EXHIBIT 99.2
STOCK OPTION AGREEMENT
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THIS STOCK OPTION AGREEMENT ("Agreement") dated as of January 26,
1999, is by and between HUBCO, Inc., a New Jersey corporation and registered
bank holding company ("HUBCO"), and Little Falls Bancorp, Inc., a New Jersey
corporation and registered savings and loan holding company ("LFB").
BACKGROUND
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WHEREAS, HUBCO and LFB, as of the date hereof, are prepared to execute
a definitive agreement and plan of merger (the "Merger Agreement") pursuant to
which LFB will be merged with and into HUBCO (the "Merger"); and
WHEREAS, HUBCO has advised LFB that it will not execute the Merger
Agreement unless LFB executes this Agreement; and
WHEREAS, the Board of Directors of LFB has determined that the Merger
Agreement provides substantial benefits to the shareholders of LFB; and
WHEREAS, as an inducement to HUBCO to enter into the Merger Agreement
and in consideration for such entry, LFB desires to grant to HUBCO an option to
purchase authorized but unissued shares of common stock of LFB in an amount and
on the terms and conditions hereinafter set forth.
AGREEMENT
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In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, HUBCO and LFB,
intending to be legally bound hereby, agree:
1. Grant of Option. LFB hereby grants to HUBCO an option to purchase
493,000 shares of common stock, $.10 par value, of LFB (the "Common Stock") at a
price of $19.25 per share (the "Option Price"), on the terms and conditions set
forth herein (the "Option").
2. Exercise of Option. This Option shall not be exercisable until the
occurrence of a Triggering Event (as such term is hereinafter defined). Upon or
after the occurrence of a Triggering Event (as such term is hereinafter
defined), HUBCO may exercise the Option, in whole or in part, at any time or
from time to time, subject to the terms and conditions set forth herein and the
termination provisions of Section 19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than HUBCO or an affiliate of HUBCO:
a. acquires beneficial ownership (as such term is defined in Rule
13d-3 as promulgated under the Exchange Act) of at least 25% of the then
outstanding shares of Common Stock, provided, however, that the continuing
ownership by a person or group which as of the date hereof owns more than 25% of
the outstanding Common Stock shall not constitute a Triggering Event; or
b. enters into a letter of intent or an agreement, whether oral or
written, with LFB pursuant to which such person or any affiliate of such person
would (i) merge or consolidate, or enter into any similar transaction, with LFB,
(ii) acquire all or a significant portion of the assets or liabilities of LFB,
or (iii) acquire beneficial ownership of securities representing, or the right
to acquire beneficial ownership or to vote securities representing, 25% or more
of the then outstanding shares of Common Stock; or
c. makes a filing with any bank or thrift regulatory authorities
with respect to or publicly announces a bona fide proposal (a "Proposal") for
(i) any merger with, consolidation with or acquisition of all or a significant
portion of all the assets or liabilities of, LFB or any other business
combination involving LFB, or (ii) a transaction involving the transfer of
beneficial ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 25% or more of the
outstanding shares of Common Stock, and in either case thereafter, if such
Proposal has not been Publicly Withdrawn (as such term is hereinafter defined)
at least 15 days prior to the meeting of stockholders of LFB called to vote on
the Merger and LFB's stockholders fail to approve the Merger by the vote
required by applicable law at the meeting of stockholders called for such
purpose; or
d. makes a bona fide Proposal and thereafter, but before such
Proposal has been Publicly Withdrawn, LFB willfully takes any action in any
manner which would materially interfere with its ability to consummate the
Merger or materially reduce the value of the transaction to HUBCO.
The term "Triggering Event" also means at any time after executing
this Agreement the willful taking of any material direct or indirect action by
LFB or any of its directors, senior executive officers, investment bankers or
other person with actual or apparent authority to speak for the Board of
Directors, inviting, encouraging or soliciting any proposal (other than from
HUBCO or an affiliate of HUBCO) which has as its purpose a tender offer for the
shares of Common Stock, a merger, consolidation, plan of exchange, plan of
acquisition or reorganization of LFB, or a sale of a significant number of
shares of Common Stock or any significant portion of its assets or liabilities.
The term "significant portion" means 25% of the assets or liabilities
of LFB. The term "significant number" means 15% of the outstanding shares of
Common Stock.
"Publicly Withdrawn", for purposes of clauses (c) and (d) above, shall
mean an unconditional bona fide withdrawal of the Proposal coupled with a public
announcement of no further interest in pursuing such Proposal or in acquiring
any controlling influence over LFB or in soliciting or inducing any other person
(other than HUBCO or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be exercised at any
time (i) in the absence of any required governmental or regulatory approval or
consent (including any filing,
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approval or consent required under the rules and regulations of the National
Association of Securities Dealers, Inc.) necessary for LFB to issue the shares
of Common Stock covered by the Option (the "Option Shares") or HUBCO to exercise
the Option or prior to the expiration or termination of any waiting period
required by law, or (ii) so long as any injunction or other order, decree or
ruling issued by any federal or state court of competent jurisdiction is in
effect which prohibits the sale or delivery of the Option Shares.
LFB shall notify HUBCO promptly in writing of the occurrence of any
Triggering Event known to it, it being understood that the giving of such notice
by LFB shall not be a condition to the right of HUBCO to exercise the Option.
LFB will not take any action which would have the effect of preventing or
disabling LFB from delivering the Option Shares to HUBCO upon exercise of the
Option or otherwise performing its obligations under this Agreement, except to
the extent required by applicable securities and banking laws and regulations.
In the event HUBCO wishes to exercise the Option, HUBCO shall send a
written notice to LFB (the date of which is hereinafter referred to as the
"Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date between two and ten business days inclusive from
the Notice Date for the closing of such a purchase (a "Closing"); provided,
however, that a Closing shall not occur prior to two days after the later of
receipt of any necessary regulatory approvals and the expiration of any legally
required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any Closing hereunder (a)
HUBCO will make payment to LFB of the aggregate price for the Option Shares so
purchased by wire transfer of immediately available funds to an account
designated by LFB; (b) LFB will deliver to HUBCO a stock certificate or
certificates representing the number of Option Shares so purchased, free and
clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever created by or through LFB, registered in the name of HUBCO or its
designee, in such denominations as were specified by HUBCO in its notice of
exercise and, if necessary, bearing a legend as set forth below; and (c) HUBCO
shall pay any transfer or other taxes required by reason of the issuance of the
Option Shares so purchased.
If required under applicable federal securities laws as determined by
LFB's counsel, a legend will be placed on each stock certificate evidencing
Option Shares issued pursuant to this Agreement, which legend will read
substantially as follows:
The shares of stock evidenced by this certificate have not been
registered for sale under the Securities Act of 1933 (the "1933 Act").
These shares may not be sold, transferred or otherwise disposed of
unless a registration statement with respect to the sale of such shares
has been filed under the 1933 Act and declared effective or, in the
opinion of counsel reasonably acceptable to Little Falls Bancorp, Inc.,
said transfer would be exempt from registration under the provisions of
the 1933 Act and the regulations promulgated thereunder.
No such legend shall be required if a registration statement is filed and
declared effective under Section 4 hereof.
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4. Registration Rights. Upon or after the occurrence of a Triggering
Event and upon receipt of a written request from HUBCO, LFB shall, if necessary
for the resale of the Option or the Option Shares by HUBCO, prepare and file a
registration statement with the Securities and Exchange Commission and any state
securities bureau covering the Option and such number of Option Shares as HUBCO
shall specify in its request, and LFB shall use its best efforts to cause such
registration statement to be declared effective in order to permit the sale or
other disposition of the Option and the Option Shares (it being understood and
agreed that in any such sale or disposition the Option Shares shall be
distributed so that upon consummation thereof, no purchaser or transferee shall
beneficially own more than 4 percent of the Common Stock then outstanding),
provided that HUBCO shall in no event have the right to have more than one such
registration statement become effective, and provided further that LFB shall not
be required to prepare and file any such registration statement in connection
with any proposed sale with respect to which counsel to LFB delivers to LFB and
to HUBCO (which is reasonably acceptable to HUBCO) its opinion to the effect
that no such filing is required under applicable laws and regulations with
respect to such sale or disposition; provided further, however, that LFB may
delay any registration of Option Shares above for a period not exceeding 90 days
in the event that LFB shall in good faith determine that any such registration
would adversely effect an offering of securities by LFB for cash. HUBCO shall
provide all information reasonable requested by LFB for inclusion in any
registration statement to be filed hereunder.
In connection with such filing, LFB shall use its best efforts to
cause to be delivered to HUBCO such certificates, opinions, accountant's letters
and other documents as HUBCO shall reasonably request and as are customarily
provided in connection with registrations of securities under the Securities Act
of 1933, as amended. All expenses incurred by LFB in complying with the
provisions of this Section 4, including without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel for LFB and
blue sky fees and expenses shall be paid by LFB. Underwriting discounts and
commissions to brokers and dealers relating to the Option Shares, fees and
disbursements of counsel to HUBCO and any other expenses incurred by HUBCO in
connection with such registration shall be borne by HUBCO. In connection with
such filing, LFB shall indemnify and hold harmless HUBCO against any losses,
claims, damages or liabilities, joint or several, to which HUBCO may become
subject, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any preliminary or final
registration statement or any amendment or supplement thereto, or arise out of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and LFB will reimburse HUBCO for any legal or other
expense reasonably incurred by HUBCO in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that LFB will not be liable in any case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
preliminary or final registration statement or such amendment or supplement
thereto in reliance upon and in conformity with written information furnished by
or on behalf of HUBCO specifically for use in the preparation thereof. HUBCO
will indemnify and hold harmless LFB to the same extent as set forth in the
immediately preceding sentence but only with reference to written information
specifically furnished by or on behalf of HUBCO for use in the preparation of
such preliminary or final registration statement or such amendment or supplement
thereto; and HUBCO will reimburse LFB for any legal or other expense reasonably
incurred by LFB in connection with investigating or defending any such loss,
claim, damage, liability or action.
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Notwithstanding anything to the contrary herein, no indemnifying party shall be
liable for any settlement effected without its prior written consent.
5. Adjustment Upon Changes in Capitalization. In the event of any
change in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, conversions, exchanges of shares or the like,
then the number and kind of Option Shares and the Option Price shall be
appropriately adjusted.
In the event any capital reorganization or reclassification of the
Common Stock, or any consolidation, merger or similar transaction of LFB with
another entity, or any sale of all or substantially all of the assets of LFB,
shall be effected in such a way that the holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions (in form
reasonably satisfactory to the holder hereof) shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified herein and in lieu of the Common
Stock immediately theretofore purchasable and receivable upon exercise of the
rights represented by this Option, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore purchasable and receivable upon exercise
of the rights represented by this Option had such reorganization,
reclassification, consolidation, merger or sale not taken place; provided,
however, that if such transaction results in the holders of Common Stock
receiving only cash, the holder hereof shall be paid the difference between the
Option Price and such cash consideration without the need to exercise the
Option.
6. Filings and Consents. Each of HUBCO and LFB will use its reasonable
efforts to make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to compliance
with all applicable laws including, in the event HUBCO is the holder hereof,
approval of the Securities and Exchange Commission, the Board of Governors of
the Federal Reserve System, the Office of Thrift Supervision, the Federal
Deposit Insurance Corporation or the New Jersey Department of Banking, and LFB
agrees to cooperate with and furnish to the holder hereof such information and
documents as may be reasonably required to secure such approvals.
7. Representations and Warranties of LFB. LFB hereby represents and
warrants to HUBCO as follows:
a. Due Authorization. LFB has full corporate power and authority to
execute, deliver and perform this Agreement and all corporate action necessary
for execution, delivery and performance of this Agreement has been duly taken by
LFB.
b. Authorized Shares. LFB has taken and, as long as the Option is
outstanding, will take all necessary corporate action to authorize and reserve
for issuance all shares of Common Stock that may be issued pursuant to any
exercise of the Option.
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c. No Conflicts. Neither the execution and delivery of this
Agreement nor consummation of the transactions contemplated hereby (assuming all
appropriate regulatory approvals) will violate or result in any violation or
default of or be in conflict with or constitute a default under any term of the
Certificate of Incorporation or Bylaws of LFB or any agreement, instrument,
judgment, decree or order applicable to LFB.
8. Specific Performance. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement and that the
obligations of the parties hereto shall be specifically enforceable.
Notwithstanding the foregoing, HUBCO shall have the right to seek money damages
against LFB for a breach of this Agreement.
9. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties or any of them with respect to the subject matter hereof.
10. Assignment or Transfer. HUBCO may not sell, assign or otherwise
transfer its rights and obligations hereunder, in whole or in part, to any
person or group of persons other than to an affiliate of HUBCO. HUBCO represents
that it is acquiring the Option for HUBCO's own account and not with a view to
or for sale in connection with any distribution of the Option or the Option
Shares. HUBCO is aware that neither the Option nor the Option Shares is the
subject of a registration statement filed with, and declared effective by, the
Securities and Exchange Commission pursuant to Section 5 of the Securities Act,
but instead each is being offered in reliance upon the exemption from the
registration requirement provided by Section 4(2) thereof and the
representations and warranties made by HUBCO in connection therewith.
11. Amendment of Agreement. Upon mutual consent of the parties hereto,
this Agreement may be amended in writing at any time, for the purpose of
facilitating performance hereunder or to comply with any applicable regulation
of any governmental authority or any applicable order of any court or for any
other purpose.
12. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
13. Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered personally, by express service, cable, telegram
or telex, or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
If to HUBCO:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attention: Mr. Kenneth T. Neilson
Chairman, President and Chief Executive Officer
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With a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
Attention: Ronald H. Janis, Esq.
Michael W. Zelenty, Esq.
If to LFB:
Little Falls Bancorp, Inc.
86 Main Street
Little Falls, New Jersey 07424
Attention: Leonard Romaine
President and Chief Executive Officer
With a copy to:
Malizia, Spidi, Sloane & Fisch, P.C.
One Franklin Square
1301 K Street, N.W., Suite 700E
Washington, D.C. 20005
Attention: Richard Fisch, 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.
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19. Termination. This Agreement shall terminate upon either the
termination of the Merger Agreement as provided therein or the consummation of
the transactions contemplated by the Merger Agreement; provided, however, that
if termination of the Merger Agreement occurs after the occurrence of a
Triggering Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 12 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Stock Option
Agreement to be executed by its duly authorized officer, all as of the day and
year first above written.
LITTLE FALLS BANCORP, INC.
By: /s/Albert J. Weite
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Albert J. Weite
Chairman
HUBCO, INC.
By: /s/Kenneth T. Neilson
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Kenneth T. Neilson,
Chairman, President and Chief Executive Officer
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