-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hKCJV7eMx5Be5GGfJEcyRdVfxFcbAHsofhEnyGs6a0/Q9mtdlModpwDHDkVzs3ZP GXmKqtVX1Eiq1x5ZoR318Q== 0000950135-94-000199.txt : 19940328 0000950135-94-000199.hdr.sgml : 19940328 ACCESSION NUMBER: 0000950135-94-000199 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19940325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UST CORP CENTRAL INDEX KEY: 0000316901 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 042436093 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 33 SEC FILE NUMBER: 033-52821 FILM NUMBER: 94518006 BUSINESS ADDRESS: STREET 1: 40 COURT ST CITY: BOSTON STATE: MA ZIP: 02108 BUSINESS PHONE: 6177267000 S-3 1 UST CORP. FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 25, 1994 REGISTRATION NO. 33- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ UST CORP. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MASSACHUSETTS 04-2436093 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION) IDENTIFICATION NO.)
------------------------ 40 COURT STREET BOSTON, MA 02108 (617) 726-1000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ ERIC R. FISCHER, EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL UST CORP. 40 COURT STREET BOSTON, MA 02108 (617) 726-1000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ ------------------------ CALCULATION OF REGISTRATION FEE ======================================================================================================= PROPOSED PROPOSED MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED PER SHARE* OFFERING PRICE* FEE - ------------------------------------------------------------------------------------------------------- Common Stock, $0.625 par value......................... 500,000 Shares $12.438 $6,219,000 $2,145 ======================================================================================================= *Estimated solely for the purposes of calculating the registration fee in accordance with Rule 457(c) under the Securities Act of 1933, based on the average of the high and low prices reported in the NASDAQ National Market System for the Common Stock on March 21, 1994.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================ 2 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. PRELIMINARY PROSPECTUS DATED MARCH 25, 1994 -- SUBJECT TO COMPLETION 500,000 SHARES UST CORP. COMMON STOCK ------------------------ All of the shares of common stock, par value $0.625 per share (the "Common Stock"), of UST Corp., a Massachusetts corporation (the "Company"), offered hereby (the "Shares") are to be sold by Kidder, Peabody Group Inc. (the "Selling Stockholder"). See "Selling Stockholder." The Company will receive no part of the proceeds from this offering. The Shares will be sold based on market prices prevailing at the time of sale on the NASDAQ National Market System. On March 21, 1994, the last reported sale price per share of Common Stock on the NASDAQ National Market System was $12.375. The Company has agreed to indemnify the Selling Stockholder against certain liabilities arising out of this offering, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). See "Selling Stockholder." ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS SEE "RISK FACTORS." ------------------------ March 25, 1994 3 AVAILABLE INFORMATION No person has been authorized to give any information or to make any representations in connection with this offering other than those contained in this Prospectus. If given or made, such representations must not be relied upon as having been authorized by the Company. This Prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities law of any such State. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and in accordance therewith files reports, proxy statements and other information with the United States Securities and Exchange Commission (the "SEC"). Such reports, proxy statements and other information filed by the Company with the SEC can be inspected and copied at public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, DC. 20549; 75 Park Place, 14th Floor, New York, New York, 10007; and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material may also be obtained at prescribed rates from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, DC. 20549. The Common Stock is quoted for trading on the NASDAQ National Market System and reports, proxy statements and other information concerning the Company may be inspected at the offices of NASDAQ, 1735 K Street, N.W., Washington, DC. 20006. This prospectus constitutes part of a registration statement (the "Registration Statement") filed by the Company with the SEC under the Securities Act. This Prospectus omits certain of the information contained in the Registration Statement and reference is hereby made to the Registration Statement and related exhibits for further information with respect to the Company and the securities offered hereby. Statements contained herein concerning the provisions of documents are necessarily summaries of such documents, and each statement is qualified in its entirety by reference to the copy of the applicable document filed with the SEC. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents, each of which was previously filed by the Company with the SEC pursuant to Section 13 of the Exchange Act, are incorporated herein by reference: (1) Annual Report on Form 10-K for the fiscal year ended December 31, 1992, (the "Company's 10-K"); (2) Quarterly Report on Form 10-Q for the quarter ended March 31, 1993; (3) Quarterly Report on Form 10-Q for the quarter ended June 30, 1993; (4) Quarterly Report on Form 10-Q for the quarter ended September 30, 1993; (5) Current Report on Form 8-K dated April 21, 1993; (6) Current Report on Form 8-K dated July 16, 1993; (7) Current Report on Form 8-K/A dated March 18, 1994, including among other information the consolidated financial statements of the Company for certain periods ended December 31, 1993, audited by Arthur Andersen & Co., independent public accountants (the "1994 Form 8-K"); and (8) the description of the Company's capital stock contained in the Company's registration statements filed under Section 12 of the Exchange Act, including any amendment or report filed for the purpose of updating such description. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities remaining unsold shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such reports and documents. Any statements contained in a document incorporated or deemed to be incorporated by referenced herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part to this Prospectus. 2 4 The Company will provide without charge to each person to whom a Prospectus is delivered, upon written or oral request of such person, a copy of any documents incorporated herein by reference (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into the documents that this Prospectus incorporates). Requests for such copies should be directed to UST Corp., Attention: Executive Vice President and General Counsel, 40 Court Street, Boston, MA 02108. 3 5 THE COMPANY The Company, a bank holding company registered with the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), was organized as a Massachusetts business corporation in 1967. The Company is also subject to examination by, and is required to file reports with, the Commissioner of Banks of the Commonwealth of Massachusetts (the "Massachusetts Commissioner"). The Company's banking subsidiaries are USTrust and United States Trust Company ("USTC"), each headquartered in Boston and each a Massachusetts trust company, and UST Bank/Connecticut ("UST/Conn") headquartered in Bridgeport, a Connecticut trust company. All of the common stock of USTrust, USTC and UST/Conn is issued to and owned by the Company. In addition, the Company owns, directly or indirectly, all of the outstanding stock of three active non-banking subsidiaries, all Massachusetts corporations: UST Leasing Corporation, UST Data Services Corp. and UST Capital Corp. Through its banking and non-banking subsidiaries, the Company provides a broad range of financial services, principally to individuals and small-and medium-sized companies in New England. In addition, an important component of the Company's financial services is the provision of trust and money management services to professionals, corporate executives, non-profit organizations, labor unions, foundations, mutual funds and owners of closely-held businesses in the New England region. As of the close of business on December 31, 1993, the Company's total assets were approximately $2 billion and USTrust, the lead bank, had over $1.9 billion or 93% of the Company's consolidated assets. USTrust and UST/Conn are engaged in a general commercial banking business and accept deposits which are insured by the Federal Deposit Insurance Corporation ("FDIC"). USTC, which has full banking powers and accepts deposits which are insured by the FDIC, focuses its activity on trust and money management and other fee generating businesses. Two of the Company's banking subsidiaries are located in Massachusetts and one is located in Connecticut. RISK FACTORS The Shares being offered hereby involve a high degree of risk and are suitable only for persons who can afford to bear such risk. RECENT OPERATING HISTORY The Company reported a loss of $20.1 million, or $1.31 per share, for 1993, resulting primarily from a loan loss provision of $42.7 million in the second quarter and writedowns of certain nonperforming assets. In addition, the Company incurred net losses in each of the two preceding recent fiscal years. See "Selected Consolidated Financial Information." BANK REGULATORY AGREEMENTS AND ORDERS Since 1992 the Company and its banking subsidiaries in Massachusetts have been operating under regulatory agreements and orders with the relevant Federal authorities and the Massachusetts Commissioner. UST/Conn has been operating under a regulatory agreement with the Banking Commissioner of the State of Connecticut (the "Connecticut Commissioner") since 1991. In February, 1994, the FDIC and the Massachusetts Commissioner terminated and lifted their regulatory order with USTC. These agreements restrict the ability of the Company and its banking subsidiaries to pay dividends. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Capital and Dividends"; "Supervision and Regulation -- Bank Regulatory Agreements and Orders" and "Description of Capital Securities." POTENTIAL REGULATORY SANCTIONS See the discussion below of certain regulatory issues related to Director Francis X. Messina in "Supervision and Regulation -- Potential Regulatory Sanctions." 4 6 PROPOSED NEW STANDARDS ON SAFETY AND SOUNDNESS -- ASSET QUALITY AND MINIMUM EARNINGS STANDARDS Proposed regulations covering standards for safety and soundness at banks and bank holding companies have been put forth by the Company's primary federal banking regulators as required by Section 132 of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). Included in the proposal are standards (1) dealing with the maximum amount of classified assets an institution may have and (2) defining a minimum earnings amount. Failure to meet these standards would require the filing of a compliance action plan with and acceptable to the Company's supervisory agencies. If the proposed regulations were to be adopted in their present form, the Company would not have been in compliance with the first standard at December 31, 1993. The federal banking regulators have not publicly indicated at this time when passage of final regulations in this area will occur or whether final regulations will be substantially similar to those proposed. At December 31, 1993, the Company had approximately $49.3 million in nonaccrual loans, $.5 million in accruing loans 90 days or more past due, $41.5 million in restructured loans and $19.5 million in other real estate owned. In addition, the Company had approximately $184 million of accruing commercial and real estate loans which, while current, have nonetheless been classified as Special Mention or Substandard in the Company's internal risk rating profile. Under the Company's definition, Substandard assets are characterized by the distinct possibility that some loss will be sustained if the credit deficiencies are not corrected. The Substandard classification, however, does not imply ultimate loss for each individual asset so classified. Special Mention assets, as defined by the Company, have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the assets. LOCAL ECONOMIC CONDITIONS; CREDIT RISK CONCENTRATION The Company's primary loan market, the New England region, continues to experience an uneven and slow recovery. Most of the loans outstanding are from Eastern Massachusetts and a substantial portion of these loans are various types of real estate loans; still others have real estate as additional collateral. At year-end 1993, the Company's exposure to credit risk for which the primary source of repayment is real estate collateral included $499 million of loans. Recent economic studies have concluded that the region's economy will remain sluggish for at least for the balance of this year. While there have been pockets of growth, they have been rather anemic, and the forecast is for small increases in the overall job market with some industries increasing modestly and others not at all. Real estate prices and activity have both improved from extremely depressed levels. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." INTEREST RATE RISK The Company engages in certain interest rate management practices in order to reduce the effect of interest rate volatility on the net interest margin and to enhance income. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Interest Rate Risk." COMPETITIVE CONDITIONS The Company's banking and non-banking subsidiaries face substantial competition throughout Massachusetts and Connecticut. This competition is provided by commercial banks, savings banks, credit unions, consumer finance companies, insurance companies, "non-bank banks," money market mutual funds, government agencies, investment management companies, investment advisors, brokers and investment bankers. In addition, the Company anticipates increased competition from out-of-state and foreign banks and bank holding companies as those entities increase their usage of interstate banking powers granted during the past few years. During the past several years, acquisitions of small-and medium-sized banks and bank holding companies by the largest New England bank holding companies and the closing by regulators of a number of banks and bank holding companies in Eastern Massachusetts and Connecticut has resulted in fewer but financially stronger competitors in the local markets served by the Company's banking subsidiaries. 5 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS This discussion should be read in conjunction with financial statements, notes and tables included in the Company's 1994 Form 8-K. See "Incorporation of Certain Documents by Reference." The Company's primary loan market, the New England region, continues to experience an uneven and slow recovery. Recent economic studies have concluded that the region's economy will remain sluggish for at least the next year. This climate has contributed to the decline in commercial and residential real estate values, although there is recent evidence that these values are stabilizing. Generally, real estate prices and activity have both improved from extremely depressed levels. Specifically, in the Commonwealth of Massachusetts, home sales and home construction are both rising due to the prevailing low mortgage rates. The harsh economic environment over the last few years has adversely affected both the net worth of certain borrowing customers of the Company's subsidiary banks and the Company's collateral position with respect to certain loans. Massachusetts has seen both an exodus and failure of a number of businesses and unemployment continues to remain at a high level. While there have been pockets of growth, they have been sluggish, and the forecasts is for small increases in the overall job market with some industries increasing modestly and others not at all. The foregoing factors continued to influence the Company's financial results for 1993, particularly in the areas of provision for loan losses and expenses related to foreclosed asset and workout expense, and are likely to continue to influence such results. Toward the end of the second quarter of 1993, a strategy was adopted which recognized that many troubled credit situations will need to be handled in an expeditious manner (including the possibility of bulk sales) in order to reduce the management and staff involvement and, in some cases, carrying costs of these workouts. This would allow the Company's resources to be redirected toward new business. However, it would increase the up-front costs of the workouts. As a result, the reserve for loan losses was increased by $19.8 million during the second quarter. At December 31, 1993, it stood at $62.5 million, or 4.74%, of loans outstanding. To achieve the higher reserve level, the Company recorded a $42.7 million provision for loan losses in the second quarter. Included in that amount was a special provision of $30 million. This special provision was management's estimate of the additional losses to be incurred from the strategic change referred to above, the continued sluggish economic climate and losses occurring during the remainder of 1993 on these and other credits as a result of recent events or new facts. The provision for the year ended December 31, 1993 totaled $64.3 million. Net chargeoffs in 1993 were $51.8 million compared with $41.9 million in 1992. At December 31, 1993, the reserve for loan losses equaled 127% of nonaccrual loans and 56% of total nonperforming assets. The above-mentioned special provision for loan losses coupled with a $3.1 million increase in foreclosed asset and workout expenses when compared with those of 1992 are the primary reasons the Company reported a $20.1 million loss, or $1.31 per share, for 1993. Positive factors in 1993 included a $21 million reduction in the costs to fund lending operations. The decreased cost outpaced the decrease in the yield on assets. Further, nonperforming assets were reduced from $175.8 million at December 31, 1992 to $110.8 at December 31, 1993, a decrease of 37%. These factors were the principal reasons that net interest revenue increased $4.6 million in 1993. Noninterest income, of $36.7 million, declined by $5.6 million in 1993. Gains on sales of securities decreased $9.3 million. This was offset in part by a $3.3 million increase in asset management fees. Asset management fees continued their positive trend due to new business and appreciation of existing clients' asset portfolios. Noninterest expense, of $97.5 million, remained essentially flat in 1993 compared with 1992. Increases in foreclosed asset and workout expense amounted to $3.1 million. In 1992, the Company added $3.8 million to a reserve for losses arising from securitized loans. There was no comparable expense for 1993, as there were no loans securitized. In 1993, the Company adopted Financial Accounting Standard No. 109 "Accounting for Income Taxes." This Standard changed the accounting for deferred income tax to the "liability method." This change, a one-time event, increased net income by $750 thousand in January 1993, representing the cumulative effect of the adoption of the new standard on the balance sheet. 6 8 FINANCIAL CONDITION Total assets, at $2.04 billion, have declined slightly since December 31, 1992 due to weak loan demand in the Company's market area consistent with the sluggish local economy and a reduction due to previously mentioned chargeoffs. At December 31, 1993, liquidity, which includes excess cash, excess funds sold and unpledged securities, totaled approximately $310 million, an increase of $35 million from 1992. The Company's deposits have decreased in the present low interest rate environment. Generally, high-yielding certificates of deposit which matured were not renewed at the prevailing rates -- these investors are utilizing mutual fund and other vehicles to obtain higher returns. Short-term borrowings have been increased to maintain liquidity at prudent levels. However, in the last six months of 1993, deposits have, in fact, increased by $25.5 million. During the latter part of 1993, the Company introduced a new transaction account called, "Choice Checking," which has brought in over $4 million in deposits. INTEREST RATE RISK Volatility in interest rates requires the Company to manage interest rate risk. Interest rate risk arises from mismatches between the repricing or maturity characteristics of assets and the liabilities which fund them. Management monitors and adjusts the difference between interest-sensitive assets and interest-sensitive liabilities ("GAP" position) within various time frames. An institution with more assets repricing than liabilities within a given time frame is considered asset sensitive ("positive GAP") and in time frames with more liabilities repricing than assets it is liability sensitive ("negative GAP"). Over a positive GAP time frame an institution will generally benefit from rising interest rates and over a negative GAP time frame will generally benefit from falling rates. Within GAP limits established by the Board of Directors of the Company, the Company seeks to balance the objective of insulating the net interest margin from rate exposure with that of taking advantage of anticipated changes in rates in order to enhance income. The following table summarizes the Company's GAP position at December 31, 1993. Approximately eighty percent of the loans are included in the 0-30 day category, as they reprice in response to changes in the interest rate environment. Securities are divided among the categories in accordance with their expected lives. They are evaluated in conjunction with the Company's asset/liability management strategy and may be sold in response to changes in interest rates, prepayment risk, loan growth and similar factors. At December 31, 1993, the one-year cumulative GAP position was slightly positive at $68 million, or approximately 3.3% of total assets. Interest Sensitivity Periods
0-30 DAYS 31-90 DAYS 91-365 DAYS OVER 1 YEAR TOTAL --------- ---------- ----------- ----------- ------ ($ IN MILLIONS) Loans........................................ $ 975 $ 25 $ 80 $ 175 $1,255 Short-term investments....................... 96 1 97 Securities................................... 8 21 86 359 474 Other assets................................. 1 5 212 218 --------- ---------- ----------- ----------- ------ Total assets............................ 1,079 47 172 746 2,044 --------- ---------- ----------- ----------- ------ Interest-bearing deposits.................... 698 85 193 291 1,267 Borrowed funds............................... 225 4 11 240 Demand deposits.............................. 23 351 374 Other liabilities and stockholders' equity... 2 161 163 --------- ---------- ----------- ----------- ------ Total liabilities and equity............ $ 948 $ 85 $ 197 $ 814 $2,044 --------- ---------- ----------- ----------- ------ GAP for period............................... $ 131 $(38) $ (25) $ (68) $ 0 ========= ---------- ----------- ----------- ====== Cumulative GAP............................... $ 93 $ 68 $ 0 ========== =========== ===========
7 9 The Company manages its interest rate risk primarily by lengthening or shortening the maturity structure of the Company's portfolio of investment securities. CAPITAL AND DIVIDENDS On June 2, 1993, the Company sold 500,000 shares of its unregistered common stock in a private placement for a cash price of $3,750,000. Substantially all of the net proceeds of that placement were used to repay principal on the Company's long-term debt. On August 12, 1993, the Company sold 2.87 million shares of its common stock in a European offering. These shares were placed with more than sixty institutional investors and the offering was made under Regulation S of the United States Securities and Exchange Commission. Net proceeds of this placement were approximately $21 million after expenses. The net proceeds continue to be held in the general funds of the Company to be used for general corporate purposes. Separately, during the last half of 1993, USTC received approval from the appropriate regulators to pay dividends of $5.25 million to the Company, on the condition that those dividends would be promptly distributed to the Subsidiary Banks. Of that total, $1.7 million was contributed as capital to the Company's Connecticut banking subsidiary, UST/Conn, and $3.55 million was contributed as capital to the Company's lead bank, USTrust. In 1993, the Company adopted Statement of Financial Accounting Standards No. 115 (SFAS 115), issued by the Financial Accounting Standards Board. This Standard deals with the classification of all debt securities and equity securities that have a ready market. According to SFAS 115, these securities must be classified as either held to maturity, available for sale, or trading and are reported at either amortized cost or fair value, depending upon the classification. At December 31, 1993, all securities in the Company's portfolio were classified as available for sale. This change in accounting method resulted in an increase of $3.3 million to stockholders' equity, representing the after-tax effect of the net unrealized gains on securities available for sale. 8 10 NONPERFORMING ASSETS The following table measures the Company's performance regarding some key indicators of asset quality:
YEAR ENDED DECEMBER 31, ----------------------------- 1993 1992 1991 ------- ------ ------ (DOLLARS IN MILLIONS) Nonperforming assets: Nonaccrual loans............................................... $ 49.3 $ 86.6 $ 89.4 Accruing loans 90 days or more past due........................ .5 1.1 8.6 Other real estate and automobiles owned (including insubstance foreclosure).................................... 19.5 43.2 51.5 Restructured loans............................................. 41.5 44.9 36.3 ------- ------ ------ Total nonperforming assets..................................... $ 110.8 $175.8 $185.8 ======= ====== ====== Reserve for loan losses.......................................... $ 62.5 $ 50.1 $ 50.1 Ratios: Reserve to nonaccrual loans.................................... 127.0% 57.9% 56.0% Reserve to total of nonaccrual loans, accruing loans 90 days or more past due and restructured loans..................... 68.5% 37.8% 37.3% Reserve to period-end loans...................................... 4.7% 3.4% 3.0% Nonaccrual loans to period-end loans............................. 3.7% 5.9% 5.4% Nonaccrual and accruing loans over 90 days past due to period-end loans.......................................................... 3.8% 6.0% 5.9% Restructured loans to period-end loans........................... 3.1% 3.1% 2.2% Nonperforming assets to period-end loans, OREO, and automobiles owned.......................................................... 8.3% 11.6% 10.9% Nonperforming assets to total assets............................. 5.4% 8.1% 7.9% Net chargeoffs................................................... $51.8 $41.9 $39.6 Net chargeoffs to average loans.................................. 3.7% 2.7% 2.3%
CORE EARNINGS The Company defines core earnings as pretax income before loan loss provision, foreclosed asset and work out expense, securities gains, and other nonrecurring income and expense items. Management believes that core earnings are a useful measure of a bank's ability to withstand the adverse effects of nonperforming assets. The following table reflects the Company's core earnings components on a comparative basis:
YEAR ENDED DECEMBER 31, ------------------------------------------------ 1993 1992 1991 1990 1989 ------ ------ ------ ----- ----- (DOLLARS IN MILLIONS) Pretax income (loss)............................ $(32.4) $ (7.7) $(12.5) $ .2 $43.1 Add back: Loan Loss provision........................... 64.3 41.9 53.7 43.7 9.8 Foreclosed asset and workout expense.......... 23.4 20.3 14.5 3.7 Securities gains.............................. (4.2) (13.5) (10.5) (3.0) (1.7) Other non recurring (income)/expense items, net........................................ (1.0) 5.3 (1.9) 1.2 2.8 ------ ------ ------ ----- ----- Core earnings................................... $ 50.1 $ 46.3 $ 43.3 $45.8 $54.0 ====== ====== ====== ===== =====
9 11 SUPERVISION AND REGULATION SUPERVISION AND REGULATION OF THE COMPANY AND ITS SUBSIDIARIES GENERAL As a bank holding company registered under the Bank Holding Company Act of 1956, as amended, the Company is subject to substantial regulation and supervision by the Federal Reserve Board. As state-chartered banks, USTC, USTrust and UST/Conn (collectively, the "Subsidiary Banks") are subject to substantial regulation and supervision by the FDIC and the applicable state bank regulatory agencies. Such activities are often intended primarily for the protection of depositors or are aimed at carrying-out broad public policy goals that may not be directly related to the financial services provided by the Company and its subsidiaries. Federal and state banking and other laws impose a number of requirements and restrictions on the business operations, investments and other activities of depository institutions and their affiliates. BANK REGULATORY AGREEMENTS AND ORDERS In February 1992, USTC and USTrust entered into separate consent agreements and orders with the FDIC and the Massachusetts Commissioner. In mid-1992 and 1993, UST/Conn agreed to two addenda to its 1991 stipulation and agreement with the Connecticut Commissioner. The Company also entered into a written agreement with the Federal Reserve Bank of Boston (the "FRB-Boston") and the Massachusetts Commissioner in August 1992. (The foregoing are hereinafter collectively referred to as the "Regulatory Agreements.") In February 1994, the FDIC and the Massachusetts Commissioner terminated and lifted the Consent Agreement and Order with USTC. The Regulatory Agreements require that the Company and the Subsidiary Banks refrain from paying dividends without prior regulatory consent and the Company has not paid a cash dividend to its stockholders since July 1991. Despite the termination of its Regulatory Agreement, USTC has agreed to continue to request regulatory consent prior to the payment of dividends. The Regulatory Agreements further require USTrust and UST/Conn to maintain Tier I leverage capital ratios at or in excess of 6%. Each of the Company's Subsidiary Banks is currently in compliance with its respective capital requirements. As provided in the Regulatory Agreements, the Company, USTrust and UST/Conn have instituted plans to reduce levels of non-performing assets and have developed written plans and policies concerning, among other matters, credit administration, loan review and intercompany transactions. USTrust and UST/Conn have also revised and expanded their investment and funds management policies as required by the Regulatory Agreements. Moreover, the Company has agreed to give the FRB-Boston and the Massachusetts Commissioner prior notice of certain significant expenditures and certain increases in management compensation. The Company has filed (and will continue to file) with the regulatory agencies a broad range of periodic reports. For a further discussion of the Regulatory Agreements, see Note 13 to Consolidated Financial Statements in the Company's 1994 8-K. For a discussion of capital in the context of the Regulatory Agreements, see "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Capital" in the Company's 10-K. For a discussion of related party transactions, see Note 14 to Consolidated Financial Statements in the Company's 1994 8-K. See "Incorporation of Certain Documents by Reference." POTENTIAL REGULATORY SANCTIONS Certain apparent and inadvertent violations of the insider lending provisions (and related lending limit provisions) of Regulation O of the FRB related to extensions of credit by USTrust to Director Francis X. Messina have led the FDIC to require that corrective action be taken and to advise USTrust orally that the FDIC may consider the imposition of civil money penalties with respect to such matters. No FDIC representative has suggested to USTrust or the Company that there was any willful or intentional misconduct on the part of USTrust, Director Messina or USTrust's other institution-affiliated parties in connection with these matters. 10 12 To address these issues, USTrust and Director Messina have undertaken a program to reduce the aggregate balance of Mr. Messina's outstanding loans from USTrust and to improve the collateral support for the remaining outstanding loan balance. The elements of this program have been communicated to and reviewed by the FDIC. In furtherance of the program, since late 1993, the outstanding principal of the aggregate loans to Director Messina and his related interests has been reduced by more than $11 million from approximately $30 million to less than $19 million, and such loans are now below all applicable lending limits. To date, the Company has incurred no losses with respect to any of these loans, although they are characterized as "Substandard" in the Company's internal risk rating profile, and all such loans are current as to both principal and interest. There has been no further action taken by any bank regulatory agency to date. The FDIC has the authority to levy civil money penalties of various amounts for violations of law or regulations, orders and written conditions and agreements, which, depending upon the nature and severity of the violations, may be, in situations where conduct has been egregious, as high as $1 million per day for the period during which such violation continues. In connection with the apparent violations described above, the FDIC has the authority to impose penalties on any of USTrust, its Board of Directors, officers of the Bank, Director Messina personally, "institution-affiliated parties" of USTrust or any combination thereof. While it is not possible to predict with certainty the probability of penalties being assessed, the person or persons upon whom any penalty would be assessed or the amounts of any such penalties, were they to be assessed, management of the Company believes that it is unlikely that this matter will have a material adverse effect on its financial condition or results of operations. Consequently, no provision in respect of penalties has been made in the Company's Consolidated Financial Statements. See Note 15 to Consolidated Financial Statements in the Company's 1994 8-K. GENERAL SUPERVISION AND REGULATION The Company, as a bank holding company under the Bank Holding Company Act of 1956, as amended in 1970 (the "BHC Act"), is registered with the Federal Reserve Board and is regulated under the provisions of the BHC Act. Under the BHC Act the Company is prohibited, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company which is not a bank and from engaging in any business other than that of banking, managing or controlling banks or furnishing services to, or acquiring premises for, its affiliated banks, except that the Company may engage in and own voting shares of companies engaging in certain activities determined by the Federal Reserve Board, by order or by regulation, to be so closely related to banking or to managing or controlling banks "as to be a proper incident thereto." The location of non-bank subsidiaries of the Company is not restricted geographically under the BHC Act. In 1989, after the passage of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), the Federal Reserve Board amended its regulations under the BHC Act to permit bank holding companies, as a non-banking activity, to own and operate savings associations without geographical restrictions. The Company is required by the BHC Act to file with the Federal Reserve Board an annual report and such additional reports as the Federal Reserve Board may require. The Federal Reserve Board also makes examinations of the Company and its subsidiaries. The BHC Act requires every bank holding company to obtain the prior approval of the Federal Reserve Board before it may acquire substantially all of the assets of any bank, or ownership or control of any voting shares of any bank, if, after such acquisition, it would own or control, directly or indirectly, more than 5% of the voting shares of such bank. Because the Company is also a bank holding company under the Massachusetts General Laws, the Massachusetts Commissioner has authority to require certain reports from the Company from time-to-time and to examine the Company and each of its subsidiaries. The Massachusetts Commissioner also has enforcement powers designed to prevent banks from engaging in unfair methods of competition or unfair or deceptive acts or practices involving consumer transactions. Prior approval of the Massachusetts Board of Bank Incorporation is also required before the Company may acquire any additional commercial banks 11 13 located in Massachusetts or in those states which permit acquisitions of banking institutions located in their states by Massachusetts bank holding companies. The Connecticut General Statutes require that the Company furnish to the Connecticut Commissioner such reports as the Connecticut Commissioner deems appropriate to the proper supervision of the Company. The Connecticut Commissioner is also authorized to make examinations of the Company and its Connecticut subsidiaries including UST/Conn, and to order the Company to cease and desist from engaging in any activity which constitutes a serious risk to the financial safety, soundness or stability of a Connecticut subsidiary bank, or is inconsistent with sound banking principles or the provisions of Chapter 658 (the banking statute) of the Connecticut General Statutes. The Subsidiary Banks, whose deposits are insured by the FDIC, and the subsidiaries of such banks are subject to a number of regulatory restrictions, including certain restrictions upon: (i) extensions of credit to the Company and the Company's non-banking affiliates (collectively with the Company, the "Affiliates"), (ii) the purchase of assets from Affiliates, (iii) the issuance of a guarantee, acceptance of letter of credit on behalf of Affiliates and (iv) investments in stock or other securities issued by Affiliates or acceptance thereof as collateral for an extension of credit. In addition, all transactions among the Company and its direct and indirect subsidiaries must be made on an arm's length basis and valued on fair market terms. The Subsidiary Banks pay substantial deposit insurance premiums to the FDIC. Such deposit premium rates were substantially increased in 1992. They were further increased for the first half of 1993 and decreased in the second half of 1993 pursuant to regulations issued under the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). Federal Reserve Board policy requires bank holding companies to serve as a source of strength to their subsidiary banks by standing ready to use available resources to provide adequate capital funds to subsidiary banks during periods of financial stress or adversity. A bank holding company also can be liable under certain provisions of FDICIA for the capital deficiencies of an undercapitalized bank subsidiary. In the event of a bank holding company's bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, the trustee will be deemed to have assumed and is required to cure immediately any deficit under any commitment by the debtor to any of the federal banking agencies to maintain the capital of an insured depository institution, and any claim for breach of such obligation will generally have priority over most other unsecured claims. Under the cross-guarantee provisions of the Federal Deposit Insurance Act, if any or all of the Subsidiary Banks were placed in conservatorship or receivership, the Company, as sole stockholder, would likely lose its investment in the applicable Subsidiary Bank or Subsidiary Banks. The Company and all its subsidiaries are also subject to certain restrictions with respect to engaging in the issue, flotation, underwriting, public sale or distribution of certain types of securities. In addition, under both Section 106 of the 1970 Amendments to the BHC Act and regulations which have been issued by the Federal Reserve Board, the Company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, lease or sale of any property or the furnishing of any service. Various consumer laws and regulations also affect the operations of the Subsidiary Banks. The Subsidiary Banks, two of which are chartered under Massachusetts law and one of which is chartered under Connecticut law, are subject to federal requirements to maintain cash reserves against deposits, and to state mandated restrictions upon the nature and amount of loans which may be made by the banks (including restrictions upon loans to "insiders" of the Company and its subsidiary banks) as well as to restrictions relating to dividends, investments, branching and other bank activities. FDICIA prescribes the supervisory and regulatory actions that will be taken against undercapitalized insured depository institutions for the purposes of promptly resolving problems at such institutions at the least possible long-term loss to the FDIC. Five categories of depository institutions have been established by FDICIA in accordance with their capital levels: "well capitalized", "adequately capitalized", "undercapitalized", "significantly undercapitalized" and "critically undercapitalized". The federal banking agencies have adopted uniform regulations to implement the prompt regulatory action provisions of FDICIA. 12 14 Under the uniform regulations, a well-capitalized institution has a minimum tier 1 capital-to-total risk-based assets ratio of 6 percent, a minimum total capital-to-total risk-based assets ratio of 10 percent and a minimum leverage ratio of 5 percent and is not subject to any written capital order or directive. An adequately capitalized institution meets all of its minimum capital requirements under the existing capital adequacy guidelines. An undercapitalized institution is one that fails to meet any one of the three minimum capital requirements. A significantly undercapitalized institution has a tier 1 capital-to-total risk-based assets ratio of less than 3 percent, a tier 1 leverage ratio of less than 3 percent or a total capital-to-total risk-based assets ratio of less than 6 percent. A critically undercapitalized institution has a tier l leverage ratio of 2 percent or less. An institution whose capital ratios meet the criteria for a well-capitalized institution may be classified as an adequately capitalized institution due to qualitative and/or quantitative factors other than capital adequacy. An adequately capitalized institution or undercapitalized institution, may under certain circumstances, be required to comply with supervisory action as it if were in the next lower category. An undercapitalized institution is required to submit a capital restoration plan for acceptance by the appropriate federal banking agency and will be subject to close monitoring of both its condition and compliance with, and progress made pursuant to, its capital restoration plan. The capital restoration plan will be accepted only if (i) it specifies the steps that will be taken to become adequately capitalized and the activities in which the institution will engage, (ii) it is based upon realistic assumptions and its likely to succeed in restoring the institution's capital, (iii) it does not appreciably increase the institution's risk exposure and (iv) each holding company that controls the institution provides appropriate assurances of performance and guaranties that the institution will comply with the plan until the institution is adequately capitalized on an average basis for each of four consecutive quarters. Liability under the guaranty is the lesser of (i) five percent of the institution's total assets at the time it become undercapitalized and (ii) the amount necessary to bring the institution into compliance with all applicable capital standards as of the time the institution fails to comply with the plan. An institution that fails to submit an acceptable plan may be placed into conservatorship or receivership unless its capital restoration plan is accepted. An undercapitalized institution will also be subject to restrictions on asset growth, acquisitions, branching, new activities, capital distributions and the payment of management fees. FDICIA requires the appropriate regulatory agencies to take one or more specific actions against significantly undercapitalized institutions and undercapitalized institutions that fail to submit capital restoration plans, which actions include but are not limited to (i) requiring the institution to sell shares or other obligations to raise capital, (ii) limiting deposit interest rates, (iii) requiring the election of a new board of directors and/or dismissing senior executive officers and directors who held such positions for more than 180 days before the institution became undercapitalized, (iv) prohibiting receipt of deposits from correspondent banks, (v) requiring divestiture or liquidation of one or more subsidiaries and (vi) requiring the parent company to divest the institution if such divestiture will improve the institution's financial condition and future prospects. In addition, an insured institution that receives a less-than-satisfactory rating for asset quality, management, earnings or liquidity may be deemed by its appropriate federal banking regulator to be engaging in an unsafe or unsound practice for purposes of issuing an order to cease and desist or to take certain affirmative actions. If the unsafe or unsound practice is likely to weaken the institution, cause insolvency or substantial dissipation of assets or earnings or otherwise seriously prejudice the interest of depositors or the FDIC, a receiver or conservator could be appointed. Finally, subject to certain exceptions, FDICIA requires critically undercapitalized institutions to be placed into receivership or conservatorship within 90 days after becoming critically undercapitalized. The Federal Reserve Board has indicated that it will consult with each federal banking agency regulating the bank subsidiaries of a holding company to monitor required supervisory actions, and based upon an assessment of these developments, will take appropriate action at the holding company level. Under FDICIA, federal bank regulators are also required to see that changes are made in the operations and/or management of a bank or bank holding company if the financial institution is deemed to be "undercapitalized." Under FDICIA, a depository institution that is "adequately capitalized" but not "well capitalized" is generally prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market. In addition, "pass through" insurance coverage may not be 13 15 available for certain employee benefit accounts. The Company believes that the application of these limitations to it would not have a material effect on its funding or liquidity. USTC is currently classified as "well capitalized" and USTrust and UST/Conn are each currently classified as "adequately capitalized." New regulations adopted pursuant to FDICIA include: (1) real estate lending standards for depository institutions, which provide guidelines concerning loan-to-value ratios for various types of real estate loans; (2) rules requiring depository institutions to develop and implement internal procedures to evaluate and control credit and settlement exposure to their correspondent banks; (3) rules implementing the FDICIA provisions prohibiting, with certain exceptions, insured state banks from making equity investments or engaging in activities of the types and amounts not permissible for national banks; and (4) rules and guidelines for enhanced financial reporting and audit requirements. Rules currently proposed for adoption pursuant to FDICIA include: (1) revisions to the risk-based capital guidelines regarding interest rate risk, concentrations of credit risk and the risks posed by "non-traditional activities"; and (2) rules addressing various "safety and soundness" issues, including operations and managerial standards, standards for asset quality, earnings and stock valuations, and compensation standards. See "Risk Factors -- Proposed New Standards on Safety and Soundness." The status of the Company as a registered bank holding company does not exempt it from certain federal and state laws and regulations applicable to corporations generally, including, without limitation, certain provisions of the federal securities laws and the Massachusetts corporate laws. With the passage of FIRREA in 1989, the Crime Control Act in 1990 and FDICIA in 1991, federal bank regulatory agencies including the Federal Reserve Board and the FDIC were granted substantially broader enforcement powers to restrict the activities of financial institutions and to impose or seek the imposition of increased civil and/or criminal penalties upon financial institutions, the individuals who manage or control such institutions and "institution affiliated parties" of such entities. Pursuant to the Community Reinvestment Act ("CRA"), federal regulatory authorities review the performance of the Company and its subsidiary banks in meeting the credit needs of the communities served by the subsidiary banks. The applicable federal regulatory authority considers compliance with this law in connection with applications for, among other things, approval of branches, branch relocations and acquisitions of banks and bank holding companies. USTrust's current CRA rating is "outstanding" and UST/Conn's current CRA rating is "satisfactory." The FDIC has determined that it will no longer examine USTC, which focuses upon trust and asset management activities, for CRA compliance. The Massachusetts Commissioner has not yet determined whether it will continue to examine USTC for CRA compliance. Supervision, regulation and examination of the Subsidiary Banks by the bank regulatory agencies are not intended for the protection of the Company's security holders. From time-to-time various proposals are made in the United States Congress as well as state legislatures which would alter the powers of, and place restrictions on, different types of bank organizations as well as bank and nonbank activities. Such legislative proposals include interstate branching and expansion of bank powers. It is impossible to predict whether any of the proposals will be adopted and the impact of such adoption on the business of the Company or its subsidiaries. GOVERNMENTAL POLICIES AND ECONOMIC CONDITIONS The earnings and business of the Company's subsidiaries are and will be affected by a number of external influences, including general economic conditions in the United States and particularly in New England and the policies of various regulatory authorities of the United States, including the Federal Reserve Board. The Federal Reserve Board regulates the supply of money and of bank credit to influence general economic conditions within the United States and throughout the world. From time-to-time, the Federal Reserve Board takes specific steps to dampen domestic inflation and to control the country's money supply. The instruments of monetary policy employed by the Federal Reserve Board for these purposes (including the level of cash reserves banks, including non-member banks such as all three of the Company's banking subsidiaries, are required to maintain against deposits) influence in various ways the interest rates paid on interest-bearing liabilities and the interest received on earning assets, and the overall level of bank loans, investments and 14 16 deposits. The impact upon the future business and earnings of the Company of prospective domestic economic conditions, and of the policies of the Federal Reserve Board as well as other U.S. regulatory authorities, cannot be predicted accurately. LEGAL PROCEEDINGS In the ordinary course of operations, the Company and its subsidiaries become defendants in a variety of judiciary and administrative proceedings. In the opinion of management, however, other than as noted above under "Supervision and Regulation -- Potential Regulatory Sanctions," there is no proceeding pending, or to the knowledge of management threatened, which in the event of an adverse decision would be likely to result in a material adverse change in the possible condition of results of operations of the Company and its subsidiaries. MANAGEMENT BOARD OF DIRECTORS Detailed information regarding each director of the Company is set out on pages 3 through 6, in the 1993 Annual Meeting Proxy Statement under the caption "Persons to be Nominated by Management for Election as Directors" which is hereby incorporated by reference. Charles M. Goldman, who is 91 years old, retired and ceased to be a Director as of June 22, 1993 and was elected Director Emeritus of the Company as of that date. Additionally, William Schwartz, Chairman of the Company and Vice Chairman of the Board of Directors, agreed with Fox-Pitt Kelton, Inc. ("FPK") (placement agent for the $22 million overseas equity placement completed by the Company in August 1993) that Mr. Schwartz would recommend to the Board of Directors that FPK be granted the right to nominate one director deemed suitable by both FPK and the Company for election to the Board. Mr. Schwartz made such a recommendation and it was accepted by the Board. As of February 28, 1994, no nominee had yet been suggested by FPK. Separately, in January 1994, Robert L. Culver (age 48), Treasurer and Chief Financial Officer of Northeastern University, joined the Board of Directors of the Company. PRINCIPAL SHAREHOLDERS Management of the Company is unaware of any shareholder that beneficially owned more than 5% of the Common Stock as of February 28, 1994. The Company is unaware of any arrangements the operation of which may at a subsequent date result in a change in control of the Company. COMPENSATION OF DIRECTORS, EXECUTIVE COMPENSATION AND BENEFIT PLAN Information concerning compensation of the Company's executive officers and directors and the Company's other remuneration plans is set out on pages 13 through 22 of the 1993 Annual Meeting Proxy Statement under the caption "Compensation of Executive Officers" which is hereby incorporated by reference. EXECUTIVE OFFICERS OF THE COMPANY EXECUTIVE POLICY COMMITTEE In 1987, the Board of Directors of the Company created an Executive Policy Committee which is the primary management forum of the Company for all strategic and policy decisions. All decisions of the Executive Policy Committee are subject to the review and approval of the Board of Directors of the Company. The Executive Policy Committee has been directed by the Board of Directors to make recommendations to the Board concerning adoption of policies, strategies and programs concerning the following, among other matters: (a) acquisitions and dispositions of corporate entities, assets and/or investments; (b) the issuance of equity and/or debt; (c) engaging in new business activities; (d) the hiring, termination, training and motivation of senior management; (e) the development of marketing programs concerning financial services; 15 17 (f) improvements to operations, service delivery and implementation of procedures for cost control; (g) improvements to the financial reporting and financial controls systems; (h) improvements to the business information systems; and (i) improvements concerning risk management and legal and regulatory compliance programs. As of February 28, 1994, there were 11 members of the Executive Policy Committee. The members of the Committee are identified and the background of each Committee member is set forth below under "Executive Officers." EXECUTIVE OFFICERS The names and ages of the executive officers of the Company and each executive officer's position with the Company and its subsidiaries are listed below. Each such executive officer is elected annually by the Directors of the Company (or the Directors of the applicable subsidiary of the Company) and serves until his or her successor is duly chosen and qualified or until his or her earlier death, removal or disqualification.
POSITIONS AND OFFICES WITH THE COMPANY (AND/OR WHERE APPROPRIATE, NAME (AGE) POSITION WITH ONE OF THE COMPANY'S SUBSIDIARIES) ---------- ---------------------------------------------------- *Neal F. Finnegan (55)........... President and Chief Executive Officer, and Director of the Company William Schwartz (61)........... Chairman of the Company and Vice Chairman of the Board of Directors of the Company Paul M. Siskind (79)............ Chairman of the Board of Directors of the Company *Walter E. Huskins, Jr. (54)..... Executive Vice President/Administration of the Company *Domenic Colasacco (45).......... Executive Vice President and Director of the Company and Chairman and President of USTC *Eric R. Fischer (48)............ Executive Vice President, General Counsel and Clerk of the Company and Executive Vice President, General Counsel and Secretary of USTrust and USTC *William C. Brooks (57).......... Senior Vice President, Treasurer, and Chief Financial Officer of the Company *Linda J. Lerner (49)............ Senior Vice President/Human Resources of the Company *Theodore M. Shediac (54)........ Chairman of the Board, USTrust *Kathie S. Stevens (43).......... Executive Vice President and Senior Lending Officer, USTrust *Kenneth L. Sullivan (57......... President, UST Data Services Corp. *Robert T. McAlear (51).......... Vice Chairman, USTrust *Katherine C. Armstrong (48)..... Senior Vice President/Credit Administration of the Company George T. Clarke (47)........... Vice President and Controller of the Company P. Clarke Dwyer (62)............ Senior Vice President/Loan Review of the Company - --------------- *Member, Executive Policy Committee
The following sets forth the principal occupation during the past five years of each of the executive officers of the Company. Mr. Finnegan has served as President and Chief Executive Officer of the Company since April 1993. During the prior five years, Mr. Finnegan was Executive Vice President in charge of Private Banking at Bankers Trust Company, New York, New York. From 1986 to 1988, Mr. Finnegan was President and Chief Operating Officer of Bowery Savings Bank in New York City. From 1982 to 1986 he was Vice Chairman of Shawmut Corporation in Boston. Mr. Finnegan also serves as Vice Chairman of the Board of Trustees of Northeastern University. Mr. Finnegan is also a Director and President of USTrust and a Director and Chairman of the Executive Committee of USTC. 16 18 Mr. Schwartz has served as Chairman of the Company since April 1993. Mr. Schwartz has been Vice Chairman of the Board of Directors of the Company since 1981. Mr. Schwartz is Vice President/Academic Affairs at Yeshiva University and is of counsel to the New York law firm of Cadwalader, Wickersham & Taft. Mr. Schwartz formerly served as Dean of Boston University School of Law. Mr. Siskind has served as Chairman of the Board of the Company since 1967. He was Chief Operating Officer of the Company from 1976 through 1984 and General Counsel of the Company in 1984 and 1985. From 1966 through 1976, Mr. Siskind served as Dean of Boston University School of Law. Mr. Huskins was elected Executive Vice President/Administration of the Company in August 1993. Mr. Huskins is also responsible for the leasing and retail banking activities of the Company. Prior to joining the Company, Mr. Huskins served as President, Sterling Protection Company, Watertown, MA (security systems) from 1990 to 1993 and as Vice Chairman of Chancellor Corporation, Boston, MA (leasing) from 1977 to 1989. Mr. Colasacco was elected Executive Vice President and a Director of the Company in 1990. In 1993, he was also elected Chairman of the Board and President of USTC. Prior to that time, he served as an Executive Vice President of USTC. He also directs the asset management and investment activities of the Company and its subsidiaries. Mr. Colasacco has been an officer of the Company or of one of its subsidiaries since 1974. Mr. Fischer was elected Executive Vice President, General Counsel and Clerk of the Company in 1992. Prior to 1992, he served as Senior Vice President, General Counsel and Assistant Clerk of the Company. Before joining the Company in 1986, he served as Assistant General Counsel of Bank of Boston Corporation and its principal subsidiary, The First National Bank of Boston. Mr. Fischer is, and has been since 1984, a member of the faculty of the Morin Center for Banking Law Studies of Boston University School of Law. He also serves as Executive Vice President, General Counsel and Secretary of USTC and USTrust, as a Director and Clerk of UST Leasing Corporation, as Clerk of UST Data Services Corp. and UST Capital Corp. and as Assistant Secretary of UST Bank/Connecticut. Mr. Brooks has been a Senior Vice President of the Company since 1984 and Treasurer since 1980. He is Chairman of the Asset and Liability Management Committee of the Company. In addition, he serves as a Director of UST Data Services Corp. and as a Director and Treasurer of UST Leasing Corporation. Mr. Brooks has been an officer of the Company since 1967. Ms. Lerner has served as Senior Vice President of the Company since she joined the Company in 1988. She directs the Human Resources activities of the Company. Prior to her joining the Company, Ms. Lerner served in a similar capacity for the Provident Institution for Savings in Boston. Mr. Shediac was elected Chairman of the Board of USTrust in 1993. Prior to that time, he served as President of USTrust. His primary responsibilities involve the retail banking operations of the Company's banking subsidiaries. Mr. Shediac has been an officer of the Company or its subsidiaries since 1980. Ms. Stevens was elected Executive Vice President and Senior Lending Officer of USTrust in 1993. Since joining the Company in 1985 and until 1993, Ms. Stevens served in the commercial banking function of USTC as Senior Vice President from 1985 through 1990 and as Executive Vice President from 1990 until 1993. Mr. Sullivan has served as President of UST Data Services Corp. since he joined the Company in 1988. In that capacity, he has responsibility for the data processing and information systems of the Company as well as for its operations activities. Prior to 1988, Mr. Sullivan served as Executive Vice President of Operations with Bankbanks Systems, Inc. in Waltham, MA. Mr. McAlear has served as Vice Chairman of USTrust since he joined the Company in 1990. His primary responsibilities involve the supervision of the controlled loan and real estate lending and workout functions of USTrust and the Company. Prior to 1990, Mr. McAlear served as an Executive Vice President in the lending area of the Bank of New England. 17 19 Ms. Armstrong was named Senior Vice President/Credit Administration of USTrust in February 1994. She has served in the credit administration and credit risk control functions of USTrust since she joined the Company in 1985. Ms. Armstrong is the Chairman of the Senior Credit Committee of the Company and USTrust. Mr. Clarke has served as Vice President and Controller of the Company since 1988. Prior to joining the Company, Mr. Clarke was Deputy Comptroller of The First National Bank of Boston. Mr. Dwyer was elected Senior Vice President/Chief Loan Review Officer of the Company in August 1993. Prior to joining the Company, Mr. Dwyer served as Senior Vice President/Loan Workout at First New Hampshire Bank, Manchester NH from 1990 through mid-1993. Prior to 1990, Mr. Dwyer was Senior Vice President/Corporate Credit Review at Shawmut Bank, N.A. in Boston, MA. There are no arrangements or understandings between any executive officer and any other person pursuant to which he or she was selected as an executive officer. DESCRIPTION OF CAPITAL SECURITIES THE COMPANY'S COMMON STOCK The Company is authorized by its Articles of Organization to issue 30,000,000 shares of Common Stock. On January 31, 1994, there were outstanding 17,322,646 shares of Common Stock. Dividend Rights. The ability of the Company and its bank subsidiaries to pay dividends is subject to certain limitations imposed by statutes of the Commonwealth of Massachusetts and by agreements with the Company's banking regulators. Generally, with respect to the bank subsidiaries, the payment of dividends is limited by statute to the amount of retained earnings, after deducting losses and statutorily defined bad debts in excess of established allowances for loan losses. Under the regulatory agreements and orders to which the Company, US Trust and UST/Conn are subject (and pursuant to a vote of the Board of Directors of USTC), no dividend may be paid by the Company to its shareholders or by the bank subsidiaries to the Company, without prior written approval of the applicable regulatory agencies. Voting Rights. Holders of Common Stock are entitled to one vote for each share on all matters voted upon by stockholders. Shares of Common Stock have non-cumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of directors can elect 100% of the directors if they chose to do so. Preemptive Rights. Authorized shares of Common Stock may be issued at any time, and from time to time, in such amounts and for such consideration as may be fixed by the Board of Directors. No holder of the Common Stock has any preemptive or preferential right to purchase or to subscribe for any shares of capital stock or other securities which may be issued by the Company. Liquidation Rights. In the event of any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of Common Stock are entitled to share, on a share-for-share basis, in any of the assets of the Company legally available for distribution to such shareholders after the payment of all debts and other liabilities of the Company and any preferential amounts attributable to any preferred stock that may then be outstanding. Assessments. Outstanding shares of Common Stock, including the Shares, are fully paid and nonassessable. Staggered Board of Directors. The Company's Articles of Organization and By-Laws provide in accordance with Section 50A of Chapter 156B of the Massachusetts General Laws ("Section 50A") for a Board of Directors of such number, to be fixed by the stockholders, as is a multiple of three, serving staggered three-year terms. A Director may be removed only for cause, as such term is defined in Section 50A. Transfer Agent and Registrar. USTC, 30 Court Street, Boston, Massachusetts 02108 serves as transfer agent and registrar for the Company's Common Stock. 18 20 THE COMPANY'S PREFERRED STOCK The Company is authorized by its Articles of Organization to issue 4,000,000 shares of preferred stock (the "Preferred Stock"), none of which were outstanding at January 31, 1994. General. The Preferred Stock is of a serial or "blank check" nature. Under Chapter 156B of the Massachusetts General Laws, after stockholder authorization of such a class of preferred stock, one or more series of preferred stock may be established and designated by action of the Board of Directors with varying rights, preferences and limitations and without further stockholder action. The Board of Directors may also fix the number of shares of the series. Series are established by the filing with the Secretary of State of the Commonwealth of Massachusetts of a certificate which is made a part of the filing company's Articles of Organization and which sets forth the rights, preferences and limitations of the respective series. Dividend and Liquidation Rights. Each series of the Preferred Stock, when issued, would have preference over the Common Stock with respect to the payment of all dividends and distribution of assets in the event of liquidation or dissolution of the Company, and may have other preferences. Determination to be Made by the Board. The determinations for each series of Preferred Stock which would be made by the Board of Directors of the Company include (1) the number of shares to constitute such series, (2) the dividend rate or rates (or the manner of determining the same) on the shares of such series, (3) whether dividends shall be cumulative, (4) whether the shares of the series shall be redeemable and the terms thereof, (5) whether the shares of the series shall be convertible into other securities of the Company, including the Common Stock, and the terms and conditions thereof, (6) the special or relative rights of holders of shares of the series in the event of liquidation, distribution or sale of assets, dissolution or winding-up of the Company, (7) the terms of voting rights, if any, of shares of the series, (8) the title or designation of the series and (9) such other rights and privileges and any qualifications, limitations or restrictions of such rights or privileges of such series as may be permitted by applicable law. As noted above, before any series would be issued, a certificate setting forth the terms thereof would be authorized by the Board of Directors and filed pursuant to the MBCL but no further stockholder action would be required for the issuance of such authorized shares. SELLING STOCKHOLDER The following table sets forth certain information provided to the Company by the person offering shares of Company Common Stock pursuant to this Prospectus, including the number of shares of Company Common Stock beneficially owned by such person as of January 31, 1994, the number of shares of Company Common Stock offered for the account of such person pursuant to this Prospectus and the number of shares of Company Common Stock to be owned by such person after completion of the offering. The Selling Stockholder acquired the Common Stock being offered pursuant to this Prospectus in a transaction not involving the public offering of Common Stock.
SHARES TO BE SHARES SHARES TO BE OWNED AFTER BENEFICIALLY SOLD PURSUANT THE NAME AND ADDRESS OF SELLING STOCKHOLDER OWNED TO THIS PROSPECTUS OFFERING --------------------------------------- ------------ ------------------ ----------- Kidder, Peabody Group, Inc............................... 500,000 500,000 -- 10 Hanover Square New York, NY 10005
All expenses incurred in connection with the offering will be borne by the Company except brokerage commissions and discounts of underwriters, dealers or agents, if any, and counsel fees of counsel to the Selling Stockholder, if any, which will be borne by the Selling Stockholder. The Company has agreed to indemnify the Selling Stockholder (and any underwriter it may utilize) against certain liabilities arising out of this offering, including liabilities under the Securities Act. The Shares were purchased by the Selling Stockholder from the Company for cash pursuant to a Purchase Agreement between the Selling Stockholder and the Company dated as of June 1, 1993. Affiliates of the Selling Stockholder have performed various investment banking services for the Company in the past and may do so again in the future. Except as aforesaid and as set 19 21 forth in "Use of Proceeds," the Selling Stockholder has not had any position, office, or other material relationship with the Company or any of its predecessors or affiliates. PLAN OF DISTRIBUTION The Company will not receive any of the proceeds from this offering. The Shares may be sold from time to time to purchasers directly by the Selling Stockholder, through its subsidiary, which is a broker-dealer registered with the Securities and Exchange Commission under Section 15 of the Exchange Act, as amended, or by means of ordinary brokers' transactions on the NASDAQ National Market System or on any securities exchange on which the Shares may be listed. Alternatively, the Selling Stockholder may from time to time offer the Shares through other dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the Selling Stockholder and/or the purchasers of Shares for whom they may act as agent. The Shares may be sold from time to time in one or more transactions at market prices prevailing at the time of sale, at prices related to such prevailing market prices at the time of sale or at negotiated prices. Such prices will be determined by the Selling Stockholder or by agreement between the Selling Stockholder and such dealers or purchasers. If a dealer other than the Selling Stockholder subsidiary is utilized in the sale of the Shares the Selling Stockholder will sell the Shares to the dealer as principal. The dealer may then resell the Shares to the public at varying prices to be determined by the dealer at the time of sale. The Selling Stockholder's subsidiary, in the ordinary course of its business, makes a market in the Common Stock and may continue to do so during the period that the Shares are sold hereunder. As a result, from time to time, the subsidiary may own, in the aggregate, a significant amount of Common Stock. USE OF PROCEEDS The Company will not receive any of the proceeds of the offering. The Company has been required to pay the Selling Stockholder a monthly fee for each month (or fraction of a month) commencing December 2, 1993 during which the Registration Statement of which this Prospectus is a part was not effective. The aggregate fees paid by the Company to the Selling Stockholder pursuant to this requirement, through the date of this Prospectus, have been approximately $43,000. EXPERTS The consolidated financial statements incorporated by reference in this prospectus and elsewhere in the registration statement have been audited by Arthur Andersen & Co., independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. LEGAL OPINION The validity of the issuance of the Common Stock offered hereby on behalf of the Selling Stockholder has been passed upon by Eric R. Fischer, Esq., General Counsel of the Company. 20 22 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The expenses to be incurred by the Company in connection with the registration of the securities being offered hereby are estimated as follows (the Selling Stockholder will not bear any portion of such expenses): SEC Registration Fee..................................................... $ 2,145.00 Legal Fees and Disbursements............................................. 20,000.00 Accounting Fees.......................................................... 25,000.00 Miscellaneous............................................................ 4,855.00 ---------- TOTAL.......................................................... $52,000.00 ==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 67 of Chapter 156B of the Massachusetts General Laws empowers a corporation to indemnify any director, officer, employee or other agent of the corporation to whatever extent specified in or authorized by its articles of organization (or a by-law or a vote adopted by stockholders). Article 6 of the Restated Articles of Organization of the Registrant provides indemnity to the Registrant's directors and officers to the fullest extent legally permissible, against all liabilities, costs and expenses incurred by the director or officer in connection with the defense or disposition or otherwise in connection with any action or proceeding in which the director or officer is involved or threatened by reason of being or having been a director or officer, or by reason of any action taken or not taken in that capacity, unless the director or officer shall have been finally adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Registrant. Article 6 also mandates the advancement of expenses, including counsel fees, by the Registrant to any person defending such an action or proceeding, upon receipt of an undertaking by the person to repay the advances if it shall ultimately be determined that indemnification of such expenses is not authorized under the foregoing standard. With respect to matters disposed of by settlement, indemnification is permitted only if the settlement is approved as in the best interests of the Registrant (a) by vote of a majority of disinterested directors then in office (even though less than a quorum), (b) by any disinterested person(s) to whom the question may be referred by a vote of a majority of such disinterested directors, (c) by vote of the holders of the majority of the then outstanding voting stock (excluding shares owned by any interested person) or (d) by any disinterested person(s) to whom the question may be referred by vote of the holders of a majority of such stock. II-1 23 ITEM 16. EXHIBITS The following exhibits are filed herewith or incorporated by reference herein:
EXHIBIT REPORT OR REGISTRATION STATEMENT NO. DESCRIPTION IN WHICH DOCUMENT IS CONTAINED - ------- ----------- -------------------------------- 4.1 Restated Articles of Organization of the Filed herewith Registrant as amended 4.2 By-laws of the Registrant as amended to Filed herewith date 4.3 Specimen of the Registrant's Common Stock Filed as Exhibit 4.1 to Registrant's Certificate* Registration Statement No. 2-67787 on Form S-1 5 Opinion of Eric R. Fischer, Esq., as to Filed herewith the validity of the Common Stock 23.1 Consent of Arthur Andersen & Co. Filed herewith 23.2 Consent of Eric R. Fischer, Esq. Contained in his opinion, filed as Exhibit 5 24 Power of Attorney Contained on signature page hereof - --------------- * Incorporated by reference.
ITEM 17. UNDERTAKINGS (A) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, as amended (the "Securities Act"), each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (B) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Exchange Act that is incorporated by reference in the registration statement) shall be deemed to be a new registration statement relating to the securities II-2 24 offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 25 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Boston, Massachusetts on February 15, 1994. UST CORP. By: /s/ NEAL F. FINNEGAN ------------------------------- Neal F. Finnegan Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons on February 15, 1994 in the capacities indicated. Each person whose signature appears below hereby, authorizes Neal F. Finnegan, Paul M. Siskind and Eric R. Fischer and each of them acting individually with full power of substitution to file one or more amendments, including post-effective amendments, to this registration statement, which amendments may make such changes as they deem appropriate, and each person whose signature appears below, individually and in each capacity stated below, hereby appoints Neal F. Finnegan, Paul M. Siskind and Eric R. Fischer and each of them acting individually, with full power of substitution, as Attorney-in-Fact to execute his name and on his behalf to file any such amendments to this registration statement.
SIGNATURE TITLE --------- ----- /s/ NEAL F. FINNEGAN Chief Executive Officer and Director - --------------------------------------------- (principal executive officer) Neal F. Finnegan /s/ WILLIAM C. BROOKS Senior Vice President and Treasurer - --------------------------------------------- (principal financial and accounting officer) William C. Brooks /s/ JAMES M. BREINER - --------------------------------------------- Director James M. Breiner /s/ DOMENIC COLASACCO - --------------------------------------------- Director Domenic Colasacco /s/ ROBERT L. CULVER - --------------------------------------------- Director Robert L. Culver - --------------------------------------------- Director Louis T. Falcone
II-4 26
SIGNATURE TITLE --------- ----- /s/ WALTER A. GULESERIAN - --------------------------------------------- Director Walter A. Guleserian - --------------------------------------------- Director Wallace M. Haselton /s/ FRANCIS X. MESSINA - --------------------------------------------- Director Francis X. Messina /s/ GERALD M. RIDGE - --------------------------------------------- Director Gerald M. Ridge /s/ WILLIAM SCHWARTZ - --------------------------------------------- Director William Schwartz /s/ SAMUEL B. SHELDON - --------------------------------------------- Director Samuel B. Sheldon /s/ JAMES V. SIDELL - --------------------------------------------- Director James V. Sidell /s/ PAUL M. SISKIND - --------------------------------------------- Director Paul M. Siskind /s/ PAUL D. SLATER - --------------------------------------------- Director Paul D. Slater /s/ MICHAEL J. VERROCHI - --------------------------------------------- Director Michael J. Verrochi
II-5 EX-4.1 2 RESTATED ARTICLES OF INCORPORATION 1 FORM CD-74-10M-10-79-152328 EXHIBIT 4.1 THE COMMONWEALTH OF MASSACHUSETTS [LETTERHEAD] MICHAEL JOSEPH CONNOLLY FEDERAL IDENTIFICATION Secretary of State NO. 04-2436093 ONE ASHBURTON PLACE, BOSTON, MASS: 02108 RESTATED ARTICLES OF ORGANIZATION GENERAL LAWS, CHAPTER 156B, SECTION 74 This certifcate must be submitted to the Secretary of the Commonweatlh within sixty days after the date of the vote of stockholders adopting the restated articles of organization. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to the Commonwealth of Massachusetts. ------------------ We. James V. Sidell President, and Eric R. Fischer Assistant Clerk of UST Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Name of Corporation) 40 Court Street, Boston, Massachusetts 02108 located at . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . do hereby certify that the following restatement of the articles of organization of the corporation was duly adopted at a meeting held on May 17, 1988, by vote of the Board of Directors in accordance with M.G.L.C. 156B, Sec. 74. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Class of Stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Class of Stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Class of Stock) 1. The name by which the corporation shall be known is: UST Corp. 2. The purposes for which the corporation is formed are as follows: To purchase, receive, hold and own bonds, shares of capital stock, mortgages, debentures, notes and other securities, obligations, contracts and evidences of indebtedness of any private, public or municipal corporation or the government of the United States or any State, territory or colony thereof or of any foreign state or country; to receive, collect and dispose of interest, dividends and income upon and from any of the bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property held or owned by it and to exercise in respect of all such property any and all the rights, poweres and privileges of individual owners thereof. To carry on any business permitted by the laws of the Commonwealth of Massachusetts to a corporation organized under Chapter 156B and subject to Chapter 167A. Note: If the space provided under any article or item on this form is insufficient, additions shall be set forth on separate 81/2 x 11 sheets of paper leaving a left hand margin of at least 1 inch for binding. Additions to more than one article may be continued on a single sheet so long as each article requiring each such addition is clearly indicated. 2 3. The total number of shares and the par value, if any, of each class of stock which the corporation is authorized to issue is as follows:
WITHOUT PAR VALUE WITH PAR VALUE CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE Preferred NONE NONE NONE Common NONE 30,000,000 0.625
* 4. If more than one class is authorized, a description of each of the different classes of stock with, if any, the preferences, voting powers, qualifications, special or relative rights or privileges as to each class thereof and any series now established: NOT APPLICABLE * 5. The restrictions, if any, imposed by the articles of organization upon the transfer of shares of stock of any class are as follows: NONE * 6. Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors of stockholders, or of any class of stockholders: See attached Riders A and B. * If there are no such provisions, state "None". 3 RIDER A " LIABILITY OF DIRECTORS A Director of this Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability, provided, however, that this provision of Article 6 shall not eliminate the liability of a director to the extent such liability is imposed by applicable law (i) for any breach of the director's duty of loyalty to this Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the director derived an improper personal benefit, or (iv) for paying a dividend, approving a stock repurchase or making loans which are illegal under certain provisions of Massachusetts law, as the same exists or hereafter may be amended. If Massachusetts law is hereafter amended to authorize the further limitation of the legal liability of the directors of this Corporation, the liability of the directors shall then be deemed to be limited to the fullest extent then permitted by Massachusetts law as so amended. Any repeal or modification of this provision of Article 6 which may hereafter be effected by the stockholders of this Corporation shall be prospective only, and shall not adversely affect any limitation on the liabilty of a director for acts or omissions prior to such repeal or modification." 4 RIDER B "INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS The Corporation shall to the fullest extent legally permissible indemnify each person who is or was a director, officer, employee or other agent of the Corporation and each person who is or was serving at the request of the Corporation as a director, trustee, officer, employee or other agent of another corporation or of any partnership, joint venture, trust, employee benefit plan or other enterprise or organization against all liabilities, costs and expenses, including but not limited to amounts paid in satisfaction of judgments, in settlement or as fines and penalties, and counsel fees and disbursements, reasonably incurred by him in connection with the defense or disposition of or otherwise in connection with or resulting from any action, suit or other proceeding, whether civil, criminal, administrative or investigative, before any court or administrative or legislative or investigative body, in which he may be or may have been involved as a party or otherwise or with which he may be or may havee been threatened, while in office or thereafter, by reason of his being or having been such a director, officer, employee, agent or trustee, or by reason of any action taken or not taken in any such capacity, except with respect to any matter as to which he shall have been finally adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that his action was in the best interests of the Corporation (any person serving another organization in one or more of the indicated capacities at the request of the Corporation who shall not have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interest of such other organization shall be deemed so to have acted in good faith with respect to the Corporation) or to the extent that such matter relates to service with respect to an employee benefit plan, in the best interest of the participants or beneficiaries of such employee benefit plan. Expenses, including but not limited to counsel fees and disbursements, so incurred by any such person in defending any such action, suit or proceeding, shall be paid from time to time by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the person indemnified to repay the amounts so paid if it shall ultimately be detemined that indemnification of such expeses is not authorized hereunder. If, in an action, suit or proceeding brough by or in the name of the Corporation, a director of the Corporation is held not liable for monetary damages, whether because that director is relieved of personal liability under the provisions of this Article 6 of the Articles of Organization, or otherwise, that director shall be deemed to have met the standard of conduct set forth above and to be entitled to indemnification for expenses reasonably incurred in the defense of such action, suit or proceeding. 5 RIDER B Continued As to any matter disposed of by settlement by any such person, pursuant to a consent decree or otherwise, no such indemnification either for the amount of such settlement or for any other expenses shall be provided unless such settlement shall be approved as in the best interests of the Corporation, after notice that it involves such indemnification, (a) by vote of a majority of the disinterested directors then in office (even though the disinterested directors be less than a quorum), or (b) by any disinterested person or persons to whom the question may be referred by vote of a majority of such disintrested directors, or (c) by vote of the hodlers of a majority of the outstanding stock at the time entitled to vote for directors, voting as a single class, exclusive of any stock owned by any interested person, or (d) by any disinterested person or persons to whome the question may be referred by vote of the holders of a majority of such stock. No such approval shall prevent the recovery from any such officer, director, employee, agent or trustee of any amounts paid to him or on his behalf as indemnification in accordance with the preceding sentence if such person is subsequently adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that his action was in the best interests of the Corporation. The right of indemnification hereby provided shall not be exclusive of or affect any other rights to which any director, officer, employee, agent or trustee may be entitled or which may lawfully be granted to him. As used herein, the terms "director", "officer", "employee", "agent", and "trustee" include their respective executors, adminstrators and other legal representatives, an "interested" person is one against whom the action, suit or other proceeding in question or another action, suit or other proceeding on the same or similar grounds is then or had been pending or threatened, and a "disinterested" person is a person against whom no such action, suit or other proceeding is then or had been pending or threatened. By action of the board of directors, notwithstanding any interest of the directors in such action, the Corporation may purchase and maintain insurance, in such amounts as the board of directors may from time to time deem appropriate, on behalf of any person who is or was a director, officer, employee or other agent of the Corporation, or is or was serving at the request of the Corporation as director, trustee, officer, employee or other agent of another corporation or of any partnership, joint venture, trust, employee benefit plan or other enterprise or organization agianst any liability incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability." 6 "We further certify that the forgoing restated articles of organization effect no amendments to the articles of organization of the corporation as heretofore amended except amendments to the following articles.. . . . . . . . . . . . . None . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (*If there are no such amendments, state "None".) Briefly describe amendments in space below: N/A IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names this nineteenth day of May in the year 1988 /s/ JAMES V. SIDELLL, James V. Sidell . . . . . . . . . . . . . . . . . . . . . . . . . . . President /s/ ERIC R. FISCHER, Eric R. Fischer . . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Clerk 7 THE COMMONWEALTH OF MASSACHUSETTS RESTATED ARTICLES OF ORGANIZATION (GENERAL LAWS, CHAPTER 156B, SECTION 74) I hereby approve the within restated articles of organization and, the filing fee in the amount of $ 150.00 having been paid, said articles are deemed to have been filed with me this 25th day of May, 1988. MICHAEL JOSEPH CONNOLLY Secretary of State A TRUE COPY ATTEST [OFFICIAL STAMP WITH /S/ MICHAEL JOSEPH CONNELLY DATE 8/10/93 AND CLERK INITIALS] TO BE FILLED IN BY CORPORATION PHOTO COPY OF RESTAED ARTICLES OF ORGANIZAITON TO BE SENT TO: Eric R. Fischer Senior Vice President and General Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . UST Corp. 40 Court Street . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Boston, MA 02108 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (617) 726-7377 Telephone: . . . . . . . . . . . . . . . . . . . . . . . COPY MAILED 8 [TWO STARS] FORM CD-72-30M-4/86-808881 THE COMMONWEALTH OF MASSACHUSETTS [LETTERHEAD] OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE MICHAEL JOSEPH CONNELLY, SECRETARY FEDERAL IDENTIFICATION ONE ASHBURTON PLACE, BOSTON, MASS: 02108 NO. 04-2436093 ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 This certificate must be submitted to the Secretary of the Commonwealth within sixty days after the date of the vote of stockholders adopting the amendment. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to the Commonwealth of Massachusetts. ----------------- We. William C. Brooks Senior Vice President and Eric R. Fischer Assistant Clerk of UST Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Name of Corporation) 40 Court Street, Boston, MA 02108 located at . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . do hereby certify that the following amendment to the articles of organization of the corporation was duly adopted at a meeting held on May 21, 1991 by vote of 9,077,657 Common Stock . . . . . . . . . . . . shares of. . . . . . . . . . . . out of 13,089,148. . . . . . . . . . . . shares outstanding, (Class of Stock) . . . . . . . . . . . . shares of. . . . . . . . . . . . out of . . . . . . . . . . . . shares outstanding, and (Class of Stock) . . . . . . . . . . . . shares of. . . . . . . . . . . . out of . . . . . . . . . . . . shares outstanding, (Class of Stock)
CROSS OUT being at least two-thirds of each class outstanding and INAPPLICABLE entitled to vote thereon and of each class or series CLAUSE of stock whose rights are adversely affected thereby:* VOTED: To create a class of Preferred Stock consisting of 4,000,000 authorized shares with a par value of $1 per share. /initialized as "ERJ for UST Corp."/ * For amendments adopted pursuant to Chapter 156B Section 70 * For amendments adopted pursuant to Chapter 156B Section 71 Note: If the space provided under any Amendment or item on this form is insufficient, additions shall be set forth on separate 81/2 x 11 sheets of paper leaving a left hand margin of at least 1 inch for binding. Additions to more than one Amendment may be continued on a single sheet so long as each Amendment requiring each such addition is clearly indicated. 9 TO CHANGE the number of shares and the par value, if any, of each class of stock withing hte corporation fill in the following: The total presently authorized is:
NO PAR VALUE WITH PAR VALUE PAR KIND OF STOCK NUMBER OF SHARES NUBMER OF SHARES VALUE COMMON none 30,000,000 $0.625 PREFERRED none none none CHANGE the total to: NO PAR VALUE WITH PAR VALUE PAR KIND OF STOCK NUMBER OF SHARES NUBMER OF SHARES VALUE COMMON none 30,000,000 $0.625 PREFERRED none 4,000,000 $1
10 THE FOREGOING AMENDMENT WILL BECOME EFFECTIVE WHEN THESE ARTICLES OF AMENDEMNT ARE FILED IN ACCORDANCE WITH CHAPTER 156B, SECTION 6 OF THE GENERAL LAWS UNLESS THESE ARTICLES SPECIFY, IN ACCORDANCE WITH THE VOTE ADOPTING THE AMENDMENT, A LATER EFFECTIVE DATE NOT MORE THAN THIRTY DAYS AFTER SUCH FILING, IN WHICH EVENT THE AMENDMENT WILL BECOEM EFFECTIVE ON SUCH LATE DATE. IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names this 3rd day of July, in the year 1991 /s/ WILLIAM C. BROOKS , William C. Brooks, Sr. Vice President /s/ ERIC R. FISCHER , Eric R. Fischer, Assistant Clerk 11 367150 THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF AMENDMENT (General Laws, Chapter 156B, Section 72) I hereby approve the within articles of amendment and, the filing fee in the amount of $4,000.00 having been paid, said articles are deemed to have been filed with me this 3rd day of July, 1991. /s/ MICHAEL J. CONNELLY MICHAEL JOSEPH CONNELLY Secretary of State A TRUE COPY ATTEST [OFFICIAL STAMP WITH /S/ MICHAEL JOSEPH CONNELLY DATE 8/10/93 AND CLERK INITIALS] TO BE FILLED IN BY CORPORATION PHOTO COPY OF AMENDMENT TO BE SENT TO: Eric R. Fischer, Esq. Senior Vice President and General Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . UST Corp. 40 Court Street . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Boston, MA 02108 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (617) 726-7377 Telephone: . . . . . . . . . . . . . . . . . . . . . . . COPY MAILED 12 THE COMMONWEALTH OF MASSACHUSETTS [LETTERHEAD] OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE MICHAEL J. CONNELLY, SECRETARY FEDERAL IDENTIFICATION ONE ASHBURTON PLACE, BOSTON, MASS: 02108 NO. 04-2436093 ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 We. William C. Brooks Senior Vice President and Eric R. Fischer Clerk of UST Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (EXACT Name of Corporation) 40 Court Street, Boston, MA 02108 located at . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (MASSACHUSETTS Address of Corporation) do hereby certify that these ARTICLES OF AMENDMENT affecting Articles NUMBERED: 4 (Number those articles 1,2,3,4,5 and/or 6 being amended hereby) of the Articles of Organization were duly adopted at a meeting held on December 6, 1990 and adjourned and concluded December 18, 1990 by a vote of: 9,365,747 shares of Common Stock out of 12,996,940 shares outstanding and at a meeting held on May 21, 1991 by a vote of: 9,077,657 Common Stock . . . . . . . . . . . . shares of. . . . . . . . . . . . out of 13,089,148. . . . . . . . . . . . shares outstanding, type, class & series, (if any) . . . . . . . . . . . . shares of. . . . . . . . . . . . out of . . . . . . . . . . . . shares outstanding, and type, class & series, (if any) . . . . . . . . . . . . shares of. . . . . . . . . . . . out of . . . . . . . . . . . . shares outstanding, type, class & series, (if any)
CROSS OUT being at least two-thirds of each class outstanding and INAPPLICABLE entitled to vote thereon and of each type, class or series CLAUSE of stock whose rights are adversely affected thereby: 2 To amend Article IV of the Restated Articles of Organization as follows: See attached Continuation Page 1 C / / P / / M / / 1 For amendments adopted pursuant Chapter 156B Section 70 R.A. / / 2 For amendments adopted pursuant Chapter 156B Section 71 5 - ------- P.C. Note: If the space provided under any Amendment or item on this form is insufficient, additions shall be set forth on separate 81/2 x 11 sheets of paper leaving a left hand margin of at least 1 inch for binding. Additions to more than one amendment may be continued on a single sheet so long as each amendment requiring each such addition is clearly indicated. 13 TO CHANGE the number of shares and the par value, (if any), of any type, class or series of stock which the corporation is authorized to issue, fill in the following: Not applicable The total presently authorized is: WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE COMMON: COMMON: PREFERRED: PREFERRED: CHANGE the total authorized to: WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE COMMON: COMMON: PREFERRED: PREFERRED:
14 The foregoing amendment will become effective when these articles of amendemnt are filed in accordance with Chapter 156b, Section 6 of The General Laws unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such late date. LATER EFFECTIVE DATE: ___________________________ IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names this 24th day of December, in the year 1993. /s/ WILLIAM C. BROOKS , William C. Brooks, Senior Vice President /s/ ERIC R. FISCHER , Eric R. Fischer, Clerk 15 450100 THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF AMENDMENT (General Laws, Chapter 156B, Section 72) =============================================== I hereby approve the within articles of amendment and, the filing fee in the amount of $100.00 having been paid, said articles are deemed to have been filed with me this 24th day of December, 1993. /s/ MICHAEL JOSEPH CONNELLY MICHAEL J. CONNELLY Secretary of State TO BE FILLED IN BY CORPORATION PHOTOCOPY OF ARTICLES OF AMENDMENT TO BE SENT TO: Sonya M. Tsiros, Esq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bingham, Dana & Gould . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 Federal Street, Boston, MA 02110 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (617) 951-8000 Telephone: . . . . . . . . . . . . . . . . . . . . . . . 16 Continuation Page 1 (A) There shall be a class of common stock having a par value of $0.625 per share consisting of 30,000,000 shares. The holders of record of such common stock shall have one vote for each share of such common stock held by them, respectively. (B) There shall be a class of Preferred Stock consisting of 4,000,000 shares with a par value of $1.00 per share. The shares of the Preferred Stock are to be issuable at any time or from time to time in one or more series as and when established by the Board of Directors, each such series to have such designation, preferences, voting powers, qualifications and special or relative rights or privileges as may be fixed by the Directors prior to the issuance of any shares thereof, and each such series may differ from every other series already outstanding as may be determined by the Directors prior to the issuance of any shares thereof, including, but not limited to, any or all of the following: (a) the dividend rate or rates or the manner of determining the same to which holders of the Preferred Stock of any such series shall be entitled and whether dividends shall be cumulative or non-cumulative; (b) the terms and manner of the redemption by the Corporation of the Preferred Stock of any such series; (c) the special or relative rights of the holders of the Preferred Stock of any such series in the event of the voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up of the Corporation; (d) the terms of the sinking fund or redemption or purchase account, if any, to be provided for the Preferred Stock of any such series; (e) the right, if any, of the holders of Preferred Stock of any such series to convert the same into stock of any other class or classes or into other securities of the Corporation, and the terms and conditions of such conversion; (f) the voting rights, if any, of the holders of Preferred Stock of any such series; and (g) such other respects as may at the time of the authorization of such shares be permitted by applicable law. EX-4.2 3 BY LAWS 1 EXHIBIT 4.2 BY-LAWS OF UST CORP ARTICLE I STOCKHOLDERS 1. ANNUAL MEETING. The annual meeting of stockholders shall be held on the third Tuesday in May in each year (or if that be a legal holiday in the place where the meeting is to be held, on the next succeeding full business day) at 11:00 o'clock A.M. unless a different hour is fixed by the Directors or the President and stated in the notice of the meeting. The purposes for which the annual meeting is to be held, in addition to those prescribed by law, by the Articles of Organization or by this By-Laws, may be specified by the Directors or the President. If no annual meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu theeof, and any action taken at such meeting shall have the same effect as if taken at the annual meeting. 2. SPECIAL MEETINGS. Special meetings of stockholders may be called by the President or by the Directors. Upon written application of one or more stockholders who hold at least 10% of the capital stock entitled to vote at the meeting, special meetings shall be called by the Clerk, or in the case of the death, absence, incapacity or refusal of the Clerk, by any other officer. The call for the meeting shall state the date, hour and place and the purposes of the meeting. 3. PLACE OF MEETINGS. All meetings of stockholders shall be held at the principal office of the corporation unless a different place (within the United States) is fixed by the Directors or the President and stated in the notice of the meeting. 4. NOTICE OF MEETINGS. A written notice of every meeting of stockholders, stating the place, date and hour thereof, and the purposes for which the meeting is to be held, shall be given by the Clerk or by the person calling the meeting at least seven days before the meeting to each stockholder entitled to vote thereat and to each stockholder, who by law, by the Articles of Organization or by these By-Laws is entitled to such notice, by leaving such notice with him or at his residence or usual place of business, or by mailing it postage prepaid and addressed to such stockholder at his address as it appears upon the books of the corporation. No notice need be given to any stockholder if a written waiver of notice, executed before or after the meeting by the stockholder or his attorney thereunto authorized, is filed with the records of the meeting. 2 5. QUORUM. The holders of a majority in interest of all stock issued, outstanding and entitled to vote at a meeting shall constitute a quorum, but a lesser number may adjourn any meeting from time to time without further notice; except that, if two or more classes of stock are outstanding and entitled to vote as separate classes, then in the case of each such class, a quorum shall consist of the holders of a majority in interest of the stock of that class issued, outstanding and entitled to vote. 6. VOTING AND PROXIES. Each stockholder shall have one vote for each share of stock entitled to vote held by him of record according to the records of the corporation, unless otherwise provided by the Articles of Organization. Stockholders may vote either in person or by written proxy dated not more than six months before the meeting named therein. Proxies shall be filed with the Clerk of the meeting, or at any adjournment thereof, before being voted. Except as otherwise limited therein, proxies shall entitle the persons name therein to vote at any adjournment of such meeting. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by one of them unless at or prior to exercise of the proxy the corporation receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a stockholder shall be deemed valid unless challenged at or prior to its exercise. 7. ACTION AT MEETING. When a quorum is present, the holders of a majority of the stock present or represented and voting on a matter, (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, the holders of a majority of the stock of that class present or represented and voting on a Matter) except where a larger vote is required by law, the Articles of Organization or these By-laws, shall decide any matter to be voted on by the stockholders. Any election by stockholders shall be determined by a plurality of the votes cast by the stockholders entitled to vote at the election. No ballot shall be required for such election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. The corporation shall not directly or indirectly vote any share of its stock. 8. ACTION WITHOUT MEETING. Any action to be taken by stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to the action by a writing filed with the records of the meetings of stockholders. Such consent shall be treated for all purposes as a vote at a meeting. -2- 3 ARTICLE II DIRECTORS 1. POWERS. The business of the corporation shall be managed by a Board of Directors who may exercise all the powers of the corporation except as otherwise provided by law, by the Articles of Organization or by these By-Laws. In the event of a vacancy in the Board of Directors, the remaing Directors, except as othewise provided by law, may exercise the powers of the full Board until the vacancy is filled. 2. ELECTION OF DIRECTORS. The Board shall consist of such number of Directors, which is a multiple of three, as is fixed by the stockholders at any Annual or Special meeting or by the Directors by vote of a majority then in office. In no event, however, will the number of Directors be less than three (3) nor more than twenty-four (24). Members of the Board of Directors shall be divided into three (3) classes and the term of the three classes shall expire in different succeeding years. Directors elected at an annual meeting of stockholders shall be elected for three-year terms and until their respective successors are duly elected and qualified. 3. VACANCIES. Any vacancy in the Board of Directors, other than a vacancy resulting from the enlargement of the Board, may be filled by the stockholders or, in the absence of stockholder action, by the Directors. 4. ENLARGEMENT OF THE BOARD. Subject to such numerical limitations as may be imposed by law, the Articles of Organization, as amended, or these By-Laws, the number of Directors constituting the Board of Directors may be increased and one or more additional Directors elected at any meeting of the stockholders or by the Directors by vote of a majority of the Directors then in office. 5. TENURE. Except for the eleven (11) Directors elected at the 1981 annual meeting of stockholders, and the four (4) Directors appointed by the Board of Directors prior to the 1982 annual meeting, and except as otherwise provided by law, by the Articles of Organization or by these By-Laws, each Director shall hold office for a term of three (3) years until the third annual meeting of stockholders next following his election and until his successor is duly chosen and qualified. Any Director may resign by delivering his written resignation to the President, Clerk or Secretary of the Corporation. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. -3- 4 6. REMOVAL. A Director may be removed from office (a) with or without cause by vote of a majority of the stockholders entitled to vote in the election of Directors, provided that the Directors of a class elected by a particular class of stockholders may be removed only by the vote of the holders of a majority of the shares of such class or (b) for cause by vote of a majority of the Directors then in office. A Director may be removed for cause only after reasonable notice and opportunity to be heard before the body proposing to remove him. 7. MEETINGS. Regular meetings of the Directors may be held without call or notice at such places and at such times the Directors may from time to time determine, provided that any Director who is absent when such determination is made shall be given notice of the determination. A regular meeting of the Directors may be held without a call or notice at the same place as the annual meeting of stockholders, or the special meeting held in lieu thereof, following such meeting of stockholders. Special meetings of the Directors may be held at any time and place designated in a call by the President, Treasurer or two or more Directors. 8. NOTICE OF MEETINGS. Notice of all special meetings of the Directors shall be given to each Director by the Secretary, or if there be no Secretary, by the Clerk, or Assistant Clerk, or in case of the death, absence, incapacity or refusal of such persons, by the officer or one of the Directors calling the meeting. Notice shall be given to each Director in person or by telephone or by telegram sent to his business or home address at least twenty four hours in advance of the meeting, or by written notice mailed to his business or home address at least forty-eight hours in advance of the meeting. Notice need not be given to any Director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any Director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. A notice or waiver of notice of a Director's meeting need not specify the purposes of the meeting. 9. QUORUM. At any meeting of the Directors, a majority of the Directors then in office shall constitute a quorum. Less than a quorum may adjourn any meeting from time to time without further notice. 10. ACTION AT MEETING. At any meeting of the Directors at which a quorum is present, the vote of a majority of those present, unless a different vote is specified by law, by the Articles of Organization, or by these By-Laws, shall be sufficient to decide such matter. 11. ACTION BY CONSENT. Any action by the Directors may be taken without a meeting if a written consent thereto is signed by all the Directors and filed with the records of the Directors' meetings. Such consent shall be treated as a vote of the Directors for all purposes. 12. COMMITTEES. The Directors may, by vote of a majority of the Directors then in office, elect from their number an executive or other committees and may be like vote delegate thereto some or all of their powers except those which by law, the Articles of Organization or these -4- 5 By-Laws they are prohibited from delegating. Except as the Directors may otherwise determine, any such committee may make rules for the conduct of its business, but unless otherwise provided by the Directors or in such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these By-Laws for the Directors. 13. ATTENDANCE. Any Director who fails to attend three (3) consecutive Directors' meetings, or who fails to attend at least 50% of the Directors' meetings in any calendar year, shall not be eligible for re-election as a Director at the annual meeting of stockholders, unless prior to such annual meeting of stockholders, such Director is declared eligible for re-election by the unanimous vote of all members of the Board of Directors who have fulfilled the foregoing attendance requirements. ARTICLE III OFFICERS 1. ENUMERATION. The officers of the Corporation shall consist of a President, a Chairman of the Board of Directors ("Chairman"), a Treasurer, a Clerk, and such other officers, including one or more Vice Presidents, Assistant Treasurers, Assistant Clerks and Secretary as the Directors may determine. 2. ELECTION. The President, Chairman, Treasurer and Clerk shall be elected annually by the Directors at their first meeting following the annual meeting of stockholders. 3. QUALIFICATION. The President may, but need not be, a Director. The Chairman must be a Director. No officer need be a stockholder. Any two or more offices may be held by the same person, provided that the President and Clerk shall not be the same person. The Clerk shall be a resident of Massachusetts unless the Corporation has a resident agent appointed for the purpose of service of process. Any officer may be required by the Directors to give bond for his faithful performance of his duties to the Corporation in such amount and with such sureties as the Directors may determine. 4. TENURE. Except as otherwise provided by law, by the Articles of Organization or by these By-Laws, the President, Chairman, Treasurer and Clerk shall hold office until the first meeting of the Directors following the annual meeting of stockholders and thereafter until his successor is chosen and qualified; and all of the officers shall hold office until the first meeting of the Directors following the annual meeting of stockholders, unless a shorter term is specified in the vote choosing or appointing them. Any officer may resign by delivering his written resignation to the Corporation at its principal office or to the President, Chairman, Clerk or Secretary, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. -5- 6 5. REMOVAL. The Directors may remove any officer with or without cause by a vote of a majority of the entire number of Directors then in office, provided that an officer may be removed for cause only after reasonable notice and opportunity to be heard by the Board of Directors prior to action thereon. 6. PRESIDENT AND VICE PRESIDENT. The President shall be the chief executive officer of the Corporation and shall, subject to the direction of the Directors, have general supervision and control of its business. Unless otherwise provided by the Directors he shall preside, when present, at all meetings of stockholders and of the Directors. Any Vice President shall have such powers as the Directors may from time to time designate. 7. CHAIRMAN. The Chairman of the Board of Directors shall be a Director of the Corporation and shall be elected by the Directors from among their number. If the Board of Directors so designates, the Chairman may also serve as the chief executive officer or the chief operating officer of the Corporation, and shall in such event, subject to the direction of the Board of Directors, have the general powers and duties of supervision and mangement of the day-to-day business of the Corporation and its officers and agents. 8. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall, subject to the direction of the Director, have general charge of the financial affairs of the corporation and shall cause to be kept accurate books of account. He shall have custody of all funds, securities, and valuable documents of the corporation, except as the Directors may otherwise provide. Any Assistant Treasurer shall have such powers as the Directors may from time to time designate. 9. CLERK AND ASSISTANT CLERKS. The Clerk shall keep a record of the meetings of stockholders. Unless a Transfer Agent is appointed, the Clerk shall keep or cause to be kept in Massachusetts, at the principal office of the corporation or at this office, the stock and transfer records of the corporation, in which are contained the names of all stockholders and the record address, and the amount of stock held by each. The Clerk need not be sworn. In case a Secretary is not elected, the Clerk shall keep a record of the meetings of the Directors. Any Assistant Clerk shall have such powers at the Directors may from time to time designate. In the absence of the Clerk from any meeting of stockholders, an Assistant Clerk, if one be elected, otherwise a Temporary Clerk designated by the person presiding at the meeting, shall perform the duties of the Clerk. -6- 7 10. SECRETARY AND ASSISTANT SECRETARIES. If a Secretary is elected, he shall keep a record of the meetings of the Directors and in his absence, an Assistant Secreatry, if one be elected, otherwise a Temporary Secretary designated by the person presiding at the meeting, shall keep a record of the meetings of the Directors. Any Assistant Secretary shall have such powers as the Directors may from time to time designate. 11. OTHER POWERS AND DUTIES. Each officer shall, subject to these By-Laws, have in addition to the duties and powers specifically set forth in these By-Laws, such duties and powers as are customarily incident to his office, and such duties and powers as the Directors may from time to time designate. ARTICLE IV CAPITAL STOCK 1. CERTIFICATES OF STOCK. Each stockholder shall be entitled to a certificate of the capital stock of the corporation in such form as may be prescribed from time to time by the Directors. The certificate shall be signed by the President or a Vice President, and by the Treasurer or an Assistant Treasurer, but when a certificate is countersigned by a transfer agent or a registrar, other than a Director, officer or employee of the corporation, such signatures may be facsimiles. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were officer at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer pursuant to the Articles of Organization, the By-Laws or any agreement to which the corporation is a party, shall have the restriction noted conspicuously on the certificate and shall also set forth on the face or back either the full text of the restriction or a statement of the existence of such restriction and a statement that the corporation will furnish a copy to the holder of such certificate upon written request and without charge. Every certificate issued when the corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications and special and relative rights of the shares of each class and series authorized to be issued or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. 2. TRANSFERS. Subject to any restrictions on transfer which may be set forth in this Article IV, shares of stock may be transferred on the books of the Corporation or by the surrender to the Corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by written assignment and power of attorney properly executed, with necessary transfer stamp affixed, and with such proof of the -7- 8 authenticity of signature as the Corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Articles of Organization or by these By-Laws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-Laws. It shall be the duty of each stockholder to notify the Corporation of his post office address. 3. RECORD DATE. The Directors may fix in advance a time of not more than sixty days preceding the date of any meeting of stockholders, or the date for the payment of any dividend or the making of any distribution to stockholders, or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at such meeting, and any adjournment thereof, or the right to receive such dividend or distribution or the right to give such consent or dissent. In such case only stockholders of record on such record date shall have such right, notwithstanding any transfer of stock on the books of the corporation, after the record date. Without fixing such record date, the Directors may for any of such purposes close the transfer books for all or any part of such period. 4. REPLACEMENT OF CERTIFICATES. In case of the alleged loss or destruction or the mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms as the Directors may prescribe. ARTICLE V MISCELLANEOUS PROVISIONS 1. FISCAL YEAR. Except as from time to time otherwise determined by the Directors, the fiscal year of the corporation shall be the twelve months ending on the last day of December. 2. SEAL. The seal of the corporation shall bear its name, the word "Massachusetts", and the year of its corporation. 3. EXECUTION OF INSTRUMENTS. All deeds, leases, transfers, contracts, bonds, notes and other obligations authorized to be executed by an officer of the corporation in its behalf shall be signed by the President or the Treasurer except as the Directors may generally or in particular cases otherwise determine. -8- 9 4. VOTING OF SECURITIES. Except as the Directors may otherwise designate, the President or Treasurer may waive notice of, and appoint any person or persons to act as proxy or attorney in fact for this corporation (with or without power of substitution) at any meeting of stockholders or shareholders of any corporation or organization, the securities of which may be held by this corporation. 5. CORPORATE RECORDS. The original, or attested copies, of the Articles of Organization, By-Laws and records of all meetings of the incorporators and stockholders, and the stock and transfer records, which shall contain the names of all stockholders and the record address and the amount of stock held by each, shall be kept in Massachusetts at the principal office of the corporation, or at an office of its transfer agent or of the Clerk. Said copies and records need not all be kept in the same office. They shall be available at all reasonable times to the inspection of any stockholder for any proper purpose but not to secure a list of stockholders for the purpose of selling said list or copies thereof or of using the same for a purpose other than in the interest of the applicant, as a stockholder, relative to the affairs of the corporation. 6. ARTICLES OF ORGANIZATION. All references in these By-Laws to the Articles of Organization shall be deemed to refer to the Arthcles of Organization of the corporation, as amended and in effect from time to time. 7. AMENDMENTS. These By-Laws may at any time be amended by vote of the stockholders, provided that notice of the substance of the proposed amendment is stated in the notice of the meeting, or may be amended by vote of a majority of the Directors then in office. No change in the date of the annual meeting may be made within sixty days before the date fixed in these By-Laws. Not later than the time of giving notice of the meeting of stockholders next following the making, amending or repealing by the Directors of any By-Law, notice thereof stating the substance of such change shall be given to all stockholders entitled to vote on amending the By-Laws. 8. OPT-OUT FROM CONTROL SHARE ACQUISITION PROVISIONS OF MASSACHUSETTS LAW. Until such time as this Section 8 of Article V shall be repealed or the By-Laws shall otherwise be amended to provide to the contrary, in each case in accordance with Article V, Section 7 of these By-Laws, the provisions of Chapter 110D of the Massachusetts General Laws, including any successor provisions thereto, ("Chapter 110D") shall not apply to "control share acquisitions" of the corporation or of shares of the corporation's capital stock within the meaning of said Chapter 110D. ARTICLE VI DIRECTORS: INDEMNIFICATION, ETC. 1. INDEMNIFICATION. Indemnification of Directors, officers, employees and agents of the corporation shall be treated the manner set forth in Article 6 of the Article 6 of the Articles of Organization of the corporation. -9- 10 2. POWERS OF DIRECTORS. The board of directors may exercise all the powers of the corporation, except those by which by law, by the Articles of Organization or by these By-Laws are conferred upon or reserved to the stockholders. In particular, and without limiting the generality of the foregoing, the board of directors may, by a majority vote of the entire Board, issue all or part of the unissued capital stock of the corporation from time to time authorized under the Articles of Organization, and may determine, subject to any requirements of law, the consideration for which stock is to be issued and the manner of allocating such consideration between capital and surplus. 3. RESIGNATION AND REMOVAL. Any director or officer may resign at any time by delivering, by mail or otherwise, his resignation in writing to the board of directors or to the clerk, which resignation shall be effective upon receipt. 4. HONORARY DIRECTORS. One or more Honorary Directors may be appointed by the Stockholders at the Annual Meeting or by the Directors at any regular meeting or any special meeting called for that purpose. Any Honorary Director may be removed by the Stockholders; an Honorary Director appointed by the Directors may be removed by the Directors. Honorary Directors shall serve until the next Annual Meeting of the Stockholders, unless sooner removed. No Honorary Director shall be deemed to be an officer or member of he Board of Directors, nor shall he or she be required to attend meetings or be authorized or required to perform any duties. Honorary Directors may attend meetings of the Board of Directors, but shall have no vote. -10- EX-5 4 OPINION OF ERIC FISCHER 1 EXHIBIT 5 UST March 25, 1994 UST Corp. 40 Court Street Boston, Massachusetts 02108 Re: UST Corp. - Registration Statement on Form S-3 ---------------------------------------------- Gentlemen: As Executive Vice President, General Counsel and Clerk to UST Corp., a Massachusetts corporation (the "Company"), I have acted as counsel to the Company in connection with the registration of an aggregate of 500,000 shares of the Company's common stock, par value $0.625 per share (the "Common Stock"), pursuant to a Registration Statement on Form S-3 (the "Registration Statement"). All of the shares of Common Stock to be registered under the Registration Statement are currently outstanding unregistered shares of the Company's Common Stock. The shares of Common Stock are expected to be sold by Kidder, Peabody Group, Inc. and the Company will receive no part of the proceeds of such sale. In rendering the opinion set forth below, I have examined certain corporate records of the Company, including its Restated Articles of Organization, as amended, its By-laws, minutes of meetings of its Board of Directors and stockholders and such other documents, instruments and certificates of government officials and officers of the Company as I have deemed necessary. I have made such examination of Massachusetts law as I have deemed relevant for purposes of this opinion, but have not made any review of the laws of any other state or jurisdiction. Accordingly, this opinion is limited to Massachusetts law. Based upon and subject to the foregoing, I am of the opinion that the Common Stock being registered pursuant to the Registration Statement is duly authorized, validly issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and I further consent to the reference to me under the caption "Legal Opinion", in the Registration Statement. Very truly yours, /s/ Eric R. Fischer Eric R. Fischer General Counsel and Clerk EX-23.1 5 CONSENT OF ARTHUR ANDERSEN 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated January 31, 1994, included in UST Corp.'s Form 8-K/A, dated March 18, 1994, which contains the Company's financial statements for the year ended December 31, 1993, and to all references to our firm included in this registration statement. ARTHUR ANDERSEN & CO. Boston, Massachusetts March 23, 1994 -----END PRIVACY-ENHANCED MESSAGE-----