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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) August 27, 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)
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<PAGE>
Item 5. Other Events
On August 28, 1997, HUBCO, INC., ("HUBCO") issued a press release
announcing the signing of a definitive agreement (the "Merger Agreement") with
Security National Bank & Trust Company of New Jersey ("SNB"), whereby SNB will
be merged with and into Hudson United Bank, HUBCO's New Jersey banking
subsidiary. The press release is attached as an Exhibit to this Form 8-K.
Under the terms of the Merger Agreement, SNB's shareholders will
receive $34.00 in cash for each share of SNB common stock. The $34.00 value is
equal to 1.4 times SNB's book value and 36 times SNB's 1996 earnings per share,
and represents a 4.7% premium on deposits. SNB is an $86 million asset bank and
trust company headquartered in Newark, New Jersey with branches in Nutley and
Kearny, New Jersey.
SNB has issued an option to HUBCO which, based on certain events, could
result in the issuance of 30,318 SNB common shares to HUBCO. The transaction
will be accounted for by HUBCO as a purchase.
Simultaneously with the execution of the Merger Agreement between
Hudson United Bank and SNB, HUBCO and an acquisition subsidiary entered into a
parallel merger agreement with Fiduciary Investment Company of New Jersey,
("FIC") a closely held corporation which owns approximately 79% of the
outstanding shares of SNB.
Consummation of both mergers are subject to customary conditions,
including but not limited to the approval by Federal and New Jersey bank
regulatory authorities and the shareholders of SNB and FIC.
The management of HUBCO, SNB and FIC anticipate that the mergers will
close during the fourth quarter of 1997.
Item 7. Exhibits
99.1 Press Release dated August 28, 1997.
99.2 Agreement and Plan of Merger dated August 27, 1997 among Hudson
United Bank and Security National Bank & Trust Company of
New Jersey.
99.3 Agreement and Plan of Merger dated August 27, 1997 among HUBCO,
Inc. and FS Acquisition Corporation and Fiduciary Investment
Company of New Jersey.
99.4 Stock Option Agreement dated August 27, 1997 among HUBCO, Inc.
and Security National Bank & Trust Company of New Jersey.
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: September 8, 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 August 28, 1997.
99.2 Agreement and Plan of Merger dated August 27, 1997 among Hudson
United Bank and Security National Bank & Trust Company of New
Jersey.
99.3 Agreement and Plan of Merger dated August 27, 1997 among HUBCO,
Inc. and FS Acquisition Corporation and Fiduciary Investment
Company of New Jersey.
99.4 Stock Option Agreement dated August 27, 1997 among HUBCO, Inc.
and Security National Bank & Trust Company of New Jersey.
HUBCO, INC.
1000 MacArthur Blvd.
Mahwah, NJ 07430
(NASDAQ: HUBC)
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD, INC.
Kenneth T. Neilson, Chairman, Kerry Thalheim
Chief Executive Officer & 675 Third Avenue
President (201) 236-2631 New York, NY 10017
Joseph Hurley, Chief Financial (212) 661-8030
Officer & Executive Vice President
(201) 236-6141
FOR IMMEDIATE RELEASE
August 28, 1997
HUBCO, INC. AND SECURITY NATIONAL BANK
SIGN A DEFINITIVE MERGER AGREEMENT
Mahwah, New Jersey, August 28, 1997 - HUBCO, Inc. (NASDAQ:HUBC) and Security
National Bank & Trust Company of New Jersey (OTC) today announced the signing of
a definitive agreement to merge Security National into Hudson United Bank,
HUBCO's New Jersey banking subsidiary. In the merger, shareholders of Security
National will receive $34.00 in cash for each share of Security National common
stock. The $34.00 value is equal to 1.4 times Security National's book value and
36 times Security National's 1996 earnings per share, and represents a 4.7%
premium on deposits. Security National is an $86 million asset bank and trust
company headquartered in Newark, New Jersey with branches in Nutley and Kearney,
New Jersey.
In connection with the transaction Security National has issued an option to
HUBCO which, based on certain events, could result in the issuance of 30,318
Security National common shares to HUBCO. The transaction will be accounted for
by HUBCO as a purchase.
HUBCO recently announced a definitive agreement to merge The Bank of Southington
(AMEX:BSO) into Lafayette American Bank, HUBCO's Connecticut banking subsidiary.
Following consummation of the Security National merger, Hudson United Bank will
have assets of approximately $1.7 billion and 60 banking offices. Upon
consummation of the Southington merger, Lafayette American will have
approximately $1.4 billion in assets and 30 banking offices .
Kenneth T. Neilson, HUBCO's Chairman, President and CEO commented "We are
pleased that Security National Bank has chosen to join HUBCO. Hudson United Bank
will bring new products and services to Security National's customers, while the
addition of Security National to Hudson United Bank will expand our presence in
Essex County, New Jersey and help us continue to increase revenues and achieve
efficiencies."
John J. Fedigan, Security National's Chairman, said "Our alliance with HUBCO
will serve the interests of Security National's customers and the communities it
serves. We are pleased to be joining a dynamic, growing banking institution."
Simultaneously with execution of the merger agreement between Hudson United Bank
and Security National, HUBCO and an acquisition subsidiary entered into a
parallel merger agreement with Fiduciary Investment Company of New Jersey, a
closely-held corporation which owns approximately 79% of the outstanding shares
of Security National Bank. Consummation of both mergers are subject to approval
by federal and New Jersey bank regulatory authorities and approval by the
shareholders of Security National Bank and Fiduciary Investment Company, as well
as other customary conditions.
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
HUDSON UNITED BANK
and
SECURITY NATIONAL BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I THE BANK MERGER........................................2
1.1 The Bank Merger....................................... 2
1.2 Effect of the Bank Merger............................. 2
1.3 Certificate of Incorporation.......................... 2
1.4 By-laws............................................... 2
1.5 Directors and Officers................................ 2
1.6 Effective Time and Closing............................ 2
ARTICLE II CONVERSION OF SNB SHARES.............................. 3
2.1 Conversion of SNB Common Stock........................ 3
2.2 Exchange of Certificates.............................. 4
2.3 SNB Stock Options..................................... 5
2.4 Stock Transfer Books.................................. 5
2.5 Dissenting Shares..................................... 6
2.6 The Bank Common Stock................................. 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SNB................. 6
3.1 Corporate Organization................................ 6
3.2 Capitalization........................................ 7
3.3 Authority; No Violation............................... 7
3.4 Financial Statements.................................. 8
3.5 Broker's and Others Fees.............................. 8
3.6 Absence of Certain Changes or Events.................. 9
3.7 Legal Proceedings..................................... 9
3.8 Taxes and Tax Returns................................. 9
3.9 Employee Benefit Plans................................10
3.10 Reports...............................................12
3.11 SNB Information.......................................13
3.12 Compliance with Applicable Law........................13
3.13 Certain Contracts.....................................13
3.14 Properties and Insurance..............................14
3.15 Minute Books..........................................14
3.16 Environmental Matters.................................14
3.17 Reserves..............................................15
3.18 No Parachute Payments.................................15
3.19 Agreements with Bank Regulators.......................15
3.20 Disclosure............................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BANK............16
4.1 Corporate Organization................................16
4.2 Authority; No Violation...............................16
4.3 Brokerage Fees........................................17
4.4 Legal Proceedings.....................................17
4.5 The Bank Information..................................17
4.6 Funding and Capital Adequacy..........................17
4.7 Disclosures...........................................18
ARTICLE V COVENANTS OF THE PARTIES..............................18
5.1 Conduct of the Business of SNB........................18
5.2 Negative Covenants....................................18
5.3 No Solicitation.......................................19
5.4 Current Information...................................19
5.5 Access to Properties and Records; Confidentiality.....19
5.6 Regulatory Matters....................................20
5.7 Approval of Stockholders; Stockholder Approval
Requirements........................................22
5.8 Further Assurances....................................22
5.9 Public Announcements..................................22
5.10 Failure to Fulfill Conditions.........................23
5.11 Indemnification and Insurance.........................23
5.12 Disclosure Supplements................................24
5.13 Transaction Expenses of SNB...........................25
ARTICLE VI CLOSING CONDITIONS....................................25
6.1 Conditions of Each Party's Obligations Under this
Agreement...........................................25
6.2 Conditions to the Obligations of the Bank Under
this Agreement......................................26
6.3 Conditions to the Obligations of SNB Under this
Agreement...........................................27
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.....................28
7.1 Termination...........................................28
7.2 Effect of Termination.................................28
7.3 Amendment.............................................29
7.4 Extension; Waiver.....................................29
ARTICLE VIII MISCELLANEOUS.........................................29
8.1 Expenses..............................................29
8.2 Survival..............................................29
8.3 Notices...............................................29
8.4 Parties in Interest...................................30
8.5 Entire Agreement......................................31
8.6 Counterparts..........................................31
8.7 Governing Law.........................................31
8.8 Descriptive Headings..................................31
Exhibit 1 Location of Principal Offices and Branch Offices of SNB and
the Bank; Location of all Branch Offices and Main Office of
the Surviving Bank; Amount of Capital Stock, number of Shares,
par value and amount of Surplus of the Surviving Bank; Names
of the current directors and officers of the Bank
Exhibit 6.2 Form of Opinion of Counsel to SNB to be Delivered to the Bank
on the Effective Time
Exhibit 6.3 Form of Opinion of Counsel to the Bank to be Delivered to SNB
on the Effective Time
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 27, 1997
(this "Agreement"), between Hudson United Bank (the "Bank"), a New Jersey
chartered commercial banking corporation, and Security National Bank & Trust
Company of New Jersey, a national banking association ("SNB").
RECITALS
The Bank desires to acquire SNB and SNB's Board of Directors
has determined, based upon the terms and conditions hereinafter set forth, that
the acquisition is in the best interests of SNB and its stockholders. The
acquisition will be accomplished by having HUBCO, Inc. ("HUBCO"), the parent
bank holding company for the Bank, acquire Fiduciary Investment Company of New
Jersey ("FIC"), the approximately 79% owner of SNB, pursuant to an Agreement and
Plan of Merger, dated the date hereof, among HUBCO, FS Acquisition Corporation
("Newco") and FIC (the "FIC Merger Agreement") under which Newco will be merged
into FIC and FIC will be merged into HUBCO immediately thereafter (the "FIC
Merger") and, immediately thereafter pursuant to the terms of this Agreement,
merging SNB with and into the Bank with the Bank surviving.
The two mergers, the FIC Merger and the merger of SNB into the
Bank, are contingent upon each other. Furthermore, as a condition of entering
into the agreements to acquire SNB, HUBCO has required that it receive an option
on certain authorized but unissued shares of SNB Common Stock (as hereinafter
defined).
The Boards of Directors of SNB and the Bank have duly adopted
and approved this Agreement and the Board of Directors of SNB has directed that
it be submitted to SNB's shareholders for approval.
Simultaneously, the Boards of Directors of HUBCO and FIC have
duly adopted and approved the FIC Merger Agreement and the Board of Directors of
FIC has directed that it be submitted to FIC's shareholders for approval.
Also, simultaneously with the execution of this Agreement, SNB
is issuing an option to HUBCO (the "HUBCO Stock Option") to purchase 30,318
shares of the authorized and unissued SNB Common Stock at an option price of
$23.00 per share, subject to adjustment and subject to the terms and conditions
set forth in the agreement governing such option.
NOW, THEREFORE, intending to be legally bound, the parties
hereto hereby agree as follows:
ARTICLE I - THE BANK MERGER
1.1. The Bank Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time (as hereinafter defined), SNB shall be
merged with and into the Bank (the "Bank Merger") in accordance with the New
Jersey Banking Act of 1948, as amended, and the National Bank Act and the Bank
shall be the surviving bank (the "Surviving Bank"), the name of which shall be
Hudson United Bank. The principal office of the Surviving Bank shall be the
principal office of the Bank. Exhibit 1 to this Agreement lists (i) the
locations of the principal offices of and branch offices of SNB and the Bank;
(ii) the locations of all branch offices and the main office of the Surviving
Bank; and (iii) the amount of the capital stock, the number of shares, the par
value and the amount of surplus of the Surviving Bank.
1.2. Effect of the Bank Merger. At the Effective Time, the
Surviving Bank shall be considered the same business and corporate entity as
each of the Bank and SNB and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of the Bank and SNB shall vest in the
Surviving Bank and the Surviving Bank shall be subject to and be deemed to have
assumed all of the debts, liabilities, obligations and duties of each of the
Bank and SNB 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 Bank. In
addition, any reference to either of the Bank or SNB in any contract or
document, whether executed or taking effect before or after the Effective Time,
shall be considered a reference to the Surviving Bank if not inconsistent with
the other provisions of the contract or document; and any pending action or
other judicial proceeding to which either of the Bank or SNB is a party, shall
not be deemed to have abated or to have discontinued by reason of the Bank
Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Bank Merger had not been made, or the Surviving Bank may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of the Bank or SNB as if the Bank Merger had not occurred.
1.3. Certificate of Incorporation. As of the Effective Time,
the certificate of incorporation of the Bank as it exists at the Effective Time
shall be the certificate of incorporation of the Surviving Bank and shall not be
amended by this Agreement or the Bank Merger.
1.4. By-laws. As of the Effective Time, the By-laws of the
Bank shall be the By-laws of the Surviving Bank until otherwise amended as
provided by law.
1.5. Directors and Officers. As of the Effective Time, the
directors and officers of the Bank shall become the directors and officers of
the Surviving Bank. The names of the current directors and officers of the Bank
are listed on Exhibit 1. The Bank shall appoint such additional officers from
SNB as the Bank shall, in its discretion, determine.
1.6. Effective Time and Closing. The Bank Merger shall become
effective (and be consummated) upon the date specified in a notice from the Bank
to the Federal Deposit Insurance Corporation (the "FDIC") and in the date
specified in the certification required by Section 137 of the New Jersey Banking
Act of 1948, as amended, to be filed with the New Jersey Department of Banking
(the "Department") after approval by the Commissioner of the Department (the
"Commissioner") (the "Effective Time"). The notice from the Bank to the FDIC and
the certification filed with the Department specifying the Effective Time shall
require the approval of SNB, which approval will not be unreasonably withheld,
and shall be consistent with this section. A closing (the "Closing") shall take
place prior to the Effective Time at 10:00 a.m., 10 days (or the first business
day thereafter) following the receipt of all necessary regulatory and
governmental approvals and consents and the expiration of all statutory waiting
periods in respect thereof and the satisfaction or waiver of all of the
conditions to the consummation of the Bank Merger specified in Article VI
hereof, including conditions to the FIC Merger as specified in the FIC Merger
Agreement (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing), at the offices of
Pitney, Hardin, Kipp & Szuch, 200 Campus Drive, Florham Park, New Jersey, or at
such other place, time or date (such actual date of Closing is hereinafter
referred to as the "Closing Date") as the Bank and SNB may mutually agree upon.
The Closing shall be at the same time and place as the closing for the FIC
Merger. The notice from the Bank to the FDIC and the certification filed with
the Department shall specify as the Effective Time of the Bank Merger a date,
immediately following the Closing, agreed to by the Bank and SNB, which time
shall be immediately after the Effective Time for the FIC Merger. Following the
execution of this Agreement, the Bank and SNB shall, if required or advised to
do so by applicable regulatory authorities, execute and deliver a simplified
bank merger agreement, both in form and substance reasonably satisfactory to the
parties hereto and consistent with the terms hereof, for delivery to the
Commissioner, the FDIC and the Comptroller of the Currency (the "Comptroller")
in connection with the approval of the Bank Merger by the regulatory
authorities.
ARTICLE II - CONVERSION OF SNB SHARES
2.1. Conversion of SNB Common Stock. Each share of common
stock, par value $5.00 per share, of SNB ("SNB Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than Dissenting
Shares as defined in Section 2.4) shall, by virtue of the Bank Merger and
without any action on the part of the holder thereof, be converted as follows:
(a) Exchange Price. Subject to the provisions of this Section
2.1, each share of SNB Common Stock issued and outstanding immediately prior to
the Effective Time (excluding treasury shares, if any, shares held by the Bank,
shares held by FIC, shares held by HUBCO and Dissenting Shares) shall be
converted at the Effective Time into the right to receive in cash an amount (the
"Exchange Price") equal to $34.00.
(b) Cancellation of SNB Certificates. After the Effective
Time, all such shares of SNB Common Stock (other than those cancelled pursuant
to Section 2.1(c)) 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(c)) shall thereafter represent the right to receive the
Exchange Price. The holders of such certificates previously evidencing such
shares of SNB Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of SNB Common Stock
except as otherwise provided herein or by law. Such certificates previously
evidencing such shares of SNB Common Stock (other than Dissenting Shares and
those cancelled pursuant to Section 2.1(c)) shall be exchanged for the Exchange
Price, upon the surrender of such certificates in accordance with this Article
II.
(c) Treasury Shares. All shares of SNB Common Stock held by
SNB in its treasury (if any) immediately prior to the Effective Time shall be
cancelled. No payment shall be made for shares of SNB Common Stock held by the
Bank, HUBCO or FIC and such shares shall also be cancelled.
2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, the Bank shall
deposit, or shall cause to be deposited, with a bank or trust company designated
by the Bank, which may be Hudson United Bank, Trust Department (the "Exchange
Agent"), for the benefit of the holders of shares of SNB Common Stock, for
exchange in accordance with this Article II, through the Exchange Agent, cash in
such amount so that the Exchange Agent possesses such amount of cash as is
required to provide all of the consideration required to be exchanged by the
Bank pursuant to the provisions of this Article II (such cash being hereinafter
referred to as the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the cash out of the Exchange Fund in
accordance with Section 2.1. Except as contemplated by Section 2.2(e) 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, the Bank 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 SNB
Common Stock (other than Dissenting Shares) (the "Certificates"), (i) a letter
of transmittal (which is reasonably agreed to by the Bank and SNB and 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 shall be in such form and have such other provisions as the
Bank may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Exchange Price. Upon surrender
of a Certificate for cancellation to the Exchange Agent together with such
letter of transmittal, duly executed, and such other customary documents as may
be required pursuant to such instructions, the holder of such Certificate shall
be entitled to receive in exchange therefor the Exchange Price and the
Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of shares of SNB Common Stock which is not registered in
the transfer records of SNB, the Exchange Price may be paid to a transferee if
the Certificate 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. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if reasonably required by the Exchange Agent, the posting by such
person of a bond in such amount as the Exchange Agent may reasonably direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen, or
destroyed certificate the Exchange Price. 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
Exchange Price, without interest.
(c) No Interest on Exchange Price. No part of the Exchange
Price shall be paid to the holder of any unsurrendered Certificate, until the
holder of such Certificate shall surrender such Certificate. No interest shall
be paid on the Exchange Price.
(d) No Further Rights in SNB Common Stock. The Exchange Price
paid upon conversion of the shares of SNB Common Stock in accordance with the
terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to such shares of SNB Common Stock.
(e) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of SNB Common Stock for two
years after the Effective Time shall be delivered to the Bank, upon demand, and
any holders of SNB Common Stock who have not theretofore complied with this
Article II shall thereafter look only to the Bank for the Exchange Price to
which they are entitled.
(f) No Liability. The Bank shall not be liable to any holder
of shares of SNB Common Stock for the Exchange Price delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(g) Withholding Rights. The Bank shall be entitled to deduct
and withhold, or cause the Exchange Agent to deduct and withhold, from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of SNB Common Stock, the minimum amounts (if any) that the Bank 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 the Bank, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of SNB Common Stock in respect of which
such deduction and withholding was made by the Bank.
2.3. SNB Stock Options. At the Effective Time, each
outstanding Stock Option (as such term is defined in Section 3.2) listed on the
SNB Disclosure Schedule, whether or not then exercisable, shall by virtue of the
Bank Merger and without any action on the part of the holder thereof, be
converted into the right to receive cash in an amount equal to (i) the excess of
the Exchange Price, without interest, over the exercise price per share provided
in such Stock Option, multiplied by (ii) the number of shares of SNB Common
Stock subject to such Stock Option.
2.4. Stock Transfer Books. At the Effective Time, the stock
transfer books of SNB shall be closed and there shall be no further registration
of transfers of shares of SNB Common Stock thereafter on the records of SNB. On
or after the Effective Time, any Certificates presented to the Exchange Agent or
the Bank for transfer shall be converted into the Exchange Price.
2.5. Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, any holder of SNB Common Stock shall have the right
to dissent in the manner provided in the National Bank Act, 12 U.S.C. 214a(b),
and if all necessary requirements of the National Bank Act are met, such shares
shall be entitled to payment in cash from the Bank of the fair value of such
shares as determined in accordance with the National Bank Act. All shares of SNB
Common Stock as to which the holder properly exercises dissenters' rights in
accordance with the National Bank Act shall constitute "Dissenting Shares"
unless and until such rights are waived, by the party initially seeking to
exercise such rights.
2.6. The Bank Common Stock. The shares of common stock of the
Bank outstanding immediately prior to the Effective Time shall not be affected
by the Bank Merger but shall be the same number of shares of the Surviving Bank.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SNB
References herein to the "SNB 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 SNB to
the Bank. SNB hereby represents and warrants to the Bank as follows:
3.1. Corporate Organization.
(a) SNB is a national banking association duly organized,
validly existing and in good standing under the laws of the United States. SNB
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on the business, operations, assets or financial condition of SNB.
(b) Except as set forth in the SNB Disclosure Schedule, SNB
has no Subsidiaries. When used with reference to SNB, the term "Subsidiary"
means any corporation, partnership, joint venture or other legal entity in which
SNB, directly or indirectly, owns at least a 50 percent stock or other equity
interest or for which SNB, directly or indirectly, acts as a general partner.
All eligible accounts of depositors issued by SNB are insured by the FDIC to the
fullest extent permitted by law.
(c) The SNB Disclosure Schedule sets forth true and complete
copies of the Articles of Association and By-laws of SNB, as in effect on the
date hereof.
3.2. Capitalization. The authorized capital stock of SNB
consists of 325,000 shares of SNB Common Stock. As of the date hereof, there are
270,432 shares of SNB Common Stock issued and outstanding. As of the date
hereof, there are 24,250 shares of SNB Common Stock issuable upon exercise of
outstanding stock options. The SNB Disclosure Schedule sets forth (i) all
options which may be exercised for issuance of SNB 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 each individual agreement
pursuant to which any Stock Option was granted, including a list of each
outstanding stock option issued pursuant thereto. All issued and outstanding
shares of SNB Common Stock have been duly authorized and validly issued, are
fully paid and no assessment has been made on such shares. Except for the Stock
Options and the HUBCO Stock Option, SNB has not granted and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase, subscription or issuance of
any shares of capital stock of SNB 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 the stockholders of SNB, SNB has the full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of SNB in accordance with the Articles of Association of SNB
and applicable laws and regulations. Except for such approval, no other
corporate proceedings on the part of SNB are necessary to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by SNB and constitutes the valid and binding obligation of SNB,
enforceable against SNB in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
SNB, nor the consummation by SNB of the transactions contemplated hereby in
accordance with the terms hereof, or compliance by SNB with any of the terms or
provisions hereof, will (i) violate any provision of SNB's Articles of
Association 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 SNB or any of its
properties or assets, or (iii) except as set forth in the SNB Disclosure
Schedule, violate, conflict with, result in a breach of any provision of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets of
SNB 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 SNB is a party, or by which it or any of its
properties or assets may be bound or affected, except, with respect to (ii) and
(iii) above, such as individually or in the aggregate will not have a material
adverse effect on the business, operations, assets or financial condition of SNB
and which will not prevent or delay the consummation of the transactions
contemplated hereby. Except for consents and approvals of or filings or
registrations with or notices to or required by the FDIC, the Commissioner, the
Department, the Comptroller, or the New Jersey Department of Environmental
Protection ("NJDEP") and the stockholders of SNB, 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 SNB in connection with (x) the execution
and delivery by SNB of this Agreement and (y) the consummation by SNB of the
Bank Merger and the other transactions contemplated hereby. To the best of SNB's
knowledge, no fact or condition exists which SNB has reason to believe will
prevent it from obtaining the aforementioned consents or approvals.
3.4. Financial Statements.
(a) The SNB Disclosure Schedule sets forth copies of the
consolidated statements of condition of SNB as of December 31, 1996, 1995 and
1994, and the related consolidated statements of operations, changes in
shareholders' 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 Arthur Andersen & Co., LLP, independent public accountants with
respect to SNB, and the consolidated unaudited statements of condition of SNB as
of June 30, 1997 and the related consolidated statements of operations, changes
in shareholders' equity and cash flows for the period ended June 30, 1997, as
filed with the Comptroller on Form 10-QSB (collectively, the "SNB Financial
Statements"). The SNB 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 fairly present the financial
position of SNB as of the respective dates set forth therein, and the related
statements of operations, changes in shareholders' equity and cash flows fairly
present the results of operations, changes in stockholders' equity and cash
flows of SNB for the respective fiscal periods set forth therein, except (with
respect to the interim period financial statements only) for the absence of
footnotes and other presentation items and subject to normal year-end
adjustments.
(b) The books and records of SNB 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 SNB Financial Statements (including the notes thereto),
as of June 30, 1997, SNB had no liabilities, whether absolute, accrued,
contingent or otherwise, material to the business, operations, assets or
financial condition of SNB which were required by GAAP (consistently applied) to
be disclosed in SNB's Form 10-QSB as of June 30, 1997. Since June 30, 1997, SNB
has not incurred any liabilities except in the ordinary course of business and
consistent with prudent banking practice, except as related to the transactions
contemplated by this Agreement.
3.5. Broker's and Other Fees. Neither SNB 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. SNB has hired Alex
Sheshunoff & Co. Investment Banking ("Sheshunoff") to provide a fairness opinion
for the Bank Merger. The agreement with Sheshunoff is set forth in the SNB
Disclosure Schedule. There are no fees (other than time charges billed at usual
and customary rates) payable to any consultants, including lawyers and
accountants, in connection with this transaction or which would be triggered by
consummation of this transaction or the termination of the services of such
consultants by SNB.
3.6. Absence of Certain Changes or Events.
(a) Except as set forth in the SNB Disclosure Schedule, there
has not been any material adverse change in the business, operations, assets or
financial condition of SNB since June 30, 1997 and to the best of SNB's
knowledge, no fact or condition exists which SNB believes will cause such a
material adverse change in the future.
(b) Except as set forth in the SNB Disclosure Schedule, SNB
has not taken or permitted any of the actions set forth in Section 5.2 hereof
between June 30, 1997 and the date hereof and, except for execution of this
Agreement and the agreement with Sheshunoff described in Section 3.5, SNB has
conducted its business only in the ordinary course, consistent with past
practice.
3.7. Legal Proceedings. Except as disclosed in the SNB
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of SNB, SNB is not a party to any, and there are no pending or, to
the best of SNB's knowledge, threatened legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against SNB. Except as disclosed in the SNB Disclosure Schedule, SNB is not a
party to any order, judgment or decree entered in any lawsuit or proceeding.
3.8. Taxes and Tax Returns.
(a) SNB has duly filed (and until the Effective Time will so
file) all returns, declarations, reports, information returns and statements
("Returns") required to be filed by it in respect of any federal, state and
local taxes (including withholding taxes, penalties or other payments required)
and has duly paid (and until the Effective Time will so pay) all such taxes due
and payable, other than taxes or other charges which are being contested in good
faith (and disclosed to the Bank in writing). SNB 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 SNB through such date. The SNB
Disclosure Schedule identifies the federal income tax returns of SNB which have
been examined by the Internal Revenue Service (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 SNB Disclosure Schedule identifies the
applicable state income tax returns of SNB which have been examined by the
applicable authorities within the past six years. No deficiencies were asserted
as a result of such examinations which have not been resolved and paid in full.
To the best knowledge of SNB, 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 SNB, nor has SNB 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 SNB Disclosure Schedule, SNB
(i) has not requested any extension of time within which to file any Return
which Return has not since been filed, (ii) is not a party to any agreement
providing for the allocation or sharing of taxes, (iii) is not required to
include in income any adjustment pursuant to Section 481(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), by reason of a voluntary change
in accounting method initiated by SNB (nor does SNB have any knowledge that the
IRS has proposed any such adjustment or change of accounting method) and (iv)
has not filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply.
3.9. Employee Benefit Plans.
(a) Except as disclosed in the SNB Disclosure Schedule, SNB
does not maintain or contribute to any "employee pension benefit plan" (the "SNB
Pension Plans"), within the meaning of Section 3(2)(A) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA (the "SNB Welfare
Plans"), stock option plan, stock purchase plan, deferred compensation plan,
severance plan, bonus plan, employment agreement or other similar plan, program
or arrangement. SNB has not, since September 2, 1974, contributed to any
"Multiemployer Plan", as such term is defined in Section 3(37) of ERISA.
(b) Except as disclosed in the SNB Disclosure Schedule, SNB
has delivered to the Bank in the SNB Disclosure Schedule a complete and accurate
copy of each of the following with respect to each of the SNB Pension Plans and
SNB Welfare Plans, if any: (1) plan document, summary plan description, and
summary of material modifications (if not available, a detailed description of
the foregoing); (ii) trust agreement or insurance contract, if any; (iii) most
recent IRS determination letter, if any; (iv) most recent actuarial report, if
any; and (v) most recent annual report on Form 5500.
(c) The present value of all accrued benefits under each of
the SNB 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 SNB Pension Plan's actuary, did not exceed the then current value of the
assets of such plans allocable to such accrued benefits.
(d) During the last five years, the Pension Benefit Guaranty
Corporation ("PBGC") has not asserted any claim for liability against SNB 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 SNB Pension Plan
have been paid. All contributions required to be made to each SNB 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 SNB which have not
been paid have been properly recorded on the books of SNB.
(f) Except as disclosed in the SNB Disclosure Schedule, each
of the SNB Pension Plans, the SNB Welfare Plans and each other plan and
arrangement identified on the SNB 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, if SNB
maintains any SNB Pension Plan, SNB intends to apply, if necessary, for, or the
IRS has issued, a favorable determination letter with respect to such SNB
Pension Plan and, except as disclosed in the SNB Disclosure Schedule, SNB is not
aware of any fact or circumstance which would disqualify any plan, that could
not be retroactively corrected (in accordance with the procedures of the IRS).
(g) To the best knowledge of SNB, no non-exempt prohibited
transaction, within the meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any of the SNB Welfare Plans or SNB Pension
Plans.
(h) No SNB Pension Plan or any trust created thereunder has
been terminated, nor have there been any "reportable events", within the meaning
of Section 4034(b) of ERISA, with respect to any of the SNB Pension Plans.
(i) No "accumulated funding deficiency", within the meaning of
Section 412 of the Code, has been incurred with respect to any of the SNB
Pension Plans.
(j) There are no pending or, to the best knowledge of SNB,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the SNB Pension Plans or the SNB Welfare Plans, any
trusts created thereunder or any other plan or arrangement identified in the SNB
Disclosure Schedule.
(k) Except as disclosed in the SNB Disclosure Schedule, no SNB
Pension Plan or SNB Welfare Plan provides medical or death benefits (whether or
not insured) beyond an employee's retirement or other termination of service,
other than (i) coverage mandated by law, or (ii) death benefits under any SNB
Pension Plan.
(l) Except with respect to customary health, life and
disability benefits or as disclosed in the SNB Disclosure Schedule, there are 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. Any deferred compensation, supplement retirement programs,
benefit equalization plans or similar arrangements have been fully reserved for
on the financial statements of SNB using, if applicable, assumptions about
interest and discount rates which would be considered reasonable as of June 30,
1997 and the death, disability or termination from employment of any person
covered by such plans would not result in any additional reserves or liabilities
with respect to such plan.
(m) With respect to each SNB Pension Plan and SNB Welfare Plan
that is funded wholly or partially through an insurance policy, there will be no
liability of SNB 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 as set forth in the SNB Disclosure Schedule or as
agreed to by the Bank in writing either pursuant to this Agreement or otherwise,
the consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee of SNB to severance pay, unemployment
compensation or any similar payment, (ii) accelerate the time of payment,
vesting, or increase the amount, of any compensation due to any current employee
or former employee under any SNB Pension Plan or SNB Welfare Plan, or (iii)
result in payments not deductible by reason of Section 280G of the Code.
(o) Except for the SNB Pension Plans and the SNB Welfare
Plans, and except as set forth on the SNB Disclosure Schedule, SNB has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of SNB or any
SNB Subsidiary or FIC or any predecessor of any thereof. The SNB Disclosure
Schedule sets forth (i) true and complete copies of the agreements,
understandings or obligations with respect to each such current or former
director, officer or employee, and (ii) the most current actuarial or other
calculation of the present value of such payments or benefits.
(p) Except as set forth in the SNB Disclosure Schedule, SNB
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 SNB 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 SNB's knowledge, neither
SNB nor any SNB Pension Plan or SNB Welfare Plan owns any individual or group
insurance policies issued by an insurer which has been found to be insolvent or
is in rehabilitation pursuant to a state proceeding.
3.10. Reports.
(a) The SNB Disclosure Schedule lists, and SNB has previously
delivered to the Bank a complete copy of, (i) each annual, quarterly or special
report, each prospectus, and each proxy statement filed by SNB under the
provisions of the Securities and Exchange Act of 1934 (the "1934 Act") or
provisions comparable to the Securities Act of 1933, as amended, and (ii) each
communication (other than general advertising materials and press releases)
mailed by SNB to its stockholders as a class since January 1, 1994. 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) SNB has, since January 1, 1994, duly filed with the
Comptroller in form which was correct in all material respects all material
forms, reports and documents required to be filed under applicable laws and
regulations (provided that information as of a later date shall be deemed to
modify information as of an earlier date), and, subject to permission from such
regulatory authorities, SNB promptly will deliver or make available to the Bank
accurate and complete copies of such reports. The SNB Disclosure Schedule lists
all examinations of SNB conducted by either the Comptroller or the FDIC since
January 1, 1994 and the dates of any responses thereto submitted by SNB.
3.11. SNB Information. The information relating to SNB, and
the agreements and arrangements with respect to the transactions contemplated
hereby, to be contained in the Proxy Statement (as defined in Section 5.6(a)
hereof) to be delivered to stockholders of SNB in connection with the
solicitation of their approval of the Bank Merger, as of the date the Proxy
Statement is mailed to stockholders of SNB, and up to and including the date of
the meeting of stockholders to which such Proxy Statement 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 SNB Disclosure Schedule, SNB holds all material licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business and
since January 1, 1994 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 SNB
(other than where such default or noncompliance will not result in a material
adverse effect on the business, operations, assets or financial condition of
SNB) and SNB 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 hereof,
contracts described in Section 3.5 hereof, and as disclosed in the SNB
Disclosure Schedule, (i) SNB is not a party to or bound by any contract or
understanding (whether written or oral) with respect to the employment of any
officers, employees, directors or consultants, and (ii) the consummation of the
transactions contemplated by this Agreement will not (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from SNB to any officer, employee,
director or consultant thereof. The SNB Disclosure Schedule sets forth true and
correct copies of any severance or employment agreements with officers,
directors, employees, agents or consultants to which SNB is a party.
(b) Except as disclosed in the SNB Disclosure Schedule and
except for loan agreements made and loan commitments issued in the ordinary
course of business, (i) as of the date of this Agreement, SNB is not a party to
or bound by any commitment, agreement or other instrument which is material to
the business, operations, assets or financial condition of SNB (but in no event
shall a contract for less than $50,000 a year be deemed material under this
paragraph) (ii) no commitment, agreement or other instrument to which SNB is a
party or by which it is bound limits the freedom of SNB to compete in any line
of business or with any person, and (iii) SNB is not a party to any collective
bargaining agreement.
(c) Except as disclosed in the SNB Disclosure Schedule,
neither SNB nor, to the best knowledge of SNB, 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 SNB is or will be the creditor) or arrangement, except for defaults which
individually or in the aggregate would not have a material adverse effect on the
business, operations, assets or financial condition of SNB.
3.14. Properties and Insurance.
0 (a) SNB owns no real property. SNB has good title to all
material assets and properties, whether tangible or intangible, reflected in
SNB's statement of condition as of June 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 June
30, 1997), subject to no encumbrances, liens, mortgages, security interests or
pledges, except (i) those items that secure liabilities that are reflected in
said statement of condition or the notes thereto or that secure liabilities
incurred in the ordinary course of business after the date of such statement of
condition, (ii) statutory liens for amounts not yet delinquent or which are
being contested in good faith, and (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 SNB. Except as affected by the transactions contemplated hereby, SNB as
lessee has the right under valid and subsisting leases to occupy, use, possess
and control all real property leased by SNB in all material respects as
presently occupied, used, possessed and controlled by SNB.
(b) The business operations and all insurable properties and
assets of SNB are insured for its benefit against all risks which, in the
reasonable judgment of the management of SNB, 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 SNB adequate for the business engaged in by
SNB. As of the date hereof, SNB has not received any notice of cancellation or
notice of a material amendment of any such insurance policy or bond and, to the
best of its knowledge, is not in default under any such policy or bond, no
coverage thereunder is being disputed and all material claims thereunder have
been filed in a timely fashion.
3.15. Minute Books. The minute books of SNB contain accurate
records of all meetings and other corporate action held of the stockholders and
Board of Directors (including committees of the Board of Directors), except
where the failure to so maintain such records would not have a material adverse
effect on the business, operations, assets or financial condition of SNB.
3.16. Environmental Matters. Except as disclosed in the SNB
Disclosure Schedule, SNB has not received any written notice, citation, claim,
assessment, proposed assessment or demand for abatement alleging that SNB
(either directly or as a successor-in-interest in connection with the
enforcement of remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or cleanup of any
condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters which correction or
cleanup would be material to the business, operations, assets or financial
condition of SNB. Except as disclosed in the SNB Disclosure Schedule, SNB has no
actual knowledge that any toxic or hazardous substances or materials have been
emitted, generated, disposed of or stored on any property currently owned or
leased by SNB, or owned or leased by SNB in the three years prior to the date of
this Agreement in any manner that violated any applicable federal, state or
local law or regulation governing or pertaining to such substances and
materials, the violation of which could reasonably be expected to have a
material adverse effect on the business, operations, assets or financial
condition of SNB. Except as disclosed in the SNB Disclosure Schedule, all
property owned or leased by SNB which was subject to the provisions of the
Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq. as amended ("ISRA"),
complied with all applicable provisions of ISRA at the time such property was
sold or transferred by SNB.
3.17. Reserves. As of June 30, 1997, the allowance for
possible loan losses in the SNB Financial Statements was adequate based upon all
factors required to be considered by SNB at that time in determining the amount
of such allowance. Except as set forth in the SNB Disclosure Schedule, the
methodology used to compute the allowance for possible loan losses complies in
all material respects with all applicable policies of the Comptroller. As of
June 30, 1997, the valuation allowance for Other Real Estate Owned ("OREO")
properties in the SNB Financial Statements was adequate based upon all factors
required to be considered by SNB at that time in determining the amount of such
allowance.
3.18. No Parachute Payments. Except pursuant to the Employment
Agreements referred to in Section 6.2(c) of this Agreement no officer, director,
employee or agent (or former officer, director, employee or agent) of SNB is
entitled now, or will or may be entitled to as a consequence of this Agreement
or the Bank Merger, to any payment or benefit from SNB or the Bank or HUBCO
which if paid or provided would constitute an "excess parachute payment", as
defined in Section 280G of the Code or regulations promulgated thereunder.
3.19. Agreements with Bank Regulators. Except as set forth in
the SNB Disclosure Schedule, SNB is not a party to any commitment letter, board
resolution submitted to a regulatory authority or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, any court, governmental authority or other regulatory
or administrative agency or commission, domestic or foreign ("Governmental
Entity") which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies or its
management, nor has SNB 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 set forth in the SNB Disclosure Schedule, SNB is not
required by Section 32 of the Federal Deposit Insurance Act to give prior notice
to a Federal banking agency of the proposed addition of an individual to its
board of directors or the employment of an individual as a senior executive
officer.
3.20. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BANK
References herein to the "The Bank 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
the Bank to SNB.
The Bank hereby represents and warrants to SNB as follows:
4.1. Corporate Organization. The Bank is a state-chartered
commercial bank, validly existing and in good standing under the laws of the
State of New Jersey, whose deposits are insured by the FDIC to the fullest
extent permitted by law. The Bank has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business as it is
now being conducted, and is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed, qualified or in good standing would not have a material
adverse effect on the business, operations, assets or financial condition of the
Bank or its subsidiaries (defined below), taken as a whole. The Bank Disclosure
Schedule sets forth true and complete copies of the certificate of incorporation
and by-laws of the Bank as in effect on the date hereof.
4.2. Authority; No Violation.
(a) The Bank 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 the Bank in accordance
with its Certificate of Incorporation and applicable laws and regulations. No
other corporate proceedings on the part of the Bank are necessary to consummate
the transactions so contemplated. This Agreement has been duly and validly
executed and delivered by the Bank and constitutes the valid and binding
obligations of the Bank, enforceable against the Bank in accordance with its
terms.
(b) Neither the execution or delivery of this Agreement by the
Bank, nor the consummation by the Bank of the transactions contemplated hereby
in accordance with the terms hereof or compliance by the Bank with any of the
terms or provisions hereof will (i) violate any provision of the Certificate of
Incorporation or By-laws of the Bank, (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 the Bank or any of its 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, SNB interest, charge or
other encumbrance upon any of the properties or assets of the 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
the Bank is a party, or by which the Bank 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 prevent or delay the consummation of
the transactions contemplated hereby. Except for consents and approvals of or
filings or registrations with or notices to the FDIC, the Commissioner, the
Department, the Comptroller, or the Board of Governors of the Federal Reserve
System, if required, 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 the Bank in connection with (x) the execution and delivery by the
Bank of this Agreement, and (y) the consummation by the Bank of the Bank Merger
and the other transactions contemplated hereby except such as are listed in the
Bank Disclosure Schedule. To the best of the Bank's knowledge, no fact or
condition exists which the Bank has reason to believe will prevent it from
obtaining the aforementioned consents and approvals.
4.3. Brokerage Fees. Neither the Bank 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, except pursuant to the agreement
with Roberts, Williams & Whitehall, a copy of which is contained in the Bank
Disclosure Schedule.
4.4. Legal Proceedings. Except for ordinary routine litigation
incidental to the business of the Bank, the Bank is not a party to any, and
there are no pending or, to the best of the Bank's knowledge, threatened legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature against the Bank which, if decided adversely to the
Bank, would prevent or delay the consummation of the transactions contemplated
hereby. Except as disclosed in the Bank Disclosure Schedule, the Bank is not a
party to any order, judgment or decree entered in any lawsuit or proceeding
which would prevent or delay the consummation of the transactions contemplated
hereby.
4.5. The Bank Information. The information relating to the
Bank and HUBCO, and the agreements and arrangements with respect to the
transactions contemplated hereby, in the Proxy Statement, as of the date of the
mailing of the Proxy Statement, and up to and including the date of the meeting
of stockholders of SNB to which such Proxy Statement 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.
4.6. Funding and Capital Adequacy. At the Effective Time, the
Bank will have sufficient funds to consummate the transactions contemplated
hereby and sufficient capital to satisfy all applicable regulatory capital
requirements.
4.7. Disclosures. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE V - COVENANTS OF THE PARTIES
5.1. Conduct of the Business of SNB. During the period from
the date of this Agreement to the Effective Time, SNB shall conduct its business
only in the ordinary course and consistent with prudent banking practice, except
for transactions permitted hereunder or with the prior written consent of the
Bank, which consent will not be unreasonably withheld. SNB also shall use all
reasonable efforts to (i) preserve its business organization, (ii) keep
available to itself the present services of its employees and (iii) preserve for
itself and the Bank the goodwill of its customers and others with whom business
relationships exist.
5.2. Negative Covenants.
(a) SNB agrees that from the date hereof to the Effective
Time, except as otherwise approved by the Bank in writing or as permitted or
required by this Agreement, it will not:
(i) change any provision of its Articles of Association or
By-laws or any similar governing documents of SNB;
(ii) change the number of shares of its authorized or issued
capital stock or issue or grant any subscription, option, warrant,
call, commitment, right to purchase or agreement of any character
relating to the authorized or issued capital stock of SNB 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;
(iii) grant any severance or termination pay (other than
pursuant to policies or contracts of SNB in effect on the date hereof
and disclosed to the Bank in the SNB Disclosure Schedule) to, or enter
into or amend any employment or severance agreement with, any of its
directors, officers or employees, except as specified in the SNB
Disclosure Schedule; 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 with respect to employee
increases in the ordinary course of business and consistent with past
practices and policies, and except that SNB may transfer title to
certain automobiles currently used by certain of its officers to such
officers for nominal or no consideration, all as specified in Section
5.2(a)(iii) of the SNB Disclosure Schedule;
(iv) sell or dispose of any substantial amount of assets or
voluntarily incur any significant liabilities other than in the
ordinary course of business consistent with past practices and policies
or in response to substantial financial demands upon the business of
SNB;
(v) except as set forth in the SNB Disclosure Schedule, make
any capital expenditures other than pursuant to binding commitments
existing on the date hereof and other than expenditures necessary to
maintain existing assets in good repair;
(vi) except as set forth in the SNB Disclosure Schedule, file
any applications or make any contract with respect to branching or site
location or relocation;
(vii) agree to acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or entity;
(viii) make any material change in its accounting methods or
practices, other than changes required in accordance with GAAP;
(ix) take any action that would result in any of its
representations and warranties contained in Article III of this
Agreement not being true and correct in any material respect at the
Effective Time or that would cause any of its conditions to Closing not
to be satisfied; or
(x) agree to do any of the foregoing.
5.3. No Solicitation. SNB and FIC and the officers and
directors of FIC, 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 the Bank or 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 SNB (an
"Acquisition Transaction"). SNB will promptly communicate to the Bank the terms
of any proposal, whether written or oral, which it may receive in respect of any
such Acquisition Transaction.
5.4. Current Information. During the period from the date of
this Agreement to the Effective Time, each of SNB and the Bank 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, SNB
shall provide the Bank with internally prepared profit and loss statements no
later than 15 days after the close of each calendar month. As soon as reasonably
available, but in no event more than 45 days after the end of each fiscal
quarter (other than the last fiscal quarter of each fiscal year) ending on or
after June 30, 1997, SNB will deliver to the Bank its quarterly report. As soon
as reasonably available, but in no event more than 90 days after the end of each
calendar year, SNB will deliver to the Bank its Annual Report.
5.5. Access to Properties and Records; Confidentiality.
(a) SNB shall permit the Bank and its representatives
reasonable access to its properties, and shall disclose and make available to
the Bank and its representatives 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 the
Bank and its representatives may have a reasonable interest. SNB shall not be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer, would
contravene any law, rule, regulation, order or judgment or would waive any
privilege. The parties will use their best efforts to obtain waivers of any such
restriction (other than waivers of the attorney-client privilege) and in any
event make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(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 Bank Merger
contemplated hereby and shall be treated as the sole property of the party
delivering the information until consummation of the Bank Merger contemplated
hereby and, if such Merger shall not occur, each party and each party's advisors
shall return to the other party all documents or other materials containing,
reflecting or referring to such information, will not retain any copies of such
information, shall use its best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. In the event that the Bank 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
referred to in Section 5.7 hereof, the parties hereto shall cooperate in the
preparation and filing by SNB an appropriate proxy statement satisfying all
applicable requirements of applicable state and federal laws, including the
rules and regulations of the Comptroller (such proxy statement in the form
mailed by SNB to the SNB shareholders together with any and all amendments or
supplements thereto, being herein referred to as the "Proxy Statement").
(b) The Bank shall furnish SNB with such information
concerning the Bank as is necessary in order to cause the Proxy Statement,
insofar as it relates to the Bank, to comply with Section 5.6(a) hereof. The
Bank agrees promptly to advise SNB if at any time prior to the SNB stockholders'
meeting referred to in Section 5.7 hereof, any information provided by the Bank
in the Proxy Statement becomes incorrect or incomplete in any material respect
and to provide SNB with the information needed to correct such inaccuracy or
omission. The Bank shall furnish SNB with such supplemental information as may
be necessary in order to cause the Proxy Statement, insofar as it relates to the
Bank, to comply with Section 5.6(a) after the mailing thereof to SNB
shareholders.
(c) SNB shall as promptly as practicable file the Proxy
Statement with the Comptroller to the extent necessary, and each of the Bank and
SNB shall promptly notify the other of all communications, oral or written, with
the Comptroller concerning the Proxy Statement.
(d) SNB shall amend or supplement the Proxy Statement if, at
any time prior to the SNB stockholders' meeting referred to in Section 5.6(a)
hereof, any information provided by SNB or the Bank in the Proxy Statement
becomes incorrect or incomplete in any material respect.
(e) The parties hereto will cooperate with each other and use
their reasonable efforts to prepare all necessary documentation, to effect all
necessary filings and to obtain all necessary permits, consents, approvals and
authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement as soon as possible,
including, without limitation, those required by the Comptroller, the FDIC, the
Commissioner, the Department and the NJDEP. The parties shall each have the
right to review in advance all filings with, including all information relating
to the other, as the case may be, and any of their respective Subsidiaries, if
any, which appears in any filing made with, or written material submitted to,
any third party or governmental body in connection with the transactions
contemplated by this Agreement.
(f) Each of the parties will promptly furnish each other with
copies of written communications received by them or any of their respective
Subsidiaries, if any, from, or delivered by any of the foregoing to, any
governmental body in respect of the transactions contemplated hereby with
respect to the Bank Merger.
(g) SNB acknowledges that the Bank is in or may be in the
process of acquiring other banks and financial institutions and that in
connection with such acquisitions, limited information concerning SNB may be
required to be included in the registration statements, if any, for the sale of
securities of the Bank's parent corporation, HUBCO, Inc. ("HUBCO") or in
Securities and Exchange Commission ("SEC") reports in connection with such
acquisitions. SNB agrees to provide the Bank with any information, certificates,
documents or other materials about SNB 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.
(h) The parties shall use all reasonable efforts to cause the
filings with the Comptroller of the Proxy Statement, and all regulatory filings
with the FDIC, the Commissioner and the Comptroller, to be filed as promptly as
practicable after the date hereof.
5.7. Approval of Stockholders; Stockholder Approval
Requirements. SNB will take all steps necessary to duly call, give notice of,
convene and hold a meeting of the stockholders of SNB (the "Stockholders
Meeting") for the purpose of securing the approval of stockholders of this
Agreement and for the purpose of securing approval by a vote of 75% or more,
after disclosure to shareholders of all of the material facts, of the employment
contracts with John J. Fedigan and Frank Zegar in the form contained in the Bank
Merger Agreement, in accordance with the approval requirements of Section
280G(b)(5)(B) of the Code, including those set forth in proposed Treasury
Regulation Section 1.280G-1, Q/A-7 or, any modifications or amendments thereof,
and any final Treasury Regulations addressing this issue applicable to any such
action or pronouncements (the "Stockholder Approval Requirements"). SNB will use
its best efforts to obtain as promptly as practicable, such approvals and
cooperate and consult with the Bank with respect to each of the foregoing
matters.
5.8. Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions to Closing and to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated by this Agreement and using its reasonable efforts to
prevent the breach of any representation, warranty, covenant or agreement of
such party contained or referred to in this Agreement and to promptly remedy the
same. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take all such
necessary action. Nothing in this section shall be construed to require any
party to participate in any threatened or actual legal, administrative or other
proceedings (other than proceedings, actions or investigations to which it is a
party or subject or threatened to be made a party or subject) in connection with
consummation of the transactions contemplated by this Agreement unless such
party shall consent in advance and in writing to such participation and the
other party agrees to reimburse and indemnify such party for and against any and
all costs and damages related thereto.
From the date hereof to the Effective Time, except as
otherwise approved by SNB in writing or as permitted or required by this
Agreement, the Bank will not take any action that would result in any of its
representations and warranties contained in Article IV of this Agreement not to
be true and correct in any material respect at the Effective Time or that would
cause any of the Bank's conditions to Closing not to be satisfied.
5.9. Public Announcements. The Bank and SNB 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 Bank
Merger transaction contemplated hereby, and the Bank and SNB agree that unless
approved mutually by them in advance, they will not issue any press release or
written statement for general circulation relating primarily to the transaction
contemplated hereby, except as may be otherwise required by law or regulation in
the opinion of counsel.
5.10. Failure to Fulfill Conditions. In the event that the
Bank or SNB determines that a material condition to its obligation to consummate
the transactions contemplated hereby cannot be fulfilled on or prior to the
Cut-Off Date (as hereinafter defined) and that it will not waive that condition,
it will promptly notify the other party. Except for any acquisition or merger
discussions the Bank may enter into with other parties, SNB and the Bank will
promptly inform the other of any facts applicable to SNB or the Bank,
respectively, or their respective directors or officers, that would be likely to
prevent or materially delay approval of the Bank Merger by any governmental
authority or which would otherwise prevent or materially delay completion of the
Bank Merger.
5.11. Indemnification and Insurance.
(a) For a period of six years after the Effective Time, or in
the case of Claims (as hereinafter defined) made prior to the end of such
six-year period, until such Claims are finally resolved, the Bank 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 SNB or any Subsidiary of SNB or serves
or has served at the request of SNB 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, (i) in connection with, arising out of or relating
to any threatened, pending or completed claim, action, suit or proceeding
(whether civil, criminal, administrative or investigative), including, without
limitation, any and all claims, actions, suits, proceedings or investigations by
or on behalf of or in the right of or against SNB, or by any present or former
shareholder of SNB (each a "Claim" and collectively "Claims"), including,
without limitation, any Claim which is based upon, arises out of or in any way
relates to the Bank Merger, the Proxy Statement, this Agreement, any of the
transactions contemplated by this Agreement, the Indemnitee's service as a
member of SNB's Board of Directors or any committee of SNB's Board of Directors,
the events leading up to the execution of this Agreement, any statement,
recommendation or solicitation made in connection therewith or related thereto
and any breach of any duty in connection with any of the foregoing, and (ii) in
connection with, arising out of or relating to the enforcement of the
obligations of the Bank set forth in this Section 5.11, but in each case only to
the fullest extent permitted under any applicable law, SNB's Articles of
Association or its By-Laws (and the Bank shall also advance expenses as incurred
to the fullest extent permitted under any thereof). Notwithstanding the
foregoing, the Bank shall not provide any indemnification or advance any
expenses with respect to any Claim which relates to a personal benefit
improperly paid or provided, or alleged to have been improperly paid or
provided, to the Indemnitee, but the Bank shall reimburse the Indemnitee for
costs incurred by the Indemnitee with respect to such Claim when and if a court
of competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that the Indemnitee was not
improperly paid or provided with the personal benefit alleged in the Claim.
(b) From and after the Effective Time, the Bank shall assume
and honor any obligation of SNB immediately prior to the Effective Time with
respect to the indemnification of the Indemnitees arising out of SNB's Articles
of Association or By-Laws as if such obligations were pursuant to a contract or
arrangement between the Bank and such Indemnitees.
(c) In the event the Bank 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 the Bank assume the obligations set forth in this Section 5.11.
(d) The Bank shall have SNB's officers and directors covered
under either SNB's existing officers' and directors' liability insurance policy
or a rider to the Bank's then current officers' and directors' liability
insurance ("D&O Insurance") policy for periods of at least six years after the
Effective Time. However, the Bank only shall be required to insure such persons
upon terms and for coverages substantially similar to SNB's existing D&O
insurance.
(e) Any Indemnitee wishing to claim indemnification under
Section 5.11, upon learning of any such Claim, shall promptly notify the Bank
thereof, but the failure to so notify shall not relieve the Bank of any
liability it may have to such Indemnitee if such failure does not materially
prejudice the Bank. In the event of any such Claim (whether arising before or
after the Effective Time) as to which indemnification under this Section 5.11 is
applicable, (a) the Bank shall have the right to assume the defense thereof and
the Bank shall not be liable to such Indemnitees for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnitees in
connection with the defense thereof, except that if the Bank elects not to
assume such defense or counsel for the Indemnitees advises that there are issues
which raise conflicts of interest between the Bank and the Indemnitees, the
Indemnitees may retain counsel satisfactory to them, and the Bank shall pay the
reasonable fees and expenses of such counsel for the Indemnitees as statements
therefor are received; provided however, that the Bank shall be obligated
pursuant to this paragraph (e) to pay for only one firm of counsel for all
Indemnitees in any jurisdiction with respect to a matter unless the use of one
counsel for such Indemnitees would present such counsel with a conflict of
interest that is not waived and (b) the Indemnitees will cooperate in the
defense of any such matter. The Bank shall not be liable for settlement of any
Claim hereunder unless such settlement is effected with its prior written
consent; provided however, that the Bank shall not have any obligation hereunder
to any Indemnitee when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and nonappealable,
that the indemnification of such Indemnitee in the manner contemplated hereby is
prohibited by applicable law or public policy.
5.12. Disclosure Supplements. From time to time prior to the
Effective Time, each party hereto will promptly supplement or amend (by written
notice to the other) its respective Disclosure Schedule delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Disclosure Schedule or which is necessary to
correct any information in such Disclosure Schedule which has been rendered
materially inaccurate thereby. For the purpose of determining satisfaction of
the conditions set forth in Article VI, no supplement or amendment to such
Disclosure Schedule shall correct or cure any warranty which was untrue when
made, but shall enable the disclosure of subsequent facts or events to maintain
the truthfulness of any warranty.
5.13. Transaction Expenses of SNB. SNB shall advise the Bank
monthly of all out-of-pocket expenses which SNB has incurred (whether billed or
unbilled) in the prior month in connection with this transaction. SNB shall not
pay any expense until at least 20 days after it has provided the Bank in writing
with a notice of the expense and SNB will not pay any such expenses if the Bank
objects to the amounts as unreasonable. SNB shall not pay or incur any expenses,
including but not limited to legal fees, on behalf of its officers or directors
in negotiating the terms of any employment, severance or compensation
arrangements connected herewith, including but not limited to the agreements for
John J. Fedigan or Frank Zegar, which expenses shall be borne by the individuals
themselves. The total transaction expenses incurred by SNB shall not exceed
$50,000. Any transaction expenses incurred by SNB in excess of $50,000 shall be
paid by FIC.
ARTICLE VI - CLOSING CONDITIONS
6.1. Conditions of Each Party's Obligations Under this
Agreement. The respective obligations of each party under this Agreement to
consummate the Bank 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) Consummation of the FIC Merger. There shall occur
simultaneously with the Closing hereunder a closing under the FIC Merger
Agreement such that the FIC Merger shall be consummated immediately before the
Effective Time hereunder.
(b) Approval of SNB Stockholders. This Agreement and the
transactions contemplated hereby (including approval of the Employment
Agreements by the requisite vote and with the disclosure required under Section
280G(b)(5) of the Code) shall have been approved by the requisite vote of the
stockholders of SNB at a meeting called for that purpose. The SNB proxy
statement, if necessary, shall have been cleared for distribution by the
Comptroller.
(c) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the Comptroller, the Commissioner, the FDIC and the NJDEP) required
to consummate the transactions contemplated hereby shall have been obtained
without any term or condition which would materially impair the value of SNB to
the Bank. 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) shall have expired.
(d) Suits and Proceedings. No order, judgment or decree shall
be outstanding against a party hereto or a third party that would have the
effect of preventing completion of the Bank Merger; no suit, action or other
proceeding shall be pending or threatened by any governmental body in which it
is sought to restrain or prohibit the Bank Merger; and no suit, action or other
proceeding shall be pending before any court or governmental agency in which it
is sought to restrain or prohibit the Bank Merger or obtain other substantial
monetary or other relief against one or more parties hereto in connection with
this Agreement and which the Bank or SNB determines in good faith, based upon
the advice of their respective counsel, makes it inadvisable to proceed with the
Bank Merger because any such suit, action or proceeding has a significant
potential to be resolved in such a way as to deprive the party electing not to
proceed of any of the material benefits to it of the Bank Merger.
6.2. Conditions to the Obligations of the Bank Under this
Agreement. The obligations of the Bank 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 SNB. Except for those representations which are made as of a particular date,
the representations and warranties of SNB 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. SNB 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 SNB 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 SNB 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 SNB Disclosure Schedule,
materially adversely affect the representation as to which the supplement or
amendment relates.
(b) Opinion of Counsel to SNB. The Bank shall have received an
opinion of counsel to SNB, dated the Closing Date, in form and substance
reasonably satisfactory to the Bank, covering the matters set forth on Exhibit
6.2 hereto.
(c) Employment Agreements. Each of John J. Fedigan and Frank
Zegar shall have executed and delivered to the Bank and HUBCO the Employment
Agreement with respect to such person substantially in the form of Exhibits A
and B hereto, respectively, which Employment Agreements shall become effective
on the Effective Date.
(d) Certificates. SNB shall have furnished the Bank with such
certificates of its officers or other documents to evidence fulfillment of the
conditions set forth in this Section 6.2 as the Bank may reasonably request.
(e) No Parachute Payments. No payments under any severance
agreement or any other plan or arrangement with SNB or the Bank or HUBCO will
constitute an "excess parachute payment," as defined in Section 280G of the Code
or regulations promulgated thereunder.
(f) Legal Fees. SNB shall have furnished the Bank with letters
from all attorneys representing SNB or to be paid by SNB in any matters
certifying that all legal fees have been paid in full for services rendered as
of the Effective Time.
(g) Merger-Related Expense. SNB shall have provided the Bank
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 and the
merger-related expenses of SNB shall be reasonable and shall not exceed $50,000.
6.3. Conditions to the Obligations of SNB Under this
Agreement. The obligations of SNB 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 the Bank. Except for those representations which are made as of a particular
date, the representations and warranties of the Bank 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. The Bank shall have performed in all
material respects, the agreements, covenants and obligations to be performed by
it prior to the Closing Date. With respect to any representation or warranty
which as of the Closing Date has required a supplement or amendment to the Bank
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 Bank 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 Bank
Disclosure Schedule, materially adversely affect the representation as to which
the supplement or amendment relates.
(b) Opinion of Counsel to the Bank. SNB shall have received an
opinion of counsel to the Bank, dated the Closing Date, in form and substance
reasonably satisfactory to SNB, covering the matters set forth on Exhibit 6.3
hereto.
(c) Fairness Opinion. SNB shall have received an updated
opinion from Sheshunoff, dated within five (5) business days prior to the date
the Proxy Statement is mailed to SNB's stockholders, to the effect that, in its
opinion, the consideration to be paid to stockholders of SNB hereunder is fair
to such stockholders from a financial point of view ("Fairness Opinion").
(d) Employment Agreements. The Bank and HUBCO shall have
executed and delivered to each of John J. Fedigan and Frank Zegar the Employment
Agreement with respect to such person substantially in the form of Exhibits A
and B hereto, respectively, which Employment Agreements shall become effective
on the Effective Date.
(e) Certificates. The Bank shall have furnished SNB 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 SNB may
reasonably request.
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated prior to
the Effective Time, whether before or after approval of this Agreement by the
stockholders of SNB:
(a) by mutual written consent of the parties hereto;
(b) (i) by SNB or the Bank if the Effective Time shall not
have occurred on or prior to December 31, 1997 (the "Cut-Off Date"), unless the
failure of such occurrence shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe its agreements set forth herein
to be performed or observed by such party at or before the Effective Time, or
(ii) by the Bank or SNB if a vote of the stockholders of SNB is taken and such
stockholders fail to approve this Agreement and the Employment Agreements at the
meeting (or any adjournment thereof) held for such purpose;
(c) by the Bank or SNB upon written notice to the other if any
application for regulatory or governmental approval necessary to consummate the
Bank Merger and the other transactions contemplated hereby shall have been
denied or withdrawn at the request or recommendation of the applicable
regulatory agency or governmental authority or by the Bank upon written notice
to SNB if any such application is approved with conditions which materially
impair the value of SNB to the Bank;
(d) by the Bank if (i) there shall have occurred a material
adverse change in the business, operations, assets, or financial condition of
SNB from that disclosed by SNB in SNB's Form 10-QSB for June 30, 1997 and SNB's
Annual Report to Shareholders for the year ended December 31, 1996; or (ii)
there was a material breach in any representation, warranty, covenant, agreement
or obligation of SNB hereunder and such breach shall not have been remedied
within 30 days after receipt by SNB of notice in writing from the Bank to SNB
specifying the nature of such breach and requesting that it be remedied;
(e) by the Bank if the conditions set forth in Section 6.1 and
6.2 are not satisfied and are not capable of being satisfied by the Cut-Off
Date;
(f) by SNB if the conditions set forth in Section 6.1 and 6.3
are not satisfied and are not capable of being satisfied by the Cut-Off Date;
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either the Bank or SNB pursuant to Section
7.1, this Agreement (other than Section 5.5(b), the third from the last sentence
of Section 5.6(g), 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 SNB but, after any such adoption, no amendment shall be made
which reduces the amount or changes the form of the consideration to be
delivered to the stockholders of SNB 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 Bank Merger, (i) extend the time for the performance
of any of the obligations or other acts of the other parties hereto; (ii) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant thereto; or (iii) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party against which the waiver is
sought to be enforced.
ARTICLE VIII - MISCELLANEOUS
8.1. Expenses.
(a) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby (including legal, accounting
and investment banking fees and expenses) shall be borne by the party incurring
such costs and expenses.
(b) Notwithstanding any provision in this Agreement to the
contrary, in the event that either of the parties shall willfully default in its
obligations hereunder, the non-defaulting party may pursue any remedy available
at law or in equity to enforce its rights and shall be paid by the willfully
defaulting party for all damages, costs and expenses, including without
limitation legal, accounting, investment banking and printing expenses, incurred
or suffered by the non-defaulting party in connection herewith or in the
enforcement of its rights hereunder if such non-defaulting party prevails.
8.2. Survival. Except for the provisions of Article II,
Section 5.8 and Section 5.11 hereof, the respective representations, warranties,
covenants and agreements of the parties to this Agreement shall not survive the
Effective Time, but shall terminate as of the Effective Time.
8.3. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by registered or certified mail, postage prepaid, as follows:
(a) If to the Bank, to:
Hudson United Bank
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 a 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.
(b) If to SNB, to:
Security National Bank & Trust Company of New Jersey
30A Vreeland Road
Florham Park, New Jersey 07932
Attn.: John J. Fedigan, Chairman
Copy to:
Shanley & Fisher, P.C.
131 Madison Avenue
Morristown, New Jersey 07962
Attn.: John Kandravy, 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
so mailed.
8.4. Parties in Interest. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Nothing in this Agreement is intended to confer,
expressly or by implication, upon any other person any rights or remedies under
or by reason of this Agreement, except for the Indemnitees covered by Section
5.11 hereof.
8.5. Entire Agreement. This Agreement, which includes the
Disclosure Schedules hereto and the other documents, agreements and instruments
executed and delivered pursuant to or in connection with this Agreement,
contains the entire Agreement between the parties hereto with respect to the
transactions contemplated by this Agreement and supersedes all prior
negotiations, arrangements or understandings, written or oral, with respect
thereto.
8.6. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
8.7. Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey, without giving effect to the principles of
conflicts of laws thereof.
8.8. Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
IN WITNESS WHEREOF, the Bank and SNB have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
ATTEST: HUDSON UNITED BANK
By: D. LYNN VAN BORKULO-NUZZO By: KENNETH T. NEILSON
---------------------------- --------------------------------------
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, Chairman,
Executive Vice President and President and Chief Executive Officer
Corporate Secretary
ATTEST: SECURITY NATIONAL BANK & TRUST
COMPANY OF NEW JERSEY
By: LEE T. SMITH, JR. By: JOHN J. FEDIGAN
------------------------------ --------------------------------------
Lee T. Smith, Jr., Asst. Secretary John J. Fedigan, Chairman
<PAGE>
CERTIFICATE OF SNB DIRECTORS
Reference is made to the Agreement and Plan of Merger, dated as of
August 27, 1997 (the "Agreement"), between Hudson United Bank (the "Bank"), a
New Jersey chartered commercial banking corporation, and Security National Bank
& Trust Company of New Jersey, a national banking association ("SNB").
Capitalized terms used herein have the meanings given to them in the Agreement.
Each of the following persons, collectively being all of the directors
of SNB, agrees to vote or cause to be voted all shares of SNB Common Stock which
are held by such person, or over which such person exercises full voting
control, in favor of the Bank Merger.
JOHN J. FEDIGAN LEE T. SMITH, JR.
- -------------------------------------- ----------------------------
John J. Fedigan Lee T. Smith, Jr.
FRANK A. ZEGAR LEON G. SMITH, M.D.
- -------------------------------------- ----------------------------
Frank A. Zegar Leon G. Smith, M.D.
ROBERT J. DEL TUFO VICTOR A. VIGGIANO
- -------------------------------------- ----------------------------
Robert J. Del Tufo Victor A. Viggiano
MICHAEL S. KURTZ BARRY YESKEL
- -------------------------------------- ----------------------------
Michael S. Kurtz Barry Yeskel
ARMAND E. LEMBO
- --------------------------------------
Armand E. Lembo
Dated: September 3, 1997
AGREEMENT AND PLAN OF MERGER
by
and
among
HUBCO, INC.
and
FS ACQUISITION CORPORATION
and
FIDUCIARY INVESTMENT COMPANY OF NEW JERSEY
Dated as of August 27, 1997
<PAGE>
TABLE OF CONTENTS
THE MERGER...................................................................2
1.1 The Merger............................................................2
1.2 Effect of the Merger..................................................2
1.3 Certificate of Incorporation..........................................2
1.4 By-laws...............................................................2
1.5 Directors and Officers................................................2
1.6 Merger of Surviving Corporation Into HUBCO............................2
1.7 Effective Time and Closing............................................3
CONVERSION OF FIC SHARES.....................................................3
2.1 Conversion of FIC Common Stock........................................3
2.2 Conversion Procedures.................................................4
2.3 Stock Transfer Books..................................................5
2.4 No Right to Dissent...................................................6
REPRESENTATIONS AND WARRANTIES OF FIC........................................6
3.1 Corporate Organization................................................6
3.2 Capitalization........................................................6
3.3 Authority; No Violation...............................................7
3.4 Financial Statements..................................................8
3.5 Broker's and Other Fees...............................................8
3.6 Absence of Certain Changes or Events..................................9
3.7 Legal Proceedings.....................................................9
3.8 Taxes and Tax Returns.................................................9
3.9 Employee Benefit Plans...............................................10
3.10 Reports.............................................................10
3.11 FIC and SNB Information.............................................11
3.12 Compliance with Applicable Law......................................11
3.13 Certain Contracts...................................................11
3.14 Properties and Insurance............................................12
3.15 Minute Books........................................................12
3.16 Environmental Matters...............................................12
3.17 Loans...............................................................13
3.18 No Parachute Payments...............................................13
3.19 Agreements with Bank Regulators.....................................13
3.20 SNB Representations.................................................14
3.21 Disclosure..........................................................14
REPRESENTATIONS AND WARRANTIES OF HUBCO.....................................14
4.1 Corporate Organization...............................................14
4.2 Authority; No Violation..............................................14
4.3 Broker's and Other Fees..............................................15
4.4 HUBCO, Newco and Bank Information....................................15
4.5 Sufficiency of Funds.................................................16
4.6 Legal Proceedings....................................................16
4.7 Bank Representations.................................................16
4.8 Disclosure...........................................................16
COVENANTS OF THE PARTIES....................................................16
5.1 Conduct of the Business of FIC.......................................16
5.2 Negative Covenants...................................................16
5.3 No Solicitation......................................................17
5.4 Current Information..................................................17
5.5 Access to Properties and Records; Confidentiality....................18
5.6 Regulatory Matters...................................................19
5.7 Approval of Stockholders; Stockholder Approval Requirements..........20
5.8 Further Assurances...................................................20
5.9 Public Announcements.................................................21
5.10 Failure to Fulfill Conditions.......................................21
5.11 Disclosure Supplements..............................................21
5.12 Transaction Expenses of FIC and HUBCO...............................21
5.13 Indemnification.....................................................22
CLOSING CONDITIONS..........................................................24
6.1 Conditions to Each Party's Obligations Under this Agreement..........24
6.2 Conditions to the Obligations of HUBCO Under this Agreement..........25
6.3 Conditions to the Obligations of FIC Under this Agreement............25
TERMINATION, AMENDMENT AND WAIVER...........................................26
7.1 Termination..........................................................26
7.2 Effect of Termination................................................27
7.3 Amendment............................................................27
7.4 Extension; Waiver....................................................27
MISCELLANEOUS...............................................................28
8.1 Expenses.............................................................28
8.2 Survival.............................................................28
8.3 Notices..............................................................28
8.4 Parties in Interest; Assignability...................................29
8.5 Entire Agreement.....................................................29
8.6 Counterparts.........................................................29
8.7 Governing Law........................................................30
8.8 Descriptive Headings.................................................30
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of August 27, 1997 (this
"Agreement"), is among HUBCO, Inc. ("HUBCO"), a New Jersey corporation and
registered bank holding company, FS Acquisition Corporation, a New Jersey
corporation and wholly-owned subsidiary of HUBCO ("Newco"), and Fiduciary
Investment Company of New Jersey, a New Jersey corporation and registered bank
holding company ("FIC").
WHEREAS, the respective Boards of Directors of HUBCO, Newco and FIC
have each determined that it is in the best interests of HUBCO and FIC and their
respective shareholders for HUBCO to acquire FIC by (i) merging Newco with and
into FIC with FIC surviving as a wholly-owned subsidiary of HUBCO, and FIC
shareholders receiving the consideration hereinafter set forth, and (ii)
immediately thereafter merging FIC into HUBCO with HUBCO as the surviving
corporation (the merger of Newco into FIC and FIC into HUBCO being collectively
referred to as the "FIC Merger") and (iii) simultaneously with the FIC Merger,
merging Security National Bank & Trust Company of New Jersey, a nationally
chartered banking institution and approximately 79% owned subsidiary of FIC
("SNB") with and into Hudson United Bank, a New Jersey chartered banking
institution and wholly owned subsidiary of HUBCO (the "Bank") with the Bank
surviving; and
WHEREAS, in order to have the Bank merge with SNB, the Bank and SNB
have entered into a separate Agreement and Plan of Merger, dated the date hereof
(the "Bank Merger Agreement"), providing for the merger of SNB into the Bank
(the "Bank Merger"); and
WHEREAS, the Bank Merger and the FIC Merger, are contingent upon each
other; and
WHEREAS, the Boards of Directors of SNB and the Bank have approved the
Bank Merger Agreement; and
WHEREAS, the Boards of Directors of FIC, HUBCO and Newco have duly
adopted and approved this Agreement and the Board of Directors of FIC has
directed that it be submitted to FIC's shareholders for approval; and
WHEREAS, as a condition for HUBCO to enter into the agreements to
acquire FIC and SNB, HUBCO has required that it receive an option on certain
authorized but unissued shares of SNB Common Stock (as hereinafter defined) and,
simultaneously with the execution of this Agreement, SNB is issuing an option to
HUBCO to purchase 30,318 shares of the authorized and unissued SNB Common Stock
at an option price of $23.00 per share, subject to adjustment and subject to the
terms and conditions set forth in the agreement governing such option;
NOW, THEREFORE, intending to be legally bound, the parties hereto
hereby agree as follows:
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as hereinafter defined), Newco shall be merged with and
into FIC (the "Merger") in accordance with the New Jersey Business Corporation
Act (the "NJBCA") and FIC 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 Newco and FIC and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of Newco and FIC 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 Newco and FIC 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 Newco and FIC 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 Newco or FIC is a
party shall not be deemed to have abated or to have discontinued by reason of
the Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Merger had not been made; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of Newco or FIC if the Merger had not occurred.
1.3 Certificate of Incorporation. As of the Effective Time, the
certificate of incorporation of Newco as it exists at the Effective Time shall
be the certificate of incorporation of the Surviving Corporation and shall not
be amended by this Agreement or the Merger.
1.4 By-laws. As of the Effective Time, the By-laws of Newco 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 and
officers of Newco shall become the directors and officers of the Surviving
Corporation.
1.6 Merger of Surviving Corporation Into HUBCO. Immediately after the
Effective Time, the Surviving Corporation shall be merged with and into HUBCO,
with HUBCO as the surviving corporation, pursuant to and in accordance with the
NJBCA.
1.7 Effective Time and Closing. The Merger shall become effective and
be consummated upon the filing of a Certificate of Merger, in form and substance
satisfactory to HUBCO and FIC, with the Secretary of State of the State of New
Jersey (the "New Jersey Certificate of Merger"). The term "Effective Time" shall
mean the date and time when the New Jersey Certificate of Merger has been so
filed. A closing (the "Closing") shall take place prior to the Effective Time at
10:00 a.m., 10 days (or the first business day thereafter) following the receipt
of all necessary regulatory, governmental and shareholder approvals and consents
and the expiration of all statutory waiting periods in respect thereof and the
satisfaction or waiver of all of the conditions to the consummation of the
Merger specified in Article VI hereof, including conditions to the Bank Merger
as specified in the Bank Merger Agreement (other than the delivery of
certificates, opinions and other instruments and documents to be delivered at
the Closing) (the "Closing Date"), at the offices of Pitney, Hardin, Kipp &
Szuch, 200 Campus Drive, Florham Park, New Jersey, or at such other place, time
or date as HUBCO and FIC may mutually agree upon. The Closing shall be at the
same time and place as the closing for the Bank Merger. Immediately following
the Closing, the New Jersey Certificate of Merger shall be filed with the New
Jersey Secretary of State.
CONVERSION OF FIC SHARES
2.1 Conversion of FIC Common Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof:
(a) Canceled Shares. Each share of common stock, no par value
per share, including but not limited to Class A Common Stock, Class B Common
Stock, Class C Common Stock, Class D Common Stock, Class E Common Stock and
Class F Common Stock, of FIC (collectively, the "FIC Common Stock"), which is
held by FIC as a treasury share, and any shares of FIC Common Stock owned by
HUBCO or any other direct or indirect subsidiary of HUBCO, shall be canceled and
retired, and no payment shall be made with respect thereto.
(b) Shares to be Exchanged; FIC Exchange Price. Subject to the
provisions of this Article II, each share of FIC Common Stock issued and
outstanding immediately prior to the Effective Time (excluding only shares of
FIC Common Stock, if any, held in treasury at such date) shall be converted at
the Effective Time into the right to receive per share in cash an amount (the
"FIC Exchange Price") determined by multiplying the SNB Share Price (i.e.,
$34.00) by the Number of FIC-Owned SNB Shares, then adding to that product the
Net Tangible Assets of FIC, and then dividing the resulting number by the number
of shares of FIC Common Stock issued and outstanding on the Closing Date
(excluding only any FIC treasury Common Stock existing at such date).
Capitalized terms used in the calculation set forth above have the following
meanings: "SNB Share Price" means the "Exchange Price," as such term is used in
the Bank Merger Agreement (i.e., $34.00). The "Number of FIC-Owned SNB Shares"
means the number of shares of SNB common stock, par value $5.00 per share ("SNB
Common Stock") owned by FIC as of the Closing Date (including for these purposes
any shares of SNB Common Stock which at or before the Closing FIC buys back from
directors of SNB pursuant to existing agreements with such directors). The "Net
Tangible Assets of FIC" means the number, whether positive or negative,
determined by subtracting the "Liabilities" of FIC as of the Closing Date from
the "Other Tangible Assets" of FIC as of the Closing Date. The "Liabilities" of
FIC means all liabilities of FIC for borrowed money, accrued interest, accrued
expenses, accrued taxes and any other items which would be accrued as
liabilities for financial statement purposes. The "Other Tangible Assets" of FIC
means all assets of FIC, excluding the shares of SNB Common Stock, any goodwill
or other assets related to SNB Common Stock and other goodwill. The value of the
Liabilities and the Other Tangible Assets of FIC shall be calculated in
accordance with generally accepted accounting principles ("GAAP") consistently
applied and including all normal recurring adjustments. Liabilities shall
include accruals for all attorneys fees, accounting fees, investment banking
fees, salaries, employee expenses, taxes and other expenses incurred or to be
incurred by FIC through the Effective Time, regardless of whether any
professional rendering services to or on behalf of FIC shall have submitted a
bill.
The amount of the FIC Exchange Price shall be determined by
mutual agreement of HUBCO and FIC, but if HUBCO and FIC cannot so agree within
five (5) business days prior to a scheduled Closing Date, HUBCO and FIC shall
engage Arthur Andersen & Co., LLP to determine the amount of the FIC Exchange
Price. In such event, Arthur Andersen & Co., LLP shall be directed to determine
the amount of the FIC Exchange Price on a basis consistent with this Section
2.1(b) and to complete its calculation prior to the scheduled Closing Date.
HUBCO and FIC each shall pay 50% of the fees of Arthur Andersen & Co., LLP in
determining the amount of the FIC Exchange Price. HUBCO and FIC each hereby
agrees that Arthur Andersen & Co., LLP's determination as to the FIC Exchange
Price shall be binding and non-appealable.
2.2 Conversion Procedures.
(a) Exchange Agent. As of the Effective Time, HUBCO shall
deposit, or shall cause to be deposited, with a bank or trust company designated
by HUBCO, which may be Hudson United Bank, Trust Department (the "Exchange
Agent"), for the benefit of the holders of shares of FIC Common Stock, for
exchange in accordance with this Article II, through the Exchange Agent, cash
sufficient to provide all of the consideration required to be exchanged by HUBCO
pursuant to the provisions of this Article II (the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver cash out of
the Exchange Fund in accordance with Section 2.1. Except as contemplated by
Section 2.2 (d) hereof, the Exchange Fund shall not be used for any other
purpose.
(b) Procedures. Promptly after the Closing Date, 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 FIC Common Stock (the "Certificates"), (i) a letter of transmittal
(which is reasonably agreed to by HUBCO and FIC and 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 shall be
in such form and have such other provisions as HUBCO may reasonably specify),
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for the FIC Exchange Price hereunder. Upon surrender of a Certificate
for cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor the FIC Exchange Price and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of shares
of FIC Common Stock which is not registered in the transfer records of FIC, the
Merger Consideration may be paid in accordance with this Article II to a
transferee if the Certificate evidencing such shares of FIC Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
reasonably required by the Exchange Agent, the posting by such person of a bond
in such amount as the Exchange Agent may reasonably direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen, or destroyed
certificate the FIC Exchange Price. 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 FIC Exchange
Price, without interest.
(c) No Further Rights in FIC Common Stock. The FIC Exchange
Price paid upon conversion of the shares of FIC Common Stock in accordance with
the terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to such shares of FIC Common Stock.
(d) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of FIC Common Stock for two
years after the Effective Time shall be delivered to HUBCO, upon demand, and any
holders of FIC Common Stock who have not theretofore complied with this Article
II shall thereafter look only to HUBCO for the Merger Consideration to which
they are entitled.
(e) No Liability. Neither HUBCO nor the Bank shall be liable
to any holder of shares of FIC Common Stock for the FIC Exchange Price delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) Withholding Rights. HUBCO shall be entitled to deduct and
withhold, or cause the Exchange Agent to deduct and withhold, from the FIC
Exchange Price otherwise payable to any holder of a Certificate the minimum
amounts (if any) that HUBCO is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986 as amended
(the "Code"), 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
Certificate 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 FIC shall be closed and there shall be no further registration of
transfers of shares of FIC Common Stock thereafter on the records of FIC. On or
after the Effective Time, any Certificates presented to the Exchange Agent or
HUBCO for any reason shall be converted into the FIC Exchange Price, but only in
accordance with the provisions hereof.
2.4 No Right to Dissent. In accordance with the provisions of the
NJBCA, no shareholder of FIC shall have dissenters rights with respect to the
Merger.
REPRESENTATIONS AND WARRANTIES OF FIC
References herein to "FIC 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 FIC to HUBCO. FIC
hereby represents and warrants to HUBCO as follows:
3.1 Corporate Organization.
(a) FIC is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. FIC has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of FIC and the FIC Subsidiaries (as
defined below), taken as a whole. FIC is registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA").
(b) SNB is the only FIC Subsidiary. For purposes of this
Agreement, the term "FIC Subsidiary" means any corporation, partnership, joint
venture or other legal entity in which FIC, directly or indirectly, owns at
least a 50% stock or other equity interest or for which FIC, 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 "FIC Subsidiary" shall include any entity which
was a FIC Subsidiary at any time during such period.
(c) The FIC Disclosure Schedule sets forth true and complete
copies of the Certificate of Incorporation and Bylaws, as in effect on the date
hereof, of FIC.
3.2 Capitalization. The authorized capital stock of FIC consists of
190,000 shares of FIC Common Stock, broken down as set forth on Exhibit A
hereto. As of the date hereof, there are 94,358 shares of FIC Common stock
issued and outstanding. The FIC Disclosure Schedule lists the name and address
of each holder of FIC Common Stock, the number of shares of each class owned by
such shareholder and nationality of such holder. Except as set forth on the FIC
Disclosure Schedule, there are no outstanding shares of any capital stock of
FIC. All issued and outstanding shares of FIC Common Stock have been duly
authorized and validly issued, are fully paid, and nonassessable. FIC owns
213,897 shares of SNB Common Stock. All such shares of SNB Common Stock are
owned by FIC free and clear of any liens, encumbrances, charges, restrictions or
rights of third parties. FIC has not granted and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the transfer, purchase, subscription or issuance of any
shares of capital stock of FIC or SNB 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, except as set forth in
the FIC Disclosure Schedule. FIC has the right to acquire from directors 1,387
shares of SNB Common Stock pursuant to agreements with SNB directors. True and
complete copies of each such agreement are contained in the FIC Disclosure
Schedule.
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 FIC, FIC has the full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved unanimously by the members of the
Board of Directors of FIC in accordance with its Certificate of Incorporation
and applicable laws and regulations. Except for such approvals, no other
corporate proceedings on the part of FIC are necessary to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by FIC, and constitutes the valid and binding obligation of FIC,
enforceable against FIC in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
FIC, nor the consummation by FIC of the transactions contemplated hereby in
accordance with the terms hereof, or compliance by FIC with any of the terms or
provisions hereof, will (i) violate any provision of FIC'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 FIC, or
any of its properties or assets, or (iii) except as set forth in the FIC
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,
SNB interest, charge or other encumbrance upon any of the respective properties
or assets of FIC 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 FIC is a party, or by which it or any of its
properties or assets may be bound or affected except, with respect to (ii) and
(iii) above, such as individually or in the aggregate will not have a material
adverse effect on the business, operations, assets or financial condition of FIC
and the FIC Subsidiaries, taken as a whole, and which will not prevent or
materially delay the consummation of the transactions contemplated hereby.
Except for consents and approvals of or filings or registrations with or notices
to the Board of Governors of the Federal Reserve System (the "FRB"), the Office
of the Comptroller of the Currency (the "OCC"), the FDIC, the New Jersey
Department of Banking and Insurance (the "Department"), the New Jersey
Department of Environmental Protection and Energy (the "NJDEP"), other
applicable government authorities, and the stockholders of FIC, 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 FIC in connection with
(x) the execution and delivery by FIC of this Agreement and (y) the consummation
by FIC of the Merger, and the consummation by FIC of the other transactions
contemplated hereby, except (i) such as are listed in the FIC Disclosure
Schedule. To the best of FIC's knowledge, no fact or condition exists which FIC
has reason to believe will prevent it from obtaining the aforementioned consents
and approvals.
3.4 Financial Statements.
(a) The FIC Disclosure Schedule sets forth copies of the
unaudited balance sheet of FIC as of December 31, 1996, 1995 and 1994, and the
related unaudited statements of income, changes in stockholders' equity and cash
flows for the periods ended December 31, in each of the three years 1996 through
1994, and the unaudited balance sheet of FIC as of June 30, 1997 and related
unaudited statement of income and changes in stockholders' equity for the period
then ended (collectively, the "FIC Financial Statements"). The FIC 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 condition of FIC as of the respective dates set forth therein, and the
related statements of income, changes in stockholders' equity and cash flows
fairly present the results of the operations, changes in stockholders' equity
and cash flows of FIC for the respective periods set forth therein, except (with
respect to the interim period financial statements only) for the absence of
footnotes and other presentation items and subject to normal year-end
adjustments.
(b) The books and records of FIC 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 FIC Financial Statements (including the notes thereto),
as of June 30, 1997, FIC does not have any liabilities, whether absolute,
accrued, contingent or otherwise, material to the business, operations, assets
or financial condition of FIC, which were required by GAAP (consistently
applied) to be disclosed in FIC's consolidated statement of condition as of June
30, 1997 or the notes thereto. Since June 30, 1997, FIC has not incurred any
liabilities except in the ordinary course of business and consistent with
prudent banking practice, except as related to the transactions contemplated by
this Agreement.
3.5 Broker's and Other Fees. Neither FIC 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. SNB has hired Alex Sheshunoff & Co.
Investment Banking ("Sheshunoff") to provide a fairness opinion for the Bank
Merger. There are no fees (other than time charges billed at usual and customary
rates) payable to any consultants, including lawyers and accountants, in
connection with this transaction or which would be triggered by consummation of
this transaction or the termination of the services of such consultants by FIC.
3.6 Absence of Certain Changes or Events.
(a) Except as disclosed in the FIC Disclosure Schedule, there
has not been any material adverse change in the business, operations, assets or
financial condition of FIC since June 30, 1997, and to the best of FIC's
knowledge, no fact or condition exists which FIC believes will cause such a
material adverse change in the future.
(b) Except as set forth in the FIC Disclosure Schedule, FIC
has not taken or permitted any of the actions set forth in Section 5.2 hereof
between June 30, 1997 and the date hereof and, except for execution of this
Agreement and the other documents contemplated hereby (and the agreement between
Sheshunoff and SNB), FIC has conducted its business only in the ordinary course,
consistent with past practice.
3.7 Legal Proceedings. Except as disclosed in the FIC Disclosure
Schedule, FIC is not a party to any, and there are no pending or, to the best of
FIC's knowledge, threatened legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against FIC. Except as disclosed in the FIC Disclosure Schedule, FIC is not a
party to any order, judgment or decree entered in any lawsuit or proceeding.
3.8 Taxes and Tax Returns.
(a) FIC 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. FIC 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 FIC through such date. None of
the federal or state income tax returns of FIC have been examined by the
Internal Revenue Service (the "IRS") or the New Jersey Division of Taxation
within the past six years. To the best knowledge of FIC, 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 FIC, nor has FIC 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 disclosed in the FIC Disclosure Schedule, FIC
(i) has not requested any extension of time within which to file any Return,
which Return has not since been filed, (ii) is not a party to any agreement
providing for the allocation or sharing of taxes, (iii) is not required to
include in income any adjustment pursuant to Section 481(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), by reason of a voluntary change
in accounting method initiated by FIC (nor does FIC have any knowledge that the
IRS has proposed any such adjustment or change of accounting method), and (iv)
has not filed a consent pursuant to Section 341(f) of the Code nor agreed to
have Section 341(f)(2) of the Code apply.
3.9 Employee Benefit Plans.
(a) FIC does not maintain or contribute to any "employee
pension benefit plan" (the "FIC 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 "FIC 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. FIC has not
contributed to any "Multiemployer Plan," as such term is defined in Section
3(37) of ERISA.
(b) Except as set forth on the FIC Disclosure Schedule, FIC
has no deferred compensation agreements, understandings or obligations for
payments or benefits to any current or former director, officer or employee of
FIC or any FIC Subsidiary or any predecessor of any thereof. The FIC Disclosure
Schedule sets forth (i) true and complete copies of the agreements,
understandings or obligations with respect to each such current or former
director, officer or employee, and (ii) the most recent actuarial or other
calculation of the present value of such payments or benefits.
(c) Except as set forth in the FIC Disclosure Schedule, FIC
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 FIC 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.
3.10 Reports.
(a) The FIC Disclosure Schedule lists, and FIC has previously
delivered to HUBCO a complete copy of, each communication mailed by FIC to its
stockholders since January 1, 1994.
(b) Since January 1, 1994, FIC has duly filed all material
forms, reports and documents which it was required to file with each agency
charged with regulating any aspect of its business, in each case in form which
was correct in all material respects, and, subject to permission from such
regulatory authorities, FIC promptly will deliver or make available to HUBCO
accurate and complete copies of such reports. The FIC Disclosure Schedule lists
the dates and substance of all examinations of FIC conducted by the FRB since
January 1, 1994 and the dates and substance of any responses thereto submitted
by FIC.
(c) As of their respective dates, each such form, report, or
document, and each communication with a shareholder 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.
3.11 FIC and SNB Information. The information relating to FIC and SNB,
this Agreement, and the transactions contemplated hereby (except for information
relating solely to HUBCO) to be contained in the Proxy Statement (as defined in
Section 5.6(a) hereof) to be delivered to stockholders of FIC in connection with
the solicitation of their approval of the Merger, as of the date the Proxy
Statement is mailed to stockholders of FIC, and up to and including the date of
the meeting of stockholders to which such Proxy Statement 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. FIC 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 FIC (including,
without limitation, consumer, community and fair lending laws) other than where
the failure to have a license, franchise, permit or authorization or where such
default or noncompliance will not result in a material adverse effect on the
business, operations, assets or financial condition of FIC, and FIC 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 as disclosed in the FIC Disclosure Schedule, (i)
FIC is not a party to or bound by any contract or understanding (whether written
or oral) with respect to the employment of any officers, employees, directors or
consultants, and (ii) the consummation of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional acts
or events) result in any payment (whether of severance pay or otherwise)
becoming due from FIC or SNB to any officer, employee, director or consultant
thereof. The FIC Disclosure Schedule sets forth true and correct copies of all
severance or employment agreements with officers, directors, employees, agents
or consultants to which FIC is a party.
(b) Except as disclosed in the FIC Disclosure Schedule, (i) as
of the date of this Agreement, FIC is not a party to or bound by any commitment,
agreement or other instrument which is material to the business, operations,
assets or financial condition of FIC, (ii) no commitment, agreement or other
instrument to which FIC is a party or by which it is bound limits the freedom of
FIC to compete in any line of business or with any person, and (iii) FIC is not
a party to any collective bargaining agreement.
(c) Except as disclosed in the FIC Disclosure Schedule,
neither FIC nor, to the best knowledge of FIC, any other party thereto, is in
default in any material respect under any lease, contract, mortgage, promissory
note, deed of trust, loan or other commitment to which FIC is a party.
3.14 Properties and Insurance.
(a) FIC does not own or lease any real property. FIC occupies
space, to the extent required, in SNB's offices at 30 Vreeland Road, Florham
Park, New Jersey. FIC has good title to all material assets and properties,
whether tangible or intangible, reflected in FIC's balance sheet as of June 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 June 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, or (ii) statutory liens for amounts not yet
delinquent or which are being contested in good faith.
(b) The business operations and all insurable properties and
assets of FIC are insured for its benefit against all risks which, in the
reasonable judgment of the management of FIC, 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 FIC adequate for the business engaged in by
FIC. As of the date hereof, FIC has not received any notice of cancellation or
notice of a material amendment of any such insurance policy or bond, and to the
best of FIC'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 FIC Disclosure Schedule sets forth in
summary form a list of all insurance policies of FIC.
3.15 Minute Books. The minute books of FIC and SNB 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.
(a) FIC has not received any written notice, citation, claim,
assessment, proposed assessment or demand for abatement alleging that FIC
(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. FIC 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 FIC, as
Other Real Estate Owned ("OREO") or otherwise, or owned or controlled by FIC as
a trustee or fiduciary (collectively, "Properties"), in any manner that violates
any presently existing federal, state or local law or regulation governing or
pertaining to such substances and materials, the violation of which would have a
material adverse effect on the assets or financial condition of FIC.
(b) FIC has no knowledge that any of the Properties have been
operated in any manner in the three years prior to the date of this Agreement
that violated any applicable federal, state or local law or regulation governing
or pertaining to toxic or hazardous substances and materials, the violation of
which would have a material adverse effect on the business, operations, assets
or financial condition of FIC.
(c) To the best of FIC's knowledge, FIC 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 could reasonably be expected to not have a
material adverse effect upon the operations requiring the permit or
registration.
(d) To the knowledge of FIC, 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 FIC or any FIC Subsidiary.
3.17 Loans. Each of the loans which FIC has extended to any person is
current in payment of interest and principal and will be repaid in full on or
prior to the Closing. The FIC Disclosure Schedule contains a true, correct and
complete copy of all documentation with respect to such loans, listing for each
loan the amount, the debtor and the terms.
3.18 No Parachute Payments. Except pursuant to the Employment
Agreements, referred to in Section 5.7 of this Agreement, no officer, director,
employee or agent (or former officer, director, employee or agent) of FIC or any
FIC 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 FIC, a FIC
Subsidiary, HUBCO or the Bank which if paid or provided would constitute an
"excess parachute payment," as defined in Section 280G of the Code or
regulations promulgated thereunder.
3.19 Agreements with Bank Regulators. FIC is not 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, nor has FIC 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 the FIC Disclosure Schedule.
3.20. SNB Representations FIC repeats the representations and
warranties made by SNB in the Bank Merger Agreement as if FIC made the
representations and warranties itself on behalf of its Subsidiary and as such
those representations and warranties are incorporated herein by reference.
3.21 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.
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 FIC.
HUBCO hereby represents and warrants to FIC as follows:
4.1 Corporate Organization. HUBCO is a corporation duly organized and
validly existing and in good standing under the laws of the State of New Jersey.
HUBCO has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on the business, operations, assets or financial condition of HUBCO or the HUBCO
Subsidiaries (defined below), taken as a whole. HUBCO is registered as a bank
holding company under the BHCA.
4.2 Authority; No Violation.
(a) Subject to the receipt of all necessary governmental
approvals, HUBCO and Newco have 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 Boards of Directors of HUBCO and Newco in
accordance with their respective Certificates of Incorporation and applicable
laws and regulations. Except for such approvals, no other corporate proceedings
on the part of HUBCO and Newco are necessary to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
HUBCO and Newco and constitutes the valid and binding obligation of HUBCO and
Newco, enforceable against HUBCO and Newco in accordance with its terms.
(b) Neither the execution or delivery of this Agreement by
HUBCO and Newco, nor the consummation by HUBCO and Newco of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by HUBCO
and Newco with any of the terms or provisions hereof will (i) violate any
provision of the Certificate of Incorporation or Bylaws of HUBCO or Newco, (ii)
assuming that the consents and approvals set forth below are duly obtained,
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to HUBCO or Newco 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,
SNB interest, charge or other encumbrance upon any of the respective properties
or assets of HUBCO or Newco 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 or Newco is a party, or by which
they or any of their respective properties or assets may be bound or affected,
except, with respect to (ii) and (iii) above, such as individually or in the
aggregate will not have a material adverse effect on the business, operations,
assets or financial condition of HUBCO and the HUBCO Subsidiaries, taken as a
whole, and which will not prevent or materially delay the consummation of the
transactions contemplated hereby. Except for consents and approvals of or
filings or registrations with or notices to the FDIC, the Department, the FRB,
the Secretary of State of New Jersey, 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 and Newco of this
Agreement, and (y) the consummation by HUBCO and Newco of the Merger, the Bank
Merger and the other transactions contemplated hereby, except such as are listed
in the HUBCO Disclosure Schedule or in the aggregate will not (if not obtained)
have a material adverse effect on the business, operations, assets or financial
condition of HUBCO. To the best of HUBCO's knowledge, no fact or condition
exists which HUBCO has reason to believe will prevent it from obtaining the
aforementioned consents and approvals.
4.3 Broker's and Other Fees. Neither HUBCO nor Newco nor any of their
respective 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, except pursuant to
the agreement with Roberts, Williams & Whitehall, a copy of which is contained
in the HUBCO Disclosure Schedule.
4.4 HUBCO, Newco and Bank Information. The information relating to
HUBCO, Newco and the Bank to be contained in the Proxy Statement (as defined in
Section 5.6 (a) hereof), as of the date of the mailing of the Proxy Statement,
and up to and including the date of the meeting of stockholders of FIC to which
such Proxy Statement 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.
4.5 Sufficiency of Funds. HUBCO has, and at the Effective Time will
have, sufficient funds to consummate the transactions contemplated hereby and
sufficient capital to satisfy all applicable regulatory requirements.
4.6 Legal Proceedings. HUBCO and Newco are not a party to any, and
there are no pending or, to the best of HUBCO's knowledge, threatened legal,
administrative or other similar proceedings which would prevent or delay the
transactions contemplated hereby.
4.7 Bank Representations . HUBCO repeats the representations and
warranties made by the Bank in the Bank Merger Agreement as if HUBCO made the
representations and warranties itself on behalf of the Bank as its Subsidiary
and as such those representations and warranties are incorporated herein by
reference.
4.8 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.
COVENANTS OF THE PARTIES
5.1 Conduct of the Business of FIC. During the period from the date of
this Agreement to the Effective Time, FIC shall conduct its business only in the
ordinary course and consistent with past practice, except for transactions
permitted hereunder or with the prior written consent of HUBCO, which consent
will not be unreasonably withheld. FIC also shall use its best efforts to (i)
preserve its business organization and that of SNB, (ii) keep available to
itself and SNB the present services of its employees and those of SNB, and (iii)
preserve for itself and HUBCO the goodwill of its customers and those of SNB and
others with whom business relationships exist.
5.2 Negative Covenants.
(a) FIC agrees that from the date hereof to the Effective
Time, except as otherwise expressly approved by HUBCO in writing or as permitted
or required by this Agreement, it will not:
(i) change any provision of its Certificate of
Incorporation or By-Laws governing documents of FIC;
(ii) change the number of shares of its authorized or
issued capital stock or issue or grant any option, warrant,
call, commitment, subscription, right to purchase or agreement
of any character relating to the authorized or issued capital
stock of FIC or SNB, 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;
(iii) grant any severance or termination pay 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; award
any increase in compensation or benefits to its directors,
officers or employees; or incur or pay any legal fees or
expenses on behalf of its officers or directors;
(iv) sell or dispose of any assets or voluntarily
incur any liabilities other than in the ordinary course of
business consistent with past practices and policies;
(v) make any capital expenditures;
(vi) agree to acquire in any manner whatsoever (other
than to realize upon collateral for a defaulted loan) any
business or entity;
(vii) make any material change in its accounting
methods or practices, other than changes required in
accordance with GAAP or regulatory authorities;
(viii) take any action that would result in any of
its representations and warranties contained in Article III of
this Agreement not being true and correct in any material
respect at the Effective Time or that would cause any of its
conditions to Closing not to be satisfied; or
(ix) agree to do any of the foregoing.
5.3 No Solicitation. FIC 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, Newco and the Bank)
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 FIC or SNB (an "Acquisition Transaction"). FIC will
promptly communicate to HUBCO the terms of any proposal, whether written or
oral, which it may receive in respect of any such Acquisition Transaction.
5.4 Current Information. During the period from the date of this
Agreement to the Effective Time, each of FIC 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, FIC
shall provide HUBCO, and HUBCO shall provide FIC, with internally prepared
profit and loss statements no later than 15 days after the close of each
calendar month. As soon as reasonably available, but in no event more than 45
days after the end of each fiscal quarter (other than the last fiscal quarter of
each fiscal year) ending on or after June 30, 1997, FIC will deliver to HUBCO
quarterly reports.
5.5 Access to Properties and Records; Confidentiality.
(a) FIC shall permit HUBCO and its representatives, and HUBCO
shall permit FIC and its representatives, reasonable access to their respective
properties, and shall disclose and make available to HUBCO and its
representatives, or FIC 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
FIC and its representatives may have a reasonable interest. Neither party shall
be required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer, would
contravene any law, rule, regulation, order or judgment or would waive any
privilege. The parties will use their best efforts to obtain waivers of any such
restriction (other than waivers of the attorney-client privilege) and in any
event make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply. Notwithstanding the
foregoing, FIC acknowledges that HUBCO may be involved in discussions concerning
other potential acquisitions and HUBCO shall not be obligated to disclose such
information to FIC 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 FIC Merger and
Bank Merger contemplated hereby and shall be treated as the sole property of the
party delivering the information until consummation of the FIC Merger and Bank
Merger contemplated hereby, and if the FIC Merger and Bank Merger shall not
occur, each party and each party's advisors shall return to the other party all
documents or other materials containing, reflecting or referring to such
information, will not retain any copies of such information, shall use its best
efforts to keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other commercial
purposes. In the event that the FIC Merger and Bank Merger contemplated hereby
do 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 FIC Merger and Bank Merger
are 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) , the parties hereto shall cooperate
in the preparation of a proxy statement satisfying all applicable requirements
of applicable state and federal laws (such proxy statement in the form mailed by
FIC to the FIC shareholders, together with any and all amendments or supplements
thereto, being herein referred to as the "Proxy Statement") .
(b) HUBCO shall furnish FIC with such information concerning
HUBCO and its subsidiaries as is necessary in order to cause the Proxy
Statement, insofar as it relates to such corporations, to comply with Section
5.6 (a) hereof. HUBCO agrees promptly to advise FIC if at any time prior to the
FIC shareholders' meeting referred to in Section 5.7 hereof, any information
provided by HUBCO in the Proxy Statement becomes incorrect or incomplete in any
material respect and to provide FIC with the information needed to correct such
inaccuracy or omission. HUBCO shall furnish FIC with such supplemental
information as may be necessary in order to cause the Proxy Statement, insofar
as it relates to HUBCO and its subsidiaries, to comply with Section 5.6(a) after
the mailing thereof to FIC shareholders.
(c) The parties hereto will cooperate with each other and use
their best efforts to prepare all necessary documentation, to effect all
necessary filings and to obtain all necessary permits, consents, approvals and
authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement as soon as possible,
including, without limitation, those required by the FDIC, the FRB, the OCC, the
Department and the NJDEP. The parties shall each have the right to review in
advance (and shall do so promptly) all filings with, including all information
relating to the other, as the case may be, and any of their respective
subsidiaries, which appears in any filing made with, or written material
submitted to, any third party or governmental body in connection with the
transactions contemplated by this Agreement.
(d) 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 with respect to the
Merger.
(e) FIC 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 FIC 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. FIC agrees to provide HUBCO
with any information, certificates, documents or other materials about FIC 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.
(f) The parties shall use all reasonable efforts to cause the
Proxy Statement to be mailed and all regulatory applications to be filed as
promptly as practicable after the date hereof.
5.7 Approval of Stockholders; Stockholder Approval Requirements. FIC
will take all steps necessary to duly call, give notice of, convene and hold a
meeting of the stockholders of FIC entitled to vote (the "Stockholders Meeting")
for the purpose of securing the approval of stockholders of this Agreement and
for the purpose of securing approval by a vote of 75% or more, after disclosure
to shareholders of all of the material facts, of the employment contracts with
John J. Fedigan and Frank Zegar in the form contained in the Bank Merger
Agreement, in accordance with the approval requirements of Section 280G(b)(5)(B)
of the Code, including those set forth in proposed Treasury Regulation Section
1.280G-1, Q/A-7 or, any modifications or amendments thereof, and any final
Treasury Regulations addressing this issue applicable to any such action or
pronouncements (the "Stockholder Approval Requirements"). FIC will use its best
efforts to obtain as promptly as practicable, such approvals and cooperate and
consult with HUBCO with respect to each of the foregoing matters.
5.8 Further Assurances.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its 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 best efforts to prevent the breach of any
representation, warranty, covenant or agreement of such party contained or
referred to in this Agreement and to promptly remedy the same. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall take all such necessary action. Nothing in
this section shall be construed to require any party to participate in any
threatened or actual legal, administrative or other proceedings (other than
proceedings, actions or investigations to which it is a party or subject or
threatened to be made a party or subject) in connection with consummation of the
transactions contemplated by this Agreement unless such party shall consent in
advance and in writing to such participation and the other party agrees to
reimburse and indemnify such party for and against any and all costs and damages
related thereto.
(b) From the date hereof to the Effective Time, except as
otherwise approved by FIC in writing or as permitted or required by this
Agreement, HUBCO will not, nor will it permit the Bank to take any action that
would result in any of its representations and warranties contained in Article
IV of this Agreement not to be true and correct in any material respect at the
Effective Time or that would cause any of HUBCO's conditions to Closing not to
be satisfied.
(c) FIC covenants hereby that it will cause SNB to comply with
the covenants and agreements of SNB contained in the Bank Merger Agreement.
HUBCO also covenants that it will cause the Bank to comply with the covenants
and agreements of the Bank contained in the Bank Merger Agreement.
5.9 Public Announcements. HUBCO and FIC shall cooperate with each other
in the development and distribution of all news releases and other public
filings and disclosures with respect to this Agreement or the merger
transactions contemplated hereby, and HUBCO and FIC agree that unless approved
mutually by them in advance, they will not issue any press release or written
statement for general real 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 FIC
determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to the Cut-Off
Date (as hereinafter defined) 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, FIC and HUBCO will promptly
inform the other of any facts applicable to FIC 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 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 Disclosure Schedules or which is necessary to correct any
information in such Disclosure Schedules which has been rendered materially
inaccurate thereby. For the purpose of determining satisfaction of the
conditions set forth in Article VI and subject to Sections 6.2(a) and 6.3(a), no
supplement or amendment to the parties' respective Disclosure Schedules shall
correct or cure any warranty which was untrue when made, but shall enable the
disclosure of subsequent facts or events to maintain the truthfulness of any
warranty.
5.12 Transaction Expenses of FIC and HUBCO.
(a) For planning purposes, FIC shall, within 15 days from the
date hereof, provide HUBCO with its estimated budget of transaction-related
expenses reasonably anticipated to be incurred by FIC or SNB in connection with
the FIC Merger and Bank Merger and the transactions contemplated herein,
including the fees and expenses of counsel, accountants, investment bankers and
other professionals. FIC shall promptly notify HUBCO if or when it determines
that it will expect to exceed its budget.
(b) After the execution of this Agreement, FIC shall advise
HUBCO monthly of all out-of-pocket expenses which it or SNB has incurred in the
prior month in connection with the transaction. FIC shall not pay any expense
until after it has provided HUBCO in writing with a notice of the expense and
will not pay any such expenses if HUBCO objects to the amounts as unreasonable.
(c) Neither FIC nor SNB shall pay or incur any expenses,
including but not limited to legal fees, on behalf of its officers or directors
in negotiating the terms of any employment, severance or compensation
arrangements, including those for John J. Fedigan or Frank Zegar.
(d) The total transaction expenses incurred by SNB shall not
exceed $50,000. FIC shall pay (i) any transaction expenses incurred by SNB in
excess of $50,000 and (ii) 50% of any fees of Arthur Andersen & Co., LLP for
determining the FIC Exchange Price. All such payments by FIC shall be made prior
to calculating the Net Tangible Assets of FIC in order to determine the FIC
Exchange Price.
5.13 Indemnification.
(a) For a period of six years after the Effective Time, or in
the case of Claims (as hereinafter defined) made prior to the end of such
six-year period, until such Claims are finally resolved, 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 FIC or serves or has served at the request of FIC
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 FIC or serves or has served at the request of FIC 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 FIC or any of their respective
affiliates, or by any former (but not any present) shareholder of FIC (each a
"Claim" and 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 FIC or of any
committee of FIC'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 5.13 in each case to the fullest extent permitted under any
applicable law, FIC's certificate of incorporation or by-laws (and HUBCO shall
also advance expenses as incurred to the fullest extent permitted under any
thereof). Notwithstanding the foregoing, HUBCO shall not provide any
indemnification or advance any expenses with respect to any Claim which relates
to a personal benefit improperly paid or provided, or alleged to have been
improperly paid or provided, to the Indemnitee, but HUBCO shall reimburse the
Indemnitee for costs incurred by the Indemnitee with respect to such Claim when
and if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that the Indemnitee was
not improperly paid or provided with the personal benefit alleged in the Claim.
(b) From and after the Effective Time, HUBCO shall assume and
honor any obligation of FIC 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 FIC 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 he made so that the successors and
assigns of HUBCO assume the obligations set forth in this Section 5.13.
(d) HUBCO shall cause FIC'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 FIC's and SNB'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 FIC's existing officers' and directors' liability insurance and if
FIC has no coverage, then no coverage shall be required hereunder.
(e) Any Indemnitee wishing to claim indemnification under this
Section 5.13 shall promptly notify HUBCO upon learning of any such 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 5.13 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 5.13 (e) to pay
for only one firm of counsel for all Indemnities 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 hereunder unless such settlement is effected
with its prior written consent. Notwithstanding anything to the contrary in this
Section 5.13, 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.
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) Consummation of the Bank Merger. There shall occur
simultaneously with the Closing hereunder a closing under the Bank Merger
Agreement such that the Bank Merger shall be consummated immediately after the
Effective Time hereunder.
(b) Approval of FIC Stockholders. This Agreement and the
transactions contemplated hereby (including approval of the Employment
Agreements by the requisite vote and with the disclosure required under Section
280G(b)(5) of the Code) shall have been approved by the requisite vote or
consent of those stockholders of FIC entitled to vote thereon.
(c) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the FDIC, the Department, the OCC and the FRB) required to
consummate the transactions contemplated hereby shall have been obtained without
any term or condition which would materially impair the value of FIC and SNB,
taken as a whole, to HUBCO. All conditions required to be satisfied prior to the
Effective Time by the terms of such approvals and consents shall have been
satisfied; and all statutory waiting periods in respect thereof (including the
Hart-Scott-Rodino waiting period if applicable) shall have expired.
(d) Suits and Proceedings. No order, judgment or decree shall
be outstanding against a party hereto or a third party that would have the
effect of preventing completion of the Merger; no suit, action or other
proceeding shall be pending or threatened by any governmental body in which it
is sought to restrain or prohibit the Merger; and no suit, action or other
proceeding shall be pending before any court or governmental agency in which it
is sought to restrain or prohibit the Merger or obtain other substantial
monetary or other relief against one or more parties hereto in connection with
this Agreement and which HUBCO or FIC determines in good faith, based upon the
advice of their respective counsel, makes it inadvisable to proceed with the
Merger because any such suit, action or proceeding has a significant potential
to be resolved in such a way as to deprive the party electing not to proceed of
any of the material benefits to it of the Merger.
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 FIC and SNB. Except for those representations which are made as of a
particular date, the representations and warranties of FIC 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. FIC 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 FIC
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 FIC 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 FIC
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 FIC, 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. FIC 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) No Parachute Payments. No payments under any severance
agreement or any other plan or arrangement with FIC or SNB or the Bank or HUBCO
will constitute an "excess parachute payment," as defined in Section 280G of the
Code or regulations promulgated thereunder.
(e) Legal Fees. FIC shall have furnished HUBCO with letters
from all attorneys representing FIC or to be paid by FIC in any matters
certifying that all legal fees have been paid in full for services rendered as
of the Effective Time.
(f) Merger-Related Expense. FIC shall have provided HUBCO with
an accounting of all merger-related expenses incurred by it through the Closing
Date, including a good faith estimate of such expenses incurred but as to which
invoices have not been submitted as of the Closing Date. The merger-related
expenses of FIC shall be reasonable.
6.3 Conditions to the Obligations of FIC Under this Agreement. The
obligations of FIC 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. FIC shall have received an
opinion of counsel to HUBCO, dated the Closing Date, in form and substance
reasonably satisfactory to FIC, covering the matters customarily covered in
opinions of counsel in transactions of this type.
(c) Certificates. HUBCO shall have furnished FIC 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 FIC may
reasonably request.
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 FIC:
(a) by mutual written consent of the parties hereto;
(b) by HUBCO or FIC (i) if the Effective Time shall not have
occurred on or prior to December 31, 1997 (the "Cut-Off Date"), 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 FIC is taken and such stockholders fail to
approve this Agreement at the meeting (or any adjournment thereof) held for such
purpose;
(c) by HUBCO or FIC 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 FIC if any such
application is approved with conditions which materially impair the value of FIC
and SNB, taken as a whole, to HUBCO;
(d) by HUBCO if (i) there shall have occurred a material
adverse change in the assets, or financial condition of FIC from that disclosed
by FIC in its Financial Statement for the period ending June 30, 1997; or (ii)
there was a material breach in any representation, warranty, covenant, agreement
or obligation of FIC hereunder and such breach shall not have been remedied
within 30 days after receipt by FIC of notice in writing from HUBCO to FIC
specifying the nature of such breach and requesting that it be remedied;
(e) by FIC, if 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 FIC specifying the nature of such breach and
requesting that it be remedied;
(f) by HUBCO if the conditions set forth in Sections 6.1 and
6.2 are not satisfied and are not capable of being satisfied by the Cut-Off
Date;
(g) by FIC if the conditions set forth in Sections 6.1 and 6.3
are not satisfied and are not capable of being satisfied by the Cut-Off Date.
7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement by either HUBCO or FIC pursuant to Section 7.1,
this Agreement (other than Section 5.5 (b), this Section 7.2 and Section 8.1)
shall forthwith become void and have no effect, without any liability on the
part of any party or its officers, directors or stockholders. Nothing contained
herein, however, shall relieve any party from any liability for any breach of
this Agreement.
7.3 Amendment. This Agreement may be amended by action taken by the
parties hereto at any time before or after adoption of this Agreement by the
stockholders of FIC 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 FIC 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.
MISCELLANEOUS
8.1 Expenses.
(a) Except as otherwise expressly stated herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including legal, accounting and investment banking fees and
expenses) shall be borne by the party incurring such costs and expenses.
Notwithstanding the foregoing, HUBCO may bear the expenses of the Bank and FIC
may bear the expenses of SNB.
(b) Notwithstanding any provision in this Agreement to the
contrary, in the event that either of the parties shall willfully default in its
obligations hereunder, the non-defaulting party may pursue any remedy available
at law or in equity to enforce its rights and shall be paid by the willfully
defaulting party for all damages, costs and expenses, including without
limitation legal, accounting, investment banking and printing expenses, incurred
or suffered by the non-defaulting party in connection herewith or in the
enforcement of its rights hereunder.
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 and 5.13.
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 Boulevard
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 a 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.
(b) If to FIC , to:
Fiduciary Investment Company of New Jersey
c/o Security National Bank & Trust Company of
New Jersey
30A Vreeland Road
Florham Park, New Jersey 07932
Attn.: John J. Fedigan, Chairman
Copy to:
Shanley & Fisher, P.C.
131 Madison Avenue
Morristown, New Jersey 07962
Attn.: John Kandravy, 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 Indemnities described in Section 5.13.
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.
IN WITNESS WHEREOF, HUBCO, Newco and FIC 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, Executive Kenneth T. Neilson, Chairman,
Vice President and Corporate Secretary President and Chief Executive
Officer
ATTEST: FIDUCIARY INVESTMENT COMPANY
OF NEW JERSEY
LEE T. SMITH JR. JOHN J. FEDIGAN
By:--------------------------------- By:---------------------------------
Lee T. Smith, Jr. , Secretary John J. Fedigan, Chairman
ATTEST: FS ACQUISITION CORP.
JOSEPH F. HURLEY D. LYNN VAN BORKULO-NUZZO
By:-------------------------------- By:---------------------------------
Joseph F. Hurley, Asst. Secretary D. Lynn VanBorkulo-Nuzzo, President
<PAGE>
CERTIFICATE OF FIC DIRECTORS
Reference is made to Agreement and Plan of Merger, dated as of August
27, 1997 (the "Agreement"), among HUBCO, Inc., FIC Investment Company of New
Jersey and FS Acquisition Corporation. Capitalized terms used herein have the
meanings given to them in the Agreement.
Each of the following persons, being all of the directors of FIC agrees
to vote or cause to be voted all shares of FIC Common Stock which are held by
such person, or over which such person exercises full voting control in favor of
the Merger and to cause FIC to vote in favor of the Bank Merger.
JOHN J. FEDIGAN
- ----------------------------------------------
John J. Fedigan
ROSS B. BURKE
- ----------------------------------------------
Ross B. Burke
FRANK A. ZEGAR
- ----------------------------------------------
Frank A. Zegar
H. MICHAEL BYRNES
- ----------------------------------------------
H. Michael Byrnes
LEE T. SMITH, JR.
- ----------------------------------------------
Lee T. Smith, Jr.
VICTOR A. VIGGIANO
- ----------------------------------------------
Victor A. Viggiano
Dated: September 3, 1997
<PAGE>
EXHIBIT A
FIC COMMON STOCK
Authorized Issued
Class A Common Stock - no par 1,000 445
Class B Common Stock - no par 20,000 2,448
Class C Non Voting Common Stock - no par 33,000 24,377
Class D Non Voting Common Stock - no par 1,000 600
Class E Non Voting Common Stock - no par 15,000 7,000
Class F Non Voting Common Stock - no par 120,000 59,488
------- ------
190,000 94,358
======
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of August
27, 1997, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and Security National Bank & Trust Company of
New Jersey, a national banking association ("SNB").
BACKGROUND
1. HUBCO and SNB, as of the date hereof, are prepared to
execute agreements and plans of merger (the "Merger Agreements") pursuant to
which Fiduciary Investment Company of New Jersey ("Fiduciary") will be merged
with a subsidiary of HUBCO (to be followed by a merger of the surviving
corporation into HUBCO) and SNB will be merged with and into Hudson United Bank
(collectively, the "Merger").
2. HUBCO has advised SNB that it will not cause the Merger
Agreements to be executed unless SNB executes this Agreement.
3. The Board of Directors of SNB has determined that the
Merger Agreements provide substantial benefits to the shareholders of SNB.
4. As an inducement to HUBCO to enter into the Merger
Agreements and in consideration for such entry, SNB desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of SNB 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 SNB,
intending to be legally bound hereby, agree:
1. Grant of Option. SNB hereby grants to HUBCO the option to
purchase 30,318 shares of common stock, $5.00 par value, of SNB (the "Common
Stock") at a price of $23.00 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 termination provisions of Section 19
of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
a. Any material change in the ownership of or certificate of
incorporation of Fiduciary whereby John J. Fedigan loses the right to elect a
majority of the directors of Fiduciary; or
b. 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 Fiduciary, HUBCO or an affiliate of
HUBCO:
(i) acquires beneficial ownership (as such term is defined in
Rule 13d-3 as promulgated under the Exchange Act) of at least 10% of the then
outstanding shares of Common Stock; or
(ii) enters into a letter of intent or an agreement, whether
oral or written, with SNB pursuant to which such person or any affiliate of such
person would (1) merge or consolidate, or enter into any similar transaction,
with SNB, (2) acquire all or a significant portion of the assets or liabilities
of SNB, or (3) acquire beneficial ownership of securities representing, or the
right to acquire beneficial ownership or to vote securities representing, 10% or
more of the then outstanding shares of Common Stock; or
(iii) makes a filing with any bank or thrift regulatory
authorities or publicly announces a bona fide proposal (a "Proposal") for (1)
any merger with, consolidation with or acquisition of all or a significant
portion of all the assets or liabilities of, SNB or any other business
combination involving SNB, or (2) a transaction involving the transfer of
beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 10% 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 SNB called to vote on the Merger and
SNB's stockholders fail to approve the Merger by the vote required by applicable
law at the meeting of stockholders called for such purpose; or
(iv) makes a bona fide Proposal and thereafter, but before
such Proposal has been Publicly Withdrawn, SNB 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 SNB or Fiduciary or any of their
directors, officers or agents with the intention of inviting, encouraging or
soliciting any proposal which has as its purpose a tender offer for the shares
of Common Stock, a merger, consolidation, plan of exchange, plan of acquisition
or reorganization of SNB, or a sale of a significant number of shares of Common
Stock or any significant portion of their respective assets or liabilities.
The term "significant portion" means 10% of the assets or
liabilities of SNB. The term "significant number" means 10% of the outstanding
shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (iii) and (iv)
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 SNB 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 SNB 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.
SNB 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 SNB shall not be a condition to the right of HUBCO to exercise the
Option. SNB will not take any action which would have the effect of preventing
or disabling SNB from delivering the Option Shares to HUBCO upon exercise of the
Option or otherwise performing its obligations under this Agreement.
In the event HUBCO wishes to exercise the Option, HUBCO shall
send a written notice to SNB (the date of which is hereinafter referred to as
the "Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date for the closing of such a purchase (a "Closing");
provided, however, that a Closing shall not occur prior to two days after the
later of receipt of any necessary regulatory approvals and the expiration of any
legally required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any Closing
hereunder (a) HUBCO will make payment to SNB of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by SNB; (b) SNB 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 SNB, 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 Security National Bank & Trust Company of New Jersey,
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, SNB 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,
or the Office of the Comptroller of the Currency and any state securities bureau
covering the Option and such number of Option Shares as HUBCO shall specify in
its request, and SNB shall use its best efforts to cause such registration
statement to be declared effective in order to permit the sale or other
disposition of the Option and the Option Shares, provided that HUBCO shall in no
event have the right to have more than one such registration statement become
effective.
In connection with such filing, SNB 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 SNB 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 SNB and blue sky fees and expenses shall be paid by SNB.
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, SNB 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 SNB 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 SNB will not be liable in any case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement of omission or alleged omission
made in such preliminary or final registration statement or such amendment or
supplement thereto in reliance upon and in conformity with written information
furnished by or on behalf of HUBCO specifically for use in the preparation
thereof. HUBCO will indemnify and hold harmless SNB 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 SNB for any legal or
other expense reasonably incurred by SNB in connection with investigating or
defending any such loss, claim, damage, liability or action.
5. Adjustment Upon Changes in Capitalization. In the event of
any change in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, conversions, exchanges of shares or the like,
then the number and kind of Option Shares and the Option Price shall be
appropriately adjusted.
In the event any capital reorganization or reclassification of
the Common Stock, or any consolidation, merger or similar transaction of SNB
with another entity, or any sale of all or substantially all of the assets of
SNB, 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 SNB will use its
best efforts to make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event HUBCO is the holder
hereof, approval of the Board of Governors of the Federal Reserve System and the
Office of the Comptroller of the Currency, and SNB 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 SNB. SNB hereby
represents and warrants to HUBCO as follows:
a. Due Authorization. SNB 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 SNB.
b. Authorized Shares. SNB has taken and, as long as the Option
is outstanding, will take all necessary corporate action to authorize and
reserve for issuance all shares of Common Stock that may be issued pursuant to
any exercise of the Option.
c. No Conflicts. Neither the execution and delivery of this
Agreement nor consummation of the transactions contemplated hereby (assuming all
appropriate regulatory approvals) will violate or result in any violation or
default of or be in conflict with or constitute a default under any term of the
Certificate of Incorporation or By-laws of SNB or any agreement, instrument,
judgment, decree, statute, rule or order applicable to SNB.
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 SNB for a breach of this Agreement.
9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof.
10. Assignment or Transfer. HUBCO may not sell, assign or
otherwise transfer its rights and obligations hereunder, in whole or in part, to
any person or group of persons other than to an affiliate of HUBCO, except upon
or after the occurrence of a Triggering Event. HUBCO represents that it is
acquiring the Option for HUBCO's own account and not with a view to or for sale
in connection with any distribution of the Option or the Option Shares. HUBCO
shall have the right to assign this Agreement to any party it selects after the
occurrence of a Triggering Event.
11. Amendment of Agreement. Upon mutual consent of the parties
hereto, this Agreement may be amended in writing at any time, for the purpose of
facilitating performance hereunder or to comply with any applicable regulation
of any governmental authority or any applicable order of any court or for any
other purpose.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
13. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally, by express service,
cable, telegram or telex, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
(a) If to HUBCO, to:
HUBCO, Inc.
Hudson United Bank
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 a 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.
(b) If to SNB, to:
Security National Bank & Trust Company of New Jersey
30A Vreeland Road
Florham Park, New Jersey 07932
Attn.: John J. Fedigan, Chairman
Copy to:
Shanley & Fisher, P.C.
131 Madison Avenue
Morristown, New Jersey 07962
Attn.: John Kandravy, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are inserted for
convenience and reference purposes, and shall not limit or otherwise affect any
of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may, by mutual
consent, extend the time for performance of any of the obligations or acts of
either party hereto. Each party may waive (a) compliance with any of the
covenants of the other party contained in this Agreement and/or (b) the other
party's performance of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement, except as provided in Section 10 permitting HUBCO to assign its
rights and obligations hereunder.
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
19. Termination. This Agreement shall terminate upon either
the termination of the Merger Agreement as provided therein or the consummation
of the transactions contemplated by the Merger Agreement; provided, however,
that if termination of the Merger Agreement occurs after the occurrence of a
Triggering Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 18 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event.
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.
WITNESS: SECURITY NATIONAL BANK & TRUST COMPANY
OF NEW JERSEY
By: LEE T. SMITH, JR. By: JOHN J. FEDIGAN
----------------------------- --------------------------------------
Lee T. Smith, Jr., Asst. John J. Fedigan, Chairman,
Secretary
WITNESS: HUBCO, INC.
By: D. LYNN VAN BORKULO-NUZZO By: KENNETH T. NEILSON
----------------------------- --------------------------------------
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, Chairman,
Executive Vice President and President and Chief Executive Officer
Corporate Secretary
