STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of January
26, 1999, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and Little Falls Bancorp, Inc., a New Jersey
corporation and registered savings and loan holding company ("LFB").
BACKGROUND
WHEREAS, HUBCO and LFB, as of the date hereof, are prepared to
execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which LFB will be merged with and into HUBCO (the "Merger"); and
WHEREAS, HUBCO has advised LFB that it will not execute the
Merger Agreement unless LFB executes this Agreement; and
WHEREAS, the Board of Directors of LFB has determined that the
Merger Agreement provides substantial benefits to the shareholders of LFB; and
WHEREAS, as an inducement to HUBCO to enter into the Merger
Agreement and in consideration for such entry, LFB desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of LFB in an
amount and on the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, HUBCO and LFB,
intending to be legally bound hereby, agree:
1. Grant of Option. LFB hereby grants to HUBCO an option to purchase 493,000
shares of common stock, $.10 par value, of LFB (the "Common Stock") at a price
of $19.25 per share (the "Option Price"), on the terms and conditions set forth
herein (the "Option").
2. Exercise of Option. This Option shall not be exercisable until the occurrence
of a Triggering Event (as such term is hereinafter defined). Upon or after the
occurrence of a Triggering Event (as such term is hereinafter defined), HUBCO
may exercise the Option, in whole or in part, at any time or from time to time,
subject to the terms and conditions set forth herein and the termination
provisions of Section 19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such term is defined in Rule 13d-3 as
promulgated under the Exchange Act) of at least 25% of the then outstanding
shares of Common Stock, provided, however, that the continuing ownership by a
person or group which as of the date hereof owns more than 25% of the
outstanding Common Stock shall not constitute a Triggering Event; or
b. enters into a letter of intent or an agreement, whether oral or written, with
LFB pursuant to which such person or any affiliate of such person would (i)
merge or consolidate, or enter into any similar transaction, with LFB, (ii)
acquire all or a significant portion of the assets or liabilities of LFB, or
(iii) acquire beneficial ownership of securities representing, or the right to
acquire beneficial ownership or to vote securities representing, 25% 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,
LFB or any other business combination involving LFB, 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,
25% 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
LFB called to vote on the Merger and LFB'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, LFB 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 at any time after
executing this Agreement the willful taking of any material direct or indirect
action by LFB or any of its directors, senior executive officers, investment
bankers or other person with actual or apparent authority to speak for the Board
of Directors, inviting, encouraging or soliciting any proposal (other than from
HUBCO or an affiliate of HUBCO) which has as its purpose a tender offer for the
shares of Common Stock, a merger, consolidation, plan of exchange, plan of
acquisition or reorganization of LFB, 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 LFB. The term "significant number" means 15% of the outstanding
shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the Proposal coupled
with a public announcement of no further interest in pursuing such Proposal or
in acquiring any controlling influence over LFB or in soliciting or inducing any
other person (other than HUBCO or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be exercised
at any time (i) in the absence of any required governmental or regulatory
approval or consent (including any filing, approval or consent required under
the rules and regulations of the National Association of Securities Dealers,
Inc.) necessary for LFB 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.
LFB 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 LFB shall not be a condition to the right of HUBCO to exercise the
Option. LFB will not take any action which would have the effect of preventing
or disabling LFB from delivering the Option Shares to HUBCO upon exercise of the
Option or otherwise performing its obligations under this Agreement, except to
the extent required by applicable securities and banking laws and regulations.
In the event HUBCO wishes to exercise the Option, HUBCO shall
send a written notice to LFB (the date of which is hereinafter referred to as
the "Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date between two and ten business days inclusive from
the Notice Date for the closing of such a purchase (a "Closing"); provided,
however, that a Closing shall not occur prior to two days after the later of
receipt of any necessary regulatory approvals and the expiration of any legally
required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any Closing hereunder (a) HUBCO will
make payment to LFB of the aggregate price for the Option Shares so purchased by
wire transfer of immediately available funds to an account designated by LFB;
(b) LFB 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
LFB, 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 as
determined by LFB's counsel, 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 Little Falls Bancorp, 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 HUBCO, LFB shall, if necessary for the
resale of the Option or the Option Shares by HUBCO, prepare and file a
registration statement with the Securities and Exchange Commission and any state
securities bureau covering the Option and such number of Option Shares as HUBCO
shall specify in its request, and LFB 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 (it being understood and
agreed that in any such sale or disposition the Option Shares shall be
distributed so that upon consummation thereof, no purchaser or transferee shall
beneficially own more than 4 percent of the Common Stock then outstanding),
provided that HUBCO shall in no event have the right to have more than one such
registration statement become effective, and provided further that LFB shall not
be required to prepare and file any such registration statement in connection
with any proposed sale with respect to which counsel to LFB delivers to LFB and
to HUBCO (which is reasonably acceptable to HUBCO) its opinion to the effect
that no such filing is required under applicable laws and regulations with
respect to such sale or disposition; provided further, however, that LFB may
delay any registration of Option Shares above for a period not exceeding 90 days
in the event that LFB shall in good faith determine that any such registration
would adversely effect an offering of securities by LFB for cash. HUBCO shall
provide all information reasonable requested by LFB for inclusion in any
registration statement to be filed hereunder.
In connection with such filing, LFB 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 LFB 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 LFB and blue sky fees and expenses shall be paid by LFB.
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, LFB shall indemnify and hold harmless HUBCO
against any losses, claims, damages or liabilities, joint or several, to which
HUBCO may become subject, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
preliminary or final registration statement or any amendment or supplement
thereto, or arise out of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and LFB 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 LFB will not be liable in any case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such preliminary or final registration statement or such amendment or
supplement thereto in reliance upon and in conformity with written information
furnished by or on behalf of HUBCO specifically for use in the preparation
thereof. HUBCO will indemnify and hold harmless LFB 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 LFB for any legal or
other expense reasonably incurred by LFB 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 LFB
with another entity, or any sale of all or substantially all of the assets of
LFB, 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 LFB will use its reasonable efforts
to make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event HUBCO is the holder
hereof, approval of the Securities and Exchange Commission, the Board of
Governors of the Federal Reserve System, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation or the New Jersey Department of Banking,
and LFB 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 LFB. LFB hereby represents and warrants to
HUBCO as follows:
a. Due Authorization. LFB 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
LFB.
b. Authorized Shares. LFB 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 LFB or any agreement, instrument,
judgment, decree or order applicable to LFB. 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 LFB for a breach of this Agreement.
9. Entire Agreement. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof.
10. Assignment or Transfer. HUBCO may not sell, assign or otherwise transfer its
rights and obligations hereunder, in whole or in part, to any person or group of
persons other than to an affiliate of HUBCO. HUBCO represents that it is
acquiring the Option for HUBCO's own account and not with a view to or for sale
in connection with any distribution of the Option or the Option Shares. HUBCO is
aware that neither the Option nor the Option Shares is the subject of a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission pursuant to Section 5 of the Securities Act, but instead
each is being offered in reliance upon the exemption from the registration
requirement provided by Section 4(2) thereof and the representations and
warranties made by HUBCO in connection therewith.
11. Amendment of Agreement. Upon mutual consent of the parties hereto, this
Agreement may be amended in writing at any time, for the purpose of facilitating
performance hereunder or to comply with any applicable regulation of any
governmental authority or any applicable order of any court or for any other
purpose.
12. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
13. Notices. All notices, requests, consents and other communications required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered personally, by express service, cable, telegram or telex,
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties as follows:
If to HUBCO:
HUBCO, Inc.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
Chairman, President and Chief Executive Officer
With a copy to:
Pitney, Xxxxxx, Xxxx & Xxxxx
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
If to LFB:
Little Falls Bancorp, Inc.
00 Xxxx Xxxxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
President and Chief Executive Officer
With a copy to:
Xxxxxxx, Spidi, Sloane & Xxxxx, P.C.
One Franklin Square
0000 X Xxxxxx, X.X., Xxxxx 000X
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx Xxxxx, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are inserted for convenience and
reference purposes, and shall not limit or otherwise affect any of the terms or
provisions hereof.
16. Waivers and Extensions. The parties hereto may, by mutual consent, extend
the time for performance of any of the obligations or acts of either party
hereto. Each party may waive (a) compliance with any of the covenants of the
other party contained in this Agreement and/or (b) the other party's performance
of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be binding upon and inure solely
to the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
18. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
19. Termination. This Agreement shall terminate upon either the termination of
the Merger Agreement as provided therein or the consummation of the transactions
contemplated by the Merger Agreement; provided, however, that if termination of
the Merger Agreement occurs after the occurrence of a Triggering Event (as
defined in Section 2 hereof), this Agreement shall not terminate until the later
of 12 months following the date of the termination of the Merger Agreement or
the consummation of any proposed transactions which constitute the Triggering
Event.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Stock Option
Agreement to be executed by its duly authorized officer, all as of the day and
year first above written.
LITTLE FALLS BANCORP, INC.
By:___________________________________________
Xxxxxx X. Xxxxx
Chairman
HUBCO, INC.
By:__________________________________________
Xxxxxxx X. Xxxxxxx,
Chairman, President and Chief Executive Officer
