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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 19, 1996
UST Corp.
(Exact name of registrant as specified in its charter)
Massachusetts 0-9623 04-2436093
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
40 Court Street
Boston, Massachusetts 02108
(Address of principal executive offices) (Zip Code)
(617) 726-7000
(Registrant's telephone number, including area code)
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<PAGE>
ITEM 5. OTHER EVENTS.
(a) On August 15, 1996, UST Corp. (the "Company") executed a definitive
Agreement and Plan of Merger under the terms of which the Company will sell its
Connecticut banking subsidiary, UST Bank/Connecticut to HUBCO, Inc., a New
Jersey based bank holding company. UST Bank/Connecticut operates four offices
in Fairfield County with total assets of approximately $110 million.
At the completion of this transaction, UST Bank/Connecticut will be merged
with and into HUBCO's subsidiary, Lafayette American Bank and Trust Company of
Bridgeport, Connecticut. The Agreement and Plan of Merger provides, among other
matters, that HUBCO will purchase UST Bank/Connecticut for cash in an amount
equal to UST Bank/Connecticut's Adjusted Tier 1 Capital, as defined in the
Agreement, plus a deposit premium of 7%.
The transaction remains subject to receipt of regulatory approvals from
the Federal Deposit Insurance Corporation and the Connecticut Commissioner of
Banks. It is currently expected that the transaction will be consummated in the
first quarter of 1997.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) Exhibits
1. Definitive Agreement and Plan of Merger, dated as of August 15,
1996, between the Company and HUBCO, Inc.
2. UST Corp.'s Press Release dated August 16, 1996 related to the
sale of UST Bank/Connecticut to HUBCO, Inc. through the merger of UST
Bank/Connecticut with and into Lafayette American Bank and Trust Company, a
subsidiary of HUBCO, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934,
the Company has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
UST Corp.
/s/ James K. Hunt
James K. Hunt
Executive Vice President, Treasurer and
Chief Financial Officer
/s/ Eric R. Fischer
Eric R. Fischer
Executive Vice President,
General Counsel and Clerk
Dated: August 16, 1996
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of August 15,
1996, among UST CORP., a Massachusetts corporation (the "Seller"), UST
BANK/CONNECTICUT, a Connecticut state-chartered bank and trust company and
wholly owned subsidiary of the Seller (the "Target Bank"), HUBCO, INC., a New
Jersey corporation (the "Parent") and LAFAYETTE AMERICAN BANK AND TRUST
COMPANY, a Connecticut state-chartered bank and trust company and wholly owned
subsidiary of the Parent ("Lafayette").
WITNESSETH:
WHEREAS, the respective Boards of Directors of the Seller and the Parent
hereto have determined that it is in the best interests of their respective
companies and shareholders that the Target Bank be merged with and into
Lafayette, upon the terms and conditions set forth herein (the "Merger"); and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree
as follows:
ARTICLE 1.
DEFINITIONS AND RULES OF INTERPRETATION
1.1 DEFINITIONS.
"Accrued Interest" shall mean the interest or dividends that have accrued
but not been paid or credited on the Deposit Liabilities.
"Actions" shall have the meaning specified in Section 4.8 hereof.
"Adjusted Tier 1 Capital" shall mean, at the time of reference, "Tier 1
Capital", as such term is defined as of the date hereof in Part 325 of the FDIC
Rules and Regulations, calculated for the Target Bank in accordance with the
accounting principles used in the preparation of the Call Report for the period
ended June 30, 1996 minus the deferred tax asset reflected at the time of
reference on the books of the Target Bank.
<PAGE>
"Affiliate" shall mean as to any Person, a Person controlled by,
controlling or under common control with, the former Person, or a director,
officer, partner, joint venturer or member of the former Person or the latter
Person.
"Bank Employees" shall have the meaning specified in Section 6.6(a)
hereof.
"Bank Holding Company Act" shall mean the Bank Holding Company Act of
1956, as amended.
"Business Combination" shall have the meaning specified in Section 6.7
hereof.
"Call Reports" shall mean those periodic consolidated reports of income
and condition on Form FFIEC 033 (or on any predecessor form) filed by the
Target Bank with the FDIC as of December 31, 1993, 1994 and 1995 and June 30,
1996 and for the periods then ended, and as of and for the periods ending after
June 30, 1996.
"Certificate of Merger" shall have the meaning specified in Section 2.2
hereof.
"Charter" shall mean the articles or certificate of incorporation,
statute, constitution, joint venture or partnership agreement or articles or
other charter of any Person other than an individual, each as from time to time
amended or modified.
"Closing" shall mean the consummation of the transactions contemplated by
the Agreement.
"Closing Adjustment Documents" shall have the meaning specified in Section
3.3(a) hereof.
"Closing Date" shall mean the time and date specified pursuant to Section
3.2(a) hereof as the time and date on which the parties hereto shall consummate
the transactions contemplated herein.
"Closing Date Balance Sheet" shall have the meaning specified in Section
3.3(a) hereof.
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Commissioner" shall mean the Banking Commissioner of the State of
Connecticut.
"Confidentiality Agreement" shall mean that certain letter agreement dated
July 22, 1996 between the parties hereto.
"Consolidated Tax" shall have the meaning specified in Section 4.17
hereof.
"Conversion Period" shall have the meaning specified in Section 6.11
hereof.
"Damages" shall mean, in respect of any obligation to indemnify any person
pursuant to the terms of this Agreement, any and all losses, claims, damages,
liabilities, obligations, judgments, settlements, awards, demands, offsets,
defenses, counterclaims, actions or proceedings, reasonable out-of-pocket
costs, expenses and attorneys' fees (including any such reasonable costs,
expenses and attorneys' fees incurred in enforcing such right of
indemnification against any indemnitor or with respect to any appeal) and
penalties and interest, if any, but shall not include any such amounts for
which the indemnified party receives payment from a third party (including
insurers) or any such amounts for which the Target Bank has recorded a
specifically allocated reserve.
"Deposits" shall mean, as of the date of determination, the deposits (as
such term is defined under Section 3(l) of the FDIA) with respect to accounts
which are booked at the Target Bank, including without limitation, deposits in
accounts maintained pursuant to IRAs and Keogh Plans.
"Deposit Liabilities" shall mean the obligation to pay the principal
balances of, and Accrued Interest on, all accounts relating to the Deposits
substantially in accordance with the terms and provisions of the contracts or
relationships by which such accounts were created or as otherwise required by
applicable laws, regulations, rulings and orders.
"Deposit Premium" shall mean seven percent (7%) of the amount of the
Deposit Liabilities as of the close of business on the date hereof, as
reflected in a statement from the Seller to the Parent delivered within ten
(10) business days after the date hereof.
<PAGE>
"Disagreement" shall have the meaning specified in Section 3.3(b) hereof.
"Effective Time" shall have the meaning specified in Section 2.2 hereof.
"Equity Investment" shall have the meaning set forth for such term as of
the date hereof in the FDIC's rules and regulations regarding activities and
investments of insured state banks at 12 C.F.R. ss.362.2(k).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) under common control with the Target Bank within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"Estimated Purchase Price" shall have the meaning specified in Section
3.1(a) hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Independent Accounting Firm" shall mean any "Big Six" accounting firm or
its successor (other than the respective independent public accountants of each
of the Parent and the Seller).
"JMS Loan" shall mean Loan #16-1-5841879-501-1 extended by the Target Bank
to the Borrower named therein.
"Material Adverse Effect" shall mean, when used with respect to any
Person, a material adverse effect on the business, operations, results of
operations or financial condition of such Person; provided, however, that
changes in the business, operations, results of operations or financial
condition of a Person resulting directly or indirectly from changes in law,
regulations or generally accepted accounting principles (or interpretations of
any thereof), changes in the general level of market interest rates, or changes
in the economic, financial or market conditions affecting the banking industry
generally in the regions in which the Target Bank operates, shall not
constitute a Material Adverse Effect.
"Measurement Date" shall have the meaning specified in Section 3.1(b)
hereof.
<PAGE>
"Measurement Date Balance Sheet" shall have the meaning specified in
Section 3.1(c) hereof.
"Measurement Date Capital" shall have the meaning specified in Section
3.1(b) hereof.
"Merger" shall have the meaning specified in the preamble hereto.
"Notice of Disagreement" shall have the meaning specified in Section
3.3(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Parent's Financial Statements" shall have the meaning specified in
Section 5.7(a) hereof.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other legal entity,
or any governmental agency or political subdivision thereof.
"Plan" shall have the meaning assigned to such term in Section 4.16
hereof.
"Public Announcement" shall mean an oral or written press release, public
announcement or public information disclosure by the Seller, the Target Bank,
the Parent and/or Lafayette relating to the Merger or the other transactions
contemplated hereby.
"Purchase Price" shall mean the consideration to be paid by Lafayette to
the Seller in consideration for the Merger, which shall be in the amount set
forth in Section 3.1(a) hereof.
"Rights" shall mean warrants, options, rights, convertible securities,
calls, understandings and other arrangements or commitments which obligate a
Person to issue or dispose of any of its capital stock.
"Services" shall have the meaning specified in Section 6.11 hereof.
"subsidiaries" shall mean, when used with reference to a Person, any
corporation, partnership or other organization, whether incorporated or
unincorporated, which is consolidated with such Person for financial reporting
purposes.
"Surviving Bank" shall have the meaning specified in Section 2.1 hereof.
<PAGE>
"Total Loans" shall mean total loans and leases net of unearned income as
would be reported on Schedule RC-C of a Call Report in the event that such a
report were prepared as of the date of determination.
1.2 RULES OF INTERPRETATION.
The following rules shall be used in interpreting this Agreement:
(a) The singular includes the plural and the plural includes the singular.
(b) A reference to any law includes any amendment or modification to such
law.
(c) The Seller and the Target Bank shall collectively be deemed to be one
party, and the Parent and Lafayette or the Parent and the Surviving Bank shall
collectively be deemed to be another.
(d) The words "include", "includes" and "including" are not limiting.
(e) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
ARTICLE 2.
THE MERGER
2.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance with
Section 36a-125 of the Banking Law of Connecticut, at the Effective Time (as
such term is defined below), the Target Bank shall merge with and into
Lafayette. Lafayette shall be the surviving corporation (hereinafter sometimes
call the "Surviving Bank") in the Merger, and shall continue its corporate
existence under the laws of the State of Connecticut as a wholly owned
subsidiary of the Parent. The name of the Surviving Bank shall continue to be
Lafayette American Bank and Trust Company. Upon consummation of the Merger, the
separate corporate existence of the Target Bank and Lafayette shall be
continued by and in the Surviving Bank, and the separate corporate existence of
the Target Bank shall terminate. Schedule 2.1 to this Agreement lists (a) the
main office of the Surviving Bank, (b) the minimum and the maximum number of
directors of the Surviving Bank as permitted by its By-Laws, and (c) the amount
of the capital stock, the number of shares, the par value and the amount of
surplus of the Surviving Bank (which as set forth in Section 2.4 hereof shall
be the capital stock of Lafayette).
<PAGE>
2.2 EFFECTIVE TIME.
The Merger shall become effective as set forth in a certificate executed
by Lafayette and the Target Bank (the "Certificate of Merger") which shall be
filed with the Secretary of State of the State of Connecticut on the Closing
Date, together with the Commissioner's approval of the Merger. The term
"Effective Time" shall be the date and time when the Merger becomes effective,
as set forth in the Certificate of Merger. Following the execution of this
Agreement, the Target Bank and Lafayette shall, if required or advised to do so
by applicable regulatory authorities, execute and deliver a simplified or
supplemental merger agreement, both in form and substance reasonably
satisfactory to the parties hereto and consistent with the terms hereof, for
delivery to the Secretary of State of the State of Connecticut and the
Commissioner in connection with the approval of the Merger by the regulatory
authorities.
2.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in Section 36a-125(g) of the Banking Law of Connecticut.
2.4 CAPITAL STOCK; RIGHTS.
Each share of the capital stock of Lafayette, which is issued and
outstanding immediately prior to the Effective Time, shall remain issued and
outstanding after the Merger as shares of the capital stock of the Surviving
Bank and shall constitute all of the issued and outstanding shares of the
Surviving Bank. All Rights to Lafayettes' capital stock which have been issued
prior to the Effective Time shall likewise become Rights to the capital stock
of the Surviving Bank from and after the Effective Time. Each share of the
capital stock of the Target Bank shall no longer be outstanding after the
Effective Time but shall ipso facto be converted into the right to receive a
pro-rata share of the Purchase Price, and such shares shall be automatically
cancelled and shall cease to exist, and each certificate previously
representing any shares of the capital stock of the Target Bank and all Rights
to shares of the capital stock of the Target Bank shall be surrendered to the
Surviving Bank as soon as practicable after the Effective Time and cancelled
and no stock of the Surviving Bank or other consideration (other than the
payment in full of the Purchase Price to the Seller) shall be delivered in
exchange therefor.
<PAGE>
2.5 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Certificate of Incorporation of Lafayette, as
in effect at the Effective Time, shall be the Certificate of Incorporation of
the Surviving Bank.
2.6 BY-LAWS.
At the Effective Time, the By-Laws of Lafayette, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Bank until
thereafter amended in accordance with applicable law.
2.7 DIRECTORS AND OFFICERS.
The directors and officers of Lafayette immediately prior to the
Effective Time shall be the directors and officers of the Surviving Bank, each
to hold office in accordance with the Certificate of Incorporation and By-Laws
of the Surviving Bank until their respective successors are duly elected or
appointed and qualified.
2.8 TAX CONSEQUENCES.
The parties hereto agree to cooperate in the allocation of the Purchase
Price amongst the assets of the Target Bank and shall report on their
respective Tax Returns (as such term is defined in Section 6.10 hereto) in a
manner consistent with such allocation.
ARTICLE 3.
THE PURCHASE PRICE
3.1 PURCHASE PRICE.
(a) In consideration of the Merger, at the Effective Time, each share of
capital stock of the Target Bank shall be converted into the right to receive
its pro-rata share of the "Purchase Price" defined below, and the Parent shall
cause Lafayette to pay, and Lafayette agrees that it shall pay, to the Seller a
purchase price (the "Purchase Price") in an amount equal to the sum of (i)
Adjusted Tier 1 Capital as of the Closing Date plus (ii) the Deposit Premium
minus (iii) the amount (if any) by which the Target Bank's allowance for loan
and lease losses on the Closing Date is less than three percent (3%) of Total
Loans on such date. An estimate of the Purchase Price shall be payable in cash
on the Closing Date in accordance with Section 3.1(b) below (such amount to be
paid on the Closing Date being herein referred to as the "Estimated Purchase
Price").
<PAGE>
(b) On the Closing Date, Lafayette shall pay to the Seller an amount in
cash equal to the sum of (i) the Target Bank's Adjusted Tier 1 Capital as of
the close of business on the last day of the calendar month immediately
preceding the Closing Date (the "Measurement Date"), which calculation shall be
based upon the figures set forth in the Measurement Date Balance Sheet (as such
term is defined below) and shall be increased or decreased to take into account
and reflect any and all transactions and adjustments contemplated by Schedule
6.3 hereto or otherwise completed at any time prior to or as of the close of
business on the Measurement Date (such total amount of increased or decreased
Adjusted Tier 1 Capital calculated as of the Measurement Date being referred to
herein as the "Measurement Date Capital") plus (ii) the Deposit Premium minus
(iii) the amount (if any) by which the Target Bank's allowance for loan and
lease losses on the Measurement Date is less than three percent (3%) of Total
Loans on such date.
(c) On the third business day prior to the Closing Date, the Seller shall
deliver to the Parent (i) an unaudited consolidated balance sheet of the Target
Bank as of the close of business on the Measurement Date (the "Measurement Date
Balance Sheet"), which Measurement Date Balance Sheet shall be prepared in
accordance with the accounting principles used in the preparation of the Call
Report for the six (6) months ended June 30, 1996, except that all accounts
between the Target Bank on the one hand and the Seller or any of the Seller's
other Affiliates on the other hand shall be closed and settled to the extent
practicable, (ii) a schedule calculating the Measurement Date Capital, and
(iii) a calculation of the Estimated Purchase Price based upon the foregoing.
3.2 CLOSING DATE.
(a) The exchange of documents and other actions comprising the
consummation of the Merger shall occur at such place and on such date as shall
be mutually agreeable to the parties hereto, which date shall be within five
(5) business days after the last of the conditions precedent set forth in
Article 7 hereof has been satisfied or properly waived or such other date as
the parties hereto shall agree or, in the absence of such an agreement, at the
close of business on such fifth business day.
(b) On the Closing Date, the following actions shall be taken:
(i) Lafayette shall pay the Estimated Purchase Price to the Seller
by wire transfer of immediately available federal funds to such bank account
in the United States of America as the Seller shall designate at least two (2)
business days prior to the Closing Date;
<PAGE>
(ii) the Target Bank and Lafayette shall file the Certificate of Merger
with the Secretary of State of the State of Connecticut; and
(iii) Each party shall take such other actions, and shall execute and
deliver such other instruments or documents, as shall be required under Article
7 hereof.
3.3 ADJUSTMENT TO ESTIMATED PURCHASE PRICE.
(a) As soon as reasonably practicable following the Closing Date, and in
no event more than ten (10) business days thereafter, the Seller shall prepare
and deliver to the Parent (i) an unaudited consolidated balance sheet of the
Target Bank as of the close of business on the Closing Date (the "Closing Date
Balance Sheet"), which Closing Date Balance Sheet shall be prepared in
accordance with the accounting principles used in the preparation of the Call
Report for the six (6) months ended June 30, 1996, except that accounts between
the Target Bank on the one hand and the Seller or any of the Seller's other
Affiliates on the other hand shall be closed and settled to the extent
practicable, (ii) a schedule calculating the Target Bank's Adjusted Tier 1
Capital as of the Closing Date, and (iii) a calculation of the Purchase Price
based upon the foregoing (collectively, the "Closing Adjustment Documents").
(b) Within ten (10) business days after delivery of the Closing Adjustment
Documents to the Parent, the Parent may dispute all or any portion of the
Closing Adjustment Documents and the calculation of the Purchase Price by
giving written notice (a "Notice of Disagreement") to the Seller setting forth
in reasonable detail the basis for any such dispute (any such dispute being
hereinafter called a "Disagreement"). The parties shall promptly commence good
faith negotiations with a view to resolving all such Disagreements. If the
Parent does not give a Notice of Disagreement in accordance with the provisions
of the first sentence of this Section 3.3(b) within the ten (10) business day
period set forth therein, the Parent shall be deemed to have irrevocably
accepted the Closing Adjustment Documents and the calculation of the Purchase
Price in the form delivered to the Parent by the Seller.
(c) If the Parent shall deliver a Notice of Disagreement to the Seller
within such ten (10) day period and the Seller shall not dispute all or any
portion of such Notice of Disagreement by giving written notice to the Parent
setting forth in reasonable detail the basis for such dispute within five (5)
business days following the delivery to the Seller of such Notice of
Disagreement, the Seller shall be deemed to have irrevocably accepted the
Closing Adjustment Documents and the calculation of the Purchase Price as
modified in the manner described in the Notice of Disagreement. If the Seller
disputes all or any portion of the Notice of Disagreement within the five (5)
business day period described in the previous sentence, and within five (5)
business days following the delivery to the Parent of the notice of such
dispute the Parent and the Seller do not resolve the Disagreement, such
Disagreement shall be referred to an Independent Accounting Firm mutually
selected by the Parent and the Seller for a resolution of such Disagreement in
accordance with the terms of this Agreement. If the Seller and the Parent do
not immediately agree on the selection of an Independent Accounting Firm, their
respective independent public accountants shall immediately select such firm.
The determinations of such firm with respect to any Disagreement shall be final
and binding upon the parties and the amount so determined shall be used to
complete the final Closing Adjustment Documents and to make the final
calculation of the Purchase Price. The Independent Accounting Firm will render
its determination as soon as practicable after referral of the Disagreement to
such firm, and each of the parties shall cooperate with such firm and provide
such firm with reasonable access to the books, records, personnel and
representatives of it and its subsidiaries and such other information as such
firm may require in order to render its determination. All of the fees and
expenses of any Independent Accounting Firm retained pursuant to this Section
3.3(c) shall be paid by Lafayette, if the Independent Accounting Firm agrees
with the position asserted by the Seller; shall be paid by the Seller, if the
Independent Accounting Firm agrees with the position asserted by Lafayette or
shall be split evenly by Lafayette and the Seller if the Independent Accounting
Firm does not agree with either Lafayette or the Seller.
<PAGE>
(d) Following the final completion of the Closing Adjustment Documents
and related final determination of the Purchase Price, all in accordance with
the provisions of Sections 3.3(a) through 3.3(c) above, (i) Lafayette shall
promptly pay to the Seller the amount by which the Purchase Price exceeds the
Estimated Purchase Price, or (ii) the Seller shall promptly pay to Lafayette
the amount by which the Estimated Purchase Price exceeds the Purchase Price, as
the case may be, such payment to be made in immediately available federal funds
and without interest to such bank account in the United States of America as
the Seller or the Parent, as applicable, shall designate.
<PAGE>
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND TARGET BANK
Each of the Seller and the Target Bank represents and warrants to the
Parent and Merger Sub as follows:
4.1 ORGANIZATION, STANDING AND AUTHORITY OF THE SELLER.
The Seller is a duly organized corporation, validly existing and in
corporate good standing under the laws of the Commonwealth of Massachusetts and
is registered as a bank holding company with the Board of Governors of the
Federal Reserve System under the Bank Holding Company Act and has all requisite
corporate power, rights and authority to own and lease its properties and
assets and to carry on its business as now being conducted.
4.2 ORGANIZATION, STANDING AND AUTHORITY OF THE TARGET BANK.
(a) The Target Bank is a bank and trust company duly organized and
validly existing and in good standing under the laws of the State of
Connecticut and has all requisite corporate power, rights and authority and all
necessary federal and state authorizations to own and lease its properties and
assets and to carry on its business as now being conducted. The deposits of the
Target Bank are insured by the FDIC's Bank Insurance Fund in accordance with
the FDIA, and the Target Bank has paid all assessments and filed all reports
required by the FDIA.
(b) Except as set forth on Schedule 4.2 hereto, the Target Bank has no
subsidiaries and no Equity Investments. To the knowledge of the Seller, each of
the Target Bank's subsidiaries is a duly organized corporation, validly
existing and in corporate good standing under the laws of the state of its
incorporation and has all requisite corporate power, rights and authority to
own and lease its properties and assets and to carry on its business as now
being conducted.
(c) Copies of the Charter and By-Laws of the Target Bank and each of its
subsidiaries, as amended to the date hereof and as currently in effect, have
been made available to the Parent and are true and complete.
<PAGE>
4.3 AUTHORIZED AND EFFECTIVE AGREEMENT.
(a) Each of the Seller and the Target Bank has all requisite corporate
power and authority to enter into and perform all of its obligations under this
Agreement (except that, with respect to the Target Bank, the authority to
consummate the Merger shall be granted prior to the Closing Date). The
execution and delivery of this Agreement and consummation of the transactions
contemplated hereby have been (or, in the case of the Target Bank, will have
been prior to the Closing Date) duly and validly authorized by all necessary
corporate action in respect thereof on the part of the Seller and the Target
Bank. This Agreement constitutes a legal, valid and binding obligation of the
Seller and the Target Bank, enforceable against each such Person in accordance
with its terms, except that enforcement thereof may be limited by the
receivership, conservatorship and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies.
(b) Neither the execution and delivery of this Agreement nor consummation
of the transactions contemplated hereby nor compliance by the Seller or the
Target Bank with any of the provisions hereof shall (i) conflict with or result
in a breach of any provision of the Charter or By-Laws of the Seller or the
Target Bank, (ii) constitute or result in a material breach of any term,
condition or provision of, or constitute a material default under, or give rise
to any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon any material
property or asset of the Target Bank pursuant to, any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation, or (iii)
violate in any material respect any order, writ, injunction, decree, statute,
rule or regulation applicable to the Seller or the Target Bank.
(c) Except as set forth in Section 6.1 hereto and except for consents,
approvals, filings, notices or registrations the failure of which to make or
obtain would not, individually or in the aggregate, have a Material Adverse
Effect on the Target Bank or prevent the consummation of the Merger, no
consents or approvals of, notices to, or filings or registrations with, any
public body or authority are necessary, and no consents or approvals of or
notices to any third parties are necessary, in connection with the execution
and delivery of this Agreement by the Seller or the Target Bank or the
consummation of the Merger.
<PAGE>
4.4 CAPITAL STRUCTURE OF THE TARGET BANK.
(a) The authorized capital stock of the Target Bank consists solely of
598,873 shares of common stock, par value $5.00 per share. As of the date
hereof, there were 518,661 shares of the Target Bank's common stock issued and
outstanding. There are no outstanding Rights with respect to the Target Bank's
capital stock. All issued and outstanding shares of capital stock of the Target
Bank have been duly authorized and are validly issued, fully paid and
nonassessable. None of the issued and outstanding shares of capital stock of
the Target Bank were issued in violation of any preemptive rights.
(b) The Seller is the lawful beneficial owner of all of the issued and
outstanding shares of capital stock of the Target Bank free and clear of all
liens, security interests, claims, charges, encumbrances, restrictions, Rights,
voting trusts and other voting agreements or commitments of any kind.
4.5 CALL REPORTS; OTHER FINANCIAL MATTERS.
(a) The Call Reports comply in all material respects with the rules,
regulations and instructions applicable to the preparation thereof. The Target
Bank has filed all Call Reports required to have been filed by it with the FDIC
for periods ending prior to the date hereof. The balance sheets included in the
Call Reports fairly present the financial position of the Target Bank as of the
dates indicated, and the statements of income included in the Call Reports
fairly present the results of operations of the Target Bank for the periods
then ended, in conformity with regulatory accounting principles generally
applicable to depository institutions such as the Target Bank, applied on a
consistent basis except as disclosed therein and, in the case of interim
statements, subject to normal year-end adjustments.
(b) The information set forth on Schedule 4.5 hereto is correct in all
material respects as of the dates indicated therein.
4.6 MATERIAL ADVERSE CHANGE.
Since June 30, 1996, except as otherwise expressly contemplated by this
Agreement, there has not been:
(a) any change or event which, individually or in the aggregate, has had,
or which the Seller reasonably expects could have, a Material Adverse Effect on
the Target Bank;
(b) any incurrence by or subjection of the Target Bank to any material
obligation or liability (whether fixed, accrued or contingent) or commitment
not referred to in this Agreement or any Schedule hereto, except such
obligations or liabilities as may be incurred in the ordinary course of
business;
<PAGE>
(c) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of the capital stock of the Target Bank;
(d) any acquisition of all or any portion of the assets of any other
Person or any sale or other disposition of all or any material portion of the
Target Bank's assets, other than in the ordinary course of business; or
(e) any material loss, destruction or damage to any property of the
Target Bank, whether or not insured.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES.
The Target Bank and its subsidiaries do not have any liabilities (as such
term is used under generally accepted accounting principles), contingent or
otherwise (including any loss contingencies that under generally accepted
accounting principles would be required to be reflected on its balance sheet or
any footnotes thereto), that individually or in the aggregate would be material
to the Target Bank except as set forth on Schedule 4.7 hereto or as disclosed
in the Call Reports.
4.8 LEGAL PROCEEDINGS.
Except as disclosed on Schedule 4.8 hereto, there are no pending, or to
the knowledge of the Seller, threatened, material legal, administrative,
arbitral or other proceedings, claims, actions or governmental investigations
of any nature ("Actions") against the Target Bank, and there are no Actions
(regardless of materiality) against the Target Bank which, if adversely
determined, would prevent the Target Bank from consummating the Merger. There
are no pending or, to the knowledge of the Seller, threatened, Actions against
the Seller which, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect on the Target Bank or prevent the
Seller or the Target Bank from performing their obligations under this
Agreement.
4.9 LICENSES, FRANCHISES AND PERMITS; COMPLIANCE WITH LAWS.
The Target Bank holds all licenses, franchises, permits and authorizations
required for the lawful conduct of its business except where the failure to so
hold any such license, franchise, permit or authorization would be immaterial
to the Target Bank. The Target Bank is in compliance with all laws, statutes,
orders, rules and regulations, and published policies or guidelines of any
federal, state or local government authority applicable to the conduct of its
business, except where the failure to so comply would not, individually or in
the aggregate, have a Material Adverse Effect on the Target Bank.
<PAGE>
4.10 BROKERS AND FINDERS.
Neither the Seller nor the Target Bank, nor any of their respective
officers, directors, employees or agents has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated hereby, except for the fees
incurred in connection with the engagement of Fox-Pitt, Kelton Inc., and except
for legal, accounting and other professional fees payable in connection with
the Merger. The Seller will be responsible for the payment of all such fees.
The Target Bank has not paid, nor will it pay for, any such fees.
4.11 PROPERTIES.
Schedule 4.11 hereto sets forth a true and complete list of all real
property owned, leased or operated by the Target Bank (including all of the
Target Bank's branches and all of the Target Bank's properties acquired by
foreclosure proceedings in the ordinary course of business) as of the date
hereof. The subsidiaries of the Target Bank do not own any assets. The Target
Bank directly or indirectly through its subsidiaries has good and marketable
title, free and clear of all liens, encumbrances or charges, to all of the
properties and assets, real and personal, reflected on the balance sheet
included in the June 30, 1996 Call Report or acquired after such date, except
(a) liens for current taxes not yet due and payable or being contested in good
faith by appropriate proceedings, (b) pledges to secure deposits and other
liens incurred in the ordinary course of the Target Bank's business, (c) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent, and (d) dispositions and encumbrances for
adequate consideration in the ordinary course of business or as expressly
permitted by the terms of this Agreement after June 30, 1996. The Target Bank
has not received any notice of violation of any applicable zoning or
environmental regulation, ordinance or other law, order, regulation, or
requirement relating to its properties. The Target Bank is not in default, and
there has not occurred any event that with the lapse of time or giving of
notice or both would constitute a default, under any leases pursuant to which
the Target Bank leases any real property, except for such defaults which,
individually or in the aggregate, would not result in the forfeiture of the use
or occupancy of the property covered by any such lease or would not result in a
material liability to the Target Bank which is not reflected in the June 30,
1996 Call Report. All such leases constitute legal, valid and binding
obligations of the Target Bank and, to the knowledge of the Target Bank, the
other party thereto, enforceable by the Target Bank in accordance with their
respective terms, except that enforcement thereof may be limited by the
receivership, conservatorship and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies. The
Target Bank has not received notice of, or made a claim with respect to, any
breach or default under any leases pursuant to which the Target Bank leases any
real property.
<PAGE>
4.12 AGREEMENTS WITH BANKING AUTHORITIES.
The Target Bank is not a party to any commitment, letter (other than
letters addressed to regulated depository institutions generally), written
agreement, memorandum of understanding or order to cease and desist with any
federal or state governmental entity charged with the supervision or regulation
of banks or engaged in the insurance of bank deposits, which restricts the
conduct of its business or in any manner relates to its capital adequacy,
credit policies, management or overall safety and soundness, and neither the
Target Bank nor the Seller has received written notification from any such
federal or state governmental entity that the Target Bank may be requested to
enter into, or otherwise be subject to, any such commitment, letter, written
agreement, memorandum of understanding or cease and desist order. The Target
Bank was a party, however, to a certain Stipulation and Agreement dated June 3,
1991 with the Commissioner, a copy of which, together with all amendments
thereto, have been furnished to the Parent, which agreement was terminated in
the third quarter of 1995, and the Target Bank is no longer bound by such
agreement in any respect.
4.13 CERTAIN CONTRACTS.
Other than in connection with loans, loan commitments, letters of credit
and other similar agreements extended or entered into in the ordinary course of
the banking business, on the date hereof, the Target Bank is not a party to any
agreement, other than agreements disclosed in Schedule 4.13 hereto or otherwise
expressly permitted under the terms of this Agreement, pursuant to which the
Target Bank may be required to expend in excess of $100,000 in any twelve-month
period. On the date hereof, except as set forth on Schedule 4.13 hereto, the
Target Bank is not a party to any agreement, arrangement or commitment relating
to the employment, election, retention in office or severance of any present or
former director or officer of the Target Bank. Schedule 4.13 sets forth a true
and complete list as of the date of this Agreement of all agreements entered
into by the Target Bank with the Seller or any Affiliate thereof.
<PAGE>
4.14 MATERIAL CONTRACT DEFAULTS.
The Target Bank is not in any material default, and there has not
occurred any event that with the lapse of time or giving of notice or both would
constitute such a material default, under any of the agreements, commitments or
other instruments referred to on Schedule 4.13 hereto. All of the agreements,
commitments or other instruments referred to on Schedule 4.13 hereto constitute
legal, valid and binding obligations of the Target Bank and, to the knowledge
of the Target Bank, the other parties thereto, enforceable by the Target Bank
in accordance with their respective terms, except that enforcement thereof may
be limited by the receivership, conservatorship and supervisory powers of bank
regulatory agencies generally as well as bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally and except that enforcement thereof may be subject
to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and the availability of
equitable remedies.
4.15 INSURANCE.
The Seller has made available to the Parent copies of polices relating to
insurance maintained by the Seller or the Target Bank with respect to the
Target Bank's properties and the conduct of the Target Bank's business.
4.16 EMPLOYEE BENEFIT PLANS.
(a) Except as described on Schedule 4.16 hereto, the Target Bank does not
maintain or contribute to any bonus, deferred compensation, pension,
profit-sharing, retirement, stock purchase, stock option or any other fringe
benefit plan, agreement, arrangement or practice. Schedule 4.16 hereto sets
forth a true and complete list of each plan which is an "employee benefit plan"
(within the meaning of Section 3(3) of ERISA) maintained by the Target Bank or
any ERISA Affiliate (each, a "Plan"). Each Plan is and 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. Except as set forth on
Schedule 4.16 hereto, since September 26, 1980, neither the Target Bank nor any
ERISA Affiliate has maintained, contributed to or been required to contribute
to any "multi-employer plan" (within the meaning of Section 3(37) of ERISA).
<PAGE>
(b) The present value of all accrued benefits under each Plan which is
subject to Title IV of ERISA did not, as of the latest valuation date, exceed
the then current value of the assets of such Plan allocable to such accrued
benefits, based upon the actuarial assumptions currently utilized for such
Plan. Full payment has been made of all amounts which the Target Bank or any
ERISA Affiliate is required under the terms of all Plans to have paid as
contributions or premiums to or in respect of such Plans as of the last day of
the most recent fiscal year of each such Plan ended prior to the date hereof.
To the knowledge of the Seller, all expenses relating to contributions or
premiums due and owing with respect to the Plans have been properly accrued and
reflected in the Call Reports as of the date of such Call Reports. To the
knowledge of the Seller, none of the Plans has incurred any "accumulated
funding deficiency" (within the meaning of Section 302 of ERISA and Section 412
of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each such Plan ended prior to the date hereof.
(c) To the knowledge of the Seller, neither the Target Bank nor any ERISA
Affiliate has engaged in a transaction in connection with which the Target Bank
or any such ERISA Affiliate could be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax liability imposed by Section 4975
of the Code. To the knowledge of the Seller, no liability under Title IV of
ERISA has been incurred either directly or indirectly by the Target Bank or any
ERISA Affiliate, other than liability for premiums to the PBGC, that has not
been satisfied in full. There is no pending or, to the knowledge of the Seller,
threatened claim against or otherwise involving any Plan, or any fiduciary
thereof, by or on behalf of any participant or beneficiary under any Plan
(other than routine claims for benefits), nor is there any pending or, to the
knowledge of Seller, threatened claim by or on behalf of any of the Plans.
(d) Except as set forth on Schedule 4.16 hereto, to the knowledge of the
Seller, there are no unfunded obligations under any Plan providing benefits
after termination of employment to any employee of the Target Bank (other than
continuation of health coverage as required by Part 6 of Title I of ERISA).
<PAGE>
4.17 TAXES AND TAX RETURNS.
The Target Bank has duly filed in correct form all federal, state, and,
to the knowledge of the Seller, local information returns and tax returns,
required to be filed by the Target Bank (all such returns being accurate and
complete in all material respects), and the Seller has duly filed in correct
form all federal, state and, to the knowledge of the Seller, local information
returns and tax returns, required to be filed by the Seller, with regard to the
consolidated tax liability of the Seller and the Target Bank (the "Consolidated
Tax") (all such returns being accurate and complete in all material respects).
The Target Bank has duly paid or made provisions for the payment of all taxes
and other governmental charges which have been incurred or that are due or
claimed to be due from the Target Bank, and the Seller has duly paid or made
provisions for the payment of all Consolidated Taxes which have been incurred
or that are due or claimed to be due from the Seller by federal, state or local
taxing authorities (including, without limitation, those due in respect of the
Target Bank's and the Seller's properties, income, business, capital stock,
deposits, franchises, licenses, sales and payrolls) other than taxes or other
charges which (a) (i) are not yet delinquent or (ii) are being contested in
good faith and (b) have not been finally determined and (c) are described on
Schedule 4.17 hereto. The amounts set up as reserves as shown on the Call
Report dated as of December 31, 1995 for the payment of all unpaid federal,
state and local taxes, including the Target Bank's share of any Consolidated
Tax (including any interest or penalties thereon), whether or not disputed or
accrued, through the year ended December 31, 1995 or for any year or period
ending prior thereto, and for which the Target Bank may be liable in its own
right or as transferee of the assets of, or successor to, any Person are
adequate under generally accepted accounting principles and auditing standards
and are sufficient to cover all such taxes due. Except as set forth on Schedule
4.17 hereto, there are no disputes pending, or claims asserted, for federal,
state or local taxes, including the Target Bank's share of any Consolidated
Tax, or assessments upon the Target Bank, nor has the Target Bank given or been
requested to give any currently effective waivers extending the statutory
period of limitation applicable to any federal or state income tax return for
any period.
4.18 LABOR MATTERS.
As of the date of this Agreement, the Target Bank is not a party to any
collective bargaining or labor agreement or union contract, there are no labor
or representation negotiations or union organizing efforts pending which
involve the Target Bank or any of its employees and there are no charges of
unfair labor practices pending or, to the knowledge of the Seller, threatened
by or before any governmental authority which involve the Target Bank or any of
its present or former employees.
<PAGE>
4.19 ENVIRONMENTAL MATTERS.
The Target Bank is in compliance in all material respects with all
environmental laws rules and regulations of the United States of America and of
states and localities in which it conducts its business. There is no suit,
claim, action or proceeding now or, to the knowledge of the Seller, threatened
by any Person (a) for alleged noncompliance with any federal, state or local
environmental law, rule or regulation or (b) relating to the discharge or
release into the environment of any hazardous material or waste at or on a site
owned, leased or operated by the Target Bank.
For the purposes of this Article 4, all references "to the knowledge of
the Seller" shall mean the knowledge of any of the following officers of the
Seller and/or the Target Bank: Walter E. Huskins, Jr., Robert A. Miller, Debra
H. Siegel, Lucy Patterson Cox, James K. Hunt, Eric R. Fischer and Linda J.
Lerner.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND LAFAYETTE
Each of the Parent and Lafayette represents and warrants to the Seller and
the Target Bank as follows:
5.1 ORGANIZATION, STANDING AND AUTHORITY OF THE PARENT.
The Parent is a duly organized corporation, validly existing and in
corporate good standing under the laws of the State of New Jersey and is
registered as a bank holding company with the Board of Governors of the Federal
Reserve System under the Bank Holding Company Act and has all requisite
corporate power, rights and authority to own and lease its properties and
assets and to carry on its business as now conducted.
5.2 ORGANIZATION, STANDING AND AUTHORITY OF LAFAYETTE.
(a) Lafayette is a state-chartered bank and trust company duly organized
and validly existing and in good standing under the laws of the State of
Connecticut and has all requisite corporate power, rights and authority and all
necessary federal and state authorizations to own and lease its properties and
assets and to carry on its business as now being conducted. The deposits of
Lafayette are insured by the FDIC's Bank Insurance Fund in accordance with the
FDIA, and Lafayette has paid all assessments and filed all reports required by
the FDIA.
<PAGE>
(b) Copies of the Charter and By-Laws of Lafayette, as amended to the date
hereof and as currently in effect, have been made available to the Seller and
are true and complete.
5.3 AUTHORIZED AND EFFECTIVE AGREEMENT.
(a) Each of the Parent and Lafayette has all requisite corporate power and
authority to enter into and perform all of its obligations under this
Agreement. The execution and delivery of this Agreement and consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of the Parent and
Lafayette. This Agreement constitutes a legal, valid and binding obligation of
each of the Parent and Lafayette enforceable against such Person in accordance
with its terms, except that enforcement thereof may be limited by the
receivership, conservatorship and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies.
(b) Neither the execution and delivery of this Agreement nor consummation
of the transactions contemplated hereby, nor compliance by the Parent or
Lafayette with any of the provisions hereof shall (i) conflict with or result
in a breach of any provision of the Charter or By-Laws of the Parent or
Lafayette, (ii) constitute or result in a material breach of any term,
condition or provision of, or constitute a material default under, or give rise
to any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon any material
property or asset of the Parent or Lafayette pursuant to, any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation, or
(iii) violate in any material respect any order, writ, injunction, decree,
statute, rule or regulation applicable to the Parent or Lafayette.
(c) Except as provided in Section 6.1 hereto and except for consents,
approvals, notices, filings or registrations the failure of which to make or
obtain would not, individually or in the aggregate prevent the Parent or
Lafayette from performing their obligations under this Agreement, no consents
or approvals of, notices to or filings or registrations with, any public body
or authority are necessary, and no consents or approvals of or notices to any
third parties are necessary, in connection with the execution and delivery of
this Agreement by the Parent or Lafayette or the consummation by Lafayette of
the Merger.
<PAGE>
5.4 LEGAL PROCEEDINGS.
There are no pending or, to the knowledge of the Parent or Lafayette,
threatened material Actions against Lafayette, and there are no Actions
(regardless of materiality) against Lafayette which, if adversely determined,
would prevent Lafayette from consummating the Merger. There are no pending or,
to the knowledge of the Parent, threatened Actions against the Parent which, if
adversely determined, would, individually or in the aggregate, prevent the
Parent or Lafayette from performing their obligations under this Agreement.
5.5 LICENSES, FRANCHISES AND PERMITS; COMPLIANCE WITH LAWS.
Lafayette holds all licenses, franchises, permits and authorizations
required for the lawful conduct of its business except where the failure to so
hold any such license, franchise, permit or authorization would be immaterial
to Lafayette. Lafayette is in compliance with all laws, statutes, orders, rules
and regulations, and published policies or guidelines of any federal, state or
local government authority applicable to the conduct of its business, except
where the failure to so comply would not, individually or in the aggregate,
have a Material Adverse Effect on Lafayette.
5.6 BROKERS AND FINDERS.
Neither the Parent nor Lafayette, nor any of their officers, directors,
employees or agents has employed any broker, finder or financial advisor or
incurred any liability for any fees or commissions in connection with the
transactions contemplated hereby, except for legal, accounting and other
professional fees payable in connection with the Merger. The Parent and
Lafayette will be responsible for the payment of all such fees.
5.7 FINANCING.
Each of the Parent and Lafayette have, and will have on the Closing Date,
available to it capital and cash sufficient to fulfill its obligations
hereunder.
<PAGE>
5.8 FINANCIAL STATEMENTS.
(a) The Parent has heretofore delivered to the Seller copies of the
consolidated statements of financial condition of the Parent as of December 31,
1993, 1994 and 1995, the related consolidated statements of income, changes in
stockholders' equity and cash flows for the periods then ended, in each case
accompanied by the audit report of Arthur Andersen LLP, independent public
accountants of the Parent, and the unaudited consolidated statement of
condition of the Parent as of June 30, 1996 and the related unaudited
consolidated statements of income and cash flows for the six (6) months then
ended, as reported in the Parent's Quarterly Report on Form 10-Q, filed with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (collectively, the "Parent's Financial Statements"). The
Parent's Financial Statements (including the related notes) have been prepared
in accordance with generally accepted accounting principles 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
the Parent as of the respective dates set forth therein, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows (including the related notes, where applicable) fairly present the
consolidated results of operations, changes in stockholders' equity and cash
flows of the Parent for the respective fiscal periods set forth therein.
(b) The books and records of the Parent and Lafayette 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 Parent's Financial Statements (including the notes thereto), as of
June 30, 1996 neither the Parent nor Lafayette had any obligation or liability,
whether absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of the Parent or Lafayette which were
required by generally accepted accounting principles (consistently applied) to
be disclosed in the Parent's consolidated statement of condition as of June 30,
1996 or the notes thereto. Since June 30, 1996, neither the Parent nor
Lafayette have incurred any liabilities, except in the ordinary course of
business and consistent with prudent banking practice.
5.9 ABSENCE OF CERTAIN CHANGES OR EVENTS.
There has not been any material adverse change in the business,
operations, assets or financial condition of the Parent or Lafayette subsidiary
since June 30, 1996, and to the best of the Parent's knowledge, no facts or
condition exists which the Parent believes will cause such a material adverse
change in the future.
<PAGE>
5.10 REGULATORY APPROVAL.
Other than the approval of the FDIC pursuant to the Bank Merger Act, the
possible necessity of obtaining a waiver from the Board of Governors of the
Federal Reserve System pursuant to the Bank Holding Company Act of 1956, as
amended, and the approval of the Commissioner for the Merger pursuant to the
Banking Law of Connecticut, no federal or state regulatory approval will be
required in order to consummate the Merger. Neither the Parent nor Lafayette is
aware of any reason why the condition set forth in Section 7.1(a) would not be
satisfied prior to March 31, 1997.
5.11 AGREEMENTS WITH BANKING AUTHORITIES.
Neither the Parent nor Lafayette is a party to any commitment, letter
(other than letters addressed to regulated depository institutions generally),
written agreement, memorandum of understanding or order to cease and desist
with any federal or state governmental entity charged with the supervision or
regulation of banks or bank holding companies or engaged in the insurance of
bank deposits, which would prohibit the Parent or Lafayette from entering into
this Agreement or consummating the Merger or otherwise require the consent of
such governmental entity prior to the consummation of the Merger, and neither
the Parent nor Lafayette has received written notification from any such
federal or state governmental entity that it may be requested to enter into, or
otherwise be subject to, any such commitment, letter, written agreement,
memorandum of understanding or cease and desist order.
5.12 ADEQUATE CAPITALIZATION.
As of the date hereof, without giving effect to the transactions
contemplated hereby, and following the consummation of the Merger, on a pro
forma basis, Lafayette will (a) remain "adequately capitalized", as defined in
the FDIA, and (b) meet all capital requirements, standards and ratios required
by each state or federal bank regulator with jurisdiction over Lafayette,
including without limitation, any such higher requirement, standard or ratio as
shall apply to institutions engaging in the acquisition of insured institution
deposits, assets or branches, and no such regulator has indicated that it will
condition any of the regulatory approvals upon an increase in Lafayette's
capital or compliance with any special capital requirement, standard or ratio.
<PAGE>
5.13 CRA RATING.
Lafayette was rated "Outstanding" following its most recent Community
Reinvestment Act examination by the regulatory agency responsible for its
supervision. Lafayette has received no notice of and has no knowledge of any
planned or threatened objection by any community group to the transactions
contemplated hereby.
ARTICLE 6.
COVENANTS
6.1 APPLICATIONS.
(a) As promptly as practicable, and in any event not later than thirty
(30) days after the date hereof, the Parent shall submit all requisite
applications for prior approval of the transactions contemplated by this
Agreement to the Commissioner and the FDIC, as appropriate, and in addition
thereto, each of the parties hereto shall, and they shall cause their
respective subsidiaries to, as promptly as practicable, submit any other
applications, notices or other filings to any other state or federal government
regulatory body, department, agency or authority, which is required for
consummation of the Merger.
(b) The Seller and the Parent shall have the right to review in advance,
and to the extent practicable each will consult the other on, in each case
subject to applicable laws relating to the exchange of information, all the
information relating to the Seller or the Parent, as the case may be, and any
of their respective subsidiaries, which appear in any filing made with, or
written materials submitted to, any third party or any government regulatory
body, department, agency or authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and government regulatory bodies, departments, agencies or authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement, and each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein.
(c) The Parent and the Seller each represents and warrants to the other
that all information concerning it and any of its subsidiaries, directors,
officers and shareholders included (or submitted for inclusion) in any
application, notice or filing contemplated under this Section 6.1 shall be
true, correct and complete in all material respects.
<PAGE>
(d) The Seller and the Parent shall promptly advise each other upon
receiving (or upon any of their subsidiaries receiving) any communication from
any government regulatory body, department, agency or authority whose consent
or approval is required for consummation of the transactions contemplated by
this Agreement which causes such party to believe that there is a reasonable
likelihood that such requisite approval will not be obtained or that the
receipt of such approval will be materially delayed.
6.2 REASONABLE EFFORTS.
The parties hereto shall each use all reasonable efforts in good faith to
(a) furnish as promptly as practicable such information as may be required in
connection with the preparation of the applications, notices or other filings
referred to in Section 6.1 above, and (b) take or cause to be taken all action
necessary or desirable on its part so as to permit consummation of the Merger
at the earliest possible date, including without limitation using all
reasonable efforts to obtain all permits, authorizations, consents, waivers and
approvals from third parties or governmental authorities required for the
consummation of the transactions contemplated hereby. Notwithstanding the
foregoing, neither the Parent nor Lafayette shall have any obligation to
refrain from entering into agreements or understandings with respect to further
acquisitions, even if such acquisitions could result in a delay in closing the
transactions contemplated hereby; provided that in the event that the Closing
Date has not occurred prior to March 31, 1997 on account of such further
acquisitions by the Parent or Lafayette, then the Parent and Lafayette agree to
compensate the Seller for the costs and expenses associated with such delayed
Closing through the payment of interest on the Deposit Premium for the period
commencing April 1, 1997 through and including the Closing Date. The interest
rate per annum for the first calendar quarter or portion thereof during which
interest accrues shall be the rate determined by the Seller to be equal to the
equivalent coupon issue yield on twenty-six (26) week United States Treasury
Bills in effect as of March 31, 1997 as published in The Wall Street Journal;
provided, that if no such equivalent coupon issue yield is available as of
March 31, 1997, the equivalent coupon issue yield for such Treasury Bills most
recently published in the Wall Street Journal prior to March 31, 1997 shall be
used. Thereafter, in subsequent calendar quarters, the rate shall be adjusted
to the rate determined by the Seller to be equal to the equivalent coupon issue
yield on such Treasury Bills in effect as of the first day of each succeeding
calendar quarter during which interest accrues as published in the Wall Street
Journal, plus one hundred (100) basis points. The payment of interest pursuant
to this Section 6.2 shall be the only compensation payable to the Seller for a
delayed Closing resulting from further acquisitions by the Parent or Lafayette,
unless otherwise provided in Article 8 hereof. The parties hereto shall use all
reasonable efforts to lift or rescind any injunction or restraining order or
other order adversely affecting the abilities of the parties to consummate the
transactions contemplated hereby. In case at any time after the Closing 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 or desirable action.
<PAGE>
6.3 CONDUCT OF BUSINESS OF THE TARGET BANK PENDING CLOSING.
(a) During the period from the date of this Agreement to the Closing Date,
except with the consent of Parent (which consent shall be deemed to have been
given upon the passage of five (5) business days following written notice from
the Seller to the Parent of the proposed action or inaction by the Target Bank
unless the Parent shall object in writing to the Seller within such five (5)
day period), the Target Bank shall:
(i) maintain its corporate existence and good standing, except where
any failure to maintain such good standing does not or would not have a
Material Adverse Effect on the Target Bank;
(ii) conduct its business and engage in transactions only in the
ordinary course and consistent with prior practice, except that the
Target Bank may carry out the transactions described in Schedule 6.3
hereto;
(iii) use all reasonable efforts to maintain and keep its properties
in as good repair and condition in all material respects as they
presently exist, except for ordinary wear and tear and damage due to
casualty;
(iv) use all reasonable efforts to maintain in full force and effect
insurance generally comparable in amount and in scope of coverage to that
now maintained by it;
(v) comply with and perform in all material respects its obligations
and duties (A) under contracts, leases and documents relating to or
affecting its assets, properties and business and (B) imposed upon it by
all federal, state and local laws and all rules, regulations and orders
imposed by federal, state or local governmental authorities, judicial
orders, judgments, decrees and similar determinations; and
<PAGE>
(vi) use all reasonable efforts to preserve its business organization
intact and the goodwill of those having business relationships with the
Target Bank or any of the Target Bank's subsidiaries.
(b) The Target Bank agrees that from the date of this Agreement to the
Closing Date, except as otherwise permitted or required by this Agreement, or
consented to by the Parent (which consent shall be deemed to have been given
upon the passage of five (5) business days following written notice from the
Seller to the Parent of the proposed action by the Target Bank unless the
Parent shall object in writing to the Seller within such five (5) day period),
the Target Bank shall not:
(i) change any provision of its Charter or By-Laws;
(ii) change the number of shares of its authorized or issued capital
stock;
(iii) issue or grant any Rights relating to its authorized or issued
capital stock or any securities convertible into shares of such stock;
(iv) split, combine or reclassify any shares of
its capital stock;
(v) 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, except as set forth on Schedule 6.3 hereto;
(vi) purchase, redeem, retire or otherwise acquire, or
hypothecate, pledge or otherwise encumber,any shares of its capital
stock;
(vii) except as set forth on Schedule 6.3 hereto, grant any
severance, reduction in force, separation or termination pay (other than
pursuant to written agreements or policies of the Target Bank in effect
on the date of this Agreement) to, or enter into any agreement which
would grant severance, reduction in force, separation or termination pay,
employment agreement or plan or deferred compensation, non-competition,
bonus, stock option, profit-sharing, retirement or incentive plan or any
other similar plan with, any of its officers or directors, or, except as
required by applicable law or regulation, renew, amend or modify any such
agreement, arrangement or plan now in existence or increase the
compensation payable to or grant bonuses to any of its directors,
officers or other employees other than merit increases or incentive
payments to employees in accordance with past practices and general
increases to employees as a class in accordance with past practice or as
required by law;
(viii) make any capital expenditures other than planned capital
expenditures in accordance with the Target Bank's budgeting procedures
(copies of which procedures have been furnished to the Parent and
Lafayette prior to the date hereof), and other than expenditures
reasonably necessary to maintain existing assets in good repair;
<PAGE>
(ix) make application for the opening or closing of, or opening or
closing, any branch offices;
(x) except as otherwise expressly permitted under this Agreement,
undertake or enter into any contract or other commitment (excluding (A)
any new commitment to extend credit involving not more than $250,000 or
(B) any present commitment to extend credit or any refinancing or
extension thereof, which in each such case is extended or entered into in
the ordinary course of business) involving an aggregate payment by the
Target Bank under any such contract or commitment of more than $250,000
in any twelve (12) month period;
(xi) take any action that would result in the representations and
warranties of the Seller or the Target Bank contained in this Agreement
not being true and correct on the date of this Agreement or as of the
Closing Date;
(xii) merge with or into, consolidate with, affiliate with, or
purchase or acquire, any other Person, or permit any other Person to be
merged or consolidated with it or be purchased or acquired by it, or
except to realize upon collateral and except for purchases or sales of
loans in the ordinary course of its business or as otherwise expressly
permitted under this Agreement, acquire all or any portion of the assets
of any other Person, or sell all or any portion of its assets;
(xiii) make any change in its accounting methods or practices, other
than changes in accordance with generally accepted accounting principles
or as required by law or regulation and other than as set forth on
Schedule 6.3 hereto; or
<PAGE>
(xiv) agree to do or announce an intention to agree
to do any of the foregoing.
6.4 CURRENT INFORMATION.
(a) During the period from the date of this Agreement to the Closing Date,
the Seller will cause one or more of its or the Target Bank's designated
representatives to confer on a regular basis with representatives of the Parent
and to report to the Parent the general status of the ongoing operations of the
Target Bank. The Seller will promptly notify the Parent of any material change
in the business, operations, properties, securities, assets or financial
condition of the Target Bank and of any governmental complaints, investigations
or hearings (or communications indicating that the same may be contemplated),
or the institution or the threat of significant pending or threatened
litigation involving the Target Bank and will keep the Parent fully informed of
such events.
(b) The Parent and the Seller will each promptly notify the other after
senior management of the Parent or the Seller, as the case may be, receives
notice of any condition or event which would constitute a violation of the
terms and conditions of this Agreement.
(c) In the event that either the Parent or the Seller determines that a
condition to its obligations to complete the Merger cannot be fulfilled and
that it will not waive that condition, it will promptly notify the other party.
6.5 ACCESS TO PROPERTIES AND RECORDS.
The Seller and the Target Bank shall permit the Parent and Lafayette
reasonable access (during normal business hours) during the period prior to the
Closing Date to the properties of the Target Bank, and shall disclose and make
available to the Parent and Lafayette all books, papers and records relating to
the Seller's ownership or control of the capital stock of the Target Bank, or
the Target Bank's properties, operations, obligations and liabilities,
including, but not limited to, all of the Target Bank's books of account
(including the general ledger), tax records, minute books of directors' and
stockholders' meetings, Charter, By-Laws, material contracts and agreements,
loan files, filings with any regulatory authority, litigation files, plans
affecting employees of the Target Bank, and any other business activities of
the Target Bank. The Seller shall not be required to provide access to or to
disclose information which does not relate to the Target Bank or where such
access or disclosure would violate or prejudice the rights or business
interests or confidences of any customer or other Person, would jeopardize the
attorney-client privilege of the Seller or the Target Bank, or would contravene
any law, rule, regulation, order, judgment, decree or binding agreement. All
information disclosed by the Seller to the Parent or Lafayette pursuant to this
Section 6.5 shall be subject to the Confidentiality Agreement.
<PAGE>
6.6 EMPLOYMENT AND EMPLOYEE BENEFITS AFTER THE CLOSING.
(a) Other than Walter E. Huskins, Jr., who shall resign from his position
as Acting President of the Target Bank on the Closing Date, the Parent and
Lafayette agree that the Surviving Bank will employ all employees who were
employed by the Target Bank on the Closing Date ("Bank Employees"), including
those Bank Employees working part-time, or who are on vacation, absent due to a
sick or personal day, family leave or workers' compensation claim. The rate
payable by the Surviving Bank to each Bank Employee shall be at a rate no less
than the applicable base salary in effect at the Target Bank for such Bank
Employee on the Closing Date. The Surviving Bank shall have no obligation to
retain any Bank Employee for any length of time after the Closing Date,
provided that in the event that the Surviving Bank elects to discharge any Bank
Employee, it shall be responsible for providing such Bank Employee with the
severance benefits set forth in Schedule 6.6 hereto. The Surviving Bank shall
not adopt or assume any obligations under the Seller's Severance Pay Plan.
(b) On the Closing Date, all Bank Employees will be immediately vested in
benefits theretofore accrued on their behalf under any employee benefit plan
maintained by the Seller. The Seller shall remain solely responsible for the
payment of all accrued benefits to employees in accordance with the terms of
any benefit plan of the Seller with respect to periods of employment ending
prior to the Closing Date. The Surviving Bank assumes responsibility for any
employee benefits payable to Bank Employees from and after the Closing Date.
(c) (i) All Bank Employees will be eligible to participate in all
employee benefit plans which the Surviving Bank makes available to its own
employees. The Parent and Lafayette agree that, to the extent not prohibited
by any employee benefit plan maintained by the Surviving Bank, it will cause
the Surviving Bank to give all Bank Employees credit for service with the
Seller and the Target Bank (and with predecessors of the Seller and the Target
Bank, in the event that the Seller and the Target Bank gave such employee
credit for such service) as constituting service with the Surviving Bank in
connection with any waiting periods or other service requirements which
determine (A) eligibility for participation, (B) schedule for vesting rights
and/or (C) differential benefits (but not for funding retroactively for time
served with the Seller) under or with respect to any of the Surviving Bank's
pension, thrift, employee stock ownership (or similar) plans, vacation
allotment, sick leave, health, life, disability or other insurance or any other
similar pension or other benefits; provided, however, that no credit will be
given for benefit accrual purposes. Without limiting the foregoing, the Parent
and Lafayette agree that the Surviving Bank shall not treat any Bank
Employee as a new employee for purposes of any exclusion under any health or
similar plan of the Surviving Bank for any preexisting medical condition.
<PAGE>
(ii) To the extent that the Surviving Bank provides any Bank Employee
with benefit or other plans and such plans permit roll-overs, the Parent and
Lafayette agree that the Surviving Bank shall allow Bank Employees to roll over
into such plans any proper distributions or contributions received from the
Seller or its plans. The Seller shall transfer the account balances in the
Seller's 401(k) plan attributable to the Bank Employees to the Surviving Bank's
401(k) Plan as soon as practicable following the Closing Date. Both the
Surviving Bank and the Seller shall amend their respective 401(k) plans and
complete such other actions that may be required to complete the transfer.
6.7 NO SOLICITATION.
Unless and until this Agreement shall have been terminated by either party
pursuant to Section 8.1 hereof, neither the Seller nor the Target Bank shall,
directly or indirectly, encourage, solicit, initiate or participate in any
discussions or negotiations with, or provide any information to, any Person
(other than the Parent or any of its affiliates or representatives) concerning
any merger involving the Target Bank, sale of all or substantially all of the
Target Bank's assets, sale of shares of capital stock issued by the Target Bank
or similar transaction involving the Target Bank (a "Business Combination").
The Seller will promptly communicate to the Parent the terms of any proposal or
inquiry relating to a Business Combination and the identity of the Person
making such proposal or inquiry which it may receive in respect of any such
transaction.
<PAGE>
6.8 PUBLIC ANNOUNCEMENTS; NOTICES TO EMPLOYEES; COMMUNICATIONS WITH CUSTOMERS.
(a) From the date of this Agreement to the Closing Date, none of the
parties hereto shall make or send a Public Announcement unless the other party
shall have first been afforded reasonable opportunity to review and comment on
the text of such Public Announcement prior to the delivery of the same;
provided, however, that nothing in this Section shall prohibit any party hereto
from making any Public Announcement which its legal counsel deems necessary
under law, if it makes a good faith effort to obtain the other party's comment
to the text of the Public Announcement before making it public.
(b) From the date of this Agreement to the date on which the condition
precedent set forth in Section 7.1(a) hereof shall have been met, except with
the prior consent of the Seller, which consent shall not be unreasonably
withheld, neither the Parent nor Lafayette shall communicate directly with
employees of the Target Bank regarding this Agreement or the transactions
contemplated hereby. Notwithstanding the foregoing, the Parent and Lafayette
shall be permitted to interview employees of the Target Bank within the thirty
(30) day period prior to the Closing Date for the purpose of determining
whether or not the Surviving Bank will retain such employees and may advise any
such employee that he or she has a position with the Surviving Bank. The Parent
and Lafayette shall be solely responsible for any acts or omissions made by
them in connection with interviewing the Target Bank's employees and agree to
indemnify and hold the Seller and the Target Bank harmless from and against any
claim, liability, losses, costs or expenses, including reasonable attorneys'
fees, resulting or arising from any acts or omissions made by the Parent or
Lafayette in connection with said interviews. Further, from the date of this
Agreement to the date which is seven (7) days prior to the Closing Date, except
with the prior consent of the Seller, which consent shall not be unreasonably
withheld, neither the Parent nor Lafayette shall communicate directly with any
of the customers of the Target Bank regarding this Agreement or the transaction
contemplated hereby, it being understood that the Seller shall have the right
to review and comment on any such communication prior to the delivery thereof.
The prohibition on communications shall not prohibit (i) advertising,
promotional campaigns, market surveys, face-to-face solicitations made at the
Parent's premises or other similar activities which are conducted in the
ordinary course of the Parent's business and not specifically targeted at the
Seller's or the Target Bank's customers or (ii) communications with customers
who as of the date of such communication are also customers of the Parent or
Lafayette, provided that such communication relates solely to such customer's
relationship with the Parent or Lafayette and does not directly or indirectly
concern such customer's relationship with the Seller or the Target Bank. From
the date hereof through the Closing Date, the Parent, Lafayette, the Seller and
the Target Bank shall cooperate with one another in order to facilitate a
smooth transition of customer service and employee relationships at the
Closing.
<PAGE>
6.9 USE OF NAME "UST", "UST BANK" AND "USTRUST".
From and after the Closing Date, neither the Parent nor the Surviving Bank
shall, and the Parent shall cause its Affiliates not to, use the name "UST",
"UST Bank", "USTrust" or any derivative thereof, except that the Surviving Bank
may refer to itself as "successor by merger to UST Bank/Connecticut".
Notwithstanding the foregoing, none of the Parent, the Surviving Bank or any
Affiliate thereof shall use the name "UST", "UST Bank", "USTrust" or any
derivative thereof in any advertisement or for any marketing purpose.
6.10 TAXES.
(a) The Seller shall prepare and timely file or cause to be prepared and
timely filed any Tax Return (as hereinafter defined) of or including the Target
Bank (which term, for purposes of this Section 6.10, includes each subsidiary
of the Target Bank), including any amendments thereto, for any Taxable Year (as
hereinafter defined) ending on or before the Closing Date and shall pay all
Taxes with respect to the Target Bank for any such Taxable Year. The Seller
shall provide the Parent or the Surviving Bank, as the case may be, with copies
of all relevant sections of Tax Returns pertaining to the Target Bank for any
such Taxable Year which has not been completely closed by expiration of the
applicable statute of limitations.
(b) The Parent shall be, or shall cause the Surviving Bank to be,
responsible for the preparation and filing of all Tax Returns of the Surviving
Bank with respect to any Taxable Year ending after the Closing Date, and the
Parent shall, or shall cause the Surviving Bank to, pay all Taxes with respect
to the Surviving Bank for such Taxable Years.
(c) Upon the commencement of any action, proceeding, or audit by any
taxing authority (whether federal, state, provincial, municipal, or local) for
the assessment or collection of any Taxes relating to a Tax Return for any
Taxable Year, the Seller shall promptly notify the Surviving Bank or the Parent
of such commencement of action, proceeding, or audit. The Seller shall then
fully cooperate with and allow the Parent or the Surviving Bank to fully
participate in any such action, proceeding, or audit, the outcome of which
could adversely affect the tax liability of the Surviving Bank or the Parent.
<PAGE>
(d) For the purposes of this Section 6.10, the following terms shall have
the following meanings:
"Short Taxable Year" shall mean any Taxable Year that with respect
to the Target Bank ends on the Closing Date by reason of the Merger.
"Tax Returns" shall mean all reports, estimates, information
statements, declarations and returns relating to, or required to be filed
in connection with, any Taxes pursuant to the statutes, rules and
regulations of any federal, state, local or foreign government taxing
authority.
"Taxable Year" shall mean any taxable year or any other period which
is treated as a taxable year (including any Short Taxable Year) with
respect to which any Tax may be imposed under any applicable statute,
rule or regulation.
"Tax" or "Taxes" shall mean all taxes, however denominated,
including any interest, penalties or additions to tax that may become
payable in respect thereof, imposed by any federal, state, local or
foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of
the foregoing, all income taxes, alternative minimum taxes, estimated
taxes, value added taxes, license taxes, environmental taxes, windfall
profits taxes, import duties, payroll and employee withholding taxes,
unemployment insurance taxes, social security taxes, sales and use taxes,
excise taxes, franchise taxes, gross receipts taxes, occupation taxes,
real and personal property taxes, stamp taxes, transfer taxes, workers'
compensation taxes, and other obligations of the same or of a similar
nature, whether arising before, on or after the Closing Date.
6.11 TRANSITION MATTERS.
During the period from the date hereof through the Closing Date, the
Seller shall, or shall cause its Affiliates to, continue to provide the Target
Bank with those services which it (or such Affiliate) has historically provided
to the Target Bank. The parties hereto agree to use all reasonable efforts to
arrange for the prompt and efficient transition of the provision of such
services, so that the Surviving Bank will not require post-Closing services
from the Seller, provided that in the event that the conversion of the Target
Bank's data processing, loan servicing, accounting and treasury operations
(excluding payroll) (collectively, the "Services") to the Surviving Bank cannot
be accomplished by the Closing Date, the parties agree to negotiate in good
faith and enter into a written agreement with respect to the provision of such
Services to the Surviving Bank for a period of time after the Closing Date
(which period shall in no event exceed one (1) year) (the "Conversion Period")
upon such terms and conditions as are customary for third-party servicing
agreements. The parties hereto agree that until February 28, 1997, the rate
payable for the Services shall remain that set forth in the Data Services
Agreement and in the other intercompany agreements that are currently in effect
between the Target Bank and its Affiliates, and that thereafter the rate
payable for such Services shall be at a market rate to be determined by the
parties hereto, which rate shall in no event exceed one hundred twenty-five
percent (125%) of the aggregate rate set forth in the current Data Services
Agreement and intercompany agreements. The aforementioned agreement shall also
contain an agreement from the Surviving Bank that the Conversion Period shall
not end during the period during which the Seller conducts the conversion onto
its systems of the deposits and loan servicing acquired from The First National
Bank of Boston and its Affiliate, BayBank, N.A., pursuant to a Purchase and
Assumption Agreement dated as of June 18, 1996, as from time to time amended,
provided, that such "black-out" period shall not extend beyond January 15,
1997.
<PAGE>
ARTICLE 7.
CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT - GENERAL.
The respective obligations of the parties hereto to effect the Merger
shall be subject to satisfaction of the following conditions at or prior to the
Closing Date, neither of which may be waived by the parties hereto:
(a) All necessary approvals, authorizations and consents of all
governmental agencies or authorities required to consummate the Merger and the
other transactions contemplated by this Agreement shall have been obtained and
shall remain in full force and effect, and all waiting periods relating to such
approvals, authorizations or consents shall have expired; and
(b) Neither the Seller nor the Parent nor any of their subsidiaries shall
be subject to any order, decree or injunction of any court or agency of
competent jurisdiction which enjoins or prohibits consummation of the
transactions contemplated by this Agreement.
7.2 CONDITIONS PRECEDENT - THE PARENT AND LAFAYETTE.
The obligations of the Parent and Lafayette to effect the Merger shall be
subject to satisfaction of the following additional conditions on or prior to
the Closing Date unless waived by the Parent pursuant to Section 8.4 hereof:
(a) The representations and warranties of the Seller and the Target Bank
set forth in Article 4 hereof shall be true and correct as of the date of this
Agreement and shall continue to be true and correct in all material respects as
of the Closing Date as though made on and as of the Closing Date (or on the
date when made in the case of any representation and warranty which
specifically relates to an earlier date), except as otherwise contemplated by
this Agreement or consented to in writing by the Parent;
(b) The Seller and the Target Bank shall have performed in all material
respects all of the obligations and complied in all material respects with all
covenants required by this Agreement;
<PAGE>
(c) The Seller shall have delivered to the Parent a certificate, dated the
Closing Date and signed by an executive officer of the Seller, to the effect
that the conditions set forth in this Section 7.2 have been satisfied;
(d) Each of the Seller and the Target Bank shall have delivered to the
Parent copies of (i) all records, certified by its Clerk or Secretary or
Assistant Clerk or Assistant Secretary to be true and complete on and as of the
Closing Date, of all corporate action taken to authorize the execution,
delivery and performance of this Agreement and consummation of the transactions
contemplated hereby and (ii) the incumbency and signature of officers executing
this Agreement;
(e) The Target Bank shall have sold all of the participations held by it
in loans extended by the Seller or any Affiliate of the Seller, and the Target
Bank shall have purchased all participations held by the Seller or an Affiliate
of the Seller in loans extended by the Target Bank, as contemplated by Schedule
6.3 hereto;
(f) The Seller shall have assumed in writing all of the obligations of the
Target Bank under the Directors Deferred Compensation Program maintained by the
Target Bank and shall have released the Parent and the Target Bank from all
such obligations;
<PAGE>
(g) The Target Bank and its subsidiaries shall have received the
resignations of the Target Bank's Acting President and of any of their
respective directors not selected by the Parent to serve as directors of the
Surviving Bank after the Closing Date;
(h) At the Closing, the Parent shall have received from general counsel to
the Seller an opinion dated as of the Closing Date, in form and substance
reasonably satisfactory to the Parent and its counsel, to the effect that the
Seller is a bank holding company duly incorporated under the laws of the
Commonwealth of Massachusetts and the Target Bank is a duly formed
state-chartered Connecticut bank and trust company and each of them has all
requisite corporate power, has taken all necessary corporate action and has
received all necessary regulatory and other approvals to authorize the
execution and delivery of this Agreement and the performance of the
transactions contemplated hereby, and that this Agreement and the performance
hereof are the valid and binding obligations of the Seller and the Target Bank
enforceable against them in accordance with their terms (subject to the
traditional exceptions) and not inconsistent with the Charter or By-Laws of the
Seller or the Target Bank or any applicable laws;
(i) The Seller or one of its Affiliates shall have purchased the JMS Loan
from the Target Bank for the purchase price set forth on Schedule 6.3 hereto;
and
(j) The Seller and the Target Bank shall have furnished the Parent with
such further certificates, documents or other materials as the Parent shall
have reasonably requested with respect to the transactions contemplated hereby.
7.3 CONDITIONS PRECEDENT - THE SELLER AND THE TARGET BANK.
The obligations of the Seller and the Target Bank to effect the Merger
shall be subject to satisfaction of the following additional conditions on or
prior to the Closing Date unless waived by the Seller pursuant to Section 8.4
hereof:
(a) The representations and warranties of the Parent and Lafayette set
forth in Article 5 hereof shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date (or on the date when made in the case of any representation and warranty
which specifically relates to an earlier date), except as otherwise
contemplated by this Agreement or consented to in writing by the Seller or
except where such inaccuracy would not, individually or in the aggregate,
materially adversely affect the Parent's or Lafayette's ability to consummate
the transactions contemplated by this Agreement;
<PAGE>
(b) The Parent and Lafayette shall have in all material respects performed
all obligations and complied with all covenants required by this Agreement;
(c) The Parent shall have delivered to the Seller a certificate, dated as
of the Closing Date and signed by an executive officer of the Parent to the
effect that the conditions set forth in this Section 7.3 have been satisfied;
(d) Each of the Parent and Lafayette shall have delivered to the Seller
copies of (i) all records, certified by its Clerk or Secretary to be true and
complete on and as of the Closing Date, of all corporate action taken to
authorize the execution, delivery and performance of this Agreement and (ii)
the incumbency and signature of officers executing this Agreement;
(e) At the Closing, the Seller shall have received from general counsel to
the Parent, an opinion dated as of the Closing Date, in form and substance
reasonably satisfactory to the Seller and its counsel, to the effect that the
Parent is a bank holding company duly incorporated under the laws of the State
of New Jersey and Lafayette is a duly formed Connecticut state-chartered bank
and trust company, and each of them has all requisite corporate power, has
taken all necessary corporate action and has received all necessary regulatory
and other approvals to authorize the execution and delivery of this Agreement
and the performance of the transactions contemplated hereby, and that this
Agreement and the performance hereof are the valid and binding obligations of
the Parent and Lafayette enforceable against them in accordance with their
terms (subject to the traditional exceptions) and not inconsistent with the
Charter or By-Laws of the Parent or Lafayette or any applicable laws; and
(f) The Parent and Lafayette shall have furnished the Seller with such
further certificates, documents or other materials as the Seller shall have
reasonably requested with respect to the transactions contemplated hereby.
<PAGE>
ARTICLE 8.
TERMINATION, WAIVER AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated:
(a) at any time on or prior to the Closing Date, by the mutual consent in
writing of the parties hereto;
(b) at any time on or prior to the Closing Date, by either party hereto in
writing, if (i) the other party has, in any material respect, breached any
covenant or agreement contained herein or (ii) any material representation or
warranty of the other party contained herein is or becomes inaccurate or
misleading, and in either case if such breach or inaccuracy has not been cured
or otherwise corrected within forty-five (45) days after the date on which
written notice of such breach or inaccuracy is given to the party committing
such breach and, in the reasonable judgment of the party terminating this
Agreement, cannot be cured or otherwise corrected by the close of business on
March 31, 1997;
(c) at any time prior to the Closing Date, by either party hereto in
writing, if any of the applications for prior approval referred to in Section
6.1 hereof is denied, and the time period for appeals and requests for
reconsideration has run; or
(d) by either party hereto in writing, if the Closing Date has not
occurred by the close of business on March 31, 1997.
8.2 EFFECT OF TERMINATION.
In the event this Agreement is terminated pursuant to Section 8.1 hereof,
this Agreement shall become null and void and have no further force or effect,
except that (a) the provisions relating to confidentiality and expenses set
forth respectively in Sections 6.5 and 9.1 shall survive any such termination,
and (b) a termination pursuant to Section 8.l(b) shall not relieve a party from
liability for a willful breach or misrepresentation, in which case the
breaching or misrepresenting party shall remain liable for any and all damages,
costs and expenses, including all reasonable attorneys' fees, sustained or
incurred by the non-breaching or non-misrepresenting party as a result thereof
or in connection therewith or with the enforcement of its rights hereunder.
<PAGE>
8.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION.
(a) Except as otherwise specifically provided in this Agreement, all
representations, warranties, covenants and other agreements in this Agreement
or in any instrument delivered pursuant hereto shall survive the Closing and
any investigation or inquiry made by any of the parties hereto, although any
claim for a breach of any such representation, warranty, covenant or other
agreement must be made within the following periods:
(i) with respect to the matters addressed in Section 4.17, prior to
the lapse of time within which federal, state or local taxing authorities
are entitled to assert any tax liability on the part of the Target Bank
for tax periods ending at or prior to the Closing Date; and
(ii) with respect to all representations, warranties, covenants and
agreements not specified in clause (i) above, within one (1) year after
(A) the Closing Date or (B) with respect to any breach of covenant, the
date such covenant was required to be performed, as the case may be.
The representations, warranties and covenants and other agreements made
herein will terminate upon the expiration of the applicable period set forth
above during which a claim based upon such representation, warranty, covenant
or other agreement may be made.
(b) The Seller agrees to indemnify the Parent and the Surviving Bank (and
their directors, officers, agents and employees) against, and the Parent and
the Surviving Bank agree to indemnify the Seller (and its directors, officers,
agents and employees) against, and each of them agrees to protect, to defend
and to hold harmless the other (and the other's directors, officers, agents and
employees) from all Damages arising out of or resulting from any inaccuracy in,
or breach of, any of the representations, warranties, covenants or other
agreements of each of them contained herein or in any certificate or instrument
delivered in connection herewith, which inaccuracy or breach is asserted and a
claim for indemnification with respect thereto is made within the applicable
survival period set forth in Section 8.3(a); provided, however, that unless a
claim for Damages is brought on account of a misrepresentation set forth in
Section 4.17 hereto or a failure to comply with the provisions of Section 6.10
hereto, no Damages incurred by either party shall give rise to a claim for
indemnification by such party unless such Damages aggregate more than $150,000
and then only to the extent of such excess. The parties hereto hereby
acknowledge and agree that, in case of a disagreement with the calculation of
the Purchase Price or any component thereof, the sole remedy of the parties
hereto shall be as set forth in Section 3.3 hereto and no claim for
indemnification shall be available therefor under this Section 8.3.
<PAGE>
(c) In any case under this Agreement where one party has indemnified the
other against any claim or legal action, indemnification shall be provided in
accordance with the procedure outlined below:
(i) Provided that prompt notice is given of a claim or suit for
which indemnification might be claimed, unless the failure to provide
such notice does not prejudice the interests of the party to whom such
notice is to be provided, the indemnifying party promptly will defend,
contest, or otherwise protect against any such claim or suit at its own
cost and expense.
(ii) The indemnified party may, but will not be obligated to,
participate at its own expense in a defense thereof by counsel of its own
choosing, but the indemnifying party shall be entitled to control the
defense unless the indemnified party has relieved the indemnifying party
from liability with respect to the particular matter, provided that the
indemnifying party may only settle or compromise the matter subject to
indemnification without the consent of the indemnified party if such
settlement includes a complete release of all indemnified parties as to
the matters in dispute and provided further that the indemnified party
will not unreasonably withhold consent to any settlement or compromise
that requires its consent.
(iii) In the event the indemnifying party fails to timely defend,
contest, or otherwise protect against any such claim or suit, the
indemnified party may, but will not be obligated to, defend, contest, or
otherwise protect against the same, and make any compromise or settlement
thereof and recover the entire costs thereof from the indemnifying party,
including reasonable attorneys' fees, disbursements and all amounts paid
as a result of such claim or suit or the compromise or settlement
thereof; provided, however, that if the indemnifying party undertakes the
defense of such matter, the indemnified party shall not be entitled to
recover from the indemnifying party for its costs incurred in the defense
thereof other than the reasonable costs of investigation undertaken by
the indemnified party and reasonable costs of providing assistance.
<PAGE>
(iv) The indemnified party shall cooperate and provide such
assistance as the indemnifying party may reasonably request in connection
with the defense of the matter subject to indemnification and in
connection with recovering from any third parties amounts that the
indemnifying party may pay or be required to pay by way of
indemnification hereunder, provided that the indemnified party shall not
be required to file a claim with its insurers as to any matter subject to
indemnification. The indemnified party shall protect its position with
respect to any matter that may be the subject of indemnification
hereunder in the same manner as it would any similar matter where no
indemnification is available.
8.4 WAIVER.
Except with respect to any required regulatory approval, each party
hereto, by written instrument signed by an executive officer of such party, may
at any time extend the time for the performance of any of the obligations or
other acts of the other party hereto and may waive (a) any inaccuracies of the
other party in the representations or warranties contained in this Agreement or
any document delivered pursuant hereto, (b) compliance with any of the
covenants, undertakings or agreements of the other party, or satisfaction of
any of the conditions precedent to its obligations, contained herein or (c) the
performance by the other party of any of its obligations set out herein.
8.5 AMENDMENT OR SUPPLEMENT.
This Agreement may be amended or supplemented at any time by mutual
written agreement of the Parent, Lafayette, the Seller and the Target Bank.
ARTICLE 9.
MISCELLANEOUS
9.1 EXPENSES.
Except as provided by Section 8.3 hereof or otherwise agreed in writing by
the parties hereto, each party hereto shall bear and pay all costs and expenses
incurred by it in connection with the transactions contemplated in this
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel.
<PAGE>
9.2 ENTIRE AGREEMENT, ETC.
(a) This Agreement and the Confidentiality Agreement contain the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersede all prior arrangements or understandings with respect
thereto, written or oral; provided, that upon the consummation of the Merger
the Confidentiality Agreement shall terminate.
(b) The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors.
Except as provided by Section 8.3 hereof, nothing in this Agreement is intended
to confer any rights, remedies, obligations or liabilities upon any party other
than the parties hereto and their respective successors and permitted assigns.
9.3 NO ASSIGNMENT.
Neither of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person without the other party's express
written consent.
9.4 NOTICES.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
telecopy, telex, cable or telegram, by overnight express or by registered or
certified mail, postage prepaid, addressed as follows:
If to the Seller or the Target Bank:
UST Corp.
40 Court Street
Boston, Massachusetts 02108
Attention: Neal F. Finnegan
Facsimile No.: (617) 726-7320
With required copies to:
UST Corp.
40 Court Street
Boston, Massachusetts 02108
Attention: Eric R. Fischer, Esq.
Facsimile No.: (617) 726-7320
<PAGE>
and to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Neal J. Curtin, Esq.
and
Maria M. Park, Esq.
Facsimile No.: (617) 951-8736
If to the Parent or Lafayette:
HUBCO, Inc.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attention:Kenneth T. Neilson
Facsimile No.: 201-236-6169
With a required copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932
Attention:Michael W. Zelenty, Esq.
Facsimile No.: (201) 966-1550
A party may change its address for notice purposes by written notice to
the other party hereto.
9.5 CAPTIONS.
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement.
9.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
9.7 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Connecticut applicable to agreements made and entirely to
be performed within such jurisdiction except to the extent federal law may be
applicable.
<PAGE>
9.8 SEVERABILITY.
In the event that any one or more provisions of this Agreement shall for
any reason be held invalid, illegal or unenforceable in any respect, by any
court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and
the parties hereto shall use their best efforts to substitute a valid, legal
and enforceable provision which, insofar as practicable, implements the
purposes and intents of this Agreement.
9.9 SPECIFIC ENFORCEABILITY.
The parties hereto recognize and hereby acknowledge that it is impossible
to measure in money the damages that would result to a party by reason of the
failure of either of the parties to perform any of the obligations imposed on
it by this Agreement. Accordingly, if any party should institute an action or
proceeding seeking specific enforcement of the provisions hereof, each party
against which such action or proceeding is brought hereby waives the claim or
defense that the party instituting such action or proceeding has an adequate
remedy at law and hereby agrees not to assert in any such action or proceeding
the claim or defense that such a remedy at law exists.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their duly authorized officers as of the day
and year first above written.
UST CORP.
By:_________________________________
Name:
Title:
UST BANK/CONNECTICUT
By:_________________________________
Name:
Title:
HUBCO, INC.
By:_________________________________
Name:
Title:
LAFAYETTE AMERICAN BANK AND TRUST
COMPANY
By:_________________________________
Name:
Title:
<PAGE>
The undersigned being the majority of the directors of Lafayette Bank and
Trust Company hereby authorize and consent to the Merger in accordance with
this Agreement and Plan of Merger:
` ___________________________________
___________________________________
___________________________________
` ___________________________________
___________________________________
___________________________________
___________________________________
<PAGE>
The undersigned being the majority of the directors of UST
Bank/Connecticut hereby authorize and consent to the Merger in accordance with
this Agreement and Plan of Merger:
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
UST CORP. ANNOUNCES DEFINITIVE AGREEMENT
TO SELL UST BANK/CONNECTICUT
BOSTON, MASS. August 16, 1996. UST Corp. (NASDAQ: USTB) announced today
the execution of a definitive agreement to sell its Connecticut banking
subsidiary, UST Bank/ Connecticut to HUBCO, Inc., a New Jersey based bank
holding company. UST Bank operates four offices in Fairfield County with total
assets of approximately $110 million.
"We are pleased to have been associated with the customers, directors and
employees of UST Bank/Connecticut," stated Neal F. Finnegan, president and
chief executive officer. "The sale of our Connecticut subsidiary, however, will
allow us to focus our resources on the pending acquisition of twenty Boston
area BayBank and Bank of Boston branches with banking resources of $860 million
which will give our Massachusetts banking subsidiary, USTrust, the third
largest branch network in greater Boston, and enable UST to become a stronger
Boston based banking company."
At the completion of the transaction, UST Bank/Connecticut will be merged
with and into HUBCO's subsidiary, Lafayette American Bank and Trust Company of
Bridgeport, Connecticut. The Agreement and Plan of Merger provides, among other
matters, that UST Corp. will receive cash in an amount equal to UST
Bank/Connecticut's Adjusted Tier 1 Capital, as defined in the Agreement, plus a
deposit premium of 7%.
The transaction is expected to be completed in the first quarter of 1997,
and is subject to the receipt of necessary regulatory approvals.
UST Corp. is a $2.0 billion Boston-based bank holding company. Through its
banking and nonbanking subsidiaries, the Company provides a broad range of
financial services, principally to individuals and small- and medium-sized
businesses in New England.
# # #
