Exhibit 1
AGREEMENT AND PLAN OF MERGERS
dated as of the 14th day of June, 1996
by and among
CENTER FINANCIAL CORPORATION
CENTERBANK
FIRST UNION CORPORATION
and
FIRST UNION BANK OF CONNECTICUT
TABLE OF CONTENTS
RECITALS................................................ 1
(A) The Company................................... 1
(B) The Bank...................................... 1
(C) First Union................................... 1
(D) FUB-CT........................................ 2
(E) Stock Option Agreement........................ 2
(F) Rights, Etc................................... 2
(G) Approvals..................................... 3
I. THE MERGERS........................................ 3
1.01. The Corporate Merger..................... 3
(A) The Continuing Corporation............... 3
(B) Rights, Etc.............................. 3
(C) Liabilities.............................. 3
(D) Certificate of Incorporation; Bylaws;
Directors; Officers...................... 4
1.02. The Bank Merger.......................... 4
(A) Contribution of Bank Common Stock........ 4
(B) The Continuing Bank...................... 4
(C) Rights, Etc.............................. 4
(D) Liabilities, Etc......................... 4
(E) Charter; Bylaws; Directors; Officers..... 5
(F) Outstanding Stock of the Continuing
Bank..................................... 5
(G) Outstanding Stock of the Bank............ 5
II. CONSIDERATION...................................... 5
2.01. Corporate Merger Consideration........... 5
(A) Outstanding First Union Common Stock..... 5
(B) Outstanding Company Common Stock......... 5
2.02. Stockholder Rights; Stock Transfers...... 6
2.03. Fractional Shares........................ 6
2.04. Exchange Procedures...................... 6
2.05. Excluded Shares; Dissenter's Shares...... 7
2.06. Reservation of Right to Revise
Transaction.............................. 7
2.07. Options.................................. 7
2.08. Effective Date and Effective Time........ 8
III. ACTIONS PENDING CONSUMMATION....................... 8
3.01. Capital Stock............................ 8
3.02. Dividends, Etc........................... 8
3.03. Indebtedness; Liabilities; Etc........... 9
3.04. Operating Procedures; Capital
Expenditures; Etc........................ 9
3.05. Liens.................................... 9
3.06. Compensation; Employment Agreements;
Etc...................................... 9
3.07. Benefit Plans............................ 9
3.08. Continuance of Business.................. 10
3.09. Amendments............................... 10
3.10. Claims................................... 10
3.11. Contracts................................ 10
3.12. Other Actions............................ 10
3.13. Agreements............................... 10
IV. REPRESENTATIONS AND WARRANTIES..................... 11
4.01. Representations and Warranties of the
Company and the Bank..................... 11
(A) Recitals................................. 11
(B) Organization, Standing and Authority..... 11
(C) Shares................................... 11
(D) Company Subsidiaries..................... 11
(E) Corporate Power.......................... 12
(F) Corporate Authority...................... 12
(G) No Defaults.............................. 12
(H) Financial Reports........................ 13
(I) Absence of Undisclosed Liabilities....... 13
(J) No Events................................ 14
(K) Properties............................... 14
(L) Litigation; Regulatory Action............ 14
(M) Compliance with Laws..................... 15
(N) Material Contracts....................... 16
(O) Reports.................................. 16
(P) No Brokers............................... 17
(Q) Employee Benefit Plans................... 17
(R) No Knowledge............................. 19
(S) Labor Agreements......................... 19
(T) Asset Classification..................... 19
(U) Allowance for Possible Loan Losses....... 19
(V) Insurance................................ 20
(W) Affiliates............................... 20
(X) State Takeover Laws; Certificate of
Incorporation............................ 20
(Y) No Further Action........................ 20
(Z) Environmental Matters.................... 21
(AA) Taxes.................................... 23
(BB) Accuracy of Information.................. 24
(CC) Derivatives Contracts; Structural Notes;
Etc...................................... 24
(DD) Accounting Controls...................... 25
(EE) Commitments and Contracts................ 25
(FF) Option Shares............................ 25
4.02. First Union and FUB-CT Representations
and Warranties........................... 25
(A) Recitals................................. 25
(B) Corporate Authority...................... 26
(C) No Defaults.............................. 26
(D) Financial Reports........................ 26
(E) No Events................................ 27
(F) No Brokers............................... 27
(G) No Knowledge............................. 27
(H) Shares Authorized........................ 27
(I) Organization, Standing and Authority..... 27
(J) Corporate Power.......................... 27
(K) Accuracy of Information.................. 27
(L) Litigation; Regulatory Action............ 28
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(M) Absence of Undisclosed Liabilities....... 28
V. COVENANTS ......................................... 28
5.01. Efforts to Consummate.................... 28
5.02. Company Proxy/Registration Statement..... 29
5.03. Registration Statement Compliance with
Securities Laws.......................... 29
5.04. Registration Statement Effectiveness..... 29
5.05. Press Releases........................... 30
5.06. Access; Information...................... 30
5.07. Acquisition Proposals.................... 30
5.08. Registration Statement Preparation....... 31
5.09. Blue-Sky Filings......................... 31
5.10. Affiliate Agreements..................... 31
5.11. Certain Policies of the Company.......... 31
5.12. State Takeover Laws; Certificate of
Incorporation............................ 31
5.13. No Rights Triggered...................... 32
5.14. Shares Listed............................ 32
5.15. Regulatory Applications.................. 32
5.16. Regulatory Divestitures.................. 33
5.17. Indemnification/Liability Coverage....... 33
5.18. Current Information...................... 34
5.19 Employee Contracts....................... 35
5.20 Employees................................ 35
VI. CONDITIONS TO CONSUMMATION OF THE ACQUISITION....... 35
6.01. Shareholder Vote......................... 35
6.02. Regulatory Approvals..................... 35
6.03. No Injunction............................ 36
6.04. Accountants' Letters..................... 36
6.05. Legal Opinion............................ 36
6.06. Legal Opinion............................ 36
6.07. Officers' Certificate.................... 36
6.08. Officers' Certificate.................... 37
6.09. Effective Registration Statement......... 37
6.10. Blue-Sky Permits......................... 37
6.11. Tax Opinions............................. 37
6.12. NYSE Listing............................. 37
6.13. Receipt of Affiliate Agreements.......... 37
VII. TERMINATION........................................ 38
7.01. Mutual Consent........................... 38
7.02. Breach................................... 38
7.03. Delay.................................... 38
7.04. No Stockholder or Regulatory Approval.... 38
7.05. Stock Option Agreement Execution......... 38
VIII. OTHER MATTERS..................................... 38
8.01. Survival................................. 38
8.02. Waiver; Amendment........................ 39
8.03. Counterparts............................. 39
8.04. GOVERNING LAW............................ 39
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8.05. Expenses................................. 39
8.06. Confidentiality.......................... 39
8.07. Notices.................................. 39
8.08. Definitions.............................. 40
8.09. Entire Understanding; No Third Party
Beneficiaries............................ 40
8.10. Headings................................. 40
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AGREEMENT AND PLAN OF MERGERS
AGREEMENT AND PLAN OF MERGERS, dated as of the 14th day of
June, 1996 (this "Plan"), by and among CENTER FINANCIAL
CORPORATION (the "Company"), CENTERBANK (the "Bank"), FIRST UNION
CORPORATION ("First Union") and FIRST UNION BANK OF CONNECTICUT
("FUB-CT").
RECITALS:
(A) The Company. The Company is a corporation duly
organized and existing in good standing under the laws of the
State of Connecticut, with its principal executive offices
located in Waterbury, Connecticut. The Company is a bank holding
company under the Bank Holding Company Act of 1956, as amended
("BHCA"). As of the date hereof, the Company has 75,000,000
authorized shares of common stock, each of $1.00 par value
("Company Common Stock"), 1,000,000 authorized shares of voting
preferred stock, no par value and 10,000,000 authorized shares of
nonvoting preferred stock, no par value (of which 300,000 shares
of such class are Series A Participating Preferred Stock, all of
such Series A Participating Preferred Stock being reserved for
issuance pursuant to the Rights Agreement, dated as of July 7,
1995 (the "Company Rights Agreement"), between the Company and
Mellon Bank, N.A., as Rights Agent) (no other class of capital
stock being authorized), of which 15,014,452 shares of Company
Common Stock and no shares of voting or nonvoting preferred stock
are issued and outstanding.
(B) The Bank. The Bank is a stock savings bank duly
organized and existing in good standing under the laws of the
State of Connecticut, with its principal executive offices
located in Waterbury, Connecticut. As of the date hereof, the
Bank has 75,000,000 authorized shares of common stock, each of
$1.00 par value ("Bank Common Stock"); 1,000,000 authorized
shares of voting preferred stock, no par value, and 10,000,000
authorized shares of nonvoting preferred stock, no par value (no
other class of capital stock being authorized), all of which
shares of Bank Common Stock are issued and outstanding and owned
by the Company and no shares of voting or nonvoting preferred
stock are issued and outstanding.
(C) First Union. First Union is a corporation duly
organized and existing in good standing under the laws of the
State of North Carolina, with its principal executive offices
located in Charlotte, North Carolina. First Union is a
registered bank holding company under the BHCA. As of the date
hereof, First Union has 750,000,000 authorized shares of common
stock, each of $3.33 1/3 par value (together with the rights
("First Union Rights") issued pursuant to a Shareholder
Protection Rights Agreement, dated December 18, 1990 (as amended,
the "First Union Rights Agreement")) attached thereto, "First
Union Common Stock"), 40,000,000 authorized shares of Class A
Preferred Stock, no-par value ("First Union Class A Preferred
Stock"), and 10,000,000 authorized shares of preferred stock,
no-par value ("First Union Preferred Stock") (no other class of
capital stock being authorized), of which 282,918,259 shares of
First Union Common Stock, 2,174,705 shares of First Union Series
B Convertible Class A Preferred Stock, 350,000 shares of First
Union Series D Adjustable Rate Cumulative Class A Preferred
Stock, 74,130 shares of First Union Series F 10.64% Class A
Preferred Stock (represented by depositary shares, each
representing a one one-fortieth interest in a share of First
Union Series F 10.64% Class A Preferred Stock), and no shares of
First Union Preferred Stock, were issued and outstanding as of
May 31, 1996.
(D) FUB-CT. FUB-CT is a bank duly organized and existing
in good standing under the laws of the State of Connecticut, with
its principal executive offices located in Stamford, Connecticut.
As of the date hereof, FUB-CT has 6,000,000 authorized shares of
common stock, each of $5.00 par value ("FUB-CT Common Stock") (no
other class of capital stock being authorized), of which
2,884,736 shares are issued and outstanding and owned by
Northeast Bancorp, Inc. ("Northeast"), a wholly-owned subsidiary
of First Union Corporation of New Jersey ("FUNC-NJ"), a wholly-
owned subsidiary of First Union. As of March 31, 1996, FUB-CT
had capital of $254,180,000, divided into common stock of
$14,424,000, surplus of $200,511,000 and undivided profits,
including capital reserves of $39,325,000, and net unrealized
gains (loss) on investment securities of $120,000.
(E) Stock Option Agreement. As a condition and inducement
to First Union's and FUB-CT's willingness to enter into this
Plan, the Company and First Union intend to enter into a Stock
Option Agreement (the "Stock Option Agreement") in the form
attached hereto as Exhibit A, pursuant to which the Company shall
grant to First Union an option to purchase under certain
circumstances, shares of Company Common Stock. The execution,
delivery and performance of the Stock Option Agreement in
accordance with its terms shall be deemed to constitute
transactions contemplated by this Plan.
(F) Rights, Etc. Except as Previously Disclosed (as
hereinafter defined) in Schedule 4.01(C), there are no shares of
capital stock of the Company or the Bank authorized and reserved
for issuance, neither the Company nor the Bank has any Rights (as
defined below) issued or outstanding and neither the Company nor
the Bank has any commitment to authorize, issue or sell any such
shares or any Rights, except pursuant to this Plan. The term
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"Rights" means securities or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for
or acquire, or any options, calls or commitments relating to,
shares of capital stock (and shall include stock appreciation
rights). There are no preemptive rights in respect of the
Company Common Stock.
(G) Approvals. The Board of Directors of each of the
Company, the Bank and First Union has approved, at meetings of
each of such Boards of Directors, this Plan and has authorized
the execution hereof in counterparts. First Union agrees
promptly to cause the Board of Directors of FUB-CT to approve
this Plan and authorize the execution hereof in counterparts,
prior to the Effective Date.
In consideration of their mutual promises and obligations,
the parties hereto adopt and make this Plan and prescribe the
terms and conditions thereof and the manner and basis of carrying
it into effect, which shall be as follows:
I. THE MERGERS.
1.01. The Corporate Merger. Subject to the terms and
conditions of this Plan and subject to Section 2.06, at the
Effective Time (as hereinafter defined):
(A) The Continuing Corporation. The Company shall
merge with and into First Union (the "Corporate Merger"),
the separate existence of the Company shall cease and First
Union (the "Continuing Corporation") shall survive and the
name of the Continuing Corporation shall be "First Union
Corporation".
(B) Rights, Etc. The Continuing Corporation shall
thereupon and thereafter possess all of the rights,
privileges, immunities and franchises, of a public as well
as of a private nature, of each of the merging corporations;
and all property, real, personal and mixed, and all debts
due on whatever account, and all other choses in action, and
all and every other interest, of or belonging to or due to
each of the corporations so merged, shall be deemed to be
vested in the Continuing Corporation without further act or
deed; and the title to any real estate or any interest
therein, vested in each of such corporations, shall not
revert or be in any way impaired by reason of the Corporate
Merger.
(C) Liabilities. The Continuing Corporation shall
thenceforth be responsible and liable for all the
liabilities, obligations and penalties of each of the
corporations so merged, in accordance with applicable law.
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(D) Certificate of Incorporation; Bylaws; Directors;
Officers. The Certificate of Incorporation and Bylaws of
the Continuing Corporation shall be those of First Union, as
in effect immediately prior to the Corporate Merger becoming
effective. The directors and officers of First Union in
office immediately prior to the Corporate Merger becoming
effective shall be the directors and officers of the
Continuing Corporation, together with such additional
directors and officers as may thereafter be elected, who
shall hold office until such time as their successors are
elected and qualified.
1.02. The Bank Merger. Following the Corporate Merger
on the Effective Date or as soon thereafter as First Union may
deem appropriate:
(A) Contribution of Bank Common Stock. First Union
shall contribute the Bank Common Stock to FUNC-NJ and shall
cause FUNC-NJ to contribute the Bank Common Stock to
Northeast.
(B) The Continuing Bank. Following the contribution
of the Bank Common Stock to FUNC-NJ and from FUNC-NJ to
Northeast and at least one day following the Effective Date,
the Bank shall be merged with and into FUB-CT (the "Bank
Merger" and together with the Corporate Merger, the
"Mergers"), the separate existence of the Bank shall cease
and FUB-CT (the "Continuing Bank") shall survive; the name
of the Continuing Bank shall be "First Union Bank of
Connecticut"; and the Continuing Bank shall continue to
conduct the business of banking at the Bank's main office in
Waterbury, Connecticut and at the legally established
branches of the Bank and FUB-CT.
(C) Rights, Etc. The Continuing Bank shall thereupon
and thereafter possess all the rights, privileges,
immunities and franchises, of a public as well as of a
private nature, of each of the banks so merged; and all
property, real, personal and mixed, and all debts due on
whatever account, and all other choses in action, and all
and every other interest, of or belonging to or due to each
of the banks so merged, shall be deemed to be vested in the
Continuing Bank without further act or deed, including
appointments, designations and nominations and all other
rights and interests in any fiduciary capacity; and the
title to any real estate or any interest therein, vested in
each of such banks, shall not revert or be in any way
impaired by reason of the Bank Merger.
(D) Liabilities, Etc. The Continuing Bank shall
thenceforth be responsible and liable for all the
liabilities, obligations and penalties of each of the banks
so merged (including liabilities arising out of the
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operation of any trust departments), in accordance with
applicable law.
(E) Charter; Bylaws; Directors; Officers. The Charter
and Bylaws of the Continuing Bank shall be those of FUB-CT,
as in effect immediately prior to the Bank Merger becoming
effective. The directors and officers of FUB-CT in office
immediately prior to the Bank Merger becoming effective
shall be the directors and officers of the Continuing Bank,
together with such additional directors and officers as may
thereafter be elected, who shall hold office until such time
as their successors are elected and qualified.
(F) Outstanding Stock of the Continuing Bank. The
amount of the capital stock of the Continuing Bank shall be
not less than $14,424,000 and shall consist of not less than
2,884,736 issued and outstanding shares of common stock,
each of $5.00 par value, and the issued and outstanding
shares shall remain issued and outstanding as shares of FUB-
CT, each of $5.00 par value, and the holders thereof shall
retain their rights therein.
(G) Outstanding Stock of the Bank. Promptly after the
Bank Merger becomes effective, Northeast shall deliver all
of the issued and outstanding shares of the capital stock of
the Bank to the Continuing Bank for cancellation.
II. CONSIDERATION.
2.01. Corporate Merger Consideration. Subject to the
provisions of this Plan, on the Effective Date:
(A) Outstanding First Union Common Stock. The shares
of First Union Common Stock issued and outstanding
immediately prior to the Effective Date shall, on and after
the Effective Date, remain as issued and outstanding shares
of First Union Common Stock.
(B) Outstanding Company Common Stock. Each share
(excluding (i) shares ("Dissenter's Shares") of Company
Common Stock held by holders who take all of the steps
required to be taken in order to entitle such holders to be
paid in accordance with Sections 33-373 and 33-374 of the
CGSA (as hereinafter defined) or (ii) shares held by the
Company or any of its subsidiaries or by First Union or any
of its subsidiaries, in each case other than in a fiduciary
capacity or as a result of debts previously contracted
("Excluded Shares")) of Company Common Stock including each
attached right (a "Company Right") issued pursuant to the
Company Rights Agreement issued and outstanding immediately
prior to the Effective Time shall, by virtue of the
Corporate Merger, automatically and without any action on
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the part of the holder thereof, become and be converted into
the right to receive the number of shares of First Union
Common Stock (the "Exchange Ratio") equal to the result of
dividing $25.44 by the average of the daily closing sales
prices of First Union Common Stock as reported on the
Composite Transactions tape of the New York Stock Exchange,
Inc. (the "NYSE") reporting system for the ten consecutive
trading days on which such shares are traded on the NYSE
ending on the last trading day prior to the Effective Date
(as reported in the Wall Street Journal).
2.02. Stockholder Rights; Stock Transfers. At the
Effective Time, holders of Company Common Stock shall cease to
be, and shall have no rights as, stockholders of the Company,
other than to receive the consideration provided under this
Article II, without interest. After the Effective Time, there
shall be no transfers on the stock transfer books of the Company
or the Continuing Corporation of the shares of Company Common
Stock which were issued and outstanding immediately prior to the
Effective Time.
2.03. Fractional Shares. Notwithstanding any other
provision hereof, no fractional shares of First Union Common
Stock and no certificates or scrip therefor, or other evidence of
ownership thereof, will be issued in the Corporate Merger;
instead, First Union shall pay to each holder of Company Common
Stock who would otherwise be entitled to a fractional share an
amount in cash determined by multiplying such fraction by the
last sale price of First Union Common Stock on the last trading
day prior to the Effective Date, as reported by the NYSE
Composite Transactions Tape (as reported in The Wall Street
Journal).
2.04. Exchange Procedures. As promptly as practicable
after the Effective Date, First Union will send or cause to be
sent to each former stockholder of the Company of record
immediately prior to the Effective Time, transmittal materials
for use in exchanging such stockholder's certificates for Company
Common Stock for the consideration set forth in this Article II.
The certificates representing the shares of First Union Common
Stock into which shares of such stockholder's Company Common
Stock are converted on the Effective Date, any fractional share
check which such stockholder shall be entitled to receive, and
any dividends paid on such shares of First Union Common Stock for
which the record date for determination of stockholders entitled
to such dividends is on or after the Effective Date, will be
delivered to such stockholder only upon delivery to First Union
National Bank of North Carolina (the "Exchange Agent") of the
certificates representing all of such shares of Company Common
Stock (or indemnity satisfactory to First Union and the Exchange
Agent, in their judgment, if any of such certificates are lost,
stolen or destroyed). No interest will be paid on any such
fractional share check or dividends to which the holder of such
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shares shall be entitled to receive upon such delivery.
Certificates surrendered for exchange by any person constituting
an Affiliate (as hereinafter defined) of the Company, shall not
be exchanged for certificates representing First Union Common
Stock until First Union has received a written agreement from
such person as specified in Section 5.10.
2.05. Excluded Shares; Dissenter's Shares. Each of the
Excluded Shares shall be canceled and retired at the Effective
Time, and no consideration shall be issued in exchange therefor.
Dissenter's Shares shall be purchased and paid for in accordance
with Section 33-374 of CGSA. If requested by First Union, prior
to the Effective Time, the Company will establish an escrow to
pay for such Dissenter's Shares.
2.06. Reservation of Right to Revise Transaction. First
Union may at any time change the method of effecting the
acquisition of the Company and the Bank (including without
limitation the provisions of this Article II) if and to the
extent it deems such change to be desirable; provided, however,
that no such change shall (A) alter or change the amount or kind
of consideration to be issued to holders of Company Common Stock
as provided for in this Plan, (B) adversely affect the intended
tax-free treatment to the Company's stockholders as a result of
receiving such consideration, or (C) materially impede or delay
receipt of any approval referred to in Section 6.02 or the
consummation of the transactions contemplated by this Plan.
2.07. Options. From and after the Effective Time, all
employee and director stock options to purchase shares of Company
Common Stock ("Options"), which are then outstanding and
unexercised, shall be converted into and become the right to
purchase shares of First Union Common Stock, and First Union
shall assume each such Option in accordance with the terms of the
plan and agreement by which it is evidenced; provided, however,
that from and after the Effective Time (i) each such Option
assumed by First Union may be exercised solely to purchase shares
of First Union Common Stock, (ii) the number of shares of First
Union Common Stock purchasable upon exercise of such Option shall
be equal to the number of shares of Company Common Stock that
were purchasable under such Option immediately prior to the
Effective Time multiplied by the Exchange Ratio and rounding down
to the nearest whole share, with cash being paid for any
fractional share interest that otherwise would be purchasable,
and (iii) the per share exercise price under each such Option
shall be adjusted by dividing the per share exercise price of
each such Option by the Exchange Ratio, and rounding up to the
nearest cent. The terms of each Option shall, in accordance with
its terms, be subject to further adjustment as appropriate to
reflect any stock split, stock dividend, recapitalization or
other similar transaction with respect to First Union Common
Stock on or subsequent to the Effective Date. The Company
represents and warrants that the number of shares of Company
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Common Stock which are issuable upon exercise of Options as of
the date hereof are Previously Disclosed in Schedule 2.07.
2.08. Effective Date and Effective Time. Subject to the
conditions to the obligations of the parties to effect the
Mergers as set forth in Article VI, the effective date of the
Corporate Merger (the "Effective Date") shall be such date as
First Union and the Company shall mutually agree upon following
the satisfaction of the conditions set forth in Sections 6.01 and
6.02 or if such parties do not so agree, shall be such date as
First Union shall notify the Company in writing not less than
five days prior thereto. The time on the Effective Date at which
the Corporate Merger shall become effective is referred to as the
"Effective Time".
III. ACTIONS PENDING CONSUMMATION.
Without the prior written consent of First Union, the
Company shall conduct its and each of the Company Subsidiaries'
(as hereinafter defined) business in the ordinary and usual
course consistent with past practice and shall use its reasonable
best efforts to maintain and preserve its and each of the Company
Subsidiaries' business organization, employees and advantageous
business relationships and to retain the services of its and each
of the Company Subsidiaries' officers and key employees, and the
Company will not, and will cause each of the Company Subsidiaries
(as hereinafter defined) not to, agree to:
3.01. Capital Stock. Except as Previously Disclosed in
Schedule 4.01(C), issue, sell or otherwise permit to become
outstanding any additional shares of capital stock of the Company
or the Company Subsidiaries, or any Rights with respect thereto,
or enter into any agreement with respect to the foregoing, or
permit any additional shares of Company Common Stock to become
subject to grants of employee stock options, stock appreciation
rights or similar stock based employee compensation rights or
take any action that permits the acceleration of Options.
3.02. Dividends, Etc. Make, declare or pay any dividend
on or in respect of (other than dividends payable on Company
Common Stock in a quarterly amount not to exceed $0.07 per share,
and dividends from Company Subsidiaries to the Company or the
Bank, as applicable) (provided, however, that the Company will
not declare or pay any dividend during the calendar quarter in
which the Effective Date occurs unless the record date for the
dividend payable on First Union Common Stock for such quarter
precedes the Effective Date), or declare or make any distribution
on, or directly or indirectly combine, split, redeem, reclassify,
purchase or otherwise acquire, any shares of the capital stock of
the Company or the Company Subsidiaries or, other than as
permitted in or contemplated by this Plan, authorize the creation
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or issuance of, or issue, any additional shares of such capital
stock or any Rights with respect thereto.
3.03. Indebtedness; Liabilities; Etc. Other than in the
ordinary course of business consistent with past practice, incur
any indebtedness for borrowed money or assume, guarantee, endorse
or otherwise as an accommodation become liable for the
obligations of any other individual or corporation, bank,
partnership, joint venture, business trust, association or other
organization (each, a "Business Entity").
3.04. Operating Procedures; Capital Expenditures; Etc.
Except as may be directed by any regulatory agency, (A) change
its or any of the Company Subsidiaries' lending, investment,
liability management or other material banking or other policies
in any material respect, except such changes as are in accordance
and in an effort to comply with Section 5.11, (B) incur or commit
to incur any capital expenditures beyond those Previously
Disclosed in Schedule 3.04, other than in the ordinary course of
business and not exceeding the Company's current budget for such
expenditure as set forth on Schedule 3.04, or (C) implement or
adopt any change in accounting principles, practices or methods,
other than as may be required by generally accepted accounting
principles.
3.05. Liens. Impose, or permit or suffer the
imposition, on any shares of capital stock of any of the Company
Subsidiaries, or on any of its or the Company Subsidiaries' other
assets, any Liens (as hereinafter defined), other than Liens on
such other assets that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect (as
hereinafter defined) on the Company, or permit any such Lien to
exist.
3.06. Compensation; Employment Agreements; Etc. Except
as Previously Disclosed in Schedule 3.06, enter into or amend any
employment, severance or similar agreement or arrangement with
any of its directors, officers, employees or consultants, or
grant any salary or wage increase, amend the terms of any Option
or increase any employee benefit (including incentive or bonus
payments), except normal individual increases in regular
compensation to employees in the ordinary course of business
consistent with past practice.
3.07. Benefit Plans. Except as Previously Disclosed in
Schedule 3.07, enter into or modify (except as may be required by
applicable law) any employment, pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect
of any of its directors, officers or other employees, including
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without limitation taking any action that accelerates the vesting
or exercise of any benefits payable thereunder.
3.08. Continuance of Business. (A) Dispose of any
portion of its assets, deposits, business or properties, except
any such disposition that is in the ordinary course of business
and is not material to the Company and the Company Subsidiaries
taken as a whole, or discontinue or terminate any existing line
of business, or make any bulk sales of mortgage servicing, (B)
merge or consolidate with, or acquire all or any portion of the
business or property of, any other entity, except any such
transaction that is in the ordinary course of business and is not
material to the Company and the Company Subsidiaries taken as a
whole (except foreclosures or acquisitions by the Bank in a
fiduciary capacity, in each case in the ordinary course of
business consistent with past practice) or (C) make any material
investment either by purchase of stock or securities,
contributions to capital, property transfers or purchase of any
property or assets of any person or Business Entity other than
from wholly-owned Company Subsidiaries and other than the
purchase or sale of loans or marketable securities in the
ordinary course of business consistent with past practices.
3.09. Amendments. Amend its Certificate of
Incorporation, Charter or Bylaws.
3.10. Claims. Settle any claim, action or proceeding
involving liability for any material money damages in an amount
greater than $100,000 or any restrictions upon the operations of
the Company or any of the Company Subsidiaries, or forgive or
compromise any material amount of debt of any person or Business
Entity, other than wholly-owned Company Subsidiaries.
3.11. Contracts. Enter into, terminate or make any
change in any material contract, agreement or lease, except in
the ordinary course of business consistent with past practice
with respect to such contracts, agreements and leases that are
terminable by it without penalty on not more than 60 days prior
written notice.
3.12. Other Actions. Take any actions that would (A)
materially impede or delay the receipt of any approval referred
to in Section 6.02 without the imposition of a condition or
restriction of the type referred to in the proviso to such
Section or (B) adversely affect the ability of any party to
timely perform its obligations under this Plan.
3.13. Agreements. Authorize, commit to or enter into
any agreement to take any of the actions referred to in Sections
3.01 through 3.12.
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IV. REPRESENTATIONS AND WARRANTIES.
4.01. Representations and Warranties of the Company and
the Bank. Each of the Company and the Bank hereby represents and
warrants to First Union and FUB-CT as follows:
(A) Recitals. The facts set forth in the Recitals of
this Plan with respect to it are true and correct.
(B) Organization, Standing and Authority. It is duly
qualified to do business and is in good standing in the States of
the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be duly qualified,
individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on the Company. Each of the Company and
the Company Subsidiaries has in effect all federal, state, local,
and foreign governmental authorizations necessary for it to own
or lease its properties and assets and to carry on its business
as it is now conducted, the absence of which, individually or in
the aggregate, is reasonably likely to have a Material Adverse
Effect on the Company.
(C) Shares. The outstanding shares of it are validly
issued and outstanding, fully paid and nonassessable, and subject
to no, and have not been issued in violation of, preemptive
rights. Except as Previously Disclosed in Schedule 4.01(C), and
except as provided in the Stock Option Agreement, there are no
shares of capital stock or other equity securities of the Company
or the Bank outstanding and no outstanding Rights with respect
thereto.
(D) Company Subsidiaries. The Company has Previously
Disclosed in Schedule 4.01(D) a list of all Business Entities
five percent or more of the equity interests of which are owned
directly or indirectly by the Company. Each of the Company
Subsidiaries that is a savings bank is an "insured depository
institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder. No equity securities of any
of the Company Subsidiaries are or may become required to be
issued (other than to the Company or a wholly-owned Company
Subsidiary) by reason of any Rights with respect thereto. There
are no contracts, commitments, understandings or arrangements by
which any of the Company Subsidiaries is or may be bound to sell
or otherwise issue any shares of its capital stock, and there are
no contracts, commitments, understandings or arrangements
relating to the rights of the Company or the Bank, as applicable,
to vote or to dispose of such shares. All of the shares of
capital stock of each Company Subsidiary held by the Company or a
Company Subsidiary are fully paid and nonassessable and subject
to no, and have not been issued in violation of, preemptive
rights and are owned by the Company or a Company Subsidiary free
and clear of any Liens. Each Company Subsidiary is in good
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standing under the laws of the jurisdiction in which it is
incorporated or organized, and is duly qualified to do business
and in good standing in each jurisdiction where its ownership or
leasing of property or the conduct of its business requires it to
be so qualified and in which the failure to be duly qualified is
reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company. Except as Previously
Disclosed in Schedule 4.01(D), the Company does not own
beneficially, directly or indirectly, any equity securities or
similar interests of any Business Entity. The deposits of the
Bank are insured by the Bank Insurance Fund (the "BIF") of the
Federal Deposit Insurance Corporation (the "FDIC"). The Bank is
a member in good standing of the Federal Home Loan Bank of Boston
(the "FHL Bank"). The term "Company Subsidiary" means any
Business Entity (including the Bank) which the Company
"controls", as defined in Section 225.2(e) of Regulation Y of the
Federal Reserve Board (other than Branford Savings Bank, so long
as the option that the Company holds to acquire voting securities
remains unexercised).
(E) Corporate Power. It and each of the Company
Subsidiaries has the corporate power and authority to carry on
its business as it is now being conducted and to own or lease all
its material properties and assets.
(F) Corporate Authority. Subject to any necessary
receipt of approval by its stockholders referred to in Section
6.01, this Plan and the transactions contemplated hereby have
been authorized by all necessary corporate action of it and this
Plan is a valid and binding agreement of it enforceable against
it in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency and other similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles. Upon execution and delivery, the
Stock Option Agreement will be a valid and binding agreement of
the Company, enforceable against it in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency and other
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(G) No Defaults. Subject to the approval by its
stockholders referred to in Section 6.01, the required regulatory
approvals referred to in Section 6.02, and the required filings
under federal and state securities laws, and except as Previously
Disclosed in Schedule 4.01(G), the execution, delivery and
performance of this Plan and the consummation by it of the
transactions contemplated hereby, does not and will not (1)
constitute a breach or violation of, or a default under, or the
acceleration or creation of a Lien (with or without the giving of
notice, passage of time or both) pursuant to, any law, rule or
regulation or any judgment, decree, order, governmental or non-
governmental permit or license, or agreement, indenture or
instrument of it or of any of the Company Subsidiaries or to
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which it or any of the Company Subsidiaries or its or their
properties is subject or bound, which breach, violation, default
or Lien is reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on the Company, (2) constitute
a breach or violation of, or a default under, its Certificate of
Incorporation, Charter or Bylaws, or (3) require any consent or
approval under any such law, rule, regulation, judgment, decree,
order, governmental or non-governmental permit or license or the
consent or approval of any other party to any such agreement,
indenture or instrument, other than any such consent or approval,
which if not obtained, would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse
Effect on the Company.
(H) Financial Reports. As to (1) the Company, its
Annual Report on Form 10-K for the fiscal year ended December 31,
1995, and all other documents filed or to be filed subsequent to
December 31, 1995 under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (together with the
rules and regulations thereunder, the "Exchange Act"), in the
form filed with the Securities and Exchange Commission (the
"SEC") (in each such case, the "Company Financial Reports"), and
(2) the Bank, its Call Reports for the fiscal year ended December
31, 1995, and all other call reports filed or to be filed
subsequent to December 31, 1995, in the form filed with the FDIC
(in each case, the "Bank Financial Reports" and together with the
Company Financial Reports, the "Company/Bank Financial Reports"),
did not and will not as of their respective dates contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under
which they were made, not misleading; and each of the balance
sheets in or incorporated by reference into the Company/Bank
Financial Reports (including the related notes and schedules
thereto) fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its
date and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in
the Company/Bank Financial Reports (including any related notes
and schedules thereto) fairly presents and will fairly present
the results of operations, changes in stockholders' equity and
cash flows, as the case may be, of the entity or entities to
which it relates for the periods set forth therein, in each case
in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each
case as may be noted therein, subject to normal and recurring
year-end audit adjustments in the case of unaudited statements.
(I) Absence of Undisclosed Liabilities. None of the
Company or the Company Subsidiaries has any obligation or
liability (contingent or otherwise) that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect
on the Company.
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(J) No Events. No events have occurred, or
circumstances have arisen, since March 31, 1996, which,
individually or in the aggregate, have had or are reasonably
likely to have a Material Adverse Effect on the Company.
(K) Properties. Except as specifically reserved
against or otherwise disclosed in the Company Financial Reports
(including the related notes and schedules thereto) and except
for those properties and assets that have been sold or otherwise
disposed of in the ordinary course of business, and except as
Previously Disclosed in Schedule 4.01(K), the Company and the
Company Subsidiaries have good and marketable title, free and
clear of all liens, encumbrances, charges, security interests,
restrictions (including restrictions on voting rights or rights
of disposition), defaults or equities of any character or claims
or third party rights of whatever nature (collectively "Liens"),
to all of the properties and assets, tangible and intangible,
reflected in the Company Financial Reports as being owned by the
Company or the Company Subsidiaries as of the dates thereof,
other than those Liens that, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect on
the Company. All buildings and all fixtures, equipment, and
other property and assets which are held under leases or
subleases by any of the Company or the Company Subsidiaries are
held under valid leases or subleases enforceable in accordance
with their respective terms.
(L) Litigation; Regulatory Action. Except as
Previously Disclosed in Schedule 4.01(L), no litigation,
proceeding or controversy before any court or governmental agency
is pending which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on the Company or which
alleges claims under any fair lending law or other law relating
to discrimination, including, without limitation, the Truth in
Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Housing Act, the Community Reinvestment
Act and the Home Mortgage Disclosure Act, and, to the best of its
knowledge, no such litigation, proceeding or controversy has been
threatened; and except as Previously Disclosed in Schedule
4.01(L), neither it nor any of the Company Subsidiaries or any of
its or their material properties or their officers, directors or
controlling persons is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment or supervisory letter or
similar submission to or from, any federal or state governmental
agency or authority charged with the supervision or regulation of
depository institutions or engaged in the insurance of deposits
(together with any and all agencies or departments of federal,
state or local government (including, without limitation the FHL
Bank, the Federal Reserve Board, the FDIC and any other federal
or state bank, thrift or other financial institution, insurance
or securities regulatory authorities (including the SEC), the
"Regulatory Authorities")) and neither it nor any of the Company
-14-
Subsidiaries has been advised by any of the Regulatory
Authorities that any such authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of
understanding, commitment or supervisory letter or similar
submission.
(M) Compliance with Laws. Except as Previously
Disclosed in Schedule 4.01(M), each of the Company and the
Company Subsidiaries:
(1) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings,
applications and registrations with, all Regulatory
Authorities that are required in order to permit it to
conduct its business as presently conducted and that are
material to the business of the Company and the Company
Subsidiaries taken as a whole; all such permits, licenses,
certificates of authority, orders and approvals are in full
force and effect and, to the best of its knowledge, no
suspension or cancellation of any of them is threatened; and
all such filings, applications and registrations are
current;
(2) has received no notification or communication
from any Regulatory Authority or the staff thereof (a)
asserting that any of the Company or the Company
Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Regulatory Authority
enforces, which, as a result of such noncompliance in any
such instance, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the
Company, (b) threatening to revoke any license, franchise,
permit or governmental authorization, which revocation,
individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on the Company, or (c)
requiring any of the Company or the Company Subsidiaries (or
any of their officers, directors or controlling persons) to
enter into any order, agreement or memorandum of
understanding (or requiring the board of directors thereof
to adopt any material resolution or policy);
(3) with respect to the Bank is "well
capitalized" for purposes of Section 38 of the Federal
Deposit Insurance Act and regulations thereunder; and
(4) is in compliance in all material respects
with all fair lending laws or other laws relating to
discrimination, including, without limitation, the Truth in
Lending Act, the Equal Credit Opportunity Act, the Fair
Credit Reporting Act, the Fair Housing Act, the Community
Reinvestment Act and the Home Mortgage Disclosure Act and
similar federal and state laws and regulations, except
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where, individually or in the aggregate, any events of
noncompliance are not reasonably likely to have a Material
Adverse Effect on the Company.
(N) Material Contracts. Except as Previously
Disclosed in Schedule 4.01(N), none of the Company or the Company
Subsidiaries, nor any of its respective assets, business or
operations, is a party to, or is bound or affected by, or
receives benefits under, any contract or agreement or amendment
thereto that in each case (1) is required to be filed as an
exhibit to an Annual Report on Form 10-K filed by the Company
that has not been filed as an exhibit to the Company's Annual
Report on Form 10-K filed for the fiscal year ended December 31,
1995, or (2) which provides for annual payments by the Company or
a Company Subsidiary of $100,000 or more. True and correct
copies of such contracts, and any agreements or amendments
thereto, have been made available to First Union. None of the
Company or the Company Subsidiaries is in default under any
contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it is a party, by which its
respective assets, business or operations may be bound or
affected, or under which it or any of its respective assets,
business or operations receives benefits, which default,
individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on the Company, and there has not
occurred any event that, with lapse of time or giving of notice
or both, would constitute such a default. Except as Previously
Disclosed in Schedule 4.01(N), neither the Company nor any
Company Subsidiary is subject to, or bound by, any contract
containing covenants which (i) limit the ability of the Company
or any Company Subsidiary to compete in any line of business or
with any person, or (ii) involve any restriction of geographical
area in which, or method by which, the Company or any Company
Subsidiary may carry on its business (other than as may be
required by law or any applicable Regulatory Authority).
(O) Reports. Since January 1, 1993, each of the
Company and the Company Subsidiaries has filed all reports and
statements, together with any amendments required to be made with
respect thereto, that it was required to file with (1) the SEC,
(2) the Connecticut Banking Commission, FDIC, the FHL Bank and
the Federal Home Financing Board, and (3) any other applicable
Regulatory Authorities. As of their respective dates (and
without giving effect to any amendments or modifications filed
after the date of this Plan with respect to reports and documents
filed before the date of this Plan), each of such reports and
documents, including the financial statements, exhibits and
schedules thereto, complied 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 any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made
-16-
therein, in light of the circumstances under which they were
made, not misleading.
(P) No Brokers. All negotiations relative to this
Plan and the transactions contemplated hereby have been carried
on by it directly with the other parties hereto and no action has
been taken by it that would give rise to any valid claim against
any party hereto for a brokerage commission, finder's fee or
other like payment, excluding a fee Previously Disclosed to First
Union to be paid to Keefe, Bruyette & Woods, Inc.
(Q) Employee Benefit Plans.
(1) Schedule 4.01(Q) contains a complete list of
all bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock and stock
option plans, all employment or severance contracts, all
medical, dental, health and life insurance plans, all other
employee benefit plans, contracts or arrangements and any
applicable "change of control" or similar provisions in any
plan, contract or arrangement maintained or contributed to
by it or any of the Company Subsidiaries for the benefit of
employees, former employees, directors, former directors or
their beneficiaries (the "Compensation and Benefit Plans").
True and complete copies of all Compensation and Benefit
Plans, including, but not limited to, any trust instruments
and/or insurance contracts, if any, forming a part thereof,
and all amendments thereto have been supplied or made
available to First Union.
(2) All "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), other than
"multiemployer plans" within the meaning of Section 3(37) of
ERISA ("Multiemployer Plans"), covering employees or former
employees of it and the Company Subsidiaries (the "ERISA
Plans"), to the extent subject to ERISA, are in substantial
compliance with ERISA. Each ERISA Plan which is an
"employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("Pension Plan") and which is intended
to be qualified, under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), has received
a favorable determination letter from the Internal Revenue
Service, and it is not aware of any circumstances reasonably
likely to result in the revocation of any such favorable
determination letter. There is no pending or, to its
knowledge, threatened litigation relating to the ERISA Plans
which, if determined adversely to the Company is reasonably
likely, individually or in the aggregate, to result in
material liability. Neither it nor any of the Company
Subsidiaries has engaged in a transaction with respect to
any ERISA Plan that would subject it or any of the Company
-17-
Subsidiaries to a tax or penalty imposed by either Section
4975 of the Code or Section 502(i) of ERISA in an amount
which would be material.
(3) No liability under Subtitle C or D of Title
IV of ERISA has been or is expected to be incurred by it or
any of the Company Subsidiaries with respect to any ongoing,
frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with it
under Section 4001(a)(15) of ERISA or Section 414 of the
Code (an "ERISA Affiliate") which have not been satisfied.
Neither it nor any of the Company Subsidiaries presently
contributes to a Multiemployer Plan, nor have they
contributed to such a plan within the past five calendar
years. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required
to be filed for any Pension Plan or by any ERISA Affiliate
within the past 12-month period.
(4) All contributions required to be made under
the terms of any ERISA Plan have been timely made. Neither
any Pension Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether
or not waived) within the meaning of Section 412 of the Code
or Section 302 of ERISA. Neither it nor any of the Company
Subsidiaries has provided, or is required to provide,
security to any Pension Plan or to any single-employer plan
of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code.
(5) Under each Pension Plan which is a
single-employer plan, as of the last day of the most recent
plan year, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the plan's most recent
actuarial valuation) did not exceed the then current value
of the assets of such plan, and there has been no material
change in the financial condition of such plan since the
last day of the most recent plan year.
(6) Neither it nor any of the Company
Subsidiaries has any obligations for retiree health and life
benefits under any plan, except as set forth in Schedule
4.01(Q). There are no restrictions on the rights of it or
any of the Company Subsidiaries to amend or terminate any
such plan without incurring any liability thereunder, except
to the extent the participants in such plan who are
receiving the benefits thereunder or who have satisfied the
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eligibility requirements thereunder and may have accrued
vested rights to such benefits.
(7) Except as Previously Disclosed in Schedule
4.01(Q), neither the execution and delivery of this Plan nor
the consummation of the transactions contemplated hereby
will (a) result in any payment (including, without
limitation, severance, unemployment compensation, golden
parachute or otherwise) becoming due to any director or any
employee of it or any of the Company Subsidiaries under any
Compensation and Benefit Plan or otherwise from it or any of
the Company Subsidiaries, (b) increase any benefits
otherwise payable under any Compensation and Benefit Plan,
or (c) result in any acceleration of the time of payment or
vesting of any such benefit.
(R) No Knowledge. It knows of no reason why the
regulatory approvals referred to in Section 6.02 should not be
obtained without the imposition of any condition of the type
referred to in the proviso following such Section 6.02.
(S) Labor Agreements. Neither it nor any of the
Company Subsidiaries is a party to, or is bound by, any
collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it
or any of the Company Subsidiaries the subject of a proceeding
asserting that it or any such Company Subsidiary has committed an
unfair labor practice (within the meaning of the National Labor
Relations Act) or seeking to compel it or such subsidiary to
bargain with any labor organization as to wages and conditions of
employment, nor is there any strike or other labor dispute
involving it or any of the Company Subsidiaries, pending or, to
the best of its knowledge, threatened, nor is it aware of any
activity involving its or any of the Company Subsidiaries'
employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
(T) Asset Classification. It has Previously Disclosed
in Schedule 4.01(T) a list, accurate and complete in all material
respects, of the aggregate amounts of loans, extensions of credit
or other assets of the Company and the Company Subsidiaries that
have been classified by it as of March 31, 1996 (the "Asset
Classification"); and no amounts of loans, extensions of credit
or other assets that have been classified as of March 31, 1996
by any regulatory examiner as "Other Loans Specially Mentioned",
"Substandard", "Doubtful", "Loss", or words of similar import are
excluded from the amounts disclosed in the Asset Classification,
other than amounts of loans, extensions of credit or other assets
that were charged off by the Company or a Company Subsidiary
prior to March 31, 1996.
(U) Allowance for Possible Loan Losses. The allowance
for possible loan losses shown on the consolidated balance sheets
-19-
of the Company included in the Company's Form 10-Q for the
quarter ended March 31, 1996 was, and the allowance for possible
loan losses to be shown on subsequent Company Financial Reports,
will be, adequate, in the opinion of the Board of Directors and
management of the Company, determined in accordance with
generally accepted accounting principles, to provide for possible
losses, net of recoveries relating to loans previously charged
off, on loans outstanding (including accrued interest
receivables) as of the date thereof.
(V) Insurance. Each of Company and the Company
Subsidiaries has taken all requisite action (including without
limitation the making of claims and the giving of notices)
pursuant to its directors' and officers' liability insurance
policy or policies in order to preserve all rights thereunder
with respect to all matters that are known to it, except for such
matters which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on the
Company. Set forth in Schedule 4.01(V) is a list of all
insurance policies maintained by or for the benefit of the
Company or the Company Subsidiaries or their directors, officers,
employees or agents.
(W) Affiliates. Except as Previously Disclosed in
Schedule 4.01(W), there is no person who, as of the date of this
Plan, may be deemed to be an "affiliate" of the Company (each, an
"Affiliate") as that term is used in Rule 145 under the
Securities Act of 1933, as amended (together with the rules and
regulations thereunder, the "Securities Act").
(X) State Takeover Laws; Certificate of Incorporation.
It has taken all necessary action to exempt this Plan and the
transactions contemplated hereby from, and this Plan, and the
transactions contemplated hereby are exempt from, (1) any
applicable state takeover laws, including, without limitation,
the provisions of Section 33-374b of the Connecticut General
Statutes Annotated (the "CGSA"), (2) any applicable takeover
provisions in the Company's Certificate of Incorporation, or in
the Bank's charter, and (3) any takeover provisions set forth in
any agreement to which the Company is a party or may be bound.
(Y) No Further Action. It has taken all action so
that the entering into of this Plan, and the consummation of the
transactions contemplated hereby or any other action or
combination of actions, or any other transactions, contemplated
hereby do not and will not (1) require a vote of stockholders
(other than the affirmative vote of the holders of at least two-
thirds of the outstanding shares of Company Common Stock entitled
to be cast on this Plan or on any other actions necessary to
facilitate the transactions contemplated hereby and the approval
of the Company in its capacity as sole stockholder of the Bank,
which approval has been given), or (2) result in the grant of any
rights to any person under the Certificate of Incorporation,
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Charter or Bylaws of the Company or any Company Subsidiary or
under any agreement to which the Company or any of the Company
Subsidiaries is a party, or (3) restrict or impair in any way the
ability of First Union or FUB-CT, to exercise the rights granted
hereunder or, as to First Union, under the Stock Option
Agreement.
(Z) Environmental Matters.
(1) To its knowledge, it and each of the Company
Subsidiaries, the Participation Facilities and the Loan/
Fiduciary Properties (each as defined below) are, and have
been, in compliance with all Environmental Laws (as defined
below), except for instances of noncompliance which are not
reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect on the Company.
(2) There is no proceeding pending or, to its
knowledge, threatened before any court, governmental agency
or board or other forum in which it or any of the Company
Subsidiaries or any Participation Facility has been, or with
respect to threatened proceedings, reasonably would be
expected to be, named as a defendant or potentially
responsible party (a) for alleged noncompliance (including
by any predecessor) with any Environmental Law, or (b)
relating to the release or threatened release into the
environment of any Hazardous Material (as defined below),
whether or not occurring at or on a site owned, leased or
operated by it or any of the Company Subsidiaries or any
Participation Facility, except for such proceedings pending
or threatened that are not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on
the Company or have been Previously Disclosed in Schedule
4.01(Z).
(3) There is no proceeding pending or, to its
knowledge, threatened before any court, governmental agency
or board or other forum in which any Loan/Fiduciary Property
(or it or any of the Company Subsidiaries in respect of any
Loan/Fiduciary Property) has been, or with respect to
threatened proceedings, reasonably would be expected to be,
named as a defendant or potentially responsible party (a)
for alleged noncompliance (including by any predecessor)
with any Environmental Law, or (b) relating to the release
or threatened release into the environment of any Hazardous
Material, whether or not occurring at or on a Loan/Fiduciary
Property, except for such proceedings pending or threatened
that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company
or have been Previously Disclosed in Schedule 4.01(Z).
(4) To its knowledge, there is no reasonable
basis for any proceeding of a type described in subsections
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(2) or (3) above, except as has been Previously Disclosed in
Schedule 4.01(Z).
(5) To its knowledge, during the period of (a)
its or any of the Company Subsidiaries' ownership or
operation of any of their respective current properties, (b)
its or any of the Company Subsidiaries' participation in the
management of any Participation Facility, or (c) its or any
of the Company Subsidiaries' holding of a security or other
interest in a Loan/Fiduciary Property, there have been no
releases of Hazardous Material in, on, under or affecting
any such property, Participation Facility or Loan/Fiduciary
Property, except for such releases that are not reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company or have been Previously
Disclosed in Schedule 4.01(Z).
(6) To its knowledge, prior to the period of (a)
its or any of the Company Subsidiaries' ownership or
operation of any of their respective current properties, (b)
its or any of the Company Subsidiaries' participation in the
management of any Participation Facility, or (c) its or any
of the Company Subsidiaries' holding of a security or other
interest in a Loan/Fiduciary Property, there were no
releases of Hazardous Material in, on, under or affecting
any such property, Participation Facility or Loan/Fiduciary
Property, except for such releases that are not reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company or have been Previously
Disclosed in Schedule 4.01(Z).
(7) The following definitions apply for purposes
of this Section 4.01(Z): "Loan/Fiduciary Property" means
any property owned or controlled by the Company or any of
the Company Subsidiaries or in which it or any of the
Company Subsidiaries holds a security or other interest,
and, where required by the context, includes any such
property where Company or any of the Company Subsidiaries
constitutes the owner or operator of such property, but only
with respect to such property; "Participation Facility"
means any facility in which it or any of the Company
Subsidiaries participates in the management and, where
required by the context, includes the owner or operator or
such property, but only with respect to such property;
"Environmental Law" means (a) any federal, state and local
law, statute, ordinance, rule, regulation, code, license,
permit, approval, order, judgment, decree, injunction, or
agreement with any governmental entity, relating to (i) the
protection, preservation or restoration of the environment,
(including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural
resource), or to human health or safety, or (ii) the
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exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Material, in
each case as amended and as now in effect and includes,
without limitation, the federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the federal Clean Air
Act, the federal Clean Water Act, the federal Resource
Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the federal
Solid Waste Disposal and the federal Toxic Substances
Control Act, and the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health
Act of 1970, each as amended and as now in effect, and (b)
any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that
may impose liability or obligations for injuries or damages
due to, or threatened as a result of, the presence of or
exposure to any Hazardous Material; "Hazardous Material"
means any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by
type or quantity, and includes, without limitation, any oil
or other petroleum product, toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous
waste, special waste or petroleum or any derivative or by-
product thereof, radon, radioactive material, asbestos,
asbestos containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
(8) For purposes of this Section 4.01(Z), the
term "knowledge" means that of the directors and officers of
the Company and the Company Subsidiaries and includes their
actual knowledge as well as that which could have been
obtained by a reasonable person in the exercise of
reasonable inquiry.
(AA) Taxes. Except as Previously Disclosed in
Schedule 4.01(AA), (1) all reports and returns with respect to
Taxes (as defined below) and tax related information reporting
requirements that are required to be filed by or with respect to
the Company or the Company Subsidiaries, including without
limitation consolidated federal income tax returns of the Company
and the Company Subsidiaries (collectively, the "Company Tax
Returns"), have been duly filed, or requests for extensions have
been timely filed and have not expired, except to the extent all
such failures to file, taken together, are not reasonably likely
to have a Material Adverse Effect on the Company, and such
Company Tax Returns were true, complete and accurate in all
material respects, (2) all taxes (which shall mean federal,
state, local or foreign income, gross receipts, windfall profits,
severance,
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property, production, sales, use, license, excise, franchise,
employment, premium, recording, documentary, transfer, back-up
withholding or similar taxes, together with any interest,
additions, or penalties with respect thereto, imposed on the
income, properties or operations of the Company or the Company
Subsidiaries, together with any interest in respect of such
additions or penalties, collectively the "Taxes") shown to be due
on the Company Tax Returns or otherwise imposed on the income,
properties or operations of the Company or Company Subsidiaries
have been paid in full, (3) the Company Tax Returns have been
examined by the Internal Revenue Service or the appropriate
state, local or foreign taxing authority or the period for
assessment of the Taxes in respect of which such Company Tax
Returns were required to be filed has expired, (4) all Taxes due
with respect to completed and settled examinations have been paid
in full, (5) no issues have been raised by the relevant taxing
authority in connection with the examination of any of the
Company Tax Returns which are reasonably likely, individually or
in the aggregate, to result in a determination that would have a
Material Adverse Effect on the Company, except as reserved
against in the Company Financial Reports filed prior to the date
of this Plan, and (6) no waivers of statutes of limitations
(excluding such statutes that relate to years under examination
by the Internal Revenue Service) have been given by or requested
with respect to any Taxes of the Company or the Company
Subsidiaries.
(BB) Accuracy of Information. The statements with
respect to the Company and the Company Subsidiaries contained in
this Plan, the Stock Option Agreement, the Schedules and any
other written documents executed and delivered by or on behalf of
it pursuant to the terms of this Plan do not omit any material
fact necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
(CC) Derivatives Contracts; Structural Notes; Etc.
None of the Company or the Company Subsidiaries is a party to or
has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial
contract or any other contract not included on the balance sheet
which is a derivative contract (including various combinations
thereof) (each a "Derivatives Contract") or owns securities that
(1) are referred to as "structured notes", "high risk mortgage
derivatives", "capped floating rate notes," or "capped floating
rate mortgage derivatives," or (2) are likely to have changes in
value as a result of interest rate changes that significantly
exceed normal changes in value attributable to interest rate
changes, except for those Derivatives Contracts and other
instruments legally purchased or entered into in the ordinary
course of business and Previously Disclosed in Schedule 4.01(CC),
including a list, as applicable, of any Company or Company
Subsidiary assets pledged as security for each such instrument.
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(DD) Accounting Controls. Each of the Company and the
Company Subsidiaries has devised and maintained systems of
internal accounting controls sufficient to provide reasonable
assurances, in the reasonable judgment of the Board of Directors
of the Company, that (1) all material transactions are executed
in accordance with management's general or specific
authorization; (2) all material transactions are recorded as
necessary to permit the preparation of financial statements in
conformity with generally accepted accounting principles
consistently applied with respect to thrifts or any other
criteria applicable to such statements, (3) access to the
material property and assets of the Company and the Company
Subsidiaries is permitted only in accordance with management's
general or specific authorization; (4) the recorded
accountability for items is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect
to any differences; and (5) there are no violations of applicable
laws, including the Bank Secrecy Act.
(EE) Commitments and Contracts. Neither the Company
nor any Company Subsidiary is a party or subject to any of the
following (whether written or oral, express or implied):
(1) except as Previously Disclosed in Schedule
4.01(EE), any employment contract or understanding
(including any understandings or obligations with respect to
severance or termination pay liabilities or fringe benefits)
with any present or former officer, director or employee
(other than those which are terminable at will by the
Company or such Company Subsidiary without any obligation on
the part of the Company or such Company Subsidiary to make
any payment in connection with such termination);
(2) except as Previously Disclosed in Schedule
4.01(EE), any real property lease with annual rental
payments aggregating $100,000 or more; or
(3) except as Previously Disclosed in Schedule
4.01(EE), any material contract with any Affiliate.
(FF) Option Shares. As to the Company, the Option
Shares (as defined in the Stock Option Agreement), when issued in
accordance with the terms of the Stock Option Agreement, will be
validly issued, fully paid and nonassessable and subject to no
preemptive Rights.
4.02. First Union and FUB-CT Representations and
Warranties. Each of First Union and FUB-CT hereby represents and
warrants to the Company, as follows:
(A) Recitals. The facts set forth in the Recitals of
this Plan with respect to it are true and correct.
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(B) Corporate Authority. Subject to the required
regulatory approvals referred to in Section 6.02 and approval by
the Board of Directors of FUB-CT as contemplated by Recital (G),
this Plan has been authorized by all necessary corporate action
of it and is a valid and binding agreement of it enforceable
against it in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency and other similar laws of
general applicability relating to or affecting creditors' rights
and to general equity principles.
(C) No Defaults. Subject to the required regulatory
approvals referred to in Section 6.02, and the required filings
under federal and state securities' laws, the execution, delivery
and performance of this Plan, and the consummation of the
transactions contemplated hereby by it, does not and will not (1)
constitute a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of it or
of any of its subsidiaries or to which it or any of its
subsidiaries or properties is subject or bound, which breach,
violation or default is reasonably likely to have a Material
Adverse Effect on First Union, (2) constitute a breach or
violation of, or a default under, its Certificate of
Incorporation, Charter or Bylaws, or (3) require any consent or
approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, or the consent or approval
of any other party to any such agreement, indenture or instrument
other than such consent or approval, which if not obtained, would
not be reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on First Union.
(D) Financial Reports. In the case of First Union,
its Annual Report on Form 10-K for the fiscal year ended December
31, 1995, and all other documents filed or to be filed subsequent
to December 31, 1995 under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, in the form filed with the SEC (in each such
case, the "First Union Financial Reports"), did not and will not
as of their respective dates contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not
misleading; and each of the balance sheets in or incorporated by
reference into the First Union Financial Reports (including the
related notes and schedules thereto) fairly presents and will
fairly present the financial position of the entity or entities
to which it relates as of its date and each of the statements of
income and changes in stockholders' equity and cash flows or
equivalent statements in the First Union Financial Reports
(including any related notes and schedules thereto) fairly
presents and will fairly present the results of operations,
changes in stockholders' equity and changes in cash flows, as the
case may be, of the entity or entities to which it relates for
the periods set forth therein, in each case in accordance with
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generally accepted accounting principles consistently applied to
banks and bank holding companies during the periods involved,
except as may be noted therein, subject to normal and recurring
year-end audit adjustments in the case of unaudited statements.
(E) No Events. No events have occurred, or
circumstances have arisen, since March 31, 1996, which,
individually or in the aggregate, have had or are reasonably
likely to have a Material Adverse Effect on First Union.
(F) No Brokers. All negotiations relative to this
Plan and the transactions contemplated hereby have been carried
on by it directly with the other parties hereto and no action has
been taken by it that would give rise to any valid claim against
any party hereto for a brokerage commission, finder's fee or
other like payment.
(G) No Knowledge. It knows of no reason why the
regulatory approvals referred to in Section 6.02 should not be
obtained without the imposition of any condition of the type
referred to in the proviso following such Section 6.02.
(H) Shares Authorized. In the case of First Union,
the shares of First Union Common Stock to be issued in exchange
for shares of Company Common Stock upon consummation of the
Corporate Merger have been duly authorized and, when issued in
accordance with the terms of this Plan, will be validly issued,
fully paid and nonassessable and subject to no preemptive rights.
(I) Organization, Standing and Authority. It is duly
qualified to do business and is in good standing in the States of
the United States and foreign jurisdictions where the failure to
be duly qualified, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on First
Union. Each of First Union and its subsidiaries has in effect
all federal, state, local and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to
carry on its business as it is now conducted, the absence of
which, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on First Union.
(J) Corporate Power. First Union and FUB-CT each has
the corporate power and authority to carry on its business as it
is now being conducted and to own or lease all its material
properties and assets.
(K) Accuracy of Information. The statements with
respect to First Union and FUB-CT contained in this Plan, the
Stock Option Agreement, the Schedules and any other written
documents executed and delivered by or on behalf of First Union
or FUB-CT pursuant to the terms of this Plan are true and correct
in all material respects, and such statements and documents do
not omit any material fact necessary to make the statements
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contained therein, in light of the circumstances under which they
were made, not misleading.
(L) Litigation; Regulatory Action. Neither First
Union nor any of its subsidiaries is a party to any litigation,
proceeding or controversy before any court or governmental agency
which, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on First Union and, to the best of
its knowledge, no such litigation, proceeding or controversy has
been threatened; and neither it nor any of its subsidiaries or
any of its or their material properties or their officers,
directors or controlling persons is a party to or is the subject
of any order, decree, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter or similar
submission to, any Regulatory Authorities, which is reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on First Union and neither it nor any of its
subsidiaries has been advised by any Regulatory Authorities that
any such authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum or understanding,
commitment letter or similar submission.
(M) Absence of Undisclosed Liabilities. None of First
Union or its subsidiaries has any obligation or liability
(contingent or otherwise) that, individually or in the aggregate,
is reasonably likely to have a Material Adverse Effect on First
Union, except as reflected in the First Union Financial Reports
prior to the date of this Plan.
V. COVENANTS.
Each of the Company and the Bank hereby covenants to First
Union and FUB-CT, and each of First Union and FUB-CT hereby
covenants to the Company and the Bank, that:
5.01. Efforts to Consummate. Subject to the terms and
conditions of this Plan, it shall use its reasonable best efforts
in good faith to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit
consummation of the Corporate Merger on the Effective Date and to
otherwise enable consummation of the transactions contemplated
hereby and shall cooperate fully with the other parties hereto to
that end (it being understood that any amendments to the
Registration Statement (as hereinafter defined) or a
resolicitation of proxies as a consequence of an acquisition
agreement by First Union or any of its subsidiaries shall not
violate this covenant), including cooperating in developing and
implementing a plan relating to data processing and any other
systems conversions.
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5.02. Company Proxy/Registration Statement. The Company
and First Union shall prepare a proxy statement/prospectus (the
"Proxy Statement") to be mailed to the holders of Company Common
Stock in connection with the transactions contemplated hereby and
to be filed by First Union (after providing drafts in advance to
the Company and its counsel for review and comment) in a
registration statement (the "Registration Statement") with the
SEC as provided in Section 5.08, which shall conform to all
applicable legal requirements. The Company shall call a special
meeting (the "Meeting") of the holders of Company Common Stock to
be held as soon as practicable for purposes of voting upon the
approval of this Plan and the Company shall use its best efforts
to solicit and obtain votes of the holders of Company Common
Stock in favor of the approval of this Plan, and, subject to the
exercise of its fiduciary duties under applicable law (based upon
the written advice of outside counsel), the Board of Directors of
the Company shall recommend approval of this Plan by such
holders.
5.03. Registration Statement Compliance with Securities
Laws. When the Registration Statement or any post-effective
amendment or supplement thereto shall become effective, and at
all times subsequent to such effectiveness, up to and including
the date of the Meeting, such Registration Statement and all
amendments or supplements thereto, with respect to all
information set forth therein furnished or to be furnished by or
on behalf of the Company relating to the Company or the Company
Subsidiaries and by or on behalf of First Union relating to First
Union or its subsidiaries, (A) will comply in all material
respects with the provisions of the Securities Act and any other
applicable statutory or regulatory requirements, and (B) will not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements contained therein not misleading; provided,
however, in no event shall any party hereto be liable for any
untrue statement of a material fact or omission to state a
material fact in the Registration Statement made in reliance
upon, and in conformity with, written information concerning
another party furnished by or on behalf of such other party
specifically for use in the Registration Statement.
5.04. Registration Statement Effectiveness. First Union
will advise the Company, promptly after First Union receives
notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed
(after providing drafts in advance to the Company and its counsel
for review and comment), of the issuance of any stop order or the
suspension of the qualification of the First Union Common Stock
for offering or sale in any jurisdiction, of the initiation or
threat of any proceeding for any such purpose, or of any request
by the SEC for the amendment or supplement of the Registration
Statement or for additional information.
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5.05. Press Releases. Neither the Company nor the Bank
will, without the prior approval of First Union (which approval
shall not be unreasonably withheld or delayed), and neither First
Union nor FUB-CT will, without the prior approval of the Company
(which approval shall not be unreasonably withheld or delayed),
issue any press release or written statement for general
circulation relating to the transactions contemplated hereby,
except as otherwise required by law.
5.06. Access; Information. Upon reasonable notice, the
Company shall afford First Union and its officers, employees,
counsel, accountants and other authorized representatives,
access, during normal business hours throughout the period prior
to the Effective Date, to all of its and the Company
Subsidiaries' properties, books, contracts, data processing
system files, commitments and records and, during such period,
the Company shall furnish promptly to First Union (1) a copy of
each material report, schedule and other document filed by the
Company and the Company Subsidiaries with any Regulatory
Authority, and (2) all other information concerning the business,
properties and personnel of the Company and the Company
Subsidiaries as First Union may reasonably request, provided that
no investigation pursuant to this Section 5.06 shall affect or be
deemed to modify or waive any representation or warranty made by
the Company or the Bank or the conditions to the obligations of
the Company or the Bank to consummate the transactions
contemplated by this Plan; and (B) First Union will not use any
information obtained pursuant to this Section 5.06 for any
purpose unrelated to the consummation of the transactions
contemplated by this Plan and, if this Plan is terminated, will
hold all information and documents obtained pursuant to this
paragraph in confidence (as provided in Section 8.06) unless and
until such time as such information or documents become publicly
available other than by reason of any action or failure to act by
First Union or as it is advised by counsel in writing that any
such information or document is required by law or applicable
published stock exchange rule to be disclosed, and in the event
of the termination of this Plan, First Union will, upon request
by the Company, deliver to the Company all documents so obtained
by First Union or destroy such documents and, in the case of
destruction, will certify such fact to the Company.
5.07. Acquisition Proposals. In the case of the
Company, without the prior written consent of First Union, it
shall not, and it shall cause the Company Subsidiaries not to,
solicit or encourage inquiries or proposals with respect to, or
furnish any nonpublic information relating to or participate in
any negotiations or discussions concerning, any acquisition or
purchase of all or a substantial portion of the assets or
deposits of, or a substantial equity interest in, the Company or
any of the Company Subsidiaries or any merger or other business
combination with the Company or any of the Company Subsidiaries
other than as contemplated by this Plan, provided, however, that
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the Company may so furnish such nonpublic information if, in the
judgment of the Board of Directors of the Company, with the
written advice of such Board's outside counsel, such furnishing
of information is required under applicable law; it shall
instruct its and the Company Subsidiaries' officers, directors,
agents, advisors and affiliates to refrain from taking any action
that would violate or conflict with any of the foregoing; and it
shall notify First Union immediately if any such inquiries or
proposals are received by, or any such negotiations or
discussions are sought to be initiated with, the Company or any
of the Company Subsidiaries.
5.08. Registration Statement Preparation. In the case
of First Union, it shall, as promptly as practicable following
the date of this Plan, and subject to the cooperation of the
Company, prepare and file the Registration Statement with the
SEC, and shall use its reasonable best efforts to cause the
Registration Statement to be declared effective as soon as
practicable after the filing thereof.
5.09. Blue-Sky Filings. In the case of First Union, it
shall use its reasonable best efforts to obtain all necessary
state securities laws or "blue sky" permits and approvals,
provided that First Union shall not be required by virtue thereof
to submit to general jurisdiction in any state.
5.10. Affiliate Agreements. In the case of the Company,
it will cause each person who may be deemed to be an Affiliate of
the Company to execute and deliver to First Union on or before
the mailing of the Proxy Statement for the Meeting an agreement
in the form attached hereto as Exhibit B restricting the
disposition of the shares of First Union Common Stock to be
received by such Affiliate in exchange for such Affiliate's
shares of Company Common Stock.
5.11. Certain Policies of the Company. In the case of
the Company, it shall, consistent with generally accepted
accounting principles and regulatory accounting principles, use
its best efforts to record any accounting adjustments required to
conform its and the Company Subsidiaries' loan, litigation and
other reserve and real estate valuation policies and practices
(including loan classifications and levels of reserves) so as to
reflect consistently on a mutually satisfactory basis the
policies and practices of First Union; provided, however, that
the Company shall not be obligated to record any such accounting
adjustments pursuant to this Section 5.11 (A) unless and until
the Company shall be reasonably satisfied that the conditions to
the obligation of the parties to consummate the Mergers will be
satisfied or waived on or before the Effective Time, and (B) in
no event until the day prior to the Effective Date.
5.12. State Takeover Laws; Certificate of Incorporation.
In the case of the Company, it shall not take any action that
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would cause the transactions contemplated by this Plan to be
subject to any applicable state takeover statute and the Company
shall take all necessary steps to exempt (or ensure the continued
exemption of) the transactions contemplated by this Plan from (A)
any applicable state takeover law, as now or hereafter in effect,
including, without limitation, Sections 33-374b and 33-374e of
the CGSA, (B) any applicable takeover provisions in the Company's
Certificate of Incorporation or in the Bank's charter, and (C)
any takeover provisions set forth in any agreement to which the
Company is a party or may be bound.
5.13. No Rights Triggered. In the case of the Company,
it shall take all necessary steps to ensure that the entering
into of this Plan and the consummation of the transactions
contemplated hereby and any other action or combination of
actions, or any other transactions contemplated hereby or thereby
do not and will not, (A) result in the grant of any rights to any
person (including directors, officers and employees of the
Company or any Company Subsidiary) under the Certificate of
Incorporation or Bylaws of the Company or any Company Subsidiary
or under any agreement to which the Company or any of the Company
Subsidiaries is a party, including the Company Rights Agreement,
or (B) restrict or impair in any way the ability of First Union
or FUB-CT to exercise the rights granted hereunder or, as to
First Union, under the Stock Option Agreement. In addition, in
the case of the Company, it shall not declare First Union or any
subsidiary of First Union an "Adverse Person" pursuant to the
Company Rights Agreement or take action that would cause First
Union to be an "Acquiring Person" as a result of the Stock Option
Agreement. The shareholder rights plan of the Bank pursuant to
which a dividend was declared on February 2, 1990 has been duly
terminated, and no shareholder rights exist thereunder.
5.14. Shares Listed. In the case of First Union, it
shall use its reasonable best efforts to list, prior to the
Effective Date, on the NYSE, upon official notice of issuance,
the shares of First Union Common Stock to be issued to the
holders of Company Common Stock pursuant to this Plan.
5.15. Regulatory Applications. In the case of First
Union and FUB-CT, subject to the cooperation of the Company and
the Bank, (A) it shall promptly prepare and submit applications
to the appropriate Regulatory Authorities for approval of the
Mergers, and (B) promptly make all other appropriate filings to
secure all other approvals, consents and rulings which are
necessary for the consummation of the Mergers by First Union and
FUB-CT. First Union will provide copies of such applications and
responses to the Company and its counsel prior to submitting such
applications and responses to the applicable Regulatory
Authorities. In the case of the Company, it agrees, upon
request, to furnish First Union with information concerning
itself, the Company Subsidiaries, its and their directors,
officers and stockholders and such other matters as may be
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necessary or advisable in connection with any filing, notice or
application made by or on behalf of First Union or any of its
subsidiaries in connection with the Mergers and the other
transactions contemplated in this Plan.
5.16. Regulatory Divestitures. In the case of the
Company, effective on or before the Effective Date (to the extent
required by any Regulatory Authority), the Company and the
Company Subsidiaries shall cease engaging in such activities as
First Union shall advise the Company in writing are not permitted
to be engaged in by First Union under applicable law following
the Effective Date, and to the extent required by any Regulatory
Authority as a conditional approval of the transactions
contemplated by this Plan, the Company shall divest any Company
Subsidiary engaged in activities or holding assets that are
impermissible for a bank holding company, on terms and conditions
agreed to by First Union.
5.17. Indemnification/Liability Coverage.
(A) For six years after the Effective Date, First
Union shall, and shall cause the Continuing Corporation to,
indemnify, defend and hold harmless the present and former
directors, officers and employees of the Company and the Company
Subsidiaries (each, an "Indemnified Party") against all
liabilities arising out of actions or omissions occurring at or
prior to the Effective Date (including, without limitation, the
transactions contemplated by this Plan) to the extent such
persons are indemnified under the CGSA and the Company's
Certificate of Incorporation and Bylaws, in each case as in
effect on the date hereof, including provisions relating to
advances of expenses incurred in the defense of any litigation.
(B) First Union shall use its reasonable best efforts
to maintain the Company's existing directors' and officers'
liability insurance policy (or a policy, including First Union's
existing policy, providing comparable coverage amount on terms no
less favorable) covering persons who are currently covered by
such insurance for a period of three years after the Effective
Date; provided, that First Union shall not be obligated to make a
premium payment in respect of such policy (or replacement policy)
which exceeds, for the portion related to the Company's directors
and officers, 150% of the annual premium payment on the Company's
current policy in effect as of the date of this Plan; provided,
further, that if such coverage can only be obtained upon the
payment of a premium in excess of 150% of the annual premium
payment of the Company's current policy, First Union shall obtain
such coverage as can reasonably be obtained by paying a premium
of 150% of the annual premium payment of the Company's current
policy in effect as of the date of this Plan.
(C) Any Indemnified Party wishing to claim
indemnification under Section 5.17(A), upon learning of such
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claim, action, suit, proceeding or investigation, shall promptly
notify First Union thereof; provided, that the failure to so
notify shall not affect the obligations of First Union and the
Continuing Corporation under Section 5.17(A) (unless such failure
materially increases First Union's liability under such Section).
In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective
Date), (1) First Union or the Continuing Corporation shall have
the right to assume the defense thereof, if it so elects, and
First Union or the Continuing Corporation shall pay all
reasonable fees and expenses of counsel for the Indemnified
Parties promptly as statements therefor are received; provided,
however, that First Union shall be obligated pursuant to this
subsection (C) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction for any single action,
suit or proceeding or any group of actions, suits or proceedings
arising out of or related to a common body of facts, (2) the
Indemnified Parties will cooperate in the defense of any such
matter, and (3) First Union shall not be liable for any
settlement effected without its prior written consent.
(D) If First Union or the Continuing Corporation or
any of its successors or assigns shall consolidate with or merge
into any other entity and shall not be the continuing or
surviving entity of such consolidation or merger or shall
transfer all or substantially all of its assets to any entity,
then and in each case, proper provision shall be made so that the
successors and assigns of First Union or the Continuing
Corporation shall assume the obligations set forth in this
Section 5.17.
5.18. Current Information.
(A) During the period from the date of this Plan to
the Effective Date, each of the Company and First Union shall,
and shall cause its representatives to, confer on a regular and
frequent basis with representatives of the other.
(B) The Company shall promptly notify First Union of
(1) any material change in the business or operations of the
Company or any Company Subsidiary, (2) any material complaints,
investigations or hearings (or communications indicating that the
same may be contemplated) of any Regulatory Authority relating to
the Company or any Company Subsidiary, (3) the institution or the
threat of material litigation involving or relating to the
Company or any Company Subsidiary, or (4) any event or condition
that might be reasonably expected to cause any of the Company's
or the Bank's representations or warranties set forth herein not
to be true and correct as of the Effective Time or prevent the
Company or the Bank from fulfilling its obligations hereunder;
and in each case shall keep First Union informed with respect
thereto.
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(C) First Union shall (1) promptly notify the Company
of any event or condition that might reasonably be expected to
cause any of First Union's and FUB-CT's representations or
warranties set forth herein not to be true and correct as of the
Effective Date and (2) notify the Company immediately of any
denial of any application filed by First Union or FUB-CT with any
Regulatory Authority with respect to this Plan, and in each case
shall keep the Company informed with respect thereto.
5.19 Employee Contracts. Following the Effective Time,
First Union shall assume and honor in accordance with their terms
all employment, severance and other compensation contracts, plans
and arrangments between the Company and any director, officer or
employee that are set forth on Schedule 5.19; provided, however,
that nothing herein shall prevent First Union from terminating
any such contract, plan or arrangement in accordance with its
terms.
5.20 Employees. (A) To the extent that a Company
Employee (as defined below) participates in pension, benefit and
similar plans of First Union or its subsidiaries, First Union
shall cause such plan, program or arrangement to treat the prior
service with the Company and its affiliates of each person who is
an employee of the Company and its affiliates at the Effective
Time ("Company Employees") as service rendered to First Union or
its affiliate, as the case may be, for purposes of eligibility to
participate and vesting.
(B) Each person employed by the Company and its
affiliates prior to the Effective Time who remains an employee of
First Union or its affiliates following the Effective Time (each
a "Continued Employee") shall be generally entitled, as soon as
administratively practicable after the Effective Time, as an
employee of First Union or its affiliates, to participate in the
pension, benefit and similar plans, of First Union and its
subsidiaries that are generally available to employees of First
Union and its affiliates. All such participation shall be
subject to such terms of such plans as may be in effect from time
to time.
VI. CONDITIONS TO CONSUMMATION OF THE ACQUISITION.
Consummation of the Mergers is conditioned upon:
6.01. Shareholder Vote. Approval of this Plan by the
requisite vote of the stockholders of the Company.
6.02. Regulatory Approvals. Procurement by First Union
and FUB-CT, as applicable, of all required regulatory consents
and approvals by the appropriate Regulatory Authorities and the
expiration of the statutory waiting period relating thereto;
provided, however, that no such approval or consent shall have
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imposed any condition or requirement which, in the reasonable
opinion of First Union, would so materially and adversely impact
the economic or business benefits to First Union of the
transactions contemplated by this Plan so as to render
inadvisable the consummation of the Mergers.
6.03. No Injunction. There shall not be in effect any
order, decree or injunction of any court or agency of competent
jurisdiction that enjoins or prohibits consummation of any of the
transactions contemplated hereby.
6.04. Accountants' Letters. The Company shall cause
KPMG Peat Marwick LLP to deliver to First Union letters, dated
the date of or shortly prior to (A) the mailing of the Proxy
Statement, and (B) the Effective Date, in form and substance
reasonably satisfactory to First Union, with respect to the
Company's consolidated financial position and results of
operations, which letters shall be based upon "agreed upon
procedures" undertaken by such firm in accordance with the
Statement on Financial Accounting Standards No. 72.
6.05. Legal Opinion. The Company shall have received an
opinion, dated the Effective Date, of Marion A. Cowell, Jr.,
counsel for First Union in form reasonably satisfactory to the
Company, which shall cover the matters contained in the first
sentence in Recital (C), the first sentence in Recital (D)
Section 4.02(B), (C), (H), (I), the first sentence in 4.02(L) and
Section 5.03.
6.06. Legal Opinion. First Union shall have received an
opinion or opinions, dated the Effective Date, of Gager &
Peterson and/or Wachtell, Lipton, Rosen & Katz, counsel for the
Company, in form reasonably satisfactory to First Union which
shall cover the matters referred to in the first sentence in
Recital (A), the first sentence in Recital (B), 4.01(B), 4.01(C),
the fifth sentence and the sixth sentence in Section 4.01(D),
Section 4.01(F) and (G), the first sentence in Section 4.01(L),
Section 4.01(W), (X), (Y) and (FF).
6.07. Officers' Certificate. (A) Each of the
representations and warranties contained herein of First Union
and FUB-CT shall be true and correct as of the date of this Plan
and upon the Effective Date with the same effect as though all
such representations and warranties had been made on the
Effective Date, except for any such representations and
warranties made as of a specified date, which shall be true and
correct as of such date, and (B) each and all of the agreements
and covenants of First Union and FUB-CT to be performed and
complied with pursuant to this Plan on or prior to the Effective
Date shall have been duly performed and complied with in all
material respects, and the Company and the Board shall have
received a certificate signed by an executive officer of each of
First Union and FUB-CT, dated the Effective Date, to such effect.
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6.08. Officers' Certificate. (A) Each of the
representations and warranties contained herein of the Company
and the Bank shall be true and correct as of the date of this
Plan and upon the Effective Date with the same effect as though
all such representations and warranties had been made on the
Effective Date, except for any such representations and
warranties made as of a specified date, which shall be true and
correct as of such date, and (B) each and all of the agreements
and covenants of the Company and the Bank to be performed and
complied with pursuant to this Plan on or prior to the Effective
Date shall have been duly performed and complied with in all
material respects, and First Union and FUB-CT shall have received
a certificate signed by the Chief Executive Officer and the Chief
Financial Officers of the Company and the Bank, dated the
Effective Date, to such effect.
6.09. Effective Registration Statement. The
Registration Statement shall have become effective and no stop or
other order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any
other Regulatory Authority.
6.10. Blue-Sky Permits. First Union shall have received
all state securities laws and "blue sky" permits necessary to
consummate the Acquisition.
6.11. Tax Opinions. First Union shall have received an
opinion from Sullivan & Cromwell, and the Company shall have
received an opinion from Wachtell, Lipton, Rosen & Katz, to the
effect that (A) the Corporate Merger constitutes a reorganization
under Section 368 of the Code, and (B) no gain or loss will be
recognized by stockholders of the Company who receive shares of
First Union Common Stock in exchange for their shares of Company
Common Stock, except that gain or loss may be recognized as to
cash received in lieu of fractional share interests. In
rendering their opinions, Sullivan & Cromwell and Wachtell,
Lipton, Rosen & Katz may require and rely upon representations
and agreements contained in documents executed by officers of
First Union, the Company and others.
6.12. NYSE Listing. The shares of First Union Common
Stock issuable pursuant to this Plan shall have been approved for
listing on the NYSE, subject to official notice of issuance.
6.13. Receipt of Affiliate Agreements. First Union
shall have received from each Affiliate of the Company the
agreement referred to in Section 5.10.
provided, however, that a failure to satisfy any of the
conditions set forth in the proviso following Section 6.02 or in
Sections 6.04, 6.06, 6.08 or 6.13 shall only constitute
conditions if asserted by First Union, and a failure to satisfy
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any of the conditions set forth in Section 6.05 or 6.07 shall
only constitute conditions if asserted by the Company.
VII. TERMINATION.
This Plan may be terminated prior to the Effective Date,
either before or after receipt of required stockholder approvals:
7.01. Mutual Consent. By the mutual consent of First
Union and the Company.
7.02. Breach. By First Union or the Company, if its
Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of (A) a breach by the
other party of any representation or warranty contained herein,
which breach cannot be or has not been cured within thirty (30)
days after the giving of written notice to the breaching party of
such breach, or (B) a breach by the other party of any of the
covenants or agreements contained herein, which breach cannot be
or has not been cured within thirty (30) days after the giving of
written notice to the breaching party of such breach.
7.03. Delay. By First Union or the Company, if its
Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not
consummated by May 1, 1997.
7.04. No Stockholder or Regulatory Approval. By the
Company or First Union, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board, in
the event that any stockholder approval contemplated by Section
6.01 is not obtained at the Meeting, including any adjournment or
adjournments thereof, or in the event that written notice is
received which states that any required regulatory approval
contemplated by Section 6.02 has not been approved or has been
denied.
7.05. Stock Option Agreement Execution. By First Union,
if the Company does not execute and deliver to First Union the
Stock Option Agreement on June 15, 1996.
VIII. OTHER MATTERS.
8.01. Survival. If the Effective Date occurs, all
representations, warranties, agreements and covenants contained
in this Plan, except for Sections 5.17, 8.01, 8.04 and 8.09,
shall not survive the Effective Date. If this Plan is terminated
prior to the Effective Date, the agreements and representations
of the parties in Sections 4.01(P), 4.01(FF) and 4.02(F),
Sections 5.03, 5.06(2), 5.12 and 5.13 and Sections 8.01, 8.03,
8.04, 8.05, 8.06, 8.07 and 8.09 shall survive such termination.
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8.02. Waiver; Amendment. Prior to the Effective Date,
any provision of this Plan may be (A) waived in writing by the
party benefitting by the provision, or (B) amended or modified at
any time (including the structure of the transactions
contemplated hereby) by an agreement in writing among the parties
hereto approved by their respective Boards of Directors and
executed in the same manner as this Plan, except that, after the
vote by the stockholders of the Company, the consideration to be
received by the stockholders of the Company for each share of
Company Common Stock shall not thereby be decreased.
8.03. Counterparts. This Plan may be executed in one or
more counterparts, each of which shall be deemed to constitute an
original. This Plan shall become effective when one counterpart
has been signed by each party hereto.
8.04. GOVERNING LAW. THIS PLAN SHALL BE GOVERNED BY,
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NORTH CAROLINA.
8.05. Expenses. Each party hereto will bear all
expenses incurred by it in connection with this Plan and the
transactions contemplated hereby, except printing expenses which
shall be shared equally between the Company and First Union.
8.06. Confidentiality. Except as otherwise provided in
Section 5.06, each of the parties hereto and their respective
agents, attorneys and accountants will maintain the
confidentiality of all information provided in connection
herewith which has not been publicly disclosed.
8.07. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (with confirmation) or mailed by
registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to First Union
or FUB-CT, to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704)374-3425
Attention: Marion A. Cowell, Jr.
General Counsel
If to the Company
or the Bank, to: Center Financial Corporation
60 North Main Street
Waterbury, Connecticut 06702
Attention: Robert J. Narkis
President, Chief Executive
Officer and Treasurer
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8.08. Definitions. Any term defined anywhere in this
Plan shall have the meaning ascribed to it for all purposes of
this Plan (unless expressly noted to the contrary). In addition:
(A) the term "Material Adverse Effect", when applied to
a party, shall mean an event, occurrence or circumstance
(including without limitation, any breach of a representation
or warranty contained herein by such party) which (1) has a
material adverse effect on the financial condition, results
of operations, business or prospects of such party and its
consolidated subsidiaries, taken as a whole, or (2) would
materially impair such party's, or any affiliated party's
(which includes, as to the Company, the Bank, and as to First
Union, FUB-CT), ability to timely perform its obligations
under this Plan or the consummation of any of the
transactions contemplated hereby; provided, that a Material
Adverse Effect with respect to a party shall not include
effects resulting from general economic conditions, changes
in accounting practices or changes to statutes, regulations
or regulatory policies, that do not have a materially more
adverse effect on such party than that experienced by
similarly situated financial institutions;
(B) the term "individually or in the aggregate" as used
in Article IV of this Plan includes all events, occurrences
and circumstances described in any paragraph of Article IV,
and is not linked to any specific paragraph; and
(C) the term "Previously Disclosed" by a party shall
mean information set forth in a Schedule that is delivered by
such party to the other party contemporaneously with the
execution of this Plan and specifically designated as
information "Previously Disclosed" pursuant to this Plan.
8.09. Entire Understanding; No Third Party Beneficiaries.
This Plan represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and
supersede any and all other oral or written agreements heretofore
made. Except for Section 5.17, nothing in this Plan, expressed or
implied, is intended to confer upon any person, other than the
parties hereto or their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this
Plan.
8.10. Headings. The headings contained in this Plan are
for reference purposes only and are not part of this Plan.
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IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in counterparts by their duly authorized
officers, all as of the day and year first above written.
FIRST UNION CORPORATION
By: /s/ Kenneth R. Stancliff
------------------------
Name: Kenneth R. Stancliff
Title: Senior Vice President
FIRST UNION BANK OF CONNECTICUT
By: /s/ Kenneth R. Stancliff
------------------------
Name: Kenneth R. Stancliff
Title: Senior Vice President
CENTER FINANCIAL CORPORATION
By: /s/ Robert J. Narkis
--------------------
Name: Robert J. Narkis
Title: Chief Executive Officer
CENTERBANK
By: /s/ Robert J. Narkis
--------------------
Name: Robert J. Narkis
Title: Chief Executive Officer
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BOARD OF DIRECTORS
CENTERBANK
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BOARD OF DIRECTORS
FIRST UNION BANK OF CONNECTICUT
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