As filed with the Securities and Exchange Commission on December 23, 1997.
File No. 333-____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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UST CORP.
(Exact name of Registrant as specified in its charter)
MASSACHUSETTS 04-2436093
(State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
40 COURT STREET, BOSTON, MASSACHUSETTS 02108 (617) 726-7000
(Address and telephone number of registrant's principal executive offices)
--------------------------------
JAMES K. HUNT ERIC R. FISCHER, ESQ.
Executive Vice President Executive Vice President,
Chief Financial Officer and Treasurer General Counsel and Clerk
UST CORP. UST CORP.
40 Court Street 40 Court Street
Boston, Massachusetts 02108 Boston, Massachusetts 02108
(617) 726-7055 (617) 726-7377
(Name, address and telephone number of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Securities Amount to Offering Price Aggregate Amount of
to be Registered be Registered Per Share* Offering Price* Registration Fee
<S> <C> <C> <C> <C>
Common Stock
Par Value $0.625 per share 1,180,000 $27.375 $32,302,500 $9529.24
</TABLE>
*Estimated solely for the purpose of determining the registration fee.
Calculated in accordance with Rule 457(c) based on the average of the high and
low prices reported in the consolidated trading system on December 19, 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion, Dated December 23, 1997
P R O S P E C T U S
UST CORP.
1,180,000 Shares of
Common Stock, $0.625 Par Value
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This Prospectus ("Prospectus") of UST Corp., a Massachusetts corporation
(the "Company" or "UST Corp."), relates to up to 1,180,000 shares (the
"Shares") of the Company's common stock, par value $0.625 per share (the
"Common Stock"), being sold by certain stockholders of the Company (the
"Selling Stockholders"), for their respective accounts. See "Selling
Stockholders." The Company will not receive any proceeds from the sale of
Shares by the Selling Stockholders. The Common Stock is traded on the Nasdaq
National Market under the symbol "USTB." On December 19, 1997, the last
reported sale price of the Common Stock on the Nasdaq National Market was
$27.15625 per share.
The Company will pay all of the expenses estimated to be $50,000
incident to the registration, offering and sale of the Shares to the public
hereunder (other than commissions, fees and discounts of underwriters, brokers,
dealers and agents). The Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act of 1933 (the "Securities Act").
All or a portion of the Shares may be disposed of by the Selling
Stockholders hereunder from time to time in one or a combination of the
following transactions: (a) transactions (which may involve block transactions)
on the Nasdaq National Market, or otherwise, at market prices prevailing at the
time of sale or at prices related to such prevailing market prices; or (b)
privately negotiated transactions at negotiated prices, including underwritten
offerings. The Selling Stockholders may effect such transactions by selling the
Shares directly to purchasers or by selling the shares to or through
underwriters, brokers or dealers, and such underwriters, brokers or dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholders or the purchasers of the Shares for whom such
underwriters, brokers or dealers may act as agent, or to whom they sell as
principal, or both (which compensation to a particular underwriter, broker or
dealer might be in excess of customary commissions or be changed from time to
time). The Selling Stockholders and the underwriters, brokers, dealers or
agents who participate in a sale of the Shares may be deemed "underwriters"
within the meaning of Section 2(11) of the Securities Act and the commissions
paid or discounts allowed to any of the underwriters, brokers, dealers or
agents in addition to any profits received on resale of the Shares if any of
the underwriters, brokers, dealers or agents should purchase any Shares as a
principal may be deemed to be underwriting discounts or commissions under the
Securities Act. See "Plan of Distribution."
Certain of the underwriters, brokers, dealers or agents may have other
business relationships with the Company and/or its affiliates in the ordinary
course.
<PAGE>
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus or
any Prospectus Supplement, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. Neither this Prospectus nor any Prospectus Supplement constitutes an
offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to make
such an offer in such jurisdiction. Neither the delivery of this Prospectus or
any Prospectus Supplement nor any sale made thereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or thereof.
Underwriting Discounts Proceeds to Selling
Price to Public and Commissions Stockholder
Per Share (l) (1)(2) (1)(2)
Total (1) (1)(2) (1)(2)
(1) The Selling Stockholders may from time to time effect the sale of the
Shares at prices and at terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. Under the
securities laws of certain states, the Shares may be sold in such states
only through registered or licensed brokers or dealers. See "Plan of
Distribution" and "Selling Stockholders."
(2) The Company has agreed to prepare and file this Prospectus and the related
Registration Statement and supplements and amendments thereto required by
the Securities Act with the Securities and Exchange Commission, and to
deliver copies of the Prospectus to the Selling Stockholders. The expenses
incurred in connection with the same, estimated at $50,000, will be
borne by the Company. The Selling Stockholders and any broker-dealers,
agents or underwriters who participate in a sale of the Shares may be
deemed "underwriters" within the meaning of the Securities Act, and any
commissions paid or discounts allowed to, and any profits received on
resale of the Shares by, any of them may be deemed to be underwriting
discounts or commissions under the Securities Act. See "Plan of
Distribution." The Company will not be responsible for any discounts,
concessions, commissions or other compensation due to any broker or dealer
in connection with the sale of any of the shares offered hereby, which
expenses will be borne by the Selling Stockholders.
The date of this Prospectus is December 23, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information concerning the Company may be inspected and copies may be
obtained (at prescribed rates) at public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the regional offices of the Commission located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and at Northwest Atrium Center,
500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511. In addition,
electronically filed documents, including reports, proxy and information
statements and other information regarding the Company, can be obtained from
the Commission's Web site at http://www.sec.gov. The Company's Common Stock is
listed on the Nasdaq National Market, and reports, proxy statements and other
information concerning the Company can also be inspected the offices of the
National Association of Securities Dealers, Inc. at 1735 K Street, Washington,
D.C. 20006.
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act with the Commission with
respect to the Common Stock being offered pursuant to this Prospectus. As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain of the information contained in the Registration Statement. For further
information with respect to the Company and the Common Stock being offered
pursuant to this Prospectus, reference is hereby made to such Registration
Statement, including the exhibits filed as part thereof. Statements contained
in this Prospectus concerning the provisions of certain documents filed with,
or incorporated by reference in, the Registration Statement are not necessarily
complete, each such statement being qualified in all respects by such
reference. Copies of all or any part of the Registration Statement, including
the documents incorporated by reference therein or exhibits thereto, may be
obtained upon payment of the prescribed rates at the offices of the Commission
set forth above.
Upon request, the Company will provide without charge to each person to
whom a copy of this Prospectus has been delivered a copy of any information
that was incorporated by reference in the Prospectus (other than exhibits to
documents, unless such exhibits are specifically incorporated by reference into
the Prospectus). The Company will also provide upon specific request, without
charge to each person to whom a copy of this Prospectus has been delivered, a
copy of all documents filed from time to time by the Company with the
Commission pursuant to the Exchange Act. Requests for such copies should be
directed to Eric R. Fischer, Executive Vice President, General Counsel and
Clerk of UST Corp., 40 Court Street, Boston, MA 02108. Telephone requests may
be directed to Mr. Fischer at (617) 726-7377.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There is incorporated herein by reference the Annual Report on Form 10-K
of the Company for the fiscal year ended December 31, 1996 and the Quarterly
Reports on Form 10-Q of the Company for the fiscal quarters ended March 31,
1997, June 30, 1997 and September 30, 1997 filed with the Commission pursuant
to Section 13(a) of the Exchange Act, the Current Report on Form 8-K/A of the
Company for the date July 2, 1996, as amended on February 7, 1997, the Current
Report on Form 8-K/A of the Company for the date August 30, 1996, as amended on
February 7, 1997, the Current Report on Form 8-K/A of the Company for the date
August 30, 1996, as amended on March 4, 1997 and the Current Report on Form 8-K
of the Company for the date December 16, 1997 filed with the Commission
pursuant to Section 13(a) of the Exchange Act, and the description of the
Common Stock contained in the Company's Registration Statement filed with the
Commission under to Section 12(g) of the Exchange Act including any amendment
or report filed for the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing such documents. Any statement contained herein or in a
document, all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
<PAGE>
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document or portion thereof which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
CAUTIONARY STATEMENT
The documents incorporated by reference in this Prospectus contain, and
additional statements issued by the Company from time to time in public filings
or press releases or publicly made orally by officers of the Company with
respect to the Company contain or may contain, "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks and uncertainties, including
without limitation those discussed in the Company's 1996 Annual Report to
Shareholders and Quarterly Reports on Form 10-Q for the quarters ended March
31, 1997, June 30, 1997 and September 30, 1997. Such forward-looking statements
speak only as of the date on which they are made, and the Company cautions
readers not to place undue reliance on such statements. All forward-looking
information is inherently uncertain and actual results may differ materially
from the assumptions, estimates or expectations reflected or contained in the
forward-looking information.
THE COMPANY
UST Corp., a bank holding company registered with the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board"), was organized as a
Massachusetts business corporation in 1967. The Company is also subject to
examination by, and is required to file reports with, the Commissioner of Banks
of the Commonwealth of Massachusetts (the "Massachusetts Commissioner"). As of
December 31, 1996, the Company's banking subsidiaries were USTrust and United
States Trust Company ("USTC"), each headquartered in Boston. USTrust and USTC
are sometimes hereinafter collectively referred to as the "Subsidiary Banks."
Subsequently, on January 3, 1997, the Company acquired Walden Bancorp, Inc. of
Acton, Massachusetts ("Walden"), and its subsidiary banks, The Co-operative
Bank of Concord ("Concord"), headquartered in Concord, and The Braintree
Savings Bank ("Braintree") headquartered in Braintree. During the second
quarter of 1997, Concord and Braintree, former subsidiaries of Walden, were
merged with and into USTrust, the principal banking subsidiary of UST Corp. The
Company's acquisition of Walden is discussed in further detail in the Company's
Annual Report on Form 10-K under the caption "Recent Developments - Acquisition
of Walden Bancorp, Inc." and the merger of Braintree, Concord and USTrust is
described in the Company's Form 10-Q for the quarter ended June 30, 1997. Each
of the Company's Subsidiary Banks are chartered under Massachusetts law. All of
the capital stock of the Subsidiary Banks is owned directly or indirectly by
the Company. In addition, the Company owns directly or indirectly through its
banking subsidiaries, all of the outstanding stock of five active nonbanking
subsidiaries, all Massachusetts corporations: UST Leasing Corporation, UST
Capital Corp., UST Securities Corp., USTrust Securities Corp. and UST Auto
Lease Corp., as well as five subsidiaries which hold foreclosed real estate. As
a result of the Walden acquisition, the Company also acquired Concord's two
nonbanking subsidiaries, Walden Financial Corp. and Walden Securities Corp., as
well as one subsidiary which holds foreclosed real estate, and Braintree's
nonbanking subsidiary, Braintree Securities Corp., as well as two subsidiaries
which hold foreclosed real estate. On October 15, 1997, the Company acquired
Firestone Financial Corp. ("Firestone") of Newton, Massachusetts, a small
business equipment finance company. The Company's acquisition of Firestone is
discussed in further detail below under the caption "Recent Developments -
Firestone."
The Company engages in one line of business, that of providing financial
services through its banking and nonbanking subsidiaries. A broad range of
financial services is provided principally to individuals and small-and
medium-sized companies in New England including those located in low-and
moderate-income neighborhoods within the Company's defined Community
Reinvestment Act assessment area. In addition, an important component of the
Company's financial services is the provision of trust and money management
services to professionals, corporate executives, nonprofit organizations, labor
unions, foundations, mutual funds and owners of closely-held businesses most of
whom are located in the New England region.
The executive office of UST Corp. is located at 40 Court Street, Boston,
Massachusetts 02108 (Telephone (617) 726-7000).
<PAGE>
The Subsidiary Banks
The Subsidiary Banks are engaged in a general banking business and accept
deposits which are insured by the Federal Deposit Insurance Corporation
("FDIC"). USTC, which has full banking powers and accepts deposits which are
insured by the FDIC, focuses its activity on trust and money management,
venture capital and other fee-generating businesses. USTrust and USTC are
commercial banks. The Subsidiary Banks are both located in Massachusetts.
For the quarter ended September 30, 1997, the Company reported net income
of $10.8m, or $0.37 per share, compared with net income of $16.0 million, or
$0.57 per share, for the same period of 1996. The third quarter results in 1996
reflect a $14.6 million pre-tax earnings credit that was recorded through the
provision for possible loan losses and a one-time charge of $3.0 million to
reflect the Company's liability for an assessment on certain deposits insured
by the Savings Association Insurance Fund. For the nine months ended September
30, 1997, net income was $19.4 million, or $0.67 per share, compared with $35.2
million, or $1.24 per share, for the first three quarters of 1996. Results for
the 1997 period include a non-recurring charge of $3.1 million for certain
non-deductible merger-related expenses (in respect of the Walden and Firestone
acquisitons) and a pre-tax charge of $11.8 million for restructuring expenses
associated with the acquisition of Walden, accounted for as a pooling of
interest and completed in January, 1997. Results for the 1996 period include
the aforementioned $14.6 million pre-tax earnings credit, a similar $5.2
million credit recorded in the second quarter and the $3.0 million one-time
deposit insurance assessment.
Recent Developments - Firestone
On August 12, 1997, the Company announced the execution of a definitive
agreement to acquire Firestone, an $85 million small business equipment finance
company headquartered in Newton, Massachusetts. The transaction, which was
consummated on October 15, 1997, was accounted for as a pooling of interests
and was structured as a tax-free exchange of 0.63 shares of UST common stock
for each of the 2.0 million outstanding closely held shares of Firestone common
stock, up to a maximum value of $30 million. At the Company's closing price of
$21.75 on August 8, 1997, the transaction was valued at approximately $27.4
million. Based on the Company's common stock average market value of $25.43
during the determination period set forth in the definitive agreement, the
Company exchanged a total of 1,180,000 shares of common stock, representing an
exchange ratio of 0.59 shares of UST for each share of Firestone. The Company's
common stock exchanged for Firestone common stock was not registered prior to
the effectiveness of the transaction and cannot be offered or resold absent
registration or an applicable exemption from registration requirements. The
Company has recorded a one-time, pre-tax charge of approximately $1 million for
acquisition-related costs in connection with the transaction.
Recent Developments - Somerset
On December 9, 1997, the Company executed an Affiliation Agreement and
Plan of Reorganization (the "Somerset Agreement") with Somerset Savings Bank
("Somerset"), pursuant to which Somerset will be merged with and into the
Company's wholly-owned principal bank subsidiary, USTrust. Somerset is a
Massachusetts savings bank which serves the consumer and small business banking
needs of its customers through its five branch offices located in the
Massachusetts communities of Somerville and Burlington. The Somerset
transaction, which is structured to qualify as a pooling-of-interests for
accounting purposes, is subject to the approval of the shareholders of Somerset
as well as to the receipt of federal and state regulatory banking approvals.
Subject to the foregoing conditions, the Somerset transaction is expected to
close during the first half of 1998.
The Somerset transaction is structured as a tax-free exchange of 0.19
shares of the Company's common stock for each share of Somerset's common stock.
At the Company's closing stock price of $29.625 on December 9, 1997, the
Somerset transaction would be valued at approximately $93.7 million, and
Somerset shareholders would receive a value of $5.63 in Company common stock
for each share of Somerset common stock. The purchase price represents a
multiple of 2.43 times stated book value of Somerset at September 30, 1997. The
Company expects to record a one-time pre-tax charge of approximately $7.5
million of acquisition related costs in connection with the Somerset
transaction.
Immediately after execution of the Somerset Agreement on December 10,
1997, the Company entered into a Stock Option Agreement with Somerset, pursuant
to which Somerset has granted to the Company the option to purchase, under
certain circumstances, 2,777,000 shares of Somerset common stock at an exercise
price of $4.875 per share and has also granted the Company certain additional
consideration related to the option.
<PAGE>
Recent Developments - Affiliated
On December 15, 1997, the Company executed an Affiliation Agreement and
Plan of Reorganization (the "Affiliated Agreement") with Affiliated Community
Bancorp, Inc. ("Affiliated"), pursuant to which the Company will acquire
Affiliated. Affiliated is a $1.1 billion bank holding company for three
community banks, Lexington Savings Bank, The Federal Savings Bank and Middlesex
Bank and Trust Company (together, the "Affiliated Banks") which serve consumer
and small business banking needs through twelve branch offices located in
eastern Middlesex County. The Affiliated transaction, which is structured to
qualify as a pooling-of-interests for accounting purposes, is subject to the
approval of the shareholders of the Company and Affiliated as well as to the
receipt of federal and state regulatory banking approvals. The Affiliated
transaction is expected to close during the first half of 1998. While the
Company will first acquire Affiliated thereby making the Affiliated Banks
subsidiaries of the Company, the Company anticipates merging the banks into its
principal banking subsidiary, USTrust, in 1998.
The Affiliated transaction is structured as a tax-free exchange of 1.41
shares of the Company's common stock for each share of Affiliated common stock.
At the Company's closing stock price of $28.3125 on December 12, 1997, the
Affiliated transaction would be valued at approximately $259 million, and
Affiliated shareholders would receive a value of $39.92 in Company common stock
for each share of Affiliated common stock. The purchase price represents a
multiple of 2.3 times stated book value of Affiliated at September 30, 1997.
The Company expects to record a one-time pre-tax charge of approximately $12
million of acquisition related costs in connection with the Affiliated
transaction. If the Company's average stock price during a period prior to
closing is less than $24.06 per share and the Company's stock price has
declined by more than 15% relative to a certain bank stock index, Affiliated
can terminate the agreement subject to the right of the Company to issue
additional shares to ensure a per share value of $33.92 in stock of the
Company.
Immediately after execution of the Affiliated Agreement on December 15,
1997, the Company entered into a Stock Option Agreement with Affiliated
pursuant to which Affiliated has granted to the Company the option to purchase,
under certain circumstances, up to 1,300,078 shares of its outstanding stock
for $32.937 per share.
SELLING STOCKHOLDERS
On October 15, 1997, the Stockholders of Firestone (the "Selling
Stockholders") collectively acquired shares of the Common Stock from the
Company in a transaction exempt from the registration requirement of the
Securities Act, in connection with an Agreement and Plan of Reorganization
dated as of August 12, 1997 (the "Acquisition Agreement") and related Agreement
and Plan of Merger, dated as of October 15, 1997, pursuant to which a
wholly-owned subsidiary of the Company merged into Firestone (with Firestone as
the surviving entity), in exchange for shares of the Common Stock.
The term Selling Stockholders includes the holders listed below and the
beneficial owners of the Shares and their transferees, pledgees, donees and
other successors.
Pursuant to the Acquisition Agreement, the Company agreed to file with the
Commission the Registration Statement, of which this Prospectus is a part, with
respect to the resale of the Shares. The Company has committed to keep the
Registration Statement effective until the earlier of (i) the first anniversary
of the closing date under the Acquisition Agreement, or (ii) such time as all
the shares of Common Stock covered by such Registration Statement have been
sold. The Company has agreed to indemnify the Selling Stockholders and its
officers, directors and controlling persons against certain liabilities,
including certain liabilities under the Securities Act.
As of October 14, 1997, except as noted below, none of the Selling
Stockholders held of record any shares of the Company's outstanding Common
Stock. Except as noted below, no Selling Stockholder has, within the past three
years, had any position, office or other material relationship with the Company
or its affiliates.
As of December 19, 1997, there were 29,719,593 shares of the Common
Stock issued and outstanding.
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of December 17, 1997 and as
adjusted to reflect the sale of all of the Common Stock offered hereby by the
Selling Stockholders.
<PAGE>
Name of Selling Shares Owned Shares Shares to be Owned
Stockholders Prior to Offering Offered (1) After Offering
----------------- ------------------ ------------ -------------
1. Michael A. Miller (2) 297,360 (3) 297,360 -0-
199 Temple Street
West Newton, MA 02165
2. MAM Family Limited 236,000 236,000 -0-
Partnership
199 Temple Street
West Newton, MA 02165
3. Robert D. Fanger (4) 312,700 312,700 -0-
190 Dudley Street
Brookline, MA 02146
4. Edward S. Yaffe (5) 118,500 (6) 118,000 500
47 Castle Drive
Sharon, MA 02067
5. David S. Cohen (7) 118,500 (8) 118,000 500
2 Savel Lane
Sharon, MA 02067
6. Michael A. Guidi (9) 59,000 59,000 -0-
62 Laurelwood Drive
Hopedale, MA 01747
7. Scott A. Cooper (10) 17,700 17,700 -0-
52 Williams Road
Sharon, MA 02067
8. Joan G. Corbett (11) 11,800 11,800 -0-
16 Harding Street
Medfield, MA 02052
9. Mary Teresa Crealese 11,800 11,800 -0-
15 Deerfield Drive
Bridgewater, MA 02324
(1) See "Plan of Distribution."
(2) Effective November 1, 1997, Michael A. Miller became a
Director of the Company. Mr. Miller is also the President and Chief
Executive Officer of Firestone.
(3) Michael A. Miller is a General Partner of the MAM Family Limited
Partnership, through which he controls one percent (1%) of the 236,000 shares
of Common Stock owned by the MAM Family Limited Partnership, or 2,360 shares.
Such shares are included here as "Shares Owned," but Mr. Miller disclaims any
beneficial ownership of such shares.
(4) Robert D. Fanger was an employee of Firestone until October
1997. Mr. Fanger was also the Chairman of the Board of Directors of
Firestone, and resigned upon the closing of the acquisition of
Firestone by the Company.
<PAGE>
(5) Edward S. Yaffe is a Senior Vice President of Firestone.
(6) As of October 14, 1997, Edward S. Yaffe owned, and continues to own
as of the date hereof, through a self-directed Individual Retirement Account,
500 shares of Common Stock. Such shares are included here as "Shares Owned,"
but are not offered for sale under this Registration Statement.
(7) David S. Cohen is the Executive Vice President, Chief
Financial Officer and Treasurer of Firestone.
(8) David S. Cohen possesses a power of attorney in respect of an
investment account owned by his parents-in-law. Such account currently holds
500 shares of Common Stock. Such shares are included here as "Shares Owned,"
but are not offered for sale under this Registration Statement and Mr. Cohen
disclaims any beneficial ownership of such shares.
(9) Michael A. Guidi is a Senior Vice President of Firestone.
(10) Scott A. Cooper owns, through a self-directed Individual Retirement
Account, 11,800 shares of Common Stock. Such shares are included here as
"Shares Owned," and are offered for sale under this Registration Statement.
(11) Joan G. Corbett is an employee of Firestone.
PLAN OF DISTRIBUTION
The sale or distribution of the Shares may be effected directly to
purchasers by the Selling Stockholders as a principal or through one or more
underwriters, brokers, dealers or agents from time to time in one or more
transactions (which may involve crosses or block transactions) (i) on any
exchange or in the over-the-counter market, (ii) in transactions otherwise than
in the over-the-counter market or (iii) through the writing of options (whether
such options are listed on an options exchange or otherwise) on, or settlement
of short sales of, the Shares. Any of such transactions may be effected at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at varying prices determined at the time of sale or
at negotiated or fixed prices, in each case as determined by the Selling
Stockholders or by agreement between the Selling Stockholders and underwriters,
brokers, dealers or agents, or purchasers. The Selling Stockholders may effect
such transactions by selling the Shares directly to purchasers or by selling
shares to or through underwriters, brokers or dealers and such underwriters,
brokers or dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders or the purchasers of
the Shares for whom such underwriters, brokers or dealers may act as agent, or
to whom they sell as principal, or both (which compensation to a particular
underwriter, broker or dealer might be in excess of customary commissions or be
changed from time to time). The Selling Stockholders and any underwriters,
brokers, dealers or agents who participate in a sale of the Shares may be
deemed "underwriters" within the meaning of Section 2(11) of the Securities Act
and the commissions paid or discounts allowed to any of such underwriters,
brokers, dealers or agents in addition to any profits received on resale of the
Shares if any of such underwriters, brokers, dealers or agents should purchase
any Shares as a principal may be deemed to be underwriting discounts or
commissions under the Securities Act.
Certain of any such underwriters, dealers, brokers or agents may have
other business relationships with the Company and/or its affiliates in the
ordinary course.
Under the securities laws of certain states, the Shares may be sold in
such states only through registered or licensed brokers or dealers.
The Company will pay all of the expenses incident to the registration,
offering and sale of the Shares to the public hereunder other than commissions,
fees and discounts of underwriters, brokers, dealers and agents. The Company
has agreed to indemnify the Selling Stockholders and controlling persons
(within the meaning of the Securities Act) against certain liabilities,
including liabilities under the Securities Act.
<PAGE>
If all or a portion of the Shares are offered through an underwritten
offering, the terms of such underwritten offering, including the initial public
offering price, the names of the underwriters and the compensation, if any, of
such underwriters, will be set forth in an accompanying Prospectus Supplement.
Until the distribution of the Shares is completed, rules of the Commission
may limit the ability of any underwriters and any other person participating in
the distribution of the Shares to bid for and purchase the Common Stock. As an
exception to these rules, underwriters are permitted to engage in certain
transactions that stabilize the price of the Common Stock. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Common Stock. If any underwriters create a short position in
the Shares in connection with the offering, selling more Shares than are set
forth on the cover page of this Prospectus, the underwriters may reduce that
short position by purchasing shares of Common Stock in the open market.
Purchases of the Common Stock for the purpose of stabilization or to reduce a
short position could cause the price of the Common Stock to be higher than it
might be in the absence of such purchases. In addition, rules of the Commission
may limit the timing of purchases and sales of shares of Common Stock by the
Selling Stockholders and any other such person. All of the foregoing may limit
the marketability of the Shares and the ability of any underwriter, broker,
dealer or agent to engage in market making activities.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of any of
the Shares by the Selling Stockholders.
CERTAIN LEGAL MATTERS
The validity of the offered Common Stock will be passed upon for the
Company by Eric R. Fischer, Executive Vice President, General Counsel and Clerk
of the Company. As of December 22, 1997, Mr. Fischer had a direct or indirect
interest in 36,798 shares of Common Stock and had options to purchase an
additional 50,800 shares, all of which options were immediately exercisable.
EXPERTS
The consolidated financial statements of UST Corp. included in its Annual
Report on Form 10-K for the year ended December 31, 1996, and incorporated by
reference in this Prospectus and elsewhere in the Registration Statement, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting compensation, are:
SEC Registration Fee.............................. $ 9,529.24
Transfer Agent and Registrar Fees and Expenses.... $ 0.00
Legal Fees and Expenses........................... $ 10,000.00
Accounting Fees and Expenses...................... $ 10,000.00
Nasdaq National Market Fee........................ $ 17,500.00
Miscellaneous..................................... $ 2,970.76
Total............................................. $ 50,000.00
__________________
* Estimates
Item 15. Indemnification of Directors and Officers.
Section 67 of Chapter 156B of the Massachusetts General Laws authorizes a
corporation to indemnify any director, officer, employee or other agent of the
corporation to whatever extent specified in or authorized by (a) the articles
of organization, (b) a by-law adopted by the stockholders or (c) a vote adopted
by the holders of a majority of the shares of stock entitled to vote on the
election of directors.
The Registrant's Articles of Organization provide that the Registrant
shall, to the fullest extent legally permissible, indemnify each person who is
or was a director, officer, employee or other agent of the Registrant and each
person who is or was serving at the request of the Registrant as such of
another corporation or of any partnership, joint venture, trust, employee
benefit plan or other enterprise or organization, against all liabilities,
costs and expenses, including but not limited to amounts paid in satisfaction
of judgments, in settlement or as fines and penalties, and counsel fees and
disbursements, reasonably incurred by him or her in connection with the defense
or disposition of or otherwise in connection with or resulting from any action,
suit or other proceeding, whether civil, criminal, administrative or
investigative, before any court or administrative or legislative or
investigative body, in which he or she may be or may have been involved as a
party or otherwise or with which he or she may be or may have been threatened,
while in office or thereafter, by reason of his or her being or having been
such a director, officer, employee, agent or trustee, or by reason of any
action taken or not taken in any such capacity. Under Massachusetts law and the
Articles, no indemnification may be provided for any person with respect to any
matter as to which he or she shall have been adjudicated in any proceeding not
to have acted in good faith in the reasonable belief that his or her action was
in the best interest of the Registrant or other entity served or, to the extent
that such matter relates to service with respect to an employee benefit plan,
in the best interest of the participants or beneficiaries of such employee
benefit plan.
If, in an action, suit or proceeding brought by or in the name of the
Registrant, a director of the Registrant is held not liable for monetary
damages, whether because that director is relieved of personal liability under
the provisions of the Articles of Organization, or otherwise, that director
shall be deemed to have met the standard of conduct set forth above and to be
entitled to indemnification for expenses reasonably incurred in the defense of
such action, suit or proceeding.
As to any matter disposed of by settlement pursuant to a consent decree or
otherwise, no indemnification either for the amount of such settlement or for
any other expenses shall be provided unless such settlement shall be approved
as in the best interests of the Registrant, after notice that it involves such
indemnification, (a) by vote of a majority of the disinterested directors then
<PAGE>
in office (even though the disinterested directors be less than a quorum), (b)
by any disinterested person or persons to whom the question may be referred by
vote of a majority of such disinterested directors, or (c) by vote of the
holders of a majority of the outstanding stock at the time entitled to vote for
directors, voting as a single class, exclusive of any stock owned by any
interested person, or (d) by any disinterested person or persons to whom the
question may be referred by vote of the holders or a majority of such stock. No
such approval shall prevent the recovery from any such officer, director,
employee, agent or trustee of any amounts paid to him or her or on his or her
behalf as indemnification in accordance with the preceding sentence if such
person is subsequently adjudicated by a court of competent jurisdiction not to
have acted in good faith in the reasonable belief that his or her action was in
the best interests of the Registrant.
The right of indemnification provided in the Registrant's Articles of
Organization shall not be exclusive of or affect any other rights to which any
director, officer, employee, agent or trustee may be entitled or which may
lawfully be granted to him or her. Indemnification of a "director", "officer",
"employee", "agent", and "trustee" includes their respective executors,
administrators and other legal representatives. An "interested" person is one
against whom the action, suit or other proceeding in question or another
action, suit or other proceeding on the same or similar grounds is then or had
been pending or threatened, and a "disinterested" person is a person against
whom no such action, suit or other proceeding is then or had been pending or
threatened.
Item 16. Exhibits.
2 Agreement and Plan of Reorganization dated as of August 12, 1997, by
and among the Registrant, Firestone and the Selling Stockholders.
5 Opinion of Eric R. Fischer, Esq.
23.1 Consent of Eric R. Fischer (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney (included on signature page).
Item 17. Undertakings.
(A) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(B) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(C) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(D) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston and the Commonwealth of Massachusetts as of
December 16, 1997.
UST Corp.
By /s/Eric R. Fischer
--------------------------
Eric R. Fischer
(Executive Vice President,
General Counsel and Clerk)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. By so signing, each of the undersigned,
in his or her capacity as a director or officer, or both, as the case may be,
of the Registrant, does hereby appoint Neal F. Finnegan, James K. Hunt and Eric
R. Fischer, and each of them severally, or if more than one acts, a majority of
them, his or her true and lawful attorneys or attorney to execute in his or her
name, place and stead, in his or her capacity as a director or officer or both,
as the case may be, of the Registrant, the Registration Statement on Form S-3
and with respect to the shares of UST Common Stock issued in connection with
this offering and any and all amendments to said Registration Statement and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on behalf of
each of the undersigned, in any and all capacities, every act whatsoever
requisite or necessary to be done in the premises as fully and to all intents
and purposes as each of the undersigned might or could do in person, hereby
ratifying and approving the acts of said attorneys and each of them.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
President and
Chief Executive
Officer (Principal Executive Officer)
/s/Neal F. Finnegan and Director December 16, 1997
- ----------------------
(Neal F. Finnegan)
Executive Vice
President, Chief Financial
Officer and Treasurer
(Principal Financial Officer
and Principal Accounting
/s/James K. Hunt Officer) December 16, 1997
- ----------------------
(James K. Hunt)
/s/Chester G. Atkins Director December 16, 1997
- ----------------------
(Chester G. Atkins)
/s/David E. Bradbury Director December 16, 1997
- ----------------------
(David E. Bradbury)
<PAGE>
/s/Robert M. Coard Director December 16, 1997
- ----------------------
(Robert M. Coard)
/s/Domenic Colasacco Director December 16, 1997
- ----------------------
(Domenic Colasacco)
/s/Robert L. Culver Director December 16, 1997
- ----------------------
(Robert L. Culver)
/s/Alan K. DerKazarian Director December 16, 1997
- ----------------------
(Alan K. DerKazarian)
/s/Donald C. Dolben Director December 16, 1997
- ----------------------
(Donald C. Dolben)
/s/Edward Guzovsky Director December 16, 1997
- ----------------------
(Edward Guzovsky)
/s/Wallace M. Haselton Director December 16, 1997
- ----------------------
(Wallace M. Haselton)
/s/Brian W. Hotarek Director December 16, 1997
- ----------------------
(Brian W. Hotarek)
/s/Francis X. Messina Director December 16, 1997
- ----------------------
(Francis X. Messina)
/s/Michael A. Miller Director December 16, 1997
- ----------------------
(Michael A. Miller)
/s/Sydney L. Miller Director December 16, 1997
- ----------------------
(Sydney L. Miller)
<PAGE>
/s/Vikki L. Pryor Director December 16, 1997
- ----------------------
(Vikki L. Pryor)
/s/Gerald M. Ridge Director December 16, 1997
- ----------------------
(Gerald M. Ridge)
/s/William Schwartz Director December 16, 1997
- ----------------------
(William Schwartz)
/s/Barbara C. Sidell Director December 16, 1997
- ----------------------
(Barbara C. Sidell)
/s/James V. Sidell Director December 16, 1997
- ----------------------
(James V. Sidell)
/s/Paul D. Slater Director December 16, 1997
- ----------------------
(Paul D. Slater)
/s/Edward J. Sullivan Director December 16, 1997
- ----------------------
(Edward J. Sullivan)
Director December 16, 1997
- ----------------------
(G. Robert Tod)
/s/Michael J. Verrochi, Jr. Director December 16, 1997
- ----------------------
(Michael J. Verrochi, Jr.)
/s/Gordon M. Weiner Director December 16, 1997
- ----------------------
(Gordon M. Weiner)
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit Description
2 Agreement and Plan of Reorganization dated as of
August 12, 1997, by and among the Registrant,
Firestone and the Selling Stockholders.
5 Opinion of Eric R. Fischer, Esq.
23.1 Consent of Eric R. Fischer (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney (included on signature page).
<PAGE>
EXHIBIT 5
UST CORP.
40 Court Street
Boston, Massachusetts 02108
December 22, 1997
UST Corp.
40 Court Street
Boston, Massachusetts 02108
Re: UST CORP. REGISTRATION STATEMENT ON FORM S-3
RELATING TO 1,180,000 SHARES OF COMMON STOCK
Ladies and Gentlemen:
This opinion is rendered to you in connection with the filing by UST
Corp., a Massachusetts corporation, (the "Corporation") of its Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission, relating to the registration under the Securities Act of
1933 of 1,180,000 shares of the Corporation's Common Stock, par value $0.625
per share (the "Common Stock"), filed with Securities and Exchange Commission
on December 22 1997, all of which Shares were issued, as unregistered shares,
on October 15, 1997 pursuant to the Terms of an Agreement and Plan of
Reorganization, dated as of August 12, 1997 (the "Agreement"), among the
Corporation, Firestone Financial Corp. ("Firestone") and each of the
stockholders of Firestone.
In rendering this opinion as General Counsel of the Corporation, I and an
attorney in my office acting under my direction have participated with the
Corporation and its officers in the preparation, review and filing of the
Registration Statement and the related prospectus (the "Prospectus"), have
examined other corporate documents and records, have made such examination of
law, and have discussed with the officers and directors of the Corporation and
its subsidiaries such questions of fact as we have deemed necessary or
appropriate. We have also relied upon certificates and statements of such
officers and directors as to factual matters and have assumed the genuineness
of all signatures not known to us as well as the authenticity of all documents
submitted to us as copies.
Subject to the foregoing and to the proposed additional proceedings being
taken as now contemplated prior to the issuance of the Common Stock, it is my
opinion that the Common Stock has been duly authorized and that the Common
Stock are validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the use of my name in the Registration Statement
and the related Prospectus.
Very truly yours,
/s/Eric R. Fischer
-------------------------
Eric R. Fischer,
Executive Vice President,
General Counsel and Clerk
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 of our report, dated
January 31, 1997, included in UST Corp.'s Annual Report on Form 10-K for the
year ended December 31, 1996 and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 19, 1997
EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
UST CORP.,
A MASSACHUSETTS CORPORATION,
FIRESTONE FINANCIAL CORP.,
A MASSACHUSETTS CORPORATION,
AND EACH OF THE
STOCKHOLDERS LISTED
ON SCHEDULE 1 HERETO
DATED AS OF AUGUST 12, 1997
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
ARTICLE I: DEFINITIONS..........................................1
ARTICLE II: THE ACQUISITION MERGER...............................9
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF BUYER..............9
Section 3.01 Corporate Organization...............................9
Section 3.02 Capitalization......................................10
Section 3.03 Authority; No Violation.............................12
Section 3.04 Consents and Approvals..............................13
Section 3.05 Financial Statements................................14
Section 3.06 Absence of Undisclosed Liabilities..................14
Section 3.07 Absence of Certain Changes or Events................15
Section 3.08 Legal Proceedings...................................15
Section 3.09 Broker's Fees.......................................15
Section 3.10 Compliance with Applicable Laws.....................15
Section 3.11 Reports.............................................16
Section 3.12 Buyer Common Stock..................................16
Section 3.13 No Intention to Liquidate...........................17
Section 3.14 Buyer Information...................................17
Section 3.15 Disclosure..........................................17
Section 3.16 Ownership of Seller Common Stock....................17
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF
SELLER AND STOCKHOLDERS...........................17
Section 4.01 Corporate Organization..............................17
Section 4.02 Capitalization......................................18
Section 4.03 Authority; No Violation.............................20
Section 4.04 Consents and Approvals..............................21
Section 4.05 Financial Statements................................21
Section 4.06 Absence of Undisclosed Liabilities..................22
Section 4.07 Broker's Fees.......................................22
Section 4.08 Absence of Certain Changes or Events................22
<PAGE>
Section 4.09 Legal Proceedings...................................22
Section 4.10 Taxes and Tax Returns...............................23
Section 4.11 Employees...........................................24
Section 4.12 Agreements with Governmental Authorities............26
Section 4.13 Material Agreements.................................26
Section 4.14 Ownership of Real Property and Assets; Leases.......26
Section 4.15 Reports.............................................27
Section 4.16 Compliance with Applicable Laws.....................27
Section 4.17 Chapters 110D and 110F Not Applicable...............28
Section 4.18 Insurance...........................................28
Section 4.19 Labor...............................................28
Section 4.20 Material Interests of Certain Persons...............28
Section 4.21 Absence of Registration Obligations.................29
Section 4.22 Loans...............................................29
Section 4.23 Seller Information..................................29
Section 4.24 Disclosure..........................................29
Section 4.25 Seller Advisory Board Members.......................30
Section 4.26 Individual Representations and Covenants of Seller
Stockholders .......................................30
Section 4.27 Financing...........................................31
Section 4.28 Year 2000...........................................31
Section 4.29 Seller's Representation Regarding Tax-Free
Reorganization Treatment............................31
Section 4.3 Seller Stockholders' Representation Regarding
Tax-Free Reorganization Treatment............................32
ARTICLE V: COVENANTS OF THE PARTIES..........................32
Section 5.01 Conduct of the Business of Seller...................32
Section 5.02 Access to Properties and Records; Confidentiality...36
Section 5.03 No Solicitation.....................................39
Section 5.04 Consents............................................39
Section 5.05 Further Assurances..................................39
Section 5.06 Seller Disclosure Supplements.......................40
Section 5.07 Public Announcements................................40
Section 5.08 Post-Closing Governance.............................40
Section 5.09 Tax-Free Reorganization Treatment...................41
Section 5.10 Employment and Benefit Matters......................41
Section 5.11 Maintenance of Records..............................41
Section 5.12 Leases..............................................42
Section 5.13 Registration of Buyer Common Stock..................42
Section 5.14 Agreements of Affiliates............................46
Section 5.15 Employment Agreements; Protection Agreements;
Non-Competition Agreement........................46
<PAGE>
Section 5.16 Exchange Act Reporting..............................47
Section 5.17 Stockholder Contribution Rights.....................47
ARTICLE VI: CLOSING CONDITIONS................................47
Section 6.01 Conditions to Each Party's Obligations..............47
Section 6.02 Conditions to the Obligations of Buyer..............48
Section 6.03 Conditions to the Obligations of Seller.............50
ARTICLE VII: CLOSING...........................................52
Section 7.01 Time and Place......................................52
Section 7.02 Deliveries at the Closing...........................52
ARTICLE VIII: TERMINATION, AMENDMENT AND WAIVER.................52
Section 8.01 Termination.........................................52
Section 8.02 Effect of Termination...............................55
Section 8.03 Amendment, Extension and Waiver.....................55
ARTICLE IX: INDEMNIFICATION...................................55
Section 9.01 Claim Period; Survival Period.......................55
Section 9.02 Terms of Indemnification............................56
Section 9.03 Procedures..........................................56
Section 9.04 Damages.............................................57
Section 9.05 Maximum Indemnification; Minimum Claims; Exception..58
ARTICLE X: MISCELLANEOUS.....................................58
Section 10.01 Expenses............................................58
Section 10.02 Notices.............................................59
Section 10.03 Parties in Interest.................................60
Section 10.04 Complete Agreement..................................60
Section 10.05 Counterparts........................................60
Section 10.06 Governing Law.......................................60
Section 10.07 Captions............................................60
Section 10.08 Effect of Investigations............................60
Section 10.09 Severability........................................60
<PAGE>
Section 10.10 Survival of Representations, Warranties and
Covenants........................................61
Section 10.11 Specific Enforceability.............................61
Section 10.12 Alternative Structure...............................61
Schedules:
Schedule 1: Stockholders
Schedule 8.01(e): Index Companies
Seller Disclosure Schedule:
Section 4.01(a) Foreign Qualification
Section 4.01 (b) Subsidiaries and Equity Investments
Section 4.02(a) Stockholders and Stock Commitments
Section 4.04 Consents and Approvals
Section 4.06 Undisclosed Liabilities
Section 4.08 Certain Changes or Events
Section 4.09(a) Pending or Threatened Proceedings
Section 4.09(b) Customer Pending or Threatened Proceedings
Section 4.09(c) Deal Proceedings
Section 4.11(a) Seller Plans
Section 4.13 Material Agreements
Section 4.14(a) Real Property Owned
Section 4.14(b) Real Property Leased or Operated
Section 4.22 Loans Serviced by Third Parties
Section 4.25 Seller Advisory Board Members
Section 4.27 Financing Arrangements
Section 5.01 Employee Benefit changes
Buyer Disclosure Schedule:
Section 3.02(a) Stock Commitments
Section 3.02(c) Significant Subsidiaries
Exhibits:
Exhibit A: Agreement and Plan of Merger
Exhibit B-1: Form of Buyer Affiliates Agreement
Exhibit B-2: Form of Seller Affiliates Agreement
Exhibit C: Form of Employment Agreement
<PAGE>
Exhibit D: Form of Protection Agreement
Exhibit E: Form of Non-Competition Agreement
Exhibit F: Form of Palmer & Dodge LLP Legal Opinion
Exhibit G: Form of Bingham, Dana & Gould LLP
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of
August 12, 1997, by and among UST CORP., a Massachusetts corporation ("Buyer"),
FIRESTONE FINANCIAL CORP., a Massachusetts corporation ("Seller"), and each of
the individuals and entities listed on Schedule 1 hereto, each in their
capacity as a stockholder of Seller (each a "Stockholder", and collectively,
the "Stockholders").
The Boards of Directors of Buyer and Seller deem it advisable and in the
best interests of their respective Stockholders to consummate, and have
approved, and the Stockholders of Seller have likewise unanimously approved,
the business combination transactions provided for herein.
In consideration of the mutual covenants, representations, warranties and
agreements contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein or as otherwise clearly required by
the context, the following terms shall have the respective meanings indicated
when used in this Agreement:
"Acquisition Merger" shall mean the merger of Acquisition Subsidiary with
and into Seller, the result of which shall be the direct acquisition by Buyer
of all of the issued and then outstanding shares of Seller Common Stock at the
Effective Time.
"Acquisition Subsidiary" shall mean that certain business corporation that
has been or shall be organized as a direct wholly-owned subsidiary of Buyer
under the laws of the Commonwealth of Massachusetts for the purpose of merging
with Seller pursuant to the terms of the Plan of Merger.
"Acquisition Transaction" shall have the meaning ascribed thereto in
Section 5.03 hereof.
"Affiliate" shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. As used in
this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") means the possession, directly
<PAGE>
or indirectly, of power to direct or cause the direction of the management and
policies of a Person whether through the ownership of voting securities, by
contract or otherwise.
"Aggregate Deductible" shall have the meaning ascribed thereto in Section
9.05(b).
"Agreement" shall mean this Agreement and Plan of Reorganization by and
among Buyer, Seller and the Stockholders.
"AMEX" shall mean the American Stock Exchange.
"Bank" shall mean USTrust, the wholly owned banking subsidiary of Buyer.
"Bank Common Stock" shall mean the 200,000 authorized shares of common
stock of the Bank, par value $47.50 per share, of the Bank.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Buyer" shall have the meaning ascribed thereto in the preamble to this
Agreement.
"Buyer Affiliates" shall have the meaning ascribed thereto in Section
5.14(b) hereof.
"Buyer Affiliates Agreement" shall mean the form of written agreement to
be executed and delivered to the Seller prior to the Effective Time by the
Buyer Affiliates, substantially in the form attached hereto as Exhibit B-1.
"Buyer Balance Sheet" shall have the meaning ascribed thereto in Section
3.05 hereof.
"Buyer Common Stock" shall have the meaning ascribed thereto in Section
3.02(a) hereof.
"Buyer Disclosure Schedule" shall have the meaning ascribed thereto in
Section 3.02(a).
"Buyer Preferred Stock" shall have the meaning ascribed thereto in Section
3.02(a) hereof.
"Buyer Reports" shall have the meaning ascribed thereto in Section 3.11
hereof.
<PAGE>
"Buyer Rights" shall have the meaning ascribed thereto in Section 3.02(a)
hereof.
"Buyer Rights Agreement" shall mean that certain Rights Agreement which
was adopted by the Buyer on September 19, 1995.
"Canadian Comfort Letter" shall have the meaning ascribed thereto in
Section 6.02(i) hereof.
"Canadian Consent" shall have the meaning ascribed thereto in Section
6.02(i) hereof.
"Cap" shall have the meaning ascribed thereto in Section 9.02(a) hereof.
"Closing" shall mean the consummation of the Acquisition Merger.
"Closing Date" shall mean the date on which the Closing occurs.
"Closing Price" shall have the meaning ascribed thereto in Section 8.01(e)
hereof.
"CMP" shall have the meaning ascribed thereto in Section 3.10 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Companies" shall have the meaning ascribed thereto in Section 4.10(a)
hereof.
"Confidential Information" shall have the meaning ascribed thereto in
Section 5.02(b) hereof.
"Confidentiality Agreement" shall mean that certain letter agreement
pertaining to the disclosure of certain Confidential Information by Seller to
Buyer dated May 16, 1997.
"Conversion Number" shall have the meaning ascribed thereto in Section
2.01(b) of the Plan of Merger.
"Damages" shall have the meaning ascribed thereto in Section 9.05 hereof.
"Determination Period" shall have the meaning ascribed thereto in Section
8.01(e) hereof.
"DOJ" shall mean the Antitrust Division of the Department of Justice.
<PAGE>
"Effective Time" shall mean the date and time at which the Acquisition
Merger has become effective pursuant to the applicable laws of The Commonwealth
of Massachusetts.
"Employment Agreements" shall mean those certain Employment Agreements to
be entered into by and among Seller, Buyer and each of Michael A. Miller, David
S. Cohen, Michael A. Guidi and Edward S. Yaffe prior to the Closing Date,
substantially in the form attached hereto as Exhibit C.
"EPA" shall mean the United States Environmental Protection Agency.
"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.
"Exchange Act" shall have the meaning ascribed thereto in Section 3.05
hereof.
"Exchange Agent" shall have the meaning ascribed thereto in Section 4.01
of the Plan of Merger.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System or the Federal Reserve Bank of Boston, as applicable.
"Filed Tax Returns" shall mean, with respect to the Companies, all Tax
Returns that have been or will required to be filed by any of the Companies on
or prior to the date hereof.
"Final Index Price" shall have the meaning ascribed thereto in Section
8.01(e) hereof.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles and practices
in effect from time to time within the United States applied consistently
throughout the period involved.
<PAGE>
"Holder" shall have the same meaning as ascribed to the term "Stockholder"
herein.
"Index Companies" shall have the meaning ascribed thereto in Section
8.01(e) hereof.
"Initial Index Price" shall have the meaning ascribed thereto in Section
8.01(e) hereof.
"Injunction" shall have the meaning ascribed thereto in Section 6.01(c)
hereof.
"IRS" shall mean the United States Internal Revenue Service.
"Loan" shall have the meaning ascribed thereto in Section 4.22 hereof.
"Material Adverse Effect" shall mean, with respect to Buyer or Seller, a
material adverse effect on the assets, properties, liabilities, business,
operations, results of operations, financial condition or prospects of Buyer or
Seller, as the case may be, and its subsidiaries, taken as a whole.
"MBCL" shall mean the Massachusetts Business Corporation Law.
"Minister" shall have the meaning ascribed thereto in Section 6.02(i)
hereof.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation system.
"Non-Competition Agreement" shall mean that certain Non-Competition
Agreement to be entered into by and between Buyer, Seller and Robert D. Fanger
prior to the Closing Date, substantially in the form attached hereto as Exhibit
E.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OSFI" shall have the meaning ascribed thereto in Section 6.02(i) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean any individual, general partnership, limited
partnership, corporation business trust, joint stock company, joint venture,
trust, estate, business trust, limited liability company, limited liability
partnership, unincorporated association, cooperative or association and, where
the context so permits, the heirs, executors, administrators, legal
representatives, successors and assigns of such Person.
<PAGE>
"Plan of Merger" shall mean that certain Agreement and Plan of Merger to
be entered into by and among Seller and Acquisition Subsidiary at or prior to
the Effective Time, substantially in the form attached hereto as Exhibit A.
"Pooling Restriction Expiration Date" means the date on which the post
Closing Date restrictions on sales and other transfers of Registrable
Securities by affiliates arising under SEC Accounting Releases 130 and 135
shall have expired.
"Protection Agreements" shall mean those certain Protection Agreements to
be entered into by and between Buyer, Seller and each of Bruce A. Miller, Joan
G. Corbett and Scott A. Cooper prior to the Closing Date, substantially in the
form attached hereto as Exhibit D.
"Records" means all records and original documents in Seller's possession
which pertain to and are utilized by Seller to administer, reflect, monitor,
evidence or record information respecting its business and operations,
including but not limited to all records and documents relating to (i)
corporate, regulatory, supervisory and litigation matters, (ii) tax planning
and payment of taxes, (iii) personnel and employment matters, and (iv) the
business or conduct of the business of Seller.
"Registrable Securities" means shares of Buyer Common Stock issued to
Holder on the Closing Date pursuant to this Agreement.
"Registration Expenses" means all expenses incident to Buyer's performance
of or compliance with Section 5.13 hereof, including without limitation all
registration, qualification, listing and filing fees applicable to any sale of
Registrable Securities (including without limitation fees relating to
registration or qualification under the "blue sky" or securities laws of any
jurisdiction designated by Holder), duplicating and printing expenses,
messenger and delivery expenses and expenses associated with any communications
with Holder required or permitted hereunder, including without limitation the
cost of mailing such communications to Holder and also including the fees and
disbursements of counsel and independent accountants of Buyer (but not of any
separate counsel retained by Holder) and any internal costs of Buyer not
specifically referred to above.
"Representatives" shall have the meaning ascribed thereto in Section
5.02(b) hereof.
<PAGE>
"Requisite Regulatory Approvals" shall have the meaning ascribed thereto
in Section 6.01(b) hereof.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning ascribed thereto in the preamble to this
Agreement and, in addition, shall mean throughout this Agreement, unless the
context contemplates otherwise, the Seller and each of its subsidiaries,
considered separately and on a consolidated basis with the parent corporation.
"Seller Advisory Board" shall mean the advisory board established by the
Board of Directors of Seller in 1994.
"Seller Affiliates" shall have the meaning ascribed thereto in Section
5.14 hereof.
"Seller Affiliates Agreement" shall mean the form of written agreement to
be executed and delivered to the Buyer prior to the Effective Time by the
Seller Affiliates, substantially in the form attached hereto as Exhibit B-2.
"Seller Balance Sheet" shall have the meaning ascribed thereto in Section
4.05 hereof.
"Seller Benefit Plans" shall have the meaning ascribed thereto in Section
4.11(a) hereof.
"Seller Buy-Sell Agreement" shall mean that certain Buy-Sell Agreement,
dated February 4, 1994, by and between the Seller and each of the stockholders
of the Seller.
"Seller Canadian Sub" shall mean Firestone Financial Canada, Ltd., an
Ontario Corporation and a wholly owned subsidiary of Seller.
"Seller Common Stock" shall have the meaning ascribed thereto in Section
4.02(a) hereof.
"Seller Disclosure Schedule" shall have the meaning ascribed thereto in
the preamble to Article IV hereof.
"Seller Employee" shall have the meaning ascribed thereto in Section 5.10
hereof.
<PAGE>
"Seller Headquarters Lease" shall mean that certain Second Amendment to
Lease dated October 31, 1995, by and between the Seller and Glen Avenue
Associates for the real property located at Suite 201 and 202, 38 Glen Avenue,
Newton Centre, Massachusetts.
"Seller Other Plans" shall have the meaning ascribed thereto in Section
4.11(a) hereof.
"Seller Pension Plans" shall have the meaning ascribed thereto in Section
4.11(a) hereof.
"Seller Reports" shall have the meaning ascribed thereto in Section 4.15
hereof.
"Significant Subsidiary" shall mean, when used in reference to a party,
any "significant subsidiary" of such party as such term is defined in
Regulation S-X of the SEC, and with respect to the Seller, the term
"Significant Subsidiary" shall also include the Seller Canadian Sub.
"Stockholder" or "Stockholders" shall have the meaning ascribed thereto in
the preamble of this Agreement.
"subsidiaries" shall mean, when used with reference to a party, any
corporation or other organization, whether incorporated or unincorporated, of
which such party or any other subsidiary of such party is a general partner
(excluding partnerships the general partnership interests of which held by such
party or any subsidiary of such party do not have a majority of the voting
interests in such partnership) or, with respect to such corporation or other
organization, at least a majority of the securities or other interests having
by their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions is directly or indirectly
owned or controlled by such party or by any one or more of its subsidiaries, or
by such party and one or more of its subsidiaries.
"Tax" means any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee or other tax or levy, of
any kind whatsoever, including any interest, penalties or additions to tax in
respect of the foregoing.
"Tax Return" means any return, declaration, report, claim for refund,
information return or other document (including any related or supporting
estimates, elections, schedules, statements or information) filed or required
<PAGE>
to be filed in connection with the determination, assessment or collection of
any Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.
"Termination Date" shall have the meaning ascribed thereto in Section
8.01(b) hereof.
"Transaction Documents" shall mean this Agreement, the Plan of Merger, the
Confidentiality Agreement, the Employment Agreements, the Protection Agreements
and the Non-Competition Agreement and each other agreement, document or
instrument executed in connection herewith or therewith.
"Transferred Employee" shall have the meaning ascribed thereto in Section
5.10 hereof.
"Weighted Average" shall have the meaning ascribed thereto in Section
8.01(e) hereof.
"Year 2000 Problem" shall have the meaning ascribed thereto in Section
4.28 hereof.
ARTICLE II
THE ACQUISITION MERGER
Subject to the terms and conditions of this Agreement and the Plan of
Merger, Acquisition Subsidiary will merge with and into Seller, with Seller
being the surviving corporation, pursuant to the provisions of, and with the
effect provided in the MBCL. The Plan of Merger provides for the terms and
conditions of the Acquisition Merger, including but not limited to the
conversion and exchange of Seller Common Stock for Buyer Common Stock, all of
which are incorporated herein and made a part of this Agreement by this
reference whether or not the Plan of Merger is executed on or subsequent to the
date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as described in the disclosure schedule which has been delivered by
Buyer to Seller (the "Buyer Disclosure Schedule"), Buyer hereby represents and
warrants to Seller as follows:
<PAGE>
3.01 Corporate Organization.
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of The Commonwealth of Massachusetts. Buyer
has the corporate power and authority to own, lease or operate all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not result in,
with respect to Buyer, a Material Adverse Effect. The Buyer is a bank
holding company registered with the Federal Reserve Board under the BHCA.
(b) Acquisition Subsidiary is or will be a corporation duly
organized, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts. From the date of its incorporation to the
Closing Date, Acquisition Subsidiary shall not engage in any material
activities other than in connection with or as contemplated by this
Agreement. Acquisition Subsidiary has been or will be formed solely for
the purpose of effectuating the Acquisition Merger.
(c) Each Significant Subsidiary of the Buyer is duly organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation. Each Significant Subsidiary of Buyer has the
corporate power and authority to own, lease or operate all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased, or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would neither
individually nor in the aggregate, result in, with respect to Buyer, any
Material Adverse Effect.
3.02 Capitalization.
(a) The authorized capital stock of the Buyer consists of
45,000,000 shares of common stock, par value $0.625 per share ("Buyer
Common Stock"), and 4,000,000 shares of preferred stock, par value $1.00
per share ("Buyer Preferred Stock"). As of the close of business on July
30, 1997, there were 28,484,793 shares of Buyer Common Stock and no
shares of Buyer Preferred Stock issued and outstanding. In addition, as
of the close of business on July 30, 1997, there were 1,415,540 shares of
Buyer Common Stock reserved for issuance upon exercise of outstanding
stock options. All issued and outstanding shares of Buyer Common Stock
and Buyer Preferred Stock have been duly authorized and validly issued
<PAGE>
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except for rights
("Buyer Rights") issuable in accordance with the Buyer Rights Agreement
upon the issuance of Buyer Common Stock as permitted under this Agreement
or as referred to in this Section 3.02 or reflected in Section 3.02(a) of
the Buyer Disclosure Schedule, the Buyer does not have and is not bound
by any outstanding subscriptions, options, warrants, calls, commitments,
rights agreements or agreements of any character calling for the Buyer to
issue, deliver or sell, or cause to be issued, delivered or sold any
shares of Buyer Common Stock or Buyer Preferred Stock or any other equity
security of the Buyer or any subsidiary of the Buyer or any securities
convertible into, exchangeable for or representing the right to subscribe
for, purchase or otherwise receive any shares of Buyer Common Stock or
Buyer Preferred Stock or any other equity security of the Buyer or any
subsidiary of the Buyer or obligating the Buyer to grant, extend or enter
into any such subscriptions, options, warrants, calls, commitments,
rights agreements or agreements. As of the date hereof there are no
outstanding contractual obligations of the Buyer to repurchase, redeem or
otherwise acquire any shares of capital stock of the Buyer or any
subsidiary of the Buyer, and the Buyer has no present intention of doing
so.
(b) The authorized capital stock of Acquisition Subsidiary consists
of or shall consist of 100 shares of common stock, $0.01 par value per
share, all of which have been or will be issued to Buyer. Upon such
issuance, all such shares were or will be duly authorized and validly
issued, fully paid and nonassessable.
(c) Section 3.02(c) of the Buyer Disclosure Schedule lists each of
the Significant Subsidiaries of the Buyer on the date of this Agreement
and indicates for each such subsidiary as of such date: (i) the
percentage and type of equity securities owned or controlled by the
Buyer; (ii) the jurisdiction of incorporation; and (iii) if the
subsidiary is a depository institution, whether it is a member of the
Federal Reserve System. Each of the subsidiaries of the Buyer that is a
depository institution is an "insured depository institution" as defined
in the FDIA and applicable regulations thereunder, and the deposits of
each such depository institution are insured by the Bank Insurance Fund
of the FDIC in accordance with the FDIA, and each such depository
institution has paid all assessments and filed all reports required by
the FDIA. As of the date hereof, no proceedings for the revocation or
termination of such deposit insurance are pending or, to the knowledge of
the Buyer, threatened. No subsidiary of the Buyer has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for a subsidiary of the Buyer to
issue deliver or sell, or cause to be issued, delivered or sold any
equity security of the Buyer or of any subsidiary of the Buyer or any
securities convertible into, exchangeable for or representing the right
to subscribe for, purchase or otherwise receive any such equity security
<PAGE>
or obligating a subsidiary of the Buyer to grant, extend or enter into
any such subscriptions, options, warrants, calls, commitments or
agreements. As of the date hereof, there are no outstanding contractual
obligations of any subsidiary of the Buyer to repurchase, redeem or
otherwise acquire any shares of capital stock of the Buyer or any
subsidiary of the Buyer. Except as may be provided under applicable law
in the case of any subsidiary of the Buyer that is a bank, all of the
shares of capital stock of each of the subsidiaries of the Buyer held by
the Buyer are fully paid and nonassessable and are owned by the Buyer
free and clear of any claim, lien, encumbrance or agreement with respect
thereto.
3.03 Authority; No Violation.
(a) Buyer has full corporate power and authority to execute and
deliver the Transaction Documents to which it is a party and to
consummate the transactions contemplated thereby. Acquisition Subsidiary
has or will have full corporate power and authority to execute and
deliver the Plan of Merger and to consummate the transactions
contemplated thereby. The execution and delivery of this Agreement and
the other Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby have
been duly and validly approved by the Board of Directors of Buyer. The
execution and delivery of the Plan of Merger and the consummation of the
transactions contemplated thereby have been or will be duly and validly
approved by Buyer, as sole stockholder of Acquisition Subsidiary, and by
the Board of Directors of Acquisition Subsidiary. No other corporate
proceedings on the part of Buyer or Acquisition Subsidiary are necessary
to consummate the transactions contemplated by any of the Transaction
Documents to which either is a party. This Agreement has been, and the
Plan of Merger and the other Transaction Documents to be executed by the
Buyer will be, duly and validly executed and delivered by Buyer and
(assuming due authorization, execution and delivery by Seller) constitute
(or, in the case of the Plan of Merger or such other Transaction
Documents, will constitute at Closing) the valid and binding obligation
of Buyer, enforceable against Buyer 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 Plan of Merger will be duly and validly executed
and delivered by Acquisition Subsidiary and (assuming due authorization,
execution and delivery by Seller) will constitute at closing the valid
<PAGE>
and binding obligation of Acquisition Subsidiary, enforceable against
Acquisition Subsidiary 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 by Buyer and Acquisition
Subsidiary of any of the Transaction Documents to which either is a
party, respectively, nor the consummation by Buyer and Acquisition
Subsidiary of the transactions contemplated hereby and thereby, nor
compliance by Buyer and Acquisition Subsidiary with any of the terms or
provisions hereof or thereof, will (i) assuming that the consents and
approvals referred to in Section 3.04 hereof are duly obtained, violate
any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Buyer or any of its subsidiaries or
any of their respective properties or assets, or, (ii) violate, conflict
with, result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration or the
creation of any lien, security interest, charge or other encumbrance upon
any of the respective properties or assets of Buyer or any of its
subsidiaries under, any of the terms, conditions or provisions of (x) the
Articles of Organization, or other charter document of like nature or
By-laws of Buyer, or such Buyer subsidiary, as the case may be, or (y)
any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Buyer or any of its
subsidiaries is a party thereto as issuer, guarantor or obligor, or by
which they or any of their respective properties or assets may be bound
or affected.
3.04 Consents and Approvals. Except for consents, waivers or approvals of,
notices to or filings or registrations with, the Federal Reserve Board, the
FTC, the DOJ, the SEC, certain state "Blue Sky" or securities commissioners,
the Secretary of State of The Commonwealth of Massachusetts under the MBCL,
NASDAQ, and the stockholders of Seller, no consents, waivers or approvals of,
notices to or filings with any public body or authority are necessary, and no
consents or approvals of any third parties (which term does not include the
Board of Directors of Buyer or Acquisition Subsidiary) are necessary, in
connection with (i) the execution and delivery by Buyer of the Transaction
Documents, (ii) the execution and delivery by Acquisition Subsidiary of the
Plan of Merger, or (iii) the consummation by Buyer and Acquisition Subsidiary,
<PAGE>
as the case may be, of the transactions contemplated by such the Transaction
Documents, including the Acquisition Merger.
3.05 Financial Statements. Buyer has made available to Seller copies of
(a) the consolidated balance sheets of Buyer and its subsidiaries as of
December 31 for the fiscal years 1994 through 1996, inclusive, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1994 through 1996, inclusive, as reported in Buyer
Annual Reports on Form 10-K for each of the three fiscal years ended December
31, 1994 through December 31, 1996 filed with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in each case accompanied
by the audit report of Arthur Andersen LLP, independent accountants for Buyer,
(b) the unaudited consolidated balance sheet of Buyer and its subsidiaries as
of March 31, 1997, the related unaudited consolidated statements of income and
changes in stockholders' equity for the three (3) months ended March 31, 1997
and March 31, 1996 and the related unaudited consolidated statements of cash
flows for the three (3) months ended March 31, 1997 and March 31, 1996, all as
reported in Buyer's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997 filed with the SEC under the Exchange Act and (c) the unaudited
consolidated balance sheet of Buyer and its subsidiaries as of June 30, 1997,
the related unaudited consolidated statements of income and changes in
stockholders' equity for the three (3) months and six (6) months ended June 30,
1997 and June 30, 1996 and the related unaudited consolidated statements of
changes in stockholders' investment for the three (3) months and six (6) months
ended June 30, 1997 and June 30, 1996, all as reported in Buyers Second Quarter
Report mailed to shareholders of Buyer for the quarter ended June 30, 1997. The
December 31, 1996 consolidated balance sheet of Buyer (including the related
notes, where applicable) (the "Buyer Balance Sheet") and the other financial
statements referred to herein (including the related notes, where applicable)
fairly present, and the financial statements to be included in any reports or
statements (including reports on Forms 10-Q and 10-K) to be filed by Buyer with
the SEC after the date hereof will fairly present, the consolidated financial
position and results of the consolidated operations and cash flows and changes
in stockholders' equity of Buyer and its subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; and each of such
statements (including the related notes, where applicable) has been and will be
prepared in accordance with GAAP consistently applied during the periods
involved, except as otherwise set forth in the notes thereto (subject, in the
case of unaudited interim statements, to normal year-end adjustments). The
books and records of Buyer and its subsidiaries have been, and are being,
maintained in accordance with GAAP and applicable legal and regulatory
requirements.
3.06 Absence of Undisclosed Liabilities. None of Buyer or any of its
subsidiaries has any obligation or liability (contingent or otherwise) that is
material on a consolidated basis to Buyer, or that when combined with all
<PAGE>
similar obligations or liabilities would be material on a consolidated basis to
Buyer, except as disclosed or reflected in the Buyer Balance Sheet or any of
the other financial statements of Buyer described in Section 3.05 above.
3.07 Absence of Certain Changes or Events. Except as disclosed in Buyer's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 or in any
Current Reports of Buyer on Form 8-K filed prior to the date of this Agreement,
since December 31, 1996, Buyer and its subsidiaries have not incurred any
material liability, except in the ordinary course of their business consistent
with their past practices or as publicly disclosed by Buyer in any Current
Reports of Buyer on Form 8-K, nor has there been any change in the assets,
properties, liabilities, business, operations, results of operations or
financial condition of Buyer or any of its subsidiaries which has had, or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Buyer.
3.08 Legal Proceedings. There is no suit, action or proceeding pending or,
to the best knowledge of Buyer, threatened, against Buyer or any subsidiary of
Buyer or challenging the validity or propriety of the transactions contemplated
by this Agreement, which, if adversely determined, would, individually or in
the aggregate, have a Material Adverse Effect on Buyer or otherwise materially
adversely affect Buyer's ability to perform its obligations under this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
legal or administrative body or arbitrator outstanding against Buyer or any
subsidiary of Buyer having, or which insofar as reasonably can be foreseen, in
the future could have, any such effect.
3.09 Broker's Fees. Neither Buyer nor any of its 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 any of
the transactions contemplated by this Agreement, except for the fees incurred
in connection with the engagement of Fox-Pitt, Kelton Inc. and for legal,
accounting and other professional fees payable in connection with the
Acquisition Merger. The Buyer will be responsible for the payment of such fees.
3.10 Compliance With Applicable Laws. Each of the Buyer and each
Significant Subsidiary thereof holds all licenses, franchises, permits and
authorizations necessary for the lawful conduct of its business, and each of
the Buyer and each Significant Subsidiary thereof has complied with and is not
in violation of or default in any respect under any, applicable law, statute,
order, rule, regulation or policy of, or agreement with, any federal, state or
local governmental agency or authority relating to the Buyer or such
Significant Subsidiary (other than where such default or noncompliance will not
result in, or create the possibility of resulting in, a material limitation on
the conduct of the business of the Buyer, will not cause, or create the
<PAGE>
possibility of causing, the Buyer or any Significant Subsidiary thereof to
incur any financial penalty in excess of $20,000 (including but not limited to
any civil money penalty or other monetary sanction under Section 8(i)(2) of the
FDIA, 12 U.S.C. ss.1818(i)(2), or under any applicable state law ("CMPs")), and
will not otherwise result, or create the possibility of resulting in any
Material Adverse Effect on the Buyer or any Significant Subsidiary of the
Buyer), and neither the Buyer nor any Significant Subsidiary of the Buyer has
received any notice of any violation of any such law, statute, order, rule,
regulation, policy or agreement, or the commencement of any proceeding in
connection with any such violation (including but not limited to any hearing or
investigation relating to the imposition or contemplated imposition of CMPs),
and does not know of any violation of, any such law, statute, order, rule,
regulation, policy or agreement which would have such a result.
3.11 Reports. Since January 1, 1994, Buyer and its subsidiaries have
filed, and subsequent to the date hereof will file, all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that were and are required to be filed with (a) the SEC, including,
but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements, (b)
the Federal Reserve Board, (c) the FDIC and (d) any applicable state securities
or banking authorities (except, in the case of state securities authorities, no
such representation is made as to filings which are not material) (all such
reports and statements are collectively referred to herein as the "Buyer
Reports"), except where the failure to so file any Buyer Report will not result
in, or create any reasonable probability of resulting in, a material limitation
on the conduct of the business of Buyer, will not cause or create any
reasonable probability of causing, Buyer to incur any material financial
penalty and will not otherwise result, or create any reasonable probability of
resulting, with respect to Buyer, in any Material Adverse Effect. As of their
respective dates, the Buyer Reports complied and, with respect to filings made
after the date of this Agreement, will at the date of filing comply, in all
material respects with all of the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed and did not
contain and, with respect to filings made after the date of this Agreement,
will not at the date of filing contain, any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
3.12 Buyer Common Stock. The Buyer Common Stock to be issued pursuant to
the Plan of Merger is duly authorized and, when issued, will be validly issued,
fully paid and nonassessable and not subject to preemptive rights, with no
personal liability attaching thereto. Buyer will have no contractual right, and
has no current intention, to reacquire any of the Buyer Common Stock issued in
connection with the Acquisition Merger.
<PAGE>
3.13 No Intention to Liquidate. Neither Buyer nor Acquisition Subsidiary
have any current intention to liquidate Seller, merge Seller with or into
another corporation, sell or otherwise dispose of the stock of Seller except
the intention of Buyer to transfer the stock of the Seller to the Bank, upon
receiving appropriate regulatory approvals, or other entities controlled by
Buyer or cause Seller to sell or otherwise dispose of any of its assets, except
for dispositions made in the ordinary course of business or transfers of assets
to corporations or other entities controlled by Buyer.
3.14 Buyer Information. The information relating to Buyer and its
subsidiaries to be contained in any documents filed with any governmental
agency or authority in connection herewith, to the extent such information is
provided in writing by Buyer, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make such
information not misleading.
3.15 Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in any certificate, list or other writing
furnished to Seller pursuant to the provisions hereof, to the best knowledge of
Buyer, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading. To the best knowledge of Buyer, all information material to
Seller's interest in the Acquisition Merger or which is necessary to make
Buyer's representations and warranties herein contained not misleading, has
been disclosed to Seller.
3.16 Ownership of Seller Common Stock. Neither the Buyer nor, to its best
knowledge, any of its affiliates or associates (as such terms are defined under
the Exchange Act) (a) beneficially own, directly or indirectly, or (b) are
parties to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of capital
stock of the Seller, which in the aggregate represent five percent (5%) or more
of the outstanding shares of capital stock of the Seller entitled to vote
generally in the election of directors.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS
Except as described in the disclosure schedule which has been delivered by
Seller to Buyer (the "Seller Disclosure Schedule"), Seller and each Stockholder
hereby represent and warrant to Buyer as follows:
<PAGE>
4.01 Corporate Organization.
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of The Commonwealth of Massachusetts. Seller
has the corporate power and authority to own, lease or operate all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not result in,
with respect to Seller, any Material Adverse Effect. Section 4.01(a)(i)
of the Seller Disclosure Schedule lists each of the jurisdictions in
which Seller or any of its subsidiaries possesses any such foreign
qualification or license and lists each license held in such
jurisdiction. Seller lends money on the security of or leases gaming
devices and equipment in each of the states listed in Section 4.01(a)(ii)
of the Seller Disclosure Schedule. Seller is not required to be licensed
in those states listed in Section 4.01(a)(ii) with respect to its
business concerning gaming devices or equipment. Seller is licensed as a
Sales Finance Company in Montana but is not required to be licensed as a
commercial or sales finance company, lender or lessor in any other state.
(b) Except as set forth in Section 4.01(b) of the Seller Disclosure
Schedule, the Seller has no subsidiaries and no Equity Investments (other
than its investments in such subsidiaries).
(c) Each subsidiary of Seller is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation. Each subsidiary of Seller has the corporate power and
authority to own, lease or operate all of its properties and assets and
to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of
the properties and assets owned, leased or operated by it makes such
licensing or qualification necessary, except where the failure to be so
licensed or qualified would, neither individually nor in the aggregate,
result in, with respect to Seller, any Material Adverse Effect.
(e) The minute books of Seller and its subsidiaries contain
complete and accurate records of all meetings and other corporate actions
authorized at such meetings held or taken since the date of Seller's
incorporation by its stockholders and Board of Directors.
4.02 Capitalization.
(a) The authorized capital stock of Seller consists of 2,750,000
shares of common stock, par value $0.01 per share ("Seller Common
<PAGE>
Stock"). As of the date of this Agreement, there are 2,000,000 shares of
Seller Common Stock issued and outstanding and no shares of Seller Common
Stock held in Seller's treasury. All of the shares of Seller Common Stock
that are issued and outstanding on the date hereof are held of record and
beneficially by those stockholders listed on Section 4.02(a) of the
Seller Disclosure Schedule. All issued and outstanding shares of Seller
Common Stock have been duly authorized and validly issued, are fully
paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof and are owned free and clear
of any claim, lien or encumbrance. Except as referred to in this Section
4.02(a) or as described in Section 4.02(a) of the Seller Disclosure
Schedule, Seller does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for Seller to issue, deliver or sell, or cause to be
issued, delivered or sold any shares of Seller Common Stock or any other
equity security of Seller or any Seller subsidiary or any securities
convertible into, exchangeable for or representing the right to subscribe
for, purchase or otherwise receive any shares of Seller Common Stock or
any other equity security of Seller or any Seller subsidiary or
obligating Seller to grant, extend or enter into any such subscriptions,
options, warrants, calls, commitments or agreements. Except as described
in Section 4.02(a) of the Seller Disclosure Schedule, as of the date
hereof, there are no outstanding contractual obligations of Seller to
repurchase, redeem or otherwise acquire any shares of capital stock of
Seller or any Seller subsidiary.
(b) Section 4.01(b) of the Seller Disclosure Schedule lists each of
the subsidiaries of Seller as of the date of this Agreement and indicates
for each such subsidiary as of such date the percentage and type of
equity securities owned or controlled by Seller and the jurisdiction of
incorporation. Except for such investments in subsidiaries or as
otherwise disclosed in Section 4.01(b) of the Seller Disclosure Schedule,
Seller does not own, control or hold with the power to vote, directly or
indirectly, of record, beneficially or otherwise, any capital stock or
any equity or ownership interest in any corporation, partnership,
association, joint venture or other entity. No subsidiary of Seller has
or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for a Seller
subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, any equity security of Seller or of any Seller subsidiary or any
securities convertible into, exchangeable for or representing the right
to subscribe for, purchase or otherwise receive any such equity security
or obligating a Seller subsidiary to grant, extend or enter into any such
subscriptions, options, warrants, calls, commitments or agreements. As of
the date hereof, there are no outstanding contractual obligations of any
Seller subsidiary to repurchase, redeem or otherwise acquire any shares
of capital stock of Seller or any Seller subsidiary. All of the shares of
<PAGE>
capital stock of each of the subsidiaries held by Seller have been duly
authorized and validly issued, are fully paid and nonassessable and are
owned by Seller free and clear of any claim, lien, encumbrance or
agreement with respect thereto.
4.03 Authority; No Violation.
(a) Seller has full corporate power and authority to execute and
deliver this Agreement and the Plan of Merger and to consummate the
transactions contemplated hereby and thereby. The execution and delivery
of this Agreement and the other Transaction Documents to which the Seller
is a party and the consummation of the transactions contemplated hereby
and thereby have been duly and validly approved by the Board of Directors
and each of the Stockholders of Seller. The Board of Directors of the
Seller submitted this Agreement and the Plan of Merger to the
stockholders of the Seller for approval, which approval was given, and no
other corporate proceedings on the part of Seller are necessary to
consummate any of the transactions so contemplated by Transaction
Documents. This Agreement has been, and the Plan of Merger and the other
Transaction Documents to be executed by Seller will be, prior to the
Closing Date duly and validly executed and delivered by Seller and
(assuming due authorization, execution and delivery by Buyer and, with
respect to the Plan Merger, Acquisition Subsidiary) constitute (or, in
the case of the Plan of Merger or such other Transaction Documents, will
constitute at Closing) the valid and binding obligations of Seller,
enforceable against Seller 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.
(b) Neither the execution and delivery of any Transaction Document
by Seller, nor the consummation by Seller of the transactions
contemplated thereby, nor compliance by Seller with any of the terms or
provisions hereof or thereof, will (i) assuming that the consents and
approvals referred to in Section 4.04 are duly obtained, violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree
or injunction applicable to Seller or any of its subsidiaries or any of
their respective properties or assets, or (ii) violate, conflict with,
result in a breach of any provisions of, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration or the
creation of any lien, security interest, charge or other encumbrance upon
<PAGE>
any of the respective properties or assets of Seller or any of its
subsidiaries under, any of the terms, conditions or provisions of (x) the
Articles of Organization or other charter document of like nature or
By-laws of Seller or such Seller subsidiary, as the case may be, or (y)
any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Seller or any of its
subsidiaries is a party thereto as issuer, guarantor or obligor, or by
which they or any of their respective properties or assets may be bound
or affected.
4.04 Consents and Approvals. Except for consents, waivers or approvals
of, notices to or filings or registrations with, the Federal Reserve Board, the
FTC, the DOJ, the SEC, certain state "Blue Sky" or securities commissioners,
the Secretary of State of The Commonwealth of Massachusetts under the MBCL,
NASDAQ, and the stockholders of Seller, or as may be set forth in Section 4.04
of the Seller Disclosure Schedule, no consents, waivers or approvals of,
notices to or filings with any public body or authority are necessary, and no
consents or approvals of any third parties, including the landlord of the
property covered by the Seller Headquarters Lease (which term does not include
the Board of Directors of Seller or any Seller subsidiary) are necessary, in
connection with (i) the execution and delivery by Seller of Transaction
Documents or (ii) the consummation by Seller of the transactions contemplated
by such agreements, including the Acquisition Merger and the transfer of
ownership of the Seller Canadian Sub to the Buyer. The affirmative vote of
holders of two-thirds of the outstanding shares of Seller Common Stock is the
only vote of the holders of any class or series of capital stock or other
securities of the Seller necessary to approve the Transaction Documents and the
transactions contemplated thereby.
4.05 Financial Statements. Seller has made available to Buyer copies of
(a) the consolidated balance sheets of Seller and its subsidiaries as of
December 31 for the fiscal years 1994 through 1996, inclusive, and the related
consolidated statements of income, changes in Stockholders' equity and cash
flows for the fiscal years 1994 through 1996, inclusive, in each case
accompanied by the audit report of Arthur Andersen LLP, independent accountants
for Seller, and (b) the unaudited consolidated balance sheets of Seller and its
subsidiaries as of June 30, 1997 and June 30, 1996, the related unaudited
consolidated statements of income and changes in Stockholders' equity for the
six (6) months ended June 30, 1997 and June 30, 1996 and the related unaudited
consolidated statements of cash flows for the six (6) months ended June 30,
1997 and June 30, 1996. The December 31, 1996 consolidated balance sheet of
Seller (including the related notes, where applicable) (the "Seller Balance
Sheet") and the other financial statements referred to herein (including the
related notes, where applicable) fairly present, and the financial statements
to be included in any reports or statements to be filed by Seller with any
state or federal governmental agency or authority or otherwise prepared by
Seller after the date hereof will fairly present, the consolidated financial
<PAGE>
position and results of the consolidated operations and cash flows and changes
in shareholders' equity of Seller and its subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth; and each of
such statements (including the related notes, where applicable) has been and
will be prepared in accordance with GAAP consistently applied during the
periods involved, except as otherwise set forth in the notes thereto (subject,
in the case of unaudited interim statements, to normal year-end adjustments).
The books and records of Seller and its subsidiaries have been, and are being,
maintained in accordance with GAAP and applicable legal and regulatory
requirements.
4.06 Absence of Undisclosed Liabilities. None of Seller or any of its
subsidiaries has any obligation or liability (contingent or otherwise) that is
material on a consolidated basis to Seller, or that when combined with all
similar obligations or liabilities would be material on a consolidated basis to
Seller, except as disclosed or reflected in the Seller Balance Sheet, any of
the other financial statements described in Section 4.05 above or Section 4.06
of the Seller Disclosure Schedule.
4.07 Broker's Fees. Neither Seller nor any of its Stockholders, 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 any of the transactions contemplated by this Agreement, except for the
fees incurred in connection with the engagement of Tucker Anthony Incorporated
and except for legal, accounting and other professional fees payable in
connection with the Acquisition Merger. The Seller will be responsible for the
payment of such fees.
4.08 Absence of Certain Changes or Events. Except as set forth in Section
4.08 of the Seller Disclosure Schedule, since December 31, 1996, Seller and its
subsidiaries have not incurred any material liability, except in the ordinary
course of their business consistent with their past practices, nor has there
been any change in the assets, properties, liabilities, business, operations,
results of operations or financial condition of Seller or any of its
subsidiaries which has had, or is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Seller.
4.09 Legal Proceedings. Seller has furnished to Buyer copies of (i) all
attorney responses to the request of the independent auditors for the Seller
and its subsidiaries with respect to loss contingencies as of December 31,
1996, and (ii) a written list of all legal and regulatory proceedings filed
against the Seller or its subsidiaries since that date. Neither the Seller nor
any subsidiary of Seller is a party to any pending or, to the knowledge of the
Seller, threatened claim, action, suit, proceeding or to the knowledge of the
Seller, investigation against Seller or such subsidiary, or is subject to any
order, judgment or decree, except for matters shown on Section 4.09(a) of the
<PAGE>
Seller Disclosure Schedule. To the best knowledge of Seller, none of Seller's
or Seller's subsidiaries' route operators, equipment distributors, customers,
including but not limited to route operators and equipment distributors, or
suppliers is a party to any pending or threatened criminal proceeding or
investigation, except for matters shown on Section 4.09(b) of the Seller
Disclosure Schedule. Except as set forth in Section 4.09(c) of the Seller
Disclosure Schedule, there is no suit, action or proceeding pending or, to the
best knowledge of Seller, threatened, against Seller or any subsidiary of
Seller or challenging the validity or propriety of the transactions
contemplated by this Agreement or the Plan of Merger, as to which there is a
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a Material Adverse
Effect on Seller or otherwise materially adversely affect Seller's ability to
perform its obligations under this Agreement, nor is there any judgment,
decree, injunction, rule or order of any legal or administrative body or
arbitrator outstanding against Seller or any subsidiary of Seller having, or
which insofar as reasonably can be foreseen, in the future could have, any such
effect.
4.10 Taxes and Tax Returns.
(a) Seller and each of its subsidiaries (referred to for purposes of
this Section 4.10, collectively, as the "Companies") have timely filed in
correct form all Filed Tax Returns, each Filed Tax Return has been
prepared in material compliance with all applicable laws and regulations,
and all Filed Tax Returns are true and accurate in all material respects.
The Companies have made available to the Buyer correct and complete
copies of all federal income Tax Returns filed with respect to the
Companies for taxable periods ended on or after December 31, 1991, and
all examination reports, and statements of deficiencies assessed against
or agreed to by any of the Companies with respect to such taxable
periods.
(b) The Companies have paid all Taxes required to be
paid.
(c) No assessment that has not been settled or otherwise resolved
has been made with respect to Taxes not shown on the Filed Tax Returns.
No deficiency in Taxes or other proposed adjustment that has not been
settled or otherwise resolved has been asserted in writing by any taxing
authority against any of the Companies nor have any of the Companies
consented to any extension of the period for assessment or collection
with respect to any Tax. No Tax Return of any of the Companies is now
under examination by any applicable taxing authority. There are no liens
for Taxes (other than current Taxes not yet due and payable) on any of
the assets of any Company. None of the Companies has requested or been
granted an extension of the time for filing any Tax Return to a date
later than the Effective Time. No claim has ever been made by a taxing
<PAGE>
authority in a jurisdiction where any of the Companies does not pay Tax
or file Tax Returns that such of the Companies is or may be subject to
Taxes assessed by that jurisdiction.
(d) Adequate provision has been made on Seller's most recent
balance sheet for all Taxes of the Companies in respect of all periods
through the date of such balance sheet.
(e) None of the Companies is a party to or bound by any Tax
indemnification, Tax allocation or Tax sharing agreement with any person
or entity or has any contractual obligation to indemnify any other person
or entity with respect to Taxes.
(f) None of the Companies has filed or been included in a combined,
consolidated or unitary income Tax Return (including any consolidated
federal income Tax Return) other than one of which one of the Companies
was the parent.
(g) None of the Companies has made any payments, is obligated to
make any payments, or is a party to any agreement that could obligate it
to make any payments that will not be deductible under Code Section 280G.
(h) None of the Companies has made or is affected by any elections
under Code Sections 108(b)(5), 338(g), or 565, or Treasury Regulation
Sections 1.1502-20(g) or
1.1502-32(f)(2).
(i) The Companies have withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party.
4.11 Employees.
(a) Except as set forth in Section 4.11(a) of the Seller Disclosure
Schedule, neither Seller nor any of its subsidiaries maintains or
contributes to any "employee pension benefit plan" (the "Seller Pension
Plans"), as such term is defined in Section 3 of ERISA, "employee welfare
benefit plan" (the "Seller Benefit Plans"), as such term is defined in
Section 3 of ERISA, stock option plan, stock purchase plan, deferred
compensation plan, other employee benefit plan for employees or former
employees of Seller or any subsidiary thereof, or any other plan, program
or arrangement of the same or similar nature that provides benefits to
nonemployee directors of Seller or any subsidiary thereof (collectively,
the "Seller Other Plans").
<PAGE>
(b) Seller has made available to Buyer a complete and accurate copy
of each of the following with respect to each of the Seller Pension
Plans, Seller Benefit Plans and Seller Other Plans: (i) plan document;
(ii) trust agreement or insurance contract, if any; (iii) most recent IRS
determination letter, if any; (iv) most recent actuarial report, if any;
and (v) most recent annual report on Form 5500.
(c) The current value of the assets of each of the Seller Pension
Plans subject to Title IV of ERISA exceeds that plan's "benefit
liabilities" as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if that plan
terminated in accordance with all applicable legal requirements.
(d) Each of the Seller Pension Plans and each of the Seller Benefit
Plans has been administered in compliance with its terms in all material
respects and is in compliance in all material respects with the
applicable provisions of ERISA (including, but not limited to, the
funding and prohibited transactions provisions thereof), the Code and
other applicable laws.
(e) There has been no reportable event within the meaning of
Section 4043(b) of ERISA or any waived funding deficiency within the
meaning of Section 412(d)(3) of the Code with respect to any Seller
Pension Plan.
(f) Seller and its subsidiaries have caused all their financial
statements, including the Seller Balance Sheet, to reflect appropriate
expenses, accruals and reserves for all Seller Pension Plans, Seller
Benefit Plans and Seller Other Plans and have made or provided for all
contributions to the Seller Pension Plans required thereunder.
(g) Neither Seller nor any of its subsidiaries has
contributed to any "multiemployer plan," as such term is
defined in Section 3(37) of ERISA.
(h) Each of the Seller Pension Plans which is intended to be a
qualified plan within the meaning of Section 401(a) of the Code is so
qualified, and Seller is not aware of any fact or circumstance which
would adversely affect the qualified status of any such plan.
(i) Neither Seller nor any of its subsidiaries is party to or
maintains any contract or other arrangement with any employee or group of
employees, providing severance payments, stock or stock-equivalent
payments or post-employment benefits of any kind or providing that any
otherwise disclosed plan, program or arrangement will irrevocably
<PAGE>
continue, with respect to any or all of its participants, for any period
of time.
4.12 Agreements with Governmental Authorities. Neither Seller nor any of
its subsidiaries is a party to any commitment, letter, written agreement,
memorandum of understanding or order to cease and desist with any federal or
state governmental agency or authority charged with the supervision or
regulation of consumer finance or small loan companies which restricts the
conduct of its business, or in any manner relates to its capital adequacy,
credit policies or practices, management or overall safety and soundness or
such entity's ability to perform its obligations hereunder.
4.13 Material Agreements. Except as set forth in Section 4.13 of the
Seller Disclosure Schedule, and other than this Agreement and the other
Transaction Documents, neither Seller nor any of its subsidiaries is a party to
or is bound by any of the following: (a) any agreement, arrangement, or
commitment that is material to the financial condition, operations, results of
operations or business of Seller and its subsidiaries taken as a whole, except
those entered into in the ordinary course of business; (b) any written (or
oral, if material) agreement or commitment relating to the employment of any
person or the election or retention in office or severance of any present or
former director or officer of the Seller or its subsidiaries; (c) any contract,
agreement, or understanding with any labor union; or (d) any agreement by and
among the Seller, its subsidiaries and/or any Affiliate thereof.
4.14 Ownership of Real Property and Assets; Leases. Except as set forth
on Section 4.14(a) of the Seller Disclosure Schedule, neither Seller nor any of
its subsidiaries own any real property. Section 4.14(b) of the Seller
Disclosure Schedule sets forth a true and complete list of all real property
leased or operated by the Seller or its subsidiaries as of the date hereof.
Seller and its subsidiaries have good and marketable title to all assets and
properties, whether real or personal, tangible or intangible, including,
without limitation, the capital stock of its subsidiaries and all other assets
and properties reflected in its consolidated balance sheet as of June 30, 1997,
or acquired subsequent thereto subject to no encumbrances, liens, mortgages,
security interests or pledges, except (a) those items that secure liabilities
that are reflected in said balance sheet or the notes thereto or incurred in
the ordinary course of business after the date of such balance sheet or (b)
statutory liens for amounts not yet delinquent or which are being contested in
good faith. The Seller and its subsidiaries as lessees have the right under
valid and existing leases to occupy, use, possess and control all property
leased by the Seller and its subsidiaries as presently occupied, used,
possessed and controlled by the Seller and its subsidiaries. Neither the Seller
nor any of its subsidiaries is 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 Seller or any of its
subsidiaries leases any real property, except for such defaults which,
individually or in the aggregate, would not result in the forfeiture of the use
<PAGE>
or occupancy of the property covered by any such lease or would not result in a
material liability to the Seller or any Significant Subsidiary of the Seller
which is not reflected on the consolidated balance sheet of the Seller dated as
of June 30, 1997. All such leases constitute legal, valid and binding
obligations of the Seller or its subsidiaries and, to the knowledge of the
Seller, the other party thereto, enforceable by the Seller or such subsidiary
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. Section 4.14(b) of the Seller Disclosure Schedule sets
forth the expiration date and renewal terms of each such lease. Neither the
Seller nor any of its subsidiaries has received notice of, or made a claim with
respect to, any breach or default under any leases pursuant to which the Seller
or any of its subsidiaries lease any real property. None of the leases,
including the Seller Headquarters Lease, to which the Seller or its
subsidiaries are a party, will terminate by reason of the Seller (a) entering
into this Agreement or any of the other Transaction Documents or (b)
consummating the transactions contemplated hereby or thereby.
4.15 Reports. Since January 1, 1994, Seller and its subsidiaries have
filed, and subsequent to the date hereof will file, all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that were and are required to be filed with any state or federal
governmental agencies or authorities (all such reports and statements are
collectively referred to herein as the "Seller Reports"), except where the
failure to so file any Seller Report will not result in, or create any
reasonable probability of resulting in, a material limitation on the conduct of
the business of Seller, will not cause or create any reasonable probability of
causing, Seller to incur any material financial penalty and will not otherwise
result, or create any reasonable probability of resulting, with respect to
Seller, in any Material Adverse Effect. As of their respective dates, the
Seller Reports complied and, with respect to filings made after the date of
this Agreement, will at the date of filing comply, in all material respects
with all of the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed and did not contain and, with
respect to filings made after the date of this Agreement, will not at the date
of filing contain, any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.16 Compliance with Applicable Laws. Seller holds all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
<PAGE>
business, and Seller has complied with every, and is not in default in any
respect under any, applicable law, statute, order, rule, regulation or policy
of, or agreement with, any federal, state or local governmental agency or
authority relating to Seller, other than where such default or noncompliance
will not result in, or create any reasonable probability of resulting in, a
material limitation on the conduct of the business of Seller, will not cause,
or create any reasonable probability of causing, Seller to incur any material
financial penalty and will not otherwise result, or create any reasonable
probability of resulting, with respect to Seller, in any Material Adverse
Effect, and Seller has not received any notice of violation of, or commencement
of any proceeding in connection with any such violation, and does not know of
any violation of, any such law, statute, order, rule, regulation, policy or
agreement which would have such a result.
4.17 Chapters 110D and 110F Not Applicable. The provisions of Chapters
110D and 110F of the Massachusetts General Laws will not, prior to the
termination of this Agreement, assuming the accuracy of the representations
contained in Section 3.16 hereof (without giving effect to the knowledge
qualification thereof), apply to this Agreement or any of the other Transaction
Documents or any of the transactions contemplated hereby or thereby.
4.18 Insurance. Seller and each of its subsidiaries is presently insured,
and since October 20, 1992 has been insured, for reasonable amounts against
such risks as companies engaged in a similar business in a similar location
would, in accordance with good business practice, customarily be insured.
Seller has made available to the Buyer copies of policies relating to insurance
maintained by the Seller or its Subsidiaries with respect to their properties
and the conduct of their respective business.
4.19 Labor. No work stoppage involving Seller or any of its subsidiaries
is pending or, to the best knowledge of Seller, threatened. Neither Seller nor
any of its subsidiaries is involved in, or, to the best knowledge of Seller,
threatened with or affected by, any dispute, arbitration, lawsuit or
administrative proceeding relating to labor or employment matters which, if
adversely decided, could result in a Material Adverse Effect with respect to
Seller. No employees of Seller or any of its subsidiaries are represented by
any labor union, and, to the best knowledge of Seller, no labor union is
attempting to organize employees of Seller or any of its subsidiaries.
4.20 Material Interests of Certain Persons. No officer, director or
Stockholder of Seller, or any "associate" (as such term is defined in Rule
14a-1 under the Exchange Act) of any such officer, director or Stockholder, has
any material interest in any material contract or property (real or personal),
tangible or intangible, used in or pertaining to the business of Seller or any
of its subsidiaries.
<PAGE>
4.21 Absence of Registration Obligations. Neither Seller nor any of its
subsidiaries is under any obligation, contingent or otherwise, by reason of any
agreement to register any of its securities under the Securities Act which will
survive the Acquisition Merger.
4.22 Loans. All currently outstanding loans of, or current extensions of
credit by, Seller (individually, a "Loan," and collectively, the "Loans") were
solicited, originated and currently exist in compliance with all applicable
material requirements of federal and state law and regulations promulgated
thereunder. The Loans are adequately documented and each note evidencing a Loan
or loan or credit agreement or security instrument related to the Loans
constitutes a valid, legal and binding obligation of the obligor thereunder,
enforceable in accordance with the terms thereof, except where the failure
thereof, individually or in the aggregate, would not have a Material Adverse
Effect with respect to Seller. There are no oral modifications or amendments or
additional agreements related to the Loans that are not reflected in Seller's
records, no claims of defense as to the enforcement of any Loan has been
asserted and Seller is aware of no acts or omissions which would give rise to
any claim or right of rescission, set-off, counterclaim or defense, except
where any of the foregoing would not have, either individually or in the
aggregate, a Material Adverse Effect with respect to Seller. Seller currently
maintains, and shall continue to maintain, an allowance for loan losses
allocable to the Loans which complies with all applicable loan loss reserve
requirements established in accordance with GAAP and by any governmental
authorities having jurisdiction with respect to Seller or any of its
subsidiaries. Except as disclosed in Section 4.22 of the Seller Disclosure
Schedule, none of the Loans are presently serviced by third parties and there
is no obligation which could result in any Loan becoming subject to any third
party servicing.
4.23 Seller Information. The information relating to Seller and its
subsidiaries to be contained in any documents filed with any governmental
agency in connection herewith, to the extent such information is provided in
writing by Seller, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make such information not
misleading.
4.24 Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in any certificate, list or other
writing, including but not necessarily limited to the Seller Disclosure
Schedule, furnished to Buyer pursuant to the provisions hereof, to the best
knowledge of Seller, contains or will contain any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein not misleading. To the best knowledge of Seller,
all information material to Buyer's interest in the Acquisition Merger, or
which is necessary to make Seller's representations and warranties herein
contained not misleading, has been disclosed to Buyer.
<PAGE>
4.25 Seller Advisory Board Members. None of the Seller Advisory Board or
any of the individual members thereof has any authority or responsibility with
respect to the management or affairs of the Seller or any of its subsidiaries
and each acts only in an advisory capacity. Section 4.25 of the Seller
Disclosure Schedule lists the members of the Seller Advisory Board.
4.26 Individual Representations and Covenants of Seller Stockholders.
Each of the Stockholders has been advised that the Buyer Common Stock being
offered and sold pursuant this Agreement has not been registered under the
Securities Act or any relevant state securities laws but are being offered and
sold pursuant to exemptions from such laws and that the Buyer's reliance upon
such exemptions is predicated in part on each Stockholder's representations to
the Buyer as contained herein. Each Stockholder represents, warrants, covenants
and agrees that (a) he, she or it is an "accredited investor" as such term is
defined in Rule 501 of SEC promulgated under the Securities Act or has been
advised by a "purchaser representative", as such term is defined in the
Securities Act, with respect to the transaction, (b) the shares of Buyer Common
Stock being acquired hereby are being acquired, for his, her or its own account
and for investment purposes only and without the intention of reselling or
redistributing such shares in a manner inconsistent with the Securities Act,
(c) except as otherwise provided in this Agreement, he, she or it has made no
agreement with others regarding the sale or redistribution of such securities,
and (d) his, her or its financial condition is such that it is not likely that
it will be necessary to dispose of such shares, in the foreseeable future. Each
of the Stockholders further represents, warrants, covenants and agrees that if,
contrary to his, her or its foregoing intentions, he, she or it should later
desire to sell, assign, pledge, transfer or otherwise dispose of the shares of
Buyer Common Stock acquired pursuant to this Agreement, in any manner, he or
she shall not do so without first obtaining (i) the opinion of counsel
satisfactory to the Buyer that such proposed disposition or transfer lawfully
may be made without the registration of such securities pursuant to the
Securities Act, and applicable state securities laws or (ii) the registration
of the shares of Buyer Common Stock received pursuant hereto. Each Stockholder
further agrees that, until registered under the Securities Act, or transferred
pursuant to the provisions of Rule 144 thereunder, or any similar provision as
promulgated by the SEC, the shares of Buyer Common Stock acquired pursuant to
this Agreement, whether upon initial issuance or upon any transfer thereof,
shall bear a legend, prominently stamped or printed thereon, reading
substantially as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL
SATISFACTORY TO BUYER THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR APPLICABLE STATE SECURITIES LAWS."
<PAGE>
4.27 Financing.Section 4.27 of the Seller Disclosure Schedule lists each
of the financing arrangements, including subordinated loans to or investments
in the Seller to which the Seller is currently a party, including maturity
date, original principal amount, interest rate and amount outstanding. Neither
the Seller nor any of its subsidiaries are party to any financing arrangement
that will accelerate or terminate by reason of Seller (i) entering into this
Agreement or any of the Transaction Documents or (ii) consummating the
transactions contemplated hereby and thereby (assuming that all of the consents
described in the Seller Disclosure Schedules are obtained).
4.28 Year 2000. There are no modifications required to any of the
Seller's computer systems in order for such systems to contain no deficiencies
relating generally to formatting for entering dates (commonly referred to and
referred herein as the "Year 2000 Problem"). The Seller's computer systems is
susceptible to all necessary modification and the Seller has adequate personnel
or consultants under contract to so timely modify its own computer systems. The
Seller is not aware of any inability on the part of any customer, insurance
company or service provider with which the Seller transacts business to timely
remedy their own deficiencies in respect of the Year 2000 Problem.
4.29 Seller's Representation Regarding Tax-Free Reorganization Treatment.
There is no plan or intention by the shareholders of Seller who own one percent
(1%) or more of Seller Common Stock, and to the best knowledge of the
management of Seller, there is no plan or intention on the part of the
remaining shareholders of Seller to sell, exchange, otherwise dispose of,
reduce the risk of loss (by short sale or otherwise) of the holding of, enter
into any contract or other arrangement with respect to, or consent to the sale,
exchange or other disposition of, any interest in a number of shares of Buyer
Common Stock received in the Acquisition Merger that would reduce the Buyer
Common Stock ownership of the existing Seller stockholders to a number of
shares having a value, in the aggregate and valued at the time of the
Acquisition Merger, of less than 50% of the value, in the aggregate and valued
immediately before the Acquisition Merger, of the Seller Common Stock
outstanding immediately before the Acquisition Merger. For purposes of this
representation, shares of Seller Common Stock exchanged for cash in lieu of
fractional shares of Buyer Common Stock will be treated as Seller Common Stock
outstanding immediately before the Acquisition Merger. Moreover, shares of
Seller Common Stock and shares of Buyer Common Stock held by existing Seller
<PAGE>
shareholders and otherwise sold, redeemed or disposed of prior to or subsequent
to the Acquisition Merger, to the extent such sale, redemption or disposition
was part of the plan of reorganization, will be taken into account in making
this representation.
4.30 Seller Stockholders' Representation Regarding Tax-Free
Reorganization Treatment. Each of the Stockholders hereby represents that as of
the date of this Agreement he, she or it has no plan or intention to sell,
exchange, otherwise dispose of, reduce the risk of loss (by short sale or
otherwise) of the holding of, enter into any contract or other arrangement with
respect to, or consent to the sale, exchange or other disposition of, any
interest in a number of the shares of Buyer Common Stock received in the
Acquisition Merger that would reduce the Buyer Common Stock ownership of the
Stockholders to a number of shares having a value, in the aggregate, valued at
the time of the Acquisition Merger, and taking into account any prior sale,
exchange, etc. by other Stockholders, of less than 50% of the value, in the
aggregate and valued immediately before the Acquisition Merger, of the Seller
Common Stock outstanding immediately before the Acquisition Merger. Each
Stockholder has taken into account in making the foregoing representation any
shares of Seller Common Stock and shares of Buyer Common Stock held by him, her
or it and otherwise sold, redeemed or disposed of prior to or subsequent to the
Acquisition Merger, to the extent such sale, redemption or disposition was part
of the plan of reorganization. Buyer, Seller and the Stockholders acknowledge
this representation is made for the purposes of enabling Buyer's and Seller's
respective counsel to deliver the tax opinions described in Article VI and
that, in the event that such representation is still deemed necessary by such
counsel under the law applicable as of the Effective Time, the Stockholders
will be required to again so represent as to their plans and intentions as of
the Effective Time.
ARTICLE V
COVENANTS OF THE PARTIES
5.01 Conduct of the Business of Seller. During the period from the date
of this Agreement to the earlier of the Effective Time or the date of
termination of this Agreement, and except as may be required or specifically
permitted pursuant to this Agreement, Seller:
(a) shall, and shall cause each of its subsidiaries to, conduct its
business and engage in transactions only in the ordinary and usual course
of business consistent with past practices, which shall include without
limitation (i) refraining from any of the activities described in Section
5.01(b) below and (ii) not entering into any material transactions except
<PAGE>
in the ordinary and usual course of business consistent with past
practices, and (iii) complying with the following covenants:
(A) maintaining 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 Seller or any of its
Significant Subsidiaries;
(B) using 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;
(C) complying with and performing in all material respects its
obligations and duties (y) under contracts, leases and documents
relating to or affecting its assets, properties and business and (z)
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
(D) using all reasonable efforts and cause its subsidiaries to
use all reasonable efforts to (x) preserve intact its business
organization and the goodwill of those having business relationships
with the Seller or any of the Seller's subsidiaries, (y) keep
available the services of its officers and employees as a group and
(z) maintain satisfactory relationships with borrowers, route
operators, equipment distributors and other customers and others
having business relationships with it;
(b) shall not and shall not permit any of its
subsidiaries to, without the prior written consent of Buyer:
(i) engage or participate in any material transaction or incur
or sustain any material obligation or liability except in the
ordinary and usual course of its businesses consistent with past
practices other than commitments and expenditures after
consultation with the Buyer not to exceed $500,000 in the aggregate
with respect to an upgrade of Seller's accounting and processing
computer systems, including the development, installation and
training of an imaging and workflow documentation system;
(ii) except in the ordinary and usual course of business
consistent with past practices, sell, lease, transfer, assign,
encumber or otherwise dispose of or enter into any contract,
<PAGE>
agreement or understanding to lease, transfer, assign, encumber or
dispose of, any of its assets;
(iii) relocate, or file any necessary application to open,
close, relocate, any office;
(iv) terminate, or give any notice (written or verbal) to
customers or governmental authorities or agencies to terminate, the
operations of any office; or
(v) waive any material right, whether in equity or at law, that
it has with respect to any asset except in the ordinary, regular
and usual course of business consistent with past practice;
(c) shall, at Buyer's request and expense, use its best efforts to
cooperate with Buyer with respect to preparation for the acquisition of
Seller by Buyer, and Seller shall confer on a regular and frequent basis
with one or more representatives of Buyer to report on operational and
related matters;
(d) shall promptly notify Buyer of any emergency or other change in
the normal course of its or its subsidiaries' businesses or in the
operation of its or its subsidiaries' properties and of any governmental
complaints, investigations or hearings (or communications indicating that
the same may be contemplated) if such emergency, change, complaint,
investigation or hearing would be material to the assets, properties,
liabilities, business, operations, results of operations, financial
condition or prospects of Seller;
(e) shall not declare or pay any dividends on or make
any other distributions in respect of Seller Common Stock;
(f) except as expressly provided for in this Agreement, shall not
adopt or amend (other than amendments required by applicable law or
amendments that reduce amounts payable by it or its subsidiaries) in any
material respect any Seller Pension Plan, any Seller Benefit Plan or any
Seller Other Plan or enter (or permit any of its subsidiaries to enter)
into any employment, severance or similar contract with any person
(including, without limitation, contracts with management which might
require that payments be made upon the consummation of the transactions
contemplated hereby) or amend any such existing agreements, plans or
contracts to grant any raise or bonus or otherwise increase any amounts
payable thereunder or benefits provided thereunder, or grant or permit
any increase in compensation to its or its subsidiaries' employees as a
class except as disclosed in Section 5.01 of the Seller Disclosure
Schedule;
<PAGE>
(g) shall not, with respect to itself or any of its subsidiaries,
authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into an agreement with respect to, any
merger, consolidation, purchase and assumption transaction or business
combination (other than the Acquisition Merger), any acquisition of a
material amount of assets or securities or assumption of liabilities, any
disposition of a material amount of assets or securities, or any release
or relinquishment of any material contract rights not in the ordinary and
usual course of business and consistent with past practices;
(h) shall not propose or adopt amendments to its or
its subsidiaries' articles of organization or by-laws;
(i) shall not issue, deliver or sell any shares (whether original
issuance or from treasury shares) of its capital stock, or securities
convertible into or exercisable for shares of its capital stock (or
permit any of its subsidiaries to issue, deliver or sell any shares of
such subsidiaries' capital stock or securities convertible into or
exercisable for shares of such subsidiaries' capital stock), or effect
any stock split, reverse stock split, recapitalization, reclassification
or similar transaction or otherwise change its equity capitalization as
it exists on the date hereof;
(j) shall not grant, confer or award any options, warrants,
conversion rights or other rights not existing on the date hereof to
acquire any shares of its capital stock;
(k) shall not purchase, redeem or otherwise acquire, or permit any
of its subsidiaries to purchase, redeem or otherwise acquire, any shares
of its capital stock or any securities convertible into or exercisable
for any shares of its capital stock;
(l) shall not impose on any share of capital stock held by it or by
any of its subsidiaries of any lien, charge, or encumbrance and shall use
its best efforts to prevent any such lien, charge or encumbrance and to
obtain the release of any such lien, charge or encumbrance that is
imposed on the Seller's property;
(m) shall not incur, or permit any of its subsidiaries to incur,
any additional debt obligation or other obligation for borrowed money, or
to guaranty any additional debt obligation or other obligation for
borrowed money, except in the ordinary and usual course of business
consistent with past practices;
<PAGE>
(n) shall not incur or commit to any capital expenditures or any
obligations or liabilities in connection therewith, other than capital
expenditures and such related obligations or liabilities incurred or
committed to in the ordinary and usual course of business consistent with
past practices, and, in all cases, Seller agrees to obtain Buyer's prior
consent with respect to capital expenditures that individually exceed
$50,000 or cumulatively exceed $100,000, other than commitments and
expenditures after consultation with the Buyer not to exceed $500,000 in
the aggregate with respect to an upgrade of Seller's accounting and
processing computer systems, including the development, installation and
training of an imaging and workflow documentation system;
(o) shall not change its methods of accounting in effect at
December 31, 1996, except as may be required by changes in GAAP as
concurred in by Seller's independent auditors, and Seller shall not
change its fiscal year;
(p) shall file all reports, applications and other documents
required to be filed by it with any governmental agency or authority
between the date of this Agreement and the Effective Time and shall
furnish to Buyer copies of all such reports promptly after the same are
filed;
(q) shall not, except as expressly contemplated
hereby, enter into any contract with any Affiliate;
(r) shall not, except for transactions in the ordinary course of
business consistent with past practice, enter into or terminate any
material contract or agreement, or make any changes in any of its
material contracts, other than renewals of contracts for less than a two
(2) year period and, subject to the provisions of Section 5.12 hereof,
leases without material adverse change of terms;
(s) shall not agree, in writing or otherwise, to take any of the
actions that are described above in this Section 5.01 as prohibited
hereunder or any action which would make any of its representations or
warranties contained in this Agreement untrue or incorrect or would
otherwise violate any of its other agreements or commitments contained in
this Agreement in any material respect.
5.02 Access to Properties and Records; Confidentiality.
(a) Except as provided below, Seller shall permit Buyer access to
its properties and those of its subsidiaries during normal business hours
upon reasonable prior notice, and shall disclose and make available to
Buyer all Records, including all books, papers and records relating to
<PAGE>
the assets, stock ownership, properties, operations, obligations and
liabilities of Seller and its subsidiaries, including, but not limited
to, all books of account (including the general ledger), tax records,
minute books of directors and Stockholders meetings, organizational
documents, by-laws, material contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files, plans
affecting employees, and any other business activities or prospects in
which Buyer may reasonably have an interest in light of the transactions
contemplated hereby. Seller shall use best efforts to make arrangements
with each third party provider of services to Seller to permit Buyer
reasonable access to all of Seller's Records held by each such third
party. Buyer shall permit Seller reasonable access during normal business
hours upon reasonable prior notice to such properties and records of
Buyer and/or its subsidiaries in which Seller may reasonably have an
interest in light of the transactions contemplated hereby. Neither Buyer
nor Seller nor any of their respective subsidiaries shall be required to
provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer, would
jeopardize the attorney-client privilege of the institution in possession
or control of such information, or would contravene any law, rule,
regulation, order, judgment, decree or binding agreement or, in the event
of any litigation or threatened litigation between the parties over the
terms of this Agreement where access to information may be adverse to the
interests of such party. The parties will use all reasonable efforts to
make appropriate substitute disclosure arrangements under circumstances
in which the restrictions of the preceding sentence apply.
(b) All Confidential Information, as such term is defined further
below, furnished by each party hereto to the other or to any of its
affiliates or to any of its or any of its affiliates' directors,
officers, employees, or representatives or agents (such persons being
referred to herein as "Representatives"), shall be treated as the sole
property of the party furnishing the information until consummation of
the transactions contemplated hereby, and, if such transactions shall not
occur, the party receiving the information or any of its affiliates or
Representatives, as the case may be, shall return to the party which
furnished such information all documents or other materials containing,
reflecting or referring to such information, shall keep confidential all
such information for the period hereinafter referred to, and shall not
directly or indirectly at any time use such information for any
competitive or other commercial purpose; provided, however, that Buyer
and its affiliates shall be permitted to retain and share with their
regulators, examiners and auditors (only to the extent Buyer is required
to disclose such information, and, provided, that such parties are
informed of the confidential nature thereof and if appropriate directed
<PAGE>
to treat such information confidentially) such materials, files and
information relating to or constituting Buyer's or any of its affiliates'
or Representatives' work product, presentations or evaluation materials
as any such party deems reasonably necessary or advisable in connection
with auditing or examination purposes. The obligation to keep such
information confidential shall continue for two years from the date this
Agreement is terminated. In the event that either party or any of its
affiliates or Representatives is requested or required in the context of
a litigation, governmental, judicial or regulatory investigation or other
similar proceeding (by oral questions, interrogatories, requests for
information or documents, subpoenas, civil investigative demands or
similar process) to disclose any Confidential Information, the party or
its affiliate or its Representative so requested or required will
directly or through the party or such affiliate or Representative, if
practicable and legally permitted, prior to providing such information,
provide the other party with notice of each such request or requirement
so that the other party may seek an appropriate protective order or other
remedy or, if appropriate, waive compliance with the provisions of this
Agreement. If, in the absence of a protective order or the receipt of a
waiver hereunder, the party or affiliate or Representative so requested
or required is, in the written opinion of its counsel, legally required
to disclose Confidential Information to any tribunal, governmental or
regulatory authority, or similar body, the party or affiliate or
Representative so required may disclose that portion of the Confidential
Information which it is advised in writing by such counsel it is legally
required to so disclose to such tribunal or authority or similar body
without liability to the other party hereto for such disclosure. The
parties and their affiliates and Representatives will exercise reasonable
efforts, at the expense of the party who disclosed such Confidential
Information to the other party, to obtain assurance that confidential
treatment will be accorded the information so disclosed.
As used in this Section 5.02(b), "Confidential Information" means
all data, reports, interpretations, forecasts and records (whether in
written form, electronically stored or otherwise) containing or otherwise
reflecting information concerning the disclosing party or its affiliates
which is not available to the general public and which the disclosing
party or any affiliate or any of their respective Representatives
provides or has previously provided to the receiving party or to the
receiving party's affiliates or Representatives at any time in connection
with the transactions contemplated by this Agreement, including but not
limited to any information obtained by meeting with Representatives of
the disclosing party or its affiliates, together with summaries,
analyses, extracts, compilations, studies, personal notes or other
documents or records, whether prepared by the receiving party or others,
which contain or otherwise reflect such information. Notwithstanding the
foregoing, the following information will not constitute "Confidential
Information": (i) information that is or becomes generally available to
the public other than as a result of a disclosure by the receiving party
<PAGE>
or any affiliate or Representative of the receiving party, (ii)
information that the receiving party can demonstrate was previously known
to it or its affiliates or Representatives on a nonconfidential basis
prior to its disclosure by the disclosing party, its affiliates or
Representatives, (iii) information that became or becomes available to
the receiving party or any affiliate or Representative thereof on a
nonconfidential basis from a source other than the disclosing party or
any affiliate or Representatives of the disclosing party, provided that
such source is not known by the disclosing party or its affiliates or
Representatives to be subject to any confidentiality agreement or other
legal restriction on disclosing such information or (iv) information that
the receiving party can demonstrate has been independently acquired or
developed by it or its affiliates or Representatives without violating
the obligations of this Section 5.02(b).
5.03 No Solicitation. Unless and until this Agreement shall have been
properly terminated by either party pursuant to Section 8.01 hereof, neither
Seller nor any of its subsidiaries shall (and Seller and each of its
subsidiaries shall use its best efforts to cause its officers, directors,
employees, representatives and agents, including, but not limited to,
investment bankers, attorneys and accountants, not to), directly or indirectly,
encourage, solicit, initiate or participate in any discussions or negotiations
with, or provide any information to, any corporation, partnership, person or
other entity or group (other than Buyer and its affiliates or representatives)
concerning any merger, tender offer, sale of assets other than in the ordinary
and usual course of business consistent with past practices, sale of shares of
capital stock or debt securities or similar transaction involving Seller or any
of its subsidiaries (an "Acquisition Transaction"). Seller will immediately
communicate to Buyer the terms of any proposal, discussion, negotiation or
inquiry relating to an Acquisition Transaction and the identity of the party
making such proposal or inquiry which it may receive in respect of any such
transaction (which shall mean that any such communication shall be delivered no
less promptly than by telephone within twenty-four (24) hours of Seller's
receipt of any such proposal or inquiry) or its receipt of any request for
information from any governmental agency or authority with respect to a
proposed Acquisition Transaction.
5.04 Consents. Each of Seller and Buyer will cooperate with the other and
use all reasonable efforts to prepare all documentation, to effect all filings
and to obtain all permits, consents, approvals and authorizations of
governmental agencies and authorities and nongovernmental third parties, which
are necessary or appropriate to consummate the transactions contemplated by
this Agreement.
5.05 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to,
as promptly as practicable, take, or cause to be taken, all action and to do,
<PAGE>
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of Buyer and Seller shall use
reasonable efforts to take all such necessary action.
5.06 Seller Disclosure Supplements. From time to time prior to the
Effective Time, and in any event on the Closing Date prior to the Effective
Time, Seller will promptly supplement or amend the Seller Disclosure Schedule
with respect to any matter hereafter arising which, if existing, occurring or
known at the date of this Agreement, would have been required to be set forth
or described in the Seller Disclosure Schedule or which is necessary to correct
any information in the Seller Disclosure Schedule which has become inaccurate.
No supplement or amendment to the Seller Disclosure Schedule pursuant to this
Section 5.06 shall have any effect for the purpose of determining Seller's
satisfaction of any of the conditions set forth in Section 6.02 hereof, but in
the event that Buyer elects to close notwithstanding such supplement or
amendment, any matter disclosed therein shall not form the basis of a claim for
breach of any representation or warranty, unless any matter disclosed as a
supplement or amendment to the Seller Disclosure Schedule was known or should
have been reasonably known as of the date hereof.
5.07 Public Announcements. Except as otherwise required by law or the
rules of NASDAQ, Seller and Buyer will cooperate with each other in the
development and distribution of all news releases and other public information
disclosures with respect to this Agreement or any of the transactions
contemplated hereby.
5.08 Post-Closing Governance. Immediately following the Effective Time,
subject to the rights of Buyer as the sole stockholder of Seller, the Board of
Directors of Seller shall consist of, in addition to those persons who are
serving as directors of Seller immediately prior to the Effective Time, those
persons who are serving as directors of Acquisition Subsidiary immediately
prior to the Effective Time, each to hold office in accordance with the
Articles of Organization and by-laws of Seller as then in effect. At all times
after the Effective Time, the Board of Directors of the Surviving Corporation
(as defined in the Plan of Merger) shall consist of at least fifty percent
(50%) Buyer appointees and up to four individuals designated by the Chief
Executive Officer of Seller. Further, at the Effective Time, the Board of
Directors of the subsidiaries of the Surviving Corporation shall consist of
those directors of such subsidiaries which the Seller has selected to serve as
directors of such subsidiary and such additional persons as shall be designated
by the Buyer prior to the Effective Time.
<PAGE>
5.09 Tax-Free Reorganization Treatment. (a) Neither Buyer, Seller nor any
Stockholder shall intentionally take or cause to be taken any action, whether
before or after the Effective Time, which would disqualify the Acquisition
Merger as a "reorganization" within the meaning of Section 368(a) of the Code.
(b) Neither the Buyer, the Seller nor any Stockholder shall intentionally
take or cause to be taken any action, whether before or after the Effective
Time, which would prevent the Acquisition Merger from qualifying for pooling of
interests accounting treatment.
5.10 Employment and Benefit Matters. In the event that any employee of
the Seller or its subsidiary (a "Seller Employee") is transferred to the Buyer
or any Affiliate of the Buyer or becomes an employee of Buyer or an Affiliate
of Buyer as a result of the transactions contemplated hereby (a "Transferred
Employee"), and becomes a participant in an employee benefit plan, program or
arrangement maintained by or contributed to by the Buyer or its Affiliates, the
Buyer shall cause such plan, program or arrangement to treat the prior service
of such Transferred Employee with the Seller or its Affiliates as service
rendered to the Buyer or its Affiliate, as the case may be, for purposes of
eligibility to participate, vesting and eligibility for special benefits under
such plan, program or arrangement of the Buyer, but not for purposes of benefit
accrual. The Buyer agrees to provide the Seller Employees and Transferred
Employees with the types and levels of employee benefits maintained by the
Buyer for similarly situated employees of the Buyer. The Buyer will treat the
service of Seller Employees with Seller as service rendered to Buyer for
purposes of eligibility to participate, vesting and for other appropriate
benefits, but not for the benefit accrual (including minimum pension amount) or
benefit payment, early retirement subsidies, minimum pension benefits or
post-retirement welfare benefits under any pension benefit plan or welfare plan
of Buyer extended to Seller Employees or Transferred Employees. In addition, it
is the intention of Buyer that, after the Closing, the benefits accorded to the
Seller Employees and Transferred Employees would, in the aggregate, be no less
favorable than Seller's existing benefit plans. All benefits offered to Seller
Employees shall conform to Buyer's benefit plans and policies, except that
Seller Employees shall be entitled to the vacation benefits offered to each of
them prior to the Effective Time and any automobile lease utilized by any
Seller Employee existing as of the date hereof, and listed in Section 5.11 of
the Seller Disclosure, shall be permitted to expire in accordance with its
terms and thereafter such Seller Employee shall be entitled to an automobile
allowance.
5.11 Maintenance of Records. Through the Effective Time, Seller will
maintain the Records in the same manner and with the same care that the Records
have been maintained prior to the execution of this Agreement. Buyer may, at
its own expense, make such copies of and excerpts from the Records as it may
deem desirable. All Records, whether held by Buyer or Seller, shall be
<PAGE>
maintained for such periods as are required by law, unless the parties shall,
applicable law permitting, agree in writing to a different period. From and
after the Effective Time, Buyer shall be solely responsible for continuing
maintenance of such Records.
5.12 Leases. Seller shall consult with Buyer before renewing or extending
any material lease of an office or other material lease of Seller or any
subsidiary for real property or relating to furniture, fixtures or equipment
that is currently in effect but that would otherwise expire on or prior to the
Effective Time. Seller shall not cancel, terminate or take other action that is
likely to result in any cancellation or termination of any such material lease
without first consulting with Buyer.
5.13 Registration of Buyer Common Stock.
(a) Buyer represents that it is eligible to use Form S-3 under the
Securities Act to effect registration of the Registrable Securities for
resale by the Stockholders. Buyer will use its best efforts to effect the
registration and qualification of the Registrable Securities in
connection therewith, Buyer shall:
(i) prepare and file as soon as practicable after the
Effective Time, and use all reasonable efforts to cause to
become effective, as soon as possible after the Pooling
Restriction Expiration Date, a registration statement on
Form S-3 (or any successor or other appropriate form)
under the Securities Act permitting the Registrable
Securities to be offered for resale by the Stockholders;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the
prospectus used in connection therewith as may be
necessary to keep such registration statement effective
and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable
Securities until the earlier of such time as all of such
Registrable Securities have been disposed of in accordance
with the intended methods of disposition by Holder set
forth in such registration statement or the expiration of
one (1) year after the Closing Date;
(iii)furnish to Holder and to any underwriter of such
Registrable Securities such number of conformed copies of
such registration statement and of each such amendment and
supplement thereto, such number of copies of the
<PAGE>
prospectus included in such registration statement
(including each preliminary prospectus and any summary
prospectus) or filed under Rule 424(b) under the
Securities Act in accordance with Rule 430A thereunder, in
conformity with the requirements of the Securities Act,
such documents incorporated by reference in such
registration statement or prospectus, and such other
documents, as Holder or any such underwriter may
reasonably request;
(iv) use all reasonable efforts to register or qualify all
Registrable Securities covered by such registration
statement under such "blue sky" or other securities law of
such jurisdictions as Holder or any underwriter of such
Registrable Securities will reasonably request, and do any
and all other acts and things which may be necessary to
enable Holder or any underwriter to consummate the
disposition in such jurisdictions of the Registrable
Securities covered by such registration statement, except
that Buyer shall not for any such purpose be required to
qualify generally to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified, or to
subject itself to taxation in any such jurisdiction or to
consent to general service of process in any such
jurisdiction; and
(v) promptly notify Holder at any time when a prospectus
relating to a registration pursuant to this Agreement is
required to be delivered under the Securities Act, of the
occurrence of any event as a result of which the
prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then
existing, and at the request of Holder prepare and furnish
to Holder a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not include
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
<PAGE>
to make the statements therein not misleading in the light
of the circumstances then existing.
Buyer may require Holder to furnish Buyer such information regarding
Holder and the distribution of such securities as Buyer may from time to
time reasonably request in writing and as will be required by law or by
the SEC in connection with any registration.
(b) Holder will, upon receipt of any notice from Buyer of the
occurrence of any event of the kind described in Section 5.13(a)(v)
hereof, discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 5.13(a)(v) hereto, which supplemented or amended
prospectus shall be made available to Holder as soon as practicable. The
period of time during which Buyer is obligated to maintain the
effectiveness of a registration statement under Section 5.13(a)(ii) above
shall be extended by the number of days of any such discontinuance.
(c) Indemnification and Contribution. Buyer agrees to indemnify and
hold harmless Holder or any person who participates as an underwriter in
the offering or sale of such securities, each officer and director of
each underwriter, and each other person, if any, who "controls" Holder or
any such underwriter within the meaning of the Securities Act against any
losses, claims, damages, liabilities and expenses, joint or several, to
which such person may be subject under the Securities Act or otherwise
insofar as such losses, claims, damages, liabilities (or actions or
proceedings in respect thereof) or expenses arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities
were registered under the Securities Act, any preliminary prospectus or
final prospectus included therein or filed under Rule 424(b) in
accordance with Rule 430A under the Securities Act, or any amendment or
supplement thereto, or any document incorporated by reference therein, or
(ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and Buyer will reimburse each such person for any legal
or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, however, that Buyer will not be liable in any such
case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
<PAGE>
alleged omission made in such registration statement, any such
preliminary prospectus or final prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to
Buyer by Holder or such underwriter for use in the preparation thereof.
Such indemnity will remain in full force and effect regardless of any
investigation made by or on behalf of Holder or any such underwriter and
will survive the transfer of such securities by Holder. Buyer also agrees
to provide for contribution as will be reasonably requested by Holder or
any underwriters in circumstances where such indemnity is held
unenforceable.
(d) Holder agrees to indemnify and hold harmless (in the same manner
and to the same extent as set forth in paragraph (a) of this Section
5.13) Buyer, each director and each officer of Buyer who will sign such
registration statement, against any losses, claims, damages, liabilities
and expenses, joint or several, to which such person may be subject under
the Securities Act or otherwise insofar as such losses, claims, damages,
liabilities (or actions or proceedings in respect thereof) or expenses
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus or final prospectus included therein or filed
under Rule 424(b) in accordance with Rule 430A under the Securities Act,
or any amendment or supplement thereto, or any document incorporated by
reference therein, or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and Holder will reimburse
each such person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, however, that Holder
will be liable in any such case only to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus or final
prospectus, amendment or supplement, in reliance upon and in conformity
with written information specifically furnished to Buyer by Holder for
use in the preparation thereof. Such indemnity will remain in full force
and effect regardless of any investigation made by or on behalf of Buyer
and will survive the transfer of such securities by Holder. Holder also
agrees to provide for contribution as will be reasonably requested by
Buyer in circumstances where such indemnity is unenforceable.
<PAGE>
(e) Indemnification and contribution similar to that specified in
the paragraphs (a) and (b) of this Section 5.13 (with appropriate
modifications) will be given by Buyer and Holder with respect to any
required registration or other qualification of such Registrable
Securities under any federal or state law or regulation of any
governmental authority other than the Securities Act. Following the
Effective Time, Stockholders of Seller shall be entitled to exercise
certain rights to cause Buyer to register a portion of the shares of
Buyer Common Stock to be issued to such Stockholders on the Closing Date,
such rights to be exercisable in accordance with the terms and conditions
set forth in Schedule 5.13 hereto, which is incorporated herein and made
a part hereof by this reference.
5.14 Agreements of Affiliates. On the date hereof, the Seller shall
identify in a letter to the Buyer, after consultation with counsel, all Persons
who, as of the date hereof, it believes may be deemed to be "affiliates" of the
Seller under SEC accounting Rules 130 and 135 (the "Seller Affiliates"). On the
date hereof, the Seller shall cause each Person who is identified as a Seller
Affiliate in the letter referred to above to deliver to the Buyer an executed
copy of the Seller Affiliates Agreement.
(b) The Buyer shall identify in a letter to the Seller, after
consultation with counsel, all Persons who, it believes may be deemed to be
"affiliates" of the Buyer, as that term is defined for purposes of SEC
accounting Rules 130 and 135 (the "Buyer Affiliates"). The Buyer shall use all
reasonable efforts to cause each Person who is identified as a Buyer Affiliate
in the letter referred to above to deliver to the Seller at least forty (40)
days prior to the Effective Time an executed copy of the Buyer Affiliates
Agreement. Prior to the Effective Time, the Buyer shall amend and supplement
such letter and use all reasonable efforts to cause each additional person who
is identified as a Buyer Affiliate to execute a copy of the Buyer Affiliates
Agreement.
(c) The Buyer shall use its best efforts to publish combined revenues and
net income figures, as contemplated by and in accordance with the terms of SEC
Accounting Series Release No. 135, in an earnings release within thirty (30)
days, and in no event shall such results be published later than sixty (60)
days, after the end of the fiscal quarter in which there are at least thirty
(30) days of post-Acquisition Merger combined operations.
5.15 Employment Agreements; Protection Agreements; Non-Competition
Agreement. Seller shall cause (i) each of Michael A. Miller, David S. Cohen,
Michael A. Guidi and Edward S. Yaffe to enter into, prior to the Closing, their
respective Employment Agreements as set forth in Exhibit C hereof, (ii) each of
Bruce A. Miller, Joan G. Corbett and Scott A. Cooper to enter into, prior to
<PAGE>
the Closing, their respective Protection Agreements as set forth in Exhibit D
hereof, and (iii) Robert D. Fanger to enter into, prior to the Closing, the
Non-Competition Agreement as set forth in Exhibit E hereof.
5.16 Exchange Act Reporting. The Buyer shall use its best efforts to
remain current with its Exchange Act reporting requirements that impact upon
the marketability of shares of Buyer Common Stock issued to the Stockholders
pursuant to this Agreement and the Plan of Merger.
5.17 Stockholder Contribution Rights. Each of the Stockholders agrees and
covenants that they will not assert any right to contribution against the
Surviving Corporation (as such term is defined in the Plan of Merger).
ARTICLE VI
CLOSING CONDITIONS
6.01 Conditions to Each Party's Obligations. The respective obligations
of each party under this Agreement shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions, none of which may be
waived, except as provided for below:
(a) Stockholders' Approval. The terms of this Agreement, the Plan
of Merger, the transactions contemplated hereby and thereby and the
execution and delivery of this Agreement and the Plan of Merger shall
have been approved by the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Seller Common Stock present and
voting at a meeting of such stockholders or by unanimous written consent,
in accordance with applicable law.
(b) Governmental Consents. All authorizations, consents, orders or
approvals of, declarations or filings with or notices to, and all
expirations of waiting periods imposed by, any governmental or regulatory
authority or agency, which are necessary for the consummation of the
Acquisition Merger, shall have been filed, occurred or been obtained (all
such authorizations, orders, declarations, approvals, filings, notices
and consents and the lapse of all such waiting periods being referred to
as the "Requisite Regulatory Approvals"), and all such Requisite
Regulatory Approvals shall be in full force and effect, except as
specifically provided in Section 6.02(i) hereof. In addition, Buyer shall
have received all state securities or blue sky permits and other
authorizations necessary to issue the Buyer Common Stock pursuant to the
Acquisition Merger in accordance with all applicable state securities or
blue sky laws.
<PAGE>
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Acquisition Merger shall
be in effect.
(d) Accounting Treatment. Each of the parties shall have received a
letter from Arthur Andersen, LLP, dated the date of the Closing,
substantially to the effect that on the basis of a review of this
Agreement and the transactions contemplated hereby, in such accountants'
opinion, Accounting Principles Board Opinion No. 16 provides that the
Merger may be accounted for as a pooling of interests.
6.02 Conditions to the Obligations of Buyer. The obligations of Buyer
under this Agreement shall be further subject to the satisfaction or waiver by
Buyer, at or prior to the Effective Time, of the following conditions:
(a) Absence of Material Adverse Changes. There shall not have
occurred any change in the assets, properties, liabilities, business,
operations, results of operations, financial condition or prospects of
Seller or any of its subsidiaries which constitutes, individually or in
the aggregate, a Material Adverse Effect on Seller.
(b) Representations and Warranties; Performance of Obligations. The
obligations of Seller required to be performed by it at or prior to the
Closing pursuant to the terms of this Agreement shall have been duly
performed and complied with in all material respects and the
representations and warranties of Seller contained in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made at and as of the
Effective Time (except as otherwise specifically contemplated by this
Agreement and except as to any representation or warranty which
specifically relates to an earlier date) and Buyer shall have received a
certificate to that effect signed on behalf of the Seller by the chairman
or president and the chief financial officer or chief accounting officer
of Seller.
(c) Third-Party Approvals. Any and all permits, consents, waivers,
clearances, approvals and authorizations of or notices to all
nongovernmental and nonregulatory third parties which are necessary in
connection with the consummation of the Acquisition Merger and are
required to be received, obtained or made by Seller, including without
limitation all such permits, consents, waivers, clearances, approvals,
authorizations and notices disclosed in Section 4.04 of the Seller
Disclosure Schedule, shall have been so received, obtained or made and
shall be in full force and effect.
<PAGE>
(d) Tax Opinion. Buyer shall have received opinions dated the
Closing Date from its counsel, Bingham, Dana & Gould LLP, or other
counsel acceptable to Buyer, substantially to the effect that, on the
basis of facts and representations set forth therein, or set forth in
writing elsewhere and referred to therein, for federal income tax
purposes the Acquisition Merger constitutes a reorganization as described
in Section 368(a) of the Code. In rendering any such opinion, such
counsel may rely, to the extent they deem necessary or appropriate, upon
opinions of other counsel and upon representations of an officer or
officers of Seller and Buyer or any of their affiliates or of Seller's
Stockholders.
(e) Burdensome Condition. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Acquisition Merger or Buyer, by any federal or
state governmental agency or authority which, in connection with the
granting of any Requisite Regulatory Approval, imposes any condition or
restriction upon Buyer, any Buyer subsidiary or Seller after the
Acquisition Merger, which would so materially adversely impact the
economic or business benefits of the transactions contemplated by this
Agreement as to render inadvisable in the reasonable judgment of Buyer
the consummation of the Acquisition Merger.
(f) Termination of Seller Buy-Sell Agreement. Buyer shall have
received from Seller and its directors and officers, as appropriate,
satisfactory evidence that the Seller Buy-Sell Agreement has been
terminated with respect to each stockholder of Seller at or prior to the
Effective Time and that neither Seller nor Buyer nor any of their
respective affiliates has any liabilities or other obligations to any
stockholder of Seller at and following the Effective Time under the
Seller Buy-Sell Agreement.
(g) Employment Agreements; Protection Agreements; Non-Competition
Agreement. The Employment Agreements shall have been executed and
delivered by each of Michael A. Miller, Edward S. Yaffe, Michael A.
Guidi, David S. Cohen and the Seller; the Protection Agreements shall
have been executed and delivered by each of Bruce A. Miller, Scott A.
Cooper and Joan G. Corbett and the Seller; and the Non-Competition
Agreement shall have been executed and delivered by Robert D. Fanger and
the Seller.
(h) Legal Opinion. Buyer shall have received a legal opinion, dated
the Closing Date, of Palmer & Dodge LLP, counsel for Seller and each of
the Stockholders, in the form attached hereto as Exhibit F.
(i) Approval to Acquire Canadian Sub. Buyer shall have received the
required consent by way of an Order in Council (the Canadian Cabinet)
<PAGE>
under Section 521 of the Canada Bank Act (the "Canadian Consent") to
permit the acquisition by the Buyer, indirectly through Seller, of all
the issued and outstanding shares of the Canadian Sub, or in the
alternative, written comfort from the OSFI or an opinion of Canadian
counsel (the "Canadian Comfort Letter") that OSFI would not initiate any
action against the Canadian Sub, the Buyer or any Affiliate of either for
non-compliance with the Canada Bank Act as a result of the Buyer's
indirect acquisition of Canadian Sub.
In addition to the foregoing, Seller will furnish Buyer with such
additional certificates, instruments or other documents in the name or on
behalf of Seller, executed by appropriate officers or others, including
without limitation certificates or correspondence of governmental
agencies or authorities or nongovernmental third parties, to evidence
fulfillment of the conditions set forth in this Section 6.02 as Buyer may
reasonably request.
Buyer agrees to use its best efforts to obtain the Canadian Consent
or, in the alternative, the Canadian Comfort Letter. Buyer further agrees
that if the Canadian Consent referred to in Section 6.02(i) has not been
received at a time when all other conditions to the Closing have been
satisfied, unless Seller agrees otherwise, Buyer will amend its business
plan to the effect that Buyer would not propose to conduct any bank
business (as defined under the Canada Bank Act) through the Canadian Sub
but rather would propose to liquidate any such business following Closing
and to cease from writing any new business or renewing existing credit
facilities. Buyer further undertakes that if neither the Canadian Consent
nor the Canadian Comfort Letter referred to in Section 6.02(i) may be
received promptly after a time when all other conditions to the Closing
have been satisfied, Buyer will waive such condition, provided that
Canadian Sub can be liquidated by Seller before the Effective Time in
accordance with applicable law and in a manner that is not deemed
materially economically disadvantageous in the judgment of the Buyer.
6.03 Conditions to the Obligations of Seller. The obligations of Seller
under this Agreement shall be further subject to the satisfaction or waiver by
Seller, at or prior to the Effective Time, of the following conditions:
(a) Absence of Material Adverse Changes. There shall not have
occurred any change in the assets, properties, liabilities, business,
operations, results of operations, financial condition or prospects of
Buyer or any of its subsidiaries which has had, or is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
Buyer.
<PAGE>
(b) Representations and Warranties; Performance of Obligations. The
obligations of Buyer required to be performed by it at or prior to the
Closing pursuant to the terms of this Agreement shall have been duly
performed and complied with in all material respects and the
representations and warranties of Buyer contained in this Agreement shall
be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made at and as of the
Effective Time (except as otherwise specifically contemplated by this
Agreement and except as to any representation or warranty which
specifically relates to an earlier date) and Seller shall have received a
certificate to that effect signed by the vice chairman and chief
financial officer of Buyer or such other appropriate officer(s) of Buyer.
(c) Third-Party Approvals. Any and all permits, consents, waivers,
clearances, approvals and authorizations of or notices to all
nongovernmental and nonregulatory third parties which are necessary in
connection with the consummation of the Acquisition Merger and are
required to be received, obtained or made by Buyer shall have been so
received, obtained or made and shall be in full force and effect.
(d) Tax Opinion. The Seller and the Stockholders shall have
received opinions dated the Closing Date from Palmer & Dodge LLP, or
other counsel acceptable to Seller, substantially to the effect that, on
the basis of facts and representations set forth therein, or set forth in
writing elsewhere and referred to therein, for federal income tax
purposes the Acquisition Merger constitutes a reorganization as described
in Section 368(a) of the Code and that no gain or loss will be recognized
by the Stockholders of Seller upon the receipt, pursuant to this
Agreement, of Buyer Common Stock solely in exchange for Seller Common
Stock and in respect of such other substantial federal income tax effects
of the Acquisition Merger as Seller may reasonably require and which are
customary in transactions of a like character. In rendering any such
opinion, such counsel may rely, to the extent they deem necessary or
appropriate, upon opinions of other counsel and upon representations of
an officer or officers of Seller and Buyer or any of their affiliates or
of Seller's Stockholders.
(e) Employment Agreements; Protection Agreements; Non-Competition
Agreement. The Employment Agreements, the Protection Agreements; and the
Non-Competition Agreement each shall have been executed and delivered by
Buyer.
(h) Legal Opinion. Seller shall have received a legal opinion,
dated the Closing Date, of Eric R. Fischer, Executive Vice President,
General Counsel and Clerk to Buyer and Bingham, Dana & Gould LLP, counsel
<PAGE>
for Buyer and the Acquisition Subsidiary, in the forms attached hereto as
Exhibit G.
In addition to the foregoing, Buyer will furnish Seller with such
additional certificates, instruments or other documents in the name or on
behalf of Buyer, executed by appropriate officers or others, including without
limitation certificates or correspondence of governmental agencies or
authorities or nongovernmental third parties, to evidence fulfillment of the
conditions set forth in this Section 6.03 as Seller may reasonably request.
ARTICLE VII
CLOSING
7.01 Time and Place. Subject to the provisions of Articles VI and VIII
hereof, the Closing of the transactions contemplated hereby shall take place at
the Boston, Massachusetts offices of Bingham, Dana & Gould LLP at 10:00 A.M.,
local time, on the first business day after the date on which all of the
conditions contained in Article VI are satisfied or waived; or at such other
place, at such other time, or on such other date as Seller and Buyer may
mutually agree upon for the Closing to take place.
7.02 Deliveries at the Closing. Subject to the provisions of Articles VI
and VIII hereof, at the Closing there shall be delivered to Seller and Buyer,
the opinions, certificates, and other documents and instruments required to be
delivered under Article VI hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated at any
time prior to the Effective Time in accordance with the following
provisions:
(a) by mutual written consent of Seller and Buyer
authorized by their respective Boards of Directors;
(b) by Seller or Buyer if the Effective Time shall not have
occurred on or prior to December 31, 1997 provided, however, in the event
the delay is caused by Seller or due to Seller's failure to promptly
produce information required for any regulatory or governmental approval,
as required by Section 5.04 hereof, or Seller's failure to otherwise
fulfill its obligations to consummate the transactions, including the
Acquisition Merger, contemplated hereby. March 2, 1998 (the "Termination
<PAGE>
Date") or such later date as shall have been agreed to in writing by
Buyer and Seller;
(c) by Buyer or Seller if any governmental or regulatory authority
or agency, or court of competent jurisdiction, shall have issued a final
permanent order or Injunction enjoining, denying approval of, or
otherwise prohibiting the consummation of the Acquisition Merger and the
time for appeal or petition for reconsideration of such order or
Injunction shall have expired without such appeal or petition being
granted; or
(d) by the Buyer or the Seller (provided that the terminating party
is not then in material breach of any representation, warranty, covenant
or other agreement contained herein), in the event of a material breach
by the other party of any representation, warranty, covenant or other
agreement contained herein which breach is not cured after thirty (30)
days written notice thereof is given to the party committing such breach;
or
(e) by the Seller, by action of its Board of Directors, whether
before or after approval of the Acquisition Merger by the stockholders of
the Seller, by giving written notice of such election to the Buyer in the
event that both of the following conditions are satisfied:
(i) the average per share last sale prices of Buyer Common
Stock as reported on NASDAQ over the ten (10) consecutive trading
day period immediately preceding the date of the last Requisite
Regulatory Approval to be received, in this case without regard to
any waiting period attached to the effectiveness thereof (such
period being hereinafter referred to as the "Determination Period",
and the price so obtained being referred to as, the "Closing Price")
is less than $18.06; and
(ii) the number obtained by dividing the Closing Price by 21.25
is less than the number obtained by subtracting (A) 0.15 from (B)
the quotient obtained by dividing the Final Index Price (as defined
below) by the Initial Index Price (as defined below).
For the purposes hereof the following terms shall have the following
meanings:
"Final Index Price" shall mean the Weighted Average of the average
of the closing prices of the Index Companies as reported on the NYSE,
NASDAQ or AMEX for the Determination Period.
"Index Companies" shall mean the companies listed on
Schedule 8.01(e) hereto.
<PAGE>
"Initial Index Price" shall mean the Weighted Average of the closing
prices of the Index Companies as reported on the NYSE, NASDAQ or AMEX on
the trading day immediately preceding execution of this Agreement.
"Weighted Average" shall mean the average determined by giving the
average of the closing prices for each of the Index Companies the
corresponding weight listed on Schedule 8.01(e) hereto.
If the Buyer or any company listed on Schedule 8.01(e) declares a stock
dividend or effects a reclassification, recapitalization, split-up,
combination, or subdivision of its common stock between the trading day
immediately preceding execution of this Agreement and the date of the
last Requisite Regulatory Approval to be received (without regard to any
waiting period attached to the effectiveness thereof), the closing prices
for such common stock shall be appropriately adjusted for the purposes of
the definitions above so as to be comparable to the price on the date
immediately preceding execution of this Agreement. There shall be
excluded from the list of companies on Schedule 8.01(e) any company as to
which there is pending at any time during the Determination Period any
publicly announced proposal for such company to be acquired by another
company in exchange for its stock. Upon such exclusion, the weight of
each remaining company in Schedule 8.01(e) will be adjusted accordingly
so that sum of all the weights of the remaining companies equals 100%.
Notwithstanding the foregoing, during the ten (10) business day period
commencing with the Buyer's receipt of the Seller's notice of termination
pursuant to this Section 8.01(e), the Buyer shall have the option to
increase the consideration to be received by the holders of Seller Common
Stock under the Plan of Merger by adjusting the Conversion Number
(hereinafter, as such term is defined in the Plan of Merger) to equal a
number (calculated to the nearest one-thousandth) obtained by dividing
(x) $11.38 by (y) the Closing Price. If the Buyer so elects within such
ten-day period, it shall give prompt written notice to the Seller of such
election and the revised Conversion Number, whereupon no termination
shall have occurred pursuant to this Section 8.01(e) and the Agreement
shall remain in effect in accordance with its terms (except as the
Conversion Number shall have been so modified).
(f) By the Board of Directors of either party (provided that the
terminating party is not then in breach of any representation or
warranty, covenant or other agreement contained in this Agreement) in the
event that any of the conditions precedent to the obligations of such
party to consummate the Acquisition Merger cannot be by mutual agreement
of the parties, satisfied or fulfilled by the date specified in Section
8.01(b) of this Agreement.
<PAGE>
8.02 Effect of Termination. In the event of termination of this Agreement
by either Seller or Buyer as provided above, this Agreement shall forthwith
become null and void (other than Sections 5.02(b) and 10.01 hereof, which shall
remain in full force and effect) and there shall be no further liability on the
part of Seller or Buyer or their respective officers or directors to the other,
except (i) any liability of Seller or Buyer under said Sections 5.02(b) and
10.01, provided that, nothing contained herein shall relieve a party from
liability for any and all damages, costs and expenses, including all reasonable
attorneys' fees, sustained or incurred by the nonbreaching party caused by a
willful breach or default hereunder occurring prior to such termination.
8.03 Amendment, Extension and Waiver. Subject to applicable law and as
may be authorized by their respective Boards of Directors, at any time prior to
the consummation of the transactions contemplated by this Agreement or
termination of this Agreement in accordance with the provisions of Section 8.01
hereof, Buyer and Seller may, (a) amend this Agreement, (b) extend the time for
the performance of any of the obligations or other acts of any other party
hereto, (c) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or (d) waive
compliance with any of the agreements or conditions contained in Articles V and
VI (other than Section 6.01) hereof; provided, however, that there may not be,
without further approval of Seller's Stockholders, any amendment, extension or
waiver of this Agreement which reduces the amount or changes the form of the
consideration to be delivered to such Stockholders hereunder other than as
contemplated by this Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party, but such waiver or failure to insist on strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
INDEMNIFICATION
9.01 Claim Period; Survival. Any claim for a breach of any
representation, warranty, covenant or other agreement contained in or
incorporated into this Agreement referred to below must be made within the
following periods:
(a) with respect to the matters addressed in Section
4.02(a), without limitation as to time period following the
Closing Date;
<PAGE>
(b) with respect to the matters addressed in Section 4.10, 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 Seller for tax
periods ending at or prior to the Closing Date; and
(c) with respect to all other representations, warranties, covenants
and agreements made by the Seller or the Stockholders contained in or
incorporated into this Agreement or in any certificate delivered pursuant
hereto, within twelve (12) months after the later of (i) the Closing Date
or (ii) with respect to any breach of covenant, the date such covenant
was required to be performed.
The representations, warranties, covenants and agreements of the Seller and the
Stockholders contained in or referred to in this Agreement or in any
certificate delivered pursuant hereto shall survive the Closing Date and
continue for the periods during which claims may be made as set forth above;
provided, however, that covenants of the Seller or Stockholders referred to in
the proviso of Section 10.10 shall survive as stated therein.
9.02 Terms of Indemnification. Subject to Section 9.05 below, the
Stockholders agree to indemnify, on a pro rata basis, Buyer (and its directors,
officers, agents and employees) against, and each of them agrees to protect, to
defend and to hold harmless the Buyer (and its directors, officers, agents and
employees) from all Damages (as such term is defined in Section 9.04 below)
arising out of or resulting from any inaccuracy in, or breach of, any of the
representations, warranties, covenants or other agreements of the Seller or the
Stockholders contained in or incorporated into this Agreement or in any
certificate or instrument delivered in connection herewith (with any
representations, warranties, covenants and other agreements of Seller being
deemed to be of the Stockholders for purposes of this indemnification), 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 9.01
above.
9.03 Procedures. In any case under this Agreement where the Stockholders
have indemnified the Buyer against any claim or legal action, indemnification
shall be provided in accordance with the procedure outlined below:
(a) Provided that prompt notice is given by the Buyer of a claim or
suit for which indemnification might be claimed, unless the failure to
provide such notice does not prejudice the interests the Stockholders,
the Stockholders promptly will defend, contest, or otherwise protect
against any such claim or suit at their own cost and expense.
(b) The Buyer may, but will not be obligated to, participate at its
own expense in a defense thereof by counsel of its own choosing, but the
<PAGE>
Stockholders shall be entitled to control the defense unless the Buyer
has relieved the Stockholders from liability with respect to the
particular matter, provided that the Stockholders may only settle or
compromise the matter subject to indemnification without the consent of
the Buyer if such settlement includes a complete release of the Buyer 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.
(c) In the event the Stockholders fail to timely defend, contest, or
otherwise protect against any such claim or suit, the Buyer 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 Stockholders, on a pro rata basis,
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 Stockholders undertake the
defense of such matter, the Buyer shall not be entitled to recover from
the Stockholders for its costs incurred in the defense thereof other than
the reasonable costs of investigation undertaken by the Buyer and
reasonable costs of providing assistance.
(d) The Buyer shall cooperate and provide such assistance as the
Stockholders 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 Stockholders may pay or be required to
pay by way of indemnification hereunder. The Buyer shall be required to
file a claim with its insurers as to any matter subject to
indemnification that is covered by insurance; provided, however, that
neither the filing of any such claim nor the insurer's rejection thereof
in whole or in part shall be a condition to the Stockholders' obligations
under this Article IX. The Buyer 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.
9.04 Damages. As used in this Article IX, the term "Damages" means 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 a party's 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 Buyer receives payment from a third
party (including insurers). Any insurance proceeds received by the Buyer with
respect to any matter that has been the subject of any prior indemnification
<PAGE>
payment(s) by the Stockholders shall be promptly remitted to the Stockholders
up to the aggregate amount of such prior indemnification payment(s).
9.05 Maximum Indemnification; Deductible; Caps; Exception.
(a) The maximum liability of the Stockholders to Buyer under this
Article IX shall be the aggregate dollar value as and when issued of all
shares of Buyer Common Stock actually issued to the Stockholders by Buyer
under the terms of this Agreement (for these purposes assumed to be the
Closing Price for each share issued) and any such other consideration
received by such stockholders in exchange for their respective shares of
Seller Common Stock pursuant to the terms of the Plan of Merger
(hereinafter the "Cap");
(b) Buyer shall not be entitled to any indemnification with respect
to representations, warranties, covenants and agreements referred to in
Section 9.01(c) of this Article IX unless and only to the extent that the
aggregate Damages to the Buyer and its affiliates (without duplication)
exceed $270,000 (the "Aggregate Deductible") and provided further (i) for
claims and actions arising within six months of the Closing Date the
Stockholders shall be liable for the full amount by which such Damages
exceeds the Aggregate Deductible up to the amount of the Cap and (ii) for
claims and actions arising after six months but within one year of the
Closing Date, the Stockholders shall be liable for the full amount by
which such Damages exceeds the Aggregate Deductible but only up to the
aggregate amount of seventy-five percent (75%) of the Cap; and
(c) Notwithstanding any other provision of this Agreement, if the
Damages for which indemnification is sought arise out of an inaccuracy or
breach which was known to be inaccurate at the time made or deemed to be
made or, with respect to a breach of a covenant, was willful at the time
performed or to be performed, then the Stockholders shall be liable for
the full amount of the Damages up to the amount of the Cap plus
out-of-pocket expenses.
ARTICLE X
MISCELLANEOUS
10.01 Expenses. Except as may otherwise be agreed to hereunder or in
other writing by the parties, all legal and other costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses.
<PAGE>
10.02 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by prepaid
registered or certified mail (return receipt requested) or by telecopy, cable,
telegram or telex addressed as follows:
(a) If to Seller, to:
Firestone Financial Corp.
38 Glen Avenue
Newton, Massachusetts 02159
Attention: Michael A. Miller
Copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
Attention:Steven N. Farber, Esq.
Marc A. Rubenstein, Esq.
(b) If to Buyer, to:
UST Corp.
40 Court Street
Boston, Massachusetts 02108
Attention:James K. Hunt
and
Eric R. Fischer
Copy to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
Attention:Neal J. Curtin, Esq.
and
Matthew J. Cushing, Esq.
and if to any of the Stockholders, to the address listed under such
Stockholder's name on the signature pages hereto, or such other address as
shall be furnished in writing by any party, and any such notice or
communication shall be deemed to have been given as of the date so mailed.
<PAGE>
10.03 Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other parties, and that nothing in
this Agreement, other than Sections 5.10 and 5.15, is intended to confer,
expressly or by implication, upon any other person any rights or remedies under
or by reason of this Agreement.
10.04 Complete Agreement. This Agreement, including the documents and
other writings referred to herein or delivered pursuant hereto, including the
Plan of Merger, contains the entire agreement and understanding of the parties
with respect to its subject matter. Except as set forth in the Plan of Merger
or in the Seller Disclosure Schedule, there are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties other than
those expressly set forth herein or therein. This Agreement supersedes all
prior agreements and understandings between the parties, both written and oral,
including without limitation the Confidentiality Agreement, with respect to its
subject matter.
10.05 Counterparts. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and each of which shall
be deemed to be an original and shall become effective when a counterpart has
been signed by each of the parties and delivered to each of the other parties.
10.06 Governing Law. This Agreement shall be governed by the laws of The
Commonwealth of Massachusetts, without giving effect to the principles of
conflicts of laws thereof.
10.07 Captions. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.08 Effect of Investigations. No investigation by the parties hereto
made heretofore or hereafter, whether pursuant to this Agreement or otherwise
shall affect the representations and warranties of the parties which are
contained herein and each such representation and warranty shall survive such
investigation, subject, however, to Article IX and Section 10.09 hereof.
10.09 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 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.
<PAGE>
10.10 Survival of Representations, Warranties and Covenants. Except as
otherwise specifically provided in this Agreement or in such other agreements,
all representations, warranties, covenants and other agreements contained in or
referred to in this Agreement or in any certificate delivered pursuant hereto
shall not survive the Closing; provided, however, the covenants contained or
referred to in Sections 5.05, 5.08, 5.09, 5.10, 5.13, 5.14, 5.15, 5.16 and 5.17
and the agreements of the "affiliates" of the Seller and Buyer shall survive
for 18 months after the last date on which such covenant or agreement was
required to be performed.
10.11 Specific Enforceability. The parties 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.
10.12 Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, Buyer shall be
entitled, with Seller's prior consent (which consent shall not be unreasonably
withheld), to revise the structure of the Acquisition Merger and related
transactions provided that each of the transactions comprising such revised
structure shall fully qualify as, or fully be treated as part of, one or more
tax-free reorganizations within the meaning of Section 368(a) of the Code, and
not subject any of the Stockholders of Seller to adverse tax consequences or
change the amount or form of consideration to be received by such Stockholders
and that the Seller receives an opinion from Palmer & Dodge LLP to that effect.
This Agreement and any related documents shall be appropriately amended in
order to reflect any such revised structure.
<PAGE>
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed as a sealed instrument by their duly authorized officers and each
Stockholder has executed and delivered this Agreement in his individual
capacity, all as of the day and year first above written.
UST CORP.
By:/s/ Neal F. Finnegan
Name: Neal F. Finnegan
Title: President and
Chief Executive Officer
FIRESTONE FINANCIAL CORP.
By:/s/ Michael A. Miller
Name: Michael A. Miller
Title: President
/s/ Michael A. Miller
Michael A. Miller, individually
Address:199 Temple Street
West Newton, MA 02165
MAM Family Limited Partnership
By:/s/ Michael A. Miller
Name: Michael A. Miller
Title: General Partner
Address:199 Temple Street
West Newton, MA 02165
/s/ Robert D. Fanger
Robert D. Fanger, individually
Address: 190 Dudley Street
Brookline, MA 02146
<PAGE>
/s/ Edward S. Yaffe
Edward S. Yaffe, individually
Address: 47 Castle Drive
Sharon, MA 02067
/s/ David S. Cohen
David S. Cohen, individually
Address: 2 Savel Lane
Sharon, MA 02067
/s/ Michael A. Guidi
Michael A. Guidi, individually
Address:62 Laurelwood Drive
Hopedale, MA 01747
Tucker Anthony CF Scott A. Cooper IRA
By:/s/ Scott A. Cooper
Name: Scott A. Cooper
Address:52 Williams Road
Sharon, MA 02067
/s/ Joan G. Corbett
Joan G. Corbett, individually
Address:16 Harding Street
Medfield, MA 02052
/s/ Mary Teresa Crealese
Mary Teresa Crealese, individually
Address:15 Deerfield Drive
Bridgewater, MA 02324
<PAGE>
/s/ Scott A. Cooper
Scott A. Cooper, individually
Address: 52 Williams Road
Sharon, MA 02067
<PAGE>
Schedule 1
Stockholders
Michael A. Miller 500,000
MAM Family Limited Partnership 400,000
Robert D. Fanger 530,000
Edward S. Yaffe 200,000
David S. Cohen 200,000
Michael A. Guidi 100,000
Scott A. Cooper 10,000
Tucker Anthony CF Scott A. Cooper IRA 20,000
Joan G. Corbett 20,000
Mary Teresa Crealese 20,000
Total 2,000,000
<PAGE>
Schedule 8.01(e)
Index Companies
Relative
Weight
(IN %)
North Fork Bancorporation 15.6
CCB Financial Corporation 11.8
Peoples Heritage Financial Corp. 10.3
Westamerica Bancorp. 10.1
Cullen/Frost Bankers Inc. 8.9
Whitney Holding Corp. 7.6
Imperial Bancorp 7.3
HUBCO Inc. 6.1
Riggs National Corp. 5.8
First Midwest Bancorp Inc. 4.9
TrustCo Bank Corp. NY 4.3
Chittenden Corporation 3.8
Banknorth Group Inc. 3.4
==============
100.00%
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
SELLER DISCLOSURE SCHEDULE
SECTION 4.01(A)(I)
FOREIGN QUALIFICATION OR LICENSE
The Seller is qualified as a foreign corporation in Colorado and
Vermont.
From time to time in the normal course of business the Seller
applies for and receives various licenses and permits for the
collection and remittance of sales and use taxes within the United
States. In addition the Seller has the following licenses:
SELLER LICENSES
Montana Sales Finance Company License
SELLER SUB LICENSES
Province of Quebec Extra-provincial License
Province of British Columbia Extra-provincial
Corporation
SECTION 4.01(A)(II)
As of July 31, 1997, the Seller has outstanding financings of video
lottery and gaming equipment in the states of Louisiana, Montana, New
Mexico and South Dakota.
As of October 15, 1997, the Seller has outstanding financings of video
lottery and gaming equipment in the states of Louisiana, Montana, South
Carolina and South
Dakota.
SECTION 4.01(B)
SUBSIDIARY AND EQUITY INVESTMENTS
FIRESTONE FINANCIAL CANADA, LTD., an Ontario Corporation - Seller
has 100% Ownership of the Common Stock of the subsidiary.
<PAGE>
FIRESTONE/DEBRAL/CENTRAL SQUARE ASSOCIATES JOINT VENTURE - A 50%
interest in a joint Venture with Debral Realty, Inc. and Richard J.
Chipman, Trustee of Central Square Trading Company Trust, the
purpose and sole activity of which was to lend on the security of
residential Real Estate. The assets are primarily residential Real
Estate mortgages on property located in Massachusetts. The Seller
has made a loan to this entity secured by various mortgages and
guaranteed by 2 of the partners. The current balance outstanding on
this loan as of June 30th, 1997 was $49,542. The current balance
outstanding on this loan as of October 15th,1997 was $47,042.
FIRESTONE/DEBRAL FUNDING TRUST - 50% interest in a joint Venture (an
entity organized to take title by foreclosure of Real Estate to
reduce losses on a loan previously contracted and secured by Real
Estate) with Debral, an entity owned by Murray Schocket. The sole
assets of this joint venture are a group of commercial office
condominiums located at 125 and 133 East Street, Dedham, MA. All
units are currently under short term lease agreements. All units are
owned without any mortgage and Seller has a 50% interest the assets.
SECTION 4.02(A)
SHARES OF SELLER COMMON STOCK
Michael A. Miller 500,000
MAM Family Limited Partnership 400,000
Robert D. Fanger 530,000
Edward S. Yaffe 200,000
David S. Cohen 200,000
Michael A. Guidi 100,000
Scott A. Cooper 10,000
Tucker Anthony CF Scott A. Cooper IRA 20,000
Joan G. Corbett 20,000
Mary Teresa Crealese 20,000
Total 2,000,000
<PAGE>
SECTION 4.02(A)
Buy/ Sell Agreement among Seller and the Stockholders dated February
4th, 1994.
SECTION 4.02(B)
Reference the disclosure in Section 4.01(b)
SECTION 4.04
Consents will be required under the following agreements:
Amended and Restated Revolving Credit Agreement
SECTION 4.06
Reference the disclosure in Section 4.11(a)
SECTION 4.08
Pursuant to the Seller's decision to prepay the 1995 Subordinated
Notes dated November 10, 1995, the Seller has sent notice on July 25th, 1997 to
the Note holders, of the Sellers intention to prepay all of the outstanding
principal of said Notes together with all accrued and unpaid interest on August
29th, 1997. Funding of such prepayment will be provided under the Sellers
Amended and Restated Revolving Credit Agreement, therefore, the prepayment is
subject to receiving approval from a majority of the Banks who are providing
financing under the Firestone Revolving Credit Agreement. The Banks have
provided preliminary verbal approval and written approval is expected by August
4th, 1997. The Seller has deferred costs of $21,349.68 associated with these
Notes which will be expensed upon the prepayment of the Notes.
The 1995 Subordinated Notes were paid in full on August 28, 1997
together with accrued interest thereon. In addition, the unamortized deferred
costs were expensed at the same time.
Seller intends to enter into an agreement, after consultation with
the Buyer, for computer consulting, software and hardware acquisition to
upgrade the Seller's existing accounting and processing systems and will
include the development, installation and training of an imaging and workflow
<PAGE>
documentation system. Please reference Section 5.01 (i) and Section 5.01 (o) of
this Agreement.
SECTION 4.09(B)
From time to time in the normal course of business, the Seller is
made aware of various liens, assessments, civil judgements and civil and
criminal lawsuits that are filed against its customers. To the best knowledge
of Seller, these liens, assessments, civil judgements and civil and criminal
lawsuits that are filed against its customers would not have a Material Adverse
Effect on Seller or otherwise materially adversely affect Seller's ability to
perform its obligations under this Agreement. Seller is not aware of any
criminal judgement against any of its customers, route operators distributors
or suppliers.
From time to time in the normal course of business, the Seller is
made aware of bankruptcy filings which are filed by its customers. To the best
knowledge of Seller, these bankruptcy filings which are filed by its customers
would not have a Material Adverse Effect on Seller or otherwise materially
adversely affect Seller's ability to perform its obligations under this
Agreement.
From time to time in the normal course of business, the Seller is
requested to provide information to the IRS or other governmental agencies,
with regard to payment history, and outstanding balances for a particular
customer. The Seller routinely provides responses to these requests for
information.
SECTION 4.10 (A)
The Seller is required to apportion its income to various states
based upon property owned, rental receipts and payroll to residents of the
state. The Seller does not have employees in any other state, but does have
leased equipment and rental income in various states. The Seller does not file
returns in states where it owned, at the time of the lease origination, a de
minimus amount of equipment in such states, but may have tax liability in such
state. The following represents the states or cities where the Seller filed
Corporate Franchise Tax returns in 1996:
Arizona Maryland City of Philadelphia
California Massachusetts Rhode Island
Colorado New Jersey Tennessee-Income
Connecticut New Hampshire Tennessee-Franchise
<PAGE>
Florida-Income New York - Income Texas - Franchise
Florida-Intangible New York - MTBT Vermont
Georgia N. Carolina Virginia
Illinois Penn - Franchise
Kentucky Penn - Income
The Seller filed consolidated federal tax returns with its parent, the
Attleboro Pawtucket Savings Bank (APSB) from March 1985 through December 31,
1991. Reference Section 4.10(f) disclosure regarding the August 21, 1992
Federal Tax return. The Seller also filed combined Commonwealth of
Massachusetts returns with APSB through December 31, 1991 and combined State of
Rhode Island returns with APSB for the years ended December 31, 1987,1988 and
1989. The Seller filed the August 21, 1992 Commonwealth of Massachusetts and
State of Rhode Island returns on a stand-alone basis.
SECTION 4.10 (B)
The Companies have paid all Taxes except for those noted in 4.10(a)
above.
SECTION 4.10(C)
In the normal course of business, state corporate franchise, property and
sales and use tax claims have been filed against the Seller. Each claim was
reviewed, discussed, resolved and if applicable, paid. As of July 28,1997 there
are no unpaid claims which have been brought to the attention of the Seller.
As of October 15, 1997 the Seller was requested to schedule an audit of
New York corporate income taxes for the period 1/1/94 through 12/31/96. The
audit is scheduled for December 1997. In addition, the Seller was requested by
the State of Alabama (a state the Seller had previously identified as de
minimus) to provide franchise tax returns. There are no other unpaid claims
which have been brought to the attention of the Seller.
SECTION 4.10(F)
The Seller had filed a combined Federal Tax Return since the acquisition
of the Seller by the APSB beginning 1985 and through and including the period
ended December 31, 1991. On August 21, 1992, the Massachusetts Commissioner of
<PAGE>
Banks seized the APSB and certain of the assets of APSB, including all of the
outstanding capital stock of the Seller were immediately sold by the FDIC. The
outstanding stock of the Seller was purchased by the current shareholders of
the Seller. The Seller has no knowledge that the Federal Tax Return for the
period ended August 21st, 1992 has been filed. For the period ended August 21,
1992, APSB had incurred significant losses, which resulted in no federal tax
liability on a consolidated basis. The Seller did not have a written tax
sharing arrangement with APSB. The Seller had recorded tax liability for the
period ended August 21, 1992 of $423,947. The Seller did not reduce this
liability until 1996, after reviewing the overall Federal and State tax
provisions decided to reduce the liability by 25%, or $106,000 in 1996. The
Seller has continued to reduce this liability by $8,833 each month in 1997. As
of June 30th, 1997, there remains an unamortized balance of $264,947. As of
October 15th, 1997, there remains an unamortized balance of $238,448.
SECTION 4.11(A)
Firestone Financial 401K Plan, dated June 28th, 1996. There will be a
"discontinuance charge" upon discontinuance of contributions or
termination of the 401K Plan as follows:
------------------------------------------------
Contract year in which Discontinuance Charge
Discontinuance Occurs as a % of plan assets
------------------------------------------------
1 to 3 2.500%
4 to 5 1.875%
6 to 7 1.250%
------------------------------------------------
Plan assets at July 31, 1997 were approximately $1,060,000.
In September 1997, the Plan administrator notified the Seller that the
401K Plan was top heavy as of December 31, 1996 resulting in an
additional Seller contribution of approximately $6,000. The Seller
expects that the Plan will also be top heavy for the year ending December
31, 1997. At this time, the Plan administrator has not estimated the
additional contribution necessary for 1997.
SECTION 4.13
AGREEMENT BETWEEN FIRESTONE AND ROBERT D. FANGER regarding
employment terms, dated September 24, 1993
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, initially dated as of
March 9th, 1994 and amended on numerous dates, the most recent amendment
being dated October 25th, 1996.
NOTE PURCHASE AGREEMENT, SUBORDINATED NOTES AND SUBORDINATION AGREEMENT
all dated November 10, 1995.
ASSISTANCE AND COOPERATION AGREEMENT, dated November 16th, 1992, among
various members of management of the Seller and The First National Bank
Boston as Agent
COMMERCIAL LEASE AGREEMENT for space located at 38 Glen Avenue, Newton
Centre, MA, amended on January 9th, 1995.
FIRESTONE FINANCIAL 401K Plan Agreement
BUY/SELL AGREEMENT among Seller and the Stockholders dated February 4th,
1994.
Seller Guarantee for Subsidiary Debt from Canadian Lender, as part of
the Amended and Restated Revolving Credit Agreement
SECTION 4.14(A)
Firestone/Debral Funding Trust - 50% interest in joint Venture with
Debral, an entity owned by Murray Schocket. The sole assets of this joint
venture are a group of commercial office condominiums located at 125 and 133
East Street, Dedham, MA. All units are currently under short term lease
agreements. All units are owned without any mortgage and Seller has a 50%
interest in the assets.
SECTION 4.14(B)
Second Amendment to Lease Between Seller and Glen Avenue
Associations. Lease of Suite 201 and 202 located at 38 Glen Ave. The term of
the lease is 60 months through October 31, 2000, with an option to extend for a
60 month period. Landlord has submitted Common Area Maintenance (CAM) charges
related to flood damage related to a storm in October 1996. These charges are
being reviewed under the terms of the lease and will be subject to final
negotiations with the landlord. Total amount of the claim submitted to Seller
<PAGE>
is $34,337 and the Seller has accrued $15,000 as of June 30, 1997 for this
matter. This matter was settled and paid in full in September 1997 for $31,
132.
SECTION 4.15
The Seller finances lease contracts and installment sale contracts. The
following table represents the states where the Seller files reports.
- --------------------------------------------------------------------------------
STATE REPORT DATE FILED
- --------------------------------------------------------------------------------
State of Colorado Biennial Report l/l/96
State of Massachusetts Certificate of Change of Directors or Officers 10/28/94
Attorney General Letter ll/l/96
Annual Report 12/31/96
State of Montana Sales Finance License 1/1/97
State of Pennsylvania Certificate of Authority 7/8/92
State of Vermont Corporate Annual Report 12/31/96
- --------------------------------------------------------------------------------
SECTION 4.16
From time to time in the normal course of business the Seller applies for and
receives various licenses and permits for the collection and remittance of
sales and use taxes within the United States.
SECTION 4.18
Seller has made available to buyer copies of the following insurance policies
currently in effect:
PACKAGE POLICY
Seaco Insurance Company (expires 8/21/98) $250,000 Personal Property,
Special Form, $1,000 Deductible, Replacement Cost Loss of Business
Income, Actual Loss Sustained up to 12 consecutive months $500,000
EDP Equipment, Special Form, $1,000 Deductible, Replacement Cost
COMMERCIAL GENERAL LIABILITY
Seaco Insurance Company (expires 8/21/98)
$1,000,000 Liability and Medical Expenses, $10,000
retainage
$5,000 Medical Expenses per person
$50,000 Fire Legal Liability
<PAGE>
WORKERS' COMPENSATION POLICY
Seaco Insurance Company (expires 8/21/98)
BUSINESS AUTO POLICY
Seaco Insurance Company (expires 8/21/98)
Leased Automobiles for:
Michael A. Miller, Robert D. Fanger, Edward S. Yaffe, David S. Cohen
LIFE INSURANCE POLICIES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
OWNER AMOUNT COMPANY EXPIRATION
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Michael A. Miller 4,950,000 First Colony Life Insurance Company 10/13/97
Robert Fanger 4,950,000 First Colony Life Insuranc Company 10/13/97
David S. Cohen 2,000,000 United of Omaha Life Insurance Company 10/13/97
Bruce A. Miller 2,000,000 First Colony Life Insurance Company 10/13/97
Deborah R. Miller 2,000,000 First Colony Life Insurance Company 10/13/97
Edward S. Yaffe 2,000,000 United of Omaha Life Insurance Company 10/13/97
Michael A. Guidi 1,000,000 First Colony Life Insurance Company 10/13/97
Scott A. Cooper 300,000 First Colony Life Insurance Company 10/13/97
Joan G. Corbett 200,000 First Colony Life Insurance Company 10/13/97
Maryteresa Crealese 200,000 First Colony Life Insurance Company 10/13/97
- ---------------------------------------------------------------------------------------------
</TABLE>
SECTION 4.25
Seller Advisory Board Members are:
Steven N. Farber
T. Lincoln Morison, Jr.
Richard A. Giesser
SECTION 4.27
[ ] Amended and Restated Revolving Credit Agreement provides for
borrowings up to $80,000,000. Under the agreement the following
amounts are outstanding:
<PAGE>
[ ] Outstanding LIBOR Loans as of July 28,1997 are as follows:
Description Amount Rate Maturity Date
US LIBOR $35,000,000 6.9688% 9/19/97
US LIBOR $21,000,000 6.9688% 8/22/97
US LIBOR $3,500,000 6.875% 8/1/97
Canadian LIBOR $1,500,000 7.000% 9/19/97
Canadian LIBOR $1,250,000 7.000% 8/22/97
[ ] Amended and Restated Revolving Credit Agreement,
Outstanding Balance under Credit Agreement as of
7/28/97:$ 500,000
[ ] Amended and Restated Revolving Credit Agreement,
Outstanding Balance under Swingline as of 7/28/97:
$ 885,000
[ ] Amended and Restated Revolving Credit Agreement,
Outstanding Balance under Credit Agreement with
Canadian Lender as of 7/28/97:$240,000
[ ] Subordinated Note Holders of Seller, as of July 28th,1997.
Reference disclosure in Section 4.08. These Subordinated Notes
were paid in full on August 28,1997 together with accrued interest
thereon.
- ----------------------------------------------------------------------------
Note Name Amount
- ----------------------------------------------------------------------------
Albert & Berta Axelrad 100,000.00
Bruce Backman 400,000.00
Willis P. & Wendy E. Burbank 200,000.00
Dorothy J. Chamberlin Trust Dated 11/3/94 75,000.00
Leona S. & Winthrop D. Chamberlin 100,000.00
David S. Cohen, IRA 9,000.00
Jane T. Cohen, IRA 6,000.00
Myron Cohen 50,000.00
Myron Cohen, IRA 214 16341-1-9-E51, Gruntal & Co., 50,000.00
Incorporated, Custodian
Scott A. Cooper, IRA 15,000.00
Scott A. & Alison C. Cooper 5,000.00
Smith Barney Custodian for Joan G. Corbett, IRA-Rollover 10,000.00
- ----------------------------------------------------------------------------
<PAGE>
- ----------------------------------------------------------------------------
Iris M. Fanger 50,000.00
Deborah S. First 300,000.00
Richard A. Giesser 117,000.00
Richard A. Giesser, IRA 33,000.00
R. Constance Giesser 116,000.00
R. Constance Giesser, IRA 34,000.00
Monroe S. Glick 100,000.00
Mercer, Williams & Co., nominee for Donald J. Glotzer 200,000.00
Stephen Gordet, SEP 80,000.00
Michael A. Guidi 30,000.00
Michael A. Guidi 15,000.00
Barbara R. Hershberg 50,000.00
Mel Howard 100,000.00
Mel Howard, IRA 100,000.00
Murray Liberman 100,000.00
Lewis J. Miller & Annette Furst 317,000.00
L. James Miller, IRA 83,000.00
Gloria & Sol Miller 50,000.00
Michael Miller, IRA 200,000.00
Michael Miller, IRA 20,000.00
Annette Miller, IRA 10,000.00
Richard P. Morse 100,000.00
Aileen J. Murstein 50,000.00
Roslyn Pavane 25,000.00
Estaire Pierce 50,000.00
Thomas C. Pontani 100,000.00
Barbara Pressman 50,000.00
Gerald Ramin, IRA 50,000.00
Harris E. & Esta-Lee Stone 50,000.00
Emily P. Sullivan, Jr. 200,000.00
Beatrice and Nathan Taubenfeld 100,000.00
Edward S. Yaffe 100,000.00
----------
- -----------------------------------------------------------------------------
[ ] Outstanding LIBOR Loans as of October 9,1997 are as
follows:
-------------------------------------------------------
Description Amount Rate Maturity-Date
-------------------------------------------------------
US LIBOR $38,000,000 6.9063% 10/23/97
US LIBOR $21,000,000 6.9336% 10/23/97
US LIBOR $2,000,000 6.8750% 10/10/97
Canadian LIBOR $1,500,000 6.9375% 10/23/97
Canadian LIBOR $1,250,000 6.9375% 10/23/97
-------------------------------------------------------
[ ] Amended and Restated Revolving Credit Agreement,
Outstanding Balance under Credit Agreement as of
10/9/97:$ 1,500,000
<PAGE>
[ ] Amended and Restated Revolving Credit Agreement,
Outstanding Balance under Swingline as of 10/9/97:
$ 2,110,000
[ ]Amended and Restated Revolving Credit Agreement, Outstanding Balance
under Credit Agreement with Canadian Lender as of 10/9/97:$230,000
[ ]Firestone Financial Canada, Ltd. has entered into various installment
sales contacts denominated in Canadian Dollars. To hedge against the foreign
exchange risk associated with the contracts which have not been guaranteed
by a distributor, the subsidiary has entered into 29 Foreign Exchange
Forward Pricing Contracts with the National Bank of Canada. The total amount
covered under these contracts as of July 29th, 1997 is $693,943 CN and
$501,743 USD. The contracts have various settlements date through June 1999.
The total amount covered under these contracts as of October 10th, 1997 is
$547,534 CN and $396,292 USD. The contracts have various settlements date
through June 1999.
[ ]On October 31, 1995, the Seller entered into a interest rate Swap
transaction for $4,000,000 at a fixed rate of 8.67% expiring on December 31,
1998. This swap was a hedge for the floating rate Subordinated Notes
disclosed above. The remaining notional amounts are as follows:
-------------------------------------
Amount Begin Date End Date
-------------------------------------
$3,750,000 6/30/97 9/30/97
$3,625,000 9/30/97 12/31/97
$3,500,000 12/31/97 3/31/98
$3,375,000 3/31/98 6/30/98
$3,350,000 6/30/98 9/30/98
$3,125,000 9/30/98 12/31/98
-------------------------------------
[ ]LOAN PARTICIPATION AGREEMENTS - From time to time the Seller enters into
a Loan Participation agreement where a third party, typically a distributor
will participate a loan or series of loans with the Seller. Seller retains
all servicing rights to the loans. At June 30, 1996, the balance of loans
due to participants is $1,142,917. At September 30, 1996, the balance of
loans due to participants is $1,197,621.
SECTION 4.28
The Seller's computer system contains the Year 2000 Problems which the Seller
is attempting to remedy through the computer upgrading described in Section
4.08. The Seller assumes without any specific knowledge, that all of its
customers, insurance companies, and service providers have and will encounter
difficulties in remedying their own Year 2000 Problem.
SECTION 5.11
Automobile Leases in force
1996 Volvo 845GTAS, term of 36 months, beginning 10/23/95, through
9/23/98
1996 Lexus ES300, term of 48 months, beginning 11/22/95,
through 10/22/99
1997 Jeep Cherokee, term of 36 months, beginning 12/19/96,
through 11/19/99
1995 Saab 9000SET, term of 36 months, beginning 6/20/95
through 5/20/98
<PAGE>
Buyer Disclosure Schedule
Section 3.02(a)
Shares of Buyer's Common Stock are reserved for issuance pursuant to the
Buyer's Stock Compensation Plan, 1995 and 1996 Director stock option plans and
the Company's Dividend Reinvestment Plan.
Section 3.02(b)
USTrust
(i) 100% common stock.
(ii) Massachusetts.
(iii) USTrust is not a member of the Federal Reserve System.
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August ___, 1997 (this "Plan of
Merger") by and among [BUYER], a Massachusetts corporation (the "Buyer"),
[SELLER], a Massachusetts corporation (the "Seller"), and [ACQUISITION
SUBSIDIARY], a Massachusetts corporation and a wholly-owned subsidiary of the
Buyer (the "Acquisition Subsidiary"). The Seller and the Acquisition Subsidiary
are hereinafter sometimes collectively referred to as the "Constituent
Corporations".
This Plan of Merger is being entered into pursuant to an Agreement and
Plan of Reorganization, dated as of August ___, 1997 (as amended and in effect
from time to time, the "Agreement"), between the Buyer, the Seller and each of
the Stockholders identified therein.
All capitalized terms used herein without definition are used with the
meanings ascribed thereto in the Agreement.
In consideration of the premises, and the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 Surviving Corporation. In accordance with the provisions of this
Plan of Merger and the Massachusetts Business Corporation Law ("MBCL"), at the
Effective Time (as hereinafter defined), the Acquisition Subsidiary shall be
merged with and into the Seller (the "Merger"), and the separate corporate
existence of the Acquisition Subsidiary shall cease. The Seller shall be the
surviving corporation in the Merger (hereinafter sometimes referred to as the
"Surviving Corporation") and shall continue its corporate existence under the
laws of the Commonwealth of Massachusetts. The name of the Surviving
Corporation shall be [THE NAME OF THE SELLER], unless such name is changed at
the request of the Buyer.
1.02 Purposes of Surviving Corporation. As of the Effective Time, the
purposes of the Surviving Corporation shall be as stated in the Articles of
<PAGE>
Organization of the Seller immediately prior to the Effective Time.
1.03 Authorized Capital Stock of Surviving Corporation. As of the
Effective Time, the Surviving Corporation shall be authorized to issue that
number of shares of $0.01 par value voting common stock which the Acquisition
Subsidiary is authorized to issue immediately prior to the Effective Time.
1.04 Description of Classes of Stock. As of the Effective Time, each
class or series of capital stock of the Surviving Corporation shall have the
same preferences, voting powers, qualifications, special or relative rights or
privileges as such class or series of capital stock of the Acquisition
Subsidiary possessed immediately prior to the Effective Time.
1.05 Effect of the Merger.
(a) Upon the Effective Time, all of the estate, property, rights,
privileges, powers and franchises of the Constituent Corporations and all
of their property, real, personal and mixed, and all the debts due on
whatever account to any of them, as well as all stock subscriptions and
other choses in action belonging to any of them, shall be transferred to
and vested in the Surviving Corporation, without further act or deed, and
all claims, demands, property and other interest shall be the property of
the Surviving Corporation, and the title to all real estate vested in any
of the Constituent Corporations shall not revert or be in any way
impaired by reason of the Merger, but shall be vested in the Surviving
Corporation.
(b) Upon the Effective Time, the rights of creditors of any
Constituent Corporation shall not in any manner be impaired, nor shall
any liability or obligation, including taxes due or to become due, or any
claim or demand in any cause existing against such corporation, or any
stockholder, director, or officer thereof, be released or impaired by the
Merger, but the Surviving Corporation shall be deemed to have assumed,
and shall be liable for, all liabilities and obligations of each of the
Constituent Corporations in the same manner and to the same extent as if
the Surviving Corporation had itself incurred such liabilities or
obligations. The stockholders, directors, and officers of the Constituent
Corporations shall continue to be subject to all liabilities, claims and
demands existing against them as such at or before the Merger. No action
or proceeding then pending before any court or tribunal of the
<PAGE>
Commonwealth of Massachusetts or otherwise in which any Constituent
Corporation is a party, or in which any such stockholder, director, or
officer is a party, shall abate or be discontinued by reason of the
Merger, but any such action or proceeding may be prosecuted to final
judgment as though no merger had taken place, or the Surviving
Corporation may be substituted as a party in place of any Constituent
Corporation by the court in which such action or proceeding is pending.
1.06 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Acquisition Subsidiary acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger
or to otherwise carry out this Plan of Merger, the officers and directors of
the Surviving Corporation shall and will be authorized to execute and deliver,
in the name and on behalf of the Constituent Corporations or otherwise, all
such deeds, bills of sale, assignments and assurances and to take and do, in
the name and on behalf of the Constituent Corporations or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or to otherwise carry out
this Plan of Merger.
1.07 Articles of Organization. At the Effective Time, the Articles of
Organization of the Acquisition Subsidiary as in effect at the Effective Time,
shall be by amendment effected by the Plan of Merger, the Articles of
Organization of the Surviving Corporation and the By-Laws of the Acquisition
Subsidiary, as in effect at the Effective Time, shall be the By-Laws of the
Surviving Corporation and, subject to the rights of the Buyer as the sole
stockholder, shall thereafter continue to be its Articles of Organization and
By-Laws until amended as provided therein or by law.
1.08 Directors and Officers. At the Effective Time, the Board of
Directors of the Surviving Corporation shall consist of those persons
comprising the Board of Directors of the Acquisition Subsidiary and those
persons comprising the Board of Directors of the Seller, in each case,
immediately prior to the Effective Time, each to hold office in accordance with
the Articles of Organization and By-Laws of the Surviving Corporation. At all
times, the Board of Directors of the Surviving Corporation shall consist of at
<PAGE>
least 50% Buyer appointees. The officers of the Seller immediately prior to the
Effective Time shall be the officers of the Surviving Corporation from and,
subject to the rights of the Buyer as the sole stockholder, after the Effective
Time each to hold office in accordance with the Articles of Organization and
By-Laws of the Surviving Corporation.
1.09 Effective Time; Conditions. If all of the conditions precedent set
forth in Article VI of the Agreement have been satisfied or waived, and this
Plan of Merger is not terminated under Section 3.01 hereof, Articles of Merger
with respect to the Merger shall be prepared by the Acquisition Subsidiary and
the Seller and filed and recorded pursuant to Section 78(d) of the MBCL (the
"Articles of Merger"). The Merger shall become effective at, and the Effective
Time shall be, the date and time specified in the Articles of Merger which
shall be not later than thirty (30) days after the filing of the Articles of
Merger (such date and time is herein referred to as the "Effective Time").
ARTICLE II
CONVERSION OF SHARES
2.01 Effect on Outstanding Shares.
(a) Acquisition Subsidiary Common Stock. By virtue of the Merger,
automatically and without any action on the part of the holder thereof,
each share of common stock of the Acquisition Subsidiary, par value $0.01
per share ("Acquisition Subsidiary Common Stock"), issued and outstanding
immediately prior to the Effective Time, shall become and be converted
into 1.00 share of common stock of the Surviving Corporation, par value
$0.01 per share ("Surviving Corporation Common Stock"). Each certificate
which immediately prior to the Effective Time represented outstanding
shares of Acquisition Subsidiary Common Stock shall on and after the
Effective Time be deemed for all purposes to represent the number of
shares of Surviving Corporation Common Stock into which the shares of
Acquisition Subsidiary Common Stock represented by such certificate shall
have been converted pursuant to this Section 2.01(a).
(b) Seller Common Stock. (i) By virtue of the Merger, automatically
and without any action on the part of the holder thereof, each share of
common stock of the Seller, par value $0.01 per share ("Seller Common
Stock"), issued and outstanding immediately prior to the Effective Time
(other than any such shares held directly or indirectly by the Buyer,
except in a fiduciary capacity, and any such shares held as treasury
<PAGE>
stock by the Seller) shall become and be converted into 0.63 shares of
the common stock of the Buyer, par value $0.625 per share ("Buyer Common
Stock"), together with that number of Buyer Rights issued pursuant to the
Buyer Rights Agreement associated therewith; provided, however, that if
the product of the Closing Price multiplied by the aggregate number of
shares of Buyer Common Stock into which all shares of Seller Common Stock
shall be converted exceeds $30,000,000, the Conversion Number shall be
adjusted downward so that the product of the Closing Price multiplied by
the aggregate number of shares of Buyer Common Stock into which all
shares of Seller Common Stock shall be converted is equal to $30,000,000
(the immediately foregoing proviso, however, will not apply if (i) a
definitive agreement for the acquisition of all of the issued and
outstanding shares of Buyer Common Stock or Bank Common Stock is
executed, (ii) a tender offer for the shares of Buyer Common Stock is
consummated or (iii) twenty-five percent (25%) or more of the voting
securities of the Buyer or the Bank is acquired by an individual or a
group of individual, in each case, during the period beginning on the
date hereof and ending on the Effective Date); provided, however, that in
the event that the Buyer has exercised its option to deliver additional
shares of its Common Stock pursuant to the last paragraph of Section
8.01(e) of the Agreement, Seller's Common Stock shall be converted into
such number of shares of the Common Stock of the Buyer, par value $0.625
per share, as provided in said Section of the Agreement. The number of
shares of Buyer Common Stock into which each share of Seller Common Stock
shall be converted is hereinafter called the "Conversion Number."
(ii) As of the Effective Time, each share of Seller Common Stock
held either directly or indirectly by the Buyer (other than in a
fiduciary capacity) or as treasury stock of the Seller shall be
cancelled, retired and cease to exist, and no payment shall be made with
respect thereto. Each certificate which immediately prior to the
Effective Time represented outstanding shares of Seller Common Stock
shall on and after the Effective Time be deemed for all purposes to
represent the number of shares of Buyer Common Stock into which the
shares of Seller Common Stock represented by such certificate shall have
been converted pursuant to this Section 2.01(b).
(c) Shares of Dissenting Holders. No conversion under Section
2.01(b) hereof shall be made with respect to the shares of Seller Common
Stock held by a Dissenting Holder (as such term is defined below);
<PAGE>
provided, however, that each share of Seller Common Stock outstanding
immediately prior to the Effective Time and held by a Dissenting Holder
who shall, after the Effective Time, withdraw his demand for appraisal or
lose his right of appraisal, in either case pursuant to the applicable
provisions of the MBCL, shall be deemed to be converted, as of the
Effective Time, into shares of Buyer Common Stock as specified in Section
2.01(b) hereof. The term "Dissenting Holder" shall mean a holder of
Seller Common Stock who has demanded appraisal rights in compliance with
the applicable provisions of the MBCL concerning the right of such holder
to dissent from the Merger and demand appraisal of such holder's shares
of Seller Common Stock.
(d) Dissenter's Rights. Any Dissenting Holder (i) who files with the
Seller a written objection to the Merger before the taking of the vote to
approve this Plan of Merger by the shareholders of the Seller and who
states in such objection that he intends to demand payment for his shares
if the Merger is concluded and (ii) whose shares are not voted in favor
of the Merger shall be entitled to demand payment for his shares of
Seller Common Stock and an appraisal of the value thereof, in accordance
with the provisions of Sections 86 through 98 of the MBCL.
2.02 Anti-Dilution. In the event that, subsequent to the date of this
Plan of Merger but prior to the Effective Time, the outstanding shares of Buyer
Common Stock or Seller Common Stock shall have been increased, decreased,
changed into or exchanged for a different number of shares or securities
through reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, or other like changes in the Buyer's or the
Seller's capitalization, other than pursuant to the Agreement, as the case may
be (a "Recapitalization"), then an appropriate and proportionate adjustment
shall be made to the Conversion Number so that each holder of Seller Common
Stock shall receive under Section 2.01(b) hereof the number of shares of Buyer
Common Stock (except for fractional shares) that such holder would have held
immediately following the Recapitalization if the Merger had occurred
immediately prior to the Recapitalization or the record date therefor, as
applicable. For purposes of this Section 2.02, in no event shall the issuance
of shares or securities by the Buyer in connection with the Buyer acquiring
directly or indirectly the stock or assets of any corporation, bank or other
entity be deemed to be a "Recapitalization".
<PAGE>
2.03 Procedures.
(a) Certificates which represent shares of Seller Common Stock that
are outstanding immediately prior to the Effective Time (an "Old
Certificate") and are converted into shares of Buyer Common Stock
pursuant to this Article II shall, after the Effective Time, be deemed to
represent shares of Buyer Common Stock into which such shares have been
converted and shall be exchangeable by the holders thereof in the manner
provided in the transmittal materials described below for new
certificates representing the shares of Buyer Common Stock into which
such shares have been converted.
(b) As promptly as practicable after the Effective Time, the
Exchange Agent shall send to each holder of record of shares of Seller
Common Stock outstanding at the Effective Time transmittal materials
(which shall be reviewed with the Seller's counsel prior to the Effective
Time) for use in exchanging the Old Certificates for such shares for new
certificates ( a "New Certificate") for shares of Buyer Common Stock into
which such shares of Seller Common Stock have been converted pursuant to
this Article II. Upon surrender of an Old Certificate, together with a
duly executed letter of transmittal and any other required documents, the
holder of such Old Certificate shall be entitled to receive, in exchange
therefor, a certificate for the number of shares of Buyer Common Stock to
which such holder is entitled pursuant to Section 2.01(b) hereof, and
such Old Certificate shall forthwith be cancelled. No dividend or other
distribution payable after the Effective Time with respect to Buyer
Common Stock shall be paid to the holder of any unsurrendered Old
Certificate until the holder thereof surrenders such Old Certificate, at
which time such holder shall receive all dividends and distributions,
without interest thereon, previously payable but withheld from such
holder pursuant hereto. After the Effective Time, there shall be no
transfers on the stock transfer books of the Seller of shares of Seller
Common Stock which were issued and outstanding at the Effective Time and
converted pursuant to the provisions of this Article II. If, after the
Effective Time, Old Certificates are presented for transfer to the
Seller, they shall be cancelled and exchanged for the shares of Buyer
Common Stock deliverable in respect thereof as determined in accordance
with the provisions and procedures set forth in this Article II.
(c) In lieu of the issuance of fractional shares of Buyer Common
Stock pursuant to Sections 2.01(b) of this Plan of Merger, cash
<PAGE>
adjustments, without interest, will be paid to the holders of Seller
Common Stock in respect of any fractional share that would otherwise be
issuable and the amount of such cash adjustment shall be equal to an
amount in cash determined by multiplying such holder's fractional
interest by the Closing Price of a share of Buyer Common Stock (rounded
up to the nearest cent). For purposes of determining whether, and in what
amounts, a particular holder of Seller Common Stock would be entitled to
receive cash adjustments under this Section 2.03(c), shares of record
held by such holder and represented by two (2) or more Old Certificates
shall be aggregated.
(d) After the Effective Time, holders of Old Certificates of the
Seller Common Stock shall cease to be, and shall have no rights as,
stockholders of the Seller, other than (i) to receive shares of Buyer
Common Stock into which such shares have been converted and, if
applicable, fractional share payments pursuant to the provisions hereof
and (ii) the rights afforded to any Dissenting Holder (as defined in
Section 2.01(c)) under applicable provisions of the MBCL.
(e) Notwithstanding the foregoing, neither the Buyer nor the Seller
nor any other person shall be liable to any former holder of shares of
Seller Common Stock for any shares or any dividends or distributions with
respect thereto properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(f) In the event any Old Certificate shall have been lost, stolen or
destroyed, upon receipt of reasonable evidence as to such loss, theft or
destruction and to the ownership of such Old Certificate by the person
claiming such Old Certificate to be lost, stolen or destroyed, and the
receipt by the Buyer of reasonable and customary indemnification, the
Buyer will issue in exchange for such lost, stolen or destroyed Old
Certificate shares of Buyer Common Stock and the fractional share
payment, if any, deliverable in respect thereof as determined in
accordance with this Article II.
(g) If any New Certificate representing shares of Buyer Common Stock
is to be issued in a name other than that in which the Old Certificate
surrendered in exchange therefor is registered, it shall be a condition
of the issuance thereof that the Old Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer (including, but not
limited to, that the signature of the transferor shall be properly
<PAGE>
guaranteed by a commercial bank, trust company, member firm of the NASD
or other eligible guarantor institution), and that the person requesting
such exchange shall pay to the Exchange Agent (as such term is defined in
Section 4.01 hereof) in advance any transfer or other taxes required by
reason of the issuance of a New Certificate representing shares of Buyer
Common Stock in any name other than that of the registered holder of the
Old Certificate surrendered, or required for any other reason, or shall
establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
ARTICLE III
AMENDMENT AND TERMINATION
3.01 Termination. Notwithstanding the approval and adoption of this Plan
of Merger by the stockholders of the Seller, the Buyer and the Acquisition
Subsidiary, this Plan of Merger shall terminate forthwith in the event that the
Agreement shall be terminated as therein provided. In the event of the
termination of this Plan of Merger as provided above, this Plan of Merger shall
forthwith become null and void and there shall be no liability on the part of
any of the parties hereto except as otherwise provided in the Agreement.
3.02 Amendment. This Plan of Merger shall not be amended except by an
instrument in writing signed on behalf of each of the parties hereto pursuant
to an amendment to the Agreement approved in the manner therein provided. If
any such amendment to the Agreement is so approved, any amendment to this Plan
of Merger required by such amendment to the Agreement shall be effected by the
parties hereto by action taken by their respective Boards of Directors.
ARTICLE IV
MISCELLANEOUS
4.01 Exchange Agent. Prior to the Effective Time, the Buyer shall appoint
United States Trust Company, Boston, Massachusetts as exchange agent for the
purpose of exchanging Old Certificates representing shares of Seller Common
Stock for New Certificates representing shares of Buyer Common Stock (the
"Exchange Agent"), and the Buyer shall issue and deliver to the Exchange Agent
New Certificates representing shares of Buyer Common Stock and shall pay to the
Exchange Agent such amounts of cash as shall be required to be delivered to
<PAGE>
holders of shares of Seller Common Stock in lieu of fractional shares of Buyer
Common Stock, pursuant to Article II of this Plan of Merger.
4.02 Counterparts. This Plan of Merger may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to each of the other parties.
4.03 Governing Law. This Plan of Merger shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts,
without giving effect to the principles of conflicts of laws thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger to
be duly executed and delivered as a sealed instrument as of the date first
above written.
[BUYER]
By:______________________________________
President
By:______________________________________
Treasurer
[SELLER]
By:______________________________________
President
By:______________________________________
Treasurer
[ACQUISITION SUBSIDIARY]
By:______________________________________
President
By:______________________________________
Treasurer
<PAGE>
EXHIBIT B-1
FORM OF BUYER AFFILIATE LETTER ADDRESSED TO SELLER
[Date]
[SELLER]
- --------------------
- --------------------
- --------------------
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of [BUYER], a Massachusetts corporation ("Buyer"), as the term
"affiliate" is used in and for purposes of Accounting Series Releases 130 and
135, as amended, of the Securities and Exchange Commission (the "Commission").
I have been further advised that pursuant to the terms of the Affiliation
Agreement and Plan of Reorganization and Agreement and Plan of Merger dated as
of July ___, 1997 (together, the "Merger Agreement"), between Buyer,
[ACQUISITION SUBSIDIARY], a wholly owned subsidiary of Buyer and a
Massachusetts corporation ("Merger Subsidiary"), and [SELLER], a Massachusetts
corporation (the "Seller"), Merger Subsidiary will be merged with and into
Seller.
I represent to and covenant with Buyer that from the date that is thirty
(30) days prior to the Effective Time (as defined in the Merger Agreement) I
will not sell, transfer or otherwise dispose of, or reduce the risk of
ownership with respect to, shares of Buyer Common Stock (as defined in the
Merger Agreement) held by me until after such time as results covering at least
thirty (30) days of combined operations of Buyer and Seller have been published
by Buyer, in the form of a quarterly earnings report, an effective registration
statement filed with the Commission, a report to the Commission on Form 10-K,
10-Q, or 8-K, or any other public filing or announcement which includes the
results of at least 30 days of combined operations.
Very truly yours,
By:________________________________
Name:
Accepted this ____ day of
_____________, 1997, by
[SELLER]
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT B-2
FORM OF SELLER AFFILIATE LETTER ADDRESSED TO BUYER
[Date]
[BUYER]
- ---------------------
- ---------------------
- ---------------------
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of [SELLER], a Massachusetts corporation ("Seller"), as the term
"affiliate" is used in and for purposes of Accounting Series Releases 130 and
135, as amended, of the Securities and Exchange Commission (the "Commission").
I have been further advised that pursuant to the terms of the Affiliation
Agreement and Plan of Reorganization and Agreement and Plan of Merger dated as
of July ___, 1997 (together, the "Merger Agreement"), between [BUYER], a
Massachusetts corporation ("Buyer"), [ACQUISITION SUBSIDIARY], a wholly owned
subsidiary of Buyer and a Massachusetts corporation ("Merger Subsidiary"), and
Seller, Merger Subsidiary will be merged with and into Seller (the "Merger"),
and that as a result of the Merger, I may receive shares of Buyer Common Stock
(as defined in the Merger Agreement) in exchange for shares of Seller Common
Stock (as defined in the Merger Agreement), owned by me.
I represent, warrant and covenant to Buyer that in the event I receive
any Buyer Common Stock pursuant to the Merger:
A. I shall not make any sale, transfer or other disposition of the
Buyer Common Stock in violation of the Securities Act of 1933, as amended
(the "Act") or the Rules and Regulations of the Commission under the Act
(the "Rules and Regulations").
B. I have carefully read this letter and the Agreement and discussed
its requirements and other applicable limitations upon my ability to
sell, transfer or otherwise dispose of Buyer Common Stock to the extent I
believed necessary, with my counsel or counsel for Seller.
I further represent to and covenant with Buyer that from the date that is
thirty (30) days prior to the Effective Time (as defined in the Merger
Agreement) I will not sell, transfer or otherwise dispose of, or reduce the
risk of ownership with respect to, shares of Seller Common Stock held by me and
<PAGE>
that I will not sell, transfer or otherwise dispose of, or reduce the risk of
ownership with respect to, any shares of Buyer Common Stock received by me in
the Merger or other shares of Buyer Common Stock until after such time as
results covering at least thirty (30) days of combined operations of Buyer and
Seller have been published by Buyer, in the form of a quarterly earnings
report, an effective registration statement filed with the Commission, a report
to the Commission on Form 10-K, 10-Q, or 8-K, or any other public filing or
announcement which includes the results of at least 30 days of combined
operations.
Very truly yours,
By:_______________________________
Name:
Accepted this ____ day of
_____________, 1997, by
[BUYER]
By:_________________________________
Name:
Title:
<PAGE>
EXHIBIT C
[SELLER]
Employment Agreement
EMPLOYMENT AGREEMENT dated August __, 1997, by and among [SELLER], a
Massachusetts corporation (the "Company"), and [EXECUTIVE], an individual
residing at [______________________________] (the "Executive"), and [BUYER], a
Massachusetts corporation (the "Buyer"). Capitalized terms used herein but not
otherwise defined herein shall have the meaning ascribed thereto in that
certain Agreement and Plan or Reorganization, among the Buyer, the Company and
each of the Stockholders listed therein, dated August ___, 1997.
1. Freedom to Contract. The Executive represents that he is free to enter
into this Agreement and that he has not made and will not make any agreement in
conflict with this Agreement.
2. Employment. The Company shall employ the Executive as [POSITION/TITLE]
and the Executive accepts such employment, all upon the terms and conditions
set forth herein. For as long as the Executive is employed in such capacity by
the Company, the corporate headquarters of the Company shall remain in
Massachusetts.
3. Duties. Subject to the general direction of the Board of Directors of
the Company or any person to whom the Board delegates its authority, the
Executive shall use his best efforts, including the highest standards of
professional competence and integrity, and shall devote his full business time
and effort to the performance of his duties hereunder. The Executive's duties
shall be performed primarily in Massachusetts, subject to business trips
reasonable in number and duration. The Executive shall not engage in any other
business activity except that the Executive may engage from time to time in
such personal investment activities as do not interfere with his day-to-day
responsibilities to the Company.
4. Compensation and Benefits.
4.1. Salary. During the Term (as defined below) of this Agreement,
the Executive shall be paid a salary (the "Salary") at the rate of
[_________________________] Dollars ($_______) per annum, payable as
customarily paid by the Company. The Company, in its sole discretion, may
increase the Salary, but has made no representation that it intends to do so.
<PAGE>
4.2. Bonus. In addition to his Salary, for each full year of employment,
the Executive shall be entitled to a bonus in an amount determined in the
discretion of the Compensation Committee of the Board of Directors of the
Surviving Corporation (as defined in the Plan of Merger).
4.3. Benefits. The Executive shall be entitled to participate in all
"employee pension benefit plans," all "employee welfare benefit plans" (each as
defined in the Employee Retirement Income Security Act of 1974) and all pay
practices and other compensation arrangements maintained by the Buyer from time
to time (the "Benefits"). The Buyer agrees to provide or cause the Company to
provide the Executive with the types and levels of Benefits maintained by the
Buyer for similarly situated employees of the Buyer. The Buyer will treat the
service of Executive with Company as service rendered to Buyer for purposes of
eligibility to participate, vesting and for other appropriate benefits, but not
for benefit accrual (including minimum pension amount) or benefit payment,
early retirement subsidies, minimum employee pension benefits or
post-retirement welfare benefits under any employee pension benefit plan or
welfare benefit plan of Buyer extended to the Executive. In addition, it is the
intention of Buyer that after, the Closing, the benefits accorded to the
Executive would, in the aggregate, be no less favorable than Company's existing
benefit plans. All Benefits shall conform to Buyer's benefit plans and
policies, except that, Executive shall be entitled to the vacation benefits
afforded to him prior to the Effective Date and any automobile lease utilized
by Executive existing as of July ___, 1997 shall be permitted to expire in
accordance with its terms and thereafter, Executive shall be entitled to an
automobile allowance in accordance with Buyer's then existing automobile
allowance policy.
4.4. Reimbursement of Expenses. The Company shall reimburse, pursuant to
the Buyer's Expense Reimbursement Plan, the Executive for all ordinary and
necessary expenses incurred by the Executive on behalf of the Company, upon the
presentation of customary vouchers.
4.5. Payment Limit. Notwithstanding the other provisions of this
Section 4, the Company shall make no payment that would constitute an "excess
parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986 or any successor provision.
5. Term; Termination; Rights Upon Termination.
5.1. Term. The term (the "Term") of employment of the Executive
hereunder shall commence as of the date first above written (the "Effective
Date") and shall continue until the second anniversary of the Effective Date
unless terminated earlier in accordance with the provisions hereof. This
Agreement shall be renewed automatically for an additional one (1) year term
unless otherwise terminated by either party by written notice to the other
<PAGE>
given at least ninety (90) days prior to the expiration of the then current
term.
5.2. Termination. The Company may at any time immediately terminate
the employment of the Executive under this Agreement with or without Cause. The
Executive may at any time immediately terminate his employment under this
Agreement with or without Reason.
(a) For purposes of this Agreement, the term "Cause" shall mean
(i) any act of dishonesty or gross and willful misconduct with
respect to the Company, including without limitation, fraud or
theft, on the part of the Executive, (ii) conviction of the
Executive for a felony, or (iii) the Executive's sustained failure
to perform significant duties hereunder after notice and a thirty
(30) day opportunity to cure. The rights and obligations of the
parties upon any termination of the Executive's employment shall be
as set forth in Section 5.3 hereof.
(b) For purposes of this Agreement, the term "Reason" shall
mean (i) a material breach by the Company of any term of this
Agreement, (ii) any event of bankruptcy or insolvency in respect of
the Company, or (iii) the occurrence of an incidence of
Deterioration as such term is defined in Section 8.2 hereof (without
regard to any reference to a Change of Control).
5.3. Rights Upon Termination. In the event that:
(a) the employment of the Executive is terminated by the
Executive for Reason or by the Company without cause, then for a
period of two (2) years after such termination, the Company shall
pay to the Executive, at the time otherwise due under Section 4 all
Salary at the rate in effect at the time of termination plus a bonus
equal to the amount of the Executive's bonus earned in the year
prior to such termination and provide all Benefits to the Executive
under Section 4. The obligations of the Company pursuant to this
Section 5.3(a) shall be in lieu of any other rights of the Executive
hereunder to compensation or Benefits in respect of any period
before or after the date of such termination;
(b) the Executive's employment terminates by reason of death or
permanent disability (as determined under the Company's current
policy), then the Company shall pay and provide to the Executive or
Executive's estate or other successor in interest at the time
otherwise due under Section 4 all Salary and benefits due to the
Executive under Section 4 through the end of the twelfth month after
the month in which the termination occurs, but reduced in the case
<PAGE>
of disability by any payments received under any disability plan,
program or policy paid for by the Company. The obligations of the
Company pursuant to this Section 5.3(b) shall be in lieu of any
other rights of the Executive hereunder to compensation or Benefits
in respect of any period before or after the date of such
termination and in lieu of any severance payment, and no other
compensation of any kind or any other amounts shall be due to the
Executive by the Company by the Company under this agreement.
(c) the employment of the Executive is terminated by the
Executive without Reason or by the Company for Cause, the Executive
shall not be entitled to compensation or benefits granted hereunder
beyond the date of the termination of the Executive's employment.
6. Non-Competition; Non-Solicitation. The Executive, as a shareholder of
the Seller, is receiving payment from the Buyer for all shares of the Seller
owned by the Executive. In addition, the parties hereto agree that the past and
future services of the Executive are special and unique and that the Executive,
as an officer of the Company, has special fiduciary duties to the Company and
the Buyer, as the sole stockholder of Company, and that for these reasons a
covenant on the part of the Executive not to compete during his employment by
the Company and for a reasonable period after the termination or expiration of
his employment is essential to protect the business of the Company and its
affiliates. Accordingly, in consideration of the promises contained herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, during the period of the Executive's employment and upon
the termination of the Executive's employment with the Company (the "End
Date"), the Executive shall not, for a period of two (2) years after the End
Date, and shall not permit any entity or business enterprise of which he is an
executive, agent, officer, promoter, director, shareholder, partner, trustee or
consultant to, directly or indirectly,
(a) solicit or accept orders or referrals from, make loans or
enter into leases other than on behalf of the Company or otherwise
interfere with or adversely affect the business relationships
(whether formed heretofore or hereafter) between the Company or the
Canadian Sub (as such term is defined in that certain Agreement and
Plan of Reorganization) and any of their route operators, equipment
distributors, customers, including but not limited to route
operators and equipment distributors, or suppliers or any person or
entity which has been identified in writing and contacted by the
Company as a potential route operator, equipment distributor,
customer, including but not limited to route operators and equipment
<PAGE>
distributors, or supplier, which actions could directly or
indirectly divert business from or adversely affect the business of
the Company or any of its affiliates; or
(b) solicit (or attempt to solicit) or encourage to leave the
employment of the Company or any of its affiliates or other than on
behalf of the Company employ in any capacity or retain as a
consultant any person who was employed or retained in any capacity,
including without limitation as an executive or as a consultant, by
the Company or any of its affiliates during the term of the
Executive's employment with the Company.
7. Confidential Information.
7.1. During and after the period of his employment, the Executive
and any person or entity controlled directly or indirectly by the Executive
shall maintain in confidence and shall not, directly or indirectly, disclose,
sell, use, publish, make copies of, or communicate to any person, firm, or
corporation any confidential information, trade secrets or proprietary data of
which he learns or learned or to which he has or had access during the course
of his employment by the Company or any of its affiliates.
7.2. For purposes of this Section 7, "confidential information,
trade secrets or proprietary data" means any information concerning any matters
affecting or relating to the business of the Company or any of its affiliates,
including but without limiting the generality of the foregoing: any customer
lists or supplier lists; research reports, market studies and plans; any
protectable technology, know-how and copyrightable material; product designs
and development; the prices the Company or any of its affiliates obtain or have
obtained from the sale of, or at which they sell or have sold, or at which they
purchase or have purchased, their products or services; estimates, bids, and
projections; trade secrets; inventions, improvements, and enhancements (whether
patentable or not); patents or patent applications; or any other information
concerning the business of the Company or any of its affiliates, their manner
of operation, their plans, policies, processes, strategies, or other data,
without regard to whether any or all of the foregoing are or would be deemed
confidential, material, or important, the parties hereto stipulating that, as
between them, the same are confidential, material, and important and gravely
affect the effective and successful conduct of the Company's business, and the
Company's goodwill, and that any breach of the terms of this paragraph shall be
a material breach of this Agreement and will result in immediate and
irreparable harm to the Company; provided that nothing shall be considered
"confidential information, trade secrets or proprietary data" which (i) is or
becomes known to the public by acts of others (other than other signatories to
this type of Agreement) or through the normal or other authorized course of
operation of the Company or its affiliates (ii) is independently developed by
<PAGE>
the Executive outside of the performance of his duties to the Company (and
which the Executive can demonstrate, by written records, was developed prior to
its disclosure to him or his access to it at the Company or its affiliates) or
(iii) is required to be disclosed by the Executive by any governmental
authority having appropriate authority (provided that the Executive has, to the
extent practicable, provided the Company or its affiliate with prior notice of
such disclosure.
7.3. All memoranda, notes, lists, records and other documents (and
all copies thereof) made or compiled by the Executive or any person or entity
controlled, directly or indirectly, by the Executive or made available to the
Executive or any person or entity controlled, directly or indirectly, by the
Executive concerning the business of the Company or any of its affiliates shall
be the Company's property and shall be delivered to the Company promptly upon
the termination of the Executive's employment.
8. Change in Control Protection.
8.1. A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied:
(a) There is an acquisition of control as defined in Section 2(a)(2)
of the Bank Holding Company Act of 1956, or any similar successor
provision, as in effect at the time of the acquisition, by any Person of
any of the Buyer, the Bank or the Company and in the case of the Bank and
the Company, such Person is not an Affiliate of Buyer; or
(b) Continuing Directors constitute one-third (1/3) or less of the
membership of the Board of Directors Buyer, whether as the result of a
proxy contest or for any other reason or reasons (for purposes of this
agreement, the term "Continuing Director" shall mean any director of
Buyer (i) who has continuously been a member of the Board of Directors of
the Buyer since not later than the Effective Date or (ii) who is a
successor of a director described in clause (i), if such successor (and
any intervening successor) shall have been recommended or elected to
succeed a Continuing Director by a majority of the then Continuing
Directors).
(c) Any Person is or becomes the Beneficial Owner (as such term is
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) directly or indirectly, of securities of the representing
twenty-five percent (25%) or more of the combined voting power of the
Buyer's, Bank's or Company's, as the case may be, then outstanding voting
<PAGE>
securities and in the case of the Bank and the Company, such Person is
not an Affiliate of Buyer;
(d) There is a change in control of the Buyer, Bank or Company of a
nature that would be required to be reported in response to item 1(a) of
Current Report on Form 8-K or item 6(e) of Schedule 14A of Regulation 14A
or any similar item, schedule or form under the Exchange Act, as in
effect at the time of the change, whether or not the Buyer, Bank or
Company is then subject to such reporting requirement; or
(e) the stockholders of the Buyer, Bank or Company, as the case may
be, approve a plan of complete liquidation of the applicable entity or an
agreement for the sale or disposition by the Buyer, Bank or Company, as
the case may be, of all or substantially all of its assets (or any
transaction having a similar effect).
8.2. Terminating Event. A "Terminating Event" shall mean, after the
occurrence of a Change of Control, (x) termination by the Company or any
successor(s) thereto of the employment of the Executive with the Company or any
successor(s) thereto for any reason other than death, disability or for Cause;
or (y) resignation of the Executive from the employ of the Company or any
successor(s) thereto while the Executive is not receiving payments or benefits
from the Company or any subsidiary, affiliate or successor by reason of the
Executive's disability, subsequent to, in each of the foregoing cases, the
occurrence of any of the following events (each of which is deemed to
constitute an incidence of "Deterioration"):
(a) A decrease in the annual base salary in effect as of the date of
the Change of Control, payable by the Company thereof to the Executive,
other than as a result of a comparable decrease in compensation payable
to all other executive officers of the Company on the basis of the
Company's or any subsidiary's financial performance; or
(b) An adverse change in the nature or scope of the Executive's
responsibilities, authorities, powers, functions or duties for the
responsibilities, authorities, powers, functions or duties exercised by
the Executive immediately prior to such Change in Control; or
(c) A relocation of more than 50 miles from the Executive's work
location immediately prior to the Change in Control where such relocation
is also more than 10 additional miles from the Executive's home.
8.3. Severance Benefits. In the event that a Terminating Event
occurs after the occurrence of a Change of Control and prior to the termination
<PAGE>
of this Agreement pursuant to the terms of Section 5 hereof, the Executive
shall be entitled to the following benefits:
(a) For a period of two (2) years following such termination, the
Company or any successor shall continue to pay the executive a salary at
the rate in effect on the date of termination, plus a bonus equal to the
bonus earned in the year prior to the year in which such termination
occurs.; provided, however, that such rate shall not be less than the
annual base salary (not including any bonus) in effect immediately prior
to and at the date hereof, unless such difference was the result of a
general decrease in all officer compensation due to financial
performance.
(b) For a period of two (2) years following such termination, the
Executive shall continue to receive all Benefits described in Section 4.2
hereof existing on the date of termination (except for any cash bonus
plans). For purposes of application of such benefits, the Executive shall
be treated as if he had remained in the employ of the Company, with an
annual salary at the rate in effect on the date of termination and
service credits will continue to accrue during such period as if the
Executive had remained in the employ of the Company.
(c) If, in spite of the provisions of Section 8.4(b) above, benefits
or service credits under any benefit plan shall not be payable or
provided under any such plan to the Executive, or to the Executive's
dependents, beneficiaries or estate, because the Executive is no longer
deemed to be an employee of the Company, the Company itself shall pay or
provide for payment of such benefits and service credits to the Executive
or to the Company's dependents, beneficiaries or estate.
9. Assumption by Another Entity of the Obligations of the Company
and the Buyer. Each of the Company and the Buyer covenants with the Executive
that as long as any portion of this Agreement remains in force, it shall not
merge or consolidate with or into any other legal entity, nor shall it
reorganize in any manner or sell all or substantially all of its assets to any
other legal entity, unless and until (i) the form of merger or acquisition
results in succession of the other entity to the obligations hereunder, or (ii)
such other entity first agrees expressly in writing to assume and perform all
of the Company's or the Buyer's, as the case may be, obligations under this
Agreement. Upon the occurrence of such a succession or assumption, the terms
"the Company" and "the Buyer" as used in this Agreement shall be construed to
refer to the entity succeeding to or assuming the Company's or the Buyer's, as
the case may be, obligations hereunder. Nothing in this Section 6 shall be
construed to limit the remedies available to the Executive for any breach of
this Agreement or to limit or relieve the Company, the Buyer and/or any
successor entity of its obligations under this Agreement.
<PAGE>
10. Miscellaneous.
10.1.Entire Agreement. This Agreement represents the entire and only
understanding between the parties on the subject matters hereof and supersedes
any other Agreements or understandings between them on such subject matters,
all of which are hereby revoked and rendered null and void.
10.2.Specific Enforcement. The parties acknowledge that the
Executive's breach of the provisions of Sections 6 and 7 of this Agreement will
cause irreparable harm to the Company and the Buyer; it is agreed and
acknowledged that the remedy of damages will not be adequate for the
enforcement of such provisions and that such provisions may be enforced by
equitable relief, including injunctive relief, which relief shall be cumulative
and in addition to any other relief to which the Company or the Buyer or both
may be entitled.
10.3.Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns; provided, that without the express
written consent of the other party, neither party may delegate or assign any of
his or its obligations or duties hereunder.
10.4.Severability. In the event any provision of this Agreement
shall be determined in any circumstances to be invalid or unenforceable, such
determination shall not affect or impair any other provision of this Agreement
or the enforcement of such provision in other appropriate circumstances, and
the remainder of the Agreement and of such provision shall be given effect, to
the greatest extent lawful, so as to carry out the intention of the parties as
manifested hereby. If any court of competent jurisdiction shall determine that
any restrictive provision herein is excessive as to its duration, its
geographic extent, or both, such provision shall be limited as may be necessary
to make such provision valid and enforceable, and such provision shall
thereupon be enforced as so limited.
10.5.Notices. Any notice or communication required or permitted to
be given pursuant to this Agreement shall be deemed to have been duly and
sufficiently given for all purposes if in writing and delivered personally to
the party to whom such notice is directed or if sent, postage prepaid, by
courier service or certified or registered mail, postage and registration
prepaid, return receipt requested, and if intended for the Executive, addressed
to the Executive at his last residence address as reflected on the records of
the Company, and if intended for the Company, addressed to it at its main
office Newton, Massachusetts with a copy to BUYER at [BUYER ADDRESS],
attention: Executive Vice President, General Counsel and Clerk, or addressed to
either party at such other address as such party may designate to the other
<PAGE>
party hereto by a notice complying with the requirements of this Section 10.5.
Any such notice shall be deemed to have been given on the date on which the
same was delivered.
10.6.Amendment. This Agreement may be modified only by an instrument
in writing executed by the parties hereto; provided, that no such amendment
shall be valid unless approved by the Company's Board of Directors and executed
on behalf of the Company by a person other than the Executive.
10.7.Waiver. No consent to or waiver of any breach or default in the
performance of any obligation hereunder shall be deemed or construed to be a
consent to or waiver of any other breach or default in performance of any of
the same or any other obligations hereunder. Failure on the part of any party
to complain of any act or failure to act of any other party or to declare any
party in default, irrespective of how long such failure continues, shall not
constitute a waiver of rights hereunder, and no waiver hereunder shall be
effective unless it is in writing, executed by the party waiving a breach or
default hereunder.
10.8.Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which, taken
together, shall constitute but one and the same instrument, and in making proof
of this Agreement it shall be necessary to produce only one such counterpart
without the necessity of accounting for any other counterparts.
10.9. Section Headings. The headings of sections of this Agreement
are for convenience of reference only and shall not be a part of or control or
affect its meaning or construction.
10.10. Survival. Notwithstanding anything else herein contained, the
provisions of Sections 5.3, 6, 7, 8, 9, and 10 and shall survive the
termination of this Agreement and of the Executive's employment by the Company
hereunder.
10.11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as an
instrument under seal as of the date first above written.
[SELLER]
By:__________________________
Name:
Title:
<PAGE>
[BUYER]
By:__________________________
Name:
Title:
_____________________________
[EXECUTIVE]
<PAGE>
EXHIBIT D
[SELLER]
Protection Agreement
PROTECTION AGREEMENT dated August ___, 1997, by and between [SELLER], a
Massachusetts corporation (the "Company"), and [OFFICER] an individual residing
at [___________________________] (the "Officer"), and [BUYER], a Massachusetts
corporation (the "Buyer").
1. Effectiveness of Agreement. This Protection Agreement is being entered
into as contemplated by an Agreement and Plan of Reorganization by and among
the Seller, the Buyer and the several Selling Stockholders listed therein,
dated as of August ___, 1997 (the "Agreement") and shall become effective upon
the consummation of the acquisition of the Seller by the Buyer as contemplated
therein (the "Effective Date"). Capitalized terms used herein but not otherwise
defined herein shall have the meaning ascribed thereto in the Agreement.
2. Freedom to Contract. The Officer represents that he is free to enter
into this Protection Agreement and that he has not made and will not make any
agreement in conflict with this Protection Agreement.
3. Term. The term (the "Term") of the Officer's protection provisions
(contained in Sections 5 and 6) of this Protection Agreement shall commence as
of the Effective Date and shall terminate eighteen (18) months after the
Effective Date.
4. Non-Competition; Non-Solicitation. The Officer, as a shareholder of the
Seller, is receiving payment from Buyer for all shares of the Seller owned by
the Officer. In addition, the parties hereto agree that the past and future
services of the Officer are special and unique and that, as an officer of the
Company, the Officer has special fiduciary duties to the Company and the Buyer,
as the sole shareholder of the Company, and that for these reasons a covenant
on the part of the Officer not to compete during his employment by the Company
and for a reasonable period after the termination or expiration of his
employment is essential to protect the business of the Company and its
affiliates. Accordingly, in consideration of the promises contained herein and
in the Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, during the period of the Officer's
employment, and for a period of two (2) years after the date that the Officer's
<PAGE>
employment with the Company is terminated (the "End Date") the Officer shall
not, and he shall not permit any entity or business enterprise of which he is
an agent, officer, promoter, director, shareholder, partner, trustee or
consultant to, directly or indirectly:
(a) solicit or accept orders or referrals, make loans or enter
into leases other than on behalf of the Company from or otherwise
interfere with or adversely effect the business relationships
(whether formed heretofore or hereafter) between the Company or the
Canadian Sub (as such term is defined in the Agreement) and any of
their route operators, equipment distributors, customers, including
but not limited to route operators and equipment distributors, or
suppliers or any person or entity which has been identified in
writing and contacted by the Company as a potential route operator,
equipment distributor, customer, including but not limited to route
operators and equipment distributors, or supplier, which actions
could directly or indirectly divert business from or adversely
affect the business of the Company or any of its affiliates; or
(b) solicit (or attempt to solicit) or encourage to leave the
employment of the Company or any of its affiliates or other than on
behalf of the Company employ in any capacity or retain as a
consultant any person who was employed or retained in any capacity,
including without limitation as an officer or as a consultant, by
the Company or any of its affiliates during the term of the
Officer's employment with the Company.
5. Terminating Event. For purposes of this Protection Agreement, a
"Terminating Event" shall mean (x) termination by the Company of the employment
of the Officer with the Company for any reason other than death, disability or
for "Cause" (which term shall mean (1) any act of dishonesty or gross and
willful misconduct with respect to the Company, including without limitation,
fraud or theft, on the part of the Officer, (2) conviction of the Officer for a
felony, or (3) the Officer's sustained failure to perform his duties after
notice and a thirty (30) day opportunity to cure; or (y) resignation of the
Officer from the employ of the Company while the Officer is not receiving
payments or benefits from the Company or any subsidiary, affiliate or successor
by reason of the Officer's disability, subsequent to, in each of the foregoing
cases, the occurrence of any of the following events (each of which is deemed
to constitute an incidence of "Deterioration"):
(a) A decrease in the annual base salary in effect as of the
Effective Date, payable by the Company to the Officer, other than as a
<PAGE>
result of a comparable decrease in compensation payable to all other
officers of the Company on the basis of the Company's financial
performance; or
(b) An adverse change in the nature or scope of the Officer's
responsibilities, authorities, powers, functions or duties from the
responsibilities, authorities, powers, functions or duties exercised by
the Officer immediately prior to the Effective Date; or
(c) A relocation of more than fifty (50) miles from the Officer's
work location on the Effective Date where such relocation is also more
than ten (10) additional miles from the Officer's home.
6. Severance Benefits; Change of Control.
(a) In the event that a Terminating Event occurs during the Term,
the Officer shall be entitled to the following benefits:
(i) For the remainder of the Term, the Company shall continue
to pay the Officer a salary at the rate in effect on the date of
termination, plus a bonus equal to the amount of the Officer's bonus
earned in the year prior to the End Date; provided, however, that
such salary rate shall not be less than the annual base salary (not
including any bonus) in effect on the Effective Date, unless such
difference was the result of a general decrease in compensation
payable to all other officers of the Company due to financial
performance;
(ii) For the remainder of the Term, the Officer shall continue
to receive all other benefits existing on the date of termination
(except for any cash bonus plans). For purposes of application of
such benefits, the Officer shall be treated as if he had remained in
the employ of the Company, with an annual salary at the rate in
effect on the Effective Date; and
(iii)If, in spite of the provisions of Section 6(a)(ii) above,
benefits or service credits under any benefit plan shall not be
payable or provided under any such plan to the Officer, or to the
Officer's dependents, beneficiaries or estate, because the Officer
is no longer deemed to be an employee of the Company, the Company
itself shall pay or provide for payment of such benefits and service
credits to the Officer or to the Officer's dependents, beneficiaries
or estate.
<PAGE>
(b) In the event that a Terminating Event occurs subsequent to a
Change of Control of any of the Company, the Buyer or the [Buyer Bank]
(the "Bank") that occurs during the Term of this Agreement, the Officer
shall be entitled to the following benefits:
(i) For a period of eighteen (18) months after the date of such
Terminating Event, the Company shall continue to pay the Officer a
salary at the rate in effect on the End Date, and at the time
otherwise due, plus a bonus equal to the amount of the Officer's
bonus earned in the year prior to the End Date; provided, however,
that such salary rate shall not be less than the annual base salary
(not including any bonus) in effect on the Effective Date, unless
such difference was the result of a general decrease in compensation
payable to all other officers of the Company due to financial
performance;
(ii) For a period of eighteen (18) months after the date of
such Terminating Event, the Officer shall continue to receive all
other benefits existing on the date of termination (except for any
cash bonus plans). For purposes of application of such benefits, the
Officer shall be treated as if he had remained in the employ of the
Company, with an annual salary at the rate in effect on the
Effective Date; and
(iii)If, in spite of the provisions of Section 6(b)(ii) above,
benefits or service credits under any benefit plan shall not be
payable or provided under any such plan to the Officer, or to the
Officer's dependents, beneficiaries or estate, because the Officer
is no longer deemed to be an employee of the Company, the Company
itself shall pay or provide for payment of such benefits and service
credits to the Officer or to the Officer's dependents, beneficiaries
or estate.
(c) For purposes of Section 6(b), a "Change in Control" shall be
deemed to have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(i) There is an acquisition of control as defined in Section
2(a)(2) of the Bank Holding Company Act of 1956, or any similar
successor provision, as in effect at the time of the acquisition, by
any Person of any of the Buyer, the Bank or the Company and in the
case of the Bank and the Company, such Person is not an Affiliate of
Buyer; or
<PAGE>
(ii) Continuing Directors constitute one-third (1/3) or less of
the membership of the Board of Directors Buyer, as the case may be,
whether as the result of a proxy contest or for any other reason or
reasons (for purposes of this agreement, the term "Continuing
Director" shall mean any director of Buyer (i) who has continuously
been a member of such entity's Board of Directors since not later
than the Effective Date or (ii) who is a successor of a director
described in clause (i), if such successor (and any intervening
successor) shall have been recommended or elected to succeed a
Continuing Director by a majority of the then Continuing Directors).
(iii)Any Person is or becomes the Beneficial Owner (as such
term is defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended) directly or indirectly, of securities of the
representing twenty-five percent (25%) or more of the combined
voting power of the Buyer's, Bank's or Company's, as the case may
be, then outstanding voting securities and in the case of the Bank
and the Company, such Person is not an Affiliate of Buyer;
(iv) There is a change in control of the Buyer, Bank or Company
of a nature that would be required to be reported in response to
item 1(a) of Current Report on Form 8-K or item 6(e) of Schedule 14A
of Regulation 14A or any similar item, schedule or form under the
Exchange Act, as in effect at the time of the change, whether or not
the Buyer, Bank or Company is then subject to such reporting
requirement; or
(v) the stockholders of the Buyer, Bank or Company, as the case
may be, approve a plan of complete liquidation of the applicable
entity or an agreement for the sale or disposition by the Buyer,
Bank or Company, as the case may be, of all or substantially all of
its assets (or any transaction having a similar effect).
7. Assumption by Another Entity of the Obligations of the Company and the
Buyer. Each of the Company and the Buyer covenants with the Officer that as
long as any portion of this Protection Agreement remains in force, it shall not
merge or consolidate with or into any other legal entity, nor shall it
reorganize in any manner or sell all or substantially all of its assets to any
other legal entity, unless and until (i) the form of merger or acquisition
results in succession of the other entity to the obligations hereunder, or (ii)
such other entity first agrees expressly in writing to assume and perform all
of the Company's or the Buyer's, as the case may be, obligations under this
<PAGE>
Protection Agreement. Upon the occurrence of such a succession or assumption,
the terms "the Company" and "the Buyer" as used in this Protection Agreement
shall be construed to refer to the entity succeeding to or assuming the
Company's or the Buyer's, as the case may be, obligations hereunder. Nothing in
this Section 7 shall be construed to limit the remedies available to the
Officer for any breach of this Protection Agreement or to limit or relieve the
Company, the Buyer and/or any successor entity of its obligations under this
Protection Agreement.
8. Confidential Information.
8.1. During and after the period of his employment, the Officer and
any person or entity controlled directly or indirectly by the Officer shall
maintain in confidence and shall not, directly or indirectly, disclose, sell,
use, publish, make copies of, or communicate to any person, firm, or
corporation any confidential information, trade secrets or proprietary data of
which he learns or learned or to which he has or had access during the course
of his employment by the Company or any of its affiliates.
8.2. For purposes of this Section 8, "confidential information,
trade secrets or proprietary data" means any information concerning any matters
affecting or relating to the business of the Company or any of its affiliates,
including but without limiting the generality of the foregoing: any customer
lists or supplier lists; research reports, market studies and plans; any
protectable technology, know-how and copyrightable material; product designs
and development; the prices the Company or any of its affiliates obtain or have
obtained from the sale of, or at which they sell or have sold, or at which they
purchase or have purchased, their products or services; estimates, bids, and
projections; trade secrets; inventions, improvements, and enhancements (whether
patentable or not); patents or patent applications; or any other information
concerning the business of the Company or any of its affiliates, their manner
of operation, their plans, policies, processes, strategies, or other data,
without regard to whether any or all of the foregoing are or would be deemed
confidential, material, or important, the parties hereto stipulating that, as
between them, the same are confidential, material, and important and gravely
affect the effective and successful conduct of the Company's business, and the
Company's goodwill, and that any breach of the terms of this paragraph shall be
a material breach of this Protection Agreement and will result in immediate and
irreparable harm to the Company; provided that nothing shall be considered
"confidential information, trade secrets or proprietary data" which (i) is or
becomes known to the public by acts of others (other than other signatories to
this type of Protection Agreement) or through the normal or other authorized
course of operation of the Company or its affiliates, (ii) is independently
developed by the Officer outside of the performance of his duties to the
<PAGE>
Company (and which the Officer can demonstrate, by written records, was
developed prior to its disclosure to him or his access to it at the Company or
its affiliates) or (iii) is required to be disclosed by the Officer by any
governmental authority having appropriate authority (provided that the Officer
has, to the extent practicable, provided the Company or its affiliate with
prior notice of such disclosure).
8.3. All memoranda, notes, lists, records and other documents (and
all copies thereof) made or compiled by the Officer or any person or entity
controlled, directly or indirectly, by the Officer or made available to the
Officer or any person or entity controlled, directly or indirectly, by the
Officer concerning the business of the Company or any of its affiliates shall
be the Company's property and shall be delivered to the Company promptly upon
the termination of the Officer's employment.
9. No Employment Contract. This Protection Agreement shall not be
construed as creating an express or implied contract of employment, and, except
as set forth herein or otherwise agreed in writing between the Officer and the
Company, the Officer shall not have any right to be retained in the employ of
the Company or the Buyer.
10. Miscellaneous.
10.1.Specific Enforcement. The parties acknowledge that the
Officer's breach of the provisions of Sections 4 and 8 of this Protection
Agreement will cause irreparable harm to the Company and the Buyer; it is
agreed and acknowledged that the remedy of damages will not be adequate for the
enforcement of such provisions and that such provisions may be enforced by
equitable relief, including injunctive relief, which relief shall be cumulative
and in addition to any other relief to which the Company or the Buyer or both
may be entitled.
10.2.Binding Effect. This Protection Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns; provided, that without the
express written consent of the other party, neither party may delegate or
assign any of his or its obligations or duties hereunder.
10.3.Severability. In the event any provision of this Protection
Agreement shall be determined in any circumstances to be invalid or
unenforceable, such determination shall not affect or impair any other
provision of this Protection Agreement or the enforcement of such provision in
other appropriate circumstances, and the remainder of the Protection Agreement
and of such provision shall be given effect, to the greatest extent lawful, so
<PAGE>
as to carry out the intention of the parties as manifested hereby. If any court
of competent jurisdiction shall determine that any restrictive provision herein
is excessive as to its duration, its geographic extent, or both, such provision
shall be limited as may be necessary to make such provision valid and
enforceable, and such provision shall thereupon be enforced as so limited.
10.4.Notices. Any notice or communication required or permitted to
be given pursuant to this Protection Agreement shall be deemed to have been
duly and sufficiently given for all purposes if in writing and delivered
personally to the party to whom such notice is directed or if sent, postage
prepaid, by courier service or certified or registered mail, postage and
registration prepaid, return receipt requested, and if intended for the
Officer, addressed to the Officer at his last residence address as reflected on
the records of the Company, and if intended for the Company, addressed to it at
its main office in Newton, Massachusetts with a copy to the Buyer at [BUYER'S
ADDRESS], attention: Executive Vice President, General Counsel and Clerk, or
addressed to either party at such other address as such party may designate to
the other party hereto by a notice complying with the requirements of this
Section 10.4. Any such notice shall be deemed to have been given on the date on
which the same was delivered.
10.5.Amendment. This Protection Agreement may be modified only by an
instrument in writing executed by the parties hereto; provided, that no such
amendment shall be valid unless executed on behalf of the Company by a person
other than the Officer.
10.6.Waiver. No consent to or waiver of any breach or default in the
performance of any obligation hereunder shall be deemed or construed to be a
consent to or waiver of any other breach or default in performance of any of
the same or any other obligations hereunder. Failure on the part of any party
to complain of any act or failure to act of any other party or to declare any
party in default, irrespective of how long such failure continues, shall not
constitute a waiver of rights hereunder, and no waiver hereunder shall be
effective unless it is in writing, executed by the party waiving a breach or
default hereunder.
10.7.Counterparts. This Protection Agreement may be executed in any
number of counterparts, each of which shall be an original and all of which,
taken together, shall constitute but one and the same instrument, and in making
proof of this Protection Agreement it shall be necessary to produce only one
(1) such counterpart without the necessity of accounting for any other
counterparts.
<PAGE>
10.8.Section Headings. The headings of sections of this Protection
Agreement are for convenience of reference only and shall not be a part of or
control or affect its meaning or construction.
10.9.Governing Law. This Protection Agreement shall be governed by,
and construed in accordance with, the internal laws of The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties have duly executed this Protection
Agreement as an instrument under seal as of the date first above written.
[SELLER]
By:_____________________________
Name:
Title:
[BUYER]
By:_____________________________
Name:
Title:
___________________________________
[OFFICER]
<PAGE>
EXHIBIT E
[SELLER]
Non-Competition Agreement
THIS NON-COMPETITION AGREEMENT, dated as of _______, 1997 (this
"Agreement"), is made by and between [SELLER], a Massachusetts corporation (the
"Seller" or the "Company"), [BUYER], a Massachusetts corporation (the "Buyer"),
and ROBERT D. FANGER ("RDF"), a former shareholder and member of the executive
management of the Company.
WHEREAS, the Company, Buyer, RDF and the other selling stockholders are
parties to that certain Agreement and Plan of Reorganization, dated as of
August ___, 1997 (the "Acquisition Agreement"), pursuant to which the Company
will purchase from RDF and the other selling stockholders all of the issued and
outstanding capital stock of the Company;
WHEREAS, RDF has been an adviser to the Company, has been involved in key
management positions in the Company and has been given access to confidential
and proprietary information relating to the Company's business and possess
valuable knowledge and skills relating to the operation of the Company's
business;
WHEREAS, there exists no contractual undertakings by RDF not to compete
against the Company or in the lines of business in which the Company has been
heretofore engaged and RDF would, therefore, be free to re-enter the such
business unless he otherwise agreed not to so do;
WHEREAS, the Acquisition Agreement provides that, as condition to the
obligations of the parties thereto to carry out the transactions referred to
therein, RDF shall enter into a non-competition agreement with the Company and
Buyer;
NOW, THEREFORE, as a material inducement to the Buyer to acquire the
Seller in accordance with the terms and conditions of the Acquisition
Agreement, and for other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
<PAGE>
Section 1. Non-Competition; No Solicitation
RDF, as a shareholder of the Company, is receiving payment from the Buyer
for all shares of the Company owned by RDF. In addition, the parties hereto
agree that the services of RDF have been special and unique and that RDF, as an
officer and director of the Company has special fiduciary duties to the Company
and the Buyer, as the sole stockholder of the Company, and that for these
reasons a covenant on the part of RDF not to compete for a reasonable period
after the termination or expiration of his employment is essential to protect
the business of the Company and its affiliates. Accordingly, in consideration
of the promises contained herein and in the Acquisition Agreement, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, RDF shall not, for a period of three (3) years after the the
Effective Date (as such term is defined in the Acquisition Agreement), and, in
the event that RDF becomes an executive, agent, officer, promoter, director,
shareholder, partner, trustee or consultant to any entity or business
enterprise which does or is reasonably likely to compete with or adversely
affect the business of the Company as so conducted in the field of commercial
leasing and financing of specialty equipment (including but not limited to
coin-operated amusement equipment, vending machines, video lottery and gaming
equipment, park and ride equipment, dry-cleaning and coin-operated laundry
equipment, office coffee equipment, leisure equipment, dairy equipment and
franchise equipment, RDF shall not, directly or indirectly,
(a) solicit or accept orders or referrals from, make loans or
enter into leases other than on behalf of the Company or otherwise
interfere with or adversely affect the business relationships
existing as of the date of this agreement between the Company or the
Canadian Sub (as such term is defined in the Acquisition Agreement)
and any of their route operators, equipment distributors, customers,
including but not limited to route operators and equipment
distributors, or suppliers or any person or entity which has been
identified in writing and contacted by the Company as a potential
route operator, equipment distributor, customer, including but not
limited to route operators and equipment distributors, or supplier,
which actions could directly or indirectly divert business from or
adversely affect the business of the Company or any of its
affiliates; or
(b) solicit (or attempt to solicit) or encourage to leave the
employment of the Company or any of its affiliates or other than on
<PAGE>
behalf of the Company employ in any capacity or retain as a
consultant any person who was employed or retained in any capacity,
including without limitation as an executive or as a consultant, by
the Company or any of its affiliates during the term of RDF's
employment with the Company.
Section 2. Confidential Information.
2.1. For a period of two (2) years from the Effective Date, RDF and
any person or entity controlled directly or indirectly by RDF shall maintain in
confidence and shall not, directly or indirectly, disclose, sell, use, publish,
make copies of, or communicate to any person, firm, or corporation any
confidential information, trade secrets or proprietary data of which he learns
or learned or to which he has or had access during the course of his employment
by the Company or any of its affiliates.
2.2. For purposes of this Section 2, "confidential information,
trade secrets or proprietary data" means any information concerning any matters
affecting or relating to the business of the Company or any of its affiliates,
including but without limiting the generality of the foregoing: any customer
lists or supplier lists; research reports, market studies and plans; any
protectable technology, know-how and copyrightable material; product designs
and development; the prices the Company or any of its affiliates obtain or have
obtained from the sale of, or at which they sell or have sold, or at which they
purchase or have purchased, their products or services; estimates, bids, and
projections; trade secrets; inventions, improvements, and enhancements (whether
patentable or not); patents or patent applications; or any other information
concerning the business of the Company or any of its affiliates, their manner
of operation, their plans, policies, processes, strategies, or other data,
without regard to whether any or all of the foregoing are or would be deemed
confidential, material, or important, the parties hereto stipulating that, as
between them, the same are confidential, material, and important and gravely
affect the effective and successful conduct of the Company's business, and the
Company's goodwill, and that any breach of the terms of this paragraph shall be
a material breach of this Agreement and will result in immediate and
irreparable harm to the Company; provided that nothing shall be considered
"confidential information, trade secrets or proprietary data" which (i) is or
becomes known to the public by acts of others (other than other signatories to
this type of Agreement) or through the normal or other authorized course of
operation of the Company or its affiliates or (ii) is independently developed
by the Officer outside of the performance of his duties to the Company (and
<PAGE>
which the Officer can demonstrate, by written records, was developed prior to
its disclosure to him or his access to it at the Company or its affiliates) or
(iii) is required to be disclosed by the Officer by any governmental authority
having appropriate authority (provided that the Officer has, to the extent
practicable, provided the Company or its affiliate with prior notice of such
disclosure).
2.3. All memoranda, notes, lists, records and other documents (and
all copies thereof) made or compiled by RDF or any person or entity controlled,
directly or indirectly, by RDF or made available to RDF or any person or entity
controlled, directly or indirectly, by RDF concerning the business of the
Company or any of its affiliates shall be the Company's property and shall be
delivered to the Company promptly upon the termination of RDF's employment
hereunder.
Section 3. Notices.
All notices, demands and other communications hereunder shall be in
writing or by written telecommunication, and shall be deemed to have been duly
given if delivered personally or if mailed by certified mail, return receipt
requested, postage prepaid, or if sent by overnight courier, or sent by written
telecommunication, as follows:
If to the Company, to:
------------------------------
------------------------------
------------------------------
Attn: _______________________
With a copy sent contemporaneously to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
Attn: Neal J. Curtin, Esq.
and
Matthew J. Cushing, Esq.
If to RDF, to:
------------------------------
------------------------------
------------------------------
Attn: _______________________
<PAGE>
With a copy sent contemporaneously to:
------------------------------
------------------------------
------------------------------
Attn: _______________________
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when receipted for, (c) if mailed,
three (3) days after being mailed as described above, and (d) if sent by
written telecommunication, when dispatched. Any person indicated above may
change his address for notice hereunder by giving notice to the other persons
indicated above in accordance with this Section 3.
Section 4. Specific Enforcement. The parties acknowledge that the
Executive's breach of the provisions of Sections 1 and 2 of this Agreement will
cause irreparable harm to the Company; it is agreed and acknowledged that the
remedy of damages will not be adequate for the enforcement of such provisions
and that such provisions may be enforced by equitable relief, including
injunctive relief, which relief shall be cumulative and in addition to any
other relief to which the Company may be entitled.
Section 5. Severability. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.
Section 6. Waivers. No delay or omission by any party hereto in
exercising any right, power or privilege hereunder shall impair such right,
power or privilege, nor shall any single or partial exercise of any such right,
power or privilege preclude any further exercise thereof or the exercise of any
other right, power or privilege.
Section 7. Counterparts. This Agreement may be executed in several
identical counterparts, each of which when executed and delivered by the
parties hereto shall be an original, but all of which together shall constitute
a single instrument.
Section 8. Assignment; Rights of Parties. The rights and obligations of
the Company hereunder shall inure to the benefit of, and shall be binding upon,
<PAGE>
the successors and assigns of the Company. The rights and obligations of RDF
hereunder are not assignable.
Section 9. Entire Agreement. This Agreement, together with the
Acquisition Agreement, contains the entire agreement between the Company and
RDF with respect to the matters referred to herein, and, except as otherwise
expressly provided herein or therein, this Agreement shall not be affected by
reference to any other document.
Section 10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as an agreement under
seal as of the day and the year first above written.
[COMPANY]
By:_____________________________
Name:
Title:
________________________________
ROBERT D. FANGER
<PAGE>
Exhibit F
Form of Legal Opinion of Palmer & Dodge LLP
<PAGE>
[Letterhead of Palmer & Dodge LLP]
UST Corp.
40 Court Street
Boston, Massachusetts 02110
Gentlemen:
This opinion is being furnished to you (the "Buyer") pursuant to Section
6.02(h) of the Agreement and Plan of Reorganization (the "Agreement") dated as
of August _, 1997 by and among the Buyer, Firestone Financial Corp. (the
"Company") and each of the Stockholders of the Company listed on Schedule I to
the Agreement (the "Stockholders"). Capitalized terms used herein, but not
otherwise defined herein, shall have the meanings ascribed to them in the
Agreement.
We have acted as counsel for the Company and, derivatively, the
Stockholders in connection with the negotiation, execution and delivery of the
Agreement and the other Transaction Documents (such term having the meaning
ascribed to it in the Agreement but excluding any confidentiality agreement
between Buyer and the Company).
Although we act from time to time as counsel to the Company, our
representation is limited to matters individually referred to us by its
management.
In rendering this opinion, we have (i) examined originals or copies of
such documents as we have deemed necessary or appropriate as a basis for the
opinions set forth herein, including, without limitation, the Transaction
Documents, (ii) as to factual matters, relied upon certificates of public
officials and of officers of the Company and the Stockholders, the
representations and warranties of the Company and the Stockholders contained in
the Agreement, and inquiries made to management of the Company and (iii)
assumed the genuineness of all documents, the conformity to originals of all
copies submitted to us and the genuineness of all signatures (other than of the
Company) on all documents submitted to us. We have assumed that each of the
parties (other than the Company) to the Transaction Documents and the other
documents and instruments relied upon by us has all requisite power and
authority and has taken all necessary action to validly execute and deliver the
documents and/or instruments to which it is a party and to effect the
transactions contemplated thereby. All opinions set forth herein as to any
Transaction Document or other agreement or instrument relate to such
Transaction Document, agreement or instrument as in effect on the date hereof.
Our opinion set forth in paragraph 1 below as to the existence,
qualification and standing of the Company is based entirely upon certificates
to such effect issued of recent date by the Secretary of the Commonwealth of
Massachusetts.
The opinions expressed herein with respect to the enforceability of any
document are subject to (i) bankruptcy, insolvency, reorganization, fraudulent
transfer and other similar laws of general application affecting the rights and
remedies of creditors, (ii) general principles of equity, whether applied in
proceedings in equity or at law and (iii) any implied duty on the part of the
party seeking enforcement to take action and make determinations on a
reasonable basis and in good faith. We express no opinion with respect to any
provision of any agreement to the extent it provides for grants of powers of
attorney or indemnification which are against public policy or with respect to
compliance with applicable anti-fraud provisions of federal or state securities
laws. Unless otherwise specified, any reference herein to "the best of our
knowledge" or to matters "known to us" shall mean the actual conscious
knowledge of persons in our firm working on this transaction without any
independent investigation.
The Opinions expressed herein are limited to matters governed by the
internal laws of the Commonwealth of Massachusetts and the federal laws of the
United States.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Seller is a corporation duly incorporated, validly existing and in
corporate good standing under the laws of The Commonwealth of Massachusetts.
The Seller is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its required to be so
qualified, except where the failure to be so qualified would not have a
Material Adverse Effect.
2. The Seller has the requisite corporate power and authority to own and
hold its properties and to conduct its business as now held or conducted by it.
3. The Seller has the corporate power and authority to enter into and
perform the Transaction Documents to which it is a party and to carry out the
transactions contemplated by the Transaction Documents.
4. The authorized capital stock of the Seller is as described in the
Agreement. All of such 2,000,000 issued shares of Seller Common Stock have been
validly issued and are fully paid and non-assessable.
5. Each of the Stockholders is the holder of record of that number of
shares of the Seller Common Stock set forth opposite his name in Schedule I to
the Agreement.
6. The execution, delivery and performance by the Seller of the
Transaction Documents to which it is a party, and the consummation of the
transactions contemplated by the Transaction Documents have been duly
authorized by all necessary corporate action on the part of the Seller. The
Transaction Documents have been duly executed and delivered by the Seller and,
as applicable, each of the Stockholders.
7. The Transaction Documents constitute valid and binding obligations of
the Seller, and as applicable, each of the Stockholders, enforceable against
the Seller and, as applicable, the Stockholders in accordance with their
<PAGE>
respective terms. The execution and delivery of the Transaction Documents and
the consummation by the Seller of the transactions contemplated by Transaction
Documents will not violate, conflict with, or result in any breach of any of
the terms, conditions, or provisions of, or constitute a default under, the
Articles of Organization or By-laws of the Seller, any applicable federal or
state law (excluding securities and antitrust laws), rule or regulation, or any
indenture, lease, agreement or other instrument known to us to which the Seller
is a party or by which it or any of its properties are bound or any decree,
judgment or order affecting the Seller or any of its subsidiaries.
8. Except as obtained and in effect at the Closing, and assuming the
accuracy of the representations and warranties made by the Seller and each of
the Stockholders in the Transaction Documents, and in any other document,
agreement, instrument or certificates executed in connection therewith, no
consent, approval, order or authorization of or registration, qualification,
designation, declaration or filing with, any U.S. or Massachusetts governmental
authority is required on the part of the Seller in connection with the
execution and delivery of the Transaction Documents or the other transactions
to be consummated at the Closing pursuant to the Agreement.
9. Without having conducted any docket research or other attempt at
verification, we do not know of any action, suit, claim, proceeding or
investigation pending or threatened against Seller or any Stockholder, at law
or in equity, or before or by any federal, state or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign that is reasonably likely to have a Material Adverse Effect on the
Seller or any Stockholder.
10. To our knowledge, the Seller has not received written notice of any
violation of any law, regulation or ordinance relating to its properties or the
conduct of its business.
11. Seller owns of record and, to our knowledge, beneficially all of the
outstanding shares of Firestone Financial Canada Ltd.
12. Seller is not required to be licensed under Chapters 140, 225D or
255E of the General Laws of the Commonwealth of Massachusetts.
The opinions set forth herein are expressed solely for your benefit and
the benefit of your counsel, and no other person shall be entitled to rely upon
such opinions. This letter shall not be referred to or copied, with or without
specific reference to our firm, in any other connection, and may not be
delivered to any other person or entity without our prior written consent.
Very truly yours,
PALMER & DODGE LLP
<PAGE>
Exhibit G
Form of Legal Opinions of Eric R. Fischer, Executive Vice
President, General Counsel and Clerk of Buyer and
Bingham, Dana & Gould LLP
<PAGE>
EXHIBIT G
[FORM OF BINGHAM, DANA & GOULD OPINION]
[DATE]
[SELLER]
- ------------------------
- ------------------------
[Stockholders listed on Exhibit A]
Re: [BUYER]
Ladies and Gentlemen:
We have acted as counsel to [BUYER], a Massachusetts corporation (the
"Buyer"), and its newly-formed wholly-owned subsidiary, [ACQUISITION SUB] (the
"Acquisition Sub"), in connection with the preparation, execution, and delivery
of the Agreement and Plan of Reorganization, dated as of the date hereof (the
"Acquisition Agreement"), between the Buyer and [SELLER], (the "Seller").
Capitalized terms used and not otherwise defined herein have the respective
meanings ascribed to them in the Acquisition Agreement.
Although we act from time to time as counsel to the Buyer and the
Acquisition Sub, our representation is limited to matters individually referred
to us by their respective management.
In connection with this opinion, we have examined originals or copies of
such documents as we have deemed necessary or appropriate as a basis for the
opinions set forth herein, including, without limitation, the following
documents:
(a) Acquisition Agreement;
(b) Agreement and Plan of Merger, dated ____________, among the
Buyer, the Seller and the Acquisition Sub (the "Plan of
Merger");
(c) the Employment Agreement, dated ____________, among the Buyer,
the Seller and Michael A. Miller (the "M.A. Miller Employment
Agreement");
<PAGE>
(d) the Employment Agreement, dated ____________, among the Buyer,
the Seller and Edward S. Yaffe (the "Yaffe Employment
Agreement");
(e) the Employment Agreement, dated ____________, among the Buyer,
the Seller and Michael A. Guidi (the "Guidi Employment
Agreement");
(f) the Employment Agreement, dated ____________, among the Buyer,
the Seller and David S. Cohen (the "Cohen Employment Agreement"
and together with the M.A. Miller Employment Agreement, the
Yaffe Employment Agreement and the Guidi Employment Agreement,
the "Employment Agreements");
(g) the Protection Agreement, dated ____________, among the Buyer,
the Seller and Bruce A. Miller (the "B.A. Miller Protection
Agreement");
(h) the Protection Agreement, dated ____________, among the Buyer,
the Seller and Joan G. Corbett (the "Corbett Protection
Agreement");
(i) the Protection Agreement, dated ____________, among the Buyer,
the Seller and Scott A. Cooper (the "Cooper Protection
Agreement" and together with the B.A. Miller Protection
Agreement and the Corbett Protection Agreement, the "Protection
Agreements"); and
(j) the Non-Competition Agreement, dated ____________, among the
Buyer, the Seller and Robert D. Fanger (the "Fanger
Non-Competition Agreement");
The Acquisition Agreement, the Plan of Merger, each of the Employment
Agreements, each of the Protection Agreements and the Fanger Non-Competition
Agreement are referred to herein collectively as the "Transaction Documents".
<PAGE>
In addition to the foregoing, we have examined (a) the original or copies
of the (i) Articles of Organization of each of the Buyer and the Acquisition
Sub, as amended to date, certified by the Secretary of the State of The
Commonwealth of Massachusetts, (ii) By-Laws of the Buyer and the Acquisition
Sub, as amended to date, certified by the Clerk of the Buyer and the
Acquisition Sub, respectively, and (b) such agreements, instruments,
certificates, corporate and public records and such other documents as we have
deemed necessary or relevant for purposes of issuing the opinions hereinafter
expressed. All opinions set forth herein as to any Transaction Document or
other agreement or instrument relate to such Transaction Document, agreement or
instrument as in effect on the date hereof.
With respect to all matters of fact (including factual conclusions and
characterizations and descriptions of purpose, intention, or other state of
mind), we have relied upon (i) the representations of the Buyer, the
Acquisition Sub and the Seller, and any other party thereto, set forth in the
Transaction Documents, and (ii) certificates of officers of the Buyer and the
Acquisition Sub, and have assumed, without independent inquiry or
investigation, the accuracy of those representations and certificates.
For purposes of this opinion, we have assumed without any investigation:
(1) the legal competence of each natural person, (2) the full power and
authority of each person other than the Buyer or the Acquisition Sub to
execute, deliver, and perform its obligations under each document heretofore
executed and delivered or hereafter to be executed and delivered, and to do
each other act heretofore done or hereafter to be done by such person, (3) the
due authorization, execution, and delivery by each person other than the Buyer
or the Acquisition Sub of each document heretofore executed and delivered or
hereafter to be executed and delivered by such person, (4) the legality,
validity, binding effect, and enforceability as to each person other than the
Buyer or the Acquisition Sub of each document heretofore executed and delivered
or hereafter to be executed and delivered, and of each other act heretofore
done or hereafter to be done by such person, (5) the genuineness of each
signature (other than signatures of officers of the Buyer or the Acquisition
Sub certified to us) on and the completeness and authenticity of each original
document and record reviewed by us in original, (6) the conformity to the
original of each document and record purporting to be a copy of an original,
<PAGE>
and (7) the completeness and authenticity of the original of each document
reviewed by us as an original or submitted to us as a copy.
When an opinion set forth below is given to our knowledge, with reference
to matters of which we are aware or that are known to us, or with another
similar qualification, the relevant knowledge or awareness is limited to the
actual knowledge or awareness of the individual lawyers in the firm who have
participated directly in the specific transactions to which this opinion
relates, without any special or additional investigation undertaken for the
purposes of this opinion.
As to any opinion below relating to the offer, sale or issuance of the
Buyer Common Stock to the Stockholders pursuant to the terms of the Acquisition
Agreement and the Plan of Merger, or the exemption of the Buyer Common Stock
from registration under the Securities Act, we have assumed that the
informational requirements of Rule 502(b) of the Securities and Exchange
Commission promulgated under the Securities Act have been complied with.
As to any opinion below relating to the existence, qualification, or
standing of the Buyer or the Acquisition Sub in any jurisdiction, our opinion
relies entirely upon, and is limited by, the certificates of public officials
attached hereto as Schedule 1.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against the Buyer or the Acquisition Subsidiary is
subject to the following general qualifications:
(i) as to any instrument delivered by the Buyer or the Acquisition
Sub, we assume that the Buyer or the Acquisition Sub, as appropriate, has
received the agreed-to consideration therefor;
(ii) as to any agreement to which the Buyer or the Acquisition Sub
is a party, we assume that such agreement is the binding obligation of
each other party or parties thereto;
(iii)the enforceability of any obligation of the Buyer or the
Acquisition Sub may be subject to, affected by, or limited by (A)
bankruptcy, insolvency, reorganization, moratorium, fraudulent
<PAGE>
conveyance, marshaling, and other similar laws or rules of law affecting
the enforcement generally of creditors' rights and remedies (including
such as may deny giving effect to waivers of debtors' or guarantors'
rights), (B) considerations of public policy, and (C) limitations on the
enforceability of provisions relating to indemnity or contribution;
(iv) no opinion is given as to the availability of any specific or
equitable relief of any kind, or of the waiver of trial by jury or of
other rights or benefits bestowed by operation of law; and
(v) the enforcement of any of your rights is in all cases subject to
your implied duty of good faith and to general principles of equity
(regardless of whether such enforcement is sought in a proceeding at law
or in equity).
This opinion is limited solely to the laws of The Commonwealth of
Massachusetts as applied by courts located in Massachusetts and the federal
laws of the United States of America, to the extent that the same may apply to
or govern the transactions set forth above except that we express no opinion as
to any federal or state securities laws other than as set forth in Paragraph 5
below. No opinion is given as to the choice of law or internal substantive
rules of law that any tribunal may apply to the transactions referred to
herein.
We understand that all of the foregoing assumptions, limitations, and
qualifications are acceptable to you.
Based on and subject to the foregoing, we are of the opinion that:
1. The Acquisition Sub is a corporation organized, existing and in
corporate good standing under the laws of The Commonwealth of Massachusetts.
2. The Acquisition Sub has the corporate power and authority to enter
into and perform the Transaction Documents to which it is a party and to carry
out the transactions contemplated by the Transaction Documents.
<PAGE>
3. The execution, delivery and performance by each of the Buyer and the
Acquisition Sub of the Transaction Documents to which it is a party, the
issuance, sale and delivery of the Buyer Common Stock by the Buyer in
accordance with the Plan of Merger, and the consummation of the transactions
contemplated by the Acquisition Agreement and the other Transaction Documents
have been duly authorized by all necessary corporate action on the part of the
Buyer and, as applicable, the Acquisition Sub. The Transaction Documents have
been duly executed and delivered by the Buyer and, as applicable, the
Acquisition Subsidiary. The Buyer Common Stock when so issued, sold and
delivered in accordance with the provisions of the Plan of Merger will be duly
and validly issued, fully paid and non-assessable.
4. The Transaction Documents constitute valid and binding obligations of
the Buyer, and, as applicable, the Acquisition Sub, enforceable against the
Buyer and, as applicable, the Acquisition Sub in accordance with their
respective terms. The execution and delivery of the Transaction Documents, the
offer, issuance and sale of the Buyer Common Stock and the consummation of the
transactions contemplated by the Transaction Documents will not violate,
conflict with or result in any breach of any terms, conditions or provisions
of, or constitute a default under, the Articles of Organization or By-laws of
the Buyer or the Acquisition Sub, any applicable federal or state law
(excluding securities and antitrust laws), rule or regulation, or any
indenture, lease, agreement or other instrument to which the Acquisition Sub is
a party or by which it or any of its properties are bound or any decree,
judgment or order affecting the Acquisition Sub, or, to our knowledge, any
indenture, lease, agreement or other instrument to which the Buyer is a party
or by which it or any of its properties are bound or any decree, judgment or
order affecting the Buyer.
5. Based on the representations of the Seller and each of the
Stockholders in the Transaction Documents, and in any other document,
agreement, instrument or certificate executed in connection therewith,
including the Purchaser and Purchaser Representative Questionnaires, the offer,
issuance and sale of the Buyer Common Stock pursuant to the Acquisition
Agreement and the Plan of Merger are exempt from registration under the
Securities Act.
All of the opinions rendered herein are as of the date hereof. We assume
no obligation to update such opinions to reflect any facts or circumstances
<PAGE>
that hereafter may come to our attention or any changes in the law that
hereafter may occur. This opinion is being rendered solely for your benefit and
is not to be referred to or used for any other purpose, or relied upon by any
third party, without our express prior written consent.
Very truly yours,
BINGHAM, DANA & GOULD LLP
<PAGE>
EXHIBIT G (CONT.)
[FORM OF MR. FISCHER LEGAL OPINION]
[DATE]
[SELLER]
- -------------------------
- -------------------------
[Stockholders listed on Exhibit A]
Re: [BUYER]
Ladies and Gentlemen:
I am Executive Vice President, General Counsel and Clerk of UST Corp., a
Massachusetts corporation (the "Company"). As such, I have acted as the
Company's counsel, and counsel to the Company's newly-formed, wholly-owned
subsidiary [Acquisition Subsidiary] (the "Acquisition Subsidiary"), together
with the firm of Bingham, Dana & Gould LLP, in connection with the preparation,
execution, and delivery of the Agreement and Plan of Reorganization, dated as
of the date hereof (the "Acquisition Agreement"), between the Buyer and
[SELLER], (the "Seller"). Capitalized terms used and not otherwise defined
herein have the respective meanings ascribed to them in the Acquisition
Agreement.
In connection with this opinion, I have examined originals or copies of
such documents as I have deemed necessary or appropriate as a basis for the
opinions set forth herein, including, without limitation, the following
documents:
(a) Acquisition Agreement;
(b) Agreement and Plan of Merger, dated ____________, among the
Buyer, the Seller and the Acquisition Sub (the "Plan of
Merger");
<PAGE>
(c) the Employment Agreement, dated ____________, among the Buyer,
the Seller and Michael A. Miller (the "M.A. Miller Employment
Agreement");
(d) the Employment Agreement, dated ____________, among the Buyer,
the Seller and Edward S. Yaffe (the "Yaffe Employment
Agreement");
(e) the Employment Agreement, dated ____________, among the Buyer,
the Seller and Michael A. Guidi (the "Guidi Employment
Agreement");
(f) the Employment Agreement, dated ____________, among the Buyer,
the Seller and David S. Cohen (the "Cohen Employment Agreement"
and together with the M.A. Miller Employment Agreement, the
Yaffe Employment Agreement and the Guidi Employment Agreement,
the "Employment Agreements");
(g) the Protection Agreement, dated ____________, among the Buyer,
the Seller and Bruce A. Miller (the "B.A. Miller Protection
Agreement");
(h) the Protection Agreement, dated ____________, among the Buyer,
the Seller and Joan G. Corbett (the "Corbett Protection
Agreement");
(i) the Protection Agreement, dated ____________, among the Buyer,
the Seller and Scott A. Cooper (the "Cooper Protection
Agreement" and together with the B.A. Miller Protection
Agreement and the Corbett Protection Agreement, the "Protection
Agreements"); and
(j) the Non-Competition Agreement, dated ____________, among the
Buyer, the Seller and Robert D. Fanger (the "Fanger
Non-Competition Agreement");
<PAGE>
The Acquisition Agreement, the Plan of Merger, each of the Employment
Agreements, each of the Protection Agreements and the Fanger Non-Competition
Agreement are referred to herein collectively as the "Transaction Documents".
In addition to the foregoing, I have examined and am familiar with (a)
the original or copies of the (i) Articles of Organization of the Buyer, as
amended to date, certified by the Secretary of the State of The Commonwealth of
Massachusetts, (ii) By-Laws of the Buyer, as amended to date, certified by the
Clerk of the Buyer, and (b) such agreements, instruments, certificates,
corporate and public records and such other documents as I have deemed
necessary or relevant for purposes of issuing the opinions hereinafter
expressed. All opinions set forth herein as to any Transaction Document or
other agreement or instrument relate to such Transaction Document, agreement or
instrument as in effect on the date hereof.
With respect to all matters of fact (including factual conclusions and
characterizations and descriptions of purpose, intention, or other state of
mind), I have relied upon (i) the representations of the Buyer and any other
party thereto, set forth in the Transaction Documents, and (ii) certificates of
officers of the Buyer and have assumed, without independent inquiry or
investigation, the accuracy of those representations and certificates.
For purposes of this opinion, I have assumed without any investigation:
(1) the legal competence of each natural person, (2) the full power and
authority of each person other than the Buyer to execute, deliver, and perform
its obligations under each document heretofore executed and delivered or
hereafter to be executed and delivered, and to do each other act heretofore
done or hereafter to be done by such person, (3) the due authorization,
execution, and delivery by each person other than the Buyer of each document
heretofore executed and delivered or hereafter to be executed and delivered by
such person, (4) the legality, validity, binding effect, and enforceability as
to each person other than the Buyer of each document heretofore executed and
delivered or hereafter to be executed and delivered, and of each other act
heretofore done or hereafter to be done by such person, (5) the genuineness of
each signature (other than signatures of officers of the Buyer certified to me)
on and the completeness and authenticity of each original document and record
<PAGE>
reviewed by us in original, (6) the conformity to the original of each document
and record purporting to be a copy of an original, and (7) the completeness and
authenticity of the original of each document reviewed by me as an original or
submitted to me as a copy.
As to any opinion below relating to the existence, qualification, or
standing of the Buyer or the Acquisition Sub in any jurisdiction, my opinion
relies entirely upon, and is limited by, the certificates of public officials
attached hereto as Schedule 1.
This opinion is limited solely to the laws of The Commonwealth of
Massachusetts as applied by courts located in Massachusetts and the federal
laws of the United States of America, to the extent that the same may apply to
or govern the transactions set forth above except that I express no opinion as
to any federal or state securities laws. No opinion is given as to the choice
of law or internal substantive rules of law that any tribunal may apply to the
transactions referred to herein.
I understand that all of the foregoing assumptions, limitations, and
qualifications are acceptable to you.
Based on and subject to the foregoing, I am of the opinion that:
1. The Buyer is a corporation organized, existing and in corporate good
standing under the laws of The Commonwealth of Massachusetts.
2. The Buyer has the requisite corporate power and authority to own and
hold its properties and to conduct its business as described in the Buyer's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
3. The Buyer has the corporate power and authority to enter into and
perform the Transaction Documents to which it is a party, to issue the Buyer
Common Stock and to carry out the transactions contemplated by the Transaction
Documents.
4. The authorized capital stock of the Buyer is as described in the
Acquisition Agreement.
<PAGE>
5. The issuance, sale and delivery of the Buyer Common Stock is not and
will not be subject to any preemptive right of stockholders of the Buyer
existing under Chapter 156B of the Massachusetts General Laws, under the
Articles of Organization or By-laws of Buyer or pursuant to an agreement to
which the Buyer is a party, or, to my knowledge, any other preemptive right or
to any contractual right of first refusal or other right in favor of any
person.
6. The execution and delivery of the Transaction Documents, the offer,
issuance and sale of the Buyer Common Stock and the consummation of the
transactions contemplated by the Transaction Documents will not violate,
conflict with or result in any breach of any terms, conditions or provisions
of, or constitute a default under, the Articles of Organization or By-laws of
the Buyer or the Acquisition Sub, any applicable federal or state law
(excluding securities and antitrust laws), rule or regulation, or any
indenture, lease, agreement or other instrument to which the Buyer or the
Acquisition Sub is a party or by which it or any of its properties are bound or
any decree, judgment or order affecting the Buyer or the Acquisition Sub.
7. Without having conducted any docket search or other attempt at
verification, I do not know of any action, suit, claim, proceeding or
investigation pending or threatened against Buyer at law or in equity, or
before or by any federal, state or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign that is
reasonably likely to have a material adverse effect on the Buyer, except as
disclosed in the Buyer's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and the Buyer's Quarterly Report on Form 10-K for the fiscal
quarters ended March 31, 1997, June 30, 1997 [and ].
All of the opinions rendered herein are as of the date hereof. I assume
no obligation to update such opinions to reflect any facts or circumstances
that hereafter may come to our attention or any changes in the law that
<PAGE>
hereafter may occur. This opinion is being rendered solely for your benefit and
is not to be referred to or used for any other purpose, or relied upon by any
third party, without my express prior written consent.
Very truly yours,
ERIC R. FISCHER
Executive Vice President, General
Counsel and Clerk
EXHIBIT 5
UST CORP.
40 Court Street
Boston, Massachusetts 02108
December 23, 1997
UST Corp.
40 Court Street
Boston, Massachusetts 02108
Re: UST CORP. REGISTRATION STATEMENT ON FORM S-3
RELATING TO 1,180,000 SHARES OF COMMON STOCK
Ladies and Gentlemen:
This opinion is rendered to you in connection with the filing by UST
Corp., a Massachusetts corporation, (the "Corporation") of its Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission, relating to the registration under the Securities Act of
1933 of 1,180,000 shares of the Corporation's Common Stock, par value $0.625
per share (the "Common Stock"), filed with Securities and Exchange Commission
on December 23, 1997, all of which Shares were issued, as unregistered shares,
on October 15, 1997 pursuant to the Terms of an Agreement and Plan of
Reorganization, dated as of August 12, 1997 (the "Agreement"), among the
Corporation, Firestone Financial Corp. ("Firestone") and each of the
stockholders of Firestone.
In rendering this opinion as General Counsel of the Corporation, I and an
attorney in my office acting under my direction have participated with the
Corporation and its officers in the preparation, review and filing of the
Registration Statement and the related prospectus (the "Prospectus"), have
examined other corporate documents and records, have made such examination of
law, and have discussed with the officers and directors of the Corporation and
its subsidiaries such questions of fact as we have deemed necessary or
appropriate. We have also relied upon certificates and statements of such
officers and directors as to factual matters and have assumed the genuineness
of all signatures not known to us as well as the authenticity of all documents
submitted to us as copies.
Subject to the foregoing and to the proposed additional proceedings being
taken as now contemplated prior to the issuance of the Common Stock, it is my
opinion that the Common Stock has been duly authorized and that the shares of
Common Stock are validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the use of my name in the Registration Statement
and the related Prospectus.
Very truly yours,
/s/Eric R. Fischer
-------------------------
Eric R. Fischer,
Executive Vice President,
General Counsel and Clerk
EXHIBIT 23.2
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 of our report, dated
January 31, 1997, included in UST Corp.'s Annual Report on Form 10-K for the
year ended December 31, 1996 and to all references to our Firm included in this
Registration Statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 19, 1997
