EXHIBIT 2.2
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AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 1, 2004
AMONG
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ BANCORP, M.H.C.,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ SAVINGS BANK
AND
CHART BANK, A COOPERATIVE BANK
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS; DISCLOSURE............................................................................... 2
1.1. CERTAIN DEFINITIONS...................................................................................... 2
1.2. OTHER DEFINITIONAL MATTERS............................................................................... 9
1.3. DISCLOSURE SCHEDULES..................................................................................... 9
ARTICLE II. THE MERGER........................................................................................... 9
2.1. THE MERGER............................................................................................... 9
2.2. SURVIVING BANK........................................................................................... 9
2.3. BANCORP.................................................................................................. 10
2.4. EFFECT OF THE MERGER..................................................................................... 11
2.5. ADDITIONAL ACTIONS....................................................................................... 11
2.6. EFFECTIVE DATE AND EFFECTIVE TIME; CLOSING............................................................... 11
ARTICLE III. CONSIDERATION; EXCHANGE PROCEDURES.................................................................. 12
3.1. CONVERSION OF SHARES..................................................................................... 12
3.2. ELECTION PROCEDURES...................................................................................... 13
3.3. EXCHANGE PROCEDURES...................................................................................... 15
3.4. RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS.................................................................. 17
3.5. NO FRACTIONAL SHARES..................................................................................... 17
3.6. DISSENTING SHARES........................................................................................ 18
3.7. ANTIDILUTION PROVISIONS................................................................................. 18
3.8. WITHHOLDING RIGHTS....................................................................................... 18
3.9. CHART OPTIONS............................................................................................ 18
ARTICLE IV. ACTIONS PENDING MERGER............................................................................... 19
4.1. AGREEMENTS OF CHART...................................................................................... 19
4.2. PARACHUTE PAYMENTS....................................................................................... 23
4.3. AGREEMENTS OF BANCORP.................................................................................... 23
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF CHART............................................................... 24
5.1. ORGANIZATION, STANDING AND AUTHORITY..................................................................... 24
5.2. CHART CAPITAL STOCK...................................................................................... 24
5.3. SUBSIDIARIES............................................................................................. 25
5.4. CORPORATE POWER.......................................................................................... 26
5.5. CORPORATE AUTHORITY...................................................................................... 26
5.6. REGULATORY APPROVALS; NO DEFAULTS........................................................................ 26
5.7. CHART FINANCIAL STATEMENTS............................................................................... 27
5.8. CHART REPORTS............................................................................................ 28
5.9. ABSENCE OF UNDISCLOSED LIABILITIES....................................................................... 29
5.10. ABSENCE OF CERTAIN CHANGES OR EVENTS.................................................................... 29
5.11. LITIGATION.............................................................................................. 30
5.12. REGULATORY MATTERS...................................................................................... 30
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5.13. COMPLIANCE WITH LAWS.................................................................................... 31
5.14. MATERIAL CONTRACTS; DEFAULTS............................................................................ 31
5.15. NO BROKERS.............................................................................................. 33
5.16. EMPLOYEE BENEFIT PLANS.................................................................................. 33
5.17. LABOR MATTERS........................................................................................... 35
5.18. ENVIRONMENTAL MATTERS................................................................................... 35
5.19. TAX MATTERS............................................................................................. 36
5.20. RISK MANAGEMENT INSTRUMENTS............................................................................. 37
5.21. INVESTMENT SECURITIES................................................................................... 38
5.22. LOANS; NONPERFORMING AND CLASSIFIED ASSETS.............................................................. 38
5.23. BANK OWNED LIFE INSURANCE............................................................................... 39
5.24. PROPERTIES.............................................................................................. 39
5.25. INTELLECTUAL PROPERTY................................................................................... 39
5.26. FIDUCIARY ACCOUNTS...................................................................................... 40
5.27. CAPITALIZATION.......................................................................................... 40
5.28. COMMUNITY REINVESTMENT ACT, ANTI-MONEY LAUNDERING AND CUSTOMER INFORMATION SECURITY.................... 40
5.29. BOOKS AND RECORDS....................................................................................... 40
5.30. INSURANCE............................................................................................... 40
5.31. ALLOWANCE FOR LOAN LOSSES............................................................................... 41
5.32. CREDIT CARD ACCOUNTS.................................................................................... 41
5.33. MERCHANT PROCESSING..................................................................................... 41
5.34. TRANSACTIONS WITH AFFILIATES............................................................................ 41
5.35. MATERIAL INTERESTS OF CERTAIN PERSONS................................................................... 41
5.36. REQUIRED VOTE; ANTITAKEOVER PROVISIONS.................................................................. 41
5.37. FAIRNESS OPINION........................................................................................ 42
5.38. DISCLOSURE.............................................................................................. 42
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BANCORP............................................................ 42
6.1. ORGANIZATION, STANDING AND AUTHORITY..................................................................... 42
6.2. CAPITAL STRUCTURE........................................................................................ 42
6.3. SUBSIDIARIES............................................................................................. 42
6.4. CORPORATE POWER.......................................................................................... 44
6.5. CORPORATE AUTHORITY...................................................................................... 44
6.6. REGULATORY APPROVALS; NO DEFAULTS........................................................................ 44
6.7. BANCORP FINANCIAL STATEMENTS............................................................................. 45
6.8. BANCORP REPORTS.......................................................................................... 46
6.9. ABSENCE OF UNDISCLOSED LIABILITIES....................................................................... 46
6.10. NO MATERIAL ADVERSE EFFECT.............................................................................. 46
6.11. LITIGATION.............................................................................................. 47
6.12. REGULATORY MATTERS...................................................................................... 47
6.13. COMPLIANCE WITH LAWS.................................................................................... 47
6.14. MATERIAL CONTRACTS; DEFAULTS............................................................................ 48
6.15. NO BROKERS.............................................................................................. 48
6.16. EMPLOYEE BENEFIT PLANS.................................................................................. 48
6.17. LABOR MATTERS........................................................................................... 50
6.18. ENVIRONMENTAL MATTERS................................................................................... 50
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6.19. TAX MATTERS............................................................................................. 51
6.20. RISK MANAGEMENT INSTRUMENTS............................................................................. 53
6.21. INVESTMENT SECURITIES................................................................................... 53
6.22. LOANS; NONPERFORMING AND CLASSIFIED ASSETS.............................................................. 53
6.23. BANK OWNED LIFE INSURANCE............................................................................... 54
6.24. PROPERTIES.............................................................................................. 54
6.25. INTELLECTUAL PROPERTY................................................................................... 55
6.26. FIDUCIARY ACCOUNTS...................................................................................... 55
6.27. CAPITALIZATION.......................................................................................... 55
6.28. COMMUNITY REINVESTMENT ACT, ANTI-MONEY LAUNDERING AND CUSTOMER INFORMATION SECURITY..................... 55
6.29. BOOKS AND RECORDS....................................................................................... 56
6.30. INSURANCE............................................................................................... 56
6.31. ALLOWANCE FOR LOAN LOSSES............................................................................... 56
6.32. CREDIT CARD ACCOUNTS.................................................................................... 56
6.33. MERCHANT PROCESSING..................................................................................... 56
6.34. TRANSACTIONS WITH AFFILIATES............................................................................ 56
6.35. OWNERSHIP OF CHART COMMON STOCK......................................................................... 57
6.36. DISCLOSURE.............................................................................................. 57
ARTICLE VII. COVENANTS........................................................................................... 57
7.1. REASONABLE BEST EFFORTS.................................................................................. 57
7.2. BANCORP CONVERSION FROM MUTUAL TO STOCK FORM............................................................. 57
7.3. REGISTRATION STATEMENTS.................................................................................. 58
7.4. SHAREHOLDER APPROVAL..................................................................................... 59
7.5. REGULATORY FILINGS....................................................................................... 59
7.6. PRESS RELEASES........................................................................................... 60
7.7. ACCESS; INFORMATION...................................................................................... 60
7.8. AFFILIATES............................................................................................... 61
7.9. ACQUISITION PROPOSAL..................................................................................... 61
7.10. CERTAIN POLICIES........................................................................................ 62
7.11. NASDAQ LISTING.......................................................................................... 63
7.12. INDEMNIFICATION......................................................................................... 63
7.13. EMPLOYMENT AND BENEFIT MATTERS.......................................................................... 64
7.14. PAYMENTS AND RELATED AGREEMENTS......................................................................... 66
7.15. NOTIFICATION OF CERTAIN MATTERS......................................................................... 66
7.16. UPDATE OF DISCLOSURE SCHEDULES.......................................................................... 66
7.17. CURRENT INFORMATION..................................................................................... 67
7.18. LOAN LOSS RESERVES...................................................................................... 67
7.19. CONTROL OF OTHER PARTY'S BUSINESS....................................................................... 67
7.20. BANCORP PRODUCTS AND SERVICES........................................................................... 67
7.21. ALCO MANAGEMENT......................................................................................... 67
7.22. TAX MATTERS............................................................................................. 68
7.23. SECTION 16.............................................................................................. 68
ARTICLE VIII. CONDITIONS TO CONSUMMATION OF THE MERGER........................................................... 68
8.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.............................................. 68
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8.2. CONDITIONS TO OBLIGATIONS OF CHART....................................................................... 69
8.3. CONDITIONS TO OBLIGATIONS OF BANCORP..................................................................... 70
ARTICLE IX. TERMINATION.......................................................................................... 71
9.1. TERMINATION.............................................................................................. 71
9.2. EFFECT OF TERMINATION; EXPENSES.......................................................................... 73
9.3. BANCORP SPECIAL PAYMENT.................................................................................. 74
9.4. CHART SPECIAL PAYMENT.................................................................................... 75
ARTICLE X. MISCELLANEOUS......................................................................................... 77
10.1. SURVIVAL................................................................................................ 77
10.2. WAIVER; AMENDMENT....................................................................................... 77
10.3. COUNTERPARTS AND FACSIMILE SIGNATURES................................................................... 77
10.4. GOVERNING LAW........................................................................................... 77
10.5. EXPENSES................................................................................................ 77
10.6. NOTICES................................................................................................. 77
10.7. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES...................................................... 78
10.8. SEVERABILITY............................................................................................ 78
10.9. ENFORCEMENT OF THE AGREEMENT............................................................................ 79
10.10. INTERPRETATION......................................................................................... 79
10.11. ASSIGNMENT............................................................................................. 79
10.12. ALTERNATIVE STRUCTURE.................................................................................. 79
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 1, 2004 (this
"AGREEMENT"), by and among ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Bancorp, M.H.C. ("BANCORP"),
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Savings Bank ("BANCORP BANK") and Chart Bank, A Cooperative
Bank ("CHART"). Capitalized terms used but not defined in the Recitals to this
Agreement shall have the meanings defined in Section 1.1.
RECITALS
WHEREAS, Chart is a Massachusetts chartered co-operative bank in stock
form, having its principal place of business in Waltham, Massachusetts;
WHEREAS, Bancorp is a Massachusetts chartered mutual holding company,
having its principal place of business in Franklin, Massachusetts;
WHEREAS, the Boards of Bancorp, Bancorp Bank and Chart have each
determined that it is advisable and in the best interests of their respective
companies (and, with respect to Chart, its stockholders) for Chart to merge with
and into Bancorp Bank, subject to the terms and conditions set forth herein;
WHEREAS, Bancorp will convert from mutual to stock form pursuant to a plan
of conversion;
WHEREAS, Bancorp Bank is a direct, wholly-owned subsidiary of Bancorp;
WHEREAS, Chart will merge with Bancorp Bank, with Bancorp Bank as the
surviving bank;
WHEREAS, as a condition and inducement to Bancorp to enter into this
Agreement, each person listed on Exhibit A to this Agreement ("SHAREHOLDER") is
entering into an agreement, simultaneously with the execution of this Agreement,
in the form of Exhibit B hereto (collectively, the "VOTING AGREEMENTS") pursuant
to which each such Shareholder has agreed, among other things, to vote the
Shareholder's shares of Chart Common Stock in favor of this Agreement and the
transactions contemplated hereby;
WHEREAS, as a condition and inducement to Bancorp to enter into this
Agreement, each director of Chart is entering into an agreement, simultaneously
with the execution of this Agreement, in the form of Exhibit C hereto
(collectively, the "RELEASE AGREEMENTS") pursuant to which each such director
has agreed to release Chart and any successors in interest from claims as
specified therein.
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the business combination transactions
described in this Agreement and to prescribe certain conditions thereto;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements contained herein, and
intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I.
DEFINITIONS; DISCLOSURE
1.1. CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:
"ACQUISITION PROPOSAL" shall mean (x) a bona fide proposal by any person
(other than Bancorp or any subsidiary of Bancorp) to Chart or its stockholders
to engage in a Change in Control Transaction, (y) a public statement by any
person (other than Bancorp or any subsidiary of Bancorp) to Chart or its
stockholders of such person's intention to make a proposal to engage in a Change
in Control Transaction if this Agreement terminates or (z) the filing by any
person (other than Bancorp or any subsidiary of Bancorp) of an application or
notice with any Governmental Authority to engage in a Change in Control
Transaction.
"AGGREGATE CASH CONSIDERATION" shall be the product of the number of
shares of Chart Common Stock outstanding immediately prior to the Effective Time
times 0.45 times the Per Share Cash Consideration.
"AGREEMENT" shall mean this Agreement, as amended or modified from time to
time in accordance with Section 10.2.
"ARTICLES OF MERGER" shall have the meaning set forth in Section 2.6(a).
"AUTHORIZED REPRESENTATIVE" shall mean the Chief Executive Officer (with
respect to Chart) or the Chief Executive or Chief Financial Officer (with
respect to Bancorp).
"BANCORP" shall have the meaning set forth in the preamble to this
Agreement.
"BANCORP ARTICLES" shall mean the Articles of Organization of Bancorp, as
amended.
"BANCORP BANK" shall mean ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Savings Bank, and any
successor thereto.
"BANCORP BANK BYLAWS" shall mean the Bylaws of Bancorp Bank.
"BANCORP BANK CHARTER" shall mean the Articles of Organization of Bancorp
Bank
"BANCORP BENEFIT PLANS" shall have the meaning set forth in Section
6.16(a).
"BANCORP BOARD" shall mean the Board of Trustees of Bancorp (before the
Conversion) and the Board of Directors of Bancorp (after the Conversion).
"BANCORP BYLAWS" shall mean the Bylaws of Bancorp.
"BANCORP COMMON STOCK" shall mean the common stock of Bancorp, which stock
shall be authorized in the Conversion.
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"BANCORP PREFERRED STOCK" shall mean the preferred stock of Bancorp, which
stock shall be authorized in the Conversion.
"BANCORP REGULATORY AUTHORITY" shall have the meaning set forth in Section
6.12(a).
"BANCORP SPECIAL PAYMENT" shall have the meaning set forth in Section 9.3.
"BANK REGULATOR" shall mean and include any pertinent federal or state
Governmental Authority charged with the supervision of banks or bank or
financial holding companies or engaged in the insurance of bank deposits,
including without limitation, the Federal Reserve Board, the FDIC, the
Depositors Insurance Fund of Massachusetts, the Co-operative Central Bank and
the Massachusetts Bank Commissioner.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"BOLI" shall have the meaning set forth in Section 5.23.
"BUSINESS DAY" shall mean Monday through Friday of each week, except a
legal holiday recognized as such by the U.S. Government or any day on which
banking institutions in the Commonwealth of Massachusetts are authorized or
obligated to close.
"CASH ELECTION SHARES" shall have the meaning set forth in Section
3.2(b)(ii).
"CERTIFICATE" shall mean any certificate that immediately prior to the
Effective Time represented shares of Chart Common Stock.
"CHANGE IN CONTROL TRANSACTION" shall mean (A) a merger, reorganization,
tender or exchange offer, recapitalization, reorganization, liquidation, share
exchange, consolidation or similar transaction involving Chart or any Chart
Subsidiary, (B) the disposition, by sale, lease, exchange or otherwise, of
assets of Chart or any Chart Subsidiary representing in either case 25% or more
of the consolidated assets of Chart and Chart Subsidiaries, or (C) the issuance,
sale or other disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities representing 19.9% or more of
the voting power of Chart or any Chart Subsidiary.
"CHART" shall have the meaning set forth in the preamble to this
Agreement.
"CHART AFFILIATES" shall have the meaning set forth in Section 7.8.
"CHART BENEFIT PLANS" shall have the meaning set forth in Section 5.16(a).
"CHART BOARD" shall mean the Board of Directors of Chart.
"CHART BOARD RECOMMENDATION" shall have the meaning set forth in Section
7.4.
"CHART BYLAWS" shall mean the Bylaws of Chart.
"CHART CHARTER" shall mean the Amended and Restated Charter of Chart.
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"CHART COMMON STOCK" shall mean the Series A and Series B common stock,
$1.00 par value per share, of Chart.
"CHART FINANCIAL STATEMENTS" shall have the meaning set forth in Section
5.7.
"CHART LOAN PROPERTY" shall have the meaning set forth in Section 5.18(b).
"CHART MEETING" shall have the meaning set forth in Section 7.4.
"CHART OPTIONS" shall mean the options to acquire Chart Common Stock
issued under the Chart Stock Option Plan.
"CHART PREFERRED STOCK" shall mean the serial preferred stock, par value
$1.00 per share, of Chart.
"CHART REGULATORY AUTHORITIES" shall have the meaning set forth in Section
5.12(a).
"CHART REPORTS" shall have the meaning set forth in Section 5.8.
"CHART SPECIAL PAYMENT" shall have the meaning set forth in Section 9.4.
"CHART STOCK" shall mean, collectively, Chart Common Stock and Chart
Preferred Stock.
"CHART STOCK OPTION PLAN" shall mean the Chart Bank 1996 Stock Option
Plan, as amended.
"CLOSING" and "CLOSING DATE" shall have the meanings set forth in Section
2.6(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMUNITY REINVESTMENT ACT" shall mean the Community Reinvestment Act of
1977, as amended.
"CONSULTING AGREEMENT" has the meaning set forth in Section 7.14.
"CONVERSION" shall mean the conversion of Bancorp from mutual to stock
form.
"CORPORATORS" shall mean the Corporators of Bancorp.
"DETERMINATION DATE" shall mean the date on which the last required
approval of a Governmental Authority is obtained with respect to the
Transactions, without regard to any requisite waiting period.
"DERIVATIVES CONTRACT" shall have the meaning set forth in Section 5.19.
"DISCLOSURE SCHEDULE" shall have the meaning set forth in Section 1.3.
"DISSENTING SHARES" shall have the meaning set forth in Section 3.6.
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"DPC SHARES" shall mean shares of Chart Common Stock held in respect of
debt previously contracted.
"EFFECTIVE DATE" shall have the meaning set forth in Section 2.6(a).
"EFFECTIVE TIME" shall have the meaning set forth in Section 2.6(a).
"ELECTION DEADLINE" shall have the meaning set forth in Section 3.2(e).
"ELECTION FORM" shall have the meaning set forth in Section 3.2(a)(ii).
"ENVIRONMENTAL LAWS" shall mean any federal, state or local law,
regulation, order, decree, permit, authorization, opinion or agency requirement
relating to: (A) the protection or restoration of the environment, health,
safety, or natural resources, (B) the handling, use, presence, disposal, release
or threatened release of any Hazardous Substance or (C) wetlands, pollution,
contamination or any injury or threat of injury to Persons or property in
connection with any Hazardous Substance.
"EQUAL CREDIT OPPORTUNITY ACT" shall mean the Equal Credit Opportunity
Act, as amended.
"EQUITY INTERESTS" shall mean, with respect to any Person, warrants,
options, rights, subscriptions, calls, commitments, convertible securities and
other arrangements or commitments of any character that call for the Person to
issue, deliver or dispose, or cause to be issued, delivered or disposed, any of
its or its Subsidiaries' capital stock or other ownership or equity interests of
such Person or its Subsidiaries.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" shall mean any entity that is considered one employer
with Chart or Bancorp, as the case may be, under Section 4001(b)or Section 414
of the Code.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"EXCHANGE AGENT" shall have the meaning set forth in Section 3.2(a).
"EXPENSES" shall have the meaning set forth in Section 9.2(b).
"EXPIRATION DATE" shall have the meaning set forth in Section 9.1(b).
"FAIR HOUSING ACT" shall mean the Fair Housing Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE ACT" shall mean the Federal Reserve Act, as amended.
"FEDERAL RESERVE BOARD" shall mean the Board of Governors of the Federal
Reserve System.
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"GAAP" shall mean United States generally accepted accounting principles.
"GOVERNMENTAL AUTHORITY" shall mean any United States or foreign, federal,
state or local governmental commission, board, body, bureau, or other regulatory
authority, agency, including courts and other judicial bodies, or any
self-regulatory body or authority, including any instrumentality or entity
designated to act for or on behalf of the foregoing.
"HAZARDOUS SUBSTANCE" shall mean any substance that is: (A) listed,
classified or regulated pursuant to any Environmental Law, (B) any petroleum
product or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon or (C) any
other substance that is the subject of regulatory action by any Governmental
Authority in connection with any Environmental Law.
"INDEMNIFIED PARTY," "INDEMNIFIED PARTIES" and "INDEMNIFYING PARTY" shall
have the meanings set forth in Section 7.12(a).
"INSURANCE AMOUNT" shall have the meaning set forth in Section 7.12(c).
"INSURANCE POLICIES" shall have the meaning set forth in Section 5.30.
"JOINT VENTURE" shall mean any corporation, limited liability company,
limited liability partnership, partnership, joint venture, trust, association or
other entity that is not a Subsidiary of Chart, as the case may be, and in which
(a) Chart, directly or indirectly, owns or controls any shares of any class of
the outstanding voting securities or other Equity Interests, including without
limitation, an equity investment, as such term as of the date hereof is defined
in the FDIC's rules and regulations regarding activities and investments of
insured state banks at 12 C.F.R. Section 362.2(g), or (b) Chart or any of its
Subsidiaries is a general partner.
"KNOWLEDGE" or any words or phrase of similar effect shall mean, with
respect to any Person, the actual knowledge of such Person, after reasonable due
inquiry.
"LIENS" shall mean any charge, mortgage, pledge, security interest,
restriction, options, rights of first refusal, claim, lien or encumbrance.
"LOANS" shall have the meaning set forth in Section 5.22(a).
"LOAN LOSS RESERVES" shall mean the reserves established by Chart in
accordance with its customary practices with respect to Loans as of the Closing
Date.
"MASSACHUSETTS BANK COMMISSIONER" shall mean the Commissioner of Banks of
The Commonwealth of Massachusetts.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, any
change or effect that (i) is or would be reasonably likely to be material and
adverse to the financial position, results of operations or business of such
Person and its Subsidiaries taken as a whole or (ii) would materially impair the
ability of any Person to perform their respective obligations
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under any Transaction Document or otherwise materially impede the consummation
of the Transactions.
"MATERIAL CONTRACT" shall have the meaning set forth in Sections 5.14.
"MGL" shall mean the Massachusetts General Laws, as amended.
"MERGER" shall have the meaning set forth in Section 2.1.
"MERGER CONSIDERATION" shall mean the number of whole shares of Bancorp
Common Stock, plus cash in lieu of any factional share interest, and/or the
amount of cash into which shares of Chart Common Stock shall be converted
pursuant to the provisions of Article III.
"MHPF" shall mean the Massachusetts Housing Partnership Fund.
"MIXED ELECTION" shall have the meaning set forth in Section 3.2(b)(iii).
"NASDAQ" shall mean The Nasdaq Stock Market, Inc.'s National Market.
"NATIONAL LABOR RELATIONS ACT" shall mean the National Labor Relations
Act, as amended.
"NO-ELECTION SHARES" shall have the meaning set forth in Section
3.2(b)(iv).
"OREO" shall mean other real estate owned.
"PAYMENT EVENT" shall have the meaning set forth in Section 9.4(a).
"PAYMENTS AGREEMENTS" shall have the meaning set forth in Section 7.14.
"PENSION PLAN" shall have the meaning set forth in Section 5.16(b).
"PER SHARE CASH CONSIDERATION" shall have the meaning set forth in Section
3.1(b)(ii).
"PER SHARE MERGER CONSIDERATION" shall mean the Per Share Stock
Consideration plus cash in lieu of any fractional share interest or the Per
Share Cash Consideration.
"PER SHARE STOCK CONSIDERATION" shall have the meaning set forth in
Section 3.1(b)(i).
"PERSON" shall mean any individual, bank, corporation, partnership,
association, joint-stock company, business trust, limited liability company or
unincorporated organization.
"PREVIOUSLY DISCLOSED" by a party shall mean information set forth in a
section of its Disclosure Schedule corresponding to the section of this
Agreement where such term is used (except as otherwise specifically provided in
Section 1.3 or otherwise in this Agreement).
"PROCEEDING" shall have the meaning set forth in Section 7.12(a).
"PROXY STATEMENT" shall have the meaning set forth in Section 7.3(a).
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"REALLOCATED CASH SHARES" shall have the meaning set forth in Section
3.2(g)(i)(C).
"REALLOCATED STOCK SHARES" shall have the meaning set forth in Section
3.2(g)(ii)(B).
"REGISTRATION STATEMENT" shall mean each and both of the registration
statements referred to in Section 7.3(a).
"REPRESENTATIVES" shall have the meaning set forth in Section 7.9.
"SAIF" shall mean the Savings Association Insurance Fund maintained by the
FDIC.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"SHAREHOLDERS" shall have the meaning set forth in the recitals to this
Agreement.
"SPECIAL PAYMENT TERMINATION DATE" shall have the meaning set forth in
Section 9.4(c).
"STOCK ELECTION SHARES" shall have the meaning set forth in Section
3.2(b)(i).
"STOCK OPTION EXCHANGE RATIO" shall mean the Per Share Stock
Consideration.
"SUBSIDIARY" shall have the meaning ascribed to that term in Rule 1-02 of
Regulation S-X of the SEC.
"SURVIVING BANK" shall have the meaning set forth in Section 2.1.
"TAX" and "TAXES" mean all federal, state, local or foreign income, gross
income, gains, gross receipts, sales, use, ad valorem, goods and services,
capital, production, transfer, franchise, windfall profits, license,
withholding, payroll, employment, disability, employer health, excise,
estimated, severance, stamp, occupation, property, environmental, custom duties,
unemployment or other taxes of any kind whatsoever, together with any interest,
additions or penalties thereto and any interest in respect of such interest and
penalties.
"TAX RETURNS" shall mean any return, declaration, report, claim for
refund, information return or other document (including any schedules or
attachments thereto) filed or required to be filed in connection with the
determination, assessment or collection of any Tax or the administration of any
laws, regulations or administrative requirements relating to any Tax.
"TENDER OFFER" shall mean a tender offer or exchange offer to purchase any
shares of Chart Common Stock such that, upon consummation of such offer, the
person making such tender offer or exchange offer would own or control 19.9% or
more of the then outstanding shares of Chart Common Stock.
"TIME EXTENSION EVENT" shall have the meaning set forth in Section 9.4(b).
"TRANSACTIONS" shall mean the Conversion and the Merger.
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"TRANSACTION DOCUMENT" shall mean any and all of this Agreement, the
Disclosure Schedules of Chart and Bancorp, the Voting Agreements, the Release
Agreements, the Payments Agreements and the Consulting Agreements.
"UNPERFECTED DISSENTING SHARES" shall have the meaning set forth in
Section 3.6.
"USA PATRIOT ACT" shall have the meaning set forth in Section 5.28.
"VOTING AGREEMENTS" shall have the meaning set forth in the recitals to
this Agreement.
"WELFARE PLAN" shall mean an employee welfare benefit plan (within the
meaning of Section 3(1) of ERISA).
1.2. OTHER DEFINITIONAL MATTERS. Unless the context otherwise requires, a
term defined anywhere in this Agreement has the same meaning throughout; all
references to "the Agreement" or "this Agreement" are to this Agreement as
modified, supplemented or amended from time to time; and terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa.
1.3. DISCLOSURE SCHEDULES. On or prior to the date hereof, Bancorp has
delivered to Chart a schedule and Chart has delivered to Bancorp a schedule
(respectively, its "DISCLOSURE SCHEDULE") setting forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Article V or
Article VI or to one or more of its covenants contained in Article IV. The mere
inclusion of a fact, circumstance or event in a Disclosure Schedule shall not be
deemed an admission by a party that such item represents a material exception or
that such item is reasonably likely to result in a Material Adverse Effect. Any
matter disclosed pursuant to one section of a party's Disclosure Schedule shall
be deemed disclosed for all purposes of such party's Disclosure Schedule, but
only to the extent that it is reasonably apparent from a reading of the
disclosure that it also qualifies or applies to other sections of the Agreement
and the corresponding Schedule.
ARTICLE II.
THE MERGER
2.1. THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time, Chart shall be merged with and into Bancorp Bank (the
"MERGER") and Bancorp Bank shall be the surviving bank of the Merger. The
identity, rights, privileges, powers, franchises, properties, assets,
liabilities and obligations of Bancorp Bank shall continue unaffected and
unimpaired by the Merger. At the time of the Merger, the separate existence of
Chart shall cease and all of the rights, privileges, powers, franchises,
properties, assets, liabilities and obligations of Chart shall be vested in and
assumed by Bancorp Bank, as the surviving bank (the "SURVIVING BANK").
2.2. SURVIVING BANK.
(a) CHARTER AND BYLAWS. The Charter and Bylaws of Surviving Bank shall be
the Charter and Bylaws of Bancorp Bank as in effect immediately prior to the
Effective Time, until
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thereafter amended as provided therein and by applicable law.
(b) NAME AND PURPOSES. The name of Surviving Bank shall be ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Savings Bank, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Bank or such other name as Bancorp may
designate, with the prior written consent of Chart (which consent shall not be
unreasonably withheld), and the purposes of Surviving Bank shall be the purposes
of Bancorp Bank as contained in its Charter, until thereafter amended as
provided in the Charter of Surviving Bank and by applicable law.
(c) CAPITAL STOCK. The total number of shares and the par value of each
class of stock that Surviving Bank is authorized to issue and the description of
each class, with their respective preferences, voting powers, qualifications,
special or relative rights or privileges, shall be the same as that of Bancorp
Bank as contained in its Charter, until thereafter amended as provided in said
Charter and by applicable law.
(d) DIRECTORS AND OFFICERS OF SURVIVING BANK.
(i) Except as set forth in Section 2.2(d)(ii), the directors and
officers of Surviving Bank immediately after the Merger shall be the
directors and officers of Bancorp Bank immediately prior to the Merger,
until such time as their successors shall be duly elected and qualified.
(ii) Promptly following the Effective Time, six persons (one of whom
shall be Chart's President and Chief Executive Officer) who were serving as
directors of Chart as of the date of this Agreement and who are mutually
agreed upon by Chart and Bancorp shall be elected or appointed to the
Surviving Bank Board of Directors. Such former directors of Chart shall be
classified evenly, to the extent practicable, into each of the classes of
the Surviving Bank Board of Directors and each of the committees of the
Surviving Bank Board of Directors shall include a number of former Chart
directors such that, to the extent practicable, former Chart directors serve
on each committee in the same proportions as they serve on the Surviving
Bank Board of Directors. If any person initially designated to be a Director
of Surviving Bank is unable at the time of such election or appointment to
serve as a Director of Surviving Bank for any reason, a replacement or
replacements designated by the mutual agreement of (i) the Directors of
Surviving Bank who were formerly directors of Chart (ii) and the Directors
of Surviving Bank who were formerly directors of Bancorp Bank shall be so
elected or appointed instead.
2.3. BANCORP.
(a) CHARTER AND BYLAWS. The Charter and Bylaws of Bancorp as of the
Effective Time shall be in the forms reviewed and approved by the Massachusetts
Bank Commissioner as part of Bancorp's Conversion approval process, until
thereafter amended as provided therein and by applicable law. Bancorp shall give
Chart the opportunity to review and comment on its Charter and Bylaws prior to
submitting them to the Massachusetts Bank Commissioner for approval, and will
accept and honor the reasonable comments and requests of Chart with respect to
the terms of the Bancorp Charter and Bylaws to the extent such comments and
requests relate to implementation of Section 2.3(b) in accordance with its
terms, and will otherwise give due
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consideration to the reasonable comments of Chart relating to the terms of the
Bancorp Charter and Bylaws.
(b) DIRECTORS OF BANCORP. Promptly following the Effective Time, six
persons (one of whom shall be Chart's President and Chief Executive Officer) who
were serving as directors of Chart as of the date of this Agreement and who are
mutually agreed upon by Chart and Bancorp shall be elected or appointed to the
Bancorp Board of Directors. Such former directors of Chart shall be classified
evenly, to the extent practicable, into each of the classes of the Bancorp Board
and each of the committees of the Bancorp Board shall include a number of former
Chart directors, to the extent practicable, such that former Chart directors
serve on each committee in the same proportions as they serve on the Bancorp
Board. If any person initially designated to be a Director of Bancorp is unable
at the time of such election or appointment to serve as a Director of Bancorp
for any reason, a replacement or replacements designated by the mutual agreement
of (i) the Directors of Bancorp who were formerly directors of Chart and (ii)
the Directors of Bancorp who were formerly trustees of Bancorp shall be so
elected or appointed instead.
2.4. EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and in the applicable provisions of
Chapters 168, 170 and 172 of the MGL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of Chart shall vest in Surviving Bank, and all
debts, liabilities, obligations, restrictions, disabilities and duties of Chart
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of Surviving Bank.
2.5. ADDITIONAL ACTIONS. If, at any time after the Effective Time,
Surviving Bank shall consider that any further assignments or assurances in law
or any other acts are necessary or desirable to (i) vest, perfect or confirm, of
record or otherwise, in Surviving Bank its right, title or interest in, to or
under any of the rights, properties or assets of Chart acquired or to be
acquired by Surviving Bank as a result of, or in connection with, the Merger, or
(ii) otherwise carry out the purposes of this Agreement, Chart and its proper
officers and directors shall be deemed to have granted to Surviving Bank an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such rights, properties or
assets in Surviving Bank and otherwise to carry out the purposes of this
Agreement, and the proper officers and directors of Surviving Bank are fully
authorized in the name of Surviving Bank or otherwise to take any and all such
action.
2.6. EFFECTIVE DATE AND EFFECTIVE TIME; CLOSING.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Article VIII and those conditions that by their nature are to be satisfied at
the consummation of the Merger, but subject to the fulfillment or waiver of
those conditions), the parties shall cause articles of merger relating to the
Merger (the "ARTICLES OF MERGER") to be filed with the Secretary of State of The
Commonwealth of Massachusetts pursuant to the MGL on (i) a date selected by
Bancorp after such satisfaction or waiver which is no later than five Business
Days after such satisfaction or waiver, or (ii) such other date to which the
parties may agree in writing; provided, however, that the closing of the
Conversion, including all of the necessary filings in connection therewith,
shall
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occur and become effective prior to and on the same day as the effective date of
the Articles of Merger. The Merger shall become effective on the date the
Articles of Merger, accompanied by payment of the filing fee (as provided in
Chapter 156B, Section 6 and Section 114 of the MGL), have been examined by and
received the endorsed approval of the Secretary of State of the Commonwealth of
Massachusetts or on such later date as may be specified therein (the "EFFECTIVE
DATE"). The "EFFECTIVE TIME" of the Merger shall be the time at which the
Articles of Merger with respect to the Merger, accompanied by payment of the
filing fee (as provided in Chapter 156B, Section 6 and Section 114 of the MGL),
have been examined by an received the endorsed approval of the Secretary of
State of the Commonwealth of Massachusetts or as set forth in such filing (the
"EFFECTIVE TIME"). The filing of the Articles of Merger and all filings
necessary to complete the Conversion shall be made on the Closing Date.
(b) A closing (the "CLOSING") shall take place on the date on which the
Articles of Merger are filed at 10:00 a.m., Eastern Time, at the principal
offices of ▇▇▇▇▇ ▇▇▇▇ LLP, Boston, Massachusetts, or at such other place, at
such other time, or on such other date as the parties may mutually agree upon
(such date, the "CLOSING DATE"). At the Closing, there shall be delivered to
Bancorp and Chart the opinions, certificates and other documents required to be
delivered under Article VIII hereof.
ARTICLE III.
CONSIDERATION; EXCHANGE PROCEDURES
3.1. CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of a holder of stock or any other Equity
Interests of Chart:
(a) Each share of Chart Common Stock held of record immediately prior
to the Effective Time by Chart, Bancorp or any Subsidiary of Chart or of Bancorp
(other than DPC Shares) shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
(b) Subject to Sections 3.2, 3.5, 3.6 and 3.7, each share of Chart
Common Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be canceled in accordance with Section 3.1(a)) shall be
converted into, and shall be canceled in exchange for, the right to receive:
(i) 3.075 shares of Bancorp Common Stock (the "PER SHARE STOCK
CONSIDERATION"), or
(ii) a cash amount equal to $30.75 per share of Chart Common Stock
(the "PER SHARE CASH CONSIDERATION").
The definition of the Per Share Stock Consideration set forth in Section
3.1(b)(i) assumes that the initial public offering price of the Bancorp Common
Stock in the Conversion will be $10.00 per share, which price shall be the price
at which shares of Bancorp Common Stock are initially sold in the Conversion,
based upon the appraised pro forma market value of Bancorp Common Stock
determined by a qualified independent appraiser selected by Bancorp and approved
by the Massachusetts Bank Commissioner (the "IPO PRICE"). If the IPO Price is an
amount other than $10.00, the Per Share Stock Consideration shall be
proportionately adjusted so that (i) the
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number of shares of Bancorp Common Stock received for each share of Chart Bank
Common Stock times (ii) the IPO Price, equals $30.75.
3.2. ELECTION PROCEDURES.
(a) Bancorp shall designate an exchange agent to act as agent (the
"EXCHANGE AGENT") for purposes of conducting the election procedure and the
exchange procedure described in Sections 3.2 and 3.3. Provided that Chart has
delivered, or caused to be delivered, to the Exchange Agent all information that
is necessary for the Exchange Agent to perform its obligations as specified
herein, the Exchange Agent shall, no later than the twenty-fifth (25th) Business
Day prior to the anticipated Effective Date, mail or make available to each
holder of record of a Certificate or Certificates:
(i) a notice and letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
theretofore representing shares of Chart Common Stock shall pass, only upon
proper delivery of the Certificates to the Exchange Agent) advising such
holder of the anticipated effectiveness of the Merger and the procedure for
surrendering to the Exchange Agent such Certificate or Certificates in
exchange for the consideration set forth in Section 3.1(b) hereof
deliverable in respect thereof pursuant to this Agreement and
(ii) an election form in such form as Bancorp and Chart shall
mutually agree (the "ELECTION FORM").
(b) Each Election Form shall permit the holder (or in the case of
nominee record holders, the beneficial owner through proper instructions and
documentation)
(i) to elect to receive Bancorp Common Stock with respect to all of
such holder's Chart Common Stock as hereinabove provided (the "STOCK
ELECTION SHARES"),
(ii) to elect to receive cash with respect to all of such holder's
Chart Common Stock as hereinabove provided (the "CASH ELECTION SHARES"),
(iii) to elect to receive Bancorp Common Stock with respect to part
of such holder's Chart Common Stock and to receive cash with respect to the
remaining part of such holder's Chart Common Stock as hereinabove provided
(a "MIXED ELECTION"), or
(iv) to indicate that such holder makes no such election with
respect to such holder's shares of Chart Common Stock (the "NO-ELECTION
SHARES").
(c) With respect to each holder of Chart Common Stock who makes a Mixed
Election, the shares of Chart Common Stock such holder elects to be converted
into the right to receive Bancorp Common Stock shall be treated as Stock
Election Shares and the shares such holder elects to be converted into the right
to receive cash shall be treated as Cash Election Shares for purposes of the
provisions contained in Sections 3.2(b), 3.2(g) and 3.2(h). Nominee record
holders who hold Chart Common Stock on behalf of multiple beneficial owners
shall indicate how many of the shares held by them are Stock Election Shares,
Cash Election Shares and No-Election Shares.
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(d) If a shareholder either (i) does not submit a properly completed
Election Form prior to the Election Deadline or (ii) revokes an Election Form
prior to the Election Deadline and does not resubmit a properly completed
Election Form prior to the Election Deadline, the shares of Chart Common Stock
held by such shareholder shall be treated as No-Election Shares. Any Dissenting
Shares shall be deemed to be Cash Election Shares, and with respect to such
shares the holders thereof shall in no event receive consideration consisting of
Bancorp Common Stock.
(e) The term "ELECTION DEADLINE" shall mean 5:00 p.m., Eastern Time, on
the 20th Business Day following but not including the date of mailing of the
Election Form or such other date as Bancorp and Chart shall mutually agree upon.
(f) Any election to receive Bancorp Common Stock or cash shall have
been properly made only if the Exchange Agent shall have actually received a
properly completed Election Form by the Election Deadline. An Election Form will
be properly completed only if accompanied by Certificates representing all
shares of Chart Common Stock covered thereby, subject to the provisions of
Section 3.3(c). Any Election Form may be revoked or changed by the Person
submitting such Election Form to the Exchange Agent by written notice to the
Exchange Agent only if such written notice is actually received by the Exchange
Agent at or prior to the Election Deadline. The Certificate or Certificates
representing Chart Common Stock relating to any revoked Election Form shall be
promptly returned without charge to the Person submitting the Election Form to
the Exchange Agent. The Exchange Agent shall have reasonable discretion to
determine when any election, modification or revocation is received, whether any
such election, modification or revocation has been properly made and to
disregard immaterial defects in any Election Form, and any good faith decisions
of the Exchange Agent regarding such matters shall be binding and conclusive.
Neither Bancorp nor the Exchange Agent shall be under any obligation to notify
any Person of any defect in an Election Form.
(g) Within five (5) Business Days after the Election Deadline, the
Exchange Agent shall calculate the allocation among holders of Chart Common
Stock of rights to receive Bancorp Common Stock or cash in the Merger in
accordance with the Election Forms as follows:
(i) If the number of Cash Election Shares times the Per Share Cash
Consideration is less than the Aggregate Cash Consideration, then:
(A) all Cash Election Shares (subject to Section 3.6 with respect
to Dissenting Shares) shall be converted into the right to receive cash,
(B) No-Election Shares shall then be deemed to be Cash Election
Shares to the extent necessary to have the total number of Cash Election
Shares times the Per Share Cash Consideration equal the Aggregate Cash
Consideration. If less than all of the No-Election Shares need to be treated
as Cash Election Shares, then the Exchange Agent shall select which
No-Election Shares shall be treated as Cash Election Shares in such manner
as the Exchange Agent shall determine in accordance with Section 3.2(h), and
all remaining No-Election Shares shall thereafter be treated as Stock
Election Shares,
(C) If all of the No-Election Shares are treated as Cash Election
Shares under the preceding subsection, and the total number of Cash Election
Shares (including such No-Election Shares treated as such) times the Per
Share Cash Consideration remains less
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than the Aggregate Cash Consideration, then the Exchange Agent shall convert
on a pro rata basis as described below a sufficient number of Stock Election
Shares into Cash Election Shares ("REALLOCATED CASH SHARES") such that the
sum of the number of Cash Election Shares plus the number of Reallocated
Cash Shares times the Per Share Cash Consideration equals the Aggregate Cash
Consideration, and all Reallocated Cash Shares will be converted into the
right to receive the Per Share Cash Consideration, and
(D) the Stock Election Shares that are not Reallocated Cash
Shares shall be converted into the right to receive the Per Share Stock
Consideration.
(ii) If the number of Cash Election Shares times the Per Share Cash
Consideration is greater than the Aggregate Cash Consideration, then:
(A) all Stock Election Shares and all No-Election Shares shall be
converted into the right to receive Bancorp Common Stock,
(B) the Exchange Agent shall convert on a pro rata basis as
described below a sufficient number of Cash Election Shares (excluding any
Dissenting Shares) ("REALLOCATED STOCK SHARES") such that the number of
remaining Cash Election Shares (including Dissenting Shares) times the Per
Share Cash Consideration equals the Aggregate Cash Consideration, and all
Reallocated Stock Shares shall be converted into the right to receive the
Per Share Stock Consideration, and
(C) the Cash Election Shares (subject to Section 3.6 with respect
to Dissenting Shares) that are not Reallocated Stock Shares shall be
converted into the right to receive the Per Share Cash Consideration.
(iii) If the number of Cash Election Shares times the Per Share Cash
Consideration is equal to the Aggregate Cash Consideration, then Sections
3.2(g)(i) and 3.2(g)(ii) above shall not apply and all No-Election Shares
and all Stock Election Shares will be converted into the right to receive
the Per Share Stock Consideration.
(h) In the event that the Exchange Agent is required pursuant to Section
3.2(g)(i)(C) to convert some Stock Election Shares into Reallocated Cash Shares,
each holder of Stock Election Shares shall be allocated a pro rata portion of
the total Reallocated Cash Shares. In the event the Exchange Agent is required,
pursuant to Section 3.2(g)(ii)(B), to convert some Cash Election Shares into
Reallocated Stock Shares, each holder of Cash Election Shares shall be allocated
a pro rata portion of the total Reallocated Stock Shares. In the event the
Exchange Agent is required pursuant to Section 3.2(g)(i)(B) to convert some
No-Election Shares into Cash Election Shares, such conversion shall be allocated
on a pro rata basis among No-Election Shares.
(i) Bancorp will include in its plan of conversion relating to the
Conversion a provision to the effect that, if any shares of Bancorp Common Stock
that are offered for sale in the community offering that is conducted as part of
the Conversion remain unsold, such shares may, in the sole discretion of
Bancorp, be issued to holders of Chart Common Stock as part of the Merger
Consideration.
3.3. EXCHANGE PROCEDURES.
(a) At or prior to the Effective Time, for the benefit of the holders
of Certificates,
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Bancorp shall deliver to the Exchange Agent certificates evidencing the number
of shares of Bancorp Common Stock issuable and the Aggregate Cash Consideration
payable pursuant to this Article III in exchange for Certificates representing
outstanding shares of Chart Common Stock. The Exchange Agent shall not be
entitled to vote or exercise any rights of ownership with respect to the shares
of Bancorp Common Stock held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or distributed
with respect to such shares for the account of the Persons entitled thereto.
(b) After completion of the allocation referred to in Section 3.2(g),
each holder of an outstanding Certificate or Certificates who has surrendered
such Certificate or Certificates to the Exchange Agent will, upon acceptance
thereof by the Exchange Agent, be entitled to a certificate or certificates
representing the number of whole shares of Bancorp Common Stock and the amount
of cash into which the aggregate number of shares of Chart Common Stock
previously represented by such Certificate or Certificates surrendered shall
have been converted pursuant to this Agreement and any other distribution
theretofore paid with respect to Bancorp Common Stock issuable in the Merger, if
such holder's shares of Chart Common Stock have been converted into Bancorp
Common Stock, in each case without interest. The Exchange Agent shall accept
such Certificates upon compliance with such reasonable terms and conditions as
the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. Each outstanding Certificate which
prior to the Effective Time represented Chart Common Stock and that is not
surrendered to the Exchange Agent in accordance with the procedures provided for
herein shall, except as otherwise herein provided, until duly surrendered to the
Exchange Agent be deemed to evidence ownership of the number of shares of
Bancorp Common Stock or the right to receive the amount of cash into which such
Chart Common Stock shall have been converted. After the Effective Time, there
shall be no further transfer on the records of Chart of Certificates
representing shares of Chart Common Stock and if such Certificates are presented
to Chart for transfer, they shall be cancelled against delivery of certificates
for Bancorp Common Stock or cash as hereinabove provided. No dividends that have
been declared will be remitted to any Person entitled to receive shares of
Bancorp Common Stock under this Agreement until such Person surrenders the
Certificate or Certificates representing Chart Common Stock, at which time such
dividends shall be remitted to such Person, without interest.
(c) Appropriate transmittal materials in a form satisfactory to Bancorp
(including a letter of transmittal specifying that delivery shall be effected
and risk of loss and title to such certificate shall pass, only upon delivery of
such certificate to the Exchange Agent) shall be mailed as soon as practicable
after the Effective Time to each holder of record of Chart Common Stock as of
the Effective Time who did not previously submit a properly completed Election
Form. Bancorp shall not be obligated to deliver cash and/or a certificate or
certificates representing shares of Bancorp Common Stock to which a holder of
Chart Common Stock would otherwise be entitled as a result of the Merger until
such holder surrenders the Certificate or Certificates representing the shares
of Chart Common Stock for exchange as provided in this Section 3.3, or, in
default thereof, an appropriate affidavit of loss and indemnity agreement and/or
a bond as may be required by Bancorp or the Exchange Agent. If any certificates
evidencing shares of Bancorp Common Stock are to be issued in a name other than
that in which the Certificate evidencing Chart Common Stock surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly
- 16 -
endorsed or accompanied by an executed form of assignment separate from the
Certificate and otherwise in proper form for transfer and that the Person
requesting such exchange pay to the Exchange Agent any transfer or other tax
required by reason of the issuance of a certificate for shares of Bancorp Common
Stock in any name other than that of the registered holder of the Certificate
surrendered or otherwise establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(d) Any portion of the shares of Bancorp Common Stock and cash
delivered to the Exchange Agent by Bancorp pursuant to Section 3.3(a) that
remains unclaimed by the stockholders of Chart for one year after the Effective
Time (as well as any proceeds from any investment thereof) shall be delivered by
the Exchange Agent to Bancorp. Any stockholders of Chart who have not
theretofore complied with Section 3.3(c) shall thereafter look only to Bancorp
for the consideration deliverable in respect of each share of Chart Common Stock
such shareholder holds as determined pursuant to this Agreement without any
interest thereon. If outstanding Certificates for shares of Chart Common Stock
are not surrendered or the payment for them is not claimed prior to the date on
which such shares of Bancorp Common Stock or cash would otherwise escheat to or
become the property of any governmental unit or agency, the unclaimed items
shall, to the extent permitted by abandoned property and any other applicable
law, become the property of Bancorp (and to the extent not in its possession
shall be delivered to it), free and clear of all claims or interest of any
Person previously entitled to such property. Neither the Exchange Agent nor any
party to this Agreement shall be liable to any holder of stock represented by
any Certificate for any consideration paid to a public official pursuant to
applicable abandoned property, escheat or similar laws. Bancorp and the Exchange
Agent shall be entitled to rely upon the stock transfer books of Chart to
establish the identity of those Persons entitled to receive the consideration
specified in this Agreement, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any Certificate, Bancorp and the Exchange Agent shall be entitled
to deposit any consideration represented thereby in escrow with an independent
third party and thereafter be relieved with respect to any claims thereto.
(e) Notwithstanding anything in this Agreement to the contrary,
Certificates surrendered for exchange by any Chart Affiliate shall not be
exchanged for certificates representing shares of Bancorp Common Stock to which
such Chart Affiliate may be entitled pursuant to the terms of this Agreement
until Bancorp has received a written agreement from such Person as specified in
Section 7.8.
3.4. RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of Chart Stock shall cease to be, and shall have no rights as,
stockholders of Chart other than to receive the consideration provided under
this Article III. After the Effective Time, there shall be no transfers on the
stock transfer books of Chart of shares of Chart Stock.
3.5. NO FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, neither certificates nor scrip for fractional shares of Bancorp
Common Stock shall be issued in the Merger. Each holder of Chart Common Stock
who otherwise would have been entitled to a fraction of a share of Bancorp
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive in lieu thereof cash (without interest) in an amount
determined by multiplying the fractional share interest to which such holder
would otherwise be entitled by the
- 17 -
Per Share Cash Consideration. No such holder shall be entitled to dividends,
voting rights or any other rights in respect of any fractional share.
3.6. DISSENTING SHARES. Each outstanding share of Chart Common Stock the
holder of which has perfected his right to dissent under applicable law and has
not effectively withdrawn or lost such right as of the Effective Time (the
"DISSENTING SHARES") shall not be converted into or represent a right to receive
shares of Bancorp Common Stock and cash hereunder. Rather, the holder thereof
shall be entitled only to payment of the appraised value of such Dissenting
Shares in accordance with the provisions of Section 26D of Chapter 170 of the
MGL. Chart shall give Bancorp (i) prompt notice of any demands filed pursuant to
such Section 26D received by Chart, withdrawals of such demands, and any other
instruments served in connection with such demands pursuant to applicable law
and received by Chart, and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demands under applicable law
consistent with the obligations of Chart thereunder. Chart shall not, except
with the prior written consent of Bancorp's Authorized Representative, (x) make
any payment with respect to, or to any person making, any such demand, (y) offer
to settle or settle any such demand or (z) waive any failure to timely deliver a
written demand in accordance with applicable law. If any holder of Dissenting
Shares shall fail to perfect or shall have effectively withdrawn or lost the
right to dissent (which shares are referred to as "UNPERFECTED DISSENTING
SHARES") at any time, the Unperfected Dissenting Shares held by such holder
shall be converted on a share by share basis into the right to receive the Per
Share Stock Consideration and/or the Per Share Cash Consideration in accordance
with the applicable provisions of this Agreement, as Bancorp or the Exchange
Agent shall determine, without any interest thereon. Any payments made in
respect of Dissenting Shares shall be made by Surviving Bank.
3.7. ANTI-DILUTION PROVISIONS. If, between the date hereof and the
Effective Time, the shares of Chart Common Stock shall be changed or adjusted
into a different number or class of shares by reason of any reclassification,
recapitalization, split-up, combination, subdivision, exchange of shares or
readjustment, or a dividend thereon, payable in stock or other security
convertible or exchangeable into stock, shall be declared with a record date
within said period, the Per Share Stock Consideration shall be adjusted
accordingly. The provisions of this Agreement assume that, at the Effective
Time, there will be no more than an aggregate of 1,557,000 shares of Chart
Common Stock outstanding or issuable upon the exercise of options or warrants or
otherwise. If there is any change in this number as of the Effective Time, the
Merger Consideration will be appropriately adjusted.
3.8. WITHHOLDING RIGHTS. Bancorp (through the Exchange Agent, if
applicable) shall be entitled to deduct and withhold from any amounts otherwise
payable pursuant to this Agreement to any holder of shares of Chart Common Stock
such amounts as Bancorp is required under the Code or any state, local or
foreign tax law or regulation thereunder to deduct and withhold with respect to
the making of such payment. Any amounts so withheld shall be treated for all
purposes of this Agreement as having been paid to the holder of Chart Common
Stock in respect of which such deduction and withholding was made by Bancorp.
3.9. CHART OPTIONS. At the Effective Time, each Chart Option that is
outstanding and unexercised immediately prior to the Effective Time, whether or
not then vested and exercisable, shall be terminated and each grantee thereof
shall be entitled to receive, in lieu of each share of
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Chart Common Stock that would otherwise have been issuable upon the exercise of
such options, whether or not then vested or exercisable, an amount of cash
computed by multiplying (i) the difference between (x) the Per Share Cash
Consideration and (y) the per share exercise price applicable to such Chart
Option by (ii) the number of such shares of Chart Common Stock subject to such
Chart Option. Chart agrees to take or to cause to be taken all action necessary
to provide for such termination and payment effective at or before the Effective
Time.
ARTICLE IV.
ACTIONS PENDING MERGER
4.1. AGREEMENTS OF CHART.
(a) Chart covenants and agrees that, except as expressly contemplated
by this Agreement, between the date of this Agreement and the Effective Time,
unless Bancorp shall otherwise agree in writing, (i) the business of Chart and
Chart's Subsidiaries shall be conducted only in, and Chart and Chart's
Subsidiaries shall not take any action except in, the usual, regular and
ordinary course of business and generally to conduct their business in
substantially the same way as heretofore conducted, and without limiting the
foregoing, to continue to operate in the same geographic markets serving the
same market segments and maintain its current loan, deposit, banking products
and service programs on substantially the same terms and conditions; (ii) Chart
shall use commercially-reasonable efforts to preserve the business organization
of Chart and Chart's Subsidiaries, to keep available the present services of the
officers, employees and consultants of Chart and Chart's Subsidiaries and to
preserve the current relationships and goodwill of Chart and Chart's
Subsidiaries with customers, suppliers and other Persons with which Chart or any
of Chart's Subsidiaries have business relationships; and (iii) Chart shall take
no action that would materially adversely affect or materially delay the ability
of Chart to obtain any necessary approvals of any Governmental Authority
required for the transactions contemplated hereby or to perform its covenants
and agreements under any Transaction Document.
(b) Without limiting the generality of Section 4.1(a) above, except as
expressly contemplated by this Agreement, Chart shall not, nor shall Chart
permit any of Chart's Subsidiaries, between the date of this Agreement and the
Effective Time, directly or indirectly do, or publicly announce an intention to
do, any of the following without the prior written consent of Bancorp's
Authorized Representative (which agreement shall not be unreasonably withheld or
delayed):
(i) CAPITAL STOCK. Other than pursuant to the Equity Interests set
forth on Section 4.1(b)(i) of Chart's Disclosure Schedule and outstanding on
the date hereof, (i) issue, sell or otherwise permit to become outstanding,
or authorize the creation of, any additional shares of stock or any Equity
Interests or (ii) permit any additional shares of stock to become subject to
grants of employee or director stock options or other Equity Interests.
(ii) DIVIDENDS; ETC. (i) Make, declare, pay or set aside for payment
any dividend on or in respect of, or declare or make any distribution on any
shares of Chart Stock, other than a regular, quarterly cash dividend at a
rate not in excess of $0.16 per share on Chart Common Stock, declared on the
first day of each calendar quarter and paid within
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ten (10) days thereafter; provided, however, that any quarterly cash
dividend declared on April 1, 2005 (and any subsequent quarterly dividend
declaration date while this Agreement is in effect) may be at a rate not in
excess of $0.18 per share on Chart Common Stock, or (ii) directly or
indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise
acquire, or issue any other securities in respect of, in lieu of, or in
substitution for, any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock (other than pursuant to the Equity Interests set forth on Schedule 5.2
of Chart's Disclosure Schedule and outstanding on the date hereof).
(iii) CONTRACTS. Except as set forth in Section 4.1(b)(iii) of
Chart's Disclosure Schedule, as otherwise permitted under this Section 4.1
or as required by law, enter into or terminate any Material Contract (as
defined in Section 5.13) or amend or modify any of its existing Material
Contracts.
(iv) HIRING. Hire any Person as an employee of Chart or any of its
Subsidiaries or promote any employee, except (i) to satisfy contractual
obligations existing as of the date hereof and set forth on Schedule
4.1(b)(iv) of Chart's Disclosure Schedule, and (ii) Persons hired to fill
any vacancies arising after the date hereof and whose employment is
terminable at the will of Chart or a Subsidiary of Chart, as applicable,
provided, however, that Chart shall not hire any Person who would have a
base salary, including any guaranteed bonus or any similar bonus, considered
on an annual basis of more than $50,000.
(v) BENEFIT PLANS. Enter into, establish, adopt, renew or amend
(except (i) as may be required by applicable law, (ii) to satisfy
contractual obligations existing as of the date hereof and set forth on
Schedule 4.1(b)(v) of Chart's Disclosure Schedule or (iii) as otherwise
contemplated by this Agreement) any pension, retirement, stock option, stock
purchase, savings, profit sharing, deferred compensation, consulting, bonus,
group insurance or other employee benefit, incentive or welfare contract,
plan or arrangement, or any trust agreement (or similar arrangement) related
thereto, in respect of any director, officer or employee of Chart or its
Subsidiaries or take any action to accelerate the vesting or exercisability
of stock options, restricted stock or other compensation or benefits payable
thereunder except pursuant to this Agreement.
(vi) DISPOSITIONS. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or
properties, or cancel or release any indebtedness of a Person or any claims
held by any Person, except in the ordinary course of business consistent
with past practice.
(vii) COMPENSATION; EMPLOYMENT AGREEMENTS. Except as contemplated by
this Agreement, enter into or amend or renew any employment, consulting,
severance or similar agreements or arrangements with any director, officer
or employee of Chart or its Subsidiaries or grant any salary or wage
increase or increase any employee benefit (including incentive or bonus
payments), except (i) for normal individual increases in compensation to
employees (other than employees who are subject to Payments Agreements) in
the ordinary course of business consistent with past practice in
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connection with annual reviews, provided that such increases shall not
result in an annual adjustment in base compensation of more than 4% in the
aggregate for all employees of Chart for the 2004 calendar year, and (ii)
for bonus payments in the ordinary course of business consistent with past
practices, provided that such payments shall not exceed in the aggregate the
amount set forth on Section 4.1(b)(vii) of Chart's Disclosure Schedule, and
(iii) for other changes that are required by applicable law.
(viii) ENVIRONMENTAL. Foreclose upon or take a deed or title to any
commercial real estate without first conducting a Phase I environmental
assessment of the property or foreclose upon any commercial real estate if
such environmental assessment indicates the presence of Hazardous Substance
in amounts that, if such foreclosure were to occur, would be material.
(ix) INSURANCE. Renew, amend or permit to expire, lapse or terminate
or knowingly take any action reasonably likely to result in the creation,
renewal, amendment, expiration, lapse or termination of any insurance
policies referred to in Section 5.30 hereof, provided, however, that the
restrictions contained in this Section 4.1(b)(ix) concerning renewal shall
apply only to those insurance policies with a term greater than one (1) year
or for which a fully earned premium has been or will be or is required to be
paid at the commencement of the coverage period (or such renewal coverage
period).
(x) ACQUISITIONS. Acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in satisfaction
of debts previously contracted in good faith) all or any portion of the
assets, business, deposits or properties of any other entity, including by
merging or consolidating with, or by purchasing an equity interest in or a
portion of the assets of, or by any other manner, any business or any
corporation, partnership, Joint Venture, other business organization or any
division thereof or any material amount of assets, other than in the
ordinary course of business consistent with past practice.
(xi) INVESTMENTS. Make any investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other Person other than a wholly owned Subsidiary
of Chart, or commitment to make such an investment, unless otherwise
permitted under Section 4.1(b)(xix).
(xii) CAPITAL EXPENDITURES. Make any capital expenditures other than
(i) capital expenditures in the ordinary course of business consistent with
past practice in amounts not exceeding $10,000 individually or $50,000 in
the aggregate and (ii) the capital expenditures set forth in Section
4.1(b)(xii) of Chart's Disclosure Schedule.
(xiii) GOVERNING DOCUMENTS. Amend the Chart Charter or the Chart
Bylaws or the articles of organization or bylaws (or equivalent documents)
of any Subsidiary of Chart.
(xiv) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by changes in laws or regulations or GAAP.
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(xv) CLAIMS. Enter into any settlement or similar agreement with
respect to any action, suit, proceeding, order or investigation to which
Chart or any of its Subsidiaries is or becomes a party after the date of
this Agreement, which settlement, agreement or action involves payment by
Chart and its Subsidiaries of an amount that exceeds $5,000 individually or
$25,000 in the aggregate and/or would impose any material restriction on the
business of Chart.
(xvi) DERIVATIVES CONTRACTS. Enter into any Derivatives Contract,
except in the ordinary course of business consistent with past practice.
(xvii) INDEBTEDNESS. Become responsible for the obligations of any
other Person (excluding endorsements of checks in the ordinary course of
business) or incur any indebtedness for borrowed money, other than deposits,
federal funds purchased, cash management accounts, borrowings from the
Federal Home Loan Bank of Boston, secured letters of credit, signature
medallion guarantee activities (within insurance limits) and securities sold
under agreements to repurchase, in each case in the ordinary course of
business consistent with past practice.
(xviii) LENDING. Other than in the ordinary course of business and
consistent with existing lending policies and practices, make any
commercial, commercial real estate, or commercial and industrial loan.
(xix) INVESTMENT SECURITIES PORTFOLIO. Other than in the ordinary
course of business, restructure or materially change its investment
securities portfolio or its gap position, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or reported.
(xx) REAL ESTATE. Make any new or additional equity investment in
real estate or commitment to make any such an investment or in any real
estate development project, other than (i) in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings
in the ordinary course of business consistent with past practice, or (ii) as
required by agreements or instruments in effect as of the date hereof.
(xxi) LOAN AND INVESTMENT POLICIES. Change in any material respect
its loan or investment policies and procedures, except as required by
regulatory authorities.
(xxii) LEASES. Enter into or renew, amend or terminate, or give
notice of a proposed renewal, amendment or termination of or make any
commitment with respect to (i) any lease, license, contract, agreement or
commitment for office space, operations space or branch space, regardless of
where located or to be located, to which Chart or any of its Subsidiaries
is, or may be, a party or by which Chart or any of its Subsidiaries or their
respective properties is bound, other than in the ordinary course and
consistent with past practices, or (ii) regardless of whether in the
ordinary course or consistent with past practices, any such lease, license,
contract, agreement or commitment involving an aggregate payment by or to
Chart or any of its Subsidiaries of more than $10,000 or having a term of
one year or more from the date of execution, other than as set forth in
Section 4.1(b)(xxii) of Chart's Disclosure Schedule.
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(xxiii) DEFAULTS. Commit any act or omission that constitutes a
material breach or default by Chart or any of its Subsidiaries under any
agreement with any Governmental Authority or under any material contract
or material license to which any of them is a party or by which any of
them or their respective properties is bound.
(xxiv) ADVERSE ACTIONS. (1) Take any action that would, or is
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code, or (2)
take any action that is intended or is reasonably likely to result in
(x) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
at or prior to the Effective Time, (y) any of the conditions to the
Merger set forth in Article VIII not being satisfied or (z) a material
violation of any provision of any Transaction Document, except, in each
case, as may be required by applicable law or regulation.
(xxv) COMMITMENTS. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
4.2. PARACHUTE PAYMENTS. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall Chart or any of its Subsidiaries
take any action or make any payments that could result, in the reasonable
opinion of Bancorp or its professional advisors, either individually or in the
aggregate, in the payment of an "excess parachute payment" within the meaning of
Section 280G of the Code or that could result, in the reasonable opinion of
Bancorp or its professional advisors, either individually or in the aggregate,
in payments that would be nondeductible pursuant to Section 162(m) of the Code.
4.3. AGREEMENTS OF BANCORP. From the date hereof until the Effective Time,
Bancorp will operate in the ordinary course of business consistent with past
practice. In addition, except as expressly contemplated or permitted by this
Agreement, without the prior written consent of Chart's Authorized
Representative, Bancorp will not, and will cause each of its Subsidiaries not to
(1) take any action that would, or is reasonably likely to, prevent or impede
the Conversion from qualifying as a reorganization within the meaning of Section
368(a) of the Code that is wholly tax-free for Bancorp and its subsidiaries and
affiliates, and the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code, that is wholly tax-free for Bancorp and
Chart and their respective subsidiaries, affiliates and shareholders (except for
tax imposed on Chart's shareholders with respect to the cash consideration
received by them); (2) take any action that is intended or is reasonably likely
to result in (w) any materially adverse impact on Bancorp's ability to perform
its covenants and agreements under this Agreement, (x) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(y) any of the conditions to the Merger set forth in Article VIII not being
satisfied or (z) a material violation of any provision of any Transaction
Document except, in each case, as may be required by applicable law or
regulation, (3) take any action that would materially adversely affect or
materially delay the ability of Bancorp or any of its Subsidiaries to obtain any
necessary approvals of any Governmental Authority required for the transactions
contemplated hereby or to perform its covenants and agreements under any
Transaction Document; (4) acquire or agree to acquire any business or any Person
(by merger or consolidation, asset purchase, purchase of equity securities or by
any other manner), or otherwise acquire or agree to acquire any assets,
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except (I) in the ordinary course of business consistent with past practice and
(II) for such acquisition that would not reasonably be expected to prevent,
impede or materially delay the consummation of the transactions contemplated by
the Transaction Documents; (5) change in any material respect its accounting
methods (or underlying assumptions), principles or practices affecting its
assets, liabilities or business, including any reserving, renewal or residual
method, practice or policy, in each case, in effect on the date hereof, except
as required by changes in GAAP or regulatory accounting principles; (6) agree or
consent to any agreement or modifications of existing agreements with any
Governmental Authority in respect of the operations of its business, except (A)
as required by law, (B) to effect the consummation of the transactions
contemplated by the Transaction Documents, or (C) as would not reasonably be
expected to have a Material Adverse Effect; or (7) enter into any contract with
respect to, or otherwise agree or commit to do, any of the foregoing; provided
that nothing herein shall preclude Bancorp from amending its Charter and Bylaws
or adopting various compensation and benefit plans, contracts and policies in
connection with the Conversion and further provided that the Conversion shall be
considered to be in the ordinary course of business of Bancorp.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF CHART
Except as Previously Disclosed, Chart hereby represents and warrants to
Bancorp:
5.1. ORGANIZATION, STANDING AND AUTHORITY. Chart is a co-operative bank in
stock form duly organized and validly existing under the laws of The
Commonwealth of Massachusetts. Chart is duly qualified to do business and is in
corporate good standing in each jurisdiction where its ownership or leasing of
property or assets or the conduct of its business requires it to be so
qualified, except when the failure to be so licensed or in good standing would
not result in a Material Adverse Effect. Chart has in effect all federal, state,
local and foreign governmental authorizations necessary for it to own, operate
or lease its properties and assets and to carry on its business as now
conducted. The deposit accounts of Chart are insured by the Bank Insurance Fund
of the FDIC and the Share Insurance Fund of the Co-operative Central Bank of
Massachusetts in the manner and to the maximum extent provided by applicable law
and except as set forth in Section 5.1 of Chart's Disclosure Schedule, and Chart
has paid all deposit insurance premiums and assessments required by applicable
laws and regulations. Chart is not obligated to make any payments for premiums
and assessments, and it has filed all reports required by the FDIC. Chart does
not have any deposits insured by the SAIF. As of the date hereof, no proceedings
for the revocation or termination of Chart's deposit insurance are pending or,
to the best knowledge of Chart, threatened. The Chart Charter and the Chart
Bylaws, copies of which have previously been made available to Bancorp, are
true, complete and correct copies of such documents in effect as of the date of
this Agreement. Chart is not in violation of any provision of the Chart Charter
or Chart Bylaws. The minute books of Chart contain in all material respects true
and accurate records of all meetings held and corporate actions taken since
January 1, 2001 of Chart's stockholders and Board (including committees of
Chart's Board) other than minutes that have not been prepared as of the date
hereof.
5.2. CHART CAPITAL STOCK. The authorized capital stock of Chart consists
solely of 3,000,000 shares of Series A Chart Common Stock, of which 1,420,000
shares are outstanding as of the date hereof, 3,000,000 shares of Series B Chart
Common Stock, of which no shares are
- 24 -
outstanding and 3,000,000 shares of Chart Preferred Stock, of which no shares
are outstanding. As of the date hereof, no shares of Chart Common Stock were
held in treasury by Chart. Except for DPC Shares, no shares of Chart Common
Stock are held by Chart's Subsidiaries. The outstanding shares of Chart Common
Stock have been duly authorized and validly issued and are fully paid and
non-assessable, and except as set forth in Section 5.2 of Chart's Disclosure
Schedule, free of preemptive rights, with no personal liability attaching to the
ownership thereof, and none of the outstanding shares of Chart Common Stock have
been issued in violation of the preemptive rights of any Person. Section 5.2 of
Chart's Disclosure Schedule sets forth for each Chart Option, the name of the
grantee, the date of the grant, the status of the option grant as qualified or
non-qualified under Section 422 of the Code, the number of shares of Chart
Common Stock subject to each option, the number of shares of Chart Common Stock
subject to options that are currently exercisable and the exercise price per
share. Except as set forth in the preceding sentence, there are no shares of
Chart Stock reserved for issuance, Chart does not have any Equity Interests
issued or outstanding with respect to Chart Stock, and Chart does not have any
commitment to authorize, issue or sell any Chart Stock or Equity Interests.
There are no outstanding contractual obligations of Chart to repurchase, redeem
or otherwise acquire any shares of capital stock of, or other Equity Interests
in, Chart or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Subsidiary of Chart. Except as set
forth in Section 5.2 of Chart's Disclosure Schedule, there are no shares of
Chart Common Stock outstanding that are subject to vesting over time or upon the
satisfaction of any condition precedent, or that are otherwise subject to any
right or obligation of repurchase or redemption on the part of Chart.
5.3. SUBSIDIARIES.
(a) (1) Chart has Previously Disclosed a list of all of its
Subsidiaries together with the jurisdiction of organization of each such
Subsidiary and the percentage and type of equity security owned or controlled by
Chart, (2) Chart owns, directly or indirectly, all the issued and outstanding
equity securities of each of its Subsidiaries, all of which are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof, (3) no equity securities
of any of its Subsidiaries are or may become required to be issued (other than
to Chart) by reason of any Equity Interest or otherwise, (4) there are no
contracts, commitments, understandings or arrangements by which any of its
Subsidiaries is or may be bound to sell or otherwise transfer any of its equity
securities (other than to Chart or any of its wholly-owned Subsidiaries), (5)
there are no contracts, commitments, understandings, or arrangements relating to
Chart's rights to vote or to dispose of such securities, (6) all the equity
securities of Chart's Subsidiaries held by Chart or its Subsidiaries are fully
paid and nonassessable and are owned by Chart or its Subsidiaries free and clear
of any Liens and (7) there are no outstanding contractual obligations of any
Subsidiary of Chart to repurchase, redeem or otherwise acquire any shares of
capital stock of, or other equity interests in, Chart or any such Subsidiary or
to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any such Subsidiary of Chart.
(b) Except for securities and other interests held in a fiduciary
capacity and beneficially owned by third parties or taken in consideration of
debts previously contracted and except as set forth in Section 5.3(b) of Chart's
Disclosure Schedule, Chart does not own beneficially, directly or indirectly,
any equity securities or similar interests of any Person or any interest in a
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partnership or Joint Venture of any kind other than its Subsidiaries and stock
in the Federal Home Loan Bank of Boston.
(c) Each of Chart's Subsidiaries has been duly organized and is validly
existing in good standing under the laws of the jurisdiction of its organization
and is duly qualified to do business and in good standing in the jurisdictions
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified, except when the failure to be so licensed or in
good standing would not result in a Material Adverse Effect.
(d) The Articles of Organization and Bylaws or equivalent
organizational documents of each of Chart's Subsidiaries, copies of which have
previously been made available to Bancorp, are true, correct and complete copies
of such documents in effect as of the date of this Agreement. Neither Chart nor
any of its Subsidiaries is in violation of any provision of its Articles of
Organization, Bylaws or equivalent organizational documents. The minute books of
each of Chart's Subsidiaries contain in all material respects true and accurate
records of all meetings held and corporate actions taken since January 1, 2001
of its stockholders and board of directors (including committees of its board of
directors) other than minutes that have not been prepared as of the date hereof.
5.4. CORPORATE POWER. Each of Chart and its Subsidiaries has the requisite
corporate power and authority to carry on its business as it is now being
conducted and to own, lease or operate all its properties and assets; and Chart
has the requisite corporate power and authority to execute, deliver and perform
its obligations under the Transaction Documents to which it is or will be a
party and to consummate the transactions contemplated hereby and thereby,
subject to receipt of all necessary approvals of Governmental Authorities and
the approval of this Agreement by the holders of not less than two-thirds of the
outstanding shares of Chart Common Stock.
5.5. CORPORATE AUTHORITY. Subject to the approval of this Agreement by the
holders of not less than two-thirds of the outstanding shares of Chart Common
Stock, this Agreement and the transactions contemplated hereby have been
authorized by all necessary corporate action of Chart and Chart Board on or
prior to the date hereof. The execution and delivery of this Agreement and the
other Transaction Documents, and the consummation of the transactions
contemplated hereby and thereby have been declared advisable by, and have been
duly and validly approved by the vote of, the Chart Board. The Chart Board (i)
has directed that this Agreement and the transactions contemplated hereby,
including the Merger, be submitted to the stockholders of Chart for approval at
a meeting of such stockholders and (ii) has recommended that the stockholders of
Chart approve this Agreement and the transactions contemplated hereby. Chart has
duly executed and delivered this Agreement and, assuming due authorization,
execution and delivery by Bancorp and Bancorp Bank, each of this Agreement and
the other Transaction Documents to which Chart is (or will be) a party is (or
will be) a valid and legally binding obligation of Chart, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles).
5.6. REGULATORY APPROVALS; NO DEFAULTS.
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(a) Except as set forth in Section 5.6 of Chart's Disclosure Schedule,
no consents or approvals of, or waivers by, or filings or registrations with,
any Governmental Authority or with any third party are required to be made or
obtained by Chart or any of its Subsidiaries in connection with the execution,
delivery or performance by Chart of this Agreement and the other Transaction
Documents to which Chart or such Chart Subsidiary is (or will be) a party, as
applicable, or to consummate the Transactions and the other transactions
contemplated hereby and thereby, except for (A) filings of applications or
notices with, and approvals or waivers by, the Federal Reserve Board, FDIC, the
Massachusetts Bank Commissioner, the Co-operative Central Bank and the MHPF, as
required, (B) filings with the SEC and state securities authorities in
connection with the issuance of Bancorp Common Stock in the Merger and the
solicitation of proxies from Chart's shareholders for approval of the Merger,
(C) the filing of Articles of Merger with the Secretary of State of the
Commonwealth of Massachusetts, (D) the approval of this Agreement by the holders
of not less than two-thirds of the outstanding shares of Chart Common Stock and
(E) such corporate approvals and such consents or approvals of, or waivers by,
or filings or registrations with, certain of the foregoing federal and state
banking agencies in connection with the Merger. As of the date hereof, Chart is
not aware of any reason why the approvals set forth above or referred to in
Section 8.1(c) will not be received in a timely manner and without the
imposition of a condition, restriction or requirement of the type described in
Section 8.1(c) or that the requisite approval of Chart's stockholders will not
be obtained.
(b) Subject to receipt of the approvals referred to in Section 5.6(a),
and the expiration of related waiting periods, the execution, delivery and
performance of this Agreement and the other Transaction Documents to which Chart
is (or will be) a party by Chart, and the consummation of the Transactions and
the other transactions contemplated hereby and thereby do not and will not (A)
constitute a breach or violation of, or a default under (or, with notice or
lapse of time, or both, would constitute a default under), or give rise to any
Lien, any acceleration of remedies or performance or any right of termination
under, any law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture, note, bond, mortgage, deed of trust,
lease or instrument of Chart or any of its Subsidiaries or to which Chart or any
of its Subsidiaries or any of their respective properties or assets is subject,
affected or bound (whether as issuer, guarantor, obligor or otherwise), (B)
constitute a breach or violation of, or a default under, the articles of
organization or bylaws (or similar governing documents) of Chart or any of its
Subsidiaries or (C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license, agreement,
indenture, note, bond, mortgage, deed of trust, lease or instrument.
5.7. CHART FINANCIAL STATEMENTS.
(a) Chart has previously furnished to Bancorp true, correct and
complete copies of Chart's audited consolidated balance sheets as of December
31, 2001, 2002, and 2003, and the related consolidated statements of income,
changes in stockholders equity and statements of cash flows for the years then
ended, together with related notes of such financial statements (all the
foregoing financial statements are referred to collectively as the "CHART
AUDITED FINANCIAL STATEMENTS"). The Chart Audited Financial Statements are
prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated and present fairly the financial condition and results of
operations of Chart as of their respective dates and for the periods indicated
thereon.
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(b) Chart has provided to Bancorp true and correct copies of Chart's
unaudited consolidated balance sheets as of June 30, 2004 and the related
unaudited consolidated statement of income for the six months ended June 30,
2003 and 2004 (the foregoing financial statements are referred to collectively
as the "CHART INTERIM FINANCIAL STATEMENTS"). The Chart Interim Financial
Statements present fairly the financial condition and results of operations of
Chart for the periods indicated thereon and are prepared in accordance with GAAP
(except for the omission of notes to the Chart Interim Financial Statements and
year-end adjustments to interim results, which adjustments will not be material)
applied on a consistent basis with all prior periods and throughout the periods
indicated.
(c) Chart has provided to Bancorp true and complete copies of all
quarterly Consolidated Reports of Condition and Income ("CALL REPORTS") as filed
with the FDIC since December 31, 2003 through and including June 30, 2004. Such
Call Reports were prepared in accordance with the FDIC's instructions and fairly
present the information purported to be shown therein.
(d) The Chart Audited Financial Statements and the Chart Interim
Financial Statements are herein referred to together as the "CHART FINANCIAL
STATEMENTS."
(e) Each of the balance sheets included in any Chart Financial
Statement sent to Chart shareholders or filed with the FDIC with respect to any
period subsequent to the year ended December 31, 2003 (including any related
notes and schedules), does or will fairly present the consolidated financial
position of Chart as of its date, and the other financial statements included
therein (including any related notes and schedules) do or will fairly present
the consolidated results of operations or other information included therein of
Chart for the periods or as of the dates therein set forth, subject to the notes
thereto, in each case in accordance with generally accepted accounting
principles and auditing standards, and do or will reflect all of its assets,
liabilities and accruals and all of its items of income and expense in
accordance with such principles consistently applied during the periods
involved.
5.8. CHART REPORTS. Since January 1, 2001, Chart and its Subsidiaries have
timely filed, and subsequent to the date hereof will timely file, all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were and are required to be filed with (i) the FDIC
and (ii) any applicable state securities or banking authorities (except, in the
case of state securities authorities, no such representation is made as to
filings that are not material) (all such reports, registrations and statements,
together with any amendments thereto and the Chart Financial Statements, are
collectively referred to herein as the "CHART REPORTS") and have paid all fees
and assessments due and payable in connection with any of the foregoing. As of
the date filed or to be filed and as amended prior to the date hereof, Chart
Reports complied and, with respect to filings made after the date of this
Agreement, will at the date of filing comply, in all material respects with all
of the statutes, rules and regulations enforced or promulgated by the regulatory
authority with which they were filed. Except for normal periodic examinations
conducted by a Bank Regulator in the regular course of the business of Chart and
its Subsidiaries, since January 1, 2001, no Bank Regulator has initiated any
proceeding or, to the best knowledge of Chart, investigation into the business
or operations of Chart or any of its Subsidiaries. Except as set forth on
Section 5.8 of Chart's Disclosure Schedule, Chart and its Subsidiaries have
resolved all material violations, criticisms or
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exceptions by any Bank Regulator with respect to any such normal periodic
examination.
5.9. ABSENCE OF UNDISCLOSED LIABILITIES. Except for those liabilities that
are appropriately reflected or reserved against in the balance sheets of the
Chart Reports and for liabilities incurred in the ordinary course of business
consistent with past practice or in connection with this Agreement or the
transactions contemplated hereby, since January 1, 2004, neither Chart nor any
of its Subsidiaries has incurred any obligation or liability (contingent or
otherwise) that, either alone or when combined with all similar liabilities, has
had, or could reasonably be expected to have, a Material Adverse Effect on
Chart.
5.10. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 2003,
except as set forth in Section 5.10 of Chart's Disclosure Schedule or reflected
in the Chart Reports, there has not been (a) either individually or in the
aggregate, any Material Adverse Effect and, to the best knowledge of Chart, no
fact or condition exists that is reasonably likely to cause such a Material
Adverse Effect in the future (assuming, for purposes of this Section 5.10 that
"MATERIAL ADVERSE EFFECT" is subject to the same exclusions contained in Section
8.3(g)((1)-(5)), (b) any material damage, destruction or loss with respect to
any property or asset of Chart or any of its Subsidiaries, (c) any change by
Chart or any of its Subsidiaries in its accounting methods, principles or
practices, other than changes required by applicable law or GAAP or regulatory
accounting as concurred in by Chart's independent accountants, (d) any
revaluation by Chart or any of its Subsidiaries of any asset, including, without
limitation, writing off of notes or accounts receivable, other than in the
ordinary course of business consistent with past practice, (e) any entry by
Chart or any of its Subsidiaries into any contract or commitment (other than
with respect to Loans, as hereinafter defined) of more than $15,000 or with a
term of more than one (1) year that is not terminable without penalty, other
than in the ordinary course of business consistent with past practice, (f) any
declaration, setting aside or payment of any dividend or distribution in respect
of any capital stock of Chart or any of its Subsidiaries or any redemption,
purchase or other acquisition of any of such securities, (g) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any directors, officers or employees of or consultants to
Chart or any of its Subsidiaries, or any grant of severance or termination pay,
or any contract or arrangement entered into to make or grant any severance or
termination pay, any payment of any bonus, or the taking of any other material
action not in the ordinary course of business with respect to the compensation
or employment of directors, officers or employees of or consultants to Chart or
any of its Subsidiaries, (h) any strike, work stoppage, slowdown or other labor
disturbance, (i) any material election made by Chart or any of its Subsidiaries
for federal or state income tax purposes, (j) any change in the credit policies
or procedures of Chart or any of its Subsidiaries, the effect of which was or is
to make any such policy or procedure materially less restrictive in any material
respect, (k) any material liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise and whether due or to become due),
including without limiting the generality of the foregoing, liabilities as
guarantor under any guarantees or liabilities for taxes, other than in the
ordinary course of business consistent with past practice, (l) any forgiveness
or cancellation of any indebtedness or contractual obligation other than in the
ordinary course of business consistent with past practice, (m) any mortgage,
pledge, lien or lease of any assets, tangible or intangible, of
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Chart or any of its Subsidiaries with a value in excess of $25,000 in the
aggregate, except with respect to (i) funds borrowed by Chart or any of its
Subsidiaries from the Federal Home Loan Bank, (ii) as required in connection
with banking services for governmental agencies (including without limitation
municipal deposits) or (iii) as required in connection with borrowing or other
activities involving the Federal Reserve Bank of Boston, in each case in the
ordinary course of business and in amounts and with terms consistent with past
practice, (n) any acquisition or disposition of any assets or properties having
a value in excess of $50,000, or any contract for any such acquisition or
disposition entered into other than loans and investment securities, (o) any
lease of real or personal property entered into, other than in connection with
foreclosed property or in the ordinary course of business consistent with past
practice.
5.11. LITIGATION. There is no claim, suit, action, proceeding or
investigation of any nature pending or, to the best knowledge of Chart,
threatened, against Chart or any Subsidiary of Chart or challenging the validity
or propriety of the transactions contemplated by this Agreement, nor is there
any judgment, decree, injunction, rule, award or order of any legal or
administrative body or arbitrator outstanding against Chart or any Subsidiary of
Chart having, or that insofar as reasonably can be foreseen, in the future could
have, any such effect or restricting, or that could restrict, its ability to
conduct business in any material respect in any area. Chart is not aware of any
facts that could reasonably give rise to any such claim, suit, action,
investigation or other proceeding.
5.12. REGULATORY MATTERS.
(a) Neither Chart nor any of its Subsidiaries nor any of any of their
respective properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, order to cease and desist with, or
extraordinary supervisory letter from, any federal or state governmental agency
or authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of deposits or
the supervision or regulation of it (collectively, the "CHART REGULATORY
AUTHORITIES"), or is subject to any order or directive specifically naming or
referring to Chart or any of its Subsidiaries by, has been required to adopt any
board resolution by, any Chart Regulatory Authority that is currently in effect,
and neither Chart nor any of its Subsidiaries has received written notification
from any such Chart Regulatory Authority that any such Person may be requested
to enter into, or otherwise be subject to, any such commitment letter, written
agreement, memorandum of understanding, cease and desist order or any other
similar order or directive. Except as set forth in Section 5.12(a) of Chart's
Disclosure Schedule, neither Chart nor any of its Subsidiaries is a party to any
agreement or arrangement entered into in connection with the consummation of a
federally assisted acquisition of a depository institution pursuant to which
Chart or any of its Subsidiaries is entitled to receive financial assistance or
indemnification from any Governmental Authority. Chart and its Subsidiaries have
paid all assessments made or imposed by any Chart Regulatory Authority.
(b) Neither Chart nor any its Subsidiaries has been advised by, or has
any knowledge of facts that would reasonably be expected to give rise to an
advisory notice by, any Chart Regulatory Authority that such Chart Regulatory
Authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
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agreement, memorandum of understanding, commitment letter, supervisory letter or
similar submission.
5.13. COMPLIANCE WITH LAWS. Each of Chart and its Subsidiaries:
(a) is in material compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(b) has all permits, licenses, franchises, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently conducted;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to Chart's knowledge, no suspension or
cancellation of any of them is threatened; and
(c) has received, since December 31, 2000, no notification or
communication from any Governmental Authority (A) asserting that Chart or any of
its Subsidiaries is not in material compliance with any of the statutes,
regulations or ordinances that such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization (nor, to Chart's knowledge, do any grounds for any of the
foregoing exist).
5.14. MATERIAL CONTRACTS; DEFAULTS.
(a) Except as set forth on Section 5.14 of Chart's Disclosure Schedule,
neither Chart nor any of its Subsidiaries is a party to, bound by or subject to
any agreement, contract, arrangement, commitment or understanding (whether
written or oral):
(i) that would be a "MATERIAL CONTRACT" within the meaning of Item
601(b)(10) of the SEC's Regulation S-K;
(ii) that materially restricts the conduct of business by Chart or
by any of its Subsidiaries;
(iii) that is material to the financial condition, results of
operations or business of Chart, except those entered into in the ordinary
course of business;
(iv) relating to the employment, including without limitation,
employment as a consultant, of any person, or the election or retention in
office, or severance of any present or former director or officer of Chart
or any of its Subsidiaries;
(v) with any labor union;
(vi) by and among Chart, any Subsidiary of Chart and/or any
affiliate thereof;
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(vii) that, upon the consummation of the transactions contemplated
by this Agreement or the other Transaction Documents, will result in any
payment (whether of severance pay or otherwise) becoming due from Chart or
any of its Subsidiaries to any officer or employee thereof;
(viii) requiring that a particular line of business be maintained;
(ix) that is a consulting or other agreement (including agreements
entered into in the ordinary course and data processing, software
programming and licensing contracts) not terminable without penalty on
sixty (60) days or less notice involving the payment of more than $20,000
per annum;
(x) except for the Chart Stock Option Plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by
any Transaction Document, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
any Transaction Document;
(xi) that purports to limit in any respect, the ability of Chart or
its businesses to solicit customers or the manner in which, or the
localities in which, all or any substantial portion of the business of
Chart and its Subsidiaries, taken as a whole, or, following consummation
of the transactions contemplated by any Transaction Document, Bancorp and
its Subsidiaries, is or would be conducted;
(xii) providing for the indemnification by Chart or a subsidiary of
Chart of any person, other than customary agreements relating to the
indemnity of directors, officers and employees of Chart or its
Subsidiaries;
(xiii) that is a Joint Venture or partnership agreement;
(xiv) that grants any right of first refusal or right of first offer
or similar right or that limits (or purports to limit) the ability of
Chart or any of its Subsidiaries to own, operate, sell, transfer, pledge
or otherwise dispose of any material amount of assets or business;
(xv) providing for any material future payments that are
conditioned, in whole or in part, on a change of control of Chart or any
of its Subsidiaries;
(xvi) that contains a "most favored nation" clause;
(xvii) pertaining to the use of or granting any right to use or
practice any rights under any Chart intellectual property assets, whether
Chart or any of its Subsidiaries is the licensee or licensor thereunder;
or
(xviii) that is an investment management or investment advisory or
sub-advisory or any other contract for the provision of financial
planning, brokerage (including, without limitation, insurance brokerage)
or similar services not terminable on sixty (60) days or less notice.
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(b) Neither Chart nor any of its Subsidiaries is in material default
under any contract, agreement, commitment, arrangement, lease, insurance policy
or other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default. No power of attorney or similar authorization
given directly or indirectly by Chart or any of its Subsidiaries is currently
outstanding.
5.15. NO BROKERS. Excluding a Previously Disclosed arrangement with and
fee paid or payable to ▇▇▇▇ ▇▇▇▇ & Co. LLC, neither Chart nor any of its
officers, directors, employees, affiliates or agents has employed any broker,
finder or financial advisor or incurred any liability for any fees or
commissions in connection with any of the transactions contemplated by this
Agreement except for legal, accounting and other professional fees payable in
connection with the Merger and the other transactions contemplated hereby. Chart
will be responsible for the payment of all such fees. The fee payable to ▇▇▇▇
▇▇▇▇ & Co. LLC in connection with the transactions contemplated by this
Agreement is as described in an engagement letter between Chart and ▇▇▇▇ ▇▇▇▇ &
Co. LLC, a true and complete copy of which has heretofore been furnished to
Bancorp.
5.16. EMPLOYEE BENEFIT PLANS.
(a) All benefit and compensation plans, contracts, policies or
arrangements covering current or former employees of Chart and its Subsidiaries
and current or former directors of Chart including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of ERISA, and
deferred compensation, stock option, stock purchase, stock appreciation rights,
stock based, incentive and bonus plans (the "CHART BENEFIT PLANS"), are
Previously Disclosed in the Disclosure Schedule. True and complete copies of all
Benefit Plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the most recent
annual report (Form 5500, with all applicable attachments), and all related
trust instruments, insurance contracts, and other funding arrangements, forming
a part of any Benefit Plans and all amendments thereto have been provided or
made available to Bancorp.
(b) All Chart Benefit Plans are in substantial compliance with ERISA,
the Code, and other applicable laws in all material respects. Except as set
forth in Section 5.16 of Chart's Disclosure Schedule, each Chart Benefit Plan
that is an "employee pension benefit plan" within the meaning of Section 3(2) of
ERISA ("PENSION PLAN") and that is intended to be qualified under Section 401(a)
of the Code, has received a favorable determination letter from the Internal
Revenue Service, and Chart is not aware of any circumstances likely to result in
revocation of any such favorable determination letter or the loss of the
qualification of such Pension Plan under Section 401(a) of the Code. There is no
material pending or, to Chart's knowledge, threatened litigation relating to the
Chart Benefit Plans. Neither Chart nor any of its Subsidiaries has engaged in a
transaction with respect to any Chart Benefit Plan or Pension Plan that could
subject Chart or any of its Subsidiaries to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA in an amount that would be
material.
(c) All contributions required to be made under the terms of any Chart
Benefit Plan have been timely made or have been reflected on the financial
statements of Chart included in
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the Chart Reports.
(d) Neither Chart, nor any of its Subsidiaries, or any ERISA Affiliate,
has incurred any liability under Title IV of ERISA that will not have been paid
in full prior to the Closing. Neither Chart nor any of its Subsidiaries or any
ERISA Affiliate currently maintains any Pension Plan subject to Code Section 412
or ERISA Section 302, and Chart has received approval from the Pension Benefit
Guaranty Corporation with regard to the termination of its defined benefit
Pension Plan. Neither Chart, nor any of its Subsidiaries, or any ERISA Affiliate
has ever maintained a Multiemployer Plan.
(e) There are no pending or, to the knowledge of Chart, threatened
claims by or on behalf of any Chart Benefit Plan, or by or on behalf of any
individual participants or beneficiaries of any Benefit Plan, alleging any
breach of fiduciary duty on the part of Chart or any of its officers, directors
or employees under ERISA or any other applicable regulations, or claiming
benefit payments for which Chart may be liable (other than those made in the
ordinary operation of such plans), nor is there, to the knowledge of Chart, any
basis for such claim. The Chart Benefit Plans are not the subject of any pending
(or to the knowledge of Chart, any threatened) investigation or audit by the
Internal Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation.
(f) With respect to any Chart Benefit Plan that is a Welfare Plan and
except as Previously Disclosed, (i) each Welfare Plan for which contributions
are claimed by Chart as deductions under any provision of the Code is in
material compliance with all applicable requirements pertaining to such
deduction, (ii) any Chart Benefit Plan that is a group health plan (within the
meaning of Section 4980B(g)(2) of the Code) complies, and in each and every case
has complied, with all of the applicable material requirements of Section 4980B
of the Code, ERISA, Title XXII of the Public Health Service Act and the Social
Security Act, and (iii) all Welfare Plans may be amended or terminated at any
time on or after the Closing Date without incurring any liability thereunder.
(g) Neither Chart nor any of its Subsidiaries has any obligations for
retiree health and life benefits under any Chart Benefit Plan, other than
coverage as may be required under Section 4980B of the Code or Part 6 of Title I
of ERISA, or under the continuation of coverage provisions of the laws of any
state or locality.
(h) Neither Chart nor any of its Subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of (i) any "excess parachute
payment" within the meaning of Code Section 280G (or any corresponding provision
of state, local or foreign Tax law) or (ii) any amount that will not be fully
deductible as a result of Code Section 162(m) (or any corresponding provision of
state, local or foreign Tax law). Except as contemplated by the Transaction
Documents, none of the execution of this Agreement, shareholder approval of this
Agreement or consummation of the transactions contemplated by this Agreement
will (A) entitle any employees of Chart or any of its Subsidiaries to severance
pay or any increase in severance pay upon any termination of employment after
the date hereof, (B) accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Chart
- 34 -
Benefit Plans, (C) result in any breach or violation of, or a default under, any
of the Chart Benefit Plans, (D) result in any payment that would be a "parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code, without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future or
(E) result in any payment that would be nondeductible pursuant to Section 162(m)
of the Code.
5.17. LABOR MATTERS. Neither Chart nor any of its Subsidiaries is a party
to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
Chart or any of its Subsidiaries the subject of a proceeding asserting that it
has committed an unfair labor practice (within the meaning of the National Labor
Relations Act) or seeking to compel Chart or any of its Subsidiaries to bargain
with any labor organization as to wages or conditions of employment, nor is
there any strike, work stoppage or other labor dispute, arbitration, lawsuit or
administrative proceeding involving it or any of its Subsidiaries pending or, to
Chart's knowledge, threatened, nor is Chart or any of its Subsidiaries aware of
any activity involving its employees seeking to certify a collective bargaining
unit or engaging in other organizational activity. No employees of Chart or any
of its Subsidiaries are represented by any labor union.
5.18. ENVIRONMENTAL MATTERS.
(a) Chart and its Subsidiaries are in material compliance with
applicable Environmental Laws;
(b) to Chart's knowledge, no real property (including buildings or
other structures) currently or formerly owned or operated by Chart or any of its
Subsidiaries, or any property in which Chart or any of its Subsidiaries has held
a security interest, Lien or a fiduciary or management role ("CHART LOAN
PROPERTY"), has been contaminated with, or has had any release of, any Hazardous
Substance except in compliance with Environmental Laws;
(c) neither Chart nor any of its Subsidiaries has participated in the
management regarding Hazardous Substances of, any Chart Loan Property that has
been contaminated with, or has had any release of, any Hazardous Substance
except in compliance with Environmental Laws;
(d) neither Chart nor any of its Subsidiaries has any material
liability for any Hazardous Substance disposal or contamination on any third
party property;
(e) neither Chart nor any of its Subsidiaries has received any notice,
demand letter, claim or request for information alleging any violation of, or
liability under, any Environmental Law;
(f) neither Chart nor any of its Subsidiaries is subject to any order,
decree, injunction or other agreement with any Governmental Authority or any
third party relating to any Environmental Law;
(g) to Chart's knowledge, there are no circumstances or conditions
(including the presence of asbestos, underground storage tanks, lead products,
polychlorinated biphenyls, prior
- 35 -
manufacturing operations, dry-cleaning, or automotive services) involving Chart
or any of its Subsidiaries, any currently or formerly owned or operated
property, or any Chart Loan Property, that could reasonably be expected to
result in any claims, liability or investigations against Chart or any of its
Subsidiaries, result in any restrictions on the ownership, use, or transfer of
any property pursuant to any Environmental Law, or adversely affect the value of
any Chart Loan Property; and
(h) Chart has delivered or, at Bancorp's request, made available to
Bancorp copies of all environmental reports, studies, sampling data,
correspondence, filings and other environmental information in its possession or
reasonably available to it relating to Chart, its Subsidiaries and any currently
or formerly owned or operated property or any Chart Loan Property.
5.19. TAX MATTERS.
(a) For the taxable years ended December 31, 2003, 2002, 2001, 2000,
1999, 1998 and 1997, each of Chart and its Subsidiaries has filed all Tax
Returns that it was required to file under applicable laws and regulations. All
such Tax Returns were correct and complete in all material respects and have
been prepared in substantial compliance with all applicable laws and
regulations. All Taxes due and owing by Chart or any of its Subsidiaries
(whether or not shown on any Tax Return) have been paid. Neither Chart nor any
of its Subsidiaries is currently the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where Chart or any of its Subsidiaries does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are no
Liens for Taxes (other than Taxes not yet due and payable) upon any of the
assets of Chart or any of its Subsidiaries.
(b) Chart and each of its Subsidiaries has withheld and paid all
Taxes required to have been withheld and paid in connection with any amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party.
(c) Except as set forth on Section 5.19(c) of Chart's Disclosure
Schedule, no foreign, federal, state, or local tax audits or administrative or
judicial Tax proceedings are pending or being conducted with respect to Chart or
any of its Subsidiaries. Neither Chart nor any of its Subsidiaries has received
from any foreign, federal, state, or local taxing authority (including
jurisdictions where Chart or any of its Subsidiaries has not filed Tax Returns)
any (i) notice indicating an intent to open an audit or other review, (ii)
request for information related to Tax matters, or (iii) notice of deficiency or
proposed adjustment for any amount of Tax proposed, asserted, or assessed by any
taxing authority against Chart or any of its Subsidiaries.
(d) Chart has provided Bancorp with true and complete copies of the
United States federal, state, local, and foreign income Tax Returns filed with
respect to Chart and its Subsidiaries for taxable periods ended on or after
December 31, 2000. The Disclosure Schedule indicates those Tax Returns that have
been audited during the last three years, and those Tax Returns that currently
are the subject of an audit. Chart has delivered to Bancorp correct and complete
copies of all examination reports, and statements of deficiencies assessed
against or agreed to by Chart or any of its Subsidiaries filed for the years
ended on or after December 31, 2000.
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(e) Neither Chart nor any of its Subsidiaries has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(f) Neither Chart nor any of its Subsidiaries has filed a consent
under Code Section 341(f) concerning collapsible corporations. Neither Chart nor
any of its Subsidiaries has been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii). Chart and each of its
Subsidiaries has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Code Section 6662. Neither Chart nor any of its
Subsidiaries is a party to or bound by any Tax allocation or sharing agreement.
Neither Chart nor any of its Subsidiaries (A) has been a member of an Affiliated
Group filing a consolidated federal income Tax Return (other than a group the
common parent of which was Chart) and (B) has any liability for the Taxes of any
Person (other than Chart and its Subsidiaries) under Reg. Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(g) Except as set forth on Section 5.19(g) of Chart's Disclosure
Schedule, the unpaid Taxes of Chart and its Subsidiaries do not exceed the
reserve for Tax liability (which reserve is distinct and different from any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) established on the books and records of Chart and its
Subsidiaries.
(h) Neither Chart nor any of its Subsidiaries will be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any: (A) change in method of accounting for a taxable period
ending on or prior to the Closing Date; (B) "closing agreement" as described in
Code Section 7121 (or any corresponding or similar provision of state, local or
foreign income Tax law) executed on or prior to the Closing Date; (C)
intercompany transactions or any excess loss account described in Treasury
Regulations under Code Section 1502 (or any corresponding or similar provision
of state, local or foreign income Tax law); (D) installment sale or open
transaction disposition made on or prior to the Closing Date; or (E) prepaid
amount received on or prior to the Closing Date.
(i) Neither Chart nor any of its Subsidiaries has distributed stock
of another person, nor had its stock distributed by another person, in a
transaction that was purported or intended to be governed in whole or in part by
Code section 355 or Code section 361.
5.20. RISK MANAGEMENT INSTRUMENTS. Neither Chart nor any of its
Subsidiaries is a party or has agreed to enter into an exchange traded or
over-the-counter equity, interest rate, foreign exchange or other swap, forward,
future, option, cap, floor or collar or any other contract that is not included
on the balance sheet and is a derivatives contract (including various
combinations thereof) (each, a "DERIVATIVES CONTRACT") or owns securities that
(i) are referred to generically as "structured notes," "high risk mortgage
derivatives," "capped floating rate notes" or "capped floating rate mortgage
derivatives" or (ii) are likely to have changes in value as a result of
non-minimal interest or exchange rate changes, except for those Derivatives
Contracts and other instruments legally purchased or entered into in the
ordinary course of business, consistent with
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safe and sound banking practices and regulatory guidance. All of such
Derivatives Contracts or other instruments, are legal, valid and binding
obligations of Chart or any of its Subsidiaries enforceable in accordance with
their terms (except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally),
and are in full force and effect. Chart and its Subsidiaries have duly performed
in all material respects all of their material obligations thereunder to the
extent that such obligations to perform have accrued; and, to Chart's knowledge,
there are no breaches, violations or defaults or allegations or assertions of
such by any party thereunder that would have or would reasonably be expected to
have a Material Adverse Effect on Chart.
5.21. INVESTMENT SECURITIES. Except for pledges to secure public and trust
deposits, Federal Reserve borrowings, Federal Home Loan Bank advances,
repurchase agreements and reverse repurchase agreements entered into in
arms'-length transactions pursuant to normal commercial terms and conditions and
other pledges required by law, none of the investments reflected in the balance
sheet of Chart contained in its most recent Financial Statements made available
to Bancorp, and none of the material investments made by Chart or any of its
Subsidiaries since January 1, 2004 is subject to any restriction (contractual,
statutory or otherwise) that would materially impair the ability of the entity
holding such investment freely to dispose of such investment at any time. The
information (including electronic information and information contained on tapes
and computer disks) with respect to all investment securities (including
mortgaged-backed securities) of Chart and its Subsidiaries furnished to Bancorp
by Chart is, as of the respective dates indicated therein, true and correct in
all material respects.
5.22. LOANS; NONPERFORMING AND CLASSIFIED ASSETS.
(a) Each loan agreement, note or borrowing arrangement (whether
written or oral), including without limitation portions of outstanding lines of
credit, loan commitments, leases, credit enhancements and guarantees
(collectively, "LOANS"), on the books and records of Chart and its Subsidiaries,
was made and has been serviced in all material respects in accordance with
customary lending standards in the ordinary course of business, is evidenced in
all material respects by appropriate and sufficient documentation and, to the
knowledge of Chart, constitutes the legal, valid and binding obligation of the
obligor named therein, subject to bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditor's rights or by general equity principles. The
information (including electronic information and information contained on tapes
and computer disks) with respect to all Loans of Chart and its Subsidiaries
furnished to Bancorp by Chart is, as of the respective dates indicated therein,
true and correct in all material respects. To the best knowledge of Chart, all
loans originated, directly or through third party mortgage brokers, have been
originated in compliance with all federal, state and local laws, including
without limitation, the Real Estate Settlement Procedures Act of 1974, as
amended.
(b) Chart has Previously Disclosed as to Chart and each Chart
Subsidiary as of the latest practicable date: (i) any written or, to Chart's
knowledge, oral Loan under the terms of which the obligor is 60 or more days
delinquent in payment of principal or interest, or to Chart's knowledge, in
default of any other material provision thereof; (ii) each Loan that has been
classified as "substandard," "doubtful," "loss" or "special mention" (or words
of similar import)
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by Chart, a Chart Subsidiary or an applicable regulatory authority (it being
understood that no representation is being made that FDIC or Staff of the
Massachusetts Bank Commissioner would agree with the loan classifications
established by Chart); (iii) a listing of the OREO acquired by foreclosure or by
deed-in-lieu thereof, including the book value thereof; and (iv) each Loan with
any director, executive officer or five percent or greater shareholder of Chart
or a Chart Subsidiary, or to the best knowledge of Chart, any Person
controlling, controlled by or under common control with any of the foregoing.
(c) No agreement pursuant to which any loans or other assets have
been or shall be sold by Chart or its Subsidiaries entitled the buyer of such
loans or other assets, unless there is material breach of a representation or
covenant by Chart or its Subsidiaries, to cause Chart or its Subsidiaries to
repurchase such loan or other asset or the buyer to pursue any other form of
recourse against Chart or its Subsidiaries.
5.23. BANK OWNED LIFE INSURANCE. Neither Chart nor any of its Subsidiaries
owns any Bank Owned Life Insurance ("BOLI").
5.24. PROPERTIES. The real and material personal property owned by Chart
or a Subsidiary of Chart or presently used by any of them in its respective
business is in an adequate condition (ordinary wear and tear excepted) and is
sufficient to carry on its business in the ordinary course of business
consistent with its past practices. Chart has good and marketable title free and
clear of all Liens to all of the real and material personal properties and
assets reflected on the consolidated statement of financial condition of Chart
as of December 31, 2003 included in the Chart Reports or acquired after such
date, other than properties sold by Chart in the ordinary course of business,
except (i) Liens for current taxes and assessments not yet due or payable, (ii)
pledges to secure deposits and other Liens incurred in the ordinary course of
its banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are not, individually or in the aggregate, material in
character, amount or extent and (iv) as reflected on the consolidated statement
of financial condition of Chart as of December 31, 2003 included in the Chart
Reports. All real and personal property that is material to Chart's business on
a consolidated basis and leased or licensed by Chart or a Subsidiary of Chart is
held pursuant to leases or licenses that are valid and enforceable in accordance
with their respective terms and such leases will not terminate or lapse prior to
the Effective Time and there exists no material default under any such leases or
licenses by Chart or any of its Subsidiaries nor, to the best knowledge of Chart
and except as set forth on Section 5.24 of Chart's Disclosure Schedule, any
event that with notice or lapse of time or both would constitute a material
default thereunder by Chart or any other Chart Subsidiaries, except for such
defaults that, individually, or in the aggregate, would not result in the
forfeiture of the use or occupancy of the property covered by such lease or in a
material liability to Chart.
5.25. INTELLECTUAL PROPERTY. Chart and each Subsidiary of Chart owns or
possesses valid and binding licenses and other rights to use without payment of
any material amount all material patents, copyrights, trade secrets, trade
names, service marks and trademarks used in its businesses, all of which have
been Previously Disclosed by Chart, and none of Chart or any of its Subsidiaries
has received any notice of conflict with respect thereto that asserts the right
of others. Chart and each Subsidiary has performed in all material respects all
the obligations required to be performed by it and is not in default under any
contract, agreement, arrangement
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or commitment relating to any of the foregoing.
5.26. FIDUCIARY ACCOUNTS. Neither Chart nor any of its Subsidiaries engage
in any trust business or administers or maintains accounts for which it acts as
a fiduciary (other than individual retirement accounts and ▇▇▇▇▇ accounts),
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor.
5.27. CAPITALIZATION. Chart is "well capitalized," as such term is defined
in the rules and regulations promulgated by the FDIC.
5.28. COMMUNITY REINVESTMENT ACT, ANTI-MONEY LAUNDERING AND CUSTOMER
INFORMATION SECURITY. Chart is not aware of, has not been advised of, and has no
reason to believe that any facts or circumstances exist, that would cause Chart:
(i) to be deemed not to be in satisfactory compliance in any material respect
with the Community Reinvestment Act, and the regulations promulgated thereunder,
or to be assigned a rating for Community Reinvestment Act purposes by federal or
state bank regulators of lower than "satisfactory;" or (ii) to be deemed to be
operating in violation in any material respect of the federal Bank Secrecy Act,
as amended, and its implementing regulations (31 C.F.R. Part 103), the USA
Patriot Act of 2001, Public Law 107-56 (the "USA PATRIOT ACT"), and the
regulations promulgated thereunder, any order issued with respect to anti-money
laundering by the U.S. Department of the Treasury's Office of Foreign Assets
Control, or any other applicable anti-money laundering statute, rule or
regulation; or (iii) to be deemed not to be in satisfactory compliance in any
material respect with the applicable privacy of customer information
requirements contained in any federal and state privacy laws and regulations,
including without limitation, in Title V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999
and regulations promulgated thereunder, as well as the provisions of the
information security program adopted by Chart pursuant to 12 C.F.R. Part 364.
Furthermore, the Chart Board has adopted and Chart has implemented an anti-money
laundering program that contains adequate and appropriate customer
identification verification procedures that has not been deemed ineffective in
any material respects by any Bank Regulators and that meets the requirements in
all material respects of Section 352 of the USA Patriot Act and the regulations
thereunder.
5.29. BOOKS AND RECORDS. The books and records of Chart and its
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements, and such books and records accurately reflect in
all material respects all dealings and transactions in respect of the business,
assets, liabilities and affairs of Chart and its Subsidiaries.
5.30. INSURANCE. Chart has Previously Disclosed all of the material
insurance policies, binders, or bonds currently maintained by Chart or any of
its Subsidiaries ("INSURANCE POLICIES"). Chart and its Subsidiaries are insured
with reputable insurers against such risks and in such amounts as the management
of Chart reasonably has determined to be prudent in accordance with industry
practices. All the Insurance Policies are in full force and effect; Chart and
its Subsidiaries are not in material default thereunder and have not received
any notice of cancellation with respect thereto; and all claims thereunder have
been filed in due and timely fashion, and Chart and its Subsidiaries, as
applicable, have timely provided such insurers with due notice of all matters
that may reasonably become a claim or otherwise constitute a basis for
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seeking recovery under the Insurance Policies.
5.31. ALLOWANCE FOR LOAN LOSSES. Chart's allowance for loan losses is in
compliance with Chart's existing methodology for determining the adequacy of its
allowance for loan losses and, to the knowledge of Chart, the standards
established by applicable Governmental Authorities and the Financial Accounting
Standards Board and is adequate under all such standards.
5.32. CREDIT CARD ACCOUNTS. Neither Chart nor any of its Subsidiaries
originate, maintain or administer credit card accounts.
5.33. MERCHANT PROCESSING. Except as set forth on Section 5.33 of Chart's
Disclosure Schedule, neither Chart nor any of its Subsidiaries provide, or has
provided, merchant credit card processing services to any merchants.
5.34. TRANSACTIONS WITH AFFILIATES. All "covered transactions" between
Chart and an "affiliate" within the meaning of Sections 23A and 23B of the
Federal Reserve Act have been in compliance with such provisions and the
provisions of Federal Reserve Board Regulation W.
5.35. MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth on
Section 5.35 of Chart's Disclosure Schedules, to the knowledge of Chart, no
officer or director of Chart, or any "associate" (as such term is defined in
Rule 14a-1 under the Exchange Act) of any such officer or director, (i) has any
interest in any material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of Chart or any of the Chart
Subsidiaries or (ii) is indebted to, or has the right under a line of credit to
borrow from, Chart or any Chart Subsidiary in an amount exceeding $25,000.
5.36. REQUIRED VOTE; ANTITAKEOVER PROVISIONS.
(a) The affirmative vote of the holders of at least two-thirds of
the issued and outstanding shares of Chart Common Stock is necessary to approve
this Agreement and the Transactions on behalf of Chart. Except as disclosed in
Section 5.36 of Chart's Disclosure Schedule, no other vote of the shareholders
of Chart is required by law, the Chart Charter, the Chart Bylaws or otherwise to
approve this Agreement and the Transactions.
(b) Assuming the accuracy of the representation and warranty of
Bancorp contained in Section 6.35, no "control share acquisition," "business
combination moratorium," "fair price" or other form of antitakeover statute or
regulation, including without limitation MGL Chapter 110F, is applicable to this
Agreement and the transactions contemplated hereby.
(c) Chart (including the Chart Board) does not have in place, and
has not ever adopted, a shareholder rights or similar plan pursuant to which,
subject to the occurrence of specified triggering events, Chart shareholders
would be permitted to purchase at a discount shares of Chart Common Stock or
other Equity Interests or property of Chart, with the intention and/or effect of
diluting the value or voting power of Chart Common Stock with respect to any
stockholder, or any other arrangement designed to have a similar intention
and/or effect (including any plan commonly referred to as a "poison pill").
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5.37. FAIRNESS OPINION. Chart Board has received the oral opinion of ▇▇▇▇
▇▇▇▇ & Co. LLC., which opinion will be promptly confirmed in writing and dated
as of the date of this Agreement, to the effect that as of the date hereof the
Merger Consideration is fair to the holders of Chart Common Stock from a
financial point of view.
5.38. DISCLOSURE. The representations and warranties contained in this
Article V, when considered as a whole, together with any certificate, list or
other writing, including but not limited to Chart's Disclosure Schedule,
specifically required to be furnished to Bancorp pursuant to the provisions
hereof, do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and information
contained herein and therein not misleading.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF BANCORP
Except as Previously Disclosed, Bancorp hereby represents and warrants to
Chart:
6.1. ORGANIZATION, STANDING AND AUTHORITY. Bancorp is a corporation duly
organized, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts. Bancorp is duly qualified to do business and is
in corporate good standing in each jurisdiction where its ownership or leasing
of property or assets or the conduct of its business requires it to be so
qualified, except when the failure to be so licensed or in good standing would
not result in a Material Adverse Effect. Bancorp has in effect all federal,
state, local and foreign governmental authorizations necessary for it to own,
operate or lease its properties and assets and to carry on its business as now
conducted. Bancorp is a bank holding company registered with the Federal Reserve
Board under the BHCA. Bancorp Articles and Bancorp Bylaws, copies of which have
previously been made available to Chart, are true, complete and correct copies
of such documents in effect as of the date of this Agreement. Bancorp is not in
violation of any provision of the Bancorp Articles or Bancorp Bylaws. The minute
books of Bancorp contain in all material respects true and accurate records of
all meetings held and corporate actions taken since January 1, 2001 of Bancorp's
Corporators and the Bancorp Board (including committees of the Bancorp Board)
other than minutes that have not been prepared as of the date hereof.
6.2. CAPITAL STRUCTURE. Bancorp has no capital stock issued and
outstanding as of the date hereof. As of the Effective Time, Bancorp will have
outstanding such number of shares of Common Stock as are issued and sold in the
Conversion and will not have outstanding any other classes of capital stock. All
shares of Bancorp Common Stock to be issued in exchange for Chart Common Stock
upon consummation of the Merger, when issued in accordance with this Agreement,
will be, and the shares of Bancorp Common Stock to be issued in connection with
the Conversion will be duly authorized, validly issued, fully paid and
nonassessable.
6.3. SUBSIDIARIES.
(a) (1) Bancorp has Previously Disclosed a list of all of its
Subsidiaries together with the jurisdiction of organization of each such
Subsidiary and the percentage and type of equity security owned or controlled by
Bancorp, (2) Bancorp owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Subsidiaries, all of which are duly
authorized,
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validly issued, fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof, (3) no equity securities
of any of its Subsidiaries are or may become required to be issued (other than
to Bancorp) by reason of any Equity Interest or otherwise, (4) there are no
contracts, commitments, understandings or arrangements by which any of its
Subsidiaries is or may be bound to sell or otherwise transfer any of its equity
securities (other than to Bancorp or any of its wholly-owned Subsidiaries), (5)
there are no contracts, commitments, understandings, or arrangements relating to
Bancorp's rights to vote or to dispose of such securities, (6) all the equity
securities of Bancorp's Subsidiaries held by Bancorp or its Subsidiaries are
fully paid and nonassessable and are owned by Bancorp or its Subsidiaries free
and clear of any Liens, and (7) there are no outstanding contractual obligations
of any Subsidiary of Bancorp to repurchase, redeem or otherwise acquire any
shares of capital stock of, or other equity interests in, Bancorp or any such
Subsidiary or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any such Subsidiary of Bancorp.
(b) Except for securities and other interests held in a fiduciary
capacity and beneficially owned by third parties or taken in consideration of
debts previously contracted, Bancorp does not own beneficially, directly or
indirectly, any equity securities or similar interests of any Person or any
interest in a partnership or Joint Venture of any kind other than its
Subsidiaries, stock in the Federal Home Loan Bank of Boston and stock in the
Savings Bank Life Insurance Company of Massachusetts.
(c) Each of Bancorp's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization and is duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified, except when the failure to be so
licensed or in good standing would not result in a Material Adverse Effect.
(d) Bancorp owns all of the capital stock of Bancorp Bank free and
clear of any lien or encumbrance.
(e) The deposit accounts of Bancorp Bank are insured by the Bank
Insurance Fund of the FDIC and the Deposit Insurance Fund of the Depositors
Insurance Fund of Massachusetts in the manner and to the maximum extent provided
by applicable law, and Bancorp Bank has paid all deposit insurance premiums and
assessments required by applicable laws and regulations. Bancorp Bank is not
obligated to make any payments for premiums and assessments and it has filed all
reports required by the FDIC. Bancorp Bank does not have any deposits insured by
the SAIF. As of the date hereof, no proceedings for the revocation or
termination of such deposit insurance are pending or, to the best knowledge of
Bancorp, threatened.
(f) The Articles of Organization and Bylaws or equivalent
organizational documents of each of Bancorp's Subsidiaries, copies of which have
previously been made available to Chart, are true, correct and complete copies
of such documents in effect as of the date of this Agreement. Neither Bancorp
nor any of its Subsidiaries is in violation of any provision of its Articles of
Organization, Bylaws or equivalent organizational documents. The minute books of
each of Bancorp's Subsidiaries contain in all material respects true and
accurate records of all meetings held and corporate actions taken since January
1, 2001 of its stockholders and Board
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(including committees of its Board) other than minutes that have not been
prepared as of the date hereof.
6.4. CORPORATE POWER. Each of Bancorp and its Subsidiaries has the
requisite corporate power and authority to carry on its business as it is now
being conducted and to own, lease or operate all its properties and assets; and
Bancorp has the requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby, subject to receipt of all necessary approvals of
Governmental Authorities and the approval of this Agreement and the Conversion
by its Corporators.
6.5. CORPORATE AUTHORITY. Subject to the approval of this Agreement and
the Conversion by Bancorp's Corporators, this Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action of
Bancorp and Bancorp Board on or prior to the date hereof. The execution and
delivery of this Agreement and the other Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby have been
declared advisable by, and have been duly and validly approved by the vote of,
the Bancorp Board. The Conversion has been approved by the Bancorp Board. The
Bancorp Board (i) has directed that this Agreement and the transactions
contemplated hereby, including the Conversion and the Merger, be submitted to
the Corporators of Bancorp for approval at a meeting of such Corporators and
(ii) has recommended that the Corporators of Bancorp approve this Agreement and
the transactions contemplated hereby (including the Conversion and the Merger).
Bancorp has duly executed and delivered this Agreement and, assuming due
authorization, execution and delivery by Chart, this Agreement is a valid and
legally binding obligation of Bancorp, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles).
6.6. REGULATORY APPROVALS; NO DEFAULTS.
(a) No consents or approvals of, or waivers by, or filings or
registrations with, any Governmental Authority or with any third party are
required to be made or obtained by Bancorp or any of its Subsidiaries in
connection with the execution, delivery or performance by Bancorp or Bancorp
Bank of this Agreement and the other Transaction Documents to which it is or
will be a party, as applicable, or to consummate the Transactions and the other
transactions contemplated hereby and thereby, except for (A) filings of
applications or notices with, and approvals or waivers by, the Federal Reserve
Board, the FDIC, the Massachusetts Bank Commissioner, the Depositors Insurance
Fund of Massachusetts, the Co-operative Central Bank and the MHPF, as required,
(B) filings with the Massachusetts Bank Commissioner, the FDIC and the SEC and
state securities authorities in connection with the Conversion and the issuance
of Bancorp Common Stock in the Conversion and in the Merger, (C) the filing of
Amended and Restated Articles of Organization and Articles of Merger with the
Secretary of State of the Commonwealth of Massachusetts, (D) the approval of the
Conversion and this Agreement by the Bancorp Corporators and (E) such corporate
approvals and such consents or approvals of, or waivers by, or filings or
registrations with, certain of the foregoing federal and state banking agencies
in connection with the Conversion or the Merger. As of the date hereof, Bancorp
is not aware of any reason why the approvals set forth above or referred to in
Section 8.1(c) will not be received in a timely manner and without the
imposition of a condition, restriction or requirement
- 44 -
of the type described in Section 8.1(c) or that the requisite approval of
Bancorp's Corporators will not be obtained.
(b) Subject to receipt of the approvals referred to in Section
6.6(a), and the expiration of related waiting periods, the execution, delivery
and performance of this Agreement and the other Transaction Documents to which
it is a party by Bancorp and the consummation of the Transactions and the other
transactions contemplated hereby and thereby do not and will not (A) constitute
a breach or violation of, or a default under (or, with notice or lapse of time,
or both, would constitute a default under), or give rise to any Lien, any
acceleration of remedies or performance or any right of termination under, any
law, rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture, note, bond, mortgage, deed of trust, lease or
instrument of Bancorp or any of its Subsidiaries or to which Bancorp or any of
its Subsidiaries or any of their respective properties or assets is subject,
affected or bound (whether as issuer, guarantor, obligor or otherwise), (B)
constitute a breach or violation of, or a default under, the articles of
organization or bylaws (or similar governing documents) of Bancorp or any of its
Subsidiaries or (C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license, agreement,
indenture, note, bond, mortgage, deed of trust, lease or instrument.
6.7. BANCORP FINANCIAL STATEMENTS.
(a) Bancorp has previously furnished to Chart true, correct and
complete copies of Bancorp's audited consolidated balance sheets as of December
31, 2001, 2002, and 2003, and the related consolidated statements of income,
changes in retained earnings and cash flows for the years then ended, together
with related notes of such financial statements (all the foregoing financial
statements are referred to collectively as the "BANCORP AUDITED FINANCIAL
STATEMENTS"). The Bancorp Audited Financial Statements are prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated and present fairly the financial condition and results of operations
of Bancorp as of their respective dates and for the periods indicated thereon.
(b) Bancorp has provided to Chart true and correct copies of
Bancorp's unaudited consolidated balance sheets as of June 30, 2004 and the
related unaudited consolidated statements of income for the six months ended
June 30, 2003 and 2004 (hereinafter the foregoing financial statements are
referred to collectively as the "BANCORP INTERIM FINANCIAL STATEMENTS"). The
Bancorp Interim Financial Statements present fairly the financial condition and
results of operations of Bancorp for the periods indicated thereon and are
prepared in accordance with GAAP (except for the omission of notes to the
Bancorp Interim Financial Statements and year-end adjustments to interim
results, which adjustments will not be material) applied on a consistent basis
with all prior periods and throughout the periods indicated.
(c) Bancorp has provided to Chart true and complete copies of all
quarterly Consolidated Statements for Bank Holding Companies ("CONSOLIDATED
STATEMENTS") as filed with the Federal Reserve Board since December 31, 2003
through and including June 30, 2004. Such Consolidated Statements were prepared
in accordance with the Federal Reserve Board's instructions and fairly present
the information purported to be shown therein.
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(d) The Audited Financial Statements and the Interim Financial
Statements are herein referred to together as the "BANCORP FINANCIAL
STATEMENTS."
(e) Each of the balance sheets included in any Bancorp Financial
Statement filed with the Federal Reserve Board with respect to any period
subsequent to the year ended December 31, 2003 (including any related notes and
schedules), does or will fairly present the consolidated financial position of
Bancorp as of its date, and the other financial statements included therein
(including any related notes and schedules) do or will fairly present the
consolidated results of operations or other information included therein of
Bancorp for the periods or as of the dates therein set forth, subject to the
notes thereto, in each case in accordance with generally accepted accounting
principles and auditing standards, and do or will reflect all of its assets,
liabilities and accruals and all of its items of income and expense in
accordance with such principles consistently applied during the periods
involved.
6.8. BANCORP REPORTS. Since January 1, 2001, Bancorp and its Subsidiaries
have timely filed, and subsequent to the date hereof will timely file, all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that were and are required to be filed with (i)
the FDIC and the Federal Reserve Board and (ii) any applicable state securities
or banking authorities (except, in the case of state securities authorities, no
such representation is made as to filings which are not material) (all such
reports, registrations and statements, together with any amendments thereto and
the Bancorp Financial Statements, are collectively referred to herein as the
"BANCORP REPORTS") and have paid all fees and assessments due and payable in
connection with any of the foregoing. As of the date filed or to be filed and as
amended prior to the date hereof, Bancorp Reports complied and, with respect to
filings made after the date of this Agreement, will at the date of filing
comply, in all material respects with all of the statutes, rules and regulations
enforced or promulgated by the regulatory authority with which they were filed.
Except for normal periodic examinations conducted by a Bank Regulator in the
regular course of the business of Bancorp and its Subsidiaries, since January 1,
2001, no Bank Regulator has initiated any proceeding or, to the best knowledge
of Bancorp, investigation into the business or operations of Bancorp or any of
its Subsidiaries. Except as set forth on Section 5.7 of Bancorp's Disclosure
Schedule, Bancorp and its Subsidiaries have resolved all material violations,
criticisms or exceptions by any Bank Regulator with respect to any such normal
periodic examination.
6.9. ABSENCE OF UNDISCLOSED LIABILITIES. Except for those liabilities that
are appropriately reflected or reserved against in the balance sheets of the
Bancorp Reports and for liabilities incurred in the ordinary course of business
consistent with past practice or in connection with this Agreement or the
transactions contemplated hereby, since January 1, 2004, neither Bancorp nor any
of its Subsidiaries has incurred any obligation or liability (contingent or
otherwise) that, either alone or when combined with all similar liabilities, has
had, or could reasonably be expected to have, a Material Adverse Effect on
Bancorp.
6.10. NO MATERIAL ADVERSE EFFECT. Since December 31, 2003, except as set
forth in Section 6.10 of Bancorp's Disclosure Schedule or reflected in the
Bancorp Reports, there has not been either individually or in the aggregate, any
Material Adverse Effect and, to the best knowledge of Bancorp, no fact or
condition exists that is reasonably likely to cause such a
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Material Adverse Effect in the future (assuming, for purposes of this Section
6.10 that "MATERIAL ADVERSE EFFECT" is subject to the same exclusions contained
in Section 8.2(c) (1)-(5)),
6.11. LITIGATION. Except as set forth on Section 6.11 of Bancorp's
Disclosure Schedule, there is no claim, suit, action, proceeding or
investigation of any nature pending or, to the best knowledge of Bancorp,
threatened, against Bancorp or any Subsidiary of Bancorp or challenging the
validity or propriety of the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule, award or order of any legal or
administrative body or arbitrator outstanding against Bancorp or any Subsidiary
of Bancorp having, or which insofar as reasonably can be foreseen, in the future
could have, any such effect or restricting, or that could restrict, its ability
to conduct business in any material respect in any area. Bancorp is not aware of
any facts that could reasonably give rise to any such claim, suit, action,
investigation or other proceeding.
6.12. REGULATORY MATTERS.
(a) Neither Bancorp nor any of its Subsidiaries nor any of any of
their respective properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, order to cease and desist with, or
extraordinary supervisory letter from, any federal or state governmental agency
or authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of deposits or
the supervision or regulation of it (collectively, the "BANCORP REGULATORY
AUTHORITIES"), or is subject to any order or directive specifically naming or
referring to Bancorp or any of its Subsidiaries by, has been required to adopt
any board resolution by, any Bancorp Regulatory Authority that is currently in
effect, and neither Bancorp nor any of its Subsidiaries has received written
notification from any such Bancorp Regulatory Authority that any such Person may
be requested to enter into, or otherwise be subject to, any such commitment
letter, written agreement, memorandum of understanding, cease and desist order
or any other similar order or directive. Except as set forth in Section 6.12(a)
of Bancorp's Disclosure Schedule, neither Bancorp nor any of its Subsidiaries is
a party to any agreement or arrangement entered into in connection with the
consummation of a federally assisted acquisition of a depository institution
pursuant to which Bancorp or any of its Subsidiaries is entitled to receive
financial assistance or indemnification from any Governmental Authority. Bancorp
and its Subsidiaries have paid all assessments made or imposed by any Bancorp
Regulatory Authority.
(b) Neither Bancorp nor any its Subsidiaries has been advised by, or
has any knowledge of facts which would reasonably be expected to give rise to an
advisory notice by, any Bancorp Regulatory Authority that such Bancorp
Regulatory Authority is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or similar
submission.
6.13. COMPLIANCE WITH LAWS. Each of Bancorp and its Subsidiaries:
(a) is in material compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the
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employees conducting such businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(b) has all permits, licenses, franchises, authorizations, orders
and approvals of, and has made all filings, applications and registrations with,
all Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently conducted;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to Bancorp's knowledge, no suspension or
cancellation of any of them is threatened; and
(c) has received, since December 31, 2000, no notification or
communication from any Governmental Authority (A) asserting that Bancorp or any
of its Subsidiaries is not in material compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization (nor, to Bancorp's knowledge, do any grounds for any of the
foregoing exist).
6.14. MATERIAL CONTRACTS; DEFAULTS. Except as set forth on Schedule 6.14
of Bancorp's Disclosure Schedules, neither Bancorp nor any of its Subsidiaries
is in material default under any contract, agreement, commitment, arrangement,
lease, insurance policy or other instrument to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or under
which it or its respective assets, business, or operations receives benefits,
and there has not occurred any event that, with the lapse of time or the giving
of notice or both, would constitute such a default. No power of attorney or
similar authorization given directly or indirectly by Bancorp or any of its
Subsidiaries is currently outstanding.
6.15. NO BROKERS. Excluding a Previously Disclosed arrangement with and
fee paid or payable to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, Inc., neither Bancorp nor any
of its officers, directors, employees, affiliates or agents has employed any
broker, finder or financial advisor or incurred any liability for any fees or
commissions in connection with any of the transactions contemplated by this
Agreement except for legal, accounting and other professional fees payable in
connection with the Merger and the other transactions contemplated hereby.
Bancorp will be responsible for the payment of all such fees. The fee payable to
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, Inc. in connection with the transactions contemplated
by this Agreement is as described in an engagement letter between Bancorp and
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, Inc., a true and complete copy of which has heretofore
been furnished to Chart.
6.16. EMPLOYEE BENEFIT PLANS.
(a) All benefit and compensation plans, contracts, policies or
arrangements covering current or former employees of Bancorp and its
Subsidiaries and current or former directors of Bancorp and its Subsidiaries
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase,
stock appreciation rights, stock based, incentive and bonus plans (the "BANCORP
BENEFIT PLANS"), are Previously Disclosed in the Disclosure Schedule. True and
complete copies of all Bancorp Benefit Plan documents and summary plan
descriptions, the most recent determination letter
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received from the Internal Revenue Service, the most recent annual report (Form
5500, with all applicable attachments), and all related trust instruments,
insurance contracts, and other funding arrangements, forming a part of any
Bancorp Benefit Plans and all amendments thereto have been provided or made
available to Chart.
(b) All Bancorp Benefit Plans are in substantial compliance with
ERISA, the Code, and other applicable laws in all material respects. Each
Bancorp Benefit Plan which is a Pension Plan and which is intended to be
qualified under Section 401(a) of the Code, has received a favorable
determination letter from the Internal Revenue Service, and Bancorp is not aware
of any circumstances likely to result in revocation of any such favorable
determination letter or the loss of the qualification of such Pension Plan under
Section 401(a) of the Code. There is no material pending or, to Bancorp's
knowledge, threatened litigation relating to the Bancorp Benefit Plans. Neither
Bancorp nor any of its Subsidiaries has engaged in a transaction with respect to
any Bancorp Benefit Plan or Pension Plan that could subject Bancorp or any of
its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code
or Section 502(i) of ERISA in an amount that would be material.
(c) All contributions required to be made under the terms of any
Bancorp Benefit Plan have been timely made or have been reflected on the
financial statements of Bancorp included in the Bancorp Reports.
(d) Neither Bancorp, nor any of its Subsidiaries, or any ERISA
Affiliate, has incurred any liability under Title IV of ERISA which will not
have been paid in full prior to the Closing. Neither Bancorp nor any of its
Subsidiaries or any ERISA Affiliate currently maintains any Pension Plan subject
to Code Section 412 or ERISA Section 302, and Bancorp has received approval from
the Pension Benefit Guaranty Corporation with regard to the termination of its
defined benefit Pension Plan. Neither Bancorp, nor any of its Subsidiaries, or
any ERISA Affiliate has ever maintained a Multiemployer Plan.
(e) There are no pending or, to the knowledge of Bancorp, threatened
claims by or on behalf of any Bancorp Benefit Plans or by or on behalf of any
individual participants or beneficiaries of any Bancorp Benefit Plan, alleging
any breach of fiduciary duty on the part of Bancorp or any of its officers,
directors or employees under ERISA or any other applicable regulations, or
claiming benefit payments for which Bancorp may be liable (other than those made
in the ordinary operation of such plans), nor is there, to the knowledge of
Bancorp, any basis for such claim. The Bancorp Benefit Plans are not the subject
of any pending (or to the knowledge of Bancorp, any threatened) investigation or
audit by the Internal Revenue Service, the Department of Labor or the Pension
Benefit Guaranty Corporation.
(f) With respect to any Bancorp Benefit Plan that is a Welfare Plan
and except as Previously Disclosed, (i) each Welfare Plan for which
contributions are claimed by Bancorp as deductions under any provision of the
Code is in material compliance with all applicable requirements pertaining to
such deduction, (ii) any Bancorp Benefit Plan that is a group health plan
(within the meaning of Section 4980B(g)(2) of the Code) complies, and in each
and every case has complied, with all of the applicable material requirements of
Section 4980B of the Code, ERISA, Title XXII of the Public Health Service Act
and the Social Security Act, and (iii) all Welfare Plans may be amended or
terminated at any time on or after the Closing Date
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without incurring any liability thereunder.
(g) Neither Bancorp nor any of its Subsidiaries has any obligations
for retiree health and life benefits under any Bancorp Benefit Plan, other than
coverage as may be required under Section 4980B of the Code or Part 6 of Title I
of ERISA, or under the continuation of coverage provisions of the laws of any
state or locality.
(h) As of the date of this Agreement, neither Bancorp nor any of its
Subsidiaries is a party to any agreement, contract, arrangement or plan that has
resulted or would result, separately or in the aggregate, in the payment of (i)
any "excess parachute payment" within the meaning of Code Section 280G (or any
corresponding provision of state, local or foreign Tax law) or (ii) any amount
that will not be fully deductible as a result of Code Section 162(m) (or any
corresponding provision of state, local or foreign Tax law). None of the
execution of this Agreement, Corporator approval of this Agreement or
consummation of the transactions contemplated by this Agreement will (A) entitle
any employees of Bancorp or any of its Subsidiaries to severance pay or any
increase in severance pay upon any termination of employment after the date
hereof, (B) accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any of the Bancorp Benefit Plans, (C) result in any breach or
violation of, or a default under, any of the Bancorp Benefit Plans, (D) result
in any payment that would be a "parachute payment" to a "disqualified
individual" as those terms are defined in Section 280G of the Code, without
regard to whether such payment is reasonable compensation for personal services
performed or to be performed in the future or (E) result in any payment that
would be nondeductible pursuant to Section 162(m) of the Code.
6.17. LABOR MATTERS. Neither Bancorp nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
Bancorp or any of its Subsidiaries the subject of a proceeding asserting that it
has committed an unfair labor practice (within the meaning of the National Labor
Relations Act) or seeking to compel Bancorp or any of its Subsidiaries to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike, work stoppage or other labor dispute, arbitration, lawsuit
or administrative proceeding involving it or any of its Subsidiaries pending or,
to Bancorp's knowledge, threatened, nor is Bancorp or any of its Subsidiaries
aware of any activity involving its employees seeking to certify a collective
bargaining unit or engaging in other organizational activity. No employees of
Bancorp or any of its Subsidiaries are represented by any labor union.
6.18. ENVIRONMENTAL MATTERS.
(a) Bancorp and its Subsidiaries are in material compliance with
applicable Environmental Laws;
(b) to Bancorp's knowledge, no real property (including buildings or
other structures) currently or formerly owned or operated by Bancorp or any of
its Subsidiaries, or any property in which Bancorp or any of its Subsidiaries
has held a security interest, Lien or a fiduciary or management role ("BANCORP
LOAN PROPERTY"), has been contaminated with, or has had any
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release of, any Hazardous Substance except in compliance with Environmental
Laws;
(c) neither Bancorp nor any of its Subsidiaries has participated in
the management regarding Hazardous Substances of, any Bancorp Loan Property
which has been contaminated with, or has had any release of, any Hazardous
Substance except in compliance with Environmental Laws;
(d) neither Bancorp nor any of its Subsidiaries has any material
liability for any Hazardous Substance disposal or contamination on any third
party property;
(e) neither Bancorp nor any of its Subsidiaries has received any
notice, demand letter, claim or request for information alleging any violation
of, or liability under, any Environmental Law;
(f) neither Bancorp nor any of its Subsidiaries is subject to any
order, decree, injunction or other agreement with any Governmental Authority or
any third party relating to any Environmental Law;
(g) to Bancorp's knowledge, there are no circumstances or conditions
(including the presence of asbestos, underground storage tanks, lead products,
polychlorinated biphenyls, prior manufacturing operations, dry-cleaning, or
automotive services) involving Bancorp or any of its Subsidiaries, any currently
or formerly owned or operated property, or any Bancorp Loan Property, that could
reasonably be expected to result in any claims, liability or investigations
against Bancorp or any of its Subsidiaries, result in any restrictions on the
ownership, use, or transfer of any property pursuant to any Environmental Law,
or adversely affect the value of any Bancorp Loan Property; and
(h) Bancorp has delivered or, at Chart's request, made available to
Chart copies of all environmental reports, studies, sampling data,
correspondence, filings and other environmental information in its possession or
reasonably available to it relating to Bancorp, its Subsidiaries and any
currently or formerly owned or operated property or any Bancorp Loan Property.
6.19. TAX MATTERS.
(a) For the taxable years ended December 31, 2003, 2002, 2001, 2000,
1999, 1998 and 1997, each of Bancorp and its Subsidiaries has filed all Tax
Returns that it was required to file under applicable laws and regulations. All
such Tax Returns were correct and complete in all material respects and have
been prepared in substantial compliance with all applicable laws and
regulations. All Taxes due and owing by Bancorp or any of its Subsidiaries
(whether or not shown on any Tax Return) have been paid. Neither Bancorp nor any
of its Subsidiaries is currently the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where Bancorp or any of its Subsidiaries does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are no
Liens for Taxes (other than Taxes not yet due and payable) upon any of the
assets of Bancorp or any of its Subsidiaries.
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(b) Bancorp and each of its Subsidiaries has withheld and paid all
Taxes required to have been withheld and paid in connection with any amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party.
(c) No foreign, federal, state, or local tax audits or
administrative or judicial Tax proceedings are pending or being conducted with
respect to Bancorp or any of its Subsidiaries. Neither Bancorp nor any of its
Subsidiaries has received from any foreign, federal, state, or local taxing
authority (including jurisdictions where Bancorp or any of its Subsidiaries has
not filed Tax Returns) any (i) notice indicating an intent to open an audit or
other review, (ii) request for information related to Tax matters, or (iii)
notice of deficiency or proposed adjustment for any amount of Tax proposed,
asserted, or assessed by any taxing authority against Bancorp or any of its
Subsidiaries.
(d) Bancorp has provided Chart with true and complete copies of the
United States federal, state, local, and foreign income Tax Returns filed with
respect to Bancorp and its Subsidiaries for taxable periods ended on or after
December 31, 2000. The Disclosure Schedule indicates those Tax Returns that have
been audited during the last three years, and those Tax Returns that currently
are the subject of an audit. Bancorp has delivered to Chart correct and complete
copies of all examination reports, and statements of deficiencies assessed
against or agreed to by Bancorp or any of its Subsidiaries filed for the years
ended on or after December 31, 2000.
(e) Neither Bancorp nor any of its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(f) Neither Bancorp nor any of its Subsidiaries has filed a consent
under Code Section 341(f) concerning collapsible corporations. Neither Bancorp
nor any of its Subsidiaries has been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii). Bancorp and each of its
Subsidiaries has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Code Section 6662. Neither Bancorp nor any of its
Subsidiaries is a party to or bound by any Tax allocation or sharing agreement.
Neither Bancorp nor any of its Subsidiaries (A) has been a member of an
Affiliated Group filing a consolidated federal income Tax Return (other than a
group the common parent of which was Bancorp) and (B) has any liability for the
Taxes of any Person (other than Bancorp and its Subsidiaries) under Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(g) The unpaid Taxes of Bancorp and its Subsidiaries do not exceed
the reserve for Tax liability (which reserve is distinct and different from any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) established on the books and records of Bancorp and its
Subsidiaries.
(h) Neither Bancorp nor any of its Subsidiaries will be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any: (A) change in method of
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accounting for a taxable period ending on or prior to the Closing Date; (B)
"closing agreement" as described in Code Section 7121 (or any corresponding or
similar provision of state, local or foreign income Tax law) executed on or
prior to the Closing Date; (C) intercompany transactions or any excess loss
account described in Treasury Regulations under Code Section 1502 (or any
corresponding or similar provision of state, local or foreign income Tax law);
(D) installment sale or open transaction disposition made on or prior to the
Closing Date; or (E) prepaid amount received on or prior to the Closing Date.
(i) Neither Bancorp nor any of its Subsidiaries has distributed
stock of another person, nor had its stock distributed by another person, in a
transaction that was purported or intended to be governed in whole or in part by
Code section 355 or Code section 361.
6.20. RISK MANAGEMENT INSTRUMENTS. Neither Bancorp nor any of its
Subsidiaries is a party or has agreed to enter into any Derivatives Contract or
owns securities that (i) are referred to generically as "structured notes,"
"high risk mortgage derivatives," "capped floating rate notes" or "capped
floating rate mortgage derivatives" or (ii) are likely to have changes in value
as a result of interest or exchange rate changes that significantly exceed
normal changes in value attributable to interest or exchange rate changes,
except for those Derivatives Contracts and other instruments legally purchased
or entered into in the ordinary course of business, consistent with safe and
sound banking practices and regulatory guidance. All of such Derivatives
Contracts or other instruments, are legal, valid and binding obligations of
Bancorp or any of its Subsidiaries enforceable in accordance with their terms
(except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally), and are in
full force and effect. Bancorp and its Subsidiaries have duly performed in all
material respects all of their material obligations thereunder to the extent
that such obligations to perform have accrued; and, to Bancorp's knowledge,
there are no breaches, violations or defaults or allegations or assertions of
such by any party thereunder that would have or would reasonably be expected to
have a Material Adverse Effect on Bancorp.
6.21. INVESTMENT SECURITIES. Except for pledges to secure public and trust
deposits, Federal Reserve borrowings, Federal Home Loan Bank advances,
repurchase agreements and reverse repurchase agreements entered into in
arms'-length transactions pursuant to normal commercial terms and conditions and
other pledges required by law, none of the investments reflected in the balance
sheet of Bancorp contained in its most recent Financial Statements made
available to Chart, and none of the material investments made by Bancorp or any
of its Subsidiaries since January 1, 2004 is subject to any restriction
(contractual, statutory or otherwise) that would materially impair the ability
of the entity holding such investment freely to dispose of such investment at
any time. The information (including electronic information and information
contained on tapes and computer disks) with respect to all investment securities
(including mortgaged-backed securities) of Bancorp and its Subsidiaries
furnished to Chart by Bancorp is, as of the respective dates indicated therein,
true and correct in all material respects.
6.22. LOANS; NONPERFORMING AND CLASSIFIED ASSETS.
(a) Each Loan on the books and records of Bancorp and its
Subsidiaries, was made and has been serviced in all material respects in
accordance with customary lending standards in the
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ordinary course of business, is evidenced in all material respects by
appropriate and sufficient documentation and, to the knowledge of Bancorp,
constitutes the legal, valid and binding obligation of the obligor named
therein, subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditor's rights or by general equity principles. The information
(including electronic information and information contained on tapes and
computer disks) with respect to all Loans of Bancorp and its Subsidiaries
furnished to Chart by Bancorp is, as of the respective dates indicated therein,
true and correct in all material respects. To the best knowledge of Bancorp, all
loans originated, directly or through third party mortgage brokers, have been
originated in compliance with all federal, state and local laws, including
without limitation, the Real Estate Settlement Procedures Act of 1974, as
amended.
(b) Bancorp has Previously Disclosed as to Bancorp and each Bancorp
Subsidiary as of the latest practicable date: (i) any written or, to Bancorp's
knowledge, oral Loan under the terms of which the obligor is 60 or more days
delinquent in payment of principal or interest, or to Bancorp's knowledge, in
default of any other material provision thereof; (ii) each Loan that has been
classified as "substandard," "doubtful," "loss" or "special mention" (or words
of similar import) by Bancorp, a Bancorp Subsidiary or an applicable regulatory
authority (it being understood that no representation is being made that FDIC or
Staff of the Massachusetts Bank Commissioner would agree with the loan
classifications established by Bancorp); (iii) a listing of the OREO acquired by
foreclosure or by deed-in-lieu thereof, including the book value thereof; and
(iv) each Loan with any trustee, director, executive officer or Corporator of
Bancorp, or to the best knowledge of Bancorp, any Person controlling, controlled
by or under common control with any of the foregoing.
(c) No agreement pursuant to which any loans or other assets have
been or shall be sold by Bancorp or its Subsidiaries entitled the buyer of such
loans or other assets, unless there is material breach of a representation or
covenant by Bancorp or its Subsidiaries, to cause Bancorp or its Subsidiaries to
repurchase such loan or other asset or the buyer to pursue any other form of
recourse against Bancorp or its Subsidiaries.
6.23. BANK OWNED LIFE INSURANCE. Bancorp has Previously Disclosed a true,
correct and complete description of all BOLI owned by Bancorp or its
Subsidiaries. The value of such BOLI as of the date hereof is fairly and
accurately reflected on the most recent Bancorp Financial Statements in
accordance with GAAP. Except as set forth on Section 6.23 of Bancorp's
Disclosure Schedule, all life insurance policies on the lives of any of the
current and former officers and directors of Bancorp or any of its Subsidiaries
that are maintained by Bancorp or any such Subsidiary that are otherwise
included as assets on the books of Bancorp or such Subsidiary are, or will at
the Effective Time be, owned by Bancorp or such Subsidiary, as the case may be,
free and clear of any claims thereon by the officers or members of their
families, except with respect to the death benefits thereunder, as to which
Bancorp or such Subsidiary agree that there will not be an amendment prior to
the Effective Time without the consent of Chart's Authorized Representative.
6.24. PROPERTIES. The real and material personal property owned by Bancorp
or a Subsidiary of Bancorp or presently used by any of them in its respective
business is in an adequate condition (ordinary wear and tear excepted) and is
sufficient to carry on its business in
- 54 -
the ordinary course of business consistent with its past practices. Bancorp has
good and marketable title free and clear of all Liens to all of the real and
material personal properties and assets reflected on the consolidated statement
of financial condition of Bancorp as of December 31, 2003 included in the
Bancorp Reports or acquired after such date, other than properties sold by
Bancorp in the ordinary course of business, except (i) Liens for current taxes
and assessments not yet due or payable, (ii) pledges to secure deposits and
other Liens incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not,
individually or in the aggregate, material in character, amount or extent and
(iv) as reflected on the consolidated statement of financial condition of
Bancorp as of December 31, 2003 included in the Bancorp Reports. All real and
personal property that is material to Bancorp's business on a consolidated basis
and leased or licensed by Bancorp or a Subsidiary of Bancorp is held pursuant to
leases or licenses that are valid and enforceable in accordance with their
respective terms and such leases will not terminate or lapse prior to the
Effective Time and there exists no material default under any such leases or
licenses by Bancorp or any of its Subsidiaries nor, to the best knowledge of
Bancorp and except as set forth on Section 6.24 of Bancorp's Disclosure
Schedule, any event which, with notice or lapse of time or both, would
constitute a material default thereunder by Bancorp or any other Bancorp
Subsidiaries, except for such defaults which, individually, or in the aggregate,
would not result in the forfeiture of the use or occupancy of the property
covered by such lease or in a material liability to Bancorp. The consent of the
landlord under the real estate leases listed on Section 6.24 of Bancorp's
Disclosure Schedule may be required in order to consummate the transactions
contemplated by this Agreement.
6.25. INTELLECTUAL PROPERTY. Bancorp and each Subsidiary of Bancorp owns
or possesses valid and binding licenses and other rights to use without payment
of any material amount all material patents, copyrights, trade secrets, trade
names, service marks and trademarks used in its businesses, all of which have
been Previously Disclosed by Bancorp, and none of Bancorp or any of its
Subsidiaries has received any notice of conflict with respect thereto that
asserts the right of others. Bancorp and each Subsidiary has performed in all
material respects all the obligations required to be performed by it and is not
in default under any contract, agreement, arrangement or commitment relating to
any of the foregoing.
6.26. FIDUCIARY ACCOUNTS. Neither Bancorp nor any of its Subsidiaries
engage in any trust business or administers or maintains accounts for which it
acts as a fiduciary (other than individual retirement accounts and ▇▇▇▇▇
accounts), including but not limited to accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor.
6.27. CAPITALIZATION. Bancorp Bank is "well capitalized," as such term is
defined in the rules and regulations promulgated by the FDIC.
6.28. COMMUNITY REINVESTMENT ACT, ANTI-MONEY LAUNDERING AND CUSTOMER
INFORMATION SECURITY. Neither Bancorp nor Bancorp Bank is aware of, has been
advised of, or has reason to believe that any facts or circumstances exist,
which would cause Bancorp Bank: (i) to be deemed not to be in satisfactory
compliance in any material respect with the Community Reinvestment Act, and the
regulations promulgated thereunder, or to be assigned a rating for Community
Reinvestment Act purposes by federal or state bank regulators of lower than
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"satisfactory;" or (ii) to be deemed to be operating in violation in any
material respect of the federal Bank Secrecy Act, as amended, and its
implementing regulations (31 C.F.R. Part 103), the USA Patriot Act, and the
regulations promulgated thereunder, any order issued with respect to anti-money
laundering by the U.S. Department of the Treasury's Office of Foreign Assets
Control, or any other applicable anti-money laundering statute, rule or
regulation; or (iii) to be deemed not to be in satisfactory compliance in any
material respect with the applicable privacy of customer information
requirements contained in any federal and state privacy laws and regulations,
including without limitation, in Title V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999
and regulations promulgated thereunder, as well as the provisions of the
information security program adopted by Bancorp Bank pursuant to 12 C.F.R. Part
364. Furthermore, the board of directors of Bancorp Bank has adopted and Bancorp
Bank has implemented an anti-money laundering program that contains adequate and
appropriate customer identification verification procedures that has not been
deemed ineffective in any material respects by any Bank Regulators and that
meets the requirements in all material respects of Section 352 of the USA
Patriot Act and the regulations thereunder.
6.29. BOOKS AND RECORDS. The books and records of Bancorp and its
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements, and such books and records accurately reflect in
all material respects all dealings and transactions in respect of the business,
assets, liabilities and affairs of Bancorp and its Subsidiaries.
6.30. INSURANCE. Bancorp has Previously Disclosed all of the material
Insurance Policies currently maintained by Bancorp or any of its Subsidiaries.
Bancorp and its Subsidiaries are insured with reputable insurers against such
risks and in such amounts as the management of Bancorp reasonably has determined
to be prudent in accordance with industry practices. All the Insurance Policies
are in full force and effect; Bancorp and its Subsidiaries are not in material
default thereunder and have not received any notice of cancellation with respect
thereto; and all claims thereunder have been filed in due and timely fashion,
and Bancorp and its Subsidiaries, as applicable, have timely provided such
insurers with due notice of all matters that may reasonably become a claim or
otherwise constitute a basis for seeking recovery under the Insurance Policies.
6.31. ALLOWANCE FOR LOAN LOSSES. Bancorp's allowance for loan losses is in
compliance with Bancorp's existing methodology for determining the adequacy of
its allowance for loan losses and, to the knowledge of Bancorp, the standards
established by applicable Governmental Authorities and the Financial Accounting
Standards Board and is adequate under all such standards.
6.32. CREDIT CARD ACCOUNTS. Neither Bancorp nor any of its Subsidiaries
originate, maintain or administer credit card accounts.
6.33. MERCHANT PROCESSING. Neither Bancorp nor any of its Subsidiaries
provide, or has provided, merchant credit card processing services to any
merchants.
6.34. TRANSACTIONS WITH AFFILIATES. All "covered transactions" between
Bancorp Bank and an "affiliate" within the meaning of Sections 23A and 23B of
the Federal Reserve Act have been in compliance with such provisions and the
provisions of Federal Reserve Board Regulation W.
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6.35. OWNERSHIP OF CHART COMMON STOCK. None of Bancorp or any of Bancorp's
Subsidiaries, or to Bancorp's knowledge, any of its other affiliates or
associates (as such terms are defined under the Exchange Act), owns beneficially
or of record, directly or indirectly, or is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, shares of Chart Common Stock (other than shares held in a
fiduciary capacity that are beneficially owned by third parties or as a result
of debts previously contracted) which in the aggregate represent 5% or more of
the outstanding Chart Common Stock.
6.36. DISCLOSURE. The representations and warranties contained in this
Article VI, when considered as a whole, together with any certificate, list or
other writing, including but not limited to Bancorp's Disclosure Schedule,
specifically required to be furnished to Chart pursuant to the provisions
hereof, do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and information
contained herein and therein not misleading.
ARTICLE VII.
COVENANTS
7.1. REASONABLE BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of Chart and Bancorp agrees to use its reasonable best efforts
in good faith to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Transactions as promptly as
practicable and otherwise to enable consummation of the Transactions, including
the satisfaction of the conditions set forth in Article VIII hereof, and shall
cooperate fully with the other parties hereto to that end. Without limiting the
generality of the foregoing, (i) Bancorp will use its reasonable best efforts to
cause the following steps to be taken on or prior to December 31, 2004: the
filing of its Plan of Conversion with the Massachusetts Bank Commissioner (and
related filings with the FDIC, if any) and the Federal Reserve; the filing of
its Registration Statement on Form S-1 with the SEC (and related filings with
the Massachusetts Bank Commissioner and the FDIC, if any); and the filing of its
regulatory applications with respect to the Merger with the Massachusetts Bank
Commissioner and the FDIC; and (ii) Chart will use its reasonable best efforts
to provide Bancorp, at least two weeks prior to the date on which Bancorp
intends to make such filings, with all financial and other information with
respect to Chart (in substantially the form required by the applicable
governmental agency) necessary to enable such filings to be made, provided that
Bancorp has notified Chart of such expected filing dates at least five weeks in
advance of such anticipated filing dates.
7.2. BANCORP CONVERSION FROM MUTUAL TO STOCK FORM. Commencing promptly
after the date of this Agreement, Bancorp and Bancorp Bank will take all
reasonable steps necessary to expeditiously effect the Conversion. In addition,
without limiting the generality of the foregoing, Bancorp shall cause the
following to be done:
(a) As promptly as practicable after receipt of all approvals or
non-objections necessary from the applicable bank regulators, Bancorp shall duly
call, give notice of, convene and hold a special meeting of its Corporators for
the purpose of approving the Conversion and for such other purposes as may be,
in the reasonable judgment of Bancorp, necessary or desirable. The Board of
Trustees of Bancorp will recommend to the Corporators the approval of the
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Conversion.
(b) Bancorp will use its reasonable best efforts to prepare and file
as promptly as practicable all required regulatory applications required in
connection with the Conversion and the Merger, including, without limitation,
filing applications with the Massachusetts Bank Commissioner, the FDIC and the
Federal Reserve Board.
7.3. REGISTRATION STATEMENTS.
(a) Bancorp agrees to use its reasonable best efforts to prepare and
file, as promptly as practicable, a Registration Statement on Form S-1 or other
applicable form to be filed by Bancorp with the SEC and the Massachusetts Bank
Commissioner in connection with the issuance of Bancorp Common Stock in the
Conversion (including the prospectus constituting a part thereof (the
"CONVERSION PROSPECTUS") and all related documents). Bancorp also agrees to
prepare and file a registration statement on Form S-4 or other applicable form
to be filed as soon as practicable (but in no event later than ten days
following the date on which the SEC declares the Registration Statement on Form
S-1 effective) by Bancorp with the SEC in connection with the issuance of
Bancorp Common Stock in the Merger (including the proxy statement and prospectus
and other proxy solicitation materials of Chart constituting a part thereof (the
"PROXY STATEMENT") and all related documents). Chart shall use its reasonable
best efforts to prepare and furnish, as soon as practicable, such information
relating to it and its directors, officers and stockholders as may be reasonably
required in connection with the above referenced documents based on its and its
legal, financial and accounting advisors' knowledge of and access to the
information required for said documents, and Chart, and its legal, financial and
accounting advisors, shall have the right to review in advance each such
Registration Statement prior to its filing. Chart agrees to cooperate with
Bancorp and Bancorp's counsel and accountants in requesting and obtaining
appropriate opinions, consents and letters from its financial advisor and
independent auditor in connection with the Registration Statements and the Proxy
Statement. Each of Chart and Bancorp agrees to use its reasonable best efforts
to cause each Registration Statement to be declared effective under the
Securities Act as promptly as reasonably practicable after the filing thereof.
Bancorp also agrees to use its reasonable best efforts to obtain approval from
the Massachusetts Bank Commissioner and all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. Promptly after the Registration Statement
containing the Conversion Prospectus is declared effective under the Securities
Act, Bancorp shall mail at its expense the Conversion Prospectus to Bancorp
Bank's eligible depositors. Promptly after the Registration Statement containing
the Proxy Statement is declared effective under the Securities Act, Chart shall
mail at its expense the Proxy Statement to its stockholders.
(b) Each of Chart and Bancorp agrees that none of the information
supplied or to be supplied by it for inclusion or incorporation by reference in
(i) either Registration Statement shall, at the time the Registration Statement
and each amendment or supplement thereto, if any, becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) the Conversion Prospectus and any
amendment or supplement thereto shall, at the date(s) of mailing to eligible
depositors and at the time of the closing of the Conversion, contain any untrue
statement of a material fact or omit to state any material fact
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required to be stated therein or necessary to make the statements therein not
misleading at the time and in light of the circumstances under which such
statement is made; and (iii) the Proxy Statement and any amendment or supplement
thereto shall, at the date(s) of mailing to stockholders and at the time of
Chart Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading at the time and in light of the circumstances
under which such statement is made. Each of Chart and Bancorp further agrees
that if such party shall become aware prior to the Effective Date of any
information furnished by such party that would cause any of the statements in
either Registration Statement, the Conversion Prospectus or the Proxy Statement
to be false or misleading with respect to any material fact, or to omit to state
any material fact necessary to make the statements therein not false or
misleading, to promptly inform the other parties thereof and to take the
necessary steps to correct the Registration Statement, the Conversion Prospectus
or the Proxy Statement.
(c) Bancorp agrees to advise Chart, promptly after Bancorp receives
notice thereof, of the time when a Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of Bancorp Common Stock for offering or
sale in any jurisdiction, of the initiation or, to the extent Bancorp is aware
thereof, threat of any proceeding for any such purpose, or of any request by the
SEC for the amendment or supplement of either Registration Statement or for
additional information.
(d) Upon Bancorp's request, Chart will cause its independent
certified public accountants to prepare and deliver to Bancorp's Conversion
agent and/or underwriter a "comfort" letter, dated the effective date of the
Conversion Registration Statement and the Effective Date, with respect to
certain financial information regarding Chart, in form and substance which is
customary in transactions of the nature of the Conversion.
7.4. SHAREHOLDER APPROVAL. Chart agrees to take, in accordance with
applicable law and the Chart Charter and the Chart Bylaws, all action necessary
to call, give notice of, convene, and hold as soon as reasonably practicable a
meeting of its stockholders to consider and vote upon the approval of this
Agreement and any other matters required to be approved by Chart's stockholders
for consummation of the Transactions (including any adjournment or postponement,
the "CHART MEETING"). Except with the prior approval of Bancorp, no other
matters shall be submitted for the approval of Chart stockholders at Chart
Meeting. Subject to Section 7.9, the Chart Board shall at all times prior to and
during such meeting recommend such approval (the "CHART BOARD RECOMMENDATION")
and shall take all reasonable lawful action to solicit such approval by its
stockholders. Bancorp, as the sole stockholder of Bancorp Bank, has approved
this Agreement and any other matters required to be approved by Bancorp Bank's
stockholders for consummation of the Transactions.
7.5. REGULATORY FILINGS.
(a) Each of Bancorp and Chart and their respective Subsidiaries
shall cooperate and use their respective commercially-reasonable efforts to
promptly prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary or advisable to consummate the Transactions
and any other transactions contemplated by this Agreement or any other
Transaction Document and to comply
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with the terms and conditions of all such permits, consents, approvals and
authorizations of all such Governmental Authorities; and any initial filings
with Governmental Authorities (other than the Conversion Prospectus and the
Proxy Statement) shall be made by Bancorp as soon as reasonably practicable
after the execution hereof. Each of Bancorp and Chart shall have a reasonable
time to review such filings in advance, and to the extent practicable each shall
consult with the other, in each case subject to applicable laws relating to the
exchange of information, with respect to all written information submitted to
any third party or any Governmental Authority in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of such parties agrees to act reasonably and as promptly as practicable.
Each party hereto agrees that it shall consult with the other parties hereto
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement or any
other Transaction Document, and each party shall keep the other parties apprised
of the status of material matters relating to completion of the transactions
contemplated hereby.
(b) Each party agrees, upon request, to furnish the other parties
with all information concerning itself, its Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or on
behalf of such other parties or any of their respective Subsidiaries to any
third party or Governmental Authority.
7.6. PRESS RELEASES. Chart and Bancorp shall consult with each other
before issuing any press release with respect to the Transactions or this
Agreement and shall not issue any such press release or make any such public
statements without the prior consent of the other party's Authorized
Representative, which shall not be unreasonably withheld; provided, however,
that a party may, without the prior consent of the other party's Authorized
Representative (but after such consultation, to the extent practicable in the
circumstances), issue such press release or make such public statements as may
upon the advice of outside counsel be required by law or the (to the extent the
same become applicable) rules or regulations of Nasdaq or other regulatory
authority. Chart and Bancorp shall cooperate to develop all public announcement
materials and make appropriate management available at presentations related to
the Transactions as reasonably requested by the other party.
7.7. ACCESS; INFORMATION.
(a) Chart agrees that upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford Bancorp
and Bancorp's officers, employees, counsel, accountants and other authorized
representatives such access during normal business hours throughout the period
prior to the Effective Time to the books, records (including, without
limitation, Tax Returns and work papers of independent auditors), properties and
personnel and to such other information as Bancorp may reasonably request and,
during such period, it shall furnish promptly to Bancorp all information
concerning its business, properties and personnel as Bancorp may reasonably
request. Representatives of Chart's senior management will meet periodically
with representatives of Bancorp to coordinate post-closing integration planning,
including working toward conforming Chart's and Bancorp's asset/liability
management, lending practice, credit review and administrative and related
policies and practices.
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(b) Bancorp agrees that upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford Chart
and its authorized representatives such access to Bancorp's personnel as Chart
may reasonably request and to such information relating to Bancorp as Chart may
reasonably request.
(c) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
7.7 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. Subject
to the requirements of law, each party shall keep confidential, and shall cause
its representatives to keep confidential, all information and documents obtained
pursuant to this Section 7.7 (as well as any other information obtained prior to
the date hereof in connection with the entering into of this Agreement) unless
such information (i) was already known to such party, (ii) becomes available to
such party from other sources not known by such party to be bound by a
confidentiality obligation, (iii) is disclosed with the prior written approval
of the party to which such information pertains or (iv) is or becomes readily
ascertainable from publicly available sources. In the event that this Agreement
is terminated or the transactions contemplated by this Agreement shall otherwise
fail to be consummated, each party shall promptly cause all copies of documents
or extracts thereof containing information and data as to another party hereto
to be returned to the party which furnished the same. No investigation by any
party of the business and affairs of any other party shall affect or be deemed
to modify or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to any party's obligation to consummate the
transactions contemplated by this Agreement.
7.8. AFFILIATES. Chart shall use its commercially-reasonable efforts
to identify those Persons who may be deemed to be "affiliates" of Chart within
the meaning of Rule 145 promulgated by the SEC under the Securities Act (the
"CHART AFFILIATES") and to cause each Person so identified to deliver to Bancorp
as soon as practicable, and in any event prior to the date of Chart Meeting, a
written agreement ("AFFILIATE AGREEMENT") to comply with the requirements of
Rule 145 under the Securities Act in connection with the sale or other transfer
of Bancorp Common Stock received in the Merger, which agreement shall be in a
form reasonably satisfactory to Chart and Bancorp.
7.9. ACQUISITION PROPOSAL. Chart agrees that neither it nor any of
its Subsidiaries nor any of Chart's or any of Subsidiary's, officers, directors,
employees, agents or representatives (the "REPRESENTATIVES") shall, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate (including
without limitation by way of furnishing confidential information or data) any
inquiries regarding or the making of any Acquisition Proposal (other than by
Bancorp). Chart further agrees that neither it nor any of its Subsidiaries nor
any of Chart's or any of Subsidiary's Representatives shall, directly or
indirectly, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to an
Acquisition Proposal or enter into any agreement, arrangement or understanding
with respect to an Acquisition Proposal or requiring it (or conditioned upon
requiring it) to abandon, terminate or fail to consummate the Merger or any
other transactions contemplated by this Agreement; provided, however, that
nothing contained in this Agreement shall prevent Chart or Chart Board between
the date of this Agreement and prior to the date of Chart Meeting from (A)
providing information in response to a request therefor by a Person who has made
an unsolicited bona fide
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written Acquisition Proposal if Chart Board receives from the Person so
requesting such information an executed confidentiality agreement no less
favorable to it than the Confidentiality Agreement entered into on June 3, 2004
by Bancorp and Chart (and Chart shall enforce and not waive any provision of any
confidentiality agreement entered into with any such Person contemplated by this
Section 7.9); (B) engaging in any negotiations or discussions with any Person
who has made an unsolicited bona fide written Acquisition Proposal; or (C)
recommending such an Acquisition Proposal to the stockholders of Chart, if and
only to the extent that, (i) in each such case referred to in clause (A), (B) or
(C) above, Chart Board determines in good faith (after consultation with outside
legal counsel) and by a majority vote of the entire Chart Board that such action
would be required in order for its directors to comply with their respective
fiduciary duties under applicable law, (ii) in each such case referred to in
clause (A) or (B) above, Chart Board also determines in good faith (after
consultation with its financial advisor) that such Acquisition Proposal, if
accepted, is reasonably likely to lead to a Superior Proposal, and (iii) in the
case referred to in clause (C) above, (w) Chart Board also determines in good
faith (after consultation with its financial advisor) and by a majority of the
entire Chart Board that such Acquisition Proposal is a Superior Proposal, (x)
Chart Board has given Bancorp five (5) Business Days' prior written notice of
its intention to recommend such Acquisition Proposal to the stockholders of
Chart, (y) Chart Board has considered any changes to the Per Share Merger
Consideration and to this Agreement (if any) proposed by Bancorp, and (z) Chart
Board has determined in good faith and by a majority vote of the entire Chart
Board, after consultation with Chart's outside legal counsel and after
consultation with its financial advisor, that such unsolicited proposal remains
a Superior Proposal even after the changes proposed by Bancorp. A "Superior
Proposal" shall be a bona fide Acquisition Proposal for 100% of the outstanding
securities of Chart that is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
Person making the proposal and, if consummated, is reasonably likely to result
in a transaction more favorable to Chart's stockholders from a financial point
of view than the Merger.
Chart agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposals and shall request the
return or destruction of all confidential information provided to any such
parties prior to the date of this Agreement. Chart agrees that it will notify
Bancorp immediately if any inquiries, proposals or offers are received by, any
such information is requested from, or any discussions or negotiations are
sought to be initiated or continued with, any of its Representatives relating to
an Acquisition Proposal. Chart will promptly (within one Business Day) advise
Bancorp following receipt of any Acquisition Proposal and the substance thereof
(including the identity of the Person making such Acquisition Proposal), and
will keep Bancorp apprised of any related developments, discussions and
negotiations (including the terms and conditions (and any amendments or
modifications thereto) of the Acquisition Proposal) on a current basis. Chart
will use its commercially-reasonable efforts to enforce (and will not waive any
provisions of) any confidentiality or similar agreement entered into by it or on
its behalf by ▇▇▇▇ ▇▇▇▇ & Co. LLC or otherwise relating to a potential
Acquisition Proposal.
7.10. CERTAIN POLICIES. Prior to the Effective Date, each of Chart and its
Subsidiaries shall, consistent with GAAP and applicable banking laws and
regulations, modify or change its loan, OREO, accrual, reserve, tax, litigation
and real estate valuation policies and practices (including loan classifications
and levels of reserves) so as to be applied on a basis that is
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consistent with that of Bancorp; provided, however, that no such modifications
or changes need be made prior to the satisfaction of all of the conditions set
forth in Article VIII; and further provided that in any event, no accrual or
reserve made by Chart or any of its Subsidiaries pursuant to this Section 7.10
shall constitute or be deemed to be a breach, violation of or failure to satisfy
any representation, warranty, covenant, agreement, condition or other provision
of this Agreement or otherwise be considered in determining whether any such
breach, violation or failure to satisfy shall have occurred. The recording of
any such adjustments shall not be deemed to imply any misstatement of previously
furnished financial statements or information and shall not be construed as
concurrence of Chart or its management with any such adjustments.
7.11. NASDAQ LISTING. Bancorp agrees to use its best efforts to list,
prior to the Effective Date, on the Nasdaq the shares of Bancorp Common Stock to
be issued in connection with the Conversion or the Merger.
7.12. INDEMNIFICATION.
(a) From and after the Effective Time, Bancorp (the "INDEMNIFYING
PARTY") shall indemnify and hold harmless each present and former director,
officer and employee of Chart or a Chart Subsidiary, as applicable, determined
as of the Effective Time (each an "INDEMNIFIED PARTY" and collectively the
"INDEMNIFIED PARTIES") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, civil or criminal, brought or threatened to be brought in or
before any court, tribunal, administrative or legislative body or agency,
arising out of matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, arising in
whole or in part out of, or pertaining to the fact that he or she was a
director, officer or employee of Chart or any Chart Subsidiary or is or was
serving at the request of Chart or any of Chart Subsidiaries as a director,
officer or employee, of another corporation, partnership, joint venture, trust
or other enterprise, including without limitation matters related to the
negotiation, execution and performance of this Agreement or any of the
transactions contemplated hereby (a "PROCEEDING"), to the fullest extent which
such Indemnified Parties would be entitled under the Chart Charter and the Chart
Bylaws as in effect as of the date hereof (subject to 7.12(b)).
(b) Any Indemnified Party wishing to claim indemnification under
this Section 7.12, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not actually prejudice the
Indemnifying Party. In the event that any such claim, action, suit, proceeding
or investigation is threatened or brought (whether before or after the Effective
Time), the Indemnified Parties may retain counsel reasonably satisfactory to the
Indemnifying Party; provided, however, that, (i) the Indemnifying Party shall
have the right to assume the defense thereof (provided that the Indemnifying
Party confirms in writing to the Indemnified Party its obligation to indemnify
such party to the extent required by this Agreement and provided, further, that
the Indemnifying Party is at least "adequately capitalized" as defined in the
relevant prompt corrective action regulations) and upon such assumption the
Indemnifying Party shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
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Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises the Indemnified Parties that there are issues which
raise conflicts of interest between the Indemnifying Party and the Indemnified
Parties, the Indemnified Parties may retain counsel which is reasonably
satisfactory to the Indemnifying Party, and the Indemnifying Party shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties (which
may not exceed one firm for all Indemnified Parties, unless the proposed counsel
for the Indemnified Parties reasonably advises the Indemnified Parties that
there are issues which raise conflicts of interest among such parties, in which
case the Indemnifying Party shall pay the reasonable fees and expenses of one
additional counsel to the extent necessary to avoid such conflict), (ii) the
Indemnified Parties will cooperate in the defense of any such matter, (iii) the
Indemnifying Party shall not be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld) and
(iv) the Indemnifying Party shall have no obligation hereunder in the event that
a federal or state banking agency or a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of an Indemnified Party by the Indemnifying
Party in the manner contemplated hereby is prohibited by applicable laws and
regulations. The Indemnified Party shall be entitled to be reimbursed by the
Indemnifying Party for fees and expenses reasonably incurred in connection with
any Proceeding as such fees and expenses are incurred (and in advance of the
final determination of the underlying claim) ("ADVANCED EXPENSES") if (x) the
Indemnified Party provides an undertaking to repay such Advanced Expenses to the
Indemnifying Party if such person shall be adjudicated or determined to be not
entitled to indemnification pursuant to the indemnification provisions in
Bancorp's Charter and/or By-laws, and (y) provides security for such undertaking
reasonably acceptable to the Indemnifying Party, if the Board of Directors of
the Indemnifying Party requests such security in its sole discretion.
(c) Prior the Effective Time, Chart shall purchase an extended
reporting period endorsement under its existing directors' and officers'
liability insurance coverage for Chart's directors and officers which shall
provide such directors and officers with coverage for six years following the
Effective Time of not less than the existing coverage under, and have other
terms that are substantially the same as and not materially less favorable on
the whole to the insured Persons than the directors' and officers' liability
insurance coverage presently maintained by Chart. Chart agrees to reasonably
cooperate in good faith with Bancorp in order to obtain the lowest premium for
such coverage (it being understood, however, that any such carrier will have no
less than a Best's Rating of "A"), provided, however, that Chart, in its sole
discretion, shall be entitled to fully pre-pay the premium for the entire
coverage period and, provided, further, that in no event shall the aggregate
premium for such insurance exceed $150,000. Bancorp shall maintain such policies
in full force and effect, and will continue to honor the obligations thereunder.
(d) If Bancorp or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any other entity, then and in each case, proper provision
shall be made so that the successors and assigns of Bancorp shall assume the
obligations set forth in this Section 7.12.
7.13. EMPLOYMENT AND BENEFIT MATTERS.
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(a) As soon as administratively practicable after the Effective
Time, Bancorp shall take all reasonable action so that employees of Chart and
its Subsidiaries (i) shall receive employee benefits which are no less favorable
than those generally afforded to other employees of Bancorp or its Subsidiaries
holding similar positions and (ii) shall be entitled to participate in each
employee benefit plan, program or arrangement of Bancorp of general
applicability (the "GENERALLY APPLICABLE PLANS") to the same extent as
similarly-situated employees of Bancorp and its Subsidiaries (it being
understood that inclusion of the employees of Chart and its Subsidiaries in the
Generally Applicable Plans may occur at different times with respect to
different plans). Bancorp shall cause each Generally Applicable Plan in which
employees of Chart and its Subsidiaries are eligible to participate to
recognize, for purposes of determining eligibility to participate in, the
vesting of benefits and for all other purposes (but not for determining the
amount of benefits or for determining accrual of benefits) under Generally
Applicable Plans, the service of such employees with Chart and its Subsidiaries
to the same extent as such service was credited for such purpose by Chart.
Employees of Chart and its Subsidiaries will be given credit for past service
with Chart for purposes of Bancorp's vacation policy.
(b) Notwithstanding anything to the contrary contained herein,
Bancorp shall have sole discretion with respect to the determination as to
whether or when to terminate, merge or continue any employee benefit plans and
programs of Chart or any of its Subsidiaries. To the extent amounts are
distributable under Chart Benefit Plans and constitute "eligible rollover
distributions" (as defined in Section 402(f)(2)(A) of the Code) said amounts may
be rolled over to any tax-qualified Bancorp Benefit Plan that accepts rollover
distributions or to any eligible individual retirement account.
(c) Except as otherwise expressly provided in this Agreement or in
the Payments Agreements, Bancorp shall honor, and Surviving Bank shall continue
to be obligated to perform, in accordance with their terms, all benefit
obligations to, and contractual rights of, current and former employees of Chart
existing as of the Effective Date, as well as all employment, severance,
deferred compensation or "change-in-control" agreements, plans or policies of
Chart, but only to the extent that such obligations (x) are Previously Disclosed
in Sections 4.1(b)(v), 4.1(b)(vii) or 5.16(a) of Chart's Disclosure Schedule and
(y) would not involve any payment that would not be permitted under Section 4.2.
Bancorp acknowledges that the consummation of the Merger will constitute a
"change-in-control" of Chart for purposes of any employee benefit plans,
agreements and arrangements of Chart.
(d) If employees of Chart or any of its Subsidiaries become eligible
to participate in a medical, dental or health plan of Bancorp, Bancorp shall
cause each such plan to (i) waive any preexisting condition limitations to the
extent such conditions are covered under the applicable medical, health or
dental plans of Bancorp and (ii) waive any waiting period limitation or evidence
of insurability requirement which would otherwise be applicable to such employee
on or after the Effective Time to the extent such employee had satisfied any
similar limitation or requirement under an analogous Plan prior to the Effective
Time, and (iii) provide full credit under such plans for any deductibles,
co-payments and out-of-pocket expenses incurred by the employees and their
beneficiaries during the portion of the calendar year prior to such
participation.
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(e) None of Bancorp or a Bancorp Subsidiary shall have any
obligation to continue the employment of any employee of Chart or a Chart
Subsidiary and nothing contained herein shall give any such Person the right to
continued employment with Bancorp or a Bancorp Subsidiary after the Effective
Time. Bancorp or a Bancorp Subsidiary shall provide the severance benefits set
forth in Section 7.13(e) of Chart's Disclosure Schedule to any employee of Chart
or a Chart Subsidiary who is not otherwise covered by a specific termination,
severance or change in control agreement and who is terminated by Bancorp or a
Bancorp Subsidiary for reasons other than "cause", or who resigns for "good
reason," in both cases as defined in Section 7.13(e) of Chart's Disclosure
Schedule.
(f) Certain employees of Chart or a Chart Subsidiary jointly
designated in writing by Chart and Bancorp shall be entitled to receive a
"retention" bonus from Chart, a Chart Subsidiary, Bancorp or a Bancorp
Subsidiary, as the case may be, in the event such employee remains an employee
of Chart, a Chart Subsidiary, Bancorp or a Bancorp Subsidiary, as applicable,
until the Effective Date (or in certain cases, through a post-closing transition
period, including systems conversion, if applicable), provided that such
employee satisfactorily fulfills the duties and responsibilities of the position
of such employee through the Effective Date or thereafter, if applicable. The
aggregate amount of such retention bonuses shall not exceed the aggregate amount
set forth on Section 7.13(f) of Chart's Disclosure Schedule, and the employees
entitled to receive retention bonuses and the amount of each such bonus shall be
mutually agreed upon in writing by the Chief Executive Officer of Chart and the
Chief Executive Officer or Chief Financial Officer of Bancorp. Retention bonuses
shall not be payable to any employee of Chart or a Chart Subsidiary who is a
party to an employment or other agreement that provides severance benefits in
the event of a change in control of Chart.
7.14. PAYMENTS AND RELATED AGREEMENTS. Concurrently with the execution of
this Agreement by Chart, Bancorp and Bancorp Bank, (i) Bancorp, Chart and
Bancorp Bank have entered into a Payments Agreement with each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Jr. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Sr. in a form that has been Previously Disclosed (the
"PAYMENTS AGREEMENTS"), and (ii) a Consulting and Non-Competition Agreement with
each of ▇▇. ▇▇▇▇▇▇ Jr. and ▇▇. ▇▇▇▇▇▇ Sr. in a form that has been Previously
Disclosed (the "CONSULTING AGREEMENTS").
7.15. NOTIFICATION OF CERTAIN MATTERS. Each of Chart and Bancorp shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) if it had been known as of the date of this Agreement, would have been
required to have been included in Chart's Disclosure Schedule, (ii) is
reasonably likely, individually or taken together with all other facts, events
and circumstances known to it, to result in any Material Adverse Effect with
respect to it, or (iii) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein.
7.16. UPDATE OF DISCLOSURE SCHEDULES. From time to time prior to the
Effective Time, Chart will promptly supplement or amend Chart's Disclosure
Schedule in writing to reflect any matter which, if existing, occurring or known
at the date of this Agreement, would have been required to be set forth or
described in Chart's Disclosure Schedule or which is necessary to correct any
information in Chart's Disclosure Schedule which has been rendered inaccurate
thereby. In addition, at or prior to the Effective Time, Chart shall provide
Bancorp with a written copy of the complete Chart's Disclosure Schedule, marked
to show any and all such supplements
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and amendments, and/or, if no such supplements or amendments were made to a
particular Section of Chart's Disclosure Schedule, Chart shall provide Bancorp
with a certificate signed on behalf of Chart by a duly authorized officer of
Chart to such effect. No supplement or amendment to Chart's Disclosure Schedule
shall have any effect for the purpose of determining satisfaction of the
conditions set forth in Section 8.3(a) hereof or compliance by Chart with the
covenants set forth in Article V hereof.
7.17. CURRENT INFORMATION.
(a) As soon as practicable, each party will furnish to the other
copies of all such financial statements and reports as it or any of its
subsidiaries shall send to its stockholders or any Governmental Authority, to
the extent any such reports furnished to any such Governmental Authority are not
confidential and except as legally prohibited thereby, and will furnish such
additional financial data as the other party may reasonably request.
(b) Promptly upon receipt thereof, each party will furnish to the
other copies of all internal control reports submitted to it and its
Subsidiaries by independent auditors in connection with each annual, interim or
special audit of the books of it and its Subsidiaries made by such auditors.
(c) Each party will promptly notify the other of any material change
in its normal course of business or in the operation of properties of it or any
of its Subsidiaries and of any governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of material litigation involving such party or any
of its Subsidiaries, and will keep the other party reasonably informed of such
events.
7.18. LOAN LOSS RESERVES. During the period from the date of this
Agreement to the Effective Time, Chart shall provide Bancorp with any
information Bancorp shall reasonably request regarding Chart's Loan Loss
Reserves.
7.19. CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in this
Agreement shall give Bancorp, directly or indirectly, the right to control or
direct the operations of Chart prior to the Effective Time. Prior to the
Effective Time, Chart shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision over the operations of Chart
and its Subsidiaries.
7.20. BANCORP PRODUCTS AND SERVICES. From and after the date of this
Agreement, Bancorp and Chart shall consult on a reasonable basis with each other
on the introduction of products and services not currently offered by Chart
which Bancorp Bank would expect to make available to customers following the
Effective Time; provided, however, that nothing herein shall obligate Chart to
offer any such products or services prior to the Effective Time.
7.21. ALCO MANAGEMENT. Chart agrees to manage its assets and liabilities
in accordance with Chart's asset and liability management policy as in effect on
the date hereof, unless otherwise agreed by the parties. Chart shall not
materially amend or modify such policy without the express written consent of
Bancorp's Authorized Representative. Chart and Bancorp agree to consult on
investment programs to be administered by Chart.
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7.22. TAX MATTERS. Without the prior written consent of the other party's
Authorized Representative, neither Bancorp nor Chart will make or change any
election, change an annual accounting period, adopt or change any accounting
method, file any amended Tax Return, enter into any closing agreement, settle
any Tax claim or assessment relating to it, surrender any right to claim a
refund of Taxes, consent to any extension or waiver of the limitation period
applicable to any Tax claim or assessment relating to it, or take any other
similar action relating to the filing of any Tax Return or the payment of any
Tax, if such election, adoption, change, amendment, agreement, settlement,
surrender, consent or other action would have the effect of increasing the its
Tax liability for any period ending after the Closing Date or decreasing any Tax
attribute of it existing on the Closing Date.
7.23. SECTION 16. Prior to the Effective Time, Bancorp shall, as
applicable, take all such steps as may be required to cause any acquisitions of
Bancorp Common Stock resulting from the transactions contemplated by this
Agreement by each individual who may be subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to Bancorp to be exempt under
Rule 16b-3 promulgated under the Exchange Act. Chart agrees to promptly furnish
Bancorp with all requisite information necessary for Bancorp to take the actions
contemplated by this Section 7.23.
ARTICLE VIII.
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligation of each of the parties hereto to consummate the Merger is
subject to the fulfillment, where permitted by law, or written waiver by the
parties hereto prior to the Closing Date of each of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been duly
approved by holders of not less than two-thirds of the outstanding shares of
Chart Common Stock.
(b) CORPORATOR APPROVAL. This Agreement and the Conversion shall
each have been duly approved by the requisite percentage of the Bancorp
Corporators.
(c) REGULATORY APPROVALS. All regulatory approvals required to
consummate the Transactions shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall have
expired and no such approval shall contain any conditions, restrictions or
requirements which Bancorp Board reasonably determines in good faith would,
individually or in the aggregate, materially reduce the benefits of the
Transactions to such a degree that Bancorp would not have entered into this
Agreement had such conditions, restrictions or requirements been known at the
date hereof.
(d) NO INJUNCTION. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the Transactions.
(e) REGISTRATION STATEMENTS. The Registration Statements shall each
have been declared effective under the Securities Act and no stop order
suspending the effectiveness of the
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Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated by the SEC and not withdrawn and Bancorp shall
have received all required approvals by Governmental Authorities, including the
Massachusetts Bank Commissioner and state securities or "blue sky" authorities.
(f) NASDAQ LISTING. The shares of Bancorp Common Stock to be issued
in the Merger and the Conversion shall have been authorized for listing on the
Nasdaq, subject to official notice of issuance.
(g) CONVERSION. Bancorp shall have consummated the Conversion, and
such Conversion shall have resulted in net proceeds sufficient to enable Bancorp
Bank to remain "well-capitalized" under applicable federal banking law and
otherwise to meet regulatory capital requirements, in each case after giving
effect to the Merger.
(h) TAX OPINIONS WITH RESPECT TO MERGER. Bancorp and Bancorp Bank
shall have received a letter setting forth the written opinion of ▇▇▇▇▇ ▇▇▇▇
LLP, in form and substance reasonably satisfactory to Bancorp and Bancorp Bank,
dated as of the Effective Date, and Chart shall have received a letter setting
forth the written opinion of ▇▇▇▇▇▇▇ Procter LLP, in form and substance
reasonably satisfactory to Chart, dated as of the Effective Date, in each case
substantially to the effect that, on the basis of the facts, representations and
assumptions set forth in such letter, the Merger will constitute a tax-free
reorganization described in section 368(a) of the Internal Revenue Code.
(i) TAX OPINION WITH RESPECT TO CONVERSIONS. Bancorp shall have
received a letter setting forth the written opinion of ▇▇▇▇▇ ▇▇▇▇ LLP, in form
and substance required by applicable regulatory authorities and reasonably
satisfactory to it and to Chart, dated as of the Effective Date, to the effect
that, on the basis of facts, representations and assumptions set forth in such
letter, the Conversion will constitute a reorganization within the meaning of
Section 368(a) of the Code.
8.2. CONDITIONS TO OBLIGATIONS OF CHART. The obligation of Chart to
consummate the Merger is also subject to the fulfillment or written waiver by
Chart prior to the Closing Date of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Bancorp in this Agreement which is qualified as to materiality
shall be true and correct and each such representation or warranty that is not
so qualified shall be true and correct in all material respects, in each case as
of the date of this Agreement, as applicable, and (except to the extent such
representations and warranties speak as of an earlier date, with respect to
which such representations and warranties shall be true and correct in all
material respects as of such earlier date) as of the Closing Date as though made
on and as of the Closing Date; provided, however, that for purposes of this
Section 8.2(a), such representations and warranties shall be deemed to be true
and correct unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate, and
without giving effect to any qualification as to materiality set forth in such
representations or warranties, would have a Material Adverse Effect on Bancorp,
and Chart shall have received a certificate, dated the Effective Date, signed by
the Chief Executive Officer and the Chief Financial Officer of Bancorp to such
effect.
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(b) PERFORMANCE OF OBLIGATIONS OF BANCORP. Bancorp shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Chart shall have
received a certificate, dated the Effective Date, to such effect signed by the
Chief Executive Officer and Chief Financial Officer of Bancorp.
(c) ABSENCE OF BANCORP CHANGES. From the date of this Agreement
through the Closing Date, there shall not have occurred any change that
individually or in the aggregate has or could reasonably be expected to have a
Material Adverse Effect on Bancorp, provided however, that solely for the
purposes of determining whether this condition has been fulfilled, Material
Adverse Effect shall not be deemed to include the impact of (1) changes in
banking and similar laws, rules or regulations of general applicability or
interpretations thereof by Governmental Authorities, (2) changes in GAAP or
regulatory accounting requirements applicable to financial institutions and
their holding companies generally, (3) changes in economic conditions affecting
financial institutions generally, including but not limited to, changes in
general levels of interest rates generally, (4) direct effects of compliance
with this Agreement on the operating performance of Bancorp, including expenses
incurred by Bancorp in consummating the transactions contemplated by this
Agreement and (5) the effects of any action or omission otherwise contemplated
by this Agreement or any other Transaction Document.
(d) OTHER ACTIONS. Bancorp shall have furnished Chart with such
certificates of its respective officers or others and such other documents to
evidence fulfillment of the conditions set forth in Sections 8.1 and 8.2 as
Chart may reasonably request.
8.3. CONDITIONS TO OBLIGATIONS OF BANCORP. The obligations of Bancorp to
consummate the Merger are also subject to the fulfillment or written waiver by
Bancorp prior to the Closing Date of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Chart in this Agreement which is qualified as to materiality shall
be true and correct and each such representation or warranty that is not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement, and (except to the extent such representations and
warranties speak as of an earlier date, with respect to which such
representations and warranties shall be true and correct in all material
respects as of such earlier date) as of the Closing Date as though made on and
as of the Closing Date; provided, however, that for purposes of this Section
8.3(a), such representations and warranties shall be deemed to be true and
correct unless the failure or failures of such representations and warranties to
be so true and correct, individually or in the aggregate, and without giving
effect to any qualification as to materiality set forth in such representations
or warranties, would have a Material Adverse Effect on Chart, and Bancorp shall
have received a certificate, dated the Effective Date, signed by the Chief
Executive Officer and the Chief Financial Officer of Chart to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF CHART. Chart shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Bancorp shall have
received a certificate, dated the Effective Date, to such effect signed by the
Chief Executive Officer and Chief Financial Officer of Chart.
(c) DISSENTING SHARES. Dissenting Shares shall not represent 10% or
more of the
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outstanding Chart Common Stock.
(d) PAYMENTS AGREEMENTS. The Payments Agreements referred to in
Section 7.14 shall have been duly executed and delivered by the respective
parties thereto and shall be in full force and effect, and each party thereto
other than Bancorp shall have performed in all material respects all obligations
required to be performed by it thereunder at or prior to the Effective Time.
(e) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver of
each Person (other than regulatory approvals contemplated in Section 8.1(c))
whose consent or approval shall be required in order to permit (i) the lawful
consummation of the Merger and (ii) the succession by Surviving Bank pursuant to
the Merger to any obligation, right or interest of Chart or any of Chart's
Subsidiaries under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument shall have been obtained, except
for such consents the failure of which to be obtained would not, individually or
in the aggregate, have a Material Adverse Effect on Bancorp after giving effect
to the consummation of the Transactions, and none of such permits, consents,
waivers, clearances, approvals and authorizations shall contain any term or
condition which would, individually or in the aggregate, have a Material Adverse
Effect on Chart or Bancorp.
(f) NO PARACHUTE PAYMENTS. Neither Chart or any of Chart's
Subsidiaries shall have taken any action or made any payments that would result,
either individually or in the aggregate, in any violation of the requirements
set forth in Section 4.2.
(g) ABSENCE OF CHART CHANGES. From the date of this Agreement
through the Closing Date, there shall not have occurred any change that
individually or in the aggregate has or could reasonably be expected to have a
Material Adverse Effect on Chart, provided however, that solely for the purposes
of determining whether this condition has been fulfilled, Material Adverse
Effect shall not be deemed to include the impact of (1) changes in banking and
similar laws, rules or regulations of general applicability or interpretations
thereof by Governmental Authorities, (2) changes in GAAP or regulatory
accounting requirements applicable to financial institutions and their holding
companies generally, (3) changes in economic conditions affecting financial
institutions generally, including but not limited to, changes in general levels
of interest rates generally, (4) direct effects of compliance with this
Agreement on the operating performance of Chart, including expenses incurred by
Chart in consummating the transactions contemplated by this Agreement and (5)
the effects of any action or omission taken with the prior consent of Bancorp or
as otherwise contemplated by this Agreement or any other Transaction Document.
(h) OTHER ACTIONS. Chart shall have furnished Bancorp with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 8.1 and 8.3 as Bancorp may
reasonably request.
ARTICLE IX. TERMINATION
9.1. TERMINATION. This Agreement may be terminated and the Merger and the
other transactions contemplated by this Agreement may be abandoned at any time
prior to the
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Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated in this Agreement by the
stockholders of Chart:
(a) MUTUAL CONSENT. By mutual consent of Bancorp and Chart, if the
Board of each so determines by vote of a majority of the members of its entire
Board.
(b) DELAY. By either Bancorp or Chart (if its Board so determines by
vote of a majority of the members of its entire Board) if (i) the Effective Time
shall not have occurred on or before July 15, 2005 or such later date as the
parties may have agreed upon in writing (the "EXPIRATION DATE"), except to the
extent that the failure of the Merger then to be consummated arises out of or
results from the knowing action or inaction of (i) the party seeking to
terminate pursuant to this Section 9.1(b)) or (ii) any of the Shareholders (if
Chart is the party seeking to terminate), which action or inaction is in
violation of its obligations under this Agreement or, in the case of the
Shareholders, his, her or its obligations under the relevant Voting Agreement.
(c) NO APPROVAL. By Chart or Bancorp, if its Board so determines by
a vote of a majority of the members of its entire Board, in the event that the
approval of any Governmental Authority required for consummation of the Merger
and the other transactions contemplated by this Agreement (other than the
Conversion) shall have been denied by final nonappealable action of such
Governmental Authority or an application therefor shall have been permanently
withdrawn at the request of a Governmental Authority.
(d) NO CONVERSION. By Chart or Bancorp, if its Board so determines
by a vote of a majority of the members of its entire Board, in the event that
(i) the requisite approval of the Conversion by Bancorp's Board of Trustees or
its Corporators is not received; (ii) the approval of any Governmental Authority
required for consummation of the Conversion shall have been denied by final
nonappealable action of such Governmental Authority or an application therefor
shall have been permanently withdrawn at the request of a Governmental
Authority; or (iii) if any court of competent jurisdiction or other governmental
authority shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Conversion and such order,
decree, ruling or other action shall have become final and nonappealable.
(e) BREACH. At any time prior to the Effective Time, by Bancorp or
Chart (provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein) if its
Board so determines by vote of a majority of the members of its entire Board, in
the event of: (i) a material breach by Bancorp or Chart, as the case may be, of
any representation or warranty contained herein, which breach would constitute,
if occurring or continuing on the Closing Date, the failure of the conditions
set forth in Section 8.2(a) or 8.3(a), as the case may be, and which cannot be
or has not been cured within 30 days after the giving of written notice to the
breaching party or parties of such breach; or (ii) a material breach by Bancorp
or Chart, as the case may be, of any of the covenants or agreements contained
herein, which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party or parties of such breach.
(f) NO SHAREHOLDER/CORPORATOR APPROVAL. By either Bancorp or Chart
(provided, that the terminating party shall not be in material breach of any of
its respective obligations under
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Section 7.2 and 7.4) if (i) any approval of the stockholders of Chart required
for the consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of Chart's
stockholders or at any adjournment or postponement thereof, or, if such meeting
of stockholders shall not have been held or shall have been canceled prior to
the Expiration Date or (ii) any approval of the Corporators of Bancorp required
for the consummation of the Transactions shall not have been obtained by reason
of the failure to obtain the required vote at a duly held meeting of Bancorp's
Corporators or at any adjournment or postponement thereof, or, if such meeting
of Corporators shall not have been held or shall have been canceled prior to the
Expiration Date.
(g) FAILURE TO RECOMMEND. By Bancorp if, at any time prior to the
Chart Meeting, (i) Chart shall have materially breached Section 7.9 or (ii) the
Chart Board shall have failed to make its recommendation referred to in Section
7.4, withdrawn such recommendation or modified or changed such recommendation in
a manner adverse in any respect to the interests of Bancorp, or (iii) Chart
shall have materially breached its obligations to call, give notice of, convene
and hold the Chart Meeting in accordance with Section 7.4.
(h) CERTAIN TENDER OFFERS. By Bancorp, if a Tender Offer is
commenced, other than by Bancorp or a Subsidiary thereof, and the Chart Board
recommends that the stockholders of Chart tender their shares in such Tender
Offer or otherwise fails to recommend that such stockholders reject such Tender
Offer.
9.2. EFFECT OF TERMINATION; EXPENSES.
(a) In the event of the termination of this Agreement pursuant to
Section 9.1, this Agreement shall forthwith become void (except as set forth in
Section 10.1), subject to Sections 9.3 and 9.4, and there shall be no liability
on the part of any party hereto, except (i) each party shall remain liable in
any action at law or otherwise for any liabilities or damages arising out of its
gross negligence or willful breach of any provision of this Agreement, and (ii)
as otherwise provided in this Section 9.2 or in Section 9.3 or Section 9.4.
(b) If:
(i) this Agreement is terminated as a result of any breach of
a representation, warranty, covenant or other agreement which is
caused by the gross negligence or willful or intentional breach of a
party hereto, such party shall be liable to the other party for all
out-of-pocket costs and expenses, including, without limitation, the
reasonable fees and expenses of lawyers, accountants and investment
bankers, incurred by such other party in connection with the
entering into of this Agreement and the carrying out of any and all
acts contemplated hereunder ("EXPENSES"); or
(ii) this Agreement is terminated pursuant to Section 9.1(d)
(other than under circumstances in which a breach of a
representation or warranty of Chart or a breach by Chart of one or
more covenants in this Agreement has materially adversely affected
Bancorp's ability to obtain the necessary votes or to complete the
Conversion in a timely manner), then Bancorp shall be liable to
Chart for Chart's Expenses; or
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(iii) Bancorp has not consummated the Conversion by July 15,
2005 (and was obligated under this Agreement as of immediately prior
to such date to use its reasonable best efforts to consummate the
Conversion) under circumstances where Section 9.3(a)(i) does not
apply, Bancorp shall be liable to Chart for Chart's Expenses;
provided that Bancorp shall not be obligated to make any payment
under this Section 9.2(b)(iii) under circumstances in which a breach
of a representation or warranty of Chart or a breach by Chart of one
or more covenants in this Agreement has materially adversely
affected Bancorp's ability to complete the Conversion in a timely
manner;
provided, however, that the maximum amount any party shall be liable
to pay to the other party for Expenses pursuant to this Section
9.2(b) shall be limited to $500,000. The payment of Expenses is not
an exclusive remedy, but is in addition to any other rights or
remedies available to the parties hereto (whether at law or in
equity) arising out of the gross negligence of a party or willful
breach of any provision of this Agreement or under this Agreement.
9.3. BANCORP SPECIAL PAYMENT.
(a) PAYMENT EVENTS. As a condition of Chart's willingness to, and in
order to induce Chart to, enter into this Agreement, and to reimburse Chart for
incurring the damages, costs and expenses related to entering into this
Agreement and consummating the transactions contemplated by this Agreement,
Bancorp hereby agrees to pay to Chart, as liquidated damages and in lieu of any
other rights or remedies under this Agreement, a payment in the amount of
$2,300,000 (as such amount may be adjusted pursuant to Section 9.3(d), the
"BANCORP SPECIAL PAYMENT") if and only if:
(i) Bancorp has failed to consummate the Conversion by July
15, 2005, as a result of a material failure to perform or comply
with any of its covenants or agreements herein; or
(ii) Chart has terminated this Agreement in accordance with
Section 9.1(e) because Bancorp has intentionally or willfully
breached any of its representations or warranties herein or
intentionally and willfully failed to perform or comply with any of
its covenants or agreements herein, in each case to such extent as
to permit such termination.
(b) DURATION OF CHART'S RIGHTS WITH RESPECT TO BANCORP SPECIAL
PAYMENT. Notwithstanding any other provision of this Agreement, the provisions
of this Section 9.3 shall remain in effect and shall be enforceable by Chart or
any successor in interest notwithstanding the expiration or any termination of
this Agreement.
(c) EXCLUSIVITY OF REMEDY. Notwithstanding anything to the contrary
set forth in this Agreement, if Bancorp pays or causes to be paid (as required
by this agreement) to Chart the Bancorp Special Payment, neither Bancorp nor any
Bancorp Subsidiary will have any further obligations or liabilities to Chart
with respect to this Agreement or the transactions contemplated by this
Agreement.
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(d) ADJUSTMENT TO AMOUNT OF BANCORP SPECIAL PAYMENT. The amount of
the Bancorp Special Payment shall be reduced by the amount of any Expenses paid
by Bancorp to Chart pursuant to Section 9.2(b).
(e) PAYMENT REQUIRED. Any payment required under this Section 9.3
will be payable by Bancorp to Chart (by wire transfer of immediately available
funds to an account designated by Chart) within five Business Days after demand
by Chart.
9.4. CHART SPECIAL PAYMENT. As a condition of Bancorp's willingness, and
in order to induce Bancorp, to enter into this Agreement and to reimburse
Bancorp for incurring the damages, costs and expenses related to entering into
this Agreement and consummating the transactions contemplated by this Agreement,
Chart will pay to Bancorp the sum of $2,300,000 (as such amount may be adjusted
pursuant to Section 9.4(f), the "CHART SPECIAL PAYMENT"), if and only if a
Payment Event (as hereinafter defined) shall have occurred before the Special
Payment Termination Date (as hereinafter defined) determined in accordance with
Section 9.4(c).
(a) "PAYMENT EVENT" shall mean any of the following events:
(i) without Bancorp's prior written consent, Chart or
shareholders of Chart shall have entered into an agreement to
effect, or shall have consummated, a Change in Control Transaction;
(ii) This Agreement shall have been terminated by Bancorp
pursuant to Section 9.1(g) or 9.1(h);
(iii) Bancorp shall have terminated this Agreement in
accordance with Section 9.1(e) because Chart has intentionally or
willfully breached any of its representations or warranties herein
or intentionally and willfully failed to perform or comply with any
of its covenants or agreements herein, in each case to such extent
as to permit such termination; or
(iv) This Agreement shall have been terminated by either party
pursuant to Section 9.1(f)(i).
(b) A "TIME EXTENSION EVENT" shall mean any of the following events:
(i) any person (other than Bancorp or any Bancorp Subsidiary)
shall have commenced a Tender Offer; or
(ii) Any person (other than Bancorp or any Bancorp Subsidiary)
shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or has the
contractual right to acquire beneficial ownership of, or any "group"
(as such term is defined in Section 13(d)(3) of the Exchange Act)
shall have been formed which beneficially owns or has the
contractual right to acquire beneficial ownership of, 15% or more of
the then outstanding shares of Chart Common Stock; or
(iii) following an Acquisition Proposal, the holders of Chart
Common Stock shall
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not have approved this Agreement at the meeting of such stockholders
held for the purpose of voting on this Agreement; or
(iv) following the occurrence of an Acquisition Proposal:
(1) the meeting of Chart stockholders held for the
purpose of voting on this Agreement shall not have been held
in violation of Chart's obligations set forth in Section 7.4
hereof, or shall have been canceled prior to termination of
this Agreement,
(2) Chart's Board shall have withdrawn or modified in a
manner adverse to Bancorp the recommendation of Chart's Board
with respect to this Agreement and the Merger, or
(3) Chart shall have willfully or intentionally breached
any representation, warranty, covenant or obligation contained
in this Agreement and such breach would entitle Bancorp to
terminate this Agreement under Section 9.1(e) hereof (without
regard to the cure period provided for therein unless such
cure is promptly effected without jeopardizing consummation of
the Merger pursuant to the terms of this Agreement).
(c) SPECIAL PAYMENT TERMINATION DATE. The "SPECIAL PAYMENT
TERMINATION DATE" shall be the earliest to occur of:
(i) The Effective Time of the Merger,
(ii) The date that is 12 months after termination or
expiration of this Agreement following the occurrence of a Time
Extension Event;
(iii) The date on which the Agreement is terminated in
accordance with its terms, BUT ONLY IF such termination takes place
PRIOR to the occurrence of a Payment Event or a Time Extension
Event.
(d) DURATION OF BANCORP'S RIGHTS WITH RESPECT TO CHART SPECIAL
PAYMENT. Notwithstanding any other provision of this Agreement, the provisions
of this Section 9.4 shall remain in effect and shall be enforceable by Bancorp
or any successor in interest notwithstanding the expiration or any termination
of this Agreement.
(e) EXCLUSIVITY OF REMEDY. Notwithstanding anything to the contrary
set forth in this Agreement, if Chart pays or causes to be paid (as required by
this agreement) to Bancorp or to Bancorp Bank the Chart Special Payment, neither
Chart nor any Chart Subsidiary will have any further obligations or liabilities
to Bancorp or Bancorp Bank with respect to this Agreement or the transactions
contemplated by this Agreement.
(f) ADJUSTMENT TO AMOUNT OF CHART SPECIAL PAYMENT. The amount of
Chart Special Payment shall be reduced by the amount of any Expenses paid by
Chart to Bancorp pursuant to Section 9.2(b).
(g) EFFECT ON STANDSTILL ARRANGEMENTS. In the event Chart pays to
Bancorp the Chart
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Special Payment, any standstill provisions contained in the Confidentiality
Agreements referred to in Section 7.9 shall terminate.
(h) PAYMENT REQUIRED. Any payment required under this Section 9.4
will be payable by Chart to Bancorp (by wire transfer of immediately available
funds to an account designated by Bancorp) within five Business Days after
demand by Bancorp.
ARTICLE X. MISCELLANEOUS
10.1. SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
agreements or covenants contained herein that by their express terms are to be
performed after the Effective Time, and the Voting Agreements, the Release
Agreements, the Consulting Agreements and the Payments Agreements, which shall
terminate in accordance with the terms thereof) or the termination of this
Agreement if this Agreement is terminated prior to the Effective Time (other
than Sections 7.7(c) and 9.4, and, excepting Section 10.12 hereof, this Article
X, which shall survive any such termination).
10.2. WAIVER; AMENDMENT. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefited by the provision or (ii)
amended or modified at any time, by an agreement in writing among the parties
hereto executed in the same manner as this Agreement, except that after Chart
Meeting no amendment shall be made which changes in kind or reduces in amount
the Merger Consideration without the further approval of Chart's stockholders.
10.3. COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement and the
exhibits hereto may be executed in one or more counterparts, all of which shall
be considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart. Facsimile execution and delivery of this Agreement and the exhibits
hereto by any of the parties shall be legal, valid and binding execution and
delivery of such document for all purposes.
10.4. GOVERNING LAW. This Agreement shall be governed by, and interpreted
in accordance with, the laws of The Commonwealth of Massachusetts applicable to
contracts made and to be performed entirely within such state.
10.5. EXPENSES. Except as otherwise provided in Section 9.2, each party
hereto will bear all expenses incurred by it in connection with this Agreement
and the transactions contemplated hereby, including fees and expenses of its own
financial consultants, accountants and counsel and, in the case of Bancorp, the
registration fee to be paid to the SEC in connection with the Registration
Statement, except that expenses of printing the Proxy Statement shall be shared
equally between Chart and Bancorp.
10.6. NOTICES. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
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If to Chart to:
ChartBank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President & Chief Executive Officer
Fax:
With a copy to:
▇▇▇▇▇▇▇ Procter LLP
Exchange Place
Boston, Massachusetts 02109
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Bancorp to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Bancorp, M.H.C.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President & Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
10.7. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement
and the other Transaction Documents represent the entire understanding of the
parties hereto and thereto with reference to the transactions contemplated
hereby and thereby and this Agreement and the other Transaction Documents
supersede any and all other oral or written agreements heretofore made. Except
for the Indemnified Parties' right to enforce Bancorp's obligation under Section
7.12, which are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each Indemnified Party and his or her heirs and
representatives, nothing in this Agreement, expressed or implied, is intended to
confer upon any Person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
10.8. SEVERABILITY. Except to the extent that application of this Section
10.8 would have a Material Adverse Effect on Chart or Bancorp, any term or
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the
- 78 -
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable. In all such cases, the parties shall use their
commercially-reasonable efforts to substitute a valid, legal and enforceable
provision which, insofar as practicable, implements the original purposes and
intents of this Agreement.
10.9. ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
10.10. INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." References to sections include
subsections which are part of the related sections (e.g. a section numbered
"Section 5.5(a)" would be part of "Section 5.5" and references to "Section 5.5"
would also refer to material contained in the subsection described as "Section
5.5(a)").
10.11. ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other party. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
10.12. ALTERNATIVE STRUCTURE. Notwithstanding any provision of this
Agreement to the contrary, Bancorp may at any time modify the structure of the
acquisition of Chart set forth herein, subject to the prior written consent of
Chart, which consent shall not be unreasonably withheld or delayed, provided
that (i) the Merger Consideration to be paid to the holders of Chart Common
Stock is not thereby changed in kind or reduced in amount as a result of such
modification, (ii) Chart determines, based upon advice from its tax counsel,
that such modification will not adversely affect the tax treatment of Chart's
stockholders as a result of receiving the Merger Consideration and (iii) such
modification will not materially delay or jeopardize receipt of any required
approvals of Governmental Authorities.
*REMAINDER OF PAGE HAS INTENTIONALLY BEEN LEFT BLANK*
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ BANCORP, M.H.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President and
Treasurer
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ SAVINGS BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President and
Treasurer
CHART BANK, A COOPERATIVE BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: President and Chief Executive
Officer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer and Chief Financial
Officer
- 80 -
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