As filed with the Securities and Exchange Commission on December 15, 1997
Registration No. ___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
HUBCO, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey
------------------------------------------------------------
(State or other Jurisdiction of Incorporation or Organization)
6711
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(Primary Standard Industrial Classification Code Number)
22-2405746
----------------------------------
(I.R.S. Employer Identification No.)
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
(201) 236-2600
--------------------------------------------
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
KENNETH T. NEILSON
Chairman, President and Chief Executive Officer
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
(201) 236-2600
-------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Please send copies of all communications
to:
MICHAEL W. ZELENTY, ESQ. HUGH T. WILKINSON, ESQ.
Pitney, Hardin, Kipp & Szuch Elias, Matz, Tiernan & Herrick L.L.P.
P.O. Box 1945 The Walker Building, 12th Floor
Morristown, New Jersey 07962 734 15th Street, N.W.
(973) 966-8125 Washington, D.C. 20005
(202) 347-0300
<PAGE>
Approximate date of commencement of proposed sale to the public: At
the Effective Time of the Merger, as defined in the Amended and Restated
Agreement and Plan of Merger dated as of October 22, 1997 (the "Merger
Agreement") among HUBCO, Inc. ("HUBCO"), Poughkeepsie Financial Corp. ("PFC")
and Bank of the Hudson ("BTH"), attached as Appendix A to the Proxy
Statement-Prospectus.
If the securities being registered on this Form are being offered
in connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
======================== ====================== ====================== ====================== ======================
Title of each class of Proposed maximum Proposed Maximum
securities to be Amount to be offering price per aggregate offering Amount of
registered registered* unit price registration fee
---------- ----------- ---- ----- ----------------
Common Stock, No Par 4,472,230 $32.8125** $146,745,047** $43,290
Value Shares
</TABLE>
* The number of shares of HUBCO Common Stock issuable in the Merger in exchange
for shares of PFC Common Stock, assuming the maximum Exchange Ratio of 0.320 set
forth in the Merger Agreement, and assuming that all currently outstanding
options to acquire shares of PFC Common Stock are exercised prior to the
Effective Time of the Merger. The Registrant also registers hereby such
additional shares of its common stock as may be issuable in the Merger pursuant
to the anti-dilution provisions of the Merger Agreement.
** Estimated solely for the purpose of calculating the registration fee for the
filing on Form S-4 pursuant to Rule 457(f)(1) under the Securities Act based on
the average of the high and low prices reported by Nasdaq for PFC Common Stock
as of December 5, 1997, a date within five business days prior to the filing of
this Registration Statement.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.
<PAGE>
[PFC LOGO]
____________, 1998
To the Stockholders of Poughkeepsie Financial Corp.:
We cordially invite you to attend a special meeting of the stockholders
of Poughkeepsie Financial Corp. ("PFC"). The Meeting is to be held at [Location]
on [Date and Time].
The Meeting has been called to seek your approval of an Amended and
Restated Agreement and Plan of Merger (the "Merger Agreement") which provides
for PFC to be merged with HUBCO, Inc. ("HUBCO"). HUBCO is a bank holding company
and the parent corporation of Hudson United Bank, a New Jersey-based bank, and
Lafayette American Bank, a Connecticut-based bank. If the Merger is completed,
PFC's subsidiary, Bank of the Hudson, will become the New York-based banking
subsidiary of HUBCO.
Upon completion of the Merger, each share of PFC Common Stock will be
converted into a number of shares of HUBCO Common Stock (the "Exchange Ratio").
The Merger Agreement provides that the Exchange Ratio will be a fraction with a
numerator of $10.00 and a denominator equal to the Median Pre-Closing Price of
HUBCO Common Stock (a term defined in the Merger Agreement generally as the
median of the weighted average daily prices of HUBCO Common Stock during a 10
trading day period shortly prior to the closing of the Merger); provided,
however, that a minimum Exchange Ratio of 0.300 will apply if the Median
Pre-Closing Price is at or above $33.33, and a maximum Exchange Ratio of 0.320
will apply if the Median Pre-Closing Price is at or below $31.25. Cash will be
paid in lieu of fractional shares.
Completion of the Merger is subject to certain conditions, including
the receipt of certain regulatory approvals and approval of the Merger Agreement
by the affirmative vote, in person or by proxy, of a majority of the outstanding
PFC Common Stock.
We urge you to read the attached Proxy Statement-Prospectus carefully.
It describes the Merger Agreement in detail and includes a copy of the Merger
Agreement as Appendix A.
Your Board of Directors has unanimously approved the Merger Agreement
and unanimously recommends that you vote "FOR" approval of the Merger Agreement.
It is very important that your shares be represented at the Meeting.
Whether or not you plan to attend, please complete, date and sign the enclosed
proxy card and return it promptly in the postage paid envelope we have provided.
Failure to return a properly executed proxy card or to vote at the Meeting will
have the same effect as a vote against the Merger Agreement.
On behalf of your Board of Directors,
Joseph B. Tockarshewsky, Chairman,
President and Chief Executive Officer
<PAGE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ____________, 1998
To the Stockholders of Poughkeepsie Financial Corp.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the
"Meeting") of Poughkeepsie Financial Corp. ("PFC") will be held on [Day of
Week], [Date], 1998, at [Time], at [Location], for the following purposes:
(1) To consider and vote upon a proposal to approve and adopt an
Amended and Restated Agreement and Plan of Merger, dated as of
October 22, 1997 (the "Merger Agreement"), by and among HUBCO,
Inc. ("HUBCO"), Poughkeepsie Financial Corp. ("PFC") and Bank
of the Hudson, ("BTH"), which provides for PFC to be merged
with and into HUBCO (the "Merger"). A copy of the Merger
Agreement is included as Appendix A to the accompanying Proxy
Statement-Prospectus. If the proposed Merger is consummated,
each share of PFC Common Stock, will be converted into the
number of shares (the "Exchange Ratio") of HUBCO Common Stock,
equal to a fraction, the numerator of which will be $10.00 and
the denominator of which will be the Median Pre-Closing Price
of HUBCO Common Stock (a term defined in the Merger Agreement
generally as the median of the weighted average daily prices
of HUBCO Common Stock during a 10 trading day period shortly
prior to the closing of the Merger), with a minimum Exchange
Ratio of 0.300 (which will apply if the Median Pre-Closing
Price is at or above $33.33) and a maximum Exchange Ratio of
0.320 (which will apply if the Median Pre-Closing Price is at
or below $31.25), subject to adjustment provisions set forth
in the Merger Agreement and described in the Proxy
Statement-Prospectus, with cash paid in lieu of fractional
shares.
(2) To transact such other business as may properly come before
the Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on ____________,
1998 as the record date for the determination of stockholders entitled to notice
of and to vote at the Meeting. Only stockholders of record at the close of
business on the record date will be entitled to notice of and to vote at the
Meeting or any adjournments or postponements thereof.
All stockholders are urged to attend the Meeting in person. It is
important that proxies be returned promptly. Therefore, whether or not you plan
to be present in person at the Meeting, please date, sign and complete the
enclosed proxy and return it in the enclosed envelope, which requires no postage
if mailed in the United States. If you decide to attend the Meeting, you may
revoke your proxy and vote your shares in person.
Poughkeepsie, New York
____________, 1998
By Order of the Board of Directors
Suzanne A. Gillespie
Secretary
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
<PAGE>
PROXY STATEMENT OF PROSPECTUS OF HUBCO, INC.
POUGHKEEPSIE FINANCIAL CORP. for its Common Stock to be issued
for its Special Meeting of Stockholders in connection with the merger of
to be held on ____________, 1998 Poughkeepsie Financial Corp.
and all adjournments or postponements thereof with and into HUBCO, Inc.
The Board of Directors of Poughkeepsie Financial Corp. ("PFC") has
called a Special Meeting of PFC stockholders to be held on [Day of Week],
[Date], 1998. The Meeting has been called to seek PFC stockholder approval of a
Merger Agreement which provides for PFC to be merged with HUBCO, Inc. ("HUBCO"),
with HUBCO as the surviving corporation. HUBCO is a bank holding company and the
parent corporation of Hudson United Bank, a New Jersey-based bank, and Lafayette
American Bank, a Connecticut-based bank. If the Merger is completed, PFC's
subsidiary, Bank of the Hudson, will become the New York-based banking
subsidiary of HUBCO.
Upon completion of the Merger, each share of PFC Common Stock will be
converted into HUBCO Common Stock. The Merger Agreement provides for an
"Exchange Ratio" (i.e., the number of shares of HUBCO Common Stock into which
each share of PFC Common Stock will be converted) equal to a fraction with a
numerator of $10.00 and a denominator equal to the Median Pre-Closing Price of
HUBCO Common Stock; provided, that a "Minimum Exchange Ratio" of 0.300 will
apply if the Median Pre-Closing Price is at or above $33.33, and a "Maximum
Exchange Ratio" of 0.320 will apply if the Median Pre-Closing Price is at or
below $31.25. Cash will be paid in lieu of fractional shares. The term "Median
Pre-Closing Price" is defined in the Merger Agreement generally as the median of
the weighted average daily prices of HUBCO Common Stock during a 10 trading day
period shortly prior to the closing of the Merger. The Exchange Ratio is subject
to anti-dilution adjustments specified in the Merger Agreement.
The Exchange Ratio formula was intended by HUBCO and PFC to result in
PFC stockholders receiving HUBCO Common Stock with a value of $10.00 for each
share of PFC Common Stock, so long as the Median Pre-Closing Price of HUBCO
Common Stock is between $31.25 and $33.33. However, because of the Minimum
Exchange Ratio and Maximum Exchange Ratio, and because the price of HUBCO Common
Stock at the time the Merger becomes effective may not be the same as the Median
Pre-Closing Price, PFC stockholders are not assured of receiving any specific
market value of HUBCO Common Stock.
Completion of the Merger is subject to certain conditions, including
bank regulatory approvals and approval of the Merger Agreement by the
affirmative vote of the majority of the outstanding shares of PFC Common Stock.
HUBCO has filed a Registration Statement with the Securities and
Exchange Commission (the "SEC") covering the shares of HUBCO Common Stock which
will be issued in connection with the Merger. This Proxy Statement-Prospectus
serves two purposes. It is the Proxy Statement being used by the PFC Board of
Directors to solicit proxies for the Meeting, and it is the Prospectus of HUBCO
regarding the HUBCO Common Stock to be issued if the Merger is completed. This
document does not serve as a prospectus to cover any resales of HUBCO Common
Stock to be issued in connection with the Merger. Persons who are considered
"affiliates" of PFC under applicable securities laws will be subject to
restrictions on their ability to resell the HUBCO Common Stock received by them
in the Merger.
This document is first being sent to PFC stockholders on or about
___________, 1998. It describes the Merger Agreement in detail and includes a
copy of the Merger Agreement as Appendix A. PFC stockholders are urged to read
this document carefully.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SEC NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
ALL INFORMATION REGARDING PFC CONTAINED OR INCORPORATED BY REFERENCE IN
THIS DOCUMENT WAS SUPPLIED BY PFC. ALL INFORMATION REGARDING HUBCO WAS SUPPLIED
BY HUBCO.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FDIC OR ANY OTHER GOVERNMENTAL AGENCY.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN WHAT IS INCLUDED IN THIS DOCUMENT. IF SUCH INFORMATION
OR REPRESENTATION IS GIVEN OR MADE, IT MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS DOCUMENT AT ANY TIME, NOR ANY DISTRIBUTION OF
SHARES OF HUBCO COMMON STOCK, SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
The date of this Proxy Statement-Prospectus is
____________, 1998.
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION........................................................
INFORMATION DELIVERED AND INCORPORATED BY REFERENCE..........................
SUMMARY OF PROXY STATEMENT-PROSPECTUS........................................
Overview............................................................
The Meeting.........................................................
The Companies ......................................................
The Merger..........................................................
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO................................
SELECTED CONSOLIDATED FINANCIAL DATA OF PFC..................................
MARKET PRICE AND DIVIDEND MATTERS............................................
Market Price and Dividend History...................................
Limitations on Dividends Under the Merger Agreement.................
Dividend Limitations on HUBCO.......................................
SUMMARY PRO FORMA FINANCIAL INFORMATION......................................
ACTUAL AND PRO FORMA PER SHARE DATA..........................................
INTRODUCTION ................................................................
CERTAIN INFORMATION REGARDING HUBCO .........................................
General.............................................................
Recent Developments.................................................
CERTAIN INFORMATION REGARDING PFC............................................
THE MEETING .................................................................
Purpose of the Meeting..............................................
Record Date; Voting Rights; Proxies.................................
Solicitation of Proxies.............................................
Quorum..............................................................
Required Vote.......................................................
THE PROPOSED MERGER..........................................................
General Description.................................................
Closing; Determination Date.........................................
Consideration ......................................................
Conversion of PFC Options...........................................
Cash in Lieu of Fractional Shares ..................................
Background of and PFC's Reasons for the Merger......................
HUBCO's Reasons for the Merger......................................
Interests of Certain Persons in the Merger .........................
Opinion of PFC's Financial Advisor..................................
Resale Considerations with Respect to the HUBCO Common Stock........
Conditions to the Merger............................................
Conduct of Business Pending the Merger..............................
Customary Representations, Warranties and Covenants.................
Regulatory Approvals................................................
Management and Operations After the Merger..........................
Exchange of Certificates, Issuance of New Options...................
Effective Time; Amendments; Termination ............................
Accounting Treatment of the Merger..................................
Federal Income Tax Consequences ....................................
No Dissenters' Rights...............................................
PRO FORMA FINANCIAL INFORMATION..............................................
DESCRIPTION OF HUBCO CAPITAL STOCK...........................................
General ............................................................
Description of HUBCO Common Stock...................................
Description of HUBCO Series B Preferred Stock.......................
COMPARISON OF THE RIGHTS OF STOCKHOLDERS OF PFC AND HUBCO....................
General ............................................................
Voting Requirements.................................................
Preferred Stock.....................................................
Classified Board of Directors ......................................
Rights of Dissenting Stockholders...................................
Shareholder Consent to Corporate Action.............................
Dividends ..........................................................
By-laws.............................................................
Shareholder Protection Legislation..................................
Limitations of Liability of Directors or Officers...................
SHAREHOLDER PROPOSALS........................................................
OTHER MATTERS................................................................
LEGAL OPINION................................................................
EXPERTS......................................................................
APPENDIX A Amended and Restated Agreement and Plan of Merger by
and among HUBCO, PFC and BTH...................................A-1
APPENDIX B Stock Option Agreement by and between HUBCO and PFC ...........B-1
APPENDIX C Fairness Opinion of Advest, Inc................................C-1
<PAGE>
AVAILABLE INFORMATION
HUBCO, Inc. ("HUBCO") is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission" or the "SEC"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such materials can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission (such as HUBCO). The address of the
Commission's web site is http://www.sec.gov. In addition, HUBCO Common Stock is
listed on The Nasdaq Stock Market, and certain material as to HUBCO can be
inspected at the offices of the National Association of Securities Dealers, Inc.
(the "NASD"), 1735 K Street, N.W., Washington, D.C. 20006.
PFC is also subject to the information requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Prior to the reorganization on May 30, 1997
(the "Reorganization") by which PFC became the holding company for Bank of the
Hudson ("BTH"), BTH was subject to the information requirements of the Exchange
Act, and filed reports, proxy statements and other information with the Office
of Thrift Supervision ("OTS"). The reports, proxy statements and other
information filed by PFC can be obtained from the SEC or from the NASD in the
same manner as HUBCO documents as set forth in the preceding paragraph. The
reports, proxy statements and other information filed by BTH prior to the
Reorganization can be inspected and copied at the public reference facilities
maintained by the OTS's Dissemination Branch, Records Management and Information
Policy Division, 1700 G Street, N.W., Washington, D.C. 20552. Prior to October
14, 1997, the name of BTH was Poughkeepsie Savings Bank, FSB.
HUBCO has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act (together with all amendments and supplements
thereto, the "Registration Statement"), with respect to the securities being
offered by this document (this "Proxy Statement-Prospectus," sometimes referred
to as this "Proxy Statement"). As permitted by the rules and regulations of the
Commission, this Proxy Statement-Prospectus omits certain information, exhibits
and undertakings contained in the Registration Statement. For further
information with respect to HUBCO and the securities offered hereby, reference
is made to the Registration Statement, including the exhibits thereto.
Statements contained in this Proxy Statement-Prospectus or in any
document incorporated by reference herein, as to the contents of any document
referred to herein or therein, are not necessarily complete, and in each
instance reference is made to the copy of such document filed as an exhibit to
the Registration Statement or such other document, each such statement being
qualified in all respects by such reference.
INFORMATION DELIVERED AND INCORPORATED BY REFERENCE
The following documents filed by HUBCO with the Commission are
incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1996.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997.
3. Current Reports on Form 8-K filed with the Commission on August 21,
1997, September 9, 1997, October 23, 1997 and December 12, 1997.
4. Form 8-A filed by HUBCO to register its Common and Preferred Stock
pursuant to Section 12(g) of the Exchange Act.
A copy of HUBCO's Annual Report to Stockholders for the year ended
December 31, 1996 ("HUBCO's Annual Report") and HUBCO's Proxy Statement for its
Annual Meeting dated March 13, 1997 ("HUBCO's Proxy Statement") are available to
any holder of PFC Common Stock, including any beneficial owner, free of charge
upon written or oral request as set forth hereinafter.
The following documents filed by PFC with the Commission are
incorporated herein by reference.
1. Annual Report on Form 10-K for the year ended December 31, 1996.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997.
3. Current Report on Form 8-K filed with the Commission on November
12, 1997
4. Form 8-B filed by PFC to register its Common Stock pursuant to
Section 12(g) of the Exchange Act
All documents filed by HUBCO or PFC pursuant to Sections 13(a), 13(c),
14, or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
earlier of (i) the date of the Special Meeting of stockholders of PFC (the
"Meeting") to which this Proxy Statement-Prospectus relates, or (ii) the
termination of the Merger Agreement which is the subject of the Meeting, are
hereby incorporated by reference into this Proxy Statement and shall be deemed a
part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement.
This Proxy Statement incorporates documents by reference which are not
presented herein or delivered herewith. These documents (not including exhibits
thereto, unless such exhibits are specifically incorporated by reference into
the information incorporated herein) are available free of charge to any holder
of PFC Common Stock, including any beneficial owner, upon written or oral
request with respect to HUBCO materials, to the office of the HUBCO Corporate
Secretary, D. Lynn Van Borkulo-Nuzzo, Esq., HUBCO, Inc., 1000 MacArthur
Boulevard, Mahwah, New Jersey 07430; telephone (201) 236-2641. Additional copies
of PFC's Annual Report and PFC's Quarterly Report on Form 10-Q filed with the
SEC for the quarter ended September 30, 1997, are available free of charge to
any holder of PFC Common Stock, including any beneficial owner, upon written or
oral request to the office of PFC Corporate Secretary, Suzanne A. Gillespie,
Poughkeepsie Financial Corp., 249 Main Mall, Poughkeepsie, New York 12601;
telephone (914) 431-6353. Responses to any such request will be made within one
business day by sending the requested documents by first class mail or other
equally prompt means. In order to ensure timely delivery of the documents in
advance of the Meeting, any request should be made by __________, 1998.
CONTAINED WITHIN AND INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS ARE CERTAIN FORWARD LOOKING STATEMENTS WITH RESPECT TO THE
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF HUBCO. FACTORS THAT
MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES:
(1) EXPECTED COST SAVINGS OR REVENUE ENHANCEMENTS FROM THE MERGER CANNOT BE
REALIZED AS ANTICIPATED; (2) DEPOSIT ATTRITION, CUSTOMER LOSS OR REVENUE LOSS
FOLLOWING THE MERGER IS GREATER THAN EXPECTED; (3) COMPETITIVE PRESSURE IN THE
BANKING AND FINANCIAL SERVICES INDUSTRY INCREASES SIGNIFICANTLY; (4) CHANGES IN
THE INTEREST RATE ENVIRONMENT; AND (5) GENERAL ECONOMIC CONDITIONS, EITHER
NATIONALLY OR IN THE STATES OF NEW JERSEY, NEW YORK OR CONNECTICUT, ARE LESS
FAVORABLE THAN EXPECTED.
<PAGE>
SUMMARY OF PROXY STATEMENT-PROSPECTUS
The following is a summary of certain information regarding the matters
to be considered at the Meeting. This summary is necessarily incomplete and is
qualified by the more detailed information contained elsewhere in this Proxy
Statement. Holders of PFC common stock and options (together, "PFC Securities")
should carefully read the entire Proxy Statement.
Overview
The Board of Directors of Poughkeepsie Financial Corp. ("PFC") has
called a Special Meeting of PFC stockholders (the "Meeting") to be held on [Day
of Week], [Date], 1998. The Meeting has been called to seek PFC shareholder
approval of an Amended and Restated Agreement and Plan of Merger, dated as of
October 22, 1997 (the "Merger Agreement"), by and among HUBCO, Inc. ("HUBCO"),
PFC and PFC's principal subsidiary, Bank of The Hudson ("BTH"). The Merger
Agreement provides for PFC to be merged with HUBCO (the "Merger"), with HUBCO as
the surviving corporation. HUBCO, a bank holding company incorporated in New
Jersey, is the parent corporation of Hudson United Bank, a New Jersey-based bank
("HUB"), and Lafayette American Bank, a Connecticut-based bank ("Lafayette"). If
the Merger is completed, BTH will become the New York-based banking subsidiary
of HUBCO. A copy of the Merger Agreement is attached as Appendix A to this Proxy
Statement.
Upon completion of the Merger, each share of common stock, par value
$0.01 per share, of PFC ("PFC Common Stock") will be converted into a number of
shares (the "Exchange Ratio") of common stock of HUBCO, no par value ("HUBCO
Common Stock"). The Merger Agreement provides that the Exchange Ratio will be a
fraction with a numerator of $10.00 and a denominator equal to the "Median
Pre-Closing Price" of HUBCO Common Stock (a term defined in the Merger Agreement
generally as the median of the weighted average daily prices of HUBCO Common
Stock during a 10 trading day period shortly prior to the closing of the
Merger); provided, that a "Minimum Exchange Ratio" of 0.300 will apply if the
Median Pre-Closing Price is at or above $33.33, and a "Maximum Exchange Ratio"
of 0.320 will apply if the Median Pre-Closing Price is at or below $31.25. Cash
will be paid in lieu of fractional shares. The Exchange Ratio is subject to
anti-dilution adjustments specified in the Merger Agreement.
This document serves two purposes. It is the Proxy Statement being used
by the PFC Board of Directors to solicit proxies for the Meeting, and it is the
Prospectus of HUBCO regarding the HUBCO Common Stock to be issued if the Merger
is completed. Therefore, this document is sometimes referred to as either the
"Proxy Statement-Prospectus" or the "Proxy Statement".
The Meeting
The Meeting will be held on [Day of Week], [Date], 1998 at [Time] , at
[Location]. At the Meeting, holders of PFC Common Stock will be asked to approve
and adopt the Merger Agreement.
Record holders of PFC Common Stock at the close of business on
___________, 1998 (the "Record Date") are entitled to vote at the Meeting.
Holders of a majority of the outstanding shares of PFC Common Stock must be
present or represented by proxy at the Meeting for a quorum. The affirmative
vote, in person or by proxy, of the majority of the outstanding shares of PFC
Common Stock is required in order to approve and adopt the Merger Agreement. As
of the Record Date, there were _________ outstanding shares of PFC Common Stock
held by approximately ___ holders of record. The directors of PFC as a group
have voting control over _______ of these shares (___%) and have agreed to vote
them in favor of the Merger Agreement. In addition, HUBCO has voting control
over ____ of these shares (___%) and the non-director executive officers of PFC
as a group have voting control over ____ of these shares (___%), all of which
shares PFC expects will be voted in favor of the Merger Agreement.
The PFC Board of Directors has unanimously approved the Merger
Agreement and unanimously recommends that holders of PFC Common Stock vote FOR
the Merger Agreement.
The Companies
HUBCO
HUBCO is a bank holding company whose principal operating subsidiaries
are HUB and Lafayette. HUBCO's corporate headquarters is located at 1000
MacArthur Boulevard, Mahwah, New Jersey 07430. HUB's corporate headquarters is
located at 3100 Bergenline Avenue, Union City, New Jersey 07084. Lafayette's
corporate headquarters is located at 1000 Lafayette Boulevard, Bridgeport,
Connecticut 06604. HUBCO's telephone number is (201) 236-2600.
HUB is a full-service commercial bank which primarily serves small and
mid-sized businesses and consumers through 57 branches in Northern New Jersey.
Lafayette is a full-service commercial bank which serves small-to-medium-sized
business firms as well as individuals through 27 banking offices located mainly
in Fairfield and New Haven counties in Connecticut. As of September 30, 1997,
HUBCO had consolidated assets of $3.0 billion, consolidated deposits of $2.3
billion and consolidated stockholders' equity of $212 million. Based on assets
as of September 30, 1997, HUBCO was the fourth largest commercial banking
company headquartered in New Jersey.
HUBCO's strategy is to enhance profitability and build market share
through both internal growth and acquisitions. Since October, 1990, HUBCO has
added over 72 branches and approximately $2.5 billion in assets through 18
acquisitions of financial institutions in both government-assisted and private
transactions. HUBCO expects to continue its acquisition strategy.
PFC
PFC is a unitary thrift holding company and conducts its business
through its wholly owned subsidiary, Bank of the Hudson ("BTH"). The principal
executive offices of PFC and BTH are located at 249 Main Mall, Poughkeepsie, New
York 12601. PFC's telephone number is (914) 431-6200.
BTH is a community savings bank serving the Mid-Hudson Valley area of
New York through 16 branches in Dutchess, Orange and Rockland counties, as well
as six residential loan origination offices in five New York counties and New
Jersey. Poughkeepsie Savings Bank, FSB, BTH's predecessor, was chartered as a
mutual savings bank by the New York State Legislature in 1831, converted to a
federal mutual savings bank in 1981 and converted to stock form in 1985.
In recent years, the business of BTH has consisted primarily of
obtaining funds in the form of deposits from the general public and borrowings
and using such funds to make residential mortgage loans and commercial mortgage
loans as well as commercial business loans, consumer loans, student loans and
other investments. Currently, BTH conducts community banking operations in the
Mid-Hudson region of New York (primarily Dutchess, Orange, Ulster, Putnam,
Rockland and Westchester counties as well as contiguous areas).
The Merger
Description of the Merger; Effective Time
In the Merger, PFC will be merged with and into HUBCO, with HUBCO as
the surviving entity. A closing under the Merger Agreement (the "Closing") will
occur on a date (the "Closing Date") to be determined by HUBCO and set forth in
a notice (the "Closing Notice") to PFC. The Closing Date specified by HUBCO in
the Closing Notice must be at least seven business days after the date of the
Closing Notice, but not more than 15 business days after the satisfaction or
waiver of the conditions to consummation of the Merger (other than the delivery
of documents to be delivered at the Closing). The Closing may also be set for
another day mutually agreed to by HUBCO and PFC. The parties currently
anticipate closing in the first quarter of 1998. Immediately following the
Closing, HUBCO will file a certificate of merger with the Secretary of State of
the State of New Jersey and with the Secretary of State of the State of
Delaware. The Merger will become effective at the "Effective Time", which will
be the close of business on the first day when the certificates of merger in
both New Jersey and Delaware have been filed. HUBCO and PFC anticipate the
Effective Time will be the close of business on the Closing Date. The exact
Closing Date and Effective Time are dependent upon satisfaction of all
conditions precedent, some of which are not under the control of HUBCO or PFC.
Consideration
Upon completion of the Merger, each share of PFC Common Stock will be
converted into a number of shares of HUBCO Common Stock equal to the Exchange
Ratio. The Merger Agreement provides that the Exchange Ratio will be a fraction
with a numerator of $10.00 and a denominator equal to the "Median Pre-Closing
Price" of HUBCO Common Stock (a term defined in the Merger Agreement generally
as the median of the weighted average daily prices of HUBCO Common Stock during
a 10 trading day period shortly prior to the closing of the Merger). The Minimum
Exchange Ratio of 0.300 will apply if the Median Pre-Closing Price is at or
above $33.33, and the Maximum Exchange Ratio of 0.320 will apply if the Median
Pre-Closing Price is at or below $31.25. Cash will be paid in lieu of fractional
shares. The Exchange Ratio is subject to anti-dilution adjustments specified in
the Merger Agreement. The Merger Agreement provides that no anti-dilution
adjustment will be made to the Exchange Ratio in connection with the stock
dividend paid by HUBCO on December 1, 1997 to its stockholders of record on
November 13, 1997 (the "1997 Stock Dividend"). If the Median Pre-Closing Price
is less than $25.75, the Board of Directors of PFC will have certain rights to
terminate the Merger Agreement unless HUBCO agrees to increase the Exchange
Ratio to a fraction with a numerator of $8.24 and a denominator equal to the
Median Pre-Closing Price.
The calculation of the Exchange Ratio called for by the Merger
Agreement was intended by HUBCO and PFC to result in stockholders of PFC
receiving in the Merger HUBCO Common Stock with a value of $10.00 for each share
of PFC Common Stock, provided that the initial Exchange Ratio calculation
(before taking into effect the Minimum and Maximum Exchange Ratios) results in
an Exchange Ratio which is neither below the Minimum Exchange Ratio nor above
the Maximum Exchange Ratio (i.e., provided the Median Pre-Closing Price of HUBCO
Common Stock is between $33.33 and $31.25). However, because of the Minimum
Exchange Ratio and Maximum Exchange Ratio, and because the price of HUBCO Common
Stock at the Effective Time may not be the same as the Median Pre-Closing Price,
PFC stockholders are not assured of receiving any specific market value of HUBCO
Common Stock. The price of HUBCO Common Stock at the Effective Time may be
higher or lower than the Median Pre-Closing Price, and may be higher or lower
than the market price at the time of entering into the Merger Agreement, the
time of mailing this Proxy Statement or at the time of the Meeting. PFC
stockholders are urged to obtain current market quotations for the HUBCO Common
Stock and the PFC Common Stock.
Prior to consummation of the Merger, PFC may, pursuant to the terms of
the Merger Agreement, increase its quarterly cash dividends to an amount
substantially equivalent to HUBCO's cash dividend as adjusted for the Exchange
Ratio.
Cash in Lieu of Fractional Shares
No fractional shares of HUBCO Common Stock will be issued in exchange
for PFC Common Stock. Instead, holders of PFC Common Stock will receive cash
equal to their fractional share interest multiplied by the Median Pre-Closing
Price of HUBCO Common Stock, without interest. All shares of HUBCO Common Stock
to be issued to each holder of PFC Common Stock will be aggregated to constitute
as many whole shares as possible before determining the person's fractional
share interest.
Conversion of PFC Options
Pursuant to the Merger Agreement and at the Effective Time, each
outstanding option to purchase a share of PFC Common Stock ("PFC Option")
granted under PFC's existing stock option plans and agreements with its
directors and employees will be converted into an option to purchase the same
number of shares of HUBCO Common Stock multiplied by the Exchange Ratio, at an
option price per share of HUBCO Common Stock equal to the option exercise price
per share of PFC Common Stock under the PFC Option divided by the Exchange
Ratio.
No Dissenters' Rights of Appraisal
Under the Delaware General Corporation Law (the "DGCL"), holders of PFC
Common Stock are not entitled to dissenters' rights of appraisal in connection
with the Merger.
Certain Federal Income Tax Consequences
The Merger is conditioned upon, among other things, the receipt of an
opinion of counsel to HUBCO to the effect that the Merger will qualify as a
tax-free reorganization as defined in Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code"). While the PFC Board of Directors has the
contractual right to waive this condition to closing, it will not do so.
Accounting Treatment of the Merger
The Merger is expected to be accounted for as a pooling of interests
for financial reporting purposes and HUBCO's obligation to consummate the Merger
is conditioned upon HUBCO's receipt of assurances from its independent
accountants that the Merger will be so treated. Under the pooling of interests
method of accounting, PFC's historical basis of assets, liabilities and
stockholders' equity will be retained by HUBCO as the surviving entity and the
combined entity's consolidated financial statements will be restated
retroactively to reflect the combined financial condition, results of operations
and cash flows as if HUBCO and PFC had been combined for all periods presented.
Required Regulatory Approvals
Consummation of the Merger is subject to prior receipt of approval of
the Merger by the Board of Governors of the Federal Reserve System (the "FRB").
An application for FRB approval has been filed and HUBCO and PFC anticipate
receiving FRB approval. However, there can be no assurance that the approval
will be granted, that it will be granted on a timely basis, or that it will be
granted without conditions unacceptable to HUBCO or PFC.
Conditions to the Merger
There are a number of conditions to completion of the Merger, including
receipt of FRB approval; approval of the Merger Agreement by the PFC
stockholders; an opinion of Pitney, Hardin, Kipp & Szuch, counsel to HUBCO, that
the Merger will result in a tax-free reorganization; and assurances to HUBCO
from its independent accountants that the Merger will be accounted for as a
pooling of interests.
Termination Rights
The Merger Agreement may be terminated by either PFC or HUBCO if, among
other reasons, the Effective Time has not occurred by July 31, 1998 (which may
be extended under certain circumstances to October 31, 1998) other than due to
failure of the terminating party to perform its obligations under the Merger
Agreement. The Merger Agreement may be terminated by PFC if PFC's Board of
Directors approves another acquisition transaction after determining, upon
advice of counsel, that approval is necessary in the exercise of its fiduciary
obligations under applicable laws. In addition, PFC may terminate the Merger
Agreement if the Median Pre-Closing Price of HUBCO Common Stock is less than
$25.75 which, given the Maximum Exchange Ratio, would result in shares of PFC
Common Stock being converted into HUBCO Common Stock with a value of less than
$8.24. However, if the PFC Board of Directors exercises this termination right,
HUBCO can choose to override the termination by increasing the Exchange Ratio to
a fraction with a numerator of $8.24 and a denominator equal to the Median
Pre-Closing Price.
Fairness Opinion
The PFC Board of Directors has retained Advest, Inc. ("Advest") to
evaluate the terms of the Merger. Advest expects to deliver a written opinion to
the PFC Board of Directors dated on or about the date of this Proxy Statement to
the effect that, as of the date of such opinion, the Exchange Ratio is fair to
the PFC stockholders from a financial point of view. Holders of PFC Common Stock
are urged to, and should, read such opinion in its entirety. For information
concerning the matters reviewed, assumptions made and factors considered by
Advest, see "THE PROPOSED MERGER -- Opinion of Financial Advisor" and Appendix C
to this Proxy Statement, which sets forth a draft of Advest's fairness opinion.
Stock Option to HUBCO for PFC Shares
HUBCO and PFC entered into a Stock Option Agreement dated October 22,
1997 (the "Stock Option Agreement") in connection with the negotiation by HUBCO
and PFC of the Merger Agreement. Pursuant to the Stock Option Agreement, PFC has
granted to HUBCO an option (the "Option"), exercisable only under certain
limited and specifically defined circumstances, to purchase up to 2,000,000
authorized but unissued shares of PFC Common Stock, representing upon issuance
approximately 13.6% of the shares of PFC Common Stock, for an exercise price of
$7.875 per share. HUBCO does not have any voting rights with respect to the
shares of PFC Common Stock subject to the Option prior to exercise of the
Option.
The Stock Option Agreement is attached to this Proxy Statement as
Appendix B hereto. In the event that certain specifically enumerated "Triggering
Events" occur and the Merger is not consummated, HUBCO would recognize a gain on
the sale of the shares of PFC Common Stock received pursuant to the exercise of
the Option if such shares of PFC Common Stock were sold at prices exceeding
$7.875 per share. The ability of HUBCO to exercise the Option and to cause up to
an additional 2,000,000 shares of PFC Common Stock to be issued may be
considered a deterrent to other potential acquisitions of control of PFC, as it
is likely to increase the cost of an acquisition of all of the shares of PFC
Common Stock which would then be outstanding. The exercise of the option by
HUBCO may also make pooling of interests accounting treatment unavailable to a
subsequent acquiror. See "THE PROPOSED MERGER -- Conversion of PFC Options."
Interests of Certain Persons in the Merger
Pursuant to Change in Control Agreements between PFC and each of Joseph
B. Tockarshewsky, its Chairman, President and Chief Executive Officer, and
Robert J. Hughes, its Executive Vice President and Chief Financial Officer,
Messrs. Tockarshewsky and Hughes will each receive a severance payment equal to
two times their respective annual base salaries, as well as continued coverage
under PFC's medical benefits plan and other benefit plans maintained by PFC
during the 24-month period following consummation of the Merger. Other PFC
executive officers and employees are covered by PFC's severance policies,
pursuant to which they could receive payments based on their years of service
with PFC as a consequence of the Merger if their employment is terminated or, in
certain cases, constructively terminated following the Merger.
Certain executive officers and directors of PFC have stock options
which will become vested by virtue of the Merger.
In addition to the foregoing, the Merger Agreement requires HUBCO to
indemnify, for a period of six years after the Effective Time, each director,
officer, employee or agent of PFC or BTH to the fullest extent which PFC or BTH
would have been permitted under applicable law and their respective Certificates
of Incorporation and By-laws had the Merger not occurred, with respect to any
claims made against such person because he or she is or was serving in such
capacity. The Merger Agreement also requires HUBCO to provide PFC's and BTH's
officers and directors with directors' and officers' liability insurance for at
least six years after the Effective Time.
Differences in Stockholders' Rights
PFC is a business corporation incorporated under the DGCL and HUBCO is
a business corporation incorporated under the New Jersey Business Corporation
Act (the "NJBCA"). The rights of PFC stockholders are currently governed by the
DGCL and PFC's articles of incorporation and by-laws. At the Effective Time,
each PFC stockholder will become a shareholder of HUBCO. The rights of HUBCO
stockholders are governed by the NJBCA and HUBCO's certificate of incorporation
and by-laws. The DGCL and the NJBCA, and the rights of stockholders thereunder,
differ with respect to voting requirements and various other matters.
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO
At or for the Year Ended December 31,
---------------------------------------------------------------------------
1996 1995 1994 1993 1992
(Dollars in thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C>
Earnings Summary:
Interest income $ 204,182 $ 203,651 $ 170,929 $ 149,528 $ 164,346
Interest expense 72,828 70,440 53,126 50,771 67,749
------------ ------------- ------------ ------------- ------------
Net interest income 131,354 133,211 117,803 98,757 96,597
Provision for possible loan losses 12,295 9,515 9,309 31,917 26,320
------------ ------------- ------------ ------------- ------------
Net interest income after
provision for possible loan losses 119,059 123,696 108,494 66,840 70,277
Other income 30,276 28,223 22,420 24,571 25,530
Other expenses 116,239 102,842 94,931 97,098 93,764
------------ ------------- ------------ -------------
------------
Income (loss) before income taxes 33,096 49,077 35,983 (5,687 ) 2,043
Income tax provision (benefit) 11,599 14,512 12,595 321 (6,441 )
============ ============= ============ ============= ============
Net income (loss) $ 21,497 $ 34,565 $ 23,388 $ (6,008 ) $ 8,484 $
============ ============= ============ ============= ============
Share Data:
Weighted average
shares outstanding (in thousands) 23,882 24,797 23,589 19,223 15,073
Net income (loss) per share $ 0.90 $ 1.39 $ 0.99 $ (0.31 ) $ 0.56 $
Cash dividend per common share 0.66 0.56 0.34 0.29 0.25
Balance Sheet Summary:
Securities held to maturity $ 280,914 $ 294,057 $ 715,509 $ 599,587 $ 456,709 $
Securities available for sale 655,492 502,381 213,815 179,267 130,789
Loans 1,884,355 1,652,022 1,569,059 1,303,397 1,373,631
Total assets 3,115,687 2,778,416 2,770,667 2,322,713 2,219,105
Deposits 2,592,092 2,446,273 2,414,999 2,103,895 2,021,029
Stockholders' equity 206,333 216,796 187,305 117,965 122,406
Performance Ratios:
Return on average assets 0.76 % 1.27 % 0.91 % (0.27) % 0.38 %
Return on average equity 10.44 % 17.31 % 15.77 % (5.01) % 7.57 %
Dividend payout 73.33 % 40.29 % 34.34 % 44.64 %
-
Average equity to average assets 7.25 % 7.35 % 5.79 % 5.39 % 5.02 %
Net interest margin 5.05 % 5.34 % 5.03 % 4.75 % 4.81 %
Asset Quality Ratios:
Allowance for possible loan
losses to total loans 1.87 % 1.82 % 1.97 % 2.57 % 2.39 %
Allowance for possible loan losses
to non-performing loans 111 % 118 % 74 % 44 % 42 %
Non-performing loans to
total loans 1.69 % 1.55 % 2.65 % 5.78 % 5.64 %
Non-performing assets to total
loans, plus other real estate 1.98 % 2.23 % 3.62 % 7.39 % 7.54 %
Net charge-offs to average loans 0.69 % 0.66 % 1.28 % 1.84 % 1.76 %
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO
At or For the Nine Months Ended September 30,
-------------------------------------------------------------
1997 1996
------------------------------- -----------------------------
(Dollars in thousands, except for per share amounts)
<S> <C> <C>
Earnings Summary:
Interest income $ 165,249 $ 149,933
Interest expense 58,772 52,491
------------ ------------
Net interest income 106,477 97,442
Provision for possible loan losses 5,027 6,675
------------ ------------
Net interest income after
provision for possible loan losses 101,450 90,767
Other income 28,993 21,915
Other expenses 70,165 83,437
------------ ------------
Income before income taxes 60,278 29,245
Income tax provision 23,860 11,208
------------ ------------
Net income $ 36,418 $ 18,037
============ ============
Share Data:
Weighted average
shares outstanding (in thousands) 23,471 24,070
Net income per share $ 1.55 $ 0.75
Cash dividend per common share 0.55 0.48
Balance Sheet Summary:
Securities held to maturity $ 232,970 $ 274,226
Securities available for sale 653,079 657,269
Loans 1,781,414 1,794,897
Total assets 3,046,034 3,034,297
Deposits 2,298,321 2,500,389
Stockholders' equity 211,893 205,144
Performance Ratios: (1)
Return on average assets 1.62 % 0.87 %
Return on average equity 23.44 % 11.86 %
Dividend payout 35.48 % 64.00 %
Average equity to average assets 6.92 % 7.31 %
Net interest margin 5.22 % 5.14 %
Asset Quality Ratios:
Allowance for possible loan
losses to total loans 2.11 % 1.83 %
Allowance for possible loan losses
to non-performing loans 116 % 95 %
Non-performing loans to
total loans 1.82 % 1.92 %
Non-performing assets to total
loans, plus other real estate 2.02 % 2.30 %
Net charge-offs to average loans 0.29 % 0.39 %
- ----------------------------
</TABLE>
(1) The Performance Ratios are presented on an annualized basis.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF POUGHKEEPSIE FINANCIAL CORP.
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------------------------
1996 1995 1994 1993 1992
(Dollars in thousands, except for per share amounts)
<S> <C> <C> <C> <C>
Earnings Summary:
Interest income $ 63,620 $ 58,959 $ 49,536 $ 47,433 $ 66,387 $
Interest expense 37,857 35,475 27,620 29,941 52,830
------------ ------------- ------------ ------------- ------------
Net interest income 25,763 23,484 21,916 17,492 13,557
Provision for possible loan losses 850 1,525 120 400 3,900
------------ ------------- ------------ ------------- ------------
Net interest income after
provision for possible loan losses 24,913 21,959 21,796 17,092 9,657
Other income (1) 1,462 (5,914 ) 2,851 6,923 24,174
Other expenses (2) 23,976 18,269 17,980 18,196 39,248
------------ ------------- ------------ ------------- ------------
Income (loss) before income taxes 2,399 (2,224 ) 6,667 5,819 (5,417 )
Income tax provision (benefit) (3) 963 (18,486 ) 150 -- --
============ ============= ============ ============= ============
Net income (loss) $ 1,436 $ 16,262 $ 6,517 $ 5,819 $ (5,417 ) $
============ ============= ============ ============= ============
Share Data:
Weighted average
shares outstanding (in thousands) 12,910 12,855 12,746 8,252 3,648
Net income (loss) per share $ 0.11 $ 1.27 $ 0.51 $ 0.71 $ (1.49 ) $
Cash dividend per common share 0.10 0.08 -- -- --
Balance Sheet Summary:
Securities held to maturity $ 29,957 $ -- $ -- $ -- $ -- $
Securities available for sale 135,790 185,600 203,883 218,646 158,540
Loans 643,339 583,767 494,189 459,607 486,563
Total assets 858,690 825,448 727,625 718,874 726,633
Deposits 575,246 534,041 489,144 437,660 457,355
Stockholders' equity 71,668 70,924 50,478 49,600 23,328
Performance Ratios:
Return on average assets 0.17 % 2.12 % 0.91 % 0.82 % (0.59) %
Return on average equity 2.02 % 28.48 % 13.31 % 11.73 % (23.06) %
Dividend payout 90.91 % 6.35 % -- -- --
Average equity to average assets 8.41 % 7.44 % 6.84 % 5.53 % 2.55 %
Net interest margin 3.21 % 3.12 % 3.17 % 2.60 % 1.61 %
Asset Quality Ratios:
Allowance for possible loan
losses to total loans 1.34 % 1.41 % 3.68 % 4.29 % 4.17 %
Allowance for possible loan losses
to non-performing loans 56.10 % 151.96 % 116.02 % 133.33 % 98.54 %
Non-performing loans to
total loans 2.40 % 0.93 % 3.17 % 3.22 % 4.23 %
Non-performing assets to total loans,
plus other real estate owned 4.00 % 3.05 % 5.57 % 8.20 % 14.06 %
Net charge-offs to average loans 0.07 % 0.27 % 0.36 % 0.21 % 1.06 %
- -------------
(1) In 1995, PFC recorded a $7.5 million loss related to certain commercial
loans held for bulk sale.
(2) In 1996, PFC recorded a $2.6 million special assessment levied by the FDIC
to recapitalize the SAIF Insurance Fund.
(3) In 1995, PFC recognized deferred tax assets of $17.6 million by reducing
previously established valuation reserves.
</TABLE>
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF POUGHKEEPSIE FINANCIAL CORP.
<TABLE>
<CAPTION>
At or For the Nine Months Ended September 30,
-------------------------------------------------------------
1997 1996
------------------------------- -----------------------------
(Dollars in thousands, except for per share amounts)
<S> <C> <C>
Earnings Summary:
Interest income $ 49,745 $ 47,034
Interest expense 29,152 28,106
----------- -----------
Net interest income 20,593 18,928
Provision for possible loan losses 950 550
----------- -----------
Net interest income after
provision for possible loan losses 19,643 18,378
Other income (1) 2,753 754
Other expenses (2) 16,689 18,772
----------- -----------
Income before income taxes 5,707 360
Income tax provision 2,325 146
=========== ===========
Net Income $ 3,382 $ 214
=========== ===========
Share Data:
Weighted average
shares outstanding (in thousands) 13,154 12,907
Net income per share 0.26 0.02
Cash dividend per common share 0.075 0.075
Balance Sheet Summary:
Securities held to maturity 26,832 30,786
Securities available for sale 154,356 143,095
Loans 656,961 637,607
Total assets 883,981 860,853
Deposits 611,731 565,060
Stockholders' equity 74,436 70,129
Performance Ratios: (3)
Return on average assets 0.55 % 0.03 %
Return on average equity 6.55 % 0.40 %
Dividend payout 28.85 % 375.00 %
Average equity to average assets 8.42 % 8.48 %
Net interest margin 3.32 % 3.17 %
Asset Quality Ratios:
Allowance for possible loan
losses to total loans 1.34 % 1.33 %
Allowance for possible loan losses
to non-performing loans 75.82 % 55.13 %
Non-performing loans to
total loans 1.77 % 2.42 %
Non-performing assets to total loans,
plus other real estate owned 2.60 % 3.62 %
Net charge-offs to average loans 0.12 % 0.05 %
- -------------
(1) In June 1996, PFC recorded a $0.9 million loss related to certain commercial
loans held for bulk sale.
(2) In September 1996, PFC recorded a $2.6 million special assessment levied by
the FDIC to recapitalize the SAIF Insurance Fund (3) The Performance Ratios
are presented on an annualized basis.
</TABLE>
<PAGE>
MARKET PRICE AND DIVIDEND MATTERS
Market Price and Dividend History
HUBCO Common Stock and the PFC Common Stock are quoted on The Nasdaq Stock
Market (formerly known as the "Nasdaq National Market System") under the symbols
"HUBC" and "PKPS", respectively. The following tables set forth, for the periods
indicated, the high and low closing prices per share of HUBCO Common Stock and
PFC Common Stock, as reported by The Nasdaq Stock Market, and quarterly
dividends per share.
All stock prices shown in the tables below have been rounded to
the nearest cent. HUBCO's stock prices and dividends shown in the tables below
have been adjusted for a 3-for-2 stock split effective January 14, 1995, a HUBCO
stock dividend payable on December 1, 1997 to stockholders of record on November
13, 1997 (the "1997 Stock Dividend"), and a HUBCO stock dividend payable on
November 15, 1996 to stockholders of record on November 4, 1996 (the "1996 Stock
Dividend").
<TABLE>
<CAPTION>
Equivalent Pro Forma Market Price Per
Market Market Share of PFC Common Stock(1)
Price Per Share Price Per Share Maximum Minimum
of HUBCO of PFC Exchange Exchange
Common Stock Common Stock Ratio (0.32) Ratio (0.30)
-------------------- ------------------- ------------------ -------------------
High Low High Low High Low High Low
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995:
First Quarter........ $ 16.38 $ 13.83 $ 4.88 $ 4.00 $ 5.24 $ 4.43 $ 4.91 $ 4.15
Second Quarter....... $ 16.97 $ 14.58 $ 6.13 $ 4.38 $ 5.43 $ 4.67 $ 5.09 $ 4.37
Third Quarter........ $ 19.91 $ 16.26 $ 5.88 $ 4.88 $ 6.37 $ 5.20 $ 5.97 $ 4.88
Fourth Quarter....... $ 20.85 $ 18.15 $ 5.38 $ 4.50 $ 6.67 $ 5.81 $ 6.26 $ 5.44
1996:
First Quarter........ $ 21.33 $ 18.32 $ 5.63 $ 5.00 $ 6.83 $ 5.86 $ 6.40 $ 5.50
Second Quarter....... $ 20.50 $ 17.32 $ 5.63 $ 4.88 $ 6.56 $ 5.54 $ 6.15 $ 5.20
Third Quarter........ $ 20.39 $ 18.61 $ 5.25 $ 4.75 $ 6.52 $ 5.96 $ 6.12 $ 5.58
Fourth Quarter....... $ 24.15 $ 19.56 $ 5.38 $ 5.00 $ 7.73 $ 6.26 $ 7.24 $ 5.87
1997:
First Quarter........ $ 25.85 $ 21.84 $ 6.50 $ 4.43 $ 8.27 $ 6.99 $ 7.76 $ 6.55
Second Quarter....... $ 28.52 $ 21.12 $ 7.31 $ 4.67 $ 9.13 $ 6.76 $ 8.56 $ 6.33
Third Quarter........ $ 32.04 $ 26.94 $ 9.38 $ 5.20 $10.25 $ 8.62 $ 9.61 $ 8.08
Fourth Quarter
(through 12/ /97)... $ $ $ $ $ $ $ $
- -------------
(1) Equivalent pro forma market price per share of PFC Common Stock represents
the high and low closing prices per share of HUBCO Common Stock, multiplied
by the Exchange Ratio. The Exchange Ratio is subject to anti-dilution
adjustments specified in the Merger Agreement. The Merger Agreement
provides that no anti-dilution adjustment will be made in connection with
the 1997 Stock Dividend.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Equivalent Pro Forma Dividends Per
HUBCO PFC Share of PFC Common Stock(1)
Common Stock Common Stock Maximum Minimum
Dividends Dividends Exchange Exchange
Per Share Per Share Ratio (0.320) Ratio (0.300)
---------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
1995:
First Quarter......... $ 0.141 $ 0.020 $ 0.045 $ 0.042
Second Quarter........ $ 0.141 $ 0.020 $ 0.045 $ 0.042
Third Quarter......... $ 0.141 $ 0.020 $ 0.045 $ 0.042
Fourth Quarter........ $ 0.141 $ 0.020 $ 0.045 $ 0.042
1996:
First Quarter......... $ 0.160 $ 0.025 $ 0.051 $ 0.048
Second Quarter........ $ 0.160 $ 0.025 $ 0.051 $ 0.048
Third Quarter......... $ 0.160 $ 0.025 $ 0.051 $ 0.048
Fourth Quarter........ $ 0.184 $ 0.025 $ 0.059 $ 0.055
1997:
First Quarter......... $ 0.184 $ 0.025 $ 0.059 $ 0.055
Second Quarter........ $ 0.184 $ 0.025 $ 0.059 $ 0.055
Third Quarter......... $ 0.184 $ 0.025 $ 0.059 $ 0.055
Fourth Quarter
(through 12/4/97)..... $ 0.200 $ 0.050 $ 0.064 $ 0.060
----------------------
(1) Equivalent pro forma cash dividends per share of PFC Common Stock
represents HUBCO historical dividend rates per share, multiplied by the
Exchange Ratio, rounded to the nearest tenth of a cent. The current
annualized dividend rate per share of HUBCO Common Stock, based upon
the four most recently declared quarterly dividend rates of $.184 per
share of HUBCO Common Stock payable on March 1, June 1, September 1 and
$.20 payable on December 1, would be $0.75. On an equivalent pro forma
basis, such current annualized HUBCO dividend per share of PFC Common
Stock would be $0.24, based on the Maximum Exchange Ratio (0.320), or
$0.225, based on the Minimum Exchange Ratio (0.300), in each case
rounded to the nearest tenth of a cent. See "MARKET PRICE AND DIVIDEND
MATTERS - Limitations on Dividends Under The Merger Agreement." No
assurance can be given as to future HUBCO dividend rates. Future HUBCO
dividends are dependent upon the earnings and financial condition of
HUBCO, as well as government regulations and policies and other
factors.
</TABLE>
<PAGE>
The following table presents for (i) October 22, 1997, the last full
trading day before public announcement of the signing of the Merger Agreement,
and (ii) the most recent date prior to the date of this Proxy Statement on which
such stock traded, the reported closing price per share of HUBCO Common Stock
and PFC Common Stock on The Nasdaq Stock Market and the equivalent price per
share of PFC Common Stock computed by multiplying the closing price of HUBCO
Common Stock (as adjusted) on each of the dates specified by the Maximum
Exchange Ratio (0.320) and the Minimum Exchange Ratio (0.300), respectively.
<TABLE>
<CAPTION>
Equivalent Price Per Share
of PFC Common Stock
Maximum Minimum
HUBCO PFC Exchange Exchange
Common Stock Common Stock Ratio (0.320) Ratio (0.300)
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
October 22, 1997........... $34.34(1) $10.06 $ N/A(2) $10.30 (2)
_________, 1997............ $____ $____ $____ $__ ___
</TABLE>
- --------------------------------------
(1) As adjusted for the 1997 Stock Dividend.
(2) If the Median Pre-Closing Price of HUBCO Common Stock were $34.34, then
pursuant to the Merger Agreement, the Minimum Exchange Ratio would apply
and the Equivalent Price Per Share of PFC Common Stock would be $10.30.
The calculation of the Exchange Ratio called for by the Merger
Agreement was intended by HUBCO and PFC to result in stockholders of PFC
receiving in the Merger HUBCO Common Stock with a value of $10.00 for each share
of PFC Common Stock, provided that the initial Exchange Ratio calculation
(before taking into effect the Minimum and Maximum Exchange Ratios) results in
an Exchange Ratio which is neither below the Minimum Exchange Ratio nor above
the Maximum Exchange Ratio (i.e., provided the Median Pre-Closing Price of HUBCO
Common Stock is between $33.33 and $31.25). However, because of the Minimum
Exchange Ratio and Maximum Exchange Ratio, and because the price of HUBCO Common
Stock at the Effective Time may not be the same as the Median Pre-Closing Price,
PFC stockholders are not assured of receiving any specific market value of HUBCO
Common Stock. The price of HUBCO Common Stock at the Effective Time may be
higher or lower than the Median Pre-Closing Price, and may be higher or lower
than the market price at the time of entering into the Merger Agreement, the
time of mailing this Proxy Statement-Prospectus or at the time of the Meeting.
PFC STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE HUBCO
COMMON STOCK AND PFC COMMON STOCK.
Limitations on Dividends Under the Merger Agreement
The Merger Agreement prohibits PFC from declaring, setting aside or
paying any dividend or other distribution in respect of its capital stock,
except that PFC may declare, set aside or pay cash dividends per share of PFC
Common Stock aggregating the cash dividends per share declared, set aside or
paid by HUBCO multiplied by 0.320, minus $0.01 (the cash amount per share which
will be used by PFC to redeem the BTH Shareholder Rights which currently trade
as part of the PFC Common Stock). However, the Merger Agreement requires that
PFC adjust the amount of any such dividends if and to the extent necessary in
the opinion of Arthur Andersen LLP ("Arthur Andersen"), independent accountants
for HUBCO, so that the declaration, setting aside and payment of such dividends
will not disqualify the Merger for pooling of interests accounting treatment.
Dividend Limitations on HUBCO
The holders of HUBCO Common Stock are entitled to receive dividends
when and if declared by HUBCO's Board of Directors out of funds legally
available therefor. HUBCO has paid regular cash dividends on its common stock
since its inception in 1982. The HUBCO Series B Convertible Preferred Stock (the
"HUBCO Series B Preferred Stock") also is entitled to receive dividends when and
if declared by HUBCO's Board of Directors out of funds legally available
therefor. HUBCO has no obligation to pay dividends on the HUBCO Preferred Stock
regardless of any dividends which may be paid on the HUBCO Common Stock. The
primary source for HUBCO's dividends is dividends from HUBCO's banking
subsidiaries to HUBCO, the payment of which is regulated. Under the New Jersey
Banking Act of 1948, as amended (the "NJBA"), HUB may pay dividends only out of
retained earnings, and only out of surplus to the extent that surplus exceeds
50% of stated capital. Under the Banking Law of Connecticut (the "CBL"),
Lafayette may pay dividends only from its net profits, and the total of all
dividends in any calendar year may not (unless specifically approved by the
Commissioner) exceed the total of its net profits of that year combined with its
retained net profits of the preceding two years. The FDIC has the authority to
prohibit a state-chartered bank from engaging in conduct which, in the FDIC's
opinion, constitutes an unsafe or unsound banking practice. Under certain
circumstances, the FDIC could claim that the payment of a dividend or other
distribution by a bank to its sole shareholder constitutes an unsafe or unsound
practice. In addition, upon consummation of the Merger, BTH will serve as an
additional source of dividends to HUBCO. Payment of any such dividends by BTH to
HUBCO will be subject to the regulations of the OTS, if BTH continues to be
federally chartered, or the New York Banking Law, if BTH converts to a New York
chartered bank.
SUMMARY FINANCIAL INFORMATION
The following tables present certain pro forma unaudited combined
condensed financial information from the pro forma unaudited combined condensed
statements of income for the nine-month period ended September 30, 1997 and for
the years ended December 31, 1996, 1995 and 1994, and the pro forma unaudited
combined condensed balance sheet at September 30, 1997. The HUBCO and PFC pro
forma combined financial information gives effect to HUBCO's proposed
acquisition of PFC in a transaction accounted for as a pooling of interests, as
if such transaction had been consummated for statement of income purposes on the
first day of the applicable periods and for balance sheet purposes on September
30, 1997. The pro forma information is based on the historical financial
statements of HUBCO and PFC, certain of which are incorporated by reference
herein. The pro forma financial information assumes a maximum Exchange Ratio of
0.320 and a minimum Exchange Ratio of 0.300 shares of HUBCO Common Stock for
each share of PFC Common Stock outstanding.
The summary unaudited pro forma financial information should be read in
conjunction with the pro forma financial information and the related notes
thereto presented elsewhere in the Proxy Statement and the consolidated
financial statements and related notes incorporated by reference in the Proxy
Statement. Anticipated cost savings net of expected Merger-related expenses and
restructuring charges are not expected to be material and therefore the pro
forma financial data does not give effect to these items. The pro forma
financial data does not take into account HUBCO's acquisitions of Security
National and Southington. See "CERTAIN INFORMATION REGARDING HUBCO - Recent
Developments." The pro forma information is not necessarily indicative of the
results of operations which would have been achieved had the Merger been
consummated as of the beginning of the periods for which such data are presented
and should not be construed as being representative of future periods.
The pro forma results of operations for 1995 and 1994 includes the
effect of reducing PFC's valuation allowance by $17.8 million and $2.5 million,
respectively, with respect to federal deferred tax assets. Considering the
combined operating results, it is unlikely that HUBCO would have established a
valuation allowance with respect to its federal deferred tax assets had the
companies always been combined. The pro forma unaudited combined statements of
income have been adjusted to reflect what the changes in the valuation allowance
would have been had the companies always been combined.
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Unaudited Combined Condensed Financial Information
(In thousands, except for per share data)
-----------------------------------------------------------------
For the Nine
Months Ended
September 30, For the Year Ended December 31,
-----------------------------------------------------------------
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Results of Operations:
Net interest income before provision for possible loan losses $ 127,070 $ 157,117 $ 156,695 $ 139,719
Provision for possible loan losses.......................... 5,977 13,145 11,040 9,429
Net interest income after provision for possible loan losses 121,093 143,972 145,655 130,290
Income before income taxes............................... 65,985 35,495 46,855 42,650
Net income................................................ 39,800 22,933 32,980 27,362
Earnings per share
Primary-maximum........................................... 1.45 .83 1.15 1.00
Primary-minimum........................................... 1.47 .83 1.16 1.01
Fully diluted-maximum..................................... 1.45 .83 1.15 1.00
Fully diluted-minimum..................................... 1.47 .83 1.16 1.00
As of September 30,
1997
-----------------------
Balance Sheet:
Total assets................................................ $ 3,926,436
Total deposits.............................................. 2,910,052
Total stockholders' equity.................................. 282,750
Book value per common and common equivalent share
Maximum................................................... 10.49
Minimum................................................... 10.59
</TABLE>
<PAGE>
ACTUAL AND PRO FORMA PER SHARE DATA
The following table sets forth per share data relating to dividends,
net income and book value of HUBCO Common Stock and PFC Common Stock, both on an
actual (historical) basis and on a pro forma combined basis, as adjusted for the
HUBCO Stock Split, 1996 Stock Dividend and 1997 Stock Dividend. The actual per
share data have been derived from the consolidated financial statements of HUBCO
and PFC, incorporated by reference herein. See "INFORMATION DELIVERED AND
INCORPORATED BY REFERENCE."
The pro forma unaudited book value per share data at September 30, 1997
and the pro forma unaudited net income per share data for the nine months ended
September 30, 1997 and for the years ended December 31, 1996, 1995 and 1994 have
been derived from the pro forma unaudited combined condensed financial
statements of HUBCO and PFC, giving effect to HUBCO's acquisition of PFC
accounted for as a pooling of interests. Pro forma unaudited per share amounts
have been determined based on the assumptions set forth in the pro forma
combined condensed unaudited financial statements presented elsewhere herein.
The actual, pro forma and pro forma equivalent per share data included
in the table below should be read in conjunction with the financial statements
of HUBCO and PFC incorporated by reference herein and the pro forma combined
condensed financial statements of HUBCO and PFC presented elsewhere herein. See
"INFORMATION DELIVERED AND INCORPORATED BY REFERENCE" and "PRO FORMA FINANCIAL
INFORMATION." Anticipated cost savings net of expected Merger-related expenses
and restructuring charges are not expected to be material and therefore the pro
forma financial data does not give effect to these items. The pro forma
financial data does not take into account HUBCO's acquisitions of Security
National and Southington. See "CERTAIN INFORMATION REGARDING HUBCO - Recent
Developments." The pro forma data presented below is not necessarily indicative
of the results that would actually have been attained if the Merger had been
consummated as of the first day of the periods described below or results that
may be attained in the future.
<PAGE>
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30, For the Year Ended December 31,
------------------------------------------------------------
1997 1996 1995 1994
---- ---- ----- ----
<S> <C> <C> <C> <C>
CASH DIVIDENDS DECLARED PER COMMON SHARE: (1)
HUBCO - Actual $ 0.55 $ 0.66 $ 0.56 $ 0.34
PFC- Actual 0.075 0.10 0.08 -
PFC, Pro forma equivalent:
Maximum 0.18 0.21 0.18 0.11
Minimum 0.17 0.20 0.17 0.10
NET INCOME PER COMMON SHARE:
HUBCO - Actual
Primary 1.55 0.90 1.41 1.00
Fully diluted 1.55 0.90 1.40 0.99
PFC - Actual 0.26 0.11 1.27 0.51
Pro Forma:
Pro forma per share of HUBCO
Common Stock:
Primary, maximum 1.45 0.83 1.15 1.00
Primary, minimum 1.47 0.83 1.16 1.01
Fully Diluted, maxi 1.45 0.83 1.15 1.00
Fully Diluted, mini 1.47 0.83 1.16 1.00
PFC, Pro forma equivalent:
Primary, maximum 0.46 0.27 0.37 0.32
Primary, minimum 0.44 0.25 0.35 0.30
Fully Diluted, maxi 0.46 0.27 0.37 0.32
Fully Diluted, mini 0.44 0.25 0.35 0.30
As of September 30,
1997
BOOK VALUE PER COMMON AND
COMMON EQUIVALENT SHARE:
HUBCO - Actual $ 9.20
PFC- Actual 5.91
Pro forma per share of HUBCO
Maximum 10.49
Minimum 10.59
PFC Pro forma equivalent
Maximum 3.36
Minimum 3.18
(1) For information regarding HUBCO's and PFC's dividends, and the market price
of HUBCO and PFC Common Stock, see "MARKET PRICE AND DIVIDEND MATTERS".
</TABLE>
<PAGE>
INTRODUCTION
This Proxy Statement solicits, on behalf of the Board of Directors of
Poughkeepsie Financial Corp. ("PFC"), approval by the holders of shares of
common stock of PFC, $0.01 par value per share ("PFC Common Stock"), of the
Amended and Restated Agreement and Plan of Merger, dated as of October 22, 1997
(the "Merger Agreement"), by and among HUBCO, Inc. ("HUBCO"), PFC and PFC's
wholly owned subsidiary, Bank of the Hudson ("BTH"). Pursuant to the Merger
Agreement, PFC will be merged with and into HUBCO (the "Merger"). A copy of the
Merger Agreement is attached as Appendix A to this Proxy Statement. Upon
consummation of the Merger, each outstanding share of PFC Common Stock, except
for Excluded Shares (as defined below), will be converted into the right to
receive a number of shares (the "Exchange Ratio") of common stock of HUBCO, no
par value ("HUBCO Common Stock"), equal to a fraction, the numerator of which
will be $10.00 and the denominator of which will be the Median Pre-Closing Price
of HUBCO Common Stock (a term defined in the Merger Agreement generally as the
median of the weighted average daily prices of HUBCO Common Stock during a 10
trading day period shortly prior to the closing of the Merger), with a minimum
Exchange Ratio (the "Minimum Exchange Ratio") of 0.300 (which will apply if the
Median Pre-Closing Price is at or above $33.33) and a maximum Exchange Ratio
(the "Maximum Exchange Ratio") of 0.320 (which will apply if the Median
Pre-Closing Price is at or below $31.25), subject to adjustment provisions set
forth in the Merger Agreement and more fully described in this Proxy Statement,
with cash paid in lieu of fractional shares. If the Median Pre-Closing Price is
less than $25.75, the Board of Directors of PFC will have certain rights to
terminate the Merger Agreement unless HUBCO agrees to increase the Exchange
Ratio to a fraction with a numerator of $8.24 and a denominator equal to the
Median Pre-Closing Price. In addition, each option to purchase a share of PFC
Common Stock pursuant to PFC's existing stock option plans and agreements,
except the option granted to HUBCO, will be converted in the Merger into the
right to receive shares of HUBCO Common Stock with a value (based on the Median
Pre-Closing Price) equal to the difference between the per share option exercise
price and the product of the Exchange Ratio multiplied by the Median Pre-Closing
Price, all as more fully described in this Proxy Statement. See "THE PROPOSED
MERGER".
All information and statements contained or incorporated by reference
herein with respect to PFC were supplied by PFC and all information and
statements contained or incorporated by reference herein with respect to HUBCO
were supplied by HUBCO.
CERTAIN INFORMATION REGARDING HUBCO
General
HUBCO is a New Jersey corporation and registered bank holding company
whose principal operating subsidiaries are Hudson United Bank ("HUB"), a New
Jersey-chartered commercial bank, and Lafayette American Bank ("Lafayette"), a
Connecticut chartered bank and trust company. HUBCO's corporate headquarters is
located at 1000 MacArthur Boulevard, Mahwah, New Jersey 07430. HUB's corporate
headquarters is located at 3100 Bergenline Avenue, Union City, New Jersey 07084.
Lafayette's corporate headquarters is located at 1000 Lafayette Boulevard,
Bridgeport, Connecticut 06604. The telephone number of HUBCO is (201) 236-2600.
HUB is a full-service commercial bank which primarily serves small and mid-sized
businesses and consumers through 57 branches in Northern New Jersey. Lafayette
is a full-service commercial bank which serves small-to-medium-sized business
firms as well as individuals through 27 banking offices located mainly in
Fairfield and New Haven counties in Connecticut. As of September 30, 1997, HUBCO
had consolidated assets of $3.0 billion, consolidated deposits of $2.3 billion
and consolidated stockholders' equity of $212 million. Based on assets as of
September 30, 1997, HUBCO was the fourth largest commercial banking company
headquartered in New Jersey.
HUBCO's strategy is to enhance profitability and build market share
through both internal growth and acquisitions. Since October, 1990, HUBCO has
added over 72 branches and approximately $2.5 billion in assets through 18
acquisitions of financial institutions in both government-assisted and private
transactions. HUBCO expects to continue its acquisition strategy. HUBCO is
continually evaluating acquisition opportunities and frequently conducts
discussions, certain financial analyses and diligence activities in connection
with possible acquisitions. As a result, acquisition discussions and, in some
cases, negotiations frequently take place and future acquisitions involving
cash, debt or equity securities can be expected. Acquisitions typically involve
the payment of a premium over book and market values, and therefore some
dilution of HUBCO's book value and net income per common share may occur in
connection with any future transactions. From time to time, HUBCO may issue new
equity or debt securities to fund its acquisition plans or for other purposes.
For additional information, see "AVAILABLE INFORMATION"; "INFORMATION DELIVERED
AND INCORPORATED BY REFERENCE" and "PRO FORMA FINANCIAL INFORMATION".
Recent Developments
On August 18, 1997, HUBCO, HUBCO's wholly owned subsidiary, Lafayette
American Bank ("Lafayette") and The Bank of Southington, a state bank and trust
company organized under Connecticut law ("Southington") signed a definitive
agreement to merge Southington into Lafayette. In the merger, each share of the
common stock of Southington, par value $6.00 per share, shall be converted into
between .618 and .787 shares of HUBCO Common Stock. Southington is a $135
million asset bank headquartered in Southington, Connecticut. The Southington
transaction is expected to close on or before January 8, 1998 and to be treated
as a pooling of interests for accounting purposes.
On August 27, 1997, HUB and Security National Bank & Trust Company of
New Jersey ("Security National") signed a definitive agreement to merge Security
National into HUB. In the merger, stockholders of Security National will receive
$34.00 in cash for each share of Security National common stock. Security
National is an $86 million asset bank and trust company headquartered in Newark,
New Jersey with branches in Nutley and Kearny, New Jersey. Simultaneously with
execution of the merger agreement between HUB and Security National, 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 79.6% of the outstanding shares of Security National.
The Security National and FIC mergers are expected to close on or about February
5, 1998 and to be treated as a purchase for accounting purposes.
[to be completed]
CERTAIN INFORMATION REGARDING PFC
PFC is a unitary thrift holding company and conducts its business
through its wholly-owned subsidiary, BTH. At September 30, 1997, PFC had total
assets of approximately $884.0 million, deposits of $611.7 million and
stockholders' equity of approximately $74.4 million. The principal executive
offices of PFC and BTH are located at 249 Main Mall, Poughkeepsie, New York,
12601. PFC's telephone number is (914) 431-6200.
BTH is a community savings bank serving the Mid-Hudson Valley area of
New York through 16 branches in Dutchess, Orange and Rockland counties, as well
as six residential loan origination offices in five New York counties and New
Jersey. Poughkeepsie Savings Bank, FSB, BTH's predecessor, was chartered as a
mutual savings bank by the New York State Legislature in 1831, converted to a
federal mutual savings bank in 1981 and converted to stock form in 1985.
In recent years, the business of BTH has consisted primarily of
obtaining funds in the form of deposits from the general public and borrowings
and using such funds to make residential mortgage loans and commercial mortgage
loans as well as commercial business loans, consumer loans, student loans and
other investments. Currently, BTH conducts community banking operations in the
Mid-Hudson region of New York (primarily Dutchess, Orange, Ulster, Putnam,
Rockland and Westchester counties as well as contiguous areas).
BTH, as a federally chartered savings bank, is subject to comprehensive
regulation and examination by the Office of Thrift Supervision ("OTS"), as its
chartering authority and primary regulator, and by the Federal Deposit Insurance
Corporation ("FDIC"), which administers the Savings Association Insurance Fund
("SAIF"), which insures the Bank's deposits to the maximum extent permitted by
law. BTH is a member of the Federal Home Loan Bank ("FHLB") of New York, which
is one of the 12 regional banks which comprise the FHLB System. BTH is further
subject to regulations of the Board of Governors of the Federal Reserve System
("FRB") governing reserves required to be maintained against deposits and
certain other matters.
THE MEETING
Purpose of the Meeting
The Meeting will be held on [Day of Week], [Date], 1998 at [Time], at
[Location]. At the Meeting, the holders of PFC Common Stock will consider and
vote upon the approval and adoption of the Merger Agreement and any other
matters as may properly be brought before the Meeting and at any adjournments or
postponements thereof. This Proxy Statement-Prospectus is first being mailed to
the holders of PFC Common Stock on or about ________________, 1998 and is
accompanied by a proxy card furnished in connection with the solicitation of
proxies by the PFC Board of Directors for use at the Meeting.
The Board of Directors of PFC has unanimously approved the Merger
Agreement and recommends a vote "FOR" approval and adoption of the Merger
Agreement.
Record Date; Voting Rights; Proxies
The Board of Directors of PFC has fixed the close of business on
________, 1998 as the record date for determining the holders of PFC Common
Stock entitled to receive notice of and to vote at the Meeting (the "Record
Date"). Only holders of record of PFC Common Stock at the close of business on
that date will be entitled to vote at the Meeting or at any adjournment or
postponement thereof.
At the close of business on the Record Date, there were ________ shares
of PFC Common Stock issued and outstanding and entitled to vote at the Meeting.
Each share of PFC Common Stock will be entitled to one vote upon each matter
properly submitted at the Meeting or at any adjournment or postponement thereof.
All properly executed proxies will, unless such proxies have been
previously revoked, be voted in accordance with the instructions indicated on
such proxies. If no instructions are indicated thereon, such shares will be
voted "FOR" approval of the Merger Agreement. The Board of Directors of PFC is
not aware of any matters other than as described in the Notice of Special
Meeting that are to come before the Meeting. If any other matter or matters are
properly presented for action before the Meeting, the persons named in the
enclosed form of proxy will have discretion to vote on such matters in
accordance with their best judgment, unless such authorization is withheld.
The presence of a shareholder at the Meeting will not automatically
revoke such shareholder's proxy. A shareholder may revoke any proxy that he or
she has given any time prior to its exercise. To do so, the shareholder must
file a written notice of revocation with, or deliver a duly executed proxy
bearing a later date to, Suzanne A. Gillespie, Secretary, Poughkeepsie Financial
Corp., 249 Main Mall, Poughkeepsie, New York 12601, or attend the Meeting and
vote in person.
Votes cast by proxy or in person at the Meeting will be tabulated by
the election inspectors appointed for the Meeting, who will determine whether or
not a quorum is present. Where, as to any matter submitted to a vote of the PFC
stockholders, proxies are marked as abstentions (or stockholders appear in
person but abstain from voting) or a broker indicates on a proxy that it does
not have discretionary authority with respect to certain shares, such
abstentions and "broker non-votes" will be treated as shares that are present
and entitled to vote for purposes of determining the presence of a quorum.
PFC STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS. IF THE MERGER IS CONSUMMATED, STOCK CERTIFICATES SHOULD BE
DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF TRANSMITTAL
WHICH WILL BE SENT TO PFC STOCKHOLDERS BY THE EXCHANGE AGENT PROMPTLY AFTER THE
EFFECTIVE TIME.
Solicitation of Proxies
In addition to using the mails, the directors, officers and employees
of PFC may solicit proxies for the Meeting from stockholders personally, by
telephone or by facsimile. These officers, directors and employees will not be
specifically compensated for their services. PFC has retained Morrow & Co., a
proxy soliciting firm ("Morrow"), to assist in the solicitation of proxies at a
fee of $___, plus reimbursement of certain out-of-pocket expenses estimated to
be approximately $___. PFC will also make arrangements with brokerage firms and
other custodians, nominees and fiduciaries to send proxy materials to their
principals and will reimburse such parties for their expenses in doing so. The
cost of soliciting proxies for the Meeting, [including the fees and expenses of
________,] will be borne by PFC.
Quorum
The presence, in person or by proxy, of at least a majority of PFC
Common Stock issued and outstanding and entitled to be voted at the Meeting is
necessary to constitute a quorum.
Required Vote
Each share of PFC Common Stock will be entitled to one vote upon each
matter properly submitted at the Meeting or at any adjournment or postponement
thereof. The affirmative vote, in person or by proxy, of at least a majority of
the outstanding shares of PFC Common Stock entitled to be voted at the Meeting
is required in order to approve and adopt the Merger Agreement.
THE REQUIRED VOTE OF THE PFC STOCKHOLDERS ON THE MERGER AGREEMENT IS
BASED UPON THE TOTAL NUMBER OF OUTSTANDING SHARES OF PFC STOCK AND NOT UPON THE
NUMBER OF SHARES WHICH ARE ACTUALLY VOTED. ACCORDINGLY, THE FAILURE TO SUBMIT A
PROXY CARD, TO VOTE IN PERSON AT THE MEETING, ABSTENTION FROM VOTING BY A
STOCKHOLDER AND ANY BROKER NON-VOTE WILL HAVE THE SAME EFFECT AS A "NO" VOTE
WITH RESPECT TO THE MERGER AGREEMENT.
Record holders of PFC Common Stock at the close of business on
___________, 1998 (the "Record Date") are entitled to vote at the Meeting.
Holders of a majority of the outstanding shares of PFC Common Stock must be
present or represented by proxy at the Meeting for a quorum. The affirmative
vote, in person or by proxy, of the majority of the outstanding shares of PFC
Common Stock is required in order to approve and adopt the Merger Agreement. As
of the Record Date, there were _________ outstanding shares of PFC Common Stock
held by approximately ___ holders of record. The directors of PFC as a group
have voting control over _______ of these shares (___%) and have agreed to vote
them in favor of the Merger Agreement. In addition, HUBCO has voting control
over ____ of these shares (___%) and the non-director executive officers of PFC
as a group have voting control over ____ of these shares (___%), all of which
shares PFC expects will be voted in favor of the Merger Agreement. No
consideration was paid to any of the directors for this agreement. HUBCO
required that the directors enter into this agreement as a condition to HUBCO
entering into the Merger Agreement.
The obligations of PFC and HUBCO to consummate the Merger Agreement are
subject, among other things, to the condition that the Merger Agreement and the
transactions contemplated thereby be approved by the requisite vote of the
stockholders of PFC. See "THE PROPOSED MERGER -- Conditions to the Merger".
THE MATTERS TO BE CONSIDERED AT THE MEETING ARE OF GREAT IMPORTANCE TO
THE STOCKHOLDERS OF PFC. ACCORDINGLY, STOCKHOLDERS ARE URGED TO READ AND
CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY STATEMENT, AND TO
COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
THE PROPOSED MERGER
A copy of the Merger Agreement is attached as Appendix A to this Proxy
Statement and is incorporated by reference herein. Descriptions of the Merger
and the Merger Agreement are qualified in their entirety by reference to the
Merger Agreement.
General Description
The Merger Agreement provides that, at the Effective Time, PFC will be
merged into HUBCO, with HUBCO as the surviving entity (the "Surviving Entity").
The separate identity and existence of PFC will cease upon consummation of the
Merger and all property, rights, powers and franchises of PFC will vest in the
Surviving Entity.
Closing; Determination Date
A closing under the Merger Agreement (the "Closing") will occur on a
date (the "Closing Date") to be determined by HUBCO and set forth in a notice
(the "Closing Notice") to PFC. The Closing Date specified by HUBCO in the
Closing Notice must be at least seven business days after the date of the
Closing Notice, but not more than 15 business days after receipt of all
necessary approvals and consents, the expiration of all statutory waiting
periods and the satisfaction or waiver of the other conditions to consummation
of the Merger, (other than the delivery of documents to be delivered at the
Closing). The Closing may also be set for another day mutually agreed to by
HUBCO and PFC. The parties currently anticipate closing in the first quarter of
1998. Immediately following the Closing, HUBCO will file a certificate of merger
with the Secretary of State of the State of New Jersey and the Secretary of
State of the State of Delaware, which will specify the effective time of the
Merger (the "Effective Time"), which HUBCO and PFC anticipate will be the close
of business on the Closing Date. The exact Closing Date is dependent upon
satisfaction of all conditions precedent, some of which are not under the
control of HUBCO or PFC. In the Closing Notice, HUBCO is also required to
specify the "Determination Date," which is used in determining the Median
Pre-Closing Price. The Determination Date is to be not more than ten business
days prior to the Closing Date set forth in the Closing Notice.
Consideration
At the Effective Time, each outstanding share of PFC Common Stock
(except for Excluded Shares, as defined below) will be converted into the right
to receive a number of shares (the "Exchange Ratio") of HUBCO Common Stock,
equal to a fraction, the numerator of which will be $10.00 and the denominator
of which will be the Median Pre-Closing Price (as defined below) of HUBCO Common
Stock, with a Minimum Exchange Ratio of 0.300 (which will apply if the Median
Pre-Closing Price is at or above $33.33) and a Maximum Exchange Ratio of 0.320
(which will apply if the Median Pre-Closing Price is at or below $31.25).
"Excluded Shares" are those shares of PFC Common Stock which are (i) held by PFC
as treasury shares, or (ii) held by HUBCO or any of its subsidiaries (other than
shares held as trustee or in a fiduciary capacity and shares held as collateral
on or in lieu of a debt previously contracted).
Under the Merger Agreement, the "Median Pre-Closing Price" will be
calculated based upon the median of the weighted average daily prices during the
10 consecutive trading day period which ends on (and includes) the Determination
Date. The "Weighted Average Daily Price" means the weighted average of sales
prices of HUBCO Common Stock as reported by Bloomberg LP, or another service as
mutually agreed upon by HUBCO and PFC. A "trading day" means a day for which a
Closing Price is so supplied and published.
The Exchange Ratio is subject to adjustment to take into account any
stock split, stock dividend, reclassification, recapitalization, merger,
combination or exchange or similar transaction by HUBCO with respect to the
HUBCO Common Stock occurring subsequent to October 22, 1997, provided that no
adjustment will be made to reflect the 1997 Stock Dividend. The Exchange Ratio
may also be subject to adjustment in connection with provisions relating to the
termination of the Merger Agreement described below.
The Merger Agreement may be terminated by PFC if the Median Pre-Closing
Price is less than $25.75 which given the Maximum Exchange Ratio, would result
in shares of PFC Common Stock being exchanged for HUBCO Common Stock with a
value of less than $8.24. PFC is obligated to provide notice of such termination
to HUBCO, which may then elect, at its sole option, to increase the Exchange
Ratio to a fraction with a numerator of $8.24 and a denominator equal to the
Median Pre-Closing Price. If HUBCO so elects and increases the Exchange Ratio,
the Merger Agreement will not be terminated. There can be no assurance that PFC
will exercise its right to terminate the Merger Agreement if the conditions
described above exist (a "Termination Event"), and if PFC does exercise its
right to terminate the Merger Agreement, there can be no assurance that HUBCO
will elect to increase the Exchange Ratio as provided in the Merger Agreement
and as described above.
The effects of the above provisions on the Exchange Ratio may be
illustrated as follows:
<TABLE>
<CAPTION>
Median Pre-Closing Price of HUBCO
Common Stock as of the Det Exchange o Ratioe
<S> <C>
Equal to or greater than $33.33.......................... 0.300
Less than $33.33 but greater than $31.25................. $10.00 / the Median Pre-Closing Price
Equal to or less than $31.25 and
greater than or equal to $25.75......................... 0.320
Less than $25.75......................................... 0.320; provided, that the PFC Board of Directors
will have the right to terminate the Merger
Agreement and HUBCO will have the right to
nullify that termination by agreeing to an
Exchange Ratio of $8.24 / the Median Pre-Closing
Price.
</TABLE>
For illustrative purposes, if, hypothetically, the Median Pre-Closing
Price of HUBCO Common Stock were $32.00, the Exchange Ratio would be 0.313
($10.00 / 32.00, with the result rounded to the nearest one-thousandth) and the
holder of 100 shares of PFC Common Stock would receive 31 whole shares of HUBCO
Common Stock and $9.60 (.3 x $32.00) in respect of the fractional share.
The calculation of the Exchange Ratio called for by the Merger
Agreement was intended by HUBCO and PFC to result in stockholders of PFC
receiving in the Merger, HUBCO Common Stock with a value of $10.00 for each
share of PFC Common Stock, provided that the initial Exchange Ratio calculation
(before taking into effect the Minimum and Maximum Exchange Ratios) results in
an Exchange Ratio which is neither below the Minimum Exchange Ratio nor above
the Maximum Exchange Ratio (i.e., provided the Median Pre-Closing Price of HUBCO
Common Stock is between $31.25 and $33.33). However, there can be no assurance
that the Median Pre-Closing Price will fall between $31.25 and $33.33 or, even
if it does, that the number of shares of HUBCO Common Stock issued in exchange
per share of PFC Common Stock in the Merger will have a value of $10.00 on the
Effective Time or the date on which certificates representing such shares of
HUBCO Common Stock are issued or delivered to PFC stockholders. The Median
Pre-Closing Price of HUBCO Common Stock will be based on the median of the
weighted average daily prices of HUBCO Common Stock during a 10-day period
ending on the Determination Date (as hereinafter defined). The price of HUBCO
Common Stock at the Effective Time may be higher or lower than the Median
Pre-Closing Price, and may be higher or lower than the market price at the time
of entering into the Merger Agreement, the time of mailing this Proxy Statement,
the time of the Meeting or the time certificates representing shares of HUBCO
Common Stock are delivered in exchange for shares of PFC Common Stock following
consummation of the Merger. Thus, the value of the HUBCO Common Stock actually
received by holders of PFC Common Stock may be more or less than (i) the Median
Pre-Closing Price, or (ii) the value of the HUBCO Common Stock on the Effective
Time resulting from the Exchange Ratio or any possible adjustment to the
Exchange Ratio as illustrated above. PFC stockholders are urged to obtain
current market quotations for the HUBCO Common Stock and the PFC Common Stock.
The Merger Agreement provides that the Exchange Ratio will be fixed as
of the "Determination Date." Unless HUBCO and PFC agree to a different date, the
"Determination Date" will be any date selected by HUBCO which is not more than
ten business days prior to the Closing Date set forth in HUBCO's Closing Notice
to PFC (which Closing Date, in turn, may be any date selected by HUBCO which is
at least five business days after the date of the Closing Notice, but not more
than 15 business days after receipt of all necessary approvals and consents, the
expiration of all statutory waiting periods and the satisfaction or waiver of
the other conditions to consummation of the Merger, other than the delivery of
documents to be delivered at the Closing). Because of the Minimum Exchange Ratio
and the Maximum Exchange Ratio, and because the price of HUBCO Common Stock at
the Effective Time may not be the same as the Median Pre-Closing Price, PFC
stockholders are not assured of receiving any specific market value of HUBCO
Common Stock. PFC stockholders will be required to vote on the proposal to
approve the Merger Agreement prior to knowing the Exchange Ratio.
It is not possible to know whether a Termination Event will occur until
after the Determination Date. The PFC Board of Directors has made no decision as
to whether it would exercise its right to terminate the Merger Agreement if
there is a Termination Event. In considering whether to exercise its termination
right in such situation, the PFC Board of Directors would, consistent with its
fiduciary duties, take into account all relevant facts and circumstances that
exist at such time and would consult with its financial advisors and legal
counsel. Approval of the Merger Agreement by the stockholders of PFC at the
Meeting will confer on the PFC Board of Directors the power, consistent with its
fiduciary duties, to elect to consummate the Merger in the event of a
Termination Event whether or not there is any increase in the Exchange Ratio and
without any further action by, or resolicitation of, the stockholders of PFC. If
PFC elects to exercise its termination right, PFC must give HUBCO prompt notice
of that decision by 11:59 p.m. on the third business day following the
Determination Date (or the third business day following receipt by PFC of the
Closing Notice, if later). During a three business-day period commencing with
its receipt of such notice from the PFC Board of Directors, HUBCO has the
option, in its sole discretion, to increase the Exchange Ratio in the manner set
forth in the Merger Agreement and as illustrated above and thereby avoid such
termination of the Merger Agreement. HUBCO is under no obligation to increase
the Exchange Ratio, and there can be no assurance that HUBCO would elect to
increase the Exchange Ratio if PFC were to exercise its right to terminate the
Merger Agreement as set forth above. Any such decision would be made by HUBCO in
light of the circumstances existing at the time HUBCO has the opportunity to
make such an election. If HUBCO elects to increase the Exchange Ratio as set
forth in the Merger Agreement and as illustrated above, it must give PFC notice
of that election by 11:59 p.m. on the third business day following receipt of
the notice of termination from PFC, in which case no termination of the Merger
Agreement would occur as a result of a Termination Event.
The foregoing discussion is qualified in its entirety by reference to
the applicable provisions in the Merger Agreement (a copy of which is set forth
as Appendix A to this Proxy Statement) relating to calculation of the Exchange
Ratio and a possible increase of the Exchange Ratio as the result of a
Termination Event.
Conversion of PFC Options
At the Effective Time, each option to purchase a share of PFC Common
Stock (a "PFC Option") granted under PFC's existing stock option plans and
agreements, except for the option granted to HUBCO, will be converted into an
option to purchase the same number of shares of HUBCO Common Stock multiplied by
the Exchange Ratio, at an option price per share of HUBCO Common Stock equal to
the option exercise price per share of PFC Common Stock under the PFC Option
divided by the Exchange Ratio. PFC currently has options outstanding under
Poughkeepsie Financial Corp. 1985 Stock Option Plan, as amended, the
Poughkeepsie Financial Corp. 1993 Directors' Stock Option Plan, as amended, and
the Poughkeepsie Financial Corp. 1993 Stock Incentive Plan, as amended.
Cash in Lieu of Fractional Shares
No fractional shares of HUBCO Common Stock will be issued in exchange
for either PFC Common Stock or PFC Options. Instead, holders of PFC Securities
will receive cash equal to the fractional share interest multiplied by the
Median Pre-Closing Price of HUBCO Common Stock, without interest. All shares of
HUBCO Common Stock to be issued to each holder of PFC Securities will be
aggregated to constitute as many whole shares as possible before determining
such person's fractional share interest.
Background of and PFC's Reasons for the Merger
The Board of Directors of PFC periodically reviewed the company's
performance, reviewed market activity in PFC Common Stock and reviewed the
performance of certain comparable publicly traded bank or thrift institutions.
In addition, the Board, on an informal basis, would periodically review merger
and acquisition activity in the thrift industry. In early 1997, the Board
discussed the implications of an increasingly competitive market place upon its
business plan and reviewed the prospects for the Company to accelerate the
increase in profitability. In reviewing trends in merger and acquisition
activity, the Board determined to closely examine strategic alternatives for
PFC. In February 1997, the Board of Directors of PFC established an Ad Hoc
Committee (the "Committee") to explore in detail various strategic options
available to PFC. In March 1997, as a result of deliberations with respect to
reviewing PFC's business strategies, the Board of Directors determined to engage
Advest (which, on certain past occasions, had provided advice to the Board of
Directors with respect to, among other things, capital markets activity) as
PFC's financial advisor. Advest was directed by the PFC Board to explore all
strategic alternatives including remaining independent (with their attendant
recommendations for any suggested revisions to PFC's business plan), expanding
PFC's franchise through acquisitions and engaging in a merger or other business
combination.
In March 1997, Advest presented the Committee and the PFC Board of
Directors with its preliminary analysis of PFC's existing business plan. In
April and May 1997, Advest discussed PFC's existing business plan, and its
prospects thereunder, with the Committee. In addition, in May 1997, the
Committee, in order to better assess the possibility of PFC entering into an
acquisition transaction, authorized Advest to commence preparation of an
information memorandum to be distributed to potential combination partners. In
June 1997, the PFC Board authorized Advest to approach 17 financial institutions
which had been identified as potential combination partners. In addition, the
PFC Board subsequently authorized Advest to contact five additional
institutions. Advest contacted these 22 institutions in an effort to establish
their levels of interest. Of the 22 parties contacted, 13 expressed interest,
executed confidentiality agreements and received an information memorandum. Such
confidentiality agreements were executed and information memorandums were
distributed during June and July 1997. Of the 13 parties who entered into
confidentiality agreements, seven of such parties provided PFC with written
indications of interest outlining the terms of a possible business combination,
in each case subject to further due diligence. In late August, the Committee and
the PFC Board, with the assistance of Advest, reviewed the proposals and
determined that three of the parties be invited to conduct a further due
diligence review of PFC. The parties conducted such further due diligence
reviews in early September. On September 17, 1997, the Committee, together with
the assistance of Advest and PFC's special counsel, discussed further the three
proposals and reviewed conversations between Advest and representatives of the
three parties which had occurred in conjunction with the due diligence review
process. Based on its review, the Committee determined to continue conversations
with two of the three parties who had conducted due diligence, HUBCO and one
other institution (the "Other Institution").
Subsequent to a PFC Board meeting on September 19, 1997, a draft of the
proposed Merger Agreement and related documents (including the Stock Opinion
Agreement) were prepared, circulated and discussed in detail among PFC, HUBCO
and their respective legal and financial advisors. In addition, during this
period PFC and its advisors conducted additional on-site due diligence of HUBCO.
The PFC Board met again on September 23, 1997, at which time it determined to
delay entering into any agreement at that point in order to provide additional
time for the Board to consider further all of the various alternatives which had
been considered.
Between the end of September and the execution of the Merger Agreement,
the PFC Board of Directors (including the Committee) and its advisors undertook
a more in depth analyses of a potential combination with the Other Institution.
On October 10, 1997 a proposed form of agreement was prepared and circulated
among PFC, the Other Institution and their respective legal and financial
advisors. The proposed transaction with the Other Institution, which was a
mutual institution which was considering a mutual-to-stock conversion,
contemplated a stock-for-stock merger transaction with PFC stockholders
receiving a number of shares of the Other Institution's to-be-issued common
stock with a market value of $10.50 per share (based on the market value of such
shares established during the sixth through tenth day of trading in the shares
issued in the initial public offering by the Other Institution) for each share
of their PFC Common Stock. There were further conversations with the Other
Institution and its advisors with respect to a possible transaction. Based on
such conversations, there were a number of concerns identified with respect to
engaging in a transaction with the Other Institution including, but not limited
to, the ability of the Other Institution to consummate its mutual-to-stock
conversion (and, if so, at what pro forma valuation) as well as to consummate a
transaction with PFC in a relatively timely fashion due to, among other factors,
the Other Institution's limited experience with merger transactions and PFC's
belief that the Other Institution had not developed a viable strategic plan for
the combined operation of PFC and the Other Institution.
On October 14, 1997, Kenneth T. Neilson, Chairman, President and Chief
Executive Officer of HUBCO met with the PFC Board upon its invitation. Mr.
Neilson made a presentation to the Board with respect to HUBCO, discussed the
proposed Merger and the operations of BTH after the Merger and addressed various
questions for the Board. On October 20, 1997, three directors of the Other
Institution met with the PFC Board upon its invitation to present their views on
a possible combination involving PFC and the Other Institution. In addition, at
the October 20th Board meeting, Advest presented updated information with
respect to the proposed transactions with HUBCO and the Other Institution.
The PFC Board met again on October 22, 1997, at which time the terms of
the Merger Agreement and the related documents, including the Stock Option
Agreement, were discussed in detail. In addition, the PFC Board again reviewed
its various strategic alternatives, including a transaction with the Other
Institution or remaining independent. The PFC Board also considered the opinion
delivered by Advest to the effect that the proposed Exchange Ratio pursuant to
the Merger Agreement was fair, from a financial point of view, to PFC's
stockholders. The PFC Board unanimously approved the Merger Agreement and Stock
Option Agreement on October 22, 1997.
The PFC Board, with the assistance of its financial and legal advisors,
has evaluated the financial, legal and market considerations bearing on the
decision to recommend the Merger. The terms of the Merger, including the
Exchange Ratio, are a result of arms-length negotiations between representatives
of PFC and HUBCO. In reaching its determination that the Merger Agreement is
fair to, and in the best interest of, PFC and holders of PFC Common Stock, the
PFC Board considered a number of factors, both from a short-term and a long-term
perspective. The factors which the PFC Board considered, without assigning any
relative or specific weights, included, without limitation, the following: (1)
the PFC Board's review of PFC's business, financial condition, results of
operations, management and prospects, including, but not limited to, its
potential growth, development, productivity and profitability; (2) the current
and prospective environment in which PFC operates, including regional economic
conditions, the competitive environment for savings and other financial
institutions generally and the trend toward consolidation in the financial
services industry; (3) information concerning the business, financial condition,
results of operations and prospects of HUBCO including recent acquisitions by
HUBCO, the recent performance of HUBCO Common Stock, historical data of HUBCO,
customary statistical measurements of HUBCO's financial performance, HUBCO's
expectations of future business prospects and earnings based upon discussions
with representatives of HUBCO; (4) the value to be received by holders of PFC
Common Stock pursuant to the Merger (including the provisions for an increased
amount of cash dividends prior to and after the Merger) in relation to the
historical trading prices and book value of PFC Common Stock; (5) the
information presented to the PFC Board by Advest with respect to the Merger and
the opinion of Advest that, as of the date of such opinion, the Exchange Ratio
is fair, from a financial point of view to PFC's stockholders; (6) the financial
and other significant terms of the HUBCO offer; (7) the review by the PFC Board
with its legal and financial advisors of the provisions of the proposed Merger
Agreement and Stock Option Agreement; (8) the future growth prospects of BTH and
HUBCO following the Merger and the potential synergies expected from the Merger,
including potential expense reductions and increases in efficiency; (9) the
expectation that HUBCO will continue to provide quality service to the community
and customers served by BTH and the prospects for future expansion of the
products and services offered by BTH in the Hudson Valley; (10) the
compatibility of the respective business and management philosophies of PFC and
HUBCO, and the prospect that Mr. Tockarshewsky will be afforded the opportunity
to have a significant management position with BTH after the Merger, that
Messrs. Tockarshewsky and deCordova will serve as directors of HUBCO and that
the existing directors of BTH will continue in such position after the Merger
(all of which were considered by the PFC Board to enhance the prospect for a
smooth transition after the Merger and the prospects that the interests of PFC's
current stockholders and BTH's customers and employees would not be overlooked
after the Merger); and (11) the alternative strategic courses available to PFC,
including remaining independent and exploring other potential acquisition
transactions, such as the possible acquisition by the Other Institution.
After considering the factors described above, the PFC Board determined
that the Merger and the consideration to be received by PFC's stockholders in
connection with the Merger was fair and, consequently, unanimously approved the
Merger Agreement as being in the best interests of PFC and its stockholders.
ACCORDINGLY, THE PFC BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF PFC VOTE
FOR APPROVAL OF THE MERGER AGREEMENT.
HUBCO's Reasons for the Merger
HUBCO entered into the Merger Agreement with PFC as part of HUBCO's
ongoing strategy of growth through acquisitions.
HUBCO's acquisition strategy consists of identifying financial
institutions with business philosophies that are similar to HUBCO's, which
operate in markets that are geographically within or close to those of HUBCO,
and which provide an ability to enhance earnings per share over an acceptable
period after the acquisition, while providing acceptable rates of return.
Acquisitions are also evaluated in terms of asset quality, interest rate risk,
core deposit base stability, potential operating efficiencies and management
abilities.
The Merger will be HUBCO's first entry into New York State. The
counties served by BTH are a natural expansion and fill a void in the middle of
HUBCO's current market. Rockland County is contiguous to New Jersey and Dutchess
County is contiguous to Connecticut.
Interests of Certain Persons in the Merger
In considering the recommendation of the PFC Board of Directors with
respect to the Merger, holders of PFC Common Stock should be aware that certain
members of the Board of Directors and management of PFC have certain interests
in the Merger in addition to their interests generally as stockholders of PFC.
All of such additional interests are described below, to the extent material,
and except as described below such persons have, to the best knowledge of PFC,
no material interest in the Merger apart from those of stockholders generally.
The PFC Board of Directors was aware of these interests of its directors and
officers and considered them, among other matters, in approving the Merger
Agreement and the transactions contemplated thereby.
Ownership of PFC Common Stock and PFC Options
As of the Record Date, the directors and executive officers of PFC and its
affiliates beneficially owned (excluding shares which could be acquired upon the
exercise of options) an aggregate of __________ shares of PFC Common Stock
(____% of the issued and outstanding shares) and options to acquire an
additional ____ shares of PFC Common Stock. Certain stock options owned by
executive officers of PFC will become vested by virtue of the Merger. For
information regarding the treatment of PFC Options, see "--Conversion of PFC
Options".
Board Membership
The Merger Agreement provides that two PFC nominees, Joseph B.
Tockarshewsky, PFC's Chairman, President and Chief Executive Officer, and Noel
deCordova, Jr., a director of PFC, will be appointed to HUBCO's Board of
Directors, at the Effective Time for a three-year term and two-year term,
respectively. In addition, Mr. Tockarshewsky will be asked to serve as Chairman
of the Board and Chief Executive Officer of BTH following the Closing. HUBCO
will invite all of the current directors of BTH to remain directors following
the Closing.
Indemnification
In the Merger Agreement, HUBCO has agreed to indemnify, defend and hold
harmless each person who is, has been, or becomes prior to the Effective Time, a
director, officer, employee or agent of PFC, or who serves or has served at the
request of PFC in any capacity with any other entity (collectively, the
"Indemnitees"), to the fullest extent which PFC would have been permitted under
applicable law and PFC's Certificate of Incorporation and By-laws had the Merger
not occurred, with respect to any claims made against such person because he or
she is or was a director, officer, employee or agent of PFC or serves or has
served at the request of PFC in any capacity with any other entity. In the
Merger Agreement, HUBCO has also agreed to cover PFC's officers and directors
under either an extension of PFC's existing directors' and officers' liability
insurance policy or a rider to HUBCO's then current policy for a period of at
least six years after the Effective Time.
Change in Control Agreements and Severance Policy
Pursuant to a Change in Control Agreement between PFC and Joseph B.
Tockarshewsky, its Chairman, President and Chief Executive Officer, and Robert
J. Hughes, its Executive Vice President and Chief Financial Officer, Messrs.
Tockarshewsky and Hughes will each receive a severance payment equal to two
times their respective annual base salaries, as well as continued coverage under
PFC's medical benefits plan and other benefit plans maintained by PFC during the
24-month period following consummation of the Merger. Other PFC executive
officers and employees are covered by PFC's severance policies, pursuant to
which they could receive substantial payments as a consequence of the Merger if
their employment is terminated or, in certain cases, constructively terminated
within the one-year period following the Merger. Mr. Tockarshewsky expects to
enter into a new employment agreement with HUBCO and BTH and Mr. Hughes will be
offered a consulting role at an appropriate compensation level under (HUBCO's
guidelines) after the Effective Time of the Merger.
Opinion of PFC's Financial Advisor
By agreement dated March 12, 1997 PFC's Board of Directors retained the
services of Advest as its financial advisor in connection with the Company's
continuing review of business and strategic planning matters and a possible
merger or acquisition transaction; and, if requested by PFC's Board of
Directors, to render its fairness opinion regarding the fairness of the
consideration to be received by the stockholders of PFC in a merger or
acquisition transaction from a financial point of view.
Advest is a nationally recognized investment banking firm and, as part
of its investment banking business, is regularly engaged in the valuation of
bank, bank holding company and thrift institution securities in connection with
mergers, acquisitions, and other corporate securities transactions. As financial
advisor to PFC, Advest was involved throughout all of the discussions with the
various financial institutions that had expressed interest in a business
combination with PFC, including the offer by HUBCO, as well as the negotiations
with HUBCO that resulted in the Merger Agreement.
Advest has delivered a written opinion to PFC's Board of Directors,
originally dated and delivered on October 22, 1997, and updated to the date of
this Proxy Statement-Prospectus to the effect that the Exchange Ratio to be
received by PFC's stockholders, pursuant to the Merger Agreement, is fair, from
a financial point of view, to the stockholders of PFC. There were no limitations
imposed by PFC on Advest in connection with its rendering of the fairness
opinion. Advest is a market maker in PFC's Common Stock.
The full text of Advest's fairness opinion, which sets forth
assumptions made and matters considered, is attached as Appendix C to this Proxy
Statement-Prospectus. PFC'S STOCKHOLDERS ARE URGED TO READ SUCH OPINION IN ITS
ENTIRETY. Advest's opinion is directed only to the consideration offered in the
Merger and does not constitute a recommendation to any PFC stockholder as to how
such stockholder should vote at the Meeting. The summary information regarding
Advest's opinion and the procedures followed in rendering such opinion set forth
in this Proxy Statement-Prospectus is qualified in its entirety by reference to
the full text of such opinion.
In arriving at the opinion, Advest reviewed, among other things: (i)
the Merger Agreement and the Stock Option Agreement; (ii) the audited
consolidated financial statements and management's discussion and analysis of
the financial condition and results of operations of HUBCO and PFC for the three
fiscal years ended December 31, 1996, (iii) the unaudited consolidated financial
statements and management's discussion and analysis of the financial condition
and results of operations for the nine-month period ending September 30, 1997
for HUBCO and PFC; (iv) certain financial information as filed with federal
banking agencies for the three years ended December 31, 1996, as well as the
nine months ended September 30, 1997, for both HUBCO and PFC; (v) financial
analyses and forecasts of PFC prepared by and reviewed with management of PFC;
(vi) the views of senior management of each of HUBCO and PFC of their respective
past and current business operations, results thereof, financial condition and
future prospects; (vii) the reported price and trading activity for HUBCO's and
PFC's common stock, including a comparison of certain financial and stock market
information for HUBCO and PFC with similar information for certain other
companies, the securities of which are publicly traded; (viii) comparative
financial and operating data on the banking industry and certain institutions
which were deemed to be reasonably similar to both companies; (ix) certain bank
mergers and acquisitions on a state, regional and nationwide basis for
institutions which were deemed to be reasonably similar to PFC and a comparison
of the proposed financial consideration in the Merger with the consideration
paid in other relevant mergers and acquisitions; (x) the pro forma impact of the
Merger on HUBCO and PFC; (xi) this Proxy Statement/Prospectus; and (xii) other
financial information, studies and analyses. Advest performed such other
investigations and took into account such other matters as Advest deemed
appropriate.
In performing its review, Advest assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information reviewed by and discussed with
Advest. Advest did not make any independent evaluation or appraisal of specific
assets or liabilities, the collateral securing assets or the liabilities of
HUBCO or PFC or any of their subsidiaries, or the collectibility of any such
assets (relying, where relevant, on the analyses and estimates of HUBCO and
PFC). With respect to the financial projections reviewed with management, Advest
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the respective managements of the
respective future financial performances of each of HUBCO and PFC. Advest also
assumed that there has been no material change in HUBCO's or PFC's assets,
financial condition, results of operations, business or prospects since the date
of the last financial statements made available to Advest.
In connection with rendering its fairness opinion to the PFC Board of
Directors, Advest performed a variety of financial analyses. The following is a
summary of such analyses, but does not purport to be a complete description of
the Advest analyses. The preparation of a fairness opinion is a complex process
involving subjective judgments and is not necessarily susceptible to partial
analyses or summary description. Advest believes that its analyses must be
considered as a whole and that selecting portions of such analyses and the
factors considered therein, without considering all factors and analyses, could
create an incomplete view of the analyses and the processes underlying Advest's
opinion.
In performing its analyses, Advest made numerous assumptions with
respect to industry performance, business and economic conditions and various
other matters, many of which cannot be predicted and are beyond the control of
PFC, HUBCO or Advest. Any estimates contained in Advest's analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than such estimates. Estimates of values of companies do
not purport to be appraisals or necessarily reflect the prices at which
companies or their securities may actually be sold. No company or transaction
utilized in Advest's analyses was identical to PFC or HUBCO or the Merger.
Because such estimates are inherently subject to uncertainty, Advest assumes no
responsibility for their accuracy.
Stock Trading History
Advest examined the history of trading prices and volume for both PFC
common stock and HUBCO common stock for the periods from December 31, 1994
through December 9, 1997. Advest also examined the relationship between
movements of the market prices for PFC and HUBCO to movements in the Nasdaq Bank
Stock Index, the Dow Jones Industrial Average, the S&P 500 Index, the Wilshire
5000 Index and the SNL Bank Index during the same period. Overall, both stocks
have performed in line with market indices, with the exception of an increase in
PFC's stock price attributed to speculation of a merger or other business
combination involving PFC.
Contribution Analysis
Advest prepared a contribution analysis showing the percentage
contributed by PFC to the combined company on a pro forma basis of assets,
loans, deposits, common equity and tangible common equity at September 30, 1997,
and net income for the twelve months ended December 31, 1996, nine months ended
September 30, 1997 and three months ended September 30, 1997. Advest then
compared these percentages to the PFC stockholders' pro forma ownership of
HUBCO. This analysis showed that PFC, as of September 30, 1997, would contribute
22.5% of pro forma consolidated assets, 26.9% to pro forma consolidated loans,
21.0% of pro forma consolidated deposits, 26.0% of pro forma consolidated equity
and 29.0% of pro forma tangible equity. This analysis excludes the pending
acquisitions of Security National and Southington.
During the fourth quarter of 1996 HUBCO reported one-time charges of
$26.8 million associated with merger related and restructuring costs. During the
twelve months ended December 31, 1996, PFC incurred non-recurring expenses of
$2.6 million relating to the SAIF special assessment and $0.9 million relating
to a loss on the bulk sale of assets. Excluding the after-tax effect of these
one-time charges and non-recurring expenses, the contribution analysis showed
that PFC would contribute 8.28% of pro forma consolidated net income for the
twelve months ended December 31, 1996, 8.50% for the nine months ended September
30, 1997, and 7.56% for the three months ended September 30, 1997.
Assuming an exchange ratio of 0.30 shares of HUBCO Common Stock for
each share of PFC Common Stock, PFC stockholders would hold approximately 14.0%
of the pro forma common stock and common stock equivalents of the combined
company.
Comparable Company Analysis
In undertaking its analysis, Advest compared the financial condition
and financial operating performance of PFC with a peer group of 9 savings banks
in New York, New Jersey and Connecticut with assets between $600 million and
$1.40 billion. The review considered asset size, return on average equity,
return on average assets, the tangible equity ratio, the ratio of nonperforming
assets to total assets and efficiency ratios, among other information. PFC had a
return on average assets of 0.53% and a return on average equity of 6.36% based
on the operating results for the twelve months ended September 30, 1997, a
tangible equity ratio of 8.42% and nonperforming assets to total assets ratio of
4.19% at September 30, 1997. This compares to the peer group median return on
average assets of 0.95%, a return on average equity of 8.65%, based on operating
results for the twelve months ended September 30, 1997, a tangible equity ratio
of 9.34% and a nonperforming assets to total assets ratio of 0.60% at September
30, 1997. In sum, the peer group reported a stronger operating performance than
PFC, a lower level of nonperforming assets and a higher equity to asset ratio.
Analysis of Selected Merger Transactions
Advest reviewed certain financial data related to 80 acquisitions of
thrift institutions, nationwide, with assets between $500 million and $1.5
billion ("peer group") announced since January 1, 1993, 14 of which were
announced from January 1, 1997 through December 9, 1997. Advest also reviewed
selected regional acquisitions including the following transactions which were
the most recent in the Mid-Atlantic region (identified by acquiror/acquiree):
Astoria Financial Corp/Greater NY SB, Charter One Financial/RCSB Financial,
North Fork Bancorp/New York Bancorp, Sovereign Bancorp/ML Bancorp, Lakeview
Financial/Westwood Financial, Crestar Financial/American National Bancorp,
Flushing Financial/New York FSB, Provident Bankshares/First Citizens Financial,
Summit Bancorp/Collective Bancorp, Sovereign Bancorp/Bankers Corp.
Advest calculated median price as a multiple of the targets' earnings
for the last four quarters (trailing 12 months), excluding the after-tax effect
of the SAIF special assessment in 1996, and as a percentage of stated book value
and tangible book value, and Advest calculated tangible premium as a percentage
of core deposits. The price relationships for the Merger were based upon HUBCO's
closing price at $36.625 on December 9, 1997 and assumed an Exchange Ratio of
0.30 shares of HUBCO Common Stock for each share of PFC Common Stock. For
nationwide thrift transactions in the peer group announced since January 1,
1997, the calculations yielded, as of the date of announcement of these
transactions, the following averages: (i) price offered as a multiple of
earnings of 18.80 times (17.4 times for regional transactions), compared with a
multiple of 31.4 times associated with the Merger; (ii) price offered as a
percentage of book value of 211% (191% for regional transactions), compared with
186% associated with the Merger; (iii) price offered as a percent of tangible
book value of 217% (203% for regional transactions), compared with 186%
associated with the Merger; and (iv) premium as a percent of core deposits of
15.76% (11.59% for regional transactions), compared to 14.02% associated with
the Merger.
At September 30, 1997, PFC had not deferred tax assets of approximately
$14.7 million (20% of stockholders' equity) on its books. In comparing the price
paid relative to PFC's book value, Advest also considered the consideration paid
relative to PFC's book value not including the deferred tax asset. On this
basis, the price paid represents 231% of book value less the deferred tax
amount. It is Advest's opinion that the deduction of the full deferred tax asset
does not make the valuation comparable; however, determining the exact
adjustment requires a series of assumptions on utilization and present value
that are subject to interpretation. The most appropriate valuation to consider
lies between the original and adjusted price to book values.
No company or transaction used as a comparison in the above analysis is
identical to PFC, HUBCO or the Merger. Accordingly, an analysis of the results
of the foregoing is not mathematical; but rather involves complex considerations
and judgments concerning differences in financial and operating characteristics
of the companies and other factors that could affect the acquisition value of
the companies to which they are being compared.
Impact Analysis
Advest analyzed the changes in the amount of fully diluted earnings per
share and book value represented by the issuance of 0.30 or 0.32 shares of HUBCO
common stock for each share of PFC Common Stock. The analysis evaluated, among
other things, possible dilution or accretion to fully diluted earnings per share
and book value per share for HUBCO. The analysis was based upon (i) September
30, 1997 balance sheet data for PFC and HUBCO (ii) projected 1998 earnings for
PFC; and (iii) projected 1998 earnings (First Call median estimate) for HUBCO,
adjusted to reflect the 1997 Stock Dividend.
These pro forma analyses indicated that, prior to adjustments for
consolidation savings, the Merger would be approximately 5% or 6% dilutive to
HUBCO's projected 1998 fully diluted earnings per share, based upon Zacks median
estimate and approximately 15.1% or 14.0% accretive to HUBCO's book value per
share based upon an exchange ratio of 0.30 shares and 0.32 shares, respectively.
A pro forma analysis based on results for the nine-months ended September 30,
1997 indicated that the transaction is 5.2% to 6.5% dilutive to HUBCO's fully
diluted earnings per share based upon an exchange ratio of 0.30 shares and 0.32
shares, respectively. It is anticipated that, with consolidation savings, the
Merger will be accretive in 1998.
Advest also analyzed the impact of the Merger on certain HUBCO values
per PFC share based on the Exchange Ratio of 0.30 shares of HUBCO Common Stock
for one share of PFC Common Stock. That analysis, which was based on certain
assumptions made by Advest, found that, based on the proposed Exchange Ratio,
HUBCO's equivalent projected 1998 earnings would be $0.66 per share or 43.0%
greater than projected PFC earnings per share; that HUBCO's equivalent book
value per share would be $3.18 or 46.2% lower than existing PFC book value per
share, and that HUBCO's equivalent dividend income would be $0.24 per share, or
140% higher than PFC's indicated annualized dividend prior to the announcement.
Consideration to Advest
Advest's engagement agreement provides that PFC will pay Advest a
transaction fee in connection with the Merger, a substantial portion of which is
contingent upon consummation of the Merger. Under the terms of the agreement,
PFC agreed to pay Advest a fee equal to 1% of the aggregate consideration paid
to stockholders and option holders in the Merger, or approximately $1.4 million
(assuming a Median Pre-Closing Price of $36.625 for HUBCO common stock), net of
$225,000 fees already paid to Advest in relation to the Merger (including
$25,000 upon acceptance of the retainer agreement with Advest, hourly fees of
$25,000, $75,000 upon execution of the Merger Agreement and $100,000 upon
delivery of the initial written fairness opinion). While the payment of all or a
significant portion of fees related to financial advisory services provided in
connection with arms-length merger and other business combination transactions
upon consummation of such transactions, as is the case with the Merger, might be
viewed as giving such financial advisors a financial interest in the successful
completion of such transactions, such compensation arrangements are standard and
customary for transactions of the size and type of the Merger.
Resale Considerations With Respect to the HUBCO Common Stock
The shares of HUBCO Common Stock that will be issued if the Merger is
consummated have been registered under the Securities Act of 1933, as amended
(the "Securities Act") and will be freely transferable, except for shares
received by persons, including directors and executive officers of PFC, who may
be deemed to be "affiliates" of PFC under Rule 145 promulgated under the
Securities Act. An "affiliate" of an issuer is defined generally as a person who
"controls" the issuer. Directors, executive officers and 10% stockholders may be
deemed to control the issuer. Affiliates may not sell their shares of HUBCO
Common Stock acquired pursuant to the Merger, except pursuant to an effective
registration statement under the Securities Act covering the HUBCO Common Stock
or in compliance with Rule 145 or another applicable exemption from the
registration requirements of the Securities Act.
Persons who may be deemed to be "affiliates" of PFC have delivered
letters to HUBCO in which they have agreed to certain restrictions on their
ability to sell, transfer or otherwise dispose of ("transfer") any PFC Common
Stock owned by them and any HUBCO Common Stock acquired by them in the Merger.
Pursuant to the accounting rules governing a pooling of interests, such persons
have agreed not to transfer the shares during the period beginning 30 days prior
to the Effective Time and ending on the date on which financial results covering
at least 30 days of post-merger combined operations of HUBCO and PFC have been
published or filed by HUBCO. Also, in connection with the pooling of interests
rules, such persons have agreed not to transfer their PFC Common Stock in the
period prior to 30 days before the Effective Time without giving HUBCO advance
notice and an opportunity to object if the transfer would interfere with pooling
of interests accounting for the Merger. Pursuant to Rule 145, such persons have
also agreed to refrain from transferring HUBCO Common Stock acquired by them in
the Merger, except in compliance with certain restrictions imposed by Rule 145.
Certificates representing the shares of HUBCO Common Stock acquired by each such
person pursuant to the Merger will bear a legend reflecting that the shares are
restricted in accordance with the letter signed by such person and may not be
transferred except in compliance with such restrictions.
Persons who may be deemed "affiliates" of HUBCO have also delivered
letters to HUBCO in which they have agreed not to transfer HUBCO Common Stock
beneficially owned by them in violation of the pooling of interests restrictions
set forth above with respect to PFC.
Conditions to the Merger
The obligation of each party to consummate the Merger is subject to
satisfaction or waiver of certain conditions, including (i) approval of the
Merger Agreement and the transactions contemplated thereby by the requisite vote
of the holders of PFC Common Stock; (ii) the receipt of all consents, approvals
and authorizations of all necessary federal and state government authorities and
expiration of all required waiting periods, necessary for the consummation of
the Merger (see "-- Regulatory Approvals"); (iii) the effectiveness of the
registration statement covering the shares of HUBCO Common Stock to be issued to
PFC stockholders, and the qualification of the issuance of HUBCO Common Stock in
every state where such qualification is required under applicable state
securities laws; (iv) the absence of any litigation that would restrain or
prohibit the consummation of the Merger; (v) the receipt of a letter from
HUBCO's independent accountants that the Merger will qualify to be treated by
HUBCO as a pooling of interests for accounting purposes; and (vi) receipt by the
parties of an opinion of Pitney, Hardin, Kipp & Szuch to the effect that the
exchange of PFC Common Stock for HUBCO Common Stock is a tax-free reorganization
within the meaning of Section 368 of the Code. See "-- Federal Income Tax
Consequences".
The obligation of HUBCO to consummate the Merger is also conditioned
on, among other things, (i) the continued accuracy in all material respects of
the representations and warranties of PFC contained in the Merger Agreement;
(ii) the performance by PFC, in all material respects, of all its obligations
under the Merger Agreement; and (iii) receipt of an opinion from Elias, Matz,
Tiernan & Herrick, L.L.P. as to certain matters.
The obligation of PFC to consummate the Merger is also conditioned on,
among other things, (i) the continued accuracy in all material respects of the
representations and warranties of HUBCO contained in the Merger Agreement; (ii)
the performance by HUBCO, in all material respects, of all its obligations under
the Merger Agreement; (iii) receipt of Advest's fairness opinion; and (iv)
receipt of an opinion from Pitney, Hardin, Kipp & Szuch as to certain matters.
Conduct of Business Pending the Merger
The Merger Agreement requires PFC to conduct its business prior to the
Effective Time only in the ordinary course of business and consistent with
prudent banking practices, except as permitted under the Merger Agreement or
with the written consent of HUBCO. Under the Merger Agreement, PFC has agreed
not to take certain actions without the prior written consent of HUBCO or unless
permitted by the Merger Agreement, including, among other things, the following:
(a) change any provision of its Certificate of Incorporation or By-laws; (b)
change the number of shares of its authorized or issued capital stock other than
as disclosed to HUBCO or issue or grant any option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating to its
authorized or issued capital stock, or any securities convertible into shares of
such stock, or split, combine or reclassify any shares of its capital stock, or
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
except that PFC may declare, set aside, or pay cash dividends per share of PFC
Common Stock aggregating the cash dividends per share declared, set aside or
paid by HUBCO multiplied by 0.320 minus $0.01 (the cash amount per share which
will be used by PFC to redeem the BTH Shareholder Rights Agreements which
currently trade as part of the PFC Common Stock); provided, however, that the
amount of any such dividends shall be adjusted if and to the extent necessary in
the opinion of Arthur Andersen, independent accountants for HUBCO, so that the
declaration, setting aside and payment of such dividends will not disqualify the
Merger for pooling-of-interests accounting treatment, described under "MARKET
PRICE AND DIVIDEND MATTERS -- Limitations on Dividends Under the Merger
Agreement"; (c) grant any severance or termination pay (other than pursuant to
written policies or contracts of PFC in effect on the date of the Merger
Agreement and disclosed to HUBCO) to, or enter into or amend any employment or
severance agreement with, any of its directors, officers or employees; (d) adopt
any new employee benefit plan or arrangement of any type, or award any increase
in compensation or benefits to its directors, officers or employees; (e) sell or
dispose of any substantial amount of assets or voluntarily incur any significant
liabilities other than in the ordinary course of business consistent with past
practices and policies or in response to substantial financial demands upon its
business; (f) make any capital expenditures other than capital expenditures
which are either pursuant to binding commitments existing on the date of the
Merger Agreement or necessary to maintain existing assets in good repair and
expenditures described in business plans or budgets previously furnished to
HUBCO; (g) file any applications or make any contracts with respect to branching
or site location or relocation; (h) agree to acquire in any manner whatsoever
(other than to realize upon collateral for a defaulted loan) any business or
entity (i) make any material change in its accounting methods or practices,
other than changes required in accordance with generally accepted accounting
principles or regulatory authorities; (j) take any action that would result in
any of PFC's representations or warranties being untrue or incorrect at the
Effective Time in any material respect or that would cause any of its conditions
to closing not to be satisfied; (k) make any new loan or other extension or
credit in excess of $3.0 million; or (l) agree to do any of the foregoing.
Under the Merger Agreement, PFC cannot, directly or indirectly,
encourage or solicit or hold discussions or negotiations with, or provide any
information to, any person, entity or group (other than HUBCO) concerning any
merger, sale of shares of capital stock or sale of substantial assets or
liabilities not in the ordinary course of business or similar transactions (an
"Acquisition Transaction"); provided, however, that notwithstanding the
foregoing, PFC may enter into discussions or negotiations or provide any
information in connection with an unsolicited possible Acquisition Transaction
if the Board of Directors of PFC, after consulting with counsel, determines in
the exercise of its fiduciary responsibilities that such discussions or
negotiations should be commenced or such information should be furnished. PFC
has agreed to promptly communicate to HUBCO the terms of any proposal, whether
written or oral, which it may receive with respect to any such Acquisition
Transaction, and the fact that it is having discussions or negotiations with a
third party about an Acquisition Transaction.
Customary Representations, Warranties and Covenants
The Merger Agreement contains customary mutual representations and
warranties, as well as covenants, relating to, among other things, (a) corporate
organization and similar corporate matters; (b) the capital structures of each
of HUBCO and PFC; (c) authorization, execution, delivery, performance and
enforceability of the Merger Agreement and related matters; (d) documents filed
by each of HUBCO and PFC with the Commissioner and the FDIC, respectively, and
the accuracy of information contained therein; (e) the accuracy of information
supplied by each of HUBCO and PFC in connection with the Registration Statement
and this Proxy Statement; (f) compliance with applicable laws; (g) the absence
of material litigation; (h) filing of tax returns and payment of taxes; (i)
matters relating to certain material contracts; (j) director and officer
contracts and retirement and other employee plans and matters relating to the
Employee Retirement Income Security Act of 1974, as amended; (k) insurance
matters; (l) certain bank regulatory matters; (m) absence of certain material
changes or events from September 30, 1997; (n) the absence of actions that would
prevent there being a tax-free reorganization or the use of the "pooling of
interests" method to account for the Merger; (o) title to properties; (p) the
adequacy of loan loss reserves; (q) environmental compliance; (r) brokers' and
finders' fees; (s) cooperation on applications and filings; and (t) the absence
of an agreement with bank regulators which restricts materially the conduct of
HUBCO's or any of its subsidiaries' or PFC's business.
Regulatory Approvals
Consummation of the Merger is subject, among other things, to prior
receipt of all necessary regulatory approvals. Consummation of the Merger
requires approval of the Merger by the FRB under the Bank Holding Company Act of
1948. An application for approval was filed on December __, 1997 with the FRB.
While HUBCO and PFC anticipate receiving such approval, there can be no
assurance that it will be granted, or that it will be granted on a timely basis
or that it will be granted without conditions unacceptable to HUBCO or PFC.
Management and Operations After the Merger
At the Effective Time, as a result of the Merger, PFC will be merged
with and into HUBCO, with HUBCO as the Surviving Entity. Following the Merger,
BTH will continue to operate as a wholly-owned subsidiary of HUBCO. At the
Effective Time, Mr. Tockarshewsky, PFC's Chairman, President and Chief Executive
Officer, and Noel deCordova, Jr. will be appointed to HUBCO's Board of Directors
for a three-year term and two-year term, respectively. Mr. Tockarshewsky will
also be asked to serve as Chairman of the Board and Chief Executive Officer of
BTH following the Closing. In addition, the Merger Agreement provides that all
of the current directors of BTH will be asked to remain as directors of BTH
following the Closing.
Exchange of Certificates, Issuance of New Options
At the Effective Time, holders of certificates formerly representing
shares of PFC Common Stock will cease to have any rights as PFC stockholders and
their certificates automatically will represent the shares of HUBCO Common Stock
into which their shares of PFC Common Stock will have been converted by the
Merger. As soon as practicable after the Effective Time, HUBCO will send written
instructions and a letter of transmittal to each holder of PFC Common Stock,
indicating the method for exchanging such holder's stock certificates for the
certificates representing those shares of HUBCO Common Stock into which such
holder's shares of PFC Common Stock have been exchanged. Holders of PFC Common
Stock should not send in their stock certificates until they receive
instructions from HUBCO.
Each share of HUBCO Common Stock for which shares of PFC Common Stock
are exchanged will be deemed to have been issued at the Effective Time.
Accordingly, holders of PFC Securities who receive HUBCO Common Stock in the
Merger will be entitled to receive any dividend or other distribution which may
be payable to holders of record of such HUBCO Common Stock as of dates on or
after the Effective Time. However, no dividend or other distribution will
actually be paid with respect to any shares of HUBCO Common Stock until the
certificate or certificates formerly representing shares of PFC Common Stock
have been surrendered, at which time any accrued dividends and other
distributions on such shares of HUBCO Common Stock will be paid without
interest. See "-- Consideration".
Holders of outstanding certificates for PFC Common Stock, upon proper
surrender of such certificates to HUBCO, will receive, promptly after the
Effective Time, a certificate representing the full number of shares of HUBCO
Common Stock into which the shares of PFC Common Stock previously represented by
the surrendered certificates have been converted. At the time of issuance of the
new stock certificate, each shareholder so entitled will receive a check for the
amount of the fractional share interest, if any, to which the shareholder may be
entitled.
At the Effective Time, each outstanding option to purchase a share of
PFC Common Stock ("PFC Option") granted under PFC's existing stock option plans
and agreements with its directors and employees will be automatically converted
into an option to purchase the same number of shares of HUBCO Common Stock
multiplied by the Exchange Ratio, at an option price per share of HUBCO Common
Stock equal to the option exercise price per share of PFC Common Stock under the
PFC Option divided by the Exchange Ratio.
From and after the Effective Time, each PFC Option which is converted
into an option to purchase HUBCO Common Stock will be administered, operated and
interpreted by a committee comprised of members of the Board of Directors of
HUBCO. HUBCO has reserved for issuance the number of shares of HUBCO Common
Stock necessary to satisfy HUBCO's obligations under such options, and has
agreed to register such shares pursuant to the Securities Act. As of the Record
Date, there were PFC Options outstanding for _____ shares of PFC Common Stock.
Effective Time; Amendments; Termination
The Closing will occur on the Closing Date to be determined by HUBCO
and set forth in the Closing Notice to PFC. The Closing Date specified by HUBCO
in the Closing Notice must be no more than 15 business days after receipt of all
necessary approvals and consents, the expiration of all statutory waiting
periods and the satisfaction or waiver of the other conditions to consummation
of the Merger, (other than the delivery of documents to be delivered at the
Closing). The Closing may also be set for another day mutually agreed to by
HUBCO and PFC. The parties currently anticipate closing in the first quarter of
1998. Immediately following the Closing, HUBCO will file a certificate of merger
with the Secretary of State of the State of New Jersey and the Secretary of
State of the State of Delaware, which will specify the Effective Time of the
Merger, which HUBCO and PFC anticipate will be the close of business on the
Closing Date. The exact Closing Date is dependent upon satisfaction of all
conditions precedent, some of which are not under the control of HUBCO or PFC.
In the Closing Notice, HUBCO is also required to specify the "Determination
Date," which is used in determining the Median Pre-Closing Price. The
Determination Date is to be not less than seven business days nor more than ten
business days prior to the Closing Date set forth in the Closing Notice. See "--
Conditions to the Merger" and "-- Regulatory Approvals".
The Merger Agreement may be amended, modified or supplemented with
respect to any of its terms by the mutual consent of HUBCO and PFC at any time
prior to the Effective Time. However, after approval of the Merger Agreement by
the stockholders of PFC, no amendment can be made which reduces the amount or
changes the form of consideration to be delivered to the stockholders of PFC
without the approval of such stockholders.
The Merger Agreement may be terminated by the mutual consent of PFC and
HUBCO. The Merger Agreement may also be terminated by PFC or HUBCO if, among
other things, (i) the Effective Time has not occurred on or before July 31, 1998
(which may be extended under certain circumstances to October 31, 1988) (the
"Cutoff Date") unless the failure of such occurrence is due to the failure of
the party seeking to terminate to perform or observe its covenants in the Merger
Agreement; (ii) a vote of the stockholders of PFC to approve the Merger
Agreement is taken and such stockholders fail to approve the Merger Agreement at
their meeting; or (iii) any regulatory approvals necessary to consummate the
transaction have been denied or withdrawn at the request of the regulatory
agency or such approval is given with conditions which materially impair the
value of PFC, taken as a whole, to HUBCO (but then only by HUBCO).
HUBCO may terminate the Merger Agreement if there has been a material
adverse change in the business, operations, assets or financial condition of PFC
and BTH, taken as a whole, from that disclosed by PFC to HUBCO in its Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997, or PFC breaches in a
material respect any representation, warranty or covenant, agreement or
obligation under the Merger Agreement and does not cure such breach within 30
days after receipt by PFC of a notice of breach. HUBCO may also terminate the
Merger Agreement if the conditions to HUBCO's obligations to close are not
satisfied and are not capable of being satisfied by the Cutoff Date.
PFC may terminate the Merger Agreement if there has been a material
adverse change in the business, operations, assets or financial condition of
HUBCO and its subsidiaries taken as a whole from that disclosed by HUBCO in its
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, except for
the effects of HUBCO's acquisitions of Security National and Southington, or if
HUBCO and its subsidiaries, taken as a whole, breaches in a material respect any
representation, warranty or covenant, agreement or obligation under the Merger
Agreement and does not cure such breach within 30 days after receipt by HUBCO of
a notice of breach, or if PFC's Board of Directors approves another acquisition
transaction after determining, upon advice of counsel, that approval was
necessary in the exercise of its fiduciary obligations under applicable laws.
PFC may also terminate the Merger Agreement if the conditions for PFC to close
are not satisfied and are not capable of being satisfied by the Cutoff Date.
In addition, the Merger Agreement may be terminated by PFC upon
occurrence of a Termination Event, as described above under the caption "THE
PROPOSED MERGER -- Consideration."
In the event of a termination, each party will retain all rights and
remedies it may have at law or equity under the Merger Agreement. Upon a
termination of the Merger Agreement, the transactions contemplated thereby will
be abandoned without further action by any party and each party will bear its
own expenses.
Accounting Treatment of the Merger
The Merger is expected to be accounted for by HUBCO under the
pooling-of-interests method of accounting in accordance with generally accepted
accounting principles. HUBCO's obligation to consummate the Merger is
conditioned upon HUBCO's receipt of assurances from its independent public
accountants, Arthur Andersen LLP, that the Merger will be so treated. As
required by generally accepted accounting principles, under pooling-of-interests
accounting, as of the Effective Time the assets and liabilities of PFC would be
added to those of HUBCO at their recorded book values and the stockholders'
equity accounts of HUBCO and PFC would be combined on HUBCO's consolidated
balance sheet. On a pooling-of-interests accounting basis, income and other
financial statements of HUBCO issued after consummation of the Merger would be
restated retroactively to reflect the consolidated combined financial position
and results of operations of HUBCO and PFC as if the Merger had taken place
prior to the periods covered by such financial statements. The pro forma
financial information contained in this Proxy Statement has been prepared using
the pooling-of-interests accounting basis to account for the Merger. See "PRO
FORMA FINANCIAL INFORMATION".
Federal Income Tax Consequences
THE FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR
GENERAL INFORMATION ONLY. IT MAY NOT BE APPLICABLE TO CERTAIN CLASSES OF
TAXPAYERS, INCLUDING INSURANCE COMPANIES, SECURITIES DEALERS, FINANCIAL
INSTITUTIONS, FOREIGN PERSONS AND PERSONS WHO ACQUIRED SHARES OF PFC COMMON
STOCK PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR RIGHTS OR OTHERWISE
AS COMPENSATION. PFC STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISERS AS
TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL AND OTHER TAX LAWS.
General. It is intended that the Merger will be treated as a tax-free
reorganization as defined in Section 368(a)(1)(A) of the Code and that,
accordingly, no gain or loss will be recognized by HUBCO or PFC or by the
stockholders of PFC upon the exchange of their shares of PFC Common Stock solely
for shares of HUBCO Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in HUBCO Common Stock).
Counsel to HUBCO is required, as a condition of Closing, to provide an opinion
to HUBCO and to PFC, with respect to the matter covered by the foregoing
sentence. With respect to this Proxy Statement, Pitney, Hardin, Kipp & Szuch,
counsel to HUBCO, has provided an opinion that, based upon the circumstances as
they presently exist, it expects to be able to render the required opinion to
both HUBCO and PFC.
Consequences of Receipt of Cash in Lieu of Fractional Shares. Cash
received by a PFC shareholder in lieu of any fractional share interest will be
treated as having been received as a payment in exchange for such fractional
share interest, and, provided the fractional share would have constituted a
capital asset in the hands of such shareholder, the shareholder should in
general recognize capital gain or loss in an amount equal to the difference
between the amount of cash received and the portion of the adjusted basis in PFC
Common Stock allocable to the fractional share interest.
Basis of HUBCO Common Stock. The basis of HUBCO Common Stock received
by a PFC shareholder who receives solely HUBCO Common Stock will be the same as
the basis of such shareholder's PFC Common Stock surrendered in exchange
therefor.
Holding Period. The holding period of shares of HUBCO Common Stock
received in the Merger by holders of PFC Common Stock will include the period
during which such shares of PFC Common Stock surrendered in exchange therefor
were held by the holder thereof, provided such shares of PFC Common Stock were
held as capital assets.
No Dissenters' Rights
Stockholders of PFC do not have dissenters' rights of appraisal in
connection with the Merger. Under the DGCL, stockholders of a Delaware
corporation who dissent from a merger or consolidation of the corporation may be
entitled to appraisal rights, unless such corporation's shares are either (i)
listed on a national securities exchange or designated as a national market
system security on an inter dealer quotation system by the National Association
of Securities Dealers, Inc., or (ii) held of record by more than 2,000
stockholders, where such stockholders receive only shares of stock or depository
receipts of the corporation surviving or resulting from the merger or
consolidation of shares of stock or depository receipts of any other corporation
which at the effective date of the merger or consolidation will be either listed
on a national securities exchange or designated as a national market system
security on an inter dealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 stockholders (or
cash in lieu of fractional share interests thereon). Since the PFC Common Stock
and the HUBCO Common Stock to be received pursuant to the Merger are presently
listed on the NASDAQ/NMS, the stockholders of PFC are not entitled to appraisal
rights.
<PAGE>
PRO FORMA FINANCIAL INFORMATION
Pro Forma Unaudited Combined Condensed Balance Sheet
of HUBCO and PFC
The following pro forma unaudited combined condensed balance sheet
combines the historical consolidated balance sheets of HUBCO and PFC giving
effect to the Merger which will be accounted for as a pooling of interests, as
if the Merger had been effective on September 30, 1997 and the pro forma
adjustments described in the notes to pro forma financial information. The
information set forth below should be read in conjunction with the historical
consolidated financial statements of HUBCO and PFC, including their respective
notes thereto, certain of which are incorporated by reference in this Proxy
Statement (see "INFORMATION DELIVERED AND INCORPORATED BY REFERENCE"), and in
conjunction with the condensed consolidated historical financial information,
including the notes thereto, appearing elsewhere in this Proxy Statement.
Anticipated cost savings net of expected Merger-related expenses and
restructuring charges are not expected to be material and therefore the pro
forma financial data does not give effect to these items. The pro forma
financial data does not take into account HUBCO's acquisitions of Security
National and Southington. The pro forma financial data is not necessarily
indicative of the actual financial position that would have occurred had the
Merger been consummated on September 30, 1997 or that may be obtained in the
future.
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Balance Sheet
As of September 30, 1997
(Dollars in thousands, except per share data)
Pro forma Pro forma
HUBCO PFC Adjustments Combined
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 165,157 $ 7,956 $ 173,113
Federal funds sold 100,000 -- 100,000
Securities 886,850 181,188 (3,579) 1,064,459
Loans 1,781,414 656,961 2,438,375
Less: Allowance for loan losses (37,622 ) (8,834) (46,456)
- --
------------- ----------- ------------
Total loans 1,743,792 648,127 2,391,919
------------- ----------- ------------
Other assets 124,657 46,710 171,367
Intangibles, net of amortization 25,578 - 25,578
============= =========== =========== ============
Total Assets $ 3,046,034 $ 883,981 $ (3,579) $ 3,926,436
============= =========== =========== =============
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $ 581,402 $ 34,216 $ - $ 615,618
Interest bearing 1,716,919 577,515 2,294,434
------------- ----------- -------------
Total Deposits 2,298,321 611,731 2,910,052
------------- ----------- -------------
Borrowings 362,354 184,939 547,293
Other liabilities 23,466 12,875 36,341
------------- ----------- -------------
Total Liabilities 2,684,141 809,545 3,493,686
Subordinated debt 100,000 -- 100,000
Capital Trust Securities 50,000 -- 50,000
Stockholders' Equity:
Preferred stock 2,216 -- 2,216
Common stock 38,448 127 6,824 45,399
Additional paid in capital 83,959 66,763 (12,340) 138,382
Retained earnings 80,518 9,264 89,782
Other 6,752 (1,718) 1,937 6,971
------------- ----------- ----------- -------------
Total Stockholders' Equity 211,893 74,436 (3,579) 282,750
============= =========== =========== =============
Total Liabilities and Stockholders' Equity $ 3,046,034 $ 883,981 $ (3,579) $ 3,926,436
============= =========== =========== =============
Common and common equivalent shares
outstanding (in thousands) - maximum 23,042 26,951
- minimum 23,042 26,707
Book value per common and common
equivalent share - maximum $ 9.20 $ 10.49
- minimum 9.20 10.59
</TABLE>
- --------------------------
See notes to pro forma financial information.
<PAGE>
Pro Forma Unaudited Combined Condensed Statements of Income of
HUBCO and PFC
The following pro forma unaudited combined condensed statements of
income combine the historical consolidated statements of income of HUBCO and PFC
giving effect to the Merger which will be accounted for as a pooling of
interests, as if the Merger had occurred on the first day of the applicable
periods indicated herein, and the pro forma adjustments described in the notes
to the pro forma combined financial statements. The information set forth below
should be read in conjunction with the condensed consolidated historical and
other pro forma financial information, including the notes thereto, incorporated
by reference or appearing elsewhere in this Proxy Statement. Anticipated cost
savings net of expected Merger-related expenses and restructuring charges are
not expected to be material and therefore the pro forma financial data does not
give effect to these items. The pro forma financial data does not take into
account HUBCO's acquisitions of Security National and Southington. The pro forma
financial data is not necessarily indicative of the results that actually would
have occurred had the Merger been consummated on the dates indicated or that may
be obtained in the future.
The pro forma results of operations for PFC includes the effect of
reducing PFC's valuation allowance with respect to federal deferred tax assets.
Considering the combined operating results, it is unlikely that HUBCO would have
established a valuation allowance with respect to its federal deferred tax
assets had the companies always been combined. The pro forma unaudited combined
statements of income have been adjusted to reflect what the changes in the
valuation allowance would have been had the companies always been combined.
Pro forma Unaudited Combined Condensed Statement of Income
For the Nine Months Ended September 30, 1997
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Proforma
HUBCO PFC Combined
----------------- -------------------- -----------------
<S> <C> <C> <C>
Interest on loans $ 120,579 $41,020 $ 161,599
Interest on securities 43,860 8,680 52,540
Other interest income 810 45 855
---------- -------- -----------
Total Interest Income 165,249 49,745 214,994
---------- -------- -----------
Interest on deposits 41,000 20,873 61,873
Interest on borrowings 17,772 8,279 26,051
---------- -------- -----------
Total Interest Expense 58,772 29,152 87,924
---------- -------- -----------
Net Interest Income 106,477 20,593 127,070
Provision for possible loan losses 5,027 950 5,977
Noninterest income 28,993 2,753 31,746
Noninterest expenses 70,165 16,689 86,854
---------- -------- -----------
Income before income taxes 60,278 5,707 65,985
Income tax provision 23,860 2,325 26,185
---------- -------- -----------
Net Income $ 36,418 $ 3,382 $ 39,800
========== ======== ===========
Earnings per share:
Primary - maximum $ 1.55 $ 1.45
Primary - minimum 1.55 1.47
Fully Diluted - maximum 1.55 1.45
Fully Diluted - minimum 1.55 1.47
Weighted Average Shares Outstanding:
Primary - maximum 23,471 27,380
Primary - minimum 23,471 27,136
Fully Diluted - maximum 23,471 27,380
Fully Diluted - minimum 23,471 27,136
- --------------------------
See notes to pro forma financial information.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Statement of Income
For the Year Ended December 31, 1996
(Dollars in thousands, except per share data)
Pro forma
HUBCO PFC Combined
----------------- -------------------- -----------------
<S> <C> <C> <C>
Interest on loans $ 149,548 $51,907 $ 201,455
Interest on securities 53,581 11,566 65,147
Other interest income 1,053 147 1,200
---------- -------- -----------
Total Interest Income 204,182 63,620 267,802
---------- -------- -----------
Interest on deposits 62,704 25,834 88,538
Interest on borrowings 10,124 12,023 22,147
---------- -------- -----------
Total Interest Expense 72,828 37,857 110,685
---------- -------- -----------
Net Interest Income 131,354 25,763 157,117
Provision for loan losses 12,295 850 13,145
Noninterest income 30,276 1,462 31,738
Noninterest expenses 116,239 23,976 140,215
---------- -------- -----------
Income before income taxes 33,096 2,399 35,495
Income tax provision 11,599 963 12,562
---------- -------- -----------
Net Income $ 21,497 $ 1,436 $ 22,933
========== ======== ===========
Earnings per share:
Primary - maximum $ 0.90 $ 0.83
Primary - minimum 0.90 0.83
Fully Diluted - maximum 0.90 0.83
Fully Diluted - minimum 0.90 0.83
Weighted Average Shares Outstanding:
Primary - maximum 23,882 27,791
Primary - minimum 23,882 27,547
Fully Diluted - maximum 23,882 27,791
Fully Diluted - minimum 23,882 27,547
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Statement of Income
For the Year Ended December 31, 1995
(Dollars in thousands, except per share data)
Pro forma
HUBCO PFC Combined
----------------- ---------------------- ----------------
<S> <C> <C> <C>
Interest on loans $ 147,087 $ 45,496 $ 192,583
Interest on securities 54,929 13,278 68,207
Other interest income 1,635 185 1,820
---------- ----------- ----------
Total Interest Income 203,651 58,959 262,610
---------- ----------- ----------
Interest on deposits 61,677 24,321 85,998
Interest on borrowings 8,763 11,154 19,917
---------- ----------- ----------
Total Interest Expense 70,440 35,475 105,915
---------- ----------- ----------
Net Interest Income 133,211 23,484 156,695
Provision for loan losses 9,515 1,525 11,040
Noninterest income 28,225 (5,914) 22,311
Noninterest expenses 102,842 18,269 121,111
---------- ----------- ----------
Income loss before income taxes 49,079 (2,224) 46,855
Income tax provision (benefit) 14,514 (639) 13,875
---------- ----------- ----------
Net Income (loss) $ 34,565 $ (1,585) $ 32,980
========== =========== ==========
Earnings per share:
Primary - maximum $ 1.41 $ 1.15
Primary - minimum 1.41 1.16
Fully Diluted - maximum 1.40 1.15
Fully Diluted - minimum 1.40 1.16
Weighted Average Shares Outstanding:
Primary - maximum 24,274 28,183
Primary - minimum 24,274 27,939
Fully Diluted - maximum 24,797 28,707
Fully Diluted - minimum 24,797 28,462
Net income as previously reported $ 34,565 $ 16,262 $ 50,827
Adjustments to income tax benefit - 17,847 17,847
--------- ----------- ---------
Net income (loss) as reported herein $ 34,565 $ (1,585) $ 32,980
========= =========== =========
</TABLE>
- --------------------------
See notes to pro forma financial information.
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Statement of Income
For the Year Ended December 31, 1994
(Dollars in thousands, except per share data)
Pro forma
HUBCO PFC Combined
----------------- -------------------- -----------------
<S> <C> <C> <C>
Interest on loans $ 116,593 $36,593 $ 153,186
Interest on securities 52,488 12,915 65,403
Other interest income 1,848 28 1,876
----------- -------- -----------
Total Interest Income 170,929 49,536 220,465
----------- -------- -----------
Interest on deposits 47,853 17,454 65,307
Interest on borrowings 5,273 10,166 15,439
----------- -------- -----------
Total Interest Expense 53,126 27,620 80,746
----------- -------- -----------
Net Interest Income 117,803 21,916 139,719
Provision for loan losses 9,309 120 9,429
Noninterest income 22,420 2,851 25,271
Noninterest expenses 94,931 17,980 112,911
----------- -------- -----------
Income before income taxes 35,983 6,667 42,650
Income tax provision 12,595 2,693 15,288
----------- -------- -----------
Net Income $ 23,388 $ 3,974 $ 27,362
=========== ======== ===========
Earnings per share:
Primary - maximum $ 1.00 $ 1.00
Primary - minimum 1.00 1.01
Fully Diluted - maximum 0.99 1.00
Fully Diluted - minimum 0.99 1.00
Weighted Average Shares Outstanding:
Primary - maximum 22,969 26,878
Primary - minimum 22,969 26,634
Fully Diluted - maximum 23,589 27,498
Fully Diluted - minimum 23,589 27,255
Net Income as previously reported $ 23,388 $ 6,517 $ 29,905
Adjustments to income tax provision - 2,543 2,543
---------- -------- ----------
Net income as reported herein $ 23,388 $ 3,974 $ 27,362
========== ======== ==========
</TABLE>
- -----------------
See notes to pro forma financial information.
<PAGE>
Notes to Pro Forma Financial Information
(1) Pro forma financial information assumes the Merger was consummated as
of September 30, 1997 for the pro forma unaudited combined condensed
balance sheet and as of the beginning of each of the periods indicated
for the pro forma unaudited combined condensed statements of income.
The pro forma information presented is not necessarily indicative of
the results of operations or the combined financial position that would
have resulted had the Merger been consummated at the beginning of the
periods indicated, nor is it necessarily indicative of the results of
operations in future periods or the future financial position of the
combined entities.
(2) It is assumed that the Merger will be accounted for on a
pooling-of-interests accounting basis, and accordingly, the related pro
forma adjustments herein reflect, where applicable, a Maximum Exchange
Ratio of 0.32 and a Minimum Exchange Ratio of 0.30 shares of HUBCO
Common Stock for each of the 12,700,325 shares of PFC Common Stock
which were outstanding at September 30, 1997.
The pro forma financial information presented herein gives effect to
the cancellation of 120,800 shares of HUBCO Common Stock at the maximum exchange
ratio of 0.32. This adjustment is the result of HUBCO's ownership of 377,500
shares of PFC Common Stock at a cost of $3,579,066.
In summary, the pro forma information reflects adjustments for the
Merger accounted for using the pooling-of-interests accounting method assuming
the Maximum Exchange Ratio, as follows:
($ in 000's)
(i) Issuance of 4,064,104 shares of HUBCO common stock $7,226
(stated value of $1.778 per share)
(ii) Elimination of 12,700,325 shares of PFC common stock (127)
($0.01 par value)
(iii) Cancel 33,600 shares of HUBCO common stock (stated (60)
value of $1.778 per share) representing shares
issued for PFC treasury shares.
(iv) Cancel 120,800 shares of HUCO common stock (stated (215)
value of $1.778 per share) representing HUBCO's
ownership of $377,500 shares of PFC common stock
-------
Adjustment to common stock 6,824
(v) Eliminate PFC's treasury stock 1,937
(vi) Eliminate HUBCO's investment in PFC common stock 3,579
-------
Adjustment offset to additional paid-in capital $12,340
=======
(3) Earnings per share data has been computed based on the combined net
income applicable to common shareholders of HUBCO using the historical
weighted average shares outstanding of HUBCO Common Stock for the given
period and the Common Stock to be issued in connection with the Merger.
(4) The pro forma information presented above does not reflect HUBCO's
pending acquisitions of The Bank of Southington and Security National
Bank & Trust Company of New Jersey. See "CERTAIN INFORMATION REGARDING
HUBCO - Recent Developments".
<PAGE>
DESCRIPTION OF HUBCO CAPITAL STOCK
General
The authorized capital stock of HUBCO presently consists of 53,045,000
shares of HUBCO Common Stock and 10,300,000 shares of preferred stock. As of
December 1, 1997, 21,530,237 shares of HUBCO Common Stock were issued and
outstanding, and 1,250 shares of HUBCO Series B Preferred Stock were
outstanding.
Under the terms of HUBCO's Certificate of Incorporation, the Board of
Directors has authority at any time (i) to divide any or all of the authorized
but unissued shares of preferred stock into series and determine the
designations, number of shares, relative rights, preferences and limitations of
any such series and (ii) to increase the number of shares of any such series
previously determined by it and to decrease such previously determined number of
shares to a number not less than that of the shares of such series then
outstanding. HUBCO Series A Convertible Preferred Stock was issued pursuant to
such authority in connection with HUBCO's acquisition of Washington Bancorp,
Inc. on July 1, 1994; no HUBCO Series A Preferred Stock remains outstanding. In
December, 1996, as part of the acquisition of Westport Bancorp, Inc. on December
13, 1997, HUBCO issued HUBCO Series B Convertible Preferred Stock; 1,250 shares
of HUBCO Series B Convertible Preferred Stock remain outstanding as December 1,
1997. See " -- Description of HUBCO Preferred Series B Stock".
HUBCO's Certificate of Incorporation authorizes the Board of Directors
of HUBCO (except in connection with certain business combinations), from time to
time and without further shareholder action, to issue new shares of authorized
but unissued HUBCO Common Stock or preferred stock. Because of its broad
discretion with respect to the creation and issuance of HUBCO Common Stock or
preferred stock without shareholder approval, the Board of Directors could
adversely affect the voting power of holders of HUBCO Common Stock or preferred
stock and, by issuing shares of preferred stock with certain voting, conversion
and/or redemption rights, could discourage any attempt to gain control of HUBCO.
Description of HUBCO Common Stock
The following description of the HUBCO Common Stock sets forth certain
general terms of the HUBCO Common Stock. For an additional description relating
to the HUBCO Common Stock, see "COMPARISON OF THE RIGHTS OF STOCKHOLDERS OF PFC
AND HUBCO".
Dividend Rights
The holders of HUBCO Common Stock are entitled to receive dividends,
when, as and if declared by the Board of Directors of HUBCO out of funds legally
available therefore subject to the preferential dividend rights of any preferred
stock that may be outstanding. The only statutory limitation is that such
dividends may not be paid when HUBCO is insolvent. Because funds for the payment
of dividends by HUBCO come primarily from the earnings of HUBCO's bank
subsidiaries, as a practical matter, restrictions on the ability of HUB and
Lafayette to pay dividends act as restrictions on the amount of funds available
for the payment of dividends by HUBCO.
As a New Jersey chartered commercial bank, HUB is subject to the
restrictions on the payment of dividends contained in the NJBA. Under the NJBA,
HUB may pay dividends only out of retained earnings, and out of surplus to the
extent that surplus exceeds 50% of stated capital. Under the CBL, Lafayette may
pay dividends only from its net profits, and the total of all dividends in any
calendar year may not (unless specifically approved by the Commissioner) exceed
the total of its net profits of that year combined with its retained net profits
of the preceding two years. Under the Financial Institutions Supervisory Act,
the FDIC has the authority to prohibit a state-chartered bank from engaging in
conduct which, in the FDIC's opinion, constitutes an unsafe or unsound banking
practice. Under certain circumstances, the FDIC could claim that the payment of
a dividend or other distribution by HUB or Lafayette to HUBCO constitutes an
unsafe or unsound practice.
HUBCO is also subject to certain FRB policies which may, in certain
circumstances, limit its ability to pay dividends. The FRB policies require,
among other things, that a bank holding company maintain a minimum capital base.
The FRB would most likely seek to prohibit any dividend payment which would
reduce a holding company's capital below these minimum amounts.
At September 30, 1997, HUB had $125.9 million available for the payment
of dividends to HUBCO, and as of September 30, 1997 Lafayette had $20.0 million
available for the payment of dividends to HUBCO. At September 30, 1997, HUBCO
had $146.0 million available for shareholder dividends, the payment of which
would not reduce any of its capital ratios below the minimum regulatory
requirements.
Voting Rights
At meetings of stockholders, holders of HUBCO Common Stock are entitled
to one vote per share. The quorum for stockholders' meetings is a majority of
the outstanding shares entitled to vote represented in person or by proxy.
Except as indicated below, all actions and authorizations to be taken or given
by stockholders require the approval of a majority of the votes cast by holders
of HUBCO Common Stock at a meeting at which a quorum is present.
The Board of Directors is divided into three classes of directors, each
class being as nearly equal in number of directors as possible. Approximately
one-third of the entire Board of Directors is elected each year and the
directors serve for terms of up to three years, and, in all cases, until their
respective successors are duly elected and qualified.
The exact number of directors and the number constituting each class is
fixed from time to time by resolution adopted by a majority of the entire Board
of Directors. Stockholders may remove any director from office for cause. The
affirmative vote of at least three-quarters of the shares of HUBCO entitled to
vote thereon is required to amend or repeal the provisions of HUBCO's
Certificate of Incorporation relating to the classification of the Board of
Directors and the removal of directors.
HUBCO's Certificate of Incorporation contains a "minimum price"
provision. In the event a "related person" (defined in the Certificate of
Incorporation to include persons who, together with their affiliates, own 10% or
more of HUBCO's Common Stock) proposes to enter into a Business Combination (as
defined in the Certificate of Incorporation) with HUBCO, the proposed
transaction will require the affirmative vote of at least three-quarters of the
outstanding shares entitled to vote on the transaction, unless either (i) the
proposed transaction is first approved by a majority of HUBCO's Board of
Directors, or (ii) the stockholders of HUBCO are offered consideration in an
amount equal to or in excess of an amount determined in accordance with a
formula contained in the Certificate of Incorporation. If either of these tests
are met, the proposed transaction need only be approved by the vote otherwise
required by law, the Certificate of Incorporation and any agreement with a
national securities exchange.
Liquidation Rights
In the event of liquidation, holders of HUBCO Common Stock are entitled
to receive ratably any assets distributed to stockholders, except that if shares
of preferred stock of HUBCO are outstanding at the time of liquidation, such
shares of preferred stock may have prior rights upon liquidation.
Assessment and Redemption
All outstanding shares of HUBCO Common Stock are fully paid and
nonassessable. HUBCO Common Stock is not redeemable at the option of the issuer
or the holders thereof.
Preemptive and Conversion Rights
Holders of HUBCO Common Stock do not have conversion rights or
preemptive rights with respect to any securities of HUBCO.
Description of HUBCO Series B Preferred Stock
Dividend Rights
The holders of HUBCO Series B Preferred Stock are entitled to receive,
when, as and if declared by the Board of Directors of HUBCO out of funds legally
available therefore, dividends at a rate to be determined by the Corporation's
Board of Directors. All dividends declared on the HUBCO Series B Preferred Stock
are pro rata per share and noncumulative. The only statutory limitation is that
such dividends may not be paid when HUBCO is insolvent.
Liquidation Rights
The holders of HUBCO Series B Preferred Stock are entitled to receive
$100.00 per share in the event of any liquidation, dissolution or winding up of
HUBCO, subject to the rights of creditors. In the event of liquidation,
dissolution or winding up, the preferential amounts with respect to the HUBCO
Series B Preferred Stock and any stock on parity with HUBCO Series B Preferred
Stock, shall be distributed pro rata in accordance with the aggregate
preferential amounts of the HUBCO Series B Preferred Stock and such stock on
parity, if any, out of or to the extent of the net assets of HUBCO legally
available for such distribution before any distributions are made with respect
to any stock junior to the rights of HUBCO Series B Preferred Stock.
Redemption
The HUBCO Series B Preferred Stock is not redeemable at the option of
the issuer or the holders thereof.
Preemptive and Conversion Rights
Holders of HUBCO Series B Preferred Stock have an option to convert
such stock into fully paid and nonassessable shares of HUBCO Common Stock. As of
September 30, 1997, the conversion rate was 33.2175 shares of Common Stock for
each share of HUBCO Series B Preferred Stock (the "Conversion Ratio"). The
Conversion Ratio is subject to adjustment upon certain events, including the
issuance of HUBCO Common Stock as a dividend with respect to the outstanding
HUBCO Common Stock, subdivision or combinations of HUBCO Common Stock, the
issuance to holders of HUBCO Common Stock generally of rights or warrants to
subscribe for HUBCO Common Stock, or the distribution to holders of HUBCO Common
Stock generally of evidences of indebtedness, assets (excluding dividends in
cash out of retained earnings) or rights or warrants to subscribe for securities
of HUBCO other than those mentioned herein. Notwithstanding the foregoing, the
Conversion Ratio is not subject to adjustment to the extent HUBCO issues any
HUBCO Common Stock in connection with any employee compensation and benefits
plans, employee agreements and contracts.
Voting Rights
Holders of shares of HUBCO Series B Preferred Stock vote together as a
class with holders of HUBCO Common Stock for the election of directors and all
other matters to which holders of HUBCO Common Stock are entitled to vote. Each
share of HUBCO Series B Preferred Stock is entitled to a number of votes equal
to the Conversion Ratio as the same may be adjusted from time to time.
COMPARISON OF THE RIGHTS OF STOCKHOLDERS
OF PFC AND HUBCO
General
PFC is a business corporation incorporated in Delaware under the DGCL
and HUBCO is a business corporation incorporated in New Jersey under the NJBCA.
The rights of PFC stockholders are currently governed by the DGCL. At the
Effective Time, each PFC shareholder will become a shareholder of HUBCO and the
rights of stockholders of HUBCO are governed by New Jersey corporate law. The
following is a comparison of certain provisions of New Jersey corporate law and
Delaware corporate law and the respective certificates of incorporation and
by-laws of each of PFC and HUBCO. This summary does not purport to be complete
and is qualified in its entirety by reference to the DGCL and the NJBCA, which
statutes may change from time to time, and the respective certificates of
incorporation and by-laws of HUBCO and PFC, which also may be changed.
Voting Requirements
Under the New Jersey Business Corporation Act, unless a greater vote is
specified in the certificate of incorporation, any amendment to a New Jersey
corporation's certificate of incorporation, the voluntary dissolution of the
corporation, or the sale or other disposition of all or substantially all of its
assets other than in the ordinary course of business or the merger or
consolidation of the corporation with another corporation, requires in each case
the affirmative vote of a majority of the votes cast by stockholders of the
corporation entitled to vote thereon. The HUBCO Certificate contains a "minimum
price" provision which requires the affirmative vote of 75% of the outstanding
shares entitled to vote on certain transactions involving "related persons"
unless the proposed transaction is either first approved by a majority of the
HUBCO Board or the stockholders of HUBCO are offered consideration in an amount
equal to or in excess of an amount determined in accordance with a formula
contained in the HUBCO Certificate. See "DESCRIPTION OF HUBCO CAPITAL STOCK --
Description of HUBCO Common Stock -- Voting Rights."
Unless otherwise specified in a Delaware corporation's certificate of
incorporation (and PFC's Certificate of Incorporation is presently silent on the
issue), Delaware law generally provides that an amendment to the certificate of
incorporation, a sale or other disposition of all or substantially all of a
corporation's assets, or a merger or consolidation of a stock corporation with
another stock corporation requires the affirmative vote of a majority of the
outstanding stock entitled to vote thereon (with respect to the amendment, the
affirmative vote of a majority of the outstanding shares of stock of each class
entitled to vote thereon is also required).
All shareholder voting rights of PFC presently are vested in the
holders of PFC Common Stock. All shareholder voting rights of HUBCO presently
are vested in the holders of the HUBCO Common Stock.
Preferred Stock
The authorized capital stock of HUBCO consists of 53,045,000 shares of
HUBCO Common Stock and 10,300,000 shares of preferred stock. As of December 1,
1997, 21,530,237 shares of HUBCO Common Stock were issued and outstanding, and
1,250 shares of HUBCO Series B Preferred Stock were outstanding. Under the terms
of the HUBCO Certificate, the HUBCO Board has authority at any time to divide
any or all of the authorized but unissued shares of preferred stock into series,
determine the designations, number of shares, relative rights, preferences, and
limitations of any such series and authorize the issuance of such series. See
"DESCRIPTION OF HUBCO CAPITAL STOCK -- General."
PFC does not have any issued or outstanding preferred stock.
Classified Board of Directors
The NJBCA permits a New Jersey corporation to provide for a classified
board. HUBCO currently has a classified Board of Directors. The Board is divided
into three classes, with one class of directors generally elected for a
three-year term at each annual meeting.
The DGCL permits a Delaware corporation to provide for the
classification of directors in its certificate of incorporation. PFC's
Certificate of Incorporation contains such a provision and divides the PFC Board
into three classes, to be as nearly equal in number of directors as possible,
and with one class of directors generally elected for a three-year term at each
annual meeting.
Rights of Dissenting Stockholders
Stockholders of a New Jersey corporation who dissent from a merger,
consolidation, sale of all or substantially all of the corporation's assets or
certain other corporate transactions are generally entitled to appraisal rights.
No statutory right of appraisal exists, however, where the stock of the New
Jersey corporation is (i) listed on a national securities exchange, (ii) is held
of record by not less than 1,000 holders, or (iii) where the consideration to be
received pursuant to the merger, consolidation or sale consists of cash or
securities or other obligations which, after the transaction, will be listed on
a national securities exchange or held of record by not less than 1,000 holders.
HUBCO's shares are presently held by more than 1,000 holders.
Stockholders of a Delaware corporation who dissent from a merger or
consolidation of the corporation may be entitled to appraisal rights. There are
no statutory rights of appraisal with respect to stockholders of a corporation
whose shares are either (i) listed on a national securities exchange or
designated as a national market system security on an inter dealer quotation
system by the National Association of Securities Dealers, Inc., or (ii) held of
record by more than 2,000 stockholders, where such stockholders receive only
shares of stock or depository receipts of the corporation surviving or resulting
from the merger or consolidation or shares of stock or depository receipts of
any other corporation which at the effective date of the merger or consolidation
will be either listed on a national securities exchange or designated as a
national market system security on an inter dealer quotation system by the
National Association of Securities Dealers, Inc. or held of record by more than
2,000 stockholders (or cash in lieu of fractional share interests therein). The
exceptions from the Delaware statutory right of appraisal apply to the PFC
Common Stock since the PFC Common Stock and the HUBCO Common Stock to be
received pursuant to the Merger are presently listed on the NASDAQ/NMS. See "THE
MERGER -- No Dissenters Rights of Appraisal".
Shareholder Consent to Corporate Action
Except as otherwise provided by the certificate of incorporation (and
the HUBCO Certificate presently is silent on this issue), the NJBCA permits any
action required or permitted to be taken at any meeting of a corporation's
stockholders, other than the annual election of directors, to be taken without a
meeting upon the written consent of stockholders who would have been entitled to
cast the minimum number of votes necessary to authorize such action at a meeting
of stockholders at which all stockholders entitled to vote were present and
voting. The annual election of directors, if not conducted at a stockholders'
meeting, may only be effected by unanimous written consent. Under the NJBCA, a
shareholder vote on a plan of merger or consolidation, if not conducted at a
stockholders' meeting, may only be effected by either: (i) unanimous written
consent of all stockholders entitled to vote on the issue with advance notice to
any other stockholders, or (ii) written consent of stockholders who would have
been entitled to cast the minimum number of votes necessary to authorize such
action at a meeting, together with advance notice to all other stockholders.
Unless otherwise provided in the certificate of incorporation, Delaware
law provides that any corporate action to be taken at any annual or special
meeting of stockholders may be taken without a meeting, if a consent in writing
to such action is signed by the holders of outstanding stock having not less
than the minimum number of votes necessary to approve such action. PFC's
Certificate of Incorporation prohibits any corporate action to be taken at an
annual or special meeting of stockholders from being taken by written consent.
Dividends
Unless there are other restrictions contained in its certificate of
incorporation (and the HUBCO Certificate presently contains none), the NJBCA
generally provides that a New Jersey corporation may declare and pay dividends
on its outstanding stock so long as the corporation is not insolvent and would
not become insolvent as a consequence of the dividend payment. Because funds for
the payment of dividends by HUBCO come primarily from the earnings of HUBCO's
bank subsidiaries, as a practical matter, restrictions on the ability of HUB or
Lafayette to pay dividends act as restrictions on the amount of funds available
for the payment of dividends by HUBCO. At September 30, 1997, HUBCO had
approximately $146.0 million available for shareholder dividends. For a
description of the regulatory restrictions on dividend payments by HUB and
Lafayette, see "DESCRIPTION OF HUBCO CAPITAL STOCK -- Description of HUBCO
Common Stock -- Dividend Rights."
Subject to any restrictions contained in a corporation's certificate of
incorporation (and PFC's Certificate of Incorporation is presently silent on
this issue), Delaware law generally provides that a corporation may declare and
pay dividends out of surplus (defined as net assets minus stated capital) or,
when no surplus exists, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year.
By-laws
Under the NJBCA, the board of directors of a New Jersey corporation has
the power to adopt, amend, or repeal the corporation's by-laws, unless such
powers are reserved in the certificate of incorporation to the stockholders
(which the HUBCO Certificate presently does not do).
Under Delaware law, the authority to adopt, amend, or repeal the
by-laws of a Delaware corporation is held exclusively by the stockholders
entitled to vote, unless such authority is conferred upon the board of directors
in the certificate of incorporation, which shall not limit or divest the
stockholders of such power. PFC's Certificate of Incorporation and By-laws
provide that a majority of the Board of Directors may amend the By-laws.
Shareholder Protection Legislation
The New Jersey Stockholders Protection Act (the "NJSPA") limits certain
transactions involving an "interested shareholder" and a "resident domestic
corporation." An "interested shareholder" is one that is directly or indirectly
a beneficial owner of 10% or more of the voting power of the outstanding voting
stock of a resident domestic corporation. The NJSPA prohibits certain business
combinations between an interested shareholder and a resident domestic
corporation for a period of five years after the date the interested shareholder
acquired its stock, unless the business combination was approved by the resident
domestic corporation's board of directors prior to the interested shareholder's
stock acquisition date. After the five-year period expires, the prohibition on
certain business combinations continues unless the combination is approved by
the affirmative vote of two-thirds of the voting stock not beneficially owned by
the interested shareholder, the combination is approved by the board prior to
the interested shareholder's stock acquisition date or certain fair price
provisions are satisfied.
Section 203 of the DGCL, in general, prohibits a "business combination"
between a corporation and an "interested stockholder" within three years of the
date such stockholder became an "interested stockholder," unless (i) prior to
such date the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, exclusive of shares owned by
directors who are also officers and by certain employee stock plans, or (iii) on
or after such date, the business combination is approved by the board of
directors and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder. The
term "business combination" is defined to include the following transactions
between the interested stockholder and the corporation or any direct or indirect
majority-owned subsidiary thereof: any merger or consolidation; any sale, lease,
exchange, mortgage, pledge, transfer or other disposition (including as part of
a dissolution) of assets having an aggregate market value equal to 10% or more
of either the aggregate market value of all assets of the corporation on a
consolidated basis or the aggregate market value of all the outstanding stock of
the corporation; certain transactions which result in the issuance or transfer
by the corporation or such subsidiary of their stock to the interested
stockholders; certain transactions that would increase the interested
stockholder's proportion of share ownership of the stock of any class or series
of the corporation or such subsidiary; and any receipt by the interested
stockholder of the benefit of any loans, advances, guarantees, pledges or other
financial benefits provided by or through the corporation or any such
subsidiary. In general, and subject to certain exceptions, an "interested
stockholder" is any person who (i) is the owner of 15% or more of the
outstanding voting stock of the corporation, or (ii) is an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation at any time within a three-year period, and
(iii) the affiliates or associates of such a person. The term "owner" is broadly
defined to include any person that individually or with or through its
affiliates or associates, among other things, beneficially owns such stock, or
has the right to acquire such stock (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding or upon the exercise of warrants or options or
otherwise or has the right to vote such stock pursuant to any agreement,
arrangement or understanding, or has an agreement, arrangement or understanding
with the beneficial owner of such stock for the purpose of acquiring, holding,
voting or disposing of such stock. The restrictions of Section 203 generally do
not apply, among other instances, to corporations that have elected, in the
manner provided therein, not to be subject to such Section or in the case of a
corporation that does not have a class of voting stock that is listed on a
national securities exchange or authorized for quotation on the NASDAQ or held
of record by more than 2,000 stockholders. Section 203 of the DGCL does not
apply to this Merger.
Limitations of Liability of Directors and Officers
Under New Jersey law, a corporation may include in its certificate of
incorporation a provision which would, subject to the limitations described
below, eliminate or limit directors' or officers' liability to the corporation
or its stockholders for monetary damage for breaches of their fiduciary duty as
a director. A similar provision under Delaware law applies to directors, but not
officers.
Under New Jersey law, a director or officer cannot be relieved from
liability or otherwise indemnified for any breach of duty based upon an act or
omission (i) in breach of such person's duty of loyalty to the corporation or
its stockholders, (ii) not in good faith or involving a knowing violation of
law, or (iii) resulting in receipt by such person of an improper personal
benefit. HUBCO's Certificate of Incorporation contains a provision which limits
a director's or officer's liability to the full extent permitted by New Jersey
law.
PFC's Certificate of Incorporation provides that PFC has the power to
indemnify its directors, officer, employees and agents to the full extent
permitted by the DGCL. Under Delaware law, a director cannot be relieved of
liability (i) for breaches of the duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for the payment of
unlawful dividends or expenditure of funds for unlawful stock purchases or
redemptions, or (iv) for transactions from which such director derived an
improper personal benefit.
SHAREHOLDER PROPOSALS
The Merger may be consummated prior to the 1998 Annual Meeting of
Stockholders of PFC, in which event there would be no PFC Annual Meeting. In the
event PFC holds a 1998 Annual Meeting of Stockholders, unless such 1998 meeting
is delayed, any proposal which a PFC shareholder wishes to have included in the
proxy materials of PFC must have been presented to PFC not later than November
20, 1997. No such proposal was received prior to November 20, 1997.
OTHER MATTERS
As of the date of this Proxy Statement, the PFC Board of Directors
knows of no other matters to be presented for action by the stockholders at the
Meeting. If any other matters are properly presented, however, it is the
intention of the persons named in the enclosed proxy to vote in accordance with
their best judgment on such matters.
LEGAL OPINION
Certain legal matters relating to the issuance of the shares of HUBCO
Common Stock offered hereby will be passed upon by Pitney, Hardin, Kipp & Szuch,
counsel to HUBCO. Attorneys in the law firm of Pitney, Hardin, Kipp & Szuch,
beneficially owned 791 shares of HUBCO Common Stock as of December 4, 1997.
EXPERTS
The consolidated financial statements of PFC, incorporated herein by
reference from PFC's Annual Report on Form 10-K for the year ended December 31,
1996, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements of HUBCO as of December 31, 1996
and 1995 and for each of the years in the three year period ended December 31,
1996, incorporated by reference herein, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein and have been so incorporated
in reliance upon the authority of said firm as experts in giving said reports.
Deloitte & Touche LLP will have a representative at the Meeting who
will have an opportunity to make a statement if such representative desires, and
who will be available to respond to appropriate questions.
<PAGE>
Appendix A
AMENDED AND RESTATED AGREEMENT PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated
as of October 22, 1997 (this "Agreement"), is among HUBCO, Inc. ("HUBCO"), a New
Jersey corporation and registered bank holding company, Poughkeepsie Financial
Corp. a Delaware corporation and registered savings and loan holding company
("PFC"), and Bank of the Hudson, a Federal savings bank wholly owned by PFC
("BTH").
WHEREAS, the respective Boards of Directors of HUBCO and PFC
have each determined that it is in the best interests of HUBCO and PFC and their
respective stockholders for HUBCO to acquire PFC by merging PFC with and into
HUBCO with HUBCO surviving and PFC shareholders receiving the consideration
hereinafter set forth; and
WHEREAS, the respective Boards of Directors of PFC, HUBCO and
BTH have each duly adopted and approved this Agreement and the Board of
Directors of PFC has directed that it be submitted to PFC's shareholders for
approval; and
WHEREAS, as a condition for HUBCO to enter into this
Agreement, HUBCO has required that it receive an option on certain authorized
but unissued shares of PFC Common Stock (as hereinafter defined) and,
simultaneously with the execution of this Agreement, PFC is issuing an option to
HUBCO (the "HUBCO Stock Option") to purchase 2,000,000 shares of the authorized
and unissued PFC Common Stock at an option price of $7.875 per share, subject to
adjustment and subject to the terms and conditions set forth in the agreement
governing the HUBCO Stock Option; and
WHEREAS, HUBCO, PFC and BTH originally entered into this
Agreement on October 22, 1997 and subsequently determined that the definition of
"Median Pre-Closing Price" in this Agreement should be modified to include the
concept of a Weighted Average Daily Price; and
WHEREAS, HUBCO, and PFC have amended and restated this
Agreement on December ___, 1997 to reflect such changes;
NOW, THEREFORE, intending to be legally bound, the parties
hereto hereby agree as follows:
ARTICLE I - THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereafter defined), PFC shall be merged
with and into HUBCO (the "Merger") in accordance with the Delaware General
Corporation Law (the "DGCL") and the New Jersey Business Corporation Act (the
"NJBCA"), and HUBCO shall be the surviving corporation (the "Surviving
Corporation").
1.2 Effect of the Merger. At the Effective Time, the Surviving
Corporation shall be considered the same business and corporate entity as each
of HUBCO and PFC and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of HUBCO and PFC shall vest in the
Surviving Corporation and the Surviving Corporation shall be subject to and be
deemed to have assumed all of the debts, liabilities, obligations and duties of
each of HUBCO and PFC and shall have succeeded to all of each of their
relationships, as fully and to the same extent as if such property, rights,
privileges, powers, franchises, debts, liabilities, obligations, duties and
relationships had been originally acquired, incurred or entered into by the
Surviving Corporation. In addition, any reference to either of HUBCO and PFC in
any contract or document, whether executed or taking effect before 2or after the
Effective Time, shall be considered a reference to the Surviving Corporation if
not inconsistent with the other provisions of the contract or document; and any
pending action or other judicial proceeding to which either of HUBCO or PFC is a
party shall not be deemed to have abated or to have discontinued by reason of
the Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Merger had not been made; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of HUBCO or PFC if the Merger had not occurred.
1.3 Certificate of Incorporation. As of the Effective Time,
the certificate of incorporation of HUBCO shall be the certificate of
incorporation of the Surviving Corporation until otherwise amended as provided
by law.
1.4 By-laws. As of the Effective Time, the By-laws of HUBCO
shall be the By-laws of the Surviving Corporation until otherwise amended as
provided by law.
1.5 Directors and Officers. As of the Effective Time, the
directors of HUBCO (including the directors appointed pursuant to Section 5.18
hereof) shall be the directors of the Surviving Corporation. As of the Effective
Time, the officers of HUBCO shall be the officers of the Surviving Corporation.
1.6 Closing Date, Closing and Effective Time. Unless a
different date, time and/or place are agreed to by the parties hereto, the
closing of the Merger (the "Closing") shall take place at 10:00 a.m., at the
offices of Pitney, Hardin, Kipp & Szuch, 200 Campus Drive, Florham Park, New
Jersey, on a date determined by HUBCO on at least seven business days notice
(the "Closing Notice") given to PFC, which date (the "Closing Date") shall be
not later than 15 business days following the receipt of all necessary
regulatory and governmental approvals and consents and the expiration of all
statutory waiting periods in respect thereof and the satisfaction or waiver of
all of the conditions to the consummation of the Merger specified in Article VI
hereof (other than the delivery of certificates, opinions and other instruments
and documents to be delivered at the Closing). In the Closing Notice, HUBCO
shall specify the "Determination Date" for purposes of determining the Median
Pre-Closing Price (as hereinafter defined), which date shall be not less than
seven business days nor more than ten business days prior to the Closing Date
set forth in the Closing Notice. The Merger shall become effective (and be
consummated) upon the later of the filing of certificates of merger, in form and
substance satisfactory to HUBCO and PFC, with the Secretary of State of the
State of New Jersey (the "New Jersey Certificate of Merger") and with the
Secretary of State of the State of Delaware (the "Delaware Certificate of
Merger"). The term "Effective Time" shall mean the close of business on the
first day when the certificates of merger in both New Jersey and Delaware have
been so filed. Immediately following the Closing, the New Jersey Certificate of
Merger shall be filed with the New Jersey Secretary of State and the Delaware
Certificate of Merger shall be filed with the Delaware Secretary of State.
ARTICLE II - CONVERSION OF PFC SHARES AND OPTIONS
2.1 Conversion of PFC Common Stock. Each share of common
stock, $.01 par value, of PFC ("PFC Common Stock"), issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted as follows:
(a) Exchange Ratio. Subject to the provisions of this
Section 2.1, each share of PFC Common Stock issued and outstanding immediately
prior to the Effective Time (excluding shares to be cancelled pursuant to
Section 2.1(d)) shall be converted at the Effective Time into the number of
shares of Common Stock, no par value, of HUBCO ("HUBCO Common Stock") equal to
the exchange ratio (the "Exchange Ratio") determined as follows:
(i) If the Median Pre-Closing Price (as hereinafter
defined) is equal to or greater than $33.33, the
Exchange Ratio shall be 0.300;
(ii) If the Median Pre-Closing Price is less than
$33.33 but greater than $31.25, the Exchange Ratio
shall be equal to the quotient obtained by dividing
$10.00 by the Median Pre-Closing Price and rounding
the result to the nearest one-thousandth; and
(iii) If the Median Pre-Closing Price is equal to or
less than $31.25, the Exchange Ratio shall be 0.320;
provided, however, that if the Median Pre-Closing
Price is less than $25.75, the Board of Directors of
PFC shall have the right, exercisable only until
11:59 p.m. on the third business day following the
Determination Date (or the third business day
following receipt by PFC of the Closing Notice, if
later), to terminate this Agreement by giving HUBCO
notice of such termination, referring to this Section
2.1, and this Agreement shall be terminated pursuant
to such notice and Section 7.1(i), effective as of
11:59 p.m. on the third business day following
receipt of such notice by HUBCO, unless prior to
11:59 p.m. on the third business day following
receipt of such termination notice, HUBCO sends
notice to PFC agreeing that the Exchange Ratio shall
be equal to the quotient obtained by dividing $8.24
by the Median Pre-Closing Price.
The "Median Pre-Closing Price" of HUBCO Common Stock
shall mean the Median Price (as hereinafter defined) calculated based upon the
Weighted Average Daily Price (as hereinafter defined) of HUBCO Common Stock
during the 10 trading days ending on and including the Determination Date. The
"Weighted Average Daily Price" shall mean the weighted average of sales prices
of HUBCO Common Stock as reported by Bloomberg LP, or another source as mutually
agreed upon by HUBCO and PFC, with respect to a trading day. The "Median Price"
shall be determined by taking the price half-way between the Weighted Average
Daily Prices left after discarding the 4 lowest and 4 highest Weighted Average
Daily Prices in the 10 day period. A trading day shall mean a day for which
Bloomberg LP reports transactions for HUBCO Common Stock.
(b) Conversion of PFC Certificates. At the Effective
Time, all shares of PFC Common Stock (other than those cancelled pursuant to
Section 2.1(d)) shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each certificate previously
evidencing any such shares (other than those cancelled pursuant to Section
2.1(d)) shall thereafter represent the right to receive the Merger Consideration
(as defined in Section 2.2(b)). The holders of such certificates previously
evidencing such shares of PFC Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of PFC
Common Stock except as otherwise provided herein or by law. Such certificates
previously evidencing such shares of PFC Common Stock (other than those
cancelled pursuant to Section 2.1(d)) shall be exchanged for certificates
evidencing shares of HUBCO Common Stock issued pursuant to this Article II, upon
the surrender of such certificates in accordance with this Article II. No
fractional shares of HUBCO Common Stock shall be issued, and, in lieu thereof, a
cash payment shall be made pursuant to Section 2.2(e).
(c) Capital Changes. If between the date hereof and
the Effective Time the presently outstanding shares of HUBCO Common Stock shall
have been changed into a different number of shares or a different class, by
reason of any stock dividend, stock split, reclassification, recapitalization,
merger, combination or exchange of shares, the Exchange Ratio and the definition
of Weighted Average Daily Price shall be correspondingly adjusted to reflect
such stock dividend, stock split, reclassification, recapitalization, merger,
combination or exchange of shares; provided, however, that no adjustment shall
be made to reflect the 3% stock dividend which has been declared by HUBCO and is
payable to HUBCO shareholders of record on November 14, 1997.
(d) Treasury Shares. All shares of PFC Common Stock
held by PFC in its treasury or owned by HUBCO or by any of HUBCO's wholly-owned
subsidiaries, including Hudson United Bank ("HUBank") (other than shares held as
trustee or in a fiduciary capacity and shares held as collateral on or in lieu
of a debt previously contracted) immediately prior to the Effective Time shall
be cancelled.
2.2 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, HUBCO
shall deposit, or shall cause to be deposited, with HUBank, Trust Department, or
another bank or trust company designated by HUBCO and reasonably acceptable to
PFC (the "Exchange Agent"), for the benefit of the holders of shares of PFC
Common Stock, for exchange in accordance with this Article II, through the
Exchange Agent, certificates evidencing shares of HUBCO Common Stock and cash in
such amount such that the Exchange Agent possesses such number of shares of
HUBCO Common Stock and such amount of cash as are required to provide all of the
consideration required to be exchanged by HUBCO pursuant to the provisions of
this Article II (such certificates for shares of HUBCO Common Stock, together
with any dividends or distributions with respect thereto, and cash being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the HUBCO Common Stock and cash
out of the Exchange Fund in accordance with Section 2.1. Except as contemplated
by Section 2.2(f) hereof, the Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As soon as reasonably
practicable either before or after the Effective Time but in no event more than
five (5) business days after the Effective Time, HUBCO will instruct the
Exchange Agent to mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time evidenced outstanding shares of
PFC Common Stock (the "Certificates"), (i) a letter of transmittal (the form and
substance of which is reasonably agreed to by HUBCO and PFC prior to the
Effective Time and which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent and which shall have such other
provisions as HUBCO may reasonably specify) and (ii) instructions for effecting
the surrender of the Certificates in exchange for certificates evidencing shares
of HUBCO Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
certificates evidencing that number of whole shares of HUBCO Common Stock which
such holder has the right to receive in respect of the shares of PFC Common
Stock formerly evidenced by such Certificate in accordance with Section 2.1 and
(y) cash in lieu of fractional shares of HUBCO Common Stock to which such holder
may be entitled pursuant to Section 2.2(e) (the shares of HUBCO Common Stock and
cash described in clauses (x) and (y) being collectively referred to as the
"Merger Consideration") and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of shares of PFC Common Stock
which is not registered in the transfer records of PFC, a certificate evidencing
the proper number of shares of HUBCO Common Stock and/or cash may be issued
and/or paid in accordance with this Article II to a transferee if the
Certificate evidencing such shares of PFC Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to evidence only the right
to receive upon such surrender the Merger Consideration. HUBCO shall establish
appropriate procedures that will enable holders of unexchanged stock
certificates of PFC's predecessors (which certificates represent shares of, or
the right to receive shares of, PFC Common Stock) to directly exchange such
certificates for the Merger Consideration.
(c) Distributions with Respect to Unexchanged Shares
of HUBCO Common Stock. No dividends or other distributions declared or made
after the Effective Time with respect to HUBCO Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of HUBCO Common Stock evidenced thereby,
and no other part of the Merger Consideration shall be paid to any such holder,
until the holder of such Certificate shall surrender such Certificate (or a
suitable affidavit of loss and customary bond). Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates evidencing shares of HUBCO Common Stock
issued in exchange therefor, without interest, (i) promptly, the amount of any
cash payable with respect to a fractional share of HUBCO Common Stock to which
such holder may have been entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date on or after the Effective
Time theretofore paid with respect to such shares of HUBCO Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date on or after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such shares of HUBCO Common Stock.
(d) No Further Rights in PFC Common Stock. All shares
of HUBCO Common Stock issued and cash paid upon conversion of the shares of PFC
Common Stock in accordance with the terms hereof shall be deemed to have been
issued or paid in full satisfaction of all rights pertaining to such shares of
PFC Common Stock.
(e) No Fractional Shares of HUBCO Common Stock. No
certificates or scrip evidencing fractional shares of HUBCO Common Stock shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to any rights of a
stockholder of HUBCO. Cash shall be paid in lieu of fractional shares of HUBCO
Common Stock, based upon the Median Pre-Closing Price of HUBCO Common Stock.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of PFC Common Stock for
two years after the Effective Time shall be delivered to HUBCO, upon demand, and
any holders of PFC Common Stock who have not theretofore complied with this
Article II shall thereafter look only to HUBCO for the Merger Consideration,
dividends and distributions to which they are entitled.
(g) No Liability. Neither HUBCO nor the Exchange
Agent shall be liable to any holder of shares of PFC Common Stock for any such
shares of HUBCO Common Stock or cash (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) Withholding Rights. HUBCO shall be entitled to
deduct and withhold, or cause the Exchange Agent to deduct and withhold, from
funds provided by the holder or from the consideration otherwise payable
pursuant to this Agreement to any holder of PFC Common Stock, the minimum
amounts (if any) that HUBCO is required to deduct and withhold with respect to
the making of such payment under the Code (as defined in Section 3.8), or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by HUBCO, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the PFC Common Stock 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 PFC shall be closed and there shall be no further registration
of transfers of shares of PFC Common Stock thereafter on the records of PFC. On
or after the Effective Time, any Certificates presented to the Exchange Agent or
HUBCO for transfer shall be converted into the Merger Consideration.
2.4 PFC Stock Options. Each Stock Option (as defined in
Section 3.2) outstanding at the Effective Time shall be converted into an option
to purchase HUBCO Common Stock, wherein (i) the right to purchase shares of PFC
Common Stock pursuant to the Stock Option shall be converted into the right to
purchase that same number of shares of HUBCO Common Stock multiplied by the
Exchange Ratio, (ii) the option exercise price per share of HUBCO Common Stock
shall be the previous option exercise price per share of the PFC Common Stock
divided by the Exchange Ratio, and (iii) in all other material respects the
option shall be subject to the same terms and conditions as governed the Stock
Option on which it was based, including the length of time within which the
option may be exercised. Shares of HUBCO Common Stock issuable upon exercise of
Stock Options shall be covered by an effective registration statement on Form
S-8, and HUBCO shall file a registration statement on Form S-8 covering such
shares as soon as possible after the Effective Time.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF PFC
References herein to "PFC 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 PFC to HUBCO.
PFC hereby represents and warrants to HUBCO as follows:
3.1 Corporate Organization.
(a) PFC is a corporation duly organized and validly
existing under the laws of the State of Delaware. PFC 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 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 and qualified would not have a material adverse effect on the
business, operations, assets or financial condition of PFC and the PFC
Subsidiaries (as defined below), taken as a whole. PFC is registered as a
savings and loan holding company under the Home Owners' Loan Act, as amended
(the "HOLA").
(b) Each PFC Subsidiary and its jurisdiction of
incorporation is listed in the PFC Disclosure Schedule. For purposes of this
Agreement, the term "PFC Subsidiary" means any corporation, partnership, joint
venture or other legal entity in which PFC, directly or indirectly, owns at
least a 50% stock or other equity interest or for which PFC, 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 "PFC Subsidiary" shall include any entity which
was a PFC Subsidiary at any time during such period. BTH is a savings bank duly
organized and validly existing in stock form under the laws of the United States
of America. All eligible accounts of depositors issued by BTH are insured by the
Savings Association Insurance Fund ("SAIF") of the Federal Deposit Insurance
Corporation (the "FDIC") to the fullest extent permitted by law. PSB Associates,
Inc. ("PSB Associates") is a corporation duly organized and in active status
under the laws of the State of New York. PSB Associates is duly licensed to sell
life insurance, mutual funds, variable annuities and unit investment trusts.
Each PFC Subsidiary has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business 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 and
qualified would not have a material adverse effect on the business, operations,
assets or financial condition of PFC and the PFC Subsidiaries, taken as a whole.
(c) The PFC Disclosure Schedule sets forth true and
complete copies of the Certificate of Incorporation and By-laws, as in effect on
the date hereof, of PFC, BTH and PSB Associates.
3.2 Capitalization. The authorized capital stock of PFC
consists of 40,000,000 shares of PFC Common Stock and 2,000,000 shares of serial
preferred stock, $.01 par value per share ("PFC Preferred Stock"). As of
September 19, 1997, there were 12,700,325, shares of PFC Common Stock issued and
outstanding, including 105,000 shares of treasury stock, and no shares of PFC
Preferred Stock issued and outstanding. As of September 19, 1997, there were
1,275,394 shares of PFC Common Stock issuable upon exercise of outstanding stock
options. The PFC Disclosure Schedule sets forth (i) all options which may be
exercised for issuance of PFC Common Stock (collectively, the "Stock Options")
and the terms upon which the options may be exercised and (ii) true and complete
copies of each plan and a specimen of each form of agreement pursuant to which
any outstanding Stock Option was granted, including a list of each outstanding
Stock Option issued pursuant thereto. All issued and outstanding shares of PFC
Common Stock, and all issued and outstanding shares of capital stock of each PFC
Subsidiary, have been duly authorized and validly issued, and are fully paid and
nonassessable. The authorized capital stock of BTH and of PSB Associates is as
set forth in the charter documents of BTH and PSB Associates, respectively
contained in the PFC Disclosure Schedule. All of the outstanding shares of
capital stock of each PFC Subsidiary are owned (directly in the case of BTH, and
indirectly in the case of each other PFC Subsidiary) by PFC and are free and
clear of any liens, encumbrances, charges, restrictions or rights of third
parties. Except for the Stock Options issued and disclosed herein, the HUBCO
Stock Option and any rights (the "PFC Rights") pursuant to the BTH Rights
Agreement dated as of May 1, 1988 (the "Rights Plan"), neither PFC nor any PFC
Subsidiary has granted or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
transfer, purchase, subscription or issuance of any shares of capital stock of
PFC or any PFC Subsidiary or any securities representing the right to purchase,
subscribe or otherwise receive any shares of such capital stock or any
securities convertible into any such shares, and there are no agreements or
understandings with respect to voting of any such shares.
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 PFC, and except as set forth in the PFC Disclosure Schedule,
PFC and BTH have the full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby in
accordance with the terms hereof. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the directors of PFC and BTH in accordance with their
respective Certificate of Incorporation and Charter and applicable laws and
regulations. Except for such approvals, no other corporate proceedings not
otherwise contemplated hereby on the part of PFC or BTH are necessary to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by PFC and BTH, and constitutes the valid and
binding obligation of each of PFC and BTH, enforceable against PFC and BTH in
accordance with its terms, except to the extent that enforcement may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, conservatorship,
receivership or other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the rights of
creditors of federal savings associations or their holding companies, (ii)
general equitable principles, and (iii) laws relating to the safety and
soundness of insured depository institutions and except that no representation
is made as to the effect or availability of equitable remedies or injunctive
relief.
(b) Neither the execution and delivery of this
Agreement by PFC or BTH, nor the consummation by PFC or BTH of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by PFC or
BTH with any of the terms or provisions hereof, will (i) violate any provision
of PFC's or BTH's Certificate of Incorporation, Charter 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 PFC, BTH or any of their respective
properties or assets, or (iii) except as set forth in the PFC Disclosure
Schedule, violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of PFC or BTH 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 PFC or BTH 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 PFC and the PFC 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 Thrift Supervision (the "OTS"), the Securities
and Exchange Commission (the "SEC"), and the stockholders of PFC, 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 PFC or BTH in connection
with (x) the execution and delivery by PFC and BTH of this Agreement and (y) the
consummation by PFC of the Merger, and the consummation by PFC and BTH of the
other transactions contemplated hereby, except (i) such as are listed in the PFC
Disclosure Schedule and (ii) such as individually or in the aggregate will not
(if not obtained) have a material adverse effect on the business, operations,
assets or financial condition of PFC and the PFC Subsidiaries taken as a whole
or prevent or materially delay the consummation of the transactions contemplated
hereby. To the best of PFC's knowledge, no fact or condition exists which PFC
has reason to believe will prevent it and BTH from obtaining the aforementioned
consents and approvals.
3.4 Financial Statements.
(a) The PFC Disclosure Schedule sets forth copies of
the consolidated balance sheets of BTH as of December 31, 1995 and 1996, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the periods ended December 31, in each of the three years 1994
through 1996, in each case accompanied by the audit report of Deloitte & Touche
LLP ("Deloitte & Touche"), independent certified public accountants with respect
to BTH, and the unaudited consolidated statement of condition of PFC as of June
30, 1997 and the related unaudited statements of income and cash flows for the
six months ended June 30, 1997 and 1996, as reported in PFC's Quarterly Report
on Form 10-Q, filed with the SEC (collectively, the "PFC Financial Statements").
The PFC Financial Statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved (except as may be indicated therein or in
the notes thereto and except for the omission of notes from interim financial
statements), and fairly present the consolidated financial condition of BTH or
PFC, as the case may be, as of the respective dates set forth therein, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows fairly present the results of the consolidated operations, changes in
stockholders' equity and cash flows of PFC for the respective periods set forth
therein.
(b) The books and records of PFC and each of its
Subsidiaries 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 PFC Financial Statements (including the notes
thereto), as of June 30, 1997, neither PFC nor any PFC Subsidiary had any
liabilities, whether absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of PFC and the PFC
Subsidiaries, taken as a whole, which were required by GAAP (consistently
applied) to be disclosed in PFC's consolidated statement of condition as of June
30, 1997 or the notes thereto. Since June 30, 1997, neither PFC nor any PFC
Subsidiary has incurred any liabilities except in the ordinary course of
business and consistent with prudent business practice, except as related to the
transactions contemplated by this Agreement or except as set forth in the PFC
Disclosure Schedule.
3.5 Broker's and Other Fees. Except for Advest, Inc.
("Advest"), neither PFC nor any of its Subsidiaries 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. The agreement with
Advest is set forth in the PFC Disclosure Schedule. Other than pursuant to the
agreement with Advest, 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 PFC or any of its Subsidiaries.
3.6 Absence of Certain Changes or Events.
(a) Except as disclosed in the PFC Disclosure
Schedule, there has not been any material adverse change in the business,
operations, assets or financial condition of PFC and the PFC Subsidiaries, taken
as a whole, since June 30, 1997, and to the best of PFC's knowledge, no fact or
condition exists which PFC believes will cause such a material adverse change in
the future; provided, however, that a material adverse change shall not be
deemed to include (i) any change in the value of the respective investment and
loan portfolios of PFC and the PFC Subsidiaries as the result of a change in
interest rates generally, (ii) any change occurring after the date hereof in any
federal or state law, rule or regulation or in GAAP, which change affects
banking institutions generally, (iii) reasonable expenses incurred in connection
with this Agreement and the transactions contemplated hereby, or (iv) actions or
omissions of PFC or any PFC Subsidiary taken with the prior written consent of
HUBCO in contemplation of the transactions contemplated hereby (including
without limitation any actions taken by PFC or BTH pursuant to Section 5.13 of
this Agreement).
(b) Except as set forth in the PFC Disclosure
Schedule, neither PFC nor any of its Subsidiaries has 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, PFC and its Subsidiaries have conducted their respective
businesses only in the ordinary course, consistent with past practice.
3.7 Legal Proceedings. Except as disclosed in the PFC
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of PFC and the PFC Subsidiaries, neither PFC nor any PFC Subsidiary
is a party to any, and there are no pending or, to the best of PFC's knowledge,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against PFC or any PFC Subsidiary
which, if decided adversely to PFC or an PFC Subsidiary, are reasonably likely
to have a material adverse effect on the business, operations, assets or
financial condition of PFC and the PFC Subsidiaries taken as a whole. Except as
disclosed in the PFC Disclosure Schedule, neither PFC nor any PFC Subsidiary is
a party to any order, judgment or decree entered in any lawsuit or proceeding
which is material to PFC or such PFC Subsidiary.
3.8 Taxes and Tax Returns. Except as disclosed in the PFC
Disclosure Schedule:
(a) PFC and each PFC Subsidiary has duly filed (and
until the Effective Time will so file) all returns, declarations, reports,
information returns and statements ("Returns") required to be filed by it on or
before the Effective Time in respect of any federal, state and local taxes
(including withholding taxes, penalties or other payments required) and has duly
paid (and until the Effective Time will so pay) all such taxes due and payable,
other than taxes or other charges which are being contested in good faith (and
disclosed to HUBCO in writing) or against which reserves have been established.
PFC and each PFC Subsidiary has established (and until the Effective Time will
establish) on its books and records reserves that are adequate for the payment
of all federal, state and local taxes not yet due and payable, but are incurred
in respect of PFC or such PFC Subsidiary through such date. None of the federal
or state income tax returns of PFC or any PFC Subsidiary have been examined by
the Internal Revenue Service (the "IRS") or the New York Division of Taxation
within the past six years. To the best knowledge of PFC, 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 PFC or any PFC Subsidiary, nor has PFC or any PFC Subsidiary given any
currently outstanding waivers or comparable consents regarding the application
of the statute of limitations with respect to any taxes or Returns.
(b) Neither PFC nor any PFC Subsidiary (i) has
requested any extension of time within which to file any Return, which Return
has not since been filed, (ii) is a party to any agreement providing for the
allocation or sharing of taxes, (iii) is required to include in income any
adjustment pursuant to Section 481(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), by reason of a voluntary change in accounting method
initiated by PFC or such PFC Subsidiary (nor does PFC have any knowledge that
the IRS has proposed any such adjustment or change of accounting method), or
(iv) has filed a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply.
(c) From January 1, 1992 until the date hereof, to
the best of PFC's knowledge, there has been no "ownership change" of PFC as
defined in Section 382(g) of the Code.
3.9 Employee, Director and Officer Benefit Plans.
(a) Except as set forth on the PFC Disclosure
Schedule, neither PFC nor any PFC Subsidiary maintains or contributes to any
"employee pension benefit plan" (the "PFC 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 "PFC Welfare Plans") within the
meaning of Section 3 of ERISA, stock option plan, stock purchase plan, deferred
compensation plan, severance plan, bonus plan, employment agreement, director
retirement program or other similar plan, program or arrangement. Neither PFC
nor any PFC Subsidiary has, since September 2, 1974, contributed to any
"Multiemployer Plan," as such term is defined in Section 3(37) of ERISA.
(b) PFC has delivered to HUBCO in the PFC Disclosure
Schedules (or previously made available to HUBCO) a complete and accurate copy
of each of the following with respect to each of the PFC Pension Plans and PFC
Welfare Plans, if any: (i) plan document, summary plan description, and summary
of material modifications (if not available, a detailed description of the
foregoing); (ii) trust agreement or insurance contract, if any; (iii) most
recent IRS determination letter, if any; (iv) most recent actuarial report, if
any; and (v) most recent annual report on Form 5500.
(c) The present value of all accrued benefits, both
vested and non-vested, under each of the PFC Pension Plans subject to Title IV
of ERISA, based upon the actuarial assumptions used for funding purposes in the
most recent actuarial valuation prepared by such PFC Pension Plan's actuary, did
not exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the best of PFC's knowledge, the actuarial assumptions then
utilized for such plans were reasonable and appropriate as of the last valuation
date and reflect then current market conditions.
(d) During the last six years, the Pension Benefit
Guaranty Corporation ("PBGC") has not asserted any claim for liability against
PFC or any PFC Subsidiary which has not been paid in full.
(e) All premiums (and interest charges and penalties
for late payment, if applicable) due to the PBGC with respect to each PFC
Pension Plan have been paid. All contributions required to be made to each PFC
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 PFC
which have not been paid have been properly recorded on the books of PFC.
(f) Except as disclosed in the PFC Disclosure
Schedule, each of the PFC Pension Plans, PFC Welfare Plans and each other
employee benefit plan and arrangement identified on the PFC Disclosure Schedule
has been operated in compliance in all material respects with the provisions of
ERISA, the Code, all regulations, rulings and announcements promulgated or
issued thereunder, and all other applicable governmental laws and regulations.
Furthermore, except as disclosed in the PFC Disclosure Schedule, if PFC
maintains any PFC Pension Plan, PFC has received or applied for a favorable
determination letter from the IRS which takes into account the Tax Reform Act of
1986 and (to the extent it mandates currently applicable requirements)
subsequent legislation, and PFC is not aware of any fact or circumstance which
would disqualify any plan.
(g) To the best knowledge of PFC, 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 PFC Welfare Plan or PFC
Pension Plan that would result in any material tax or penalty for PFC or any PFC
Subsidiary.
(h) No PFC Pension Plan or any trust created
thereunder has been terminated, nor have there been any "reportable events"
(notice of which has not been waived by the PBGC), within the meaning of Section
4034(b) of ERISA, with respect to any PFC Pension Plan.
(i) No "accumulated funding deficiency," within the
meaning of Section 412 of the Code, has been incurred with respect to any PFC
Pension Plan.
(j) There are no material pending or, to the best
knowledge of PFC, material threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of, or against any of the PFC Pension Plans
or the PFC Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the PFC Disclosure Schedule.
(k) Except as disclosed in the PFC Disclosure
Schedule, no PFC Pension Plan or PFC Welfare Plan provides medical or death
benefits (whether or not insured) beyond an employee's retirement or other
termination of service, other than (i) coverage mandated by law or pursuant to
conversion or continuation rights set out in such Plan or an insurance policy
providing benefits thereunder, or (ii) death benefits under any PFC Pension
Plan.
(l) Except with respect to customary health, life and
disability benefits, there are no unfunded benefit obligations which are not
accounted for by reserves shown on the PFC Financial Statements and established
in accordance with GAAP.
(m) With respect to each PFC Pension Plan and PFC
Welfare Plan that is funded wholly or partially through an insurance policy,
there will be no liability of PFC or any PFC Subsidiary as of the Effective Time
under any such insurance policy or ancillary agreement with respect to such
insurance policy in the nature of a retroactive rate adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or partially
out of events occurring prior to the Effective Time.
(n) Except (i) for payments and other benefits due
pursuant to the employment agreements included within the PFC Disclosure
Schedule, and (ii) as set forth in the PFC Disclosure Schedule, or as expressly
agreed to by HUBCO in writing either pursuant to this Agreement or otherwise,
the consummation of the transactions contemplated by this Agreement will not (x)
entitle any current or former employee of PFC or any PFC Subsidiary to severance
pay, unemployment compensation or any similar payment, or (y) accelerate the
time of payment or vesting, or increase the amount of any compensation or
benefits due to any current or former employee under any PFC Pension Plan or PFC
Welfare Plan.
(o) Except for the PFC Pension Plans and the PFC
Welfare Plans, and except as set forth on the PFC Disclosure Schedule, PFC has
no deferred compensation agreements, understandings or obligations for payments
or benefits to any current or former director, officer or employee of PFC or any
PFC Subsidiary or any predecessor of any thereof. The PFC Disclosure Schedule
sets forth (or lists, if previously delivered to HUBCO): (i) true and complete
copies of the agreements, understandings or obligations with respect to each
such current or former director, officer or employee, and (ii) the most recent
actuarial or other calculation of the present value of such payments or
benefits.
(p) Except as set forth in the PFC Disclosure
Schedule, PFC 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 PFC 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 PFC's knowledge,
neither PFC nor any PFC Pension Plan or PFC 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 PFC Disclosure Schedule lists, and as to item
(i) below PFC has previously delivered to HUBCO a complete copy of, each (i)
final registration statement, prospectus, annual, quarterly or current report
and definitive proxy statement filed by PFC since January 1, 1996 pursuant to
the Securities Act of 1933, as amended (the "1933 Act"), or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and (ii) communication (other
than general advertising materials and press releases) mailed by PFC to its
stockholders as a class since January 1, 1996, and each such communication, as
of its date, complied in all material respects with all applicable statutes,
rules and regulations and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided that
information as of a later date shall be deemed to modify information as of an
earlier date.
(b) Since January 1, 1996, (i) each of PFC and BTH
has filed all reports that it was required to file under the 1934 Act, and (ii)
each of PFC, BTH and PSB Associates 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, PFC promptly will deliver or make available to HUBCO accurate and
complete copies of such reports. As of their respective dates, each such form,
report, or document, and each such final registration statement, prospectus,
annual, quarterly or current report, definitive proxy statement or
communication, complied in all material respects with all applicable statutes,
rules and regulations and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided that
information contained in any such document as of a later date shall be deemed to
modify information as of an earlier date. The PFC Disclosure Schedule lists the
dates of all examinations of PFC, BTH or PSB Associates conducted by the OTS
since January 1, 1996 and the dates of any responses thereto submitted by PFC,
BTH or PSB Associates.
3.11 PFC and BTH Information. The information relating to PFC
and BTH, this Agreement, and the transactions contemplated hereby (except for
information relating solely to HUBCO) to be contained in the Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof) to be delivered to
stockholders of PFC in connection with the solicitation of their approval of the
Merger, as of the date the Proxy Statement-Prospectus is mailed to stockholders
of PFC, and up to and including the date of the meeting of stockholders to which
such Proxy Statement-Prospectus relates, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.12 Compliance with Applicable Law. Except as set forth in
the PFC Disclosure Schedule, PFC and each PFC Subsidiary holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business and has complied with and is not in default in any respect under any
applicable law, statute, order, rule, regulation, policy and/or guideline of any
federal, state or local governmental authority relating to PFC or such PFC
Subsidiary (including, without limitation, consumer, community and fair lending
laws) (other than where the failure to have a license, franchise, permit or
authorization or where such default or noncompliance will not result in a
material adverse effect on the business, operations, assets or financial
condition of PFC and the PFC Subsidiaries taken as a whole), and PFC has not
received notice of violation of, and does not know of any violations of, any of
the above.
3.13 Certain Contracts.
(a) Except for plans referenced in Section 3.9 and as
disclosed in the PFC Disclosure Schedule, (i) neither PFC nor any PFC Subsidiary
is a party to or bound by any written contract or any understanding with respect
to the employment of any officers, employees, directors or consultants, and (ii)
the consummation of the transactions contemplated by this Agreement will not
(either alone or upon the occurrence of any additional acts or events) result in
any payment (whether of severance pay or otherwise) becoming due from PFC or any
PFC Subsidiary to any officer, employee, director or consultant thereof. The PFC
Disclosure Schedule lists, and either the PFC Disclosure Schedule sets forth
true and correct copies of or PFC has previously made available to HUBCO, all
severance or employment agreements with officers, directors, employees, agents
or consultants to which PFC or any PFC Subsidiary is a party.
(b) Except as disclosed in the PFC Disclosure
Schedule and except for loan commitments, loan agreements and loan instruments
entered into or issued by BTH in the ordinary course of business, (i) as of the
date of this Agreement, neither PFC nor any PFC Subsidiary is a party to or
bound by any commitment, agreement or other instrument which is material to the
business, operations, assets or financial condition of PFC and the PFC
Subsidiaries taken as a whole, (ii) no commitment, agreement or other instrument
to which PFC or any PFC Subsidiary is a party or by which any of them is bound
limits the freedom of PFC or any PFC Subsidiary to compete in any line of
business or with any person, and (iii) neither PFC nor any PFC Subsidiary is a
party to any collective bargaining agreement.
(c) Except as disclosed in the PFC Disclosure
Schedule, neither PFC nor any PFC Subsidiary or, to the best knowledge of PFC,
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 BTH 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 PFC and the PFC Subsidiaries, taken as a whole.
3.14 Properties and Insurance.
(a) Except as set forth in the PFC Disclosure
Schedule, PFC or a PFC Subsidiary has good and, as to owned real property,
marketable title to all material assets and properties, whether real or
personal, tangible or intangible, reflected in PFC's consolidated balance sheet
as of December 31, 1996, or owned and acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of for fair value in
the ordinary course of business since December 31, 1996), subject to no
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items that secure liabilities that are reflected in said balance sheet or the
notes thereto or that secure liabilities incurred in the ordinary course of
business after the date of such balance sheet, (ii) statutory liens for amounts
not yet delinquent or which are being contested in good faith, (iii) such
encumbrances, liens, mortgages, security interests, pledges and title
imperfections that are not in the aggregate material to the business,
operations, assets, and financial condition of PFC and the PFC Subsidiaries
taken as a whole, and (iv) with respect to owned real property, title
imperfections noted in title reports delivered to HUBCO prior to the date
hereof. Except as affected by the transactions contemplated hereby, PFC or one
or more of its Subsidiaries as lessees have the right under valid and subsisting
leases to occupy, use, possess and control all real property leased by PFC and
such Subsidiaries in all material respects as presently occupied, used,
possessed and controlled by PFC and its Subsidiaries.
(b) The business operations and all insurable
properties and assets of PFC and each PFC Subsidiary are insured for their
benefit against all risks which, in the reasonable judgment of the management of
PFC, 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 PFC
adequate for the business engaged in by PFC and the PFC Subsidiaries. As of the
date hereof, neither PFC nor any PFC Subsidiary has received any notice of
cancellation or notice of a material amendment of any such insurance policy or
bond, and to the best of PFC'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 PFC Disclosure
Schedule sets forth in summary form a list of all insurance policies of PFC and
the PFC Subsidiaries.
3.15 Minute Books. The minute books of PFC, BTH and PSB
Associates contain records of all meetings and other corporate action held of
their respective stockholders and Boards of Directors (including committees of
their respective Boards of Directors) that are complete and accurate in all
material respects.
3.16 Environmental Matters. Except as set forth in the PFC
Disclosure Schedule:
(a) Neither PFC nor any PFC Subsidiary has received
any written notice, citation, claim, assessment, proposed assessment or demand
for abatement alleging that PFC or such PFC Subsidiary (either directly or as a
trustee or fiduciary, or as a successor-in-interest in connection with the
enforcement of remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or cleanup of any
condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters, which correction or
cleanup would be material to the business, operations, assets or financial
condition of PFC and the PFC Subsidiaries taken as a whole. PFC 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 PFC or
any PFC Subsidiary, as OREO or otherwise, or owned or controlled by PFC or any
PFC Subsidiary as a trustee or fiduciary (collectively, "Properties"), in any
manner that violates any presently existing federal, state or local law or
regulation governing or pertaining to such substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of PFC and the PFC Subsidiaries, taken
as a whole. Except as described in the PFC Disclosure Schedule, none of the
Properties is located in the State of New Jersey or the State of Connecticut.
(b) PFC has no knowledge that any of the Properties
has been operated in any manner in the three years prior to the date of this
Agreement that violated any applicable federal, state or local law or regulation
governing or pertaining to toxic or hazardous substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of PFC and the PFC Subsidiaries taken
as a whole.
(c) To the best of PFC's knowledge, PFC, each PFC
Subsidiary and any and all of their tenants or subtenants have all necessary
permits and have filed all necessary registrations material to permit the
operation of the Properties in the manner in which the operations are currently
conducted under all applicable federal, state or local environmental laws,
excepting only those permits and registrations the absence of which would not
have a material adverse effect upon the operations of requiring the permit or
registration.
(d) To the knowledge of PFC, 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 PFC or any PFC Subsidiary.
3.17 Reserves. As of June 30, 1997, each of the allowance for
loan losses and the reserve for OREO properties in the PFC Financial Statements
was adequate pursuant to GAAP (consistently applied), and the methodology used
to compute each of the loan loss reserve and the reserve for OREO properties
complies in all material respects with GAAP (consistently applied) and all
applicable policies of the OTS.
3.18 No Parachute Payments. Except as set forth on the PFC
Disclosure Schedule, no officer, director, employee or agent (or former officer,
director, employee or agent) of PFC or any PFC 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 PFC, a PFC Subsidiary, HUBCO or any HUBCO Subsidiary
which if paid or provided would constitute an "excess parachute payment," as
defined in Section 280G of the Code or regulations promulgated thereunder.
3.19 Agreements with Bank Regulators. Neither PFC nor any PFC
Subsidiary is a party to any agreement or memorandum of understanding with, or a
party to any commitment letter, board resolution submitted to a regulatory
authority or similar undertaking to, or is subject to any order or directive by,
or is a recipient of any extraordinary supervisory letter from, any court,
governmental authority or other regulatory or administrative agency or
commission, domestic or foreign ("Governmental Entity") which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies or its management, except for those the
existence of which has been disclosed in writing to HUBCO by PFC prior to the
date of this Agreement, nor has PFC been advised by any Governmental Entity that
it is contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission, except as disclosed in writing to HUBCO by PFC prior to the date of
this Agreement. Neither PFC nor any PFC Subsidiary is required by Section 32 of
the Federal Deposit Insurance Act to give prior notice to a Federal banking
agency of the proposed addition of an individual to its board of directors or
the employment of an individual as a senior executive officer, except to the
extent caused by BTH's formation of PFC or the reorganization (the
"Reorganization") by which PFC became the holding company for BTH, or except as
otherwise disclosed in writing to HUBCO by PFC prior to the date of this
Agreement.
3.20 Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUBCO
References herein to the "HUBCO Disclosure Schedule" shall
mean all of the disclosure schedules required by this Article IV, dated as of
the date hereof and referenced to the specific sections and subsections of
Article IV of this Agreement, which have been delivered on the date hereof by
HUBCO to PFC. HUBCO hereby represents and warrants to PFC as follows:
4.1 Corporate Organization.
(a) HUBCO is a corporation duly organized and validly
existing 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 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 and qualified 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 Bank Holding Company Act
of 1956, as amended (the "BHCA").
(b) Each of the HUBCO Subsidiaries is listed in the
HUBCO Disclosure Schedule. For purposes of this Agreement, the term "HUBCO
Subsidiary" means any corporation, partnership, joint venture or other legal
entity in which HUBCO, directly or indirectly, owns at least a 50% stock or
other equity interest or for which HUBCO, directly or indirectly, acts as a
general partner, 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 "HUBCO Subsidiary" shall include any entity which was a HUBCO
Subsidiary at any time during such period. Each HUBCO Subsidiary is duly
organized and validly existing under the laws of the jurisdiction of its
incorporation. HUBank is duly organized and validly existing under the laws of
the State of New Jersey. Lafayette American Bank and Trust Company ("Lafayette")
is duly organized and validly existing under the laws of the State of
Connecticut. All eligible accounts of depositors issued by HUBank and Lafayette
are insured by the Bank Insurance Fund ("BIF") of the FDIC to the fullest extent
permitted by law. Each HUBCO Subsidiary has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business as it
is now being conducted and is duly licensed or qualified to do business 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 and qualified would not have a material adverse effect on the business,
operations, assets or financial condition of HUBCO and the HUBCO Subsidiaries,
taken as a whole. The HUBCO Disclosure Schedule sets forth true and complete
copies of the Certificate of Incorporation and By-laws of HUBCO as in effect on
the date hereof.
4.2 Capitalization. The authorized capital stock of HUBCO
consists of 51,500,000 shares of HUBCO Common Stock and 10,300,000 shares of
preferred stock ("HUBCO Authorized Preferred Stock"). As of September 30, 1997,
there were 21,624,469 shares of HUBCO Common Stock issued and outstanding,
excluding 0 shares of treasury stock. Since such date, and from time to time
hereafter, HUBCO may sell or repurchase shares of HUBCO Common Stock. As of
September 30, 1997, there were 22,160 shares of HUBCO Authorized Preferred Stock
outstanding, all of which are designated Series B, no par value, Convertible
Preferred Stock.
Except for shares issuable under or arising from the Agreement
and Plan of Merger, dated August 18, 1997 (the "Southington Agreement"), by and
among HUBCO, Lafayette and The Bank of Southington ("Southington"), and except
as otherwise described in the HUBCO Disclosure Schedule, there are no shares of
HUBCO Common Stock issuable upon the exercise of outstanding stock options or
otherwise. All issued and outstanding shares of HUBCO Common Stock and HUBCO
Authorized Preferred Stock, and all issued and outstanding shares of capital
stock of HUBCO's Subsidiaries, have been duly authorized and validly issued, are
fully paid, nonassessable and free of preemptive rights, and are free and clear
of all liens, encumbrances, charges, restrictions or rights of third parties.
All of the outstanding shares of capital stock of the HUBCO Subsidiaries are
owned by HUBCO free and clear of any liens, encumbrances, charges, restrictions
or rights of third parties. Except for the shares issuable under the Southington
Agreement and except as otherwise described in the HUBCO Disclosure Schedule,
neither HUBCO nor any HUBCO Subsidiary has granted or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of HUBCO or any HUBCO Subsidiary or any securities representing
the right to purchase, subscribe or otherwise receive any shares of such capital
stock or any securities convertible into any such shares, and there are no
agreements or understandings with respect to voting of any such shares.
4.3 Authority; No Violation.
(a) Subject to the receipt of all necessary
governmental approvals, HUBCO has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby in accordance with the terms hereof. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of HUBCO in accordance with
its Certificate of Incorporation and applicable laws and regulations. Except for
such approvals, no other corporate proceedings on the part of HUBCO are
necessary to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by HUBCO and constitutes a valid
and binding obligation of HUBCO, enforceable against HUBCO in accordance with
its terms, except to the extent that enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, conservatorship,
receivership or other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the rights of
creditors of bank holding companies, (ii) general equitable principles, and
(iii) laws relating to the safety and soundness of insured depository
institutions and except that no representation is made as to the effect or
availability of equitable remedies or injunctive relief.
(b) Neither the execution or delivery of this
Agreement by HUBCO, nor the consummation by HUBCO of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by HUBCO
with any of the terms or provisions hereof will (i) violate any provision of the
Certificate of Incorporation or By-laws of HUBCO, (ii) assuming that the
consents and approvals set forth below are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to HUBCO, any HUBCO Subsidiary, or any of their respective properties
or assets, or (iii) violate, conflict with, result in a breach of any provision
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of HUBCO or any HUBCO Subsidiary under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which HUBCO is a party, or
by which it or any of their 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 FRB, the OTS and the SEC, no
consents or approvals of or filings or registrations with or notices to any
third party or any public body or authority are necessary on behalf of HUBCO in
connection with (x) the execution and delivery by HUBCO of this Agreement, and
(y) the consummation by HUBCO of the Merger and the other transactions
contemplated hereby, except such as are listed in the HUBCO Disclosure Schedule
or in the aggregate will not (if not obtained) have a material adverse effect on
the business, operations, assets or financial condition of HUBCO. To the best of
HUBCO's knowledge, no fact or condition exists which HUBCO has reason to believe
will prevent it from obtaining the aforementioned consents and approvals.
4.4 Financial Statements.
(a) The HUBCO Disclosure Schedule sets forth copies
of the consolidated statements of financial condition of HUBCO as of December
31, 1995 and 1996, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended December 31, in
each of the three fiscal years 1994 through 1996, in each case accompanied by
the audit report of Arthur Andersen LLP ("Arthur Andersen"), independent public
accountants with respect to HUBCO, and the unaudited consolidated statement of
condition of HUBCO as of June 30, 1997 and the related unaudited consolidated
statements of income and cash flows for the three and six months ended June 30,
1997 and 1996, as reported in HUBCO's Quarterly Report on Form 10-Q, filed with
the SEC under the 1934 Act (collectively, the "HUBCO Financial Statements"). The
HUBCO Financial Statements (including the related notes) have been prepared in
accordance with GAAP consistently applied during the periods involved (except as
may be indicated therein or in the notes thereto), and fairly present the
consolidated financial position of HUBCO as of the respective dates set forth
therein, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows (including the related notes, where
applicable) fairly present the consolidated results of operations, changes in
stockholders' equity and cash flows of HUBCO for the respective fiscal periods
set forth therein.
(b) The books and records of HUBCO and the HUBCO
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed
or reserved against in the HUBCO Financial Statements (including the notes
thereto), as of June 30, 1997 neither HUBCO nor any of the HUBCO Subsidiaries
had any obligation or liability, whether absolute, accrued, contingent or
otherwise, material to the business, operations, assets or financial condition
of HUBCO or any of the HUBCO Subsidiaries which were required by GAAP
(consistently applied) to be disclosed in HUBCO's consolidated statement of
condition as of June 30, 1997 or the notes thereto. Except for the transactions
contemplated by this Agreement, and other proposed acquisitions by HUBCO since
June 30, 1997 reflected in any Form 8-K filed by HUBCO with the SEC, neither
HUBCO nor any HUBCO Subsidiary has incurred any liabilities since June 30, 1997
except in the ordinary course of business and consistent with past practice.
4.5 Broker's and Other Fees. Neither HUBCO nor any of its
directors or officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement.
4.6 Absence of Certain Changes or Events. There has not been
any material adverse change in the business, operations, assets or financial
condition of HUBCO and HUBCO's Subsidiaries taken as a whole since June 30, 1997
and to the best of HUBCO's knowledge, except for the effects of the transactions
contemplated by the Southington Agreement and the agreements by which HUBCO is
to acquire Security National Bank & Trust Company of New Jersey and its holding
company, Fiduciary Investment Company of New Jersey (the "Effects of Announced
Acquisitions"), no facts or condition exists which HUBCO believes will cause
such a material adverse change in the future.
4.7 Legal Proceedings. Except as disclosed in the HUBCO
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of HUBCO or its Subsidiaries, neither HUBCO nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
HUBCO's knowledge, threatened legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against HUBCO or any of its Subsidiaries which, if decided adversely to HUBCO or
its Subsidiaries, are reasonably likely to have a material adverse effect on the
business, operations, assets or financial condition of HUBCO or its
Subsidiaries. Except as disclosed in the HUBCO Disclosure Schedule, neither
HUBCO nor HUBCO's Subsidiaries is a party to any order, judgment or decree
entered in any lawsuit or proceeding which is material to HUBCO or its
Subsidiaries.
4.8 Reports. Since January 1, 1996, HUBCO has filed all
reports that it was required to file with the SEC under the 1934 Act, all of
which complied in all material respects with all applicable requirements of the
1934 Act and the rules and regulations adopted thereunder. As of their
respective dates, each such report and each registration statement, proxy
statement, form or other document filed by HUBCO with the SEC, including without
limitation, any financial statements or schedules included therein, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1996, HUBCO and each HUBCO
Subsidiary has duly filed all material forms, reports and documents which they
were required to file with each agency charged with regulating any aspect of
their business.
4.9 HUBCO Information. The information relating to HUBCO and
its Subsidiaries (including, without limitation, information regarding other
transactions which HUBCO is required to disclose), this Agreement and the
transactions contemplated hereby in the Registration Statement and Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof), as of the date of
the mailing of the Proxy Statement-Prospectus, and up to and including the date
of the meeting of stockholders of PFC to which such Proxy Statement-Prospectus
relates, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement shall comply as to form in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
rules and regulations promulgated thereunder.
4.10 Compliance With Applicable Law. Except as set forth in
the HUBCO Disclosure Schedule, each of HUBCO and HUBCO's Subsidiaries holds all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business, and has complied with and is not in default in
any respect under any applicable law, statute, order, rule, regulation, policy
and/or guideline of any federal, state or local governmental authority relating
to HUBCO or HUBCO's Subsidiaries (including without limitation consumer,
community and fair lending laws) (other than where such default or noncompliance
will not result in a material adverse effect on the business, operations, assets
or financial condition of HUBCO and HUBCO's Subsidiaries taken as a whole) and
HUBCO has not received notice of violation of, and does not know of any
violations of, any of the above.
4.11 Funding and Capital Adequacy. At the Effective Time,
after giving pro forma effect to the Merger and any other acquisition which
HUBCO or its Subsidiaries have agreed to consummate, HUBCO will be deemed "well
capitalized" under prompt corrective action regulatory capital requirements.
4.12 HUBCO Common Stock. As of the date hereof, HUBCO has
available and reserved shares of HUBCO Common Stock sufficient for issuance
pursuant to the Merger and upon the exercise of Stock Options subsequent
thereto. The HUBCO Common Stock to be issued hereunder pursuant to the Merger,
and upon exercise of the Stock Options, when so issued, will be duly authorized
and validly issued, fully paid, nonassessable, free of preemptive rights and
free and clear of all liens, encumbrances or restrictions created by or through
HUBCO, with no personal liability attaching to the ownership thereof. The HUBCO
Common Stock to be issued hereunder pursuant to the Merger, and upon exercise of
the Stock Options, when so issued, will be registered under the 1933 Act and
issued in accordance with all applicable state and federal laws, rules and
regulations.
4.13 Agreements with Bank Regulators. Neither HUBCO nor any
HUBCO Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution submitted to a
regulatory authority or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any Government Entity which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve policies or
its management, except for those the existence of which has been disclosed in
writing to PFC by HUBCO prior to the date of this Agreement, nor has HUBCO been
advised by any Governmental Entity that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission, except as disclosed
in writing to PFC by HUBCO prior to the date of this Agreement. Neither HUBCO
nor any HUBCO Subsidiary is required by Section 32 of the Federal Deposit
Insurance Act to give prior notice to a Federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer, except as disclosed in writing to PFC
by HUBCO prior to the date of this Agreement.
4.14 Taxes and Tax Returns.
(a) HUBCO and HUBCO's subsidiaries have duly filed
(and until the Effective Time will so file) all Returns required to be filed by
them in respect of any federal, state and local taxes (including withholding
taxes, penalties or other payments required) and have duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other than taxes or
other charges which are being contested in good faith (and disclosed to PFC in
writing). HUBCO and HUBCO's subsidiaries have established on their books and
records reserves that are adequate for the payment of all federal, state and
local taxes not yet due and payable, but are incurred in respect of HUBCO
through such date. The HUBCO Disclosure Schedule identifies the federal income
tax returns of HUBCO and its Subsidiaries which have been examined by the IRS
within the past six years. No deficiencies were asserted as a result of such
examinations which have not been resolved and paid in full. The HUBCO Disclosure
Schedule identifies the applicable state income tax returns of HUBCO and its
Subsidiaries which have been examined by the applicable authorities. No
deficiencies were asserted as a result of such examinations which have not been
resolved and paid in full. To the best knowledge of HUBCO, there are no audits
or other administrative or court proceedings presently pending nor any other
disputes pending with respect to, or claims asserted for, taxes or assessments
upon HUBCO or its Subsidiaries, nor has HUBCO or its Subsidiaries given any
currently outstanding waivers or comparable consents regarding the application
of the statute of limitations with respect to any taxes or Returns.
(b) Except as set forth in the HUBCO Disclosure
Schedule, neither HUBCO nor any Subsidiary of HUBCO (i) has requested any
extension of time within which to file any Return which Return has not since
been filed, (ii) is a party to any agreement providing for the allocation or
sharing of taxes, (iii) is required to include in income any adjustment pursuant
to Section 481(a) of the Code, by reason of a voluntary change in accounting
method initiated by HUBCO or any of its Subsidiaries (nor does HUBCO have any
knowledge that the IRS has proposed any such adjustment or change of accounting
method) or (iv) has filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply.
4.15 Employee Benefit Plans.
(a) HUBCO and its Subsidiaries maintain or contribute
to certain "employee pension benefit plans" (the "HUBCO Pension Plans"), as such
term is defined in Section 3(2)(A) of ERISA, and "employee welfare benefit
plans" (the "HUBCO Welfare Plans"), as such term is defined in Section 3(1) of
ERISA. Since September 2, 1974, neither HUBCO nor its subsidiaries have
contributed to any "Multiemployer Plan", as such term is defined in Section
3(37) of ERISA.
(b) HUBCO is not aware of any fact or circumstance
which would disqualify any HUBCO Pension Plan or HUBCO Welfare Plan that could
not be retroactively corrected (in accordance with the procedures of the IRS).
(c) The present value of all accrued benefits under
each of the HUBCO Pension Plans subject to Title IV of ERISA, based upon the
actuarial assumptions used for purposes of the most recent actuarial valuation
prepared by such HUBCO Pension Plan's actuary, did not exceed the then current
value of the assets of such plans allocable to such accrued benefits.
(d) During the last six years, the PBGC has not
asserted any claim for liability against HUBCO or any of its subsidiaries which
has not been paid in full.
(e) All premiums (and interest charges and penalties
for late payment, if applicable) due to the PBGC with respect to each HUBCO
Pension Plan have been paid. All contributions required to be made to each HUBCO
Pension Plan under the terms thereof, ERISA or other applicable law have been
timely made, and all amounts properly accrued to date as liabilities of HUBCO
which have not been paid have been properly recorded on the books of HUBCO.
(f) No "accumulated funding deficiency", within the
meaning of Section 412 of the Code, has been incurred with respect to any of the
HUBCO Pension Plans.
(g) There are no pending or, to the best knowledge of
HUBCO, threatened or anticipated claims (other than routine claims for benefits)
by, on behalf of or against any of the HUBCO Pension Plans or the HUBCO Welfare
Plans, any trusts created thereunder or any other plan or arrangement identified
in the HUBCO Disclosure Schedule.
(h) Except with respect to customary health, life and
disability benefits or as disclosed in the HUBCO Disclosure Schedule, HUBCO has
no unfunded benefit obligations which are not accounted for by reserves shown on
the financial statements and established under GAAP or otherwise noted on such
financial statements.
4.16 Contracts. Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any of its Subsidiaries, or to the best knowledge of
HUBCO, 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 a banking subsidiary of HUBCO is or
will be the creditor) or arrangement, except for defaults which individually or
in the aggregate would not have a material adverse effect on the business,
operations, assets or financial condition of HUBCO and its subsidiaries, taken
as a whole.
4.17 Properties and Insurance.
(a) HUBCO and its Subsidiaries have good and, as to
owned real property, marketable title to all material assets and properties,
whether real or personal, tangible or intangible, reflected in HUBCO's
consolidated balance sheet as of December 31, 1996, or owned and acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since
December 31, 1996), subject to no encumbrances, liens, mortgages, security
interests or pledges, except (i) those items that secure liabilities that are
reflected in said balance sheet or the notes thereto or that secure liabilities
incurred in the ordinary course of business after the date of such balance
sheet, (ii) statutory liens for amounts not yet delinquent or which are being
contested in good faith, (iii) such encumbrances, liens, mortgages, security
interests, pledges and title imperfections that are not in the aggregate
material to the business, operations, assets, and financial condition of HUBCO
and its subsidiaries taken as a whole and (iv) with respect to owned real
property, title imperfections noted in title reports. Except as disclosed in the
HUBCO Disclosure Schedule, HUBCO and its Subsidiaries as lessees have the right
under valid and subsisting leases to occupy, use, possess and control all
property leased by HUBCO or its Subsidiaries in all material respects as
presently occupied, used, possessed and controlled by HUBCO and its
Subsidiaries.
(b) The business operations and all insurable
properties and assets of HUBCO and its Subsidiaries are insured for their
benefit against all risks which, in the reasonable judgment of the management of
HUBCO, should be insured against, in each case under policies or bonds issued by
insurers of recognized responsibility, in such amounts with such deductibles and
against such risks and losses as are in the opinion of the management of HUBCO
adequate for the business engaged in by HUBCO and its Subsidiaries. As of the
date hereof, neither HUBCO nor any of its Subsidiaries has received any notice
of cancellation or notice of a material amendment of any such insurance policy
or bond or is in default under any such policy or bond, no coverage thereunder
is being disputed and all material claims thereunder have been filed in a timely
fashion.
4.18. Environmental Matters. Except as disclosed in the HUBCO
Disclosure Schedule, neither HUBCO nor any of its Subsidiaries has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that HUBCO or any of its Subsidiaries (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 HUBCO and its
Subsidiaries taken as a whole. Except as disclosed in the HUBCO Disclosure
Schedule, HUBCO has no knowledge that any toxic or hazardous substances or
materials have been emitted, generated, disposed of or stored on any property
currently owned or leased by HUBCO or any of its subsidiaries in any manner that
violates or, after the lapse of time is reasonably likely to violate, any
presently existing federal, state or local law or regulation governing or
pertaining to such substances and materials, the violation of which would have a
material adverse effect on the business, operations, assets or financial
condition of HUBCO and its Subsidiaries, taken as a whole.
4.19 Reserves. As of June 30, 1997, the allowance for possible
loan losses in the HUBCO Financial Statements was adequate based upon all
factors required to be considered by HUBCO at that time in determining the
amount of such allowance. The methodology used to compute the allowance for
possible loan losses complies in all material respects with all applicable FDIC,
Connecticut Department of Banking and New Jersey Department of Banking policies.
As of June 30, 1997, the valuation allowance for OREO properties in the HUBCO
Financial Statements was adequate based upon all factors required to be
considered by HUBCO at that time in determining the amount of such allowance.
4.20 Disclosure. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE V - COVENANTS OF THE PARTIES
5.1 Conduct of the Business of PFC and BTH. During the period
from the date of this Agreement to the Effective Time, PFC and BTH shall, and
shall cause each PFC Subsidiary to, conduct their respective businesses only in
the ordinary course and consistent with prudent business practice, except for
transactions permitted hereunder or with the prior written consent of HUBCO,
which consent will not be unreasonably withheld. Each of PFC and BTH also shall
use its reasonable best efforts to (i) preserve its business organization and
that of the PFC Subsidiaries intact, (ii) keep available to itself and the PFC
Subsidiaries the present services of its employees and those of such PFC
Subsidiaries, and (iii) preserve for itself and HUBCO the goodwill of its
customers and those of the PFC Subsidiaries and others with whom business
relationships exist.
5.2 Negative Covenants and Dividend Covenants. From the date
hereof to the Effective Time, except as otherwise approved by HUBCO in writing,
or as set forth in the PFC Disclosure Schedule, or as permitted or required by
this Agreement, neither PFC nor BTH will:
(a) change any provision of its Certificate of
Incorporation or By-laws or any similar governing documents;
(b) change the number of shares of its authorized or
issued capital stock (other than upon exercise of stock options or warrants
described on the PFC Disclosure Schedule in accordance with the terms thereof)
or issue or grant any option, warrant, call, commitment, subscription, right to
purchase or agreement of any character relating to its authorized or issued
capital stock, or any securities convertible into shares of such stock, or
split, combine or reclassify any shares of its capital stock, or declare, set
aside or pay any dividend, or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock; provided,
however, that from the date hereof to the Effective Time, PFC may declare, set
aside or pay cash dividends per share of PFC Common Stock aggregating (i) the
cash dividends per share declared, set aside or paid by HUBCO during such period
multiplied by 0.320 (the maximum Exchange Ratio) minus (ii) $0.01 (the amount
per share required to redeem the PFC Rights); provided, further, that the amount
of any such dividends shall be adjusted, if and to the extent necessary in the
opinion of Arthur Andersen, independent accountants for HUBCO, so that the
declaration, setting aside and payment of such dividends will not disqualify the
Merger for pooling of interests accounting treatment.
(c) grant any severance or termination pay (other
than pursuant to written policies or contracts of PFC in effect on the date
hereof and disclosed to HUBCO in the PFC Disclosure Schedule) to, or enter into
or amend any employment or severance agreement with, any of its directors,
officers or employees; adopt any new employee benefit plan or arrangement of any
type; or award any increase in compensation or benefits to its directors,
officers or employees, except in each case as specified in Section 5.2 of the
PFC Disclosure Schedule;
(d) sell or dispose of any substantial amount of
assets or voluntarily incur any significant liabilities other than in the
ordinary course of business consistent with past practices and policies or in
response to substantial financial demands upon the business of PFC or BTH;
(e) make any capital expenditures other than pursuant
to binding commitments existing on the date hereof, expenditures necessary to
maintain existing assets in good repair, and expenditures described in business
plans or budgets previously furnished to HUBCO;
(f) file any applications or make any contract with
respect to branching or site location or relocation;
(g) agree to acquire in any manner whatsoever (other
than to realize upon collateral for a defaulted loan) any business or entity or
make any new investments in securities other than investments in government or
agency bonds having a maturity of less than five years;
(h) make any material change in its accounting
methods or practices, other than changes required in accordance with generally
accepted accounting principles or regulatory authorities;
(i) take any action that would result in any of its
representations and warranties contained in Article III of this Agreement not
being true and correct in any material respect at the Effective Time or that
would cause any of its conditions to Closing not to be satisfied;
(j) without first conferring with HUBCO, make or
commit to make any new loan or other extension of credit in an amount of
$3,000,000 or more, renew for a period in excess of one year any existing loan
or other extension of credit in an amount of $3,000,000 or more, or increase by
$3,000,000 or more the aggregate credit outstanding to any borrower or group of
affiliated borrowers, except such loan initiations, renewals or increases that
are committed as of the date of this Agreement and identified on the PFC
Disclosure Schedule and residential mortgage loans made in the ordinary course
of business in accordance with past practice; or
(k) agree to do any of the foregoing.
5.3 No Solicitation. So long as this Agreement remains in
effect, PFC and BTH shall not, directly or indirectly, encourage or solicit or
hold discussions or negotiations with, or provide any information to, any
person, entity or group (other than HUBCO) concerning any merger or sale of
shares of capital stock or sale of substantial assets or liabilities not in the
ordinary course of business, or similar transactions involving PFC or BTH (an
"Acquisition Transaction"). Notwithstanding the foregoing, PFC may enter into
discussions or negotiations or provide information in connection with an
unsolicited possible Acquisition Transaction if the Board of Directors of PFC,
after consulting with counsel, determines in the exercise of its fiduciary
responsibilities that such discussions or negotiations should be commenced or
such information should be furnished. PFC shall promptly communicate to HUBCO
the terms of any proposal, whether written or oral, which it may receive in
respect of any such Acquisition Transaction and the fact that it is having
discussions or negotiations with a third party about an Acquisition Transaction.
5.4 Current Information. During the period from the date of
this Agreement to the Effective Time, each of PFC 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, PFC
agrees to provide HUBCO, and HUBCO agrees to provide PFC, with internally
prepared profit and loss statements no later than 21 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, PFC will deliver to HUBCO
and HUBCO will deliver to PFC their respective quarterly reports on Form 10-Q,
as filed under the 1934 Act. As soon as reasonably available, but in no event
more than 90 days after the end of each calendar year, PFC will deliver to HUBCO
and HUBCO will deliver to PFC their respective Annual Reports on Form 10-K as
filed under the 1934 Act.
5.5 Access to Properties and Records; Confidentiality.
(a) PFC and BTH shall permit HUBCO and its
representatives, and HUBCO shall permit, and cause each HUBCO Subsidiary to
permit, PFC and its representatives, reasonable access to their respective
properties, and shall disclose and make available to HUBCO and its
representatives, or PFC 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
PFC and its representatives may have a reasonable interest. Neither party shall
be required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer, would
contravene any law, rule, regulation, order or judgment or would waive any
privilege. The parties will use their reasonable best efforts to obtain waivers
of any such restriction (other than waivers of the attorney-client privilege)
and in any event make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
Notwithstanding the foregoing, PFC acknowledges that HUBCO may be involved in
discussions concerning other potential acquisitions and HUBCO shall not be
obligated to disclose such information to PFC except as such information is
disclosed to HUBCO's shareholders generally.
(b) All information furnished by the parties hereto
previously in connection with transactions contemplated by this Agreement or
pursuant hereto shall be used solely for the purpose of evaluating the Merger
contemplated hereby and shall be treated as the sole property of the party
delivering the information until consummation of the Merger contemplated hereby,
and if such Merger shall not occur, each party and each party's advisors shall
return to the other party all documents or other materials containing,
reflecting or referring to such information, will not retain any copies of such
information, shall use its reasonable best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. In the event that the Merger
contemplated hereby does not occur, all documents, notes and other writings
prepared by a party hereto or its advisors based on information furnished by the
other party shall be promptly destroyed. The obligation to keep such information
confidential shall continue for five years from the date the proposed Merger is
abandoned but shall not apply to (i) any information which (A) the party
receiving the information can establish by convincing evidence was already in
its possession prior to the disclosure thereof to it by the other party; (B) was
then generally known to the public; (C) became known to the public through no
fault of the party receiving such information; or (D) was disclosed to the party
receiving such information by a third party not bound by an obligation of
confidentiality; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction.
5.6 Regulatory Matters.
(a) For the purposes of holding the Stockholders
Meeting (as such term is defined in Section 5.7 hereof), and qualifying under
applicable federal and state securities laws the HUBCO Common Stock to be issued
to PFC stockholders in connection with the Merger, the parties hereto shall
cooperate in the preparation and filing by HUBCO with the SEC of a Registration
Statement including a combined proxy statement and prospectus satisfying all
applicable requirements of applicable state and federal laws, including the 1933
Act, the 1934 Act and applicable state securities laws and the rules and
regulations thereunder (such proxy statement and prospectus in the form mailed
by PFC and HUBCO to the PFC shareholders together with any and all amendments or
supplements thereto, being herein referred to as the "Proxy
Statement-Prospectus" and the various documents to be filed by HUBCO under the
1933 Act with the SEC to register the HUBCO Common Stock for sale, including the
Proxy Statement-Prospectus, are referred to herein as the "Registration
Statement").
(b) HUBCO shall furnish PFC with such information
concerning HUBCO and its Subsidiaries (including, without limitation,
information regarding other transactions which HUBCO is required to disclose) as
is necessary in order to cause the Proxy Statement-Prospectus, insofar as it
relates to such corporations, to comply with Section 5.6(a) hereof. HUBCO agrees
promptly to advise PFC if at any time prior to the Stockholders Meeting, any
information provided by HUBCO in the Proxy Statement-Prospectus becomes
incorrect or incomplete in any material respect and to provide PFC with the
information needed to correct such inaccuracy or omission. HUBCO shall furnish
PFC with such supplemental information as may be necessary in order to cause the
Proxy Statement-Prospectus, insofar as it relates to HUBCO and its Subsidiaries,
to comply with Section 5.6(a) after the mailing thereof to PFC shareholders.
(c) PFC shall furnish HUBCO with such information
concerning PFC as is necessary in order to cause the Proxy Statement-Prospectus,
insofar as it relates to PFC, to comply with Section 5.6(a) hereof. PFC agrees
promptly to advise HUBCO if at any time prior to the Stockholders Meeting, any
information provided by PFC in the Proxy Statement-Prospectus becomes incorrect
or incomplete in any material respect and to provide HUBCO with the information
needed to correct such inaccuracy or omission. PFC shall furnish HUBCO with such
supplemental information as may be necessary in order to cause the Proxy
Statement-Prospectus, insofar as it relates to PFC, to comply with Section
5.6(a) after the mailing thereof to PFC shareholders.
(d) HUBCO shall as promptly as practicable make such
filings as are necessary in connection with the offering of the HUBCO Common
Stock with applicable state securities agencies and shall use all reasonable
efforts to qualify the offering of such stock under applicable state securities
laws at the earliest practicable date. PFC shall promptly furnish HUBCO with
such information regarding PFC shareholders as HUBCO requires to enable it to
determine what filings are required hereunder. PFC authorizes HUBCO to utilize
in such filings the information concerning PFC provided to HUBCO in connection
with, or contained in, the Proxy Statement-Prospectus. HUBCO shall furnish PFC's
counsel with copies of all such filings and keep PFC advised of the status
thereof. HUBCO shall as promptly as practicable file the Registration Statement
containing the Proxy Statement-Prospectus with the SEC, and each of HUBCO and
PFC shall promptly notify the other of all communications, oral or written, with
the SEC concerning the Registration Statement and the Proxy
Statement-Prospectus.
(e) HUBCO shall cause the HUBCO Common Stock issuable
pursuant to the Merger to be listed on the NASDAQ at the Effective Time. HUBCO
shall cause the HUBCO Common Stock which shall be issuable pursuant to exercise
of Stock Options to be accepted for listing on the NASDAQ when issued.
(f) The parties hereto will cooperate with each other
and use their reasonable best efforts to prepare all necessary documentation, to
effect all necessary filings and to obtain all necessary permits, consents,
approvals and authorizations of all third parties and governmental bodies
necessary to consummate the transactions contemplated by this Agreement as soon
as possible, including, without limitation, those required by the FRB and the
OTS. The parties shall each have the right to review in advance (and shall do so
promptly) all filings with, including all information relating to the other, as
the case may be, and any of their respective subsidiaries, which appears in any
filing made with, or written material submitted to, any third party or
governmental body in connection with the transactions contemplated by this
Agreement.
(g) Each of the parties will promptly furnish each
other with copies of written communications received by them or any of their
respective subsidiaries from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated hereby.
(h) PFC 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 PFC 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. PFC agrees to
provide HUBCO with any information, certificates, documents or other materials
about PFC 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. PFC shall use its reasonable efforts to
cause its attorneys and accountants to provide HUBCO and any underwriters for
HUBCO with any consents, comfort letters, opinion letters, reports or
information which are necessary to complete the registration statements and
applications for any such acquisition or issuance of securities. HUBCO shall
reimburse PFC for reasonable expenses thus incurred by PFC should this
transaction be terminated for any reason other than as described in Section
7.1(f). HUBCO shall not file with the SEC any registration statement or
amendment thereto or supplement thereof containing information regarding PFC
unless PFC shall have consented in writing to such filing, which consent shall
not be unreasonably delayed or withheld.
(i) Between the date of this Agreement and the
Effective Time, PFC shall cooperate with HUBCO to reasonably conform PFC's
policies and procedures regarding applicable regulatory matters, to those of
HUBCO as HUBCO may reasonably identify to PFC from time to time.
5.7 Approval of Stockholders. PFC will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
stockholders of PFC (the "Stockholders Meeting") for the purpose of securing the
PFC stockholder approval of this Agreement required by law, (ii) recommend to
the stockholders of PFC the approval of this Agreement and the transactions
contemplated hereby and use its reasonable best efforts to obtain, as promptly
as practicable, such approval, subject to the right not to make a recommendation
or to withdraw a recommendation if either (x) PFC's investment banker withdraws
its fairness opinion prior to the Stockholders Meeting, or (y) PFC's Board of
Directors, after consulting with counsel, determines in the exercise of its
fiduciary responsibilities that such recommendation should not be made or should
be withdrawn, and (iii) 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 reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions to Closing and to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated by this Agreement and using its reasonable best
efforts to prevent the breach of any representation, warranty, covenant or
agreement of such party contained or referred to in this Agreement and to
promptly remedy the same. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action. Nothing in this section shall be construed
to require any party to participate in any threatened or actual legal,
administrative or other proceedings (other than proceedings, actions or
investigations to which it is a party or subject or threatened to be made a
party or subject) in connection with consummation of the transactions
contemplated by this Agreement unless such party shall consent in advance and in
writing to such participation and the other party agrees to reimburse and
indemnify such party for and against any and all costs and damages related
thereto if the Merger is not consummated.
(b) HUBCO agrees that from the date hereof to the
Effective Time, except as otherwise approved by PFC in writing or as permitted
or required by this Agreement, HUBCO will not, nor will it permit any HUBCO
Subsidiary to: (i) take any action that would result in any of its
representations and warranties contained in Article IV of this Agreement not
being true and correct in any material respect at the Effective Time, or that
would cause any of its conditions to Closing not to be satisfied; (ii) amend its
Certificate of Incorporation in a manner which would adversely affect in any
manner the terms of the HUBCO Common Stock or the ability of HUBCO to consummate
the Merger; or (iii) make any acquisition that individually or in the aggregate
can reasonably be expected to materially adversely affect the ability of HUBCO
to consummate the Merger on or before October 31, 1998.
(c) HUBCO, PFC and BTH will use reasonable efforts to
cause the Merger to occur on or before March 31, 1998.
5.9 Public Announcements. HUBCO and PFC 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 PFC agree that unless approved
mutually by them in advance, they will not issue any press release or written
statement for general circulation relating primarily to the transactions
contemplated hereby, except as may be otherwise required by law or regulation
upon the advice of counsel.
5.10 Failure to Fulfill Conditions. In the event that HUBCO or
PFC determines that a material condition to its obligation to consummate the
Merger cannot be fulfilled on or prior to July 31, 1998 (as the same may be
extended in accordance with the following sentence, the "Cutoff Date") and that
it will not waive that condition, it will promptly notify the other party. The
"Cutoff Date" shall be extended to October 31, 1998 if subsequent to the date
hereof HUBCO or one of its Subsidiaries enters into an agreement relating to
another acquisition and HUBCO notifies PFC in writing that such other
acquisition can reasonably be expected to delay the Closing beyond July 31, 1998
but not beyond October 31, 1998. Except for any acquisition or merger
discussions HUBCO may enter into with other parties, PFC and HUBCO will promptly
inform the other of any facts applicable to PFC 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 Schedules or which is necessary to correct any
information in such Schedules which has been rendered materially inaccurate
thereby. For the purpose of determining satisfaction of the conditions set forth
in Article VI and subject to Sections 6.2(a) and 6.3(a), no supplement or
amendment to the parties' respective Disclosure Schedules shall correct or cure
any warranty which was untrue when made, but shall enable the disclosure of
subsequent facts or events to maintain the truthfulness of any warranty.
5.12 Transaction Expenses of PFC.
(a) For planning purposes, PFC shall, within 30 days
from the date hereof, provide HUBCO with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by PFC in
connection with this transaction based on facts and circumstances currently
known, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. PFC shall promptly notify HUBCO if or when it
determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement,
PFC shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. PFC shall accrue
and/or pay all of such amounts as soon as possible.
(c) PFC shall cause its professionals to render
monthly invoices within 15 days after the end of each month. PFC shall notify
HUBCO monthly of all out-of-pocket expenses which PFC has incurred in connection
with this transaction.
(d) HUBCO, in reasonable consultation with PFC, shall
make all arrangements with respect to the printing and mailing of the Proxy
Statement-Prospectus.
5.13 Reserves. Notwithstanding that PFC believes that it has
established all reserves and taken all provisions for possible loan losses
required by GAAP and applicable laws, rules and regulations, PFC recognizes that
HUBCO may have adopted different loan, accrual and reserve policies (including
loan classifications and levels of reserves for possible loan losses). From and
after the date of this Agreement to the Effective Time and in order to formulate
the plan of integration for the Merger, PFC and HUBCO shall consult and
cooperate with each other with respect to (i) conforming, based upon such
consultation, PFC's loan, accrual and reserve policies to those policies of
HUBCO to the extent appropriate, provided that any required change in PFC's
practices in connection with the matters described in this clause (i) need not
be effected until the parties receive all necessary stockholder, third party and
governmental approvals and consents to consummate the transactions contemplated
hereby, (ii) new extensions of credit or material revisions to existing terms of
credits by BTH, in each case where the aggregate exposure exceeds $3,000,000,
and (iii) conforming, based upon such consultation, the composition of the
investment portfolio and overall asset/liability management position of PFC and
BTH to the extent appropriate.
5.14 Indemnification.
(a) For a period of six years after the Effective
Time, HUBCO shall indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date hereof or who becomes prior to the
Effective Time, a director, officer, employee or agent of PFC or BTH or serves
or has served at the request of PFC or BTH 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 PFC or BTH or serves or has served at
the request of PFC or BTH 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 PFC or BTH or any of their respective affiliates, or by any former or
present shareholder of PFC (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, the Proxy Statement/Prospectus, this
Agreement, any of the transactions contemplated by this Agreement, the
Indemnitee's service as a member of the Board of Directors of PFC or BTH or of
any committee of PFC's or BTH'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) the enforcement of the
obligations of HUBCO set forth in this Section 5.14, in each case to the fullest
extent which PFC or BTH would have been permitted under any applicable law and
their respective Certificates of Incorporation and By-Laws had the Merger not
occurred (and HUBCO shall also advance expenses as incurred to the fullest
extent so permitted). Notwithstanding the foregoing, but subject to subsection
(b) below, 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 PFC or BTH immediately prior to the Effective
Time with respect to the indemnification of the Indemnitees arising out of the
Certificate of Incorporation, Charter or By-Laws of PFC or BTH, or arising out
of any written indemnification agreements between PFC and/or BTH and such
persons disclosed in the PFC Disclosure Schedule, as if such obligations were
pursuant to a contract or arrangement between HUBCO and such Indemnitees.
(c) In the event HUBCO or any of its successors or
assigns (i) reorganizes or consolidates with or merges into or enters into
another business combination transaction with any other person or entity and is
not the resulting, continuing or surviving corporation or entity of such
consolidation, merger or transaction, or (ii) liquidates, dissolves or transfers
all or substantially all of its properties and assets to any person or entity,
then, and in each such case, proper provision shall be made so that the
successors and assigns of HUBCO assume the obligations set forth in this Section
5.14.
(d) HUBCO shall cause PFC's and BTH'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 PFC's and BTH'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 PFC's and BTH's existing officers' and directors'
liability insurance.
(e) Any Indemnitee wishing to claim indemnification
under this Section 5.14 shall promptly notify HUBCO upon learning of any Claim,
but the failure to so notify shall not relieve HUBCO of any liability it may
have to such Indemnitee if such failure does not materially prejudice HUBCO. In
the event of any Claim (whether arising before or after the Effective Time) as
to which indemnification under this Section 5.14 is applicable, (x) HUBCO shall
have the right to assume the defense thereof and HUBCO shall not be liable to
such Indemnitees for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof,
except that if HUBCO elects not to assume such defense, or counsel for the
Indemnitees advises that there are issues which raise conflicts of interest
between HUBCO and the Indemnitees, the Indemnitees may retain counsel
satisfactory to them, and HUBCO shall pay the reasonable fees and expenses of
such counsel for the Indemnitees as statements therefor are received; provided,
however, that HUBCO shall be obligated pursuant to this Section 5.14(e) to pay
for only one firm of counsel for all Indemnitees in any jurisdiction with
respect to a matter unless the use of one counsel for multiple Indemnitees would
present such counsel with a conflict of interest that is not waived, and (y) the
Indemnitees will cooperate in the defense of any such matter. HUBCO shall not be
liable for settlement of any claim, action or proceeding hereunder unless such
settlement is effected with its prior written consent. Notwithstanding anything
to the contrary in this Section 5.14, HUBCO shall not have any obligation
hereunder to any Indemnitee when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that the indemnification of such Indemnitee in the manner
contemplated hereby is prohibited by applicable law or public policy.
5.15 Pooling and Tax-Free Reorganization Treatment. Prior to
the date hereof, neither HUBCO or PFC has taken any action or failed to take any
action which would disqualify the Merger for pooling of interests accounting
treatment. Before the Effective Time, neither HUBCO nor PFC shall intentionally
take, fail to take, or cause to be taken or not taken any action within its
control, which would disqualify the Merger as a "pooling-of-interests" for
accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code. Subsequent to the Effective Time, HUBCO shall not take and
shall cause the Surviving Corporation not to take any action within their
control that would disqualify the Merger as such a "reorganization" under the
Code.
5.16 Comfort Letters. HUBCO shall cause Arthur Andersen, its
independent public accountants, to deliver to PFC, and PFC shall cause Deloitte
& Touche, its independent public accountants, to deliver to HUBCO and to its
officers and directors who sign the Registration Statement for this transaction,
a short-form "comfort letter" or "agreed upon procedures" letter, dated the date
of the mailing of the Proxy Statement-Prospectus for the Stockholders Meeting of
PFC, in the form customarily issued by such accountants at such time in
transactions of this type (provided that Arthur Andersen and Deloitte & Touche
have been provided with representation letters from HUBCO and PFC in accordance
with Statement on Auditing Standards No. 72).
5.17 Affiliates. Promptly, but in any event within two weeks,
after the execution and delivery of this Agreement, PFC shall deliver to HUBCO
(a) a letter identifying all persons who, to the knowledge of PFC, may be deemed
to be affiliates of PFC under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of PFC and (b) use its reasonable best efforts
to cause each person who may be deemed to be an affiliate of PFC to execute and
deliver to HUBCO a letter agreement, substantially in the form of Exhibit
5.17-1, agreeing to comply with Rule 145 and to refrain from transferring shares
as required by the pooling-of-interests accounting rules. Within two weeks after
the date hereof, HUBCO shall use its reasonable best efforts to cause its
directors and executive officers to enter into letter agreements in the form of
Exhibit 5.17-2 with HUBCO concerning the pooling-of-interests accounting rules.
HUBCO hereby agrees to publish, or file a Form 8-K, Form 10-K or Form 10-Q
containing financial results covering at least 30 days of post-Merger combined
operations of HUBCO and PFC as soon as practicable (but in no event later than
30 days) following the close of the first calendar month ending 30 days after
the Effective Time, in form and substance sufficient to remove the restrictions
set forth in paragraph "B" of Exhibit 5.17-1.
5.18 Appointment of Directors. HUBCO shall cause Joseph B.
Tockarshewsky and Noel deCordova, Jr. to be appointed at the Effective Time as
directors of HUBCO. The Chairman of the Board of Directors of HUBCO shall
recommend to the HUBCO Board of Directors that Joseph B. Tockarshewsky be
nominated for a three year term as a director of HUBCO and that Noel deCordova,
Jr. be nominated for a two year term as a director of HUBCO at the first HUBCO
shareholders meeting held following the Closing. BTH shall cause such persons as
HUBCO shall designate to be appointed at the Effective Time as directors of BTH.
HUBCO will invite all current directors of BTH to remain as directors of BTH
following the Closing and will ask Joseph B. Tockarshewsky to serve as Chairman
of the Board and Chief Executive Officer of BTH following the Closing.
5.19 Rights Plan. PFC shall cause the PFC Rights to be
redeemed or terminated and, if requested by HUBCO, PFC shall cause the Rights
Plan to be terminated, in each case effective at or prior to the Closing and
without substantial cost to HUBCO.
5.20 Operation of BTH Post-Closing; Employee Matters.
(a) Following consummation of the Merger, HUBCO shall
operate BTH as a separate bank subsidiary under the name "Bank of the Hudson."
It is HUBCO's current intention that BTH's current main office in Poughkeepsie,
New York, will be maintained as the main office of HUBCO's New York State
banking operations indefinitely following the Closing. Following the Closing,
HUBCO will use reasonable efforts to preserve the historical artifacts currently
located at such Poughkeepsie, New York office. At such time as HUBCO may
relocate the main office of its New York State banking operations HUBCO will
cause such artifacts to be donated to a museum serving the Poughkeepsie, New
York community. HUBCO agrees that it will support PFC's and BTH's efforts to
have such main office listed on the National Registry of Historic Properties.
(b) PFC and BTH acknowledge that HUBCO may choose to
cause BTH to be operated as a New York State-chartered commercial bank as soon
as practicable after the Effective Time, whether by means of conversion, merger
with a phantom bank or otherwise. PFC and BTH shall use reasonable efforts prior
to the Closing to cooperate with and assist HUBCO in accomplishing that result;
provided, that nothing in this Section 5.20(b) shall require BTH to convert from
a federal savings bank to another form of bank prior to the Closing.
(c) Following consummation of the Merger, HUBCO shall
honor the existing written contracts with officers and employees of PFC and BTH
that are included in the PFC Disclosure Schedule.
(d) Following consummation of the Merger, HUBCO shall
continue to provide the level of post-retirement benefits currently provided by,
or agreed to be provided by, PFC or BTH to those persons identified in Section
5.20(d) of the PFC Disclosure Schedule, only to the extent such persons and such
benefits are identified in Section 5.20(d) of the PFC Disclosure Schedule, or
HUBCO at its option shall provide other, substantially equivalent, benefits to
such persons.
(e) Prior to, or effective upon, the Closing, PFC and
BTH shall cause their Non-Employee Directors' Retirement Plan to be terminated
and shall fully fund all benefits thereunder so that neither BTH nor HUBCO as
successor to PFC shall have any continuing obligation thereunder. Prior to such
termination, PFC and BTH may amend and fund the Non-Employee Directors'
Retirement Plan in the manner described in Section 5.2 of the PFC Disclosure
Schedule.
(f) Following consummation of the Merger, HUBCO shall
make available to all employees and officers of PFC or BTH employed by HUBCO or
its Subsidiaries following the Merger ("continuing employees") coverage under
the benefit plans generally available to HUBCO's employees and officers
(including pension and health and hospitalization) on the terms and conditions
available to HUBCO's employees and officers. Following consummation of the
Merger, HUBCO shall honor the severance policies of PFC and BTH previously
disclosed to HUBCO in writing, and HUBCO shall not change such severance
policies (as applicable to persons employed by PFC or BTH on the Closing Date)
for a period of six months following the Effective Time. After the Effective
Time, HUBCO may terminate, merge or change existing PFC or BTH benefit plans.
Continuing employees will receive credit for prior employment by PFC or BTH for
the sole purpose of determining whether such continuing employees are eligible
to participate in or be vested under HUBCO's medical, vacation, sick leave,
disability, pension, and other employee benefit plans. Credit for prior service
will not be given for purposes of benefit accrual under any defined benefit
pension plan of HUBCO.
ARTICLE VI - CLOSING CONDITIONS
6.1 Conditions to Each Party's Obligations Under this
Agreement. The respective obligations of each party under this Agreement to
consummate the Merger shall be subject to the satisfaction, or, where
permissible under applicable law, waiver at or prior to the Effective Time of
the following conditions:
(a) Approval of Stockholders; SEC Registration. This
Agreement and the transactions contemplated hereby shall have been approved by
the requisite vote of the stockholders of PFC. The HUBCO Registration Statement
and Proxy Statement-Prospectus shall have been declared effective by the SEC and
shall not be subject to a stop order or any threatened stop order, and the
issuance of the HUBCO Common Stock shall have been qualified in every state
where such qualification is required under the applicable state securities laws.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the FRB, the OTS and the SEC) required to consummate the
transactions contemplated hereby shall have been obtained without any term or
condition which would materially impair the value of PFC and BTH, taken as a
whole, to HUBCO. All conditions required to be satisfied prior to the Effective
Time by the terms of such approvals and consents shall have been satisfied; and
all statutory waiting periods in respect thereof (including the
Hart-Scott-Rodino waiting period if applicable) shall have expired.
(c) Suits and Proceedings. No order, judgment or
decree shall be outstanding against a party hereto or a third party that would
have the effect of preventing completion of the Merger; no suit, action or other
proceeding shall be pending or threatened by any governmental body in which it
is sought to restrain or prohibit the Merger; and no suit, action or other
proceeding shall be pending before any court or governmental agency in which it
is sought to restrain or prohibit the Merger or obtain other substantial
monetary or other relief against one or more parties hereto in connection with
this Agreement and which HUBCO or PFC determines in good faith, based upon the
advice of their respective counsel, makes it inadvisable to proceed with the
Merger because any such suit, action or proceeding has a significant potential
to be resolved in such a way as to deprive the party electing not to proceed of
any of the material benefits to it of the Merger.
(d) Tax Opinion. HUBCO and PFC shall each have
received an opinion, dated as of the Effective Time, of Pitney, Hardin, Kipp &
Szuch, or of counsel to PFC reasonably acceptable to HUBCO, reasonably
satisfactory in form and substance to PFC and its counsel and to HUBCO, based
upon representation letters reasonably required by such counsel, dated on or
about the date of such opinion, and such other facts and representations as
counsel may reasonably deem relevant, to the effect that: (i) the Merger will be
treated for federal income tax purposes as a reorganization qualifying under the
provisions of Section 368 of the Code; (ii) no gain or loss will be recognized
by PFC; (iii) no gain or loss will be recognized by PFC shareholders upon the
exchange of PFC Common Stock solely for HUBCO Common Stock; (iv) the basis of
any HUBCO Common Stock received in exchange for PFC Common Stock shall equal the
basis of the recipient's PFC Common Stock surrendered on the exchange, reduced
by the amount of cash received, if any, on the exchange, and increased by the
amount of the gain recognized, if any, on the exchange (whether characterized as
dividend or capital gain income); and (v) the holding period for any HUBCO
Common Stock received in exchange for PFC Common Stock will include the period
during which PFC Common Stock surrendered on the exchange was held, provided
such stock was held as a capital asset on the date of the exchange.
(e) Pooling of Interests. HUBCO shall have received a
letter, dated the Closing Date, from its accountants, Arthur Andersen,
reasonably satisfactory to HUBCO and PFC, to the effect that the Merger shall be
qualified to be treated by HUBCO as a pooling-of-interests for accounting
purposes.
6.2 Conditions to the Obligations of HUBCO Under this
Agreement. The obligations of HUBCO under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of
Obligations of PFC and BTH. Except for those representations which are made as
of a particular date, the representations and warranties of PFC 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. PFC 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 PFC
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 PFC 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 PFC
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 PFC, dated the Closing Date, in form and substance
reasonably satisfactory to HUBCO, substantially in accordance with Exhibit
6.2(b) hereto.
(c) Certificates. PFC 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) Legal Fees. PFC shall have furnished HUBCO with
letters from all attorneys representing PFC and BTH in any significant matters
confirming that all material legal fees have been paid in full for services
rendered as of the Effective Time.
(e) Merger-Related Expenses. PFC 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 PFC shall be reasonable.
6.3 Conditions to the Obligations of PFC Under this Agreement.
The obligations of PFC 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. PFC shall have
received an opinion of counsel to HUBCO, dated the Closing Date, in form and
substance reasonably satisfactory to PFC, substantially in accordance with
Exhibit 6.3(b) hereto.
(c) Fairness Opinion. PFC shall have received an
opinion from Advest dated no more than three days prior to the date the Proxy
Statement-Prospectus is mailed to PFC's stockholders (and, if it shall become
necessary to resolicit proxies thereafter, dated no more than three days prior
to the date of any substantive amendment to the Proxy Statement/Prospectus) to
the effect that, in its opinion, the consideration to be paid to stockholders of
PFC hereunder is fair to such stockholders from a financial point of view
("Fairness Opinion").
(d) Certificates. HUBCO shall have furnished PFC 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 PFC 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 PFC:
(a) by mutual written consent of the parties hereto;
(b) by HUBCO or PFC (i) if the Effective Time shall
not have occurred on or prior to the Cutoff 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 PFC 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 PFC 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 PFC
if any such application is approved with conditions (other than conditions which
are customary in such regulatory approvals) which materially impair the value of
PFC and BTH, taken as a whole, to HUBCO;
(d) by HUBCO if (i) there shall have occurred a
material adverse change in the business, operations, assets, or financial
condition of PFC and BTH, taken as a whole, from that disclosed by PFC in PFC's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 (it being
understood that those matters disclosed in the PFC Disclosure Schedule shall not
be deemed to constitute such a material adverse change) or (ii) there was a
material breach in any representation, warranty, covenant, agreement or
obligation of PFC hereunder and such breach shall not have been remedied within
30 days after receipt by PFC of notice in writing from HUBCO to PFC specifying
the nature of such breach and requesting that it be remedied;
(e) by PFC if (i) there shall have occurred a
material adverse change in the business, operations, assets or financial
condition of HUBCO and its Subsidiaries taken as a whole from that disclosed by
HUBCO in HUBCO's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997 except for the Effects of Announced Acquisitions (it being understood that
those matters disclosed in the HUBCO Disclosure Schedule shall not be deemed to
constitute such a material adverse change); or (ii) there was a material breach
in any representation, warranty, covenant, agreement or obligation of HUBCO
hereunder and such breach shall not have been remedied within 30 days after
receipt by HUBCO of notice in writing from PFC specifying the nature of such
breach and requesting that it be remedied;
(f) by PFC, if PFC's Board of Directors shall have
approved an Acquisition Transaction after determining, upon advice of counsel,
that such approval was necessary in the exercise of its fiduciary obligations
under applicable laws;
(g) by HUBCO if the conditions set forth in Sections
6.1 and 6.2 are not satisfied and are not capable of being satisfied by the
Cutoff Date;
(h) by PFC if the conditions set forth in Sections
6.1 and 6.3 are not satisfied and are not capable of being satisfied by the
Cutoff Date; or
(i) by PFC, in accordance with Section 2.1(a)(iii).
7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement by either HUBCO or PFC pursuant to Section 7.1,
this Agreement (other than Section 5.5(b), the penultimate sentence of Section
5.6(h), this Section 7.2 and Section 8.1) shall forthwith become void and have
no effect, without any liability on the part of any party or its officers,
directors or stockholders. Nothing contained herein, however, shall relieve any
party from any liability for any breach of this Agreement.
7.3 Amendment. This Agreement may be amended by action taken
by the parties hereto at any time before or after adoption of this Agreement by
the stockholders of PFC 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 shareholders of PFC without the approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties hereto.
7.4 Extension; Waiver. The parties may, at any time prior to
the Effective Time of the Merger, (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party against which the waiver is
sought to be enforced.
ARTICLE VIII - MISCELLANEOUS
8.1 Expenses.
(a) Except as otherwise expressly stated herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including legal, accounting and investment
banking fees and expenses) shall be borne by the party incurring such costs and
expenses. Notwithstanding the foregoing, PFC may bear the expenses of BTH.
(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), 5.14, 5.17 and 5.20.
8.3 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by reputable overnight courier or sent by registered or certified
mail, postage prepaid, as follows:
(a) If to HUBCO, to:
HUBCO, Inc.
1000 MacArthur Blvd.
Mahwah, New Jersey 07430
Attn.: Kenneth T. Neilson, Chairman,
President and Chief Executive Officer
Copy to:
1000 MacArthur Blvd.
Mahwah, New Jersey 07430
Attn.: D. Lynn Van Borkulo-Nuzzo, Esq.
And copy to:
Pitney, Hardin, Kipp & Szuch
(Delivery) 200 Campus Drive
Florham Park, New Jersey
(Mail) P.O. Box 1945
Morristown, New Jersey 07962-1945
Attn.: Michael W. Zelenty, Esq.
(b) If to PFC or BTH, to:
Poughkeepsie Financial Corp.
249 Main Mall
Poughkeepsie, New York 12601
Attn.: Joseph B. Tockarshewsky, Chairman,
President and Chief Executive Officer
Copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
The Walker Building, 12th Floor
734 15th Street, N.W.
Washington, D.C. 20005
Attn.: W. Michael Herrick, Esq.
or such other addresses as shall be furnished in writing by any party, and any
such notice or communications shall be deemed to have been given as of the date
actually received.
8.4 Parties in Interest; Assignability. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement except the Indemnitees described
in Section 5.14. This Agreement and the rights and obligations of the parties
hereunder may not be assigned.
8.5 Entire Agreement. This Agreement, which includes the
Disclosure Schedules hereto and the other documents, agreements and instruments
executed and delivered pursuant to or in connection with this Agreement,
contains the entire Agreement between the parties hereto with respect to the
transactions contemplated by this Agreement and supersedes all prior
negotiations, arrangements or understandings, written or oral, with respect
thereto, other than any confidentiality agreements entered into by the parties
hereto.
8.6 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
8.7 Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey, without giving effect to the principles of
conflicts of laws thereof.
8.8 Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
IN WITNESS WHEREOF, HUBCO, PFC and BTH have caused this
Agreement to be executed by their duly authorized officers and by no less than a
majority of the directors of each of them as of the day and year first above
written.
ATTEST: HUBCO, INC.
D. LYNN VAN BORKULO-NUZZO KENNETH T. NEILSON
By: _________________________________ By: ________________________________
Kenneth T. Neilson, Chairman,
President and Chief Executive Officer
ATTEST: POUGHKEEPSIE FINANCIAL CORP.
ELIZABETH J. WHALEN JOSEPH B. TOCKARSHEWSKY
By: _________________________________ By: ________________________________
Elizabeth J. Whalen Joseph B. Tockarshewsky, Chairman,
President and Chief Executive Officer
ATTEST: BANK OF THE HUDSON
ELIZABETH J. WHALEN JOSEPH B. TOCKARSHEWSKY
By: _________________________________ By: ________________________________
Elizabeth J. Whalen Joseph B. Tockarshewsky, Chairman,
President and Chief Executive Officer
<PAGE>
AGREEMENT OF PFC AND BTH DIRECTORS
Reference is made to the Agreement and Plan of Merger, dated
October 22, 1997 (the "Merger Agreement"), among HUBCO, Inc., Poughkeepsie
Financial Corp., and Bank of the Hudson. Capitalized terms used herein and not
otherwise defined have the meanings given to them in the Merger Agreement.
Each of the following persons, being all of the directors of
PFC and BTH, solely in such person's capacity as a holder of PFC Common Stock,
agrees to vote or cause to be voted all shares of PFC Common Stock which are
held by such person, or over which such person exercises full voting control
(except as trustee or in a fiduciary capacity, or as nominee), in favor of the
Merger.
It is understood and agrees that this Agreement of PFC and BTH
Directors (this "Agreement") relates solely to the capacity of the undersigned
as shareholders or other beneficial owners of shares of PFC Common Stock and is
not in any way intended to affect the exercise by the undersigned of the
undersigned's responsibilities as directors of PFC or BTH. It is further
understood and agreed that this Agreement is not in any way intended to affect
the exercise by the undersigned of any fiduciary responsibility which the
undersigned may have in respect of any shares of PFC Common Stock held by the
undersigned as of the date hereof.
MILTON CHAZEN
- ---------------------------- -----------------------------
Milton Chazen Henry C. Meagher
ROBERT M. PERKINS
- ---------------------------- -----------------------------
Nicole deCordova, Jr. Robert M. Perkins
BURTON GOLD ELIZABETH K. SHEQUINE
- ---------------------------- -----------------------------
Burton Gold Elizabeth K. Shequine
ROBERT J. HUGHES JOSEPH B. TOCKARSHEWSKY
- ---------------------------- -----------------------------
Robert J. Hughes Joseph B. Tockarshewsky
JAMES V. TOMAI, JR.
- ---------------------------- -----------------------------
Jeh V. Johnson James V. Tomai, Jr.
Dated: October 22, 1997
<PAGE>
EXHIBIT 5.17-1
FORM OF PFC AFFILIATE LETTER
October __, 1997
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed acquisition (the "Merger") of Poughkeepsie Financial Corporation, a
Delaware corporation and registered savings and loan holding company (the
"Company"), by HUBCO, Inc., a New Jersey corporation and registered bank holding
company ("HUBCO"), pursuant to the Agreement and Plan of Merger dated as of
October 22, 1997 (the "Agreement") between the Company, Bank of the Hudson and
HUBCO. I currently own shares of the Company's common stock, $.01 par value
("PFC Common Stock"). As a result of the Merger, I will receive shares of
HUBCO's common stock, no par value ("HUBCO Common Stock") in exchange for my PFC
Common Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of the Company, as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations promulgated under the Securities Act of 1933, as amended (the "1933
Act") by the Securities and Exchange Commission ("SEC") and as the term
"affiliate" is used for purposes of the SEC's rules and regulations applicable
to the determination of whether a merger can be accounted for as a "pooling of
interests" as specified in the SEC's Accounting Series Release 135, as amended
by Staff Accounting Bulletins Nos. 65 and 76 ("ASR 135").
I represent to and agree with HUBCO that:
A. Transfer Review Restrictions. During the period beginning
on the date hereof and ending 30 days prior to the consummation of the Merger, I
shall not sell, transfer, reduce my risk with respect to or otherwise dispose of
("transfer") any PFC Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control, to
transfer any PFC Common Stock owned by such person or entity, without notifying
HUBCO in advance of the proposed transfer and giving HUBCO a reasonable
opportunity to review the transfer before it is consummated. HUBCO, if advised
to do so by its independent public accountants, may instruct me not to make or
permit the transfer because it may interfere with the "pooling of interests"
treatment of the Merger. I shall abide by any such instructions.
B. Transfer Restrictions During Merger Consummation Period. I
shall not transfer any PFC Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control, to
transfer any PFC Common Stock owned by such person or entity during the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUBCO by means of the filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, as amended, the issuance of
a quarterly earnings report, or any other public issuance which satisfies the
requirements of ASR 135. For purposes of this paragraph only, "PFC Common Stock"
includes HUBCO Common Stock into which my Poughkeepsie Common Stock is
converted.
C. Compliance with Rule 145. I have been advised that the
issuance of HUBCO Common Stock to me pursuant to the Merger will be registered
with the SEC under the 1933 Act on a Registration Statement on Form S-4.
However, I have also been advised that, since I may be deemed to be an affiliate
of the Company at the time the Merger is submitted for a vote of the Company's
stockholders, any transfer by me of HUBCO Common Stock is restricted under Rule
145 promulgated by the SEC under the 1933 Act. I agree not to transfer the HUBCO
Common Stock received by me or any of my affiliates unless (i) such transfer is
made in conformity with the volume and other limitations of Rule 145 promulgated
by the SEC under the 1933 Act, (ii) in the opinion of HUBCO's counsel or counsel
reasonably acceptable to HUBCO, such transfer is otherwise exempt from
registration under the 1933 Act or (iii) such transfer is registered under the
1933 Act.
D. Stop Transfer Instructions; Legend on Certificates. I also
understand and agree that stop transfer instructions will be given to HUBCO's
transfer agents with respect to the HUBCO Common Stock received by me and any of
my affiliates and that there will be placed on the certificates of the HUBCO
Common Stock issued to me and any of my affiliates, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED OCTOBER
22, 1997 BETWEEN THE REGISTERED HOLDER HEREOF AND HUBCO, INC., A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF HUBCO, INC."
E. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for the Company.
Execution of this letter is not an admission on my part that I
am an "affiliate" of the Company as described in the second paragraph of this
letter, or a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter. This letter shall
terminate concurrently with any termination of the Agreement in accordance with
its terms.
Very truly yours,
-----------------------------
Name:
Accepted this ___ day of October , 1997 by HUBCO, INC.
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 5.17-2
FORM OF AFFILIATE LETTER FOR HUBCO AFFILIATES
October ___, 1997
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of Poughkeepsie Financial Corporation, a Delaware
Corporation and registered savings and loan holding company ("PFC"), with and
into HUBCO, Inc., a New Jersey corporation and registered bank holding company
("HUBCO"), pursuant to the Agreement and Plan of Merger dated as of October 22,
1997(the "Agreement") between HUBCO and PFC. I currently own shares of HUBCO's
common stock, no par value ("HUBCO Common Stock").
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of HUBCO, as the term "affiliate" is used for
purposes of the rules and regulations of the Securities and Exchange Commission
(the "Commission") applicable to the determination of whether a merger can be
accounted for as a "pooling of interests" as specified in the Commission's
Accounting Series Release 135, as amended by Staff Accounting Bulletins Nos. 65
and 76 ("ASR 135").
I represent and covenant with HUBCO and PFC that:
A. Transfer Restrictions Prior to Merger Consummation. During
the period beginning on the date hereof and ending 30 days prior to the
consummation of the Merger, I shall not sell, transfer, reduce my risk with
respect to or otherwise dispose of ("transfer") any HUBCO Common Stock owned by
me, and I shall not permit any relative who shares my home, or any person or
entity who or which I control, from transferring any HUBCO Common Stock owned by
such person or entity, without notifying HUBCO in advance of the proposed
transfer and giving HUBCO a reasonable opportunity to object to the transfer
before it is consummated. HUBCO, upon advice of its independent public
accountants, may instruct me not to make or permit the transfer because it may
interfere with the "pooling of interests" treatment of the Merger. I shall abide
by any such instructions.
B. Post-Consummation Transfer Restrictions. During the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUBCO by means of filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, the issuance of a quarterly
earnings report, or any other public issuance which satisfies the requirements
of ASR 135, I shall not transfer any HUBCO Common Stock owned by me, and I shall
not permit any relative who shares my home, or any person or entity who or which
I control, to transfer any HUBCO Common Stock owned by such person or entity.
C. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for HUBCO.
Execution of this letter is not an admission on my part that I
am an "affiliate" of HUBCO as described in the second paragraph of this letter,
or a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-------------------------------------
Name:
Title:
Accepted this ____ day of
October, 1997 by
HUBCO, INC.
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT 6.2
FORM OF OPINION OF COUNSEL TO PFC
TO BE DELIVERED TO HUBCO ON THE EFFECTIVE TIME
(a) PFC and BTH have full corporate power to carry out the
transactions contemplated in the Agreement. The execution and delivery of the
Agreement and the consummation of the transactions contemplated thereunder have
been duly and validly authorized by all necessary corporate action on the part
of PFC and BTH, and the Agreement constitutes the valid and legally binding
obligations of PFC and BTH enforceable in accordance with its terms, except as
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship, and other laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally or the
rights of creditors of federal savings institutions or their holding companies,
(ii) general equitable principles, and (iii) laws relating to the safety and
soundness of insured depository institutions, and except that no opinion need be
rendered as to the effect or availability of equitable remedies or injunctive
relief (regardless of whether such enforceability is considered in a proceeding
in equity or at law). Subject to satisfaction of the conditions set forth in the
Agreement, neither the transactions contemplated in the Agreement, nor
compliance by PFC and BTH with any of the provisions thereof, will (i) conflict
with or result in a breach or default under (A) the certificate of incorporation
or bylaws of PFC or the charter or bylaws of BTH, or (B) based on certificates
of officers and without independent verification, to the knowledge of such
counsel, any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which PFC or BTH is a party; or (ii) to the
knowledge of such counsel, result in the creation or imposition of any material
lien, instrument or encumbrance upon the property of PFC or BTH, except such
material lien, instrument or obligation that has been disclosed to HUBCO
pursuant to the Agreement, or (iii) violate in any material respect any order,
writ, injunction, or decree known to such counsel, or any statute, rule or
regulation applicable to PFC or BTH.
(b) PFC is a corporation validly existing under the laws of
the State of Delaware and has the corporate power and authority to own or lease
all of its properties and assets and to conduct the business in which it is
currently engaged as described in the Proxy Statement/Prospectus. BTH is a
validly existing federally-chartered savings bank organized under the laws of
the United States of America. The deposits of BTH are insured to the maximum
extent provided by law by the Federal Deposit Insurance Corporation.
(c) PFC is authorized to transact business as a foreign
corporation in the State of New York as of the date hereof.
(d) There is, to the knowledge of such counsel, no legal,
administrative, arbitration or governmental proceeding or investigation pending
or threatened to which PFC or BTH is a party which would, if determined
adversely to PFC or BTH, have a material adverse effect on the business,
properties, results of operations, or condition, financial or otherwise, of PFC
or BTH taken as a whole or which presents a claim to restrain or prohibit the
transactions contemplated by the Agreement.
(e) No consent, approval, authorization, or order of any
federal or state court or federal or state governmental agency or body, or to
such counsels knowledge of any third party, is required for the consummation by
PFC or BTH of the transactions contemplated by the Agreement, except for such
consents, approvals, authorizations or orders as have been obtained or which
would not have a Material Adverse Effect upon HUBCO upon consummation of the
Merger.
In addition to the foregoing opinions, counsel shall state that on the
sole basis of such counsel's participation in conferences with officers and
employees of PFC in connection with the preparation of the Prospectus/Proxy
Statement and without other independent investigation or inquiry, such counsel
has no reason to believe that the Prospectus/Proxy Statement, including any
amendments or supplements thereto (except for the financial information,
financial statements, notes to financial statements, financial schedules and
other financial or statistical data and stock valuation information contained or
incorporated by reference therein and except for any information supplied by
HUBCO for inclusion therein, as to which counsel need express no belief), as of
the date of mailing thereof and as of the date of the meeting of shareholders of
PFC to approve the Merger, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make any statement therein, in
light of the circumstances under which it was made, not misleading. Counsel may
state in connection with the foregoing that such counsel has not independently
verified and does not assume any responsibility for the accuracy, completeness
or fairness of any information or statements contained in the Prospectus/Proxy
Statement, except with respect to identified statements of law or regulations or
legal conclusions relating to PFC or BTH or the transactions contemplated in the
Agreement and that it is relying as to materiality as to factual matters on
certificates of officers and representatives of the parties to the Agreement and
other factual representations by PFC and BTH.
Such counsel's opinion shall be limited to matters governed by
federal banking and securities laws and by Delaware corporate law and, with
respect to paragraph (c), New York corporate law.
<PAGE>
EXHIBIT 6.3
FORM OF OPINION OF COUNSEL TO HUBCO
TO BE DELIVERED TO PFC ON THE EFFECTIVE TIME
(a) HUBCO is a corporation validly existing 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 described
in the Proxy Statement/Prospectus on pages __ and __ under the caption
"_____________________________." HUBCO is registered as a bank holding company
under the BHCA.
(b) Each Subsidiary of HUBCO listed as such in the HUBCO
Disclosure Schedule is validly existing under the laws of the jurisdiction of
its incorporation.
(c) The authorized capital stock of HUBCO consists of
____________ shares of common stock, no par value per share ("HUBCO Common
Stock") and _____________ shares of Series B, no par value, Convertible
Preferred Stock (the "Authorized Preferred Stock). Except for
to our knowledge, there are no outstanding subscription rights, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever (either firm or conditional) obligating HUBCO to issue, deliver or
sell, cause to be issued, delivered or sold, or restricting HUBCO from selling
any additional HUBCO Common Stock or Authorized Preferred Stock or obligating
HUBCO to grant, extend or enter into any such agreement or commitment. The HUBCO
Common Stock to be issued in connection with the Merger in accordance with
Article II of the Agreement, when so issued in accordance therewith, will be
duly authorized, validly issued, fully paid and non-assessable, free of
preemptive rights and free and clear of all liens, encumbrances or restrictions
created by HUBCO.
(d) The Agreement has been authorized, executed and delivered
by HUBCO and constitutes the valid and binding obligations of HUBCO enforceable
in accordance with its terms, except that the enforceability of the obligations
of HUBCO may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, or laws affecting institutions the deposits of which
are insured by the FDIC or other laws heretofore or hereafter enacted relating
to or affecting the enforcement of creditors' rights generally and by principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law). In addition, certain remedial and other
provisions of the Agreement may be limited by implied covenants of good faith,
fair dealing, and commercially reasonable conduct, by judicial discretion, in
the instance of equitable remedies, and by applicable public policies and laws.
(e) Subject to satisfaction of the conditions set forth in the
Agreement, the execution and delivery of the Agreement and the consummation of
the transactions contemplated thereby will not (i) conflict with or violate any
provision of or result in the breach of any provision of the Certificate of
Incorporation or By-Laws of HUBCO; (ii) based on certificates of officers of
HUBCO and without independent verification, conflict with or violate in any
material respect, or result in a material breach or violation of the terms or
provisions of, or constitute a default under, or result in (whether upon or
after the giving of notice or lapse of time or both) any material obligation
under, any indenture, mortgage, deed of trust or loan agreement or any other
agreement, instrument, judgment, order, arbitration award or decree of which we
have knowledge (through our representation of HUBCO in connection therewith or
in the course of our representation of HUBCO in connection with the Agreement)
and to which HUBCO is a party or by which HUBCO is bound; or (iii) cause HUBCO
to violate any corporation or banking law applicable to HUBCO.
(f) All actions of the directors and shareholders of HUBCO
required by federal banking law and New Jersey law or by the Certificate of
Incorporation or By-Laws of HUBCO, to be taken by HUBCO to authorize the
execution, delivery and performance of the Agreement and consummation of the
Merger have been taken.
(g) Assuming that there has been due authorization of the
Merger by all necessary corporate and governmental proceedings on the part of
PFC and that PFC has taken all action required to be taken by it prior to the
Effective Time, upon the appropriate filing of the Certificates of Merger in
respect of the Merger with the Delaware Secretary of State and the New Jersey
Secretary of State in accordance with Section 1.6 of the Agreement, the Merger
will become effective at the Effective Time, as such term is defined in Section
1.6, and upon effectiveness of the Merger each share of PFC Common Stock will be
converted as provided in Article II of the Agreement.
(h) No approvals, authorizations, consents or other actions or
filings under federal banking law or New Jersey law ("Approvals") are required
to be obtained by HUBCO in order to permit the execution and delivery of the
Agreement by HUBCO and the performance by HUBCO of the transactions contemplated
thereby other than those Approvals which have been obtained or those Approvals
or consents required to be obtained by PFC.
(i) The Registration Statement has been declared effective by
the Securities and Exchange Commission ("SEC") under the 1933 Act and we are not
aware that any stop order suspending the effectiveness has been issued under the
1933 Act or proceedings therefor initiated or threatened by the SEC.
We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Proxy Statement/Prospectus and make no representation that we have independently
verified the accuracy, completeness or fairness of such statements, but from our
examination of the Proxy Statement/Prospectus and our general familiarity with
HUBCO no facts have come to our attention that caused us to believe that (except
for financial statements and other tabular financial information, and other
financial and statistical data and information, as to which we do not express
any belief) the Proxy Statement/Prospectus on the date of the mailing thereof
and on the date of the meeting of stockholders of PFC at which the Agreement was
approved, contained any untrue statement of a material fact regarding HUBCO or
the Merger, or omitted to make a material fact regarding HUBCO or the Merger
therein, in light of the circumstances under which they were made, not
misleading.
We are members of the Bar of the State of New Jersey and we
express no opinion as to any of the laws of any jurisdiction other than the laws
of the State of New Jersey and federal laws and regulations of the United States
of America.
<PAGE>
Appendix B
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of October
22, 1997, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and Poughkeepsie Financial Corp., a Delaware
corporation and registered savings and loan holding company ("PFC").
BACKGROUND
WHEREAS, HUBCO and PFC, as of the date hereof, are prepared to
execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which PFC will be merged with and into HUBCO (the "Merger"); and
WHEREAS, HUBCO has advised PFC that it will not execute the
Merger Agreement unless PFC executes this Agreement; and
WHEREAS, the Board of Directors of PFC has determined that the
Merger Agreement provides substantial benefits to the shareholders of PFC; and
WHEREAS, as an inducement to HUBCO to enter into the Merger
Agreement and in consideration for such entry, PFC desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of PFC 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 PFC,
intending to be legally bound hereby, agree:
1. Grant of Option. PFC hereby grants to HUBCO the
option to purchase 2,000,000 shares of common stock, $0.01 par value, of PFC
(the "Common Stock") at a price of $7.875 per share (the "Option Price"), on the
terms and conditions set forth herein (the "Option").
2. Exercise of Option. This Option shall not be
exercisable until the occurrence of a Triggering Event (as such term is
hereinafter defined). Upon or after the occurrence of a Triggering Event (as
such term is hereinafter defined), HUBCO may exercise the Option, in whole or in
part, at any time or from time to time, subject to the terms and conditions set
forth herein and the termination provisions of Section 19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such
term is defined in Rule 13d-3 as promulgated under the Exchange Act) of at least
15% of the then outstanding shares of Common Stock; or
b. enters into a letter of intent or an
agreement, whether oral or written, with PFC pursuant to which such person or
any affiliate of such person would (i) merge or consolidate, or enter into any
similar transaction, with PFC, (ii) acquire all or a significant portion of the
assets or liabilities of PFC, or (iii) acquire beneficial ownership of
securities representing, or the right to acquire beneficial ownership or to vote
securities representing, 15% or more of the then outstanding shares of Common
Stock; or
c. makes a filing with any bank or thrift
regulatory authorities or publicly announces a bona fide proposal (a "Proposal")
for (i) any merger with, consolidation with or acquisition of all or a
significant portion of all the assets or liabilities of, PFC or any other
business combination involving PFC, or (ii) a transaction involving the transfer
of beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 15% 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 PFC called to vote on the Merger and
PFC's stockholders fail to approve the Merger by the vote required by applicable
law at the meeting of stockholders called for such purpose; or
d. makes a bona fide Proposal and
thereafter, but before such Proposal has been Publicly Withdrawn, PFC 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 PFC or any of its directors, senior
executive officers, investment bankers or other person with actual or apparent
authority to speak for the Board of Directors, inviting, encouraging or
soliciting any proposal which has as its purpose a tender offer for the shares
of Common Stock, a merger, consolidation, plan of exchange, plan of acquisition
or reorganization of PFC, or a sale of a significant number of shares of Common
Stock or any significant portion of its assets or liabilities.
The term "significant portion" means 25% of the assets or
liabilities of PFC. The term "significant number" means 15% of the outstanding
shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the Proposal coupled
with a public announcement of no further interest in pursuing such Proposal or
in acquiring any controlling influence over PFC 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 PFC 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.
PFC 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 PFC shall not be a condition to the right of HUBCO to exercise the
Option. PFC will not take any action which would have the effect of preventing
or disabling PFC from delivering the Option Shares to HUBCO upon exercise of the
Option or otherwise performing its obligations under this Agreement, except to
the extent required by applicable securities and banking laws and regulations.
In the event HUBCO wishes to exercise the Option, HUBCO shall
send a written notice to PFC (the date of which is hereinafter referred to as
the "Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date between two and ten business days inclusive from
the Notice Date for the closing of such a purchase (a "Closing"); provided,
however, that a Closing shall not occur prior to two days after the later of
receipt of any necessary regulatory approvals and the expiration of any legally
required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any
Closing hereunder (a) HUBCO will make payment to PFC of the aggregate price for
the Option Shares so purchased by wire transfer of immediately available funds
to an account designated by PFC; (b) PFC 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 PFC, 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 Poughkeepsie Financial
Corp., 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, PFC
shall, if necessary for the resale of the Option or the Option Shares by HUBCO,
prepare and file a registration statement with the Securities and Exchange
Commission and any state securities bureau covering the Option and such number
of Option Shares as HUBCO shall specify in its request, and PFC shall use its
best efforts to cause such registration statement to be declared effective in
order to permit the sale or other disposition of the Option and the Option
Shares, provided that HUBCO shall in no event have the right to have more than
one such registration statement become effective, and provided further that PFC
shall not be required to prepare and file any such registration statement in
connection with any proposed sale with respect to which counsel to PFC delivers
to PFC and to HUBCO (which is reasonably acceptable to HUBCO) its opinion to the
effect that no such filing is required under applicable laws and regulations
with respect to such sale or disposition; provided further, however, that PFC
may delay any registration of Option Shares above for a period not exceeding 90
days in the event that PFC shall in good faith determine that any such
registration would adversely effect an offering of securities by PFC for cash.
HUBCO shall provide all information reasonable requested by PFC for inclusion in
any registration statement to be filed hereunder.
In connection with such filing, PFC 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 PFC 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 PFC and blue sky fees and expenses shall be paid by PFC.
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, PFC 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 PFC 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 PFC will not be liable in any case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such preliminary or final registration statement or such amendment or
supplement thereto in reliance upon and in conformity with written information
furnished by or on behalf of HUBCO specifically for use in the preparation
thereof. HUBCO will indemnify and hold harmless PFC 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 PFC for any legal or
other expense reasonably incurred by PFC in connection with investigating or
defending any such loss, claim, damage, liability or action. Notwithstanding
anything to the contrary herein, no indemnifying party shall be liable for any
settlement effected without its prior written consent.
5. Adjustment Upon Changes in Capitalization. In the
event of any change in the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, conversions, exchanges of shares or
the like, then the number and kind of Option Shares and the Option Price shall
be appropriately adjusted.
In the event any capital reorganization or reclassification of
the Common Stock, or any consolidation, merger or similar transaction of PFC
with another entity, or any sale of all or substantially all of the assets of
PFC, 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 PFC will
use its reasonable efforts to make all filings with, and to obtain consents of,
all third parties and governmental authorities necessary to the consummation of
the transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event HUBCO is the holder
hereof, approval of the Securities and Exchange Commission, the Board of
Governors of the Federal Reserve System, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation or the New York Department of Banking, and
PFC 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 PFC. PFC hereby
represents and warrants to HUBCO as follows:
a. Due Authorization. PFC 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 PFC.
b. Authorized Shares. PFC has taken and, as
long as the Option is outstanding, will take all necessary corporate action to
authorize and reserve for issuance all shares of Common Stock that may be issued
pursuant to any exercise of the Option.
c. No Conflicts. Neither the execution and
delivery of this Agreement nor consummation of the transactions contemplated
hereby (assuming all appropriate regulatory approvals) will violate or result in
any violation or default of or be in conflict with or constitute a default under
any term of the Certificate of Incorporation or Bylaws of PFC or any agreement,
instrument, judgment, decree or order applicable to PFC.
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 PFC 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.
HUBCO represents that it is acquiring the Option for HUBCO's own account and not
with a view to or for sale in connection with any distribution of the Option or
the Option Shares. HUBCO is aware that neither the Option nor the Option Shares
is the subject of a registration statement filed with, and declared effective
by, the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act, but instead each is being offered in reliance upon the exemption
from the registration requirement provided by Section 4(2) thereof and the
representations and warranties made by HUBCO in connection therewith.
11. Amendment of Agreement. Upon mutual consent of
the parties hereto, this Agreement may be amended in writing at any time, for
the purpose of facilitating performance hereunder or to comply with any
applicable regulation of any governmental authority or any applicable order of
any court or for any other purpose.
12. Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force and
effect.
13. Notices. All notices, requests, consents and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered personally, by express
service, cable, telegram or telex, or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties as follows:
If to HUBCO:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attention: Mr. Kenneth T. Neilson
President and Chief Executive Officer
With a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
Attention: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
If to PFC:
Poughkeepsie Financial Corp.
249 Main Mall
Poughkeepsie, New York 12601
Attention: Mr. Joseph B. Tockarshewsky
Chairman, President and Chief Executive
Officer
With a copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
The Walker Building, 12th Floor
734 15th Street, N.W.
Washington, D.C. 20005
Attention: W. Michael Herrick, Esq.
Hugh T. Wilkinson, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are
inserted for convenience and reference purposes, and shall not limit or
otherwise affect any of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may,
by mutual consent, extend the time for performance of any of the obligations or
acts of either party hereto. Each party may waive (a) compliance with any of the
covenants of the other party contained in this Agreement and/or (b) the other
party's performance of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
18. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
19. Termination. This Agreement shall terminate upon
either the termination of the Merger Agreement as provided therein or the
consummation of the transactions contemplated by the Merger Agreement; provided,
however, that if termination of the Merger Agreement occurs after the occurrence
of a Triggering Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 18 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Stock Option
Agreement to be executed by its duly authorized officer, all as of the day and
year first above written.
POUGHKEEPSIE FINANCIAL CORP.
JOSEPH B. TOCKARSHEWSKY
By:-----------------------------------------------
Joseph B. Tockarshewsky
Chairman, President and Chief Executive Officer
HUBCO, INC.
D. LYNN VAN BORKULO-NUZZO
By:---------------------------------------------
D. Lynn Van Borkulo-Nuzzo
Executive Vice President and Corporate Secretary
<PAGE>
Appendix C
[FORM OF OPINION]
Board of Directors
Poughkeepsie Financial Corp.
249 Main Mall
Poughkeepsie, New York 12602
Members of the Board:
Poughkeepsie Financial Corporation ("Poughkeepsie") and HUBCO, Inc.
("HUBCO") have entered into an Agreement and Plan of Merger dated as of October
22, 1997 (the "Merger Agreement"), pursuant to which Poughkeepsie shall be
merged into HUBCO in a merger transaction (the "Merger").
The Merger Agreement provides that each outstanding share of
Poughkeepsie common stock issued and outstanding immediately prior to the
Effective Time (as defined in the Merger Agreement) will be converted into the
number of shares of HUBCO common stock, no par value, equal to the exchange
ratio (the "Exchange Ratio") determined as follows:
(i) if the Median Pre-Closing Price (as defined in the Merger
Agreement) is equal to or greater than $33.33, the Exchange Ratio shall
be 0.300;
(ii) if the Median Pre-Closing Price is less than $33.33 but greater
than $31.25, the Exchange Ratio shall be equal to the quotient obtained
by dividing $10.00 by the Median Pre-Closing Price; and
(iii)If the Median Pre-Closing Price is equal to or less than $31.25
the Exchange Ratio shall be 0.320; provided, however, that if the
Median Pre-Closing Price is less than $25.75, the Board of Directors of
Poughkeepsie shall have the right to terminate the Merger Agreement,
subject to certain requirements, unless HUBCO agrees that the Exchange
Ratio shall be equal to the quotient obtained by dividing $8.24 by the
Median Pre-Closing Price.
In addition, Poughkeepsie has the right to declare, set aside and pay
cash dividends per share on Poughkeepsie common stock equivalent in amount to
the cash dividends per share declared by HUBCO multiplied by the Exchange Ratio
up until the Effective Time (the "Equivalent Rate Dividend").
The terms and conditions of the proposed transaction are described in
more detail in the Merger Agreement. The Merger Agreement is expected to be
considered by the shareholders of Poughkeepsie at a shareholders' meeting and
the Merger consummated shortly after the receipt of shareholder and state and
federal regulatory approvals.
In connection with executing the Merger Agreement, Poughkeepsie entered
into a Stock Option Agreement (the "Option Agreement") dated October 22, 1997,
pursuant to which Poughkeepsie granted HUBCO an option to acquire up to
2,000,000 shares of Poughkeepsie common stock at a price of $7.875 per share,
subject to adjustment and subject to the terms and conditions set forth in the
Option Agreement.
You have asked us whether, in our opinion, the Exchange Ratio is fair,
from a financial point of view, to the shareholders of Poughkeepsie.
In arriving at the opinion set forth below, we have, among other
things: reviewed the Merger Agreement and the exhibits and schedules thereto;
reviewed the Option Agreement; reviewed the Annual Reports on Form 10-K for
HUBCO for the three fiscal years ended December 31, 1996, as well as unaudited
financial information for the quarter and nine months ended September 30, 1997;
reviewed the Annual Reports on Form 10-K for Poughkeepsie for the three years
ended December 31, 1996, as well as unaudited financial information for the
quarter and nine months ended September 30, 1997; reviewed certain financial
information as filed with federal banking agencies for the three years ended
December 31, 1996, as well as the nine months ended September 30, 1997, for each
of HUBCO and Poughkeepsie; reviewed the Proxy Statement/Prospectus dated
December __, 1997; reviewed comparative financial and operating data on the
banking industry and certain institutions which were deemed to be comparable to
the companies; reviewed the historical market prices and trading activity for
the common shares of each of HUBCO and Poughkeepsie and compared them with
certain publicly-traded companies which were deemed to be comparable to each
company; considered the beneficial financial impact to the shareholders of
Poughkeepsie of the Equivalent Rate Dividend; reviewed certain thrift mergers
and acquisitions on a state, regional and nationwide basis for institutions
which were deemed to be comparable to Poughkeepsie and compared the proposed
consideration with the financial terms of certain other mergers and acquisitions
which were deemed relevant; conducted discussions with members of senior
management of Poughkeepsie and conducted limited discussions with members of
senior management of HUBCO concerning the financial condition, business and
prospects of each respective company; and reviewed such other financial
information, studies and analyses and performed such other investigations and
took into account such other matters as we deemed necessary.
In preparing this opinion we have assumed and relied upon the accuracy
and completeness of all financial and other information reviewed by us for the
purposes of this opinion, and we have not independently verified such
information nor have we undertaken an independent evaluation of the assets or
liabilities of Poughkeepsie or HUBCO. Advest has been retained by the Board of
Directors of Poughkeepsie to act as financial advisor to Poughkeepsie with
respect to the Merger and will receive a fee for its services including a fee
for this opinion. This opinion is necessarily based upon circumstances and
conditions as they exist and can be evaluated by us as of the date of this
letter. Our opinion is directed to the Board of Directors of Poughkeepsie and
does not constitute a recommendation of any kind to any shareholder of
Poughkeepsie as to how such shareholder should vote at the shareholders' meeting
to be held in connection with the Merger. We have assumed for purposes of this
opinion that there has been no material change in the financial condition of
either Poughkeepsie or HUBCO from that existing and reflected in the financial
statements of either company on September 30, 1997.
In reliance upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the Exchange Ratio is fair, from a financial point of
view, to the stockholders of Poughkeepsie.
Very truly yours,
Advest, Inc.
By:
--------------------------------
Michael T. Mayes
Managing Director and Group Head
MTM:gc
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
(i) Limitation of Liability of Directors and Officers. Section
14A:2-7(3) of the New Jersey Business Corporation Act permits a corporation to
provide in its Certificate of Incorporation that a director or officer shall not
be personally liable to the corporation or its shareholders for breach of any
duty owed to the corporation or its shareholders, except that such provision
shall not relieve a director or officer from liability for any breach of duty
based upon an act or omission (a) in breach of such person's duty of loyalty to
the corporation or its shareholders, (b) not in good faith or involving a
knowing violation of law or (c) resulting in receipt by such person of any
improper personal benefit. HUBCO's Certificate of Incorporation includes
limitations on the liability of officers and directors to the fullest extent
permitted by New Jersey law.
(ii) Indemnification of Directors, Officers, Employees and Agents.
Under Article X of its Certificate of Incorporation, HUBCO must, to the fullest
extent permitted by law, indemnify its directors, officers, employees and
agents. Section 14A:3-5 of the New Jersey Business Corporation Act provides that
a corporation may indemnify its directors, officers, employees and agents
against judgments, fines, penalties, amounts paid in settlement and expenses,
including attorneys' fees, resulting from various types of legal actions or
proceedings if the actions of the party being indemnified meet the standards of
conduct specified therein. Determinations concerning whether or not the
applicable standard of conduct has been met can be made by (a) a disinterested
majority of the Board of Directors, (b) independent legal counsel, or (c) an
affirmative vote of a majority of shares held by the shareholders. No
indemnification is permitted to be made to or on behalf of a corporate director,
officer, employee or agent if a judgment or other final adjudication adverse to
such person establishes that his acts or omissions (A) were in breach of his
duty of loyalty to the corporation or its shareholders, (B) were not in good
faith or involved a knowing violation of law or (C) resulted in receipt by such
person of an improper personal benefit.
(iii) Insurance. HUBCO's directors and officers are insured against
losses arising from any claim against them such as wrongful acts or omissions,
subject to certain limitations.
Item 21. Exhibits and Financial Statement Schedules.
A. Exhibits
Exhibit
Number Description
- ------- -----------
2(a) Amended and Restated Agreement and Plan of Merger, dated as of October
22, 1997, by and among HUBCO, Inc. ("HUBCO") and Poughkeepsie Financial
Corp. ("PFC") and Bank of the Hundson ("BTH") (included as Appendix A
to the Proxy Statement).
2(b) Stock Option Agreement, dated October 22, 1997, by and between HUBCO
and PFC (included as Appendix B to the Proxy Statement).
5 Opinion of Pitney, Hardin, Kipp & Szuch as to the legality of the
securities to be registered.
8 Opinion of Pitney, Hardin, Kipp & Szuch as to certain tax consequences
of the Merger.
13(a) Annual Report of PFC on Form 10-K filed with the SEC for the year ended
December 31, 1996.
13(b) Quarterly Report of PFC on Form 10-Q filed with the SEC for the quarter
ended September 30, 1997.
13(c) Quarterly Report of PFC on Form 10-Q filed with the SEC for the quarter
ended June 30, 1997.
20 Current Report of PFC on Form 8-K filed with the SEC on November ___,
1997. [List others; ask H. Wilenson]
23(a) Consent of Deloitte & Touche LLP.
23(b) Consent of Arthur Andersen LLP.
23(c) Consent of Advest, Inc.
23(d) Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibits 5 and 8
hereto).
99 Form of Proxy Card to be utilized by the Board of Directors of PFC.
B. Financial Statement Schedules
All financial statement schedules have been omitted because they are
not applicable or the required information is included in the financial
statements or notes thereto or incorporated by reference therein.
C. Reports, Opinions or Appraisals
The Form of the Fairness Opinion of Advest, Inc. is included as
Appendix C to the Proxy Statement-Prospectus.
<PAGE>
Item 22. Undertakings.
1. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
2. The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
3. The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph 2 immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a) (3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
4. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
5. The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
6. Subject to appropriate interpretation, the undersigned registrant
hereby undertakes to supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration statement
when it became effective.
7. The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 and Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Township of Mahwah,
State of New Jersey, on the ____ day of December, 1997.
HUBCO, INC.
KENNETH T. NEILSON
By:------------------------------
Kenneth T. Neilson,
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
KENNETH T. NEILSON Chairman, President, Chief December 3, 1997
- ------------------------------ Executive Officer and Director
(Kenneth T. Neilson)
ROBERT J. BURKE
- -----------------------------
(Robert J. Burke) Director December 12, 1997
DONALD P. CALCAGNINI
- -----------------------------
(Donald P. Calcagnini) Director December 12, 1997
JOAN DAVID
- -----------------------------
(Joan David) Director December 5, 1997
- -----------------------------
(Thomas R. Farley) Director December __, 1997
BRYANT D. MALCOLM
- -----------------------------
(Bryant D. Malcolm) Director December 8, 1997
W. PETER MCBRIDE
- -----------------------------
(W. Peter McBride) Director December 8, 1997
DAVID S. ROSOW
- -----------------------------
(David S. Rosow) Director December 5, 1997
CHARLES F. X. POGGI
- -----------------------------
(Charles F.X. Poggi) Director December 12, 1997
JAMES E. SCHIERLOH
- -----------------------------
(James E. Schierloh) Director December 12, 1997
- -----------------------------
(John H. Tatigian) Director December __, 1997
- -----------------------------
(Sister Grace Frances Strauber) Director December __, 1997
JOSEPH F. HURLEY Executive Vice President and
- ----------------------------- Chief Financial Officer December 8, 1997
(Joseph F. Hurley)
CHRIS A. WITKOWSKI
- ---------------------------- Controller December 12, 1997
(Chris A. Witkowski)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
2(a) Amended and Restated Agreement and Plan of Merger, dated as of
October 22, 1997, by and among HUBCO, Inc. ("HUBCO"),
Poughkeepsie Financial Corp. ("PFC") and Bank of the Hudson
("BTH") (included as Appendix A to the Proxy Statement).*
2(b) Stock Option Agreement, dated October 22, 1997, by and between
HUBCO and PFC (included as Appendix B to the Proxy
Statement).*
5 Opinion of Pitney, Hardin, Kipp & Szuch as to the legality of
the securities to be registered.
8 Opinion of Pitney, Hardin, Kipp & Szuch as to certain tax
consequences of the Merger.
13(a) Annual Report of PFC on Form 10-K filed with the SEC for the
year ended December 31, 1996. **
13(b) Quarterly Report of PFC on Form 10-Q filed with the SEC for
the quarter ended September 30, 1997. **
13(c) Quarterly Report of PFC on Form 10-Q filed with the SEC for
the quarter ended June 30, 1997. **
20 Current Report of PFC on Form 8-K filed with the SEC on
November 12, 1997. **
23(a) Consent of Deloitte & Touche LLP.
23(b) Consent of Arthur Andersen LLP.
23(c) Consent of Advest, Inc.
23(d) Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibits
5 and 8 hereto).
99 Form of Proxy Card to be utilized by the Board of Directors of
PFC.
- ---------------------------------
* Included elsewhere in this registration statement.
** Incorporated by reference.
Exhibit 5
December 15, 1997
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn: Kenneth T. Neilson, Chairman, President
and Chief Executive Officer
Re: Merger of HUBCO, Inc. and Poughkeepsie Financial Corp.
We have acted as counsel to HUBCO, Inc. ("HUBCO") in
connection with its proposed issuance of common stock, no par value (the "Common
Stock"), pursuant to the Amended and Restated Agreement and Plan of Merger among
HUBCO, Poughkeepsie Financial Corp.and Bank of the Hudson, dated October 22,
1997. The Common Stock is being registered pursuant to a Registration Statement
on Form S-4 (the "Registration Statement") being filed with the Securities and
Exchange Commission on the date hereof.
We have examined originals, or copies certified or otherwise
identified to our satisfaction, of the Certificate of Incorporation and By-laws
of HUBCO as currently in effect, relevant resolutions of the Board of Directors
of HUBCO, and such other documents as we have deemed necessary or appropriate in
order to express the opinion set forth in this letter.
Based on the foregoing and assuming that the Registration
Statement has been declared effective under the Securities Act of 1933, as
amended, we are of the opinion that when issued as described in the Registration
Statement, including the Prospectus relating to the Common Stock (the
"Prospectus"), the Common Stock will be legally issued, fully paid and
non-assessable.
We hereby consent to the use of this opinion as an Exhibit to
the Registration Statement and to the reference to this firm under the heading
"Legal Opinion" in the Prospectus.
Very truly yours,
PITNEY, HARDIN, KIPP & SZUCH
Exhibit 8
December 12, 1997
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attn.: Kenneth T. Neilson, Chairman, President
and Chief Executive Officer
Poughkeepsie Financial Corp.
Attn.:
Re: Merger of Hubco, Inc. and Poughkeepsie Financial Corp.
We have represented HUBCO, Inc. ("HUBCO"), a New Jersey
corporation which is a registered bank holding company, in connection with the
proposed merger of Poughkeepsie Financial Corp. ("PFC"), a Delaware corporation
and unitary thrift holding company with and into HUBCO (the "Merger"). The
Merger shall be effected pursuant to the provisions of the Amended and Restated
Agreement and Plan of Merger dated as of October 22, 1997 (the "Merger
Agreement"), among HUBCO, PFC and PFC's wholly-owned subsidiary, Bank of the
Hudson. The Merger Agreement defines those capitalized terms appearing in this
letter which are not defined in this letter.
In connection with such representation, we have reviewed the
Registration Statement to be filed with the Securities and Exchange Commission
pertaining to the Merger (the "Registration Statement"), and, in our opinion,
the information included in the section of the Registration Statement captioned
"Federal Income Tax Consequences" accurately describes the material federal
income tax consequences of the Merger. In addition, attached to this letter is a
form of opinion of this firm regarding federal income tax matters applicable to
the Merger (the "Closing Tax Opinion"), the delivery of which is a condition
precedent to the consummation of the Merger pursuant to Section 6.1(d) of the
Merger Agreement. At this time, we expect to deliver such opinion substantially
in the form attached at the closing of the Merger.
Very truly yours,
PITNEY, HARDIN, KIPP & SZUCH
<PAGE>
December __, 1997
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attn.: Kenneth T. Neilson, Chairman, President
and Chief Executive Officer
Poughkeepsi Financial Corp.
Attn.:
Re: Merger of HUBCO, Inc. and Poughkeepsie Financial Corp.
Ladies and Gentlemen:
We have represented HUBCO, Inc. ("HUBCO"), a New Jersey corporation
which is a registered bank holding company, in connection with the proposed
merger of Poughkeepsie Financial Corp. ("PFC"), a Delaware corporation and
unitary thrift holding company with and into HUBCO (the "Merger"). The Merger
shall be effectuated pursuant to the provisions of an Amended and Restated
Agreement and Plan of Merger dated as of October 22, 1997 (the "Merger
Agreement"), among HUBCO, PFC and Bank of the Hudson ("BTH"). This opinion is
delivered pursuant to Section 6.1(d) of the Merger Agreement. The Merger
Agreement defines those capitalized terms appearing in this letter which are not
defined in this letter. Unless otherwise indicated, all sections refer to the
Internal Revenue Code of 1986, as amended (the "Code").
Pursuant to the Merger Agreement, at the Effective Time, the Merger
shall be effectuated by the merger of PFC with and into HUBCO, in accordance
with the laws of the State of New Jersey and Delaware, the Delaware General
Corporation laws and the New Jersey Business Corporation Act.
Pursuant to the Merger Agreement, at the Effective Time, each
outstanding share of common stock, $0.01 par value, of PFC (the "PFC Common
Stock"), other than shares owned by HUBCO or any of HUBCO's wholly-owned
subsidiaries (other than shares held in a fiduciary capacity or as collateral on
or in lieu of a debt previously contracted) and shares held by PFC in its
treasury, shall be converted into the right to receive and be exchanged for a
number of shares (the "Exchange Ratio") of common stock of HUBCO, without par
value ("HUBCO Common Stock"), equal to a fraction, the numerator of which will
be $10.00 and the denominator of which will be the "Median Pre-Closing Price" of
HUBCO Common Stock (a term defined in the Merger Agreement generally as the
median closing price of HUBCO Common Stock during a 10 trading day period
shortly prior to the closing of the Merger), with a Minimum Exchange Ratio of
0.300 (which will apply if the Median Pre-Closing Price is at or above $33.33)
and a Maximum Exchange Ratio of 0.320 (which will apply if the Median
Pre-Closing Price is at or below $31.25), subject to adjustment provisions set
forth in the Merger Agreement. No fractional shares of HUBCO Common Stock will
be issued in exchange for PFC Common Stock. Instead, cash will be paid in lieu
of fractional shares of HUBCO Common Stock, based upon the Median Pre-Closing
Price of HUBCO Common Stock.
In addition to the foregoing facts, on the date of this letter, you
have delivered to us certificates in which you have made the following
additional representations in regard to the Merger and have authorized us to
rely on such representations in expressing the opinions contained in this
letter.
1. The fair market value of HUBCO's Common Stock and other
consideration received by holders of the PFC Common Stock will be approximately
equal to the fair market value of the PFC Common Stock surrendered in the
exchange.
2. None of the compensation received by any shareholder-employees of
PFC will be separate consideration for, or allocable to, any of their shares of
PFC Common Stock; none of the shares of HUBCO Common Stock received by any
shareholder-employees will be separate consideration for, or allocable to, any
employment agreement; and the compensation paid to any shareholder-employees
will be for services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's-length for similar services.
3. HUBCO has no plan or intention to redeem or otherwise reacquire any
of its stock issued in the Merger.
4. The payment of cash in lieu of fractional shares of HUBCO Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
HUBCO of issuing fractional shares of HUBCO Common Stock and does not represent
separately bargained-for consideration.
5. Following the Merger, HUBCO will continue the historic business of
PFC or use a significant portion of PFC's business assets in the business of
HUBCO.
6. There is no intercorporate indebtedness existing between HUBCO and
PFC that was issued, acquired, or will be settled at a discount.
7. Neither HUBCO nor PFC is an investment company as defined in Section
368(a)(2)(F)(iii) and (iv).
8. HUBCO has no plan or intention to liquidate, sell or otherwise
dispose of any of the assets of PFC acquired in the Merger, except for
dispositions made in the ordinary course of business, or, transfers described in
Section 368(a)(2)(C).
9. HUBCO, PFC and the shareholders of PFC will pay their respective
expenses, if any, incurred in connection with the Merger.
10. Other than the contemplated merger of PFC with and into HUBCO,
there is no larger integrated transaction of which the Merger constitutes only
one step.
11. PFC is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A).
12. There is no plan or intention by the shareholders of PFC who own 5%
or more of the PFC Common Stock, and to the best knowledge of the management of
PFC, there is no plan or intention on the part of the remaining shareholders of
PFC to sell, exchange or otherwise dispose of a number of shares of HUBCO Common
Stock received in the Merger that would reduce the PFC shareholders' ownership
of HUBCO Common Stock to a number of shares having a value, as of the date of
the Merger, of less than 50% of the value of all of the formerly outstanding PFC
Common Stock as of the same date. For purposes of this representation, shares of
PFC Common Stock exchanged for cash in lieu of fractional shares of HUBCO Common
Stock or surrendered by dissenters will be treated as outstanding PFC Common
Stock on the date of the Merger. Moreover, shares of PFC Common Stock held by
PFC shareholders and otherwise sold, redeemed or disposed of prior or subsequent
to the Merger will be considered in making this representation.
13. The liabilities of PFC to be assumed by HUBCO and the liabilities
to which the transferred assets of PFC are subject were incurred by PFC in the
ordinary course of its business.
14. The fair market value of the assets of PFC transferred to HUBCO
will equal or exceed the sum of the liabilities assumed by HUBCO, plus the
amount of liabilities, if any, to which the transferred assets are subject.
As counsel to HUBCO, we have examined the Merger Agreement and copies
of ancillary agreements, certificates, instruments and documents pertaining to
the Merger delivered by the parties to the Merger. In such examination, we have
assumed the genuineness of all signatures and the authenticity of all documents
submitted to us. As to any facts material to our opinions expressed in this
letter, we have relied on representations of the parties to the Merger and have
not undertaken to verify any of those representations by independent
investigation. We have based our opinions contained in this letter on our
analysis of the Code, Treasury Regulations promulgated thereunder, and relevant
interpretive authorities as in effect on the date of this letter.
Based on the foregoing, we are of the opinion that:
1. The Merger qualifies as a "reorganization" within the meaning of
Section 368(a)(1)(A). HUBCO and PFC each are a "party to a reorganization"
within the meaning of Section 368(b)(2).
2. No gain or loss will be recognized for federal income tax purposes
by HUBCO or PFC in connection with the Merger. Sections 361(a) and 1032(a).
3. No gain or loss will be recognized for federal income tax purposes
by holders of shares of PFC Common Stock upon the exchange in the Merger of such
shares solely into shares of HUBCO Common Stock (except with respect to cash
received in lieu of a fractional share interest in PFC Common Stock). Section
354(a).
4. Cash received by a holder of PFC Common Stock in lieu of a
fractional share interest in HUBCO Common Stock will be treated as received for
such fractional share interest, and provided the fractional share would have
constituted a capital asset in the hands of such holder, the holder should in
general recognize capital gain or loss in an amount equal to the difference
between the amount of cash received and the portion of the adjusted tax basis in
PFC Common Stock allocable to the fractional share interest. Section 1001.
5. The basis of shares of HUBCO Common Stock received in the Merger by
holders of PFC Common Stock will be the same as the basis of such shares of PFC
Common Stock surrendered in exchange therefor. Section 358.
6. The holding period of shares of HUBCO Common Stock received in the
Merger by holders of PFC Common Stock will include the period during which such
shares of PFC Common Stock surrendered in exchange therefor were held by the
holder thereof, provided such shares of PFC Common Stock were held as capital
assets. Section 1223(1).
Exhibit 23(a)
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in this Registration Statement of
HUBCO, Inc. on Form S-4, in connection with the proposed merger of Poughkeepsie
Financial Corp. ("PFC") with and into HUBCO, Inc., of our report dated January
24, 1997 appearing in the Annual Report on Form 10-K of PFC for the year ended
December 31, 1996 and to the reference to us under the heading "Experts" in the
Proxy Statement/Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Stamford, Connecticut
December 12, 1997
Exhibit 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To HUBCO, Inc.
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 of our report dated
February 7, 1997 included in HUBCO's Annual Report on Form 10-K and to all
references to our firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
December 12, 1997
Exhibit 23(c)
CONSENT OF ADVEST, INC.
Advest Inc. ("Advest") hereby consents to the inclusion of its Opinion regarding
the fairness, from a financial point of view, of the consideration to be
received by Poughkeepsie Financial Corp.'s stockholders pursuant to the Merger
Agreement in the Form S-4 Registration Statement. Advest further consents to the
use of its name under the headings "Background of and PFC's Reasons for the
Merger" and "Opinion of PFC's Financial Advisor" in the registration statement.
By giving such consent, Advest does not thereby admit that it is an expert with
respect to any part of such Form S-4 Registration Statement within the meaning
of the term "expert" as used in The Securities Act of 1933, as amended, or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
ADVEST, INC.
BY:MICHAEL T. MAYES
------------------------
MICHAEL T. MAYES
Managing Director
New York, New York
December 12, 1997
Exhibit 99
REVOCABLE PROXY
POUGHKEEPSIE FINANCIAL CORP.
PROXY
FOR THE SPECIAL MEETING OF STOCKHOLDERS
____________, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
POUGHKEEPSIE FINANCIAL CORP.
The undersigned stockholder of Poughkeepsie Financial Corp.
("PFC") hereby appoints ________________, _______________ and
__________________, and each of them, as Proxy, each with full power of
substitution, and hereby authorizes such proxy to represent the undersigned and
to vote all of the shares of stock of PFC standing in the undersigned's name at
the Special Meeting of Stockholders of PFC to be held at [Location], on [Day of
Week], ____________, 1998 at [Time], and at any adjournments or postponements
thereof. The undersigned hereby revokes any and all proxies heretofore given
with respect to such Special Meeting.
This proxy, when properly executed, will be voted as specified
herein. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR APPROVAL AND
ADOPTION OF THE AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER.
(continued on reverse side)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
A |X| Please mark your votes as in this example.
The Board of Directors recommends a vote FOR 1. Approval of the Amended and Restated FOR AGAINST ABSTAIN
approval and adoption of the Amended and Restated Agreement and Plan of Merger, dated
Agreement and Plan of Merger. dated as of October 22, 1997 by and
among HUBCO, Inc., Poughkeepsie |_| |_| |_|
Financial Corp. and Bank of the Hudson.
2. To vote, in its discretion, upon
any such other business as may
properly come before the Special
Meeting or any adjournments or
postponements thereof.
</TABLE>
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS
VOTED AT THE SPECIAL MEETING.
<TABLE>
<CAPTION>
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
<S> <C>
SIGNATURE DATE: , 1997
-------------------------------------------- -------------------------------
SIGNATURE DATE: , 1997
-------------------------------------------- -------------------------------
</TABLE>
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
