date hereof may also be filed
by HUBCO on Forms 8-K, and thereby be incorporated by reference herein.
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. THESE DOCUMENTS (NOT INCLUDING EXHIBITS
THERETO, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THE INFORMATION INCORPORATED HEREIN), AS WELL AS ADDITIONAL COPIES OF WESTPORT'S
1995 ANNUAL REPORT AND WESTPORT'S SECOND QUARTER 10-Q, ARE AVAILABLE FREE OF
CHARGE TO ANY HOLDER OF WESTPORT SECURITIES, 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; TELEPHONE (201) 236-2641. 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 ENSURE TIMELY DELIVERY OF THE
DOCUMENTS IN ADVANCE OF THE MEETING, ANY REQUEST SHOULD BE MADE BY OCTOBER 17,
1996.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUMMARY OF PROXY STATEMENT-PROSPECTUS
The following is a summary of certain information regarding the matters
to be considered at the Meeting. This summary is necessarily incomplete and is
qualified by the more detailed information contained elsewhere in this Proxy
Statement. Holders of Westport Securities should carefully read the entire Proxy
Statement.
GENERAL
This Proxy Statement solicits, on behalf of the Board of Directors of
Westport Bancorp, Inc. ("WESTPORT"), approval by the holders of shares of common
stock of Westport, $.01 par value per share ("WESTPORT COMMON STOCK"), and by
the holders of shares of Westport Series A Convertible Preferred Stock, $.01 par
value per share ("WESTPORT PREFERRED STOCK"), of the Agreement and Plan of
Merger, dated June 21, 1996 (the "MERGER AGREEMENT"), by and among HUBCO, Inc.
("HUBCO"), Westport and The Westport Bank & Trust Company ("WBTC"). Pursuant to
the Merger Agreement, Westport will be merged with and into HUBCO (the
"MERGER"). Upon consummation of the Merger, each outstanding share of Westport
Common Stock, except for Excluded Shares (as defined below), will be converted
into the right to receive 0.3225 shares (the "EXCHANGE RATIO") of HUBCO common
stock, no par value ("HUBCO COMMON STOCK"), and each outstanding share of
Westport Preferred Stock, except for Excluded Shares, will be converted into the
right to receive one share of a new HUBCO Series B Convertible Preferred Stock
("NEW HUBCO PREFERRED STOCK") having substantially identical terms as the
Westport Preferred Stock, in each case subject to adjustment in certain
circumstances and as more fully described elsewhere herein. See "THE PROPOSED
MERGER".
THE MEETING
Time, Date, Place and Purpose
The Special Meeting of Shareholders of Westport (the "MEETING") will be
held on Thursday, October 24, 1996 at 4:00 p.m. local time, at Westport Bancorp,
Inc., 87 Post Road East, Westport, Connecticut 06880. At the Meeting, holders of
shares of Westport Common Stock and Westport Preferred Stock (together,
"WESTPORT STOCK") will be asked to approve the Merger Agreement. See "THE
MEETING" and "THE PROPOSED MERGER".
Record Date, Quorum, Vote Required
Only holders of record of Westport Stock at the close of business on
September 5, 1996 (the "RECORD DATE") are entitled to notice of and to vote at
the Meeting. At such date, there were 6,070,281 shares of Westport Common Stock
outstanding held by approximately 667 holders of record, and 39,600 shares of
Westport Preferred Stock outstanding held by approximately 24 holders of record.
The presence, in person or by proxy, of at least a majority of Westport Stock
issued and outstanding and entitled to be voted at the Meeting is necessary to
constitute a quorum. The affirmative vote, in person or by proxy, of at least
two-thirds of the outstanding shares of Westport Common Stock and Westport
Preferred Stock entitled to be voted at the Meeting, voting together as a single
class, is required in order to approve and adopt the Merger Agreement. As of the
Record Date, the directors and executive officers of Westport and its affiliates
(including Josiah T. Austin) beneficially owned (excluding shares which could be
acquired upon the exercise of options) an aggregate of 2,384,028 shares of
Westport Common Stock (39.3%) and 26,000 shares of Westport Preferred Stock
(65.7%) issued and outstanding and entitled to vote at the Meeting. The Westport
directors have agreed to vote the shares of Westport Stock that they
beneficially own in favor of the Merger Agreement. As of the Record Date, Josiah
T. Austin (who has the right under the Merger Agreement to designate one of the
directors of HUBCO's Connecticut chartered bank subsidiary, Lafayette American
Bank and Trust Company ("LAFAYETTE"), at the time the Merger becomes effective
(the "EFFECTIVE TIME")), beneficially owned 737,250 shares of Westport Common
Stock (12.1%) and 10,500 shares of Westport Preferred Stock (26.5%). As of the
Record Date, HUBCO owned 264,500 shares of Westport Common Stock (4.4%). See
"THE MEETING".
Recommendation of the Westport Board of Directors
THE WESTPORT BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT HOLDERS OF WESTPORT STOCK VOTE FOR THE
MERGER AGREEMENT.
THE COMPANIES
HUBCO
HUBCO is a bank holding company whose principal operating subsidiaries
are Hudson United Bank ("HUB"), a New Jersey-chartered commercial bank, and
Lafayette. 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. Lafayette's corporate
headquarters are located at 1087 Broad Street, Bridgeport, Connecticut 06604.
The telephone number of HUBCO is (201) 236-2200. HUB is a full-service
commercial bank which primarily serves small and mid-sized businesses and
consumers through 59 branches in Northern New Jersey. Lafayette is a
full-service commercial bank which serves small-to-medium-sized business firms
as well as individuals through 21 banking offices located mainly in Fairfield
and New Haven counties in Connecticut. As of June 30, 1996, prior to its
acquisition of Lafayette (the "LAFAYETTE ACQUISITION") and its acquisition (the
"HOMETOWN ACQUISITION") of Hometown Bancorporation, Inc. ("HOMETOWN"), HUBCO had
consolidated assets of $1.7 billion, consolidated deposits of $1.5 billion and
consolidated stockholders' equity of $130 million. Based on assets as of June
30, 1996, HUBCO was the fifth largest commercial banking company headquartered
in New Jersey.
On July 1, 1996, HUBCO completed the Lafayette Acquisition in a
transaction accounted for as a pooling of interests. As of June 30, 1996,
Lafayette reported assets, deposits and stockholders' equity of $741 million,
$647 million and $59 million, respectively. In connection with the Lafayette
Acquisition, HUBCO announced that it expected to take one-time charges for
merger-related expenses and restructuring charges of approximately $8.5 million,
after tax. At June 30, 1996, Lafayette had incurred approximately $1.5 million
(after tax) of such one-time expenses and charges. HUBCO expects that the
remaining estimated $7.0 million (after tax) of additional one-time expenses and
charges will be included in the results for the third quarter. These
merger-related expenses and charges will impact results for the third quarter of
1996. The previously announced aggregate of $8.5 million (after tax) was only an
estimate and actual results may differ.
On August 30, 1996, HUBCO completed the Hometown Acquisition in a
transaction accounted for as a purchase, and merged Hometown's two-branch
Connecticut bank subsidiary, The Bank of Darien into Lafayette. As of
June 30, 1996, Hometown reported assets of $205 million. HUBCO's strategy is to
enhance profitability and build market share through both internal growth and
acquisitions. Since October, 1990, HUBCO has added over 67 branches and
approximately $2 billion in assets through 16 acquisitions of financial
institutions in both government-assisted and private transactions. HUBCO EXPECTS
TO CONTINUE ITS ACQUISITION STRATEGY.
On September 13, 1996, HUBCO sold $75 million aggregate principal
amount of 8.20% Subordinated Debentures due 2006 in a private placement. The net
proceeds to HUBCO from the debenture offering were $73,737,750, before deducting
HUBCO's expenses in connection with the offering, which are expected to be not
more than $200,000.
See "CERTAIN INFORMATION REGARDING HUBCO"; "AVAILABLE INFORMATION";
"INFORMATION DELIVERED AND INCORPORATED BY REFERENCE"; and "SELECTED
CONSOLIDATED FINANCIAL DATA OF LAFAYETTE".
Westport
Westport is the bank holding company of WBTC, a Connecticut-chartered
bank and trust company, both of which are headquartered at 87 Post Road East,
Westport, Connecticut 06880. The telephone number of Westport is (203) 222-6911.
Westport's principal asset is the capital stock of WBTC, and its principal
business is the business of WBTC. Westport acquired WBTC in October 1984.
As of June 30, 1996, Westport reported total assets of $317 million,
total deposits of $259 million and stockholders' equity of $25 million. WBTC,
which was originally chartered in 1852, operates from its home office in
Westport, Connecticut and from branch offices located in the mid-Fairfield
County, Connecticut communities of Weston, Fairfield, Redding/Georgetown, Greens
Farms, Shelton and Saugatuck. See "CERTAIN INFORMATION REGARDING WESTPORT";
"AVAILABLE INFORMATION"; AND "INFORMATION DELIVERED AND INCORPORATED BY
REFERENCE".
THE MERGER
Description of the Merger
At the Effective Time, Westport will be merged with and into HUBCO,
with HUBCO as the surviving entity. WBTC simultaneously will be merged with
Lafayette, HUBCO's principal Connecticut bank subsidiary (the "BANK MERGER").
See "THE PROPOSED MERGER -- General Description". A COPY OF THE MERGER AGREEMENT
IS ATTACHED AS APPENDIX A TO THIS PROXY STATEMENT.
Consideration
At the Effective Time, each outstanding share of Westport Common Stock
(except for Excluded Shares, as defined below) will be converted into the right
to receive 0.3225 shares of HUBCO Common Stock, and each outstanding share of
Westport Preferred Stock will be converted into the right to receive one share
of New HUBCO Preferred Stock. The New HUBCO Preferred Stock will have terms
substantially identical to those set forth on Exhibit 2.1(a) to the Merger
Agreement. Exhibit 2.1(a) is attached as Appendix D to this Proxy Statement. The
Exchange Ratio (and the terms of the New HUBCO Preferred Stock which are based
on the Exchange Ratio) are subject to adjustments in certain circumstances, as
more fully described in this Proxy Statement. "EXCLUDED SHARES" are those shares
of Westport Stock which (i) are held by Westport as treasury shares, (ii) are
held by HUBCO or any of its subsidiaries (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), or (iii) in the case of Westport Preferred Stock, as to
which dissenters' rights have been validly exercised ("DISSENTING SHARES").
While Westport shareholders are entitled to dissenters' rights of appraisal in
connection with the Merger with respect to shares of Westport Preferred Stock,
there are no dissenters' rights in the Merger with respect to shares of Westport
Common Stock.
Conversion of Westport Stock Options
At the Effective Time, each holder of one or more options to purchase a
share of Westport Common Stock (a "WESTPORT OPTION") granted under Westport's
existing stock option plans and agreements which is or will be by virtue of the
Merger vested (a "VESTED WESTPORT OPTION") will be asked to agree to convert
each such vested option into the right to receive one or more shares of HUBCO
Common Stock. (Westport Options which are to be so converted into HUBCO Common
Stock are referred to herein as "CONVERTING STOCK OPTIONS"). Each Converting
Stock Option will be assigned a value (the "OPTION VALUE") equal to (a) the
"MEDIAN PRE-CLOSING PRICE" of a share 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 minus (b) the stated exercise price
for the Westport Option. At the Effective Time, each Converting Stock 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 Westport Option which is not a Converting Stock Option
(a "CONTINUING STOCK OPTION") will be converted into and become pursuant to the
Merger Agreement an option to purchase HUBCO Common Stock. Each such Continuing
Stock Option which represented the right to purchase one share of Westport
Common Stock shall be converted at the Effective Time into the right to purchase
0.3225 (or such other fraction as the Exchange Ratio may be adjusted to) shares
of HUBCO Common Stock for a per share exercise price equal to the per share
exercise price of the Continuing Stock Option divided by the Exchange Ratio, and
otherwise in all material respects will remain subject to the same terms and
conditions as was the prior Westport Option. The HUBCO 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 Westport Stock Options".
Cash in Lieu of Fractional Shares
No fractional shares of HUBCO Common Stock will be issued in exchange
for either Westport Common Stock or Converting Stock 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 Westport
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".
Dissenters' Rights of Appraisal
UNDER THE DELAWARE GENERAL CORPORATION LAW (THE "DGCL"), WESTPORT
SHAREHOLDERS ARE ENTITLED TO DISSENTERS' RIGHTS OF APPRAISAL IN CONNECTION WITH
THE MERGER WITH RESPECT TO SHARES OF WESTPORT PREFERRED STOCK, BUT NOT WITH
RESPECT TO SHARES OF WESTPORT COMMON STOCK. SEE "RIGHTS OF DISSENTING WESTPORT
SHAREHOLDERS" AND APPENDIX C TO THIS PROXY STATEMENT, WHICH SET FORTH THE STEPS
TO BE TAKEN BY A HOLDER OF WESTPORT PREFERRED STOCK 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, Westport'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 Westport had been combined
for all periods presented. See "PRO FORMA FINANCIAL INFORMATION" and "THE
PROPOSED MERGER -- Accounting Treatment of the Merger".
Required Regulatory Approvals
Consummation of the Merger is subject to prior receipt of approval of
the Bank Merger by the Commissioner (the "COMMISSIONER") of the Connecticut
Department of Banking (the "CTDOB") and the FDIC, and the approval of the Merger
Agreement and the transactions contemplated thereby or waiver of such approval
by the Board of Governors of the Federal Reserve System (the "FRB").
Applications for these approvals or requests for waivers have been filed and
HUBCO and Westport anticipate receiving such approvals or waivers. However,
there can be no assurance that the approvals or waivers will be granted, that
they will be granted on a timely basis, or that they will be granted without
conditions unacceptable to HUBCO or Westport. 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 Agreement and the transactions contemplated thereby by the requisite vote
of the shareholders of Westport; 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 Westport to consummate the
Merger is also conditioned on, among other things, the addition of two persons,
designated by Westport and acceptable to HUBCO, to HUBCO's Board of Directors
(such persons will be Michael H. Flynn, currently Westport's President and CEO,
and David A. Rosow, currently Westport's Chairman, unless HUBCO and Westport
agree to the contrary); the appointment of three persons designated by Westport
and acceptable to HUBCO (such persons will include Messrs. Flynn and Rosow
unless HUBCO and Westport agree to the contrary) and one person designated by
Josiah T. Austin (who will be William D. Rueckert, one of the current directors
of Westport and WBTC) to serve as directors of Lafayette at the Effective Time;
the election of Mr. Flynn as President and CEO of Lafayette, subject to his
agreement to make certain changes in his employment agreement; the appointment
of Mr. Rosow as Chairman of the Executive Committee of HUBCO's Board of
Directors; and written acknowledgment, acceptance and assumption by HUBCO of
existing employment, severance and other compensation agreements between
Westport and certain of its officers and directors. See "Interest of Certain
Persons in the Merger" below and "THE PROPOSED MERGER -- Regulatory Approvals";
"-- Conditions to the Merger"; and "-- Interests of Certain Persons in the
Merger".
Termination Rights
The Merger Agreement may be terminated by either Westport or HUBCO if,
among other reasons, the Effective Time has not occurred by March 31, 1997 other
than due to failure of the terminating party to perform its obligations under
the Merger Agreement. In addition, Westport may terminate the Merger Agreement
if both (i) the HUBCO Common Stock Average Price on the Determination Date is
less than $16.75, and (ii) the number obtained by dividing the HUBCO Common
Stock Average Price on the Determination Date by $20.375 (the HUBCO Common Stock
Closing Price on the Starting Date) is less than the number obtained by dividing
the Index Price on the Determination Date by $1,069.25 (the Index Price on the
Starting Date) and subtracting .075 from the quotient. If the conditions in both
(i) and (ii) above exist and the Westport Board of Directors 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 or, if no FRB approval is required, then the date of the FDIC
approval of the Bank Merger. The "STARTING DATE" is June 24, 1996, the first
trading day after public announcement of the Merger Agreement. The "HUBCO COMMON
STOCK AVERAGE PRICE" is the average closing price of HUBCO Common Stock for the
20 consecutive trading days ending on the Determination Date. The "INDEX PRICE"
on a given date is the closing price of the NASDAQ Bank Index, as reported in
The Wall Street Journal. If Westport terminates the Merger Agreement in order to
approve an "ACQUISITION TRANSACTION" (generally a merger or a similar
transaction with a party unaffiliated with HUBCO) or if, under certain
circumstances, the Merger Agreement is terminated and an Acquisition Transaction
is subsequently closed within 24 months, Westport will be required to pay HUBCO
a termination fee (the "TERMINATION FEE") equal to $3 million, plus the legal
fees and expenses of HUBCO incurred in enforcing its right to the Termination
Fee. The Termination Fee provisions of the Merger Agreement may be considered a
deterrent to other potential acquisitions of control of Westport. For a more
complete description of the foregoing termination rights, and for a description
of other termination rights available to Westport 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 on a
date mutually agreed to by HUBCO and Westport and as soon as practicable (but in
any event within five business days) after receipt of all necessary approvals
and consents, the expiration of all statutory 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 Westport. The parties currently
anticipate closing in late November or early December 1996. Immediately
following the Closing, HUBCO and Westport will file appropriate certificates of
merger with the Secretaries of State of the States of Delaware and New Jersey.
The Effective Time will be the close of business on the first day when both such
certificates have been filed. The Effective Time is dependent upon satisfaction
of all conditions precedent, some of which are not under the control of HUBCO
and/or Westport. See "THE PROPOSED MERGER -- Effective Time; Amendments;
Termination"; and "-- Regulatory Approvals".
Fairness Opinion
The Westport Board of Directors has retained Ostrowski & Company, Inc.
("O&CO") to evaluate the terms of the Merger. O&Co has delivered a written
opinion to the Westport Board of Directors to the effect that, as of the date of
such opinion, the terms of the Merger Agreement were fair to the Westport
shareholders from a financial point of view. HOLDERS OF WESTPORT STOCK ARE URGED
TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY. For information concerning
the matters reviewed, assumptions made and factors considered by O&Co, see "THE
PROPOSED MERGER -- Opinion of Financial Advisor" and Appendix B to this Proxy
Statement, which sets forth O&Co's updated fairness opinion in its entirety.
Westport's obligation to consummate the Merger is subject to its receipt of the
updated fairness opinion attached as Appendix B to this Proxy Statement, and
HUBCO not having taken any action which causes O&Co to withdraw its fairness
opinion prior to the Closing.
Interests of Certain Persons in the Merger
A number of executive officers of Westport 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. Certain
executive officers of Westport have stock options which have become or will
become vested by virtue of the Merger. Also, HUBCO has agreed, among other
things, to the appointment of Mr. Flynn (subject to certain conditions), Mr.
Rosow, and certain other designees of Westport, to executive positions and
positions on the boards of directors of HUBCO and Lafayette and the appointment
of a designee of Josiah T. Austin to the board of directors of Lafayette. Mr.
Austin's director designee is William D. Rueckert, one of the current directors
of Westport and WBTC. In the Merger Agreement, HUBCO has agreed to indemnify
each director, officer, employee or agent of Westport or WBTC, or persons who
have served at the request of Westport or WBTC in any capacity with any other
entity, to the fullest extent permitted under applicable law or Westport's and
WBTC's Certificate of Incorporation and By-laws, as applicable, with respect to
any claims made against such person because he or she is or was serving in such
capacity. In the Merger Agreement, HUBCO has also agreed to provide Westport's
and WBTC's officers and directors with directors' and officers' liability
insurance for at least six years after the Effective Time. See "THE PROPOSED
MERGER -- Conditions to the Merger"; "-- Conversion of Westport Stock Options";
and "-- Interests of Certain Persons in the Merger".
Differences in Shareholders' Rights
Westport is a business corporation organized under the DGCL and HUBCO
is a business corporation incorporated under the New Jersey Business Corporation
Act (the "NJBCA"). The rights of Westport shareholders are currently governed by
the DGCL and Westport's Certificate of Incorporation and By-laws. At the
Effective Time, each Westport 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 DGCL and the NJBCA, and the rights
of shareholders thereunder, differ with respect to voting requirements and
various other matters. See "COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF WESTPORT
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 $130,503 $111,012 $92,404 $93,374 $80,873
Interest expense 43,432 34,618 29,653 37,548 40,871
------ ------ ------ ------ ------
Net interest income 87,071 76,394 62,751 55,826 40,002
Provision for possible loan losses 4,825 4,184 5,527 7,612 4,048
------ ------ ------ ------ ------
Net interest income after
provision for possible
loan losses 82,246 72,210 57,224 48,214 35,954
Other income 18,142 12,155 10,881 10,937 7,696
Other expenses 65,234 54,921 45,622 49,218 35,201
------ ------ ------ ------ ------
Income before income taxes 35,154 29,444 22,483 9,933 8,449
Income tax provision 11,272 10,892 8,300 637 2,657
------ ------ ----- --- -----
Net income $23,882 $18,552 $14,183 $9,296 $5,792
======= ======= ======= ====== ======
PER SHARE DATA:
Weighted average
shares outstanding 14,484 14,201 14,212 12,984 11,280
Net income per share $1.65 $1.31 $1.00 $0.72 $0.51
Cash dividend per common share 0.60 0.36 0.31 0.27 0.22
BALANCE SHEET SUMMARY:
Securities held to maturity $266,203 $562,567 $499,479 $421,744 $218,355
Securities available for sale 312,902 130,633 73,816 14,109 -
Loans 955,924 946,655 735,425 716,424 674,999
Total assets 1,739,568 1,822,886 1,460,036 1,314,402 1,041,522
Deposits 1,535,260 1,590,632 1,296,529 1,180,023 935,847
Stockholders' equity 142,480 127,438 108,830 98,429 71,673
PERFORMANCE RATIOS:
Return on average assets 1.37% 1.11% 1.02% 0.72% 0.61%
Return on average equity 17.85 15.87 13.66 10.81 8.31
Dividend payout 33.52 27.07 29.25 35.53 35.48
Average equity to average assets 7.67 6.98 7.50 6.70 7.30
Net interest margin 5.44 4.99 4.95 4.83 4.66
ASSET QUALITY RATIOS:
Allowance for possible loan
losses to total loans (1) 1.96% 1.90% 2.05% 1.71% 1.50%
Allowance for possible loan losses
to non-performing loans (2) 104.99 80.17 77.66 66.17 87.94
Non-performing loans to
total loans (1)(2) 1.86 2.37 2.64 2.59 1.71
Non-performing assets to total
loans, plus other real estate (1)(2) 2.48 3.24 3.92 4.31 3.49
Net charge-offs to average loans 0.44 0.74 0.43 1.07 0.52
Ratio of earnings to combined
fixed charges and preferred
stock dividend requirements (3):
Excluding Interest on Deposits 8.29x 8.94x 25.79x 14.33x 7.11x
Including Interest on Deposits 1.79 1.83 1.76 1.26 1.21
</TABLE>
- --------
(1) Total loans are net of unearned income and deferred loan fees.
(2) Non-performing loans and non-performing assets do not include loans past
due 90 days or more and still accruing.
(3) The ratio of earnings to combined fixed charges and preferred stock
dividend requirements is computed by dividing the sum of income before
taxes, fixed charges and preferred dividiends by the sum of fixed charges
and preferred dividends. Fixed charges represent interest expenses
(including interest attributable to capital leases, the estimated interest
component of operating lease rental payments and both excluding and
including interest on deposits).
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO
FOR SIX MONTHS ENDED JUNE 30,
------------------------------------
1996 1995
(DOLLARS IN THOUSANDS,
EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C>
EARNINGS SUMMARY
Interest income $61,567 $65,638
Interest expense 20,814 21,911
------ ------
Net interest income 40,753 43,727
Provision for possible loan losses 1,896 2,250
----- -----
Net interest income after
provision for possible
loan losses 38,857 41,477
Other income 9,982 8,436
Other expenses 28,001 33,980
------ ------
Income before income taxes 20,838 15,933
Income tax provision 7,678 4,030
----- -----
Net income $13,160 $11,903
======= ======
PER SHARE DATA:
Weighted average
shares outstanding 13,844 14,545
Net income per share $.95 $.82
Cash dividend per common share .34 .30
BALANCE SHEET SUMMARY:
Securities held to maturity $240,002 $511,100
Securities available for sale 404,993 119,328
Loans 954,136 950,407
Total assets 1,739,866 1,737,458
Deposits 1,487,807 1,525,722
Stockholders' equity 130,114 134,140
PERFORMANCE RATIOS:
Return on average assets 1.52% 1.36%
Return on average equity 19.43 18.49
Dividend payout 35.79 36.59
Average equity to average assets 7.66 7.36
Net interest margin 5.17 5.44
ASSET QUALITY RATIOS:
Allowance for possible loan
losses to total loans (1) 1.89 1.92
Allowance for possible loan
losses to non-performing loans (2) 85.98 86.64
Non-performing loans to
total loans (1)(2) 2.20 2.21
Non-performing assets to total
loans, plus other real estate (1)(2) 2.58 2.81
Net charge-offs to average loans 0.53 0.42
Ratio of earnings to combined
fixed charges and preferred
stock dividend requirements (3):
Excluding Interest on Deposits 10.35x 6.05x
Including Interest on Deposits 2.00 1.70
</TABLE>
--------
(1)Total loans are net of unearned income and deferred loan fees.
(2)Non-performing loans and non-performing assets do not
include loans past due 90 days or more and still accruing.
(3)The ratio of earnings to combined fixed charges and
preferred stock dividend requirements is computed by
dividing the sum of income before taxes, fixed charges and
preferred dividiends by the sum of fixed charges and
preferred dividends. Fixed charges represent interest
expenses (including interest attributable to capital
leases, the estimated interest component of operating
lease rental payments and both excluding and including
interest on deposits).
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF WESTPORT
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1995 1994 1993 1992 1991
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATIONS SUMMARY:
Interest income $20,725 $17,334 $15,709 $16,719 $20,616
Interest expense 6,027 4,749 5,684 8,034 12,218
----- ----- ----- ----- ------
Net interest income 14,698 12,585 10,025 8,685 8,398
Provision for loan losses 1,500 1,800 2,890 2,500 6,232
----- ----- ----- ----- -----
Net interest income after
provision for possible
loan losses 13,198 10,785 7,135 6,185 2,166
Other income 4,005 3,928 5,384 4,996 6,207
OREO expense - net 137 319 552 462 1,141
Other expenses 11,241 11,268 11,017 11,048 13,104
------ ------ ------ ------ ------
Income (loss) before income taxes 5,825 3,126 950 (329) (5,872)
Income tax provision (benefit) (1,005) (1,236) (252) 13 15
------- ------- ----- -- --
Net income (loss) $6,830 $4,362 $1,202 $(342) $(5,887)
====== ===== ===== ===== =======
PER SHARE DATA:
Weighted average number of
common shares and common
stock equivalents utilized in the
earnings per share calculation (1) -
Primary 10,365,000 10,382,000 10,513,000 2,192,000 2,122,000
Fully diluted (2) 10,469,000 --- --- --- ---
Net income (loss) per
common share -
Primary $0.66 $0.44 $0.12 $(0.16) $(2.77)
Fully diluted (2) 0.65 --- --- --- ---
Cash dividends declared
per common share 0.09 --- --- --- ---
Book value per share -
fully diluted (3)(4) 2.44 1.86 1.52 1.38 2.89
BALANCE SHEET SUMMARY:
Securities held to maturity $--- $43,206 $42,604 $--- $10,794
Securities available for sale 85,338 27,190 48,397 29,923 14,942
Loans (5) 178,052 186,648 158,942 181,633 178,253
Total assets 312,917 283,504 272,657 251,714 244,454
Deposits 274,670 253,958 255,516 237,836 228,767
Stockholders' equity 24,282 16,398 12,405 11,017 6,125
PERFORMANCE RATIOS:
Return on average assets 2.41% 1.63% 0.48% (0.14)% (2.32)%
Return on average equity (3) 33.06 31.77 10.34 (3.64) (67.16)
Dividend payout ratio 13.64 --- --- --- ---
Average equity to average
assets (3) 7.28 5.12 4.69 3.89 3.46
Net interest margin 5.7 5.1 4.5 4.0 3.7
ASSET QUALITY RATIOS:
Allowance for possible loan
losses to total loans (5) 1.60% 1.79% 1.90% 2.20% 2.40%
Allowance for possible loan losses
to non-performing loans (6) 109.73 40.55 25.18 24.78 17.73
Non-performing loans to total loans (5)(6) 1.46 4.41 7.56 8.88 13.53
Non-performing assets to total loans (5)(6) 1.46 4.60 9.27 12.03 16.36
Net charge-offs to average loans 1.14 .87 2.23 1.68 4.03
- --------------------------------------------
(1) Assumes the conversion and/or exercise of preferred stock, warrants and stock options in 1995, 1994 and 1993 using the
"treasury stock method". For 1992 and 1991, this computation excludes stock options, warrants and preferred stock because their
effect would have been antidilutive.
(2) Fully diluted earnings per share were not applicable in 1994, 1993, 1992 and 1991.
(3) 1995, 1994, 1993 and 1992 amounts include the convertible, noncumulative preferred shares issued in 1992.
(4) 1995, 1994, 1993 and 1992 include the assumed issuance of additional Common Stock and the related proceeds from the assumed
exercise of certain stock options and warrants and the assumed conversion of preferred stock.
(5) Loans are net of deferred loan fees amounting to $260,000, $400,000, $337,000, $457,000 and $378,000 for 1995, 1994, 1993,
1992, and 1991, respectively.
(6) Non-performing loans include nonaccrual loans, loans past due 90 days or more and still accruing and other impaired
loans. Non-performing assets include the aforementioned and other real estate owned.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF WESTPORT
FOR THE SIX MONTHS ENDED JUNE 30,
-----------------------------------------
1996 1995
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
<S> <C> <C>
OPERATIONS SUMMARY:
Interest income $10,898 $10,194
Interest expense 3,253 2,905
Net interest income ----- -----
Provision for loan losses 7,645 7,289
600 750
--- ---
Net interest income after
provision for possible
loan losses 7,045 6,539
Other income 2,144 1,708
OREO expense - net 1 109
Other expenses 5,598 5,454
----- -----
Income before income taxes 3,590 2,684
Income tax provision (benefit) 1,491 (558)
----- ----
Net income $2,099 $3,242
===== =====
PER SHARE DATA:
Weighted average number of
common shares and common
stock equivalents utilized in the
earnings per share calculation (1) -
Primary 10,556,441 10,191,198
Fully diluted (2) --- ---
Net income per
common share -
Primary $0.20 $0.32
Fully diluted (2) -- --
Cash dividends declared
per common share 0.09 0.02
Book value per share -
fully diluted (3)(4) 2.49 2.18
BALANCE SHEET SUMMARY:
Securities held to maturity --- 45,016
Securities available for sale 90,814 24,150
Loans (5) 182,680 178,983
Total assets 316,648 287,108
Deposits 258,891 238,648
Stockholders' equity 25,115 21,366
PERFORMANCE RATIOS:
Return on average assets 1.41% 2.33
Return on average equity (3) 17.06 35.35%
Dividend payout ratio 45.00 6.25
Average equity to average assets (3) 8.24 6.59
Net interest margin 5.6 5.7
ASSET QUALITY RATIOS:
Allowance for possible loan
losses to total loans (5) 1.71% 1.70%
Allowance for possible loan losses
to non-performing loans (6) 74.22 47.17
Non-performing loans to total loans (5)(6) 2.30 3.60
Non-performing assets to total loans (5)(6) 2.33 3.64
Net charge-offs to average loans 0.18 0.57
</TABLE>
- ------------------------------------
(1) Assumes the conversion and/or exercise of preferred stock, warrants and
stock options in 1996 and 1995 using the "treasury stock method."
(2) Fully diluted earnings per share were not applicable in 1996 and 1995.
(3) 1996 and 1995 amounts include the convertible, noncumulative preferred
shares issued in 1992.
(4) 1996 and 1995 include the assumed issuance of additional Common Stock and
the related proceeds from the assumed exercise of certain stock options and
warrants and the assumed conversion of preferred stock.
(5) Loans are net of deferred loan fees amounting to $309,000 and $232,000 for
1996 and 1995, respectively.
(6) Non-performing loans include nonaccrual loans, loans past due 90 days or
more and still accruing and other impaired loans. Non-performing assets
include the aforementioned and other real estate owned.
<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 28,252 25,499 2,481 15,878 16,007
possible loan losses
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 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(2) 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
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 4.92 5.00 4.36 4.89 4.45
ASSET QUALITY RATIOS:
Allowance for possible loan losses
to total loans (2) 1.65% 2.21% 3.75% 3.48% 2.71%
Allowance for possible loan losses
to non-performing loans (3) 110.07 80.51 34.29 38.16 30.45
Non-performing loans to total
loans (2)(3) 1.50 2.75 10.95 9.11 8.91
Non-performing assets to total
loans, plus other real estate and
assets for sale (2)(3) 2.53 4.28 12.32 10.90 10.22
Net charge-off to average total
loans .92 2.49 3.93 2.77 1.74
- -------------------
(1) Represents the effect of a change in accounting method for purchased mortgage servicing rights.
(2) Total loans are net of unearned income and deferred loan fees and before the allowance for possible loan losses.
(3) Non-performing loans and non-performing assets do not include accruing loans past due 90 days or more.
</TABLE>
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF LAFAYETTE
FOR SIX MONTHS ENDED JUNE 30,
--------------------------------
1996 1995
(DOLLARS IN THOUSANDS,
EXCEPT FOR PER SHARE AMOUNTS)
EARNINGS SUMMARY:
Interest income $27,306 $25,283
Interest expense 10,693 9,863
------ -----
Net interest income 16,613 15,420
Provision for possible loan losses 2,500 1,990
----- -----
Net interest income after provision
for possible loan losses 14,113 13,430
Other income 2,551 3,654
Other expenses 14,922 13,923
------ ------
Income before income taxes 1,742 3,161
Provision (benefit) for income taxes 952 (6,118)
--- ------
Net income $790 $9,279
==== ======
PER SHARE DATA:
Weighted average common shares
outstanding:
Primary 10,333,896 10,195,202
Fully diluted 10,362,741 10,230,048
Net income $0.08 $0.91
Cash Dividends Declared 0.15 0.00
BALANCE SHEET SUMMARY:
Securities held to maturity $25,142 $116,208
Securities available for sale 100,575 61,341
Loans (1) 548,005 467,384
Total assets 741,208 708,375
Deposits 646,949 571,011
Shareholders' equity 58,564 49,777
PERFORMANCE RATIOS:
Return on average assets (2) 0.62% 2.76%
Return on average equity (2) 7.56 45.31
Dividend payout 190.00 0.00
Average equity to average assets 8.17 6.09
Net interest margin 5.02 4.99
ASSET QUALITY RATIOS:
Allowance for possible loan losses
to total loans (1) 1.76% 2.09%
Allowance for possible loan
losses to non-performing loans (3) 96.25 111.36
Non-performing loans to
total loans (1)(3) 1.83 1.87
Non-performing assets to other
total loans, plus real estate owned(1)(3) 2.39 3.11
Net charge-offs to average
total loans 0.26 0.42
- ----------------- --
(1) Total loans are net of unearned income and deferred loan fees and before
the allowance for possible loan losses.
(2) Excludes merger related charges of $2,088 in 1996.
(3) Non-performing loans and non-performing assets do not include accruing
loans past due 90 days or more.
<PAGE>
MARKET PRICE AND DIVIDEND MATTERS
MARKET PRICE AND DIVIDEND HISTORY
HUBCO Common Stock and Westport Common Stock are quoted on The Nasdaq
Stock Market (formerly known as the "Nasdaq National Market System") under the
symbols "HUBC" and "WBAT," respectively. The following tables set forth, for the
periods indicated, the high and low closing prices per share of HUBCO Common
Stock and Westport Common Stock, as reported by The Nasdaq Stock Market, 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 "HUBCO STOCK SPLIT") paid January
14, 1995 to record holders of HUBCO Common Stock on January 3, 1995 and
Lafayette's 1-for-2 reverse stock split in 1994 (the "LAFAYETTE REVERSE STOCK
SPLIT").
EQUIVALENT
MARKET MARKET PRO FORMA
PRICE PER SHARE PRICE PER SHARE MARKET PRICE PER
OF HUBCO OF WESTPORT SHARE OF WESTPORT
COMMON STOCK COMMON STOCK COMMON STOCK(1)
HIGH LOW HIGH LOW HIGH LOW
1994:
First Quarter.......... $15.83 $13.42 $3.50 $2.50 $5.11 $4.33
Second Quarter......... 15.00 13.33 3.25 2.25 4.84 4.30
Third Quarter.......... 15.17 13.13 3.50 2.25 4.89 4.23
Fourth Quarter......... 15.00 12.50 3.50 2.75 4.84 4.03
1995:
First Quarter.......... 17.38 14.67 5.00 2.88 5.61 4.73
Second Quarter......... 18.00 15.50 6.00 4.00 5.81 5.00
Third Quarter.......... 21.13 17.25 5.75 4.50 6.81 5.56
Fourth Quarter......... 22.13 19.25 7.00 4.75 7.14 6.21
1996:
First Quarter.......... 22.75 18.38 7.00 6.00 7.34 5.93
Second Quarter......... 21.75 18.25 6.75 5.00 7.01 5.89
Third Quarter (through
September 17, 1996)... 21.75 19.25 6.63 5.63 7.01 6.21
- -------------
(1) Equivalent pro forma market price per share of Westport Common
Stock represents the high and low closing prices per share of HUBCO Common
Stock, multiplied by the 0.3225 Exchange Ratio.
<PAGE>
HUBCO WESTPORT EQUIVALENT
COMMON STOCK COMMON STOCK PRO FORMA CASH
DIVIDENDS DIVIDENDS DIVIDEND PER SHARE
PER SHARE PER SHARE OF WESTPORT
COMMON STOCK (1)
1994:
First Quarter........... $.08 $ - $.0258
Second Quarter.......... .08 - .0258
Third Quarter........... .10 - .0323
Fourth Quarter.......... .10 - .0323
1995:
First Quarter........... .15 - .0484
Second Quarter.......... .15 .02 .0484
Third Quarter........... .15 .02 .0484
Fourth Quarter.......... .15 .05(2) .0484
1996:
First Quarter........... .17 .035 .0548
Second Quarter.......... .17 .055 .0548
Third Quarter (through
September 17, 1996) ... .17 .055 .0548
--------------------
(1) Equivalent pro forma cash dividends per share of Westport Common Stock
represents HUBCO historical dividend rates per share, multiplied by the
0.3225 Exchange Ratio, rounded to the nearest hundredth of a 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 1 and December
1, would be $.68. On an equivalent pro forma basis, such current annualized
HUBCO dividend per share of Westport Common Stock would be $.2193, based on
the 0.3225 Exchange Ratio, rounded to the nearest hundredth of a 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.
(2) Westport paid two dividends in the fourth quarter of 1995.
The following table presents for (i) June 20, 1996, the last full trading
day before public announcement of the signing of the Merger Agreement, and (ii)
the most recent date prior to the date of this Proxy Statement on which such
stock traded, the reported closing price per share of HUBCO Common Stock and
Westport Common Stock on The Nasdaq Stock Market and the equivalent price per
share of Westport Common Stock computed by multiplying the closing price of
HUBCO Common Stock on each of the dates specified by the Exchange Ratio of
0.3225.
EQUIVALENT
PRICE PER SHARE
HUBCO WESTPORT OF WESTPORT
COMMON STOCK COMMON STOCK COMMON STOCK
June 20, 1996........ $20.13 $5.75 $6.49
September 17, 1996.... 21.13 -- 6.81
September 13, 1996 -- 6.50 --
<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 WESTPORT COMMON
STOCK WILL RECEIVE IN THE MERGER MAY INCREASE OR DECREASE PRIOR TO AND FOLLOWING
THE MERGER. HUBCO AND WESTPORT SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE HUBCO COMMON STOCK AND THE WESTPORT COMMON STOCK. IN
ADDITION, PAST DIVIDENDS PAID IN RESPECT OF HUBCO COMMON STOCK AND WESTPORT
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 WESTPORT COMMON STOCK BEFORE OR
AFTER THE EFFECTIVE TIME.
LIMITATIONS ON DIVIDENDS UNDER THE MERGER AGREEMENT
The Merger Agreement prohibits Westport from declaring, setting aside
or paying any dividend or other distribution in respect of its capital stock,
except that Westport may declare, set aside or 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. Previously, Westport has declared and paid a quarterly cash dividend
on Westport Common Stock of $.035 per share and on Westport Preferred Stock of
$3.50 per share on April 1, 1996 to shareholders of record on March 22, 1996,
and a quarterly cash dividend on Westport Common Stock of $.055 per share and on
Westport Preferred Stock of $5.50 per share on July 10, 1996 to shareholders of
record on July 1, 1996 and on September 5, 1996 to shareholders of record on
August 26, 1996. In addition, Westport is expected to pay a dividend on Westport
Common Stock of $.055 per share and a dividend on Westport Preferred Stock of
$5.50 per share as of December 1, 1996 and March 1, 1997 if the Merger has not
earlier been consummated or terminated.
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 on its common stock
since its inception in 1982. The New HUBCO Preferred Stock will also be entitled
to receive dividends when and if declared by HUBCO's Board of Directors out of
funds legally available therefor. HUBCO will have no obligation to pay dividends
on the New HUBCO Preferred Stock regardless of any dividends which may be paid
on the HUBCO Common Stock. The primary source for HUBCO's dividends is dividends
from HUBCO's banking subsidiaries 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. Under the Banking Law of Connecticut
(the "BLC"), Lafayette may pay dividends only from its net profits, and the
total of all dividends in any calendar year may not (unless specifically
approved by the Commissioner) exceed the total of its net profits of that year
combined with its retained net profits of the preceding two years. 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 six month period ended June 30, 1996 and for the
years ended December 31, 1995, 1994 and 1993, and the Pro Forma Unaudited
Combined Condensed Balance Sheet at June 30, 1996. The HUBCO, Lafayette and
Westport Pro Forma combined financial information gives effect to HUBCO's
proposed acquisition of Westport and the Lafayette Acquisition in transactions
accounted for as poolings 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 June 30, 1996. The HUBCO, Lafayette,
Hometown and Westport Pro Forma combined financial information gives effect to
the Lafayette and Westport acquisitions, as described above, and also gives
effect to the Hometown Acquisition reflected as a purchase effective as of
January 1, 1995 for statement of income purposes and on June 30, 1996 for
balance sheet purposes. See "PRO FORMA FINANCIAL INFORMATION". The Pro Forma
information is based on the historical financial statements of HUBCO, Lafayette,
Westport and Hometown, certain of which are incorporated by reference herein.
See "INFORMATION DELIVERED AND INCORPORATED BY REFERENCE". The Pro Forma
financial information assumes an Exchange Ratio of 0.3225 shares of HUBCO Common
Stock for each share of Westport Common Stock outstanding.
The summary unaudited Pro Forma financial 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.
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 unaudited
combined condensed statements of income for the years ended December 31, 1994
and 1993.
The income tax provision (benefit) for Lafayette and Westport
includes the effect of reducing Lafayette's and Westport's valuation allowance
with respect to federal deferred tax assets. Considering the combined operating
results, it is unlikely that HUBCO would have established a valuation allowance
with respect to its federal deferred tax assets had the companies always been
combined. The pro forma unaudited combined statements of income have been
adjusted to reflect what the changes in the valuation allowance would have been
had the companies always been combined.
On September 13, 1996, HUBCO sold $75 million aggregate
principal amount of 8.20% Subordinated Debentures due 2006 in a private
placement. The net proceeds to HUBCO from the debenture offering were
$73,737,750, before deducting HUBCO's expenses in connection with the offering,
which are expected to be not more than $200,000. See "CERTAIN INFORMATION
REGARDING HUBCO -- Recent Developments." The Pro Forma financial information
does not reflect the sale of the debentures.
<PAGE>
<TABLE>
PRO FORMA UNAUDITED COMBINED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<CAPTION>
FOR THE SIX MONTHS FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
ENDED JUNE 30, 1996 1995 1994 1993
------------------- ---- ---- ----
<S> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net interest income before provision for possible loan
losses............................................... $67,973 $138,872 $117,803 $98,757
Provision for possible loan losses...................... 5,046 9,590 9,309 31,917
Net interest income after provision for possible loan
losses............................................... 62,927 129,282 108,494 66,840
Income (loss) before income taxes....................... 25,589 47,508 35,983 (2,569)
Net income (loss) before cumulative effect of change
in accounting principle.............................. 15,351 33,162 23,388 (2,890)
Earnings (loss) per common share before cumulative
effect of change in accounting principle:
Primary.............................................. 0.67 1.42 1.05 (.16)
Fully diluted........................................ 0.67 1.41 1.04 (.16)
PERFORMANCE RATIO:
Ratio of earnings to combined fixed charges and
preferred stock dividend requirements: (1)
Excluding Interest on Deposits...................... 6.46x 4.83x 5.84x .36x
Including Interest on Deposits...................... 1.66 1.59 1.65 .95
AS OF JUNE 30, 1996
-------------------
BALANCE SHEET:
Total assets....................................... $2,976,731
Total deposits..................................... 2,568,038
Total stockholders' equity......................... 198,699
Book value per common share........................ 8.80
- -----------------------
(1) The ratio of earnings to combined fixed charges and preferred stock dividends is computed by dividing the sum of income
before tax, fixed charges and preferred dividends by the sum of fixed charges and preferred dividends. Fixed charges
represents interest expenses both excluding and including interest on deposits. These pro forma ratios assume a preferred
dividend payment of $5.50 per share of New HUBCO Preferred Stock.
</TABLE>
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 Westport Common
Stock, both on an actual (historical) basis and on a pro forma combined basis,
as adjusted for the HUBCO Stock Split and the Lafayette Reverse Stock Split. The
actual per share data have been derived from the consolidated financial
statements of HUBCO and Westport incorporated by reference herein. See
"INFORMATION DELIVERED AND INCORPORATED BY REFERENCE".
The Pro Forma unaudited book value per share data for the six
months ended June 30, 1996 and the Pro Forma unaudited net income per share data
at June 30, 1996 and for the years ended December 31, 1995, 1994 and 1993 have
been derived from the Pro Forma unaudited combined condensed financial
statements of HUBCO and Westport, giving effect to HUBCO's acquisitions of
Lafayette and Westport accounted for as poolings of interests, and giving effect
to the Hometown Acquisition accounted for under the purchase method. Pro Forma
unaudited 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 Westport incorporated by reference herein and the pro
forma combined condensed financial statements of HUBCO, Westport and Lafayette
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.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR ENDED DECEMBER 31,
ENDED JUNE 30, 1996 1995 1994 1993
<S> <C> <C> <C> <C>
CASH DIVIDENDS DECLARED PER COMMON SHARE:
HUBCO - Actual (1) $ .34 $ .60 $ .36 $ .31
Westport- Actual (1) .09 .09 - -
Westport - pro forma equivalent .11 .19 .12 .10
NET INCOME (LOSS) PER COMMON SHARE:
HUBCO - Actual:
Primary .95 1.67 1.33 1.00
Fully diluted .95 1.65 1.31 1.00
Westport - Actual:
Primary .20 .66 .44 .12
Fully diluted .20 .65 .44 .12
HUBCO, Lafayette, Hometown and Westport, pro forma:
Primary (2) .67 1.42 1.05 (.16)
Fully diluted (2) .67 1.41 1.04 (.16)
Westport, pro forma equivalent:
Primary .22 .46 .37 (.04)
Fully diluted .22 .45 .36 (.04)
</TABLE>
AS OF JUNE 30,
1996
--------------
NET BOOK VALUE PER COMMON
SHARE:
HUBCO - Actual $9.63
Westport- Actual 2.49
HUBCO, Lafayette and 8.80
Westport pro forma (3)
Westport, pro forma equivalent 2.84
(1) For information regarding HUBCO's and Westport's dividends, and the market
price of HUBCO and Westport Common Stock, see "MARKET PRICE AND DIVIDEND
MATTERS".
(2) Represents 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 historical weighted
average shares outstanding of HUBCO Common Stock, (ii) the weighted average
outstanding shares of Growth Financial Corp. ("GROWTH") and Lafayette adjusted
to equivalent shares of HUBCO Common Stock, as of the earliest applicable period
presented and (iii) for the six months ended June 30, 1996, 38,759 common share
equivalents applicable to the warrants for 61,477 shares of HUBCO Common Stock
issued in the Lafayette Acquisition for the 104,554 Lafayette Warrants, (iv)
2,071,467 shares of HUBCO Common Stock assumed to be issued pursuant to the
Merger and 1,277,100 common share equivalents applicable to the conversion to
common shares of the preferred stock assumed to be issued pursuant to the
Merger.
(3) Represents the pro forma combined net book value of HUBCO, Lafayette and
Westport 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 HUBCO's acquisition of Growth (the "GROWTH
ACQUISITION") and (iii) 5,720,626 shares of HUBCO Common Stock assumed to be
issued pursuant to the Lafayette Acquisition and 38,759 Common Stock equivalents
applicable to the Lafayette Warrants and (iv) 2,071,467 shares of HUBCO Common
Stock assumed to be issued pursuant to the Merger, and 1,277,100 Common share
equivalents applicable to the conversion to common shares of the preferred stock
assumed to be issued pursuant to the Merger.
<PAGE>
INTRODUCTION
This Proxy Statement solicits, on behalf of the Board of Directors of
Westport Bancorp, Inc. ("WESTPORT"), approval by the holders of shares of common
stock of Westport, $.01 par value per share ("WESTPORT COMMON STOCK"), and by
the holders of shares of Westport Series A Convertible Preferred Stock, $.01 par
value per share ("WESTPORT PREFERRED Stock"), of the Agreement and Plan of
Merger, dated June 21, 1996 (the "MERGER AGREEMENT"), by and among HUBCO, Inc.
("HUBCO"), Westport and The Westport Bank & Trust Company ("WBTC"). Pursuant to
the Merger Agreement, Westport will be merged with and into HUBCO (the
"MERGER"). A copy of the Merger Agreement is attached as Appendix A to this
Proxy Statement. Upon consummation of the Merger, each outstanding share of
Westport Common Stock, except for Excluded Shares (as defined below), will be
converted into the right to receive 0.3225 shares (the "EXCHANGE RATIO") of
HUBCO common stock, no par value ("HUBCO COMMON STOCK"), and each share of
Westport Preferred Stock will be converted into the right to receive one share
of a newly created HUBCO Series B Convertible Preferred Stock ("NEW HUBCO
PREFERRED STOCK") having substantially identical terms as the Westport Preferred
Stock, in each case subject to adjustment in certain circumstances and as more
fully described elsewhere herein. The New HUBCO Preferred Stock will have terms
substantially identical to those set forth in Exhibit 2.1(a) to the Merger
Agreement. Exhibit 2.1(a) is attached as Appendix D to this Proxy Statement. See
"THE PROPOSED MERGER".
All information and statements contained or incorporated by reference
herein with respect to Westport were supplied by Westport 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 New Jersey corporation and registered bank holding company
whose principal operating subsidiaries are Hudson United Bank ("HUB"), a New
Jersey-chartered commercial bank, and Lafayette American Bank and Trust Company
("LAFAYETTE"), a Connecticut chartered 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. Lafayette's corporate headquarters are located at 1087 Broad Street,
Bridgeport, Connecticut 06604. The telephone number of HUBCO is (201) 236-2200.
HUB is a full-service commercial bank which primarily serves small and mid-sized
businesses and consumers through 61 branches in Northern New Jersey. Lafayette
is a full-service commercial bank which serves small-to-medium-sized business
firms as well as individuals through 21 banking offices located mainly in
Fairfield and New Haven counties in Connecticut. As of June 30, 1996, prior to
its acquisition of Lafayette (the "LAFAYETTE ACQUISITION") and its acquisition
(the "HOMETOWN ACQUISITION") of Hometown Bancorporation, Inc. ("HOMETOWN"),
HUBCO had consolidated assets of $1.7 billion, consolidated deposits of $1.5
billion and consolidated stockholders' equity of $130 million. Based on assets
as of June 30, 1996, HUBCO was the fifth 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 67 branches and approximately $2 billion in assets
through 16 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 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. From time to
time, HUBCO may issue new equity or debt securities to fund its acquisition
plans or for other purposes. See "PRO FORMA FINANCIAL INFORMATION".
RECENT DEVELOPMENTS
In connection with the Lafayette Acquisition, HUBCO announced that it
expected to take one-time charges for merger-related expenses and restructuring
charges of approximately $8.5 million, after tax. At June 30, 1996, Lafayette
had incurred approximately $1.5 million (after tax) of such one-time expenses
and charges. HUBCO expects that the remaining estimated $7.0 million (after tax)
of additional one-time expenses and charges will be included in the results for
the third quarter. These merger-related expenses and charges will impact results
for the third quarter of 1996. The previously announced aggregate of $8.5
million, (after tax) was only an estimate and actual results may differ.
On August 15, 1996, Lafayette entered into an agreement to acquire UST
Bank/Connecticut, subsidiary of UST Corp., in an all cash transaction. Under the
terms of the agreement, Lafayette will acquire by merger UST Bank/Connecticut
and will pay to UST Corp. cash equal to UST Bank/Connecticut's capital (less its
deferred tax asset), plus a 7% deposit premium on UST Bank/Connecticut's
deposits. The acquisition is structured as a taxable cash merger which will
allow HUBCO to deduct the deposit premium for tax purposes. UST Bank/Connecticut
is a $112 million asset commercial bank with $100 million in deposits and four
offices in Fairfield County, Connecticut. After certain of its loans are sold to
an affiliate of UST Corp. as contemplated by the merger agreement, UST
Bank/Connecticut will have $63 million in loans. Consummation of the merger is
subject to approval by Federal and Connecticut bank regulatory authorities and
other customary conditions.
On August 16, 1996, HUB entered into an agreement to acquire the
Clifton branch of Interchange State Bank which has deposits totaling $13.6
million. On June 28, 1996 HUB signed an agreement to sell its Kinnelon branch,
with $11 million in deposits, to The Ramapo Bank.
On August 30, 1996, HUBCO closed the Hometown Acquisition and
Hometown's subsidiary bank, The Bank of Darien, was merged into Lafayette.
On September 13, 1996, HUBCO sold $75 million aggregate principal
amount of 8.20% Subordinated Debentures due 2006 in a private placement. The net
proceeds to HUBCO from the debenture offering were $73,737,750, before deducting
Hubco's expenses in connection with the offering, which are expected to be
not more than $200,000.
CERTAIN INFORMATION REGARDING WESTPORT
Westport is the bank holding company of WBTC, a Connecticut-chartered
bank and trust company, both of which are headquartered in Westport,
Connecticut. Westport's principal asset is the capital stock of WBTC, and its
principal business is the business of WBTC. Westport acquired WBTC in October
1984.
As of June 30, 1996, Westport reported total assets of $317 million,
total deposits of $259 million and stockholders' equity of $25 million. WBTC,
which was originally chartered in 1852, operates from its home office in
Westport, Connecticut and from branch offices located in the mid-Fairfield
County, Connecticut communities of Weston, Fairfield, Redding/Georgetown, Greens
Farms, Shelton and Saugatuck. See "AVAILABLE INFORMATION" AND "INFORMATION
DELIVERED AND INCORPORATED BY REFERENCE".
THE MEETING
PURPOSE OF THE MEETING
This Proxy Statement-Prospectus is first being mailed to the holders of
Westport Stock on or about September 19, 1996 and is accompanied by a proxy card
furnished in connection with the solicitation of proxies by the Westport Board
of Directors for use at the Meeting. The Meeting is scheduled to be held on
Thursday, October 24, 1996 at 4:00 p.m., at Westport Bancorp, Inc., 87 Post Road
East, Westport, Connecticut 06880. At the Meeting, the holders of Westport Stock
will consider and vote upon the approval of the Merger Agreement and any other
matters as may properly be brought before the Meeting and at any adjournments or
postponements thereof.
THE BOARD OF DIRECTORS OF WESTPORT HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND RECOMMENDS A VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT.
RECORD DATE; VOTING RIGHTS; PROXIES
The Board of Directors of Westport has fixed the close of business on
September 5, 1996 as the record date for determining the holders of Westport
Stock entitled to receive notice of and to vote at the Meeting (the "RECORD
DATE"). Only holders of record of Westport Stock at the close of business on
that date will be entitled to vote at the Meeting or at any adjournment or
postponement thereof.
At the close of business on the Record Date, there were 6,070,281
shares of Westport Common Stock and 39,600 shares of Westport Preferred Stock
issued and outstanding and entitled to vote at the Meeting. Each share of
Westport Common Stock will be entitled to one vote (a total of 6,070,281 votes)
and each share of Westport Preferred Stock will be entitled to 100 votes (a
total of 3,960,000 votes) upon each matter properly submitted at the Meeting or
at any adjournment or postponement thereof. The holders of Westport Common Stock
and Westport Preferred Stock will vote as one class on the matters that come
before the Meeting. At the Meeting, Westport shareholders will be entitled to
cast a total of 10,030,281 votes.
All properly executed proxies will, unless such proxies have been
previously revoked, be voted in accordance with the instructions indicated on
such proxies. IF NO INSTRUCTIONS ARE INDICATED THEREON, SUCH SHARES WILL BE
VOTED "FOR" APPROVAL OF THE MERGER AGREEMENT. The Board of Directors of Westport
is not aware of any matters other than as described in the Notice of Special
Meeting that are to come before the Meeting. If any other matter or matters are
properly presented for action before the Meeting, the persons named in the
enclosed form of proxy will have the discretion to vote on such matters in
accordance with their best judgment, unless such authorization is withheld.
The presence of a shareholder at the Meeting will not automatically
revoke such shareholder's proxy. A shareholder may revoke any proxy that he or
she has given any time prior to its exercise. To do so, the shareholder must
file a written notice of revocation with, or deliver a duly executed proxy
bearing a later date to, John J. Henchy, Secretary, Westport Bancorp, Inc., 87
Post Road East, Westport, Connecticut 06880, or attend the Meeting and vote in
person.
Votes cast by proxy or in person at the Meeting will be tabulated by
the election inspectors appointed for the Meeting, who will determine whether or
not a quorum is present. Where, as to any matter submitted to a vote of the
Westport shareholders, proxies are marked as abstentions (or shareholders appear
in person but abstain from voting) or a broker indicates on a proxy that it does
not have discretionary authority with respect to certain shares, such
abstentions and "broker non-votes" will be treated as shares that are present
and entitled to vote for purposes of determining the presence of a quorum.
Westport has adopted and is the sponsor of a combined employee stock
ownership and 401(k) savings profit sharing plan, a portion of which constitutes
an "employee stock ownership plan" under applicable law (the "WESTPORT ESOP").
For the purposes of this Proxy Statement-Prospectus, with respect to the
Westport ESOP, the term "participant" shall be deemed to include the beneficiary
of a deceased participant. The Westport ESOP holds 29,437 shares of Westport
Common Stock, all of which have been allocated to the accounts of participants
under the Westport ESOP. Each participant in the Westport ESOP will receive a
form to be used to instruct the trustee of the Westport ESOP how to vote the
Westport Common Stock held by the Westport ESOP that is allocated to such
participant. The Westport ESOP provides that participants in the Westport ESOP
are permitted to direct the trustee as to the voting of the shares of Westport
Common Stock allocated to their accounts; otherwise the trustee of the Westport
ESOP has sole discretion as to the voting of such stock held by the Westport
ESOP. The Westport ESOP provides that the trustee will vote such shares as
instructed. The Westport ESOP also provides that the trustee of the Westport
ESOP shall vote all unallocated shares and allocated shares for which the
trustee has not received directions from the applicable participant in their
sole discretion. The trustee of the Westport ESOP is WBTC.
The directions of participants regarding the voting of the shares
allocated to them will not be disclosed to Westport, HUBCO or WBTC, and will be
tabulated by American Stock Transfer & Trust Company, which is Westport's stock
transfer agent.
To be effective, directions to the trustees of the Westport ESOP must
be received by American Stock Transfer & Trust Company at 6201 15th Avenue,
Brooklyn, New York 11219, ATTN.: Westport ESOP Vote, by the close of business
(5:00 p.m. E.D.T.) on October 21, 1996. Directions to the trustee received after
the close of business on October 21, 1996, or received at a different address,
will not be effective. A participant in the Westport ESOP who is otherwise a
Westport shareholder should (i) complete and return directions to the Westport
ESOP trustee with respect to shares of Westport Common Stock held by the
Westport ESOP that are allocated to such participant and (ii) complete and
return the enclosed proxy with respect to such other shares of Westport Stock.
WESTPORT SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH
THEIR PROXY CARDS. IF THE MERGER IS CONSUMMATED, STOCK CERTIFICATES SHOULD BE
DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF TRANSMITTAL
WHICH WOULD BE SENT TO WESTPORT SHAREHOLDERS BY THE EXCHANGE AGENT PROMPTLY
AFTER THE EFFECTIVE TIME.
SOLICITATION OF PROXIES
In addition to using the mails, the directors, officers and employees
of Westport and WBTC may solicit proxies for the Meeting from shareholders
personally, by telephone or by telegraph. These officers, directors and
employees will not be specifically compensated for their services. Westport has
retained Beacon Hill Partners, Inc., a proxy soliciting firm ("BEACON HILL"), to
assist in the solicitation of proxies at a fee of $2,750, plus reimbursement of
certain out-of-pocket expenses estimated to be approximately $750. Westport will
also make arrangements with brokerage firms and other custodians, nominees and
fiduciaries to send proxy materials to their principals and will reimburse such
parties for their expenses in doing so. The cost of soliciting proxies for the
Meeting, including the fees and expenses of Beacon Hill, will be borne by
Westport.
QUORUM
The presence, in person or by proxy, of at least a majority of Westport
Stock issued and outstanding and entitled to be voted at the Meeting is
necessary to constitute a quorum.
REQUIRED VOTE
Each share of Westport Common Stock will be entitled to one vote (a
total of 6,070,281 votes) and each share of Westport Preferred Stock will be
entitled to 100 votes (a total of 3,960,000 votes) upon each matter properly
submitted at the Meeting or at any adjournment or postponement thereof. The
affirmative vote, in person or by proxy, of at least two-thirds of the
outstanding shares of Westport Common Stock and Westport Preferred Stock
entitled to be voted at the Meeting, voting together as a single class, is
required in order to approve and adopt the Merger Agreement.
THE REQUIRED VOTE OF THE WESTPORT SHAREHOLDERS ON THE MERGER AGREEMENT
IS BASED UPON THE TOTAL NUMBER OF OUTSTANDING SHARES OF WESTPORT STOCK AND NOT
UPON THE NUMBER OF SHARES WHICH ARE ACTUALLY VOTED. ACCORDINGLY, THE FAILURE TO
SUBMIT A PROXY CARD, TO VOTE IN PERSON AT THE MEETING, ABSTENTION FROM VOTING BY
A SHAREHOLDER AND ANY BROKER NON-VOTE WILL HAVE THE SAME EFFECT AS A "NO" VOTE
WITH RESPECT TO THE MERGER AGREEMENT.
As of the Record Date, the directors and executive officers of Westport
and its affiliates (including Josiah T. Austin) beneficially owned (excluding
shares which could be acquired upon an exercise of options) an aggregate of
2,384,028 shares of Westport Common Stock (39.3%) and 26,000 shares of Westport
Preferred Stock (65.7%) issued and outstanding and entitled to vote at the
Meeting, including an aggregate of 1,667 shares of Westport Common Stock held in
the executive officers' accounts in the Westport ESOP. The Westport directors
have agreed to vote the shares of Westport Stock that they beneficially own in
favor of the Merger Agreement. No consideration was paid to any of the directors
for this agreement. HUBCO required that the directors enter into this agreement
as a condition to HUBCO entering into the Merger Agreement. As of the Record
Date, Josiah T. Austin beneficially owned 737,250 shares of Westport Common
Stock (12.1%) and 10,500 shares of Westport Preferred Stock (26.5%). Although
Mr. Austin is not a director or a management official of Westport, pursuant to
the Merger Agreement, at the Effective Time, one of the directors of Lafayette
shall be designated by Mr. Austin. Mr. Austin's director designee is William D.
Rueckert, one of the current directors of Westport and WBTC. As of the Record
Date, HUBCO owned 264,500 shares of Westport Common Stock (4.4%).
The Westport ESOP owns 29,437 shares of Westport Common Stock (0.5%)
issued and outstanding and entitled to vote at the Meeting. All such shares of
Westport Common Stock have been allocated to the accounts of participants as of
the Record Date. The Westport ESOP provides that participants in the Westport
ESOP are permitted to direct the trustee as to the voting of the shares of
Westport Common Stock allocated to their accounts; otherwise the trustee of the
Westport ESOP has sole discretion as to the voting of such stock held by the
Westport ESOP. The trustee has discretion to vote unallocated shares and
allocated shares for which no instructions are received. See "-- Record Date;
Voting Rights; Proxies".
In addition, the Trust Department of WBTC, as trustee for certain
Westport stockholders, had sole or shared voting authority with respect to
146,772 shares of Westport Common Stock (2.4%) and 2,500 shares of Westport
Preferred Stock (6.3%) as of the Record Date.
The obligations of Westport and HUBCO to consummate the Merger
Agreement are subject, among other things, to the condition that the Merger
Agreement and the transactions contemplated thereby be approved by the requisite
vote of the shareholders of Westport. See "THE PROPOSED MERGER -- Conditions to
the Merger".
THE MATTERS TO BE CONSIDERED AT THE MEETING ARE OF GREAT IMPORTANCE TO
THE SHAREHOLDERS OF WESTPORT. ACCORDINGLY, SHAREHOLDERS ARE URGED TO READ AND
CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY STATEMENT-PROSPECTUS,
AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
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, Westport
will be merged into HUBCO, with HUBCO as the surviving corporation (the
"SURVIVING CORPORATION"). The separate identity and existence of Westport will
cease upon consummation of the Merger and all property, rights, powers and
franchises of each of Westport and HUBCO will vest in the Surviving Corporation.
WBTC simultaneously will be merged with Lafayette, HUBCO's principal Connecticut
bank subsidiary (the "BANK MERGER").
CONSIDERATION
At the Effective Time, each outstanding share of Westport Common Stock
(except for Excluded Shares, as defined below) will be converted into the right
to receive 0.3225 shares of HUBCO Common Stock, and each outstanding share of
Westport Preferred Stock will be converted into the right to receive one share
of New HUBCO Preferred Stock. The New HUBCO Preferred Stock will have terms
substantially identical to those set forth on Exhibit 2.1(a) to the Merger
Agreement. Exhibit 2.1(a) is attached as Appendix D to this Proxy Statement.
"EXCLUDED SHARES" are those shares of Westport Stock which (i) are held by
Westport as treasury shares, (ii) are held by HUBCO or any of its subsidiaries
(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), or (iii) in the case
of Westport Preferred Stock, as to which dissenters' rights have been validly
exercised ("DISSENTING SHARES"). While Westport shareholders are entitled to
dissenters' rights of appraisal in connection with the Merger with respect to
shares of Westport Preferred Stock, there are no dissenters' rights in the
Merger with respect to shares of Westport Common Stock. The Exchange Ratio (and
the terms of the New HUBCO Preferred Stock which are based on the Exchange
Ratio) are subject to adjustment to take into account any stock split, stock
dividend, reclassification, recapitalization, merger, combination or exchange or
similar transaction by HUBCO with respect to the HUBCO Common Stock occurring
subsequent to June 21, 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 WESTPORT STOCK OPTIONS
At the Effective Time, each holder of one or more options to purchase a
share of Westport Common Stock (a "WESTPORT OPTION") granted under Westport's
existing stock option plans and agreements which is or will be by virtue of the
Merger vested (a "VESTED WESTPORT OPTION") will be asked to agree to convert
each such vested option into the right to receive one or more shares of HUBCO
Common Stock. Westport Options which are to be so converted into HUBCO Common
Stock are referred to herein as "CONVERTING STOCK OPTIONS". Each Converting
Stock Option will be assigned a value (the "OPTION Value") equal to (a) the
"Median Pre-Closing Price" of a share of HUBCO Common Stock (as defined below)
multiplied by the Exchange Ratio minus (b) the stated exercise price for the
Westport Option. At the Effective Time, each Converting Stock Option will be
converted into that number of shares of HUBCO Common Stock equal to the Option
Value, multiplied by the number of shares of Westport Common Stock for which the
option may be exercised, 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"). 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. 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 Westport Option which is not a Converting Stock Option
(a "CONTINUING STOCK OPTION") will be converted into and become pursuant to the
Merger Agreement an option to purchase HUBCO Common Stock. Each such Continuing
Stock Option which represented the right to purchase one share of Westport
Common Stock will be converted at the Effective Time into the right to purchase
0.3225 (or such other fraction as the Exchange Ratio may be adjusted to) shares
of HUBCO Common Stock for a per share exercise price equal to the per share
exercise price of the Continuing Stock Option divided by the Exchange Ratio, and
otherwise will remain subject to the same terms and conditions as was the prior
Westport Option. The HUBCO 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. Westport currently has options outstanding under the Westport Bancorp, Inc.
1985 Incentive Stock Option Plan 1990 Restatement (the "1985 PLAN"), Stock
Option Plans and Agreements dated December 17, 1992 by and between Westport and
Mr. Flynn, Thomas P. Bilbao and Richard T. Cummings, Jr., and the Westport
Bancorp, Inc. Amended and Restated 1995 Incentive Stock Option Plan (the "1995
PLAN").
WESTPORT WARRANTS
The Merger Agreement provides for warrants to purchase Westport Common
Stock outstanding at the Effective Time to be converted into warrants to
purchase HUBCO Common Stock. Since the date of the Merger Agreement, all such
Westport Warrants have been exercised and none will be outstanding at the
Effective Time.
CASH IN LIEU OF FRACTIONAL SHARES
No fractional shares of HUBCO Common Stock will be issued in exchange
for either Westport Common Stock or Converting Stock 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 Westport shareholder or option holder will be aggregated to constitute
as many whole shares as possible before determining such person's fractional
share interest.
DISSENTERS' RIGHTS OF APPRAISAL
Holders of Westport Preferred Stock who follow the procedures specified
in Section 262 of the DGCL will be entitled to the rights and remedies of
dissenting shareholders. Pursuant to Section 262, holders of Westport Preferred
Stock have the right to dissent from the Merger and to obtain payment of the
fair value of their shares of Westport Preferred Stock if the Merger is
consummated. Necessary procedural steps are set forth in Section 262 of the
DGCL. While Westport shareholders are entitled to dissenters' rights of
appraisal in connection with the Merger with respect to shares of Westport
Preferred Stock, there are no dissenters' rights in the Merger with respect to
shares of Westport Common Stock.
See "RIGHTS OF DISSENTING WESTPORT SHAREHOLDERS".
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger
In the late 1980's and through 1992, Westport experienced significant
operating losses, and in late 1991, commenced efforts to recapitalize. Following
the successful recapitalization, since 1992 Westport's principal focus has been
on building the size and earnings of its core banking operations. As Westport
began to restore both earnings and core franchise value beginning in 1993, it
also was approached by various potential merger and acquisition parties.
However, the Board of Directors continued to pursue Westport's business plan on
an independent basis believing that the long range potential of the franchise
was more valuable to shareholders than a potential sale at such time.
For the year ended December 31, 1994, Westport reported then record
earnings. Westport continued to pursue its business plan of independent
operations, and focusing on continued growth of profitability and core banking
operations. However, various parties expressed an interest in Westport, citing
its excellent franchise in a key market area. In response, beginning in August
1995, David A. Rosow, Chairman of the Board of Westport and WBTC, had a series
of preliminary discussions with representatives of several parties which had
expressed interest in an acquisition of Westport. After considering the
preliminary interest shown by such parties, and in consultation with its
financial advisor, O&Co, the Westport Board of Directors determined that
potential valuations of Westport warranted further discussions to evaluate
whether a potential merger or acquisition transaction might be in the best long
term interests of shareholders.
As a result of those preliminary discussions and preliminary
evaluations of the Board of Directors, commencing in November 1995
representatives of Westport engaged in serious discussions with one such party.
Upon completion of that party's due diligence review of the business and
operations of Westport, that party indicated that it was prepared to discuss a
possible stock acquisition of Westport. However, based on the terms and
conditions then being discussed with such party, the Westport Board of Directors
concluded that discussions with such party regarding a possible acquisition of
Westport should be terminated on the basis of its view that it was not in the
best interests of Westport and its shareholders to pursue such discussions.
Accordingly, no agreement as to price or terms was reached.
Throughout late 1995 and early 1996, Westport continued to pursue long
range plans focusing on continued growth of profitability and core banking
operations. Among other considerations, Westport, working with O&Co, sought to
identify one or more franchise expanding merger partners which would enhance
both long term core franchise value as well as earnings. Those discussions did
not result in any potential transactions. However, in the course of those
efforts, in February 1996 Peter J. Ostrowski of O&Co met with Kenneth T.
Neilson, Chairman, President and CEO of HUBCO, and Joseph Greco, a Regional
President of HUB and a former client of Mr. Ostrowski. Messrs. Neilson and Greco
discussed HUBCO's interest in the Connecticut market, noting in particular the
then recently announced proposed acquisition of Lafayette.
Again in late March and mid April 1996, Mr. Neilson expressed to Mr.
Ostrowski an interest in meeting with representatives of Westport and
potentially opening merger discussions. The April meeting included a general
discussion of possible terms and price to determine whether or not the parties
should continue discussions with the intent of reaching agreement. In late April
1996, representatives of Westport, along with Mr. Ostrowski, met with HUBCO to
discuss, among other things, HUBCO's performance, technology and operational
strategies, the Connecticut banking market and industry issues.
At a meeting of Westport's Board of Directors held on May 16, 1996, the
Westport Board of Directors was advised regarding the meetings with
representatives of HUBCO. O&Co made a presentation to the Board which reviewed
HUBCO's financial performance and condition based on public data that included a
pro forma analysis of a combination of HUBCO and Westport. On May 20, 1996, O&Co
distributed to the Westport directors a detailed package of publicly available
information about HUBCO, which included, among other things, the proxy
statement/prospectus for the Lafayette Acquisition, HUBCO's annual report to
shareholders and analysts' commentaries. The Board confirmed that preliminary
discussion should continue.
General discussion continued throughout May and early June. These
discussions included potential structure and possible deal terms. Also, HUBCO
had announced another acquisition transaction in Connecticut. In mid-June 1996,
the parties met to discuss potential price terms and conditions. HUBCO indicated
preliminarily that it would consider making an offer with an exchange ratio for
the Westport Common Stock of approximately .30 per share and the exchange of
each share of Westport Preferred Stock for one share of a newly created series
of HUBCO preferred stock, subject to the completion of due diligence and the
negotiation of other transaction terms.
On June 14, 1996, the Westport Board held a telephonic meeting to
receive a briefing on the discussions with HUBCO and to discuss the HUBCO
proposal. With the consent of Westport's Board of Directors, on June 14, 1996,
representatives of Westport and HUBCO began negotiations on a form of draft
Agreement and Plan of Merger, and HUBCO began to conduct on-site due diligence
of Westport and WBTC.
On June 17, 1996, the Westport Board of Directors met to discuss
developments. The initial draft of the Agreement and Plan of Merger was
distributed and Westport's outside counsel summarized its terms and the proposed
transaction structure, and identified certain transaction terms that remained
open for further negotiation. The Board directed that negotiations continue with
HUBCO.
On June 20, 1996, Westport's Board met to review and discuss the
revised transaction terms. Westport's outside counsel reviewed a new draft of
the Agreement and Plan of Merger highlighting the changes from the first draft,
and the Board met with Mr. Neilson. The Board also received from O&Co a
preliminary valuation analysis, including market pricing, balance sheet and
income comparisons for a peer group of Connecticut banks, a summary of
comparable acquisitions of banking institutions, and a presentation of assumed
valuations for Westport based on a range of ratios to adjusted book value and
earnings. O&Co also reviewed with the Board the result of the on site and other
due diligence review of certain business and financial information of HUBCO.
At a subsequent meeting later that day, the results of continued
negotiations with HUBCO were presented and discussed. O&Co updated its valuation
analysis to June 20, 1996, and provided the Board with its opinion that the
terms of the Merger Agreement were fair to the shareholders of Westport from a
financial point of view. A copy of the Agreement and Plan of Merger, including
all annexes, schedules and exhibits, was distributed to Board members, and final
changes were noted. After discussion and further questions and answers, the
Agreement and Plan of Merger was unanimously approved by the Board, and the
Board authorized Messrs. Flynn and Rosow to execute the definitive Agreement and
Plan of Merger subject to completion of final language.
The HUBCO Board approved the Agreement and Plan of Merger after the
market closed on June 20, 1996, subject to completion of the applicable
documentation.
On June 21, 1996, the definitive Agreement and Plan of Merger was
executed and the Westport Board met to confirm its execution. Public
announcement was made of the proposed merger before the opening of The Nasdaq
Stock Market on June 21, 1996.
Recommendation of the Westport Board of Directors and Reasons for the
Merger
The Westport Board of Directors has unanimously approved the Merger
Agreement and has determined that the Merger is fair to, and in the best
interests of, Westport and its shareholders. The Westport Board therefore
unanimously recommends that holders of Westport Stock vote to approve and adopt
the Merger Agreement. The Westport Board believes that the Merger will enable
holders of Westport Stock to realize increased value due to the premium over
market price, net income per share of Westport Stock and book value per share of
Westport Stock. The Board also believes that the Merger may enable Westport's
shareholders to participate in opportunities for appreciation of HUBCO Stock.
See "-- Background" above and "-- Opinion of Financial Advisor" below. In
reaching its decision to approve the Merger Agreement, the Westport Board
consulted with its outside counsel regarding the legal terms of the Merger and
the Westport Board's fiduciary obligations in its consideration of the proposed
Merger, its financial advisor, O&Co, regarding the financial aspects and
fairness of the proposed Merger Agreement, as well as with management of
Westport, and, without assigning any relative or specific weight, considered the
following material factors, both from a short-term and long-term prospective.
(i) The Westport Board's familiarity with, and review of,
Westport's business, financial condition, results of
operations and prospects, including, but not limited
to, its potential growth, development, productivity
and profitability and the business risks associated
therewith;
(ii) The current and prospective environment in which
Westport operates, including national and local
economic conditions, the highly competitive
environment for financial institutions generally, the
increased regulatory burden on financial
institutions, and the trend toward consolidation in
the financial services industry;
(iii) The potential appreciation in market and book value
of Westport Stock on both the short- and long-term
basis, as a stand alone entity;
(iv) Information concerning the business, financial
condition, results of operations, asset quality and
prospects of HUBCO, including the long-term growth
potential of HUBCO Stock, the future growth prospects
of HUBCO, combined with Westport, following the
proposed Merger and the potential synergies expected
from the Merger and the business risks associated
therewith;
(v) The potential for appreciation and growth for the
market and book value of HUBCO Stock, following the
proposed Merger;
(vi) The oral presentation and opinion of O&Co that the
terms of the Merger Agreement are fair to the holders
of Westport Stock from a financial point of view (see
"-- Opinion of Financial Advisor" below);
(vii) The financial and other significant terms of the
proposed Merger including the terms and conditions of
the Merger Agreement;
(viii) The benefits of the business combination with a
larger bank holding company, such as HUBCO, with a
significant presence in Connecticut and northern New
Jersey;
(ix) The expectation that HUBCO will continue to provide
quality service to the communities and customers
served by Westport and HUBCO's capacity, as a larger
institution with a larger capital base, to provide a
wider range of services, enhanced access to credit,
and greater convenience to such customers and
communities; and
(x) The compatibility with respect to businesses and
management philosophies of Westport and HUBCO and
HUBCO's strong commitment to the Connecticut and New
Jersey communities it serves.
HUBCO's Reasons
HUBCO entered into the Merger Agreement with Westport 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.
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 expects to have a network of 27
branch banking offices through southwestern Connecticut, which is
demographically similar to and geographically neighbors the northern New Jersey
market of HUBCO. The HUBCO Board believes that Westport'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 Westport, HUBCO's ability to
offer expanded services to Westport customers and HUBCO's financial strength --
thereby positively contributing to HUBCO's earnings. See "CERTAIN INFORMATION
REGARDING HUBCO -- Recent Developments".
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Westport Board of Directors
with respect to the Merger, holders of Westport Stock should be aware that
certain members of the Board of Directors and management of Westport have
certain interests in the Merger in addition to their interests generally as
stockholders of Westport. 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 Westport, no material interest in the Merger apart from those
of stockholders generally. The Westport 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.
Beneficial Ownership of Westport Stock
As of the Record Date, the directors and executive officers of Westport
and its affiliates beneficially owned (excluding shares which could be acquired
upon the exercise of options) an aggregate of 2,384,028 shares of the Westport
Common Stock (39.3%) and 26,000 shares of the Westport Preferred Stock (65.7%)
issued and outstanding and entitled to vote at the Meeting. The Westport
directors have agreed to vote the shares of Westport Stock that they
beneficially own in favor of the Merger Agreement. No consideration was paid to
any of the directors for this agreement. HUBCO required that the directors enter
into this agreement as a condition to HUBCO entering into the Merger Agreement.
See "THE MEETING -- REQUIRED VOTE".
Board Membership and Management Positions
The Merger Agreement provides that two nominees designated by Westport
and acceptable to HUBCO will be appointed to HUBCO's Board of Directors,
effective at the Effective Time. Such nominees are to be Michael H. Flynn,
currently Westport's President and CEO, and David A. Rosow, currently Westport's
Chairman, unless HUBCO and Westport agree to the contrary. In addition, it is a
condition to Westport's obligation to consummate the Merger that three nominees
designated by Westport and acceptable to HUBCO and one person designated by
Josiah T. Austin are appointed directors of Lafayette as of the Effective Time.
The three nominees of Westport are to include Messrs. Flynn and Rosow unless
HUBCO and Westport agree to the contrary. Mr. Austin has indicated that his
director designee will be William D. Rueckert, one of the current directors of
Westport and WBTC. Such persons would continue to receive compensation as
directors after the Merger, and Mr. Flynn also would receive compensation as an
officer of Lafayette provided that the conditions set forth in the Merger
Agreement as described below are satisfied. Westport's obligation to close is
also conditioned on HUBCO appointing Mr. Flynn as President and CEO of Lafayette
and Mr.Rosow as Chairman of the Executive Committee of the HUBCO Board of
Directors.
The Merger Agreement further provides that immediately after the
Effective Time, HUBCO shall enter into a new employment agreement with Michael
H. Flynn upon terms consistent with the Merger Agreement but otherwise no less
favorable than his current agreement with Westport and WBTC, if Mr. Flynn amends
his existing employment agreement so that under no circumstances would Westport,
WBTC, HUBCO or any HUBCO subsidiary be required to make any payments or provide
any benefits to him (upon, or accelerated by a change in control, as a
consequence of the Merger Agreement or otherwise) which, if paid or provided,
would constitute an "excess parachute payment" as defined in Section 280G of the
Code. Mr. Flynn and HUBCO are in the process of negotiating such a contract and
although no definitive agreements have yet been reached regarding Mr. Flynn's
employment arrangements with HUBCO, it is anticipated that such arrangements
will be on terms similar to his current agreement with Westport and WBTC and may
also include, among other things, an increase in salary and an agreement to
convert Mr. Flynn's existing stock options into options to purchase HUBCO stock.
HUBCO's obligation to enter into a new employment agreement with Mr. Flynn is
conditioned on Mr. Flynn's amendment of his current agreement in the manner
described above by a date certain, which date HUBCO has extended to September
27, 1996.
Indemnification
In the Merger Agreement, HUBCO has agreed 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 Westport or WBTC, or who serves or has
served at the request of Westport or WBTC in any capacity with any other entity
(collectively, the "INDEMNITEES"), to the fullest extent permitted under
applicable law or Westport's or WBTC's Certificate of Incorporation and By-laws,
as applicable, with respect to any claims made against such person because he or
she is or was a director, officer, employee or agent of Westport or WBTC or
serves or has served at the request of Westport or WBTC in any capacity with any
other entity. In the Merger Agreement, HUBCO has also agreed to cover Westport's
and WBTC's officers and directors under either an extension of Westport'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 and Option Acceleration
Prior to the execution of the Merger Agreement, a number of executive
officers of Westport 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. Westport and WBTC have employment agreements with each of
Mr. Flynn and Thomas P. Bilbao, William B. Laudano, Jr. and Richard T. Cummings,
Jr. that provide for certain payments following termination of employment in the
event of a change in control. In addition, Westport has entered into stock
option agreements with Messrs. Flynn, Bilbao and Cummings that provide for
accelerated vesting in the event of a change in control.
Each employment agreement provides that if the executive officer's
employment is terminated or constructively terminated (as defined) other than
because of his willful misconduct (as defined), disability, death, or retirement
in connection with or within two years following a "change in control" (as
defined), the officer will (subject to certain limitations) be entitled to
continue to participate in certain benefit plans and to receive certain
insurance benefits for three years and to be paid a lump sum cash amount equal
to 2.99 times his average salary and bonus for the five calendar years preceding
the change in control. The cash payment will not be reduced by compensation
received from a subsequent employer, but benefit plan and insurance coverages
will be offset by benefits received from another employer. In addition, in the
case of a change in control that occurs before January 1, 1997, if all or a
portion of the cash payment, continued benefits, and continued insurance
coverage, together with any other amount in the nature of compensation to be
received by Messrs. Flynn or Bilbao (including the accelerated vesting of stock
options and enhanced benefits under Westport's Supplemental Executive Retirement
Plan, described below), would be subject to the 20 percent excise tax imposed on
"excess parachute payments," the executive officer will be paid the amount
necessary to cause the total payments and benefits received by the executive
officer (including the "gross-up" payment), net of taxes, to be equal to the
amount the executive officer would have received, net of taxes, if the 20
percent excise tax had not applied. Westport estimates that Messrs. Flynn,
Bilbao, Laudano, and Cummings would receive cash payments and benefits
(excluding the accelerated vesting of options) having a present value of
approximately $841,800, $718,500, $336,200, and $313,200, respectively, if a
change in control occurred as of December 31, 1996. The Merger will constitute a
"change in control" for purposes of the agreements. It is a precondition to
HUBCO's obligation under the Merger Agreement to enter into a new employment
agreement with Mr. Flynn that prior to September 27, 1996 he amends his existing
employment agreement so that no "gross-up" payout is necessary because such
payments are reduced below the threshold provided by Section 280G of the Code.
See "-- Board Membership and Management Positions" above. One of the conditions
to the consummation of the Merger is that HUBCO shall have acknowledged,
accepted and assumed certain employment, severance and other compensation
contracts between Westport and certain of its officers and directors.
Pursuant to stock option agreements dated December 17, 1992, Westport
granted to Messrs. Flynn, Bilbao, and Cummings non-qualified options to purchase
up to 425,000, 250,000, and 50,000 shares of Westport Common Stock,
respectively, that were to become exercisable gradually over five years and that
were to expire 10 years following the date of the stock option agreement. The
exercise price of these options was $2.00 per share. Each such option agreement
provides that all of the unexpired options will become immediately exercisable
upon a change in control of Westport. The Merger will constitute a change in
control for purposes of such agreements. Mr. Laudano holds an option to purchase
up to 75,000 shares of Westport Common Stock dated September 2, 1993 that is
intended to qualify as an incentive stock option under the 1985 Plan. That
option is fully vested and exercisable. The option will terminate within one
year after the termination of Mr. Laudano's employment due to death or
disability or three months after the termination of Mr. Laudano's employment for
any other reason.
Pursuant to stock option agreements dated May 16, 1996, Westport
granted to Messrs. Flynn and Bilbao options that were intended to qualify as
incentive stock options to purchase up to 27,713 and 23,308 shares of Westport
Common Stock, respectively, under the 1995 Plan. These options became
exercisable immediately to the extent of 16,666 and 16,666 shares, respectively,
and the remaining shares were to become exercisable on January 1, 1997. However,
the options became exercisable in full upon the occurrence of a change in
control, which was defined in the 1995 Plan to include the filing of a Current
Report on Form 8-K describing a change of control of Westport pursuant to Item 1
thereof or indicating that such a change in control is imminent, which filing
occurred on July 3, 1996.
WBTC has adopted a Supplemental Executive Retirement Plan, as amended
(the "SERP"), that covers Messrs. Flynn and Bilbao and another officer of WBTC.
The SERP supplements retirement benefits under WBTC's Pension Plan such that the
SERP and the Pension Plan together will provide a SERP participant with a
benefit at the Normal Retirement Date (as defined) equal to 70% of the
participant's final average earnings (defined as the average annual earnings
during the five consecutive years that yield the highest compensation). A
participant who terminates employment after the Early Retirement Date under the
Pension Plan (generally, age 55 with five years of service) is entitled to
reduced benefits under the SERP. The benefit payable to a participant who
terminates employment after his or her Early Retirement Date is equal to the
product of (c) times the amount determined by subtracting (b) from (a), where:
(a) is 70% of the participant's final average earnings as reduced by .55% for
each month by which the date of the participant's distribution precedes his or
her Normal Retirement Date, to a maximum of 60 months, plus .35% for each such
month in excess of 60 months, (b) is the actuarial equivalent of the
participant's accrued benefit under the Pension Plan and (c) is a fraction (not
in excess of one), the numerator of which is the participant's years of service
(as defined for purposes of the Pension Plan) and the denominator of which is
the number of years of service with which the participant would be credited if
he or she remained employed until his or her Normal Retirement Date.
Payments under the SERP are made in equal monthly installments for a
maximum of 15 years, with 10 years of payments guaranteed. If the participant
dies prior to retirement and while still actively employed by WBTC, no benefit
is payable under the SERP. In the event of a change in control (as defined), the
participant will be entitled to the normal or early retirement benefit described
above, whichever is applicable, except that, for purposes of calculating the
early retirement benefit, the participant will be credited with two additional
years of age and service. The Merger will constitute a change in control for
purposes of the SERP. The SERP is non-contributory and unfunded. To provide for
the payment of benefits under the SERP, subject to the claims of general
creditors of WBTC in the event that it becomes insolvent (as defined), WBTC has
entered into a trust agreement with People's Bank as trustee establishing the
Trust under the SERP, and has transferred to the trustee certain life insurance
policies having an aggregate cash surrender value as of September 4, 1996 of
$576,054. In the event of a change in control (as defined), including the
Merger, WBTC will be obligated to make an irrevocable contribution to the Trust
in an amount that is sufficient to pay each participant in the SERP (and any
beneficiary) the benefits to which those individuals would be entitled pursuant
to the SERP as of the date on which the change in control occurred. The SERP is
not qualified under the provisions of the Internal Revenue Code of 1986. Because
Mr. Flynn has accrued virtually no benefits under WBTC's Pension Plan, and Mr.
Bilbao has accrued none, the SERP would provide Messrs. Flynn and Bilbao
benefits upon retirement equal to approximately 70% of their respective final
average earnings (as defined). If Messrs. Flynn and Bilbao were to retire on
their normal retirement dates, and if their final average earnings equaled their
1995 salaries, then Messrs. Flynn and Bilbao would receive annual payments of
$105,000 and $94,500, respectively, under the SERP. Upon the closing of the
Merger, Messrs. Flynn and Bilbao would be entitled to retire and to begin
receiving annual payments of $48,364 and $42,686, respectively, under the SERP.
WBTC has entered into split dollar insurance agreements (collateral
assignment method) with Messrs. Laudano and Cummings dated as of December 1,
1995 covering life insurance policies in the face amounts of $268,000 and
$277,000, respectively, on their lives. Premiums on the policies are paid by
WBTC. Upon the surrender of the policy or the death of the insured, except as
described below, WBTC is entitled to be repaid its cumulative premium payments
(or if less, the cash surrender value of the policy in the case of surrender).
However, if the insured's employment is terminated for any reason other than
cause (as defined in the insured's employment agreement) or if his employment is
actually or constructively terminated after a change in control (as defined),
WBTC will release its claim to be repaid and will charge to the insured as
additional compensation the cumulative premiums paid by it under the split
dollar agreement. The Merger will constitute a change in control for such
purposes.
Under Westport's Directors' Retirement Plan, each of the seven
non-employee Westport directors will be entitled to an annual retirement benefit
under the plan equal to the annual retainer fee paid to Westport's directors.
The benefit will be payable to the director: (i) if the director retires from
the Westport Board on or after his or her 70th birthday; (ii) if the director
ceases to serve as a director as a result of permanent and total disability
following at least 20 years of service as a director; (iii) if, under certain
circumstances, a change in control of Westport occurs; (iv) if the director
retires on or after his 65th birthday following at least 10 years of service as
a director; or (v) if the director retires regardless of age, following at least
15 years of service as a director. The Merger will constitute a change in
control for this purpose. A director will not begin to receive his retirement
benefit under the plan until he or she reaches the age of 65 unless the
director's termination is caused by his or her permanent and total disability.
The annual benefit is payable to the retired director for a period of time equal
to the total number of years that he or she served as a director (excluding any
period when he or she was both a salaried employee of Westport and a director).
If a former director dies after he or she has begun receiving his or her
retirement benefit payments but before he or she has received his or her entire
benefit, the unpaid balance will continue to be paid to his or her designated
beneficiary for up to 10 years after his or her death. If a director dies after
reaching age 65 or completing at least 15 years of service as a director, but
before retiring from the Westport Board, a retirement benefit will be paid to
his or her designated beneficiary in an amount and for a period equal to the
retirement benefit his or her beneficiary would have received under the plan if
the director had retired from the Westport Board on the date of the last annual
meeting of stockholders before the date of his or her death, provided that no
benefit will be payable to the beneficiary or estate for more than l0 years. No
benefit is payable to a director's beneficiary or estate if the director dies
prior to age 65, unless the director would otherwise have been entitled to a
retirement benefit under the plan at the time of his or her death. Following the
closing of the Merger, Messrs. Damman, Gault, Hersher, Mitchell, Rosow, Rueckert
and Sherwood will be entitled to an annual benefit of $6,000 for a period of 13,
13, 7, 13, 6, 5 and 13 years, respectively, commencing upon the director's
attainment of age 65.
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 filing of Westport's
Form 8-K concerning the Merger, which occurred on July 3, 1996, constituted a
change-in-control which accelerated certain of these options, and the Merger
will constitute a change in control that will accelerate vesting under certain
other options.
OPINION OF FINANCIAL ADVISOR
O&Co has been retained by Westport as its financial advisor since 1994
and is currently providing, among other services, advice and assistance relating
to the evaluation and execution of mergers and acquisitions pursuant to an
engagement letter dated January 9, 1995 (the "O&CO ENGAGEMENT LETTER"). Westport
selected O&Co on the basis of its in depth knowledge of the bank and thrift
industry; the qualifications, experience and reputation of its personnel in the
banking and investment communities; as well as its experience in the valuation
of bank and thrift institutions and their securities in connection with mergers
and acquisitions and other corporate transactions.
As part of the advisory services described above, the Board of
Directors of Westport requested O&Co's opinion as to the fairness, from a
financial point of view, of the terms of the Merger Agreement to the holders of
Westport Stock. Pursuant to the terms of the Merger Agreement, each share of
Westport Common Stock will be converted into the right to receive 0.3225 shares
of HUBCO Common Stock, and each share of Westport Preferred Stock will be
converted into the right to receive one share of a new HUBCO Series B Preferred
Stock having substantially identical terms as the Westport Preferred Stock, in
each case subject to adjustment in certain circumstances as described in the
Merger Agreement. On June 20, 1996, O&Co delivered its opinion to the Board of
Directors of Westport that, as of such date, the terms of the Merger Agreement
were fair to the holders of Westport Stock from a financial point of view. This
opinion was updated and confirmed by O&Co as of September 18, 1996.
THE FULL TEXT OF O&CO'S UPDATED FAIRNESS OPINION IS ATTACHED AS
APPENDIX B TO THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF THE FAIRNESS OPINION SET FORTH HEREIN IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO APPENDIX B. HOLDERS OF WESTPORT STOCK ARE URGED TO READ
THE OPINION IN ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED,
ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS OF THE REVIEW UNDERTAKEN
BY O&CO IN CONNECTION THEREWITH. O&CO'S OPINION IS DIRECTED SOLELY TO THE
FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE TERMS OF THE MERGER AGREEMENT
AND DOES NOT CONSTITUTE ANY RECOMMENDATION TO THE BOARD OF DIRECTORS OF WESTPORT
OR TO THE HOLDERS OF WESTPORT STOCK WITH RESPECT TO ANY VOTE AT THE MEETING.
In connection with providing its opinion, O&Co examined and relied
upon, among other things, the Merger Agreement, annual reports to shareholders,
proxy statements and related audited financial statements for Westport and HUBCO
for the three fiscal years ended December 31, 1993, 1994, and 1995; the Joint
Proxy Statement-Prospectus dated May 8, 1996 relating to the Agreement and Plan
of Merger between Lafayette and HUBCO, certain interim financial reports for
Westport and HUBCO, certain other financial information for Westport and HUBCO,
including pro forma financial statements and managements' estimates relating to,
among other things, earnings, asset quality and capital. O&Co conducted
discussions with executive management of both Westport and HUBCO concerning
historical financial performance and condition, market area economic conditions,
and future business prospects and financial forecasts. O&Co reviewed stock
market prices and trading activity for the common shares of Westport and HUBCO.
O&Co also reviewed comparable financial, operating and market data for the
banking industry and selected peer groups; compared the terms of the Merger
Agreement with other bank merger and acquisition transactions; and considered
such additional financial and other information it deemed relevant.
In preparing its opinion, O&Co relied upon the accuracy, completeness
and fair presentation of all information supplied or otherwise made available to
it by, or on behalf of, Westport and HUBCO. O&Co did not independently verify
such information or undertake an independent evaluation or appraisal of the
assets or liabilities of Westport or HUBCO, nor were they furnished any such
evaluations or appraisals. With respect to forecasts of expected future
financial performance, O&Co was advised that they reflected the best currently
available estimates and judgment of the executive management of Westport and
HUBCO. O&Co's opinion was necessarily based upon the information available to
them and the market, economic and other conditions as they existed, and could be
evaluated, as of the date of their opinion.
In connection with providing its fairness opinion to the Board of
Directors of Westport, O&Co performed a variety of financial analyses. The
following is a summary of the material terms of such analyses but does not
purport to be a complete description of O&Co's analyses or presentations to the
Westport Board of Directors. The preparation of a fairness opinion is a complex
process involving subjective judgments and is not necessarily susceptible to
partial analyses or summary description. O&Co believes that its analyses must be
considered as a whole and that selecting portions of such analyses and the
factors considered therein, without considering all factors and analyses, could
create an incomplete view of the analyses and the processes underlying O&Co's
opinion.
In performing its analyses, O&Co made numerous assumptions with respect
to industry performance, business and economic conditions and various other
matters, many of which may be more or less favorable than actual results.
Estimates of values of companies do not purport to be appraisals or necessarily
reflect the prices at which companies or their securities may actually be sold.
No company or transaction utilized in O&Co's analyses was identical to Westport
or HUBCO or to the terms of the Merger Agreement. Because such estimates are
inherently subject to uncertainty, O&Co assumes no responsibility for their
accuracy.
Stock Trading History
O&Co examined the history of trading prices for Westport Common Stock
and HUBCO Common Stock for the period from June 14, 1995 through June 19, 1996.
During that time period, Westport Common Stock traded in the $4.00 to $7.00
range; from mid-November 1995 through January 1996, there was significant price
appreciation and the stock began trading as high as $7.00. During the second
quarter of 1996, Westport Common Stock traded in the range of $5.00 to $6.25. On
June 19, 1996, Westport Common Stock closed at $5.875.
From June 14, 1995 through June 19, 1996, HUBCO Common Stock traded in
the $17.00 to $22.75 range. During November 1995 through January 1996, there was
significant price appreciation and the stock traded as high as $22.75. After the
announcement of the proposed merger with Lafayette, the stock declined from
$22.50 to $20.50 and continued to decline through April 1996, reaching a low of
$18.25. The price rebounded in the second quarter, reaching a high of $21.75.
The closing price for HUBCO Common Stock on June 19, 1996 was $20.125.
Contribution Analysis
O&Co prepared a contribution analysis showing the percentage
contributed by Westport to the combined company on a pro forma basis of assets,
deposits, and equity at March 31, 1996 for Westport and December 31, 1995 for
pro forma HUBCO which included the recently announced proposed mergers of
Lafayette and Hometown. Net income amounts were estimated for the twelve months
ended December 31, 1996. The 1996 net income estimate was used since it more
appropriately measured the recurring earnings streams for both Westport and
HUBCO. O&Co then compared these percentages to the Westport shareholders' pro
forma ownership of HUBCO. This analysis showed that Westport shareholders would
contribute 10.4% of pro forma consolidated assets, 9.8% of pro forma
consolidated deposits, 12.7% of pro forma consolidated equity and 9.6% of pro
forma twelve months ended December 31, 1996 net income. Westport shareholders
would receive 15.27% of the pro forma ownership of the combined company based on
the 0.3225 Exchange Ratio.
Comparable Company Analysis
O&Co compared the financial condition, financial operating performance
and trading performance of Westport with a peer group of 18 commercial banks in
the Northeast with assets between $170 million and $485 million. Westport
reported a return on average assets of 2.07%, and return on equity of 27.25%,
based on March 31, 1996 operating results annualized, and an equity to assets
ratio of 7.95%; the peer group had median return on average assets of 0.96%; a
median return on average equity of 12.3% and a median equity to asset ratio of
7.86%. Westport reported somewhat stronger operating performance than the peer
group, with a comparable equity to assets ratio.
At May 31, 1996, Westport's Common Stock price was $6.00, or 9.2 times
trailing twelve months earnings and 243% of reported March 31, 1996 book value,
compared to the peer group median for these same price measures of 11.4 times
and 133%, respectively. Westport's trading performance was also significantly
greater than its peer as a percent of book value and slightly below peer on an
earnings multiple basis.
Discounted Cash Flow Analysis
O&Co performed an analysis which estimated the future cash flows to
Westport shareholders over four years under various circumstances, assuming
Westport performed in accordance with the earnings forecasts of its management.
To approximate the terminal value of Westport Common Stock at the end of the
four-year period, O&Co applied price to earnings multiples ranging from 14.0
times to 20.0 times which resulted in percentages of book value ranging from
178% to 254%. The terminal values were then discounted to present values using
discount rates ranging from 12.5% to 20.0% chosen to reflect assumptions
regarding rates of return and risk premiums required by holders or prospective
buyers of Westport Common Stock.
This analysis indicated a range of present values per share of $3.82 to $6.40.
Analysis of Selected Merger Transactions
O&Co reviewed certain financial data, as of the date of the
announcement, for acquisitions of commercial banks and thrifts in the Northeast
announced between January 1995 and June 19, 1996. O&Co also reviewed
acquisitions of commercial banks and thrifts in Connecticut during the same
period.
O&Co calculated the average multiple of price to target's earnings for
trailing 12 months, the average percentage of price to book value and the
average premium (price in excess of reported equity) as a percentage of core
deposits, on a quarterly basis beginning January 1, 1995 through June 19, 1996.
For transactions announced in the second quarter of 1996, the calculations
resulted in the following averages: (i) price as a multiple to earnings for
Northeast bank transactions 28.1 times, Northeast thrift transactions 15.0
times, and Connecticut transactions 19.4 times, compared with 17.3 times
Westport's estimated 1996 earnings associated with the HUBCO proposal; (ii)
price as a percentage of book value for Northeast bank transactions 196.0%,
Northeast thrift transactions 172.0%, Connecticut transactions 176.0%, compared
with 260.0% of Westport's fully diluted shareholders' equity in the HUBCO
proposal; (iii) premium as a percentage of core deposits for Northeast bank
transactions 11.3%, Northeast thrift transactions 6.1%, Connecticut transactions
6.7%, compared with 17.1% of Westport's core deposits in the HUBCO proposal.
Impact Analysis
O&Co analyzed the changes in the amount of fully diluted earnings per
share and book value represented by the issuance of 0.3225 shares of HUBCO
Common Stock for each share of fully diluted Westport Common Stock. The analysis
evaluated, among other things, possible impact on fully diluted earnings per
share and book value per share of HUBCO. The analysis was based upon (i)
reported March 31, 1996 balance sheet data for Westport; (ii) pro forma December
31, 1995 data for HUBCO (including the proposed acquisition of Lafayette and
Hometown); (iii) earnings estimate for twelve months ended December 31, 1996 for
Westport; and (iv) earnings estimate for twelve months ended December 31, 1996
for pro forma HUBCO. These analyses indicated that the Merger would be
approximately 6.25% dilutive to pro forma HUBCO's fully diluted earnings per
share, and approximately 2.96% dilutive to pro forma HUBCO's book value.
O&Co also analyzed the impact of the Merger on certain HUBCO values per
equivalent Westport share based on the proposed exchange ratio of 0.3225 shares
of HUBCO Common Stock for each share of fully diluted Westport Common Stock. The
equivalent estimated annual earnings per share would be $0.59 or 58% greater
than Westport's estimated earnings per share; the equivalent book value per
share would be $2.99 or 20% greater than Westport's book value per share; and
the equivalent annual cash dividend would be $0.22 per share or 57% greater than
Westport's indicated annual cash dividend of $0.14 per share prior to the
execution of the Merger Agreement.
Pursuant to the O&Co Engagement Letter, Westport has agreed to pay O&Co
a fee for its advisory services in connection with the Merger equal to 1.5% of
the aggregate value of the consideration received by holders of Westport Stock
upon the Closing, or approximately $1.071 million based upon an estimated
aggregate value of $71.424 million. Westport has paid O&Co $100,000 upon the
signing of the Merger Agreement, and has agreed to pay an additional $200,000
upon the mailing of this Proxy Statement and the balance of the fee upon
Closing. Pursuant to the O&Co Engagement Letter, Westport has also agreed to
reimburse O&Co for its reasonable out-of-pocket expenses, including legal fees,
incurred in connection with its engagement and to indemnify O&Co and its
affiliates and their respective directors, officers, employees, agents and
controlling persons against certain expenses and liabilities.
RESALE CONSIDERATIONS WITH RESPECT TO THE HUBCO STOCK
The shares of HUBCO 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 Westport, who may be deemed to be "affiliates" of Westport
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 Stock acquired pursuant to the Merger, except
pursuant to an effective registration statement under the Securities Act
covering the HUBCO 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 Westport 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 Westport
Stock owned by them and any HUBCO 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 Westport have been
published or filed by HUBCO. Also, in connection with the pooling of interests
rules, such persons have agreed not to transfer their Westport 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 Stock acquired by them in the
Merger, except in compliance with certain restrictions imposed by Rule 145.
Certificates representing the shares of HUBCO 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 Westport.
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 Agreement and the transactions contemplated thereby by the requisite vote
of the holders of Westport Stock; (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 Stock to be issued to
Westport shareholders; (iv) the absence of any litigation that would restrain or
prohibit the consummation of the Merger; (v) the receipt of a letter from
HUBCO's independent accountants that the Merger will qualify 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 Westport 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 Westport contained in the Merger
Agreement; and (ii) the performance by Westport, in all material respects, of
all its obligations under the Merger Agreement.
The obligation of Westport 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 to the HUBCO Board of
Directors of two persons designated by Westport and acceptable to HUBCO (which
persons will be Michael H. Flynn and David A. Rosow unless HUBCO and Westport
agree to the contrary), (iv) the appointment to the Board of Directors of
Lafayette of three persons designated by Westport and acceptable to HUBCO (which
persons will include Messrs. Flynn and Rosow unless HUBCO and Westport agree to
the contrary), and one person designated by Josiah T. Austin (who will be
William D. Rueckert, one of the current directors of Westport and WBTC), (v) the
election of Mr. Flynn as President and CEO of Lafayette, subject to certain
conditions; (vi) the appointment of Mr. Rosow as Chairman of the Executive
Committee of the HUBCO Board of Directors; and (vii) written acknowledgment,
acceptance and assumption by HUBCO of existing employment, severance and other
compensation agreements between Westport and its officers and directors.
CONDUCT OF BUSINESS PENDING THE MERGER
The Merger Agreement requires each of Westport and WBTC to conduct its
business prior to the Effective Time only in the ordinary course of business and
consistent with prudent banking practices, except as permitted under the Merger
Agreement or with the written consent of HUBCO. Under the Merger Agreement, each
of Westport and WBTC 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 any provision of its Certificate
of Incorporation or By-laws; (b) change the number of shares of its authorized
or issued capital stock other than as disclosed to HUBCO or issue or grant any
option, warrant, call, commitment, subscription, right to purchase or agreement
of any character relating to its authorized or issued capital stock, 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 on Westport Common Stock of $.055 per share described
under "MARKET PRICE AND DIVIDEND MATTERS -- Limitations on Dividends Under the
Merger Agreement"; (c) grant any severance or termination pay (other than
pursuant to written policies or contracts of Westport 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; (d) 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; (e) 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 its business; (f) make any capital
expenditures other than capital expenditures which are either pursuant to
binding commitments existing on the date of the Merger Agreement or necessary to
maintain existing assets in good repair and expenditures described in business
plans or budgets previously furnished to HUBCO; (g) file any applications or
make any contracts with respect to branching or site location or relocation; (h)
agree to acquire in any manner whatsoever (other than to realize upon collateral
for a defaulted loan) any business or entity or make any investments in
securities other than investments in government or agency bonds having a
maturity of less than five years; (i) make any material change in its accounting
methods or practices, other than changes required in accordance with generally
accepted accounting principles or regulatory authorities; (j) take any action
that would result in any of Westport's representations or warranties being
untrue or incorrect at the Effective Time in any material respect or that would
cause any of its conditions to closing not to be satisfied; (k) make or commit
to make, renew or increase loans or other extensions of credit in an amount
exceeding $1 million, without first conferring with HUBCO; or (l) agree to do
any of the foregoing.
Under the Merger Agreement, Westport 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 of capital stock 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, Westport may enter into discussions or negotiations or provide any
information in connection with an unsolicited possible Acquisition Transaction
if the Board of Directors of Westport, 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.
Westport has agreed to promptly communicate to HUBCO the 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.
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 Westport; (c) authorization, execution, delivery, performance and
enforceability of the Merger Agreement and related matters; (d) documents filed
by each of HUBCO and Westport with the Commissioner and the FDIC, respectively,
and the accuracy of information contained therein; (e) the accuracy of
information supplied by each of HUBCO and Westport 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 March 31, 1996; (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.
REGULATORY APPROVALS
Consummation of the Merger is subject, among other things, to prior
receipt of all necessary regulatory approvals. Consummation of the Merger
requires approval of the Bank Merger by the Commissioner under the BLC, and the
FDIC under the Bank Merger Act (the "BANK MERGER ACT"), and the approval of the
Merger or waiver of the need for such approval by 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 or waiver 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 Westport. Applications for approval or requests for
waiver were filed on August 12, 1996 with the Commissioner, on July 27, 1996
with the FDIC and on July 24, 1996 with the FRB. While HUBCO and Westport
anticipate receiving all such approvals or waivers, 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 Westport.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
At the Effective Time, as a result of the Merger, Westport will be
merged with and into HUBCO, with HUBCO as the Surviving Corporation.
Simultaneously, WBTC will be merged with and into Lafayette, HUBCO's principal
Connecticut bank subsidiary. Following the Bank Merger, Lafayette will continue
to operate as a wholly-owned subsidiary of HUBCO. At the Effective Time, two
persons designated by Westport and acceptable to HUBCO (who are to be Michael H.
Flynn and David A. Rosow unless HUBCO and Westport agree to the contrary) will
become directors of HUBCO; three persons designated by Westport and acceptable
to HUBCO (who are to include Michael H. Flynn and David A. Rosow unless HUBCO
and Westport agree to the contrary) and one person designated by Josiah T.
Austin (William D. Rueckert, who is one of the current directors of Westport and
WBTC) will become directors of Lafayette; Mr. Flynn will become the President
and CEO of Lafayette (subject to certain conditions), and Mr. Rosow will become
the Chairman of the Executive Committee of the HUBCO Board of Directors. For
information regarding Messrs. Flynn and Rosow, see Westport's 10-K.
EXCHANGE OF CERTIFICATES, ISSUANCE OF SHARES FOR OPTIONS
At the Effective Time, holders of certificates formerly representing
shares of Westport Stock will cease to have any rights as Westport shareholders
and their certificates automatically will represent the shares of HUBCO Stock
into which their shares of Westport 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 Westport Stock,
indicating the method for exchanging such holder's stock certificates for the
certificates representing those shares of HUBCO Stock into which such holder's
shares of Westport Stock have been exchanged. HOLDERS OF WESTPORT STOCK SHOULD
NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE INSTRUCTIONS FROM HUBCO.
Each share of HUBCO Stock for which shares of Westport Stock or
Converting Stock Options are exchanged will be deemed to have been issued at the
Effective Time. Accordingly, Westport shareholders who receive HUBCO Stock in
the Merger will be entitled to receive any dividend or other distribution which
may be payable to holders of record of such HUBCO 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 Stock until the certificate or
certificates formerly representing shares of Westport Stock have been
surrendered, at which time any accrued dividends and other distributions on such
shares of HUBCO Stock will be paid without interest. See "-- Consideration".
Holders of outstanding certificates for Westport 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
Stock into which the shares of Westport 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.
Holders of Converting Stock Options, will receive, promptly after the
Effective Time, a certificate representing the full number of shares of HUBCO
Common Stock into which the Converting Stock Options have been converted. At the
time of issuance of the stock certificates, each holder of a Converting Stock
Option will receive a check for the amount of the fractional share interest, if
any, to which the holder of the Converting Stock Option may be entitled.
Immediately following the Closing HUBCO will provide holders of
Continuing Stock Options with a means to exchange their existing option grant
agreements for new grant agreements covering HUBCO Common Stock.
EFFECTIVE TIME; AMENDMENTS; TERMINATION
The Closing will occur on a date mutually agreed to by HUBCO and
Westport and as soon as practicable (but in any event within five business days)
after receipt of all necessary approvals and consents, the expiration of all
statutory 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
Westport. The parties currently anticipate closing in late November or early
December 1996. Immediately following the Closing, HUBCO and Westport will file
appropriate certificates of merger with the Secretaries of State of the States
of Delaware and New Jersey. The Effective Time will be the close of business on
the first day when both such certificates have been filed. The Effective Time is
dependent upon satisfaction of all conditions precedent, some of which are not
under the control of HUBCO and/or Westport. 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 Westport at any
time prior to the Effective Time. However, after approval of the Merger
Agreement by the shareholders of Westport, no amendment can be made which
reduces the amount or changes the form of consideration to be delivered to the
shareholders of Westport without the approval of such shareholders.
The Merger Agreement may be terminated by the mutual consent of
Westport and HUBCO. The Merger Agreement may also be terminated by Westport or
HUBCO if, among other things, (i) the Effective Time has not occurred on or
before March 31, 1997 unless the failure of such occurrence is due to the
failure of the party seeking to terminate to perform or observe its covenants in
the Merger Agreement; (ii) a vote of the stockholders of Westport to approve the
Merger Agreement is taken and such stockholders fail to approve the Merger
Agreement at their meeting; or (iii) any regulatory approvals necessary to
consummate the transaction have been denied or withdrawn at the request of the
regulatory agency or such approval is given with conditions which materially
impair the value of Westport and WBTC, taken as a whole, 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
Westport and WBTC, taken as a whole, from that disclosed by Westport to HUBCO in
its Quarterly Report on Form 10-Q for the three months ended March 31, 1996, or
Westport breaches in a material respect any representation, warranty or
covenant, agreement or obligation under the Merger Agreement and does not cure
such breach within 30 days after receipt by Westport of a notice of breach.
Westport 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 three
months ended March 31, 1996, or HUBCO and its subsidiaries, taken as a whole,
breaches in a material respect any representation, warranty or covenant,
agreement or obligation 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 Westport may terminate the Merger Agreement if the
conditions for Westport to close are not satisfied.
Westport may terminate the Merger Agreement unilaterally if its Board
of Directors approves an Acquisition Transaction in an exercise of its fiduciary
responsibilities and Westport has paid to HUBCO in full the $3 million
Termination Fee described below.
In addition, the Merger Agreement may be terminated by Westport if 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 or, if FRB approval is not
required, the date the FDIC approves the Bank Merger) is less than $16.75 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 June 24, 1996,
$20.375 (the "HUBCO RATIO"), is less than the number obtained by dividing the
Index Price (i.e., the closing price of the Nasdaq Bank Index, as reported by
The Wall Street Journal) on the Determination Date by the Index Price on June
24, 1996, $1,069.25, and subtracting .075 from the result (after such
subtraction, the "INDEX RATIO"). However, Westport is obligated to provide
notice of such termination to HUBCO, which may then elect, at its sole option,
to increase the Exchange Ratio as set forth in the Merger Agreement and as
illustrated below. If HUBCO so elects and increases the Exchange Ratio, the
Merger Agreement will not be terminated. There can be no assurance that Westport
will exercise its right to terminate the Merger Agreement if the conditions
described above (a "TERMINATION EVENT") exist and if Westport does exercise its
right to 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 three scenarios:
(1) If the HUBCO Common Stock Average Price on the
Determination Date is equal to or greater than $16.75, there would be
no Termination Event and no adjustment to the Exchange Ratio.
(2) If the HUBCO Ratio (i.e., generally the percentage decline
in HUBCO's stock price) is equal to or greater than the Index Ratio
(i.e., generally the percentage change in the Nasdaq Bank Index less
7.5%), 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 $16.75 and the HUBCO Ratio is less than
the Index Ratio, there would be a Termination Event and Westport 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 $16.75 multiplied by the existing
Exchange Ratio and the denominator of which is the HUBCO Common Stock
Average Price on the Determination Date, and (ii) a quotient (rounded
to four decimals), the numerator of which is the Index Ratio multiplied
by the existing Exchange Ratio and the denominator of which is the
HUBCO Ratio.
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 Westport Common Stock in the Merger, nor do
they reflect all possible termination or increased Exchange Ratio scenarios.
Westport stockholders should be aware that the HUBCO Common Stock
Average Price on the Determination Date will be based on the average of the
closing prices of HUBCO Common Stock during a 20-day period ending on the
Determination Date. Accordingly, because the market price of HUBCO Common Stock
between the Determination 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 Westport Common Stock following consummation of the Merger, will
fluctuate and possibly decline, the value of the HUBCO Common Stock actually
received by holders of Westport Common Stock may be more or less than (i) the
HUBCO Common Stock Average Price on the Determination 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.
It is not possible to know whether a Termination Event will occur until
after the Determination Date. The Westport Board of Directors 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 Westport Board of Directors 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 Westport at the Meeting will confer on the Westport Board of Directors 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 Westport. If Westport elects to exercise its termination right,
Westport must give HUBCO prompt notice of that decision during a ten-day period
beginning on the Determination Date, but the Westport Board of Directors 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 Westport 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 Westport notice of that election within seven days after receipt of the
notice of termination from Westport 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.
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) 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, if:
(a) the Merger Agreement is terminated by Westport because the Westport
Board of Directors has approved an Acquisition Transaction; or
(b) the Merger Agreement is terminated by HUBCO (i) because of a breach
by Westport of any covenant in the Merger Agreement, or (ii) because of a
failure of the Westport shareholders to approve the Merger due to an action
taken by Westport or Westport's Board of Directors, or (iii) following a
withdrawal by O & Co. of its Fairness Opinion prior to the Closing; or
(c) the Merger Agreement is terminated by Westport, other than pursuant
to: (i) the mutual consent of HUBCO and Westport, (ii) if the Effective Time
does not occur by March 31, 1997 (provided that before October 1, 1996 Westport
has satisfied all conditions to HUBCO's obligation to close other than any
requirement of Westport stockholder approval or any condition waived by HUBCO),
(iii) the failure of the Westport stockholders to approve the Merger Agreement
unless (A) such failure is attributable to an action or omission of Westport or
Westport's Board of Directors or (B) a proposal to effect an Acquisition
Transaction was made public before the Meeting, (iv) the failure to obtain
requisite regulatory approval of the Merger, (v) a material adverse change with
respect to HUBCO since March 31, 1996 or a material uncured breach by HUBCO of
any representation, warranty or covenant, agreement or obligation of HUBCO in
the Merger Agreement, (vi) approval by the Westport Board of Directors of an
Acquisition Transaction, (vii) failure of HUBCO to satisfy all conditions to
Westport's obligation to close, or (viii) a Termination Event,
and, in the case of either clause (b) or (c) above,
x) after the execution of the Merger Agreement and prior to
the date of termination of the Merger Agreement Westport is informed orally or
in writing of a proposal to effect an Acquisition Transaction which proposal is
not fully withdrawn prior to the date of termination and which proposal is made
by a company or person other than HUBCO and its affiliates; and
y) before or within 12 months after the date of the
termination of the Merger Agreement (i) Westport enters into an agreement to
engage in an Acquisition Transaction with any person other than HUBCO, or (ii)
the Board of Directors of Westport approves an Acquisition Transaction or
recommends that the shareholders of Westport approve or accept any Acquisition
Transaction, in each case, other than as contemplated by the Merger Agreement,
and
z) an Acquisition Transaction between Westport and another
person closes (an "ACQUISITION TRANSACTION CLOSING") within 24 months after the
termination of the Merger Agreement;
then the Merger Agreement provides that Westport or its successor in interest
shall pay to HUBCO as a condition to a termination under clause (a) above or
under clauses (b) or (c) above as a condition to and simultaneous with the
Acquisition Transaction Closing, a Termination Fee equal to $3 million, plus the
legal fees and expenses of HUBCO incurred in enforcing its right to the
Termination Fee.
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 Westport would be added to those of HUBCO at their
recorded book values and the stockholders' equity accounts of HUBCO and Westport
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 Westport 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 WESTPORT COMMON
STOCK PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR RIGHTS OR OTHERWISE
AS COMPENSATION. WESTPORT 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 Section 368(a)(1)(A) of the Code and that,
accordingly, no gain or loss will be recognized by HUBCO or Westport or by the
shareholders of Westport upon the exchange of their shares of Westport Stock
solely for shares of HUBCO 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 Westport, 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 Westport 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
Westport Common Stock allocable to the fractional share interest.
Basis of HUBCO Stock. The basis of HUBCO Stock received by a Westport
shareholder who receives solely HUBCO Stock will be the same as the basis of
such shareholder's Westport Stock surrendered in exchange therefor.
Holding Period. The holding period of shares of HUBCO Stock received in
the Merger by holders of Westport Stock will include the period during which
such shares of Westport Stock surrendered in exchange therefor were held by the
holder thereof, provided such shares of Westport Stock were held as capital
assets.
Holders of Westport Options. HOLDERS OF CONVERTING STOCK OPTIONS WILL
RECEIVE HUBCO COMMON STOCK AND CASH IN LIEU OF FRACTIONAL SHARES IN CANCELLATION
OF THEIR CONVERTING STOCK 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 CONVERTING STOCK OPTIONS. HOLDERS OF CONVERTING STOCK OPTIONS WILL BE
REQUIRED TO DEPOSIT AN AMOUNT FOR WITHHOLDING TAXES WITH HUBCO UPON RECEIPT OF
THE HUBCO COMMON STOCK. Holders of Continuing Stock Options will receive like
options to purchase HUBCO Common Stock and will not be subject to tax on the
conversion of their Westport Options. Holders of Continuing Stock Options should
face the same tax consequences upon the exercise of their Continuing Stock
Options as they would have faced had they exercised their Continuing Stock
Options prior to the Merger. Persons who may be deemed to be "affiliates" of
Westport have delivered letters to HUBCO in which they have agreed to certain
restrictions in order for the Merger to comply with the "Pooling-of-Interests
Accounting" rules set forth in Accounting Series Releases Numbered 130 and 135
(the "RESTRICTIONS") on their ability to transfer any HUBCO Stock acquired by
them in the Merger. Accordingly, the income realized by such "affiliates" who
hold Converting Stock Options upon receipt of their HUBCO Common Stock will be
taxable at the time such Restrictions lapse, unless such "affiliates" elect to
include such income in gross income in the taxable year of the receipt of their
HUBCO Common Stock in accordance with Section 83(b) of the Code.
Consequences to Dissenting Westport Shareholders. Holders of Westport
Preferred Stock who perfect their dissenters' rights will receive only cash for
their shares of Westport Preferred 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 Westport Preferred Stock surrendered
therefor. The gain or loss will be characterized as a capital gain or loss if
(a) the holder's shares of Westport Preferred Stock are held as capital assets
and (b) the holder receives cash with respect to all shares of Westport
Preferred 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.
PRO FORMA FINANCIAL INFORMATION
PRO FORMA UNAUDITED COMBINED BALANCE SHEET
OF HUBCO, LAFAYETTE, HOMETOWN AND WESTPORT
The following pro forma unaudited combined condensed balance
sheet combines the historical consolidated balance sheets of HUBCO and Westport
giving effect to the Merger which will be accounted for as a pooling of
interests, as if the Merger had been effective on June 30, 1996, and the
historical consolidated balance sheet of Hometown as of June 30, 1996, giving
effect to the Hometown Acquisition which was consummated on August 30, 1996 and
was accounted for as a purchase, effective June 30, 1996, and the historical
consolidated balance sheet of Lafayette giving effect to the Lafayette
Acquisition, which was consummated on July 1, 1996 and was accounted for as a
pooling of interests, and also takes into account the Growth Acquisition, 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, Hometown
and Westport, including their respective notes thereto, certain of which are
incorporated by reference in this Proxy Statement (see "INFORMATION DELIVERED
AND INCORPORATED 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 remaining $7.0
million (after tax) of additional merger-related expenses and restructuring
charges that are expected to be taken in the third quarter of 1996 in connection
with the Lafayette Acquisition have been reflected in the pro forma combined
balance sheets. However, since the proposed remaining $7.0 million of
merger-related expenses and restructuring charges are nonrecurring, they have
not been reflected in the pro forma combined statements of income. See "CERTAIN
INFORMATION REGARDING HUBCO -- Recent Developments". The pro forma financial
data do not give effect to any 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 June 30, 1996 or that may be obtained in the future.
On September 13, 1996, HUBCO sold $75 million aggregate
principal amount of 8.20% Subordinated Debentures due 2006 in a private
placement. The net proceeds to HUBCO from the debenture offering were
$73,737,750, before deducting HUBCO's expenses in connection with the offering,
which are expected to be not more than $200,000. See "CERTAIN INFORMATION
REGARDING HUBCO -- Recent Developments." The Pro Forma financial information
does not reflect the sale of the debentures.
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED COMBINED
CONDENSED BALANCE SHEET AS OF JUNE 30, 1996
($ in thousands, except per share data)
Pro Pro
Assets forma Pro- forma Pro- Pro Pro
Adjust- forma Home- Adjust- Forma forma forma
HUBCO Lafayette ments Combined town ments Combined Westport Adjustments Combined
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and due from banks $81,389 $37,875 $ $119,264 $12,464 $(1,020) $130,708 $21,767 $ $152,475
- -
Federal funds sold - - - - 1,690 - 1,690 13,500 - 15,190
Securities 644,995 125,717 (6,355) 764,357 83,563 (32,000) 815,920 90,814 (1,701) 905,033
Loans 954,136 548,005 - 1,502,141 101,971 - 1,604,112 182,680 - 1,786,792
Less: Allowance for loan
losses (18,055) (9,664) - (27,719) (2,569) - (30,288) (3,121) - (33,409)
-----------------------------------------------------------------------------------------------------------
936,081 538,341 - 1,474,422 99,402 - 1,573,824 179,559 - 1,753,383
-----------------------------------------------------------------------------------------------------------
Other assets 68,045 39,275 - 107,320 7,475 - 114,795 10,816 - 125,611
Intangibles, net of
amortization 9,356 - - 9,356 155 15,336 24,847 192 - 25,039
-----------------------------------------------------------------------------------------------------------
Total Assets $1,739,866 $741,208 $(6,355) $2,474,719 $204,749 $(17,684) $2,661,784 $316,648 $(1,701) $2,976,731
===========================================================================================================
Liabilities and Stockholders'
Equity
Deposits:
Noninterest bearing $ 315,958 $135,485 $ - $451,443 $ 25,044 $ - $476,487 $78,953 $ - $555,440
Interest bearing 1,171,849 511,464 - 1,683,313 149,347 - 1,832,660 179,938 - 2,012,598
----------------------------------------------------------------------------------------------------------
Total deposits 1,487,807 646,949 - 2,134,756 174,391 - 2,309,147 258,891 - 2,568,038
----------------------------------------------------------------------------------------------------------
Borrowings 85,357 29,197 - 114,554 11,500 (1,410) 124,644 29,049 - 153,693
Other liabilities 11,588 6,498 7,038 25,124 1,614 970 27,708 3,593 - 31,301
----------------------------------------------------------------------------------------------------------
Total Liabilities 1,584,752 682,644 7,038 2,274,434 187,505 (440) 2,461,499 291,533 - 2,753,032
Subordinated debt 25,000 - - 25,000 - - 25,000 - - 25,000
Stockholders' Equity:
Preferred stock - - - - - - - - - -
Common stock 25,502 201 9,437 35,140 1,833 (1,833) 35,140 61 3,622 38,823
Additional paid in
capital 62,283 50,433 (22,037) 90,679 14,123 (14,123) 90,679 23,485 (5,323) 108,841
Retained earnings 61,028 8,437 (7,038) 62,427 2,411 (2,411) 62,427 2,495 - 64,922
Other (18,699) (507) 6,245 (12,961) (1,123) 1,123 (12,961) (926) - (13,887)
------------------------------------------------------------------------------------------------------------
Total Capital 130,114 58,564 (13,393) 175,285 17,244 (17,244) 175,285 25,115 (1,701) 198,699
Total Liabilities
and Capital $1,739,866 $741,208 $(6,355) $2,474,719 $204,749 $(17,684) $2,661,784 $316,648 $(1,701) $2,976,731
============================================================================================================
Common and common
equivalent shares
outstanding 13,518 19,279 19,278 22,627
Book value per common and
common equivalent share $9.63 $9.12 $9.12 $8.80
</TABLE>
<PAGE>
Pro Forma Unaudited Combined Statements of Income
of HUBCO, Lafayette, Hometown and Westport
The following pro forma unaudited combined condensed
statements of income combine the historical consolidated statements of income of
HUBCO, Lafayette, Hometown and Westport 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
Lafayette Acquisition, which was consummated on July 1, 1996 and was accounted
for as a pooling of interests, and the Hometown Acquisition, which was
consummated on August 30, 1996 and was accounted for as a purchase, and the pro
forma adjustments described in the notes to the pro forma combined financial
statements, and also takes into account the Growth Acquisition, which was
consummated on January 12, 1996 and 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 statements of income were prepared on the
assumption that the Hometown Acquisition 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 remaining $7.0 million (after
tax) of merger-related expenses and restructuring charges expected to be taken
in connection with the Lafayette Acquisition has been reflected in the pro forma
combined balance sheet; however, since the proposed merger-related expenses and
restructuring charges are nonrecurring, they have not been reflected in the pro
forma combined statements of income. The pro forma financial data do not give
effect to any 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.
The income tax provision (benefit) for Lafayette and Westport
includes the effect of reducing Lafayette's and Westport's valuation allowance
with respect to federal deferred tax assets. Considering the combined operating
results, it is unlikely that HUBCO would have established a valuation allowance
with respect to its federal deferred tax assets had the companies always been
combined. The pro forma unaudited combined statements of income have been
adjusted to reflect what the changes in the valuation allowance would have been
had the companies always been combined.
On September 13, 1996, HUBCO sold $75 million aggregate
principal amount of 8.20% Subordinated Debentures due 2006 in a private
placement. The net proceeds to HUBCO from the debenture offering were
$73,737,750, before deducting HUBCO's expenses in connection with the offering,
which are expected to be not more than $200,000. See "CERTAIN INFORMATION
REGARDING HUBCO -- Recent Developments". The Pro Forma financial information
does not reflect the sale of the debentures.
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENTS OF INCOME FOR THE SIX MONTHS
ENDED JUNE 30, 1996
($ In thousands, except per share data)
Pro Pro Pro Pro
Forma Home- Forma Forma Forma
HUBCO Lafayette Combined town Adjustments Combined Westport Combined
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest on loans $42,240 $23,052 $65,292 $4,442 $ - $69,734 $8,123 $77,857
Interest on securities 19,125 4,153 23,278 2,831 (910) 25,199 2,672 27,871
Other interest income 202 101 303 8 - 311 103 414
---------------------------------------------------------------------------------------------
Total Interest Income 61,567 27,306 88,873 7,281 (910) 95,244 10,898 106,142
---------------------------------------------------------------------------------------------
Interest on deposits 18,585 9,956 28,541 2,820 - 31,361 2,848 34,209
Interest on borrowings 2,229 737 2,966 624 (35) 3,555 405 3,960
---------------------------------------------------------------------------------------------
Total Interest Expense 20,814 10,693 31,507 3,444 (35) 34,916 3,253 38,169
---------------------------------------------------------------------------------------------
Net Interest Income 40,753 16,613 57,366 3,837 (875) 60,328 7,645 67,973
Provision for loan losses 1,896 2,500 4,396 50 - 4,446 600 5,046
Noninterest income 9,982 2,551 12,533 643 - 13,176 2,144 15,320
Noninterest expense 28,001 14,922 42,923 3,361 775 47,059 5,599 52,658
---------------------------------------------------------------------------------------------
Pre-Tax Income (Loss) 20,838 1,742 22,580 1,069 (1,650) 21,999 3,590 25,589
Income tax provision (benefit) 7,678 952 8,630 450 (333) 8,747 1,491 10,238
---------------------------------------------------------------------------------------------
Net Income (Loss) $13,160 $790 $13,950 $619 $(1,317) $13,252 $2,099 $15,351
=============================================================================================
Earnings (loss) per share:
Primary $0.95 $0.71 $0.68 $0.67
Fully Diluted $0.95 $0.71 $0.68 $0.67
Weighted Average Shares
Outstanding:
Common and common
equivalent shares 13,844 19,604 19,604 22,953
Preferred (HUBCO) - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
($ in thousands, except per share data)
Pro- Pro- Pro-
Pro Forma Pro Forma Home- Forma Forma Forma
HUBCO Growth Combined Lafayette Combined town Adjust- Combined Combined
ments Westport
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest on loans $80,503 $8,437 $88,940 $41,947 $130,887 $7,625 $ $138,512 $16,200 $154,712
-
Interest on securities 39,065 1,185 40,250 10,313 50,563 7,269 (1,820) 56,012 4,366 60,378
Other interest income 1,143 170 1,313 163 1,476 186 - 1,662 159 1,821
------------------------------------------------------------------------------------------------------
Total Interest Income 120,711 9,792 130,503 52,423 182,926 15,080 (1,820) 196,186 20,725 216,911
------------------------------------------------------------------------------------------------------
Interest on deposits 35,557 3,821 39,378 17,189 56,567 6,171 - 62,738 5,110 67,848
Interest on borrowings 4,052 2 4,054 3,792 7,846 1,497 (69) 9,274 917 10,191
------------------------------------------------------------------------------------------------------
Total Interest Expense 39,609 3,823 43,432 20,981 64,413 7,668 (69) 72,012 6,027 78,039
------------------------------------------------------------------------------------------------------
Net Interest Income 81,102 5,969 87,071 31,442 118,513 7,412 (1,751) 124,174 14,698 138,872
Provision (benefit)for
loan losses 4,200 625 4,825 3,190 8,015 75 - 8,090 1,500 9,590
Noninterest income 17,791 351 18,142 6,078 24,220 1,420 - 25,640 4,005 29,645
Noninterest expense 60,164 5,070 65,234 26,230 91,464 6,951 1,626 100,041 11,378 111,419
------------------------------------------------------------------------------------------------------
Pre-Tax Income (Loss) 34,529 625 35,154 8,100 43,254 1,806 (3,377) 41,683 5,825 47,508
Income tax provision
(benefit) 10,845 427 11,272 1,385 12,657 497 (665) 12,489 1,857 14,346
------------------------------------------------------------------------------------------------------
Net Income (Loss) $23,684 $198 $23,882 $6,715 $30,597 $1,309 $(2,712) $29,194 $3,968 $33,162
======================================================================================================
Earnings per share:
Primary $1.82 $1.67 $1.53 $1.46 $1.42
Fully Diluted $1.79 $1.65 $1.51 $1.45 $1.41
Weighted Average Shares
Outstanding:
Common and common
equivalent shares 12,743 13,976 19,691 19,691 23,040
Preferred (HUBCO) 508 508 508 508 508
Net Income (loss) as
previously reported $23,684 $198 $23,882 $18,927 $42,809 $1,309 $(2,712) $41,406 $6,830 $48,236
Adjustments to income
tax provision (benefit) - - - (12,212) (12,212) - - (12,212) (2,862) (15,074)
Net income (loss) as
reported herein $23,684 $198 $23,882 $6,715 $30,597 $1,309 $(2,712) $29,194 $3,968 $33,162
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
($ in thousands, except per share data)
Pro Forma Pro Forma Pro Forma
HUBCO Growth Combined Lafayette Combined Westport Combined
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest on loans $62,031 $6,697 $68,728 $34,136 $102,864 $13,729 $116,593
Interest on securities 39,958 810 40,768 8,236 49,004 3,484 52,488
Other interest income 1,364 152 1,516 211 1,727 121 1,848
---------------------------------------------------------------------------------------------
Total Interest Income 103,353 7,659 111,012 42,583 153,595 17,334 170,929
---------------------------------------------------------------------------------------------
Interest on deposits 29,268 2,352 31,620 11,790 43,410 4,443 47,853
Interest on borrowings 2,989 9 2,998 1,969 4,967 306 5,273
--------------------------------------------------------------------------------------------
Total Interest Expense 32,257 2,361 34,618 13,759 48,377 4,749 53,126
---------------------------------------------------------------------------------------------
Net Interest Income 71,096 5,298 76,394 28,824 105,218 12,585 117,803
Provision for loan losses 3,550 634 4,184 3,325 7,509 1,800 9,309
Noninterest income 11,828 327 12,155 6,337 18,492 3,928 22,420
Noninterest expense 51,050 3,871 54,921 28,423 83,344 11,587 94,931
---------------------------------------------------------------------------------------------
Pre-Tax Income 28,324 1,120 29,444 3,413 32,857 3,126 35,983
Income tax provision 10,892 - 10,892 939 11,831 764 12,595
---------------------------------------------------------------------------------------------
Net Income $17,432 $1,120 $18,552 $2,474 $21,026 $2,362 $23,388
=============================================================================================
Earnings per share:
Primary $1.36 $1.33 $1.11 $1.05
Fully Diluted $1.33 $1.31 $1.10 $1.04
Weighted Average Shares
Outstanding:
Common & common
equivalent shares 12,496 13,599 18,491 21,840
Preferred (HUBCO) 602 602 602 602
Net income as previously
reported $17,432 $1,120 $18,552 $6,137 $24,689 $4,362 $29,051
Adjustments to income tax
provision (benefit) - - - (3,663) (3,663) (2,000) (5,663)
Net income as reported herein $17,432 $1,120 $18,552 $2,474 $21,026 $2,362 $23,388
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED
DECEMBER 31, 1993
($ in thousands, except per share data)
Pro Forma Pro Forma Pro Forma
HUBCO Growth Combined Lafayette Combined Westport Combined
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest on loans $56,140 $4,472 $60,612 $34,798 $95,410 $13,482 $108,892
Interest on securities 28,734 1,219 29,953 6,306 36,259 1,798 38,057
Other interest income 1,676 163 1,839 311 2,150 429 2,579
---------------------------------------------------------------------------------------------
Total Interest Income 86,550 5,854 92,404 41,415 133,819 15,709 149,528
---------------------------------------------------------------------------------------------
Interest on deposits 26,604 2,142 28,746 13,809 42,555 5,642 48,197
Interest on borrowings 907 - 907 1,625 2,532 42 2,574
---------------------------------------------------------------------------------------------
Total Interest Expense 27,511 2,142 29,653 15,434 45,087 5,684 50,771
---------------------------------------------------------------------------------------------
Net Interest Income 59,039 3,712 62,751 25,981 88,732 10,025 98,757
Provision for loan losses 4,874 653 5,527 23,500 29,027 2,890 31,917
Noninterest income 10,579 302 10,881 8,306 19,187 5,384 24,571
Noninterest expense 42,313 3,309 45,622 36,789 82,411 11,569 93,980
---------------------------------------------------------------------------------------------
Pre-Tax Income (Loss) 22,431 52 22,483 (26,002) (3,519) 950 (2,569)
Income tax provision (benefit) 8,560 (260) 8,300 (8,508) (208) 529 321
---------------------------------------------------------------------------------------------
Income (loss) before cumulative
effect of change in
accounting principle 13,871 312 14,183 (17,494) (3,311) 421 (2,890)
Cumulative effect of change in
accounting principle - - - (3,118) (3,118) - (3,118)
----------------------------------------------------------------------------------------------
Net Income (Loss) $13,871 $312 $14,183 $(20,612) $(6,429) $421 $(6,008)
==============================================================================================
Earnings (loss) per share before
cumulative effect of change in
accounting principle:
Primary $1.06 $1.00 $(0.22) $(0.16)
Fully Diluted $1.06 $1.00 $(0.22) $(0.16)
Earnings (loss) per share after
cumulative effect of Change in
accounting principle:
Primary $1.06 $1.00 $(0.43) $(0.33)
Fully Diluted $1.06 $1.00 $(0.43) $(0.33)
Weighted Average Shares Outstanding:
Common & common equivalent 13,109 14,212 14,918 18,267
shares
Preferred (HUBCO) - - - -
Net income (loss) as previously $13,871 $312 $14,183 $(29,136) $(14,953) $1,202 $(13,751)
reported
Adjustments to income tax - - - 8,524 8,524 (781) 7,743
provision (benefit)
Net income (loss) as reported herein $13,871 $312 $14,183 $(20,612) $(6,429) $421 $(6,008)
</TABLE>
<PAGE>
NOTES TO PRO FORMA FINANCIAL INFORMATION
(1) Pro forma financial information assumes that the Growth Acquisition,
the Lafayette Acquisition and the Merger were consummated as of the
beginning of each of the periods indicated and that the Hometown
Acquisition was consummated as of January 1, 1995 for the pro forma
unaudited combined statements of income and as of June 30, 1996 for
the pro forma unaudited combined balance sheet. Because the Hometown
Acquisition was 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
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
operation 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
0.3225 shares of HUBCO Common Stock for each of the 6,068,531 shares
of Westport Common Stock which were outstanding at June 30, 1996.
The pro forma financial information presented herein gives effect to
the cancellation of 85,300 shares of HUBCO Common Stock. This
adjustment is the result of HUBCO's ownership, as of August 6, 1996,
of 264,500 shares of Westport Common Stock at a cost of $1,701,125.
As a result, the pro forma information was adjusted for the Merger by
the (i) addition of 2,156,761 shares of HUBCO Common Stock with a
stated value of $1.778 per share amounting to $3,834,734; (ii)
elimination of 6,068,531 shares of Westport Common Stock with a par
value of $.01 per share amounting to $60,685; (iii) cancellation of
85,300 shares of HUBCO Common Stock amounting to $151,663; (iv)
issuance of 39,600 shares of New HUBCO Preferred Stock with a par
value of $.01, amounting to $396, (v) elimination of 39,600 shares of
Westport Preferred Stock with a par value of $.01, amounting to $396;
and (vi) recording of the remaining net amount of $5,323,511 as a
reduction of additional paid in capital at June 30, 1996.
The effect of the remaining $7.0 million of the total $8.5 million
(after tax) restructuring charge in connection with the Lafayette
Acquisition has been reflected in the pro forma combined balance
sheet as an increase in other liabilities.
(3) The Lafayette Acquisition was 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 10,029,637 shares of Lafayette
common stock which were outstanding at June 30, 1996.
The pro forma financial information presented herein gives effect to
the cancellation of 323,400 shares of HUBCO Common Stock. This
adjustment is the result of HUBCO's ownership of 550,000 shares of
Lafayette common stock at a cost of $6,354,687.
As a result, the pro forma information was adjusted for the Lafayette
Acquisition by the (i) addition of 5,897,426 shares of HUBCO Common
Stock with a stated value of $1.778 per share, amounting to
$10,485,623; (ii) elimination of 10,029,637 shares of Lafayette
Common Stock with a stated value of $.02 per share, amounting to
$200,593; (iii) cancellation of 323,400 shares of HUBCO Common Stock
amounting to $575,005; (iv) addition of 146,600 shares of HUBCO
Common Stock amounting to $260,655 in exchange for Lafayette's stock
options; and (v) recording of the remaining net amount of $16,367,000
as a reduction of additional paid in capital at June 30, 1996.
(4) 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 June 30,
1996. 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; and (vii) the book value of Hometown's loans and
deposits are deemed to approximate estimated fair value at June 30,
1996 and therefore no fair value adjustment is necessary.
(5) On January 12, 1996, HUBCO completed its purchase of Growth, 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 interests. The pro forma financials presented
herein reflect the effect of this acquisition.
(6) Earnings per share data has been computed based on the combined
historical net income applicable to common stockholders of HUBCO,
Westport, 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 38,759 common share equivalents applicable
to the 61,477 HUBCO warrants issued in the Lafayette Acquisition for
the 104,554 Lafayette warrants outstanding.
(7) Certain insignificant reclassifications have been included herein to
conform to statement presentations.
<PAGE>
RIGHTS OF DISSENTING WESTPORT SHAREHOLDERS
WESTPORT SHAREHOLDERS ARE ENTITLED TO DISSENTERS' RIGHTS OF APPRAISAL
IN CONNECTION WITH THE MERGER WITH RESPECT TO SHARES OF WESTPORT PREFERRED
STOCK. HOWEVER, THERE ARE NO DISSENTERS' RIGHTS IN THE MERGER WITH RESPECT TO
SHARES OF WESTPORT COMMON STOCK.
Holders of Westport Preferred Stock who follow the procedures specified
in Section 262 of the DGCL will be entitled to have their shares of Westport
Preferred Stock appraised by the Delaware Court of Chancery and to receive
payment of the "fair value" of such shares, exclusive of any element of value
arising from the accomplishment or expectation of the Merger, as determined by
such Court. A dissenting shareholder should assume that neither Westport nor
HUBCO will take any action to perfect his or her appraisal rights. Therefore, a
shareholder desiring to exercise appraisal rights should strictly comply with
the procedures set forth in Section 262 and is urged to consult his or her legal
advisor before electing or attempting to exercise such rights. Failure to follow
any of such procedures may result in a termination or waiver of appraisal rights
under Section 262. A person having a beneficial interest in shares of Westport
Preferred Stock held of record in the name of another person, such as a broker
or nominee, must act promptly to cause the record holder to follow the steps
summarized below properly and in a timely manner to perfect whatever appraisal
rights the beneficial owner may have.
The following discussion of the provisions of Section 262 is not
intended to be a complete statement of its provisions and is qualified in its
entirety by reference to the full text of that section, a copy of which is
included herein as Appendix C.
Under Section 262, a dissenting shareholder electing to exercise
appraisal rights must satisfy both of the requirements set forth in paragraphs 1
and 2 below:
1. Deliver to Westport, before the taking of the vote on the Merger, a
written demand for appraisal of his or her Westport Preferred Stock which
reasonably informs Westport of the identity of the shareholder of record and
that such shareholder intends thereby to demand the appraisal of his or her
Westport Preferred Stock. This written demand is in addition to and separate
from any proxy or vote against the proposal to approve the Merger Agreement.
Neither a vote against such proposal nor a proxy directing such vote shall
satisfy the requirement for such written demand. The written demand for
appraisal should be delivered either in person to the Secretary of Westport at
the Meeting, or by mail (certified mail, return receipt requested, being the
recommended form of transmittal) to: John J. Henchy, Secretary, Westport
Bancorp, Inc., 87 Post Road East, Westport Connecticut 06880 before the vote on
the proposal to approve the Merger Agreement;
2. Not vote in favor of the Merger. A failure to vote against the
Merger will not constitute a waiver of appraisal rights. However, any
shareholder who executes a proxy and who desires to perfect his or her appraisal
rights must mark the proxy "Against" the proposal to approve the Merger
Agreement or must abstain because if the executed proxy is left blank, it will
be voted for the Merger, in which case appraisal rights will be waived.
In addition, a holder of shares of Westport Preferred Stock wishing to
exercise his or her appraisal rights must hold of record such shares on the date
the written demand for appraisal is made and must hold such shares continuously
through the Effective Time of the Merger. The written demand for appraisal must
be made by or for the holder of record of the Westport Preferred Stock.
Accordingly, such demand should be executed by or for such shareholder of
record, fully and correctly, as such shareholder's name appears on his or her
stock certificates. If the Westport Preferred Stock certificates are owned of
record in a fiduciary capacity, such as by a trustee, guardian or custodian,
execution of the demand should be made in such capacity and if the stock is
owned of record by more than one person, as in a joint tenancy or tenancy in
common, such demand should be executed by or for all joint owners. An authorized
agent, including one of two or more joint owners, may execute the demand for
appraisal for a shareholder of record. However, the agent must identify the
record owner or owners and expressly disclose the fact that in executing the
demand he or she is acting as agent for the record owner or owners. A record
holder, such as a broker, who holds shares of Westport Preferred Stock as
nominee for several beneficial owners may exercise appraisal rights with respect
to the shares of Westport Preferred Stock held for one or more beneficial owners
while not exercising such rights with respect to shares of Westport Preferred
Stock held for other beneficial owners; in such case, the written demand should
set forth the number of shares of Westport Preferred Stock as to which appraisal
is sought and where no known number of shares of Westport Preferred Stock is
expressly mentioned, the demand will be presumed to cover all shares of Westport
Preferred Stock held in the name of the record holder. Shareholders who hold
their shares of Westport Preferred Stock in brokerage accounts or other nominee
forms and who wish to exercise appraisal rights must take all necessary steps in
order that a demand for appraisal is made by the record holder of such shares
and are urged to consult with their brokers to determine the appropriate
procedures for the making of the demand for appraisal by the record holder.
Dissenting shareholders who are not the owners of record of their
shares should consult their legal counsel regarding their ability to exercise
appraisal rights with respect to the Westport Preferred Stock.
Within ten days after the Effective Time, HUBCO will notify each former
holder of Westport Preferred Stock who has satisfied the foregoing conditions of
the date on which the Merger became effective. Within 120 days after the
Effective Time, HUBCO or any such shareholder who has satisfied the foregoing
conditions and is otherwise entitled to appraisal rights under Section 262 may
file a petition in the Delaware Court of Chancery demanding a determination of
the fair value of the Westport Preferred Stock formerly held by all shareholders
entitled to appraisal rights. If no such petition is filed, appraisal rights
will be lost for all shareholders who had previously demanded appraisal of their
Westport Preferred Stock. Dissenting shareholders seeking to exercise appraisal
rights should assume that HUBCO will not file a petition with respect to the
appraised value of Westport Preferred Stock and that HUBCO will not initiate any
negotiations with respect to the "fair value" of Westport Preferred Stock.
Accordingly, holders of Westport Preferred Stock who wish to exercise their
appraisal rights should regard it as their obligation to take all steps
necessary to perfect their appraisal rights in the manner prescribed in Section
262.
Within 120 days after the day of the Effective Time, any Dissenting
Shareholder who has complied with the provisions of Section 262 is entitled,
upon written request, to receive from HUBCO a statement setting forth the
aggregate number of shares of Westport Preferred Stock not voted in favor of the
Merger Agreement and, with respect to which demands for appraisal were received
by Westport, the number of holders of such Westport Preferred Stock. Such
written statement must be mailed by HUBCO within ten days after the written
request therefor has been received by HUBCO or within ten days after expiration
of the time for delivery of demands for appraisal under Section 262, whichever
is later.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Court of Chancery will determine the former holders of
Westport Preferred Stock entitled to appraisal rights and will appraise the
value of the Westport Preferred Stock formerly owned by such shareholders,
determining the "fair value" exclusive of any element of value arising from the
accomplishment or expectation of the Merger.
Although HUBCO and Westport believe that the terms of the Merger are
fair, neither can make any representation as to the outcome of any appraisal of
"fair value" as determined by the Delaware Court of Chancery, and shareholders
should recognize that such an appraisal could result in a determination of a
lower, higher or equivalent value. Moreover, HUBCO may or may not argue in an
appraisal proceeding for a determination of "fair value" by the Delaware Court
of Chancery which is lower than the value of the consideration received by
holders of Westport Preferred Stock pursuant to the Merger Agreement. In
determining the "fair value" of the Westport Preferred Stock, the Court is
required to take into account all relevant factors. Therefore, such
determination could be based upon considerations in addition to the price paid
in the Merger, such as the market value of the Westport Preferred Stock, asset
values, dividends, earnings, prospects, the nature of the enterprise and other
facts which could be ascertained as of the date of the Merger. The Delaware
Supreme Court has stated with respect to Section 262 that, among other things,
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in an appraisal proceeding. In addition, Delaware Courts have
decided that the statutory appraisal remedy, depending on the relevant facts and
circumstances, may or may not be a shareholder's exclusive remedy in connection
with mergers similar to the Merger.
The Court of Chancery may also, on application, (i) determine a fair
rate of interest, simple or compound, if any, to be paid to Dissenting
Shareholders in addition to the value of the capital stock for the period from
the Effective Time of the Merger to the date of payment, (ii) assess costs among
the parties as the Court deems equitable and (iii) order all or a portion of the
expenses incurred by any Dissenting Shareholder in connection with the appraisal
proceeding, including without limitation, reasonable attorneys' fees and fees
and expenses of experts, to be charged pro rata against the value of all shares
entitled to appraisal. Determinations by the Court are subject to appellate
review by the Delaware Supreme Court.
Any Dissenting Shareholder of Westport who has duly demanded an
appraisal in compliance with Section 262 will not, after the Effective Time of
the Merger, be entitled to vote the Westport Preferred Stock for any purpose nor
be entitled to the payment of dividends or other distributions on his or her
Westport Preferred Stock.
If no petition for an appraisal is filed within the time provided, or
if a former holder of Westport Preferred Stock delivers to HUBCO a written
withdrawal of his or her demand for an appraisal and an acceptance of the
consideration to be received in the Merger, either within 60 days after the
Effective Time or with the written approval of HUBCO, then the right of such
shareholder to an appraisal will cease and such shareholder shall be entitled to
receive such consideration in the Merger, without interest, as if he or she had
not demanded appraisal of his or her Westport Preferred Stock. No pending
appraisal proceeding in the Court of Chancery will be dismissed as to any
shareholder without the approval of the Court, which approval may be conditioned
on such terms as the Court deems just.
DESCRIPTION OF HUBCO CAPITAL STOCK
GENERAL
The authorized capital stock of HUBCO presently consists of 50 million
shares of HUBCO Common Stock and 10 million shares of preferred stock. As of
August 31, 1996, 19,271,900 shares of HUBCO Common Stock were issued and
outstanding, and no shares of HUBCO preferred stock were outstanding. Of the
authorized but unissued shares of HUBCO Common Stock, 246,192 shares are
reserved for issuance under HUBCO's Restricted Stock Plan, 325,096 shares are
reserved for issuance upon exercise of stock options and 49,506 are reserved for
issuance upon exercise of warrants.
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 Convertible Preferred Stock was issued pursuant to
such authority in connection with HUBCO's acquisition of Washington Bancorp,
Inc. on July 1, 1994; no HUBCO Series A Preferred Stock remains outstanding.
HUBCO's Certificate of Incorporation authorizes the Board of Directors
of HUBCO (except in connection with certain business combinations), from time to
time and without further shareholder action, to issue new shares of authorized
but unissued HUBCO Common Stock or preferred stock. Because of its broad
direction with respect to the creation and issuance of HUBCO Common Stock or
preferred stock without shareholder approval, the Board of Directors could
adversely affect the voting power of holders of HUBCO Common Stock or preferred
stock and, by issuing shares of preferred stock with certain voting, conversion
and/or redemption rights could discourage any attempt to gain control of HUBCO.
DESCRIPTION OF NEW HUBCO PREFERRED STOCK
The following description of the New HUBCO Preferred Stock sets forth
certain general terms and provisions of the preferred stock which HUBCO has
agreed to issue pursuant to the Merger Agreement. The following summary does not
purport to be complete and is qualified in its entirety by reference to Exhibit
2.1(a) to the Merger Agreement. Exhibit 2.1(a) is attached as Appendix D to this
Proxy Statement. Appendix D contains the proposed language to be included in the
amendment to the certificate of incorporation of HUBCO which will create the New
HUBCO Preferred Stock and prescribe the designations, powers, and relative
rights and preferences of the New HUBCO Preferred Stock.
The New HUBCO Preferred Stock will be a series of non-cumulative
convertible preferred stock designated "Series B Convertible Preferred Stock."
The New HUBCO Preferred Stock will have a stated value of $100.00 per share. The
shares when issued will be fully paid and non-assessable. HUBCO anticipates that
it may issue up to a maximum of 39,600 shares of the New HUBCO Preferred Stock
upon the consummation of the acquisition of Westport. (The pro forma financial
statements contained in this Proxy Statement-Prospectus reflect the issuance of
39,600 shares of New HUBCO Preferred Stock. See "PRO FORMA FINANCIAL
INFORMATION".) Upon the reacquisition of any of the New HUBCO Preferred Stock,
through redemption, conversion or otherwise, such reacquired shares will be
canceled and will become part of the authorized and unissued preferred stock of
HUBCO, but will not be authorized and unissued New HUBCO Preferred Stock. The
New HUBCO Preferred Stock will have the dividend, liquidation, redemption,
voting and conversion rights set forth below.
Rank
The New HUBCO Preferred Stock shall, with respect to rights on
liquidation, winding up and dissolution of HUBCO, rank prior to the HUBCO Common
Stock and to all other classes and series of equity securities of HUBCO now or
hereafter authorized, issued or outstanding (the HUBCO Common Stock and such
other classes and series of equity securities collectively may be referred to as
the "JUNIOR STOCK"), other than any class or series of equity securities of
HUBCO ranking on a parity with (the "PARITY STOCK") or senior to (the "SENIOR
Stock") the New HUBCO Preferred Stock as to rights upon liquidation of HUBCO.
The New HUBCO Preferred Stock shall be junior to all outstanding debt of HUBCO.
The New HUBCO Preferred Stock shall be subject to creation of Senior Stock,
Parity Stock and Junior Stock.
Dividends
Holders of the New HUBCO Preferred Stock will be entitled to dividends
when, as and if declared by the HUBCO Board of Directors out of funds legally
available therefor. Dividends will be noncumulative.
Conversion Rights
Each share of New HUBCO Preferred Stock will be convertible at any time
at the option of the holder thereof into 32.25 shares of HUBCO Common Stock (the
"CONVERSION RATIO"), subject to adjustment as described below.
In case of any consolidation or merger to which HUBCO is a party, other
than a merger or consolidation in which HUBCO is the continuing corporation, or
in case of any sale or conveyance to another corporation of the property of
HUBCO as an entirety or substantially as an entirety, or in case of any
statutory exchange of securities with another corporation, there will be no
adjustment of the Conversion Ratio, but each holder of shares of New HUBCO
Preferred Stock then outstanding will have the right thereafter to convert such
shares into the kind and amount of securities, cash or other property which such
holder would have owned or have been entitled to receive immediately after such
consolidation, merger, statutory exchange, sale or conveyance had such shares
been converted immediately prior to the effective date of such consolidation,
merger, statutory exchange, sale or conveyance.
The Conversion Ratio will be subject to adjustment upon certain events,
including the issuance of HUBCO Common Stock as a dividend with respect to the
outstanding HUBCO Common Stock, subdivisions or combinations of HUBCO Common
Stock, the issuance to holders of HUBCO Common Stock generally of rights or
warrants to subscribe for HUBCO Common Stock, or the distribution to holders of
HUBCO Common Stock generally of evidences of indebtedness, assets (excluding
dividends in cash out of retained earnings) or rights or warrants to subscribe
for securities of HUBCO other than those mentioned above.
Conversions of shares of New HUBCO Preferred Stock may be effected by
delivering certificates evidencing such shares, together with written notice of
conversion and a proper assignment of such certificates to HUBCO or in blank, to
the office or agency to be maintained by HUBCO for that purpose.
Fractional shares of HUBCO Common Stock will not be delivered upon
conversion, but a cash adjustment will be paid in respect of such fractional
interests, based on the then current market price per share of HUBCO Common
Stock.
Liquidation Rights
The amount which the holders of shares of New HUBCO Preferred Stock
shall be entitled to receive, subject to the rights of creditors, in the event
of any liquidation, dissolution or winding up of HUBCO, whether voluntary or
involuntary, will be $100.00 per share.
Upon any such liquidation, dissolution or winding up, the preferential
amounts with respect to the New HUBCO Preferred Stock and any Parity Stock are
to be distributed pro rata in accordance with the aggregate preferential amounts
of the New HUBCO Preferred Stock and such Parity Stock, if any, out of or to the
extent of the net assets of HUBCO legally available for such distribution,
before any distributions are made with respect to any Junior Stock.
Voting Rights
Holders of shares of New HUBCO Preferred Stock will vote together as a
class with holders of the HUBCO Common Stock for the election of directors and
all other matters as to which holders of the HUBCO Common Stock shall be
entitled to vote. Each share of New HUBCO Preferred Stock shall be entitled to
32.25 votes, which represents the number of shares of HUBCO Common Stock into
which the New HUBCO Preferred Stock is convertible, subject to adjustments of
the Conversion Ratio, as described above. See "Description of HUBCO Common Stock
- -- Voting Rights" for a discussion of the classification of HUBCO's Board of
Directors.
In addition, the approval of a majority of the outstanding shares of
New HUBCO Preferred Stock voted together as a class will be required in order to
amend the Certificate of Incorporation of HUBCO to affect adversely the rights
of the holders of the New HUBCO Preferred Stock or to take any action which
would result in the creation of or an increase in the number of authorized
shares senior or superior with respect to dividends or upon liquidation to the
New HUBCO Preferred Stock. Subject to the foregoing, HUBCO's Certificate of
Incorporation may be amended to increase the number of authorized shares of
Parity Stock or Junior Stock without the vote by class of the holders of the
outstanding New HUBCO Preferred Stock.
Redemption
The New HUBCO Preferred Stock is not subject to any mandatory
redemption by either HUBCO or the holder, nor to any sinking fund or other
similar provisions.
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
WESTPORT 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
subsidiaries, as a practical matter, restrictions on the ability of HUB and
Lafayette 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 BLC, Lafayette may
pay dividends only from its net profits, and the total of all dividends in any
calendar year may not (unless specifically approved by the Commissioner) exceed
the total of its net profits of that year combined with its retained net profits
of the preceding two years. 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 or Lafayette 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.
At June 30, 1996, HUB had $123 million available for the payment of
dividends to HUBCO, and as of June 30, 1996 Lafayette had $8 million available
for the payment of dividends to HUBCO. At June 30, 1996, HUBCO had $71 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 affiliates, 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.
COMPARISON OF THE RIGHTS OF SHAREHOLDERS
OF WESTPORT AND HUBCO
GENERAL
Westport is a business corporation incorporated in Delaware under the
DGCL and HUBCO is a business corporation incorporated in New Jersey under the
NJBCA. The rights of Westport shareholders are currently governed by Delaware
corporate law and Westport's Certificate of Incorporation and Bylaws. At the
Effective Time, each Westport shareholder will become a shareholder of HUBCO and
the rights of shareholders of HUBCO are governed by New Jersey corporate law and
HUBCO's Certificate of Incorporation and Bylaws. The following is a comparison
of certain provisions of New Jersey corporate law and Delaware corporate law and
the respective certificates of incorporation and by-laws of each of Westport and
HUBCO. This summary does not purport to be complete and is qualified in its
entirety by reference to the DGCL and the NJBCA, which statutes may change from
time to time, and the respective certificates of incorporation and by-laws of
HUBCO and Westport, which also may be changed.
VOTING REQUIREMENTS
Unless otherwise specified in a Delaware corporation's certificate of
incorporation, Delaware law generally provides that an amendment to the
certificate of incorporation, a sale or other disposition of all or
substantially all of a corporation's assets, or a merger or consolidation of a
stock corporation with another stock corporation requires the affirmative vote
of a majority of the outstanding stock entitled to vote thereon (with respect to
the amendment, the affirmative vote of a majority of the outstanding shares of
stock of each class entitled to vote thereon is also required). Westport's
Certificate of Incorporation requires the affirmative vote of the holders of
two-thirds of its outstanding stock in connection with an amendment or
restatement of its Certificate of Incorporation, any consolidation or merger,
any sale, lease or exchange of all or substantially all of its property or
assets and dissolution. Westport's Certificate of Incorporation provides that
certain business combinations with interested stockholders or their affiliates
or associates must be approved by at least 85% of the outstanding voting stock.
This higher vote is not required, however, when a business combination has been
approved by a majority of the disinterested directors. Certain amendments to the
business combination provisions of the Certificate of Incorporation require the
affirmative vote of 85% of the voting stock, voting together as a single class,
although this higher vote is not required if a majority of the disinterested
directors approves the amendment. Also, Westport's certificate of designations
provides that the affirmative vote of a majority of the outstanding shares of
Westport Preferred Stock, voted together as a class, is required for an
amendment to the Certificate of Incorporation that would adversely affect the
rights of the holders of such stock or increase the number of authorized shares
with senior or superior dividend or liquidation rights.
Under New Jersey law, 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 a corporation's
assets otherwise 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. HUBCO's Certificate of Incorporation
presently does contain provisions specifying a greater vote in certain
circumstances. See "DESCRIPTION OF HUBCO CAPITAL STOCK -- Description of HUBCO
Common Stock -- Voting Rights".
All shareholder voting rights of Westport presently are vested in the
holders of Westport Common Stock and in the holders of Westport Preferred Stock.
Each share of Westport Common Stock is entitled to one vote and each share of
Westport Preferred Stock is entitled to 100 votes. All shareholder voting rights
of HUBCO presently are vested in the holders of the HUBCO Common Stock.
Following the Merger, the New HUBCO Preferred Stock would have voting rights.
See "DESCRIPTION OF HUBCO CAPITAL STOCK -- Description of New HUBCO Preferred
Stock".
Under Delaware law, if the shares of the corporation are divided into
classes, the holders of the outstanding shares of a class (or in some cases a
series thereof) are entitled to vote as a class upon a proposed amendment to the
certificate of incorporation, whether or not entitled to vote thereon by the
provisions of the certificate of incorporation, if the amendment would increase
or decrease the aggregate number of authorized shares of such class, increase or
decrease the par value of the shares of such class, or alter or change the
powers, preferences, or special rights of the shares of such class so as to
affect them adversely. However, the number of authorized shares of any such
class or classes of stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the stock of the corporation entitled to vote (without
a class vote) if the certificate of incorporation so provides and such provision
originally was adopted in accordance with Delaware law.
Under New Jersey law, the holders of a class or series of shares are
entitled to vote as a class upon a proposed amendment to the certificate of
incorporation, whether or not entitled to vote thereon by the provisions of the
certificate of incorporation, if the amendment would exclude or limit their
right to vote on any matter, limit or deny their preemptive rights, cancel or
otherwise adversely affect their dividends which have accrued but have not been
declared, create a new class or series having or convertible into shares having
rights or preferences superior to the class or increase the rights or preference
of any class or series. In addition, notwithstanding any provision of the
certificate of incorporation, the holders of a class or series of shares whose
rights or preferences would be subordinated or otherwise adversely affected by a
proposed amendment are entitled to vote as a class if the amendment would affect
their shares in the following manner: (i) decrease the par value; (ii) effect a
conversion, exchange or reclassification of their shares; (iii) effect a
conversion or exchange of any shares of another class or series into their class
or series; (iv) change the designation, preferences, limitations or relative
rights of their shares; (v) change the shares into a different number of shares,
or into the same number of another class or series; or (vi) divide their shares
into a series or determine the designation, preferences, limitation or relative
rights of any such series, or authorize the board to take any such action.
CUMULATIVE VOTING
Under New Jersey law, shareholders do not have cumulative voting rights
in the election of directors unless the certificate of incorporation so
provides. Under Delaware law, a certificate of incorporation may provide for
cumulative voting rights in the election of directors. Neither HUBCO's nor
Westport's certificate of incorporation provides for cumulative voting.
CLASSIFIED BOARD OF DIRECTORS
New Jersey law 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. Delaware law permits the directors of
a Delaware corporation to be divided into one, two or three classes. Westport's
Certificate of Incorporation and Bylaws do not provide for a classified board.
RIGHTS OF DISSENTING SHAREHOLDERS
Shareholders of a Delaware corporation who dissent from a merger or
consolidation of the corporation may be entitled to appraisal rights. There are
no statutory rights of appraisal with respect to shareholders of a corporation
whose shares are either (i) listed on a national securities exchange or
designated as a national market system security on an inter dealer quotation
system by the National Association of Securities Dealers, Inc., or (ii) held of
record by more than 2,000 shareholders, where such shareholders receive only
shares of stock or depository receipts of the corporation surviving or resulting
from the merger or consolidation or shares of stock or depository receipts of
any other corporation which at the effective date of the merger or consolidation
will be either listed on a national securities exchange or designated as a
national market system security on an inter dealer quotation system by the
National Association of Securities Dealers, Inc. or held of record by more than
2,000 shareholders (or cash in lieu of fractional share interests therein).
Since the exceptions from the Delaware statutory right of appraisal do not apply
to the Westport Preferred Stock, holders of the Westport Preferred Stock have
statutory rights of appraisal with respect to the Merger. See "THE MERGER --
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.
SHAREHOLDER CONSENT TO CORPORATE ACTION
Unless otherwise provided in the certificate of incorporation, Delaware
law provides that any corporate action to be taken at any annual or special
meeting of shareholders may be taken without a meeting, if a consent in writing
to such action is signed by the holders of outstanding stock having not less
than the minimum number of votes necessary to approve such action. Westport's
Certificate of Incorporation and Bylaws permit shareholders to take action
without a meeting by unanimous written consent.
Except as otherwise provided by the certificate of incorporation (and
HUBCO's certificate presently is silent on this issue), New Jersey law permits
any action required or permitted to be taken at any meeting of a corporation's
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 New Jersey
law, 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.
DIVIDENDS
Subject to any restrictions contained in a corporation's certificate of
incorporation, Delaware law generally provides that a corporation may declare
and pay dividends out of surplus (defined as net assets minus stated capital)
or, when no surplus exists, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year.
Unless there are other restrictions contained in its certificate of
incorporation (and HUBCO's Certificate of Incorporation presently contains
none), New Jersey law 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 subsidiaries, as a practical matter, restrictions
on the ability of HUB and Lafayette to pay dividends act as restrictions on the
amount of funds available for the payment of dividends by HUBCO. For a
description of the regulatory restrictions on dividend payments by HUB and
Lafayette, see "DESCRIPTION OF HUBCO CAPITAL STOCK -- Description of HUBCO
Common Stock -- Dividend Rights".
BY-LAWS
Under Delaware law, the authority to adopt, amend, or repeal the
by-laws of a Delaware corporation is held exclusively by the shareholders
entitled to vote, unless such authority is conferred upon the board of directors
in the certificate of incorporation, which shall not limit or divest the
shareholders of such power. Westport's Certificate of Incorporation and By-laws
provide that a majority of the Board of Directors may amend the By-laws.
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 HUBCO's
Certificate of Incorporation does not do).
PREEMPTIVE RIGHTS
Under both Delaware and New Jersey law, shareholders have only such
preemptive rights as may be provided in the certificate of incorporation.
Neither HUBCO's Certificate of Incorporation nor Westport's Certificate of
Incorporation provides shareholders with preemptive rights.
TRANSACTIONS INVOLVING OFFICERS OR DIRECTORS
A Delaware corporation may loan money to, or guarantee any obligation
incurred by or otherwise assist, any officer or other employee of the
corporation or its subsidiary (including any officer or employee who is a
director) if, in the judgment of the board of directors, such loan, guarantee or
assistance may reasonably be expected to benefit the corporation. With respect
to any contract or transaction between a Delaware corporation and one or more of
its directors or officers or between a Delaware corporation and another entity
in which one or more of its directors or officers is a director or officer or
has a financial interest, such transactions are neither void nor voidable solely
for that reason or solely because that director or officer is present at or
participates in a meeting or solely because his or their votes are counted if
either (i) the material facts as to the director's or officer's interest or
relationship are made known to the disinterested directors or the shareholders
of the corporation, who thereafter in good faith approve the transaction, or
(ii) the contract or transaction is fair to the corporation as of the time it is
approved or ratified by either the board of directors, a committee thereof, or
the shareholders.
A New Jersey corporation may loan money to, or guarantee any obligation
incurred by, its officers, employees or directors if in the judgment of the
directors such loan or guarantee may reasonably be expected to benefit the
corporation. With respect to any other contract or transaction between the
corporation and one or more of its directors (or any other corporation or entity
in which such director or directors are otherwise interested), such transactions
are neither void nor voidable if either (i) the director's or officer's interest
is made known to the disinterested directors or the shareholders of the
corporation, who thereafter approve the transaction, or (ii) the contract or
transaction is fair to the corporation as of the time it is approved or ratified
by either the board of directors, a committee thereof, or the shareholders.
LIMITATIONS OF LIABILITY OF DIRECTORS AND OFFICERS
Under New Jersey law, a corporation may include in its certificate of
incorporation a provision which would, subject to the limitations described
below, eliminate or limit directors' or officers' liability to the corporation
or its shareholders for monetary damage for breaches of their fiduciary duty as
a director. A similar provision under Delaware law applies to directors, but not
officers.
Westport's Certificate of Incorporation provides that Westport has the
power to indemnify its directors, officer, employees and agents to the full
extent permitted by the DGCL. Under Delaware law, a director cannot be relieved
of liability (i) for breaches of the duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for the payment of
unlawful dividends or expenditure of funds for unlawful stock purchases or
redemptions, or (iv) for transactions from which such director derived an
improper personal benefit.
Under New Jersey law, a director or officer cannot be relieved from
liability or otherwise indemnified for any breach of duty based upon an act or
omission (i) in breach of such person's duty of loyalty to the corporation or
its shareholders, (ii) not in good faith or involving a knowing violation of
law, or (iii) resulting in receipt by such person of an improper personal
benefit. HUBCO's Certificate of Incorporation contains a provision which limits
a director's or officer's liability to the full extent permitted by New Jersey
law.
SHAREHOLDER PROTECTION LEGISLATION
Section 203 of the DGCL, in general, prohibits a "business combination"
between a corporation and an "interested stockholder" within three years of the
date such stockholder became an "interested stockholder," unless (i) prior to
such date the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, exclusive of shares owned by
directors who are also officers and by certain employee stock plans, or (iii) on
or after such date, the business combination is approved by the board of
directors and authorized at an annual or special meeting of shareholders, and
not by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder. The
term "business combination" is defined to include the following transactions
between the interested stockholder and the corporation or any direct or indirect
majority-owned subsidiary thereof: any merger or consolidation; any sale, lease,
exchange, mortgage, pledge, transfer or other disposition (including as part of
a dissolution) of assets having an aggregate market value equal to 10% or more
of either the aggregate market value of all assets of the corporation on a
consolidated basis or the aggregate market value of all the outstanding stock of
the corporation; certain transactions which result in the issuance or transfer
by the corporation or such subsidiary of their stock to the interested
stockholders; certain transactions that would increase the interested
stockholder's proportion of share ownership of the stock of any class or series
of the corporation or such subsidiary; and any receipt by the interested
stockholder of the benefit of any loans, advances, guarantees, pledges or other
financial benefits provided by or through the corporation or any such
subsidiary. In general, and subject to certain exceptions, an "interested
stockholder" is any person who (i) is the owner of 15% or more of the
outstanding voting stock of the corporation, or (ii) is an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation at any time within a three-year period, and
(iii) the affiliates or associates of such a person. The term "owner" is broadly
defined to include any person that individually or with or through its
affiliates or associates, among other things, beneficially owns such stock, or
has the right to acquire such stock (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding or upon the exercise of warrants or options or
otherwise or has the right to vote such stock pursuant to any agreement,
arrangement or understanding, or has an agreement, arrangement or understanding
with the beneficial owner of such stock for the purpose of acquiring, holding,
voting or disposing of such stock. The restrictions of Section 203 generally do
not apply, among other instances, to corporations that have elected, in the
manner provided therein, not to be subject to such Section or in the case of a
corporation that does not have a class of voting stock that is listed on a
national securities exchange or authorized for quotation on The Nasdaq Stock
Market or held of record by more than 2,000 stockholders.
The New Jersey Shareholders Protection Act (the "ACT") prohibits
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 Act 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 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 stockholder, the combination is approved by the board prior to the
interested stockholder's stock acquisition date or certain fair price provisions
are satisfied.
CAPITAL STOCK
The authorized capital stock of HUBCO consists of 50 million shares of
HUBCO Common Stock and 10 million shares of preferred stock. No shares of HUBCO
preferred stock are currently issued and outstanding. Under the terms of the
HUBCO Certificate of Incorporation, 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 Westport consists of 20,500,000 shares of Westport Common Stock
and 2,000,000 shares of serial preferred stock. As of the Record Date, there
were 39,600 shares of Westport Preferred Stock issued and outstanding.
SHAREHOLDER PROPOSALS
Any proposal which a Westport shareholder wishes to have included in
the proxy materials of Westport if Westport has a 1997 Annual Meeting of
Shareholders must be presented to Westport no later than December 25, 1996.
OTHER MATTERS
As of the date of this Proxy Statement, the Westport Board of Directors
knows of no other matters to be presented for action by the stockholders at the
Meeting. If any other matters are properly presented, however, it is the
intention of the persons named in the enclosed proxy to vote in accordance with
their best judgment on such matters.
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 1,259 shares of HUBCO Common Stock as of August 14, 1996.
EXPERTS
The consolidated financial statements of Westport 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 reports.
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.
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 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 the Meeting who will
have an opportunity to make a statement if such representative desires, and who
will be available to respond to appropriate questions.
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated June 21, 1996 (this
"Agreement"), is among HUBCO, Inc. ("HUBCO"), a New Jersey corporation and
registered bank holding company, Westport Bancorp, Inc., a Delaware corporation
("WBI") and registered bank holding company, and The Westport Bank & Trust
Company, a Connecticut chartered bank and trust company, wholly owned by WBI
("Westport").
WHEREAS, the respective Boards of Directors of HUBCO and WBI
have each determined that it is in the best interests of HUBCO and WBI and their
respective stockholders for HUBCO to acquire WBI by (i) merging WBI with and
into HUBCO with HUBCO surviving and WBI shareholders receiving the consideration
hereinafter set forth, and (ii) in HUBCO's discretion, simultaneously with the
merger of WBI into HUBCO, by merging Westport with a Connecticut bank subsidiary
of HUBCO; and
WHEREAS, the respective Boards of Directors of WBI, HUBCO and
Westport have each duly adopted and approved this Agreement and the Board of
Directors of WBI has directed that it be submitted to WBI's shareholders for
approval; and
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 hereafter defined), WBI shall be merged
with and into HUBCO (the "Merger") in accordance the Delaware General
Corporation Law (the "DGCL") and the New Jersey Business Corporation Act (the
"NJBCA") and HUBCO shall be the surviving corporation (the "Surviving
Corporation").
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 HUBCO and WBI and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of HUBCO and WBI 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 HUBCO and WBI 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 HUBCO and WBI 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 HUBCO or WBI 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 HUBCO or WBI if the Merger had not occurred.
1.3 CERTIFICATE OF INCORPORATION. As of the Effective Time,
the certificate of incorporation of HUBCO shall be amended to fix the
preferences, limitations and relative rights of the series of HUBCO Preferred
Stock the shares of which are to be issued in the Merger pursuant to Article II
hereof. On or prior to the Effective Time, HUBCO shall deliver to the Secretary
of State of the State of New Jersey for filing, pursuant to Section 7-2 of the
NJBCA, a certificate of amendment, in form mutually acceptable to HUBCO and WBI
(the "Certificate of Amendment"), giving effect to the foregoing and containing
any other provisions with respect to the aforementioned series of HUBCO
Preferred Stock necessary to permit consummation of the Merger in accordance
with the terms of this Agreement. The certificate of incorporation of HUBCO, as
so amended, at the Effective Time shall be the certificate of incorporation of
the Surviving Corporation and shall not otherwise be amended by this Agreement
or the Merger but thereafter may be amended as provided by law.
1.4 BY-LAWS. As of the Effective Time, the By-laws of HUBCO
shall be the By-laws of the Surviving Corporation until
otherwise amended as provided by law.
1.5 DIRECTORS AND OFFICERS. As of the Effective Time, the
directors of the Surviving Corporation shall be the directors of HUBCO
(including the two directors appointed pursuant to Section 6.3(f) hereof). As of
the Effective Time, the officers of the Surviving Corporation shall be the
officers of HUBCO.
1.6 EFFECTIVE TIME AND CLOSING. The Merger shall become
effective (and be consummated) upon the later of the filing of certificates of
merger, in form and substance satisfactory to HUBCO and WBI, with the Secretary
of State of the State of New Jersey (the "New Jersey Certificate of Merger") and
with the Secretary of State of the State of Delaware (the "Delaware Certificate
of Merger"). The term "Effective Time" shall mean the close of business on the
first day when the certificates of merger in both New Jersey and Delaware have
been so filed. A closing (the "Closing") shall take place prior to the Effective
Time at 10:00 a.m., on a date mutually agreeable and as soon as practicable (but
in any event within five business days) following the receipt of all necessary
regulatory, governmental and shareholder 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)
(the "Closing Date"), 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 WBI may mutually agree upon. Immediately following the Closing, the New
Jersey Certificate of Merger shall be filed with the New Jersey Secretary of
State and the Delaware Certificate of Merger shall be filed with the Delaware
Secretary of State.
1.7 THE BANK MERGER. At HUBCO's option, at the Effective Time,
and simultaneously with the Merger, Westport shall be merged (the "Bank Merger")
with HUBCO's principal Connecticut bank subsidiary (the "Connecticut Bank") or
with another subsidiary of HUBCO, if HUBCO has no Connecticut bank subsidiary at
the Effective Time, in accordance with the provisions of Section 36a-125 of the
Banking Law of Connecticut. If the Bank Merger is consummated, the directors of
the surviving bank (the "Surviving Bank") (or if the Bank Merger is not
consummated, the directors of Westport at the Effective Time) shall include
three persons designated by WBI and acceptable to HUBCO (which persons shall
include Michael H. Flynn and David A. Rosow, unless HUBCO and WBI shall agree in
writing to the contrary) and shall include one person designated by Josiah T.
Austin and acceptable to HUBCO. At HUBCO's option, at any time following the
execution of this Agreement, Westport shall, and HUBCO shall cause the
Connecticut Bank to, execute and deliver a merger agreement, in form and
substance reasonably satisfactory to the parties hereto, for delivery to the
Connecticut Commissioner of Banking (the "Connecticut Commissioner") and the
Federal Deposit Insurance Corporation (the "FDIC") for approval of the Bank
Merger, subject to consummation of the Merger.
ARTICLE II - CONVERSION OF WBI SHARES, OPTIONS AND WARRANTS
2.1 CONVERSION OF WBI STOCK. Each share of common stock, $.01
par value, of WBI ("WBI Common Stock"), issued and outstanding immediately prior
to the Effective Time, and each share of Series A Convertible Preferred Stock,
$.01 par value, of WBI ("WBI Preferred Stock" and, together with the WBI Common
Stock, "WBI 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 OF STOCK; EXCHANGE RATIO. Subject to the
provisions of this Section 2.1, each share of WBI Common Stock issued and
outstanding immediately prior to the Effective Time (excluding any treasury
shares and shares held by HUBCO) shall be converted at the Effective Time into
the right to receive 0.3225 of a share (the "Exchange Ratio") of common stock,
no par value, of HUBCO ("HUBCO Common Stock"). Subject to the provisions of this
Section 2.1, each share of WBI Preferred 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 one share of a newly created series of HUBCO Preferred
Stock ("New HUBCO Preferred Stock" and, together with the HUBCO Common Stock,
the "HUBCO Stock") having terms (to be set forth in the Certificate of
Amendment) substantially identical to those set forth on Exhibit 2.1(a) hereto.
(B) CANCELLATION OF WBI CERTIFICATES. After the Effective
Time, all such shares of WBI 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 WBI Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of WBI Stock except as otherwise provided herein or by
law. Such certificates previously evidencing such shares of WBI 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 or New HUBCO
Preferred Stock, as the case may be, 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 WBI Stock held by WBI
in its treasury or owned by HUBCO or by any of HUBCO's wholly-owned
subsidiaries, including Hudson United Bank ("HUBank") (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 HUBank, Trust Department, or
another bank or trust company designated by HUBCO and reasonably acceptable to
WBI (the "Exchange Agent"), for the benefit of the holders of shares of WBI
Stock, for exchange in accordance with this Article II, through the Exchange
Agent, certificates evidencing shares of HUBCO Stock and cash in such amount
such that the Exchange Agent possesses such number of shares of HUBCO 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 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 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, HUBCO 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 WBI
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 WBI 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 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) if the Certificate formerly represented WBI Common
Stock, then (x) 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 WBI Common Stock formerly evidenced by such Certificate in accordance with
Section 2.1 and (y) cash in lieu of fractional shares of HUBCO Common Stock to
which such holder may be entitled pursuant to Section 2.2(e), and (B) if the
Certificate formerly represented WBI Preferred Stock, then certificates
evidencing that number of whole or partial shares of New HUBCO Preferred Stock
which such holder has the right to receive in respect of the shares of WBI
Preferred Stock formerly evidenced by such Certificate in accordance with
Section 2.1 (the shares of HUBCO 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 WBI Stock which is not registered in the transfer records
of WBI, a certificate evidencing the proper number of shares of HUBCO 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 WBI 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 WBI's predecessors (which certificates represent shares
of, or the right to receive shares of, WBI Stock) to directly exchange such
certificates for the Merger Consideration.
(C) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF
HUBCO STOCK. No dividends or other distributions declared or made after the
Effective Time with respect to HUBCO 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 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 Stock issued in exchange therefor,
without interest, (i) promptly, the amount of any cash payable with respect to a
fractional share of HUBCO 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 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 Stock.
(D) NO FURTHER RIGHTS IN WBI STOCK. All shares of HUBCO
Stock issued and cash paid upon conversion of the shares of WBI 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 WBI Stock.
(E) NO FRACTIONAL SHARES OF HUBCO COMMON STOCK. 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 Quotations 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 WBI Stock for two
years after the Effective Time shall be delivered to HUBCO, upon demand, and any
holders of WBI 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 HUBank shall be liable
to any holder of shares of WBI Stock for any such shares of HUBCO 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 WBI 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 WBI 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 WBI shall be closed and there shall be no further registration
of transfers of shares of WBI Stock thereafter on the records of WBI. 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 WBI Preferred Stock shall have the
right to dissent in the manner provided in Section 262 of the DGCL, and if all
necessary requirements of the DGCL are met, such shares shall be entitled to
payment of the fair value of such shares in accordance with the provisions of
the DGCL ("Dissenting Shares"), provided, however, that (i) if any holder of
Dissenting Shares shall subsequently withdraw such holder's demand for appraisal
of such shares within 60 days of the Effective Time, or, with the written
consent of the Surviving Corporation, any time thereafter, or (ii) if any holder
fails to follow the procedures for establishing such holder's entitlement to
appraisal rights as provided in the DGCL, the right to appraisal of such shares
shall be forfeited and such shares shall thereupon be deemed to have been
converted into the right to receive and to have become exchangeable for, as of
the Effective Time, the Merger Consideration.
2.5 WBI STOCK OPTIONS.
(A) CONVERTING STOCK OPTIONS. Stock Options (as defined in
Section 3.2) which, as of the Effective Time, are outstanding and fully vested
and exercisable as to all of the shares of WBI Common Stock that are subject to
such option (including options that become exercisable as a result of the
transactions contemplated by this Agreement) (each, a "Vested Stock Option"),
shall be converted at the Effective Time into HUBCO Common Stock in accordance
with the formula set forth below, to the extent permitted under the WBI Stock
Option Plans (as defined in Section 3.2) and the agreements pursuant to which
such Vested Stock Options were granted (each, an "Option Grant Agreement"). Each
Vested Stock Option to be so converted is referred to herein as a "Converting
Stock Option." If conversion of any Vested Stock Option would not be permitted
under the related WBI Stock Option Plan or Option Grant Agreement without the
consent of the optionee affected thereby, WBI, in consultation with HUBCO, shall
use its reasonable best efforts to obtain the consent of the necessary parties
to amend the related WBI Stock Option Plan or Option Grant Agreement or both, as
necessary, to permit such conversion, and to cause Vested Stock Options
outstanding at the Effective Time to be Converting Stock Options.
(i) Each outstanding Converting 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 Converting Stock Option from the
product therefrom (the "Option Value"), and
(ii) Each holder of Converting 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 Converting 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) CONTINUING STOCK OPTIONS. Each Stock Option
outstanding at the Effective Time (i) which is not a Vested Stock Option or (ii)
which is a Vested Stock Option and which is not a Converting Stock Option (each
of the foregoing, a "Continuing Stock Option") shall be converted into an option
to purchase HUBCO Common Stock, wherein (i) the right to purchase shares of WBI
Common Stock pursuant to the Continuing 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 WBI 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
Continuing 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 Continuing 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 hereof). Shares of HUBCO Common Stock issuable upon
exercise of Continuing Stock Options shall be covered by an effective
registration statement on Form S-8, and HUBCO shall use its reasonable best
efforts to file a registration statement on Form S-8 covering such shares as
soon as possible after the Effective Time.
2.6 WBI WARRANTS. At the Effective Time, HUBCO shall expressly
assume the due and punctual performance of each and every covenant and condition
to be performed and observed by WBI, and all the obligations of WBI, under each
Warrant which evidences the right to purchase a number of shares of WBI Common
Stock and which is outstanding at the Effective Time (each, a "WBI Warrant").
Each WBI Warrant automatically shall be converted, without further action on the
part of the holder, into a like warrant (each an "HUBCO Warrant") to purchase
for the same aggregate purchase price that number of shares of HUBCO Common
Stock which equals the number of shares of WBI Common Stock which may be
purchased under the WBI Warrant multiplied by the Exchange Ratio, and such HUBCO
Warrant shall thereafter be subject to the same terms and conditions as
specified in the WBI 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 WBI Warrant,
HUBCO shall not be required to issue new Certificates evidencing the Warrant to
purchase HUBCO Common Stock but the old WBI Warrant certificates shall continue
to evidence such rights until exchanged, transferred or exercised.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF WBI
References herein to "WBI 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 WBI to HUBCO.
WBI hereby represents and warrants to HUBCO as follows:
3.1 CORPORATE ORGANIZATION.
(a) WBI is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. WBI 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 WBI and the WBI Subsidiaries (as
defined below), taken as a whole. WBI is registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA").
(b) (Westport and NYLF Corp. are the only current WBI
Subsidiaries. For purposes of this Agreement, the term "WBI Subsidiary" means
any corporation, partnership, joint venture or other legal entity in which WBI,
directly or indirectly, owns at least a 50% stock or other equity interest or
for which WBI, directly or indirectly, acts as a general partner, provided that
to the extent that any representation or warranty set forth herein covers a
period of time prior to the date of this Agreement, the term "WBI Subsidiary"
shall include any entity which was an WBI Subsidiary at any time during such
period. Westport is a state-chartered bank and trust company duly organized and
validly existing in stock form and in good standing under the laws of the State
of Connecticut. All eligible accounts of depositors issued by Westport are
insured by the Bank Insurance Fund of the FDIC to the fullest extent permitted
by law. NYLF Corp. is a corporation duly organized and in active status under
the laws of the State of Connecticut. Each WBI 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 WBI and the WBI Subsidiaries, taken
as a whole.
(c) The WBI Disclosure Schedule sets forth true and
complete copies of the Certificate of Incorporation and By-laws, as in effect on
the date hereof, of WBI, Westport and NYLF.
3.2 CAPITALIZATION. The authorized capital stock of WBI
consists of 20,500,000 shares of WBI Common Stock and 2,000,000 shares of WBI
Preferred Stock. As of June 18, 1996, there were 5,743,531 shares of WBI Common
Stock issued and outstanding and 39,600 shares of WBI Preferred Stock issued and
outstanding. As of June 18, 1996, there were 1,034,721 shares of WBI Common
Stock issuable upon exercise of outstanding stock options. The WBI Disclosure
Schedule sets forth (i) all options which may be exercised for issuance of WBI
Common Stock (collectively, the "Stock Options") and the terms upon which the
options may be exercised, (ii) true and complete copies of each plan and a
specimen of each form of agreement pursuant to which any outstanding Stock
Option was granted, including a list of each outstanding Stock Option issued
pursuant thereto, (iii) all WBI Warrants and the terms upon which the WBI
Warrants may be exercised, and (iv) a specimen of each form of agreement
pursuant to which any WBI Warrant was granted. All issued and outstanding shares
of WBI Stock, and all issued and outstanding shares of capital stock of each WBI
Subsidiary, have been duly authorized and validly issued, are fully paid, and
nonassessable. The authorized capital stock of Westport is as set forth in the
charter documents of Westport contained in Section 3.1 of the WBI Disclosure
Schedule. All of the outstanding shares of capital stock of each WBI Subsidiary
are owned (directly in the case of Westport, and indirectly in the case of NYLF
Corp.) by WBI and are free and clear of any liens, encumbrances, charges,
restrictions or rights of third parties. Except for the Stock Options and the
WBI Warrants issued and disclosed herein, neither WBI nor Westport has granted
nor is 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 WBI or Westport 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.
3.3 AUTHORITY; NO VIOLATION.
(a) Subject to the approval of this Agreement and the
transactions contemplated hereby by all applicable regulatory authorities and by
the stockholders of WBI, and except as set forth in Section 3.3 of the WBI
Disclosure Schedule, WBI and Westport have 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, except as set forth in Section 3.3
of the WBI Disclosure Schedule, the consummation of the transactions
contemplated hereby have been duly and validly approved by all of the directors
of WBI and Westport in accordance with their respective Certificates of
Incorporation and applicable laws and regulations. Except for such approvals,
and except as set forth in Section 3.3 of the WBI Disclosure Schedule, no other
corporate proceedings not otherwise contemplated hereby on the part of WBI or
Westport are necessary to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by WBI and Westport,
and constitutes the valid and binding obligation of each of WBI and Westport,
enforceable against WBI and Westport in accordance with its terms.
(b) Neither the execution and delivery of this Agreement
by WBI or Westport, nor the consummation by WBI or Westport of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by WBI or
Westport with any of the terms or provisions hereof, will (i) violate any
provision of WBI's or Westport'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 WBI, Westport or any of their respective
properties or assets, or (iii) except as set forth in the WBI Disclosure
Schedule, violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of WBI or Westport 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 WBI or Westport is a party, or by which
they or any of their respective 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 WBI and the WBI Subsidiaries, taken as a whole,
and which will not prevent or materially 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 (the "FRB"), the FDIC, the Connecticut Commissioner, the
Connecticut Department of Environmental Protection (the "DEP"), the Securities
and Exchange Commission (the "SEC"), other applicable government authorities,
the stockholders of WBI, 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 WBI or Westport in connection with (x) the execution and delivery
by WBI and Westport of this Agreement and (y) the consummation by WBI of the
Merger, the consummation by Westport of the Bank Merger, if any, and the
consummation by WBI and Westport of the other transactions contemplated hereby,
except (i) such as are listed in the WBI 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 WBI
and the WBI Subsidiaries taken as a whole or prevent or materially delay the
consummation of the transactions contemplated hereby. To the best of WBI's
knowledge, no fact or condition exists which WBI has reason to believe will
prevent it from obtaining the aforementioned consents and approvals.
3.4 FINANCIAL STATEMENTS.
(a) The WBI Disclosure Schedule sets forth copies of the
consolidated balance sheets of WBI as of December 31, 1994 and 1995, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the periods ended December 31, in each of the three years 1993
through 1995, in each case accompanied by the audit report of Arthur Andersen
LLP ("Arthur Andersen"), independent public accountants with respect to WBI, and
the unaudited consolidated statement of condition of WBI as of March 31, 1996
and the related unaudited statements of income and cash flows for the three
months ended March 31, 1996 and 1995, as reported in WBI's Quarterly Report on
Form 10-Q, filed with the SEC (collectively, the "WBI Financial Statements").
The WBI 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 consolidated financial condition of WBI as
of the respective dates set forth therein, and the related consolidated
statements of income, changes in stockholders' equity and cash flows fairly
present the results of the consolidated operations, changes in stockholders'
equity and cash flows of WBI for the respective periods set forth therein.
(b) The books and records of WBI and Westport are being
maintained in material compliance with applicable legal and accounting
requirements.
(c) Except as and to the extent reflected, disclosed or
reserved against in the WBI Financial Statements (including the notes thereto),
as of March 31, 1996, or except as set forth in Section 3.4 of the WBI
Disclosure Schedule, neither WBI nor any WBI Subsidiary had any liabilities,
whether absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of WBI and the WBI Subsidiaries, taken
as a whole, which were required by GAAP (consistently applied) to be disclosed
in WBI's consolidated statement of condition as of March 31, 1996 or the notes
thereto. Since March 31, 1996, WBI and Westport have 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 except as set forth in the WBI Disclosure Schedule.
3.5 BROKER'S AND OTHER FEES. Except for Ostrowski & Company,
Inc. ("O & Co."), neither WBI or Westport nor any of their 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 agreement with O & Co. is set forth in the
WBI Disclosure Schedule. Other than pursuant to the agreement with O & Co.,
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 WBI or
Westport.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in the WBI Disclosure Schedule,
there has not been any material adverse change in the business, operations,
assets or financial condition of WBI and the WBI Subsidiaries, taken as a whole,
since March 31, 1996, and to the best of WBI's knowledge, no fact or condition
exists which WBI believes will cause such a material adverse change in the
future.
(b) Except as set forth in the WBI Disclosure Schedule,
neither WBI nor Westport has taken or permitted any of the actions set forth in
Section 5.2 hereof between March 31, 1996 and the date hereof and, except for
execution of this Agreement and the other documents contemplated hereby, WBI has
conducted its business only in the ordinary course, consistent with past
practice.
3.7 LEGAL PROCEEDINGS. Except as disclosed in the WBI
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of WBI and the WBI Subsidiaries, neither WBI nor any WBI Subsidiary
is a party to any, and there are no pending or, to the best of WBI's knowledge,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against WBI or any WBI Subsidiary
which, if decided adversely to WBI or an WBI Subsidiary, are reasonably likely
to have a material adverse effect on the business, operations, assets or
financial condition of WBI and the WBI Subsidiaries taken as a whole. Except as
disclosed in the WBI Disclosure Schedule, neither WBI nor any WBI Subsidiary is
a party to any order, judgment or decree entered in any lawsuit or proceeding
which is material to WBI or such WBI Subsidiary.
3.8 TAXES AND TAX RETURNS. Except as disclosed in the WBI
Disclosure Schedule:
(a) WBI and each WBI Subsidiary 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 on or before the
Effective Time 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. WBI and each
WBI Subsidiary has established (and until the Effective Time will establish) on
its books and records reserves that are adequate for the payment of all federal,
state and local taxes not yet due and payable, but are incurred in respect of
WBI or such WBI Subsidiary through such date. None of the federal or state
income tax returns of WBI or any WBI Subsidiary have been examined by the
Internal Revenue Service (the "IRS") or the Connecticut Division of Taxation
within the past six years. To the best knowledge of WBI, 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 WBI or any WBI Subsidiary, nor has WBI or any WBI Subsidiary 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 WBI nor any WBI Subsidiary (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, (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 WBI
or such WBI Subsidiary (nor does WBI 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 WBI's knowledge, there has been no "ownership change" of WBI as defined
in Section 382(g) of the Code.
3.9 EMPLOYEE, DIRECTOR AND OFFICER BENEFIT PLANS.
(a) Except as set forth on the WBI Disclosure Schedule,
neither WBI nor any WBI Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "WBI Pension Plans") within the meaning of Section 3
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
"employee welfare benefit plan" (the "WBI Welfare Plans") within the meaning of
Section 3 of ERISA, stock option plan, stock purchase plan, deferred
compensation plan, severance plan, bonus plan, employment agreement, director
retirement program or other similar plan, program or arrangement. Neither WBI
nor any WBI Subsidiary has, since September 2, 1974, contributed to any
"Multiemployer Plan," as such term is defined in Section 3(37) of ERISA.
(b) WBI has delivered to HUBCO in the WBI Disclosure
Schedules (or previously made available to HUBCO) a complete and accurate copy
of each of the following with respect to each of the WBI Pension Plans and WBI
Welfare Plans, if any: (i) plan document, summary plan description, and summary
of material modifications (if not available, a detailed description of the
foregoing); (ii) trust agreement or insurance contract, if any; (iii) most
recent IRS determination letter, if any; (iv) most recent actuarial report, if
any; and (v) most recent annual report on Form 5500.
(c) The present value of all accrued benefits, both vested
and non-vested, under each of the WBI 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 WBI Pension Plan's actuary, did
not exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the best of WBI's knowledge, the actuarial assumptions then
utilized for such plans were reasonable and appropriate as of the last valuation
date and reflect then current market conditions.
(d) During the last six years, the Pension Benefit
Guaranty Corporation ("PBGC") has not asserted any claim for liability against
WBI or any WBI Subsidiary 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 WBI Pension
Plan have been paid. All contributions required to be made to each WBI 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 WBI which have
not been paid have been properly recorded on the books of WBI.
(f) Except as disclosed in the WBI Disclosure Schedule,
each of the WBI Pension Plans, WBI Welfare Plans and each other employee benefit
plan and arrangement identified on the WBI Disclosure Schedule has been operated
in compliance in all material respects with the provisions of ERISA, the Code,
all regulations, rulings and announcements promulgated or issued thereunder, and
all other applicable governmental laws and regulations. Furthermore, except as
disclosed in the WBI Disclosure Schedule, if WBI maintains any WBI Pension Plan,
WBI has received or applied for a favorable determination letter from the IRS
which takes into account the Tax Reform Act of 1986 and subsequent legislation,
and WBI is not aware of any fact or circumstance which would disqualify any
plan.
(g) To the best knowledge of WBI, 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 WBI Welfare Plan or WBI Pension Plan
that would result in any material tax or penalty for WBI or any WBI Subsidiary.
(h) No WBI 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 WBI Pension Plan.
(i) No "accumulated funding deficiency," within the
meaning of Section 412 of the Code, has been incurred with respect to any WBI
Pension Plan.
(j) There are no material pending, or, to the best
knowledge of WBI, material threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of, or against any of the WBI Pension Plans
or the WBI Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the WBI Disclosure Schedule.
(k) Except as disclosed in the WBI Disclosure Schedule, no
WBI Pension Plan or WBI 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 pursuant to conversion or
continuation rights set out in such Plan or an insurance policy providing
benefits thereunder, or (ii) death benefits under any WBI Pension Plan.
(l) Except with respect to customary health, life and
disability benefits, there are no unfunded benefit obligations which are not
accounted for by reserves shown on the WBI Financial Statements and established
under GAAP or otherwise noted on such Financial Statements.
(m) With respect to each WBI Pension Plan and WBI Welfare
Plan that is funded wholly or partially through an insurance policy, there will
be no liability of WBI or any WBI Subsidiary as of the Effective Time under any
such insurance policy or ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events occurring prior to the Effective Time.
(n) Except (i) for payments and other benefits due
pursuant to the employment agreements included within the WBI Disclosure
Schedule, and (ii) as set forth in Section 3.9(n) of the WBI Disclosure
Schedule, or as expressly agreed to by HUBCO in writing either pursuant to this
Agreement or otherwise, the consummation of the transactions contemplated by
this Agreement will not (x) entitle any current or former employee of WBI or any
WBI Subsidiary to severance pay, unemployment compensation or any similar
payment, or (y) accelerate the time of payment or vesting, or increase the
amount of any compensation or benefits due to any current or former employee
under any WBI Pension Plan or WBI Welfare Plan.
(o) Except for the WBI Pension Plans and the WBI Welfare
Plans, and except as set forth on the WBI Disclosure Schedule, WBI has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of WBI or any
WBI Subsidiary or any predecessor of any thereof. The WBI Disclosure Schedule
sets forth (or lists, if previously delivered to HUBCO): (i) true and complete
copies of the agreements, understandings or obligations with respect to each
such current or former director, officer or employee, and (ii) the most recent
actuarial or other calculation of the present value of such payments or
benefits.
(p) Except as set forth in the WBI Disclosure Schedule,
WBI does not maintain or otherwise pay for life insurance policies (other than
group term life policies on employees) with respect to any director, officer or
employee. The WBI Disclosure Schedule lists each such insurance policy and any
agreement with a party other than the insurer with respect to the payment,
funding or assignment of such policy. To the best of WBI's knowledge, neither
WBI nor any WBI Pension Plan or WBI Welfare Plan owns any individual or group
insurance policies issued by an insurer which has been found to be insolvent or
is in rehabilitation pursuant to a state proceeding.
3.10 REPORTS.
(a) The WBI Disclosure Schedule lists, and as to item (i)
below WBI has previously delivered to HUBCO a complete copy of, each (i) final
registration statement, prospectus, annual, quarterly or special report and
definitive proxy statement filed by WBI since January 1, 1994 pursuant to the
Securities Act of 1933, as amended (the "1933 Act"), or the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and (ii) communication (other than
general advertising materials and press releases) mailed by WBI to its
stockholders as a class since January 1, 1994, 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) Since January 1, 1994, (i) WBI has filed all reports
that it was required to file with the SEC under the 1934 Act, and (ii) WBI and
Westport each has duly filed all material forms, reports and documents which
they were required to file with each agency charged with regulating any aspect
of their business, in each case in form which was correct in all material
respects, and, subject to permission from such regulatory authorities, WBI
promptly will deliver or make available to HUBCO accurate and complete copies of
such reports. As of their respective dates, each such form, report, or document,
and each such final registration statement, prospectus, annual, quarterly or
special report, definitive proxy statement or communication, complied in all
material respects with all applicable statutes, rules and regulations and did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; provided that information contained in any such document
as of a later date shall be deemed to modify information as of an earlier date.
The WBI Disclosure Schedule lists the dates of all examinations of WBI or
Westport conducted by either the FRB, the FDIC or the Connecticut Commissioner
since January 1, 1994 and the dates of any responses thereto submitted by WBI or
Westport.
3.11 WBI AND WESTPORT INFORMATION. The information relating to
WBI and Westport, this Agreement, and the transactions contemplated hereby
(except for information relating solely to HUBCO) to be contained in the Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof) to be delivered to
stockholders of WBI in connection with the solicitation of their approval of the
Merger, as of the date the Proxy Statement is mailed to stockholders of WBI, 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. Except as set forth in
the WBI Disclosure Schedule, WBI and each WBI Subsidiary holds all 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 WBI or such WBI
Subsidiary (including, without limitation, consumer, community and fair lending
laws) (other than where the failure to have a license, franchise, permit or
authorization or where such default or noncompliance will not result in a
material adverse effect on the business, operations, assets or financial
condition of WBI and the WBI Subsidiaries taken as a whole), and WBI 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 for plans referenced in Section 3.9 and as
disclosed in the WBI Disclosure Schedule, (i) neither WBI nor Westport is a
party to or bound by any written contract or any understanding 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 WBI or
Westport to any officer, employee, director or consultant thereof. The WBI
Disclosure Schedule lists, and either the WBI Disclosure Schedule sets forth
true and correct copies of or WBI has previously made available to HUBCO, all
severance or employment agreements with officers, directors, employees, agents
or consultants to which WBI or Westport is a party.
(b) Except as disclosed in the WBI Disclosure Schedule and
except for loan commitments, loan agreements and loan instruments entered into
or issued in the ordinary course of business, (i) as of the date of this
Agreement, neither WBI nor any WBI Subsidiary is a party to or bound by any
commitment, agreement or other instrument which is material to the business,
operations, assets or financial condition of WBI and the WBI Subsidiaries taken
as a whole, (ii) no commitment, agreement or other instrument to which WBI or
any WBI Subsidiary is a party or by which any of them is bound limits the
freedom of WBI or any WBI Subsidiary to compete in any line of business or with
any person, and (iii) neither WBI nor any WBI Subsidiary is a party to any
collective bargaining agreement.
(c) Except as disclosed in the WBI Disclosure Schedule,
neither WBI nor any WBI Subsidiary or, to the best knowledge of WBI, 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 Westport 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 WBI and the WBI Subsidiaries, taken as a whole.
3.14 PROPERTIES AND INSURANCE.
(a) Except as set forth in the WBI Disclosure Schedule,
WBI or a WBI Subsidiary 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 WBI's consolidated balance sheet as of December 31,
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 December 31, 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 WBI and the WBI Subsidiaries taken as a whole, and (iv) with
respect to owned real property, title imperfections noted in title reports
delivered to HUBCO prior to the date hereof. Except as affected by the
transactions contemplated hereby, WBI and Westport as lessees have the right
under valid and subsisting leases to occupy, use, possess and control all real
property leased by WBI and Westport in all material respects as presently
occupied, used, possessed and controlled by WBI and Westport.
(b) The business operations and all insurable properties
and assets of WBI and each WBI Subsidiary are insured for their benefit against
all risks which, in the reasonable judgment of the management of WBI, 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 WBI adequate
for the business engaged in by WBI and the WBI Subsidiaries. As of the date
hereof, neither WBI nor any WBI Subsidiary has received any notice of
cancellation or notice of a material amendment of any such insurance policy or
bond, and to the best of WBI's 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 WBI Disclosure
Schedule sets forth in summary form a list of all insurance policies of WBI and
the WBI Subsidiaries.
3.15 MINUTE BOOKS. The minute books of WBI and Westport
contain records of all meetings and other corporate action held of their
respective stockholders and Boards of Directors (including committees of their
respective Boards of Directors) that are complete and accurate in all material
respects.
3.16 ENVIRONMENTAL MATTERS. Except as set forth in the WBI
Disclosure Schedule:
(a) Neither WBI nor any WBI Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that WBI or such WBI Subsidiary (either directly or as a
trustee or fiduciary, or as a successor-in-interest in connection with the
enforcement of remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or cleanup of any
condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters, which correction or
cleanup would be material to the business, operations, assets or financial
condition of WBI and the WBI Subsidiaries taken as a whole. WBI has no knowledge
that any toxic or hazardous substances or materials have been emitted,
generated, disposed of or stored on any real property owned or leased by WBI or
any WBI Subsidiary, as OREO or otherwise, or owned or controlled by WBI or any
WBI Subsidiary as a trustee or fiduciary (collectively, "Properties"), 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 WBI and the WBI Subsidiaries, taken
as a whole. None of the Properties is in the State of New Jersey.
(b) WBI has no knowledge that any of the Properties has
been operated in any manner in the three years prior to the date of this
Agreement that violated any applicable federal, state or local law or regulation
governing or pertaining to toxic or hazardous substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of WBI and the WBI Subsidiaries taken
as a whole.
(c) To the best of WBI's knowledge, WBI, each WBI
Subsidiary 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) To the knowledge of WBI, 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 WBI or any WBI Subsidiary.
(e) WBI has no knowledge that any of 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").
3.17 RESERVES. As of March 31, 1996, each of the allowance for
loan losses and the reserve for OREO properties in the WBI Financial Statements
was adequate pursuant to GAAP (consistently applied), and the methodology used
to compute each of the loan loss reserve and the reserve for OREO properties
complies in all material respects with GAAP (consistently applied) and all
applicable policies of the FDIC and the Connecticut Commissioner.
3.18 NO PARACHUTE PAYMENTS. Except as set forth on the WBI
Disclosure Schedule, no officer, director, employee or agent (or former officer,
director, employee or agent) of WBI or any WBI Subsidiary is entitled now, or
will or may be entitled to as a consequence of this Agreement or the Merger, to
any payment or benefit from WBI, an WBI Subsidiary, HUBCO or HUBank which if
paid or provided would constitute an "excess parachute payment," as defined in
Section 280G of the Code or regulations promulgated thereunder.
3.19 AGREEMENTS WITH BANK REGULATORS. Neither WBI nor any WBI
Subsidiary is a party to any agreement or memorandum of understanding with, or a
party to any commitment letter, board resolution submitted to a regulatory
authority or similar undertaking to, or is subject to any order or directive by,
or is a recipient of any extraordinary supervisory letter from, any court,
governmental authority or other regulatory or administrative agency or
commission, domestic or foreign ("Governmental Entity") which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies or its management, except for those the
existence of which has been disclosed in writing to HUBCO by WBI prior to the
date of this Agreement, nor has WBI 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 HUBCO by WBI prior to the date of
this Agreement. Neither WBI nor any WBI Subsidiary is required by Section 32 of
the Federal Deposit Insurance Act to give prior notice to a Federal banking
agency of the proposed addition of an individual to its board of directors or
the employment of an individual as a senior executive officer, except as
disclosed in writing to HUBCO by WBI prior to the date of this Agreement.
3.20 DISCLOSURE. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF 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 WBI. HUBCO hereby represents and warrants to WBI 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 the HUBCO
Subsidiaries (defined below), taken as a whole. HUBCO is registered as a bank
holding company under the BHCA.
(b) Each of the HUBCO Subsidiaries is listed in the HUBCO
Disclosure Schedule. For purposes of this Agreement, the term "HUBCO Subsidiary"
means any corporation, partnership, joint venture or other legal entity in which
HUBCO, directly or indirectly, owns at least a 50% stock or other equity
interest or for which HUBCO, directly or indirectly, acts as a general partner.
Each HUBCO Subsidiary is duly organized and validly existing and in good
standing under the laws of the jurisdiction of its incorporation. HUBank is a
state-chartered commercial bank duly organized and validly existing and in good
standing under the laws of the State of New Jersey. All eligible accounts of
depositors issued by HUBank are insured by the Bank Insurance Fund of the FDIC
to the fullest extent permitted by law. Each HUBCO 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 the HUBCO 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 50,000,000 common shares, no par value ("HUBCO Common
Stock"), and 10,000,000 shares of preferred stock ("HUBCO Authorized Preferred
Stock"). As of June 12, 1996, there are 13,626,663 shares of HUBCO Common Stock
issued and outstanding, excluding 716,286 shares of treasury stock. From time to
time hereafter, subject to the covenant in Section 5.17 below, HUBCO may sell or
repurchase shares of HUBCO Common Stock. There are no shares of HUBCO Authorized
Preferred Stock outstanding. Except for shares issuable under or arising from
the Agreement and Plan of Merger, dated February 5, 1996 (the "Lafayette
Agreement"), between HUBCO and Lafayette American Bank and Trust Company
("Lafayette"), the HUBCO 1995 Stock Option Plan, and stock options issued to the
former Chief Executive Officer of Urban National Bank (the "HUBCO Stock Option
Plans"), 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
the HUBCO 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 the HUBCO 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
Plans and HUBCO's obligations under the Lafayette Agreement, neither HUBCO nor
any HUBCO Subsidiary 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
any HUBCO Subsidiary 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.
4.3 AUTHORITY; NO VIOLATION.
(a) Subject to the receipt of all necessary governmental
approvals, HUBCO has 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
such approvals, 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 obligation 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, any
HUBCO Subsidiary, or any of their respective properties or assets, or (iii)
violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets of
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 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
HUBCO and the HUBCO Subsidiaries, taken as a whole, and which will not prevent
or materially delay the consummation of the transactions contemplated hereby.
Except for consents and approvals of or filings or registrations with or notices
to the FDIC, the FRB, the Secretary of State of New Jersey, the Secretary of
State of Connecticut, or other applicable Governmental Entities, 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 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 1995, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended December 31, in
each of the three fiscal years 1993 through 1995, in each case accompanied by
the audit report of Arthur Andersen, independent public accountants with respect
to HUBCO, and the unaudited consolidated statement of condition of HUBCO as of
March 31, 1996 and the related unaudited consolidated statements of income and
cash flows for the three months ended March 31, 1996 and 1995, 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 of 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 the HUBCO 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 the HUBCO Financial Statements (including the notes
thereto), as of March 31, 1996 neither HUBCO nor any of the HUBCO 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 the HUBCO Subsidiaries which were required by GAAP
(consistently applied) to be disclosed in HUBCO's consolidated statement of
condition as of March 31, 1996 or the notes thereto. Except for the transactions
contemplated by this Agreement, and other proposed acquisitions by HUBCO since
March 31, 1996 reflected in any Form 8-K filed by HUBCO with the SEC, neither
HUBCO nor any HUBCO Subsidiary has incurred any liabilities since March 31, 1996
except in the ordinary course of business and consistent with past practice.
4.5 BROKER'S AND OTHER 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 March 31,
1996 and to the best of HUBCO's knowledge, except for any merger related charges
arising from or connected with the consummation of the transactions contemplated
by the Lafayette Agreement and the effect of the consummation of other publicly
announced mergers or acquisitions, not yet consummated (the "Effects of
Announced Acquisitions"), no facts or condition exists which HUBCO believes will
cause such a material adverse change in the future.
4.7 LEGAL PROCEEDINGS. Except as disclosed in the HUBCO
Disclosure Schedule, and 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, are reasonably likely to 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 TAX RETURNS.
(a) HUBCO and each HUBCO Subsidiary 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 WBI 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 HUBCO's Subsidiaries
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.
4.9 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.
4.10 REPORTS. Since January 1, 1994, 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, 1994, HUBCO and each HUBCO
Subsidiary has duly filed all material forms, reports and documents which they
were required to file with each agency charged with regulating any aspect of
their business.
4.11 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 WBI 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 1933 Act, the 1934 Act and the
rules and regulations promulgated thereunder.
4.12 COMPLIANCE WITH APPLICABLE LAW. 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.
4.13 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 HUBank or another HUBCO Subsidiary 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 HUBCO Subsidiaries,
taken as a whole.
4.14 PROPERTIES AND INSURANCE.
(a) HUBCO and the HUBCO Subsidiaries have good and, as to
owned real property, marketable title to all material assets and properties,
whether real or personal, tangible or intangible, reflected in HUBCO's
consolidated balance sheet as of March 31, 1996, or owned and acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since March
31, 1996), 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 HUBCO
Subsidiaries 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 HUBCO Subsidiaries as lessees have the right
under valid and subsisting leases to occupy, use, possess and control all
property leased by HUBCO or the HUBCO Subsidiaries in all material respects as
presently occupied, used, possessed and controlled by HUBCO and the HUBCO
Subsidiaries.
(b) The business operations and all insurable properties
and assets of HUBCO and the HUBCO Subsidiaries 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 HUBCO Subsidiaries. As of
the date hereof, neither HUBCO nor any HUBCO Subsidiary 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.
4.15 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.
4.16 ENVIRONMENTAL MATTERS. Except as disclosed in the HUBCO
Disclosure Schedule, neither HUBCO nor any HUBCO Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that HUBCO or any HUBCO Subsidiary (either directly, or as a
trustee or fiduciary, or as a successor-in-interest in connection with the
enforcement of remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or cleanup of any
condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters which correction or
cleanup would be material to the business, operations, assets or financial
condition of HUBCO and the HUBCO Subsidiaries 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 any
HUBCO 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 HUBCO
Subsidiaries, taken as a whole.
4.17 RESERVES. As of March 31, 1996, each of the allowance for
loan losses and the reserve for OREO properties in the HUBCO Financial
Statements was adequate pursuant to GAAP (consistently applied), and the
methodology used to compute each of the loan loss reserve and the reserve for
OREO properties complies in all material respects with GAAP (consistently
applied) and all applicable policies of the FDIC and the New Jersey Department
of Banking.
4.18 HUBCO STOCK. As of the date hereof, HUBCO has available
and reserved shares of HUBCO Common Stock sufficient for issuance pursuant to
the Merger and upon the exercise of HUBCO Warrants and Continuing Stock Options
and conversion of New HUBCO Preferred Stock subsequent thereto. The HUBCO Stock
to be issued hereunder pursuant to the Merger, upon exercise of the HUBCO
Warrants and the Continuing Stock Options, and upon the conversion of the New
HUBCO Preferred Stock, when so issued, will be duly authorized and validly
issued, fully paid, nonassessable, free of preemptive rights and free and clear
of all liens, encumbrances or restrictions created by or through HUBCO, with no
personal liability attaching to the ownership thereof. The HUBCO Stock to be
issued hereunder pursuant to the Merger, upon exercise of the HUBCO Warrants and
the Continuing Stock Options, and upon the conversion of the New HUBCO Preferred
Stock, when so issued, will be registered under the 1933 Act and issued in
accordance with all applicable state and federal laws, rules and regulations.
4.19 AGREEMENTS WITH BANK REGULATORS. Neither HUBCO nor any
HUBCO Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution submitted to a
regulatory authority or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any 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 WBI 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 WBI by HUBCO prior to the date of this Agreement. Neither HUBCO
nor any HUBCO Subsidiary is required by Section 32 of the Federal Deposit
Insurance Act to give prior notice to a Federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer, except as disclosed in writing to WBI
by HUBCO prior to the date of this Agreement.
4.20 DISCLOSURE. 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 WBI. During the period from the
date of this Agreement to the Effective Time, WBI shall, and shall cause
Westport to, conduct their respective businesses 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. WBI also shall use its reasonable best efforts to (i)
preserve its business organization and that of Westport intact, (ii) keep
available to itself and Westport the present services of its employees and those
of Westport, and (iii) preserve for itself and HUBCO the goodwill of its
customers and those of Westport and others with whom business relationships
exist.
5.2 NEGATIVE COVENANTS. From the date hereof to the Effective
Time, except as otherwise approved by HUBCO in writing, or as set forth in the
WBI Disclosure Schedule, or as permitted or required by this Agreement, neither
WBI not Westport will:
(a) change any provision of its Certificate of
Incorporation or By-laws or any similar governing documents;
(b) change the number of shares of its authorized or
issued capital stock (other than upon exercise of stock options or warrants
described on the WBI Disclosure Schedule in accordance with the terms thereof)
or issue or grant any option, warrant, call, commitment, subscription, right to
purchase or agreement of any character relating to its authorized or issued
capital stock, 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, WBI may declare, set aside
or pay cash dividends per share of WBI 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 following its July 1996 dividend WBI 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;
(c) grant any severance or termination pay (other than
pursuant to written policies or contracts of WBI in effect on the date hereof
and disclosed to HUBCO in the WBI Disclosure Schedule) to, or enter into or
amend any employment or severance agreement with, any of its directors, officers
or employees; 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, except in each case as specified in Section 5.2 of the WBI Disclosure
Schedule;
(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 WBI or Westport;
(e) make any capital expenditures other than pursuant to
binding commitments existing on the date hereof, expenditures necessary to
maintain existing assets in good repair, and expenditures described in business
plans or budgets previously furnished to HUBCO;
(f) file any applications or make any contract 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 or make any investments in securities other than
investments in government or agency bonds having a maturity of less than five
years;
(h) make any material change in its accounting methods or
practices, other than changes required in accordance with generally accepted
accounting principles or regulatory authorities;
(i) 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;
(j) without first conferring with HUBCO, make or commit to
make any new loan or other extension of credit in an amount of $1,000,000 or
more, renew for a period in excess of one year any existing loan or other
extension of credit in an amount of $1,000,000 or more, or increase by
$1,000,000 or more the aggregate credit outstanding to any borrower or group of
affiliated borrowers, except such loan initiations, renewals or increases that
are committed as of the date of this Agreement and identified on the WBI
Disclosure Schedule and residential mortgage loans made in the ordinary course
of business in accordance with past practice; or
(k) agree to do any of the foregoing.
5.3 NO SOLICITATION. WBI and Westport 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 WBI or Westport (an "Acquisition Transaction").
Notwithstanding the foregoing, WBI may enter into discussions or negotiations or
provide information in connection with an unsolicited possible Acquisition
Transaction if the Board of Directors of WBI, 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. WBI shall promptly communicate to HUBCO the terms of any proposal,
whether written or oral, which it may receive in respect of any such Acquisition
Transaction and the fact that it is having discussions or negotiations with a
third party about an Acquisition Transaction.
5.4 CURRENT INFORMATION. During the period from the date of
this Agreement to the Effective Time, each of WBI 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, WBI
agrees to provide HUBCO, and HUBCO agrees to provide WBI, 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 June 30, 1996, WBI will deliver to HUBCO
and HUBCO will deliver to WBI their respective quarterly reports on Form 10-Q,
as filed with the SEC under the 1934 Act. As soon as reasonably available, but
in no event more than 90 days after the end of each calendar year, WBI will
deliver to HUBCO and HUBCO will deliver to WBI their respective Annual Reports
on Form 10-K as filed with the SEC under the 1934 Act.
5.5 ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.
(a) WBI and Westport shall permit HUBCO and its
representatives, and HUBCO shall permit, and cause each HUBCO Subsidiary to
permit, WBI and its representatives, reasonable access to their respective
properties, and shall disclose and make available to HUBCO and its
representatives, or WBI 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
WBI 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 reasonable 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, WBI acknowledges that HUBCO may be involved in
discussions concerning other potential acquisitions and HUBCO shall not be
obligated to disclose such information to WBI except as such information is
disclosed to HUBCO's shareholders generally.
(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 reasonable 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 Meeting
(as such term is defined in Section 5.7 hereof), and qualifying under applicable
federal and state securities laws the HUBCO Stock to be issued to WBI
stockholders in connection with the Merger, the parties hereto shall cooperate
in the preparation and filing by HUBCO or WBI (as applicable) with the SEC of a
Registration Statement and a combined proxy statement and prospectus satisfying
all applicable requirements of applicable state and federal laws, including the
1933 Act, the 1934 Act and applicable state securities laws and the rules and
regulations thereunder (such proxy statement and prospectus in the form mailed
by WBI and HUBCO to the WBI 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 Stock for sale, including the Proxy
Statement-Prospectus, are referred to herein as the "Registration Statement").
(b) HUBCO shall furnish WBI 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 WBI if at any time prior to the Stockholders Meeting, any
information provided by HUBCO in the Proxy Statement-Prospectus becomes
incorrect or incomplete in any material respect and to provide WBI with the
information needed to correct such inaccuracy or omission. HUBCO shall furnish
WBI 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 WBI shareholders.
(c) WBI shall furnish HUBCO with such information
concerning WBI as is necessary in order to cause the Proxy Statement-Prospectus,
insofar as it relates to WBI, to comply with Section 5.6(a) hereof. WBI agrees
promptly to advise HUBCO if at any time prior to the Stockholders Meeting, any
information provided by WBI 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. WBI shall furnish HUBCO with such
supplemental information as may be necessary in order to cause the Proxy
Statement-Prospectus, insofar as it relates to WBI, to comply with Section
5.6(a) after the mailing thereof to WBI shareholders.
(d) HUBCO shall as promptly as practicable make such
filings as are necessary in connection with the offering of the HUBCO 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. WBI shall promptly furnish HUBCO with such
information regarding WBI shareholders as HUBCO requires to enable it to
determine what filings are required hereunder. WBI authorizes HUBCO to utilize
in such filings the information concerning WBI provided to HUBCO in connection
with, or contained in, the Proxy Statement-Prospectus. HUBCO shall furnish WBI's
counsel with copies of all such filings and keep WBI advised of the status
thereof. HUBCO shall as promptly as practicable file the Registration Statement
containing the Proxy Statement-Prospectus with the SEC, and each of HUBCO and
WBI shall promptly notify the other of all communications, oral or written, with
the SEC concerning the Registration Statement and the Proxy
Statement-Prospectus.
(e) HUBCO shall cause the HUBCO Common Stock issuable
pursuant to the Merger to be listed on the NASDAQ at the Effective Time. HUBCO
shall cause the HUBCO Common Stock which shall be issuable pursuant to exercise
of HUBCO Warrants or Continuing Stock Options or conversion of New HUBCO
Preferred Stock to be accepted for listing on the NASDAQ when issued.
(f) The parties hereto will cooperate with each other and
use their reasonable best efforts to prepare all necessary documentation, to
effect all necessary filings and to obtain all necessary permits, consents,
approvals and authorizations of all third parties and governmental bodies
necessary to consummate the transactions contemplated by this Agreement as soon
as possible, including, without limitation, those required by the FDIC, the FRB
and the Connecticut Commissioner. The parties shall each have the right to
review in advance (and shall do so promptly) all filings with, including all
information relating to the other, as the case may be, and any of their
respective subsidiaries, which appears in any filing made with, or written
material submitted to, any third party or governmental 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 from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated hereby.
(h) WBI 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 WBI 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. WBI agrees to
provide HUBCO with any information, certificates, documents or other materials
about WBI 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. WBI 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 for any such acquisition or issuance of securities. HUBCO shall
reimburse WBI for reasonable expenses thus incurred by WBI should this
transaction be terminated for any reason other than as described in Section
7.1(f). HUBCO shall not file with the SEC any registration statement or
amendment thereto or supplement thereof containing information regarding WBI
unless WBI shall have consented to such filing, which consent shall not be
unreasonably delayed or withheld.
(i) The parties hereto acknowledge that the approval of
HUBCO's shareholders will not be required under the rules of NASDAQ if the
transactions contemplated by the Lafayette Agreement are consummated. The
parties further acknowledge and agree that if the Lafayette Agreement is
terminated prior to consummation for any reason, then the approval of the
shareholders of HUBCO shall be a condition to the Closing hereunder and HUBCO
agrees to cause a special shareholder meeting to be held promptly to vote upon
the issuance of the HUBCO stock hereunder. In such event the parties agree to
use the Proxy Statement-Prospectus as a joint proxy statement to solicit such
approval.
(j) Between the date of this Agreement and the Effective
Time, WBI shall cooperate with HUBCO to reasonably conform WBI's policies and
procedures regarding applicable regulatory matters, including without limitation
Federal Reserve, Bank Secrecy Act and FDIC matters, to those of HUBCO as HUBCO
may reasonably identify to WBI from time to time.
5.7 APPROVAL OF STOCKHOLDERS. WBI will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
stockholders of WBI (the "Stockholders Meeting") for the purpose of securing the
WBI stockholder approval of this Agreement required by law, (ii) subject to the
qualification set forth in Section 5.3 hereof and the right not to make a
recommendation or to withdraw a recommendation if its investment banker
withdraws its fairness opinion prior to the Stockholders Meeting, recommend to
the stockholders of WBI the approval of this Agreement and the transactions
contemplated hereby and use its reasonable best efforts to obtain, as promptly
as practicable, such approval, and (iii) cooperate and consult with HUBCO with
respect to each of the foregoing matters.
If it becomes necessary under NASDAQ rules or applicable laws
to obtain HUBCO shareholder approval, HUBCO shall take all steps necessary to
obtain the approval of its shareholders as promptly as possible. In connection
therewith, HUBCO shall take all steps necessary to duly call, give notice and
convene a meeting of its shareholders for such purpose.
5.8 FURTHER ASSURANCES.
(a) Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action 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 best efforts to prevent
the breach of any representation, warranty, covenant or agreement of such party
contained or referred to in this Agreement and to promptly remedy the same. 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 if the Merger is not consummated.
(b) HUBCO agrees that from the date hereof to the
Effective Time, except as otherwise approved by WBI in writing or as permitted
or required by this Agreement, HUBCO will not, nor will it permit any HUBCO
Subsidiary to, take any action: (i) 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 (ii)
that would cause any of its conditions to Closing not to be satisfied, or (iii)
that would constitute a breach or default of its obligations under this
Agreement, or (iv) that would, at the time such action is taken, reasonably be
expected to: (x) delay or cause a delay of more than 60 days in the receipt of
any regulatory approvals or other approvals or consents which are required to be
obtained in order to consummate the Merger or (y) materially jeopardize the
receipt of such approvals or consents.
5.9 PUBLIC ANNOUNCEMENTS. HUBCO and WBI 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
transactions contemplated hereby, and HUBCO and WBI 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 transactions
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
WBI determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to March 31,
1997 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, WBI and HUBCO will promptly inform the other of any
facts applicable to WBI 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 Entity or which would otherwise prevent or materially
delay completion of the Merger.
5.11 EMPLOYEE MATTERS.
(a) Following consummation of the Merger, HUBCO agrees
with WBI to honor the existing written contracts with officers and employees of
WBI and Westport that are included in the WBI Disclosure Schedule, except as
otherwise specified in Section 5.20 and 6.3(e) hereof.
(b) Following consummation of the Merger, HUBCO shall make
available to all employees and officers of Westport thereafter employed by any
of HUBCO's bank subsidiaries (which may include Westport) (the "New Employer")
coverage under the benefit plans generally available to HUBank's employees and
officers (including pension and health and hospitalization) on the terms and
conditions available to HUBank's employees and officers, and shall honor the
severance policies of WBI and Westport previously disclosed to HUBCO in writing
with respect to persons whose employment is terminated within six months after
the Effective Time. After the Effective Time, HUBCO may terminate, merge or
change existing WBI and Westport benefit plans to the extent permitted under
applicable law. Employees of Westport employed by the New Employer will receive
credit for prior employment by Westport for the purposes of determining their
eligibility to participate in all employee benefit plans of New Employer.
Service completed while employed by Westport will also be taken into account for
purposes of determining benefit levels under New Employer's vacation plan, and
severance plan (after the initial six month period has lapsed). Credit for prior
service will be given for purposes of vesting, but not for benefit accrual under
New Employer's pension benefit plans. No pre-existing condition limitation or
evidence of insurability shall be imposed under New Employer's group health
plans, unless such employee was subject to such a limitation under Westport's
group health plan.
5.12 DISCLOSURE SUPPLEMENTS. From time to time prior to the
Effective Time, each party hereto will promptly supplement or amend (by written
notice to the other) its respective Disclosure Schedules delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Schedules or which is necessary to correct any
information in such Schedules which has been rendered materially inaccurate
thereby. For the purpose of determining satisfaction of the conditions set forth
in Article VI and subject to Sections 6.2(a) and 6.3(a), no supplement or
amendment to the parties' respective Disclosure Schedules 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.
5.13 TRANSACTION EXPENSES OF WBI AND HUBCO.
(a) For planning purposes, WBI shall, within 15 days from
the date hereof, provide HUBCO with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by WBI in connection with this
transaction, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. WBI shall promptly notify HUBCO if or when it
determines that it will expect to exceed its budget; provided, however, that
HUBCO acknowledges that WBI shall not be deemed to have breached this Agreement
by virtue of its exceeding such budget.
(b) Promptly after the execution of this Agreement, WBI
shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. WBI shall accrue
and/or pay all of such amounts as soon as possible.
(c) WBI shall advise HUBCO monthly of all out-of-pocket
expenses which WBI has incurred in connection with this transaction.
(d) HUBCO, in reasonable consultation with WBI, shall make
all arrangements with respect to the printing and mailing of the Proxy
Statement.
5.14 INDEMNIFICATION.
(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 WBI or Westport or serves or has
served at the request of WBI or Westport 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 WBI or Westport or serves or has served
at the request of WBI or Westport in any capacity with any other person, in
connection with, arising out of or relating to (i) 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 WBI or Westport or any of their respective affiliates,
or by any former (but not any present) shareholder of WBI (collectively,
"Claims"), including, without limitation, any Claim which is based upon, arises
out of or in any way relates to the Merger, this Agreement, any of the
transactions contemplated by this Agreement, the Indemnitee's service as a
member of the Board of Directors of WBI or Westport or of any committee of WBI's
or Westport'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, or (ii) the enforcement of the obligations of HUBCO set forth
in this Section 5.14, in each case to the fullest extent permitted under any of
(x) applicable law, (y) the Certificate of Incorporation of WBI or Westport, as
applicable, or (z) the By-Laws of WBI or Westport, as applicable (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 WBI or Westport immediately prior to the Effective
Time with respect to the indemnification of the Indemnitees arising out of the
Certificate of Incorporation or By-Laws of WBI or Westport 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 5.14.
(d) HUBCO shall cause WBI's and Westport's officers and
directors to be covered under HUBCO's then current officers' and directors'
liability insurance policy for a period of six years after the Effective Time,
or, in the alternative, to be covered under an extension of WBI's and Westport's
existing officers' and directors' liability insurance policy. However, HUBCO
shall only be required to insure such persons upon terms and for coverages
substantially similar to WBI's and Westport's existing officers' and directors'
liability insurance.
(e) Any Indemnitee wishing to claim indemnification under
this Section 5.14 shall promptly notify HUBCO upon learning of any Claim, 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 Claim (whether arising before or after the Effective Time) as to
which indemnification under this Section 5.14 is applicable, (x) 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 Indemnitee 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 Section 5.14(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 multiple Indemnitees would
present such counsel with a conflict of interest that is not waived, and (y) 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. Notwithstanding anything
to the contrary in this Section 5.14, 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.
5.15 BANK MERGER. Notwithstanding that WBI believes that it
has established all reserves and taken all provisions for possible loan losses
required by GAAP and applicable laws, rules and regulations, WBI recognizes that
HUBCO may have adopted different loan, accrual and reserve policies (including
loan classifications and levels of reserves for possible loan losses). From and
after the date of this Agreement to the Effective Time and in order to formulate
the plan of integration for the Bank Merger, WBI and HUBCO shall consult and
cooperate with each other with respect to (i) conforming, based upon such
consultation, WBI's loan, accrual and reserve policies to those policies of
HUBCO to the extent appropriate, provided that any required change in WBI's
practices in connection with the matters described in this clause (i) need not
be effected until the parties receive all necessary governmental approvals and
consents to consummate the transactions contemplated hereby, (ii) new extensions
of credit or material revisions to existing terms of credits by Westport, in
each case where the aggregate exposure exceeds $500,000, and (iii) conforming,
based upon such consultation, the composition of the investment portfolio and
overall asset/liability management position of WBI and Westport to the extent
appropriate.
5.16 COMPLIANCE WITH ANTITRUST LAWS. Each of HUBCO and WBI
shall use its reasonable 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 WBI shall use its reasonable best efforts to avoid the filing of,
resist or resolve such suit. HUBCO and WBI shall use their reasonable 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. Reasonable 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 WBI, 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 WBI 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 5.16, the divestiture or the holding separate of a
branch or branches of HUBank, the Connecticut Bank or Westport with, in the
aggregate, less than $20 million in assets shall not be considered to have a
material adverse effect on HUBCO.
5.17 POOLING AND TAX-FREE REORGANIZATION TREATMENT. Prior to
the date hereof, neither HUBCO or WBI 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 WBI 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. 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.
5.18 COMFORT LETTERS. HUBCO shall cause Arthur Andersen, its
independent public accountants, to deliver to WBI, and WBI shall cause Arthur
Andersen, 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
WBI, in the form customarily issued by such accountants at such time in
transactions of this type.
5.19 AFFILIATES. Promptly, but in any event within two weeks,
after the execution and delivery of this Agreement, WBI shall deliver to HUBCO
(a) a letter identifying all persons who, to the knowledge of WBI, may be deemed
to be affiliates of WBI under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of WBI and (b) copies of letter agreements,
each substantially in the form of Exhibit 5.19-1, executed by each such person
so identified as an affiliate of WBI 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 5.19-2 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 WBI 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 5.19-1.
5.20 APPOINTMENTS. HUBCO agrees to cause Michael H. Flynn to
be appointed at the Effective Time as President and Chief Executive Officer of
the Connecticut Bank and immediately after the Effective Time to enter into a
new employment agreement with Michael H. Flynn upon terms consistent with this
Agreement but otherwise no less favorable to him than his current agreement if,
prior to the effective date of the Registration Statement Michael H. Flynn
amends in writing his employment agreement so that under no circumstances would
WBI, Westport, HUBCO or any HUBCO Subsidiary be required to make any payments or
provide any benefits to him (upon, or accelerated by, a change in control, as a
consequence of this Agreement or the Merger or otherwise) which, if paid or
provided, would constitute an "excess parachute payment" as defined in Section
280G of the Code. HUBCO agrees to cause David A. Rosow to be appointed at the
Effective Time as Chairman of the Executive Committee of the HUBCO Board of
Directors.
ARTICLE VI - CLOSING CONDITIONS
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS
AGREEMENT. The respective obligations of each party under this Agreement to
consummate the Merger shall be subject to the satisfaction, or, where
permissible under applicable law, waiver at or prior to the Effective Time of
the following conditions:
(A) APPROVAL OF STOCKHOLDERS; SEC REGISTRATION. This
Agreement and the transactions contemplated hereby shall have been approved by
the requisite vote of the stockholders of WBI and, if necessary under NASDAQ
rules or applicable laws, the stockholders of HUBCO. 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 Stock and 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 FDIC, the FRB and the Connecticut Commissioner) required to
consummate the transactions contemplated hereby shall have been obtained without
any term or condition which would materially impair the value of WBI and
Westport, taken as a whole, 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 Hart-Scott-Rodino waiting period if applicable) 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 WBI 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 WBI shall each have received an
opinion, dated as of the Effective Time, of Pitney, Hardin, Kipp & Szuch, or of
counsel to WBI reasonably acceptable to HUBCO, reasonably satisfactory in form
and substance to WBI and its counsel and to HUBCO, based upon representation
letters reasonably required by such counsel, 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 Section 368 of the Code; (ii) no gain
or loss will be recognized by WBI; (iii) no gain or
loss will be recognized upon the exchange of WBI
Stock solely for HUBCO Stock; (iv) the basis of any
HUBCO Stock received in exchange for WBI Stock shall
equal the basis of the recipient's WBI 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 Stock received in exchange for WBI Stock
will include the period during which WBI 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,
reasonably satisfactory to HUBCO and WBI, 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 WBI AND WESTPORT. Except for those representations which are made
as of a particular date, the representations and warranties of WBI contained in
this Agreement shall be true and correct in all material respects on the date of
the Closing (the "Closing Date") as though made on and as of the Closing Date.
WBI 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 WBI 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 WBI 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 WBI Disclosure Schedule, materially adversely
affect the representation as to which the supplement or amendment relates.
(B) OPINION OF COUNSEL. HUBCO shall have received an
opinion of counsel to WBI, dated the Closing Date, in form and substance
reasonably satisfactory to HUBCO, covering the matters customarily covered in
opinions of counsel in transactions of this type.
(C) CERTIFICATES. WBI 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.
(D) CONNECTICUT DEP COMPLIANCE. With respect to any
Properties which are Establishments under the Connecticut Transfer Act, prior to
the Closing WBI shall have delivered to HUBCO an appropriate Form in form and
content acceptable to the DEP and prior to the Closing shall have fully accrued
on WBI's books and disclosed to HUBCO the entire anticipated costs associated
with any requested or reasonably anticipated clean-up.
(E) LEGAL FEES. WBI shall have furnished HUBCO with
letters from all attorneys representing WBI and Westport in any matters
confirming that all legal fees have been paid in full for services rendered as
of the Effective Time.
(F) MERGER-RELATED EXPENSES. WBI shall have provided HUBCO
with an accounting of all merger-related expenses incurred by it through the
Closing Date, including a good faith estimate of such expenses incurred but as
to which invoices have not been submitted as of the Closing Date. The
merger-related expenses of WBI shall be reasonable.
6.3 CONDITIONS TO THE OBLIGATIONS OF WBI UNDER THIS AGREEMENT.
The obligations of WBI 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 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 effect the representation as to which
the supplement or amendment relates.
(B) OPINION OF COUNSEL TO HUBCO. WBI shall have received
an opinion of counsel to HUBCO, dated the Closing Date, in form and substance
reasonably satisfactory to WBI, covering the matters customarily covered in
opinions of counsel in transactions of this type.
(C) FAIRNESS OPINION. WBI shall have received an opinion
from O & Co. dated no more than three days prior to the date the Proxy
Statement-Prospectus is mailed to WBI's stockholders (and, if it shall become
necessary to resolicit proxies thereafter, dated no more than three days prior
to the date of any substantive amendment to the Proxy Statement/Prospectus) to
the effect that, in its opinion, the consideration to be paid to stockholders of
WBI hereunder is fair to such stockholders from a financial point of view
("Fairness Opinion"), and HUBCO shall not have taken any action (including the
announcement of any other proposed acquisition) which causes O & Co. to withdraw
its Fairness Opinion prior to the Closing.
(D) CERTIFICATES. HUBCO shall have furnished WBI 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 WBI may
reasonably request.
(E) CERTAIN CONTRACTS. HUBCO shall have specifically
acknowledged, accepted and assumed (in a document in form and substance
reasonably satisfactory to WBI) any written employment, severance and other
compensation contracts between WBI and its officers and directors (including
former officers and directors) contained in the WBI 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 WBI is terminated for any reason prior to the Closing, or if the
employment, severance and other contracts have been amended as provided
hereunder HUBCO shall assume the amended written contracts.
(F) DIRECTORS AND PRESIDENT. Two nominees, designated by
WBI and acceptable to HUBCO (which persons shall be Michael H. Flynn and David
A. Rosow, unless HUBCO and WBI shall agree in writing to the contrary), shall be
duly appointed by the Board of Directors of HUBCO to HUBCO's Board of Directors,
effective at the Effective Time. Provision shall have been made such that four
nominees, designated by WBI and acceptable to HUBCO (which persons shall include
Michael H. Flynn and David A. Rosow, unless HUBCO and WBI shall agree in writing
to the contrary), shall have been appointed as directors of the Surviving Bank
(or shall continue as directors of Westport if the Bank Merger is not
consummated at the Effective Time). HUBCO shall have caused Michael H. Flynn to
be elected President of the Connecticut Bank, subject to the condition of
Section 5.20 hereof. HUBCO shall have caused David A. Rosow to be appointed
Chairman of the Executive Committee of the HUBCO Board of Directors.
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 WBI:
(a) by mutual written consent of the parties hereto;
(b) by HUBCO or WBI (i) if the Effective Time shall not
have occurred on or prior to March 31, 1997 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) if a vote of
the stockholders of WBI is taken and such stockholders fail to approve this
Agreement at the meeting (or any adjournment thereof) held for such purpose, or
(iii) if a vote of the stockholders of HUBCO is required by applicable NASDAQ
rules, such vote is taken and such stockholders fail to approve this Agreement
at the meeting (or any adjournment thereof) held for such purpose;
(c) by HUBCO or WBI 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 Entity or by HUBCO upon written notice to WBI if any such
application is approved with conditions (other than conditions which are
customary in such regulatory approvals) which materially impair the value of WBI
and Westport, taken as a whole, to HUBCO;
(d) by HUBCO if (i) there shall have occurred a material
adverse change in the business, operations, assets, or financial condition of
WBI and Westport, taken as a whole, from that disclosed by WBI in WBI's
Quarterly Report on Form 10-Q for the three months ended March 31, 1996 (it
being understood that those matters disclosed in the WBI Disclosure Schedule
shall not be deemed to constitute such a material adverse change) or (ii) there
was a material breach in any representation, warranty, covenant, agreement or
obligation of WBI hereunder and such breach shall not have been remedied within
30 days after receipt by WBI of notice in writing from HUBCO to WBI specifying
the nature of such breach and requesting that it be remedied;
(e) by WBI, 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 three months ended March 31, 1996
except for the Effects of Announced Acquisitions (it being understood that those
matters disclosed in the HUBCO Disclosure Schedule shall not be deemed to
constitute such a material adverse change); 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 WBI specifying the nature of such
breach and requesting that it be remedied;
(f) by WBI, if WBI'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 WBI has paid to HUBCO in full the Termination Fee
specified hereunder in Section 8.1(c) upon the termination of this Agreement;
(g) by HUBCO if the conditions set forth in Section 6.2
are not satisfied and are not capable of being satisfied by March 31, 1997;
(h) by WBI if the conditions set forth in Section 6.3 are
not satisfied and are not capable of being satisfied by March 31, 1997; or
(i) by WBI, if (either before or after its approval by the
stockholders of WBI) 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 both of the following
conditions are satisfied:
(1) the HUBCO Common Stock Average Price on the
Determination Date shall be less than $16.75; 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");
Notwithstanding the foregoing, if WBI elects to exercise its termination right
pursuant to this subsection (i), it shall give prompt written notice to HUBCO
(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 of
increasing the consideration to be received by the holders of WBI 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 $16.75
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. If
HUBCO makes an election contemplated by the preceding sentence, within such
seven-day period, it shall give prompt written notice to WBI 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 NASDAQ (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 NASDAQ 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 or, if no FRB
approval is required, then the date of the approval by the FDIC of the Bank
Merger is received.
"Index Price" on a given date means the closing price of the
NASDAQ Bank Index on such date, as reported in The Wall Street Journal.
"Starting Date" means the first NASDAQ trading day immediately
following the date of the first public announcement of the entry into this
Agreement.
7.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement by either HUBCO or WBI pursuant to Section 7.1,
this Agreement (other than Section 5.5(b), the penultimate sentence of Section
5.6(h), 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 WBI but, after any such adoption, no amendment shall be made
which reduces or changes the amount or form of the consideration to be delivered
to the shareholders of WBI 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) Except as otherwise expressly stated herein, 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.
Notwithstanding the foregoing, WBI may bear the expenses of Westport.
(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.
(c) If
(i) this Agreement is terminated by WBI
pursuant to Section 7.1(f), or
(ii) this Agreement is terminated: (ww) by
HUBCO pursuant to Section 7.1(d)(ii) because of a breach by WBI of any covenant,
or (xx) by HUBCO pursuant to Section 7.1(b)(ii) because of an action taken by
WBI or WBI's Board of Directors, or (yy) by HUBCO following a withdrawal by O &
Co. of its Fairness Opinion prior to the Closing, or (zz) by WBI, other than
pursuant to Section 7.1(a), Section 7.1(b)(i) if before October 1, 1996 WBI has
satisfied all conditions in Section 6.2 (other than any requirement of WBI
stockholder approval or any condition waived by HUBCO), Section 7.1(b)(ii)
unless either (A) the failure of the WBI stockholders to approve the Agreement
is attributable to an action or omission of WBI or WBI's Board of Directors or
(B) a proposal to effect an Acquisition Transaction was made public before the
meeting of stockholders referred to in Section 7.1(b)(ii), Section 7.1(c),
Section 7.1(e), Section 7.1(f), Section 7.1(h) or Section 7.1(i), and
(a) after the execution of this Agreement and prior to the
date of termination of this Agreement WBI is informed orally or in writing of a
proposal to effect an Acquisition Transaction which proposal is not fully
withdrawn prior to the date of termination and which proposal is made by a
company or person other than HUBCO and its affiliates; and
(b) before or within 12 months after the date of the
termination of this Agreement (x) WBI shall have entered into an agreement to
engage in an Acquisition Transaction with any person other than HUBCO, or (y)
the Board of Directors of WBI shall have approved an Acquisition Transaction or
shall have recommended that the shareholders of WBI approve or accept any
Acquisition Transaction, in each case, other than as contemplated by this
Agreement, and
(c) an Acquisition Transaction between WBI and another
person shall have closed ("Acquisition Transaction Closing") within 24 months
after the termination of this Agreement;
then WBI or its successor in interest shall pay to HUBCO as a condition to a
termination under clause (i) above or under clause (ii) above as a condition to
and simultaneous with the Acquisition Transaction Closing, a termination fee
(the "Termination Fee") equal to $3,000,000 (THREE MILLION DOLLARS), plus the
legal fees and expenses of HUBCO incurred in enforcing its right to the
Termination Fee.
8.2 SURVIVAL. 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, except for Article
II, this Section 8.2 and Sections 5.5(b), 5.11 and 5.14.
8.3 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by reputable overnight courier or sent by registered or certified
mail, postage prepaid, as follows:
(a) If to HUBCO, to:
HUBCO, Inc.
1000 MacArthur Blvd.
Mahwah, New Jersey 07430
Attn.: Kenneth T. Neilson, Chairman,
President and Chief Executive Officer
Copy to: 1000 MacArthur Blvd.
Mahwah, New Jersey 07430
Attn.: D. Lynn Van Borkulo-Nuzzo, Esq.
And copy to: Pitney, Hardin, Kipp & Szuch
(Delivery) 200 Campus Drive
Florham Park, New Jersey
(Mail) P.O. Box 1945
Morristown, New Jersey 07962-1945
Attn.: Michael W. Zelenty, Esq.
(b) If to WBI or Westport, to:
Westport Bancorp, Inc.
87 Post Road East
Westport, Connecticut 06880
Attn.: Michael H. Flynn, President
and Chief Executive Officer
Copy to: Hogan & Hartson, L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attn.: Stuart G. Stein, Esq.
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
actually received.
8.4 PARTIES IN INTEREST; ASSIGNABILITY. 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 the Indemnitees described
in Section 5.14. This Agreement and the rights and obligations of the parties
hereunder may not be assigned.
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, other than any confidentiality agreements entered into by the parties
hereto.
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 WBI's knowledge or similar phrases refer as of the
date hereof to the best knowledge of the Chief Executive Officer, the Chief
Financial Officer and the person serving in the capacity of chief lending
officer of WBI and thereafter refer to the best knowledge of any senior officer
of WBI or any WBI Subsidiary. 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 Chairman, 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 any HUBCO Subsidiary. Any reference to a person's knowledge
or best knowledge shall mean, as of the date of the statement in question, such
person's actual knowledge or what such person should have known in the ordinary
exercise of that person's duties in the capacity referred to herein.
IN WITNESS WHEREOF, HUBCO, WBI and Westport have caused this
Agreement to be executed by their duly authorized officers and by no less than a
majority of the directors of each of them as of the day and year first above
written.
ATTEST: HUBCO, INC.
By:/S/ D. LYNN VAN BORKULO-NUZZO By: /S/ KENNETH T. NEILSON
------------------------------- ---------------------------------------
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, Chairman,
Secretary President and Chief Executive Officer
ATTEST: WESTPORT BANCORP, INC.
By: /S/ JOHN J. HENCHY By: /S/ MICHAEL H. FLYNN
----------------------------- ---------------------------------------
John J. Henchy, Michael H. Flynn, President
Secretary and Chief Executive Officer
ATTEST: THE WESTPORT BANK & TRUST COMPANY
By: /S/ JOHN J. HENCHY By: /S/ MICHAEL H. FLYNN
---------------------------- ---------------------------------------
John J. Henchy, Michael H. Flynn, President
Secretary and Chief Executive Officer
DIRECTORS OF WESTPORT BANCORP, INC. and
THE WESTPORT BANK & TRUST COMPANY:
/S/ JAY SHERWOOD /S/ KURT B. HERSHER
- --------------------------------- -------------------------------------
/S/ WILLIAM D. RUECKERT /S/ WILLIAM E. MITCHELL
- --------------------------------- -------------------------------------
/S/ MICHAEL H. FLYNN /S/ GEORGE H. DAMMAN
- --------------------------------- -------------------------------------
/S/ DAVID A. ROSOW /S/ WILLIAM L. GAULT
- --------------------------------- -------------------------------------
DIRECTORS OF HUBCO, INC.:
/S/ JOAN DAVID /S/ KENNETH T. NEILSON
- --------------------------------- --------------------------------------
/S/ BRYANT MALCOLM /S/ CHARLES F.X. POGGI
- --------------------------------- --------------------------------------
/S/ ROBERT J. BURKE /S/ JAMES E. SCHIERLOH
- --------------------------------- --------------------------------------
/S/ W. PETER MCBRIDE
- ---------------------------------
CERTIFICATE OF WBI AND WESTPORT DIRECTORS
Reference is made to the Agreement and Plan of Merger, dated
June 21, 1996 (the "Agreement"), among HUBCO, Inc., Westport Bancorp, Inc., and
The Westport Bank & Trust Company. Capitalized terms used herein have the
meanings given to them in the Agreement.
Each of the following persons, being all of the directors of WBI and Westport,
agrees to vote or cause to be voted all shares of WBI Stock which are held by
such person, or over which such person exercises full voting control (except as
trustee or in a fiduciary capacity, or as nominee), in favor of the Merger.
/S/ DAVID A. ROSOW /S/ KURT B. HERSHER
- --------------------------------- ------------------------------------
/S/ WILLIAM D. RUECKERT /S/ GEORGE H. DAMMAN
- --------------------------------- ------------------------------------
/S/ WILLIAM E. MITCHELL /S/ MICHAEL H. FLYNN
- --------------------------------- ------------------------------------
/S/ JAY SHERWOOD /S/ WILLIAM L. GAULT
- --------------------------------- ------------------------------------
Dated: June 21, 1996
<PAGE>
APPENDIX B
OSTROWSKI & COMPANY, INC.
September 18, 1996
Board of Directors
Westport Bancorp, Inc.
87 Post Road East
Westport, CT 06880
Members of the Board:
You have requested an update of our opinion dated June 20, 1996 as to
the fairness, from a financial point of view, of the terms of a proposed
Agreement and Plan of Merger dated June 21, 1996 (the "Merger Agreement"), by
and among HUBCO, Inc. ("HUBCO"), Westport Bancorp, Inc. ("Westport") and The
Westport Bank and Trust Company ("WBTC"), to the holders of Westport common
stock, par value $.01 ("Westport Common Stock"), and the holders of Westport
Series A Convertible Preferred Stock, par value $.01 ("Westport Preferred
Stock", and collectively, "Westport Shareholders"). Pursuant to the terms of the
Merger Agreement, each share of Westport common stock will be converted into the
right to receive 0.3225 shares of HUBCO common stock, no par value, and each
share of Westport Preferred Stock will be converted into the right to receive
one share of a new HUBCO Series B Preferred Stock having substantially identical
terms as the Westport Preferred Stock, in each case subject to adjustment in
certain circumstances as described in the Merger Agreement.
Ostrowski & Company, Inc., as part of its bank and thrift advisory
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
purposes. We are familiar with Westport, having provided financial advisory
services to the Board of Directors since 1994, and we participated in the
negotiations leading to the Merger Agreement. We have received and will receive
fees from Westport for advisory services, and will receive fees for advisory
services in connection with the completion of the transactions contemplated in
the proposed Merger Agreement.
In connection with providing this opinion, we have examined and relied
upon, among other things, the Merger Agreement; the Proxy Statement-Prospectus
contained in the Form S-4 Registration Statement filed by HUBCO with the
Securities and Exchange Commission on August 23, 1996; annual reports to
shareholders, proxy statements and related audited financial statements for
Westport and HUBCO for each of the three fiscal years ended December 31, 1993,
1994 and 1995; the Joint Proxy Statement-Prospectus dated May 8, 1996 relating
to the Agreement and Plan of Merger between Lafayette American Bank and Trust
Company and HUBCO; certain unaudited interim financial reports for Westport and
HUBCO for the quarters ended March 31, 1996 and June 30, 1996, certain other
financial information for Westport and HUBCO, including pro forma financial
statements and managements' estimates relating to, among other things, earnings,
asset quality, and capital. We have conducted discussions with executive
management of both Westport and HUBCO concerning historical financial
performance and condition, market area economic conditions, and future business
prospects and financial forecasts. We have reviewed stock market prices and
trading activity for the common shares of Westport and HUBCO. We have reviewed
comparable financial, operating and market data for the banking industry and
selected peer groups; compared the terms of the Merger Agreement with other bank
merger and acquisition transactions; and have considered such additional
financial and other information deemed relevant.
In preparing our opinion, we have relied upon the accuracy,
completeness and fair presentation of all information supplied or otherwise made
available to us by, or on behalf of, Westport and HUBCO. We have not
independently verified such information or undertaken an independent evaluation
or appraisal of the assets or liabilities of Westport or HUBCO, nor have we been
furnished any such evaluations or appraisals. With respect to forecasts of
expected future financial performance, we have been advised that they reflect
the best currently available estimates and judgment of the executive managements
of Westport and HUBCO. This opinion is necessarily based upon the information
available to us and the market, economic and other conditions, as they exist and
can be evaluated, as of the date of this letter.
This opinion is directed solely to the fairness, from a financial point
of view, of the terms of the Merger Agreement to Westport Shareholders and does
not constitute a recommendation to any Westport Shareholder as to how such
Westport Shareholder should vote with respect to the Merger Agreement.
In reliance upon and subject to the foregoing, it is our opinion that
as of the date hereof, the terms of the Merger Agreement are fair, from a
financial point of view, to Westport Shareholders.
Very truly yours,
OSTROWSKI & COMPANY, INC.
<PAGE>
APPENDIX C
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
262 APPRAISAL RIGHTS. - (a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection(d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to ss.228 of this title shall be entitled to an appraisal by the Court
of Chancery of the fair value of his shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the world "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss.251 (other than a merger effected pursuant to subsection
(g) of ss.251), ss.252, ss.254, ss.257, ss.258, ss.263 or ss.264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc., or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of ss.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to ss.ss.251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock or depository receipts at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under ss.253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsections (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of his
shares shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of his shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to take such action
must do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to ss.228 or
ss.253 of this title, each constituent corporation, either before the effective
date of the merger or consolidation or within 10 days thereafter, shall notify
each of the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of the merger
or consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation, such notice
shall be given by the surviving or resulting corporation to all such holders of
any class or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within twenty days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of such holder's shares.
If such notice did not notify stockholders of the effective date of the merger
or consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation notifying
each of the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the effective date of the
merger or consolidation or (ii) the surviving or resulting corporation shall
send such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more than
20 days following the sending of the first notice, such second notice need only
be sent to each stockholder who is entitled to appraisal rights and who has
demanded appraisal of such holder's shares in accordance with this subsection.
An affidavit of the secretary or assistant secretary or of the transfer agent of
the corporation that is required to give either notice that such notice has been
given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice is given;
provided that, if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware, or such publication
as the Court deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs thereof shall be borne
by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings, and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and in the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
period provided in subsection (e) of this section, or if such stockholder shall
deliver to the surviving or resulting corporation a written withdrawal of his
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
<PAGE>
APPENDIX D
The Merger Agreement requires that the New HUBCO Preferred Stock have terms (to
be set forth in a Certificate of Amendment to HUBCO's Certificate of
Incorporation) substantially identical to those set forth on Exhibit 2.1(a) to
the Merger Agreement. Exhibit 2.1(a) to the Merger Agreement is reproduced
below. It is anticipated that the actual Certificate of Amendment will differ
from Exhibit 2.1(a) in certain immaterial respects, such as by referring to the
New HUBCO Preferred Stock as "Series B Convertible Preferred Stock" and by
deleting any reference to Westport warrants, as all such warrants have been
exercised and none will be outstanding at the Effective Time.
EXHIBIT 2.1(A) TO THE MERGER AGREEMENT
ARTICLE V
SECTION D-SERIES B PREFERRED STOCK
(C) The Series B Preferred Stock, shall have a stated value of
$100.00 per share, and the shares therefore, when issued for such amount, shall
be fully paid and non-assessable. The Series B Preferred Stock shall consist of
_______ shares, which number may be increased (but only in connection with a
stock split or stock dividend) or decreased from time to time (but not below the
number thereof then outstanding) by the Board of Directors. Upon the
reacquisition of any of the Series B Preferred Stock, through conversion or
otherwise, such reacquired Shares shall be canceled and shall become part of the
authorized and unissued Preferred Stock, but shall not be authorized and
unissued Series B Preferred Stock. The rights, preferences and limitations of
the Series B Preferred Stock are as follows:
(a) Rank. The Series B Preferred Stock shall, with
respect to rights on liquidation, winding up and dissolution of the Corporation,
rank prior to the Common Stock and to all other classes and series of equity
securities of the Corporation now or hereafter authorized, issued or
outstanding, other than any class or series of equity securities ranking on a
parity with the Series B Preferred Stock (the "Parity Stock"), or any class or
series of equity securities of the Corporation ranking senior to the Series B
Preferred Stock as to rights upon liquidation (the "Senior Stock"). The Series B
Preferred Stock shall be junior to all outstanding debt of the Corporation. The
Series B Preferred Stock shall be subject to creation of Senior Stock, Parity
Stock and classes or series of equity securities ranking junior to the Series B
Preferred Stock (the "Junior Stock").
(b) Dividends. Holders of record of Series B
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of the funds of the Corporation legally available
therefore, dividends at a rate to be determined by the Corporation's Board of
Directors. All dividends declared on the Series B Preferred Stock shall be
declared pro rata per share and shall be noncumulative. All dividends declared
shall be payable to holders of record of the Series B Preferred Stock as they
appear at the close of business on the stock books of the Corporation on record
dates determined by the Board of Directors, not more than 60 calendar days
preceding the date on which such dividends are payable.
(c) Liquidation Preference. The amount which the
holders of shares of Series B Preferred Stock shall be entitled to receive,
subject to the rights of creditors, in the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, shall be
$100.00 per share. Upon any such liquidation, dissolution or winding up, the
preferential amounts with respect to the Series B Preferred Stock and any Parity
Stock shall be distributed pro rata in accordance with the aggregate
preferential amounts of the Series B Preferred Stock and such Parity Stock, if
any, out of or to the extent of the net assets of the Corporation legally
available for such distribution, before any distributions are made with respect
to any Junior Stock.
(d) Redemption. The Series B Preferred Stock is not
subject to any redemption rights on the part of the Corporation, nor shall the
holders of the Series B Preferred Stock have the right to require the
Corporation to redeem their shares.
(e) Conversion.
(i) At the Option of the Holder. At the option
of each of the holders of outstanding Series B Preferred Stock, such stock may
be converted into the fully paid and nonassessable shares of Common Stock as
provided for in this Paragraph (e). As used in this Paragraph (e), Common Stock
means (A) the Common Stock, no par value, of the Corporation, as authorized by
this Certificate of Incorporation, and (B) any other class of capital stock into
which such Common Stock has been changed pursuant to any reclassification or
reorganization.
(ii) Conversion Ratio. The Series B Preferred
Stock may be converted into Common Stock at the conversion rate in effect at the
"Conversion Date" (as defined below). On and after ________, 199_, the
conversion rate shall be 32.25 shares of Common Stock for each share of Series B
Preferred Stock converted (the "Conversion Ratio"). The Conversion Ratio shall
be subject to adjustment from time to time, as provided in Subparagraph (iv) of
this Paragraph (e).
(iii) Certain Transactions. In case of any
consolidation or merger to which the Corporation is a party, other than a merger
or consolidation in which the Corporation is the continuing corporation, or in
case of any sale or conveyance to another corporation of the property of the
Corporation as an entirety or substantially as an entirety, or in case of any
statutory exchange of securities with another corporation, there will be no
adjustment of the Conversion Ratio, but each holder of shares of Series B
Preferred Stock then outstanding will have the right thereafter to convert such
shares into the kind and amount of securities, cash or other property which such
holder would have owned or have been entitled to receive immediately after such
consolidation, merger, statutory exchange, sale or conveyance had such shares
been converted immediately prior to the effective date of such consolidation,
merger, statutory exchange, sale or conveyance.
(iv) Adjustment of Conversion Ratio. The
Conversion Ratio is subject to adjustment, upon certain events, including the
issuance of Common Stock of the Corporation as a dividend with respect to the
outstanding Common Stock, subdivisions or combinations of Common Stock, the
issuance to holders of Common Stock generally of rights or warrants to subscribe
for Common Stock, or the distribution to holders of Common Stock generally of
evidences of indebtedness, assets (excluding dividends in cash out of retained
earnings) or rights or warrants to subscribe for securities of the Corporation
other than those mentioned above. The adjustments required by this Subparagraph
(iv) shall be made whenever and as often as any specified event requiring an
adjustment shall occur, except that no adjustment of the number of shares of
Common Stock into which each share of Series B Preferred Stock is convertible
that would otherwise be required shall be made (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for in
Subparagraph (iii)) unless and until such adjustment, either by itself or with
other adjustments not previously made, adds or subtracts at least five percent
(5%) to or from the number of shares of Common Stock into which each share of
Series B Preferred Stock is convertible immediately prior to the making of such
adjustment. Any adjustment representing a change of less than such minimum
amount (except as aforesaid) shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Subparagraph (iv)
and not previously made, would result in a minimum adjustment. For the purpose
of any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence. Each adjustment in the
Conversion Ratio pursuant to this Subparagraph (iv) shall become effective as of
either (A) the record date for the payment of such dividend, or (B) the
effective date of any such subdivision or combination. Notwithstanding the
foregoing, the Conversion Ratio shall not be subject to adjustment to the extent
the Corporation issues any Common Stock in connection with (x) the exercise of
stock purchase rights pursuant to Warrant Certificates issued __________, 199___
by the Corporation in exchange for warrants previously exchangeable for shares
of the common stock of Westport Bancorp, Inc.; and (y) any employee compensation
and benefit plans, employee agreements and contracts. No adjustment in the
Conversion Ratio for the Series B Preferred Stock shall be made if, at the same
time that the Corporation takes an action with respect to the Common Stock that
would otherwise require adjustment under this Subparagraph (iv), the Corporation
shall take the same action with respect to the Series B Preferred Stock in the
same proportion as if each share of Series B Preferred Stock had been converted
into shares of Common Stock at the then applicable Conversion Ratio immediately
before the record date for the determination of holders of Common Stock entitled
to receive the dividends, rights, warrants, or distributions. Whenever the
Conversion Ratio is adjusted as provided in this Subparagraph (iv), the
Corporation shall promptly file with the Transfer Agent for the Series B
Preferred Stock a statement signed by the Chairman of the Board, President or
Vice President of the Corporation and by its Treasurer or its Secretary showing
in detail the facts requiring such adjustment, and shall exhibit the statement
to any holder of Series B Preferred Stock desiring to inspect the statement. In
addition, with respect to adjustments made while any Series B Preferred Stock is
outstanding, the Corporation shall state to the Transfer Agent and in the next
quarterly and annual report to shareholders that an adjustment has been effected
and give the adjusted Conversion Ratio. Such quarterly and annual report shall
be mailed to all holders of record of the Series B Preferred Stock on the record
date used for mailing such quarterly and annual report to holders of Common
Stock.
(v) Conversion Procedure. The Series B Preferred
Stock may be converted by (A) surrendering the certificates representing the
shares of such Series B Preferred Stock, together with (B) written notice of
conversion, and (C) a proper assignment of such certificates to the Corporation
or in blank. The notice of conversion shall state the name(s) and address(es) in
which the certificates representing the Common Stock issuable upon such
conversion shall be issued. The date upon which the certificates representing
the shares to be converted, the notice of conversion and the assignment are
received by the transfer agent is referred to herein as the "Conversion Date."
As promptly as practicable after the Conversion Date, the Corporation shall
issue and deliver, as specified in the notice of conversion, certificate(s) for
the number of full shares of Common Stock (or other shares of capital stock,
other securities, cash or other property) issuable upon such conversion,
together with any cash instead of fractional shares as provided in Subparagraph
(vi) below. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the Conversion Date, and at such time the
rights of the holder as a holder of the converted shares of the Series B
Preferred Stock shall cease and the person or persons in whose names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Common Stock represented thereby.
(vi) Cash Adjustment. No fractional shares of
Common Stock (or other shares of stock or other securities) or scrip
representing fractional shares shall be issued upon conversion of the Series B
Preferred Stock. Instead, the Corporation shall pay a cash adjustment in an
amount equal to the same fraction of the current market price per share of the
Common Stock (or other shares of capital stock or other securities) at the
Conversion Date. As used in this Subparagraph (vi), the term "current market
price" at any time means the daily average closing price for a period of thirty
business days ending on the business day before the date for which such price is
to be determined. The closing price for each business day will be either (A) the
last sale price as quoted on the principal national securities exchange upon
which the Common Stock (or other capital stock or securities) is listed or
admitted to trading, or, (B) if the Common Stock (or other capital stock or
securities) is not so listed or admitted, the average of the closing bid and
asked prices as quoted on the National Association of Securities Dealers
Automated Quotation System. If, for any reason, such closing prices cannot
reasonably be determined, then the current market price will be determined by
any reasonable method selected by the Board of Directors of the Corporation.
(vii) Corporation to Reserve Stock for
Conversion. As long as any Series B Preferred Stock remains outstanding, the
Corporation shall reserve out of its authorized but unissued Common Stock the
full number of shares of Common Stock deliverable upon the conversion of all
outstanding Series B Preferred Stock.
(f) Voting Rights.
(i) Number of Votes. Holders of shares of Series
B Preferred Stock shall vote together as a class with holders of the Common
Stock for the election of directors and all other matters as to which holders of
the Common Stock shall be entitled to vote. Each share of Series B Preferred
Stock shall be entitled to 32.25 votes, which represents a number of votes equal
to the number of shares of Common Stock into which the Series B Preferred Stock
is convertible and which number is subject to adjustment pursuant to
Subparagraph (e)(iv).
(ii) Additional Voting Rights. In addition, the
approval of a majority of the outstanding shares of Series B Preferred Stock,
voted together as a class, shall be required in order to amend the Certificate
of Incorporation of the Corporation to affect adversely the rights of the
holders of the Series B Preferred Stock or to take any action which would result
in the creation of or an increase in the number of authorized shares senior or
superior with respect to dividends or upon liquidation to the Series B Preferred
Stock. Subject to the foregoing, the Corporation's Certificate of Incorporation
may be amended to increase the number of authorized shares of Parity Stock or
Junior Stock without the vote by class of the holders of the outstanding Series
B Preferred Stock.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN 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. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A. Exhibits
Exhibit
Number Description
2 Agreement and Plan of Merger, dated June 21, 1996, by and among HUBCO,
Inc. ("HUBCO") and Westport Bancorp, Inc. ("WESTPORT") and The Westport
Bank & Trust Company (included as Appendix A 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.**
23(a) Consent of Arthur Andersen LLP. (Westport)
23(b) Consent of Arthur Andersen LLP. (HUBCO)
- ------------------------------------------------------
* Included elsewhere in this registration statement.
** Previously filed.
<PAGE>
23(c) Consent of Arthur Andersen, LLP. (Lafayette)
23(d) Consent of Ostrowski & Company, Inc.
23(e) Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibits 5 and 8
hereto). **
99(a) Form of Proxy Card to be utilized by the Board of Directors of Westport.
99(b) Power of Attorney of Officers and Directors of HUBCO.
99(c) Consent of Michael H. Flynn as person about to become director.
99(d) Consent of David A. Rosow as person about to become director.
B. Financial Statement Schedules
All financial statement 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
Fairness Opinion of Ostrowski & Company, Inc. is included as Appendix B
to the Proxy Statement-Prospectus.
- -----------------------------------------------
** Previously filed.
<PAGE>
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 Securities 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 Securities 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 became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this amended 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 18th day of September, 1996.
HUBCO, Inc.
By: KENNETH T. NEILSON
--------------------
Kenneth T. Neilson,
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
amended registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- -----
KENNETH T. NEILSON Chairman, President, Chief September 18, 1996
- ----------------------- Executive Officer and Director
(Kenneth T. Neilson) (Principal Executive Officer)
ROBERT J. BURKE* Director September 18, 1996
- -----------------------
(Robert J. Burke)
Director September 18, 1996
- -----------------------
(Donald P. Calcagnini)
JOAN DAVID* Director September 18, 1996
- -----------------------
(Joan David)
THOMAS R. FARLEY* Director September 18, 1996
- -----------------------
(Thomas R. Farley)
Director September 18, 1996
- -----------------------
(Robert B. Goldstein)
BRYANT MALCOLM*
- -----------------------
(Bryant Malcolm) Director September 18, 1996
W. PETER McBRIDE* Director September 18, 1996
- -----------------------
(W. Peter McBride)
CHARLES F.X. POGGI* Director September 18, 1996
- -----------------------
(Charles F.X. Poggi)
JAMES E. SCHIERLOH* Director September 18, 1996
- -----------------------
(James E. Schierloh)
Director September 18, 1996
- -----------------------
(John Tatigian)
Director September 18, 1996
- ------------------------
(Sister Grace Frances Strauber)
RICHARD LINHART Treasurer and Chief Financial September 18, 1996
- ----------------------- Officer (Principal Financial
(Richard Linhart) Officer)
CHRISTINA L. MAIER* Assistant Treasurer (Principal September 18, 1996
- ----------------------- Accounting Officer)
(Christina L. Maier)
- -------------------------------------------------------
KENNETH T. NEILSON
- -------------------------------------------
* By Kenneth T. Neilson, as Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit Description Page
Number
2 Agreement and Plan of Merger, dated June 21, 1996, by and *
among HUBCO, Inc. ("HUBCO") and Westport Bancorp, Inc.
("WESTPORT") and The Westport Bank & Trust Company (included
as Appendix A 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.
23(a) Consent of Arthur Andersen LLP. (Westport)
23(b) Consent of Arthur Andersen LLP. (HUBCO)
23(c) Consent of Arthur Andersen LLP. (Lafayette)
23(d) Consent of Ostrowski & Company, Inc.
23(e) Consent of Pitney, Hardin, Kipp & Szuch (included in **
Exhibits 5 and 8 hereto).
99(a) Form of Proxy Card to be utilized by the Board of Directors
of Westport.
99(b) Power of Attorney of Officers and Directors of HUBCO.
99(c) Consent of Michael H. Flynn as person about to become director.
99(d) Consent of David A. Rosow as person about to become director.
- ---------------------------------
* Included elsewhere in this registration statement.
** Previously filed.
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Westport Bancorp, Inc.
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our report dated
January 26, 1996 included in Westport Bancorp, Inc.'s Amendment No. 1 to Form
10-K on Form 10-K/A for the year ended December 31, 1995 and to all references
to our firm included in this registration statement.
ARTHUR ANDERSEN LLP
New York, NY
September 18, 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 July 1, 1996 included in HUBCO's Current Report on Form 8-K filed
on August 22, 1996 and to all references to our firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Roseland, NJ
September 18, 1996
Exhibit 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Lafayette American Bank and Trust Company
As independent public accountants, we hereby consent to the incorporation by
reference in the Registration Statement on Form S-4 of our report dated January
17, 1996 included in the Company's 1995 Annual Report on Form F-2 and to all
references to our firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
New York, New York
September 18, 1996
Exhibit 23(d)
CONSENT OF OSTROWSKI & COMPANY, INC.
We hereby consent to the use of our firm's name in the Form
S-4 Registration Statement of HUBCO, Inc. ("HUBCO") and amendments thereto
relating to the registration of shares of HUBCO's common stock and preferred
stock to be issued in connection with the proposed acquisition of Westport
Bancorp, Inc. ("Westport"). We also consent to the inclusion of our opinion
letter dated September 18, 1996 as an Appendix to the Proxy Statement/Prospectus
included as part of the Form S-4 Registration Statement, and to the references
to our opinion included in the Proxy Statement/Prospectus.
Ostrowski & Company, Inc.
Date: September 18, 1996
REVOCABLE PROXY EXHIBIT 99(A)
WESTPORT BANCORP, INC.
PROXY
FOR THE SPECIAL MEETING OF SHAREHOLDERS
OOCTOBER 24, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
WESTPORT BANCORP, INC.
The undersigned shareholder of Westport Bancorp, Inc.
("WESTPORT") hereby appoints Michael H. Flynn, William L. Gault and Jay
Sherwood, and each of them, as Proxy, each with full power of substitution, and
hereby authorizes such proxy to represent the undersigned and to vote all of the
shares of stock of Westport standing in the undersigned's name at the Special
Meeting of Shareholders of Westport to be held at Westport Bancorp, Inc., 87
Post Road East, Westport, Connecticut, on Thursday, October 24, 1996 at 4:00
p.m., and at any adjournment or postponement thereof. The undersigned hereby
revokes any and all proxies heretofore given with respect to such Special
Meeting.
This proxy, when properly executed, will be voted as specified
herein. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR APPROVAL OF THE
AGREEMENT AND PLAN OF MERGER.
(continued on reverse side)
<PAGE>
X Please mark your votes as in this example.
- -------
The Board of Directors recommends a vote FOR approval of the Agreement and Plan
of Merger.
1. Approval of the Agreement and Plan of Merger, dated June 21, 1996, by
and among HUBCO, Inc., Westport and the Westport Bank & Trust Company
FOR ________ AGAINST __________ ABSTAIN _______
2. To vote, in its discretion, upon any such other business as may
properly come before the Special Meeting or any adjournment or
postponemnet thereof.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED AT THE
SPECIAL MEETING.
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
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.
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. 333-10761) 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
--------- ----- -----
KENNETH T. NEILSON Chairman, President, Chief September 17, 1996
- ----------------------- Executive Officer and Director
(Kenneth T. Neilson) (Principal Executive Officer)
ROBERT J. BURKE Director September 17, 1996
- -----------------------
(Robert J. Burke)
Director
- -----------------------
(Donald P. Calcagnini)
JOAN DAVID Director September 17, 1996
- -----------------------
(Joan David)
THOMAS R. FARLEY Director September 17, 1996
- -----------------------
(Thomas R. Farley)
Director
- -----------------------
(Robert B. Goldstein)
BRYANT MALCOLM Director September 17, 1996
- -----------------------
(Bryant Malcolm)
W. PETER McBRIDE Director September 17, 1996
- -----------------------
(W. Peter McBride)
Director September 17, 1996
- -----------------------
(Harry J. Leber)
CHARLES F.X. POGGI Director September 17, 1996
- -----------------------
(Charles F.X. Poggi)
JAMES E. SCHIERLOH Director September 17, 1996
- -----------------------
(James E. Schierloh)
Director
- -----------------------
(John Tatigian)
Director
- ----------------------------
(Sister Grace Frances Strauber)
RICHARD LINHART Treasurer and Chief Financial September 17, 1996
- ----------------------- Officer (Principal Financial
(Richard Linhart) Officer)
CHRISTINA L. MAIER Assistant Treasurer (Principal September 17, 1996
- ----------------------- Accounting Officer)
(Christina L. Maier)
Exhibit 99(c)
CONSENT OF PERSON ABOUT TO BECOME DIRECTOR
To HUBCO, Inc.
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as amended, I
hereby consent to the references in the Registration Statement of HUBCO, Inc.
("HUBCO") on Form S-4 (Registration No. 333-10761) and amendments thereto, which
indicate that I may become a director of HUBCO upon consummation of the merger
of Westport Bancorp, Inc. with HUBCO.
MICHAEL H. FLYNN
September 6, 1996
Exhibit 99(d)
CONSENT OF PERSON ABOUT TO BECOME DIRECTOR
To HUBCO, Inc.
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as amended, I
hereby consent to the references in the Registration Statement of HUBCO, Inc.
("HUBCO") on Form S-4 (Registration No. 333-10761) and amendments thereto, which
indicate that I may become a director of HUBCO upon consummation of the merger
of Westport Bancorp, Inc. with HUBCO.
DAVID A. ROSOW
September 6, 1996
