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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 3, 1998
HUBCO, INC.
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(Exact name of registrant as specified in its charter)
New Jersey
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(State or other jurisdiction of incorporation)
1-10699 22-2405746
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(Commission File Number) (IRS Employer Identification No.)
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
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(Address of principal executive offices)
(201) 236-2600
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(Registrant's telephone number, including area code)
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Item 5. Other Events
On March 3, 1998, HUBCO, INC. ("HUBCO") announced the signing of a
definitive merger agreement (the "Agreement") between HUBCO ("NASDAQ:HUBC), and
Community Financial Holding Corporation (NASDAQ:CMFH), the holding company for
Community National Bank of New Jersey. Community Financial Holding Corporation
is a $150 million commercial bank holding company headquartered in Westmont, New
Jersey. A copy of the Press Release dated March 3, 1998 is attached as an
Exhibit to this Form 8-K.
Under the terms of the Agreement each share of Community 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, unless HUBCO agrees to increase the exchange ratio to provide the value
which would have been received based on a $29.00 HUBCO price. Based upon HUBCO's
March 2, 1998 closing price, the value of the acquisition is $29.6 million or
$25.28 per share of Community Common Stock. This represents a deposit premium of
10.3% and the value of the transaction, including options, equates 2.55 times
Community book value and 47 times 1997 earnings, which were significantly
impacted by the opening of four branches during 1997.
In connection with the execution of the Agreement, Community Financial
has issued an option to HUBCO which, under certain defined circumstances, could
result in the issuance of 252,790 shares of Community Common Stock to HUBCO. The
transaction, is expected to be treated as a tax-free exchange to holders of
Community Common Stock, will be accounted for as a pooling of interests. As part
of the transaction, Community National Bank will be merged into Hudson United
Bank but will be operated as the Community National division of Hudson United
Bank after the closing. The Merger is subject to approval by Federal and New
Jersey bank regulatory authorities as well as other customary conditions.
HUBCO also signed a definitive agreement dated March 2, 1998 to
purchase 22 branches of First Union National Bank located in New Jersey,
Connecticut and New York with deposits of $310 million, in the aggregate.
Item 7. Exhibits
2(a) Agreement and Plan of Merger dated as of March 2, 1998 by and
among HUBCO, Inc., Hudson United Bank, Community Financial
Holding Corporation and Community National Bank.
2(b) Purchase and Assumption Agreement dated as of March 2,1998, by
and between HUBCO, Inc. and First Union National Bank.
99(a) Stock Option Agreement dated as of March 2, 1998 by and between
Community Financial Holding Corporation and HUBCO, Inc.
99(b) Press Release dated March 3, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUBCO, INC.
Dated: March 31, 1998 By: D. LYNN VAN BORKULO-NUZZO
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D. Lynn Van Borkulo-Nuzzo
Executive Vice President and
Corporate Secretary
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INDEX TO EXHIBIT
Exhibit No. Description
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2(a) Agreement and Plan of Merger dated as of March 2, 1998 by and
among HUBCO, Inc., Hudson United Bank, Community Financial
Holding Corporation and Community National Bank.
2(b) Purchase and Assumption Agreement dated as of March 2,1998, by
and between HUBCO, Inc. and First Union National Bank.
99(a) Stock Option Agreement dated as of March 2, 1998 by and between
Community Financial Holding Corporation and HUBCO, Inc.
99(b) Press Release dated March 3, 1998
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 2, , 1998
("Agreement"), is among HUBCO, Inc. ("HUBCO"), a New Jersey corporation and
registered bank holding company, Hudson United Bank (the "Bank"), a New Jersey
state-chartered commercial banking corporation and wholly-owned subsidiary of
HUBCO, Community Financial Holding Company, a New Jersey corporation and
registered bank holding company ("CFHC"), and Community National Bank, a
federally-chartered banking association and wholly-owned subsidiary of CFHC
("Community").
WHEREAS, the respective Board of Directors of HUBCO and CFHC
have each determined that it is in the best interests of HUBCO and CFHC and
their respective shareholders for HUBCO to acquire CFHC by merging CFHC with and
into HUBCO with HUBCO surviving and CFHC shareholders receiving the
consideration hereinafter set forth. Immediately after the merger of CFHC into
HUBCO, Community shall be merged with and into the Bank with the Bank surviving;
and
WHEREAS, the respective Board of Directors of CFHC, HUBCO, the
Bank and Community have each duly adopted and approved this Agreement and the
Board of Directors of CFHC has directed that it be submitted to CFHC's
shareholders for approval; and
WHEREAS, as a condition for HUBCO to enter into this
Agreement, HUBCO has required that it receive an option on certain authorized
but unissued shares of CFHC Common Stock (as hereinafter defined) and,
simultaneously with the execution of this Agreement, CFHC is issuing an option
to HUBCO (the "HUBCO Stock Option") to purchase 252,790 shares of the authorized
and unissued CFHC Common Stock subject to the terms and conditions set forth in
the Agreement governing the HUBCO Stock Option;
NOW, THEREFORE, intending to be legally bound, the parties
hereto hereby agree as follows:
ARTICLE I - THE MERGER
1.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereafter defined), CFHC shall be merged
with and into HUBCO (the "Merger") in accordance the New Jersey Business
Corporation Act ("NJBCA") and HUBCO shall be the surviving corporation (the
"Surviving Corporation").
1.2. Effect of the Merger. At the Effective Time, the
Surviving Corporation shall be considered the same business and corporate entity
as each of HUBCO and CFHC and thereupon and thereafter, all the property,
rights, privileges, powers and franchises of each of HUBCO and CFHC shall vest
in the Surviving Corporation and the Surviving Corporation shall be subject to
and be deemed to have assumed all of the debts, liabilities, obligations and
duties of each of HUBCO and CFHC and shall have succeeded to all of each of
their relationships, as fully and to the same extent as if such property,
rights, privileges, powers, franchises, debts, obligations, duties and
relationships had been originally acquired, incurred or entered into by the
Surviving Corporation. In addition, any reference to either of HUBCO and CFHC in
any contract or document, whether executed or taking effect before or after the
Effective Time, shall be considered a reference to the Surviving Corporation if
not inconsistent with the other provisions of the contract or document; and any
pending action or other judicial proceeding to which either of HUBCO or CFHC is
a party, shall not be deemed to have abated or to have discontinued by reason of
the Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Merger had not been made; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of HUBCO or CFHC if the Merger had not occurred.
1.3. Certificate of Incorporation. As of the Effective Time,
the certificate of incorporation of HUBCO shall be the certificate of
incorporation of the Surviving Corporation until otherwise amended as provided
by law.
1.4. By-Laws. As of the Effective Time, the By-Laws of HUBCO
shall be the By-Laws of the Surviving Corporation until otherwise amended as
provided by law.
1.5. Directors and Officers. As of the Effective Time, the
directors and officers of HUBCO shall become the directors and officers of the
Surviving Corporation.
1.6. Closing Date, Closing and Effective Time. Unless a
different date, time and/or place are agreed to by the parties hereto, the
closing of the Merger (the "Closing") shall take place at 10:00 a.m., at the
offices of Pitney, Hardin, Kipp & Szuch, 200 Campus Drive, Florham Park, New
Jersey, on a date determined by HUBCO on at least five business days notice (the
"Closing Notice") given to CFHC, which date (the "Closing Date") shall be not
less than seven nor more than 10 business days following the receipt of all
necessary regulatory and governmental approvals and consents and the expiration
of all statutory waiting periods in respect thereof and the satisfaction or
waiver of all of the conditions to the consummation of the Merger specified in
Article VI hereof (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing). In the Closing
Notice, HUBCO shall specify the "Determination Date" for purposes of determining
the Median Pre-Closing Price (as hereinafter defined), which date shall be not
less than seven business days nor more than ten business days prior to the
Closing Date set forth in the Closing Notice. Simultaneous with or immediately
following the Closing, HUBCO and CFHC shall cause to be filed a certificate of
merger, in form and substance satisfactory to HUBCO and CFHC, with the Secretary
of State of the State of New Jersey (the "Certificate of Merger"). The
Certificate of Merger shall specify as the "Effective Time" of the Merger a date
and time following the Closing agreed to by HUBCO and CFHC (which date and time
the parties currently anticipate will be the close of business on the Closing
Date). In the event the parties fail to specify the date and time in the merger
certificates, the Merger shall become effective upon (and the "Effective Time"
shall be) the time of the filing of the Certificate of Merger.
1.7. The Bank Merger. Immediately following the Effective
Time, Community shall be then merged with and into the Bank (the "Bank Merger")
in accordance with the provisions of the New Jersey Banking Act of 1948, as
amended (the "Banking Act") and the National Bank Act. In the Bank Merger, the
Bank shall be the surviving bank (the "Surviving Bank"), except that at the
Effective Time, the business of Community shall be operated as a division of the
Surviving Bank named "Community National division of Hudson United Bank" or such
other similar name agreed to by the parties hereto (the "New Division"). Upon
the consummation of the Bank Merger, the separate existence of Community shall
cease and the Surviving Bank shall be considered the same business and corporate
entity as each of Community and the Bank and all of the property, rights,
privileges, powers and franchises of each of Community and the Bank shall vest
in the Surviving Bank and the Surviving Bank shall be deemed to have assumed all
of the debts, liabilities, obligations and duties of each of Community and the
Bank and shall have succeeded to all or each of their relationships, fiduciary
or otherwise, as fully and to the same extent as if such property, rights,
privileges, powers, franchises, debts, obligations, duties and relationships had
been originally acquired, incurred or entered into by the Surviving Bank. Upon
the consummation of the Bank Merger, the certificate of incorporation and
By-Laws of the Bank shall become the certificate of incorporation and By-Laws of
the Surviving Bank and the officers and directors of the Bank shall be the
officers and directors of the Surviving Bank, except as provided in Section 5.20
hereof. Following the execution of this Agreement, Community and the Bank shall
execute and deliver a merger agreement (the "Bank Merger Agreement"), both in
form and substance reasonably satisfactory to the parties hereto, substantially
as set forth in Exhibit 1.7 hereto, for delivery to the Commissioner of the New
Jersey Department of Banking and Insurance (the "Department"), the Federal
Deposit Insurance Corporation (the "FDIC") and the Office of the Comptroller of
the Currency (the "OCC") for approval of the Bank Merger.
ARTICLE II - CONVERSION OF CFHC SHARES
2.1. Conversion of CFHC Common Stock. Each share of common
stock, par value $5.00 per share, of CFHC ("CFHC Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than Excluded Shares,
as hereinafter defined) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted as follows:
(a) Exchange of Common Stock; Exchange Ratio; Median
Pre-Closing Price. Subject to the provisions of this Section 2.1, each share of
CFHC Common Stock issued and outstanding immediately prior to the Effective Time
(excluding any treasury shares and shares to be canceled pursuant to Section
2.1(d) hereof) shall be converted at the Effective Time into the right to
receive 0.695 shares (the "Exchange Ratio") of Common Stock, no par value, of
HUBCO ("HUBCO Common Stock") subject to adjustment as provided in Section 2.1(c)
and subject to the payment of cash in lieu of fractional shares in accordance
with Section 2.2(e); provided, however, that if the Median Pre-Closing Price of
HUBCO Common Stock is less than or equal to $29.00, CFHC shall have the right,
exercisable only until 11:59 p.m. on the third business day following receipt by
CFHC of the Closing Notice, to terminate this Agreement by giving HUBCO written
notice of such termination, referring to this Section 2.1, and this Agreement
shall be terminated pursuant to such notice, subject to Section 7.1, effective
as of 11:59 p.m. on the third business day following receipt of such notice by
HUBCO, provided further, that if HUBCO sends notice to CFHC prior to 11:59 p.m.
on the third business day following receipt of such termination notice agreeing
that the Exchange Ratio shall be equal to the quotient obtained by dividing
$20.30 by the Median Pre-Closing Price, then the notice of termination shall be
voided.
The "Median Pre-Closing Price" shall be determined by taking
the price half-way between the Closing Prices left after discarding the 4 lowest
and 4 highest Closing Prices in the 10 consecutive trading day period which ends
on (and includes) the Determination Date. The "Closing Price" shall mean the
closing price of HUBCO Common Stock as supplied by the NASDAQ Stock Market and
published in The Wall Street Journal. A "trading day" shall mean a day for which
a Closing Price is so supplied and published. (The NASDAQ Stock Market, or such
other national securities exchange on which HUBCO Common Stock may be traded
after the date hereof, is referred to herein as "NASDAQ")
(b) Cancellation of CFHC Certificates. After the Effective
Time, all such shares of CFHC Common Stock (other than those canceled pursuant
to Section 2.1(d)) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate previously
evidencing any such shares (other than those canceled pursuant to Section
2.1(d)) shall thereafter represent the right to receive the Merger Consideration
(as defined in Section 2.2(b)). The holders of such certificates previously
evidencing such shares of CFHC Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of
CFHC Common Stock except as otherwise provided herein or by law. Such
certificates previously evidencing such shares of CFHC Common Stock (other than
those canceled pursuant to Section 2.1(d)) shall be exchanged for certificates
evidencing shares of HUBCO Common Stock, as the case may be, issued pursuant to
this Article II, upon the surrender of such certificates in accordance with this
Article II. No fractional shares of HUBCO Common Stock shall be issued, and, in
lieu thereof, a cash payment shall be made pursuant to Section 2.2(e).
(c) Capital Changes. If between the date hereof and the
Effective Time the outstanding shares of HUBCO Common Stock shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, stock split, reclassification, recapitalization, merger,
combination or exchange of shares, the Exchange Ratio and the definition of
Closing Price (as set forth in Section 2.1(a)) shall be correspondingly adjusted
as appropriate to reflect such stock dividend, stock split, reclassification,
recapitalization, merger, combination or exchange of shares.
(d) Excluded Shares. All shares of CFHC Common Stock held by
CFHC in its treasury or owned by HUBCO or by any of HUBCO's wholly-owned
subsidiaries which is a constituent party to the Bank Merger (other than shares
held as trustee or in a fiduciary capacity and shares held as collateral on or
in lieu of a debt previously contracted) immediately prior to the Effective Time
("Excluded Shares") shall be canceled.
2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, HUBCO shall
deposit, or shall cause to be deposited, with Hudson United Bank, Trust
Department or another bank or trust company designated by HUBCO and reasonably
acceptable to CFHC (the "Exchange Agent"), for the benefit of the holders of
shares of CFHC Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates evidencing shares of HUBCO Common Stock
and cash in such amount such that the Exchange Agent possesses such number of
shares of HUBCO Common Stock and such amount of cash as are required to provide
all of the consideration required to be exchanged by HUBCO pursuant to the
provisions of this Article II (such certificates for shares of HUBCO Common
Stock, together with any dividends or distributions with respect thereto, and
cash being hereinafter referred to as the "Exchange Fund"). The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the HUBCO Common Stock and
cash out of the Exchange Fund in accordance with Section 2.1. Except as
contemplated by Section 2.2(f) hereof, the Exchange Fund shall not be used for
any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable
either before or after the Effective Time, but in any event no later than 15
business days after the Effective Time, HUBCO will instruct the Exchange Agent
to mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time evidenced outstanding shares of CFHC
Common Stock (the "Certificates"), (i) a letter of transmittal (the form and
substance of which is reasonably agreed to by HUBCO and CFHC prior to the
Effective Time and which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent and which shall have such other
provisions as HUBCO may reasonably specify) and (ii) instructions for effecting
the surrender of the Certificates in exchange for certificates evidencing shares
of HUBCO Common Stock and cash in lieu of fractional shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) certificates evidencing that number
of whole shares of HUBCO Common Stock which such holder has the right to receive
in respect of the shares of CFHC Common Stock formerly evidenced by such
Certificate in accordance with Section 2.1 and (y) cash in lieu of fractional
shares of HUBCO Common Stock to which such holder may be entitled pursuant to
Section 2.2(e) (the shares of HUBCO Common Stock and cash described in clauses
(x) and (y) being collectively referred to as the "Merger Consideration") and
the Certificates so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of CFHC Common Stock which is not registered in
the transfer records of CFHC, a certificate evidencing the proper number of
shares of HUBCO Common Stock and/or cash may be issued and/or paid in accordance
with this Article II to a transferee if the Certificate evidencing such shares
of CFHC Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to evidence only the right to receive upon such
surrender the Merger Consideration.
(c) Distributions with Respect to Unexchanged Shares of HUBCO
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to HUBCO Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of HUBCO Common Stock evidenced thereby, and no other part
of the Merger Consideration shall be paid to any such holder, until the holder
of such Certificate shall surrender such Certificate (or a suitable affidavit of
loss and customary bond). Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
certificates evidencing shares of HUBCO Common Stock issued in exchange
therefor, without interest, (i) promptly, the amount of any cash payable with
respect to a fractional share of HUBCO Common Stock to which such holder may
have been entitled pursuant to Section 2.2(e) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such shares of HUBCO Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions, with a record date
after the Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such shares of HUBCO Common Stock. No
interest shall be paid on the Merger Consideration.
(d) No Further Rights in CFHC Common Stock. All shares of
HUBCO Common Stock issued and cash paid upon conversion of the shares of CFHC
Common Stock in accordance with the terms hereof shall be deemed to have been
issued or paid in full satisfaction of all rights pertaining to such shares of
CFHC Common Stock.
(e) No Fractional Shares. No certificates or scrip evidencing
fractional shares of HUBCO Common Stock shall be issued upon the surrender for
exchange of Certificates and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a shareholder of HUBCO. Cash shall
be paid in lieu of fractional shares of HUBCO Common Stock, based upon the
Median Pre-Closing Price per whole share of HUBCO Common Stock.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of CFHC Common Stock for two
years after the Effective Time shall be delivered to HUBCO, upon demand, and any
holders of CFHC Common Stock who have not theretofore complied with this Article
II shall thereafter look only to HUBCO for the Merger Consideration, dividends
and distributions to which they are entitled.
(g) No Liability. Neither HUBCO, the Bank nor the Exchange
Agent shall be liable to any holder of shares of CFHC Common Stock for any such
shares of HUBCO Common Stock or cash (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) Withholding Rights. HUBCO shall be entitled to deduct and
withhold, or cause the Exchange Agent to deduct and withhold, from funds
provided by the holder or from the consideration otherwise payable pursuant to
this Agreement to any holder of shares of CFHC Common Stock the minimum amounts
(if any) that HUBCO is required to deduct and withhold with respect to the
making of such payment under the Code (as defined in Section 3.8), or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by HUBCO, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of CFHC Common Stock in respect
of which such deduction and withholding was made by HUBCO.
2.3. Stock Transfer Books. At the Effective Time, the stock
transfer books of CFHC shall be closed and there shall be no further
registration of transfers of shares of CFHC Common Stock thereafter on the
records of CFHC. On or after the Effective Time, any Certificates presented to
the Exchange Agent or HUBCO for transfer shall be converted into the Merger
Consideration.
2.4. CFHC Stock Options and Warrants. The Stock Options (as
defined in Section 3.2) described in the CFHC Disclosure Schedule are issued and
outstanding pursuant to the CFHC 1994 Employee and Director Stock Option Plan
(the "CFHC Stock Option Plan") and the agreements pursuant to which such Stock
Options were granted (each, an "Option Grant Agreement"). HUBCO acknowledges and
agrees to honor the provisions of the CFHC Stock Option Plan and the Option
Grant Agreement, including those relating to vesting and conversion in
connection with a change in control of CFHC. Certain warrants to acquire CFHC
Common Stock are issued and outstanding pursuant to the PMG Warrants (as defined
in Section 3.2 hereof). Each PMG Warrant which, as of the Effective Time, is
outstanding shall be converted into a warrant to purchase HUBCO Common Stock as
follows: (i) the right to purchase shares of CFHC Common Stock pursuant to the
PMG Warrant shall be converted into the right to purchase that same number of
shares of HUBCO Common Stock multiplied by the Exchange Ratio, (ii) the option
exercise price per share of HUBCO Common Stock shall be the previous PMG Warrant
exercise price per share of the CFHC Common Stock divided by the Exchange Ratio,
and (iii) in all other material respects the new warrant shall be subject to the
same terms and conditions as governed the PMG Warrant on which it was based,
including the length of time within which the warrant may be exercised.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF CFHC
References herein to "CFHC Disclosure Schedules" shall mean
all of the disclosure schedules required by this Article III, dated as of the
date hereof and referenced to the specific sections and subsections of Article
III of this Agreement, which have been delivered on the date hereof by CFHC to
HUBCO. CFHC hereby represents and warrants to HUBCO as follows:
3.1. Corporate Organization.
(a) CFHC is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. CFHC has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of CFHC and the CFHC Subsidiaries (as
defined below), taken as a whole. CFHC is registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA").
(b) Each CFHC Subsidiary and its jurisdiction of incorporation
is listed in the CFHC Disclosure Schedule. For the purpose of this Agreement,
the term "CFHC Subsidiary" means any corporation, partnership, joint venture or
other legal entity in which CFHC, directly or indirectly, owns at least a 50%
stock or other equity interest or for which CFHC, directly or indirectly, acts
as a general partner, provided that to the extent that any representation or
warranty set forth herein covers a period of time prior to the date of this
Agreement, the term "CFHC Subsidiary" shall include any entity which was a CFHC
Subsidiary at any time during such period. Community is a federally-chartered
commercial banking association duly organized and validly existing in stock form
and in good standing under the laws of the United States of America. All
eligible accounts of depositors issued by Community are insured by the Bank
Insurance Fund of the FDIC (the "BIF") to the fullest extent permitted by law.
Each CFHC Subsidiary has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing would not have a material adverse
effect on the business, operations, assets or financial condition of CFHC and
the CFHC Subsidiaries, taken as a whole.
(c) The CFHC Disclosure Schedule sets forth true and complete
copies of the Certificate of Incorporation and By-Laws, as in effect on the date
hereof, of CFHC and each CFHC Subsidiary. Except as set forth in Disclosure
Schedule 3.1(b), Community and CFHC do not own or control, directly or
indirectly, any equity interest in any corporation, company, association,
partnership, joint venture or other entity.
3.2. Capitalization. The authorized capital stock of CFHC
consists of 3,200,000 shares of CFHC Common Stock and 200,000 shares of CFHC
Preferred Stock, par value $5.00 per share. As of December 31, 1997, there were
1,027,712 shares of CFHC Common Stock issued and outstanding and no shares of
CFHC Preferred Stock issued and outstanding. As of December 31, 1997, there were
276,077 shares of CFHC Common Stock issuable upon exercise of outstanding stock
options and 27,349 shares of CFHC Common Stock issuable upon the exercise of
outstanding warrants held by Pennsylvania Merchant Group Ltd. (the "PMG
Warrants"). The CFHC Disclosure Schedule sets forth (i) all options which may be
exercised for issuance of CFHC Common Stock (collectively, the "Stock Options")
and the terms upon which the options may be exercised, and (ii) true and
complete copies of each plan and a specimen of each form of agreement pursuant
to which any outstanding Stock Option was granted, including a list of each
outstanding Stock Option issued pursuant thereto. All Stock Options will be
fully vested on the Closing Date, in each case in accordance with the terms of
the CFHC Stock Option Plan and Option Grant Agreements pursuant to which such
Stock Options were granted. All issued and outstanding shares of CFHC Common
Stock, and all issued and outstanding shares of capital stock of each CFHC
Subsidiary, have been duly authorized and validly issued, are fully paid,
nonassessable and free of preemptive rights and are free and clear of any liens,
encumbrances, charges, restrictions or rights of third parties imposed by CFHC
or any CFHC Subsidiary. Except for the Stock Options and the HUBCO Stock Option
and the PMG Warrants, neither CFHC nor Community has granted nor is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase, subscription or issuance of
any shares of capital stock of CFHC or Community or any securities representing
the right to purchase, subscribe or otherwise receive any shares of such capital
stock or any securities convertible into any such shares, and there are no
agreements or understandings with respect to voting of any such shares.
3.3. Authority; No Violation.
(a) Subject to the approval of this Agreement and the
transactions contemplated hereby by all applicable regulatory authorities and by
the shareholders of CFHC, and except as set forth in the CFHC Disclosure
Schedule, CFHC and Community have the full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by the directors of CFHC and
Community in accordance with their respective Certificate of Incorporation and
By-Laws and applicable laws and regulations. Except for such approvals, no other
corporate proceedings on the part of CFHC or Community are necessary to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by CFHC and Community, and constitutes valid and
binding obligations of CFHC and Community, enforceable against CFHC and
Community in accordance with its terms, except to the extent that enforcement
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally or the
rights of creditors of national banks or their holding companies, (ii) general
equitable principles, and (iii) laws relating to the safety and soundness of
insured depository institutions and except that no representation is made as to
the effect or availability of equitable remedies or injunctive relief.
(b) Neither the execution and delivery of this Agreement by
CFHC or Community, nor the consummation by CFHC or Community of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by CFHC
or Community with any of the terms or provisions hereof, will (i) upon the
approval thereof by the CFHC shareholders, violate any provision of CFHC's or
Community's Certificate of Incorporation or By-Laws, (ii) assuming that the
consents and approvals set forth below are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to CFHC, Community or any of their respective properties or assets,
or (iii) except as set forth in the CFHC Disclosure Schedule, violate, conflict
with, result in a breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of, accelerate the performance required by, or result
in the creation of any lien, security interest, charge or other encumbrance upon
any of the respective properties or assets of CFHC or Community under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
CFHC or Community is a party, or by which they or any of their respective
properties or assets may be bound or affected except, with respect to (ii) and
(iii) above, such as individually or in the aggregate will not have a material
adverse effect on the business, operations, assets or financial condition of
CFHC and the CFHC Subsidiaries, taken as a whole, and which will not prevent or
delay the consummation of the transactions contemplated hereby. Except for
consents and approvals of or filings or registrations with or notices to the
Board of Governors of the Federal Reserve System (the "FRB"), the FDIC, the OCC,
the Department, the New Jersey Department of Environmental Protection (the
"DEP"), the SEC, other applicable government authorities, and the shareholders
of CFHC, no consents or approvals of or filings or registrations with or notices
to any third party or any public body or authority are necessary on behalf of
CFHC or Community in connection with (x) the execution and delivery by CFHC of
this Agreement and (y) the consummation by CFHC of the Merger, and the
consummation by CFHC and Community of the other transactions contemplated
hereby. To the best of CFHC's knowledge, no fact or condition exists which CFHC
has reason to believe will prevent it and Community from obtaining the
aforementioned consents and approvals.
3.4. Financial Statements.
(a) The CFHC Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of CFHC as of December 31, 1995
and 1996, and the related consolidated statements of income, changes in
shareholders' equity and of cash flows for the periods ended December 31, in
each of the two fiscal years 1995 through 1996, in each case accompanied by the
audit report of KPMG Peat Marwick independent public accountants with respect to
CFHC ("Peat Marwick"), and the unaudited consolidated statement of condition of
CFHC as of September 30, 1997 and the related unaudited consolidated statements
of income and cash flows for the nine months ended September 30, 1997 and 1996,
as reported in CFHC's Quarterly Report on Form 10-Q, filed with the SEC under
the Securities Exchange Act of 1934, as amended ("1934 Act") (collectively, the
"CFHC Financial Statements"). The CFHC Financial Statements (including the
related notes) have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied during the periods involved
(except as may be indicated therein or in the notes thereto), and fairly present
the consolidated financial condition of CFHC as of the respective dates set
forth therein, and the related consolidated statements of income, changes in
shareholders' equity and cash flows fairly present the results of the
consolidated operations, changes in shareholders' equity and cash flows of CFHC
for the respective periods set forth therein.
(b) The books and records of CFHC and each CFHC Subsidiary are
being maintained in material compliance with applicable legal and accounting
requirements and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the CFHC Financial Statements (including the notes thereto),
as of September 30, 1997, neither CFHC nor any CFHC Subsidiary had any
liabilities, whether absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of CFHC and any CFHC
Subsidiary, taken as a whole which were required by GAAP (consistently applied)
to be disclosed in CFHC's consolidated statement of condition as of September
30, 1997 or the notes thereto. Since September 30, 1997, neither CFHC nor any
CFHC Subsidiary has incurred any liabilities except in the ordinary course of
business and consistent with prudent business practice, except as related to the
transactions contemplated by this Agreement or except as set forth in the CFHC
Disclosure Schedule.
3.5. Broker's and Other Fees. Except for Berwind Financial,
L.P. ("Berwind"), neither CFHC, any CFHC Subsidiary nor any of their directors
or officers has employed any broker or finder or incurred any liability for any
broker's or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement. The agreement with Berwind is set
forth in the CFHC Disclosure Schedule. Other than pursuant to the agreement with
Berwind and an agreement with Law Offices of Stevens & Lee, a Professional
Corporation, pursuant to which CFHC will pay a flat fee of $75,000 plus
reasonable out-of-pocket expenses for legal representation in connection with
this Agreement and the transactions contemplated hereunder, there are no fees
(other than time charges billed at usual and customary rates) payable to any
consultants, including lawyers and accountants, in connection with this
transaction or which would be triggered by consummation of this transaction or
the termination of the services of such consultants by CFHC or any CFHC
Subsidiary.
3.6. Absence of Certain Changes or Events.
(a) Except as disclosed in the CFHC Disclosure Schedule, there
has not been any material adverse change in the business, operations, assets or
financial condition of CFHC and any CFHC Subsidiary, taken as a whole, since
December 31, 1997 and to the best of CFHC's knowledge, no fact or condition
exists which CFHC believes will cause such a material adverse change in the
future.
(b) Except as set forth in the CFHC Disclosure Schedule,
neither CFHC nor any CFHC Subsidiary has taken or permitted any of the actions
set forth in Section 5.2 hereof between December 31, 1997 and the date hereof
and, except for execution of this Agreement, and the other documents
contemplated hereby, CFHC and each CFHC Subsidiary has conducted their
respective businesses only in the ordinary course, consistent with past
practice.
3.7. Legal Proceedings. Except as disclosed in the CFHC
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of CFHC and the CFHC Subsidiaries, neither CFHC nor any CFHC
Subsidiary is a party to any, and there are no pending or, to the best of CFHC's
knowledge, threatened legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against CFHC or any
CFHC Subsidiary which, if decided adversely to CFHC or any CFHC Subsidiary, are
reasonably likely to have a material adverse effect on the business, operations,
assets or financial condition of CFHC and the CFHC Subsidiaries taken as a
whole. Except as disclosed in the CFHC Disclosure Schedule, neither CFHC nor any
CFHC Subsidiary is a party to any order, judgment or decree entered in any
lawsuit or proceeding which is material to CFHC or such CFHC Subsidiary.
3.8. Taxes and Tax Returns.
(a) Except as set forth on the CFHC Disclosure Schedule, CFHC
and each CFHC Subsidiary has duly filed (and until the Effective Time will so
file) all returns, declarations, reports, information returns and statements
("Returns") required to be filed by it on or before the Effective Time in
respect of any federal, state and local taxes (including withholding taxes,
penalties or other payments required) and has duly paid (and until the Effective
Time will so pay) all such taxes due and payable, other than taxes or other
charges which are being contested in good faith (and disclosed to HUBCO in
writing) or against which reserves have been established. CFHC and each CFHC
Subsidiary has established (and until the Effective Time will establish) on
their books and records reserves that are adequate for the payment of all
federal, state and local taxes not yet due and payable, but are incurred in
respect of CFHC or any CFHC Subsidiary through such date. None of the federal or
state income tax returns of CFHC or any CFHC Subsidiary have been examined by
the Internal Revenue Service (the "IRS") or the New Jersey Division of Taxation
within the past six years. To the best knowledge of CFHC, there are no audits or
other administrative or court proceedings presently pending nor any other
disputes pending with respect to, or claims asserted for, taxes or assessments
upon CFHC or any CFHC Subsidiary, nor has CFHC or any CFHC Subsidiary given any
currently outstanding waivers or comparable consents regarding the application
of the statute of limitations with respect to any taxes or Returns.
(b) Neither CFHC nor any CFHC Subsidiary (i) has requested any
extension of time within which to file any Return which Return has not since
been filed, (ii) is a party to any agreement providing for the allocation or
sharing of taxes, (iii) is required to include in income any adjustment pursuant
to Section 481(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
by reason of a voluntary change in accounting method initiated by CFHC or any
CFHC Subsidiary (nor does CFHC have any knowledge that the IRS has proposed any
such adjustment or change of accounting method), or (iv) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
3.9. Employee Benefit Plans.
(a) Except as set forth on the CFHC Disclosure Schedule,
neither CFHC nor any CFHC Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "CFHC Pension Plans") as such term is defined in
Section 3(2)(A) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), "employee welfare benefit plan" (the "CFHC Welfare Plans") as
such terms is defined in Section 3(1) of ERISA, stock option plan, stock
purchase plan, deferred compensation plan, severance plan, bonus plan,
employment agreement, director retirement program or other similar plan, program
or arrangement. Neither CFHC nor any CFHC Subsidiary has, since September 2,
1974, contributed to any "Multiemployer Plan," as such term is defined in
Section 3(37) of ERISA.
(b) CFHC has delivered to HUBCO in the CFHC Disclosure
Schedules (or previously made available to HUBCO) a complete and accurate copy
of each of the following with respect to each of the CFHC Pension Plans and CFHC
Welfare Plans, if any: (i) plan document, summary plan description, and summary
of material modifications (if not available, a detailed description of the
foregoing); (ii) trust agreement or insurance contract, if any; (iii) most
recent IRS determination letter, if any; (iv) most recent actuarial report, if
any; and (v) most recent annual report on Form 5500.
(c) The present value of all accrued benefits, both vested and
non-vested, under each of the CFHC Pension Plans subject to Title IV of ERISA,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial valuation prepared by such CFHC Pension Plan's actuary, did not
exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the best of CFHC 's knowledge, the actuarial assumptions
then utilized for such plans were reasonable and appropriate as of the last
valuation date and reflect then current market conditions.
(d) During the last six years, the Pension Benefit Guaranty
Corporation ("PBGC") has not asserted any claim for liability against CFHC or
any CFHC Subsidiary which has not been paid in full.
(e) All premiums (and interest charges and penalties for late
payment, if applicable) due to the PBGC with respect to each CFHC Pension Plan
have been paid. All contributions required to be made to each CFHC Pension Plan
under the terms thereof, ERISA or other applicable law have been timely made,
and all amounts properly accrued to date as liabilities of CFHC which have not
been paid have been properly recorded on the books of CFHC .
(f) Each of the CFHC Pension Plans and each of the CFHC
Welfare Plans has been operated in compliance in all material respects with the
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder, and all other applicable governmental laws and
regulations. CFHC is not aware of any fact or circumstance which would
disqualify any plan that could not be retroactively corrected (in accordance
with the procedures of the IRS).
(g) To the best knowledge of CFHC, no non-exempt prohibited
transaction, within the meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any CFHC Welfare Plan or CFHC Pension Plan
that would result in any material tax or penalty for CFHC or any CFHC
Subsidiary.
(h) Except as disclosed in the CFHC Disclosure Schedule, no
CFHC Pension Plan or any trust created thereunder has been terminated, nor have
there been any "reportable events" (notice of which has not been waived by the
PBGC), within the meaning of Section 4034(b) of ERISA, with respect to any CFHC
Pension Plan.
(i) No "accumulated funding deficiency," within the meaning of
Section 412 of the Code, has been incurred with respect to any CFHC Pension
Plan.
(j) There are no material pending, or, to the best knowledge
of CFHC, material threatened or anticipated claims (other than routine claims
for benefits) by, on behalf of, or against any of the CFHC Pension Plans or the
CFHC Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the CFHC Disclosure Schedule.
(k) Except as disclosed in the CFHC Disclosure Schedule, no
CFHC Pension Plan or CFHC Welfare Plan provides medical or death benefits
(whether or not insured) beyond an employee's retirement or other termination of
service, other than (i) coverage mandated by law or pursuant to conversion or
continuation rights set out in such Plan or an insurance policy providing
benefits thereunder, or (ii) death benefits under any CFHC Pension Plan.
(l) Except with respect to customary health, life and
disability benefits, there are no unfunded benefit obligations which are not
accounted for by reserves shown on the CFHC Financial Statements and established
under GAAP or otherwise noted on such Financial Statements.
(m) With respect to each CFHC Pension Plan and CFHC Welfare
Plan that is funded wholly or partially through an insurance policy, there will
be no liability of CFHC or any CFHC Subsidiary as of the Effective Time under
any such insurance policy or ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events occurring prior to the Effective Time.
(n) Except (i) for payments and other benefits due pursuant to
the employment or severance agreements included within the CFHC Disclosure
Schedule, and (ii) as set forth in Section 3.9(n) of the CFHC Disclosure
Schedule, or as expressly agreed to by HUBCO in writing either pursuant to this
Agreement or otherwise, the consummation of the transactions contemplated by
this Agreement will not (x) entitle any current or former employee of CFHC or
any CFHC Subsidiary to severance pay, unemployment compensation or any similar
payment, or (y) accelerate the time of payment or vesting, or increase the
amount of any compensation or benefits due to any current or former employee
under any CFHC Pension Plan or CFHC Welfare Plan.
(o) Except for the CFHC Pension Plans and the CFHC Welfare
Plans, and except as set forth on the CFHC Disclosure Schedule, CFHC has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of CFHC or any
CFHC Subsidiary or any predecessor of any thereof. The CFHC Disclosure Schedule
sets forth (or lists, if previously delivered to HUBCO): (i) true and complete
copies of the deferred compensation agreements, understandings or obligations
with respect to each such current or former director, officer or employee, and
(ii) the most recent actuarial or other calculation of the present value of such
payments or benefits.
(p) Except as set forth in the CFHC Disclosure Schedule, CFHC
does not maintain or otherwise pay for life insurance policies (other than group
term life policies on employees) with respect to any director, officer or
employee. The CFHC Disclosure Schedule lists each such insurance policy and any
agreement with a party other than the insurer with respect to the payment,
funding or assignment of such policy. To the best of CFHC 's knowledge, neither
CFHC nor any CFHC Pension Plan or CFHC Welfare Plan owns any individual or group
insurance policies issued by an insurer which has been found to be insolvent or
is in rehabilitation pursuant to a state proceeding.
(q) Except as set forth in the CFHC Disclosure Schedule, CFHC
does not maintain any retirement plan or retiree medical plan or arrangement for
directors. The CFHC Disclosure Schedule sets forth the complete documentation
and actuarial evaluation of any such plan.
3.10. Reports.
(a) The CFHC Disclosure Schedule lists, and as to item (i)
below CFHC has previously delivered to HUBCO a complete copy of, each (i) final
registration statement, prospectus, annual, quarterly or special report and
definitive proxy statement filed by CFHC since January 1, 1994 pursuant to the
Securities Act of 1933, as amended ("1933 Act"), or the 1934 Act and (ii)
communication (other than general advertising materials and press releases)
mailed by CFHC to its shareholders as a class since January 1, 1994.
(b) Since January 1, 1994, (i) CFHC has filed all reports that
it was required to file with the SEC under the 1934 Act, and (ii) CFHC and
Community each has duly filed all material forms, reports and documents which
they were required to file with each agency charged with regulating any aspect
of their business, in each case in form which was correct in all material
respects, and, subject to permission from such regulatory authorities, CFHC
promptly will deliver or make available to HUBCO accurate and complete copies of
such reports. As of their respective dates, each such form, report, or document
referred to in either of clauses (i) or (ii) above, and each final registration
statement, prospectus, annual, quarterly or special report, definitive proxy
statement or communication referred to in either of clauses (i) or (ii) of
paragraph (b) above, complied in all material respects with all applicable
statutes, rules and regulations and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided that
information contained in any such document as of a later date shall be deemed to
modify information as of an earlier date. The CFHC Disclosure Schedule lists the
dates of all examinations of CFHC or Community conducted by either the FRB, the
OCC or the FDIC since January 1, 1995 and the dates of any responses thereto
submitted by CFHC or Community.
3.11. CFHC and Community Information. The information relating
to CFHC and Community, this Agreement, and the transactions contemplated hereby
(except for information relating solely to HUBCO) to be contained in the Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof) to be delivered to
shareholders of CFHC in connection with the solicitation of their approval of
the Merger, as of the date the Proxy Statement-Prospectus is mailed to
shareholders of CFHC, and up to and including the date of the meeting of
shareholders to which such Proxy Statement-Prospectus relates, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.12. Compliance with Applicable Law. Except as set forth in
the CFHC Disclosure Schedule, CFHC and each CFHC Subsidiary holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business and has complied with and is not in default in any respect under any
applicable law, statute, order, rule, regulation, policy and/or guideline of any
federal, state or local governmental authority relating to CFHC or such CFHC
Subsidiary (including, without limitation, consumer, community and fair lending
laws) (other than where the failure to have a license, franchise, permit or
authorization or where such default or noncompliance will not result in a
material adverse effect on the business, operations, assets or financial
condition of CFHC and the CFHC Subsidiaries taken as a whole) and CFHC has not
received notice of violation of, and does not know of any violations of, any of
the above.
3.13. Certain Contracts.
(a) Except for plans referenced in Section 3.9 and disclosed
in the CFHC Disclosure Schedule, (i) neither CFHC nor any CFHC Subsidiary is a
party to or bound by any written contract or any understanding with respect to
the employment of any officers, employees, directors or consultants, and (ii)
the consummation of the transactions contemplated by this Agreement will not
(either alone or upon the occurrence of any additional acts or events) result in
any payment (whether of severance pay or otherwise) becoming due from CFHC or
any CFHC Subsidiary to any officer, employee, director or consultant thereof.
The CFHC Disclosure Schedule sets forth true and correct copies of all severance
or employment agreements with officers, directors, employees, agents or
consultants to which CFHC or any CFHC Subsidiary is a party.
(b) Except as disclosed in the CFHC Disclosure Schedule or
disclosed as an Exhibit to CFHC's Annual Report on Form 10-K for the year end
December 31, 1996 and except for loan commitments, loan agreements and loan
instruments entered into or issued by Community in the ordinary course of
business, (i) as of the date of this Agreement, neither CFHC nor any CFHC
Subsidiary is a party to or bound by any commitment, agreement or other
instrument which is material to the business, operations, assets or financial
condition of CFHC and the CFHC Subsidiaries taken as a whole, (ii) no
commitment, agreement or other instrument to which CFHC or any CFHC Subsidiary
is a party or by which either of them is bound limits the freedom of CFHC or any
CFHC Subsidiary to compete in any line of business or with any person, and (iii)
neither CFHC nor any CFHC Subsidiary is a party to any collective bargaining
agreement.
(c) Except as disclosed in the CFHC Disclosure Schedule,
neither CFHC nor any CFHC Subsidiary or, to the best knowledge of CFHC, any
other party thereto, is in default in any material respect under any material
lease, contract, mortgage, promissory note, deed of trust, loan or other
commitment (except those under which Community is or will be the creditor) or
arrangement, except for defaults which individually or in the aggregate would
not have a material adverse effect on the business, operations, assets or
financial condition of CFHC and the CFHC Subsidiaries, taken as a whole.
3.14. Properties and Insurance.
(a) Except as set forth in the CFHC Disclosure Schedule, CFHC
or a CFHC Subsidiary has good and, as to owned real property, marketable title
to all material assets and properties, whether real or personal, tangible or
intangible, reflected in CFHC's consolidated balance sheet as of September 30,
1997, or owned and acquired subsequent thereto (except to the extent that such
assets and properties have been disposed of for fair value in the ordinary
course of business since September 30, 1997), subject to no encumbrances, liens,
mortgages, security interests or pledges, except (i) those items that secure
liabilities that are reflected in said balance sheet or the notes thereto or
that secure liabilities incurred in the ordinary course of business after the
date of such balance sheet, (ii) statutory liens for amounts not yet delinquent
or which are being contested in good faith, (iii) such encumbrances, liens,
mortgages, security interests, pledges and title imperfections that are not in
the aggregate material to the business, operations, assets, and financial
condition of CFHC and the CFHC Subsidiaries taken as a whole and (iv) with
respect to owned real property, title imperfections noted in title reports
delivered to HUBCO prior to the date hereof. Except as affected by the
transactions contemplated hereby, CFHC or one or more of the CFHC Subsidiaries
as lessees have the right under valid and subsisting leases to occupy, use,
possess and control all real property leased by CFHC and such CFHC Subsidiaries
in all material respects as presently occupied, used, possessed and controlled
by CFHC and such CFHC Subsidiaries.
(b) The business operations and all insurable properties and
assets of CFHC and Community are insured for their benefit against all risks
which, in the reasonable judgment of the management of CFHC, should be insured
against, in each case under policies or bonds issued by insurers of recognized
responsibility, in such amounts with such deductibles and against such risks and
losses as are in the opinion of the management of CFHC adequate for the business
engaged in by CFHC and Community. As of the date hereof, neither CFHC nor
Community has received any notice of cancellation or notice of a material
amendment of any such insurance policy or bond or is in default under any such
policy or bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion.
3.15. Minute Books. As of the date of this Agreement, the
minute books of CFHC and the CFHC Subsidiaries contain accurate records of all
meetings and other corporate action held of their respective shareholders and
Boards of Directors (including committees of their respective Boards of
Directors) through a date not later than 30 days prior to the date of this
Agreement, and except for the Merger, no material corporate actions were
considered or approved by the shareholders or Boards of Directors (or committees
thereof) between such date and the date of this Agreement which are not fully
disclosed in the CFHC Disclosure Schedule. On the Closing Date, the minute books
of CFHC and the CFHC Subsidiaries shall contain accurate records of all meetings
and other corporate action held of their respective shareholders and Boards of
Directors (including committees of their respective Boards of Directors) through
the Closing Date.
3.16. Environmental Matters. Except as disclosed in the CFHC
Disclosure Schedule, neither CFHC nor any CFHC Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that CFHC or any CFHC Subsidiary (either directly or as a
successor in interest in connection with the enforcement of remedies to realize
the value of properties serving as collateral for outstanding loans) is
responsible for the correction or cleanup of any condition resulting from the
violation of any law, ordinance or other governmental regulation regarding
environmental matters, other than corrections or cleanups which, in the
aggregate, are immaterial to CFHC and the CFHC Subsidiaries, taken as a whole.
Except as disclosed in the CFHC Disclosure Schedule, CFHC has no knowledge that
any toxic or hazardous substances or materials have been emitted, generated,
disposed of or stored on any non-residential property currently owned or leased
by CFHC or any CFHC Subsidiary, or owned or leased in the five years prior to
the date of this Agreement in any manner that violates any presently existing
federal, state or local law or regulation governing or pertaining to such
substances and materials, other than violations which, in the aggregate, are
immaterial to CFHC and the CFHC Subsidiaries, taken as a whole. Except as
disclosed in the CFHC Disclosure Schedule, all property formerly owned or leased
by CFHC or any CFHC Subsidiary which was subject to the provisions of the
Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq. as amended ("ISRA"),
complied with all applicable provisions of ISRA at the time such property was
sold or transferred other than non-compliances which, in the aggregate, are
immaterial to CFHC and the CFHC Subsidiaries, taken as a whole
3.17. Reserves. As of September 30, 1997, the allowance for
loan losses in the CFHC Financial Statements was adequate pursuant to GAAP
(consistently applied), and the methodology used to compute the loan loss
reserve complied in all material respects with GAAP (consistently applied) and
all applicable policies of the OCC. As of December 31, 1997, the allowance for
loan losses in the financial statements which will be included in CFHC's Annual
Report on Form 10-K for the year ended December 31, 1997 will be adequate
pursuant to GAAP (consistently applied), and the methodology used to compute the
loan loss reserve will comply in all material respects with GAAP (consistently
applied) and all applicable policies of the OCC. As of December 31, 1997,
neither CFHC nor Community held any OREO properties which required, or will
require a reserve in the financial statements which will be included in CFHC's
Annual Report on Form 10-K for the year ended December 31, 1997.
3.18. No Parachute Payments. Except as set forth in the CFHC
Disclosure Schedule, no officer, director, employee or agent (or former officer,
director, employee or agent) of CFHC or any CFHC Subsidiary is entitled now, or
will or may be entitled to as a consequence of this Agreement or the Merger, to
any payment or benefit from CFHC, a CFHC Subsidiary, HUBCO or a HUBCO Subsidiary
which if paid or provided would constitute an "excess parachute payment", as
defined in Section 280G of the Code or regulations promulgated thereunder.
3.19. Agreements with Bank Regulators. Neither CFHC nor any
CFHC Subsidiary is a party to any agreement or memorandum of understanding with,
or a party to any commitment letter, board resolution submitted to a regulatory
authority or similar undertaking to, or is subject to any order or directive by,
or is a recipient of any extraordinary supervisory letter from, any court,
governmental authority or other regulatory or administrative agency or
commission, domestic or foreign ("Governmental Entity") which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies or its management, except for those the
existence of which has been disclosed in writing to HUBCO by CFHC prior to the
date of this Agreement, nor has CFHC been advised by any Governmental Entity
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission, except as disclosed in writing to HUBCO by CFHC prior to
the date of this Agreement. Neither CFHC nor any CFHC Subsidiary is required by
Section 32 of the Federal Deposit Insurance Act to give prior notice to a
Federal banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer,
except as disclosed in writing to HUBCO by CFHC prior to the date of this
Agreement.
3.20. Year 2000 Compliance. CFHC and the CFHC Subsidiaries
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order to be substantially Year 2000
compliant on or before the end of 1999 and CFHC does not expect the future cost
of addressing such issues to be material.
3.21. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUBCO
References herein to the "HUBCO Disclosure Schedule" shall
mean all of the disclosure schedules required by this Article IV, dated as of
the date hereof and referenced to the specific sections and subsections of
Article IV of this Agreement, which have been delivered on the date hereof by
HUBCO to CFHC. HUBCO hereby represents and warrants to CFHC as follows:
4.1. Corporate Organization.
(a) HUBCO is a corporation duly organized and validly existing
and in good standing under the laws of the State of New Jersey. HUBCO has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of HUBCO and the HUBCO Subsidiaries
(defined below), taken as a whole. HUBCO is registered as a bank holding company
under the BHCA.
(b) Each HUBCO Subsidiary is listed in the HUBCO Disclosure
Schedule. For the purposes of this Agreement, the term "HUBCO Subsidiary" means
any corporation, partnership, joint venture or other legal entity in which HUBCO
directly or indirectly, owns at least a 50% stock or other equity interest or
for which HUBCO, directly or indirectly, acts as a general partner provided that
to the extent that any representation or warranty set forth herein covers a
period of time prior to the date of this Agreement, the term "HUBCO Subsidiary"
shall include any entity which was an HUBCO Subsidiary at any time during such
period. Each HUBCO Subsidiary is duly organized and validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Bank is a
state-chartered commercial banking corporation duly organized and validly
existing and in good standing under the laws of the State of New Jersey. All
eligible accounts of depositors issued by the Bank are insured by the BIF to the
fullest extent permitted by law. Each HUBCO Subsidiary has the corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as it is now being conducted and is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing would
not have a material adverse effect on HUBCO and the HUBCO Subsidiaries taken as
a whole. The HUBCO Disclosure Schedule sets forth true and complete copies of
the Certificate of Incorporation and By-Laws of HUBCO and the Bank as in effect
on the date hereof.
4.2. Capitalization. The authorized capital stock of HUBCO
consists solely of 53,045,000 common shares, no par value ("HUBCO Common
Stock"), and 10,609,000 shares of preferred stock ("HUBCO Authorized Preferred
Stock"). As of December 31, 1997, there were 21,911,502 shares of HUBCO Common
Stock issued and outstanding, and no shares of treasury stock, and 1,250 shares
of HUBCO Authorized Preferred Stock outstanding, all of which were designated
Series B, no par value, Convertible Preferred Stock. From time to time
hereafter, subject to the covenant in Section 5.17 below, HUBCO may sell or
repurchase shares of HUBCO Common Stock. Except for shares issuable under or
arising from the merger agreements by which HUBCO is to acquire Bank of the
Hudson ("BTH") and its parent corporation, Poughkeepsie Financial Corp. (the
"BTH Agreement"), MSB Bank and its parent corporation MSB Bancorp, Inc. (the
"MSB Agreement"), the HUBCO 1995 Stock Option Plan (the "HUBCO Stock Option
Plans") and outstanding warrants to purchase 33,284 shares of HUBCO Common
Stock, there are no shares of HUBCO Common Stock issuable upon the exercise of
outstanding stock options or otherwise. All issued and outstanding shares of
HUBCO Common Stock, and all issued and outstanding shares of capital stock of
the HUBCO Subsidiaries, have been duly authorized and validly issued, are fully
paid, nonassessable and free of preemptive rights, and are free and clear of all
liens, encumbrances, charges, restrictions or rights of third parties. All of
the outstanding shares of capital stock of the HUBCO Subsidiaries are owned by
HUBCO free and clear of any liens, encumbrances, charges, restrictions or rights
of third parties. Except for the shares issuable under the HUBCO Stock Option
Plans and HUBCO's obligations under the BTH Agreement and the MSB Agreement,
neither HUBCO nor any HUBCO Subsidiary has granted or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of HUBCO or any HUBCO Subsidiary or any securities representing
the right to purchase, subscribe or otherwise receive any shares of such capital
stock or any securities convertible into any such shares, and there are no
agreements or understandings with respect to voting of any such shares.
4.3. Authority; No Violation.
(a) Subject to the receipt of all necessary governmental
approvals, HUBCO has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby in
accordance with the terms hereof. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of HUBCO in accordance with its
Certificate of Incorporation and applicable laws and regulations. Except for
such approvals, no other corporate proceedings on the part of HUBCO are
necessary to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by HUBCO and constitutes the valid
and binding obligation of HUBCO, enforceable against HUBCO in accordance with
its terms.
(b) Neither the execution or delivery of this Agreement by
HUBCO, nor the consummation by HUBCO of the transactions contemplated hereby in
accordance with the terms hereof, or compliance by HUBCO with any of the terms
or provisions hereof will (i) violate any provision of the Certificate of
Incorporation or By-Laws of HUBCO, (ii) assuming that the consents and approvals
set forth below are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to HUBCO, any
HUBCO Subsidiary, or any of their respective properties or assets, or (iii)
violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets of
HUBCO under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which HUBCO is a party, or by which it or any of its
properties or assets may be bound or affected, except, with respect to (ii) and
(iii) above, such as individually or in the aggregate will not have a material
adverse effect on HUBCO, and which will not prevent or materially delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the FDIC, the FRB,
the OCC, the Department, the Secretary of State of New Jersey, or other
applicable Governmental Entities, no consents or approvals of or filings or
registrations with or notices to any third party or any public body or authority
are necessary on behalf of HUBCO in connection with (x) the execution and
delivery by HUBCO of this Agreement, and (y) the consummation by HUBCO of the
Merger and the other transactions contemplated hereby, except such as are listed
in the HUBCO Disclosure Schedule or in the aggregate will not (if not obtained)
have a material adverse effect on HUBCO and which will not prevent or materially
delay the consummation of the transactions contemplated hereby. To the best of
HUBCO's knowledge, no fact or condition exists which HUBCO has reason to believe
will prevent it from obtaining the aforementioned consents and approvals.
4.4. Financial Statements.
(a) The HUBCO Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of HUBCO as of December 31, 1995
and 1996, and the related consolidated statements of income, changes in
shareholders' equity and of cash flows for the periods ended December 31, in
each of the two fiscal years 1995 through 1996, in each case accompanied by the
audit report of Arthur Andersen, LLP independent public accountants with respect
to HUBCO ("Arthur Andersen"), and the unaudited consolidated statement of
condition of HUBCO as of September 30, 1997 and the related unaudited
consolidated statements of income and cash flows for the nine months ended
September 30, 1997 and 1996, as reported in HUBCO's Quarterly Report on Form
10-Q, filed with the SEC under the 1934 Act (collectively, the "HUBCO Financial
Statements"). The HUBCO Financial Statements (including the related notes) have
been prepared in accordance with GAAP consistently applied during the periods
involved (except as may be indicated therein or in the notes thereto), and
fairly present the consolidated financial position of HUBCO as of the respective
dates set forth therein, and the related consolidated statements of income,
changes in shareholders' equity and of cash flows (including the related notes,
where applicable) fairly present the consolidated results of operations, changes
in shareholders' equity and cash flows of HUBCO for the respective fiscal
periods set forth therein.
(b) The books and records of HUBCO and the HUBCO Subsidiaries
are being maintained in material compliance with applicable legal and accounting
requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the HUBCO Financial Statements (including the notes
thereto), as of September 30, 1997 neither HUBCO nor any of the HUBCO
Subsidiaries had any obligation or liability, whether absolute, accrued,
contingent or otherwise, material to the business, operations, assets or
financial condition of HUBCO or any of the HUBCO Subsidiaries which were
required by GAAP (consistently applied) to be disclosed in HUBCO's consolidated
statement of condition as of September 30, 1997 or the notes thereto. Except for
the transactions contemplated by this Agreement, and the other proposed
acquisitions by HUBCO reflected in any Form 8-K filed by HUBCO with the SEC
since September 30, 1997, neither HUBCO nor any HUBCO Subsidiary has incurred
any liabilities.
4.5. Broker's and Other Fees. Neither HUBCO, any HUBCO
Subsidiary nor any of its directors or officers has employed any broker or
finder or incurred any liability for any broker's or finder's fees or
commissions in connection with any of the transactions contemplated by this
Agreement.
4.6. Absence of Certain Changes or Events. There has not been
any material adverse change in the business, operations, assets or financial
condition of HUBCO and HUBCO's Subsidiaries taken as a whole since September 30,
1997 and to the best of HUBCO's knowledge, except for any merger related charges
arising from or connected with the consummation of the transactions contemplated
by the BTH Agreement, the MSB Agreement and the effect of the consummation of
other publicly announced mergers or acquisitions, not yet consummated (the
"Effects of Announced Acquisitions"), no facts or condition exists which HUBCO
believes will cause such a material adverse change in the future.
4.7. Legal Proceedings. Except as disclosed in the HUBCO
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of HUBCO or the HUBCO Subsidiaries, neither HUBCO nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
HUBCO's knowledge, threatened legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against HUBCO or any of the HUBCO Subsidiaries which, if decided adversely to
HUBCO or the HUBCO Subsidiaries, are reasonably likely to have a material
adverse effect on HUBCO and the HUBCO Subsidiaries taken as a whole. Except as
disclosed in the HUBCO Disclosure Schedule, neither HUBCO nor any HUBCO
Subsidiary is a party to any order, judgment or decree entered in any lawsuit or
proceeding which is material to HUBCO or the HUBCO Subsidiaries taken as a
whole.
4.8. Tax Returns.
(a) HUBCO and each HUBCO Subsidiary have duly filed (and until
the Effective Time will so file) all Returns required to be filed by them in
respect of any federal, state and local taxes (including withholding taxes,
penalties or other payments required) and have duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other than taxes or
other charges which are being contested in good faith (and disclosed to CFHC in
writing). HUBCO and HUBCO's Subsidiaries have established (and until the
Effective Time will establish) on their books and records reserves that are
adequate for the payment of all federal, state and local taxes not yet due and
payable, but are incurred in respect of HUBCO or HUBCO's Subsidiaries through
such date. The HUBCO Disclosure Schedule identifies the federal income tax
returns of HUBCO and HUBCO's Subsidiaries which have been examined by the IRS
within the past six years. No deficiencies were asserted as a result of such
examinations which have not been resolved and paid in full. The HUBCO Disclosure
Schedule identifies the applicable state income tax returns of HUBCO and HUBCO's
Subsidiaries which have been examined by the applicable authorities. No
deficiencies were asserted as a result of such examinations which have not been
resolved and paid in full. To the best knowledge of HUBCO, there are no audits
or other administrative or court proceedings presently pending nor any other
disputes pending with respect to, or claims asserted for, taxes or assessments
upon HUBCO or HUBCO's Subsidiaries, nor has HUBCO or HUBCO's Subsidiaries given
any currently outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any taxes or Returns.
(b) Except as set forth in the HUBCO Disclosure Schedule,
neither HUBCO nor any Subsidiary of HUBCO (i) has requested any extension of
time within which to file any Return which Return has not since been filed, (ii)
is a party to any agreement providing for the allocation or sharing of taxes
with third parties, (iii) is required to include in income any adjustment
pursuant to Section 481(a) of the Code, by reason of a voluntary change in
accounting method initiated by HUBCO (nor does HUBCO have any knowledge that the
IRS has proposed any such adjustment or change of accounting method) or (iv) has
filed a consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply.
4.9. Employee Benefit Plans.
(a) HUBCO and the HUBCO Subsidiaries maintain or contribute to
certain "employee pension benefit plans" (the "HUBCO Pension Plans"), as such
term is defined in Section 3(2)(A) of ERISA, and "employee welfare benefit
plans" (the "HUBCO Welfare Plans"), as such term is defined in Section 3(1) of
ERISA. Since September 2, 1974, neither HUBCO nor any HUBCO Subsidiary has
contributed to any "Multiemployer Plan", as such term is defined in Section
3(37) of ERISA.
(b) Each of the HUBCO Pension Plans and each of the HUBCO
Welfare Plans has been operated in compliance in all material respects with the
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder, and all other applicable governmental laws and
regulations. HUBCO is not aware of any fact or circumstance which would
disqualify any plan that could not be retroactively corrected (in accordance
with the procedures of the IRS).
(c) The present value of all accrued benefits under each of
the HUBCO Pension Plans subject to Title IV of ERISA, based upon the actuarial
assumptions used for purposes of the most recent actuarial valuation prepared by
such HUBCO Pension Plan's actuary, did not exceed the then current value of the
assets of such plans allocable to such accrued benefits. To the best of HUBCO's
knowledge, the actuarial assumptions then utilized for such plans were
reasonable and appropriate as of the last valuation date and reflect the then
current market conditions.
(d) During the last five years, the PBGC has not asserted any
claim for liability against HUBCO or any HUBCO Subsidiary which has not been
paid in full.
(e) All premiums (and interest charges and penalties for late
payment, if applicable) due to the PBGC with respect to each HUBCO Pension Plan
have been paid. All contributions required to be made to each HUBCO Pension Plan
under the terms thereof, ERISA or other applicable law have been timely made,
and all amounts properly accrued to date as liabilities of HUBCO which have not
been paid have been properly recorded on the books of HUBCO.
(f) No "accumulated funding deficiency", within the meaning of
Section 412 of the Code, has been incurred with respect to any of the HUBCO
Pension Plans.
(g) There are no pending or, to the best knowledge of HUBCO,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the HUBCO Pension Plans or the HUBCO Welfare Plans,
any trusts created thereunder or any other plan or arrangement identified in the
HUBCO Disclosure Schedule.
(h) Except with respect to customary health, life and
disability benefits or as disclosed in the HUBCO Disclosure Schedule, HUBCO has
no unfunded benefit obligations which are not accounted for by reserves shown on
the financial statements and established under GAAP or otherwise noted on such
financial statements.
(i) To the best knowledge of HUBCO, no non-exempt prohibited
transaction, within the meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any HUBCO Welfare Plan or HUBCO Pension Plan
that would result in any material tax or penalty for HUBCO or any HUBCO
Subsidiary.
(h) Except as disclosed in the HUBCO Disclosure Schedule, no
HUBCO Pension Plan or any trust created thereunder has been terminated, nor have
there been any "reportable events" (notice of which has not been waived by the
PBGC), within the meaning of Section 4034(b) of ERISA, with respect to any HUBCO
Pension Plan.
4.10. Reports. Since January 1, 1994, HUBCO has filed all
reports that it was required to file with the SEC under the 1934 Act, all of
which complied in all material respects with all applicable requirements of the
1934 Act and the rules and regulations adopted thereunder. As of their
respective dates, each such report and each registration statement, proxy
statement, form or other document filed by HUBCO with the SEC, including without
limitation, any financial statements or schedules included therein, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1994, HUBCO and each HUBCO
Subsidiary has duly filed all material forms, reports and documents which they
were required to file with each agency charged with regulating any aspect of
their business.
4.11. HUBCO Information. The information relating to HUBCO and
the HUBCO Subsidiaries (including, without limitation, information regarding
other transactions which HUBCO is required to disclose), this Agreement and the
transactions contemplated hereby to be contained in the Registration Statement
and Proxy Statement-Prospectus (as defined in Section 5.6(a) hereof), as of the
date of the mailing of the Proxy Statement-Prospectus, and up to and including
the date of the meeting of shareholders of CFHC to which such Proxy
Statement-Prospectus relates, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Registration Statement shall
comply as to form in all material respects with the provisions of the 1933 Act,
the 1934 Act and the rules and regulations promulgated thereunder.
4.12. Compliance With Applicable Law. Except as set forth in
the HUBCO Disclosure Schedule, each of HUBCO and HUBCO's Subsidiaries holds all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business, and has complied with and is not in default in
any respect under any applicable law, statute, order, rule, regulation, policy
and/or guideline of any federal, state or local governmental authority relating
to HUBCO or HUBCO's Subsidiaries (including without limitation consumer,
community and fair lending laws) (other than where the failure to have a
license, franchise, permit or authorization or where such default or
noncompliance will not result in a Material Adverse Effect on HUBCO) and HUBCO
has not received notice of violation of, and does not know of any violations of,
any of the above.
4.13. Contracts. Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any HUBCO Subsidiary, or to the best knowledge of
HUBCO, any party thereto, is in default in any material respect under any
material lease, contract, mortgage, promissory note, deed of trust, loan or
other commitment (except those under which the Bank or another HUBCO Subsidiary
is or will be the creditor) or arrangement, except for defaults which
individually or in the aggregate would not have a material adverse effect on
HUBCO.
4.14. Properties and Insurance.
(a) HUBCO and the HUBCO Subsidiaries have good and, as to
owned real property, marketable title to all material assets and properties,
whether real or personal, tangible or intangible, reflected in HUBCO's
consolidated balance sheet as of September 30, 1997, or owned and acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since
September 30, 1997), subject to no encumbrances, liens, mortgages, security
interests or pledges, except (i) those items that secure liabilities that are
reflected in said balance sheet or the notes thereto or that secure liabilities
incurred in the ordinary course of business after the date of such balance
sheet, (ii) statutory liens for amounts not yet delinquent or which are being
contested in good faith, and (iii) such encumbrances, liens, mortgages, security
interests, pledges and title imperfections that are not in the aggregate
material to the business, operations, assets, and financial condition of HUBCO
and the HUBCO Subsidiaries taken as a whole. Except as disclosed in the HUBCO
Disclosure Schedule, HUBCO and the HUBCO Subsidiaries as lessees have the right
under valid and subsisting leases to occupy, use, possess and control all
property leased by HUBCO or the HUBCO Subsidiaries in all material respects as
presently occupied, used, possessed and controlled by HUBCO and the HUBCO
Subsidiaries.
(b) The business operations and all insurable properties and
assets of HUBCO and the HUBCO Subsidiaries are insured for their benefit against
all risks which, in the reasonable judgment of the management of HUBCO, should
be insured against, in each case under policies or bonds issued by insurers of
recognized responsibility, in such amounts with such deductibles and against
such risks and losses as are in the opinion of the management of HUBCO adequate
for the business engaged in by HUBCO and the HUBCO Subsidiaries. As of the date
hereof, neither HUBCO nor any HUBCO Subsidiary has received any notice of
cancellation or notice of a material amendment of any such insurance policy or
bond or is in default under any such policy or bond, no coverage thereunder is
being disputed and all material claims thereunder have been filed in a timely
fashion.
4.15. Environmental Matters. Except as disclosed in the HUBCO
Disclosure Schedule, neither HUBCO nor any HUBCO Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that HUBCO or any HUBCO Subsidiary (either directly, or as a
trustee or fiduciary, or as a successor-in-interest in connection with the
enforcement of remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or cleanup of any
condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters which correction or
cleanup would be material to the business, operations, assets or financial
condition of HUBCO and the HUBCO Subsidiaries taken as a whole. Except as
disclosed in the HUBCO Disclosure Schedule, HUBCO has no knowledge that any
toxic or hazardous substances or materials have been emitted, generated,
disposed of or stored on any non-residential property currently owned or leased
by HUBCO or any HUBCO Subsidiary, or owned or leased in the five years prior to
the date of this Agreement in any manner that violates any presently existing
federal, state or local law or regulation governing or pertaining to such
substances and materials, other than violations which, in the aggregate, are
immaterial to HUBCO and the HUBCO Subsidiaries, taken as a whole. Except as
disclosed in the HUBCO Disclosure Schedule, all property formerly owned or
leased by HUBCO or any HUBCO Subsidiary which was subject to ISRA, complied with
all applicable provisions of ISRA at the time such property was sold or
transferred other than non-compliances which, in the aggregate, are immaterial
to HUBCO and the HUBCO Subsidiaries, taken as a whole.
4.16. Reserves. As of September 30, 1997, each of the
allowances for loan losses and the reserve for OREO properties in the HUBCO
Financial Statements was adequate pursuant to GAAP (consistently applied), and
the methodology used to compute each of the loan loss reserves and the reserve
for OREO properties complies in all material respects with GAAP (consistently
applied) and all applicable policies of the FDIC and the New Jersey Department
of Banking.
4.17. HUBCO Stock. As of the date hereof, HUBCO has available
and reserved shares of HUBCO Common Stock sufficient for issuance pursuant to
the Merger and upon the exercise of the CFHC Stock Options and the PMG Warrants.
The HUBCO Common Stock to be issued hereunder pursuant to the Merger and upon
the exercise of the CFHC Stock Options and the PMG Warrants, when so issued,
will be duly authorized and validly issued, fully paid, nonassessable, free of
preemptive rights and free and clear of all liens, encumbrances or restrictions
created by or through HUBCO, with no personal liability attaching to the
ownership thereof. The HUBCO Common Stock to be issued hereunder pursuant to the
Merger, when so issued, will be registered under the 1933 Act and issued in
accordance with all applicable state and federal laws, rules and regulations and
approved for listing on NASDAQ.
4.18. Agreements with Bank Regulators. Neither HUBCO nor any
HUBCO Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution submitted to a
regulatory authority or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any Government Entity which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve policies or
its management, except for those the existence of which has been disclosed in
writing to CFHC by HUBCO prior to the date of this Agreement, nor has HUBCO been
advised by any Governmental Entity that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission, except as disclosed
in writing to CFHC by HUBCO prior to the date of this Agreement. Neither HUBCO
nor any HUBCO Subsidiary is required by Section 32 of the Federal Deposit
Insurance Act to give prior notice to a Federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer, except as disclosed in writing to CFHC
by HUBCO prior to the date of this Agreement.
4.19. Capital Adequacy. At the Effective Time, after taking
into account the effect of the Merger, the consummation of the mergers
contemplated by the BTH Agreement and the MSB Agreement and the agreement
whereby HUBCO will assume the deposits in 22 branches of First Union Bank, HUBCO
will have sufficient capital to satisfy all applicable regulatory capital
requirements.
4.20. Minute Books. The minute books of HUBCO and its bank
subsidiaries contain records of all meetings and other corporate action held of
their respective shareholders and Boards of Directors (including committees of
their respective Boards of Directors) that are complete and accurate in all
material respects.
4.21. Year 2000 Compliance. HUBCO and the HUBCO Subsidiaries
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order to be Year 2000 compliant on or before
the end of 1999 and HUBCO does not expect the future cost of addressing such
issues to be material.
4.22. Disclosure. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE V - COVENANTS OF THE PARTIES
5.1. Conduct of the Business of CFHC. During the period from
the date of this Agreement to the Effective Time, CFHC and Community shall, and
shall cause each CFHC Subsidiary to, conduct their respective businesses only in
the ordinary course and consistent with prudent business practice, except for
transactions permitted hereunder or with the prior written consent of HUBCO,
which consent will not be unreasonably withheld. Each of CFHC and Community also
shall use its reasonable best efforts to (i) preserve its business organization
and that of the CFHC Subsidiaries intact, (ii) keep available to itself the
present services of its employees and those of the CFHC Subsidiaries, and (iii)
preserve for itself and HUBCO the goodwill of its customers and those of the
CFHC Subsidiaries and others with whom business relationships exist.
5.2. Negative Covenants. From the date hereof to the Effective
Time, except as otherwise approved by HUBCO in writing, or as set forth in the
CFHC Disclosure Schedule, or as permitted or required by this Agreement, neither
CFHC nor Community will:
(a) change any provision of its Certificate of Incorporation
or any similar governing documents;
(b) change any provision of its By-Laws without the consent of
HUBCO which consent shall not be unreasonably withheld;
(c) change the number of shares of its authorized or issued
capital stock (other than upon exercise of stock options or warrants
described in the CFHC Disclosure Schedule in accordance with the term
thereof) or issue or grant any option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating
to its authorized or issued capital stock, or any securities
convertible into shares of such stock, or split, combine or reclassify
any shares of its capital stock, or declare, set aside or pay any
dividend, or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock; provided,
however, that from the date hereof to the Effective Time, CFHC may
declare, set aside or pay dividends on the CFHC Common Stock in a
quarterly amount equal to $0.14 per share.
(d) grant any severance or termination pay (other than
pursuant to policies or contracts of CFHC in effect on the date hereof
and disclosed to HUBCO in the CFHC Disclosure Schedule) to, or enter
into or amend any employment or severance agreement with, any of its
directors, officers or employees; adopt any new employee benefit plan
or arrangement of any type; or award any increase in compensation or
benefits to its directors, officers or employees except in each case as
specified in Section 5.2 of the CFHC Disclosure Schedule.
(e) sell or dispose of any substantial amount of assets or
voluntarily incur any significant liabilities other than in the
ordinary course of business consistent with past practices and policies
or in response to substantial financial demands upon the business of
CFHC or Community.
(f) except for reasonable capital expenditures in connection
with the establishment of its branch in Medford, New Jersey and other
capital expenditures not to exceed $25,000 in the aggregate, make any
capital expenditures other than pursuant to binding commitments
existing on the date hereof, expenditures necessary to maintain
existing assets in good repair and expenditures described in business
plans or budgets previously furnished to HUBCO.
(g) file any applications or make any contract with respect to
branching or site location or relocation.
(h) agree to acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or entity or
make any new investments in securities other than investments in
government, municipal or agency bonds having a maturity of less than
five years.
(i) make any material change in its accounting methods or
practices, other than changes required in accordance with generally
accepted accounting principles or regulatory authorities.
(j) take any action that would result in any of its
representations and warranties contained in Article III of this
Agreement not being true and correct in any material respect at the
Effective Time or that would cause any of its conditions to Closing not
to be satisfied;
(k) without first conferring with HUBCO, make or commit to
make any new loan or other extension of credit in an amount of $500,000
or more, renew for a period in excess of one year any existing loan or
other extension of credit in an amount of $500,000 or more, or increase
by $500,000 or more the aggregate credit outstanding to any borrower or
group of affiliated borrowers except such loan initiations, renewals or
increases that are committed as of the date of this Agreement and
identified in the CFHC Disclosure Schedule and residential loans made
in the ordinary course of business in accordance with past practice; or
(l) agree to do any of the foregoing.
5.3. No Solicitation. So long as this Agreement remains in
effect, CFHC and Community shall not, directly or indirectly, encourage or
solicit or hold discussions or negotiations with, or provide any information to,
any person, entity or group (other than HUBCO) concerning any merger or sale of
shares of capital stock or sale of substantial assets or liabilities not in the
ordinary course of business, or similar transactions involving CFHC or Community
(an "Acquisition Transaction"). Notwithstanding the foregoing, (i) CFHC may
respond to inquiries from holders of CFHC Common Stock in the ordinary course of
business and (ii) CFHC may enter into discussions or negotiations or provide any
information in connection with an unsolicited possible Acquisition Transaction
if the Board of Directors of CFHC, after consulting with counsel, determines in
the exercise of its fiduciary responsibilities that such discussions or
negotiations should be commenced or such information should be furnished. CFHC
shall promptly communicate to HUBCO the terms of any proposal, whether written
or oral, which it may receive in respect of any such Acquisition Transaction and
the fact that it is having discussions or negotiations with a third party about
an Acquisition Transaction.
5.4. Current Information. During the period from the date of
this Agreement to the Effective Time, each of CFHC and HUBCO will cause one or
more of its designated representatives to confer with representatives of the
other party on a monthly or more frequent basis regarding its business,
operations, properties, assets and financial condition and matters relating to
the completion of the transactions contemplated herein. On a monthly basis, CFHC
agrees to provide HUBCO, and HUBCO agrees to provide CFHC, with internally
prepared profit and loss statements no later than 15 days after the close of
each calendar month. As soon as reasonably available, but in no event more than
45 days after the end of each fiscal quarter (other than the last fiscal quarter
of each fiscal year), CFHC will deliver to HUBCO and HUBCO will deliver to CFHC
their respective quarterly reports on Form 10-Q, as filed with the SEC under the
1934 Act. As soon as reasonably available, but in no event more than 90 days
after the end of each calendar year, CFHC will deliver to HUBCO and HUBCO will
deliver to CFHC their respective Annual Reports on Form 10-K as filed with the
SEC under the 1934 Act.
5.5. Access to Properties and Records; Confidentiality.
(a) CFHC and Community shall permit HUBCO and its
representatives, and HUBCO shall permit, and cause each HUBCO Subsidiary to
permit, CFHC and its representatives, reasonable access to their respective
properties, and shall disclose and make available to HUBCO and its
representatives, or CFHC and its representatives as the case may be, all books,
papers and records relating to its assets, stock ownership, properties,
operations, obligations and liabilities, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
directors' and shareholders' meetings, organizational documents, By-Laws,
material contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files, plans affecting employees, and any
other business activities or prospects in which HUBCO and its representatives or
CFHC and its representatives may have a reasonable interest. Neither party shall
be required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer, would
contravene any law, rule, regulation, order or judgment or would waive any
privilege. The parties will use their reasonable best efforts to obtain waivers
of any such restriction (other than waivers of the attorney-client privilege)
and in any event make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
Notwithstanding the foregoing, CFHC acknowledges that HUBCO may be involved in
discussions concerning other potential acquisitions and HUBCO shall not be
obligated to disclose such information to CFHC except as such information is
disclosed to HUBCO's shareholders generally.
(b) All information furnished by the parties hereto previously
in connection with transactions contemplated by this Agreement or pursuant
hereto shall be used solely for the purpose of evaluating the Merger
contemplated hereby and shall be treated as the sole property of the party
delivering the information until consummation of the Merger contemplated hereby
and, if such Merger shall not occur, each party and each party's advisors shall
return to the other party all documents or other materials containing,
reflecting or referring to such information, will not retain any copies of such
information, shall use its reasonable best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. In the event that the Merger
contemplated hereby does not occur, all documents, notes and other writings
prepared by a party hereto or its advisors based on information furnished by the
other party shall be promptly destroyed. The obligation to keep such information
confidential shall continue for five years from the date the proposed Merger is
abandoned but shall not apply to (i) any information which (A) the party
receiving the information can establish by convincing evidence was already in
its possession prior to the disclosure thereof to it by the other party; (B) was
then generally known to the public; (C) became known to the public through no
fault of the party receiving such information; or (D) was disclosed to the party
receiving such information by a third party not bound by an obligation of
confidentiality; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction.
5.6. Regulatory Matters.
(a) For the purposes of holding the Shareholders Meeting (as
such term is defined in Section 5.7 hereof), and qualifying under applicable
federal and state securities laws the HUBCO Common Stock to be issued to CFHC
shareholders in connection with the Merger, the parties hereto shall cooperate
in the preparation and filing by HUBCO with the SEC of a Registration Statement
including a proxy statement and prospectus satisfying all applicable
requirements of applicable state and federal laws, including the 1933 Act, the
1934 Act and applicable state securities laws and the rules and regulations
thereunder (such proxy statement and prospectus in the form mailed by CFHC and
HUBCO to the CFHC shareholders together with any and all amendments or
supplements thereto, being herein referred to as the "Proxy
Statement-Prospectus" and the various documents to be filed by HUBCO under the
1933 Act with the SEC to register the HUBCO Common Stock for sale, including the
Proxy Statement-Prospectus, are referred to herein as the "Registration
Statement").
(b) HUBCO shall furnish CFHC with such information concerning
HUBCO and the HUBCO Subsidiaries (including, without limitation, information
regarding other transactions which HUBCO is required to disclose) as is
necessary in order to cause the Proxy Statement-Prospectus, insofar as it
relates to such corporations, to comply with Section 5.6(a) hereof. HUBCO agrees
promptly to advise CFHC if at any time prior to the Shareholders' Meeting any
information provided by HUBCO in the Proxy Statement-Prospectus becomes
incorrect or incomplete in any material respect and to provide CFHC with the
information needed to correct such inaccuracy or omission. HUBCO shall furnish
CFHC with such supplemental information as may be necessary in order to cause
the Proxy Statement-Prospectus, insofar as it relates to HUBCO and the HUBCO
Subsidiaries, to comply with Section 5.6(a) after the mailing thereof to CFHC
shareholders.
(c) CFHC shall furnish HUBCO with such information concerning
CFHC as is necessary to cause the Proxy Statement-Prospectus, insofar as it
relates to CFHC, to comply with Section 5.6(a) hereof. CFHC agrees promptly to
advise HUBCO if at any time prior to the Shareholders' Meeting, any information
provided by CFHC in the Proxy Statement-Prospectus becomes incorrect or
incomplete in any material respect and to provide HUBCO with the information
needed to correct such inaccuracy or omission. CFHC shall furnish HUBCO with
such supplemental information as may be necessary in order to cause the Proxy
Statement-Prospectus, insofar as it relates to CFHC and Community to comply with
Section 5.6(a) after the mailing thereof to CFHC shareholders.
(d) HUBCO shall as promptly as practicable make such filings
as are necessary in connection with the offering of the HUBCO Common Stock with
applicable state securities agencies and shall use all reasonable efforts to
qualify the offering of such stock under applicable state securities laws at the
earliest practicable date. CFHC shall promptly furnish HUBCO with such
information regarding the CFHC shareholders as HUBCO requires to enable it to
determine what filings are required hereunder. CFHC authorizes HUBCO to utilize
in such filings the information concerning CFHC and Community provided to HUBCO
in connection with, or contained in, the Proxy Statement-Prospectus. HUBCO shall
furnish CFHC's counsel with copies of all such filings and keep CFHC advised of
the status thereof. HUBCO and CFHC shall as promptly as practicable file the
Registration Statement containing the Proxy Statement-Prospectus with the SEC,
and each of HUBCO and CFHC shall promptly notify the other of all
communications, oral or written, with the SEC concerning the Registration
Statement and the Proxy Statement-Prospectus.
(e) HUBCO shall cause the HUBCO Common Stock issuable pursuant
to the Merger to be listed on NASDAQ at the Effective Time. HUBCO shall cause
the HUBCO Common Stock which shall be issuable pursuant to exercise of Stock
Options to be accepted for filing on the NASDAQ when issued.
(f) The parties hereto will cooperate with each other and use
their reasonable best efforts to prepare all necessary documentation, to effect
all necessary filings and to obtain all necessary permits, consents, approvals
and authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement as soon as possible,
including, without limitation, those required by the FDIC, the FRB, the OCC, the
Department and the DEP. Without limiting the foregoing, the parties shall use
reasonable business efforts to file for approval or waiver by the appropriate
bank regulatory agencies within 45 days after the date hereof. The parties shall
each have the right to review in advance (and shall do so promptly) all filings
with, including all information relating to the other, as the case may be, and
any of their respective subsidiaries, which appears in any filing made with, or
written material submitted to, any third party or Governmental Entity (including
the SEC) in connection with the transactions contemplated by this Agreement.
(g) Each of the parties will promptly furnish each other with
copies of written communications received by them or any of their respective
subsidiaries from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
(h) CFHC acknowledges that HUBCO is in or may be in the
process of acquiring other banks and financial institutions and that in
connection with such acquisitions, information concerning CFHC may be required
to be included in the registration statements, if any, for the sale of
securities of HUBCO or in SEC reports in connection with such acquisitions. CFHC
agrees to provide HUBCO with any information, certificates, documents or other
materials about CFHC as are reasonably necessary to be included in such other
SEC reports or registration statements, including registration statements which
may be filed by HUBCO prior to the Effective Time. CFHC shall use its reasonable
efforts to cause its attorneys and accountants to provide HUBCO and any
underwriters for HUBCO with any consents, comfort letters, opinion letters,
reports or information which are necessary to complete the registration
statements and applications or any such acquisition or issuance of securities.
HUBCO shall reimburse CFHC for reasonable expenses thus incurred by CFHC should
this transaction be terminated for any reason other than Section 7.1(i). HUBCO
shall not file with the SEC any registration statement or amendment thereto or
supplement thereof containing information regarding CFHC unless CFHC shall have
consented to such filing, which consent shall not be unreasonably delayed or
withheld.
5.7. Approval of Shareholders. CFHC will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
shareholders of CFHC (the "Shareholders Meeting") for the purpose of securing
the approval of shareholders of this Agreement, (ii) subject to the
qualification set forth in Section 5.3 hereof and the right not to make a
recommendation or to withdraw a recommendation if (x) its investment banker
withdraws its fairness opinion prior to the Shareholders' Meeting or (y) CFHC's
Board of Directors, after consulting with counsel, determines in the exercise of
its fiduciary duties that such recommendation should not be made or should be
withdrawn, recommend to the shareholders of CFHC the approval of this Agreement
and the transactions contemplated hereby and use its reasonable best efforts to
obtain, as promptly as practicable, such approval, and (iii) cooperate and
consult with HUBCO with respect to each of the foregoing matters.
If it becomes necessary under NASDAQ rules or applicable laws
to obtain HUBCO shareholder approval, HUBCO shall take all steps necessary to
obtain the approval of its shareholders as promptly as possible. In connection
therewith, HUBCO shall take all steps necessary to duly call, give notice and
convene a meeting of its shareholders for such purpose.
5.8. Further Assurances.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to satisfy
the conditions to Closing and to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, using reasonable
efforts to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated by this Agreement and using its reasonable best efforts to prevent
the breach of any representation, warranty, covenant or agreement of such party
contained or referred to in this Agreement and to promptly remedy the same. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
Nothing in this section shall be construed to require any party to participate
in any threatened or actual legal, administrative or other proceedings (other
than proceedings, actions or investigations to which it is a party or subject or
threatened to be made a party or subject) in connection with consummation of the
transactions contemplated by this Agreement unless such party shall consent in
advance and in writing to such participation and the other party agrees to
reimburse and indemnify such party for and against any and all costs and damages
related thereto if the Merger is not consummated.
(b) HUBCO agrees that from the date hereof to the Effective
Time, except as otherwise approved by CFHC in writing or as permitted or
required by this Agreement, HUBCO will use reasonable business efforts to
maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships, and HUBCO will not, nor will
it permit any HUBCO Subsidiary to, take any action: (i) that would result in any
of its representations and warranties contained in Article IV of this Agreement
not being true and correct in any material respect at, or prior to, the
Effective Time, or (ii) that would cause any of its conditions to Closing not to
be satisfied, or (iii) that would constitute a breach or default of its
obligations under this Agreement.
5.9. Public Announcements. HUBCO and CFHC shall cooperate with
each other in the development and distribution of all news releases and other
public filings and disclosures with respect to this Agreement or the Merger
transactions contemplated hereby, and HUBCO and CFHC agree that unless approved
mutually by them in advance, they will not issue any press release or written
statement for general circulation relating primarily to the transactions
contemplated hereby, except as may be otherwise required by law or regulation
upon the advice of counsel.
5.10. Failure to Fulfill Conditions. In the event that HUBCO
or CFHC determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to September
30, 1998 (the "Cutoff Date") and that it will not waive that condition, it will
promptly notify the other party. Except for any acquisition or merger
discussions HUBCO may enter into with other parties, CFHC and HUBCO will
promptly inform the other of any facts applicable to CFHC or HUBCO,
respectively, or their respective directors or officers, that would be likely to
prevent or materially delay approval of the Merger by any Governmental Entity or
which would otherwise prevent or materially delay completion of the Merger.
5.11. Employee Matters.
(a) Following consummation of the Merger, HUBCO agrees with
CFHC to honor the existing written contracts with officers and employees of CFHC
and Community that are included in the CFHC Disclosure Schedule.
(b) Following consummation of the Merger, the Bank intends to
make available to all employees of CFHC and Community employed by the Bank
coverage under the HUBCO Pension and Welfare Plans generally available to the
Bank's employees on the terms and conditions available to the Bank's newly hired
employees; provided, however, that credit for prior service with CFHC and/or
Community will be given for the sole purpose of determining whether such
employees are eligible to participate, and vest, when applicable, in the Bank's
medical, vacation, sick leave, disability and 401(k) plans. At HUBCO's option,
CFHC's 401(k) plan will either be frozen or merged into HUBCO's 401(k) plan; in
either event, all employer contributions to CFHC's 401(k) plan will become fully
vested as of the Effective Time.. No prior existing condition limitation shall
be imposed with respect to any medical coverage plan of the Bank.
(c) Following the consummation of the Merger, the Bank intends
to maintain Community' existing severance policy (as restated on March 2, 1998)
attached hereto as Exhibit 5.11, and recognize years of service completed while
employed by CFHC and/or Community for purposes of such policy. Following the
expiration of the foregoing severance policy, any years of service recognized
for purposes of this Section 5.11(c) will be taken into account under the terms
of any applicable severance policy of HUBCO.
5.12. Disclosure Supplements. From time to time prior to the
Effective Time, each party hereto will promptly supplement or amend (by written
notice to the other) its respective Disclosure Schedules delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Schedules or which is necessary to correct any
information in such Schedules which has been rendered materially inaccurate
thereby. For the purpose of determining satisfaction of the conditions set forth
in Article VI and subject to Sections 6.2(a) and 6.3(a), no supplement or
amendment to the parties' respective Disclosure Schedules which corrects any
representation or warranty which was untrue when made shall eliminate the other
party's right (if any) to terminate this Agreement based on the original untruth
of the representation or warranty; provided, that the other party shall be
deemed to have waived such right if it does not exercise such right within 15
days after receiving the correcting supplement or amendment.
5.13. Transaction Expenses of CFHC.
(a) For planning purposes, CFHC shall, within 15 days from the
date hereof, provide HUBCO with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by CFHC in connection with this
transaction, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. CFHC shall promptly notify HUBCO if or when it
determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, CFHC shall
ask all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements. CFHC shall accrue and/or pay
all of such amounts as soon as possible.
(c) CFHC shall advise HUBCO monthly of all out-of-pocket
expenses which CFHC has incurred in connection with this transaction.
(d) HUBCO, in reasonable consultation with CFHC, shall make
all arrangements with respect to the printing and mailing of the Proxy
Statement-Prospectus.
5.14. Indemnification
(a) For a period of six years after the Effective Time, HUBCO
shall indemnify, defend and hold harmless each person who is now, or has been at
any time prior to the date hereof or who becomes prior to the Effective Time, a
director, officer, employee or agent of CFHC or Community or serves or has
served at the request of CFHC or Community in any capacity with any other person
(collectively, the "Indemnitees") against any and all claims, damages,
liabilities, losses, costs, charges, expenses (including, without limitation,
reasonable costs of investigation, and the reasonable fees and disbursements of
legal counsel and other advisers and experts as incurred), judgments, fines,
penalties and amounts paid in settlement, asserted against, incurred by or
imposed upon any Indemnitee by reason of the fact that he or she is or was a
director, officer, employee or agent of CFHC or Community or serves or has
served at the request of CFHC or Community in any capacity with any other
person, in connection with, arising out of or relating to (i) any threatened,
pending or completed claim, action, suit or proceeding (whether civil, criminal,
administrative or investigative), including, without limitation, any and all
claims, actions, suits, proceedings or investigations by or on behalf of or in
the right of or against CFHC or Community or any of their respective affiliates,
or by any shareholder of CFHC (collectively, "Claims"), including, without
limitation, any Claim which is based upon, arises out of or in any way relates
to the Merger, this Agreement, any of the transactions contemplated by this
Agreement, the Indemnitee's service as a member of the Board of Directors of
CFHC or Community or of any committee of CFHC's or Community's Board of
Directors, the events leading up to the execution of this Agreement, any
statement, recommendation or solicitation made in connection therewith or
related thereto and any breach of any duty in connection with any of the
foregoing, or (ii) the enforcement of the obligations of HUBCO set forth in this
Section 5.14, in each case to the fullest extent which CFHC or Community would
have been permitted under any applicable law, the respective Certificate of
Incorporation of CFHC or Community and the respective By-Laws of CFHC or
Community had the Merger not occurred (and HUBCO shall also advance expenses as
incurred to the fullest extent so permitted). Notwithstanding the foregoing,
HUBCO shall not provide any indemnification not permitted by law nor shall HUBCO
advance expenses with respect to any Claim which relates to a personal benefit
improperly paid or provided, or alleged to have been improperly paid or
provided, to the Indemnitee, but HUBCO shall reimburse the Indemnitee for costs
incurred by the Indemnitee with respect to such Claim when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
become final and nonappealable, that the Indemnitee was not improperly paid or
provided with the personal benefit alleged in the Claim.
(b) From and after the Effective Time, HUBCO shall assume and
honor any obligation of CFHC or Community immediately prior to the Effective
Time with respect to the indemnification of the Indemnitees arising out of the
Certificate of Incorporation or By-Laws of CFHC or Community as if such
obligations were pursuant to a contract or arrangement between HUBCO and such
Indemnitees.
(c) In the event HUBCO or any of its successors or assigns (i)
reorganizes or consolidates with or merges into or enters into another business
combination transaction with any other person or entity and is not the
resulting, continuing or surviving corporation or entity of such consolidation,
merger or transaction, or (ii) liquidates, dissolves or transfers all or
substantially all of its properties and assets to any person or entity, then,
and in each such case, proper provision shall be made so that the successors and
assigns of HUBCO assume the obligations set forth in this Section 5.14.
(d) HUBCO shall cause CFHC's and Community's officers and
directors to be covered under HUBCO's then current officers' and directors'
liability insurance policy for a period of six years after the Effective Time,
or, in the alternative, to be covered under an extension of CFHC's and
Community's existing officers' and directors' liability insurance policy.
However, HUBCO shall only be required to insure such persons upon terms and for
coverages substantially similar to CFHC's and Community's existing officers' and
directors' liability insurance.
(e) Any Indemnitee wishing to claim indemnification under this
Section 5.14 shall promptly notify HUBCO upon learning of any Claim, but the
failure to so notify shall not relieve HUBCO of any liability it may have to
such Indemnitee if such failure does not materially prejudice HUBCO. In the
event of any Claim (whether arising before or after the Effective Time) as to
which indemnification under this Section 5.14 is applicable, (x) HUBCO shall
have the right to assume the defense thereof and HUBCO shall not be liable to
such Indemnitees for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof,
except that if HUBCO elects not to assume such defense, or counsel for the
Indemnitees advises that there are issues which raise conflicts of interest
between HUBCO and the Indemnitees, the Indemnitees may retain counsel
satisfactory to them, and HUBCO shall pay the reasonable fees and expenses of
such counsel for the Indemnitees as statements therefor are received; provided,
however, that HUBCO shall be obligated pursuant to this Section 5.14(e) to pay
for only one firm of counsel for all Indemnitees in any jurisdiction with
respect to a matter unless the use of one counsel for multiple Indemnitees would
present such counsel with a conflict of interest that is not waived, and (y) the
Indemnitees will cooperate in the defense of any such matter. HUBCO shall not be
liable for settlement of any claim, action or proceeding hereunder unless such
settlement is effected with its prior written consent. Notwithstanding anything
to the contrary in this Section 5.14, HUBCO shall not have any obligation
hereunder to any Indemnitee when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that the indemnification of such Indemnitee in the manner
contemplated hereby is prohibited by applicable law or public policy.
5.15. Notwithstanding that CFHC believes that it has
established all reserves and taken all provisions for possible loan losses
required by GAAP and applicable laws, rules and regulations, CFHC recognizes
that HUBCO may have adopted different loan, accrual and reserve policies
(including loan classifications and levels of reserves for possible loan
losses). From and after the date of this Agreement to the Effective Time and in
order to formulate the plan of integration for the Bank Merger, CFHC and HUBCO
shall consult and cooperate with each other with respect to (i) conforming to
the extent appropriate, based upon such consultation, CFHC's loan, accrual and
reserve policies and CFHC's other policies and procedures regarding applicable
regulatory matters, including without limitation Federal Reserve, the National
Bank Act, the Bank Secrecy Act and FDIC matters, to those policies of HUBCO as
HUBCO may reasonably identify to CFHC from time to time, (ii) new extensions of
credit or material revisions to existing terms of credits by Bank, in each case
where the aggregate exposure exceeds $500,000, and (iii) conforming, based upon
such consultation, the composition of the investment portfolio and overall
asset/liability management position of CFHC and Community to the extent
appropriate; provided that any required change in CFHC's practices in connection
with the matters described in clause (i) or (iii) above need not be effected
until the parties receive all necessary governmental approvals and consents to
consummate the transactions contemplated hereby,
5.16. Each of HUBCO and CFHC shall use its reasonable best
efforts to resolve such objections, if any, which may be asserted with respect
to the Merger under antitrust laws, including, without limitation, the
Hart-Scott-Rodino Act. In the event a suit is threatened or instituted
challenging the Merger as violative of antitrust laws, each of HUBCO and CFHC
shall use its reasonable best efforts to avoid the filing of, resist or resolve
such suit. HUBCO and CFHC shall use their reasonable best efforts to take such
action as may be required: (a) by the Antitrust Division of the Department of
Justice or the Federal Trade Commission in order to resolve such objections as
either of them may have to the Merger under antitrust laws, or (b) by any
federal or state court of the United States, in any suit brought by a private
party or governmental entity challenging the Merger as violative of antitrust
laws, in order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order, or other order which has the effect of
preventing the consummation of the Merger. Reasonable best efforts shall
include, but not be limited to, the proffer by HUBCO of its willingness to
accept an order agreeing to the divestiture, or the holding separate, of any
assets of HUBCO or CFHC, except to the extent that any such divestitures or
holding separate arrangement would have a material adverse effect on HUBCO. The
entry by a court, in any suit brought by a private party or governmental entity
challenging the Merger as violative of antitrust laws, of an order or decree
permitting the Merger, but requiring that any of the businesses, product lines
or assets of HUBCO or CFHC be divested or held separate thereafter shall not be
deemed a failure to satisfy the conditions specified in Section 6.1 hereof
except to the extent that any divestitures or holding separate arrangement would
have a material adverse effect on HUBCO and HUBCO shall not have voluntarily
consented to such divestitures or holding separate arrangements. For the
purposes of this Section 5.16, the divestiture or the holding separate of a
branch or branches of the Bank with, in the aggregate, less than $450,000,000 in
assets shall not be considered to have a material adverse effect on HUBCO.
5.17. Prior to the date hereof, neither HUBCO or CFHC has
taken any action or failed to take any action which would disqualify the Merger
for pooling of interests accounting treatment. Before the Effective Time,
neither HUBCO nor CFHC shall intentionally take, fail to take, or cause to be
taken or not taken any action within its control, which would disqualify the
Merger as a "pooling-of-interests" for accounting purposes or as a
"reorganization" within the meaning of Section 368(a) of the Code. Subsequent to
the Effective Time, HUBCO shall not take and shall cause the Surviving
Corporation not to take any action within their control that would disqualify
the Merger as such a "reorganization" under the Code.
5.18. HUBCO shall cause Arthur Andersen, its independent
public accountants, to deliver to CFHC, and CFHC shall cause Peat Marwick, its
independent public accountants, to deliver to HUBCO and to its officers and
directors who sign the Registration Statement for this transaction, a short-form
"comfort letter" or "agreed upon procedures" letter, dated the date of the
mailing of the Proxy Statement-Prospectus for the Shareholders Meeting of CFHC,
in the form customarily issued by such accountants at such time in transactions
of this type.
5.19. CFHC has previously delivered to HUBCO a letter
identifying all persons who, to the knowledge of CFHC, may be deemed to be
affiliates of CFHC under Rule 145 of the 1933 Act and the pooling-of-interests
accounting rules, including, without limitation, all directors and executive
officers of CFHC. Promptly, but in any event within two weeks, after the
execution and delivery of this Agreement, CFHC shall deliver to HUBCO copies of
letter agreements, each substantially in the form of Exhibit 5.19-1, executed by
each such person who has been identified by CFHC in such letter as an affiliate
of CFHC agreeing to comply with Rule 145 and to refrain from transferring shares
as required by the pooling-of-interests accounting rules. Within two weeks after
the date hereof, HUBCO shall cause its directors and executive officers to enter
into letter agreements in the form of Exhibit 5.19-2 with HUBCO concerning the
pooling-of-interests accounting rules. HUBCO hereby agrees to publish, or file a
Form 8-K, Form 10-K or Form 10-Q containing financial results covering at least
30 days of post-Merger combined operations of HUBCO and CFHC as soon as
practicable (but in no event later than 30 days) following the close of the
first calendar month ending 30 days after the Effective Time, in form and
substance sufficient to remove the restrictions set forth in paragraph "B" of
Exhibit 5.19-1.
5.20. HUBCO agrees to (i) cause Robert T. Pluese to be
appointed to the Board of Directors of the Surviving Bank and to use its best
efforts to cause Mr. Pluese to be re-elected to the Board of the Surviving Bank
for a period of three years, (ii) cause each director of Community to be
appointed as a member of an advisory board of the New Division for a period of
three years and cause each such member to receive fees for service on the
advisory board equal to $4,500.00 annually and (iii) cause Gerard M. Banmiller
to be appointed as Regional President of the New Division.
ARTICLE VI - CLOSING CONDITIONS
6.1. Conditions to Each Party's Obligations Under this
Agreement. The respective obligations of each party under this Agreement to
consummate the Merger shall be subject to the satisfaction, or, where
permissible under applicable law, waiver at or prior to the Effective Time of
the following conditions:
(a) Approval of CFHC Shareholders; SEC Registration. This
Agreement and the transactions contemplated hereby shall have been approved by
the requisite vote of the shareholders of CFHC. The HUBCO Registration Statement
shall have been declared effective by the SEC and shall not be subject to a stop
order or any threatened stop order, and the issuance of the HUBCO Common Stock
shall have been qualified in every state where such qualification is required
under the applicable state securities laws.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the FDIC, the Department, the FRB, the OCC, the SEC and the DEP)
required to consummate the transactions contemplated hereby shall have been
obtained without any term or condition which would materially impair the value
of CFHC and Community, taken as a whole, to HUBCO. All conditions required to be
satisfied prior to the Effective Time by the terms of such approvals and
consents shall have been satisfied; and all statutory waiting periods in respect
thereof (including the Hart-Scott-Rodino waiting period if applicable) shall
have expired.
(c) Suits and Proceedings. No order, judgment or decree shall
be outstanding against a party hereto or a third party that would have the
effect of preventing completion of the Merger; no suit, action or other
proceeding shall be pending or threatened by any governmental body in which it
is sought to restrain or prohibit the Merger; and no suit, action or other
proceeding shall be pending before any court or governmental agency in which it
is sought to restrain or prohibit the Merger or obtain other substantial
monetary or other relief against one or more parties hereto in connection with
this Agreement and which HUBCO or CFHC determines in good faith, based upon the
advice of their respective counsel, makes it inadvisable to proceed with the
Merger because any such suit, action or proceeding has a significant potential
to be resolved in such a way as to deprive the party electing not to proceed of
any of the material benefits to it of the Merger.
(d) Tax Opinion. HUBCO shall have received an opinion, dated
as of the Effective Time, of Pitney, Hardin, Kipp & Szuch, reasonably
satisfactory in form and substance to HUBCO, and CFHC shall have received an
opinion, dated as of the Effective Time, of Stevens & Lee reasonably
satisfactory in form and substance to CFHC, in each case based upon
representation letters reasonably required by such counsel, dated on or about
the date of such opinion, and such other facts and representations as such
counsel may reasonably deem relevant, to the effect that
(i) the Merger will be treated for federal income tax purposes
as a reorganization qualifying under the provisions of Section
368 of the Code; (ii) no gain or loss will be recognized by
CFHC; (iii) no gain or loss will be recognized by the holders
of CFHC Common Stock upon the exchange of CFHC Common Stock
solely for HUBCO Common Stock; (iv) the tax basis of any HUBCO
Common Stock received in exchange for CFHC Common Stock shall
equal the basis of the recipient's CFHC Common Stock
surrendered on the exchange, reduced by the amount of cash
received, if any, on the exchange, and increased by the amount
of the gain recognized, if any, on the exchange (whether
characterized as dividend or capital gain income); and (v) the
holding period for any HUBCO Common Stock received in exchange
for CFHC Common Stock will include the period during which
CFHC Common Stock surrendered on the exchange was held,
provided such stock was held as a capital asset on the date of
the exchange.
(e) Pooling of Interests. HUBCO shall have received a letter,
dated the Closing Date, from its accountants, Arthur Andersen, reasonably
satisfactory to HUBCO and CFHC, to the effect that the Merger shall be qualified
to be treated by HUBCO as a pooling-of-interests for accounting purposes.
6.2. Conditions to the Obligations of HUBCO Under this
Agreement. The obligations of HUBCO under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of Obligations
of CFHC and Community. Except for those representations which are made as of a
particular date, the representations and warranties of CFHC contained in this
Agreement shall be true and correct in all material respects on the Closing Date
as though made on and as of the Closing Date. CFHC shall have performed in all
material respects the agreements, covenants and obligations to be performed by
it prior to the Closing Date. With respect to any representation or warranty
which as of the Closing Date has required a supplement or amendment to the CFHC
Disclosure Schedule to render such representation or warranty true and correct
in all material respects as of the Closing Date, the representation and warranty
shall be deemed true and correct as of the Closing Date only if (i) the
information contained in the supplement or amendment to the Disclosure Schedule
related to events occurring following the execution of this Agreement and (ii)
the facts disclosed in such supplement or amendment would not either alone, or
together with any other supplements or amendments to the CFHC Disclosure
Schedule, materially adversely affect the representation as to which the
supplement or amendment relates.
(b) Opinion of Counsel. HUBCO shall have received an opinion
of counsel to CFHC, dated the Closing Date, in form and substance reasonably
satisfactory to HUBCO, substantially in accordance with Exhibit 6.2(b) hereto.
(c) Certificates. CFHC shall have furnished HUBCO with such
certificates of its officers or other documents to evidence fulfillment of the
conditions set forth in this Section 6.2 as HUBCO may reasonably request.
(d) Legal Fees. CFHC shall have furnished HUBCO with letters
from all attorneys representing CFHC and Community in any matters confirming
that all legal fees have been paid in full for services rendered as of the
Effective Time.
(e) Merger Related Expense. CFHC shall have provided HUBCO
with an accounting of all merger related expenses incurred by it through the
Closing Date, including a good faith estimate of such expenses incurred but as
to which invoices have not been submitted as of the Closing Date.
6.3. Conditions to the Obligations of CFHC Under this
Agreement. The obligations of CFHC under this Agreement shall be further subject
to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of Obligations
of HUBCO. Except for those representations which are made as of a particular
date, the representations and warranties of HUBCO contained in this Agreement
shall be true and correct in all material respects on the Closing Date as though
made on and as of the Closing Date. HUBCO shall have performed in all material
respects, the agreements, covenants and obligations to be performed by it prior
to the Closing Date. With respect to any representation or warranty which as of
the Closing Date has required a supplement or amendment to the HUBCO Disclosure
Schedule to render such representation or warranty true and correct in all
material respects as of the Closing Date, the representation and warranty shall
be deemed true and correct as of the Closing Date only if (i) the information
contained in the supplement or amendment to the Disclosure Schedule related to
events occurring following the execution of this Agreement and (ii) the facts
disclosed in such supplement or amendment would not either alone, or together
with any other supplements or amendments to the HUBCO Disclosure Schedule,
materially adversely effect the representation as to which the supplement or
amendment relates.
(b) Opinion of Counsel to HUBCO. CFHC shall have received an
opinion of counsel to HUBCO, dated the Closing Date, in form and substance
reasonably satisfactory to CFHC, substantially in accordance with Exhibit 6.3(b)
hereto.
(c) Fairness Opinion. CFHC shall have received an opinion from
Berwind, dated no more than three days prior to the date the Proxy
Statement-Prospectus is mailed to CFHC's shareholders (and if it shall become
necessary to resolicit proxies thereafter, dated no more than three days prior
to the date of any substantive amendment to the Proxy Statement-Prospectus), to
the effect that, in its opinion, the consideration to be paid to shareholders of
CFHC hereunder is fair to such shareholders from a financial point of view
("Fairness Opinion").
(d) Certificates. HUBCO shall have furnished CFHC with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 6.3 as CFHC may
reasonably request.
(e) Officer and Director. Robert T. Pluese shall be appointed
by the Board of Directors of the Bank to the Surviving Bank's Board of Directors
and Gerard M. Banmiller shall be appointed as Regional President of the New
Division, effective at the Effective Time.
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1. This Agreement may be terminated prior to the Effective
Time, whether before or after approval of this Agreement by the shareholders of
CFHC:
(a) by mutual written consent of the parties hereto;
(b) by HUBCO or CFHC (i) if the Effective Time shall not have
occurred on or prior to the Cutoff Date unless the failure of such occurrence
shall be due to the failure of the party seeking to terminate this Agreement to
perform or observe its agreements set forth herein to be performed or observed
by such party at or before the Effective Time, or (ii) if a vote of the
shareholders of CFHC is taken and such shareholders fail to approve this
Agreement at the meeting (or any adjournment or postponement thereof) held for
such purpose, or (iii) if a vote of the shareholders of HUBCO is required by
applicable NASDAQ rules, such vote is taken and such shareholders fail to
approve this Agreement at the meeting (or any adjournment or postponement
thereof) held for such purpose;
(c) by HUBCO or CFHC upon written notice to the other if any
application for regulatory or governmental approval necessary to consummate the
Merger and the other transactions contemplated hereby shall have been denied or
withdrawn at the request or recommendation of the applicable regulatory agency
or Governmental Entity or by HUBCO upon written notice to CFHC if any such
application is approved with conditions (other than conditions which are
customary in such regulatory approvals) which would have a Material Adverse
Effect on HUBCO;
(d) by HUBCO if (i) there shall have occurred a change in the
business, operations, assets, or financial condition of CFHC and Community,
taken as a whole, from that disclosed by CFHC in CFHC's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997 which change shall have resulted
in a material adverse effect on CFHC or (ii) there was a material breach in any
representation, warranty, covenant, agreement or obligation of CFHC hereunder
and such breach shall not have been remedied within 30 days after receipt by
CFHC of notice in writing from HUBCO to CFHC specifying the nature of such
breach and requesting that it be remedied, provided, that those matters
disclosed in the CFHC Disclosure Schedule shall not be deemed to have caused
such a material adverse effect and for the purposes of this Section 7.1(d) only,
the term material adverse effect shall not be deemed to include the impact of
any changes in the business, operations, assets or financial condition of CFHC
or Community, taken as a whole, resulting from (x) changes in interest rates and
economic conditions affecting banking institutions generally, (y) changes in
banking and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, and (z) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to banks
and bank holding companies;
(e) by CFHC, if (i) there shall have occurred a change in the
business, operations, assets or financial condition of HUBCO and the HUBCO
Subsidiaries taken as a whole from that disclosed by HUBCO in HUBCO's Annual
Report on Form 10-K for the year ended December 31, 1996 and Quarterly Report on
Form 10-Q for the nine month period ending September 30, 1997 except for the
Effects of Announced Acquisitions, which change shall have resulted in a
material adverse effect on HUBCO (it being understood that those matters
disclosed in the HUBCO Disclosure Schedule shall not be deemed to have caused
such a material adverse effect); or (ii) there was a material breach in any
representation, warranty, covenant, agreement or obligation of HUBCO hereunder
and such breach shall not have been remedied within 30 days after receipt by
HUBCO of notice in writing from CFHC specifying the nature of such breach and
requesting that it be remedied, provided, that those matters disclosed in the
HUBCO Disclosure Schedule shall not be deemed to have caused such a material
adverse effect and for the purposes of this Section 7.1(e) only, the term
material adverse effect shall not be deemed to include the impact of any changes
in the business, operations, assets or financial condition of HUBCO or the Bank,
taken as a whole, resulting from (x) changes in interest rates and economic
conditions affecting banking institutions generally, (y) changes in banking and
similar laws of general applicability or interpretations thereof by courts or
governmental authorities, and (z) changes in generally accepted accounting
principles or regulatory accounting requirements applicable to banks and bank
holding companies;
(f) by CFHC, if CFHC's Board of Directors shall have approved
an Acquisition Transaction after determining, upon advice of counsel, that such
approval was necessary in the exercise of its fiduciary obligations under
applicable laws;
(g) by HUBCO if the conditions set forth in Section 6.2 are
not satisfied and are not capable of being satisfied by the Cutoff Date; or
(h) by CFHC if the conditions set forth in Section 6.3 are not
satisfied and are not capable of being satisfied by the Cutoff Date;
(i) by CFHC, in accordance with Section 2.1(a).
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either HUBCO or CFHC pursuant to Section
7.1, this Agreement (other than Section 5.5(b), the penultimate sentence of
Section 5.6(h), this Section 7.2 and Section 8.1) shall forthwith become void
and have no effect, without any liability on the part of any party or its
officers, directors or shareholders. Nothing contained herein, however, shall
relieve any party from any liability for any breach of this Agreement.
7.3. Amendment. This Agreement may be amended by action taken
by the parties hereto at any time before or after adoption of this Agreement by
the shareholders of CFHC but, after any such adoption, no amendment shall be
made which reduces the amount or changes the form of the consideration to be
delivered to the shareholders of CFHC without the approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties hereto.
7.4. Extension; Waiver. The parties may, at any time prior to
the Effective Time of the Merger, (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party against which the waiver is
sought to be enforced.
ARTICLE VIII - MISCELLANEOUS
8.1. Expenses.
(a) Except as otherwise expressly stated herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including legal, accounting and investment banking fees and
expenses) shall be borne by the party incurring such costs and expenses.
Notwithstanding the foregoing, HUBCO shall bear all expenses of the financial
printer in connection with the Registration Statement and the Proxy
Statement-Prospectus and HUBCO may bear the expenses of the Bank and CFHC may
bear the expenses of Community.
(b) Notwithstanding any provision in this Agreement to the
contrary, in the event that either of the parties shall willfully default in its
obligations hereunder, the non-defaulting party may pursue any remedy available
at law or in equity to enforce its rights and shall be paid by the willfully
defaulting party for all damages, costs and expenses, including without
limitation legal, accounting, investment banking and printing expenses, incurred
or suffered by the non-defaulting party in connection herewith or in the
enforcement of its rights hereunder.
8.2. Survival. The respective representations, warranties,
covenants and agreements of the parties to this Agreement shall not survive the
Effective Time, but shall terminate as of the Effective Time, except for Article
II, this Section 8.2 and Sections 5.5(b), 5.8(a) and 5.14.
8.3. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by reputable overnight courier or sent by registered or certified
mail, postage prepaid, as follows:
(a) If to HUBCO, to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: Kenneth T. Neilson, President and
Chief Executive Officer
Copy to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: D. Lynn Van Borkulo-Nuzzo, Esq.
And copy to:
Pitney, Hardin, Kipp & Szuch
(mail to) P.O. Box 1945
Morristown, NJ 07962
(deliver to) 200 Campus Drive
Florham Park, NJ 07932
Attn.: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
(b) If to CFHC, to:
Community Financial Holding Company
222 Haddon Avenue
Westmont, NJ 08108
Attn.: Robert T. Pluese, Chairman
Copy to:
Stevens & Lee
1415 Route 70 East, Suite 506
Cherry Hill, NJ 08034
Attn.: Jeffrey P. Waldron, Esq.
Edward C. Hogan, Esq.
or such other addresses as shall be furnished in writing by any party, and any
such notice or communications shall be deemed to have been given as of the date
actually received.
8.4. Parties in Interest; Assignability. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement except the Indemnitees described
in Section 5.14. This Agreement and the rights and obligations of the parties
hereunder may not be assigned.
8.5. Entire Agreement. This Agreement, which includes the
Disclosure Schedules hereto and the other documents, agreements and instruments
executed and delivered pursuant to or in connection with this Agreement,
contains the entire Agreement between the parties hereto with respect to the
transactions contemplated by this Agreement and supersedes all prior
negotiations, arrangements or understandings, written or oral, with respect
thereto, other than any confidentiality agreements entered into by the parties
hereto.
8.6. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
8.7. Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey, without giving effect to the principles of
conflicts of laws thereof.
8.8. Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
<PAGE>
IN WITNESS WHEREOF, HUBCO, the Bank, CFHC and Community have
caused this Agreement to be executed by their duly authorized officers as of the
day and year first above written.
ATTEST: HUBCO, INC.
D. LYNN VAN BORKULO-NUZZO KENNETH T. NEILSON
By:____________________________ By:___________________________
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, President
Secretary and Chief Executive Officer
ATTEST: COMMUNITY FINANCIAL
HOLDING CORPORATION
KAREN L. KUTCHER GERARD M. BANMILLER
By:____________________________ By:_________________________________
Karen L. Kutcher Gerard M. Banmiller, President
Title: Executive Vice President
and Chief Operating Officer
ATTEST: HUDSON UNITED BANK
D. LYNN VAN BORKULO-NUZZO KENNETH T. NEILSON
By:____________________________ By:_________________________________
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, President
Secretary and Chief Executive Officer
ATTEST: COMMUNITY NATIONAL BANK
KAREN L. KUTCHER GERARD M. BANMILLER
By:____________________________ By:_________________________________
Karen L. Kutcher Gerard M. Banmiller, President
Title: Executive Vice President
and Chief Operating Officer
<PAGE>
CERTIFICATE OF THE DIRECTORS OF COMMUNITY FINANCIAL HOLDING CORPORATION
AND COMMUNITY NATIONAL BANK
Reference is made to the Agreement and Plan of Merger, dated
as of March 2, 1998 (the "Agreement"), among HUBCO, Inc., Hudson United Bank,
Community Financial Holding Corporation and Community National Bank. Capitalized
terms used herein have the meanings given to them in the Agreement.
Each of the following persons, being all of the directors of
CFHC and Community, agrees to vote or cause to be voted all shares of CFHC
Common Stock which are held by such person, or over which such person exercises
full voting control, in favor of the Merger, unless prior to such vote CFHC's
Board of Directors makes the determination described in clause (y) of Section
5.7 of the Agreement.
ELIZABETH BURNS FRANK SMITH
- --------------------------------- ------------------------------------
Elizabeth Burns Frank Smith
MICHAEL BRENNAN MARVIN SAMSON
- --------------------------------- ------------------------------------
Michael Brennan Marvin Samson
GERALD DEFELICIS ROBERT T. PLUESE
- --------------------------------- ------------------------------------
Gerald DeFelicis Robert T. Pluese
LETITIA COLUMBI DORIS DAMM
- --------------------------------- ------------------------------------
Letitia Colombi Doris Damm
GERARD M. BENMILLER JOSEPH RIGGS
- --------------------------------- ------------------------------------
Gerard M. Benmiller Joseph Riggs
Dated: As of March 2, 1998
<PAGE>
EXHIBIT 5.11
COMMUNITY NATIONAL BANK
OFFICER AND STAFF SEVERANCE POLICY
(restated March 2, 1998)
If an employee employed as of the date of the close of business on
March 2, 1998 is terminated within 14 months subsequent to the consummation of
the merger between CFHC and HUBCO, other than (i) termination for cause, death,
disability, retirement or voluntary termination on the part of the employee, or
(ii) termination of an employee covered under an employment agreement with CFHC
or HUBCO, then said employee shall be entitled to the following lump sum
payment, subject to applicable withholding, at the date of termination:
Full Time Staff:
5 or more Years of Service at Time of Termination - 2 weeks Salary for
each Year of Service
0 to 5 Years of Service at Time of Termination - 1 week Salary for each
one Year of Service
Part Time Staff:
Same as above except based on hours worked
For the purpose of this Officer and Staff Severance Policy,
the term "termination for cause" shall mean a termination upon ten days written
notice to the employee as a result of the employee's (i) willful misconduct,
(ii) intentional breach of fiduciary duty involving personal profit, (iii)
intentional refusal to perform material stated duties, (iv) willful violation of
any law, rule, or regulation (other than traffic violations or similar offenses)
or final cease-and-desist order.
<PAGE>
EXHIBIT 1.7
SUBSIDIARY AGREEMENT AND PLAN OF MERGER
This Subsidiary Agreement and Plan of Merger (this
"Agreement") is dated as of March __, 1998, among HUDSON UNITED BANK (the
"Bank"), a New Jersey state-chartered banking corporation and a wholly-owned
subsidiary of HUBCO, Inc., a New Jersey corporation ("Parent"), and COMMUNITY
NATIONAL BANK ("Community"), a federally-chartered banking association and a
wholly-owned subsidiary of Community Financial Holding Corporation, a New Jersey
corporation ("CFHC"). The principal office of the Bank is located at 3100
Bergenline Avenue, Union City, New Jersey. The Bank has capital of $________,
divided into _______ shares of common stock, each of par value $___ per share
(the "Bank Common Stock"), capital surplus of $________ and undivided profits,
including capital reserves, of $_________, as of December 31, 1997. The
principal office of Community is located at ________________________________,
New Jersey. Community has capital of $_________ divided into ____ shares of
common stock, each of $____ par value (the "Community Common Stock"), capital
surplus of $_________ and undivided profits, including capital reserves, of
$_________, as of December 31, 1997.
WHEREAS, the respective Board of Directors of Parent, CFHC,
the Bank and Community has approved, and deem it advisable and in the best
interests of their respective shareholders to consummate, the business
combination transaction between Parent and CFHC set forth in the Agreement and
Plan of Merger, dated as of February __, 1998 (the "Parent Merger Agreement"),
by and among Parent, CFHC, the Bank and Community, pursuant to which CFHC will
merge with and into Parent (the "Parent Merger"); and
WHEREAS, not less than a majority of each of the Boards of
Directors of the Bank and Community have approved, and deem it advisable to
consummate, the subsidiary merger provided for herein (the "Subsidiary Merger")
and in the Parent Merger Agreement, in accordance with the provisions of
applicable law;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Parent Merger Agreement, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Subsidiary Merger. Subject to the
provisions of this Agreement, the Subsidiary Merger shall become effective in
accordance with the terms of the Certificate of Merger pursuant to N.J.S.A.
17:9A-137 (the "Certificate of Merger") which shall be filed with the New Jersey
Department of Banking and Insurance (the "Banking Department") and the written
notice regarding the consummation of the Subsidiary Merger (the "Notice") which
shall be filed with the Office of the Comptroller of the Currency (the "OCC")
immediately following the Effective Time (as defined in Section 1.6 of the
Parent Merger Agreement). The term "Subsidiary Merger Effective Time" shall be
the date and time when the Subsidiary Merger becomes effective, as set forth in
the Certificate of Merger and the Notice.
1.2 Closing. Notwithstanding anything to the contrary
contained in the Parent Merger Agreement, the closing of the Subsidiary Merger
will take place immediately subsequent to the Parent Merger on the date and at
the location specified in the Parent Merger Agreement with respect to the Parent
Merger or at such other time, date or place as may be agreed to by the parties
hereto (the "Closing Date").
1.3. Effect of the Subsidiary Merger.
(a) At the Subsidiary Merger Effective Time:
(i) the separate existence of Community shall cease
and Community shall be merged with and into the Bank (the Bank is sometimes
referred to as herein as the "Surviving Bank"), except that at the Effective
Time the business of Community shall be operated as a division of the Surviving
Bank called "Community National Division of Hudson United Bank" or such other
similar name as agreed to by the parties (the "New Division");
(ii) the Certificate of Incorporation of the Bank as
in effect immediately prior to the Subsidiary Merger Effective Time shall be the
Certificate of Incorporation of the Surviving Bank until duly amended in
accordance with applicable law, and the name of the Surviving Bank shall be
Hudson United Bank;
(iii) the Bylaws of the Bank as in effect immediately
prior to the Subsidiary Merger Effective Time shall be the Bylaws of the
Surviving Bank;
(iv) the main office and branch offices of the Bank
established and authorized immediately prior to the Subsidiary Merger Effective
Time and listed on Exhibit A attached hereto and the main office and branch
offices of Community established and authorized immediately prior to the
Subsidiary Merger Effective Time and listed on Exhibit B attached hereto shall
become established and authorized branch offices of the Surviving Bank;
(v) the directors of the Bank immediately prior to
the Subsidiary Merger Effective Time and Robert T. Pluese who will be appointed
by the Bank at the Subsidiary Merger Effective Time, shall be the directors of
the Surviving Bank, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Bank until their respective successors
are duly elected or appointed and qualified (the names of the directors of the
Surviving Bank are listed on Exhibit C attached hereto);
(vi) the executive officers of the Bank immediately
prior to the Subsidiary Merger Effective Time shall be the executive officers of
the Surviving Bank, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Bank until their respective successors
are duly elected or appointed and qualified (the names of the executive officers
of the Surviving Bank are listed on Exhibit D attached hereto); and
(vii) an advisory board to the New Division shall be
created and such other appointments shall be made pursuant to Section 5.20 of
the Parent Merger Agreement
(b) At and after the Subsidiary Merger Effective
Time, the Subsidiary Merger shall have all the effects set forth in N.J.S.A.
17:9A-139 and 12 U.S.C. 214a and, in connection therewith, all assets of the
Bank and Community as they exist at the Subsidiary Merger Effective Time shall
pass to and vest in the Surviving Bank without any conveyance or other transfer.
The Surviving Bank shall be responsible for all liabilities and obligations of
every kind and description of each of Community and the Bank existing as of the
Subsidiary Merger Effective Time, whether matured or unmatured, accrued,
absolute, contingent or otherwise, and whether or not reflected or reserved
against on balance sheets, books of account or records of Community or the Bank.
(c) The business of the Surviving Bank shall be that
of a New Jersey banking corporation, which shall be conducted as its
headquarters or main office at 3100 Bergenline Avenue, Union City, New Jersey
and its established and authorized branch offices which are listed on Exhibits A
and B.
ARTICLE II
EFFECT OF THE SUBSIDIARY MERGER ON THE CAPITAL
OF THE CONSTITUENT BANKS; EXCHANGE OF CERTIFICATES
2.1 Effect on Community Capital Stock. At the Subsidiary
Merger Effective Time, by virtue of the Subsidiary Merger and without any action
on the part of the holder of any shares of Community Common Stock, all shares of
Community Common Stock (other than shares of Community Common Stock that are
owned by Community as treasury stock) shall become and be converted into the
right to receive that number of shares of common stock, __ par value of the Bank
as shall in the aggregate have a fair market value equal to the fair market
value of the shares of Community Common Stock being exchanged at the Subsidiary
Merger Effective Time. All shares of Community Common Stock that are owned by
Community as treasury stock shall automatically be canceled and retired and
shall cease to exist and no stock of the Bank or other consideration shall be
delivered in exchange therefor.
2.2 The Bank Common Stock. The shares of the Bank Common Stock
issued and outstanding immediately prior to the Subsidiary Merger Effective Time
shall remain outstanding and unchanged after the Subsidiary Merger.
2.3 Capital of Surviving Bank. The amount of capital stock of
the Surviving Bank immediately following the Subsidiary Merger Effective Time
shall be $_________, divided into ________ shares of common stock, each of $____
par value, and immediately following the Subsidiary Merger Effective Time, the
Surviving Bank shall have a surplus of $_________ and undivided profits,
including capital reserves, which, when combined with the capital and surplus,
will be equal to the combined capital structures of Community and the Bank
referred to in the preamble of this Agreement, adjusted, however, for normal
earnings and expenses between December 31, 1997 and the Subsidiary Merger
Effective Time.
ARTICLE III
COVENANTS
3.1 Covenants of the Bank and Community. During the period
from the date of this Agreement and continuing until the Subsidiary Merger
Effective Time, each of the parties hereto agrees to observe and perform all
agreements and covenants of Parent, CFHC, the Bank and Community in the Parent
Merger Agreement that pertain or are applicable to the Bank and Community,
respectively. Each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
subject to and in accordance with the applicable provisions of the Parent Merger
Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Each Party's Obligation To Effect the
Subsidiary Merger. The respective obligations of each party to effect the
Subsidiary Merger shall be subject to the satisfaction prior to the Closing Date
of the following conditions:
(a) Satisfaction of Conditions. Each condition to
consummation of the Parent Merger contained in the Parent Merger Agreement shall
have been satisfied (or waived by the party or parties entitled to assert such
condition), and each party shall have received a certificate from the other
party to the effect that all of the conditions to its obligation to consummate
the Parent Merger contained in the Parent Merger Agreement have been satisfied
or waived.
(b) No Injunctions or Restraints; Illegality. No
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Subsidiary Merger shall be in effect. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, restricts or makes illegal
the consummation of the Subsidiary Merger.
(c) Shareholder Approvals. This Agreement and the
transactions contemplated hereby shall have been duly approved, ratified and
confirmed in accordance with applicable law and the respective certificate of
incorporation and By-Laws of Community and the Bank by the affirmative vote of
the shareholders of Community and the Bank, such vote adopted at a meeting of
each such sole shareholder or by each such shareholder's written consent in lieu
thereof.
(d) Other Approvals. Other than the filings and
approvals provided for by Section 1.1, all requisite regulatory approvals
relating to the Subsidiary Merger shall have been filed, occurred or been
obtained and shall continue to be in full force and effect. In addition, all
consents, approvals and permits of and notices to non-governmental third parties
that are necessary to consummate the Subsidiary Merger shall have been filed,
occurred or been obtained and shall continue to be in full force and effect.
ARTICLE V
TERMINATION AND AMENDMENT
5.1 Termination. This Agreement shall be terminated
immediately and without any action on the part of Community or the Bank upon
termination of the Parent Merger Agreement. This Agreement may be terminated at
any time prior to the Subsidiary Merger Effective Time by mutual consent of the
Bank and Community in a written instrument, if the Board of Directors of each so
determines by a vote of a majority of the members of its entire board.
5.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 5.1, this Agreement shall forthwith become void
and there shall be no liability or obligation under this Agreement on the part
of the Bank, Community or their respective officers, directors or affiliates.
5.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
ARTICLE VI
GENERAL PROVISIONS
6.1 Definitions. All capitalized terms which are used but not
defined herein shall have the meanings set forth in the Parent Merger Agreement.
6.2 Nonsurvival of Agreements. None of the agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except to the extent set forth in the Parent Merger
Agreement.
6.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the Bank or Community, respectively, at the addresses for
notices to Parent or CFHC, respectively, as set forth in the Parent Merger
Agreement, with copies to the persons referred to therein.
6.4 Counterparts. This Agreement may be adopted, certified and
executed in separate counterparts, each of which shall be considered one and the
same agreement and shall become effective when all counterparts have been signed
by each of the parties and delivered to the other party, it being understood
that both parties need not sign the same counterpart.
6.5 Entire Agreement. Except as otherwise set forth in this
Agreement or the Parent Merger Agreement (including the documents and the
instruments referred to herein or therein), this Agreement constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
6.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New Jersey without regard
to any applicable conflicts of law.
6.7 Binding Effect. This Agreement is intended to be binding
on any successors of the parties.
6.8 Assignment. Except as provided herein, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party.
<PAGE>
IN WITNESS WHEREOF, the Bank and Community have caused this
Agreement to be signed by their duly authorized officers, under the respective
seal of such entities, all as of the date first above written.
ATTEST HUDSON UNITED BANK
- ------------------------------ ----------------------------------
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, President and Chief
Secretary Executive Officer
ATTEST COMMUNITY NATIONAL BANK
- ------------------------------ ----------------------------------
By: Karen L. Kutcher Gerard M. Banmiller, President
Title: Executive Vice President
and Chief Operating Officer
<PAGE>
EXHIBIT A
Names and Locations of the Main Office and Branch Offices of the Bank
<PAGE>
EXHIBIT B
Names and Locations of the Main Office and Branch Offices of Community
<PAGE>
EXHIBIT C
Names of the Directors of the Surviving Bank
<PAGE>
EXHIBIT D
Names of the Executive Officers of the Surviving Bank
<PAGE>
EXHIBIT 5.19-1
FORM OF CFHC AFFILIATE LETTER
March __, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed acquisition (the "Merger") of Community Financial Holding Corporation
(the "Company"), by HUBCO, Inc., a New Jersey corporation and registered bank
holding company ("HUBCO"), pursuant to the Agreement and Plan of Merger dated
March 2, 1998 (the "Agreement") between the Company, its bank subsidiary, HUBCO
and its bank subsidiary. Capitalized terms used herein and not otherwise defined
have the meanings assigned to them in the Agreement. I currently own shares of
CFHC Common Stock. As a result of the Merger, I will receive shares of HUBCO
Common Stock in exchange for my CFHC Common Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of the Company, as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations promulgated under the Securities Act of 1933, as amended (the "1933
Act") by the Securities and Exchange Commission ("SEC") and as the term
"affiliate" is used for purposes of the SEC's rules and regulations applicable
to the determination of whether a merger can be accounted for as a "pooling of
interests" as specified in the SEC's Accounting Series Release 135, as amended
by Staff Accounting Bulletins Nos. 65 and 76 ("ASR 135").
I represent to and agree with HUBCO that:
A. Transfer Review Restrictions. During the period beginning
on the date hereof and ending 30 days prior to the consummation of the Merger, I
shall not sell, transfer, reduce my risk with respect to or otherwise dispose of
("transfer") any CFHC Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control, to
transfer any CFHC Common Stock owned by such person or entity, without notifying
HUBCO in advance of the proposed transfer and giving HUBCO a reasonable
opportunity to review the transfer before it is consummated. HUBCO, if advised
to do so by its independent public accountants in writing a copy of which is
provided to me, may instruct me not to make or permit the transfer because it
may interfere with the "pooling of interests" treatment of the Merger. I shall
abide by any such instructions.
B. Transfer Restrictions During Merger Consummation Period. I
shall not transfer any CFHC Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control, to
transfer any CFHC Common Stock owned by such person or entity during the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUBCO by means of the filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, as amended, the issuance of
a quarterly earnings report, or any other public issuance which satisfies the
requirements of ASR 135. For purposes of this paragraph only, "CFHC Common
Stock" includes HUBCO Common Stock as converted.
C. Compliance with Rule 145. I have been advised that the
issuance of HUBCO Common Stock to me pursuant to the Merger will be registered
with the SEC under the 1933 Act on a Registration Statement on Form S-4.
However, I have also been advised that, since I may be deemed to be an affiliate
of the Company at the time the Merger is submitted for a vote of the Company's
shareholders, any transfer by me of HUBCO Common Stock is restricted under Rule
145 promulgated by the SEC under the 1933 Act. I agree not to transfer any HUBCO
Common Stock received by me or any of my affiliates unless (i) such transfer is
made in conformity with the volume and other limitations of Rule 145 promulgated
by the SEC under the 1933 Act, (ii) in the opinion of HUBCO's counsel or counsel
reasonably acceptable to HUBCO, such transfer is otherwise exempt from
registration under the 1933 Act or (iii) such transfer is registered under the
1933 Act.
D. Stop Transfer Instructions; Legend on Certificates. I also
understand and agree that stop transfer instructions will be given to HUBCO's
transfer agents with respect to the HUBCO Common Stock received by me and any of
my affiliates and that there will be placed on the certificates of the HUBCO
Common Stock issued to me and any of my affiliates, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED MARCH 2,
1998 BETWEEN THE REGISTERED HOLDER HEREOF AND HUBCO, INC., A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF HUBCO, INC."
E. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for the Company.
Execution of this letter is not an admission on my part that I
am an "affiliate" of the Company as described in the second paragraph of this
letter, or a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter. This letter shall
terminate concurrently with any termination of the Agreement in accordance with
its terms.
Very truly yours,
-----------------------------
Name:
Accepted this _____
day of _______, 199__ by
HUBCO, INC.
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 5.19-2
FORM OF AFFILIATE LETTER FOR HUBCO AFFILIATES
March __, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of Community Financial Holding Corporation
("CFHC") with and into HUBCO, Inc., a New Jersey corporation and registered bank
holding company ("HUBCO"), pursuant to the Agreement and Plan of Merger dated
March 2, 1998 (the "Agreement") between CFHC, its bank subsidiary, HUBCO and its
bank subsidiary. I currently own shares of HUBCO's common stock, no par value
("HUBCO Common Stock").
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of HUBCO, as the term "affiliate" is used for
purposes of the rules and regulations of the Securities and Exchange Commission
(the "SEC") applicable to the determination of whether a merger can be accounted
for as a "pooling of interests" as specified in the SEC's Accounting Series
Release 135, as amended by Staff Accounting Bulletins Nos.
65 and 76 ("ASR 135").
I represent and covenant with HUBCO and CFHC that:
A. Transfer Restrictions Prior to Merger Consummation. During
the period beginning on the date hereof and ending 30 days prior to the
consummation of the Merger, I shall not sell, transfer, reduce my risk with
respect to or otherwise dispose of ("transfer") any HUBCO Common Stock owned by
me, and I shall not permit any relative who shares my home, or any person or
entity who or which I control, from transferring any HUBCO Common Stock owned by
such person or entity, without notifying HUBCO in advance of the proposed
transfer and giving HUBCO a reasonable opportunity to object to the transfer
before it is consummated. HUBCO, upon advice of its independent public
accountants, may instruct me not to make or permit the transfer because it may
interfere with the "pooling of interests" treatment of the Merger. I shall abide
by any such instructions.
B. Post-Consummation Transfer Restrictions. During the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUBCO by means of filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, the issuance of a quarterly
earnings report, or any other public issuance which satisfies the requirements
of ASR 135, I shall not transfer any HUBCO Common Stock owned by me, and I shall
not permit any relative who shares my home, or any person or entity who or which
I control, to transfer any HUBCO Common Stock owned by such person or entity.
C. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for HUBCO.
Execution of this letter is not an admission on my part that I
am an "affiliate" of HUBCO as described in the second paragraph of this letter,
or a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-------------------------------------
Name:
Title:
Accepted this ____ day of
________________, 199_ by
HUBCO, INC.
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT 6.2
FORM OF OPINION OF COUNSEL TO CFHC
TO BE DELIVERED TO HUBCO ON THE EFFECTIVE TIME
(a) CFHC and Community have full corporate power to carry out
the transactions contemplated in the Agreement. The execution and delivery of
the Agreement and the consummation of the transactions contemplated thereunder
have been duly and validly authorized by all necessary corporate action on the
part of CFHC and Community, and the Agreement constitutes the valid and legally
binding obligations of CFHC and Community enforceable in accordance with its
terms, except as may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, receivership, conservatorship, and other laws now or hereafter in
effect relating to or affecting the enforcement of creditors' rights generally
or the rights of creditors of federal banking associations or their holding
companies, (ii) general equitable principles, and (iii) laws relating to the
safety and soundness of insured depository institutions, and except that no
opinion need be rendered as to the effect or availability of equitable remedies
or injunctive relief (regardless of whether such enforceability is considered in
a proceeding in equity or at law). Subject to satisfaction of the conditions set
forth in the Agreement, neither the transactions contemplated in the Agreement,
nor compliance by CFHC and Community with any of the provisions thereof, will
(i) conflict with or result in a breach or default under (A) the certificate of
incorporation or bylaws of CFHC or the charter or bylaws of Community, or (B)
based on certificates of officers and without independent verification, to the
knowledge of such counsel, any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which CFHC or Community is a
party; or (ii) to the knowledge of such counsel, result in the creation or
imposition of any material lien, instrument or encumbrance upon the property of
CFHC or Community, except such material lien, instrument or obligation that has
been disclosed to HUBCO pursuant to the Agreement, or (iii) violate in any
material respect any order, writ, injunction, or decree known to such counsel,
or any statute, rule or regulation applicable to CFHC or Community.
(b) CFHC is a corporation validly existing and in good
standing under the laws of the State of New Jersey, Community is a validly
existing federally-chartered banking association under the laws of the United
States of America and each of CFHC and Community has the corporate power and
authority to own or lease all of its properties and assets and to conduct the
business in which it is currently engaged as described on pages __ and __ under
the caption "_____________________" in the Proxy Statement-Prospectus. The
deposits of Community are insured to the maximum extent provided by law by the
Federal Deposit Insurance Corporation.
(c) Each CFHC Subsidiary listed as such in the CFHC Disclosure
Schedule is validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
(d) There is, to the knowledge of such counsel, no legal,
administrative, arbitration or governmental proceeding or investigation pending
or threatened to which CFHC or Community is a party which would, if determined
adversely to CFHC or Community, have a material adverse effect on the business,
properties, results of operations, or condition, financial or otherwise, of CFHC
or Community taken as a whole or which presents a claim to restrain or prohibit
the transactions contemplated by the Agreement.
(e) No consent, approval, authorization, or order of any
federal or state court or federal or state governmental agency or body, or to
such counsel's knowledge of any third party, is required for the consummation by
CFHC or Community of the transactions contemplated by the Agreement, except for
such consents, approvals, authorizations or orders as have been obtained or
which would not have a material adverse effect upon HUBCO upon consummation of
the Merger.
In addition to the foregoing opinions, counsel shall state that on the
sole basis of such counsel's participation in conferences with officers and
employees of CFHC in connection with the preparation of the Prospectus-Proxy
Statement and without other independent investigation or inquiry, such counsel
has no reason to believe that the Prospectus-Proxy Statement, including any
amendments or supplements thereto (except for the financial information,
financial statements, notes to financial statements, financial schedules and
other financial or statistical data and stock valuation information contained or
incorporated by reference therein and except for any information supplied by
HUBCO for inclusion therein, as to which counsel need express no belief), as of
the date of mailing thereof and as of the date of the meeting of shareholders of
CFHC to approve the Merger, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make any statement therein, in
light of the circumstances under which it was made, not misleading. Counsel may
state in connection with the foregoing that such counsel has not independently
verified and does not assume any responsibility for the accuracy, completeness
or fairness of any information or statements contained in the Prospectus-Proxy
Statement, except with respect to identified statements of law or regulations or
legal conclusions relating to CFHC or Community or the transactions contemplated
in the Agreement and that it is relying as to materiality as to factual matters
on certificates of officers and representatives of the parties to the Agreement
and other factual representations by CFHC and Community.
Such counsel's opinion shall be limited to matters governed by
the laws of the State of New Jersey and federal laws and regulations of the
United States of America.
<PAGE>
EXHIBIT 6.3
FORM OF OPINION OF COUNSEL TO HUBCO
TO BE DELIVERED TO CFHC ON THE EFFECTIVE TIME
(a) HUBCO is a corporation validly existing and in good
standing under the laws of the State of New Jersey, the Bank is a validly
existing New Jersey state-chartered banking association under the laws of the
State of New Jersey and each of HUBCO and the Bank has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as described in the Proxy Statement-Prospectus on pages __ and __ under
the caption "_____________________________." HUBCO is registered as a bank
holding company under the BHCA.
(b) Each HUBCO Subsidiary listed as such in the HUBCO
Disclosure Schedule is validly existing under the laws of the jurisdiction of
its incorporation.
(c) The authorized capital stock of HUBCO consists of
____________ shares of common stock, no par value per share ("HUBCO Common
Stock") and _____________ shares of Series B, no par value, Convertible
Preferred Stock (the "Authorized Preferred Stock). Except for
to our knowledge, there are no outstanding subscription rights, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever (either firm or conditional) obligating HUBCO to issue, deliver or
sell, cause to be issued, delivered or sold, or restricting HUBCO from selling
any additional HUBCO Common Stock or Authorized Preferred Stock or obligating
HUBCO to grant, extend or enter into any such agreement or commitment. The HUBCO
Common Stock to be issued in connection with the Merger in accordance with
Article II of the Agreement, when so issued in accordance therewith, will be
duly authorized, validly issued, fully paid and non-assessable, free of
preemptive rights and free and clear of all liens, encumbrances or restrictions
created by HUBCO.
(d) The Agreement has been authorized, executed and delivered
by HUBCO and the Bank and constitutes the valid and binding obligations of HUBCO
and the Bank enforceable in accordance with its terms, except that the
enforceability of the obligations of HUBCO and the Bank may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, or
laws affecting institutions the deposits of which are insured by the FDIC or
other laws heretofore or hereafter enacted relating to or affecting the
enforcement of creditors' rights generally and by principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). In addition, certain remedial and other provisions of the
Agreement may be limited by implied covenants of good faith, fair dealing, and
commercially reasonable conduct, by judicial discretion, in the instance of
equitable remedies, and by applicable public policies and laws.
(e) Subject to satisfaction of the conditions set forth in the
Agreement, the execution and delivery of the Agreement and the consummation of
the transactions contemplated thereby will not (i) conflict with or violate any
provision of or result in the breach of any provision of the Certificate of
Incorporation or By-Laws of HUBCO or the Charter and By-Laws of the Bank ; (ii)
based on certificates of officers of HUBCO and without independent verification,
conflict with or violate in any material respect, or result in a material breach
or violation of the terms or provisions of, or constitute a default under, or
result in (whether upon or after the giving of notice or lapse of time or both)
any material obligation under, any indenture, mortgage, deed of trust or loan
agreement or any other agreement, instrument, judgment, order, arbitration award
or decree of which we have knowledge (through our representation of HUBCO and
the Bank in connection therewith or in the course of our representation of HUBCO
and the Bank in connection with the Agreement) and to which HUBCO or the Bank is
a party or by which HUBCO or the Bank is bound; or (iii) cause HUBCO or the Bank
to violate any corporation or banking law applicable to HUBCO.
(f) All actions of the directors and shareholders of HUBCO and
the Bank required by federal banking laws and regulations and New Jersey law or
by the Certificate of Incorporation or By-Laws of HUBCO and the Bank, to be
taken by HUBCO and the Bank to authorize the execution, delivery and performance
of the Agreement and consummation of the Merger have been taken.
(g) Assuming that there has been due authorization of the
Merger by all necessary corporate and governmental proceedings on the part of
CFHC and that CFHC has taken all action required to be taken by it prior to the
Effective Time, upon the appropriate filing of the Certificate of Merger in
respect of the Merger with the New Jersey Secretary of State in accordance with
Section 1.6 of the Agreement, the Merger will become effective at the Effective
Time, as such term is defined in Section 1.6, and upon effectiveness of the
Merger each share of CFHC Common Stock will be converted as provided in Article
II of the Agreement.
(h) No approvals, authorizations, consents or other actions or
filings under federal banking law or New Jersey law ("Approvals") are required
to be obtained by HUBCO or the Bank in order to permit the execution and
delivery of the Agreement by HUBCO or the Bank and the performance by HUBCO or
the Bank of the transactions contemplated thereby other than those Approvals
which have been obtained or those Approvals or consents required to be obtained
by CFHC.
(i) The Registration Statement has been declared effective by
the Securities and Exchange Commission ("SEC") under the 1933 Act and we are not
aware that any stop order suspending the effectiveness has been issued under the
1933 Act or proceedings therefor initiated or threatened by the SEC.
We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Proxy Statement-Prospectus and make no representation that we have independently
verified the accuracy, completeness or fairness of such statements, but from our
examination of the Proxy Statement-Prospectus and our general familiarity with
HUBCO no facts have come to our attention that caused us to believe that (except
for financial statements and other tabular financial information, and other
financial and statistical data and information, as to which we do not express
any belief) the Proxy Statement-Prospectus on the date of the mailing thereof
and on the date of the meeting of stockholders of CFHC at which the Agreement
was approved, contained any untrue statement of a material fact regarding HUBCO
or the Merger, or omitted to make a material fact regarding HUBCO or the Merger
therein, in light of the circumstances under which they were made, not
misleading.
We are members of the Bar of the State of New Jersey and we
express no opinion as to any of the laws of any jurisdiction other than the laws
of the State of New Jersey and federal laws and regulations of the United States
of America.
PURCHASE AND ASSUMPTION AGREEMENT
This Agreement, dated as of March 2, 1998, is by and between HUBCO,
Inc., a bank holding company having its principal place of business in Mahwah,
New Jersey ("Buyer"), and First Union National Bank, a national banking
association having its principal place of business in Charlotte, North Carolina
("Seller").
I. DEFINITIONS
1.1 Certain Defined Terms.
Some of the capitalized terms appearing in this Agreement are
defined below. The definition of a term expressed in the singular also applies
to that term as used in the plural and vice versa.
"Affiliate" means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, a specified Person, except in those cases where the
controlling Person exercises control solely in a fiduciary capacity.
"Amount of Premium" has the meaning set forth in Section 3.1
of this Agreement.
"Assets" has the meaning set forth in Section 2.1 of this
Agreement.
"Benefit Plan" means any pension, profit-sharing, or other
employee benefit, fringe benefit, severance or welfare plan maintained by or
with respect to which contributions are made by, Seller or any of its Affiliates
with respect to Seller's employees.
"Branches" means those branch offices of Seller listed on
Schedule 1.1 to this Agreement.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday
or Friday on which Seller is open for business.
"CBCT" means customer branch communications terminal.
"Cash Reserve Lines of Credit" means those consumer lines of
credit made available to customers of the Branches as a protection against
overdrafts on Deposit Accounts.
"Cash Reserve Loans" means those loans outstanding on the
Closing Date pursuant to Cash Reserve Lines of Credit.
<PAGE>
"Closing" means the purchase of the Assets by Buyer and the
assumption of the Liabilities by Buyer on the Closing Date.
"Closing Date" has the meaning set forth in Section 9.1 of
this Agreement.
"Commercial Loans" means those commercial loans of Seller
listed on Schedule 1.2 to this Agreement.
"Deposit Accounts" means the deposit accounts at the Branches,
the balances of which are included in the Deposits or would be so included if
the Deposit Account had a positive balance.
"Deposits" means all deposits (as defined in 12 U.S.C. Section
1813(l)) which are booked at the Branches on the Closing Date, including in each
case accrued but unpaid interest and both collected and uncollected funds, but
excluding (i) deposits held in accounts for which Seller acts as fiduciary
(other than deposits held by Retirement Plans), (ii) deposits constituting
official checks, travelers checks, money orders or certified checks, or (iii)
deposits held in CAP Accounts.
"Equipment Leases" means those operating and financial leases
and conditional sales contracts covering Fixed Assets which Seller may assign to
Buyer without restriction or with the lessor's written consent.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any entity that is considered one
employer with Seller under Section 4001 of ERISA or Section 414 of the Internal
Revenue Code of 1986, as amended.
"Federal Funds Rate" means, for any day, the rate per annum
(expressed on a basis of calculation of actual days in a year) equal to the
"near closing bid" federal funds rate published in The Wall Street Journal on
the Business Day following the Closing Date.
<PAGE>
"Fixed Assets" means all fixtures (including signage poles),
leasehold improvements, furnishings (excluding artwork owned by Seller), vaults,
safe deposit boxes, equipment (including, for example, all ATM machines, but
excluding any computer or telecommunications equipment), supplies (other than
forms and other supplies which bear Seller's name or logo), and other personal
property, which are owned or (to the extent of Seller's interest as lessee)
leased by Seller, which are located at the Branches on the Closing Date.
"Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government having authority in the
United States, whether federal, state or local.
"Hazardous Material" means any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous
or otherwise regulated, under any applicable state or federal law relating to
the protection, preservation or restoration of the environment, including, but
not limited to, the following federal environmental laws: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendment and Reauthorization Act, the Water Pollution Control Act of 1972, the
Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act
of 1976, the Solid Waste Disposal Act, the Toxic Substances Control Act and the
Insecticide, Fungicide and Rodenticide Act, each as amended.
"Leased Branches" means all premises of the Branches which are
leased under the Real Property Leases.
"Liabilities" has the meaning set forth in Section 2.2 of this
Agreement.
"Mediator" means the firm of KPMG Peat Marwick LLP or if such
firm declines to perform the functions of the Mediator specified in this
Agreement, then another firm of certified public accountants mutually agreeable
to Seller and Buyer.
"Overdrafts" means those overdrafts of the book balance of any
Deposit Accounts which are not subject to Cash Reserve Lines of Credit.
"Person" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"Real Property" means the land (including the improvements
thereon) owned by Seller on which any Branches are located.
"Real Property Leases" means the lease agreements pursuant to
which any Branches are leased by Seller.
<PAGE>
"Retirement Plans" means those non-discretionary individual
retirement accounts and qualified retirement plan accounts relating to the
Deposits for which Seller acts as custodian or trustee.
"Training Expenses" means the overtime and out-of-pocket
expenses (meals and mileage) incurred by Seller as a result of Buyer's training
schedule prior to Closing.
"Welfare Benefit Plans" means those Benefit Plans which are
"welfare benefit plans" as defined by ERISA.
II. PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Purchase of Assets.
Subject to the terms and conditions of this Agreement, Seller agrees
to sell, assign and transfer possession of and all right, title and interest of
Seller in and to the following assets to Buyer (the "Assets") and Buyer agrees
to purchase the same from Seller, as of the close of business on the Closing
Date:
(a) the Real Property;
(b) the Fixed Assets;
(c) cash on hand in the Branches;
(d) the Cash Reserve Loans;
(e) the Overdrafts;
(f) Seller's rights under the Cash Reserve Lines of Credit and
any safe deposit box rental agreements relating to safe deposit boxes
located at the Branches; and
(g) the Commercial Loans.
2.2 Assumption of Liabilities.
Buyer agrees to assume, pay, perform and discharge the
following liabilities of Seller (the "Liabilities") as of the close of business
on the Closing Date:
(a) the Deposits and all terms and agreements relating to the
Deposit Accounts;
(b) Seller's duties and responsibilities relating to the
Deposits with respect to: (i) the abandoned property laws of any state,
(ii) any legal process which is served on Seller on or before the
Closing Date with respect to claims against or for the Deposits that is
not against Seller over and above the amount of the Deposits and which
is identified by Seller on Schedule 1.3 to this Agreement on or prior
to the Closing Date; or (iii) any other applicable law;
(c) Seller's duties and responsibilities with respect to the
Real Property Leases and the Equipment Leases;
(d) Seller's duties and responsibilities with respect to the
Cash Reserve Lines of Credit, Cash Reserve Loans, and the Commercial
Loans;
(e) Seller's duties and responsibilities with respect to the
safe deposit boxes located at the Branches; and
(f) Seller's duties and responsibilities with respect to the
Retirement Plans.
2.3 Transfer of Records.
(a) At the Closing, Seller also shall transfer to Buyer
possession and all right, title and interest of Seller in and to all
books and records relating to the Assets and the Liabilities which are
maintained at the Branches.
(b) All books and records relating to the Assets and the
Liabilities held by either Seller or Buyer after the Closing Date shall
be maintained in accordance with (and for the period provided in) that
party's standard recordkeeping policies and procedures. Throughout such
period, the party holding such books and records shall comply with the
reasonable request of the other party to provide copies of specified
documents, at the expense of the requesting party. The requesting party
shall give reasonable notice of any such request.
2.4 Tax Matters.
(a) Notwithstanding Section 2.5, Buyer shall pay to Seller or
the relevant taxing jurisdiction (as appropriate under the
circumstances), or reimburse Seller if Seller shall have paid, any
sales and use taxes and any interest and penalties thereon which are
payable or arise as a result of this Agreement or the consummation of
any of the transactions contemplated by this Agreement.
(b) Notwithstanding Section 2.5, Buyer shall pay to Seller or
the relevant taxing jurisdiction (as appropriate under the
circumstances), or reimburse Seller if Seller shall have paid, any real
property transfer, recording and similar documentary taxes arising out
of the transfer of the Real Property, the Leased Branches, the Real
Property Leases and the Fixed Assets.
2.5 Proration of Certain Expenses.
Subject to the provisions of Section 2.4, all rentals, real
estate taxes, personal property taxes (tangible or intangible), and utility,
water and sewer charges and assessments, as well as semiannual assessments paid
to the Bank Insurance Fund or the Savings Association Insurance Fund with
respect to the Deposits, shall be prorated between Buyer and Seller as of the
close of business on the Closing Date.
2.6 Back Office Conversion.
Seller and Buyer shall cooperate with each other and shall use
their reasonable best efforts (consistent with their internal day-to-day
operations) in order to cause the timely transfer of information concerning the
Assets and the Liabilities which is maintained on Seller's data processing
systems so that Buyer can incorporate such information into Buyer's data
processing systems no later than the opening of business on the Business Day
following the Closing Date.
2.7 Processing of Certain Items After Closing.
A draft of the written practices and procedures under which
Buyer and Seller shall handle all items (including, for example, automated
clearing house and electronic funds transfer items) relating to the Assets and
the Liabilities, which are presented or returned following the Closing Date, and
any claims relating to such items are attached to this Agreement as Exhibit A,
including certain other matters relating to consummation of the transactions
contemplated hereby (the "Working Agreement"). As promptly as practicable
following the execution of this Agreement, the parties agree to finalize the
Working Agreement.
2.8 Information Returns.
Buyer shall file all required information returns with the
Internal Revenue Service with respect to interest paid on the Deposits after the
Closing Date, interest received on the Cash Reserve Loans after the Closing
Date, and any other information returns required with respect to the Assets and
the Liabilities for the periods beginning after the Closing Date. Seller will
file all required information returns with the Internal Revenue Service and any
information returns required by state or local tax authorities with respect to
interest paid on the Deposits on or before the Closing Date, interest received
on the Cash Reserve Loans on or before the Closing Date, and any other
information returns required with respect to the Assets and the Liabilities for
periods ending on or before the Closing Date.
III. CONSIDERATION
3.1 Calculation.
In consideration of Buyer's purchase of the Assets and its
assumption of the Liabilities, Seller agrees to pay to Buyer an amount equal to
the Deposits, plus accrued interest thereon, less the sum of the following, in
each case calculated as of the close of business on the Closing Date:
(a) $1,678,000, representing the purchase price of the Fixed
Assets;
(b) $1,605,000, representing the purchase price of the Real
Property not listed on Schedule 1.4 of this Agreement;
(c) the fair market value of the Real Property listed on
Schedule 1.4 of this Agreement, as determined by an appraiser mutually
agreed upon by Buyer and Seller;
(d) the principal amount of the Cash Reserve Loans, plus
accrued interest thereon;
(e) the principal amount of the Commercial Loans, plus accrued
interest thereon;
(f) the amount of cash on hand at the Branches;
(g) the principal amount of the Overdrafts;
(h) the net amount (which may be a negative amount) of taxes
payable by Buyer and Seller under Section 2.4 (i.e., the amount payable
by Buyer less the amount payable by Seller);
(i) the net amount (which may be a negative amount) of any
adjustments under Section 2.5 (i.e., the amount payable by Buyer less
the amount payable by Seller);
(j) an amount equal to ten (10) percent of the average of the
monthly Deposit average for the three calendar months preceding the
month during which the Closing Date occurs (the "Amount of Premium");
provided, however, that for purposes of calculating the Amount of
Premium, the amount of Deposits shall not include brokered deposits;
and
(k) the Training Expenses.
3.2 Settlement.
(a) Not later than the first Saturday following the Closing
Date, Seller shall deliver to Buyer the Closing Statement prepared in
accordance with Seller's customary practices and procedures used in
preparing financial statements, substantially in the form of Exhibit B
to this Agreement, which shall be completed as of the close of business
on the Closing Date and be the basis of the payment to be made to
Buyer's account on the Monday following the Closing Date (the
"Settlement Payment").
(b) The parties shall cooperate in the preparation of the
Adjusted Closing Statement within 30 days after the Closing Date which
shall be prepared in accordance with Seller's customary practices and
procedures used in preparing financial statements, substantially in the
form of Exhibit C to this Agreement, which shall be completed as of the
close of business on the Closing Date. On the Business Day after Buyer
and Seller agree to the Adjusted Closing Statement, or Buyer and Seller
receive notice of any determination of the Adjusted Closing Statement
under subsection (c) (the "Adjusted Settlement Date"), Seller shall pay
to Buyer (or Buyer shall pay to Seller, as the case may be) an amount
(the "Adjustment Payment") equal to the amount due stated on the
Adjusted Closing Statement, plus interest from the day after the
Closing Date until the calendar day before the Adjustment Payment is
made at a rate per annum (calculated daily based on a 360-day year)
equal to the Federal Funds Rate.
(c) If the parties are unable to agree on the Adjusted Closing
Statement within 30 days after the Closing Date, either party may
submit the matter to the Mediator, which shall determine all disputed
portions of the Adjusted Closing Statement in accordance with the terms
and conditions of this Agreement within 30 days after the submission.
The parties shall each pay half of the fees and expenses of the
Mediator, except that the Mediator may assess the full amount of its
fees and expenses against either party if it determines that party
negotiated the Adjusted Closing Statement in bad faith. The Adjusted
Closing Statement, as agreed upon by the parties and/or determined
under this subsection, shall be final and binding upon the parties.
(d) The Settlement Payment and the Adjustment Payment shall
each be made by wire transfer of immediately available funds to the
account of the party receiving the payment, which account shall be
identified by the party receiving the funds to the other party not less
than two Business Days prior to such payment.
IV. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller makes the following representations and warranties to Buyer.
4.1 Power and Authority.
(a) Seller has the corporate power and authority to enter into
and perform this Agreement. The execution and delivery of this
Agreement has been duly authorized by all necessary corporate action by
Seller. Upon execution and delivery by both parties, this Agreement
will constitute a valid and binding obligation of Seller, enforceable
in accordance with its terms, subject to conservatorship, receivership,
and a court's right under general principles of equity to refuse to
direct specific performance.
(b) The performance of this Agreement by Seller will not
violate any provision of the Articles of Association or Bylaws of
Seller, or any applicable law, rule, regulation, or order or any
contract or instrument by which Seller is bound, except for such
violations which alone, or taken in the aggregate, would not reasonably
be expected to have a material adverse effect on the financial
condition, business or operations of the Branches, taken as a whole, or
the consummation of the transactions contemplated by this Agreement (a
"Seller Material Adverse Effect").
4.2 Litigation and Regulatory Proceedings.
There are no actions, complaints, petitions, suits or other
proceedings, or any decree, injunction, judgment, order or ruling, entered,
promulgated or pending or (to Seller's knowledge) threatened against Seller or
any of the Assets or the Liabilities, which alone, or taken in the aggregate,
reasonably would be expected to have a Seller Material Adverse Effect. No
governmental agency has notified Seller that it would oppose or not approve or
consent to the transactions contemplated by this Agreement and Seller knows of
no reason for any such opposition, disapproval or nonconsent.
4.3 Consents and Approvals.
Except for required regulatory approvals, no consents,
approvals, filings or registrations with any third party or any public body,
agency or authority are required in connection with Seller's consummation of the
transactions contemplated by this Agreement, other than any required lessor
consents to the assignment of the Real Property Leases and the Equipment Leases
and as may be required as a result of any facts or circumstances relating solely
to Buyer.
4.4 Real Property.
(a) Schedule 4.4 contains a list of all the Real Property.
(b) Seller has good and marketable title to the Real Property,
free and clear of all encumbrances, except for easements and
restrictions of record, applicable zoning laws, the rights of landlords
under any ground leases relating to the Real Property, the rights of
any tenants, and liens for taxes and assessments not delinquent.
4.5 Fixed Assets.
Seller has good and marketable title to the Fixed Assets, free
and clear of all encumbrances, claims, charges, security interests, or liens, if
any, which do not materially detract from the value of or interfere with the use
of the Fixed Assets.
4.6 Ownership of Cash Reserve Loans.
Seller has full power and authority to hold each Cash
Reserve Loan, and has good title to the Cash Reserve Loans free and clear of all
liens and encumbrances. Seller is authorized to sell and assign the Cash Reserve
Loans to Buyer and, upon such assignment, Buyer will have the rights of Seller
with respect to the Cash Reserve Loans in accordance with the terms and
conditions thereof.
4.7 Validity of and Compliance with Real Property Leases.
The Real Property Leases are valid and existing leases under
which Seller, as lessee, is entitled to possession of the leased premises. To
Seller's knowledge, no event has occurred and is continuing, which constitutes a
default under any of the Real Property Leases. Subject to Seller obtaining any
necessary landlord consents, the assignment of such leases will transfer to
Buyer all of Seller's rights under the Real Property Leases.
4.8 Compliance with Certain Laws.
The Deposit Accounts and the Cash Reserve Lines of Credit were
opened, extended or made, and have been maintained, in accordance with all
applicable federal and state laws, regulations, rules and orders, and the
Branches have been operated in compliance with Seller's policies and procedures
and all applicable federal and state laws, regulations, rules and orders, except
for such instances of noncompliance which do not have, and are not reasonably
likely to have, a Seller Material Adverse Effect.
4.9 FDIC Insurance.
The Deposits are insured by the Federal Deposit Insurance
Corporation through the Bank Insurance Fund and the Savings Association
Insurance Fund to the extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when due by Seller.
4.10 Ownership of Commercial Loans.
Seller has full power and authority to hold each Commercial
Loan and has good title to the Commercial Loans free and clear of all liens and
encumbrances. Seller is authorized to sell and assign the Commercial Loans to
Buyer and, upon such assignment, Buyer will have the rights of Seller with
respect to the Commercial Loans in accordance with the terms and conditions
thereof.
4.11 Employment Contracts.
There are no employment or individual severance contracts
between Seller and any of the employees of the Branches.
V. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer makes the following representations and warranties to Seller.
5.1 Power and Authority.
(a) Buyer has the corporate power and authority to enter into
and perform this Agreement. The execution and delivery of this
Agreement has been duly authorized by all necessary corporate action by
Buyer. Upon execution and delivery by both parties, this Agreement will
constitute a valid and binding obligation of Buyer, enforceable in
accordance with its terms subject to conservatorship, receivership, and
a court's right under general principles of equity to refuse to direct
specific performance.
(b) The performance of this Agreement by Buyer will not
violate any provision of the Certificate of Incorporation, Bylaws or
similar governing documents of Buyer, or any applicable law, rule,
regulation, or order or any contract or instrument by which Buyer is
bound except for such violations which alone, or taken in the
aggregate, would not reasonably be expected to have a material adverse
effect on the consummation of the transactions contemplated by this
Agreement (a "Buyer Material Adverse Effect").
5.2 Litigation and Regulatory Proceedings.
There are no actions, complaints, petitions, suits or other
proceedings, or any decree, injunction, judgment, order or ruling, entered,
promulgated or pending or (to Buyer's knowledge) threatened against Buyer or any
of its properties or assets which alone, or taken in the aggregate, reasonably
would be expected to have a Buyer Material Adverse Effect. No governmental
agency has notified Buyer that it would oppose or not approve or consent to the
transactions contemplated by this Agreement, and Buyer knows of no reason for
any such opposition, disapproval or nonconsent.
5.3 Consents and Approvals.
Except for required regulatory approvals, no consents,
approvals, filings or registrations with any third party or any public body,
agency or authority are required in connection with Buyer's consummation of the
transactions contemplated by this Agreement other than what may be required as a
result of any facts or circumstances relating solely to Seller.
VI. ADDITIONAL AGREEMENTS OF SELLER
6.1 Access to Seller's Premises, Records and Personnel.
(a) Upon execution of this Agreement, Seller shall give Buyer
and its representatives such access to the Branches as Buyer may
reasonably request, provided that Buyer does not unreasonably interfere
with the Branches' business operations. Seller shall not be required to
provide access to or to disclose information where such access or
disclosure might violate or prejudice the rights of any customer or
employee or would be contrary to law, rule, regulation or any legal or
regulatory order or process or any fiduciary duty or binding agreement
entered into prior to the date of this Agreement.
(b) Anything contained in this Agreement to the contrary
notwithstanding, Seller shall not be required to disclose, or to cause
the disclosure to Buyer or its representatives (or provide access to
any offices, properties, books or records of Seller, that could result
in the disclosure to such Persons or others), of any tax returns and/or
any work papers relating thereto or any other confidential information
relating to income or franchise taxes or other taxes of Seller, or
trade secrets, patent or trademark applications, or product research
and development belonging to or performed by or for Seller, nor shall
Seller be required to permit or to cause others to permit Buyer or its
representatives to copy or remove from the offices or properties of
Seller any documents, drawings or other materials that might reveal any
such confidential information; provided, however, Buyer shall have
access to tax returns to the extent that liability for the taxes at
issue could be imposed on Buyer.
(c) At Buyer's request, Seller shall authorize and permit
certain of its officers and members of management to engage in
discussions with Buyer for the purposes of discussing the Branches'
business and negotiating and concluding management employment
contracts, employee benefit plans, and new incentive plans and Buyer
shall maintain the confidentiality of any information furnished by such
officers or members of management of Seller pursuant to such
discussions with Buyer.
6.2 Matters Relating to Branch Closing.
In the event that Buyer intends to close any of the Branches
on the Closing Date or before ninety (90) days thereafter, Buyer and Seller
agree to the following:
(a) Subject to subsection (b), Seller and Buyer shall prepare
Branch closing notices to Seller's customers, to be mailed by Seller at
Buyer's request and expense, at such time as shall be mutually agreed
upon between Buyer and Seller. Seller and Buyer also shall prepare
another notice to Seller's customers, to be mailed by Seller at Buyer's
request and expense, of Buyer's impending acquisition of the Branches
within ten Business Days following Seller's receipt of notice that
Buyer has obtained any and all required regulatory approvals for the
transactions contemplated by this Agreement or such earlier date as
Seller and Buyer may mutually agree upon. After Seller mails this
notice, Buyer shall be permitted to provide to Seller material to be
sent, at Buyer's expense, to the depositors, borrowers and other
customers of the Branches concerning the proposed acquisition and
Buyer's products. Each party's communication shall be subject to the
approval of the other party, which approval shall not be unreasonably
withheld.
(b) Unless Buyer shall certify in writing at the time that (x)
Buyer is not aware of the occurrence of any event or condition, which,
if not corrected, would be reasonably expected to result in the failure
of any condition to Closing under Sections 9.3 or 9.4; (y) Buyer has no
reason to believe that any regulatory approval required under Section
9.3(a) will not be forthcoming, and (z) no challenge has been
threatened or filed and is pending with respect to any such regulatory
approval:
(i) Buyer shall not take any action with respect to
any of the Branches which would require that notices be posted
or provided to customers or regulators, as required by 12
U.S.C. Section 1831r-1, on or prior to the Closing Date; and
(ii) Seller shall not be required to participate in
the closing of any Branch or in any notice to customers
relating to such a closing.
(c) Notwithstanding the foregoing, Buyer agrees that it will
not close the Newark/Springfield Avenue Branch prior to one year after
the Closing Date.
6.3 Regulatory Approvals.
Seller agrees to use its reasonable best efforts to obtain
promptly any regulatory approval on which its consummation of the transactions
contemplated by this Agreement is conditioned. Seller also agrees to cooperate
with Buyer in obtaining any regulatory approval which Buyer must obtain before
the Closing. Seller shall notify Buyer promptly of any significant development
with respect to any application it files under this Section. Seller also shall
provide Buyer with a copy of any regulatory approval it receives under this
Section, promptly after Seller's receipt of the same.
6.4 Conduct of Business.
Except as provided in this Agreement or as may otherwise be
agreed upon by Buyer, Seller will continue to carry on the business at the
Branches until the Closing in the ordinary course of business, consistent with
prudent business practices. Seller shall not terminate the operation of any
Branch, unless those operations cease due to events beyond Seller's control.
Seller will notify Buyer of any event of which Seller obtains knowledge which
would make any of Seller's representations under Article IV of this Agreement
false in any material respect.
6.5 Covenant of Seller not to Compete.
Seller hereby agrees not to purchase or open a de novo brick
and mortar branch facility (excluding any ATMs or CBCTs) within an area
extending one (1) mile in all directions from the location of each Branch for a
period of two (2) years from the Closing Date; provided, however, that Seller,
or its affiliates, shall be expressly permitted to acquire a financial
institution notwithstanding the fact that the financial institution to be
acquired has a branch or other facility in such location, and provided, further,
that the consolidation of one or more of Seller's branches in Clifton, New
Jersey into a new branch or facility in any such location shall not be
prohibited by this Section 6.5.
6.6 Covenant of Seller Not to Solicit.
Seller hereby agrees that from the date of this Agreement and
for a period of two (2) years after the Closing Date, Seller shall not
specifically target and solicit customers of the Branches whose Deposits are
being purchased by the Seller; provided, however, that nothing in this section
shall (i) restrict general mass mailings, telemarketing calls, statement
stuffers, advertisements or other similar communications whether in print, on
radio or television, or by other means that are directed to the general public
or to a group of customers who may include customers of the Branches, provided
that such group is defined by criteria other than solely as customers of the
Branches, or (ii) otherwise prevent Seller from taking such actions as may be
required to comply with any applicable federal or state laws, rules or
regulations or from servicing or communicating with the then-current customers
of Seller or its affiliates.
VII. ADDITIONAL AGREEMENTS OF BUYER
7.1 Regulatory Approvals.
Buyer agrees to use its reasonable best efforts to obtain
promptly any regulatory approval on which its consummation of the transactions
contemplated by this Agreement is conditioned. Buyer also agrees to cooperate
with Seller in obtaining any regulatory approval which Seller must obtain before
the Closing. Buyer shall notify Seller promptly of any significant development
with respect to any application it files under this Section. Buyer also shall
provide Seller with a copy of any regulatory approval it receives under this
Section, promptly after Buyer's receipt of the same.
7.2 Change of Name, Etc.
Immediately after the Closing, Buyer will (a) change the name
and logo on all documents and facilities relating to the Assets and the
Liabilities to Buyer's name and logo, (b) notify all persons whose Cash Reserve
Loans, Commercial Loans or Deposits are transferred under this Agreement of the
consummation of the transactions contemplated by this Agreement, and (c) provide
all appropriate notices to the Federal Deposit Insurance Corporation and any
other regulatory authorities required as a result of the consummation of such
transactions. Buyer agrees not to use any forms or other documents bearing
Seller's name or logo after the Closing without the prior written consent of
Seller, and, if such consent is given, Buyer agrees that all such forms or other
documents to which such consent relates will be stamped or otherwise marked in
such a way that identifies Buyer as the party using the form or other document.
As soon as practicable and, in any event, within two calendar days after the
Closing Date, Buyer will issue new checks reflecting its transit and routing
number to customers of the Branches with check writing privileges. Buyer shall
use its best efforts to encourage these customers to begin using such checks and
cease using checks bearing Seller's name.
7.3 Real Property.
(a) Except as expressly set forth herein, Buyer hereby acknowledges and
agrees that: (i) Buyer is expressly purchasing the Real Property in its existing
condition "AS IS, WHERE IS, AND WITH ALL FAULTS" with respect to any facts,
circumstances, conditions and defects; (ii) Seller has no obligation to repair
or correct any such facts, circumstances, conditions or defects or to compensate
Buyer for same; (iii) Seller has specifically bargained for the assumption by
Buyer of all responsibility to inspect and investigate the Real Property and of
all risk of adverse conditions; and (iv) Buyer has or will have prior to the
Closing undertaken all such physical inspections and examinations of the Real
Property as Buyer deems necessary or appropriate as to the condition of the Real
Property. Except as expressly set forth herein, Buyer acknowledges that Seller
has made no representations or warranties and shall have no liability to Buyer
(and Buyer hereby waives any right to recourse against Seller) with respect to
the conditions of the soil, the existence or nonexistence of hazardous
substances, any past use of the Real Property, the economic feasibility of the
Real Property, or the Real Property's compliance or noncompliance with all laws,
rules or regulations affecting the Real Property.
(b) Buyer may, at Buyer's option, within sixty (60) days from
the date of this Agreement, undertake such physical inspections and examinations
of the Real Property and the Leased Real Property, and the legal title thereto,
including such inspections of the buildings thereon, as Buyer deems necessary or
appropriate. The cost of any such inspections and examinations shall be
responsibility of Buyer.
(i) If Buyer shall discover a Material Defect, as
defined herein, as a result of Buyer's inspections and
examinations Buyer shall give Seller written notice as soon as
possible describing the facts or conditions constituting such
Material Defect and the measures which Buyer reasonably
believes are necessary to correct such Material Defect. Seller
shall promptly notify Buyer whether Seller elects to cure such
Material Defect or terminate the Agreement with respect to
such Branch, unless Buyer elects to waive such Material
Defect. If Seller elects to cure, then Seller shall have until
the Closing Date, or such later time as shall be mutually
agreeable to the parties which agreement shall not be
unreasonably withheld, in which to cure such Material Defect
to Buyer's reasonable satisfaction and, unless such cure is
after the Closing Date, Seller's reasonable cure shall be a
condition to Buyer's obligation to purchase the Assets and
assume the Liabilities with respect to such Branch under this
Agreement. "Material Defect" shall mean the existence of (x) a
lien or encumbrance on the legal title to the Real Property,
except as previously disclosed in writing to Buyer by Seller,
which materially detracts from the value of the Real Property,
(y) any discharge, disposal, release, threatened release or
emission of any Hazardous Material in the ground or the
structure of the Branch or the existence of any underground
storage tank for which the Buyer has been advised in writing
by its legal counsel that Buyer could become responsible for
the assessment, removal or remediation of such discharge,
disposal, release, threatened release, emission, the existence
of such tank or for other corrective action, (z) with respect
to the buildings, material deficiencies in the plumbing,
electrical, HVAC, drive thru air transport system, roof,
walls, or foundations.
(ii) With regard to the Leased Branches, Buyer and
Seller understand that conducting the inspections and
affecting the cure of a Material Defect, if any, may require
the action or the consent of the lessor. In the event that the
lessor elects not to undertake such action or give such
consent relating to the cure of a Material Defect, then Buyer
may terminate the Agreement with respect to such Branch.
(c) No information or the contents of any environmental
audits, nor the results of any investigation of the real estate
conducted pursuant to this section, including, but not limited to, the
contents of the report issued in connection therewith, shall be
disclosed by Buyer or its agents, consultants or employees to any third
party without Seller's prior written approval, unless and until Buyer
is legally compelled to make such disclosure under applicable laws or
until Buyer completes its purchase of the Real Property pursuant to
this Agreement. Notwithstanding the foregoing, Buyer may disclose such
matters to its directors, executive officers, legal counsel and such
employees who are reasonably required to receive such disclosure (such
parties being referred to as "Buyer" for purposes of this section), the
specific identities of whom shall be supplied to Seller prior to any
permitted disclosure to such party by Buyer. If this Agreement is
terminated for any reason, Buyer shall immediately deliver and/or
return to Seller any and all documents, plans and other items furnished
to Buyer pursuant to this section.
VIII. SELLER'S EMPLOYEES
8.1 Transferred Employees.
(a) Buyer will offer to employ all of Seller's employees who
are employed at the Branches on the Closing Date. From and after the
Closing Date, Buyer shall provide the employees of Seller who are
offered employment with Buyer, and who accept such employment, with a
salary or hourly wage comparable to that earned by them at the time of
the Closing. (Such employees who become employees of Buyer after the
Closing shall be referred to as "Transferred Employees.")
(b) Seller is responsible for the filing of Forms W-2 with the
Internal Revenue Service and any required filing with state tax
authorities, with respect to wages and benefits paid to each
Transferred Employee for periods ending on or prior to the Closing
Date.
8.2 Employee Benefits.
(a) (i) Following the Closing, Buyer shall not have any
liability or obligation under any Benefit Plans or any other program or
arrangement of Seller or an ERISA Affiliate thereof under which any
current or former employee of Seller or any of its Affiliates has any
right to any benefits;
(ii) Upon the Closing, the participation of Transferred
Employees in the Benefit Plans shall cease in accordance with the terms
of such plans; and
(iii) With respect to the Transferred Employees, Seller shall
be responsible for any welfare benefits or claims which, by reason of
events which take place on or prior to the Closing Date, become payable
under the terms of any Welfare Benefit Plan. With respect to
Transferred Employees, Buyer shall be responsible for any welfare
benefits or claims which become payable by reason of events that take
place after the Closing Date.
(b) (i) From and after the Closing Date, Buyer shall provide
the Transferred Employees with the employee benefits, if any, provided
to employees of Buyer and its Affiliates, subject to the terms of
Buyer's benefit plans;
(ii) Buyer will grant for purposes of vacation benefits,
severance pay and all welfare benefit plans (as defined in ERISA) past
service credit to all Transferred Employees for periods of time
credited to such Transferred Employees under the Welfare Benefit Plans.
In addition, Buyer's plans and programs shall be applied to the
Transferred Employees without regard to any limitations relating to
preexisting conditions or required physical examinations that would not
otherwise apply under the respective Welfare Benefit Plans to the
extent that such Transferred Employees are covered by the Welfare
Benefit Plans on the Closing Date;
(iii) Buyer shall take whatever action is necessary, including
amendment of its 401-K savings plan, to grant to each Transferred
Employee past service credit for all purposes (including any waiting
period) under Buyer's 401-K savings plan for all periods of service
credited to each such Transferred Employee under the Seller's 401-K
savings plan. Within 45 days after the Closing Date, Seller shall
provide to Buyer such information as Buyer reasonably requires to
establish the service for the Transferred Employees credited under the
Seller's 401-K savings plan; and
(iv) Buyer will grant to each Transferred Employee past
service credit for service which has been granted under Seller's
defined benefit pension plan, for all purposes, other than benefit
accrual, under Buyer's defined benefit pension plan.
8.3 Training.
Seller shall permit Buyer to train the Transferred Employees
before Closing with regard to Buyer's operations, policies and procedures at
Buyer's sole cost and expense. This training shall take place outside of
business hours and may, at Seller's option, take place at the Branches.
IX. CLOSING AND CONDITIONS TO CLOSING
9.1 Time and Place of Closing.
The Closing shall be on a date mutually agreed upon by the
parties (the "Closing Date") which shall be on a Friday and shall be no more
than 60 days after the last regulatory approval necessary for the Closing has
been obtained (without regard to any statutory waiting periods following such
approval). The Closing shall take place at Seller's offices located at 190 River
Road, 3rd Floor, Summit, New Jersey 07901, at 10:00 a.m. on the Closing Date, or
at a time and place otherwise determined by mutual agreement of the parties.
9.2 Exchange of Closing Documents.
The parties shall exchange drafts of all documents to be
delivered at the Closing (other than the Closing Statement) at least ten
Business Days prior to the Closing Date.
9.3 Buyer's Conditions to Closing.
Buyer's obligations to purchase the Assets and assume the
Liabilities is contingent upon and subject to the fulfillment of the following
conditions in all material respects:
(a) the parties obtaining all regulatory approvals which are
required in order for them to proceed with the transactions
contemplated by this Agreement and the expiration of any required
waiting period without the commencement of adverse proceedings by any
governmental authority with jurisdiction over the transactions
contemplated by this Agreement;
(b) each representation and warranty of Seller in this
Agreement being true and correct in all material respects as of the
Closing Date and all covenants and conditions of Seller to be performed
or met by Seller on or before the Closing Date having been performed or
met in all material respects;
(c) Seller's delivery to Buyer of the following documents in
form and substance reasonably satisfactory to Buyer:
(i) special warranty deeds conveying the Real
Property;
(ii) bills of sale, assignments and other instruments
of transfer sufficient to convey to Buyer all of Seller's
right, title, and interest in and to the remaining Assets;
(iii) a certificate executed by an appropriate
officer of Seller attesting, to the officer's best knowledge,
to Seller's compliance with the conditions set forth in
Section 9.3(b); and
(iv) estoppel certificates executed by the lessors of
the Leased Branches; and
(d) Buyer's agreement to receive the Closing Statement and the
Settlement Payment as provided in Section 3.2.
9.4 Seller's Conditions to Closing.
Seller's obligation to sell the Assets and transfer the
Liabilities to Buyer is contingent upon and subject to the fulfillment of the
following conditions in all material respects:
(a) the parties obtaining all regulatory approvals which are
required in order for them to proceed with the transactions
contemplated by this Agreement and the expiration of any required
waiting period without the commencement of adverse proceedings by any
governmental authority with jurisdiction over the transactions
contemplated by this Agreement;
(b) each representation and warranty of Buyer in this
Agreement being true and correct in all material respects as of the
Closing Date and all covenants and conditions of Buyer to be performed
or met by Buyer on or before the Closing Date having been performed or
met in all material respects;
(c) Buyer's delivery to Seller of the following documents in
form and substance reasonably satisfactory to Seller:
(i) one or more executed assumptions of the Real
Property Leases;
(ii) one or more executed instruments assuming the
remaining Liabilities; and
(iii) a certificate executed by an appropriate
officer of Buyer attesting, to the officer's best knowledge,
to Buyer's compliance with the conditions set forth in Section
9.4(b).
9.5 Survival of Representations and Warranties.
Unless provided otherwise in this Agreement, Buyer's and
Seller's representations and warranties under this Agreement or contained in any
certificate or instrument delivered by either party at the Closing shall survive
for a period of one year following the Closing Date.
X. TERMINATION
10.1 Termination by Either Party.
Either party may terminate this Agreement upon written notice
to the other if:
(a) as a result of any breach of any representation, warranty
or covenant, the party terminating this Agreement has given the other
party written notice of such breach and such breach is not cured within
30 days thereafter;
(b) the Closing does not occur within two hundred seventy
(270) days after the date of this Agreement; or
(c) the other party so agrees in writing.
The termination of this Agreement under subsection (a) shall
not absolve the breaching party from any liability to the other party arising
out of its breach of this Agreement.
XI. MISCELLANEOUS
11.1 Continuing Cooperation.
(a) On and after the Closing Date, Seller agrees to execute,
acknowledge and deliver such documents and instruments as Buyer may
reasonably request to vest in Buyer the full legal and equitable title
to the Assets and Liabilities.
(b) On and after the Closing Date, Buyer shall execute,
acknowledge and deliver such documents and instruments as Seller may
reasonably request to relieve and discharge Seller from its obligations
with respect to the Liabilities.
(c) Seller and Buyer shall cooperate with each other in
connection with any examination conducted by any tax authority
subsequent to the Closing Date by promptly providing upon request
information relating to the tax liability of any business operated by
Seller or Buyer with respect to the Branches and promptly informing the
other of the institution of, any material developments concerning, and
the outcome of, the same.
(d) Except as provided in Section 7.2, no interest in or right
to use First Union National Bank's logo or the name "First Union" or
any other similar word, name, symbol or device in which Seller has any
interest by itself or in combination with any other word, name, symbol
or device, or any similar variation of any of the foregoing
(collectively, the "Retained Names and Marks") is being transferred to
Buyer pursuant to the transactions contemplated hereby. Unless
permitted pursuant to Section 7.2, Buyer shall not after the Closing
Date in any way knowingly use any materials or property, whether or not
in existence on the Closing Date, that bear any Retained Name or Mark.
Buyer agrees that Seller shall have no responsibility for claims by
third parties arising out of, or relating to, the use by the Buyer of
any Retained Name or Mark after the Closing Date, and Buyer agrees to
indemnify and hold harmless Seller from any and all claims (and all
expenses, including reasonable attorneys' fees and disbursements
incurred in connection with any such claim) that may arise out of the
use thereof by Buyer.
11.2 Merger and Amendment.
This Agreement sets out the complete agreement of the parties
with respect to the matters discussed in this Agreement, and it supersedes all
prior agreements between the parties, whether written or oral, which apply to
these matters. No provision of this Agreement may be changed or waived except as
expressly stated in a document executed by both parties.
11.3 Dispute Resolution.
(a) Neither Seller nor Buyer shall assert any claim arising
out of or relating to this Agreement (except with respect to claims to
be handled under the Working Agreement or submitted to the Mediator
under Section 3.2(c)), unless:
(i) except for claims arising under or in respect of
Sections 2.4, 2.5 or 11.1(d), the amount in dispute with
respect to any claim exceeds $5,000.00;
(ii) except for claims arising in respect of Sections
2.4, 2.5 or 11.1(d), the aggregate amount of all claims by
Buyer or Seller (as the case may be) which satisfy the
preceding clause exceeds $50,000.00, in which case a claim may
be asserted only to the extent that such threshold has been
exceeded;
(iii) except for claims arising under Sections 2.4,
2.5, or 11.1(d), the aggregate amount of all claims by Buyer
or Seller (as the case may be) shall not exceed the Amount of
Premium; and
(iv) except for claims arising under Sections 2.4,
2.5 or 11.1(d), the notification required by Section 11.3(b)
(if any) is given on or before the first anniversary of the
Closing Date.
(b) The parties shall attempt in good faith to resolve any
dispute arising out of or relating to this Agreement promptly by
negotiations, as provided in this subsection (b). Either party may give
the other party written notice of any dispute not resolved in the
normal course of business. Executives of both parties at comparable
levels at least one step above the personnel who have previously been
involved in the dispute shall meet at a mutually acceptable time and
place within ten days after delivery of such notice, and thereafter as
often as they reasonably deem necessary, to exchange relevant
information and to attempt to resolve the dispute. If the matter has
not been resolved by these persons within 30 days of the disputing
party's notice, or if the parties fail to meet within ten days, the
dispute shall be referred to more senior executives of both parties who
have authority to settle the dispute and who shall likewise meet to
attempt to resolve the dispute. All negotiations under this subsection
(b) are confidential and shall be treated as compromise and settlement
negotiations for purposes of the Federal Rules of Evidence, applicable
state rules of evidence, and common law. The procedures set forth above
will be followed in advance of litigation of any dispute between the
parties; nevertheless, either party may seek a preliminary injunction
or other provisional judicial relief if in its judgment such an action
is necessary to avoid irreparable damage or to preserve the status quo.
Despite any such action, the parties will continue to participate in
good faith in the procedures set forth in this subsection (b).
(c) Neither party shall have any liability for lost profits or
punitive damages with respect to any claim arising out of or relating
to this Agreement. The sole recourse and remedy of a party hereto for
breach of this Agreement by the other party hereto shall be against
such other party and its assets, and no officer, director, employee,
stockholder or affiliate of any party shall be liable at law or in
equity for the breach by such party of any of its obligations under
this Agreement.
11.4 Indemnification.
After the Closing Date, and unless otherwise provided in the
Agreement:
(a) Buyer shall indemnify and hold Seller harmless from and
against all claims, lawsuits, costs (including reasonable counsel fees)
and liabilities which arise out of or relate to transactions or
operations at the Branches after the Closing Date, and from any loss or
damage resulting from any breach by Buyer of any representation,
warranty or covenant of Buyer contained in this Agreement. If any claim
or lawsuit is made or commenced as to which Seller proposes to demand
such indemnification, it shall notify Buyer with reasonable promptness;
provided, however, that any failure by Seller to notify Buyer shall not
relieve Buyer from its obligations hereunder, except to the extent that
Buyer is actually prejudiced by such failure to give notice. Buyer
shall have the option of defending such claim or lawsuit with counsel
of its own choosing at its own cost and expense and such counsel shall,
to the extent consistent with its professional responsibilities,
cooperate with Seller and any counsel designated by Seller. Buyer shall
be liable for any settlement of any claim or lawsuit against Seller
made with Buyer's written consent, which consent shall not be
unreasonably withheld.
(b) Seller shall indemnify and hold Buyer harmless from and
against all claims, lawsuits, costs (including reasonable counsel fees)
and liabilities which arise out of or relate to transactions or
operations at the Branches on or before the Closing Date, and from any
loss or damage resulting from any breach by Seller of any
representation, warranty or covenant of Seller contained in this
Agreement. If any claim or lawsuit is made or commenced as to which
Buyer proposes to demand such indemnification, it shall notify Seller
with reasonable promptness; provided, however, that any failure by
Buyer to notify Seller shall not relieve Seller from its obligations
hereunder, except to the extent the Seller is actually prejudiced by
such failure to give notice. Seller shall have the option of defending
such claim or lawsuit with counsel of its own choosing at its own cost
and expense and such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with Buyer and any counsel
designated by Buyer. Seller shall be liable for any settlement of any
claim or lawsuit against Buyer made with Seller's written consent,
which consent shall not be unreasonably withheld.
(c) Any claims for indemnification brought under this Section
shall be subject to the provisions of Section 11.3.
11.5 Counterparts.
This Agreement may be executed in any number of counterparts,
each of which will constitute an original, but all of which taken together shall
constitute one and the same instrument.
11.6 Exhibits and Schedules.
All exhibits and schedules referred to in this Agreement shall
constitute a part of this Agreement.
11.7 Assignment.
This Agreement is not assignable by either party without the
written consent of the other party, which consent shall not be unreasonably
withheld, except that Buyer may assign this Agreement, in whole or in part, to
its subsidiary banks, provided, that any such assignment by Buyer will not
relieve it of its liabilities or obligations hereunder, and provided, further,
that it is understood and agreed that (i) there shall be a single Closing as set
forth in Section 9.1 of the Agreement, (ii) a single data processing conversion,
and (iii) a single settlement of items between Buyer and Seller on the Closing
Date.
11.8 Headings.
The headings contained in this Agreement are inserted for
convenience only and shall not affect the meaning of this Agreement or any of
its provisions.
11.9 Notices.
Any notice under this Agreement shall be made in writing and
shall be deemed given when delivered in person, when delivered by first class
mail postage prepaid (in which case the notice shall be deemed given on the
third Business Day following the date on which the notice is postmarked), or
when delivered by facsimile transmission, which transmission also shall be sent
by first class mail, postage prepaid before the second Business Day following
the transmission (in which case the notice shall be deemed given on the day
transmitted if transmitted before or during normal business hours or, otherwise,
on the next succeeding Business Day) to the parties at the respective addresses
set forth below or at such other addresses as each party shall inform the other
in writing.
If to Seller to: Jonathan Stern
Senior Vice President
First Union National Bank
190 River Road
Summit, New Jersey 07901
with a copy to: Keith D. Lembo, Esq.
Senior Vice President
and Deputy General Counsel
First Union Corporation
One First Union Center, Leg-0630,
31st Floor
Charlotte, North Carolina 28288-0603
If to Buyer to: Christine Witkowski
Senior Vice President & Controller
HUBCO, Inc.
1000 MacArthur Blvd.
Mahwah, New Jersey 07430
with a copy to: D. Lynn Van Borkulo-Nuzzo, Esq,
Executive Vice President & General Counsel
HUBCO, Inc.
1000 MacArthur Blvd.
Mahwah, New Jersey 07430
11.10 Expenses.
Unless specifically stated to the contrary in this Agreement,
each party will assume and pay for the expenses it incurs with respect to the
purchase and sale of the Assets and assumption of the Liabilities under this
Agreement; provided, however, that Buyer shall pay all fees and expenses
associated with the regulatory application process. Each party shall be
responsible for any fee payable to any agent, broker or finder acting on its
behalf in this transaction.
11.11 Public Announcements.
Each party shall consult with the other before making any
announcement or other public communication with respect to the transactions
contemplated by this Agreement and shall furnish a copy of the text to the other
party of the announcement or other communication.
11.12 Governing Law; Jurisdiction.
This Agreement and the legal relations between the parties
shall be governed by and construed in accordance with the laws of the State of
New Jersey applicable to contracts made and to be performed entirely within the
State of New Jersey.
11.13 No Third Party Beneficiaries.
The parties intend that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any Person other than
Seller and Buyer.
IN WITNESS WHEREOF, each of the parties to this Agreement has caused
this Agreement to be executed by a duly authorized officer as of the date
written on page one of this Agreement.
HUBCO, INC.
By:/s/ D. Lynn Van Borkulo-Nuzzo
--------------------------------
Its:Executive Vice President
FIRST UNION NATIONAL BANK
By:/s/ Jonathan Stern
--------------------------------
Its:Senior Vice President
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of March 2,
1998, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and COMMUNITY FINANCIAL HOLDING CORPORATION, a
New Jersey corporation and registered bank holding company ("CFHC").
BACKGROUND
WHEREAS, HUBCO and CFHC, as of the date hereof, are prepared
to execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which CFHC will be merged with and into HUBCO (the "Merger"); and
WHEREAS, HUBCO has advised CFHC that it will not execute the
Merger Agreement unless CFHC executes this Agreement; and
WHEREAS, the Board of Directors of CFHC has determined that
the Merger Agreement provides substantial benefits to the shareholders of CFHC;
and
WHEREAS, as an inducement to HUBCO to enter into the Merger
Agreement and in consideration for such entry, CFHC desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of CFHC in an
amount and on the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, HUBCO and CFHC,
intending to be legally bound hereby, agree:
1. Grant of Option. CFHC hereby grants to HUBCO the
option to purchase 252,790 shares of common stock, $5.00 par value, of CFHC (the
"Common Stock") at a price of $24.40 per share (the "Option Price"), on the
terms and conditions set forth herein (the "Option").
2. Exercise of Option. This Option shall not be
exercisable until the occurrence of a Triggering Event (as such term is
hereinafter defined). Upon or after the occurrence of a Triggering Event (as
such term is hereinafter defined), HUBCO may exercise the Option, in whole or in
part, at any time or from time to time, subject to the terms and conditions set
forth herein and the termination provisions of Section 19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such term
is defined in Rule 13d-3 as promulgated under the Exchange Act) of at least 20%
of the then outstanding shares of Common Stock; or
b. enters into a letter of intent or an
agreement, whether oral or written, with CFHC pursuant to which such person or
any affiliate of such person would (i) merge or consolidate, or enter into any
similar transaction, with CFHC, (ii) acquire all or a significant portion of the
assets or liabilities of CFHC, or (iii) acquire beneficial ownership of
securities representing, or the right to acquire beneficial ownership or to vote
securities representing, 20% or more of the then outstanding shares of Common
Stock; or
c. makes a filing with any bank regulatory
authorities or publicly announces a bona fide proposal (a "Proposal") for (i)
any merger with, consolidation with or acquisition of all or a significant
portion of all the assets or liabilities of, CFHC or any other business
combination involving CFHC, or (ii) a transaction involving the transfer of
beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 20% or more of the
outstanding shares of Common Stock, and thereafter, if such Proposal has not
been Publicly Withdrawn (as such term is hereinafter defined) at least 15 days
prior to the meeting of shareholders of CFHC called to vote on the Merger and
CFHC's shareholders fail to approve the Merger by the vote required by
applicable law at the meeting of shareholders called for such purpose; or
d. makes a bona fide Proposal and thereafter,
but before such Proposal has been Publicly Withdrawn, CFHC willfully takes any
action in any manner which would materially interfere with its ability to
consummate the Merger or materially reduce the value of the transaction to
HUBCO.
The term "Triggering Event" also means the taking of any
material direct or indirect action by CFHC or any of its directors, senior
executive officers, investment bankers or other person with actual or apparent
authority to speak for the CFHC Board of Directors, inviting, encouraging or
soliciting any proposal which has as its purpose a tender offer for the shares
of Common Stock, a merger, consolidation, plan of exchange, plan of acquisition
or reorganization of CFHC, or a sale of a significant number of shares of Common
Stock or any significant portion of its assets or liabilities (any of the
foregoing, an "Insider Action"); provided, that such Insider Action shall not
constitute a Triggering Event if (i) promptly but in any event within 24 hours
after the Insider Action occurs, CFHC so notifies HUBCO in a writing which
describes the Insider Action in reasonable detail, (ii) promptly but in any
event within 48 hours after HUBCO requests in writing, CFHC takes all actions
which HUBCO reasonably requests in order to ameliorate any actual or potential
negative effects of the Insider Action, and (iii) the Insider Action does not
actually have an adverse effect on HUBCO or on the ability of HUBCO or CFHC to
consummate the Merger or to do so in a timely manner.
The term "significant portion" means 25% of the assets or
liabilities of CFHC. The term "significant number" means 20% of the outstanding
shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the Proposal coupled
with a public announcement of no further interest in pursuing such Proposal or
in acquiring any controlling influence over CFHC or in soliciting or inducing
any other person (other than HUBCO or any affiliate of HUBCO) to do so.
Notwithstanding the foregoing, the Option may not be exercised
at any time (i) in the absence of any required governmental or regulatory
approval or consent necessary for CFHC to issue the shares of Common Stock
covered by the Option (the "Option Shares") or HUBCO to exercise the Option or
prior to the expiration or termination of any waiting period required by law, or
(ii) so long as any injunction or other order, decree or ruling issued by any
federal or state court of competent jurisdiction is in effect which prohibits
the sale or delivery of the Option Shares, or (iii) if at any time between the
exercise of the Option and the issuance of the Option Shares, HUBCO has breached
in a material respect any of the material covenants of the Merger Agreement
which remain applicable to it.
CFHC shall notify HUBCO promptly in writing of the occurrence
of any Triggering Event known to it, it being understood that the giving of such
notice by CFHC shall not be a condition to the right of HUBCO to exercise the
Option. CFHC will not take any action which would have the effect of preventing
or disabling CFHC from delivering the Option Shares to HUBCO upon exercise of
the Option or otherwise performing its obligations under this Agreement, except
to the extent required by applicable securities and banking laws and
regulations.
In the event HUBCO wishes to exercise the Option, HUBCO shall
send a written notice to CFHC (the date of which is hereinafter referred to as
the "Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date between two and ten business days inclusive from
the Notice Date for the closing of such a purchase (a "Closing"); provided,
however, that a Closing shall not occur prior to two days after the later of
receipt of any necessary regulatory approvals and the expiration of any legally
required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any Closing
hereunder (a) HUBCO will make payment to CFHC of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by CFHC; (b) CFHC will deliver to HUBCO a stock certificate
or certificates representing the number of Option Shares so purchased, free and
clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever created by or through CFHC, registered in the name of HUBCO or its
designee, in such denominations as were specified by HUBCO in its notice of
exercise and bearing a legend as set forth below; and (c) HUBCO shall pay any
transfer or other taxes required by reason of the issuance of the Option Shares
so purchased.
A legend will be placed on each stock certificate evidencing
Option Shares issued pursuant to this Agreement, which legend will read
substantially as follows:
The shares of stock evidenced by this certificate have not been
registered for sale under the Securities Act of 1933 (the "1933 Act").
These shares may not be sold, transferred or otherwise disposed of
unless a registration statement with respect to the sale of such shares
has been filed under the 1933 Act and declared effective or, in the
opinion of counsel reasonably acceptable to COMMUNITY FINANCIAL HOLDING
CORPORATION, said transfer would be exempt from registration under the
provisions of the 1933 Act and the regulations promulgated thereunder.
No such legend shall be required if a registration statement is filed and
declared effective under Section 4 hereof.
4. Registration Rights. Upon or after the occurrence of
a Triggering Event and upon receipt of a written request from HUBCO, CFHC shall,
if necessary for the resale of the Option or the Option Shares by HUBCO, prepare
and file a registration statement with the Securities and Exchange Commission
and any state securities bureau covering the Option and such number of Option
Shares as HUBCO shall specify in its request, and CFHC shall use its best
efforts to cause such registration statement to be declared effective in order
to permit the sale or other disposition of the Option and the Option Shares,
provided that HUBCO shall in no event have the right to have more than one such
registration statement become effective, and provided further that CFHC shall
not be required to prepare and file any such registration statement in
connection with any proposed sale with respect to which counsel to CFHC delivers
to CFHC and to HUBCO its opinion (which is reasonably acceptable to HUBCO) to
the effect that no such filing is required under applicable laws and regulations
with respect to such sale or disposition; provided further, however, that CFHC
may delay any registration of Option Shares above for a period not exceeding 90
days in the event that CFHC shall in good faith determine that any such
registration would adversely effect an offering of securities by CFHC for cash.
HUBCO shall provide all information reasonable requested by CFHC for inclusion
in any registration statement to be filed hereunder.
In connection with such filing, CFHC shall use its best
efforts to cause to be delivered to HUBCO such certificates, opinions,
accountant's letters and other documents as HUBCO shall reasonably request and
as are customarily provided in connection with registrations of securities under
the Securities Act of 1933, as amended. All reasonable expenses incurred by CFHC
in complying with the provisions of this Section 4, including without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for CFHC and blue sky fees and expenses shall be paid
by CFHC. Underwriting discounts and commissions to brokers and dealers relating
to the Option Shares, fees and disbursements of counsel to HUBCO and any other
expenses incurred by HUBCO in connection with such registration shall be borne
by HUBCO. In connection with such filing, CFHC shall indemnify and hold harmless
HUBCO against any losses, claims, damages or liabilities, joint or several, to
which HUBCO may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any preliminary or final registration statement or any amendment or supplement
thereto, or arise out of the omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading; and CFHC
will reimburse HUBCO for any legal or other expense reasonably incurred by HUBCO
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that CFHC will not be liable in any case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such preliminary or final registration statement or
such amendment or supplement thereto in reliance upon and in conformity with
written information furnished by or on behalf of HUBCO specifically for use in
the preparation thereof. HUBCO will indemnify and hold harmless CFHC to the same
extent as set forth in the immediately preceding sentence but only with
reference to written information specifically furnished by or on behalf of HUBCO
for use in the preparation of such preliminary or final registration statement
or such amendment or supplement thereto; and HUBCO will reimburse CFHC for any
legal or other expense reasonably incurred by CFHC in connection with
investigating or defending any such loss, claim, damage, liability or action.
Notwithstanding anything to the contrary herein, no indemnifying party shall be
liable for any settlement effected without its prior written consent.
5. Adjustment Upon Changes in Capitalization. In the
event of any change in the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, conversions, exchanges of shares or
the like, then the number and kind of Option Shares and the Option Price shall
be appropriately adjusted.
In the event any capital reorganization or reclassification of
the Common Stock, or any consolidation, merger or similar transaction of CFHC
with another entity, or any sale of all or substantially all of the assets of
CFHC, shall be effected in such a way that the holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions (in form
reasonably satisfactory to the holder hereof) shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified herein and in lieu of the Common
Stock immediately theretofore purchasable and receivable upon exercise of the
rights represented by this Option, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore purchasable and receivable upon exercise
of the rights represented by this Option had such reorganization,
reclassification, consolidation, merger or sale not taken place; provided,
however, that if such transaction results in the holders of Common Stock
receiving only cash, the holder hereof shall be paid the difference between the
Option Price and such cash consideration without the need to exercise the
Option.
6. Filings and Consents. Each of HUBCO and CFHC will
use its reasonable efforts to make all filings with, and to obtain consents of,
all third parties and governmental authorities necessary to the consummation of
the transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event HUBCO is the holder
hereof, approval of the Securities and Exchange Commission, the Board of
Governors of the Federal Reserve System, the Office of Comptroller of the
Currency, the Federal Deposit Insurance Corporation or the New Jersey Department
of Banking and Insurance, and CFHC agrees to cooperate with and furnish to the
holder hereof such information and documents as may be reasonably required to
secure such approvals.
7. Representations and Warranties of CFHC. CFHC
hereby represents and warrants
to HUBCO as follows:
a. Due Authorization. CFHC has full corporate
power and authority to execute, deliver and perform this Agreement and all
corporate action necessary for execution, delivery and performance of this
Agreement has been duly taken by CFHC.
b. Authorized Shares. CFHC has taken and, as
long as the Option is outstanding, will take all necessary corporate action to
authorize and reserve for issuance all shares of Common Stock that may be issued
pursuant to any exercise of the Option.
c. No Conflicts. Neither the execution and
delivery of this Agreement nor consummation of the transactions contemplated
hereby (assuming all appropriate regulatory approvals) will violate or result in
any violation or default of or be in conflict with or constitute a default under
any term of the Certificate of Incorporation or Bylaws of CFHC or any agreement,
instrument, judgment, decree or order applicable to CFHC.
8. Specific Performance. The parties hereto acknowledge
that damages would be an inadequate remedy for a breach of this Agreement and
that the obligations of the parties hereto shall be specifically enforceable.
Notwithstanding the foregoing, HUBCO shall have the right to seek money damages
against CFHC for a breach of this Agreement.
9. Entire Agreement. This Agreement and the Merger
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof.
10. Assignment or Transfer. HUBCO may not sell, assign
or otherwise transfer its rights and obligations hereunder, in whole or in part,
to any person or group of persons other than to a wholly-owned subsidiary of
HUBCO. HUBCO represents that it is acquiring the Option for HUBCO's own account
and not with a view to or for sale in connection with any distribution of the
Option or the Option Shares. HUBCO is aware that neither the Option nor the
Option Shares is the subject of a registration statement filed with, and
declared effective by, the Securities and Exchange Commission pursuant to
Section 5 of the Securities Act, but instead each are being offered in reliance
upon the exemption from the registration requirement provided by Section 4(2)
thereof and the representations and warranties made by HUBCO in connection
therewith.
11. Amendment of Agreement. Upon mutual consent of the
parties hereto, this Agreement may be amended in writing at any time, for the
purpose of facilitating performance hereunder or to comply with any applicable
regulation of any governmental authority or any applicable order of any court or
for any other purpose.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
13. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally, by express service,
cable, telegram or telex, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
If to HUBCO:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: Kenneth T. Neilson
President and Chief Executive Officer
With a copy to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: D. Lynn Van Borkulo-Nuzzo, Esq.
Executive Vice President and General Counsel
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, NJ 07932
Attn.: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
If to CFHC:
Community Financial Holding Corporation
222 Haddon Avenue
Westmont, NJ 08108
Attn.: Robert T. Pluese
Chairman
With a copy to:
Stevens & Lee
1415 Route 70 East, Suite 506
Cherry Hill, NJ 08034
Attn.: Jeffrey P. Waldron, Esq.
Edward C. Hogan, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are
inserted for convenience and reference purposes, and shall not limit or
otherwise affect any of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may, by
mutual consent, extend the time for performance of any of the obligations or
acts of either party hereto. Each party may waive (a) compliance with any of the
covenants of the other party contained in this Agreement and/or (b) the other
party's performance of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
18. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
19. Termination. This Agreement shall terminate upon
either the termination of the Merger Agreement as provided therein or the
consummation of the transactions contemplated by the Merger Agreement; provided,
however, that if termination of the Merger Agreement occurs after the occurrence
of a Triggering Event (as defined in Section 2 hereof) and the Merger Agreement
has not been terminated by CFHC due to a material breach by HUBCO of a material
covenants of the Merger Agreement applicable to HUBCO, this Agreement shall not
terminate until the later of 18 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Stock Option
Agreement to be executed by its duly authorized officer, all as of the day and
year first above written.
COMMUNITY FINANCIAL HOLDING CORPORATION
GERARD M. BENMILLER
By:-------------------------------------
Gerard M. Benmiller, President
HUBCO, INC.
KENNETH T. NEILSON
By:-------------------------------------
Kenneth T. Neilson, President and
Chief Executive Officer
HUBCO, INC.
1000 MacArthur Blvd.
Mahwah, NJ 07430
(NASDAQ: HUBC)
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD, INC.
Kenneth T. Neilson, Chairman Kerry Thalheim/Regina Lenihan
Pres. & CEO - (201) 236-2631 675 Third Avenue
Joseph F. Hurley, Executive New York, NY 10017
Vice President and CEO (212) 661-8030
(201) 236-6141
FOR IMMEDIATE RELEASE
March 3, 1998
HUBCO, INC. AND COMMUNITY FINANCIAL HOLDING CORPORATION SIGN
DEFINITIVE MERGER AGREEMENT
Mahwah, New Jersey March 3, 1998 -- HUBCO, Inc. (NASDAQ:HUBC), and
Community Financial Holding Corporation (NASDAQ:CMFH), the holding company for
Community National Bank of New Jersey, today announced the signing of definitive
merger agreement. Community Financial Holding Company is a $150 million
commercial bank holding company headquartered in Westmont, New Jersey.
Under the terms of the agreement, each share of Community Financial
Common Stock will be exchanged for 0.695 shares of HUBCO Common Stock. The
Community Financial Board of Directors has certain rights to terminate the
Agreement if the median HUBCO price during a pricing period prior to the closing
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 HUBCO price. Based on
the closing price for HUBCO Common Stock on March 2, 1998, the value of the
acquisition is $29.6 million or $25.28 per share of Community Financial Common
Stock. This represents a deposit premium of 10.3% and the value of the
transaction, including options, equates 2.55 times Community Financial's book
value and 47 times 1997 earnings, which were significantly impacted by the
opening of four branches during 1997.
In connection with the execution of the merger agreement, Community
Financial has issued an option to HUBCO which, under certain defined
circumstances, could result in the issuance of 252,790 shares of Community
Financial Common Stock to HUBCO. The transaction, which is expected to be
treated as a tax-free exchange to holders of Community Financial Common Stock,
will be accounted for as a pooling of interests. As part of the transaction,
Community National Bank of New Jersey will be merged into Hudson United Bank but
will be operated as the Community National division of Hudson United Bank after
the closing. The Merger is subject to approval by Federal and New Jersey bank
regulatory authorities as well as other customary conditions.
Kenneth T. Neilson, HUBCO's Chairman, President and CEO commented, "We
are pleased that Community National Bank has chosen to join HUBCO. Hudson United
Bank will bring new products and services to Community National's customers,
while the addition of Community National will mark our first entry into Camden,
Burlington, and Gloucester counties."
HUBCO, Inc. is the holding company for Hudson United Bank, a $1.7
billion asset bank in New Jersey, and Lafayette American Bank, a $1.4 billion
asset bank in Connecticut. In addition, HUBCO has announced definitive
agreements to acquire Poughkeepsie Financial Corp., which owns Bank of the
Hudson, and MSB Bancorp, Inc., parent company for MSB Bank, in New York State.
Together these institutions will operate under the Bank of The Hudson name with
32 branches in New York State. HUBCO also recently announced the signing of an
agreement to purchase 22 branches of First Union National Bank located in New
Jersey, Connecticut and New York. After closing all pending acquisitions, HUBCO
will have total assets in excess of $5 billion.
HUBCO's bank subsidiaries offer a full array of innovative products and
services to retain and commercial markets including imaged checking accounts,
24-hour telephone banking, loans by phone, alternative investments, insurance
products, private label credit programs, trust services, and a wide variety of
commercial loans and services including international services, cash management
services, asset based loans and SBA loans.
