================================================================================
- --------------------------------------------------------------------------------
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
- --------------------------------------------------------------------------------
================================================================================
HUBCO, INC.
(Name of Registrant as Specified in its Charter
and
Name of Person Filing Proxy Statement)
================================================================================
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction
applies:
______________________________________________________
2) Aggregate number of securities to which transaction applies:
______________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
______________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________
5) Total fee paid:
______________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing with which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: _____________________________________
Form, Schedule or Registration Statement No.: _________________
Filing Party: ________________________________________________
Date Filed: __________________________________________________
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
HUBCO, INC.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1998
To Our Shareholders:
The Annual Meeting of Shareholders of HUBCO, Inc. ("HUBCO") will be
held on April 22, 1998 at 11 a.m. at the Sheraton Crossroads, Crossroads
Corporate Center, Route 17 North, Mahwah, New Jersey 07495, for the purpose of
considering and voting upon the following matters:
(1) The election of the four persons named in the
accompanying Proxy Statement to serve as directors of
HUBCO for the terms specified in the Proxy Statement.
(2) An amendment to the HUBCO, Inc. Restricted Stock Plan
(the "Restricted Stock Plan") to extend the
termination date of the Restricted Stock Plan to
December 12, 2005, to increase the maximum number of
shares of common stock which may be awarded under the
Restricted Stock Plan by authorizing an additional
250,000 shares to be issued after May 25, 1997, and
to provide, in the event of a Change in Control (as
defined in the Restricted Stock Plan) for the
automatic expiration of the Restricted Period (as
defined in the Restricted Stock Plan) related to any
grants of restricted shares which at such time is
five years or less in duration.
(3) An amendment to the HUBCO, Inc. 1995 Stock Option
Plan (the "Stock Option Plan") to increase the
maximum number of shares of common stock which may be
made subject to options granted pursuant to the Stock
Option Plan by authorizing an additional 750,000
shares to be issued after May 25, 1997, to increase
the maximum number of shares of common stock with
respect to these options which may be granted to any
one person during the term of the Stock Option Plan
to an aggregate of 437,500 shares and to remove
language which links the number of shares which may
be granted pursuant to the Stock Option Plan to the
number of shares which may be granted pursuant to the
Restricted Stock Plan.
(4) Such other business as may properly come before the
meeting.
Your Board of Directors unanimously recommends a vote FOR its nominees
for directors, FOR the amendment to the Restricted Stock Plan and FOR the
amendment to the Stock Option Plan.
Shareholders of record at the close of business on February 27, 1998
are entitled to notice of and to vote at the meeting. Whether or not you
contemplate attending the meeting, please execute the enclosed proxy and return
it to HUBCO. You may revoke your proxy at any time prior to its exercise by
delivering to HUBCO a later-dated proxy or by delivering written notice of
revocation to HUBCO.
Sincerely,
D. LYNN VAN BORKULO-NUZZO
-----------------------------
Executive Vice President and
Corporate Secretary
March 24, 1998
IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY
<PAGE>
HUBCO, INC.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
-------------------------
PROXY STATEMENT
DATED MARCH 24, 1998
GENERAL PROXY STATEMENT INFORMATION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of HUBCO, Inc. (the "Corporation" or "HUBCO") of
proxies for use at the Annual Meeting of Shareholders of the Corporation (the
"Annual Meeting") to be held at the Sheraton Crossroads, Crossroads Corporate
Center, Route 17 North, Mahwah, New Jersey 07495, on April 22, 1998 at 11 a.m.
local time. The business expected to be voted upon at the Annual Meeting is the
election of four persons named in this proxy statement to serve as directors for
the terms specified herein, an amendment to the HUBCO, Inc. Restricted Stock
Plan (the "Restricted Stock Plan") and an amendment to the HUBCO, Inc. 1995
Stock Option Plan (the "Stock Option Plan"). This proxy statement is first being
mailed to shareholders on approximately March 24, 1998.
Outstanding Securities and Voting Rights
The record date for determining shareholders entitled to notice of, and
to vote at, the Annual Meeting is February 27, 1998. Only shareholders of record
as of that date will be entitled to notice of, and to vote at, the Annual
Meeting.
On the record date, 22,648,970 shares of common stock, without par
value, and 1,000 shares of Series B Preferred stock, no par value, were
outstanding and eligible to be voted at the Annual Meeting. Each share of common
stock is entitled to one vote per share. Each share of Series B Preferred stock
is entitled to 33.2175 votes per share. At the Annual Meeting, inspectors of
election will tabulate both ballots cast by shareholders present and voting in
person, and votes cast by proxy. Under applicable state law and HUBCO's
Certificate of Incorporation and By-laws, abstentions and broker non-votes are
counted for purposes of establishing a quorum but otherwise do not count.
Generally, the approval of a specified percentage of shares voted at a
shareholder meeting is required to approve a proposal and thus abstentions and
broker non-votes have no effect on the outcome of a vote. Directors will be
elected by a plurality of the votes cast at the Annual Meeting. The proposed
amendment to the Restricted Stock Plan and amendment to the Stock Option Plan
will be approved by a majority of the votes cast at the Annual Meeting.
All shares represented by valid proxies received pursuant to this
solicitation will be voted in favor of the four nominees named in this Proxy
Statement, in favor of the amendment to the Restricted Stock Plan and in favor
of the amendment to the Stock Option Plan unless the shareholder specifies a
different choice by means of his proxy or revokes the proxy prior to the time it
is exercised. Should any other matters properly come before the Annual Meeting,
the persons named as proxies will vote upon such matters in their discretion.
Revocability of Proxies
Any shareholder giving a proxy has the right to attend and to vote at
the Annual Meeting in person. A proxy may be revoked prior to the Annual Meeting
by filing a later-dated proxy or by a written revocation if it is sent to the
Secretary of the Corporation, D. Lynn Van Borkulo-Nuzzo, at 1000 MacArthur
Boulevard, Mahwah, New Jersey 07430, and is received by the Corporation in
advance of the Annual Meeting. A proxy may be revoked at the Annual Meeting by
filing a later-dated proxy or a written notice of revocation with the Secretary
of the Meeting prior to the voting of such proxy.
Solicitation of Proxies
This Proxy solicitation is being made by the Board of Directors of the
Corporation and the cost of the solicitation will be borne by the Corporation.
In addition to the use of the mails, proxies may be solicited personally or by
telephone or facsimile transmission by officers, directors and employees of the
Corporation, Hudson United Bank ("HUB"), or Lafayette American Bank ("LAB"), the
Corporation's wholly-owned subsidiaries, who will not be specially compensated
for such solicitation activities. Arrangements may be made with brokerage houses
and other custodians, nominees and fiduciaries for forwarding solicitation
material to the beneficial owners of shares held of record by such persons, and
the Corporation will reimburse such persons for their reasonable expenses
incurred in forwarding the materials.
PROPOSAL 1 -- ELECTION OF DIRECTORS
HUBCO's Certificate of Incorporation and By-laws authorize a minimum of
5 and a maximum of 25 directors, but leaves the exact number to be fixed by
resolution of the HUBCO Board of Directors. The HUBCO Board is presently
comprised of 12 members.
Pursuant to the HUBCO Certificate of Incorporation, the directors of
HUBCO are divided into three classes. Directors are generally elected for
three-year terms on a staggered basis, except that some directors may be
nominated for shorter terms in order to more nearly equalize the size of the
three classes.
Messrs. Farley and Neilson, Ms. David and Sister Grace Frances Strauber
are each being nominated for a three-year term extending to the 2001 Annual
Meeting. If, for any reason, any of the nominees become unavailable for
election, the proxy solicited by the HUBCO Board will be voted for a substitute
nominee selected by the HUBCO Board. The HUBCO Board has no reason to believe
that any of the named nominees is not available or will not serve if elected.
The names of the nominees for election, the directors whose terms
extend beyond the HUBCO Meeting and certain information about each of them are
set forth in the tables below. Years of service on the HUBCO Board includes
prior service on the Board of Directors of HUB prior to the formation of the
holding company.
<PAGE>
<TABLE>
<CAPTION>
Table I--Nominees for 1998 Annual Meeting
<S> <C> <C> <C>
Name, Age &
Position with Principal Occupation Director Term
HUBCO During Past Five Years Since Expiring
-------------- -------------------------------------------- --------- --------
Joan David, 59 Substitute Teacher, Board of Cooperative 1994 2001
Educational Services of Rockland County.
Thomas R. Farley, Retired February 1995; formerly a partner in 1994 2001
71 the law firm of Farley & Isles (1980-1995).
Kenneth T. Chairman, President and CEO of HUBCO and HUB. 1989 2001
Neilson, 49,
Chairman,
President & CEO
Sister Grace Chairperson, Franciscan Health System of N.J. 1979 2001
Frances Strauber, (1991 - 1993), Member (1991 - present);
70 Administrative Post on the Leadership Team
for the U.S. region of the Franciscan Sisters
of the Poor (1993 - present); Management
Consultant, Health System, Inc., Brooklyn,
N.Y., Franciscan Sisters of the Poor (1986 -
present). Member, Board of Stewards
Franciscan Partnership, Inc. (1998 - present).
</TABLE>
<TABLE>
<CAPTION>
Table II--Directors Whose Terms Continue
Beyond This Annual Meeting
<S> <C> <C> <C>
Name, Age &
Position with Principal Occupation Director Term
HUBCO During Past Five Years Since Expiring
------------------- -------------------------------------------- --------- --------
Robert J. Burke, 64 President and Chief Operating Officer, Union 1979 2000
Dry Dock and Repair Co., Hoboken, N.J. (ship
repair facility).
Donald P. Chairman of the Board of Directors of 1996 2000
Calcagnini, 62 Lafayette American Bank since March 1993;
Chief Executive Officer of LAB (March 1993 to
April 1994); Chairman of the Board of Directors
(March 1992 to February 1994); President (1986
to 1992) and Chief Executive Officer (1986 to
February 1994), Lafayette American Bancorp.
W. Peter McBride, President of McBride Enterprises, Inc. and 1995 1999
52 President of Urban Farms, Inc. (real-estate
development and investment companies).
Bryant Malcolm, 63 President, Malcolm-Brooker Company, Inc. (a 1995 1999
consulting firm) 1997-present; President, of
B.D. Malcolm Company, Inc. (general
contractors) from 1961-1997.
Charles F.X. President and Chief Operating Officer, The 1973 2000
Poggi, 67 Poggi Press (general printing business).
David A. Rosow, 55 Director of the former Westport Bancorp and 1996 2000
its subsidiary The Westport Bank and Trust
Company (1990-1996) and Chairman of the Board
of both (1991-1996); Chairman and CEO of
Rosow & Company, Inc. (a private investment
company); Chairman of International Golf
Group, Inc.
James E. Chairman, Emeritus; Chairman of the Board 1972 1999
Schierloh, 68 of HUBCO and HUB (1990-1996); formerly
self-employed Certified Public Accountant.
John H. Tatigian, Senior Vice President of Peter Paul-Hershey 1996 1999
Jr., 62 (confection company).
</TABLE>
No director of HUBCO is also a director of any other company registered
pursuant to Section 12 of the Exchange Act or subject to the requirements of
Section 15(d) of the Exchange Act or any company registered as an investment
company under the Investment Company Act of 1940.
Board of Directors' Meetings; Committees of the HUBCO Board
The HUBCO Board held 11 board meetings during 1997 and 19 board
committee meetings. The HUBCO Board holds regularly-scheduled bi-monthly
meetings and special meetings as circumstances require. At present, all of the
directors of HUBCO also serve on at least one subsidiary bank board.
HUBCO has a standing Audit Committee of the Board of Directors. This
committee arranges for HUBCO's and its subsidiaries' directors examinations
through its independent public accountants, reviews and evaluates the
recommendations of the directors examinations, receives all reports of
examination of HUBCO, HUB and LAB by bank regulatory agencies, analyzes such
regulatory reports, and reports to each board the results of its analysis of the
regulatory reports. This committee also receives reports directly from HUBCO's
internal auditing department and recommends any action to be taken in connection
therewith. The Audit Committee met 7 times during 1997. During 1997, Sister
Grace Frances Strauber served as Chairperson of the Audit Committee. The other
HUBCO members of the Audit Committee are Messrs. Farley, Malcolm, Schierloh,
Tatigian and Calcagnini.
HUBCO has a standing Nominating Committee consisting of Messrs. Burke,
Farley, McBride, Neilson and Poggi. The committee considers recommendations from
shareholders received sufficiently in advance of the mailing of the proxy
statement for the annual meeting. The committee reviews qualifications of and
recommends to the HUBCO Board potential candidates for election as directors.
Requirements include a certain level of stock ownership and prospects are
business people from within the communities served by HUBCO who are willing to
commit time and dedicate effort to the success of HUBCO. During 1997, the
committee met 3 times.
During 1997, no incumbent director of HUBCO attended fewer than 75% of
the total meetings of the HUBCO Board and meetings of committees of the HUBCO
Board on which such director served.
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information concerning the beneficial
ownership of HUBCO Common Stock as of December 31, 1997, by each executive
officer of HUBCO for whom individual information is required to be set forth in
this Proxy Statement pursuant to the rules of the Commission (the "HUBCO Named
Officers"), by each director and by all directors and executive officers as a
group. HUBCO does not know of any person who beneficially owns more than 5% of
the outstanding HUBCO Common Stock.
<TABLE>
<CAPTION>
Number of Common Shares Beneficially
<S> <C> <C>
Name of Beneficial Owner Owned (1) Percent of Class
- ------------------------ --------- ----------------
Robert J. Burke 82,322 (2) *
Donald P. Calcagnini 104,418 (3) *
Joan David 160,166 (4) *
Thomas R. Farley 45,320 (5) *
Joseph F. Hurley 0
Bryant Malcolm 19,757 (6) *
W. Peter McBride 4,143 *
John F. McIlwain 25,158 (7) *
Kenneth T. Neilson 240,474 (8) 1.1%
Thomas Nelson 21,246 (9) *
Charles F. X. Poggi 223,542 1.0%
David A. Rosow 627,851 (10) 2.9%
James E. Schierloh 85,466 (11) *
Sister Grace Frances Strauber 1,108 *
John H. Tatigian, Jr. 34,034 (12) *
D. Lynn Van Borkulo-Nuzzo 76,453 (13) *
Directors and Executive Officers of
HUBCO as a group (16 persons) 1,848,794 (14) 8.4%
</TABLE>
- -----------------------
NOTES:
* Less than 1.00%.
(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared
investment power. Beneficially owned shares also include shares owned
(i) by a spouse, minor children or by relatives sharing the same home,
(ii) by entities owned or controlled by the named person, and (iii) by
other persons if the named person has the right to acquire such shares
within 60 days by the exercise of any right or option. Unless otherwise
noted, all shares are owned of record and beneficially by the named
person, either directly or through the HUBCO dividend reinvestment
plan.
(2) Of this total, 13,266 shares are held by Mr. Burke's wife, and 28,582
are held by Union Dry Dock & Repair Co. Mr. Burke disclaims beneficial
ownership of the shares held by his wife.
(3) Of this total, 11,653 shares are held in HUBCO's 401(k) Plan and 72
shares are held by Mr. Calcagnini as Trustee for his aunt.
(4) Of this total, 10,306 are held in an IRA and 28,513 are held by Mrs.
David and Mr. Lawrence David as trustees for the David Foundation.
(5) Of this total, 1,192 shares are held by Mr. Farley's wife. Mr. Farley
disclaims beneficial ownership of the shares owned by his wife.
(6) Of this total, 1,056 shares are held by Mr. Malcolm's wife. Mr. Malcolm
disclaims beneficial ownership of the shares held by his wife.
(7) Of this total, 4,388 shares are held in HUBCO's 401(k) plan, 795 shares
are held for Mr. McIlwain under HUBCO's restricted stock plan, and
12,730 shares represent vested options.
(8) Of this total, 23,826 shares are held in Mr. Neilson's account in
HUBCO's 401(k) plan, which he directs, 3,807 shares are held in an IRA,
2,704 shares are held by Mr. Neilson's wife, 23,976 shares are held for
his minor children, 7,000 shares are held under HUBCO's restricted
stock plan, and 118,450 shares represent vested options. Mr. Neilson
disclaims beneficial ownership of the shares owned by his wife.
(9) Of this total, 4,924 are held in HUBCO's 401(k) plan, 2,000 shares are
held for Mr. Nelson under HUBCO's restricted stock plan, and 14,322
shares represent vested options.
(10) This total includes 10,300 shares held in the Rosow Family Foundation
Charitable Trust and 613,838 held by Mr. Rosow's wife. Mr. Rosow
disclaims beneficial ownership of the shares owned by his wife.
(11) Of this total 5,339 shares are held by Mr. Schierloh's wife. Mr.
Schierloh disclaims beneficial ownership of the shares owned by his
wife.
(12) Of this total, 21,264 shares are held in an IRA directed by Mr.
Tatigian.
(13) Of this total, 10,040 shares are held in Ms. Van Borkulo-Nuzzo's
account in HUBCO's 401(k) plan, which she directs, 3,591 shares are
held for Ms. Van Borkulo-Nuzzo under HUBCO's restricted stock plan, and
55,697 shares represent vested options.
(14) Of this total, 70,116 shares are held in HUBCO's 401(k) plans for
specified individuals, 13,386 shares are held for executive officers
under HUBCO's restricted stock plan, and 256,896 shares represent
vested options. Excluded from the shares reported in the Table are
69,766 shares held by HUB's Trust Department as trustee for HUBCO's
pension plan. These additional shares held by HUB's Trust Department
are not reported as beneficially owned by HUBCO's directors or
executive officers, although by virtue of the officers' and directors'
service on HUB's Trust Committee, it may be asserted that the directors
and officers have beneficial ownership of such shares. The directors
and executive officers disclaim beneficial ownership of such shares.
EXECUTIVE COMPENSATION
General
Executive compensation is described below in the tabular format
mandated by the Securities and Exchange Commission (the "Commission"). The
letters in parentheses above each column heading are the letters designated by
the Commission for such columns, and are provided to make inter-company
comparisons easier.
<PAGE>
Summary Compensation Table
The following table summarizes all compensation earned in the past
three years for services performed in all capacities for HUBCO and its
subsidiaries with respect to the HUBCO Named Officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------------------
Awards
----------------------------------
Annual Compensation
---------------------------
(g)
Securities (i)
(a) (f) Underlying All Other
Name and (b) (c) (d) Restricted Options/ Compensation
Principal Position Year Salary ($) Bonus ($) Stock SARs(#) (2) ($)
Award (s)(1) $
- ------------------------- ---------- ----------- ------------ --------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth T. Neilson, 1997 365,000 365,000 236,688 46,000 19,643
Chairman, President & 1996 325,000 325,000 -0- -0- 29,384
CEO, HUBCO & HUB 1995 250,000 250,000 -0- -0- 23,196
D. Lynn Van 1997 185,000 92,500 67,625 12,500 15,237
Borkulo-Nuzzo, EVP & 1996 160,000 80,000 -0- -0- 10,942
Corporate Secretary, 1995 145,000 72,500 -0- -0- 10,146
HUBCO, HUB & LAB
John McIlwain, EVP & 1997 169,615 32,500 -0- 10,000 12,678
Chief Credit Officer 1996 124,808 62,000 -0- -0- 10,206
HUBCO 1995 124,000 77,500 -0- -0- 10,982
Joseph F. Hurley, EVP, 1997 114,423 -0- -0- 10,000 2,072
(3) 1996 N/A N/A N/A N/A N/A
Treasurer & Chief 1995 N/A N/A N/A N/A N/A
Financial Officer,
HUBCO, HUB & LAB
Thomas Nelson, 1997 160,000 32,000 67,625 12,500 9,545
EVP & Chief Operations 1996 160,000 20,000 -0- 3,183 4,752
Officer, HUBCO 1995 160,000 44,862 -0- -0- 4,752
</TABLE>
- -----------------------
NOTES:
(1) The dollar amounts listed represent the number of shares of restricted
stock granted, multiplied by the fair market value of each share of
stock on the date of the grant. With respect to dividends paid on all
shares of restricted stock, cash dividends are paid directly to the
officer holding the restricted stock but stock dividends are added to
the restricted stock and are subject to the same restrictions. The
number of shares reflected have been adjusted for the 3 for 2 stock
split effected January, 1995, the 3% stock dividend effected October,
1996 and the 3% stock dividend effected December 1, 1997. As of
December 31, 1997, Mr. Neilson, Ms. Van Borkulo-Nuzzo, Mr. McIlwain,
Mr. Hurley, and Mr. Nelson held 7,000, 3,591, 795, 0, and 2,000 shares
of restricted stock, respectively, with aggregate values of $273,875,
$140,497, $31,104, $0, and $78,250 respectively.
(2) All amounts in this column represent employer contributions to 401(k)
plans on behalf of the HUBCO Named Officers and premiums for life
insurance in excess of $50,000.
(3) Mr. Hurley was hired by HUBCO on May 5, 1997 and therefore, information
with respect to Mr. Hurley's compensation during the two prior years is
not included in this table.
<PAGE>
Option Grants in 1997
The following table shows the options granted to Named Officers in 1997,
and their potential value at the end of the option term, assuming certain levels
of appreciation of the Corporation's common stock.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Alternative to
(f) and (g)
Grant Date Value
Individual Grants
- ------------------------------------------------------------------------------------------- ----------------------
(a) (b) (c) (d) (e) (h)
Percent of
Number of Total
Securities Options/SARs Exercise
Underlying Granted to or Base Grant Date
Options/SARs Employees in Price Expiration Present Value ($)(1)
Name Granted (#) Fiscal Year (#/Sh) Date
---- ------------ ----------- ------- -------- ---------------------
<S> <C> <C> <C> <C> <C>
Kenneth T. Neilson 46,000 35.32% 33.8125 11/19/07 492,200
D. Lynn Van Borkulo-Nuzzo 12,500 9.60% 33.8125 11/19/07 133,750
John F. McIlwain 10,000 7.68% 33.8125 11/19/07 107,000
Joseph F. Hurley 10,000 7.68% 33.8125 11/19/07 107,000
Thomas Nelson 12,500 9.60% 33.8125 11/19/07 133,750
</TABLE>
- -----------------------
NOTES:
(1) The Black-Scholes option pricing model was chosen to estimate the grant
date present value of the options set forth in this table. HUBCO's use of
this model should not be construed as an endorsement of its accuracy at
valuing options. All stock option valuation models, including the
Black-Scholes model, require a prediction about the future movement of the
stock price. The following assumptions were made for purposes of
calculating the grant date present value: an option term of seven years,
volatility at 27.18% to 29.90%, dividend yield of 2.37% to 3.36%, and
risk-free interest rate of 5.90% to 6.73%. The real value of the options
in this table depends upon the actual performance of HUBCO Common Stock
during the applicable period. The options vest in five years.
Option Exercises
The following table is intended to show options exercised during the
last fiscal year and the value of unexercised options held at year-end 1997 by
the HUBCO Named Officers. HUBCO does not utilize stock appreciation rights
("SARs") in its compensation package, although the Commission rules require that
SARs be reflected in Table headings.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal and FY-End Option/SAR Values
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)(1)
Shares
Name Acquired on Exercise (#) Value Exercisable/ Exercisable/
Realized ($) Unexercisable Unexercisable
- -------------------------- ------------------------- -------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Kenneth T. Neilson 24,050 527,145 118,450/46,000 3,201,940/244,375
D. Lynn Van Borkulo-Nuzzo -0- -0- 55,697/12,500 1,505,601/66,406
John F. McIlwain 3,090 70,239 12,730/10,000 344,117/53,125
Joseph F. Hurley -0- -0- 0/10,000 0/53,125
Thomas Nelson -0- -0- 14,322/25,231 387,152/384,543
</TABLE>
- -----------------------
NOTES:
(1) Options are "in the money" if the fair market value of the underlying
security exceeds the exercise price of the option at year-end.
Employment Contracts, Termination of Employment and Change in Control
Arrangements
Under HUBCO's restricted stock plan, each share of stock awarded is
subject to a "Restricted Period" of from two to ten years, as determined by the
committee administering the plan when it awards the shares. Effective upon the
date of grant, the officer or employee is entitled to all the rights of a
shareholder with respect to the shares, including dividend and voting rights.
However, if a share recipient leaves the employment of HUBCO or its subsidiaries
during the Restricted Period for any reason, his or her shares may be forfeited
to HUBCO. Upon the occurrence of a change in control of HUBCO, every Restricted
Period then in existence with a remaining term of five years or less will
automatically expire.
Under the HUBCO, Inc. 1995 Stock Option Plan, options are granted with
a term not to exceed ten years from the grant date. Each option is granted with
a vesting schedule as determined by the Stock Committee. In the event of a
change in control, as defined in the Plan, any option which has not vested, as
of the date of the change in control, becomes fully vested.
As of January 1, 1997, the Corporation and HUB entered into revised
change in control agreements with Kenneth T. Neilson, D. Lynn Van Borkulo-Nuzzo
and one other officer. These contracts superseded previous agreements with these
Executives. At the same time, the Corporation also entered into a change in
control agreement with John McIlwain. Under the agreements, the Executives
generally are entitled to be employed for a period of three years after a change
in control, with substantially the same title, same salary and same benefits as
existed prior to the change in control or the Executives are entitled to certain
severance payments and benefits. The agreements do not become effective unless
there is a change in control and continue to be in effect for a period of three
years after a change in control. Prior to a change in control, unless HUBCO
stops the automatic renewal feature, the agreements are for two year "evergreen"
terms.
As of January 1, 1998, the Corporation and HUB entered into change in
control agreements with Messrs. Hurley and Nelson, respectively. In the event of
a Change in Control, Mr. Hurley would be entitled to be employed for a period of
one year and Mr. Nelson two years and each would be entitled to substantially
the same title, same salary and same benefits as existed prior to the change in
control or the Executive would be entitled to certain severance payments and
benefits. These agreements do not become effective unless there is a change in
control and then remain in effect for one year in the case of Mr. Hurley and two
years in the case of Mr. Nelson. Prior to a change in control, unless HUBCO
stops their automatic renewal, the agreements are for two year "evergreen"
terms. As of January 1, 1998, the Corporation entered into change in control
agreements having substantially the same terms and conditions, with one other
officer.
Each agreement defines "change in control" to mean any of the
following: (i) the acquisition of beneficial ownership by any person or group of
25% or more of HUBCO's voting securities or all or substantially all of its
assets; (ii) the merger consolidation or combination (a "merger") with an
unaffiliated entity unless following the merger HUBCO's directors constitute 50%
or more of the directors of the combined entity and HUBCO's CEO is the CEO of
the surviving entity; or (iii) during any two consecutive calendar years
individuals who were directors of HUBCO at the start of the period cease to
constitute two-thirds of the directors unless the election of the directors was
approved by the vote of two-thirds of the directors then in office; or (iv) the
transfer of all or substantially all of HUBCO's assets.
With respect to Mr. Neilson's contract, if he is terminated without
cause, resigns for good reason (as defined in the contract) within the first 90
days following a change in control, resigns for any reason after that 90 day
period following a change in control, dies, or is disabled, he (or his estate)
is entitled to a lump sum payment equal to three times the sum of his annual
salary and his highest bonus in the last three years, as well as a continuation
of his family's health coverage for a period of three years. In the event that
the severance payments and benefits under the agreement, together with any other
parachute payments, would constitute an excess parachute payment under Section
280G of the Internal Revenue Code of 1986 (the "Code"), the payments to Mr.
Neilson would be increased in an amount sufficient to pay the excise taxes and
other income and payroll taxes necessary to allow Mr. Neilson to retain the same
net amount, after such taxes as he was otherwise entitled to receive (a "Make
Whole Tax Provision").
With respect to Ms. Van Borkulo-Nuzzo's contract (and one other
officer's), if she is terminated without cause, resigns for good reason
following a change in control, dies or is disabled, she (or her estate) is
entitled to a lump sum payment equal to three times the sum of her annual salary
and highest annual bonus in the last three years, as well as a continuation of
her family's health coverage for a period of three years. The contract for Ms.
Van Borkulo-Nuzzo (and the one other officer) also contains a Make Whole Tax
Provision.
With respect to the contracts for Mr. McIlwain, Mr. Hurley, Mr. Nelson
and the one other officer, if they are terminated without cause, resign for good
reason following a change in control, die or are disabled, they (or their
estates) are entitled to a lump sum payment equal to a multiple (three times for
Mr. McIlwain, two times for Mr. Nelson, and one time for Mr. Hurley and the one
other officer,) of the sum of their annual salary and the highest bonus paid in
the last three years for Mr. McIlwain and paid or to be paid for the other
officers, as well as a continuation of their family's health coverage for the
same number of years as the salary entitlement. However, under these contracts,
in the event that the severance payments and benefits under the agreements,
together with any other parachute payments, would constitute excess parachute
payments under Section 280G of the Code, the payments and benefits under the
agreements will be reduced (but not below zero) to the extent necessary to avoid
excess parachute payments.
Pension Plans
Pension Plans. In 1996 HUBCO consolidated its two non-contributory,
defined benefit pension plans which were previously known as the Employees'
Retirement Plan of HUBCO, Inc. (the "Base Plan") and the Retirement Plan for
Non-Bargaining Employees of HUBCO, Inc. (the "Non-Bargaining Retirement Plan").
The consolidated plan is now known as the Employees Retirement Plan of HUBCO,
Inc. (the "Plan").
The Plan. The Plan covers any employee of HUBCO or its subsidiaries who
works over 1,000 hours per year, is over age 20 1/2 and has completed 6 months
of service. The annual retirement benefit for the HUBCO Named Officers is the
sum of (i) 1.25% of the employee's base year-end compensation during the year he
or she joins the Plan multiplied by the number of years of service with HUBCO or
HUB prior to joining the Plan; plus (ii) 1.25% of the employee's base year-end
compensation during each year of a participant's service after joining the Plan.
Retirement benefits normally commence when an employee reaches age 65 but
provides for early retirement when an employee's age plus years of service
equals 85.
Additional retirement benefits are provided to non-bargaining employees
of HUBCO and its subsidiaries. The annual retirement benefit for covered
employees is calculated by taking 1% of an employee's base average annual
earnings (determined by averaging the highest five continuous years of credited
service, excluding the last year of service) multiplied by the years of credited
service, adding 1/2% of an employee's base average annual earnings in excess of
the average Social Security Wage Base (calculated based upon the year of birth)
multiplied by the years of credited service, and subtracting the pension benefit
the employee will receive under the basis calculation. The Plan also provides
for disability pension benefits.
In the Plan, compensation in the form of a bonus is excluded from
benefit calculations. Thus, for each Named Officer, only the amounts which are
shown each year under the heading "Salary" in the Summary Compensation Table in
this Proxy Statement are covered.
As of January 1, 1996, HUBCO adopted a Supplemental Employee Retirement
Plan ("SERP"). The SERP provides a pension benefit which, in large part, makes
up the amount of the benefits which cannot be provided under the Plan as a
result of the limit on the amount of compensation which can be taken into
account under Section 401(a)(17) of the Code ($160,000 in 1997 and indexed for
inflation in subsequent years) and the amount of benefits payable under Section
415 of the Code. Unlike the Plan, the SERP covers salary and one-third of
incentive compensation. The benefit is payable as a single life annuity and 100%
survivor benefits are paid for the life of the designated beneficiary. Kenneth
Neilson is the only person who has been designated as a participant under the
SERP. HUBCO has purchased life insurance to fund the benefit.
The following table shows an employee's estimated annual retirement
benefit from the Plan and the SERP combined, assuming retirement at age 65 for
an individual reaching such age before January 1, 1998 and assuming a straight
life annuity benefit, for the specified compensation levels and years of
service. Except for Mr. Neilson, the amounts in the table below are limited
under Section 401(a)(17) of the Code, as described in the preceding paragraph.
The benefits listed in the table are not subject to any deduction for social
security or other offset amounts. Mr. Neilson has approximately 14 years of
credited service under the pension plan as of January 1, 1998 and, at age 65,
would have 30 years of credited service. Ms. Van Borkulo-Nuzzo has approximately
31 years of credited service under the pension plan as of January 1, 1998, and,
at age 65, would have approximately 48 years of credited service. Mr. McIlwain
has approximately 5 years of credited service as of January 1, 1998 and, at age
65, would have 11 years of credited service. Mr. Hurley has no years of credited
service as of January 1, 1998 and, at age 65, would have approximately 18 years
of credited service. Mr. Nelson has approximately 6 years of credited service as
of January 1, 1998 and at age 65, would have approximately 18 years of credited
service.
<PAGE>
<TABLE>
<CAPTION>
Pension Plan Table
Years of Service
<S> <C> <C> <C> <C> <C>
Salary 15 20 25 30 35
-- -- -- -- --
$125,000 $25,927 $34,569 $43,211 $51,853 $60,496
$150,000 $31,552 $42,069 $52,586 $63,103 $73,621
$200,000 $42,802 $57,069 $71,336 $85,603 $99,871
$250,000 $54,052 $72,069 $90,086 $108,103 $126,121
$300,000 $65,302 $87,069 $108,836 $130,603 $152,371
$350,000 $76,552 $102,069 $127,586 $153,103 $178,621
$400,000 $87,802 $117,069 $146,336 $175,603 $204,871
$450,000 $99,052 $132,069 $165,086 $198,103 $231,121
$500,000 $110,302 $147,069 $183,836 $220,603 $257,371
$550,000 $121,552 $162,069 $202,586 $243,103 $283,621
$600,000 $132,802 $177,069 $221,336 $265,603 $309,871
</TABLE>
Directors' Compensation
The HUBCO Board has established directors' retainers and fees effective January
1, 1997 as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(1) Committee Retainers:
Chairman, Audit Committee $5,000
Chairman, Compensation Committee $5,000
Chairman, Nominating Committee $5,000
Chairman, Long Range Planning Committee $5,000
Chairman, Policies And Procedures Committee $8,500
Chairman, Trust Committee $5,000
Member, Audit Committee $1,500
Member, Compensation Committee $1,500
Member, Nominating Committee $1,500
Member, Long Range Planning Committee $1,500
Member, Policies And Procedures Committee $5,000
Member, Trust Committee $1,500
(2) Annual HUBCO Director's Retainer $12,000
(3) HUBCO Board Meetings $ 500
(4) Annual Subsidiary Director's Retainer $6,000
(5) Subsidiary Board Meetings $ 250
(6) Committee meetings, HUBCO or Subsidiary $ 0
</TABLE>
The Chairman, President and CEO does not receive any retainer or Board
fees. The Executive Committee was created in January, 1997 and no retainers have
yet been paid to the Chairman or the members of the Executive Committee.
Executive Committee compensation will be established after the HUBCO Board of
Directors meeting scheduled for the date of the Annual Meeting.
Retirement. During 1996, the Board voluntarily discontinued a
retirement plan which would have provided non-employee directors having at least
36 months of service upon retirement with a retirement benefit each year for a
period up to 10 years equal to 10% of the director's retainer in effect at the
date of his or her retirement, multiplied by the number of years of service as a
director (not to exceed 10 years). Payout of vested benefits began in 1996.
Deferred Compensation. The HUBCO Board adopted a nonqualified Deferred
Compensation Plan for directors covering the retainer and committee fees
effective January 1, 1995. Participation is optional. Interest is paid on
deferred fees at the highest rate paid by HUB on passbook savings. The
provisions of the Deferred Compensation Plan are designed to comply with certain
rulings of the Internal Revenue Service under which the deferred amounts are not
taxed until received. Under the Deferred Compensation Plan, the directors who
elect to defer their fees will receive the fees over time after they retire.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Bonuses are based upon parameters established by the full HUBCO Board.
All actions of the Compensation Committee are subject to review and ratification
by the Board of Directors of HUBCO. Thus, this report is being issued over the
names of all the directors of HUBCO and is concurred in by all compensation
committees members.
The Compensation Committee members are: Charles F.X. Poggi (Chairman),
Robert Burke, Joan David, W. Peter McBride and John Tatigian.
This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act, or under the Exchange Act, except to the extent
that HUBCO specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
Executive Compensation Policy
HUBCO's policy is to compensate its executives fairly and adequately
for the responsibility assumed, for the success and direction of HUBCO, for the
effort expended in discharging that responsibility, and for the results achieved
directly or indirectly from each executive's performance. "Fair and adequate
compensation" is established after careful review of:
1. HUBCO's earnings;
2. HUBCO's performance as compared to other companies of similar
size and market area; and
3. Comparison of what the market demands for compensation of
similarly situated experienced executives.
Total compensation takes into consideration a mix of base salary,
bonus, restricted stock awards and stock options. The particular mix is
established in order to competitively attract competent professionals, retain
those professionals, and reward extraordinary achievement.
The Compensation Committee also considers net income and earnings per
share of HUBCO Common Stock before finalizing officer increases for the coming
year.
Based upon its current levels of compensation, HUBCO is not affected by
the provisions of the Code which limit the deductibility to a company of
compensation in excess of $1 million paid to any of its top five executives.
Since the grant of options under the 1995 Stock Option Plan may, in subsequent
years, result in total compensation to an officer in excess of $1 million, the
1995 Stock Option Plan has been designed so that compensation payable under the
Option Plan conforms to the Code requirements and will be deductible by HUBCO.
In certain instances, compensation decisions take into account
contractual commitments assumed by or agreed to by HUBCO as a result of an
acquisition.
Base Salary
Subject to HUBCO Board review and ratification, the responsibility for
establishing base salary for executives is delegated to the Compensation
Committee.
Salary is minimum compensation for any particular position and is not
tied to any performance formula or standard. However, that is not to say that
poor performance will not result in termination. Superior performance is
expected of all executive officers.
To establish salary, the following criteria are used:
1. Position description.
2. Direct responsibility assumed.
3. Comparative studies of peer group compensation. Special weight
is given to local factors.
4. Earnings performance of HUBCO.
5. Competitive level of salary to attract and retain qualified
and experienced executives.
Annual Bonuses
Each year the HUBCO Board establishes the parameters for the award of
bonuses. For 1997, the parameters involved HUBCO's performance specifically
related to return on equity and minimum loan loss reserve levels.
Under the bonus program the bonus pool may not exceed 10% of after tax
profits of HUBCO and the creation of the bonus pool may not cause the year-end
results to fall below the targeted return on equity or the loan loss reserve to
fall below the targeted loan loss reserve percentage. If the targeted results
are not achieved, no bonuses will be paid under the program. Even if the
targeted level is achieved, each department must meet its budget in order to be
eligible for a bonus and employees must achieve key established goals in order
to be personally eligible.
Restricted Stock
The responsibility for establishing restricted stock awards is
delegated to the Stock Committee.
The Stock Committee meets two times each year to evaluate management's
recommendations concerning meritorious performance of officers and employees for
consideration to receive restricted stock awards.
The Stock Committee makes awards based upon the following criteria:
1. Performance of the officer or employee in HUBCO, HUB or LAB.
2. The benefit which HUBCO, HUB or LAB has derived as a result of
the efforts of the award candidate under consideration.
3. HUBCO's desire to encourage long-term employment of the award
candidate.
Stock Options
The 1995 Stock Option Plan was approved by HUBCO's shareholders at the
1995 Annual Meeting.
The responsibility for awards of stock options rests with the Stock
Committee.
The Stock Committee makes recommendations for awards based upon the
following criteria:
1. Performance of the officer or employee in HUBCO, HUB or LAB.
2. The benefit which HUBCO, HUB or LAB has derived as a result of
the efforts of the award candidate under consideration.
3. HUBCO's desire to encourage long-term employment of the award
candidate.
Perquisites
Perks, such as company automobiles and their related expenses, country
club memberships, auxiliary insurance benefits and other perks which the HUBCO
Board may approve from time to time are determined and awarded pursuant to
evaluation under the same criteria used to establish the base salary or, in
certain circumstances, pursuant to contractual commitments assumed by or agreed
to by HUBCO as a result of an acquisition.
* * * * *
HUBCO has long believed that a strong, explicit link should exist
between executive compensation and the value delivered to shareholders. The
bonus program, restricted stock awards and stock option awards all provide
competitive compensation which can increase based on HUBCO's performance. Since
each bonus is based on a direct, explicit link to HUBCO's performance, it is
directly and explicitly linked to the value received by shareholders. HUBCO's
profitability inures to the benefit of shareholders, and is a direct result of
the direction established by management. The general compensation philosophy is
that senior executives should be superior performers whose total compensation
(including base salary, bonus, restricted stock and options) should place
compensation above the seventy-fifth percentile in line with HUBCO's
performance.
In 1997, the Compensation Committee utilized two salary surveys to
establish executive compensation. The first survey, conducted by Wyatt Data
Services, entitled "Financial Institution Benchmark Compensation Report", was
prepared for the Northeastern United States financial industry. The second
report, "N.J. Bankers' Salary Survey", prepared by KPMG Peat Marwick, identified
compensation in institutions in the $3 to $5 billion category in the New York,
New Jersey, Pennsylvania tri-state area.
Mr. Neilson, the Chairman, President and CEO of HUBCO, received an
increase of $25,000, effective for 1998. He is eligible for bonuses equal to
100% of his base salary. Mr. Neilson's base salary is $390,000. The HUBCO Board
believes that this package represents fair compensation in view of HUBCO's 1997
performance and peer group comparisons.
THE BOARD OF DIRECTORS OF HUBCO
Robert J. Burke
Donald P. Calcagnini
Joan David
Thomas R. Farley
Bryant Malcolm
W. Peter McBride
Kenneth T. Neilson
Charles F.X. Poggi
David A Rosow
James E. Schierloh
Sister Grace Francis Strauber
John H. Tatigian, Jr.
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on a
hypothetical $100 investment made at the close of business on December 31, 1992
in: (a) HUBCO Common Stock; (b) the Standard & Poor's ("S&P") 500 Index; and (c)
the Keefe, Bruyette & Woods 50 ("KBW 50") Index. The graph is calculated
assuming that all dividends are reinvested during the relevant periods. The
graph shows how a $100 investment would increase or decrease in value over time,
based on dividends (stock or cash) and increases or decreases in the market
price of the stock.
The KBW 50 is an index composed of fifty money center and regional
banks. HUBCO believes the KBW 50 Index provides a consistent means for comparing
the performance of HUBCO's Common Stock against other financial institutions
generally.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
HUBCO Inc. $100 140.46 141.61 219.54 258.61 436.76
S&P 500 Index $100 110.08 111.53 153.45 188.86 251.63
KBW 50 Index $100 105.54 100.16 160.41 226.92 331.73
</TABLE>
[OBJECT OMITTED]
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above under the caption "Board Compensation Committee Report
on Executive Compensation," various aspects of the compensation of the HUBCO
Named Officers are determined by the Compensation Committee.
The Compensation Committee members are: Charles F.X. Poggi (Chairman),
Robert Burke, Joan David, W. Peter McBride and John H. Tatigian, Jr.
Mr. Neilson serves on the Boards of Directors of HUBCO, HUB and LAB and
is an officer of HUBCO and HUB. Mr. Neilson absented himself from all
discussions, and abstained from all voting, on the Boards on which he served
with respect to his own compensation.
Charles F.X. Poggi, who serves on the Boards of Directors of HUBCO and
HUB, and who is the Chairman of the Compensation Committee and is involved in
setting executive compensation, is President of Poggi Press, a general printing
company. During 1997, Poggi Press was paid $164,397 for printing work for HUBCO
and its subsidiaries. Management believes the terms and conditions of this
transaction to be equivalent to terms available from an independent third party.
W. Peter McBride, a Director of HUBCO and HUB, serves on the
Compensation Committee. Various companies with which Mr. McBride is affiliated
have business relationships with HUBCO or its subsidiaries. The Franklin Lakes
office of HUB (obtained through merger with Urban) is leased from Urban Farms
Shopping Center, Inc., a New Jersey corporation of which W. Peter McBride is the
President and a shareholder. The lease was originally executed in 1979 and
extended on November 1, 1994 to December 31, 1999. Management believes the terms
and conditions of this lease to be equivalent to terms available from an
independent third party. The annual aggregate lease payments through December
31, 1997 were $148,838. Urban Farms, Inc., a McBride-owned company, does
landscape work for HUB. In 1997, $1,600 was paid for such services. F. A.
McBride Co. does heating and air conditioning work at various locations
previously a part of Urban. In 1997, this company was paid $77,699 for such
services.
Certain Transactions with Management
HUB and LAB have made in the past and, assuming continued satisfaction
of generally applicable credit standards, expects to continue to make, loans to
directors, executive officers and their associates (i.e., corporations or
organizations for which they serve as officers or directors or in which they
have beneficial ownership interests of 10% or more). These loans have all been
made in the ordinary course of the banking business on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and do not involve more than the
normal risk of collectability or other unfavorable features. Directors,
executive officers and their associates did not during 1996 or during 1997
through the date of this Proxy Statement borrow from HUB or LAB an amount in
excess of 10% of either bank's equity capital for any one director or executive
officer (together with their associates) or an amount in excess of 20% of either
bank's equity capital for all directors and executive officers and their
associates as a group.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires HUBCO's directors, principal
officers, and persons who own more than 10% of HUBCO's equity securities to file
with the Commission initial reports of ownership and reports of changes in
ownership of such securities. To HUBCO's knowledge, based solely on a review of
the copies of such reports furnished to it, during the fiscal year ended
December 31, 1997, Section 16(a) filing requirements with respect to HUBCO's
equity securities were complied with.
RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 1
HUBCO directors will be elected by a plurality of the votes cast at the
HUBCO Meeting, whether in person or by proxy. THE HUBCO BOARD UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE NOMINATED SLATE OF DIRECTORS INCLUDED IN PROPOSAL 1.
PROPOSAL 2--AMENDMENT TO THE
HUBCO, INC. RESTRICTED STOCK PLAN
General
The Board of Directors of the Corporation as of May 21, 1997 (the
"Effective Date") unanimously approved the adoption of an amendment to the
HUBCO, Inc. Restricted Stock Plan (the "Restricted Stock Plan"), subject to the
approval of the Corporation's shareholders. The amendment to the Restricted
Stock Plan extends the termination date of the Restricted Stock Plan to December
12, 2005, increases the maximum number of shares of common stock which may be
awarded under the Restricted Stock Plan by authorizing an additional 250,000
shares which may be issued after May 25, 1997 and provides, in the event of a
Change in Control (as defined in the Restricted Stock Plan) for the automatic
expiration of the Restricted Period (as defined in the Restricted Stock Plan)
related to any grants of restricted shares which at the date of the Change in
Control is five years or less in duration. Without the amendments, the
Restricted Stock Plan would have expired and no further shares would be issued.
Previously only restricted stock grants subject to restrictions of two years or
less could vest on a Change in Control.
The Restricted Stock Plan is administered by a committee of the Board (the
"Committee"), consisting of no fewer than three persons, who qualify as
"disinterested persons" appointed by the Board. The purpose of the Restricted
Stock Plan is to assist the Corporation in attracting and retaining highly
qualified persons as officers and employees of the Corporation, HUB and LAB.
The Committee selects from among the officers and other key employees of
the Corporation, and its Subsidiaries, the individuals to whom awards will be
granted, and determines the specific terms of each award, including any payment
to be required from the recipient thereof, subject to the provisions of the
Restricted Stock Plan. The Committee construes and interprets the Restricted
Stock Plan and awards granted thereunder, determines the duration and purposes
for leaves of absence which do not constitute a termination of employment for
purposes of the Restricted Stock Plan and determines in the event of employment
termination, whether the Restricted Period upon such Participant's shares will
lapse at such time of termination of employment. Stock awarded under the
Restricted Stock Plan which is forfeited pursuant to the terms of the Restricted
Stock Plan may again be the subject of awards if these awards are made after the
Effective Date. The Restricted Stock Plan provides for an appropriate adjustment
in the event of stock splits, stock dividends, recapitalizations and similar
events.
On March 6, 1998, the latest available date before the mailing of this
Proxy Statement, the closing price for the shares of common stock quoted by The
Wall Street Journal was $36.50.
The essential features of the Restricted Stock Plan are summarized below.
The summary is qualified in its entirety by reference to the full text of the
Restricted Stock Plan, as amended, which appears as Exhibit A to this Proxy
Statement.
Stock Subject to Restricted Stock Plan
The stock to be issued under the Restricted Stock Plan, as amended,
consists of authorized but unissued common stock of the Corporation. The
Restricted Stock Plan, without the amendment, authorized the issuance of up to
300,000 shares subject to adjustment upon certain events. The amendment to the
Restricted Stock Plan increases the number of shares subject to the Restricted
Stock Plan by authorizing the issuance of 250,000 shares after May 25, 1997.
The share limitation is subject to adjustment upon the occurrence of
certain events, including stock dividends, stock splits, mergers,
consolidations, recapitalizations and other capital adjustments. The Corporation
must reserve out of its authorized but unissued shares or out of shares held in
the Corporation's treasury sufficient shares for the award of the additional
250,000 shares under the Restricted Stock Plan. Shares awarded under the
Restricted Stock Plan which are subsequently forfeited, resold or returned to
the Corporation pursuant to the Restricted Stock Plan will not count against the
aggregate limitation.
Administration of Restricted Stock Plan
The Restricted Stock Plan is administered by a committee (the "Committee")
consisting of at least three persons designated by the Corporation's Board of
Directors. The Committee currently consists of Messrs. Burke, Tatigian, and
David. No Committee Member may be an employee of the Corporation or any of its
Subsidiaries. The Committee determines those employees eligible to participate
in the Restricted Stock Plan, those employees who are to be granted restricted
stock awards, the number of shares to be covered by the award, the price, if
any, to be paid for the shares awarded under the Restricted Stock Plan, and the
nature and terms of any restrictions on the employee's rights in that stock. The
Committee also has authority to interpret the Restricted Stock Plan, to
prescribe, amend, and rescind rules relating to the Restricted Stock Plan, and
to make all other determinations necessary or advisable for administering the
Restricted Stock Plan. The Committee also determines the duration and purposes
for leaves of absence which do not constitute a termination of employment for
purposes of the Restricted Stock Plan and determines in the event of employment
termination, whether the Restricted Period upon such Participant's shares will
lapse at such time of termination of employment.
Grant of Awards
Officers and other key employees of the Corporation, HUB, LAB and any other
subsidiary of the Corporation are eligible to participate in the Restricted
Stock Plan. Except as set forth in the table below, at present, the Corporation
does not know which officers and other key employees will receive awards in the
future pursuant to the increase in the number of shares authorized by the
amended Restricted Stock Plan. Directors will be eligible to participate only if
they are employees.
The following table presents information concerning the number of shares of
restricted stock and the corresponding dollar value of such restricted stock to
be received by or allocated to the Named Officers, executive officers as a
group, nonexecutive officers and employees as a group, and any person receiving
5% or more of the 250,000 shares of restricted stock initially available
pursuant to the Restricted Stock Plan. All of such shares were granted subject
to shareholder approval.
<PAGE>
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
Restricted Stock Plan
Dollar Value
Name and Position ($)(1) Number of Units
- -------------------------------------------------- ------------------ ---------------
<S> <C> <C>
Kenneth T. Neilson............................ $ 236,687 7,000
President & C.E.O.
D. Lynn Van Borkulo-Nuzzo..................... $ 67,625 2,000
Executive Vice President &
Corporate Secretary
John McIlwain.................................. $ 0 0
EVP & Chief Credit Officer
Joseph F. Hurley............................... $ 0 0
EVP, Treasurer &
Chief Financial Officer
Thomas Nelson.................................. $ 67,625 2,000
EVP &
Chief Operations Officer
Executive Officer Group........................ $ 371,937 11,000
Non-Executive Officer/Employee Group........... $ 449,547 16,250
</TABLE>
- ------------------
NOTES:
(1) Based upon the value at the date of grant.
Restrictions
The Committee may impose restrictions of any nature on the shares of stock
awarded pursuant to the Restricted Stock Plan. In addition, the Committee may,
but need not, require the payment of a purchase price in exchange for such
shares.
Restricted Period
Each share of stock awarded under the Restricted Stock Plan will be subject
to a "Restricted Period" of from two to ten years, as determined by the
Committee when it awards the shares. During the Restricted Period, certificates
representing the shares will be held by an escrow agent and the employee will be
prohibited from selling, transferring or otherwise disposing of the shares. If a
share recipient leaves the employ of the Corporation and its subsidiaries during
the Restricted Period for any reason, his or her shares will be forfeited and
must be returned to the Corporation, which will refund to the employee the
price, if any, he or she paid for such shares. An amendment to the Restricted
Stock Plan has been added to clarify past interpretations of the Restricted
Stock Plan that the Committee is given discretion to waive this forfeiture
requirement if the share recipient leaves the Corporation's employ due to death,
retirement, disability or reasons other than termination for Cause, even within
the first two years.
In the Restricted Stock Plan, upon the occurrence of a Change in Control of
the Corporation, every Restricted Period of five years or less will
automatically expire. Previously only restricted stock grants subject to
restrictions of two years or less would vest on a Change in Control. Generally,
a "Change in Control" is deemed to occur if a person, group or entity acquires
10% or more of the Corporation's voting stock (unless that person, group or
entity acquires less than 25% of the voting stock and receives prior approval of
2/3 of the Board of Directors for acquisitions above 10%), if the Corporation's
common stock is purchased pursuant to a tender or exchange offer not made by the
Corporation or its affiliates, if the Corporation's stockholders approve a
merger or consolidation of the Corporation with another company (other than a
merger in which the Corporation is the surviving entity and its shareholders and
directors remain the same), if all or substantially all of the Corporation's
assets are sold or otherwise disposed of, if a liquidation or dissolution of the
Corporation occurs, if there is a substantial change in the make-up of the Board
of Directors which is not approved by the continuing directors, or if the
ownership of HUB's common stock or assets changes.
Amendment and Termination of Restricted Stock Plan
The Board may at any time terminate, suspend, or modify the Restricted
Stock Plan. Under the Restricted Stock Plan, any amendment which increases the
maximum number of shares which may be issued under the Restricted Stock Plan,
changes the class of persons eligible to participate in the Restricted Stock
Plan, extends the period during which shares may be granted or makes any other
change which would materially increase the benefits of the Restricted Stock Plan
to employees of the Corporation requires shareholder approval.
Federal Income Tax Consequences Under the Restricted Stock Plan
The following is a summary of the Federal income tax consequences of
transactions under the Restricted Stock Plan, based on Federal income tax laws
in effect on January 1, 1998. This summary is not intended to be comprehensive
and does not describe state or local income tax consequences.
Restricted Stock. A recipient of restricted stock generally will not be
subject to tax at the time the restricted stock is received, but it will be
subject to tax at ordinary income rates on the excess of: 1) the fair market
value of the restricted stock when the restricted stock is first either
transferable or not subject to a substantial risk of forfeiture, over 2) the
amount (if any) paid for the stock by the recipient. However, a recipient who so
elects under Section 83(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), within 30 days of the date of transfer of the shares will recognize
taxable ordinary income in the year of receipt of the shares equal to the excess
of the fair market value of such shares of restricted stock at the time of such
transfer (determined without regard to the restrictions) over the purchase price
(if any) of such restricted stock. Upon the subsequent sale or exchange of such
stock, the recipient will recognize capital gain or loss measured by the
difference between the amount realized on the disposition and the basis of the
restricted stock, which will equal the sum of the amount paid for the stock,
plus the amount included in gross income upon the transfer.
If the restricted shares subject to a Section 83(b) election are
forfeited before they are vested, the recipient may be entitled to a capital
loss for Federal income tax purposes equal to the purchase price (if any) of the
forfeited shares, but the recipient will not be entitled to a loss with respect
to any income recognized as a result of the Section 83(b) election.
With respect to the sale of the shares after the restricted period has
expired, the holding period to determine whether the recipient has long-term or
short-term capital gain or loss generally begins when the restrictions expire
and the tax basis of such shares will generally be based on the fair market
value of such shares on such date. However, if the recipient timely elects to be
taxed as of the date of the award of shares, the holding period commences on
such date and the tax basis will be equal to the fair market value of the shares
on such date (determined without regard to the restrictions). The recipient's
employer generally will be entitled to a deduction equal to the amount that is
taxable as ordinary income to the recipient, subject to the reporting
requirements and the ordinary and necessary test.
Capital Gains. Under current law, a taxpayer's net capital gain (i.e.,
the amount by which the taxpayer's net long-term capital gains exceed his net
short-term capital losses) from a sale of shares is subject to a maximum federal
income tax rate of 20% if the shares have been held for more than 18 months, and
a maximum federal income tax rate of 28% if the shares have been held for more
than one year but less than 18 months. Ordinary income is subject to tax at
rates as high as 39.6%. Capital losses are currently deductible against capital
gains without limitation, but are currently deductible against ordinary income
in any year only to the extent of $3,000 ($1,500 in the case of a married
individual filing a separate return). Capital losses which are not currently
deductible by reason of the foregoing limitation may be carried forward to
future years.
Dividends on Restricted Stock. Dividends on restricted stock
transferred to a participant in the Restricted Stock Plan which are paid prior
to the time such stock becomes vested or transferable by the recipient will
generally be treated as compensation which is taxable as ordinary income to the
participant and will be deductible by the Corporation, subject to satisfaction
of the reporting requirements and the ordinary and necessary test. However, if
the recipient of restricted stock makes a timely Section 83(b) election with
respect to the stock, dividends paid on such stock will be treated as dividend
income which is taxable as ordinary income to the recipient, but will not be
deductible by the Corporation.
Payment in Respect of a Change in Control. The Restricted Stock Plan
provides for the lapse of restriction in the event of a "Change in Control," as
defined in the Restricted Stock Plan. The acceleration of these benefits may be
deemed to constitute a "parachute payment" under the Code. "Excess parachute
payments," as defined in the Code, will subject the recipient thereof to an
additional 20% excise tax and are not deductible by the Corporation
Vote Required for Approval
In accordance with the New Jersey Business Corporation Act and the
Corporation's By-laws, the affirmative vote of a majority of those shares of
common stock cast whether in person or by proxy at the Annual Meeting and
entitled to vote is required for the adoption of the amendment to the Restricted
Stock Plan.
Board of Directors' Recommendation
THE HUBCO BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE
RESTRICTED STOCK PLAN INCLUDED IN PROPOSAL 2.
PROPOSAL 3 -- ADOPTION OF THE AMENDMENT TO
THE HUBCO, INC. STOCK OPTION PLAN
General
The Board of Directors of the Corporation on January 21, 1998 unanimously
approved the adoption of an amendment to the HUBCO, Inc. 1995 Stock Option Plan
(the "Stock Option Plan"), subject to the approval of the Corporation's
shareholders. The amendment increases the maximum number of shares for which
options may be issued under the Stock Option Plan by permitting options for an
additional 750,000 shares to be issued after May 25, 1997, increases the maximum
number of shares of common stock with respect to options which may be granted to
any one person during the term of the Stock Option Plan to 437,500, and removes
language which links the number of shares which may be granted pursuant to the
Stock Option Plan to the number of shares which may be granted under the
Restricted Stock Plan.
The purposes of the Stock Option Plan are to assist the Corporation in
attracting and retaining highly qualified executives, to align executive and
stockholder long-term interests by creating a direct link between executive
compensation and stockholder return, to enable executives of the Corporation to
develop and maintain stock ownership positions in the Corporation and to provide
such executives with incentives to contribute to the success of the Corporation.
The full text of the Stock Option Plan, as amended, is attached to this
Proxy Statement as Exhibit B and the following description of the Stock Option
Plan is qualified in its entirety by reference to Exhibit B.
Types of Options
All options granted under the Stock Option Plan are options for shares
of the Corporation's common stock. The options may be either "Incentive
Options," options intended to constitute "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or "Non-qualified Options," options which, when granted or due to
subsequent disqualification, do not qualify as incentive stock options within
the meaning of Section 422 of the Code.
Administration
The Stock Option Plan is administered by a committee designated by the
Board of Directors (the "Committee") from among members of the Board who are
"outside directors," within the meaning of Section 162(m) of the Code, and who
are ineligible to receive options under the Stock Option Plan within one year of
such designation. The Committee identifies each optionee (a "Participant") and
determines the number of shares subject to each option, the date of grant and
the terms and conditions governing the option. The Committee is also charged
with the responsibility of interpreting the Stock Option Plan and making all
administrative determinations thereunder.
Eligibility
All officers, group and divisional officers, and other key employees of
the Corporation and its Subsidiaries designated by the Committee are eligible to
receive options under the Stock Option Plan. No non-employee director of the
Corporation or its Subsidiaries may receive any options under the Stock Option
Plan. The Corporation is unable, at the present time, to determine the identity
or number of executive officers and other key employees who may receive options
pursuant to the increase in the number of shares authorized by the amendment to
the Stock Option Plan in the future since discretion for the grant of stock
options is vested in the Committee. All options granted in 1997 were issued
under the authority of the Stock Option Plan without amendment.
Terms and Conditions of Stock Options
Term; 10% Shareholders
All options granted under the Stock Option Plan will have terms of ten
years or less. The Stock Option Plan provides that any options which are
intended to be Incentive Options and are granted to a Participant who owns more
than 10% of the Corporation's common stock (a "10% Shareholder") must have terms
of five years or less.
Limitations on Grant and Exercise
The Stock Option Plan provides that, with respect to options granted
which are intended to be Incentive Options, the aggregate fair market value
(determined at the time the option is granted) of stock exercisable for the
first time by an employee during any calendar year may not exceed $100,000. For
example, the Committee could grant an Incentive Option covering $200,000 of
common stock to a Participant only if the Committee deferred the exercise of one
half of the options beyond the first year in which the other half of the options
first become exercisable.
Exercise Price
The Stock Option Plan provides that options are to be granted at an
exercise price equal to or greater than the fair market value (on the date of
grant) of the stock purchasable thereunder. Incentive Options granted to 10%
Shareholders must bear an exercise price of not less than 110% of the fair
market value of the stock purchasable thereunder on the date of grant. The Stock
Option Plan defines "fair market value" as the mean between the highest and
lowest sale prices reported on any exchange on which the stock is listed and
traded on the valuation date, or if there are no such sales on that date, then
on the last preceding date on which such a sale was reported. If the stock is
not listed on any exchange but is quoted on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") on a last sale basis,
then the fair market value of the stock is defined as the mean between the high
and low price reported on the valuation date. If the stock is not quoted on the
NASDAQ on a last sale basis, fair market value is to be determined by the
Corporation's Board of Directors in good faith and in accordance with applicable
Internal Revenue Service regulations.
The Stock Option Plan provides that the purchase price for shares
acquired pursuant to the exercise of any option is payable in full at the time
of exercise. The exercise price may be paid in cash or, unless otherwise
prohibited by the terms of the agreement by which the option was granted, by one
or more of the following means: (i) in the form of unrestricted shares of the
Corporation's common stock ("Shares") already owned by the Participant based in
any such instance on the fair market value of the Shares on the date the option
is exercised; provided, however, that, in the case of an Incentive Option, the
right to make a payment in the form of already owned Shares may be authorized
only at the time the option is granted; (ii) by delivering a properly executed
exercise notice to the Corporation, together with a copy of irrevocable
instructions to a broker to deliver promptly to the Corporation the amount of
sale or loan proceeds to pay the purchase price; (iii) by a combination thereof,
in each case in the manner provided in the option agreement; or (iv) by any
other means acceptable to the Corporation. To the extent the option exercise
price may be paid in Shares as provided above, Shares delivered by the
Participant may be (i) shares which were received by the Participant upon
exercise of one or more Incentive Options, but only if such Shares have been
held by the Participant for at least the greater of (a) two years from the date
the Incentive Options were granted or (b) one year after the transfer of Shares
to the Participant, or (ii) shares which were received by the Participant upon
exercise of one or more Non-qualified Options, but only if such Shares have been
held by the Participant for at least six months. Payment of the exercise price
with stock may result in certain tax advantages for Participants and may enable
Participants to limit or avoid out-of-pocket expenditures.
Exercise Period
The Stock Option Plan provides that if a Participant's employment
terminates by reason of death or disability, the right of the Participant, his
or her estate, beneficiary or representative to exercise any outstanding, vested
options will terminate six months later or upon the earlier expiration of the
stated term of the option. If a Participant's employment terminates by reason of
retirement, voluntary resignation or dismissal without "Cause" (as defined in
the Stock Option Plan), the right of the Participant to exercise any
outstanding, vested options will terminate 60 days later or upon the earlier
expiration of the stated term of the option. No option shall be exercisable
after the date of termination for Cause. "Cause" is defined in the Stock Option
Plan as (i) the conviction of the Participant of a felony by a court of
competent jurisdiction, (ii) the indictment of the Participant by a state or
Federal grand jury of competent jurisdiction for embezzlement or
misappropriation of funds of the Corporation or for any act of dishonesty or
lack of fidelity towards the Corporation, (iii) the written confession by the
Participant of any act of dishonesty towards the Corporation or any embezzlement
or misappropriation of the Corporation's funds, or (iv) willful or gross neglect
of the duties for which the Participant was responsible, all as the Committee,
in its sole discretion, may determine.
Change in Control Provisions
Upon a "Change in Control" (as defined in the Stock Option Plan) all
outstanding options under the Stock Option Plan become immediately and fully
exercisable.
The Stock Option Plan defines Change in Control generally to mean any
of the following events: (a) any person unaffiliated with the Corporation
becomes the beneficial owner of 10% of the Corporation's outstanding common
stock (unless such person gets the approval of two-thirds of the Corporation's
Directors then in office for acquisitions in excess of 10% and acquires no more
than 25% of the Corporation's common stock); (b) the Corporation's common stock
is first purchased pursuant to a tender or exchange offer by a nonaffiliate of
the Corporation; (c) the Corporation's stockholders approval of (i) a merger or
consolidation of the Corporation with or into another Corporation (other than a
merger or consolidation in which the Corporation is the surviving corporation
and which does not result in any reclassification or reorganization of the
Corporation's then outstanding shares of common stock or a change in the
Corporation's directors, other than the addition of not more than three
directors), (ii) a sale or disposition of all or substantially all the
Corporation's assets, or (iii) a plan of liquidation or dissolution of the
Corporation; (d) during any consecutive two calendar-year period, individuals
who at the beginning of such period constitute the Board of Directors of the
Corporation ("Continuing Directors") for any reason cease to constitute
two-thirds of the Board of the Corporation or its successor (persons who are
nominated or elected to the Board by two-thirds of the Continuing Directors are
also deemed Continuing Directors); (e) a sale of (i) a controlling interest in
the Corporation to a nonaffiliate of the Corporation or (ii) all or
substantially all of the Corporation's assets (other than in the ordinary course
of business).
Shares Subject to the Stock Option Plan
The amendment increases the number of shares for which options may be
granted under the Stock Option Plan. Prior to the amendment the maximum number
of shares that could be granted under the Stock Option Plan was 500,000, subject
to adjustment for certain capital changes after the adopting of an amendment to
the Stock Option Plan on December 13, 1994. Furthermore, that number was reduced
by grants of restricted stock under the Restricted Stock Plan after December 13,
1994.
Under the amendment, the maximum number is increased by authorizing
options to be issued for an additional 750,000 shares after May 25, 1997.
Furthermore, the number of shares subject to options will no longer be reduced
by shares issued under the Restricted Stock Plan. Also, the amendment increases
the maximum number of options for shares that may be issued to any one employee
under the Stock Option plan to 437,500 shares.
The Stock Option Plan provides that the number and price of shares
available for stock options and the number of shares covered by outstanding
stock options shall be adjusted equitably for stock splits, stock dividends,
recapitalizations, mergers and other changes in the Corporation's capital stock.
Comparable changes will be made to the per share exercise price of each
outstanding option, but no change shall be made in the total price applicable to
the unexercised portion of an unexercised option, except for any change in the
aggregate price resulting from rounding off of share quantities or prices.
Termination and Amendment
The Stock Option Plan will terminate automatically on December 12,
2005. However, the Board of Directors has the right to terminate the Stock
Option Plan at any time.
The Board of Directors also has the right to amend the Stock Option
Plan. However, without the approval of the Corporation's shareholders no
amendment may be made to the Stock Option Plan if the amendment would: (a)
except as provided under the Stock Option Plan for changes in capitalization,
increase the maximum number of shares available for grants under the Stock
Option Plan, either in the aggregate or for any participant, (b) expand the
class of employees eligible to receive options, (c) decrease the minimum option
exercise price as provided in the Stock Option Plan, (d) extend the maximum term
for options granted under the Stock Option Plan, (e) extend the term of the
Stock Option Plan, or (f) take any other action requiring stockholder approval
under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Federal Income Tax Consequences Under the Stock Option Plan
The following is a summary of the Federal income tax consequences of
transactions under the Stock Option Plan, based on Federal income tax laws in
effect on January 1, 1998. This summary is not intended to be comprehensive and
does not describe state or local income tax consequences.
Benefits which may be granted pursuant to the Stock Option Plan include
incentive stock options and nonqualified stock options.
Incentive Stock Options. No income is realized by an optionee upon the
grant or exercise of an incentive stock option. If shares of common stock are
transferred to an optionee upon the exercise of an incentive stock option, and
if no disqualifying disposition of such shares is made by such optionee within
two years after the date of grant of the option or within one year after the
transfer of such shares to such optionee, then (1) upon the sale or exchange of
such shares, any amount realized in excess of the option exercise price will be
taxed to such optionee as a long-term capital gain and any loss sustained will
be treated as a long-term capital loss, and (2) no deduction will be allowed to
the Corporation for Federal income tax purposes. The exercise of an incentive
stock option will give rise to an item of tax preference that may result in
alternative minimum tax liability for the optionee.
If common stock acquired upon the exercise of an incentive stock option
is disposed of prior to two years after the grant date or one year after the
exercise date, generally (1) the optionee will realize compensation (i.e.,
ordinary income) in the year of disposition in an amount equal to the excess (if
any) of the fair market value of such shares at exercise (or if less, the amount
realized on the disposition of such shares, if the shares are disposed of by
sale or exchange) over the option exercise price paid for such shares, and (2)
the Corporation will be entitled to deduct the amount of compensation income,
which was taxed to the optionee for Federal income tax purposes, if it complies
with applicable reporting requirements (the "reporting requirements") and if the
amount represents an ordinary and necessary business expense of the Corporation
(the "ordinary and necessary test"). Any further gain (or loss) realized by the
optionee will be taxed as short-term or long-term capital gain (or loss), as the
case may be, and will not result in any deduction by the Corporation. Different
rules may apply if common stock is purchased by an optionee who is also an
officer, director or more than 10% shareholder. See "Special Rules Applicable to
Corporate Insiders," below.
Nonqualified Stock Options. Except as noted below, in the case of
nonqualified stock options: (1) no income is realized by the optionee at the
time the option is granted; (2) if the shares are unrestricted, the optionee
realizes ordinary income at exercise in an amount equal to the difference
between the option exercise price paid for the shares and the fair market value
of the shares on the date of exercise; (3) the Corporation is entitled to a
Federal income tax deduction equal to the amount of income taxed to the
optionee, subject to the Corporation's satisfaction of the reporting
requirements and the ordinary and necessary test; and (4) upon disposition of
the common stock acquired by exercise of the option, appreciation (or
depreciation) occurring after the date of exercise is treated as either
short-term or long-term capital gain (or loss), depending on the recipient's
holding period of the shares. Different rules may apply if common stock is
purchased by an optionee who is also an officer, director or more than 10%
shareholder. See "Special Rules Applicable to Corporate Insiders," below.
Special Rules Applicable to Corporate Insiders. Generally, individuals
subject to Section 16(b) of the Exchange Act ("Insiders") are not taxed until
six months after exercise of a nonqualified stock option, with the excess of the
fair market value of the shares of common stock received upon exercise over the
option purchase price, determined as of the end of the six-month period, being
taxed as ordinary income, and the holding period for treating any gain (or loss)
as long-term capital gain (or loss) beginning at the end of such period.
However, an Insider who elects to be taxed under Section 83(b) of the Code
should be taxed on the excess of the fair market value of the shares at the time
of exercise over the option purchase price.
Stock Swaps. The Stock Option Plan provides that, with the
Corporation's permission, an optionee may transfer previously owned shares to
the Corporation to satisfy the purchase price under an option (a "Stock Swap").
Generally, if an optionee utilizes previously owned shares to purchase shares
upon the exercise of an incentive stock option, the optionee will not realize
any gain upon the exchange of the old shares for the new shares and will carry
over into the same number of new shares the basis and holding period for the old
shares. If the optionee purchases more shares than the number of old shares
surrendered in the Stock Swap, the incremental number of shares received in the
Stock Swap will have a basis of zero and a holding period beginning on the date
of the exercise of the incentive stock option. If, however, shares acquired
through the exercise of an incentive stock option are used in a Stock Swap prior
to the end of the statutory holding period applicable to the old shares, the
Stock Swap will constitute a disqualifying disposition of the old shares,
resulting in the immediate recognition of ordinary income (see "Incentive Stock
Options," above).
If a Stock Swap is used to exercise a nonqualified stock option, the
use of old shares to pay the purchase price of an equal number of new shares
generally will be tax-free to the optionee, and he will carry over into the new
shares the basis and holding period of the old shares. However, if more shares
are acquired than surrendered, the incremental shares received in the Stock Swap
will generally be taxed as compensation income in an amount equal to their fair
market value at the time of the Stock Swap. The optionee's basis in those
additional shares will be their fair market value taken into account in
quantifying the optionee's compensation income and the holding period for such
shares will begin on the date of the Stock Swap.
Capital Gains. Under current law, a taxpayer's net capital gain (i.e.,
the amount by which the taxpayer's net long-term capital gains exceed his net
short-term capital losses) from a sale of shares is subject to a maximum federal
income tax rate of 20% if the shares have been held for more than 18 months, and
a maximum federal income tax rate of 28% if the shares have been held for more
than one year but less than 18 months. Ordinary income is subject to tax at
rates as high as 39.6%. Capital losses are currently deductible against capital
gains without limitation, but are currently deductible against ordinary income
in any year only to the extent of $3,000 ($1,500 in the case of a married
individual filing a separate return). Capital losses which are not currently
deductible by reason of the foregoing limitation may be carried forward to
future years.
Payment in Respect of a Change in Control. The Stock Option Plan
provides for the early exercisability of outstanding options in the event of a
"Change in Control," as defined in the Stock Option Plan. The acceleration of
these benefits may be deemed to constitute a "parachute payment" under the Code.
"Excess parachute payments," as defined in the Code, will subject the recipient
thereof to an additional 20% excise tax and are not deductible by the
Corporation
Vote Required for Approval
In accordance with the New Jersey Business Corporation Act and the
Corporation's By-laws, the affirmative vote of a majority of those shares of
common stock cast whether in person or by proxy at the Annual Meeting and
entitled to vote is required for the adoption of the amendment to the Stock
Option Plan.
Recommendation and Vote Required for Adoption of Proposal 4
The affirmative vote of the holders of a majority of the Corporation's
outstanding common stock cast whether in person or by proxy at the Annual
Meeting is required to adopt the amendment to the 1995 Stock Option Plan. THE
HUBCO BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE 1995 STOCK
OPTION PLAN
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Anderson LLP, independent public accountants, have audited the
books and records of HUBCO since 1991. Selection of HUBCO's independent public
accountants for the 1998 fiscal year will be made by the Board of Directors
subsequent to the Annual Meeting.
Arthur Anderson LLP has advised HUBCO that one or more of its
representatives will be present at the Annual Meeting of shareholders to make a
statement if they so desire and to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any proposal which a HUBCO shareholder wishes to have included in the
Proxy solicitation materials of HUBCO to be used in connection with the 1999
Annual Meeting must be presented to HUBCO no later than November 27, 1998.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the Annual Meeting. However, in the event such other matters come before
that meeting, it is the intention of the persons named in the proxy to vote on
any such matters in accordance with the recommendation of the Board of
Directors.
Shareholders are urged to sign the enclosed proxy, which is solicited
on behalf of the Board of Directors, and return it to the Corporation in the
enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
KENNETH T. NEILSON
-----------------------------------
Kenneth T. Neilson
Chairman, President and
Chief Executive Officer
Mahwah, New Jersey
March 24, 1998
<PAGE>
Exhibit A
The following is the Restricted Stock Plan in its entirety. Proposed amendments
to the Restricted Stock Plan appear in BOLD and are underlined. The existing
language which is to be deleted by amendment is crossed out.
HUBCO, INC.
RESTRICTED STOCK PLAN
SECTION 1 - Purpose
The HUBCO, Inc. Restricted Stock Plan (the "Plan") is designed to
attract and retain the services of selected key employees of HUBCO, INC. (the
"Corporation") and its Subsidiaries who are in a position to make a material
contribution to the achievement of the goals of the Corporation or one or more
of its Subsidiaries. It is also intended to enhance management's identification
with the shareholders of the Corporation and to encourage the continued
employment of certain key employees with the Corporation and its Subsidiaries.
Under the Plan, Awards shall be made to Eligible Employees in the form of
Restricted Stock. The Plan, having been approved by the Board of Directors,
shall become effective on February 7, 1989 subject to approval by the
shareholders of the Corporation.
SECTION 2 - Definitions
Capitalized terms not specifically defined elsewhere shall have the
following meanings:
"Award" means an award of Restricted Stock to a Participant pursuant to
the Plan.
"Affiliate" means the Corporation, a Subsidiary, or any employee
benefit plan established or maintained by the Corporation or a Subsidiary.
"Agreement" means a Restricted Stock Award Agreement which is entered
into by the corporation and a Participant pursuant hereto.
"Board of Directors" means the Board of Directors of the Corporation.
"Change in Capitalization" means any change in the outstanding Shares
of Common Stock by reason of any stock dividend or split, recapitalization,
merger, consolidation, combination or exchange of shares or other similar
corporate change.
"Change in Control" means the occurrence of one or more of the
following events: (a) the Corporation acquires actual knowledge that any person
(as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) other
than an Affiliate is or becomes the beneficial owner (as defined in Rule 13d-3
of the Exchange Act) directly or indirectly, of securities of the Corporation
representing 10% or more of the combined voting power of the Corporation's then
outstanding securities, (b) the first purchase of Common Stock pursuant to a
tender or exchange offer (other than a tender or exchange offer made by an
Affiliate), (c) the approval by the Corporation's stockholders of (i) a merger
or consolidation of the Corporation with or into another corporation (other than
a merger or consolidation in which the Corporation is the surviving corporation
and which does not result in any reclassification or reorganization of the
Corporation's then outstanding shares of Common Stock or a change in the
Corporation's directors), (ii) a sale or disposition of all or substantially all
of the Corporation's assets or (iii) a plan of liquidation or dissolution of the
Corporation, (d) during any period of two consecutive calendar years (which
years may include 1988 or any subsequent year), individuals who at the beginning
of such period constitute the Board of Directors of the Corporation cease for
any reason to constitute at least two-thirds thereof, unless the election or
nomination for the election by the Corporation's stockholders of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period, or (e) a sale
of (i) common stock of the Bank if after such sale any person (as defined above)
other than an Affiliate owns a majority of the Bank's common stock or (ii) all
or substantially all of the Bank's assets (other than in the ordinary course of
business). Notwithstanding the foregoing, no Change in Control shall be deemed
to have occurred for purposes of clause (a) above if a person is or becomes the
beneficial owner, directly or indirectly, or more than 10% but less than 25% of
the combined voting power of the Corporation's then outstanding securities if
the acquisition of all voting securities in excess of 10% was approved in
advance by two-thirds of the directors then in office.
"Committee" means a committee consisting of at least three (3)
Disinterested Persons appointed by the Board of Directors to administer the Plan
and to perform the functions set forth herein.
"Common Stock" means the common stock of the Corporation.
"Disability" means the condition which results when an individual has
become permanently and totally disabled within the meaning of Section 105(d)(4)
of the Internal Revenue Code of 1986, as amended.
"Disinterested Person" means a person (within the meaning of Rule 16b-3
under the Exchange Act) who at the time he exercises discretion as a member of
the Committee is not and at any time within one (1) year prior thereto has not
been eligible for selection (within the meaning of Rule 16b-3 of the Exchange
Act) as a person to whom Shares may be allocated pursuant to this Plan or any
other plan of the Corporation or any Subsidiary entitling participants therein
to acquire stock of the Corporation or any Subsidiary.
"Eligible Employee" means any officer or other key employee of the
Corporation or a Subsidiary designated by the Committee as eligible to receive
Awards subject to the conditions set forth herein.
"Escrow Agent" means the escrow agent under the Escrow Agreement,
designated by the Committee.
"Escrow Agreement" means an agreement between the Corporation, the
Escrow Agent and a Participant, in the form specified by the Committee, under
which Shares awarded pursuant hereto shall be held by the Escrow Agent until
either (a) the restrictions relating to such Shares expire and the Shares are
delivered to the Participant or (b) the Corporation reacquires the Shares
pursuant hereto and the Shares are delivered to the Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Participant" means an Eligible Employee who has been selected by the
Committee to receive an Award under the Plan.
"Plan year" means the fiscal year of the Corporation commencing on
January 1 and ending on December 31.
"Restricted Period" means Common Stock which has been awarded to a
Participant subject to the restrictions referred to in the Plan and the
restrictions set forth in the Agreement.
"Retirement" means any normal or early retirement by a Participant
pursuant to the terms of any pension plan or policy of the Corporation or any
Subsidiary which is applicable to such Participant at the time of his or her
retirement.
"Shares" means shares of Common Stock, whether or not Restricted Stock.
"Subsidiary(ies)" means any corporation or other legal entity, domestic
or foreign, more than 50% of the voting power of which is owned or controlled,
directly or indirectly by the Corporation.
SECTION 3 - Administration
3.1 Generally. The Plan shall be administered by the Committee which
shall hold meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its meetings. A
majority of the Committee shall constitute a quorum and a majority of the quorum
may authorize any action. Each member of the Committee shall not be an employee
of the Corporation or any Subsidiary and shall be a Disinterested Person. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or the Awards, and
all members of the Committee shall be fully indemnified by the Corporation with
respect to any such Action, determination or interpretation.
3.2 Powers of the Committee. Subject to the express terms and
conditions set forth herein, the Committee shall have the power from time to
time:
(a) to select those Eligible Employees to whom Awards shall be
granted under the Plan and to determine the number of Shares of
Restricted Stock to be granted pursuant to each Award, the terms and
conditions of each Award, including the restrictions relating to such
Shares and the purchase price per Share, if any;
(b) to construe and interpret the Plan and the Awards granted
thereunder and to establish, amend and revoke rules and regulations for
the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the
extent it shall deem necessary or advisable to make the Plan fully
effective, and all decisions and determinations by the Committee in the
exercise of this power shall be final and binding upon the Corporation,
its Subsidiaries and the Participants;
(c) to determine the duration and purposes for leaves of
absence which may be granted to a Participant without constituting a
termination of employment or service for purposes of the Plan;
(d) to determine, in the event of an employee's termination
of employment, whether the Restricted Period or any other restrictions
upon some or all of the Restricted Shares will lapse at such time of
termination of employment; and
(e) generally, to exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best interests
of the Corporation with respect to the Plan.
3.3 No Duty to Make Awards. The Committee may in any Plan Year refrain
from designating any Participants or may refrain from making any Awards, but
such action shall not be deemed a termination of the Plan. No Participant or
employee shall have any claim or right to be granted Awards under the Plan.
SECTION 4 - Stock Subject to Plan
4.1 Maximum Number of Shares. The maximum number of Shares that may be
issued or transferred pursuant to Awards under the Plan is 300,000 granted after
May 25, 1997 is 250,000 (or the number and kind of shares of stock or other
securities which are substituted for those Shares or to which those Shares are
adjusted pursuant to the Plan upon a Change in Capitalization ) after March 31,
1998) and the Corporation shall reserve for the purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the Corporation's
treasury, or partly out of each, such number of Shares as shall be determined by
the Board. The maximum number of Shares that may be issued or transferred
pursuant to Awards made under the Plan prior to May 25, 1997 was 300,000 shares,
as adjusted for Changes in Capitalization occurring after February 7, 1989.
4.2 Return of Shares. Whenever any Shares subject to an Award are
resold or returned to the Corporation, or are forfeited for any reason pursuant
to the terms of the Plan, such Shares may again be the subject of Awards
hereunder.
4.3 Change in Capitalization. In the event of a Change in
Capitalization, the Committee shall conclusively determine the appropriate
adjustments, if any, and shall make such appropriate adjustments, to the maximum
number and class of shares of stock with respect to which Awards may be granted
under the Plan. If, by reason of a Change in Capitalization, a Participant shall
be entitled to new, additional or different shares of stock or securities, such
new, additional or different shares shall thereupon be subject to all of the
conditions and restrictions which were applicable to the Shares pursuant to the
Award prior to such Change in Capitalization.
SECTION 5 - Restricted Stock
5.1 The Committee may grant Awards of Restricted Stock which shall be
evidenced by an Agreement between the Corporation and the Participant. Each
Agreement shall contain such restrictions, terms and conditions as the Committee
may require and (without limiting the generality of the foregoing) such
Agreements shall require that an appropriate legend be placed on Share
certificates. Such Agreements shall set forth a Restricted Period of from two
(2) to ten (10) years, as selected by the Committee, for each Share of
Restricted Stock granted pursuant thereto. Any Share granted to a Participant
may have a different Restricted Period from any other Share. Awards of
Restricted Stock shall also be subject to the terms and provisions set forth
elsewhere in this Section 5.
5.2 Rights of Participant
(a) Shares of Restricted Stock granted pursuant to an Award
hereunder shall be issued in the name of the Participant as soon as
reasonably practicable after the Award is granted and the purchase
price, if any, is paid by the Participant provided that the Participant
has executed an Agreement evidencing the Award, and Escrow Agreement,
appropriate blank stock powers and any other documents which the
Committee, in its absolute discretion, may require as a condition to
the issuance of such Shares. If a Participant shall fail to execute the
Agreement evidencing an Award, an Escrow Agreement or appropriate blank
stock powers or shall fail to pay the purchase price, if any, for the
Restricted Stock, the Award shall be null and void. Shares issued in
connection with an Award shall be deposited together with the stock
powers with the Escrow Agent designated by the Committee. Except as
restricted by the terms of the Agreement, upon delivery of the Shares
to the escrow Agent, the Participant shall have all of the rights of a
stockholder with respect to such Shares, including the right to vote
the shares and to receive all dividends or other distributions paid or
made with respect to the shares.
(b) If a Participant receives rights or warrants with respect
to any Shares which were awarded to him as Restricted Stock, such
rights or warrants or any Shares or other securities he acquires by the
exercise of such rights or warrants may be held, exercised, sold or
otherwise disposed of by the Participant free and clear of the
restrictions and obligations provided by this Plan.
5.3 Non-transferability. Until the Restricted Period and any other
restrictions upon the Shares of Restricted Stock awarded to a Participant shall
have lapsed in the manner set forth in Section 5.4, such Shares shall not be
sold, transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Participant. The Committee may
also impose such other restrictions and conditions on the Shares as it deems
appropriate.
5.4 Lapse of Restrictions.
(a) Restrictions upon Shares of Restricted Stock awarded
hereunder shall lapse at such time or times and criteria as the
Committee may determine; provided, however, that the restrictions upon
such Shares shall lapse only if the Participant on the date of such
lapse is then and has continuously been an employee of the Corporation
or a Subsidiary from the date the Award was granted.
(b) The Restricted Period applicable to any Shares awarded to
a Participant shall expire in accordance with its terms.
Notwithstanding the foregoing, upon the occurrence of any Change in
Control, every Restricted Period which at that time is two five years
or less in duration shall automatically expire.
(c) In the event of termination of Participant's employment as
a result of his or her death, Retirement or Disability, the Committee,
in its absolute discretion, may determine that the Restricted Period
and any other restrictions upon some or all Shares of Restricted Stock
awarded to the Participant shall thereupon immediately lapse. The
Committee may also decide at any time, in its absolute discretion and
on such terms and conditions as it deems appropriate, to remove or
modify the restrictions upon Shares of Restricted Stock awarded
hereunder.
5.5 Forfeit of Shares to Corporation. Subject to Section 5.4(c), upon
the termination of employment of the Participant, all of such Shares with
respect to which restrictions have not lapsed shall be resold by the Participant
to the Corporation at the same price paid by the Participant for such Shares or
shall be forfeited and automatically transferred to and reacquired by the
Corporation at no cost to the Corporation if no purchase price had been paid for
such Shares.
5.6 Treatment of Dividends. At the time of an Award of Shares of
Restricted Stock, the Committee may, in its discretion, determine that the
payment to the Participant of dividends, or a specified portion thereof,
declared or paid on such Shares by the Corporation shall be deferred until the
earlier to occur of (i) the lapsing of the restrictions imposed upon such
Shares, in which case such dividends shall be paid over to the Participant, or
(ii) the forfeiture of such shares under Section 5.5 hereof, in which case such
dividends shall be forfeited to the Corporation. In the event of any deferral of
dividends, such dividends shall be held by the Corporation for the account of
the Participant until the lapsing of restrictions upon the shares. In the event
of such deferral, interest shall be credited on the amount of the account from
time to time, at a rate per annum as the Committee, in its discretion, shall
determine. Payment of deferred dividends, together with interest accrued thereon
as aforesaid, shall be made upon the earlier to occur of the events specified in
(i) and (ii) of the immediately preceding sentence, in the manner specified
therein.
SECTION 6 - Exchange of Restricted Stock for Common Stock
When the restrictions imposed by Section 5 expire or have been canceled
with respect to one or more shares of Restricted Stock, the Corporation shall
notify the Participant and the Escrow Agent of same. The Escrow Agent shall then
return the certificate covering the Restricted Shares to the Corporation and
upon receipt of such certificate the Corporation shall deliver to the
Participant (or such Participant's legal representative, beneficiary or heir) a
certificate for a number of shares of Common Stock, without any legend or
restrictions (except those required by any federal or state securities laws),
equivalent to the number of shares of Restricted Stock for which restrictions
have been cancelled or have expired. A new certificate covering Restricted
Shares previously awarded to the Participant which remain restricted shall be
issued to the Participant and held by the Escrow Agent and the Agreement, as it
relates to such shares, shall remain in effect.
SECTION 7 - Termination and Amendment of the Plan
7.1 The Plan shall terminate on February 7, 1997, the eighth
anniversary of its effective date December 12, 2005, and no Award may be granted
thereafter. The Board may sooner terminate or amend the Plan at any time, and
from time to time; provided, however, that, except as otherwise provided herein,
no amendment shall be effective unless approved by the shareholders of the
Corporation in accordance with applicable law and regulations at an annual or
special meeting held within twelve months before or after the date of adoption
of such amendment, if such amendment will:
(a) increase the number of Shares as to which Awards may be
granted under the Plan;
(b) change the class of persons eligible to participate in
the Plan;
(c) extend the maximum period for granting or exercising
Restricted Stock provided herein; or
(d) otherwise materially increase the benefits accruing to
employees under the Plan
Except as otherwise provided herein, rights and obligations under any
Award granted before any amendment of the Plan shall not be altered or impaired
by such amendment, except with the consent of the Participant.
SECTION 8 - Regulations and Other Approvals; Governing Law
8.1 Governing Law. This Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of the
State of New Jersey without giving effect to the choice of law principles
thereof, except to the extent that such law is preempted by federal law.
8.2 Other Applicable Laws. The obligation of the Corporation to sell or
deliver Shares with respect to Awards granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
8.3 Rule 16b-3. The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall interpret and
administer the provisions of the Plan or any Agreement in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be inoperative and
shall not affect the validity of the Plan.
8.4 Registration of Shares, Etc. Each Award is subject to the
requirement that, if at any time the Committee determines, in its absolute
discretion, that the listing, registration or qualification of shares issuable
pursuant to the Plan is required by any securities exchange or under any state
or federal law, or the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the issuance
of Shares, no Shares shall be issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
8.5 Restrictions on Disposition. In the event that the disposition of
Shares acquired by a Participant pursuant to the Plan is not covered by a then
current registration statement under the Securities Act of 1933, as amended, and
is not otherwise exempt from such registration, such Shares shall be restricted
against transfer to the extent required by the Securities Act of 1933, as
amended, or regulation thereunder, and the Committee may require any individual
receiving Shares pursuant to the Plan, as a condition precedent to receipt of
such Shares, to represent to the Corporation in writing that the Shares acquired
by such individual are acquired for investment only and not with a view to
distribution.
SECTION 9 - Miscellaneous
9.1 Expenses. All expenses and costs incurred in connection with the
operation of the Plan shall be borne by the Corporation.
9.2 Non-Exclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of Shares otherwise than under the
Plan.
9.3 Withholding of Taxes. The Corporation shall have the right to
deduct from any distribution of cash to any Participant an amount equal to the
federal, state and local income taxes and other amounts required by law to be
withheld with respect to any Award. Notwithstanding anything to the contrary
contained herein, if a Participant is entitled to receive Shares pursuant to an
Award, the Corporation shall have the right to require such Participant, prior
to the delivery of such Shares, to pay to the Corporation the amount of any
federal, state or local income taxes and other amounts which the Corporation is
required by law to withhold.
<PAGE>
Exhibit B
The following is the Stock Option Plan in its entirety. Proposed amendments to
the Stock Option Plan appear in BOLD and are underlined. The existing language
which is to be deleted by amendment is crossed out.
HUBCO, INC. 1995 STOCK OPTION PLAN
ARTICLE I. PURPOSE
The purposes of the 1995 Stock Option Plan are (i) to attract
and retain highly-qualified executives, (ii) to align executive and stockholder
long-term interests by creating a direct link between executive compensation and
stockholder return, (iii) to enable executives of HUBCO, Inc. (the
"Corporation") to develop and maintain stock ownership positions in the
Corporation, and (iv) to provide incentives to such executives to contribute to
the success of the Corporation. To achieve these objectives, the Plan provides
for the granting of "incentive stock options" within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended, and nonqualified stock
options.
ARTICLE II. DEFINITIONS
Whenever the following terms are used in this Plan, they shall
have the meaning specified below:
"Affiliate" shall mean the Corporation, a Subsidiary, or any
employee benefit plan established or maintained by the Corporation or a
Subsidiary.
"Board" shall mean the Board of Directors of the Corporation.
"Cause" shall mean (i) the conviction of the Participant of a
felony by a court of competent jurisdiction, (ii) the indictment of the
Participant by a state or Federal grand jury of competent jurisdiction for
embezzlement or misappropriation of funds of the Corporation or for any act of
dishonesty or lack of fidelity towards the Corporation, (iii) the written
confession by the Participant of any act of dishonesty towards the Corporation
or any embezzlement or misappropriation of the Corporation's funds, or (iv)
willful or gross neglect of the duties for which the Participant was
responsible, all as the Committee, in its sole discretion, may determine.
"Change in Control" shall mean the occurrence of one or more
of the following events: (i) the Corporation acquires actual knowledge that any
person (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act) other than an Affiliate is or becomes the beneficial owner (as defined in
Rule 13d-3 of the Exchange Act) directly or indirectly, of securities of the
Corporation representing 10% or more of the combined voting power of the
Corporation's then outstanding securities, (ii) the first purchase of Common
Stock pursuant to a tender or exchange offer (other than a tender or exchange
offer made by an Affiliate), (iii) the approval by the Corporation's
stockholders of (a) a merger or consolidation of the Corporation with or into
another corporation (other than a merger or consolidation in which the
Corporation is the surviving corporation and which does not result in any
reclassification or reorganization of the Corporation's then outstanding shares
of Common Stock or a change in the Corporation's directors, other than the
addition of not more than three directors), (b) a sale or disposition of all or
substantially all of the Corporation's assets, or (c) a plan of liquidation or
dissolution of the Corporation, (iv) during any period of two consecutive
calendar years, individuals who at the beginning of such period constitute the
Board of Directors of the Corporation cease for any reason to constitute at
least two-thirds thereof, unless the election or nomination for the election by
the Corporation's stockholders of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period, or (v) a sale of (a) Common Stock of the Corporation if
after such sale any person (as defined above) other than an Affiliate owns a
majority of the Corporation's Common Stock or (b) all or substantially all of
the Corporation's assets (other than in the ordinary course of business).
Notwithstanding the foregoing, no Change in Control shall be deemed to have
occurred for purposes of clause (i) above if a person is or becomes the
beneficial owner, directly or indirectly, of more than 10% but less than 25% of
the combined voting power of the Corporation's then outstanding securities if
the acquisition of all voting securities in excess of 10% was approved in
advance by two-thirds of the directors then in office.
"Code" shall mean the Internal Revenue Code of 1986, as now in
effect or as hereafter amended. (All citations to sections of the Code are to
such sections as they may from time to time be amended or renumbered.).
"Committee" shall mean the committee consisting of at least
three (3) directors of the Corporation appointed by the Board to administer the
Plan pursuant to the provisions of Article III of the Plan.
"Common Stock" or "Stock" shall mean the common stock of the
Corporation, no par value.
"Disability" shall mean permanent and total disability within
the meaning of Section 105(d)(4) of the Code.
"Employee" shall mean a common law employee (as defined in
accordance with the regulations and Revenue Rulings then applicable under
Section 3401(c) of the Code) of an Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Incentive Option" shall mean an Option whose terms satisfy
the requirements imposed by Section 422 of the Code and which is intended by the
Committee to be treated as an Incentive Option.
"Nonqualified Option" shall mean either (i) any Option which,
when granted, is not an Incentive Option, and (ii) an Incentive Option which,
subsequent to its grant, ceases to qualify as an Incentive Option because of a
failure to satisfy the requirements of Section 422(b) of the Code.
"Option" shall mean a right to purchase Common Stock which is
awarded in accordance with the terms of this Plan.
"Participant" shall mean an Employee who has been granted an
Option under the Plan.
"Plan" shall mean the HUBCO, Inc. 1995 Stock Option Plan, as
may be amended from time to time.
"Retirement" shall mean any normal or early retirement by a
Participant pursuant to the terms of any pension plan or policy of the
Corporation or any Subsidiary which is applicable to such Participant at the
time of his or her Termination of Service.
"Secretary" shall mean the corporate secretary of the
Corporation.
"Securities Act" shall mean the Securities Act of 1933.
"Shares" shall mean shares of Common Stock.
"Subsidiary(ies)" shall mean any corporation or other legal
entity, domestic or foreign, more than 50% of the voting power of which is owned
or controlled, directly or indirectly by the Corporation.
"Terminate (Termination of) Service (or Termination)" shall
mean the time at which the Participant ceases to provide services to the
Corporation as an employee, but shall not include a lapse in providing services
which the Committee determines to be a temporary leave of absence.
ARTICLE III. ADMINISTRATION
The Plan shall be administered by a committee (the
"Committee") selected by the Board from among its members, which shall consist
of not less than three members, each of whom must be both (i) a "disinterested
person" within the meaning of the rules promulgated under Section 16(b) of the
Exchange Act, and (ii) an "outside director" within the meaning of Section
162(m) of the Code. The Committee shall hold meetings at such times as may be
necessary for the proper administration of the Plan and shall keep minutes of
its meetings. A majority of the Committee shall constitute a quorum and a
majority of the quorum may authorize any action.
Subject to the provisions of the Plan, the Committee shall
have sole authority, in its absolute discretion: (i) to determine which of the
eligible Employees of the Corporation shall be granted Options; (ii) to grant
Options; (iii) to determine the times when Options may be granted and the number
of Shares that may be purchased pursuant to such Options; (iv) to determine the
exercise price of the Shares subject to each Option, which price shall be not
less than the minimum specified in Section 6.1; (v) to determine the time or
times when each Option becomes exercisable, the duration of the exercise period,
and any other restrictions on the exercise of Options issued hereunder; (vi) to
prescribe the form or forms of the Option agreements under the Plan; (vii) to
determine the circumstances under which the time for exercising Options should
be accelerated and to accelerate the time for exercising outstanding Options;
(viii) to determine the duration and purposes for leaves of absence which may be
granted to a Participant without constituting a Termination of Service for
purposes of the Plan; (ix) to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the administration of the
Plan; and (x) to construe and interpret the Plan, the rules and regulations and
the Option agreements under the Plan, and to make all other determinations
deemed necessary or advisable for the administration of the Plan; provided,
however, that with respect to those eligible Employees who are not "officers" of
the Corporation, within the meaning of Section 16(b) of the Exchange Act, the
Committee may delegate to any person or persons ("Subcommittee") all or any part
of its authority as set forth in (i) through (x) above. All references in the
Plan to the powers of a Subcommittee to act for the Committee shall be
applicable only to the extent consistent with the foregoing provision and only
to the extend consistent with the powers which have actually been delegated to
it. All decisions, determinations and interpretations of the Committee, or
Subcommittee, to the extent consistent with such delegation, shall be final and
binding.
ARTICLE IV. SHARES SUBJECT TO PLAN
The maximum number of Shares that may be made subject to
Options granted pursuant to the Plan is 500,000 after May 25, 1997 is 750,000
(or the number and kind of Shares or other securities which are substituted for
those Shares or to which those Shares are adjusted pursuant to the provisions of
Article VIII of the Plan ), except that the maximum shall be reduced by the
number of Shares granted after December 1, 1994 under the HUBCO, Inc. Restricted
Stock Plan after March 31, 1998) plus that number of Shares authorized prior to
May 25, 1997. The maximum number of Shares with respect to which Options may be
granted to any one person during the term of the plan shall not exceed 175,000
437,500, except as such number of Shares shall be adjusted in accordance with
the provision of Article VIII hereof. The Corporation shall reserve such number
of Shares for the purposes of the Plan out of its authorized but unissued
shares, or out of Shares held in the Corporation's treasury, or partly out of
each, as shall be determined by the Board. No fractional Shares shall be issued
with respect to Options granted under the Plan. The maximum number of Shares
that could be issued or transferred pursuant to Awards made under the Plan prior
to May 25, 1997, was 500,000 shares, as adjusted for Changes in Capitalization
occurring after December 13, 1994.
In the event that any outstanding Option under the Plan for
any reason expires, is terminated, forfeited or is cancelled prior to the
expiration date of the Plan, the Shares called for by the unexercised portion of
such Option may, to the extent permitted by Rule 16b-3 under the Exchange Act,
again be subject to an Option under the Plan.
ARTICLE V. ELIGIBILITY FOR AWARD OF OPTIONS
The Committee may designate any officer of the Corporation,
any group or divisional officer, and any other key Employee of the Corporation
as eligible to receive Options under the Plan. Non-employee directors shall not
be eligible to participate in the Plan.
ARTICLE VI. GRANT OF OPTIONS
The Committee or Subcommittee may in its sole discretion grant
Options to such officers and key Employees of the Corporation as it determines
appropriate consistent with Article V. Options shall be evidenced by Option
agreements (which need not be identical) in such forms as the Committee may from
time to time approve.
Option agreements shall conform to the terms and conditions of
the Plan. Such agreements may provide that the grant of any Option under the
Plan, or that Stock acquired pursuant to the exercise of any Option, shall be
subject to such other conditions (whether or not applicable to the Option or
Stock received by any other optionee) as the Committee determines appropriate,
including, without limitation, provisions conditioning exercise upon the
occurrence of certain events or performance or the passage of time, provisions
to assist the optionee in financing the purchase of Stock through the exercise
of Options, provisions for forfeiture, or restrictions on resale or other
disposition, of shares acquired under the Plan, provisions giving the
Corporation the right to repurchase shares acquired under the Plan in the event
the Participant elects to dispose of such shares, and provisions to comply with
federal and state securities laws and federal and state income tax and other
payroll tax withholding requirements. Options granted under this Plan which are
intended to qualify as Incentive Options shall be specifically designated as
such in the Option agreement.
6.1 OPTION PRICE. The exercise price for each Option granted
under the Plan shall be determined by the Committee or Subcommittee; provided,
however, that it shall not be less than the fair market value of the Stock on
the date of grant. The fair market value shall be deemed for all purposes of the
Plan to be the mean between the highest and lowest sale prices reported as
having occurred on any Exchange with which the Stock may be listed and traded on
the date chosen to determine such fair market value, or, if there are no such
sales on that date, then on the last preceding date on which such a sale was
reported. If the Stock is not listed on any exchange but the Stock is quoted on
the National Market System of the National Association of Securities Dealers
Automated Quotation (NASDAQ) System on a last sale basis, then the fair market
value of the Stock shall be deemed to be the mean between the high and low price
reported on the date of grant. If the Stock is not quoted on the NASDAQ on a
last sale basis, then the fair market value of the Stock shall mean the amount
determined by the Board to be the fair market value based upon a good faith
attempt to value the Stock accurately and computed in accordance with applicable
regulations of the Internal Revenue Service.
6.2 EXERCISABILITY AND TERMS OF OPTIONS. The Committee or
Subcommittee shall determine the dates after which Options may be exercised, in
whole or in part, and may establish a vesting schedule that must be satisfied
before Options may be exercised; provided, however, that no Option may be
exercisable within six months of the date it is granted. If an Option is
exercisable in installments, installments which are exercisable and not
exercised shall remain exercisable.
Subject to Section 6.8 in the case of Incentive Options, all
Options shall have a term of no more than ten years from the date of grant;
provided, however, that upon the Termination of Service of a Participant,
Options that have not become exercisable before the date the Participant
Terminates Service shall be forfeited and terminated immediately. Without
limiting the foregoing, no Option shall be exercisable after the date of
termination, if the Termination of Service is by the Corporation or any
Subsidiary for Cause.
If a Participant shall Terminate Service by reason of his
death or Disability, all vested Options held by such Participant may be
exercised by the Participant, his estate or beneficiary, or his representative,
as the case may be, for a period of six months from the date of such
Termination, or until the expiration of the stated term of such Option,
whichever period is shorter. If a Participant shall Terminate Service by reason
of Retirement, voluntary resignation or dismissal without Cause, all vested
Options held by such Participant may be exercised for a period of sixty (60)
days from the date of Termination or until the expiration of the stated term of
such Option, whichever period is shorter.
In the event of a Change In Control, any Option granted under
the Plan to a Participant which has not, as of the date of the Change In
Control, become exercisable shall become fully exercisable.
6.3 NON-TRANSFERABILITY OF OPTION RIGHTS. No Option shall be
transferable except by will or the laws of descent and distribution, and then
shall be limited by Section 6.2. During the lifetime of the Participant, the
Option shall be exercisable only by him. The Committee may, however, in its sole
discretion, allow for transfers of Nonqualified Options to family members,
subject to such conditions or limitations as it may establish to ensure
compliance with Rule 16b-3 promulgated pursuant to the Exchange Act, or for
other purposes.
6.4 NO OBLIGATION TO EXERCISE OPTION. The grant of an Option
shall impose no obligation on the Participant to exercise such Option.
6.5 CANCELLATION OF OPTIONS. The Committee, or Subcommittee,
in its discretion, may, with the consent of any Participant, cancel any
outstanding Option.
6.6. NO RIGHTS AS A STOCKHOLDER. A Participant or a transferee
of an Option shall have no rights as a stockholder with respect to any Share
covered by his Option until he shall have become the holder of record of such
Share, and he shall not be entitled to any dividends or distributions or other
rights in respect of such Share for which the record date is prior to the date
on which be shall have become the holder of record thereof.
6.7 SPECIAL PROVISIONS APPLICABLE TO INCENTIVE OPTIONS. To the
extent the aggregate fair market value (determined as of the time the Option is
granted) of the Stock with respect to which any Options granted hereunder which
are intended to be Incentive Options may be exercisable for the first time by
the Participant in any calendar year (under this Plan or any other stock option
plan of the Corporation or any parent or Subsidiary thereof) exceeds $100,000,
such Options shall not be considered Incentive Options.
No Incentive Option may be granted to an individual who, at
the time the Option is granted, owns directly, or indirectly within the meaning
of Section 424(d) of the Code, stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Corporation or of any
parent or Subsidiary thereof, unless such Option (i) has an Option price of at
least 110 percent of the fair market value of the Stock on the date of the grant
of such option; and (ii) cannot be exercised more than five years after the date
it is granted.
Each Participant who receives an Incentive Option must agree
to notify the Corporation in writing immediately after the Participant makes a
disqualifying disposition of any Stock acquired pursuant to the exercise of an
Incentive Option. A disqualifying disposition is any disposition (including any
sale) of such Stock before the later of (i) two years after the date the
optionee was granted the Incentive Option or (ii) one year after the date the
Participant acquired Stock by exercising the Incentive Option. Any transfer of
ownership to a broker or nominee shall be deemed to be a disposition unless the
Participant provides proof satisfactory to the Committee of his continued
beneficial ownership of the Stock.
Any other provision of the Plan to the contrary
notwithstanding, no Incentive Option shall be granted after the date which is
ten years from the date this Plan is adopted, or the date the Plan is approved
by the stockholders, whichever is earlier.
ARTICLE VII. EXERCISE OF OPTION
Any Option may be exercised in whole or in part at any time
subsequent to such Option becoming exercisable during the term of such Option;
provided, however, that each partial exercise shall be for whole Shares only.
Each Option, or any exercisable portion thereof, may only be exercised by
delivery to the Secretary or his office of (i) notice in writing signed by the
Participant (or other person then entitled to exercise such Option) that such
Option, or a specified portion thereof, is being exercised; (ii) payment in full
for the purchased Shares (as specified in Section 7.2 below); (iii) such
representations and documents as are necessary or advisable to effect compliance
with all applicable provisions of Federal or state securities laws or
regulations; (iv) in the event that the Option or portion thereof shall be
exercised pursuant to Section 6.3 by any person or persons other than the
Participant, appropriate proof of the right of such person or persons to
exercise the Option or portion thereof; and (v) full payment to the Corporation
of all amounts which, under federal or state law, it is required to withhold
upon exercise of the Option.
7.1 SHARE CERTIFICATES. Upon receiving notice and payment, the
Corporation will cause to be delivered to the Participant, as soon as
practicable, a certificate in the Participant's name for the Shares purchased.
The Shares issuable and deliverable upon the exercise of a Stock Option shall be
fully paid and non-assessable. The Corporation shall not be required to issue or
deliver any certificate or certificates for Shares purchased upon the complete
or partial exercise of the Stock Option prior to fulfillment of (i) the
completion of any registration or other qualification of such Shares under any
federal or state law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory body which may be
necessary or advisable; and (ii) the obtaining of any approval or other
clearance from any federal or state governmental agency which may be necessary
or advisable.
7.2 PAYMENT FOR SHARES. Payment for Shares purchased under an
Option granted hereunder shall be made in full upon exercise of the Option, by
certified or bank cashier's check payable to the order of the Corporation or,
unless otherwise prohibited by the terms of an Option agreement, by one or more
of the following: (i) in the form of unrestricted Shares already owned by the
Participant based in any such instance on the fair market value of the Stock on
the date the Option is exercised; provided, however, that, in the case of an
Incentive Option, the right to make a payment in the form of already owned
Shares may be authorized only at the time the Option is granted; (ii) by
delivering a properly executed exercise notice to the Corporation, together with
a copy of irrevocable instructions to a broker to deliver promptly to the
Corporation the amount of sale or loan proceeds to pay the purchase price; (iii)
by a combination thereof, in each case in the manner provided in the Option
agreement; or (iv) by any other means acceptable to the Corporation. To
facilitate the foregoing, the Corporation may enter into agreements for
coordinated procedures with one or more brokerage firms. To the extent the
Option exercise price may be paid in Shares as provided above, Shares delivered
by the Participant may be (i) shares which were received by the Participant upon
exercise of one or more Incentive Options, but only if such Shares have been
held by the Participant for at least the greater of (a) two years from the date
the Incentive Options were granted or (b) one year after the transfer of Shares
to the Participant, or (ii) shares which were received by the Participant upon
exercise of one or more Nonqualified Options, but only if such Shares have been
held by the Participant for at least six months.
7.3 SHARE WITHHOLDING. The Committee shall require that a
Participant pay to the Corporation, at the time of exercise of a Nonqualified
Option, such amount as the Committee deems necessary to satisfy the
Corporation's obligation to withhold federal or state income or other taxes
incurred by reason of the exercise or the transfer of Shares thereupon. A
Participant may satisfy such withholding requirements by having the Corporation
withhold from the number of Shares otherwise issuable upon exercise of the
Option that number of shares having an aggregate fair market value on the date
of exercise equal to the minimum amount required by law to be withheld;
provided, however, that in the case of an exercise by a Participant subject to
Section 16(b) of the Exchange Act, the Participant must (i) exercise the Option
during the period beginning on the third business day following the date of
release to the press of the quarterly or annual summary of earnings for the
Corporation, and ending on the twelfth business day following such date, or (ii)
irrevocably elect to utilize Share withholding at least six months prior to the
date of exercise.
ARTICLE VIII. ADJUSTMENT FOR RECAPITALIZATION, ETC.
The aggregate number of Shares which may be purchased pursuant
to Options granted, the number of Shares covered by each outstanding Option, and
the price per share thereof in each such Option shall be appropriately adjusted
for any increase or decrease in the number of outstanding Shares resulting from
a stock split or other subdivision or consolidation of Shares or for other
capital adjustments or payments of stock dividends or distributions, other
increases or decreases in the outstanding Shares effected without receipt of
consideration by the Corporation, or reorganization, merger or consolidation, or
other similar change affecting the Shares.
Such adjustment to an Option shall be made without a change to
the total price applicable to the unexercised portion of the Option (except for
any change in the aggregate price resulting from rounding-off of Share
quantities or prices). Any such adjustment made by the Committee shall be final
and binding upon all Participants, the Corporation, their representatives, and
all other interested persons. No fractional Shares shall be issued as a result
of such adjustment.
In the event of a Change in Control involving (i) the
liquidation or dissolution of the Corporation, (ii) a merger or consolidation in
which the Corporation is not the surviving corporation or (iii) the sale or
disposition of all or substantially all of the Corporation's assets, provision
shall be made in connection with such transaction for the assumption of Options
theretofore granted under the Plan, or the substitution for such Options of new
options of the successor corporation, with appropriate adjustment as to the
number and kind of Shares and the purchase price for Shares thereunder, or, in
the discretion of the Committee, the Plan and the Options issued hereunder shall
terminate on the effective date of such transaction if appropriate provision is
made for payment to the Participant of an amount in cash equal to the fair
market value of the Options less the exercise price for such Options.
ARTICLE IX. GOVERNMENT REGULATIONS AND
REGISTRATION OF SHARES
The Plan, and the grant and exercise of Options thereunder,
and the Corporation's obligation to sell and deliver stock under such Options,
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any regulatory or governmental agency as may be
required.
Each Option is subject to the requirement that if, at any
time, the Committee determines, in its absolute discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or NASDAQ or under any state or federal law,
or the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the issuance of Shares, no
Shares shall be issued, in whole or in part, unless such listing, registration,
qualification, consent or approval has been effected or obtained, free of any
conditions not acceptable to the Committee. The Corporation shall not be deemed,
by reason of the granting of any Option, to have any obligation to register the
Shares subject to such Option under the Securities Act or to maintain in effect
any registration of such Shares which may be made at any time under the
Securities Act.
Unless a registration statement under the Securities Act and
the applicable rules and regulations thereunder is then in effect with respect
to Shares issued upon exercise of any Option (which registration shall not be
required), the Corporation shall require that the offer and sale of such shares
be exempt from the registration provisions of said Act. In furtherance of such
exemption, the Corporation may require, as a condition precedent to the exercise
of any Option, that the person exercising the Option give to the Corporation
written representation and undertaking, satisfactory in form and substance to
the Corporation, that he is acquiring the Shares for his own account for
investment and not with a view to the distribution or resale thereof and
otherwise establish to the Corporation's satisfaction that the offer or sale of
the Shares issuable upon exercise of the Option will not constitute or result in
any breach or violation of the Securities Act or any similar state act or
statute or any rules or regulations thereunder. In the event a Registration
Statement under the Securities Act is not then in effect with respect to the
Shares issued upon exercise of an Option, the Corporation shall place upon any
stock certificate an appropriate legend referring to the restrictions on
disposition under the Act.
The Corporation is relieved from any liability for the
non-issuance or non-transfer or any delay in issuance or transfer of any Shares
subject to Options under the Plan which results from the inability of the
Corporation to obtain, or in any delay in obtaining, from any regulatory body
having jurisdiction, all requisite authority to issue or transfer Shares upon
exercise of the Options under the Plan if counsel for the Corporation deems such
authority necessary for lawful issuance or transfer of any such Shares.
Appropriate legends may be placed on the stock certificates evidencing Shares
issued upon exercise of Options to reflect such transfer restrictions.
ARTICLE X. OTHER PROVISIONS
The validity, interpretation and administration of the Plan
and any rules, regulations, determinations or decisions made thereunder, and the
rights of any and all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance with the laws of the
State of New Jersey.
As used herein, the masculine gender shall include the
feminine gender.
The headings in the Plan are for reference purposes only and
shall not affect the meaning or interpretation of the Plan.
All notices or other communications made or given pursuant to
this Plan shall be in writing and shall be sufficiently made or given if
hand-delivered or mailed by certified mail, addressed to any Participant at the
address contained in the records of the Corporation or to the Corporation at its
principal office.
The proceeds received from the sale of Shares pursuant to the
Plan shall be used for general corporate purposes.
Nothing in the Plan or in any Option granted hereunder shall
confer on any Participant or eligible Employee any right to continue in the
employ of the Corporation or any of its Subsidiaries, or to interfere in any way
with the right of the Corporation or any of its Subsidiaries to terminate such
Participant's or Employee's employment at any time.
The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act, and the Committee shall interpret and administer the
provisions of the Plan or any Option in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.
All expenses and costs incurred in connection with the
operation of the Plan shall be borne by the Corporation.
The adoption of this Plan shall not affect any other
compensation or incentive plans in effect for the Corporation. Nothing in this
Plan shall be construed to limit the right of the Corporation (i) to establish,
alter or terminate any other forms of incentives, benefits or compensation for
Employees of the Corporation, including, without limitation, conditioning the
right to receive other incentives, benefits or compensation on an Employee not
participating in this Plan; or (ii) to grant or assume options otherwise than
under this Plan in connection with any proper corporate purpose, including,
without limitation, the grant or assumption of stock options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock, or assets of any corporation, firm or association.
Participants shall have no rights as shareholders unless and
until certificates for Shares are registered in their names in satisfaction of a
properly exercised Option.
If the Committee or Subcommittee shall find that any person to
whom any amount is payable under the Plan is unable to care for his affairs
because of illness or accident, or is a minor, or has died, then any payment due
to such person or his estate (unless a prior claim therefore has been made by a
duly appointed legal representative), may, if the Committee or Subcommittee so
directs the Corporation, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Committee and the Corporation therefore.
ARTICLE XI. EFFECTIVE DATE AND EXPIRATION DATE OF PLAN
The Plan is effective as of December 13, 1994, subject to
approval by the stockholders of the Corporation in a manner which complies with
Rule 16b-3 under the Exchange Act and Section 422 of the Code and applicable
state law. The expiration date of the Plan, after which no Option may be granted
hereunder, shall be December 12, 2005.
ARTICLE XII. AMENDMENT OR DISCONTINUANCE OF PLAN
The Board may, without the consent of the Corporation's
stockholders or Participants under the Plan, at any time terminate the Plan
entirely, and at any time or from time to time amend or modify the Plan,
provided that no such action shall adversely affect Options theretofore granted
hereunder without the Participant's consent, and provided further that no such
action by the Board, without approval of the stockholders, may (i) increase the
total number of Shares which may be purchased or acquired pursuant to Options
granted under the Plan, either in the aggregate or for any Participant or
eligible Employee, except as contemplated in Article VIII; (ii) expand the class
of employees eligible to receive Options under the Plan; (iii) decrease the
minimum Option price; (iv) extend the maximum term of Options granted hereunder;
(v) extend the term of the Plan; or (vi) take any other action requiring
stockholder approval under Rule 16b-3 under the Exchange Act.
No amendment or modification may become effective if it would
cause the Plan to fail to meet the applicable requirements of Rule 16b-3.
Notwithstanding anything herein to the contrary, no provision of the Plan shall
be amended more than once every six months, other than to comport with changes
in the Code, the Exchange Act or the rules thereunder.
ARTICLE XIII. SHAREHOLDER APPROVAL
Anything in the Plan to the contrary notwithstanding, the
grant of Options hereunder shall be of no force or effect, and no Option granted
hereunder shall vest or become exercisable in any respect, unless and until the
Plan is approved by the affirmative vote of a majority of the shares outstanding
within 12 months after December 13, 1994.
As adopted by the Salary and Personnel Committee of the Board of Directors of
HUBCO, Inc. on December 6, 1995 and the Board of Directors of HUBCO, Inc. on
December 13, 1994.
HUBCO, INC.
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
April 22, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert J. Burke and James E. Schierloh
and each of them, as Proxy, each with full power of substitution to vote all of
the stock of HUBCO, Inc. standing in the undersigned's name at the Annual
Meeting of Shareholders of HUBCO, INC., to be held at the Sheraton Crossroads,
Crossroads Corporate Center, Route 17 North, Mahwah, New Jersey on April 22,
1998, at 11:00 a.m., and at any adjournments or postponements thereof. The
undersigned hereby revokes any and all proxies heretofore given with respect to
such meeting.
This proxy will be voted as specified herein. If no choice is
specified, this proxy will be voted FOR the Board of Directors' nominees and FOR
the approval of the amendment to the HUBCO, Inc. Restricted Stock Plan and FOR
the amendment to the HUBCO, Inc. 1995 Stock Option Plan.
(continued on reverse side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
HUBCO, INC.
April 22, 1998
(Please detach and Mail in the Envelope Provided)
A |X| Please mark your votes as in this example.
The Board of Directors recommends a vote FOR the Board of Directors' nominees
and FOR the approval of the amendment to the HUBCO, Inc. Restricted Stock Plan
and FOR the amendment to the HUBCO, Inc. 1995 Stock Option Plan.
<TABLE>
<CAPTION>
WITHHOLD
FOR AUTHORITY
all nominees to vote for all nominees
listed at right listed at right
<S> <C> <C> <C>
1. ELECTION OF Nominees: Thomas R. Farley
DIRECTORS [_| |_| Kenneth T. Neilson
Joan David
Sister Grace Frances Strauber
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominees, check
the box to vote "FOR" all nominees and strike a line through the nominee's name
in the list at right for which authority to vote is being withheld.
2. An amendment to the HUBCO, Inc. Restricted Stock Plan (the "Restricted Stock
Plan") to extend the termination date of the Restricted Stock Plan to
December 12, 2005, to increase the maximum number of shares of common stock
which may be amended under the Restricted Stock Plan by authorizing an
additional 250,000 shares to be issued after May 25, 1997, and to provide in
the event of a Change in Control (as defined in the Restricted Stock Plan)
for the automatic expiration of the Restricted Period (as defined in the
Restricted Stock Plan) related to any grant of restricted shares which at
such time is five years of less of duration.
[_| FOR |_| AGAINST |_| ABSTAIN
3. An amendment to the HUBCO, Inc. 1995 Stock Option Plan (the "Stock Option
Plan") to increase the maximum number of shares of common stock which may be
made subject to options granted pursuant to the Stock Option Plan by
authorizing an additional 750,000 shares to be issued after May 25, 1997, to
increase the maximum number of shares of common stock with respect to these
options which may be granted to any one person during the term of the Stock
Option Plan to 437,500 and to remove language which links the number of
shares which may be granted pursuant to the Stock Option Plan to the number
of shares which may be granted pursuant to the Restricted Stock Plan
[_| FOR |_| AGAINST |_| ABSTAIN
4. In their discretion upon such other matters as may properly come before the
meeting.
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURE SIGNATURE
---------------------------------- -------------------------
DATED: , 1997 DATED: , 1997
------------------------- -----------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If signing in the name of a corporation or partnership,
please sign with corporate or partnership name and indicate title of authorized
signatory.
