EXHIBIT 99(a)
STOCK OPTION AGREEMENT
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THIS STOCK OPTION AGREEMENT ("Agreement") dated as of February 5,
1996, is by and between HUBCO, Inc., a New Jersey corporation and
registered bank holding company ("HUBCO"), and Lafayette American Bank and
Trust Company, a commercial bank organized under the laws of Connecticut
("Lafayette").
BACKGROUND
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1. HUBCO and Lafayette, as of the date hereof, are prepared to
execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which HUBCO will acquire Lafayette through a merger of
Lafayette with and into an interim Connecticut-chartered commercial bank
(the "Merger").
2. HUBCO has advised Lafayette that it will not execute the
Merger Agreement unless Lafayette executes this Agreement.
3. The Board of Directors of Lafayette has determined that the
Merger Agreement provides substantial benefits to the shareholders of
Lafayette.
4. As an inducement to HUBCO to enter into the Merger Agreement
and in consideration for such entry, Lafayette desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of
Lafayette in an amount and on the terms and conditions hereinafter set
forth.
AGREEMENT
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In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, HUBCO and
Lafayette, intending to be legally bound hereby, agree:
1. GRANT OF OPTION. Lafayette hereby grants to HUBCO the
option to purchase 2,400,000 shares of common stock, no par value, of
Lafayette (the "Common Stock") at a price of $10.75 per share (the "Option
Price"), on the terms and conditions set forth herein (the "Option").
2. EXERCISE OF OPTION. This Option shall not be exercisable
until the occurrence of a Triggering Event (as such term is hereinafter
defined). Upon or after the occurrence of a Triggering Event (as such term
is hereinafter defined), HUBCO may exercise the Option, in whole or in
part, at any time or from time to time, subject to the termination
provisions of Section 19 of this Agreement and subject to Section 20 of
this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such term is defined
in Rule 13d-3 as promulgated under the Exchange Act) of at least 20% of
the then outstanding shares of Common Stock; or
b. enters into a letter of intent or an agreement, whether
oral or written, with Lafayette pursuant to which such person or any
affiliate of such person would (i) merge or consolidate, or enter into any
similar transaction, with Lafayette, (ii) acquire all or a significant
portion of the assets or liabilities of Lafayette, or (iii) acquire
beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 20% or more of the
then outstanding shares of Common Stock; or
c. makes a filing with any bank or thrift regulatory
authorities or publicly announces a bona fide proposal (a "Proposal") for
(i) any merger with, consolidation with or acquisition of all or a
significant portion of all the assets or liabilities of, Lafayette or any
other business combination involving Lafayette, or (ii) a transaction
involving the transfer of beneficial ownership of securities representing,
or the right to acquire beneficial ownership or to vote securities
representing, 20% or more of the outstanding shares of Common Stock, and
thereafter, if such Proposal has not been Publicly Withdrawn (as such term
is hereinafter defined) at least 15 days prior to the meeting of
stockholders of Lafayette called to vote on the Merger and Lafayette'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, Lafayette willfully takes any
action in any manner which would materially interfere with its ability to
consummate the Merger or materially reduce the value of the transaction to
HUBCO.
The term "Triggering Event" also means the taking of any material
direct or indirect action by Lafayette or any of its directors, officers or
agents with the intention of inviting, encouraging or soliciting any
proposal which has as its purpose a tender offer for the shares of Common
Stock, a merger, consolidation, plan of exchange, plan of acquisition or
reorganization of Lafayette, or a sale of a significant number of shares of
Common Stock or any significant portion of its assets or liabilities.
The term "significant portion" means 25% of the assets or
liabilities of Lafayette. 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 Lafayette or in soliciting
or inducing any other person (other than HUBCO or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be exercised at
any time (i) in the absence of any required governmental or regulatory
approval or consent necessary for Lafayette to issue the shares of Common
Stock covered by the Option (the "Option Shares") or HUBCO to exercise the
Option or prior to the expiration or termination of any waiting period
required by law, or (ii) so long as any injunction or other order, decree
or ruling issued by any federal or state court of competent jurisdiction is
in effect which prohibits the sale or delivery of the Option Shares.
Lafayette shall notify HUBCO promptly in writing of the
occurrence of any Triggering Event known to it, it being understood that
the giving of such notice by Lafayette shall not be a condition to the
right of HUBCO to exercise the Option. Lafayette will not take any action
which would have the effect of preventing or disabling Lafayette from
delivering the Option Shares to HUBCO upon exercise of the Option or
otherwise performing its obligations under this Agreement.
In the event HUBCO wishes to exercise the Option, HUBCO shall
send a written notice to Lafayette (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 for the closing of such a
purchase (a "Closing"); PROVIDED, HOWEVER, that a Closing shall not occur
prior to two days after the later of receipt of any necessary regulatory
approvals and the expiration of any legally required notice or waiting
period, if any.
3. PAYMENT AND DELIVERY OF CERTIFICATES. At any Closing
hereunder (a) HUBCO will make payment to Lafayette of the aggregate price
for the Option Shares so purchased by wire transfer of immediately
available funds to an account designated by Lafayette; (b) Lafayette will
deliver to HUBCO a stock certificate or certificates representing the
number of Option Shares so purchased, free and clear of all liens, claims,
charges and encumbrances of any kind or nature whatsoever created by or
through Lafayette, registered in the name of HUBCO or its designee, in such
denominations as were specified by HUBCO in its notice of exercise and, if
necessary, bearing a legend as set forth below; and (c) HUBCO shall pay any
transfer or other taxes required by reason of the issuance of the Option
Shares so purchased.
If required under applicable federal securities laws, a legend
will be placed on each stock certificate evidencing Option Shares issued
pursuant to this Agreement, which legend will read substantially as
follows:
The shares of stock evidenced by this certificate have not been
registered for sale under the Securities Act of 1933 (the "1933 Act").
These shares may not be sold, transferred or otherwise disposed of
unless a registration statement with respect to the sale of such
shares has been filed under the 1933 Act and declared effective or, in
the opinion of counsel reasonably acceptable to Lafayette American
Bank and Trust Company, said transfer would be exempt from
registration under the provisions of the 1933 Act and the regulations
promulgated thereunder.
No such legend shall be required if a registration statement is filed and
declared effective under Section 4 hereof.
4. REGISTRATION RIGHTS. Upon or after the occurrence of a
Triggering Event and upon receipt of a written request from HUBCO,
Lafayette shall, if necessary for the resale of the Option or the Option
Shares by HUBCO, prepare and file a registration statement with the
Securities and Exchange Commission, the Federal Deposit Insurance
Corporation and any state securities bureau covering the Option and such
number of Option Shares as HUBCO shall specify in its request, and
Lafayette shall use its best efforts to cause such registration statement
to be declared effective in order to permit the sale or other disposition
of the Option and the Option Shares, provided that HUBCO shall in no event
have the right to have more than one such registration statement become
effective.
In connection with such filing, Lafayette shall use its best
efforts to cause to be delivered to HUBCO such certificates, opinions,
accountant's letters and other documents as HUBCO shall reasonably request
and as are customarily provided in connection with registrations of
securities under the Securities Act of 1933, as amended. All expenses
incurred by Lafayette 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 Lafayette and blue sky fees
and expenses shall be paid by Lafayette. Underwriting discounts and
commissions to brokers and dealers relating to the Option Shares, fees and
disbursements of counsel to HUBCO and any other expenses incurred by HUBCO
in connection with such registration shall be borne by HUBCO. In
connection with such filing, Lafayette shall indemnify and hold harmless
HUBCO against any losses, claims, damages or liabilities, joint or several,
to which HUBCO may become subject, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any preliminary or final registration statement or any
amendment or supplement thereto, or arise out of a material fact required
to be stated therein or necessary to make the statements herein not
misleading; and Lafayette will reimburse HUBCO for any legal or other
expense reasonably incurred by HUBCO in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, that Lafayette 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 of omission or alleged
omission made in such preliminary or final registration statement or such
amendment or supplement thereto in reliance upon and in conformity with
written information furnished by or on behalf of HUBCO specifically for use
in the preparation thereof. HUBCO will indemnify and hold harmless
Lafayette to the same extent as set forth in the immediately preceding
sentence but only with reference to written information specifically
furnished by or on behalf of HUBCO for use in the preparation of such
preliminary or final registration statement or such amendment or supplement
thereto; and HUBCO will reimburse Lafayette for any legal or other expense
reasonably incurred by Lafayette in connection with investigating or
defending any such loss, claim, damage, liability or action.
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
Lafayette with another entity, or any sale of all or substantially all of
the assets of Lafayette, shall be effected in such a way that the holders
of Common Stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for Common Stock, then, as a condition of
such reorganization, reclassification, consolidation, merger or sale,
lawful and adequate provisions (in form reasonably satisfactory to the
holder hereof) shall be made whereby the holder hereof shall thereafter
have the right to purchase and receive upon the basis and upon the terms
and conditions specified herein and in lieu of the Common Stock immediately
theretofore purchasable and receivable upon exercise of the rights
represented by this Option, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of
shares of Common Stock immediately theretofore purchasable and receivable
upon exercise of the rights represented by this Option had such
reorganization, reclassification, consolidation, merger or sale not taken
place; PROVIDED, HOWEVER, that if such transaction results in the holders
of Common Stock receiving only cash, the holder hereof shall be paid the
difference between the Option Price and such cash consideration without the
need to exercise the Option.
6. FILINGS AND CONSENTS. Each of HUBCO and Lafayette will use
its best efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to the consummation of
the transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event HUBCO is the
holder hereof, approval of the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation and the Connecticut
Department of Banking, and Lafayette agrees to cooperate with and furnish
to the holder hereof such information and documents as may be reasonably
required to secure such approvals.
7. REPRESENTATIONS AND WARRANTIES OF LAFAYETTE. Lafayette
hereby represents and warrants to HUBCO as follows:
a. DUE AUTHORIZATION. Lafayette 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 Lafayette.
b. AUTHORIZED SHARES. Lafayette 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 By-laws of Lafayette
or any agreement, instrument, judgment, decree, statute, rule or order
applicable to Lafayette.
8. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement and
that the obligations of the parties hereto shall be specifically
enforceable. Notwithstanding the foregoing, HUBCO shall have the right to
seek money damages against Lafayette for a breach of this Agreement.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, among the parties or any of them with respect to the subject
matter hereof.
10. ASSIGNMENT OR TRANSFER. HUBCO may not sell, assign or
otherwise transfer its rights and obligations hereunder, in whole or in
part, to any person or group of persons other than to an affiliate of
HUBCO, except upon or after the occurrence of a Triggering Event. HUBCO
represents that it is acquiring the Option for HUBCO's own account and not
with a view to or for sale in connection with any distribution of the
Option or the Option Shares. HUBCO shall have the right to assign this
Agreement to any party it selects after the occurrence of a Triggering
Event.
11. AMENDMENT OF AGREEMENT. Upon mutual consent of the parties
hereto, this Agreement may be amended in writing at any time, for the
purpose of facilitating performance hereunder or to comply with any
applicable regulation of any governmental authority or any applicable order
of any court or for any other purpose.
12. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force
and effect.
13. NOTICES. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered personally, by
express service, cable, telegram or telex, or by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties
as follows:
If to HUBCO:
HUBCO, Inc.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn.: Xx. Xxxxxxx X. Xxxxxxx, President and
Chief Executive Officer
With a copy to:
Pitney, Xxxxxx, Xxxx & Xxxxx
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attn.: Xxxxxx X. Xxxxx, Esq.
If to Lafayette:
Lafayette American Bank and Trust Company
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attn.: Xx. Xxxxxx X. Xxxxxxxxx, President and
Chief Executive Officer
With a copy to:
Xxxxxxxxxx, Sandler, Kohl, Xxxxxx & Xxxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxxx X. Xxxxxxxxx, Esq.
or to such other address as the person to whom notice is to be given may
have previously furnished to the others in writing in the manner set forth
above (provided that notice of any change of address shall be effective
only upon receipt thereof).
14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
15. CAPTIONS. The captions in the Agreement are inserted for
convenience and reference purposes, and shall not limit or otherwise affect
any of the terms or provisions hereof.
16. WAIVERS AND EXTENSIONS. The parties hereto may, by mutual
consent, extend the time for performance of any of the obligations or acts
of either party hereto. Each party may waive (a) compliance with any of
the covenants of the other party contained in this Agreement and/or (b) the
other party's performance of any of its obligations set forth in this
Agreement.
17. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement, except as provided in Section 10 permitting HUBCO to assign its
rights and obligations hereunder.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
19. TERMINATION. This Agreement shall terminate upon either the
termination of the Merger Agreement as provided therein or the consummation
of the transactions contemplated by the Merger Agreement; PROVIDED,
HOWEVER, that if termination of the Merger Agreement occurs after the
occurrence of a Triggering Event (as defined in Section 2 hereof), this
Agreement shall not terminate until the later of 18 months following the
date of the termination of the Merger Agreement or the consummation of any
proposed transactions which constitute the Triggering Event.
20. EFFECTIVENESS AND TERMINATION FEE. Solely for the purposes
of the Connecticut Banking Laws, Section 36a-184, this Agreement shall not
be considered effective until and unless it is submitted to and approved by
the Commissioner of the Connecticut Department of Banking (the
"Commissioner"). Lafayette shall pay HUBCO a termination fee of $5,000,000
(the "Termination Fee"), forthwith on demand, in lieu of all its other
rights hereunder, if each of the following conditions are met: (a) the
Option never becomes effective due to a failure by the Commissioner to make
a determination that the Option may be exercised, after a request for
approval by HUBCO to do so is submitted by HUBCO to the Commissioner, and
either the Commissioner makes a determination that the Option may not be
exercised or a period of five months elapses from the date the request is
submitted by HUBCO; (b) a Triggering Event has occurred, which would allow
HUBCO to exercise the Option; and (c) Lafayette is merged or acquired by
another financial institution within 18 months following the Triggering
Event. In the event that HUBCO is due the Termination Fee hereunder and
Lafayette fails to pay such Fee on demand by HUBCO, Lafayette shall in
addition reimburse HUBCO for the legal fees and expenses incurred by
HUBCO in seeking to enforce and in collecting the Termination Fee.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Stock Option
Agreement to be executed by its duly authorized officer, all as of the day
and year first above written.
LAFAYETTE AMERICAN BANK AND TRUST
COMPANY
By: /s/ XXXXXX X. XXXXXXXXX
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Xxxxxx X. Xxxxxxxxx,
President & Chief Executive
Officer
HUBCO, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx,
President & Chief Executive
Officer
