AGREEMENT AND
PLAN OF MERGER
BY
AND
AMONG
HUBCO, INC.
AND
MSB BANCORP, INC.
AND
MSB BANK
DATED: DECEMBER 15, 1997
TABLE OF CONTENTS
PAGE
----
ARTICLE I - THE MERGER........................................................1
1.1 THE MERGER................................................................1
1.2 EFFECT OF THE MERGER......................................................1
1.3 CERTIFICATE OF INCORPORATION..............................................2
1.4 BY-LAWS...................................................................2
1.5 DIRECTORS AND OFFICERS....................................................2
1.6 CLOSING DATE, CLOSING AND EFFECTIVE TIME.................................2
1.7 THE BANK MERGER...........................................................3
ARTICLE II - CONVERSION OF MSB SHARES, OPTIONS AND WARRANTS...................3
2.1 CONVERSION OF MSB STOCK...................................................3
2.2 EXCHANGE OF CERTIFICATES..................................................5
2.3 STOCK TRANSFER BOOKS......................................................8
2.4 DISSENTING SHARES.........................................................8
2.5 MSB STOCK OPTIONS.........................................................8
2.6 MSB PREFERRED SHARE PURCHASE RIGHTS.......................................9
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF MSB...........................9
3.1 CORPORATE ORGANIZATION....................................................9
3.2 CAPITALIZATION...........................................................10
3.3 AUTHORITY; NO VIOLATION..................................................11
3.4 FINANCIAL STATEMENTS.....................................................12
3.5 BROKER'S AND OTHER FEES..................................................13
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.....................................13
3.7 LEGAL PROCEEDINGS........................................................14
3.8 TAXES AND TAX RETURNS....................................................14
3.9 EMPLOYEE, DIRECTOR AND OFFICER BENEFIT PLANS.............................14
3.10 REPORTS.................................................................17
3.11 MSB AND BANK INFORMATION................................................18
3.12 COMPLIANCE WITH APPLICABLE LAW..........................................18
3.13 CERTAIN CONTRACTS.......................................................18
3.14 PROPERTIES AND INSURANCE................................................19
3.15 MINUTE BOOKS............................................................20
3.16 ENVIRONMENTAL MATTERS...................................................20
3.17 RESERVES................................................................21
3.18 NO PARACHUTE PAYMENTS...................................................21
3.19 AGREEMENTS WITH BANK REGULATORS.........................................21
3.20 DISCLOSURE..............................................................21
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUBCO.........................21
4.1 CORPORATE ORGANIZATION...................................................22
4.2 CAPITALIZATION...........................................................22
4.3 AUTHORITY; NO VIOLATION..................................................23
4.4 FINANCIAL STATEMENTS.....................................................24
4.5 BROKER'S AND OTHER FEES..................................................25
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.....................................25
4.7 LEGAL PROCEEDINGS........................................................25
4.8 TAX RETURNS..............................................................25
4.9 EMPLOYEE BENEFIT PLANS...................................................26
4.10 REPORTS.................................................................27
4.11 HUBCO INFORMATION.......................................................27
4.12 COMPLIANCE WITH APPLICABLE LAW..........................................27
4.13 CONTRACTS...............................................................28
4.14 PROPERTIES AND INSURANCE................................................28
4.15 FUNDING AND CAPITAL ADEQUACY............................................28
4.16 ENVIRONMENTAL MATTERS...................................................28
4.17 RESERVES................................................................29
4.18 HUBCO STOCK.............................................................29
4.19. AGREEMENTS WITH BANK REGULATORS........................................29
4.20 MINUTE BOOKS............................................................30
4.21. DISCLOSURE.............................................................30
ARTICLE V - COVENANTS OF THE PARTIES.........................................30
5.1 CONDUCT OF THE BUSINESS OF MSB...........................................30
5.2 NEGATIVE COVENANTS.......................................................30
5.3 NO SOLICITATION..........................................................32
5.4 CURRENT INFORMATION......................................................32
5.5 ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY........................32
5.6 REGULATORY MATTERS.......................................................33
5.7 APPROVAL OF STOCKHOLDERS.................................................35
5.8 FURTHER ASSURANCES.......................................................35
5.9 PUBLIC ANNOUNCEMENTS.....................................................36
5.10 FAILURE TO FULFILL CONDITIONS...........................................36
5.11 EMPLOYEE MATTERS........................................................37
5.12 DISCLOSURE SUPPLEMENTS..................................................38
5.13 TRANSACTION EXPENSES OF MSB AND HUBCO...................................38
5.14 INDEMNIFICATION.........................................................38
5.15 BANK POLICIES AND BANK MERGER...........................................40
5.16 COMPLIANCE WITH ANTITRUST LAWS..........................................41
5.17 POOLING AND TAX-FREE REORGANIZATION TREATMENT...........................41
5.18 COMFORT LETTERS........................................................41
5.19 AFFILIATES.............................................................42
5.20 APPOINTMENTS..........................................................42
5.21 DIRECTOR RETIREMENT PROGRAM...........................................42
ARTICLE VI - CLOSING CONDITIONS..............................................43
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT..............43
6.2 CONDITIONS TO THE OBLIGATIONS OF HUBCO UNDER THIS AGREEMENT..............44
6.3 CONDITIONS TO THE OBLIGATIONS OF MSB UNDER THIS AGREEMENT................45
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER..............................46
7.1 TERMINATION..............................................................46
7.2 EFFECT OF TERMINATION....................................................48
7.3. AMENDMENT...............................................................48
7.4. EXTENSION; WAIVER.......................................................48
ARTICLE VIII - MISCELLANEOUS.................................................48
8.1. EXPENSES................................................................48
8.2 SURVIVAL.................................................................48
ii
8.3 NOTICES..................................................................48
8.4 PARTIES IN INTEREST; ASSIGNABILITY.......................................49
8.5 ENTIRE AGREEMENT.........................................................49
8.6 COUNTERPARTS.............................................................50
8.7 GOVERNING LAW............................................................50
8.8 DESCRIPTIVE HEADINGS.....................................................50
8.9 KNOWLEDGE................................................................50
EXHIBITS
2.1(a) - TERMS OF NEW HUBCO PREFERRED STOCK
5.19-1 - FORM OF MSB AFFILIATE LETTER
5.19-2 - FORM OF AFFILIATE LETTER FOR HUBCO AFFILIATES
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated December 15, 1997
(this "AGREEMENT"), is among HUBCO, Inc. ("HUBCO"), a New Jersey corporation and
registered bank holding company, MSB Bancorp, Inc., a Delaware corporation
("MSB") and registered savings and loan holding company, and MSB Bank, a
federally chartered savings bank wholly owned by MSB ("BANK").
WHEREAS, the respective Boards of Directors of HUBCO and MSB
have each determined that it is in the best interests of HUBCO and MSB and their
respective stockholders for HUBCO to acquire MSB by (i) merging MSB with and
into HUBCO with HUBCO surviving and MSB shareholders receiving the consideration
hereinafter set forth, and (ii) in HUBCO's discretion, simultaneously with the
merger of MSB into HUBCO, by merging Bank with a New York bank or thrift
subsidiary of HUBCO; and
WHEREAS, as a condition for HUBCO to enter into this
Agreement, HUBCO has required that it receive an option on certain authorized
but unissued shares of MSB Common Stock (as hereinafter defined) and,
simultaneously with the execution of this Agreement, MSB is issuing an option to
HUBCO to purchase 600,000 shares of the authorized and unissued MSB Common Stock
at an option price of $29.00 per share, subject to adjustment and subject to the
terms and conditions set forth in the agreement governing such option (the
"HUBCO Option"); and
WHEREAS, the respective Boards of Directors of MSB, HUBCO and
Bank have each duly adopted and approved this Agreement and the Board of
Directors of MSB has directed that it be submitted to MSB's shareholders for
approval;
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), MSB shall be merged
with and into HUBCO (the "MERGER") in accordance the Delaware General
Corporation Law (the "DGCL") and the New Jersey Business Corporation Act (the
"NJBCA") and HUBCO shall be the surviving corporation (the "SURVIVING
CORPORATION").
1.2 EFFECT OF THE MERGER. At the Effective Time, the Surviving
Corporation shall be considered the same business and corporate entity as each
of HUBCO and MSB and thereupon and thereafter, all the property, rights,
privileges, powers and franchises of each of
1
HUBCO and MSB shall vest in the Surviving Corporation and the Surviving
Corporation shall be subject to and be deemed to have assumed all of the debts,
liabilities, obligations and duties of each of HUBCO and MSB and shall have
succeeded to all of each of their relationships, as fully and to the same extent
as if such property, rights, privileges, powers, franchises, debts, liabilities,
obligations, duties and relationships had been originally acquired, incurred or
entered into by the Surviving Corporation. In addition, any reference to either
of HUBCO or MSB in any contract or document, whether executed or taking effect
before or after the Effective Time, shall be considered a reference to the
Surviving Corporation if not inconsistent with the other provisions of the
contract or document; and any pending action or other judicial proceeding to
which either of HUBCO or MSB 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 occurred; or
the Surviving Corporation may be substituted as a party to such action or
proceeding, and any judgment, order or decree may be rendered for or against it
that might have been rendered for or against either of HUBCO or MSB if the
Merger had not occurred.
1.3 CERTIFICATE OF INCORPORATION. As of the Effective Time,
the certificate of incorporation of HUBCO shall be amended to fix the
prefErences, limitations and relative rights of the series of HUBCO Preferred
Stock the shares of which are to be issued in the Merger pursuant to Article II
hereof. On or prior to the Effective Time, HUBCO shall deliver to the Secretary
of State of the State of New Jersey for filing, pursuant to Section 7-2 of the
NJBCA, a certificate of amendment, in form mutually acceptable to HUBCO and MSB
(the "CERTIFICATE OF AMENDMENT"), giving effect to the foregoing and containing
any other provisions with respect to the aforementioned series of HUBCO
Preferred Stock necessary to permit consummation of the Merger in accordance
with the terms of this Agreement. The certificate of incorporation of HUBCO, as
so amended, at the Effective Time shall be the certificate of incorporation of
the Surviving Corporation and shall not otherwise be amended by this Agreement
or the Merger but thereafter may be amended as provided by law.
1.4 BY-LAWS. As of the Effective Time, the By-laws of HUBCO
shall be the By-laws of the Surviving Corporation until otherwise amended as
provided by law.
1.5 DIRECTORS AND OFFICERS. As of the Effective Time, the
directors of the Surviving Corporation shall be the directors of HUBCO
(including the one director appointed pursuant to Section 6.3(f) hereof). As of
the Effective Time, the officers of the Surviving Corporation shall be the
officers of HUBCO.
1.6 CLOSING DATE, CLOSING AND EFFECTIVE TIME. Unless a
different date, time and/or place are agreed to by the parties hereto, the
closing of the Merger (the "CLOSING") shall take place at 10:00 a.m., at the
offices of Pitney, Xxxxxx, Xxxx & Xxxxx, 000 Xxxxxx Xxxxx, Xxxxxxx Xxxx, Xxx
Xxxxxx, xx a date determined by HUBCO on at least five business days notice (the
"CLOSING NOTICE") given to MSB, which date (the "CLOSING Date") shall be not
less than seven nor more than 10 business days following the receipt of all
necessary regulatory and governmental approvals and consents and the expiration
of all statutory waiting periods in respect thereof and the satisfaction or
waiver of all of the conditions to the consummation of the Merger specified in
2
Article VI hereof (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing). In the Closing
Notice, HUBCO shall specify the "DETERMINATION DATE" for purposes of determining
the Median Pre-Closing Price (as hereinafter defined), which date is the date on
which the parties receive the last approval or waiver from a federal bank
regulatory agency necessary to permit consummation of the Merger. Simultaneous
with or immediately following the Closing, HUBCO and MSB shall cause to be filed
certificates of merger, in form and substance satisfactory to HUBCO and MSB,
with the Secretary of State of the 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"). The New Jersey Certificate of Merger and
the Delaware Certificate of Merger shall specify as the "EFFECTIVE TIME" of the
Merger a date and time following the Closing agreed to by HUBCO and MSB (which
date and time the parties currently anticipate will be the close of business on
the Closing Date). In the event the parties fail to specify the date and time in
the merger certificates, the Merger shall become effective upon (and the
"EFFECTIVE TIME" shall be) the later of the filing of the New Jersey Certificate
of Merger and the Delaware Certificate of Merger.
1.7 THE BANK MERGER. At HUBCO's option, at the Effective Time,
and simultaneously with the Merger, Bank shall be merged (the "BANK MERGER")
with HUBCO's principal New York bank or thrift subsidiary (the "NEW YORK BANK")
or with another subsidiary of HUBCO, if HUBCO has no New York bank subsidiary at
the Effective Time, in accordance with the provisions of the Banking Law of New
York and/or the Home Owners' Loan Act of 1933 ("HOLA") and the regulations of
the Office of Thrift Supervision ("OTS") thereunder, and/or the provisions of
the National Bank Act and the regulations of the Office of the Comptroller of
the Currency (the "OCC") thereunder. If the Bank Merger is consummated, the
directors of the surviving bank (the "SURVIVING BANK") (or if the Bank Merger is
not consummated, the directors of Bank at the Effective Time) shall include all
current directors of the Bank in accordance with Section 5.20 hereof. At HUBCO's
option, at any time following the execution of this Agreement, Bank shall, and
HUBCO shall cause the New York Bank to, execute and deliver a merger agreement,
in form and substance reasonably satisfactory to the parties hereto (the "BANK
MERGER AGREEMENT") for delivery to the New York Superintendent of Banking (the
"NEW YORK SUPERINTENDENT"), the Federal Deposit Insurance Corporation (the
"FDIC"), the OTS and/or the OCC, as appropriate, for approval of the Bank
Merger, subject to consummation of the Merger. The Bank Merger Agreement shall
contain provisions whereby the surviving entity (if not Bank) shall expressly
assume Bank's liquidation account and its obligations related thereto.
ARTICLE II - CONVERSION OF MSB SHARES, OPTIONS AND WARRANTS
2.1 CONVERSION OF MSB STOCK. Each share of common stock, $.01
par value, of MSB ("MSB COMMON STOCK"), issued and outstanding immediately prior
to the Effective Time, and each share of 8.75% Cumulative Convertible Preferred
Stock, Series A, $.01 par value, of MSB ("MSB PREFERRED STOCK" and, together
with the MSB Common Stock, "MSB STOCK"), issued and outstanding immediately
prior to the Effective Time (other than Dissenting Shares as defined in
3
Section 2.4) shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted as follows:
(a) EXCHANGE OF COMMON STOCK; EXCHANGE RATIO; MEDIAN
PRE-CLOSING PRICE; EXCHANGE OF PREFERRED STOCK. Subject to the provisions of
this Section 2.1, each share of MSB Common Stock issued and outstanding
immediately prior to the Effective Time (excluding any treasury shares and
shares to be cancelled pursuant to Section 2.1(d) hereof) shall be converted at
the Effective Time into the right to receive the number of shares of Common
Stock, no par value, of HUBCO ("HUBCO COMMON STOCK") equal to the exchange ratio
(the "EXCHANGE RATIO") determined as follows:
(i) If the Median Pre-Closing Price (as
hereinafter defined) is not greater than $37.13 and not less than $34.97, the
Exchange Ratio shall be the number determined by dividing $36.02 by the Median
Pre-Closing Price;
(ii) If the Median Pre-Closing Price is
greater than $37.13, the Exchange Ratio shall be 0.97; and
(iii) If the Median Pre-Closing Price is
less than $34.97, the Exchange Ratio shall be 1.03; PROVIDED, HOWEVER, that if
the Median Pre-Closing Price is less than $27.00, MSB shall have the right,
exercisable only until 11:59 p.m. on the third business day following receipt by
MSB of the Closing Notice, to terminate this Agreement by giving HUBCO notice of
such termination, referring to this Section 2.1, and this Agreement shall be
terminated pursuant to such notice, subject to Section 7.1, effective as of
11:59 p.m. on the third business day following receipt of such notice by HUBCO,
PROVIDED, FURTHER, that if HUBCO sends notice to MSB prior to 11:59 p.m. on the
third business day following receipt of such termination notice agreeing that
the Exchange Ratio shall be equal to the quotient obtained by dividing $27.81
(I.E., 1.03 multiplied by $27.00) by the Median Pre-Closing Price, then the
notice of termination shall be voided.
The "MEDIAN PRE-CLOSING PRICE" shall be
determined by taking the price half-way between the Closing Prices left after
discarding the 4 lowest and 4 highest Closing Prices in the 10 consecutive
trading day period which ends on (and includes) the Determination Date. The
"CLOSING PRICE" shall mean the closing price of HUBCO Common Stock as supplied
by the NASDAQ Stock Market and published in THE WALL STREET JOURNAL. A "TRADING
DAY" shall mean a day for which a Closing Price is so supplied and published.
(The NASDAQ Stock Market, or such other national securities exchange on which
HUBCO Common Stock may be traded after the date hereof, is referred to herein as
"NASDAQ")
Subject to the provisions of this Section 2.1,
each share of MSB Preferred Stock issued and outstanding immediately prior to
the Effective Time (excluding any treasury shares, shares held by HUBCO and
Dissenting Shares) shall be converted at the Effective Time into the right to
receive one share of a newly created series of HUBCO Preferred Stock ("NEW HUBCO
4
PREFERRED STOCK" and, together with the HUBCO Common Stock, the "HUBCO STOCK")
having terms (to be set forth in the Certificate of Amendment) substantially
identical to those of the MSB Preferred Stock as they exist immediately prior to
the Effective Time, adjusted to reflect the economic consequences of the
conversion of MSB Common Stock into HUBCO Common Stock at the Exchange Ratio.
Such terms are set forth on EXHIBIT 2.1(A) hereto.
(b) CANCELLATION OF MSB CERTIFICATES. After the
Effective Time, all such shares of MSB Stock (other than those cancelled
pursuant to Section 2.1(d)) shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
certificate previously evidencing any such shares (other than Dissenting Shares
and those cancelled 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 MSB Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of MSB Stock except as otherwise provided
herein or by law. Such certificates previously evidencing such shares of MSB
Stock (other than Dissenting Shares and those cancelled pursuant to Section
2.1(d)) shall be exchanged for certificates evidencing shares of HUBCO Common
Stock or New HUBCO Preferred Stock, as the case may be, issued pursuant to this
Article II, upon the surrender of such certificates in accordance with this
Article II. No fractional shares of HUBCO Common Stock shall be issued, and, in
lieu thereof, a cash payment shall be made pursuant to Section 2.2(e).
(c) CAPITAL CHANGES. If between the date
hereof and the Effective Time the outstanding shares of HUBCO Common Stock shall
have been changed into a different number of shares or a different class, by
reason of any stock dividend, stock split, reclassification, recapitalization,
merger, combination or exchange of shares, the Exchange Ratio and the definition
of Closing Price (as set forth in Section 2.1(a) shall be correspondingly
adjusted to reflect such stock dividend, stock split, reclassification,
recapitalization, merger, combination or exchange of shares.
(d) TREASURY SHARES. All shares of MSB Stock held
by MSB in its treasury or owned by HUBCO or by any of HUBCO's wholly-owned
subsidiaries which is a constituent party to the Bank Merger (other than shares
held as trustee or in a fiduciary capacity and shares held as collateral on or
in lieu of a debt previously contracted) immediately prior to the Effective Time
shall be cancelled.
2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time,
HUBCO shall deposit, or shall cause to be deposited, with Xxxxxx United Bank
("XXXXXX UNITED"), Trust Department, or another bank or trust company designated
by HUBCO and reasonably acceptable to MSB (the "EXCHANGE AGENT"), for the
benefit of the holders of shares of MSB Stock, for exchange in accordance with
this Article II, through the Exchange Agent, certificates evidencing shares of
HUBCO Stock and cash in such amount such that the Exchange Agent possesses such
number of shares of HUBCO Stock and such amount of cash as are required to
provide all of the consideration
5
required to be exchanged by HUBCO pursuant to the provisions of this Article II
(such certificates for shares of HUBCO Stock, together with any dividends or
distributions with respect thereto, and cash being hereinafter referred to as
the "EXCHANGE FUND"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the HUBCO Stock and cash out of the Exchange Fund in
accordance with Section 2.1. Except as contemplated by Section 2.2(f) hereof,
the Exchange Fund shall not be used for any other purpose.
(b) EXCHANGE PROCEDURES. As soon as reasonably
practicable either before or after the Effective Time but in no event later than
five days after the Effective Time, HUBCO will instruct the Exchange Agent to
mail to each holder of record of a certificate or certificates which immediately
prior to the Effective Time evidenced outstanding shares of MSB Stock (other
than Dissenting Shares) (the "CERTIFICATES"), (i) a letter of transmittal (the
form and substance of which is reasonably agreed to by HUBCO and MSB prior to
the Effective Time and which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent and which shall have such other
provisions as HUBCO may reasonably specify) and (ii) instructions for effecting
the surrender of the Certificates in exchange for certificates evidencing shares
of HUBCO Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent (or in the case of a lost Certificate, an appropriate Affidavit of Loss
and Indemnity Agreement and/or a bond as may be reasonably required in each case
by HUBCO), 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
(and HUBCO shall cause the Exchange Agent to send to such holder within ten
business days after receipt of all necessary documentation): (A) if the
Certificate formerly represented MSB Common Stock, then (x) certificates
evidencing that number of whole shares of HUBCO Common Stock which such holder
has the right to receive in respect of the shares of MSB Common Stock formerly
evidenced by such Certificate in accordance with Section 2.1 and (y) cash in
lieu of fractional shares of HUBCO Common Stock to which such holder may be
entitled pursuant to Section 2.2(e), and (B) if the Certificate formerly
represented MSB Preferred Stock, then certificates evidencing that number of
whole or partial shares of New HUBCO Preferred Stock which such holder has the
right to receive in respect of the shares of MSB Preferred Stock formerly
evidenced by such Certificate in accordance with Section 2.1 (the shares of
HUBCO Stock and cash described in clauses (A) and (B) being collectively, the
"MERGER CONSIDERATION") and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of shares of MSB Stock which
is not registered in the transfer records of MSB, a certificate evidencing the
proper number of shares of HUBCO 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 MSB 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.
6
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES
OF HUBCO STOCK. No dividends or other distributions declared or made after the
Effective Time with respect to HUBCO Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of HUBCO Stock evidenced thereby, and no other part of the
Merger Consideration shall be paid to any such holder, until the holder of such
Certificate shall surrender such Certificate (or a suitable affidavit of loss
and customary bond). Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
certificates evidencing shares of HUBCO Stock issued in exchange therefor,
without interest, (i) promptly, the amount of any cash payable with respect to a
fractional share of HUBCO Stock to which such holder may have been entitled
pursuant to Section 2.2(e) and the amount of dividends or other distributions
with a record date on or after the Effective Time theretofore paid with respect
to such shares of HUBCO Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions, with a record date on or after the
Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such shares of HUBCO Stock.
(d) NO FURTHER RIGHTS IN MSB STOCK. All shares of
HUBCO Stock issued and cash paid upon conversion of the shares of MSB 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 MSB Stock.
(e) NO FRACTIONAL SHARES OF HUBCO COMMON STOCK. No
certificates or scrip evidencing fractional shares of HUBCO Common Stock shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to any rights of a
stockholder of HUBCO. Cash shall be paid in lieu of fractional shares of HUBCO
Common Stock, based upon the Median Pre-Closing Price of HUBCO Common Stock.
(f) TERMINATION OF EXCHANGE FUND. Any portion of
the Exchange Fund which remains undistributed to the holders of MSB Stock for
two years after the Effective Time shall be delivered to HUBCO, upon demand, and
any holders of MSB Stock who have not theretofore complied with this Article II
shall thereafter look only to HUBCO for the Merger Consideration, dividends and
distributions to which they are entitled.
(g) NO LIABILITY. Neither HUBCO nor the Exchange
Agent shall be liable to any holder of shares of MSB Stock for any such shares
of HUBCO Stock or cash (or dividends or distributions with respect thereto)
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(h) WITHHOLDING RIGHTS. HUBCO shall be entitled to
deduct and withhold, or cause the Exchange Agent to deduct and withhold, from
funds provided by the holder or from the consideration otherwise payable
pursuant to this Agreement to any holder of MSB Stock Options (as defined in
Section 3.2), the minimum amounts (if any) that HUBCO is required to deduct and
withhold with respect to the making of such payment under the Code (as defined
in Section 3.8), or any provision of state, local or foreign tax law. To the
extent that amounts are so
7
withheld by HUBCO, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the MSB Stock Options in
respect of which such deduction and withholding was made by HUBCO.
2.3 STOCK TRANSFER BOOKS At the Effective Time, the stock
transfer books of MSB shall be closed and there shall be no further registration
of transfers of shares of MSB Stock thereafter on the records of MSB. On or
after the Effective Time, any Certificates presented to the Exchange Agent or
HUBCO for transfer shall be converted into the Merger Consideration.
2.4 DISSENTING SHARES Notwithstanding anything in this
Agreement to the contrary, any holder of MSB Preferred Stock shall have the
right to dissent in the manner provided in Section 262 of the DGCL, and if all
necessary requirements of the DGCL are met, such shares shall be entitled to
payment of the fair value of such shares in accordance with the provisions of
the DGCL ("DISSENTING SHARES"), provided, however, that (i) if any holder of
Dissenting Shares shall subsequently withdraw such holder's demand for appraisal
of such shares within 60 days of the Effective Time, or, with the written
consent of the Surviving Corporation, any time thereafter, or (ii) if any holder
fails to follow the procedures for establishing such holder's entitlement to
appraisal rights as provided in the DGCL, the right to appraisal of such shares
shall be forfeited and such shares shall thereupon be deemed to have been
converted into the right to receive and to have become exchangeable for, as of
the Effective Time, the Merger Consideration.
2.5 MSB STOCK OPTIONS.
(a) CONVERTING STOCK OPTIONS. Holders of Stock
Options (as defined in Section 3.2) which, as of the Effective Time, are
outstanding shall be given the right to elect to have all or a portion of such
Stock Options convert at the Effective Time into HUBCO Common Stock in
accordance with the formula set forth below, to the extent permitted under the
MSB Stock Option Plans (as defined in Section 3.2) and the agreements pursuant
to which such Stock Options were granted (each, an "OPTION GRANT AGREEMENT").
Each Stock Option to be so converted is referred to herein as a "CONVERTING
STOCK OPTION."
(i) Each outstanding Converting Stock Option
shall be valued on the basis of the Median Pre-Closing Price
of HUBCO Common Stock (as defined in Section 2.2(e))
multiplied by the Exchange Ratio and subtracting the stated
exercise price for each Converting Stock Option from the
product therefrom (the "OPTION VALUE"), and
(ii) Each holder of Converting Stock Options
shall receive at the Effective Time, a number of shares of
HUBCO Common Stock equal to the aggregate Option Value for all
of such holder's Converting Stock Options, divided by the
Median Pre-Closing Price of HUBCO Common Stock.
(iii) Cash shall be paid in lieu of
fractional shares, based upon the Median Pre-Closing Price of
HUBCO Common Stock.
8
(b) CONTINUING STOCK OPTIONS. Each Stock Option
outstanding at the Effective Time which is not a Converting Stock Option (each
of the foregoing, a "CONTINUING STOCK OPTION") shall be converted into an option
to purchase HUBCO Common Stock, wherein (i) the right to purchase shares of MSB
Common Stock pursuant to the Continuing Stock Option shall be converted into the
right to purchase that same number of shares of HUBCO Common Stock multiplied by
the Exchange Ratio, (ii) the option exercise price per share of HUBCO Common
Stock shall be the previous option exercise price per share of the MSB Common
Stock divided by the Exchange Ratio, and (iii) in all other material respects
the option shall be subject to the same terms and conditions as governed the
Continuing Stock Option on which it was based, including the length of time
within which the option may be exercised (which shall not be extended except
that the holder of a Stock Option who continues in the service of HUBCO or a
subsidiary of HUBCO shall not be deemed to have terminated service for purposes
of determining the Continuing Stock Option exercise period) and for all
Continuing Stock Options, such adjustments shall be and are intended to be
effected in a manner which is consistent with Section 424(a) of the Code (as
defined in Section 3.2 hereof). Shares of HUBCO Common Stock issuable upon
exercise of Continuing Stock Options shall be covered by an effective
registration statement on Form S-8, and HUBCO shall use its reasonable best
efforts to file a registration statement on Form S-8 covering such shares as
soon as possible after the Effective Time.
2.6 MSB PREFERRED SHARE PURCHASE RIGHTS. At or before the
Effective Time, MSB shall cause its Preferred Share Purchase Rights issued
pursuant to the Rights Agreement between MSB and Mellon Bank, N.A. dated as of
September 16, 1994 (the "PREFERRED SHARE PURCHASE RIGHTS") to be redeemed for
$.01 per Right or otherwise to become inoperable.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF MSB
References herein to "MSB 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 MSB to HUBCO.
MSB hereby represents and warrants to HUBCO as follows:
3.1 CORPORATE ORGANIZATION.
(a) MSB is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. MSB is
registered as a savings and loan holding company under HOLA. MSB 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 MSB. As used
herein, the capitalized term "MATERIAL ADVERSE EFFECT," when used with respect
to a particular corporation, means an adverse effect on the assets, financial
condition or results of operations of the corporation or any of its subsidiaries
which is materially adverse to the business, operations, assets or financial
9
condition of the corporation and its subsidiaries, taken as a whole, other than
a material adverse effect caused by any change occurring after the date hereof
in any federal or state law, rule or regulation or in GAAP, which change affects
banking institutions generally, including any change affecting the Bank
Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF") of the
FDIC.
(b) Bank, MSB Financial Services, Inc. ("MSB
FINANCIAL") and MSB Travel Inc. ("MSB TRAVEL") are the only current MSB
Subsidiaries. For purposes of this Agreement, the term "MSB SUBSIDIARY" means
any corporation, partnership, joint venture or other legal entity in which MSB,
directly or indirectly, owns at least a 50% stock or other equity interest or
for which MSB, 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 "MSB SUBSIDIARY"
shall include any entity which was an MSB Subsidiary at any time during such
period. Bank is a federally-chartered savings bank duly organized and validly
existing in stock form and in good standing under the laws of the United States.
All eligible accounts of depositors issued by Bank are insured either by the BIF
or the SAIF to the fullest extent permitted by law. Each of MSB Financial and
MSB Travel is a corporation duly organized and in active status under the laws
of the State of New York. Each MSB Subsidiary has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted and is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing would
not have a Material Adverse Effect on MSB.
(c) The MSB Disclosure Schedule sets forth true and
complete copies of the Certificate of Incorporation and By-laws, as in effect on
the date hereof, of MSB, Bank, MSB Financial and MSB Travel.
3.2 CAPITALIZATION. The authorized capital stock of MSB
consists of 5,000,000 shares of MSB Common Stock and 1,000,000 shares of MSB
Preferred Stock. As of December 10, 1997, there were 3,045,000 shares of MSB
Common Stock issued and 2,844,153 outstanding and 600,000 shares of MSB
Preferred Stock issued and outstanding. As of December 10, 1997, there were
73,838 shares of MSB Common Stock issuable upon exercise of outstanding stock
options. The MSB Disclosure Schedule sets forth (i) all options which may be
exercised for issuance of MSB Common Stock (collectively, the "STOCK OPTIONS")
and the terms upon which the options may be exercised, and (ii) true and
complete copies of each plan and a specimen of each form of agreement pursuant
to which any outstanding Stock Option was granted, including a list of each
outstanding Stock Option issued pursuant thereto. All Stock Options are fully
vested and will be fully vested on the Closing Date, in each case in accordance
with the terms of the MSB Stock Option Plans and Option Grant Agreements
pursuant to which such Stock Options were granted. All issued and outstanding
shares of MSB Stock, and all issued and outstanding shares of capital stock of
each MSB Subsidiary, have been duly authorized and validly issued, are fully
paid, and
10
nonassessable. The authorized capital stock of Bank is as set forth in
the charter documents of Bank contained in Section 3.1 of the MSB Disclosure
Schedule. All of the outstanding shares of capital stock of each MSB Subsidiary
are owned (directly in the case of Bank and MSB Travel, and indirectly in the
case of MSB Financial) by MSB and are free and clear of any liens, encumbrances,
charges, restrictions or rights of third parties. Except for the Stock Options
and the HUBCO Option, neither MSB nor Bank 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 MSB or Bank 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 stockholders of MSB, and except as set forth in Section 3.3 of the
MSB Disclosure Schedule, MSB and Bank 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, except as set forth in Section 3.3
of the MSB Disclosure Schedule, the consummation of the transactions
contemplated hereby have been duly and validly approved by all of the directors
of MSB and Bank in accordance with their respective Certificates of
Incorporation and applicable laws and regulations. Except for such approvals,
and except as set forth in Section 3.3 of the MSB Disclosure Schedule, no other
corporate proceedings not otherwise contemplated hereby on the part of MSB or
Bank are necessary to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by MSB and Bank, and
constitutes the valid and binding obligation of each of MSB and Bank,
enforceable against MSB and Bank in accordance with its terms, except to the
extent that enforcement may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, conservatorship, receivership or other similar laws
now or hereafter in effect relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of federally-chartered
savings banks or their holding companies, (ii) general equitable principles, and
(iii) laws relating to the safety and soundness of insured depository
institutions and except that no representation is made as to the effect or
availability of equitable remedies or injunctive relief..
(b) Neither the execution and delivery of this
Agreement by MSB or Bank, nor the consummation by MSB or Bank of the
transactions contemplated hereby in accordance with the terms hereof, or
compliance by MSB or Bank with any of the terms or provisions hereof, will (i)
violate any provision of MSB's or Bank's Certificate of Incorporation or
By-laws, (ii) assuming that the consents and approvals set forth below are duly
obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to MSB, Bank or any of their
respective properties or assets, or (iii) except as set forth in the MSB
Disclosure Schedule, violate, conflict with, result in a breach of any
provisions of, constitute a
11
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 MSB or Bank 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 MSB or Bank 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 MSB, 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 OTS,
the OCC, the FDIC, the Securities and Exchange Commission (the "SEC"), other
applicable government authorities, the stockholders of MSB, 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 MSB or Bank in
connection with (x) the execution and delivery by MSB and Bank of this Agreement
and (y) the consummation by MSB of the Merger, the consummation by Bank of the
Bank Merger, if any, and the consummation by MSB and Bank of the other
transactions contemplated hereby, except (i) such as are listed in the MSB
Disclosure Schedule and (ii) such as individually or in the aggregate will not
(if not obtained) have a Material Adverse Effect on MSB or prevent or materially
delay the consummation of the transactions contemplated hereby. To the best of
MSB's knowledge, no fact or condition exists which MSB has reason to believe
will prevent it from obtaining the aforementioned consents and approvals.
3.4 FINANCIAL STATEMENTS.
(a) MSB has previously delivered to HUBCO copies
of the consolidated balance sheets of MSB as of December 31, 1995 and 1996, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for the periods ended December 31, in each of the three years
1994 through 1996, in each case accompanied by the audit report of the
independent public accountants with respect to MSB (KPMG Peat Marwick, LLP
("PEAT MARWICK") with respect to 1996 and Xxxxxx & Xxxxxxxxx, P.C. with respect
to 1995 and 1994) and the unaudited consolidated statement of condition of MSB
as of September 30, 1997 and the related unaudited statements of income for the
three and nine months ended September 30, 1997 and 1996 and cash flows for the
nine months ended September 30, 1997 and 1996, as reported in MSB's Quarterly
Report on Form 10-Q, filed with the SEC (collectively, the "MSB Financial
Statements"). The MSB 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 except for the omission of notes
from interim financial statements), and fairly present the consolidated
financial condition of MSB 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
stockholders' equity and cash flows of MSB for the respective periods set forth
therein.
12
(b) The books and records of MSB and Bank
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 MSB Financial Statements (including the
notes thereto), as of September 30, 1997, or except as set forth in Section 3.4
of the MSB Disclosure Schedule, neither MSB nor any MSB Subsidiary had any
liabilities, whether absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of MSB and the MSB
Subsidiaries, taken as a whole, which were required by GAAP (consistently
applied) to be disclosed in MSB's consolidated statement of condition as of
September 30, 1997 or the notes thereto. Since September 30, 1997, MSB and Bank
have not incurred any liabilities except in the ordinary course of business and
consistent with prudent banking practice, except as related to the transactions
contemplated by this Agreement or except as set forth in the MSB Disclosure
Schedule.
3.5 BROKERS AND OTHER FEES. Except for Xxxxx, Xxxxxxxx &
Xxxxx, Inc. ("XXXXX"), neither MSB or Bank nor any of their directors or
officers has employed any broker or finder or incurred any liability for any
broker's or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement. The agreement with Xxxxx is set
forth in the MSB Disclosure Schedule. Other than pursuant to the agreement with
Xxxxx or as set forth in Section 3.5 of the MSB Disclosure Schedule, there are
no fees (other than time charges and disbursements 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 MSB
or Bank.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in the MSB Disclosure
Schedule, there has not been any material adverse change in the business,
operations, assets or financial condition of MSB and the MSB Subsidiaries, taken
as a whole, since September 30, 1997, and to the best of MSB's knowledge, no
fact or condition exists which MSB believes will cause such a material adverse
change in the future.; PROVIDED, HOWEVER, that a material adverse change shall
not be deemed to include (i) any change occurring after the date hereof in any
federal or state law, rule or regulation or in GAAP, which change affects
banking institutions generally, including any change affecting the BIF or the
SAIF, (ii) reasonable expenses incurred in connection with this Agreement and
the transactions contemplated hereby, or (iii) actions or omissions of MSB or
any MSB Subsidiary taken with the prior written consent of HUBCO in
contemplation of the transactions contemplated hereby (including without
limitation any actions taken by MSB or Bank pursuant to Section 5.15 of this
Agreement).
(b) Except as set forth in the MSB Disclosure
Schedule, neither MSB nor Bank has taken or permitted any of the actions set
forth in Section 5.2 hereof between September 30, 1997 and the date hereof and,
except for execution of this Agreement and the other documents contemplated
hereby, MSB has conducted its business only in the ordinary course, consistent
with past practice.
13
3.7 LEGAL PROCEEDINGS. Except as disclosed in the MSB
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of MSB and the MSB Subsidiaries, neither MSB nor any MSB Subsidiary
is a party to any, and there are no pending or, to the best of MSB's knowledge,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against MSB or any MSB Subsidiary
which, if decided adversely to MSB or an MSB Subsidiary, are reasonably likely
to have a Material Adverse Effect on MSB. Except as disclosed in the MSB
Disclosure Schedule, neither MSB nor any MSB Subsidiary is a party to any order,
judgment or decree entered in any lawsuit or proceeding which is material to MSB
or such MSB Subsidiary.
3.8 TAXES AND TAX RETURNS. Except as disclosed in the MSB
Disclosure Schedule:
(a) MSB and each MSB Subsidiary has duly filed (and
until the Effective Time will so file) all returns, declarations, reports,
information returns and statements ("RETURNS") required to be filed by it on or
before the Effective Time in respect of any federal, state and local taxes
(including withholding taxes, penalties or other payments required) and has duly
paid (and until the Effective Time will so pay) all such taxes due and payable,
other than taxes or other charges which are being contested in good faith (and
disclosed to HUBCO in writing) or against which reserves have been established.
MSB and each MSB 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 MSB or such MSB Subsidiary through such date. None of the federal
or state income tax returns of MSB or any MSB Subsidiary have been examined by
the Internal Revenue Service (the "IRS") or the New York Division of Taxation
within the past six years. To the best knowledge of MSB, 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 MSB or any MSB Subsidiary, nor has MSB or any MSB 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 MSB nor any MSB 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 MSB or such MSB Subsidiary (nor does MSB have any knowledge that
the IRS has proposed any such adjustment or change of accounting method), or
(iv) has filed a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply.
3.9 EMPLOYEE, DIRECTOR AND OFFICER BENEFIT PLANS.
(a) Except as set forth on the MSB Disclosure
Schedule, neither MSB nor any MSB Subsidiary maintains or contributes to any
"employee pension benefit plan" (the
14
"MSB PENSION PLANS") within the meaning of Section 3 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), "employee welfare benefit
plan" (the "MSB WELFARE PLANS") within the meaning of Section 3 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 MSB nor any MSB Subsidiary has, since
September 2, 1974, contributed to any "Multiemployer Plan," as such term is
defined in Section 3(37) of ERISA.
(b) MSB has delivered to HUBCO in the MSB
Disclosure Schedules (or previously made available to HUBCO) a complete and
accurate copy of each of the following with respect to each of the MSB Pension
Plans and MSB 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 MSB 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 MSB 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 MSB'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
MSB or any MSB 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
MSB Pension Plan have been paid. All contributions required to be made to each
MSB 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 MSB
which have not been paid have been properly recorded on the books of MSB.
(f) Except as disclosed in the MSB Disclosure
Schedule, each of the MSB Pension Plans, MSB Welfare Plans and each other
employee benefit plan and arrangement identified on the MSB 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 MSB Disclosure Schedule, if MSB
maintains any MSB Pension Plan, MSB has received or applied for a favorable
determination letter from the IRS which takes into account the Tax Reform Act of
1986 and subsequent legislation, and MSB is not aware of any fact or
circumstance which would disqualify any plan.
15
(g) To the best knowledge of MSB, 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 MSB Welfare Plan or MSB
Pension Plan that would result in any material tax or penalty for MSB or any MSB
Subsidiary.
(h) Except as disclosed in the MSB Disclosure
Schedule, no MSB 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 MSB Pension Plan.
(i) No "accumulated funding deficiency," within
the meaning of Section 412 of the Code, has been incurred with respect to any
MSB Pension Plan.
(j) There are no material pending, or, to the best
knowledge of MSB, material threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of, or against any of the MSB Pension Plans
or the MSB Welfare Plans, any trusts created thereunder or any other plan or
arrangement identified in the MSB Disclosure Schedule.
(k) Except as disclosed in the MSB Disclosure
Schedule, no MSB Pension Plan or MSB 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 MSB 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 MSB Financial Statements and established
under GAAP or otherwise noted on such Financial Statements.
(m) With respect to each MSB Pension Plan and MSB
Welfare Plan that is funded wholly or partially through an insurance policy,
there will be no liability of MSB or any MSB 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 MSB Disclosure
Schedule, and (ii) as set forth in Section 3.9(n) of the MSB Disclosure
Schedule, or as expressly agreed to by HUBCO in writing either pursuant to this
Agreement or otherwise, the consummation of the transactions contemplated by
this Agreement will not (x) entitle any current or former employee of MSB or any
MSB 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 MSB Pension Plan or MSB Welfare Plan.
16
(o) Except for the MSB Pension Plans and the MSB
Welfare Plans, and except as set forth on the MSB Disclosure Schedule, MSB has
no deferred compensation agreements, understandings or obligations for payments
or benefits to any current or former director, officer or employee of MSB or any
MSB Subsidiary or any predecessor of any thereof. The MSB Disclosure Schedule
sets forth (or lists, if previously delivered to HUBCO): (i) true and complete
copies of the deferred compensation agreements, understandings or obligations
with respect to each such current or former director, officer or employee, and
(ii) the most recent actuarial or other calculation of the present value of such
payments or benefits.
(p) Except as set forth in the MSB Disclosure
Schedule, MSB 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 MSB Disclosure Schedule lists each such insurance
policy and any agreement with a party other than the insurer with respect to the
payment, funding or assignment of such policy. To the best of MSB's knowledge,
neither MSB nor any MSB Pension Plan or MSB 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 MSB Disclosure
Schedule, MSB does not maintain any retirement plan for directors. The MSB
Disclosure Schedule sets forth the complete documentation and actuarial
evaluation of any such plan.
3.10 REPORTS.
(a) The MSB Disclosure Schedule lists, and as to
item (i) below MSB has previously delivered to HUBCO a complete copy of, each
(i) final registration statement, prospectus, annual, quarterly or special
report and definitive proxy statement filed by MSB since January 1, 1995
pursuant to the Securities Act of 1933, as amended (the "1933 ACT"), or the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), and (ii)
communication (other than general advertising materials and press releases)
mailed by MSB to its stockholders as a class since January 1, 1995, 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, 1995, (i) MSB has filed all
reports that it was required to file with the SEC under the 1934 Act, and (ii)
MSB and Bank each has duly filed all material forms, reports and documents which
they were required to file with each agency charged with regulating any aspect
of their business, in each case in form which was correct in all material
respects, and, subject to permission from such regulatory authorities, MSB
promptly will deliver or make available to HUBCO accurate and complete copies of
such reports. As of their respective dates, each such form, report, or document,
and each such final registration statement, prospectus,
17
annual, quarterly or special 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 MSB Disclosure Schedule lists the
dates of all examinations of MSB or Bank conducted by either the OTS, the FDIC
or the New York Superintendent since January 1, 1995 and the dates of any
responses thereto submitted by MSB or Bank.
3.11 MSB AND BANK INFORMATION. The information relating to
MSB and Bank, this Agreement, and the transactions contemplated hereby (except
for information relating solely to HUBCO) to be contained in the Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof) to be delivered to
stockholders of MSB in connection with the solicitation of their approval of the
Merger, as of the date the Proxy Statement-Prospectus is mailed to stockholders
of MSB, and up to and including the date of the meeting of stockholders 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 MSB Disclosure Schedule, MSB and each MSB 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 MSB or such MSB
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 MSB), and MSB 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
as disclosed in the MSB Disclosure Schedule, (i) neither MSB nor Bank 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 MSB or Bank to
any officer, employee, director or consultant thereof. The MSB Disclosure
Schedule lists, and either the MSB Disclosure Schedule sets forth true and
correct copies of or MSB has previously made available to HUBCO, all severance
or employment agreements with officers, directors, employees, agents or
consultants to which MSB or Bank is a party.
18
(b) Except as disclosed in the MSB Disclosure
Schedule and except for loan commitments, loan agreements and loan instruments
entered into or issued in the ordinary course of business, (i) as of the date of
this Agreement, neither MSB nor any MSB 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 MSB and the MSB Subsidiaries taken
as a whole, (ii) no commitment, agreement or other instrument to which MSB or
any MSB Subsidiary is a party or by which any of them is bound limits the
freedom of MSB or any MSB Subsidiary to compete in any line of business or with
any person, and (iii) neither MSB nor any MSB Subsidiary is a party to any
collective bargaining agreement.
(c) Except as disclosed in the MSB Disclosure
Schedule, neither MSB nor any MSB Subsidiary or, to the best knowledge of MSB,
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 Bank 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 MSB.
3.14 PROPERTIES AND INSURANCE.
(a) Except as set forth in the MSB Disclosure
Schedule, MSB or a MSB 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 MSB's consolidated balance sheet
as of December 31, 1996, 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, 1996), 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 MSB and the MSB Subsidiaries
taken as a whole, and (iv) with respect to owned real property, title
imperfections noted in title reports delivered to HUBCO prior to the date
hereof. Except as affected by the transactions contemplated hereby, MSB and Bank
as lessees have the right under valid and subsisting leases to occupy, use,
possess and control all real property leased by MSB and Bank in all material
respects as presently occupied, used, possessed and controlled by MSB and Bank.
(b) The business operations and all insurable
properties and assets of MSB and each MSB Subsidiary are insured for their
benefit against all risks which, in the reasonable judgment of the management of
MSB, 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 MSB
adequate for the business engaged in by MSB and the MSB Subsidiaries. As of the
date hereof, neither MSB nor any MSB Subsidiary has received any notice of
cancellation or notice of a
19
material amendment of any such insurance policy or bond, and to the best of
MSB's knowledge, is not 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 MSB Disclosure Schedule sets forth in summary form a
list of all insurance policies of MSB and the MSB Subsidiaries.
3.15 MINUTE BOOKS. The minute books of MSB and Bank contain
records of all meetings and other corporate action held of their respective
stockholders 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 MSB
Disclosure Schedule:
(a) Neither MSB nor any MSB Subsidiary has received
any written notice, citation, claim, assessment, proposed assessment or demand
for abatement alleging that MSB or such MSB 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 MSB and the MSB Subsidiaries taken as a whole. MSB 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 MSB or
any MSB Subsidiary, as OREO or otherwise, or owned or controlled by MSB or any
MSB 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 MSB. None of the
Properties is in the State of New Jersey.
(b) MSB 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 MSB.
(c) To the best of MSB's knowledge, MSB, each MSB
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 requiring the permit or
registration.
(d) To the knowledge of MSB, there are no
underground storage tanks on, in or under any of the Properties and no
underground storage tanks have been closed or
20
removed from any of the Properties while the property was owned, operated or
controlled by MSB or any MSB Subsidiary.
3.17 RESERVES. As of September 30, 1997, each of the
allowance for loan losses and the reserve for OREO properties in the MSB
Financial Statements was adequate pursuant to GAAP (consistently applied), and
the methodology used to compute each of the loan loss reserve and the reserve
for OREO properties complies in all material respects with GAAP (consistently
applied) and all applicable policies of the OTS.
3.18 NO PARACHUTE PAYMENTS. Except as set forth on the MSB
Disclosure Schedule, no officer, director, employee or agent (or former officer,
director, employee or agent) of MSB or any MSB 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 MSB, an MSB Subsidiary, HUBCO or any HUBCO
Subsidiary which if paid or provided would constitute an "excess parachute
payment," as defined in Section 280G of the Code or regulations promulgated
thereunder.
3.19 AGREEMENTS WITH BANK REGULATORS. Neither MSB nor any MSB
Subsidiary is a party to any agreement or memorandum of understanding with, or a
party to any commitment letter, board resolution submitted to a regulatory
authority or similar undertaking to, or is subject to any order or directive by,
or is a recipient of any extraordinary supervisory letter from, any court,
governmental authority or other regulatory or administrative agency or
commission, domestic or foreign ("GOVERNMENTAL ENTITY") which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies or its management, except for those the
existence of which has been disclosed in writing to HUBCO by MSB prior to the
date of this Agreement, nor has MSB been advised by any Governmental Entity that
it is contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission, except as disclosed in writing to HUBCO by MSB prior to the date of
this Agreement. Neither MSB nor any MSB Subsidiary is required by Section 32 of
the Federal Deposit Insurance Act to give prior notice to a Federal banking
agency of the proposed addition of an individual to its board of directors or
the employment of an individual as a senior executive officer, except as
disclosed in writing to HUBCO by MSB prior to the date of this Agreement.
3.20 DISCLOSURE. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HUBCO
References herein to the "HUBCO Disclosure Schedule" shall
mean all of the disclosure schedules required by this Article IV, dated as of
the date hereof and referenced to the specific sections and subsections of
Article IV of this Agreement, which have been delivered on the date hereof by
HUBCO to MSB. HUBCO hereby represents and warrants to MSB as follows:
21
4.1 CORPORATE ORGANIZATION.
(a) HUBCO is a corporation duly organized and validly
existing and in good standing under the laws of the State of New Jersey. HUBCO
is registered as a bank holding company under the BHCA. HUBCO has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a Material Adverse Effect on HUBCO.
(b) Each of the HUBCO Subsidiaries is listed in the
HUBCO Disclosure Schedule. For purposes of this Agreement, the term "HUBCO
Subsidiary" means any corporation, partnership, joint venture or other legal
entity in which HUBCO, directly or indirectly, owns at least a 50% stock or
other equity interest or for which HUBCO, directly or indirectly, acts as a
general partner. Each HUBCO Subsidiary is duly organized and validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
Xxxxxx United is a state-chartered commercial bank duly organized and validly
existing and in good standing under the laws of the State of New Jersey. All
eligible accounts of depositors issued by Xxxxxx United are insured by the BIF
to the fullest extent permitted by law. Each HUBCO Subsidiary has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a Material Adverse Effect on HUBCO. The HUBCO
Disclosure Schedule sets forth true and complete copies of the Certificate of
Incorporation and By-laws of HUBCO as in effect on the date hereof.
4.2 CAPITALIZATION. The authorized capital stock of HUBCO
consists solely of 53,045,000 common shares, no par value ("HUBCO COMMON
STOCK"), and 10,609,000 shares of preferred stock ("HUBCO AUTHORIZED PREFERRED
STOCK"). As of December 1, 1997, there were 21,530,237 shares of HUBCO Common
Stock issued and outstanding, and no shares of treasury stock, and 1,250 shares
of HUBCO Authorized Preferred Stock outstanding, all of which were designated
Series B, no par value, Convertible Preferred Stock. From time to time
hereafter, subject to the covenant in Section 5.17 below, HUBCO may sell or
repurchase shares of HUBCO Common Stock. Except for shares issuable under or
arising from the merger agreements by which HUBCO is to acquire Bank of the
Xxxxxx ("BTH") and its parent corporation, Poughkeepsie Financial Corp. (the
"BTH AGREEMENT"), Security National Bank & Trust Company of New Jersey ("SNB")
and its parent corporation, Fiduciary Investment Company of New Jersey (the "SNB
AGREEMENTS"), and The Bank of Southington (the "SOUTHINGTON AGREEMENT"), and the
HUBCO 1995 Stock Option Plan (the "HUBCO STOCK OPTION PLANS"), there are no
shares of HUBCO Common Stock issuable upon the exercise of outstanding stock
options or otherwise. All issued and outstanding shares of HUBCO Common Stock,
and all issued and outstanding shares of capital
22
stock of the HUBCO Subsidiaries, have been duly authorized and validly issued,
are fully paid, nonassessable and free of preemptive rights, and are free and
clear of all liens, encumbrances, charges, restrictions or rights of third
parties. All of the outstanding shares of capital stock of the HUBCO
Subsidiaries are owned by HUBCO free and clear of any liens, encumbrances,
charges, restrictions or rights of third parties. Except for the shares issuable
under the HUBCO Stock Option Plans and HUBCO's obligations under the BTH
Agreement, neither HUBCO nor any HUBCO Subsidiary has granted or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of HUBCO or any HUBCO Subsidiary or any securities representing
the right to purchase, subscribe or otherwise receive any shares of such capital
stock or any securities convertible into any such shares, and there are no
agreements or understandings with respect to voting of any such shares.
4.3 AUTHORITY; NO VIOLATION.
(a) Subject to the receipt of all necessary
governmental approvals, HUBCO has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby in accordance with the terms hereof. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of HUBCO in accordance with
its Certificate of Incorporation and applicable laws and regulations. Except for
such approvals, no other corporate proceedings on the part of HUBCO are
necessary to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by HUBCO and constitutes the valid
and binding obligation of HUBCO, enforceable against HUBCO in accordance with
its terms.
(b) Neither the execution or delivery of this
Agreement by HUBCO, nor the consummation by HUBCO of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by HUBCO
with any of the terms or provisions hereof will (i) violate any provision of the
Certificate of Incorporation or By-laws of HUBCO, (ii) assuming that the
consents and approvals set forth below are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to HUBCO, any HUBCO Subsidiary, or any of their respective properties
or assets, or (iii) violate, conflict with, result in a breach of any provision
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of HUBCO under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which HUBCO is a party, or by which it or any of its
properties or assets may be bound or affected, except, with respect to (ii) and
(iii) above, such as individually or in the aggregate will not have a Material
Adverse Effect on HUBCO, and which will not prevent or materially delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the FDIC, the FRB,
the OTS, the
23
OCC, the New York Superintendent, the Secretary of State of New Jersey, the
Secretary of State of New York, or other applicable Governmental Entities, no
consents or approvals of or filings or registrations with or notices to any
third party or any public body or authority are necessary on behalf of HUBCO in
connection with (x) the execution and delivery by HUBCO of this Agreement, and
(y) the consummation by HUBCO of the Merger and the other transactions
contemplated hereby, except such as are listed in the HUBCO Disclosure Schedule
or in the aggregate will not (if not obtained) have a Material Adverse Effect on
HUBCO. To the best of HUBCO's knowledge, no fact or condition exists which HUBCO
has reason to believe will prevent it from obtaining the aforementioned consents
and approvals.
4.4 FINANCIAL STATEMENTS.
(a) The HUBCO Disclosure Schedule sets forth copies
of the consolidated statements of financial condition of HUBCO as of December
31, 1995 and 1996, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended December 31, in
each of the three fiscal years 1994 through 1996, in each case accompanied by
the audit report of Xxxxxx Xxxxxxxx, LLP independent public accountants with
respect to HUBCO ("XXXXXX XXXXXXXX"), and the unaudited consolidated statement
of condition of HUBCO as of September 30, 1997 and the related unaudited
consolidated statements of income and cash flows for the three months ended
September 30, 1997 and 1996, as reported in HUBCO's Quarterly Report on Form
10-Q, filed with the SEC under the 1934 Act (collectively, the "HUBCO FINANCIAL
STATEMENTS"). The HUBCO Financial Statements (including the related notes) have
been prepared in accordance with GAAP consistently applied during the periods
involved (except as may be indicated therein or in the notes thereto), and
fairly present the consolidated financial position of HUBCO as of the respective
dates set forth therein, and the related consolidated statements of income,
changes in stockholders' equity and of cash flows (including the related notes,
where applicable) fairly present the consolidated results of operations, changes
in stockholders' equity and cash flows of HUBCO for the respective fiscal
periods set forth therein.
(b) The books and records of HUBCO the HUBCO
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed
or reserved against in the HUBCO Financial Statements (including the notes
thereto), as of September 30, 1997 neither HUBCO nor any of the HUBCO
Subsidiaries had any obligation or liability, whether absolute, accrued,
contingent or otherwise, material to the business, operations, assets or
financial condition of HUBCO or any of the HUBCO Subsidiaries which were
required by GAAP (consistently applied) to be disclosed in HUBCO's consolidated
statement of condition as of September 30, 1997 or the notes thereto. Except for
the transactions contemplated by this Agreement, and other proposed acquisitions
by HUBCO since September 30, 1997 reflected in any Form 8-K filed by HUBCO with
the SEC, neither HUBCO nor any HUBCO Subsidiary has incurred any liabilities
since September 30, 1997 except in the ordinary course of business and
consistent with past practice.
24
4.5 BROKER'S AND OTHER FEES. Neither HUBCO nor any of its
directors or officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. There has not been
any material adverse change in the business, operations, assets or financial
condition of HUBCO and HUBCO's Subsidiaries taken as a whole since September 30,
1997 and to the best of HUBCO's knowledge, except for any merger related charges
arising from or connected with the consummation of the transactions contemplated
by the BTH Agreement and the effect of the consummation of other publicly
announced mergers or acquisitions, not yet consummated (the "EFFECTS OF
ANNOUNCED ACQUISITIONS"), no facts or condition exists which HUBCO believes will
cause such a material adverse change in the future.
4.7 LEGAL PROCEEDINGS. Except as disclosed in the HUBCO
Disclosure Schedule, and except for ordinary routine litigation incidental to
the business of HUBCO or its Subsidiaries, neither HUBCO nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
HUBCO's knowledge, threatened legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against HUBCO or any of its Subsidiaries which, if decided adversely to HUBCO or
its Subsidiaries, are reasonably likely to have a Material Adverse Effect on
HUBCO. Except as disclosed in the HUBCO Disclosure Schedule, neither HUBCO nor
HUBCO's Subsidiaries is a party to any order, judgment or decree entered in any
lawsuit or proceeding which is material to HUBCO or its Subsidiaries.
4.8 TAX RETURNS.
(a) HUBCO and each HUBCO Subsidiary have duly filed
(and until the Effective Time will so file) all Returns required to be filed by
them in respect of any federal, state and local taxes (including withholding
taxes, penalties or other payments required) and have duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other than taxes or
other charges which are being contested in good faith (and disclosed to MSB in
writing). HUBCO and HUBCO's Subsidiaries have established (and until the
Effective Time will establish) on their books and records reserves that are
adequate for the payment of all federal, state and local taxes not yet due and
payable, but are incurred in respect of HUBCO or HUBCO's Subsidiaries through
such date. The HUBCO Disclosure Schedule identifies the federal income tax
returns of HUBCO and HUBCO's Subsidiaries which have been examined by the IRS
within the past six years. No deficiencies were asserted as a result of such
examinations which have not been resolved and paid in full. The HUBCO Disclosure
Schedule identifies the applicable state income tax returns of HUBCO and HUBCO's
Subsidiaries which have been examined by the applicable authorities. No
deficiencies were asserted as a result of such examinations which have not been
resolved and paid in full. To the best knowledge of HUBCO, there are no audits
or other administrative or court proceedings presently pending nor any other
disputes pending with respect to, or claims asserted for, taxes or assessments
upon HUBCO or HUBCO's Subsidiaries, nor has HUBCO or HUBCO's Subsidiaries given
any currently outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any taxes or Returns.
25
(b) Except as set forth in the HUBCO Disclosure
Schedule, neither HUBCO nor any Subsidiary of HUBCO (i) has requested any
extension of time within which to file any Return which Return has not since
been filed, (ii) is a party to any agreement providing for the allocation or
sharing of taxes with third parties, (iii) is required to include in income any
adjustment pursuant to Section 481(a) of the Code, by reason of a voluntary
change in accounting method initiated by HUBCO (nor does HUBCO have any
knowledge that the IRS has proposed any such adjustment or change of accounting
method) or (iv) has filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply.
4.9 EMPLOYEE BENEFIT PLANS.
(a) HUBCO and its subsidiaries maintain or contribute
to certain "employee pension benefit plans" (the "HUBCO PENSION PLANS"), as such
term is defined in Section 3(2)(A) of ERISA, and "employee welfare benefit
plans" (the "HUBCO WELFARE PLANS"), as such term is defined in Section 3(1) of
ERISA. Since September 2, 1974, neither HUBCO nor its subsidiaries have
contributed to any "Multiemployer Plan", as such term is defined in Section
3(37) of ERISA.
(b) Each of the HUBCO Pension Plans and each of the
HUBCO Welfare Plans has been operated in compliance in all material respects
with the provisions of ERISA, the Code, all regulations, rulings and
announcements promulgated or issued thereunder, and all other applicable
governmental laws and regulations. HUBCO is not aware of any fact or
circumstance which would disqualify any plan that could not be retroactively
corrected (in accordance with the procedures of the IRS).
(c) The present value of all accrued benefits under
each of the HUBCO Pension Plans subject to Title IV of ERISA, based upon the
actuarial assumptions used for purposes of the most recent actuarial valuation
prepared by such HUBCO Pension Plan's actuary, did not exceed the then current
value of the assets of such plans allocable to such accrued benefits.
(d) During the last five years, the PBGC has not
asserted any claim for liability against HUBCO or any of its subsidiaries which
has not been paid in full.
(e) All premiums (and interest charges and penalties
for late payment, if applicable) due to the PBGC with respect to each HUBCO
Pension Plan have been paid. All contributions required to be made to each HUBCO
Pension Plan under the terms thereof, ERISA or other applicable law have been
timely made, and all amounts properly accrued to date as liabilities of HUBCO
which have not been paid have been properly recorded on the books of HUBCO.
(f) No "accumulated funding deficiency", within the
meaning of Section 412 of the Code, has been incurred with respect to any of the
HUBCO Pension Plans.
(g) There are no pending or, to the best knowledge of
HUBCO, threatened or anticipated claims (other than routine claims for benefits)
by, on behalf of or against any of the
26
HUBCO Pension Plans or the HUBCO Welfare Plans, any trusts created thereunder or
any other plan or arrangement identified in the HUBCO Disclosure Schedule.
(h) Except with respect to customary health, life and
disability benefits or as disclosed in the HUBCO Disclosure Schedule, HUBCO has
no unfunded benefit obligations which are not accounted for by reserves shown on
the financial statements and established under GAAP or otherwise noted on such
financial statements.
4.10 REPORTS. Since January 1, 1995, HUBCO has filed all
reports that it was required to file with the SEC under the 1934 Act, all of
which complied in all material respects with all applicable requirements of the
1934 Act and the rules and regulations adopted thereunder. As of their
respective dates, each such report and each registration statement, proxy
statement, form or other document filed by HUBCO with the SEC, including without
limitation, any financial statements or schedules included therein, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1995, HUBCO and each HUBCO
Subsidiary has duly filed all material forms, reports and documents which they
were required to file with each agency charged with regulating any aspect of
their business.
4.11 HUBCO INFORMATION. The information relating to HUBCO and
its Subsidiaries (including, without limitation, information regarding other
transactions which HUBCO is required to disclose), this Agreement and the
transactions contemplated hereby in the Registration Statement and Proxy
Statement-Prospectus (as defined in Section 5.6(a) hereof), as of the date of
the mailing of the Proxy Statement-Prospectus, and up to and including the date
of the meeting of stockholders of MSB to which such Proxy Statement-Prospectus
relates, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement shall comply as to form in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
rules and regulations promulgated thereunder.
4.12 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in
the HUBCO Disclosure Schedule, each of HUBCO and HUBCO's Subsidiaries holds all
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business, and has complied with and is not in default in
any respect under any applicable law, statute, order, rule, regulation, policy
and/or guideline of any federal, state or local governmental authority relating
to HUBCO or HUBCO's Subsidiaries (including without limitation consumer,
community and fair lending laws) (other than where such default or noncompliance
will not result in a Material Adverse Effect on HUBCO) and HUBCO has not
received notice of violation of, and does not know of any violations of, any of
the above.
27
4.13 CONTRACTS. Except as disclosed in the HUBCO Disclosure
Schedule, neither HUBCO nor its Subsidiaries, or to the best knowledge of HUBCO,
any party thereto, is in default in any material respect under any material
lease, contract, mortgage, promissory note, deed of trust, loan or other
commitment (except those under which Xxxxxx United or another HUBCO Subsidiary
is or will be the creditor) or arrangement, except for defaults which
individually or in the aggregate would not have a Material Adverse Effect on
HUBCO.
4.14 PROPERTIES AND INSURANCE.
(a) HUBCO and the HUBCO Subsidiaries have good and,
as to owned real property, marketable title to all material assets and
properties, whether real or personal, tangible or intangible, reflected in
HUBCO's consolidated balance sheet as of September 30, 1997, or owned and
acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of for fair value in the ordinary course of
business since September 30, 1997), subject to no encumbrances, liens,
mortgages, security interests or pledges, except (i) those items that secure
liabilities that are reflected in said balance sheet or the notes thereto or
that secure liabilities incurred in the ordinary course of business after the
date of such balance sheet, (ii) statutory liens for amounts not yet delinquent
or which are being contested in good faith, (iii) such encumbrances, liens,
mortgages, security interests, pledges and title imperfections that are not in
the aggregate material to the business, operations, assets, and financial
condition of HUBCO and the HUBCO Subsidiaries taken as a whole and (iv) with
respect to owned real property, title imperfections noted in title reports.
Except as disclosed in the HUBCO Disclosure Schedule, HUBCO and the HUBCO
Subsidiaries as lessees have the right under valid and subsisting leases to
occupy, use, possess and control all property leased by HUBCO or the HUBCO
Subsidiaries in all material respects as presently occupied, used, possessed and
controlled by HUBCO and the HUBCO Subsidiaries.
(b) The business operations and all insurable
properties and assets of HUBCO and the HUBCO Subsidiaries are insured for their
benefit against all risks which, in the reasonable judgment of the management of
HUBCO, should be insured against, in each case under policies or bonds issued by
insurers of recognized responsibility, in such amounts with such deductibles and
against such risks and losses as are in the opinion of the management of HUBCO
adequate for the business engaged in by HUBCO and the HUBCO Subsidiaries. As of
the date hereof, neither HUBCO nor any HUBCO Subsidiary has received any notice
of cancellation or notice of a material amendment of any such insurance policy
or bond or is in default under any such policy or bond, no coverage thereunder
is being disputed and all material claims thereunder have been filed in a timely
fashion.
4.15 FUNDING AND CAPITAL ADEQUACY. At the Effective Time,
after giving pro forma effect to the Merger and any other acquisition which
HUBCO or its Subsidiaries have agreed to consummate, HUBCO will have sufficient
capital to satisfy all applicable regulatory capital requirements.
4.16 ENVIRONMENTAL MATTERS. Except as disclosed in the HUBCO
Disclosure Schedule, neither HUBCO nor any HUBCO Subsidiary has received any
written notice, citation,
28
claim, assessment, proposed assessment or demand for abatement alleging that
HUBCO or any HUBCO Subsidiary (either directly, or as a trustee or fiduciary, or
as a successor-in-interest in connection with the enforcement of remedies to
realize the value of properties serving as collateral for outstanding loans) is
responsible for the correction or cleanup of any condition resulting from the
violation of any law, ordinance or other governmental regulation regarding
environmental matters which correction or cleanup would be material to the
business, operations, assets or financial condition of HUBCO and the HUBCO
Subsidiaries taken as a whole. Except as disclosed in the HUBCO Disclosure
Schedule, HUBCO has no knowledge that any toxic or hazardous substances or
materials have been emitted, generated, disposed of or stored on any property
currently owned or leased by HUBCO or any HUBCO Subsidiary 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 HUBCO.
4.17 RESERVES. As of September 30, 1997, each of the
allowance for loan losses and the reserve for OREO properties in the HUBCO
Financial Statements was adequate pursuant to GAAP (consistently applied), and
the methodology used to compute each of the loan loss reserve and the reserve
for OREO properties complies in all material respects with GAAP (consistently
applied) and all applicable policies of the FDIC and the New Jersey Department
of Banking.
4.18 HUBCO STOCK. As of the date hereof, HUBCO has available
and reserved shares of HUBCO Common Stock sufficient for issuance pursuant to
the Merger and upon conversion of New HUBCO Preferred Stock subsequent thereto.
The HUBCO Stock to be issued hereunder pursuant to the Merger and upon the
conversion of the New HUBCO Preferred Stock, when so issued, will be duly
authorized and validly issued, fully paid, nonassessable, free of preemptive
rights and free and clear of all liens, encumbrances or restrictions created by
or through HUBCO, with no personal liability attaching to the ownership thereof.
The HUBCO Stock to be issued hereunder pursuant to the Merger and upon the
conversion of the New HUBCO Preferred Stock, when so issued, will be registered
under the 1933 Act and issued in accordance with all applicable state and
federal laws, rules and regulations.
4.19 AGREEMENTS WITH BANK REGULATORS. Neither HUBCO nor any
HUBCO Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution submitted to a
regulatory authority or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any Government Entity which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve policies or
its management, except for those the existence of which has been disclosed in
writing to MSB by HUBCO prior to the date of this Agreement, nor has HUBCO been
advised by any Governmental Entity that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission, except as disclosed
in writing to MSB by HUBCO prior to the date of this Agreement. Neither HUBCO
nor any HUBCO Subsidiary is required by Section 32 of the
29
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 MSB by HUBCO prior to the date of this Agreement.
4.20 MINUTE BOOKS. The minute books of HUBCO and its bank
subsidiaries contain records of all meetings and other corporate action held of
their respective stockholders and Boards of Directors (including committees of
their respective Boards of Directors) that are complete and accurate in all
material respects.
4.21 DISCLOSURE. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE V - COVENANTS OF THE PARTIES
5.1 CONDUCT OF THE BUSINESS OF MSB. During the period from
the date of this Agreement to the Effective Time, MSB shall, and shall cause
Bank to, conduct their respective businesses only in the ordinary course and
consistent with prudent banking practice, except for transactions permitted
hereunder or with the prior written consent of HUBCO, which consent will not be
unreasonably withheld. MSB also shall use its reasonable best efforts to (i)
preserve its business organization and that of Bank intact, (ii) keep available
to itself and Bank the present services of its employees and those of Bank, and
(iii) preserve for itself and HUBCO the goodwill of its customers and those of
Bank and others with whom business relationships exist.
5.2. NEGATIVE COVENANTS From the date hereof to the Effective
Time, except as otherwise approved by HUBCO in writing, or as set forth in the
MSB Disclosure Schedule, or as permitted or required by this Agreement, neither
MSB not Bank will:
(a) change any provision of its Certificate of
Incorporation or By-laws or any similar governing documents;
(b) change the number of shares of its authorized or
issued capital stock (other than upon exercise of stock options or
warrants described on the MSB Disclosure Schedule in accordance with
the terms thereof) or issue or grant any option, warrant, call,
commitment, subscription, right to purchase or agreement of any
character relating to its authorized or issued capital stock, or any
securities convertible into shares of such stock, or split, combine or
reclassify any shares of its capital stock, or declare, set aside or
pay any dividend, or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock;
PROVIDED, HOWEVER, from the date hereof to the Effective Time, MSB may
declare, set aside or pay only the cumulative dividends due on the MSB
Preferred Stock and dividends on the MSB Common Stock in the same
amount as was paid in the two quarters prior to the date hereof, less
the amount, if any, used by MSB to redeem the Preferred Share Purchase
Rights pursuant to Section 2.6 hereof.
30
(c) grant any severance or termination pay (other
than pursuant to written policies or contracts of MSB in effect on the
date hereof and disclosed to HUBCO in the MSB Disclosure Schedule) to,
or enter into or amend any employment or severance agreement with, any
of its directors, officers or employees; adopt any new employee benefit
plan or arrangement of any type; or award any increase in compensation
or benefits to its directors, officers or employees, except in each
case as specified in Section 5.2 of the MSB Disclosure Schedule;
(d) 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 MSB or Bank;
(e) make any capital expenditures other than pursuant
to binding commitments existing on the date hereof, expenditures
necessary to maintain existing assets in good repair, and expenditures
described in business plans or budgets previously furnished to HUBCO;
(f) file any applications or make any contract with
respect to branching or site location or relocation;
(g) agree to acquire in any manner whatsoever (other
than to realize upon collateral for a defaulted loan) any business or
entity or make any investments in securities other than investments in
government or agency bonds having a maturity of less than five years;
(h) make any material change in its accounting
methods or practices, other than changes required in accordance with
generally accepted accounting principles or regulatory authorities;
(i) 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;
(j) without first conferring with HUBCO, make or
commit to make any new loan or other extension of credit in an amount
of $1,000,000 or more, renew for a period in excess of one year any
existing loan or other extension of credit in an amount of $1,000,000
or more, or increase by $1,000,000 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 MSB Disclosure
Schedule and residential mortgage loans made in the ordinary course of
business in accordance with past practice; or
31
(k) agree to do any of the foregoing.
5.3 NO SOLICITATION. MSB and Bank shall not, directly or
indirectly, encourage or solicit or hold discussions or negotiations with, or
provide any information to, any person, entity or group (other than HUBCO)
concerning any merger or sale of shares of capital stock or sale of substantial
assets or liabilities not in the ordinary course of business, or similar
transactions involving MSB or Bank (an "ACQUISITION TRANSACTION").
Notwithstanding the foregoing, MSB may enter into discussions or negotiations or
provide information in connection with an unsolicited possible Acquisition
Transaction if the Board of Directors of MSB, 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. MSB shall promptly communicate to HUBCO the terms of any proposal,
whether written or oral, which it may receive in respect of any such Acquisition
Transaction and the fact that it is having discussions or negotiations with a
third party about an Acquisition Transaction.
5.4 CURRENT INFORMATION. During the period from the date of
this Agreement to the Effective Time, each of MSB and HUBCO will cause one or
more of its designated representatives to confer with representatives of the
other party on a monthly or more frequent basis regarding its business,
operations, properties, assets and financial condition and matters relating to
the completion of the transactions contemplated herein. On a monthly basis, MSB
agrees to provide HUBCO, and HUBCO agrees to provide MSB, with internally
prepared profit and loss statements no later than 15 days after the close of
each calendar month. As soon as reasonably available, but in no event more than
45 days after the end of each fiscal quarter (other than the last fiscal quarter
of each fiscal year) MSB will deliver to HUBCO and HUBCO will deliver to MSB
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, MSB will deliver to HUBCO and HUBCO will
deliver to MSB 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) MSB and Bank shall permit HUBCO and its
representatives, and HUBCO shall permit, and cause each HUBCO Subsidiary to
permit, MSB and its representatives, reasonable access to their respective
properties, and shall disclose and make available to HUBCO and its
representatives, or MSB 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 stockholders' meetings, organizational documents, by-laws,
material contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files, plans affecting employees, and any
other business activities or prospects in which HUBCO and its representatives or
MSB 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
32
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, MSB acknowledges that
HUBCO may be involved in discussions concerning other potential acquisitions and
HUBCO shall not be obligated to disclose such information to MSB except as such
information is disclosed to HUBCO's shareholders generally.
(b) All information furnished by the parties hereto
previously in connection with transactions contemplated by this Agreement or
pursuant hereto shall be used solely for the purpose of evaluating the Merger
contemplated hereby and shall be treated as the sole property of the party
delivering the information until consummation of the Merger contemplated hereby,
and if such Merger shall not occur, each party and each party's advisors shall
return to the other party all documents or other materials containing,
reflecting or referring to such information, will not retain any copies of such
information, shall use its reasonable best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. In the event that the Merger
contemplated hereby does not occur, all documents, notes and other writings
prepared by a party hereto or its advisors based on information furnished by the
other party shall be promptly destroyed. The obligation to keep such information
confidential shall continue for five years from the date the proposed Merger is
abandoned but shall not apply to (i) any information which (A) the party
receiving the information can establish by convincing evidence was already in
its possession prior to the disclosure thereof to it by the other party; (B) was
then generally known to the public; (C) became known to the public through no
fault of the party receiving such information; or (D) was disclosed to the party
receiving such information by a third party not bound by an obligation of
confidentiality; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction.
5.6 REGULATORY MATTERS.
(a) For the purposes of holding the
Stockholders Meeting (as such term is defined in Section 5.7 hereof), and
qualifying under applicable federal and state securities laws the HUBCO Stock to
be issued to MSB stockholders in connection with the Merger, the parties hereto
shall cooperate in the preparation and filing by HUBCO or MSB (as applicable)
with the SEC of a Registration Statement and 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 MSB and HUBCO to the MSB shareholders
together with any and all amendments or supplements thereto, being herein
referred to as the "PROXY STATEMENT-PROSPECTUS" and the various documents to be
filed by HUBCO under the 1933 Act with the SEC to register the HUBCO Stock for
sale, including the Proxy Statement-Prospectus, are referred to herein as the
"REGISTRATION STATEMENT").
(b) HUBCO shall furnish MSB with such information
concerning HUBCO and its Subsidiaries (including, without limitation,
information regarding other transactions which HUBCO is required to disclose) as
is necessary in order to cause the Proxy
33
Statement-Prospectus, insofar as it relates to such corporations, to comply with
Section 5.6(a) hereof. HUBCO agrees promptly to advise MSB if at any time prior
to the Stockholders Meeting, any information provided by HUBCO in the Proxy
Statement-Prospectus becomes incorrect or incomplete in any material respect and
to provide MSB with the information needed to correct such inaccuracy or
omission. HUBCO shall furnish MSB with such supplemental information as may be
necessary in order to cause the Proxy Statement-Prospectus, insofar as it
relates to HUBCO and its Subsidiaries, to comply with Section 5.6(a) after the
mailing thereof to MSB shareholders.
(c) MSB shall furnish HUBCO with such information
concerning MSB as is necessary in order to cause the Proxy Statement-Prospectus,
insofar as it relates to MSB, to comply with Section 5.6(a) hereof. MSB agrees
promptly to advise HUBCO if at any time prior to the Stockholders Meeting, any
information provided by MSB in the Proxy Statement-Prospectus becomes incorrect
or incomplete in any material respect and to provide HUBCO with the information
needed to correct such inaccuracy or omission. MSB shall furnish HUBCO with such
supplemental information as may be necessary in order to cause the Proxy
Statement-Prospectus, insofar as it relates to MSB, to comply with Section
5.6(a) after the mailing thereof to MSB shareholders.
(d) HUBCO shall as promptly as practicable make such
filings as are necessary in connection with the offering of the HUBCO 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. MSB shall promptly furnish HUBCO with such
information regarding MSB shareholders as HUBCO requires to enable it to
determine what filings are required hereunder. MSB authorizes HUBCO to utilize
in such filings the information concerning MSB provided to HUBCO in connection
with, or contained in, the Proxy Statement-Prospectus. HUBCO shall furnish MSB's
counsel with copies of all such filings and keep MSB advised of the status
thereof. HUBCO shall file as promptly as practicable, and shall use reasonable
business efforts to file within 45 days after the date hereof, the Registration
Statement containing the Proxy Statement-Prospectus with the SEC, and each of
HUBCO and MSB shall promptly notify the other of all communications, oral or
written, with the SEC concerning the Registration Statement and the Proxy
Statement-Prospectus.
(e) HUBCO shall cause the HUBCO Common Stock issuable
pursuant to the Merger to be listed on the NASDAQ at the Effective Time. HUBCO
shall cause the HUBCO Common Stock which shall be issuable pursuant to
conversion of New HUBCO Preferred Stock to be accepted for listing on the NASDAQ
when issued.
(f) The parties hereto will cooperate with each other
and use their reasonable best efforts to prepare all necessary documentation and
applications, to effect all necessary filings and to obtain all necessary
permits, consents, approvals and authorizations of all third parties and
governmental bodies necessary to consummate the transactions contemplated by
this Agreement as soon as possible, including, without limitation, those
required by the FDIC, the FRB, the OTS, the OCC and the New York Superintendent.
Without limiting the foregoing, the parties shall use reasonable business
efforts to file for approval or waiver by the appropriate bank
34
regulatory agencies within 45 days after the date hereof. The parties shall each
have the right to review in advance (and shall do so promptly) all filings with,
including all information relating to the other, as the case may be, and any of
their respective subsidiaries, which appears in any filing made with, or written
material submitted to, any third party or governmental body (including the SEC)
in connection with the transactions contemplated by this Agreement.
(g) Each of the parties will promptly furnish each
other with copies of written communications received by them or any of their
respective subsidiaries from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated hereby.
(h) MSB acknowledges that HUBCO is in or may be in
the process of acquiring other banks and financial institutions and that in
connection with such acquisitions, information concerning MSB may be required to
be included in the registration statements, if any, for the sale of securities
of HUBCO or in SEC reports in connection with such acquisitions. MSB agrees to
provide HUBCO with any information, certificates, documents or other materials
about MSB as are reasonably necessary to be included in such other SEC reports
or registration statements, including registration statements which may be filed
by HUBCO prior to the Effective Time. MSB shall use its reasonable efforts to
cause its attorneys and accountants to provide HUBCO and any underwriters for
HUBCO with any consents, comfort letters, opinion letters, reports or
information which are necessary to complete the registration statements and
applications for any such acquisition or issuance of securities. HUBCO shall
reimburse MSB for reasonable expenses thus incurred by MSB should this
transaction be terminated for any reason other than as described in Section
7.1(f). HUBCO shall not file with the SEC any registration statement or
amendment thereto or supplement thereof containing information regarding MSB
unless MSB shall have consented to such filing, which consent shall not be
unreasonably delayed or withheld.
5.7 APPROVAL OF STOCKHOLDERS. MSB will (i) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
stockholders of MSB (the "STOCKHOLDERS MEETING") for the purpose of securing the
MSB stockholder approval of this Agreement required by law, (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 its investment banker
withdraws its fairness opinion prior to the Stockholders Meeting, recommend to
the stockholders of MSB the approval of this Agreement and the transactions
contemplated hereby and use its reasonable best efforts to obtain, as promptly
as practicable, such approval, and (iii) cooperate and consult with HUBCO with
respect to each of the foregoing matters.
If it becomes necessary under NASDAQ rules or applicable laws
to obtain HUBCO shareholder approval, HUBCO shall take all steps necessary to
obtain the approval of its shareholders as promptly as possible. In connection
therewith, HUBCO shall take all steps necessary to duly call, give notice and
convene a meeting of its shareholders for such purpose.
5.8 FURTHER ASSURANCES.
35
(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. If any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall take all
such necessary action. Nothing in this section shall be construed to require any
party to participate in any threatened or actual legal, administrative or other
proceedings (other than proceedings, actions or investigations to which it is a
party or subject or threatened to be made a party or subject) in connection with
consummation of the transactions contemplated by this Agreement unless such
party shall consent in advance and in writing to such participation and the
other party agrees to reimburse and indemnify such party for and against any and
all costs and damages related thereto if the Merger is not consummated.
(b) HUBCO agrees that from the date hereof to the
Effective Time, except as otherwise approved by MSB in writing or as permitted
or required by this Agreement, HUBCO will use reasonable business efforts to
maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships, and HUBCO will not, nor will
it permit any HUBCO Subsidiary to, take any action: (i) that would result in any
of its representations and warranties contained in Article IV of this Agreement
not being true and correct in any material respect at the Effective Time, or
(ii) that would cause any of its conditions to Closing not to be satisfied, or
(iii) that would constitute a breach or default of its obligations under this
Agreement.
5.9 PUBLIC ANNOUNCEMENTS. HUBCO and MSB 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 each of HUBCO and MSB agrees that unless
approved by the other in advance, it 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 in
the opinion of counsel.
5.10 FAILURE TO FULFILL CONDITIONS. In the event that HUBCO
or MSB determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to July 2, 1998
and that it will not waive that condition, it will promptly notify the other
party. Except for any acquisition or merger discussions HUBCO may enter into
with other parties, MSB and HUBCO will promptly inform the other of any facts
applicable to MSB or HUBCO, respectively, or their respective directors or
officers, that would be
36
likely to prevent or materially delay approval of the Merger by any Governmental
Entity or which would otherwise prevent or materially delay completion of the
Merger.
5.11 EMPLOYEE MATTERS.
(a) Following consummation of the Merger, HUBCO
agrees with MSB to honor the existing written contracts with officers and
employees of MSB and Bank that are included in the MSB Disclosure Schedule,
except as otherwise specified in Section 5.20 and 6.3(e) hereof.
(b) Following consummation of the Merger, HUBCO shall
make available to all employees and officers of Bank thereafter employed by any
of HUBCO's bank subsidiaries (which may include Bank) (the "NEW EMPLOYER")
coverage under the benefit plans generally available to Xxxxxx United's
employees and officers (including pension and health and hospitalization) on the
terms and conditions available to Xxxxxx United's employees and officers. As
soon as practicable, but in any event prior to December 31, 1997, the MSB Board
of Directors shall amend the MSB Bank Employee Severance Plan the "SEVERANCE
PLAN") as set forth in Section 5.11(b)(1) of the HUBCO Disclosure Schedule.
HUBCO shall provide severance payments in accordance with the Severance Plan, as
so amended, to employees and officers of MSB who are covered by the Severance
Plan and whose employment is terminated at or following the Closing by HUBCO or
at HUBCO's direction. HUBCO shall provide severance payments in accordance with
Section 5.11(b)(2) of the HUBCO Disclosure Schedule to employees of MSB who are
not covered by the Severance Plan and whose employment is terminated at or
following the Closing by HUBCO or at HUBCO's direction. On or prior to December
31, 1997, Bank shall contribute to its Employee Stock Ownership Plan ("ESOP") an
amount sufficient to repay all currently outstanding loans that were obtained by
the ESOP in order to finance its purchase of MSB Common Stock and shall cause
the shares of MSB Common Stock released from the suspense account as a result of
such repayment to be allocated among the persons eligible for such allocation
("ESOP PARTICIPANTS") as soon as practicable thereafter in accordance with the
terms of the ESOP and the requirements of all applicable laws. In the event
that, due to the limitations of any applicable law, a portion of the shares of
MSB Common Stock released following the ESOP's repayment of the outstanding
loans cannot be immediately allocated to the ESOP Participants, all such shares
shall be held in the ESOP's suspense account and allocated to the ESOP
Participants as soon as practicable thereafter. If the participation of all or a
portion of the ESOP Participants shall cease during the one year period
beginning on the Closing, HUBCO shall treat such terminations of participation
as one or more "partial terminations" of the ESOP (within the meaning of section
411 of the Code) and HUBCO shall take, or cause to be taken, all actions that
may be necessary or required to be taken as a result of a partial termination of
a tax-qualified plan. After the Effective Time, HUBCO may terminate, merge or
change existing MSB and Bank benefit plans to the extent permitted under
applicable law. Employees of Bank employed by the New Employer will receive
credit for prior employment by Bank for the purposes of determining their
eligibility to participate in all employee benefit plans of New Employer.
Service completed while employed by Bank will also be taken into account for
purposes of determining benefit levels under New Employer's
37
vacation plan, and severance plan (after the initial six month period has
lapsed). Credit for prior service will be given for purposes of vesting, but not
for benefit accrual under New Employer's pension benefit plans. No pre-existing
condition limitation or evidence of insurability shall be imposed under New
Employer's group health plans, unless such employee was subject to such a
limitation under Bank's group health plan.
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), a supplement or
amendment to the parties' respective Disclosure Schedules which corrects any
representation or warranty which was untrue when made shall not 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 MSB AND HUBCO.
(a) For planning purposes, MSB shall, within 15 days
from the date hereof, provide HUBCO with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by MSB in
connection with this transaction, including the fees and expenses of counsel,
accountants, investment bankers and other professionals. MSB shall promptly
notify HUBCO if or when it determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement,
MSB shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. MSB shall accrue
and/or pay all of such amounts as soon as possible.
(c) MSB shall advise HUBCO monthly of all
out-of-pocket expenses which MSB has incurred in connection with this
transaction.
(d) HUBCO, in reasonable consultation with MSB, shall
make all arrangements with respect to the printing and mailing of the Proxy
Statement-Prospectus.
5.14 INDEMNIFICATION
(a) For a period of six years after the Effective
Time, HUBCO shall indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date hereof or who becomes prior to the
Effective Time, a director, officer, employee or agent of MSB or Bank or serves
or has served at the request of MSB or Bank in any capacity with any other
person (collectively, the "INDEMNITEES") against any and all claims, damages,
liabilities, losses,
38
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 MSB or Bank or serves or has served at the request of MSB or Bank 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 MSB or Bank
or any of their respective affiliates, or by any shareholder of MSB
(collectively, "CLAIMS"), including, without limitation, any Claim which is
based upon, arises out of or in any way relates to the Merger, this Agreement,
any of the transactions contemplated by this Agreement, the Indemnitee's service
as a member of the Board of Directors of MSB or Bank or of any committee of
MSB's or Bank's Board of Directors, the events leading up to the execution of
this Agreement, any statement, recommendation or solicitation made in connection
therewith or related thereto and any breach of any duty in connection with any
of the foregoing, or (ii) the enforcement of the obligations of HUBCO set forth
in this Section 5.14, in each case to the fullest extent permitted under any of
(x) applicable law, (y) the Certificate of Incorporation of MSB or Bank, as
applicable, or (z) the By-Laws of MSB or Bank, as applicable (and HUBCO shall
also advance expenses as incurred to the fullest extent permitted under any
thereof).
(b) From and after the Effective Time, HUBCO shall
assume and honor any obligation of MSB or Bank immediately prior to the
Effective Time with respect to the indemnification of the Indemnitees arising
out of the Certificate of Incorporation or By-Laws of MSB or Bank as if such
obligations were pursuant to a contract or arrangement between HUBCO and such
Indemnitees.
(c) In the event HUBCO or any of its successors or
assigns (i) reorganizes or consolidates with or merges into or enters into
another business combination transaction with any other person or entity and is
not the resulting, continuing or surviving corporation or entity of such
consolidation, merger or transaction, or (ii) liquidates, dissolves or transfers
all or substantially all of its properties and assets to any person or entity,
then, and in each such case, proper provision shall be made so that the
successors and assigns of HUBCO assume the obligations set forth in this Section
5.14.
(d) HUBCO shall cause MSB's and Bank's officers and
directors to be covered under HUBCO's then current officers' and directors'
liability insurance policy for a period of six years after the Effective Time,
or, in the alternative, to be covered under an extension of MSB's and Bank's
existing officers' and directors' liability insurance policy. However, HUBCO
shall only be required to insure such persons upon terms and for coverages
substantially similar to MSB's and Bank's existing officers' and directors'
liability insurance.
(e) Any Indemnitee wishing to claim indemnification
under this Section 5.14 shall promptly notify HUBCO upon learning of any Claim,
but the failure to so notify
39
shall not relieve HUBCO of any liability it may have to such Indemnitee if such
failure does not materially prejudice HUBCO. In the event of any Claim (whether
arising before or after the Effective Time) as to which indemnification under
this Section 5.14 is applicable, (x) HUBCO shall have the right to assume the
defense thereof and HUBCO shall not be liable to such Indemnitees for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnitee in connection with the defense thereof, except that if HUBCO elects
not to assume such defense, or counsel for the Indemnitees advises that there
are issues which raise conflicts of interest between HUBCO and the Indemnitees,
the Indemnitees may retain counsel satisfactory to them, and HUBCO shall pay the
reasonable fees and expenses of such counsel for the Indemnitees as statements
therefor are received; PROVIDED, HOWEVER, that HUBCO shall be obligated pursuant
to this Section 5.14(e) to pay for only one firm of counsel for all Indemnitees
in any jurisdiction with respect to a matter unless the use of one counsel for
multiple Indemnitees would present such counsel with a conflict of interest that
is not waived, and (y) the Indemnitees will cooperate in the defense of any such
matter. HUBCO shall not be liable for settlement of any claim, action or
proceeding hereunder unless such settlement is effected with its prior written
consent. Notwithstanding anything to the contrary in this Section 5.14, HUBCO
shall not have any obligation hereunder to any Indemnitee when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that the indemnification of such Indemnitee
in the manner contemplated hereby is prohibited by applicable law or public
policy.
5.15 BANK POLICIES AND BANK MERGER
(a) Notwithstanding that MSB believes that it has
established all reserves and taken all provisions for possible loan losses
required by GAAP and applicable laws, rules and regulations, MSB recognizes that
HUBCO may have adopted different loan, accrual and reserve policies (including
loan classifications and levels of reserves for possible loan losses). From and
after the date of this Agreement to the Effective Time and in order to formulate
the plan of integration for the Bank Merger, MSB and HUBCO shall consult and
cooperate with each other with respect to (i) conforming to the extent
appropriate, based upon such consultation, MSB's loan, accrual and reserve
policies and MSB's other policies and procedures regarding applicable regulatory
matters, including without limitation Federal Reserve, Bank Secrecy Act and FDIC
matters, to those policies of HUBCO as HUBCO may reasonably identify to MSB from
time to time, (ii) new extensions of credit or material revisions to existing
terms of credits by Bank, in each case where the aggregate exposure exceeds
$500,000, and (iii) conforming, based upon such consultation, the composition of
the investment portfolio and overall asset/liability management position of MSB
and Bank to the extent appropriate; PROVIDED that any required change in MSB's
practices in connection with the matters described in clause (i) or (iii) above
need not be effected until the parties receive all necessary governmental
approvals and consents to consummate the transactions contemplated hereby,
(b) If the Bank Merger is consummated, HUBCO shall
cause the New York Bank to hold its meetings alternatively in Goshen and
Poughkeepsie.
40
5.16 COMPLIANCE WITH ANTITRUST LAWS. Each of HUBCO and MSB
shall use its reasonable best efforts to resolve such objections, if any, which
may be asserted with respect to the Merger under antitrust laws, including,
without limitation, the Xxxx-Xxxxx-Xxxxxx Act. In the event a suit is threatened
or instituted challenging the Merger as violative of antitrust laws, each of
HUBCO and MSB shall use its reasonable best efforts to avoid the filing of,
resist or resolve such suit. HUBCO and MSB shall use their reasonable best
efforts to take such action as may be required: (a) by the Antitrust Division of
the Department of Justice or the Federal Trade Commission in order to resolve
such objections as either of them may have to the Merger under antitrust laws,
or (b) by any federal or state court of the United States, in any suit brought
by a private party or governmental entity challenging the Merger as violative of
antitrust laws, in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order, or other order which has the effect
of preventing the consummation of the Merger. Reasonable best efforts shall
include, but not be limited to, the proffer by HUBCO of its willingness to
accept an order agreeing to the divestiture, or the holding separate, of any
assets of HUBCO or MSB, except to the extent that any such divestitures or
holding separate arrangement would have a Material Adverse Effect on HUBCO. The
entry by a court, in any suit brought by a private party or governmental entity
challenging the Merger as violative of antitrust laws, of an order or decree
permitting the Merger, but requiring that any of the businesses, product lines
or assets of HUBCO or MSB be divested or held separate thereafter shall not be
deemed a failure to satisfy the conditions specified in Section 6.1 hereof
except to the extent that any divestitures or holding separate arrangement would
have a Material Adverse Effect on HUBCO and HUBCO shall not have voluntarily
consented to such divestitures or holding separate arrangements. For the
purposes of this Section 5.16, the divestiture or the holding separate of a
branch or branches of Xxxxxx United, the New York Bank or Bank with, in the
aggregate, less than $20 million in assets shall not be considered to have a
Material Adverse Effect on HUBCO.
5.17 POOLING AND TAX-FREE REORGANIZATION TREATMENT. Prior to
the date hereof, neither HUBCO or MSB has taken any action or failed to take any
action which would disqualify the Merger for pooling of interests accounting
treatment. Before the Effective Time, neither HUBCO nor MSB shall intentionally
take, fail to take, or cause to be taken or not taken any action within its
control, which would disqualify the Merger as a "pooling-of-interests" for
accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code. Subsequent to the Effective Time, HUBCO shall not take and
shall cause the Surviving Corporation not to take any action within their
control that would disqualify the Merger as such a "reorganization" under the
Code.
5.18 COMFORT LETTERS. HUBCO shall cause Xxxxxx Xxxxxxxx, its
independent public accountants, to deliver to MSB, and MSB shall cause Peat
Marwick, its independent public accountants, to deliver to HUBCO and to its
officers and directors who sign the Registration Statement for this transaction,
a short-form "comfort letter" or "agreed upon procedures" letter, dated the date
of the mailing of the Proxy Statement-Prospectus for the Stockholders Meeting of
MSB, in the form customarily issued by such accountants at such time in
transactions of this type.
41
5.19 AFFILIATES Promptly, but in any event within two
weeks, after the execution and delivery of this Agreement, MSB shall deliver to
HUBCO (a) a letter identifying all persons who, to the knowledge of MSB, may be
deemed to be affiliates of MSB under Rule 145 of the 1933 Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of MSB and (b) copies of letter agreements,
each substantially in the form of EXHIBIT 5.19-1, executed by each such person
so identified as an affiliate of MSB agreeing to comply with Rule 145 and to
refrain from transferring shares as required by the pooling-of-interests
accounting rules. Within two weeks after the date hereof, HUBCO shall cause its
directors and executive officers to enter into letter agreements in the form of
EXHIBIT 5.19-2 with HUBCO concerning the pooling-of-interests accounting rules.
HUBCO hereby agrees to publish, or file a Form 8-K, Form 10-K or Form 10-Q
containing financial results covering at least 30 days of post-Merger combined
operations of HUBCO and MSB as soon as practicable (but in no event later than
30 days) following the close of the first calendar month ending 30 days after
the Effective Time, in form and substance sufficient to remove the restrictions
set forth in paragraph "B" of Exhibit 5.19-1.
5.20 APPOINTMENTS. HUBCO agrees to cause Xxxxxxx Xxxxx to be
appointed at the Effective Time as Vice Chairman of the Board of the New York
Bank and President of the Southern Region of the New York Bank and immediately
after the Effective Time to enter into an employment agreement with Xxxxxxx
Xxxxx on terms and conditions to be mutually agreed upon by HUBCO and Xxxxxxx
Xxxxx (but containing the specific terms set forth in Section 5.20 of the HUBCO
Disclosure Schedule). Xxxxxxx Xxxxx and MSB shall amend Xxxxx' current
employment agreement effective at the Closing to reduce any payout under his
current employment contract so it would not constitute an "excess parachute
payment" as defined in Section 280G of the Code. Such amendment shall be
acceptable to HUBCO. HUBCO agrees to cause one director of MSB selected by MSB
(who may be Xxxxxxx Xxxxx) and acceptable to HUBCO to be appointed at the
Effective Time to the HUBCO Board of Directors. HUBCO shall ask each of the
current directors of Bank to serve as directors of the Surviving Bank (if the
Bank Merger is consummated) or to continue to serve as directors of Bank (if the
Bank Merger is not consummated) and directors of such Board shall receive Board
fees and be subject to Board duties substantially consistent with the fees and
duties of the directors of other bank subsidiaries of HUBCO. HUBCO shall modify
or waive the provisions of its mandatory retirement policy to the extent
necessary so that such directors who would otherwise be required to retire in
the six year period following the Closing because they will have reached HUBCO's
mandatory retirement age of 72 shall be permitted to continue to serve until age
75.
5.21 DIRECTOR RETIREMENT PROGRAM. The MSB Director
Retirement Program shall have been terminated on or before December 31, 1997 and
the present value of all benefits (including any accelerated benefits) shall
have been paid to directors covered thereby prior to the Closing and all
obligations of MSB, Bank, HUBCO and all HUBCO Subsidiaries thereby released, to
the satisfaction of HUBCO.
42
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 STOCKHOLDERS; SEC REGISTRATION. This
Agreement and the transactions contemplated hereby shall have been approved by
the requisite vote of the stockholders of MSB and, if necessary under NASDAQ
rules or applicable laws, the stockholders of HUBCO. The HUBCO Registration
Statement and Proxy Statement-Prospectus shall have been declared effective by
the SEC and shall not be subject to a stop order, and the issuance of the HUBCO
Stock shall have been qualified in every state where such qualification is
required under the applicable state securities laws.
(b) REGULATORY FILINGS. All necessary regulatory
or governmental approvals and consents (including without limitation any
required approval of the FDIC, the FRB, the OTS, the OCC and the New York
Superintendent) required to consummate the transactions contemplated hereby
shall have been obtained without any term or condition which would have a
Material Adverse Effect on HUBCO. All conditions required to be satisfied prior
to the Effective Time by the terms of such approvals and consents shall have
been satisfied; and all statutory waiting periods in respect thereof (including
the Xxxx-Xxxxx-Xxxxxx waiting period if applicable) shall have expired.
(c) SUITS AND PROCEEDINGS. There shall not be in
effect any order, judgment, injunction or decree of a court of competent
jurisdiction which enjoins or prohibits consummation of the transactions
contemplated hereby.
(d) TAX OPINION. HUBCO shall have received an
opinion, dated as of the Effective Time, of Pitney, Xxxxxx, Xxxx & Xxxxx,
reasonably satisfactory in form and substance to HUBCO, and MSB shall have
received an opinion, dated as of the Effective Time, of Xxxxxxx Xxxxxxxx & Wood,
reasonably satisfactory in form and substance to MSB, in each case based upon
representation letters reasonably required by such counsel, dated on or about
the date of such opinion, and such other facts and representations as such
counsel may reasonably deem relevant, to the effect that
(i) the Merger will be treated for federal income tax purposes
as a reorganization qualifying under the provisions of Section
368 of the Code; (ii) no gain or loss will be recognized by
MSB; (iii) no gain or loss will be recognized upon the
exchange of MSB Stock solely for HUBCO Stock; (iv) the basis
of any HUBCO Stock received in exchange for MSB Stock shall
equal the basis of the recipient's MSB Stock surrendered on
the exchange, reduced by the amount of cash received, if any,
on the exchange, and increased by the amount of the gain
recognized, if any, on the exchange
43
(whether characterized as dividend or capital gain income);
and (v) the holding period for any HUBCO Stock received in
exchange for MSB Stock will include the period during which
MSB Stock surrendered on the exchange was held, provided
such stock was held as a capital asset on the date of the
exchange.
(e) POOLING OF INTERESTS. HUBCO shall have received a
letter, dated the Closing Date, from its accountants, Xxxxxx Xxxxxxxx,
reasonably satisfactory to HUBCO and MSB, to the effect that the Merger shall be
qualified to be treated by HUBCO as a pooling-of-interests for accounting
purposes.
6.2 CONDITIONS TO THE OBLIGATIONS OF HUBCO UNDER THIS
AGREEMENT. The obligations of HUBCO under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS OF MSB AND BANK. Except for those representations which are made as
of a particular date, the representations and warranties of MSB 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. MSB 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 MSB
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 MSB 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 MSB
Disclosure Schedule, materially adversely affect the representation as to which
the supplement or amendment relates.
(b) OPINION OF COUNSEL. HUBCO shall have received an
opinion of counsel to MSB, dated the Closing Date, in form and substance
reasonably satisfactory to HUBCO, covering the matters customarily covered in
opinions of counsel in transactions of this type.
(c) CERTIFICATES. MSB shall have furnished HUBCO with
such certificates of its officers or other documents to evidence fulfillment of
the conditions set forth in this Section 6.2 as HUBCO may reasonably request.
(d) DIRECTOR RETIREMENT PROGRAM. The MSB Director
Retirement Program shall have been terminated on or before the Closing and the
present value of all benefits (including any accelerated benefits) shall have
been paid to directors covered thereby and all obligations of MSB, Bank, HUBCO
and all HUBCO Subsidiaries thereby released, to the satisfaction of HUBCO.
44
(e) XXXXX CONTRACT. The current Xxxxx employment
agreement shall have been amended to limit payments thereunder to those that do
not constitute an "excess parachute payment" under the Code.
(f) LEGAL FEES. MSB shall have furnished HUBCO with
letters from all attorneys representing MSB and Bank in any matters confirming
that all legal fees have been paid in full for services rendered as of the
Effective Time.
(g) MERGER-RELATED EXPENSES. MSB shall have provided
HUBCO with an accounting of all merger-related expenses incurred by it through
the Closing Date, including a good faith estimate of such expenses incurred but
as to which invoices have not been submitted as of the Closing Date.
(h) MSB PREFERRED SHARE PURCHASE RIGHTS. At or before
the Effective Time, MSB shall cause the Preferred Share Purchase Rights to be
redeemed for $.01 per Right or otherwise to become inoperable.
6.3 CONDITIONS TO THE OBLIGATIONS OF MSB UNDER THIS AGREEMENT.
The obligations of MSB under this Agreement shall be further subject to the
satisfaction or waiver, at or prior to the Effective Time, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS OF HUBCO. Except for those representations which are made as of a
particular date, the representations and warranties of HUBCO contained in this
Agreement shall be true and correct in all material respects on the Closing Date
as though made on and as of the Closing Date. HUBCO shall have performed in all
material respects the agreements, covenants and obligations to be performed by
it prior to the Closing Date. With respect to any representation or warranty
which as of the Closing Date has required a supplement or amendment to the HUBCO
Disclosure Schedule to render such representation or warranty true and correct
in all material respects as of the Closing Date, the representation and warranty
shall be deemed true and correct as of the Closing Date only if (i) the
information contained in the supplement or amendment to the HUBCO Disclosure
Schedule related to events occurring following the execution of this Agreement
and (ii) the facts disclosed in such supplement or amendment would not either
alone, or together with any other supplements or amendments to the HUBCO
Disclosure Schedule, materially adversely effect the representation as to which
the supplement or amendment relates.
(b) OPINION OF COUNSEL TO HUBCO. MSB shall have
received an opinion of counsel to HUBCO, dated the Closing Date, in form and
substance reasonably satisfactory to MSB, covering the matters customarily
covered in opinions of counsel in transactions of this type.
(c) FAIRNESS OPINION. MSB shall have received an
opinion from Xxxxx, dated no more than three days prior to the date the Proxy
Statement-Prospectus is mailed to MSB's stockholders (and, if it shall become
necessary to resolicit proxies thereafter, dated no more
45
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 stockholders of MSB hereunder is fair to such stockholders from a
financial point of view ("FAIRNESS OPINION"), and HUBCO shall not have taken any
action (including the announcement of any other proposed acquisition) which
causes Xxxxx to withdraw its Fairness Opinion prior to the Closing.
(d) CERTIFICATES. HUBCO shall have furnished MSB with
such certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 6.3 as MSB may
reasonably request.
(e) CERTAIN CONTRACTS. HUBCO shall have specifically
acknowledged, accepted and assumed (in a document in form and substance
reasonably satisfactory to MSB) any written employment, severance and other
compensation contracts between MSB and its officers and directors (including
former officers and directors) contained in the MSB Disclosure Schedules in a
writing delivered to the officers and directors covered thereby, unless the
employment contract is terminated or, if applicable, the employment of the
officer by MSB is terminated for any reason prior to the Closing, or if the
employment, severance and other contracts have been amended as provided
hereunder HUBCO shall assume the amended written contracts.
(f) DIRECTORS. One nominee, designated by MSB (which
may be Xxxxxxx Xxxxx) and acceptable to HUBCO, shall be duly appointed by the
Board of Directors of HUBCO to HUBCO's Board of Directors, effective at the
Effective Time. Provision shall have been made such that all directors of MSB
shall have been appointed as directors of the Surviving Bank (or shall continue
as directors of Bank if the Bank Merger is not consummated at the Effective
Time). HUBCO shall have caused Xxxxxxx Xxxxx to be elected Vice Chairman of the
Board of the New York Bank and President of the Southern Region of the New York
Bank. HUBCO shall have presented to Xxxxxxx Xxxxx, for his acceptance by
countersignature, an employment agreement executed by HUBCO which contains (i)
the specific terms set forth in Section 5.20 of the HUBCO Disclosure Schedule
and (ii) terms which are otherwise reasonable and which are not inconsistent
with the terms set forth in Section 5.20 of the HUBCO Disclosure Schedule.
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
stockholders of MSB:
(a) by mutual written consent of the parties hereto;
(b) by HUBCO or MSB (i) if the Effective Time shall
not have occurred on or prior to June 30, 1998 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 stockholders of MSB is taken and such stockholders fail to approve this
Agreement at
46
the meeting (or any adjournment or postponement thereof) held for
such purpose, or (iii) if a vote of the stockholders of HUBCO is required by
applicable NASDAQ rules, such vote is taken and such stockholders fail to
approve this Agreement at the meeting (or any adjournment or postponement
thereof) held for such purpose;
(c) by HUBCO or MSB upon written notice to the other
if any application for regulatory or governmental approval necessary to
consummate the Merger and the other transactions contemplated hereby shall have
been denied or withdrawn at the request or recommendation of the applicable
regulatory agency or Governmental Entity or by HUBCO upon written notice to MSB
if any such application is approved with conditions (other than conditions which
are customary in such regulatory approvals) which would have a Material Adverse
Effect on HUBCO;
(d) by HUBCO if (i) there shall have occurred a
change in the business, operations, assets, or financial condition of MSB and
Bank, taken as a whole, from that disclosed by MSB in MSB's Quarterly Report on
Form 10-Q for the three months ended September 30, 1997 which change shall have
resulted in a Material Adverse Effect on MSB (it being understood that those
matters disclosed in the MSB Disclosure Schedule shall not be deemed to have
caused such a Material Adverse Effect) or (ii) there was a material breach in
any representation, warranty, covenant, agreement or obligation of MSB hereunder
and such breach shall not have been remedied within 30 days after receipt by MSB
of notice in writing from HUBCO to MSB specifying the nature of such breach and
requesting that it be remedied;
(e) by MSB, if (i) there shall have occurred a change
in the business, operations, assets or financial condition of HUBCO and its
Subsidiaries taken as a whole from that disclosed by HUBCO in HUBCO's Quarterly
Report on Form 10-Q for the three months ended September 30, 1997 except for the
Effects of Announced Acquisitions, which change shall have resulted in a
Material Adverse Effect on HUBCO (it being understood that those matters
disclosed in the HUBCO Disclosure Schedule shall not be deemed to have caused
such a Material Adverse Effect); or (ii) there was a material breach in any
representation, warranty, covenant, agreement or obligation of HUBCO hereunder
and such breach shall not have been remedied within 30 days after receipt by
HUBCO of notice in writing from MSB specifying the nature of such breach and
requesting that it be remedied;
(f) by MSB, if MSB's Board of Directors shall have
approved an Acquisition Transaction after determining, upon advice of counsel,
that such approval was necessary in the exercise of its fiduciary obligations
under applicable laws;
(g) by HUBCO if the conditions set forth in Section
6.2 are not satisfied and are not capable of being satisfied by June 30, 1998;
(h) by MSB if the conditions set forth in Section 6.3
are not satisfied and are not capable of being satisfied by June 30, 1998; or
47
(i) by MSB, in accordance with Section 2.1(a)(iii).
7.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement by either HUBCO or MSB 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 stockholders. 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 stockholders of MSB but, after any such adoption, no amendment shall be made
which reduces or changes the amount or form of the consideration to be delivered
to the shareholders of MSB without the approval of such stockholders. 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.. 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, MSB may bear the expenses of Bank.
8.2 SURVIVAL. The respective representations, warranties,
covenants and agreements of the parties to this Agreement shall not survive the
Effective Time, but shall terminate as of the Effective Time, except for Article
II, this Section 8.2 and Sections 5.5(b), 5.8(a), 5.11 and 5.14.
8.3 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by reputable overnight courier or sent by registered or certified
mail, postage prepaid, as follows:
(a) If to HUBCO, to:
HUBCO, Inc.
48
0000 XxxXxxxxx Xxxx.
Xxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxxxxx X. Xxxxxxx, Chairman,
President and Chief Executive Officer
Copy to: 0000 XxxXxxxxx Xxxx.
Xxxxxx, Xxx Xxxxxx 00000
Attn.: X. Xxxx Van Borkulo-Xxxxx, Esq.
And copy to: Pitney, Xxxxxx, Xxxx & Xxxxx
(Delivery) 000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx
(Mail) X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attn.: Xxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
(b) If to MSB or Bank, to:
MSB Bancorp, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attn.: Xxxxxxx X. Xxxxx,
Chairman of the Board, President
and Chief Executive Officer
Copy to: Xxxxxxx Xxxxxxxx & Wood
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Omer X.X. Xxxxxxxx, 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
49
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. Representations made herein which are qualified
by the phrase to the best of MSB's knowledge or similar phrases refer as of the
date hereof to the best knowledge of the Chief Executive Officer, the Chief
Financial Officer and the Executive Vice President and Chief Operating Officer
of MSB and thereafter refer to the best knowledge of any senior officer of MSB
or any MSB Subsidiary. Representations made herein which are qualified by the
phrase to the best of HUBCO's knowledge or similar phrases refer as of the date
hereof to the best of the knowledge of the Chairman, President and Chief
Executive Officer, the Executive Vice President/Legal and the Chief Financial
Officer of HUBCO and thereafter refer to the best knowledge of any senior
officer of HUBCO or any HUBCO Subsidiary. Any reference to a person's knowledge
or best knowledge shall mean, as of the date of the statement in question, such
person's actual knowledge or what such person should have known in the ordinary
exercise of that person's duties in the capacity referred to herein.
IN WITNESS WHEREOF, HUBCO, MSB and Bank have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
ATTEST: HUBCO, INC.
By: /s/ X. Xxxx Van Borkulo-Xxxxx By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------- --------------------------------
X. Xxxx Van Borkulo-Xxxxx, Xxxxxxx X. Xxxxxxx, Chairman,
Secretary President and Chief Executive
Officer
ATTEST: MSB BANCORP, INC.
By: /s/ Xxxxx XxXxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------- --------------------------------
Xxxxx XxXxxx, Xxxxxxx X. Xxxxx, Chairman of the
50
Secretary Board, President and Chief Executive
Officer
ATTEST: MSB BANK
By: /s/ Xxxxx XxXxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------- --------------------------------
Xxxxx XxXxxx, Xxxxxxx X. Xxxxx, Chairman of the
Secretary Board, President and Chief Executive
Officer
51
EXHIBIT 2.1(a)
TERMS OF SERIES C PREFERRED STOCK
Section 1. GENERAL.
The Series C Preferred Stock, shall have a stated value of $.01 per
share, and the shares therefore, when issued for such amount, shall be fully
paid and non-assessable. The Series C Preferred Stock shall consist of _______
shares, which number may be increased (but only in connection with a stock split
or stock dividend) or decreased from time to time (but not below the number
thereof then outstanding) by the Board of Directors. Upon the reacquisition of
any of the Series C Preferred Stock, through conversion or otherwise, such
reacquired Shares shall be canceled and shall become part of the authorized and
unissued Preferred Stock, but shall not be authorized and unissued Series C
Preferred Stock. The rights, preferences and limitations of the Series C
Preferred Stock are as follows:
Section 2. DIVIDENDS.
(a) Dividends shall accrue daily on each share of this Series C for
each dividend payment period at the rate of 8.75% per annum (multiplied by the
liquidation preference per share) or $___ per share per annum from the date of
their original issuance to and including [the first of January 15, April 15,
July 15 or October 15, 1998 to follow the Effective Time of the Merger] (the
"Initial Dividend Period") and for each quarterly dividend payment period
thereafter, commencing on January 15, April 15, July 15 and October 15 as the
case may be, of each year and ending on and including the day next preceding the
first day of the next such quarterly dividend payment period (a "Quarterly
Dividend Period" and, together with the Initial Dividend Period, a "Dividend
Period"). Such dividends shall accrue from the date of original issuance of such
shares, shall be payable in arrears, when, as and if declared by the Board of
Directors and out of funds of the Corporation legally available for the payment
of dividends, on the 15th day of January, April, July and October of each year,
commencing [the first of January 15, April 15, July 15 or October 15, 1998 to
follow the Effective Time of the Merger] and shall cumulate if not paid on such
payment dates, whether or not in any Dividend Period or Periods there shall be
funds of the Corporation legally available for the payment of dividends. Each
such dividend shall be paid to the holders of record of shares of this Series C
as they appear on the books of the Corporation on such record dates, not
exceeding 30 days preceding the payment dates thereof ("Dividend Payment
Dates"), as shall be fixed by the Board of Directors of the Corporation or by a
duly authorized committee thereof (each a "Dividend Record Date").
(b) The amount of dividends per share of this Series C payable for each
Quarterly Dividend Period shall be $_____. The amount of dividends payable for
the Initial Dividend Period or any period shorter than a full Quarterly Dividend
Period shall be computed on the basis of 30-day months, a 360-day year and the
actual number of days elapsed in the period.
1
(c) No dividends shall be declared or paid or set apart for payment on
any series of preferred stock or any class of capital stock of the Corporation
ranking, as to dividends or upon liquidation, on a parity with or junior to this
Series C for any period (other than dividends payable in Common Stock or another
stock ranking junior to this Series C as to dividends and upon liquidation), nor
shall the Corporation make any other distribution on the Common Stock of the
Corporation or on any other stock of the Corporation ranking junior to or on a
parity with this Series C as to dividends or upon liquidation, unless (i) full
cumulative dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment on
this Series C for all past Dividend Periods for this Series C terminating on or
prior to the date of payment of any such dividends on the Common Stock or such
other series of preferred stock and (ii) sufficient funds have been set apart
for payment of dividends on this Series C for the Dividend Period during which
payment is to be made for such current Dividend Period. When full cumulative
dividends for all past and current Dividend Periods are not paid or provided
for, as aforesaid, upon the shares of this Series C and any other series of
preferred stock and any other class of capital stock of the Corporation ranking,
as to dividends, on a parity with this Series C (herein referred to as "Dividend
Parity Stock"), all dividends declared upon shares of this Series C and any
other Dividend Parity Stock shall be declared PRO RATA so that the amount of
dividends declared per share on this Series C and all other Dividend Parity
Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of this Series C and such other Dividend
Parity Stock bear to each other. Holders of shares of this Series C shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of full cumulative dividends, as herein provided, on this Series C. No interest
or sum of money in lieu of interest shall be payable in respect of any dividend
payment or payments on this Series C which may have accumulated or be in
arrears. As used herein, the phrase "set apart" in respect of the payment of
dividends shall require deposit of any funds in a bank or trust company that is
not an Affiliate of the Corporation in a separate deposit account maintained for
the benefit of the holders of this Series C.
(d) Unless full cumulative dividends on all outstanding shares of this
Series C shall have been paid for all past dividend payment periods or declared
and set apart for payment, so long as any shares of this Series C are
outstanding, no Common Stock or any other stock of the Corporation ranking
junior to or on a parity with this Series C as to dividends or upon liquidation
and no warrants, calls, options or other rights to acquire Common Stock, any
equity security of the Corporation or other security exercisable or exchangeable
into Common Stock or any such other stock of the Corporation shall be redeemed,
purchased or otherwise acquired or retired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any shares
of any such stock) by the Corporation or any entity directly or indirectly
controlled by the Corporation (except by conversion into or exchange for stock
of the Corporation or such entity ranking junior to this Series C as to
dividends and upon liquidation).
(e) If the percentage of dividends payable on the shares of this Series
C that is deductible under Section 243(a)(i) of the Internal Revenue Code of
1986, as amended, is reduced below 70%, the dividend rate of this Series C shall
be increased, during any period any such
2
deduction is in effect, by an amount equal to 5.829 basis points for each
percentage point the 70% rate is reduced. Thus, for example, if the dividend
rate on this Series C is then 8.75% and if such percentage changes from 70% to
65%, the dividend rate on this Series C shall be increased to 9.04145%.
Section 3. REDEMPTION.
(a) After January 10, 1999, the shares of this Series C shall be
redeemable by the Corporation in whole or, from time to time, in part. The
shares of this Series C shall be redeemable by the Corporation at the redemption
prices (expressed as a percentage of the liquidation preference per share of
Series C) as follows, plus in each case an amount equal to all accrued and
unpaid dividends thereon (whether or not earned or declared) to the date fixed
for redemption.
If redeemed during the twelve-month period beginning January 10 of the
year indicated:
YEAR REDEMPTION PRICE PER SHARE
---- --------------------------
1999 106.125%
2000 105.250
2001 104.375
2002 103.500
2003 102.625
2004 101.750
2005 100.875
and at 100% per share thereafter.
(b) In the event that fewer than all the outstanding shares of this
Series C are to be redeemed as permitted by this Section 3, the number of shares
to be redeemed shall be determined by the Board of Directors, and the shares to
be redeemed shall be determined by lot or PRO RATA as may be determined by the
Board of Directors or by such other method as may be approved by the Board of
Directors that is required to conform to any rule or regulation of any stock
exchange upon which the shares of this Series C may at the time be listed.
(c) Notice of any redemption of shares of this Series C,
specifying the date fixed for redemption (herein referred to as the "Redemption
Date") and place of redemption, shall be given by first class mail to each
holder of record of the shares to be redeemed, at his address of record, not
more than 60 nor less than 30 days prior to the Redemption Date. Each such
notice shall also specify the redemption price applicable to the shares to be
redeemed and that dividends on shares to be redeemed shall cease to accrue and
accumulate on the Redemption Date. If less than all the
3
shares owned by such stockholder are then to be redeemed, the notice shall also
specify the number of shares thereof which are to be redeemed and the fact that
a new certificate or certificates representing any unredeemed shares shall be
issued without cost to such holder.
(d) Notice of redemption of shares of this Series C having been given
as provided in paragraph (c) of this Section 3, then, unless the Corporation
shall have defaulted in providing for the payment of the redemption price and an
amount equal to all accrued and unpaid dividends to the Redemption Date,
dividends shall cease to accrue on the shares of this Series C called for
redemption at the Redemption Date, all rights of the holders thereof (except the
right to receive the redemption price and all accrued and unpaid dividends to
the Redemption Date) shall cease with respect to such shares and such shares
shall not, after the Redemption Date, be deemed to be outstanding and shall not
have the status of preferred stock. In case fewer than all the shares
represented by any certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
(e) Any shares of this Series C which shall at any time have been
redeemed or converted shall, after such redemption or conversion, have the
status of authorized but unissued shares of preferred stock, without designation
as to series until such shares are once more designated as part of a particular
series by the Board of Directors.
(f) In the event that full cumulative dividends on this Series C have
not been paid or declared and set apart for payment for all past Dividend
Periods, no shares of this Series C shall be redeemed unless all outstanding
shares of this Series C are simultaneously redeemed, and neither the Corporation
nor any entity directly or indirectly controlled by the Corporation shall
purchase or otherwise acquire any shares of this Series C; provided, however,
that the foregoing shall not prevent the purchase or acquisition of shares of
this Series C pursuant to a purchase or exchange offer made on the same terms to
all holders of all outstanding shares of this Series C or pursuant to the
exercise of the conversion right provided in Section 4.
(g) Shares of this Series C are not subject or entitled to the benefit
of a sinking fund.
(h) In addition to the Corporation's right to redeem any or all of the
Series C as provided in this Section 3, upon the exercise by a holder of Series
C of the conversion privilege pursuant to Section 4 below, the Corporation may,
by notice of redemption given pursuant to this Section 3 prior to the close of
business on the 10th business day after the date on which all of the conditions
specified in paragraph (b)(1) of Section 4 hereof are satisfied redeem all or a
part of the shares of Series C so surrendered for conversion at a per share
redemption price equal to (i) the Current Market Price (as defined in Section
4(d)(4) hereof) of the Corporation's Common Stock on the date the shares of this
Series C are surrendered for conversion multiplied by the number of shares of
Common Stock into which the Series C shares then subject to the Corporation's
notice of redemption would have been convertible, or (ii) the redemption price
specified in Section 3(a), whichever of (i) or (ii) is higher. This redemption
must be funded and completed within three
4
business days of the Corporation's notice, or the Corporation's right to redeem
the shares of this Series C subject to the Corporation's notice pursuant to this
paragraph (h) shall be extinguished.
Section 4. CONVERSION.
(a) Subject to and upon compliance with the provisions of this Section
4, and subject to the Corporation's right to redeem shares of Series C
surrendered for conversion pursuant to Section 3(h) hereof, on or after January
10, 1999, the holder of any shares of this Series C shall have the right, at its
option, to convert the shares into a number of fully paid and nonassessable
shares of Common Stock (calculated as to each conversion to the nearest 1/100th
of a share) equal to $_____ for each share surrendered for conversion divided by
the Conversion Price (as defined in paragraph (d) of this Section 4 below) by
surrendering the shares to be converted, in the manner provided in paragraph (b)
of this Section 4 below; PROVIDED HOWEVER, that if the Corporation shall have
called some or all of the shares of this Series C for redemption, such right
shall terminate on the close of business on the third business day next
preceding the date fixed for redemption unless the Corporation has defaulted in
making or providing for the payment due on the date fixed for redemption.
Anything herein to the contrary notwithstanding, the shares of this Series C
shall become immediately convertible under the circumstances, and subject to the
terms and conditions, set forth in paragraph (i) of this Section 4.
(b) (1) In order to exercise the conversion privilege, the holder of
each share of this Series C to be converted shall surrender the
certificate representing such share to the Conversion Agent for this
Series C appointed for such purpose by the Corporation (the "Conversion
Agent"), or, if no Conversion Agent has been appointed or if the holder
has not received notice of such appointment, then to the Corporation,
with the Notice of Election to Convert on the back of said certificate
duly completed and signed, together with funds equal to the Dividend
Amount, if any, required to be paid under paragraph (b)(2) of this
Section 4 below, at the principal office of the Conversion Agent or the
Corporation, as the case may be. Unless the shares issuable on
conversion are to be issued in the same name as the name in which the
shares of this Series C are registered, each share surrendered for
conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder or its
duly authorized attorney and by funds in an amount sufficient to pay
any transfer or similar tax.
(2) The holders of shares of this Series C at the close of
business on a Dividend Record Date shall be entitled to receive the
dividend payable on those shares on the corresponding Dividend Payment
Date notwithstanding the conversion of the shares after the Dividend
Record Date or the Corporation's default in payment of the dividend due
on the Dividend Payment Date. However, shares of this Series C
surrendered for conversion during the period between the close of
business on any Dividend Record Date and the opening of business on the
corresponding Dividend Payment Date (except shares called for
redemption on a
5
date fixed for redemption during that period) must be accompanied by
payment of an amount equal to the dividend payable on the shares on the
Dividend Payment Date (the "Dividend Amount"). The dividend with
respect to a share of this Series C called for redemption during the
period from the close of business on the Record Date to the opening of
business on the corresponding Dividend Payment Date will be payable
upon such Dividend Payment Date, and the holder converting such share
of this Series C need not include a payment of such dividend amount
upon surrender of such share of this Series C. The holders of shares of
this Series C on a Dividend Record Date who (or whose transferees)
convert any of those shares on or after the corresponding Dividend
Payment Date will receive the dividend payable by the Corporation on
those shares of this Series C on the Dividend Payment Date, and need
not include payment of the Dividend Amount upon surrender of those
shares for conversion. Except as provided above, the Corporation shall
make no payment or adjustment for accrued and unpaid dividends on
shares of this Series C, whether or not in arrears, on conversion of
those shares, or for dividends on the shares of Common Stock issued
upon the conversion.
(3) As promptly as practicable after the surrender by a holder
of the certificates for shares of this Series C in accordance with this
paragraph (b), and subject to the Corporation's right to redeem all or
a part of such Series C shares as provided in Section 3(h) hereof, the
Corporation shall issue and shall deliver at the office of the
Conversion Agent to the holder, or on its written order, a certificate
or certificates for the number of full shares of Common Stock issuable
upon the conversion of those shares in accordance with the provisions
of this paragraph (b)(3), and any fractional interest in respect of a
share of Common Stock arising upon the conversion shall be settled as
provided in paragraph (c) of this Section 4 below.
(4) Unless the Corporation shall have exercised its right to
redeem the shares of Series C surrendered for conversion pursuant to
this Section 4, each conversion shall be deemed to have been effected
as of the close of business on the 10th business day after the date on
which all of the conditions specified in paragraph (b)(1) of this
Section 4 above shall have been satisfied, and, the person or persons
in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares of Common
Stock represented by those certificates at such time on such date and
such conversion shall be at the Conversion Price in effect at such time
on such date, unless the stock transfer books of the Corporation shall
be closed on that date, in which event such person or persons shall be
deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books
are open, but such conversion shall be at the Conversion Price in
effect on the 10th business day after the date upon which all of the
conditions specified in paragraph (b)(1) of this Section 4
6
above shall have been satisfied. All shares of Common Stock delivered
upon conversion of this Series C will upon delivery be duly and validly
issued and fully paid and nonassessable, free of all liens and charges
and not subject to any preemptive rights. Upon the surrender of
certificates representing shares of this Series C to be converted and
the failure of the Corporation to provide to the holder thereof a
notice of redemption pursuant to paragraph (h) of Section 3 hereof
prior to the 10th business day after the date on which all of the
conditions specified in paragraph (b)(1) of this Section 4 shall have
been satisfied, the shares shall no longer be deemed to be outstanding
and all rights of a holder with respect to the shares surrendered for
conversion shall immediately terminate except the right to receive the
Common Stock or other securities, cash or other assets as herein
provided (including without limitation any dividend payable as
specified in paragraph (b)(1) of this Section 4 above).
(c) No fractional shares or securities representing fractional
shares of Common Stock shall be issued upon conversion of this Series
C. Any fractional interest in a share of Common Stock resulting from
conversion of a share of this Series C shall be paid in cash (computed
to the nearest cent) based on the price (as defined in paragraph (d)(4)
of this Section 4 below) of the Common Stock on the Trading Day (as
defined in paragraph (d)(4) below) next preceding the day of
conversion. If more than one share shall be surrendered for conversion
at one time by the same holder, the number of whole shares of Common
Stock issuable upon the conversion shall be computed on the basis of
the aggregate Liquidation Preference (as such term is defined in
paragraph (a) of Section 7 below) of the shares of this Series C so
surrendered.
(d) The "Conversion Price" per share of this Series C shall be
$____, subject to adjustment from time to time as follows:
(1) In case the Corporation shall (1) pay a dividend
or make a distribution on its Common Stock in shares of its
Common Stock, (2) subdivide its outstanding Common Stock into
a greater number of shares, or (3) combine its outstanding
Common Stock into a smaller number of shares, the Conversion
Price in effect immediately prior to such event shall be
proportionally adjusted so that the holder of any share of
this Series C thereafter surrendered for conversion shall be
entitled to receive the number and kind of shares of Common
Stock of the Corporation which such holder would have been
entitled to receive had the share been converted immediately
prior to the happening of such event. An adjustment made
pursuant to this paragraph (d)(1) shall become effective
immediately after the record date in the case of a dividend or
distribution except as provided in paragraph (d)(7) of this
Section 4 below, and shall become effective immediately after
the effective date in the case of subdivision or combination.
If any dividend or distribution is not paid or made, the
Conversion Price then in effect shall be appropriately
readjusted.
7
(2) In case the Corporation shall issue rights or
warrants to all holders of its Common Stock entitling them
(for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase Common Stock at
a price per share less than the Current Market Price (as
defined in paragraph (d)(4) of this Section 4 below) of the
Common Stock at the record date for the determination of
stockholders entitled to receive the rights or warrants, the
Conversion Price in effect immediately prior to the issuance
of such rights or warrants shall be adjusted so that it shall
equal the price determined by multiplying the Conversion Price
in effect immediately prior to the date of issuance of the
rights or warrants by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding on the
date of issuance of the rights or warrants plus the number of
shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so offered for
subscription or purchase would purchase at the Current Market
Price at that record date, and of which the denominator of
which shall be the number of shares of Common Stock
outstanding on the date of issuance of the rights or warrants
plus the number of additional shares of Common Stock for
subscription or purchase. The adjustment provided for in this
paragraph (d)(2) shall be made successively whenever any such
rights or warrants are issued, and shall become effective
immediately, except as provided in paragraph (d)(7) of this
Section 4 below after such record date. In determining whether
any rights or warrants entitle the holders of the Common Stock
to subscribe for or purchase shares of Common Stock at less
than the Current Market Price, and in determining the
aggregate offering price of the shares of Common Stock so
offered, there shall be taken into account any consideration
received by the Corporation for such rights or warrants, the
value of such consideration, if other than cash, to be
determined by the Board (whose determination, if made in good
faith, shall be conclusive). If any or all of such rights or
warrants are not so issued or expire or terminate without
having been exercised, the Conversion Price then in effect
shall be appropriately readjusted.
(3) In case the Corporation shall distribute to all
holders of its Common Stock any shares of capital stock of the
Corporation (other than Common Stock) or evidences of
indebtedness or assets (excluding cash dividends or
distributions paid from retained earnings of the Corporation)
or rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in paragraph (d)(2) of
this Section 4 above) then, in each such case, the Conversion
Price shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the date of the distribution by a
fraction the numerator of which shall be the Current Market
Price of the Common Stock on the record date mentioned below
less the then fair market value (as determined by the Board,
whose determination, if made in good faith, shall be
conclusive) of that portion of the capital stock or assets or
evidences of indebtedness so distributed, or of the rights or
warrants so distributed, applicable to one share of Common
Stock, and the
8
denominator of which shall be the Current Market Price of the
Common Stock on the record date. Such adjustment shall become
effective immediately, except as provided in paragraph (d)(4)
of this Section 4 below, after the record date for the
determination of stockholders entitled to receive such
distribution. If any such distribution is not made or if any
or all of such rights or warrants expire or terminate without
having been exercised, the Conversion Price then in effect
shall be appropriately readjusted.
(4) For the purpose of any computation under
paragraphs (d)(2) or (d)(3) of this Section 4 above, the
"Current Market Price" of the Common Stock at any date shall
be the average of the last reported sale prices per share for
the ten consecutive Trading Days (as defined below) preceding
the date of such computation. The last reported sale price for
each day shall be (i) the last reported sale price of the
Common Stock on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation
System (the "Nasdaq National Market System"), or any similar
system of automated dissemination of quotations of securities
prices then in common use, if so quoted, or (ii) if not quoted
as described in clause (i), the mean between the high bid and
low asked quotations for the Common Stock as reported by the
National Quotation Bureau Incorporated if at least two
securities dealers have inserted both bid and asked quotations
for the Common Stock on at least five of the ten preceding
days, or (iii) if the Common Stock is listed or admitted for
trading on any national securities exchange, the last sale
price, or the closing bid price if no sale occurred, of the
Common Stock on the principal securities exchange on which the
Common Stock is listed. If the Common Stock is quoted on a
national securities or central market system, in lieu of a
market or quotation system described above, the last reported
sale price shall be determined in the manner set forth in
clause (ii) of the preceding sentence if bid and asked
quotations are reported but actual transactions are not, and
in the manner set forth in clause (iii) of the preceding
sentence if actual transactions are reported. If none of the
conditions set forth above is met, the last reported sale
price of the Common Stock on any day or the average of such
last reported sale prices for any period shall be the fair
market value of such class of stock as determined by a member
firm of the New York Stock Exchange, Inc. selected by the
Corporation. As used herein the term "Trading Days" means (x)
if the Common Stock is quoted on the Nasdaq National Market
System or any similar system of automated dissemination of
quotations of securities prices, days on which trades may be
made on such system, or (y) if not quoted as described in
clause (x), days on which quotations are reported by the
National Quotation Bureau Incorporated, or (z) if the Common
Stock is listed or admitted for trading on any national
securities exchange, days on which such national securities
exchange is open for business.
(5) No adjustment in the Conversion Price shall be
required unless such adjustment would require a change of at
least one percent in the Conversion Price;
9
PROVIDED, HOWEVER, that any adjustments which by reason of
this paragraph (d)(5) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment; and PROVIDED, further, that adjustment shall be
required and made in accordance with the provisions of this
Section 4 (other than this paragraph (d)(5)) not later than
such time as may be required in order to preserve the tax free
nature of a distribution to the holders of shares of Common
Stock. All calculations under this Section 4 shall be made to
the nearest cent or the nearest one hundredth of a share, as
the case may be. Anything in this paragraph (d) to the
contrary notwithstanding, the Corporation shall be entitled to
make such reductions in the Conversion Price, in addition to
those required by this paragraph (d), as it in its discretion
shall determine to be advisable in order that any stock
dividend, subdivision or combination of shares, distribution
of capital stock or rights or warrants to purchase stock or
securities, or distribution of evidences of indebtedness or
assets (other than cash dividends or distributions paid from
retained earnings) hereinafter made by the Corporation to its
stockholders shall be a tax free distribution for federal
income tax purposes.
(6) Whenever the Conversion Price is adjusted, as
herein provided, the Corporation shall promptly file with the
Conversion Agent an officers' certificate setting forth the
Conversion Price after the adjustment and setting forth a
brief statement of the facts requiring the adjustment, which
certificate shall be conclusive evidence of the correctness of
the adjustment. Promptly after delivery of the certificate,
the Corporation shall prepare a notice of the adjustment of
the Conversion Price setting forth the adjusted Conversion
Price and the date on which the adjustment becomes effective
and shall mail the notice of such adjustment of the Conversion
Price to the holder of each share of this Series C at such
holder's last address as shown on the stock books of the
Corporation.
(7) In any case in which this paragraph (d) provides
that an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until the
occurrence of the event (i) issuing to the holder of any share
of this Series C converted after the record date and before
the occurrence of the event the additional shares of Common
Stock issuable upon the conversion by reason of the adjustment
required by the event over and above the Common Stock issuable
upon such conversion before giving effect to the adjustment
and (ii) paying to the holder any amount in cash in lieu of
any fractional share pursuant to paragraph (c) of this Section
4 above.
(e) If:
(1) the Corporation shall authorize the granting to
the holders of the Common Stock of rights or warrants to
subscribe for or purchase any shares of any class or any other
rights or warrants; or
10
(2) there shall be any reclassification of the Common
Stock (other than a subdivision or combination of the
outstanding Common Stock and other than a change in the par
value, or from par value to no par value, or from no par value
to par value), or any consolidation, merger, or statutory
share exchange to which the Corporation is a party, or any
sale or transfer of all or substantially all the assets of the
Corporation; or
(3) there shall be a voluntary or an involuntary
dissolution, liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the Conversion Agent, and
shall cause to be mailed to the holders of shares of this Series C at their
addresses as shown on the stock books of the Corporation, at least 15 days prior
to the applicable date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of the dividend, distribution or
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to the dividend, distribution
or rights or warrants are to be determined or (ii) the date on which the
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon the reclassification,
consolidation, merger, statutory share exchange, sale, transfer, dissolution,
liquidation or winding up. Failure to give any such notice or any defect in the
notice shall not affect the legality or validity of the proceedings described in
this paragraph (e).
(f) (1) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights, out
of the aggregate of its authorized but unissued shares of
Common Stock or its issued shares of Common Stock held in its
treasury, or both, for the purpose of effective conversions of
this Series C the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of
this Series C not theretofore converted. For purposes of this
paragraph (f), the number of shares of Common Stock which
shall be deliverable upon the conversion of all outstanding
shares of this Series C shall be computed as if at the time of
computation all the outstanding shares were held by a single
holder.
(2) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par
value (if any) of the shares of Common Stock deliverable upon
conversion of this Series C, the Corporation will take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common
Stock at the adjusted Conversion Price.
11
(3) The Corporation will endeavor to list the shares
of Common Stock required to be delivered upon conversion of
this Series C, prior to the delivery, upon each national
securities exchange, if any, upon which the outstanding Common
Stock is listed at the time of delivery.
(4) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon conversion of
this Series C, the Corporation will endeavor, in good faith
and as expeditiously as possible, to comply with all federal
and state laws and regulations thereunder requiring the
registration of those securities with, or any approval of or
consent to the delivery thereof by, any governmental
authority.
(g) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock on conversion of this Series C pursuant hereto; PROVIDED, HOWEVER,
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the holder of this Series C to be converted
and no such issue or delivery shall be made unless and until the person
requesting the issue or delivery has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that the
tax has been paid.
(h) In case of any reclassification or change of outstanding shares of
Common Stock (other than change in par value, or as a result of subdivision or
combination), or in case of any consolidation of the Corporation with, or merger
of the Corporation with or into, any other entity that requires the vote of the
holders of Common Stock or that results in a reclassification, change,
conversion, exchange or cancellation of outstanding shares of Common Stock or
any sale or transfer of all or substantially all of the assets of the
Corporation, each holder of shares of this Series C then outstanding shall, in
connection with such transaction, have the right to convert the shares of this
Series C held by the holder into the kind and amount of securities, cash and
other property which the holder would have been entitled to receive upon such
reclassification, change, consolidation, merger, sale or transfer if the holder
had held the Common Stock issuable upon the conversion of the shares of this
Series C immediately prior to the reclassification, change, consolidation,
merger, sale or transfer.
(i) In the event that the Corporation shall consummate any
consolidation or merger or similar business combination, pursuant to which the
outstanding shares of Common Stock are by operation of law exchanged solely for
or changed, reclassified or converted into stock, securities or cash or any
other property, or any combination thereof, then provision shall be made so that
shares of this Series C that are not immediately converted and receive the
consideration provided in paragraph (h) of this Section 4, shall, in connection
with such consolidation, merger or similar business combination, be assumed by
and shall become preferred stock of such successor or resulting corporation,
having in respect of such corporation, insofar as possible, the same powers,
preferences and relative rights, and the qualifications, limitations or
restrictions thereon, that this Series C had immediately prior to such
transaction, except that after such transaction each share of
12
this Series C shall be immediately convertible, otherwise on the terms and
conditions provided by Section 4, into the nature and kind of consideration so
receivable by a holder of the number of shares of Common Stock into which such
shares of this Series C could have been converted immediately prior to such
transaction. The rights of this Series C as preferred stock of such successor or
resulting corporation shall successively be subject to adjustments pursuant to
Section 4 and paragraph (d) of this Section 4 hereof after any such transaction
as nearly equivalent as practicable to the adjustment provided for by such
paragraph prior to such transaction. The Corporation shall not consummate any
such merger, consolidation or similar transaction unless all then outstanding
shares of this Series C (other than such shares that are converted pursuant to
paragraph (h) of this Section 4) shall be assumed and authorized by the
successor or resulting corporation as aforesaid.
Section 5. PREEMPTIVE RIGHTS. Shares of this Series C are not entitled
to any preemptive rights to acquire any unissued shares of any stock of the
Corporation, now or hereafter authorized, or any other securities of the
Corporation, whether or not convertible into shares of stock of the Corporation
or carrying a right to subscribe to or acquire any such shares of stock.
Section 6. VOTING. Except as required by law, the shares of this Series
C shall not have any voting powers, either general or special, except as
provided in this Section 6:
(a) Unless the vote of the holders of a greater number of shares shall
then be required by law, the affirmative vote of the holders of at least 66-2/3%
of all of the shares of this Series C at the time outstanding given in person or
by proxy, at a meeting called for the purpose, on which matter the holders of
shares of this Series C shall vote together as a separate class, shall be
necessary to authorize, effect or validate any amendment, alteration or repeal
of any of the provisions of the Certificate of Incorporation of the Corporation
or of any certificate, amendatory or supplemental thereto which amendment,
alteration or repeal would, if effected, adversely affect the powers,
preferences, rights or privileges of this Series C other than any such amendment
or alteration subject to paragraph (b) of this Section 6.
(b) Notwithstanding anything set forth herein to the contrary, the
Board of Directors of the Corporation without the vote of the holders of shares
of this Series C may authorize and issue additional shares of Common Stock and
preferred stock ranking on a parity as to dividends and upon liquidation with
the shares of this Series C. No class or series of equity securities of the
Corporation may rank senior to this Series C as to dividends or upon
liquidation.
(c) (1) So long as any shares of this Series C are
outstanding, if the Corporation shall have failed to pay full
cumulative dividends on all outstanding shares of this Series
C for four Dividend Periods, whether or not consecutive, the
number of directors of the Corporation shall automatically be
increased by two, and the holders of this Series C shall have
the right, voting together as a class and separately from all
other classes and series, to elect such two additional
directors at a special meeting of holders of the shares of
this Series C to be held for the purpose
13
of electing directors and thereafter at each successive annual
meeting of stockholders. The right of the holders of this
Series C to elect such members of the Board of Directors as
aforesaid shall continue until full cumulative dividends for
all past Dividend Periods on this Series C have been paid or
declared and set apart for payment.
(2) Each director elected by the holders of this
Series C shall comply with the requirements of New Jersey law
applicable to directors of a New Jersey corporation and with
all federal laws applicable to directors of a savings and loan
holding company. Unless otherwise required by law, directors
elected by the holders of this Series C shall not become
members of any of the three classes of directors otherwise
required by the Certificate of Incorporation and By-laws of
the Corporation with respect to the remaining directors
elected by other classes or series of stock entitled to vote
therefor but shall serve until the next annual meeting or
until their respective successors shall be elected and shall
qualify. At such time as all cumulative dividends have been
paid in full, the voting right of the holders of this Series C
shall, without further action, terminate, subject to revesting
in the event of each and every subsequent failure of the
Corporation to pay such dividends for the requisite number of
periods described above.
(3) The term of office of all directors elected by
the holders of this Series C in office at any time when the
aforesaid voting right is vested in such holders shall
terminate upon the election of their successors at any meeting
of stockholders held for the purpose of electing directors,
provided, however, that, without further action, and unless
otherwise required by law, any director that shall have been
elected by holders of this Series C as provided herein may be
removed at any time, either with or without cause, by the
affirmative vote of the holders of record of a majority of
outstanding shares of this Series C, voting separately as one
class, at a duly held meeting of the holders of this Series C.
(4) Upon the later of any termination of the
aforesaid voting right in accordance with the foregoing
provisions or the expiration of the minimum term of office
required by law, the term of office of all directors elected
by the holders of this Series C pursuant thereto then in
office shall, without further action, thereupon terminate
unless otherwise required by law. Upon such termination, the
number of directors constituting the board of directors of the
Corporation shall, without further action, be reduced by two,
subject always to the increase of the number of directors
pursuant to the provisions of this paragraph (c) in the case
of the future right of such holders of this Series C to elect
directors as provided herein.
(5) Unless otherwise required by law, in case of any
vacancy occurring among the directors so elected by the
holders of this Series C, the remaining director may appoint a
successor to hold office for the unexpired term of the
director whose
14
place shall be vacant, and if all directors so elected shall
cease to serve as directors before their term shall expire,
the holders of this Series C then outstanding may, at a
meeting of such holders duly held, elect successors to hold
office for the unexpired terms of the directors whose places
shall be vacant.
(6) The directors elected by the holders of this
Series C in accordance with the provisions of this paragraph
(c) shall be entitled to one vote per director on any matter
and otherwise to the same rights and privileges as all other
directors of the Corporation.
(7) So long as any shares of this Series C are
outstanding, the Certificate of Incorporation and By-laws of
the Corporation shall contain provisions ensuring that the
number of directors of the Corporation shall at all times be
such that the exercise by the holder of shares of this Series
C of the right to elect directors under the circumstances
provided in this paragraph (c) will not contravene any
provisions of the Corporation's Certificate of Incorporation
or By-laws.
(8) On any matter on which the holders of Series C
shall be entitled to vote, they shall be entitled to one vote
for each share held. The holders of Series C shall vote only
as a separate class; their votes shall not be counted together
with the holders of the Common Stock or any other class or
series of Preferred Stock as a single class. At any meeting of
stockholders held while holders of this Series C have the
voting power set forth in this paragraph (c), the holders of a
majority of the then outstanding shares of this Series C who
are present in person or by proxy shall be sufficient to
constitute a quorum for the election of directors as herein
provided.
(d) Notwithstanding anything to the contrary in Chapter 11 of the New
Jersey Business Corporation Act, the holders of this Series C shall be entitled
to dissenters' rights pursuant to, and to the fullest extent permitted by, the
Chapter 11 of the New Jersey Business Corporation Act in the event of a merger
or consolidation in which the Corporation is a constituent corporation or the
sale of substantially all of the assets of the Corporation.
Section 7. LIQUIDATION RIGHTS.
(a) Upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of the shares of this Series C shall
be entitled to receive out of the assets of the Corporation available for
distribution to stockholders under applicable law, before any payment or
distribution of assets shall be made on the Common Stock or on any other class
or series of stock of the Corporation ranking junior to this Series C upon
liquidation, the amount of $___ per share (the "Liquidation Preference"), plus a
sum equal to all dividends accrued on such shares (whether or not earned or
declared ) and unpaid to the date fixed for such liquidation, dissolution or
winding up. The sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all the
property and assets of the Corporation shall not be
15
deemed a dissolution, liquidation or winding up of the Corporation for the
purposes of this Section 7, nor shall the merger or consolidation of the
Corporation into or with any other corporation or association or the merger or
consolidation of any other corporation or association into or with the
Corporation, be deemed to be a dissolution, liquidation or winding up of the
Corporation for the purposes of this Section 7.
(b) After the payment in cash (in New York Clearing House funds or its
equivalent) to the holders of the shares of this Series C of the full
preferential amounts for the shares of this Series C, as set forth in paragraph
(a) of this Section 7 the holders of this Series C as such shall have no further
right or claim to any of the remaining assets of the Corporation.
(c) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series C upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation shall be
insufficient to pay in full all amounts to which such holders are entitled
pursuant to paragraph (a) of this Section 7, no distribution shall be made on
account of any shares of any other series of preferred stock or any other class
of stock of the Corporation ranking on a parity with the shares of this Series C
upon such liquidation, dissolution or winding up unless proportionate amounts
shall be paid on account of the shares of this Series C, ratably, in proportion
to the full amounts to which holders of all such shares which are on a parity
with the shares of this Series C are respectively entitled upon such
dissolution, liquidation or winding up.
Section 8. RANK. The Corporation shall not issue any other series of
preferred stock ranking senior to this Series C as to the payment of dividends
or upon liquidation or any other series of any equity securities ranking senior
to this Series C as to the payment of dividends or upon liquidation. The
Corporation may issue shares of Common Stock and any other series of preferred
stock ranking junior to or on a parity with this Series C as to the payment of
dividends or upon liquidation. For purposes of this certificate of designations,
any stock of any series or class of the Corporation shall be deemed to rank:
(a) senior to the shares of this Series C, as to dividends or upon
liquidation, if the holders of such series or class shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of shares of this Series C;
(b) on a parity with shares of this Series C, as to dividends or upon
liquidation, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share or sinking fund provisions, if any,
be different from those of this Series C, if the holders of such stock shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such stock
and the holders of shares of this Series C; and
16
(c) junior to shares of this Series C, as to dividends or upon
liquidation, if such stock shall be Common Stock or if the holders of shares of
this Series C shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
series or class.
Section 9. REPORTS AND NOTICES. So long as any shares of this Series C
shall be outstanding, the Corporation shall provide to the holder or holders of
such shares copies of all annual, quarterly and other reports of the Corporation
and copies of all stockholder notices of the Corporation when and as furnished
to the holders of the Common Stock.
Section 10. RESTRICTIONS ON TRANSFER. No transfer of the shares of
Series C may be made to any person if, after giving effect to such transfer,
such person would beneficially own more than 25% of the issued and outstanding
shares of Series C then outstanding.
17
EXHIBIT 5.19-1
FORM OF MSB AFFILIATE LETTER
December __, 1997
HUBCO, Inc.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Gentlemen:
I am delivering this letter to you in connection with the proposed
acquisition (the "Merger") of MSB Bancorp, Inc. (the "Company"), by HUBCO, Inc.,
a New Jersey corporation and registered bank holding company ("HUBCO"), pursuant
to the Agreement and Plan of Merger dated December 15, 1997 (the "Agreement")
between the Company, its bank subsidiary, and HUBCO. Capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the
Agreement. I currently own shares of MSB Common Stock. I own no shares of MSB
Preferred Stock. As a result of the Merger, I will receive shares of HUBCO
Common Stock in exchange for my MSB Common Stock.
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of the Company, as the term "affiliate" is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations
promulgated under the Securities Act of 1933, as amended (the "1933 Act") by the
Securities and Exchange Commission ("SEC") and as the term "affiliate" is used
for purposes of the SEC's rules and regulations applicable to the determination
of whether a merger can be accounted for as a "pooling of interests" as
specified in the SEC's Accounting Series Release 135, as amended by Staff
Accounting Bulletins Nos. 65 and 76 ("ASR 135").
I represent to and agree with HUBCO that:
A. TRANSFER REVIEW RESTRICTIONS. During the period beginning on the
date hereof and ending 30 days prior to the consummation of the Merger, I shall
not sell, transfer, reduce my risk with respect to or otherwise dispose of
("transfer") any MSB 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
MSB Stock owned by such person or entity, without notifying HUBCO in advance of
the proposed transfer and giving HUBCO a reasonable opportunity to review the
transfer before it is consummated. HUBCO, if advised to do so by its independent
public accountants, may instruct me not to make or permit the transfer because
it may interfere with the "pooling of interests" treatment of the Merger. I
shall abide by any such instructions.
1
B. TRANSFER RESTRICTIONS DURING MERGER CONSUMMATION PERIOD. I shall not
transfer any MSB 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
MSB Stock owned by such person or entity during the period beginning 30 days
prior to the consummation of the Merger and ending immediately after financial
results covering at least 30 days of post-Merger combined operations have been
published by HUBCO by means of the filing of a Form 10-Q or Form 8-K under the
Securities Exchange Act of 1934, as amended, the issuance of a quarterly
earnings report, or any other public issuance which satisfies the requirements
of ASR 135. For purposes of this paragraph only, "MSB Stock" includes HUBCO
Common Stock is converted.
C. COMPLIANCE WITH RULE 145. I have been advised that the issuance of
HUBCO Common Stock to me pursuant to the Merger will be registered with the SEC
under the 1933 Act on a Registration Statement on Form S-4. However, I have also
been advised that, since I may be deemed to be an affiliate of the Company at
the time the Merger is submitted for a vote of the Company's stockholders, any
transfer by me of HUBCO Common Stock is restricted under Rule 145 promulgated by
the SEC under the 1933 Act. I agree not to transfer any HUBCO Common Stock
received by me or any of my affiliates unless (i) such transfer is made in
conformity with the volume and other limitations of Rule 145 promulgated by the
SEC under the 1933 Act, (ii) in the opinion of HUBCO's counsel or counsel
reasonably acceptable to HUBCO, such transfer is otherwise exempt from
registration under the 1933 Act or (iii) such transfer is registered under the
1933 Act.
D. STOP TRANSFER INSTRUCTIONS; LEGEND ON CERTIFICATES. I also
understand and agree that stop transfer instructions will be given to HUBCO's
transfer agents with respect to the HUBCO Common Stock received by me and any of
my affiliates and that there will be placed on the certificates of the HUBCO
Common Stock issued to me and any of my affiliates, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED DECEMBER
__, 1997 BETWEEN THE REGISTERED HOLDER HEREOF AND HUBCO, INC., A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF HUBCO, INC."
E. CONSULTATION WITH COUNSEL. I have carefully read this letter and the
Agreement and discussed the requirements of such documents and other applicable
limitations upon my ability to transfer HUBCO Common Stock to the extent I felt
necessary with my counsel or counsel for the Company.
2
Execution of this letter is not an admission on my part that I am an
"affiliate" of the Company as described in the second paragraph of this letter,
or a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-----------------------------
Name:
Accepted this _____
day of _______, 199__ by
HUBCO, INC.
By: ______________________________
Name:
Title:
3
EXHIBIT 5.19-2
FORM OF AFFILIATE LETTER FOR HUBCO AFFILIATES
December __, 1997
HUBCO, Inc.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Gentlemen:
I am delivering this letter to you in connection with the proposed
merger (the "Merger") of MSB Bancorp, Inc. ("MSB") with and into HUBCO, Inc., a
New Jersey corporation and registered bank holding company ("HUBCO"), pursuant
to the Agreement and Plan of Merger dated December 15, 1997 (the "Agreement")
between MSB, its bank subsidiary, and HUBCO. I currently own shares of HUBCO's
common stock, no par value ("HUBCO Common Stock").
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of HUBCO, as the term "affiliate" is used for purposes of
the rules and regulations of the Securities and Exchange Commission (the
"Commission") applicable to the determination of whether a merger can be
accounted for as a "pooling of interests" as specified in the Commission's
Accounting Series Release 135, as amended by Staff Accounting Bulletins Nos. 65
and 76 ("ASR 135").
I represent and covenant with HUBCO and MSB that:
A. TRANSFER RESTRICTIONS PRIOR TO MERGER CONSUMMATION. During the
period beginning on the date hereof and ending 30 days prior to the consummation
of the Merger, I shall not sell, transfer, reduce my risk with respect to or
otherwise dispose of ("transfer") any HUBCO Common Stock owned by me, and I
shall not permit any relative who shares my home, or any person or entity who or
which I control, from transferring any HUBCO Common Stock owned by such person
or entity, without notifying HUBCO in advance of the proposed transfer and
giving HUBCO a reasonable opportunity to object to the transfer before it is
consummated. HUBCO, upon advice of its independent public accountants, may
instruct me not to make or permit the transfer because it may interfere with the
"pooling of interests" treatment of the Merger. I shall abide by any such
instructions.
B. POST-CONSUMMATION TRANSFER RESTRICTIONS. During the period beginning
30 days prior to the consummation of the Merger and ending immediately after
financial results covering at least 30 days of post-Merger combined operations
have been published by HUBCO by means of filing of a Form 10-Q or Form 8-K under
the Securities Exchange Act of 1934, the
issuance of a quarterly earnings report, or any other public issuance which
satisfies the requirements of ASR 135, I shall not transfer any HUBCO Common
Stock owned by me, and I shall not permit any relative who shares my home, or
any person or entity who or which I control, to transfer any HUBCO Common Stock
owned by such person or entity.
C. CONSULTATION WITH COUNSEL. I have carefully read this letter and the
Agreement and discussed the requirements of such documents and other applicable
limitations upon my ability to transfer HUBCO Common Stock to the extent I felt
necessary with my counsel or counsel for HUBCO.
Execution of this letter is not an admission on my part that I am an
"affiliate" of HUBCO as described in the second paragraph of this letter, or a
waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-------------------------------------
Name:
Title:
Accepted this ____ day of
________________, 199_ by
HUBCO, INC.
By: ________________________________
Name:
Title:
