================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 16, 1997
HUBCO, INC.
(Exact name of registrant as specified in its charter)
New Jersey
(State or other jurisdiction of incorporation)
1-10699 22-2405746
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
----------------------------------------
(Address of principal executive offices)
(201) 236-2600
----------------------------------------------------
(Registrant's telephone number, including area code)
================================================================================
<PAGE>
Item 5. Other Events
- ------- ------------
HUBCO, Inc. ("HUBCO") and MSB Bancorp, Inc. ("MSB") jointly announced
on December 16, 1997 the signing of a definitive merger agreement (the "Merger
Agreement") with MSB and MSB's bank subsidiary, MSB Bank, whereby HUBCO will
acquire MSB in a stock for stock exchange which is intended to qualify as a
pooling of interests. A copy of the Press Release is attached as an Exhibit to
this Form 8-K.
Under the terms of the agreement, MSB will be merged into HUBCO, Inc.
It is expected that MSB Bank will be merged into Bank of the Hudson ("BTH"),
which will be HUBCO's New York banking subsidiary following the completion of
HUBCO's pending acquisition of BTH's parent, Poughkeepsie Financial Corp. Under
the terms of the MSB merger agreement, each share of MSB common stock will be
exchanged for HUBCO common stock with a value of $36.02, provided that the
median closing HUBCO stock price during a 10-day pricing period ending on the
day the parties receive final federal bank regulatory approval held, is between
$34.97 and $37.13. If the median closing HUBCO stock price during this period is
greater than $37.13 the exchange ratio will be .97, and if it is less than
$34.97 the exchange ratio will be 1.03 shares. MSB has certain rights to
terminate the merger agreement if the median closing HUBCO price during the
pricing period is less than $27.00 per share unless HUBCO agrees to deliver
shares of HUBCO common stock having a value of $27.81 in exchange for each share
of MSB common stock.
In connection with the execution of the merger agreement, MSB has
issued an option to HUBCO which, under certain defined circumstances, would
enable HUBCO to purchase up to 600,000 shares of authorized and unissued MSB
common stock at a price of $29.00 per share. The transaction, which is expected
to close in the second quarter of 1998, is expected to be treated as a tax-free
exchange to holders of MSB stock and accounted for as a pooling of interests.
On December 16, 1997, HUBCO held a conference call with banking
industry analysts and others to discuss the acquisition. The following
information was provided to participants in connection with the presentation.
HUBCO estimates cost savings to be in the range of 35% to 40% of MSB's
total overhead expenses, or approximately $7.0 million pre-tax. In past
acquisitions HUBCO has achieved cost savings ranging from 35% to 60% of
overhead. HUBCO's estimate is based on past experience, industry averages,
specific information obtained during the due diligence process and input from
the MSB senior management team.
Earnings accretion is anticipated based on both the cost savings to be
achieved and earnings enhancement by developing a small business lending niche
along with associated deposit benefits, resulting in a slight widening of the
net interest margin. HUBCO also anticipates that new revenue will result from
the offering of additional products and services through MSB branches. While
HUBCO anticipates some positive effect from the revenue enhancement aspect of
this transaction, it is unable to specify such benefits with sufficient
assurance to take them into account in the estimates. (1) (2)
HUBCO anticipates that merger-related and restructuring charges of
approximately $9 million after tax will be taken in connection with the
transaction. These charges are likely to include employment contract payouts,
severance payments, investment banking fees, service contract terminations,
disposal of equipment and fixtures no longer necessary for the operation of the
institution and certain reserves necessary to bring the reserve levels in line
with HUBCO's policies. (3)
HUBCO estimates gross book value accretion, net of any restructuring
charges, to be 10%. This figure was arrived at by combining the capital accounts
of MSB and HUBCO using the maximum 1.03 exchange ratio to convert MSB's
outstanding shares to HUBCO shares. HUBCO's estimate of net book value accretion
factors include the tax-adjusted merger-related and restructuring charges
associated with this acquisition. (2) (3)
(1) The statements concerning cost savings are forward looking
statements under the Private Securities Litigation Reform Act of 1995. The
correctness of the estimate depends upon a number of factors including, but not
limited to, the ability to effectively centralize loan credit, finance and data
processing functions without substantial cost increases, the ability to
terminate certain leases, economic conditions and other factors. The amount of
the cost savings may vary from the estimates.
(2) The estimates of book value accretion and earnings accretion for
HUBCO are forward looking statements under the Private Securities Reform Act of
1995. The ability of HUBCO to realize accretion to book value is subject to a
number of factors, including but not limited to, restructuring costs and the
impact of other transactions, and as a result, the actual results of HUBCO could
differ materially. The ability of HUBCO to realize accretion to earnings is
subject to a number of factors, including, but not limited to those set forth in
the text and the impact of other acquisitions, general conditions, interest
rates and costs savings and as a result, the actual results of HUBCO could
differ materially. The correctness of the estimate depends upon a number of
factors including but not limited to the ability to effectively centralize loan
credit, finance and data processing functions without substantial cost increase,
the ability to terminate certain leases, economic conditions and other factors.
The amount of the cost savings may vary from the estimates.
(3) The statements concerning one-time charges are forward looking
statements under the Private Securities Litigation Reform Act of 1995. The
correctness of the estimate depends upon a number of factors and the amount of
the actual charge incurred may vary from the estimate. While HUBCO has developed
this anticipated charge after considering what it believes to be all relevant
factors and including all currently known amounts, the actual amount of the
restructuring charge may vary, depending upon a number of factors, including but
not limited to the timing of the closing. HUBCO's ability to retain officers of
MSB who have employment or severance contracts, as well as those who do not,
economic conditions, the resolution of various contractual contingencies with
third parties and other factors.
Item 7. Exhibits
- ------- --------
99.1 Press Release dated December 16, 1997.
99.2 Agreement and Plan of Merger dated December 15, 1997 among HUBCO,
Inc., MSB Bancorp, Inc. and MSB Bank.
99.3 Stock Option Agreement dated December 15, 1997 among HUBCO, Inc.
and MSB Bancorp, Inc.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUBCO, INC.
Dated: December 22, 1997 By:D. LYNN VAN BORKULO-NUZZO
-----------------------------
D. Lynn Van Borkulo-Nuzzo,
Executive Vice President
<PAGE>
INDEX TO EXHIBIT
Exhibit No. Description
- ---------- -----------
99.1 Press Release dated December 16, 1997.
99.2 Agreement and Plan of Merger dated December 15, 1997 among HUBCO,
Inc., MSB Bancorp, Inc. and MSB Bank.
99.3 Stock Option Agreement dated December 15, 1997 among HUBCO, Inc.
and MSB Bancorp, Inc.
FOR IMMEDIATE RELEASE
December 16, 1997
HUBCO, Inc. and MSB Bancorp, Inc. Sign a Definitive Merger Agreement
Mahwah, New Jersey and Goshen, New York; December 16, 1997-- HUBCO,
Inc. (NASDAQ:HUBC), and MSB Bancorp, Inc. (AMEX:MBB) today announced the signing
of a definitive merger agreement. MSB Bancorp is the holding company for MSB
Bank, a $774 million asset institution headquartered in Goshen, NY. It operates
16 branches in Orange, Putnam and Sullivan Counties in New York.
Under the terms of the agreement MSB Bancorp, Inc. will be merged into
HUBCO, Inc. It is expected that MSB Bank will be merged into Bank of the Hudson,
HUBCO's New York subsidiary following the Poughkeepsie Financial acquisition.
Under the terms of the merger agreement each share of MSB common stock will be
exchanged for HUBCO common stock with a value of $36.02, provided that the
median closing HUBCO stock price during a 10-day pricing period ending on the
day the parties receive final federal bank regulatory approval, is between
$34.97 and $37.13. If the median closing HUBCO stock price during this period is
greater than $37.13 the exchange ratio will be .97 and if it is less than $34.97
the exchange ratio will be 1.03 shares. MSB has certain rights to terminate the
agreement if the median closing HUBCO price during the pricing period is less
than $27.00 per share unless HUBCO agrees to deliver shares of HUBCO common
stock having a value of $27.81 in exchange for each share of MSB common stock.
The price of $36.02 per share equates to a value of $115 million or
163% of book value, 267% of tangible book value and 32 times MSB's annualized
nine month earnings. The price represents a deposit premium of approximately 6%
as measured relative to total equity and 10% as measured relative to tangible
equity.
In connection with the execution of the merger agreement, MSB has
issued an option to HUBCO which, under certain defined circumstances, would
enable HUBCO to purchase up to 600,000 shares of authorized and unissued MSB
common stock at a price of $29.00 per share. The transaction, which is expected
to close in the second quarter of 1998, is expected to be treated as a tax-free
exchange to holders of MSB stock and accounted for as a pooling of interests.
This will be HUBCO twenty-first acquisition in seven years and will
expand HUBCO's New York subsidiary to $1.6 billion in assets with 32 banking
offices. Bank of the Hudson will have the number one market share in Orange
County, one of New York's fastest growing counties, as well as in Dutchess
County.
Upon closing, William C. Myers, President and Chief Executive Officer
of MSB, will become Vice Chairman and President of the Southern Region of Bank
of the Hudson. Mr. Myers remarked, "The past two years have been a dynamic and
eventful time for MSB Bancorp, culminating with the agreement to merge with
HUBCO. I am proud of the progress we have made in building a vibrant banking
franchise to serve the financial needs of the people of New York. It is
gratifying to have created value for our shareholders."
"We are delighted that this merger will expand our anticipated New York
presence into five counties," stated Kenneth T. Neilson, HUBCO's Chairman,
President and Chief Executive Officer. "We will continue to focus on providing
personalized local service to our customers and communities while adding many
additional products and services including a full line of business products."
Consummation of the merger is subject to approval by bank regulatory
authorities and the shareholders of MSB Bancorp as well as other customary
conditions.
HUBCO, Inc. is a $3 billion bank holding company which currently owns
commercial banks in New Jersey and Connecticut. HUBCO's principal subsidiaries
are Hudson United Bank, a $1.7 billion asset institution with 57 banking offices
in New Jersey, and Lafayette, American Bank, a $1.3 billion asset institution
with 27 banking offices in Connecticut. Acquisitions of The Bank of Southington
in Connecticut, Security National Bank in New Jersey and Poughkeepsie Financial
Corp. in New York are in process and are all expected to close in the first
quarter of 1998. Subsequent to the closing of all pending acquisitions, HUBCO's
total assets will be $4.9 billion. HUBCO, Inc. offers a full array of innovative
products and services for the retail and commercial market, including imaged
checking accounts, 24 hour telephone banking, loans by phone, international
services, alternative investments, insurance products, trust services and a wide
variety of deposit and loan products.
# # #
AGREEMENT AND
PLAN OF MERGER
by
and
among
HUBCO, INC.
and
MSB BANCORP, INC.
and
MSB BANK
Dated: December 15, 1997
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated December 15, 1997
(this "Agreement"), is among HUBCO, Inc. ("HUBCO"), a New Jersey corporation and
registered bank holding company, MSB Bancorp, Inc., a Delaware corporation
("MSB") and registered savings and loan holding company, and MSB Bank, a
federally chartered savings bank wholly owned by MSB ("Bank").
WHEREAS, the respective Boards of Directors of HUBCO and MSB
have each determined that it is in the best interests of HUBCO and MSB and their
respective stockholders for HUBCO to acquire MSB by (i) merging MSB with and
into HUBCO with HUBCO surviving and MSB shareholders receiving the consideration
hereinafter set forth, and (ii) in HUBCO's discretion, simultaneously with the
merger of MSB into HUBCO, by merging Bank with a New York bank or thrift
subsidiary of HUBCO; and
WHEREAS, as a condition for HUBCO to enter into this
Agreement, HUBCO has required that it receive an option on certain authorized
but unissued shares of MSB Common Stock (as hereinafter defined) and,
simultaneously with the execution of this Agreement, MSB is issuing an option to
HUBCO to purchase 600,000 shares of the authorized and unissued MSB Common Stock
at an option price of $29.00 per share, subject to adjustment and subject to the
terms and conditions set forth in the agreement governing such option (the
"HUBCO Option"); and
WHEREAS, the respective Boards of Directors of MSB, HUBCO and
Bank have each duly adopted and approved this Agreement and the Board of
Directors of MSB has directed that it be submitted to MSB's shareholders for
approval;
NOW, THEREFORE, intending to be legally bound, the parties
hereto hereby agree as follows:
ARTICLE I - THE MERGERARTICLE I - THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereafter defined), MSB 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 MSB and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of HUBCO and MSB 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 MSB 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 or MSB 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 MSB 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 occurred; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of HUBCO or MSB if the Merger had not occurred.
1.3 Certificate of Incorporation. As of the ffective 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 MSB
(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 one director 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 Closing Date, Closing and Effective Time. Unless a
different date, time and/or place are agreed to by the parties hereto, the
closing of the Merger (the "Closing") shall take place at 10:00 a.m., at the
offices of Pitney, Hardin, Kipp & Szuch, 200 Campus Drive, Florham Park, New
Jersey, on a date determined by HUBCO on at least five business days notice (the
"Closing Notice") given to MSB, which date (the "Closing Date") shall be not
less than seven nor more than 10 business days following the receipt of all
necessary regulatory and governmental approvals and consents and the expiration
of all statutory waiting periods in respect thereof and the satisfaction or
waiver of all of the conditions to the consummation of the Merger specified in
Article VI hereof (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing). In the Closing
Notice, HUBCO shall specify the "Determination Date" for purposes of determining
the Median Pre-Closing Price (as hereinafter defined), which date is the date on
which the parties receive the last approval or waiver from a federal bank
regulatory agency necessary to permit consummation of the Merger. Simultaneous
with or immediately following the Closing, HUBCO and MSB shall cause to be filed
certificates of merger, in form and substance satisfactory to HUBCO and MSB,
with the Secretary of State of the State of New Jersey (the "New Jersey
Certificate of Merger") and with the Secretary of State of the State of Delaware
(the "Delaware Certificate of Merger"). The New Jersey Certificate of Merger and
the Delaware Certificate of Merger shall specify as the "Effective Time" of the
Merger a date and time following the Closing agreed to by HUBCO and MSB (which
date and time the parties currently anticipate will be the close of business on
the Closing Date). In the event the parties fail to specify the date and time in
the merger certificates, the Merger shall become effective upon (and the
"Effective Time" shall be) the later of the filing of the New Jersey Certificate
of Merger and the Delaware Certificate of Merger.
1.7 The Bank Merger. At HUBCO's option, at the Effective Time,
and simultaneously with the Merger, Bank shall be merged (the "Bank Merger")
with HUBCO's principal New York bank or thrift subsidiary (the "New York Bank")
or with another subsidiary of HUBCO, if HUBCO has no New York bank subsidiary at
the Effective Time, in accordance with the provisions of the Banking Law of New
York and/or the Home Owners' Loan Act of 1933 ("HOLA") and the regulations of
the Office of Thrift Supervision ("OTS") thereunder, and/or the provisions of
the National Bank Act and the regulations of the Office of the Comptroller of
the Currency (the "OCC") thereunder. 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 Bank at the Effective Time) shall include all
current directors of the Bank in accordance with Section 5.20 hereof. At HUBCO's
option, at any time following the execution of this Agreement, Bank shall, and
HUBCO shall cause the New York Bank to, execute and deliver a merger agreement,
in form and substance reasonably satisfactory to the parties hereto (the "Bank
Merger Agreement") for delivery to the New York Superintendent of Banking (the
"New York Superintendent"), the Federal Deposit Insurance Corporation (the
"FDIC"), the OTS and/or the OCC, as appropriate, for approval of the Bank
Merger, subject to consummation of the Merger. The Bank Merger Agreement shall
contain provisions whereby the surviving entity (if not Bank) shall expressly
assume Bank's liquidation account and its obligations related thereto.
ARTICLE II - CONVERSION OF MSB SHARES, OPTIONS AND WARRANTS
2.1 Conversion of MSB Stock. Each share of common stock, $.01
par value, of MSB ("MSB Common Stock"), issued and outstanding immediately prior
to the Effective Time, and each share of 8.75% Cumulative Convertible Preferred
Stock, Series A, $.01 par value, of MSB ("MSB Preferred Stock" and, together
with the MSB Common Stock, "MSB 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 Common Stock; Exchange Ratio; Median
Pre-Closing Price; Exchange of Preferred Stock. Subject to the provisions of
this Section 2.1, each share of MSB Common Stock issued and outstanding
immediately prior to the Effective Time (excluding any treasury shares and
shares to be cancelled pursuant to Section 2.1(d) hereof) shall be converted at
the Effective Time into the right to receive the number of shares of Common
Stock, no par value, of HUBCO ("HUBCO Common Stock") equal to the exchange ratio
(the "Exchange Ratio") determined as follows:
(i) If the Median Pre-Closing Price (as hereinafter
defined) is not greater than $37.13 and not less than $34.97, the Exchange Ratio
shall be the number determined by dividing $36.02 by the Median Pre-Closing
Price;
(ii) If the Median Pre-Closing Price is greater than
$37.13, the Exchange Ratio shall be 0.97; and
(iii) If the Median Pre-Closing Price is less than
$34.97, the Exchange Ratio shall be 1.03; provided, however, that if the Median
Pre-Closing Price is less than $27.00, MSB shall have the right, exercisable
only until 11:59 p.m. on the third business day following receipt by MSB of the
Closing Notice, to terminate this Agreement by giving HUBCO notice of such
termination, referring to this Section 2.1, and this Agreement shall be
terminated pursuant to such notice, subject to Section 7.1, effective as of
11:59 p.m. on the third business day following receipt of such notice by HUBCO,
provided, further, that if HUBCO sends notice to MSB prior to 11:59 p.m. on the
third business day following receipt of such termination notice agreeing that
the Exchange Ratio shall be equal to the quotient obtained by dividing $27.81
(i.e., 1.03 multiplied by $27.00) by the Median Pre-Closing Price, then the
notice of termination shall be voided.
The "Median Pre-Closing Price" shall be determined by taking
the price half-way between the Closing Prices left after discarding the 4 lowest
and 4 highest Closing Prices in the 10 consecutive trading day period which ends
on (and includes) the Determination Date. The "Closing Price" shall mean the
closing price of HUBCO Common Stock as supplied by the NASDAQ Stock Market and
published in The Wall Street Journal. A "trading day" shall mean a day for which
a Closing Price is so supplied and published. (The NASDAQ Stock Market, or such
other national securities exchange on which HUBCO Common Stock may be traded
after the date hereof, is referred to herein as "NASDAQ")
Subject to the provisions of this Section 2.1, each share of
MSB 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
of the MSB Preferred Stock as they exist immediately prior to the Effective
Time, adjusted to reflect the economic consequences of the conversion of MSB
Common Stock into HUBCO Common Stock at the Exchange Ratio. Such terms are set
forth on Exhibit 2.1(a) hereto.
(b) Cancellation of MSB Certificates. After the Effective
Time, all such shares of MSB 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 MSB Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of MSB Stock except as otherwise provided herein or by
law. Such certificates previously evidencing such shares of MSB 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 2.1(a) 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 MSB Stock held by MSB in
its treasury or owned by HUBCO or by any of HUBCO's wholly-owned subsidiaries
which is a constituent party to the Bank Merger (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 Hudson United Bank ("Hudson
United"), Trust Department, or another bank or trust company designated by HUBCO
and reasonably acceptable to MSB (the "Exchange Agent"), for the benefit of the
holders of shares of MSB 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 but in no event later than five days
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 MSB 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 MSB 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 (or in the case of a lost Certificate, an appropriate Affidavit of Loss
and Indemnity Agreement and/or a bond as may be reasonably required in each case
by HUBCO), 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
(and HUBCO shall cause the Exchange Agent to send to such holder within ten
business days after receipt of all necessary documentation): (A) if the
Certificate formerly represented MSB 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 MSB 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 MSB 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 MSB 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 MSB Stock which
is not registered in the transfer records of MSB, 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 MSB 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.
(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 MSB Stock. All shares of HUBCO Stock
issued and cash paid upon conversion of the shares of MSB 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 MSB 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 of HUBCO Common Stock.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of MSB Stock for two years after
the Effective Time shall be delivered to HUBCO, upon demand, and any holders of
MSB Stock who have not theretofore complied with this Article II shall
thereafter look only to HUBCO for the Merger Consideration, dividends and
distributions to which they are entitled.
(g) No Liability. Neither HUBCO nor the Exchange Agent shall
be liable to any holder of shares of MSB 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 MSB 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 MSB 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 MSB shall be closed and there shall be no further registration
of transfers of shares of MSB Stock thereafter on the records of MSB. 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 MSB 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 MSB Stock Options.
(a) Converting Stock Options. Holders of Stock Options (as
defined in Section 3.2) which, as of the Effective Time, are outstanding shall
be given the right to elect to have all or a portion of such Stock Options
convert at the Effective Time into HUBCO Common Stock in accordance with the
formula set forth below, to the extent permitted under the MSB Stock Option
Plans (as defined in Section 3.2) and the agreements pursuant to which such
Stock Options were granted (each, an "Option Grant Agreement"). Each Stock
Option to be so converted is referred to herein as a "Converting Stock Option."
(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 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 MSB
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 MSB 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 except
that the holder of a Stock Option who continues in the service of HUBCO or a
subsidiary of HUBCO shall not be deemed to have terminated service for purposes
of determining the Continuing Stock Option exercise period) 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 MSB Preferred Share Purchase Rights. At or before the
Effective Time, MSB shall cause its Preferred Share Purchase Rights issued
pursuant to the Rights Agreement between MSB and Mellon Bank, N.A. dated as of
September 16, 1994 (the "Preferred Share Purchase Rights") to be redeemed for
$.01 per Right or otherwise to become inoperable.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF MSB
References herein to "MSB 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 MSB to HUBCO.
MSB hereby represents and warrants to HUBCO as follows:
3.1 Corporate Organization.
(a) MSB is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. MSB is registered as a
savings and loan holding company under HOLA. MSB 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 MSB. As used herein, the capitalized term
"Material Adverse Effect," when used with respect to a particular corporation,
means an adverse effect on the assets, financial condition or results of
operations of the corporation or any of its subsidiaries which is materially
adverse to the business, operations, assets or financial condition of the
corporation and its subsidiaries, taken as a whole, other than a material
adverse effect caused by any change occurring after the date hereof in any
federal or state law, rule or regulation or in GAAP, which change affects
banking institutions generally, including any change affecting the Bank
Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF") of the
FDIC.
(b) Bank, MSB Financial Services, Inc. ("MSB Financial") and
MSB Travel Inc. ("MSB Travel") are the only current MSB Subsidiaries. For
purposes of this Agreement, the term "MSB Subsidiary" means any corporation,
partnership, joint venture or other legal entity in which MSB, directly or
indirectly, owns at least a 50% stock or other equity interest or for which MSB,
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 "MSB Subsidiary" shall include any
entity which was an MSB Subsidiary at any time during such period. Bank is a
federally-chartered savings bank duly organized and validly existing in stock
form and in good standing under the laws of the United States. All eligible
accounts of depositors issued by Bank are insured either by the BIF or the SAIF
to the fullest extent permitted by law. Each of MSB Financial and MSB Travel is
a corporation duly organized and in active status under the laws of the State of
New York. Each MSB 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 MSB.
(c) The MSB Disclosure Schedule sets forth true and complete
copies of the Certificate of Incorporation and By-laws, as in effect on the date
hereof, of MSB, Bank, MSB Financial and MSB Travel.
3.2 Capitalization. The authorized capital stock of MSB
consists of 5,000,000 shares of MSB Common Stock and 1,000,000 shares of MSB
Preferred Stock. As of December 10, 1997, there were 3,045,000 shares of MSB
Common Stock issued and 2,844,153 outstanding and 600,000 shares of MSB
Preferred Stock issued and outstanding. As of December 10, 1997, there were
73,838 shares of MSB Common Stock issuable upon exercise of outstanding stock
options. The MSB Disclosure Schedule sets forth (i) all options which may be
exercised for issuance of MSB Common Stock (collectively, the "Stock Options")
and the terms upon which the options may be exercised, and (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. All Stock Options are fully
vested and will be fully vested on the Closing Date, in each case in accordance
with the terms of the MSB Stock Option Plans and Option Grant Agreements
pursuant to which such Stock Options were granted. All issued and outstanding
shares of MSB Stock, and all issued and outstanding shares of capital stock of
each MSB Subsidiary, have been duly authorized and validly issued, are fully
paid, and nonassessable. The authorized capital stock of Bank is as set forth in
the charter documents of Bank contained in Section 3.1 of the MSB Disclosure
Schedule. All of the outstanding shares of capital stock of each MSB Subsidiary
are owned (directly in the case of Bank and MSB Travel, and indirectly in the
case of MSB Financial) by MSB and are free and clear of any liens, encumbrances,
charges, restrictions or rights of third parties. Except for the Stock Options
and the HUBCO Option, neither MSB nor Bank 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 MSB or Bank 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 MSB, and except as set forth in Section 3.3 of the MSB
Disclosure Schedule, MSB and Bank 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 MSB
Disclosure Schedule, the consummation of the transactions contemplated hereby
have been duly and validly approved by all of the directors of MSB and Bank 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 MSB Disclosure Schedule, no other corporate proceedings not
otherwise contemplated hereby on the part of MSB or Bank are necessary to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by MSB and Bank, and constitutes the valid and
binding obligation of each of MSB and Bank, enforceable against MSB and Bank in
accordance with its terms, except to the extent that enforcement may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, conservatorship,
receivership or other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the rights of
creditors of federally-chartered savings banks or their holding companies, (ii)
general equitable principles, and (iii) laws relating to the safety and
soundness of insured depository institutions and except that no representation
is made as to the effect or availability of equitable remedies or injunctive
relief.
(b) Neither the execution and delivery of this Agreement by
MSB or Bank, nor the consummation by MSB or Bank of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by MSB or
Bank with any of the terms or provisions hereof, will (i) violate any provision
of MSB's or Bank'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 MSB, Bank or any of their respective properties or
assets, or (iii) except as set forth in the MSB 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 MSB or Bank
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which MSB or Bank 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 MSB, 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 OTS, the OCC, the FDIC,
the Securities and Exchange Commission (the "SEC"), other applicable government
authorities, the stockholders of MSB, 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 MSB or Bank in connection with (x) the execution and
delivery by MSB and Bank of this Agreement and (y) the consummation by MSB of
the Merger, the consummation by Bank of the Bank Merger, if any, and the
consummation by MSB and Bank of the other transactions contemplated hereby,
except (i) such as are listed in the MSB Disclosure Schedule and (ii) such as
individually or in the aggregate will not (if not obtained) have a Material
Adverse Effect on MSB or prevent or materially delay the consummation of the
transactions contemplated hereby. To the best of MSB's knowledge, no fact or
condition exists which MSB has reason to believe will prevent it from obtaining
the aforementioned consents and approvals.
3.4 Financial Statements.
(a) MSB has previously delivered to HUBCO copies of the
consolidated balance sheets of MSB as of December 31, 1995 and 1996, 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 1994
through 1996, in each case accompanied by the audit report of the independent
public accountants with respect to MSB (KPMG Peat Marwick, LLP ("Peat Marwick")
with respect to 1996 and Nugent & Haeussler, P.C. with respect to 1995 and 1994)
and the unaudited consolidated statement of condition of MSB as of September 30,
1997 and the related unaudited statements of income for the three and nine
months ended September 30, 1997 and 1996 and cash flows for the nine months
ended September 30, 1997 and 1996, as reported in MSB's Quarterly Report on Form
10-Q, filed with the SEC (collectively, the "MSB Financial Statements"). The MSB
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 MSB 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 MSB for the respective periods set forth therein.
(b) The books and records of MSB and Bank 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 MSB Financial Statements (including the notes thereto),
as of September 30, 1997, or except as set forth in Section 3.4 of the MSB
Disclosure Schedule, neither MSB nor any MSB Subsidiary had any liabilities,
whether absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of MSB and the MSB Subsidiaries, taken
as a whole, which were required by GAAP (consistently applied) to be disclosed
in MSB's consolidated statement of condition as of September 30, 1997 or the
notes thereto. Since September 30, 1997, MSB and Bank 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 MSB Disclosure Schedule.
3.5 Broker's and Other Fees. Except for Keefe, Bruyette &
Woods, Inc. ("Keefe"), neither MSB or Bank 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 Keefe is set
forth in the MSB Disclosure Schedule. Other than pursuant to the agreement with
Keefe or as set forth in Section 3.5 of the MSB Disclosure Schedule, there are
no fees (other than time charges and disbursements 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 MSB
or Bank.
3.6 Absence of Certain Changes or Events.
(a) Except as disclosed in the MSB Disclosure Schedule, there
has not been any material adverse change in the business, operations, assets or
financial condition of MSB and the MSB Subsidiaries, taken as a whole, since
September 30, 1997, and to the best of MSB's knowledge, no fact or condition
exists which MSB believes will cause such a material adverse change in the
future.; provided, however, that a material adverse change shall not be deemed
to include (i) any change occurring after the date hereof in any federal or
state law, rule or regulation or in GAAP, which change affects banking
institutions generally, including any change affecting the BIF or the SAIF, (ii)
reasonable expenses incurred in connection with this Agreement and the
transactions contemplated hereby, or (iii) actions or omissions of MSB or any
MSB Subsidiary taken with the prior written consent of HUBCO in contemplation of
the transactions contemplated hereby (including without limitation any actions
taken by MSB or Bank pursuant to Section 5.15 of this Agreement).
(b) Except as set forth in the MSB Disclosure Schedule,
neither MSB nor Bank has taken or permitted any of the actions set forth in
Section 5.2 hereof between September 30, 1997 and the date hereof and, except
for execution of this Agreement and the other documents contemplated hereby, MSB
has conducted its business only in the ordinary course, consistent with past
practice.
3.7 Legal Proceedings. Except as disclosed in the MSB
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of MSB and the MSB Subsidiaries, neither MSB nor any MSB Subsidiary
is a party to any, and there are no pending or, to the best of MSB's knowledge,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against MSB or any MSB Subsidiary
which, if decided adversely to MSB or an MSB Subsidiary, are reasonably likely
to have a Material Adverse Effect on MSB. Except as disclosed in the MSB
Disclosure Schedule, neither MSB nor any MSB Subsidiary is a party to any order,
judgment or decree entered in any lawsuit or proceeding which is material to MSB
or such MSB Subsidiary.
3.8 Taxes and Tax Returns. Except as disclosed in the MSB
Disclosure Schedule:
(a) MSB and each MSB 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. MSB and each
MSB 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
MSB or such MSB Subsidiary through such date. None of the federal or state
income tax returns of MSB or any MSB Subsidiary have been examined by the
Internal Revenue Service (the "IRS") or the New York Division of Taxation within
the past six years. To the best knowledge of MSB, 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 MSB
or any MSB Subsidiary, nor has MSB or any MSB 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 MSB nor any MSB 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 MSB or such
MSB Subsidiary (nor does MSB have any knowledge that the IRS has proposed any
such adjustment or change of accounting method), or (iv) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
3.9 Employee, Director and Officer Benefit Plans.
(a) Except as set forth on the MSB Disclosure Schedule,
neither MSB nor any MSB Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "MSB 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 "MSB 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 MSB
nor any MSB Subsidiary has, since September 2, 1974, contributed to any
"Multiemployer Plan," as such term is defined in Section 3(37) of ERISA.
(b) MSB has delivered to HUBCO in the MSB Disclosure Schedules
(or previously made available to HUBCO) a complete and accurate copy of each of
the following with respect to each of the MSB Pension Plans and MSB 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 MSB 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 MSB 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 MSB'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 MSB or any
MSB 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 MSB Pension Plan
have been paid. All contributions required to be made to each MSB 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 MSB which have not
been paid have been properly recorded on the books of MSB.
(f) Except as disclosed in the MSB Disclosure Schedule, each
of the MSB Pension Plans, MSB Welfare Plans and each other employee benefit plan
and arrangement identified on the MSB 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 MSB Disclosure Schedule, if MSB maintains any MSB Pension Plan,
MSB 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 MSB is not aware of any fact or circumstance which would disqualify any
plan.
(g) To the best knowledge of MSB, 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 MSB Welfare Plan or MSB Pension Plan
that would result in any material tax or penalty for MSB or any MSB Subsidiary.
(h) Except as disclosed in the MSB Disclosure Schedule, no MSB
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 MSB Pension
Plan.
(i) No "accumulated funding deficiency," within the meaning of
Section 412 of the Code, has been incurred with respect to any MSB Pension Plan.
(j) There are no material pending, or, to the best knowledge
of MSB, material threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of, or against any of the MSB Pension Plans or the MSB
Welfare Plans, any trusts created thereunder or any other plan or arrangement
identified in the MSB Disclosure Schedule. (k) Except as disclosed in the MSB
Disclosure Schedule, no MSB Pension Plan or MSB 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 MSB 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 MSB Financial Statements and established
under GAAP or otherwise noted on such Financial Statements.
(m) With respect to each MSB Pension Plan and MSB Welfare Plan
that is funded wholly or partially through an insurance policy, there will be no
liability of MSB or any MSB 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 MSB Disclosure Schedule, and (ii)
as set forth in Section 3.9(n) of the MSB 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 MSB or any MSB 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 MSB Pension Plan or MSB
Welfare Plan.
(o) Except for the MSB Pension Plans and the MSB Welfare
Plans, and except as set forth on the MSB Disclosure Schedule, MSB has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of MSB or any
MSB Subsidiary or any predecessor of any thereof. The MSB Disclosure Schedule
sets forth (or lists, if previously delivered to HUBCO): (i) true and complete
copies of the deferred compensation agreements, understandings or obligations
with respect to each such current or former director, officer or employee, and
(ii) the most recent actuarial or other calculation of the present value of such
payments or benefits.
(p) Except as set forth in the MSB Disclosure Schedule, MSB
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 MSB 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 MSB's knowledge, neither
MSB nor any MSB Pension Plan or MSB Welfare Plan owns any individual or group
insurance policies issued by an insurer which has been found to be insolvent or
is in rehabilitation pursuant to a state proceeding.
(q) Except as set forth in the MSB Disclosure Schedule, MSB
does not maintain any retirement plan for directors. The MSB Disclosure Schedule
sets forth the complete documentation and actuarial evaluation of any such plan.
3.10 Reports.
(a) The MSB Disclosure Schedule lists, and as to item (i)
below MSB 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 MSB since January 1, 1995 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 MSB to its
stockholders as a class since January 1, 1995, 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, 1995, (i) MSB has filed all reports that
it was required to file with the SEC under the 1934 Act, and (ii) MSB and Bank
each has duly filed all material forms, reports and documents which they were
required to file with each agency charged with regulating any aspect of their
business, in each case in form which was correct in all material respects, and,
subject to permission from such regulatory authorities, MSB 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 MSB Disclosure
Schedule lists the dates of all examinations of MSB or Bank conducted by either
the OTS, the FDIC or the New York Superintendent since January 1, 1995 and the
dates of any responses thereto submitted by MSB or Bank.
3.11 MSB and Bank Information. The information relating to MSB
and Bank, 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 MSB in connection with the solicitation of their approval of the
Merger, as of the date the Proxy Statement-Prospectus is mailed to stockholders
of MSB, 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 MSB Disclosure Schedule, MSB and each MSB 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 MSB or such MSB
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 MSB), and MSB 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 MSB Disclosure Schedule, (i) neither MSB nor Bank 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 MSB or Bank to
any officer, employee, director or consultant thereof. The MSB Disclosure
Schedule lists, and either the MSB Disclosure Schedule sets forth true and
correct copies of or MSB has previously made available to HUBCO, all severance
or employment agreements with officers, directors, employees, agents or
consultants to which MSB or Bank is a party.
(b) Except as disclosed in the MSB 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 MSB nor any MSB 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 MSB and the MSB Subsidiaries taken
as a whole, (ii) no commitment, agreement or other instrument to which MSB or
any MSB Subsidiary is a party or by which any of them is bound limits the
freedom of MSB or any MSB Subsidiary to compete in any line of business or with
any person, and (iii) neither MSB nor any MSB Subsidiary is a party to any
collective bargaining agreement.
(c) Except as disclosed in the MSB Disclosure Schedule,
neither MSB nor any MSB Subsidiary or, to the best knowledge of MSB, any other
party thereto, is in default in any material respect under any material lease,
contract, mortgage, promissory note, deed of trust, loan or other commitment
(except those under which Bank is or will be the creditor) or arrangement,
except for defaults which individually or in the aggregate would not have a
Material Adverse Effect on MSB.
3.14 Properties and Insurance.
(a) Except as set forth in the MSB Disclosure Schedule, MSB or
a MSB 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 MSB's consolidated balance sheet as of December 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 December 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 MSB and the MSB 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, MSB and Bank as lessees have the right under
valid and subsisting leases to occupy, use, possess and control all real
property leased by MSB and Bank in all material respects as presently occupied,
used, possessed and controlled by MSB and Bank.
(b) The business operations and all insurable properties and
assets of MSB and each MSB Subsidiary are insured for their benefit against all
risks which, in the reasonable judgment of the management of MSB, 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 MSB adequate
for the business engaged in by MSB and the MSB Subsidiaries. As of the date
hereof, neither MSB nor any MSB 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 MSB'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 MSB Disclosure
Schedule sets forth in summary form a list of all insurance policies of MSB and
the MSB Subsidiaries.
3.15 Minute Books. The minute books of MSB and Bank 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 MSB
Disclosure Schedule:
(a) Neither MSB nor any MSB Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that MSB or such MSB 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 MSB and the MSB Subsidiaries taken as a whole. MSB 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 MSB or
any MSB Subsidiary, as OREO or otherwise, or owned or controlled by MSB or any
MSB 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 MSB. None of the
Properties is in the State of New Jersey.
(b) MSB 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 MSB.
(c) To the best of MSB's knowledge, MSB, each MSB 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 MSB, 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 MSB or any MSB Subsidiary.
3.17 Reserves. As of September 30, 1997, each of the allowance
for loan losses and the reserve for OREO properties in the MSB 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 OTS.
3.18 No Parachute Payments. Except as set forth on the MSB
Disclosure Schedule, no officer, director, employee or agent (or former officer,
director, employee or agent) of MSB or any MSB 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 MSB, an MSB Subsidiary, HUBCO or any HUBCO
Subsidiary 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 MSB nor any MSB
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 MSB prior to the
date of this Agreement, nor has MSB 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 MSB prior to the date of
this Agreement. Neither MSB nor any MSB 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 MSB 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 MSB. HUBCO hereby represents and warrants to MSB 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 is
registered as a bank holding company under the BHCA. 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 HUBCO.
(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. Hudson United
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 Hudson United are insured by the BIF 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 HUBCO. 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 53,045,000 common shares, no par value ("HUBCO Common
Stock"), and 10,609,000 shares of preferred stock ("HUBCO Authorized Preferred
Stock"). As of December 1, 1997, there were 21,530,237 shares of HUBCO Common
Stock issued and outstanding, and no shares of treasury stock, and 1,250 shares
of HUBCO Authorized Preferred Stock outstanding, all of which were designated
Series B, no par value, Convertible Preferred 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. Except for shares issuable under or
arising from the merger agreements by which HUBCO is to acquire Bank of the
Hudson ("BTH") and its parent corporation, Poughkeepsie Financial Corp. (the
"BTH Agreement"), Security National Bank & Trust Company of New Jersey ("SNB")
and its parent corporation, Fiduciary Investment Company of New Jersey (the "SNB
Agreements"), and The Bank of Southington (the "Southington Agreement"), and the
HUBCO 1995 Stock Option Plan (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 BTH 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 HUBCO, 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 OTS, the OCC, the New York Superintendent, the Secretary of State of New
Jersey, the Secretary of State of New York, 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 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.67
(a) The HUBCO Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of HUBCO as of December 31, 1995
and 1996, 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 1994 through 1996, in each case accompanied by
the audit report of Arthur Andersen, LLP independent public accountants with
respect to HUBCO ("Arthur Andersen"), and the unaudited consolidated statement
of condition of HUBCO as of September 30, 1997 and the related unaudited
consolidated statements of income and cash flows for the three months ended
September 30, 1997 and 1996, 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 September 30, 1997 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 September 30, 1997 or the notes thereto. Except for
the transactions contemplated by this Agreement, and other proposed acquisitions
by HUBCO since September 30, 1997 reflected in any Form 8-K filed by HUBCO with
the SEC, neither HUBCO nor any HUBCO Subsidiary has incurred any liabilities
since September 30, 1997 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 September 30,
1997 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 BTH 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
HUBCO. 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 (and until
the Effective Time will so file) all Returns required to be filed by them in
respect of any federal, state and local taxes (including withholding taxes,
penalties or other payments required) and have 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 MSB in
writing). HUBCO and HUBCO's Subsidiaries have established (and until the
Effective Time will establish) 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) HUBCO and its subsidiaries maintain or contribute to
certain "employee pension benefit plans" (the "HUBCO Pension Plans"), as such
term is defined in Section 3(2)(A) of ERISA, and "employee welfare benefit
plans" (the "HUBCO Welfare Plans"), as such term is defined in Section 3(1) of
ERISA. Since September 2, 1974, neither HUBCO nor its subsidiaries have
contributed to any "Multiemployer Plan", as such term is defined in Section
3(37) of ERISA.
(b) Each of the HUBCO Pension Plans and each of the HUBCO
Welfare Plans 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. HUBCO is not aware of any fact or circumstance which would
disqualify any plan that could not be retroactively corrected (in accordance
with the procedures of the IRS).
(c) The present value of all accrued benefits under each of
the HUBCO Pension Plans subject to Title IV of ERISA, based upon the actuarial
assumptions used for purposes of the most recent actuarial valuation prepared by
such HUBCO Pension Plan's actuary, did not exceed the then current value of the
assets of such plans allocable to such accrued benefits.
(d) During the last five years, the PBGC has not asserted any
claim for liability against HUBCO or any of its subsidiaries which has not been
paid in full.
(e) All premiums (and interest charges and penalties for late
payment, if applicable) due to the PBGC with respect to each 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.
(f) 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.
(g) There are no pending or, to the best knowledge of HUBCO,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the HUBCO Pension Plans or the HUBCO Welfare Plans,
any trusts created thereunder or any other plan or arrangement identified in the
HUBCO Disclosure Schedule.
(h) Except with respect to customary health, life and
disability benefits or as disclosed in the HUBCO Disclosure Schedule, HUBCO has
no unfunded benefit obligations which are not accounted for by reserves shown on
the financial statements and established under GAAP or otherwise noted on such
financial statements.
4.10 Reports. Since January 1, 1995, 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, 1995, 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 MSB 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 HUBCO) 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 Hudson United 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
HUBCO.
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 September 30, 1997, or owned and acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since
September 30, 1997), 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 HUBCO.
4.17 Reserves. As of September 30, 1997, 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 conversion of New HUBCO Preferred Stock subsequent thereto.
The HUBCO Stock to be issued hereunder pursuant to the Merger 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 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 MSB 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 MSB 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 MSB
by HUBCO prior to the date of this Agreement.
4.20 Minute Books. The minute books of HUBCO and its bank
subsidiaries 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.
4.21. 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 MSB. During the period from the
date of this Agreement to the Effective Time, MSB shall, and shall cause Bank
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. MSB also shall use its reasonable best efforts to (i)
preserve its business organization and that of Bank intact, (ii) keep available
to itself and Bank the present services of its employees and those of Bank, and
(iii) preserve for itself and HUBCO the goodwill of its customers and those of
Bank 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
MSB Disclosure Schedule, or as permitted or required by this Agreement, neither
MSB not Bank 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 MSB 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, MSB may declare, set aside or pay only
the cumulative dividends due on the MSB Preferred Stock and dividends on the MSB
Common Stock in the same amount as was paid in the two quarters prior to the
date hereof, less the amount, if any, used by MSB to redeem the Preferred Share
Purchase Rights pursuant to Section 2.6 hereof.
(c) grant any severance or termination pay (other than
pursuant to written policies or contracts of MSB in effect on the date hereof
and disclosed to HUBCO in the MSB 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 MSB 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 MSB or Bank;
(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 MSB
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. MSB and Bank 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 MSB or Bank (an "Acquisition Transaction").
Notwithstanding the foregoing, MSB may enter into discussions or negotiations or
provide information in connection with an unsolicited possible Acquisition
Transaction if the Board of Directors of MSB, 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. MSB 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 MSB 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, MSB
agrees to provide HUBCO, and HUBCO agrees to provide MSB, 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) MSB will deliver to HUBCO and HUBCO will deliver to MSB
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, MSB will deliver to HUBCO and HUBCO will
deliver to MSB 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) MSB and Bank shall permit HUBCO and its representatives,
and HUBCO shall permit, and cause each HUBCO Subsidiary to permit, MSB and its
representatives, reasonable access to their respective properties, and shall
disclose and make available to HUBCO and its representatives, or MSB 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 MSB 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, MSB acknowledges that
HUBCO may be involved in discussions concerning other potential acquisitions and
HUBCO shall not be obligated to disclose such information to MSB 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 MSB
stockholders in connection with the Merger, the parties hereto shall cooperate
in the preparation and filing by HUBCO or MSB (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 MSB and HUBCO to the MSB 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 MSB 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 MSB 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 MSB with the information
needed to correct such inaccuracy or omission. HUBCO shall furnish MSB 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 MSB shareholders.
(c) MSB shall furnish HUBCO with such information concerning
MSB as is necessary in order to cause the Proxy Statement-Prospectus, insofar as
it relates to MSB, to comply with Section 5.6(a) hereof. MSB agrees promptly to
advise HUBCO if at any time prior to the Stockholders Meeting, any information
provided by MSB 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. MSB shall furnish HUBCO with such
supplemental information as may be necessary in order to cause the Proxy
Statement-Prospectus, insofar as it relates to MSB, to comply with Section
5.6(a) after the mailing thereof to MSB 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. MSB shall promptly furnish HUBCO with such
information regarding MSB shareholders as HUBCO requires to enable it to
determine what filings are required hereunder. MSB authorizes HUBCO to utilize
in such filings the information concerning MSB provided to HUBCO in connection
with, or contained in, the Proxy Statement-Prospectus. HUBCO shall furnish MSB's
counsel with copies of all such filings and keep MSB advised of the status
thereof. HUBCO shall file as promptly as practicable, and shall use reasonable
business efforts to file within 45 days after the date hereof, the Registration
Statement containing the Proxy Statement-Prospectus with the SEC, and each of
HUBCO and MSB 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 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 and
applications, 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, the OTS, the OCC and the New York Superintendent.
Without limiting the foregoing, the parties shall use reasonable business
efforts to file for approval or waiver by the appropriate bank regulatory
agencies within 45 days after the date hereof. The parties shall each have the
right to review in advance (and shall do so promptly) all filings with,
including all information relating to the other, as the case may be, and any of
their respective subsidiaries, which appears in any filing made with, or written
material submitted to, any third party or governmental body (including the SEC)
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) MSB 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 MSB 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. MSB agrees to provide HUBCO
with any information, certificates, documents or other materials about MSB 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. MSB 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 MSB for
reasonable expenses thus incurred by MSB 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 MSB unless MSB shall have consented to
such filing, which consent shall not be unreasonably delayed or withheld.
5.7 Approval of Stockholders. MSB will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
stockholders of MSB (the "Stockholders Meeting") for the purpose of securing the
MSB 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 MSB 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. If
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 MSB in writing or as permitted or required
by this Agreement, HUBCO will use reasonable business efforts to maintain and
preserve intact its business organization, properties, leases, employees and
advantageous business relationships, and 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.
5.9 Public Announcements. HUBCO and MSB 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 each of HUBCO and MSB agrees that unless
approved by the other in advance, it 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
MSB determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to July 2, 1998
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, MSB and HUBCO will promptly inform the other of any facts
applicable to MSB 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
MSB to honor the existing written contracts with officers and employees of MSB
and Bank that are included in the MSB 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 Bank thereafter employed by any of
HUBCO's bank subsidiaries (which may include Bank) (the "New Employer") coverage
under the benefit plans generally available to Hudson United's employees and
officers (including pension and health and hospitalization) on the terms and
conditions available to Hudson United's employees and officers. As soon as
practicable, but in any event prior to December 31, 1997, the MSB Board of
Directors shall amend the MSB Bank Employee Severance Plan the "Severance Plan")
as set forth in Section 5.11(b)(1) of the HUBCO Disclosure Schedule. HUBCO shall
provide severance payments in accordance with the Severance Plan, as so amended,
to employees and officers of MSB who are covered by the Severance Plan and whose
employment is terminated at or following the Closing by HUBCO or at HUBCO's
direction. HUBCO shall provide severance payments in accordance with Section
5.11(b)(2) of the HUBCO Disclosure Schedule to employees of MSB who are not
covered by the Severance Plan and whose employment is terminated at or following
the Closing by HUBCO or at HUBCO's direction. On or prior to December 31, 1997,
Bank shall contribute to its Employee Stock Ownership Plan ("ESOP") an amount
sufficient to repay all currently outstanding loans that were obtained by the
ESOP in order to finance its purchase of MSB Common Stock and shall cause the
shares of MSB Common Stock released from the suspense account as a result of
such repayment to be allocated among the persons eligible for such allocation
("ESOP Participants") as soon as practicable thereafter in accordance with the
terms of the ESOP and the requirements of all applicable laws. In the event
that, due to the limitations of any applicable law, a portion of the shares of
MSB Common Stock released following the ESOP's repayment of the outstanding
loans cannot be immediately allocated to the ESOP Participants, all such shares
shall be held in the ESOP's suspense account and allocated to the ESOP
Participants as soon as practicable thereafter. If the participation of all or a
portion of the ESOP Participants shall cease during the one year period
beginning on the Closing, HUBCO shall treat such terminations of participation
as one or more "partial terminations" of the ESOP (within the meaning of section
411 of the Code) and HUBCO shall take, or cause to be taken, all actions that
may be necessary or required to be taken as a result of a partial termination of
a tax-qualified plan. After the Effective Time, HUBCO may terminate, merge or
change existing MSB and Bank benefit plans to the extent permitted under
applicable law. Employees of Bank employed by the New Employer will receive
credit for prior employment by Bank for the purposes of determining their
eligibility to participate in all employee benefit plans of New Employer.
Service completed while employed by Bank 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 Bank'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), a supplement or
amendment to the parties' respective Disclosure Schedules which corrects any
representation or warranty which was untrue when made shall not eliminate the
other party's right (if any) to terminate this Agreement based on the original
untruth of the representation or warranty; provided, that the other party shall
be deemed to have waived such right if it does not exercise such right within 15
days after receiving the correcting supplement or amendment.
5.13 Transaction Expenses of MSB and HUBCO.
(a) For planning purposes, MSB shall, within 15 days from the
date hereof, provide HUBCO with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by MSB in connection with this
transaction, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. MSB shall promptly notify HUBCO if or when it
determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, MSB shall
ask all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements. MSB shall accrue and/or pay
all of such amounts as soon as possible.
(c) MSB shall advise HUBCO monthly of all out-of-pocket
expenses which MSB has incurred in connection with this transaction.
(d) HUBCO, in reasonable consultation with MSB, shall make all
arrangements with respect to the printing and mailing of the Proxy
Statement-Prospectus.
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 MSB or Bank or serves or has served at
the request of MSB or Bank 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 MSB or Bank or serves or has served at the request of MSB or Bank 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 MSB or Bank
or any of their respective affiliates, or by any shareholder of MSB
(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 MSB or Bank or of any committee of
MSB's or Bank'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 MSB or Bank, as
applicable, or (z) the By-Laws of MSB or Bank, 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 MSB or Bank 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 MSB or Bank 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 MSB's and Bank'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 MSB's and Bank'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 MSB's and Bank'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 Policies and Bank Merger.
(a) Notwithstanding that MSB believes that it has established
all reserves and taken all provisions for possible loan losses required by GAAP
and applicable laws, rules and regulations, MSB 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, MSB and HUBCO shall consult and
cooperate with each other with respect to (i) conforming to the extent
appropriate, based upon such consultation, MSB's loan, accrual and reserve
policies and MSB's other policies and procedures regarding applicable regulatory
matters, including without limitation Federal Reserve, Bank Secrecy Act and FDIC
matters, to those policies of HUBCO as HUBCO may reasonably identify to MSB from
time to time, (ii) new extensions of credit or material revisions to existing
terms of credits by Bank, 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 MSB
and Bank to the extent appropriate; provided that any required change in MSB's
practices in connection with the matters described in clause (i) or (iii) above
need not be effected until the parties receive all necessary governmental
approvals and consents to consummate the transactions contemplated hereby,
(b) If the Bank Merger is consummated, HUBCO shall cause the
New York Bank to hold its meetings alternatively in Goshen and Poughkeepsie.
5.16 Compliance with Antitrust Laws. Each of HUBCO and MSB
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 MSB shall use its reasonable best efforts to avoid the filing of,
resist or resolve such suit. HUBCO and MSB 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 MSB, 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 MSB 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 Hudson United, the New York Bank or Bank 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 MSB 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 MSB 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 MSB, and MSB shall cause Peat
Marwick, 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
MSB, 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, MSB shall deliver to HUBCO
(a) a letter identifying all persons who, to the knowledge of MSB, may be deemed
to be affiliates of MSB under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of MSB 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 MSB 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 MSB 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 William Myers to be
appointed at the Effective Time as Vice Chairman of the Board of the New York
Bank and President of the Southern Region of the New York Bank and immediately
after the Effective Time to enter into an employment agreement with William
Myers on terms and conditions to be mutually agreed upon by HUBCO and William
Myers (but containing the specific terms set forth in Section 5.20 of the HUBCO
Disclosure Schedule). William Myers and MSB shall amend Myers' current
employment agreement effective at the Closing to reduce any payout under his
current employment contract so it would not constitute an "excess parachute
payment" as defined in Section 280G of the Code. Such amendment shall be
acceptable to HUBCO. HUBCO agrees to cause one director of MSB selected by MSB
(who may be William Myers) and acceptable to HUBCO to be appointed at the
Effective Time to the HUBCO Board of Directors. HUBCO shall ask each of the
current directors of Bank to serve as directors of the Surviving Bank (if the
Bank Merger is consummated) or to continue to serve as directors of Bank (if the
Bank Merger is not consummated) and directors of such Board shall receive Board
fees and be subject to Board duties substantially consistent with the fees and
duties of the directors of other bank subsidiaries of HUBCO. HUBCO shall modify
or waive the provisions of its mandatory retirement policy to the extent
necessary so that such directors who would otherwise be required to retire in
the six year period following the Closing because they will have reached HUBCO's
mandatory retirement age of 72 shall be permitted to continue to serve until age
75.
5.21 Director Retirement Program. The MSB Director Retirement
Program shall have been terminated on or before December 31, 1997 and the
present value of all benefits (including any accelerated benefits) shall have
been paid to directors covered thereby prior to the Closing and all obligations
of MSB, Bank, HUBCO and all HUBCO Subsidiaries thereby released, to the
satisfaction of HUBCO.
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 MSB 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, and the issuance of the HUBCO Stock 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, the OTS, the OCC and the New York Superintendent)
required to consummate the transactions contemplated hereby shall have been
obtained without any term or condition which would have a Material Adverse
Effect on 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. There shall not be in effect any
order, judgment, injunction or decree of a court of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated hereby.
(d) Tax Opinion. HUBCO shall have received an opinion, dated
as of the Effective Time, of Pitney, Hardin, Kipp & Szuch, reasonably
satisfactory in form and substance to HUBCO, and MSB shall have received an
opinion, dated as of the Effective Time, of Thacher Proffitt & Wood, reasonably
satisfactory in form and substance to MSB, in each case 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 such
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 MSB; (iii) no gain or loss
will be recognized upon the exchange of MSB Stock solely for HUBCO Stock; (iv)
the basis of any HUBCO Stock received in exchange for MSB Stock shall equal the
basis of the recipient's MSB 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 MSB Stock will include the period during which MSB 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 MSB, 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 MSB and Bank. Except for those representations which are made as of a
particular date, the representations and warranties of MSB 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. MSB 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 MSB
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 MSB 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 MSB
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 MSB, 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. MSB 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) Director Retirement Program. The MSB Director Retirement
Program shall have been terminated on or before the Closing and the present
value of all benefits (including any accelerated benefits) shall have been paid
to directors covered thereby and all obligations of MSB, Bank, HUBCO and all
HUBCO Subsidiaries thereby released, to the satisfaction of HUBCO.
(e) Myers Contract. The current Myers employment agreement
shall have been amended to limit payments thereunder to those that do not
constitute an "excess parachute payment" under the Code.
(f) Legal Fees. MSB shall have furnished HUBCO with letters
from all attorneys representing MSB and Bank in any matters confirming that all
legal fees have been paid in full for services rendered as of the Effective
Time.
(g) Merger-Related Expenses. MSB 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.
(h) MSB Preferred Share Purchase Rights. At or before the
Effective Time, MSB shall cause the Preferred Share Purchase Rights to be
redeemed for $.01 per Right or otherwise to become inoperable.
6.3 Conditions to the Obligations of MSB Under this Agreement.
The obligations of MSB 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. MSB shall have received an
opinion of counsel to HUBCO, dated the Closing Date, in form and substance
reasonably satisfactory to MSB, covering the matters customarily covered in
opinions of counsel in transactions of this type.
(c) Fairness Opinion. MSB shall have received an opinion from
Keefe, dated no more than three days prior to the date the Proxy
Statement-Prospectus is mailed to MSB'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
MSB 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 Keefe to withdraw
its Fairness Opinion prior to the Closing.
(d) Certificates. HUBCO shall have furnished MSB 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 MSB may
reasonably request.
(e) Certain Contracts. HUBCO shall have specifically
acknowledged, accepted and assumed (in a document in form and substance
reasonably satisfactory to MSB) any written employment, severance and other
compensation contracts between MSB and its officers and directors (including
former officers and directors) contained in the MSB 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 MSB 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. One nominee, designated by MSB (which may be
William Myers) and acceptable to HUBCO, shall be duly appointed by the Board of
Directors of HUBCO to HUBCO's Board of Directors, effective at the Effective
Time. Provision shall have been made such that all directors of MSB shall have
been appointed as directors of the Surviving Bank (or shall continue as
directors of Bank if the Bank Merger is not consummated at the Effective Time).
HUBCO shall have caused William Myers to be elected Vice Chairman of the Board
of the New York Bank and President of the Southern Region of the New York Bank.
HUBCO shall have presented to William Myers, for his acceptance by
countersignature, an employment agreement executed by HUBCO which contains (i)
the specific terms set forth in Section 5.20 of the HUBCO Disclosure Schedule
and (ii) terms which are otherwise reasonable and which are not inconsistent
with the terms set forth in Section 5.20 of the HUBCO Disclosure Schedule.
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 MSB:
(a) by mutual written consent of the parties hereto;
(b) by HUBCO or MSB (i) if the Effective Time shall not have
occurred on or prior to June 30, 1998 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 MSB is taken and such stockholders fail to approve this
Agreement at the meeting (or any adjournment or postponement 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 or postponement
thereof) held for such purpose;
(c) by HUBCO or MSB 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 MSB if any such
application is approved with conditions (other than conditions which are
customary in such regulatory approvals) which would have a Material Adverse
Effect on HUBCO;
(d) by HUBCO if (i) there shall have occurred a change in the
business, operations, assets, or financial condition of MSB and Bank, taken as a
whole, from that disclosed by MSB in MSB's Quarterly Report on Form 10-Q for the
three months ended September 30, 1997 which change shall have resulted in a
Material Adverse Effect on MSB (it being understood that those matters disclosed
in the MSB Disclosure Schedule shall not be deemed to have caused such a
Material Adverse Effect) or (ii) there was a material breach in any
representation, warranty, covenant, agreement or obligation of MSB hereunder and
such breach shall not have been remedied within 30 days after receipt by MSB of
notice in writing from HUBCO to MSB specifying the nature of such breach and
requesting that it be remedied;
(e) by MSB, if (i) there shall have occurred a 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 September 30, 1997 except for the
Effects of Announced Acquisitions, which change shall have resulted in a
Material Adverse Effect on HUBCO (it being understood that those matters
disclosed in the HUBCO Disclosure Schedule shall not be deemed to have caused
such a Material Adverse Effect); 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 MSB specifying the nature of such breach and
requesting that it be remedied;
(f) by MSB, if MSB'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;
(g) by HUBCO if the conditions set forth in Section 6.2 are
not satisfied and are not capable of being satisfied by June 30, 1998;
(h) by MSB if the conditions set forth in Section 6.3 are not
satisfied and are not capable of being satisfied by June 30, 1998; or
(i) by MSB, in accordance with Section 2.1(a)(iii).
7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement by either HUBCO or MSB 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 MSB 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 MSB 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. 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, MSB may bear the expenses of Bank.
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), 5.8(a), 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.: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
(b) If to MSB or Bank, to:
MSB Bancorp, Inc.
35 Matthews Street
Goshen, New York 10924
Attn.: William C. Myers,
Chairman of the Board, President
and Chief Executive Officer
Copy to: Thacher Proffitt & Wood
Two World Trade Center
New York, NY 10048
Attn.: Omer S.J. Williams, 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 MSB'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 Executive Vice President and Chief Operating Officer
of MSB and thereafter refer to the best knowledge of any senior officer of MSB
or any MSB 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, MSB and Bank have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
ATTEST: HUBCO, INC.
D. LYNN VAN BORKULO-NUZZO KENNETH T. NEILSON
By: __________________________ By: _____________________________
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, Chairman,
Secretary President and Chief Executive Officer
ATTEST: MSB BANCORP, INC.
KAREN DE LUCA WILLIAM C. MYERS
By: _________________________ By: _____________________________
Karen DeLuca, William C. Myers, Chairman of the Board,
Secretary President and Chief Executive Officer
ATTEST: MSB BANK
KAREN DE LUCA WILLIAM C. MYERS
By: _________________________ By: ____________________________
Karen DeLuca, William C. Myers, Chairman of the Board,
Secretary President and Chief Executive Officer
<PAGE>
CERTIFICATE OF MSB AND MSB DIRECTORS
Reference is made to the Agreement and Plan of Merger, dated
December 15, 1997 (the "Agreement"), among HUBCO, Inc., MSB Bancorp, Inc., and
MSB Bank. Capitalized terms used herein have the meanings given to them in the
Agreement.
Each of the following persons, being all of the directors of
MSB and Bank, agrees to vote or cause to be voted all shares of MSB 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.
WILLIAM C. MYERS NICHOLAS J. SCALI
- ------------------------------------ ------------------------------------
William C. Myers Nicholas J. Scali
FREDERICK B. WILDFOERSTER, JR. JOHN L. KRAUSE
- ------------------------------------ ------------------------------------
Frederick B. Wildfoerster, Jr. John L. Krause
DOUGLAS PORTO RALPH W. DECKER
- ------------------------------------ ------------------------------------
Douglas Porto Ralph W. Decker
JOAN M. COSTELLO JOSEPH R. DONOVAN
- ------------------------------------ ------------------------------------
Joan M. Costello Joseph R. Donovan
JOHN W. NORTON DANIEL R. SNYDER
- ------------------------------------ ------------------------------------
John W. Norton Daniel R. Snyder
Dated: December 15, 1997
<PAGE>
EXHIBIT 2.1(a)
TERMS OF SERIES C PREFERRED STOCK
Section 1. General.
The Series C Preferred Stock, shall have a stated value of $.01 per
share, and the shares therefore, when issued for such amount, shall be fully
paid and non-assessable. The Series C 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 C 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 C
Preferred Stock. The rights, preferences and limitations of the Series C
Preferred Stock are as follows:
Section 2. Dividends.
(a) Dividends shall accrue daily on each share of this Series C for
each dividend payment period at the rate of 8.75% per annum (multiplied by the
liquidation preference per share) or $___ per share per annum from the date of
their original issuance to and including [the first of January 15, April 15,
July 15 or October 15, 1998 to follow the Effective Time of the Merger] (the
"Initial Dividend Period") and for each quarterly dividend payment period
thereafter, commencing on January 15, April 15, July 15 and October 15 as the
case may be, of each year and ending on and including the day next preceding the
first day of the next such quarterly dividend payment period (a "Quarterly
Dividend Period" and, together with the Initial Dividend Period, a "Dividend
Period"). Such dividends shall accrue from the date of original issuance of such
shares, shall be payable in arrears, when, as and if declared by the Board of
Directors and out of funds of the Corporation legally available for the payment
of dividends, on the 15th day of January, April, July and October of each year,
commencing [the first of January 15, April 15, July 15 or October 15, 1998 to
follow the Effective Time of the Merger] and shall cumulate if not paid on such
payment dates, whether or not in any Dividend Period or Periods there shall be
funds of the Corporation legally available for the payment of dividends. Each
such dividend shall be paid to the holders of record of shares of this Series C
as they appear on the books of the Corporation on such record dates, not
exceeding 30 days preceding the payment dates thereof ("Dividend Payment
Dates"), as shall be fixed by the Board of Directors of the Corporation or by a
duly authorized committee thereof (each a "Dividend Record Date").
(b) The amount of dividends per share of this Series C payable for each
Quarterly Dividend Period shall be $_____. The amount of dividends payable for
the Initial Dividend Period or any period shorter than a full Quarterly Dividend
Period shall be computed on the basis of 30-day months, a 360-day year and the
actual number of days elapsed in the period.
(c) No dividends shall be declared or paid or set apart for payment on
any series of preferred stock or any class of capital stock of the Corporation
ranking, as to dividends or upon liquidation, on a parity with or junior to this
Series C for any period (other than dividends payable in Common Stock or another
stock ranking junior to this Series C as to dividends and upon liquidation), nor
shall the Corporation make any other distribution on the Common Stock of the
Corporation or on any other stock of the Corporation ranking junior to or on a
parity with this Series C as to dividends or upon liquidation, unless (i) full
cumulative dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment on
this Series C for all past Dividend Periods for this Series C terminating on or
prior to the date of payment of any such dividends on the Common Stock or such
other series of preferred stock and (ii) sufficient funds have been set apart
for payment of dividends on this Series C for the Dividend Period during which
payment is to be made for such current Dividend Period. When full cumulative
dividends for all past and current Dividend Periods are not paid or provided
for, as aforesaid, upon the shares of this Series C and any other series of
preferred stock and any other class of capital stock of the Corporation ranking,
as to dividends, on a parity with this Series C (herein referred to as "Dividend
Parity Stock"), all dividends declared upon shares of this Series C and any
other Dividend Parity Stock shall be declared pro rata so that the amount of
dividends declared per share on this Series C and all other Dividend Parity
Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of this Series C and such other Dividend
Parity Stock bear to each other. Holders of shares of this Series C shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of full cumulative dividends, as herein provided, on this Series C. No interest
or sum of money in lieu of interest shall be payable in respect of any dividend
payment or payments on this Series C which may have accumulated or be in
arrears. As used herein, the phrase "set apart" in respect of the payment of
dividends shall require deposit of any funds in a bank or trust company that is
not an Affiliate of the Corporation in a separate deposit account maintained for
the benefit of the holders of this Series C.
(d) Unless full cumulative dividends on all outstanding shares of this
Series C shall have been paid for all past dividend payment periods or declared
and set apart for payment, so long as any shares of this Series C are
outstanding, no Common Stock or any other stock of the Corporation ranking
junior to or on a parity with this Series C as to dividends or upon liquidation
and no warrants, calls, options or other rights to acquire Common Stock, any
equity security of the Corporation or other security exercisable or exchangeable
into Common Stock or any such other stock of the Corporation shall be redeemed,
purchased or otherwise acquired or retired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any shares
of any such stock) by the Corporation or any entity directly or indirectly
controlled by the Corporation (except by conversion into or exchange for stock
of the Corporation or such entity ranking junior to this Series C as to
dividends and upon liquidation).
(e) If the percentage of dividends payable on the shares of this Series
C that is deductible under Section 243(a)(i) of the Internal Revenue Code of
1986, as amended, is reduced below 70%, the dividend rate of this Series C shall
be increased, during any period any such deduction is in effect, by an amount
equal to 5.829 basis points for each percentage point the 70% rate is reduced.
Thus, for example, if the dividend rate on this Series C is then 8.75% and if
such percentage changes from 70% to 65%, the dividend rate on this Series C
shall be increased to 9.04145%.
Section 3. Redemption.
(a) After January 10, 1999, the shares of this Series C shall be
redeemable by the Corporation in whole or, from time to time, in part. The
shares of this Series C shall be redeemable by the Corporation at the redemption
prices (expressed as a percentage of the liquidation preference per share of
Series C) as follows, plus in each case an amount equal to all accrued and
unpaid dividends thereon (whether or not earned or declared) to the date fixed
for redemption.
If redeemed during the twelve-month period beginning January 10 of the
year indicated:
Year Redemption Price Per Share
---- --------------------------
1999 106.125%
2000 105.250
2001 104.375
2002 103.500
2003 102.625
2004 101.750
2005 100.875
and at 100% per share thereafter.
(b) In the event that fewer than all the outstanding shares of this
Series C are to be redeemed as permitted by this Section 3, the number of shares
to be redeemed shall be determined by the Board of Directors, and the shares to
be redeemed shall be determined by lot or pro rata as may be determined by the
Board of Directors or by such other method as may be approved by the Board of
Directors that is required to conform to any rule or regulation of any stock
exchange upon which the shares of this Series C may at the time be listed.
(c) Notice of any redemption of shares of this Series C, specifying the
date fixed for redemption (herein referred to as the "Redemption Date") and
place of redemption, shall be given by first class mail to each holder of record
of the shares to be redeemed, at his address of record, not more than 60 nor
less than 30 days prior to the Redemption Date. Each such notice shall also
specify the redemption price applicable to the shares to be redeemed and that
dividends on shares to be redeemed shall cease to accrue and accumulate on the
Redemption Date. If less than all the shares owned by such stockholder are then
to be redeemed, the notice shall also specify the number of shares thereof which
are to be redeemed and the fact that a new certificate or certificates
representing any unredeemed shares shall be issued without cost to such holder.
(d) Notice of redemption of shares of this Series C having been given
as provided in paragraph (c) of this Section 3, then, unless the Corporation
shall have defaulted in providing for the payment of the redemption price and an
amount equal to all accrued and unpaid dividends to the Redemption Date,
dividends shall cease to accrue on the shares of this Series C called for
redemption at the Redemption Date, all rights of the holders thereof (except the
right to receive the redemption price and all accrued and unpaid dividends to
the Redemption Date) shall cease with respect to such shares and such shares
shall not, after the Redemption Date, be deemed to be outstanding and shall not
have the status of preferred stock. In case fewer than all the shares
represented by any certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
(e) Any shares of this Series C which shall at any time have been
redeemed or converted shall, after such redemption or conversion, have the
status of authorized but unissued shares of preferred stock, without designation
as to series until such shares are once more designated as part of a particular
series by the Board of Directors.
(f) In the event that full cumulative dividends on this Series C have
not been paid or declared and set apart for payment for all past Dividend
Periods, no shares of this Series C shall be redeemed unless all outstanding
shares of this Series C are simultaneously redeemed, and neither the Corporation
nor any entity directly or indirectly controlled by the Corporation shall
purchase or otherwise acquire any shares of this Series C; provided, however,
that the foregoing shall not prevent the purchase or acquisition of shares of
this Series C pursuant to a purchase or exchange offer made on the same terms to
all holders of all outstanding shares of this Series C or pursuant to the
exercise of the conversion right provided in Section 4.
(g) Shares of this Series C are not subject or entitled to the benefit
of a sinking fund.
(h) In addition to the Corporation's right to redeem any or all of the
Series C as provided in this Section 3, upon the exercise by a holder of Series
C of the conversion privilege pursuant to Section 4 below, the Corporation may,
by notice of redemption given pursuant to this Section 3 prior to the close of
business on the 10th business day after the date on which all of the conditions
specified in paragraph (b)(1) of Section 4 hereof are satisfied redeem all or a
part of the shares of Series C so surrendered for conversion at a per share
redemption price equal to (i) the Current Market Price (as defined in Section
4(d)(4) hereof) of the Corporation's Common Stock on the date the shares of this
Series C are surrendered for conversion multiplied by the number of shares of
Common Stock into which the Series C shares then subject to the Corporation's
notice of redemption would have been convertible, or (ii) the redemption price
specified in Section 3(a), whichever of (i) or (ii) is higher. This redemption
must be funded and completed within three business days of the Corporation's
notice, or the Corporation's right to redeem the shares of this Series C subject
to the Corporation's notice pursuant to this paragraph (h) shall be
extinguished.
Section 4. Conversion.
(a) Subject to and upon compliance with the provisions of this Section
4, and subject to the Corporation's right to redeem shares of Series C
surrendered for conversion pursuant to Section 3(h) hereof, on or after January
10, 1999, the holder of any shares of this Series C shall have the right, at its
option, to convert the shares into a number of fully paid and nonassessable
shares of Common Stock (calculated as to each conversion to the nearest 1/100th
of a share) equal to $_____ for each share surrendered for conversion divided by
the Conversion Price (as defined in paragraph (d) of this Section 4 below) by
surrendering the shares to be converted, in the manner provided in paragraph (b)
of this Section 4 below; provided however, that if the Corporation shall have
called some or all of the shares of this Series C for redemption, such right
shall terminate on the close of business on the third business day next
preceding the date fixed for redemption unless the Corporation has defaulted in
making or providing for the payment due on the date fixed for redemption.
Anything herein to the contrary notwithstanding, the shares of this Series C
shall become immediately convertible under the circumstances, and subject to the
terms and conditions, set forth in paragraph (i) of this Section 4.
(b) (1) In order to exercise the conversion privilege, the holder of
each share of this Series C to be converted shall surrender the
certificate representing such share to the Conversion Agent for this
Series C appointed for such purpose by the Corporation (the "Conversion
Agent"), or, if no Conversion Agent has been appointed or if the holder
has not received notice of such appointment, then to the Corporation,
with the Notice of Election to Convert on the back of said certificate
duly completed and signed, together with funds equal to the Dividend
Amount, if any, required to be paid under paragraph (b)(2) of this
Section 4 below, at the principal office of the Conversion Agent or the
Corporation, as the case may be. Unless the shares issuable on
conversion are to be issued in the same name as the name in which the
shares of this Series C are registered, each share surrendered for
conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder or its
duly authorized attorney and by funds in an amount sufficient to pay
any transfer or similar tax.
(2) The holders of shares of this Series C at the close of
business on a Dividend Record Date shall be entitled to receive the
dividend payable on those shares on the corresponding Dividend Payment
Date notwithstanding the conversion of the shares after the Dividend
Record Date or the Corporation's default in payment of the dividend due
on the Dividend Payment Date. However, shares of this Series C
surrendered for conversion during the period between the close of
business on any Dividend Record Date and the opening of business on the
corresponding Dividend Payment Date (except shares called for
redemption on a date fixed for redemption during that period) must be
accompanied by payment of an amount equal to the dividend payable on
the shares on the Dividend Payment Date (the "Dividend Amount"). The
dividend with respect to a share of this Series C called for redemption
during the period from the close of business on the Record Date to the
opening of business on the corresponding Dividend Payment Date will be
payable upon such Dividend Payment Date, and the holder converting such
share of this Series C need not include a payment of such dividend
amount upon surrender of such share of this Series C. The holders of
shares of this Series C on a Dividend Record Date who (or whose
transferees) convert any of those shares on or after the corresponding
Dividend Payment Date will receive the dividend payable by the
Corporation on those shares of this Series C on the Dividend Payment
Date, and need not include payment of the Dividend Amount upon
surrender of those shares for conversion. Except as provided above, the
Corporation shall make no payment or adjustment for accrued and unpaid
dividends on shares of this Series C, whether or not in arrears, on
conversion of those shares, or for dividends on the shares of Common
Stock issued upon the conversion.
(3) As promptly as practicable after the surrender by a holder
of the certificates for shares of this Series C in accordance with this
paragraph (b), and subject to the Corporation's right to redeem all or
a part of such Series C shares as provided in Section 3(h) hereof, the
Corporation shall issue and shall deliver at the office of the
Conversion Agent to the holder, or on its written order, a certificate
or certificates for the number of full shares of Common Stock issuable
upon the conversion of those shares in accordance with the provisions
of this paragraph (b)(3), and any fractional interest in respect of a
share of Common Stock arising upon the conversion shall be settled as
provided in paragraph (c) of this Section 4 below.
(4) Unless the Corporation shall have exercised its right to
redeem the shares of Series C surrendered for conversion pursuant to
this Section 4, each conversion shall be deemed to have been effected
as of the close of business on the 10th business day after the date on
which all of the conditions specified in paragraph (b)(1) of this
Section 4 above shall have been satisfied, and, the person or persons
in whose name or 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 by those certificates at such time on such date and
such conversion shall be at the Conversion Price in effect at such time
on such date, unless the stock transfer books of the Corporation shall
be closed on that date, in which event such person or persons shall be
deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books
are open, but such conversion shall be at the Conversion Price in
effect on the 10th business day after the date upon which all of the
conditions specified in paragraph (b)(1) of this Section 4 above shall
have been satisfied. All shares of Common Stock delivered upon
conversion of this Series C will upon delivery be duly and validly
issued and fully paid and nonassessable, free of all liens and charges
and not subject to any preemptive rights. Upon the surrender of
certificates representing shares of this Series C to be converted and
the failure of the Corporation to provide to the holder thereof a
notice of redemption pursuant to paragraph (h) of Section 3 hereof
prior to the 10th business day after the date on which all of the
conditions specified in paragraph (b)(1) of this Section 4 shall have
been satisfied, the shares shall no longer be deemed to be outstanding
and all rights of a holder with respect to the shares surrendered for
conversion shall immediately terminate except the right to receive the
Common Stock or other securities, cash or other assets as herein
provided (including without limitation any dividend payable as
specified in paragraph (b)(1) of this Section 4 above).
(c) No fractional shares or securities representing fractional shares
of Common Stock shall be issued upon conversion of this Series C. Any fractional
interest in a share of Common Stock resulting from conversion of a share of this
Series C shall be paid in cash (computed to the nearest cent) based on the price
(as defined in paragraph (d)(4) of this Section 4 below) of the Common Stock on
the Trading Day (as defined in paragraph (d)(4) below) next preceding the day of
conversion. If more than one share shall be surrendered for conversion at one
time by the same holder, the number of whole shares of Common Stock issuable
upon the conversion shall be computed on the basis of the aggregate Liquidation
Preference (as such term is defined in paragraph (a) of Section 7 below) of the
shares of this Series C so surrendered.
(d) The "Conversion Price" per share of this Series C shall be $____,
subject to adjustment from time to time as follows:
(1) In case the Corporation shall (1) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (2)
subdivide its outstanding Common Stock into a greater number of shares,
or (3) combine its outstanding Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior to such event
shall be proportionally adjusted so that the holder of any share of
this Series C thereafter surrendered for conversion shall be entitled
to receive the number and kind of shares of Common Stock of the
Corporation which such holder would have been entitled to receive had
the share been converted immediately prior to the happening of such
event. An adjustment made pursuant to this paragraph (d)(1) shall
become effective immediately after the record date in the case of a
dividend or distribution except as provided in paragraph (d)(7) of this
Section 4 below, and shall become effective immediately after the
effective date in the case of subdivision or combination. If any
dividend or distribution is not paid or made, the Conversion Price then
in effect shall be appropriately readjusted.
(2) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them (for a period expiring
within 45 days after the record date mentioned below) to subscribe for
or purchase Common Stock at a price per share less than the Current
Market Price (as defined in paragraph (d)(4) of this Section 4 below)
of the Common Stock at the record date for the determination of
stockholders entitled to receive the rights or warrants, the Conversion
Price in effect immediately prior to the issuance of such rights or
warrants shall be adjusted so that it shall equal the price determined
by multiplying the Conversion Price in effect immediately prior to the
date of issuance of the rights or warrants by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding on
the date of issuance of the rights or warrants plus the number of
shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock so offered for subscription or
purchase would purchase at the Current Market Price at that record
date, and of which the denominator of which shall be the number of
shares of Common Stock outstanding on the date of issuance of the
rights or warrants plus the number of additional shares of Common Stock
for subscription or purchase. The adjustment provided for in this
paragraph (d)(2) shall be made successively whenever any such rights or
warrants are issued, and shall become effective immediately, except as
provided in paragraph (d)(7) of this Section 4 below after such record
date. In determining whether any rights or warrants entitle the holders
of the Common Stock to subscribe for or purchase shares of Common Stock
at less than the Current Market Price, and in determining the aggregate
offering price of the shares of Common Stock so offered, there shall be
taken into account any consideration received by the Corporation for
such rights or warrants, the value of such consideration, if other than
cash, to be determined by the Board (whose determination, if made in
good faith, shall be conclusive). If any or all of such rights or
warrants are not so issued or expire or terminate without having been
exercised, the Conversion Price then in effect shall be appropriately
readjusted.
(3) In case the Corporation shall distribute to all holders of
its Common Stock any shares of capital stock of the Corporation (other
than Common Stock) or evidences of indebtedness or assets (excluding
cash dividends or distributions paid from retained earnings of the
Corporation) or rights or warrants to subscribe for or purchase any of
its securities (excluding those referred to in paragraph (d)(2) of this
Section 4 above) then, in each such case, the Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of the
distribution by a fraction the numerator of which shall be the Current
Market Price of the Common Stock on the record date mentioned below
less the then fair market value (as determined by the Board, whose
determination, if made in good faith, shall be conclusive) of that
portion of the capital stock or assets or evidences of indebtedness so
distributed, or of the rights or warrants so distributed, applicable to
one share of Common Stock, and the denominator of which shall be the
Current Market Price of the Common Stock on the record date. Such
adjustment shall become effective immediately, except as provided in
paragraph (d)(4) of this Section 4 below, after the record date for the
determination of stockholders entitled to receive such distribution. If
any such distribution is not made or if any or all of such rights or
warrants expire or terminate without having been exercised, the
Conversion Price then in effect shall be appropriately readjusted.
(4) For the purpose of any computation under paragraphs (d)(2)
or (d)(3) of this Section 4 above, the "Current Market Price" of the
Common Stock at any date shall be the average of the last reported sale
prices per share for the ten consecutive Trading Days (as defined
below) preceding the date of such computation. The last reported sale
price for each day shall be (i) the last reported sale price of the
Common Stock on the National Market System of the National Association
of Securities Dealers, Inc. Automated Quotation System (the "Nasdaq
National Market System"), or any similar system of automated
dissemination of quotations of securities prices then in common use, if
so quoted, or (ii) if not quoted as described in clause (i), the mean
between the high bid and low asked quotations for the Common Stock as
reported by the National Quotation Bureau Incorporated if at least two
securities dealers have inserted both bid and asked quotations for the
Common Stock on at least five of the ten preceding days, or (iii) if
the Common Stock is listed or admitted for trading on any national
securities exchange, the last sale price, or the closing bid price if
no sale occurred, of the Common Stock on the principal securities
exchange on which the Common Stock is listed. If the Common Stock is
quoted on a national securities or central market system, in lieu of a
market or quotation system described above, the last reported sale
price shall be determined in the manner set forth in clause (ii) of the
preceding sentence if bid and asked quotations are reported but actual
transactions are not, and in the manner set forth in clause (iii) of
the preceding sentence if actual transactions are reported. If none of
the conditions set forth above is met, the last reported sale price of
the Common Stock on any day or the average of such last reported sale
prices for any period shall be the fair market value of such class of
stock as determined by a member firm of the New York Stock Exchange,
Inc. selected by the Corporation. As used herein the term "Trading
Days" means (x) if the Common Stock is quoted on the Nasdaq National
Market System or any similar system of automated dissemination of
quotations of securities prices, days on which trades may be made on
such system, or (y) if not quoted as described in clause (x), days on
which quotations are reported by the National Quotation Bureau
Incorporated, or (z) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which such
national securities exchange is open for business.
(5) No adjustment in the Conversion Price shall be required
unless such adjustment would require a change of at least one percent
in the Conversion Price; provided, however, that any adjustments which
by reason of this paragraph (d)(5) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment;
and provided, further, that adjustment shall be required and made in
accordance with the provisions of this Section 4 (other than this
paragraph (d)(5)) not later than such time as may be required in order
to preserve the tax free nature of a distribution to the holders of
shares of Common Stock. All calculations under this Section 4 shall be
made to the nearest cent or the nearest one hundredth of a share, as
the case may be. Anything in this paragraph (d) to the contrary
notwithstanding, the Corporation shall be entitled to make such
reductions in the Conversion Price, in addition to those required by
this paragraph (d), as it in its discretion shall determine to be
advisable in order that any stock dividend, subdivision or combination
of shares, distribution of capital stock or rights or warrants to
purchase stock or securities, or distribution of evidences of
indebtedness or assets (other than cash dividends or distributions paid
from retained earnings) hereinafter made by the Corporation to its
stockholders shall be a tax free distribution for federal income tax
purposes.
(6) Whenever the Conversion Price is adjusted, as herein
provided, the Corporation shall promptly file with the Conversion Agent
an officers' certificate setting forth the Conversion Price after the
adjustment and setting forth a brief statement of the facts requiring
the adjustment, which certificate shall be conclusive evidence of the
correctness of the adjustment. Promptly after delivery of the
certificate, the Corporation shall prepare a notice of the adjustment
of the Conversion Price setting forth the adjusted Conversion Price and
the date on which the adjustment becomes effective and shall mail the
notice of such adjustment of the Conversion Price to the holder of each
share of this Series C at such holder's last address as shown on the
stock books of the Corporation.
(7) In any case in which this paragraph (d) provides that an
adjustment shall become effective immediately after a record date for
an event, the Corporation may defer until the occurrence of the event
(i) issuing to the holder of any share of this Series C converted after
the record date and before the occurrence of the event the additional
shares of Common Stock issuable upon the conversion by reason of the
adjustment required by the event over and above the Common Stock
issuable upon such conversion before giving effect to the adjustment
and (ii) paying to the holder any amount in cash in lieu of any
fractional share pursuant to paragraph (c) of this Section 4 above.
(e) If:
(1) the Corporation shall authorize the granting to the
holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of any class or any other rights or warrants; or
(2) there shall be any reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common
Stock and other than a change in the par value, or from par value to no
par value, or from no par value to par value), or any consolidation,
merger, or statutory share exchange to which the Corporation is a
party, or any sale or transfer of all or substantially all the assets
of the Corporation; or
(3) there shall be a voluntary or an involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the Conversion Agent, and
shall cause to be mailed to the holders of shares of this Series C at their
addresses as shown on the stock books of the Corporation, at least 15 days prior
to the applicable date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of the dividend, distribution or
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to the dividend, distribution
or rights or warrants are to be determined or (ii) the date on which the
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon the reclassification,
consolidation, merger, statutory share exchange, sale, transfer, dissolution,
liquidation or winding up. Failure to give any such notice or any defect in the
notice shall not affect the legality or validity of the proceedings described in
this paragraph (e).
(f) (1) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued shares of Common Stock or its issued shares
of Common Stock held in its treasury, or both, for the purpose of
effective conversions of this Series C the full number of shares of
Common Stock deliverable upon the conversion of all outstanding shares
of this Series C not theretofore converted. For purposes of this
paragraph (f), the number of shares of Common Stock which shall be
deliverable upon the conversion of all outstanding shares of this
Series C shall be computed as if at the time of computation all the
outstanding shares were held by a single holder.
(2) Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value (if any) of the
shares of Common Stock deliverable upon conversion of this Series C,
the Corporation will take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of Common
Stock at the adjusted Conversion Price.
(3) The Corporation will endeavor to list the shares of Common
Stock required to be delivered upon conversion of this Series C, prior
to the delivery, upon each national securities exchange, if any, upon
which the outstanding Common Stock is listed at the time of delivery.
(4) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon conversion of this
Series C, the Corporation will endeavor, in good faith and as
expeditiously as possible, to comply with all federal and state laws
and regulations thereunder requiring the registration of those
securities with, or any approval of or consent to the delivery thereof
by, any governmental authority.
(g) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock on conversion of this Series C pursuant hereto; provided, however,
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the holder of this Series C to be converted
and no such issue or delivery shall be made unless and until the person
requesting the issue or delivery has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that the
tax has been paid.
(h) In case of any reclassification or change of outstanding shares of
Common Stock (other than change in par value, or as a result of subdivision or
combination), or in case of any consolidation of the Corporation with, or merger
of the Corporation with or into, any other entity that requires the vote of the
holders of Common Stock or that results in a reclassification, change,
conversion, exchange or cancellation of outstanding shares of Common Stock or
any sale or transfer of all or substantially all of the assets of the
Corporation, each holder of shares of this Series C then outstanding shall, in
connection with such transaction, have the right to convert the shares of this
Series C held by the holder into the kind and amount of securities, cash and
other property which the holder would have been entitled to receive upon such
reclassification, change, consolidation, merger, sale or transfer if the holder
had held the Common Stock issuable upon the conversion of the shares of this
Series C immediately prior to the reclassification, change, consolidation,
merger, sale or transfer.
(i) In the event that the Corporation shall consummate any
consolidation or merger or similar business combination, pursuant to which the
outstanding shares of Common Stock are by operation of law exchanged solely for
or changed, reclassified or converted into stock, securities or cash or any
other property, or any combination thereof, then provision shall be made so that
shares of this Series C that are not immediately converted and receive the
consideration provided in paragraph (h) of this Section 4, shall, in connection
with such consolidation, merger or similar business combination, be assumed by
and shall become preferred stock of such successor or resulting corporation,
having in respect of such corporation, insofar as possible, the same powers,
preferences and relative rights, and the qualifications, limitations or
restrictions thereon, that this Series C had immediately prior to such
transaction, except that after such transaction each share of this Series C
shall be immediately convertible, otherwise on the terms and conditions provided
by Section 4, into the nature and kind of consideration so receivable by a
holder of the number of shares of Common Stock into which such shares of this
Series C could have been converted immediately prior to such transaction. The
rights of this Series C as preferred stock of such successor or resulting
corporation shall successively be subject to adjustments pursuant to Section 4
and paragraph (d) of this Section 4 hereof after any such transaction as nearly
equivalent as practicable to the adjustment provided for by such paragraph prior
to such transaction. The Corporation shall not consummate any such merger,
consolidation or similar transaction unless all then outstanding shares of this
Series C (other than such shares that are converted pursuant to paragraph (h) of
this Section 4) shall be assumed and authorized by the successor or resulting
corporation as aforesaid.
Section 5. Preemptive Rights. Shares of this Series C are not entitled
to any preemptive rights to acquire any unissued shares of any stock of the
Corporation, now or hereafter authorized, or any other securities of the
Corporation, whether or not convertible into shares of stock of the Corporation
or carrying a right to subscribe to or acquire any such shares of stock.
Section 6. Voting. Except as required by law, the shares of this Series
C shall not have any voting powers, either general or special, except as
provided in this Section 6:
(a) Unless the vote of the holders of a greater number of shares shall
then be required by law, the affirmative vote of the holders of at least 66-2/3%
of all of the shares of this Series C at the time outstanding given in person or
by proxy, at a meeting called for the purpose, on which matter the holders of
shares of this Series C shall vote together as a separate class, shall be
necessary to authorize, effect or validate any amendment, alteration or repeal
of any of the provisions of the Certificate of Incorporation of the Corporation
or of any certificate, amendatory or supplemental thereto which amendment,
alteration or repeal would, if effected, adversely affect the powers,
preferences, rights or privileges of this Series C other than any such amendment
or alteration subject to paragraph (b) of this Section 6.
(b) Notwithstanding anything set forth herein to the contrary, the
Board of Directors of the Corporation without the vote of the holders of shares
of this Series C may authorize and issue additional shares of Common Stock and
preferred stock ranking on a parity as to dividends and upon liquidation with
the shares of this Series C. No class or series of equity securities of the
Corporation may rank senior to this Series C as to dividends or upon
liquidation.
(c) (1) So long as any shares of this Series C are outstanding,
if the Corporation shall have failed to pay full cumulative
dividends on all outstanding shares of this Series C for four
Dividend Periods, whether or not consecutive, the number of
directors of the Corporation shall automatically be increased
by two, and the holders of this Series C shall have the right,
voting together as a class and separately from all other
classes and series, to elect such two additional directors at
a special meeting of holders of the shares of this Series C to
be held for the purpose of electing directors and thereafter
at each successive annual meeting of stockholders. The right
of the holders of this Series C to elect such members of the
Board of Directors as aforesaid shall continue until full
cumulative dividends for all past Dividend Periods on this
Series C have been paid or declared and set apart for payment.
(2) Each director elected by the holders of this
Series C shall comply with the requirements of New Jersey law
applicable to directors of a New Jersey corporation and with
all federal laws applicable to directors of a savings and loan
holding company. Unless otherwise required by law, directors
elected by the holders of this Series C shall not become
members of any of the three classes of directors otherwise
required by the Certificate of Incorporation and By-laws of
the Corporation with respect to the remaining directors
elected by other classes or series of stock entitled to vote
therefor but shall serve until the next annual meeting or
until their respective successors shall be elected and shall
qualify. At such time as all cumulative dividends have been
paid in full, the voting right of the holders of this Series C
shall, without further action, terminate, subject to revesting
in the event of each and every subsequent failure of the
Corporation to pay such dividends for the requisite number of
periods described above.
(3) The term of office of all directors elected by
the holders of this Series C in office at any time when the
aforesaid voting right is vested in such holders shall
terminate upon the election of their successors at any meeting
of stockholders held for the purpose of electing directors,
provided, however, that, without further action, and unless
otherwise required by law, any director that shall have been
elected by holders of this Series C as provided herein may be
removed at any time, either with or without cause, by the
affirmative vote of the holders of record of a majority of
outstanding shares of this Series C, voting separately as one
class, at a duly held meeting of the holders of this Series C.
(4) Upon the later of any termination of the
aforesaid voting right in accordance with the foregoing
provisions or the expiration of the minimum term of office
required by law, the term of office of all directors elected
by the holders of this Series C pursuant thereto then in
office shall, without further action, thereupon terminate
unless otherwise required by law. Upon such termination, the
number of directors constituting the board of directors of the
Corporation shall, without further action, be reduced by two,
subject always to the increase of the number of directors
pursuant to the provisions of this paragraph (c) in the case
of the future right of such holders of this Series C to elect
directors as provided herein.
(5) Unless otherwise required by law, in case of any
vacancy occurring among the directors so elected by the
holders of this Series C, the remaining director may appoint a
successor to hold office for the unexpired term of the
director whose place shall be vacant, and if all directors so
elected shall cease to serve as directors before their term
shall expire, the holders of this Series C then outstanding
may, at a meeting of such holders duly held, elect successors
to hold office for the unexpired terms of the directors whose
places shall be vacant.
(6) The directors elected by the holders of this
Series C in accordance with the provisions of this paragraph
(c) shall be entitled to one vote per director on any matter
and otherwise to the same rights and privileges as all other
directors of the Corporation.
(7) So long as any shares of this Series C are
outstanding, the Certificate of Incorporation and By-laws of
the Corporation shall contain provisions ensuring that the
number of directors of the Corporation shall at all times be
such that the exercise by the holder of shares of this Series
C of the right to elect directors under the circumstances
provided in this paragraph (c) will not contravene any
provisions of the Corporation's Certificate of Incorporation
or By-laws.
(8) On any matter on which the holders of Series C
shall be entitled to vote, they shall be entitled to one vote
for each share held. The holders of Series C shall vote only
as a separate class; their votes shall not be counted together
with the holders of the Common Stock or any other class or
series of Preferred Stock as a single class. At any meeting of
stockholders held while holders of this Series C have the
voting power set forth in this paragraph (c), the holders of a
majority of the then outstanding shares of this Series C who
are present in person or by proxy shall be sufficient to
constitute a quorum for the election of directors as herein
provided.
(d) Notwithstanding anything to the contrary in Chapter 11 of the New
Jersey Business Corporation Act, the holders of this Series C shall be entitled
to dissenters' rights pursuant to, and to the fullest extent permitted by, the
Chapter 11 of the New Jersey Business Corporation Act in the event of a merger
or consolidation in which the Corporation is a constituent corporation or the
sale of substantially all of the assets of the Corporation.
Section 7. Liquidation Rights.
(a) Upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of the shares of this Series C shall
be entitled to receive out of the assets of the Corporation available for
distribution to stockholders under applicable law, before any payment or
distribution of assets shall be made on the Common Stock or on any other class
or series of stock of the Corporation ranking junior to this Series C upon
liquidation, the amount of $___ per share (the "Liquidation Preference"), plus a
sum equal to all dividends accrued on such shares (whether or not earned or
declared ) and unpaid to the date fixed for such liquidation, dissolution or
winding up. The sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all the
property and assets of the Corporation shall not be deemed a dissolution,
liquidation or winding up of the Corporation for the purposes of this Section 7,
nor shall the merger or consolidation of the Corporation into or with any other
corporation or association or the merger or consolidation of any other
corporation or association into or with the Corporation, be deemed to be a
dissolution, liquidation or winding up of the Corporation for the purposes of
this Section 7.
(b) After the payment in cash (in New York Clearing House funds or its
equivalent) to the holders of the shares of this Series C of the full
preferential amounts for the shares of this Series C, as set forth in paragraph
(a) of this Section 7 the holders of this Series C as such shall have no further
right or claim to any of the remaining assets of the Corporation.
(c) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series C upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation shall be
insufficient to pay in full all amounts to which such holders are entitled
pursuant to paragraph (a) of this Section 7, no distribution shall be made on
account of any shares of any other series of preferred stock or any other class
of stock of the Corporation ranking on a parity with the shares of this Series C
upon such liquidation, dissolution or winding up unless proportionate amounts
shall be paid on account of the shares of this Series C, ratably, in proportion
to the full amounts to which holders of all such shares which are on a parity
with the shares of this Series C are respectively entitled upon such
dissolution, liquidation or winding up.
Section 8. Rank. The Corporation shall not issue any other series of
preferred stock ranking senior to this Series C as to the payment of dividends
or upon liquidation or any other series of any equity securities ranking senior
to this Series C as to the payment of dividends or upon liquidation. The
Corporation may issue shares of Common Stock and any other series of preferred
stock ranking junior to or on a parity with this Series C as to the payment of
dividends or upon liquidation. For purposes of this certificate of designations,
any stock of any series or class of the Corporation shall be deemed to rank:
(a) senior to the shares of this Series C, as to dividends or upon
liquidation, if the holders of such series or class shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of shares of this Series C;
(b) on a parity with shares of this Series C, as to dividends or upon
liquidation, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share or sinking fund provisions, if any,
be different from those of this Series C, if the holders of such stock shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such stock
and the holders of shares of this Series C; and
(c) junior to shares of this Series C, as to dividends or upon
liquidation, if such stock shall be Common Stock or if the holders of shares of
this Series C shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
series or class.
Section 9. Reports and Notices. So long as any shares of this Series C
shall be outstanding, the Corporation shall provide to the holder or holders of
such shares copies of all annual, quarterly and other reports of the Corporation
and copies of all stockholder notices of the Corporation when and as furnished
to the holders of the Common Stock.
Section 10. Restrictions on Transfer. No transfer of the shares of
Series C may be made to any person if, after giving effect to such transfer,
such person would beneficially own more than 25% of the issued and outstanding
shares of Series C then outstanding.
<PAGE>
EXHIBIT 5.19-1
FORM OF MSB AFFILIATE LETTER
December __, 1997
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed acquisition (the "Merger") of MSB Bancorp, Inc. (the "Company"), by
HUBCO, Inc., a New Jersey corporation and registered bank holding company
("HUBCO"), pursuant to the Agreement and Plan of Merger dated December 15, 1997
(the "Agreement") between the Company, its bank subsidiary, and HUBCO.
Capitalized terms used herein and not otherwise defined have the meanings
assigned to them in the Agreement. I currently own shares of MSB Common Stock. I
own no shares of MSB Preferred Stock. As a result of the Merger, I will receive
shares of HUBCO Common Stock in exchange for my MSB Common Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of the Company, as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations promulgated under the Securities Act of 1933, as amended (the "1933
Act") by the Securities and Exchange Commission ("SEC") and as the term
"affiliate" is used for purposes of the SEC's rules and regulations applicable
to the determination of whether a merger can be accounted for as a "pooling of
interests" as specified in the SEC's Accounting Series Release 135, as amended
by Staff Accounting Bulletins Nos. 65 and 76 ("ASR 135").
I represent to and agree with HUBCO that:
A. Transfer Review Restrictions. During the period beginning
on the date hereof and ending 30 days prior to the consummation of the Merger, I
shall not sell, transfer, reduce my risk with respect to or otherwise dispose of
("transfer") any MSB Stock owned by me, and I shall not permit any relative who
shares my home, or any person or entity who or which I control, to transfer any
MSB Stock owned by such person or entity, without notifying HUBCO in advance of
the proposed transfer and giving HUBCO a reasonable opportunity to review the
transfer before it is consummated. HUBCO, if advised to do so by its independent
public accountants, may instruct me not to make or permit the transfer because
it may interfere with the "pooling of interests" treatment of the Merger. I
shall abide by any such instructions.
B. Transfer Restrictions During Merger Consummation Period. I
shall not transfer any MSB Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control, to
transfer any MSB Stock owned by such person or entity during the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUBCO by means of the filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, as amended, the issuance of
a quarterly earnings report, or any other public issuance which satisfies the
requirements of ASR 135. For purposes of this paragraph only, "MSB Stock"
includes HUBCO Common Stock is converted.
C. Compliance with Rule 145. I have been advised that the
issuance of HUBCO Common Stock to me pursuant to the Merger will be registered
with the SEC under the 1933 Act on a Registration Statement on Form S-4.
However, I have also been advised that, since I may be deemed to be an affiliate
of the Company at the time the Merger is submitted for a vote of the Company's
stockholders, any transfer by me of HUBCO Common Stock is restricted under Rule
145 promulgated by the SEC under the 1933 Act. I agree not to transfer any HUBCO
Common Stock received by me or any of my affiliates unless (i) such transfer is
made in conformity with the volume and other limitations of Rule 145 promulgated
by the SEC under the 1933 Act, (ii) in the opinion of HUBCO's counsel or counsel
reasonably acceptable to HUBCO, such transfer is otherwise exempt from
registration under the 1933 Act or (iii) such transfer is registered under the
1933 Act.
D. Stop Transfer Instructions; Legend on Certificates. I also
understand and agree that stop transfer instructions will be given to HUBCO's
transfer agents with respect to the HUBCO Common Stock received by me and any of
my affiliates and that there will be placed on the certificates of the HUBCO
Common Stock issued to me and any of my affiliates, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED DECEMBER
__, 1997 BETWEEN THE REGISTERED HOLDER HEREOF AND HUBCO, INC., A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF HUBCO, INC."
E. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for the Company.
Execution of this letter is not an admission on my part that I
am an "affiliate" of the Company as described in the second paragraph of this
letter, or a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter. This letter shall
terminate concurrently with any termination of the Agreement in accordance with
its terms.
Very truly yours,
-----------------------------
Name:
Accepted this _____
day of _______, 199__ by
HUBCO, INC.
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 5.19-2
FORM OF AFFILIATE LETTER FOR HUBCO AFFILIATES
December __, 1997
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of MSB Bancorp, Inc. ("MSB") with and into HUBCO,
Inc., a New Jersey corporation and registered bank holding company ("HUBCO"),
pursuant to the Agreement and Plan of Merger dated December 15, 1997 (the
"Agreement") between MSB, its bank subsidiary, and HUBCO. I currently own shares
of HUBCO's common stock, no par value ("HUBCO Common Stock").
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of HUBCO, as the term "affiliate" is used for
purposes of the rules and regulations of the Securities and Exchange Commission
(the "Commission") applicable to the determination of whether a merger can be
accounted for as a "pooling of interests" as specified in the Commission's
Accounting Series Release 135, as amended by Staff Accounting Bulletins Nos. 65
and 76 ("ASR 135").
I represent and covenant with HUBCO and MSB that:
A. Transfer Restrictions Prior to Merger Consummation. During
the period beginning on the date hereof and ending 30 days prior to the
consummation of the Merger, I shall not sell, transfer, reduce my risk with
respect to or otherwise dispose of ("transfer") any HUBCO Common Stock owned by
me, and I shall not permit any relative who shares my home, or any person or
entity who or which I control, from transferring any HUBCO Common Stock owned by
such person or entity, without notifying HUBCO in advance of the proposed
transfer and giving HUBCO a reasonable opportunity to object to the transfer
before it is consummated. HUBCO, upon advice of its independent public
accountants, may instruct me not to make or permit the transfer because it may
interfere with the "pooling of interests" treatment of the Merger. I shall abide
by any such instructions.
B. Post-Consummation Transfer Restrictions. During the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUBCO by means of filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, the issuance of a quarterly
earnings report, or any other public issuance which satisfies the requirements
of ASR 135, I shall not transfer any HUBCO Common Stock owned by me, and I shall
not permit any relative who shares my home, or any person or entity who or which
I control, to transfer any HUBCO Common Stock owned by such person or entity.
C. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for HUBCO.
Execution of this letter is not an admission on my part that I
am an "affiliate" of HUBCO as described in the second paragraph of this letter,
or a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-------------------------------------
Name:
Title:
Accepted this ____ day of
________________, 199_ by
HUBCO, INC.
By: ________________________________
Name:
Title:
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of December
15, 1997, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and MSB Bancorp, Inc., a Delaware corporation
and registered savings and loan holding company ("MSB").
BACKGROUND
WHEREAS, HUBCO and MSB, as of the date hereof, are prepared to
execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which MSB will be merged with and into HUBCO (the "Merger"); and
WHEREAS, HUBCO has advised MSB that it will not execute the
Merger Agreement unless MSB executes this Agreement; and
WHEREAS, the Board of Directors of MSB has determined that the
Merger Agreement provides substantial benefits to the shareholders of MSB; and
WHEREAS, as an inducement to HUBCO to enter into the Merger
Agreement and in consideration for such entry, MSB desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of MSB in an
amount and on the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, HUBCO and MSB,
intending to be legally bound hereby, agree:
1. Grant of Option. MSB hereby grants to HUBCO the option to
purchase 600,000 shares of common stock, $0.01 par value, of MSB (the "Common
Stock") at a price of $29.00 per share (the "Option Price"), on the terms and
conditions set forth herein (the "Option").
2. Exercise of Option. This Option shall not be exercisable
until the occurrence of a Triggering Event (as such term is hereinafter
defined). Upon or after the occurrence of a Triggering Event (as such term is
hereinafter defined), HUBCO may exercise the Option, in whole or in part, at any
time or from time to time, subject to the terms and conditions set forth herein
and the termination provisions of Section 19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such term is defined in
Rule 13d-3 as promulgated under the Exchange Act) of at least 20% of the then
outstanding shares of Common Stock; or
b. enters into a letter of intent or an agreement, whether
oral or written, with MSB pursuant to which such person or any affiliate of such
person would (i) merge or consolidate, or enter into any similar transaction,
with MSB, (ii) acquire all or a significant portion of the assets or liabilities
of MSB, or (iii) acquire beneficial ownership of securities representing, or the
right to acquire beneficial ownership or to vote securities representing, 20% or
more of the then outstanding shares of Common Stock; or
c. makes a filing with any bank or thrift regulatory
authorities or publicly announces a bona fide proposal (a "Proposal") for (i)
any merger with, consolidation with or acquisition of all or a significant
portion of all the assets or liabilities of, MSB or any other business
combination involving MSB, or (ii) a transaction involving the transfer of
beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 20% or more of the
outstanding shares of Common Stock, and thereafter, if such Proposal has not
been Publicly Withdrawn (as such term is hereinafter defined) at least 15 days
prior to the meeting of stockholders of MSB called to vote on the Merger and
MSB's stockholders fail to approve the Merger by the vote required by applicable
law at the meeting of stockholders called for such purpose; or
d. makes a bona fide Proposal and thereafter, but before such
Proposal has been Publicly Withdrawn, MSB willfully takes any action in any
manner which would materially interfere with its ability to consummate the
Merger or materially reduce the value of the transaction to HUBCO.
The term "Triggering Event" also means the taking of any
material direct or indirect action by MSB or any of its directors, senior
executive officers, investment bankers or other person with actual or apparent
authority to speak for the MSB Board of Directors, inviting, encouraging or
soliciting any proposal which has as its purpose a tender offer for the shares
of Common Stock, a merger, consolidation, plan of exchange, plan of acquisition
or reorganization of MSB, or a sale of a significant number of shares of Common
Stock or any significant portion of its assets or liabilities.
The term "significant portion" means 25% of the assets or
liabilities of MSB. The term "significant number" means 20% of the outstanding
shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the Proposal coupled
with a public announcement of no further interest in pursuing such Proposal or
in acquiring any controlling influence over MSB or in soliciting or inducing any
other person (other than HUBCO or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be exercised
at any time (i) in the absence of any required governmental or regulatory
approval or consent necessary for MSB to issue the shares of Common Stock
covered by the Option (the "Option Shares") or HUBCO to exercise the Option or
prior to the expiration or termination of any waiting period required by law, or
(ii) so long as any injunction or other order, decree or ruling issued by any
federal or state court of competent jurisdiction is in effect which prohibits
the sale or delivery of the Option Shares.
MSB shall notify HUBCO promptly in writing of the occurrence
of any Triggering Event known to it, it being understood that the giving of such
notice by MSB shall not be a condition to the right of HUBCO to exercise the
Option. MSB will not take any action which would have the effect of preventing
or disabling MSB from delivering the Option Shares to HUBCO upon exercise of the
Option or otherwise performing its obligations under this Agreement, except to
the extent required by applicable securities and banking laws and regulations.
In the event HUBCO wishes to exercise the Option, HUBCO shall
send a written notice to MSB (the date of which is hereinafter referred to as
the "Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date between two and ten business days inclusive from
the Notice Date for the closing of such a purchase (a "Closing"); provided,
however, that a Closing shall not occur prior to two days after the later of
receipt of any necessary regulatory approvals and the expiration of any legally
required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any Closing
hereunder (a) HUBCO will make payment to MSB of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by MSB; (b) MSB will deliver to HUBCO a stock certificate or
certificates representing the number of Option Shares so purchased, free and
clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever created by or through MSB, registered in the name of HUBCO or its
designee, in such denominations as were specified by HUBCO in its notice of
exercise and, if necessary, bearing a legend as set forth below; and (c) HUBCO
shall pay any transfer or other taxes required by reason of the issuance of the
Option Shares so purchased.
If required under applicable federal securities laws, a legend
will be placed on each stock certificate evidencing Option Shares issued
pursuant to this Agreement, which legend will read substantially as follows:
The shares of stock evidenced by this certificate have not been
registered for sale under the Securities Act of 1933 (the "1933 Act").
These shares may not be sold, transferred or otherwise disposed of
unless a registration statement with respect to the sale of such shares
has been filed under the 1933 Act and declared effective or, in the
opinion of counsel reasonably acceptable to MSB Bancorp, Inc., said
transfer would be exempt from registration under the provisions of the
1933 Act and the regulations promulgated thereunder.
No such legend shall be required if a registration statement is filed and
declared effective under Section 4 hereof.
4. Registration Rights. Upon or after the occurrence of a
Triggering Event and upon receipt of a written request from HUBCO, MSB shall, if
necessary for the resale of the Option or the Option Shares by HUBCO, prepare
and file a registration statement with the Securities and Exchange Commission
and any state securities bureau covering the Option and such number of Option
Shares as HUBCO shall specify in its request, and MSB shall use its best efforts
to cause such registration statement to be declared effective in order to permit
the sale or other disposition of the Option and the Option Shares, provided that
HUBCO shall in no event have the right to have more than one such registration
statement become effective, and provided further that MSB shall not be required
to prepare and file any such registration statement in connection with any
proposed sale with respect to which counsel to MSB delivers to MSB and to HUBCO
(which is reasonably acceptable to HUBCO) its opinion to the effect that no such
filing is required under applicable laws and regulations with respect to such
sale or disposition; provided further, however, that MSB may delay any
registration of Option Shares above for a period not exceeding 90 days in the
event that MSB shall in good faith determine that any such registration would
adversely effect an offering of securities by MSB for cash. HUBCO shall provide
all information reasonable requested by MSB for inclusion in any registration
statement to be filed hereunder.
In connection with such filing, MSB shall use its best efforts
to cause to be delivered to HUBCO such certificates, opinions, accountant's
letters and other documents as HUBCO shall reasonably request and as are
customarily provided in connection with registrations of securities under the
Securities Act of 1933, as amended. All expenses incurred by MSB in complying
with the provisions of this Section 4, including without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for MSB and blue sky fees and expenses shall be paid by MSB.
Underwriting discounts and commissions to brokers and dealers relating to the
Option Shares, fees and disbursements of counsel to HUBCO and any other expenses
incurred by HUBCO in connection with such registration shall be borne by HUBCO.
In connection with such filing, MSB shall indemnify and hold harmless HUBCO
against any losses, claims, damages or liabilities, joint or several, to which
HUBCO may become subject, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
preliminary or final registration statement or any amendment or supplement
thereto, or arise out of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and MSB will reimburse
HUBCO for any legal or other expense reasonably incurred by HUBCO in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that MSB will not be liable in any case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such preliminary or final registration statement or such amendment or
supplement thereto in reliance upon and in conformity with written information
furnished by or on behalf of HUBCO specifically for use in the preparation
thereof. HUBCO will indemnify and hold harmless MSB to the same extent as set
forth in the immediately preceding sentence but only with reference to written
information specifically furnished by or on behalf of HUBCO for use in the
preparation of such preliminary or final registration statement or such
amendment or supplement thereto; and HUBCO will reimburse MSB for any legal or
other expense reasonably incurred by MSB in connection with investigating or
defending any such loss, claim, damage, liability or action. Notwithstanding
anything to the contrary herein, no indemnifying party shall be liable for any
settlement effected without its prior written consent.
5. Adjustment Upon Changes in Capitalization. In the event of
any change in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, conversions, exchanges of shares or the like,
then the number and kind of Option Shares and the Option Price shall be
appropriately adjusted.
In the event any capital reorganization or reclassification of
the Common Stock, or any consolidation, merger or similar transaction of MSB
with another entity, or any sale of all or substantially all of the assets of
MSB, shall be effected in such a way that the holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions (in form
reasonably satisfactory to the holder hereof) shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified herein and in lieu of the Common
Stock immediately theretofore purchasable and receivable upon exercise of the
rights represented by this Option, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore purchasable and receivable upon exercise
of the rights represented by this Option had such reorganization,
reclassification, consolidation, merger or sale not taken place; provided,
however, that if such transaction results in the holders of Common Stock
receiving only cash, the holder hereof shall be paid the difference between the
Option Price and such cash consideration without the need to exercise the
Option.
6. Filings and Consents. Each of HUBCO and MSB will use its
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event HUBCO is the holder
hereof, approval of the Securities and Exchange Commission, the Board of
Governors of the Federal Reserve System, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation or the New York Department of Banking, and
MSB agrees to cooperate with and furnish to the holder hereof such information
and documents as may be reasonably required to secure such approvals.
7. Representations and Warranties of MSB. MSB hereby
represents and warrants to HUBCO as follows:
a. Due Authorization. MSB has full corporate power and
authority to execute, deliver and perform this Agreement and all corporate
action necessary for execution, delivery and performance of this Agreement has
been duly taken by MSB.
b. Authorized Shares. MSB has taken and, as long as the Option
is outstanding, will take all necessary corporate action to authorize and
reserve for issuance all shares of Common Stock that may be issued pursuant to
any exercise of the Option.
c. No Conflicts. Neither the execution and delivery of this
Agreement nor consummation of the transactions contemplated hereby (assuming all
appropriate regulatory approvals) will violate or result in any violation or
default of or be in conflict with or constitute a default under any term of the
Certificate of Incorporation or Bylaws of MSB or any agreement, instrument,
judgment, decree or order applicable to MSB.
8. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement and that
the obligations of the parties hereto shall be specifically enforceable.
Notwithstanding the foregoing, HUBCO shall have the right to seek money damages
against MSB for a breach of this Agreement.
9. Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof.
10. Assignment or Transfer. HUBCO may not sell, assign or
otherwise transfer its rights and obligations hereunder, in whole or in part, to
any person or group of persons other than to a wholly-owned subsidiary of HUBCO.
HUBCO represents that it is acquiring the Option for HUBCO's own account and not
with a view to or for sale in connection with any distribution of the Option or
the Option Shares. HUBCO is aware that neither the Option nor the Option Shares
is the subject of a registration statement filed with, and declared effective
by, the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act, but instead each is being offered in reliance upon the exemption
from the registration requirement provided by Section 4(2) thereof and the
representations and warranties made by HUBCO in connection therewith.
11. Amendment of Agreement. Upon mutual consent of the parties
hereto, this Agreement may be amended in writing at any time, for the purpose of
facilitating performance hereunder or to comply with any applicable regulation
of any governmental authority or any applicable order of any court or for any
other purpose.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
13. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally, by express service,
cable, telegram or telex, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
If to HUBCO:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attention: Mr. Kenneth T. Neilson
President and Chief Executive Officer
With a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
Attention: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
If to MSB:
MSB Bancorp, Inc.
35 Matthews Street
Goshen, New York 10924
Attention: William C. Myers,
Chairman of the Board, President
and Chief Executive Officer
With a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, NY 10048
Attention: Omer S. J. Williams, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are inserted for
convenience and reference purposes, and shall not limit or otherwise affect any
of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may, by mutual
consent, extend the time for performance of any of the obligations or acts of
either party hereto. Each party may waive (a) compliance with any of the
covenants of the other party contained in this Agreement and/or (b) the other
party's performance of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
19. Termination. This Agreement shall terminate upon either
the termination of the Merger Agreement as provided therein or the consummation
of the transactions contemplated by the Merger Agreement; provided, however,
that if termination of the Merger Agreement occurs after the occurrence of a
Triggering Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 18 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Stock Option
Agreement to be executed by its duly authorized officer, all as of the day and
year first above written.
MSB BANCORP, INC.
WILLIAM C. MYERS
By:-------------------------------------------------
William C. Myers,
Chairman, President and Chief Executive Officer
HUBCO, INC.
KENNETH T. NEILSON
By:--------------------------------------------------
Kenneth T. Neilson,
Chairman, President and Chief Executive Officer
