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EXHIBIT 10
EXECUTION COPY
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:
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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.
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"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:
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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
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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.
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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
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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
President and Chief Executive Officer
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.
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If to PFC:
Poughkeepsie Financial Corp.
249 Main Mall
Poughkeepsie, New York 12601
Attention: Mr. Joseph B. Tockarshewsky
Chairman, President and Chief Executive
Officer
With a copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
The Walker Building, 12th Floor
734 15th Street, N.W.
Washington, D.C. 20005
Attention: W. Michael Herrick, Esq.
Hugh T. Wilkinson, 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 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.
By: /s/ JOSEPH B. TOCKARSHEWSKY
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Joseph B. Tockarshewsky
Chairman, President and Chief Executive Officer
HUBCO, INC.
By: /s/ KENNETH T. NEILSON
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Kenneth T. Neilson,
President & Chief Executive Officer
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