As filed with the Securities and Exchange Commission on June 9, 1998
Registration No. ___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
HUBCO, INC.
(Exact name of registrant as specified in its charter)
New Jersey
(State or other Jurisdiction of Incorporation or Organization)
6711
(Primary Standard Industrial Classification Code Number)
22-2405746
(I.R.S. Employer Identification No.)
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
(201) 236-2600
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
KENNETH T. NEILSON
Chairman, President and Chief Executive Officer
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
(201) 236-2600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Please send copies of all communications to:
MICHAEL W. ZELENTY, ESQ. PAUL F. McALENNEY, ESQ.
Pitney, Hardin, Kipp & Szuch Day, Berry & Howard LLP
P.O. Box 1945 CityPlace I
Morristown, New Jersey 07962 Hartford, CT 06103-3499
(973) 966-8125 (860) 275-0100
<PAGE>
Approximate date of commencement of proposed sale to the public: At
the Effective Time of the Merger, as defined in the Agreement and Plan of Merger
dated as of March 31, 1998 (the "Merger Agreement") among HUBCO, Inc. ("HUBCO"),
Lafayette American Bank ("Lafayette"), Dime Financial Corporation ("DFC"), and
The Dime Savings Bank of Wallingford ("DIME"), attached as Appendix A to the
Proxy Statement-Prospectus.
If the securities being registered on this Form are being offered
in connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
======================== ====================== ====================== ====================== ======================
Title of each class of Proposed maximum Proposed maximum
securities to be Amount to be offering price per aggregate offering Amount of
registered registered unit price registration fee
<S> <C> <C> <C> <C>
Common Stock, No Par 5,744,147 $33.07** $189,958,941** $56,038
Value Shares*
</TABLE>
* The number of shares of HUBCO Common Stock issuable in the Merger in exchange
for shares of DFC Common Stock, assuming the Maximum Exchange Ratio of 1.05 set
forth in the Merger Agreement, and assuming that all currently outstanding
options to acquire shares of DFC Common Stock are exercised prior to the
Effective Time of the Merger. The Registrant also registers hereby such
additional shares of its common stock as may be issuable in the Merger pursuant
to the anti-dilution provisions of the Merger Agreement.
** Estimated solely for the purpose of calculating the registration fee for the
filing on Form S-4 pursuant to Rule 457(f)(1) under the Securities Act based on
the average of the high and low prices reported on The Nasdaq National Market
System for DFC Common Stock as of June 6, 1998, a date within five business days
prior to the filing of this Registration Statement.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.
<PAGE>
[DFC LOGO]
______________, 1998
To the Shareholders of Dime Financial Corporation:
We cordially invite you to attend a special meeting of the shareholders
(the "Meeting") of Dime Financial Corporation ("DFC"). The meeting is to be held
at [Location] on [Date and Time].
We have called the meeting to seek your approval of an Agreement and
Plan of Merger (the "Merger Agreement") which provides for DFC to be merged (the
"Merger") with and into HUBCO, Inc. ("HUBCO"), and to approve the transactions
contemplated thereby. HUBCO is a bank holding company with bank subsidiaries
based in New Jersey, New York and Connecticut. Immediately following completion
of the Merger of DFC into HUBCO, DFC's subsidiary bank, The Dime Savings Bank of
Wallingford, will be merged into HUBCO's Connecticut banking subsidiary,
Lafayette American Bank.
If the Merger Agreement is approved and the Merger is consummated, DFC
Common Stock will be converted into the right to receive HUBCO Common Stock at
an Exchange Ratio determined by dividing $38.25 by the Median Pre-Closing Price
of HUBCO Common Stock, with a Maximum Exchange Ratio of 1.05 and a Minimum
Exchange Ratio of 0.93. The "Median Pre-Closing Price" will be determined by
taking the price half-way between the closing prices left after discarding the
four lowest and four highest closing prices in the ten consecutive trading day
period which ends on (and includes) the day the parties receive final bank
regulatory approval for the Merger. If the Median Pre-Closing Price of HUBCO
Common Stock is less than $31.43, DFC will have the right to terminate the
Merger Agreement unless HUBCO agrees to increase the Exchange Ratio to $33.00
divided by the Median Pre-Closing Price of HUBCO Common Stock. Cash will be paid
in lieu of fractional shares. The investment banking firm of A.G. Edwards &
Sons, Inc. has advised your Board of Directors that, in its opinion, as of March
30, 1998, and as of the date hereof, the consideration to be received by the
holders of DFC Common Stock is fair from a financial point of view to the
holders of such shares.
Completion of the Merger is subject to certain conditions, including
receipt of bank regulatory approvals and approval of the Merger Agreement by the
affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares of DFC Common Stock entitled to vote at the meeting.
We urge you to read the attached Proxy Statement-Prospectus carefully.
It describes the Merger Agreement in detail and includes a copy of the Merger
Agreement as Appendix A.
Your Board of Directors has unanimously approved the Merger Agreement
and unanimously recommends that you vote "FOR" approval of the Merger Agreement
and the transactions contemplated thereby.
It is very important that your shares be represented at the Meeting.
Whether or not you plan to attend, please complete, date and sign the enclosed
proxy card and return it promptly in the postage paid envelope we have provided.
Failure to return a properly executed proxy card or to vote at the Meeting will
have the same effect as a vote against the Merger Agreement. Prior to the voting
of the proxy at the Meeting, any person giving a proxy has the power to revoke
it at any time, and the shareholders who are present at the meeting may withdraw
their proxies and vote in person.
If the Merger Agreement is approved and the Merger is consummated, you
will be sent a letter of transmittal with instructions for surrendering your
certificates representing shares of DFC Common Stock. Please do not send your
share certificates until you receive these materials.
On behalf of your Board of Directors,
______________, Chairman
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ____________, 1998
To the Shareholders of Dime Financial Corporation:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the
"Meeting") of Dime Financial Corporation ("DFC") will be held on [Day of Week],
[Date], 1998, at [Time], at [Location], for the following purposes:
(1) To consider and vote on a proposal to approve and adopt an Agreement
and Plan of Merger dated as of March 31, 1998 (the "Merger Agreement")
among HUBCO, Inc. ("HUBCO"), Lafayette American Bank ("Lafayette"), DFC
and The Dime Savings Bank of Wallingford ("DIME"), which provides for
DFC to be merged with and into HUBCO (the "Merger"), and the
transactions contemplated thereby. The attached Proxy
Statement-Prospectus describes the Merger Agreement in detail and
includes a copy of the Merger Agreement as Appendix A. If the Merger is
consummated, each share of DFC Common Stock (except for treasury shares
and certain shares held by HUBCO or its subsidiaries) will be converted
into the right to receive a number of shares (the "Exchange Ratio") of
HUBCO Common Stock equal to $38.25 divided by the Median Pre-Closing
Price of HUBCO Common Stock, rounded to the nearest thousandth, with a
Maximum Exchange Ratio of 1.05 and a Minimum Exchange Ratio of 0.93.
(The Median Pre-Closing Price is defined generally as the median of the
closing prices of HUBCO Common Stock during the ten-trading day period
ending on the day the parties receive final bank regulatory approval
for the Merger, after discarding the four lowest and four highest
closing prices during such period.) The Exchange Ratio is subject to
adjustment as set forth in the Merger Agreement to prevent dilution in
the event of any stock split, reclassification or other similar event.
Also, if the Median Pre-Closing Price of HUBCO Common Stock is less
than $31.43, DFC will have certain rights to terminate the Merger
Agreement unless HUBCO agrees to increase the Exchange Ratio to $33.00
divided by the Median Pre-Closing Price of HUBCO Common Stock. HUBCO
will pay cash to DFC stockholders in lieu of issuing fractional shares
of HUBCO Common Stock.
(2) To transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on ____________,
1998 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting. Only shareholders of record at the close of
business on the record date will be entitled to notice of and to vote at the
Meeting or any adjournments or postponements thereof.
A Proxy Statement-Prospectus containing more detailed information with
respect to the matters to be considered at the Meeting (including a copy of the
Merger Agreement attached as Appendix A thereto) accompany and form part of this
notice.
Holders of DFC Common Stock have dissenters' rights in connection with
the Merger. See "RIGHTS OF DISSENTING DFC SHAREHOLDERS" in, and Appendix D to,
the accompanying Proxy Statement-Prospectus for a description of the manner in
which such rights may be exercised.
All shareholders are urged to attend the Meeting in person. It is
important that proxies be returned promptly. Whether or not you plan to be
present in person at the Meeting, please date, sign and complete the enclosed
proxy and return it in the enclosed envelope, which requires no postage if
mailed in the United States. If you decide to attend the Meeting, you may revoke
your proxy and vote your shares in person. If you are a shareholder whose shares
are not registered in your name, you will need additional documentation from the
holder of record of your shares to vote personally at the Meeting.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
By Order of the Board of Directors
Eleanor M. Tolla, Secretary
Wallingford, Connecticut
_______________, 1998
<PAGE>
PROXY STATEMENT OF PROSPECTUS OF HUBCO, INC.
DIME FINANCIAL CORPORATION for its Common Stock, to be
for its Special Meeting of Shareholders issued in connection with the
to be held on ____________, 1998 merger of Dime Financial
and all adjournments or postponements Corporation with and into
thereof HUBCO, Inc.
The Board of Directors of Dime Financial Corporation ("DFC") has called
a Special Meeting of DFC shareholders (the "Meeting") to be held on [Day of
Week], [Date], 1998. The Meeting has been called to seek DFC shareholder
approval of a Merger Agreement which provides for DFC to be merged with and into
HUBCO, Inc. ("HUBCO"), with HUBCO as the surviving corporation. HUBCO is a bank
holding company with bank subsidiaries based in New Jersey, New York and
Connecticut. Immediately following completion of the Merger of DFC into HUBCO
(the "Merger"), DFC's subsidiary bank, The Dime Savings Bank of Wallingford
("DIME"), will be merged with and into HUBCO's Connecticut banking subsidiary,
Lafayette American Bank.
Upon completion of the Merger, each share of common stock, par value
$1.00 per share, of DFC ("DFC Common Stock") (except for treasury shares and
certain shares held by HUBCO or its subsidiaries) will be converted into the
right to receive a number of shares (the "Exchange Ratio") of Common Stock, no
par value, of HUBCO ("HUBCO Common Stock") equal to $38.25 divided by the Median
Pre-Closing Price of HUBCO Common Stock, rounded to the nearest thousandth, with
a Maximum Exchange Ratio of 1.05 and a Minimum Exchange Ratio of 0.93. (The
Median Pre-Closing Price is defined generally as the median of the closing
prices of HUBCO Common Stock during the ten-trading day period ending on the day
the parties receive final bank regulatory approval for the Merger, after
discarding the four lowest and four highest closing prices during such period.)
The Exchange Ratio is subject to adjustment as set forth in the Merger Agreement
to prevent dilution in the event of any stock split, reclassification or other
similar event. Also, if the Median Pre-Closing Price of HUBCO Common Stock is
less than $31.43, DFC will have certain rights to terminate the Merger Agreement
unless HUBCO agrees to increase the Exchange Ratio to $33.00 divided by the
Median Pre-Closing Price of HUBCO Common Stock. HUBCO will pay cash to DFC
stockholders in lieu of issuing fractional shares of HUBCO Common Stock. See
"THE PROPOSED MERGER -- Consideration; Median Pre-Closing Price; Determination
Date."
Completion of the Merger is subject to certain conditions, including
bank regulatory approvals and approval of the Merger Agreement by the
affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares of DFC Common Stock entitled to vote at the Meeting.
HUBCO has filed a Registration Statement with the Securities and
Exchange Commission (the "Commission" or the "SEC") covering the HUBCO Common
Stock which will be issued in connection with the Merger. This Proxy
Statement-Prospectus serves two purposes. It is the Proxy Statement being used
by the DFC Board of Directors to solicit proxies for the Meeting, including any
adjournments or postponements thereof, and it is the Prospectus of HUBCO
regarding the HUBCO Common Stock to be issued if the Merger is completed. This
document does not serve as a prospectus to cover any resales of HUBCO Common
Stock to be issued in connection with the Merger. Persons who are considered
"affiliates" of DFC under applicable securities laws will be subject to
restrictions on their ability to resell the HUBCO Common Stock received by them
in the Merger.
This document is first being sent to DFC shareholders on or about
___________, 1998. It describes the Merger Agreement in detail and includes a
copy of the Merger Agreement as Appendix A. DFC shareholders are urged to read
this document carefully.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SEC OR ANY STATE SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
ALL INFORMATION REGARDING DFC CONTAINED OR INCORPORATED BY REFERENCE IN
THIS DOCUMENT WAS SUPPLIED BY DFC. ALL INFORMATION REGARDING HUBCO WAS SUPPLIED
BY HUBCO.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC") OR ANY OTHER GOVERNMENTAL
AGENCY.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN WHAT IS INCLUDED OR INCORPORATED BY REFERENCE IN THIS
DOCUMENT. IF SUCH INFORMATION OR REPRESENTATION IS GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS DOCUMENT AT ANY TIME, NOR ANY DISTRIBUTION OF
SHARES OF HUBCO STOCK, SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL IMPLY THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF HUBCO OR DFC
SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
The date of this Proxy Statement-Prospectus is ____________, 1998.
<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION.....................................................
INFORMATION INCORPORATED BY REFERENCE.....................................
SUMMARY OF PROXY STATEMENT-PROSPECTUS.....................................
Overview.........................................................
The Meeting......................................................
The Companies ...................................................
The Merger.......................................................
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO.............................
SELECTED CONSOLIDATED FINANCIAL DATA OF DFC...............................
MARKET PRICE AND DIVIDEND MATTERS.........................................
Market Price and Dividend History................................
Limitations on Dividends Under the Merger Agreement..............
Dividend Limitations on HUBCO....................................
SELECTED PRO FORMA FINANCIAL INFORMATION..................................
ACTUAL AND PRO FORMA PER SHARE DATA.......................................
INTRODUCTION .............................................................
CERTAIN INFORMATION REGARDING HUBCO ......................................
General..........................................................
Recent Developments..............................................
CERTAIN INFORMATION REGARDING DFC.........................................
THE MEETING ..............................................................
Purpose of the Meeting...........................................
Record Date; Voting Rights; Proxies..............................
Solicitation of Proxies..........................................
Quorum...........................................................
Required Vote....................................................
THE PROPOSED MERGER.......................................................
General Description; The Bank Merger.............................
Closing Date; Effective Time ....................................
Consideration; Median Pre-Closing Price; Determination Date .....
Conversion of DFC Options........................................
Cash in Lieu of Fractional Shares ...............................
Stock Option to HUBCO for DFC Shares.............................
Background of the Merger.........................................
DFC Board's Reasons for the Merger and Recommendation............
HUBCO's Reasons for the Merger...................................
Security Ownership of Certain Beneficial Owners..................
Interests of Certain Persons in the Merger ......................
Opinion of DFC's Financial Advisor...............................
Resale Considerations with Respect to the HUBCO Common Stock.....
Conditions to the Merger.........................................
Conduct of Business Pending the Merger...........................
Representations, Warranties and Covenants........................
Regulatory Approvals.............................................
Management and Operations After the Merger.......................
Exchange of Certificates, Issuance of New Options................
Amendments; Termination .........................................
Accounting Treatment of the Merger...............................
Federal Income Tax Consequences .................................
RIGHTS OF DISSENTING DFC SHAREHOLDERS.....................................
THE ADDITIONAL PROPOSAL...................................................
PRO FORMA FINANCIAL INFORMATION...........................................
DESCRIPTION OF HUBCO CAPITAL STOCK........................................
General .........................................................
Description of HUBCO Common Stock................................
Description of HUBCO Preferred Stock.............................
COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF DFC AND HUBCO.................
General .........................................................
Voting Requirements..............................................
Removal of Directors; Number of Directors........................
Stock............................................................
Classified Board of Directors ...................................
Rights of Dissenting Shareholders................................
Shareholder Consent to Corporate Action..........................
Inspection Rights................................................
Dividends .......................................................
By-laws..........................................................
Shareholder Protection Legislation...............................
Evaluation of Offers.............................................
Limitations of Liability of Directors or Officers................
Indemnification of Directors and Officers........................
Preemptive Rights
SHAREHOLDER PROPOSALS.....................................................
OTHER MATTERS.............................................................
LEGAL OPINION.............................................................
EXPERTS...................................................................
APPENDIX A Agreement and Plan of Merger by and among HUBCO, HUB, DFC
and DIME.......................................................A-1
APPENDIX B Stock Option Agreement by and between HUBCO and DFC ...........B-1
APPENDIX C Fairness Opinion of A.G. Edwards & Sons, Inc...................C-1
APPENDIX D Sections 33-855 to 33-872 of the General Statutes of
Connecticut....................................................D-1
<PAGE>
AVAILABLE INFORMATION
Each of HUBCO, Inc. ("HUBCO") and Dime Financial Corporation ("DFC") is
subject to the information requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and in accordance therewith files reports,
proxy and information statements and other information with the Securities and
Exchange Commission (the "Commission" or the "SEC"). Such reports, proxy and
information statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and at the Commission's Regional Offices
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such materials can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission (such as HUBCO and DFC). The
address of the Commission's web site is http://www.sec.gov. In addition, HUBCO
Common Stock and DFC Common Stock are each quoted on The Nasdaq National Market
System, and certain material as to HUBCO and DFC can be inspected at the offices
of the National Association of Securities Dealers, Inc. (the "NASD"), 1735 K
Street, N.W., Washington, D.C. 20006.
HUBCO has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act of 1933, as amended (the "Securities Act")
(together with all amendments and supplements thereto, the "Registration
Statement"), with respect to the securities being offered by this document (this
"Proxy Statement-Prospectus," sometimes referred to as this "Proxy Statement").
As permitted by the rules and regulations of the Commission, this Proxy
Statement-Prospectus omits certain information, exhibits and undertakings
contained in the Registration Statement. For further information with respect to
HUBCO, DFC and the securities offered hereby, reference is made to the
Registration Statement, including the exhibits thereto.
Statements contained in this Proxy Statement-Prospectus or in any
document incorporated by reference herein, as to the contents of any document
referred to herein or therein, are not necessarily complete, and in each
instance reference is made to the copy of such document filed as an exhibit to
the Registration Statement or such other document, each such statement being
qualified in all respects by such reference.
ALL INFORMATION REGARDING DFC CONTAINED IN, DELIVERED WITH OR
INCORPORATED BY REFERENCE IN THIS DOCUMENT WAS SUPPLIED BY DFC. ALL INFORMATION
REGARDING HUBCO WAS SUPPLIED BY HUBCO.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by HUBCO with the Commission are
incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31,
1997, filed on March 31, 1998.
2. Quarterly Report on Form 10-Q for the quarter ended March 31,
1998, filed with the Commission on May 15, 1998.
3. Current Reports on Form 8-K filed with the Commission on
January 14, 1998, January 16, 1998, February 13, 1998, March
20, 1998, March 31, 1998, April 2, 1998, April 20, 1998, June
2, 1998 and the Current Report on Form 8-K/A filed on May 15,
1998.
[Prior to the effectiveness of this Registration Statement,
HUBCO will file a Current Report on Form 8-K which contains
supplemental financial information of HUBCO for the years-
ended December 31, 1997, 1996 and 1995 which will be restated
to include the effects of the acquisitions of The Bank of
Southington, Poughkeepsie Financial Corp. and MSB Bancorp,
Inc., all of which have been accounted for as a pooling of
interests for accounting purposes.]
4. The description of HUBCO's Common Stock and Preferred Stock
contained in the Forms 8-A filed by HUBCO to register its
Common Stock and Preferred Stock pursuant to Section 12(g) of
the Exchange Act, including any amendments or reports filed
for the purpose of updating the description of such Common
Stock or Preferred Stock.
The following documents filed by DFC with the Commission are
incorporated herein by reference.
1. Annual Report on Form 10-K for the year ended December 31,
1997.
2. Quarterly report on Form 10-Q for the quarter ended March 31,
1998 filed with the Commission on May 15, 1998.
3. Current Report on Form 8-K filed with the Commission on April
9, 1998.
4. The description of DFC's Common Stock contained in the Form
8-A filed by DFC to register its Common Stock pursuant to
Section 12(g) of the Exchange Act, including any amendments or
reports filed for the purpose of updating such description.
All documents filed by HUBCO or DFC pursuant to Sections 13(a), 13(c),
14, or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
earlier of (i) the date of the Special Meeting of Shareholders of DFC (the
"Meeting") to which this Proxy Statement-Prospectus relates, or (ii) the
termination of the Merger Agreement which is the subject of the Meeting, are
hereby incorporated by reference into this Proxy Statement and shall be deemed a
part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement.
A copy of HUBCO's Annual Report to Shareholders for the year ended
December 31, 1997 ("HUBCO's Annual Report") and HUBCO's Proxy Statement for its
Annual Meeting dated March 24, 1998 ("HUBCO's Proxy Statement") are available
free of charge, upon written or oral request as set forth hereinafter, to any
holder, including any beneficial owner, of shares DFC Common Stock.
A copy of DFC's Annual Report to Shareholders for the year ended
December 31, 1997 ("DFC's Annual Report") and DFC's Proxy Statement for its 1998
Annual Meeting of Shareholders are available to any holder of DFC Common Stock,
including any beneficial owner, free of charge upon written or oral request as
set forth hereinafter. By notice dated April 9, 1998, DFC shareholders were
notified that the 1998 Annual Meeting of DFC Shareholders has been postponed
indefinitely. See "SHAREHOLDER PROPOSALS."
This Proxy Statement-Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. These documents (not
including the exhibits thereto, unless such exhibits are specifically
incorporated by reference into the information incorporated herein) are
available free of charge to any holder of DFC Common Stock, including any
beneficial owner, upon written or oral request (a) with respect to documents
relating to HUBCO, to the office of the HUBCO Corporate Secretary, D. Lynn Van
Borkulo-Nuzzo, Esq., HUBCO, Inc., 1000 MacArthur Boulevard, Mahwah, New Jersey
07430; telephone (201) 236-2641. ; and, (b) with respect to documents relating
to DFC, to the office of the DFC Corporate Secretary, Eleanor M. Tolla, Dime
Financial Corporation, 95 Barnes Road, Wallingford, Connecticut 06492; telephone
(203) 269-8881. Responses to any such request will be made within one business
day by sending the requested documents by first class mail or other equally
prompt means. In order to ensure timely delivery of the documents in advance of
the Meeting, any request should be made by __________, 1998.
CONTAINED WITHIN AND INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT-PROSPECTUS ARE CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF HUBCO AND DFC, BOTH
INDIVIDUALLY AND ON A COMBINED PRO FORMA BASIS. SUCH STATEMENTS ARE NOT
HISTORICAL FACTS AND INCLUDE EXPRESSIONS ABOUT HUBCO'S AND/OR DFC'S CONFIDENCE,
STRATEGIES AND EXPRESSIONS ABOUT EARNINGS, NEW AND EXISTING PROGRAMS AND
PRODUCTS, RELATIONSHIPS, OPPORTUNITIES, TECHNOLOGY AND MARKET CONDITIONS. THESE
STATEMENTS MAY BE IDENTIFIED BY FORWARD-LOOKING TERMINOLOGY, SUCH AS "EXPECT",
"BELIEVE" OR "ANTICIPATE", OR EXPRESSIONS OF CONFIDENCE LIKE "STRONG" OR
"ON-GOING", OR SIMILAR STATEMENTS OR VARIATIONS OF SUCH TERMS. THESE
FORWARD-LOOKING STATEMENTS INCLUDE CERTAIN RISKS AND UNCERTAINTIES. FACTORS THAT
MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES:
(1) EXPECTED COST SAVINGS OR REVENUE ENHANCEMENTS FROM THE MERGER OR HUBCO'S
OTHER ACQUISITIONS CANNOT BE REALIZED AS ANTICIPATED; (2) DEPOSIT ATTRITION,
CUSTOMER LOSS OR REVENUE LOSS FOLLOWING THE MERGER OR HUBCO'S OTHER ACQUISITIONS
IS GREATER THAN EXPECTED; (3) COMPETITIVE PRESSURE IN THE BANKING AND FINANCIAL
SERVICES INDUSTRY INCREASES SIGNIFICANTLY; (4) CHANGES IN THE INTEREST RATE
ENVIRONMENT; AND (5) GENERAL ECONOMIC CONDITIONS, EITHER NATIONALLY OR IN THE
STATES OF NEW JERSEY, NEW YORK OR CONNECTICUT, ARE LESS FAVORABLE THAN EXPECTED.
<PAGE>
SUMMARY OF PROXY STATEMENT-PROSPECTUS
The following is a summary of certain information regarding the matters
to be considered at the Meeting. This summary is necessarily incomplete and is
qualified in its entirety by the more detailed information contained elsewhere
in this Proxy Statement, including the accompanying Appendixes and the documents
incorporated herein by reference. DFC Shareholders should carefully read the
entire Proxy Statement.
Overview
The Board of Directors of Dime Financial Corporation ("DFC") has called
a Special Meeting of DFC shareholders (the "Meeting") to be held on [Day of
Week], [Date], 1998. The Meeting has been called to seek shareholder approval of
an Agreement and Plan of Merger dated as of March 31, 1998 (the "Merger
Agreement") among HUBCO, Inc. ("HUBCO"), Lafayette American Bank ("Lafayette"),
DFC and DFC's subsidiary, The Dime Savings Bank of Wallingford ("DIME"). The
Merger Agreement provides for DFC to be merged with and into HUBCO (the
"Merger"), with HUBCO as the surviving corporation. A copy of the Merger
Agreement is attached as Appendix A to this Proxy Statement.
Upon completion of the Merger, each share of common stock, par value
$1.00 per share, of DFC ("DFC Common Stock"), other than Excluded Shares (as
defined below), will be converted into the right to receive a number of shares
(the "Exchange Ratio") of common stock of HUBCO, no par value ("HUBCO Common
Stock") determined by dividing $38.25 by the Median Pre-Closing Price of HUBCO
Common Stock, and rounding to the nearest thousandth; provided, that if the
number so determined exceeds 1.05, the Exchange Ratio will be 1.05 (the "Maximum
Exchange Ratio"), and if the number so determined is less than 0.93, the
Exchange Ratio will be 0.93 (the "Minimum Exchange Ratio"). The Exchange Ratio
is subject to adjustment as set forth in the Merger Agreement to prevent
dilution in the event of any stock split, reclassification or other similar
event. Also, if the Median Pre-Closing Price of HUBCO Common Stock is less than
$31.43 (which, at the Maximum Exchange Ratio of 1.05, would result in each share
of DFC Common Stock being exchanged for shares of HUBCO Common Stock with an
aggregate value (based on the Median Pre-Closing Price) of less than $33.00),
DFC will have certain rights to terminate the Merger Agreement unless HUBCO
agrees to increase the Exchange Ratio to $33.00 divided by the Median
Pre-Closing Price of HUBCO Common Stock. HUBCO will pay cash to DFC stockholders
in lieu of issuing fractional shares of HUBCO Common Stock. The "Median
Pre-Closing Price" of HUBCO Common Stock will be determined by taking the price
half-way between the closing prices left after discarding the four lowest and
four highest closing prices of HUBCO Common Stock during the ten-trading day
period ending on the day the parties receive final bank regulatory approval for
the Merger. "Excluded Shares" are those shares of DFC Common Stock which are (i)
held by DFC as treasury shares, or (ii) held by HUBCO or any of its subsidiaries
(other than shares held as trustee or in a fiduciary capacity and shares held as
collateral on or in lieu of a debt previously contracted).
At the Meeting, holders of DFC Common Stock will be asked to approve
and adopt the Merger Agreement and the transactions contemplated thereby.
Approval and adoption of the Merger Agreement will constitute approval of the
Merger.
This document serves two purposes. It is the Proxy Statement being used
by the DFC Board of Directors to solicit proxies for the Meeting, and it is the
Prospectus of HUBCO regarding the HUBCO Common Stock to be issued if the Merger
is completed. Therefore, this document is sometimes referred to as either the
"Proxy Statement-Prospectus" or the "Proxy Statement."
The Meeting
The Meeting will be held on [Day of Week], [Date], 1998 at [Time], at
[Location]. At the Meeting, holders of DFC Common Stock will be asked to approve
and adopt the Merger Agreement and the transactions contemplated thereby.
Record holders of DFC Common Stock at the close of business on
___________, 1998 (the "Record Date") are entitled to vote at the Meeting.
Holders of a majority of the outstanding shares of DFC Common Stock entitled to
vote at the Meeting must be present or represented by proxy at the Meeting for a
quorum. The affirmative vote, in person or by proxy, of the holders of at least
two-thirds of the issued and outstanding shares DFC Common Stock entitled to
vote at the Meeting is required in order to approve and adopt the Merger
Agreement and the transactions contemplated thereby. As of the Record Date,
there were _________ outstanding shares of DFC Common Stock held by
approximately ___ holders of record. The directors of DFC as a group have voting
control over _______ of these shares (____%) and have agreed to vote them in
favor of the Merger Agreement. In addition, HUBCO has voting control over ____
of these shares (___%) and the non-director executive officers of DFC as a group
have voting control over ______ of these shares (____%), all of which shares DFC
expects will be voted in favor of the Merger Agreement.
The DFC Board of Directors has unanimously approved the Merger
Agreement and unanimously recommends that holders of DFC Common Stock vote FOR
the Merger Agreement and the transactions contemplated thereby.
The Companies
HUBCO
HUBCO is a bank holding company whose principal operating subsidiaries
are Hudson United Bank ("HUB"), a New Jersey-chartered commercial bank,
Lafayette American Bank ("Lafayette"), a Connecticut-chartered commercial bank,
and Bank of the Hudson ("BTH"), federally-chartered savings bank based in New
York. BTH was recently acquired through HUBCO's acquisition of BTH's parent
corporation, Poughkeepsie Financial Corporation ("PFC"). HUBCO anticipates
converting BTH into a New York state-chartered commercial bank at some point in
the future.
HUBCO's corporate headquarters is located at 1000 MacArthur Boulevard,
Mahwah, New Jersey 07430, and its telephone number is (201) 236-2600. HUB's
corporate headquarters is located at 3100 Bergenline Avenue, Union City, New
Jersey 07084. Lafayette's corporate headquarters is located at 1000 Lafayette
Boulevard, Bridgeport, Connecticut 06604. BTH's corporate headquarters is
located at 249 Main Mall, Poughkeepsie, New York 12601.
HUB is a full-service commercial bank which primarily serves small and
mid-sized businesses and consumers through 61 branches in Northern New Jersey.
Lafayette is a full-service commercial bank which serves small-to-medium-sized
business firms as well as individuals through 30 banking offices located mainly
in Fairfield and New Haven counties in Connecticut. BTH is a community savings
bank serving the Mid-Hudson Valley area of New York through 32 branches in
Dutchess, Orange and Rockland counties, as well as six residential loan
origination offices in five New York counties and New Jersey. As of March 31,
1998 (prior to its New York State acquisitions), HUBCO had consolidated assets
of $3.05 billion, consolidated deposits of $2.45 billion and consolidated
stockholders' equity of $200.3 million. Based on assets as of March 31, 1998,
HUBCO was the fourth largest commercial banking company headquartered in New
Jersey. PFC, which was acquired by HUBCO on April 24, 1998 and is not included
in HUBCO's March 31, 1998 financial information, had consolidated assets of
$848.8 million, consolidated deposits of $622.8 million and consolidated
stockholders' equity of $71.1 million as of March 31, 1998. MSB Bancorp, Inc.
("MSB"), which was acquired by HUBCO on May 29, 1998 and is not included in
HUBCO's March 31, 1998 financial information, had consolidated assets of $753.7
million, consolidated deposits of $661.0 million and consolidated stockholders'
equity of $74.3 million as of March 31, 1998.
HUBCO's strategy is to enhance profitability and build market share
through both internal growth and acquisitions. As of the date of this Proxy
Statement-Prospectus, in addition to the Merger, HUBCO has pending the
acquisitions of Community Financial Holding Corporation ("CFHC") and IBS
Financial Corp. ("IBSF") and the purchase of 23 branch offices from First Union
National Bank (the "Branch Purchase"). CFHC is the parent corporation of
Community National Bank ("CNB"), a bank headquartered in Westmont, New Jersey
which had 8 branches and $159.4 million in assets as of March 31, 1998. IBSF is
the parent corporation of Inter-Boro Savings and Loan Association (the
"Association"), a New Jersey state chartered savings and loan association
headquartered in Cherry Hill, New Jersey, which had 9 branches and $752.1
million in assets as of March 31, 1998. The Branch Purchase represents the
acquisition of 23 branches located in New Jersey, New York and Connecticut with
deposits of $330 million, in the aggregate. Assuming consummation of all
acquisitions pending as of the date of this Proxy Statement, HUBCO will have
completed over 25 acquisitions and will have added over 140 branches and over $6
billion in assets through acquisitions since 1990. HUBCO expects to continue its
acquisition strategy.
<PAGE>
DFC
DFC is a Connecticut corporation and registered bank holding company.
DFC's wholly-owned subsidiary, DIME, is a Connecticut-chartered savings bank.
The principal executive offices of DFC and DIME are located at 95 Barnes Road,
Wallingford, Connecticut 06492 and their telephone number is (203) 269-8881.
DIME is a full-service savings bank which serves individual and
business customers through 11 branches located in New Haven County, Connecticut.
As of March 31, 1998, DFC had consolidated assets of $1.0 billion, consolidated
deposits of $853.3 million and consolidated stockholders' equity of $82.4
million. Based on assets as of March 31, 1998, DIME was the tenth largest bank
headquartered in Connecticut.
The Merger
Description of the Merger; Closing Date; Effective Time
In the Merger, DFC will be merged with and into HUBCO, with HUBCO as
the surviving entity. A closing under the Merger Agreement (the "Closing") will
occur on a date (the "Closing Date") to be determined by HUBCO and set forth in
a notice (the "Closing Notice") to DFC. The Closing Date specified by HUBCO must
be at least five business days after the date of the Closing Notice, but no less
than seven and no more than ten business days after the satisfaction or waiver
of the conditions to consummation of the Merger (other than the delivery of
documents to be delivered at the Closing). The Closing may also be set for
another day mutually agreed to by HUBCO and DFC. HUBCO and DFC currently
anticipate closing in the third quarter of 1998. Simultaneous with or
immediately following the Closing, HUBCO and DFC will file Certificates of
Merger with the Secretary of State of the State of New Jersey and the Secretary
of State of the State of Connecticut. The Merger will become effective at a date
and time following the Closing which HUBCO and DFC will specify in the
Certificates of Merger (the "Effective Time"). If no Effective Time is specified
in the Certificates of Merger, the Effective Time will be the time at which the
later of the New Jersey Certificate of Merger or the Connecticut Certificate of
Merger is filed. HUBCO and DFC currently anticipate that the Effective Time will
be the close of business on the Closing Date. The exact Closing Date and
Effective Time are dependent upon satisfaction of all conditions precedent, some
of which are not under the control of HUBCO or DFC.
Bank Merger
Immediately following the Effective Time, DIME will be merged with and
into Lafayette (the "Bank Merger"), with Lafayette as the surviving bank (the
"Surviving Bank").
Consideration; Median Pre-Closing Price
Upon completion of the Merger, each share of DFC Common Stock (other
than Excluded Shares) will be converted into the right to receive a number of
shares (the "Exchange Ratio") of HUBCO Common Stock determined by dividing
$38.25 by the Median Pre-Closing Price of HUBCO Common Stock, and rounding to
the nearest thousandth; provided, that if the number so determined exceeds 1.05,
the Maximum Exchange Ratio of 1.05 will apply, and if the number so determined
is less than 0.93, the Minimum Exchange Ratio of 0.93 will apply. The Exchange
Ratio is subject to adjustment as set forth in the Merger Agreement to prevent
dilution in the event of any stock split, reclassification or other similar
event. Also, if the Median Pre-Closing Price of HUBCO Common Stock is less than
$31.43 (which, at the Maximum Exchange Ratio of 1.05, would result in each share
of DFC Common Stock being exchanged for shares of HUBCO Common Stock with an
aggregate value (based on the Median Pre-Closing Price) of less than $33.00),
DFC will have certain rights to terminate the Merger Agreement unless HUBCO
agrees to increase the Exchange Ratio to $33.00 divided by the Median
Pre-Closing Price of HUBCO Common Stock. HUBCO will pay cash to DFC stockholders
in lieu of issuing fractional shares of HUBCO Common Stock. The "Median
Pre-Closing Price" of HUBCO Common Stock will be determined by taking the price
half-way between the closing prices left after discarding the four lowest and
four highest closing prices of HUBCO Common Stock during the ten-trading day
period ending on the day the parties receive final bank regulatory approval for
the Merger.
The calculation of the Exchange Ratio called for by the Merger
Agreement was intended by HUBCO and DFC to result in shareholders of DFC
receiving in the Merger HUBCO Common Stock with a value of $38.25, provided that
the Median Pre-Closing Price is between $36.43 and $41.13. However, because of
the Minimum Exchange Ratio and Maximum Exchange Ratio, and because the price of
HUBCO Common Stock at the Effective Time may not be the same as the Median
Pre-Closing Price, DFC shareholders are not assured of receiving any specific
market value of HUBCO Common Stock. The price of HUBCO Common Stock at the
Effective Time may be higher or lower than the Median Pre-Closing Price, and may
be higher or lower than the market price at the time of entering into the Merger
Agreement, the time of mailing this Proxy Statement or at the time of the
Meeting. DFC SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
HUBCO COMMON STOCK AND DFC COMMON STOCK.
Cash in Lieu of Fractional Shares
No fractional shares of HUBCO Common Stock will be issued in exchange
for DFC Common Stock. Instead, holders of DFC Common Stock will receive from
HUBCO cash equal to their fractional share interest multiplied by the Median
Pre-Closing Price of HUBCO Common Stock, without interest. All shares of HUBCO
Common Stock to be issued to a holder of DFC Common Stock will be aggregated to
constitute as many whole shares as possible before determining the person's
fractional share interest.
Conversion of DFC Options
DFC has outstanding a number of options to purchase shares of DFC
Common Stock ("DFC Options") which were granted to optionees ("Optionees")
pursuant to the 1986 Stock Option and Incentive Plan, the City Savings Bank of
Meriden Stock Option Plan, the 1986 Stock Option Plan for Outside Directors,
Non-Qualified Stock Option Agreements, as amended, for William J. Farrell and M.
Joseph Canavan, the 1996 Stock Option and Incentive Plan, the Chairman's 1996
Non-Qualified Stock Option Agreement, and the 1996 Stock Option Plan for Outside
Directors (the "DFC Stock Option Plans") and the option grant agreements
thereunder (the "Option Grant Agreements"). Pursuant to the Merger Agreement,
HUBCO has agreed to honor the provisions of the DFC Stock Option Plans and the
Option Grant Agreements, including those relating to vesting and conversion in
connection with a change in control of DFC. By virtue of the Merger, all DFC
Options will be vested on the Closing Date. Pursuant to the Merger Agreement,
each DFC Option outstanding at the Effective Time (each a "Continuing Stock
Option") will be converted into an option to purchase HUBCO Common Stock,
wherein (i) the right to purchase shares of DFC Common Stock pursuant to the
Continuing Stock Option will be converted into the right to purchase that same
number of shares of HUBCO Common Stock multiplied by the Exchange Ratio, (ii)
the option exercise price per share of HUBCO Common Stock will be the previous
option exercise price per share of the DFC Common Stock divided by the Exchange
Ratio, and (iii) in all other material respects the option will be subject to
the same terms and conditions as governed the DFC Option on which it was based,
including the length of time within which the option may be exercised (which
will not be extended except that the holder of a Continuing Stock Option who
continues in the service of HUBCO or a subsidiary of HUBCO will not be deemed to
have terminated service for purposes of determining the Continuing Stock Option
exercise period). If a Stock Option Grant Agreement also provided for a Stock
Appreciation Right, the Stock Appreciation Right will also continue (subject to
the same adjustments as are provided for Continuing Stock Options). Shares of
HUBCO Common Stock issuable upon exercise of Continuing Stock Options will be
covered by a registration statement on Form S-8, which HUBCO has agreed to use
reasonable best efforts to file as soon as possible after the Effective Time.
Dissenters' Rights of Appraisal
Under the Connecticut Business Corporation Act (the "CTBCA"), holders
of DFC Common Stock are entitled to dissenters' rights of appraisal in
connection with the Merger. See "RIGHTS OF DISSENTING DFC SHAREHOLDERS" and
Appendix D to this Proxy Statement, which set forth the steps to be taken by a
DFC shareholder who wishes to exercise the right to dissent.
Federal Income Tax Consequences
The Merger is structured as a tax-free reorganization under Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), and,
accordingly, no gain or loss will be recognized by HUBCO or DFC or by the
shareholders of DFC upon the exchange of their shares of DFC Common Stock solely
for shares of HUBCO Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in HUBCO Common Stock).
HUBCO's and DFC's obligations to consummate the Merger are conditioned upon,
among other things, the receipt of an opinion of Pitney, Hardin, Kipp & Szuch,
counsel to HUBCO, dated the Closing Date, to the effect that the Merger will
qualify as a tax-free reorganization as defined in Section 368 of the Code.
While HUBCO and DFC each has the contractual right to waive this condition to
closing, neither will do so. In connection with the Registration Statement of
which this Proxy Statement is a part, such counsel has delivered its opinion to
the effect that the Merger will qualify as a tax-free reorganization as defined
in Section 368 of the Code. See "The Proposed Merger -- Federal Income Tax
Consequences."
Accounting Treatment of the Merger
The Merger is expected to be accounted for as a pooling of interests
for financial reporting purposes, and each party's obligation to consummate the
Merger is conditioned upon HUBCO's receipt of assurances from Arthur Andersen,
LLP, HUBCO's independent accountants that the Merger will be so treated. Under
the pooling-of-interests method of accounting, DFC's historical basis of assets,
liabilities and stockholders' equity will be retained by HUBCO as the surviving
entity, and the combined entity's consolidated financial statements will be
restated retroactively to reflect the combined financial condition, results of
operations and cash flows as if HUBCO and DFC had been combined for all periods
presented.
Required Regulatory Approvals
Consummation of the Merger is subject to prior receipt of approval of
the Merger by the Federal Deposit Insurance Corporation (the "FDIC") and the
Connecticut Department of Banking (the "CTDOB"). Applications for FDIC and CTDOB
approval have been filed, and HUBCO and DFC anticipate receiving such approvals.
However, there can be no assurance that the approvals will be granted, that they
will be granted on a timely basis, or that they will be granted without
conditions unacceptable to HUBCO or DFC.
Conditions to the Merger
There are a number of conditions to completion of the Merger, including
receipt of bank regulatory approvals; approval of the Merger Agreement by the
DFC shareholders; receipt of an opinion of counsel to HUBCO that the Merger will
result in a tax-free reorganization; assurances to HUBCO from its independent
accountants that the Merger will be accounted for as a pooling of interests; and
certain other conditions usual and customary in transactions similar to the
Merger.
Exchange of Certificates
As soon as reasonably practicable either before or after the Effective
Time, the Exchange Agent for HUBCO will send DFC shareholders letters of
transmittal and instructions for exchanging their stock certificates for
certificates representing HUBCO Common Stock. Holders of DFC Common Stock should
not send in their stock certificates until they receive instructions from the
Exchange Agent.
Termination Rights
The Merger Agreement may be terminated by either DFC or HUBCO if, among
other reasons, the Effective Time has not occurred by December 31, 1998 other
than due to failure of the terminating party to perform its obligations under
the Merger Agreement. The Merger Agreement may be terminated by DFC if DFC's
Board of Directors approves another acquisition transaction after determining,
upon advice of counsel, that approval is necessary in the exercise of its
fiduciary obligations under applicable laws. In addition, DFC may terminate the
Merger Agreement if the Median Pre-Closing Price of HUBCO Common Stock is less
than $31.43 which, given the Maximum Exchange Ratio, would result in shares of
DFC Common Stock being converted into HUBCO Common Stock with a value (based on
the Median Pre-Closing Price) of less than $33.00 (i.e., $31.43 multiplied by
the 1.05 Maximum Exchange Ratio). However, if DFC exercises this termination
right, HUBCO can choose to override the termination by increasing the Exchange
Ratio to $33.00 divided by the Median Pre-Closing Price of HUBCO Common Stock.
Fairness Opinion
On March 30, 1998, at the meeting at which the DFC Board approved and
adopted the Merger Agreement and the transactions contemplated thereby, A.G.
Edwards & Sons, Inc. ("A.G. Edwards") rendered its oral and written opinion to
the DFC Board that, as of such date, the Merger consideration was fair, from a
financial point of view, to DFC's shareholders. The written opinion (the
"Opinion") was updated as of the date of this Proxy Statement-Prospectus. For
information concerning the matters reviewed, assumptions made and factors
considered by A.G. Edwards, see "THE PROPOSED MERGER -- Opinion of Financial
Advisor" and Appendix C to this Proxy Statement, which sets forth a copy of A.G.
Edwards' updated written fairness opinion.
Holders of DFC Common Stock are urged to, and should, read such opinion in its
entirety.
No Solicitation by DFC of Alternative Transactions
Pursuant to the Merger Agreement, DFC has agreed that it will not,
directly or indirectly, encourage or solicit or hold discussions or negotiations
with, or provide any information to, any person other than HUBCO concerning any
merger or similar acquisition transactions involving DFC or DIME (an
"Acquisition Transaction"), except that DFC may enter into discussions or
negotiations or provide information in connection with an unsolicited possible
Acquisition Transaction if the Board of Directors of DFC, after consulting with
counsel, determines in the exercise of its fiduciary responsibilities that such
action should be so taken. This restriction, along with the Stock Option
Agreement described in the following paragraph, may be considered a deterrent to
other potential acquisitions of control of DFC.
Stock Option to HUBCO for DFC Shares
HUBCO and DFC entered into a Stock Option Agreement dated as of March
31, 1998 (the "Stock Option Agreement") in connection with the negotiation by
HUBCO and DFC of the Merger Agreement. Pursuant to the Stock Option Agreement,
DFC has granted to HUBCO an option (the "Option"), exercisable only under
certain limited and specifically defined circumstances (none of which has
occurred as of the date hereof), to purchase up to 1,040,000 authorized but
unissued shares of DFC Common Stock, representing upon issuance approximately
[19.9%] of the shares of DFC Common Stock, for an exercise price of $30.25 per
share. HUBCO does not have any voting rights with respect to the shares of DFC
Common Stock subject to the Option prior to exercise of the Option. Acquisitions
of DFC Common Stock pursuant to exercise of the option would be subject to prior
regulatory approval under certain circumstances.
The Stock Option Agreement is attached to this Proxy Statement as
Appendix B hereto. If certain specifically enumerated "Triggering Events" occur
and the Merger is not consummated, HUBCO would recognize a gain on the sale of
the shares of DFC Common Stock received pursuant to the exercise of the Option
if such shares of DFC Common Stock were sold at prices exceeding $30.25 per
share. The ability of HUBCO to exercise the Option and to cause up to an
additional 1,040,000 shares of DFC Common Stock to be issued may be considered a
deterrent to other potential acquisitions of control of DFC, even if the
potential acquiror were prepared to pay a higher price per share for DFC Common
Stock, as it is likely to increase the cost of an acquisition of all of the
shares of DFC Common Stock which would then be outstanding. The exercise of the
option by HUBCO may also make pooling-of-interests accounting treatment
unavailable to a subsequent acquiror.
Interests of Certain Persons in the Merger
The Merger Agreement provides that HUBCO will cause five current
directors of DIME to be appointed to the Board of Directors of the Surviving
Bank at the Effective Time and will invite each other director of DIME to serve
on a regional advisory board of the Surviving Bank.
Certain directors of DIME have entered into deferred fee agreements
with DIME. Under these agreements, directors are entitled to the amounts
deferred with earnings. The Merger Agreement permits DIME, and DIME intends to
adopt a trust to hold the amounts payable to the directors pursuant to these
agreements.
Certain officers and other employees of DFC have stock options which
will become fully vested by virtue of the Merger.
DFC and DIME have entered into change-in-control severance agreements
(the "Change-In-Control Agreements") with each of their four senior officers,
Richard H. Dionne, Albert E. Fiacre, Jr., Timothy R. Stanton, and Frank P.
LaMonaca (hereinafter "Executive" or "Executives") as well as certain other
officers of DFC. If the Executive's employment is, in certain cases, terminated
or constructively terminated within two years following a change-in-control,
which term includes the Merger, the Executive would be entitled to a lump sum
severance benefit and certain fringe benefits for a period of one year after
termination. It is estimated that the current value of the lump sum severance is
[$1,121,558] for Mr. Dionne, [$225,198] for Mr. Fiacre, [$202,764] for Mr.
Stanton and [$190,084] for Mr. LaMonaca. Benefits payable under the
Change-In-Control Agreements are subject, however, to the limitation described
in Section 280G of the Code, if applicable.
DFC and DIME have also entered into an employment agreement (the
"Employment Agreement") with Mr. Dionne whereby Mr. Dionne has agreed to remain
in the employ of DFC and DIME and DFC and DIME have agreed to retain Mr.
Dionne's services through January 31, 2001. As the successor to DFC and DIME,
HUBCO and Lafayette will assume any obligations of DFC and DIME under the
Employment Agreement. Mr. Dionne, however, will not receive any severance
benefit under the Employment Agreement if he is otherwise entitled to benefits
under his Change-In-Control Agreement.
In addition to the foregoing, the Merger Agreement requires HUBCO to
indemnify each director, officer, employee or agent of DFC or any of its
subsidiaries to the fullest extent which DFC would have been permitted under
applicable law and DFC's Certificate of Incorporation and By-laws had the Merger
not occurred, with respect to any claims made against such person because he or
she is or was serving in such capacity. The Merger Agreement also requires HUBCO
to provide DFC's officers and directors with directors' and officers' liability
insurance for at least six years after the Effective Time.
For further details regarding the foregoing, see "THE PROPOSED MERGER -
Interests of Certain Persons in the Merger."
Differences in Shareholders' Rights
DFC is a business corporation incorporated under the CTBCA and HUBCO is
a business corporation incorporated under the New Jersey Business Corporation
Act (the "NJBCA"). The rights of DFC shareholders are currently governed by the
CTBCA and DFC's certificate of incorporation and by-laws. At the Effective Time,
each DFC shareholder will become a shareholder of HUBCO. The rights of HUBCO
shareholders are governed by the NJBCA and HUBCO's certificate of incorporation
and by-laws. The CTBCA and the NJBCA, and the rights of shareholders thereunder,
differ with respect to voting requirements, dissenters' rights, and various
other matters. See "COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF DFC AND HUBCO."
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth selected historical consolidated
financial information (audited and unaudited) for both HUBCO and DFC for the
three month periods ended March 31, 1998 and March 31, 1997 and for the five
years ended December 31, 1997. The financial information for HUBCO has been
restated to include the effects of the merger with The Bank of Southington
("TBOS") which was consummated on January 12, 1998 and has been accounted for as
a pooling of interests. HUBCO's financial information does not take into account
HUBCO's pending acquisitions of IBSF or CFHC, the Branch Purchase or HUBCO's
recently completed acquisitions of PFC and MSB. None of these acquisitions had
closed as of March 31, 1998 and none are sufficiently material to HUBCO under
SEC rules to require inclusion in this Proxy Statement-Prospectus of financial
statements regarding such acquisitions. The selected consolidated financial data
of HUBCO and DFC for each of the five years in the period ended December 31,
1997 have been derived from, and should be read in conjunction with, the
respective audited consolidated financial statements of HUBCO and DFC, including
the related notes thereto, incorporated by reference in this Proxy
Statement-Prospectus. The selected consolidated financial data of HUBCO and DFC
for the three month periods ended March 31, 1998 and March 31, 1997 have been
derived from, and should be read in conjunction with, the respective unaudited
consolidated financial statements of HUBCO and DFC, including the related notes
thereto, incorporated by reference in this Proxy Statement-Prospectus. In the
opinion of management of each of HUBCO and DFC, their respective unaudited
consolidated financial statements include all adjustments, consisting of only
normal recurring accruals, necessary to present fairly the financial position
and results of operations for such interim periods. Operating results of each of
HUBCO and DFC for the three months ended March 31, 1998 are not necessarily
indicative of operating results which may be expected for the entire year.
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO
Three Months Ended March 31,
-----------------------------------------------
1998 1997
---------------- ----------------
(Dollars in thousands, except for per share amounts)
<S> <C> <C>
Earnings Summary:
Interest income $ 53,729 $ 56,830
Interest expense 18,712 20,935
-------------- --------------
Net interest income 35,017 35,895
Provision for possible loan losses 1,939 1,734
-------------- --------------
Net interest income after
provision for possible loan losses 33,078 34,161
Other income 10,948 8,895
Other expenses 27,404 24,232
-------------- --------------
Income (loss) before income taxes 16,622 18,824
Income tax provision 5,652 7,156
============== ==============
Net income (loss) $ 10,970 $ 11,668
============== ==============
Share Data:
Weighted average common
shares outstanding (in thousands): 22,644 23,024
Diluted 22,952 24,767
Net income per share $ 0.48 $ 0.50
Diluted $ 0.48 $ 0.47
Cash dividend per common share $ 0.20 $ 0.18
Balance Sheet Summary:
Securities held to maturity $ 228,992 $ 250,868
Securities available for sale 635,537 715,891
Loans 1,836,360 1,930,736
Total assets 3,050,967 3,196,884
Deposits 2,448,016 2,557,806
Stockholders' equity 200,269 217,192
Performance Ratios:
Return on average assets 1.51 % 1.47 %
Return on average equity 22.80 % 21.31 %
Dividend payout 41.67 % 36.80 %
Average equity to average assets 6.62 % 6.88 %
Net interest margin 5.28 % 4.96 %
Asset Quality Ratios:
Allowance for possible loan
losses to total loans 2.20 % 1.92 %
Allowance for possible loan losses
to non-performing loans 107 % 117 %
Non-performing loans to
total loans 2.05 % 1.65 %
Non-performing assets to total
loans, plus other real estate 2.23 % 1.92 %
Net charge-offs to average loans 0.15 % 0.06 %
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF HUBCO
At or for the Year Ended December 31,
----------------------------------------------------------------------
1997 1996 1995 1994 1993
(Dollars in thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C>
Earnings Summary:
Interest income $ 228,438 $ 213,509 $ 212,258 $ 178,052 $ 155,745
Interest expense 81,461 76,171 73,385 55,184 53,070
------------- ------------ ------------ ------------ ------------
Net interest income 146,977 137,338 138,873 122,868 102,675
Provision for possible loan losses 8,530 12,520 10,274 10,069 32,519
------------- ------------ ------------ ------------ ------------
Net interest income after
provision for possible loan losses 138,447 124,818 128,599 112,799 70,156
Other income 41,686 30,811 28,677 23,027 24,868
Other expenses 98,944 120,746 106,584 98,883 100,006
------------- ------------ ------------ ------------ ------------
Income (loss) before income taxes 81,189 34,883 50,692 36,943 (4,982)
Income tax provision 31,512 12,248 15,084 12,831 521
============= ============ ============ ============ ============
Net income (loss) $ 49,677 $ 22,635 $ 35,608 $ 24,112 $ (5,503)
============= ============ ============ ============ ============
Share Data:
Weighted average common shares outstanding (in thousands):
Basic 22,919 23,247 22,857 21,083 17,401
Diluted $ 24,206 25,048 24,935 23,729 19,981
Basic earnings per share 2.14 $ 0.94 $ 1.52 $ 1.12 $ (0.32)
Diluted earnings per share 2.05 0.90 1.43 1.02 (0.28)
Cash dividend per common share 0.75 0.66 0.56 0.34 (0.29)
Balance Sheet Summary:
Securities held to maturity $ 227,570 $ 280,914 $ 294,057 $ 715,796 $ 601,246
Securities available for sale 578,658 690,157 528,651 232,424 196,473
Loans 1,857,677 1,965,184 1,726,316 1,642,465 1,372,060
Total assets 3,174,254 3,242,938 2,890,478 2,872,350 2,417,206
Deposits 2,431,114 2,708,371 2,547,677 2,507,642 2,190,291
Stockholders' equity 196,733 216,635 226,253 195,772 125,858
Performance Ratios:
Return on average assets 1.60 % 0.77 % 1.26 % 0.91 % -0.23 %
Return on average equity 23.25 % 10.49 % 17.07 % 15.41 % -4.31 %
Dividend payout 35.05 % 70.21 % 36.84 % 30.36 % --
Average equity to average assets 6.90 % 7.29 % 7.39 % 5.88 % 5.42 %
Net interest margin 5.22 % 5.07 % 5.37 % 5.05 % 4.75 %
Asset Quality Ratios:
Allowance for possible loan
losses to total loans 2.11 % 1.87 % 1.84 % 1.96 % 2.54 %
Allowance for possible loan losses
to non-performing loans 111 % 107 % 114 % 75 % 45 %
Non-performing loans to
total loans 1.89 % 1.74 % 1.62 % 2.61 % 5.65 %
Non-performing assets to total
loans, plus other real estate 2.09 % 2.04 % 2.28 % 3.57 % 7.20 %
Net charge-offs to average loans 0.46 % 0.68 % 0.65 % 1.28 % 1.79 %
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF DFC
Three Months Ended March 31,
-----------------------------------------------
1998 1997
---------------- ----------------
(Dollars in thousands, except for per share amounts)
<S> <C> <C>
Earnings Summary:
Interest income $ 17.462 $ 14,199
Interest expense 10,053 7,513
-------------- --------------
Net interest income 7,409 6,686
Provision for loan losses 50 50
-------------- --------------
Net interest income after provision 7,359 6,636
Other income 681 526
Other expenses 3,545 3,388
-------------- --------------
Income before income taxes 4,495 3,774
Income Tax expense (benefit) 1,885 0
-------------- --------------
Net income $ 2,610 $ 3,774
============== ==============
Share Data:
Weighted average Common Shares
Outstanding (in thousands):
Basic 5,218 5,135
Diluted 5,370 5,246
Basic Earnings per share $ 0.50 $ 0.73
Diluted Earnings per share $ 0.49 $ 0.72
Cash Dividend Paid per common share $ 0.12 $ 0.09
Balance Sheet Summary:
Securities held to maturity $ 167,226 $ 133,279
Securities available for sale $ 414,756 $ 234,176
Loans, net $ 362,881 $ 380,061
Total assets $ 1,016,401 $ 814,431
Deposits $ 853,260 $ 687,149
Stockholders' equity $ 82,427 $ 63,754
Performance Ratios:
Return on average assets 1.06 % 1.94 %
Return on average equity 12.94 % 23.84 %
Dividend payout 24.00 % 12.33 %
Average equity to average assets 8.21 % 8.15 %
Net interest margin 3.02 % 3.46 %
Asset Quality Ratios:
Allowance for possible loan
losses to total loans 3.17 % 3.23 %
Allowance for possible loan losses
to non-performing loans 490.02 % 470.72 %
Non-performing loans to
total loans 0.65 % 0.69 %
Non-performing assets to total
loans, plus other real estate 0.78 % 0.92 %
Net charge-offs to average loans 0.14 % 0.07 %
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF DFC
At or for the Year Ended December 31,
---------------------------------------------------------------------------
1997 1996 1995 1994 1993
(Dollars in thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C>
Earnings Summary:
Interest Income $ 63,009 $ 51,391 $ 47,476 $ 44,703 $ 49,973
Interest Expense 34,788 25,495 22,079 18,755 22,519
------------- ------------- ------------- ------------- -------------
Net Interest Income 28,221 25,896 25,397 25,948 27,454
------------- ------------- ------------- ------------- -------------
Provision for loan losses 200 2,000 7,550 4,516 20,900
------------- ------------- ------------- ------------- -------------
Net interest income after provision 28,021 23,896 17,847 21,432 6,554
Other income 2,233 2,375 2,378 3,479 2,680
Other expenses 13,436 13,808 16,997 20,123 31,856
------------- ------------- ------------- ------------- -------------
Income (loss) before income taxes
Extraordinary Item, and Cumulative
Effect of Changes in Accounting Methods 16,818 12,463 3,228 4,788 (22,622)
Income Tax expense (benefit) 70 (10) (2,813) 60 0
------------- ------------- ------------- ------------- -------------
Income before Extraordinary Item
and Cumulative Effect of Changes
in Accounting Methods 16,748 12,473 6,041 4,728 (22,622)
------------- ------------- ------------- ------------- -------------
Extraordinary Item:
Prepayment penalty on long-term debt (874)
Cumulative Effect of Changes
in Accounting Methods
Postretirement benefits other than
pensions, net of tax (477)
Income taxes 563
Net Income (loss) $ 16,748 $ 12,473 $ 6,041 $ 4,728 $ (23,410)
------------- ------------- ------------- ------------- -------------
Share Data:
Weighted Average Common
Shares Outstanding (in thousands)
Basic 5,149 5,084 5,006 4,994 4,994
Diluted 5,298 5,145 5,026 5,005 4,997
Basic Earnings (loss) per share $ 3.25 $ 2.45 $ 1.21 $ 0.95 $ (4.69)
Diluted Earnings (loss) per share $ 3.16 $ 2.42 $ 1.20 $ 0.94 $ (4.69)
Cash Dividend per common share $ 0.40 $ 0.30 $ -- $ -- $ $--
Balance Sheet Summary:
Securities held to maturity $ 135,037 $ 120,257 $ 47,898 $ 51,869 $ 79,192
Securities available for sale $ 398,346 $ 184,961 $ 103,328 $ 4,582 $ 426
Loans, net $ 361,658 $ 387,293 $ 443,664 $ 501,052 $ 494,019
Total assets $ 961,436 $ 751,303 $ 658,373 $ 637,729 $ 672,114
Deposits $ 817,091 $ 626,098 $ 543,344 $ 527,786 $ 566,845
Stockholders' equity $ 79,285 $ 62,611 $ 51,668 $ 45,196 $ 40,358
</TABLE>
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF DFC
<TABLE>
<CAPTION>
At or for the Year Ended December 31,
---------------------------------------------------------------------------
1997 1996 1995 1994 1993
(Dollars in thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C>
Performance Ratios:
Return on average assets 1.94 % 1.82 % 0.95 % 0.71 % (3.26 %)
Return on average equity 24.20 % 22.19 % 12.82 % 11.06 % (36.40 %)
Dividend payout 12.31 % 12.24 % -- % -- % -- %
Average equity to average assets 8.01 % 8.19 % 7.43 % 6.46 % 8.95 %
Net interest margin 3.33 % 3.85 % 4.12 % 4.22 % 4.18 %
Asset Quality Ratios:
Allowance for possible loan
losses to total loans 3.30 % 3.23 % 2.80 % 1.83 % 2.77 %
Allowance for possible loan losses
to non-performing loans 539.77 % 503.07 % 166.36 % 117.17 % 109.44 %
Non-performing loans to
total loans 0.61 % 0.64 % 1.68 % 1.56 % 2.53 %
Non-performing assets to total
loans, plus other real estate 0.74 % 0.94 % 1.99 % 2.27 % 3.77 %
Net charge-offs to average loans 0.20 % 0.43 % 0.83 % 1.79 % 5.15 %
</TABLE>
<PAGE>
MARKET PRICE AND DIVIDEND MATTERS
Market Price and Dividend History
HUBCO Common Stock is quoted on The Nasdaq National Market System under the
symbol "HUBC", and DFC Common Stock is quoted on The Nasdaq National Market
System under the symbol "DIBK". The following tables set forth, for the periods
indicated, the high and low closing prices per share of HUBCO Common Stock and
DFC Common Stock on The Nasdaq National Market System, in each case as reported
the following business day in The Wall Street Journal, and quarterly dividends
declared per share.
All stock prices shown in the tables below have been rounded to
the nearest cent. HUBCO's stock prices and dividends shown in the tables below
have been adjusted for a HUBCO stock dividend payable on December 1, 1997 to
shareholders of record on November 13, 1997 (the "1997 Stock Dividend") and a
HUBCO stock dividend payable on November 15, 1996 to shareholders of record on
November 4, 1996 (the "1996 Stock Dividend").
<TABLE>
<CAPTION>
Equivalent Pro Forma Equivalent Pro Forma
Market Market Market Price Per Share Market Price Per Share
Price Per Share Price Per Share of DFC Common Stock of DFC Common Stock
of HUBCO of DFC (1.05 Exchange Ratio) (0.93 Exchange Ratio)
---------------- ---------------
Common Stock Common Stock (1) (1)
------------ ------------ --- ---
High Low High Low High Low High Low
---- --- ---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996:
First Quarter........ $ 21.33 $ 18.32 $ 14.00 $ 12.25 $ 22.40 $ 19.24 $ 19.84 $ 17.04
Second Quarter....... $ 20.50 $ 17.32 $ 15.25 $ 12.75 $ 21.53 $ 18.19 $ 19.07 $ 16.11
Third Quarter........ $ 20.39 $ 18.61 $ 17.75 $ 14.50 $ 21.41 $ 19.54 $ 18.96 $ 17.31
Fourth Quarter....... $ 24.15 $ 19.56 $ 18.75 $ 16.50 $ 25.36 $ 20.54 $ 22.46 $ 18.19
1997:
First Quarter........ $ 25.85 $ 21.84 $ 21.25 $ 17.25 $ 27.14 $ 22.93 $ 24.04 $ 20.31
Second Quarter....... $ 28.52 $ 21.12 $ 26.25 $ 17.50 $ 29.95 $ 22.18 $ 26.52 $ 19.64
Third Quarter........ $ 32.04 $ 26.94 $ 32.13 $ 24.88 $ 33.64 $ 28.29 $ 29.80 $ 25.05
Fourth Quarter......... $ 39.13 $ 30.94 $ 32.25 $ 28.00 $ 41.09 $ 32.49 $ 36.39 $ 28.77
1998:
First Quarter......... $ 39.00 $ 33.25 $ 37.00 $ 28.63 $ 40.95 $ 34.91 $ 36.27 $ 30.92
Second Quarter
(through 6/__/98)..... $ $ $ $ $ $ $ $
</TABLE>
- -------------
(1) Equivalent pro forma market price per share of DFC Common Stock represents
the high and low closing prices per share of HUBCO Common Stock, multiplied
by the 1.05 Maximum Exchange Ratio, or the 0.93 Minimum Exchange Ratio, as
indicated. The Exchange Ratio is subject to customary anti-dilution
adjustments specified in the Merger Agreement.
<PAGE>
Equivalent Pro Forma Dividends Per
Share of DFC Common Stock (1)
<TABLE>
<CAPTION>
HUBCO Common Stock DFC Common Stock
Dividends Per Share Dividends Per Maximum (1.05) Minimum (0.93) Exchange
Share Exchange Ratio Ratio
<S> <C> <C> <C> <C>
1996:
First Quarter...... $ 0.160 $ 0.07 $ 0.168 $0.149
Second Quarter..... $ 0.160 $ 0.07 $ 0.168 $ 0.149
Third Quarter...... $ 0.160 $ 0.08 $ 0.168 $ 0.149
Fourth Quarter..... $ 0.184 $ 0.08 $ 0.193 $ 0.171
1997:
First Quarter...... $ 0.184 $ 0.09 $ 0.193 $ 0.171
Second Quarter..... $ 0.184 $ 0.10 $ 0.193 $ 0.171
Third Quarter...... $ 0.184 $ 0.10 $ 0.193 $ 0.171
Fourth Quarter .... $ 0.200 $ 0.11 $ 0.210 $ 0.186
1998:
First Quarter...... $ 0.200 $ 0.12 $ 0.210 $ 0.186
Second Quarter
(through 6/__/98). $ $ $ $
...................
</TABLE>
----------------------
(1) Equivalent pro forma cash dividends per share of DFC Common Stock
represents HUBCO historical dividend rates per share, multiplied by the
1.05 Maximum Exchange Ratio, or the 0.93 Minimum Exchange Ratio, as
indicated, rounded to the nearest tenth of a cent. The current
annualized dividend rate per share of HUBCO Common Stock, based upon
the four most recently declared quarterly dividend rates of $.184 per
share of HUBCO Common Stock payable on September 1, 1997 and $.20
payable on December 1, 1997, March 2, 1998 and June 2, 1998, would be
$0.784. On an equivalent pro forma basis, such current annualized HUBCO
dividend per share of DFC Common Stock would be $0.823, based on the
Maximum Exchange Ratio (1.05), or $0.729, based on the Minimum Exchange
Ratio (0.93), in each case rounded to the nearest tenth of a cent. See
-- Limitations on Dividends Under The Merger Agreement." No assurance
can be given as to future HUBCO dividend rates. Future HUBCO dividends
are dependent upon the earnings and financial condition of HUBCO, as
well as government regulations and policies and other factors.
<PAGE>
The following table presents for (i) March 30, 1998, the last full
trading day before public announcement of the signing of the Merger Agreement,
and (ii) the most recent full trading day prior to the date of this Proxy
Statement-Prospectus, the reported closing price per share of HUBCO Common Stock
and of DFC Common Stock on The Nasdaq Stock Market and the equivalent price per
share of DFC Common Stock computed by multiplying the closing price of HUBCO
Common Stock on each of the dates specified by the Maximum Exchange Ratio (1.05)
and the Minimum Exchange Ratio (0.93), respectively.
<TABLE>
<CAPTION>
Equivalent Price Per Share
of DFC Common Stock
HUBCO DFC Maximum Exchange Ratio Minimum Exchange
Common Stock Common Stock (1.05) Ratio (0.93)
------------ ------------ ------ ------------
<S> <C> <C> <C> <C>
March 30, 1998............. $38.81 $36.00 $40.75 $36.10
June __, 1998.............. $____ $____ $____ $____
</TABLE>
The calculation of the Exchange Ratio called for by the Merger
Agreement was intended by HUBCO and DFC to result in shareholders of DFC
receiving in the Merger HUBCO Common Stock with a value of $38.25, provided that
the Median Pre-Closing Price is between $36.43 and $41.13. However, because of
the Minimum Exchange Ratio and Maximum Exchange Ratio, and because the price of
HUBCO Common Stock at the Effective Time may not be the same as the Median
Pre-Closing Price, DFC shareholders are not assured of receiving any specific
market value of HUBCO Common Stock. The price of HUBCO Common Stock at the
Effective Time may be higher or lower than the Median Pre-Closing Price, and may
be higher or lower than the market price at the time of entering into the Merger
Agreement, the time of mailing this Proxy Statement or at the time of the
Meeting. DFC SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
HUBCO COMMON STOCK AND THE DFC COMMON STOCK.
Limitations on Dividends Under the Merger Agreement
The Merger Agreement prohibits DFC from declaring, setting aside or
paying any dividend or other distribution on its capital stock, except that DFC
may pay dividends on the DFC Common Stock in a quarterly amount equal to $0.12
per share.
Dividend Limitations on HUBCO
The holders of HUBCO Common Stock are entitled to receive dividends
when and if declared by HUBCO's Board of Directors out of funds legally
available therefor. HUBCO has paid regular cash dividends on its common stock
since its inception in 1982. The HUBCO Series B Convertible Preferred Stock (the
"HUBCO Series B Preferred Stock") also is entitled to receive dividends when and
if declared by HUBCO's Board of Directors out of funds legally available
therefor. HUBCO has no obligation to pay dividends on the HUBCO Series B
Preferred Stock regardless of any dividends which may be paid on the HUBCO
Common Stock. The primary source for HUBCO's dividends is dividends from HUBCO's
banking subsidiaries to HUBCO, the payment of which is regulated. Under the New
Jersey Banking Act of 1948, as amended (the "NJBA"), HUB may pay dividends only
out of retained earnings, and only out of surplus to the extent that surplus
exceeds 50% of stated capital. Under the Banking Law of Connecticut (the "CBL"),
Lafayette may pay dividends only from its net profits, and the total of all
dividends in any calendar year may not (unless specifically approved by the
Commissioner of the Connecticut Department of Banking ("CTDOB")) exceed the
total of its net profits of that year combined with its retained net profits of
the preceding two years. The FDIC has the authority to prohibit a
state-chartered bank from engaging in conduct which, in the FDIC's opinion,
constitutes an unsafe or unsound banking practice. Under certain circumstances,
the FDIC could claim that the payment of a dividend or other distribution by a
bank to its sole shareholder constitutes an unsafe or unsound practice. Under
the Office of the Thrift Supervision Regulations (the "OTSR"), BTH may pay
dividends up to an amount equal to one hundred percent of its net income to date
during the calendar year plus the amount that would reduce by one-half its
surplus capital ratio at the beginning of the calendar year or up to an amount
equal to seventy-five percent of its net income over the most recent
four-quarter period, provided in each case that if immediately after giving
effect to such proposed dividend (on a pro forma basis), BTH's capital will be
equal to or greater than the amount of its regulatory capital requirement.
SELECTED PRO FORMA FINANCIAL INFORMATION
The following tables present certain pro forma unaudited combined
condensed financial information from the pro forma unaudited combined condensed
statements of income for the years ended December 31, 1997, 1996 and 1995, and
for the three month period ended March 31, 1998, and the pro forma unaudited
combined condensed balance sheet at March 31, 1998. The HUBCO and DFC pro forma
combined financial information gives effect to HUBCO's proposed acquisition of
DFC in a transaction accounted for as a pooling of interests, as if such
transaction had been consummated for statement of income purposes on the first
day of the applicable periods and for balance sheet purposes on March 31, 1998.
The financial information for HUBCO has been restated to include the effects of
the merger of TBOS which was consummated on January 12, 1998 and accounted for
as a pooling of interests. The pro forma information is based on the historical
financial statements of HUBCO and DFC, certain of which are incorporated by
reference herein. The pro forma financial information assumes a Maximum Exchange
Ratio of 1.05 and a Minimum Exchange Ratio of 0.93 shares of HUBCO Common Stock
for each share of DFC Common Stock outstanding.
The selected unaudited pro forma financial information should be read
in conjunction with the pro forma financial information and the related notes
thereto presented elsewhere in the Proxy Statement and the consolidated
financial statements and related notes incorporated by reference in the Proxy
Statement. Anticipated cost savings net of expected Merger-related expenses and
restructuring charges are not expected to be material and, therefore, the pro
forma financial data does not give effect to these items, nor does it take into
account HUBCO's pending acquisitions of CFHC or IBSF, the Branch Purchase or
HUBCO's recently completed acquisitions of PFC and MSB. See "CERTAIN INFORMATION
REGARDING HUBCO - Recent Developments." None of the acquisitions had closed as
of March 31, 1998 and none is sufficiently material to HUBCO under SEC rules to
require inclusion in this Proxy Statement-Prospectus of financial statements or
pro forma presentation regarding such acquisitions. The pro forma information is
not necessarily indicative of the results of operations which would have been
achieved had the Merger been consummated as of the beginning of the periods for
which such data are presented and should not be construed as being
representative of future periods.
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Unaudited Combined Condensed Financial Information
(In thousands, except for per share data)
For the Three
Months Ended
March 31, For the Years Ended December 31,
--------------------- --------------------------------------------
1998 1997 1996 1995
--------------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
Results of Operations:
Net interest income before provision for loan losses..$ 42,426 $ 175,198 $ 163,234 $ 164,270
Provision for loan losses.............................. 1,989 8,730 14,520 17,824
Net interest income after provision for loan losses.... 40,437 166,468 148,714 146,446
Income before income taxes............................. 21,117 98,007 47,346 53,920
Net income............................................. 13,580 66,425 35,108 41,649
Earnings per share
Basic- maximum exchange ratio.......................... 0.48 2.31 1.19 1.44
Basic - minimum exchange ratio......................... 0.49 2.37 1.22 1.47
Diluted - maximum exchange ratio....................... 0.47 2.21 1.14 1.35
Diluted - minimum exchange ratio....................... 0.48 2.26 1.16 1.38
As of March 31, 1998
-------------------------
Balance Sheet:
Total assets..........................................$ 4,067,367
Total deposits......................................... 3,299,401
Total stockholders' equity............................. 282,697
Book value per common share
Maximum exchange ratio............................ 10.03
Minimum exchange ratio............................ 10.26
</TABLE>
<PAGE>
ACTUAL AND PRO FORMA PER SHARE DATA
The following table sets forth per share data relating to dividends,
net income and book value of HUBCO Common Stock and DFC Common Stock, both on an
actual (historical) basis and on a pro forma combined basis, as adjusted for the
1996 Stock Dividend and 1997 Stock Dividend. The actual per share data have been
derived from the consolidated financial statements of HUBCO and DFC,
respectively, incorporated by reference herein. The financial information for
HUBCO has been restated to include the effects of the merger with TBOS which was
consummated on January 12, 1998 and has been accounted for as a pooling of
interests. See "INFORMATION INCORPORATED BY REFERENCE."
The pro forma unaudited book value per share data at March 31, 1998 and
December 31, 1997 and the pro forma unaudited net income per share data for the
three month periods ended March 31, 1998, and for the years ended December 31,
1997, 1996 and 1995 have been derived from the pro forma unaudited combined
condensed financial statements of HUBCO and DFC, giving effect to HUBCO's
acquisition of DFC accounted for as a pooling of interests. Pro forma unaudited
per share amounts have been determined based on the assumptions set forth in the
pro forma combined condensed unaudited financial statements presented elsewhere
herein. See "PRO FORMA FINANCIAL INFORMATION."
The actual, pro forma and pro forma equivalent per share data included
in the table below should be read in conjunction with the financial statements
of HUBCO and DFC incorporated by reference herein and the pro forma combined
condensed financial statements of HUBCO and DFC presented elsewhere herein. See
"INFORMATION INCORPORATED BY REFERENCE" and "PRO FORMA FINANCIAL INFORMATION."
Anticipated cost savings net of expected Merger-related expenses and
restructuring charges are not expected to be material and, therefore, the pro
forma financial data does not give effect to these items, nor does it take into
account HUBCO's pending acquisitions of CFHC or IBSF, the Branch Purchase or the
recently completed acquisitions of PFC and MSB. See "CERTAIN INFORMATION
REGARDING HUBCO - Recent Developments." None of these acquisitions had closed as
of December 31, 1997 and none are sufficiently material to HUBCO under SEC rules
to require inclusion in this Proxy Statement-Prospectus of financial statements
or pro forma presentation regarding such acquisitions. The pro forma information
is not necessarily indicative of the results of operations which would have been
achieved had the Merger been consummated as of the beginning of the periods for
which such data are presented and should not be construed as being
representative of future periods.
<PAGE>
<TABLE>
<CAPTION>
For the Three Months
Ended March 31, 1998 For the Year Ended December 31
-------------------- ------------------------------
1995 1997 1996
---- ---- ----
<S> <C> <C> <C> <C>
CASH DIVIDENDS DECLARED
PER COMMON SHARE (1):
HUBCO - Actual $ 0.20 $ 0.75 $ 0.66 $ 0.56
DFC- Actual 0.12 $ 0.40 $ 0.30 --
DFC, Pro forma equivalent: (2)
Maximum Exchange Ratio 0.21 0.79 0.69 0.59
Minimum Exchange Ratio 0.19 0.70 0.61 0.52
NET INCOME PER COMMON SHARE:
HUBCO - Actual
Basic $ 0.48 $ 2.14 $ 0.94 $ 1.52
Diluted 0.48 2.05 0.90 1.43
DFC - Actual
Basic 0.50 3.25 2.45 1.21
Diluted 0.49 3.16 2.42 1.20
Pro Forma:
Pro forma per share of HUBCO Common Stock
Basic, maximum exchange ratio 0.48 2.31 1.19 1.44
Basic, minimum exchange ratio 0.49 2.37 1.22 1.47
Diluted, maximum exchange ratio 0.47 2.21 1.14 1.35
Diluted, minimum exchange ratio 0.48 2.26 1.16 1.38
DFC, Pro forma equivalent: (3)
Basic, maximum exchange ratio 0.50 2.43 1.25 1.51
Basic, minimum exchange ratio 0.46 2.20 1.13 1.37
Diluted, maximum exchange ratio 0.49 2.32 1.20 1.42
Diluted, minimum exchange ratio 0.45 2.10 1.08 1.28
<CAPTION>
As of As of
March 31, 1998 December 31, 1997
BOOK VALUE PER COMMON SHARE:
<S> <C> <C>
HUBCO - Actual $ 8.83 $ 8.68
DFC- Actual tangible 15.33 14.95
Actual Total 15.70 15.35
Pro forma per share of HUBCO
Maximum Exchange Ratio 10.03 9.82
Minimum Exchange Ratio 10.26 10.05
DFC, Pro forma equivalent(4)
Maximum Exchange Ratio 10.53 10.31
Minimum Exchange Ratio 9.54 9.35
</TABLE>
- ----------------------
(1) For information regarding HUBCO's and DFC's dividends, and the market price
of HUBCO and DFC Common Stock, see "MARKET PRICE AND
DIVIDEND MATTERS."
(2) Equivalent pro forma cash dividends per share of DFC Common Stock represents
HUBCO historical dividend rates per share, multiplied by the Maximum
Exchange Ratio of 1.05 or the Minimum Exchange Ratio of 0.93, as the case
may be, rounded to the nearest tenth of a cent. The current annualized
dividend rate per share of HUBCO Common Stock, based upon the four most
recently declared quarterly dividend rates of $.184 per share of HUBCO
Common Stock payable on September 1, 1997 and $.20 payable on December 1,
1997, March 2, 1998 and June 2, 1998, would be $0.784. On an equivalent pro
forma basis, such current annualized HUBCO dividend per share of DFC Common
Stock would be $0.823 based on the Maximum Exchange Ratio (1.05), or $0.729
based on the Minimum Exchange Ratio (0.93), in each case rounded to the
nearest tenth of a cent. See "MARKET PRICE AND DIVIDEND MATTERS -
Limitations on Dividends Under The Merger Agreement." No assurance can be
given as to future HUBCO dividend rates. Future HUBCO dividends are
dependent upon the earnings and financial condition of HUBCO, as well as
government regulations and policies and other factors.
(3) Equivalent pro forma net income per share of DFC Common Stock represents pro
forma net income per shares of HUBCO Common Stock, multiplied by the Maximum
Exchange Ratio of 1.05 or the Minimum Exchange Ratio of 0.93, as the case
may be, rounded to the nearest tenth of a cent.
(4) Equivalent pro forma book value per share or DFC Common Stock represents pro
forma book value per share of HUBCO Common Stock, multiplied by the Maximum
Exchange Ratio of 1.05 or the Minimum Exchange Ratio of 0.93, as the case
may be, rounded to the nearest tenth of a cent.
<PAGE>
INTRODUCTION
This Proxy Statement-Prospectus is being furnished to the holders of
common stock, par value $1.00 per share, of DFC ("DFC Common Stock") in
connection with the solicitation of proxies on behalf of the Board of Directors
of DFC for use at the Meeting, to be held on __________, 1998, and at any
adjournments or postponements thereof, to consider and vote upon the approval
and adoption of the Merger Agreement and approval of the transactions
contemplated thereby. A copy of the Merger Agreement is attached as Appendix A
to this Proxy Statement-Prospectus. For purposes of this Proxy
Statement-Prospectus, "approval and adoption of the Merger Agreement" refers to
approval and adoption of the Merger Agreement and the transactions contemplated
thereby, including the Merger. This Proxy Statement-Prospectus is accompanied by
the notice of special meeting for the Meeting and a form of proxy which is being
solicited by the Board of Directors of DFC for use at the Meeting.
THE BOARD OF DIRECTORS OF DFC HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND RECOMMENDS THAT THE DFC SHAREHOLDERS VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
This Proxy Statement-Prospectus also serves as a prospectus for the
shares of HUBCO Common Stock to be issued in connection with the Merger.
Upon completion of the Merger, if approved and consummated, each share
of DFC Common Stock, other than Excluded Shares (as defined below), will be
converted into the right to receive a number of shares (the "Exchange Ratio") of
common stock of HUBCO, no par value ("HUBCO Common Stock"). Cash will be paid in
lieu of fractional shares. The Exchange Ratio will be determined by dividing
$38.25 by the Median Pre-Closing Price of HUBCO Common Stock, and rounding to
the nearest thousandth. However, a "Maximum Exchange Ratio" of 1.05 will apply
if the Exchange Ratio as so determined would exceed 1.05, and a "Minimum
Exchange Ratio" of 0.93 will apply if the Exchange Ratio as so determined would
be less than 0.93. The Exchange Ratio is subject to adjustment, as set forth in
the Merger Agreement, to prevent dilution in the event of any stock split,
reclassification or other similar event. Also, if the Median Pre-Closing Price
of HUBCO Common Stock is less than $31.43, DFC will have certain rights to
terminate the Merger Agreement unless HUBCO agrees to increase the Exchange
Ratio to $33.00 divided by the Median Pre-Closing Price of HUBCO Common Stock.
The "Median Pre-Closing Price" of HUBCO Common Stock is defined in the Merger
Agreement as the price half-way between the closing prices left after discarding
the four lowest and four highest closing prices in the ten consecutive trading
day period which ends on (and includes) the Determination Date. The
"Determination Date" is defined in the Merger Agreement as the day the parties
receive final bank regulatory approval for the Merger and one notifies the other
that such approval has been received. "Excluded Shares" are those shares of DFC
Common Stock which are (i) held by DFC as treasury shares, or (ii) held by HUBCO
or any of its subsidiaries (other than shares held as trustee or in a fiduciary
capacity and shares held as collateral on or in lieu of a debt previously
contracted).
DFC has outstanding a number of options to purchase shares of DFC
Common Stock ("DFC Options") which were granted to optionees ("Optionees")
pursuant to the 1986 Stock Option and Incentive Plan, the City Savings Bank of
Meriden Stock Option Plan, the 1986 Stock Option Plan for Outside Directors,
Non-Qualified Stock Option Agreements, as amended, for William J. Farrell and M.
Joseph Canavan, the 1996 Stock Option and Incentive Plan, the Chairman's 1996
Non-Qualified Stock Option Agreement, and the 1996 Stock Option Plan for Outside
Directors (the "DFC Stock Option Plans") and the option grant agreements
thereunder (the "Option Grant Agreements"). Pursuant to the Merger Agreement,
HUBCO has agreed to honor the provisions of the DFC Stock Option Plan and the
Option Grant Agreements, including those relating to vesting and conversion in
connection with a change in control of DFC. By virtue of the Merger, all DFC
Options will be vested on the Closing Date. Pursuant to the Merger Agreement,
each DFC Option outstanding at the Effective Time (each a "Continuing Stock
Option") will be converted into an option to purchase HUBCO Common Stock,
wherein (i) the right to purchase shares of DFC Common Stock pursuant to the
Continuing Stock Option will be converted into the right to purchase that same
number of shares of HUBCO Common Stock multiplied by the Exchange Ratio, (ii)
the option exercise price per share of HUBCO Common Stock will be the previous
option exercise price per share of the DFC Common Stock divided by the Exchange
Ratio, and (iii) in all other material respects the option will be subject to
the same terms and conditions as governed the DFC Option on which it was based,
including the length of time within which the option may be exercised (which
will not be extended except that the holder of a Continuing Stock Option who
continues in the service of HUBCO or a subsidiary of HUBCO will not be deemed to
have terminated service for purposes of determining the Continuing Stock Option
exercise period). If a Stock Option Grant Agreement also provided for a Stock
Appreciation Right, the Stock Appreciation Right will also continue (subject to
the same adjustments as are provided for Continuing Stock Options). Shares of
HUBCO Common Stock issuable upon exercise of Continuing Stock Options will be
covered by a registration statement on Form S-8, which HUBCO has agreed to use
reasonable best efforts to file as soon as possible after the Effective Time.
All information and statements contained in, delivered with, or
incorporated by reference in this Proxy Statement-Prospectus with respect to DFC
were supplied by DFC, and all information and statements contained or
incorporated by reference herein with respect to HUBCO were supplied by HUBCO.
CERTAIN INFORMATION REGARDING HUBCO
General
HUBCO is a New Jersey corporation and registered bank holding company
whose principal operating subsidiaries are Hudson United Bank ("HUB"), a New
Jersey-chartered commercial bank, Lafayette American Bank ("Lafayette"), a
Connecticut-chartered commercial bank, and Bank of the Hudson ("BTH"), a
federally chartered savings bank. HUBCO's corporate headquarters is located at
1000 MacArthur Boulevard, Mahwah, New Jersey 07430 and its telephone number is
(201) 236-2600. HUB's corporate headquarters is located at 3100 Bergenline
Avenue, Union City, New Jersey 07084. Lafayette's corporate headquarters is
located at 1000 Lafayette Boulevard, Bridgeport, Connecticut 06604. BTH's
corporate headquarters is located at 249 Main Mall, Poughkeepsie, New York
12601.
HUB is a full-service commercial bank which primarily serves small and
mid-sized businesses and consumers through 61 branches in Northern New Jersey.
Lafayette is a full-service commercial bank which serves small-to-medium-sized
business firms as well as individuals through 30 banking offices located mainly
in Fairfield and New Haven counties in Connecticut. BTH, which was recently
acquired by HUBCO, is a community savings bank serving the Mid-Hudson Valley
area of New York through 16 branches in Dutchess, Orange and Rockland Counties,
as well as six residential loan origination offices in five New York counties
and New Jersey. BTH is currently a federally-chartered savings bank and HUBCO
anticipates converting BTH into a New York state-chartered commercial bank at
some point in the future. As of March 31, 1998 (prior to its New York State
acquisitions), HUBCO had consolidated assets of $3.05 billion, consolidated
deposits of $2.45 billion and consolidated stockholders' equity of $200.3
million. Based on assets as of March 31, 1998, HUBCO was the fourth largest
commercial banking company headquartered in New Jersey.
As of the date of this Proxy Statement - Prospectus, in addition to the
Merger, HUBCO has pending the acquisitions of IBS Financial Corp., ("IBSF") and
Community Financial Holding Corporation ("CFHC"). as well as the purchase of 23
branches of First Union National Bank located in New Jersey, New York and
Connecticut with deposits of $330 million, in the aggregate (the "Branch
Purchase"). IBSF is the parent corporation of Inter-Boro Savings and Loan
Association, a bank headquartered in Cherry Hill, New Jersey which had nine
branches and $752.1 million assets as of March 31, 1998. CFHC is the parent
corporation of Community National Bank of New Jersey ("CNB"), a bank
headquartered in Westmont, New Jersey which had eight branches and $159.4
million in assets as of March 31, 1998.
HUBCO's strategy is to enhance profitability and build market share
through both internal growth and acquisitions. Assuming consummation of all
acquisitions pending as of the date of this Proxy Statement, HUBCO will have
completed over 25 acquisitions and will have added over 140 branches and over $6
billion in assets through acquisitions since 1990. HUBCO expects to continue its
acquisition strategy. HUBCO is continually evaluating acquisition opportunities
and frequently conducts discussions, certain financial analyses and diligence
activities in connection with possible acquisitions. As a result, acquisition
discussions and, in some cases, negotiations frequently take place and future
acquisitions involving cash, debt or equity securities can be expected.
Acquisitions typically involve the payment of a premium over book and market
values, and therefore some dilution of HUBCO's book value and net income per
common share may occur in connection with any future transactions. From time to
time, HUBCO may issue new equity or debt securities to fund its acquisition
plans or for other purposes. For additional information, see "AVAILABLE
INFORMATION"; "INFORMATION INCORPORATED BY REFERENCE" and "PRO FORMA FINANCIAL
INFORMATION".
<PAGE>
Recent Developments
IBS Financial Corp.
On March 31, 1998, HUBCO, HUB, IBS Financial Corp. ("IBSF") and IBSF's
wholly-owned subsidiary, Inter-Boro Savings and Loan Association
("Association"), signed a definitive merger agreement to merge IBSF into HUBCO
and Association into HUB. In the IBSF Merger, each share of IBSF Common Stock
will be exchanged for a fixed number of shares of HUBCO Common Stock at an
exchange ratio of 0.534 shares of HUBCO Common Stock. IBSF has certain rights to
terminate the merger agreement if HUBCO's share price should decrease more than
15% between the day after the announcement and a pre-closing determination date,
and also decrease 10% more than a specified index, unless HUBCO agrees to
increase the consideration to be received by the holders of IBSF Common Stock.
IBSF is a savings and loan holding company headquartered in Cherry Hill, New
Jersey. At March 31, 1998, IBSF had $734 million in assets. The IBSF Merger is
expected to close in the third quarter of 1998 and to be accounted for under the
pooling of interests method of accounting.
Community Financial Holding Corporation
On March 3, 1998, HUBCO, HUB, Community Financial Holding Company
("CFHC") and CFHC's wholly-owned subsidiary, Community National Bank of New
Jersey ("CNB"), signed a definitive merger agreement to merge CFHC into HUBCO
and CNB into HUB. Pursuant to the merger agreement, each share of CFHC common
stock will be exchanged for 0.695 shares of HUBCO Common Stock, so long as the
median closing price for HUBCO Common Stock during a pre-closing period is not
below $29.00. CFHC has certain rights to terminate the merger agreement if the
median closing price of HUBCO Common Stock during such period is below $29.00,
unless HUBCO agrees to increase the exchange ratio to provide the value which
would have been received based on a $29.00 price for HUBCO Common Stock. CFHC is
a commercial bank holding company headquartered in Westmont, New Jersey. At
March 31, 1998, CFHC had $150 million in assets. The CFHC Merger is expected to
close in the second quarter of 1998 and to be accounted for under the pooling of
interests method of accounting.
Poughkeepsie Financial Corp.
On April 24, 1998, HUBCO completed its acquisition of PFC and BTH by
merging PFC into HUBCO. As a result, BTH became HUBCO's New York-based bank
subsidiary. In the merger, each share of PFC common stock was converted into
0.300 shares of HUBCO Common Stock. As of March 31, 1998, PFC had $848.8 million
in assets. The PFC acquisition was treated as a pooling of interests for
accounting purposes.
MSB Bancorp, Inc.
On May 29, 1998, HUBCO completed its acquisition of MSB and MSB Bank by
merging MSB into HUBCO (the "MSB Merger") and MSB Bank into BTH. In the MSB
Merger, each share of MSB Common Stock was converted into 1.0209 shares of HUBCO
Common Stock. At March 31, 1998, MSB had $753.7 million in assets. The MSB
Merger was treated as a pooling of interests for accounting purposes.
Purchase of 23 branches from First Union National Bank
On March 2, 1998, HUBCO signed a definitive agreement to purchase 23
branches of First Union National Bank located in New Jersey, New York and
Connecticut with deposits of $330 million, in the aggregate at March 31, 1998.
The purchase is expected to close in the second quarter of 1998.
Security National Bank & Trust Company of New Jersey
On February 5, 1998, HUBCO completed its acquisition of Security
National Bank & Trust Company of New Jersey ("SNB"), an $86 million asset bank
and trust company headquartered in Newark, New Jersey, by merging SNB into HUB.
In the merger, shareholders of SNB received $34.00 in cash for each share of SNB
Common Stock. Simultaneously with the merger of SNB into HUB, HUBCO acquired
Fiduciary Investment Company of New Jersey, a closely held corporation which
owned approximately 79.6% of the outstanding shares of SNB.
The Bank of Southington
On January 8, 1998 HUBCO completed its acquisition of The Bank of
Southington, a state bank and trust company organized under Connecticut law and
headquartered in Southington, Connecticut ("TBOS"), by merging TBOS into
Lafayette. In the merger, each share of TBOS common stock was converted into
.618 shares of HUBCO Common Stock. TBOS had $135 million in assets as of
September 30, 1997. The TBOS acquisition was treated as a pooling of interests
for accounting purposes.
CERTAIN INFORMATION REGARDING DFC
DFC is a Connecticut corporation and registered bank holding company.
DFC's wholly-owned subsidiary, DIME, is a Connecticut-chartered savings bank.
The principal executive offices of DFC and DIME are located at 95 Barnes Road,
Wallingford, Connecticut 06492 and their telephone number is (203) 269-8881.
DIME is a full-service savings bank which serves individual and
business customers through 11 branches located in New Haven County, Connecticut.
As of March 31, 1998, DFC had consolidated assets of $1.0 billion, consolidated
deposits of $853.3 million and consolidated stockholders' equity of $82.4
million. Based on assets as of March 31, 1998, DIME was the tenth largest bank
headquartered in Connecticut. For additional information, see "AVAILABLE
INFORMATION"; "SELECTED CONSOLIDATED FINANCIAL DATA OF DFC" and "PRO FORMA
FINANCIAL INFORMATION" and the DFC documents incorporated by reference herein as
described under "INFORMATION INCORPORATED BY REFERENCE".
THE MEETING
Purpose of the Meeting
The Meeting will be held on [Day of Week], [Date], 1998 at [Time], at
[Location]. At the Meeting, the holders of DFC Common Stock will consider and
vote on the approval and adoption of the Merger Agreement and the transactions
contemplated thereby, and any other matters as may properly be brought before
the Meeting and at any adjournments or postponements thereof. This Proxy
Statement is first being mailed to the holders of DFC Common Stock on or about
__________, 1998 and is accompanied by a proxy card furnished in connection with
the solicitation of proxies by the DFC Board of Directors for use at the
Meeting.
The Board of Directors of DFC has unanimously approved the Merger
Agreement and recommends a vote "FOR" approval and adoption of the Merger
Agreement.
Record Date; Voting Rights; Proxies
The Board of Directors of DFC has fixed the close of business on
________, 1998 as the record date for determining the holders of DFC Common
Stock entitled to receive notice of and to vote at the Meeting (the "Record
Date"). Only holders of record of DFC Common Stock at the close of business on
that date will be entitled to vote at the Meeting or at any adjournment or
postponement thereof.
At the close of business on the Record Date, there were _________
shares of DFC Common Stock issued and outstanding and entitled to vote at the
Meeting. Each share of DFC Common Stock will be entitled to one vote upon each
matter properly submitted at the Meeting or at any adjournment or postponement
thereof.
All properly executed proxies will, unless such proxies have been
previously revoked, be voted in accordance with the instructions indicated on
such proxies. If no instructions are indicated thereon, such shares will be
voted "FOR" approval and adoption of the Merger Agreement and the transactions
contemplated thereby. The Board of Directors of DFC is not aware of any matters
other than as described in the Notice of Special Meeting that are to come before
the Meeting. If any other matter or matters are properly presented for action
before the Meeting, the persons named in the enclosed form of proxy will have
discretion to vote on such matters in accordance with their best judgment,
unless such authorization is withheld.
A proxy may be revoked at any time prior to its exercise by (i) the
filing of a written notice of revocation with the Corporate Secretary of DFC,
Eleanor M. Tolla, Dime Financial Corporation, 95 Barnes Road, Wallingford,
Connecticut 06492; (ii) delivering to DFC a duly executed proxy bearing a later
date, or (iii) attending the Meeting and voting in person. However, shareholders
whose shares are not registered in their own names will need appropriate
documentation from the holder of record of their shares to vote personally at
the Meeting.
Votes cast by proxy or in person at the Meeting will be tabulated by
the election inspectors appointed for the Meeting, who will determine whether or
not a quorum is present.
DFC SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS. IF THE MERGER IS CONSUMMATED, STOCK CERTIFICATES SHOULD BE
DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF TRANSMITTAL
WHICH WILL BE SENT TO DFC SHAREHOLDERS BY THE EXCHANGE AGENT PROMPTLY AFTER THE
EFFECTIVE TIME.
Solicitation of Proxies
In addition to using the mails, the directors, officers and employees
of DFC may solicit proxies for the Meeting from shareholders personally, by
telephone or by facsimile. These officers, directors and employees will not be
specifically compensated for their services. DFC has retained Regan and
Associates, Inc., a proxy soliciting firm ("Regan"), to assist in the
solicitation of proxies at a fee of $4,500, plus reimbursement of certain
out-of-pocket expenses estimated to be approximately $2,250. DFC will also make
arrangements with brokerage firms and other custodians, nominees and fiduciaries
to send proxy materials to their principals and will reimburse such parties for
their expenses in doing so. The cost of soliciting proxies for the Meeting,
including the fees and expenses of Regan, will be borne by DFC.
Quorum
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of DFC Common Stock entitled to vote is
necessary to constitute a quorum at the Meeting.
Required Vote
Each share of DFC Common Stock will be entitled to one vote upon each
matter properly submitted at the Meeting or at any adjournment or postponement
thereof.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS OF THE
ISSUED AND THE OUTSTANDING SHARES OF DFC COMMON STOCK ENTITLED TO VOTE AT THE
MEETING IS REQUIRED IN ORDER TO APPROVE AND ADOPT THE MERGER AGREEMENT. BECAUSE
THE REQUIRED VOTE OF DFC SHAREHOLDERS ON THE MERGER AGREEMENT IS BASED UPON THE
TOTAL NUMBER OF OUTSTANDING SHARES OF DFC COMMON STOCK ENTITLED TO VOTE AND NOT
UPON THE NUMBER OF SHARES THAT ARE ACTUALLY VOTED, A FAILURE TO RETURN A
PROPERLY EXECUTED PROXY CARD OR TO VOTE IN PERSON, OR ABSTAINING FROM VOTING,
WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT. BROKER
NON-VOTES WILL NOT BE COUNTED AS HAVING BEEN VOTED IN PERSON OR BY PROXY AT THE
MEETING AND WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT.
Record holders of DFC Common Stock at the close of business on
___________, 1998 (the "Record Date") are entitled to vote at the Meeting. As of
the Record Date, there were _________ outstanding shares of DFC Common Stock
held by approximately ___ holders of record. The directors of DFC as a group
have voting control over _______ of these shares (____%) and have agreed to vote
them in favor of the Merger Agreement. No consideration was paid to any of the
directors for this agreement. HUBCO requested that the directors enter into this
agreement in connection with HUBCO entering into the Merger Agreement. In
addition, HUBCO has voting control over ____ shares of DFC Common Stock (___%)
and the non-director executive officers of DFC as a group have voting control
over ____ shares of DFC Common Stock (___%), all of which shares DFC expects
will be voted in favor of the Merger Agreement.
The obligations of DFC and HUBCO to consummate the Merger are subject,
among other things, to the condition that the Merger Agreement and the
transactions contemplated thereby be approved by the requisite vote of the
shareholders of DFC. See "THE PROPOSED MERGER -- Conditions to the Merger."
THE MATTERS TO BE CONSIDERED AT THE MEETING ARE OF GREAT IMPORTANCE TO
THE SHAREHOLDERS OF DFC. ACCORDINGLY, SHAREHOLDERS ARE URGED TO READ AND
CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY STATEMENT, AND TO
COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
THE PROPOSED MERGER
A copy of the Merger Agreement is attached as Appendix A to this Proxy
Statement and is incorporated by reference herein. Descriptions of the Merger
and the Merger Agreement are qualified in their entirety by reference to the
Merger Agreement.
General Description; The Bank Merger
The Merger Agreement provides that, at the Effective Time, DFC will be
merged with and into HUBCO, with HUBCO as the surviving entity (the "Surviving
Entity"). The separate identity and existence of DFC will cease upon
consummation of the Merger, and all property, rights, powers, liabilities and
franchises of DFC will vest in the Surviving Entity. Immediately following the
Effective Time, DIME will be merged with and into Lafayette (the "Bank Merger"),
with Lafayette as the surviving bank (the "Surviving Bank").
Closing Date; Effective Time
A closing under the Merger Agreement (the "Closing") will occur on a
date (the "Closing Date") to be determined by HUBCO and set forth in a notice
(the "Closing Notice") to DFC. The Closing Date specified by HUBCO must be at
least five business days after the date of the Closing Notice, but no less than
seven and no more than ten business days after the satisfaction or waiver of the
conditions to consummation of the Merger (other than the delivery of documents
to be delivered at the Closing). The Closing may also be set for another day
mutually agreed to by HUBCO and DFC. HUBCO and DFC currently anticipate closing
in the third quarter of 1998. Simultaneous with or immediately following the
Closing, HUBCO and DFC will file Certificates of Merger with the Secretary of
State of the State of New Jersey and the Secretary of State of the State of
Connecticut. The Merger will become effective at a date and time following the
Closing which HUBCO and DFC will specify in the Certificates of Merger (the
"Effective Time"). If no Effective Time is specified in the Certificates of
Merger, the Effective Time will be the time at which the later of the New Jersey
Certificate of Merger or the Connecticut Certificate of Merger is filed. HUBCO
and DFC currently anticipate that the Effective Time will be the close of
business on the Closing Date. The exact Closing Date and Effective Time are
dependent upon satisfaction of all conditions precedent, some of which are not
under the control of HUBCO or DFC.
Consideration; Median Pre-Closing Price; Determination Date
At the Effective Time, each outstanding share of DFC Common Stock
(except for Excluded Shares) will be converted into the right to receive a
number of shares (the "Exchange Ratio") of HUBCO Common Stock. The Exchange
Ratio will be determined by dividing $38.25 by the Median Pre-Closing Price of
HUBCO Common Stock, and rounding to the nearest thousandth. However, a "Maximum
Exchange Ratio" of 1.05 will apply if the Exchange Ratio as so determined would
exceed 1.05, and a "Minimum Exchange Ratio" of 0.93 will apply if the Exchange
Ratio as so determined would be less than 0.93. In lieu of issuing fractional
shares of HUBCO Common Stock, HUBCO will pay cash equal to the fractional share
interest multiplied by the Median Pre-Closing Price of HUBCO Common Stock.
The "Median Pre-Closing Price" of HUBCO Common Stock will be determined
by taking the price half-way between the closing prices of HUBCO Common Stock as
published in The Wall Street Journal left after discarding the four lowest and
four highest closing prices in the ten consecutive trading day period which ends
on (and includes) the Determination Date. The "Determination Date" is defined in
the Merger Agreement as the day the parties receive final bank regulatory
approval for the Merger and one notifies the other that such approval has been
received.
The Exchange Ratio is subject to adjustment to take into account any
stock split, stock dividend, reclassification, recapitalization, merger,
combination or exchange or similar transaction by HUBCO with respect to the
HUBCO Common Stock occurring subsequent to March 31, 1998. The Exchange Ratio
may also be subject to adjustment in connection with provisions relating to the
termination of the Merger Agreement described in the following paragraph.
The Merger Agreement may be terminated by DFC if the Median Pre-Closing
Price is less than $31.43, which, given the 1.05 Maximum Exchange Ratio, would
result in shares of DFC Common Stock being exchanged for HUBCO Common Stock with
a value (based on the Median Pre-Closing Price) of less than $33.00 (i.e.,
$31.43 multiplied by the 1.05 Maximum Exchange Ratio). DFC is obligated to
provide notice of such termination to HUBCO, which may then elect, at its sole
option, to increase the Exchange Ratio to $33.00 divided by the Median
Pre-Closing Price of HUBCO Common Stock. If HUBCO so elects and increases the
Exchange Ratio, the Merger Agreement will not be terminated. There can be no
assurance that DFC will exercise its right to terminate the Merger Agreement if
the conditions described above exist (a "Termination Event"), and if DFC does
exercise its right to terminate the Merger Agreement, there can be no assurance
that HUBCO will elect to increase the Exchange Ratio as provided in the Merger
Agreement and as described above.
The effects of the above provisions on the Exchange Ratio may be
illustrated as follows:
<TABLE>
<CAPTION>
Median Pre-Closing Price of HUBCO
Common Stock as of the Determination Date Exchange Ratio
<S> <C>
Greater than $41.13...................................... 0.93
Between $41.13 and $36.43................................ $38.25 / the Median Pre-Closing Price
Less than $36.43 and greater than or equal to $31.43..... 1.05
Less than $31.43......................................... 1.05; provided, that DFC will have the right to
terminate the Merger Agreement and HUBCO will
have the right to nullify that termination by
agreeing to an Exchange Ratio of $33.00/the
Median Pre-Closing Price.
</TABLE>
For illustrative purposes, if, hypothetically, the Median Pre-Closing
Price of HUBCO Common Stock were $37.00, the Exchange Ratio would be 1.034
($38.25 / 37.00, rounded to the nearest thousandth), and the holder of 100
shares of DFC Common Stock would receive 103 whole shares of HUBCO Common Stock
and a cash payment of $14.80 (0.4 x $37.00) in respect of the fractional share.
The calculation of the Exchange Ratio called for by the Merger
Agreement was intended by HUBCO and DFC to result in shareholders of DFC
receiving HUBCO Common Stock with a value of $38.25 for each share of DFC Common
Stock, provided that the Median Pre-Closing Price of HUBCO Common Stock is
between $36.43 and $41.13. However, there can be no assurance that the Median
Pre-Closing Price will fall between $36.43 and $41.13 or, even if it does, that
the number of shares of HUBCO Common Stock issued in exchange per share of DFC
Common Stock in the Merger will have a value of $38.25 on the Effective Time or
on the day when certificates representing such shares of HUBCO Common Stock are
issued or delivered to DFC stockholders.
As described above, the Median Pre-Closing Price will be determined by
taking the price half-way between the closing prices of HUBCO Common Stock left
after discarding the 4 lowest and 4 highest closing prices in the 10 consecutive
trading day period which ends on (and includes) the Determination Date. The
price of HUBCO Common Stock at the Effective Time may be higher or lower than
the Median Pre-Closing Price, and may be higher or lower than the market price
at the time of entering into the Merger Agreement, the time of mailing this
Proxy Statement, the time of the Meeting or the time certificates representing
shares of HUBCO Common Stock are delivered in exchange for shares of DFC Common
Stock following consummation of the Merger. Thus, the value of the HUBCO Common
Stock actually received by holders of DFC Common Stock may be more or less than
(i) the Median Pre-Closing Price of HUBCO Common Stock or (ii) the value of the
HUBCO Common Stock at the Effective Time. DFC SHAREHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR HUBCO COMMON STOCK AND DFC COMMON STOCK.
It is not possible to know whether a Termination Event will occur until
after the Determination Date. DFC has made no decision as to whether it would
exercise its right to terminate the Merger Agreement if there is a Termination
Event. In considering whether to exercise its termination right in such
situation, the DFC Board of Directors would, consistent with its fiduciary
duties, take into account all relevant facts and circumstances that exist at
such time and would consult with its financial advisors and legal counsel.
Approval of the Merger Agreement by the shareholders of DFC at the Meeting will
confer on the DFC Board of Directors the power, consistent with its fiduciary
duties, to elect to consummate the Merger following a Termination Event whether
or not there is any increase in the Exchange Ratio and without any further
action by, or resolicitation of, the shareholders of DFC. If DFC elects to
exercise its termination right, DFC must give HUBCO prompt notice of that
decision by 11:59 p.m. on the third business day following the Determination
Date. During a three business-day period commencing with its receipt of such
notice from the DFC Board of Directors, HUBCO has the option, in its sole
discretion, to increase the Exchange Ratio in the manner set forth in the Merger
Agreement and as illustrated above and thereby avoid termination of the Merger
Agreement. HUBCO is under no obligation to increase the Exchange Ratio, and
there can be no assurance that HUBCO would elect to increase the Exchange Ratio
if DFC were to exercise its right to terminate the Merger Agreement as set forth
above. Any decision would be made by HUBCO in light of the circumstances
existing at the time HUBCO has the opportunity to make the election. If HUBCO
elects to increase the Exchange Ratio as set forth in the Merger Agreement and
as illustrated above, it must give DFC notice of that election by 11:59 p.m. on
the third business day following receipt of the notice of termination from DFC,
in which case no termination of the Merger Agreement would occur as a result of
a Termination Event.
The foregoing discussion is qualified in its entirety by reference to
the applicable provisions in the Merger Agreement (a copy of which is set forth
as Appendix A to this Proxy Statement) relating to a possible increase of the
Exchange Ratio as the result of a Termination Event.
Conversion of DFC Options
DFC has outstanding a number of options to purchase shares of DFC
Common Stock ("DFC Options") which were granted to optionees ("Optionees")
pursuant to the 1986 Stock Option and Incentive Plan, the City Savings Bank of
Meriden Stock Option Plan, the 1986 Stock Option Plan for Outside Directors,
Non-Qualified Stock Option Agreements, as amended, for William J. Farrell and M.
Joseph Canavan, the 1996 Stock Option and Incentive Plan, the Chairman's 1996
Non-Qualified Stock Option Agreement, and the 1996 Stock Option Plan for Outside
Directors (the "DFC Stock Option Plans") and the option grant agreements
thereunder (the "Option Grant Agreements"). Pursuant to the Merger Agreement,
HUBCO has agreed to honor the provisions of the DFC Stock Option Plan and the
Option Grant Agreements, including those relating to vesting and conversion in
connection with a change in control of DFC. By virtue of the Merger, all DFC
Options will be vested on the Closing Date. Pursuant to the Merger Agreement,
each DFC Option outstanding at the Effective Time (each a "Continuing Stock
Option") will be converted into an option to purchase HUBCO Common Stock,
wherein (i) the right to purchase shares of DFC Common Stock pursuant to the
Continuing Stock Option will be converted into the right to purchase that same
number of shares of HUBCO Common Stock multiplied by the Exchange Ratio, (ii)
the option exercise price per share of HUBCO Common Stock will be the previous
option exercise price per share of the DFC Common Stock divided by the Exchange
Ratio, and (iii) in all other material respects the option will be subject to
the same terms and conditions as governed the DFC Option on which it was based,
including the length of time within which the option may be exercised (which
will not be extended except that the holder of a Continuing Stock Option who
continues in the service of HUBCO or a subsidiary of HUBCO will not be deemed to
have terminated service for purposes of determining the Continuing Stock Option
exercise period). If a Stock Option Grant Agreement also provided for a Stock
Appreciation Right, the Stock Appreciation Right will also continue (subject to
the same adjustments as are provided for Continuing Stock Options). Shares of
HUBCO Common Stock issuable upon exercise of Continuing Stock Options will be
covered by a registration statement on Form S-8, which HUBCO has agreed to use
reasonable best efforts to file as soon as possible after the Effective Time.
Cash in Lieu of Fractional Shares
No fractional shares of HUBCO Common Stock will be issued in exchange
for any DFC Common Stock. Instead, holders of such DFC Common Stock will receive
cash equal to the fractional share interest multiplied by the Median Pre-Closing
Price of HUBCO Common Stock, without interest. All shares of HUBCO Common Stock
to be issued to each holder of DFC Common Stock will be aggregated to constitute
as many whole shares as possible before determining such person's fractional
share interest.
Stock Option to HUBCO for DFC Shares
HUBCO and DFC entered into a Stock Option Agreement dated as of March
31, 1998 (the "Stock Option Agreement") in connection with the negotiation by
HUBCO and DFC of the Merger Agreement. A copy of the Stock Option Agreement is
attached as Appendix B to this Proxy Statement and is incorporated by reference
herein. The following description of the Stock Option Agreement is qualified in
its entirety by reference to the Stock Option Agreement. Pursuant to the Stock
Option Agreement, DFC has granted to HUBCO an option (the "Option"), exercisable
only under certain limited and specifically defined circumstances (none of which
has occurred as of the date hereof), to purchase up to 1,040,000 authorized but
unissued shares of DFC Common Stock, representing upon issuance approximately
[19.9%] of the outstanding shares of DFC Common Stock, for an exercise price of
$30.25 per share. HUBCO does not have any voting rights with respect to the
shares of DFC Common Stock subject to the Option prior to exercise of the
Option. Acquisitions of DFC Common Stock pursuant to exercise of the option
would be subject to prior regulatory approval under certain circumstances.
If certain specifically enumerated "Triggering Events" occur and the
Merger is not consummated, HUBCO would recognize a gain on the sale of the
shares of DFC Common Stock received pursuant to the exercise of the Option if
such shares of DFC Common Stock were sold at prices exceeding $30.25 per share.
The ability of HUBCO to exercise the Option and to cause up to an additional
1,040,000 shares of DFC Common Stock to be issued may be considered a deterrent
to other potential acquisitions of control of DFC, even if the potential
acquiror were prepared to pay a higher price per share for DFC Common Stock, as
it is likely to increase the cost of an acquisition of all of the shares of DFC
Common Stock which would then be outstanding. The exercise of the option by
HUBCO may also make pooling-of-interests accounting treatment unavailable to a
subsequent acquiror.
The Option is exercisable only upon the occurrence of a Triggering
Event. As used in the Stock Option Agreement, the term "Triggering Event" means
a person or group (as such terms are defined in the Exchange Act and the rules
and regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such term is defined in Exchange
Act Rule 13d-3) of a least 20% of the then outstanding shares of
DFC Common Stock; or
b. enters into a letter of intent or an agreement, whether oral or
written, with DFC pursuant to which such person or any affiliate of
such person would (i) merge or consolidate, or enter into any
similar transaction, with DFC, (ii) acquire all or a significant
portion of the assets or liabilities of DFC, or (iii) acquire
beneficial ownership of securities representing, or the right to
acquire beneficial ownership or to vote securities representing,
20% or more of the then outstanding shares of DFC Common Stock; or
c. makes a filing with any bank or thrift regulatory authorities or
publicly announces a bona fide proposal (a "Proposal") for (i) any
merger with, consolidation with or acquisition of all or a
significant portion of all of the assets or liabilities of, DFC or
any other business combination involving DFC, or (ii) a transaction
involving the transfer of beneficial ownership of securities
representing, or the right to acquire beneficial ownership of or to
vote securities representing, 20% or more of the outstanding shares
of DFC Common Stock, and thereafter, such Proposal has not been
Publicly Withdrawn (as such term is --- defined in the Stock Option
Agreement) at least 15 days prior to the meeting of shareholders of
DFC called to vote on the Merger and DFC's shareholders fail to
approve the Merger by the vote required by applicable law at the
meeting of --- shareholders called for such purpose; or
d. makes a bona fide Proposal and thereafter, but before such Proposal
has been Publicly Withdrawn, DFC willfully takes any action in any
manner which would materially interfere with its ability to
consummate the Merger or materially reduce the value of the Merger
to HUBCO.
The term "Triggering Event" also means the taking of any material
direct or indirect action by DFC or any of its directors, senior executive
officers, investment bankers or other person with actual or apparent authority
to speak for the DFC Board of Directors, inviting, encouraging or soliciting any
proposal which has as its purpose a tender offer for the shares of DFC Common
Stock, a merger, consolidation, plan of exchange, plan of acquisition or
reorganization of DFC, or a sale by DFC of a significant number of shares of DFC
Common Stock or any significant portion of its assets or liabilities.
The Stock Option Agreement will terminate upon either the termination
of the Merger Agreement as provided therein or the consummation of the
transactions contemplated by the Merger Agreement; provided, however, that if
termination of the Merger Agreement occurs after the occurrence of a Triggering
Event, the Stock Option Agreement will not terminate until the later of 18
months following the date of the termination of the Merger Agreement or the
consummation of any proposed transactions which constitute the Triggering Event.
Background of the Merger
The unanimous decision of the DFC Board of Directors (the "Board") to
approve the Merger Agreement and to recommend approval thereof by the DFC
shareholders is the result of a process undertaken by the Board over a period of
approximately two years, with the assistance of management and outside advisors,
to define, assess and implement a strategic plan that is in the best interests
of DFC and its shareholders, and that gives full and fair consideration to the
interests of employees, customers and the community DFC has served.
Following the return to profitability achieved by DFC in 1994 and the
corporate restructuring initiatives implemented by DFC in 1995, management, at
the direction of the Board, undertook in the second quarter of 1996 to formulate
a three-year strategic plan (the "Strategic Plan") designed, among other things,
to identify and prioritize appropriate short- and mid-term corporate goals and
to commence a process of assessing the intrinsic value of DFC to guide the Board
in setting the long-term future direction for DFC.
At a special meeting of the Board held on June 11, 1996 in connection
with the development of a Strategic Plan, the Board discussed in general terms
the future direction of DFC and the need for full education of Board members
concerning market conditions, industry trends and other factors affecting the
subject of strategic alternatives. These discussions led to management inviting
representatives of three investment banking firms with expertise in the banking
industry to make separate preliminary presentations to the Board concerning
these subjects at subsequent meetings of the Board on September 11 and 18, and
October 16, 1996. The last of these presentations was made pursuant to a
specific engagement, the scope of which was limited to a report and analysis of
the various strategic alternatives the Board might pursue.
At the meeting of the Board held on September 18, 1996, the Board voted
unanimously to approve the Strategic Plan. At each of the foregoing three
meetings, the Directors also discussed with management external growth
opportunities that might be effected through possible acquisitions of other
banks by DFC. At the conclusion of the October 16 meeting, the Directors
expressed concern whether potential targets for DFC to acquire could be readily
identified that would contribute positively to DFC's earnings and to shareholder
value.
The Board continued its consideration and discussion of strategic
alternatives at a special meeting held on November 19, 1996 and during a regular
meeting held on November 20, 1996. At the November 20 meeting, DFC's legal
counsel, Day, Berry & Howard LLP, addressed the Directors with respect to their
legal duties in connection with their consideration of DFC's strategic
alternatives. At a meeting held on December 18, 1996, a second report was
received from the investment banking firm that had addressed the Board on
October 16. Among other issues discussed at this meeting, the Directors debated
(1) whether an investment banking firm should be retained to assist DFC in
connection with a possible sale of DFC or a merger with a larger institution,
(2) the merits of refraining from any such activity in the absence of any active
solicitation of DFC from a larger institution, and (3) the merits of pursuit of
continued independence focusing upon internal growth. The Directors adjourned
the December 18 meeting without having reached a resolution of the issues
discussed, but agreeing to continue their analysis and discussion at a special
meeting to be held on January 15, 1997.
At the special meeting of the Board held on January 15, 1997, the
Directors discussed extensively the alternatives of remaining independent and of
seeking a structured combination with another party, but again did not reach a
consensus view. Upon conclusion of the discussion, a motion was made and
seconded that DFC pursue a strategy of remaining independent and that no express
action be undertaken to seek any form of merger or business combination at that
time. Although several Directors disagreed with the motion, after further
discussion, the motion was approved unanimously by the Directors present.
After the January 15, 1997 meeting, management and the Board focused
their attention on implementation of the Strategic Plan and continuing to pursue
possible acquisition opportunities for DFC. At a regular meeting of the Board
held on March 19, 1997, the Board received a report from management in
connection with its ongoing efforts to identify appropriate acquisition
candidates for DFC. Although management presented an analysis of potential
acquisition targets at that time, DFC did not engage in sustained discussions
with any such target.
The issue of DFC being sold to another bank was not raised again with
the Board until the meetings of the Board held on May 21 and 28, 1997. At the
May 21 meeting, Mr. Dionne reported that he had received two telephone calls on
May 16 and May 19 from a representative of a significant shareholder of DFC
stating that there were three institutions interested in acquiring DFC and that
an offer from at least one of these institutions was imminent. At the May 28
meeting, management reported that on May 22, 1997, DFC's Chief Financial Officer
received a telephone call from the Chief Financial Officer of another banking
institution stating that that institution had an interest in DFC, including the
possibility of an acquisition in the future, but suggesting that no such action
was imminent. At that meeting, counsel addressed the Directors on their
continuing duties under applicable law, including with regard to receipt of
unsolicited acquisition proposals or expressions of interest. The Directors then
discussed the advisability of DFC retaining an investment banking firm to advise
DFC. Following discussion, the Board unanimously approved a motion that the
Board's Planning Committee, together with Mr. Dionne and Mr. Fiacre, interview a
number of investment banking firms and present a recommendation to the Board for
its consideration.
The Planning Committee interviewed representatives of three investment
banking firms at successive meetings on June 9, 12 and 17, 1997. At the
conclusion of the June 17 meeting, the committee unanimously agreed to recommend
that DFC retain an investment banking firm, and a majority of the committee
members voted to recommend that First Albany be the investment banking firm
retained. The Planning Committee's recommendation was approved by the Board at
the regular meeting on June 18, 1997. During the meeting, Mr. Dionne informed
the Directors that he had received an unsolicited telephone call from another
institution expressing an interest in a strategic alliance with DFC.
An engagement letter between DFC and First Albany dated as of June 30,
1997 was approved by the Board during a regular meeting of the Directors held on
July 16, 1997 and was thereafter executed.
A special meeting of the Board was held on September 15, 1997. Chairman
Lukens reported at that time that DFC had received additional unsolicited verbal
expressions of interest from two more potential acquirers (one of which was
HUBCO) since the last Board meeting. Representatives of First Albany discussed
each of these two proposals, and the subject of strategic alternatives
generally, with the Directors. Once again, the Directors engaged in a lengthy
discussion of the subject. After discussion, a motion was made and seconded that
each of the unsolicited proposals be rejected, that further discussions with
these parties be discouraged, and that the Board's earlier determination to
remain independent be communicated to the parties involved. Each Director
expressed his or her views on the motion, which was then defeated by a 7-3 vote.
The Directors agreed to continue their discussion of DFC's strategic
alternatives during the September 17, 1997 Board meeting.
On September 17, 1997, the Board reconvened and considered a motion
made by Chairman Lukens to instruct DFC's management, acting directly or through
First Albany, to seek expressions of interest from various third parties with
respect to a possible acquisition of or merger with DFC. During discussion of
the motion, it was noted that adoption of the resolution would in no way
preclude a subsequent decision by the Board to remain independent. After full
discussion, the resolution was approved by a 6-3 vote.
After the September 17 meeting, First Albany contacted representatives
of ten institutions considered the most likely candidates to acquire or merge
with DFC and requested that each submit a written indication of interest on or
before September 30. While awaiting the results of these contacts, First Albany
received an unsolicited indication of interest from another institution, which
was added to the list of candidates. Overall, First Albany received six written
indications of interest in response to the request for proposals. First Albany
held subsequent discussions with the interested parties.
A special meeting of the Board was held on October 10, 1997 to receive
the report of senior management and First Albany regarding their efforts to
obtain indications of interest. Extensive discussion of the six proposals
followed. During the meeting, the Board entertained, but defeated by a 7 to 3
vote, a motion to terminate discussions with the six candidates. The Directors
then also approved, by a 7 to 3 vote, a motion instructing management, in
conjunction with its advisors, to engage in further discussions with the
candidates and to identify the one candidate and proposal that provided the most
favorable terms for a possible transaction. The motion also empowered senior
management to enter into negotiation of a definitive agreement for the Board's
consideration. DFC's legal counsel was also in attendance at this meeting, as
well as at those held on September 15 and 17, 1997.
During the ensuing month, First Albany and management conducted
extensive discussions and negotiations with three candidates, one of which had
first contacted DFC in late October, and each of which conducted a detailed due
diligence review of DFC. Limited discussions were also continued with a fourth
party, which also completed due diligence. By November 5, 1997, two of the
parties had emerged as offering the best proposals, in particular with respect
to value and price protection by use of a "collar", two factors that had been
stressed as important by DFC. Concentrated negotiations continued with these two
candidates through November 6, when final offers were submitted. After full
consideration, a decision was made by senior management to terminate further
discussions with one of the two parties and to commence negotiation of a
definitive agreement with the preferred candidate. Between November 8 and
November 11, a definitive agreement was negotiated and due diligence was
conducted by DFC.
A special meeting of the Board was held on November 12, 1997 for the
purpose of receiving and voting on management's recommendation to enter into a
merger agreement with the preferred candidate. The agreement provided for a
merger in which DFC shareholders would have received stock of the proposed
merger partner, the value of which would have been fixed at $36.00 per DFC share
within a specified "collar" above and below an agreed market price of the merger
partner's stock, and would have fluctuated up or down with the value of the
merger partner's stock outside the "collar". Among other things, DFC would have
been given the right to terminate the merger if the value to be received per
share of DFC stock fell below $33.00.
The Board of Directors reviewed with its legal and financial advisors
the terms of the proposed merger and the related documents, drafts of which had
been provided prior to the meeting. Each of the Directors then expressed his or
her views with respect to the proposed transaction. As this occurred, it became
increasingly clear that a significant division of opinion existed among the
Directors. After all discussion had been concluded, the Directors voted on a
motion to approve the merger. The vote was five votes in favor and five votes
against. The motion failed to pass for lack of a majority in favor.
Following the November 12 vote, DFC received a written request from the
CEO of the party that had been the prospective merger partner to meet with the
Board. The Board voted to decline this request at its regular meeting held on
November 19, 1997. On December 12, 1997, DFC received a similar request in
writing from the CEO of HUBCO, which request was declined by the Board at its
regular meeting held on December 17, 1997. In each case, the Board felt that it
was too soon after the November 12 vote to reconsider the issue of sale or
merger of DFC. Thereafter, further verbal communications were received by senior
management of DFC and by DFC's financial advisor from representatives of both
institutions expressing a continuing interest in a merger with DFC.
During this time and into early 1998, DFC's senior management continued
to explore several potential opportunities for DFC to acquire other financial
institutions or branch offices. On December 17, 1997 and January 21, 1998 senior
management reported to the Board on their efforts in that regard. In February of
1998, three Directors attended a conference on bank mergers and acquisitions as
an additional means of keeping the Board informed of developments in the area
generally.
During the months of January and February, 1998, DFC, through a number
of contacts made with DFC, its financial advisor, and one of the Directors, was
made aware of the continuing interest on the part of three of the four
institutions that had conducted due diligence in October and November in the
possibility of pursuing a merger with DFC. This included both HUBCO and the
party with which a definitive agreement had been negotiated in November. These
contacts, and other factors, led several of the Directors to conclude that the
Board should again discuss the issue of whether a merger of DFC with another
institution should be pursued.
At a regular meeting of the Board on February 25, 1998, the Directors
voted unanimously to have the Chairman contact the CEOs of the three financial
institutions that had expressed continuing interest in DFC, including HUBCO, to
invite each to attend a special meeting of the Board to express separately their
interest in a transaction with DFC. That meeting was later scheduled for March
24, 1998.
The Board had a number of reasons for this decision, which included the
following: (1) the desire, based on the interest of DFC shareholders, to be
apprised on a continuing basis of the nature and magnitude of interest in a
transaction with DFC; (2) the closeness of the vote on the definitive agreement
on November 12, 1997; (3) the recognition that merger and acquisition activity
had been extensive in Connecticut for a considerable period, raising the
possibility that opportunities could at some time decline; (4) the recognition
that an objective of growth through internal means and through acquisition by
DFC could be difficult to achieve and (5) encouragement of DFC by certain
significant shareholders of DFC to pursue an appropriate merger alternative.
Following the February 25 meeting, in late February and early March,
the CEOs of each of the three parties were contacted and advised of the Board's
decision. DFC's financial advisor followed up these contacts by advising the
parties, among other things, of DFC's continuing interest in both price and
price protection. Each of HUBCO and the party with which a definitive agreement
had been negotiated in November promptly confirmed their interest in meeting
with the DFC Board, but the CEO of the latter party alerted DFC that it might
not be in a position to meet the price or price protection provisions it had
offered in November. The third party that was contacted also subsequently
accepted DFC's invitation. Each of the three parties was provided with updated
financial information concerning DFC.
On March 18, 1998, the Board approved the engagement by DFC of A. G.
Edwards & Sons, Inc. ("A. G. Edwards") as a financial advisor to DFC in
connection with a possible merger transaction. The Board also approved a
modification to First Albany's June 30, 1997 engagement letter expressly
extending the engagement of that firm to cover a possible merger transaction.
These modifications were necessitated by a decision of the two principals at
First Albany who had been involved in advising DFC to move to A. G. Edwards on
March 10, 1998. The changes were reached by mutual agreement of the two firms
with DFC to assure continuity of service to DFC at no additional cost. Under the
agreements with A. G. Edward and First Albany, it was agreed that A. G. Edwards
would render a fairness opinion in connection with any merger transaction.
Representatives of A. G. Edwards and First Albany then presented preliminary
information on each of the three potential merger partners that had been invited
to make presentations at the special meeting on March 24. DFC's legal counsel
was also represented at this meeting.
An engagement letter with A. G. Edwards dated as of March 23, 1998 and
a letter agreement with First Albany dated as of March 23, 1998 modifying the
terms of the engagement of First Albany, as approved by the Board on March 18,
was subsequently executed by the respective parties thereto.
On March 24, 1998, representatives of each of the three institutions
(including HUBCO) made separate presentations of their proposals to the DFC
Board and responded to questions. Legal counsel and DFC's financial advisors
were also in attendance. Between presentations, and following the final
presentation, the Board discussed the proposals that had been made, and received
the analysis of its financial advisors. Thereafter, the Board voted unanimously
(one Director having departed after the final presentation but prior to the
vote) to authorize a Negotiating Committee, consisting of Chairman Lukens and
Directors Canavan, Nicoletti and Valenti, together with management and DFC's
financial advisors, to negotiate exclusively with HUBCO with the objective of
reaching agreement on the terms and conditions of a definitive merger agreement
for the Board's consideration. In making this decision, the Board first
determined that the proposal made by the party with which a definitive agreement
had been negotiated in November was not competitive, the exchange ratio having
been reduced from the November offer and the collar having been eliminated.
Based on all of the information, the Board concluded that HUBCO offered the best
of the three proposals, including the best price and acceptable price protection
terms.
On March 25, 1998, Mr. Dionne and A. G. Edwards met with Mr. Neilson of
HUBCO to negotiate certain terms of the possible transaction. On March 26, 1998,
the Negotiating Committee met with DFC's legal and financial advisors and
approved the terms that had been negotiated. On March 26, 1998, work was also
commenced by HUBCO on preparation of a definitive agreement. On March 27, 1998
DFC received a letter from the party with which DFC had negotiated a definitive
agreement in November offering to increase the exchange ratio in its new
proposal to a level that would equal that which it had agreed to in November and
expressing a willingness to negotiate some form of collar. The members of the
Negotiating Committee were apprised of the receipt of this letter but agreed
that management should continue to focus exclusively on efforts to complete
negotiations with HUBCO. Negotiation of the detailed terms of a merger with
HUBCO, and of the terms and conditions of the definitive agreements, continued
through March 30, 1998, on which date final agreement as to all terms and
conditions was reached by the parties.
On March 30, 1998, the Board of Directors met with legal and financial
advisors to review the terms of the proposed transaction with HUBCO and the
related documents, drafts of which had been provided prior to the meeting. A
copy of the March 27 letter from the other party was also provided to the
Directors prior to the meeting. At the meeting, A. G. Edwards delivered its oral
opinion, which was confirmed in writing on March 30, that the consideration to
be paid to the DFC shareholders in the proposed transaction with HUBCO was fair
to the DFC shareholders from a financial point of view. After completing its
review and discussion, the Board of Directors of DFC unanimously adopted formal
resolutions approving the Merger Agreement and the Stock Option Agreement and
the Board of Directors of Dime unanimously adopted formal resolutions approving
the Merger Agreement. On March 30, 1998 DFC also approved the transaction as the
sole shareholder of Dime
The definitive agreements relating to the Merger were executed by the
parties on March 30 and on the morning of March 31, whereupon the parties issued
a public announcement concerning the transaction.
DFC Board's Reasons for the Merger and Recommendation
In determining to approve the Merger Agreement, the Bank Merger
Agreement, the Stock Option Agreement and the transactions contemplated thereby,
the DFC Board considered, among others, the following factors:
(1) The Board considered the terms of the Merger Agreement, the merger
agreement between Lafayette and DIME with respect to the Bank Merger (the "Bank
Merger Agreement"), the Stock Option Agreement and the transactions contemplated
thereby. The Board took into account the Exchange Ratio offered by HUBCO. The
Board considered the overall impact of the Exchange Ratio on the value to be
received by DFC shareholders. The Board also considered the effect of the collar
provisions. Also relevant to the Board's determination were the termination
provisions and the terms of the Stock Option Agreement. The Board considered
that DFC could terminate the Merger Agreement under certain circumstances and
that the Stock Option Agreement might discourage third parties from seeking to
acquire DFC by increasing the cost of such an acquisition.
(2) The Board considered the lengthy and thorough process that DFC had
pursued to elicit expressions of interest from a large number of potential
merger partners, the extent of due diligence and negotiation that had occurred
with a number of interested parties, and the fact that HUBCO had presented the
highest offer which, in the Board's judgment, represented the greatest value and
price protection to DFC shareholders.
(3) The Board considered the changing banking climate in Connecticut at
the time it approved the Merger Agreement with HUBCO, as compared to that in the
state when it rejected the proposed merger with another bank in November of
1997. The Board considered the diminishing opportunity to make profits on loans,
the general flattening of the market for bank stocks and the impact of lower
interest rates and tighter margins on the banking industry in general. The Board
also considered the apparent leveling off of demand for thrift acquisitions and
mergers that was occurring at the time.
(4) The Board considered the advice of its financial advisor, A.G.
Edwards, and reviewed the detailed financial analyses, pro forma results and
other information presented by A.G. Edwards. The Board considered the opinion of
A.G. Edwards (including the assumptions and financial information and
projections relied upon by it in arriving at such opinion) that, as of March 30,
1998 and based upon the matters described in its oral and written opinion as of
that date, the consideration to be received in the Merger by the DFC
Shareholders was fair, from a financial point of view, to such holders. See " --
Opinion of DFC's Financial Advisor".
(5) The Board recognized that the combined company would be more likely
than DFC alone to possess the financial and technological resources to compete
more effectively in the rapidly changing marketplace for banking and financial
services. The Board considered senior management's unsuccessful attempts to find
suitable acquisition targets of its own. The Board also took into account the
dilutive effect that an acquisition by DFC of another bank could have on DFC's
value. In addition, the Board considered that DFC was unlikely to be able to
increase the products and services it offered its customers enough to allow it
to remain competitive in the changing market for banking and financial services.
(6) The Board considered that its potential ability to continue to
influence ongoing bank policies and activities in Connecticut after the Merger
was enhanced by HUBCO's commitment to place five DFC Directors on the Lafayette
Board and to installing the remaining DFC Directors on an advisory board.
(7) The Board considered the complimentary nature of HUBCO's business,
business strategies and products, HUBCO's financial results, and HUBCO's growing
franchise in Connecticut.
(8) The Board considered the general impact the Merger would have on
the various constituencies served by DFC, including its customers and others.
The Board took into account that the combined company would be able to offer a
more extensive range of products and banking services to DFC's customers.
(9) The Board considered HUBCO's agreement with DFC on a variety of
issues affecting employees and the community served by DFC, including: that
HUBCO would honor all of DFC's existing agreements; that HUBCO would provide DFC
employees with adequate severance benefits; that all DFC branch personnel would
be offered comparable employment; that all DFC employees would receive credit
for service with all comparable HUBCO benefits, including pension; and that
HUBCO intends to continue DFC's existing charitable contribution program.
(10) The Board considered information with respect to, among other
things, the historical financial results of HUBCO and reviewed information with
respect to HUBCO's business, operations, financial condition and future
prospects. The Board considered the results of the due diligence investigation
conducted by DFC's management and advisors.
(11) The Board considered that the Merger is expected to be tax-free
for federal income tax purposes to DFC shareholders to the extent that they
receive shares of HUBCO Common Stock in the Merger rather than cash.
(12) The Board considered the nature of, and likelihood of obtaining,
the regulatory approvals that would be required with respect to the Merger.
(13) The Board took into account the current and prospective economic
and competitive environment facing the financial services industry generally and
each of DFC and HUBCO in particular.
In reaching its determination to approve the Merger Agreement, the Bank
Merger Agreement, the Stock Option Agreement and the transactions contemplated
thereby, the Board did not assign any relative or specific weights to different
factors considered by it, and individual Directors may have given differing
weights to different factors. The foregoing discussion of the information and
factors considered by the Board is not intended to be exhaustive but is believed
to include all material factors considered by the Board.
HUBCO's Reasons for the Merger
HUBCO entered into the Merger Agreement with DFC as part of HUBCO's
ongoing strategy of growth through acquisitions.
HUBCO's acquisition strategy consists of identifying financial
institutions with business philosophies that are similar to HUBCO's, which
operate in markets that are geographically within or close to those of HUBCO,
and which provide an ability to enhance earnings per share over an acceptable
period after the acquisition, while providing acceptable rates of return.
Acquisitions are also evaluated in terms of asset quality, interest rate risk,
core deposit base stability, potential operating efficiencies and management
abilities.
Pursuant to this acquisition strategy, HUBCO has pursued acquisitions
of financial institutions in Connecticut and in other states which are
geographically close to HUBCO's current markets and which otherwise meet HUBCO's
acquisition goals. HUBCO's expressions of interest in, and merger with DFC are
consistent with this strategy. HUBCO anticipates that combining the Connecticut
operations of DIME and Lafayette will enhance HUBCO's ability to promote
operational efficiencies and to service the combined institution's Connecticut
customers.
Interests of Certain Persons in the Merger
The Merger Agreement provides that HUBCO will cause five current
directors of DIME to be appointed to the Board of Directors of the Surviving
Bank at the Effective Time. Currently, the Surviving Bank's directors are paid
an annual retainer of $6,000 and a fee of $250 per meeting attended. The Merger
Agreement also provides that HUBCO will invite each other director of DIME to
serve on a regional advisory board of the Surviving Bank.
Certain directors and former directors of DIME and City Savings Bank of
Meriden (which was acquired by DIME on December 2, 1988) have entered into
deferred directors' fee agreements. Under these agreements, the DIME directors
are entitled to the amounts deferred with earnings and the City Savings Bank of
Meriden directors are entitled to fixed installment payments. The Merger
Agreement permits DIME, and DIME intends, to adopt a trust to hold the amounts
payable to the directors pursuant to these agreements which HUBCO and Lafayette
have agreed to assume. Although the trust's assets will be subject to the claims
of DIME's creditors (or those of the Surviving Bank after the Bank Merger) in
the event of DIME's (or the Surviving Bank's) insolvency, the amounts in the
trust may otherwise only be used for payment to the directors, until all such
payments have been made.
Under the Merger Agreement, each holder of a DFC Option will have such
DFC Option converted into an option to purchase HUBCO Common Stock where (i) the
right to purchase shares of DFC Common Stock pursuant to the DFC Option will be
converted into the right to purchase that same number of shares of HUBCO Common
Stock multiplied by the Exchange Ratio, (ii) the option exercise price per share
of HUBCO Common Stock will be the previous option exercise price per share of
the DFC Common Stock divided by the Exchange Ratio, and (iii) in all other
material respects the option will be subject to the same terms and conditions as
governed the DFC Option on which it was based, including the length of time in
which the option may be exercised. Options granted to directors, officers and
other employees of DFC and DIME provide that they will become fully vested on a
change-in-control, which will result from the Merger.
DFC and Dime (the "Employers") have entered into an employment
agreement (the "Employment Agreement") with Richard H. Dionne, President and
Chief Executive officer, whereby Mr. Dionne has agreed to remain in the employ
of the Employers, and the Employers have agreed to retain Mr. Dionne's services
through January 31, 2001 (the "Term"). The Employment Agreement provides that if
Mr. Dionne is terminated by the Employers during the Term other than for cause,
disability, material breach, as these terms are defined in the Employment
Agreement, or death, the Employers will pay to Mr. Dionne a lump sum severance
payment equal to the commuted value of Mr. Dionne's base salary in effect or
authorized at the time of the termination for the period remaining in the Term
(determined by discounting all payments at an agreed upon discount rate). Mr.
Dionne also will receive this benefit if he terminates his employment for "good
reason" as it is defined in the Employment Agreement. As the successors to the
Employers, HUBCO and Lafayette will assume any obligations of the Employers
under the Employment Agreement. Mr. Dionne, however, will not receive any
severance benefit under the Employment Agreement if he is otherwise entitled to
benefits under the Change-In-Control Agreement described below. The Employers
have entered into change-in-control severance agreements (the "Change-In-Control
Agreements") with each of their four senior officers, Richard H. Dionne, Albert
E. Fiacre, Jr., Timothy R. Stanton, and Frank P. LaMonaca (hereinafter
"Executive" or "Executives") as well as certain other officers of DFC.
For a period of two years following a "change-in-control," as defined
in each Change-In-Control Agreement, the Executive would be entitled to certain
payments in the event of the termination of his employment other than upon
death, retirement or disability or (a) by the Employers for "cause," as defined
in the Change-In-Control Agreements, or (b) in the event of a termination by the
Executive for "good reason" ("Change-In-Control Termination"). A
change-in-control will result from the Merger. If the Executive terminates his
employment because of a reduction of his compensation, position, duties, or
responsibilities, the need to move his principal residence, the non-payment by
the Employers of any salary, bonus or other material benefit due to the
Executive, or a material breach of any material terms of employment, such
termination would be considered to be for "good reason."
Upon a Change-In-Control Termination, Mr. Dionne would be entitled to,
among other benefits, a lump sum severance benefit of 2.99 times the average of
the cash compensation received by Mr. Dionne from the Employers in the most
recent three years prior to the date of his termination. In the case of each of
Messrs. Fiacre, Stanton and LaMonaca, the lump sum severance benefit equals the
cash compensation received by the Executive in the most recent calendar year of
employment prior to termination. It is estimated that the current value of the
lump sum severance is $1,121,557.61 for Mr. Dionne, $225,198.12 for Mr. Fiacre,
$202,764.16 for Mr. Stanton and $190,084.16 for Mr. LaMonaca. In addition, all
stock options granted to each Executive under any plan of the Employers would
become immediately exercisable in full and remain so for a period of three
months from the date of the Change-In-Control Termination. Each Executive would
also be entitled to continue to receive all perquisites and to participate in
all insurance plans for a period of one year from the date of the
Change-In-Control Termination. Benefits payable under the Change-In-Control
Agreements are subject, however, to the limitation described in Section 280G of
the Code, if applicable. Under the Merger Agreement, HUBCO has agreed that the
Employers and Mr. Dionne may enter into a separate agreement ("Mr. Dionne's
Indemnification Agreement") whereby the Employers agree to indemnify and hold
Mr. Dionne harmless for any liabilities arising out of the calculation or
application of said Section 280G limitation to the benefits payable under his
Change-In-Control Agreement, including any challenge thereto by the Internal
Revenue Service.
The Change-In-Control Agreements also include a non-competition
covenant (the "Covenant") between each Executive and the Employers. In the event
of the termination of the Executive's employment with the Employers, for a
period of one year the Executive agrees not to engage in certain competitive
activity with the Employers. The Covenant does not apply if the Executive
terminates his employment for good reason, or if the Employers terminate his
employment other than for cause, disability, or material breach, as defined in
the Change-In-Control Agreements.
HUBCO has agreed to honor the "Change-In-Control Agreements" and Mr.
Dionne's Indemnification Agreement.
Pursuant to the Merger Agreement, for a period of six years, HUBCO has
agreed to indemnify, defend and hold harmless each person who is, has been, or
becomes prior to the Effective Time, a director, officer, employee or agent of
DFC or DIME, or who serves or has served at the request of DFC or DIME in any
capacity with any other person (collectively, the "Indemnitees"), to the fullest
extent which DFC or DIME would have been permitted under applicable law and
their respective Certificates of Incorporation and By-laws had the Merger not
occurred, with respect to any claims made against such person because he or she
is or was a director, officer, employee or agent of DFC or serves or has served
at the request of DFC in any capacity with any other entity. In the Merger
Agreement, HUBCO has also agreed to cover DFC's officers and directors under
either an extension of DFC's existing directors' and officers' liability
insurance policy or a rider to HUBCO's then current policy for a period of at
least six years after the Effective Time.
HUBCO and DFC have agreed in the Merger Agreement that HUBCO will
provide DFC employees with certain severance and other benefits with credit
given for prior years of service with DFC and/or DIME and that DIME may pay
bonuses pursuant to its 1998 corporate bonus plan through the last month end
preceding the Effective Time. HUBCO and DFC have also agreed that HUBCO will
offer comparable employment to all DIME branch employees in good standing and
use its best efforts to offer comparable employment to all other DIME employees
in good standing. These covenants with respect to employee matters were not
intended to confer any rights or remedies on any person other than DFC and DIME.
<PAGE>
Opinion of DFC's Financial Advisor
On March 23, 1998, DFC engaged A.G. Edwards to act as its financial
advisor and to render a fairness opinion as to the fairness, from a financial
point of view, to DFC shareholders of the Merger Consideration to be received in
connection with the Merger.
A.G. Edwards is a nationally recognized securities and investment
banking firm engaged in, among other things, the evaluation of businesses and
their securities in connection with mergers and acquisitions, leveraged buyouts,
negotiated underwritings, competitive bidding, secondary distribution of listed
and unlisted securities, private placements, and valuations for estate,
corporate and other purposes. A.G. Edwards was selected by DFC as financial
advisor based upon such expertise, the reputation of A.G. Edwards in investment
banking and mergers and acquisitions, and A.G. Edwards' expertise in providing
financial advisory services to savings banks and the banking industry generally.
A.G. Edwards is not aware of any present or contemplated relationship between
A.G. Edwards, DFC, DFC's directors and officers or its shareholders or HUBCO
which, in its opinion, would affect its ability to render a fair and independent
opinion in this matter.
On March 30, 1998, at the meeting at which the DFC Board approved and
adopted the Merger Agreement and the transactions contemplated thereby, A.G.
Edwards rendered its oral and written opinion to the DFC Board that, as of such
date, the Merger Consideration was fair, from a financial point of view, to
DFC's shareholders. The written opinion (the "Opinion") was updated as of the
date of this Proxy Statement-Prospectus.
THE FULL TEXT OF THE A.G. EDWARDS UPDATED OPINION, WHICH SETS FORTH,
AMONG OTHER THINGS, ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED
AND LIMITATIONS OF THE SCOPE OF THE REVIEW UNDERTAKEN BY A.G. EDWARDS IN
RENDERING ITS OPINION, IS ATTACHED AS APPENDIX C TO THIS PROXY
STATEMENT-PROSPECTUS. DFC SHAREHOLDERS ARE URGED TO, AND SHOULD, READ THE A.G.
EDWARDS OPINION CAREFULLY AND IN ITS ENTIRETY. THE OPINION WAS DIRECTED TO THE
DFC BOARD AND ADDRESSES ONLY THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, TO
DFC SHAREHOLDERS OF THE MERGER CONSIDERATION TO BE RECEIVED PURSUANT TO THE
MERGER AGREEMENT AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF DFC
CAPITAL STOCK AS TO HOW TO VOTE WITH RESPECT TO THE MERGER AGREEMENT AND THE
MERGER. THE SUMMARY OF THE OPINION SET FORTH IN THIS PROXY STATEMENT-PROSPECTUS
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In connection with rendering its Opinion, A.G. Edwards reviewed, among
other things: (i) the Merger Agreement and exhibits thereto; (ii) the Stock
Option Agreement; (iii) DFC's audited consolidated financial statements and
management's discussion and analysis of financial condition and results of
operations contained in its Annual Report for the year ended December 31, 1997;
(iv) HUBCO's audited consolidated financial statements and management's
discussion and analysis of financial condition and results of operations
contained in its Annual Report for the fiscal year ended December 31, 1997; (v)
a review of expressions of interest for DFC by potential bidders other than
HUBCO; (vi) certain financial analyses and forecasts of DFC prepared by and
reviewed with management of DFC and the views of senior management of DFC
regarding DFC's past and current business operations, results thereof, financial
condition and future prospects; (vii) certain financial analyses and forecasts
of HUBCO prepared by, and reviewed with, management of HUBCO and the views of
senior management of HUBCO regarding HUBCO's past and current business
operations, results thereof, financial condition, and future prospects,
including the impact of pending mergers and acquisitions of CFHC, IBSF, the
Branch Purchase and the recently completed acquisitions of PFC, MSB, TBOS and
SNB, as well as information relating to the strategic, financial and operational
benefits anticipated from the Merger; (viii) the pro forma impact of the Merger
on DFC and HUBCO; (ix) the publicly reported historical price and trading
activity for HUBCO Common Stock and DFC Common Stock, including a comparison of
certain financial and stock market information for HUBCO and DFC with similar
publicly available information for certain other companies the securities of
which are publicly traded; (x) the financial terms of recent business
combinations of banking and savings institutions, to the extent publicly
available; (xi) the current market environment generally and the banking
environment in particular; and (xii) such other information, financial studies,
analyses and investigations, and financial, economic, and market criteria as
A.G. Edwards considered relevant. In rendering its opinion, A.G. Edwards has
reviewed the pro forma impact of the Merger as if it will be accounted for as a
pooling-of-interests business combination in accordance with U.S. Generally
Accepted Accounting Principals ("U.S. GAAP") and has assumed that the Merger
will be consummated on the terms contained in the Merger Agreement, without any
waiver of any material terms or conditions by DFC.
In rendering its Opinion, A.G. Edwards has relied upon and assumed,
without independent verification, the accuracy and completeness of all financial
and other information, publicly available, or furnished to, or otherwise
discussed with A.G. Edwards for the purposes of the Opinion. With respect to
financial projections and other information provided to or otherwise discussed
with A.G. Edwards, A.G. Edwards assumed and was advised by the senior management
of DFC and HUBCO, respectively, that such projections and other information were
reasonably prepared on a basis that reflects the best currently available
estimates and judgments of the senior management of DFC and HUBCO, respectively.
The Board of Directors of DFC did not specifically engage A.G. Edwards to, and
therefore A.G. Edwards did not, verify the accuracy or completeness of any such
information. A.G. Edwards did not conduct a physical inspection of any of the
properties or facilities of DFC or HUBCO or analyze any loan or asset
documentation, nor did it make or obtain any independent evaluation or
appraisals of any such properties or facilities or of any loans, investments or
financial assets and liabilities. Furthermore, A.G. Edwards is not an expert in
the evaluation of allowances for loan losses, and it did not make an independent
evaluation of the adequacy of the allowances for loan losses of DFC and HUBCO,
nor did it review the loan portfolios of DFC or HUBCO beyond what was required
to conduct its due diligence review of the Merger. A.G. Edwards has relied upon
the assurances of the management of DFC and HUBCO that the respective
managements are not aware of any facts that would make such information
inaccurate or misleading. A.G. Edwards did not express an opinion as to what the
value of the HUBCO Common Stock will be when issued to the holders of DFC Common
Stock pursuant to the Merger, or the price at which HUBCO Common Stock will
trade subsequent to the Merger. A.G. Edwards' Opinion in necessarily based upon
financial and other conditions and circumstances existing and disclosed to it as
of March 30, 1998.
The following is a summary of the material analyses performed by A.G.
Edwards in arriving at its Opinion:
Exchange Ratio Analysis. A.G. Edwards reviewed the historical prices of
DFC and HUBCO common stock, respectively, and the resulting market-based
exchange ratios (i.e, the ratio obtained by dividing the price of DFC Common
Stock by the price of HUBCO Common Stock on a particular date) since March 1996
and compared them to the proposed Exchange Ratio of 0.93 to 1.05. Based upon the
closing stock prices of DFC and HUBCO Common Stock on March 20, 1998 of $30.250
and $37.875, respectively, a market-based exchange ratio was 0.80. The maximum
and minimum Exchange Ratio for the reviewed period were 1.03 and 0.67,
respectively.
Analysis of Selected Publicly Traded Companies. A.G. Edwards used
publicly available information to compare selected financial and market trading
information for DFC and a group of selected savings institutions (the "DFC
Comparable Group"). The savings institutions in the DFC Comparable Group were
selected by A.G. Edwards based on their geographic proximity and similarity of
business lines to DFC's. The DFC Comparable Group was comprised of: Abington
Bancorp, Inc. (Abington, Massachusetts); Andover Bancorp, Inc. (Andover,
Massachusetts); BostonFed Bancorp, Inc. (Burlington, Massachusetts); American
Bank of Connecticut (Waterbury, Connecticut); BSB Bancorp, Inc. (Binghamton, New
York); First Essex Bancorp, Inc. (Andover, Massachusetts); First Federal of East
Hartford (East Hartford, Connecticut); MECH Financial, Inc. (Hartford,
Connecticut); Metro West Bank (Framingham, Massachusetts). The financial
information reviewed included, among other things, stock price to the last
twelve months ("LTM") earnings per share, stock price to tangible book value per
share, stock price to book value per share and current dividend yield. A.G.
Edwards calculated DFC's ratios using implied valuations based on a $38.25 stock
price for DFC Common Stock. The implied stock price to LTM earnings per share
for DFC was 20.2 times versus a median of 18.2 times for the DFC Comparable
Group. The implied stock price to tangible book value per share for DFC was 256%
versus a median of 215% for the DFC Comparable Group. The implied stock price to
book value per share multiple was 249% for DFC versus a median of 197% for the
DFC Comparable Group. Current dividend yield for DFC, which was calculated based
on the estimated post-Merger dividend was 2.1% versus a median of 1.7% for the
DFC Comparable Group.
A.G. Edwards also used publicly available information to perform a
similar comparison of selected financial and market trading information for
HUBCO versus selected publicly traded commercial bank holding companies (the
"HUBCO Comparable Group"). The companies in the HUBCO Comparable Group were
selected by A.G. Edwards based on their geographic proximity and similar of
business lines to HUBCO's. The HUBCO Comparable Group was comprised of:
Banknorth Group Inc. (Burlington, Vermont); Commerce Bancorp, Inc. (Cherry Hill,
New Jersey); Community Bank System, Inc. (DeWitt, New York); Chittenden Corp.
(Burlington, Vermont); Fulton Financial Corp. (Lancaster, Pennsylvania);
Keystone Financial Inc. (Harrisburg, Pennsylvania); North Fork Bancorp
(Melville, New York); Susquehanna Bancshares, Inc. (Lititz, Pennsylvania); Trust
Co Bank Corp. of New York (Schenectady, New York); UST Corp. (Boston,
Massachusetts); and Valley National Bancorp (Wayne, New Jersey). The financial
information reviewed included, among other things, stock price to LTM earnings
per share, stock price to tangible book value per share, stock price to book
value per share and current dividend yield. The stock price to LTM earnings per
share multiple for HUBCO was 18.5 times versus a median of 20.9 times for the
HUBCO Comparable Group. The stock price to tangible book value per share for
HUBCO was 528% versus a median of 363% for the HUBCO Comparable Group. The stock
price to book value per share for HUBCO was 459% versus a median of 315% for the
HUBCO Comparable Group. Current dividend yield for HUBCO was 2.1% versus a
median of 2.1% for the HUBCO Comparable Group.
Analysis of Selected Merger Transactions. A.G. Edwards reviewed three
groups of selected merger and acquisition transactions involving public
commercial banking and savings institutions and compared these transactions with
the Merger. The first group included commercial banking and savings institutions
mergers and corporate transactions announced since January 1, 1994 in which the
selling institution was headquartered in Connecticut and the aggregate deal size
was in excess of $100 million (the "Connecticut Merger Comparables"). The second
group was comprised of mergers and corporate transactions of commercial banking
and savings institutions announced since January 1, 1996 in which the selling
institution was headquartered in New England (Connecticut, New Hampshire, Maine,
Massachusetts, Rhode Island, and Vermont) and the aggregate deal size was $100
million and greater (the "New England Merger Comparables"). The third group
included mergers and corporate transactions announced since January 1, 1997 in
which the selling institution was a savings institution headquartered in the
United States and the aggregate deal size was in excess of $100 million but less
than $250 million (the "Nationwide Merger Comparables").
A.G. Edwards reviewed, among other things, the ratios of stock price to
LTM earnings per share, stock price to tangible book value per share and stock
price to book value per share in each transaction and compared the medians of
these ratios to the same ratios for the Merger. The Merger ratios were
calculated based on a $38.25 stock price for DFC common stock. The implied stock
price to LTM earnings per share for the Merger was 20.1 times versus a median of
19.8 times for the Connecticut Merger Comparables, a median of 20.8 times for
the New England Merger Comparables and a median of 22.0 times for the Nationwide
Merger Comparables. The implied stock price to tangible book value per share for
the Merger was 256% versus a median of 220% for the Connecticut Merger
Comparables, a median of 231% for the New England Merger Comparables and a
median of 211% for the Nationwide Merger Comparables. The implied stock price to
book value per share for the Merger was 249% versus a median of 206% for the
Connecticut Merger Comparables, a median of 209% for the New England Merger
Companies and a median of 199% for the Nationwide Merger Comparables.
Present Value Analysis. A.G. Edwards reviewed the projected net income
statements for the years 1998 through 2001 as prepared by the management of DFC
(the "DFC Projections") on a U.S. GAAP basis and performed a discounted present
value analysis of DFC based on these projections (the "Present Value Analysis").
In performing the Present Value Analysis, A.G. Edwards (i) discounted the net
income for each projected year back to March 31, 1998 and (ii) added the sum to
the present value as of March 31, 1998 of the capitalized terminal value of the
net income for 2001 (the "Terminal Value"). The Terminal Value was determined
based on anticipated earnings growth rates and various discount rates that A.G.
Edwards believed to be reasonable for such an analysis. Based on Present Value
Analysis, A.G. Edwards calculated the range for DFC Common Stock between $26.99
and $31.03.
Pro Forma Merger Analysis. A.G. Edwards analyzed the impact of the
Merger on DFC's Equivalent Pro Forma earnings per share, DFC's Equivalent Pro
Forma tangible book value per share, DFC's Equivalent Pro Forma book value per
share and pro forma dividend yield with and without the impact of the IBSF
acquisition. For each of these financial items (earnings per share, tangible
book value per share and book value per share), Equivalent Pro Forma is defined
as the product of (i) the associated pro forma HUBCO financial item and (ii)
each Exchange Ratio in the range as defined by the Agreement. A.G .Edwards also
analyzed the impact of the Merger on HUBCO's pro forma earnings per share,
tangible book value per share and book value per share with and without the
impact of the IBSF acquisition. Such analysis was based on DFC's and HUBCO's
respective management projections and expense savings as well as consolidation
efficiencies as estimated by HUBCO's management. A.G. Edwards used a range of
Exchange Ratios between 0.93 and 1.05. A.G. Edwards observed that before taking
into account any restructuring charges to be incurred by HUBCO in connection
with the Merger, the Merger would result in a range of Equivalent Pro Forma
earnings per share accretion of 22.1% to 35.7% to DFC shareholders without the
impact of the IBSF acquisition. The Merger would also result in a range of
dilution of Equivalent Pro Forma tangible book value per share and a range of
Equivalent Pro Forma book value per share of 38.8% to 32.1% and of 25.0% to
16.8%, respectively, without the impact of the IBSF acquisition. Taking into
consideration the impact of the IBSF acquisition, the Merger would result in a
range of accretion to Equivalent Pro Forma earnings per share of 23.9% to 37.9%,
a range of dilution of Equivalent Pro Forma tangible book value per share of
29.2% to 21.2% and a range of dilution of Equivalent Pro Forma book value per
share of 25.0% to 16.8%. The Merger would also result in dividend yield between
2.0% and 2.1%. A.G. Edwards also determined that based on DFC stock price of
$38.25, the Merger would be accretive 2.1% and 0.5% to HUBCO's earnings per
share with and without the IBSF acquisition, respectively, 53.1% and 32.1%
accretive to HUBCO's tangible book value per share with and without the IBSF
acquisition, respectively, and 58.2% and 44.5% accretive to HUBCO's book value
per share with and without the IBSF acquisition, respectively.
Analysis of the Merger Premiums to Market Value. A.G. Edwards analyzed
the premium of the consideration to be received by DFC shareholders to the
market value of DFC Common Stock one day, one week, two weeks, one month, three
months and one year prior to the announcement of the Merger (the "Merger
Premiums"). The Merger Premiums in the range of 3.4% to 111.5% compare with a
range of median premiums for Connecticut Merger Comparables between 11.7% and
77.5%, a range of median premiums for New England Merger Comparables between
12.1% and 81.6% and a range of median premiums for Nationwide Merger Comparables
between 11.1% and 93.6%.
The Opinion does not purport to be a complete description of all the
analyses performed by A.G. Edwards in arriving at its opinion. The preparation
of a fairness opinion is a complex process and is not susceptible to partial
analysis or summary description. In rendering its Opinion, A.G. Edwards applied
its judgment to a variety of complex analyses and assumptions, considered the
results of all of its analyses as a whole and did not attribute any particular
weight to any analysis or factor considered by it. Furthermore, selecting any
portion of its analyses, without considering all analyses, would create an
incomplete view of the process underlying its Opinion. In addition, A.G. Edwards
may have given various analyses and factors more or less weight than other
analyses and factors, and may have deemed various assumptions more or less
probable than other assumptions, so that the ranges of valuations resulting from
any particular analysis described above should not be taken to be A.G. Edwards'
view of the actual value of DFC or HUBCO. In performing its analyses, A.G.
Edwards made numerous assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which are beyond the
control of DFC or HUBCO. The assumptions made and judgments applied by A.G.
Edwards in rendering its opinion are not readily susceptible to description
beyond that set forth in the written text of the Opinion itself. Any estimates
contained herein are not necessarily indicative of future results or actual
values, which may be significantly more or less favorable than those suggested
by such estimates. A.G. Edwards does not assume responsibility if future results
are different from those projected. The analyses performed were prepared solely
as part of A.G. Edwards' analysis of the fairness, from a financial point of
view, to DFC shareholders of the consideration to be received in the Merger and
were conducted in connection with the delivery of the Opinion. As described
above, the Opinion to the DFC Board was one of the many factors taken into
consideration by the DFC Board in making its determination to approve the Merger
Agreement and the Merger. The decision to enter into the Merger Agreement was
solely that of the DFC Board.
The terms of the engagement of A.G. Edwards by DFC are set forth in a
letter agreement between A.G. Edwards and DFC (the "Engagement Letter").
Pursuant to the terms of the Engagement Letter, as compensation for rendering
its financial advisory services and its Opinion to the Board of Directors of
DFC, DFC agreed to pay A.G. Edwards a fee, payable upon the delivery of an
opinion, of $150,000, such fee having been paid. DFC has also agreed to pay A.G.
Edwards, upon the closing of the Merger, a fee of $669,890. DFC has agreed to
reimburse A.G. Edwards for reasonable fees of A.G. Edwards' counsel and for A.G.
Edwards' travel and out-of-pocket expenses incurred in connection with its
engagement. DFC has also agreed to indemnify A.G. Edwards against certain
liabilities in connection with the engagement of A.G. Edwards.
First Albany will also be compensated by DFC for the financial advisory
services it performed in connection with the Merger. DFC will pay First Albany a
fee of $819,890, and it has agreed to reimburse First Albany for related travel
and other out-of-pocket expenses and indemnify First Albany in connection with
its engagement.
Resale Considerations With Respect to the HUBCO Common Stock
The shares of HUBCO Common Stock that will be issued if the Merger is
consummated have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), and will be freely transferable, except for shares
received by persons, including directors and executive officers of DFC, who may
be deemed to be "affiliates" of DFC under Rule 145 promulgated under the
Securities Act ("Rule 145"). An "affiliate" of an issuer is defined generally as
a person who "controls" the issuer. Directors, executive officers and 10%
shareholders may be deemed to control the issuer. Affiliates may not sell their
shares of HUBCO Common Stock acquired pursuant to the Merger, except pursuant to
an effective registration statement under the Securities Act covering the HUBCO
Common Stock or in compliance with Rule 145 or another applicable exemption from
the registration requirements of the Securities Act.
Persons who may be deemed to be "affiliates" of DFC have delivered
letters to HUBCO in which they have agreed to certain restrictions on their
ability to sell, transfer or otherwise dispose of ("transfer") any DFC Common
Stock owned by them and any HUBCO Common Stock acquired by them in the Merger.
Pursuant to the accounting rules governing a pooling-of-interests, such persons
have agreed not to transfer the shares during the period beginning 30 days prior
to the Effective Time and ending on the date on which financial results covering
at least 30 days of post-merger combined operations of HUBCO and DFC have been
published or filed by HUBCO. Also, in connection with the pooling-of-interests
rules, such persons have agreed not to transfer their DFC Common Stock in the
period prior to 30 days before the Effective Time without giving HUBCO advance
notice and an opportunity to object if the transfer would interfere with
pooling-of-interests accounting for the Merger. Pursuant to Rule 145, such
persons have also agreed to refrain from transferring HUBCO Common Stock
acquired by them in the Merger, except (i) in compliance with Rule 145, (ii) if
such transfer, in the opinion of HUBCO's counsel or counsel reasonably
acceptable to HUBCO, is otherwise exempt from registration under the Securities
Act or (iii) if such transfer is registered under the Securities Act.
Certificates representing the shares of HUBCO Common Stock acquired by each such
person pursuant to the Merger will bear a legend reflecting that the shares are
restricted in accordance with the letter signed by such person and may not be
transferred except in compliance with such restrictions.
Persons who may be deemed "affiliates" of HUBCO have also delivered
letters to HUBCO in which they have agreed not to transfer HUBCO Common Stock
beneficially owned by them in violation of the pooling-of-interests restrictions
set forth above with respect to DFC.
Conditions to the Merger
The obligation of each party to consummate the Merger is subject to
satisfaction or waiver of certain conditions, including (i) approval of the
Merger Agreement and the transactions contemplated thereby by the requisite vote
of the holders of DFC Common Stock; (ii) the receipt of all consents, approvals
and authorizations of all necessary federal and state government authorities and
expiration of all required waiting periods, necessary for the consummation of
the Merger (see "-- Regulatory Approvals"); (iii) the effectiveness of the
registration statement covering the shares of HUBCO Common Stock to be issued to
DFC shareholders, and the qualification of the issuance of HUBCO Common Stock in
every state where such qualification is required under applicable state
securities laws; (iv) the absence of any litigation that would restrain or
prohibit the consummation of the Merger; (v) receipt by HUBCO and DFC of an
opinion of Pitney, Hardin, Kipp & Szuch, counsel to HUBCO, to the effect that
the exchange of DFC Common Stock for HUBCO Common Stock is a tax-free
reorganization within the meaning of Section 368 of the Code. See "-- Federal
Income Tax Consequences", and (vi) the receipt by HUBCO of a letter from HUBCO's
independent accountants that the Merger will qualify to be treated by HUBCO as a
pooling of interests for accounting purposes.
The obligation of HUBCO to consummate the Merger is also conditioned
on, among other things, (i) the continued accuracy in all material respects of
the representations and warranties of DFC contained in the Merger Agreement;
(ii) the performance by DFC, in all material respects, of all its obligations
under the Merger Agreement; (iii) receipt of an opinion from Day, Berry & Howard
LLP, counsel to DFC, as to certain matters; and (iv) neither DFC nor Dime
receiving a rating of less than satisfactory from any bank regulatory agency
with respect to year 2000 compliance.
The obligation of DFC to consummate the Merger is also conditioned on,
among other things, (i) the continued accuracy in all material respects of the
representations and warranties of HUBCO contained in the Merger Agreement; (ii)
the performance by HUBCO, in all material respects, of all its obligations under
the Merger Agreement; (iii) receipt of A.G. Edwards' fairness opinion; (iv)
receipt of an opinion from Pitney, Hardin, Kipp & Szuch as to certain matters;
and (v) the appointment of five directors, nominated by DFC and acceptable to
HUBCO, to the Board of Directors of the Surviving Bank.
Conduct of Business Pending the Merger
The Merger Agreement requires DFC to conduct its business prior to the
Effective Time only in the ordinary course of business and consistent with
prudent banking practices, except as permitted under the Merger Agreement or
with the written consent of HUBCO (which will not be unreasonably withheld).
Under the Merger Agreement, DFC has agreed not to take certain actions without
the prior written consent of HUBCO or unless permitted by the Merger Agreement,
including, among other things, the following: (a) change any provision of its
Certificate of Incorporation or By-laws; (b) change the number of shares of its
authorized or issued capital stock (other than upon the exercise of certain
stock options), grant any option or similar right relating to its capital stock,
or declare, set aside or pay any dividend or other distribution in respect of
its capital stock, except that DFC may pay dividends on the DFC Common Stock in
a quarterly amount equal to $0.12 per share; (c) grant any severance or
termination pay (other than pursuant to written policies or contracts of DFC in
effect on the date of the Merger Agreement and disclosed to HUBCO) to, or enter
into or amend any employment or severance agreement with, any of its directors,
officers or employees, or adopt any new employee benefit plan or arrangement or
award an increase in compensation or benefits, except in each case as disclosed
to HUBCO prior to execution of the Merger Agreement; (d) sell or dispose of any
substantial amount of assets or voluntarily incur any significant liabilities
other than in the ordinary course of business consistent with past practices and
policies or in response to substantial financial demands upon its business; (e)
make any capital expenditures other than pursuant to binding commitments
existing on the date of the Merger Agreement, expenditures necessary to maintain
existing assets in good repair and expenditures described in business plans or
budgets previously furnished to HUBCO; (f) file any applications or make any
contracts with respect to branching or site location or relocation; (g) agree to
acquire in any manner whatsoever (other than to realize upon collateral for a
defaulted loan) any business or entity or make any investments not in compliance
with the provisions of the Merger Agreement; (h) make any material change in its
accounting methods or practices, other than changes required in accordance with
generally accepted accounting principles or regulatory authorities; (i) take any
action that would result in any of DFC's representations or warranties being
untrue or incorrect at the Effective Time in any material respect or that would
cause any of its conditions to closing not to be satisfied; (j) without first
conferring with HUBCO, make or commit to make any new loan or other extension or
credit in excess of $500,000 or renew for a period greater than one year any
existing loan in an amount of $500,000 or more, or increase by $500,000 or more
the aggregate credit outstanding to any existing borrower or affiliated group;
or (k) agree to do any of the foregoing.
Under the Merger Agreement, DFC cannot, directly or indirectly,
encourage or solicit or hold discussions or negotiations with, or provide any
information to, any person, entity or group (other than HUBCO) concerning any
merger, sale of shares of capital stock or sale of substantial assets or
liabilities not in the ordinary course of business or any similar transactions
(an "Acquisition Transaction"). Notwithstanding the foregoing, DFC may enter
into discussions or negotiations or provide any information in connection with
an unsolicited possible Acquisition Transaction if the Board of Directors of
DFC, after consulting with counsel, determines in the exercise of its fiduciary
responsibilities that such discussions or negotiations should be commenced or
such information should be furnished. DFC has agreed to promptly communicate to
HUBCO the terms of any proposal, whether written or oral, which it may receive
with respect to any such Acquisition Transaction, and the fact that it is having
discussions or negotiations with a third party about an Acquisition Transaction.
Representations, Warranties and Covenants
The Merger Agreement contains customary mutual representations and
warranties, as well as covenants, relating to, among other things, (a) corporate
organization and similar corporate matters; (b) the capital structures of each
of HUBCO and DFC; (c) authorization, execution, delivery, performance and
enforceability of the Merger Agreement, no conflict, between the Merger
Agreement and each party's governing documents, and material contracts, required
governmental consents and approvals and related matters; (d) financial
statements and other documents filed by each of HUBCO and DFC with the SEC, and
the accuracy of information contained therein; (e) the accuracy of information
supplied by each of HUBCO and DFC in connection with the Registration Statement
and this Proxy Statement; (f) compliance with applicable laws; (g) the absence
of material litigation; (h) filing of tax returns and payment of taxes; (i)
matters relating to certain material contracts; (j) director and officer
contracts and payments thereunder, and retirement and other employee plans and
matters relating to the Employee Retirement Income Security Act of 1974, as
amended; (k) insurance matters; (l) certain bank regulatory matters; (m) absence
of certain material changes or events from December 31, 1997; (n) the absence of
actions that would prevent there being a tax-free reorganization or the use of
the "pooling-of-interests" method to account for the Merger; (o) title to
properties; (p) the adequacy of loan loss reserves; (q) environmental
compliance; (r) brokers' and finders' fees; (s) cooperation on applications and
filings; (t) the accuracy of all minute books; (u) the absence of an agreement
with bank regulators which restricts materially the conduct of HUBCO's or DFC's
business or that of their respective subsidiaries; and (v) matters relating to
the HUBCO Common Stock to be issued in the Merger.
Regulatory Approvals
Consummation of the Merger is subject, among other things, to prior
receipt of all necessary regulatory approvals. In order to consummate the Merger
and the Bank Merger, HUBCO must obtain regulatory approvals from the FDIC and
the CTDOB and an approval or waiver from the Federal Reserve Board ("FRB").
HUBCO has applied to the FDIC for approval to merge DIME into Lafayette, has
applied to the FRB for approval or a waiver to acquire DFC, and has applied to
the CTDOB for approval of the acquisition of DIME. Approval by the FRB, FDIC or
the CTDOB does not constitute an endorsement of the Merger or the Bank Merger or
a determination that the terms of the Merger or Bank Merger are fair to the
shareholders of DFC or HUBCO.
Management and Operations After the Merger
At the Effective Time, as a result of the Merger, DFC will be merged
with and into HUBCO, with HUBCO as the Surviving Entity. Immediately following
the Effective Time, DIME will be merged with and into Lafayette, with Lafayette
as the Surviving Bank.
The Merger Agreement provides that HUBCO will cause five directors,
nominated by DFC and acceptable to HUBCO, to be elected to the Board of
Directors of the Surviving Bank.
Exchange of Certificates, Issuance of New Options
Except as described below under "RIGHTS OF DISSENTING DFC
SHAREHOLDERS", at the Effective Time, holders of certificates formerly
representing shares of DFC Common Stock will cease to have any rights as DFC
shareholders and their certificates automatically will represent the shares of
HUBCO Common Stock into which their shares of DFC Common Stock will have been
converted by the Merger. As soon as practicable either before or after the
Effective Time, but in no event later than five business days after the
Effective Time, HUBCO or its agent will send written instructions and a letter
of transmittal to each record holder of DFC Common Stock, indicating the method
for exchanging their stock certificates for certificates representing shares of
HUBCO Common Stock. Holders of DFC Common Stock should not send in their stock
certificates until they receive such instructions and letter of transmittal from
HUBCO or its agent.
Each share of HUBCO Common Stock for which shares of DFC Common Stock
are exchanged will be deemed to have been issued at the Effective Time.
Accordingly, holders of DFC Common Stock who receive HUBCO Common Stock in the
Merger will be entitled to receive any dividend or other distribution which may
be payable to holders of record of such HUBCO Common Stock as of dates on or
after the Effective Time. However, no dividend or other distribution will
actually be paid with respect to any shares of HUBCO Common Stock until the
certificate or certificates formerly representing shares of DFC Common Stock
have been surrendered, at which time any accrued dividends and other
distributions on such shares of HUBCO Common Stock will be paid without
interest. See "-- Consideration".
Holders of outstanding certificates for DFC Common Stock, upon proper
surrender of such certificates to HUBCO, will receive, promptly after the
Effective Time, a certificate representing the full number of shares of HUBCO
Common Stock into which the shares of DFC Common Stock previously represented by
the surrendered certificates have been converted. At the time of issuance of the
new stock certificate, each shareholder so entitled will receive a check for the
amount of the fractional share interest, if any, to which the shareholder may be
entitled.
Following the Effective Time, HUBCO will make arrangements with each
holder of a Continuing Stock Option to exchange the Optionee's Option Grant
Agreement for an agreement reflecting the conversion of the Continuing Stock
Option into an option to acquire HUBCO Common Stock.
Amendments; Termination
The Merger Agreement may be amended, modified or supplemented with
respect to any of its terms by the mutual consent of HUBCO and DFC at any time
prior to the Effective Time. However, after approval of the Merger Agreement by
the shareholders of DFC, no amendment can be made which reduces the amount or
changes the form of consideration to be delivered to the shareholders of DFC
without the approval of such shareholders.
The Merger Agreement may be terminated by the mutual consent of DFC and
HUBCO. The Merger Agreement may also be terminated by DFC or HUBCO if, among
other things, (i) the Effective Time has not occurred on or before December 31,
1998 (the "Cutoff Date") unless the failure of such occurrence is due to the
failure of the party seeking to terminate to perform or observe its covenants in
the Merger Agreement; (ii) a vote of the shareholders of DFC to approve the
Merger Agreement is taken and such shareholders fail to approve the Merger
Agreement at their meeting; or (iii) any regulatory approvals necessary to
consummate the transaction have been denied or withdrawn at the request of the
regulatory agency or such approval is given with conditions which would have a
material adverse effect on HUBCO (but then only by HUBCO).
HUBCO may terminate the Merger Agreement if there has been a material
adverse change in the business, operations, assets or financial condition of DFC
and DIME, taken as a whole, from that disclosed by DFC in its Annual Report on
Form 10-K for the year ended December 31, 1997, or DFC breaches in a material
respect any representation, warranty, covenant, agreement or obligation under
the Merger Agreement and does not cure such breach within 30 days after receipt
by DFC of a notice of breach. HUBCO may also terminate the Merger Agreement if
the conditions to HUBCO's obligations to close are not satisfied and are not
capable of being satisfied by the Cutoff Date.
DFC may terminate the Merger Agreement if there has been a material
adverse change in the business, operations, assets or financial condition of
HUBCO and its subsidiaries taken as a whole from that disclosed by HUBCO in its
Annual Report on Form 10-K for the year ended December 31, 1997, or if HUBCO
breaches in a material respect any representation, warranty, covenant, agreement
or obligation under the Merger Agreement and does not cure such breach within 30
days after receipt by HUBCO of a notice of breach, or if DFC's Board of
Directors approves another acquisition transaction after determining, upon
advice of counsel, that approval was necessary in the exercise of its fiduciary
obligations under applicable laws. DFC may also terminate the Merger Agreement
if the conditions for DFC to close are not satisfied and are not capable of
being satisfied by the Cutoff Date.
In addition, the Merger Agreement may be terminated by DFC upon
occurrence of a Termination Event, as described above under the caption "THE
PROPOSED MERGER -- Consideration; Median Pre-Closing Price; Determination Date."
If the Merger Agreement is terminated, the transactions contemplated
thereby will be abandoned without further action by any party, each party will
bear its own expenses and each party will retain all rights and remedies it may
have at law or equity under the Merger Agreement.
Accounting Treatment of the Merger
The Merger is expected to be accounted for by HUBCO under the
pooling-of-interests method of accounting in accordance with generally accepted
accounting principles. Each of HUBCO's and DFC's obligation to consummate the
Merger is conditioned upon HUBCO's receipt of assurances from its independent
public accountants, Arthur Andersen LLP, that the Merger will be so treated. As
required by generally accepted accounting principles, under pooling-of-interests
accounting, as of the Effective Time the assets and liabilities of DFC would be
added to those of HUBCO at their recorded book values and the stockholders'
equity accounts of HUBCO and DFC would be combined on HUBCO's consolidated
balance sheet. On a pooling-of-interests accounting basis, income and other
financial statements of HUBCO issued after consummation of the Merger would be
restated retroactively to reflect the consolidated combined financial position
and results of operations of HUBCO and DFC as if the Merger had taken place
prior to the periods covered by such financial statements. The pro forma
financial information contained in this Proxy Statement has been prepared using
the pooling-of-interests accounting basis to account for the Merger. See "PRO
FORMA FINANCIAL INFORMATION".
Federal Income Tax Consequences
The following is a discussion of certain federal income tax
consequences of the Merger but is not intended to be a complete description of
such consequences. The discussion is included for general information purposes
only and may not apply to special situations, such as DFC shareholders, if any,
who received HUBCO Common Stock upon the exercise of employee stock options of
otherwise as compensation, that hold DFC Common Stock as part of a "straddle" or
"conversion transaction", or that are insurance companies, securities dealers,
financial institutions or foreign persons, and does not discuss any aspects of
state, local or foreign taxation. This discussion is based upon laws,
regulations, rulings and decisions now in effect and on proposed regulations,
all of which are subject to change (possibly with retroactive effect) by
legislation, administrative action or judicial decision. No ruling has been or
will be requested from the Internal Revenue Service on any tax matter relating
to the tax consequences of the Merger.
General
As an exhibit to the Registration Statement of which this Proxy
Statement is a part, Pitney, Hardin, Kipp & Szuch, counsel to HUBCO, have
advised HUBCO and DFC in an opinion dated as of the date of this Proxy Statement
that:
(i) No gain or loss will be recognized for federal income tax purposes
by DFC shareholders upon the exchange in the Merger of shares of DFC Common
Stock solely for HUBCO Common Stock (except with respect to cash received in
lieu of a fractional share interest in HUBCO Common Stock).
(ii) The basis of HUBCO Common Stock received in the Merger by DFC
shareholders (including the basis of any fractional share interest in HUBCO
Common Stock) will be the same as the basis of the shares of DFC Common Stock
surrendered in exchange therefor.
(iii) The holding period of HUBCO Common Stock (including the holding
period of any fractional share interest in HUBCO Common Stock) will include the
holding period during which the shares of DFC Common Stock surrendered in
exchange therefor were held by the DFC stockholder, provided such shares of DFC
Common Stock were held as capital assets.
(iv) Cash received by a holder of DFC Common Stock in lieu of a
fractional share interest in HUBCO Common Stock will be treated as received for
such fractional share interest, and, provided the fractional share would have
constituted a capital asset in hands of such holder, the holder should in
general recognize capital gain or loss in an amount equal to the difference
between the amount of cash received and the portion of the adjusted tax basis in
DFC Common Stock allocable to the fractional share interest.
Consummation of the Merger is conditioned, among other things, on
receipt by each of HUBCO and DFC of an opinion of Pitney, Hardin, Kipp & Szuch,
dated the Effective Time, to the effect that, as of such date, the (i) the
Merger will be treated for federal income tax purposes as a reorganization
qualifying under the provisions of Section 368 of the Internal Revenue Code of
1986, as amended; (ii) no gain or loss will be recognized by DFC; (iii) no gain
or loss will be recognized by the holders of DFC Common Stock upon the exchange
of DFC Common Stock solely for HUBCO Common Stock; (iv) the tax basis of any
HUBCO Common Stock received in exchange for DFC Common Stock shall equal the
basis of the recipient's DFC Common Stock surrendered on the exchange; and (v)
holding period for any HUBCO Common Stock received in exchange for DFC Common
Stock will include the period during which DFC Common Stock surrendered on the
exchange was held, provided such stock was held as a capital asset on the date
of the exchange. Unlike a ruling from the Internal Revenue Service, an opinion
of counsel is not binding on the Internal Revenue Service, and there can be no
assurance that the Internal Revenue Service will not take a position contrary to
one or more of the positions reflected herein or that the positions herein will
be upheld by the courts if challenged by the Internal Revenue Service. While
HUBCO and DFC have the contractual right to waive this condition to closing,
neither will do so, and the Merger will not take place if the opinions are not
obtained.
The opinions of Pitney, Hardin, Kipp & Szuch summarized above are or
will be based, among other things, on representations contained in certificates
of officers of DFC and HUBCO.
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON
THE PARTICULAR CIRCUMSTANCES OF EACH HOLDER OF DFC COMMON STOCK, AND OTHER
FACTORS, EACH SUCH HOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE MERGER
(INCLUDING THE APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND OTHER TAX
LAWS).
Consequences of Receipt of Cash in Lieu of Fractional Shares. Cash
received by a DFC shareholder in lieu of any fractional share interest will be
treated as having been received as a payment in redemption of such fractional
share interest as if a fractional share of HUBCO Common Stock had been issued in
the Merger and then redeemed by HUBCO, and, provided the fractional share would
have constituted a capital asset in the hands of such shareholder, the
shareholder should in general recognize capital gain or loss in an amount equal
to the difference between the amount of cash received and the portion of the
adjusted basis in DFC Common Stock allocable to the fractional share interest.
Basis of HUBCO Common Stock. The basis of HUBCO Common Stock received
by an DFC shareholder who receives solely HUBCO Common Stock will be the same as
the basis of such shareholder's DFC Common Stock surrendered in exchange
therefor.
Holding Period. The holding period of shares of HUBCO Common Stock
received in the Merger by holders of DFC Common Stock will include the period
during which such shares of DFC Common Stock surrendered in exchange therefor
were held by the holder thereof, provided such shares of DFC Common Stock were
held as capital assets.
RIGHTS OF DISSENTING DFC SHAREHOLDERS
Any DFC shareholder who objects to the Merger Agreement shall have the
right to be paid the fair value of all shares of DFC Common Stock owned by such
shareholder in accordance with the provisions of Sections 33-855 to 33-872 of
the Connecticut Business Corporation Act (the "CTBCA"), a copy of which is set
forth in Appendix D to this Proxy Statement-Prospectus. The following discussion
is not a complete statement of the law pertaining to such rights, and is
qualified in its entirety by reference to such sections of the CTBCA. The right
to be paid the value of such shares shall be such shareholder's exclusive remedy
as holder of such shares with respect to the Merger, whether or not such
shareholder proceeds as provided in CTBCA Sections 33-855 to 33-872.
Any DFC shareholder may elect to exercise such right by giving written
notice to DFC of such shareholder's intent to demand payment for such
shareholder's shares as provided in CTBCA Section 33-861(a) prior to the voting
of the DFC shareholders on the proposal to approve the Merger Agreement and must
not vote any of his or her shares in favor of the proposal. Such notice should
be sent to Dime Financial Corporation, 95 Barnes Road, Wallingford, Connecticut
06492, Attention: Eleanor M. Tolla, Corporate Secretary.
A DFC shareholder who votes in favor of the Merger Agreement will be
precluded from exercising dissenters' rights.
A vote against the Merger Agreement will not of itself satisfy the
requirement that a dissenting DFC shareholder deliver his or her written notice
of intent to demand payment if the Merger is consummated, nor will such vote
satisfy any other notice requirement under Connecticut law with respect to
dissenters' rights.
A demand for payment must be executed by or for the shareholder of
record fully and correctly, as the shareholder's name appears on the share
certificate. A beneficial owner of shares of DFC Common Stock who is not the
record owner may make such demand for payment with respect to all (but not less
than all) shares held on his or her behalf if the beneficial owner submits to
DFC at or before the assertion of his or her dissenters' rights a written
consent of the record holder. A record owner, such as a broker, who holds DFC
Common Stock for others, may make such demand for payment with respect to less
than all of the shares of DFC Common stock held of record by such person. In
that event, the record owner must make such demand with respect to all shares
owned beneficially by the same person, and must provide DFC with the name and
address of each person on whose behalf such demand is being made.
If the Merger Agreement is approved, any shareholder notifying DFC of
his or her intent to demand payment for his or her shares as provided in CTBCA
33-861(a), provided none of such shareholder's shares shall have been voted in
favor of the Merger Agreement, may require DFC to purchase such shareholder's
shares at fair value. As provided in CTBCA Section 33-862, DFC shall send a
dissenters' notice to shareholders who have complied with CTBCA Section 33-861
no later than ten days after the consummation of the Merger. The dissenters'
notice sent by DFC shall state where the demand for payment must be sent and
where and when certificates for certificated shares must be deposited; inform
holders of uncertificated shares to what extent transfer of the shares will be
restricted after the payment demand is received; supply a form for demanding
payment that includes the date of the first announcement to news media or to
shareholders of the terms of the Merger Agreement (March 31, 1998); and require
that each shareholder asserting dissenters' rights certify whether or not such
shareholder acquired beneficial ownership of the shares before that date.
Finally, DFC shall set a date by which DFC must receive the payment demand,
which date may not be fewer than 30 nor more than 60 days after the date that
the written dissenters' notice is delivered by DFC, and DFC shall ensure that
each such dissenters' notice is accompanied by a copy of CTBCA Sections 33-855
to 33-872.
After a DFC shareholder receives such written dissenters' notice by
DFC, such shareholder must demand payment for such shareholder's shares and
certify whether such shareholder acquired beneficial ownership of such shares
prior to the date of the first announcement to the news media or to shareholders
of the terms of the Merger Agreement in accordance with the terms of the
dissenters' notice, as provided in CTBCA Section 33-863(a). Such shareholder who
demands payment shall also be required to submit the certificate or certificates
representing such shareholder's shares to DFC in accordance with the terms of
the dissenters' notice. A shareholder's failure to demand payment or deposit his
share certificates shall terminate such shareholder's rights under CTBCA
Sections 33-855 to 33-872.
If a DFC shareholder makes such demand for payment and submits such
share certificates to DFC, such shareholder shall retain all other rights of a
DFC shareholder until these rights are canceled or modified by the consummation
of the Merger as provided in CTBCA Section 33-863(b). Any shareholder failing to
make such demand as described above shall be bound by the terms of the Merger
Agreement if it is approved.
Pursuant to CTBCA Section 33-864, DFC is further entitled to restrict
the transfer of uncertificated shares from the date the demand for payment by
such shareholders is received until DFC either consummates the Merger or fails
to do so within 60 days after the date set for demanding payment and depositing
share certificates. A DFC shareholder who has asserted dissenters' rights as to
uncertified securities retains all rights (other than the foregoing potential
restriction on transfer) of a DFC shareholder until such rights are canceled or
modified by the consummation of the Merger.
After DFC either receives such demand for payment by a DFC shareholder,
or upon consummation of the Merger, DFC shall pay each shareholder who makes a
proper demand for payment pursuant to CTBCA Section 33-863 the amount DFC
estimates to be the fair value of such shareholder's shares, plus accrued
interest as provided in CTBCA Section 33-865(a). The payment by DFC to such
shareholder shall be accompanied by: DFC's balance sheet as of the fiscal year
ending not more than 16 months before the date of payment; an income statement
for that year; a statement of changes in shareholders' equity for that year; the
latest available interim financial statements, if any; a statement of DFC's
estimate of the fair value of the shares; an explanation of how the interest was
calculated; a statement of the dissenting shareholder's right to demand payment
under CTBCA Section 33-860; and a copy of CTBCA Sections 33-855 to 33-872.
Pursuant to CTBCA Section 33-866, if the Merger is not consummated
within 60 days after the date set for such shareholders' demand for payment and
deposit of share certificates, DFC shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares. If the
Merger is consummated after the deposited certificates have been returned and
the transfer restrictions have been released, DFC shall send a new dissenters'
notice under CTBCA Section 33-862 and repeat the payment demand procedure.
DFC may elect to withhold payment to a shareholder who makes a demand
for payment pursuant to CTBCA Section 33-863 if such shareholder was not the
beneficial owner of such shares before the date set forth in the dissenters'
notice as the date of the first announcement to the news media or to
shareholders of the terms of the Merger Agreement. Pursuant to CTBCA Section
33-867(b), if DFC elects to withhold payment to such shareholder and the Merger
is consummated, DFC shall estimate the fair value of such shareholder's shares,
plus accrued interest, and shall pay this amount to such shareholder if such
shareholder agrees to accept such payment in full satisfaction of such
shareholder's demand. DFC's offer to such shareholder shall be accompanied by a
statement of DFC's estimate of the fair value of such shares, an explanation of
how the interest was calculated and a statement of such shareholder's right to
demand payment under CTBCA Section 33-868.
Pursuant to CTBCA Section 33-868, a dissenting DFC shareholder may
notify DFC in writing of such shareholder's own estimate of the fair value of
his shares and the amount of interest due, and demand payment of his estimate,
less any payment by DFC under CTBCA Section 33-865, or may reject DFC's offer to
purchase such shareholder's shares, and demand payment for the fair value of
such shareholder's shares and interest owing, provided, however, that such
action may be taken only if (a) such shareholder believes that the amount paid
under CTBCA Section 33-865 or offered under CTBCA Section 33-867 is less than
the fair value of such shareholder's shares or that the interest due is
incorrectly calculated; (b) DFC fails to make payment under CTBCA Section 33-865
within 60 days after the date set for such shareholder's demand for payment; or
(c) if the Merger is not consummated, and DFC fails to return the deposited
certificates or release the transfer restrictions imposed on uncertificated
shares within 60 days after the date set for such shareholder's demand for
payment. Such dissenting DFC shareholder must make a demand for payment pursuant
to CTBCA Section 33-868(a) within 30 days after DFC makes or offers payment for
such shareholder's shares. Failure to make such a demand within the 30-day
period will be treated as a waiver of such shareholder's right to demand payment
in an amount exceeding the amount previously paid or offered by DFC.
If a DFC's shareholder's demand for payment under CTBCA Section 33-868
remains unsettled, DFC shall commence a proceeding within 60 days after receipt
of such shareholder's demand for payment and file a petition in the Hartford,
Connecticut Superior Court or before any judge thereof, requesting that the fair
value of the shares of such shareholder and the accrued interest thereon be
found and determined as provided in CTBCA Section 33-871(a). If DFC fails to
timely commence such proceeding, DFC shall pay each dissenting shareholder whose
demand remains unsettled the amount demanded. All shareholders making such
demand for payment as described above, whose demands remain unsettled, wherever
residing, shall be made parties to the proceeding. A copy of the petition shall
be served on each such shareholder who is a resident of Connecticut.
Non-resident dissenting shareholders may be served by registered or certified
mail or by publication as provided by law. The jurisdiction of the court shall
be exclusive. The court may, if it so elects, appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of fair
value. The appraisers shall have such power and authority as shall be specified
in the order of their appointment or an amendment thereof. Each DFC shareholder
made a party to the proceeding is entitled to judgment for the amount, if any,
by which the court finds the fair value of such shareholders' shares, plus
interest, exceeds the amount paid by DFC, or for the fair value, plus accrued
interest, of the after-acquired shares of such shareholders for which DFC
elected to withhold payment under CTBCA Section 33-867. The costs and expenses,
including the reasonable compensation and expenses of court-appointment
appraisers, of any such proceeding shall be determined by the court and shall be
assessed against DFC, but all or any part of such costs and expenses may be
apportioned and assessed as the court may deem equitable against any or all
shareholders who are parties to the proceeding to whom DFC has made an offer to
pay for the shares if the court finds that the action of such shareholders was
arbitrary or vexatious or not in good faith in demanding payment under CTBCA
Section 33-868. Such expenses also may include the fees and expenses of counsel
and experts employed by any party, and be entered against (a) DFC in favor of
any or all dissenting shareholders who are parties to the proceeding if DFC
failed to substantially comply with the requirements of CTBCA Sections 33-860 to
33-868, inclusive, or (b) either DFC or a dissenter, in favor of any other
party, if the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously or not in good faith with respect to rights provided by
CTBCA Sections 33-855 to 33-872, inclusive. If the court finds that the services
of counsel for any shareholder were of substantial benefit to other dissenting
shareholders similarly situated, and that such fees should not be assessed
against DFC, the court may find that such fees should be paid out of the amounts
awarded to the dissenting shareholders who were benefited.
The foregoing is only a summary of the rights of an objecting holder of
DFC Common Stock. Any holder of DFC Common Stock who intends to object to the
Merger Agreement should carefully review the text of the applicable provisions
of the CTBCA set forth in Appendix D to this Proxy Statement--Prospectus and
should also consult with such holder's attorney. THE FAILURE OF A HOLDER OF DFC
COMMON STOCK TO FOLLOW PRECISELY THE PROCEDURES SUMMARIZED ABOVE AND SET FORTH
IN APPENDIX D MAY RESULT IN LOSS OF DISSENTERS' RIGHTS. No further notice of the
events giving rise to dissenters' rights or any steps associated therewith will
be furnished to holders of DFC Common Stock, except as otherwise required by
law.
In general, any objecting shareholder who perfects the right to be paid
the fair value of such holder's DFC Common Stock in cash will recognize taxable
gain or loss for federal income tax purposes upon receipt of such cash in an
amount equal to the difference between the amount of cash received and their
adjusted tax basis in the DFC Common Stock.
<PAGE>
PRO FORMA FINANCIAL INFORMATION
Pro Forma Unaudited Combined Condensed Balance Sheet
of HUBCO and DFC
The following pro forma unaudited combined condensed balance sheet
combines the historical consolidated balance sheets of HUBCO and DFC giving
effect to the Merger, which will be accounted for as a pooling-of-interests, as
if the Merger had been effective on March 31, 1998 and the pro forma adjustments
described in the notes to pro forma financial information. The information set
forth below should be read in conjunction with the historical consolidated
financial statements of HUBCO and DFC, including the respective notes thereto,
certain of which are incorporated by reference in this Proxy
Statement-Prospectus. The financial information for HUBCO has been restated to
include the effect of the merger with TBOS which was consummated on January 12,
1998 and has been accounted for as a pooling of interests. Anticipated cost
savings net of expected Merger-related expenses and restructuring charges are
not expected to be material and, therefore, the pro forma financial data does
not give effect to these items, nor does it take into account HUBCO's pending
acquisitions of CFHC, or IBSF, the Branch Purchase or HUBCO's recently completed
acquisitions of PFC and MSB. See "CERTAIN INFORMATION REGARDING HUBCO - Recent
Developments." None of these acquisitions had closed as of March 31, 1998 and
none are sufficiently material to HUBCO under SEC rules to require inclusion in
this Proxy Statement-Prospectus of financial statements or pro forma financial
information regarding such acquisitions. The pro forma information is not
necessarily indicative of the results of operations which would have been
achieved had the Merger been consummated as of the beginning of the period for
which such data are presented and should not be construed as being
representative of future periods.
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Balance Sheet
As of March 31, 1998
(Dollars in thousands, except per share data)
Pro forma Pro forma
HUBCO DFC Adjustments Combined
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 147,640 $ 11,720 $ -- $ 159,360
Federal funds sold 76,958 29,210 106,168
Securities 864,529 589,174 1,453,703
Loans 1,836,360 374,752 2,211,112
Less: Allowance for loan losses (40,337) (11,871) (52,208)
------------- ----------- ---------- -----------
Total loans 1,796,023 362,881 -- 2,158,904
------------- ------------ ---------- ------------
Other assets 137,540 21,435 158,975
Intangibles, net of amortization 28,276 1,981 30,257
============= ============ =========== ============
Total Assets $ 3,050,966 $ 1,016,401 $ -- $ 4,067,367
============= ============ =========== ============
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $ 623,023 $ 49,210 $ -- $ 672,233
Interest bearing 1,824,993 804,050 2,629,043
------------- ------------ ----------- ------------
Total Deposits 2,448,016 853,260 3,301,276
------------- ------------ ------------
Borrowings 216,915 73,000 289,915
Other liabilities 35,766 7,714 43,480
------------- ------------ ---------- ------------
Total Liabilities 2,700,697 933,974 -- 3,634,671
Subordinated debt 100,000 -- 100,000
Capital Trust Securities 50,000 -- 50,000
Stockholders' Equity:
Preferred stock 50 -- -- 50
Common stock 40,305 5,599 4,198 50,103
Additional paid in capital 75,974 53,576 (7,096) 122,455
Retained earnings 75,200 25,459 -- 100,658
Treasury Stock -- (2,898) 2,898 0
Restricted Stock (708) -- -- (708)
Unrealized gain (loss) on securities
available for sale 9,448 691 -- 10,139
------------- ------------ ----------- ------------
Total Stockholders' Equity 200,269 82,427 -- 282,697
============= ============ =========== ============
Total Liabilities and Stockholders' Equity $ 3,050,966 $ 1,016,401 $ -- $ 4,067,368
============= ============ =========== ============
Common shares outstanding (in thousands)
- maximum exchange ratio 22,669 5,248 28,179
- minimum exchange ratio 22,669 5,248 27,550
Book value per common share
- maximum exchange ratio $ 8.83 $ 15.71 10.03
- minimum exchange ratio $ 8.83 $ 15.71 10.26
</TABLE>
See notes to pro forma financial information.
<PAGE>
Pro Forma Unaudited Combined Condensed Statements of Income of
HUBCO and DFC
The following pro forma unaudited combined condensed statements of
income combine the historical consolidated statements of income of HUBCO and DFC
giving effect to the Merger, which will be accounted for as a
pooling-of-interests, as if the Merger had occurred on the first day of the
applicable periods indicated herein, and the pro forma adjustments described in
the notes to the pro forma financial information. The information set forth
below should be read in conjunction with the consolidated historical financial
statements of HUBCO and DFC and the other pro forma financial information,
including the notes thereto, incorporated by reference or appearing elsewhere in
this Proxy Statement-Prospectus. The financial information for HUBCO has been
restated to include the effect of the merger with TBOS which was consummated on
January 12, 1998 and has been accounted for as a pooling of interest.
Anticipated cost savings net of expected Merger-related expenses and
restructuring charges are not expected to be material and therefore the pro
forma financial data does not give effect to these items. The pro forma
financial data does not take into account HUBCO's pending acquisitions of CFHC
or IBSF, the Branch Purchase or HUBCO's recently completed acquisitions of PFC
and MSB. See "CERTAIN INFORMATION REGARDING HUBCO - Recent Developments." None
of these acquisitions had closed as of March 31, 1998 and none are sufficiently
material to HUBCO under SEC rules to require inclusion in this Proxy
Statement-Prospectus of financial statement or pro forma financial information
regarding such acquisitions. The pro forma financial data is not necessarily
indicative of the actual financial results that would have occurred had the
Merger been consummated as of the beginning of the periods for which such data
are presented and should not be construed as being representative of results
that may be obtained in the future.
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Statement of Income
For the Three Months Ended March 31, 1998
(Dollars in thousands, except per share data)
Pro forma
HUBCO DFC Combined
----------------- -------------------- -----------------
<S> <C> <C> <C>
Interest on loans $ 40,582 $ 7,608 $ 48,190
Interest on securities 12,586 9,486 22,072
Other interest income 561 368 929
---------- ---------- ----------
Total Interest Income 53,729 17,462 71,191
---------- ---------- ----------
Interest on deposits 13,421 9,038 22,459
Interest on borrowings 5,291 1,015 6,306
---------- ---------- ----------
Total Interest Expense 18,712 10,053 28,765
---------- ---------- ----------
Net Interest Income before
provision for loan losses 35,017 7,409 42,426
Provision for possible loan losses 1,939 50 1,989
---------- ---------- ----------
Net Interest Income after
provision for loan losses 33,078 7,359 40,437
Noninterest income 10,948 681 11,629
Noninterest expenses 27,404 3,545 30,949
---------- ---------- ----------
Income before income taxes 16,622 4,495 21,117
Income tax provision 5,652 1,885 7,537
---------- ---------- ----------
Net Income $ 10,970 $ 2,610 $ 13,580
========== ========== ==========
Earnings per share:
Basic - maximum $ 0.48 $ 0.50 $ 0.48
Basic - minimum 0.48 0.50 0.49
Diluted - maximum 0.48 0.49 0.47
Diluted - minimum 0.48 0.49 0.48
Weighted Average Shares Outstanding
(in thousands):
Basic - maximum 22,644 5,218 28,154
Basic - minimum 22,644 5,218 27,525
Diluted - maximum 22,952 5,370 28,767
Diluted - minimum 22,952 5,370 28,104
</TABLE>
See notes to pro forma financial information.
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Statement of Income For the Year Ended
December 31, 1997 (Dollars in thousands, except per share data)
Pro forma Pro forma
HUBCO DFC (6) Combined
-------------- --------------- ------------
<S> <C> <C> <C>
Interest on loans $ 168,052 $ 31,757 $ 199,809
Interest on securities 59,031 29,995 89,026
Other interest income 1,355 1,257 2,612
------------ ------------ ------------
Total Interest Income 228,438 63,009 291,447
------------ ------------ ------------
Interest on deposits 57,468 31,513 88,981
Interest on borrowings 23,993 3,275 27,268
------------ ------------ ------------
Total Interest Expense 81,461 34,788 116,249
------------ ------------ ------------
Net Interest Income
before provision for loan losses 146,977 28,221 175,198
Provision for possible loan losses 8,530 200 8,730
------------ ------------ ------------
Net Interest Income after provision for loan losses 138,447 28,021 166,468
Noninterest income 41,686 2,233 43,919
Noninterest expenses 98,944 13,436 112,380
------------ ------------ ------------
Income before income taxes 81,189 16,818 98,007
Income tax provision (6) 31,512 6,644 38,156
------------ ------------ ------------
Net Income (6) $ 49,677 $ 10,174 $ 59,851
============ ============ ============
Net income per share (6):
Basic - maximum $ 2.14 $ 1.98 $ 2.11
Basic - minimum 2.14 1.98 2.15
Diluted - maximum 2.05 1.92 1.99
Diluted - minimum 2.05 1.92 2.04
Weighted Average Shares Outstanding
(in thousands):
Basic - maximum 22,919 5,149 28,429
Basic - minimum 22,919 5,149 27,800
Diluted - maximum 24,206 5,298 30,021
Diluted - minimum 24,206 5,298 29,358
Net income as previously reported $ 49,677 $ 16,748 $ 66,425
Pro forma Adjustments to income tax -- (6,574) (6,574)
provision (benefit) (6) ========== ========== ==========
Net income as reported herein $ 49,677 $ 10,174 $ 59,851
========== ========== ==========
</TABLE>
See notes to pro forma financial information.
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Statement of Income For the Year Ended
December 31, 1996 (Dollars in thousands, except per share data)
Pro forma Pro forma
HUBCO DFC (6) Combined
-------------- --------------- ------------
<S> <C> <C> <C>
Interest on loans $ 156,772 $ 35,417 $ 192,189
Interest on securities 55,495 15,022 70,517
Other interest income 1,242 952 2,194
------------ ------------ ------------
Total Interest Income 213,509 51,391 264,900
------------ ------------ ------------
Interest on deposits 66,046 21,497 87,543
Interest on borrowings 10,125 3,998 14,123
------------ ------------ ------------
Total Interest Expense 76,171 25,495 101,666
------------ ------------ ------------
Net Interest Income
before provision for loan losses 137,338 25,896 163,234
Provision for loan losses 12,520 2,000 14,520
---------- ---------- ----------
Net Interest Income after provision for loan losses 124,818 23,896 148,714
Noninterest income 30,811 2,375 33,186
Noninterest expenses 120,746 13,808 134,554
------------ ------------ ------------
Income before income taxes 34,883 12,463 47,346
Income tax provision (6) 12,248 5,790 18,038
------------ ------------ ------------
Net Income (6) $ 22,635 $ 6,673 $ 39,308
============ ============ ============
Net income per share (6):
Basic - maximum $ 0.94 $ 1.31 $ 1.02
Basic - minimum 0.94 1.31 1.04
Diluted - maximum 0.90 1.30 0.95
Diluted - minimum 0.90 1.30 0.97
Weighted Average Shares Outstanding:
(in thousands)
Basic - maximum 23,247 5,084 28,757
Basic - minimum 23,247 5,084 28,128
Diluted - maximum 25,048 5,145 30,863
Diluted - minimum 25,048 5,145 30,200
Net income as previously reported $ 22,635 $ 12,473 $ 35,108
Pro forma Adjustements to income tax -- (5,800) (5,800)
provision (benefit) (6) ========== ========== ==========
Net income as reported herein $ 22,635 $ 6,673 $ 29,308
========== ========== ==========
</TABLE>
See notes to pro forma financial information.
<PAGE>
<TABLE>
<CAPTION>
Pro forma Unaudited Combined Condensed Statement of Income For the Year Ended
December 31, 1995 (Dollars in thousands, except per share data)
Pro forma Pro forma
HUBCO DFC (6) Combined
-------------- --------------- ---------------
<S> <C> <C> <C>
Interest on loans $ 154,151 $ 39,781 $ 193,932
Interest on securities 56,172 6,395 62,567
Other interest income 1,935 1,300 3,235
------------ ------------ ------------
Total Interest Income 212,258 47,476 259,734
------------ ------------ ------------
Interest on deposits 64,598 17,893 82,491
Interest on borrowings 8,787 4,186 12,973
------------ ------------ ------------
Total Interest Expense 73,385 22,079 95,464
------------ ------------ ------------
Net Interest Income
before provision for loan losses 138,873 25,397 164,270
Provision for loan losses 10,274 7,550 17,824
---------- ---------- ----------
Net Interest Income after provision for loan losses 128,599 17,847 146,446
Noninterest income 28,677 2,378 31,055
Noninterest expenses 106,584 16,997 123,581
------------ ------------ ------------
Income before income taxes 50,692 3,228 53,920
Income tax provision (6) 15,084 1,997 17,081
------------ ------------ ------------
Net Income (6) $ 35,608 $ 1,231 $ 36,839
============ ============ ============
Net income per share (6):
Basic - maximum $ 1.52 $ 0.25 $ 1.30
Basic - minimum 1.52 0.25 1.33
Diluted - maximum 1.43 0.24 1.20
Diluted - minimum 1.43 0.24 1.22
Weighted Average Common Shares:
(in thousands)
Basic - maximum 22,857 5,006 28,367
Basic - minimum 22,857 5,006 27,738
Diluted - maximum 24,935 5,026 30,750
Diluted - minimum 24,935 5,026 30.087
Net income as previously reported $ 35,608 $ 6,041 $ 41,649
Pro forma adjustments to income tax -- (4,810) (4,810)
provision (benefit) (6) ========== ========== ==========
Net income as reported herein $ 35,608 $ 1,231 $ 36,839
========== ========== ==========
</TABLE>
See notes to pro forma financial information.
<PAGE>
Notes to pro forma financial information:
(1) Pro forma financial information assumes the Merger was consummated as
of March 31, 1998 for the pro forma unaudited combined condensed
balance sheet and as of the beginning of each of the periods indicated
for the pro forma unaudited combined condensed statements of income.
The pro forma information presented is not necessarily indicative of
the results of operations or the combined financial position that would
have resulted had the Merger been consummated at the beginning of the
periods indicated, nor is it necessarily indicative of the results of
operations in future periods or the future financial position of the
combined entities.
(2) It is assumed that the Merger will be accounted for on a
pooling-of-interests accounting basis, and accordingly, the related pro
forma adjustments herein reflect, where applicable, a Maximum Exchange
Ratio of 1.05 shares of HUBCO Common Stock for each of the 5,248,067
(net of 351,607 treasury shares held) shares of DFC Common Stock which
were outstanding at March 31, 1998.
(3) The pro forma financial information presented herein gives effect to
the cancellation of 351,607 shares of DFC Common Stock held in DFC's
treasury at a cost of $2,898,386.
In summary, the pro forma information reflects adjustments for the
Merger accounted for using the pooling-of-interests accounting method
assuming the 1.05 Maximum Exchange Ratio, as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C> <C>
(i) Issuance of 5,510,471 shares of $ 9,798
HUBCO Common Stock (stated
value of $1.778 per share)
(ii) Elimination of 5,599,674 shares of (5,600)
DFC Common Stock ($1.00 par value)
-------
Adjustment to Common stock 4,198
(iii) Eliminate DFC's treasury stock 2,898
-------
Adjustment offset to additional 7,096
paid-in capital
</TABLE>
(4) Earnings per share data has been computed based on the combined
historical net income applicable to common shareholders of HUBCO using
the historical weighted average shares outstanding of HUBCO Common
Stock for the given period and the HUBCO Common Stock to be issued in
connection with the Merger.
(5) The pro forma information presented above does not reflect HUBCO's
pending acquisitions of IBSF or CFHC, the pending Branch Purchase or
the recently completed acquisitions of MSB or PFC. See "CERTAIN
INFORMATION REGARDING HUBCO - Recent Developments."
(6) The restatement of DFC's historical 1997, 1996, and 1995 statements of
income relates to the reversal of federal tax benefits previously
recognized by DFC in 1997, 1996 and 1995 as a result of DFC's reversal
of its valuation allowance on deferred tax assets. DFC established a
valuation allowance on both federal and state deferred tax assets upon
adoption of SFAS #109 due to uncertainities regarding DFC's ability to
realize its deferred tax assets. Subsequently, as a result of improved
profitability, the valuation allowance was reversed during 1995, 1996
and 1997, resulting in significant income tax benefits in those years.
The pro forma adjustment to income tax provision (benefit) is a
reversal of the tax benefits described above.
The valuation allowance that existed as of December 31, 1994 is not
needed on a pro forma basis. The evaluation of the need for a valuation
allowance is based on the combined results of HUBCO and DFC. HUBCO
files a consolidated federal tax return with its subsidiaries, and
therefore any losses sustained by DFC would be offset by profits of
HUBCO and its other subsidiaries and no valuation allowance would be
required as of December 31, 1994 had the companies always be combined.
Accordingly, the pro forma financial statements include a pro forma
adjustment to reflect what the changes to valuation allowance would
have been had the companies always been combined.
<PAGE>
DESCRIPTION OF HUBCO CAPITAL STOCK
General
The authorized capital stock of HUBCO presently consists of 53,045,000
shares of HUBCO Common Stock and 10,300,000 shares of preferred stock. As of
June 1, 1998, _____________ shares of HUBCO Common Stock were issued and
outstanding, and 500 shares of HUBCO Series B Preferred Stock were outstanding.
Under the terms of HUBCO's Certificate of Incorporation, the Board of
Directors of HUBCO has authority at any time (i) to divide any or all of the
authorized but unissued shares of preferred stock into series and determine the
designations, number of shares, relative rights, preferences and limitations of
any such series and (ii) to increase the number of shares of any such series
previously determined by it and to decrease such previously determined number of
shares to a number not less than that of the shares of such series then
outstanding. HUBCO Series A Convertible Preferred Stock was issued pursuant to
such authority in connection with HUBCO's acquisition of Washington Bancorp,
Inc. on July 1, 1994; no HUBCO Series A Preferred Stock remains outstanding. In
December, 1996, as part of the acquisition of Westport Bancorp, Inc., HUBCO
issued HUBCO Series B Convertible Preferred Stock; 500 shares of HUBCO Series B
Convertible Preferred Stock remain outstanding as of March 31, 1998. See " --
Description of HUBCO Preferred Stock".
HUBCO's Certificate of Incorporation authorizes the Board of Directors
of HUBCO (except in connection with certain business combinations), from time to
time and without further shareholder action, to issue new shares of authorized
but unissued HUBCO Common Stock or preferred stock. Because of its broad
discretion with respect to the creation and issuance of HUBCO Common Stock or
preferred stock without shareholder approval, the Board of Directors could
adversely affect the voting power of holders of HUBCO Common Stock or preferred
stock and, by issuing shares of preferred stock with certain voting, conversion
and/or redemption rights, could discourage any attempt to gain control of HUBCO.
Description of HUBCO Common Stock
The following description of the HUBCO Common Stock sets forth certain
general terms of the HUBCO Common Stock. For an additional description relating
to the HUBCO Common Stock, see "COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF DFC
AND HUBCO".
Dividend Rights
The holders of HUBCO Common Stock are entitled to receive dividends,
when, as and if declared by the Board of Directors of HUBCO out of funds legally
available therefor, subject to the preferential dividend rights of any preferred
stock that may be outstanding. The only statutory limitation is that such
dividends may not be paid when HUBCO is insolvent. Because funds for the payment
of dividends by HUBCO come primarily from the earnings of HUBCO's bank
subsidiaries, as a practical matter, restrictions on the ability of those bank
subsidiaries to pay dividends act as restrictions on the amount of funds
available for the payment of dividends by HUBCO.
As a New Jersey chartered commercial bank, HUB is subject to the
restrictions on the payment of dividends contained in the NJBA. Under the NJBA,
HUB may pay dividends only out of retained earnings, and out of surplus to the
extent that surplus exceeds 50% of stated capital. Under the CBL, Lafayette may
pay dividends only from its net profits, and the total of all dividends in any
calendar year may not (unless specifically approved by the CTDOB) exceed the
total of its net profits of that year combined with its retained net profits of
the preceding two years. Under the Financial Institutions Supervisory Act, the
Federal Deposit Insurance Corporation ("FDIC") has the authority to prohibit a
state-chartered bank from engaging in conduct which, in the FDIC's opinion,
constitutes an unsafe or unsound banking practice. Under certain circumstances,
the FDIC could claim that the payment of a dividend or other distribution by HUB
or Lafayette to HUBCO constitutes an unsafe or unsound practice. In addition,
BTH, HUBCO's recently acquired New York-based bank, will serve as an additional
source of dividends to HUBCO. Payment of any such dividends by BTH, will be
subject to the regulations of the OTS, if BTH continues to be federally
chartered, or the New York Banking Law, if BTH converts to a New York
State-chartered bank. Under the Office of the Thrift Supervision Regulations
(the "OTSR"), BTH may pay dividends up to an amount equal to one hundred percent
of its net income to date during the calendar year plus the amount that would
reduce by one-half its surplus capital ratio at the beginning of the calendar
year or up to an amount equal to seventy-five percent of its net income over the
most recent four-quarter period, provided in each case that if immediately after
giving effect to such proposed dividend (on a pro forma basis), BTH's capital is
equal to or greater than the amount of its regulatory capital requirement.
HUBCO is also subject to certain FRB policies which may, in certain
circumstances, limit its ability to pay dividends. The FRB policies require,
among other things, that a bank holding company maintain a minimum capital base.
The FRB would most likely seek to prohibit any dividend payment which would
reduce a holding company's capital below such minimum amount.
At March 31, 1998, HUB had $130.1 million available for the payment of
dividends to HUBCO, Lafayette had $1.7 million available for the payment of
dividends to HUBCO. At March 31, 1998 (prior to its New York State
acquisitions), HUBCO had $104.0 million available for shareholder dividends, the
payment of which would not reduce any of its capital ratios below the minimum
regulatory requirements. As of March 31, 1998, BTH had $9.7 million available
for the payment of dividends.
Voting Rights
At meetings of shareholders, holders of HUBCO Common Stock are entitled
to one vote per share. The quorum for shareholders' meetings is a majority of
the outstanding shares entitled to vote represented in person or by proxy.
Except as indicated below, all actions and authorizations to be taken or given
by shareholders require the approval of a majority of the votes cast by holders
of HUBCO Common Stock at a meeting at which a quorum is present.
The Board of Directors is divided into three classes of directors, each
class being as nearly equal in number of directors as possible. Approximately
one-third of the entire Board of Directors is elected each year and the
directors serve for terms of up to three years, and, in all cases, until their
respective successors are duly elected and qualified.
The exact number of directors and the number constituting each class is
fixed from time to time by resolution adopted by a majority of the entire Board
of Directors. Shareholders may remove any director from office for cause. The
affirmative vote of at least three-quarters of the shares of HUBCO entitled to
vote thereon is required to amend or repeal the provisions of HUBCO's
Certificate of Incorporation relating to the classification of the Board of
Directors and the removal of directors.
HUBCO's Certificate of Incorporation contains a "minimum price"
provision. If a "related person" (defined in the Certificate of Incorporation to
include persons who, together with their affiliates, own 10% or more of HUBCO's
Common Stock) proposes to enter into a Business Combination (as defined in the
Certificate of Incorporation) with HUBCO, the proposed transaction will require
the affirmative vote of at least three-quarters of the outstanding shares
entitled to vote on the transaction, unless either (i) the proposed transaction
is first approved by a majority of HUBCO's Board of Directors, or (ii) the
shareholders of HUBCO are offered consideration in an amount equal to or in
excess of an amount determined in accordance with a formula contained in the
Certificate of Incorporation. If either of these tests are met, the proposed
transaction need only be approved by the vote otherwise required by law, the
Certificate of Incorporation and any agreement with a national securities
exchange.
Liquidation Rights
In a liquidation, holders of HUBCO Common Stock are entitled to receive
ratably any assets distributed to shareholders, except that if shares of
preferred stock of HUBCO are outstanding at the time of liquidation, such shares
of preferred stock may have prior rights upon liquidation.
Assessment and Redemption
All outstanding shares of HUBCO Common Stock are fully paid and
nonassessable. HUBCO Common Stock is not redeemable at the option of the issuer
or the holders thereof.
Preemptive and Conversion Rights
Holders of HUBCO Common Stock do not have conversion rights or
preemptive rights with respect to any securities of HUBCO.
Description of HUBCO Preferred Stock
General
500 shares of HUBCO Series B Convertible Preferred Stock ("HUBCO Series
B Preferred Stock") remain outstanding as of March 31, 1998. The following is a
description of the existing HUBCO Series B Preferred Stock.
HUBCO Series B Preferred Stock
Dividend Rights. The holders of HUBCO Series B Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors of HUBCO
out of funds legally available therefore, dividends at a rate to be determined
by the Corporation's Board of Directors. All dividends declared on the HUBCO
Series B Preferred Stock are pro rata per share and noncumulative. The only
statutory limitation is that such dividends may not be paid when HUBCO is
insolvent.
Liquidation Rights. The holders of HUBCO Series B Preferred Stock are
entitled to receive $100.00 per share in any liquidation, dissolution or winding
up of HUBCO, subject to the rights of creditors. In a liquidation, dissolution
or winding up, the preferential amounts with respect to the HUBCO Series B
Preferred Stock and any stock on parity with HUBCO Series B Preferred Stock,
shall be distributed pro rata in accordance with the aggregate preferential
amounts of the HUBCO Series B Preferred Stock and such stock on parity, if any,
out of or to the extent of the net assets of HUBCO legally available for such
distribution before any distributions are made with respect to any stock junior
to the rights of HUBCO Series B Preferred Stock.
Redemption. The HUBCO Series B Preferred Stock is not redeemable at the
option of the issuer or the holders thereof.
Preemptive and Conversion Rights. Holders of HUBCO Series B Preferred
Stock have an option to convert such stock into fully paid and nonassessable
shares of HUBCO Common Stock. As of March 31, 1998, the conversion rate was
33.2175 shares of Common Stock for each share of HUBCO Series B Preferred Stock
(the "Conversion Ratio"). The Conversion Ratio is subject to adjustment upon
certain events, including the issuance of HUBCO Common Stock as a dividend with
respect to the outstanding HUBCO Common Stock, subdivision or combinations of
HUBCO Common Stock, the issuance to holders of HUBCO Common Stock generally of
rights or warrants to subscribe for HUBCO Common Stock, or the distribution to
holders of HUBCO Common Stock generally of evidences of indebtedness, assets
(excluding dividends in cash out of retained earnings) or rights or warrants to
subscribe for securities of HUBCO other than those mentioned herein.
Notwithstanding the foregoing, the Conversion Ratio is not subject to adjustment
to the extent HUBCO issues any HUBCO Common Stock in connection with any
employee compensation and benefits plans, employee agreements and contracts.
Holders of HUBCO Series B Preferred Stock do not have preemptive rights with
respect to any securities of HUBCO.
Voting Rights. Holders of shares of HUBCO Series B Preferred Stock vote
together as a class with holders of HUBCO Common Stock for the election of
directors and all other matters to which holders of HUBCO Common Stock are
entitled to vote. Each share of HUBCO Series B Preferred Stock is entitled to a
number of votes equal to the Conversion Ratio as the same may be adjusted from
time to time.
COMPARISON OF THE RIGHTS OF SHAREHOLDERS
OF DFC AND HUBCO
General
DFC is a business corporation incorporated under the
Connecticut Business Corporation Act (the "CTBCA") and HUBCO is a business
corporation incorporated under the New Jersey Business Corporation Act (the
"NJBCA"). The rights of DFC shareholders are currently governed by the CTBCA and
DFC's certificate of incorporation and by-laws. At the Effective Time, each DFC
shareholder will become a shareholder of HUBCO. The rights of HUBCO shareholders
are governed by the NJBCA and HUBCO's certificate of incorporation and by-laws.
The following is a comparison of certain provisions of the CTBCA, the NJBCA and
the respective certificates of incorporation and by-laws of DFC and HUBCO. This
summary does not purport to be complete and is qualified in its entirety by
reference to the CTBCA and the NJBCA, which may change from time to time, and
the certificates of incorporation and by-laws of HUBCO and DFC (which are filed
or incorporated by reference as exhibits to the Registration Statement), which
also may be changed.
Voting Requirements
Under the NJBCA, unless a greater vote is specified in the certificate
of incorporation, the amendment to the certificate of incorporation of a New
Jersey corporation, the voluntary dissolution of the corporation, the sale or
other disposition of all, or substantially all of the assets of the corporation
other than in the ordinary course of business or the merger or consolidation of
the corporation with another corporation, require, in each case, a majority of
the votes cast by shareholders of the corporation entitled to vote thereon. The
HUBCO Certificate requires the affirmative vote of 75% of the outstanding shares
entitled to vote on certain transactions involving "related persons" unless the
proposed transaction is either first approved by a majority of the HUBCO Board
or the shareholders of HUBCO are offered consideration in an amount equal to or
in excess of an amount determined in accordance with a formula contained in the
HUBCO Certificate of Incorporation. See "DESCRIPTION OF HUBCO CAPITAL STOCK --
Description of HUBCO Common Stock -- Voting Rights."
Under the CTBCA, unless a greater vote is specified in the certificate
of incorporation or by a corporation's board of directors, most amendments to
the certificate of incorporation of a Connecticut corporation, once approved by
the corporation's directors, must be approved by a majority of the corporation's
shareholders voting on the amendment. The CTBCA provides that shareholder
approval is not required for certain "housekeeping" changes to a corporation's
certificate of incorporation.
The CTBCA provides that the voluntary dissolution of a Connecticut
corporation that was incorporated prior to January 1, 1997 must be approved by
the affirmative vote of at least two-thirds of the shares entitled to vote
thereon, unless such corporation's certificate of incorporation specifically
provides otherwise. DFC was incorporated prior to that date, and its certificate
of incorporation does not allow for a lesser vote.
Similarly, because DFC was incorporated prior to January 1, 1997 and
does not provide otherwise in its certificate of incorporation, under the CTBCA,
DFC cannot sell or otherwise dispose of all or substantially all of its assets
other than in the ordinary course of business without first obtaining the
approval of two-thirds of the voting power of each voting group entitled to vote
thereon and two-thirds of the voting power of each class of stock of DFC
outstanding prior to January 1, 1997, whether or not otherwise entitled to vote
thereon.
Under the CTBCA, a Connecticut corporation incorporated prior to
January 1, 1997, unless its certificate of incorporation provides otherwise,
cannot merge with another corporation without first obtaining the approval of
two-thirds of the corporation's shareholders entitled to vote on the
transaction. DFC's certificate of incorporation does not provide for a different
shareholder vote on merger proposals.
Removal of Directors; Number of Directors
The NJBCA allows removal of directors for cause by the affirmative vote
of the majority of the votes cast by the holders of shares entitled to vote for
the election of directors. HUBCO's Certificate of Incorporation states that
shareholders may remove a director from office only for cause. HUBCO's
Certificate of Incorporation also allows shareholders to increase or decrease
the number of directors constituting the Board by the affirmative vote of at
least three-quarters of all of the outstanding shares of common stock entitled
to vote.
The CTBCA allows shareholders to remove directors, with or without
cause, unless the corporation's certificate of incorporation provides that
directors may be removed only for cause, by the affirmative vote of a majority
of the shares voting on the removal. The DFC certificate of incorporation is
more restrictive. It provides for the removal of directors only for cause and by
the affirmative vote of eighty percent of the voting power of the issued and
outstanding shares entitled to vote thereon.
Under the CTBCA, a board of directors shall consist of one or more
individuals, with the number specified in the corporation's certificate of
incorporation or bylaws. DFC's certificate provides that its board of directors
shall consist of not less than three members, and its Bylaws states that DFC's
board shall have no fewer than three or more than twenty-one directors. Under
the CTBCA, the number of DFC directors may be increased up to the maximum
allowed for in its Bylaws by an affirmative vote of a majority of its shares
voting on the proposed increase.
Stock
The authorized capital stock of HUBCO consists of 53,045,000 shares of
HUBCO Common Stock and 10,300,000 shares of preferred stock. As of June 1, 1998,
_____________ shares of HUBCO Common Stock were issued and outstanding, and 500
shares of HUBCO Series B Preferred Stock were outstanding. Under the terms of
the HUBCO Certificate of Incorporation, the HUBCO Board has authority at any
time to divide any or all of the authorized but unissued shares of preferred
stock into series, determine the designations, number of shares, relative
rights, preferences, and limitations of any such series and authorize the
issuance of such series. See "DESCRIPTION OF HUBCO CAPITAL STOCK".
The authorized capital stock of DFC consists of 9,000,000 shares of DFC
Common Stock, par value $1.00 per share, and 1,000,000 shares of DFC preferred
stock, no par value. As of March 31, 1998, 5,248,067 shares of DFC Common Stock
were issued and outstanding, and no shares of DFC preferred stock were
outstanding. Under the DFC certificate of incorporation, the DFC Board has the
authority, subject to the limitations set forth by law, to issue shares of
preferred stock in series, establish the number of shares to be included in each
series, and to fix the designation, powers, preferences, and relative,
participating, optional, or other special rights of the shares of each series
and the qualifications, limitations, or restrictions thereof.
Classified Board of Directors
The NJBCA permits a New Jersey corporation to provide for a classified
board. HUBCO currently has a classified Board of Directors. The Board is divided
into three classes, with one class of directors generally elected for a
three-year term at each annual meeting.
Under the CTBCA, a Connecticut corporation also can have a classified
board of directors. Currently, DFC's certificate of incorporation provides for
three classes of directors, with each director serving a term of three years.
Accordingly, the DFC Board is divided into three classes, with one class of
directors generally elected for a three year term at each annual meeting.
Rights of Dissenting Shareholders
Shareholders of a New Jersey corporation who dissent from a merger,
consolidation, sale of all or substantially all of the corporation's assets or
certain other corporate transactions are generally entitled to appraisal rights.
No statutory right of appraisal exists, however, where the stock of the New
Jersey corporation is (i) listed on a national securities exchange, (ii) is held
of record by not less than 1,000 holders, or (iii) where the consideration to be
received pursuant to the merger, consolidation or sale consists of cash or
securities or other obligations which, after the transaction, will be listed on
a national securities exchange or held of record by not less than 1,000 holders.
Under the CTBCA, any shareholder of a Connecticut corporation has the
right to dissent from certain enumerated corporate actions, including mergers,
share exchanges and the sale or exchange of all, or substantially all, of the
property of a Connecticut corporation other than in the usual course of
business. Under Connecticut law, dissenting shareholders shall be entitled to
receive the fair market value of their shares, and the right to receive such
shall be a dissenting shareholders' exclusive remedy. See "RIGHTS OF DISSENTING
DFC SHAREHOLDERS."
Shareholder Consent to Corporate Action
Except as otherwise provided by the certificate of incorporation (and
the HUBCO Certificate presently is silent on this issue), the NJBCA permits any
action required or permitted to be taken at any meeting of a corporation's
shareholders, other than the annual election of directors, to be taken without a
meeting upon the written consent of shareholders who would have been entitled to
cast the minimum number of votes necessary to authorize such action at a meeting
of shareholders at which all shareholders entitled to vote were present and
voting. The annual election of directors, if not conducted at a shareholders'
meeting, may only be effected by either (i) unanimous written consent of all
shareholders entitled to vote on the issue or (ii) written consent of
shareholders who would have been entitled to cast the minimum number of votes
necessary to authorize such action at a meeting, together with advanced notice
to all other shareholders. Under the NJBCA, a shareholder vote on a plan of
merger or consolidation, if not conducted at a shareholders' meeting, may only
be effected by written consent of shareholders who would have been entitled to
cast the minimum number of votes necessary to authorize such action at a
meeting, together with advance notice to all other shareholders. HUBCO's By-laws
provide that a special meeting of shareholders may be called for any purpose by
the Chairman of the Board, the President or the Board of Directors.
Under the CTBCA, any action that may be taken at a shareholders'
meeting may be taken without a meeting by the unanimous written consent of the
shareholders who would have been entitled to vote on the matter had a meeting
been held. Action may be taken by the written consent of less than all of a
corporation's shareholders entitled to vote on a matter if specifically allowed
for in a corporation's certificate of incorporation. In no event, however, may
directors be elected by action of shareholders without a meeting other than by
unanimous written consent, or pursuant to a plan of merger. DFC's certificate of
incorporation expressly prohibits any shareholder action from being taken by
written consent. All action required or permitted to be taken by DFC's
shareholders must be effected at a duly called annual or special meeting of DFC
shareholders. Special meetings of DFC shareholders may be called at any time by
the President, the Board, or on the written request of the holders of at least
thirty-five percent of the issued and outstanding shares of stock entitled to
vote at a meeting of shareholders.
Dividends
Unless there are other restrictions contained in its certificate of
incorporation (and the HUBCO Certificate presently contains none), the NJBCA
generally provides that a New Jersey corporation may declare and pay dividends
on its outstanding stock so long as the corporation is not insolvent and would
not become insolvent as a consequence of the dividend payment. Because funds for
the payment of dividends by HUBCO come primarily from the earnings of HUBCO's
bank subsidiaries, as a practical matter, restrictions on the ability of HUB,
Lafayette or BTH to pay dividends act as restrictions on the amount of funds
available for the payment of dividends by HUBCO. At March 31, 1998, HUBCO had
approximately $104.0 million available for shareholder dividends. For a
description of the regulatory restrictions on dividend payments by HUB, and
Lafayette and BTH, see "DESCRIPTION OF HUBCO CAPITAL STOCK -- Description of
HUBCO Common Stock -- Dividend Rights."
Under the CTBCA, unless expressly restricted in the certificate of
incorporation, the directors of a Connecticut corporation may declare and pay
dividends. The CTBCA, however, prohibits a corporation from declaring and paying
dividends if, after doing so: (i) the corporation would be left unable to pay
its debts; or (ii) its total assets would be less than the sum of its total
liabilities plus, unless its certificate of incorporation provides otherwise,
the amount that would be needed to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the distribution if the corporation were to be dissolved at the time
of distribution.
DFC's certificate of incorporation provides that dividends on
outstanding shares of preferred stock shall be paid, or declared and set apart
for payment, before any dividends shall be paid or declared and set apart for
payment on the DFC Common Stock with respect to the same dividend period. It
also sets forth that, if upon the voluntary or involuntary liquidation,
dissolution, or winding up of DFC, the assets available for distribution to
holders of shares of preferred stock of all series shall be insufficient to pay
such holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series of preferred
stock in accordance with the respective preferential amounts payable with
respect thereto. No shares of DFC preferred stock are presently outstanding.
By-laws
Under the NJBCA, the board of directors of a New Jersey corporation has
the power to adopt, amend, or repeal the corporation's by-laws, unless such
powers are reserved in the certificate of incorporation to the shareholders. The
HUBCO Certificate does not reserve such power.
Under the CTBCA, the board of directors of a Connecticut corporation
may adopt, amend or repeal the corporation's bylaws unless: (1) the
corporation's certificate of incorporation reserves this power to the
corporation's shareholders; or (2) the shareholders, in amending or repealing a
particular bylaw, provide expressly that the board of directors may not amend or
repeal that bylaw. Furthermore, the CTBCA allows a corporation's shareholders to
amend or repeal a corporation's bylaws even though the bylaws may also be
amended or repealed by its board of directors.
DFC's Bylaws and certificate of incorporation allow the Bylaws to be
altered, amended, added to or repealed by the affirmative vote of the holders of
a majority of the voting power of shares entitled to vote thereon or by the
affirmative vote of directors holding a majority of the number of directorships.
DFC's Bylaws and certificate of incorporation require that the alteration,
amendment and repeal of and the addition to certain sections of its Bylaws be
approved by the affirmative vote of the holders of not less than eighty percent
of the voting power of the issued and outstanding shares entitled to vote
thereon. The sections are those pertaining to special meetings of shareholders;
the number, election, and terms of office of directors; shareholder nomination
of director candidates; removal of directors; vacancies on the board of
directors; and amendments to the bylaws.
Limitations of Liability of Directors and Officers
Under New Jersey law, a corporation may include in its certificate of
incorporation a provision which would, subject to the limitations described
below, eliminate or limit a directors' or an officers' personal liability to the
corporation or its shareholders for monetary damage for breaches of their
fiduciary duty as a director or officer. Under New Jersey law, a director or
officer cannot be relieved from liability or otherwise indemnified for any
breach of duty based upon an act or omission (i) in breach of such person's duty
of loyalty to the corporation or its shareholders, (ii) not in good faith or
involving a knowing violation of law, or (iii) resulting in receipt by such
person of an improper personal benefit. HUBCO's Certificate of Incorporation
contains a provision which limits a director's or officer's liability to the
full extent permitted by New Jersey law.
Under the CTBCA, directors and officers of Connecticut corporations are
not liable for any actions taken as directors or officers, or any failure to
take action, if they acted, or failed to act, in a manner consistent with the
standard of care established for directors and officers under Connecticut law. A
director or officer must exercise his or her duties: (i) in good faith; (ii)
with the care an ordinarily prudent person in a like position would exercise
under similar circumstances; and (iii) in a manner he or she reasonably believes
to be in the best interest of the corporation.
The DFC certificate of incorporation expressly limits the personal
liability of any director for monetary damages for breach of duty as a director
to the amount of the compensation received by the director for serving the
corporation during the year of the violation provided: (i) the breach did not
involve a knowing or culpable violation of law; (ii) the breach did not enable
the director or an associate to receive an improper personal economic gain;
(iii) the breach did not show a lack of good faith or a conscious disregard of
the director's duty to the corporation; (iv) the breach did not constitute a
sustained or unexcused pattern of inattention to the director's duty; or (v) the
breach did not create liability of the director to the corporation in connection
with the director's approval of an unlawful distribution.
Indemnification of Directors and Officers
The NJBCA provides that a corporation has the power to indemnify a
director, officer, employee or agent ("Corporate Agent") against his or her
expenses and liabilities in connection with any proceeding involving the
Corporate Agent by reason of his or her being or having been a Corporate Agent,
other than a proceeding by or in the right of the corporation, if: (i) the
Corporate Agent was acting in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation; and
(ii) with respect to any criminal proceeding, the Corporate Agent had no
reasonable cause to believe that his or her conduct was unlawful. A corporation
has the power to indemnify a Corporate Agent against his or her expenses in
connection with any proceeding by or in the right of the corporation to procure
a judgment in its favor which involves the Corporate Agent because he or she was
or is a Corporate Agent, if he or she acted in good faith and in a manner the
Corporate Agent reasonably believed to be in or not opposed to the best
interests of the corporation.
HUBCO's Certificate of Incorporation provides that HUBCO shall
indemnify its current and former officers, directors, employees and agents
against expenses incurred in connection with any pending or threatened action,
suit, or proceeding, with respect to which the officer, director, employee or
agent is a party, or is threatened to be made a party, to the full extent
permitted by the NJBCA. HUBCO maintains directors' and officers' liability
insurance on behalf of such persons.
Under the CTBCA, a Connecticut corporation may indemnify its directors,
officers, employees and agents made a party to a proceeding because he or she
was a director, officer, employee or agent against liability incurred in the
proceeding if: (i) he or she conducted himself or herself in good faith; (ii) he
or she reasonably believed that his or her conduct was not inconsistent with the
best interests of the corporation; and (iii) in the case of any criminal
proceeding, he or she had no reasonable cause to be believe his or her conduct
was unlawful. The CTBCA also allows corporations to pay for or reimburse the
reasonable expenses incurred by a director, officer, employee and agent who is a
party to a proceeding in advance of its final disposition. The CTBCA, however,
requires Connecticut corporations incorporated prior to January 1, 1997 to
provide their directors, officers, employees and agents with the full amount of
indemnification and advancement of expenses permitted under Connecticut law,
unless a corporation's certificate of incorporation expressly provides
otherwise. DFC was incorporated prior to January 1, 1997, and its certificate of
incorporation does not provide otherwise. Furthermore, DFC's Bylaws state that
it shall provide indemnification to its officers, directors, employees and to
such other persons specified in Connecticut law to the full extent permitted or
required of Connecticut corporations.
SHAREHOLDER PROPOSALS
The 1998 Annual Meeting of Shareholders of DFC has been postponed, and,
as of the date hereof, has not been rescheduled. If the Merger is approved and
consummated, it is anticipated that the 1998 Annual Meeting of Shareholders of
DFC will not be held. If DFC holds the 1998 Annual Meeting of Shareholders, any
proposal which a DFC shareholder wishes to have included in the proxy materials
of DFC must have been presented to DFC not later than November 7, 1997. No such
proposal was received prior to March 20, 1998.
OTHER MATTERS
As of the date of this Proxy Statement, the DFC Board of Directors
knows of no other matters to be presented for action by the shareholders at the
Meeting. If any other matters are properly presented, the persons named in the
enclosed proxy intend to vote in accordance with their best judgment on such
matters.
LEGAL OPINION
Certain legal matters relating to the issuance of the shares of HUBCO
Common Stock offered hereby will be passed upon by Pitney, Hardin, Kipp & Szuch,
counsel to HUBCO. Attorneys in the law firm of Pitney, Hardin, Kipp & Szuch,
beneficially owned 792 shares of HUBCO Common Stock as of June 2, 1998. Certain
legal matters in connection with the Merger will be passed upon for DFC by Day,
Berry & Howard LLP, counsel to DFC.
EXPERTS
The consolidated financial statements of DFC as of December 31, 1997
and 1996, and for each of the years in the three year period ended December 31,
1997, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated herein by reference, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of HUBCO as of December 31, 1997
and 1996 and for each of the years in the three year period ended December 31,
1997, incorporated by reference herein, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports.
KPMG Peat Marwick LLP will have a representative at the Meeting who
will have an opportunity to make a statement if such representative desires, and
who will be available to respond to appropriate questions.
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 31, 1998
("Agreement"), is among HUBCO, Inc. ("HUBCO"), a New Jersey corporation and
registered bank holding company, Lafayette American Bank (the "Bank"), a
Connecticut state-chartered commercial banking corporation and wholly-owned
subsidiary of HUBCO, Dime Financial Corporation, a Connecticut corporation and
registered bank holding company ("DFC"), and The Dime Savings Bank of
Wallingford, a state savings bank and wholly-owned subsidiary of DFC (the
"Dime").
RECITALS
The respective Boards of Directors of HUBCO and DFC have each
determined that it is in the best interests of HUBCO and DFC and their
respective shareholders for HUBCO to acquire DFC by merging DFC with and into
HUBCO with HUBCO surviving and DFC shareholders receiving the consideration
hereinafter set forth. Immediately after the merger of DFC into HUBCO, the Dime
shall be merged with and into the Bank with the Bank surviving.
The respective Boards of Directors of DFC, HUBCO, the Bank and
the Dime have each duly adopted and approved this Agreement and the Board of
Directors of DFC has directed that it be submitted to DFC's shareholders for
approval.
As a condition for HUBCO to enter into this Agreement, HUBCO
has required that it receive an option on certain authorized but unissued shares
of DFC Common Stock (as hereinafter defined) and, simultaneously with the
execution of this Agreement, DFC is issuing an option to HUBCO (the "HUBCO Stock
Option") to purchase certain shares of the authorized and unissued DFC Common
Stock subject to the terms and conditions set forth in the Agreement governing
the HUBCO Stock Option.
NOW, THEREFORE, intending to be legally bound, the parties
hereto hereby agree as follows:
ARTICLE I - THE MERGER
1.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereafter defined), DFC shall be merged
with and into HUBCO (the "Merger") in accordance the New Jersey Business
Corporation Act (the "NJBCA") and the Connecticut Business Corporation Act
("CBC") and HUBCO shall be the surviving corporation (the "Surviving
Corporation").
1.2. Effect of the Merger. At the Effective Time, the
Surviving Corporation shall be considered the same business and corporate entity
as each of HUBCO and DFC and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of HUBCO and DFC shall vest in the
Surviving Corporation and the Surviving Corporation shall be subject to and be
deemed to have assumed all of the debts, liabilities, obligations and duties of
each of HUBCO and DFC and shall have succeeded to all of each of their
relationships, as fully and to the same extent as if such property, rights,
privileges, powers, franchises, debts, liabilities, obligations, duties and
relationships had been originally acquired, incurred or entered into by the
Surviving Corporation. In addition, any reference to either of HUBCO and DFC in
any contract or document, whether executed or taking effect before or after the
Effective Time, shall be considered a reference to the Surviving Corporation if
not inconsistent with the other provisions of the contract or document; and any
pending action or other judicial proceeding to which either of HUBCO or DFC is a
party, shall not be deemed to have abated or to have discontinued by reason of
the Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Merger had not been made; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of HUBCO or DFC if the Merger had not occurred.
1.3. Certificate of Incorporation. As of the Effective Time,
the certificate of incorporation of HUBCO shall be the certificate of
incorporation of the Surviving Corporation until otherwise amended as provided
by law.
1.4. By-Laws. As of the Effective Time, the By-Laws of HUBCO
shall be the By-Laws of the Surviving Corporation until otherwise amended as
provided by law.
1.5. Directors and Officers. As of the Effective Time, the
directors and officers of HUBCO shall be the directors and officers of the
Surviving Corporation.
1.6 Closing, Closing Date, Determination Date and Effective
Time. Unless a different date, time and/or place are agreed to by the parties
hereto, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., at the offices of Pitney, Hardin, Kipp & Szuch, 200 Campus Drive, Florham
Park, New Jersey, on a date determined by HUBCO on at least five business days
notice (the "Closing Notice") given to DFC, which date (the "Closing Date")
shall be not less than seven nor more than 10 business days following the
receipt of all necessary regulatory and governmental approvals and consents and
the expiration of all statutory waiting periods in respect thereof and the
satisfaction or waiver of all of the conditions to the consummation of the
Merger specified in Article VI hereof (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing). In
the Closing Notice, HUBCO shall specify the "Determination Date" for purposes of
determining the Median Pre-Closing Price (as hereinafter defined), which date
shall be the first date on which all federal and state bank regulatory approvals
(and waivers, if applicable) necessary for consummation of the Merger shall have
been received and either party shall have informed the other party that all such
federal and state bank regulatory approvals (and waivers, if applicable) have
been received. Simultaneous with or immediately following the Closing, HUBCO and
DFC shall cause to be filed (a) a certificate of merger, in form and substance
satisfactory to HUBCO and DFC, with the Secretary of State of the State of New
Jersey (the "New Jersey Certificate of Merger") and (b) a certificate of merger,
in form and substance satisfactory to HUBCO and DFC, with the Secretary of State
of Connecticut (the "Connecticut Certificate of Merger"). Each Certificate of
Merger shall specify as the "Effective Time" of the Merger, which Effective Time
shall be a date and time following the Closing agreed to by HUBCO and DFC (which
date and time the parties currently anticipate will be the close of business on
the Closing Date). In the event the parties fail to specify the date and time in
the merger certificates, the Merger shall become effective upon (and the
"Effective Time" shall be) the later of the time of the filing of the New Jersey
Certificate of Merger or the Connecticut Certificate of Merger.
1.7 The Bank Merger. Immediately following the Effective Time,
the Dime shall be then merged with and into the Bank (the "Bank Merger") in
accordance with the provisions of Section 36a-125 of the Banking Law of
Connecticut (the "Banking Act"). In the Bank Merger, the Bank shall be the
surviving bank (the "Surviving Bank"). Upon the consummation of the Bank Merger,
the separate existence of the Dime shall cease and the Surviving Bank shall be
considered the same business and corporate entity as each of the Dime and the
Bank and all of the property, rights, privileges, powers and franchises of each
of the Dime and the Bank shall vest in the Surviving Bank and the Surviving Bank
shall be deemed to have assumed all of the debts, liabilities, obligations and
duties of each of the Dime and the Bank and shall have succeeded to all or each
of their relationships, fiduciary or otherwise, as fully and to the same extent
as if such property, rights, privileges, powers, franchises, debts, obligations,
duties and relationships had been originally acquired, incurred or entered into
by the Surviving Bank. Upon the consummation of the Bank Merger, the certificate
of incorporation and By-Laws of the Bank shall be the certificate of
incorporation and By-Laws of the Surviving Bank and the officers and directors
of the Bank shall be the officers and directors of the Surviving Bank, except as
provided in Section 5.20 hereof. Following the execution of this Agreement, the
Dime and the Bank shall execute and deliver a merger agreement (the "Bank Merger
Agreement"), both in form and substance reasonably satisfactory to the parties
hereto, substantially as set forth in Exhibit 1.7 hereto, for delivery to the
Commissioner of the Connecticut Department of Banking (the "Department") and the
Federal Deposit Insurance Corporation (the "FDIC") for approval of the Bank
Merger.
ARTICLE II - CONVERSION OF DFC SHARES
2.1. Conversion of DFC Common Stock. Each share of common
stock, par value $1.00 per share, of DFC ("DFC Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than Excluded Shares,
as hereinafter defined) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted as follows:
(a) Exchange of Common Stock; Exchange Ratio. Subject
to the provisions of this Section 2.1, each share of DFC Common Stock issued and
outstanding immediately prior to the Effective Time (excluding any treasury
shares and shares to be canceled pursuant to Section 2.1(d) hereof) shall be
converted at the Effective Time into the right to receive a certain number (the
"Exchange Ratio") of shares of Common Stock, no par value, of HUBCO ("HUBCO
Common Stock") determined in accordance with the next sentence, subject to
adjustment as provided in Section 2.1(c) and subject to the payment of cash in
lieu of fractional shares in accordance with Section 2.2(e). The Exchange Ratio
shall be a number between 1.05 and .93, with the exact number determined from
the quotient, rounded to the nearest thousandth, obtained by dividing $38.25 by
the Median Pre-Closing Price (as defined in Section 2.2(e)) of HUBCO Common
Stock, except if the quotient is greater than 1.05, the Exchange Ratio shall be
1.05 and if the quotient is less than .93, the Exchange Ratio shall be .93.
(b) Cancellation of DFC Certificates. After the
Effective Time, all such shares of DFC Common Stock (other than those canceled
pursuant to Section 2.1(d)) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously evidencing any such shares (other than those canceled
pursuant to Section 2.1(d)) shall thereafter represent the right to receive the
Merger Consideration (as defined in Section 2.2(b)). The holders of such
certificates previously evidencing such shares of DFC Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of DFC Common Stock except as otherwise provided herein
or by law. Such certificates previously evidencing such shares of DFC Common
Stock (other than those canceled pursuant to Section 2.1(d)) shall be exchanged
for certificates evidencing shares of HUBCO Common Stock issued pursuant to this
Article II, upon the surrender of such certificates in accordance with this
Article II. No fractional shares of HUBCO Common Stock shall be issued, and, in
lieu thereof, a cash payment shall be made pursuant to Section 2.2(e).
(c) Capital Changes. If between the date hereof and
the Effective Time the outstanding shares of HUBCO Common Stock shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, stock split, reclassification, recapitalization, merger,
combination or exchange of shares, the Exchange Ratio and the definition of
Median Pre-Closing Price shall be correspondingly adjusted to reflect such stock
dividend, stock split, reclassification, recapitalization, merger, combination
or exchange of shares.
(d) Excluded Shares. All shares of DFC Common Stock
held by DFC in its treasury or owned by HUBCO or by any of HUBCO's wholly-owned
subsidiaries (other than shares held as trustee or in a fiduciary capacity and
shares held as collateral on or in lieu of a debt previously contracted)
immediately prior to the Effective Time ("Excluded Shares") shall be canceled.
2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, HUBCO
shall deposit, or shall cause to be deposited, with Hudson United Bank, Trust
Department or another bank or trust company designated by HUBCO and reasonably
acceptable to DFC (the "Exchange Agent"), for the benefit of the holders of
shares of DFC Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates evidencing shares of HUBCO Common Stock
and cash in such amount such that the Exchange Agent possesses such number of
shares of HUBCO Common Stock and such amount of cash as are required to provide
all of the consideration required to be exchanged by HUBCO pursuant to the
provisions of this Article II (such certificates for shares of HUBCO Common
Stock, together with any dividends or distributions with respect thereto, and
cash being hereinafter referred to as the "Exchange Fund"). The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the HUBCO Common Stock and
cash out of the Exchange Fund in accordance with Section 2.1. Except as
contemplated by Section 2.2(f) hereof, the Exchange Fund shall not be used for
any other purpose.
(b) Exchange Procedures. As soon as reasonably
practicable either before or after the Effective Time, but in any event no later
than five business days after the Effective Time, HUBCO will instruct the
Exchange Agent to mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time evidenced outstanding shares of
DFC Common Stock (the "Certificates"), (i) a letter of transmittal (the form and
substance of which is reasonably agreed to by HUBCO and DFC prior to the
Effective Time and which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent and which shall have such other
provisions as HUBCO may reasonably specify) and (ii) instructions for effecting
the surrender of the Certificates in exchange for certificates evidencing shares
of HUBCO Common Stock and cash in lieu of fractional shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) certificates evidencing that number
of whole shares of HUBCO Common Stock which such holder has the right to receive
in respect of the shares of DFC Common Stock formerly evidenced by such
Certificate in accordance with Section 2.1 and (y) cash in lieu of fractional
shares of HUBCO Common Stock to which such holder may be entitled pursuant to
Section 2.2(e) (the shares of HUBCO Common Stock and cash described in clauses
(x) and (y) being collectively referred to as the "Merger Consideration") and
the Certificates so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of DFC Common Stock which is not registered in
the transfer records of DFC, a certificate evidencing the proper number of
shares of HUBCO Common Stock and/or cash may be issued and/or paid in accordance
with this Article II to a transferee if the Certificate evidencing such shares
of DFC Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to evidence only the right to receive upon such
surrender the Merger Consideration.
(c) Distributions with Respect to Unexchanged Shares
of HUBCO Common Stock. No dividends or other distributions declared or made
after the Effective Time with respect to HUBCO Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of HUBCO Common Stock evidenced thereby,
and no other part of the Merger Consideration shall be paid to any such holder,
until the holder of such Certificate shall surrender such Certificate (or a
suitable affidavit of loss and customary bond). Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates evidencing shares of HUBCO Common Stock
issued in exchange therefor, without interest, (i) promptly, the amount of any
cash payable with respect to a fractional share of HUBCO Common Stock to which
such holder may have been entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date on or after the Effective
Time theretofore paid with respect to such shares of HUBCO Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date on or after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such shares of HUBCO Common Stock.
(d) No Further Rights in DFC Common Stock. All shares
of HUBCO Common Stock issued and cash paid upon conversion of the shares of DFC
Common Stock in accordance with the terms hereof shall be deemed to have been
issued or paid in full satisfaction of all rights pertaining to such shares of
DFC Common Stock.
(e) No Fractional Shares; Median Pre-Closing Price.
No certificates or scrip evidencing fractional shares of HUBCO Common Stock
shall be issued upon the surrender for exchange of Certificates and such
fractional share interests will not entitle the owner thereof to vote or to any
rights of a shareholder of HUBCO. Cash shall be paid in lieu of fractional
shares of HUBCO Common Stock, based upon the Median Pre-Closing Price per whole
share of HUBCO Common Stock. The "Median Pre-Closing Price" shall be determined
by taking the price half-way between the Closing Prices left after discarding
the 4 lowest and 4 highest Closing Prices in the 10 consecutive trading day
period which ends on (and includes) the Determination Date. The "Closing Price"
shall mean the closing price of HUBCO Common Stock as supplied by the NASDAQ
Stock Market and published in The Wall Street Journal. A "trading day" shall
mean a day for which a Closing Price is so supplied and published. (The NASDAQ
Stock Market, or such other national securities exchange on which HUBCO Common
Stock may be traded after the date hereof, is referred to herein as "NASDAQ")
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of DFC Common Stock for
two years after the Effective Time shall be delivered to HUBCO, upon demand, and
any holders of DFC Common Stock who have not theretofore complied with this
Article II shall thereafter look only to HUBCO for the Merger Consideration,
dividends and distributions to which they are entitled.
(g) No Liability. Neither HUBCO, the Bank nor the
Exchange Agent shall be liable to any holder of shares of DFC Common Stock for
any such shares of HUBCO Common Stock or cash (or dividends or distributions
with respect thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Withholding Rights. HUBCO shall be entitled to
deduct and withhold, or cause the Exchange Agent to deduct and withhold, from
funds provided by the holder or from the consideration otherwise payable
pursuant to this Agreement to any holder of DFC Common Stock, the minimum
amounts (if any) that HUBCO is required to deduct and withhold with respect to
the making of such payment under the Code (as defined in Section 3.8), or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by HUBCO, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of DFC Common Stock in respect
of which such deduction and withholding was made by HUBCO.
2.3. Stock Transfer Books. At the Effective Time, the stock
transfer books of DFC shall be closed and there shall be no further registration
of transfers of shares of DFC Common Stock thereafter on the records of DFC. On
or after the Effective Time, any Certificates presented to the Exchange Agent or
HUBCO for transfer shall be converted into the Merger Consideration.
2.4. DFC Stock Options. The Stock Options (as defined in
Section 3.2) described in the DFC Disclosure Schedule are issued and outstanding
pursuant to the 1986 Stock Option and Incentive Plan, the City Savings Bank of
Meriden Stock Option Plan, the 1986 Stock Option Plan for Outside Directors,
Non-Qualified Stock Option Agreements, as amended, for William J. Farrell and M.
Joseph Canavan, the 1996 Stock Option and Incentive Plan, the Chairman's 1996
Non-Qualified Stock Option Agreement, and the 1996 Stock Option Plan for Outside
Directors (the "DFC Stock Option Plans") and the agreements pursuant to which
such Stock Options were granted (each, an "Option Grant Agreement"). HUBCO
acknowledges and agrees to honor the provisions of the DFC Stock Option Plan and
the Option Grant Agreement, including those relating to vesting and conversion
in connection with a change in control of DFC. Each Stock Option outstanding at
the Effective Time (each a "Continuing Stock Option") shall be converted into an
option to purchase HUBCO Common Stock, wherein (i) the right to purchase shares
of DFC Common Stock pursuant to the Continuing Stock Option shall be converted
into the right to purchase that same number of shares of HUBCO Common Stock
multiplied by the Exchange Ratio, (ii) the option exercise price per share of
HUBCO Common Stock shall be the previous option exercise price per share of the
DFC Common Stock divided by the Exchange Ratio, and (iii) in all other material
respects the option shall be subject to the same terms and conditions as
governed the Continuing Stock Option on which it was based, including the length
of time within which the option may be exercised (which shall not be extended
except that the holder of a Stock Option who continues in the service of HUBCO
or a subsidiary of HUBCO shall not be deemed to have terminated service for
purposes of determining the Continuing Stock Option exercise period) and for all
Continuing Stock Options, such adjustments shall be and are intended to be
effected in a manner which is consistent with Section 424(a) of the Code (as
defined in Section 3.2 hereof). If a Stock Option Grant Agreement also provided
for a Stock Appreciation Right, the Stock Appreciation Right shall also continue
(subject to the same adjustments as are provided for Continuing Stock Options).
Shares of HUBCO Common Stock issuable upon exercise of Continuing Stock Options
shall be covered by an effective registration statement on Form S-8, and HUBCO
shall use its reasonable best efforts to file a registration statement on Form
S-8 covering such shares as soon as possible after the Effective Time.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF DFC
References herein to "DFC Disclosure Schedule" shall mean all
of the disclosure schedules required by this Article III, dated as of the date
hereof and referenced to the specific sections and subsections of Article III of
this Agreement, which have been delivered on the date hereof by DFC to HUBCO.
DFC hereby represents and warrants to HUBCO as follows:
3.1. Corporate Organization
(a) DFC is a corporation duly organized and validly
existing under the laws of the State of Connecticut. DFC has the corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly licensed or qualified to
do business in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified would not have a material adverse effect on the
business, operations, assets or financial condition of DFC and the DFC
Subsidiaries (as defined below), taken as a whole. DFC is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the
"BHCA").
(b) Each DFC Subsidiary and its jurisdiction of
incorporation is listed in the DFC Disclosure Schedule. For purposes of this
Agreement, the term "DFC Subsidiary" means any corporation, partnership, joint
venture or other legal entity in which DFC, directly or indirectly, owns at
least a 50% stock or other equity interest or for which DFC, directly or
indirectly, acts as a general partner, provided that to the extent that any
representation or warranty set forth herein covers a period of time prior to the
date of this Agreement, the term "DFC Subsidiary" shall include any entity which
was a DFC Subsidiary at any time during such period. The Dime is a Connecticut
state-chartered savings bank duly organized and validly existing in stock form
under the laws of the State of Connecticut. All eligible accounts of depositors
issued by the Dime are insured by the Bank Insurance Fund of the FDIC (the
"BIF") to the fullest extent permitted by law. Each DFC Subsidiary has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on the business, operations, assets or financial
condition of DFC and the DFC Subsidiaries, taken as a whole.
(c) The DFC Disclosure Schedule sets forth true and
complete copies of the Certificate of Incorporation and By-Laws, as in effect on
the date hereof, of DFC and each DFC Subsidiary. Except as set forth in
Disclosure Schedule 3.1(b), the Dime and DFC do not own or control, directly or
indirectly, any equity interest in any corporation, company, partnership, joint
venture or other entity.
3.2. Capitalization. The authorized capital stock of DFC
consists of 9,000,000 shares of DFC Common Stock and 1,000,000 shares of
preferred stock. None of the preferred stock has been issued. As of March 27,
1998, there were 5,248,067 shares of DFC Common Stock issued and outstanding and
351,607 treasury shares. As of March 27, 1998, there were 496,160 shares of DFC
Common Stock issuable upon exercise of outstanding stock options and stock
appreciation rights. The DFC Disclosure Schedule sets forth (i) all options and
stock appreciation rights which may be exercised for issuance of DFC Common
Stock (collectively, the "Stock Options"), their strike prices and exercise
dates, and (ii) true and complete copies of each plan and a specimen of each
form of agreement pursuant to which any outstanding Stock Option was granted,
including a list of each outstanding Stock Option issued pursuant thereto. All
issued and outstanding shares of DFC Common Stock, and all issued and
outstanding shares of capital stock of each DFC Subsidiary, have been duly
authorized and validly issued, are fully paid, nonassessable and free of
preemptive rights and are free and clear of any liens, encumbrances, charges,
restrictions or rights of third parties imposed by DFC or any DFC Subsidiary.
Except for the Stock Options and the HUBCO Stock Option, neither DFC nor the
Dime has granted nor is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
transfer, purchase, subscription or issuance of any shares of capital stock of
DFC or the Dime or any securities representing the right to purchase, subscribe
or otherwise receive any shares of such capital stock or any securities
convertible into any such shares, and there are no agreements or understandings
with respect to voting of any such shares.
3.3. Authority; No Violation.
(a) Subject to the approval of this Agreement and the
transactions contemplated hereby by all applicable regulatory authorities and by
the shareholders of DFC, and the approval of the Bank Merger Agreement by DFC as
sole shareholder of the Dime, DFC and the Dime have the full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
directors of DFC and the Dime in accordance with their respective Certificate of
Incorporation and By-Laws and applicable laws and regulations. Except for such
approvals, no other corporate proceedings not otherwise contemplated hereby on
the part of DFC or the Dime are necessary to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
DFC and the Dime, and constitutes the valid and binding obligation of each of
DFC and the Dime, enforceable against DFC and the Dime in accordance with its
terms, except to the extent that enforcement may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, conservatorship, receivership or other
similar laws now or hereafter in effect relating to or affecting the enforcement
of creditors' rights generally or the rights of creditors of Connecticut
state-chartered savings banks or their holding companies, (ii) general equitable
principles, and (iii) laws relating to the safety and soundness of insured
depository institutions and except that no representation is made as to the
effect or availability of equitable remedies or injunctive relief.
(b) Neither the execution and delivery of this
Agreement by DFC or the Dime, nor the consummation by DFC or the Dime of the
transactions contemplated hereby in accordance with the terms hereof, or
compliance by DFC or the Dime with any of the terms or provisions hereof, will
(i) violate any provision of DFC's or the Dime's Certificate of Incorporation or
By-Laws, (ii) assuming that the consents and approvals set forth below are duly
obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to DFC, the Dime or any of their
respective properties or assets, or (iii) except as set forth in the DFC
Disclosure Schedule, violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the respective
properties or assets of DFC or the Dime under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which DFC or the Dime is a
party, or by which they or any of their respective properties or assets may be
bound or affected except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a material adverse effect on the
business, operations, assets or financial condition of DFC and the DFC
Subsidiaries, taken as a whole, and which will not prevent or materially delay
the consummation of the transactions contemplated hereby. Except for consents
and approvals of or filings or registrations with or notices to the Board of
Governors of the Federal Reserve System (the "FRB"), the FDIC, the Department,
the Connecticut Department of Environmental Protection (the "DEP"), the
Securities and Exchange Commission (the "SEC"), and the shareholders of DFC, no
consents or approvals of or filings or registrations with or notices to any
third party or any public body or authority are necessary on behalf of DFC or
the Dime in connection with (x) the execution and delivery by DFC of this
Agreement and (y) the consummation by DFC of the Merger, and the consummation by
DFC and the Dime of the other transactions contemplated hereby, except (i) such
as are listed in the DFC Disclosure Schedule and (ii) such as individually or in
the aggregate will not (if not obtained) have a material adverse effect on the
business, operations, assets or financial condition of DFC and the DFC
Subsidiaries taken as a whole or prevent or materially delay the consummation of
the transactions contemplated hereby. To the best of DFC's knowledge, no fact or
condition exists which DFC has reason to believe will prevent it and the Dime
from obtaining the aforementioned consents and approvals.
3.4. Financial Statements.
(a) The DFC Disclosure Schedule sets forth copies of
the consolidated statements of financial condition of DFC as of December 31,
1996 and 1997, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended December 31, in
each of the three fiscal years 1995 through 1997, in each case accompanied by
the audit report of KPMG Peat Marwick LLP, independent public accountants with
respect to DFC ("Peat Marwick"), filed with the SEC under the Securities
Exchange Act of 1934, as amended ("1934 Act") (collectively, the "DFC Financial
Statements"). The DFC Financial Statements (including the related notes) have
been prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied during the periods involved (except as may be
indicated therein or in the notes thereto), and fairly present the consolidated
financial condition of DFC as of the respective dates set forth therein, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows fairly present the results of the consolidated operations, changes in
shareholders' equity and cash flows of DFC for the respective periods set forth
therein.
(b) The books and records of DFC and each of its
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements.
(c) Except as and to the extent reflected, disclosed
or reserved against in the DFC Financial Statements (including the notes
thereto), as December 31, 1997, neither DFC nor any DFC Subsidiary had any
liabilities, whether absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of DFC and the DFC
Subsidiaries, taken as a whole which were required by GAAP (consistently
applied) to be disclosed in DFC's consolidated statement of condition as of
December 31, 1997 or the notes thereto. Since December 31, 1997, neither DFC nor
any DFC Subsidiary has incurred any liabilities except in the ordinary course of
business and consistent with prudent business practice, except as related to the
transactions contemplated by this Agreement or except as set forth in the DFC
Disclosure Schedule.
3.5. Broker's and Other Fees. Except for A.G. Edwards & Sons,
Inc. ("A.G. Edwards") and First Albany Corporation ("First Albany"), neither
Dime Financial Corporation nor any of its Subsidiaries nor any of their
respective directors or officers has employed any broker or finder or incurred
any liability for any broker's or finder's fees or commissions in connection
with any of the transactions contemplated by this Agreement. The agreement with
A.G. Edwards and the agreement with First Albany are set forth in the DFC
Disclosure Schedule. Other than pursuant to the agreement with A.G. Edwards and
First Albany or as set forth in the DFC Disclosure Schedule, there are no fees
(other than time charges billed at usual and customary rates) payable to any
consultants, including lawyers and accountants, in connection with this
transaction or which would be triggered by consummation of this transaction or
the termination of the services of such consultants by DFC or any its
Subsidiaries.
3.6. Absence of Certain Changes or Events.
(a) Except as disclosed in the DFC Disclosure
Schedule, there has not been any material adverse change in the business,
operations, assets or financial condition of DFC and any DFC Subsidiary, taken
as a whole, since December 31, 1997 and to the best of DFC's knowledge, no fact
or condition exists which DFC believes will cause such a material adverse change
in the future; provided, however, that a material adverse change shall not be
deemed to include (i) any change in the value of the respective investment and
loan portfolios of DFC and the DFC Subsidiaries as the result of a change in
interest rates generally, (ii) any change occurring after the date hereof in any
federal or state law, rule or regulation or in GAAP, which change affects
banking institutions generally, (iii) reasonable expenses incurred in connection
with this Agreement and the transactions contemplated hereby, or (iv) actions or
omissions of DFC or any DFC Subsidiary taken with the prior written consent of
HUBCO in contemplation of the transactions contemplated hereby (including
without limitation any actions taken by DFC or the Dime pursuant to Section 5.15
of this Agreement).
(b) Except as set forth in the DFC Disclosure
Schedule, neither DFC nor any DFC Subsidiary has taken or permitted any of the
actions set forth in Section 5.2 hereof between December 31, 1997 and the date
hereof and, except for execution of this Agreement, and the other documents
contemplated hereby, DFC and each DFC Subsidiary has conducted their respective
businesses only in the ordinary course, consistent with past practice.
3.7. Legal Proceedings. Except as disclosed in the DFC
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of DFC and the DFC Subsidiaries, neither DFC nor any DFC Subsidiary
is a party to any, and there are no pending or, to the best of DFC's knowledge,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against DFC or any DFC Subsidiary
which, if decided adversely to DFC or any DFC Subsidiary, are reasonably likely
to have a material adverse effect on the business, operations, assets or
financial condition of DFC and the DFC Subsidiaries taken as a whole. Except as
disclosed in the DFC Disclosure Schedule, neither DFC nor any DFC Subsidiary is
a party to any order, judgment or decree entered in any lawsuit or proceeding
which is material to DFC or such DFC Subsidiary.
3.8. Taxes and Tax Returns.
(a) DFC and each DFC Subsidiary has duly filed (and
until the Effective Time will so file) all returns, declarations, reports,
information returns and statements ("Returns") required to be filed by it on or
before the Effective Time in respect of any federal, state and local taxes
(including withholding taxes, penalties or other payments required) and has duly
paid (and until the Effective Time will so pay) all such taxes due and payable,
other than taxes or other charges which are being contested in good faith (and
disclosed to HUBCO in writing) or against which reserves have been established.
DFC and each DFC Subsidiary has established (and until the Effective Time will
establish) on its books and records reserves that are adequate for the payment
of all federal, state and local taxes not yet due and payable, but are incurred
in respect of DFC or such DFC Subsidiary through such date. None of the federal
or state income tax returns of DFC or any DFC Subsidiary have been examined by
the Internal Revenue Service (the "IRS") or the Connecticut Department of
Revenue Services within the past six years. To the best knowledge of DFC, there
are no audits or other administrative or court proceedings presently pending nor
any other disputes pending with respect to, or claims asserted for, taxes or
assessments upon DFC or any DFC Subsidiary, nor has DFC or any DFC Subsidiary
given any currently outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any taxes or Returns.
(b) Except as set forth in the DFC Disclosure
Schedule, neither DFC nor any DFC Subsidiary (i) has requested any extension of
time within which to file any Return which Return has not since been filed, (ii)
is a party to any agreement providing for the allocation or sharing of taxes,
(iii) is required to include in income any adjustment pursuant to Section 481(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), by reason of a
voluntary change in accounting method initiated by DFC or such DFC Subsidiary
(nor does DFC have any knowledge that the IRS has proposed any such adjustment
or change of accounting method), or (iv) has filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply.
(c) The DFC Disclosure Schedule lists all of DFC's
and any DFC Subsidiary's federal, state and local tax loss carry forwards
including the year in which such tax loss carry forward was accumulated.
3.9. Employee Benefit Plans.
(a) Except as set forth on the DFC Disclosure
Schedule, neither DFC nor any DFC Subsidiary maintains or contributes to any
"employee pension benefit plan" (the "DFC Pension Plans") within the meaning of
such term in Section 3(2)(A) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), "employee welfare benefit plan" (the "DFC Welfare
Plans") within the meaning of such term in Section 3(1) of ERISA, stock option
plan, stock purchase plan, deferred compensation plan, severance plan, bonus
plan, employment agreement, director retirement program or other similar plan,
program or arrangement. Neither DFC nor any DFC Subsidiary has, since September
2, 1974, contributed to any "Multiemployer Plan," within the meaning of Section
3(37) of ERISA.
(b) DFC has previously delivered to HUBCO, and
included in the DFC Disclosure Schedules, a complete and accurate copy of each
of the following with respect to each of the DFC Pension Plans and DFC Welfare
Plans, if any: (i) plan document, summary plan description, and summary of
material modifications (if not available, a detailed description of the
foregoing); (ii) trust agreement or insurance contract, if any; (iii) most
recent IRS determination letter, if any; (iv) most recent actuarial report, if
any; and (v) most recent annual report on Form 5500.
(c) The present value of all accrued benefits, both
vested and non-vested, under each of the DFC Pension Plans subject to Title IV
of ERISA, based upon the actuarial assumptions used for funding purposes in the
most recent actuarial valuation prepared by such DFC Pension Plan's actuary, did
not exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the best of DFC 's knowledge, the actuarial assumptions
then utilized for such plans were reasonable and appropriate as of the last
valuation date and reflect then current market conditions.
(d) During the last six years, the Pension Benefit
Guaranty Corporation ("PBGC") has not asserted any claim for liability against
DFC or any DFC Subsidiary which has not been paid in full.
(e) All premiums (and interest charges and penalties
for late payment, if applicable) due to the PBGC with respect to each DFC
Pension Plan have been paid. All contributions required to be made to each DFC
Pension Plan under the terms thereof, ERISA or other applicable law have been
timely made, and all amounts properly accrued to date as liabilities of DFC
which have not been paid have been properly recorded on the books of DFC .
(f) Except as disclosed in the DFC Disclosure
Schedule, each of the DFC Pension Plans, DFC Welfare Plans and each other
employee benefit plan and arrangement identified on the DFC Disclosure Schedule
has been operated in compliance in all material respects with the provisions of
ERISA, the Code, all regulations, rulings and announcements promulgated or
issued thereunder, and all other applicable governmental laws and regulations.
Furthermore, except as disclosed in the DFC Disclosure Schedule, if DFC
maintains any DFC Pension Plan, DFC has received or applied for a favorable
determination letter from the IRS which takes into account the Tax Reform Act of
1986 and (to the extent it mandates currently applicable requirements)
subsequent legislation, and DFC is not aware of any fact or circumstance which
would disqualify any plan, other than operational defects which could be
retroactively corrected (in accordance with the procedures of the IRS) without a
material adverse effect on DFC and the DFC Subsidiaries taken as a whole.
(g) To the best knowledge of DFC, no non-exempt
prohibited transaction, within the meaning of Section 4975 of the Code or
Section 406 of ERISA, has occurred with respect to any DFC Welfare Plan or DFC
Pension Plan that would result in any material tax or penalty for DFC or any DFC
Subsidiary.
(h) No DFC Pension Plan or any trust created
thereunder has been terminated, nor have there been any "reportable events"
(notice of which has not been waived by the PBGC), within the meaning of Section
4034(b) of ERISA, with respect to any DFC Pension Plan.
(i) No "accumulated funding deficiency," within the
meaning of Section 412 of the Code, has been incurred with respect to any DFC
Pension Plan.
(j) There are no material pending, or, to the best
knowledge of DFC, material threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of, or against any of the DFC Pension Plans
or the DFC Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the DFC Disclosure Schedule.
(k) Except as disclosed in the DFC Disclosure
Schedule, no DFC Pension Plan or DFC Welfare Plan provides medical or death
benefits (whether or not insured) beyond an employee's retirement or other
termination of service, other than (i) coverage mandated by law or pursuant to
conversion or continuation rights set out in such Plan or an insurance policy
providing benefits thereunder, or (ii) death benefits under any DFC Pension
Plan.
(l) Except with respect to customary health, life and
disability benefits, there are no unfunded benefit obligations which are not
accounted for by reserves shown on the DFC Financial Statements and established
in accordance with GAAP.
(m) With respect to each DFC Pension Plan and DFC
Welfare Plan that is funded wholly or partially through an insurance policy,
there will be no liability of DFC or any DFC Subsidiary as of the Effective Time
under any such insurance policy or ancillary agreement with respect to such
insurance policy in the nature of a retroactive rate adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or partially
out of events occurring prior to the Effective Time.
(n) Except (i) for payments and other benefits due
pursuant to the employment agreements and the 1998 corporate bonus plan included
within the DFC Disclosure Schedule, and (ii) as set forth in the DFC Disclosure
Schedule, or as expressly agreed to by HUBCO in writing either pursuant to this
Agreement or otherwise, the consummation of the transactions contemplated by
this Agreement will not (x) entitle any current or former employee of DFC or any
DFC Subsidiary to severance pay, unemployment compensation or any similar
payment, or (y) accelerate the time of payment or vesting, or increase the
amount of any compensation or benefits due to any current or former employee
under any DFC Pension Plan or DFC Welfare Plan.
(o) Except for the DFC Pension Plans and the DFC
Welfare Plans, and except as set forth on the DFC Disclosure Schedule, DFC has
no deferred compensation agreements, understandings or obligations for payments
or benefits to any current or former director, officer or employee of DFC or any
DFC Subsidiary or any predecessor of any thereof. The DFC Disclosure Schedule
sets forth: (i) true and complete copies of the agreements, understandings or
obligations with respect to each such current or former director, officer or
employee, and (ii) the most recent actuarial or other calculation of the present
value of such payments or benefits.
(p) Except as set forth in the DFC Disclosure
Schedule, DFC does not maintain or otherwise pay for life insurance policies
(other than group term life policies on employees) with respect to any director,
officer or employee. The DFC Disclosure Schedule lists each such insurance
policy and includes a copy of each agreement with a party other than the insurer
with respect to the payment, funding or assignment of such policy. To the best
of DFC 's knowledge, neither DFC nor any DFC Pension Plan or DFC Welfare Plan
owns any individual or group insurance policies issued by an insurer which has
been found to be insolvent or is in rehabilitation pursuant to a state
proceeding.
(q) Except as set forth in the DFC Disclosure
Schedule, DFC does not maintain any retirement plan or retiree medical plan or
arrangement for directors. The DFC Disclosure Schedule sets forth the complete
documentation and actuarial evaluation of any such plan.
3.10. Reports.
(a) The DFC Disclosure Schedule lists, and as to item
(i) below DFC has previously delivered to HUBCO a complete copy of, each (i)
final registration statement, prospectus, annual, quarterly or current report
and definitive proxy statement filed by DFC since January 1, 1996 pursuant to
the Securities Act of 1933, as amended ("1933 Act"), or the 1934 Act and (ii)
communication (other than general advertising materials and press releases)
mailed by DFC to its shareholders as a class since January 1, 1996, and each
such communication, as of its date, complied in all material respects with all
applicable statutes, rules and regulations and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading; provided
that information as of a later date shall be deemed to modify information as of
an earlier date.
(b) Since January 1, 1996, (i) DFC has filed all
reports that it was required to file with the SEC under the 1934 Act, and (ii)
DFC and the Dime each has duly filed all material forms, reports and documents
which it was required to file with each agency charged with regulating any
aspect of its business, in each case in form which was correct in all material
respects, and, subject to permission from such regulatory authorities, DFC
promptly will deliver or make available to HUBCO accurate and complete copies of
such reports. As of their respective dates, each such form, report, or document,
and each such final registration statement, prospectus, annual, quarterly or
current report, definitive proxy statement or communication, complied in all
material respects with all applicable statutes, rules and regulations and did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; provided that information contained in any such document
as of a later date shall be deemed to modify information as of an earlier date.
The DFC Disclosure Schedule lists the dates of all examinations of DFC or the
Dime conducted by either the FRB, the FDIC or the Department since January 1,
1996 and the dates of any responses thereto submitted by DFC or the Dime.
3.11. DFC and Dime Information. The information relating to
DFC and the Dime, this Agreement, and the transactions contemplated hereby
(except for information relating solely to HUBCO) to be contained in the Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof) to be delivered to
shareholders of DFC in connection with the solicitation of their approval of the
Merger, as of the date the Proxy Statement-Prospectus is mailed to shareholders
of DFC, and up to and including the date of the meeting of shareholders to which
such Proxy Statement-Prospectus relates, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.12. Compliance with Applicable Law. Except as set forth in
the DFC Disclosure Schedule, DFC and each DFC Subsidiary holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business and has complied with and is not in default in any respect under any
applicable law, statute, order, rule, regulation, policy and/or guideline of any
federal, state or local governmental authority relating to DFC or such DFC
Subsidiary (including, without limitation, consumer, community and fair lending
laws) (other than where the failure to have a license, franchise, permit or
authorization or where such default or noncompliance will not result in a
material adverse effect on the business, operations, assets or financial
condition of DFC and the DFC Subsidiaries taken as a whole) and DFC has not
received notice of violation of, and does not know of any violations of, any of
the above.
3.13. Certain Contracts.
(a) Except for plans referenced in Section 3.9 and
except as disclosed in the DFC Disclosure Schedule, (i) neither DFC nor any DFC
Subsidiary is a party to or bound by any written contract or any understanding
with respect to the employment of any officers, employees, directors or
consultants, and (ii) the consummation of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional acts
or events) result in any payment (whether of severance pay or otherwise)
becoming due from DFC or any DFC Subsidiary to any officer, employee, director
or consultant thereof. The DFC Disclosure Schedule sets forth true and correct
copies of all severance or employment agreements with officers, directors,
employees, agents or consultants to which DFC or any DFC Subsidiary is a party.
(b) Except as disclosed in the DFC Disclosure
Schedule and except for loan commitments, loan agreements and loan instruments
entered into or issued by the Dime in the ordinary course of business, (i) as of
the date of this Agreement, neither DFC nor any DFC Subsidiary is a party to or
bound by any commitment, agreement or other instrument which is material to the
business, operations, assets or financial condition of DFC and the DFC
Subsidiaries taken as a whole, (ii) no commitment, agreement or other instrument
to which DFC or any DFC Subsidiary is a party or by which either of them is
bound limits the freedom of DFC or any DFC Subsidiary to compete in any line of
business or with any person, and (iii) neither DFC nor any DFC Subsidiary is a
party to any collective bargaining agreement.
(c) Except as disclosed in the DFC Disclosure
Schedule, neither DFC nor any DFC Subsidiary or, to the best knowledge of DFC,
any other party thereto, is in default in any material respect under any
material lease, contract, mortgage, promissory note, deed of trust, loan or
other commitment (except those under which the Dime is or will be the creditor)
or arrangement, except for defaults which individually or in the aggregate would
not have a material adverse effect on the business, operations, assets or
financial condition of DFC and the DFC Subsidiaries, taken as a whole.
3.14. Properties and Insurance.
(a) Except as set forth in the DFC Disclosure
Schedule, DFC or a DFC Subsidiary has good and, as to owned real property,
marketable title to all material assets and properties, whether real or
personal, tangible or intangible, reflected in DFC's consolidated balance sheet
as of December 31, 1997, or owned and acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of for fair value in
the ordinary course of business since December 31, 1997), subject to no
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items that secure liabilities that are reflected in said balance sheet or the
notes thereto or that secure liabilities incurred in the ordinary course of
business after the date of such balance sheet, (ii) statutory liens for amounts
not yet delinquent or which are being contested in good faith, (iii) such
encumbrances, liens, mortgages, security interests, pledges and title
imperfections that are not in the aggregate material to the business,
operations, assets, and financial condition of DFC and the DFC Subsidiaries
taken as a whole and (iv) with respect to owned real property, title
imperfections noted in title reports delivered to HUBCO prior to the date
hereof. Except as affected by the transactions contemplated hereby, DFC or one
or more of its Subsidiaries as lessees have the right under valid and subsisting
leases to occupy, use, possess and control all real property leased by DFC and
such Subsidiaries in all material respects as presently occupied, used,
possessed and controlled by DFC and its Subsidiaries.
(b) The business operations and all insurable
properties and assets of DFC and each DFC Subsidiary are insured for their
benefit against all risks which, in the reasonable judgment of the management of
DFC, should be insured against, in each case under policies or bonds issued by
insurers of recognized responsibility, in such amounts with such deductibles and
against such risks and losses as are in the opinion of the management of DFC
adequate for the business engaged in by DFC and the DFC Subsidiaries. As of the
date hereof, neither DFC nor any DFC Subsidiary has received any notice of
cancellation or notice of a material amendment of any such insurance policy or
bond or is in default under any such policy or bond, no coverage thereunder is
being disputed and all material claims thereunder have been filed in a timely
fashion. The DFC Disclosure Schedule sets forth in summary form a list of all
insurance policies of DFC and the DFC Subsidiaries.
3.15. Minute Books. As of the date of this Agreement, the
minute books of DFC and the DFC Subsidiaries contain accurate records of all
meetings and other corporate action held of their respective shareholders and
Boards of Directors (including committees of their respective Boards of
Directors) through a date not later than 30 days prior to the date of this
Agreement, and except for the Merger, no material corporate actions were
considered or approved by the shareholders or Boards of Directors (or committees
thereof) between such date and the date of this Agreement which are not fully
disclosed in the DFC Disclosure Schedule. On the Closing Date, the minute books
of DFC and the DFC Subsidiaries shall contain accurate records of all meetings
and other corporate action held of their respective shareholders and Boards of
Directors (including committees of their respective Boards of Directors) through
the Closing Date.
3.16. Environmental Matters. Except as set forth in the DFC
Disclosure Schedule:
(a) Neither DFC nor any DFC Subsidiary has received
any written notice, citation, claim, assessment, proposed assessment or demand
for abatement alleging that DFC or such DFC Subsidiary (either directly or as a
trustee or fiduciary, or as a successor-in-interest in connection with the
enforcement of remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or cleanup of any
condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters, which correction or
cleanup would be material to the business, operations, assets or financial
condition of DFC and the DFC Subsidiaries taken as a whole. DFC has no knowledge
that any toxic or hazardous substances or materials have been emitted,
generated, disposed of or stored on any real property owned or leased by DFC or
any DFC Subsidiary, as OREO or otherwise, or owned or controlled by DFC or any
DFC Subsidiary as a trustee or fiduciary (collectively, "Properties"), in any
manner that violates any presently existing federal, state or local law or
regulation governing or pertaining to such substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of DFC and the DFC Subsidiaries, taken
as a whole.
(b) DFC has no knowledge that any of the Properties
has been operated in any manner in the three years prior to the date of this
Agreement that violated any applicable federal, state or local law or regulation
governing or pertaining to toxic or hazardous substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of DFC and the DFC Subsidiaries taken
as a whole.
(c) To the best of DFC's knowledge, DFC, each DFC
Subsidiary and any and all of their tenants or subtenants have all necessary
permits and have filed all necessary registrations material to permit the
operation of the Properties in the manner in which the operations are currently
conducted under all applicable federal, state or local environmental laws,
excepting only those permits and registrations the absence of which would not
have a material adverse effect upon the operations of requiring the permit or
registration.
(d) To the knowledge of DFC, there are no underground
storage tanks on, in or under any of the Properties and no underground storage
tanks have been closed or removed from any of the Properties while the property
was owned, operated or controlled by DFC or any DFC Subsidiary.
3.17. Reserves. As of December 31, 1997, each of the allowance
for loan losses and the reserve for OREO properties in the DFC Financial
Statements was adequate pursuant to GAAP (consistently applied), and the
methodology used to compute each of the loan loss reserve and the reserve for
OREO properties complies in all material respects with GAAP (consistently
applied) and all applicable policies of the FDIC and the Department.
3.18. No Parachute Payments. Except as set forth in the DFC
Disclosure Schedule, no officer, director, employee or agent (or former officer,
director, employee or agent) of DFC or any DFC Subsidiary is entitled now, or
will or may be entitled to as a consequence of this Agreement or the Merger, to
any payment or benefit from DFC, a DFC Subsidiary, HUBCO or any HUBCO Subsidiary
which if paid or provided would constitute an "excess parachute payment", as
defined in Section 280G of the Code or regulations promulgated thereunder.
3.19. Agreements with Bank Regulators. Neither DFC nor any DFC
Subsidiary is a party to any agreement or memorandum of understanding with, or a
party to any commitment letter, board resolution submitted to a regulatory
authority or similar undertaking to, or is subject to any order or directive by,
or is a recipient of any extraordinary supervisory letter from, any court,
governmental authority or other regulatory or administrative agency or
commission, domestic or foreign ("Governmental Entity") which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies or its management, except for those the
existence of which has been disclosed in writing to HUBCO by DFC prior to the
date of this Agreement, nor has DFC been advised by any Governmental Entity that
it is contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission, except as disclosed in writing to HUBCO by DFC prior to the date of
this Agreement. Neither DFC nor any DFC Subsidiary is required by Section 32 of
the Federal Deposit Insurance Act to give prior notice to a Federal banking
agency of the proposed addition of an individual to its board of directors or
the employment of an individual as a senior executive officer, except as
disclosed in writing to HUBCO by DFC prior to the date of this Agreement.
3.20. Year 2000 Compliance. DFC and the DFC Subsidiaries have
taken all reasonable steps necessary to address the software, accounting and
record keeping issues raised in order to be substantially Year 2000 compliant on
or before the end of 1999 and DFC does not expect the future cost of addressing
such issues to be material. Neither DFC nor Dime has received a rating from any
bank regulatory agency in year 2000 compliance as of the date hereof.
3.21. Investments. Dime represents that it will communicate in
good faith its business decisions regarding investments. Section 3.21 of the DFC
Disclosure Schedule sets forth, as of the date hereof: (i) the Dime Funds and
Investment Policy (the "Dime Investment Policy"), (ii) the projected Maturities
and estimated Cash Flows, by month, which DFC and Dime management anticipates
receiving and reinvesting, and (iii) all firm commitments (each, a "Commitment")
by which either DFC or Dime is obligated to make an investment, whether of Cash
Flow, Maturities or Sales Proceeds (each, an "Investment"). For purposes of this
Agreement, "Cash Flow" means earnings on Investments and return of capital from
Investments (including principal paydowns, prepayments and redemptions of
Investments). "Maturities" means scheduled maturities of instruments. "Cash
Flow" and "Maturities" specifically exclude proceeds ("Sales Proceeds") from the
voluntary sale or other transfer of instruments by DFC or Dime.
3.22. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUBCO
References herein to the "HUBCO Disclosure Schedule" shall
mean all of the disclosure schedules required by this Article IV, dated as of
the date hereof and referenced to the specific sections and subsections of
Article IV of this Agreement, which have been delivered on the date hereof by
HUBCO to DFC. HUBCO hereby represents and warrants to DFC as follows:
4.1. Corporate Organization.
(a) HUBCO is a corporation duly organized and validly
existing and in good standing under the laws of the State of New Jersey. HUBCO
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on the business, operations, assets or financial condition of HUBCO and the
HUBCO Subsidiaries (defined below), taken as a whole. HUBCO is registered as a
bank holding company under the BHCA.
(b) Each HUBCO Subsidiary is listed in the HUBCO
Disclosure Schedule. For purposes of this Agreement, the term "HUBCO Subsidiary"
means any corporation, partnership, joint venture or other legal entity in which
HUBCO directly or indirectly, owns at least a 50% stock or other equity interest
or for which HUBCO, directly or indirectly, acts as a general partner provided
that to the extent that any representation or warranty set forth herein covers a
period of time prior to the date of this Agreement, the term "HUBCO Subsidiary"
shall include any entity which was an HUBCO Subsidiary at any time during such
period. Each HUBCO Subsidiary is duly organized and validly existing under the
laws of the jurisdiction of its incorporation. The Bank is a state-chartered
commercial banking corporation duly organized and validly existing under the
laws of the State of Connecticut. Hudson United Bank ("HUB") is duly organized
and validly existing under the laws of the State of New Jersey. All eligible
accounts of depositors issued by the Bank and HUB are insured by the Bank
Insurance Fund of the FDIC ("BIF") to the fullest extent permitted by law. Each
HUBCO Subsidiary has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a material adverse effect on the business, operations, assets or
financial condition of HUBCO and the HUBCO Subsidiaries, taken as a whole. The
HUBCO Disclosure Schedule sets forth true and complete copies of the Certificate
of Incorporation and By-Laws of HUBCO and the Bank as in effect on the date
hereof.
4.2. Capitalization. The authorized capital stock of HUBCO
consists of 53,045,000 common shares, no par value ("HUBCO Common Stock"), and
10,300,000 shares of preferred stock ("HUBCO Authorized Preferred Stock"). As of
March 26, 1998, there were 22,648,970 shares of HUBCO Common Stock issued and
outstanding, and no shares of treasury stock, and 1,000 shares of HUBCO
Authorized Preferred Stock outstanding, all of which were designated Series B,
no par value, Convertible Preferred Stock. Except as described in the HUBCO
Disclosure Schedule, there are no shares of HUBCO Common Stock issuable upon the
exercise of outstanding stock options or otherwise. All issued and outstanding
shares of HUBCO Common Stock and HUBCO Authorized Preferred Stock, and all
issued and outstanding shares of capital stock of HUBCO's Subsidiaries, have
been duly authorized and validly issued, are fully paid, nonassessable and free
of preemptive rights, and are free and clear of all liens, encumbrances,
charges, restrictions or rights of third parties. All of the outstanding shares
of capital stock of the HUBCO Subsidiaries are owned by HUBCO free and clear of
any liens, encumbrances, charges, restrictions or rights of third parties.
Except as described in the HUBCO Disclosure Schedule, neither HUBCO nor any
HUBCO Subsidiary has granted or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the transfer, purchase or issuance of any shares of capital stock of HUBCO or
any HUBCO Subsidiary or any securities representing the right to purchase,
subscribe or otherwise receive any shares of such capital stock or any
securities convertible into any such shares, and there are no agreements or
understandings with respect to voting of any such shares.
4.3. Authority; No Violation.
(a) Subject to the receipt of all necessary
governmental approvals and the possible need under NASDAQ rules (as hereinafter
defined) to obtain HUBCO shareholder approval, HUBCO and the Bank have full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Boards of Directors of HUBCO and the Bank in accordance with their respective
Certificate of Incorporation and applicable laws and regulations. Except for
such approvals, no other corporate proceedings on the part of HUBCO or the Bank
are necessary to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by HUBCO and the Bank and
constitutes a valid and binding obligation of HUBCO and the Bank, enforceable
against HUBCO and the Bank in accordance with its terms, except to the extent
that enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership or other similar laws now or hereafter
in effect relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of bank holding companies, (ii) general
equitable principles, and (iii) laws relating to the safety and soundness of
insured depository institutions and except that no representation is made as to
the effect or availability of equitable remedies or injunctive relief.
(b) Neither the execution or delivery of this
Agreement by HUBCO or the Bank, nor the consummation by HUBCO or the Bank of the
transactions contemplated hereby in accordance with the terms hereof, or
compliance by HUBCO or the Bank with any of the terms or provisions hereof will
(i) violate any provision of the Certificate of Incorporation or By-Laws of
HUBCO or the Bank, (ii) assuming that the consents and approvals set forth below
are duly obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to HUBCO, any HUBCO
Subsidiary, or any of their respective properties or assets, or (iii) violate,
conflict with, result in a breach of any provision of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
other encumbrance upon any of the properties or assets of HUBCO or any HUBCO
Subsidiary under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which HUBCO or the Bank is a party, or by which it
or any of their properties or assets may be bound or affected, except, with
respect to (ii) and (iii) above, such as individually or in the aggregate will
not have a material adverse effect on the business, operation, assets or
financial condition of HUBCO and the HUBCO Subsidiaries, taken as a whole, and
which will not prevent or materially delay the consummation of the transactions
contemplated hereby. Except for consents and approvals of or filings or
registrations with or notices to the FDIC, the FRB, the Department, the
Secretary of State of New Jersey and the Secretary of State of Connecticut and
the possible need under NASDAQ rules (as hereafter defined) to obtain
shareholder approval, no consents or approvals of or filings or registrations
with or notices to any third party or any public body or authority are necessary
on behalf of HUBCO or the Bank in connection with (x) the execution and delivery
by HUBCO or the Bank of this Agreement, and (y) the consummation by HUBCO or the
Bank of the Merger and the other transactions contemplated hereby, except such
as are listed in the HUBCO Disclosure Schedule or in the aggregate will not (if
not obtained) have a material adverse effect on the business, operation, assets
or financial condition of HUBCO and the HUBCO Subsidiaries, taken as a whole. To
the best of HUBCO's knowledge, no fact or condition exists which HUBCO has
reason to believe will prevent it from obtaining the aforementioned consents and
approvals.
4.4. Financial Statements.
(a) The HUBCO Disclosure Schedule sets forth copies
of the consolidated statements of financial condition of HUBCO as of December
31, 1995, 1996 and 1997, and the related consolidated statements of income,
changes in stockholders' equity and of cash flows for the periods ended December
31, in each of the two fiscal years 1996 through 1997, in each case accompanied
by the audit report of Arthur Andersen LLP ("Arthur Andersen"), independent
public accountants with respect to HUBCO (collectively, the "HUBCO Financial
Statements"). The HUBCO Financial Statements (including the related notes) have
been prepared in accordance with GAAP consistently applied during the periods
involved (except as may be indicated therein or in the notes thereto), and
fairly present the consolidated financial position of HUBCO as of the respective
dates set forth therein, and the related consolidated statements of income,
changes in stockholders' equity and of cash flows (including the related notes,
where applicable) fairly present the consolidated results of operations, changes
in stockholders' equity and cash flows of HUBCO for the respective fiscal
periods set forth therein.
(b) The books and records of HUBCO and the HUBCO
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed
or reserved against in the HUBCO Financial Statements (including the notes
thereto), as of December 31, 1997 neither HUBCO nor any of the HUBCO
Subsidiaries had any obligation or liability, whether absolute, accrued,
contingent or otherwise, material to the business, operations, assets or
financial condition of HUBCO or any of the HUBCO Subsidiaries which were
required by GAAP (consistently applied) to be disclosed in HUBCO's consolidated
statement of condition as of December 31, 1997 or the notes thereto. Except for
the transactions contemplated by this Agreement, and the other proposed
acquisitions by HUBCO reflected in any Form 8-K filed by HUBCO with the SEC
since December 31, 1997, neither HUBCO nor any HUBCO Subsidiary has incurred any
liabilities since December 31, 1997 except in the ordinary course of business
and consistent with past practice (including for other pending or contemplated
acquisitions).
4.5. Broker's and Other Fees. Neither HUBCO nor any of its
directors or officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement.
4.6. Absence of Certain Changes or Events. There has not been
any HUBCO Material Adverse Change since December 31, 1997 and to the best of
HUBCO's knowledge, no facts or condition exists which HUBCO believes will cause
a HUBCO Material Adverse Change in the future. "HUBCO Material Adverse Change"
means any change which is material and adverse to the consolidated financial
condition, results, business or assets of HUBCO and the HUBCO Subsidiaries taken
as a whole, other than (i) a change in the value of the respective investment
and loan portfolios of HUBCO and the HUBCO Subsidiaries as the result of a
change in interest rates generally, (ii) a change occurring after the date
hereof in any federal or state law, rule or regulation or in GAAP, which change
affects banking institutions generally, (iii) reasonable expenses incurred in
connection with this Agreement and the transactions contemplated hereby, (iv)
changes resulting from acquisitions by HUBCO or any HUBCO Subsidiary pending on
the date hereof as set forth in the HUBCO Disclosure Schedule (other than
changes resulting from facts not disclosed to, or otherwise known by, DFC on or
prior to the date hereof as to which HUBCO shall bear the burden of proof in any
dispute pertaining thereto), (v) the entry, after the date hereof, by HUBCO or
any HUBCO Subsidiary into an agreement to acquire another entity, or (vi)
matters disclosed in the HUBCO Disclosure Schedule.
4.7 Legal Proceedings. Except as disclosed in the HUBCO
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of HUBCO or its Subsidiaries, neither HUBCO nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
HUBCO's knowledge, threatened legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against HUBCO or any of its Subsidiaries which, if decided adversely to HUBCO or
its Subsidiaries, are reasonably likely to have a material adverse effect on the
business, operations, assets or financial condition of HUBCO or its
Subsidiaries, taken as a whole. Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any of its Subsidiaries is a party to any order,
judgment or decree entered in any lawsuit or proceeding which is material to
HUBCO or its Subsidiaries.
4.8 Reports. Since January 1, 1996, HUBCO has filed all
reports that it was required to file with the SEC under the 1934 Act, all of
which complied in all material respects with all applicable requirements of the
1934 Act and the rules and regulations adopted thereunder. As of their
respective dates, each such report and each registration statement, proxy
statement, form or other document filed by HUBCO with the SEC, including without
limitation, any financial statements or schedules included therein, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1996, HUBCO and each HUBCO
Subsidiary has duly filed all material forms, reports and documents which they
were required to file with each agency charged with regulating any aspect of
their business.
4.9 HUBCO Information. The information relating to HUBCO and
its Subsidiaries (including, without limitation, information regarding other
transactions which HUBCO is required to disclose), this Agreement and the
transactions contemplated hereby in the Registration Statement and Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof), as of the date of
the mailing of the Proxy Statement-Prospectus, and up to and including the date
of the meeting of stockholders of DFC to which such Proxy Statement-Prospectus
relates, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement shall comply as to form in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
rules and regulations promulgated thereunder.
4.10 Compliance With Applicable Law. Except as set forth in
the HUBCO Disclosure Schedule, each of HUBCO and HUBCO's Subsidiaries holds all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business, and has complied with and is not in default in
any respect under any applicable law, statute, order, rule, regulation, policy
and/or guideline of any federal, state or local governmental authority relating
to HUBCO or HUBCO's Subsidiaries (including without limitation consumer,
community and fair lending laws) (other than where such default or noncompliance
will not result in a material adverse effect on the business, operations, assets
or financial condition of HUBCO and HUBCO's Subsidiaries taken as a whole) and
HUBCO has not received notice of violation of, and does not know of any
violations of, any of the above.
4.11 Funding and Capital Adequacy. At the Effective Time,
after giving pro forma effect to the Merger and any other acquisition which
HUBCO or its Subsidiaries have agreed to consummate, HUBCO will be deemed "well
capitalized" under prompt corrective action regulatory capital requirements.
4.12 HUBCO Common Stock. As of the date hereof, HUBCO has
available and reserved shares of HUBCO Common Stock sufficient for issuance
pursuant to the Merger and upon the exercise of Stock Options subsequent
thereto. The HUBCO Common Stock to be issued hereunder pursuant to the Merger,
and upon exercise of the Stock Options, when so issued, will be duly authorized
and validly issued, fully paid, nonassessable, free of preemptive rights and
free and clear of all liens, encumbrances or restrictions created by or through
HUBCO, with no personal liability attaching to the ownership thereof. The HUBCO
Common Stock to be issued hereunder pursuant to the Merger, and upon exercise of
the Stock Options, when so issued, will be registered under the 1933 Act and
issued in accordance with all applicable state and federal laws, rules and
regulations.
4.13 Agreements with Bank Regulators. Neither HUBCO nor any
HUBCO Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution submitted to a
regulatory authority or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any Government Entity which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve policies or
its management, except for those the existence of which has been disclosed in
writing to DFC by HUBCO prior to the date of this Agreement, nor has HUBCO been
advised by any Governmental Entity that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission, except as disclosed
in writing to DFC by HUBCO prior to the date of this Agreement. Neither HUBCO
nor any HUBCO Subsidiary is required by Section 32 of the Federal Deposit
Insurance Act to give prior notice to a Federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer, except as disclosed in writing to DFC
by HUBCO prior to the date of this Agreement.
4.14 Taxes and Tax Returns.
(a) HUBCO and HUBCO's Subsidiaries have duly filed
(and until the Effective Time will so file) all Returns required to be filed by
them in respect of any federal, state and local taxes (including withholding
taxes, penalties or other payments required) and have duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other than taxes or
other charges which are being contested in good faith (and disclosed to DFC in
writing). HUBCO and HUBCO's Subsidiaries have established on their books and
records reserves that are adequate for the payment of all federal, state and
local taxes not yet due and payable, but are incurred in respect of HUBCO
through such date. The HUBCO Disclosure Schedule identifies the federal income
tax returns of HUBCO and its Subsidiaries which have been examined by the IRS
within the past six years. No deficiencies were asserted as a result of such
examinations which have not been resolved and paid in full. The HUBCO Disclosure
Schedule identifies the applicable state income tax returns of HUBCO and its
Subsidiaries which have been examined by the applicable authorities. No
deficiencies were asserted as a result of such examinations which have not been
resolved and paid in full. To the best knowledge of HUBCO, there are no audits
or other administrative or court proceedings presently pending nor any other
disputes pending with respect to, or claims asserted for, taxes or assessments
upon HUBCO or its Subsidiaries, nor has HUBCO or its Subsidiaries given any
currently outstanding waivers or comparable consents regarding the application
of the statute of limitations with respect to any taxes or Returns.
(b) Except as set forth in the HUBCO Disclosure
Schedule, neither HUBCO nor any Subsidiary of HUBCO (i) has requested any
extension of time within which to file any Return which Return has not since
been filed, (ii) is a party to any agreement providing for the allocation or
sharing of taxes, (iii) is required to include in income any adjustment pursuant
to Section 481(a) of the Code, by reason of a voluntary change in accounting
method initiated by HUBCO or any of its Subsidiaries (nor does HUBCO have any
knowledge that the IRS has proposed any such adjustment or change of accounting
method) or (iv) has filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply.
4.15 Employee Benefit Plans.
(a) HUBCO and its Subsidiaries maintain or contribute
to certain "employee pension benefit plans" (the "HUBCO Pension Plans"), as such
term is defined in Section 3(2)(A) of ERISA, and "employee welfare benefit
plans" (the "HUBCO Welfare Plans"), as such term is defined in Section 3(1) of
ERISA. Since September 2, 1974, neither HUBCO nor its subsidiaries have
contributed to any "Multiemployer Plan", as such term is defined in Section
3(37) of ERISA.
(b) HUBCO is not aware of any fact or circumstance
which would disqualify any HUBCO Pension Plan or HUBCO Welfare Plan that could
not be retroactively corrected (in accordance with the procedures of the IRS).
(c) The present value of all accrued benefits under
each of the HUBCO Pension Plans subject to Title IV of ERISA, based upon the
actuarial assumptions used for purposes of the most recent actuarial valuation
prepared by such HUBCO Pension Plan's actuary, did not exceed the then current
value of the assets of such plans allocable to such accrued benefits. To the
best of HUBCO's knowledge, the actuarial assumptions then utilized for such
plans were reasonable and appropriate as of the last valuation date and
reflected then current market conditions.
(d) During the last six years, the PBGC has not
asserted any claim for liability against HUBCO or any of its subsidiaries which
has not been paid in full.
(e) All premiums (and interest charges and penalties
for late payment, if applicable) due to the PBGC with respect to each HUBCO
Pension Plan have been paid. All contributions required to be made to each HUBCO
Pension Plan under the terms thereof, ERISA or other applicable law have been
timely made, and all amounts properly accrued to date as liabilities of HUBCO
which have not been paid have been properly recorded on the books of HUBCO.
(f) No "accumulated funding deficiency", within the
meaning of Section 412 of the Code, has been incurred with respect to any of the
HUBCO Pension Plans.
(g) There are no pending or, to the best knowledge of
HUBCO, threatened or anticipated material claims (other than routine claims for
benefits) by, on behalf of or against any of the HUBCO Pension Plans or the
HUBCO Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the HUBCO Disclosure Schedule.
(h) Except with respect to customary health, life and
disability benefits or as disclosed in the HUBCO Disclosure Schedule, HUBCO has
no unfunded benefit obligations which are not accounted for by reserves shown on
the financial statements and established under GAAP or otherwise noted on such
financial statements.
(i) Except as disclosed in the HUBCO Disclosure
Schedule, each of the HUBCO Pension Plans, HUBCO Welfare Plans and each other
employee benefit plan and arrangement identified on the HUBCO Disclosure
Schedule has been operated in compliance in all material respects with the
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder, and all other applicable governmental laws and
regulations. Furthermore, except as disclosed in the HUBCO Disclosure Schedule,
if HUBCO maintains any HUBCO Pension Plan, HUBCO has received or applied for a
favorable determination letter from the IRS which takes into account the Tax
Reform Act of 1986 and (to the extent it mandates currently applicable
requirements) subsequent legislation, and HUBCO is not aware of any fact or
circumstance which would disqualify any plan, other than operational defects
which could be retroactively corrected (in accordance with the procedures of the
IRS) without a material adverse effect on HUBCO and the HUBCO Subsidiaries taken
as a whole.
(j) To the best knowledge of HUBCO, no non-exempt
prohibited transaction, within the meaning of Section 4975 of the Code or
Section 406 of ERISA, has occurred with respect to any HUBCO Welfare Plan or
HUBCO Pension Plan that would result in any material tax or penalty for HUBCO or
any HUBCO Subsidiary.
4.16 Contracts. Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any of its Subsidiaries, or to the best knowledge of
HUBCO, any other party thereto, is in default in any material respect under any
material lease, contract, mortgage, promissory note, deed of trust, loan or
other commitment (except those under which a banking subsidiary of HUBCO is or
will be the creditor) or arrangement, except for defaults which individually or
in the aggregate would not have a material adverse effect on the business,
operations, assets or financial condition of HUBCO and its subsidiaries, taken
as a whole.
4.17 Properties and Insurance.
(a) HUBCO and its Subsidiaries have good and, as to
owned real property, marketable title to all material assets and properties,
whether real or personal, tangible or intangible, reflected in HUBCO's
consolidated balance sheet as of December 31, 1997, or owned and acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since
December 31, 1997), subject to no encumbrances, liens, mortgages, security
interests or pledges, except (i) those items that secure liabilities that are
reflected in said balance sheet or the notes thereto or that secure liabilities
incurred in the ordinary course of business after the date of such balance
sheet, (ii) statutory liens for amounts not yet delinquent or which are being
contested in good faith, (iii) such encumbrances, liens, mortgages, security
interests, pledges and title imperfections that are not in the aggregate
material to the business, operations, assets, and financial condition of HUBCO
and its subsidiaries taken as a whole and (iv) with respect to owned real
property, title imperfections noted in title reports. Except as disclosed in the
HUBCO Disclosure Schedule, HUBCO and its Subsidiaries as lessees have the right
under valid and subsisting leases to occupy, use, possess and control all
property leased by HUBCO or its Subsidiaries in all material respects as
presently occupied, used, possessed and controlled by HUBCO and its
Subsidiaries.
(b) The business operations and all insurable
properties and assets of HUBCO and its Subsidiaries are insured for their
benefit against all risks which, in the reasonable judgment of the management of
HUBCO, should be insured against, in each case under policies or bonds issued by
insurers of recognized responsibility, in such amounts with such deductibles and
against such risks and losses as are in the opinion of the management of HUBCO
adequate for the business engaged in by HUBCO and its Subsidiaries. As of the
date hereof, neither HUBCO nor any of its Subsidiaries has received any notice
of cancellation or notice of a material amendment of any such insurance policy
or bond or is in default under any such policy or bond, no coverage thereunder
is being disputed and all material claims thereunder have been filed in a timely
fashion.
4.18. Environmental Matters.
(a) Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any of its Subsidiaries has received any written
notice, citation, claim, assessment, proposed assessment or demand for abatement
alleging that HUBCO or any of its Subsidiaries (either directly or as a
successor-in-interest in connection with the enforcement of remedies to realize
the value of properties serving as collateral for outstanding loans) is
responsible for the correction or cleanup of any condition resulting from the
violation of any law, ordinance or other governmental regulation regarding
environmental matters which correction or cleanup would be material to the
business, operations, assets or financial condition of HUBCO and its
Subsidiaries taken as a whole. Except as disclosed in the HUBCO Disclosure
Schedule, HUBCO has no knowledge that any toxic or hazardous substances or
materials have been emitted, generated, disposed of or stored on any property
currently owned or leased by HUBCO or any of its subsidiaries in any manner that
violates or, after the lapse of time is reasonably likely to violate, any
presently existing federal, state or local law or regulation governing or
pertaining to such substances and materials, the violation of which would have a
material adverse effect on the business, operations, assets or financial
condition of HUBCO and its Subsidiaries, taken as a whole.
(b) HUBCO has no knowledge that any of the Properties
has been operated in any manner in the three years prior to the date of this
Agreement that violated any applicable federal, state or local law or regulation
governing or pertaining to toxic or hazardous substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of HUBCO and the HUBCO Subsidiaries
taken as a whole.
4.19. Reserves. As of December 31, 1997, the allowance for
possible loan losses in the HUBCO Financial Statements was adequate based upon
all factors required to be considered by HUBCO at that time in determining the
amount of such allowance. The methodology used to compute the allowance for
possible loan losses complies in all material respects with all applicable FDIC,
Connecticut Department of Banking and New Jersey Department of Banking policies.
As of December 31, 1997, the valuation allowance for OREO properties in the
HUBCO Financial Statements was adequate based upon all factors required to be
considered by HUBCO at that time in determining the amount of such allowance.
4.20. Year 2000 Compliance. HUBCO and the HUBCO Subsidiaries
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order to be substantially Year 2000
compliant on or before the end of 1999 and HUBCO does not expect the future cost
of addressing such issues to be material. Neither HUBCO nor any HUBCO Subsidiary
has received a rating of less than satisfactory from any bank regulatory agency
with respect to Year 2000 compliance.
4.21. Disclosure. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE V - COVENANTS OF THE PARTIES
5.1. Conduct of the Business of DFC. During the period from
the date of this Agreement to the Effective Time, DFC and the Dime shall, and
shall cause each DFC Subsidiary to, conduct their respective businesses only in
the ordinary course and consistent with prudent business practice, except for
transactions permitted hereunder or with the prior written consent of HUBCO,
which consent will not be unreasonably withheld. Each of DFC and the Dime also
shall use its reasonable best efforts to (i) preserve its business organization
and that of the DFC Subsidiaries intact, (ii) keep available to itself and the
DFC Subsidiaries the present services of their respective employees, and (iii)
preserve for itself and HUBCO the goodwill of its customers and those of the DFC
Subsidiaries and others with whom business relationships exist.
5.2. Negative Covenants. From the date hereof to the Effective
Time, except as otherwise approved by HUBCO in writing, or as set forth in the
DFC Disclosure Schedule, or as permitted or required by this Agreement, neither
DFC nor the Dime will:
(a) change any provision of its Certificate of
Incorporation or any similar governing documents;
(b) change any provision of its By-Laws without the
consent of HUBCO which consent shall not be unreasonably withheld;
(c) change the number of shares of its authorized or
issued capital stock (other than upon exercise of stock options or warrants
described on the DFC Disclosure Schedule in accordance with the terms thereof)
or issue or grant any option, warrant, call, commitment, subscription, right to
purchase or agreement of any character relating to its authorized or issued
capital stock, or any securities convertible into shares of such stock, or
split, combine or reclassify any shares of its capital stock, or declare, set
aside or pay any dividend, or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock; provided,
however, that from the date hereof to the Effective Time, DFC may declare, set
aside or pay dividends on the DFC Common Stock in a quarterly amount equal to
$0.12 per share, with the dividend payment dates to be coordinated with HUBCO,
it being the intention of the parties that the shareholders of DFC receive
dividends for any particular calendar quarter on either the DFC Common Stock or
the HUBCO Common Stock acquired in exchange therefor pursuant to the terms of
this Agreement but not both; provided further, that nothing contained herein
shall be deemed to affect the ability of Dime to pay dividends on its capital
stock to DFC.
(d) grant any severance or termination pay (other
than pursuant to policies or contracts of DFC in effect on the date hereof and
disclosed to HUBCO in the DFC Disclosure Schedule) to, or enter into or amend
any employment or severance agreement with, any of its directors, officers or
employees; adopt any new employee benefit plan or arrangement of any type; or
award any increase in compensation or benefits to its directors, officers or
employees except in each case as specified in Section 5.2 of the DFC Disclosure
Schedule.
(e) sell or dispose of any substantial amount of
assets or voluntarily incur any significant liabilities other than in the
ordinary course of business consistent with past practices and policies or in
response to substantial financial demands upon the business of DFC or the Dime.
(f) make any capital expenditures other than pursuant
to binding commitments existing on the date hereof, expenditures necessary to
maintain existing assets in good repair and expenditures described in business
plans or budgets previously furnished to HUBCO.
(g) file any applications or make any contract with
respect to branching or site location or relocation.
(h) agree to acquire in any manner whatsoever (other
than to realize upon collateral for a defaulted loan) any business or entity.
(i) make any material change in its accounting
methods or practices, other than changes required in accordance with generally
accepted accounting principles or regulatory authorities.
(j) take any action that would result in any of its
representations and warranties contained in Article III of this Agreement not
being true and correct in any material respect at the Effective Time or that
would cause any of its conditions to Closing not to be satisfied;
(k) without first conferring with HUBCO, make or
commit to make any new loan or other extension of credit in an amount of
$500,000 or more, renew for a period in excess of one year any existing loan or
other extension of credit in an amount of $500,000 or more, or increase by
$500,000 or more the aggregate credit outstanding to any borrower or group of
affiliated borrowers except such loan initiations, renewals or increases that
are committed as of the date of this Agreement and identified on the DFC
Disclosure Schedule and residential mortgage loans made in the ordinary course
of business in accordance with past practice; or
(l) agree to do any of the foregoing.
5.3. No Solicitation. So long as this Agreement remains in
effect, DFC and the Dime shall not, directly or indirectly, encourage or solicit
or hold discussions or negotiations with, or provide any information to, any
person, entity or group (other than HUBCO) concerning any merger or sale of
shares of capital stock or sale of substantial assets or liabilities not in the
ordinary course of business, or similar transactions involving DFC or the Dime
(an "Acquisition Transaction"). Notwithstanding the foregoing, DFC may enter
into discussions or negotiations or provide information in connection with an
unsolicited possible Acquisition Transaction if the Board of Directors of DFC,
after consulting with counsel, determines in the exercise of its fiduciary
responsibilities that such discussions or negotiations should be commenced or
such information should be furnished. DFC shall promptly communicate to HUBCO
the terms of any proposal, whether written or oral, which it may receive in
respect of any such Acquisition Transaction and the fact that it is having
discussions or negotiations with a third party about an Acquisition Transaction.
5.4. Current Information. During the period from the date of
this Agreement to the Effective Time, each of DFC and HUBCO will cause one or
more of its designated representatives to confer with representatives of the
other party on a monthly or more frequent basis regarding its business,
operations, properties, assets and financial condition and matters relating to
the completion of the transactions contemplated herein. On a monthly basis, DFC
agrees to provide HUBCO, and HUBCO agrees to provide DFC, with internally
prepared profit and loss statements no later than 15 days after the close of
each calendar month. As soon as reasonably available, but in no event more than
45 days after the end of each fiscal quarter (other than the last fiscal quarter
of each fiscal year), DFC will deliver to HUBCO and HUBCO will deliver to DFC
their respective quarterly reports on Form 10-Q, as filed with the SEC under the
1934 Act. As soon as reasonably available, but in no event more than 90 days
after the end of each calendar year, DFC will deliver to HUBCO and HUBCO will
deliver to DFC their respective Annual Reports on Form 10-K as filed with the
SEC under the 1934 Act.
5.5. Access to Properties and Records; Confidentiality.
(a) DFC and the Dime shall permit HUBCO and its
representatives, and HUBCO shall permit, and cause each HUBCO Subsidiary to
permit, DFC and its representatives, reasonable access to their respective
properties, and shall disclose and make available to HUBCO and its
representatives, or DFC and its representatives as the case may be, all books,
papers and records relating to its assets, stock ownership, properties,
operations, obligations and liabilities, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
directors' and shareholders' meetings, organizational documents, By-Laws,
material contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files, plans affecting employees, and any
other business activities or prospects in which HUBCO and its representatives or
DFC and its representatives may have a reasonable interest. Neither party shall
be required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer, would
contravene any law, rule, regulation, order or judgment or would waive any
privilege. The parties will use their reasonable best efforts to obtain waivers
of any such restriction (other than waivers of the attorney-client privilege)
and in any event make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
Notwithstanding the foregoing, DFC acknowledges that HUBCO may be involved in
discussions concerning other potential acquisitions and HUBCO shall not be
obligated to disclose such information to DFC except as such information is
disclosed to HUBCO's shareholders generally.
(b) All information furnished by the parties hereto
previously in connection with transactions contemplated by this Agreement or
pursuant hereto shall be used solely for the purpose of evaluating the Merger
contemplated hereby and shall be treated as the sole property of the party
delivering the information until consummation of the Merger contemplated hereby
and, if such Merger shall not occur, each party and each party's advisors shall
return to the other party all documents or other materials containing,
reflecting or referring to such information, will not retain any copies of such
information, shall use its reasonable best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. In the event that the Merger
contemplated hereby does not occur, all documents, notes and other writings
prepared by a party hereto or its advisors based on information furnished by the
other party shall be promptly destroyed. The obligation to keep such information
confidential shall continue for five years from the date the proposed Merger is
abandoned but shall not apply to (i) any information which (A) the party
receiving the information can establish by convincing evidence was already in
its possession prior to the disclosure thereof to it by the other party; (B) was
then generally known to the public; (C) became known to the public through no
fault of the party receiving such information; or (D) was disclosed to the party
receiving such information by a third party not bound by an obligation of
confidentiality; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction. Notwithstanding
the foregoing provision, counsel for each party hereto may retain one copy of
all information in its files for archival purposes.
5.6. Regulatory Matters.
(a) For the purposes of holding the Shareholders
Meeting (as such term is defined in Section 5.7 hereof), and qualifying under
applicable federal and state securities laws the HUBCO Common Stock to be issued
to DFC shareholders in connection with the Merger, the parties hereto shall
cooperate in the preparation and filing by HUBCO with the SEC of a Registration
Statement including a combined proxy statement and prospectus satisfying all
applicable requirements of applicable state and federal laws, including the 1933
Act, the 1934 Act and applicable state securities laws and the rules and
regulations thereunder (such proxy statement and prospectus in the form mailed
by DFC and HUBCO to the DFC shareholders together with any and all amendments or
supplements thereto, being herein referred to as the "Proxy
Statement-Prospectus" and the various documents to be filed by HUBCO under the
1933 Act with the SEC to register the HUBCO Common Stock for sale, including the
Proxy Statement-Prospectus, are referred to herein as the "Registration
Statement").
(b) HUBCO shall furnish DFC with such information
concerning HUBCO and its Subsidiaries (including, without limitation,
information regarding other transactions which HUBCO is required to disclose) as
is necessary in order to cause the Proxy Statement-Prospectus, insofar as it
relates to such corporations, to comply with Section 5.6(a) hereof. HUBCO agrees
promptly to advise DFC if at any time prior to the Shareholders' Meeting any
information provided by HUBCO in the Proxy Statement-Prospectus becomes
incorrect or incomplete in any material respect and to provide DFC with the
information needed to correct such inaccuracy or omission. HUBCO shall furnish
DFC with such supplemental information as may be necessary in order to cause the
Proxy Statement-Prospectus, insofar as it relates to HUBCO and the HUBCO
Subsidiaries, to comply with Section 5.6(a) after the mailing thereof to DFC
shareholders.
(c) DFC shall furnish HUBCO with such information
concerning DFC as is necessary in order to cause the Proxy Statement-Prospectus,
insofar as it relates to DFC, to comply with Section 5.6(a) hereof. DFC agrees
promptly to advise HUBCO if at any time prior to the Shareholders' Meeting, any
information provided by DFC in the Proxy Statement-Prospectus becomes incorrect
or incomplete in any material respect and to provide HUBCO with the information
needed to correct such inaccuracy or omission. DFC shall furnish HUBCO with such
supplemental information as may be necessary in order to cause the Proxy
Statement-Prospectus, insofar as it relates to DFC and the Dime to comply with
Section 5.6(a) after the mailing thereof to DFC shareholders.
(d) HUBCO shall as promptly as practicable make such
filings as are necessary in connection with the offering of the HUBCO Common
Stock with applicable state securities agencies and shall use all reasonable
efforts to qualify the offering of such stock under applicable state securities
laws at the earliest practicable date. DFC shall promptly furnish HUBCO with
such information regarding the DFC shareholders as HUBCO requires to enable it
to determine what filings are required hereunder. DFC authorizes HUBCO to
utilize in such filings the information concerning DFC and the Dime provided to
HUBCO in connection with, or contained in, the Proxy Statement-Prospectus. HUBCO
shall furnish DFC's counsel with copies of all such filings and keep DFC advised
of the status thereof. HUBCO and DFC shall as promptly as practicable file the
Registration Statement containing the Proxy Statement-Prospectus with the SEC,
and each of HUBCO and DFC shall promptly notify the other of all communications,
oral or written, with the SEC concerning the Registration Statement and the
Proxy Statement-Prospectus.
(e) HUBCO shall cause the HUBCO Common Stock issuable
pursuant to the Merger to be listed on the NASDAQ at the Effective Time. HUBCO
shall cause the HUBCO Common Stock which shall be issuable pursuant to exercise
of Stock Options to be accepted for listing on the NASDAQ when issued.
(f) The parties hereto will cooperate with each other
and use their reasonable best efforts to prepare all necessary documentation, to
effect all necessary filings and to obtain all necessary permits, consents,
approvals and authorizations of all third parties and governmental bodies
necessary to consummate the transactions contemplated by this Agreement as soon
as possible, including, without limitation, those required by the FDIC, the FRB,
the Department and the DEP. Without limiting the foregoing, the parties shall
use reasonable business efforts to file for approval or waiver by the
appropriate bank regulatory agencies within 45 days after the date hereof. The
parties shall each have the right to review in advance (and shall do so
promptly) all filings with, including all information relating to the other, as
the case may be, and any of their respective subsidiaries, which appears in any
filing made with, or written material submitted to, any third party or
governmental body in connection with the transactions contemplated by this
Agreement.
(g) Each of the parties will promptly furnish each
other with copies of written communications received by them or any of their
respective subsidiaries from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated hereby.
(h) DFC acknowledges that HUBCO is in or may be in
the process of acquiring other banks and financial institutions and that in
connection with such acquisitions, information concerning DFC may be required to
be included in the registration statements, if any, for the sale of securities
of HUBCO or in SEC reports in connection with such acquisitions. DFC agrees to
provide HUBCO with any information, certificates, documents or other materials
about DFC as are reasonably necessary to be included in such other SEC reports
or registration statements, including registration statements which may be filed
by HUBCO prior to the Effective Time. DFC shall use its reasonable efforts to
cause its attorneys and accountants to provide HUBCO and any underwriters for
HUBCO with any consents, comfort letters, opinion letters, reports or
information which are necessary to complete the registration statements and
applications for any such acquisition or issuance of securities. HUBCO shall
reimburse DFC for reasonable expenses thus incurred by DFC should this
transaction be terminated for any reason. HUBCO shall not file with the SEC any
registration statement or amendment thereto or supplement thereof containing
information regarding DFC unless DFC shall have consented in writing to such
filing, which consent shall not be unreasonably delayed or withheld.
(i) Between the date of this Agreement and the
Effective Time, DFC shall cooperate with HUBCO to reasonably conform DFC's
policies and procedures regarding applicable regulatory matters, to those of
HUBCO as HUBCO may reasonably identify to DFC from time to time.
5.7. Approval of Shareholders. DFC, as sole shareholder of
Dime, will approve the Bank Merger Agreement. DFC will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
shareholders of DFC (the "Shareholders Meeting") for the purpose of securing the
approval of shareholders of this Agreement, (ii) subject to the qualification
set forth in Section 5.3 hereof and the right not to make a recommendation or to
withdraw a recommendation if (x) its investment banker withdraws its fairness
opinion prior to the Shareholders' Meeting or (y) DFC's Board of Directors,
after consulting with counsel, determines in the exercise of its fiduciary
duties that such recommendation should not be made or should be withdrawn,
recommend to the shareholders of DFC the approval of this Agreement and the
transactions contemplated hereby and use its reasonable best efforts to obtain,
as promptly as practicable, such approval, and (iii) cooperate and consult with
HUBCO with respect to each of the foregoing matters.
If it becomes necessary under NASDAQ rules or applicable laws
to obtain HUBCO shareholder approval, HUBCO shall take all steps necessary to
obtain the approval of its shareholders as promptly as possible. In connection
therewith, HUBCO shall take all steps necessary to duly call, give notice and
convene a meeting of its shareholders for such purpose.
5.8. Further Assurances.
(a) Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions to Closing and to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated by this Agreement and using its reasonable best
efforts to prevent the breach of any representation, warranty, covenant or
agreement of such party contained or referred to in this Agreement and to
promptly remedy the same. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action. Nothing in this section shall be construed
to require any party to participate in any threatened or actual legal,
administrative or other proceedings (other than proceedings, actions or
investigations to which it is a party or subject or threatened to be made a
party or subject) in connection with consummation of the transactions
contemplated by this Agreement unless such party shall consent in advance and in
writing to such participation and the other party agrees to reimburse and
indemnify such party for and against any and all costs and damages related
thereto if the Merger is not consummated.
(b) HUBCO agrees that from the date hereof to the
Effective Time, except as otherwise approved by DFC in writing or as permitted
or required by this Agreement, HUBCO will use reasonable business efforts to
maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships, and HUBCO will not, nor will
it permit any HUBCO Subsidiary to, take any action: (i) that would result in any
of its representations and warranties contained in Article IV of this Agreement
not being true and correct in any material respect at, or prior to, the
Effective Time, or (ii) that would cause any of its conditions to Closing not to
be satisfied, or (iii) that would constitute a breach or default of its
obligations under this Agreement.
(c) HUBCO, Bank, DFC and the Dime will use reasonable
efforts to cause the Merger to occur on or before August 31, 1998.
5.9. Public Announcements. HUBCO and DFC shall cooperate with
each other in the development and distribution of all news releases and other
public filings and disclosures with respect to this Agreement or the Merger
transactions contemplated hereby, and HUBCO and DFC agree that unless approved
mutually by them in advance, they will not issue any press release or written
statement for general circulation relating primarily to the transactions
contemplated hereby, except as may be otherwise required by law or regulation
upon the advice of counsel.
5.10. Failure to Fulfill Conditions. In the event that HUBCO
or DFC determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to December 31,
1998 (the "Cutoff Date") and that it will not waive that condition, it will
promptly notify the other party. Except for any acquisition or merger
discussions HUBCO may enter into with other parties, DFC and HUBCO will promptly
inform the other of any facts applicable to DFC or HUBCO, respectively, or their
respective directors or officers, that would be likely to prevent or materially
delay approval of the Merger by any Governmental Entity or which would otherwise
prevent or materially delay completion of the Merger.
5.11. Employee Matters.
(a) Following consummation of the Merger, HUBCO
agrees with DFC to honor the existing written employment and severance contracts
with officers and employees of DFC and Dime that are included in the DFC
Disclosure Schedule.
(b) Following consummation of the Merger, the Bank
will decide whether to continue each of the Dime and/or DFC's pension and
welfare plans for the benefit of employees of Dime and DFC, or to have such
employees become covered under a HUBCO Pension and Welfare Plan. If HUBCO
decides to cover Dime and DFC employees under a HUBCO Pension and Welfare Plan,
such employees will receive credit for prior years of service with Dime and/or
DFC for purposes of determining eligibility to participate, and vesting and
eligibility for early retirement benefits, other than qualification for the
"Rule of 85," if applicable. No prior existing condition limitation shall be
imposed with respect to any medical coverage plan as a result of the Merger.
(c) Following the consummation of the Merger, the
Bank shall honor Dime's severance policy as specified in Section 5.2(d) of the
Dime Disclosure Schedule for six months and to recognize years of service
completed while employed by DFC and/or Dime for purposes of such policy.
Following the expiration of the foregoing severance policy, any years of service
recognized for purposes of this Section 5.11(c) will be taken into account under
the terms of any applicable severance policy of HUBCO.
(d) HUBCO intends to continue to make charitable
contributions consistent with past practices of Dime, as is consistent with
prudent banking. HUBCO will offer comparable employment to all Dime branch
employees in good standing. HUBCO will use its best efforts to offer comparable
employment to all other Dime employees in good standing. Comparable employment
shall mean similar employment at a location less than 35 miles from their
current location and as specified in the DFC Disclosure Schedule.
(e) Employees of DFC or Dime who continue as
employees of HUBCO or Bank following the Closing shall be entitled initially to
the amount of vacation time per year to which they were previously entitled
under the applicable DFC or Dime vacation policy or, if greater, the amount of
vacation time per year to which they would be entitled under the applicable
HUBCO or Bank. Thereafter, increases in the amount of vacation time per year
shall be based solely on the applicable HUBCO or Bank vacation policy.
5.12. Disclosure Supplements. From time to time prior to the
Effective Time, each party hereto will promptly supplement or amend (by written
notice to the other) its respective Disclosure Schedules delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Schedules or which is necessary to correct any
information in such Schedules which has been rendered materially inaccurate
thereby. For the purpose of determining satisfaction of the conditions set forth
in Article VI and subject to Sections 6.2(a) and 6.3(a), no supplement or
amendment to the parties' respective Disclosure Schedules which corrects any
representation or warranty which was untrue when made shall eliminate the other
party's right (if any) to terminate this Agreement based on the original untruth
of the representation or warranty; provided, that the other party shall be
deemed to have waived such right if it does not exercise such right within 15
days after receiving the correcting supplement or amendment.
5.13. Transaction Expenses of DFC.
(a) For planning purposes, DFC shall, within 15 days
from the date hereof, provide HUBCO with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by DFC in
connection with this transaction, including the fees and expenses of counsel,
accountants, investment bankers and other professionals. DFC shall promptly
notify HUBCO if or when it determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement,
DFC shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. DFC shall accrue
and/or pay all of such amounts as soon as possible.
(c) DFC shall cause its professionals to render
monthly invoices within 15 days after the end of each month. DFC shall advise
HUBCO monthly of all out-of-pocket expenses which DFC has incurred in connection
with this transaction.
(d) HUBCO, in reasonable consultation with DFC, shall
make all arrangements with respect to the printing and mailing of the Proxy
Statement-Prospectus.
5.14 Indemnification.
(a) For a period of six years after the Effective
Time, HUBCO shall indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date hereof or who becomes prior to the
Effective Time, a director, officer, employee or agent of DFC or the Dime or
serves or has served at the request of DFC or the Dime in any capacity with any
other person (collectively, the "Indemnitees") against any and all claims,
damages, liabilities, losses, costs, charges, expenses (including, without
limitation, reasonable costs of investigation, and the reasonable fees and
disbursements of legal counsel and other advisers and experts as incurred),
judgments, fines, penalties and amounts paid in settlement, asserted against,
incurred by or imposed upon any Indemnitee by reason of the fact that he or she
is or was a director, officer, employee or agent of DFC or the Dime or serves or
has served at the request of DFC or the Dime in any capacity with any other
person, in connection with, arising out of or relating to (i) any threatened,
pending or completed claim, action, suit or proceeding (whether civil, criminal,
administrative or investigative), including, without limitation, any and all
claims, actions, suits, proceedings or investigations by or on behalf of or in
the right of or against DFC or the Dime or any of their respective affiliates,
or by any former or present shareholder of DFC (each a "Claim" and collectively,
"Claims"), including, without limitation, any Claim which is based upon, arises
out of or in any way relates to the Merger, the Proxy Statement/Prospectus, this
Agreement, any of the transactions contemplated by this Agreement, the
Indemnitee's service as a member of the Board of Directors of DFC or the Dime or
of any committee of DFC's or the Dime's Board of Directors, the events leading
up to the execution of this Agreement, any statement, announcement,
recommendation or solicitation made in connection therewith or related thereto
(or the absence of any of the foregoing) and any breach of any duty in
connection with any of the foregoing, or (ii) the enforcement of the obligations
of HUBCO set forth in this Section 5.14, in each case to the fullest extent
which DFC or the Dime would have been permitted under any applicable law and
their respective Certificates of Incorporation By-Laws had the Merger not
occurred (and HUBCO shall also advance expenses as incurred to the fullest
extent so permitted). Notwithstanding the foregoing, but subject to subsection
(b) below, HUBCO shall not provide any indemnification or advance any expenses
with respect to any Claim which relates to a personal benefit improperly paid or
provided, or alleged to have been improperly paid or provided, to the
Indemnitee, but HUBCO shall reimburse the Indemnitee for costs incurred by the
Indemnitee with respect to such Claim when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that the Indemnitee was not improperly paid or
provided with the personal benefit alleged in the Claim.
(b) From and after the Effective Time, HUBCO shall
assume and honor any obligation of DFC or the Dime immediately prior to the
Effective Time with respect to the indemnification of the Indemnitees arising
out of the Certificate of Incorporation or By-Laws of DFC or the Dime, or
arising out of any written indemnification agreements between DFC and/or the
Dime and such persons disclosed in the DFC Disclosure Schedule, as if such
obligations were pursuant to a contract or arrangement between HUBCO and such
Indemnitees.
(c) In the event HUBCO or any of its successors or
assigns (i) reorganizes or consolidates with or merges into or enters into
another business combination transaction with any other person or entity and is
not the resulting, continuing or surviving corporation or entity of such
consolidation, merger or transaction, or (ii) liquidates, dissolves or transfers
all or substantially all of its properties and assets to any person or entity,
then, and in each such case, proper provision shall be made so that the
successors and assigns of HUBCO assume the obligations set forth in this Section
5.14.
(d) HUBCO shall cause DFC's and the Dime's officers
and directors to be covered under HUBCO's then current officers' and directors'
liability insurance policy for a period of six years after the Effective Time,
or, in the alternative, to be covered under an extension of DFC's and the Dime's
existing officers' and directors' liability insurance policy. However, HUBCO
shall only be required to insure such persons upon terms and for coverages
substantially similar to DFC's and the Dime's existing officers' and directors'
liability insurance.
(e) Any Indemnitee wishing to claim indemnification
under this Section 5.14 shall promptly notify HUBCO upon learning of any Claim,
but the failure to so notify shall not relieve HUBCO of any liability it may
have to such Indemnitee if such failure does not materially prejudice HUBCO. In
the event of any Claim (whether arising before or after the Effective Time) as
to which indemnification under this Section 5.14 is applicable, (x) HUBCO shall
have the right to assume the defense thereof and HUBCO shall not be liable to
such Indemnitees for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof,
except that if HUBCO elects not to assume such defense, or counsel for the
Indemnitees advises that there are issues which raise conflicts of interest
between HUBCO and the Indemnitees, the Indemnitees may retain counsel
satisfactory to them, and HUBCO shall pay the reasonable fees and expenses of
such counsel for the Indemnitees as statements therefor are received; provided,
however, that HUBCO shall be obligated pursuant to this Section 5.14(e) to pay
for only one firm of counsel for all Indemnitees in any jurisdiction with
respect to a matter unless the use of one counsel for multiple Indemnitees would
present such counsel with a conflict of interest that is not waived, and (y) the
Indemnitees will cooperate in the defense of any such matter. HUBCO shall not be
liable for settlement of any claim, action or proceeding hereunder unless such
settlement is effected with its prior written consent. Notwithstanding anything
to the contrary in this Section 5.14, HUBCO shall not have any obligation
hereunder to any Indemnitee when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that the indemnification of such Indemnitee in the manner
contemplated hereby is prohibited by applicable law or public policy.
5.15 Bank Policies and Bank Merger. Notwithstanding that DFC
believes that it has established all reserves and taken all provisions for
possible loan losses required by GAAP and applicable laws, rules and
regulations, DFC recognizes that HUBCO may have adopted different loan, accrual
and reserve policies (including loan classifications and levels of reserves for
possible loan losses). From and after the date of this Agreement to the
Effective Time and in order to formulate the plan of integration for the Bank
Merger, DFC and HUBCO shall consult and cooperate with each other with respect
to (i) conforming to the extent appropriate, based upon such consultation, DFC's
loan, accrual and reserve policies and DFC's other policies and procedures
regarding applicable regulatory matters, including without limitation Federal
Reserve, the Bank Secrecy Act and FDIC matters, to those policies of HUBCO as
HUBCO may reasonably identify to DFC from time to time, (ii) new extensions of
credit or material revisions to existing terms of credits by Bank, in each case
where the aggregate exposure exceeds $500,000, and (iii) conforming, based upon
such consultation, the composition of the investment portfolio and overall
asset/liability management position of DFC and the Dime to the extent
appropriate; provided that any required change in DFC's practices in connection
with the matters described in clause (i) or (iii) above need not be effected
until the parties receive all necessary governmental approvals and consents to
consummate the transactions contemplated hereby,
5.16 Compliance with Antitrust Laws. Each of HUBCO and DFC
shall use its reasonable best efforts to resolve such objections, if any, which
may be asserted with respect to the Merger under antitrust laws, including,
without limitation, the Hart-Scott-Rodino Act. In the event a suit is threatened
or instituted challenging the Merger as violative of antitrust laws, each of
HUBCO and DFC shall use its reasonable best efforts to avoid the filing of,
resist or resolve such suit. HUBCO and DFC shall use their reasonable best
efforts to take such action as may be required: (a) by the Antitrust Division of
the Department of Justice or the Federal Trade Commission in order to resolve
such objections as either of them may have to the Merger under antitrust laws,
or (b) by any federal or state court of the United States, in any suit brought
by a private party or governmental entity challenging the Merger as violative of
antitrust laws, in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order, or other order which has the effect
of preventing the consummation of the Merger. Reasonable best efforts shall
include, but not be limited to, the proffer by HUBCO of its willingness to
accept an order agreeing to the divestiture, or the holding separate, of any
assets of HUBCO or DFC, except to the extent that any such divestitures or
holding separate arrangement would have a material adverse effect on HUBCO. The
entry by a court, in any suit brought by a private party or governmental entity
challenging the Merger as violative of antitrust laws, of an order or decree
permitting the Merger, but requiring that any of the businesses, product lines
or assets of HUBCO or DFC be divested or held separate thereafter shall not be
deemed a failure to satisfy the conditions specified in Section 6.1 hereof
except to the extent that any divestitures or holding separate arrangement would
have a material adverse effect on HUBCO and HUBCO shall not have voluntarily
consented to such divestitures or holding separate arrangements. For the
purposes of this Section 5.16, the divestiture or the holding separate of a
branch or branches of the Bank with, in the aggregate, less than $50,000,000 in
assets shall not be considered to have a material adverse effect on HUBCO.
5.17 Pooling and Tax-Free Reorganization Treatment. Prior to
the date hereof, neither HUBCO or DFC has taken any action or failed to take any
action which would disqualify the Merger for pooling of interests accounting
treatment. Before the Effective Time, neither HUBCO nor DFC shall intentionally
take, fail to take, or cause to be taken or not taken any action within its
control, which would disqualify the Merger as a "pooling-of-interests" for
accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code. Subsequent to the Effective Time, HUBCO shall not take and
shall cause the Surviving Corporation not to take any action within their
control that would disqualify the Merger as such a "reorganization" under the
Code.
5.18 Comfort Letters. HUBCO shall cause Arthur Andersen, its
independent public accountants, to deliver to DFC, and DFC shall cause Peat
Marwick, its independent public accountants, to deliver to HUBCO and to its
officers and directors who sign the Registration Statement for this transaction,
a short-form "comfort letter" or "agreed upon procedures" letter, dated the date
of the mailing of the Proxy Statement-Prospectus for the Shareholders Meeting of
DFC, in the form customarily issued by such accountants at such time in
transactions of this type.
5.19 Affiliates. Promptly, but in any event within two weeks,
after the execution and delivery of this Agreement, DFC shall deliver to HUBCO
(a) a letter identifying all persons who, to the knowledge of DFC, may be deemed
to be affiliates of DFC under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of DFC and (b) use its reasonable best efforts
to cause each person who may be deemed to be an affiliate of DFC to execute and
deliver to HUBCO a letter agreement, substantially in the form of Exhibit
5.19-1, agreeing to comply with Rule 145 and to refrain from transferring shares
as required by the pooling-of-interests accounting rules. Within two weeks after
the date hereof, HUBCO shall use its reasonable best efforts to cause its
directors and executive officers to enter into letter agreements in the form of
Exhibit 5.19-2 with HUBCO concerning the pooling-of-interests accounting rules.
HUBCO hereby agrees to publish, or file a Form 8-K, Form 10-K or Form 10-Q
containing financial results covering at least 30 days of post-Merger combined
operations of HUBCO and DFC as soon as practicable (but in no event later than
30 days) following the close of the first calendar month ending 30 days after
the Effective Time, in form and substance sufficient to remove the restrictions
set forth in paragraph "B" of Exhibit 5.19-1.
5.20 Appointments. HUBCO agrees to cause five current
directors of Dime to be appointed to the Board of Directors of the Surviving
Bank and to invite each other director of Dime to serve on a regional advisory
board of the Surviving Bank.
5.21 Investment Policy. From the date hereof through and
including June 15, 1998, DFC and Dime shall limit their Investment of Cash Flow
and Maturities to instruments which are permissible under the Dime Investment
Policy. From and including June 16, 1998 through the Effective Time, DFC and
Dime shall limit their Investment of Cash Flow and Maturities to instruments
which are permissible under the HUBCO Investment Policy. From the date hereof
through the Effective Time, DFC and Dime shall limit their Investment of Sales
Proceeds to instruments which are permissible under the HUBCO Investment Policy.
From the date hereof through the Effective Time, DFC and Dime shall: (i) provide
notice to HUBCO, prior to or contemporaneous with each Investment, of the
intended nature and amount of such Investment, (ii) provide HUBCO written
reports of each week's Investments promptly following such week, and (iii) not
make any Commitments which would obligate either of them to make an Investment
at any time after June 15, 1998 which would not be permissible under the HUBCO
Investment Policy.
ARTICLE VI - CLOSING CONDITIONS
6.1. Conditions to Each Party's Obligations Under this
Agreement. The respective obligations of each party under this Agreement to
consummate the Merger shall be subject to the satisfaction, or, where
permissible under applicable law, waiver at or prior to the Effective Time of
the following conditions:
(a) Approval of DFC Shareholders; SEC Registration.
This Agreement and the transactions contemplated hereby shall have been approved
by the requisite vote of the shareholders of DFC, and if required, by the
requisite vote of the shareholders of HUBCO. The HUBCO Registration Statement
shall have been declared effective by the SEC and shall not be subject to a stop
order or any threatened stop order, and the issuance of the HUBCO Common Stock
shall have been qualified in every state where such qualification is required
under the applicable state securities laws.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the FDIC, the Department, the FRB, the SEC and the DEP) required to
consummate the transactions contemplated hereby shall have been obtained without
any term or condition which would materially impair the value of DFC and the
Dime, taken as a whole, to HUBCO. All conditions required to be satisfied prior
to the Effective Time by the terms of such approvals and consents shall have
been satisfied; and all statutory waiting periods in respect thereof (including
the Hart-Scott-Rodino waiting period if applicable) shall have expired.
(c) Suits and Proceedings. No order, judgment or
decree shall be outstanding against a party hereto or a third party that would
have the effect of preventing completion of the Merger; no suit, action or other
proceeding shall be pending or threatened by any governmental body in which it
is sought to restrain or prohibit the Merger; and no suit, action or other
proceeding shall be pending before any court or governmental agency in which it
is sought to restrain or prohibit the Merger or obtain other substantial
monetary or other relief against one or more parties hereto in connection with
this Agreement and which HUBCO or DFC determines in good faith, based upon the
advice of their respective counsel, makes it inadvisable to proceed with the
Merger because any such suit, action or proceeding has a significant potential
to be resolved in such a way as to deprive the party electing not to proceed of
any of the material benefits to it of the Merger.
(d) Tax Opinion. HUBCO and DFC shall each have
received an opinion, dated as of the Effective Time, of Pitney, Hardin, Kipp &
Szuch, reasonably satisfactory in form and substance to DFC and its counsel and
to HUBCO, based upon representation letters reasonably required by such counsel,
dated on or about the date of such opinion, and such other facts and
representations as such counsel may reasonably deem relevant, to the effect
that: (i) the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368 of the Code; (ii)
no gain or loss will be recognized by DFC; (iii) no gain or loss will be
recognized by the DFC shareholders upon the exchange in the Merger of DFC Common
Stock into HUBCO Common Stock (except with respect to cash received in lieu of a
fractional share interest in DFC Common Stock; (iv) the tax basis of any HUBCO
Common Stock received in exchange for DFC Common Stock shall equal the basis of
the recipient's DFC Common Stock surrendered on the exchange, reduced by the
amount of cash received, if any, on the exchange, and increased by the amount of
the gain recognized, if any, on the exchange (whether characterized as dividend
or capital gain income); and (v) the holding period for any HUBCO Common Stock
received in exchange for DFC Common Stock will include the period during which
DFC Common Stock surrendered on the exchange was held, provided such stock was
held as a capital asset on the date of the exchange.
(e) Pooling of Interests. HUBCO shall have received a
letter, dated the Closing Date, from its accountants, Arthur Andersen,
reasonably satisfactory to HUBCO and DFC, to the effect that the Merger shall be
qualified to be treated by HUBCO as a pooling-of-interests for accounting
purposes.
6.2. Conditions to the Obligations of HUBCO Under this
Agreement. The obligations of HUBCO under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of
Obligations of DFC and the Dime. Except for those representations which are made
as of a particular date, the representations and warranties of DFC contained in
this Agreement shall be true and correct in all material respects on the Closing
Date as though made on and as of the Closing Date. DFC shall have performed in
all material respects the agreements, covenants and obligations to be performed
by it prior to the Closing Date. With respect to any representation or warranty
which as of the Closing Date has required a supplement or amendment to the DFC
Disclosure Schedule to render such representation or warranty true and correct
in all material respects as of the Closing Date, the representation and warranty
shall be deemed true and correct as of the Closing Date only if (i) the
information contained in the supplement or amendment to the Disclosure Schedule
related to events occurring following the execution of this Agreement and (ii)
the facts disclosed in such supplement or amendment would not either alone, or
together with any other supplements or amendments to the DFC Disclosure
Schedule, materially adversely affect the representation as to which the
supplement or amendment relates.
(b) Opinion of Counsel. HUBCO shall have received an
opinion of counsel to DFC, dated the Closing Date, in form and substance
reasonably satisfactory to HUBCO, substantially in accordance with Exhibit
6.2(b) hereto.
(c) Certificates. DFC shall have furnished HUBCO with
such certificates of its officers or other documents to evidence fulfillment of
the conditions set forth in this Section 6.2 as HUBCO may reasonably request.
(d) Legal Fees. DFC shall have furnished HUBCO with
letters from all attorneys representing DFC and the Dime in any matters
confirming that all material legal fees have been paid in full for services
rendered as of the Effective Time.
(e) Merger Related Expense. DFC shall have provided
HUBCO with an accounting of all merger related expenses incurred by it through
the Closing Date, including a good faith estimate of such expenses incurred but
as to which invoices have not been submitted as of the Closing Date. The merger
related expenses of DFC shall be reasonable.
(f) Year 2000 Compliance. Neither DFC nor Dime shall
have received a rating of less than satisfactory from any bank regulatory agency
in year 2000 compliance.
6.3. Conditions to the Obligations of DFC Under this
Agreement. The obligations of DFC under this Agreement shall be further subject
to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of
Obligations of HUBCO. Except for those representations which are made as of a
particular date, the representations and warranties of HUBCO contained in this
Agreement shall be true and correct in all material respects on the Closing Date
as though made on and as of the Closing Date. HUBCO shall have performed in all
material respects, the agreements, covenants and obligations to be performed by
it prior to the Closing Date. With respect to any representation or warranty
which as of the Closing Date has required a supplement or amendment to the HUBCO
Disclosure Schedule to render such representation or warranty true and correct
in all material respects as of the Closing Date, the representation and warranty
shall be deemed true and correct as of the Closing Date only if (i) the
information contained in the supplement or amendment to the Disclosure Schedule
related to events occurring following the execution of this Agreement and (ii)
the facts disclosed in such supplement or amendment would not either alone, or
together with any other supplements or amendments to the HUBCO Disclosure
Schedule, materially adversely effect the representation as to which the
supplement or amendment relates.
(b) Opinion of Counsel to HUBCO. DFC shall have
received an opinion of counsel to HUBCO, dated the Closing Date, in form and
substance reasonably satisfactory to DFC, substantially in accordance with
Exhibit 6.3(b) hereto.
(c) Fairness Opinion. DFC shall have received an
opinion from A.G. Edwards, dated no more than three days prior to the date the
Proxy Statement-Prospectus is mailed to DFC's shareholders (and if it shall
become necessary to resolicit proxies thereafter, dated no more than three days
prior to the date of any substantive amendment to the Proxy
Statement-Prospectus), to the effect that, in its opinion, the consideration to
be paid to shareholders of DFC hereunder is fair to such shareholders from a
financial point of view ("Fairness Opinion").
(d) Certificates. HUBCO shall have furnished DFC with
such certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 6.3 as DFC may
reasonably request.
(e) Bank Director Appointment. Five directors,
nominated by DFC and acceptable to HUBCO, shall have been added to the Board of
Directors of the Bank.
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated prior to
the Effective Time, whether before or after approval of this Agreement by the
shareholders of DFC:
(a) by mutual written consent of the parties hereto;
(b) by HUBCO or DFC (i) if the Effective Time shall
not have occurred on or prior to the Cutoff Date unless the failure of such
occurrence shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe its agreements set forth herein to be performed
or observed by such party at or before the Effective Time, or (ii) if a vote of
the shareholders of DFC is taken and such shareholders fail to approve this
Agreement at the meeting (or any adjournment or postponement thereof) held for
such purpose, or (iii) if a vote of the shareholders of HUBCO is required by
applicable NASDAQ rules, such vote is taken and such shareholders fail to
approve this Agreement at the meeting (or any adjournment or postponement
thereof) held for such purpose;
(c) by HUBCO or DFC upon written notice to the other
if any application for regulatory or governmental approval necessary to
consummate the Merger and the other transactions contemplated hereby shall have
been denied or withdrawn at the request or recommendation of the applicable
regulatory agency or Governmental Entity or by HUBCO upon written notice to DFC
if any such application is approved with conditions (other than conditions which
are customary in such regulatory approvals) which would materially impair the
value of DFC and the Dime, taken as a whole, to HUBCO;
(d) by HUBCO if (i) there shall have occurred a
material adverse change in the business, operations, assets, or financial
condition of DFC and the Dime, taken as a whole, from that disclosed by DFC in
DFC's Annual Report on Form 10-K for the year ended December 31, 1997 (it being
understood that those matters disclosed in the DFC Disclosure Schedule shall not
be deemed to constitute such a material adverse change) or (ii) there was a
material breach in any representation, warranty, covenant, agreement or
obligation of DFC hereunder and such breach shall not have been remedied within
30 days after receipt by DFC of notice in writing from HUBCO to DFC specifying
the nature of such breach and requesting that it be remedied;
(e) by DFC, if (i) there shall have occurred a HUBCO
Material Adverse Change from that disclosed by HUBCO in HUBCO's Annual Report on
Form 10-K for the year ended December 31, 1997; or (ii) there was a material
breach in any representation, warranty, covenant, agreement or obligation of
HUBCO hereunder and such breach shall not have been remedied within 30 days
after receipt by HUBCO of notice in writing from DFC specifying the nature of
such breach and requesting that it be remedied;
(f) by DFC, if DFC's Board of Directors shall have
approved an Acquisition Transaction after determining, upon advice of counsel,
that such approval was necessary in the exercise of its fiduciary obligations
under applicable laws;
(g) by HUBCO if the conditions set forth in Sections
6.1 and 6.2 are not satisfied and are not capable of being satisfied by the
Cutoff Date;
(h) by DFC if the conditions set forth in Sections
6.1 and 6.3 are not satisfied and are not capable of being satisfied by the
Cutoff Date; or
(i) by DFC, if (either before or after its approval
by the shareholders of DFC) its Board of Directors so determines by a vote of a
majority of the members of its entire Board, at any time during the three (3)
business day period commencing with the Determination Date, if the Median
Pre-Closing Price of HUBCO Common Stock Average Price on the Determination Date
is less than $31.43. Notwithstanding the foregoing, if DFC elects to exercise
its termination right pursuant to this subsection (i), it shall give prompt
written notice to HUBCO (provided that such notice of election to terminate may
be withdrawn at any time within the aforementioned three (3) business day
period)). During the three (3) business day period commencing with its receipt
of such notice, HUBCO shall have the option of increasing the consideration to
be received by the holders of DFC Common Stock hereunder by increasing the
Exchange Ratio to equal a number (rounded to four decimals) equal to a quotient,
the numerator of which is $33.00 and the denominator of which is the Median
Pre-Closing Price of HUBCO Common Stock. If HUBCO makes an election contemplated
by the preceding sentence, within such three (3) business day period, it shall
give prompt written notice to DFC of such election and the revised Exchange
Ratio, whereupon no termination shall have occurred pursuant to this subsection
(i) and this Agreement shall remain in effect in accordance with its terms
(except as the Exchange Ratio shall have been so modified), and any references
in this Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this subsection.
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either HUBCO or DFC pursuant to Section
7.1, this Agreement (other than Section 5.5(b), the penultimate sentence of
Section 5.6(h), this Section 7.2 and Section 8.1) shall forthwith become void
and have no effect, without any liability on the part of any party or its
officers, directors or shareholders. Nothing contained herein, however, shall
relieve any party from any liability for any breach of this Agreement.
7.3. Amendment. This Agreement may be amended by action taken
by the parties hereto at any time before or after adoption of this Agreement by
the shareholders of DFC but, after any such adoption, no amendment shall be made
which reduces the amount or changes the form of the consideration to be
delivered to the shareholders of DFC without the approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties hereto.
7.4. Extension; Waiver. The parties may, at any time prior to
the Effective Time of the Merger, (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party against which the waiver is
sought to be enforced.
ARTICLE VIII - MISCELLANEOUS
8.1. Expenses.
(a) Except as otherwise expressly stated herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including legal, accounting and investment
banking fees and expenses) shall be borne by the party incurring such costs and
expenses. Notwithstanding the foregoing, DFC may bear the expenses of the Dime.
(b) Notwithstanding any provision in this Agreement
to the contrary, in the event that either of the parties shall willfully default
in its obligations hereunder, the non-defaulting party may pursue any remedy
available at law or in equity to enforce its rights and shall be paid by the
willfully defaulting party for all damages, costs and expenses, including
without limitation legal, accounting, investment banking and printing expenses,
incurred or suffered by the non-defaulting party in connection herewith or in
the enforcement of its rights hereunder.
8.2. Survival. The respective representations, warranties,
covenants and agreements of the parties to this Agreement shall not survive the
Effective Time, but shall terminate as of the Effective Time, except for Article
II, this Section 8.2 and Sections 5.5(b), 5.8(a) and 5.14.
8.3. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by reputable overnight courier or sent by registered or certified
mail, postage prepaid, as follows:
(a) If to HUBCO, to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: Kenneth T. Neilson, Chairman,
President and Chief Executive Officer
Copy to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: D. Lynn Van Borkulo-Nuzzo, Esq.
And copy to:
Pitney, Hardin, Kipp & Szuch
(mail to) P.O. Box 1945
Morristown, NJ 07962
(deliver to) 200 Campus Drive
Florham Park, NJ 07932
Attn.: Ronald H. Janis, Esq.
(b) If to DFC, to:
Dime Financial Corp.
95 Barnes Road
Wallingford, CT 0642
Attention: Richard H. Dionne, President and
Chief Executive Officer
Copy to:
Day. Berry & Howard
CityPlace I
Hartford, CT 06103
Attention Paul F. McAlenney, Esq.
or such other addresses as shall be furnished in writing by any party, and any
such notice or communications shall be deemed to have been given as of the date
actually received.
8.4. Parties in Interest; Assignability. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement except the Indemnitees described
in Section 5.14. This Agreement and the rights and obligations of the parties
hereunder may not be assigned.
8.5. Entire Agreement. This Agreement, which includes the
Disclosure Schedules hereto and the other documents, agreements and instruments
executed and delivered pursuant to or in connection with this Agreement,
contains the entire Agreement between the parties hereto with respect to the
transactions contemplated by this Agreement and supersedes all prior
negotiations, arrangements or understandings, written or oral, with respect
thereto, other than any confidentiality agreements entered into by the parties
hereto.
8.6. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
8.7. Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey, without giving effect to the principles of
conflicts of laws thereof.
8.8. Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
<PAGE>
IN WITNESS WHEREOF, HUBCO, the Bank, DFC and the Dime have
caused this Agreement to be executed by their duly authorized officers as of the
day and year first above written.
ATTEST: HUBCO, INC.
By: D. LYNN VAN BORKULO-NUZZO KENNETH T. NEILSON
________________________ By: ___________________________
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, Chairman,
Secretary President and Chief Executive Officer
DIME FINANCIAL CORPORATION
RICHARD H. DIONNE
By: ____________________________
Richard H. Dionne, President and
Chief Executive Officer
ATTEST: LAFAYETTE AMERICAN BANK
D. LYNN VAN BORKULO-NUZZO KENNETH T. NEILSON
By: ______________________ By: _____________________________
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson
Secretary
THE DIME SAVINGS BANK
OF WALLINGFORD
RICHARD H. DIONNE
By: ______________________________
Richard H. Dionne, President and
Chief Executive Officer
<PAGE>
AGREEMENT OF DFC AND DIME DIRECTORS
Reference is made to the Agreement and Plan of Merger, dated
March 31, 1998 (the "Merger Agreement"), among HUBCO, Inc. ("HUBCO"), a New
Jersey corporation and registered bank holding company, Lafayette American Bank
(the "Bank"), a New Jersey state-chartered commercial banking corporation and
wholly-owned subsidiary of HUBCO, Dime Financial Corporation, a Connecticut
corporation and registered bank holding company ("DFC"), and The Dime Savings
Bank of Wallingford, a Connecticut state-chartered savings bank and wholly-owned
subsidiary of DFC (the "Dime"). Capitalized terms used herein and not otherwise
defined have the meanings given to them in the Merger Agreement.
Each of the following persons, being all of the directors of
DFC and the Dime, solely in such person's capacity as a holder of DFC Common
Stock, agrees to vote or cause to be voted all shares of DFC Common Stock which
are held by such person, or over which such person exercises full voting control
(except as trustee or in a fiduciary capacity, or as nominee), in favor of the
Merger.
It is understood and agreed that this Agreement of DFC and
Dime Directors (this "Agreement") relates solely to the capacity of the
undersigned as shareholders or other beneficial owners of shares of DFC Common
Stock and is not in any way intended to affect the exercise by the undersigned
of the undersigned's responsibilities as directors of DFC or the Dime. It is
further understood and agreed that this Agreement is not in any way intended to
affect the exercise by the undersigned of any fiduciary responsibility which the
undersigned may have in respect of any shares of DFC Common Stock held by the
undersigned as of the date hereof.
JUDGE RALPH D. LUKENS RICHARD H. DIONNE
- ----------------------------------- ------------------------------------
Judge Ralph D. Lukens Richard H. Dionne
FRED A. VALENTI ROSALIND F. GALLAGHER
- ----------------------------------- ------------------------------------
Fred A. Valenti Rosalind F. Gallagher
ROBERT NICOLETTI M. JOSEPH CANAVAN
- ----------------------------------- ------------------------------------
Robert Nicoletti, Ph.D. M. Joseph Canavan
WILLIAM J. FARRELL RICHARD D. STAPLETON
- ----------------------------------- ------------------------------------
William J. Farrell Richard D. Stapleton
GARY O. OLSON THEODORE H. HORWITZ
- ----------------------------------- ------------------------------------
Gary O. Olson Theodore H. Horwitz
<PAGE>
EXHIBIT 5.19-1
FORM OF AFFILIATE LETTER FOR DFC AFFILIATES
March __, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed acquisition (the "Merger") of Dime Financial Corp. (the "DFC"), by
HUBCO, Inc., a New Jersey corporation and registered bank holding company
("HUBCO"), pursuant to the Agreement and Plan of Merger dated March __, 1998
(the "Agreement") between DFC, its bank subsidiary, HUBCO and its bank
subsidiary. Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Agreement. I currently own shares of DFC Common
Stock. As a result of the Merger, I will receive shares of HUBCO Common Stock in
exchange for my DFC Common Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of DFC, as the term "affiliate" is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations
promulgated under the Securities Act of 1933, as amended (the "1933 Act") by the
Securities and Exchange Commission ("SEC") and as the term "affiliate" is used
for purposes of the SEC's rules and regulations applicable to the determination
of whether a merger can be accounted for as a "pooling of interests" as
specified in the SEC's Accounting Series Release 135, as amended by Staff
Accounting Bulletins Nos. 65 and 76 ("ASR 135").
I represent to and agree with HUBCO that:
A. Transfer Review Restrictions. During the period beginning
on the date hereof and ending 30 days prior to the consummation of the Merger, I
shall not sell, transfer, reduce my risk with respect to or otherwise dispose of
("transfer") any DFC Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control, to
transfer any DFC Common Stock owned by such person or entity, without notifying
HUBCO in advance of the proposed transfer and giving HUBCO a reasonable
opportunity to review the transfer before it is consummated. HUBCO, if advised
to do so by its independent public accountants in writing a copy of which is
provided to me, may instruct me not to make or permit the transfer because it
may interfere with the "pooling of interests" treatment of the Merger. I shall
abide by any such instructions.
B. Transfer Restrictions During Merger Consummation Period. I
shall not transfer any DFC Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control, to
transfer any DFC Common Stock owned by such person or entity during the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUBCO by means of the filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, as amended, the issuance of
a quarterly earnings report, or any other public issuance which satisfies the
requirements of ASR 135. For purposes of this paragraph only, "DFC Common Stock"
includes HUBCO Common Stock as converted.
C. Compliance with Rule 145. I have been advised that the
issuance of HUBCO Common Stock to me pursuant to the Merger will be registered
with the SEC under the 1933 Act on a Registration Statement on Form S-4.
However, I have also been advised that, since I may be deemed to be an affiliate
of DFC at the time the Merger is submitted for a vote of DFC's shareholders, any
transfer by me of HUBCO Common Stock is restricted under Rule 145 promulgated by
the SEC under the 1933 Act. I agree not to transfer any HUBCO Common Stock
received by me or any of my affiliates unless (i) such transfer is made in
conformity with the volume and other limitations of Rule 145 promulgated by the
SEC under the 1933 Act, (ii) in the opinion of HUBCO's counsel or counsel
reasonably acceptable to HUBCO, such transfer is otherwise exempt from
registration under the 1933 Act or (iii) such transfer is registered under the
1933 Act.
D. Stop Transfer Instructions; Legend on Certificates. I also
understand and agree that stop transfer instructions will be given to HUBCO's
transfer agents with respect to the HUBCO Common Stock received by me and any of
my affiliates and that there will be placed on the certificates of the HUBCO
Common Stock issued to me and any of my affiliates, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED MARCH
__, 1998 BETWEEN THE REGISTERED HOLDER HEREOF AND HUBCO, INC., A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF HUBCO, INC."
E. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for DFC.
Execution of this letter is not an admission on my part that I
am an "affiliate" of DFC as described in the second paragraph of this letter, or
a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-----------------------------
Name:
Accepted this _____
day of _______, 199__ by
HUBCO, INC.
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 5.19-2
FORM OF AFFILIATE LETTER FOR HUBCO AFFILIATES
March __, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of Dime Financial Corp. ("DFC") with and into
HUBCO, Inc., a New Jersey corporation and registered bank holding company
("HUBCO"), pursuant to the Agreement and Plan of Merger dated March __, 1998
(the "Agreement") between DFC, its bank subsidiary, HUBCO and its bank
subsidiary. I currently own shares of HUBCO's common stock, no par value ("HUBCO
Common Stock").
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of HUBCO, as the term "affiliate" is used for
purposes of the rules and regulations of the Securities and Exchange Commission
(the "SEC") applicable to the determination of whether a merger can be accounted
for as a "pooling of interests" as specified in the SEC's Accounting Series
Release 135, as amended by Staff Accounting Bulletins Nos.
65 and 76 ("ASR 135").
I represent and covenant with HUBCO and DFC that:
A. Transfer Restrictions Prior to Merger Consummation. During
the period beginning on the date hereof and ending 30 days prior to the
consummation of the Merger, I shall not sell, transfer, reduce my risk with
respect to or otherwise dispose of ("transfer") any HUBCO Common Stock owned by
me, and I shall not permit any relative who shares my home, or any person or
entity who or which I control, from transferring any HUBCO Common Stock owned by
such person or entity, without notifying HUBCO in advance of the proposed
transfer and giving HUBCO a reasonable opportunity to object to the transfer
before it is consummated. HUBCO, upon advice of its independent public
accountants, may instruct me not to make or permit the transfer because it may
interfere with the "pooling of interests" treatment of the Merger. I shall abide
by any such instructions.
B. Post-Consummation Transfer Restrictions. During the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUBCO by means of filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, the issuance of a quarterly
earnings report, or any other public issuance which satisfies the requirements
of ASR 135, I shall not transfer any HUBCO Common Stock owned by me, and I shall
not permit any relative who shares my home, or any person or entity who or which
I control, to transfer any HUBCO Common Stock owned by such person or entity.
C. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for HUBCO.
Execution of this letter is not an admission on my part that I
am an "affiliate" of HUBCO as described in the second paragraph of this letter,
or a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-------------------------------------
Name:
Title:
Accepted this ____ day of
________________, 199_ by
HUBCO, INC.
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT 6.2(b)
FORM OF OPINION OF COUNSEL TO DFC
TO BE DELIVERED TO HUBCO ON THE EFFECTIVE TIME
(a) DFC and Dime have full corporate power to carry out the
transactions contemplated in the Agreement. The execution and delivery of the
Agreement and the consummation of the transactions contemplated thereunder have
been duly and validly authorized by all necessary corporate action on the part
of DFC and Dime, and the Agreement constitutes the valid and legally binding
obligations of DFC and Dime enforceable in accordance with its terms, except as
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship, and other laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally or the
rights of creditors of Connecticut state-chartered capital stock savings banks
or their holding companies, (ii) general equitable principles, and (iii) laws
relating to the safety and soundness of insured depository institutions, and
except that no opinion need be rendered as to the effect or availability of
equitable remedies or injunctive relief (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Subject to
satisfaction of the conditions set forth in the Agreement, neither the
transactions contemplated in the Agreement, nor compliance by DFC and Dime with
any of the provisions thereof, will (i) conflict with or result in a breach or
default under the certificate of incorporation or bylaws of DFC or the charter
or bylaws of Dime, or (ii) based exclusively on certificates of officers and
without independent verification, to the knowledge of such counsel, (A) conflict
with or result in a breach or default under any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which DFC or Dime is a
party; or (B) result in the creation or imposition of any material lien,
instrument or encumbrance upon the property of DFC or Dime, except such material
lien, instrument or obligation that has been disclosed to HUBCO pursuant to the
Agreement, or (iii) violate in any material respect any order, writ, injunction,
or decree known to such counsel, or any statute, rule or regulation applicable
to DFC or Dime.
(b) DFC is a corporation validly existing and in good standing
under the laws of the State of Connecticut, Dime is a validly existing capital
stock savings bank under the laws of the State of Connecticut and each of DFC
and Dime has the corporate power and authority to own or lease all of its
properties and assets and to conduct the business in which it is currently
engaged as described on pages __ and __ under the caption
"_____________________" in the Proxy Statement-Prospectus.
(c) There is, to the knowledge of such counsel, no legal,
administrative, arbitration or governmental proceeding or investigation pending
or threatened to which DFC or Dime is a party which would, if determined
adversely to DFC or Dime, have a material adverse effect on the business,
properties, results of operations, or condition, financial or otherwise, of DFC
or Dime taken as a whole or which presents a claim to restrain or prohibit the
transactions contemplated by the Agreement.
(d) No consent, approval, authorization, or order of any
federal or state court or federal or state governmental agency or body, or to
such counsel's knowledge of any third party, is required for the consummation by
DFC or Dime of the transactions contemplated by the Agreement, except for such
consents, approvals, authorizations or orders as have been obtained or which
would not have a material adverse effect upon HUBCO upon consummation of the
Merger.
In addition to the foregoing opinions, counsel shall state that on the
sole basis of such counsel's participation in conferences with officers and
employees of DFC in connection with the preparation of the Prospectus-Proxy
Statement and without other independent investigation or inquiry, such counsel
has no reason to believe that the Prospectus-Proxy Statement, including any
amendments or supplements thereto (except for the financial information,
financial statements, notes to financial statements, financial schedules and
other financial or statistical data and stock valuation information contained or
incorporated by reference therein and except for any information supplied by
HUBCO for inclusion therein, as to which counsel need express no belief), as of
the date of mailing thereof and as of the date of the meeting of shareholders of
DFC to approve the Merger, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make any statement therein, in
light of the circumstances under which it was made, not misleading. Counsel may
state in connection with the foregoing that such counsel has not independently
verified and does not assume any responsibility for the accuracy, completeness
or fairness of any information or statements contained in the Prospectus-Proxy
Statement, except with respect to identified statements of law or regulations or
legal conclusions relating to DFC or Dime or to their participation in the
transactions contemplated in the Agreement and that it is relying as to
materiality as to factual matters on certificates of officers and
representatives of the parties to the Agreement and other factual
representations by DFC and Dime.
Such counsel's opinion shall be limited to matters governed by
the laws of the State of Connecticut and federal laws and regulations of the
United States of America.
<PAGE>
EXHIBIT 6.3(b)
FORM OF OPINION OF COUNSEL TO HUBCO
TO BE DELIVERED TO DFC ON THE EFFECTIVE TIME
(a) HUBCO is a corporation validly existing and in good
standing under the laws of the State of New Jersey, the Lafayette is a validly
existing Connecticut state-chartered commercial banking corporation under the
laws of the State of Connecticut and each of HUBCO and Lafayette has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as described in the Proxy Statement-Prospectus on
pages __ and __ under the caption "_____________________________." HUBCO is
registered as a bank holding company under the BHCA.
(b) Each HUBCO Subsidiary listed as such in the HUBCO
Disclosure Schedule is validly existing and in good standing under the laws of
the jurisdiction of its incorporation.
(c) The authorized capital stock of HUBCO consists of
____________ shares of common stock, no par value per share ("HUBCO Common
Stock") and _____________ shares of Series B, no par value, Convertible
Preferred Stock (the "Authorized Preferred Stock). Except for
to our knowledge, there are no outstanding subscription rights, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever (either firm or conditional) obligating HUBCO to issue, deliver or
sell, cause to be issued, delivered or sold, or restricting HUBCO from selling
any additional HUBCO Common Stock or Authorized Preferred Stock or obligating
HUBCO to grant, extend or enter into any such agreement or commitment. The HUBCO
Common Stock to be issued in connection with the Merger in accordance with
Article II of the Agreement, or pursuant to the Continuing Stock Options, when
so issued in accordance therewith, will be duly authorized, validly issued,
fully paid and non-assessable, free of preemptive rights and free and clear of
all liens, encumbrances or restrictions created by HUBCO.
(d) The Agreement has been authorized, executed and delivered
by HUBCO and Lafayette and constitutes the valid and binding obligations of
HUBCO and Lafayette enforceable in accordance with its terms, except that the
enforceability of the obligations of HUBCO and Lafayette may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, or
laws affecting institutions the deposits of which are insured by the FDIC or
other laws heretofore or hereafter enacted relating to or affecting the
enforcement of creditors' rights generally and by principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). In addition, certain remedial and other provisions of the
Agreement may be limited by implied covenants of good faith, fair dealing, and
commercially reasonable conduct, by judicial discretion, in the instance of
equitable remedies, and by applicable public policies and laws.
(e) Subject to satisfaction of the conditions set forth in the
Agreement, the execution and delivery of the Agreement and the consummation of
the transactions contemplated thereby will not (i) conflict with or violate any
provision of or result in the breach of any provision of the Certificate of
Incorporation or By-Laws of HUBCO or the Charter and By-Laws of Lafayette; (ii)
based on certificates of officers of HUBCO and without independent verification,
conflict with or violate in any material respect, or result in a material breach
or violation of the terms or provisions of, or constitute a default under, or
result in (whether upon or after the giving of notice or lapse of time or both)
any material obligation under, any indenture, mortgage, deed of trust or loan
agreement or any other agreement, instrument, judgment, order, arbitration award
or decree of which we have knowledge (through our representation of HUBCO and
Lafayette in connection therewith or in the course of our representation of
HUBCO and Lafayette in connection with the Agreement) and to which HUBCO or
Lafayette is a party or by which HUBCO or Lafayette is bound; or (iii) cause
HUBCO or Lafayette to violate any corporation or banking law applicable to
HUBCO.
(f) All actions of the directors and shareholders of HUBCO and
Lafayette required by federal banking laws and regulations, New Jersey law and
Connecticut banking law or by the Certificate of Incorporation or By-Laws of
HUBCO and Lafayette, to be taken by HUBCO and Lafayette to authorize the
execution, delivery and performance of the Agreement and consummation of the
Merger have been taken.
(g) Assuming that there has been due authorization of the
Merger by all necessary corporate and governmental proceedings on the part of
DFC and Dime and that DFC and Dime have taken all action required to be taken by
it prior to the Effective Time, upon the appropriate filing of the Certificates
of Merger in respect of the Merger with the New Jersey Secretary of State and
the Connecticut Secretary of State in accordance with Section 1.6 of the
Agreement, the Merger will become effective at the Effective Time, as such term
is defined in Section 1.6, and upon effectiveness of the Merger each share of
DFC Common Stock will be converted as provided in Article II of the Agreement.
(h) No approvals, authorizations, consents or other actions or
filings under federal banking laws, New Jersey law or Connecticut banking law
("Approvals") are required to be obtained by HUBCO or Lafayette in order to
permit the execution and delivery of the Agreement by HUBCO or Lafayette and the
performance by HUBCO or Lafayette of the transactions contemplated thereby other
than those Approvals which have been obtained or those Approvals or consents
required to be obtained by DFC or Dime.
(i) The Registration Statement has been declared effective by
the Securities and Exchange Commission ("SEC") under the 1933 Act and we are not
aware that any stop order suspending the effectiveness has been issued under the
1933 Act or proceedings therefor initiated or threatened by the SEC.
We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Proxy Statement-Prospectus and make no representation that we have independently
verified the accuracy, completeness or fairness of such statements, but from our
examination of the Proxy Statement-Prospectus and our general familiarity with
HUBCO no facts have come to our attention that caused us to believe that (except
for financial statements and other tabular financial information, and other
financial and statistical data and information, as to which we do not express
any belief) the Proxy Statement-Prospectus on the date of the mailing thereof
and on the date of the meeting of stockholders of DFC at which the Agreement was
approved, contained any untrue statement of a material fact regarding HUBCO or
the Merger, or omitted to make a material fact regarding HUBCO or the Merger
therein, in light of the circumstances under which they were made, not
misleading.
We are members of the Bar of the State of New Jersey and we
express no opinion as to any of the laws of any jurisdiction other than the laws
of the State of New Jersey, Connecticut banking law and federal laws and
regulations of the United States of America.
<PAGE>
APPENDIX B
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of March
31, 1998, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and Dime Financial Corporation, a Connecticut
corporation and registered bank holding company ("DFC").
BACKGROUND
WHEREAS, HUBCO and DFC, as of the date hereof, are prepared to
execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which DFC will be merged with and into HUBCO (the "Merger"); and
WHEREAS, HUBCO has advised DFC that it will not execute the
Merger Agreement unless DFC executes this Agreement; and
WHEREAS, the Board of Directors of DFC has determined that the
Merger Agreement provides substantial benefits to the shareholders of DFC; and
WHEREAS, as an inducement to HUBCO to enter into the Merger
Agreement and in consideration for such entry, DFC desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of DFC in an
amount and on the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, HUBCO and DFC,
intending to be legally bound hereby, agree:
1. Grant of Option. DFC hereby grants to HUBCO the option to
purchase 1,040,000 shares of common stock, $1.00 par value, of DFC (the "Common
Stock") at a price of $30.25 per share (the "Option Price"), on the terms and
conditions set forth herein (the "Option"); provided that in no event shall the
number of shares of Common Stock for which the Option is exercisable exceed
19.9% of DFC's issued and outstanding shares of Common Stock without giving
effect to any shares subject to or issued pursuant to the Option.
2. Exercise of Option. This Option shall not be exercisable
until the occurrence of a Triggering Event (as such term is hereinafter
defined). Upon or after the occurrence of a Triggering Event (as such term is
hereinafter defined), HUBCO may exercise the Option, in whole or in part, at any
time or from time to time, subject to the terms and conditions set forth herein
and the termination provisions of Section 19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such term is
defined in Rule 13d-3 as promulgated under the Exchange Act) of at least 20% of
the then outstanding shares of Common Stock; or
b. enters into a letter of intent or an agreement,
whether oral or written, with DFC pursuant to which such person or any affiliate
of such person would (i) merge or consolidate, or enter into any similar
transaction, with DFC, (ii) acquire all or a significant portion of the assets
or liabilities of DFC, or (iii) acquire beneficial ownership of securities
representing, or the right to acquire beneficial ownership or to vote securities
representing, 20% or more of the then outstanding shares of Common Stock; or
c. makes a filing with any bank or thrift regulatory
authorities or publicly announces a bona fide proposal (a "Proposal") for (i)
any merger with, consolidation with or acquisition of all or a significant
portion of all the assets or liabilities of, DFC or any other business
combination involving DFC, or (ii) a transaction involving the transfer of
beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 20% or more of the
outstanding shares of Common Stock, and thereafter, if such Proposal has not
been Publicly Withdrawn (as such term is hereinafter defined) at least 15 days
prior to the meeting of stockholders of DFC called to vote on the Merger and
DFC's stockholders fail to approve the Merger by the vote required by applicable
law at the meeting of stockholders called for such purpose; or
d. makes a bona fide Proposal and thereafter, but
before such Proposal has been Publicly Withdrawn, DFC willfully takes any action
in any manner which would materially interfere with its ability to consummate
the Merger or materially reduce the value of the transaction to HUBCO.
The term "Triggering Event" also means the taking of any
material direct or indirect action by DFC or any of its directors, officers or
agents with the intention of inviting, encouraging or soliciting any proposal
which has as its purpose a tender offer for the shares of Common Stock, a
merger, consolidation, plan of exchange, plan of acquisition or reorganization
of DFC, or a sale of a significant number of shares of Common Stock or any
significant portion of its assets or liabilities.
The term "significant portion" means 25% of the assets or
liabilities of DFC. The term "significant number" means 20% of the outstanding
shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the Proposal coupled
with a public announcement of no further interest in pursuing such Proposal or
in acquiring any controlling influence over DFC or in soliciting or inducing any
other person (other than HUBCO or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be exercised
at any time (i) in the absence of any required governmental or regulatory
approval or consent necessary for DFC to issue the shares of Common Stock
covered by the Option (the "Option Shares") or HUBCO to exercise the Option or
prior to the expiration or termination of any waiting period required by law, or
(ii) so long as any injunction or other order, decree or ruling issued by any
federal or state court of competent jurisdiction is in effect which prohibits
the sale or delivery of the Option Shares.
DFC shall notify HUBCO promptly in writing of the occurrence
of any Triggering Event known to it, it being understood that the giving of such
notice by DFC shall not be a condition to the right of HUBCO to exercise the
Option. DFC will not take any action which would have the effect of preventing
or disabling DFC from delivering the Option Shares to HUBCO upon exercise of the
Option or otherwise performing its obligations under this Agreement, except to
the extent required by applicable securities and banking laws and regulations.
In the event HUBCO wishes to exercise the Option, HUBCO shall
send a written notice to DFC (the date of which is hereinafter referred to as
the "Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date between two and ten business days inclusive from
the Notice Date for the closing of such a purchase (a "Closing"); provided,
however, that a Closing shall not occur prior to two days after the later of
receipt of any necessary regulatory approvals and the expiration of any legally
required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any Closing
hereunder (a) HUBCO will make payment to DFC of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by DFC; (b) DFC will deliver to HUBCO a stock certificate or
certificates representing the number of Option Shares so purchased, free and
clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever created by or through DFC, registered in the name of HUBCO or its
designee, in such denominations as were specified by HUBCO in its notice of
exercise and, if necessary, bearing a legend as set forth below; and (c) HUBCO
shall pay any transfer or other taxes required by reason of the issuance of the
Option Shares so purchased.
If required under applicable federal securities laws, a legend
will be placed on each stock certificate evidencing Option Shares issued
pursuant to this Agreement, which legend will read substantially as follows:
The shares of stock evidenced by this certificate have not been
registered for sale under the Securities Act of 1933 (the "1933 Act").
These shares may not be sold, transferred or otherwise disposed of
unless a registration statement with respect to the sale of such shares
has been filed under the 1933 Act and declared effective or, in the
opinion of counsel reasonably acceptable to Dime Financial Corporation,
said transfer would be exempt from registration under the provisions of
the 1933 Act and the regulations promulgated thereunder.
No such legend shall be required if a registration statement is filed and
declared effective under Section 4 hereof.
4. Registration Rights. Upon or after the occurrence of a
Triggering Event and upon receipt of a written request from HUBCO, DFC shall, if
necessary for the resale of the Option or the Option Shares by HUBCO, prepare
and file a registration statement with the Securities and Exchange Commission
and any state securities bureau covering the Option and such number of Option
Shares as HUBCO shall specify in its request, and DFC shall use its best efforts
to cause such registration statement to be declared effective in order to permit
the sale or other disposition of the Option and the Option Shares, provided that
HUBCO shall in no event have the right to have more than one such registration
statement become effective, and provided further that DFC shall not be required
to prepare and file any such registration statement in connection with any
proposed sale with respect to which counsel to DFC delivers to DFC and to HUBCO
(which is reasonably acceptable to HUBCO) its opinion to the effect that no such
filing is required under applicable laws and regulations with respect to such
sale or disposition; provided further, however, that DFC may delay any
registration of Option Shares above for a period not exceeding 90 days in the
event that DFC shall in good faith determine that any such registration would
adversely effect an offering of securities by DFC for cash. HUBCO shall provide
all information reasonable requested by DFC for inclusion in any registration
statement to be filed hereunder.
In connection with such filing, DFC shall use its best efforts
to cause to be delivered to HUBCO such certificates, opinions, accountant's
letters and other documents as HUBCO shall reasonably request and as are
customarily provided in connection with registrations of securities under the
Securities Act of 1933, as amended. All expenses incurred by DFC in complying
with the provisions of this Section 4, including without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for DFC and blue sky fees and expenses shall be paid by DFC.
Underwriting discounts and commissions to brokers and dealers relating to the
Option Shares, fees and disbursements of counsel to HUBCO and any other expenses
incurred by HUBCO in connection with such registration shall be borne by HUBCO.
In connection with such filing, DFC shall indemnify and hold harmless HUBCO
against any losses, claims, damages or liabilities, joint or several, to which
HUBCO may become subject, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
preliminary or final registration statement or any amendment or supplement
thereto, or arise out of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and DFC will reimburse
HUBCO for any legal or other expense reasonably incurred by HUBCO in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that DFC will not be liable in any case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such preliminary or final registration statement or such amendment or
supplement thereto in reliance upon and in conformity with written information
furnished by or on behalf of HUBCO specifically for use in the preparation
thereof. HUBCO will indemnify and hold harmless DFC to the same extent as set
forth in the immediately preceding sentence but only with reference to written
information specifically furnished by or on behalf of HUBCO for use in the
preparation of such preliminary or final registration statement or such
amendment or supplement thereto; and HUBCO will reimburse DFC for any legal or
other expense reasonably incurred by DFC in connection with investigating or
defending any such loss, claim, damage, liability or action. Notwithstanding
anything to the contrary herein, no indemnifying party shall be liable for any
settlement effected without its prior written consent.
5. Adjustment Upon Changes in Capitalization. In the event of
any change in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, conversions, exchanges of shares or the like,
then the number and kind of Option Shares and the Option Price shall be
appropriately adjusted.
In the event any capital reorganization or reclassification of
the Common Stock, or any consolidation, merger or similar transaction of DFC
with another entity, or any sale of all or substantially all of the assets of
DFC, shall be effected in such a way that the holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions (in form
reasonably satisfactory to the holder hereof) shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified herein and in lieu of the Common
Stock immediately theretofore purchasable and receivable upon exercise of the
rights represented by this Option, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore purchasable and receivable upon exercise
of the rights represented by this Option had such reorganization,
reclassification, consolidation, merger or sale not taken place; provided,
however, that if such transaction results in the holders of Common Stock
receiving only cash, the holder hereof shall be paid the difference between the
Option Price and such cash consideration without the need to exercise the
Option.
6. Filings and Consents. Each of HUBCO and DFC will use its
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event HUBCO is the holder
hereof, approval of the Securities and Exchange Commission, the Board of
Governors of the Federal Reserve System, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation or the New York Department of Banking, and
DFC agrees to cooperate with and furnish to the holder hereof such information
and documents as may be reasonably required to secure such approvals.
7. Representations and Warranties of DFC. DFC hereby
represents and warrants to HUBCO as follows:
a. Due Authorization. DFC has full corporate power
and authority to execute, deliver and perform this Agreement and all corporate
action necessary for execution, delivery and performance of this Agreement has
been duly taken by DFC.
b. Authorized Shares. DFC has taken and, as long as
the Option is outstanding, will take all necessary corporate action to authorize
and reserve for issuance all shares of Common Stock that may be issued pursuant
to any exercise of the Option.
c. No Conflicts. Neither the execution and delivery
of this Agreement nor consummation of the transactions contemplated hereby
(assuming all appropriate regulatory approvals) will violate or result in any
violation or default of or be in conflict with or constitute a default under any
term of the Certificate of Incorporation or Bylaws of DFC or any agreement,
instrument, judgment, decree or order applicable to DFC.
8. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement and that
the obligations of the parties hereto shall be specifically enforceable.
Notwithstanding the foregoing, HUBCO shall have the right to seek money damages
against DFC for a breach of this Agreement.
9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof.
10. Assignment or Transfer. HUBCO may not sell, assign or
otherwise transfer its rights and obligations hereunder, in whole or in part, to
any person or group of persons other than to an affiliate of HUBCO. HUBCO
represents that it is acquiring the Option for HUBCO's own account and not with
a view to or for sale in connection with any distribution of the Option or the
Option Shares. HUBCO is aware that neither the Option nor the Option Shares is
the subject of a registration statement filed with, and declared effective by,
the Securities and Exchange Commission pursuant to Section 5 of the Securities
Act, but instead each is being offered in reliance upon the exemption from the
registration requirement provided by Section 4(2) thereof and the
representations and warranties made by HUBCO in connection therewith.
11. Amendment of Agreement. Upon mutual consent of the parties
hereto, this Agreement may be amended in writing at any time, for the purpose of
facilitating performance hereunder or to comply with any applicable regulation
of any governmental authority or any applicable order of any court or for any
other purpose.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
13. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally, by express service,
cable, telegram or telex, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
If to HUBCO:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attention: Mr. Kenneth T. Neilson
President and Chief Executive Officer
With a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
Attention: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
If to DFC:
Dime Financial Corporation
95 Barnes Road
Wallingford, CT 06492
Attention: Richard H. Dionne
President and Chief Executive Officer
With a copy to:
Day, Berry & Howard
CityPlace I
Hartford, CT 06103
Attention: Paul F. McAlenney, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are inserted for
convenience and reference purposes, and shall not limit or otherwise affect any
of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may, by mutual
consent, extend the time for performance of any of the obligations or acts of
either party hereto. Each party may waive (a) compliance with any of the
covenants of the other party contained in this Agreement and/or (b) the other
party's performance of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
19. Termination. This Agreement shall terminate upon either
the termination of the Merger Agreement as provided therein or the consummation
of the transactions contemplated by the Merger Agreement; provided, however,
that if termination of the Merger Agreement occurs after the occurrence of a
Triggering Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 18 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event.
20. Effectiveness and Termination Fee. Solely for the purposes
of the Connecticut Banking Laws, Section 36a-184, this Agreement shall not be
considered effective until and unless it is submitted to and approved by the
Commissioner of the Connecticut Department of Banking (the "Commissioner"). DFC
shall pay HUBCO a termination fee of $5,000,000 (the "Termination Fee"),
forthwith on demand, in lieu of all its other rights hereunder, if each of the
following conditions are met: (a) the Option never becomes effective due to a
failure by the Commissioner to make a determination that the Option may be
exercised, after a request for approval by HUBCO to do so is submitted by HUBCO
to the Commissioner, and either the Commissioner makes a determination that the
Option may not be exercised or a period of five months elapses from the date the
request is submitted by HUBCO; (b) a Triggering Event has occurred, which would
allow HUBCO to exercise the Option; and (c) DFC is merged or acquired by another
financial institution within 18 months following the Triggering Event. In the
event that HUBCO is due the Termination Fee hereunder and DFC fails to pay such
Fee on demand by HUBCO, DFC shall in addition reimburse HUBCO for the legal fees
and expenses incurred by HUBCO in seeking to enforce and in collecting the
Termination Fee.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Stock Option
Agreement to be executed by its duly authorized officer, all as of the day and
year first above written.
DIME FINANCIAL CORPORATION
By: /s/ Richard H. Donne
----------------------------------------------
Richard H. Dionne
President and Chief Executive Officer
HUBCO, INC.
By: /s/ Kenneth T. Neilson
---------------------------------------------
Kenneth T. Neilson,
President & Chief Executive Officer
<PAGE>
APPENDIX C
FORM OF FAIRNESS OPINION OF
A.G. EDWARDS
[date], 1998
Board of Directors
Dime Financial Corporation
95 Barnes Road
Wallingford, CT 06492
Members of the Board:
You have requested the opinion of A.G. Edwards & Sons, Inc. ("Edwards") as to
the fairness, from a financial point of view, to the holders of the outstanding
shares of common stock of Dime Financial Corporation ("Dime") (the "Dime
Stockholders"), of the Merger Consideration (as hereinafter defined) to be
received in the proposed merger (the "Merger") of Dime with and into HUBCO, Inc.
("HUBCO") pursuant to the Agreement and Plan of Merger dated March 31, 1998 (the
"Agreement").
Pursuant to the Agreement, each share of the common stock of Dime will be
converted into a certain number (the "Exchange Ratio") of shares of HUBCO common
stock, and cash in lieu of fractional shares, the "Merger Consideration"). As
set forth more fully in the Agreement, the Exchange Ratio shall be a number
between 1.050 and 0.930 with the exact number determined from the quotient,
rounded to the nearest thousandth, obtained by dividing $38.25 by the Median
Pre-Closing Price of HUBCO common stock, except that if the quotient is greater
than 1.050, the Exchange Ratio shall be 1.050 and if the quotient is less than
0.930, the Exchange Ratio shall be 0.930. The Median Pre-Closing Price shall be
determined by taking the price half-way between the Closing Prices (as defined
in the Agreement) left after discarding the 4 lowest and 4 highest Closing
Prices in the 10 consecutive trading day period which ends on and includes the
Determination Date (as defined in the Agreement).
Edwards, as part of its investment banking business, is regularly engaged in,
among other things, the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
bids, secondary distribution of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with Dime through our engagement with the Board of Directors with
respect to the Merger. As part of our engagement for this transaction, Edwards
will receive a fee for rendering its fairness opinion. Edwards will also receive
a fee at the closing of the transaction equal to a percentage of the total
Merger Consideration received by the Dime Stockholders. We are not aware of any
present or contemplated relationship between Edwards, Dime, Dime's Board of
Directors and officers or its shareholders, or HUBCO, which in our opinion would
affect our ability to render a fair and independent opinion in this matter.
In connection with its opinion, Edwards activities included, among other things:
(i) a review of the Agreement and Plan of Merger and related
documents;
(ii) a review of expressions of interest for dime by other
potential bidders with the board of Directors of Dime;
(iii) conversations with management of Dime and HUBCO, respectively,
regarding the nature and extent of the terms of the Merger;
(iv) a review of publicly available information regarding Dime and
HUBCO, which Edwards deemed relevant, including Dime's and
HUBCO's annual and quarterly reports, proxy statements and
other relevant filings with the SEC through the fiscal periods
ended December 31, 1997, and research reports and analyst
opinions;
(v) a review of financial projections for dime for fiscal years
1998 through 2001 as provided by Dime's management, and for
HUBCO for fiscal year 1998 including the impact of pending
mergers and acquisitions, and of another proposed merger to be
announced, as provided by HUBCO's management;
(vi) an investigation of certain other internal operating and
financial information regarding Dime and HUBCO, respectively,
supplied to Edwards by the management of Dime and HUBCO,
respectively, concerning the business, operations and
financial prospects of Dime and HUBCO, respectively, and as
combined entities;
(vii) a review of the industry and respective market segments in
which Dime and HUBCO operate;
(viii) a review of the reported price and trading activity for the
common stock of dime and HUBCO, respectively;
(ix) a review of publicly available information concerning certain
other companies that Edwards believed to be relevant in
evaluating Dime and HUBCO, respectively, and the trading of
such companies' securities;
(x) a review of information relating to the nature and financial
terms of certain other mergers or acquisitions that Edwards
considered relevant in evaluating the transaction; and
(xi) an assessment of other information that Edwards considered
relevant to its analyses.
In rendering its opinion, Edwards has relied upon and assumed, without
independent verification, the accuracy and completeness of all financial and
other information, publicly available or furnished to, or otherwise discussed
with, Edwards for the purposes of this opinion as described above. With respect
to financial forecasts and/or other information provided to or otherwise
discussed with Edwards, Edwards assumed, and has been advised by the senior
management of Dime and HUBCO, respectively, that such forecasts and other
information were reasonably prepared on a basis that reflects the best currently
available estimates and business judgments of the senior management of Dime and
HUBCO, respectively. The Board of Directors has not specifically engaged Edwards
to, and therefore Edwards has not, verified the accuracy or completeness of any
such information. We have not conducted a physical inspection of any of the
properties or facilities of Dime or HUBCO or analyzed any loan or asset
documentation, nor have we made or obtained any independent evaluation or
appraisals of any such properties or facilities or of any loans, investments or
financial assets and liabilities. Furthermore, we are not experts in the
evaluation of allowances for loan losses, and we have not made an independent
evaluation of the adequacy of the allowances for loan losses of Dime and HUBCO,
nor have we reviewed the loan portfolios of Dime or HUBCO beyond what was
required to conduct our due diligence review of the Merger. Edwards did not
express an opinion as to what the value of the HUBCO common stock will be when
issued to the holders of Dime common stock pursuant to the Merger, or the price
at which HUBCO common stock will trade subsequent to the Merger. Edwards'
opinion is necessarily based upon financial, and other conditions and
circumstances existing and disclosed to it as of March 31,1998.
Our opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us as of, the date hereof. Our
opinion as expressed herein, is limited to the fairness, from a financial point
of view, to the Dime Stockholders, of the Merger Consideration to be received
pursuant to the Agreement and does not constitute a recommendation to any Dime
Stockholder as to how such stockholder should vote at the meeting of Dime
Stockholders held in connection with the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Merger Consideration to be received, pursuant to the Agreement is
fair, from a financial point of view, to the Dime Stockholders.
Very truly yours,
A.G. EDWARDS & SONS, INC.
<PAGE>
APPENDIX D
CTBCA SS.SS. 33-855-872
DISSENTERS' RIGHTS
(A)
RIGHT TO DISSENT AND OBTAIN
PAYMENT FOR SHARES
Sec. 33-855. Definitions. As used in sections 33-855 to 33-872,
inclusive:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 33-856 and who exercises that right when and in
the manner required by sections 33-860 to 33-868, inclusive.
(3) "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
Sec. 33-856. Right to dissent. (a) A shareholder is entitled to dissent
from, and obtain payment of the fair value of his shares in the event of, any of
the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party (A) if shareholder approval is required for the merger by section 33-817
or the certificate of incorporation and the shareholder is entitled to vote on
the merger or (B) if the corporation is a subsidiary that is merged with its
parent under section 33-818;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
year after the date of sale;
(4) An amendment of the certificate of incorporation that materially
and adversely affects rights in respect of a dissenter's shares because it: (A)
Alters or abolishes a preferential right of the shares; (B) creates, alters or
abolishes a right in respect to redemption, including a provision respecting a
sinking fund for the redemption or repurchase, of the shares; (C) alters or
abolishes a preemptive right of the holder of the shares to acquire shares or
other securities; (D) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or (E)
reduces the number of shares owned by the shareholder to a fraction of a share
if the fractional share so created is to be acquired for cash under section
33-668; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the certificate of incorporation, bylaws or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(b) Where the right to be paid the value of shares is made available to
a shareholder by this section, such remedy shall be his exclusive remedy as
holder of such shares against the corporate transactions described in this
section, whether or not he proceeds as provided in sections 33-855 to 33-872,
inclusive.
Sec. 33-857. Dissent by nominees and beneficial owners. (a) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if: (1) He submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and (2) he does so with
respect to all shares of which he is the beneficial shareholder or over which he
has power to direct the vote.
Secs. 33-858 and 33-859. Reserved for future use.
(B)
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
Sec. 33-860. Notice of dissenters' rights. (a) If proposed corporate
action creating dissenters' rights under section 33-856 is submitted to a vote
at a shareholders' meeting, the meeting notice shall state that shareholders are
or may be entitled to assert dissenters' rights under sections 33-855 to 33-872,
inclusive, and be accompanied by a copy of said sections.
(b) If corporate action creating dissenters' rights under section
33-856 is taken without a vote of shareholders, the corporation shall notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in section 33-862.
Sec. 33-861. Notice of intent to demand payment. (a) If proposed
corporate action creating dissenters' rights under section 33-856 is submitted
to a vote at a shareholders' meeting, a shareholder who wishes to assert
dissenters' rights (1) shall deliver to the corporation before the vote is taken
written notice of his intent to demand payment for his shares if the proposed
action is effectuated and (2) shall not vote his shares in favor of the proposed
action.
(b) A shareholder who does not satisfy the requirements of subsection
(a) of this section is not entitled to payment for his shares under sections
33-855 to 33-872, inclusive.
Sec. 33-862. Dissenters' notice. (a) If proposed corporate action
creating dissenters' rights under section 33-856 is authorized at a
shareholders' meeting, the corporation shall deliver a written dissenters'
notice to all shareholders who satisfied the requirements of section 33-861.
(b) The dissenters' notice shall be sent no later than ten days after
the corporate action was taken and shall:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than sixty days after
the date the subsection (a) of this section notice is delivered; and
(5) Be accompanied by a copy of sections 33-855 to 33-872, inclusive.
Sec. 33-863. Duty to demand payment. (a) A shareholder sent a
dissenters' notice described in section 33-862 must demand payment, certify
whether he acquired beneficial ownership of the shares before the date required
to be set forth in the dissenters, notice pursuant to subdivision (3) of
subsection (b) of said section and deposit his certificates in accordance with
the terms of the notice.
(b) The shareholder who demands payment and deposits his share
certificates under subsection (a) of this section retains all other rights of a
shareholder until these rights are canceled or modified by the taking of the
proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under sections 33-855 to 33-872,
inclusive.
Sec. 33-864. Share restrictions. (a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is taken or the restrictions
released under section 33-866.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
Sec. 33-865. Payment. (a) Except as provided in section 33-867, as soon
as the proposed corporate action is taken, or upon receipt of a payment demand,
the corporation shall pay each dissenter who complied with section 33-863 the
amount the corporation estimates to be the fair value of his shares, plus
accrued interest.
(b) The payment shall be accompanied by: (1) The corporation's balance
sheet as of the end of a fiscal year ending not more than sixteen months before
the date of payment, an income statement for that year, a statement of changes
in shareholders' equity for that year and the latest available interim financial
statements, if any; (2) a statement of the corporation's estimate of the fair
value of the shares; (3) an explanation of how the interest was calculated; (4)
a statement of the dissenter's right to demand payment under section 33-860; and
(5) a copy of sections 33-855 to 33-872, inclusive.
Sec. 33-866. Failure to take action. (a) If the corporation does not
take the proposed action within sixty days after the date set for demanding
payment and depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 33-862 and repeat the payment demand procedure.
Sec. 33-867. After-acquired shares. (a) A corporation may elect to
withhold payment required by section 33-865 from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated and a statement of the dissenter's right to demand payment under
section 33-868.
Sec. 33-868. Procedure if shareholder dissatisfied with payment or
offer. (a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate, less any payment under section 33-865, or reject the
corporation's offer under section 33-867 and demand payment of the fair value of
his shares and interest due, if:
(1) The dissenter believes that the amount paid under section 33-865 or
offered under section 33-867 is less than the fair value of his shares or that
the interest due is incorrectly calculated;
(2) The corporation fails to make payment under section 33-865 within
sixty days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
of this section within thirty days after the corporation made or offered payment
for his shares.
Secs. 33-869 and 33-870. Reserved for future use.
(C)
JUDICIAL APPRAISAL OF SHARES
Sec. 33-871. Court action. (a) If a demand for payment under section
33-868 remains unsettled, the corporation shall commence a proceeding within
sixty days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the sixty-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the superior court
for the judicial district where a corporation's principal office or, if none in
this state, its registered office is located. If the corporation is a foreign
corporation without a registered office in this state, it shall commence the
proceeding in the superior court for the judicial district where the registered
office of the domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
(c) The corporation shall make all dissenters, whether or not residents
of this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment (1) for the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the corporation, or (2)
for the fair value, plus accrued interest, of his after-acquired shares for
which the corporation elected to withhold payment under section 33-867.
Sec. 33-872. Court costs and counsel fees. (a) The court in an
appraisal proceeding commenced under section 33-871 shall determine all costs of
the proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously or not in good faith in demanding
payment under section 33-868.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable: (1)
Against the corporation and in favor of any or all dissenters if the court finds
the corporation did not substantially comply with the requirements of sections
33-860 to 33-868, inclusive; or (2) against either the corporation or a
dissenter, in favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by sections 33-855 to
33-872, inclusive.
(c) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
------------------------
As revised through April 30, 1998.
------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
(i) Limitation of Liability of Directors and Officers. Section
14A:2-7(3) of the New Jersey Business Corporation Act permits a corporation to
provide in its Certificate of Incorporation that a director or officer shall not
be personally liable to the corporation or its shareholders for breach of any
duty owed to the corporation or its shareholders, except that such provision
shall not relieve a director or officer from liability for any breach of duty
based upon an act or omission (a) in breach of such person's duty of loyalty to
the corporation or its shareholders, (b) not in good faith or involving a
knowing violation of law or (c) resulting in receipt by such person of any
improper personal benefit. HUBCO's Certificate of Incorporation includes
limitations on the liability of officers and directors to the fullest extent
permitted by New Jersey law.
(ii) Indemnification of Directors, Officers, Employees and Agents.
Under Article X of its Certificate of Incorporation, HUBCO must, to the fullest
extent permitted by law, indemnify its directors, officers, employees and
agents. Section 14A:3-5 of the New Jersey Business Corporation Act provides that
a corporation may indemnify its directors, officers, employees and agents
against judgments, fines, penalties, amounts paid in settlement and expenses,
including attorneys' fees, resulting from various types of legal actions or
proceedings if the actions of the party being indemnified meet the standards of
conduct specified therein. Determinations concerning whether or not the
applicable standard of conduct has been met can be made by (a) a disinterested
majority of the Board of Directors, (b) independent legal counsel, or (c) an
affirmative vote of a majority of shares held by the shareholders. No
indemnification is permitted to be made to or on behalf of a corporate director,
officer, employee or agent if a judgment or other final adjudication adverse to
such person establishes that his acts or omissions (A) were in breach of his
duty of loyalty to the corporation or its shareholders, (B) were not in good
faith or involved a knowing violation of law or (C) resulted in receipt by such
person of an improper personal benefit.
(iii) Insurance. HUBCO's directors and officers are insured against
losses arising from any claim against them such as wrongful acts or omissions,
subject to certain limitations.
Item 21. Exhibits and Financial Statement Schedules.
A. Exhibits
Exhibit
Number Description
2(a) Agreement and Plan of Merger, dated as of March 31, 1998, by and among
HUBCO, Inc. ("HUBCO"), Lafayette American Bank ("Lafayette"), Dime
Financial Corporation ("DFC") and The Dime Savings Bank of Wallingford
("DIME") (included as Appendix A to the Proxy Statement). *
2(b) Stock Option Agreement, dated as of March 31, 1997, by and between
HUBCO and DFC (included as Appendix B to the Proxy Statement). *
3(a) Certificate of Incorporation of HUBCO, is incorporated by reference to
exhibit (3a) of HUBCO's Annual Report on Form 10-K for the year-ended
December 31, 1997.
3(b) By-Laws of HUBCO, incorporated by reference to exhibit (3b) of HUBCO's
Annual Report on Form 10-K for the year-ended December 31, 1997.
5 Opinion of Pitney, Hardin, Kipp & Szuch as to the legality of the
securities to be registered.
8 Opinion of Pitney, Hardin, Kipp & Szuch as to certain tax consequences
of the Merger.
13 Annual Report of HUBCO on Form 10-K filed with the SEC for the year
ended December 31, 1997. **
23(a) Consent of KPMG Peat Marwick LLP.
23(b) Consent of Arthur Andersen LLP.
23(c) Consent of A.G. Edwards & Sons, Inc.
23(d) Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibits 5 and 8
hereto).
99 Form of Proxy Card to be utilized by the Board of Directors of DFC.
- -------------------------
* Included elsewhere in this registration statement.
** Incorporated by reference.
B. Financial Statement Schedules
All financial statement schedules have been omitted because they are
not applicable or the required information is included in the financial
statements or notes thereto or incorporated by reference therein.
C. Reports, Opinions or Appraisals
The Form of the Fairness Opinion of A.G. Edwards & Sons, Inc.. is
included as Appendix C to the Proxy Statement-Prospectus.
Item 22. Undertakings.
1. The undersigned registrant hereby undertakes: to file, during any period in
which offers or sales are being made, a post-effective amendment to this
registration statement: (i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933: (ii) To reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate registration statement; (iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
2. The undersigned registrant hereby undertakes that for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3. The undersigned registrant hereby undertakes to remove from registration by
means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
4. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
5. The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
6. The registrant undertakes that every prospectus (i) that is filed pursuant to
paragraph 2 immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a) (3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
7. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
8. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
9. Subject to appropriate interpretation, the undersigned registrant hereby
undertakes to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
10. The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 and Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Township of Mahwah,
State of New Jersey, on the 4 day of June, 1998.
HUBCO, INC.
KENNETH T. NEILSON
By:-----------------------------------
Kenneth T. Neilson,
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Chairman, President, Chief
KENNETH T. NEILSON Executive Officer and Director June 4, 1998
- -------------------------------------
(Kenneth T. Neilson)
ROBERT J. BURKE Director June 5, 1998
- -------------------------------------
(Robert J. Burke)
Director June __, 1998
- -------------------------------------
(Donald P. Calcagnini)
Director June __, 1998
- -------------------------------------
(Joan David)
Director June __, 1998
- -------------------------------------
(Thomas R. Farley)
BRYANT D. MALCOLM Director June 4, 1998
- -------------------------------------
(Bryant D. Malcolm)
W. PETER McBRIDE Director June 4, 1998
- -------------------------------------
(W. Peter McBride)
DAVID A. ROSOW Director June 5, 1998
- -------------------------------------
(David A. Rosow)
Director June __, 1998
- -------------------------------------
(Charles F.X. Poggi)
JAMES E. SCHIERLOH Director June 5, 1998
- -------------------------------------
(James E. Schierloh)
Director June __, 1998
- -------------------------------------
(John H. Tatigian)
SR. GRACE FRANCES STRAUBER Director June 4, 1998
- -------------------------------------
(Sister Grace Frances Strauber)
NOEL deCORDOVA Director June 4, 1998
- -------------------------------------
(Noel deCordova)
JOSEPH B. TOCKARSHEWSKY Director June 5, 1998
- -------------------------------------
(Joseph B. Tockarshewsky)
Director June __, 1998
- -------------------------------------
(William C. Myers)
Executive Vice President and June 5, 1998
JOSEPH F. HURLEY Chief Financial Officer
- -------------------------------------
(Joseph F. Hurley)
Senior Vice President June 5, 1998
CHRIS A. WITKOWSKI and Controller
- -------------------------------------
(Chris A. Witkowski)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C> <C>
2(a) Agreement and Plan of Merger, dated as of March 31, 1998, by and among *
HUBCO, Inc. ("HUBCO"), Lafayette American Bank ("Lafayette"), Dime
Financial Corporation ("DFC") and The Dime Savings Bank of Wallingford
("DIME") (included as Appendix A to the Proxy Statement).
2(b) Stock Option Agreement, dated as of March 2, 1998, by and between HUBCO *
and DFC (included as Appendix B to the Proxy Statement).
3(a) Certificate of Incorporation of HUBCO, incorporated by reference to
exhibit (3a) of HUBCO's Annual Report on Form 10-K for the year-ended
December 31, 1997.
3(b) By-Laws of HUBCO, incorporated by reference to exhibit (3b) of HUBCO's
Annual Report onForm 10-K for the year-ended December 31, 1997.
5 Opinion of Pitney, Hardin, Kipp & Szuch as to the legality of the
securities to be registered.
8 Opinion of Pitney, Hardin, Kipp & Szuch as to certain tax consequences
of the Merger.
13 Annual Report of HUBCO on Form 10-K filed with the SEC for the year **
ended December 31, 1997.
23(a) Consent of KPMG Peat Marwick LLP.
23(b) Consent of Arthur Andersen LLP.
23(c) Consent of A.G. Edwards & Sons, Inc.
23(d) Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibits 5 and 8
hereto).
99 Form of Proxy Card to be utilized by the Board of Directors of DFC.
</TABLE>
- ---------------------------------
* Included elsewhere in this registration statement.
** Incorporated by reference.
Exhibit 5
June 8, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn: Kenneth T. Neilson, Chairman, President
and Chief Executive Officer
Re: Merger of HUBCO, Inc. and Dime Financial Corporation
We have acted as counsel to HUBCO, Inc. ("HUBCO") in
connection with its proposed issuance of common stock, no par value (the "Common
Stock"), pursuant to the Agreement and Plan of Merger among HUBCO, Lafayette
American Bank, Dime Financial Corporation and The Dime Savings Bank of
Wallingford dated as of March 31, 1998. The Common Stock is being registered
pursuant to a Registration Statement on Form S-4 (the "Registration Statement")
being filed with the Securities and Exchange Commission on the date hereof.
We have examined originals, or copies certified or otherwise
identified to our satisfaction, of the Certificate of Incorporation and By-laws
of HUBCO as currently in effect, relevant resolutions of the Board of Directors
of HUBCO, and such other documents as we have deemed necessary or appropriate in
order to express the opinion set forth in this letter.
Based on the foregoing and assuming that the Registration
Statement has been declared effective under the Securities Act of 1933, as
amended, we are of the opinion that when issued as described in the Registration
Statement, including the Prospectus relating to the Common Stock (the
"Prospectus"), the Common Stock will be legally issued, fully paid and
non-assessable.
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Opinion" in the Prospectus.
Very truly yours,
PITNEY, HARDIN, KIPP & SZUCH
Exhibit 8
June 8, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Dime Financial Corporation
95 Barnes Road
Wallingford, CT 06492
Ladies and Gentlemen:
We have acted as counsel to HUBCO, Inc., a New Jersey corporation and
registered bank holding company ("HUBCO"), in connection with the planned merger
(the "Merger") of Dime Financial Corporation, a Connecticut corporation and
registered bank holding company ("DFC"), with and into HUBCO, pursuant to the
Agreement and Plan of Merger (the "Agreement"), dated as of March 31, 1998, by
and among HUBCO, Lafayette American Bank, a Connecticut state-chartered
commercial banking corporation and wholly-owned subsidiary of HUBCO (the
"Bank"), DFC, and The Dime Savings Bank of Wallingford, a Connecticut-chartered
savings bank and wholly-owned subsidiary of DFC ("Dime"). Immediately following
the Merger, Dime shall be merged with and into the Bank (the "Bank Merger") in
accordance with the provisions of Section 36a-125 of the Banking Law of
Connecticut. Capitalized terms used but not defined herein shall have the
meanings specified in the Proxy Statement-Prospectus pertaining to the Merger.
We have assumed with your consent that:
(a) the Merger will be effected in accordance with the Agreement,
and
(b) the representations contained in the letters of representation
from DFC and HUBCO to us dated June 5, 1998 will be true at
the Effective Time.
On the basis of the foregoing, and our consideration of such other
matters of fact and law as we have deemed necessary or appropriate, it is our
opinion, under presently applicable federal income tax law, that the Merger will
constitute a reorganization under Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and that:
(i) no gain or loss will be recognized for federal income tax
purposes by HUBCO or DFC in connection with the Merger;
(ii) no gain or loss will be recognized for federal income tax
purposes by DFC stockholders upon the exchange in the Merger of shares of DFC
Common Stock solely for HUBCO Common Stock (except with respect to cash received
in lieu of a fractional share interest in HUBCO Common Stock);
(iii) the basis of HUBCO Common Stock received in the Merger
by DFC Common Stockholders (including the basis of any fractional share interest
in HUBCO Common Stock) will be the same as the basis of the shares of DFC Common
Stock surrendered in exchange therefor;
(iv) the holding period of HUBCO Common Stock received in the
Merger by DFC stockholders (including the holding period of any fractional share
interest in HUBCO Common Stock) will include the holding period during which the
shares of DFC Common Stock surrendered in exchange therefor were held by the DFC
stockholder, provided such shares of DFC Common Stock were held as capital
assets;
(v) cash received by a holder of DFC Common Stock in lieu of a
fractional share interest in HUBCO Common Stock will be treated as received in
exchange for such fractional share interest and, provided the fractional share
would have constituted a capital asset in the hands of such holder, the holder
should in general recognize capital gain or loss in an amount equal to the
difference between the amount of cash received and the portion of the adjusted
tax basis in the DFC Common Stock allocable to the fractional share interest;
and
(vi) holders that hold DFC Common Stock as a capital asset and
that dissent from the Merger and receive cash in exchange for their DFC Common
Stock should in general recognize gain or loss in an amount equal to the
difference between the amount of cash received (less any amount constituting
interest) and the basis in the DFC Common Stock surrendered therefor. Special
rules may apply to dissenters that actually or constructively (pursuant to
Section 318 of the Code) own either shares of DFC as to which dissenter's rights
are not being exercised or shares of HUBCO. Any amount constituting interest
would be taxable as ordinary income.
The tax consequences described above may not be applicable to DFC
stockholders that acquired the stock of DFC pursuant to the exercise of an
employee stock option or right or otherwise as compensation, that hold DFC
Common Stock as part of a "straddle" or "conversion transaction" or that are
insurance companies, securities dealers, financial institutions or foreign
persons.
We hereby consent to the reference to us under the heading "THE
PROPOSED MERGER -- Federal Income Tax Consequences" in the Proxy
Statement-Prospectus pertaining to the Merger and to the filing of this opinion
as an exhibit to the related Registration Statement on Form S-4 filed with the
Securities and Exchange Commission. In giving this consent, we do not hereby
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
PITNEY, HARDIN, KIPP & SZUCH
Exhibit 23(a)
Consent of Independent Auditors
The Board of Directors
Dime Financial Corporation
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of HUBCO, INC. of our report dated January 21, 1998, relating to the
consolidated balance sheets of Dime Financial Corporation and subsidiary as of
December 31, 1997, and 1996, and the related consolidated statements of
operations, changes in shareholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1997, which report appears in the
December 31, 1997 annual report on Form 10-K of Dime Financial Corporation. We
also consent to the reference to our firm under the heading "Experts."
KPMG PEAT MARWICK LLP
Hartford, Connecticut
June 8, 1998
Exhibit 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-4 of our
report dated January 10, 1998 included in HUBCO Inc.'s Annual Report on Form
10-K and to all references to our firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
June 9, 1998
Exhibit 23(c)
Consent of DFC Financial Advisor
We consent to the inclusion of the form of our Fairness Opinion to be issued to
Dime Financial Corporation, and to the reference to our firm, in this
Registration Statement on Form S-4.
A.G. EDWARDS & SONS, INC.
June 8, 1998
Exhibit 99
REVOCABLE PROXY
Dime Financial Corporation
95 Barnes Road
Wallingford, Connecticut 06492
This proxy is solicited on behalf
of the Board of Directors of
Dime Financial Corporation
for the Special Meeting of
Shareholders to be held on
_________, 1998.
The undersigned shareholder of Dime Financial Corporation hereby appoints
_____________________ and _________________________, or any of them, with full
powers of substitution, to represent and to vote as proxy, as designated, all
shares of common stock of Dime Financial Corporation held of record by the
undersigned on ____________, 1998 at the Special Meeting of Stockholders (the
"Special Meeting") to be held at _____ a.m., on ____________, 1998, or at any
adjournment or postponement thereof, upon the matters described in the
accompanying Notice of Special Meeting and Proxy Statement-Prospectus and upon
such other matters as may properly come before the Special Meeting. The
undersigned hereby revokes all prior proxies.
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned stockholder. If no direction is given,
this Proxy will be voted FOR the proposals listed in Items 1 and 2.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN IN THE ENCLOSED ENVELOPE.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Fold and Detach Here)
<PAGE>
The Board of Directors unanimously recommends a vote "FOR" each of the |X|
proposals in Items 1 and 2. Please mark your votes as indicated in this example.
1. To adopt and approve the Agreement and Plan of Merger, dated as of March 31,
1998, by and among HUBCO, Inc., Lafayette American Bank, Dime Financial
Corporation and The Dime Savings Bank of Wallingford (the "Merger Agreement")
and to approve the transactions contemplated thereby, pursuant to which Dime
Financial Corporation will merge with and into HUBCO, Inc.
FOR AGAINST ABSTAIN
|_| |_| |_|
2. To permit the individuals appointed herein, in their discretion, to vote upon
and transact such other business as may properly come before the Meeting or any
adjournment or postponement thereof.
FOR AGAINST ABSTAIN
|_| |_| |_|
I Will Attend the Special Meeting. |_|
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders and the Proxy Statement for the Special Meeting.
-----------------------------------------------------------
Signature(s)
-----------------------------------------------------------
Signature(s)
Dated:_____________________________, 1998
Please sign exactly as your name appears on this proxy.
Joint owners should each sign personally.
If signing as attorney, executor, administrator, trustee or guardian,
please include your full title. Corporate or partnership proxies should be
signed by an authorized officer.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Fold and Detach Here)
