As filed with the Securities and Exchange Commission on May 8, 1998
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
(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. JEFFREY P. WALDRON, ESQ.
Pitney, Hardin, Kipp & Szuch Stevens & Lee
P.O. Box 1945 1415 Route 70 East, Suite 506
Morristown, New Jersey 07962 Cherry Hill, New Jersey 08034
(973) 966-8125 (609) 354-9200
<PAGE>
Approximate date of commencement of proposed sale to the public: At
the Effective Time of the Merger, as defined in the Agreement and Plan of Merger
dated as of March 2, 1998 (the "Merger Agreement") among HUBCO, Inc. ("HUBCO"),
Hudson United Bank ("HUB"), Community Financial Holding Corporation, ("CFHC"),
and Community National Bank of New Jersey ("CNB"), 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 917,618 $35.61** $32,677,763** $9,640
Value Shares*
</TABLE>
* The number of shares of HUBCO Common Stock issuable in the Merger in exchange
for shares of CFHC Common Stock, assuming the Exchange Ratio of 0.695 set forth
in the Merger Agreement, and assuming that all currently outstanding options to
acquire shares of CFHC 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 bid information reported on The Nasdaq SmallCap
Market for CFHC Common Stock as of May 4, 1998, 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>
[CFHC LOGO]
______________, 1998
To the Shareholders of Community Financial Holding Corporation:
We cordially invite you to attend a special meeting of the shareholders
of Community Financial Holding Corporation ("CFHC"). The meeting is to be held
at [Location] on [Date] at 2:00 p.m.
We have called the meeting to seek your approval of a Merger Agreement
which provides for CFHC to be merged with HUBCO, Inc. HUBCO is a bank holding
company with bank subsidiaries based in New Jersey and Connecticut. Upon
completion of pending acquisitions, HUBCO will also operate a bank subsidiary
based in New York State. Immediately following completion of the Merger of CFHC
into HUBCO, CFHC's subsidiary bank, Community National Bank of New Jersey
("CNB"), will be merged into HUBCO's New Jersey banking subsidiary, Hudson
United Bank. Thereafter, the business of CNB will be operated as a division of
Hudson United Bank named "Community National Division of Hudson United Bank" or
another similar name agreed to by HUBCO and CFHC.
In the Merger, each share of CFHC Common Stock will be converted into
0.695 shares of HUBCO Common Stock, subject to adjustment under certain
circumstances. Cash will be paid in lieu of fractional shares. The investment
banking firm of Berwind Financial, L.P. has advised your Board of Directors
that, in its opinion, as of March 2, 1998 and, , 1998, the consideration to be
received by the holders of CFHC Common Stock is fair from a financial point of
view to the holders of such shares.
Completion of the Merger is subject to certain conditions, including
receipt of bank regulatory approvals and approval of the Merger Agreement by the
affirmative vote of a majority of the votes cast by the holders of CFHC Common
Stock entitled to vote at the meeting, assuming a quorum is present.
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 special
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.
On behalf of your Board of Directors,
Robert T. Pluese, Chairman
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ____________, 1998
To the Shareholders of Community Financial Holding Corporation:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the
"Meeting") of Community Financial Holding Corporation ("CFHC") will be held on
[Day of Week], [Date], 1998, at 2:00 p.m., at [Location], for the following
purposes:
(1) To consider and vote on a proposal to approve and adopt an Agreement
and Plan of Merger dated as of March 2, 1998 (the "Merger Agreement")
among HUBCO, Inc. ("HUBCO"), Hudson United Bank ("HUB"), CFHC and
Community National Bank of New Jersey ("CNB"), which provides for CFHC
to be merged with and into HUBCO (the "Merger"). The attached Proxy
Statement-Prospectus describes the Merger Agreement in detail and
includes a copy of the Merger Agreement as Appendix A. If the Merger is
consummated, each share of the common stock, par value $5.00 per share,
of CFHC ("CFHC Common Stock") (except for treasury shares and certain
shares held by HUBCO or its subsidiaries) will be converted into 0.695
shares (the "Exchange Ratio") of common stock, no par value, of HUBCO
("HUBCO Common Stock"). The Exchange Ratio is subject to adjustment as
set forth in the Merger Agreement to prevent dilution in the event of
any stock split, reclassification or other similar event. Also, if the
Median Pre-Closing Price of HUBCO Common Stock (as defined in the
Merger Agreement and described in the attached Proxy Statement) is less
than $29.00, CFHC will have certain rights to terminate the Merger
Agreement unless HUBCO agrees to increase the Exchange Ratio to an
amount equal to $20.30 divided by the Median Pre-Closing Price. HUBCO
will pay cash to CFHC shareholders in lieu of issuing fractional shares
of HUBCO Common Stock.
(2) To consider and vote upon a proposal (the "Additional Proposal") to
authorize the Board of Directors of CFHC, in its discretion, to vote
upon such other business as may properly come before the Meeting and
any adjournment or postponement thereof, including, without limitation,
a motion to adjourn the Meeting to another time or place for the
purpose of soliciting additional proxies if there are not sufficient
votes at the time of the Meeting to constitute a quorum or approve the
Merger Agreement.
The Board of Directors has fixed the close of business on ____________,
1998 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting. Only shareholders of record at the close of
business on the record date will be entitled to notice of and to vote at the
Meeting or any adjournments or postponements thereof.
All shareholders are urged to attend the Meeting in person. It is
important that proxies be returned promptly. 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. If you are a shareholder whose shares
are not registered in your name, you will need additional documentation from the
holder of record of your shares to vote personally at the Meeting.
By Order of the Board of Directors
Kevin L. Kutcher, Secretary
Westmont, New Jersey
____________, 1998
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND "FOR"
APPROVAL OF THE ADDITIONAL PROPOSAL.
<PAGE>
PROXY STATEMENT OF COMMUNITY PROSPECTUS OF HUBCO, INC.
FINANCIAL HOLDING CORPORATION for its Common Stock to be
for its Special Meeting of Shareholders issued in connection with
to be held on ____________, 1998 the merger of Community
and all adjournments or postponements Financial Holding Corporation
thereof with and into HUBCO, Inc.
The Board of Directors of Community Financial Holding Corporation
("CFHC") has called a Special Meeting of CFHC shareholders (the "Meeting") to be
held on [Day of Week], [Date], 1998. The Meeting has been called to seek CFHC
shareholder approval of a Merger Agreement which provides for CFHC to be merged
with HUBCO, Inc. ("HUBCO"), with HUBCO as the surviving corporation. HUBCO is a
bank holding company with bank subsidiaries based in New Jersey and Connecticut.
Upon completion of pending acquisitions, HUBCO will also operate a bank
subsidiary based in New York State. Immediately following completion of the
Merger of CFHC into HUBCO (the "Merger"), CFHC's subsidiary bank, Community
National Bank of New Jersey ("CNB"), will be merged into HUBCO's New Jersey
banking subsidiary, Hudson United Bank.
Upon completion of the Merger, each share of the common stock, par
value $5.00 per share, of CFHC ("CFHC Common Stock") (except for treasury shares
and certain shares held by HUBCO or its subsidiaries) will be converted into
0.695 shares (the "Exchange Ratio") of common stock, no par value, of HUBCO
("HUBCO Common Stock"). The Exchange Ratio is subject to adjustment as set forth
in the Merger Agreement to prevent dilution in the event of any stock split,
reclassification or other similar event. Also, if the Median Pre-Closing Price
of HUBCO Common Stock (as defined in the Merger Agreement and described in the
attached Proxy Statement) is less than $29.00, CFHC will have certain rights to
terminate the Merger Agreement unless HUBCO agrees to increase the Exchange
Ratio to an amount equal to $20.30 divided by the Median Pre-Closing Price.
HUBCO will pay cash to CFHC shareholders in lieu of issuing fractional shares 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 a majority of the votes cast by the holders of CFHC Common
Stock entitled to vote at the Meeting.
HUBCO has filed a Registration Statement with the Securities and
Exchange Commission (the "SEC") covering the 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 CFHC 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
CFHC 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 CFHC shareholders on or about
___________, 1998. It describes the Merger Agreement in detail and includes a
copy of the Merger Agreement as Appendix A. CFHC shareholders 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 CFHC CONTAINED OR INCORPORATED BY REFERENCE
IN THIS DOCUMENT WAS SUPPLIED BY CFHC. 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
FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC") OR ANY OTHER GOVERNMENTAL
AGENCY.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN 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 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 CFHC....................................
MARKET PRICE AND DIVIDEND MATTERS...............................................
Market Price and Dividend History......................................
Limitations on Dividends Under the Merger Agreement....................
Dividend Limitations on HUBCO..........................................
PRO FORMA FINANCIAL INFORMATION.................................................
ACTUAL AND PRO FORMA PER SHARE DATA.............................................
INTRODUCTION ...................................................................
CERTAIN INFORMATION REGARDING HUBCO ............................................
General................................................................
Recent Developments....................................................
CERTAIN INFORMATION REGARDING CFHC..............................................
General................................................................
Recent Developments....................................................
THE MEETING ....................................................................
Purpose of the Meeting.................................................
Record Date; Voting Rights; Proxies....................................
Solicitation of Proxies................................................
Quorum.................................................................
Required Vote..........................................................
THE PROPOSED MERGER.............................................................
General Description....................................................
Closing Date; Effective Time ..........................................
Consideration; Median Pre-Closing Price ...............................
Conversion of CFHC Options.............................................
Cash in Lieu of Fractional Shares .....................................
Stock Option to HUBCO for CFHC Shares..................................
Background of the Merger...............................................
CFHC Board's Reasons for the Merger and Recommendation.................
HUBCO's Reasons for the Merger.........................................
Security Ownership of Certain Beneficial Owners........................
Interests of Certain Persons in the Merger ............................
Opinion of CFHC's Independent Financial Advisor........................
Resale Considerations with Respect to the HUBCO Common Stock...........
Conditions to the Merger...............................................
Conduct of Business Pending the Merger.................................
Representations, Warranties and Covenants..............................
Regulatory Approvals...................................................
Management and Operations After the Merger.............................
Exchange of Certificates, Issuance of New Options......................
Amendments; Termination ...............................................
Accounting Treatment of the Merger.....................................
Federal Income Tax Consequences .......................................
No Dissenters' Rights..................................................
THE ADDITIONAL PROPOSAL.........................................................
PRO FORMA FINANCIAL INFORMATION.................................................
DESCRIPTION OF HUBCO CAPITAL STOCK..............................................
General ...............................................................
Description of HUBCO Common Stock......................................
Description of HUBCO Preferred Stock...................................
COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF CFHC AND HUBCO......................
General ...............................................................
Voting Requirements....................................................
Removal of Directors; Number of Directors..............................
Preferred Stock........................................................
Classified Board of Directors .........................................
Rights of Dissenting Shareholders......................................
Shareholder Consent to Corporate Action................................
Inspection Rights......................................................
Dividends .............................................................
By-laws................................................................
Shareholder Protection Legislation.....................................
Evaluation of Offers...................................................
Limitations of Liability of Directors or Officers......................
Indemnification of Directors and Officers..............................
Preemptive Rights
SHAREHOLDER PROPOSALS...........................................................
OTHER MATTERS...................................................................
LEGAL OPINION...................................................................
EXPERTS.........................................................................
APPENDIX A Agreement and Plan of Merger by and among HUBCO, HUB, CFHC
and CNB.......................................................A-1
APPENDIX B Stock Option Agreement by and between HUBCO and CFHC ..........B-1
APPENDIX C Fairness Opinion of Berwind Financial, L.P.....................C-1
<PAGE>
AVAILABLE INFORMATION
Each of HUBCO, Inc. ("HUBCO") and Community Financial Holding Company
("CFHC") 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 and CFHC). The address of the Commission's web site is
http://www.sec.gov. In addition, HUBCO Common Stock and CFHC Common Stock are
each listed on The Nasdaq Stock Market, and certain material as to HUBCO and
CFHC 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.
HUBCO has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act of 1933, as amended (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.
ALL INFORMATION REGARDING CFHC CONTAINED IN, DELIVERED WITH OR
INCORPORATED BY REFERENCE IN THIS DOCUMENT WAS SUPPLIED BY CFHC. ALL INFORMATION
REGARDING HUBCO WAS SUPPLIED BY HUBCO.
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, 1997.
2. Current Reports on Form 8-K filed with the Commission on January
14, 1998, January 16, 1998, February 13, 1998, March 20, 1998,
March 31, 1998 and April 2, 1998.
3. Forms 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 Shareholders for the year ended
December 31, 1997 ("HUBCO's Annual Report") and HUBCO's Proxy Statement dated
March 24, 1998 for its 1998 Annual Meeting ("HUBCO's Proxy Statement") are
available free of charge, upon written or oral request as set forth hereinafter,
to any holder, including any beneficial owner, of shares CFHC Common Stock.
A copy of CFHC's Annual Report on Form 10-K for the year ended December
31, 1997 ("CFHC's Annual Report") accompanies each copy of this Proxy Statement
delivered to holders of CFHC Common Stock. Additional copies of this document
are available to any holder of CFHC Common Stock, including any beneficial
owner, free of charge upon written or oral request as set forth hereinafter.
The following documents filed by CFHC with the Commission are
incorporated herein by reference.
1. Annual Report on Form 10-K for the year ended December 31, 1997.
2. Current Report on Form 8-K filed with the Commission on March 13,
1998.
All documents filed by HUBCO pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act subsequent to the date hereof and prior to the earlier
of (i) the date of the Special Meeting of Shareholders of CFHC (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 the
exhibits thereto, unless such exhibits are specifically incorporated by
reference into the information incorporated herein) are available free of charge
to any holder of CFHC 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; and,
with respect to CFHC materials, to the office of CFHC's President, Gerard M.
Banmiller, 222 Haddon Avenue, Westmont, New Jersey 08108; telephone (609)
869-7900. Additional copies of CFHC's Annual Report on Form 10-K are also
available free of charge to any holder of CFHC Common Stock, including any
beneficial owner, upon written or oral request, submitted to the office of
CFHC's President, Gerard M. Banmiller, 222 Haddon Avenue, Westmont, New Jersey
08108; telephone (609) 869-7900. 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 AND CFHC.
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 OR HUBCO'S OTHER ACQUISITIONS CANNOT BE REALIZED AS ANTICIPATED; (2)
DEPOSIT ATTRITION, CUSTOMER LOSS OR REVENUE LOSS FOLLOWING THE MERGER OR HUBCO'S
OTHER ACQUISITIONS 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. CFHC Shareholders should carefully read the entire Proxy Statement.
OVERVIEW
The Board of Directors of Community Financial Holding Corporation
("CFHC") has called a Special Meeting of CFHC shareholders (the "Meeting") to be
held on [Day of Week], [Date], 1998. The Meeting has been called to seek
shareholder approval of an Agreement and Plan of Merger, dated as of March 2,
1998 (the "Merger Agreement") among HUBCO, Inc. ("HUBCO"), HUBCO's New Jersey
bank subsidiary, Hudson United Bank ("HUB"), CFHC and CFHC's principal
subsidiary, Community National Bank of New Jersey ("CNB"). The Merger Agreement
provides for CFHC to be merged with HUBCO (the "Merger"), with HUBCO as the
surviving corporation. 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
$5.00 per share, of CFHC ("CFHC Common Stock"), other than Excluded Shares (as
defined below), will be converted into 0.695 shares (the "Exchange Ratio") of
common stock of HUBCO, no par value ("HUBCO Common Stock"). The Exchange Ratio
is subject to adjustment as set forth in the Merger Agreement to prevent
dilution in the event of any stock split, reclassification or other similar
event. Also, if the Median Pre-Closing Price of HUBCO Common Stock is less than
$29.00, CFHC will have certain rights to terminate the Merger Agreement unless
HUBCO agrees to increase the Exchange Ratio to an amount equal to $20.30 divided
by the Median Pre-Closing Price. "Median Pre-Closing Price" is defined in the
Merger Agreement generally as the median closing price of HUBCO Common Stock
during a ten trading day period shortly prior to the closing of the Merger. Cash
will be paid in lieu of fractional shares. "Excluded Shares" are those shares of
CFHC Common Stock which are (i) held by CFHC 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).
At the Meeting, holders of CFHC Common Stock will be asked to approve
and adopt the Merger Agreement and to approve a proposal (the "Additional
Proposal") to give the CFHC Board of Directors discretion to vote upon other
matters that may properly be brought before the Meeting and any adjournment or
postponement thereof, including a motion to adjourn the Meeting in order to
solicit additional proxies if there are insufficient votes at the time of the
Meeting to constitute a quorum or approve the Merger Agreement.
This document serves two purposes. It is the Proxy Statement being used
by the CFHC 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 2:00 p.m.,
at [Location]. At the Meeting, holders of CFHC Common Stock will be asked to
approve and adopt the Merger Agreement and to approve the Additional Proposal.
Record holders of CFHC 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 CFHC Common Stock entitled to
vote at the Meeting must be present or represented by proxy at the Meeting for a
quorum. If a quorum is present, the affirmative vote, in person or by proxy, of
a majority of the votes cast affirmatively or negatively by the holders of CFHC
Common Stock entitled to vote at the Meeting is required in order to approve and
adopt the Merger Agreement. The affirmative vote of the holders of a majority of
the votes cast affirmatively or negatively by the holders of CFHC Common Stock
entitled to vote at the Meeting is required in order to approve and adopt the
Additional Proposal. As of the Record Date, there were _________ outstanding
shares of CFHC Common Stock held by approximately ___ holders of record. The
directors of CFHC 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 CFHC as a group have voting control over
______ of these shares (____%), all of which shares CFHC expects will be voted
in favor of the Merger Agreement and the Additional Proposal.
The CFHC Board of Directors has unanimously approved the Merger
Agreement and unanimously recommends that holders of CFHC Common Stock vote FOR
the Merger Agreement and FOR the Additional Proposal.
THE COMPANIES
HUBCO
HUBCO is a bank holding company whose principal operating subsidiaries
are HUB, a New Jersey-chartered commercial bank, Lafayette American Bank
("Lafayette"), a Connecticut-chartered commercial bank, and Bank of the Hudson,
a federally chartered savings bank headquartered in Poughkeepsie, New York
("BTH"). BTH was recently acquired through HUBCO's acquisition of BTH's parent
corporation, Poughkeepsie Financial Corporation ("PFC") which had 16 branches
and $875 million in assets as of December 31, 1997. BTH is currently a
federally-chartered savings bank and HUBCO anticipates converting BTH into a
state-chartered commercial bank at some point in the future.
HUBCO's corporate headquarters is located at 1000 MacArthur Boulevard,
Mahwah, New Jersey 07430, and its telephone number is (201) 236-2600. 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. BTH's corporate headquarters is
located at 249 Main Mall, Poughkeepsie, New York 12601.
HUB is a full-service commercial bank which primarily serves small and
mid-sized businesses and consumers through 61 branches in Northern New Jersey.
Lafayette is a full-service commercial bank which serves small-to-medium-sized
business firms as well as individuals through 30 banking offices located mainly
in Fairfield and New Haven counties in Connecticut. 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. As of December 31,
1997, HUBCO had consolidated assets of $3.046 billion, consolidated deposits of
$2.314 billion and consolidated stockholders' equity of $186.1 million. Based on
assets as of December 31, 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. As of the date of this Proxy
Statement-Prospectus, in addition to the Merger, HUBCO has pending the
acquisitions of MSB Bancorp, Inc. ("MSB"), IBS Financial Corp. ("IBSF"), and
Dime Financial Corporation ("DFC") and the purchase of 23 branch offices from
First Union National Bank (the "Branch Purchase"). MSB is the parent corporation
of MSB Bank, a bank headquartered in Goshen, New York which had 16 branches and
$765.4 million in assets as of March 31, 1998. HUBCO anticipates that MSB Bank
will be merged into BTH following the merger of MSB into HUBCO. IBSF is the
parent corporation of Inter-Boro Savings and Loan Association (the
"Association") a New Jersey state chartered savings and loan association
headquartered in Cherry Hill, New Jersey, which had __ branches and [$___]
million in assets as of March 31, 1998. DFC is the parent corporation of The
Dime Savings Bank of Wallingford, Connecticut ("Dime"), a bank headquartered in
Wallingford, Connecticut which had ___ branches and [$___] million in assets as
of March 31, 1998. The Branch Purchase represents the acquisition of 23 branches
located in New Jersey, New York and Connecticut with deposits of $330 million,
in the aggregate. Assuming consummation of all other acquisitions pending as of
the date of this Proxy Statement, HUBCO will have completed over 25 acquisitions
since 1990, and HUBCO will have added over 140 branches and over $6 billion in
assets through acquisitions this decade. HUBCO expects to continue its
acquisition strategy.
CFHC
CFHC is a New Jersey business corporation, which is registered as a
bank holding company under the Bank Holding Company Act of 1956, as amended.
CFHC was incorporated on April 23, 1991, and became an active bank holding
company in April 1991 through its acquisition of 100% of the shares of CNB, a
full service commercial national bank established in 1987. CNB accounts for
substantially all of the consolidated assets, revenues and operating results of
CFHC. In March 1994, Community Investment Corporation, Inc. was formed as a
wholly-owned subsidiary of CNB for the purpose of purchasing, holding and
selling investments of CNB. CFHC's principal executive offices are located at
222 Haddon Avenue, Westmont, New Jersey 08108, and its telephone number is (609)
869-7900.
The principal activity of CNB is to provide its local communities in
Camden, Gloucester and Burlington Counties, New Jersey, with general commercial
and retail banking services. Through its eight full service banking offices, CNB
offers commercial and consumer loans of all types, including real estate loans,
residential mortgage loans, home equity loans and lines of credit, auto loans
and other credit products. CNB's deposit services include business and
individual demand and time deposit accounts, NOW accounts, money market
accounts, Individual Retirement Accounts and holiday accounts.
As of December 31, 1997, CNB had total assets of $150.7 million, total
deposits of $136.8 million and total stockholders' equity of $11.6 million.
THE MERGER
Description of the Merger; Closing Date; Effective Time
In the Merger, CFHC 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 CFHC. The Closing Date specified by HUBCO
must be at least five business days after the date of the Closing Notice, but no
less than seven and no more than ten 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 CFHC. HUBCO and CFHC currently
anticipate closing in the third quarter of 1998. Simultaneous with or
immediately following the Closing, HUBCO and CFHC will file a Certificate of
Merger with the Secretary of State of the State of New Jersey. The Merger will
become effective at a date and time following the Closing which HUBCO and CFHC
will specify in the Certificate of Merger (the "Effective Time"). If no
Effective Time is specified in the Certificate of Merger, the Effective Time
will be the time at which the Certificate of Merger is filed. HUBCO and CFHC
currently anticipate that 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 CFHC.
Bank Merger
Immediately following the Effective Time, CNB will be merged with and
into HUB (the "Bank Merger"), with HUB as the surviving bank (the "Surviving
Bank"), with the business of CNB operated as a division of the Surviving Bank
named "Community National Division of Hudson United Bank" or another similar
name agreed to by HUBCO and CFHC (the "New Division").
Consideration; Median Pre-Closing Price
Upon completion of the Merger, each share of CFHC Common Stock (other
than Excluded Shares) will be converted into 0.695 shares (the "Exchange Ratio")
of HUBCO Common Stock. HUBCO will pay cash in lieu of issuing fractional shares
of HUBCO Common Stock. The Exchange Ratio is subject to adjustments specified in
the Merger Agreement to prevent dilution in the event of any stock split,
reclassification or other similar event. Also, if the Median Pre-Closing Price
of HUBCO Common Stock is less than $29.00, CFHC will have certain rights to
terminate the Merger Agreement unless HUBCO agrees to increase the Exchange
Ratio to an amount equal to $20.30 (i.e., $29.00 multiplied by the 0.695
Exchange Ratio), divided by the Median Pre-Closing Price. The "Median
Pre-Closing Price" will be determined by taking the price half-way between the
closing prices left after discarding the four lowest and four highest closing
prices in the ten consecutive trading day period which ends on (and includes)
the Determination Date. The "Determination Date" is the date specified as such
in the Closing Notice which HUBCO provides to CFHC, which date must be between
seven and ten business days prior to the Closing Date set forth in the Closing
Notice.
CFHC shareholders 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. CFHC SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
HUBCO COMMON STOCK AND THE CFHC COMMON STOCK.
Cash in Lieu of Fractional Shares
No fractional shares of HUBCO Common Stock will be issued in exchange
for CFHC Common Stock. Instead, holders of CFHC Common Stock will receive from
HUBCO 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 CFHC Common Stock or CFHC Options
will be aggregated to constitute as many whole shares as possible before
determining the person's fractional share interest.
Conversion of CFHC Options
CFHC has outstanding a number of options to purchase shares of CFHC
Common Stock ("CFHC Options") which were granted to optionees ("Optionees")
pursuant to the CFHC 1994 Employee and Director Stock Option Plan (the "CFHC
Stock Option Plan") and the option grant agreements thereunder (the "Option
Grant Agreements"). Pursuant to the Merger Agreement, HUBCO has agreed to honor
the provisions of the CFHC Stock Option Plan and the Option Grant Agreements,
including those relating to vesting and conversion in connection with a change
in control of CFHC. Accordingly, under the CFHC Stock Option Plan, upon the
approval of the Merger Agreement by the shareholders of CFHC at the Meeting, all
outstanding CFHC Options (whenever granted) will be immediately and fully
exercisable. Upon the consummation of the Merger, each outstanding CFHC Option
will be converted into shares of HUBCO Common Stock in an amount determined in
accordance with a formula set forth in the CFHC Stock Option Plan. This formula
may result in Optionees receiving greater consideration in the Merger for their
CFHC Options than the consideration they would have received had they exercised
their CFHC Options immediately prior to the Effective Time. See "The Proposed
Merger - - Conversion of CFHC Options."
No Dissenters' Rights of Appraisal
Under the New Jersey Business Corporation Act (the "NJBCA"), holders of
CFHC Common Stock are not entitled to dissenters' rights of appraisal in
connection with the Merger.
Certain Federal Income Tax Consequences
HUBCO's and CFHC's obligations to consummate the Merger are conditioned
upon, among other things, the receipt of an opinion of counsel to HUBCO and an
opinion of counsel to CFHC, each dated the Closing Date, 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 HUBCO and CFHC
each has the contractual right to waive this condition to closing, neither will
do so. In connection with the Registration Statement of which this Proxy
Statement is a part, each such counsel has delivered its opinion to the effect
that the Merger will qualify as a tax-free reorganization as defined in Section
368 of the Code.
Accounting Treatment of the Merger
The Merger is expected to be accounted for as a pooling of interests
for financial reporting purposes, and each party'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, CFHC'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 CFHC 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 Federal Deposit Insurance Corporation (the "FDIC") and the New
Jersey Department of Banking (the "NJDOB"). Applications for FDIC and NJDOB
approval have been filed, and HUBCO and CFHC anticipate receiving such
approvals. However, there can be no assurance that the approvals will be
granted, that they will be granted on a timely basis, or that they will be
granted without conditions unacceptable to HUBCO or CFHC.
Conditions to the Merger
There are a number of conditions to completion of the Merger, including
receipt of bank regulatory approval; approval of the Merger Agreement by the
CFHC shareholders; an opinion of Pitney, Hardin, Kipp & Szuch, counsel to HUBCO,
and an opinion of Stevens & Lee, counsel to CFHC, that the Merger will result in
a tax-free reorganization; assurances to HUBCO from its independent accountants
that the Merger will be accounted for as a pooling of interests; and certain
other conditions usual and customary in transactions similar to the Merger.
Exchange of Certificates
Promptly after the Effective Time, the Exchange Agent for HUBCO will
send CFHC shareholders letters of transmittal and instructions for exchanging
their stock certificates for certificates representing HUBCO Common Stock.
Holders of CFHC Common Stock should not send in their stock certificates until
they receive instructions from the Exchange Agent.
Termination Rights
The Merger Agreement may be terminated by either CFHC or HUBCO if,
among other reasons, the Effective Time has not occurred by September 30, 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 CFHC if
CFHC'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, CFHC may
terminate the Merger Agreement if the Median Pre-Closing Price of HUBCO Common
Stock is less than $29.00 which, given the Maximum Exchange Ratio, would result
in shares of CFHC Common Stock being converted into HUBCO Common Stock with a
value of less than $20.30 (i.e., $29.00 multiplied by the 0.695 Exchange Ratio).
However, if CFHC exercises this termination right, HUBCO can choose to override
the termination by increasing the Exchange Ratio to $20.30 divided by the Median
Pre-Closing Price.
Fairness Opinion
Berwind Financial, L.P. ("Berwind") has rendered its written opinion as
of March 2, 1998, and expects to give an updated opinion dated the date of this
Proxy Statement-Prospectus, to the Board of Directors of CFHC, that, as of the
respective dates of such opinions and subject to the assumptions set forth
therein, the Exchange Ratio is fair to the holders of CFHC Common Stock from a
financial point of view. For information concerning the matters reviewed,
assumptions made and factors considered by Berwind, see "THE PROPOSED MERGER --
Opinion of Financial Advisor" and Appendix C to this Proxy Statement, which sets
forth a copy of Berwind's written fairness opinion. Holders of CFHC Common Stock
are urged to, and should, read such opinion in its entirety.
No Solicitation by CFHC of Alternative Transactions
Pursuant to the Merger Agreement, CFHC has agreed that it will not,
directly or indirectly, encourage or solicit or hold discussions or negotiations
with, or provide any information to, any person other than HUBCO concerning any
merger or similar acquisition transactions involving CFHC or CFHC Bank (an
"Acquisition Transaction"), except that CFHC may enter into discussions or
negotiations or provide information in connection with an unsolicited possible
Acquisition Transaction if the Board of Directors of CFHC, after consulting with
counsel, determines in the exercise of its fiduciary responsibilities that such
action should be so taken. This restriction, along with the Stock Option
Agreement described in the following paragraph, may be considered a deterrent to
other potential acquisitions of control of CFHC.
Stock Option to HUBCO for CFHC Shares
HUBCO and CFHC entered into a Stock Option Agreement dated as of March
2, 1998 (the "Stock Option Agreement") in connection with the negotiation by
HUBCO and CFHC of the Merger Agreement. Pursuant to the Stock Option Agreement,
CFHC has granted to HUBCO an option (the "Option"), exercisable only under
certain limited and specifically defined circumstances (none of which has
occurred as of the date hereof), to purchase up to 252,790 authorized but
unissued shares of CFHC Common Stock, representing upon issuance approximately
19.5% of the shares of CFHC Common Stock, for an exercise price of $24.40 per
share. HUBCO does not have any voting rights with respect to the shares of CFHC
Common Stock subject to the Option prior to exercise of the Option. Acquisitions
of CFHC Common Stock pursuant to exercise of the option would be subject to
prior regulatory approval under certain circumstances.
The Stock Option Agreement is attached to this Proxy Statement as
Appendix B hereto. If certain specifically enumerated "Triggering Events" occur
and the Merger is not consummated, HUBCO would recognize a gain on the sale of
the shares of CFHC Common Stock received pursuant to the exercise of the Option
if such shares of CFHC Common Stock were sold at prices exceeding $24.40 per
share. The ability of HUBCO to exercise the Option and to cause up to an
additional 252,790 shares of CFHC Common Stock to be issued may be considered a
deterrent to other potential acquisitions of control of CFHC, even if such
potential acquiror were prepared to pay a higher price per share for CFHC Common
Stock, as it is likely to increase the cost of an acquisition of all of the
shares of CFHC 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.
Interests of Certain Persons in the Merger
Certain directors and executive officers of CFHC are the holders of
CFHC Options which will be converted into shares of HUBCO Common Stock upon
consummation of the Merger. In addition, certain officers of CFHC and CNB are
parties to agreements with CFHC which may entitle such officers to additional
compensation upon a change in control of CFHC. Furthermore, the Merger Agreement
provides that Robert T. Pluese, Chairman of the Board of CFHC, will be appointed
to the Board of Directors of the Surviving Bank, each director of CNB will be
appointed to an advisory board of the New Division and Gerard M. Banmiller,
President of CFHC, will be appointed as Regional President of the New Division.
Also, HUBCO has agreed to provide certain indemnification, for a specified
period of time after the Effective Time, to persons who served as directors and
officers of CFHC and CNB.
For further details regarding the foregoing, see "THE PROPOSED MERGER -
Interests of Certain Persons in the Merger."
Differences in Shareholders' Rights
CFHC and HUBCO each is a business corporation incorporated under the
NJBCA. The rights of CFHC shareholders are currently governed by the NJBCA and
CFHC's certificate of incorporation and by-laws. At the Effective Time, each
CFHC shareholder will become a shareholder of HUBCO. The rights of HUBCO
shareholders are governed by the NJBCA and HUBCO's certificate of incorporation
and by-laws.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth selected historical consolidated
financial information (audited and unaudited) for both HUBCO and CFHC for the
five years ended December 31, 1997. The financial information for HUBCO has been
restated to include the effects of the merger with The Bank of Southington
("TBOS") which was consummated on January 12, 1998 and has been accounted for as
a pooling of interests. HUBCO's financial information does not take into account
HUBCO's pending acquisitions of MSB, DFC, IBSF, the Branch Purchase or HUBCO's
recently completed acquisitions of PFC and Security National Bank & Trust
Company of New Jersey ("SNB"). See "CERTAIN INFORMATION REGARDING HUBCO - Recent
Developments." None of the acquisitions had closed as of December 31, 1997 and
none are sufficiently material to HUBCO under SEC rules to require inclusion in
this Proxy Statement-Prospectus of financial statements regarding such
acquisitions. The tables have been derived from, and should be read in
conjunction with, the historical financial statements of HUBCO and CFHC,
including the related notes thereto, delivered with or incorporated by reference
in this Proxy Statement-Prospectus. See "INFORMATION DELIVERED AND INCORPORATED
BY REFERENCE."
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO
At or for the Year Ended December 31,
-------------------------------------------------------------------------
1997 1996 1995 1994 1993
(Dollars in thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C>
Earnings Summary:
Interest income $ 228,438 $ 213,509 $ 212,258 $ 178,052 $ 155,745
Interest expense 81,461 76,171 73,385 55,184 53,070
------------- ------------ ------------ ------------ ------------
Net interest income 146,977 137,338 138,873 122,868 102,675
Provision for possible loan losses 8,530 12,520 10,274 10,069 32,519
------------- ------------ ------------ ------------ ------------
Net interest income after
provision for possible loan losses 138,447 124,818 128,599 112,799 70,156
Other income 41,686 30,811 28,677 23,027 24,868
Other expenses 98,944 120,746 106,584 98,883 100,006
------------- ------------ ------------ ------------ -----------
Income before income taxes 81,189 34,883 50,692 36,943 (4,982)
Income tax provision 31,512 12,248 15,084 12,831 521
============= ============ ============ ============ ============
Net income (loss) $ 49,677 $ 22,635 $ 35,608 $ 24,112 $ (5,503)
============= ============ ============ ============ ============
Share Data:
Weighted average common
shares outstanding (in thousands):
Basic 22,919 23,247 22,857 21,083 17,401
Diluted 24,206 25,048 24,935 23,729 19,981
Basic earnings per share $ 2.14 $ 0.94 $ 1.52 $ 1.12 $ (0.32)
Diluted earnings per share 2.05 0.90 1.43 1.02 (0.28)
Cash dividend per common share 0.75 0.66 0.56 0.34 (0.29)
Balance Sheet Summary:
Securities held to maturity $ 227,570 $ 280,914 $ 294,057 $ 715,796 $ 601,246
Securities available for sale 578,658 690,157 528,651 232,424 196,473
Loans 1,857,677 1,965,184 1,726,316 1,642,465 1,372,060
Total assets 3,174,254 3,242,938 2,890,478 2,872,350 2,417,206
Deposits 2,431,114 2,708,371 2,547,677 2,507,642 2,190,291
Stockholders' equity 196,733 216,635 226,253 195,772 125,858
Performance Ratios:
Return on average assets 1.60 % 0.77 % 1.26 % 0.91 % -0.23 %
Return on average equity 23.25 % 10.49 % 17.07 % 15.41 % -4.31 %
Dividend payout 35.05 % 70.21 % 36.84 % 30.36 % --
Average equity to average assets 6.90 % 7.29 % 7.39 % 5.88 % 5.42 %
Net interest margin 5.22 % 5.07 % 5.37 % 5.05 % 4.75 %
Asset Quality Ratios:
Allowance for possible loan
losses to total loans 2.11 % 1.87 % 1.84 % 1.96 % 2.54 %
Allowance for possible loan losses
to non-performing loans 111 % 107 % 114 % 75 % 45 %
Non-performing loans to
total loans 1.89 % 1.74 % 1.62 % 2.61 % 5.65 %
Non-performing assets to total
loans, plus other real estate 2.09 % 2.04 % 2.28 % 3.57 % 7.20 %
Net charge-offs to average loans 0.46 % 0.68 % 0.65 % 1.28 % 1.79 %
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF CFHC
At or for the Year Ended December 31,
---------------------------------------------------------------------------
1997 1996 1995 1994 1993
(Dollars in thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C>
Earnings Summary:
Interest income $ 9,312 $ 8,594 $ 7,455 $ 6,011 $ 5,346
Interest expense 2,996 2,831 2,549 1,911 1,787
Net interest income 6,316 5,763 4,906 4,100 3,559
Provision for loan losses 590 340 210 105 270
Net interest income
after provision for loan losses 5,726 5,423 4,696 3,995 3,289
Noninterest income 1,300 895 652 630 679
Noninterest expense (1) 6,269 4,849 4,189 3,473 3,054
Income before income taxes 757 1,469 1,159 1,152 914
Income taxes 127 463 367 403 358
Income before accounting changes 630 1,006 792 749 556
Net income (1) 630 1,006 792 749 577
Per Share Data: (2)
Income before accounting changes - diluted $ 0.57 $ 0.93 $ 0.76 $ 0.89 1.17
Diluted (1) (3) 0.57 0.93 0.76 0.89 1.21
Book value end of period 11.27 10.65 9.73 8.70 9.06
Period End Balance Sheet:
Total assets $ 150,671 $ 126,527 $ 112,845 $ 95,625 $ 86,076
Loans Held for Sale 1,746 1,305 262 0 0
Loans (net) 85,800 71,649 62,542 52,839 43,548
Securities (4) 37,909 32,728 39,060 31,946 29,676
Federal funds sold 7,300 8,050 1,550 1,150 5,775
Deposits 136,757 111,448 99,504 83,947 78,358
Shares outstanding (2) 1,027,713 1,027,713 1,024,078 1,024,078 477,006
Stockholders' equity 11,584 10,946 9,961 8,907 4,321
Performance Ratios:
Return on average assets 0.48 % 0.85 % 0.76 % 0.83 % 0.77 %
Return on average equity 5.64 9.72 8.50 11.20 14.56
Net interest margin 5.44 5.39 5.27 5.02 5.22
Asset Quality Ratios:
Allowance for loan losses
to period end loans 1.12 % 1.02 % 0.94 % 1.13 % 1.62 %
Allowance for loan losses
to nonaccrual loans 148.18 139.87 186.10 116.65 224.31
Non-performing assets to period end 1.05 0.75 1.52 1.20 1.10
loans & foreclosed properties
Net charge offs to average loans 0.45 0.29 0.38 0.48 0.77
Liquidity and Capital Ratios:
Average loans to average deposits 66.52 % 64.73 % 63.00 % 57.01 % 64.65 %
Tier 1 Risk-Based Capital Ratio 12.09 13.86 15.80 17.07 9.52
Total Risk-Based Capital Ratio 13.11 14.80 16.75 18.20 10.77
Tier 1 Leverage Ratio 7.91 8.70 8.74 10.11 5.17
</TABLE>
(1) During 1993, CFHC adopted Statement of Financial Accounting Standards No.
109 with a resultant benefit of $20,851 which is included in Net Income.
(2) Adjusted to give retroactive effect to the 5% stock dividends of 1997,
1996, 1995, 1994 and 1993 for all years presented. (3) Represents net
income per share on a fully diluted basis. Basic net income per share for
1997, 1996, 1995 and 1994 was $0.61, $0.98, $0.77 and $0.91,
respectively. There was no dilution for 1993. (4) Total of securities
available for sale and investment securities
<PAGE>
MARKET PRICE AND DIVIDEND MATTERS
Market Price and Dividend History
HUBCO Common Stock is quoted on The Nasdaq National Market under the symbol
"HUBC", and CFHC Common Stock is quoted on The Nasdaq SmallCap Market under the
symbol "CMFH". The following tables set forth, for the periods indicated, the
high and low closing prices per share of HUBCO Common Stock and the high and low
bid information per share of CFHC Common Stock, in each case on The Nasdaq Stock
Market as reported the following business day in The Wall Street Journal, 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 HUBCO stock dividend payable on December 1, 1997 to
shareholders of record on November 13, 1997 (the "1997 Stock Dividend") and a
HUBCO stock dividend payable on November 15, 1996 to shareholders of record on
November 4, 1996 (the "1996 Stock Dividend"). CFHC's stock prices shown in the
table below have been adjusted for 5% CFHC Common Stock dividends distributed in
December 1997 and December 1996.
<TABLE>
<CAPTION>
Market Market
Price Per Share Price Per Share Equivalent Pro Forma
of HUBCO of CFHC Market Price Per Share
Common Stock Common Stock of CFHC Common Stock(1)
------------------- -------------------- ----------------------
High Low High Low High Low
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
1996:
First Quarter........ $ 21.33 $ 18.32 $ 12.70 $ 11.34 $ 14.82 $ 12.73
Second Quarter....... $ 20.50 $ 17.32 $ 12.02 $ 10.66 $ 14.25 $ 12.04
Third Quarter........ $ 20.39 $ 18.61 $ 13.15 $ 10.66 $ 14.17 $ 12.93
Fourth Quarter....... $ 24.15 $ 19.56 $ 18.57 $ 12.62 $ 16.78 $ 13.59
1997:
First Quarter........ $ 25.85 $ 21.84 $ 19.05 $ 15.95 $ 17.97 $ 15.18
Second Quarter....... $ 28.52 $ 21.12 $ 17.14 $ 14.76 $ 19.82 $ 14.68
Third Quarter........ $ 32.04 $ 26.94 $ 17.62 $ 15.48 $ 22.27 $ 18.72
Fourth Quarter......... $ 39.13 $ 30.94 $ 18.50 $ 17.50 $ 27.20 $ 21.50
1998:
First Quarter......... $ 39.00 $ 33.25 $ 26.00 $ 17.75 $ 27.10 $ 23.11
Second Quarter
(through __/__/98).... $ $ $ $ $ $
</TABLE>
- -------------
(1) Equivalent pro forma market price per share of CFHC Common Stock represents
the high and low closing prices per share of HUBCO Common Stock, multiplied
by the 0.695 Exchange Ratio. The Exchange Ratio is subject to customary
anti-dilution adjustments specified in the Merger Agreement.
<PAGE>
<TABLE>
<CAPTION>
HUBCO CFHC Equivalent Pro Forma
Common Stock Common Stock Cash Dividends Per
Cash Dividends Cash Dividends Share of CFHC
Per Share Per Share Common Stock (1)
--------- --------- ----------------
<S> <C> <C> <C>
1996:
First Quarter.............. $ 0.160 - 0.111
Second Quarter............. $ 0.160 - 0.111
Third Quarter.............. $ 0.160 - 0.111
Fourth Quarter............. $ 0.184 - 0.128
1997:
First Quarter.............. $ 0.184 - 0.128
Second Quarter............. $ 0.184 - 0.128
Third Quarter.............. $ 0.184 - 0.128
Fourth Quarter ............ $ 0.200 - 0.139
1998:
First Quarter.............. $ 0.200 - 0.139
Second Quarter
(through 5/5/98)........... $ 0.200 $ 0.14 0.139
</TABLE>
- --------------------
(1) Equivalent pro forma cash dividends per share of CFHC Common Stock
represents HUBCO historical dividend rates per share, multiplied by the
0.695 Exchange Ratio, rounded to the nearest one hundredth 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 June 1 and September
1, 1997 and $.20 payable on December 1, 1997 and March 2, 1998, would
be $0.768. On an equivalent pro forma basis, such current annualized
HUBCO dividend per share of CFHC Common Stock would be $0.534, based on
the 0.695 Exchange Ratio, 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.
<PAGE>
The following table presents for (i) March 2, 1998, the last full
trading day before public announcement of the signing of the Merger Agreement,
and (ii) the most recent full trading day prior to the printing of this Proxy
Statement, the reported closing price per share of HUBCO Common Stock and of
CFHC Common Stock on The Nasdaq Stock Market and the equivalent price per share
of CFHC Common Stock computed by multiplying the closing price of HUBCO Common
Stock on each of the dates specified by the 0.695 Exchange Ratio.
<TABLE>
<CAPTION>
Equivalent Price Per
HUBCO CFHC Share of CFHC
Common Stock Common Stock Common Stock
------------ ------------ --------------------
<S> <C> <C> <C>
March 2, 1998.............. $36.38 $25.00 $25.28
__ ____, 1998..............
</TABLE>
CFHC shareholders 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. CFHC SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE HUBCO COMMON STOCK AND CFHC COMMON STOCK.
LIMITATIONS ON DIVIDENDS UNDER THE MERGER AGREEMENT
The Merger Agreement prohibits CFHC from declaring, setting aside or
paying any dividend or other distribution on its capital stock, except that CFHC
may pay dividends on the CFHC Common Stock in a quarterly amount equal to $0.14
per share.
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 Series B
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 of the Connecticut Department of Banking) 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, BTH, HUBCO's
recently acquired New York-based bank, 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, BTH converts to a New York
State-chartered bank.
PRO FORMA 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 years ended December 31, 1997, 1996 and 1995, and
the pro forma unaudited combined condensed balance sheet at December 31, 1997.
The HUBCO and CFHC pro forma combined financial information gives effect to
HUBCO's proposed acquisition of CFHC 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 December 31, 1997. The financial information for HUBCO has been
restated to include the effects of the merger with TBOS which was consummated on
January 12, 1998 and accounted for as a pooling of interests. The pro forma
information is based on the historical financial statements of HUBCO and CFHC,
certain of which are incorporated by reference herein. The pro forma financial
information assumes an Exchange Ratio of 0.695 shares of HUBCO Common Stock for
each share of CFHC 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, nor does it take into
account HUBCO's pending acquisitions of MSB, DFC, IBSF, the Branch Purchase or
HUBCO's recently completed acquisitions of PFC and Security National Bank &
Trust Company of New Jersey ("SNB"). See "CERTAIN INFORMATION REGARDING HUBCO -
Recent Developments." None of the acquisitions had closed as of December 31,
1997 and none are sufficiently material to HUBCO under SEC rules to require
inclusion in this Proxy Statement-Prospectus of financial statements or pro
forma presentation regarding such acquisitions. 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.
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Unaudited Combined Condensed Financial Information
(In thousands, except for per share data)
For the Years Ended December 31,
----------------------------------------------
1997 1996 1995
------------ ----------- ------------
<S> <C> <C> <C>
Results of Operations:
Net interest income before provision for possible loan losses.......... $ 153,293 $ 143,101 $ 143,779
Provision for possible loan losses..................................... 9,120 12,860 10,484
Net interest income after provision for possible loan losses........... 144,173 130,241 133,295
Income before income taxes............................................. 81,946 36,352 51,851
Net income............................................................. 50,307 23,641 36,400
Earnings per share
Basic.................................................................. 2.09 0.95 1.50
Diluted................................................................ 2.01 0.91 1.41
As of
December 31,
1997
---------------
Balance Sheet:
Total assets........................................................... $ 3,324,925
Total deposits......................................................... 2,567,871
Total stockholders' equity............................................. 208,317
Book value per common share............................................ 8.86
</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 CFHC Common Stock, both on
an actual (historical) basis and on a pro forma combined basis, as adjusted for
the 1996 Stock Dividend and 1997 Stock Dividend. The actual per share data have
been derived from the consolidated financial statements of HUBCO and CFHC,
respectively, incorporated by reference herein. The financial information for
HUBCO has been restated to include the effects of the merger with TBOS which was
consummated on January 12, 1998 and has been accounted for as a pooling of
interests. See "INFORMATION DELIVERED AND INCORPORATED BY REFERENCE."
The pro forma unaudited book value per share data at December 31, 1997
and the pro forma unaudited net income per share data for the years ended
December 31, 1997, 1996 and 1995 have been derived from the pro forma unaudited
combined condensed financial statements of HUBCO and CFHC, giving effect to
HUBCO's acquisition of CFHC 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. See "PRO FORMA FINANCIAL INFORMATION."
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 CFHC incorporated by reference herein and the pro forma combined
condensed financial statements of HUBCO and CFHC 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, nor does it take
into account HUBCO's pending acquisitions of MSB, DFC, IBSF, the Branch Purchase
or HUBCO's recently completed acquisitions of PFC and SNB. See "CERTAIN
INFORMATION REGARDING HUBCO - Recent Developments." None of the acquisitions had
closed as of December 31, 1997 and none are sufficiently material to HUBCO under
SEC rules to require inclusion in this Proxy Statement-Prospectus of financial
statements or pro forma presentation regarding such acquisitions. 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.
<PAGE>
<TABLE>
<CAPTION>
For the Years Ended December 31,
--------------------------------------------
1997 1996 1995
------------ ------------- -------------
<S> <C> <C> <C>
CASH DIVIDENDS DECLARED PER COMMON SHARE: (1)
HUBCO - Actual................................................ $ 0.75 $ 0.66 $ 0.56
CFHC - Actual................................................. -- -- --
CFHC, Pro forma equivalent: (2)............................... 0.52 0.46 0.39
NET INCOME PER COMMON SHARE:
HUBCO - Actual
Basic.................................................... 2.14 0.94 1.52
Diluted.................................................. 2.05 0.90 1.43
CFHC - Actual
Basic.................................................... 0.61 0.98 0.77
Diluted.................................................. 0.57 0.93 0.76
Pro Forma:
Pro forma per share of HUBCO Common Stock
Basic.................................................... 2.09 0.95 1.50
Diluted.................................................. 2.01 0.91 1.41
CFHC, Pro forma equivalent:
Basic.................................................... 1.45 0.66 1.04
Diluted.................................................. 1.40 0.63 0.98
As of
December 31,
1997
-------------------
BOOK VALUE PER COMMON SHARE:
HUBCO - Actual................................................ $ 8.68
CFHC - Actual ................................................ 11.27
Total.................................................... 19.95
Pro forma per share of HUBCO...................................... 8.86
CFHC, Pro forma equivalent........................................ 6.16
</TABLE>
(1) For information regarding HUBCO's and CFHC's dividends, and the market
price of HUBCO and CFHC Common Stock, see "MARKET PRICE AND DIVIDEND
MATTERS."
(2) Equivalent pro forma cash dividends per share of CFHC 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 June 1 and September 1, 1997 and $.20
payable on December 1, 1997 and March 2, 1998, would be $0.768. On an
equivalent pro forma basis, such current annualized HUBCO dividend per
share of CFHC Common Stock would be $0.534 based on the 0.695 Exchange
Ratio, 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.
<PAGE>
INTRODUCTION
This Proxy Statement solicits, on behalf of the Board of Directors of
Community Financial Holding Corporation ("CFHC"), approval by the holders of
shares of common stock of CFHC, $5.00 par value per share ("CFHC Common Stock"),
of the Agreement and Plan of Merger, dated as of March 2, 1998 (the "Merger
Agreement") among HUBCO, Inc. ("HUBCO"), HUBCO's New Jersey bank subsidiary,
Hudson United Bank ("HUB"), CFHC and CFHC's principal subsidiary, Community
National Bank of New Jersey ("CNB"). Pursuant to the Merger Agreement, CFHC will
be merged with and into HUBCO (the "Merger"), with HUBCO as the surviving
corporation. A copy of the Merger Agreement is attached as Appendix A to this
Proxy Statement.
Upon completion of the Merger, each share of CFHC Common Stock, other
than Excluded Shares (as defined below), will be converted into 0.695 shares
(the "Exchange Ratio") of common stock of HUBCO, no par value ("HUBCO Common
Stock"). The Exchange Ratio is subject to adjustment, as set forth in the Merger
Agreement and more fully described in this Proxy Statement, to prevent dilution
in the event of any stock split, reclassification or other similar event. Also,
if the Median Pre-Closing Price of HUBCO Common Stock is less than $29.00, CFHC
will have certain rights to terminate the Merger Agreement unless HUBCO agrees
to increase the Exchange Ratio to an amount equal to $20.30 divided by the
Median Pre-Closing Price. "Median Pre-Closing Price" is defined in the Merger
Agreement generally as the median closing price of HUBCO Common Stock during a
ten trading day period shortly prior to the closing of the Merger. Cash will be
paid in lieu of fractional shares. "Excluded Shares" are those shares of CFHC
Common Stock which are (i) held by CFHC 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).
CFHC has outstanding a number of options to purchase shares of CFHC
Common Stock ("CFHC Options") which were granted to optionees ("Optionees")
pursuant to the CFHC 1994 Employee and Director Stock Option Plan (the "CFHC
Stock Option Plan") and the option grant agreements thereunder (the "Option
Grant Agreements") . Pursuant to the Merger Agreement, HUBCO has agreed to honor
the provisions of the CFHC Stock Option Plan and the Option Grant Agreements,
including those relating to vesting and conversion in connection with a change
in control of CFHC. Accordingly, under the CFHC Stock Option Plan, upon the
approval of the Merger Agreement by the shareholders of CFHC at the Meeting, all
outstanding CFHC Options (whenever granted) will be immediately and fully
exercisable. Upon the consummation of the Merger, each outstanding CFHC Option
will be converted into shares of HUBCO Common Stock in an amount determined in
accordance with a formula set forth in the CFHC Stock Option Plan. This formula
may result in Optionees receiving greater consideration in the Merger for their
CFHC Options than the consideration they would have received had they exercised
their CFHC Options immediately prior to the Effective Time. See "The Proposed
Merger - - Conversion of CFHC Options."
All information and statements contained in, delivered with, or
incorporated by reference in this Proxy Statement with respect to CFHC were
supplied by CFHC, 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, Lafayette American Bank ("Lafayette"), a
Connecticut-chartered commercial bank, and BTH, a federally-chartered savings
bank. HUBCO's corporate headquarters is located at 1000 MacArthur Boulevard,
Mahwah, New Jersey 07430 and its telephone number is (201) 236-2600. 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. BTH's corporate headquarters is
located at 249 Main Mall, Poughkeepsie, New York 12601. HUB is a full-service
commercial bank which primarily serves small and mid-sized businesses and
consumers through 60 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 30 banking offices located mainly in Fairfield
and New Haven counties in Connecticut. BTH, which was recently acquired by HUBCO
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.
BTH is currently a federally-chartered savings bank and HUBCO anticipates
converting BTH into a state-chartered commercial bank at some point in the
future. As of December 31, 1997, HUBCO had consolidated assets of $3.046
billion, consolidated deposits of $2.314 billion and consolidated stockholders'
equity of $186.1 million. Based on assets as of December 31, 1997, HUBCO was the
fourth largest commercial banking company headquartered in New Jersey.
Prior to closing the Merger, HUBCO expects to complete its pending
acquisition of MSB Bancorp, Inc. ("MSB"). MSB is the parent corporation of MSB
Bank, a bank headquartered in Goshen, New York which had 16 branches and $765.4
million in assets as of December 31, 1997. HUBCO anticipates that MSB Bank will
be merged into BTH following the MSB merger. HUBCO also expects to close the
Branch Purchase which represents the aquisition of 23 branches from First Union
National Bank located in New Jersey, New York and Connecticut with deposits of
$330 million, in the aggregate.
HUBCO's strategy is to enhance profitability and build market share
through both internal growth and acquisitions. Assuming consummation of all
other acquisitions pending as of the date of this Proxy Statement, HUBCO will
have completed over 25 acquisitions since 1990, and HUBCO will have added over
140 branches and over $6 billion in assets through acquisitions this decade.
HUBCO expects to continue its acquisition strategy. HUBCO is continually
evaluating acquisition opportunities and frequently conducts discussions,
certain financial analyses and due 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
First Quarter 1998 Results
HUBCO reported that in the first quarter of 1998 fully diluted earnings
per share increased to $0.48 per share from $0.47 in 1997 including merger
related costs. Excluding $2.3 million of merger related and restructuring
charges, fully diluted earnings per share were up 17% to $0.55 per share versus
$0.47 per share for the same period last year. This resulted in an annualized
Return on Average Assets of 1.73% and an annualized Return on Average Equity of
26.17% for the quarter compared to 1.47% and 21.31% for the 1997 period,
respectively, excluding merger costs.
The merger related and restructuring charges relate to consummation of
HUBCO's acquisition of TBOS, which was accounted for as a pooling of interests.
HUBCO's first quarter 1998 results also reflect consummation of HUBCO's
acquisition of SNB, which closed on February 6, 1998 and was accounted for as a
purchase.
HUBCO's net interest margin for the first quarter of 1998 was 5.28%
compared to 4.96% in the first quarter of 1997. Other income, excluding security
gains, increased 6% during the first quarter of 1998 compared with first quarter
1997. Excluding non-recurring 1997 items, other income increased 20% compared
with first quarter 1997, driven primarily by significantly higher fee income in
the trust and Shoppers Charge divisions.
Overhead expenses for the first quarter of 1998 were $25.1 million,
excluding merger related charges, compared with $24.2 million in the first
quarter of 1997. This increase was primarily due to additional staffing and
other costs related to the planning and integration of acquired or soon to be
acquired companies. HUBCO's efficiency ratio (a ratio of overhead expenses to
recurring tax equivalent income) was 53.9% for the first quarter of 1998.
Total non-performing assets of $41.08 million (1.35% of assets) at
March 31, 1998 were up from $37.20 million at March 31, 1997 and from $38.94
million at December 31, 1997. The increase in non-performing assets was related
primarily to the mortgage portfolios which are collateralized by real property.
The Allowance for Possible Loan Losses totaled $40.34 million at March 31, 1998,
up from $37.16 million at March 31, 1997 and $39.24 million at December 31,
1997, representing 107% of non-performing loans and 2.20% of the loan portfolio
as of March 31, 1998.
HUBCO's total assets at March 31, 1998 were $3.05 billion. Loans
totaled $1.84 billion, deposits were $2.45 billion and stockholders' equity was
$200.3 million.
Dime Financial Corporation
On March 31, 1998, HUBCO, Lafayette, Dime Financial Corporation ("DFC")
and DFC's wholly-owned subsidiary, The Dime Savings Bank of Wallingford ("Dime")
signed a definitive merger agreement to merge DFC into HUBCO and Dime into
Lafayette. In the DFC Merger, DFC shareholders will receive HUBCO common stock
with an indicated value of $38.25 per share based upon the median price of HUBCO
common stock in a period immediately before regulatory approval (if the price of
HUBCO stock during such period is between $36.42 and $41.13). A maximum exchange
ratio of 1.05 shares of HUBCO Common Stock for each share of DFC common stock
will apply if HUBCO's pre-approval price is below $36.43. A minimum exchange
ratio of 0.93 shares will apply if HUBCO's pre-approval price is above $41.13.
DFC is a $961 million asset bank holding company headquartered in Wallingford,
Connecticut. The DFC Merger is expected to close in the third quarter of 1998
and to be treated as a pooling of interests.
IBS Financial Corp.
On March 31, 1998, HUBCO, HUB, IBS Financial Corp. ("IBSF") and IBSF's
wholly-owned subsidiary, Inter-Boro Savings and Loan Association ("Association")
signed a definitive merger agreement to merge IBSF into HUBCO and Association
into HUB. In the IBSF Merger, each share of IBSF Common Stock will be exchanged
for a fixed number of shares of HUBCO common stock at an exchange ratio of 0.534
shares of HUBCO common stock for each IBSF share. IBSF has certain rights to
terminate the merger agreement if HUBCO's share price should decrease more than
15% between the day after the announcement and a pre-closing determination date,
and also decreases 10% more than a specified index, unless HUBCO agrees to
deliver shares of HUBCO common stock having a value which would satisfy these
criteria. IBSF is a $734 million asset savings and loan holding company
headquartered in Cherry Hill, New Jersey. The IBSF Merger is expected to close
in the third quarter of 1998 and to be treated as a pooling of interests.
Poughkeepsie Financial Corp.
On April 24, 1998, HUBCO completed its acquisition of PFC and BTH by
merging PFC into HUBCO. As a result, BTH became HUBCO's New York-based bank
subsidiary. In the merger, each share of PFC common stock was converted into
0.300 shares of HUBCO Common Stock. PFC had $875 million in assets as of
December 31, 1997. The PFC acquisition was treated as a pooling of interests for
accounting purposes.
MSB Bancorp, Inc.
On December 16, 1997 HUBCO, MSB and MSB Bank signed a definitive merger
agreement to merge MSB into HUBCO (the "MSB Merger"). It is expected that MSB
Bank will be merged into BTH, which will be HUBCO's New York banking subsidiary
following completion of the PFC Merger. In the MSB Merger, each share of MSB
Common Stock will be converted into between .97 and 1.03 shares of HUBCO Common
Stock. MSB is headquartered in Goshen, New York and has branches in Orange,
Putnam and Sullivan counties. As of December 31, 1997, MSB had $765.4 million in
assets. The MSB Merger is expected to closing in the second quarter of 1998 and
to be treated as a pooling of interests.
Purchase of 23 branches from First Union National Bank
On March 2, 1998, HUBCO signed a definitive agreement to purchase 23
branches of First Union National Bank located in New Jersey, New York and
Connecticut with deposits of $330 million, in the aggregate. The purchase is
expected to close in the second quarter of 1998.
Security National Bank & Trust Company of New Jersey
On February 5, 1998 HUBCO completed its acquisition of Security
National Bank & Trust Company of New Jersey ("SNB"), an $86 million asset bank
and trust company headquartered in Newark, New Jersey by merging SNB into HUB.
In the merger, shareholders of SNB received $34.00 in cash for each share of SNB
Common Stock. Simultaneously with the merger of SNB into HUB, HUBCO acquired
Fiduciary Investment Company of New Jersey ("FIC"), a closely held corporation
which owned approximately 79.6% of the outstanding shares of SNB.
The Bank of Southington
On January 8, 1998 HUBCO completed its acquisition of The Bank of
Southington, a state bank and trust company organized under Connecticut law and
headquartered in Southington, Connecticut ("TBOS"), by merging TBOS into
Lafayette. In the merger, each share of TBOS common stock was converted into
.618 shares of HUBCO Common Stock. TBOS had $135 million in assets as of
September 30, 1997. The TBOS acquisition was treated as a pooling of interests
for accounting purposes.
CERTAIN INFORMATION REGARDING CFHC
CFHC is a New Jersey business corporation and registered bank holding
company under the Bank Holding Company Act of 1956, as amended. CFHC was
incorporated on April 23, 1991, and became an active bank holding company in
April 1991 through its acquisition of 100% of the shares of CNB, a full service
commercial national bank established in 1987. CNB accounts for substantially all
of the consolidated assets, revenues and operating results of CFHC. In March
1994, Community Investment Corporation, Inc. was formed as a wholly-owned
subsidiary of CNB, for the purpose of purchasing, holding and selling
investments of CNB. CFHC's principal executive offices are located at 222 Haddon
Avenue, Westmont, New Jersey 08108, and its telephone number is (609) 869-7900.
The principal activity of CNB is to provide its local communities in
Camden, Gloucester and Burlington Counties, New Jersey, with general commercial
and retail banking services. Through its eight full service banking offices, CNB
offers commercial and consumer loans of all types, including real estate loans,
residential mortgage loans, home equity loans and lines of credit, auto loans
and other credit products. CNB's deposit services include business and
individual demand and time deposit accounts, NOW accounts, money market
accounts, Individual Retirement Accounts and holiday accounts.
Recent Developments
CFHC reported net earnings for the three months ended March 31, 1998 of
$166,000 or $0.14 per diluted share as compared to $141,000 or $0.13 per diluted
share for the period ended March 31, 1997. CFHC ended the first quarter of 1998
with $163 million in assets as compared to $123 million at March 31, 1997, an
increase of $40 million or 32%.
CFHC reported net interest income of $1.7 million for the first quarter
of 1998 as compared to $1.5 million for the first quarter of 1997, an increase
of $257,000 or 17%. CFHC's net interest margin for the first quarter of 1998 was
5.23% versus 5.53% for the first quarter last year. Other income increased from
$241,000 for the first quarter of 1997 to $448,000 for the first quarter of 1998
primarily due to increased mortgage banking activities. Operating expenses
increased $458,000 from $1.4 million for the first quarter of 1997 to $1.9
million for the first quarter of 1998 primarily due to branch expansion.
The allowance for possible loan losses was $1.1 million at March 31,
1998, which represented 1.21% of the total loan portfolio. CFHC's provision for
loan losses for the first quarter of 1998 was $105,000 as compared to $75,000
for the first quarter last year.
CFHC stockholders' equity was $11.7 million at March 31, 1998 as
compared to $10.9 million at March 31, 1997.
CFHC has declared a quarterly cash dividend of $0.14 per common share,
payable June 1, 1998 to shareholders of record on May 18, 1998. This dividend is
the first cash dividend declared by CFHC since its formation in 1991. The cash
dividend is expressly permitted by the terms of the Merger Agreement.
Data Processing Contract
CNB has outsourced virtually all of its data processing operations
pursuant to a contract with Fiserv, Inc. ("Fiserv") for the provision of data
processing services with respect to deposit accounts, checking accounts, loan
accounts and other matters. The current contract with Fiserv was entered into on
November 1, 1996 and has a term of five years. In the event of early termination
of the contract with CNB, Fiserv may charge CNB a fee determined by multiplying
75% of CNB's average monthly invoice from Fiserv by the remaining months of the
term. HUBCO has advised CFHC that if the Merger is consummated, HUBCO intends to
terminate the contract with Fiserv on or about November 1, 1998. Management
estimates that the termination fee charged by Fiserv in such event would be
approximately $615,000.
Medford Branch
On January 9, 1998, CNB entered into a lease agreement for a location
in Medford, Burlington County, New Jersey. CNB plans to operate a full-service
banking branch at this location. The lease agreement is contingent upon the
completed construction of a retail shopping complex in which the branch is to be
located. Construction is scheduled to be completed by the end of 1998.
THE MEETING
PURPOSE OF THE MEETING
The Meeting will be held on [Day of Week], [Date], 1998 at [2:00 p.m.],
at [Location]. At the Meeting, the holders of CFHC Common Stock will consider
and vote on the approval and adoption of the Merger Agreement, approval of the
Additional Proposal and any other matters as may properly be brought before the
Meeting and at any adjournments or postponements thereof. This Proxy Statement
is first being mailed to the holders of CFHC Common Stock on or about
__________, 1998 and is accompanied by a proxy card furnished in connection with
the solicitation of proxies by the CFHC Board of Directors for use at the
Meeting.
The Board of Directors of CFHC has unanimously approved the Merger
Agreement and recommends a vote "FOR" approval and adoption of the Merger
Agreement and "FOR" the approval of the Additional Proposal.
Record Date; Voting Rights; Proxies
The Board of Directors of CFHC has fixed the close of business on
________, 1998 as the record date for determining the holders of CFHC Common
Stock entitled to receive notice of and to vote at the Meeting (the "Record
Date"). Only holders of record of CFHC 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 CFHC Common Stock issued and outstanding and entitled to vote at the
Meeting. Each share of CFHC 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 and adoption of the Merger Agreement and "FOR" the approval
of the Additional Proposal. The Board of Directors of CFHC 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.
A proxy may be revoked at any time prior to its exercise by the filing
of a written notice of revocation with the Secretary of CFHC, by delivering to
CFHC a duly executed proxy bearing a later date, or by attending the Meeting and
voting in person. However, shareholders whose shares are not registered in their
own names will need appropriate documentation from the holder of record of their
shares to vote personally at the Meeting. In order to revoke a proxy, a
shareholder must either file a written notice of revocation or duly executed
proxy with: Kevin L. Kutcher, Secretary, Community Financial Holding
Corporation, 222 Haddon Avenue, Westmont, New Jersey 08108 or attend the Meeting
and vote in person as described above.
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.
CFHC SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS. IF THE MERGER IS CONSUMMATED, STOCK CERTIFICATES SHOULD BE
DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF TRANSMITTAL
WHICH WILL BE SENT TO CFHC SHAREHOLDERS BY THE EXCHANGE AGENT PROMPTLY AFTER THE
EFFECTIVE TIME.
SOLICITATION OF PROXIES
In addition to using the mails, the directors, officers and employees
of CFHC may solicit proxies for the Meeting from shareholders personally, by
telephone or by facsimile. These officers, directors and employees will not be
specifically compensated for their services. CFHC 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 will be
borne by CFHC.
QUORUM
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of CFHC Common Stock entitled to vote is
necessary to constitute a quorum at the Meeting.
REQUIRED VOTE
Each share of CFHC 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 of a majority of the votes cast at the Meeting
affirmatively or negatively by the holders of the outstanding shares of CFHC
Common Stock present and entitled to vote at the Meeting is required in order to
approve and adopt the Merger Agreement.
The affirmative vote of the holders of a majority of votes cast at the
Meeting affirmatively or negatively by the holders of the outstanding shares of
CFHC Common Stock present and entitled to vote at the Meeting is required in
order to approve and adopt the additional proposal.
Abstentions and broker non-votes will be considered present for
purposes of determining the presence of a quorum at the Meeting, but as unvoted
on the matters as to which abstentions or non-votes have been specified.
Record holders of CFHC Common Stock at the close of business on
___________, 1998 (the "Record Date") are entitled to vote at the Meeting. As of
the Record Date, there were _________ outstanding shares of CFHC Common Stock
held by approximately ___ holders of record. The directors of CFHC 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 CFHC
as a group have voting control over ____ of these shares (___%), all of which
shares CFHC expects will be voted in favor of the Merger Agreement. No
consideration was paid to any of the directors for this agreement. HUBCO
requested that the directors enter into this agreement in connection with HUBCO
entering into the Merger Agreement.
The obligations of CFHC and HUBCO to consummate the Merger Agreement
are subject, among other things, to the condition that the Merger Agreement and
the transactions contemplated thereby be approved by the requisite vote of the
shareholders of CFHC. See "THE PROPOSED MERGER -- Conditions to the Merger."
THE MATTERS TO BE CONSIDERED AT THE MEETING ARE OF GREAT IMPORTANCE TO
THE SHAREHOLDERS OF CFHC. ACCORDINGLY, SHAREHOLDERS 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; BANK MERGER
The Merger Agreement provides that, at the Effective Time, CFHC will be
merged into HUBCO, with HUBCO as the surviving entity (the "Surviving Entity").
The separate identity and existence of CFHC will cease upon consummation of the
Merger, and all property, rights, powers and franchises of CFHC will vest in the
Surviving Entity. Immediately following the Effective Time, CNB will be merged
with and into HUB (the "Bank Merger"), with HUB as the surviving bank (the
"Surviving Bank"), with the business of CNB operated as a division of the
Surviving Bank named "Community National Division of Hudson United Bank" or
another similar name agreed to by HUBCO and CFHC (the "New Division").
CLOSING DATE; EFFECTIVE TIME
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 CFHC. The Closing Date specified by HUBCO must be at
least five business days after the date of the Closing Notice, but no less than
seven and no more than ten 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 CFHC. HUBCO and CFHC currently anticipate
closing in the second quarter of 1998. Simultaneous with or immediately
following the Closing, HUBCO and CFHC will file a Certificate of Merger with the
Secretary of State of the State of New Jersey. The Merger will become effective
at a date and time following the Closing which HUBCO and CFHC will specify in
the Certificate of Merger (the "Effective Time"). If no Effective Time is
specified in the Certificate of Merger, the Effective Time will be the time at
which the Certificate of Merger is filed. HUBCO and CFHC currently anticipate
that 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 CFHC.
CONSIDERATION; MEDIAN PRE-CLOSING PRICE; DETERMINATION DATE
At the Effective Time, each outstanding share of CFHC Common Stock
(except for Excluded Shares) will be converted into the right to receive 0.695
shares (the "Exchange Ratio") of HUBCO Common Stock. In lieu of issuing
fractional shares of HUBCO Common Stock, HUBCO will pay cash equal to the
fractional share interest multiplied by the Median Pre-Closing Price of HUBCO
Common Stock. The "Median Pre-Closing Price" will be determined by taking the
price half-way between the closing prices left after discarding the four lowest
and four highest closing prices in the ten consecutive trading day period which
ends on (and includes) the Determination Date. The "Determination Date" is the
date specified as such in the Closing Notice which HUBCO provides to CFHC, which
date must be between seven and ten business days prior to the Closing Date set
forth in the Closing Notice.
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 March 2, 1998. The Exchange Ratio may
also be subject to adjustment in connection with provisions relating to the
termination of the Merger Agreement described in the following paragraph.
The Merger Agreement may be terminated by CFHC if the Median
Pre-Closing Price is less than $29.00, which, given the 0.695 Exchange Ratio,
would result in shares of CFHC Common Stock being exchanged for HUBCO Common
Stock with a value of less than $20.30 (i.e., $29.00 multiplied by the 0.695
Exchange Ratio). CFHC is obligated to provide notice of such termination to
HUBCO, which may then elect, at its sole option, to increase the Exchange Ratio
to $20.30 divided by 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 CFHC will exercise its right to terminate the Merger
Agreement if the conditions described above exist (a "Termination Event"), and
if CFHC 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:
Median Pre-Closing Price of HUBCO
Common Stock as of the Determination Date Exchange Ratio
- ------------------------------------------------ --------------
Equal to or greater than $29.00................. 0.695
Less than $29.00................................ 0.695; provided, that CFHC 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 $20.30/the
Median Pre-Closing Price.
For illustrative purposes, if, hypothetically, the Median Pre-Closing
Price of HUBCO Common Stock were $30.00, the Exchange Ratio would be 0.695, and
the holder of 100 shares of CFHC Common Stock would receive 69 whole shares of
HUBCO Common Stock and a cash payment of $15.00 (0.5 x $30.00) in respect of the
fractional share.
The Median Pre-Closing Price will be determined by taking the price
half-way between the closing prices of HUBCO Common Stock left after discarding
the 4 lowest and 4 highest closing prices in the 10 consecutive trading day
period which ends on (and includes) the Determination Date. The 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 CFHC Common Stock following
consummation of the Merger. Thus, the value of the HUBCO Common Stock actually
received by holders of CFHC 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. CFHC SHAREHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE HUBCO COMMON STOCK AND THE CFHC COMMON STOCK.
It is not possible to know whether a Termination Event will occur until
after the Determination Date. CFHC 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 CFHC 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 shareholders of CFHC at the Meeting will
confer on the CFHC Board of Directors the power, consistent with its fiduciary
duties, to elect to consummate the Merger following a Termination Event whether
or not there is any increase in the Exchange Ratio and without any further
action by, or resolicitation of, the shareholders of CFHC. If CFHC elects to
exercise its termination right, CFHC 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 CFHC of the Closing Notice,
if later). During a three business-day period commencing with its receipt of
such notice from the CFHC 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 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 CFHC were to exercise its right to terminate the Merger Agreement as set
forth above. Any decision would be made by HUBCO in light of the circumstances
existing at the time HUBCO has the opportunity to make the election. If HUBCO
elects to increase the Exchange Ratio as set forth in the Merger Agreement and
as illustrated above, it must give CFHC notice of that election by 11:59 p.m. on
the third business day following receipt of the notice of termination from CFHC,
in which case no termination of the Merger Agreement would occur as a result of
a Termination Event.
The foregoing discussion is qualified in its entirety by reference to
the applicable provisions in the Merger Agreement (a copy of which is set forth
as Appendix A to this Proxy Statement) relating to a possible increase of the
Exchange Ratio as the result of a Termination Event.
CONVERSION OF CFHC OPTIONS
CFHC has outstanding a number of options to purchase shares of CFHC
Common Stock ("CFHC Options") which were granted to optionees ("Optionees")
pursuant to the CFHC 1994 Employee and Director Stock Option Plan (the "CFHC
Stock Option Plan") and the option grant agreements thereunder (the "Option
Grant Agreements") . Pursuant to the Merger Agreement, HUBCO has agreed to honor
the provisions of the CFHC Stock Option Plan and the Option Grant Agreements,
including those relating to vesting and conversion in connection with a change
in control of CFHC. Accordingly, under the CFHC Stock Option Plan, upon the
approval and adoption of the Merger Agreement by the shareholders of CFHC at the
Meeting, all outstanding CFHC Options (wherever granted) will be immediately and
fully exercisable. Upon the consummation of the Merger, each outstanding CFHC
Option will be cancelled and each Optionee will receive shares of HUBCO Common
Stock in an amount equal to (i) the difference between (A) the greater of (1)
the Median Pre-closing Price multiplied by the Exchange Ratio, or (2) the
highest market price (as determined under the CFHC Stock Option Plan) of a share
of CFHC Common Stock on any business day during the 90 day period ending on the
date of the Meeting (the greater of (1) or (2) being the "Adjusted Market
Price") and (B) the exercise price of the CFHC Option, multiplied by (ii) the
number of shares of CFHC Common Stock covered by the CFHC Option, divided by
(iii) the Adjusted Market Price, and multiplied by (iv) the Exchange Ratio. This
calculation may result in Optionees receiving greater consideration in the
Merger for their CFHC Options than the consideration they would have received
had they exercised their CFHC Options immediately prior to the Effective Time.
CASH IN LIEU OF FRACTIONAL SHARES
No fractional shares of HUBCO Common Stock will be issued in exchange
for any CFHC Common Stock or CFHC Options. Instead, holders of such CFHC
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 CFHC Common Stock or
CFHC Options will be aggregated to constitute as many whole shares as possible
before determining such person's fractional share interest.
STOCK OPTION TO HUBCO FOR CFHC SHARES
HUBCO and CFHC entered into a Stock Option Agreement dated as of March
2, 1998 (the "Stock Option Agreement") in connection with the negotiation by
HUBCO and CFHC of the Merger Agreement. Pursuant to the Stock Option Agreement,
CFHC has granted to HUBCO an option (the "Option"), exercisable only under
certain limited and specifically defined circumstances (none of which has
occurred as of the date hereof), to purchase up to 252,790 authorized but
unissued shares of CFHC Common Stock, representing upon issuance approximately
19.5% of the shares of CFHC Common Stock, for an exercise price of $24.40 per
share. HUBCO does not have any voting rights with respect to the shares of CFHC
Common Stock subject to the Option prior to exercise of the Option. Acquisitions
of CFHC Common Stock pursuant to exercise of the option would be subject to
prior regulatory approval under certain circumstances.
The Stock Option Agreement is attached to this Proxy Statement as
Appendix B hereto. If certain specifically enumerated "Triggering Events" occur
and the Merger is not consummated, HUBCO would recognize a gain on the sale of
the shares of CFHC Common Stock received pursuant to the exercise of the Option
if such shares of CFHC Common Stock were sold at prices exceeding $24.40 per
share. The ability of HUBCO to exercise the Option and to cause up to an
additional 252,790 shares of CFHC Common Stock to be issued may be considered a
deterrent to other potential acquisitions of control of CFHC, even if such
potential acquiror were prepared to pay a higher price per share for CFHC Common
Stock, as it is likely to increase the cost of an acquisition of all of the
shares of CFHC 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.
The Option is exercisable only upon the occurrence of a Triggering
Event. As used in the Stock Option 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 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 Exchange
Act Rule 13d-3) of a least 20% of the then outstanding shares of CFHC Common
Stock; or
b. enters into a letter of intent or an agreement, whether oral or
written, with CFHC pursuant to which such person or any affiliate of such person
would (i) merge or consolidate, or enter into any similar transaction, with
CFHC, (ii) acquire all or a significant portion of the assets or liabilities of
CFHC, or (iii) acquire beneficial ownership of securities representing, or the
right to acquire beneficial ownership or to vote securities representing, 20% or
more of the then outstanding shares of CFHC Common Stock; or
c. makes a filing with any bank 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, CFHC or any other business combination involving CFHC,
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, a 20% or more of the outstanding shares of CFHC Common
Stock, and thereafter, if such Proposal has not been Publicly Withdrawn (as such
term is defined in the Stock Option Agreement) at least 15 days prior to the
meeting of shareholders of CFHC called to vote on the Merger and CFHC's
shareholders fail to approve the Merger by the vote required by applicable law
at the meeting of shareholders called for such purpose; or
d. makes a bona fide Proposal and thereafter, but before such Proposal
has been Publicly Withdrawn, CFHC 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 CFHC or any of its directors, senior executive
officers, investment bankers or other person with actual or apparent authority
to speak for the CFHC Board of Directors, inviting, encouraging or soliciting
any proposal which has as its purpose a tender offer for the shares of CFHC
Common Stock, a merger, consolidation, plan of exchange, plan of acquisition or
reorganization of CFHC, or a sale of a significant number of shares of CFHC
Common Stock or any significant portion of its assets or liabilities (any of the
foregoing, an "Insider Action"); provided, that such Insider Action shall not
constitute a Triggering Event if (i) promptly but in any event within 24 hours
after the Insider Action occurs, CFHC so notifies HUBCO in a writing which
describes the Insider Action in reasonable detail, (ii) promptly but in any
event within 48 hours after HUBCO requests in writing, CFHC takes all actions
which HUBCO reasonably requests in order to ameliorate any actual or potential
negative effects of the Insider Action, and (iii) the Insider Action does not
actually have an adverse effect on HUBCO or on the ability of HUBCO or CFHC to
consummate the Merger or to do so in a timely manner.
The Stock Option Agreement will 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 and the Merger Agreement has not been terminated by CFHC due to a material
breach by HUBCO of a material covenant of the Merger Agreement applicable to
HUBCO, the Stock Option Agreement will 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.
BACKGROUND OF THE MERGER
CFHC was formed in April 1991 to acquire 100% of the outstanding common
stock of CNB and become a registered bank holding company. The years since its
formation have been a period of substantial and rapid change in the financial
services industry, characterized by regulatory change, capital and asset quality
issues, intensifying competition and consolidation. During this period, the
management and Board of Directors of CFHC have reviewed various strategies and
have taken numerous steps to enhance shareholder value, including conducting a
initial public offering in 1994, substantially expanding its branch network,
maintaining asset quality and expanding and refining the products offered to
customers.
As part of its review of strategic alternatives to enhancing
shareholder value, management and the Board of Directors of CFHC have
considered, from time to time, the possible affiliation of CFHC with a larger
financial institution. In January 1997, CFHC engaged Berwind to prepare and
submit to CFHC Berwind's analysis of the current merger and acquisition market
and CFHC's relative financial performance. As a result of such analysis, CFHC's
Board of Directors determined that an affiliation with another financial
institution at that time would not provide sufficient value to CFHC or its
shareholders, and that to maintain CFHC's then current course of independence
and continue with CNB's branch expansion were in the best interests of CFHC and
its shareholders.
During the remainder of 1997, the banking industry in general
experienced a significant increase in stock prices spurred partly by increased
merger and acquisition activity. In addition, the recent consolidation of banks
in CNB's market area had strengthened CNB's competitors, thereby intensifying
competitive pressures As a result, in November 1997, the Board of Directors,
after consultation with Berwind, determined that it would be in CFHC's best
interests for Berwind to conduct again a similar analysis. On the basis of the
results of that analysis, Berwind was authorized by the Board of Directors to
contact a limited number of qualified prospects to determine their interest in a
business combination with CFHC. Berwind prepared a confidential information
brochure and contacted certain potential acquirors, including HUBCO. Twelve
financial institutions expressed some interest in CFHC. This process resulted in
four written expressions of interest being presented to CFHC's Board of
Directors, including the proposal from HUBCO. On February 4, 1998, a special
committee of the Board of Directors met and preliminarily decided that HUBCO's
and one other expression of interest were eligible for further consideration and
qualification. The committee rejected the other two expressions of interest
because the price and other terms were less favorable.
Onsite due diligence was performed by HUBCO and the other interested
party during the week of February 9, 1998. HUBCO and HUB made a definitive offer
to acquire CFHC and CNB on February 13, 1998. CFHC elected to pursue HUBCO's
offer over the other expression of interest and the parties proceeded with the
negotiation of a definitive agreement. A definitive agreement was executed on
March 2, 1998 among HUBCO, CFHC, HUB and CNB.
<PAGE>
CFHC BOARD'S REASONS FOR THE MERGER AND RECOMMENDATION
In determining to accept the offer from HUBCO and enter into the Merger
Agreement, CFHC's Board of Directors considered a number of factors, including
the following: (i) the financial condition, operating results, and future
prospects of HUBCO and CFHC; (ii) pro forma financial information giving effect
to the completion of the Merger including, among other things, pro forma book
value, earnings and dividends per share; (iii) a comparison of the price being
paid in the Merger to the prices paid in other comparable bank mergers based,
among other things, on multiples of earnings and book value; (iv) the tax free
nature of the transaction to CFHC's shareholders to the extent that they receive
HUBCO Common Stock (see, generally, "Federal Income Tax Consequences"); (v) the
historical trading prices for HUBCO Common Stock and CFHC Common Stock; (vi) the
fixed Exchange Ratio, the potential for appreciation in the market value of the
HUBCO Common Stock and the effect of any such appreciation prior to the
Effective Time on the consideration to be received by CFHC shareholders in the
Merger; (vii) CFHC's alternatives to the Merger, including the written proposals
of the other three institutions which had expressed an interest in an
acquisition of CFHC; (viii) operational, management, stock price history,
dividend history and post acquisition policies of the four companies expressing
an interest in acquiring CFHC, including customary statistical measurements of
the financial performance and strength of each such entity; (ix) the absence of
any geographic overlap of the respective market areas of HUBCO and CFHC, and the
resulting likelihood of greater dependence by HUBCO on the management and
employees of CNB, which would lead to a greater number of jobs being preserved
for CNB's employees and would allow CNB's plan for growth in southern New Jersey
to continue through the New Division; (x) the results of Berwind's efforts to
locate entities interested in a business combination transaction with CFHC; (xi)
the financial aspects of each written indication of interest, including
comparative exchange ratios or proposed price levels, dividend levels, liquidity
and trading characteristics of each entity's stock; (xii) the provisions of the
Merger Agreement allowing CFHC to terminate the Merger Agreement upon the
occurrence of certain events, including a Termination Event, or if certain
conditions are not satisfied (see "Consideration; Median Pre-Closing Price;
Determination Date," "Conditions to the Merger" and "Amendments; Termination");
(xiii) HUBCO's agreement to operate the business of CNB as the New Division
under the name "Community National Division of Hudson United Bank" or another
similar name agreed to by HUBCO and CFHC; (xiv) the provisions of the Merger
Agreement allowing CFHC to respond to unsolicited inquiries from third parties
regarding a business combination with CFHC, if the fiduciary duty of its Board
of Directors legally requires it to do so (see "Conduct of Business Pending the
Merger"); (xv) HUBCO's agreement to provide specified severance payments to
employees of CFHC and CNB whose employment is not continued following the
Merger, in accordance with the severance policy of CNB; (xvi) CNB's ability to
maintain community representation in the local market after the Merger through
the creation of an advisory board for the New Division; and (xvii) CFHC's view
that consolidation in the financial services industry is likely to continue.
The Board of Directors also took into account that CFHC shareholders
would have the opportunity to participate in the future growth of HUBCO by
obtaining HUBCO Common Stock in the Merger. The Board noted that, after the
Merger, CFHC, as part of an interstate bank holding company of greater size and
resources, should be able to provide its customers with a greater range of
services and should become a stronger competitor in its existing markets. The
Board of Directors of CFHC believes that the Merger will result in a stronger
and more effective competitor in CFHC's markets, better able to compete
effectively in the rapidly changing marketplace for banking and financial
services, and to take advantage of opportunities that might not be available to
CFHC on its own. CFHC's Board of Directors believes that the Merger will provide
CFHC's customers with a broader range of products and services, as well as
greater convenience, and will provide its shareholders with a more liquid
investment.
The foregoing does not purport to be a complete list of the matters
considered by CFHC's Board of Directors in approving the Merger. In approving
the Merger, the Board did not identify any one factor or group of factors as
being more significant than any other factor in the decision making process.
Individual directors, however, may have given one or more factors more weight
than other factors. The emphasis of the Board's discussions in considering the
transaction was on the financial aspects of the transaction, including the
consideration to be paid to CFHC's shareholders in the Merger and the pro forma
combined financial information of the two companies.
The Board of Directors of CFHC believes that the terms of the Merger
are fair and in the best interest of CFHC and its shareholders, and has
unanimously approved the Merger Agreement. The Board of Directors of CFHC
unanimously recommends that the shareholders of CFHC approve the Merger
Agreement.
HUBCO'S REASONS FOR THE MERGER
HUBCO entered into the Merger Agreement with CFHC 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.
Pursuant to this acquisition strategy, HUBCO has pursued acquisitions
of financial institutions in New Jersey and in other states which are
geographically close to HUBCO's current markets and which otherwise meet HUBCO's
acquisition goals. HUBCO's expressions of interest in, and merger with CFHC are
consistent with this strategy.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the CFHC Board of Directors with
respect to the Merger, holders of CFHC Common Stock should be aware that certain
members of the Board of Directors and management of CFHC have certain interests
in the Merger in addition to their interests generally as shareholders of CFHC.
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 CFHC,
no material interest in the Merger apart from those of stockholders generally.
The CFHC Board of Directors was aware of these interests of its directors and
officers and considered them, among other matters, in making its decision to
approve the Merger Agreement and the transactions contemplated thereby.
Board and Advisory Board Membership
The Merger Agreement provides that HUBCO will cause Robert T. Pluese,
Chairman of the Board of CFHC, to be appointed to the Board of Directors of the
Surviving Bank. Furthermore, each director of CNB will be appointed as a member
of an advisory board of the New Division for a period of three years and each
such member will receive fees for service on the advisory board equal to $4,500
annually.
Executive Appointments
At the Effective Time, HUBCO will cause Gerard M. Banmiller, President
of CFHC, to be appointed to serve as the Regional President of the New Division.
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 CFHC, or who serves or has served at the
request of CFHC in any capacity with any other entity (collectively, the
"Indemnitees"), to the fullest extent which CFHC would have been permitted under
applicable law and CFHC'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 CFHC or serves or
has served at the request of CFHC in any capacity with any other entity. In the
Merger Agreement, HUBCO has also agreed to cover CFHC's officers and directors
under either an extension of CFHC'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.
Stock Options
The directors and executive officers of CFHC own approximately 164,500
shares of CFHC Common Stock and options to purchase an additional 234,142
shares. Each option to purchase CFHC Common Stock outstanding at the Effective
Time will be converted into shares of HUBCO Common Stock in the manner described
under "Conversion of CFHC Options."
Agreements With Officers
Gerard M. Banmiller, President of CFHC and President and Chief
Executive Officer of CNB, has an employment agreement with CFHC. The Agreement
provides, among other things, that in the event that Mr. Banmiller's employment
is terminated (other than for cause) following a sale of CFHC (such as the
Merger), Mr. Banmiller is entitled to receive a lump sum payment in the amount
equal to the sum of (i) his base salary which would otherwise have been payable
for the remainder of the calendar year in which the termination occurs, plus
(ii) his base salary for the following calendar year. For example, if a sale of
CFHC had occurred and Mr. Banmiller's employment was terminated as of March 31,
1998, Mr. Banmiller would have been entitled to receive a total of approximately
$252,000 under his agreement.
Kevin L. Kutcher, Executive Vice President, Treasurer and Secretary of
CFHC and Executive Vice President and Chief Operating Officer of CNB, and two
other officers of CNB are each a party to Severance Compensation Agreements with
CFHC. Under such agreements, in the event of a change in control of CFHC or the
Bank (such as the Merger), each such officer is entitled to receive monthly 1/12
of his annual base salary in effect on the effective day of the change in
control, which payments continue for the remainder of the calendar year in which
the termination occurs and for the following calendar year. However, such
officer's right to such payments terminates upon the termination of his
employment for cause or voluntarily, or his acceptance of employment with a bank
or other financial institution (including the acquiror) in a capacity and with
compensation commensurate with his position and base salary at the time of the
change in control. For example, if a change in control had occurred and the
employment of Mr. Kutcher and the other two officers was terminated as of March
31, 1998 other than for cause or voluntarily, and such officers did not accept
employment with a bank or other financial institution (including HUB) in a
capacity and with compensation commensurate with their respective positions and
base salaries at the time of the change of control, such officers would have
been entitled to receive, in the aggregate, approximately $474,000 under their
agreements.
OPINION OF CFHC'S INDEPENDENT FINANCIAL ADVISOR
CFHC retained Berwind to act as is financial advisor and to render a
fairness opinion in connection with the Merger. Berwind rendered its opinion to
the Board of Directors of CFHC that, based upon and subject to the various
considerations set forth therein, as of, March 2, 1998 (the "March Opinion"),
and as of the date of this Proxy Statement-Prospectus (the "Proxy Opinion"), the
consideration to be received in the Merger is fair, from a financial point of
view, to the holders of CFHC Common Stock.
The full text of the Proxy Opinion, which sets forth the assumptions
made, matters considered and limitations of the review undertaken, is attached
as Exhibit C to this Proxy Statement-Prospectus, is incorporated herein by
reference, and should be read in its entirety in connection with this Proxy
Statement-Prospectus. The summary of the opinion of Berwind set forth herein is
qualified in its entirety by reference to the full text of such opinion attached
as Exhibit C to this Proxy Statement-Prospectus.
Berwind was selected by the Board of Directors to act as CFHC's
financial advisor in connection with the Merger based upon its qualifications,
expertise and experience. Berwind has knowledge of, and experience with, New
Jersey and surrounding banking markets as well as banking organizations
operating in those markets and was selected by CFHC because of its knowledge of,
experience with, and reputation in the financial services industry. Berwind, as
part of its investment banking business, is engaged regularly in the valuation
of assets, securities and companies in connection with various types of asset
and securities transactions, including mergers, acquisitions, private
placements, and valuations for various other purposes and in the determination
of adequate consideration in such transactions.
On March 2, 1998, CFHC's Board of Directors approved and executed the
Merger Agreement. Prior to such approval, Berwind delivered its March Opinion to
CFHC's Board stating that, as of such date, the consideration to be received in
the Merger was fair to the shareholders of CFHC from a financial point of view.
Berwind reached the same opinion as of the date of its Proxy Opinion. The full
text of the Proxy Opinion which sets forth assumptions made, matters considered
and limits on the review undertaken is attached as Exhibit C to this Proxy
Statement-Prospectus. No limitations were imposed by CFHC's Board of Directors
upon Berwind with respect to the investigations made or procedures followed by
Berwind in rendering the March Opinion or the Proxy Opinion.
In rendering its Proxy Opinion, Berwind: (i) reviewed the historical
financial performances, current financial positions and general prospects of
CFHC and HUBCO; (ii) reviewed the Merger Agreement; (iii) reviewed and analyzed
the stock market performance of CFHC and HUBCO; (iv) studied and analyzed the
consolidated financial and operating data of CFHC and HUBCO; (v) considered the
terms and conditions of the proposed Merger as compared with the terms and
conditions of comparable bank and bank holding company mergers and acquisitions;
(vi) met and/or communicated with certain members of CFHC's and HUBCO's senior
management to discuss their respective operations, historical financial
statements, and future prospects; (vii) reviewed this Proxy
Statement-Prospectus, and (viii) conducted such other financial analyses,
studies and investigations as Berwind deemed appropriate.
In delivering its March Opinion and Proxy Opinion, Berwind assumed that
in the course of obtaining the necessary regulatory and governmental approvals
for the Merger, no restriction will be imposed on HUBCO or CFHC that would have
a material adverse effect on the contemplated benefits of the Merger. Berwind
also assumed that there will not occur any change in applicable law or
regulation that would cause a material adverse change in the prospects or
operations of HUBCO after the Merger.
Berwind relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by and
discussed with it for purposes of its opinions. With respect to CFHC's financial
forecasts reviewed by Berwind in rendering its opinions, Berwind assumed that
such financial forecasts were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the management of CFHC as to the
future financial performance of CFHC. Berwind did not make an independent
evaluation or appraisal of the assets (including loans) or liabilities of CFHC
or HUBCO nor was it furnished with any such appraisal. Berwind also did not
independently verify and has relied on and assumed that all allowances for loan
and lease losses set forth in the balance sheets of CFHC and HUBCO were adequate
and complied fully with applicable law, regulatory policy and sound banking
practice as of the date of such financial statements.
The following is a summary of selected analyses prepared by Berwind and
presented to CFHC's Board in connection with the March Opinion and analyzed by
Berwind in connection with the March and Proxy Opinions. In connection with
delivering its Proxy Opinion, Berwind updated these analyses to reflect current
market conditions and events occurring since the date of the March Opinion. Such
reviews and updates led Berwind to conclude that it was not necessary to change
the conclusions it had reached in connection with rendering the March Opinion.
Comparable Companies and Comparable Acquisition Transaction Analyses.
Berwind compared selected financial and operating data for CFHC with those of a
peer group of selected banks and bank holding companies of comparable asset size
as of the most recent financial period publicly available, headquartered in New
Jersey and Pennsylvania. Financial data and operating ratios compared in the
analysis of the CFHC peer group included but were not limited to: return on
average assets, return on average shareholders' equity, shareholders' equity to
assets ratio and certain asset quality ratios.
Berwind also compared selected financial, operating and stock market
data for HUBCO with those of a peer group of selected bank holding companies of
comparable asset size as of the most recent period publicly available,
headquartered in New Jersey, Pennsylvania, Maryland and New York. Financial,
operating and stock market data, ratios and multiples compared in the analysis
of the HUBCO peer group included but were not limited to: return on average
assets, return on average shareholders' equity, shareholders' equity to asset
ratios, certain asset quality ratios, price to book value, price to tangible
book value, price to earnings (latest twelve months) and dividend yield.
Berwind also compared the multiples of book value, tangible book value
and latest twelve months' earnings inherent to the Merger with the multiples
paid in recent acquisitions of banks and bank holding companies that Berwind
deemed comparable. The transactions deemed comparable by Berwind included both
interstate and intrastate acquisitions announced during the twelve month period
ended as of the date of its Proxy Opinion, in which the selling institution's
assets were between $100 million and $300 million as of the most recent period
publicly available prior to announcement. Berwind analyzed this data in two
groups: a national group and a performance group. In addition, Berwind compared
both interstate and intrastate acquisitions announced during the twelve month
period ended as of the date of its Proxy Opinion, in which the selling
institution was located in New Jersey and Pennsylvania and its assets were
between $50 million and $300 million prior to announcement. No company or
transaction, however, used in this analysis is identical to CFHC, HUBCO or the
Merger. Accordingly, an analysis of the result of the foregoing is not
mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies and other factors that would affect the public trading values of the
companies or company to which they are being compared.
Discounted Dividend Analyses. Using discounted dividend analyses,
Berwind estimated the present value of CFHC's Common Stock after a five year
period by applying a range of earnings multiples to CFHC's terminal year
earnings under various growth assumptions. The range of multiples used reflected
a variety of scenarios regarding the growth and profitability prospects of CFHC.
The terminal values were then discounted to present value using discount rates,
reflecting different assumptions regarding the rates of return required by
holders or prospective buyers of CFHC's Common Stock.
Pro Forma Contribution Analysis. Berwind analyzed the changes in the
amount of earnings, book value and dividends represented by one share of CFHC
stock prior to the Merger and the number of shares of HUBCO stock after the
Merger resulting from the Exchange Ratio. The analysis considered, among other
things, the changes that the Merger would cause to CFHC's earnings per share,
book value per share and indicated dividends. In reviewing the pro forma
combined earnings, equity and assets of HUBCO based on the Merger with CFHC,
Berwind analyzed the contribution that CFHC would have made to the combined
company's earnings, equity and assets as of and for the most recent quarterly
period ended prior to the date of the Proxy Opinion. Berwind also reviewed the
percentage ownership that CFHC shareholders would hold in the combined company.
In connection with rendering its March Opinion and Proxy Opinion,
Berwind performed a variety of financial analyses. Although the evaluation of
the fairness, from a financial point of view, of the consideration to be paid in
the Merger was to some extent a subjective one based on the experience and
judgment of Berwind and not merely the result of mathematical analysis of
financial data, Berwind principally relied on the previously discussed financial
valuation methodologies in its determination. Berwind believes its analyses must
be considered as a whole and that selecting portions of such analyses and
factors considered by Berwind without considering all such analyses and factors
could create an incomplete view of the process underlying Berwind's opinions. In
its analysis, Berwind made numerous assumptions with respect to business,
market, monetary and economic conditions, industry performance and other
matters, many of which are beyond CFHC's and HUBCO's control. Any estimates
contained in Berwind's analyses are not necessarily indicative of future results
or values, which may be significantly more or less favorable than such
estimates.
In reaching its opinion as to fairness, none of the analyses performed
by Berwind was assigned a greater or lesser weighting by Berwind than any other
analysis. As a result of its consideration of the aggregate of all factors
present and analyses performed, Berwind reached the conclusion, and opined, that
the consideration to be received in the Merger as set forth in the Agreement, is
fair from a financial point of view to CFHC and its shareholders.
Berwind's Proxy Opinion was based solely upon the information available
to it and the economic, market and other circumstances as they existed as of the
date its Proxy Opinion was delivered; events occurring after the date of its
Proxy Opinion could materially affect the assumptions used in preparing its
Proxy Opinion. Berwind has not undertaken to reaffirm and revise its Proxy
Opinion or otherwise comment upon any events occurring after the date thereof.
Pursuant to the terms of the engagement letter dated January 20, 1997
(the "Engagement Letter"), CFHC has agreed to pay Berwind $339,061 upon the
consummation of the Merger for acting as financial advisor in connection with
the Merger including delivering its March and Proxy Opinions. This fee was
determined by negotiation between CFHC and Berwind. Berwind is also entitled to
be reimbursed for its reasonable out-of-pocket expenses incurred in providing
services pursuant to the Engagement Letter (such expenses not to exceed $3,000).
Whether or not the Merger is consummated, CFHC has also agreed to indemnify
Berwind and certain related persons against certain liabilities relating to or
arising out of its engagement.
Pursuant to the Engagement Letter, in early 1997 Berwind prepared and
submitted to CFHC its analysis of the then current merger and acquisition market
and of CFHC's relative financial performance. Berwind was paid a negotiated fee
of $7,500 for such services. Except for the foregoing, Berwind has not had any
material relationship with CFHC or any of its affiliates during the past two
years.
The full text of the Proxy Opinion of Berwind dated as of the date of
this Proxy Statement-Prospectus, which sets forth assumptions made and matters
considered, is attached hereto as Exhibit C. CFHC's shareholders are urged to
read the Proxy Opinion in its entirety. Berwind's Proxy Opinion is directed only
to the financial consideration to be received by CFHC's shareholders in the
Merger and does not constitute a recommendation to any holder of CFHC Common
Stock as to how such holder should vote at the CFHC Special Meeting.
THE FOREGOING PROVIDES ONLY A SUMMARY OF THE PROXY OPINION OF BERWIND
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THAT OPINION,
WHICH IS SET FORTH IN EXHIBIT C TO THIS PROXY STATEMENT-PROSPECTUS.
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 CFHC, who may
be deemed to be "affiliates" of CFHC under Rule 145 promulgated under the
Securities Act. An "affiliate" of an issuer is defined generally as a person who
"controls" the issuer. Directors, executive officers and 10% shareholders may be
deemed to control the issuer. Affiliates may not sell their shares of HUBCO
Common Stock acquired pursuant to the Merger, except pursuant to an effective
registration statement under the Securities Act covering the HUBCO Common Stock
or in compliance with Rule 145 or another applicable exemption from the
registration requirements of the Securities Act.
Persons who may be deemed to be "affiliates" of CFHC 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 CFHC 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 CFHC have been
published or filed by HUBCO. Also, in connection with the pooling-of-interests
rules, such persons have agreed not to transfer their CFHC 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.
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 CFHC 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
CFHC shareholders, 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) receipt by HUBCO of an opinion of
Pitney, Hardin, Kipp & Szuch, counsel to HUBCO, and the receipt by CFHC of an
opinion of Stevens & Lee, counsel to CFHC, in each case to the effect that the
exchange of CFHC 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", and (vi) the receipt by HUBCO 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.
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 CFHC contained in the Merger Agreement;
(ii) the performance by CFHC, in all material respects, of all its obligations
under the Merger Agreement; and (iii) receipt of an opinion from Stevens & Lee,
counsel to CFHC, as to certain matters.
The obligation of CFHC 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 Berwind's fairness opinion; (iv) receipt
of an opinion from Pitney, Hardin, Kipp & Szuch, counsel to HUBCO, as to certain
matters; and (vi) the appointment of Robert T. Pluese, Chairman of the Board of
CFHC, to the Board of Directors of the Surviving Bank and the appointment of
Gerard M. Banmiller, President of CFHC, as Regional President of the New
Division.
CONDUCT OF BUSINESS PENDING THE MERGER
The Merger Agreement requires CFHC to conduct its business prior to the
Effective Time only in the ordinary course of business and consistent with
prudent business practices, except as permitted under the Merger Agreement or
with the written consent of HUBCO (which will not be unreasonably withheld).
Under the Merger Agreement, CFHC 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, grant any option or similar right relating
to its capital stock, or declare, set aside or pay any dividend or other
distribution in respect of its capital stock, except that CFHC may pay dividends
on the CFHC Common Stock in a quarterly amount equal to $0.14 per share; (c)
grant any severance or termination pay (other than pursuant to written policies
or contracts of CFHC 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, or adopt any new employee benefit
plan or arrangement or award an increase in compensation or benefits, except in
each case as disclosed to HUBCO prior to execution of the Merger Agreement; (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 its business; (e) except for reasonable capital expenditures in connection
with the establishment of its branch in Medford, New Jersey and other capital
expenditures not to exceed $25,000 in the aggregate, make any capital
expenditures other than pursuant to binding commitments existing on the date of
the Merger Agreement, 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 contracts with respect
to branching or site location or relocation; (g) agree to acquire in any manner
whatsoever (other than to realize upon collateral for a defaulted loan) any
business or entity or make any investments in securities other than, investments
in government or agency bonds having a maturity of less than five years; (h)
make any material change in its accounting methods or practices, other than
changes required in accordance with generally accepted accounting principles or
regulatory authorities; (i) take any action that would result in any of CFHC'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; (j) without first conferring with HUBCO, make or commit to make
any new loan or other extension or credit in excess of $500,000 or renew for a
period greater than one year any existing loan in an amount of $500,000 or more,
or increase by $500,000 or more the aggregate credit outstanding to any existing
borrower or affiliated group; or (k) agree to do any of the foregoing.
Under the Merger Agreement, CFHC 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"). Notwithstanding the foregoing, (i) CFHC may respond
to inquiries from holders of CFHC Common Stock in the ordinary course of
business and (ii) CFHC may enter into discussions or negotiations or provide any
information in connection with an unsolicited possible Acquisition Transaction
if the Board of Directors of CFHC, 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. CFHC
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.
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 CFHC; (c) authorization, execution, delivery, performance and
enforceability of the Merger Agreement, no conflict between the Merger Agreement
and each party's governing documents and material contracts, required
governmental consents and approvals and related matters; (d) financial
statements and other documents filed by each of HUBCO and CFHC with the SEC, and
the accuracy of information contained therein; (e) the accuracy of information
supplied by each of HUBCO and CFHC 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 payments thereunder, 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 December 31, 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; (t) the accuracy of all minute books; (u) the absence of an agreement
with bank regulators which restricts materially the conduct of HUBCO's or CFHC's
business or that of their respective subsidiaries; (v) Year 2000 compliance; and
(w) matters relating to the HUBCO Common Stock to be issued in the Merger.
REGULATORY APPROVALS
Consummation of the Merger is subject, among other things, to prior
receipt of all necessary regulatory approvals. In order to consummate the Merger
and the Bank Merger, HUBCO must obtain regulatory approvals from the FDIC and
the NJDOB and an approval or waiver from the Federal Reserve Board ("FRB").
HUBCO has applied to the FDIC for approval to merge CNB into HUB, has applied to
the FRB for approval or a waiver to acquire CFHC, and has applied to the NJDOB
for approval of the acquisition of CNB. Approval by the FRB, FDIC or the NJDOB
does not constitute an endorsement of the Merger or the Bank Merger or a
determination that the terms of the Merger or Bank Merger are fair to the
shareholders of CFHC or HUBCO.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
At the Effective Time, as a result of the Merger, CFHC will be merged
with and into HUBCO, with HUBCO as the Surviving Entity. Immediately following
the Effective Time, CNB will be merged with and into HUB, with HUB as the
Surviving Bank, with the business of CNB operated as the New Division of the
Surviving Bank named "Community National Division of Hudson United Bank" or
another similar name agreed to by HUBCO and CFHC.
The Merger Agreement provides that HUBCO will cause Robert T. Pluese to
be appointed to the Board of Directors of the Surviving Bank and Gerard M.
Banmiller to be appointed as Regional President of the New Division. The Merger
Agreement further provides that the Board of Directors of HUBCO and of HUB will
serve as the Board of Directors of the Surviving Entity and Surviving Bank,
respectively, and that each director of CNB will be appointed as a member of an
advisory board of the New Division for a period of three years.
EXCHANGE OF CERTIFICATES, ISSUANCE OF HUBCO COMMON STOCK FOR CFHC OPTIONS
At the Effective Time, holders of certificates formerly representing
shares of CFHC Common Stock will cease to have any rights as CFHC shareholders
and their certificates automatically will represent the shares of HUBCO Common
Stock into which their shares of CFHC Common Stock will have been converted by
the Merger. Promptly after the Effective Time, but in no event later than five
days after the Effective Time, HUBCO will send written instructions and a letter
of transmittal to each holder of CFHC Common Stock, indicating the method for
exchanging their stock certificates for certificates representing shares of
HUBCO Common Stock. Holders of CFHC 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 CFHC Common Stock
are exchanged will be deemed to have been issued at the Effective Time.
Accordingly, holders of CFHC Common Stock 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 CFHC 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 CFHC 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 CFHC 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.
As discussed above under the caption "Conversion of CFHC Options,"
holders of CFHC Options will receive shares of HUBCO Common Stock in exchange
for their CFHC Options.
AMENDMENTS; TERMINATION
The Merger Agreement may be amended, modified or supplemented with
respect to any of its terms by the mutual consent of HUBCO and CFHC at any time
prior to the Effective Time. However, after approval of the Merger Agreement by
the shareholders of CFHC, no amendment can be made which reduces the amount or
changes the form of consideration to be delivered to the shareholders of CFHC
without the approval of such shareholders.
The Merger Agreement may be terminated by the mutual consent of CFHC
and HUBCO. The Merger Agreement may also be terminated by CFHC or HUBCO if,
among other things, (i) the Effective Time has not occurred on or before
September 30, 1998 (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 shareholders of CFHC to
approve the Merger Agreement is taken and such shareholders 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 would have
a material adverse effect on 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
CFHC and CNB, taken as a whole, from that disclosed by CFHC to HUBCO in its
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (except
for changes resulting from (x) changes in interest rates and economic conditions
affecting banking institutions generally, (y) changes in banking and similar
laws of general applicability or interpretations thereof by courts or
governmental authorities, and (z) changes in generally accepted accounting
principles or regulatory accounting requirements applicable to banks and bank
holding companies), or CFHC 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 CFHC of a notice of
breach. HUBCO may also terminate the Merger Agreement if the conditions to
HUBCO's obligations under the Merger Agreement are not satisfied and are not
capable of being satisfied by the Cutoff Date.
CFHC 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 September 30, 1997 (except
for the effects of HUBCO's previously announced acquisitions of PFC, MSB, TBOS,
SNB or the 22 branches from First Union National Bank and changes resulting from
(x) changes in interest rates and economic conditions affecting banking
institutions generally, (y) changes in banking and similar laws of general
applicability or interpretations thereof by courts or governmental authorities,
and (z) changes in generally accepted accounting principles or regulatory
accounting requirements applicable to banks and bank holding companies), or if
HUBCO 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 CFHC'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. CFHC may also terminate the Merger Agreement
if the conditions to CFHC's obligations under the Merger Agreement are not
satisfied and are not capable of being satisfied by the Cutoff Date.
In addition, the Merger Agreement may be terminated by CFHC upon the
occurrence of a Termination Event, as described above under the caption "THE
PROPOSED MERGER -- Consideration; Median Pre-Closing Price; Determination Date."
If the Merger Agreement is terminated, the transactions contemplated
thereby will be abandoned without further action by any party, each party will
bear its own expenses (except for CFHC's expenses incurred in connection with
HUBCO's other acquisitions and the printing expenses for this Proxy
Statement-Prospectus, which will be paid by HUBCO) and each party will retain
all rights and remedies it may have at law or equity under the Merger Agreement.
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. Each of HUBCO's and CFHC'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 CFHC would be
added to those of HUBCO at their recorded book values and the stockholders'
equity accounts of HUBCO and CFHC 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 CFHC 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 following is a discussion of certain federal income tax
consequences of the Merger but is not intended to be a complete description of
such consequences. The discussion is included for general information purposes
only and may not apply to special situations, such as CFHC shareholders, if any,
who received HUBCO Common Stock upon the exercise of employee stock options of
otherwise as compensation, that hold CFHC Common Stock as part of a "straddle"
or "conversion transaction", or that are insurance companies, securities
dealers, financial institutions or foreign persons, and does not discuss any
aspects of state, local or foreign taxation. This discussion is based upon laws,
regulations, rulings and decisions now in effect and on proposed regulations,
all of which are subject to change (possibly with retroactive effect) by
legislation, administrative action or judicial decision. No ruling has been or
will be requested from the Internal Revenue Service on any tax matter relating
to the tax consequences of the Merger.
As an exhibit to the Registration Statement of which this Proxy
Statement is a part, Pitney, Hardin, Kipp & Szuch, counsel to HUBCO, have
advised HUBCO and CFHC in an opinion dated as of the date of this Proxy
Statement that:
(i) No gain or loss will be recognized for federal income tax purposes
by CFHC shareholders upon the exchange in the Merger of such shares of CFHC
Common Stock solely for HUBCO Common Stock, (except with respect to cash
received in lieu of a fractional share interest in HUBCO Common Stock).
(ii) The basis of HUBCO Common Stock received in the Merger by CFHC
shareholders (including the basis of any fractional share interest in HUBCO
Common Stock) will be the same as the basis of the shares of CFHC Common Stock
surrendered in exchange therefore.
(iii) The holding period of HUBCO Common Stock (including the holding
period of any fractional share interest in HUBCO Common Stock) will include the
holding period during which the shares of CFHC Common Stock surrendered in
exchange therefore were held by the CFHC stockholder, provided such shares of
CFHC Common Stock were held as capital assets.
(iv) Cash received by a holder of CFHC 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 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
CFHC Common Stock allocable to the fractional share interest.
Consummation of the Merger is conditioned, among other things, on
receipt by each of HUBCO and CFHC of an opinion of their respective counsel,
dated the Effective Time, to the effect that, as of such date, the (i) the
Merger will be treated for federal income tax purposes as a reorganization
qualifying under the provisions of Section 368 of the Internal Revenue Code of
1986, as amended, and (ii) no gain or loss will be recognized by CFHC; (iii) no
gain or loss will be recognized by the holders of CFHC Common Stock upon the
exchange of CFHC Common Stock solely for HUBCO Common Stock; (iv) the tax basis
of any HUBCO Common Stock received in exchange for CFHC Cmmon Stock shall equal
the basis of the recipient's CFHC Common Stock surrendered on the exchange; and
(v) the holding period for any HUBCO Common Stock received in exchange for CFHC
Common Stock will include the period during which CFHC Common Stock surrendered
on the exchange was held, provided such stock was held as a capital assets on
the date of the exchange. Unlike a ruling from the Internal Revenue Serice, an
opinion of counsel is not binding on the Internal Revenue Service, and there can
be no assurance that the Internal Revenue Service will not take a position
contrary to one or more of the positions reflected herein or that the positions
herein will be upheld by the courts if challenged by the Internal Revenue
Service. While HUBCO and CFHC have the contractual right to waive this condition
to closing, neither will do so, and the Merger will not take place if the
opinions are not obtained.
The opinions of Pitney, Hardin, Kipp & Szuch summarized above are or
will be based, among other things, on representations contained in certificates
of officers of CFHC and HUBCO.
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON
THE PARTICULAR CIRCUMSTANCES OF EACH HOLDER OF CFHC COMMON STOCK, AND OTHER
FACTORS, EACH SUCH HOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE MERGER
(INCLUDING THE APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND OTHER TAX
LAWS.
Consequences of Receipt of Cash in Lieu of Fractional Shares. Cash
received by an CFHC shareholder in lieu of any fractional share interest will be
treated as having been received as a payment in redemption of such fractional
share interest as if a fractional share of HUBCO Common Stock had been issued in
the Merger and then redeemed by HUBCO, 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 CFHC Common Stock allocable to the fractional share interest.
Basis of HUBCO Common Stock. The basis of HUBCO Common Stock received
by an CFHC shareholder who receives solely HUBCO Common Stock will be the same
as the basis of such shareholder's CFHC Common Stock surrendered in exchange
therefor.
Holding Period. The holding period of shares of HUBCO Common Stock
received in the Merger by holders of CFHC Common Stock will include the period
during which such shares of CFHC Common Stock surrendered in exchange therefor
were held by the holder thereof, provided such shares of CFHC Common Stock were
held as capital assets.
NO DISSENTERS' RIGHTS
Under the NJBCA, holders of CFHC Common Stock do not have dissenters'
rights of appraisal in connection with the Merger.
THE ADDITIONAL PROPOSAL
The CFHC Board is not aware of any other business that may properly
come before the Meeting. The CFHC Board seeks the authorization of the CFHC
shareholders to direct the vote of the proxies if matters incident to the
conduct of the Meeting properly come before the Meeting, including, without
limitation, a motion to adjourn the Meeting to another time or place for the
purpose of soliciting additional proxies if there are not sufficient votes at
the time of the Meeting to constitute a quorum or approve the Merger Agreement.
As to all such matters, the CFHC Board intends to direct the voting of such
shares in the manner determined by the Board of Directors in its discretion, and
in the exercise of its duties and responsibilities, to be in the best interests
of CFHC, and its shareholders, taken as a whole.
If it is necessary to adjourn the Meeting, no notice of the time and
place of the adjourned Meeting is required to be given to shareholders other
than an announcement of such time and place at the Meeting. Only proxies marked
"FOR" this proposal will be voted for adjournment, if such vote is necessary.
THE CFHC BOARD UNANIMOUSLY RECOMMENDS THAT ITS SHAREHOLDERS VOTE "FOR"
THE ADDITIONAL PROPOSAL, AUTHORIZING ITS BOARD OF DIRECTORS TO DIRECT THE VOTE
OF THE PROXIES UPON SUCH OTHER MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AS
MAY PROPERLY COME BEFORE SUCH MEETING, INCLUDING WITHOUT LIMITATION, A MOTION TO
ADJOURN SUCH MEETING.
<PAGE>
PRO FORMA FINANCIAL INFORMATION
Pro Forma Unaudited Combined Condensed Balance Sheet
of HUBCO and CFHC
The following pro forma unaudited combined condensed balance sheet
combines the historical consolidated balance sheets of HUBCO and CFHC giving
effect to the Merger which will be accounted for as a pooling-of-interests, as
if the Merger had been effective on December 31, 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 CFHC, including their respective
notes thereto, certain of which are incorporated by reference in this Proxy
Statement-Prospectus. The financial information for HUBCO has been restated to
include the effects of the merger with TBOS which was consummated on January 12,
1998 and has been accounted for as a pooling of interests. 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, nor does it take into account HUBCO's pending
acquisitions of MSB, DFC or IBSF, the Branch Purchase or HUBCO's recently
completed acquisitions of PFC and SNB. See "CERTAIN INFORMATION REGARDING HUBCO
- - Recent Developments." None of the acquisitions had closed as of December 31,
1997 and none are sufficiently material to HUBCO under SEC rules to require
inclusion in this Proxy Statement-Prospectus of financial statements or pro
forma presentation regarding such acquisitions. 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.
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Balance Sheet
As of December 31, 1997
(Dollars in thousands, except per share data)
Pro forma Pro forma
HUBCO CFHC Adjustments Combined
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 177,815 $ 10,852 $ -- $ 188,667
Federal funds sold 220,300 7,300 227,600
Securities 806,228 37,909 -- 844,137
Loans 1,857,677 88,520 1,946,197
Less: Allowance for loan losses (39,240) (974) (40,214)
------------ ------------ ---------- ------------
Total loans 1,818,437 87,546 -- 1,905,983
------------ ------------ ---------- ------------
Other assets 127,142 7,064 134,206
Intangibles, net of amortization 24,332 -- 24,332
============ ============ ============ ============
Total Assets $ 3,174,254 150,671 $ -- 3,324,925
============ ============ ============ ============
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $ 650,480 $ 45,727 $ -- $ 696,207
Interest bearing 1,780,634 91,030 1,871,664
------------ ------------ ------------
Total Deposits 2,431,114 136,757 2,567,871
------------ ------------ ------------
Borrowings 361,351 1,596 362,947
Other liabilities 35,056 734 -- 35,790
------------ ------------ ---------- ------------
Total Liabilities 2,827,521 139,087 -- 2,966,608
Subordinated debt 100,000 -- 100,000
Capital Trust Securities 50,000 -- 50,000
Stockholders' Equity:
Preferred stock 125 -- -- 125
Common stock 40,297 5,190 (3,727) 41,760
Additional paid in capital 77,607 5,514 3,608 86,729
Retained earnings 68,784 999 -- 69,783
Treasury Stock -- (119) 119 --
Restricted Stock (444) -- -- (444)
Unrealized gain on securities
available for sale 10,364 -- -- 10,364
------------ ------------ ------------ ------------
Total Stockholders' Equity $ 196,733 $ 11,584 $ -- $ 208,317
============ ============ ============ ============
Total Liabilities and Stockholders' Equity $ 3,174,254 $ 150,671 $ -- $ 3,324,925
============ ============ ============ ============
Common shares outstanding (in thousands) 22,664 1,028 23,487
Book value per common share 8.68 11.27 8.86
</TABLE>
See notes to pro forma financial information.
<PAGE>
Pro Forma Unaudited Combined Condensed Statements of Income of
HUBCO and CFHC
The following pro forma unaudited combined condensed statements of
income combine the historical consolidated statements of income of HUBCO and
CFHC 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-Prospectus. The financial information for HUBCO has been restated to
include the effects of the merger with TBOS which was consummated on January 12,
1998 and has been accounted for as a pooling of interests. 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 pending acquisitions of MSB, DFC or IBSF, the Branch Purchase or
HUBCO's recently completed acquisitions of PFC and SNB. See "CERTAIN INFORMATION
REGARDING HUBCO - Recent Developments." None of the acquisitions had closed as
of December 31, 1997 and none are sufficiently material to HUBCO under SEC rules
to require inclusion in this Proxy Statement-Prospectus of financial statement
or pro forma presentation regarding the entity to be acquired. The pro forma
financial data is not necessarily indicative of the actual financial results
that would have occurred had the Merger been consummated on December 31, 1997 or
that may be obtained in the future.
Pro forma Unaudited Combined Condensed Statement of Income For the Year Ended
December 31, 1997 (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma
HUBCO CFHC Combined
-------------- --------------- ------------
<S> <C> <C> <C>
Interest on loans $ 168,052 $ 6,920 $ 174,972
Interest on securities 59,031 2,148 61,179
Other interest income 1,355 244 1,599
------------ ------------ ------------
Total Interest Income 228,438 9,312 237,750
------------ ------------ ------------
Interest on deposits 57,468 2,936 60,404
Interest on borrowings 23,993 60 24,053
------------ ------------ ------------
Total Interest Expense 81,461 2,996 84,457
------------ ------------ ------------
Net Interest Income
before provision for loan loss 146,977 6,316 153,293
Provision for possible loan losses 8,530 590 9,120
------------ ------------ ------------
Net Interest Income after provision for loan loss 138,447 5,726 144,173
Noninterest income 41,686 1,300 42,986
Noninterest expenses 98,944 6,269 105,213
------------ ------------ ------------
Income before income taxes 81,189 757 81,946
Income tax provision 31,512 127 31,639
------------ ------------ ------------
Net Income $ 49,677 $ 630 $ 50,307
============ ============ ============
Earnings per share:
Basic $ 2.14 $ 0.61 $ 2.09
Diluted 2.05 0.57 2.01
Weighted Average Shares Outstanding
(in thousands):
Basic 22,919 1,028 23,742
Diluted 24,206 1,114 25,029
</TABLE>
See notes to pro forma financial information.
<PAGE>
Pro forma Unaudited Combined Condensed Statement of Income For the Year Ended
December 31, 1996 (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma
HUBCO CFHC Combined
-------------- --------------- ------------
<S> <C> <C> <C>
Interest on loans $ 156,772 $ 6,181 $ 162,953
Interest on securities 55,495 2,044 57,539
Other interest income 1,242 369 1,611
------------ ------------ ------------
Total Interest Income 213,509 8,594 222,103
------------ ------------ ------------
Interest on deposits 66,046 2,681 68,727
Interest on borrowings 10,125 150 10,275
------------ ------------ ------------
Total Interest Expense 76,171 2,831 79,002
------------ ------------ ------------
Net Interest Income
before provision for loan losses 137,338 5,763 143,101
Provision for loan losses 12,520 340 12,860
---------- ---------- ----------
Net Interest Income after provision for loan losses 124,818 5,423 130,241
Noninterest income 30,811 895 31,706
Noninterest expenses 120,746 4,849 125,595
------------ ------------ ------------
Income before income taxes 34,883 1,469 36,352
Income tax provision 12,248 463 12,711
------------ ------------ ------------
Net Income $ 22,635 $ 1,006 $ 23,641
============ ============ ============
Earnings per share:
Basic $ 0.94 $ 0.98 $ 0.95
Diluted 0.90 0.93 0.91
Weighted Average Shares Outstanding:
(in thousands)
Basic 23,247 1,026 24,070
Diluted 25,048 1,083 25,871
</TABLE>
See notes to pro forma financial information.
<PAGE>
Pro forma Unaudited Combined Condensed Statement of Income For the Year Ended
December 31, 1995 (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma
HUBCO CFHC Combined
-------------- --------------- ---------------
<S> <C> <C> <C>
Interest on loans $ 154,151 $ 5,418 $ 159,569
Interest on securities 56,172 1,675 57,847
Other interest income 1,935 362 2,297
------------ ------------ ------------
Total Interest Income 212,258 7,455 219,713
------------ ------------ ------------
Interest on deposits 64,598 2,434 67,032
Interest on borrowings 8,787 115 8,902
------------ ------------ ------------
Total Interest Expense 73,385 2,549 75,934
------------ ------------ ------------
Net Interest Income
before provision for loan losses 138,873 4,906 143,779
Provision for loan losses 10,274 210 10,484
---------- ---------- ----------
Net Interest Income after provision for loan losses 128,599 4,696 133,295
Noninterest income 28,677 652 29,329
Noninterest expenses 106,584 4,189 110,773
------------ ------------ ------------
Income before income taxes 50,692 1,159 51,851
Income tax provision 15,084 367 15,451
------------ ------------ ------------
Net Income $ 35,608 $ 792 $ 36,400
============ ============ ============
Earnings per share:
Basic $ 1.52 $ 0.77 $ 1.50
Diluted 1.43 0.76 1.41
Weighted Average Common Shares:
(in thousands)
Basic 22,857 1,024 23,680
Diluted 24,935 1,047 25,758
</TABLE>
See note to pro forma financial information.
<PAGE>
Notes to Pro Forma Financial Information
(1) Pro forma financial information assumes the Merger was consummated as of
December 31, 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, an Exchange Ratio of
0.695 shares of HUBCO Common Stock for each of the 1,027,713 (net of
10,200 treasury shares held) shares of CFHC Common Stock which were
outstanding at December 31, 1997.
(3) The pro forma financial information presented herein gives effect to the
cancellation of 10,200 shares of CFHC Common Stock held in CFHC's treasury
at a cost of $118,844.
In summary, the pro forma information reflects adjustments for the Merger
accounted for using the pooling-of-interests accounting method assuming the
0.695 Exchange Ratio, as follows:
<TABLE>
($ in 000's)
<S> <C>
(i) Issuance of 822,790 shares of HUBCO Common Stock
(stated value of $1.778 per share) 1,463
(ii) Elimination of 1,037,913 shares of CFHC Common
Stock ($5.00 par value) (5,190)
Adjustment to common stock (3,727)
(iii) Eliminate CFHC's treasury stock 119
Adjustment offset to additional paid-in capital $ 3,608
</TABLE>
(4) Earnings per share data has been computed based on the combined historical
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 HUBCO Common Stock to be issued in connection with the
Merger.
(5) The pro forma information presented above does not reflect HUBCO's pending
acquisitions of MSB, DFC or IBSF, the pending Branch Purchase or the
recently completed acquisitions of PFC or SNB. 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
March 31, 1998, 22,668,940 shares of HUBCO Common Stock were issued and
outstanding, and 500 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., HUBCO
issued HUBCO Series B Convertible Preferred Stock; 500 shares of HUBCO Series B
Convertible Preferred Stock remain outstanding as of March 31, 1998. See " --
Description of HUBCO Preferred 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 SHAREHOLDERS OF CFHC
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 those bank
subsidiaries 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, Hudson United Bank is
subject to the restrictions on the payment of dividends contained in the NJBA.
Under the NJBA, Hudson United Bank 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 Federal Deposit Insurance
Corporation ("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 Hudson United Bank or
Lafayette to HUBCO constitutes an unsafe or unsound practice. In addition, BTH,
HUBCO's recently acquired New York-based bank 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
State-chartered bank.
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 March 31, 1998, Hudson United Bank had $130.1 million available for
the payment of dividends to HUBCO, and as of March 31, 1998, Lafayette had $1.7
million available for the payment of dividends to HUBCO. At March 31, 1998,
HUBCO had $104.0 million available for shareholder dividends, the payment of
which would not reduce any of its capital ratios below the minimum regulatory
requirements.
Voting Rights
At meetings of shareholders, holders of HUBCO Common Stock are entitled
to one vote per share. The quorum for shareholders' meetings is a majority of
the outstanding shares entitled to vote represented in person or by proxy.
Except as indicated below, all actions and authorizations to be taken or given
by shareholders require the approval of a majority of the votes cast by holders
of HUBCO Common Stock at a meeting at which a quorum is present.
The Board of Directors is divided into three classes of directors, each
class being as nearly equal in number of directors as possible. Approximately
one-third of the entire Board of Directors is elected each year and the
directors serve for terms of up to three years, and, in all cases, until their
respective successors are duly elected and qualified.
The exact number of directors and the number constituting each class is
fixed from time to time by resolution adopted by a majority of the entire Board
of Directors. Shareholders may remove any director from office for cause. The
affirmative vote of at least three-quarters of the shares of HUBCO entitled to
vote thereon is required to amend or repeal the provisions of HUBCO's
Certificate of Incorporation relating to the classification of the Board of
Directors and the removal of directors.
HUBCO's Certificate of Incorporation contains a "minimum price"
provision. If a "related person" (defined in the Certificate of Incorporation to
include persons who, together with their affiliates, own 10% or more of HUBCO's
Common Stock) proposes to enter into a Business Combination (as defined in the
Certificate of Incorporation) with HUBCO, the proposed transaction will require
the affirmative vote of at least three-quarters of the outstanding shares
entitled to vote on the transaction, unless either (i) the proposed transaction
is first approved by a majority of HUBCO's Board of Directors, or (ii) the
shareholders of HUBCO are offered consideration in an amount equal to or in
excess of an amount determined in accordance with a formula contained in the
Certificate of Incorporation. If either of these tests are met, the proposed
transaction need only be approved by the vote otherwise required by law, the
Certificate of Incorporation and any agreement with a national securities
exchange.
Liquidation Rights
In a liquidation, holders of HUBCO Common Stock are entitled to receive
ratably any assets distributed to shareholders, except that if shares of
preferred stock of HUBCO are outstanding at the time of liquidation, such shares
of preferred stock may have prior rights upon liquidation.
Assessment and Redemption
All outstanding shares of HUBCO Common Stock are fully paid and
nonassessable. HUBCO Common Stock is not redeemable at the option of the issuer
or the holders thereof.
Preemptive and Conversion Rights
Holders of HUBCO Common Stock do not have conversion rights or
preemptive rights with respect to any securities of HUBCO.
DESCRIPTION OF HUBCO PREFERRED STOCK
General
500 shares of HUBCO Series B Convertible Preferred Stock ("HUBCO Series
B Preferred Stock") remain outstanding as of March 31, 1998. Pursuant to the
agreement governing the MSB Merger, HUBCO is required to create and issue shares
of new HUBCO Preferred Stock in exchange for MSB Preferred Stock on a
share-for-share basis. However, shares of MSB Preferred Stock owned by HUBCO at
the effective time of that merger will be cancelled in the Merger. If, as is
expected, HUBCO continues to own all shares of MSB Preferred Stock at such
effective time, all such shares will be cancelled and no new HUBCO Preferred
Stock will be created or issued. The following is a description of the existing
HUBCO Series B Preferred Stock.
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 any liquidation, dissolution or winding
up of HUBCO, subject to the rights of creditors. In a 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 December 31, 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 SHAREHOLDERS
OF CFHC AND HUBCO
GENERAL
CFHC and HUBCO are each business corporations incorporated in New
Jersey under the NJBCA and the rights of shareholders of CFHC and HUBCO are
governed by New Jersey corporate law. At the Effective Time, each CFHC
shareholder will become a shareholder of HUBCO. The following is a comparison of
certain provisions of the certificates of incorporation and by-laws of each of
CFHC and HUBCO. This summary does not purport to be complete and is qualified in
its entirety by reference to the NJBCA, which may change from time to time, and
the certificates of incorporation and by-laws of HUBCO and CFHC, which also may
be changed.
VOTING REQUIREMENTS
Under the NJBCA, unless a greater vote is specified in the certificate
of incorporation, the amendment to the certificate of incorporation of a New
Jersey corporation, the voluntary dissolution of the corporation, the sale or
other disposition of all, or substantially all of the assets of the corporation
other than in the ordinary course of business or the merger or consolidation of
the corporation with another corporation, requires in each case, a majority of
the votes cast by shareholders of the corporation entitled to vote thereon. The
HUBCO Certificate requires the affirmative vote of 75% of the outstanding shares
entitled to vote on certain transactions involving "related persons" unless the
proposed transaction is either first approved by a majority of the HUBCO Board
or the shareholders of HUBCO are offered consideration in an amount equal to or
in excess of an amount determined in accordance with a formula contained in the
HUBCO Certificate. See "DESCRIPTION OF HUBCO CAPITAL STOCK -- Description of
HUBCO Common Stock -- Voting Rights." The CFHC Certificate of Incorporation
requires the affirmative vote of at least (i) 80% of the outstanding shares
entitled to vote and (ii) after excluding shares held by "related persons" and
their affiliates, the majority of the remaining shares entitled to vote, in
order to approve certain "business combinations" involving "related persons,"
unless the proposed transaction is either first approved by a majority of the
CFHC Board of Directors, or the shareholders of CFHC are offered consideration
in an amount equal to or in excess of the amount determined in accordance with
the formula contained in the CFHC Certificate. If either of these tests are met,
the proposed transaction need only be approved by the vote otherwise required by
law or the CFHC Certificate of Incorporation. The term "related person" is
defined in the Certificate of Incorporation to include a person who, together
with his or her affiliates, owns 10% or more of the CFHC Common Stock.
All shareholder voting rights of CFHC presently are vested in the
holders of CFHC Common Stock. All shareholder voting rights of HUBCO presently
are vested in the holders of the HUBCO Common Stock.
REMOVAL OF DIRECTORS; NUMBER OF DIRECTORS
The NJBCA allows for the removal of directors for cause by the
affirmative vote of the majority of the votes cast by the holders of shares
entitled to vote for the election of directors. HUBCO's Certificate of
Incorporation states that shareholders may remove a director from office only
for cause. HUBCO's Certificate of Incorporation also allows shareholders to
increase or decrease the number of directors constituting the Board by the
affirmative vote of at least three-quarters of all of the outstanding shares of
common stock entitled to vote. CFHC's Certificate of Incorporation states that
shareholders may remove a director from office only for cause by the affirmative
vote of two-thirds of the shares entitled to vote for the election of directors.
CFHC's Certificate of Incorporation and Bylaws do not allow shareholders to
increase or decrease the number of directors constituting the Board of
Directors. Such power is vested solely in the Board of Directors.
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 March 31,
1998, 22,668,940 shares of HUBCO Common Stock were issued and outstanding, and
500 shares of HUBCO Series B Preferred Stock were outstanding. Under the terms
of the HUBCO Certificate of Incorporation, the HUBCO Board has authority at any
time to divide any or all of the authorized but unissued shares of preferred
stock into series, determine the designations, number of shares, relative
rights, preferences, and limitations of any such series and authorize the
issuance of such series. See "DESCRIPTION OF HUBCO CAPITAL STOCK -- General."
The authorized capital stock of CFHC consists of 1,600,000 shares of
CFHC Common Stock and 200,000 shares of preferred stock. As of March 31, 1998,
1,044,236 shares of CFHC Common Stock were issued and outstanding and no shares
of the preferred stock of CFHC were issued or outstanding. Under the terms of
the CFHC Certificate of Incorporation, the Board of Directors of CFHC has the
authority at any time to divide the preferred stock into one or more series and
to determine the number of shares and the designation of the series and the
relative voting, dividend, liquidation and other rights, preferences and
limitations of the shares of each series.
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. CFHC also 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.
RIGHTS OF DISSENTING SHAREHOLDERS
Shareholders of a New Jersey corporation who dissent from a merger,
consolidation, sale of all or substantially all of the corporation's assets or
certain other corporate transactions are generally entitled to appraisal rights.
No statutory right of appraisal exists, however, where the stock of the New
Jersey corporation is (i) listed on a national securities exchange, (ii) is held
of record by not less than 1,000 holders, or (iii) where the consideration to be
received pursuant to the merger, consolidation or sale consists of cash or
securities or other obligations which, after the transaction, will be listed on
a national securities exchange or held of record by not less than 1,000 holders.
The exceptions from the New Jersey statutory right of appraisal apply
to the CFHC Common Stock since the HUBCO Common Stock to be received pursuant to
the Merger is presently listed on the NASDAQ/NMS and is presently held by more
than 1,000 holders. See "THE MERGER -- No Dissenters Rights of Appraisal".
SHAREHOLDER CONSENT TO CORPORATE ACTION
Except as otherwise provided by the certificate of incorporation (and
both the HUBCO Certificate and the CFHC Certificate presently are silent on this
issue), the NJBCA permits any action required or permitted to be taken at any
meeting of a corporation's shareholders, other than the annual election of
directors, to be taken without a meeting upon the written consent of
shareholders who would have been entitled to cast the minimum number of votes
necessary to authorize such action at a meeting of shareholders at which all
shareholders entitled to vote were present and voting. The annual election of
directors, if not conducted at a shareholders' meeting, may only be effected by
unanimous written consent. Under the NJBCA, a shareholder vote on a plan of
merger or consolidation, if not conducted at a shareholders' meeting, may only
be effected by either: (i) unanimous written consent of all shareholders
entitled to vote on the issue with advance notice to any other shareholders, or
(ii) written consent of shareholders who would have been entitled to cast the
minimum number of votes necessary to authorize such action at a meeting,
together with advance notice to all other shareholders. HUBCO's By-laws provide
that a special meeting of shareholders may be called for any purpose by the
Chairman of the Board, the President or the Board of Directors. CFHC's By-laws
provide that a special meeting of shareholders may be called for any purpose by
the Chairman of the Board, the President, or the Board of Directors, or by any
one or more shareholders owning, in the aggregate, not less than 10% of the
outstanding CFHC Common Stock upon petition to a court as required by the NJBCA.
DIVIDENDS
Unless there are other restrictions contained in its certificate of
incorporation (and both the HUBCO Certificate and the CFHC Certificate presently
contain 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 Hudson United Bank or Lafayette to pay dividends act as
restrictions on the amount of funds available for the payment of dividends by
HUBCO. At March 31, 1998, HUBCO had approximately $104.0 million available for
shareholder dividends. For a description of the regulatory restrictions on
dividend payments by Hudson United Bank and Lafayette, see "DESCRIPTION OF HUBCO
CAPITAL STOCK -- Description of HUBCO Common Stock -- Dividend Rights."
On April 22, 1998, CFHC declared a cash dividend on the CFHC Common
Stock in an amount equal to $0.14 per share payable on June 1, 1998 to
shareholders of record as of May 18, 1998. Prior to such dividend, CFHC had
never declared or paid a cash dividend to its shareholders. CFHC's ability to
pay cash dividends is primarily, if not entirely, dependent upon cash dividends
paid to CFHC by CNB. The payment of dividends to CFHC by CNB is restricted under
federal banking law. The approval of the Office of the Comptroller of the
Currency (the "OCC") will be required if the total of all dividends declared in
any calendar year by CNB exceeds CNB's net profits to date, as defined, for that
year combined with its retained profits for the preceding two years. In
addition, CNB may not pay a dividend in an amount greater than its undivided
profits then on hand after deducting its losses and bad debts. The FRB and the
OCC also have the authority under federal law to enjoin a national bank or bank
holding company from engaging in what, in their opinion, constitutes an unsafe
or unsound practice in conducting business, including the payment of a dividend
under certain circumstances in which the bank or bank holding company fails to
meet minimum capital requirements or in which its earnings are impaired. At
March 31, 1998, CFHC had approximately $1,799,740 available for shareholder
dividends.
BY-LAWS
Under the NJBCA, the board of directors of a New Jersey corporation has
the power to adopt, amend, or repeal the corporation's by-laws, unless such
powers are reserved in the certificate of incorporation to the shareholders. The
HUBCO Certificate and the CFHC Certificate do not reserve such power). Under
CFHC Certificate, any amendment to CFHC's bylaws made by CFHC's shareholders
must be approved by the affirmative vote of the holders of at least two-thirds
of the shares entitled to vote thereon.
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 a directors' or an officers' personal liability to the
corporation or its shareholders for monetary damage for breaches of their
fiduciary duty as a director or officer. Under New Jersey law, a director or
officer cannot be relieved from liability or otherwise indemnified for any
breach of duty based upon an act or omission (i) in breach of such person's duty
of loyalty to the corporation or its shareholders, (ii) not in good faith or
involving a knowing violation of law, or (iii) resulting in receipt by such
person of an improper personal benefit. Both HUBCO's Certificate and CFHC's
Certificate contain a provision which limits a director's or officer's liability
to the full extent permitted by New Jersey law.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The NJBCA provides that a corporation has the power to indemnify a
director, officer, employee or agent ("Corporate Agent") against his or her
expenses and liabilities in connection with any proceeding involving the
Corporate Agent by reason of his or her being or having been a Corporate Agent,
other than a proceeding by or in the right of the corporation, if: (i) the
Corporate Agent was acting in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation; and
(ii) with respect to any criminal proceeding, the Corporate Agent had no
reasonable cause to believe that his or her conduct was unlawful. A corporation
has the power to indemnify a Corporate Agent against his or her expenses in
connection with any proceeding by or in the right of the corporation to procure
a judgment in its favor which involves the Corporate Agent because he or she was
or is a Corporate Agent, if he or she acted in good faith and in a manner the
Corporate Agent reasonably believed to be in or not opposed to the best
interests of the corporation.
HUBCO's Certificate of Incorporation provides that HUBCO shall
indemnify its current and former officers, directors, employees and agents
against expenses incurred in connection with any pending or threatened action,
suit, or proceeding, with respect to which the officer, director, employee or
agent is a party, or is threatened to be made a party, to the full extent
permitted by the NJBCA. HUBCO maintains directors' and officers' liability
insurance on behalf of such persons. The CFHC Certificate of Incorporation
provides that CFHC shall indemnify every person who is or was a director or
executive officer of CFHC, or any such person who serves or served in any
capacity with any other enterprise at the request of CFHC, to the fullest extent
permitted by law against all expenses and liabilities reasonably incurred by or
imposed upon him or her in connection with any proceeding to which he or she may
be made, or threatened to be made, a party, or in which he or she may become
involved by reason of his or her being or having been a director or executive
officer of CFHC, or serving or having served such other enterprise, whether or
not he or she is a director or executive officer of CFHC, or continues to serve
such other enterprise, at the time the expenses or liabilities are incurred.
CFHC maintains directors' and officers' liability insurance on behalf of such
persons.
SHAREHOLDER PROPOSALS
The Merger may be consummated prior to the 1998 Annual Meeting of
Shareholders of CFHC, in which event there would be no CFHC Annual Meeting. If
CFHC holds a 1998 Annual Meeting of Shareholders, unless such 1998 meeting is
delayed, any proposal which a CFHC shareholder wishes to have included in the
proxy materials of CFHC must have been presented to CFHC not later than December
16, 1997. No such proposal was received on or prior to December 16, 1997.
OTHER MATTERS
As of the date of this Proxy Statement, the CFHC Board of Directors
knows of no other matters to be presented for action by the shareholders at the
Meeting. If any other matters are properly presented, the persons named in the
enclosed proxy intend 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 812 shares of HUBCO Common Stock as of April 22, 1998.
Certain legal matters in connection with the Merger will be passed upon for CFHC
by Stevens & Lee, counsel to CFHC.
EXPERTS
The consolidated financial statements of CFHC as of December 31, 1997
and 1996, and for each of the years in the three year period ended December 31,
1997 have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated herein by reference, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of HUBCO as of December 31, 1997
and 1996, and for each of the years in the three year period ended December 31,
1997, incorporated by reference herein, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports.
KPMG Peat Marwick 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.
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 2, , 1998
("Agreement"), is among HUBCO, Inc. ("HUBCO"), a New Jersey corporation and
registered bank holding company, Hudson United Bank (the "Bank"), a New Jersey
state-chartered commercial banking corporation and wholly-owned subsidiary of
HUBCO, Community Financial Holding Company, a New Jersey corporation and
registered bank holding company ("CFHC"), and Community National Bank, a
federally-chartered banking association and wholly-owned subsidiary of CFHC
("Community").
WHEREAS, the respective Board of Directors of HUBCO and CFHC
have each determined that it is in the best interests of HUBCO and CFHC and
their respective shareholders for HUBCO to acquire CFHC by merging CFHC with and
into HUBCO with HUBCO surviving and CFHC shareholders receiving the
consideration hereinafter set forth. Immediately after the merger of CFHC into
HUBCO, Community shall be merged with and into the Bank with the Bank surviving;
and
WHEREAS, the respective Board of Directors of CFHC, HUBCO, the
Bank and Community have each duly adopted and approved this Agreement and the
Board of Directors of CFHC has directed that it be submitted to CFHC'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 CFHC Common Stock (as hereinafter defined) and,
simultaneously with the execution of this Agreement, CFHC is issuing an option
to HUBCO (the "HUBCO Stock Option") to purchase 252,790 shares of the authorized
and unissued CFHC Common Stock subject to the terms and conditions set forth in
the Agreement governing the HUBCO Stock Option;
NOW, THEREFORE, intending to be legally bound, the parties
hereto hereby agree as follows:
ARTICLE I - THE MERGER
1.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereafter defined), CFHC shall be merged
with and into HUBCO (the "Merger") in accordance the New Jersey Business
Corporation Act ("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 CFHC and thereupon and thereafter, all the property,
rights, privileges, powers and franchises of each of HUBCO and CFHC 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 CFHC 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, 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 CFHC in
any contract or document, whether executed or taking effect before or after the
Effective Time, shall be considered a reference to the Surviving Corporation if
not inconsistent with the other provisions of the contract or document; and any
pending action or other judicial proceeding to which either of HUBCO or CFHC 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 CFHC 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 and officers of HUBCO shall become the directors and 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 five business days notice (the
"Closing Notice") given to CFHC, which date (the "Closing Date") shall be not
less than seven nor more than 10 business days following the receipt of all
necessary regulatory and governmental approvals and consents and the expiration
of all statutory waiting periods in respect thereof and the satisfaction or
waiver of all of the conditions to the consummation of the Merger specified in
Article VI hereof (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing). In the Closing
Notice, HUBCO shall specify the "Determination Date" for purposes of determining
the Median Pre-Closing Price (as hereinafter defined), which date 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. Simultaneous with or immediately
following the Closing, HUBCO and CFHC shall cause to be filed a certificate of
merger, in form and substance satisfactory to HUBCO and CFHC, with the Secretary
of State of the State of New Jersey (the "Certificate of Merger"). The
Certificate of Merger shall specify as the "Effective Time" of the Merger a date
and time following the Closing agreed to by HUBCO and CFHC (which date and time
the parties currently anticipate will be the close of business on the Closing
Date). In the event the parties fail to specify the date and time in the merger
certificates, the Merger shall become effective upon (and the "Effective Time"
shall be) the time of the filing of the Certificate of Merger.
1.7 The Bank Merger. Immediately following the Effective Time,
Community shall be then merged with and into the Bank (the "Bank Merger") in
accordance with the provisions of the New Jersey Banking Act of 1948, as amended
(the "Banking Act") and the National Bank Act. In the Bank Merger, the Bank
shall be the surviving bank (the "Surviving Bank"), except that at the Effective
Time, the business of Community shall be operated as a division of the Surviving
Bank named "Community National division of Hudson United Bank" or such other
similar name agreed to by the parties hereto (the "New Division"). Upon the
consummation of the Bank Merger, the separate existence of Community shall cease
and the Surviving Bank shall be considered the same business and corporate
entity as each of Community and the Bank and all of the property, rights,
privileges, powers and franchises of each of Community and the Bank shall vest
in the Surviving Bank and the Surviving Bank shall be deemed to have assumed all
of the debts, liabilities, obligations and duties of each of Community and the
Bank and shall have succeeded to all or each of their relationships, fiduciary
or otherwise, as fully and to the same extent as if such property, rights,
privileges, powers, franchises, debts, obligations, duties and relationships had
been originally acquired, incurred or entered into by the Surviving Bank. Upon
the consummation of the Bank Merger, the certificate of incorporation and
By-Laws of the Bank shall become the certificate of incorporation and By-Laws of
the Surviving Bank and the officers and directors of the Bank shall be the
officers and directors of the Surviving Bank, except as provided in Section 5.20
hereof. Following the execution of this Agreement, Community and the Bank shall
execute and deliver a merger agreement (the "Bank Merger Agreement"), both in
form and substance reasonably satisfactory to the parties hereto, substantially
as set forth in Exhibit 1.7 hereto, for delivery to the Commissioner of the New
Jersey Department of Banking and Insurance (the "Department"), the Federal
Deposit Insurance Corporation (the "FDIC") and the Office of the Comptroller of
the Currency (the "OCC") for approval of the Bank Merger.
ARTICLE II - CONVERSION OF CFHC SHARES
2.1. Conversion of CFHC Common Stock. Each share of common
stock, par value $5.00 per share, of CFHC ("CFHC Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than Excluded Shares,
as hereinafter defined) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted as follows:
(a) Exchange of Common Stock; Exchange Ratio; Median
Pre-Closing Price. Subject to the provisions of this Section 2.1, each share of
CFHC Common Stock issued and outstanding immediately prior to the Effective Time
(excluding any treasury shares and shares to be canceled pursuant to Section
2.1(d) hereof) shall be converted at the Effective Time into the right to
receive 0.695 shares (the "Exchange Ratio") of Common Stock, no par value, of
HUBCO ("HUBCO Common Stock") subject to adjustment as provided in Section 2.1(c)
and subject to the payment of cash in lieu of fractional shares in accordance
with Section 2.2(e); provided, however, that if the Median Pre-Closing Price of
HUBCO Common Stock is less than or equal to $29.00, CFHC shall have the right,
exercisable only until 11:59 p.m. on the third business day following receipt by
CFHC of the Closing Notice, to terminate this Agreement by giving HUBCO written
notice of such termination, referring to this Section 2.1, and this Agreement
shall be terminated pursuant to such notice, subject to Section 7.1, effective
as of 11:59 p.m. on the third business day following receipt of such notice by
HUBCO, provided further, that if HUBCO sends notice to CFHC prior to 11:59 p.m.
on the third business day following receipt of such termination notice agreeing
that the Exchange Ratio shall be equal to the quotient obtained by dividing
$20.30 by the Median Pre-Closing Price, then the notice of termination shall be
voided.
The "Median Pre-Closing Price" shall be determined by taking
the price half-way between the Closing Prices left after discarding the 4 lowest
and 4 highest Closing Prices in the 10 consecutive trading day period which ends
on (and includes) the Determination Date. The "Closing Price" shall mean the
closing price of HUBCO Common Stock as supplied by the NASDAQ Stock Market and
published in The Wall Street Journal. A "trading day" shall mean a day for which
a Closing Price is so supplied and published. (The NASDAQ Stock Market, or such
other national securities exchange on which HUBCO Common Stock may be traded
after the date hereof, is referred to herein as "NASDAQ")
(b) Cancellation of CFHC Certificates. After the Effective
Time, all such shares of CFHC Common Stock (other than those canceled pursuant
to Section 2.1(d)) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate previously
evidencing any such shares (other than those canceled 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 CFHC Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of
CFHC Common Stock except as otherwise provided herein or by law. Such
certificates previously evidencing such shares of CFHC Common Stock (other than
those canceled pursuant to Section 2.1(d)) shall be exchanged for certificates
evidencing shares of HUBCO Common Stock, as the case may be, issued pursuant to
this Article II, upon the surrender of such certificates in accordance with this
Article II. No fractional shares of HUBCO Common Stock shall be issued, and, in
lieu thereof, a cash payment shall be made pursuant to Section 2.2(e).
(c) Capital Changes. If between the date hereof and the
Effective Time the outstanding shares of HUBCO Common Stock shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, stock split, reclassification, recapitalization, merger,
combination or exchange of shares, the Exchange Ratio and the definition of
Closing Price (as set forth in Section 2.1(a)) shall be correspondingly adjusted
as appropriate to reflect such stock dividend, stock split, reclassification,
recapitalization, merger, combination or exchange of shares.
(d) Excluded Shares. All shares of CFHC Common Stock held by
CFHC in its treasury or owned by HUBCO or by any of HUBCO's wholly-owned
subsidiaries which is a constituent party to the Bank Merger (other than shares
held as trustee or in a fiduciary capacity and shares held as collateral on or
in lieu of a debt previously contracted) immediately prior to the Effective Time
("Excluded Shares") shall be canceled.
2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, HUBCO shall
deposit, or shall cause to be deposited, with Hudson United Bank, Trust
Department or another bank or trust company designated by HUBCO and reasonably
acceptable to CFHC (the "Exchange Agent"), for the benefit of the holders of
shares of CFHC 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 any event no later than 15
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 CFHC
Common Stock (the "Certificates"), (i) a letter of transmittal (the form and
substance of which is reasonably agreed to by HUBCO and CFHC 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 and cash in lieu of fractional shares. 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 CFHC 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 Certificates so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of CFHC Common Stock which is not registered in
the transfer records of CFHC, 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 CFHC 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.
(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 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
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. No
interest shall be paid on the Merger Consideration.
(d) No Further Rights in CFHC Common Stock. All shares of
HUBCO Common Stock issued and cash paid upon conversion of the shares of CFHC
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
CFHC Common Stock.
(e) No Fractional Shares. No certificates or scrip evidencing
fractional shares of HUBCO Common Stock shall be issued upon the surrender for
exchange of Certificates and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a shareholder of HUBCO. Cash shall
be paid in lieu of fractional shares of HUBCO Common Stock, based upon the
Median Pre-Closing Price per whole share of HUBCO Common Stock.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of CFHC Common Stock for two
years after the Effective Time shall be delivered to HUBCO, upon demand, and any
holders of CFHC 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, the Bank nor the Exchange
Agent shall be liable to any holder of shares of CFHC 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 shares of CFHC 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 CFHC 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 CFHC shall be closed and there shall be no further
registration of transfers of shares of CFHC Common Stock thereafter on the
records of CFHC. 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. CFHC Stock Options and Warrants. The Stock Options (as
defined in Section 3.2) described in the CFHC Disclosure Schedule are issued and
outstanding pursuant to the CFHC 1994 Employee and Director Stock Option Plan
(the "CFHC Stock Option Plan") and the agreements pursuant to which such Stock
Options were granted (each, an "Option Grant Agreement"). HUBCO acknowledges and
agrees to honor the provisions of the CFHC Stock Option Plan and the Option
Grant Agreement, including those relating to vesting and conversion in
connection with a change in control of CFHC. Certain warrants to acquire CFHC
Common Stock are issued and outstanding pursuant to the PMG Warrants (as defined
in Section 3.2 hereof). Each PMG Warrant which, as of the Effective Time, is
outstanding shall be converted into a warrant to purchase HUBCO Common Stock as
follows: (i) the right to purchase shares of CFHC Common Stock pursuant to the
PMG Warrant 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 PMG Warrant
exercise price per share of the CFHC Common Stock divided by the Exchange Ratio,
and (iii) in all other material respects the new warrant shall be subject to the
same terms and conditions as governed the PMG Warrant on which it was based,
including the length of time within which the warrant may be exercised.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF CFHC
References herein to "CFHC Disclosure Schedules" 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 CFHC to
HUBCO. CFHC hereby represents and warrants to HUBCO as follows:
3.1. Corporate Organization.
(a) CFHC is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. CFHC has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of CFHC and the CFHC Subsidiaries (as
defined below), taken as a whole. CFHC is registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA").
(b) Each CFHC Subsidiary and its jurisdiction of incorporation
is listed in the CFHC Disclosure Schedule. For the purpose of this Agreement,
the term "CFHC Subsidiary" means any corporation, partnership, joint venture or
other legal entity in which CFHC, directly or indirectly, owns at least a 50%
stock or other equity interest or for which CFHC, 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 "CFHC Subsidiary" shall include any entity which was a CFHC
Subsidiary at any time during such period. Community is a federally-chartered
commercial banking association duly organized and validly existing in stock form
and in good standing under the laws of the United States of America. All
eligible accounts of depositors issued by Community are insured by the Bank
Insurance Fund of the FDIC (the "BIF") to the fullest extent permitted by law.
Each CFHC Subsidiary has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing would not have a material adverse
effect on the business, operations, assets or financial condition of CFHC and
the CFHC Subsidiaries, taken as a whole.
(c) The CFHC Disclosure Schedule sets forth true and complete
copies of the Certificate of Incorporation and By-Laws, as in effect on the date
hereof, of CFHC and each CFHC Subsidiary. Except as set forth in Disclosure
Schedule 3.1(b), Community and CFHC do not own or control, directly or
indirectly, any equity interest in any corporation, company, association,
partnership, joint venture or other entity.
3.2. Capitalization. The authorized capital stock of CFHC
consists of 3,200,000 shares of CFHC Common Stock and 200,000 shares of CFHC
Preferred Stock, par value $5.00 per share. As of December 31, 1997, there were
1,027,712 shares of CFHC Common Stock issued and outstanding and no shares of
CFHC Preferred Stock issued and outstanding. As of December 31, 1997, there were
276,077 shares of CFHC Common Stock issuable upon exercise of outstanding stock
options and 27,349 shares of CFHC Common Stock issuable upon the exercise of
outstanding warrants held by Pennsylvania Merchant Group Ltd. (the "PMG
Warrants"). The CFHC Disclosure Schedule sets forth (i) all options which may be
exercised for issuance of CFHC Common Stock (collectively, the "Stock Options")
and the terms upon which the options may be exercised, and (ii) true and
complete copies of each plan and a specimen of each form of agreement pursuant
to which any outstanding Stock Option was granted, including a list of each
outstanding Stock Option issued pursuant thereto. All Stock Options will be
fully vested on the Closing Date, in each case in accordance with the terms of
the CFHC Stock Option Plan and Option Grant Agreements pursuant to which such
Stock Options were granted. All issued and outstanding shares of CFHC Common
Stock, and all issued and outstanding shares of capital stock of each CFHC
Subsidiary, have been duly authorized and validly issued, are fully paid,
nonassessable and free of preemptive rights and are free and clear of any liens,
encumbrances, charges, restrictions or rights of third parties imposed by CFHC
or any CFHC Subsidiary. Except for the Stock Options and the HUBCO Stock Option
and the PMG Warrants, neither CFHC nor Community has granted nor is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase, subscription or issuance of
any shares of capital stock of CFHC or Community 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 shareholders of CFHC, and except as set forth in the CFHC Disclosure
Schedule, CFHC and Community 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 CFHC and
Community in accordance with their respective Certificate of Incorporation and
By-Laws and applicable laws and regulations. Except for such approvals, no other
corporate proceedings on the part of CFHC or Community are necessary to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by CFHC and Community, and constitutes valid and
binding obligations of CFHC and Community, enforceable against CFHC and
Community 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 national banks or their holding companies, (ii) general
equitable principles, and (iii) laws relating to the safety and soundness of
insured depository institutions and except that no representation is made as to
the effect or availability of equitable remedies or injunctive relief.
(b) Neither the execution and delivery of this Agreement by
CFHC or Community, nor the consummation by CFHC or Community of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by CFHC
or Community with any of the terms or provisions hereof, will (i) upon the
approval thereof by the CFHC shareholders, violate any provision of CFHC's or
Community's Certificate of Incorporation or By-Laws, (ii) assuming that the
consents and approvals set forth below are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to CFHC, Community or any of their respective properties or assets,
or (iii) except as set forth in the CFHC 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 CFHC or Community 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
CFHC or Community 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
CFHC and the CFHC Subsidiaries, taken as a whole, and which will not prevent or
delay the consummation of the transactions contemplated hereby. Except for
consents and approvals of or filings or registrations with or notices to the
Board of Governors of the Federal Reserve System (the "FRB"), the FDIC, the OCC,
the Department, the New Jersey Department of Environmental Protection (the
"DEP"), the SEC, other applicable government authorities, and the shareholders
of CFHC, 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
CFHC or Community in connection with (x) the execution and delivery by CFHC of
this Agreement and (y) the consummation by CFHC of the Merger, and the
consummation by CFHC and Community of the other transactions contemplated
hereby. To the best of CFHC's knowledge, no fact or condition exists which CFHC
has reason to believe will prevent it and Community from obtaining the
aforementioned consents and approvals.
3.4. Financial Statements.
(a) The CFHC Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of CFHC as of December 31, 1995
and 1996, and the related consolidated statements of income, changes in
shareholders' equity and of cash flows for the periods ended December 31, in
each of the two fiscal years 1995 through 1996, in each case accompanied by the
audit report of KPMG Peat Marwick independent public accountants with respect to
CFHC ("Peat Marwick"), and the unaudited consolidated statement of condition of
CFHC as of September 30, 1997 and the related unaudited consolidated statements
of income and cash flows for the nine months ended September 30, 1997 and 1996,
as reported in CFHC's Quarterly Report on Form 10-Q, filed with the SEC under
the Securities Exchange Act of 1934, as amended ("1934 Act") (collectively, the
"CFHC Financial Statements"). The CFHC Financial Statements (including the
related notes) have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied during the periods involved
(except as may be indicated therein or in the notes thereto), and fairly present
the consolidated financial condition of CFHC as of the respective dates set
forth therein, and the related consolidated statements of income, changes in
shareholders' equity and cash flows fairly present the results of the
consolidated operations, changes in shareholders' equity and cash flows of CFHC
for the respective periods set forth therein.
(b) The books and records of CFHC and each CFHC Subsidiary 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 CFHC Financial Statements (including the notes thereto),
as of September 30, 1997, neither CFHC nor any CFHC Subsidiary had any
liabilities, whether absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of CFHC and any CFHC
Subsidiary, taken as a whole which were required by GAAP (consistently applied)
to be disclosed in CFHC's consolidated statement of condition as of September
30, 1997 or the notes thereto. Since September 30, 1997, neither CFHC nor any
CFHC 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 CFHC
Disclosure Schedule.
3.5. Broker's and Other Fees. Except for Berwind Financial,
L.P. ("Berwind"), neither CFHC, any CFHC Subsidiary nor any of their directors
or officers has employed any broker or finder or incurred any liability for any
broker's or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement. The agreement with Berwind is set
forth in the CFHC Disclosure Schedule. Other than pursuant to the agreement with
Berwind and an agreement with Law Offices of Stevens & Lee, a Professional
Corporation, pursuant to which CFHC will pay a flat fee of $75,000 plus
reasonable out-of-pocket expenses for legal representation in connection with
this Agreement and the transactions contemplated hereunder, 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 CFHC or any CFHC
Subsidiary.
3.6. Absence of Certain Changes or Events.
(a) Except as disclosed in the CFHC Disclosure Schedule, there
has not been any material adverse change in the business, operations, assets or
financial condition of CFHC and any CFHC Subsidiary, taken as a whole, since
December 31, 1997 and to the best of CFHC's knowledge, no fact or condition
exists which CFHC believes will cause such a material adverse change in the
future.
(b) Except as set forth in the CFHC Disclosure Schedule,
neither CFHC nor any CFHC Subsidiary has taken or permitted any of the actions
set forth in Section 5.2 hereof between December 31, 1997 and the date hereof
and, except for execution of this Agreement, and the other documents
contemplated hereby, CFHC and each CFHC Subsidiary has conducted their
respective businesses only in the ordinary course, consistent with past
practice.
3.7. Legal Proceedings. Except as disclosed in the CFHC
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of CFHC and the CFHC Subsidiaries, neither CFHC nor any CFHC
Subsidiary is a party to any, and there are no pending or, to the best of CFHC's
knowledge, threatened legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against CFHC or any
CFHC Subsidiary which, if decided adversely to CFHC or any CFHC Subsidiary, are
reasonably likely to have a material adverse effect on the business, operations,
assets or financial condition of CFHC and the CFHC Subsidiaries taken as a
whole. Except as disclosed in the CFHC Disclosure Schedule, neither CFHC nor any
CFHC Subsidiary is a party to any order, judgment or decree entered in any
lawsuit or proceeding which is material to CFHC or such CFHC Subsidiary.
3.8. Taxes and Tax Returns.
(a) Except as set forth on the CFHC Disclosure Schedule, CFHC
and each CFHC 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. CFHC and each CFHC
Subsidiary has established (and until the Effective Time will establish) on
their books and records reserves that are adequate for the payment of all
federal, state and local taxes not yet due and payable, but are incurred in
respect of CFHC or any CFHC Subsidiary through such date. None of the federal or
state income tax returns of CFHC or any CFHC Subsidiary have been examined by
the Internal Revenue Service (the "IRS") or the New Jersey Division of Taxation
within the past six years. To the best knowledge of CFHC, 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 CFHC or any CFHC Subsidiary, nor has CFHC or any CFHC 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 CFHC nor any CFHC 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 CFHC or any
CFHC Subsidiary (nor does CFHC have any knowledge that the IRS has proposed any
such adjustment or change of accounting method), or (iv) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
3.9. Employee Benefit Plans.
(a) Except as set forth on the CFHC Disclosure Schedule,
neither CFHC nor any CFHC Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "CFHC Pension Plans") as such term is defined in
Section 3(2)(A) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), "employee welfare benefit plan" (the "CFHC Welfare Plans") as
such terms is defined in Section 3(1) 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 CFHC nor any CFHC Subsidiary has, since September 2,
1974, contributed to any "Multiemployer Plan," as such term is defined in
Section 3(37) of ERISA.
(b) CFHC has delivered to HUBCO in the CFHC Disclosure
Schedules (or previously made available to HUBCO) a complete and accurate copy
of each of the following with respect to each of the CFHC Pension Plans and CFHC
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 CFHC 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 CFHC 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 CFHC '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 CFHC or
any CFHC 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 CFHC Pension Plan
have been paid. All contributions required to be made to each CFHC 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 CFHC which have not
been paid have been properly recorded on the books of CFHC .
(f) Each of the CFHC Pension Plans and each of the CFHC
Welfare Plans has been operated in compliance in all material respects with the
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder, and all other applicable governmental laws and
regulations. CFHC is not aware of any fact or circumstance which would
disqualify any plan that could not be retroactively corrected (in accordance
with the procedures of the IRS).
(g) To the best knowledge of CFHC, 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 CFHC Welfare Plan or CFHC Pension Plan
that would result in any material tax or penalty for CFHC or any CFHC
Subsidiary.
(h) Except as disclosed in the CFHC Disclosure Schedule, no
CFHC 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 CFHC
Pension Plan.
(i) No "accumulated funding deficiency," within the meaning of
Section 412 of the Code, has been incurred with respect to any CFHC Pension
Plan.
(j) There are no material pending, or, to the best knowledge
of CFHC, material threatened or anticipated claims (other than routine claims
for benefits) by, on behalf of, or against any of the CFHC Pension Plans or the
CFHC Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the CFHC Disclosure Schedule.
(k) Except as disclosed in the CFHC Disclosure Schedule, no
CFHC Pension Plan or CFHC 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 CFHC 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 CFHC Financial Statements and established
under GAAP or otherwise noted on such Financial Statements.
(m) With respect to each CFHC Pension Plan and CFHC Welfare
Plan that is funded wholly or partially through an insurance policy, there will
be no liability of CFHC or any CFHC 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 or severance agreements included within the CFHC Disclosure
Schedule, and (ii) as set forth in Section 3.9(n) of the CFHC 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 CFHC or
any CFHC 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 CFHC Pension Plan or CFHC Welfare Plan.
(o) Except for the CFHC Pension Plans and the CFHC Welfare
Plans, and except as set forth on the CFHC Disclosure Schedule, CFHC has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of CFHC or any
CFHC Subsidiary or any predecessor of any thereof. The CFHC Disclosure Schedule
sets forth (or lists, if previously delivered to HUBCO): (i) true and complete
copies of the deferred compensation agreements, understandings or obligations
with respect to each such current or former director, officer or employee, and
(ii) the most recent actuarial or other calculation of the present value of such
payments or benefits.
(p) Except as set forth in the CFHC Disclosure Schedule, CFHC
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 CFHC 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 CFHC 's knowledge, neither
CFHC nor any CFHC Pension Plan or CFHC Welfare Plan owns any individual or group
insurance policies issued by an insurer which has been found to be insolvent or
is in rehabilitation pursuant to a state proceeding.
(q) Except as set forth in the CFHC Disclosure Schedule, CFHC
does not maintain any retirement plan or retiree medical plan or arrangement for
directors. The CFHC Disclosure Schedule sets forth the complete documentation
and actuarial evaluation of any such plan.
3.10. Reports.
(a) The CFHC Disclosure Schedule lists, and as to item (i)
below CFHC has previously delivered to HUBCO a complete copy of, each (i) final
registration statement, prospectus, annual, quarterly or special report and
definitive proxy statement filed by CFHC since January 1, 1994 pursuant to the
Securities Act of 1933, as amended ("1933 Act"), or the 1934 Act and (ii)
communication (other than general advertising materials and press releases)
mailed by CFHC to its shareholders as a class since January 1, 1994.
(b) Since January 1, 1994, (i) CFHC has filed all reports that
it was required to file with the SEC under the 1934 Act, and (ii) CFHC and
Community each has duly filed all material forms, reports and documents which
they were required to file with each agency charged with regulating any aspect
of their business, in each case in form which was correct in all material
respects, and, subject to permission from such regulatory authorities, CFHC
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
referred to in either of clauses (i) or (ii) above, and each final registration
statement, prospectus, annual, quarterly or special report, definitive proxy
statement or communication referred to in either of clauses (i) or (ii) of
paragraph (b) above, 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 CFHC Disclosure Schedule lists the
dates of all examinations of CFHC or Community conducted by either the FRB, the
OCC or the FDIC since January 1, 1995 and the dates of any responses thereto
submitted by CFHC or Community.
3.11. CFHC and Community Information. The information relating
to CFHC and Community, 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
shareholders of CFHC in connection with the solicitation of their approval of
the Merger, as of the date the Proxy Statement-Prospectus is mailed to
shareholders of CFHC, and up to and including the date of the meeting of
shareholders 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 CFHC Disclosure Schedule, CFHC and each CFHC 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 CFHC or such CFHC
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 CFHC and the CFHC Subsidiaries taken as a whole) and CFHC 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 disclosed
in the CFHC Disclosure Schedule, (i) neither CFHC nor any CFHC 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 CFHC or
any CFHC Subsidiary to any officer, employee, director or consultant thereof.
The CFHC Disclosure Schedule sets forth true and correct copies of all severance
or employment agreements with officers, directors, employees, agents or
consultants to which CFHC or any CFHC Subsidiary is a party.
(b) Except as disclosed in the CFHC Disclosure Schedule or
disclosed as an Exhibit to CFHC's Annual Report on Form 10-K for the year end
December 31, 1996 and except for loan commitments, loan agreements and loan
instruments entered into or issued by Community in the ordinary course of
business, (i) as of the date of this Agreement, neither CFHC nor any CFHC
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 CFHC and the CFHC Subsidiaries taken as a whole, (ii) no
commitment, agreement or other instrument to which CFHC or any CFHC Subsidiary
is a party or by which either of them is bound limits the freedom of CFHC or any
CFHC Subsidiary to compete in any line of business or with any person, and (iii)
neither CFHC nor any CFHC Subsidiary is a party to any collective bargaining
agreement.
(c) Except as disclosed in the CFHC Disclosure Schedule,
neither CFHC nor any CFHC Subsidiary or, to the best knowledge of CFHC, 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 Community 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 CFHC and the CFHC Subsidiaries, taken as a whole.
3.14. Properties and Insurance.
(a) Except as set forth in the CFHC Disclosure Schedule, CFHC
or a CFHC 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 CFHC's consolidated balance sheet as of September 30,
1997, or owned and acquired subsequent thereto (except to the extent that such
assets and properties have been disposed of for fair value in the ordinary
course of business since September 30, 1997), subject to no encumbrances, liens,
mortgages, security interests or pledges, except (i) those items that secure
liabilities that are reflected in said balance sheet or the notes thereto or
that secure liabilities incurred in the ordinary course of business after the
date of such balance sheet, (ii) statutory liens for amounts not yet delinquent
or which are being contested in good faith, (iii) such encumbrances, liens,
mortgages, security interests, pledges and title imperfections that are not in
the aggregate material to the business, operations, assets, and financial
condition of CFHC and the CFHC 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, CFHC or one or more of the CFHC Subsidiaries
as lessees have the right under valid and subsisting leases to occupy, use,
possess and control all real property leased by CFHC and such CFHC Subsidiaries
in all material respects as presently occupied, used, possessed and controlled
by CFHC and such CFHC Subsidiaries.
(b) The business operations and all insurable properties and
assets of CFHC and Community are insured for their benefit against all risks
which, in the reasonable judgment of the management of CFHC, 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 CFHC adequate for the business
engaged in by CFHC and Community. As of the date hereof, neither CFHC nor
Community 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.
3.15. Minute Books. As of the date of this Agreement, the
minute books of CFHC and the CFHC Subsidiaries contain accurate records of all
meetings and other corporate action held of their respective shareholders and
Boards of Directors (including committees of their respective Boards of
Directors) through a date not later than 30 days prior to the date of this
Agreement, and except for the Merger, no material corporate actions were
considered or approved by the shareholders or Boards of Directors (or committees
thereof) between such date and the date of this Agreement which are not fully
disclosed in the CFHC Disclosure Schedule. On the Closing Date, the minute books
of CFHC and the CFHC Subsidiaries shall contain accurate records of all meetings
and other corporate action held of their respective shareholders and Boards of
Directors (including committees of their respective Boards of Directors) through
the Closing Date.
3.16. Environmental Matters. Except as disclosed in the CFHC
Disclosure Schedule, neither CFHC nor any CFHC Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that CFHC or any CFHC Subsidiary (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, other than corrections or cleanups which, in the
aggregate, are immaterial to CFHC and the CFHC Subsidiaries, taken as a whole.
Except as disclosed in the CFHC Disclosure Schedule, CFHC has no knowledge that
any toxic or hazardous substances or materials have been emitted, generated,
disposed of or stored on any non-residential property currently owned or leased
by CFHC or any CFHC Subsidiary, or owned or leased in the five years prior to
the date of this Agreement in any manner that violates any presently existing
federal, state or local law or regulation governing or pertaining to such
substances and materials, other than violations which, in the aggregate, are
immaterial to CFHC and the CFHC Subsidiaries, taken as a whole. Except as
disclosed in the CFHC Disclosure Schedule, all property formerly owned or leased
by CFHC or any CFHC Subsidiary which was subject to the provisions of the
Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq. as amended ("ISRA"),
complied with all applicable provisions of ISRA at the time such property was
sold or transferred other than non-compliances which, in the aggregate, are
immaterial to CFHC and the CFHC Subsidiaries, taken as a whole
3.17. Reserves. As of September 30, 1997, the allowance for
loan losses in the CFHC Financial Statements was adequate pursuant to GAAP
(consistently applied), and the methodology used to compute the loan loss
reserve complied in all material respects with GAAP (consistently applied) and
all applicable policies of the OCC. As of December 31, 1997, the allowance for
loan losses in the financial statements which will be included in CFHC's Annual
Report on Form 10-K for the year ended December 31, 1997 will be adequate
pursuant to GAAP (consistently applied), and the methodology used to compute the
loan loss reserve will comply in all material respects with GAAP (consistently
applied) and all applicable policies of the OCC. As of December 31, 1997,
neither CFHC nor Community held any OREO properties which required, or will
require a reserve in the financial statements which will be included in CFHC's
Annual Report on Form 10-K for the year ended December 31, 1997.
3.18. No Parachute Payments. Except as set forth in the CFHC
Disclosure Schedule, no officer, director, employee or agent (or former officer,
director, employee or agent) of CFHC or any CFHC 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 CFHC, a CFHC Subsidiary, HUBCO or a 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 CFHC nor any
CFHC 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 CFHC prior to the
date of this Agreement, nor has CFHC 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 CFHC prior to
the date of this Agreement. Neither CFHC nor any CFHC Subsidiary is required by
Section 32 of the Federal Deposit Insurance Act to give prior notice to a
Federal banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer,
except as disclosed in writing to HUBCO by CFHC prior to the date of this
Agreement.
3.20. Year 2000 Compliance. CFHC and the CFHC Subsidiaries
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order to be substantially Year 2000
compliant on or before the end of 1999 and CFHC does not expect the future cost
of addressing such issues to be material.
3.21. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
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 CFHC. HUBCO hereby represents and warrants to CFHC as follows:
4.1. Corporate Organization.
(a) HUBCO is a corporation duly organized and validly existing
and in good standing under the laws of the State of New Jersey. HUBCO has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of HUBCO and the HUBCO Subsidiaries
(defined below), taken as a whole. HUBCO is registered as a bank holding company
under the BHCA.
(b) Each HUBCO Subsidiary is listed in the HUBCO Disclosure
Schedule. For the 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 an HUBCO Subsidiary at any time during such
period. Each HUBCO Subsidiary is duly organized and validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Bank is a
state-chartered commercial banking corporation duly organized and validly
existing and in good standing under the laws of the State of New Jersey. All
eligible accounts of depositors issued by the Bank are insured by the BIF to the
fullest extent permitted by law. Each HUBCO Subsidiary has the corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as it is now being conducted and is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing would
not have a material adverse effect on HUBCO 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 and the Bank as in effect
on the date hereof.
4.2. Capitalization. The authorized capital stock of HUBCO
consists solely of 53,045,000 common shares, no par value ("HUBCO Common
Stock"), and 10,609,000 shares of preferred stock ("HUBCO Authorized Preferred
Stock"). As of December 31, 1997, there were 21,911,502 shares of HUBCO Common
Stock issued and outstanding, and no shares of treasury stock, and 1,250 shares
of HUBCO Authorized Preferred Stock outstanding, all of which were designated
Series B, no par value, Convertible Preferred Stock. From time to time
hereafter, subject to the covenant in Section 5.17 below, HUBCO may sell or
repurchase shares of HUBCO Common Stock. Except for shares issuable under or
arising from the merger agreements by which HUBCO is to acquire Bank of the
Hudson ("BTH") and its parent corporation, Poughkeepsie Financial Corp. (the
"BTH Agreement"), MSB Bank and its parent corporation MSB Bancorp, Inc. (the
"MSB Agreement"), the HUBCO 1995 Stock Option Plan (the "HUBCO Stock Option
Plans") and outstanding warrants to purchase 33,284 shares of HUBCO Common
Stock, there are no shares of HUBCO Common Stock issuable upon the exercise of
outstanding stock options or otherwise. All issued and outstanding shares of
HUBCO Common Stock, and all issued and outstanding shares of capital stock of
the HUBCO Subsidiaries, have been duly authorized and validly issued, are fully
paid, nonassessable and free of preemptive rights, and are free and clear of all
liens, encumbrances, charges, restrictions or rights of third parties. All of
the outstanding shares of capital stock of the HUBCO Subsidiaries are owned by
HUBCO free and clear of any liens, encumbrances, charges, restrictions or rights
of third parties. Except for the shares issuable under the HUBCO Stock Option
Plans and HUBCO's obligations under the BTH Agreement and the MSB Agreement,
neither HUBCO nor any HUBCO Subsidiary has granted or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of HUBCO or any HUBCO Subsidiary or any securities representing
the right to purchase, subscribe or otherwise receive any shares of such capital
stock or any securities convertible into any such shares, and there are no
agreements or understandings with respect to voting of any such shares.
4.3. Authority; No Violation.
(a) Subject to the receipt of all necessary governmental
approvals, HUBCO has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby in
accordance with the terms hereof. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of HUBCO in accordance with its
Certificate of Incorporation and applicable laws and regulations. Except for
such approvals, no other corporate proceedings on the part of HUBCO are
necessary to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by HUBCO and constitutes the valid
and binding obligation of HUBCO, enforceable against HUBCO in accordance with
its terms.
(b) Neither the execution or delivery of this Agreement by
HUBCO, nor the consummation by HUBCO of the transactions contemplated hereby in
accordance with the terms hereof, or compliance by HUBCO with any of the terms
or provisions hereof will (i) violate any provision of the Certificate of
Incorporation or By-Laws of HUBCO, (ii) assuming that the consents and approvals
set forth below are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to HUBCO, any
HUBCO Subsidiary, or any of their respective properties or assets, or (iii)
violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets of
HUBCO under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which HUBCO is a party, or by which it or any of its
properties or assets may be bound or affected, except, with respect to (ii) and
(iii) above, such as individually or in the aggregate will not have a material
adverse effect on HUBCO, and which will not prevent or materially delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the FDIC, the FRB,
the OCC, the Department, the Secretary of State of New Jersey, or other
applicable Governmental Entities, no consents or approvals of or filings or
registrations with or notices to any third party or any public body or authority
are necessary on behalf of HUBCO in connection with (x) the execution and
delivery by HUBCO of this Agreement, and (y) the consummation by HUBCO of the
Merger and the other transactions contemplated hereby, except such as are listed
in the HUBCO Disclosure Schedule or in the aggregate will not (if not obtained)
have a material adverse effect on HUBCO and which will not prevent or materially
delay the consummation of the transactions contemplated hereby. 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
shareholders' equity and of cash flows for the periods ended December 31, in
each of the two fiscal years 1995 through 1996, in each case accompanied by the
audit report of Arthur Andersen, LLP independent public accountants with respect
to HUBCO ("Arthur Andersen"), and the unaudited consolidated statement of
condition of HUBCO as of September 30, 1997 and the related unaudited
consolidated statements of income and cash flows for the nine months ended
September 30, 1997 and 1996, as reported in HUBCO's Quarterly Report on Form
10-Q, filed with the SEC under the 1934 Act (collectively, the "HUBCO Financial
Statements"). The HUBCO Financial Statements (including the related notes) have
been prepared in accordance with GAAP consistently applied during the periods
involved (except as may be indicated therein or in the notes thereto), and
fairly present the consolidated financial position of HUBCO as of the respective
dates set forth therein, and the related consolidated statements of income,
changes in shareholders' equity and of cash flows (including the related notes,
where applicable) fairly present the consolidated results of operations, changes
in shareholders' 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 September 30, 1997 neither HUBCO nor any of the HUBCO
Subsidiaries had any obligation or liability, whether absolute, accrued,
contingent or otherwise, material to the business, operations, assets or
financial condition of HUBCO or any of the HUBCO Subsidiaries which were
required by GAAP (consistently applied) to be disclosed in HUBCO's consolidated
statement of condition as of September 30, 1997 or the notes thereto. Except for
the transactions contemplated by this Agreement, and the other proposed
acquisitions by HUBCO reflected in any Form 8-K filed by HUBCO with the SEC
since September 30, 1997, neither HUBCO nor any HUBCO Subsidiary has incurred
any liabilities.
4.5. Broker's and Other Fees. Neither HUBCO, any HUBCO
Subsidiary nor any of its directors or officers has employed any broker or
finder or incurred any liability for any broker's or finder's fees or
commissions in connection with any of the transactions contemplated by this
Agreement.
4.6. Absence of Certain Changes or Events. There has not been
any material adverse change in the business, operations, assets or financial
condition of HUBCO and HUBCO's Subsidiaries taken as a whole since September 30,
1997 and to the best of HUBCO's knowledge, except for any merger related charges
arising from or connected with the consummation of the transactions contemplated
by the BTH Agreement, the MSB Agreement and the effect of the consummation of
other publicly announced mergers or acquisitions, not yet consummated (the
"Effects of Announced Acquisitions"), no facts or condition exists which HUBCO
believes will cause such a material adverse change in the future.
4.7 Legal Proceedings. Except as disclosed in the HUBCO
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of HUBCO or the HUBCO 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 the HUBCO Subsidiaries which, if decided adversely to
HUBCO or the HUBCO Subsidiaries, are reasonably likely to have a material
adverse effect on HUBCO and the HUBCO Subsidiaries taken as a whole. Except as
disclosed in the HUBCO Disclosure Schedule, neither HUBCO nor any HUBCO
Subsidiary is a party to any order, judgment or decree entered in any lawsuit or
proceeding which is material to HUBCO or the HUBCO Subsidiaries taken as a
whole.
<PAGE>
4.8 Tax Returns.
(a) HUBCO and each HUBCO Subsidiary have duly filed (and until
the Effective Time will so file) all Returns required to be filed by them in
respect of any federal, state and local taxes (including withholding taxes,
penalties or other payments required) and have duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other than taxes or
other charges which are being contested in good faith (and disclosed to CFHC in
writing). HUBCO and HUBCO's Subsidiaries have established (and until the
Effective Time will establish) on their books and records reserves that are
adequate for the payment of all federal, state and local taxes not yet due and
payable, but are incurred in respect of HUBCO or HUBCO's Subsidiaries through
such date. The HUBCO Disclosure Schedule identifies the federal income tax
returns of HUBCO and HUBCO's Subsidiaries which have been examined by the IRS
within the past six years. No deficiencies were asserted as a result of such
examinations which have not been resolved and paid in full. The HUBCO Disclosure
Schedule identifies the applicable state income tax returns of HUBCO and HUBCO's
Subsidiaries which have been examined by the applicable authorities. No
deficiencies were asserted as a result of such examinations which have not been
resolved and paid in full. To the best knowledge of HUBCO, there are no audits
or other administrative or court proceedings presently pending nor any other
disputes pending with respect to, or claims asserted for, taxes or assessments
upon HUBCO or HUBCO's Subsidiaries, nor has HUBCO or HUBCO's Subsidiaries given
any currently outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any taxes or Returns.
(b) Except as set forth in the HUBCO Disclosure Schedule,
neither HUBCO nor any Subsidiary of HUBCO (i) has requested any extension of
time within which to file any Return which Return has not since been filed, (ii)
is a party to any agreement providing for the allocation or sharing of taxes
with third parties, (iii) is required to include in income any adjustment
pursuant to Section 481(a) of the Code, by reason of a voluntary change in
accounting method initiated by HUBCO (nor does HUBCO have any knowledge that the
IRS has proposed any such adjustment or change of accounting method) or (iv) has
filed a consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply.
4.9 Employee Benefit Plans.
(a) HUBCO and the HUBCO 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 any HUBCO Subsidiary has
contributed to any "Multiemployer Plan", as such term is defined in Section
3(37) of ERISA.
(b) Each of the HUBCO Pension Plans and each of the HUBCO
Welfare Plans has been operated in compliance in all material respects with the
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder, and all other applicable governmental laws and
regulations. HUBCO is not aware of any fact or circumstance which would
disqualify any plan that could not be retroactively corrected (in accordance
with the procedures of the IRS).
(c) The present value of all accrued benefits under each of
the HUBCO Pension Plans subject to Title IV of ERISA, based upon the actuarial
assumptions used for purposes of the most recent actuarial valuation prepared by
such HUBCO Pension Plan's actuary, did not exceed the then current value of the
assets of such plans allocable to such accrued benefits. To the best of HUBCO's
knowledge, the actuarial assumptions then utilized for such plans were
reasonable and appropriate as of the last valuation date and reflect the then
current market conditions.
(d) During the last five years, the PBGC has not asserted any
claim for liability against HUBCO or any HUBCO 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 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.
(i) To the best knowledge of HUBCO, no non-exempt prohibited
transaction, within the meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any HUBCO Welfare Plan or HUBCO Pension Plan
that would result in any material tax or penalty for HUBCO or any HUBCO
Subsidiary.
(h) Except as disclosed in the HUBCO Disclosure Schedule, no
HUBCO Pension Plan or any trust created thereunder has been terminated, nor have
there been any "reportable events" (notice of which has not been waived by the
PBGC), within the meaning of Section 4034(b) of ERISA, with respect to any HUBCO
Pension Plan.
4.10 Reports. Since January 1, 1994, HUBCO has filed all
reports that it was required to file with the SEC under the 1934 Act, all of
which complied in all material respects with all applicable requirements of the
1934 Act and the rules and regulations adopted thereunder. As of their
respective dates, each such report and each registration statement, proxy
statement, form or other document filed by HUBCO with the SEC, including without
limitation, any financial statements or schedules included therein, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1994, HUBCO and each HUBCO
Subsidiary has duly filed all material forms, reports and documents which they
were required to file with each agency charged with regulating any aspect of
their business.
4.11 HUBCO Information. The information relating to HUBCO and
the HUBCO Subsidiaries (including, without limitation, information regarding
other transactions which HUBCO is required to disclose), this Agreement and the
transactions contemplated hereby to be contained 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 shareholders of CFHC to which such Proxy
Statement-Prospectus relates, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Registration Statement shall
comply as to form in all material respects with the provisions of the 1933 Act,
the 1934 Act and the rules and regulations promulgated thereunder.
4.12 Compliance With Applicable Law. Except as set forth in
the HUBCO Disclosure Schedule, each of HUBCO and HUBCO's Subsidiaries holds all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business, and has complied with and is not in default in
any respect under any applicable law, statute, order, rule, regulation, policy
and/or guideline of any federal, state or local governmental authority relating
to HUBCO or HUBCO's Subsidiaries (including without limitation consumer,
community and fair lending laws) (other than where 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 HUBCO) and HUBCO
has not received notice of violation of, and does not know of any violations of,
any of the above.
4.13 Contracts. Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any HUBCO Subsidiary, or to the best knowledge of
HUBCO, any party thereto, is in default in any material respect under any
material lease, contract, mortgage, promissory note, deed of trust, loan or
other commitment (except those under which the Bank or another HUBCO Subsidiary
is or will be the creditor) or arrangement, except for defaults which
individually or in the aggregate would not have a material adverse effect on
HUBCO.
4.14 Properties and Insurance.
(a) HUBCO and the HUBCO Subsidiaries have good and, as to
owned real property, marketable title to all material assets and properties,
whether real or personal, tangible or intangible, reflected in HUBCO's
consolidated balance sheet as of September 30, 1997, or owned and acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since
September 30, 1997), subject to no encumbrances, liens, mortgages, security
interests or pledges, except (i) those items that secure liabilities that are
reflected in said balance sheet or the notes thereto or that secure liabilities
incurred in the ordinary course of business after the date of such balance
sheet, (ii) statutory liens for amounts not yet delinquent or which are being
contested in good faith, and (iii) such encumbrances, liens, mortgages, security
interests, pledges and title imperfections that are not in the aggregate
material to the business, operations, assets, and financial condition of HUBCO
and the HUBCO Subsidiaries taken as a whole. Except as disclosed in the HUBCO
Disclosure Schedule, HUBCO and the HUBCO Subsidiaries as lessees have the right
under valid and subsisting leases to occupy, use, possess and control all
property leased by HUBCO or the HUBCO Subsidiaries in all material respects as
presently occupied, used, possessed and controlled by HUBCO and the HUBCO
Subsidiaries.
(b) The business operations and all insurable properties and
assets of HUBCO and the HUBCO Subsidiaries are insured for their benefit against
all risks which, in the reasonable judgment of the management of HUBCO, should
be insured against, in each case under policies or bonds issued by insurers of
recognized responsibility, in such amounts with such deductibles and against
such risks and losses as are in the opinion of the management of HUBCO adequate
for the business engaged in by HUBCO and the HUBCO Subsidiaries. As of the date
hereof, neither HUBCO nor any HUBCO Subsidiary has received any notice of
cancellation or notice of a material amendment of any such insurance policy or
bond or is in default under any such policy or bond, no coverage thereunder is
being disputed and all material claims thereunder have been filed in a timely
fashion.
4.15 Environmental Matters. Except as disclosed in the HUBCO
Disclosure Schedule, neither HUBCO nor any HUBCO Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that HUBCO or any HUBCO Subsidiary (either directly, or as a
trustee or fiduciary, or as a successor-in-interest in connection with the
enforcement of remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or cleanup of any
condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters which correction or
cleanup would be material to the business, operations, assets or financial
condition of HUBCO and the HUBCO Subsidiaries taken as a whole. Except as
disclosed in the HUBCO Disclosure Schedule, HUBCO has no knowledge that any
toxic or hazardous substances or materials have been emitted, generated,
disposed of or stored on any non-residential property currently owned or leased
by HUBCO or any HUBCO Subsidiary, or owned or leased in the five years prior to
the date of this Agreement in any manner that violates any presently existing
federal, state or local law or regulation governing or pertaining to such
substances and materials, other than violations which, in the aggregate, are
immaterial to HUBCO and the HUBCO Subsidiaries, taken as a whole. Except as
disclosed in the HUBCO Disclosure Schedule, all property formerly owned or
leased by HUBCO or any HUBCO Subsidiary which was subject to ISRA, complied with
all applicable provisions of ISRA at the time such property was sold or
transferred other than non-compliances which, in the aggregate, are immaterial
to HUBCO and the HUBCO Subsidiaries, taken as a whole.
4.16 Reserves. As of September 30, 1997, each of the
allowances for loan losses and the reserve for OREO properties in the HUBCO
Financial Statements was adequate pursuant to GAAP (consistently applied), and
the methodology used to compute each of the loan loss reserves and the reserve
for OREO properties complies in all material respects with GAAP (consistently
applied) and all applicable policies of the FDIC and the New Jersey Department
of Banking.
4.17 HUBCO Stock. As of the date hereof, HUBCO has available
and reserved shares of HUBCO Common Stock sufficient for issuance pursuant to
the Merger and upon the exercise of the CFHC Stock Options and the PMG Warrants.
The HUBCO Common Stock to be issued hereunder pursuant to the Merger and upon
the exercise of the CFHC Stock Options and the PMG Warrants, 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, when so issued, will be registered under the 1933 Act and issued in
accordance with all applicable state and federal laws, rules and regulations and
approved for listing on NASDAQ.
4.18. 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 CFHC 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 CFHC 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 CFHC
by HUBCO prior to the date of this Agreement.
4.19 Capital Adequacy. At the Effective Time, after taking
into account the effect of the Merger, the consummation of the mergers
contemplated by the BTH Agreement and the MSB Agreement and the agreement
whereby HUBCO will assume the deposits in 22 branches of First Union Bank, HUBCO
will have sufficient capital to satisfy all applicable regulatory capital
requirements.
4.20 Minute Books. The minute books of HUBCO and its bank
subsidiaries contain records of all meetings and other corporate action held of
their respective shareholders and Boards of Directors (including committees of
their respective Boards of Directors) that are complete and accurate in all
material respects.
4.21. Year 2000 Compliance. HUBCO and the HUBCO Subsidiaries
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order to be Year 2000 compliant on or before
the end of 1999 and HUBCO does not expect the future cost of addressing such
issues to be material.
4.21. Disclosure. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE V - COVENANTS OF THE PARTIES
5.1. Conduct of the Business of CFHC. During the period from
the date of this Agreement to the Effective Time, CFHC and Community shall, and
shall cause each CFHC 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 CFHC and Community also
shall use its reasonable best efforts to (i) preserve its business organization
and that of the CFHC Subsidiaries intact, (ii) keep available to itself the
present services of its employees and those of the CFHC Subsidiaries, and (iii)
preserve for itself and HUBCO the goodwill of its customers and those of the
CFHC Subsidiaries and others with whom business relationships exist.
5.2. Negative Covenants. From the date hereof to the Effective
Time, except as otherwise approved by HUBCO in writing, or as set forth in the
CFHC Disclosure Schedule, or as permitted or required by this Agreement, neither
CFHC nor Community will:
(a) change any provision of its Certificate of Incorporation
or any similar governing documents;
(b) change any provision of its By-Laws without the consent of
HUBCO which consent shall not be unreasonably withheld;
(c) change the number of shares of its authorized or issued
capital stock (other than upon exercise of stock options or warrants
described in the CFHC Disclosure Schedule in accordance with the term
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, CFHC may
declare, set aside or pay dividends on the CFHC Common Stock in a
quarterly amount equal to $0.14 per share.
(d) grant any severance or termination pay (other than
pursuant to policies or contracts of CFHC in effect on the date hereof
and disclosed to HUBCO in the CFHC 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 CFHC Disclosure Schedule.
(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 the business of
CFHC or Community.
(f) except for reasonable capital expenditures in connection
with the establishment of its branch in Medford, New Jersey and other
capital expenditures not to exceed $25,000 in the aggregate, 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.
(g) file any applications or make any contract with respect to
branching or site location or relocation.
(h) agree to acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or entity or
make any new investments in securities other than investments in
government, municipal or agency bonds having a maturity of less than
five years.
(i) make any material change in its accounting methods or
practices, other than changes required in accordance with generally
accepted accounting principles or regulatory authorities.
(j) take any action that would result in any of 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;
(k) without first conferring with HUBCO, make or commit to
make any new loan or other extension of credit in an amount of $500,000
or more, renew for a period in excess of one year any existing loan or
other extension of credit in an amount of $500,000 or more, or increase
by $500,000 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 in the CFHC Disclosure Schedule and residential loans made
in the ordinary course of business in accordance with past practice; or
(l) agree to do any of the foregoing.
5.3. No Solicitation. So long as this Agreement remains in
effect, CFHC and Community 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 CFHC or Community
(an "Acquisition Transaction"). Notwithstanding the foregoing, (i) CFHC may
respond to inquiries from holders of CFHC Common Stock in the ordinary course of
business and (ii) CFHC may enter into discussions or negotiations or provide any
information in connection with an unsolicited possible Acquisition Transaction
if the Board of Directors of CFHC, 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. CFHC
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 CFHC 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, CFHC
agrees to provide HUBCO, and HUBCO agrees to provide CFHC, with internally
prepared profit and loss statements no later than 15 days after the close of
each calendar month. As soon as reasonably available, but in no event more than
45 days after the end of each fiscal quarter (other than the last fiscal quarter
of each fiscal year), CFHC will deliver to HUBCO and HUBCO will deliver to CFHC
their respective quarterly reports on Form 10-Q, as filed with the SEC under the
1934 Act. As soon as reasonably available, but in no event more than 90 days
after the end of each calendar year, CFHC will deliver to HUBCO and HUBCO will
deliver to CFHC their respective Annual Reports on Form 10-K as filed with the
SEC under the 1934 Act.
5.5. Access to Properties and Records; Confidentiality.
(a) CFHC and Community shall permit HUBCO and its
representatives, and HUBCO shall permit, and cause each HUBCO Subsidiary to
permit, CFHC and its representatives, reasonable access to their respective
properties, and shall disclose and make available to HUBCO and its
representatives, or CFHC 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 shareholders' 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
CFHC 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, CFHC acknowledges that HUBCO may be involved in
discussions concerning other potential acquisitions and HUBCO shall not be
obligated to disclose such information to CFHC 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 Shareholders 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 CFHC
shareholders 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 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 CFHC and
HUBCO to the CFHC 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 CFHC with such information concerning
HUBCO and the HUBCO 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 CFHC if at any time prior to the Shareholders' Meeting any
information provided by HUBCO in the Proxy Statement-Prospectus becomes
incorrect or incomplete in any material respect and to provide CFHC with the
information needed to correct such inaccuracy or omission. HUBCO shall furnish
CFHC with such supplemental information as may be necessary in order to cause
the Proxy Statement-Prospectus, insofar as it relates to HUBCO and the HUBCO
Subsidiaries, to comply with Section 5.6(a) after the mailing thereof to CFHC
shareholders.
(c) CFHC shall furnish HUBCO with such information concerning
CFHC as is necessary to cause the Proxy Statement-Prospectus, insofar as it
relates to CFHC, to comply with Section 5.6(a) hereof. CFHC agrees promptly to
advise HUBCO if at any time prior to the Shareholders' Meeting, any information
provided by CFHC 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. CFHC shall furnish HUBCO with
such supplemental information as may be necessary in order to cause the Proxy
Statement-Prospectus, insofar as it relates to CFHC and Community to comply with
Section 5.6(a) after the mailing thereof to CFHC 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. CFHC shall promptly furnish HUBCO with such
information regarding the CFHC shareholders as HUBCO requires to enable it to
determine what filings are required hereunder. CFHC authorizes HUBCO to utilize
in such filings the information concerning CFHC and Community provided to HUBCO
in connection with, or contained in, the Proxy Statement-Prospectus. HUBCO shall
furnish CFHC's counsel with copies of all such filings and keep CFHC advised of
the status thereof. HUBCO and CFHC shall as promptly as practicable file the
Registration Statement containing the Proxy Statement-Prospectus with the SEC,
and each of HUBCO and CFHC 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 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 filing on the NASDAQ when issued.
(f) The parties hereto will cooperate with each other and use
their reasonable best efforts to prepare all necessary documentation, to effect
all necessary filings and to obtain all necessary permits, consents, approvals
and authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement as soon as possible,
including, without limitation, those required by the FDIC, the FRB, the OCC, the
Department and the DEP. Without limiting the foregoing, the parties shall use
reasonable business efforts to file for approval or waiver by the appropriate
bank regulatory agencies within 45 days after the date hereof. The parties shall
each have the right to review in advance (and shall do so promptly) all filings
with, including all information relating to the other, as the case may be, and
any of their respective subsidiaries, which appears in any filing made with, or
written material submitted to, any third party or Governmental Entity (including
the SEC) in connection with the transactions contemplated by this Agreement.
(g) Each of the parties will promptly furnish each other with
copies of written communications received by them or any of their respective
subsidiaries from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
(h) CFHC 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 CFHC 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. CFHC
agrees to provide HUBCO with any information, certificates, documents or other
materials about CFHC 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. CFHC shall use its reasonable
efforts to cause its attorneys and accountants to provide HUBCO and any
underwriters for HUBCO with any consents, comfort letters, opinion letters,
reports or information which are necessary to complete the registration
statements and applications or any such acquisition or issuance of securities.
HUBCO shall reimburse CFHC for reasonable expenses thus incurred by CFHC should
this transaction be terminated for any reason other than Section 7.1(i). HUBCO
shall not file with the SEC any registration statement or amendment thereto or
supplement thereof containing information regarding CFHC unless CFHC shall have
consented to such filing, which consent shall not be unreasonably delayed or
withheld.
5.7. Approval of Shareholders. CFHC will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
shareholders of CFHC (the "Shareholders Meeting") for the purpose of securing
the approval of shareholders of this Agreement, (ii) subject to the
qualification set forth in Section 5.3 hereof and the right not to make a
recommendation or to withdraw a recommendation if (x) its investment banker
withdraws its fairness opinion prior to the Shareholders' Meeting or (y) CFHC's
Board of Directors, after consulting with counsel, determines in the exercise of
its fiduciary duties that such recommendation should not be made or should be
withdrawn, recommend to the shareholders of CFHC the approval of this Agreement
and the transactions contemplated hereby and use its reasonable best efforts to
obtain, as promptly as practicable, such approval, and (iii) cooperate and
consult with HUBCO with respect to each of the foregoing matters.
If it becomes necessary under NASDAQ rules or applicable laws
to obtain HUBCO shareholder approval, HUBCO shall take all steps necessary to
obtain the approval of its shareholders as promptly as possible. In connection
therewith, HUBCO shall take all steps necessary to duly call, give notice and
convene a meeting of its shareholders for such purpose.
5.8. Further Assurances.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to satisfy
the conditions to Closing and to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, using reasonable
efforts to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated by this Agreement and using its reasonable best efforts to prevent
the breach of any representation, warranty, covenant or agreement of such party
contained or referred to in this Agreement and to promptly remedy the same. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
Nothing in this section shall be construed to require any party to participate
in any threatened or actual legal, administrative or other proceedings (other
than proceedings, actions or investigations to which it is a party or subject or
threatened to be made a party or subject) in connection with consummation of the
transactions contemplated by this Agreement unless such party shall consent in
advance and in writing to such participation and the other party agrees to
reimburse and indemnify such party for and against any and all costs and damages
related thereto if the Merger is not consummated.
(b) HUBCO agrees that from the date hereof to the Effective
Time, except as otherwise approved by CFHC in writing or as permitted or
required by this Agreement, HUBCO will use reasonable business efforts to
maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships, and HUBCO will not, nor will
it permit any HUBCO Subsidiary to, take any action: (i) that would result in any
of its representations and warranties contained in Article IV of this Agreement
not being true and correct in any material respect at, or prior to, the
Effective Time, or (ii) that would cause any of its conditions to Closing not to
be satisfied, or (iii) that would constitute a breach or default of its
obligations under this Agreement.
5.9. Public Announcements. HUBCO and CFHC 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 CFHC 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 CFHC determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to September
30, 1998 (the "Cutoff Date") and that it will not waive that condition, it will
promptly notify the other party. Except for any acquisition or merger
discussions HUBCO may enter into with other parties, CFHC and HUBCO will
promptly inform the other of any facts applicable to CFHC or HUBCO,
respectively, or their respective directors or officers, that would be likely to
prevent or materially delay approval of the Merger by any Governmental Entity or
which would otherwise prevent or materially delay completion of the Merger.
5.11. Employee Matters.
(a) Following consummation of the Merger, HUBCO agrees with
CFHC to honor the existing written contracts with officers and employees of CFHC
and Community that are included in the CFHC Disclosure Schedule.
(b) Following consummation of the Merger, the Bank intends to
make available to all employees of CFHC and Community employed by the Bank
coverage under the HUBCO Pension and Welfare Plans generally available to the
Bank's employees on the terms and conditions available to the Bank's newly hired
employees; provided, however, that credit for prior service with CFHC and/or
Community will be given for the sole purpose of determining whether such
employees are eligible to participate, and vest, when applicable, in the Bank's
medical, vacation, sick leave, disability and 401(k) plans. At HUBCO's option,
CFHC's 401(k) plan will either be frozen or merged into HUBCO's 401(k) plan; in
either event, all employer contributions to CFHC's 401(k) plan will become fully
vested as of the Effective Time.. No prior existing condition limitation shall
be imposed with respect to any medical coverage plan of the Bank.
(c) Following the consummation of the Merger, the Bank intends
to maintain Community' existing severance policy (as restated on March 2, 1998)
attached hereto as Exhibit 5.11, and recognize years of service completed while
employed by CFHC and/or Community for purposes of such policy. Following the
expiration of the foregoing severance policy, any years of service recognized
for purposes of this Section 5.11(c) will be taken into account under the terms
of any applicable severance policy of HUBCO.
5.12. Disclosure Supplements. From time to time prior to the
Effective Time, each party hereto will promptly supplement or amend (by written
notice to the other) its respective Disclosure Schedules delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Schedules or which is necessary to correct any
information in such Schedules which has been rendered materially inaccurate
thereby. For the purpose of determining satisfaction of the conditions set forth
in Article VI and subject to Sections 6.2(a) and 6.3(a), no supplement or
amendment to the parties' respective Disclosure Schedules which corrects any
representation or warranty which was untrue when made shall eliminate the other
party's right (if any) to terminate this Agreement based on the original untruth
of the representation or warranty; provided, that the other party shall be
deemed to have waived such right if it does not exercise such right within 15
days after receiving the correcting supplement or amendment.
5.13. Transaction Expenses of CFHC.
(a) For planning purposes, CFHC shall, within 15 days
from the date hereof, provide HUBCO with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by CFHC in
connection with this transaction, including the fees and expenses of counsel,
accountants, investment bankers and other professionals. CFHC 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,
CFHC shall ask all of its attorneys and other professionals to render current
and correct invoices for all unbilled time and disbursements. CFHC shall accrue
and/or pay all of such amounts as soon as possible.
(c) CFHC shall advise HUBCO monthly of all
out-of-pocket expenses which CFHC has incurred in connection with this
transaction.
(d) HUBCO, in reasonable consultation with CFHC,
shall make all arrangements with respect to the printing and mailing of the
Proxy Statement-Prospectus.
<PAGE>
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 CFHC or Community or
serves or has served at the request of CFHC or Community 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 CFHC or Community or serves
or has served at the request of CFHC or Community 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 CFHC or Community or any of their respective affiliates,
or by any shareholder of CFHC (collectively, "Claims"), including, without
limitation, any Claim which is based upon, arises out of or in any way relates
to the Merger, this Agreement, any of the transactions contemplated by this
Agreement, the Indemnitee's service as a member of the Board of Directors of
CFHC or Community or of any committee of CFHC's or Community's Board of
Directors, the events leading up to the execution of this Agreement, any
statement, recommendation or solicitation made in connection therewith or
related thereto and any breach of any duty in connection with any of the
foregoing, or (ii) the enforcement of the obligations of HUBCO set forth in this
Section 5.14, in each case to the fullest extent which CFHC or Community would
have been permitted under any applicable law, the respective Certificate of
Incorporation of CFHC or Community and the respective By-Laws of CFHC or
Community had the Merger not occurred (and HUBCO shall also advance expenses as
incurred to the fullest extent so permitted). Notwithstanding the foregoing,
HUBCO shall not provide any indemnification not permitted by law nor shall HUBCO
advance 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
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 CFHC or Community immediately prior to the
Effective Time with respect to the indemnification of the Indemnitees arising
out of the Certificate of Incorporation or By-Laws of CFHC or Community 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 CFHC's and Community'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 CFHC's and
Community'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 CFHC's and Community's existing officers' and
directors' liability insurance.
(e) Any Indemnitee wishing to claim indemnification
under this Section 5.14 shall promptly notify HUBCO upon learning of any Claim,
but the failure to so notify shall not relieve HUBCO of any liability it may
have to such Indemnitee if such failure does not materially prejudice HUBCO. In
the event of any Claim (whether arising before or after the Effective Time) as
to which indemnification under this Section 5.14 is applicable, (x) HUBCO shall
have the right to assume the defense thereof and HUBCO shall not be liable to
such Indemnitees for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof,
except that if HUBCO elects not to assume such defense, or counsel for the
Indemnitees advises that there are issues which raise conflicts of interest
between HUBCO and the Indemnitees, the Indemnitees may retain counsel
satisfactory to them, and HUBCO shall pay the reasonable fees and expenses of
such counsel for the Indemnitees as statements therefor are received; provided,
however, that HUBCO shall be obligated pursuant to this Section 5.14(e) to pay
for only one firm of counsel for all Indemnitees in any jurisdiction with
respect to a matter unless the use of one counsel for multiple Indemnitees would
present such counsel with a conflict of interest that is not waived, and (y) the
Indemnitees will cooperate in the defense of any such matter. HUBCO shall not be
liable for settlement of any claim, action or proceeding hereunder unless such
settlement is effected with its prior written consent. Notwithstanding anything
to the contrary in this Section 5.14, HUBCO shall not have any obligation
hereunder to any Indemnitee when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that the indemnification of such Indemnitee in the manner
contemplated hereby is prohibited by applicable law or public policy.
5.15. Bank Policies and Bank Merger. Notwithstanding that CFHC
believes that it has established all reserves and taken all provisions for
possible loan losses required by GAAP and applicable laws, rules and
regulations, CFHC recognizes that HUBCO may have adopted different loan, accrual
and reserve policies (including loan classifications and levels of reserves for
possible loan losses). From and after the date of this Agreement to the
Effective Time and in order to formulate the plan of integration for the Bank
Merger, CFHC and HUBCO shall consult and cooperate with each other with respect
to (i) conforming to the extent appropriate, based upon such consultation,
CFHC's loan, accrual and reserve policies and CFHC's other policies and
procedures regarding applicable regulatory matters, including without limitation
Federal Reserve, the National Bank Act, the Bank Secrecy Act and FDIC matters,
to those policies of HUBCO as HUBCO may reasonably identify to CFHC from time to
time, (ii) new extensions of credit or material revisions to existing terms of
credits by Bank, in each case where the aggregate exposure exceeds $500,000, and
(iii) conforming, based upon such consultation, the composition of the
investment portfolio and overall asset/liability management position of CFHC and
Community to the extent appropriate; provided that any required change in CFHC's
practices in connection with the matters described in clause (i) or (iii) above
need not be effected until the parties receive all necessary governmental
approvals and consents to consummate the transactions contemplated hereby,
5.16. Compliance with Antitrust Laws. Each of HUBCO and CFHC
shall use its reasonable best efforts to resolve such objections, if any, which
may be asserted with respect to the Merger under antitrust laws, including,
without limitation, the Hart-Scott-Rodino Act. In the event a suit is threatened
or instituted challenging the Merger as violative of antitrust laws, each of
HUBCO and CFHC shall use its reasonable best efforts to avoid the filing of,
resist or resolve such suit. HUBCO and CFHC shall use their reasonable best
efforts to take such action as may be required: (a) by the Antitrust Division of
the Department of Justice or the Federal Trade Commission in order to resolve
such objections as either of them may have to the Merger under antitrust laws,
or (b) by any federal or state court of the United States, in any suit brought
by a private party or governmental entity challenging the Merger as violative of
antitrust laws, in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order, or other order which has the effect
of preventing the consummation of the Merger. Reasonable best efforts shall
include, but not be limited to, the proffer by HUBCO of its willingness to
accept an order agreeing to the divestiture, or the holding separate, of any
assets of HUBCO or CFHC, except to the extent that any such divestitures or
holding separate arrangement would have a material adverse effect on HUBCO. The
entry by a court, in any suit brought by a private party or governmental entity
challenging the Merger as violative of antitrust laws, of an order or decree
permitting the Merger, but requiring that any of the businesses, product lines
or assets of HUBCO or CFHC be divested or held separate thereafter shall not be
deemed a failure to satisfy the conditions specified in Section 6.1 hereof
except to the extent that any divestitures or holding separate arrangement would
have a material adverse effect on HUBCO and HUBCO shall not have voluntarily
consented to such divestitures or holding separate arrangements. For the
purposes of this Section 5.16, the divestiture or the holding separate of a
branch or branches of the Bank with, in the aggregate, less than $450,000,000 in
assets shall not be considered to have a material adverse effect on HUBCO.
5.17. Pooling and Tax-Free Reorganization Treatment. Prior to
the date hereof, neither HUBCO or CFHC 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 CFHC shall intentionally
take, fail to take, or cause to be taken or not taken any action within its
control, which would disqualify the Merger as a "pooling-of-interests" for
accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code. Subsequent to the Effective Time, HUBCO shall not take and
shall cause the Surviving Corporation not to take any action within their
control that would disqualify the Merger as such a "reorganization" under the
Code.
5.18. Comfort Letters. HUBCO shall cause Arthur Andersen, its
independent public accountants, to deliver to CFHC, and CFHC shall cause Peat
Marwick, its independent public accountants, to deliver to HUBCO and to its
officers and directors who sign the Registration Statement for this transaction,
a short-form "comfort letter" or "agreed upon procedures" letter, dated the date
of the mailing of the Proxy Statement-Prospectus for the Shareholders Meeting of
CFHC, in the form customarily issued by such accountants at such time in
transactions of this type.
5.19. Affiliates. CFHC has previously delivered to HUBCO a
letter identifying all persons who, to the knowledge of CFHC, may be deemed to
be affiliates of CFHC under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of CFHC. Promptly, but in any event within two
weeks, after the execution and delivery of this Agreement, CFHC shall deliver to
HUBCO copies of letter agreements, each substantially in the form of Exhibit
5.19-1, executed by each such person who has been identified by CFHC in such
letter as an affiliate of CFHC agreeing to comply with Rule 145 and to refrain
from transferring shares as required by the pooling-of-interests accounting
rules. Within two weeks after the date hereof, HUBCO shall cause its directors
and executive officers to enter into letter agreements in the form of Exhibit
5.19-2 with HUBCO concerning the pooling-of-interests accounting rules. HUBCO
hereby agrees to publish, or file a Form 8-K, Form 10-K or Form 10-Q containing
financial results covering at least 30 days of post-Merger combined operations
of HUBCO and CFHC as soon as practicable (but in no event later than 30 days)
following the close of the first calendar month ending 30 days after the
Effective Time, in form and substance sufficient to remove the restrictions set
forth in paragraph "B" of Exhibit 5.19-1.
5.20. Appointments and Empoyees. HUBCO agrees to (i) cause
Robert T. Pluese to be appointed to the Board of Directors of the Surviving Bank
and to use its best efforts to cause Mr. Pluese to be re-elected to the Board of
the Surviving Bank for a period of three years, (ii) cause each director of
Community to be appointed as a member of an advisory board of the New Division
for a period of three years and cause each such member to receive fees for
service on the advisory board equal to $4,500.00 annually and (iii) cause Gerard
M. Banmiller to be appointed as Regional President of the New Division.
<PAGE>
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 CFHC Shareholders; SEC Registration. This
Agreement and the transactions contemplated hereby shall have been approved by
the requisite vote of the shareholders of CFHC. The HUBCO Registration Statement
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 FDIC, the Department, the FRB, the OCC, the SEC and the DEP)
required to consummate the transactions contemplated hereby shall have been
obtained without any term or condition which would materially impair the value
of CFHC and Community, 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 CFHC 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 shall have received an opinion, dated
as of the Effective Time, of Pitney, Hardin, Kipp & Szuch, reasonably
satisfactory in form and substance to HUBCO, and CFHC shall have received an
opinion, dated as of the Effective Time, of Stevens & Lee reasonably
satisfactory in form and substance to CFHC, in each case based upon
representation letters reasonably required by such counsel, dated on or about
the date of such opinion, and such other facts and representations as such
counsel may reasonably deem relevant, to the effect that
(i) the Merger will be treated for federal income tax purposes
as a reorganization qualifying under the provisions of Section
368 of the Code; (ii) no gain or loss will be recognized by
CFHC; (iii) no gain or loss will be recognized by the holders
of CFHC Common Stock upon the exchange of CFHC Common Stock
solely for HUBCO Common Stock; (iv) the tax basis of any HUBCO
Common Stock received in exchange for CFHC Common Stock shall
equal the basis of the recipient's CFHC 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 CFHC Common Stock will include the period during which
CFHC 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 CFHC, 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 CFHC and Community. Except for those representations which are made as of a
particular date, the representations and warranties of CFHC 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. CFHC 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 CFHC
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 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 CFHC 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 CFHC, dated the Closing Date, in form and substance reasonably
satisfactory to HUBCO, substantially in accordance with Exhibit 6.2(b) hereto.
(c) Certificates. CFHC 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. CFHC shall have furnished HUBCO with letters
from all attorneys representing CFHC and Community in any matters confirming
that all legal fees have been paid in full for services rendered as of the
Effective Time.
(e) Merger Related Expense. CFHC 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.
6.3. Conditions to the Obligations of CFHC Under this
Agreement. The obligations of CFHC 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 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. CFHC shall have received an
opinion of counsel to HUBCO, dated the Closing Date, in form and substance
reasonably satisfactory to CFHC, substantially in accordance with Exhibit 6.3(b)
hereto.
(c) Fairness Opinion. CFHC shall have received an opinion from
Berwind, dated no more than three days prior to the date the Proxy
Statement-Prospectus is mailed to CFHC's shareholders (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 shareholders of
CFHC hereunder is fair to such shareholders from a financial point of view
("Fairness Opinion").
(d) Certificates. HUBCO shall have furnished CFHC 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 CFHC may
reasonably request.
(e) Officer and Director. Robert T. Pluese shall be appointed
by the Board of Directors of the Bank to the Surviving Bank's Board of Directors
and Gerard M. Banmiller shall be appointed as Regional President of the New
Division, effective at the Effective Time.
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
shareholders of CFHC:
(a) by mutual written consent of the parties hereto;
(b) by HUBCO or CFHC (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
shareholders of CFHC is taken and such shareholders fail to approve this
Agreement at the meeting (or any adjournment or postponement thereof) held for
such purpose, or (iii) if a vote of the shareholders of HUBCO is required by
applicable NASDAQ rules, such vote is taken and such shareholders fail to
approve this Agreement at the meeting (or any adjournment or postponement
thereof) held for such purpose;
(c) by HUBCO or CFHC 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 CFHC if any such
application is approved with conditions (other than conditions which are
customary in such regulatory approvals) which would have a Material Adverse
Effect on HUBCO;
(d) by HUBCO if (i) there shall have occurred a change in the
business, operations, assets, or financial condition of CFHC and Community,
taken as a whole, from that disclosed by CFHC in CFHC's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997 which change shall have resulted
in a material adverse effect on CFHC or (ii) there was a material breach in any
representation, warranty, covenant, agreement or obligation of CFHC hereunder
and such breach shall not have been remedied within 30 days after receipt by
CFHC of notice in writing from HUBCO to CFHC specifying the nature of such
breach and requesting that it be remedied, provided, that those matters
disclosed in the CFHC Disclosure Schedule shall not be deemed to have caused
such a material adverse effect and for the purposes of this Section 7.1(d) only,
the term material adverse effect shall not be deemed to include the impact of
any changes in the business, operations, assets or financial condition of CFHC
or Community, taken as a whole, resulting from (x) changes in interest rates and
economic conditions affecting banking institutions generally, (y) changes in
banking and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, and (z) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to banks
and bank holding companies;
(e) by CFHC, if (i) there shall have occurred a change in the
business, operations, assets or financial condition of HUBCO and the HUBCO
Subsidiaries taken as a whole from that disclosed by HUBCO in HUBCO's Annual
Report on Form 10-K for the year ended December 31, 1996 and Quarterly Report on
Form 10-Q for the nine month period ending September 30, 1997 except for the
Effects of Announced Acquisitions, which change shall have resulted in a
material adverse effect on HUBCO (it being understood that those matters
disclosed in the HUBCO Disclosure Schedule shall not be deemed to have caused
such a material adverse effect); or (ii) there was a material breach in any
representation, warranty, covenant, agreement or obligation of HUBCO hereunder
and such breach shall not have been remedied within 30 days after receipt by
HUBCO of notice in writing from CFHC specifying the nature of such breach and
requesting that it be remedied, provided, that those matters disclosed in the
HUBCO Disclosure Schedule shall not be deemed to have caused such a material
adverse effect and for the purposes of this Section 7.1(e) only, the term
material adverse effect shall not be deemed to include the impact of any changes
in the business, operations, assets or financial condition of HUBCO or the Bank,
taken as a whole, resulting from (x) changes in interest rates and economic
conditions affecting banking institutions generally, (y) changes in banking and
similar laws of general applicability or interpretations thereof by courts or
governmental authorities, and (z) changes in generally accepted accounting
principles or regulatory accounting requirements applicable to banks and bank
holding companies;
(f) by CFHC, if CFHC's Board of Directors shall have approved
an Acquisition Transaction after determining, upon advice of counsel, that such
approval was necessary in the exercise of its fiduciary obligations under
applicable laws;
(g) by HUBCO if the conditions set forth in Section 6.2 are
not satisfied and are not capable of being satisfied by the Cutoff Date; or
(h) by CFHC if the conditions set forth in Section 6.3 are not
satisfied and are not capable of being satisfied by the Cutoff Date;
(i) by CFHC, in accordance with Section 2.1(a).
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either HUBCO or CFHC 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 shareholders. 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 shareholders of CFHC 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 CFHC without the approval of such shareholders.
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, HUBCO shall bear all expenses of the financial
printer in connection with the Registration Statement and the Proxy
Statement-Prospectus and HUBCO may bear the expenses of the Bank and CFHC may
bear the expenses of Community.
(b) Notwithstanding any provision in this Agreement to the
contrary, in the event that either of the parties shall willfully default in its
obligations hereunder, the non-defaulting party may pursue any remedy available
at law or in equity to enforce its rights and shall be paid by the willfully
defaulting party for all damages, costs and expenses, including without
limitation legal, accounting, investment banking and printing expenses, incurred
or suffered by the non-defaulting party in connection herewith or in the
enforcement of its rights hereunder.
8.2. Survival. The respective representations, warranties,
covenants and agreements of the parties to this Agreement shall not survive the
Effective Time, but shall terminate as of the Effective Time, except for Article
II, this Section 8.2 and Sections 5.5(b), 5.8(a) and 5.14.
<PAGE>
8.3. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by reputable overnight courier or sent by registered or certified
mail, postage prepaid, as follows:
(a) If to HUBCO, to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: Kenneth T. Neilson, President and
Chief Executive Officer
Copy to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: D. Lynn Van Borkulo-Nuzzo, Esq.
And copy to:
Pitney, Hardin, Kipp & Szuch
(mail to) P.O. Box 1945
Morristown, NJ 07962
(deliver to) 200 Campus Drive
Florham Park, NJ 07932
Attn.: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
(b) If to CFHC, to:
Community Financial Holding Company
222 Haddon Avenue
Westmont, NJ 08108
Attn.: Robert T. Pluese, Chairman
<PAGE>
Copy to:
Stevens & Lee
1415 Route 70 East, Suite 506
Cherry Hill, NJ 08034
Attn.: Jeffrey P. Waldron, Esq.
Edward C. Hogan, 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.
<PAGE>
IN WITNESS WHEREOF, HUBCO, the Bank, CFHC and Community have
caused this Agreement to be executed by their duly authorized officers as of the
day and year first above written.
ATTEST: HUBCO, INC.
By: D. LYNN VAN BORKULO-NUZZO By: KENNETH T. NEILSON
--------------------------- ------------------------------
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, President
Secretary and Chief Executive Officer
ATTEST: COMMUNITY FINANCIAL
HOLDING CORPORATION
By: KEVIN L. KUTCHER By: GERARD M. BANMILLER
--------------------------- - ------------------------------
Kevin L. Kutcher, Gerard M. Banmiller, President
Secretary
ATTEST: HUDSON UNITED BANK
By: D. LYNN VAN BORKULO-NUZZO By: KENNETH T. NEILSON
----------------------------- --------------------------------
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, President
Secretary and Chief Executive Officer
ATTEST: COMMUNITY NATIONAL BANK
By: KEVIN L. KUTCHER By: GERARD M. BANMILLER
---------------------------- -------------------------------
Kevin L. Kutcher, Gerard M. Banmiller, President
Secretary
<PAGE>
CERTIFICATE OF THE DIRECTORS OF COMMUNITY FINANCIAL
HOLDING CORPORATION AND COMMUNITY NATIONAL BANK
Reference is made to the Agreement and Plan of Merger, dated
as of March 2, 1998 (the "Agreement"), among HUBCO, Inc., Hudson United Bank,
Community Financial Holding Corporation and Community National Bank. Capitalized
terms used herein have the meanings given to them in the Agreement.
Each of the following persons, being all of the directors of
CFHC and Community, agrees to vote or cause to be voted all shares of CFHC
Common Stock which are held by such person, or over which such person exercises
full voting control, in favor of the Merger, unless prior to such vote CFHC's
Board of Directors makes the determination described in clause (y) of Section
5.7 of the Agreement.
ELIZABETH BURNS FRANK SMITH
- ----------------------------------- ---------------------------
Elizabeth Burns Frank Smith
MICHAEL BRENNAN MARVIN SAMSON
- ----------------------------------- ---------------------------
Michael Brennan Marvin Samson
GERALD DEFELICIS ROBERT T. PLUESE
- ----------------------------------- ---------------------------
Gerald DeFelicis Robert T. Pluese
LETITIA COLOMBI DORIS DAMM
- ----------------------------------- ---------------------------
Letitia Colombi Doris Damm
GERARD M. BANMILLER JOSEPH RIGGS
- ----------------------------------- ---------------------------
Gerard M. Banmiller Joseph Riggs
Dated: As of March 2, 1998
<PAGE>
EXHIBIT 1.7
SUBSIDIARY AGREEMENT AND PLAN OF MERGER
This Subsidiary Agreement and Plan of Merger (this
"Agreement") is dated as of March __, 1998, among HUDSON UNITED BANK (the
"Bank"), a New Jersey state-chartered banking corporation and a wholly-owned
subsidiary of HUBCO, Inc., a New Jersey corporation ("Parent"), and COMMUNITY
NATIONAL BANK ("Community"), a federally-chartered banking association and a
wholly-owned subsidiary of Community Financial Holding Corporation, a New Jersey
corporation ("CFHC"). The principal office of the Bank is located at 3100
Bergenline Avenue, Union City, New Jersey. The Bank has capital of $________,
divided into _______ shares of common stock, each of par value $___ per share
(the "Bank Common Stock"), capital surplus of $________ and undivided profits,
including capital reserves, of $_________, as of December 31, 1997. The
principal office of Community is located at ________________________________,
New Jersey. Community has capital of $_________ divided into ____ shares of
common stock, each of $____ par value (the "Community Common Stock"), capital
surplus of $_________ and undivided profits, including capital reserves, of
$_________, as of December 31, 1997.
WHEREAS, the respective Board of Directors of Parent, CFHC,
the Bank and Community has approved, and deem it advisable and in the best
interests of their respective shareholders to consummate, the business
combination transaction between Parent and CFHC set forth in the Agreement and
Plan of Merger, dated as of February __, 1998 (the "Parent Merger Agreement"),
by and among Parent, CFHC, the Bank and Community, pursuant to which CFHC will
merge with and into Parent (the "Parent Merger"); and
WHEREAS, not less than a majority of each of the Boards of
Directors of the Bank and Community have approved, and deem it advisable to
consummate, the subsidiary merger provided for herein (the "Subsidiary Merger")
and in the Parent Merger Agreement, in accordance with the provisions of
applicable law;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Parent Merger Agreement, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Subsidiary Merger. Subject to the
provisions of this Agreement, the Subsidiary Merger shall become effective in
accordance with the terms of the Certificate of Merger pursuant to N.J.S.A.
17:9A-137 (the "Certificate of Merger") which shall be filed with the New Jersey
Department of Banking and Insurance (the "Banking Department") and the written
notice regarding the consummation of the Subsidiary Merger (the "Notice") which
shall be filed with the Office of the Comptroller of the Currency (the "OCC")
immediately following the Effective Time (as defined in Section 1.6 of the
Parent Merger Agreement). The term "Subsidiary Merger Effective Time" shall be
the date and time when the Subsidiary Merger becomes effective, as set forth in
the Certificate of Merger and the Notice.
1.2 Closing. Notwithstanding anything to the contrary
contained in the Parent Merger Agreement, the closing of the Subsidiary Merger
will take place immediately subsequent to the Parent Merger on the date and at
the location specified in the Parent Merger Agreement with respect to the Parent
Merger or at such other time, date or place as may be agreed to by the parties
hereto (the "Closing Date").
1.3. Effect of the Subsidiary Merger.
(a) At the Subsidiary Merger Effective Time:
(i) the separate existence of Community shall cease
and Community shall be merged with and into the Bank (the Bank is sometimes
referred to as herein as the "Surviving Bank"), except that at the Effective
Time the business of Community shall be operated as a division of the Surviving
Bank called "Community National Division of Hudson United Bank" or such other
similar name as agreed to by the parties (the "New Division");
(ii) the Certificate of Incorporation of the Bank as
in effect immediately prior to the Subsidiary Merger Effective Time shall be the
Certificate of Incorporation of the Surviving Bank until duly amended in
accordance with applicable law, and the name of the Surviving Bank shall be
Hudson United Bank;
(iii) the Bylaws of the Bank as in effect immediately
prior to the Subsidiary Merger Effective Time shall be the Bylaws of the
Surviving Bank;
(iv) the main office and branch offices of the Bank
established and authorized immediately prior to the Subsidiary Merger Effective
Time and listed on Exhibit A attached hereto and the main office and branch
offices of Community established and authorized immediately prior to the
Subsidiary Merger Effective Time and listed on Exhibit B attached hereto shall
become established and authorized branch offices of the Surviving Bank;
(v) the directors of the Bank immediately prior to
the Subsidiary Merger Effective Time and Robert T. Pluese who will be appointed
by the Bank at the Subsidiary Merger Effective Time, shall be the directors of
the Surviving Bank, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Bank until their respective successors
are duly elected or appointed and qualified (the names of the directors of the
Surviving Bank are listed on Exhibit C attached hereto);
(vi) the executive officers of the Bank immediately
prior to the Subsidiary Merger Effective Time shall be the executive officers of
the Surviving Bank, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Bank until their respective successors
are duly elected or appointed and qualified (the names of the executive officers
of the Surviving Bank are listed on Exhibit D attached hereto); and
(vii) an advisory board to the New Division shall be
created and such other appointments shall be made pursuant to Section 5.20 of
the Parent Merger Agreement
(b) At and after the Subsidiary Merger Effective
Time, the Subsidiary Merger shall have all the effects set forth in N.J.S.A.
17:9A-139 and 12 U.S.C. 214a and, in connection therewith, all assets of the
Bank and Community as they exist at the Subsidiary Merger Effective Time shall
pass to and vest in the Surviving Bank without any conveyance or other transfer.
The Surviving Bank shall be responsible for all liabilities and obligations of
every kind and description of each of Community and the Bank existing as of the
Subsidiary Merger Effective Time, whether matured or unmatured, accrued,
absolute, contingent or otherwise, and whether or not reflected or reserved
against on balance sheets, books of account or records of Community or the Bank.
(c) The business of the Surviving Bank shall be that
of a New Jersey banking corporation, which shall be conducted as its
headquarters or main office at 3100 Bergenline Avenue, Union City, New Jersey
and its established and authorized branch offices which are listed on Exhibits A
and B.
ARTICLE II
EFFECT OF THE SUBSIDIARY MERGER ON THE CAPITAL
OF THE CONSTITUENT BANKS; EXCHANGE OF CERTIFICATES
2.1 Effect on Community Capital Stock. At the Subsidiary
Merger Effective Time, by virtue of the Subsidiary Merger and without any action
on the part of the holder of any shares of Community Common Stock, all shares of
Community Common Stock (other than shares of Community Common Stock that are
owned by Community as treasury stock) shall become and be converted into the
right to receive that number of shares of common stock, __ par value of the Bank
as shall in the aggregate have a fair market value equal to the fair market
value of the shares of Community Common Stock being exchanged at the Subsidiary
Merger Effective Time. All shares of Community Common Stock that are owned by
Community as treasury stock shall automatically be canceled and retired and
shall cease to exist and no stock of the Bank or other consideration shall be
delivered in exchange therefor.
2.2 The Bank Common Stock. The shares of the Bank Common Stock
issued and outstanding immediately prior to the Subsidiary Merger Effective Time
shall remain outstanding and unchanged after the Subsidiary Merger.
2.3 Capital of Surviving Bank. The amount of capital stock of
the Surviving Bank immediately following the Subsidiary Merger Effective Time
shall be $_________, divided into ________ shares of common stock, each of $____
par value, and immediately following the Subsidiary Merger Effective Time, the
Surviving Bank shall have a surplus of $_________ and undivided profits,
including capital reserves, which, when combined with the capital and surplus,
will be equal to the combined capital structures of Community and the Bank
referred to in the preamble of this Agreement, adjusted, however, for normal
earnings and expenses between December 31, 1997 and the Subsidiary Merger
Effective Time.
ARTICLE III
COVENANTS
3.1 Covenants of the Bank and Community. During the period
from the date of this Agreement and continuing until the Subsidiary Merger
Effective Time, each of the parties hereto agrees to observe and perform all
agreements and covenants of Parent, CFHC, the Bank and Community in the Parent
Merger Agreement that pertain or are applicable to the Bank and Community,
respectively. Each of the parties hereto agrees to use all reasonable 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
consummate and make effective the transactions contemplated by this Agreement,
subject to and in accordance with the applicable provisions of the Parent Merger
Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Each Party's Obligation To Effect the
Subsidiary Merger. The respective obligations of each party to effect the
Subsidiary Merger shall be subject to the satisfaction prior to the Closing Date
of the following conditions:
(a) Satisfaction of Conditions. Each condition to
consummation of the Parent Merger contained in the Parent Merger Agreement shall
have been satisfied (or waived by the party or parties entitled to assert such
condition), and each party shall have received a certificate from the other
party to the effect that all of the conditions to its obligation to consummate
the Parent Merger contained in the Parent Merger Agreement have been satisfied
or waived.
(b) No Injunctions or Restraints; Illegality. No
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Subsidiary Merger shall be in effect. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, restricts or makes illegal
the consummation of the Subsidiary Merger.
(c) Shareholder Approvals. This Agreement and the
transactions contemplated hereby shall have been duly approved, ratified and
confirmed in accordance with applicable law and the respective certificate of
incorporation and By-Laws of Community and the Bank by the affirmative vote of
the shareholders of Community and the Bank, such vote adopted at a meeting of
each such sole shareholder or by each such shareholder's written consent in lieu
thereof.
(d) Other Approvals. Other than the filings and
approvals provided for by Section 1.1, all requisite regulatory approvals
relating to the Subsidiary Merger shall have been filed, occurred or been
obtained and shall continue to be in full force and effect. In addition, all
consents, approvals and permits of and notices to non-governmental third parties
that are necessary to consummate the Subsidiary Merger shall have been filed,
occurred or been obtained and shall continue to be in full force and effect.
ARTICLE V
TERMINATION AND AMENDMENT
5.1 Termination. This Agreement shall be terminated
immediately and without any action on the part of Community or the Bank upon
termination of the Parent Merger Agreement. This Agreement may be terminated at
any time prior to the Subsidiary Merger Effective Time by mutual consent of the
Bank and Community in a written instrument, if the Board of Directors of each so
determines by a vote of a majority of the members of its entire board.
5.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 5.1, this Agreement shall forthwith become void
and there shall be no liability or obligation under this Agreement on the part
of the Bank, Community or their respective officers, directors or affiliates.
5.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
ARTICLE VI
GENERAL PROVISIONS
6.1 Definitions. All capitalized terms which are used but not
defined herein shall have the meanings set forth in the Parent Merger Agreement.
6.2 Nonsurvival of Agreements. None of the agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except to the extent set forth in the Parent Merger
Agreement.
6.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the Bank or Community, respectively, at the addresses for
notices to Parent or CFHC, respectively, as set forth in the Parent Merger
Agreement, with copies to the persons referred to therein.
6.4 Counterparts. This Agreement may be adopted, certified and
executed in separate counterparts, each of which shall be considered one and the
same agreement and shall become effective when all counterparts have been signed
by each of the parties and delivered to the other party, it being understood
that both parties need not sign the same counterpart.
6.5 Entire Agreement. Except as otherwise set forth in this
Agreement or the Parent Merger Agreement (including the documents and the
instruments referred to herein or therein), this Agreement constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
6.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New Jersey without regard
to any applicable conflicts of law.
6.7 Binding Effect. This Agreement is intended to be binding
on any successors of the parties.
6.8 Assignment. Except as provided herein, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party.
<PAGE>
IN WITNESS WHEREOF, the Bank and Community have caused this
Agreement to be signed by their duly authorized officers, under the respective
seal of such entities, all as of the date first above written.
ATTEST HUDSON UNITED BANK
- ------------------------------ ----------------------------------
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, President and Chief
Secretary Executive Officer
ATTEST COMMUNITY NATIONAL BANK
- ------------------------------ ----------------------------------
By: Gerard M. Banmiller, President
Title:
<PAGE>
EXHIBIT 5.11
COMMUNITY NATIONAL BANK
OFFICER AND STAFF SEVERANCE POLICY
(restated March 2, 1998)
If an employee employed as of the date of the close of business on
March 2, 1998 is terminated within 14 months subsequent to the consummation of
the merger between CFHC and HUBCO, other than (i) termination for cause, death,
disability, retirement or voluntary termination on the part of the employee, or
(ii) termination of an employee covered under an employment agreement with CFHC
or HUBCO, then said employee shall be entitled to the following lump sum
payment, subject to applicable withholding, at the date of termination:
Full Time Staff:
5 or more Years of Service at Time of Termination - 2 weeks Salary for
each Year of Service
0 to 5 Years of Service at Time of Termination - 1 week Salary for each
one Year of Service
Part Time Staff:
Same as above except based on hours worked
For the purpose of this Officer and Staff Severance
Policy, the term "termination for cause" shall mean a termination upon ten days
written notice to the employee as a result of the employee's (i) willful
misconduct, (ii) intentional breach of fiduciary duty involving personal profit,
(iii) intentional refusal to perform material stated duties, (iv) willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order.
<PAGE>
EXHIBIT 5.19-1
FORM OF CFHC AFFILIATE LETTER
March __, 1998
HUBCO, Inc.
[ADDRESS]
Gentlemen:
I am delivering this letter to you in connection with the
proposed acquisition (the "Merger") of Community Financial Holding Corporation
(the "Company"), by HUBCO, Inc., a New Jersey corporation and registered bank
holding company ("HUBCO"), pursuant to the Agreement and Plan of Merger dated
March 2, 1998 (the "Agreement") between the Company, its bank subsidiary, HUBCO
and its bank subsidiary. Capitalized terms used herein and not otherwise defined
have the meanings assigned to them in the Agreement. I currently own shares of
CFHC Common Stock. As a result of the Merger, I will receive shares of HUBCO
Common Stock in exchange for my CFHC 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 CFHC 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 CFHC 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 in writing a copy of which is
provided to me, 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 CFHC 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 CFHC 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, "CFHC Common
Stock" includes HUBCO Common Stock as 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
shareholders, any transfer by me of HUBCO Common Stock is restricted under Rule
145 promulgated by the SEC under the 1933 Act. I agree not to transfer any HUBCO
Common Stock received by me or any of my affiliates unless (i) such transfer is
made in conformity with the volume and other limitations of Rule 145 promulgated
by the SEC under the 1933 Act, (ii) in the opinion of HUBCO's counsel or counsel
reasonably acceptable to HUBCO, such transfer is otherwise exempt from
registration under the 1933 Act or (iii) such transfer is registered under the
1933 Act.
D. Stop Transfer Instructions; Legend on Certificates. I also
understand and agree that stop transfer instructions will be given to HUBCO's
transfer agents with respect to the HUBCO Common Stock received by me and any of
my affiliates and that there will be placed on the certificates of the HUBCO
Common Stock issued to me and any of my affiliates, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED MARCH 2,
1998 BETWEEN THE REGISTERED HOLDER HEREOF AND HUBCO, INC., A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF HUBCO, INC."
E. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for the Company.
Execution of this letter is not an admission on my part that I
am an "affiliate" of the Company as described in the second paragraph of this
letter, or a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter. This letter shall
terminate concurrently with any termination of the Agreement in accordance with
its terms.
Very truly yours,
-----------------------------
Name:
Accepted this _____
day of _______, 199__ by
HUBCO, INC.
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 5.19-2
FORM OF AFFILIATE LETTER FOR HUBCO AFFILIATES
March __, 1998
HUBCO, Inc.
[ADDRESS]
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of Community Financial Holding Corporation
("CFHC") with and into HUBCO, Inc., a New Jersey corporation and registered bank
holding company ("HUBCO"), pursuant to the Agreement and Plan of Merger dated
March 2, 1998 (the "Agreement") between CFHC, its bank subsidiary, HUBCO and its
bank subsidiary. 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 "SEC") 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 and covenant with HUBCO and CFHC 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.
<PAGE>
Very truly yours,
-------------------------------------
Name:
Title:
Accepted this ____ day of
________________, 199_ by
HUBCO, INC.
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT 6.2
FORM OF OPINION OF COUNSEL TO CFHC
TO BE DELIVERED TO HUBCO ON THE EFFECTIVE TIME
(a) CFHC and Community 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 CFHC and Community, and the Agreement constitutes the valid and legally
binding obligations of CFHC and Community 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 banking 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
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 CFHC and Community 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 CFHC or the charter or bylaws of Community, 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 CFHC or Community 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
CFHC or Community, 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 CFHC or Community.
(b) CFHC is a corporation validly existing and in good
standing under the laws of the State of New Jersey, Community is a validly
existing federally-chartered banking association under the laws of the United
States of America and each of CFHC and Community 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 on pages __ and __ under
the caption "_____________________" in the Proxy Statement-Prospectus. The
deposits of Community are insured to the maximum extent provided by law by the
Federal Deposit Insurance Corporation.
(c) Each CFHC Subsidiary listed as such in the CFHC Disclosure
Schedule is validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
(d) There is, to the knowledge of such counsel, no legal,
administrative, arbitration or governmental proceeding or investigation pending
or threatened to which CFHC or Community is a party which would, if determined
adversely to CFHC or Community, have a material adverse effect on the business,
properties, results of operations, or condition, financial or otherwise, of CFHC
or Community 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 counsel's knowledge of any third party, is required for the consummation by
CFHC or Community 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 CFHC 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
CFHC 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 CFHC or Community 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 CFHC and Community.
Such counsel's opinion shall be limited to matters governed by
the laws of the State of New Jersey and federal laws and regulations of the
United States of America.
<PAGE>
EXHIBIT 6.3
FORM OF OPINION OF COUNSEL TO HUBCO
TO BE DELIVERED TO CFHC ON THE EFFECTIVE TIME
(a) HUBCO is a corporation validly existing and in good
standing under the laws of the State of New Jersey, the Bank is a validly
existing New Jersey state-chartered banking association under the laws of the
State of New Jersey and each of HUBCO and the Bank has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as 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 HUBCO Subsidiary 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 the Bank and constitutes the valid and binding obligations of HUBCO
and the Bank enforceable in accordance with its terms, except that the
enforceability of the obligations of HUBCO and the Bank 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 or the Charter and By-Laws of the Bank ; (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 and
the Bank in connection therewith or in the course of our representation of HUBCO
and the Bank in connection with the Agreement) and to which HUBCO or the Bank is
a party or by which HUBCO or the Bank is bound; or (iii) cause HUBCO or the Bank
to violate any corporation or banking law applicable to HUBCO.
(f) All actions of the directors and shareholders of HUBCO and
the Bank required by federal banking laws and regulations and New Jersey law or
by the Certificate of Incorporation or By-Laws of HUBCO and the Bank, to be
taken by HUBCO and the Bank 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
CFHC and that CFHC has taken all action required to be taken by it prior to the
Effective Time, upon the appropriate filing of the Certificate of Merger in
respect of the Merger with 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 CFHC 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 or the Bank in order to permit the execution and
delivery of the Agreement by HUBCO or the Bank and the performance by HUBCO or
the Bank of the transactions contemplated thereby other than those Approvals
which have been obtained or those Approvals or consents required to be obtained
by CFHC.
(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 CFHC 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 March 2,
1998, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and COMMUNITY FINANCIAL HOLDING CORPORATION, a
New Jersey corporation and registered bank holding company ("CFHC").
BACKGROUND
WHEREAS, HUBCO and CFHC, as of the date hereof, are prepared
to execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which CFHC will be merged with and into HUBCO (the "Merger"); and
WHEREAS, HUBCO has advised CFHC that it will not execute the
Merger Agreement unless CFHC executes this Agreement; and
WHEREAS, the Board of Directors of CFHC has determined that
the Merger Agreement provides substantial benefits to the shareholders of CFHC;
and
WHEREAS, as an inducement to HUBCO to enter into the Merger
Agreement and in consideration for such entry, CFHC desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of CFHC 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 CFHC,
intending to be legally bound hereby, agree:
1. Grant of Option. CFHC hereby grants to HUBCO the option to
purchase 252,790 shares of common stock, $5.00 par value, of CFHC (the "Common
Stock") at a price of $24.40 per share (the "Option Price"), on the terms and
conditions set forth herein (the "Option").
2. Exercise of Option. This Option shall not be exercisable
until the occurrence of a Triggering Event (as such term is hereinafter
defined). Upon or after the occurrence of a Triggering Event (as such term is
hereinafter defined), HUBCO may exercise the Option, in whole or in part, at any
time or from time to time, subject to the terms and conditions set forth herein
and the termination provisions of Section 19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such term is
defined in Rule 13d-3 as promulgated under the Exchange Act) of at least 20% of
the then outstanding shares of Common Stock; or
b. enters into a letter of intent or an agreement,
whether oral or written, with CFHC pursuant to which such person or any
affiliate of such person would (i) merge or consolidate, or enter into any
similar transaction, with CFHC, (ii) acquire all or a significant portion of the
assets or liabilities of CFHC, or (iii) acquire beneficial ownership of
securities representing, or the right to acquire beneficial ownership or to vote
securities representing, 20% or more of the then outstanding shares of Common
Stock; or
c. makes a filing with any bank 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, CFHC or any other business
combination involving CFHC, or (ii) a transaction involving the transfer of
beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 20% or more of the
outstanding shares of Common Stock, and thereafter, if such Proposal has not
been Publicly Withdrawn (as such term is hereinafter defined) at least 15 days
prior to the meeting of shareholders of CFHC called to vote on the Merger and
CFHC's shareholders fail to approve the Merger by the vote required by
applicable law at the meeting of shareholders called for such purpose; or
d. makes a bona fide Proposal and thereafter, but
before such Proposal has been Publicly Withdrawn, CFHC 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 CFHC or any of its directors, senior
executive officers, investment bankers or other person with actual or apparent
authority to speak for the CFHC 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 CFHC, or a sale of a significant number of shares of Common
Stock or any significant portion of its assets or liabilities (any of the
foregoing, an "Insider Action"); provided, that such Insider Action shall not
constitute a Triggering Event if (i) promptly but in any event within 24 hours
after the Insider Action occurs, CFHC so notifies HUBCO in a writing which
describes the Insider Action in reasonable detail, (ii) promptly but in any
event within 48 hours after HUBCO requests in writing, CFHC takes all actions
which HUBCO reasonably requests in order to ameliorate any actual or potential
negative effects of the Insider Action, and (iii) the Insider Action does not
actually have an adverse effect on HUBCO or on the ability of HUBCO or CFHC to
consummate the Merger or to do so in a timely manner.
The term "significant portion" means 25% of the assets or
liabilities of CFHC. The term "significant number" means 20% of the outstanding
shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the Proposal coupled
with a public announcement of no further interest in pursuing such Proposal or
in acquiring any controlling influence over CFHC or in soliciting or inducing
any other person (other than HUBCO or any affiliate of HUBCO) 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 CFHC 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, or (iii) if at any time between the
exercise of the Option and the issuance of the Option Shares, HUBCO has breached
in a material respect any of the material covenants of the Merger Agreement
which remain applicable to it.
CFHC 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 CFHC shall not be a condition to the right of HUBCO to exercise the
Option. CFHC will not take any action which would have the effect of preventing
or disabling CFHC 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 CFHC (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 CFHC of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by CFHC; (b) CFHC 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 CFHC, registered in the name of HUBCO or its
designee, in such denominations as were specified by HUBCO in its notice of
exercise and 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.
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 COMMUNITY FINANCIAL HOLDING
CORPORATION, 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, CFHC 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 CFHC 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 CFHC shall
not be required to prepare and file any such registration statement in
connection with any proposed sale with respect to which counsel to CFHC delivers
to CFHC and to HUBCO its opinion (which is reasonably acceptable to HUBCO) 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 CFHC
may delay any registration of Option Shares above for a period not exceeding 90
days in the event that CFHC shall in good faith determine that any such
registration would adversely effect an offering of securities by CFHC for cash.
HUBCO shall provide all information reasonable requested by CFHC for inclusion
in any registration statement to be filed hereunder.
In connection with such filing, CFHC 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 reasonable expenses incurred by CFHC
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 CFHC and blue sky fees and expenses shall be paid
by CFHC. 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, CFHC 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 the omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading; and CFHC
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 CFHC 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 CFHC 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 CFHC for any
legal or other expense reasonably incurred by CFHC 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 CFHC
with another entity, or any sale of all or substantially all of the assets of
CFHC, 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 CFHC 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 Comptroller of the
Currency, the Federal Deposit Insurance Corporation or the New Jersey Department
of Banking and Insurance, and CFHC 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 CFHC. CFHC hereby
represents and warrants to HUBCO as follows:
a. Due Authorization. CFHC 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 CFHC.
b. Authorized Shares. CFHC 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 CFHC or any agreement,
instrument, judgment, decree or order applicable to CFHC.
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 CFHC for a breach of this Agreement.
9. Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof.
10. Assignment or Transfer. HUBCO may not sell, assign or
otherwise transfer its rights and obligations hereunder, in whole or in part, to
any person or group of persons other than to a wholly-owned subsidiary of HUBCO.
HUBCO represents that it is acquiring the Option for HUBCO's own account and not
with a view to or for sale in connection with any distribution of the Option or
the Option Shares. HUBCO is aware that neither the Option nor the Option Shares
is the subject of a registration statement filed with, and declared effective
by, the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act, but instead each are 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, NJ 07430
Attn.: Kenneth T. Neilson
President and Chief Executive Officer
With a copy to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: D. Lynn Van Borkulo-Nuzzo, Esq.
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, NJ 07932
Attn.: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
If to CFHC:
Community Financial Holding Corporation
222 Haddon Avenue
Westmont, NJ 08108
Attn.: Robert T. Pluese
Chairman
With a copy to:
Stevens & Lee
1415 Route 70 East, Suite 506
Cherry Hill, NJ 08034
Attn.: Jeffrey P. Waldron, Esq.
Edward C. Hogan, 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) and the Merger Agreement has
not been terminated by CFHC due to a material breach by HUBCO of a material
covenants of the Merger Agreement applicable to HUBCO, 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
<PAGE>
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.
COMMUNITY FINANCIAL HOLDING CORPORATION
By: GERARD M. BANMILLER
-------------------------------
Gerard M. Banmiller, President
HUBCO, INC.
By: KENNETH T. NEILSON
-------------------------------
Kenneth T. Neilson, President and
Chief Executive Officer
<PAGE>
APPENDIX C
FORM OF FAIRNESS OPINION OF
BERWIND FINANCIAL, L.P.
[date], 1998
Board of Directors
Community Financial Holding Corporation
231 Haddon Avenue
Westmont, New Jersey 08108
Members of the Board:
You have requested our opinion as to the fairness, from a financial
point of view, to the shareholders of Community Financial Holding Corporation
("Community") of the financial terms of the proposed merger by and between
Community and HUBCO, Inc. ("HUBCO"). The terms of the proposed merger (the
"Proposed Merger") by and between Community and HUBCO are set forth in the
Agreement and Plan of Merger dated March 3, 1998 (the "Merger Agreement") and
provide that each outstanding share of Community common stock will be converted
into the right to receive .695 shares of HUBCO common stock as defined in the
Merger Agreement.
Berwind Financial, L.P., as part of its investment banking business,
regularly is engaged in the valuation of assets, securities and companies in
connection with various types of asset and security transactions, including
mergers, acquisitions, private placements and valuations for various other
purposes, and in the determination of adequate consideration in such
transactions.
In arriving at our opinion, we have, among other things: (i) reviewed
the historical financial performances, current financial positions and general
prospects of Community and HUBCO, (ii) reviewed the Merger Agreement, (iii)
reviewed and analyzed the stock market performance of Community and HUBCO, (iv)
studied and analyzed the consolidated financial and operating data of Community
and HUBCO, (v) considered the terms and conditions of the Proposed Merger
between Community and HUBCO as compared with the terms and conditions of
comparable bank and bank holding company mergers and acquisitions, (vi) met
and/or communicated with certain members of Community's and HUBCO's senior
management to discuss their respective operations, historical financial
statements and future prospects, (vii) reviewed this proxy statement /
prospectus, and (viii) conducted such other financial analyses, studies and
investigations as we deemed appropriate.
Our opinion is given in reliance on information and representations
made or given by Community and HUBCO, and their respective officers, directors,
auditors, counsel and other agents, and on filings, releases and other
information issued by Community and HUBCO including financial statements,
financial projections, and stock price data as well as certain information from
recognized independent sources. We have not independently verified the
information concerning Community and HUBCO nor other data which we have
considered in our review and, for purposes of the opinion set forth below, we
have assumed and relied upon the accuracy and completeness of all such
information and data. Additionally, we assume that the Proposed Merger is, in
all respects, lawful under applicable law.
With regard to financial and other information relating to the general
prospects of Community, we have assumed that such information has been
reasonably prepared and reflects the best currently available estimates and
judgment of the management of Community as to its most likely future
performance. For Community and HUBCO, we have assumed the allowance for loan
losses indicated on the balance sheets of each entity is adequate to cover such
losses; we have not reviewed credit files of either Community or HUBCO. Also, in
rendering our opinion, we have assumed that in the course of obtaining the
necessary regulatory approvals for the Proposed Merger no conditions will be
imposed that will have a material adverse effect on the contemplated benefits of
the Proposed Merger to Community.
Our opinion is based upon information provided to us by the management
of Community, as well as market, economic, financial and other conditions as
they exist and can be evaluated only as of the date hereof and speaks to no
other period. Our opinion pertains only to the financial consideration of the
Proposed Merger and does not constitute a recommendation to the Board of
Community and does not constitute a recommendation to Community shareholders as
to how such shareholders should vote on the Proposed Merger.
Based on the foregoing, it is our opinion that, as of the date hereof,
the financial terms of the Proposed Merger by and between Community and HUBCO
are fair, from a financial point of view, to the shareholders of Community.
Sincerely,
BERWIND FINANCIAL, L.P.
<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) Agreement and Plan of Merger, dated as of March 2, 1998, by and among
HUBCO, Inc. ("HUBCO"), Hudson United Bank ("HUB"), Community Financial
Holding Corporation ("CFHC") and Community National Bank ("CNB")
(included as Appendix A to the Proxy Statement). *
2(b) Stock Option Agreement, dated as of March 2, 1997, by and between HUBCO
and CFHC (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 Annual Report of CFHC on Form 10-K filed with the SEC for the year
ended December 31, 1997. **
23(a) Consent of KPMG Peat Marwick LLP.
23(b) Consent of Arthur Andersen LLP.
23(c) Consent of Berwind Financial, L.P.
23(d) Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibits 5 and 8
hereto).
99(a) Form of Proxy Card to be utilized by the Board of Directors of CFHC.
- -------------------------
* Included elsewhere in this registration statement.
** Incorporated by reference.
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 Berwind Financial, L.P. 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 30th day of April, 1998.
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>
Chairman, President, Chief
KENNETH T. NEILSON Executive Officer and Director April 30, 1998
- ------------------------------------
(Kenneth T. Neilson)
ROBERT J. BURKE Director April 30, 1998
+------------------------------------
(Robert J. Burke)
DONALD P. CALCAGNINI
- ------------------------------------ Director April 30, 1998
(Donald P. Calcagnini)
JOAN DAVID
- ------------------------------------ Director April 30, 1998
(Joan David)
THOMAS R. FARLEY
- ------------------------------------ Director April 30, 1998
(Thomas R. Farley)
BRYANT D. MALCOLM
- ------------------------------------ Director April 30, 1998
(Bryant D. Malcolm)
W. PETER MCBRIDE
- ------------------------------------ Director April 30, 1998
(W. Peter McBride)
DAVID A. ROSOW
- ------------------------------------ Director April 30, 1998
(David A. Rosow)
CHARLES F.X. POGGI
- ------------------------------------ Director April 30, 1998
(Charles F.X. Poggi)
JAMES E. SCHIERLOH
- ------------------------------------ Director April 30, 1998
(James E. Schierloh)
JOHN H. TATIGIAN
- ------------------------------------ Director April 30, 1998
(John H. Tatigian)
SR. GRACE FRANCES STRAUBER
- ------------------------------------ Director April 30, 1998
(Sister Grace Frances Strauber)
JOSEPH F. HURLEY Executive Vice President and Chief
- ------------------------------------ Financial Officer April 30, 1998
(Joseph F. Hurley)
CHRIS A. WITKOWSKI Senior Vice President
- ------------------------------------ and Controller April 30, 1998
(Chris A. Witkowski)
- ------------------------------------ Director April __, 1998
(Joseph B. Tockarshewsky)
- ------------------------------------ Director April __, 1998
(Noel deCordova, Jr.)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
2(a) Agreement and Plan of Merger, dated as of March 2, 1998, by and among
HUBCO, Inc. ("HUBCO"), Hudson United Bank ("HUB"), Community Financial
Holding Corporation ("CFHC") and Community National Bank ("CNB")
(included as Appendix A to the Proxy Statement). *
2(b) Stock Option Agreement, dated as of March 2, 1998, by and between HUBCO
and CFHC (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 Annual Report of CFHC on Form 10-K filed with the SEC for the year
ended December 31, 1996. **
23(a) Consent of KPMG Peat Marwick LLP.
23(b) Consent of Arthur Andersen LLP.
23(c) Consent of Berwind Financial, L.P.
23(d) Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibits 5 and 8
hereto).
99(a) Form of Proxy Card to be utilized by the Board of Directors of CFHC.
- ---------------------------------
* Included elsewhere in this registration statement.
** Incorporated by reference.
Exhibit 5
May 5, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn: Kenneth T. Neilson, Chairman, President
and Chief Executive Officer
Re: Merger of HUBCO, Inc. and Community Financial Holding
Corporation
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 Agreement and Plan of Merger among HUBCO, Hudson United
Bank ("HUB"), Community Financial Holding Corporation ("CFHC") and Community
National Bank ("CNB") dated as of March 2, 1998. 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
May 5, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Community Financial Holding Company
222 Haddon Avenue
Westmont, NJ 08108
Ladies and Gentlemen:
We have acted as special counsel in connection with the planned merger
(the "Merger") of Community Financial Holding Company, a New Jersey corporation
and registered bank holding company ("CFHC"), with and into HUBCO, Inc., a New
Jersey corporation and registered bank holding company ("HUBCO"), pursuant to
the Agreement and Plan of Merger (the "Agreement"), dated as of March 2, 1998,
by and among HUBCO, Hudson United Bank, a New Jersey state-chartered commercial
banking corporation and wholly-owned subsidiary of HUBCO (the "Bank"), CFHC, and
Community National Bank, a federally-chartered banking association and
wholly-owned subsidiary of CFHC ("Community"). Immediately following the Merger,
Community shall be merged with and into the Bank (the "Bank Merger") in
accordance with the provisions of the New Jersey Banking Act of 1948, as
amended, and the National Banking Act. Capitalized terms used but not defined
herein shall have the meanings specified in the Proxy Statement-Prospectus
pertaining to the Merger
We have assumed with your consent that:
(a) the Merger will be effected in accordance with the Agreement, and
(b) the representations contained in the letters of representation from
CFHC and HUBCO to us dated May 5, 1998 will be true at the Effective Time.
On the basis of the foregoing, and our consideration of such other
matters of fact and law as we have deemed necessary or appropriate, it is our
opinion, under presently applicable federal income tax law, that the Merger will
constitute a reorganization under Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and that:
(i) no gain or loss will be recognized for federal income tax
purposes by CFHC stockholders upon the exchange in the Merger of shares of CFHC
stock solely for HUBCO stock (except with respect to cash received in lieu of a
fractional share interest in HUBCO stock);
(ii) the basis of HUBCO stock received in the Merger by CFHC
stockholders (including the basis of any fractional share interest in HUBCO
stock) will be the same as the basis of the shares of CFHC stock surrendered in
exchange therefor;
(iii) the holding period of HUBCO stock received in the Merger
by CFHC stockholders (including the holding period of any fractional share
interest in HUBCO stock) will include the holding period during which the shares
of CFHC stock surrendered in exchange therefor were held by the CFHC
stockholder, provided such shares of CFHC stock were held as capital assets; and
(iv) cash received by a holder of CFHC stock in lieu of a
fractional share interest in HUBCO 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
the CFHC stock allocable to the fractional share interest.
The tax consequences described above may not be applicable to CFHC
stockholders that acquired the stock of CFHC pursuant to the exercise of an
employee stock option or right or otherwise as compensation, that hold CFHC
stock as part of a "straddle" or "conversion transaction" or that are insurance
companies, securities dealers, financial institutions or foreign persons.
We hereby consent to the reference to us under the heading "THE
PROPOSED MERGER -- Federal Income Tax Consequences" in the Proxy
Statement-Prospectus pertaining to the Merger and to the filing of this opinion
as an exhibit to the related Registration Statement on Form S-4 filed with the
Securities and Exchange Commission. In giving this consent, we do not hereby
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
PITNEY, HARDIN, KIPP & SZUCH
Exhibit 23(a)
Consent of Independent Auditors
The Board of Directors
Community Financial Holding Corporation
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of HUBCO, INC. of our report dated February 12, 1998, relating to the
consolidated balance sheets of Community Financial Holding Corporation and
subsidiaries as of December 31, 1997, and 1996, and the related consolidated
statements of income, changes in shareholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1997, which report
appears in the December 31, 1997 annual report on Form 10-K of Community
Financial Holding Corporation. We also consent to the reference to our firm
under the caption "Experts."
KPMG PEAT MARWICK LLP
Philadelphia, Pennsylvania
May 7, 1998
Exhibit 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-4 of our
report dated January 10, 1998 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
May 8, 1998
Exhibit 23(c)
May 5, 1998
Consent of Berwind Financial, L.P.
We consent to the inclusion of our Fairness Opinion issued to Community
Financial Holding Corporation in this registration statement on Form S-4. We
also consent to the reference to our firm under the caption "Experts".
Berwind Financial, L.P.
ANTHONY A. LATINI
By:------------------------
Anthony A. Latini
Title: Vice President
Exhibit 99(b)
HUBCO, INC.
POWER OF ATTORNEY
FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth T. Neilson and D. Lynn Van
Borkulo-Nuzzo, as their attorney-in-fact, with power of substitution, for him or
her in any and all capacities, to sign any and all amendments (whether pre- or
post-effective), to this Registration Statement on Form S-4 of HUBCO, Inc. (SEC
file No. ______________________) and to file the same with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Chairman, President, Chief
KENNETH T. NEILSON Executive Officer and Director April 30, 1998
- ------------------------------------
(Kenneth T. Neilson)
ROBERT J. BURKE Director April 30, 1998
- ------------------------------------
(Robert J. Burke)
DONALD P. CALCAGNINI
- ------------------------------------ Director April 30, 1998
(Donald P. Calcagnini)
JOAN DAVID
- ------------------------------------ Director April 30, 1998
(Joan David)
THOMAS R. FARLEY
- ------------------------------------ Director April 30, 1998
(Thomas R. Farley)
BRYANT D. MALCOLM
- ------------------------------------ Director April 30, 1998
(Bryant D. Malcolm)
W. PETER MCBRIDE
- ------------------------------------ Director April 30, 1998
(W. Peter McBride)
DAVID A. ROSOW
- ------------------------------------ Director April 30, 1998
(David A. Rosow)
CHARLES F.X. POGGI
- ------------------------------------ Director April 30, 1998
(Charles F.X. Poggi)
JAMES E. SCHIERLOH
- ------------------------------------ Director April 30, 1998
(James E. Schierloh)
JOHN H. TATIGIAN
- ------------------------------------ Director April 30, 1998
(John H. Tatigian)
SR. GRACE FRANCES STRAUBER
- ------------------------------------ Director April 30, 1998
(Sister Grace Frances Strauber)
JOSEPH F. HURLEY Executive Vice President and Chief
- ------------------------------------ Financial Officer April 30, 1998
(Joseph F. Hurley)
CHRIS A. WITKOWSKI Senior Vice President
- ------------------------------------ and Controller April 30, 1998
(Chris A. Witkowski)
- ------------------------------------ Director April __, 1998
(Joseph B. Tockarshewsky)
- ------------------------------------ Director April __, 1998
(Noel deCordova, Jr.)
</TABLE>
Exhibit 99(a)
REVOCABLE PROXY
Community Financial Holding Corporation
222 Haddon Avenue
Westmont, New Jersey 08108
This proxy is solicited on behalf of the Board of Directors of
Community Financial Holding Corporation for the Special
Meeting of Shareholders to be held on _________, 1998.
The undersigned shareholder of Community Financial Holding Corporation hereby
appoints _____________________ and _________________________, or any of them,
with full powers of substitution, to represent and to vote as proxy, as
designated, all shares of common stock of Community Financial Holding
Corporation held of record by the undersigned on ____________, 1998 at the
Special Meeting of Stockholders (the "Special Meeting") to be held at _____
a.m., on, ____________, 1998, or at any adjournment or postponement thereof,
upon the matters described in the accompanying Notice of Special Meeting and
Proxy Statement-Prospectus and upon such other matters as may properly come
before the Special Meeting. The undersigned hereby revokes all prior proxies.
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned stockholder. If no direction is given,
this Proxy will be voted FOR the proposals listed in Items 1 and 2.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN IN THE ENCLOSED ENVELOPE.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Fold and Detach Here)
<PAGE>
The Board of Directors unanimously recommends a vote "FOR" each of the
proposals in Items 1 and 2.
Please mark your votes as indicated in this example. |X|
1. Approval of the Agreement and Plan of Merger, dated as of March 2, 1998, by
and among HUBCO, Inc., Hudson United Bank, Community Financial Holding
Corporation and Community National Bank (the "Merger Agreement"), pursuant to
which Community Financial Holding Corporation will merge with and into HUBCO,
Inc.
FOR AGAINST ABSTAIN
|_| |_| |_|
2. Approval of an additional proposal to give the Board of Directors of
Community Financial Holding Corporation discretion to vote upon other matters
that may properly be brought before the Special Meeting, including a motion to
adjourn the Special Meeting in order to solicit additional proxies.
FOR AGAINST ABSTAIN
|_| |_| |_|
I Will Attend the Special Meeting. |_|
The undersigned hereby acknowledges receipt of
the Notice of Special Meeting of Shareholders
and the Proxy Statement for the Special Meeting.
------------------------------------------------
Signature(s)
------------------------------------------------
Signature(s)
Dated:____________________________________, 1998
Please sign exactly as your name appears on this
proxy. Joint owners should each sign personally.
If signing as attorney, executor, administrator,
trustee or guardian, please include your full
title. Corporate or partnership proxies should
be signed by an authorized officer.
- --------------------------------------------------------------------------------
(Fold and Detach Here)
