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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
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) - June 29, 1999
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HUDSON UNITED BANCORP
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(Exact Name of Registrant as Specified in Charter)
NEW JERSEY
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(State or Other Jurisdiction of Incorporation)
1-10699 22-2405746
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(Commission File Number) (IRS Employer Identification No.)
1000 MacArthur Boulevard, Mahwah, New Jersey 07430
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(Address of Principal Executive Offices)
(201) 236-2600
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(Registrant's Telephone Number)
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Item 5. Other Events
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Hudson United Bancorp ("HUB") announced on June 29, 1999 the signing of
a definitive agreement to acquire JeffBanks, Inc. ("JEFF") under which HUB will
acquire JEFF in a stock for stock exchange which is intended to be a tax-free
exchange. A copy of the Press Release is attached as Exhibit 99.3 to this
amendment to Form 8-K.
Under the terms of the JEFF Merger Agreement, each share of JEFF common
stock will be exchanged for .95 shares of HUB common stock. A copy of the Merger
Agreement is attached as Exhibit 99.1 to this amendment to Form 8-K.
HUB also announced on June 29, 1999 the signing of a definitive
agreement to acquire Southern Jersey Bancorp of Delaware Inc. ("SJB") under
which HUB will acquire SJB in a stock for stock exchange which is intended to be
a tax-free exchange. A copy of the Press Release is attached as Exhibit 99.6 to
this amendment to Form 8-K.
Under the terms of the SJB Merger Agreement, each share of SJB common
stock will be exchanged for 1.26 shares of HUB common stock. A copy of the
Merger Agreement is attached as Exhibit 99.4 to this amendment to Form 8-K.
On June 29, 1999, HUB held a conference call with banking industry
analysts and others to discuss the acquisitions. The relevant slides from the
presentation are attached as Exhibit 99.7 to this amendment to Form 8-K.
This Form 8-K contains forward-looking statement within the meaning of
the Private Securities Litigation Reform Act of 1995. The presentation contains
estimates of future operating results for 1999 and beyond for Hudson United
Bancorp, Inc., JeffBanks, Inc. and Southern Jersey Bancorp of Delaware, Inc. on
a stand-alone and pro-forma combined basis and estimates of financial condition,
merger-related expenses and cost savings on a combined basis. These statements
are not historical facts and include expressions about management's confidence
and strategies and management's expectations about new and existing programs,
products, relationships, opportunities, technology and market conditions. Such
forward-looking statements involve certain risks and uncertainties. Actual
results may differ materially from the results discussed in these
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, movements in interest rates, the possibility of
disruption in credit markets, successful implementation and integration of
Hudson United Bancorp's acquisitions, successful implementation of Year 2000
technology changes, and the impact of legal and regulatory barriers and
structures. Hudson United Bancorp assumes no obligation for updating such
forward-looking statements at any time.
Item 7. Exhibits
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99.1 Agreement and Plan of Merger dated June 28, 1999 among Hudson
United Bancorp, ("HUB"), Hudson United Bank, JeffBanks, Inc.,
("JBI") Jefferson Bank and Jefferson Bank of New Jersey.
99.2 Stock Option Agreement dated June 28, 1999 between HUB and JBI.
99.3 Press Release dated June 29, 1999 regarding acquisition of
JeffBanks, Inc.
99.4 Agreement and Plan of Merger dated June 28, 1998 among Hudson
United Bancorp, ("HUB"), Hudson United Bank, Southern Jersey
Bancorp of Delaware, Inc. ("SJBDI") and Farmers and Merchants
National Bank ("FAMNB").
99.5 Stock Option Agreement dated June 28, 1999 between HUB and SJBDI.
99.6 Press Release dated June 29, 1999 regarding acquisition of
Southern Jersey Bancorp
99.7 Slides for Analyst Presentation of June 29, 1999.
<PAGE>
SIGNATURES
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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.
HUDSON UNITED BANCORP
Dated: June 30, 1999 By: D. LYNN VAN BORKULO-NUZZO
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D. Lynn Van Borkulo-Nuzzo,
Executive Vice President
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INDEX TO EXHIBIT
Exhibit No. Description
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99.1 Agreement and Plan of Merger dated June 28, 1999 among Hudson
United Bancorp, ("HUB"), Hudson United Bank, JeffBanks, Inc.,
("JBI") Jefferson Bank and Jefferson Bank of New Jersey.
99.2 Stock Option Agreement dated June 28, 1999 between HUB and JBI.
99.3 Press Release dated June 29, 1999 regarding acquisition of
JeffBanks, Inc.
99.4 Agreement and Plan of Merger dated June 28, 1998 among Hudson
United Bancorp, ("HUB"), Hudson United Bank, Southern Jersey
Bancorp of Delaware, Inc. ("SJBDI") and Farmers and Merchants
National Bank ("FAMNB").
99.5 Stock Option Agreement dated June 28, 1999 between HUB and SJBDI.
99.6 Press Release dated June 29, 1999 regarding acquisition of
Southern Jersey Bancorp
99.7 Slides for Analyst Presentation of June 29, 1999.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 28, 1999
(this "Agreement"), is among Hudson United Bancorp. ("HUB"), 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 HUB, JeffBanks, Inc. a Pennsylvania corporation and
registered bank holding company ("JBI"), Jefferson Bank, a Pennsylvania bank and
wholly-owned subsidiary of JBI ("JBPA") and Jefferson Bank of New Jersey, a New
Jersey bank and wholly-owned subsidiary of JBI ("JBNJ") (JBPA and JBNJ
collectively, the "Jefferson Banks").
RECITALS
The respective Boards of Directors of HUB and JBI have each
determined that it is in the best interests of HUB and JBI and their respective
shareholders for HUB to acquire JBI by merging JBI with and into HUB with HUB
surviving and JBI shareholders receiving the consideration hereinafter set
forth. Immediately after the merger of JBI into HUB, each of the Jefferson Banks
shall be merged with and into the Bank with the Bank surviving.
The respective Boards of Directors of JBI, HUB, the Bank and
the Jefferson Banks have each duly adopted and approved this Agreement and the
Board of Directors of JBI has directed that it be submitted to both HUB's and
JBI's shareholders for approval.
As a condition for HUB to enter into this Agreement, HUB has
required that it receive an option on certain authorized but unissued shares of
JBI Common Stock (as hereinafter defined) and, simultaneously with the execution
of this Agreement, JBI is issuing an option to HUB (the "HUB Stock Option") to
purchase certain shares of the authorized and unissued JBI Common Stock subject
to the terms and conditions set forth in the Agreement governing the HUB 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), JBI shall be merged
with and into HUB (the "Merger") in accordance with the New Jersey Business
Corporation Act and the Pennsylvania Business Corporation Law and HUB 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 HUB and JBI and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of HUB and JBI 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 HUB and JBI 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 HUB and JBI 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 HUB or JBI 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 HUB or JBI if the Merger had not occurred.
1.3. Certificate of Incorporation. As of the Effective Time,
the certificate of incorporation of HUB 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 HUB 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 HUB 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 HUB on at least five business days
notice (the "Closing Notice") given by HUB to JBI, 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). The Closing Notice shall specify the scheduled Closing Date, and
shall specify the "Determination Date," which shall be the fifth business day
prior to the scheduled Closing Date. Simultaneous with or immediately following
the Closing, HUB and JBI shall cause to be filed certificates of merger, in form
and substance satisfactory to HUB and JBI, with the Department of the Treasury,
State of New Jersey (the "New Jersey Certificate of Merger") and the Secretary
of State of the Commonwealth of Pennsylvania (the "Pennsylvania Certificate of
Merger" together with the New Jersey Certificate of Merger, the "Certificates of
Merger"). The Certificate of Mergers shall each specify the "Effective Time" of
the Merger, which Effective Time shall be a date and time following the Closing
agreed to by HUB and JBI (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 later of the Certificates of Merger.
1.7 The Bank Mergers. Immediately following the Effective
Time, JBPA shall be then merged with and into the Bank in accordance with the
provisions of the New Jersey Banking Act of 1948, as amended (the "New Jersey
Banking Act") and the Pennsylvania Banking Code of 1965, as amended (the
"Pennsylvania Code") and JBNJ shall be merged with and into the Bank in
accordance with the New Jersey Banking Act (the "Bank Mergers"). In each of the
Bank Mergers, the Bank shall be the surviving bank (the "Surviving Bank"). Upon
the consummation of the Bank Mergers, the separate existence of each of the
Jefferson Banks shall cease and the Surviving Bank shall be considered the same
business and corporate entity as each of the Jefferson Banks and the Bank and
all of the property, rights, privileges, powers and franchises of each of the
Jefferson Banks 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 Jefferson Banks 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 Mergers, 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. Following the execution of this Agreement, JBPA and the Bank
shall execute and deliver a merger agreement and JBNJ and the Bank shall execute
and deliver a merger agreement (collectively, the "Bank Merger Agreements"),
both in form and substance reasonably satisfactory to the parties hereto, each
as substantially set forth in Exhibit 1.7 hereto, for delivery to the
Commissioner of the New Jersey Department of Banking and Insurance (the "New
Jersey Department"), the Pennsylvania Department of Banking (the "Pennsylvania
Department"), and the Federal Deposit Insurance Corporation (the "FDIC"), with
respect to the merger of JBPA into the Bank, and to the New Jersey Department
and the FDIC, with respect to the merger of JBNJ into the Bank, for approval of
the Bank Mergers.
ARTICLE II - CONVERSION OF JBI SHARES
2.1. Conversion of JBI Common Stock. Each share of common
stock, par value $1.00 per share, of JBI ("JBI 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 JBI 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 .95 shares
(the "Exchange Ratio") of Common Stock, no par value, of HUB ("HUB Common
Stock") subject to adjustment as provided in Section 2.1(c) and subject to the
payment of cash in lieu of fractional shares in accordance with Section 2.2(e).
(b) Cancellation of JBI Certificates. After the
Effective Time, all such shares of JBI 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 JBI Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of JBI Common Stock except as otherwise provided herein
or by law. Such certificates previously evidencing such shares of JBI Common
Stock (other than those canceled pursuant to Section 2.1(d)) shall be exchanged
for certificates evidencing shares of HUB Common Stock issued pursuant to this
Article II, upon the surrender of such certificates in accordance with this
Article II. No fractional shares of HUB 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 HUB 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 (a "Capital Change"), the Exchange Ratio 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 JBI Common Stock
held by JBI in its treasury or owned by HUB or by any of HUB'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, HUB shall
deposit, or shall cause to be deposited, with Hudson United Bank, Trust
Department or another bank or trust company designated by HUB and reasonably
acceptable to JBI (the "Exchange Agent"), for the benefit of the holders of
shares of JBI Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates evidencing shares of HUB Common Stock
and cash in such amount such that the Exchange Agent possesses such number of
shares of HUB Common Stock and such amount of cash as are required to provide
all of the consideration required to be exchanged by HUB pursuant to the
provisions of this Article II (such certificates for shares of HUB 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 HUB 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, HUB 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 JBI Common Stock
(the "Certificates"), (i) a letter of transmittal (the form and substance of
which is reasonably agreed to by HUB and JBI 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 HUB may
reasonably specify) and (ii) instructions for effecting the surrender of the
Certificates in exchange for certificates evidencing shares of HUB 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
HUB Common Stock which such holder has the right to receive in respect of the
shares of JBI Common Stock formerly evidenced by such Certificate in accordance
with Section 2.1 and (y) cash in lieu of fractional shares of HUB Common Stock
to which such holder may be entitled pursuant to Section 2.2(e) (the shares of
HUB 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 JBI Common Stock which is not registered in the transfer records of JBI, a
certificate evidencing the proper number of shares of HUB 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 JBI 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 HUB
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to HUB 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 HUB 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 HUB 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 HUB 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 HUB Common Stock.
(d) No Further Rights in JBI Common Stock. All shares of HUB
Common Stock issued and cash paid upon conversion of the shares of JBI 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 JBI Common
Stock.
(e) No Fractional Shares; Median Pre-Closing Price. No
certificates or scrip evidencing fractional shares of HUB 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 HUB. Cash shall be paid in lieu of fractional shares of HUB
Common Stock, based upon the Median Pre-Closing Price of the HUB Common Stock.
The "Median Pre-Closing Price" shall be determined by taking the price half-way
between the Closing Prices left after discarding the four lowest and four
highest Closing Prices in the 10 consecutive trading day period which ends on
(and includes) the Determination Date. The "Closing Price" shall mean the
closing price of HUB Common Stock as supplied by the New York Stock Exchange 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 New York Stock Exchange, or
such other national securities exchange on which HUB Common Stock may be traded
after the date hereof, is referred to herein as the "NYSE")
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of JBI Common Stock for two
years after the Effective Time shall be delivered to HUB, upon demand, and any
holders of JBI Common Stock who have not theretofore complied with this Article
II shall thereafter look only to HUB for the Merger Consideration, dividends and
distributions to which they are entitled.
(g) No Liability. Neither HUB, the Bank nor the Exchange Agent
shall be liable to any holder of shares of JBI Common Stock for any such shares
of HUB 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. HUB 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 JBI Common Stock, the minimum amounts (if any)
that HUB 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 HUB,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of JBI Common Stock in respect of which such
deduction and withholding was made by HUB.
2.3. Stock Transfer Books. At the Effective Time, the stock
transfer books of JBI shall be closed and there shall be no further registration
of transfers of shares of JBI Common Stock thereafter on the records of JBI. On
or after the Effective Time, any Certificates presented to the Exchange Agent or
HUB for transfer shall be converted into the Merger Consideration.
2.4. JBI Stock Options. Other than the HUB Stock Option, all
options which may be exercised for issuance of JBI Common Stock (each, a "Stock
Option" and collectively the "Stock Options") are described in the JBI
Disclosure Schedule and are issued and outstanding pursuant to the Key Employee
Stock Option Plan (the "JBI Stock Option Plan") and the agreements pursuant to
which such Stock Options were granted (each, an "Option Grant Agreement"). HUB
acknowledges and agrees to honor the provisions of the JBI Stock Option Plan and
the Option Grant Agreements, including those relating to vesting and conversion
in connection with a change in control of JBI. Each Stock Option outstanding at
the Effective Time (each, a "Continuing Stock Option") shall be converted into
an option to purchase HUB Common Stock, wherein (i) the right to purchase shares
of JBI Common Stock pursuant to the Continuing Stock Option shall be converted
into the right to purchase that same number of shares of HUB Common Stock
multiplied by the Exchange Ratio, (ii) the option exercise price per share of
HUB Common Stock shall be the previous option exercise price per share of the
JBI 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 HUB or
a subsidiary of HUB 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 HUB Common Stock issuable upon
exercise of Continuing Stock Options shall be covered by an effective
registration statement on Form S-8, and HUB 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 JBI
References herein to "JBI 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 JBI to HUB. JBI
hereby represents and warrants to HUB as follows:
3.1. Corporate Organization.
(a) JBI is a corporation duly organized and validly existing
under the laws of the Commonwealth of Pennsylvania. JBI 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 JBI and the JBI
Subsidiaries (as defined below), taken as a whole. JBI is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the
"BHCA").
(b) Each JBI Subsidiary and its jurisdiction of incorporation
is listed in the JBI Disclosure Schedule. For purposes of this Agreement, the
term "JBI Subsidiary" means any corporation, partnership, joint venture or other
legal entity in which JBI, directly or indirectly, owns at least a 50% stock or
other equity interest or for which JBI, 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 "JBI Subsidiary" shall include any entity which was a JBI Subsidiary at
any time during such period. JBPA is a bank duly organized and validly existing
in stock form under the laws of the Commonwealth of Pennsylvania. JBNJ is a bank
duly organized and validly existing in stock form under the laws of the State of
New Jersey. All eligible accounts of depositors issued by each of the Jefferson
Banks are insured by the Bank Insurance Fund of the FDIC (the "BIF") to the
fullest extent permitted by law. Each JBI 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 JBI and the JBI
Subsidiaries, taken as a whole.
(c) The JBI Disclosure Schedule sets forth true and complete
copies of the Certificate of Incorporation and Bylaws, as in effect on the date
hereof, of JBI and each material JBI Subsidiary. Except as set forth in the JBI
Disclosure Schedule, the Jefferson Banks and JBI do not own or control, directly
or indirectly, any equity interest in any corporation, company, Jefferson Banks,
partnership, joint venture or other entity.
3.2. Capitalization. The authorized capital stock of JBI
consists of 20,000,000 shares of JBI Common Stock. As of June 28, 1999, there
were 10,511,935 shares of JBI Common Stock issued and outstanding. The JBI
Disclosure Schedule contains (i) a list of all Stock Options, their strike
prices and expiration dates, and (ii) true and complete copies of the JBI 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 JBI Stock Option Plan and Option Grant Agreements pursuant to which such
Stock Options were granted. All issued and outstanding shares of JBI Common
Stock, and all issued and outstanding shares of capital stock of each JBI
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 JBI or
any JBI Subsidiary. Except for the Stock Options listed on the JBI Disclosure
Schedule and the HUB Stock Option, neither JBI nor the Jefferson Banks 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 JBI or the Jefferson
Banks 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 JBI, and except as set forth in the JBI Disclosure Schedule,
JBI and each of the Jefferson Banks 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 JBI and the
Jefferson Banks in accordance with their respective Certificates 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 JBI or the Jefferson Banks are necessary to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by JBI and each of the Jefferson Banks, and constitutes a valid
and binding obligation of each of JBI and each of the Jefferson Banks,
enforceable against JBI and each of the Jefferson Banks 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 Pennsylvania or New
Jersey state-chartered 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
JBI or any of the Jefferson Banks, nor the consummation by JBI or any of the
Jefferson Banks of the transactions contemplated hereby in accordance with the
terms hereof, or compliance by JBI or any of the Jefferson Banks with any of the
terms or provisions hereof, will (i) violate any provision of JBI's or any of
the Jefferson Banks' 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 JBI, any of the Jefferson Banks or any of their
respective properties or assets, or (iii) except as set forth in the JBI
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 JBI or any of the Jefferson Banks 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 JBI
or any of the Jefferson Banks 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 JBI and the JBI 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 New Jersey Department, the Connecticut Department, the New Jersey
Department of Environmental Protection (the "NJDEP") (if required), the
Pennsylvania Department of Environmental Protection (the "PDEP") (if required),
the Securities and Exchange Commission (the "SEC"), and the shareholders of JBI,
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 JBI or
any of the Jefferson Banks in connection with (x) the execution and delivery by
JBI of this Agreement and (y) the consummation by JBI of the Merger, and the
consummation by JBI and the Jefferson Banks of the other transactions
contemplated hereby, except (i) such as are listed in the JBI 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 JBI and the JBI Subsidiaries taken as a whole or prevent
or materially delay the consummation of the transactions contemplated hereby. To
the best of JBI's knowledge, no fact or condition exists which JBI has reason to
believe will prevent it and the Jefferson Banks from obtaining the
aforementioned consents and approvals.
3.4. Financial Statements.
(a) The JBI Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of JBI as of December 31, 1997
and 1998, 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 1996 through 1998, in each case accompanied by
the audit report of Grant Thornton, LLP, independent public accountants with
respect to JBI ("Grant Thornton"), and the unaudited consolidated statement of
condition of JBI as of March 31, 1999 and the related unaudited consolidated
statements of income and cash flows for the three months ended March 31, 1998
and 1999, as reported in JBI's Quarterly Report on Form 10-Q, filed with the SEC
under the Securities Exchange Act of 1934, as amended ("1934 Act")
(collectively, the "JBI Financial Statements"). The JBI 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 JBI 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 JBI
for the respective periods set forth therein.
(b) The books and records of JBI 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 JBI Financial Statements (including the notes thereto),
as of December 31, 1998, neither JBI nor any JBI Subsidiary had any liabilities,
whether absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of JBI and the JBI Subsidiaries, taken
as a whole which were required by GAAP (consistently applied) to be disclosed in
JBI's consolidated statement of condition as of December 31, 1998 or the notes
thereto. Since December 31, 1998, neither JBI nor any JBI Subsidiary has
incurred any liabilities except in the ordinary course of business and
consistent with past business practice, except as related to the transactions
contemplated by this Agreement or except as set forth in the JBI Disclosure
Schedule.
3.5. Broker's and Other Fees. Except for Keefe, Bruyette &
Woods, Inc. ("KBW"), neither JBI 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
KBW is set forth in the JBI Disclosure Schedule. Other than pursuant to the
agreement with KBW, 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 JBI or any its Subsidiaries.
3.6. Absence of Certain Changes or Events.
(a) Except as disclosed in the JBI Disclosure Schedule, there
has not been any JBI Material Adverse Change (as hereinafter defined) since
December 31, 1998 and to the best of JBI's knowledge, no fact or condition
exists which JBI believes will cause such an JBI Material Adverse Change in the
future. "JBI Material Adverse Change" means any change which is material and
adverse to the consolidated financial condition, results of operations, business
or assets of JBI and the JBI Subsidiaries taken as a whole, other than (i) a
change in the value of the respective investment and loan portfolios of JBI and
the JBI 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 commercial banks generally, (iii)
reasonable expenses incurred in connection with this Agreement and the
transactions contemplated hereby, (iv) payments to executive officers or other
employees of JBI or the Jefferson Banks pursuant to agreements or arrangements
with such persons, which agreements or arrangements are included in the JBI
Disclosure Schedule, or (v) actions or omissions of JBI or any JBI Subsidiary
either specifically permitted by this Agreement or taken with the prior written
consent of HUB in contemplation of the transactions contemplated hereby
(including without limitation any actions taken by JBI or the Jefferson Banks
pursuant to Section 5.15 of this Agreement).
(b) Except as set forth in the JBI Disclosure Schedule and
except for capital expenditures, neither JBI nor any JBI Subsidiary has taken or
permitted any of the actions set forth in Section 5.2 hereof between December
31, 1998 and the date hereof and, except for execution of this Agreement, and
the other documents contemplated hereby, JBI and each JBI Subsidiary has
conducted their respective businesses only in the ordinary course, consistent
with past practice.
3.7. Legal Proceedings. Except as disclosed in the JBI
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of JBI and the JBI Subsidiaries, neither JBI nor any JBI Subsidiary
is a party to any, and there are no pending or, to the best of JBI's knowledge,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against JBI or any JBI Subsidiary
which, if decided adversely to JBI or any JBI Subsidiary, are reasonably likely
to have a material adverse effect on the business, operations, assets or
financial condition of JBI and the JBI Subsidiaries taken as a whole. Except as
disclosed in the JBI Disclosure Schedule, neither JBI nor any JBI Subsidiary is
a party to any order, judgment or decree entered in any lawsuit or proceeding
which is material to JBI or such JBI Subsidiary.
3.8. Taxes and Tax Returns.
(a) JBI and each JBI 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
HUB in writing) or against which reserves have been established. JBI and each
JBI 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
JBI or such JBI Subsidiary through such date. None of the federal or state
income tax returns of JBI or any JBI Subsidiary have been examined by the
Internal Revenue Service (the "IRS"), the New Jersey Division of Taxation, or
the Pennsylvania Department of Revenue within the past six years. To the best
knowledge of JBI, except as disclosed in the JBI 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 JBI or any JBI Subsidiary, nor has JBI or any JBI 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 JBI nor any JBI 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 JBI 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 JBI or such JBI Subsidiary (nor does
JBI 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 JBI nor any JBI Subsidiary has any tax loss
carryforwards.
3.9. Employee Benefit Plans.
(a) Except as set forth on the JBI Disclosure Schedule,
neither JBI nor any JBI Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "JBI 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 "JBI 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 JBI nor any JBI Subsidiary has, since September 2, 1974,
contributed to any "Multiemployer Plan," within the meaning of Section 3(37) of
ERISA.
(b) JBI has previously delivered to HUB, and included in the
JBI Disclosure Schedule, a complete and accurate copy of each of the following
with respect to each of the JBI Pension Plans and JBI 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 JBI 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 JBI 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 JBI'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 JBI or any
JBI 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 JBI Pension Plan
have been paid. All contributions required to be made to each JBI 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 JBI which have not
been paid have been properly recorded on the books of JBI .
(f) Except as disclosed in the JBI Disclosure Schedule, each
of the JBI Pension Plans, JBI Welfare Plans and each other employee benefit plan
and arrangement identified on the JBI 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 JBI Disclosure Schedule, if JBI maintains any JBI Pension Plan,
JBI 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 JBI is
not aware of any fact or circumstance which would disqualify any plan.
(g) To the best knowledge of JBI, 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 JBI Welfare Plan or JBI Pension Plan
that would result in any material tax or penalty for JBI or any JBI Subsidiary.
(h) No JBI 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 JBI Pension Plan.
(i) No "accumulated funding deficiency," within the meaning of
Section 412 of the Code, has been incurred with respect to any JBI Pension Plan.
(j) There are no material pending, or, to the best knowledge
of JBI, material threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of, or against any of the JBI Pension Plans or the JBI
Welfare Plans, any trusts created thereunder or any other plan or arrangement
identified in the JBI Disclosure Schedule.
(k) Except as disclosed in the JBI Disclosure Schedule, no JBI
Pension Plan or JBI 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 JBI 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 JBI Financial Statements and established
in accordance with GAAP.
(m) With respect to each JBI Pension Plan and JBI Welfare Plan
that is funded wholly or partially through an insurance policy, there will be no
liability of JBI or any JBI 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 JBI Disclosure Schedule, and (ii)
as set forth in the JBI Disclosure Schedule, or as expressly agreed to by HUB 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 JBI or any JBI 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 JBI Pension Plan or JBI
Welfare Plan.
(o) Except for the JBI Pension Plans and the JBI Welfare
Plans, and except as set forth on the JBI Disclosure Schedule, JBI has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of JBI or any
JBI Subsidiary or any predecessor of any thereof. The JBI 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 JBI Disclosure Schedule, JBI
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 JBI 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 JBI
`s knowledge, neither JBI nor any JBI Pension Plan or JBI 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 JBI Disclosure Schedule, JBI
does not maintain any retirement plan or retiree medical plan or arrangement for
directors. The JBI Disclosure Schedule sets forth the complete documentation and
actuarial evaluation of any such plan.
3.10. Reports.
(a) The JBI Disclosure Schedule lists each (i) final
registration statement, prospectus, annual, quarterly or current report and
definitive proxy statement filed by JBI since January 1, 1997 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 JBI to its shareholders as a class since January 1, 1997, and each
such communication, as of its date, complied as to form 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, 1997, (i) JBI has filed all reports that
it was required to file with the SEC under the 1934 Act, and (ii) JBI and the
Jefferson Banks 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, JBI
promptly will deliver or make available to HUB 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 as to form
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 JBI Disclosure Schedule lists the dates of all examinations of JBI or the
Jefferson Banks conducted by the FDIC since January 1, 1997 and the dates of any
responses thereto submitted by JBI or the Jefferson Banks.
3.11. JBI and Jefferson Banks Information. The information
relating to JBI and the Jefferson Banks, this Agreement, and the transactions
contemplated hereby (except for information relating solely to HUB) to be
contained in the Joint Proxy Statement-Prospectus (as defined in Section 5.6(a)
hereof) to be delivered to shareholders of JBI and shareholders of HUB in
connection with the solicitation of their approval of the Merger, as of the date
of the mailing of the Joint Proxy Statement-Prospectus to the shareholders of
JBI and the shareholders of HUB, and up to and including the date of the
meetings of shareholders of JBI and shareholders of HUB to which such Joint
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 JBI Disclosure Schedule, JBI and each JBI 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 JBI or such JBI
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 JBI and the JBI Subsidiaries taken as a whole) and JBI 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 JBI Disclosure Schedule, (i) neither JBI nor any JBI 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 JBI or any
JBI Subsidiary to any officer, employee, director or consultant thereof. The JBI
Disclosure Schedule sets forth true and correct copies of all severance or
employment agreements with officers, directors, employees, agents or consultants
to which JBI or any JBI Subsidiary is a party.
(b) Except as disclosed in the JBI Financial Statements, in
the SEC-filed documents referred to in Section 3.10, or in the JBI Disclosure
Schedule, and except for loan commitments, loan agreements and loan instruments
entered into or issued by the Jefferson Banks in the ordinary course of
business, (i) as of the date of this Agreement, neither JBI nor any JBI
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 JBI and the JBI Subsidiaries taken as a whole, and (ii) neither JBI
nor any JBI Subsidiary is a party to any collective bargaining agreement.
(c) Except as disclosed in the JBI Disclosure Schedule and
except for loan commitments, loan agreements and loan instruments entered into
or issued by the Jefferson Banks in the ordinary course of business, no
commitment, agreement or other instrument to which JBI or any JBI Subsidiary is
a party or by which either of them is bound limits the freedom of JBI or any JBI
Subsidiary to compete in any line of business or with any person.
(d) Except as disclosed in the JBI Disclosure Schedule,
neither JBI nor any JBI Subsidiary or, to the best knowledge of JBI, 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 Jefferson Banks 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 JBI and the JBI Subsidiaries, taken as a whole.
3.14. Properties and Insurance.
(a) Except as set forth in the JBI Disclosure Schedule, JBI or
a JBI 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 JBI's consolidated balance sheet as of December 31,
1998, 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, 1998), 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 JBI and the JBI Subsidiaries taken as a whole and (iv) with respect
to owned real property, title imperfections noted in title reports delivered to
HUB prior to the date hereof. Except as affected by the transactions
contemplated hereby, JBI 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 JBI and such Subsidiaries in all material respects as
presently occupied, used, possessed and controlled by JBI and its Subsidiaries.
(b) Except as set forth in the JBI Disclosure Schedule, the
business operations and all insurable properties and assets of JBI and each JBI
Subsidiary are insured for their benefit against all risks which, in the
reasonable judgment of the management of JBI, 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 JBI adequate for the business engaged in by JBI
and the JBI Subsidiaries. As of the date hereof, neither JBI nor any JBI
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 JBI Disclosure Schedule sets
forth in summary form a list of all insurance policies of JBI and the JBI
Subsidiaries.
3.15. Minute Books. The minute books of JBI and the JBI
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 JBI
Disclosure Schedule:
(a) Neither JBI nor any JBI Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that JBI or such JBI 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 JBI and the JBI Subsidiaries taken as a whole. JBI 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 JBI or
any JBI Subsidiary, as OREO or otherwise, or owned or controlled by JBI or any
JBI 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 JBI and the JBI Subsidiaries, taken
as a whole.
(b) JBI 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 JBI and the JBI Subsidiaries taken as a whole.
(c) To the best of JBI's knowledge, JBI, each JBI 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 JBI, 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 JBI or any JBI Subsidiary.
3.17. Reserves. As of December 31, 1998, the allowance for
loan losses in the JBI 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 FDIC. As of December 31, 1998, the reserve for
OREO properties (or if no reserve, the carrying value of OREO properties) in the
JBI 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
FDIC.
3.18. No Parachute Payments. Except as set forth in the JBI
Disclosure Schedule, no officer, director, employee or agent (or former officer,
director, employee or agent) of JBI or any JBI 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 JBI, a JBI Subsidiary, HUB or any HUB 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 JBI nor any JBI
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 HUB by JBI prior to the date
of this Agreement, nor has JBI 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 HUB by JBI prior to the date of
this Agreement. Neither JBI nor any JBI 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 HUB by JBI prior to the date of this Agreement.
3.20. Year 2000 Compliance. JBI and the JBI 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 JBI and the JBI Subsidiaries to be substantially Year
2000 compliant on or before the end of 1999 and, except as set forth in the JBI
Disclosure Schedule, JBI does not expect the future cost of addressing such
issues to be material. Neither JBI nor any JBI 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 JBI, the stock repurchases by HUB identified in writing to JBI, and the
employee benefit plans of JBI and the Jefferson Banks with JBI's independent
auditors, JBI 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 representations or
warranties herein not misleading in light of the circumstances under which they
were made.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUB
References herein to the "HUB 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 HUB to
JBI. HUB hereby represents and warrants to JBI as follows:
4.1. Corporate Organization.
(a) HUB is a corporation duly organized and validly existing
and in good standing under the laws of the State of New Jersey. HUB 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 HUB and the HUB Subsidiaries
(defined below), taken as a whole. HUB is registered as a bank holding company
under the BHCA.
(b) Each HUB Subsidiary is listed in the HUB Disclosure
Schedule. For purposes of this Agreement, the term "HUB Subsidiary" means any
corporation, partnership, joint venture or other legal entity in which HUB
directly or indirectly, owns at least a 50% stock or other equity interest or
for which HUB, 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 "HUB Subsidiary"
shall include any entity which was an HUB Subsidiary at any time during such
period. Each HUB 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. All eligible accounts of depositors issued by
the Bank are insured by the BIF to the fullest extent permitted by law. Each HUB
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 HUB and the HUB Subsidiaries, taken as a whole.
(c) The HUB Disclosure Schedule sets forth true and complete
copies of the Certificate of Incorporation and Bylaws, as in effect on the date
hereof, of HUB and the Bank.
4.2. Capitalization. The authorized capital stock of HUB
consists of 54,636,350 common shares, no par value ("HUB Common Stock"), and
10,609,000 shares of preferred stock ("HUB Authorized Preferred Stock"). As of
May 31, 1999, there were 40,633,204 shares of HUB Common Stock issued,
39,998,576 shares of HUB Common Stock outstanding, and 634,628 treasury shares,
and no shares of HUB Authorized Preferred Stock outstanding. Except as described
in the HUB Disclosure Schedule, there are no shares of HUB Common Stock issuable
upon the exercise of outstanding stock options or otherwise. All issued and
outstanding shares of HUB Common Stock and HUB Authorized Preferred Stock, and
all issued and outstanding shares of capital stock of HUB'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 HUB Subsidiaries are owned by HUB free and clear of any
liens, encumbrances, charges, restrictions or rights of third parties. Except as
described in the HUB Disclosure Schedule, neither HUB nor any HUB 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 HUB or any HUB 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, HUB 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 HUB in accordance with its
Certificate of Incorporation and applicable laws and regulations. Except for
such approvals, no other corporate proceedings on the part of HUB are necessary
to consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by HUB and constitutes a valid and binding
obligation of HUB, enforceable against HUB 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
HUB, nor the consummation by HUB of the transactions contemplated hereby in
accordance with the terms hereof, or compliance by HUB with any of the terms or
provisions hereof will (i) violate any provision of the Certificate of
Incorporation or Bylaws of HUB, (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 HUB, any
HUB 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
HUB or any HUB 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 HUB 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 HUB and the HUB 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 SEC, the New Jersey Department, the
Pennsylvania Department, or the Department of Treasury, State of New Jersey, and
the shareholders of HUB, 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 HUB in connection with (x) the execution and delivery by HUB of
this Agreement, and (y) the consummation by HUB of the Merger and the other
transactions contemplated hereby, except such as are listed in the HUB
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 HUB and the HUB Subsidiaries, taken as a whole. To the best of
HUB's knowledge, no fact or condition exists which HUB has reason to believe
will prevent it from obtaining the aforementioned consents and approvals.
4.4. Financial Statements.
(a) The HUB Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of HUB as of December 31, 1997
and 1998, 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 1996 through 1998, in each case accompanied by
the audit report of Arthur Andersen, LLP, independent public accountants with
respect to HUB ("Arthur Andersen"), and the unaudited consolidated statement of
condition of HUB as of March 31, 1999 and the related unaudited consolidated
statements of income and cash flows for the three months ended March 31, 1998
and 1999, as reported in HUB's Quarterly Report on Form 10-Q, filed with the SEC
under the Securities Exchange Act of 1934, as amended ("1934 Act")
(collectively, the "HUB Financial Statements"). The HUB 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 HUB 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 HUB for the respective fiscal periods set forth therein.
(b) The books and records of HUB and the HUB 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 HUB Financial Statements (including the notes thereto),
as of December 31, 1998 neither HUB nor any of the HUB Subsidiaries had any
obligation or liability, whether absolute, accrued, contingent or otherwise,
material to the business, operations, assets or financial condition of HUB or
any of the HUB Subsidiaries which were required by GAAP (consistently applied)
to be disclosed in HUB's consolidated statement of condition as of December 31,
1998 or the notes thereto. Except for the transactions contemplated by this
Agreement, and any other proposed acquisitions by HUB reflected in any Form 8-K
filed by HUB with the SEC since December 31, 1998, neither HUB nor any HUB
Subsidiary has incurred any liabilities since December 31, 1998 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 HUB 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 HUB Material Adverse Change since December 31, 1998 and to the best of HUB's
knowledge, no facts or condition exists which HUB believes will cause a HUB
Material Adverse Change in the future. "HUB Material Adverse Change" means any
change which is material and adverse to the consolidated financial condition,
results of operations, business or assets of HUB and the HUB Subsidiaries taken
as a whole, other than (i) a change in the value of the respective investment
and loan portfolios of HUB and the HUB 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 HUB or any HUB Subsidiary pending on the date
hereof or known to JBI, or (v) the entry, after the date hereof, by HUB or any
HUB Subsidiary into an agreement to acquire another entity.
4.7 Legal Proceedings. Except as disclosed in the HUB
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of HUB or its Subsidiaries, neither HUB nor any of its Subsidiaries
is a party to any, and there are no pending or, to the best of HUB's knowledge,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against HUB or any of its
Subsidiaries which, if decided adversely to HUB or its Subsidiaries, are
reasonably likely to have a material adverse effect on the business, operations,
assets or financial condition of HUB or its Subsidiaries, taken as a whole.
Except as disclosed in the HUB Disclosure Schedule, neither HUB nor any of its
Subsidiaries is a party to any order, judgment or decree entered in any lawsuit
or proceeding which is material to HUB or its Subsidiaries.
4.8 Reports.
(a) The HUB Disclosure Schedule lists each (i) final
registration statement, prospectus, annual, quarterly or current report and
definitive proxy statement filed by JBI since January 1, 1997 pursuant to the
1933 Act or the 1934 Act and (ii) communication (other than general advertising
materials and press releases) mailed by HUB to its shareholders as a class since
January 1, 1997, and each such communication, as of its date, complied as to
form 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, 1997, (i) HUB has filed all reports that
it was required to file with the SEC under the 1934 Act, and (ii) HUB and the
Bank 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, HUB promptly will
deliver or make available to JBI 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 as to form 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 HUB
Disclosure Schedule lists the dates of all examinations of HUB or the Bank
conducted by the FDIC since January 1, 1997 and the dates of any responses
thereto submitted by HUB or the Bank.
4.9 HUB Information. The information relating to HUB and its
Subsidiaries (including, without limitation, information regarding other
transactions which HUB is required to disclose), this Agreement and the
transactions contemplated hereby in the Registration Statement and Joint Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof), as of the date of
the mailing of the Joint Proxy Statement-Prospectus to the shareholders of JBI
and the shareholders of HUB, and up to and including the date of the meetings of
shareholders of JBI and shareholders of HUB to which such Joint 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 HUB Disclosure Schedule, each of HUB and HUB'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 HUB or HUB'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 HUB and HUB's Subsidiaries taken as a whole) and HUB 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 HUB
or its Subsidiaries have agreed to consummate, HUB will be deemed "well
capitalized" under prompt corrective action regulatory capital requirements.
4.12 HUB Common Stock. As of the date hereof, HUB has
available and reserved shares of HUB Common Stock sufficient for issuance
pursuant to the Merger and upon the exercise of Stock Options subsequent
thereto. The HUB 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 HUB,
with no personal liability attaching to the ownership thereof. The HUB 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 the NYSE.
4.13 Agreements with Bank Regulators. Neither HUB nor any HUB
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 JBI by HUB prior to the date of this Agreement, nor has HUB 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 JBI by HUB prior to the date of this Agreement. Neither HUB nor
any HUB 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 JBI by HUB prior to
the date of this Agreement.
4.14 Taxes and Tax Returns.
(a) HUB and HUB'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 JBI in writing). HUB and
HUB'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 HUB through such date. The HUB
Disclosure Schedule identifies the federal income tax returns of HUB 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 HUB Disclosure Schedule identifies the applicable
state income tax returns of HUB 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 HUB, 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 HUB or its Subsidiaries, nor has
HUB 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 HUB Disclosure Schedule,
neither HUB nor any Subsidiary of HUB (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 HUB
or any of its Subsidiaries (nor does HUB 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) Except as set forth on the HUB Disclosure Schedule,
neither HUB nor any HUB Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "HUB 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 "HUB 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 HUB nor any HUB Subsidiary has, since September 2, 1974,
contributed to any "Multiemployer Plan," within the meaning of Section 3(37) of
ERISA.
(b) HUB has previously delivered to JBI, and included in the
HUB Disclosure Schedule, a complete and accurate copy of each of the following
with respect to each of the HUB Pension Plans and HUB 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 HUB 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 HUB 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 HUB' 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 PBGC has not asserted any
claim for liability against HUB or any HUB 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 HUB Pension Plan
have been paid. All contributions required to be made to each HUB 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 HUB which have not
been paid have been properly recorded on the books of HUB .
(f) Except as disclosed in the HUB Disclosure Schedule, each
of the HUB Pension Plans, HUB Welfare Plans and each other employee benefit plan
and arrangement identified on the HUB 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 HUB Disclosure Schedule, if HUB maintains any HUB Pension Plan,
HUB 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 HUB is
not aware of any fact or circumstance which would disqualify any plan.
(g) To the best knowledge of HUB, 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 HUB Welfare Plan or HUB Pension Plan
that would result in any material tax or penalty for HUB or any HUB Subsidiary.
(h) No HUB 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 HUB Pension Plan.
(i) No "accumulated funding deficiency," within the meaning of
Section 412 of the Code, has been incurred with respect to any HUB Pension Plan.
(j) There are no material pending, or, to the best knowledge
of HUB, material threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of, or against any of the HUB Pension Plans or the HUB
Welfare Plans, any trusts created thereunder or any other plan or arrangement
identified in the HUB Disclosure Schedule.
(k) Except as disclosed in the HUB Disclosure Schedule, no HUB
Pension Plan or HUB 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 HUB 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 HUB Financial Statements and established
in accordance with GAAP.
(m) With respect to each HUB Pension Plan and HUB Welfare Plan
that is funded wholly or partially through an insurance policy, there will be no
liability of HUB or any HUB 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 HUB Disclosure Schedule, and (ii)
as set forth in the HUB Disclosure Schedule, or as expressly agreed to by HUB 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 HUB or any HUB 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 HUB Pension Plan or HUB
Welfare Plan.
(o) Except for the HUB Pension Plans and the HUB Welfare
Plans, and except as set forth on the HUB Disclosure Schedule, HUB has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of HUB or any
HUB Subsidiary or any predecessor of any thereof. The HUB 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 HUB Disclosure Schedule, HUB
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 HUB 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 HUB
`s knowledge, neither HUB nor any HUB Pension Plan or HUB 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 HUB Disclosure Schedule, HUB
does not maintain any retirement plan or retiree medical plan or arrangement for
directors. The HUB Disclosure Schedule sets forth the complete documentation and
actuarial evaluation of any such plan.
4.16 Contracts.
(a) Except as disclosed in the HUB Disclosure Schedule,
neither HUB nor any of its Subsidiaries, or to the best knowledge of HUB, 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 HUB 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 HUB and its subsidiaries, taken as a whole.
(b) Except as disclosed in the HUB Financial Statements, in
the SEC-filed documents referred to in Section 4.8, or in the HUB Disclosure
Schedule, and except for loan commitments, loan agreements and loan instruments
entered into or issued by the Bank in the ordinary course of business, (i) as of
the date of this Agreement, neither HUB nor any HUB 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 HUB and the HUB
Subsidiaries taken as a whole, and (ii) neither HUB nor any HUB Subsidiary is a
party to any collective bargaining agreement.
(c) Except as disclosed in the HUB Disclosure Schedule and
except for loan commitments, loan agreements and loan instruments entered into
or issued by the Bank in the ordinary course of business, no commitment,
agreement or other instrument to which HUB or any HUB Subsidiary is a party or
by which either of them is bound limits the freedom of HUB or any HUB Subsidiary
to compete in any line of business or with any person.
4.17 Properties and Insurance.
(a) HUB 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 HUB's consolidated balance
sheet as of December 31, 1998, 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, 1998), 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 HUB 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 HUB Disclosure Schedule, HUB and
its Subsidiaries as lessees have the right under valid and subsisting leases to
occupy, use, possess and control all property leased by HUB or its Subsidiaries
in all material respects as presently occupied, used, possessed and controlled
by HUB and its Subsidiaries.
(b) The business operations and all insurable properties and
assets of HUB and its Subsidiaries are insured for their benefit against all
risks which, in the reasonable judgment of the management of HUB, 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 HUB adequate
for the business engaged in by HUB and its Subsidiaries. As of the date hereof,
neither HUB 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 HUB
Disclosure Schedule, neither HUB nor any of its Subsidiaries has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that HUB 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 HUB and its Subsidiaries
taken as a whole. Except as disclosed in the HUB Disclosure Schedule, HUB 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
HUB 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 HUB and its Subsidiaries,
taken as a whole.
4.19 Reserves. As of December 31, 1998, the allowance for
possible loan losses in the HUB Financial Statements was adequate pursuant to
GAAP (consistently applied), and the methodology used to compute the allowance
for possible loan losses complies in all material respects with GAAP
(consistently applied) and all applicable policies of the FDIC. As of December
31, 1998, the valuation allowance for OREO properties in the HUB Financial
Statements was adequate pursuant to GAAP (consistently applied), and the
methodology used to compute the valuation allowance for OREO properties complies
in all material respects with GAAP (consistently applied), and all applicable
policies of the FDIC.
4.20. Year 2000 Compliance. HUB and the HUB 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 HUB and the HUB Subsidiaries to be substantially Year
2000 compliant on or before the end of 1999 and HUB does not expect the future
cost of addressing such issues to be material. Neither HUB nor any HUB
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
HUB, the stock repurchases by JBI identified in writing to HUB, and the employee
benefit plans of JBI and the Jefferson Banks with HUB's independent auditors,
HUB 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 HUB nor any HUB
Subsidiary owns any shares of JBI Common Stock.
4.22 Disclosure. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the representations or
warranties herein not misleading in light of the circumstances under which they
were made.
ARTICLE V - COVENANTS OF THE PARTIES
5.1. Conduct of the Business of JBI. During the period from
the date of this Agreement to the Effective Time, JBI and the Jefferson Banks
shall, and shall cause each JBI 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 HUB, which consent will not be unreasonably withheld. Each of JBI and
the Jefferson Banks also shall use its reasonable best efforts to (i) preserve
its business organization and that of the JBI Subsidiaries intact, (ii) keep
available to itself and the JBI Subsidiaries the present services of their
respective employees, and (iii) preserve for itself and HUB the goodwill of its
customers and those of the JBI 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 HUB in writing, or as set forth in the JBI
Disclosure Schedule, or as permitted or required by this Agreement, neither JBI
nor any of the Jefferson Banks 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
HUB 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 JBI 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 other than its
regular quarterly cash dividend in the amount of $0.62 per share per
quarter; provided, however, that nothing contained herein shall be
deemed to affect the ability of the Jefferson Banks to pay dividends on
their capital stock to JBI;
(d) grant any severance or termination pay (other than
pursuant to policies or contracts of JBI in effect on the date hereof
and disclosed to HUB in the JBI 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 JBI
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
JBI or the Jefferson Banks;
(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 HUB, except as set forth in Section 5.2 of the
JBI 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 HUB, make or commit to make
any new loan or new extension of credit in an amount of $5,000,000 or
more, except such loan initiations that are committed as of the date of
this Agreement and identified on the JBI 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, JBI and the Jefferson Banks 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 HUB) 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 JBI or either
of the Jefferson Banks (an "Acquisition Transaction"). Notwithstanding the
foregoing, JBI may enter into discussions or negotiations or provide information
in connection with an unsolicited possible Acquisition Transaction if the Board
of Directors of JBI, 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. JBI shall promptly
communicate to HUB 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 JBI and HUB 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, JBI
agrees to provide HUB, and HUB agrees to provide JBI, 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), JBI will deliver to HUB and HUB will deliver to JBI 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, JBI will deliver to HUB and HUB will deliver to
JBI 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) JBI and the Jefferson Banks shall permit HUB and its
representatives, and HUB shall permit, and cause each HUB Subsidiary to permit,
JBI and its representatives, reasonable access to their respective properties,
and shall disclose and make available to HUB and its representatives, or JBI 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 HUB and its representatives or JBI 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, JBI acknowledges that
HUB may be involved in discussions concerning other potential acquisitions and
HUB shall not be obligated to disclose such information to JBI except as such
information is disclosed to HUB'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 Meetings (as
referred to in Section 5.7 hereof), and qualifying under applicable federal and
state securities laws the HUB Common Stock to be issued to JBI shareholders in
connection with the Merger, the parties hereto shall cooperate in the
preparation and filing by HUB with the SEC of a Registration Statement including
a joint 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 JBI and HUB to their
respective shareholders together with any and all amendments or supplements
thereto, being herein referred to as the "Joint Proxy Statement-Prospectus" and
the various documents to be filed by HUB under the 1933 Act with the SEC to
register the HUB Common Stock for sale, including the Joint Proxy
Statement-Prospectus, are referred to herein as the "Registration Statement").
(b) HUB shall furnish JBI with such information concerning HUB
and its Subsidiaries (including, without limitation, information regarding other
transactions which HUB is required to disclose) as is necessary in order to
cause the Joint Proxy Statement-Prospectus, insofar as it relates to such
corporations, to comply with Section 5.6(a) hereof. HUB agrees promptly to
advise JBI if at any time prior to the Shareholders' Meetings any information
provided by HUB in the Joint Proxy Statement-Prospectus becomes incorrect or
incomplete in any material respect and promptly to provide JBI with the
information needed to correct such inaccuracy or omission. HUB shall promptly
furnish JBI with such supplemental information as may be necessary in order to
cause the Joint Proxy Statement-Prospectus, insofar as it relates to HUB and the
HUB Subsidiaries, to comply with Section 5.6(a) after the mailing thereof to the
parties' respective shareholders.
(c) JBI shall furnish HUB with such information concerning JBI
as is necessary in order to cause the Joint Proxy Statement-Prospectus, insofar
as it relates to JBI, to comply with Section 5.6(a) hereof. JBI agrees promptly
to advise HUB if at any time prior to the Shareholders' Meetings, any
information provided by JBI in the Joint Proxy Statement-Prospectus becomes
incorrect or incomplete in any material respect and promptly to provide HUB with
the information needed to correct such inaccuracy or omission. JBI shall
promptly furnish HUB with such supplemental information as may be necessary in
order to cause the Joint Proxy Statement-Prospectus, insofar as it relates to
JBI and the Jefferson Banks to comply with Section 5.6(a) after the mailing
thereof to the parties' respective shareholders.
(d) HUB shall as promptly as practicable make such filings as
are necessary in connection with the offering of the HUB 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. JBI shall promptly furnish HUB with such information
regarding the JBI shareholders as HUB requires to enable it to determine what
filings are required hereunder. JBI authorizes HUB to utilize in such filings
the information concerning JBI and the Jefferson Banks provided to HUB in
connection with, or contained in, the Joint Proxy Statement-Prospectus. HUB
shall furnish JBI's counsel with copies of all such filings and keep JBI advised
of the status thereof. HUB and JBI shall as promptly as practicable file the
Registration Statement containing the Joint Proxy Statement-Prospectus with the
SEC, and each of HUB and JBI shall promptly notify the other of all
communications, oral or written, with the SEC concerning the Registration
Statement and the Joint Proxy Statement-Prospectus.
(e) HUB shall cause the HUB Common Stock issuable pursuant to
the Merger to be listed on the NYSE at the Effective Time. HUB shall cause the
HUB Common Stock which shall be issuable pursuant to exercise of Stock Options
to be accepted for listing on the NYSE 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 New
Jersey Department, the Pennsylvania Department and (if required) the NJDEP and
PDEP. 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) JBI acknowledges that HUB is in or may be in the process
of acquiring other banks and financial institutions and that in connection with
such acquisitions, information concerning JBI may be required to be included in
the registration statements, if any, for the sale of securities of HUB or in SEC
reports in connection with such acquisitions. JBI agrees to provide HUB with any
information, certificates, documents or other materials about JBI as are
reasonably necessary to be included in such other SEC reports or registration
statements, including registration statements which may be filed by HUB prior to
the Effective Time. JBI shall use its reasonable efforts to cause its attorneys
and accountants to provide HUB and any underwriters for HUB 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. HUB shall reimburse JBI for reasonable expenses thus
incurred by JBI should this transaction be terminated for any reason. HUB shall
not file with the SEC any registration statement or amendment thereto or
supplement thereof containing information regarding JBI unless JBI shall have
consented in writing to such filing, which consent shall not be unreasonably
delayed or withheld.
5.7. Approval of Shareholders.
(a) JBI will (i) take all steps necessary duly to call, give
notice of, convene and hold a meeting of the shareholders of JBI (the "JBI
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 JBI'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 JBI
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 HUB with respect to each of the
foregoing matters.
(b) HUB will (i) take all steps necessary duly to call, give
notice of, convene and hold a meeting of the shareholders of HUB (the "HUB
Shareholders Meeting") for the purpose of securing the approval of shareholders
of this Agreement, (ii) recommend to the shareholders of HUB 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 JBI with respect to each of the foregoing matters.
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) HUB agrees that from the date hereof to the Effective
Time, except as otherwise approved by JBI in writing or as permitted or required
by this Agreement, HUB will use reasonable business efforts to maintain and
preserve intact its business organization, properties, leases, employees and
advantageous business relationships, and HUB will not, nor will it permit any
HUB 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 $0.05 per share of HUB 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 HUB 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) HUB, the Bank, JBI and the Jefferson Banks will use
reasonable efforts to cause the Merger to occur on or before November 30, 1999.
5.9. Public Announcements. HUB and JBI 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 HUB and JBI 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 HUB or
JBI determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to April 30,
2000 (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 HUB may enter into with other parties, JBI and HUB will promptly
inform the other of any facts applicable to JBI or HUB, 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, HUB agrees with JBI
to honor the existing written employment and severance contracts with officers
and employees of JBI and Jefferson Banks that are included in the JBI Disclosure
Schedule, and to institute for key employees the compensation and incentive
structure described on Schedule 5.11(a) of the HUB Disclosure Schedule.
(b) Following consummation of the Merger, HUB will decide
whether to continue each of the Jefferson Banks and/or JBI's pension and welfare
plans for the benefit of employees of the Jefferson Banks and JBI, or to have
such employees become covered under a HUB Pension and Welfare Plan. If HUB
decides to cover Jefferson Banks and JBI employees under a HUB Pension and
Welfare Plan, such employees will receive credit for prior years of service with
the Jefferson Banks and/or JBI 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 JBI or
the Jefferson Banks 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 JBI Disclosure Schedule) whose employment is
discontinued by HUB or the Bank or any of the HUB 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
JBI or the Jefferson Banks or any successor or predecessor thereto or other JBI
Subsidiary, subject to a minimum of two weeks' severance and a maximum of 26
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, 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 HUB.
(d) Employees of JBI and the Jefferson Banks who become
employees of HUB or any HUB Subsidiary shall become entitled to participate in
HUB'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 JBI or the Jefferson Banks and (ii) enter the
HUB defined benefit pension plan on the entry date concurrent with or next
following the employee's satisfaction of such plan's minimum participation
requirements.
(e) Employees of JBI and the Jefferson Banks who become
employees of HUB or any HUB Subsidiary shall become entitled to participate in
the applicable HUB 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 JBI or the Jefferson
Banks, 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.
(f) JBI and the Jefferson Banks may continue to administer
such bonus programs and arrangements as are disclosed pursuant to this Agreement
through the Effective Time, provided that bonuses shall be paid only to the
extent they have been previously accrued and their payment will not cause JBI's
earnings to fall below budgeted amounts.
(g) Within ninety (90) days after the date hereof, HUB and the
Bank shall use their reasonable best efforts to inform the employees of JBI and
the Jefferson Banks of the likelihood of such employees having continued
employment with HUB or a HUB Subsidiary following the Effective Time and, where
appropriate, shall use their reasonable best efforts to interview the JBI and
Jefferson Banks employees to determine if there are mutually beneficial
employment opportunities available at HUB or a HUB Subsidiary. It is the intent
of HUB and the Bank in connection with reviewing applicants for employment
positions to give any JBI and Jefferson Banks 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.
(h) Each employee of JBI or the Jefferson Banks identified in
Section 5.11 of the JBI Disclosure Schedule shall be entitled to receive a
"retention" bonus from JBI or the Jefferson Banks in the amount set forth in
Section 5.11 of the JBI Disclosure Schedule in the event that such employee
remains an employee of JBI or the Jefferson Banks, as applicable until the
fifteenth day following successful completion of the conversion of the Jefferson
Banks' computer systems to those of the Bank, and satisfactorily fulfills the
duties and responsibilities of the position of such employee of JBI or the
Jefferson Banks, as the case may be, through such time; provided that retention
bonuses, in the aggregate, shall not exceed $500,000.
(i) HUB 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. HUB shall not be obligated to pay any
out-placement fees in connection with the foregoing or more than $50,000 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 JBI.
(a) For planning purposes, JBI shall, within 30 days from the
date hereof, provide HUB with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by JBI 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. JBI shall promptly notify HUB if or when it determines that it
will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, JBI shall
ask all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements. JBI shall accrue and/or pay
all of such amounts as soon as possible.
(c) JBI shall cause its professionals to render monthly
invoices within 15 days after the end of each month. JBI shall advise HUB
monthly of all out-of-pocket expenses which JBI has incurred in connection with
this transaction.
(d) HUB, in reasonable consultation with JBI, shall make all
arrangements with respect to the printing and mailing of the Joint Proxy
Statement-Prospectus.
5.14 Indemnification.
(a) For a period of six years after the Effective Time, HUB
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 JBI or the Jefferson Banks or serves or
has served at the request of JBI or the Jefferson Banks 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 JBI or the Jefferson Banks
or serves or has served at the request of JBI or the Jefferson Banks 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 JBI or the Jefferson Banks or any
of their respective affiliates, or by any former or present shareholder of JBI
(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 JBI or the Jefferson Banks or of any committee of JBI's or
the Jefferson Banks' 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 HUB set
forth in this Section 5.14, in each case to the fullest extent which JBI or the
Jefferson Banks would have been permitted under any applicable law and their
respective Certificates of Incorporation or Bylaws had the Merger not occurred
(and HUB shall also advance expenses as incurred to the fullest extent so
permitted). Notwithstanding the foregoing, but subject to subsection (b) below,
HUB 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 HUB
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, HUB shall assume and
honor any obligation of JBI or the Jefferson Banks immediately prior to the
Effective Time with respect to the indemnification of the Indemnitees arising
out of the Certificate of Incorporation or Bylaws of JBI or the Jefferson Banks,
or arising out of any written indemnification agreements between JBI and/or the
Jefferson Banks and such persons disclosed in the JBI Disclosure Schedule, as if
such obligations were pursuant to a contract or arrangement between HUB and such
Indemnitees.
(c) In the event HUB 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 HUB assume the obligations set forth in this Section 5.14.
(d) HUB shall cause JBI's and the Jefferson Banks' officers
and directors to be covered under HUB'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 JBI's and the
Jefferson Banks' existing officers' and directors' liability insurance policy.
However, HUB shall only be required to insure such persons upon terms and for
coverages substantially similar to JBI's and the Jefferson Banks' existing
officers' and directors' liability insurance.
(e) Any Indemnitee wishing to claim indemnification under this
Section 5.14 shall promptly notify HUB upon learning of any Claim, but the
failure to so notify shall not relieve HUB of any liability it may have to such
Indemnitee if such failure does not materially prejudice HUB. 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) HUB shall have the
right to assume the defense thereof and HUB 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 HUB elects not to assume such defense, or counsel for the
Indemnitees advises that there are issues which raise conflicts of interest
between HUB and the Indemnitees, the Indemnitees may retain counsel satisfactory
to them, and HUB shall pay the reasonable fees and expenses of such counsel for
the Indemnitees as statements therefor are received; provided, however, that HUB
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. HUB 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, HUB 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 Mergers. Notwithstanding that JBI
believes that it has established all reserves and taken all provisions for
possible loan losses required by GAAP and applicable laws, rules and
regulations, JBI recognizes that HUB 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
Mergers, JBI and HUB shall consult and cooperate with each other with respect to
(i) conforming to the extent appropriate, based upon such consultation, JBI's
loan, accrual and reserve policies and JBI'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 HUB as HUB
may reasonably identify to JBI from time to time, (ii) new extensions of credit
by the Jefferson Banks where the aggregate exposure exceeds $5,000,000, and
(iii) conforming, based upon such consultation, the composition of the
investment portfolio and overall asset/liability management position of JBI and
the Jefferson Banks to the extent appropriate; provided that any required change
in JBI'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 all necessary regulatory, governmental and
shareholder approvals and consents have been received, all statutory waiting
periods in respect thereof have expired, HUB agrees in writing that all
conditions precedent to the Closing have occurred (other than the delivery of
certificates, opinions and other instruments and documents to be delivered at
the Closing), and HUB has provided the Closing Notice. No accrual or reserve
made by JBI or any JBI 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 Pooling and Tax-Free Reorganization Treatment. Before the
Effective Time, neither HUB nor JBI 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, HUB 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.
5.17 Comfort Letters. HUB shall cause Arthur Andersen, its
independent public accountants, to deliver to JBI, and JBI shall cause Grant
Thornton, its independent public accountants, to deliver to HUB and to its
officers and directors who sign the Registration Statement for this transaction,
a "comfort letter" or "agreed upon procedures" letter, dated the date of the
mailing of the Joint Proxy Statement-Prospectus for the Shareholders Meeting of
JBI, in the form customarily issued by such accountants at such time in
transactions of this type, and in substance reasonably satisfactory to JBI.
5.18 Affiliates. Promptly, but in any event within two weeks,
after the execution and delivery of this Agreement, JBI shall deliver to HUB (a)
a letter identifying all persons who, to the knowledge of JBI, may be deemed to
be affiliates of JBI under Rule 145 of the 1933 Act and the pooling-of-interests
accounting rules, including, without limitation, all directors and executive
officers of JBI and (b) use its reasonable best efforts to cause each person who
may be deemed to be an affiliate of JBI to execute and deliver to HUB 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,
HUB shall use its reasonable best efforts to cause its directors and executive
officers (and other parties who may be deemed to be affiliates, if any) to enter
into letter agreements in the form of Exhibit 5.19-2 with HUB concerning the
pooling-of-interests accounting rules.
5.19 Operation of the JBI Division. For a period of no less
than three years following the Closing, HUB shall cause the Bank to operate a
separate division of the Bank to be known as the Jefferson Bank Division of
Hudson United Bank (the "Division"), which Division will be assigned
responsibility, within established policies and procedures of the Bank, for the
former business banking operations of the Jefferson Banks and of the Bank's
southern New Jersey branches, and for the residential mortgage lending and
consumer lending for the Bank as a whole.
5.20 Appointments. As of the Effective Time: (a) HUB and the
Bank shall cause Betsy Z. Cohen to be appointed as Chairperson and Chief
Executive Officer of the Division; (b) the Bank shall cause Robert B. Goldstein
to be appointed as President and Chief Operating Officer of the Division; (c)
the Bank shall invite the directors of JBI to serve on an advisory Board of
Directors for the Division; (d) HUB shall cause three persons designated by JBI
and reasonably acceptable to HUB to be appointed as directors of the Bank; and
(e) HUB shall cause Betsy Z. Cohen and William H. Lamb to be appointed as
directors of HUB. In connection with HUB's next annual shareholders meeting, HUB
shall cause Betsy Z. Cohen to be nominated for a three year term as director of
HUB.
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 JBI and by the requisite vote of the
shareholders of HUB. The HUB 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 HUB Common Stock shall have been qualified
in every state where such qualification is required under the applicable state
securities laws. The HUB Common Stock to be issued in connection with the
Merger, including HUB Common Stock to be issued for the JBI Stock Options, shall
have been approved for listing on the NYSE.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the FDIC, the New Jersey Department, the Pennsylvania Department,
the FRB, the SEC and (if necessary) the NJDEP and the PDEP) 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 JBI and the Jefferson Banks, taken as a
whole, to HUB. 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 HUB or JBI 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. HUB and JBI shall each have received an
opinion, dated as of the Effective Time, of Pitney, Hardin, Kipp & Szuch,
reasonably satisfactory in form and substance to JBI and its counsel and to HUB,
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 JBI; (iii) no gain or loss will be recognized by the JBI
shareholders upon the exchange of JBI Common Stock solely for HUB Common Stock;
(iv) the tax basis of any HUB Common Stock received in exchange for JBI Common
Stock shall equal the basis of the recipient's JBI 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 HUB Common Stock received in exchange for JBI Common Stock will
include the period during which JBI 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. HUB shall have received a letter,
dated the Closing Date, from its accountants, Arthur Andersen, reasonably
satisfactory to HUB and JBI, 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 HUB as a pooling-of-interests for
accounting purposes.
6.2. Conditions to the Obligations of HUB Under this
Agreement. The obligations of HUB 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 JBI and the Jefferson Banks. Except for those representations which are made
as of a particular date, the representations and warranties of JBI 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. JBI 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 JBI 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 JBI Disclosure Schedule,
materially adversely affect the representation as to which the supplement or
amendment relates.
(b) Opinion of Counsel. HUB shall have received an opinion of
counsel to JBI, dated the Closing Date, in form and substance reasonably
satisfactory to HUB, substantially to the effect set forth in accordance with
Exhibit 6.2(b) hereto.
(c) Certificates. JBI shall have furnished HUB with such
certificates of its officers or other documents to evidence fulfillment of the
conditions set forth in this Section 6.2 as HUB may reasonably request.
(d) Legal Fees. JBI shall have furnished HUB with letters from
all attorneys representing JBI and the Jefferson Banks 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. JBI shall have provided HUB 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 JBI, other than printing expenses (which are within the control of
HUB), shall be based upon normal and customary billing rates and fees.
6.3. Conditions to the Obligations of JBI Under this
Agreement. The obligations of JBI 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 HUB. Except for those representations which are made as of a particular date,
the representations and warranties of HUB 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. HUB 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 HUB 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 HUB Disclosure Schedule, materially adversely affect the
representation as to which the supplement or amendment relates.
(b) Opinion of Counsel to HUB. JBI shall have received an
opinion of counsel to HUB, dated the Closing Date, in form and substance
reasonably satisfactory to JBI, substantially to the effect set forth in
accordance with Exhibit 6.3(b) hereto.
(c) Certificates. HUB shall have furnished JBI with such
certificates of its officers and such other documents to evidence fulfillment of
the conditions set forth in this Section 6.3 as JBI may reasonably request.
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 JBI:
(a) by mutual written consent of the parties hereto;
(b) by HUB or JBI (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 JBI 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 HUB 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 HUB or JBI 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 HUB upon written notice to JBI 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 JBI and the Jefferson Banks, taken as a whole, to HUB;
(d) by HUB if (i) there shall have occurred an JBI Material
Adverse Change from that disclosed by JBI in JBI's Annual Report on Form 10-K
for the year ended December 31, 1998 or (ii) there was a material breach in any
representation, warranty, covenant, agreement or obligation of JBI hereunder and
such breach shall not have been remedied within 30 days after receipt by JBI of
notice in writing from HUB to JBI specifying the nature of such breach and
requesting that it be remedied;
(e) by JBI, if (i) there shall have occurred a HUB Material
Adverse Change from that disclosed by HUB in HUB's Annual Report on Form 10-K
for the year ended December 31, 1998, which change shall have resulted in a
material adverse effect on HUB (it being understood that those matters disclosed
in the HUB 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 HUB hereunder and such breach
shall not have been remedied within 30 days after receipt by HUB of notice in
writing from JBI specifying the nature of such breach and requesting that it be
remedied;
(f) by JBI, if JBI'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 HUB 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 JBI 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 JBI, if (either before or after the approval of this
Agreement by the stockholders of JBI) 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 business day period commencing with (and including) the Determination
Date, if both of the following conditions are satisfied:
(x) the Median Pre-Closing Price of HUB Common Stock
on the Determination Date (the "Determination Price"), is less than the HUB
Floor Price. The "HUB Floor Price" is 70% of the HUB Average Starting Date
Price. The "HUB Average Starting Date Price" is the average of the high and low
sale prices of HUB Common Stock on the trading day immediately preceding the
date hereof (the "Starting Date"), as the same shall be adjusted to reflect any
Capital Change; and
(y) (A) the quotient obtained by dividing the
Determination Price by the HUB Average Starting Date Price (the "HUB Ratio") is
less than (B) the quotient obtained by dividing the number calculated using the
index of financial institutions set forth on Exhibit A hereto (the "Index
Price") as of the close of business on the Determination Date by the Index Price
as of the close of business on the Starting Date and subtracting 0.20 from the
quotient in this clause (y)(B) (such number being referred to herein as the
"Index Ratio").
Notwithstanding the foregoing, if JBI elects to exercise its
termination right pursuant to this subsection (i), it shall give prompt written
notice to HUB (provided that such notice of election to terminate may be
withdrawn at any time within the aforementioned three business day period)).
During the two business day period commencing with its receipt of such notice,
HUB shall have the option of increasing the consideration to be received by the
holders of JBI 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 HUB Floor Price multiplied by the Exchange Ratio (as
then in effect) and the denominator of which is the Determination Price, 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 HUB Ratio. If HUB makes an election
contemplated by the preceding sentence, within such two business day period, it
shall give prompt written notice to JBI 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 HUB or JBI 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 JBI 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 JBI 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, JBI may bear the expenses of the Jefferson Banks.
(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 HUB, to:
Hudson United Bancorp.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: Kenneth T. Neilson, Chairman, President and
Chief Executive Officer
Copy to:
Hudson United Bancorp.
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 JBI, to:
JeffBanks, Inc.
1845 Walnut Street
Philadelphia, PA 19109
Attn.: Betsy Z. Cohen, Chairman and Chief Executive Officer
Copy to:
Ledgewood Law Firm, P.C.
1521 Locust Street, Suite 800
Philadelphia, PA 19102
Attn.: J. Baur Whittlesey, 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, HUB, the Bank, JBI and the Jefferson Banks
have caused this Agreement to be executed by their duly authorized officers as
of the day and year first above written.
ATTEST: HUDSON UNITED BANCORP
VIRGINIA A. LAZALA D. LYNN VAN BORKULO-NUZZO
By: ________________________ By: ___________________________
Virginia A. Lazala, D. Lynn Van Borkulo-Nuzzo,
Assistant Corporate Secretary Executive Vice President
ATTEST: JEFFBANKS, INC.
ROBERT GOLDSTEIN BETSY Z. COHEN
By: ________________________ By: _________________________________
Robert Goldstein Betsy Z. Cohen, Chairman,
President and Chief Executive Officer
ATTEST: HUDSON UNITED BANK
VIRGINIA A. LAZALA D. LYNN VAN BORKULO-NUZZO
By: ________________________ By: _________________________________
Virginia A. Lazala D. Lynn Van Borkulo-Nuzzo
Assistant Corporate Secretary Executive Vice President
ATTEST: JEFFERSON BANK
ROBERT GOLDSTEIN BETSY Z. COHEN
By: ________________________ By: _________________________________
President Betsy Z. Cohen, Chairman,
and Chief Executive Officer
ATTEST: JEFFERSON BANK OF NEW JERSEY
ROBERT GOLDSTEIN BETSY Z. COHEN
By: ________________________ By: ________________________________
President Betsy Z. Cohen, Chairman,
and Chief Executive Officer
<PAGE>
Exhibit A to
Merger Agreement
Index
- ------------------------------------------------- ------------------------------
Company Name Ticker
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Carolina First CAFC
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Centura Banks CBC
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Commerce Bancorp CBH
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Commercial Federal CFB
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Community First Bank CFBX
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Cullen/Frost CFR
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
First Bancorp FBP
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
First Midwest FMBI
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
FirstMerit Corp. FMER
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Premier Bancshs PMB
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Provident Bancshs PBKS
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Riggs National Corp RIGS
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Silicon Val Bkshrs SIVB
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Susquehan Bkshs SUSQ
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Trust Co Bank NY TRST
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
United Bancshares UBSI
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Whitney Hldg WTNY
- ------------------------------------------------- ------------------------------
The "Index Price" is determined by adding the price per common share of each of
the companies listed above on the appropriate date (i.e., the Starting Date or
the Determination Date, as the case nay be). If any company belonging to the
Index Group declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares, or similar
transaction between the Starting Date and the Determination Date, the price per
share of the common stock of such company on the Determination Date shall be
appropriately adjusted.
If, at any time after the Starting Date and before the Determination Date, the
common stock of any company on this Exhibit A ceases to be publicly traded or
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization, such company shall
be removed from the Index Group effective as of the Starting Date (i.e., such
Company shall not be considered part of the Index Group for any purposes in
connection with this Merger Agreement).
<PAGE>
EXHIBIT 5.19-1
FORM OF AFFILIATE LETTER FOR JBI AFFILIATES
_____________, 1999
Hudson United Bancorp
1000 MacArthur Boulevard
Mahwah, NJ 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed acquisition (the "Merger") of JeffBanks, Inc. ("JBI"), by Hudson United
Bancorp, a New Jersey corporation and registered bank holding company ("HUB"),
pursuant to the Agreement and Plan of Merger dated as of March 31, 1998 (the
"Agreement") between JBI, and its banking subsidiaries, Jefferson Bank and
Jefferson Bank of New Jersey, HUB and its bank subsidiary Hudson United Bank.
Capitalized terms used herein and not otherwise defined have the meanings
assigned to them in the Agreement. I currently own shares of JBI Common Stock.
As a result of the Merger, I will receive shares of HUB Common Stock in exchange
for my JBI Common Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of JBI, 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 HUB 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 JBI 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 JBI Common Stock owned by such person or entity, without notifying
HUB three business days in advance of the proposed transfer (the "Notice
Period") and giving HUB a reasonable opportunity to review the transfer before
it is consummated. HUB, 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 JBI 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 JBI 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 HUB 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, "JBI Common Stock" includes HUB Common Stock as
converted. I understand that HUB has agreed to publish financial results
covering at least 30 days of post-Merger combined operations of HUB and JBI 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 HUB 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 JBI at the time the Merger is submitted for a vote of JBI's shareholders, any
transfer by me of HUB Common Stock is restricted under Rule 145 promulgated by
the SEC under the 1933 Act. I agree not to transfer any HUB 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 HUB's counsel or counsel
reasonably acceptable to HUB, 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 HUB's
transfer agents with respect to the HUB Common Stock received by me and any of
my affiliates and that there will be placed on the certificates of the HUB
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 HUDSON UNITED
BANCORP, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES
OF HUDSON UNITED BANCORP"
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 HUB Common Stock to the
extent I felt necessary with my counsel or counsel for JBI.
Execution of this letter is not an admission on my part that I
am an "affiliate" of JBI 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 _______, 1999 by
HUDSON UNITED BANCORP
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 5.19-2
FORM OF AFFILIATE LETTER FOR HUB AFFILIATES
_______________, 1999
Hudson United Bancorp
1000 MacArthur Boulevard
Mahwah, NJ 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of JeffBanks, Inc. ("JBI") with and into Hudson
United Bancorp, a New Jersey corporation and registered bank holding company
("HUB"), pursuant to the Agreement and Plan of Merger dated as of June 28, 1999
(the "Agreement") between JBI, its bank subsidiaries, HUB and its bank
subsidiary. I currently own shares of HUB's common stock, no par value ("HUB
Common Stock").
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of HUB, 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 HUB and JBI 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 HUB 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 HUB Common Stock owned by
such person or entity, without notifying HUB three business days in advance of
the proposed transfer (the "Notice Period") and giving HUB a reasonable
opportunity to object to the transfer before it is consummated. HUB, 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 HUB 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 HUB 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 HUB 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 HUB has agreed to publish financial
results covering at least 30 days of post-Merger combined operations of HUB and
JBI 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 HUB Common Stock to the
extent I felt necessary with my counsel or counsel for HUB.
Execution of this letter is not an admission on my part that I
am an "affiliate" of HUB 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
________________, 1999 by
HUDSON UNITED BANCORP
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT 6.2
FORM OF OPINION OF COUNSEL TO JBI
TO BE DELIVERED TO HUB ON THE EFFECTIVE TIME
(a) 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 JBI and the
Jefferson Banks and the Agreement constitutes a valid and legally binding
obligation of JBI and each of the Jefferson Banks 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 banks 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).
(b) Subject to satisfaction of the conditions set forth in the
Agreement, neither the transactions contemplated in the Agreement, nor
compliance by JBI and each Jefferson Bank 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 JBI or the charter or bylaws of any
Jefferson Banks or (B) based on certificates of officers of JBI and each
Jefferson Bank 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 JBI or any Jefferson Bank is a party and which
was referenced in the JBI 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 JBI or any Jefferson Bank except
such material lien, instrument or obligation that has been disclosed to HUB
pursuant to the Agreement, or (iii) violate in any material respect any order,
writ, injunction, or decree known to such counsel, or any corporation or banking
law applicable to JBI or any Jefferson Bank.
(c) JBI is a corporation validly existing under the laws of
Pennsylvania, Jefferson Bank # 1 Bank is a validly existing bank under the laws
of Pennsylvania and Jefferson Bank #2 is a validly existing bank under the laws
of New Jersey and JBI and each Jefferson Bank 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 Joint Proxy Statement-Prospectus. The
deposits of each Jefferson Bank are insured to the maximum extent provided by
law by the Federal Deposit Insurance Corporation.
(d) Each JBI Subsidiary listed as such in the JBI Disclosure
Schedule is validly existing under the laws of the jurisdiction of its
incorporation.
(e) There is, to the actual knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or investigation
pending or threatened to which JBI or each Jefferson Bank is a party which
would, if determined adversely to JBI or any Jefferson Bank have a material
adverse effect on the business, properties, results of operations, or condition,
financial or otherwise, of JBI or any Jefferson Bank 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 HUB.
(f) All actions of the directors and shareholders of JBI and
each Jefferson Bank required by federal banking laws and regulations and
Pennsylvania law or New Jersey law or by the Certificate of Incorporation or
Bylaws of JBI or any Jefferson Bank, to be taken by JBI or any Jefferson Bank to
authorize the execution, delivery and performance of the Agreement and
consummation of the Merger have been taken.
(g) 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
JBI Disclosure Schedule, is required for the consummation by JBI or each
Jefferson Bank 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 HUB 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 JBI 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 HUB
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 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 JBI or any Jefferson Bank 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 JBI and any Jefferson
Bank.
Such counsel's opinion shall be limited to matters governed by
the corporate and banking laws of the Commonwealth of Pennsylvania and 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 HUB
TO BE DELIVERED TO JBI ON THE EFFECTIVE TIME
(a) HUB 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 HUB 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 Joint Proxy Statement-Prospectus on pages __ and __ under the
caption "_________________________." HUB is registered as a bank holding company
under the BHCA.
(b) The authorized capital stock of HUB consists of
____________ shares of common stock, no par value per share ("HUB Common Stock")
and _____________ shares of preferred stock (the "Authorized Preferred Stock).
The HUB 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 HUB.
(c) 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 HUB and the
Bank, and the Agreement constitutes a valid and legally binding obligation of
HUB and the Bank 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 banks 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).
(d) Subject to satisfaction of the conditions set forth in the
Agreement, neither the transactions contemplated in the Agreement, nor
compliance by HUB and the Bank 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 HUB or the Bank or (B) based on certificates of
officers of HUB and the Bank 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 HUB or the Bank is a party
and which was referenced in the HUB Disclosure Schedule; or (ii) violate in any
material respect any order, writ, injunction, or decree known to such counsel,
or any corporation or banking law applicable to HUB or the Bank.
(e) All actions of the directors and shareholders of HUB and
the Bank required by federal banking laws and regulations and New Jersey law or
by the Certificate of Incorporation or Bylaws of HUB and the Bank, to be taken
by HUB and the Bank to authorize the execution, delivery and performance of the
Agreement and consummation of the Merger have been taken.
(f) Assuming that there has been due authorization of the
Merger by all necessary corporate and governmental proceedings on the part of
JBI and that JBI has 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 Department of the Treasury, State of New Jersey
and the Secretary of State of the Commonwealth of Pennsylvania 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 JBI Common Stock will be converted as provided in
Article II of the Agreement.
(g) No approvals, authorizations, consents or other actions or
filings under federal banking law or New Jersey law ("Approvals") are required
to be obtained by HUB or the Bank in order to permit the execution and delivery
of the Agreement by HUB or the Bank and the performance by HUB 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 JBI.
(h) 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.
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 HUB 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 JBI 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 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 HUB or the Bank 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 HUB and the Bank.
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.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of June 28,
1999, is by and between Hudson United Bancorp, a New Jersey corporation and
registered bank holding company ("HUB"), and JeffBanks, Inc., a Pennsylvania
corporation and registered bank holding company ("JBI").
BACKGROUND
WHEREAS, HUB and JBI, as of the date hereof, are prepared to
execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which JBI will be merged with and into HUB (the "Merger"); and
WHEREAS, HUB has advised JBI that it will not execute the
Merger Agreement unless JBI executes this Agreement; and
WHEREAS, the Board of Directors of JBI has determined that the
Merger Agreement provides substantial benefits to the shareholders of JBI; and
WHEREAS, as an inducement to HUB to enter into the Merger
Agreement and in consideration for such entry, JBI desires to grant to HUB an
option to purchase authorized but unissued shares of common stock of JBI 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, HUB and JBI, intending
to be legally bound hereby, agree:
1. Grant of Option. JBI hereby grants to HUB an option to purchase 1,212,706
shares of common stock, $1.00 par value, of JBI (the "Common Stock") at a price
of $26.00 per share (the "Option Price"), on the terms and conditions set forth
herein (the "Option"); provided, however, that in no event shall the number of
shares for which this Option is exercisable exceed the lesser of (i) 19.9% of
the issued and outstanding shares of Common Stock, and (ii) such number of
shares of Common Stock that will trigger application of the provisions of
Subchapter E of Chapter 25 of the Pennsylvania Business Corporation Law.
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), HUB 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 HUB or an affiliate of HUB:
a. acquires beneficial ownership (as such term is defined in Rule 13d-3 as
promulgated under the Exchange Act) of at least 10% of the then outstanding
shares of Common Stock; or
b. enters into a letter of intent or an agreement, whether oral or written, with
JBI pursuant to which such person or any affiliate of such person would (i)
merge or consolidate, or enter into any similar transaction, with JBI, (ii)
acquire all or a significant portion of the assets or liabilities of JBI, or
(iii) acquire beneficial ownership of securities representing, or the right to
acquire beneficial ownership or to vote securities representing, 10% 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, JBI or any other business combination involving
JBI, 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, 10% 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 JBI called to vote on the Merger and JBI'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, JBI 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 HUB.
The term "Triggering Event" also means the taking of any
material direct or indirect action by JBI 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 HUB or an affiliate of HUB) 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 JBI,
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 10% of the assets or
liabilities of JBI. The term "significant number" means 10% 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 JBI or in soliciting or inducing any
other person (other than HUB 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 JBI to issue the shares of Common Stock covered by the
Option (the "Option Shares") or HUB 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.
JBI shall notify HUB promptly in writing of the occurrence of
any Triggering Event known to it, it being understood that the giving of such
notice by JBI shall not be a condition to the right of HUB to exercise the
Option. JBI will not take any action which would have the effect of preventing
or disabling JBI from delivering the Option Shares to HUB 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 HUB wishes to exercise the Option, HUB shall send
a written notice to JBI (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) HUB will
make payment to JBI of the aggregate price for the Option Shares so purchased by
wire transfer of immediately available funds to an account designated by JBI;
(b) JBI will deliver to HUB 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
JBI, registered in the name of HUB or its designee, in such denominations as
were specified by HUB in its notice of exercise and, if necessary, bearing a
legend as set forth below; and (c) HUB 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 JeffBanks, Inc., 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 HUB, JBI shall, if necessary for the
resale of the Option or the Option Shares by HUB, 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 HUB
shall specify in its request, and JBI 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 HUB shall
in no event have the right to have more than one such registration statement
become effective, and provided further that JBI shall not be required to prepare
and file any such registration statement in connection with any proposed sale
with respect to which counsel to JBI delivers to JBI and to HUB (which is
reasonably acceptable to HUB) 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 JBI may delay any registration of
Option Shares above for a period not exceeding 90 days in the event that JBI
shall in good faith determine that any such registration would adversely effect
an offering of securities by JBI for cash. HUB shall provide all information
reasonable requested by JBI for inclusion in any registration statement to be
filed hereunder.
In connection with such filing, JBI shall use its best efforts
to cause to be delivered to HUB such certificates, opinions, accountant's
letters and other documents as HUB 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 JBI 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 JBI and blue sky fees and expenses shall be paid by JBI.
Underwriting discounts and commissions to brokers and dealers relating to the
Option Shares, fees and disbursements of counsel to HUB and any other expenses
incurred by HUB in connection with such registration shall be borne by HUB. In
connection with such filing, JBI shall indemnify and hold harmless HUB against
any losses, claims, damages or liabilities, joint or several, to which HUB 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 JBI will reimburse HUB for any legal or
other expense reasonably incurred by HUB in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that JBI 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 HUB specifically for use in the preparation thereof. HUB will
indemnify and hold harmless JBI 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 HUB for use in the preparation of such
preliminary or final registration statement or such amendment or supplement
thereto; and HUB will reimburse JBI for any legal or other expense reasonably
incurred by JBI 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 JBI
with another entity, or any sale of all or substantially all of the assets of
JBI, 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 HUB and JBI 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 HUB 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 JBI agrees to cooperate with and furnish to the holder hereof such
information and documents as may be reasonably required to secure such
approvals.
7. Repurchase of Option.
a. At any time after the occurrence of a Repurchase Event (as defined below) (i)
at the request of the Holder, delivered prior to the termination of this
Agreement, JBI (or any successor thereto) shall repurchase the Option from the
holder of this Option (the "Holder") at a price (the "Option Repurchase Price")
equal to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which this
Option may then be exercised and (ii) at the request of the owner of Option
Shares from time to time (the "Owner"),delivered prior to the termination of
this Agreement, JBI (or any successor thereto) shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the market/offer price multiplied by
the number of Option Shares so designated. The term "market/offer price" shall
mean the highest of (i) the highest price per share of Common Stock paid by any
person that acquires beneficial ownership of 50% or more of the then outstanding
Common Stock, (ii) the price per share of Common Stock to be paid by any third
party pursuant to an agreement with JBI entered into after the date hereof and
prior to the date the Holder gives notice of the required repurchase of this
Option or the Owner gives notice of the required repurchase of Option Shares, as
the case may be, (iii) the highest closing price for shares of Common Stock
within the six-month period immediately preceding the date the Holder gives
notice of the required repurchase of this Option or the Owner gives notice of
the required repurchase of Option Shares, as the case may be, or (iv) in the
event of a sale of all or any substantial part of the assets or deposits of JBI
or any bank subsidiary of JBI (a "JBI Subsidiary"), the sum of the net price
paid in such sale for such assets or deposits and the current market value of
the remaining net assets of JBI and its Subsidiaries as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to JBI, divided by the
number of shares of Common Stock of JBI outstanding at the time of such sale on
a fully-diluted basis. In determining the market/offer price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to JBI.
b. The Holder and the Owner, as the case may be, may exercise its right to
require JBI to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to JBI, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the Owner,
as the case may be, elects to require JBI to repurchase this Option and/or the
Option Shares in accordance with the provisions of this Section 7. As promptly
as practicable, and in any event within five (5) business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, JBI shall deliver or cause
to be delivered to the Holder the Option Repurchase Price and/or to the Owner
the Option Share Repurchase Price therefor or the portion thereof that JBI is
not then prohibited under applicable law, regulation and administrative policy
from so delivering.
c. To the extent that JBI is prohibited under applicable law or regulation, or
as a consequence of governmental administrative policy, from repurchasing the
Option and/or the Option Shares in full, JBI shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five (5) business days
after the date on which JBI is no longer so prohibited; provided, however, that
if JBI at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of governmental administrative policy, from
delivering to the Holder and/or the Owner, as appropriate, the Option Repurchase
Price and the Option Share Repurchase Price, respectively, in full (and JBI
hereby undertakes to use its reasonable best efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish such repurchase), the Holder or Owner may
revoke its notice of repurchase of the Option and/or the Option Shares whether
in whole or to the extent of the prohibition, whereupon, in the latter case, JBI
shall promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that JBI is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Priceless the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by JBI described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth (30th) day after
such date, the Holder shall nonetheless have the right to exercise the Option
until the expiration of such 30-day period.
d. For purposes of this Section 7, a "Repurchase Event" shall be deemed to have
occurred upon the occurrence of any of the following events or transactions
after the date hereof: (i) any person other than HUB or any HUB Subsidiary (a
"Third Party") acquires beneficial ownership of fifteen percent (15%) or more of
the then outstanding Common Stock; or (ii) JBI enters into a written definitive
agreement with any Third Party providing for (i) the acquisition by a Third
Party of fifteen percent (15%) or more of the assets of JBI and its Subsidiaries
taken as a whole; or (ii) the acquisition by a Third Party of fifteen percent
(15%) or more of the outstanding Common Stock or any securities convertible into
or exchangeable or exercisable for shares of Common Stock that would constitute
fifteen percent (15%) or more of the outstanding Common Stock upon such
conversion, exchange or exercise; or (iii) the acquisition by JBI of the assets
or stock of a Third Party if, as a result, the outstanding shares of Common
Stock immediately prior thereto are increased by fifteen percent (15%); or (iv)
the merger, consolidation or business combination of JBI with or into a Third
Party where, following such merger, consolidation or business combination, the
shareholders of JBI (other than the Third Party or its affiliates) prior to such
transaction do not hold, immediately after such transaction, securities of the
surviving entity constituting more than fifty percent (50%) of the total voting
power of the surviving entity.
8. Representations and Warranties of JBI. JBI hereby represents and warrants to
HUB as follows:
a. Due Authorization. JBI 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
JBI.
b. Authorized Shares. JBI 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 JBI or any agreement, instrument, judgment, decree or
order applicable to JBI.
9. 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,
HUB shall have the right to seek money damages against JBI for a breach of this
Agreement.
10. 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.
11. Assignment or Transfer. HUB 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 HUB. HUB represents that it is acquiring
the Option for HUB's own account and not with a view to or for sale in
connection with any distribution of the Option or the Option Shares. HUB 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 HUB in connection therewith.
12. 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.
13. 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.
14. 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:
(a) If to HUB, to:
Hudson United Bancorp.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attn.: Kenneth T. Neilson, Chairman, President and
Chief Executive Officer
Copy to:
Hudson United Bancorp.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attn.: D. Lynn Van Borkulo-Nuzzo, Esq.
And copy to:
Pitney, Hardin, Kipp & Szuch
(mail to) P.O. Box 1945
Morristown, New Jersey 07962
(deliver to) 200 Campus Drive
Florham Park, New Jersey 07932
Attn.: Ronald H. Janis, Esq.
(b) If to JBI, to:
JeffBanks, Inc.
1845 Walnut Street
Philadelphia, PA 19109
Attn.: Betsy Z. Cohen, Chairman and Chief Executive Officer
Copy to:
Ledgewood Law Firm, P.C.
1521 Locust Street, Suite 800
Philadelphia, PA 19102
Attn.: J. Baur Whittlesey, 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).
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
16. 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.
17. 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.
18. 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.
19. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
20. 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 twenty-four (24) months following the date of the termination of the Merger
Agreement or the consummation of any proposed transactions which constitute the
Triggering Event.
21. Severability. If for any reason a court or a federal or state regulatory
agency of competent jurisdiction determines that the Holder is not permitted to
acquire, or JBI is not permitted to repurchase pursuant to Section 7, the full
number of shares of Common Stock provided herein, it is the express intention of
JBI to allow the Holder to acquire or to require JBI to repurchase such lesser
number of shares as may be permissible, without any amendment or modification
hereof.
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.
ATTEST: JEFFBANKS, INC.
ROBERT GOLDSTEIN BETSY Z. COHEN
By: ________________________ By: _________________________________
Robert Goldstein Robert Goldstein Chairman,
President and Chief Executive Officer
ATTEST: HUDSON UNITED BANCORP
VIRGINIA A. LAZALA D. LYNN VAN BORKULO-NUZZO
By: ________________________ By: _________________________________
Virginia A. Lazala D. Lynn Van Borkulo-Nuzzo
Assistant Corporate Secretary Executive Vice-President
FOR IMMEDIATE RELEASE
For: Hudson United Bancorp.
Contact:
Kenneth T. Neilson, Chairman & CEO Chris Witkowski, Sr. Vice President
201-236-2631 Assistant to the President, 201-236-6144
HUDSON UNITED BANCORP SIGNS DEFINITIVE AGREEMENT
WITH JEFFBANKS, INC.
(June 29, 1999) - Hudson United Bancorp (NYSE: HU), today announced that it has
signed a definitive agreement to merge with JeffBanks, Inc. (NASDAQ: JEFF), a
$1.7 billion holding company with 32 branches located throughout the greater
Philadelphia area of Pennsylvania and South Jersey. This merger significantly
strengthens Hudson United's position in the Southern New Jersey market and
extends its franchise into a fourth state, Pennsylvania. Together with Southern
Jersey Bancorp, a $470 million asset institution, whose merger with Hudson
United Bancorp is also being announced today, the combined entity is the second
largest banking company headquartered in New Jersey with $9.5 billion in assets
and over 200 branch offices throughout New Jersey, Connecticut, New York and
Pennsylvania.
Kenneth T. Neilson, Chairman and CEO of Hudson United Bancorp and Betsy Z.
Cohen, Chairman and CEO of JeffBanks, Inc. announced their intent to create the
$3.3 billion Jefferson Bank Division of Hudson United Bank. This entity will
combine Jefferson Bank, the existing South Jersey branches and lending
businesses of Hudson United and Southern Jersey Bancorp.
Under the terms of the agreement between JeffBanks, Inc. and Hudson United,
which is intended to be a tax free exchange, JeffBanks, Inc. shareholders will
receive .95 shares of Hudson United Bancorp common stock for each share of
JeffBanks, Inc. common stock. The common stock of Hudson United Bancorp closed
at $34.94 per share equating to a price of $33.19 per share of JeffBanks, Inc.
common stock. The total transaction value is $371 million, which is 2.6 times
JeffBanks book value and 20 times JeffBanks 1999 IBES earnings estimates, with a
deposit premium of 19%. JeffBanks, Inc. has issued an option to Hudson United
Bancorp which would enable them to purchase 1,212,706 shares of JeffBanks, Inc.
common stock under certain defined circumstances.
Pending appropriate corporate, shareholder and regulatory approvals, the
agreement is expected to be completed by the fourth quarter of 1999 and to be
accounted for as a pooling of interests.
Operating through its subsidiaries, Jefferson Bank (Pennsylvania) and Jefferson
Bank of NJ, Philadelphia-based JeffBanks, Inc. operates 32 branches in
Burlington and Camden counties in New Jersey, and Chester, Delaware, Montgomery
and Philadelphia counties in Pennsylvania.
"We are delighted to join forces with JeffBanks, Inc. in a transaction that
represents our first foray into the state of Pennsylvania," said Neilson.
"JeffBanks' strong financial track record and leadership position within the
areas of small business lending and mortgage banking make this transaction a
strong strategic fit while providing Hudson United with an immediate presence in
one of the premiere banking markets in the country."
Betsy Z. Cohen, Chairman and CEO of JeffBanks, Inc. said "I view this as an
opportunity to reinforce the Delaware Valley presence of Jefferson Bank. This
new combined entity will bring larger institutional resources to this region.
Equally important, we will continue to be committed to high levels of customer
service, with local control of the credit decision process." Cohen will be
Chairman and CEO of the newly created Jefferson Bank Division of Hudson United
Bank. Ms. Cohen will be a member of the Board of Directors and will join the
Executive Committee of Hudson United Bancorp.
Jefferson Bank President and COO, Robert B. Goldstein said, "The key reason for
the decision to align Jefferson with Hudson United is the philosophical synergy
and intense focus on the delivery of the customer experience and building
long-lasting relationships. Jefferson Banks' outstanding team of commercial
lending and branch personnel will continue to deliver Jefferson's trademark
brand of highly personalized customer service to consumers and small and
mid-sized businesses in our expanded market." Goldstein will continue in his
current capacity for the newly created division and will also be a member of the
Board of Directors at Hudson United Bank.
Neilson ended, " The merger with the Jefferson franchise will allow us to
compete even more effectively in the greater Philadelphia market. This alliance
expands our marketplace to Philadelphia and its suburbs, as well as bringing
core competencies in several areas which we will export throughout our
franchise."
Hudson United Bancorp's banking subsidiary offers a full array of innovative
products and services to retail and commercial customers including: imaged
checking accounts, 24-hour telephone banking, loans by phone, alternative
investments, insurance products, trust services and a wide variety of commercial
loans and services including international services, cash management services,
asset based loans, SBA loans and much more.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 28, 1999
("Agreement"), is among Hudson United Bancorp. ("HUB"), 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 HUB, Southern Jersey Bancorp of Delaware, Inc., a Delaware
corporation and registered bank holding company ("SJBDI"), and Farmers and
Merchants National Bank, a national bank and wholly-owned subsidiary of SJBDI
("FAMNB").
RECITALS
The respective Boards of Directors of HUB and SJBDI have each
determined that it is in the best interests of HUB and SJBDI and their
respective shareholders for HUB to acquire SJBDI by merging SJBDI with and into
HUB with HUB surviving and SJBDI shareholders receiving the consideration
hereinafter set forth. Immediately after the merger of SJBDI into HUB, FAMNB
shall be merged with and into the Bank with the Bank surviving.
The respective Boards of Directors of SJBDI, HUB, the Bank and
FAMNB have each duly adopted and approved this Agreement and the Board of
Directors of SJBDI has directed that it be submitted to SJBDI's shareholders for
approval.
As a condition for HUB to enter into this Agreement, HUB has
required that it receive an option on certain authorized but unissued shares of
SJBDI Common Stock (as hereinafter defined) and, simultaneously with the
execution of this Agreement, SJBDI is issuing an option to HUB (the "HUB Stock
Option") to purchase certain shares of the authorized and unissued SJBDI Common
Stock subject to the terms and conditions set forth in the Agreement governing
the HUB Stock Option (the "HUB Stock Option Agreement").
As a condition for SJBDI to enter into this Agreement, SJBDI
has required that it receive an put option on certain authorized but unissued
shares of SJBDI Common Stock (as hereinafter defined) and, simultaneously with
the execution of this Agreement, HUB is issuing a put option to SJBDI (the
"SJBDI Put Option") to require HUB to purchase certain shares of the authorized
and unissued SJBDI Common Stock subject to the terms and conditions set forth in
the Agreement governing the HUB Stock Option Agreement.
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), SJBDI shall be merged
with and into HUB (the "Merger") in accordance with the New Jersey Business
Corporation Act (the "NJBCA") and the Delaware General Corporation Law (the
"DGCL") and HUB 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 HUB and SJBDI and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of HUB and SJBDI 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 HUB and SJBDI 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 HUB and SJBDI 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 HUB or SJBDI 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 HUB or SJBDI if the Merger had not occurred.
1.3. Certificate of Incorporation. As of the Effective Time,
the certificate of incorporation of HUB 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 HUB 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 HUB shall be the directors and officers of the
Surviving Corporation.
1.6 Closing, Closing 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 HUB on at least five business days notice (the
"Closing Notice") given by HUB to SJBDI, 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).
The Closing Notice shall specify the scheduled Closing Date, and shall specify
the "Determination Date," which shall be the fifth business day prior to the
scheduled Closing Date. Simultaneous with or immediately following the Closing,
HUB and SJBDI shall cause to be filed certificates of merger, in form and
substance satisfactory to HUB and SJBDI, with the Department of the Treasury,
State of New Jersey (the "New Jersey Certificate of Merger") and with the
Secretary of State of the State of Delaware (the "Delaware Certificate of
Merger" and, together with the New Jersey Certificate of Merger, the
"Certificates of Merger"). The Certificates 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 HUB and SJBDI (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 Certificates
of Merger, the Merger shall become effective upon (and the "Effective Time"
shall be) the time of the filing of the later of the two Certificates of Merger.
1.7 The Bank Merger. Immediately following the Effective Time,
FAMNB shall be then merged with and into the Bank (the "Bank Merger") in
accordance with the provisions of the New Jersey Banking Act of 1948, as amended
(the "Banking Act") and applicable federal law. 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 FAMNB shall cease and the Surviving Bank
shall be considered the same business and corporate entity as FAMNB and the Bank
and all of the property, rights, privileges, powers and franchises of FAMNB 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 FAMNB
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. Following the
execution of this Agreement, FAMNB and the Bank shall execute and deliver a
merger agreement (the "Bank Merger Agreement"), in form and substance reasonably
satisfactory to the parties hereto, as substantially set forth in Exhibit 1.7
hereto, for delivery to the Commissioner of the New Jersey Department of Banking
and Insurance (the "Department"), the Federal Deposit Insurance Corporation (the
"FDIC") and the Office of the Comptroller of the Currency (the "OCC") for
approval of the Bank Merger.
ARTICLE II - CONVERSION OF SJBDI SHARES
2.1. Conversion of SJBDI Common Stock. Each share of common
stock, par value $1.67 per share, of SJBDI ("SJBDI 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 SJBDI 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 1.26
shares (the "Exchange Ratio") of Common Stock, no par value, of HUB ("HUB Common
Stock") subject to adjustment as provided in Section 2.1(c) and subject to the
payment of cash in lieu of fractional shares in accordance with Section 2.2(e).
(b) Cancellation of SJBDI Certificates. After the
Effective Time, all such shares of SJBDI 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 SJBDI Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of SJBDI Common Stock except as otherwise provided herein
or by law. Such certificates previously evidencing such shares of SJBDI Common
Stock (other than those canceled pursuant to Section 2.1(d)) shall be exchanged
for certificates evidencing shares of HUB Common Stock issued pursuant to this
Article II, upon the surrender of such certificates in accordance with this
Article II. No fractional shares of HUB 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 HUB 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 (a "Capital Change"), the Exchange Ratio 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 SJBDI Common Stock
held by SJBDI in its treasury or owned by HUB or by any of HUB'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, HUB shall
deposit, or shall cause to be deposited, with Hudson United Bank, Trust
Department or another bank or trust company designated by HUB and reasonably
acceptable to SJBDI (the "Exchange Agent"), for the benefit of the holders of
shares of SJBDI Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates evidencing shares of HUB Common Stock
and cash in such amount such that the Exchange Agent possesses such number of
shares of HUB Common Stock and such amount of cash as are required to provide
all of the consideration required to be exchanged by HUB pursuant to the
provisions of this Article II (such certificates for shares of HUB 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 HUB 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, HUB 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 SJBDI Common Stock
(the "Certificates"), (i) a letter of transmittal (the form and substance of
which is reasonably agreed to by HUB and SJBDI 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 HUB may
reasonably specify) and (ii) instructions for effecting the surrender of the
Certificates in exchange for certificates evidencing shares of HUB 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
HUB Common Stock which such holder has the right to receive in respect of the
shares of SJBDI Common Stock formerly evidenced by such Certificate in
accordance with Section 2.1 and (y) cash in lieu of fractional shares of HUB
Common Stock to which such holder may be entitled pursuant to Section 2.2(e)
(the shares of HUB 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 SJBDI Common Stock which is not registered in the transfer records
of SJBDI, a certificate evidencing the proper number of shares of HUB 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 SJBDI 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 HUB
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to HUB 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 HUB 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 HUB 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 HUB 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 HUB Common Stock.
(d) No Further Rights in SJBDI Common Stock. All shares of HUB
Common Stock issued and cash paid upon conversion of the shares of SJBDI 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 SJBDI
Common Stock.
(e) No Fractional Shares; Median Pre-Closing Price. No
certificates or scrip evidencing fractional shares of HUB 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 HUB. Cash shall be paid in lieu of fractional shares of HUB
Common Stock, based upon the Median Pre-Closing Price of the HUB Common Stock on
the Closing Date. The "Median Pre-Closing Price" shall be determined by taking
the price half-way between the Closing Prices left after discarding the four
lowest and four highest Closing Prices in the 10 consecutive trading day period
which ends on (and includes) the Determination Date. The "Closing Price" shall
mean the closing price of HUB Common Stock as supplied by the New York Stock
Exchange 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 New York Stock
Exchange, or such other national securities exchange on which HUB Common Stock
may be traded after the date hereof, is referred to herein as the "NYSE")
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of SJBDI Common Stock for two
years after the Effective Time shall be delivered to HUB, upon demand, and any
holders of SJBDI Common Stock who have not theretofore complied with this
Article II shall thereafter look only to HUB for, and HUB will provide, the
Merger Consideration, dividends and distributions to which they are entitled.
(g) No Liability. Neither HUB, the Bank nor the Exchange Agent
shall be liable to any holder of shares of SJBDI Common Stock for any such
shares of HUB 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. HUB 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 SJBDI Common Stock, the minimum amounts (if any)
that HUB 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 HUB,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of SJBDI Common Stock in respect of which such
deduction and withholding was made by HUB.
2.3. Stock Transfer Books. At the Effective Time, the stock
transfer books of SJBDI shall be closed and there shall be no further
registration of transfers of shares of SJBDI Common Stock thereafter on the
records of SJBDI. On or after the Effective Time, any Certificates presented to
the Exchange Agent or HUB for transfer shall be converted into the Merger
Consideration.
2.4. SJBDI Stock Options. Other than the HUB Stock Option, all
options which may be exercised for issuance of SJBDI Common Stock (each, a
"Stock Option" and collectively the "Stock Options") are described in the SJBDI
Disclosure Schedule and are issued and outstanding pursuant to the Stock Option
and Stock Appreciation Plans adopted on March 25, 1993 and December 8, 1994
(collectively, the "SJBDI Stock Option Plan") and the agreements pursuant to
which such Stock Options were granted (each, an "Option Grant Agreement"). HUB
acknowledges and agrees to honor the provisions of the SJBDI Stock Option Plan
and the Option Grant Agreements, including those relating to vesting and
conversion in connection with a change in control of SJBDI. Each Stock Option
outstanding at the Effective Time shall be converted into the right to receive
immediately after the Effective Time a number of whole shares of HUB Common
Stock equal to the positive number (or zero, if the result is negative)
determined by (x) subtracting (i) the aggregate exercise price for the Stock
Option from (ii) the product determined by multiplying (A) the number of shares
of SJBDI Common Stock covered by the Stock Option, times (B) the Exchange Ratio,
times (C) the Closing Price, and (y) dividing the resulting number by the
Closing Price. No fractional shares of HUB Common Stock shall be issued pursuant
to this Section 2.4 and in lieu thereof, each optionee who would otherwise be
entitled to a fractional interest will receive an amount in cash determined by
multiplying such fractional interest by the Closing Price.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SJBDI
References herein to "SJBDI 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 SJBDI to
HUB. SJBDI hereby represents and warrants to HUB as follows:
3.1. Corporate Organization.
(a) SJBDI is a corporation duly organized and validly existing
under the laws of the State of Delaware. SJBDI 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 SJBDI and the SJBDI
Subsidiaries (as defined below), taken as a whole. SJBDI is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the
"BHCA").
(b) Each SJBDI Subsidiary and its jurisdiction of
incorporation is listed in the SJBDI Disclosure Schedule. For purposes of this
Agreement, the term "SJBDI Subsidiary" means any corporation, partnership, joint
venture or other legal entity in which SJBDI, directly or indirectly, owns at
least a 50% stock or other equity interest or for which SJBDI, 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 "SJBDI Subsidiary" shall include any entity
which was a SJBDI Subsidiary at any time during such period. The term "SJBDI
Subsidiary" shall not include any entity in which SJBDI's equity interest was
acquired pursuant to a debt previously contracted. FAMNB is a national bank duly
organized and validly existing in stock form under the laws of the United
States. All eligible accounts of depositors issued by FAMNB are insured by the
Bank Insurance Fund of the FDIC (the "BIF") to the fullest extent permitted by
law. Each SJBDI 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 SJBDI and the SJBDI Subsidiaries, taken as a whole.
(c) The SJBDI Disclosure Schedule sets forth true and complete
copies of the Certificate of Incorporation and Bylaws, as in effect on the date
hereof, of SJBDI and each SJBDI Subsidiary. Except as set forth in Disclosure
Schedule 3.1(b), FAMNB and SJBDI 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 SJBDI
consists of 5,000,000 shares of SJBDI Common Stock, $1.67 par value, and 500,000
shares of SJBDI preferred stock, no par value ("SJBDI Preferred Stock"). As of
June 27, 1999, there were 1,307,683 shares of SJBDI Common Stock issued and
outstanding, including 179,602 treasury shares. As of June 27, 1999, there were
75,480 shares of SJBDI Common Stock issuable upon exercise of outstanding stock
options. No SJBDI Preferred Stock has been issued or is outstanding. The SJBDI
Disclosure Schedule contains (i) a list of all Stock Options, their strike
prices and expiration dates, and (ii) true and complete copies of the SJBDI
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 SJBDI Stock Option Plan and Option Grant Agreements pursuant to which such
Stock Options were granted. All issued and outstanding shares of SJBDI Common
Stock, and all issued and outstanding shares of capital stock of each SJBDI
Subsidiary, have been duly authorized and validly issued, are fully paid,
nonassessable (other than pursuant to federal law), and free of preemptive
rights and are free and clear of any liens, encumbrances, charges, restrictions
or rights of third parties imposed by SJBDI or any SJBDI Subsidiary. Except for
the Stock Options listed on the SJBDI Disclosure Schedule and the HUB Stock
Option and the SJBDI Put Option, neither SJBDI nor FAMNB 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 SJBDI or FAMNB 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; there are
no agreements or understandings with respect to voting of any such shares as to
which SJBDI or FAMNB is a party, and, to the knowledge of SJBDI, there are no
other 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 SJBDI, and except as set forth in the SJBDI Disclosure
Schedule, SJBDI and FAMNB 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 SJBDI and FAMNB in accordance with
their respective Certificates or Articles 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 SJBDI or FAMNB are
necessary to consummate the transactions so contemplated. Without limiting the
foregoing, the SJBDI Board of Directors has taken all actions necessary so that
the transactions contemplated hereby will not be adversely affected by SJBDI's
Shareholder Rights Agreement dated November 30, 1989, as amended (the "SJBDI
Shareholder Rights Plan"). This Agreement has been duly and validly executed and
delivered by SJBDI and FAMNB, and constitutes a valid and binding obligation of
each of SJBDI and FAMNB, enforceable against SJBDI and FAMNB in accordance with
its terms, except to the extent that enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, conservatorship,
receivership or other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the rights of
creditors of national banks or their holding companies, (ii) general equitable
principles, and (iii) laws relating to the safety and soundness of insured
depository institutions and except that no representation is made as to the
effect or availability of equitable remedies or injunctive relief.
(b) Neither the execution and delivery of this Agreement by
SJBDI or FAMNB, nor the consummation by SJBDI or FAMNB of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by SJBDI
or FAMNB with any of the terms or provisions hereof, will (i) violate any
provision of SJBDI's or FAMNB' Certificate or Articles 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 SJBDI, FAMNB or any of their
respective properties or assets, or (iii) except as set forth in the SJBDI
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 SJBDI or FAMNB 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 SJBDI or FAMNB 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 SJBDI and the SJBDI
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 OCC, the New Jersey Department of Environmental Protection (the "DEP") (if
required), the Securities and Exchange Commission (the "SEC"), and the
shareholders of SJBDI, 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 SJBDI or FAMNB in connection with (x) the execution and delivery by
SJBDI of this Agreement and (y) the consummation by SJBDI of the Merger, and the
consummation by SJBDI and FAMNB of the other transactions contemplated hereby,
except (i) such as are listed in the SJBDI 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
SJBDI and the SJBDI Subsidiaries taken as a whole or prevent or materially delay
the consummation of the transactions contemplated hereby. To the knowledge of
SJBDI, no fact or condition exists which SJBDI has reason to believe will
prevent it and FAMNB from obtaining the aforementioned consents and approvals.
3.4. Financial Statements; Reserves.
(a) The SJBDI Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of SJBDI as of December 31, 1997
and 1998, 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 1996 through 1998, in each case accompanied by
the audit report of Athey & Company, Certified Public Accountants, Professional
Association, independent public accountants with respect to SJBDI ("Athey &
Co."), and the unaudited consolidated statement of condition of SJBDI as of
March 31, 1999 and the related unaudited consolidated statements of income and
cash flows for the three months ended March 31, 1998 and 1999, as reported in
SJBDI's Quarterly Report on Form 10-Q, filed with the SEC under the Securities
Exchange Act of 1934, as amended ("1934 Act") (collectively, the "SJBDI
Financial Statements"). In the opinion of the management of SJBDI and its
accountants, as of December 31, 1998, the allowance for loan losses in the SJBDI
Financial Statements was adequate pursuant to generally accepted accounting
principles ("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 OCC. In the opinion of the
management of SJBDI and its accountants, as of December 31, 1998, the reserve
for OREO properties (or if no reserve, the carrying value of OREO properties) in
the SJBDI 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 OCC. In all other respects, the SJBDI 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 condition of SJBDI 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 SJBDI for the respective periods set forth therein.
(b) The books and records of SJBDI and all of the SJBDI
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 SJBDI Financial Statements (including the notes
thereto), as of December 31, 1998, neither SJBDI nor any SJBDI Subsidiary had
any liabilities, whether absolute, accrued, contingent or otherwise, material to
the business, operations, assets or financial condition of SJBDI and the SJBDI
Subsidiaries, taken as a whole which were required by GAAP (consistently
applied) to be disclosed in SJBDI's consolidated statement of condition as of
December 31, 1998 or the notes thereto. Since December 31, 1998, neither SJBDI
nor any SJBDI Subsidiary has incurred any liabilities except in the ordinary
course of business and consistent with past business practice, except as related
to the transactions contemplated by this Agreement or except as set forth in the
SJBDI Disclosure Schedule.
3.5. Broker's and Other Fees. Except as set forth on Section
3.5 of the SJBDI Disclosure Schedule, neither SJBDI nor the SJBDI 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. Other than as set forth on Section 3.5 of the SJBDI 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
SJBDI or the SJBDI Subsidiaries.
3.6. Absence of Certain Changes or Events.
(a) Except as disclosed in the SJBDI Disclosure Schedule,
there has not been any SJBDI Material Adverse Change (as hereinafter defined)
since December 31, 1998 and to the knowledge of SJBDI, no fact or condition
exists which SJBDI believes will cause such a SJBDI Material Adverse Change in
the future. "SJBDI Material Adverse Change" means any change which is material
and adverse to the consolidated financial condition, results of operations,
business or assets of SJBDI and the SJBDI Subsidiaries taken as a whole, other
than (i) 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, (ii) reasonable expenses incurred in connection with this Agreement
and the transactions contemplated hereby, (iii) payments to executive officers
or other employees of SJBDI or FAMNB pursuant to agreements or arrangements with
such persons, which agreements or arrangements are included in the SJBDI
Disclosure Schedule, or (iv) actions or omissions of SJBDI or any SJBDI
Subsidiary either specifically permitted by this Agreement or taken with the
prior written consent of HUB in contemplation of the transactions contemplated
hereby (including without limitation any actions taken by SJBDI or FAMNB
pursuant to Section 5.15 of this Agreement).
(b) Except as set forth in the SJBDI Disclosure Schedule,
neither SJBDI nor any SJBDI Subsidiary has taken or permitted to be taken any of
the actions set forth in Section 5.2 hereof between December 31, 1998 and the
date hereof and, except for execution of this Agreement, and the other documents
contemplated hereby, SJBDI and each SJBDI Subsidiary has conducted their
respective businesses only in the ordinary course, consistent with past
practice.
3.7. Legal Proceedings. Except as disclosed in the SJBDI
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of SJBDI and the SJBDI Subsidiaries, neither SJBDI nor any SJBDI
Subsidiary is a party to any, and there are no pending or, to the knowledge of
SJBDI, threatened legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature against SJBDI or any SJBDI
Subsidiary which, if decided adversely to SJBDI or any SJBDI Subsidiary, are
reasonably likely to have a material adverse effect on the business, operations,
assets or financial condition of SJBDI and the SJBDI Subsidiaries taken as a
whole. Except as disclosed in the SJBDI Disclosure Schedule, neither SJBDI nor
any SJBDI Subsidiary is a party to any order, judgment or decree entered in any
lawsuit or proceeding which is material to SJBDI or such SJBDI Subsidiary.
3.8. Taxes and Tax Returns.
(a) SJBDI and each SJBDI 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
HUB in writing) or against which reserves have been established. SJBDI and each
SJBDI 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 SJBDI or such SJBDI Subsidiary through such date. None of the federal
or state income tax returns of SJBDI or any SJBDI Subsidiary have been examined
by the Internal Revenue Service (the "IRS") or the New Jersey or Delaware
Divisions of Taxation within the past six years. To the knowledge of SJBDI,
except as disclosed in the SJBDI 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 SJBDI or any SJBDI Subsidiary, nor has SJBDI or any SJBDI 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 disclosed in the SJBDI Disclosure Schedule,
neither SJBDI nor any SJBDI 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 SJBDI or such SJBDI
Subsidiary (nor, to the knowledge of SJBDI, has the IRS 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) Except as set forth in Note 13 to the 1998 SJBDI Financial
Statements, neither SJBDI nor any SJBDI Subsidiary has any tax loss
carryforwards.
3.9. Employee Benefit Plans.
(a) Except as set forth on the SJBDI Disclosure Schedule,
neither SJBDI nor any SJBDI Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "SJBDI 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 "SJBDI 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 SJBDI nor any SJBDI Subsidiary has, since
September 2, 1974, contributed to any "Multiemployer Plan," within the meaning
of Section 3(37) of ERISA.
(b) SJBDI has previously delivered to HUB, and included in the
SJBDI Disclosure Schedule, a complete and accurate copy of each of the following
with respect to each of the SJBDI Pension Plans and SJBDI 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 SJBDI 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 SJBDI Pension Plan's actuary, did
not exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the knowledge of SJBDI, 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 SJBDI or
any SJBDI 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 SJBDI Pension Plan
have been paid. All contributions required to be made to each SJBDI 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 SJBDI which have not
been paid have been properly recorded on the books of SJBDI .
(f) Except as disclosed in the SJBDI Disclosure Schedule, each
of the SJBDI Pension Plans, SJBDI Welfare Plans and each other employee benefit
plan and arrangement identified on the SJBDI 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 SJBDI Disclosure Schedule, if SJBDI
maintains any SJBDI Pension Plan, SJBDI 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 SJBDI is not aware of any fact or circumstance which
would disqualify any plan.
(g) To the knowledge of SJBDI, 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 SJBDI Welfare Plan or SJBDI Pension Plan
that would result in any material tax or penalty for SJBDI or any SJBDI
Subsidiary.
(h) No SJBDI 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 SJBDI Pension Plan.
(i) No "accumulated funding deficiency," within the meaning of
Section 412 of the Code, has been incurred with respect to any SJBDI Pension
Plan.
(j) There are no material pending, or, to the knowledge of
SJBDI, material threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of, or against any of the SJBDI Pension Plans or the
SJBDI Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the SJBDI Disclosure Schedule.
(k) Except as disclosed in the SJBDI Disclosure Schedule, no
SJBDI Pension Plan or SJBDI 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 SJBDI 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 SJBDI Financial Statements and
established in accordance with GAAP.
(m) With respect to each SJBDI Pension Plan and SJBDI Welfare
Plan that is funded wholly or partially through an insurance policy, there will
be no liability of SJBDI or any SJBDI 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 SJBDI Disclosure Schedule, and
(ii) as set forth in the SJBDI Disclosure Schedule, or as expressly agreed to by
HUB 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 SJBDI or any SJBDI 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 SJBDI
Pension Plan or SJBDI Welfare Plan.
(o) Except for the SJBDI Pension Plans and the SJBDI Welfare
Plans, and except as set forth on the SJBDI Disclosure Schedule, SJBDI has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of SJBDI or any
SJBDI Subsidiary or any predecessor of any thereof. The SJBDI 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 SJBDI Disclosure Schedule,
SJBDI 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 SJBDI 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 knowledge
of SJBDI, neither SJBDI nor any SJBDI Pension Plan or SJBDI 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 SJBDI Disclosure Schedule,
SJBDI does not maintain any retirement plan or retiree medical plan or
arrangement for directors. The SJBDI Disclosure Schedule sets forth the complete
documentation and actuarial evaluation of any such plan.
3.10. Reports.
(a) The SJBDI Disclosure Schedule lists, and as to item (i)
below SJBDI has previously delivered to HUB a complete copy of, each (i) final
registration statement, prospectus, annual, quarterly or current report and
definitive proxy statement filed by SJBDI since January 1, 1997 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 SJBDI to its shareholders as a class since January 1, 1997, 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, 1997, (i) SJBDI has filed all reports
that it was required to file with the SEC under the 1934 Act, and (ii) SJBDI and
FAMNB 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, SJBDI promptly will
deliver or make available to HUB 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 SJBDI
Disclosure Schedule lists the dates of all examinations of SJBDI or FAMNB
conducted by either the FRB, the OCC or the FDIC since January 1, 1997 and the
dates of any responses thereto submitted by SJBDI or FAMNB.
3.11. SJBDI and FAMNB Information. The information relating to
SJBDI and FAMNB (unless objected to by SJBDI), this Agreement, and the
transactions contemplated hereby (except for information relating solely to HUB)
to be contained in the Proxy Statement-Prospectus (as defined in Section 5.6(a)
hereof) to be delivered to shareholders of SJBDI in connection with the
solicitation of their approval of the Merger, as of the date the Proxy
Statement-Prospectus is mailed to shareholders of SJBDI, 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 SJBDI Disclosure Schedule, SJBDI and each SJBDI 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 SJBDI or such SJBDI 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 SJBDI and the SJBDI Subsidiaries
taken as a whole) and SJBDI 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 SJBDI Disclosure Schedule, (i) neither SJBDI nor any SJBDI 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 SJBDI or
any SJBDI Subsidiary to any officer, employee, director or consultant thereof.
The SJBDI Disclosure Schedule sets forth true and correct copies of all
severance or employment agreements with officers, directors, employees, agents
or consultants to which SJBDI or any SJBDI Subsidiary is a party.
(b) Except as disclosed in the SJBDI Disclosure Schedule and
except for loan commitments, loan agreements and loan instruments entered into
or issued by FAMNB in the ordinary course of business, (i) as of the date of
this Agreement, neither SJBDI nor any SJBDI 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 SJBDI and the SJBDI Subsidiaries
taken as a whole, (ii) no commitment, agreement or other instrument to which
SJBDI or any SJBDI Subsidiary is a party or by which either of them is bound
limits the freedom of SJBDI or any SJBDI Subsidiary to compete in any line of
business or with any person, and (iii) neither SJBDI nor any SJBDI Subsidiary is
a party to any collective bargaining agreement.
(c) Except as disclosed in the SJBDI Disclosure Schedule,
neither SJBDI nor any SJBDI Subsidiary or, to the knowledge of SJBDI, 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 FAMNB 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 SJBDI and the SJBDI Subsidiaries, taken as a whole.
3.14. Properties and Insurance.
(a) Except as set forth in the SJBDI Disclosure Schedule,
SJBDI or a SJBDI 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 SJBDI's consolidated balance sheet as of December
31, 1998, or owned and acquired subsequent thereto (except to the extent that
such assets and properties have been disposed of in the ordinary course of
business since December 31, 1998 either (A) to third parties in arms' length
transactions or (B) to insiders or to directors or officers of SJBDI pursuant to
the approval of the board of directors of SJBDI and for fair value), 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 SJBDI and the SJBDI Subsidiaries
taken as a whole and (iv) with respect to owned real property, title
imperfections noted in title reports delivered to HUB prior to the date hereof.
Except as affected by the transactions contemplated hereby, SJBDI or a SJBDI
Subsidiary as lessees have the right under valid and subsisting leases to
occupy, use, possess and control all real property leased by SJBDI and such
SJBDI Subsidiaries in all material respects as presently occupied, used,
possessed and controlled by SJBDI and SJBDI Subsidiaries.
(b) Except as set forth in the SJBDI Disclosure Schedule, the
business operations and all insurable properties and assets of SJBDI and each
SJBDI Subsidiary are insured for their benefit against all risks which, in the
reasonable judgment of the management of SJBDI, 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 SJBDI adequate for the
business engaged in by SJBDI and the SJBDI Subsidiaries. As of the date hereof,
neither SJBDI nor any SJBDI 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
SJBDI Disclosure Schedule sets forth in summary form a list of all insurance
policies of SJBDI and the SJBDI Subsidiaries.
3.15. Minute Books. The minute books of SJBDI and the SJBDI
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 SJBDI
Disclosure Schedule:
(a) Neither SJBDI nor any SJBDI Subsidiary has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that SJBDI or such SJBDI 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 SJBDI and the SJBDI Subsidiaries taken as a whole. SJBDI 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 SJBDI
or any SJBDI Subsidiary, as OREO or otherwise, or owned or controlled by SJBDI
or any SJBDI Subsidiary as a trustee or fiduciary (collectively, "Properties"),
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 SJBDI and the SJBDI Subsidiaries, taken as a whole.
(b) SJBDI 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 SJBDI and the SJBDI Subsidiaries taken as a whole.
(c) To the knowledge of SJBDI, SJBDI, each SJBDI 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 SJBDI, 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 SJBDI or any SJBDI Subsidiary.
3.17. No Parachute Payments. No officer, director, employee or
agent (or former officer, director, employee or agent) of SJBDI or any SJBDI
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 SJBDI, a SJBDI
Subsidiary, HUB or any HUB Subsidiary which if paid or provided would constitute
an "excess parachute payment", as defined in Section 280G of the Code or
regulations promulgated thereunder.
3.18. Agreements with Bank Regulators. Except as disclosed in
Section 3.18 in the SJBDI Disclosure Schedule, neither SJBDI nor any SJBDI
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 HUB by SJBDI prior to the
date of this Agreement, nor has SJBDI 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 HUB by SJBDI prior to
the date of this Agreement. Except as disclosed in Section 3.18 in the SJBDI
Disclosure Schedule, neither SJBDI nor any SJBDI 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 HUB by SJBDI prior to the date of this
Agreement.
3.19. Year 2000 Compliance. SJBDI and the SJBDI 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 SJBDI and the SJBDI Subsidiaries to be
substantially Year 2000 compliant on or before the end of 1999 and, except as
set forth in the SJBDI Disclosure Schedule, SJBDI does not expect the future
cost of addressing such issues to be material. Neither SJBDI nor any SJBDI
Subsidiary has received a rating of less than satisfactory from any bank
regulatory agency with respect to Year 2000 compliance.
3.20. Accounting for the Merger: Reorganization. As of the
date hereof, after reviewing the terms of this Agreement, the stock repurchases
by HUB and SJBDI, and the employee benefit plans of SJBDI and FAMNB with SJBDI's
independent auditors, SJBDI 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.
3.21. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUB
References herein to the "HUB 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 HUB to
SJBDI. HUB hereby represents and warrants to SJBDI as follows:
4.1. Corporate Organization.
(a) HUB is a corporation duly organized and validly existing
and in good standing under the laws of the State of New Jersey. HUB 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 HUB and the HUB Subsidiaries
(defined below), taken as a whole. HUB is registered as a bank holding company
under the BHCA.
(b) Each HUB Subsidiary is listed in the HUB Disclosure
Schedule. For purposes of this Agreement, the term "HUB Subsidiary" means any
corporation, partnership, joint venture or other legal entity in which HUB
directly or indirectly, owns at least a 50% stock or other equity interest or
for which HUB, 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 "HUB Subsidiary"
shall include any entity which was an HUB Subsidiary at any time during such
period. Each HUB 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. All eligible accounts of depositors issued by
the BIF to the fullest extent permitted by law. Each HUB 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 HUB and the HUB Subsidiaries, taken as a whole. The HUB Disclosure
Schedule sets forth true and complete copies of the Certificate of Incorporation
and Bylaws of HUB as in effect on the date hereof.
4.2. Capitalization. The authorized capital stock of HUB
consists of 54,636,350 common shares, no par value ("HUB Common Stock"), and
10,609,000 shares of preferred stock ("HUB Authorized Preferred Stock"). As of
May 31, 1999, there were 40,633,204 shares of HUB Common Stock issued and
39,998,576 outstanding, and 634,628 shares of treasury stock, and no shares of
HUB Authorized Preferred Stock outstanding. Except as described in the HUB
Disclosure Schedule, there are no shares of HUB Common Stock issuable upon the
exercise of outstanding stock options or otherwise. All issued and outstanding
shares of HUB Common Stock and HUB Authorized Preferred Stock, and all issued
and outstanding shares of capital stock of HUB'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 HUB Subsidiaries are owned by HUB free and clear of any
liens, encumbrances, charges, restrictions or rights of third parties. Except as
described in the HUB Disclosure Schedule, neither HUB nor any HUB 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 HUB or any HUB 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, HUB 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 HUB in accordance with its
Certificate of Incorporation and applicable laws and regulations. Except for
such approvals, no other corporate proceedings on the part of HUB are necessary
to consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by HUB and constitutes a valid and binding
obligation of HUB, enforceable against HUB 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 HUB
and the Bank, nor the consummation by HUB and the Bank of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by HUB
and the Bank with any of the terms or provisions hereof will (i) violate any
provision of the Certificate of Incorporation or Bylaws of HUB 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 HUB, any HUB 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 HUB or any HUB 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 HUB 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 HUB and the HUB 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 OCC, the
Department, the SEC, or the Department of Treasury, State of New Jersey, 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 HUB in
connection with (x) the execution and delivery by HUB of this Agreement, and (y)
the consummation by HUB of the Merger and the other transactions contemplated
hereby, except such as are listed in the HUB 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 HUB and the HUB
Subsidiaries, taken as a whole. To the knowledge of HUB, no fact or condition
exists which HUB has reason to believe will prevent it from obtaining the
aforementioned consents and approvals.
4.4. Financial Statements.
(a) The HUB Disclosure Schedule sets forth copies of the
consolidated statements of financial condition of HUB as of December 31, 1997
and 1998, 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 1996 through 1998, in each case accompanied by
the audit report of Arthur Andersen, LLP, independent public accountants with
respect to HUB ("Arthur Andersen"), and the unaudited consolidated statement of
condition of HUB as of March 31, 1999 and the related unaudited consolidated
statements of income and cash flows for the three months ended March 31, 1998
and 1999, as reported in HUB's Quarterly Report on Form 10-Q, filed with the SEC
under the Securities Exchange Act of 1934, as amended ("1934 Act")
(collectively, the "HUB Financial Statements"). The HUB 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 HUB 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 HUB for the respective fiscal periods set forth therein.
(b) The books and records of HUB and the HUB 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 HUB Financial Statements (including the notes thereto),
as of December 31, 1998 neither HUB nor any of the HUB Subsidiaries had any
obligation or liability, whether absolute, accrued, contingent or otherwise,
material to the business, operations, assets or financial condition of HUB or
any of the HUB Subsidiaries which were required by GAAP (consistently applied)
to be disclosed in HUB's consolidated statement of condition as of December 31,
1998 or the notes thereto. Except for the transactions contemplated by this
Agreement, and any other proposed acquisitions by HUB reflected in any Form 8-K
filed by HUB with the SEC since December 31, 1998, neither HUB nor any HUB
Subsidiary has incurred any liabilities since December 31, 1998 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 HUB 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 HUB Material Adverse Change since December 31, 1998 and to the knowledge of
HUB, no facts or condition exists which HUB believes will cause a HUB Material
Adverse Change in the future. "HUB Material Adverse Change" means any change
which is material and adverse to the consolidated financial condition, results
of operations, business or assets of HUB and the HUB Subsidiaries taken as a
whole, other than (i) a change in the value of the respective investment and
loan portfolios of HUB and the HUB 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 HUB or any HUB Subsidiary pending on the date
hereof or known to SJBDI, or (v) the entry, after the date hereof, by HUB or any
HUB Subsidiary into an agreement to acquire another entity.
4.7 Legal Proceedings. Except as disclosed in the HUB
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of HUB or any HUB Subsidiaries, neither HUB nor any HUB Subsidiary
is a party to any, and there are no pending or, to the knowledge of HUB,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against HUB or any of its
Subsidiaries which, if decided adversely to HUB or any HUB Subsidiaries, are
reasonably likely to have a material adverse effect on the business, operations,
assets or financial condition of HUB and the HUB Subsidiaries, taken as a whole.
Except as disclosed in the HUB Disclosure Schedule, neither HUB nor any HUB
Subsidiary is a party to any order, judgment or decree entered in any lawsuit or
proceeding which is material to HUB and the HUB Subsidiaries, taken as a whole.
4.8 Reports. Since January 1, 1997, HUB 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 HUB 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, 1997, HUB and each HUB 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, in each case
which was correct in all material respects.
4.9 HUB Information. The information relating to HUB and the
HUB Subsidiaries (including, without limitation, information regarding other
transactions which HUB 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 SJBDI 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 HUB Disclosure Schedule, each of HUB and HUB'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 HUB or HUB'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 HUB and HUB's Subsidiaries taken as a whole) and HUB 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 HUB
or the HUB Subsidiaries have agreed to consummate, HUB will be deemed "well
capitalized" under prompt corrective action regulatory capital requirements.
4.12 HUB Common Stock. As of the date hereof, HUB has
available and reserved shares of HUB Common Stock sufficient for issuance
pursuant to the Merger. The HUB Common Stock to be issued hereunder pursuant to
the Merger, 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 HUB, with no personal
liability attaching to the ownership thereof. The HUB Common Stock to be issued
hereunder pursuant to the Merger, when so issued, will be registered under the
1933 Act and issued in accordance with all applicable state and federal laws,
rules and regulations, and will be approved or listed for trading on the NYSE.
4.13 Agreements with Bank Regulators. Except as set forth in
the HUB Disclosure Schedule, neither HUB nor any HUB 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, nor has HUB 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 set forth
in the HUB Disclosure Schedule, neither HUB nor any HUB 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.
4.14 Taxes and Tax Returns.
(a) HUB and the HUB 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 SJBDI in
writing) or against which reserves have been established. HUB and the HUB
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 HUB through such date. The HUB
Disclosure Schedule identifies the federal income tax returns of HUB and the HUB
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 HUB Disclosure Schedule identifies the applicable
state income tax returns of HUB and the HUB 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 knowledge of HUB, 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 HUB or the HUB Subsidiaries, nor
has HUB or the HUB 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 HUB Disclosure Schedule,
neither HUB nor any HUB 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 Code, by reason of a voluntary change in accounting method initiated by HUB
or the HUB Subsidiaries (nor does HUB 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) Except as set forth on the HUB Disclosure Schedule,
neither HUB nor any HUB Subsidiary maintains or contributes to any "employee
pension benefit plan" (the "HUB 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 "HUB 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 HUB nor any HUB Subsidiary has, since September 2, 1974,
contributed to any "Multiemployer Plan," within the meaning of Section 3(37) of
ERISA.
(b) HUB has previously delivered to SJBDI, and included in the
HUB Disclosure Schedule, a complete and accurate copy of each of the following
with respect to each of the HUB Pension Plans and HUB 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 HUB 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 HUB 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 HUB' 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 HUB or any
HUB 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 HUB Pension Plan
have been paid. All contributions required to be made to each HUB 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 HUB which have not
been paid have been properly recorded on the books of HUB .
(f) Except as disclosed in the HUB Disclosure Schedule, each
of the HUB Pension Plans, HUB Welfare Plans and each other employee benefit plan
and arrangement identified on the HUB 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 HUB Disclosure Schedule, if HUB maintains any HUB Pension Plan,
HUB 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 HUB is
not aware of any fact or circumstance which would disqualify any plan.
(g) To the best knowledge of HUB, 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 HUB Welfare Plan or HUB Pension Plan
that would result in any material tax or penalty for HUB or any HUB Subsidiary.
(h) No HUB 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 HUB Pension Plan.
(i) No "accumulated funding deficiency," within the meaning of
Section 412 of the Code, has been incurred with respect to any HUB Pension Plan.
(j) There are no material pending, or, to the best knowledge
of HUB, material threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of, or against any of the HUB Pension Plans or the HUB
Welfare Plans, any trusts created thereunder or any other plan or arrangement
identified in the HUB Disclosure Schedule.
(k) Except as disclosed in the HUB Disclosure Schedule, no HUB
Pension Plan or HUB 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 HUB 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 HUB Financial Statements and established
in accordance with GAAP.
(m) With respect to each HUB Pension Plan and HUB Welfare Plan
that is funded wholly or partially through an insurance policy, there will be no
liability of HUB or any HUB 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 HUB Disclosure Schedule, and (ii)
as set forth in the HUB Disclosure Schedule, or as expressly agreed to by HUB 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 HUB or any HUB 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 HUB Pension Plan or HUB
Welfare Plan.
(o) Except for the HUB Pension Plans and the HUB Welfare
Plans, and except as set forth on the HUB Disclosure Schedule, HUB has no
deferred compensation agreements, understandings or obligations for payments or
benefits to any current or former director, officer or employee of HUB or any
HUB Subsidiary or any predecessor of any thereof. The HUB 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 HUB Disclosure Schedule, HUB
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 HUB 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 HUB
`s knowledge, neither HUB nor any HUB Pension Plan or HUB 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 HUB Disclosure Schedule, HUB
does not maintain any retirement plan or retiree medical plan or arrangement for
directors. The HUB Disclosure Schedule sets forth the complete documentation and
actuarial evaluation of any such plan.
4.16 Contracts. Except as disclosed in the HUB Disclosure
Schedule, neither HUB nor any of the HUB Subsidiaries, or to the knowledge of
HUB, 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 HUB 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 HUB and the HUB Subsidiaries, taken
as a whole.
4.17 Properties and Insurance.
(a) HUB and the HUB 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 HUB's consolidated
balance sheet as of December 31, 1998, 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, 1998), 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 HUB and the HUB Subsidiaries
taken as a whole and (iv) with respect to owned real property, title
imperfections noted in title reports. Except as disclosed in the HUB Disclosure
Schedule, HUB and the HUB Subsidiaries as lessees have the right under valid and
subsisting leases to occupy, use, possess and control all property leased by HUB
or the HUB Subsidiaries in all material respects as presently occupied, used,
possessed and controlled by HUB and the HUB Subsidiaries.
(b) The business operations and all insurable properties and
assets of HUB and the HUB Subsidiaries are insured for their benefit against all
risks which, in the reasonable judgment of the management of HUB, 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 HUB adequate
for the business engaged in by HUB and the HUB Subsidiaries. As of the date
hereof, neither HUB nor any of the HUB 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 HUB
Disclosure Schedule, neither HUB nor any of the HUB Subsidiaries has received
any written notice, citation, claim, assessment, proposed assessment or demand
for abatement alleging that HUB or any of the HUB Subsidiaries (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 HUB and the HUB Subsidiaries taken as a whole. Except as disclosed
in the HUB Disclosure Schedule, HUB 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 HUB or any of the HUB Subsidiaries , as
OREO or otherwise, or owned or controlled by HUB or any HUB Subsidiary as a
trustee or fiduciary, 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 HUB and the HUB Subsidiaries, taken
as a whole.
4.19 Reserves. As of December 31, 1998, the allowance for
possible loan losses in the HUB Financial Statements was adequate pursuant to
GAAP (consistently applied), and the methodology used to compute the allowance
for possible loan losses complies in all material respects with GAAP
(consistently applied) and all applicable policies of the OCC. As of December
31, 1998, the valuation allowance for OREO properties in the HUB Financial
Statements was adequate pursuant to GAAP (consistently applied), and the
methodology used to compute the valuation allowance for OREO properties complies
in all material respects with GAAP (consistently applied) and all applicable
policies of the OCC.
4.20. Year 2000 Compliance. HUB and the HUB 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 HUB and the HUB Subsidiaries to be substantially Year
2000 compliant on or before the end of 1999 and HUB does not expect the future
cost of addressing such issues to be material. Neither HUB nor any HUB
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
HUB and SJBDI, other pending transactions involving HUB, and the employee
benefit plans of SJBDI and FAMNB with HUB's independent auditors, HUB 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 HUB nor any HUB
Subsidiary owns any shares of SJBDI Common Stock.
4.22 No Approval of HUB's Shareholders Currently Required.
Based upon laws and regulations applicable to HUB and currently in effect,
including the rules, regulations and policies of the NYSE, as of the date of
this Agreement, neither approval of this Agreement by the shareholders of HUB
nor approval of the transactions contemplated hereby by the shareholders of HUB
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 SJBDI. During the period from
the date of this Agreement to the Effective Time, SJBDI and FAMNB shall, and
shall cause each SJBDI Subsidiary to, conduct their respective businesses only
in the ordinary course and consistent with past business practice, except for
transactions permitted hereunder or with the prior written consent of HUB, which
consent will not be unreasonably withheld. Each of SJBDI and FAMNB also shall
use its reasonable best efforts to (i) preserve its business organization and
that of the SJBDI Subsidiaries intact, (ii) keep available to itself and the
SJBDI Subsidiaries the present services of their respective employees, and (iii)
preserve for itself and HUB the goodwill of its customers and those of the SJBDI
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 HUB in writing, or as set forth in the
SJBDI Disclosure Schedule, or as permitted or required by this Agreement,
neither SJBDI nor FAMNB will:
(a) change any provision of its Certificate or Articles of
Incorporation or any similar governing documents;
(b) change any provision of its Bylaws without the consent of
HUB 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 SJBDI 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 other than as
necessary to redeem the rights granted under its Amended Stockholders
Right Agreement dated April 11, 1996; provided, however, that nothing
contained herein shall be deemed to affect the ability of FAMNB to pay
dividends on their capital stock to SJBDI; and provided, further, that
this paragraph shall not prohibit SJBDI from taking actions
contemplated by Section 5.18 of this Agreement;
(d) grant any severance or termination pay (other than
pursuant to policies or contracts of SJBDI in effect on the date hereof
and disclosed to HUB in the SJBDI 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 SJBDI
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
SJBDI or FAMNB;
(f) make any capital expenditures in excess of $100,000 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 HUB, except as set forth in Section 5.2 of the
SJBDI 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 HUB, make or commit to make
any new loan or other extension of credit in an amount of $100,000 or
more, renew for a period in excess of one year any existing loan or
other extension of credit in an amount of $100,000 or more, or increase
by $100,000 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 SJBDI 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, SJBDI and FAMNB 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 HUB) 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 SJBDI or either
of FAMNB (an "Acquisition Transaction"). Notwithstanding the foregoing, SJBDI
may enter into discussions or negotiations or provide information in connection
with an unsolicited possible Acquisition Transaction if the Board of Directors
of SJBDI, 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. SJBDI shall promptly
communicate to HUB 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 SJBDI and HUB 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,
SJBDI agrees to provide HUB, and HUB agrees to provide SJBDI, 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), SJBDI will deliver to HUB and HUB will deliver to SJBDI
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, SJBDI will deliver to HUB and HUB will
deliver to SJBDI 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) SJBDI and FAMNB shall permit HUB and its representatives,
and HUB shall permit, and cause each HUB Subsidiary to permit, SJBDI and its
representatives, reasonable access to their respective properties, and shall
disclose and make available to HUB and its representatives, or SJBDI 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 HUB and its representatives or SJBDI 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. Under circumstances in which the
restrictions of the preceding sentence apply, 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. Notwithstanding the foregoing, SJBDI
acknowledges that HUB may be involved in discussions concerning other potential
acquisitions and HUB shall not be obligated to disclose such information to
SJBDI except as such information is disclosed to HUB'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.
(c) Without limiting the foregoing, HUB, directly or through
agents, for the 15 calendar day period (the "Due Diligence Period") immediately
following the date of this Agreement, shall have the right to perform due
diligence on SJBDI and FAMNB and a complete audit acquisition of SJBDI and
FAMNB. Within the Due Diligence Period, HUB shall have the right to terminate
this Agreement if the due diligence review by HUB causes HUB to reach a
conclusion about the financial condition, business, assets or the quality of the
representations and warranties of SJBDI or FAMNB, adverse from conclusions about
the same matters which HUB's senior executives held at the time HUB executed
this Agreement.
5.6. Regulatory Matters.
(a) For the purposes of holding the Shareholders Meeting (as
defined in Section 5.7 hereof), and qualifying under applicable federal and
state securities laws the HUB Common Stock to be issued to SJBDI shareholders in
connection with the Merger, the parties hereto shall cooperate in the
preparation and filing by HUB 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 SJBDI and HUB to the SJBDI
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 HUB under the 1933 Act with the SEC to register the HUB Common
Stock for sale, including the Proxy Statement-Prospectus, are referred to herein
as the "Registration Statement").
(b) HUB shall furnish SJBDI with such information concerning
HUB and HUB Subsidiaries (including, without limitation, information regarding
other transactions which HUB 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. HUB agrees promptly to
advise SJBDI if at any time prior to the Shareholders Meeting any information
provided by HUB in the Proxy Statement-Prospectus becomes incorrect or
incomplete in any material respect and promptly to provide SJBDI with the
information needed to correct such inaccuracy or omission. HUB shall promptly
furnish SJBDI with such supplemental information as may be necessary in order to
cause the Proxy Statement-Prospectus, insofar as it relates to HUB and the HUB
Subsidiaries, to comply with Section 5.6(a) after the mailing thereof to SJBDI
shareholders.
(c) SJBDI shall furnish HUB with such information concerning
SJBDI as is necessary in order to cause the Proxy Statement-Prospectus, insofar
as it relates to SJBDI, to comply with Section 5.6(a) hereof. SJBDI agrees
promptly to advise HUB if at any time prior to the Shareholders Meeting, any
information provided by SJBDI in the Proxy Statement-Prospectus becomes
incorrect or incomplete in any material respect and promptly to provide HUB with
the information needed to correct such inaccuracy or omission. SJBDI shall
promptly furnish HUB with such supplemental information as may be necessary in
order to cause the Proxy Statement-Prospectus, insofar as it relates to SJBDI
and FAMNB to comply with Section 5.6(a) after the mailing thereof to SJBDI
shareholders.
(d) HUB shall as promptly as practicable make such filings as
are necessary in connection with the offering of the HUB 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. SJBDI shall promptly furnish HUB with such
information regarding the SJBDI shareholders as HUB requires to enable it to
determine what filings are required hereunder. SJBDI authorizes HUB to utilize
in such filings the information concerning SJBDI and FAMNB provided to HUB in
connection with, or contained in, the Proxy Statement-Prospectus. HUB shall
furnish SJBDI's counsel with copies of all such filings and keep SJBDI advised
of the status thereof. HUB and SJBDI shall as promptly as practicable file the
Registration Statement containing the Proxy Statement-Prospectus with the SEC,
and each of HUB and SJBDI shall promptly notify the other of all communications,
oral or written, with the SEC concerning the Registration Statement and the
Proxy Statement-Prospectus.
(e) HUB shall cause the HUB Common Stock issuable pursuant to
the Merger to be listed on the NYSE at the Effective Time.
(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 OCC, the
Department and (if required) the DEP. Without limiting the foregoing, the
parties shall use reasonable business efforts to file for approval of the Merger
or waiver of the need for such approval 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) SJBDI acknowledges that HUB is in or may be in the process
of acquiring other banks and financial institutions and that in connection with
such acquisitions, information concerning SJBDI may be required to be included
in the registration statements, if any, for the sale of securities of HUB or in
SEC reports in connection with such acquisitions. SJBDI agrees to provide HUB
with any non-confidential information, certificates, documents or other
materials about SJBDI as are reasonably necessary to be included in such other
SEC reports or registration statements, including registration statements which
may be filed by HUB prior to the Effective Time. SJBDI shall use its reasonable
efforts to cause its attorneys and accountants to provide HUB and any
underwriters for HUB 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.
HUB shall reimburse SJBDI for reasonable expenses thus incurred by SJBDI should
this transaction be terminated for any reason. HUB shall not file with the SEC
any registration statement or amendment thereto or supplement thereof containing
information regarding SJBDI unless SJBDI 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,
SJBDI shall cooperate with HUB to reasonably conform SJBDI's policies and
procedures regarding applicable regulatory matters to those of HUB, as HUB may
reasonably identify to SJBDI from time to time.
5.7. Approval of Shareholders. SJBDI will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
shareholders of SJBDI (the "Shareholders Meeting") for the purpose of securing
the approval of those 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) SJBDI'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 SJBDI 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 HUB with respect to each of the foregoing matters.
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.
(b) HUB agrees that from the date hereof to the Effective
Time, except as otherwise approved by SJBDI in writing or as permitted or
required by this Agreement, HUB will use reasonable business efforts to maintain
and preserve intact its business organization, properties, leases, employees and
advantageous business relationships, and HUB will not, nor will it permit any
HUB 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 $.05 per share of HUB 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 HUB 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) HUB, the Bank, SJBDI and FAMNB will use reasonable efforts
to cause the Merger to occur on or before November 30, 1999.
5.9. Public Announcements. HUB and SJBDI 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 HUB and SJBDI 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 HUB or
SJBDI determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to April 30,
2000 (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 HUB may enter into with other parties, SJBDI and HUB will promptly
inform the other of any facts applicable to SJBDI or HUB, 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, HUB agrees with
SJBDI to honor the existing written employment and severance contracts with
officers and employees of SJBDI and FAMNB that are included in the SJBDI
Disclosure Schedule, including without limitation the deferred compensation
agreements with Clarence D. McCormick, Sr., the Chairman of SJBDI ("McCormick,
Sr.") and Clarence D. McCormick, Jr., the President of SJBDI ("McCormick, Jr.").
(b) Following consummation of the Merger, HUB will decide
whether to continue FAMNB and/or SJBDI's pension and welfare plans for the
benefit of employees of FAMNB and SJBDI, or to have such employees become
covered under a HUB Pension and Welfare Plan. If HUB decides to cover FAMNB and
SJBDI employees under a HUB Pension and Welfare Plan, such employees will
receive credit for prior years of service with FAMNB and/or SJBDI 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 SJBDI
or FAMNB 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 SJBDI Disclosure Schedule) whose employment is
discontinued by HUB or the Bank or any of the HUB 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
SJBDI or FAMNB or any successor or predecessor thereto or other SJBDI
Subsidiary, subject to a minimum of two weeks' severance and a maximum of 26
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 HUB.
(d) Employees of SJBDI and FAMNB who become employees of HUB
or any HUB Subsidiary shall become entitled to participate in HUB'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 SJBDI or FAMNB and (ii) enter the HUB defined
benefit pension plan on the entry date concurrent with or next following the
employee's satisfaction of such plan's minimum participation requirements.
(e) Employees of SJBDI and FAMNB who become employees of HUB
or any HUB Subsidiary shall become entitled to participate in the applicable HUB
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 SJBDI or FAMNB, 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.
(f) SJBDI and FAMNB may continue to administer such bonus
programs and arrangements as are disclosed pursuant to this Agreement through
the Effective Time, provided that bonuses shall be paid only to the extent they
have been previously accrued and their payment will not cause SJBDI's earnings
to fall below budgeted amounts.
(g) During the Due Diligence Period, HUB and SJBDI shall agree
upon those employees of SJBDI or FAMNB who shall be eligible to receive a
"retention" bonus in an amount that HUB and SJBDI shall agree upon. Each
retention bonus shall be payable in the event that the employee (i) remains an
employee of SJBDI or FAMNB, as applicable, until the earlier of the fifteenth
day following successful substantial completion of the conversion of FAMNB's
computer systems to those of the Bank or June 30, 2000 and (ii) satisfactorily
fulfills the duties and responsibilities of the position of the employee through
such time; provided that HUB at its option may select an earlier time for
payment of any retention bonus; and provided, further, that retention bonuses,
in the aggregate, shall not exceed $250,000.
(h) HUB 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. HUB shall not be obligated to pay any
out-placement fees in connection with the foregoing or more than $50,000 in the
aggregate for such services.
(j) Prior to the Closing and effective as of the Effective
Time, HUB and SJBDI shall enter into non-compete agreements (the "Non-Compete
Agreements") with McCormick, Sr. and McCormick, Jr. having the terms set forth
in Section 5.11(j) of the HUB Disclosure Schedule, and other terms reasonably
satisfactory to HUB, and shall enter into such other agreements or arrangements
with HUB as are described in Section 5.11(j) of the HUB Disclosure Schedule.
(k) HUB at the Closing will offer each director of SJBDI a
position on a HUB regional advisory board.
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 SJBDI.
(a) For planning purposes, SJBDI shall, within 30 days from
the date hereof, provide HUB with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by SJBDI 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. SJBDI shall promptly notify HUB if or when it determines that it
will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, SJBDI
shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. SJBDI shall accrue
and/or pay all of such amounts as soon as possible.
(c) SJBDI shall cause its professionals to render monthly
invoices within 15 days after the end of each month. SJBDI shall advise HUB
monthly of all out-of-pocket expenses which SJBDI has incurred in connection
with this transaction.
(d) HUB, in reasonable consultation with SJBDI, 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, HUB
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 SJBDI or FAMNB or serves or has served
at the request of SJBDI or FAMNB 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 SJBDI or FAMNB or serves or has served
at the request of SJBDI or FAMNB 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 SJBDI or FAMNB or any of their respective affiliates, or
by any former or present shareholder of SJBDI (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 SJBDI or FAMNB or
of any committee of SJBDI's or FAMNB'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 HUB set forth in this Section 5.14, in each case to the fullest
extent which SJBDI or FAMNB would have been permitted under any applicable law
and their respective Certificates of Incorporation or Bylaws had the Merger not
occurred (and HUB shall also advance expenses as incurred to the fullest extent
so permitted). Notwithstanding the foregoing, but subject to subsection (b)
below, HUB 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 HUB 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, HUB shall assume and
honor any obligation of SJBDI or FAMNB immediately prior to the Effective Time
with respect to the indemnification of the Indemnitees arising out of the
Certificate of Incorporation or Bylaws of SJBDI or FAMNB, or arising out of any
written indemnification agreements between SJBDI and/or FAMNB and such persons
disclosed in the SJBDI Disclosure Schedule, as if such obligations were pursuant
to a contract or arrangement between HUB and such Indemnitees.
(c) In the event HUB 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 HUB assume the obligations set forth in this Section 5.14.
(d) HUB shall cause SJBDI's and FAMNB's officers and directors
to be covered under HUB'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 SJBDI's and FAMNB's existing
officers' and directors' liability insurance policy. However, HUB shall only be
required to insure such persons upon terms and for coverages substantially
similar to SJBDI's and FAMNB's existing officers' and directors' liability
insurance.
(e) Any Indemnitee wishing to claim indemnification under this
Section 5.14 shall promptly notify HUB upon learning of any Claim, but the
failure to so notify shall not relieve HUB of any liability it may have to such
Indemnitee if such failure does not materially prejudice HUB. 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) HUB shall have the
right to assume the defense thereof and HUB 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 HUB elects not to assume such defense, or counsel for the
Indemnitees advises that there are issues which raise conflicts of interest
between HUB and the Indemnitees, the Indemnitees may retain counsel satisfactory
to them, and HUB shall pay the reasonable fees and expenses of such counsel for
the Indemnitees as statements therefor are received; provided, however, that HUB
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. HUB 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, HUB 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 SJBDI
believes that it has established all reserves and taken all provisions for
possible loan losses required by GAAP and applicable laws, rules and
regulations, SJBDI recognizes that HUB 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, SJBDI and HUB shall consult and cooperate with each other with respect
to (i) conforming to the extent appropriate, based upon such consultation,
SJBDI's loan, accrual and reserve policies and SJBDI'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 HUB
as HUB may reasonably identify to SJBDI from time to time, (ii) new extensions
of credit or material revisions to existing terms of credits by FAMNB, in each
case where the aggregate exposure exceeds $100,000, and (iii) conforming, based
upon such consultation, the composition of the investment portfolio and overall
asset/liability management position of SJBDI and FAMNB to the extent
appropriate; provided that any required change in SJBDI'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 HUB agrees in writing that all conditions precedent to the Closing have
occurred and HUB has provided the Closing Notice. No accrual or reserve made by
SJBDI or any SJBDI 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 Pooling and Tax-Free Reorganization Treatment. Before the
Effective Time, neither HUB nor SJBDI 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, HUB 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.
5.17 Comfort Letters. HUB shall cause Arthur Andersen, its
independent public accountants, to deliver to SJBDI, and SJBDI shall cause Athey
& Co., its independent public accountants, to deliver to HUB 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,
in the form customarily issued by such accountants at such time in transactions
of this type.
5.18 Regulatory Capital Issues. FAMNB is currently required by
the OCC to attain a leverage capital ratio of 6% by September 30, 1999 (the
"Regulatory Capital Requirement"). Promptly following the execution of this
Agreement, FAMNB shall request a waiver of the Regulatory Capital Requirement
from the OCC pending consummation of the Merger. If FAMNB fails to obtain such a
waiver, or if the OCC imposes conditions to the granting of such a waiver, SJBDI
and FAMNB shall confer with HUB regarding the appropriate method of complying
with the Regulatory Capital Requirement or the conditions to the waiver, as the
case may be, and SJBDI and FAMNB shall use their best efforts to comply with the
Regulatory Capital Requirement or the conditions to the waiver in a manner which
(a) does not involve the issuance of additional shares of SJBDI Common Stock and
(b) would not cause the Merger to fail to qualify for pooling-of-interests
accounting treatment. If, despite compliance with this Section 5.18, SJBDI or
FAMNB must take actions which would cause the Merger not to qualify for
pooling-of-interests accounting treatment, HUB shall have the right to terminate
this Agreement upon the taking of such actions by SJBDI or FAMNB.
5.19 Affiliates. Promptly, but in any event within two weeks,
after the execution and delivery of this Agreement, SJBDI shall deliver to HUB
(a) a letter identifying all persons who, to the knowledge of SJBDI, may be
deemed to be affiliates of SJBDI under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of SJBDI and (b) use its reasonable best
efforts to cause each person who may be deemed to be an affiliate of SJBDI to
execute and deliver to HUB 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, HUB 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 HUB concerning the
pooling-of-interests accounting rules. HUB 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 HUB and SJBDI as soon as
practicable (but in no event later than 15 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.
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 SJBDI. The HUB 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 HUB Common Stock
shall have been qualified in every state where such qualification is required
under the applicable state securities laws. The HUB Common Stock to be issued in
connection with the Merger shall have been approved for listing on the NYSE.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the FDIC, the Department, the FRB, the OCC, the SEC and (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 SJBDI
and FAMNB, taken as a whole, to HUB. 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 HUB or SJBDI 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. HUB and SJBDI shall each have received an
opinion, dated as of the Effective Time, of Pitney, Hardin, Kipp & Szuch,
reasonably satisfactory in form and substance to SJBDI and its counsel and to
HUB, 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 SJBDI; (iii) no gain or loss will be
recognized by the SJBDI shareholders upon the exchange of SJBDI Common Stock
solely for HUB Common Stock; (iv) the tax basis of any HUB Common Stock received
in exchange for SJBDI Common Stock shall equal the basis of the recipient's
SJBDI 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 HUB Common Stock
received in exchange for SJBDI Common Stock will include the period during which
SJBDI 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. HUB shall have received a letter,
dated the Closing Date, from its accountants, Arthur Andersen, reasonably
satisfactory to HUB and SJBDI, 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 HUB as a pooling-of-interests for
accounting purposes.
6.2. Conditions to the Obligations of HUB Under this
Agreement. The obligations of HUB 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 SJBDI and FAMNB. Except for those representations which are made as of a
particular date, the representations and warranties of SJBDI 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. SJBDI 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 SJBDI 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 SJBDI Disclosure Schedule,
materially adversely affect the representation as to which the supplement or
amendment relates.
(b) Opinion of Counsel. HUB shall have received an opinion of
counsel to SJBDI, dated the Closing Date, in form and substance reasonably
satisfactory to HUB, substantially to the effect set forth in accordance with
Exhibit 6.2(b) hereto.
(c) Certificates. SJBDI shall have furnished HUB with such
certificates of its officers or other documents to evidence fulfillment of the
conditions set forth in this Section 6.2 as HUB may reasonably request.
(d) Legal Fees. SJBDI shall have furnished HUB with letters
from all attorneys representing SJBDI and FAMNB 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. SJBDI shall have provided HUB 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 SJBDI, other than printing expenses (which are within the control of
HUB), shall be reasonable, taking into account normal and customary billing
rates, fees and expenses for similar transactions.
(f) Non-Compete Agreements. Each of McCormick, Sr. and
McCormick, Jr. shall have executed and delivered to HUB the Non-Compete
Agreements as set forth in Section 5.11.
6.3. Conditions to the Obligations of SJBDI Under this
Agreement. The obligations of SJBDI 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 HUB. Except for those representations which are made as of a particular date,
the representations and warranties of HUB 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. HUB 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 HUB 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 HUB Disclosure Schedule, materially adversely affect the
representation as to which the supplement or amendment relates.
(b) Opinion of Counsel to HUB. SJBDI shall have received an
opinion of counsel to HUB, dated the Closing Date, in form and substance
reasonably satisfactory to SJBDI, substantially to the effect set forth in
accordance with Exhibit 6.3(b) hereto.
(c) Fairness Opinion. SJBDI shall have received an opinion
from First Capital Group, LLC, dated no more than three days prior to the date
the Proxy Statement-Prospectus is mailed to SJBDI'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 SJBDI hereunder is fair to such shareholders from a
financial point of view ("Fairness Opinion").
(d) Certificates. HUB shall have furnished SJBDI with such
certificates of its officers and such other documents to evidence fulfillment of
the conditions set forth in this Section 6.3 as SJBDI may reasonably request.
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 SJBDI:
(a) by mutual written consent of the parties hereto;
(b) by HUB or SJBDI (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 SJBDI 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 HUB is required by NYSE 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 HUB or SJBDI 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 HUB upon written notice to SJBDI 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 SJBDI and FAMNB, taken as a whole, to HUB;
(d) by HUB if (i) there shall have occurred a SJBDI Material
Adverse Change from that disclosed by SJBDI in SJBDI's Annual Report on Form
10-K for the year ended December 31, 1998, which change shall have resulted in a
material adverse effect on SJBDI (it being understood that those matters
disclosed in the SJBDI 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 SJBDI hereunder
and such breach shall not have been remedied within 30 days after receipt by
SJBDI of notice in writing from HUB to SJBDI specifying the nature of such
breach and requesting that it be remedied;
(e) by SJBDI, if (i) there shall have occurred a HUB Material
Adverse Change from that disclosed by HUB in HUB's Annual Report on Form 10-K
for the year ended December 31, 1998, which change shall have resulted in a
material adverse effect on HUB (it being understood that those matters disclosed
in the HUB 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 HUB hereunder and such breach
shall not have been remedied within 30 days after receipt by HUB of notice in
writing from SJBDI specifying the nature of such breach and requesting that it
be remedied;
(f) by SJBDI, if SJBDI'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 HUB 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 SJBDI 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 HUB within the Due Diligence Period if HUB, if the due
diligence review by HUB causes HUB to reach a conclusion about the financial
condition, business, assets or the quality of the representations and warranties
of SJBDI or FAMNB, adverse from conclusions about the same matters which HUB's
senior executives held at the time HUB executed this Agreement; or
(j) by SJBDI, if (either before or after the approval of this
Agreement by the stockholders of SJBDI) 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 business day period commencing with (and including) the Determination
Date, if both of the following conditions are satisfied:
(x) the Median Pre-Closing Price of HUB Common Stock
on the Determination Date (the "Determination Price"), is less than the HUB
Floor Price. The "HUB Floor Price" is 70% of the HUB Average Starting Date
Price. The "HUB Average Starting Date Price" is the average of the high and low
sale prices of HUB Common Stock on the trading day immediately preceding the
date hereof (the "Starting Date"), as the same shall be adjusted to reflect any
Capital Change; and
(y) (A) the quotient obtained by dividing the
Determination Price by the HUB Average Starting Date Price (the "HUB Ratio") is
less than (B) the quotient obtained by dividing the number calculated using the
index of financial institutions set forth on Exhibit A hereto (the "Index
Price") as of the close of business on the Determination Date by the Index Price
as of the close of business on the Starting Date and subtracting 0.20 from the
quotient in this clause (y)(B) (such number being referred to herein as the
"Index Ratio").
Notwithstanding the foregoing, if SJBDI elects to exercise its
termination right pursuant to this subsection (j), it shall give prompt written
notice to HUB (provided that such notice of election to terminate may be
withdrawn at any time within the aforementioned three business day period)).
During the two business day period commencing with its receipt of such notice,
HUB shall have the option of increasing the consideration to be received by the
holders of SJBDI 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 HUB Floor Price multiplied by the Exchange Ratio
(as then in effect) and the denominator of which is the Determination Price, 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 HUB Ratio. If HUB makes an election
contemplated by the preceding sentence, within such two business day period, it
shall give prompt written notice to SJBDI of such election and the revised
Exchange Ratio, whereupon no termination shall have occurred pursuant to this
subsection (j) 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 (j).
(k) by HUB during the Due Diligence Period if the due
diligence review by HUB causes HUB to reach a conclusion about the financial
condition, business, assets or the quality of the representations and warranties
of SJBDI or FAMNB, adverse from conclusions about the same matters which HUB's
senior executives held at the time HUB executed this Agreement.
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either HUB or SJBDI 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 SJBDI 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 SJBDI 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, SJBDI may bear the expenses of FAMNB.
(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 HUB, to:
Hudson United Bancorp.
1000 MacArthur Boulevard
Mahwah, NJ 07430
Attn.: Kenneth T. Neilson, Chairman, President and
Chief Executive Officer
Copy to:
Hudson United Bancorp.
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 SJBDI, to:
Southern Jersey Bancorp of Delaware, Inc.
53 South Laurel Street
Bridgeton, NJ 08302
Attn: Clarence D. McCormick, Sr., Chairman and CEO
Copy to:
Block and Balestri, P.C.
15851 Dallas Parkway
Suite 1020
Addison, TX 75001
Attn: Steven R. Block, 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. In the event HUB 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, then proper
provision shall be made so that such resulting, continuing or surviving
corporation or entity assumes the obligations of HUB in this Agreement.
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.
8.9. Knowledge. Whenever the phrase "to the knowledge of
SJBDI" or another similar qualification is used herein, the relevant knowledge
shall refer to the actual knowledge of McCormick Sr., McCormick, Jr., and the
Chief Financial Officer of SJBDI. Whenever the phrase "to the knowledge of HUB"
or another similar qualification is used herein, the relevant knowledge shall
refer to the actual knowledge of HUB's Chief Executive Officer, Chief Financial
Officer and Senior Loan Officer.
IN WITNESS WHEREOF, HUB, the Bank, SJBDI and FAMNB have caused
this Agreement to be executed by their duly authorized officers as of the day
and year first above written.
ATTEST: HUDSON UNITED BANCORP
VIRGINIA A. LAZALA D. LYNN VAN BORKULO-NUZZO
By: ________________________ By: ___________________________
Virginia A. Lazala D. Lynn Van Borkulo-Nuzzo
Assistant Corporate Secretary Executive Vice-President
ATTEST: SOUTHERN JERSEY BANCORP
OF DELAWARE, INC.
PAUL J. RITTER CLARENCE D. McCORMICK
By: ________________________ By: _________________________________
Paul J. Ritter, III Clarence D. McCormick, Sr.
Assistant Secretary Chairman and CEO
ATTEST: HUDSON UNITED BANK
VIRGINIA A. LAZALA D. LYNN VAN BORKULO-NUZZO
By: ________________________ By: _________________________________
Virginia A. Lazala D. Lynn Van Borkulo-Nuzzo
Assistant Corporate Secretary Executive Vice-President
ATTEST: FARMERS AND MERCHANT
NATIONAL BANK
PAUL J. RITTER CLARENCE D. McCORMICK
By: ________________________ By: _________________________________
Paul J. Ritter, III Clarence D. McCormick, Sr.
Assistant Secretary Chairman
<PAGE>
Exhibit A to
Merger Agreement
Index
- ------------------------------------------------- ------------------------------
Company Name Ticker
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Carolina First CAFC
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Centura Banks CBC
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Commerce Bancorp CBH
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Commercial Federal CFB
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Community First Bank CFBX
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Cullen/Frost CFR
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
First Bancorp FBP
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
First Midwest FMBI
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
FirstMerit Corp. FMER
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Premier Bancshs PMB
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Provident Bancshs PBKS
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Riggs National Corp RIGS
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Silicon Val Bkshrs SIVB
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Susquehan Bkshs SUSQ
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Trust Co Bank NY TRST
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
United Bancshares UBSI
- ------------------------------------------------- ------------------------------
- ------------------------------------------------- ------------------------------
Whitney Hldg WTNY
- ------------------------------------------------- ------------------------------
The "Index Price" is determined by adding the price per common share of each of
the companies listed above on the appropriate date (i.e., the Starting Date or
the Determination Date, as the case nay be). If any company belonging to the
Index Group declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares, or similar
transaction between the Starting Date and the Determination Date, the price per
share of the common stock of such company on the Determination Date shall be
appropriately adjusted.
If, at any time after the Starting Date and before the Determination Date, the
common stock of any company on this Exhibit A ceases to be publicly traded or
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization, such company shall
be removed from the Index Group effective as of the Starting Date (i.e., such
Company shall not be considered part of the Index Group for any purposes in
connection with this Merger Agreement).
<PAGE>
EXHIBIT 5.19-1
FORM OF AFFILIATE LETTER FOR SJBDI AFFILIATES
_____________, 1999
Hudson United Bancorp
1000 MacArthur Boulevard
Mahwah, NJ 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed acquisition (the "Merger") of SJBDI, a Delaware corporation and
registered bank holding company ("SJBDI"), by Hudson United Bancorp, a New
Jersey corporation and registered bank holding company ("HUB"), pursuant to the
Agreement and Plan of Merger dated as of June 28 1999 (the "Agreement") between
SJBDI, and its wholly-owned subsidiary FAMNB, HUB and its bank subsidiary Hudson
United Bank. Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Agreement. I currently own shares of SJBDI
Common Stock. As a result of the Merger, I will receive shares of HUB Common
Stock in exchange for my SJBDI Common Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of SJBDI, 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 HUB 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 SJBDI 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 SJBDI Common Stock owned by such person or entity, without
notifying HUB three business days in advance of the proposed transfer (the
"Notice Period") and giving HUB a reasonable opportunity to review the transfer
before it is consummated. HUB, 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 SJBDI 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 SJBDI 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 HUB 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, "SJBDI Common Stock" includes
HUB Common Stock as converted. I understand that HUB has agreed to publish
financial results covering at least 30 days of post-Merger combined operations
of HUB and SJBDI 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 HUB 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 SJBDI at the time the Merger is submitted for a vote of SJBDI's shareholders,
any transfer by me of HUB Common Stock is restricted under Rule 145 promulgated
by the SEC under the 1933 Act. I agree not to transfer any HUB 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 HUB's counsel or counsel
reasonably acceptable to HUB, 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 HUB's
transfer agents with respect to the HUB Common Stock received by me and any of
my affiliates and that there will be placed on the certificates of the HUB
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 HUDSON UNITED
BANCORP, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES
OF HUDSON UNITED BANCORP"
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 HUB Common Stock to the
extent I felt necessary with my counsel or counsel for SJBDI.
Execution of this letter is not an admission on my part that I
am an "affiliate" of SJBDI 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 _______, 1999 by
HUDSON UNITED BANCORP
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 5.19-2
FORM OF AFFILIATE LETTER FOR HUB AFFILIATES
_______________, 1999
Hudson United Bancorp
1000 MacArthur Boulevard
Mahwah, NJ 07430
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of SJBDI, a Delaware corporation and registered
bank holding company, ("SJBDI") with and into Hudson United Bancorp, a New
Jersey corporation and registered bank holding company ("HUB"), pursuant to the
Agreement and Plan of Merger dated as of June 28,1999 (the "Agreement") between
SJBDI, its subsidiaries, HUB and its bank subsidiary.
I currently own shares of HUB's common stock, no par value ("HUB Common Stock").
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of HUB, 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 HUB and SJBDI 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 HUB 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 HUB Common Stock owned by
such person or entity, without notifying HUB three business days in advance of
the proposed transfer (the "Notice Period") and giving HUB a reasonable
opportunity to object to the transfer before it is consummated. HUB, 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 HUB 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 HUB 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 HUB 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 HUB has agreed to publish financial
results covering at least 30 days of post-Merger combined operations of HUB and
SJBDI 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 HUB Common Stock to the
extent I felt necessary with my counsel or counsel for HUB.
Execution of this letter is not an admission on my part that I
am an "affiliate" of HUB 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
________________, 1999 by
HUDSON UNITED BANCORP
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT 6.2
FORM OF OPINION OF COUNSEL TO SJBDI
TO BE DELIVERED TO HUB ON THE EFFECTIVE TIME
(a) 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 SJBDI and
FAMNB, and the Agreement constitutes a valid and legally binding obligation of
SJBDI and FAMNB 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 national banks 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).
(b) Subject to satisfaction of the conditions set forth in the
Agreement, neither the transactions contemplated in the Agreement, nor
compliance by SJBDI and FAMNB 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 SJBDI or the charter or bylaws of FAMNB, or (B) based
on certificates of officers of SJBDI and FAMNB 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 SJBDI
or FAMNB is a party and which was referenced in the SJBDI 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
SJBDI or FAMNB, except such material lien, instrument or obligation that has
been disclosed to HUB pursuant to the Agreement, or (iii) violate in any
material respect any order, writ, injunction, or decree known to such counsel,
or any corporation or banking law applicable to SJBDI or FAMNB.
(c) SJBDI is a corporation validly existing under the laws of
Delaware, FAMNB is a validly existing bank under the laws of and each of SJBDI
and FAMNB 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 FAMNB
are insured to the maximum extent provided by law by the Federal Deposit
Insurance Corporation.
(d) Each SJBDI Subsidiary listed as such in the SJBDI
Disclosure Schedule is validly existing under the laws of the jurisdiction of
its incorporation.
(e) There is, to the actual knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or investigation
pending or threatened to which SJBDI or FAMNB is a party which would, if
determined adversely to SJBDI or FAMNB, have a material adverse effect on the
business, properties, results of operations, or condition, financial or
otherwise, of SJBDI and FAMNB 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 HUB.
(f) All actions of the directors and shareholders of SJBDI and
FAMNB required by federal banking laws and regulations, Delaware law or New
Jersey law or by the Certificate of Incorporation or Bylaws of SJBDI or FAMNB,
to be taken by SJBDI or FAMNB to authorize the execution, delivery and
performance of the Agreement and consummation of the Merger have been taken.
(g) 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 based on certificates of officers of SJBDI
and FAMNB and without independent verification, of any third party under any
note, bond, mortgage, indenture, license, agreement or other instrument referred
to in the SJBDI Disclosure Schedule, is required for the consummation by SJBDI
or FAMNB 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 HUB 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 SJBDI 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 HUB
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 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 SJBDI or FAMNB 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 SJBDI and FAMNB.
Such counsel's opinion shall be limited to matters governed by
the corporate laws of the State of Delaware 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 HUB
TO BE DELIVERED TO SJBDI ON THE EFFECTIVE TIME
(a) HUB 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 HUB 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
"_________________________." HUB is registered as a bank holding company under
the BHCA.
(b) The authorized capital stock of HUB consists of
____________ shares of common stock, no par value per share ("HUB Common Stock")
and _____________ shares of preferred stock (the "Authorized Preferred Stock).
The HUB 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 HUB.
(c) 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 HUB and the
Bank, and the Agreement constitutes a valid and legally binding obligation of
HUB and the Bank 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 banks 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).
(d) Subject to satisfaction of the conditions set forth in the
Agreement, neither the transactions contemplated in the Agreement, nor
compliance by HUB and the Bank 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 HUB or the Bank or (B) based on certificates of
officers of HUB and the Bank 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 HUB or the Bank is a party
and which was referenced in the HUB Disclosure Schedule; or (ii) violate in any
material respect any order, writ, injunction, or decree known to such counsel,
or any corporation or banking law applicable to HUB or the Bank.
(e) All actions of the directors and shareholders of HUB and
the Bank required by federal banking laws and regulations and New Jersey law or
by the Certificate of Incorporation or Bylaws of HUB and the Bank, to be taken
by HUB and the Bank to authorize the execution, delivery and performance of the
Agreement and consummation of the Merger have been taken.
(f) Assuming that there has been due authorization of the
Merger by all necessary corporate and governmental proceedings on the part of
SJBDI and that SJBDI 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 Department of Treasury of the State of New Jersey
and the Delaware 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
SJBDI Common Stock will be converted as provided in Article II of the Agreement.
(g) No approvals, authorizations, consents or other actions or
filings under federal banking law or New Jersey law ("Approvals") are required
to be obtained by HUB or the Bank in order to permit the execution and delivery
of the Agreement by HUB or the Bank and the performance by HUB 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 SJBDI.
(h) 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.
(i) There is, to the actual knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or investigation
pending or threatened to which HUB or the Bank is a party which would, if
determined adversely to HUB or the Bank, have a material adverse effect on the
business, properties, results of operations, or condition, financial or
otherwise, of HUB and the Bank 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 SJBDI.
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 HUB 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 SJBDI 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 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 HUB or the Bank 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 HUB and the Bank.
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.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of June 28,
1999, is by and between Hudson United Bancorp, a New Jersey corporation and
registered bank holding company ("HUB"), and Southern Jersey Bancorp of
Delaware, Inc., a Delaware corporation and registered bank holding company
("SJBDI").
BACKGROUND
WHEREAS, HUB and SJBDI, as of the date hereof, are prepared to
execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which SJBDI will be merged with and into HUB (the "Merger"); and
WHEREAS, HUB has advised SJBDI that it will not execute the
Merger Agreement unless SJBDI executes this Agreement and SJBDI has advised HUB
that it will not execute the Merger Agreement unless HUB executes this
Agreement; and
WHEREAS, the Board of Directors of SJBDI has determined that
the Merger Agreement provides substantial benefits to the shareholders of SJBDI;
and
WHEREAS, the Board of Directors of HUB has determined that the
Merger Agreement provides substantial benefits to the shareholders of HUB; and
WHEREAS, as an inducement to HUB to enter into the Merger
Agreement and in consideration for such entry, SJBDI desires to grant to HUB an
option to purchase authorized but unissued shares of common stock of SJBDI in an
amount and on the terms and conditions hereinafter set forth; and
WHEREAS, as an inducement to SJBDI to enter into the Merger
Agreement and in consideration for such entry, HUB desires to grant to SJBDI the
right to require HUB to purchase authorized but unissued shares of common stock
of SJBDI to HUB 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, HUB and SJBDI,
intending to be legally bound hereby, agree:
1. Grant of Option. SJBDI hereby grants to HUB an option to purchase 200,000
shares of common stock, $1.67 par value, of SJBDI (the "Common Stock") at a
price of $24.00 per share (the "Option Price"), on the terms and conditions set
forth herein (the "Option").
2. Exercise of Option. The Option shall not be exercisable until the occurrence
of an Option Triggering Event (as such term is hereinafter defined). Upon or
after the occurrence of an Option Triggering Event, HUB 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 22 of this
Agreement.
The term "Option 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 HUB or an affiliate of HUB:
a. acquires beneficial ownership (as such term is defined in Rule 13d-3 as
promulgated under the Exchange Act) of at least 10% of the then outstanding
shares of Common Stock; or
b. enters into a letter of intent or an agreement, whether oral or written, with
SJBDI pursuant to which such person or any affiliate of such person would (i)
merge or consolidate, or enter into any similar transaction, with SJBDI, (ii)
acquire all or a significant portion of the assets or liabilities of SJBDI, or
(iii) acquire beneficial ownership of securities representing, or the right to
acquire beneficial ownership or to vote securities representing, 10% 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, SJBDI or any other business combination involving
SJBDI, 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, 10% 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 SJBDI called to vote on the Merger and SJBDI'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, SJBDI 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 HUB.
The term "Option Triggering Event" also means the taking of
any material direct or indirect action by SJBDI 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 HUB or an affiliate of HUB) 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 SJBDI,
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 10% of the assets or
liabilities of SJBDI. The term "significant number" means 10% 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 SJBDI or in soliciting or inducing
any other person (other than HUB 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, without limitation, any filing, approval or
consent required under the rules and regulations of the National Association of
Securities Dealers, Inc., (the "NASD"), necessary for SJBDI to issue the shares
of Common Stock covered by the Option (the "Option Shares") or HUB 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.
SJBDI shall notify HUB promptly in writing of the occurrence
of any Option Triggering Event known to it, it being understood that the giving
of such notice by SJBDI shall not be a condition to the right of HUB to exercise
the Option. SJBDI will not take any action which would have the effect of
preventing or disabling SJBDI from delivering the Option Shares to HUB 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 HUB wishes to exercise the Option, HUB shall send
a written notice to SJBDI (the date of which is hereinafter referred to as the
"Option 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 Option 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. Grant of Put. HUB hereby grants to SJBDI the right to require HUB to purchase
200,000 shares of Common Stock at the Option Price, on the terms and conditions
set forth herein (the "Put").
4. Exercise of Put. This Put shall be exercisable following the "Put Triggering
Event," which is the termination of the merger agreement by any party thereto.
Upon or after the occurrence of a Put Triggering Event, SJBDI may exercise the
Put, in whole or in part, on one occasion only, within six months after the Put
Triggering Event, subject to the terms and conditions set forth herein and the
termination provisions of Section 22 of this Agreement.
Notwithstanding the foregoing, HUB shall not be obligated to
purchase any Put Shares (i) in the absence of any required governmental or
regulatory approval or consent, including, without limitation, any filing,
approval or consent required under the rules and regulations of the NASD
necessary for SJBDI to issue the shares of Common Stock covered by the Put (the
"Put Shares") or HUB to purchase the Put Shares or prior to the expiration or
termination of any waiting period required by law, or (ii) if as a condition
precedent to obtaining any regulatory approval or consent, HUB is required to
take or refrain from taking any action or to agree to take or refrain from
taking any action which HUB reasonably determines would materially impair the
value of the Put Shares or would impose a material operating or financial burden
on HUB, or (iii) 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 Put Shares. HUB will make reasonable
efforts promptly to obtain all necessary regulatory approvals upon exercise of
the Put.
HUB will not take any action which would have the effect of
preventing or disabling HUB from purchasing the Put Shares from SJBDI upon
exercise of the Put or otherwise performing its obligations under this
Agreement, except to the extent required by applicable securities and banking
laws and regulations, provided, however, that this paragraph shall not restrict
in any way HUB's ability to negotiate, enter into, or consummate mergers or
acquisitions.
In the event SJBDI wishes to exercise the Put, SJBDI shall
send a written notice (the "Put Notice") to HUB (the date of which is
hereinafter referred to as the "Put Notice Date") specifying the total number of
Put Shares it wishes to sell and a place and date between two and ten business
days inclusive from the Put Notice Date for the closing of such a sale (a
"Closing"); provided, however, that a Closing shall not occur prior to two days
nor more than ten days after the later of receipt of any necessary regulatory
approvals and the expiration of any legally required notice or waiting period,
if any.
5. Payment and Delivery of Certificates. At any Closing hereunder (a) HUB will
make payment to SJBDI of the aggregate price for the Option or Put Shares so
purchased by wire transfer of immediately available funds to an account
designated by SJBDI; (b) SJBDI will deliver to HUB a stock certificate or
certificates representing the number of Option or Put Shares so purchased, free
and clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever created by or through SJBDI, registered in the name of HUB or its
designee, in such denominations as were specified by HUB in its notice of
exercise and, if necessary, bearing a legend as set forth below; and (c) HUB
shall pay any transfer or other taxes required by reason of the issuance of the
Option or Put Shares so purchased.
If required under applicable federal securities laws, a legend
will be placed on each stock certificate evidencing Option or Put 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 SJBDI, 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 6 hereof.
6. Registration Rights. Upon or after the occurrence of an Option Triggering
Event or a Put Exercise and upon receipt of a written request from HUB, SJBDI
shall, if necessary for the resale of the Option or the Option or Put Shares by
HUB, 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 or Put Shares as HUB shall specify in its request. SJBDI 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 or Put Shares, as the case may be, provided that HUB shall in no event
have the right to have more than one such registration statement become
effective, and provided further that SJBDI shall not be required to prepare and
file any such registration statement in connection with any proposed sale with
respect to which counsel to SJBDI delivers to SJBDI and to HUB (which is
reasonably acceptable to HUB) 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 SJBDI may delay any registration of
Option or Put Shares above for a period not exceeding 90 days in the event that
SJBDI shall in good faith determine that any such registration would adversely
effect an offering of securities by SJBDI for cash. HUB shall provide all
information reasonable requested by SJBDI for inclusion in any registration
statement to be filed hereunder.
In connection with such filing, SJBDI shall use its best
efforts to cause to be delivered to HUB such certificates, opinions,
accountant's letters and other documents as HUB 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 SJBDI 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 SJBDI and blue sky fees and expenses shall be paid by SJBDI.
Underwriting discounts and commissions to brokers and dealers relating to the
Option or Put Shares, fees and disbursements of counsel to HUB and any other
expenses incurred by HUB in connection with such registration shall be borne by
HUB. In connection with such filing, SJBDI shall indemnify and hold harmless HUB
against any losses, claims, damages or liabilities, joint or several, to which
HUB 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 SJBDI will
reimburse HUB for any legal or other expense reasonably incurred by HUB in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that SJBDI 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 HUB specifically for use in the
preparation thereof. HUB will indemnify and hold harmless SJBDI 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 HUB
for use in the preparation of or inclusion in such preliminary or final
registration statement or such amendment or supplement thereto; and HUB will
reimburse SJBDI for any legal or other expense reasonably incurred by SJBDI 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.
7. 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 or Put 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 SJBDI
with another entity, or any sale of all or substantially all of the assets of
SJBDI, 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 the 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 the 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.
8. Filings and Consents. Each of HUB and SJBDI 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 or Put herein provided shall be subject
to compliance with all applicable laws including, in the event HUB 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 each party agrees to cooperate with and furnish to the other such
information and documents as may be reasonably required to secure such
approvals.
9. Representations and Warranties of SJBDI. SJBDI hereby represents and warrants
to HUB as follows:
a. Due Authorization. SJBDI 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
SJBDI.
b. Authorized Shares. SJBDI 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 SJBDI or any agreement, instrument, judgment, decree
or order applicable to SJBDI.
10. Representations and Warranties of HUB. HUB hereby represents and warrants to
SJBDI as follows:
a. Due Authorization. HUB 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 HUB.
b. 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 HUB or any agreement,
instrument, judgment, decree or order applicable to HUB.
11. 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, each party shall have the right to seek money damages against the
other for a breach of this Agreement.
12. 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.
13. Assignment or Transfer. Neither party may sell, assign or otherwise transfer
its rights and obligations hereunder, in whole or in part, to any person or
group of persons, except that HUB may transfer its rights hereunder to an
affiliate. HUB represents that it is acquiring the Option for HUB's own account
and not with a view to or for sale in connection with any distribution of the
Option or the Option Shares. HUB is aware that neither the Option nor the Option
or Put Shares are 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 HUB in connection
therewith.
14. 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.
15. 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.
16. 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 HUB:
Hudson United Bancorp
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attention: 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 SJBDI:
Southern Jersey Bancorp of Delaware, Inc.
53 South Laurel Street
Bridgeton, New Jersey 08302
Attention: Clarence D. McCormick, Sr.
Chairman and Chief Executive Officer
With a copy to:
Block & Balestri, P.C.
15851 Dallas Parkway
Suite 1020
Addison, Texas 75001
Attention: Steven R. Block, 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).
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
18. 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.
19. 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.
20. 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.
21. 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.
22. 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 (i) if termination
of the Merger Agreement occurs after the occurrence of an Option Triggering
Event (as defined in Section 2 hereof), this Agreement shall not terminate until
the later of 24 months following the date of the termination of the Merger
Agreement or the consummation of any proposed transactions which constitute the
Triggering Event and (ii) if termination of the Merger Agreement occurs pursuant
to a Put Triggering Event (as defined in Section 4 hereof), this Agreement shall
terminate six 6 months after such Put Triggering Event, unless the Put Notice
has been delivered prior thereto, in which case this Agreement shall terminate
following the Closing under such Put Notice.
23. Cut-Back. Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock subject to the Option and the Put shall be
automatically reduced if, and only to the extent, necessary to avoid HUB
becoming (either by virtue of the execution and delivery of this Agreement or by
virtue of the exercise of the Option or Put) an "Acquiring Person" under the
Amended Stockholders Rights Agreement dated as of April 11, 1996 by and between
SJBDI and The Farmers and Merchants National Bank of Bridgeton.
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.
SOUTHERN JERSEY BANCORP
OF DELAWARE, INC.
CLARENCE D. McCORMICK, SR.
By:-------------------------------------
Clarence D. McCormick, Sr.
Chairman & Chief Executive Officer
HUDSON UNITED BANCORP
D. LYNN VAN BORKULO-NUZZO
By:-------------------------------------
D. Lynn Van Borkulo-Nuzzo
Executive Vice-President
FOR IMMEDIATE RELEASE
For: Hudson United Bancorp.
Contact:
Kenneth T. Neilson, Chairman & CEO Chris Witkowski, Sr. Vice President
201-236-2631 Assistant to the President, 201-236-6144
HUDSON UNITED BANCORP SIGNS DEFINITIVE
MERGER AGREEMENT WITH SOUTHERN JERSEY BANCORP
Mahwah, NJ (June 29, 1999) - Hudson United Bancorp (NYSE: HU), today announced a
merger with Southern Jersey Bancorp (NASDAQ: SOJB), a $470 million asset bank
holding company with 17 branches in Southern New Jersey. Also today, Hudson
United Bancorp and JeffBanks, Inc. signed a merger agreement. The combined
entity is the second largest banking company headquartered in New Jersey with
$9.5 billion in assets and over 200 branch offices in New Jersey, Connecticut,
New York and Pennsylvania.
Kenneth T. Neilson, Chairman and CEO of Hudson United Bancorp announced the
intent to create a $3.3 billion Jefferson Bank Division of Hudson United Bank
which will combine Southern Jersey Bancorp, Jefferson Bank and Hudson United's
existing South Jersey branches and lending businesses.
Under the terms of the agreement between Southern Jersey Bancorp of Delaware,
Inc. and Hudson United, which is intended to be a tax free exchange, Southern
Jersey Bancorp of Delaware shareholders will receive 1.26 shares of Hudson
United Bancorp common stock for each share of Southern Jersey Bancorp common
stock. The common stock of Hudson United Bancorp closed at $34.94 per share
equating to a price of $44.02 per share of Southern Jersey Bancorp common stock.
The total transaction value is $54 million, which is 1.6 times Southern Jersey
Bancorp's book value and 11 times 1999 estimated earnings adjusted for
synergies, with a deposit premium of 5.3%. Southern Jersey Bancorp has issued an
option to Hudson United Bancorp which would enable them to purchase 200,000
shares of common stock under certain defined circumstances.
Pending appropriate corporate, shareholder and regulatory approvals, the
agreement is expected to be completed by the fourth quarter of 1999 and to be
accounted for as a pooling of interests.
Serving the Cumberland, Gloucester and Salem counties of New Jersey with 17
branches, Southern Jersey Bancorp is the bank holding company for Farmers and
Merchants National Bank of Bridgeton.
Kenneth T. Neilson, Chairman and CEO of Hudson United Bancorp said, "The merger
with Southern Jersey Bancorp reinforces our already strong market share and
presence within the South Jersey marketplace. Moreover, Southern Jersey
Bancorp's strong deposit franchise and dominant market share provide us with an
opportunity to offer many new products and services to the Farmers and Merchants
growing customer base."
Clarence McCormick Sr, Chairman and CEO of Southern Jersey Bancorp said "
Farmers and Merchants Bank has always tried to serve our communities, customers
and shareholders and we believe that our affiliation with Hudson United provides
the community banking atmosphere and service that we have been known for, and we
look forward to becoming a part of the Hudson United Bank family."
Hudson United Bancorp's banking subsidiary offers a full array of innovative
products and services to retail and commercial customers including: imaged
checking accounts, 24-hour telephone banking, loans by phone, alternative
investments, insurance products, trust services and a wide variety of commercial
loans and services including international services, cash management services,
asset based loans, SBA loans and much more.
Hudson United Bancorp, Inc.
Merger Announcement With
JeffBanks, Inc.
and
Southern Jersey Bancorp of Delaware, Inc.
June 29, 1999
<PAGE>
Forward Looking Statements
- --------------------------
This document contains forward-looking statement within the meaning of the
Private Securities Litigation Reform Act of 1995. This presentation contains
estimates of future operating results for 1999 and beyond for Hudson United
Bancorp, Inc., JeffBanks, Inc. and Southern Jersey Bancorp of Delaware, Inc.
on a stand-alone and pro-forma combined basis and estimates of financial
condition, merger-related expenses and cost savings on a combined basis.
These statements are not historical facts and include expressions about
management's confidence and strategies and management's expectations about
new and existing programs, products, relationships, opportunities,
technology and market conditions. Such forward-looking statements involve
certain risks and uncertainties. Actual results may differ materially from
the results discussed in these forward-looking statements. Factors that
might cause such a difference include, but are not limited to, movements in
interest rates, the possibility of disruption in credit markets, successful
implementation and integration of Hudson United Bancorp's acquisitions,
successful implementation of Year 2000 technology changes, and the impact of
legal and regulatory barriers and structures. Hudson United Bancorp assumes
no obligation for updating such forward-looking statements at any time.
<PAGE>
1. Transaction Summary
2. Transaction Rationale
3. Transaction Economics
4. Summary
Appendix
<PAGE>
<TABLE>
<CAPTION>
Transaction Summary
- -------------------
Southern
JeffBanks Jersey Bancorp
--------- --------------
<S> <C> <C>
Fixed Exchange Ratio: 0.95 1.26
Price Per Share: $33.13 $44.00
Transaction Value: $374 million $54 million
Earnings Multiple (1999 IBES Estimate): 20x N/A
Earnings Multiple (1999 Est. adjusted for
Synergies) (1) 12x 11x
Earnings Accretion Year 2000: $0.02 $0.07
Price to Book Value: 2.6x 1.6x
Structure: Tax-Free Exchange Tax-Free Exchange
Accounting: Pooling Pooling
Expected Closing 4th Quarter 1999 4th Quarter 1999
Due Diligence/Y2K Review: Completed Substantially Completed
System Conversion: 4th Quarter 1999 4th Quarter 1999
</TABLE>
<PAGE>
Transaction Rationale
Strategic Reasons for the Combinations
--------------------------------------
|X| Complement strong market presence in Philadelphia and Southern NJ
|X| Obtain attractive, small business and consumer customer bases
|X| Capitalize on strong integration skills and familiarity with markets
|X| Achieve substantial cost savings and potential revenue synergies
|X| Accretive to earnings in first full year of operations on cost saves
alone
|X| Accretive to book value
<PAGE>
Strategic Reasons for the Combinations
--------------------------------------
JeffBanks
---------
Strong Small Business Lender in Philadelphia Markets
Mortgage Banking Specialists in FHV & VA Loans
Largest Entry Point in Eastern Pennsylvania
Southern Jersey Bancorp
-----------------------
Strong Deposit Franchise in Southern NJ including #1 Market Share in
Cumberland County
Strong Deposit Market Share in Cumberland and Salem Counties
Opportunity to Sell Many New Products and Services
This combination
----------------
Enhance Hudson United's Commercial Banking Franchise
Significant Cost Savings Opportunities
Adds New Banking Customers
Accretive to Earnings
Low Risk Integration
<PAGE>
Attractive Deposit and Loan
Composition - March 31, 1999
- ----------------------------
<TABLE>
<CAPTION>
Southern
Jersey
Hudson United JeffBanks Bancorp Pro Forma
--------------------------------- -------------------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Loans $ % $ $ $ %
Commercial 690 20 257 66 1,012 21
Commercial Real Estate 678 20 403 80 1,161 23
Consumer 548 16 337 62 947 19
Residential Mortgage 1,508 44 268 33 1,810 37
----- --- ----- ----- ----- ----
Total 3,324 100 1,265 241 4,930 100
Deposits
Non-interest Bearing 870 18 206 60 1,136 17
Money Market and Savings 2,041 41 441 160 2,642 40
Certificates 2,021 41 598 209 2,828 43
----- --- ----- --- ----- ---
Total 4,932 100 1,245 429 6,606 100
----- --- ----- --- ----- ----
</TABLE>
<PAGE>
Transaction Economics
Transaction Economics
- ---------------------
|X| Accretion based on conservative, achievable cost savings and
no revenue enhancement
----------------------
- Jeff Banks: 35% or $12.1 million after-tax
- Southern Jersey: 40% or $3.7 million after-tax
|X| Substantial Revenue Enhancement Opportunities
|X| Merger Related Charges of:
- Jeff Banks: $27.5 million pre-tax
- Southern Jersey: $30.0 million pre-tax
<PAGE>
Revenue Enhancement Opportunities
- ---------------------------------
|X| Strong Loan Generation to replace significant investment portfolio at
Hudson United
|X| Additional Products Available to New Customers
- Asset Based Lending
- Equipment Leasing
- International Services
- Trust Services
- Insurance Services
- Relationship Deposit Accounts
<PAGE>
Pro Forma Balance Sheet (in Millions)
- -------------------------------------
March 31, 1999 Proforma
HU(1) JEFF SOJB Combined
----- ---- ---- --------
Total Assets $7,556 $1,680 $465 $9,701
Securities 3,225 287 106 3,618
Loans 3,738 1,265 231 5,234
Total Deposits 5,330 1,245 429 7,004
Total Capital 454 133 31 618
Shares Outstanding 40.4 10.5 1.1 52.0
- --------------------------------------------
(1) HU's information reflects the effect of the Little Falls acquisition which
closed May 21, 1999 and the pending acquisition with Advest.
<PAGE>
Strong Balance Sheet Maintained
-------------------------------
HU JEFF SOJB Combined
-- ---- ---- --------
Common Equity/Total Assets 6.1% 7.9% 6.7% 6.4%
Leverage Capital Ratio 6.8 9.3 5.9 6.9
Loans/Earnings Assets 52.7 80.4 57.0 58.0
Deposits/Total Funding 76.8 81.4 100.0 78.8
<PAGE>
Pro Forma Income Statement (in Millions)
- ----------------------------------------
IBES 1999 Estimates Proforma
HU JEFF SOJB(1) Combined
-- ---- ------- --------
Net Income $100.5 $18.3 $1.0 $119.8
Projected:
Cost Saves - 12.1 3.7 15.8
Adj. Net Income 100.5 30.4 4.8 135.6
Shares - Diluted 40.0 10.7 1.5 52.2
Adjusted EPS 2.51 2.84 3.09 2.60
Adjusted ROAA 1.45% 1.83% 1.22% 1.51%
Adjusted ROAE 22.1 20.7 13.3 22.0
Efficiency Ratio 46 43 48 45
Net Int. Margin 4.25 4.17 2.95 4.19
Does not include one-time merger related charges.
- -------------------------------------------------
(1) Represents 1st Quarter 1999 annualized, no IBES estimates available.
<PAGE>
Conclusion
----------
|X| Enhance Hudson United's Banking Franchise
- Strong business lender
- Attractive deposit franchise
|X| Financially Attractive
- Accretive to earnings and book value
- Attractive pricing
|X| Low-Risk Transaction
- Conservative assumptions
- Proven integration track record
- History of value creation through acquisition
|X| Enhances Shareholder Value
<PAGE>
APPENDIX
Low-Risk Integration
History of Success (In Millions)
- --------------------------------
<TABLE>
<CAPTION>
Institution Date Price Paid Deposits Loans
- ----------- ---- ---------- -------- -----
<S> <C> <C> <C> <C>
Mountain Ridge State 10/90 Nominal $ 47 $ 12
Meadowlands National Bank 4/91 Nominal $ 60 $ 22
Center Savings & Loan 9/91 Nominal $ 90 $ 79
Irving Federal Savings & Loan 2/92 Nominal $ 160 $ 62
Broadway Bank & Trust 3/92 $ 3.4 $ 355 $ 25
Pilgrim State Bank 6/93 $ 6.2 $ 123 $ 47
Polifly Federal Savings & Loan Branches 5/94 $ 6.2 $ 105 $ .5
Washington Savings Bank 7/94 $ 40.5 $ 300 $ 169
Shoppers Charge Accounts Co.1 12/94 $ 16.3 N/A $ 60
Jefferson National Bank 4/95 $ 9.7 $ 99 $ 42
Urban National Bank 6/95 $ 38.2 $ 230 $ 92
Growth Financial Corp. 1/96 $ 25.6 $ 110 $ 102
Crossland Federal Savings Bank Branches 2/96 $ 3.0 $ 60 $ .2
Lafayette American Bank 7/96 $ 120.0 $ 647 $ 548
Hometown Bancorporation, Inc. 8/96 $ 31.0 $ 162 $ 99
UST Bank, CT 11/96 $ 13.0 $ 100 $ 73
Westport Bancorp, Inc. 12/96 $ 67.8 $ 259 $ 183
The Bank of Southington 1/98 $ 26.7 $ 122 $ 85
Security National Bank & Trust 2/98 $ 11.0 $ 77 $ 48
Poughkeepsie Financial 4/98 $ 136.0 $ 611 $ 648
MSB Bancorp 5/98 $ 115.0 $ 686 $ 375
First Union Branches 6/98 $ 32.0 $ 320 $ .4
Community Financial 8/98 $ 29.6 $ 137 $ 87
Dime Financial 8/98 $ 201.0 $ 817 $ 374
IBS Financial 8/98 $ 227.0 $ 560 $ 218
FNB Branch Purchase 3/99 $ 9.1 $ 151 $ -
Little Falls Bancorp, Inc. 5/99 $ 55.0 $ 234 $ 153
Advest Asset Purchase Pending $ 2.0 $ 150 $ 159
JeffBanks, Inc. Pending $ 374.0 $ 1,245 $1,265
Southern Jersey Bancorp Pending $ 54.0 $ 429 $ 231
</TABLE>
1 Non-Bank Acquisition
<PAGE>
JeffBanks, Inc.
- ---------------
32 Branch Locations - 5 in New Jersey and 27 in Pennsylvania
Counties of Operation:
- ----------------------
<TABLE>
<CAPTION>
Burlington(NJ) Camden(NJ) Chester(PA) Delaware(PA) Montgomery(PA) Phila(PA)
-------------- ---------- ----------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Median Household Income 55,408 44,886 68,603 50,047 58,379 30,272
5 Year Projected Growth 14% 7% 28% 14% 17% 6%
5 Year Projected Growth in
Per Capita Income 21 12 31 22 23 18
JEFF Market Share 1% 1% 4% 1% 2% 3%
JEFF Rank in County 14 16 11 15 16 5
HUB Rank in County 6 5 - - - -
Proforma Rank in County 6 5 11 15 16 5
</TABLE>
Data source: SNL Securities
<PAGE>
Southern Jersey Bancorp
-----------------------
17 Branch Locations - All in New Jersey
Counties of Operation:
- ----------------------
Cumberland(NJ) Gloucester(NJ) Salem(NJ)
-------------- -------------- ---------
Median Household Income 36,611 49,577 41,900
5 Year Projected Growth 7% 11% 9%
5 Year Projected Growth in
Per Capita Income 18 19 21
SOJB Market Share 24% 1% 10%
SOJB Rank in County 1 18 6
HUB Rank in County - 11 -
Proforma Rank in County 1 9 6
Data source: SNL Securities
