STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated as of October
22, 1997, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and Poughkeepsie Financial Corp., a Delaware
corporation and registered savings and loan holding company ("PFC").
BACKGROUND
WHEREAS, HUBCO and PFC, as of the date hereof, are prepared to
execute a definitive agreement and plan of merger (the "Merger Agreement")
pursuant to which PFC will be merged with and into HUBCO (the "Merger"); and
WHEREAS, HUBCO has advised PFC that it will not execute the
Merger Agreement unless PFC executes this Agreement; and
WHEREAS, the Board of Directors of PFC has determined that the
Merger Agreement provides substantial benefits to the shareholders of PFC; and
WHEREAS, as an inducement to HUBCO to enter into the Merger
Agreement and in consideration for such entry, PFC desires to grant to HUBCO an
option to purchase authorized but unissued shares of common stock of PFC in an
amount and on the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, HUBCO and PFC,
intending to be legally bound hereby, agree:
1. Grant of Option. PFC hereby grants to HUBCO the
option to purchase 2,000,000 shares of common stock, $0.01 par value, of PFC
(the "Common Stock") at a price of $7.875 per share (the "Option Price"), on the
terms and conditions set forth herein (the "Option").
2. Exercise of Option. This Option shall not be
exercisable until the occurrence of a Triggering Event (as such term is
hereinafter defined). Upon or after the occurrence of a Triggering Event (as
such term is hereinafter defined), HUBCO may exercise the Option, in whole or in
part, at any time or from time to time, subject to the terms and conditions set
forth herein and the termination provisions of Section 19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such
term is defined in Rule 13d-3 as promulgated under the Exchange Act) of at least
15% of the then outstanding shares of Common Stock; or
b. enters into a letter of intent or an
agreement, whether oral or written, with PFC pursuant to which such person or
any affiliate of such person would (i) merge or consolidate, or enter into any
similar transaction, with PFC, (ii) acquire all or a significant portion of the
assets or liabilities of PFC, or (iii) acquire beneficial ownership of
securities representing, or the right to acquire beneficial ownership or to vote
securities representing, 15% or more of the then outstanding shares of Common
Stock; or
c. makes a filing with any bank or thrift
regulatory authorities or publicly announces a bona fide proposal (a "Proposal")
for (i) any merger with, consolidation with or acquisition of all or a
significant portion of all the assets or liabilities of, PFC or any other
business combination involving PFC, or (ii) a transaction involving the transfer
of beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 15% or more of the
outstanding shares of Common Stock, and thereafter, if such Proposal has not
been Publicly Withdrawn (as such term is hereinafter defined) at least 15 days
prior to the meeting of stockholders of PFC called to vote on the Merger and
PFC's stockholders fail to approve the Merger by the vote required by applicable
law at the meeting of stockholders called for such purpose; or
d. makes a bona fide Proposal and
thereafter, but before such Proposal has been Publicly Withdrawn, PFC willfully
takes any action in any manner which would materially interfere with its ability
to consummate the Merger or materially reduce the value of the transaction to
HUBCO.
The term "Triggering Event" also means the taking of any
material direct or indirect action by PFC or any of its directors, senior
executive officers, investment bankers or other person with actual or apparent
authority to speak for the Board of Directors, inviting, encouraging or
soliciting any proposal which has as its purpose a tender offer for the shares
of Common Stock, a merger, consolidation, plan of exchange, plan of acquisition
or reorganization of PFC, or a sale of a significant number of shares of Common
Stock or any significant portion of its assets or liabilities.
The term "significant portion" means 25% of the assets or
liabilities of PFC. The term "significant number" means 15% of the outstanding
shares of Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the Proposal coupled
with a public announcement of no further interest in pursuing such Proposal or
in acquiring any controlling influence over PFC or in soliciting or inducing any
other person (other than HUBCO or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be exercised
at any time (i) in the absence of any required governmental or regulatory
approval or consent necessary for PFC to issue the shares of Common Stock
covered by the Option (the "Option Shares") or HUBCO to exercise the Option or
prior to the expiration or termination of any waiting period required by law, or
(ii) so long as any injunction or other order, decree or ruling issued by any
federal or state court of competent jurisdiction is in effect which prohibits
the sale or delivery of the Option Shares.
PFC shall notify HUBCO promptly in writing of the occurrence
of any Triggering Event known to it, it being understood that the giving of such
notice by PFC shall not be a condition to the right of HUBCO to exercise the
Option. PFC will not take any action which would have the effect of preventing
or disabling PFC from delivering the Option Shares to HUBCO upon exercise of the
Option or otherwise performing its obligations under this Agreement, except to
the extent required by applicable securities and banking laws and regulations.
In the event HUBCO wishes to exercise the Option, HUBCO shall
send a written notice to PFC (the date of which is hereinafter referred to as
the "Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date between two and ten business days inclusive from
the Notice Date for the closing of such a purchase (a "Closing"); provided,
however, that a Closing shall not occur prior to two days after the later of
receipt of any necessary regulatory approvals and the expiration of any legally
required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any
Closing hereunder (a) HUBCO will make payment to PFC of the aggregate price for
the Option Shares so purchased by wire transfer of immediately available funds
to an account designated by PFC; (b) PFC will deliver to HUBCO a stock
certificate or certificates representing the number of Option Shares so
purchased, free and clear of all liens, claims, charges and encumbrances of any
kind or nature whatsoever created by or through PFC, registered in the name of
HUBCO or its designee, in such denominations as were specified by HUBCO in its
notice of exercise and, if necessary, bearing a legend as set forth below; and
(c) HUBCO shall pay any transfer or other taxes required by reason of the
issuance of the Option Shares so purchased.
If required under applicable federal securities laws, a legend
will be placed on each stock certificate evidencing Option Shares issued
pursuant to this Agreement, which legend will read substantially as follows:
The shares of stock evidenced by this certificate have not been
registered for sale under the Securities Act of 1933 (the "1933 Act").
These shares may not be sold, transferred or otherwise disposed of
unless a registration statement with respect to the sale of such shares
has been filed under the 1933 Act and declared effective or, in the
opinion of counsel reasonably acceptable to Poughkeepsie Financial
Corp., said transfer would be exempt from registration under the
provisions of the 1933 Act and the regulations promulgated thereunder.
No such legend shall be required if a registration statement is filed and
declared effective under Section 4 hereof.
4. Registration Rights. Upon or after the occurrence
of a Triggering Event and upon receipt of a written request from HUBCO, PFC
shall, if necessary for the resale of the Option or the Option Shares by HUBCO,
prepare and file a registration statement with the Securities and Exchange
Commission and any state securities bureau covering the Option and such number
of Option Shares as HUBCO shall specify in its request, and PFC shall use its
best efforts to cause such registration statement to be declared effective in
order to permit the sale or other disposition of the Option and the Option
Shares, provided that HUBCO shall in no event have the right to have more than
one such registration statement become effective, and provided further that PFC
shall not be required to prepare and file any such registration statement in
connection with any proposed sale with respect to which counsel to PFC delivers
to PFC and to HUBCO (which is reasonably acceptable to HUBCO) its opinion to the
effect that no such filing is required under applicable laws and regulations
with respect to such sale or disposition; provided further, however, that PFC
may delay any registration of Option Shares above for a period not exceeding 90
days in the event that PFC shall in good faith determine that any such
registration would adversely effect an offering of securities by PFC for cash.
HUBCO shall provide all information reasonable requested by PFC for inclusion in
any registration statement to be filed hereunder.
In connection with such filing, PFC shall use its best efforts
to cause to be delivered to HUBCO such certificates, opinions, accountant's
letters and other documents as HUBCO shall reasonably request and as are
customarily provided in connection with registrations of securities under the
Securities Act of 1933, as amended. All expenses incurred by PFC in complying
with the provisions of this Section 4, including without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for PFC and blue sky fees and expenses shall be paid by PFC.
Underwriting discounts and commissions to brokers and dealers relating to the
Option Shares, fees and disbursements of counsel to HUBCO and any other expenses
incurred by HUBCO in connection with such registration shall be borne by HUBCO.
In connection with such filing, PFC shall indemnify and hold harmless HUBCO
against any losses, claims, damages or liabilities, joint or several, to which
HUBCO may become subject, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
preliminary or final registration statement or any amendment or supplement
thereto, or arise out of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and PFC will reimburse
HUBCO for any legal or other expense reasonably incurred by HUBCO in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that PFC will not be liable in any case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such preliminary or final registration statement or such amendment or
supplement thereto in reliance upon and in conformity with written information
furnished by or on behalf of HUBCO specifically for use in the preparation
thereof. HUBCO will indemnify and hold harmless PFC to the same extent as set
forth in the immediately preceding sentence but only with reference to written
information specifically furnished by or on behalf of HUBCO for use in the
preparation of such preliminary or final registration statement or such
amendment or supplement thereto; and HUBCO will reimburse PFC for any legal or
other expense reasonably incurred by PFC in connection with investigating or
defending any such loss, claim, damage, liability or action. Notwithstanding
anything to the contrary herein, no indemnifying party shall be liable for any
settlement effected without its prior written consent.
5. Adjustment Upon Changes in Capitalization. In the
event of any change in the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, conversions, exchanges of shares or
the like, then the number and kind of Option Shares and the Option Price shall
be appropriately adjusted.
In the event any capital reorganization or reclassification of
the Common Stock, or any consolidation, merger or similar transaction of PFC
with another entity, or any sale of all or substantially all of the assets of
PFC, shall be effected in such a way that the holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions (in form
reasonably satisfactory to the holder hereof) shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified herein and in lieu of the Common
Stock immediately theretofore purchasable and receivable upon exercise of the
rights represented by this Option, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore purchasable and receivable upon exercise
of the rights represented by this Option had such reorganization,
reclassification, consolidation, merger or sale not taken place; provided,
however, that if such transaction results in the holders of Common Stock
receiving only cash, the holder hereof shall be paid the difference between the
Option Price and such cash consideration without the need to exercise the
Option.
6. Filings and Consents. Each of HUBCO and PFC will
use its reasonable efforts to make all filings with, and to obtain consents of,
all third parties and governmental authorities necessary to the consummation of
the transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event HUBCO is the holder
hereof, approval of the Securities and Exchange Commission, the Board of
Governors of the Federal Reserve System, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation or the New York Department of Banking, and
PFC agrees to cooperate with and furnish to the holder hereof such information
and documents as may be reasonably required to secure such approvals.
7. Representations and Warranties of PFC. PFC hereby
represents and warrants to HUBCO as follows:
a. Due Authorization. PFC has full corporate
power and authority to execute, deliver and perform this Agreement and all
corporate action necessary for execution, delivery and performance of this
Agreement has been duly taken by PFC.
b. Authorized Shares. PFC has taken and, as
long as the Option is outstanding, will take all necessary corporate action to
authorize and reserve for issuance all shares of Common Stock that may be issued
pursuant to any exercise of the Option.
c. No Conflicts. Neither the execution and
delivery of this Agreement nor consummation of the transactions contemplated
hereby (assuming all appropriate regulatory approvals) will violate or result in
any violation or default of or be in conflict with or constitute a default under
any term of the Certificate of Incorporation or Bylaws of PFC or any agreement,
instrument, judgment, decree or order applicable to PFC.
8. Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy for a breach of this
Agreement and that the obligations of the parties hereto shall be specifically
enforceable. Notwithstanding the foregoing, HUBCO shall have the right to seek
money damages against PFC for a breach of this Agreement.
9. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, among the parties or any of them with respect to the subject matter
hereof.
10. Assignment or Transfer. HUBCO may not sell,
assign or otherwise transfer its rights and obligations hereunder, in whole or
in part, to any person or group of persons other than to an affiliate of HUBCO.
HUBCO represents that it is acquiring the Option for HUBCO's own account and not
with a view to or for sale in connection with any distribution of the Option or
the Option Shares. HUBCO is aware that neither the Option nor the Option Shares
is the subject of a registration statement filed with, and declared effective
by, the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act, but instead each is being offered in reliance upon the exemption
from the registration requirement provided by Section 4(2) thereof and the
representations and warranties made by HUBCO in connection therewith.
11. Amendment of Agreement. Upon mutual consent of
the parties hereto, this Agreement may be amended in writing at any time, for
the purpose of facilitating performance hereunder or to comply with any
applicable regulation of any governmental authority or any applicable order of
any court or for any other purpose.
12. Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force and
effect.
13. Notices. All notices, requests, consents and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered personally, by express
service, cable, telegram or telex, or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties as follows:
If to HUBCO:
HUBCO, Inc.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
With a copy to:
Pitney, Xxxxxx, Xxxx & Xxxxx
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
If to PFC:
Poughkeepsie Financial Corp.
000 Xxxx Xxxx
Xxxxxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxxxxxxx
Chairman, President and Chief Executive
Officer
With a copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
Xxx Xxxxxx Xxxxxxxx, 00xx Xxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: W. Xxxxxxx Xxxxxxx, Esq.
Xxxx X. Xxxxxxxxx, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are
inserted for convenience and reference purposes, and shall not limit or
otherwise affect any of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may,
by mutual consent, extend the time for performance of any of the obligations or
acts of either party hereto. Each party may waive (a) compliance with any of the
covenants of the other party contained in this Agreement and/or (b) the other
party's performance of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
18. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
19. Termination. This Agreement shall terminate upon
either the termination of the Merger Agreement as provided therein or the
consummation of the transactions contemplated by the Merger Agreement; provided,
however, that if termination of the Merger Agreement occurs after the occurrence
of a Triggering Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 18 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Stock Option
Agreement to be executed by its duly authorized officer, all as of the day and
year first above written.
POUGHKEEPSIE FINANCIAL CORP.
XXXXXX X. XXXXXXXXXXXXX
By:-----------------------------------------------
Xxxxxx X. Xxxxxxxxxxxxx
Chairman, President and Chief Executive Officer
HUBCO, INC.
X. XXXX VAN BORKULO-XXXXX
By:---------------------------------------------
X. Xxxx Van Borkulo-Xxxxx
Executive Vice President and Corporate Secretary
