================================================================================
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) October 23, 1997
HUBCO, INC.
(Exact name of registrant as specified in its charter)
New Jersey
(State or other jurisdiction of incorporation)
1-10699 22-2405746
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
(Address of principal executive offices)
(201) 236-2600
(Registrant's telephone number, including area code)
================================================================================
<PAGE>
Item 5. Other Events
- ------- ------------
HUBCO, Inc. ("HUBCO") announced on March 31, 1998 the signing of a
definitive agreement among HUBCO, Hudson United Bank, HUBCO's New Jersey banking
subsidiary, IBS Financial Corp. ("IBSF") and Inter-Boro Savings and Loan
Association (the "IBSF Merger Agreement") under which HUBCO will acquire IBSF in
a stock for stock exchange which is intended to qualify as a pooling of
interests. A copy of the Press Release is attached as an Exhibit to this Form
8-K.
Under the terms of the IBSF Merger Agreement each share of IBSF common
stock will be exchanged for a fixed number of shares of HUBCO common stock at an
exchange ratio of 0.534 shares of HUBCO common stock for each IBSF share. Based
upon HUBCO's March 30, 1998 closing price of $38.81, 0.534 shares of HUBCO
common stock would have a value of $20.73. This equates to a total transaction
value of $227 million, or 1.76 times IBSF's book value, and 38 times IBSF's last
twelve months reported earnings, and a deposit premium of 17.5%.
In connection with the execution of the IBSF Merger Agreement, IBSF has
issued an option to HUBCO that, under certain defined circumstances, would
enable HUBCO to purchase up to 2,700,000 shares of IBSF common stock. In
addition, IBSF has certain rights to terminate the IBSF Merger Agreement if
HUBCO's share price should decrease more than 15% between the day after the
announcement and a pre-closing determination date, and also decrease 10% more
than a specified index, unless HUBCO agrees to deliver shares of HUBCO common
stock having a value which would satisfy these criteria. The transaction, which
is expected to close in the third quarter of 1998, is expected to be treated as
a tax-free exchange to holders of IBSF common stock.
HUBCO also announced on March 31, 1998 the signing of a definitive
agreement among HUBCO, Lafayette American Bank, HUBCO's Connecticut banking
subsidiary, Dime Financial Corporation ("DFC") and The Dime Savings Bank of
Wallingford (the "Dime Merger Agreement")under which HUBCO will acquire DFC in a
stock for stock exchange which is intended to qualify as a pooling of interests.
A copy of the Press Release is attached as an Exhibit to this Form 8-K.
Under the terms of the Dime Merger Agreement DFC shareholders will
receive HUBCO common stock with an indicated value of $38.25 per share based
upon the median price of HUBCO common stock in a period immediately before
regulatory approval (if the price of HUBCO stock during such period is between
$36.42 and $41.13). A maximum exchange ratio for each share of DFC common stock
will apply if HUBCO's pre-approval price is below $36.43. A minium exchange
ratio of .93 shares will apply if HUBCO's pre-approval price is above $41.13.
The $38.25 per share value equates to a total transaction value of $201 million,
or 2.49 times DFC's book value, 19 times DFC's tax effected last twelve months
earnings, and a deposit premium of 14.5%.
In connection with the execution of the Dime Merger Agreement, DFC has
issued an option to HUBCO which would enable HUBCO to purchase up to 1,044,000
shares of DFC common stock under certain defined circumstances. In addition, DFC
has certain rights to terminate the Dime Merger Agreement if the median
pre-approval price of HUBCO is less than $31.43 per share unless HUBCO agrees to
deliver shares of HUBCO common stock with a value at the pre-approval price of
$33.00 in exchange for each share of DFC common stock under certain defined
circumstances. The transaction, which is expected to close in the third quarter
of 1998, is expected to be treated as a tax-free exchange to holders of DFC
common stock. A copy of the Press Release is attached as an exhibit to this Form
8-K.
On March 31, 1998, HUBCO held a conference call with banking industry
analysts and others to discuss the acquisitions. The following additional
information was provided to participants during the investor presentation.
* HUBCO anticipates $6.7 million in projected expense savings with
respect to the acquisition of DFC and $9.0 million in projected expense savings
with respect to the acquisition of IBSF.
* Merger related and restructuring charges will be taken and HUBCO
presently estimates they will be approximately $21.0 million for IBSF and $10.8
million for DFC on a pre-tax basis. These charges include, among others,
investment and other professional fees, service contract terminations, lease
terminations, disposal of equipment and fixtures no longer necessary for the
operation of the institution, employment contract payouts and severance
payments.
* The earnings multiple (last twelve months with normalized tax
expense) to be paid by HUBCO, as adjusted for cost saves, is estimated to be 13
times for Dime. The earnings multiple (last twelve months with normalized tax
expense) to be paid by HUBCO, as adjusted for cost saves and the ability to
leverage IBSF's excess capital, is estimated to be 16 times for IBSF. Both of
these ratios are less than the current price to earnings ratio for HUBCO and,
therefore, HUBCO expects the acquisitions to be accretive to earnings.
* The price to book value to be paid by HUBCO is estimated to be 249%
for Dime and 176% for IBSF.
* The premium over book value as a percent of deposits is anticipated
to be 14.5% for Dime and 17.6% for IBSF.
* On a pro forma basis, taking into account all of HUBCO's pending
acquisitions, HUBCO estimates it will have approximately $7.0 billion of total
assets, $3.6 billion of total loans, $2.6 billion of total investments, $5.6
billion of total deposits, $500 million of total capital, and a leverage ratio
of 6.6%.
The estimates and statements in such conference call and in this Form
8-K concerning projected expense savings, restructuring charges, earnings
multiples adjusted for cost savings, premium over book value as a percent of
deposits, premium to book value, pro forma information for all acquisitions
combined, as well as other projected information are forward looking statements
under the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve significant risks and uncertainties. The actual results may
differ materially from the estimates and statements presented. Factors that may
cause such a difference include, but are not limited to, customer retention,
employee retention, the integration and computer conversions to HUBCO's systems,
the ability to effectively centralize loan, credit, finance and data processing
functions without substantial cost increases, the ability to terminate certain
leases, factors related to the successful integration of these new transactions
and the other pending acquisitions without incurring substantial unexpected
liabilities, changes in deposit base and loan portfolio, loan loss provisions,
changes in interest rates and economic conditions generally.
Item 7. Exhibits
- ------- --------
99.1 Press Release dated March 31, 1998.
99.2 Agreement and Plan of Merger dated March 31, 1998 among HUBCO,
Inc., ("HUBCO") Hudson United Bank, IBS Financial Corporation
("IBSF") and Inter-Boro Savings and Loan Association.
99.3 Stock Option Agreement dated March 31, 1998 among HUBCO. and
IBSF.
99.4 Agreement and Plan of Merger dated March 31, 1998 among HUBCO,
Lafayette American Bank, Dime Financial Corporation ("DFC") and
Dime Savings Bank of Wallingford.
99.5 Stock Option Agreement dated March 31, 1998 among HUBCO and DFC.
<PAGE>
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
-----------------------------
D. Lynn Van Borkulo-Nuzzo,
Executive Vice President
<PAGE>
INDEX TO EXHIBIT
Exhibit No. Description
- ---------- -----------
99.1 Press Release dated March 31, 1998.
99.2 Agreement and Plan of Merger dated March 31, 1998 among HUBCO,
Inc., ("HUBCO") Hudson United Bank, IBS Financial Corp.("IBSF"),
and Inter- Boro Savings and Loan Association.
99.3 Stock Option Agreement dated March 31, 1998 among HUBCO and IBSF.
99.4 Agreement and Plan of Merger dated March 31, 1998 among HUBCO,
Lafayette American Bank, Dime Financial Corporation ("DFC") and
Dime Savings and Loan Association of Wallingford.
99.5 Stock Option Agreement dated March 31, 1998 among HUBCO and DFC.
HUBCO, INC.
1000 MacArthur Blvd.
Mahwah, NJ 07430
(NASDAQ:HUBC)
AT THE COMPANY:
Kenneth T. Neilson, Chairman, President
& Chief Executive Officer
(201) 236-2631
Joseph F. Hurley, Executive Vice President
& Chief Financial Officer
(201) 236-6141
FOR IMMEDIATE RELEASE
March 31, 1998
HUBCO, Inc. Expands Its Franchise With Two Acquisitions
-------------------------------------------------------
Mahwah, New Jersey, March 31, 1998 -- HUBCO, Inc. (NASDAQ: HUBC), one
of New Jersey's fastest growing financial institutions, today reported the
signing of agreements to acquire two financial institutions. For the year ended
December 31, 1997, HUBCO, Inc. reported a return on average equity in excess of
24% and a return on average assets in excess of 1.65%. HUBCO is leveraging its
high performance results by entering into acquisitions which are anticipated to
drive further revenue growth and efficiencies.
HUBCO announced the signing of separate definitive merger agreements
with Dime Financial Corporation ("Dime") (NASDAQ: DIBK) and with IBS Financial
Corporation ("IBS") (NASDAQ: IBSF). Dime is the holding company for The Dime
Savings Bank of Wallingford, Connecticut, a $961 million asset institution that
operates eleven offices in New Haven County. IBS Financial Corp. is the holding
company for Inter-Boro Savings and Loan Association, a $734 million asset
company headquartered in Cherry Hill, New Jersey operating ten offices in New
Jersey's suburban Philadelphia communities.
Dime Financial Corporation
--------------------------
Under the terms of the agreement, Dime common shareholders will receive
HUBCO stock with an indicated value of $38.25 per share based upon the median
price of HUBCO stock in a period immediately before regulatory approval(if the
price of HUBCO stock during such period is between $36.43 and $41.13). A maximum
exchange ratio of 1.05 shares of HUBCO for each share of Dime will apply if
HUBCO's pre-approval price is below $36.43. A minimum exchange ratio of 0.93
will apply if HUBCO's pre-approval price is above $41.13. The $38.25 per share
value equates to a total transaction value of $201 million, or 2.49 times Dime's
book value, 19 times Dime's tax effected last twelve months earnings and a
deposit premium of 14.5%. In connection with execution of the merger agreement,
Dime has issued an option to HUBCO which would enable HUBCO to purchase up to
1,040,000 shares of Dime common stock under certain defined circumstances. In
addition, Dime has certain rights to terminate the agreement if the median
pre-closing price of HUBCO is less than $31.43 per share unless HUBCO agrees to
deliver shares of HUBCO with a value at the median pre-closing price of $33.00
in exchange for each share of Dime. The transaction, which is expected to close
in the third quarter of 1998, is expected to be treated as a tax-free exchange
to holders of Dime common stock and to be accounted for as a pooling of
interests.
IBS Financial Corp.
Under the terms of the IBS agreement, each share of IBS common stock
will be exchanged for a fixed number of shares of HUBCO common stock at an
exchange ratio of 0.534 shares of HUBCO for each IBS share. Based on HUBCO's
March 30, 1998 closing price of $38.81 for its common stock, 0.534 shares has a
value of $20.73. This equates to a total transaction value of $227 million, or
1.76 times IBS's book value, 38 times IBS's last twelve months reported earnings
and a deposit premium of 17.5%. In connection with the execution of the merger
agreement, IBS has issued an option to HUBCO that, under certain defined
circumstances, would enable HUBCO to purchase up to 2,700,000 shares of IBS
common stock. In addition, IBS has certain rights to terminate the agreement if
HUBCO's share price should decrease more than 15% between the day after the
announcement and a pre-closing determination date and also decrease 10% more
than a specified index unless HUBCO agrees to deliver shares of HUBCO, having a
value which would satisfy these criteria. This transaction, which is expected to
close in the third quarter of 1998, is expected to be treated as a tax-free
exchange to holders of IBS common stock and to be accounted for as a pooling of
interests.
These acquisitions represent HUBCO's twenty-fourth and twenty-fifth
acquisitions in the past seven years, and will significantly increase HUBCO's
market share in New Haven County in Connecticut and in Burlington, Camden and
Gloucester counties in New Jersey. With the completion of all announced
acquisitions, HUBCO will have assets in excess of $7 billion and over 160
banking offices in New Jersey, Connecticut and New York. HUBCO's market
capitalization will exceed $1.5 billion.
"This merger provides the southern region of Hudson United Bank with a
significant market share, provides new products and services to Inter-Boro's
customers and rewards our shareholders for their support," said Mr. Joseph M.
Ochman, Sr., Chairman, President and Chief Executive Officer of IBS.
Richard H. Dionne, President and Chief Executive Officer of Dime
Financial, stated "We are delighted to join forces with HUBCO and Lafayette
American. This merger should greatly enhance the products and services we can
offer Dime customers and provide our shareholders with an excellent opportunity
to participate with HUBCO in a dynamic, multi-state commercial banking
franchise."
Kenneth T. Neilson, HUBCO's Chairman, President and Chief Executive
Officer commented, "We are very pleased to have both Dime Financial and IBS
choose to join the HUBCO organization. These institutions significantly
strengthen our market share and penetration in Connecticut and South Jersey, two
markets that we consider attractive. Further, these acquisitions will be
significantly accretive to HUBCO's book value per share and are expected to be
accretive to its earnings per share.
HUBCO, Inc. is the holding company for Hudson United Bank in New Jersey
and Lafayette American Bank in Connecticut. During the second quarter of 1998,
HUBCO expects to add a New York subsidiary under the name "Bank of the Hudson"
through its pending acquisitions of Poughkeepsie Financial Corp. and MSB
Bancorp, Inc. and their subsidiary banks.
HUBCO's banking subsidiaries offer a full array of innovative products
and services to retail and commercial customers including imaged checking
accounts, 24 hour telephone banking, PC banking, loans by phone, alternative
investments, insurance products, private label credit card programs, trust
services and a wide variety of commercial loans and services including
international services, cash management services, asset based loans and SBA
loans.
# # #
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 31, 1998
("Agreement"), is among HUBCO, Inc. ("HUBCO"), a New Jersey corporation and
registered bank holding company, Hudson United Bank (the "Bank"), a New Jersey
state-chartered commercial banking corporation and wholly-owned subsidiary of
HUBCO, IBS Financial Corp., a New Jersey corporation and registered savings and
loan holding company ("IBSF"), and Inter-Boro Savings and Loan Association, a
New Jersey state-chartered savings and loan association and wholly-owned
subsidiary of IBSF (the "Association").
RECITALS
The respective Boards of Directors of HUBCO and IBSF have each
determined that it is in the best interests of HUBCO and IBSF and their
respective shareholders for HUBCO to acquire IBSF by merging IBSF with and into
HUBCO with HUBCO surviving and IBSF shareholders receiving the consideration
hereinafter set forth. Immediately after the merger of IBSF into HUBCO, the
Association shall be merged with and into the Bank with the Bank surviving.
The respective Boards of Directors of IBSF, HUBCO, the Bank
and the Association have each duly adopted and approved this Agreement and the
Board of Directors of IBSF has directed that it be submitted to IBSF's
shareholders for approval.
As a condition for HUBCO to enter into this Agreement, HUBCO
has required that it receive an option on certain authorized but unissued shares
of IBSF Common Stock (as hereinafter defined) and, simultaneously with the
execution of this Agreement, IBSF is issuing an option to HUBCO (the "HUBCO
Stock Option") to purchase certain shares of the authorized and unissued IBSF
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), IBSF shall be merged
with and into HUBCO (the "Merger") in accordance with the New Jersey Business
Corporation Act (the "NJBCA") and HUBCO shall be the surviving corporation (the
"Surviving Corporation").
1.2. Effect of the Merger. At the Effective Time, the
Surviving Corporation shall be considered the same business and corporate entity
as each of HUBCO and IBSF and thereupon and thereafter, all the property,
rights, privileges, powers and franchises of each of HUBCO and IBSF 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 IBSF and shall have succeeded to all of each of
their relationships, as fully and to the same extent as if such property,
rights, privileges, powers, franchises, debts, liabilities, obligations, duties
and relationships had been originally acquired, incurred or entered into by the
Surviving Corporation. In addition, any reference to either of HUBCO and IBSF 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 IBSF 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 IBSF 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. Bylaws. As of the Effective Time, the Bylaws of HUBCO
shall be the Bylaws of the Surviving Corporation until otherwise amended as
provided by law.
1.5. Directors and Officers. As of the Effective Time, the
directors and officers of HUBCO shall be the directors and officers of the
Surviving Corporation.
1.6 Closing, Closing Date, Determination Date and Effective
Time. Unless a different date, time and/or place are agreed to by the parties
hereto, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., at the offices of Pitney, Hardin, Kipp & Szuch, 200 Campus Drive, Florham
Park, New Jersey, on a date determined by HUBCO on at least five business days
notice (the "Closing Notice") given to IBSF, which date (the "Closing Date")
shall be not less than seven nor more than 10 business days following the
receipt of all necessary regulatory, governmental and shareholder approvals and
consents and the expiration of all statutory waiting periods in respect thereof
and the satisfaction or waiver of all of the conditions to the consummation of
the Merger specified in Article VI hereof (other than the delivery of
certificates, opinions and other instruments and documents to be delivered at
the Closing). In the Closing Notice, HUBCO shall specify the "Determination
Date" for purposes of determining the Median Pre-Closing Price (as hereinafter
defined), which date shall be the later of (i) the first date on which all
federal bank regulatory approvals (and waivers, if applicable) necessary for
consummation of the Merger have been received and either party has notified the
other in writing that all such approvals (and waivers, if applicable) have been
received, or (ii) the date of the Shareholders Meeting (as such term is defined
in Section 5.7 hereof). Simultaneous with or immediately following the Closing,
HUBCO and IBSF shall cause to be filed a certificate of merger, in form and
substance satisfactory to HUBCO and IBSF, with the Secretary of State of the
State of New Jersey (the "Certificate of Merger"). The Certificate of Merger
shall specify the "Effective Time" of the Merger, which Effective Time shall be
a date and time following the Closing agreed to by HUBCO and IBSF (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
Certificate of Merger, 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,
the Association 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"). In the Bank Merger, the Bank shall be the surviving
bank (the "Surviving Bank"). Upon the consummation of the Bank Merger, the
separate existence of the Association shall cease and the Surviving Bank shall
be considered the same business and corporate entity as each of the Association
and the Bank and all of the property, rights, privileges, powers and franchises
of each of the Association and the Bank shall vest in the Surviving Bank and the
Surviving Bank shall be deemed to have assumed all of the debts, liabilities,
obligations and duties of each of the Association 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 Bylaws of the Bank
shall be the certificate of incorporation and Bylaws of the Surviving Bank and
the officers and directors of the Bank shall be the officers and directors of
the Surviving Bank, except as provided in Section 5.20 hereof. Following the
execution of this Agreement, the Association 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") and the Federal Deposit
Insurance Corporation (the "FDIC") for approval of the Bank Merger.
ARTICLE II - CONVERSION OF IBSF SHARES
2.1. Conversion of IBSF Common Stock. Each share of common
stock, par value $.01 per share, of IBSF ("IBSF Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than Excluded Shares,
as hereinafter defined) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted as follows:
(a) Exchange of Common Stock; Exchange Ratio. Subject
to the provisions of this Section 2.1, each share of IBSF Common Stock issued
and outstanding immediately prior to the Effective Time (other than Excluded
Shares) shall be converted at the Effective Time into the right to receive 0.534
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) or in Section
7.1(i) and subject to the payment of cash in lieu of fractional shares in
accordance with Section 2.2(e).
(b) Cancellation of IBSF Certificates. After the
Effective Time, all such shares of IBSF 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 IBSF Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of IBSF Common Stock except as otherwise provided herein
or by law. Such certificates previously evidencing such shares of IBSF Common
Stock (other than those canceled pursuant to Section 2.1(d)) shall be exchanged
for certificates evidencing shares of HUBCO Common Stock issued pursuant to this
Article II, upon the surrender of such certificates in accordance with this
Article II. No fractional shares of HUBCO Common Stock shall be issued, and, in
lieu thereof, a cash payment shall be made pursuant to Section 2.2(e).
(c) Capital Changes. If between the date hereof and
the Effective Time the outstanding shares of HUBCO Common Stock shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, stock split, reclassification, recapitalization, merger,
combination or exchange of shares, the Exchange Ratio and the definition of
Median Pre-Closing Price shall be correspondingly adjusted to reflect such stock
dividend, stock split, reclassification, recapitalization, merger, combination
or exchange of shares.
(d) Excluded Shares. All shares of IBSF Common Stock
held by IBSF in its treasury or owned by HUBCO or by any of HUBCO's wholly-owned
subsidiaries (other than shares held as trustee or in a fiduciary capacity and
shares held as collateral on or in lieu of a debt previously contracted)
immediately prior to the Effective Time ("Excluded Shares") shall be canceled.
2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, HUBCO shall
deposit, or shall cause to be deposited, with Hudson United Bank, Trust
Department or another bank or trust company designated by HUBCO and reasonably
acceptable to IBSF (the "Exchange Agent"), for the benefit of the holders of
shares of IBSF 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 Sections 2.1 and 2.2(b). Except
as contemplated by Section 2.2(f) hereof, the Exchange Fund shall not be used
for any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable
either before or after the Effective Time, but in any event no later than five
business days after the Effective Time, HUBCO will instruct the Exchange Agent
to mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time evidenced outstanding shares of IBSF
Common Stock (the "Certificates"), (i) a letter of transmittal (the form and
substance of which is reasonably agreed to by HUBCO and IBSF 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 IBSF Common Stock formerly evidenced by such
Certificate in accordance with Section 2.1 (as adjusted pursuant to Section
7.1(i) if applicable) 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 IBSF Common Stock which is not registered in the transfer records
of IBSF, 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 IBSF 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 Merger Consideration to which such
holder is entitled pursuant to Section 2.2(b) and the amount of dividends or
other distributions with a record date on or after the Effective Time
theretofore paid with respect to the shares of HUBCO Common Stock to which such
holder is entitled, and (ii) at the appropriate payment date, the amount of
dividends or other distributions, with a record date on or after the Effective
Time but prior to surrender and a payment date occurring after surrender,
payable with respect to such shares of HUBCO Common Stock.
(d) No Further Rights in IBSF Common Stock. All shares of
HUBCO Common Stock issued and cash paid upon conversion of the shares of IBSF
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
IBSF Common Stock.
(e) No Fractional Shares; Median Pre-Closing Price. No
certificates or scrip evidencing fractional shares of HUBCO Common Stock shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to any rights of a
shareholder of HUBCO. Cash shall be paid in lieu of fractional shares of HUBCO
Common Stock, based upon the Median Pre-Closing Price per whole share of HUBCO
Common Stock. The "Median Pre-Closing Price" shall be determined by taking the
price half-way between the Closing Prices left after discarding the 4 lowest and
4 highest Closing Prices in the 10 consecutive trading day period which ends on
(and includes) the Determination Date. The "Closing Price" shall mean the
closing price of HUBCO Common Stock as supplied by the Nasdaq Stock Market and
published in The Wall Street Journal. A "trading day" shall mean a day for which
a Closing Price is so supplied and published. (The Nasdaq Stock Market, or such
other national securities exchange on which HUBCO Common Stock may be traded
after the date hereof, is referred to herein as "Nasdaq")
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of IBSF Common Stock for two
years after the Effective Time shall be delivered to HUBCO, upon demand, and any
holders of IBSF 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 IBSF 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 IBSF 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 IBSF 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 IBSF shall be closed and there shall be no further
registration of transfers of shares of IBSF Common Stock thereafter on the
records of IBSF. 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. IBSF Stock Options. Other than the HUBCO Stock Option,
all options which may be exercised for issuance of IBSF Common Stock (each, a
"Stock Option" and collectively the "Stock Options") are described in the IBSF
Disclosure Schedule and are issued and outstanding pursuant to the IBSF 1995
Stock Option Plan (the "IBSF 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 IBSF Stock Option Plan
and the Option Grant Agreements, including those relating to vesting and
conversion in connection with a change in control of IBSF. Each Stock Option
outstanding at the Effective Time (each, a "Continuing Stock Option") shall be
converted into an option to purchase HUBCO Common Stock, wherein (i) the right
to purchase shares of IBSF Common Stock pursuant to the Continuing Stock Option
shall be converted into the right to purchase that same number of shares of
HUBCO Common Stock multiplied by the Exchange Ratio, (ii) the option exercise
price per share of HUBCO Common Stock shall be the previous option exercise
price per share of the IBSF Common Stock divided by the Exchange Ratio, and
(iii) in all other material respects the option shall be subject to the same
terms and conditions as governed the Continuing Stock Option on which it was
based, including the length of time within which the option may be exercised
(which shall not be extended except that the holder of a Stock Option who
continues in the service of HUBCO or a subsidiary of HUBCO shall not be deemed
to have terminated service for purposes of determining the Continuing Stock
Option exercise period) and for all Continuing Stock Options, such adjustments
shall be and are intended to be effected in a manner which is consistent with
Section 424(a) of the Code (as defined in Section 3.8 hereof). Shares of HUBCO
Common Stock issuable upon exercise of Continuing Stock Options shall be covered
by an effective registration statement on Form S-8, and HUBCO shall use its
reasonable best efforts to file a registration statement on Form S-8 covering
such shares as soon as possible after the Effective Time.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF IBSF
References herein to "IBSF Disclosure Schedule" shall mean all
of the disclosure schedules required by this Article III, dated as of the date
hereof and referenced to the specific sections and subsections of Article III of
this Agreement, which have been delivered on the date hereof by IBSF to HUBCO.
IBSF hereby represents and warrants to HUBCO as follows:
3.1. Corporate Organization
(a) IBSF is a corporation duly organized and validly existing
under the laws of the State of New Jersey. IBSF has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not have a material adverse effect on the
business, operations, assets or financial condition of IBSF and the IBSF
Subsidiaries (as defined below), taken as a whole. IBSF is registered as a
savings and loan holding company under the Home Owners' Loan Act, as amended
(the "HOLA").
(b) Each IBSF Subsidiary and its jurisdiction of incorporation
is listed in the IBSF Disclosure Schedule. For purposes of this Agreement, the
term "IBSF Subsidiary" means any corporation, partnership, joint venture or
other legal entity in which IBSF, directly or indirectly, owns at least a 50%
stock or other equity interest or for which IBSF, 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 "IBSF Subsidiary" shall include any entity which was a IBSF
Subsidiary at any time during such period. The Association is a New Jersey
state-chartered savings and loan association duly organized and validly existing
in stock form under the laws of the State of New Jersey. All eligible accounts
of depositors issued by the Association are insured by the Savings Association
Insurance Fund of the FDIC (the "SAIF") to the fullest extent permitted by law.
Each IBSF Subsidiary has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a material adverse effect on the business, operations, assets or
financial condition of IBSF and the IBSF Subsidiaries, taken as a whole.
(c) The IBSF Disclosure Schedule sets forth true and complete
copies of the Certificate of Incorporation and Bylaws, as in effect on the date
hereof, of IBSF and each IBSF Subsidiary. Except as set forth in Disclosure
Schedule 3.1(b), the Association and IBSF 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 IBSF
consists of 25,000,000 shares of IBSF Common Stock. As of March 27, 1998, there
were 10,959,674 shares of IBSF Common Stock issued and outstanding and 650,049
treasury shares. As of March 27, 1998, there were 1,275,503 shares of IBSF
Common Stock issuable upon exercise of outstanding stock options. The IBSF
Disclosure Schedule contains (i) a list of all Stock Options, their strike
prices and expiration dates, and (ii) true and complete copies of the IBSF Stock
Option Plan and a specimen of each form of Option Grant 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 IBSF Stock Option Plan and Option Grant Agreements pursuant to which such
Stock Options were granted. All issued and outstanding shares of IBSF Common
Stock, and all issued and outstanding shares of capital stock of each IBSF
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 IBSF
or any IBSF Subsidiary. Except for the Stock Options listed on the IBSF
Disclosure Schedule and the HUBCO Stock Option, neither IBSF nor the Association
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 IBSF or the
Association 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 IBSF, and except as set forth in the IBSF Disclosure
Schedule, IBSF and the Association 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 IBSF and the
Association in accordance with their respective Certificate of Incorporation and
Bylaws and applicable laws and regulations. Except for such approvals, no other
corporate proceedings not otherwise contemplated hereby on the part of IBSF or
the Association are necessary to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by IBSF and the
Association, and constitutes a valid and binding obligation of each of IBSF and
the Association, enforceable against IBSF and the Association 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 New Jersey state-chartered savings and loan associations or their
holding companies, (ii) general equitable principles, and (iii) laws relating to
the safety and soundness of insured depository institutions and except that no
representation is made as to the effect or availability of equitable remedies or
injunctive relief.
(b) Neither the execution and delivery of this Agreement by
IBSF or the Association, nor the consummation by IBSF or the Association of the
transactions contemplated hereby in accordance with the terms hereof, or
compliance by IBSF or the Association with any of the terms or provisions
hereof, will (i) violate any provision of IBSF's or the Association's
Certificate of Incorporation or Bylaws, (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 IBSF, the Association or any of their respective properties or
assets, or (iii) except as set forth in the IBSF 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 IBSF or the
Association 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 IBSF or the Association 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 IBSF and the IBSF Subsidiaries,
taken as a whole, and which will not prevent or materially delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the Board of
Governors of the Federal Reserve System (the "FRB"), the FDIC, the Office of
Thrift Supervision (the "OTS"), the Department, the New Jersey Department of
Environmental Protection (the "DEP") (if required), the Securities and Exchange
Commission (the "SEC"), and the shareholders of IBSF, 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 IBSF or the Association in
connection with (x) the execution and delivery by IBSF of this Agreement and (y)
the consummation by IBSF of the Merger, and the consummation by IBSF and the
Association of the other transactions contemplated hereby, except (i) such as
are listed in the IBSF Disclosure Schedule and (ii) such as individually or in
the aggregate will not (if not obtained) have a material adverse effect on the
business, operations, assets or financial condition of IBSF and the IBSF
Subsidiaries taken as a whole or prevent or materially delay the consummation of
the transactions contemplated hereby. To the best of IBSF's knowledge, no fact
or condition exists which IBSF has reason to believe will prevent it and the
Association from obtaining the aforementioned consents and approvals.
3.4. Financial Statements.
(a) The IBSF Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of IBSF as of September 30, 1996
and 1997, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended September 30, in
each of the three fiscal years 1995 through 1997, in each case accompanied by
the audit report of Deloitte & Touche LLP, independent public accountants with
respect to IBSF ("D&T"), and the unaudited consolidated statement of condition
of IBSF as of December 31, 1997 and the related unaudited consolidated
statements of income and cash flows for the three months ended December 31, 1997
and 1996, as reported in IBSF's Quarterly Report on Form 10-Q, filed with the
SEC under the Securities Exchange Act of 1934, as amended ("1934 Act")
(collectively, the "IBSF Financial Statements"). The IBSF 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 IBSF as of the respective
dates set forth therein, and the related consolidated statements of income,
changes in stockholders' equity and cash flows fairly present the results of the
consolidated operations, changes in shareholders' equity and cash flows of IBSF
for the respective periods set forth therein.
(b) The books and records of IBSF and each of its Subsidiaries
are being maintained in material compliance with applicable legal and accounting
requirements.
(c) Except as and to the extent reflected, disclosed or
reserved against in the IBSF Financial Statements (including the notes thereto),
as of December 31, 1997, neither IBSF nor any IBSF Subsidiary had any
liabilities, whether absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of IBSF and the IBSF
Subsidiaries, taken as a whole which were required by GAAP (consistently
applied) to be disclosed in IBSF's consolidated statement of condition as of
December 31, 1997 or the notes thereto. Since December 31, 1997, neither IBSF
nor any IBSF 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 IBSF Disclosure Schedule.
3.5. Broker's and Other Fees. Except for Ryan, Beck & Co.,
Inc. ("Ryan, Beck"), neither IBSF nor any of its Subsidiaries nor any of their
respective directors or officers has employed any broker or finder or incurred
any liability for any broker's or finder's fees or commissions in connection
with any of the transactions contemplated by this Agreement. The agreement with
Ryan, Beck is set forth in the IBSF Disclosure Schedule. Other than pursuant to
the agreement with Ryan, Beck, 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 IBSF or any its Subsidiaries.
3.6. Absence of Certain Changes or Events.
(a) Except as disclosed in the IBSF Disclosure Schedule, there
has not been any IBSF Material Adverse Change (as hereinafter defined) since
December 31, 1997 and to the best of IBSF's knowledge, no fact or condition
exists which IBSF believes will cause such an IBSF Material Adverse Change in
the future. "IBSF Material Adverse Change" means any change which is material
and adverse to the consolidated financial condition, results of operations,
business or assets of IBSF and the IBSF Subsidiaries taken as a whole, other
than (i) a change in the value of the respective investment and loan portfolios
of IBSF and the IBSF Subsidiaries as the result of a change in interest rates
generally, (ii) a change occurring after the date hereof in any federal or state
law, rule or regulation or in GAAP, which change affects savings institutions
generally, (iii) reasonable expenses incurred in connection with this Agreement
and the transactions contemplated hereby, (iv) payments to executive officers or
other employees of IBSF or the Association pursuant to agreements or
arrangements with such persons, which agreements or arrangements are included in
the IBSF Disclosure Schedule, or (v) actions or omissions of IBSF or any IBSF
Subsidiary either specifically permitted by this Agreement or taken with the
prior written consent of HUBCO in contemplation of the transactions contemplated
hereby (including without limitation any actions taken by IBSF or the
Association pursuant to Section 5.15 of this Agreement).
(b) Except as set forth in the IBSF Disclosure Schedule,
neither IBSF nor any IBSF 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, IBSF and each IBSF Subsidiary has conducted their
respective businesses only in the ordinary course, consistent with past
practice.
3.7. Legal Proceedings. Except as disclosed in the IBSF
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of IBSF and the IBSF Subsidiaries, neither IBSF nor any IBSF
Subsidiary is a party to any, and there are no pending or, to the best of IBSF's
knowledge, threatened legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against IBSF or any
IBSF Subsidiary which, if decided adversely to IBSF or any IBSF Subsidiary, are
reasonably likely to have a material adverse effect on the business, operations,
assets or financial condition of IBSF and the IBSF Subsidiaries taken as a
whole. Except as disclosed in the IBSF Disclosure Schedule, neither IBSF nor any
IBSF Subsidiary is a party to any order, judgment or decree entered in any
lawsuit or proceeding which is material to IBSF or such IBSF Subsidiary.
3.8. Taxes and Tax Returns.
(a) IBSF and each IBSF 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. IBSF and each
IBSF Subsidiary has established (and until the Effective Time will establish) on
its books and records reserves that are adequate for the payment of all federal,
state and local taxes not yet due and payable, but are incurred in respect of
IBSF or such IBSF Subsidiary through such date. None of the federal or state
income tax returns of IBSF or any IBSF 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 IBSF, except as disclosed in
the IBSF Disclosure Schedule, 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 IBSF or any IBSF
Subsidiary, nor has IBSF or any IBSF 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 IBSF nor any IBSF 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 except as disclosed in the IBSF Disclosure Schedule, (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 IBSF or such IBSF Subsidiary (nor does
IBSF have any knowledge that the IRS has proposed any such adjustment or change
of accounting method), or (iv) has filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply.
(c) Neither IBSF nor any IBSF Subsidiary has any tax loss
carryforwards.
3.9. Employee Benefit Plans.
(a) Except as set forth on the IBSF Disclosure Schedule,
neither IBSF nor any IBSF Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "IBSF Pension Plans") within the meaning of such term
in Section 3(2)(A) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), "employee welfare benefit plan" (the "IBSF Welfare Plans")
within the meaning of such term in Section 3(1) of ERISA, stock option plan,
stock purchase plan, deferred compensation plan, severance plan, bonus plan,
employment agreement, director retirement program or other similar plan, program
or arrangement. Neither IBSF nor any IBSF Subsidiary has, since September 2,
1974, contributed to any "Multiemployer Plan," within the meaning of Section
3(37) of ERISA.
(b) IBSF has previously delivered to HUBCO, and included in
the IBSF Disclosure Schedule, a complete and accurate copy of each of the
following with respect to each of the IBSF Pension Plans and IBSF 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 IBSF 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 IBSF 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 IBSF'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 IBSF or
any IBSF 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 IBSF Pension Plan
have been paid. All contributions required to be made to each IBSF 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 IBSF which have not
been paid have been properly recorded on the books of IBSF .
(f) Except as disclosed in the IBSF Disclosure Schedule, each
of the IBSF Pension Plans, IBSF Welfare Plans and each other employee benefit
plan and arrangement identified on the IBSF Disclosure Schedule has been
operated in compliance in all material respects with the provisions of ERISA,
the Code, all regulations, rulings and announcements promulgated or issued
thereunder, and all other applicable governmental laws and regulations.
Furthermore, except as disclosed in the IBSF Disclosure Schedule, if IBSF
maintains any IBSF Pension Plan, IBSF has received or applied for a favorable
determination letter from the IRS which takes into account the Tax Reform Act of
1986 and (to the extent it mandates currently applicable requirements)
subsequent legislation, and IBSF is not aware of any fact or circumstance which
would disqualify any plan.
(g) To the best knowledge of IBSF, 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 IBSF Welfare Plan or IBSF Pension Plan
that would result in any material tax or penalty for IBSF or any IBSF
Subsidiary.
(h) No IBSF 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 IBSF Pension Plan.
(i) No "accumulated funding deficiency," within the meaning of
Section 412 of the Code, has been incurred with respect to any IBSF Pension
Plan.
(j) There are no material pending, or, to the best knowledge
of IBSF, material threatened or anticipated claims (other than routine claims
for benefits) by, on behalf of, or against any of the IBSF Pension Plans or the
IBSF Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the IBSF Disclosure Schedule.
(k) Except as disclosed in the IBSF Disclosure Schedule, no
IBSF Pension Plan or IBSF 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 IBSF 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 IBSF Financial Statements and established
in accordance with GAAP.
(m) With respect to each IBSF Pension Plan and IBSF Welfare
Plan that is funded wholly or partially through an insurance policy, there will
be no liability of IBSF or any IBSF Subsidiary as of the Effective Time under
any such insurance policy or ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events occurring prior to the Effective Time.
(n) Except (i) for payments and other benefits due pursuant to
the employment agreements included within the IBSF Disclosure Schedule, and (ii)
as set forth in the IBSF Disclosure Schedule, or as expressly agreed to by HUBCO
in writing either pursuant to this Agreement or otherwise, or as required by
law, the consummation of the transactions contemplated by this Agreement will
not (x) entitle any current or former employee of IBSF or any IBSF 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 IBSF
Pension Plan or IBSF Welfare Plan.
(o) Except for the IBSF Pension Plans and the IBSF Welfare
Plans, and except as set forth on the IBSF Disclosure Schedule, IBSF has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of IBSF or any
IBSF Subsidiary or any predecessor of any thereof. The IBSF Disclosure Schedule
sets forth: (i) true and complete copies of the agreements, understandings or
obligations with respect to each such current or former director, officer or
employee, and (ii) the most recent actuarial or other calculation of the present
value of such payments or benefits.
(p) Except as set forth in the IBSF Disclosure Schedule, IBSF
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 IBSF Disclosure Schedule lists each such insurance policy and
includes a copy of each agreement with a party other than the insurer with
respect to the payment, funding or assignment of such policy. To the best of
IBSF `s knowledge, neither IBSF nor any IBSF Pension Plan or IBSF 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 IBSF Disclosure Schedule, IBSF
does not maintain any retirement plan or retiree medical plan or arrangement for
directors. The IBSF Disclosure Schedule sets forth the complete documentation
and actuarial evaluation of any such plan.
3.10. Reports.
(a) The IBSF Disclosure Schedule lists, and as to item (i)
below IBSF has previously delivered to HUBCO a complete copy of, each (i) final
registration statement, prospectus, annual, quarterly or current report and
definitive proxy statement filed by IBSF since January 1, 1996 pursuant to the
Securities Act of 1933, as amended ("1933 Act"), or the 1934 Act and (ii)
communication (other than general advertising materials and press releases)
mailed by IBSF to its shareholders as a class since January 1, 1996, and each
such communication, as of its date, complied in all material respects with all
applicable statutes, rules and regulations and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading; provided
that information as of a later date shall be deemed to modify information as of
an earlier date..
(b) Since January 1, 1996, (i) IBSF has filed all reports that
it was required to file with the SEC under the 1934 Act, and (ii) IBSF and the
Association each has duly filed all material forms, reports and documents which
it was required to file with each agency charged with regulating any aspect of
its business, in each case in form which was correct in all material respects,
and, subject to permission from such regulatory authorities, IBSF promptly will
deliver or make available to HUBCO accurate and complete copies of such reports.
As of their respective dates, each such form, report, or document, and each such
final registration statement, prospectus, annual, quarterly or current report,
definitive proxy statement or communication, complied in all material respects
with all applicable statutes, rules and regulations and did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading;
provided that information contained in any such document as of a later date
shall be deemed to modify information as of an earlier date. The IBSF Disclosure
Schedule lists the dates of all examinations of IBSF or the Association
conducted by either the FDIC or the OTS since January 1, 1996 and the dates of
any responses thereto submitted by IBSF or the Association.
3.11. IBSF and Association Information. The information
relating to IBSF and the Association, 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 IBSF in connection with the
solicitation of their approval of the Merger, as of the date the Proxy
Statement-Prospectus is mailed to shareholders of IBSF, 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 IBSF Disclosure Schedule, IBSF and each IBSF 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 IBSF or such IBSF
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 IBSF and the IBSF Subsidiaries taken as a whole) and IBSF 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 IBSF Disclosure Schedule, (i) neither IBSF nor any IBSF 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 IBSF or
any IBSF Subsidiary to any officer, employee, director or consultant thereof.
The IBSF Disclosure Schedule sets forth true and correct copies of all severance
or employment agreements with officers, directors, employees, agents or
consultants to which IBSF or any IBSF Subsidiary is a party.
(b) Except as disclosed in the IBSF Disclosure Schedule and
except for loan commitments, loan agreements and loan instruments entered into
or issued by the Association in the ordinary course of business, (i) as of the
date of this Agreement, neither IBSF nor any IBSF 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 IBSF and the IBSF
Subsidiaries taken as a whole, (ii) no commitment, agreement or other instrument
to which IBSF or any IBSF Subsidiary is a party or by which either of them is
bound limits the freedom of IBSF or any IBSF Subsidiary to compete in any line
of business or with any person, and (iii) neither IBSF nor any IBSF Subsidiary
is a party to any collective bargaining agreement.
(c) Except as disclosed in the IBSF Disclosure Schedule,
neither IBSF nor any IBSF Subsidiary or, to the best knowledge of IBSF, any
other party thereto, is in default in any material respect under any material
lease, contract, mortgage, promissory note, deed of trust, loan or other
commitment (except those under which the Association 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 IBSF and the IBSF Subsidiaries, taken as a whole.
3.14. Properties and Insurance.
(a) Except as set forth in the IBSF Disclosure Schedule, IBSF
or a IBSF 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 IBSF's consolidated balance sheet as of December 31,
1997, or owned and acquired subsequent thereto (except to the extent that such
assets and properties have been disposed of for fair value in the ordinary
course of business since December 31, 1997), subject to no encumbrances, liens,
mortgages, security interests or pledges, except (i) those items that secure
liabilities that are reflected in said balance sheet or the notes thereto or
that secure liabilities incurred in the ordinary course of business after the
date of such balance sheet, (ii) statutory liens for amounts not yet delinquent
or which are being contested in good faith, (iii) such encumbrances, liens,
mortgages, security interests, pledges and title imperfections that are not in
the aggregate material to the business, operations, assets, and financial
condition of IBSF and the IBSF 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, IBSF or one or more of its Subsidiaries as
lessees have the right under valid and subsisting leases to occupy, use, possess
and control all real property leased by IBSF and such Subsidiaries in all
material respects as presently occupied, used, possessed and controlled by IBSF
and its Subsidiaries.
(b) Except as set forth in the IBSF Disclosure Schedule, the
business operations and all insurable properties and assets of IBSF and each
IBSF Subsidiary are insured for their benefit against all risks which, in the
reasonable judgment of the management of IBSF, 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 IBSF adequate for the business
engaged in by IBSF and the IBSF Subsidiaries. As of the date hereof, neither
IBSF nor any IBSF Subsidiary has received any notice of cancellation or notice
of a material amendment of any such insurance policy or bond or is in default
under any such policy or bond, no coverage thereunder is being disputed and all
material claims thereunder have been filed in a timely fashion. The IBSF
Disclosure Schedule sets forth in summary form a list of all insurance policies
of IBSF and the IBSF Subsidiaries.
3.15. Minute Books. The minute books of IBSF and the IBSF
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.
3.16. Environmental Matters. Except as set forth in the IBSF
Disclosure Schedule:
(a) Neither IBSF nor any IBSF Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that IBSF or such IBSF 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 IBSF and the IBSF Subsidiaries taken as a whole. IBSF has no
knowledge that any toxic or hazardous substances or materials have been emitted,
generated, disposed of or stored on any real property owned or leased by IBSF or
any IBSF Subsidiary, as OREO or otherwise, or owned or controlled by IBSF or any
IBSF Subsidiary as a trustee or fiduciary (collectively, "Properties"), in any
manner that violates any presently existing federal, state or local law or
regulation governing or pertaining to such substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of IBSF and the IBSF Subsidiaries,
taken as a whole. Except as described in the IBSF Disclosure Schedule, none of
the Properties is located in the State of New Jersey or the State of
Connecticut.
(b) IBSF has no knowledge that any of the Properties has been
operated in any manner in the three years prior to the date of this Agreement
that violated any applicable federal, state or local law or regulation governing
or pertaining to toxic or hazardous substances and materials, the violation of
which would have a material adverse effect on the business, operations, assets
or financial condition of IBSF and the IBSF Subsidiaries taken as a whole.
(c) To the best of IBSF's knowledge, IBSF, each IBSF
Subsidiary and any and all of their tenants or subtenants have all necessary
permits and have filed all necessary registrations material to permit the
operation of the Properties in the manner in which the operations are currently
conducted under all applicable federal, state or local environmental laws,
excepting only those permits and registrations the absence of which would not
have a material adverse effect upon the operations that require the permit or
registration.
(d) To the knowledge of IBSF, there are no underground storage
tanks on, in or under any of the Properties and no underground storage tanks
have been closed or removed from any of the Properties while the property was
owned, operated or controlled by IBSF or any IBSF Subsidiary.
3.17. Reserves. As of December 31, 1997, the allowance for
loan losses in the IBSF Financial Statements was adequate pursuant to GAAP
(consistently applied), and the methodology used to compute the loan loss
reserve complies in all material respects with GAAP (consistently applied) and
all applicable policies of the OTS. As of December 31, 1997, the reserve for
OREO properties (or if no reserve, the carrying value of OREO properties) in the
IBSF Financial Statements was adequate pursuant to GAAP (consistently applied),
and the methodology used to compute the reserve for OREO properties (or if no
reserve, the carrying value of OREO properties) complies in all material
respects with GAAP (consistently applied) and all applicable policies of the
OTS.
3.18. No Parachute Payments. Except as set forth in the IBSF
Disclosure Schedule, no officer, director, employee or agent (or former officer,
director, employee or agent) of IBSF or any IBSF 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 IBSF, a IBSF Subsidiary, HUBCO or any HUBCO
Subsidiary which if paid or provided would constitute an "excess parachute
payment", as defined in Section 280G of the Code or regulations promulgated
thereunder.
3.19. Agreements with Bank Regulators. Neither IBSF nor any
IBSF 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 IBSF prior to the
date of this Agreement, nor has IBSF 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 IBSF prior to
the date of this Agreement. Neither IBSF nor any IBSF 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 IBSF prior to the date of this
Agreement.
3.20. Year 2000 Compliance. IBSF and the IBSF Subsidiaries
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order for the data processing systems used
in the business conducted by IBSF and the IBSF Subsidiaries to be substantially
Year 2000 compliant on or before the end of 1999 and, except as set forth in the
IBSF Disclosure Schedule, IBSF does not expect the future cost of addressing
such issues to be material. Neither IBSF nor any IBSF Subsidiary has received a
rating of less than satisfactory from any bank regulatory agency with respect to
Year 2000 compliance.
3.21. Accounting for the Merger: Reorganization. As of the
date hereof, after reviewing the terms of this Agreement, the stock repurchases
by HUBCO and IBSF, and the employee benefit plans of IBSF and the Association
with IBSF's independent auditors, IBSF does not have any reason to believe that
the Merger will fail to qualify (i) for pooling-of-interests accounting
treatment under GAAP, or (ii) as a reorganization under Section 368(a) of the
Code.
3.22. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUBCO
References herein to the "HUBCO Disclosure Schedule" shall
mean all of the disclosure schedules required by this Article IV, dated as of
the date hereof and referenced to the specific sections and subsections of
Article IV of this Agreement, which have been delivered on the date hereof by
HUBCO to IBSF. HUBCO hereby represents and warrants to IBSF 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 Bank Holding Company Act of 1956, as amended (the "BHCA").
(b) Each HUBCO Subsidiary is listed in the HUBCO Disclosure
Schedule. For purposes of this Agreement, the term "HUBCO Subsidiary" means any
corporation, partnership, joint venture or other legal entity in which HUBCO
directly or indirectly, owns at least a 50% stock or other equity interest or
for which HUBCO, directly or indirectly, acts as a general partner provided that
to the extent that any representation or warranty set forth herein covers a
period of time prior to the date of this Agreement, the term "HUBCO Subsidiary"
shall include any entity which was an HUBCO Subsidiary at any time during such
period. Each HUBCO Subsidiary is duly organized and validly existing under the
laws of the jurisdiction of its incorporation. The Bank is a state-chartered
commercial banking corporation duly organized and validly existing under the
laws of the State of New Jersey. Lafayette American Bank and Trust Company
("Lafayette") is duly organized and validly existing under the laws of the State
of Connecticut. All eligible accounts of depositors issued by the Bank and
Lafayette are insured by the Bank Insurance Fund of the FDIC ("BIF") to the
fullest extent permitted by law. Each HUBCO Subsidiary has the corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as it is now being conducted and is duly licensed or qualified to
do business in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified would not have a material adverse effect on the
business, operations, assets or financial condition of HUBCO and the HUBCO
Subsidiaries, taken as a whole. The HUBCO Disclosure Schedule sets forth true
and complete copies of the Certificate of Incorporation and Bylaws of HUBCO as
in effect on the date hereof.
4.2. Capitalization. The authorized capital stock of HUBCO
consists of 53,045,000 common shares, no par value ("HUBCO Common Stock"), and
10,300,000 shares of preferred stock ("HUBCO Authorized Preferred Stock"). As of
March 26, 1998, there were 22,648,970 shares of HUBCO Common Stock issued and
outstanding, and no shares of treasury stock, and 1,000 shares of HUBCO
Authorized Preferred Stock outstanding, all of which were designated Series B,
no par value, Convertible Preferred Stock. Except as described in the HUBCO
Disclosure Schedule, there are no shares of HUBCO Common Stock issuable upon the
exercise of outstanding stock options or otherwise. All issued and outstanding
shares of HUBCO Common Stock and HUBCO Authorized Preferred Stock, and all
issued and outstanding shares of capital stock of HUBCO's Subsidiaries, have
been duly authorized and validly issued, are fully paid, nonassessable and free
of preemptive rights, and are free and clear of all liens, encumbrances,
charges, restrictions or rights of third parties. All of the outstanding shares
of capital stock of the HUBCO Subsidiaries are owned by HUBCO free and clear of
any liens, encumbrances, charges, restrictions or rights of third parties.
Except as described in the HUBCO Disclosure Schedule, neither HUBCO nor any
HUBCO Subsidiary has granted or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the transfer, purchase or issuance of any shares of capital stock of HUBCO or
any HUBCO Subsidiary or any securities representing the right to purchase,
subscribe or otherwise receive any shares of such capital stock or any
securities convertible into any such shares, and there are no agreements or
understandings with respect to voting of any such shares.
4.3. Authority; No Violation.
(a) Subject to the receipt of all necessary governmental
approvals, HUBCO has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby in
accordance with the terms hereof. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of HUBCO in accordance with its
Certificate of Incorporation and applicable laws and regulations. Except for
such approvals, no other corporate proceedings on the part of HUBCO are
necessary to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by HUBCO and constitutes a valid
and binding obligation of HUBCO, enforceable against HUBCO in accordance with
its terms, except to the extent that enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, conservatorship,
receivership or other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the rights of
creditors of bank holding companies, (ii) general equitable principles, and
(iii) laws relating to the safety and soundness of insured depository
institutions and except that no representation is made as to the effect or
availability of equitable remedies or injunctive relief..
(b) Neither the execution or delivery of this Agreement by
HUBCO, nor the consummation by HUBCO of the transactions contemplated hereby in
accordance with the terms hereof, or compliance by HUBCO with any of the terms
or provisions hereof will (i) violate any provision of the Certificate of
Incorporation or Bylaws of HUBCO, (ii) assuming that the consents and approvals
set forth below are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to HUBCO, any
HUBCO Subsidiary, or any of their respective properties or assets, or (iii)
violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets of
HUBCO or any HUBCO Subsidiary under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which HUBCO is a party, or by which it or
any of their properties or assets may be bound or affected, except, with respect
to (ii) and (iii) above, such as individually or in the aggregate will not have
a material adverse effect on the business, operation, assets or financial
condition of HUBCO and the HUBCO Subsidiaries, taken as a whole, and which will
not prevent or materially delay the consummation of the transactions
contemplated hereby. Except for consents and approvals of or filings or
registrations with or notices to the FDIC, the FRB, the OTS, the SEC, the
Department, or the Secretary of State of New Jersey, and the possible need under
the Nasdaq rules to obtain HUBCO shareholder approval, no consents or approvals
of or filings or registrations with or notices to any third party or any public
body or authority are necessary on behalf of HUBCO in connection with (x) the
execution and delivery by HUBCO of this Agreement, and (y) the consummation by
HUBCO of the Merger and the other transactions contemplated hereby, except such
as are listed in the HUBCO Disclosure Schedule or in the aggregate will not (if
not obtained) have a material adverse effect on the business, operation, assets
or financial condition of HUBCO and the HUBCO Subsidiaries, taken as a whole. To
the best of HUBCO's knowledge, no fact or condition exists which HUBCO has
reason to believe will prevent it from obtaining the aforementioned consents and
approvals.
4.4. Financial Statements.
(a) The HUBCO Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of HUBCO as of December 31, 1996
and 1997, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended December 31, in
each of the three fiscal years 1995 through 1997, in each case accompanied by
the audit report of Arthur Andersen LLP ("Arthur Andersen"), independent public
accountants with respect to HUBCO (collectively, the "HUBCO Financial
Statements"). The HUBCO Financial Statements (including the related notes) have
been prepared in accordance with GAAP consistently applied during the periods
involved (except as may be indicated therein or in the notes thereto), and
fairly present the consolidated financial position of HUBCO as of the respective
dates set forth therein, and the related consolidated statements of income,
changes in stockholders' equity and of cash flows (including the related notes,
where applicable) fairly present the consolidated results of operations, changes
in stockholders' equity and cash flows of HUBCO for the respective fiscal
periods set forth therein.
(b) The books and records of HUBCO and the HUBCO Subsidiaries
are being maintained in material compliance with applicable legal and accounting
requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the HUBCO Financial Statements (including the notes
thereto), as of December 31, 1997 neither HUBCO nor any of the HUBCO
Subsidiaries had any obligation or liability, whether absolute, accrued,
contingent or otherwise, material to the business, operations, assets or
financial condition of HUBCO or any of the HUBCO Subsidiaries which were
required by GAAP (consistently applied) to be disclosed in HUBCO's consolidated
statement of condition as of December 31, 1997 or the notes thereto. Except for
the transactions contemplated by this Agreement, and the other proposed
acquisitions by HUBCO reflected in any Form 8-K filed by HUBCO with the SEC
since December 31, 1997, neither HUBCO nor any HUBCO Subsidiary has incurred any
liabilities since December 31, 1997 except in the ordinary course of business
and consistent with past practice (including for other pending or contemplated
acquisitions).
4.5. Broker's and Other Fees. Neither HUBCO nor any of its
directors or officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement.
4.6. Absence of Certain Changes or Events. There has not been
any HUBCO Material Adverse Change since December 31, 1997 and to the best of
HUBCO's knowledge, no facts or condition exists which HUBCO believes will cause
a HUBCO Material Adverse Change in the future. "HUBCO Material Adverse Change"
means any change which is material and adverse to the consolidated financial
condition, results of operations, business or assets of HUBCO and the HUBCO
Subsidiaries taken as a whole, other than (i) a change in the value of the
respective investment and loan portfolios of HUBCO and the HUBCO Subsidiaries as
the result of a change in interest rates generally, (ii) a change occurring
after the date hereof in any federal or state law, rule or regulation or in
GAAP, which change affects banking institutions generally, (iii) reasonable
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, (iv) changes resulting from acquisitions by HUBCO or any
HUBCO Subsidiary pending on the date hereof and known to IBSF, other than
changes resulting from facts not disclosed to, or otherwise known by, IBSF on or
prior to the date hereof, or (v) the entry, after the date hereof, by HUBCO or
any HUBCO Subsidiary into an agreement to acquire another entity.
4.7 Legal Proceedings. Except as disclosed in the HUBCO
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of HUBCO or its Subsidiaries, neither HUBCO nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
HUBCO's knowledge, threatened legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against HUBCO or any of its Subsidiaries which, if decided adversely to HUBCO or
its Subsidiaries, are reasonably likely to have a material adverse effect on the
business, operations, assets or financial condition of HUBCO or its
Subsidiaries, taken as a whole. Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any of its Subsidiaries is a party to any order,
judgment or decree entered in any lawsuit or proceeding which is material to
HUBCO or its Subsidiaries.
4.8 Reports. Since January 1, 1996, HUBCO has filed all
reports that it was required to file with the SEC under the 1934 Act, all of
which complied in all material respects with all applicable requirements of the
1934 Act and the rules and regulations adopted thereunder. As of their
respective dates, each such report and each registration statement, proxy
statement, form or other document filed by HUBCO with the SEC, including without
limitation, any financial statements or schedules included therein, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1996, HUBCO and each HUBCO
Subsidiary has duly filed all material forms, reports and documents which they
were required to file with each agency charged with regulating any aspect of
their business.
4.9 HUBCO Information. The information relating to HUBCO and
its Subsidiaries (including, without limitation, information regarding other
transactions which HUBCO is required to disclose), this Agreement and the
transactions contemplated hereby in the Registration Statement and Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof), as of the date of
the mailing of the Proxy Statement-Prospectus, and up to and including the date
of the meeting of stockholders of IBSF to which such Proxy Statement-Prospectus
relates, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement shall comply as to form in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
rules and regulations promulgated thereunder.
4.10 Compliance With Applicable Law. Except as set forth in
the HUBCO Disclosure Schedule, each of HUBCO and HUBCO's Subsidiaries holds all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business, and has complied with and is not in default in
any respect under any applicable law, statute, order, rule, regulation, policy
and/or guideline of any federal, state or local governmental authority relating
to HUBCO or HUBCO's Subsidiaries (including without limitation consumer,
community and fair lending laws) (other than where such default or noncompliance
will not result in a material adverse effect on the business, operations, assets
or financial condition of HUBCO and HUBCO's Subsidiaries taken as a whole) and
HUBCO has not received notice of violation of, and does not know of any
violations of, any of the above.
4.11 Funding and Capital Adequacy. At the Effective Time,
after giving pro forma effect to the Merger and any other acquisition which
HUBCO or its Subsidiaries have agreed to consummate, HUBCO will be deemed "well
capitalized" under prompt corrective action regulatory capital requirements.
4.12 HUBCO Common Stock. As of the date hereof, HUBCO has
available and reserved shares of HUBCO Common Stock sufficient for issuance
pursuant to the Merger and upon the exercise of Stock Options subsequent
thereto. The HUBCO Common Stock to be issued hereunder pursuant to the Merger,
and upon exercise of the Stock Options, when so issued, will be duly authorized
and validly issued, fully paid, nonassessable, free of preemptive rights and
free and clear of all liens, encumbrances or restrictions created by or through
HUBCO, with no personal liability attaching to the ownership thereof. The HUBCO
Common Stock to be issued hereunder pursuant to the Merger, and upon exercise of
the Stock Options, when so issued, will be registered under the 1933 Act and
issued in accordance with all applicable state and federal laws, rules and
regulations, and will be approved or listed for trading on Nasdaq.
4.13 Agreements with Bank Regulators. Neither HUBCO nor any
HUBCO Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution submitted to a
regulatory authority or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any Government Entity which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve policies or
its management, except for those the existence of which has been disclosed in
writing to IBSF 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 IBSF 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 IBSF
by HUBCO prior to the date of this Agreement.
4.14 Taxes and Tax Returns.
(a) HUBCO and HUBCO's subsidiaries have duly filed (and until
the Effective Time will so file) all Returns required to be filed by them in
respect of any federal, state and local taxes (including withholding taxes,
penalties or other payments required) and have duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other than taxes or
other charges which are being contested in good faith (and disclosed to IBSF in
writing). HUBCO and HUBCO's subsidiaries have established on their books and
records reserves that are adequate for the payment of all federal, state and
local taxes not yet due and payable, but are incurred in respect of HUBCO
through such date. The HUBCO Disclosure Schedule identifies the federal income
tax returns of HUBCO and its Subsidiaries which have been examined by the IRS
within the past six years. No deficiencies were asserted as a result of such
examinations which have not been resolved and paid in full. The HUBCO Disclosure
Schedule identifies the applicable state income tax returns of HUBCO and its
Subsidiaries which have been examined by the applicable authorities. No
deficiencies were asserted as a result of such examinations which have not been
resolved and paid in full. To the best knowledge of HUBCO, there are no audits
or other administrative or court proceedings presently pending nor any other
disputes pending with respect to, or claims asserted for, taxes or assessments
upon HUBCO or its Subsidiaries, nor has HUBCO or its Subsidiaries given any
currently outstanding waivers or comparable consents regarding the application
of the statute of limitations with respect to any taxes or Returns.
(b) Except as set forth in the HUBCO Disclosure Schedule,
neither HUBCO nor any Subsidiary of HUBCO (i) has requested any extension of
time within which to file any Return which Return has not since been filed, (ii)
is a party to any agreement providing for the allocation or sharing of taxes,
(iii) is required to include in income any adjustment pursuant to Section 481(a)
of the Code, by reason of a voluntary change in accounting method initiated by
HUBCO or any of its Subsidiaries (nor does HUBCO have any knowledge that the IRS
has proposed any such adjustment or change of accounting method) or (iv) has
filed a consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply.
4.15 Employee Benefit Plans.
(a) HUBCO and its Subsidiaries maintain or contribute to
certain "employee pension benefit plans" (the "HUBCO Pension Plans"), as such
term is defined in Section 3(2)(A) of ERISA, and "employee welfare benefit
plans" (the "HUBCO Welfare Plans"), as such term is defined in Section 3(1) of
ERISA. Since September 2, 1974, neither HUBCO nor its subsidiaries have
contributed to any "Multiemployer Plan", as such term is defined in Section
3(37) of ERISA.
(b) HUBCO is not aware of any fact or circumstance which would
disqualify any HUBCO Pension Plan or HUBCO Welfare Plan that could not be
retroactively corrected (in accordance with the procedures of the IRS).
(c) The present value of all accrued benefits under each of
the HUBCO Pension Plans subject to Title IV of ERISA, based upon the actuarial
assumptions used for purposes of the most recent actuarial valuation prepared by
such HUBCO Pension Plan's actuary, did not exceed the then current value of the
assets of such plans allocable to such accrued benefits.
(d) During the last six years, the PBGC has not asserted any
claim for liability against HUBCO or any of its subsidiaries which has not been
paid in full.
(e) All premiums (and interest charges and penalties for late
payment, if applicable) due to the PBGC with respect to each HUBCO Pension Plan
have been paid. All contributions required to be made to each HUBCO Pension Plan
under the terms thereof, ERISA or other applicable law have been timely made,
and all amounts properly accrued to date as liabilities of HUBCO which have not
been paid have been properly recorded on the books of HUBCO.
(f) No "accumulated funding deficiency", within the meaning of
Section 412 of the Code, has been incurred with respect to any of the HUBCO
Pension Plans.
(g) There are no pending or, to the best knowledge of HUBCO,
threatened or anticipated material claims (other than routine claims for
benefits) by, on behalf of or against any of the HUBCO Pension Plans or the
HUBCO Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the HUBCO Disclosure Schedule.
(h) Except with respect to customary health, life and
disability benefits or as disclosed in the HUBCO Disclosure Schedule, HUBCO has
no unfunded benefit obligations which are not accounted for by reserves shown on
the financial statements and established under GAAP or otherwise noted on such
financial statements.
4.16 Contracts. Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any of its Subsidiaries, or to the best knowledge of
HUBCO, any other party thereto, is in default in any material respect under any
material lease, contract, mortgage, promissory note, deed of trust, loan or
other commitment (except those under which a banking subsidiary of HUBCO is or
will be the creditor) or arrangement, except for defaults which individually or
in the aggregate would not have a material adverse effect on the business,
operations, assets or financial condition of HUBCO and its subsidiaries, taken
as a whole.
4.17 Properties and Insurance.
(a) HUBCO and its Subsidiaries have good and, as to owned real
property, marketable title to all material assets and properties, whether real
or personal, tangible or intangible, reflected in HUBCO's consolidated balance
sheet as of December 31, 1997, or owned and acquired subsequent thereto (except
to the extent that such assets and properties have been disposed of for fair
value in the ordinary course of business since December 31, 1997), subject to no
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items that secure liabilities that are reflected in said balance sheet or the
notes thereto or that secure liabilities incurred in the ordinary course of
business after the date of such balance sheet, (ii) statutory liens for amounts
not yet delinquent or which are being contested in good faith, (iii) such
encumbrances, liens, mortgages, security interests, pledges and title
imperfections that are not in the aggregate material to the business,
operations, assets, and financial condition of HUBCO and its subsidiaries taken
as a whole and (iv) with respect to owned real property, title imperfections
noted in title reports. Except as disclosed in the HUBCO Disclosure Schedule,
HUBCO and its Subsidiaries as lessees have the right under valid and subsisting
leases to occupy, use, possess and control all property leased by HUBCO or its
Subsidiaries in all material respects as presently occupied, used, possessed and
controlled by HUBCO and its Subsidiaries.
(b) The business operations and all insurable properties and
assets of HUBCO and its Subsidiaries are insured for their benefit against all
risks which, in the reasonable judgment of the management of HUBCO, should be
insured against, in each case under policies or bonds issued by insurers of
recognized responsibility, in such amounts with such deductibles and against
such risks and losses as are in the opinion of the management of HUBCO adequate
for the business engaged in by HUBCO and its Subsidiaries. As of the date
hereof, neither HUBCO nor any of its Subsidiaries has received any notice of
cancellation or notice of a material amendment of any such insurance policy or
bond or is in default under any such policy or bond, no coverage thereunder is
being disputed and all material claims thereunder have been filed in a timely
fashion.
4.18. Environmental Matters. Except as disclosed in the HUBCO
Disclosure Schedule, neither HUBCO nor any of its Subsidiaries has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that HUBCO or any of its Subsidiaries (either directly or as
a successor-in-interest in connection with the enforcement of remedies to
realize the value of properties serving as collateral for outstanding loans) is
responsible for the correction or cleanup of any condition resulting from the
violation of any law, ordinance or other governmental regulation regarding
environmental matters which correction or cleanup would be material to the
business, operations, assets or financial condition of HUBCO and its
Subsidiaries taken as a whole. Except as disclosed in the HUBCO Disclosure
Schedule, HUBCO has no knowledge that any toxic or hazardous substances or
materials have been emitted, generated, disposed of or stored on any property
currently owned or leased by HUBCO or any of its subsidiaries in any manner that
violates or, after the lapse of time is reasonably likely to violate, any
presently existing federal, state or local law or regulation governing or
pertaining to such substances and materials, the violation of which would have a
material adverse effect on the business, operations, assets or financial
condition of HUBCO and its Subsidiaries, taken as a whole.
4.19 Reserves. As of December 31, 1997, the allowance for
possible loan losses in the HUBCO Financial Statements was adequate based upon
all factors required to be considered by HUBCO at that time in determining the
amount of such allowance. The methodology used to compute the allowance for
possible loan losses complies in all material respects with all applicable FDIC,
Connecticut Department of Banking and New Jersey Department of Banking policies.
As of December 31, 1997, the valuation allowance for OREO properties in the
HUBCO Financial Statements was adequate based upon all factors required to be
considered by HUBCO at that time in determining the amount of such allowance.
4.20. Year 2000 Compliance. HUBCO and the HUBCO Subsidiaries
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order for the data processing systems used
in the business conducted by HUBCO and the HUBCO Subsidiaries to be
substantially Year 2000 compliant on or before the end of 1999 and HUBCO does
not expect the future cost of addressing such issues to be material. Neither
HUBCO nor any HUBCO Subsidiary has received a rating of less than satisfactory
from any bank regulatory agency with respect to Year 2000 compliance.
4.21 Accounting for the Merger; Reorganization. As of the date
hereof, after reviewing the terms of this Agreement, the stock repurchases by
HUBCO and IBSF, and the employee benefit plans of IBSF and the Association with
HUBCO's independent auditors, HUBCO does not have any reason to believe that the
Merger will fail to qualify (i) for pooling-of-interests treatment under GAAP,
or (ii) as a reorganization under Section 368(a) of the Code. As of the date
hereof, neither HUBCO nor any HUBCO Subsidiary owns any shares of IBSF Common
Stock.
4.22 No Approval of HUBCO's Shareholders Currently Required.
Based upon laws and regulations applicable to HUBCO and currently in effect,
including the rules, regulations and policies of the NASD, as of the date of
this Agreement, assuming that HUBCO's pending acquisitions of MSB Bancorp and
Poughkeepsie Financial Corp. are consummated prior to closing the Merger,
neither approval of this Agreement by the shareholders of HUBCO nor approval of
the transactions contemplated hereby by the shareholders of HUBCO will be
required.
4.23 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 IBSF. During the period from
the date of this Agreement to the Effective Time, IBSF and the Association
shall, and shall cause each IBSF 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 IBSF
and the Association also shall use its reasonable best efforts to (i) preserve
its business organization and that of the IBSF Subsidiaries intact, (ii) keep
available to itself and the IBSF Subsidiaries the present services of their
respective employees, and (iii) preserve for itself and HUBCO the goodwill of
its customers and those of the IBSF 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
IBSF Disclosure Schedule, or as permitted or required by this Agreement, neither
IBSF nor the Association will:
(a) change any provision of its Certificate of Incorporation
or any similar governing documents;
(b) change any provision of its Bylaws without the consent of
HUBCO which consent shall not be unreasonably withheld;
(c) change the number of shares of its authorized or issued
capital stock (other than upon exercise of stock options or warrants
described on the IBSF Disclosure Schedule in accordance with the terms
thereof) or issue or grant any option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating
to its authorized or issued capital stock, or any securities
convertible into shares of such stock, or split, combine or reclassify
any shares of its capital stock, or declare, set aside or pay any
dividend, or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock; provided,
however, that from the date hereof to the Effective Time, IBSF may
declare, set aside or pay dividends on the IBSF Common Stock in a
quarterly amount equal to $0.10 per share, with the dividend payment
dates to be coordinated with HUBCO, it being the intention of the
parties that the shareholders of IBSF receive dividends for any
particular calendar quarter on either the IBSF Common Stock or the
HUBCO Common Stock acquired in exchange therefor pursuant to the terms
of this Agreement but not both; provided, further, that nothing
contained herein shall be deemed to affect the ability of the
Association to pay dividends on its capital stock to IBSF;
(d) grant any severance or termination pay (other than
pursuant to policies or contracts of IBSF in effect on the date hereof
and disclosed to HUBCO in the IBSF 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
(i) as required by law or (ii) as specified in Section 5.2 of the IBSF
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
IBSF or the Association;
(f) make any capital expenditures in excess of $50,000 in the
aggregate, 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, except as set forth in Section 5.2 of
the IBSF Disclosure Schedule;
(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 on the IBSF Disclosure Schedule and residential mortgage
loans made in the ordinary course of business in accordance with past
practice; or
(l) agree to do any of the foregoing.
5.3. No Solicitation. So long as this Agreement remains in
effect, IBSF and the Association 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 IBSF or the
Association (an "Acquisition Transaction"). Notwithstanding the foregoing, IBSF
may enter into discussions or negotiations or provide information in connection
with an unsolicited possible Acquisition Transaction if the Board of Directors
of IBSF, 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. IBSF 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 IBSF 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, IBSF
agrees to provide HUBCO, and HUBCO agrees to provide IBSF, with internally
prepared profit and loss statements no later than 25 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), IBSF will deliver to HUBCO and HUBCO will deliver to IBSF
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, IBSF will deliver to HUBCO and HUBCO will
deliver to IBSF 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) IBSF and the Association shall permit HUBCO and its
representatives, and HUBCO shall permit, and cause each HUBCO Subsidiary to
permit, IBSF and its representatives, reasonable access to their respective
properties, and shall disclose and make available to HUBCO and its
representatives, or IBSF 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, Bylaws,
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
IBSF 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, IBSF acknowledges that HUBCO may be involved in
discussions concerning other potential acquisitions and HUBCO shall not be
obligated to disclose such information to IBSF 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 IBSF
shareholders in connection with the Merger, the parties hereto shall cooperate
in the preparation and filing by HUBCO with the SEC of a Registration Statement
including a combined proxy statement and prospectus satisfying all applicable
requirements of applicable state and federal laws, including the 1933 Act, the
1934 Act and applicable state securities laws and the rules and regulations
thereunder (such proxy statement and prospectus in the form mailed by IBSF and
HUBCO to the IBSF 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 IBSF with such information concerning
HUBCO and its Subsidiaries (including, without limitation, information regarding
other transactions which HUBCO is required to disclose) as is necessary in order
to cause the Proxy Statement-Prospectus, insofar as it relates to such
corporations, to comply with Section 5.6(a) hereof. HUBCO agrees promptly to
advise IBSF 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 promptly to provide IBSF with the
information needed to correct such inaccuracy or omission. HUBCO shall promptly
furnish IBSF 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
IBSF shareholders.
(c) IBSF shall furnish HUBCO with such information concerning
IBSF as is necessary in order to cause the Proxy Statement-Prospectus, insofar
as it relates to IBSF, to comply with Section 5.6(a) hereof. IBSF agrees
promptly to advise HUBCO if at any time prior to the Shareholders' Meeting, any
information provided by IBSF in the Proxy Statement-Prospectus becomes incorrect
or incomplete in any material respect and promptly to provide HUBCO with the
information needed to correct such inaccuracy or omission. IBSF shall promptly
furnish HUBCO with such supplemental information as may be necessary in order to
cause the Proxy Statement-Prospectus, insofar as it relates to IBSF and the
Association to comply with Section 5.6(a) after the mailing thereof to IBSF
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. IBSF shall promptly furnish HUBCO with such
information regarding the IBSF shareholders as HUBCO requires to enable it to
determine what filings are required hereunder. IBSF authorizes HUBCO to utilize
in such filings the information concerning IBSF and the Association provided to
HUBCO in connection with, or contained in, the Proxy Statement-Prospectus. HUBCO
shall furnish IBSF's counsel with copies of all such filings and keep IBSF
advised of the status thereof. HUBCO and IBSF shall as promptly as practicable
file the Registration Statement containing the Proxy Statement-Prospectus with
the SEC, and each of HUBCO and IBSF 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 listing on 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 Entities necessary to
consummate the transactions contemplated by this Agreement as soon as possible,
including, without limitation, those required by the FDIC, the FRB, the OTS, the
Department and (if required) 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 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) IBSF 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 IBSF 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. IBSF
agrees to provide HUBCO with any information, certificates, documents or other
materials about IBSF 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. IBSF shall use its reasonable
efforts to cause its attorneys and accountants to provide HUBCO and any
underwriters for HUBCO with any consents, comfort letters, opinion letters,
reports or information which are necessary to complete the registration
statements and applications for any such acquisition or issuance of securities.
HUBCO shall reimburse IBSF for reasonable expenses thus incurred by IBSF should
this transaction be terminated for any reason. HUBCO shall not file with the SEC
any registration statement or amendment thereto or supplement thereof containing
information regarding IBSF unless IBSF shall have consented in writing to such
filing, which consent shall not be unreasonably delayed or withheld.
(i) Between the date of this Agreement and the Effective Time,
IBSF shall cooperate with HUBCO to reasonably conform IBSF's policies and
procedures regarding applicable regulatory matters to those of HUBCO, as HUBCO
may reasonably identify to IBSF from time to time.
5.7. Approval of Shareholders. IBSF will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
shareholders of IBSF (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) IBSF'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 IBSF 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 (i) take all steps necessary to duly call, give notice
and convene a meeting of its shareholders for such purpose, and (ii) subject to
the right not to make a recommendation or to withdraw a recommendation if
HUBCO'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 HUBCO the approval of this
Agreement and the transactions contemplated hereby and use its reasonable best
efforts to obtain, as promptly as practicable, such approval.
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 IBSF 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, or (iv) to declare, set aside, make or pay any
extraordinary cash dividend in excess of $0.40 per share of HUBCO Common Stock,
or (v) to enter into any agreement after the date hereof with respect to one or
more acquisitions that, individually or in the aggregate, can reasonably be
expected to materially adversely affect the ability of HUBCO to consummate the
Merger prior to the Cutoff Date (as such term is hereinafter defined), or (vi)
to agree to do any of the foregoing.
(c) HUBCO, the Bank, IBSF and the Association will use
reasonable efforts to cause the Merger to occur on or before October 31, 1998.
5.9. Public Announcements. HUBCO and IBSF 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 IBSF 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 IBSF determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to December 31,
1998 (the "Cutoff Date") and that it will not waive that condition, it will
promptly notify the other party. Except for any acquisition or merger
discussions HUBCO may enter into with other parties, IBSF and HUBCO will
promptly inform the other of any facts applicable to IBSF 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
IBSF to honor the existing written employment and severance contracts with
officers and employees of IBSF and Association that are included in the IBSF
Disclosure Schedule.
(b) Following consummation of the Merger, the Bank will decide
whether to continue each of the Association and/or IBSF's pension and welfare
plans for the benefit of employees of the Association and IBSF, or to have such
employees become covered under a HUBCO Pension and Welfare Plan. If HUBCO
decides to cover Association and IBSF employees under a HUBCO Pension and
Welfare Plan, such employees will receive credit for prior years of service with
the Association and/or IBSF for purposes of determining eligibility to
participate, and vesting, if applicable. No prior existing condition limitation
shall be imposed with respect to any medical coverage plan as a result of the
Merger.
(c) Any person who was serving as an employee of either IBSF
or the Association immediately prior to the Effective Time (other than those
employees covered by either a written employment agreement or the arrangements
set forth in Section 5.11 of the IBSF Disclosure Schedule) whose employment is
discontinued by HUBCO or the Bank or any of the HUBCO Subsidiaries within six
months after the Effective Time (unless termination of such employment is for
Cause (as defined below)) shall be entitled to a severance payment from the Bank
equal in amount to one week's base pay for each full year such employee was
employed by IBSF or the Association or any successor or predecessor thereto or
other IBSF Subsidiary, subject to a minimum of two weeks' severance and a
maximum of 25 weeks' severance, together with any accrued but unused vacation
leave with respect to the calendar year in which termination occurs. For
purposes of this Section 5.11, "Cause" shall mean termination because of the
employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties or willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses). Following the expiration of the foregoing
severance policy, any years of service recognized for purposes of this Section
5.11(c) will be taken into account under the terms of any applicable severance
policy of HUBCO.
(d)(i) Each participant in the IBS Financial Corp. Employee
Stock Ownership Plan ("IBSF ESOP") not fully vested will, in accordance with the
terms of the IBSF ESOP, become fully vested in his or her IBSF ESOP account as
of the Effective Time. As soon as practicable after the execution of this
Agreement, IBSF, the Association and HUBCO will cooperate to cause the IBSF ESOP
to be amended and other action taken, in a manner reasonably acceptable to IBSF
and HUBCO, to provide that the IBSF ESOP will terminate upon the Effective Time.
Between the date hereof and the Effective Time, the existing IBSF ESOP
indebtedness shall be paid in the ordinary course of business pursuant to the
existing loan amortization schedule and IBSF or the Association shall make such
contributions to the IBSF ESOP as necessary to fund such payments. Any
indebtedness of the IBSF ESOP remaining as of the Effective Time shall be repaid
from the Trust associated with the IBSF ESOP through application or sale of the
HUBCO Common Stock received by the IBSF ESOP; provided, however, that (A) any
related sale or distribution of shares by the IBSF ESOP shall be effected in
accordance with the requirements of federal and any applicable state securities
laws and regulations, including any rules of the NASD, (B) any related sale or
distribution of shares by the IBSF ESOP and any participant shall be effected in
such a manner (and with such safeguards as may be necessary or appropriate) so
as not to jeopardize the intended "pooling of interests" accounting treatment of
the Merger, and (C) all distributions from the IBSF ESOP after the Effective
Time shall be in shares of HUBCO Common Stock. Upon the repayment of the IBSF
ESOP loan, the remaining funds in the IBSF ESOP suspense account will be
allocated (to the extent permitted by Sections 401(a), 415 or 4975 of the Code
and the applicable laws and regulations including, without limitation, the
applicable provisions of ERISA) to IBSF ESOP participants (as determined under
the terms of the IBSF ESOP). IBSF and HUBCO agree that, subject to the
conditions described herein, as soon as practicable after the Effective Time and
repayment of the IBSF ESOP loan, participants in the IBSF ESOP shall be entitled
at their election to have the amounts in their IBSF ESOP accounts either
distributed to them in a lump sum or rolled over to another tax-qualified plan
(including HUBCO or Bank plans to the extent permitted by HUBCO) or individual
retirement account.
(ii) The actions relating to termination of the IBSF ESOP will
be adopted conditioned upon the consummation of the Merger and upon receiving a
favorable determination letter from the Internal Revenue Service ("IRS") with
regard to the continued qualification of the IBSF ESOP after any required
amendments. IBSF and HUBCO will cooperate in submitting appropriate requests for
any such determination letter to the IRS and will use their best efforts to seek
the issuance of such letter as soon as practicable following the date hereof.
IBSF and HUBCO will adopt such additional amendments to the IBSF ESOP as may be
reasonably required by the IRS as a condition to granting such determination
letter, provided that such amendments do not (A) substantially change the terms
outlined herein, (B) have a Material Adverse Change on IBSF or (C) result in an
additional material liability to HUBCO.
(iii) As of and following the Effective Time, HUBCO shall
cause the IBSF ESOP to be maintained for the exclusive benefit of employees and
other persons who were participants or beneficiaries therein prior to the
Effective Time and proceed with termination of the IBSF ESOP through
distribution of its assets in accordance with its terms subject to the
amendments described herein and as otherwise may be required to comply with
applicable law or to obtain a favorable determination from the IRS as to the
continuing qualified status of the IBSF ESOP, provided, however, that no such
termination distributions of the IBSF ESOP shall occur after the Effective Time
until a favorable termination letter has been received from the IRS. IBSF shall
cause the IBSF ESOP to be amended, effective as of the Effective Time, to
provide that the administrative committee thereof shall consist of four
individuals, two of whom are appointed by the Board of Directors of IBSF prior
to the Effective Time (the appointment of such individuals will be subject to
the prior consent of HUBCO, and such individuals after their appointment may not
be unreasonably removed or changed by HUBCO or its affiliates for a period of
two years after the Effective Time), and two of whom are appointed by HUBCO as
of the Effective Time.).
(e) As of and following the Effective Time, HUBCO shall cause
the Excess Benefit Plan of IBSF ("Excess Benefit Plan") to be maintained for the
exclusive benefit of its sole participant until the participant receives his
termination distribution from the IBSF ESOP at which time HUBCO shall cause the
Excess Benefit Plan to distribute amounts credited to his account in accordance
with the terms of the Excess Benefit Plan.
(f) Employees of IBSF and the Association who become employees
of HUBCO or any HUBCO Subsidiary shall become entitled to participate in HUBCO's
defined benefit pension plan in accordance with its terms. In this regard, each
such employee shall (i) receive, for purposes of participation and vesting only,
credit for all service with IBSF or the Association and (ii) enter the HUBCO
defined benefit pension plan on the entry date concurrent with or next following
the employee's satisfaction of such plan's minimum participation requirements.
(g) Employees of IBSF and the Association who become employees
of HUBCO or any HUBCO Subsidiary shall become entitled to participate in the
applicable HUBCO retirement savings plan ("401(k) Plan") in accordance with its
terms. In this regard, each such employee shall (i) receive, for purposes of
participation and vesting only, credit for all service with IBSF or the
Association, and (ii) enter the applicable 401(k) Plan on the entry date
concurrent with or next following the employee's satisfaction of such plan's
minimum participation requirements.
(h) Each participant in the IBSF Recognition and Retention
Plan ("RRP") not fully vested will, in accordance with the terms of the RRP,
become fully vested in Plan Share Awards thereunder as of the Effective Time. As
soon as practicable after the execution of this Agreement, IBSF, the Association
and HUBCO will cooperate to cause the RRP to be amended and other action taken,
in a manner reasonably acceptable to IBSF and HUBCO, to provide that the RRP
will terminate upon the Effective Time; provided, however, that (A) any
distribution of shares under the RRP shall be effected in accordance with the
requirements, if any, of federal and state securities laws and regulations, (B)
any distribution of shares under the RRP shall be effected in such a manner (and
with such safeguards as may be necessary or appropriate) so as not to jeopardize
the intended "pooling of interests" accounting treatment of the Merger, and (C)
all distributions from the RRP after the Effective Time shall be in shares of
HUBCO Common Stock. No action shall be taken that would adversely affect the
rights of plan participants who hold outstanding grants or awards of shares of
IBSF Common Stock, whether before or after the Effective Time. No further grants
or awards shall be made under the RRP following the date of this Agreement.
(i) IBSF and the Association may continue to administer such
bonus programs and arrangements as are disclosed pursuant to this Agreement
through the Effective Time, with such equitable modifications as may be
appropriate to take into account the circumstances of the Merger and the timing
thereof. In the event the Merger shall occur prior to the end of the current
fiscal year, bonuses shall be provided on a pro rata basis with respect to the
interim period; provided, however, that bonuses for such interim period, in the
aggregate, shall not exceed $50,000.
(j) Within ninety (90) days after the date hereof, HUBCO and
the Bank shall use their reasonable best efforts to inform the employees of IBSF
and the Association of the likelihood of such employees having continued
employment with HUBCO or a HUBCO Subsidiary following the Effective Time and,
where appropriate, shall use their reasonable best efforts to interview the IBSF
and Association employees to determine if there are mutually beneficial
employment opportunities available at HUBCO or a HUBCO Subsidiary. It is the
intent of HUBCO and the Bank in connection with reviewing applicants for
employment positions to give any IBSF and Association employee who is terminated
for other than Cause within six (6) months following the Effective Time the same
consideration as is afforded the Bank employees for such positions in accordance
with existing formal or informal polices for a period of six (6) months from
such date of termination.
(k) Each employee of IBSF or the Association identified in
Section 5.11 of the IBSF Disclosure Schedule shall be entitled to receive a
"retention" bonus from IBSF or the Association in the amount set forth in
Section 5.11 of the IBSF Disclosure Schedule in the event that such employee
remains an employee of IBSF or the Association, as applicable until the
Effective Time (or in certain cases, the date the systems conversion occurs
after the Effective Time) and satisfactorily fulfills the duties and
responsibilities of the position of such employee of IBSF or the Association, as
the case may be, through the Effective Time; provided that retention bonuses, in
the aggregate, shall not exceed $150,000.
(l) HUBCO shall pay the cost of out-placement services for
employees who are terminated without Cause in connection with the Merger within
six (6) months after the Effective Time. HUBCO shall not be obligated to pay any
out-placement fees in connection with the foregoing or more than $25,000 in the
aggregate for such services.
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 IBSF.
(a) For planning purposes, IBSF shall, within 30 days from the
date hereof, provide HUBCO with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by IBSF in connection with this
transaction based on facts and circumstances then currently known, including the
fees and expenses of counsel, accountants, investment bankers and other
professionals. IBSF 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, IBSF shall
ask all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements. IBSF shall accrue and/or pay
all of such amounts as soon as possible.
(c) IBSF shall cause its professionals to render monthly
invoices within 15 days after the end of each month. IBSF shall advise HUBCO
monthly of all out-of-pocket expenses which IBSF has incurred in connection with
this transaction.
(d) HUBCO, in reasonable consultation with IBSF, 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 IBSF or the Association or serves or has
served at the request of IBSF or the Association 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 IBSF or the Association or serves or has
served at the request of IBSF or the Association 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 IBSF or the Association or any of their respective
affiliates, or by any former or present shareholder of IBSF (each a "Claim" and
collectively, "Claims"), including, without limitation, any Claim which is based
upon, arises out of or in any way relates to the Merger, the Proxy
Statement/Prospectus, this Agreement, any of the transactions contemplated by
this Agreement, the Indemnitee's service as a member of the Board of Directors
of IBSF or the Association or of any committee of IBSF's or the Association'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 IBSF or the Association
would have been permitted under any applicable law and their respective
Certificates of Incorporation or Bylaws had the Merger not occurred (and HUBCO
shall also advance expenses as incurred to the fullest extent so permitted).
Notwithstanding the foregoing, but subject to subsection (b) below, HUBCO shall
not provide any indemnification or advance any expenses with respect to any
Claim which relates to a personal benefit improperly paid or provided, or
alleged to have been improperly paid or provided, to the Indemnitee, but HUBCO
shall reimburse the Indemnitee for costs incurred by the Indemnitee with respect
to such Claim when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and nonappealable,
that the Indemnitee was not improperly paid or provided with the personal
benefit alleged in the Claim.
(b) From and after the Effective Time, HUBCO shall assume and
honor any obligation of IBSF or the Association immediately prior to the
Effective Time with respect to the indemnification of the Indemnitees arising
out of the Certificate of Incorporation or Bylaws of IBSF or the Association, or
arising out of any written indemnification agreements between IBSF and/or the
Association and such persons disclosed in the IBSF Disclosure Schedule, as if
such obligations were pursuant to a contract or arrangement between HUBCO and
such Indemnitees.
(c) In the event HUBCO or any of its successors or assigns (i)
reorganizes or consolidates with or merges into or enters into another business
combination transaction with any other person or entity and is not the
resulting, continuing or surviving corporation or entity of such consolidation,
merger or transaction, or (ii) liquidates, dissolves or transfers all or
substantially all of its properties and assets to any person or entity, then,
and in each such case, proper provision shall be made so that the successors and
assigns of HUBCO assume the obligations set forth in this Section 5.14.
(d) HUBCO shall cause IBSF's and the Association'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 IBSF's and the
Association'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 IBSF's and the Association's existing
officers' and directors' liability insurance.
(e) Any Indemnitee wishing to claim indemnification under this
Section 5.14 shall promptly notify HUBCO upon learning of any Claim, but the
failure to so notify shall not relieve HUBCO of any liability it may have to
such Indemnitee if such failure does not materially prejudice HUBCO. In the
event of any Claim (whether arising before or after the Effective Time) as to
which indemnification under this Section 5.14 is applicable, (x) HUBCO shall
have the right to assume the defense thereof and HUBCO shall not be liable to
such Indemnitees for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof,
except that if HUBCO elects not to assume such defense, or counsel for the
Indemnitees advises that there are issues which raise conflicts of interest
between HUBCO and the Indemnitees, the Indemnitees may retain counsel
satisfactory to them, and HUBCO shall pay the reasonable fees and expenses of
such counsel for the Indemnitees as statements therefor are received; provided,
however, that HUBCO shall be obligated pursuant to this Section 5.14(e) to pay
for only one firm of counsel for all Indemnitees in any jurisdiction with
respect to a matter unless the use of one counsel for multiple Indemnitees would
present such counsel with a conflict of interest that is not waived, and (y) the
Indemnitees will cooperate in the defense of any such matter. HUBCO shall not be
liable for settlement of any claim, action or proceeding hereunder unless such
settlement is effected with its prior written consent. Notwithstanding anything
to the contrary in this Section 5.14, HUBCO shall not have any obligation
hereunder to any Indemnitee when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that the indemnification of such Indemnitee in the manner
contemplated hereby is prohibited by applicable law or public policy.
5.15 Bank Policies and Bank Merger. Notwithstanding that IBSF
believes that it has established all reserves and taken all provisions for
possible loan losses required by GAAP and applicable laws, rules and
regulations, IBSF 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, IBSF and HUBCO shall consult and cooperate with each other with respect
to (i) conforming to the extent appropriate, based upon such consultation,
IBSF's loan, accrual and reserve policies and IBSF's other policies and
procedures regarding applicable regulatory matters, including without limitation
Federal Reserve, the Bank Secrecy Act and FDIC matters, to those policies of
HUBCO as HUBCO may reasonably identify to IBSF from time to time, (ii) new
extensions of credit or material revisions to existing terms of credits by the
Association, 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 IBSF and
the Association to the extent appropriate; provided that any required change in
IBSF's practices in connection with the matters described in clause (i) or (iii)
above need not be effected (A) more than five days prior to the Effective Time
and (B) unless and until HUBCO agrees in writing that all conditions precedent
to the Determination Date have occurred and HUBCO has provided the Closing
Notice. No accrual or reserve made by IBSF or any IBSF Subsidiary pursuant to
this subsection, or any litigation or regulatory proceeding arising out of any
such accrual or reserve, shall constitute or be deemed to be a breach or
violation of any representation, warranty, covenant, condition or other
provision of this Agreement or to constitute a termination event within the
meaning of Section 7.1(d) or Section 7.1(g) hereof.
5.16 [Reserved]
5.17 Pooling and Tax-Free Reorganization Treatment. Before the
Effective Time, neither HUBCO nor IBSF shall intentionally take, fail to take,
or cause to be taken or not taken any action within its control, which would
disqualify the Merger as a "pooling-of-interests" for accounting purposes or as
a "reorganization" within the meaning of Section 368(a) of the Code. Subsequent
to the Effective Time, HUBCO shall not take and shall cause the Surviving
Corporation not to take any action within their control that would disqualify
the Merger as such a "reorganization" under the Code.
5.18 Comfort Letters. HUBCO shall cause Arthur Andersen, its
independent public accountants, to deliver to IBSF, and IBSF shall cause D&T,
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 IBSF,
in the form customarily issued by such accountants at such time in transactions
of this type.
5.19 Affiliates. Promptly, but in any event within two weeks,
after the execution and delivery of this Agreement, IBSF shall deliver to HUBCO
(a) a letter identifying all persons who, to the knowledge of IBSF, may be
deemed to be affiliates of IBSF under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of IBSF and (b) use its reasonable best efforts
to cause each person who may be deemed to be an affiliate of IBSF to execute and
deliver to HUBCO a letter agreement, substantially in the form of Exhibit
5.19-1, agreeing to comply with Rule 145 and to refrain from transferring shares
as required by the pooling-of-interests accounting rules. Within two weeks after
the date hereof, HUBCO shall use its reasonable best efforts to cause its
directors and executive officers to enter into letter agreements in the form of
Exhibit 5.19-2 with HUBCO concerning the pooling-of-interests accounting rules.
HUBCO hereby agrees to publish, or file a Form 8-K, Form 10-K or Form 10-Q
containing financial results covering at least 30 days of post-Merger combined
operations of HUBCO and IBSF as soon as practicable (but in no event later than
30 days) following the close of the first calendar month ending 30 days after
the Effective Time, in form and substance sufficient to remove the restrictions
set forth in paragraph "B" of Exhibit 5.19-1.
5.20 Appointments. Joseph M. Ochman, Sr. shall be appointed as
a director of the Surviving Bank and Chairman of the Southern New Jersey
Advisory Council of the Surviving Bank at the Closing. Mr. Ochman will receive a
consulting contract for services to be rendered during a transitional period on
terms substantially similar to those set forth in Section 5.20 of the HUBCO
Disclosure Schedule, with the form of the consulting contract to be reasonably
acceptable to HUBCO and Mr. Ochman.
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 Shareholders; SEC Registration. This Agreement
and the transactions contemplated hereby shall have been approved by the
requisite vote of the shareholders of IBSF and, if required, by the requisite
vote of the shareholders of HUBCO. The HUBCO Registration Statement shall have
been declared effective by the SEC and shall not be subject to a stop order or
any threatened stop order, and the issuance of the HUBCO Common Stock shall have
been qualified in every state where such qualification is required under the
applicable state securities laws.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the FDIC, the OTS, the Department, the FRB, the SEC and (if
necessary) the DEP) required to consummate the transactions contemplated hereby
shall have been obtained without the imposition of any non-standard or
non-customary term or condition which would materially impair the value of IBSF
and the Association, 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 Entity 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 Entity 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 IBSF determines in good faith, based upon the
advice of their respective counsel, makes it inadvisable to proceed with the
Merger because any such suit, action or proceeding has a significant potential
to be resolved in such a way as to deprive the party electing not to proceed of
any of the material benefits to it of the Merger.
(d) Tax Opinion. HUBCO and IBSF shall each have received an
opinion, dated as of the Effective Time, of Pitney, Hardin, Kipp & Szuch,
reasonably satisfactory in form and substance to IBSF and its counsel and to
HUBCO, based upon representation letters reasonably required by such counsel,
dated on or about the date of such opinion, and such other facts and
representations as such counsel may reasonably deem relevant, to the effect
that: (i) the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368 of the Code; (ii)
no gain or loss will be recognized by IBSF; (iii) no gain or loss will be
recognized by the IBSF shareholders upon the exchange of IBSF Common Stock
solely for HUBCO Common Stock; (iv) the tax basis of any HUBCO Common Stock
received in exchange for IBSF Common Stock shall equal the basis of the
recipient's IBSF Common Stock surrendered in the exchange, reduced by the amount
of cash received, if any, in the exchange, and increased by the amount of the
gain recognized, if any, in the exchange (whether characterized as dividend or
capital gain income); and (v) the holding period for any HUBCO Common Stock
received in exchange for IBSF Common Stock will include the period during which
IBSF Common Stock surrendered in 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 IBSF, to the effect that, based on a review of this
Agreement and related agreements and the facts and circumstances known to it,
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 IBSF and the Association. Except for those representations which are made as
of a particular date, the representations and warranties of IBSF 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, except to the extent waived
pursuant to Section 5.12 hereof. IBSF 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 IBSF 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 IBSF 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 IBSF, dated the Closing Date, in form and substance reasonably
satisfactory to HUBCO, substantially to the effect set forth in accordance with
Exhibit 6.2(b) hereto.
(c) Certificates. IBSF 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. IBSF shall have furnished HUBCO with letters
from all attorneys representing IBSF and the Association in any matters
confirming that all material legal fees have been paid in full for services
rendered as of the Effective Time.
(e) Merger Related Expense. IBSF shall have provided HUBCO
with an accounting of all merger related expenses incurred by it through the
Closing Date, including a good faith estimate of such expenses incurred but as
to which invoices have not been submitted as of the Closing Date. The merger
related expenses of IBSF, other than printing expenses (which are within the
control of HUBCO), shall be reasonable, taking into account normal and customary
billing rates, fees and expenses for similar transactions.
6.3. Conditions to the Obligations of IBSF Under this
Agreement. The obligations of IBSF 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, except to the extent waived pursuant to
Section 5.12 hereof. 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
affect the representation as to which the supplement or amendment relates.
(b) Opinion of Counsel to HUBCO. IBSF shall have received an
opinion of counsel to HUBCO, dated the Closing Date, in form and substance
reasonably satisfactory to IBSF, substantially to the effect set forth in
accordance with Exhibit 6.3(b) hereto.
(c) Fairness Opinion. IBSF shall have received an opinion from
Ryan, Beck, dated no more than three days prior to the date the Proxy
Statement-Prospectus is mailed to IBSF'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
IBSF hereunder is fair to such shareholders from a financial point of view
("Fairness Opinion").
(d) Certificates. HUBCO shall have furnished IBSF with such
certificates of its officers and such other documents to evidence fulfillment of
the conditions set forth in this Section 6.3 as IBSF may reasonably request.
(e) Bank Director Appointment. Joseph M. Ochman, Sr. shall
have been appointed to the Board of Directors of the Bank and shall have been
appointed Chairman of the Southern New Jersey Advisory Council of the Surviving
Bank.
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated prior to
the Effective Time, whether before or after approval of this Agreement by the
shareholders of IBSF:
(a) by mutual written consent of the parties hereto;
(b) by HUBCO or IBSF (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 IBSF is taken and such shareholders fail to approve this
Agreement at the meeting (or any adjournment or postponement thereof) held for
such purpose (provided that the terminating party shall not be in material
breach of any of its obligations under Section 5.7 hereof), 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 (provided that
the terminating party shall not be in material breach of any of its obligations
under Section 5.7 hereof);
(c) by HUBCO or IBSF 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 IBSF if any such
application is approved with conditions (other than conditions which are
customary or standard in such regulatory approvals) which would materially
impair the value of IBSF and the Association, taken as a whole, to HUBCO;
(d) by HUBCO if (i) there shall have occurred an IBSF Material
Adverse Change from that disclosed by IBSF in IBSF's Quarterly Report on Form
10-Q for the quarter ended December 31, 1997 (it being understood that those
matters disclosed in the IBSF Disclosure Schedule shall not be deemed to
constitute such a material adverse effect) or (ii) there was a material breach
in any representation, warranty, covenant, agreement or obligation of IBSF
hereunder and such breach shall not have been remedied within 30 days after
receipt by IBSF of notice in writing from HUBCO to IBSF specifying the nature of
such breach and requesting that it be remedied;
(e) by IBSF, if (i) there shall have occurred a HUBCO Material
Adverse Change from that disclosed by HUBCO in HUBCO's Annual Report on Form
10-K for the year ended December 31, 1997, 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 constitute
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 IBSF specifying the nature of such breach and
requesting that it be remedied;
(f) by IBSF, if IBSF's Board of Directors shall have approved
an Acquisition Transaction after determining, upon advice of counsel, that such
approval was necessary in the exercise of its fiduciary obligations under
applicable laws;
(g) by HUBCO if the conditions set forth in Sections 6.1 and
6.2 are not satisfied and are not capable of being satisfied by the Cutoff Date;
(h) by IBSF if the conditions set forth in Sections 6.1 and
6.3 are not satisfied and are not capable of being satisfied by the Cutoff Date;
or
(i) by IBSF, if (either before or after the approval of this
Agreement by the shareholders of IBSF) its Board of Directors so determines by a
vote of a majority of the members of its entire Board, at any time during the
five business day period commencing with (and including) the first business day
following the Determination Date, if both of the following conditions are
satisfied:
(1) the Median Pre-Closing Price of HUBCO Common
Stock on the Determination Date is less than 85% of the Closing Price of HUBCO
Common Stock on the first Nasdaq trading day immediately following the date of
the first public announcement of the entry into this Agreement (the "Starting
Date") (85% of HUBCO's Starting Date Closing Price is referred to herein as the
"HUBCO Floor Price"); and
(2) (i) the quotient obtained by dividing the Median
Pre-Closing Price of HUBCO Common Stock on the Determination Date by HUBCO's
Starting Date Closing Price (the "HUBCO Ratio") is less than (ii) the quotient
obtained by dividing the KBW 50 Index, as published the following business day
by Bloomberg or other reliable source (the "Index Price") as of the
Determination Date by the Index Price as of the Starting Date and subtracting
0.10 from the quotient in this clause (2)(ii) (such number being referred to
herein as the "Index Ratio").
Notwithstanding the foregoing, if IBSF elects to exercise its termination right
pursuant to this subsection (i), it shall give prompt written notice to HUBCO
(provided that such notice of election to terminate may be withdrawn at any time
within the aforementioned five business day period)). During the three business
day period commencing with its receipt of such notice, HUBCO shall have the
option of increasing the consideration to be received by the holders of IBSF
Common Stock hereunder by increasing the Exchange Ratio to equal the lesser of
(i) a number (rounded to four decimals) equal to a quotient, the numerator of
which is the HUBCO Floor Price multiplied by the Exchange Ratio (as then in
effect) and the denominator of which is the Median Pre-Closing Price of HUBCO
Common Stock, and (ii) a number (rounded to four decimals) equal to a quotient,
the numerator of which is the Index Ratio multiplied by the Exchange Ratio (as
then in effect) and the denominator of which is the HUBCO Ratio. If HUBCO makes
an election contemplated by the preceding sentence, within such three business
day period, it shall give prompt written notice to IBSF of such election and the
revised Exchange Ratio, whereupon no termination shall have occurred pursuant to
this subsection (i) and this Agreement shall remain in effect in accordance with
its terms (except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be deemed to
refer to the Exchange Ratio as adjusted pursuant to this subsection (i).
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either HUBCO or IBSF 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 IBSF 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 IBSF 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, IBSF may bear the expenses of the Association.
(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), 5.11 and 5.14.
8.3. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by reputable overnight courier or sent by registered or certified
mail, postage prepaid, as follows:
(a) If to HUBCO, to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: Kenneth T. Neilson, Chairman,
President and Chief Executive Officer
Copy to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: D. Lynn Van Borkulo-Nuzzo, Esq.
And copy to:
Pitney, Hardin, Kipp & Szuch
(mail to) P.O. Box 1945
Morristown, NJ 07962
(deliver to) 200 Campus Drive
Florham Park, NJ 07932
Attn.: Michael W. Zelenty, Esq.
(b) If to IBSF, to:
IBS Financial Corp.
1909 East Route 70
Cherry Hill, NJ 08003
Attn.: Joseph M. Ochman, Sr., Chairman,
President and Chief Executive Officer
Copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
The Walker Building, 12th Floor
734 15th Street, N.W.
Washington, D.C. 20005
Attn.: Gerald F. Heupel, Jr., Esq.
or such other addresses as shall be furnished in writing by any party, and any
such notice or communications shall be deemed to have been given as of the date
actually received.
8.4. Parties in Interest; Assignability. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement except the Indemnitees described
in Section 5.14. This Agreement and the rights and obligations of the parties
hereunder may not be assigned.
8.5. Entire Agreement. This Agreement, which includes the
Disclosure Schedules hereto and the other documents, agreements and instruments
executed and delivered pursuant to or in connection with this Agreement,
contains the entire Agreement between the parties hereto with respect to the
transactions contemplated by this Agreement and supersedes all prior
negotiations, arrangements or understandings, written or oral, with respect
thereto, other than any confidentiality agreements entered into by the parties
hereto.
8.6. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
8.7. Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey, without giving effect to the principles of
conflicts of laws thereof.
8.8. Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
IN WITNESS WHEREOF, HUBCO, the Bank, IBSF and the Association
have caused this Agreement to be executed by their duly authorized officers as
of the day and year first above written.
ATTEST: HUBCO, INC.
By: /s/ D. Lynn Van Borkulo-Nuzzo By: /s/ Kenneth T. Neilson
---------------------------- ----------------------------
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, Chairman,
Secretary President and Chief Executive Officer
ATTEST: IBS FINANCIAL CORP.
By: /s/Chiara Eisennagel By:/s/ Joseph M. Ochman, Sr.
----------------------------- -----------------------------
Chiara Eisennagel Joseph M. Ochman, Sr., Chairman,
Corporate Secretary President and Chief Executive Officer
ATTEST: HUDSON UNITED BANK
By: /s/ D. Lynn Van Borkulo-Nuzzo By: /s/ Kenneth T. Neilson
---------------------------- ----------------------------
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, Chairman,
Secretary President and Chief Executive Officer
ATTEST: INTER-BORO SAVINGS
AND LOAN ASSOCIATION
By: /s/Chiara Eisennagel By:/s/ Joseph M. Ochman, Sr.
----------------------------- -----------------------------
Chiara Eisennagel Joseph M. Ochman, Sr., Chairman,
Corporate Secretary President and Chief Executive Officer
<PAGE>
AGREEMENT OF IBSF AND ASSOCIATION DIRECTORS
Reference is made to the Agreement and Plan of Merger, dated
as of March 31, 1998 (the "Merger Agreement"), 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, IBS Financial Corp., a New Jersey corporation
and registered savings and loan holding company ("IBSF"), and Inter-Boro Savings
and Loan Association, a New Jersey state-chartered savings and loan association
and wholly-owned subsidiary of IBSF (the "Association"). Capitalized terms used
herein and not otherwise defined have the meanings given to them in the Merger
Agreement.
Each of the following persons, being all of the directors of
IBSF and the Association, solely in such person's capacity as a holder of IBSF
Common Stock, agrees to vote or cause to be voted all shares of IBSF Common
Stock which are held by such person as of the voting record date for the
Shareholders Meeting, or over which such person exercises full voting control
(except as trustee or in a fiduciary capacity, or as nominee), in favor of the
Merger, unless HUBCO or the Bank is then in breach or default in any material
respect with regard to any covenant, agreement, representation or warranty
contained in the Agreement.
It is understood and agreed that this Agreement of IBSF and
Association Directors (this "Agreement") relates solely to the capacity of the
undersigned as shareholders or other beneficial owners of shares of IBSF Common
Stock and is not in any way intended to affect the exercise by the undersigned
of the undersigned's responsibilities as directors of IBSF or the Association.
It is further understood and agreed that this Agreement is not in any way
intended to affect the exercise by the undersigned of any fiduciary
responsibility which the undersigned may have in respect of any shares of IBSF
Common Stock held by the undersigned as of the date hereof.
- ------------------------------- ----------------------------------------
Joseph M. Ochman, Sr. Paul W. Gleason
- ------------------------------- ----------------------------------------
Thomas J. Auchler Francis X. Lorbecki, Jr.
- ------------------------------- ----------------------------------------
John A. Borden Albert D. Stiles
- -------------------------------
Frank G. Lockhardt
Dated: As of March 31, 1998
<PAGE>
EXHIBIT 5.19-1
FORM OF AFFILIATE LETTER FOR IBSF AFFILIATES
_____________, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed acquisition (the "Merger") of IBS Financial Corp. ("IBSF"), by HUBCO,
Inc., a New Jersey corporation and registered bank holding company ("HUBCO"),
pursuant to the Agreement and Plan of Merger dated as of March 31, 1998 (the
"Agreement") between IBSF, its thrift 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 IBSF Common Stock.
As a result of the Merger, I will receive shares of HUBCO Common Stock in
exchange for my IBSF Common Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of IBSF, 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 IBSF 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 IBSF Common Stock owned by such person or entity, without notifying
HUBCO three business days in advance of the proposed transfer (the "Notice
Period") 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 prior
to the end of the Notice Period 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 IBSF 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 IBSF 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,
Form 10-K 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, in each case except for transfers by
operation of law, by will or under the laws of descent and distribution. For
purposes of this paragraph only, "IBSF Common Stock" includes HUBCO Common Stock
as converted. I understand that HUBCO has agreed to publish financial results
covering at least 30 days of post-Merger combined operations of HUBCO and IBSF
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.
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 IBSF at the time the Merger is submitted for a vote of IBSF'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 AS OF
MARCH 31, 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 IBSF.
Execution of this letter is not an admission on my part that I
am an "affiliate" of IBSF 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 _______, 1998 by
HUBCO, INC.
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 5.19-2
FORM OF AFFILIATE LETTER FOR HUBCO AFFILIATES
_______________, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of IBS Financial Corp. ("IBSF") with and into
HUBCO, Inc., a New Jersey corporation and registered bank holding company
("HUBCO"), pursuant to the Agreement and Plan of Merger dated as of March 31,
1998 (the "Agreement") between IBSF, its thrift 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 IBSF 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 three business days in advance of
the proposed transfer (the "Notice Period") 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 prior to the end
of the Notice Period 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, in
each case except for transfers by operation of law, by will or under the laws of
descent and distribution. I understand that HUBCO has agreed to publish
financial results covering at least 30 days of post-Merger combined operations
of HUBCO and IBSF 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.
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
________________, 1998 by
HUBCO, INC.
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT 6.2
FORM OF OPINION OF COUNSEL TO IBSF
TO BE DELIVERED TO HUBCO ON THE EFFECTIVE TIME
(a) IBSF and the Association 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 IBSF and the Association, and the Agreement constitutes a
valid and legally binding obligation of IBSF and the Association 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 New Jersey chartered
savings institutions or their holding companies, (ii) general equitable
principles, (iii) laws relating to the safety and soundness of insured
depository institutions, and (iv) implied covenants of good faith, fair dealing
and commercially reasonable conduct and by applicable public policies and laws,
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 IBSF and the
Association 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
IBSF or the charter or bylaws of the Association, or (B) based on certificates
of officers of IBSF and the Association and without independent verification, to
the actual knowledge of such counsel, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which IBSF or the
Association is a party and which was referenced in the IBSF Disclosure Schedule;
or (ii) to the actual knowledge of such counsel, result in the creation or
imposition of any material lien, instrument or encumbrance upon the property of
IBSF or the Association, 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 corporation, banking or securities statute, rule or regulation
applicable to IBSF or the Association.
(b) IBSF is a corporation validly existing under the laws of
the State of New Jersey, the Association is a validly existing New
Jersey-chartered savings and loan association under the laws of the State of New
Jersey and each of IBSF and the Association 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 the Association are insured to the maximum extent provided by law by
the Federal Deposit Insurance Corporation.
(c) Each IBSF Subsidiary listed as such in the IBSF Disclosure
Schedule is validly existing under the laws of the jurisdiction of its
incorporation.
(d) There is, to the actual knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or investigation
pending or threatened to which IBSF or the Association is a party which would,
if determined adversely to IBSF or the Association, have a material adverse
effect on the business, properties, results of operations, or condition,
financial or otherwise, of IBSF or the Association taken as a whole or which
presents a claim to restrain or prohibit the transactions contemplated by the
Agreement, except any proceeding or investigation disclosed to HUBCO.
(e) No consent, approval, authorization, or order of any
federal or state court or federal or state banking or securities agency or body,
or to such counsel's actual knowledge of any third party under any note, bond,
mortgage, indenture, license, agreement or other instrument referred to in the
IBSF Disclosure Schedule, is required for the consummation by IBSF or the
Association 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 IBSF 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
IBSF 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 IBSF or the Association 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 IBSF and the Association.
Such counsel's opinion shall be limited to matters governed by
the corporate and banking laws of the State of New Jersey and the federal
securities and banking laws and regulations of the United States of America.
<PAGE>
EXHIBIT 6.3
FORM OF OPINION OF COUNSEL TO HUBCO
TO BE DELIVERED TO IBSF ON THE EFFECTIVE TIME
(a) HUBCO is a corporation validly existing under the laws of
the State of New Jersey, the Bank is a validly existing New Jersey
state-chartered commercial banking corporation 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 a valid and binding obligation 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 Bylaws of HUBCO or the Charter and Bylaws 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 Bylaws 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
IBSF and that IBSF 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 IBSF 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 IBSF.
(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 statement, 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 IBSF at which the Agreement
was approved, contained any untrue statement of a material fact regarding HUBCO
or the Merger, or omitted to state 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.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of March
31, 1998, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and IBS Financial Corp., a New Jersey
corporation and registered savings and loan holding company ("IBSF").
BACKGROUND
WHEREAS, HUBCO and IBSF, as of the date hereof, are prepared
to execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which IBSF will be merged with and into HUBCO (the "Merger"); and
WHEREAS, HUBCO has advised IBSF that it will not execute the
Merger Agreement unless IBSF executes this Agreement; and
WHEREAS, the Board of Directors of IBSF has determined that
the Merger Agreement provides substantial benefits to the shareholders of IBSF;
and
WHEREAS, as an inducement to HUBCO to enter into the Merger
Agreement and in consideration for such entry, IBSF desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of IBSF 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 IBSF,
intending to be legally bound hereby, agree:
1. Grant of Option. IBSF hereby grants to HUBCO an option to
purchase 2,700,000 shares of common stock, $.01 par value, of IBSF (the "Common
Stock") at a price of $18.00 per share (the "Option Price"), on the terms and
conditions set forth herein (the "Option").
2. Exercise of Option. This Option shall not be exercisable
until the occurrence of a Triggering Event (as such term is hereinafter
defined). Upon or after the occurrence of a Triggering Event (as such term is
hereinafter defined), HUBCO may exercise the Option, in whole or in part, at any
time or from time to time, subject to the terms and conditions set forth herein
and the termination provisions of Section 19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such term is
defined in Rule 13d-3 as promulgated under the Exchange Act) of at least 15% of
the then outstanding shares of Common Stock; or
b. enters into a letter of intent or an agreement,
whether oral or written, with IBSF pursuant to which such person or any
affiliate of such person would (i) merge or consolidate, or enter into any
similar transaction, with IBSF, (ii) acquire all or a significant portion of the
assets or liabilities of IBSF, or (iii) acquire beneficial ownership of
securities representing, or the right to acquire beneficial ownership or to vote
securities representing, 15% or more of the then outstanding shares of Common
Stock; or
c. makes a filing with any bank or thrift regulatory
authorities with respect to 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, IBSF or any other
business combination involving IBSF, or (ii) a transaction involving the
transfer of beneficial ownership of securities representing, or the right to
acquire beneficial ownership or to vote securities representing, 15% or more of
the outstanding shares of Common Stock, and in either case thereafter, if such
Proposal has not been Publicly Withdrawn (as such term is hereinafter defined)
at least 15 days prior to the meeting of stockholders of IBSF called to vote on
the Merger and IBSF's stockholders fail to approve the Merger by the vote
required by applicable law at the meeting of stockholders called for such
purpose; or
d. makes a bona fide Proposal and thereafter, but
before such Proposal has been Publicly Withdrawn, IBSF 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 IBSF or any of its directors, senior
executive officers, investment bankers or other person with actual or apparent
authority to speak for the Board of Directors, inviting, encouraging or
soliciting any proposal (other than from HUBCO or an affiliate of HUBCO) 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 IBSF,
or a sale of a significant number of shares of Common Stock or any significant
portion of its assets or liabilities.
The term "significant portion" means 25% of the assets or
liabilities of IBSF. The term "significant number" means 15% of the outstanding
shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the Proposal coupled
with a public announcement of no further interest in pursuing such Proposal or
in acquiring any controlling influence over IBSF or in soliciting or inducing
any other person (other than HUBCO or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be exercised
at any time (i) in the absence of any required governmental or regulatory
approval or consent (including any filing, approval or consent required under
the rules and regulations of the National Association of Securities Dealers,
Inc.) necessary for IBSF 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.
IBSF 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 IBSF shall not be a condition to the right of HUBCO to exercise the
Option. IBSF will not take any action which would have the effect of preventing
or disabling IBSF 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 IBSF (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 IBSF of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by IBSF; (b) IBSF 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 IBSF, registered in the name of HUBCO or its
designee, in such denominations as were specified by HUBCO in its notice of
exercise and, if necessary, bearing a legend as set forth below; and (c) HUBCO
shall pay any transfer or other taxes required by reason of the issuance of the
Option Shares so purchased.
If required under applicable federal securities laws, a legend
will be placed on each stock certificate evidencing Option Shares issued
pursuant to this Agreement, which legend will read substantially as follows:
The shares of stock evidenced by this certificate
have not been registered for sale under the Securities Act of 1933 (the
"1933 Act"). These shares may not be sold, transferred or otherwise
disposed of unless a registration statement with respect to the sale of
such shares has been filed under the 1933 Act and declared effective
or, in the opinion of counsel reasonably acceptable to IBS Financial
Corp., said transfer would be exempt from registration under the
provisions of the 1933 Act and the regulations promulgated thereunder.
No such legend shall be required if a registration statement
is filed and declared effective under Section 4 hereof.
4. Registration Rights. Upon or after the occurrence of a
Triggering Event and upon receipt of a written request from HUBCO, IBSF 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 IBSF 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 IBSF shall
not be required to prepare and file any such registration statement in
connection with any proposed sale with respect to which counsel to IBSF delivers
to IBSF and to HUBCO (which is reasonably acceptable to HUBCO) its opinion to
the effect that no such filing is required under applicable laws and regulations
with respect to such sale or disposition; provided further, however, that IBSF
may delay any registration of Option Shares above for a period not exceeding 90
days in the event that IBSF shall in good faith determine that any such
registration would adversely effect an offering of securities by IBSF for cash.
HUBCO shall provide all information reasonable requested by IBSF for inclusion
in any registration statement to be filed hereunder.
In connection with such filing, IBSF shall use its best
efforts to cause to be delivered to HUBCO such certificates, opinions,
accountant's letters and other documents as HUBCO shall reasonably request and
as are customarily provided in connection with registrations of securities under
the Securities Act of 1933, as amended. All expenses incurred by IBSF 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 IBSF and blue sky fees and expenses shall be paid by IBSF.
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, IBSF shall indemnify and hold harmless HUBCO
against any losses, claims, damages or liabilities, joint or several, to which
HUBCO may become subject, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
preliminary or final registration statement or any amendment or supplement
thereto, or arise out of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and IBSF 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 IBSF 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 IBSF 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 IBSF for any
legal or other expense reasonably incurred by IBSF 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 IBSF
with another entity, or any sale of all or substantially all of the assets of
IBSF, 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 IBSF will use its
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event HUBCO is the holder
hereof, approval of the Securities and Exchange Commission, the Board of
Governors of the Federal Reserve System, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation or the New Jersey Department of Banking,
and IBSF 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 IBSF. IBSF hereby
represents and warrants to HUBCO as follows:
a. Due Authorization. IBSF 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 IBSF.
b. Authorized Shares. IBSF 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 IBSF or any agreement,
instrument, judgment, decree or order applicable to IBSF.
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 IBSF for a breach of this Agreement.
9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof.
10. Assignment or Transfer. HUBCO may not sell, assign or
otherwise transfer its rights and obligations hereunder, in whole or in part, to
any person or group of persons other than to an affiliate of HUBCO. HUBCO
represents that it is acquiring the Option for HUBCO's own account and not with
a view to or for sale in connection with any distribution of the Option or the
Option Shares. HUBCO is aware that neither the Option nor the Option Shares is
the subject of a registration statement filed with, and declared effective by,
the Securities and Exchange Commission pursuant to Section 5 of the Securities
Act, but instead each is being offered in reliance upon the exemption from the
registration requirement provided by Section 4(2) thereof and the
representations and warranties made by HUBCO in connection therewith.
11. Amendment of Agreement. Upon mutual consent of the parties
hereto, this Agreement may be amended in writing at any time, for the purpose of
facilitating performance hereunder or to comply with any applicable regulation
of any governmental authority or any applicable order of any court or for any
other purpose.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
13. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally, by express service,
cable, telegram or telex, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
If to HUBCO:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attention: Mr. Kenneth T. Neilson
President and Chief Executive Officer
With a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
Attention: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
If to IBSF:
IBS Financial Corp.
The Operations Center
1909 E. Route 70
Cherry Hill, New Jersey 08003
Attention: Joseph M. Ochman, Sr.
Chairman, President and Chief
Executive Officer
With a copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
The Walker Building, 12th Floor
734 15th Street, N.W.
Washington, D.C. 20005
Attention: Gerald F. Heupel, Jr.
or to such other address as the person to whom notice is to be
given may have previously furnished to the others in writing in the manner set
forth above (provided that notice of any change of address shall be effective
only upon receipt thereof).
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are inserted for
convenience and reference purposes, and shall not limit or otherwise affect any
of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may, by mutual
consent, extend the time for performance of any of the obligations or acts of
either party hereto. Each party may waive (a) compliance with any of the
covenants of the other party contained in this Agreement and/or (b) the other
party's performance of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
19. Termination. This Agreement shall terminate upon either
the termination of the Merger Agreement as provided therein or the consummation
of the transactions contemplated by the Merger Agreement; provided, however,
that if termination of the Merger Agreement occurs after the occurrence of a
Triggering Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 18 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Stock Option
Agreement to be executed by its duly authorized officer, all as of the day and
year first above written.
IBS FINANCIAL CORP.
By: /s/ Joseph M. Ochman, Sr.
-----------------------------------------------
Joseph M. Ochman, Sr.
Chairman, President and Chief Executive Officer
HUBCO, INC.
By: /s/ Kenneth T. Neilson
-----------------------------------------------
Kenneth T. Neilson,
President & Chief Executive Officer
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 31, 1998
("Agreement"), is among HUBCO, Inc. ("HUBCO"), a New Jersey corporation and
registered bank holding company, Lafayette American Bank (the "Bank"), a
Connecticut state-chartered commercial banking corporation and wholly-owned
subsidiary of HUBCO, Dime Financial Corporation, a Connecticut corporation and
registered bank holding company ("DFC"), and The Dime Savings Bank of
Wallingford, a state savings bank and wholly-owned subsidiary of DFC (the
"Dime").
RECITALS
The respective Boards of Directors of HUBCO and DFC have each
determined that it is in the best interests of HUBCO and DFC and their
respective shareholders for HUBCO to acquire DFC by merging DFC with and into
HUBCO with HUBCO surviving and DFC shareholders receiving the consideration
hereinafter set forth. Immediately after the merger of DFC into HUBCO, the Dime
shall be merged with and into the Bank with the Bank surviving.
The respective Boards of Directors of DFC, HUBCO, the Bank and
the Dime have each duly adopted and approved this Agreement and the Board of
Directors of DFC has directed that it be submitted to DFC's shareholders for
approval.
As a condition for HUBCO to enter into this Agreement, HUBCO
has required that it receive an option on certain authorized but unissued shares
of DFC Common Stock (as hereinafter defined) and, simultaneously with the
execution of this Agreement, DFC is issuing an option to HUBCO (the "HUBCO Stock
Option") to purchase certain shares of the authorized and unissued DFC Common
Stock subject to the terms and conditions set forth in the Agreement governing
the HUBCO Stock Option.
NOW, THEREFORE, intending to be legally bound, the parties
hereto hereby agree as follows:
ARTICLE I - THE MERGER
1.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereafter defined), DFC shall be merged
with and into HUBCO (the "Merger") in accordance the New Jersey Business
Corporation Act (the "NJBCA") and the Connecticut Business Corporation Act
("CBC") and HUBCO shall be the surviving corporation (the "Surviving
Corporation").
1.2. Effect of the Merger. At the Effective Time, the
Surviving Corporation shall be considered the same business and corporate entity
as each of HUBCO and DFC and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of HUBCO and DFC shall vest in the
Surviving Corporation and the Surviving Corporation shall be subject to and be
deemed to have assumed all of the debts, liabilities, obligations and duties of
each of HUBCO and DFC and shall have succeeded to all of each of their
relationships, as fully and to the same extent as if such property, rights,
privileges, powers, franchises, debts, liabilities, obligations, duties and
relationships had been originally acquired, incurred or entered into by the
Surviving Corporation. In addition, any reference to either of HUBCO and DFC in
any contract or document, whether executed or taking effect before or after the
Effective Time, shall be considered a reference to the Surviving Corporation if
not inconsistent with the other provisions of the contract or document; and any
pending action or other judicial proceeding to which either of HUBCO or DFC is a
party, shall not be deemed to have abated or to have discontinued by reason of
the Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Merger had not been made; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of HUBCO or DFC if the Merger had not occurred.
1.3. Certificate of Incorporation. As of the Effective Time,
the certificate of incorporation of HUBCO shall be the certificate of
incorporation of the Surviving Corporation until otherwise amended as provided
by law.
1.4. By-Laws. As of the Effective Time, the By-Laws of HUBCO
shall be the By-Laws of the Surviving Corporation until otherwise amended as
provided by law.
1.5. Directors and Officers. As of the Effective Time, the
directors and officers of HUBCO shall be the directors and officers of the
Surviving Corporation.
1.6 Closing, Closing Date, Determination Date and Effective
Time. Unless a different date, time and/or place are agreed to by the parties
hereto, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., at the offices of Pitney, Hardin, Kipp & Szuch, 200 Campus Drive, Florham
Park, New Jersey, on a date determined by HUBCO on at least five business days
notice (the "Closing Notice") given to DFC, which date (the "Closing Date")
shall be not less than seven nor more than 10 business days following the
receipt of all necessary regulatory and governmental approvals and consents and
the expiration of all statutory waiting periods in respect thereof and the
satisfaction or waiver of all of the conditions to the consummation of the
Merger specified in Article VI hereof (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing). In
the Closing Notice, HUBCO shall specify the "Determination Date" for purposes of
determining the Median Pre-Closing Price (as hereinafter defined), which date
shall be the first date on which all federal and state bank regulatory approvals
(and waivers, if applicable) necessary for consummation of the Merger shall have
been received and either party shall have informed the other party that all such
federal and state bank regulatory approvals (and waivers, if applicable) have
been received. Simultaneous with or immediately following the Closing, HUBCO and
DFC shall cause to be filed (a) a certificate of merger, in form and substance
satisfactory to HUBCO and DFC, with the Secretary of State of the State of New
Jersey (the "New Jersey Certificate of Merger") and (b) a certificate of merger,
in form and substance satisfactory to HUBCO and DFC, with the Secretary of State
of Connecticut (the "Connecticut Certificate of Merger"). Each Certificate of
Merger shall specify as the "Effective Time" of the Merger, which Effective Time
shall be a date and time following the Closing agreed to by HUBCO and DFC (which
date and time the parties currently anticipate will be the close of business on
the Closing Date). In the event the parties fail to specify the date and time in
the merger certificates, the Merger shall become effective upon (and the
"Effective Time" shall be) the later of the time of the filing of the New Jersey
Certificate of Merger or the Connecticut Certificate of Merger.
1.7 The Bank Merger. Immediately following the Effective Time,
the Dime shall be then merged with and into the Bank (the "Bank Merger") in
accordance with the provisions of Section 36a-125 of the Banking Law of
Connecticut (the "Banking Act"). In the Bank Merger, the Bank shall be the
surviving bank (the "Surviving Bank"). Upon the consummation of the Bank Merger,
the separate existence of the Dime shall cease and the Surviving Bank shall be
considered the same business and corporate entity as each of the Dime and the
Bank and all of the property, rights, privileges, powers and franchises of each
of the Dime and the Bank shall vest in the Surviving Bank and the Surviving Bank
shall be deemed to have assumed all of the debts, liabilities, obligations and
duties of each of the Dime and the Bank and shall have succeeded to all or each
of their relationships, fiduciary or otherwise, as fully and to the same extent
as if such property, rights, privileges, powers, franchises, debts, obligations,
duties and relationships had been originally acquired, incurred or entered into
by the Surviving Bank. Upon the consummation of the Bank Merger, the certificate
of incorporation and By-Laws of the Bank shall be the certificate of
incorporation and By-Laws of the Surviving Bank and the officers and directors
of the Bank shall be the officers and directors of the Surviving Bank, except as
provided in Section 5.20 hereof. Following the execution of this Agreement, the
Dime and the Bank shall execute and deliver a merger agreement (the "Bank Merger
Agreement"), both in form and substance reasonably satisfactory to the parties
hereto, substantially as set forth in Exhibit 1.7 hereto, for delivery to the
Commissioner of the Connecticut Department of Banking (the "Department") and the
Federal Deposit Insurance Corporation (the "FDIC") for approval of the Bank
Merger.
ARTICLE II - CONVERSION OF DFC SHARES
2.1. Conversion of DFC Common Stock. Each share of common
stock, par value $1.00 per share, of DFC ("DFC Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than Excluded Shares,
as hereinafter defined) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted as follows:
(a) Exchange of Common Stock; Exchange Ratio. Subject
to the provisions of this Section 2.1, each share of DFC Common Stock issued and
outstanding immediately prior to the Effective Time (excluding any treasury
shares and shares to be canceled pursuant to Section 2.1(d) hereof) shall be
converted at the Effective Time into the right to receive a certain number (the
"Exchange Ratio") of shares of Common Stock, no par value, of HUBCO ("HUBCO
Common Stock") determined in accordance with the next sentence, subject to
adjustment as provided in Section 2.1(c) and subject to the payment of cash in
lieu of fractional shares in accordance with Section 2.2(e). The Exchange Ratio
shall be a number between 1.05 and .93, with the exact number determined from
the quotient, rounded to the nearest thousandth, obtained by dividing $38.25 by
the Median Pre-Closing Price (as defined in Section 2.2(e)) of HUBCO Common
Stock, except if the quotient is greater than 1.05, the Exchange Ratio shall be
1.05 and if the quotient is less than .93, the Exchange Ratio shall be .93.
(b) Cancellation of DFC Certificates. After the
Effective Time, all such shares of DFC Common Stock (other than those canceled
pursuant to Section 2.1(d)) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously evidencing any such shares (other than those canceled
pursuant to Section 2.1(d)) shall thereafter represent the right to receive the
Merger Consideration (as defined in Section 2.2(b)). The holders of such
certificates previously evidencing such shares of DFC Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of DFC Common Stock except as otherwise provided herein
or by law. Such certificates previously evidencing such shares of DFC Common
Stock (other than those canceled pursuant to Section 2.1(d)) shall be exchanged
for certificates evidencing shares of HUBCO Common Stock issued pursuant to this
Article II, upon the surrender of such certificates in accordance with this
Article II. No fractional shares of HUBCO Common Stock shall be issued, and, in
lieu thereof, a cash payment shall be made pursuant to Section 2.2(e).
(c) Capital Changes. If between the date hereof and
the Effective Time the outstanding shares of HUBCO Common Stock shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, stock split, reclassification, recapitalization, merger,
combination or exchange of shares, the Exchange Ratio and the definition of
Median Pre-Closing Price shall be correspondingly adjusted to reflect such stock
dividend, stock split, reclassification, recapitalization, merger, combination
or exchange of shares.
(d) Excluded Shares. All shares of DFC Common Stock
held by DFC in its treasury or owned by HUBCO or by any of HUBCO's wholly-owned
subsidiaries (other than shares held as trustee or in a fiduciary capacity and
shares held as collateral on or in lieu of a debt previously contracted)
immediately prior to the Effective Time ("Excluded Shares") shall be canceled.
2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, HUBCO
shall deposit, or shall cause to be deposited, with Hudson United Bank, Trust
Department or another bank or trust company designated by HUBCO and reasonably
acceptable to DFC (the "Exchange Agent"), for the benefit of the holders of
shares of DFC Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates evidencing shares of HUBCO Common Stock
and cash in such amount such that the Exchange Agent possesses such number of
shares of HUBCO Common Stock and such amount of cash as are required to provide
all of the consideration required to be exchanged by HUBCO pursuant to the
provisions of this Article II (such certificates for shares of HUBCO Common
Stock, together with any dividends or distributions with respect thereto, and
cash being hereinafter referred to as the "Exchange Fund"). The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the HUBCO Common Stock and
cash out of the Exchange Fund in accordance with Section 2.1. Except as
contemplated by Section 2.2(f) hereof, the Exchange Fund shall not be used for
any other purpose.
(b) Exchange Procedures. As soon as reasonably
practicable either before or after the Effective Time, but in any event no later
than five business days after the Effective Time, HUBCO will instruct the
Exchange Agent to mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time evidenced outstanding shares of
DFC Common Stock (the "Certificates"), (i) a letter of transmittal (the form and
substance of which is reasonably agreed to by HUBCO and DFC prior to the
Effective Time and which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent and which shall have such other
provisions as HUBCO may reasonably specify) and (ii) instructions for effecting
the surrender of the Certificates in exchange for certificates evidencing shares
of HUBCO Common Stock and cash in lieu of fractional shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) certificates evidencing that number
of whole shares of HUBCO Common Stock which such holder has the right to receive
in respect of the shares of DFC Common Stock formerly evidenced by such
Certificate in accordance with Section 2.1 and (y) cash in lieu of fractional
shares of HUBCO Common Stock to which such holder may be entitled pursuant to
Section 2.2(e) (the shares of HUBCO Common Stock and cash described in clauses
(x) and (y) being collectively referred to as the "Merger Consideration") and
the Certificates so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of DFC Common Stock which is not registered in
the transfer records of DFC, a certificate evidencing the proper number of
shares of HUBCO Common Stock and/or cash may be issued and/or paid in accordance
with this Article II to a transferee if the Certificate evidencing such shares
of DFC Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to evidence only the right to receive upon such
surrender the Merger Consideration.
(c) Distributions with Respect to Unexchanged Shares
of HUBCO Common Stock. No dividends or other distributions declared or made
after the Effective Time with respect to HUBCO Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of HUBCO Common Stock evidenced thereby,
and no other part of the Merger Consideration shall be paid to any such holder,
until the holder of such Certificate shall surrender such Certificate (or a
suitable affidavit of loss and customary bond). Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates evidencing shares of HUBCO Common Stock
issued in exchange therefor, without interest, (i) promptly, the amount of any
cash payable with respect to a fractional share of HUBCO Common Stock to which
such holder may have been entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date on or after the Effective
Time theretofore paid with respect to such shares of HUBCO Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date on or after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such shares of HUBCO Common Stock.
(d) No Further Rights in DFC Common Stock. All shares
of HUBCO Common Stock issued and cash paid upon conversion of the shares of DFC
Common Stock in accordance with the terms hereof shall be deemed to have been
issued or paid in full satisfaction of all rights pertaining to such shares of
DFC Common Stock.
(e) No Fractional Shares; Median Pre-Closing Price.
No certificates or scrip evidencing fractional shares of HUBCO Common Stock
shall be issued upon the surrender for exchange of Certificates and such
fractional share interests will not entitle the owner thereof to vote or to any
rights of a shareholder of HUBCO. Cash shall be paid in lieu of fractional
shares of HUBCO Common Stock, based upon the Median Pre-Closing Price per whole
share of HUBCO Common Stock. The "Median Pre-Closing Price" shall be determined
by taking the price half-way between the Closing Prices left after discarding
the 4 lowest and 4 highest Closing Prices in the 10 consecutive trading day
period which ends on (and includes) the Determination Date. The "Closing Price"
shall mean the closing price of HUBCO Common Stock as supplied by the NASDAQ
Stock Market and published in The Wall Street Journal. A "trading day" shall
mean a day for which a Closing Price is so supplied and published. (The NASDAQ
Stock Market, or such other national securities exchange on which HUBCO Common
Stock may be traded after the date hereof, is referred to herein as "NASDAQ")
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of DFC Common Stock for
two years after the Effective Time shall be delivered to HUBCO, upon demand, and
any holders of DFC Common Stock who have not theretofore complied with this
Article II shall thereafter look only to HUBCO for the Merger Consideration,
dividends and distributions to which they are entitled.
(g) No Liability. Neither HUBCO, the Bank nor the
Exchange Agent shall be liable to any holder of shares of DFC Common Stock for
any such shares of HUBCO Common Stock or cash (or dividends or distributions
with respect thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Withholding Rights. HUBCO shall be entitled to
deduct and withhold, or cause the Exchange Agent to deduct and withhold, from
funds provided by the holder or from the consideration otherwise payable
pursuant to this Agreement to any holder of DFC Common Stock, the minimum
amounts (if any) that HUBCO is required to deduct and withhold with respect to
the making of such payment under the Code (as defined in Section 3.8), or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by HUBCO, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of DFC Common Stock in respect
of which such deduction and withholding was made by HUBCO.
2.3. Stock Transfer Books. At the Effective Time, the stock
transfer books of DFC shall be closed and there shall be no further registration
of transfers of shares of DFC Common Stock thereafter on the records of DFC. On
or after the Effective Time, any Certificates presented to the Exchange Agent or
HUBCO for transfer shall be converted into the Merger Consideration.
2.4. DFC Stock Options. The Stock Options (as defined in
Section 3.2) described in the DFC Disclosure Schedule are issued and outstanding
pursuant to the 1986 Stock Option and Incentive Plan, the City Savings Bank of
Meriden Stock Option Plan, the 1986 Stock Option Plan for Outside Directors,
Non-Qualified Stock Option Agreements, as amended, for William J. Farrell and M.
Joseph Canavan, the 1996 Stock Option and Incentive Plan, the Chairman's 1996
Non-Qualified Stock Option Agreement, and the 1996 Stock Option Plan for Outside
Directors (the "DFC Stock Option Plans") and the agreements pursuant to which
such Stock Options were granted (each, an "Option Grant Agreement"). HUBCO
acknowledges and agrees to honor the provisions of the DFC Stock Option Plan and
the Option Grant Agreement, including those relating to vesting and conversion
in connection with a change in control of DFC. Each Stock Option outstanding at
the Effective Time (each a "Continuing Stock Option") shall be converted into an
option to purchase HUBCO Common Stock, wherein (i) the right to purchase shares
of DFC Common Stock pursuant to the Continuing Stock Option shall be converted
into the right to purchase that same number of shares of HUBCO Common Stock
multiplied by the Exchange Ratio, (ii) the option exercise price per share of
HUBCO Common Stock shall be the previous option exercise price per share of the
DFC Common Stock divided by the Exchange Ratio, and (iii) in all other material
respects the option shall be subject to the same terms and conditions as
governed the Continuing Stock Option on which it was based, including the length
of time within which the option may be exercised (which shall not be extended
except that the holder of a Stock Option who continues in the service of HUBCO
or a subsidiary of HUBCO shall not be deemed to have terminated service for
purposes of determining the Continuing Stock Option exercise period) and for all
Continuing Stock Options, such adjustments shall be and are intended to be
effected in a manner which is consistent with Section 424(a) of the Code (as
defined in Section 3.2 hereof). If a Stock Option Grant Agreement also provided
for a Stock Appreciation Right, the Stock Appreciation Right shall also continue
(subject to the same adjustments as are provided for Continuing Stock Options).
Shares of HUBCO Common Stock issuable upon exercise of Continuing Stock Options
shall be covered by an effective registration statement on Form S-8, and HUBCO
shall use its reasonable best efforts to file a registration statement on Form
S-8 covering such shares as soon as possible after the Effective Time.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF DFC
References herein to "DFC Disclosure Schedule" shall mean all
of the disclosure schedules required by this Article III, dated as of the date
hereof and referenced to the specific sections and subsections of Article III of
this Agreement, which have been delivered on the date hereof by DFC to HUBCO.
DFC hereby represents and warrants to HUBCO as follows:
3.1. Corporate Organization
(a) DFC is a corporation duly organized and validly
existing under the laws of the State of Connecticut. DFC has the corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly licensed or qualified to
do business in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified would not have a material adverse effect on the
business, operations, assets or financial condition of DFC and the DFC
Subsidiaries (as defined below), taken as a whole. DFC is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the
"BHCA").
(b) Each DFC Subsidiary and its jurisdiction of
incorporation is listed in the DFC Disclosure Schedule. For purposes of this
Agreement, the term "DFC Subsidiary" means any corporation, partnership, joint
venture or other legal entity in which DFC, directly or indirectly, owns at
least a 50% stock or other equity interest or for which DFC, directly or
indirectly, acts as a general partner, provided that to the extent that any
representation or warranty set forth herein covers a period of time prior to the
date of this Agreement, the term "DFC Subsidiary" shall include any entity which
was a DFC Subsidiary at any time during such period. The Dime is a Connecticut
state-chartered savings bank duly organized and validly existing in stock form
under the laws of the State of Connecticut. All eligible accounts of depositors
issued by the Dime are insured by the Bank Insurance Fund of the FDIC (the
"BIF") to the fullest extent permitted by law. Each DFC Subsidiary has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on the business, operations, assets or financial
condition of DFC and the DFC Subsidiaries, taken as a whole.
(c) The DFC Disclosure Schedule sets forth true and
complete copies of the Certificate of Incorporation and By-Laws, as in effect on
the date hereof, of DFC and each DFC Subsidiary. Except as set forth in
Disclosure Schedule 3.1(b), the Dime and DFC do not own or control, directly or
indirectly, any equity interest in any corporation, company, partnership, joint
venture or other entity.
3.2. Capitalization. The authorized capital stock of DFC
consists of 9,000,000 shares of DFC Common Stock and 1,000,000 shares of
preferred stock. None of the preferred stock has been issued. As of March 27,
1998, there were 5,248,067 shares of DFC Common Stock issued and outstanding and
351,607 treasury shares. As of March 27, 1998, there were 496,160 shares of DFC
Common Stock issuable upon exercise of outstanding stock options and stock
appreciation rights. The DFC Disclosure Schedule sets forth (i) all options and
stock appreciation rights which may be exercised for issuance of DFC Common
Stock (collectively, the "Stock Options"), their strike prices and exercise
dates, and (ii) true and complete copies of each plan and a specimen of each
form of agreement pursuant to which any outstanding Stock Option was granted,
including a list of each outstanding Stock Option issued pursuant thereto. All
issued and outstanding shares of DFC Common Stock, and all issued and
outstanding shares of capital stock of each DFC Subsidiary, have been duly
authorized and validly issued, are fully paid, nonassessable and free of
preemptive rights and are free and clear of any liens, encumbrances, charges,
restrictions or rights of third parties imposed by DFC or any DFC Subsidiary.
Except for the Stock Options and the HUBCO Stock Option, neither DFC nor the
Dime has granted nor is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
transfer, purchase, subscription or issuance of any shares of capital stock of
DFC or the Dime or any securities representing the right to purchase, subscribe
or otherwise receive any shares of such capital stock or any securities
convertible into any such shares, and there are no agreements or understandings
with respect to voting of any such shares.
3.3. Authority; No Violation.
(a) Subject to the approval of this Agreement and the
transactions contemplated hereby by all applicable regulatory authorities and by
the shareholders of DFC, and the approval of the Bank Merger Agreement by DFC as
sole shareholder of the Dime, DFC and the Dime have the full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
directors of DFC and the Dime in accordance with their respective Certificate of
Incorporation and By-Laws and applicable laws and regulations. Except for such
approvals, no other corporate proceedings not otherwise contemplated hereby on
the part of DFC or the Dime are necessary to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
DFC and the Dime, and constitutes the valid and binding obligation of each of
DFC and the Dime, enforceable against DFC and the Dime in accordance with its
terms, except to the extent that enforcement may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, conservatorship, receivership or other
similar laws now or hereafter in effect relating to or affecting the enforcement
of creditors' rights generally or the rights of creditors of Connecticut
state-chartered savings banks or their holding companies, (ii) general equitable
principles, and (iii) laws relating to the safety and soundness of insured
depository institutions and except that no representation is made as to the
effect or availability of equitable remedies or injunctive relief.
(b) Neither the execution and delivery of this
Agreement by DFC or the Dime, nor the consummation by DFC or the Dime of the
transactions contemplated hereby in accordance with the terms hereof, or
compliance by DFC or the Dime with any of the terms or provisions hereof, will
(i) violate any provision of DFC's or the Dime's Certificate of Incorporation or
By-Laws, (ii) assuming that the consents and approvals set forth below are duly
obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to DFC, the Dime or any of their
respective properties or assets, or (iii) except as set forth in the DFC
Disclosure Schedule, violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the respective
properties or assets of DFC or the Dime under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which DFC or the Dime is a
party, or by which they or any of their respective properties or assets may be
bound or affected except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a material adverse effect on the
business, operations, assets or financial condition of DFC and the DFC
Subsidiaries, taken as a whole, and which will not prevent or materially delay
the consummation of the transactions contemplated hereby. Except for consents
and approvals of or filings or registrations with or notices to the Board of
Governors of the Federal Reserve System (the "FRB"), the FDIC, the Department,
the Connecticut Department of Environmental Protection (the "DEP"), the
Securities and Exchange Commission (the "SEC"), and the shareholders of DFC, no
consents or approvals of or filings or registrations with or notices to any
third party or any public body or authority are necessary on behalf of DFC or
the Dime in connection with (x) the execution and delivery by DFC of this
Agreement and (y) the consummation by DFC of the Merger, and the consummation by
DFC and the Dime of the other transactions contemplated hereby, except (i) such
as are listed in the DFC Disclosure Schedule and (ii) such as individually or in
the aggregate will not (if not obtained) have a material adverse effect on the
business, operations, assets or financial condition of DFC and the DFC
Subsidiaries taken as a whole or prevent or materially delay the consummation of
the transactions contemplated hereby. To the best of DFC's knowledge, no fact or
condition exists which DFC has reason to believe will prevent it and the Dime
from obtaining the aforementioned consents and approvals.
3.4. Financial Statements.
(a) The DFC Disclosure Schedule sets forth copies of
the consolidated statements of financial condition of DFC as of December 31,
1996 and 1997, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended December 31, in
each of the three fiscal years 1995 through 1997, in each case accompanied by
the audit report of KPMG Peat Marwick LLP, independent public accountants with
respect to DFC ("Peat Marwick"), filed with the SEC under the Securities
Exchange Act of 1934, as amended ("1934 Act") (collectively, the "DFC Financial
Statements"). The DFC Financial Statements (including the related notes) have
been prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied during the periods involved (except as may be
indicated therein or in the notes thereto), and fairly present the consolidated
financial condition of DFC as of the respective dates set forth therein, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows fairly present the results of the consolidated operations, changes in
shareholders' equity and cash flows of DFC for the respective periods set forth
therein.
(b) The books and records of DFC and each of its
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements.
(c) Except as and to the extent reflected, disclosed
or reserved against in the DFC Financial Statements (including the notes
thereto), as December 31, 1997, neither DFC nor any DFC Subsidiary had any
liabilities, whether absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of DFC and the DFC
Subsidiaries, taken as a whole which were required by GAAP (consistently
applied) to be disclosed in DFC's consolidated statement of condition as of
December 31, 1997 or the notes thereto. Since December 31, 1997, neither DFC nor
any DFC Subsidiary has incurred any liabilities except in the ordinary course of
business and consistent with prudent business practice, except as related to the
transactions contemplated by this Agreement or except as set forth in the DFC
Disclosure Schedule.
3.5. Broker's and Other Fees. Except for A.G. Edwards & Sons,
Inc. ("A.G. Edwards") and First Albany Corporation ("First Albany"), neither
Dime Financial Corporation nor any of its Subsidiaries nor any of their
respective directors or officers has employed any broker or finder or incurred
any liability for any broker's or finder's fees or commissions in connection
with any of the transactions contemplated by this Agreement. The agreement with
A.G. Edwards and the agreement with First Albany are set forth in the DFC
Disclosure Schedule. Other than pursuant to the agreement with A.G. Edwards and
First Albany or as set forth in the DFC Disclosure Schedule, there are no fees
(other than time charges billed at usual and customary rates) payable to any
consultants, including lawyers and accountants, in connection with this
transaction or which would be triggered by consummation of this transaction or
the termination of the services of such consultants by DFC or any its
Subsidiaries.
3.6. Absence of Certain Changes or Events.
(a) Except as disclosed in the DFC Disclosure
Schedule, there has not been any material adverse change in the business,
operations, assets or financial condition of DFC and any DFC Subsidiary, taken
as a whole, since December 31, 1997 and to the best of DFC's knowledge, no fact
or condition exists which DFC believes will cause such a material adverse change
in the future; provided, however, that a material adverse change shall not be
deemed to include (i) any change in the value of the respective investment and
loan portfolios of DFC and the DFC Subsidiaries as the result of a change in
interest rates generally, (ii) any change occurring after the date hereof in any
federal or state law, rule or regulation or in GAAP, which change affects
banking institutions generally, (iii) reasonable expenses incurred in connection
with this Agreement and the transactions contemplated hereby, or (iv) actions or
omissions of DFC or any DFC Subsidiary taken with the prior written consent of
HUBCO in contemplation of the transactions contemplated hereby (including
without limitation any actions taken by DFC or the Dime pursuant to Section 5.15
of this Agreement).
(b) Except as set forth in the DFC Disclosure
Schedule, neither DFC nor any DFC Subsidiary has taken or permitted any of the
actions set forth in Section 5.2 hereof between December 31, 1997 and the date
hereof and, except for execution of this Agreement, and the other documents
contemplated hereby, DFC and each DFC Subsidiary has conducted their respective
businesses only in the ordinary course, consistent with past practice.
3.7. Legal Proceedings. Except as disclosed in the DFC
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of DFC and the DFC Subsidiaries, neither DFC nor any DFC Subsidiary
is a party to any, and there are no pending or, to the best of DFC's knowledge,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against DFC or any DFC Subsidiary
which, if decided adversely to DFC or any DFC Subsidiary, are reasonably likely
to have a material adverse effect on the business, operations, assets or
financial condition of DFC and the DFC Subsidiaries taken as a whole. Except as
disclosed in the DFC Disclosure Schedule, neither DFC nor any DFC Subsidiary is
a party to any order, judgment or decree entered in any lawsuit or proceeding
which is material to DFC or such DFC Subsidiary.
3.8. Taxes and Tax Returns.
(a) DFC and each DFC Subsidiary has duly filed (and
until the Effective Time will so file) all returns, declarations, reports,
information returns and statements ("Returns") required to be filed by it on or
before the Effective Time in respect of any federal, state and local taxes
(including withholding taxes, penalties or other payments required) and has duly
paid (and until the Effective Time will so pay) all such taxes due and payable,
other than taxes or other charges which are being contested in good faith (and
disclosed to HUBCO in writing) or against which reserves have been established.
DFC and each DFC Subsidiary has established (and until the Effective Time will
establish) on its books and records reserves that are adequate for the payment
of all federal, state and local taxes not yet due and payable, but are incurred
in respect of DFC or such DFC Subsidiary through such date. None of the federal
or state income tax returns of DFC or any DFC Subsidiary have been examined by
the Internal Revenue Service (the "IRS") or the Connecticut Department of
Revenue Services within the past six years. To the best knowledge of DFC, there
are no audits or other administrative or court proceedings presently pending nor
any other disputes pending with respect to, or claims asserted for, taxes or
assessments upon DFC or any DFC Subsidiary, nor has DFC or any DFC Subsidiary
given any currently outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any taxes or Returns.
(b) Except as set forth in the DFC Disclosure
Schedule, neither DFC nor any DFC Subsidiary (i) has requested any extension of
time within which to file any Return which Return has not since been filed, (ii)
is a party to any agreement providing for the allocation or sharing of taxes,
(iii) is required to include in income any adjustment pursuant to Section 481(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), by reason of a
voluntary change in accounting method initiated by DFC or such DFC Subsidiary
(nor does DFC have any knowledge that the IRS has proposed any such adjustment
or change of accounting method), or (iv) has filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply.
(c) The DFC Disclosure Schedule lists all of DFC's
and any DFC Subsidiary's federal, state and local tax loss carry forwards
including the year in which such tax loss carry forward was accumulated.
3.9. Employee Benefit Plans.
(a) Except as set forth on the DFC Disclosure
Schedule, neither DFC nor any DFC Subsidiary maintains or contributes to any
"employee pension benefit plan" (the "DFC Pension Plans") within the meaning of
such term in Section 3(2)(A) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), "employee welfare benefit plan" (the "DFC Welfare
Plans") within the meaning of such term in Section 3(1) of ERISA, stock option
plan, stock purchase plan, deferred compensation plan, severance plan, bonus
plan, employment agreement, director retirement program or other similar plan,
program or arrangement. Neither DFC nor any DFC Subsidiary has, since September
2, 1974, contributed to any "Multiemployer Plan," within the meaning of Section
3(37) of ERISA.
(b) DFC has previously delivered to HUBCO, and
included in the DFC Disclosure Schedules, a complete and accurate copy of each
of the following with respect to each of the DFC Pension Plans and DFC Welfare
Plans, if any: (i) plan document, summary plan description, and summary of
material modifications (if not available, a detailed description of the
foregoing); (ii) trust agreement or insurance contract, if any; (iii) most
recent IRS determination letter, if any; (iv) most recent actuarial report, if
any; and (v) most recent annual report on Form 5500.
(c) The present value of all accrued benefits, both
vested and non-vested, under each of the DFC Pension Plans subject to Title IV
of ERISA, based upon the actuarial assumptions used for funding purposes in the
most recent actuarial valuation prepared by such DFC Pension Plan's actuary, did
not exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the best of DFC 's knowledge, the actuarial assumptions
then utilized for such plans were reasonable and appropriate as of the last
valuation date and reflect then current market conditions.
(d) During the last six years, the Pension Benefit
Guaranty Corporation ("PBGC") has not asserted any claim for liability against
DFC or any DFC Subsidiary which has not been paid in full.
(e) All premiums (and interest charges and penalties
for late payment, if applicable) due to the PBGC with respect to each DFC
Pension Plan have been paid. All contributions required to be made to each DFC
Pension Plan under the terms thereof, ERISA or other applicable law have been
timely made, and all amounts properly accrued to date as liabilities of DFC
which have not been paid have been properly recorded on the books of DFC .
(f) Except as disclosed in the DFC Disclosure
Schedule, each of the DFC Pension Plans, DFC Welfare Plans and each other
employee benefit plan and arrangement identified on the DFC Disclosure Schedule
has been operated in compliance in all material respects with the provisions of
ERISA, the Code, all regulations, rulings and announcements promulgated or
issued thereunder, and all other applicable governmental laws and regulations.
Furthermore, except as disclosed in the DFC Disclosure Schedule, if DFC
maintains any DFC Pension Plan, DFC has received or applied for a favorable
determination letter from the IRS which takes into account the Tax Reform Act of
1986 and (to the extent it mandates currently applicable requirements)
subsequent legislation, and DFC is not aware of any fact or circumstance which
would disqualify any plan, other than operational defects which could be
retroactively corrected (in accordance with the procedures of the IRS) without a
material adverse effect on DFC and the DFC Subsidiaries taken as a whole.
(g) To the best knowledge of DFC, no non-exempt
prohibited transaction, within the meaning of Section 4975 of the Code or
Section 406 of ERISA, has occurred with respect to any DFC Welfare Plan or DFC
Pension Plan that would result in any material tax or penalty for DFC or any DFC
Subsidiary.
(h) No DFC Pension Plan or any trust created
thereunder has been terminated, nor have there been any "reportable events"
(notice of which has not been waived by the PBGC), within the meaning of Section
4034(b) of ERISA, with respect to any DFC Pension Plan.
(i) No "accumulated funding deficiency," within the
meaning of Section 412 of the Code, has been incurred with respect to any DFC
Pension Plan.
(j) There are no material pending, or, to the best
knowledge of DFC, material threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of, or against any of the DFC Pension Plans
or the DFC Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the DFC Disclosure Schedule.
(k) Except as disclosed in the DFC Disclosure
Schedule, no DFC Pension Plan or DFC Welfare Plan provides medical or death
benefits (whether or not insured) beyond an employee's retirement or other
termination of service, other than (i) coverage mandated by law or pursuant to
conversion or continuation rights set out in such Plan or an insurance policy
providing benefits thereunder, or (ii) death benefits under any DFC Pension
Plan.
(l) Except with respect to customary health, life and
disability benefits, there are no unfunded benefit obligations which are not
accounted for by reserves shown on the DFC Financial Statements and established
in accordance with GAAP.
(m) With respect to each DFC Pension Plan and DFC
Welfare Plan that is funded wholly or partially through an insurance policy,
there will be no liability of DFC or any DFC Subsidiary as of the Effective Time
under any such insurance policy or ancillary agreement with respect to such
insurance policy in the nature of a retroactive rate adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or partially
out of events occurring prior to the Effective Time.
(n) Except (i) for payments and other benefits due
pursuant to the employment agreements and the 1998 corporate bonus plan included
within the DFC Disclosure Schedule, and (ii) as set forth in the DFC Disclosure
Schedule, or as expressly agreed to by HUBCO in writing either pursuant to this
Agreement or otherwise, the consummation of the transactions contemplated by
this Agreement will not (x) entitle any current or former employee of DFC or any
DFC Subsidiary to severance pay, unemployment compensation or any similar
payment, or (y) accelerate the time of payment or vesting, or increase the
amount of any compensation or benefits due to any current or former employee
under any DFC Pension Plan or DFC Welfare Plan.
(o) Except for the DFC Pension Plans and the DFC
Welfare Plans, and except as set forth on the DFC Disclosure Schedule, DFC has
no deferred compensation agreements, understandings or obligations for payments
or benefits to any current or former director, officer or employee of DFC or any
DFC Subsidiary or any predecessor of any thereof. The DFC Disclosure Schedule
sets forth: (i) true and complete copies of the agreements, understandings or
obligations with respect to each such current or former director, officer or
employee, and (ii) the most recent actuarial or other calculation of the present
value of such payments or benefits.
(p) Except as set forth in the DFC Disclosure
Schedule, DFC does not maintain or otherwise pay for life insurance policies
(other than group term life policies on employees) with respect to any director,
officer or employee. The DFC Disclosure Schedule lists each such insurance
policy and includes a copy of each agreement with a party other than the insurer
with respect to the payment, funding or assignment of such policy. To the best
of DFC 's knowledge, neither DFC nor any DFC Pension Plan or DFC Welfare Plan
owns any individual or group insurance policies issued by an insurer which has
been found to be insolvent or is in rehabilitation pursuant to a state
proceeding.
(q) Except as set forth in the DFC Disclosure
Schedule, DFC does not maintain any retirement plan or retiree medical plan or
arrangement for directors. The DFC Disclosure Schedule sets forth the complete
documentation and actuarial evaluation of any such plan.
3.10. Reports.
(a) The DFC Disclosure Schedule lists, and as to item
(i) below DFC has previously delivered to HUBCO a complete copy of, each (i)
final registration statement, prospectus, annual, quarterly or current report
and definitive proxy statement filed by DFC since January 1, 1996 pursuant to
the Securities Act of 1933, as amended ("1933 Act"), or the 1934 Act and (ii)
communication (other than general advertising materials and press releases)
mailed by DFC to its shareholders as a class since January 1, 1996, and each
such communication, as of its date, complied in all material respects with all
applicable statutes, rules and regulations and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading; provided
that information as of a later date shall be deemed to modify information as of
an earlier date.
(b) Since January 1, 1996, (i) DFC has filed all
reports that it was required to file with the SEC under the 1934 Act, and (ii)
DFC and the Dime each has duly filed all material forms, reports and documents
which it was required to file with each agency charged with regulating any
aspect of its business, in each case in form which was correct in all material
respects, and, subject to permission from such regulatory authorities, DFC
promptly will deliver or make available to HUBCO accurate and complete copies of
such reports. As of their respective dates, each such form, report, or document,
and each such final registration statement, prospectus, annual, quarterly or
current report, definitive proxy statement or communication, complied in all
material respects with all applicable statutes, rules and regulations and did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; provided that information contained in any such document
as of a later date shall be deemed to modify information as of an earlier date.
The DFC Disclosure Schedule lists the dates of all examinations of DFC or the
Dime conducted by either the FRB, the FDIC or the Department since January 1,
1996 and the dates of any responses thereto submitted by DFC or the Dime.
3.11. DFC and Dime Information. The information relating to
DFC and the Dime, this Agreement, and the transactions contemplated hereby
(except for information relating solely to HUBCO) to be contained in the Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof) to be delivered to
shareholders of DFC in connection with the solicitation of their approval of the
Merger, as of the date the Proxy Statement-Prospectus is mailed to shareholders
of DFC, and up to and including the date of the meeting of shareholders to which
such Proxy Statement-Prospectus relates, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.12. Compliance with Applicable Law. Except as set forth in
the DFC Disclosure Schedule, DFC and each DFC Subsidiary holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business and has complied with and is not in default in any respect under any
applicable law, statute, order, rule, regulation, policy and/or guideline of any
federal, state or local governmental authority relating to DFC or such DFC
Subsidiary (including, without limitation, consumer, community and fair lending
laws) (other than where the failure to have a license, franchise, permit or
authorization or where such default or noncompliance will not result in a
material adverse effect on the business, operations, assets or financial
condition of DFC and the DFC Subsidiaries taken as a whole) and DFC has not
received notice of violation of, and does not know of any violations of, any of
the above.
3.13. Certain Contracts.
(a) Except for plans referenced in Section 3.9 and
except as disclosed in the DFC Disclosure Schedule, (i) neither DFC nor any DFC
Subsidiary is a party to or bound by any written contract or any understanding
with respect to the employment of any officers, employees, directors or
consultants, and (ii) the consummation of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional acts
or events) result in any payment (whether of severance pay or otherwise)
becoming due from DFC or any DFC Subsidiary to any officer, employee, director
or consultant thereof. The DFC Disclosure Schedule sets forth true and correct
copies of all severance or employment agreements with officers, directors,
employees, agents or consultants to which DFC or any DFC Subsidiary is a party.
(b) Except as disclosed in the DFC Disclosure
Schedule and except for loan commitments, loan agreements and loan instruments
entered into or issued by the Dime in the ordinary course of business, (i) as of
the date of this Agreement, neither DFC nor any DFC Subsidiary is a party to or
bound by any commitment, agreement or other instrument which is material to the
business, operations, assets or financial condition of DFC and the DFC
Subsidiaries taken as a whole, (ii) no commitment, agreement or other instrument
to which DFC or any DFC Subsidiary is a party or by which either of them is
bound limits the freedom of DFC or any DFC Subsidiary to compete in any line of
business or with any person, and (iii) neither DFC nor any DFC Subsidiary is a
party to any collective bargaining agreement.
(c) Except as disclosed in the DFC Disclosure
Schedule, neither DFC nor any DFC Subsidiary or, to the best knowledge of DFC,
any other party thereto, is in default in any material respect under any
material lease, contract, mortgage, promissory note, deed of trust, loan or
other commitment (except those under which the Dime is or will be the creditor)
or arrangement, except for defaults which individually or in the aggregate would
not have a material adverse effect on the business, operations, assets or
financial condition of DFC and the DFC Subsidiaries, taken as a whole.
3.14. Properties and Insurance.
(a) Except as set forth in the DFC Disclosure
Schedule, DFC or a DFC Subsidiary has good and, as to owned real property,
marketable title to all material assets and properties, whether real or
personal, tangible or intangible, reflected in DFC's consolidated balance sheet
as of December 31, 1997, or owned and acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of for fair value in
the ordinary course of business since December 31, 1997), subject to no
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items that secure liabilities that are reflected in said balance sheet or the
notes thereto or that secure liabilities incurred in the ordinary course of
business after the date of such balance sheet, (ii) statutory liens for amounts
not yet delinquent or which are being contested in good faith, (iii) such
encumbrances, liens, mortgages, security interests, pledges and title
imperfections that are not in the aggregate material to the business,
operations, assets, and financial condition of DFC and the DFC Subsidiaries
taken as a whole and (iv) with respect to owned real property, title
imperfections noted in title reports delivered to HUBCO prior to the date
hereof. Except as affected by the transactions contemplated hereby, DFC or one
or more of its Subsidiaries as lessees have the right under valid and subsisting
leases to occupy, use, possess and control all real property leased by DFC and
such Subsidiaries in all material respects as presently occupied, used,
possessed and controlled by DFC and its Subsidiaries.
(b) The business operations and all insurable
properties and assets of DFC and each DFC Subsidiary are insured for their
benefit against all risks which, in the reasonable judgment of the management of
DFC, should be insured against, in each case under policies or bonds issued by
insurers of recognized responsibility, in such amounts with such deductibles and
against such risks and losses as are in the opinion of the management of DFC
adequate for the business engaged in by DFC and the DFC Subsidiaries. As of the
date hereof, neither DFC nor any DFC Subsidiary has received any notice of
cancellation or notice of a material amendment of any such insurance policy or
bond or is in default under any such policy or bond, no coverage thereunder is
being disputed and all material claims thereunder have been filed in a timely
fashion. The DFC Disclosure Schedule sets forth in summary form a list of all
insurance policies of DFC and the DFC Subsidiaries.
3.15. Minute Books. As of the date of this Agreement, the
minute books of DFC and the DFC Subsidiaries contain accurate records of all
meetings and other corporate action held of their respective shareholders and
Boards of Directors (including committees of their respective Boards of
Directors) through a date not later than 30 days prior to the date of this
Agreement, and except for the Merger, no material corporate actions were
considered or approved by the shareholders or Boards of Directors (or committees
thereof) between such date and the date of this Agreement which are not fully
disclosed in the DFC Disclosure Schedule. On the Closing Date, the minute books
of DFC and the DFC Subsidiaries shall contain accurate records of all meetings
and other corporate action held of their respective shareholders and Boards of
Directors (including committees of their respective Boards of Directors) through
the Closing Date.
3.16. Environmental Matters. Except as set forth in the DFC
Disclosure Schedule:
(a) Neither DFC nor any DFC Subsidiary has received
any written notice, citation, claim, assessment, proposed assessment or demand
for abatement alleging that DFC or such DFC Subsidiary (either directly or as a
trustee or fiduciary, or as a successor-in-interest in connection with the
enforcement of remedies to realize the value of properties serving as collateral
for outstanding loans) is responsible for the correction or cleanup of any
condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters, which correction or
cleanup would be material to the business, operations, assets or financial
condition of DFC and the DFC Subsidiaries taken as a whole. DFC has no knowledge
that any toxic or hazardous substances or materials have been emitted,
generated, disposed of or stored on any real property owned or leased by DFC or
any DFC Subsidiary, as OREO or otherwise, or owned or controlled by DFC or any
DFC Subsidiary as a trustee or fiduciary (collectively, "Properties"), in any
manner that violates any presently existing federal, state or local law or
regulation governing or pertaining to such substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of DFC and the DFC Subsidiaries, taken
as a whole.
(b) DFC has no knowledge that any of the Properties
has been operated in any manner in the three years prior to the date of this
Agreement that violated any applicable federal, state or local law or regulation
governing or pertaining to toxic or hazardous substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of DFC and the DFC Subsidiaries taken
as a whole.
(c) To the best of DFC's knowledge, DFC, each DFC
Subsidiary and any and all of their tenants or subtenants have all necessary
permits and have filed all necessary registrations material to permit the
operation of the Properties in the manner in which the operations are currently
conducted under all applicable federal, state or local environmental laws,
excepting only those permits and registrations the absence of which would not
have a material adverse effect upon the operations of requiring the permit or
registration.
(d) To the knowledge of DFC, there are no underground
storage tanks on, in or under any of the Properties and no underground storage
tanks have been closed or removed from any of the Properties while the property
was owned, operated or controlled by DFC or any DFC Subsidiary.
3.17. Reserves. As of December 31, 1997, each of the allowance
for loan losses and the reserve for OREO properties in the DFC Financial
Statements was adequate pursuant to GAAP (consistently applied), and the
methodology used to compute each of the loan loss reserve and the reserve for
OREO properties complies in all material respects with GAAP (consistently
applied) and all applicable policies of the FDIC and the Department.
3.18. No Parachute Payments. Except as set forth in the DFC
Disclosure Schedule, no officer, director, employee or agent (or former officer,
director, employee or agent) of DFC or any DFC Subsidiary is entitled now, or
will or may be entitled to as a consequence of this Agreement or the Merger, to
any payment or benefit from DFC, a DFC Subsidiary, HUBCO or any HUBCO Subsidiary
which if paid or provided would constitute an "excess parachute payment", as
defined in Section 280G of the Code or regulations promulgated thereunder.
3.19. Agreements with Bank Regulators. Neither DFC nor any DFC
Subsidiary is a party to any agreement or memorandum of understanding with, or a
party to any commitment letter, board resolution submitted to a regulatory
authority or similar undertaking to, or is subject to any order or directive by,
or is a recipient of any extraordinary supervisory letter from, any court,
governmental authority or other regulatory or administrative agency or
commission, domestic or foreign ("Governmental Entity") which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies or its management, except for those the
existence of which has been disclosed in writing to HUBCO by DFC prior to the
date of this Agreement, nor has DFC been advised by any Governmental Entity that
it is contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission, except as disclosed in writing to HUBCO by DFC prior to the date of
this Agreement. Neither DFC nor any DFC Subsidiary is required by Section 32 of
the Federal Deposit Insurance Act to give prior notice to a Federal banking
agency of the proposed addition of an individual to its board of directors or
the employment of an individual as a senior executive officer, except as
disclosed in writing to HUBCO by DFC prior to the date of this Agreement.
3.20. Year 2000 Compliance. DFC and the DFC Subsidiaries have
taken all reasonable steps necessary to address the software, accounting and
record keeping issues raised in order to be substantially Year 2000 compliant on
or before the end of 1999 and DFC does not expect the future cost of addressing
such issues to be material. Neither DFC nor Dime has received a rating from any
bank regulatory agency in year 2000 compliance as of the date hereof.
3.21. Investments. Dime represents that it will communicate in
good faith its business decisions regarding investments. Section 3.21 of the DFC
Disclosure Schedule sets forth, as of the date hereof: (i) the Dime Funds and
Investment Policy (the "Dime Investment Policy"), (ii) the projected Maturities
and estimated Cash Flows, by month, which DFC and Dime management anticipates
receiving and reinvesting, and (iii) all firm commitments (each, a "Commitment")
by which either DFC or Dime is obligated to make an investment, whether of Cash
Flow, Maturities or Sales Proceeds (each, an "Investment"). For purposes of this
Agreement, "Cash Flow" means earnings on Investments and return of capital from
Investments (including principal paydowns, prepayments and redemptions of
Investments). "Maturities" means scheduled maturities of instruments. "Cash
Flow" and "Maturities" specifically exclude proceeds ("Sales Proceeds") from the
voluntary sale or other transfer of instruments by DFC or Dime.
3.22. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUBCO
References herein to the "HUBCO Disclosure Schedule" shall
mean all of the disclosure schedules required by this Article IV, dated as of
the date hereof and referenced to the specific sections and subsections of
Article IV of this Agreement, which have been delivered on the date hereof by
HUBCO to DFC. HUBCO hereby represents and warrants to DFC as follows:
4.1. Corporate Organization.
(a) HUBCO is a corporation duly organized and validly
existing and in good standing under the laws of the State of New Jersey. HUBCO
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on the business, operations, assets or financial condition of HUBCO and the
HUBCO Subsidiaries (defined below), taken as a whole. HUBCO is registered as a
bank holding company under the BHCA.
(b) Each HUBCO Subsidiary is listed in the HUBCO
Disclosure Schedule. For purposes of this Agreement, the term "HUBCO Subsidiary"
means any corporation, partnership, joint venture or other legal entity in which
HUBCO directly or indirectly, owns at least a 50% stock or other equity interest
or for which HUBCO, directly or indirectly, acts as a general partner provided
that to the extent that any representation or warranty set forth herein covers a
period of time prior to the date of this Agreement, the term "HUBCO Subsidiary"
shall include any entity which was an HUBCO Subsidiary at any time during such
period. Each HUBCO Subsidiary is duly organized and validly existing under the
laws of the jurisdiction of its incorporation. The Bank is a state-chartered
commercial banking corporation duly organized and validly existing under the
laws of the State of Connecticut. Hudson United Bank ("HUB") is duly organized
and validly existing under the laws of the State of New Jersey. All eligible
accounts of depositors issued by the Bank and HUB are insured by the Bank
Insurance Fund of the FDIC ("BIF") to the fullest extent permitted by law. Each
HUBCO Subsidiary has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a material adverse effect on the business, operations, assets or
financial condition of HUBCO and the HUBCO Subsidiaries, taken as a whole. The
HUBCO Disclosure Schedule sets forth true and complete copies of the Certificate
of Incorporation and By-Laws of HUBCO and the Bank as in effect on the date
hereof.
4.2. Capitalization. The authorized capital stock of HUBCO
consists of 53,045,000 common shares, no par value ("HUBCO Common Stock"), and
10,300,000 shares of preferred stock ("HUBCO Authorized Preferred Stock"). As of
March 26, 1998, there were 22,648,970 shares of HUBCO Common Stock issued and
outstanding, and no shares of treasury stock, and 1,000 shares of HUBCO
Authorized Preferred Stock outstanding, all of which were designated Series B,
no par value, Convertible Preferred Stock. Except as described in the HUBCO
Disclosure Schedule, there are no shares of HUBCO Common Stock issuable upon the
exercise of outstanding stock options or otherwise. All issued and outstanding
shares of HUBCO Common Stock and HUBCO Authorized Preferred Stock, and all
issued and outstanding shares of capital stock of HUBCO's Subsidiaries, have
been duly authorized and validly issued, are fully paid, nonassessable and free
of preemptive rights, and are free and clear of all liens, encumbrances,
charges, restrictions or rights of third parties. All of the outstanding shares
of capital stock of the HUBCO Subsidiaries are owned by HUBCO free and clear of
any liens, encumbrances, charges, restrictions or rights of third parties.
Except as described in the HUBCO Disclosure Schedule, neither HUBCO nor any
HUBCO Subsidiary has granted or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the transfer, purchase or issuance of any shares of capital stock of HUBCO or
any HUBCO Subsidiary or any securities representing the right to purchase,
subscribe or otherwise receive any shares of such capital stock or any
securities convertible into any such shares, and there are no agreements or
understandings with respect to voting of any such shares.
4.3. Authority; No Violation.
(a) Subject to the receipt of all necessary
governmental approvals and the possible need under NASDAQ rules (as hereinafter
defined) to obtain HUBCO shareholder approval, HUBCO and the Bank have full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Boards of Directors of HUBCO and the Bank in accordance with their respective
Certificate of Incorporation and applicable laws and regulations. Except for
such approvals, no other corporate proceedings on the part of HUBCO or the Bank
are necessary to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by HUBCO and the Bank and
constitutes a valid and binding obligation of HUBCO and the Bank, enforceable
against HUBCO and the Bank in accordance with its terms, except to the extent
that enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership or other similar laws now or hereafter
in effect relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of bank holding companies, (ii) general
equitable principles, and (iii) laws relating to the safety and soundness of
insured depository institutions and except that no representation is made as to
the effect or availability of equitable remedies or injunctive relief.
(b) Neither the execution or delivery of this
Agreement by HUBCO or the Bank, nor the consummation by HUBCO or the Bank of the
transactions contemplated hereby in accordance with the terms hereof, or
compliance by HUBCO or the Bank with any of the terms or provisions hereof will
(i) violate any provision of the Certificate of Incorporation or By-Laws of
HUBCO or the Bank, (ii) assuming that the consents and approvals set forth below
are duly obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to HUBCO, any HUBCO
Subsidiary, or any of their respective properties or assets, or (iii) violate,
conflict with, result in a breach of any provision of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
other encumbrance upon any of the properties or assets of HUBCO or any HUBCO
Subsidiary under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which HUBCO or the Bank is a party, or by which it
or any of their properties or assets may be bound or affected, except, with
respect to (ii) and (iii) above, such as individually or in the aggregate will
not have a material adverse effect on the business, operation, assets or
financial condition of HUBCO and the HUBCO Subsidiaries, taken as a whole, and
which will not prevent or materially delay the consummation of the transactions
contemplated hereby. Except for consents and approvals of or filings or
registrations with or notices to the FDIC, the FRB, the Department, the
Secretary of State of New Jersey and the Secretary of State of Connecticut and
the possible need under NASDAQ rules (as hereafter defined) to obtain
shareholder approval, no consents or approvals of or filings or registrations
with or notices to any third party or any public body or authority are necessary
on behalf of HUBCO or the Bank in connection with (x) the execution and delivery
by HUBCO or the Bank of this Agreement, and (y) the consummation by HUBCO or the
Bank of the Merger and the other transactions contemplated hereby, except such
as are listed in the HUBCO Disclosure Schedule or in the aggregate will not (if
not obtained) have a material adverse effect on the business, operation, assets
or financial condition of HUBCO and the HUBCO Subsidiaries, taken as a whole. To
the best of HUBCO's knowledge, no fact or condition exists which HUBCO has
reason to believe will prevent it from obtaining the aforementioned consents and
approvals.
4.4. Financial Statements.
(a) The HUBCO Disclosure Schedule sets forth copies
of the consolidated statements of financial condition of HUBCO as of December
31, 1995, 1996 and 1997, and the related consolidated statements of income,
changes in stockholders' equity and of cash flows for the periods ended December
31, in each of the two fiscal years 1996 through 1997, in each case accompanied
by the audit report of Arthur Andersen LLP ("Arthur Andersen"), independent
public accountants with respect to HUBCO (collectively, the "HUBCO Financial
Statements"). The HUBCO Financial Statements (including the related notes) have
been prepared in accordance with GAAP consistently applied during the periods
involved (except as may be indicated therein or in the notes thereto), and
fairly present the consolidated financial position of HUBCO as of the respective
dates set forth therein, and the related consolidated statements of income,
changes in stockholders' equity and of cash flows (including the related notes,
where applicable) fairly present the consolidated results of operations, changes
in stockholders' equity and cash flows of HUBCO for the respective fiscal
periods set forth therein.
(b) The books and records of HUBCO and the HUBCO
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed
or reserved against in the HUBCO Financial Statements (including the notes
thereto), as of December 31, 1997 neither HUBCO nor any of the HUBCO
Subsidiaries had any obligation or liability, whether absolute, accrued,
contingent or otherwise, material to the business, operations, assets or
financial condition of HUBCO or any of the HUBCO Subsidiaries which were
required by GAAP (consistently applied) to be disclosed in HUBCO's consolidated
statement of condition as of December 31, 1997 or the notes thereto. Except for
the transactions contemplated by this Agreement, and the other proposed
acquisitions by HUBCO reflected in any Form 8-K filed by HUBCO with the SEC
since December 31, 1997, neither HUBCO nor any HUBCO Subsidiary has incurred any
liabilities since December 31, 1997 except in the ordinary course of business
and consistent with past practice (including for other pending or contemplated
acquisitions).
4.5. Broker's and Other Fees. Neither HUBCO nor any of its
directors or officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement.
4.6. Absence of Certain Changes or Events. There has not been
any HUBCO Material Adverse Change since December 31, 1997 and to the best of
HUBCO's knowledge, no facts or condition exists which HUBCO believes will cause
a HUBCO Material Adverse Change in the future. "HUBCO Material Adverse Change"
means any change which is material and adverse to the consolidated financial
condition, results, business or assets of HUBCO and the HUBCO Subsidiaries taken
as a whole, other than (i) a change in the value of the respective investment
and loan portfolios of HUBCO and the HUBCO Subsidiaries as the result of a
change in interest rates generally, (ii) a change occurring after the date
hereof in any federal or state law, rule or regulation or in GAAP, which change
affects banking institutions generally, (iii) reasonable expenses incurred in
connection with this Agreement and the transactions contemplated hereby, (iv)
changes resulting from acquisitions by HUBCO or any HUBCO Subsidiary pending on
the date hereof as set forth in the HUBCO Disclosure Schedule (other than
changes resulting from facts not disclosed to, or otherwise known by, DFC on or
prior to the date hereof as to which HUBCO shall bear the burden of proof in any
dispute pertaining thereto), (v) the entry, after the date hereof, by HUBCO or
any HUBCO Subsidiary into an agreement to acquire another entity, or (vi)
matters disclosed in the HUBCO Disclosure Schedule.
4.7 Legal Proceedings. Except as disclosed in the HUBCO
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of HUBCO or its Subsidiaries, neither HUBCO nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
HUBCO's knowledge, threatened legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against HUBCO or any of its Subsidiaries which, if decided adversely to HUBCO or
its Subsidiaries, are reasonably likely to have a material adverse effect on the
business, operations, assets or financial condition of HUBCO or its
Subsidiaries, taken as a whole. Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any of its Subsidiaries is a party to any order,
judgment or decree entered in any lawsuit or proceeding which is material to
HUBCO or its Subsidiaries.
4.8 Reports. Since January 1, 1996, HUBCO has filed all
reports that it was required to file with the SEC under the 1934 Act, all of
which complied in all material respects with all applicable requirements of the
1934 Act and the rules and regulations adopted thereunder. As of their
respective dates, each such report and each registration statement, proxy
statement, form or other document filed by HUBCO with the SEC, including without
limitation, any financial statements or schedules included therein, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1996, HUBCO and each HUBCO
Subsidiary has duly filed all material forms, reports and documents which they
were required to file with each agency charged with regulating any aspect of
their business.
4.9 HUBCO Information. The information relating to HUBCO and
its Subsidiaries (including, without limitation, information regarding other
transactions which HUBCO is required to disclose), this Agreement and the
transactions contemplated hereby in the Registration Statement and Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof), as of the date of
the mailing of the Proxy Statement-Prospectus, and up to and including the date
of the meeting of stockholders of DFC to which such Proxy Statement-Prospectus
relates, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement shall comply as to form in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
rules and regulations promulgated thereunder.
4.10 Compliance With Applicable Law. Except as set forth in
the HUBCO Disclosure Schedule, each of HUBCO and HUBCO's Subsidiaries holds all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business, and has complied with and is not in default in
any respect under any applicable law, statute, order, rule, regulation, policy
and/or guideline of any federal, state or local governmental authority relating
to HUBCO or HUBCO's Subsidiaries (including without limitation consumer,
community and fair lending laws) (other than where such default or noncompliance
will not result in a material adverse effect on the business, operations, assets
or financial condition of HUBCO and HUBCO's Subsidiaries taken as a whole) and
HUBCO has not received notice of violation of, and does not know of any
violations of, any of the above.
4.11 Funding and Capital Adequacy. At the Effective Time,
after giving pro forma effect to the Merger and any other acquisition which
HUBCO or its Subsidiaries have agreed to consummate, HUBCO will be deemed "well
capitalized" under prompt corrective action regulatory capital requirements.
4.12 HUBCO Common Stock. As of the date hereof, HUBCO has
available and reserved shares of HUBCO Common Stock sufficient for issuance
pursuant to the Merger and upon the exercise of Stock Options subsequent
thereto. The HUBCO Common Stock to be issued hereunder pursuant to the Merger,
and upon exercise of the Stock Options, when so issued, will be duly authorized
and validly issued, fully paid, nonassessable, free of preemptive rights and
free and clear of all liens, encumbrances or restrictions created by or through
HUBCO, with no personal liability attaching to the ownership thereof. The HUBCO
Common Stock to be issued hereunder pursuant to the Merger, and upon exercise of
the Stock Options, when so issued, will be registered under the 1933 Act and
issued in accordance with all applicable state and federal laws, rules and
regulations.
4.13 Agreements with Bank Regulators. Neither HUBCO nor any
HUBCO Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution submitted to a
regulatory authority or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any Government Entity which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve policies or
its management, except for those the existence of which has been disclosed in
writing to DFC by HUBCO prior to the date of this Agreement, nor has HUBCO been
advised by any Governmental Entity that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission, except as disclosed
in writing to DFC by HUBCO prior to the date of this Agreement. Neither HUBCO
nor any HUBCO Subsidiary is required by Section 32 of the Federal Deposit
Insurance Act to give prior notice to a Federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer, except as disclosed in writing to DFC
by HUBCO prior to the date of this Agreement.
4.14 Taxes and Tax Returns.
(a) HUBCO and HUBCO's Subsidiaries have duly filed
(and until the Effective Time will so file) all Returns required to be filed by
them in respect of any federal, state and local taxes (including withholding
taxes, penalties or other payments required) and have duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other than taxes or
other charges which are being contested in good faith (and disclosed to DFC in
writing). HUBCO and HUBCO's Subsidiaries have established on their books and
records reserves that are adequate for the payment of all federal, state and
local taxes not yet due and payable, but are incurred in respect of HUBCO
through such date. The HUBCO Disclosure Schedule identifies the federal income
tax returns of HUBCO and its Subsidiaries which have been examined by the IRS
within the past six years. No deficiencies were asserted as a result of such
examinations which have not been resolved and paid in full. The HUBCO Disclosure
Schedule identifies the applicable state income tax returns of HUBCO and its
Subsidiaries which have been examined by the applicable authorities. No
deficiencies were asserted as a result of such examinations which have not been
resolved and paid in full. To the best knowledge of HUBCO, there are no audits
or other administrative or court proceedings presently pending nor any other
disputes pending with respect to, or claims asserted for, taxes or assessments
upon HUBCO or its Subsidiaries, nor has HUBCO or its Subsidiaries given any
currently outstanding waivers or comparable consents regarding the application
of the statute of limitations with respect to any taxes or Returns.
(b) Except as set forth in the HUBCO Disclosure
Schedule, neither HUBCO nor any Subsidiary of HUBCO (i) has requested any
extension of time within which to file any Return which Return has not since
been filed, (ii) is a party to any agreement providing for the allocation or
sharing of taxes, (iii) is required to include in income any adjustment pursuant
to Section 481(a) of the Code, by reason of a voluntary change in accounting
method initiated by HUBCO or any of its Subsidiaries (nor does HUBCO have any
knowledge that the IRS has proposed any such adjustment or change of accounting
method) or (iv) has filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply.
4.15 Employee Benefit Plans.
(a) HUBCO and its Subsidiaries maintain or contribute
to certain "employee pension benefit plans" (the "HUBCO Pension Plans"), as such
term is defined in Section 3(2)(A) of ERISA, and "employee welfare benefit
plans" (the "HUBCO Welfare Plans"), as such term is defined in Section 3(1) of
ERISA. Since September 2, 1974, neither HUBCO nor its subsidiaries have
contributed to any "Multiemployer Plan", as such term is defined in Section
3(37) of ERISA.
(b) HUBCO is not aware of any fact or circumstance
which would disqualify any HUBCO Pension Plan or HUBCO Welfare Plan that could
not be retroactively corrected (in accordance with the procedures of the IRS).
(c) The present value of all accrued benefits under
each of the HUBCO Pension Plans subject to Title IV of ERISA, based upon the
actuarial assumptions used for purposes of the most recent actuarial valuation
prepared by such HUBCO Pension Plan's actuary, did not exceed the then current
value of the assets of such plans allocable to such accrued benefits. To the
best of HUBCO's knowledge, the actuarial assumptions then utilized for such
plans were reasonable and appropriate as of the last valuation date and
reflected then current market conditions.
(d) During the last six years, the PBGC has not
asserted any claim for liability against HUBCO or any of its subsidiaries which
has not been paid in full.
(e) All premiums (and interest charges and penalties
for late payment, if applicable) due to the PBGC with respect to each HUBCO
Pension Plan have been paid. All contributions required to be made to each HUBCO
Pension Plan under the terms thereof, ERISA or other applicable law have been
timely made, and all amounts properly accrued to date as liabilities of HUBCO
which have not been paid have been properly recorded on the books of HUBCO.
(f) No "accumulated funding deficiency", within the
meaning of Section 412 of the Code, has been incurred with respect to any of the
HUBCO Pension Plans.
(g) There are no pending or, to the best knowledge of
HUBCO, threatened or anticipated material claims (other than routine claims for
benefits) by, on behalf of or against any of the HUBCO Pension Plans or the
HUBCO Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the HUBCO Disclosure Schedule.
(h) Except with respect to customary health, life and
disability benefits or as disclosed in the HUBCO Disclosure Schedule, HUBCO has
no unfunded benefit obligations which are not accounted for by reserves shown on
the financial statements and established under GAAP or otherwise noted on such
financial statements.
(i) Except as disclosed in the HUBCO Disclosure
Schedule, each of the HUBCO Pension Plans, HUBCO Welfare Plans and each other
employee benefit plan and arrangement identified on the HUBCO Disclosure
Schedule has been operated in compliance in all material respects with the
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder, and all other applicable governmental laws and
regulations. Furthermore, except as disclosed in the HUBCO Disclosure Schedule,
if HUBCO maintains any HUBCO Pension Plan, HUBCO has received or applied for a
favorable determination letter from the IRS which takes into account the Tax
Reform Act of 1986 and (to the extent it mandates currently applicable
requirements) subsequent legislation, and HUBCO is not aware of any fact or
circumstance which would disqualify any plan, other than operational defects
which could be retroactively corrected (in accordance with the procedures of the
IRS) without a material adverse effect on HUBCO and the HUBCO Subsidiaries taken
as a whole.
(j) To the best knowledge of HUBCO, no non-exempt
prohibited transaction, within the meaning of Section 4975 of the Code or
Section 406 of ERISA, has occurred with respect to any HUBCO Welfare Plan or
HUBCO Pension Plan that would result in any material tax or penalty for HUBCO or
any HUBCO Subsidiary.
4.16 Contracts. Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any of its Subsidiaries, or to the best knowledge of
HUBCO, any other party thereto, is in default in any material respect under any
material lease, contract, mortgage, promissory note, deed of trust, loan or
other commitment (except those under which a banking subsidiary of HUBCO is or
will be the creditor) or arrangement, except for defaults which individually or
in the aggregate would not have a material adverse effect on the business,
operations, assets or financial condition of HUBCO and its subsidiaries, taken
as a whole.
4.17 Properties and Insurance.
(a) HUBCO and its Subsidiaries have good and, as to
owned real property, marketable title to all material assets and properties,
whether real or personal, tangible or intangible, reflected in HUBCO's
consolidated balance sheet as of December 31, 1997, or owned and acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since
December 31, 1997), subject to no encumbrances, liens, mortgages, security
interests or pledges, except (i) those items that secure liabilities that are
reflected in said balance sheet or the notes thereto or that secure liabilities
incurred in the ordinary course of business after the date of such balance
sheet, (ii) statutory liens for amounts not yet delinquent or which are being
contested in good faith, (iii) such encumbrances, liens, mortgages, security
interests, pledges and title imperfections that are not in the aggregate
material to the business, operations, assets, and financial condition of HUBCO
and its subsidiaries taken as a whole and (iv) with respect to owned real
property, title imperfections noted in title reports. Except as disclosed in the
HUBCO Disclosure Schedule, HUBCO and its Subsidiaries as lessees have the right
under valid and subsisting leases to occupy, use, possess and control all
property leased by HUBCO or its Subsidiaries in all material respects as
presently occupied, used, possessed and controlled by HUBCO and its
Subsidiaries.
(b) The business operations and all insurable
properties and assets of HUBCO and its Subsidiaries are insured for their
benefit against all risks which, in the reasonable judgment of the management of
HUBCO, should be insured against, in each case under policies or bonds issued by
insurers of recognized responsibility, in such amounts with such deductibles and
against such risks and losses as are in the opinion of the management of HUBCO
adequate for the business engaged in by HUBCO and its Subsidiaries. As of the
date hereof, neither HUBCO nor any of its Subsidiaries has received any notice
of cancellation or notice of a material amendment of any such insurance policy
or bond or is in default under any such policy or bond, no coverage thereunder
is being disputed and all material claims thereunder have been filed in a timely
fashion.
4.18. Environmental Matters.
(a) Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor any of its Subsidiaries has received any written
notice, citation, claim, assessment, proposed assessment or demand for abatement
alleging that HUBCO or any of its Subsidiaries (either directly or as a
successor-in-interest in connection with the enforcement of remedies to realize
the value of properties serving as collateral for outstanding loans) is
responsible for the correction or cleanup of any condition resulting from the
violation of any law, ordinance or other governmental regulation regarding
environmental matters which correction or cleanup would be material to the
business, operations, assets or financial condition of HUBCO and its
Subsidiaries taken as a whole. Except as disclosed in the HUBCO Disclosure
Schedule, HUBCO has no knowledge that any toxic or hazardous substances or
materials have been emitted, generated, disposed of or stored on any property
currently owned or leased by HUBCO or any of its subsidiaries in any manner that
violates or, after the lapse of time is reasonably likely to violate, any
presently existing federal, state or local law or regulation governing or
pertaining to such substances and materials, the violation of which would have a
material adverse effect on the business, operations, assets or financial
condition of HUBCO and its Subsidiaries, taken as a whole.
(b) HUBCO has no knowledge that any of the Properties
has been operated in any manner in the three years prior to the date of this
Agreement that violated any applicable federal, state or local law or regulation
governing or pertaining to toxic or hazardous substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of HUBCO and the HUBCO Subsidiaries
taken as a whole.
4.19. Reserves. As of December 31, 1997, the allowance for
possible loan losses in the HUBCO Financial Statements was adequate based upon
all factors required to be considered by HUBCO at that time in determining the
amount of such allowance. The methodology used to compute the allowance for
possible loan losses complies in all material respects with all applicable FDIC,
Connecticut Department of Banking and New Jersey Department of Banking policies.
As of December 31, 1997, the valuation allowance for OREO properties in the
HUBCO Financial Statements was adequate based upon all factors required to be
considered by HUBCO at that time in determining the amount of such allowance.
4.20. Year 2000 Compliance. HUBCO and the HUBCO Subsidiaries
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order to be substantially Year 2000
compliant on or before the end of 1999 and HUBCO does not expect the future cost
of addressing such issues to be material. Neither HUBCO nor any HUBCO Subsidiary
has received a rating of less than satisfactory from any bank regulatory agency
with respect to Year 2000 compliance.
4.21. Disclosure. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE V - COVENANTS OF THE PARTIES
5.1. Conduct of the Business of DFC. During the period from
the date of this Agreement to the Effective Time, DFC and the Dime shall, and
shall cause each DFC Subsidiary to, conduct their respective businesses only in
the ordinary course and consistent with prudent business practice, except for
transactions permitted hereunder or with the prior written consent of HUBCO,
which consent will not be unreasonably withheld. Each of DFC and the Dime also
shall use its reasonable best efforts to (i) preserve its business organization
and that of the DFC Subsidiaries intact, (ii) keep available to itself and the
DFC Subsidiaries the present services of their respective employees, and (iii)
preserve for itself and HUBCO the goodwill of its customers and those of the DFC
Subsidiaries and others with whom business relationships exist.
5.2. Negative Covenants. From the date hereof to the Effective
Time, except as otherwise approved by HUBCO in writing, or as set forth in the
DFC Disclosure Schedule, or as permitted or required by this Agreement, neither
DFC nor the Dime will:
(a) change any provision of its Certificate of
Incorporation or any similar governing documents;
(b) change any provision of its By-Laws without the
consent of HUBCO which consent shall not be unreasonably withheld;
(c) change the number of shares of its authorized or
issued capital stock (other than upon exercise of stock options or warrants
described on the DFC Disclosure Schedule in accordance with the terms thereof)
or issue or grant any option, warrant, call, commitment, subscription, right to
purchase or agreement of any character relating to its authorized or issued
capital stock, or any securities convertible into shares of such stock, or
split, combine or reclassify any shares of its capital stock, or declare, set
aside or pay any dividend, or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock; provided,
however, that from the date hereof to the Effective Time, DFC may declare, set
aside or pay dividends on the DFC Common Stock in a quarterly amount equal to
$0.12 per share, with the dividend payment dates to be coordinated with HUBCO,
it being the intention of the parties that the shareholders of DFC receive
dividends for any particular calendar quarter on either the DFC Common Stock or
the HUBCO Common Stock acquired in exchange therefor pursuant to the terms of
this Agreement but not both; provided further, that nothing contained herein
shall be deemed to affect the ability of Dime to pay dividends on its capital
stock to DFC.
(d) grant any severance or termination pay (other
than pursuant to policies or contracts of DFC in effect on the date hereof and
disclosed to HUBCO in the DFC Disclosure Schedule) to, or enter into or amend
any employment or severance agreement with, any of its directors, officers or
employees; adopt any new employee benefit plan or arrangement of any type; or
award any increase in compensation or benefits to its directors, officers or
employees except in each case as specified in Section 5.2 of the DFC Disclosure
Schedule.
(e) sell or dispose of any substantial amount of
assets or voluntarily incur any significant liabilities other than in the
ordinary course of business consistent with past practices and policies or in
response to substantial financial demands upon the business of DFC or the Dime.
(f) make any capital expenditures other than pursuant
to binding commitments existing on the date hereof, expenditures necessary to
maintain existing assets in good repair and expenditures described in business
plans or budgets previously furnished to HUBCO.
(g) file any applications or make any contract with
respect to branching or site location or relocation.
(h) agree to acquire in any manner whatsoever (other
than to realize upon collateral for a defaulted loan) any business or entity.
(i) make any material change in its accounting
methods or practices, other than changes required in accordance with generally
accepted accounting principles or regulatory authorities.
(j) take any action that would result in any of its
representations and warranties contained in Article III of this Agreement not
being true and correct in any material respect at the Effective Time or that
would cause any of its conditions to Closing not to be satisfied;
(k) without first conferring with HUBCO, make or
commit to make any new loan or other extension of credit in an amount of
$500,000 or more, renew for a period in excess of one year any existing loan or
other extension of credit in an amount of $500,000 or more, or increase by
$500,000 or more the aggregate credit outstanding to any borrower or group of
affiliated borrowers except such loan initiations, renewals or increases that
are committed as of the date of this Agreement and identified on the DFC
Disclosure Schedule and residential mortgage loans made in the ordinary course
of business in accordance with past practice; or
(l) agree to do any of the foregoing.
5.3. No Solicitation. So long as this Agreement remains in
effect, DFC and the Dime shall not, directly or indirectly, encourage or solicit
or hold discussions or negotiations with, or provide any information to, any
person, entity or group (other than HUBCO) concerning any merger or sale of
shares of capital stock or sale of substantial assets or liabilities not in the
ordinary course of business, or similar transactions involving DFC or the Dime
(an "Acquisition Transaction"). Notwithstanding the foregoing, DFC may enter
into discussions or negotiations or provide information in connection with an
unsolicited possible Acquisition Transaction if the Board of Directors of DFC,
after consulting with counsel, determines in the exercise of its fiduciary
responsibilities that such discussions or negotiations should be commenced or
such information should be furnished. DFC shall promptly communicate to HUBCO
the terms of any proposal, whether written or oral, which it may receive in
respect of any such Acquisition Transaction and the fact that it is having
discussions or negotiations with a third party about an Acquisition Transaction.
5.4. Current Information. During the period from the date of
this Agreement to the Effective Time, each of DFC and HUBCO will cause one or
more of its designated representatives to confer with representatives of the
other party on a monthly or more frequent basis regarding its business,
operations, properties, assets and financial condition and matters relating to
the completion of the transactions contemplated herein. On a monthly basis, DFC
agrees to provide HUBCO, and HUBCO agrees to provide DFC, with internally
prepared profit and loss statements no later than 15 days after the close of
each calendar month. As soon as reasonably available, but in no event more than
45 days after the end of each fiscal quarter (other than the last fiscal quarter
of each fiscal year), DFC will deliver to HUBCO and HUBCO will deliver to DFC
their respective quarterly reports on Form 10-Q, as filed with the SEC under the
1934 Act. As soon as reasonably available, but in no event more than 90 days
after the end of each calendar year, DFC will deliver to HUBCO and HUBCO will
deliver to DFC their respective Annual Reports on Form 10-K as filed with the
SEC under the 1934 Act.
5.5. Access to Properties and Records; Confidentiality.
(a) DFC and the Dime shall permit HUBCO and its
representatives, and HUBCO shall permit, and cause each HUBCO Subsidiary to
permit, DFC and its representatives, reasonable access to their respective
properties, and shall disclose and make available to HUBCO and its
representatives, or DFC and its representatives as the case may be, all books,
papers and records relating to its assets, stock ownership, properties,
operations, obligations and liabilities, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
directors' and shareholders' meetings, organizational documents, By-Laws,
material contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files, plans affecting employees, and any
other business activities or prospects in which HUBCO and its representatives or
DFC and its representatives may have a reasonable interest. Neither party shall
be required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer, would
contravene any law, rule, regulation, order or judgment or would waive any
privilege. The parties will use their reasonable best efforts to obtain waivers
of any such restriction (other than waivers of the attorney-client privilege)
and in any event make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
Notwithstanding the foregoing, DFC acknowledges that HUBCO may be involved in
discussions concerning other potential acquisitions and HUBCO shall not be
obligated to disclose such information to DFC except as such information is
disclosed to HUBCO's shareholders generally.
(b) All information furnished by the parties hereto
previously in connection with transactions contemplated by this Agreement or
pursuant hereto shall be used solely for the purpose of evaluating the Merger
contemplated hereby and shall be treated as the sole property of the party
delivering the information until consummation of the Merger contemplated hereby
and, if such Merger shall not occur, each party and each party's advisors shall
return to the other party all documents or other materials containing,
reflecting or referring to such information, will not retain any copies of such
information, shall use its reasonable best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. In the event that the Merger
contemplated hereby does not occur, all documents, notes and other writings
prepared by a party hereto or its advisors based on information furnished by the
other party shall be promptly destroyed. The obligation to keep such information
confidential shall continue for five years from the date the proposed Merger is
abandoned but shall not apply to (i) any information which (A) the party
receiving the information can establish by convincing evidence was already in
its possession prior to the disclosure thereof to it by the other party; (B) was
then generally known to the public; (C) became known to the public through no
fault of the party receiving such information; or (D) was disclosed to the party
receiving such information by a third party not bound by an obligation of
confidentiality; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction. Notwithstanding
the foregoing provision, counsel for each party hereto may retain one copy of
all information in its files for archival purposes.
5.6. Regulatory Matters.
(a) For the purposes of holding the Shareholders
Meeting (as such term is defined in Section 5.7 hereof), and qualifying under
applicable federal and state securities laws the HUBCO Common Stock to be issued
to DFC shareholders in connection with the Merger, the parties hereto shall
cooperate in the preparation and filing by HUBCO with the SEC of a Registration
Statement including a combined proxy statement and prospectus satisfying all
applicable requirements of applicable state and federal laws, including the 1933
Act, the 1934 Act and applicable state securities laws and the rules and
regulations thereunder (such proxy statement and prospectus in the form mailed
by DFC and HUBCO to the DFC shareholders together with any and all amendments or
supplements thereto, being herein referred to as the "Proxy
Statement-Prospectus" and the various documents to be filed by HUBCO under the
1933 Act with the SEC to register the HUBCO Common Stock for sale, including the
Proxy Statement-Prospectus, are referred to herein as the "Registration
Statement").
(b) HUBCO shall furnish DFC with such information
concerning HUBCO and its Subsidiaries (including, without limitation,
information regarding other transactions which HUBCO is required to disclose) as
is necessary in order to cause the Proxy Statement-Prospectus, insofar as it
relates to such corporations, to comply with Section 5.6(a) hereof. HUBCO agrees
promptly to advise DFC if at any time prior to the Shareholders' Meeting any
information provided by HUBCO in the Proxy Statement-Prospectus becomes
incorrect or incomplete in any material respect and to provide DFC with the
information needed to correct such inaccuracy or omission. HUBCO shall furnish
DFC with such supplemental information as may be necessary in order to cause the
Proxy Statement-Prospectus, insofar as it relates to HUBCO and the HUBCO
Subsidiaries, to comply with Section 5.6(a) after the mailing thereof to DFC
shareholders.
(c) DFC shall furnish HUBCO with such information
concerning DFC as is necessary in order to cause the Proxy Statement-Prospectus,
insofar as it relates to DFC, to comply with Section 5.6(a) hereof. DFC agrees
promptly to advise HUBCO if at any time prior to the Shareholders' Meeting, any
information provided by DFC in the Proxy Statement-Prospectus becomes incorrect
or incomplete in any material respect and to provide HUBCO with the information
needed to correct such inaccuracy or omission. DFC shall furnish HUBCO with such
supplemental information as may be necessary in order to cause the Proxy
Statement-Prospectus, insofar as it relates to DFC and the Dime to comply with
Section 5.6(a) after the mailing thereof to DFC shareholders.
(d) HUBCO shall as promptly as practicable make such
filings as are necessary in connection with the offering of the HUBCO Common
Stock with applicable state securities agencies and shall use all reasonable
efforts to qualify the offering of such stock under applicable state securities
laws at the earliest practicable date. DFC shall promptly furnish HUBCO with
such information regarding the DFC shareholders as HUBCO requires to enable it
to determine what filings are required hereunder. DFC authorizes HUBCO to
utilize in such filings the information concerning DFC and the Dime provided to
HUBCO in connection with, or contained in, the Proxy Statement-Prospectus. HUBCO
shall furnish DFC's counsel with copies of all such filings and keep DFC advised
of the status thereof. HUBCO and DFC shall as promptly as practicable file the
Registration Statement containing the Proxy Statement-Prospectus with the SEC,
and each of HUBCO and DFC shall promptly notify the other of all communications,
oral or written, with the SEC concerning the Registration Statement and the
Proxy Statement-Prospectus.
(e) HUBCO shall cause the HUBCO Common Stock issuable
pursuant to the Merger to be listed on the NASDAQ at the Effective Time. HUBCO
shall cause the HUBCO Common Stock which shall be issuable pursuant to exercise
of Stock Options to be accepted for listing on the NASDAQ when issued.
(f) The parties hereto will cooperate with each other
and use their reasonable best efforts to prepare all necessary documentation, to
effect all necessary filings and to obtain all necessary permits, consents,
approvals and authorizations of all third parties and governmental bodies
necessary to consummate the transactions contemplated by this Agreement as soon
as possible, including, without limitation, those required by the FDIC, the FRB,
the Department and the DEP. Without limiting the foregoing, the parties shall
use reasonable business efforts to file for approval or waiver by the
appropriate bank regulatory agencies within 45 days after the date hereof. The
parties shall each have the right to review in advance (and shall do so
promptly) all filings with, including all information relating to the other, as
the case may be, and any of their respective subsidiaries, which appears in any
filing made with, or written material submitted to, any third party or
governmental body in connection with the transactions contemplated by this
Agreement.
(g) Each of the parties will promptly furnish each
other with copies of written communications received by them or any of their
respective subsidiaries from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated hereby.
(h) DFC acknowledges that HUBCO is in or may be in
the process of acquiring other banks and financial institutions and that in
connection with such acquisitions, information concerning DFC may be required to
be included in the registration statements, if any, for the sale of securities
of HUBCO or in SEC reports in connection with such acquisitions. DFC agrees to
provide HUBCO with any information, certificates, documents or other materials
about DFC as are reasonably necessary to be included in such other SEC reports
or registration statements, including registration statements which may be filed
by HUBCO prior to the Effective Time. DFC shall use its reasonable efforts to
cause its attorneys and accountants to provide HUBCO and any underwriters for
HUBCO with any consents, comfort letters, opinion letters, reports or
information which are necessary to complete the registration statements and
applications for any such acquisition or issuance of securities. HUBCO shall
reimburse DFC for reasonable expenses thus incurred by DFC should this
transaction be terminated for any reason. HUBCO shall not file with the SEC any
registration statement or amendment thereto or supplement thereof containing
information regarding DFC unless DFC shall have consented in writing to such
filing, which consent shall not be unreasonably delayed or withheld.
(i) Between the date of this Agreement and the
Effective Time, DFC shall cooperate with HUBCO to reasonably conform DFC's
policies and procedures regarding applicable regulatory matters, to those of
HUBCO as HUBCO may reasonably identify to DFC from time to time.
5.7. Approval of Shareholders. DFC, as sole shareholder of
Dime, will approve the Bank Merger Agreement. DFC will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
shareholders of DFC (the "Shareholders Meeting") for the purpose of securing the
approval of shareholders of this Agreement, (ii) subject to the qualification
set forth in Section 5.3 hereof and the right not to make a recommendation or to
withdraw a recommendation if (x) its investment banker withdraws its fairness
opinion prior to the Shareholders' Meeting or (y) DFC's Board of Directors,
after consulting with counsel, determines in the exercise of its fiduciary
duties that such recommendation should not be made or should be withdrawn,
recommend to the shareholders of DFC the approval of this Agreement and the
transactions contemplated hereby and use its reasonable best efforts to obtain,
as promptly as practicable, such approval, and (iii) cooperate and consult with
HUBCO with respect to each of the foregoing matters.
If it becomes necessary under NASDAQ rules or applicable laws
to obtain HUBCO shareholder approval, HUBCO shall take all steps necessary to
obtain the approval of its shareholders as promptly as possible. In connection
therewith, HUBCO shall take all steps necessary to duly call, give notice and
convene a meeting of its shareholders for such purpose.
5.8. Further Assurances.
(a) Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions to Closing and to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated by this Agreement and using its reasonable best
efforts to prevent the breach of any representation, warranty, covenant or
agreement of such party contained or referred to in this Agreement and to
promptly remedy the same. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action. Nothing in this section shall be construed
to require any party to participate in any threatened or actual legal,
administrative or other proceedings (other than proceedings, actions or
investigations to which it is a party or subject or threatened to be made a
party or subject) in connection with consummation of the transactions
contemplated by this Agreement unless such party shall consent in advance and in
writing to such participation and the other party agrees to reimburse and
indemnify such party for and against any and all costs and damages related
thereto if the Merger is not consummated.
(b) HUBCO agrees that from the date hereof to the
Effective Time, except as otherwise approved by DFC in writing or as permitted
or required by this Agreement, HUBCO will use reasonable business efforts to
maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships, and HUBCO will not, nor will
it permit any HUBCO Subsidiary to, take any action: (i) that would result in any
of its representations and warranties contained in Article IV of this Agreement
not being true and correct in any material respect at, or prior to, the
Effective Time, or (ii) that would cause any of its conditions to Closing not to
be satisfied, or (iii) that would constitute a breach or default of its
obligations under this Agreement.
(c) HUBCO, Bank, DFC and the Dime will use reasonable
efforts to cause the Merger to occur on or before August 31, 1998.
5.9. Public Announcements. HUBCO and DFC shall cooperate with
each other in the development and distribution of all news releases and other
public filings and disclosures with respect to this Agreement or the Merger
transactions contemplated hereby, and HUBCO and DFC agree that unless approved
mutually by them in advance, they will not issue any press release or written
statement for general circulation relating primarily to the transactions
contemplated hereby, except as may be otherwise required by law or regulation
upon the advice of counsel.
5.10. Failure to Fulfill Conditions. In the event that HUBCO
or DFC determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to December 31,
1998 (the "Cutoff Date") and that it will not waive that condition, it will
promptly notify the other party. Except for any acquisition or merger
discussions HUBCO may enter into with other parties, DFC and HUBCO will promptly
inform the other of any facts applicable to DFC or HUBCO, respectively, or their
respective directors or officers, that would be likely to prevent or materially
delay approval of the Merger by any Governmental Entity or which would otherwise
prevent or materially delay completion of the Merger.
5.11. Employee Matters.
(a) Following consummation of the Merger, HUBCO
agrees with DFC to honor the existing written employment and severance contracts
with officers and employees of DFC and Dime that are included in the DFC
Disclosure Schedule.
(b) Following consummation of the Merger, the Bank
will decide whether to continue each of the Dime and/or DFC's pension and
welfare plans for the benefit of employees of Dime and DFC, or to have such
employees become covered under a HUBCO Pension and Welfare Plan. If HUBCO
decides to cover Dime and DFC employees under a HUBCO Pension and Welfare Plan,
such employees will receive credit for prior years of service with Dime and/or
DFC for purposes of determining eligibility to participate, and vesting and
eligibility for early retirement benefits, other than qualification for the
"Rule of 85," if applicable. No prior existing condition limitation shall be
imposed with respect to any medical coverage plan as a result of the Merger.
(c) Following the consummation of the Merger, the
Bank shall honor Dime's severance policy as specified in Section 5.2(d) of the
Dime Disclosure Schedule for six months and to recognize years of service
completed while employed by DFC and/or Dime for purposes of such policy.
Following the expiration of the foregoing severance policy, any years of service
recognized for purposes of this Section 5.11(c) will be taken into account under
the terms of any applicable severance policy of HUBCO.
(d) HUBCO intends to continue to make charitable
contributions consistent with past practices of Dime, as is consistent with
prudent banking. HUBCO will offer comparable employment to all Dime branch
employees in good standing. HUBCO will use its best efforts to offer comparable
employment to all other Dime employees in good standing. Comparable employment
shall mean similar employment at a location less than 35 miles from their
current location and as specified in the DFC Disclosure Schedule.
(e) Employees of DFC or Dime who continue as
employees of HUBCO or Bank following the Closing shall be entitled initially to
the amount of vacation time per year to which they were previously entitled
under the applicable DFC or Dime vacation policy or, if greater, the amount of
vacation time per year to which they would be entitled under the applicable
HUBCO or Bank. Thereafter, increases in the amount of vacation time per year
shall be based solely on the applicable HUBCO or Bank vacation policy.
5.12. Disclosure Supplements. From time to time prior to the
Effective Time, each party hereto will promptly supplement or amend (by written
notice to the other) its respective Disclosure Schedules delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Schedules or which is necessary to correct any
information in such Schedules which has been rendered materially inaccurate
thereby. For the purpose of determining satisfaction of the conditions set forth
in Article VI and subject to Sections 6.2(a) and 6.3(a), no supplement or
amendment to the parties' respective Disclosure Schedules which corrects any
representation or warranty which was untrue when made shall eliminate the other
party's right (if any) to terminate this Agreement based on the original untruth
of the representation or warranty; provided, that the other party shall be
deemed to have waived such right if it does not exercise such right within 15
days after receiving the correcting supplement or amendment.
5.13. Transaction Expenses of DFC.
(a) For planning purposes, DFC shall, within 15 days
from the date hereof, provide HUBCO with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by DFC in
connection with this transaction, including the fees and expenses of counsel,
accountants, investment bankers and other professionals. DFC shall promptly
notify HUBCO if or when it determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement,
DFC shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. DFC shall accrue
and/or pay all of such amounts as soon as possible.
(c) DFC shall cause its professionals to render
monthly invoices within 15 days after the end of each month. DFC shall advise
HUBCO monthly of all out-of-pocket expenses which DFC has incurred in connection
with this transaction.
(d) HUBCO, in reasonable consultation with DFC, shall
make all arrangements with respect to the printing and mailing of the Proxy
Statement-Prospectus.
5.14 Indemnification.
(a) For a period of six years after the Effective
Time, HUBCO shall indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date hereof or who becomes prior to the
Effective Time, a director, officer, employee or agent of DFC or the Dime or
serves or has served at the request of DFC or the Dime in any capacity with any
other person (collectively, the "Indemnitees") against any and all claims,
damages, liabilities, losses, costs, charges, expenses (including, without
limitation, reasonable costs of investigation, and the reasonable fees and
disbursements of legal counsel and other advisers and experts as incurred),
judgments, fines, penalties and amounts paid in settlement, asserted against,
incurred by or imposed upon any Indemnitee by reason of the fact that he or she
is or was a director, officer, employee or agent of DFC or the Dime or serves or
has served at the request of DFC or the Dime in any capacity with any other
person, in connection with, arising out of or relating to (i) any threatened,
pending or completed claim, action, suit or proceeding (whether civil, criminal,
administrative or investigative), including, without limitation, any and all
claims, actions, suits, proceedings or investigations by or on behalf of or in
the right of or against DFC or the Dime or any of their respective affiliates,
or by any former or present shareholder of DFC (each a "Claim" and collectively,
"Claims"), including, without limitation, any Claim which is based upon, arises
out of or in any way relates to the Merger, the Proxy Statement/Prospectus, this
Agreement, any of the transactions contemplated by this Agreement, the
Indemnitee's service as a member of the Board of Directors of DFC or the Dime or
of any committee of DFC's or the Dime's Board of Directors, the events leading
up to the execution of this Agreement, any statement, announcement,
recommendation or solicitation made in connection therewith or related thereto
(or the absence of any of the foregoing) and any breach of any duty in
connection with any of the foregoing, or (ii) the enforcement of the obligations
of HUBCO set forth in this Section 5.14, in each case to the fullest extent
which DFC or the Dime would have been permitted under any applicable law and
their respective Certificates of Incorporation By-Laws had the Merger not
occurred (and HUBCO shall also advance expenses as incurred to the fullest
extent so permitted). Notwithstanding the foregoing, but subject to subsection
(b) below, HUBCO shall not provide any indemnification or advance any expenses
with respect to any Claim which relates to a personal benefit improperly paid or
provided, or alleged to have been improperly paid or provided, to the
Indemnitee, but HUBCO shall reimburse the Indemnitee for costs incurred by the
Indemnitee with respect to such Claim when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that the Indemnitee was not improperly paid or
provided with the personal benefit alleged in the Claim.
(b) From and after the Effective Time, HUBCO shall
assume and honor any obligation of DFC or the Dime immediately prior to the
Effective Time with respect to the indemnification of the Indemnitees arising
out of the Certificate of Incorporation or By-Laws of DFC or the Dime, or
arising out of any written indemnification agreements between DFC and/or the
Dime and such persons disclosed in the DFC Disclosure Schedule, as if such
obligations were pursuant to a contract or arrangement between HUBCO and such
Indemnitees.
(c) In the event HUBCO or any of its successors or
assigns (i) reorganizes or consolidates with or merges into or enters into
another business combination transaction with any other person or entity and is
not the resulting, continuing or surviving corporation or entity of such
consolidation, merger or transaction, or (ii) liquidates, dissolves or transfers
all or substantially all of its properties and assets to any person or entity,
then, and in each such case, proper provision shall be made so that the
successors and assigns of HUBCO assume the obligations set forth in this Section
5.14.
(d) HUBCO shall cause DFC's and the Dime's officers
and directors to be covered under HUBCO's then current officers' and directors'
liability insurance policy for a period of six years after the Effective Time,
or, in the alternative, to be covered under an extension of DFC's and the Dime's
existing officers' and directors' liability insurance policy. However, HUBCO
shall only be required to insure such persons upon terms and for coverages
substantially similar to DFC's and the Dime's existing officers' and directors'
liability insurance.
(e) Any Indemnitee wishing to claim indemnification
under this Section 5.14 shall promptly notify HUBCO upon learning of any Claim,
but the failure to so notify shall not relieve HUBCO of any liability it may
have to such Indemnitee if such failure does not materially prejudice HUBCO. In
the event of any Claim (whether arising before or after the Effective Time) as
to which indemnification under this Section 5.14 is applicable, (x) HUBCO shall
have the right to assume the defense thereof and HUBCO shall not be liable to
such Indemnitees for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof,
except that if HUBCO elects not to assume such defense, or counsel for the
Indemnitees advises that there are issues which raise conflicts of interest
between HUBCO and the Indemnitees, the Indemnitees may retain counsel
satisfactory to them, and HUBCO shall pay the reasonable fees and expenses of
such counsel for the Indemnitees as statements therefor are received; provided,
however, that HUBCO shall be obligated pursuant to this Section 5.14(e) to pay
for only one firm of counsel for all Indemnitees in any jurisdiction with
respect to a matter unless the use of one counsel for multiple Indemnitees would
present such counsel with a conflict of interest that is not waived, and (y) the
Indemnitees will cooperate in the defense of any such matter. HUBCO shall not be
liable for settlement of any claim, action or proceeding hereunder unless such
settlement is effected with its prior written consent. Notwithstanding anything
to the contrary in this Section 5.14, HUBCO shall not have any obligation
hereunder to any Indemnitee when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that the indemnification of such Indemnitee in the manner
contemplated hereby is prohibited by applicable law or public policy.
5.15 Bank Policies and Bank Merger. Notwithstanding that DFC
believes that it has established all reserves and taken all provisions for
possible loan losses required by GAAP and applicable laws, rules and
regulations, DFC recognizes that HUBCO may have adopted different loan, accrual
and reserve policies (including loan classifications and levels of reserves for
possible loan losses). From and after the date of this Agreement to the
Effective Time and in order to formulate the plan of integration for the Bank
Merger, DFC and HUBCO shall consult and cooperate with each other with respect
to (i) conforming to the extent appropriate, based upon such consultation, DFC's
loan, accrual and reserve policies and DFC's other policies and procedures
regarding applicable regulatory matters, including without limitation Federal
Reserve, the Bank Secrecy Act and FDIC matters, to those policies of HUBCO as
HUBCO may reasonably identify to DFC from time to time, (ii) new extensions of
credit or material revisions to existing terms of credits by Bank, in each case
where the aggregate exposure exceeds $500,000, and (iii) conforming, based upon
such consultation, the composition of the investment portfolio and overall
asset/liability management position of DFC and the Dime to the extent
appropriate; provided that any required change in DFC's practices in connection
with the matters described in clause (i) or (iii) above need not be effected
until the parties receive all necessary governmental approvals and consents to
consummate the transactions contemplated hereby,
5.16 Compliance with Antitrust Laws. Each of HUBCO and DFC
shall use its reasonable best efforts to resolve such objections, if any, which
may be asserted with respect to the Merger under antitrust laws, including,
without limitation, the Hart-Scott-Rodino Act. In the event a suit is threatened
or instituted challenging the Merger as violative of antitrust laws, each of
HUBCO and DFC shall use its reasonable best efforts to avoid the filing of,
resist or resolve such suit. HUBCO and DFC shall use their reasonable best
efforts to take such action as may be required: (a) by the Antitrust Division of
the Department of Justice or the Federal Trade Commission in order to resolve
such objections as either of them may have to the Merger under antitrust laws,
or (b) by any federal or state court of the United States, in any suit brought
by a private party or governmental entity challenging the Merger as violative of
antitrust laws, in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order, or other order which has the effect
of preventing the consummation of the Merger. Reasonable best efforts shall
include, but not be limited to, the proffer by HUBCO of its willingness to
accept an order agreeing to the divestiture, or the holding separate, of any
assets of HUBCO or DFC, except to the extent that any such divestitures or
holding separate arrangement would have a material adverse effect on HUBCO. The
entry by a court, in any suit brought by a private party or governmental entity
challenging the Merger as violative of antitrust laws, of an order or decree
permitting the Merger, but requiring that any of the businesses, product lines
or assets of HUBCO or DFC be divested or held separate thereafter shall not be
deemed a failure to satisfy the conditions specified in Section 6.1 hereof
except to the extent that any divestitures or holding separate arrangement would
have a material adverse effect on HUBCO and HUBCO shall not have voluntarily
consented to such divestitures or holding separate arrangements. For the
purposes of this Section 5.16, the divestiture or the holding separate of a
branch or branches of the Bank with, in the aggregate, less than $50,000,000 in
assets shall not be considered to have a material adverse effect on HUBCO.
5.17 Pooling and Tax-Free Reorganization Treatment. Prior to
the date hereof, neither HUBCO or DFC has taken any action or failed to take any
action which would disqualify the Merger for pooling of interests accounting
treatment. Before the Effective Time, neither HUBCO nor DFC shall intentionally
take, fail to take, or cause to be taken or not taken any action within its
control, which would disqualify the Merger as a "pooling-of-interests" for
accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code. Subsequent to the Effective Time, HUBCO shall not take and
shall cause the Surviving Corporation not to take any action within their
control that would disqualify the Merger as such a "reorganization" under the
Code.
5.18 Comfort Letters. HUBCO shall cause Arthur Andersen, its
independent public accountants, to deliver to DFC, and DFC shall cause Peat
Marwick, its independent public accountants, to deliver to HUBCO and to its
officers and directors who sign the Registration Statement for this transaction,
a short-form "comfort letter" or "agreed upon procedures" letter, dated the date
of the mailing of the Proxy Statement-Prospectus for the Shareholders Meeting of
DFC, in the form customarily issued by such accountants at such time in
transactions of this type.
5.19 Affiliates. Promptly, but in any event within two weeks,
after the execution and delivery of this Agreement, DFC shall deliver to HUBCO
(a) a letter identifying all persons who, to the knowledge of DFC, may be deemed
to be affiliates of DFC under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of DFC and (b) use its reasonable best efforts
to cause each person who may be deemed to be an affiliate of DFC to execute and
deliver to HUBCO a letter agreement, substantially in the form of Exhibit
5.19-1, agreeing to comply with Rule 145 and to refrain from transferring shares
as required by the pooling-of-interests accounting rules. Within two weeks after
the date hereof, HUBCO shall use its reasonable best efforts to cause its
directors and executive officers to enter into letter agreements in the form of
Exhibit 5.19-2 with HUBCO concerning the pooling-of-interests accounting rules.
HUBCO hereby agrees to publish, or file a Form 8-K, Form 10-K or Form 10-Q
containing financial results covering at least 30 days of post-Merger combined
operations of HUBCO and DFC as soon as practicable (but in no event later than
30 days) following the close of the first calendar month ending 30 days after
the Effective Time, in form and substance sufficient to remove the restrictions
set forth in paragraph "B" of Exhibit 5.19-1.
5.20 Appointments. HUBCO agrees to cause five current
directors of Dime to be appointed to the Board of Directors of the Surviving
Bank and to invite each other director of Dime to serve on a regional advisory
board of the Surviving Bank.
5.21 Investment Policy. From the date hereof through and
including June 15, 1998, DFC and Dime shall limit their Investment of Cash Flow
and Maturities to instruments which are permissible under the Dime Investment
Policy. From and including June 16, 1998 through the Effective Time, DFC and
Dime shall limit their Investment of Cash Flow and Maturities to instruments
which are permissible under the HUBCO Investment Policy. From the date hereof
through the Effective Time, DFC and Dime shall limit their Investment of Sales
Proceeds to instruments which are permissible under the HUBCO Investment Policy.
From the date hereof through the Effective Time, DFC and Dime shall: (i) provide
notice to HUBCO, prior to or contemporaneous with each Investment, of the
intended nature and amount of such Investment, (ii) provide HUBCO written
reports of each week's Investments promptly following such week, and (iii) not
make any Commitments which would obligate either of them to make an Investment
at any time after June 15, 1998 which would not be permissible under the HUBCO
Investment Policy.
ARTICLE VI - CLOSING CONDITIONS
6.1. Conditions to Each Party's Obligations Under this
Agreement. The respective obligations of each party under this Agreement to
consummate the Merger shall be subject to the satisfaction, or, where
permissible under applicable law, waiver at or prior to the Effective Time of
the following conditions:
(a) Approval of DFC Shareholders; SEC Registration.
This Agreement and the transactions contemplated hereby shall have been approved
by the requisite vote of the shareholders of DFC, and if required, by the
requisite vote of the shareholders of HUBCO. The HUBCO Registration Statement
shall have been declared effective by the SEC and shall not be subject to a stop
order or any threatened stop order, and the issuance of the HUBCO Common Stock
shall have been qualified in every state where such qualification is required
under the applicable state securities laws.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the FDIC, the Department, the FRB, the SEC and the DEP) required to
consummate the transactions contemplated hereby shall have been obtained without
any term or condition which would materially impair the value of DFC and the
Dime, taken as a whole, to HUBCO. All conditions required to be satisfied prior
to the Effective Time by the terms of such approvals and consents shall have
been satisfied; and all statutory waiting periods in respect thereof (including
the Hart-Scott-Rodino waiting period if applicable) shall have expired.
(c) Suits and Proceedings. No order, judgment or
decree shall be outstanding against a party hereto or a third party that would
have the effect of preventing completion of the Merger; no suit, action or other
proceeding shall be pending or threatened by any governmental body in which it
is sought to restrain or prohibit the Merger; and no suit, action or other
proceeding shall be pending before any court or governmental agency in which it
is sought to restrain or prohibit the Merger or obtain other substantial
monetary or other relief against one or more parties hereto in connection with
this Agreement and which HUBCO or DFC determines in good faith, based upon the
advice of their respective counsel, makes it inadvisable to proceed with the
Merger because any such suit, action or proceeding has a significant potential
to be resolved in such a way as to deprive the party electing not to proceed of
any of the material benefits to it of the Merger.
(d) Tax Opinion. HUBCO and DFC shall each have
received an opinion, dated as of the Effective Time, of Pitney, Hardin, Kipp &
Szuch, reasonably satisfactory in form and substance to DFC and its counsel and
to HUBCO, based upon representation letters reasonably required by such counsel,
dated on or about the date of such opinion, and such other facts and
representations as such counsel may reasonably deem relevant, to the effect
that: (i) the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368 of the Code; (ii)
no gain or loss will be recognized by DFC; (iii) no gain or loss will be
recognized by the DFC shareholders upon the exchange in the Merger of DFC Common
Stock into HUBCO Common Stock (except with respect to cash received in lieu of a
fractional share interest in DFC Common Stock; (iv) the tax basis of any HUBCO
Common Stock received in exchange for DFC Common Stock shall equal the basis of
the recipient's DFC Common Stock surrendered on the exchange, reduced by the
amount of cash received, if any, on the exchange, and increased by the amount of
the gain recognized, if any, on the exchange (whether characterized as dividend
or capital gain income); and (v) the holding period for any HUBCO Common Stock
received in exchange for DFC Common Stock will include the period during which
DFC Common Stock surrendered on the exchange was held, provided such stock was
held as a capital asset on the date of the exchange.
(e) Pooling of Interests. HUBCO shall have received a
letter, dated the Closing Date, from its accountants, Arthur Andersen,
reasonably satisfactory to HUBCO and DFC, to the effect that the Merger shall be
qualified to be treated by HUBCO as a pooling-of-interests for accounting
purposes.
6.2. Conditions to the Obligations of HUBCO Under this
Agreement. The obligations of HUBCO under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of
Obligations of DFC and the Dime. Except for those representations which are made
as of a particular date, the representations and warranties of DFC contained in
this Agreement shall be true and correct in all material respects on the Closing
Date as though made on and as of the Closing Date. DFC shall have performed in
all material respects the agreements, covenants and obligations to be performed
by it prior to the Closing Date. With respect to any representation or warranty
which as of the Closing Date has required a supplement or amendment to the DFC
Disclosure Schedule to render such representation or warranty true and correct
in all material respects as of the Closing Date, the representation and warranty
shall be deemed true and correct as of the Closing Date only if (i) the
information contained in the supplement or amendment to the Disclosure Schedule
related to events occurring following the execution of this Agreement and (ii)
the facts disclosed in such supplement or amendment would not either alone, or
together with any other supplements or amendments to the DFC Disclosure
Schedule, materially adversely affect the representation as to which the
supplement or amendment relates.
(b) Opinion of Counsel. HUBCO shall have received an
opinion of counsel to DFC, dated the Closing Date, in form and substance
reasonably satisfactory to HUBCO, substantially in accordance with Exhibit
6.2(b) hereto.
(c) Certificates. DFC shall have furnished HUBCO with
such certificates of its officers or other documents to evidence fulfillment of
the conditions set forth in this Section 6.2 as HUBCO may reasonably request.
(d) Legal Fees. DFC shall have furnished HUBCO with
letters from all attorneys representing DFC and the Dime in any matters
confirming that all material legal fees have been paid in full for services
rendered as of the Effective Time.
(e) Merger Related Expense. DFC shall have provided
HUBCO with an accounting of all merger related expenses incurred by it through
the Closing Date, including a good faith estimate of such expenses incurred but
as to which invoices have not been submitted as of the Closing Date. The merger
related expenses of DFC shall be reasonable.
(f) Year 2000 Compliance. Neither DFC nor Dime shall
have received a rating of less than satisfactory from any bank regulatory agency
in year 2000 compliance.
6.3. Conditions to the Obligations of DFC Under this
Agreement. The obligations of DFC under this Agreement shall be further subject
to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of
Obligations of HUBCO. Except for those representations which are made as of a
particular date, the representations and warranties of HUBCO contained in this
Agreement shall be true and correct in all material respects on the Closing Date
as though made on and as of the Closing Date. HUBCO shall have performed in all
material respects, the agreements, covenants and obligations to be performed by
it prior to the Closing Date. With respect to any representation or warranty
which as of the Closing Date has required a supplement or amendment to the HUBCO
Disclosure Schedule to render such representation or warranty true and correct
in all material respects as of the Closing Date, the representation and warranty
shall be deemed true and correct as of the Closing Date only if (i) the
information contained in the supplement or amendment to the Disclosure Schedule
related to events occurring following the execution of this Agreement and (ii)
the facts disclosed in such supplement or amendment would not either alone, or
together with any other supplements or amendments to the HUBCO Disclosure
Schedule, materially adversely effect the representation as to which the
supplement or amendment relates.
(b) Opinion of Counsel to HUBCO. DFC shall have
received an opinion of counsel to HUBCO, dated the Closing Date, in form and
substance reasonably satisfactory to DFC, substantially in accordance with
Exhibit 6.3(b) hereto.
(c) Fairness Opinion. DFC shall have received an
opinion from A.G. Edwards, dated no more than three days prior to the date the
Proxy Statement-Prospectus is mailed to DFC's shareholders (and if it shall
become necessary to resolicit proxies thereafter, dated no more than three days
prior to the date of any substantive amendment to the Proxy
Statement-Prospectus), to the effect that, in its opinion, the consideration to
be paid to shareholders of DFC hereunder is fair to such shareholders from a
financial point of view ("Fairness Opinion").
(d) Certificates. HUBCO shall have furnished DFC with
such certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 6.3 as DFC may
reasonably request.
(e) Bank Director Appointment. Five directors,
nominated by DFC and acceptable to HUBCO, shall have been added to the Board of
Directors of the Bank.
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated prior to
the Effective Time, whether before or after approval of this Agreement by the
shareholders of DFC:
(a) by mutual written consent of the parties hereto;
(b) by HUBCO or DFC (i) if the Effective Time shall
not have occurred on or prior to the Cutoff Date unless the failure of such
occurrence shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe its agreements set forth herein to be performed
or observed by such party at or before the Effective Time, or (ii) if a vote of
the shareholders of DFC is taken and such shareholders fail to approve this
Agreement at the meeting (or any adjournment or postponement thereof) held for
such purpose, or (iii) if a vote of the shareholders of HUBCO is required by
applicable NASDAQ rules, such vote is taken and such shareholders fail to
approve this Agreement at the meeting (or any adjournment or postponement
thereof) held for such purpose;
(c) by HUBCO or DFC upon written notice to the other
if any application for regulatory or governmental approval necessary to
consummate the Merger and the other transactions contemplated hereby shall have
been denied or withdrawn at the request or recommendation of the applicable
regulatory agency or Governmental Entity or by HUBCO upon written notice to DFC
if any such application is approved with conditions (other than conditions which
are customary in such regulatory approvals) which would materially impair the
value of DFC and the Dime, taken as a whole, to HUBCO;
(d) by HUBCO if (i) there shall have occurred a
material adverse change in the business, operations, assets, or financial
condition of DFC and the Dime, taken as a whole, from that disclosed by DFC in
DFC's Annual Report on Form 10-K for the year ended December 31, 1997 (it being
understood that those matters disclosed in the DFC Disclosure Schedule shall not
be deemed to constitute such a material adverse change) or (ii) there was a
material breach in any representation, warranty, covenant, agreement or
obligation of DFC hereunder and such breach shall not have been remedied within
30 days after receipt by DFC of notice in writing from HUBCO to DFC specifying
the nature of such breach and requesting that it be remedied;
(e) by DFC, if (i) there shall have occurred a HUBCO
Material Adverse Change from that disclosed by HUBCO in HUBCO's Annual Report on
Form 10-K for the year ended December 31, 1997; or (ii) there was a material
breach in any representation, warranty, covenant, agreement or obligation of
HUBCO hereunder and such breach shall not have been remedied within 30 days
after receipt by HUBCO of notice in writing from DFC specifying the nature of
such breach and requesting that it be remedied;
(f) by DFC, if DFC's Board of Directors shall have
approved an Acquisition Transaction after determining, upon advice of counsel,
that such approval was necessary in the exercise of its fiduciary obligations
under applicable laws;
(g) by HUBCO if the conditions set forth in Sections
6.1 and 6.2 are not satisfied and are not capable of being satisfied by the
Cutoff Date;
(h) by DFC if the conditions set forth in Sections
6.1 and 6.3 are not satisfied and are not capable of being satisfied by the
Cutoff Date; or
(i) by DFC, if (either before or after its approval
by the shareholders of DFC) its Board of Directors so determines by a vote of a
majority of the members of its entire Board, at any time during the three (3)
business day period commencing with the Determination Date, if the Median
Pre-Closing Price of HUBCO Common Stock Average Price on the Determination Date
is less than $31.43. Notwithstanding the foregoing, if DFC elects to exercise
its termination right pursuant to this subsection (i), it shall give prompt
written notice to HUBCO (provided that such notice of election to terminate may
be withdrawn at any time within the aforementioned three (3) business day
period)). During the three (3) business day period commencing with its receipt
of such notice, HUBCO shall have the option of increasing the consideration to
be received by the holders of DFC Common Stock hereunder by increasing the
Exchange Ratio to equal a number (rounded to four decimals) equal to a quotient,
the numerator of which is $33.00 and the denominator of which is the Median
Pre-Closing Price of HUBCO Common Stock. If HUBCO makes an election contemplated
by the preceding sentence, within such three (3) business day period, it shall
give prompt written notice to DFC of such election and the revised Exchange
Ratio, whereupon no termination shall have occurred pursuant to this subsection
(i) and this Agreement shall remain in effect in accordance with its terms
(except as the Exchange Ratio shall have been so modified), and any references
in this Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this subsection.
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either HUBCO or DFC pursuant to Section
7.1, this Agreement (other than Section 5.5(b), the penultimate sentence of
Section 5.6(h), this Section 7.2 and Section 8.1) shall forthwith become void
and have no effect, without any liability on the part of any party or its
officers, directors or shareholders. Nothing contained herein, however, shall
relieve any party from any liability for any breach of this Agreement.
7.3. Amendment. This Agreement may be amended by action taken
by the parties hereto at any time before or after adoption of this Agreement by
the shareholders of DFC but, after any such adoption, no amendment shall be made
which reduces the amount or changes the form of the consideration to be
delivered to the shareholders of DFC without the approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties hereto.
7.4. Extension; Waiver. The parties may, at any time prior to
the Effective Time of the Merger, (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party against which the waiver is
sought to be enforced.
ARTICLE VIII - MISCELLANEOUS
8.1. Expenses.
(a) Except as otherwise expressly stated herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including legal, accounting and investment
banking fees and expenses) shall be borne by the party incurring such costs and
expenses. Notwithstanding the foregoing, DFC may bear the expenses of the Dime.
(b) Notwithstanding any provision in this Agreement
to the contrary, in the event that either of the parties shall willfully default
in its obligations hereunder, the non-defaulting party may pursue any remedy
available at law or in equity to enforce its rights and shall be paid by the
willfully defaulting party for all damages, costs and expenses, including
without limitation legal, accounting, investment banking and printing expenses,
incurred or suffered by the non-defaulting party in connection herewith or in
the enforcement of its rights hereunder.
8.2. Survival. The respective representations, warranties,
covenants and agreements of the parties to this Agreement shall not survive the
Effective Time, but shall terminate as of the Effective Time, except for Article
II, this Section 8.2 and Sections 5.5(b), 5.8(a) and 5.14.
8.3. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by reputable overnight courier or sent by registered or certified
mail, postage prepaid, as follows:
(a) If to HUBCO, to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: Kenneth T. Neilson, Chairman,
President and Chief Executive Officer
Copy to:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: D. Lynn Van Borkulo-Nuzzo, Esq.
And copy to:
Pitney, Hardin, Kipp & Szuch
(mail to) P.O. Box 1945
Morristown, NJ 07962
(deliver to) 200 Campus Drive
Florham Park, NJ 07932
Attn.: Ronald H. Janis, Esq.
(b) If to DFC, to:
Dime Financial Corp.
95 Barnes Road
Wallingford, CT 0642
Attention: Richard H. Dionne, President and
Chief Executive Officer
Copy to:
Day. Berry & Howard
CityPlace I
Hartford, CT 06103
Attention Paul F. McAlenney, Esq.
or such other addresses as shall be furnished in writing by any party, and any
such notice or communications shall be deemed to have been given as of the date
actually received.
8.4. Parties in Interest; Assignability. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement except the Indemnitees described
in Section 5.14. This Agreement and the rights and obligations of the parties
hereunder may not be assigned.
8.5. Entire Agreement. This Agreement, which includes the
Disclosure Schedules hereto and the other documents, agreements and instruments
executed and delivered pursuant to or in connection with this Agreement,
contains the entire Agreement between the parties hereto with respect to the
transactions contemplated by this Agreement and supersedes all prior
negotiations, arrangements or understandings, written or oral, with respect
thereto, other than any confidentiality agreements entered into by the parties
hereto.
8.6. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
8.7. Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey, without giving effect to the principles of
conflicts of laws thereof.
8.8. Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
<PAGE>
IN WITNESS WHEREOF, HUBCO, the Bank, DFC and the Dime have
caused this Agreement to be executed by their duly authorized officers as of the
day and year first above written.
ATTEST: HUBCO, INC.
By: D. LYNN VAN BORKULO-NUZZO KENNETH T. NEILSON
________________________ By: ___________________________
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson, Chairman,
Secretary President and Chief Executive Officer
DIME FINANCIAL CORPORATION
RICHARD H. DIONNE
By: ____________________________
Richard H. Dionne, President and
Chief Executive Officer
ATTEST: LAFAYETTE AMERICAN BANK
D. LYNN VAN BORKULO-NUZZO KENNETH T. NEILSON
By: ______________________ By: _____________________________
D. Lynn Van Borkulo-Nuzzo, Kenneth T. Neilson
Secretary
THE DIME SAVINGS BANK
OF WALLINGFORD
RICHARD H. DIONNE
By: ______________________________
Richard H. Dionne, President and
Chief Executive Officer
<PAGE>
AGREEMENT OF DFC AND DIME DIRECTORS
Reference is made to the Agreement and Plan of Merger, dated
March 31, 1998 (the "Merger Agreement"), among HUBCO, Inc. ("HUBCO"), a New
Jersey corporation and registered bank holding company, Lafayette American Bank
(the "Bank"), a New Jersey state-chartered commercial banking corporation and
wholly-owned subsidiary of HUBCO, Dime Financial Corporation, a Connecticut
corporation and registered bank holding company ("DFC"), and The Dime Savings
Bank of Wallingford, a Connecticut state-chartered savings bank and wholly-owned
subsidiary of DFC (the "Dime"). Capitalized terms used herein and not otherwise
defined have the meanings given to them in the Merger Agreement.
Each of the following persons, being all of the directors of
DFC and the Dime, solely in such person's capacity as a holder of DFC Common
Stock, agrees to vote or cause to be voted all shares of DFC Common Stock which
are held by such person, or over which such person exercises full voting control
(except as trustee or in a fiduciary capacity, or as nominee), in favor of the
Merger.
It is understood and agreed that this Agreement of DFC and
Dime Directors (this "Agreement") relates solely to the capacity of the
undersigned as shareholders or other beneficial owners of shares of DFC Common
Stock and is not in any way intended to affect the exercise by the undersigned
of the undersigned's responsibilities as directors of DFC or the Dime. It is
further understood and agreed that this Agreement is not in any way intended to
affect the exercise by the undersigned of any fiduciary responsibility which the
undersigned may have in respect of any shares of DFC Common Stock held by the
undersigned as of the date hereof.
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
Dated: As of March 31, 1998
<PAGE>
EXHIBIT 5.19-1
FORM OF AFFILIATE LETTER FOR DFC AFFILIATES
March __, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed acquisition (the "Merger") of Dime Financial Corp. (the "DFC"), by
HUBCO, Inc., a New Jersey corporation and registered bank holding company
("HUBCO"), pursuant to the Agreement and Plan of Merger dated March 31, 1998
(the "Agreement") between DFC, its bank subsidiary, HUBCO and its bank
subsidiary. Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Agreement. I currently own shares of DFC Common
Stock. As a result of the Merger, I will receive shares of HUBCO Common Stock in
exchange for my DFC Common Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of DFC, as the term "affiliate" is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations
promulgated under the Securities Act of 1933, as amended (the "1933 Act") by the
Securities and Exchange Commission ("SEC") and as the term "affiliate" is used
for purposes of the SEC's rules and regulations applicable to the determination
of whether a merger can be accounted for as a "pooling of interests" as
specified in the SEC's Accounting Series Release 135, as amended by Staff
Accounting Bulletins Nos. 65 and 76 ("ASR 135").
I represent to and agree with HUBCO that:
A. Transfer Review Restrictions. During the period beginning
on the date hereof and ending 30 days prior to the consummation of the Merger, I
shall not sell, transfer, reduce my risk with respect to or otherwise dispose of
("transfer") any DFC Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control, to
transfer any DFC Common Stock owned by such person or entity, without notifying
HUBCO in advance of the proposed transfer and giving HUBCO a reasonable
opportunity to review the transfer before it is consummated. HUBCO, if advised
to do so by its independent public accountants in writing a copy of which is
provided to me, may instruct me not to make or permit the transfer because it
may interfere with the "pooling of interests" treatment of the Merger. I shall
abide by any such instructions.
B. Transfer Restrictions During Merger Consummation Period. I
shall not transfer any DFC Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control, to
transfer any DFC Common Stock owned by such person or entity during the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUBCO by means of the filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, as amended, the issuance of
a quarterly earnings report, or any other public issuance which satisfies the
requirements of ASR 135. For purposes of this paragraph only, "DFC Common Stock"
includes HUBCO Common Stock as converted.
C. Compliance with Rule 145. I have been advised that the
issuance of HUBCO Common Stock to me pursuant to the Merger will be registered
with the SEC under the 1933 Act on a Registration Statement on Form S-4.
However, I have also been advised that, since I may be deemed to be an affiliate
of DFC at the time the Merger is submitted for a vote of DFC's shareholders, any
transfer by me of HUBCO Common Stock is restricted under Rule 145 promulgated by
the SEC under the 1933 Act. I agree not to transfer any HUBCO Common Stock
received by me or any of my affiliates unless (i) such transfer is made in
conformity with the volume and other limitations of Rule 145 promulgated by the
SEC under the 1933 Act, (ii) in the opinion of HUBCO's counsel or counsel
reasonably acceptable to HUBCO, such transfer is otherwise exempt from
registration under the 1933 Act or (iii) such transfer is registered under the
1933 Act.
D. Stop Transfer Instructions; Legend on Certificates. I also
understand and agree that stop transfer instructions will be given to HUBCO's
transfer agents with respect to the HUBCO Common Stock received by me and any of
my affiliates and that there will be placed on the certificates of the HUBCO
Common Stock issued to me and any of my affiliates, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED MARCH
31, 1998 BETWEEN THE REGISTERED HOLDER HEREOF AND HUBCO, INC., A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF HUBCO, INC."
E. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for DFC.
Execution of this letter is not an admission on my part that I
am an "affiliate" of DFC as described in the second paragraph of this letter, or
a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-----------------------------
Name:
Accepted this _____
day of _______, 199__ by
HUBCO, INC.
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 5.19-2
FORM OF AFFILIATE LETTER FOR HUBCO AFFILIATES
March __, 1998
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of Dime Financial Corp. ("DFC") with and into
HUBCO, Inc., a New Jersey corporation and registered bank holding company
("HUBCO"), pursuant to the Agreement and Plan of Merger dated March 30, 1998
(the "Agreement") between DFC, its bank subsidiary, HUBCO and its bank
subsidiary. I currently own shares of HUBCO's common stock, no par value ("HUBCO
Common Stock").
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of HUBCO, as the term "affiliate" is used for
purposes of the rules and regulations of the Securities and Exchange Commission
(the "SEC") applicable to the determination of whether a merger can be accounted
for as a "pooling of interests" as specified in the SEC's Accounting Series
Release 135, as amended by Staff Accounting Bulletins Nos.
65 and 76 ("ASR 135").
I represent and covenant with HUBCO and DFC that:
A. Transfer Restrictions Prior to Merger Consummation. During
the period beginning on the date hereof and ending 30 days prior to the
consummation of the Merger, I shall not sell, transfer, reduce my risk with
respect to or otherwise dispose of ("transfer") any HUBCO Common Stock owned by
me, and I shall not permit any relative who shares my home, or any person or
entity who or which I control, from transferring any HUBCO Common Stock owned by
such person or entity, without notifying HUBCO in advance of the proposed
transfer and giving HUBCO a reasonable opportunity to object to the transfer
before it is consummated. HUBCO, upon advice of its independent public
accountants, may instruct me not to make or permit the transfer because it may
interfere with the "pooling of interests" treatment of the Merger. I shall abide
by any such instructions.
B. Post-Consummation Transfer Restrictions. During the period
beginning 30 days prior to the consummation of the Merger and ending immediately
after financial results covering at least 30 days of post-Merger combined
operations have been published by HUBCO by means of filing of a Form 10-Q or
Form 8-K under the Securities Exchange Act of 1934, the issuance of a quarterly
earnings report, or any other public issuance which satisfies the requirements
of ASR 135, I shall not transfer any HUBCO Common Stock owned by me, and I shall
not permit any relative who shares my home, or any person or entity who or which
I control, to transfer any HUBCO Common Stock owned by such person or entity.
C. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer HUBCO Common Stock to
the extent I felt necessary with my counsel or counsel for HUBCO.
Execution of this letter is not an admission on my part that I
am an "affiliate" of HUBCO as described in the second paragraph of this letter,
or a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-------------------------------------
Name:
Title:
Accepted this ____ day of
________________, 199_ by
HUBCO, INC.
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT 6.2(b)
FORM OF OPINION OF COUNSEL TO DFC
TO BE DELIVERED TO HUBCO ON THE EFFECTIVE TIME
(a) DFC and Dime have full corporate power to carry out the
transactions contemplated in the Agreement. The execution and delivery of the
Agreement and the consummation of the transactions contemplated thereunder have
been duly and validly authorized by all necessary corporate action on the part
of DFC and Dime, and the Agreement constitutes the valid and legally binding
obligations of DFC and Dime enforceable in accordance with its terms, except as
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship, and other laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally or the
rights of creditors of Connecticut state-chartered capital stock savings banks
or their holding companies, (ii) general equitable principles, and (iii) laws
relating to the safety and soundness of insured depository institutions, and
except that no opinion need be rendered as to the effect or availability of
equitable remedies or injunctive relief (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Subject to
satisfaction of the conditions set forth in the Agreement, neither the
transactions contemplated in the Agreement, nor compliance by DFC and Dime with
any of the provisions thereof, will (i) conflict with or result in a breach or
default under the certificate of incorporation or bylaws of DFC or the charter
or bylaws of Dime, or (ii) based exclusively on certificates of officers and
without independent verification, to the knowledge of such counsel, (A) conflict
with or result in a breach or default under any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which DFC or Dime is a
party; or (B) result in the creation or imposition of any material lien,
instrument or encumbrance upon the property of DFC or Dime, except such material
lien, instrument or obligation that has been disclosed to HUBCO pursuant to the
Agreement, or (iii) violate in any material respect any order, writ, injunction,
or decree known to such counsel, or any statute, rule or regulation applicable
to DFC or Dime.
(b) DFC is a corporation validly existing and in good standing
under the laws of the State of Connecticut, Dime is a validly existing capital
stock savings bank under the laws of the State of Connecticut and each of DFC
and Dime has the corporate power and authority to own or lease all of its
properties and assets and to conduct the business in which it is currently
engaged as described on pages __ and __ under the caption
"_____________________" in the Proxy Statement-Prospectus.
(c) There is, to the knowledge of such counsel, no legal,
administrative, arbitration or governmental proceeding or investigation pending
or threatened to which DFC or Dime is a party which would, if determined
adversely to DFC or Dime, have a material adverse effect on the business,
properties, results of operations, or condition, financial or otherwise, of DFC
or Dime taken as a whole or which presents a claim to restrain or prohibit the
transactions contemplated by the Agreement.
(d) No consent, approval, authorization, or order of any
federal or state court or federal or state governmental agency or body, or to
such counsel's knowledge of any third party, is required for the consummation by
DFC or Dime of the transactions contemplated by the Agreement, except for such
consents, approvals, authorizations or orders as have been obtained or which
would not have a material adverse effect upon HUBCO upon consummation of the
Merger.
In addition to the foregoing opinions, counsel shall state that on the
sole basis of such counsel's participation in conferences with officers and
employees of DFC in connection with the preparation of the Prospectus-Proxy
Statement and without other independent investigation or inquiry, such counsel
has no reason to believe that the Prospectus-Proxy Statement, including any
amendments or supplements thereto (except for the financial information,
financial statements, notes to financial statements, financial schedules and
other financial or statistical data and stock valuation information contained or
incorporated by reference therein and except for any information supplied by
HUBCO for inclusion therein, as to which counsel need express no belief), as of
the date of mailing thereof and as of the date of the meeting of shareholders of
DFC to approve the Merger, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make any statement therein, in
light of the circumstances under which it was made, not misleading. Counsel may
state in connection with the foregoing that such counsel has not independently
verified and does not assume any responsibility for the accuracy, completeness
or fairness of any information or statements contained in the Prospectus-Proxy
Statement, except with respect to identified statements of law or regulations or
legal conclusions relating to DFC or Dime or to their participation in the
transactions contemplated in the Agreement and that it is relying as to
materiality as to factual matters on certificates of officers and
representatives of the parties to the Agreement and other factual
representations by DFC and Dime.
Such counsel's opinion shall be limited to matters governed by
the laws of the State of Connecticut and federal laws and regulations of the
United States of America.
<PAGE>
EXHIBIT 6.3(b)
FORM OF OPINION OF COUNSEL TO HUBCO
TO BE DELIVERED TO DFC ON THE EFFECTIVE TIME
(a) HUBCO is a corporation validly existing and in good
standing under the laws of the State of New Jersey, the Lafayette is a validly
existing Connecticut state-chartered commercial banking corporation under the
laws of the State of Connecticut and each of HUBCO and Lafayette has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as described in the Proxy Statement-Prospectus on
pages __ and __ under the caption "_____________________________." HUBCO is
registered as a bank holding company under the BHCA.
(b) Each HUBCO Subsidiary listed as such in the HUBCO
Disclosure Schedule is validly existing and in good standing under the laws of
the jurisdiction of its incorporation.
(c) The authorized capital stock of HUBCO consists of
____________ shares of common stock, no par value per share ("HUBCO Common
Stock") and _____________ shares of Series B, no par value, Convertible
Preferred Stock (the "Authorized Preferred Stock). Except for
to our knowledge, there are no outstanding subscription rights, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever (either firm or conditional) obligating HUBCO to issue, deliver or
sell, cause to be issued, delivered or sold, or restricting HUBCO from selling
any additional HUBCO Common Stock or Authorized Preferred Stock or obligating
HUBCO to grant, extend or enter into any such agreement or commitment. The HUBCO
Common Stock to be issued in connection with the Merger in accordance with
Article II of the Agreement, or pursuant to the Continuing Stock Options, when
so issued in accordance therewith, will be duly authorized, validly issued,
fully paid and non-assessable, free of preemptive rights and free and clear of
all liens, encumbrances or restrictions created by HUBCO.
(d) The Agreement has been authorized, executed and delivered
by HUBCO and Lafayette and constitutes the valid and binding obligations of
HUBCO and Lafayette enforceable in accordance with its terms, except that the
enforceability of the obligations of HUBCO and Lafayette may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, or
laws affecting institutions the deposits of which are insured by the FDIC or
other laws heretofore or hereafter enacted relating to or affecting the
enforcement of creditors' rights generally and by principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). In addition, certain remedial and other provisions of the
Agreement may be limited by implied covenants of good faith, fair dealing, and
commercially reasonable conduct, by judicial discretion, in the instance of
equitable remedies, and by applicable public policies and laws.
(e) Subject to satisfaction of the conditions set forth in the
Agreement, the execution and delivery of the Agreement and the consummation of
the transactions contemplated thereby will not (i) conflict with or violate any
provision of or result in the breach of any provision of the Certificate of
Incorporation or By-Laws of HUBCO or the Charter and By-Laws of Lafayette; (ii)
based on certificates of officers of HUBCO and without independent verification,
conflict with or violate in any material respect, or result in a material breach
or violation of the terms or provisions of, or constitute a default under, or
result in (whether upon or after the giving of notice or lapse of time or both)
any material obligation under, any indenture, mortgage, deed of trust or loan
agreement or any other agreement, instrument, judgment, order, arbitration award
or decree of which we have knowledge (through our representation of HUBCO and
Lafayette in connection therewith or in the course of our representation of
HUBCO and Lafayette in connection with the Agreement) and to which HUBCO or
Lafayette is a party or by which HUBCO or Lafayette is bound; or (iii) cause
HUBCO or Lafayette to violate any corporation or banking law applicable to
HUBCO.
(f) All actions of the directors and shareholders of HUBCO and
Lafayette required by federal banking laws and regulations, New Jersey law and
Connecticut banking law or by the Certificate of Incorporation or By-Laws of
HUBCO and Lafayette, to be taken by HUBCO and Lafayette to authorize the
execution, delivery and performance of the Agreement and consummation of the
Merger have been taken.
(g) Assuming that there has been due authorization of the
Merger by all necessary corporate and governmental proceedings on the part of
DFC and Dime and that DFC and Dime have taken all action required to be taken by
it prior to the Effective Time, upon the appropriate filing of the Certificates
of Merger in respect of the Merger with the New Jersey Secretary of State and
the Connecticut Secretary of State in accordance with Section 1.6 of the
Agreement, the Merger will become effective at the Effective Time, as such term
is defined in Section 1.6, and upon effectiveness of the Merger each share of
DFC Common Stock will be converted as provided in Article II of the Agreement.
(h) No approvals, authorizations, consents or other actions or
filings under federal banking laws, New Jersey law or Connecticut banking law
("Approvals") are required to be obtained by HUBCO or Lafayette in order to
permit the execution and delivery of the Agreement by HUBCO or Lafayette and the
performance by HUBCO or Lafayette of the transactions contemplated thereby other
than those Approvals which have been obtained or those Approvals or consents
required to be obtained by DFC or Dime.
(i) The Registration Statement has been declared effective by
the Securities and Exchange Commission ("SEC") under the 1933 Act and we are not
aware that any stop order suspending the effectiveness has been issued under the
1933 Act or proceedings therefor initiated or threatened by the SEC.
We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Proxy Statement-Prospectus and make no representation that we have independently
verified the accuracy, completeness or fairness of such statements, but from our
examination of the Proxy Statement-Prospectus and our general familiarity with
HUBCO no facts have come to our attention that caused us to believe that (except
for financial statements and other tabular financial information, and other
financial and statistical data and information, as to which we do not express
any belief) the Proxy Statement-Prospectus on the date of the mailing thereof
and on the date of the meeting of stockholders of DFC at which the Agreement was
approved, contained any untrue statement of a material fact regarding HUBCO or
the Merger, or omitted to make a material fact regarding HUBCO or the Merger
therein, in light of the circumstances under which they were made, not
misleading.
We are members of the Bar of the State of New Jersey and we
express no opinion as to any of the laws of any jurisdiction other than the laws
of the State of New Jersey, Connecticut banking law and federal laws and
regulations of the United States of America.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of March
31, 1998, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and Dime Financial Corporation, a Connecticut
corporation and registered bank holding company ("DFC").
BACKGROUND
WHEREAS, HUBCO and DFC, as of the date hereof, are prepared to
execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which DFC will be merged with and into HUBCO (the "Merger"); and
WHEREAS, HUBCO has advised DFC that it will not execute the
Merger Agreement unless DFC executes this Agreement; and
WHEREAS, the Board of Directors of DFC has determined that the
Merger Agreement provides substantial benefits to the shareholders of DFC; and
WHEREAS, as an inducement to HUBCO to enter into the Merger
Agreement and in consideration for such entry, DFC desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of DFC in an
amount and on the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, HUBCO and DFC,
intending to be legally bound hereby, agree:
1. Grant of Option. DFC hereby grants to HUBCO the option to
purchase 1,040,000 shares of common stock, $1.00 par value, of DFC (the "Common
Stock") at a price of $30.25 per share (the "Option Price"), on the terms and
conditions set forth herein (the "Option"); provided that in no event shall the
number of shares of Common Stock for which the Option is exercisable exceed
19.9% of DFC's issued and outstanding shares of Common Stock without giving
effect to any shares subject to or issued pursuant to the Option.
2. Exercise of Option. This Option shall not be exercisable
until the occurrence of a Triggering Event (as such term is hereinafter
defined). Upon or after the occurrence of a Triggering Event (as such term is
hereinafter defined), HUBCO may exercise the Option, in whole or in part, at any
time or from time to time, subject to the terms and conditions set forth herein
and the termination provisions of Section 19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such term is
defined in Rule 13d-3 as promulgated under the Exchange Act) of at least 20% of
the then outstanding shares of Common Stock; or
b. enters into a letter of intent or an agreement,
whether oral or written, with DFC pursuant to which such person or any affiliate
of such person would (i) merge or consolidate, or enter into any similar
transaction, with DFC, (ii) acquire all or a significant portion of the assets
or liabilities of DFC, or (iii) acquire beneficial ownership of securities
representing, or the right to acquire beneficial ownership or to vote securities
representing, 20% or more of the then outstanding shares of Common Stock; or
c. makes a filing with any bank or thrift regulatory
authorities or publicly announces a bona fide proposal (a "Proposal") for (i)
any merger with, consolidation with or acquisition of all or a significant
portion of all the assets or liabilities of, DFC or any other business
combination involving DFC, or (ii) a transaction involving the transfer of
beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 20% or more of the
outstanding shares of Common Stock, and thereafter, if such Proposal has not
been Publicly Withdrawn (as such term is hereinafter defined) at least 15 days
prior to the meeting of stockholders of DFC called to vote on the Merger and
DFC's stockholders fail to approve the Merger by the vote required by applicable
law at the meeting of stockholders called for such purpose; or
d. makes a bona fide Proposal and thereafter, but
before such Proposal has been Publicly Withdrawn, DFC willfully takes any action
in any manner which would materially interfere with its ability to consummate
the Merger or materially reduce the value of the transaction to HUBCO.
The term "Triggering Event" also means the taking of any
material direct or indirect action by DFC or any of its directors, officers or
agents with the intention of inviting, encouraging or soliciting any proposal
which has as its purpose a tender offer for the shares of Common Stock, a
merger, consolidation, plan of exchange, plan of acquisition or reorganization
of DFC, or a sale of a significant number of shares of Common Stock or any
significant portion of its assets or liabilities.
The term "significant portion" means 25% of the assets or
liabilities of DFC. The term "significant number" means 20% of the outstanding
shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the Proposal coupled
with a public announcement of no further interest in pursuing such Proposal or
in acquiring any controlling influence over DFC or in soliciting or inducing any
other person (other than HUBCO or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be exercised
at any time (i) in the absence of any required governmental or regulatory
approval or consent necessary for DFC to issue the shares of Common Stock
covered by the Option (the "Option Shares") or HUBCO to exercise the Option or
prior to the expiration or termination of any waiting period required by law, or
(ii) so long as any injunction or other order, decree or ruling issued by any
federal or state court of competent jurisdiction is in effect which prohibits
the sale or delivery of the Option Shares.
DFC shall notify HUBCO promptly in writing of the occurrence
of any Triggering Event known to it, it being understood that the giving of such
notice by DFC shall not be a condition to the right of HUBCO to exercise the
Option. DFC will not take any action which would have the effect of preventing
or disabling DFC from delivering the Option Shares to HUBCO upon exercise of the
Option or otherwise performing its obligations under this Agreement, except to
the extent required by applicable securities and banking laws and regulations.
In the event HUBCO wishes to exercise the Option, HUBCO shall
send a written notice to DFC (the date of which is hereinafter referred to as
the "Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date between two and ten business days inclusive from
the Notice Date for the closing of such a purchase (a "Closing"); provided,
however, that a Closing shall not occur prior to two days after the later of
receipt of any necessary regulatory approvals and the expiration of any legally
required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any Closing
hereunder (a) HUBCO will make payment to DFC of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by DFC; (b) DFC will deliver to HUBCO a stock certificate or
certificates representing the number of Option Shares so purchased, free and
clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever created by or through DFC, registered in the name of HUBCO or its
designee, in such denominations as were specified by HUBCO in its notice of
exercise and, if necessary, bearing a legend as set forth below; and (c) HUBCO
shall pay any transfer or other taxes required by reason of the issuance of the
Option Shares so purchased.
If required under applicable federal securities laws, a legend
will be placed on each stock certificate evidencing Option Shares issued
pursuant to this Agreement, which legend will read substantially as follows:
The shares of stock evidenced by this certificate have not been
registered for sale under the Securities Act of 1933 (the "1933 Act").
These shares may not be sold, transferred or otherwise disposed of
unless a registration statement with respect to the sale of such shares
has been filed under the 1933 Act and declared effective or, in the
opinion of counsel reasonably acceptable to Dime Financial Corporation,
said transfer would be exempt from registration under the provisions of
the 1933 Act and the regulations promulgated thereunder.
No such legend shall be required if a registration statement is filed and
declared effective under Section 4 hereof.
4. Registration Rights. Upon or after the occurrence of a
Triggering Event and upon receipt of a written request from HUBCO, DFC shall, if
necessary for the resale of the Option or the Option Shares by HUBCO, prepare
and file a registration statement with the Securities and Exchange Commission
and any state securities bureau covering the Option and such number of Option
Shares as HUBCO shall specify in its request, and DFC shall use its best efforts
to cause such registration statement to be declared effective in order to permit
the sale or other disposition of the Option and the Option Shares, provided that
HUBCO shall in no event have the right to have more than one such registration
statement become effective, and provided further that DFC shall not be required
to prepare and file any such registration statement in connection with any
proposed sale with respect to which counsel to DFC delivers to DFC and to HUBCO
(which is reasonably acceptable to HUBCO) its opinion to the effect that no such
filing is required under applicable laws and regulations with respect to such
sale or disposition; provided further, however, that DFC may delay any
registration of Option Shares above for a period not exceeding 90 days in the
event that DFC shall in good faith determine that any such registration would
adversely effect an offering of securities by DFC for cash. HUBCO shall provide
all information reasonable requested by DFC for inclusion in any registration
statement to be filed hereunder.
In connection with such filing, DFC shall use its best efforts
to cause to be delivered to HUBCO such certificates, opinions, accountant's
letters and other documents as HUBCO shall reasonably request and as are
customarily provided in connection with registrations of securities under the
Securities Act of 1933, as amended. All expenses incurred by DFC in complying
with the provisions of this Section 4, including without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for DFC and blue sky fees and expenses shall be paid by DFC.
Underwriting discounts and commissions to brokers and dealers relating to the
Option Shares, fees and disbursements of counsel to HUBCO and any other expenses
incurred by HUBCO in connection with such registration shall be borne by HUBCO.
In connection with such filing, DFC shall indemnify and hold harmless HUBCO
against any losses, claims, damages or liabilities, joint or several, to which
HUBCO may become subject, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
preliminary or final registration statement or any amendment or supplement
thereto, or arise out of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and DFC will reimburse
HUBCO for any legal or other expense reasonably incurred by HUBCO in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that DFC will not be liable in any case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such preliminary or final registration statement or such amendment or
supplement thereto in reliance upon and in conformity with written information
furnished by or on behalf of HUBCO specifically for use in the preparation
thereof. HUBCO will indemnify and hold harmless DFC to the same extent as set
forth in the immediately preceding sentence but only with reference to written
information specifically furnished by or on behalf of HUBCO for use in the
preparation of such preliminary or final registration statement or such
amendment or supplement thereto; and HUBCO will reimburse DFC for any legal or
other expense reasonably incurred by DFC in connection with investigating or
defending any such loss, claim, damage, liability or action. Notwithstanding
anything to the contrary herein, no indemnifying party shall be liable for any
settlement effected without its prior written consent.
5. Adjustment Upon Changes in Capitalization. In the event of
any change in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, conversions, exchanges of shares or the like,
then the number and kind of Option Shares and the Option Price shall be
appropriately adjusted.
In the event any capital reorganization or reclassification of
the Common Stock, or any consolidation, merger or similar transaction of DFC
with another entity, or any sale of all or substantially all of the assets of
DFC, shall be effected in such a way that the holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions (in form
reasonably satisfactory to the holder hereof) shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified herein and in lieu of the Common
Stock immediately theretofore purchasable and receivable upon exercise of the
rights represented by this Option, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore purchasable and receivable upon exercise
of the rights represented by this Option had such reorganization,
reclassification, consolidation, merger or sale not taken place; provided,
however, that if such transaction results in the holders of Common Stock
receiving only cash, the holder hereof shall be paid the difference between the
Option Price and such cash consideration without the need to exercise the
Option.
6. Filings and Consents. Each of HUBCO and DFC will use its
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event HUBCO is the holder
hereof, approval of the Securities and Exchange Commission, the Board of
Governors of the Federal Reserve System, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation or the New York Department of Banking, and
DFC agrees to cooperate with and furnish to the holder hereof such information
and documents as may be reasonably required to secure such approvals.
7. Representations and Warranties of DFC. DFC hereby
represents and warrants to HUBCO as follows:
a. Due Authorization. DFC has full corporate power
and authority to execute, deliver and perform this Agreement and all corporate
action necessary for execution, delivery and performance of this Agreement has
been duly taken by DFC.
b. Authorized Shares. DFC has taken and, as long as
the Option is outstanding, will take all necessary corporate action to authorize
and reserve for issuance all shares of Common Stock that may be issued pursuant
to any exercise of the Option.
c. No Conflicts. Neither the execution and delivery
of this Agreement nor consummation of the transactions contemplated hereby
(assuming all appropriate regulatory approvals) will violate or result in any
violation or default of or be in conflict with or constitute a default under any
term of the Certificate of Incorporation or Bylaws of DFC or any agreement,
instrument, judgment, decree or order applicable to DFC.
8. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement and that
the obligations of the parties hereto shall be specifically enforceable.
Notwithstanding the foregoing, HUBCO shall have the right to seek money damages
against DFC for a breach of this Agreement.
9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof.
10. Assignment or Transfer. HUBCO may not sell, assign or
otherwise transfer its rights and obligations hereunder, in whole or in part, to
any person or group of persons other than to an affiliate of HUBCO. HUBCO
represents that it is acquiring the Option for HUBCO's own account and not with
a view to or for sale in connection with any distribution of the Option or the
Option Shares. HUBCO is aware that neither the Option nor the Option Shares is
the subject of a registration statement filed with, and declared effective by,
the Securities and Exchange Commission pursuant to Section 5 of the Securities
Act, but instead each is being offered in reliance upon the exemption from the
registration requirement provided by Section 4(2) thereof and the
representations and warranties made by HUBCO in connection therewith.
11. Amendment of Agreement. Upon mutual consent of the parties
hereto, this Agreement may be amended in writing at any time, for the purpose of
facilitating performance hereunder or to comply with any applicable regulation
of any governmental authority or any applicable order of any court or for any
other purpose.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
13. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally, by express service,
cable, telegram or telex, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
If to HUBCO:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attention: Mr. Kenneth T. Neilson
President and Chief Executive Officer
With a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
Attention: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
If to DFC:
Dime Financial Corporation
95 Barnes Road
Wallingford, CT 06492
Attention: Richard H. Dionne
President and Chief Executive Officer
With a copy to:
Day, Berry & Howard
CityPlace I
Hartford, CT 06103
Attention: Paul F. McAlenney, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are inserted for
convenience and reference purposes, and shall not limit or otherwise affect any
of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may, by mutual
consent, extend the time for performance of any of the obligations or acts of
either party hereto. Each party may waive (a) compliance with any of the
covenants of the other party contained in this Agreement and/or (b) the other
party's performance of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
19. Termination. This Agreement shall terminate upon either
the termination of the Merger Agreement as provided therein or the consummation
of the transactions contemplated by the Merger Agreement; provided, however,
that if termination of the Merger Agreement occurs after the occurrence of a
Triggering Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 18 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event.
20. Effectiveness and Termination Fee. Solely for the purposes
of the Connecticut Banking Laws, Section 36a-184, this Agreement shall not be
considered effective until and unless it is submitted to and approved by the
Commissioner of the Connecticut Department of Banking (the "Commissioner"). DFC
shall pay HUBCO a termination fee of $5,000,000 (the "Termination Fee"),
forthwith on demand, in lieu of all its other rights hereunder, if each of the
following conditions are met: (a) the Option never becomes effective due to a
failure by the Commissioner to make a determination that the Option may be
exercised, after a request for approval by HUBCO to do so is submitted by HUBCO
to the Commissioner, and either the Commissioner makes a determination that the
Option may not be exercised or a period of five months elapses from the date the
request is submitted by HUBCO; (b) a Triggering Event has occurred, which would
allow HUBCO to exercise the Option; and (c) DFC is merged or acquired by another
financial institution within 18 months following the Triggering Event. In the
event that HUBCO is due the Termination Fee hereunder and DFC fails to pay such
Fee on demand by HUBCO, DFC shall in addition reimburse HUBCO for the legal fees
and expenses incurred by HUBCO in seeking to enforce and in collecting the
Termination Fee.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Stock Option
Agreement to be executed by its duly authorized officer, all as of the day and
year first above written.
DIME FINANCIAL CORPORATION
By: /s/ Richard H. Donne
----------------------------------------------
Richard H. Dionne
President and Chief Executive Officer
HUBCO, INC.
By: /s/ Kenneth T. Neilson
---------------------------------------------
Kenneth T. Neilson,
President & Chief Executive Officer
