Exhibit 99.3
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THE TRANSFER OF THIS AGREEMENT IS
SUBJECT TO CERTAIN PROVISIONS CONTAINED HEREIN
STOCK OPTION AGREEMENT
This Stock Option Agreement, dated as of June 27, 2001 (the
"Agreement"), is made by and between Borel Bank & Trust Company, a California
corporation ("Issuer"), and Boston Private Financial Holdings, Inc., a
Massachusetts corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Reorganization dated June 27, 2001 (the "Reorganization Agreement"),
providing for, among other things, the merger of a wholly owned subsidiary of
Grantee with and into Issuer (the "Merger"), with Issuer being the surviving
corporation and wholly owned subsidiary of Grantee; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Reorganization Agreement, Issuer has agreed to grant to Grantee the Option
(as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Reorganization Agreement, and intending to be legally bound hereby,
Issuer and Grantee agree as follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Reorganization
Agreement. As used in this Agreement, the following terms shall have the
meanings indicated:
(a) "Average Market Price" means the average of the closing bid price
of the shares of Issuer Common Stock on the Nasdaq National Market at the
end of the regular session for the ten (10) consecutive trading days ending
on and including the trading date immediately preceding the date of the
Cash Exercise Notice.
(b) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(c) "Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
(d) "Holder" means Grantee and, to the extent Grantee has assigned its
rights and obligations under this Agreement as permitted herein, any
subsidiary or direct or indirect transferee of Grantee.
(e) "Person" shall have the meaning specified in Sections 3(a)(9) and
13(d)(3) of the Exchange Act and the rules and regulations thereunder.
(f) "Securities Act" means the Securities Act of 1933, as amended.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option")
to purchase up to 584,876 fully paid and non-assessable shares (the "Option
Shares") of common stock, no par value ("Issuer Common Stock"), of Issuer at
a purchase price per Option Share of $24.62 (the "Purchase Price"), but in no
event shall the number of Option Shares exceed 19.9% of the issued and
outstanding shares of Issuer Common Stock. The Purchase Price and the number
of Option Shares that may be received upon the exercise of the Option are
subject to adjustment as set forth below.
3. EXERCISE OF OPTION.
(a) The Holder may exercise the Option, in whole or in part, at any
time and from time to time but only following the occurrence of a Purchase
Event (as defined below); PROVIDED THAT the Option shall terminate and be
of no further force and effect upon the earliest to occur of (such earliest
date the "Expiration Date"):
(i) the Effective Time of the Merger; or
(ii) 15 months after the first occurrence of a Purchase Event; or
(iii) 15 months after the termination of the Reorganization
Agreement on or following (x) the occurrence of a Preliminary Purchase
Event (as defined below) or Purchase Event or (y) a termination of the
Reorganization Agreement by Grantee pursuant to Section 13.1(d) of the
Reorganization Agreement; or
(iv) termination of the Reorganization Agreement in accordance
with the terms thereof prior to the occurrence of a Preliminary
Purchase Event or a Purchase Event other than a termination by Grantee
pursuant to Section 13.1(d) of the Reorganization Agreement.
Notwithstanding the occurrence of the Expiration Date, the Holder shall be
entitled to purchase the Option Shares pursuant to any exercise of the Option to
the extent the Holder exercised the Stock Option prior to the occurrence of the
Expiration Date. Notwithstanding anything to the contrary contained herein, any
purchase of shares upon exercise of the Option shall be subject to compliance
with applicable law, including, without limitation, the Bank Holding Company Act
of 1956, as amended, or any permit, approval or authorization issued and
required by any governmental or regulatory authority relating to this Agreement,
the Option and the transactions contemplated hereby (a "Governmental Approval").
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) The Board of Directors of Issuer shall have approved, or
recommended to the Issuer's shareholders that they approve, a proposal
received by Issuer from a person (other than Grantee or any subsidiary
of Grantee) to effect an Acquisition Transaction (as defined below),
Tender Offer (as defined below) or Exchange Offer (as defined below);
(ii) Issuer shall have breached any covenant or obligation
contained in the Reorganization Agreement after a proposal is made by
any third party other than Grantee or
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any subsidiary of Grantee, to engage in an Acquisition Transaction and
following such breach Grantee would be entitled to terminate the
Reorganization Agreement (whether immediately or after the giving of
notice or passage of time or both);
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined under the Exchange Act and the rules and regulations
promulgated thereunder) shall have been formed which beneficially owns
or has the right to acquire beneficial ownership of ten percent (10%)
or more of the then outstanding shares of Issuer Common Stock.
As used herein, the term "Acquisition Transaction" shall mean (A) a
merger, consolidation or similar transaction involving Issuer or any
of its subsidiaries (other than internal mergers, reorganizations,
consolidations or dissolutions involving only Issuer and/or existing
subsidiaries) (B) the disposition, by sale, lease, exchange or
otherwise, of ten (10%) or more of the consolidated assets or deposit
liabilities of Issuer and its subsidiaries, or (C) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or any similar transaction), other than by Issuer or its subsidiaries,
of securities representing ten percent (10%) or more of the voting
power of Issuer or any of its subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership of, or the right to acquire
beneficial ownership of, or any "group" (as defined under the Exchange
Act and the rules and regulations thereunder) shall have been formed
which beneficially owns or has the right to acquire beneficial
ownership of, ten percent (10%) or more of the then outstanding shares
of Issuer Common Stock; or
(ii) any person (other than Grantee or any subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control ten
percent (10%) or more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender Offer" or
an "Exchange Offer", respectively); or
(iii) Issuer, without having received Grantee's prior written
consent, shall have entered into an agreement with any person (other
than Grantee or any subsidiary of Grantee) with respect to, or the
Board of Directors of Issuer shall have recommended that the
shareholders of Issuer approve or accept, a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or any similar transaction), other than by Issuer or its subsidiaries,
representing ten percent (10%) or more of the voting power of Issuer
or any of its subsidiaries; or
(iv) any person (other than Grantee or any subsidiary of Grantee)
shall have filed an application or notice with the Federal Reserve
Board, California Department of
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Financial Institutions (the "DFI") or other federal or state
regulatory authority, which application or notice has been accepted
for processing, for approval to engage in an Acquisition Transaction;
or
(v) the holders of Issuer Common Stock shall not have approved
the Reorganization Agreement at the meeting of such shareholders held
for the purpose of voting on the Reorganization Agreement, such
meeting shall not have been held or shall have been canceled prior to
termination of the Reorganization Agreement, or Issuer's Board of
Directors shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors with respect
to the Reorganization Agreement, in each case after it shall have been
publicly announced that any person (other than Grantee or any
subsidiary of Grantee) shall have (A) made or disclosed an intention
to make a proposal to engage in an Acquisition Transaction, (B)
commenced a Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer, or (C) filed an
application (or given a notice), whether in draft or final form, under
the Bank Holding Company Act of 1956, as amended, the Bank Merger Act,
the Change in Bank Control Act of 1978, or any other federal or state
banking law or regulation for approval to engage in an Acquisition
Transaction.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Purchase Event or Preliminary Purchase Event; PROVIDED, HOWEVER,
such notice shall not be a condition to the right of the Holder to exercise
the Option.
(e) In the event Holder wishes to exercise the Option, it shall send
to Issuer a written notice (dated the date on which it is sent to Issuer,
which date is referred to as the "Notice Date") specifying (i) the total
number of Option Shares it intends to purchase pursuant to such exercise
and (ii) a date not earlier than three (3) business days nor later than
sixty (60) business days from the Notice Date for the closing (the
"Closing") of such purchase (the "Closing Date"). The Closing shall be held
at the Issuer's principal office or at such other place as Issuer and
Holder may agree. If prior notification to or approval of the Federal
Reserve Board, the DFI or any other regulatory authority is required as a
condition precedent to such purchase, then (A) Holder shall promptly file
and process the required notice or application for approval; (B) Issuer
shall cooperate with Holder in the filing of the required notice or
application for approval and the obtaining of any such approval; and (C)
the Closing Date shall be subject to extension as may be necessary to
permit the Holder to submit such filing to, and, if necessary, to obtain
such approval from, the Federal Reserve Board, the DFI or other applicable
regulatory authority; PROVIDED, HOWEVER, that the notice of Option exercise
and the Notice Date must be, no later than the date on which the Option
would otherwise terminate. Any exercise of the Option shall be deemed to
have occurred on the Notice Date.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated
by Issuer, an amount equal to the Purchase Price multiplied by the number
of Option Shares to be purchased on such Closing Date and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer
specified in Section 12(g) hereof
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(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section
4(a), (i) Issuer shall deliver to Holder (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which
Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever, and (B) if the Option is exercised in
part only, an executed new agreement with the same terms as this Agreement
evidencing the right to purchase the balance of the shares of Issuer Common
Stock purchasable hereunder; and (ii) Holder shall deliver to Issuer a
letter agreeing that Holder shall not offer to sell or otherwise dispose of
such Option Shares in violation of the provisions of this Agreement,
Governmental Approval or applicable state and federal securities laws.
(c) Certificates for the Option Shares delivered at each Closing shall
be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESALE RESTRICTIONS ARISING UNDER THE TERMS OF A STOCK
OPTION AGREEMENT DATED AS OF JUNE 27, 2001, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF THE ISSUER.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if the Option
Shares have been sold or transferred in compliance with the provisions of
this Agreement.
5. REPRESENTATIONS AND WARRANTIES AND COVENANTS OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) DUE AUTHORIZATION. Issuer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
California. Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Issuer and require no action by, or in respect of, or filing with,
any governmental body, agency or official, except for any filings, the
failure of which to make would not materially impair the ability of Issuer
to perform its obligations hereunder. This Agreement has been duly executed
and delivered by Issuer and constitutes a binding agreement of Issuer
enforceable against Issuer in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the rights of creditors generally or by
equitable principles, whether such enforcement is sought in law or equity.
(b) AUTHORIZED STOCK. Issuer has taken all necessary corporate action
to authorize and reserve and to permit it to issue, and, at all times from
the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance, the
number of shares of Issuer Common Stock necessary for Holder to exercise
the Option without additional authorization of Issuer Common Stock, Issuer
will take all
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necessary corporate action to authorize and reserve for issuance all
additional shares of Issuer Common Stock or other securities which may be
issued pursuant to Section 7 upon exercise of the Option. The shares of
Issuer Common Stock to be issued upon due exercise of the Option, including
all additional shares of Issuer Common Stock or other securities which may
be issuable pursuant to Section 7, upon issuance pursuant hereto, shall be
duly and validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all liens, claims, charges, encumbrances and
security interests of any kind or nature whatsoever, including any
preemptive or similar rights of any stockholder of Issuer. The Issuer has
taken all necessary actions to render any and all antitakeover measures,
including statutory measures and measures in the Issuer's Articles of
Incorporation or Bylaws, inapplicable to the Option or the issuance or
acquisition of the Option Shares.
(c) NO CONFLICT. The execution and delivery by Issuer of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not violate or conflict with Issuer's Articles of
Incorporation or Bylaws, or any statute, regulation, judgment, order, writ,
decree or injunction applicable to Issuer (other than as may be effected by
Grantee's ownership of Issuer Common Stock exceeding certain limits set
forth by statute or regulation) or its properties or assets and do not and
will not violate, conflict with, result in a breach of, constitute a
default (or an event which with due notice and/or lapse of time would
constitute a default) under, result in a termination or cancellation of,
accelerate the performance required by any right or obligation of Issuer,
or result in the loss of any benefit, creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the properties
or assets of Issuer under the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, or loan agreement or other
agreement, instrument or obligation to which Issuer is a party, or by which
Issuer or any of its properties or assets may be bound or affected.
(d) OBSERVANCE OF COVENANTS. Issuer agrees that it will not, by
amendment of its Articles of Incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid, or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer.
(e) COMPLIANCE. Issuer shall promptly take all action as may from time
to time be required (including, without limitation, complying with all
premerger notification, reporting and waiting period requirements of the
Federal Reserve Board or any other federal or state regulatory authority
including without limitation, as specified in the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, and the regulations
promulgated thereunder, the Bank Holding Company Act of 1956, as amended,
the Change in Bank Control Act of 1978, as amended, or the California
Financial Code Section 700 ET. SEQ., as necessary, before the Option may be
exercised, and cooperating fully with Holder in preparing such applications
or notices and providing such information in compliance with all applicable
laws and any Governmental Approval in order to permit Grantee to exercise
the Option and Issuer duly and effectively to issue shares of Common Stock
pursuant hereto. Issuer shall also promptly take all action provided herein
to protect the rights of Grantee against dilution.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby represents and
warrants to Issuer that this Option is not being, and any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public
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distribution thereof and will not be transferred or otherwise disposed of except
in compliance with the Securities Act and all other applicable laws and
governmental approvals.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, merger,
conversation, combination, exchange of shares extraordinary or liquidating
dividend or similar transaction, which would have the effect of diluting
the Holder's rights hereunder, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the documentation
pertaining to such transaction so that Holder shall receive, upon exercise
of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock
if the Option had been exercised immediately prior to such event, or the
record date therefor, as applicable. If any additional shares of Issuer
Common Stock are issued or otherwise become outstanding after the date of
this Agreement (whether upon exercise of stock options or otherwise but
excluding any issuance pursuant to an event described in the first sentence
of this Section 7(a)), the number of shares of Issuer Common Stock subject
to the Option shall be adjusted so that, after such issuance, such number
of shares, together with any shares of Issuer Common Stock previously
issued pursuant hereto, equals 19.9% of the number of shares of Issuer
Common Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option (with any fractional
share being rounded up to the next full share). Issuer agrees that in no
event shall the number of shares of Issuer Common Stock issued after the
date of this Agreement pursuant to the preceding sentence, together with
the number of shares of Issuer Common Stock subject to the Option, adjusted
as aforesaid, exceed the number of available authorized but unissued and
unreserved shares of Issuer Common Stock. Nothing contained in this Section
7(a) or elsewhere in this Agreement shall be deemed to authorize Issuer to
issue shares in breach of any provision of the Reorganization Agreement.
(b) Without limiting the parties' relative rights and obligations
under the Reorganization, in the event that Issuer shall, prior to the
Expiration Date, enter into an agreement (i) to consolidate with or merge
into any person, other than Grantee or one of its subsidiaries, and shall
not be the continuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one of its
subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or
exchanged for stock or other securities of Issuer or any other person or
cash or any other property or the outstanding shares of Issuer Common Stock
immediately prior to such merger shall after such merger represent less
than 50% of the outstanding shares and share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or a substantial part
of its consolidated assets or deposit liabilities to any Person other than
Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that
the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged
for, an option (the "Substitute Option"), at the election of Grantee, of
either (A) the Acquiring Corporation (as defined below), (B) any person
that controls the Acquiring Corporation, or (C) in the case of a merger
described in clause (ii), Issuer (such person in each such case being
referred to as the "Substitute Option Issuer").
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(c) The Substitute Option shall have the same terms as the Option,
PROVIDED THAT if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee. The Issuer and the
Substitute Option Issuer shall take such steps in connection with such
consolidation, merger, liquidation or other such transaction as may be
reasonably necessary to assure that the provisions hereof shall thereafter
apply as nearly as possible to any securities or property thereafter
deliverable upon exercise of the Option. The Substitute Option Issuer shall
also enter into an agreement with the then holder or holders of the
Substitute Option in substantially the same form as this Agreement (after
giving effect for such purposes to the provisions of this Agreement), which
shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as is hereinafter defined) as is
equal to the Assigned Value (as is hereinafter defined) multiplied by the
number of shares of the Issuer Common Stock for which the Option was
exercisable immediately prior to any event in Section 7(b), divided by the
Average Price (as is hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of the Issuer
Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares of the Substitute Common Stock for
which the Substitute Option is exercisable.
(e) As used herein, the following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (B) Issuer in a merger in which Issuer is the
continuing or surviving person, and (C) the transferee of all or any
substantial part of the Issuer's assets (or the assets of its
subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued
by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the highest of (A) the price
per share of the Issuer Common Stock at which a Tender Offer or
Exchange Offer therefor has been made by any person (other than
Grantee or a subsidiary of Grantee), (B) the price per share of the
Issuer Common Stock to be paid by any person (other than Grantee or a
subsidiary of Grantee) pursuant to an agreement with Issuer, and (C)
the highest closing price per share of Issuer Common Stock as quoted
on The Nasdaq Stock Market (or if Common Stock is not quoted on The
Nasdaq Stock Market, the highest bid price per share on any day as
quoted on the principal trading market or securities exchange on which
such shares are traded as reported by a recognized source chosen by
Grantee and reasonably acceptable to Issuer) within the six-month
period immediately preceding the agreement governing the transaction
described in Section 7(b) which gave rise to the Substitute Option;
PROVIDED, HOWEVER, that in the event of a sale of less than all of
Issuer's consolidated assets or deposit liabilities, the Assigned
Value shall be the sum of the price paid in such sale for such assets
or deposit liabilities and the current market value of the remaining
consolidated net assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder (or by a
majority in interest of the Holders if
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there shall be more than one Holder (a "Holder Majority")) and
reasonably acceptable to Issuer, divided by the number of shares of
the Issuer Common Stock outstanding at the time of such sale. In the
event that an exchange offer is made for the Issuer Common Stock or an
agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or other
property issuable or deliverable in exchange for the Issuer Common
Stock shall be determined by a nationally recognized investment
banking firm selected by Holder (or a Holder Majority) and reasonably
acceptable to Issuer.
(iv) "Average Price" shall mean the average closing price of the
Substitute Common Stock for the one year immediately preceding the
effective date of the consolidation, merger or sale in question, but
in no event higher than the closing price of the shares of the
Substitute Common Stock on the day preceding such consolidation,
merger or sale; PROVIDED THAT if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to
a share of common stock issued by Issuer, the person merging into
Issuer or by any company which controls or is controlled by such
merging person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding prior to exercise
of the Substitute Option (with any fractional share being rounded up to the
next full share). In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of the
Substitute Common Stock but for this clause (f), the Substitute Option
Issuer shall make a cash payment to Grantee equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in
this clause (f) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (f). The difference in value shall
be determined by a nationally recognized investment banking firm selected
by Grantee and reasonably acceptable to the Substitute Option Issuer, whose
determination shall be conclusive and binding on the parties.
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder and take all other actions that may be
necessary so that the provisions of this Section 7 are given full force and
effect (including, without limitation, any action that may be necessary so
that the shares of Substitute Common Stock are in no way distinguishable
from or have lesser economic value than other shares of common stock issued
by the Substitute Option Issuer).
(h) At the written request of Holder delivered to the Substitute
Option Issuer prior to the Expiration Date, the Substitute Option Issuer
shall repurchase from Holder (i) the Substitute Option and/or (ii) all
Substitute Common Stock theretofore purchased by Holder pursuant hereto
with respect to which Holder then has beneficial ownership. The date on
which Holder exercises its rights under this Section 7(h) is referred to as
the "Substitute Option Request Date." Such repurchase shall be at an
aggregate price (the "Substitute Option Repurchase Consideration") equal to
the sum of (A) the excess, if any, of (1) the Highest Closing Price (as
defined below) for each share of Substitute Common Stock over (2) the
Substitute Purchase Price per share of Substitute Common Stock, multiplied
by the number of shares of Substitute Common Stock for which the Substitute
Option may then be exercised and as to which Holder has exercised its
repurchase right hereunder, plus (B) the Highest Closing Price for each
share of
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Substitute Common Stock, multiplied by the number of shares of Substitute
Common Stock previously acquired by Holder upon exercise of the Option or
Substitute Option and as to which Holder has exercised its repurchase right
hereunder. The term "Highest Closing Price" shall mean the highest closing
price per share of Substitute Common Stock on the Nasdaq National Market
(or, if Substitute Common Stock is not quoted on The Nasdaq Stock Market,
the highest bid price per share on any day as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Grantee and reasonably acceptable
to Issuer) or, if such shares are not traded in a trading market or listed
on an exchange, as quoted by the brokerage firms acting as market makers
for the Substitute Common Stock prior to the trading or listing of the
Substitute Common Stock on any national securities exchange and thereafter
as reported by the principal trading market or securities exchange on which
such shares are traded, during the 60 business days preceding the
Substitute Option Request Date.
(i) The provisions of Sections 8(b), 8(c), 10, 11 and 12 shall
apply, with appropriate adjustments, to any securities for which the
Option becomes exercisable pursuant to this Section 7 and as
applicable, references in such sections to "Issuer", "Option",
"Purchase Price", "Issuer Common Stock", "Repurchase Consideration",
and "Request Date" shall be deemed to be references to "Substitute
Option Issuer", "Substitute Option", "Substitute Purchase Price",
"Substitute Common Stock", "Substitute Option Repurchase
Consideration", and "Substitute Option Request Date", respectively.
(j) The parties agree to share equally all fees, costs and expenses of
the independent nationally recognized investment banking firm required
pursuant to Sections 7 and 8 under this Agreement.
8. REPURCHASE AT THE OPTION OF GRANTEE.
(a) At any time after the first occurrence of a Purchase Event that
occurs prior to the Expiration Date, upon the written notice (the "Cash
Exercise Notice") of Holder delivered to Issuer prior to the Expiration
Date, Issuer shall repurchase from Holder (i) the Option and (ii) all
Option Shares theretofore purchased by Holder pursuant hereto with respect
to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the "Request
Date." Such repurchase shall be at an aggregate price (the "Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any Option
Shares acquired pursuant to the Option with respect to which Holder
then has beneficial ownership;
(ii) (x) the excess, if any, of (A) the Applicable Price (as
defined below) for each Option Share over (B) the Purchase Price per
Option Share (subject to adjustment pursuant to Section 7(a)),
multiplied by (y) the number of Option Shares (subject to adjustment
pursuant to Secton 7) with respect to which the Option has not been
exercised; and
(iii) (A) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7(a)) paid
(or, in the case of Option Shares with respect to which the Option has
been exercised but the Closing Date has not occurred, payable)
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by Holder for each Option Share with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership, multiplied by (B) the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
pay the Repurchase Consideration to Holder in immediately available funds,
and Holder shall surrender to Issuer the Option and the certificates
evidencing the Option Shares purchased thereunder with respect to which
Holder then has beneficial ownership and has designated to be repurchased,
and Holder shall represent that it has sole record and beneficial ownership
of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever.
(c) Notwithstanding the provisions hereof to the contrary, to the
extent that Issuer is prohibited under applicable law, regulation or
administrative policy from repurchasing all or any portion of the Option or
Option Shares, then (i) Issuer shall promptly give notice of such fact to
Holder; (ii) Issuer shall, from time to time subject to the last sentence
of this Section 8(c), deliver to Holder that portion of the Repurchase
Consideration that it is not then so prohibited from paying; (iii) at
Holder's request, Issuer shall promptly file any required notice or
application for approval and expeditiously process the same. After Holder's
receipt of such notice from Issuer, Issuer shall not be in breach of its
repurchase obligation hereunder to the extent it is or remains, despite
reasonable efforts to obtain any required approvals, legally prohibited
from repurchasing the Option or Option Shares. Holder shall have the right
(A) to revoke its request for repurchase with respect to the portion of the
Option or Option Shares that Issuer is prohibited from repurchasing, (B) to
require Issuer to deliver to Holder the Option and/or Option Shares Issuer
is prohibited from repurchasing, and (C) subject to compliance with and
only to the extent permitted by applicable law and any Governmental
Approval, to exercise the Option as to the number of Option Shares for
which the Option was exercisable at the Request Date less the number of
such Option Shares in respect of which the Repurchase Consideration has
been lawfully paid. If the Expiration Date occurs prior to, or is scheduled
to occur within, 180 days after the date of the notice by Issuer described
in clause 8(c)(i) above, then, notwithstanding the occurrence of the
Expiration Date, Holder shall have the right to receive the Repurchase
Consideration to the extent Issuer is or becomes, within a 180 day period
from the date of such notice by Issuer, legally permitted to repurchase.
Except as set forth in the preceding sentence, Holder's repurchase rights
under this Agreement shall terminate concurrently with the termination of
Holder's right to exercise the Option, pursuant to Section 3(a).
(d) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for
any such share by the person or groups described in Section 3(b)(iii), (ii)
the price per share of Issuer Common Stock received by holders of Issuer
Common Stock in connection with any Tender Offer, Exchange Offer
transaction described in Section 3(c)(iii), or (iii) the highest bid price
per share of Issuer Common Stock on The Nasdaq Stock Market or other
principal trading market or securities exchange on which such shares are
traded as reported by a recognized source selected by Holder during the 60
business days preceding the Request Date; PROVIDED, HOWEVER, that in the
event of a sale of less than all of Issuer's assets, the Applicable Price
shall be the sum of the price paid in such sale for such assets or deposit
liabilities and the current market value of the remaining
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consolidated net assets of Issuer as determined by a nationally recognized
investment banking firm selected by Holder (or the Holder Majority) and
reasonably acceptable to Issuer, divided by the number of shares of the
Issuer Common Stock outstanding at the time of such sale. If the
consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder (or the
Holder Majority) and reasonably acceptable to Issuer, which determination
shall be conclusive for all purposes of this Agreement.
9. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including
Grantee and any permitted transferee ("Selling Shareholder"), after
exercise of the Option, expeditiously prepare and file an application for a
permit pursuant to Section 690 ET SEQ. of the California Financial Code
together with an offering circular (a "Section 690 Application") if the
Issuer Common Stock is an Exempt Security and, if the Issuer Common Stock
is not an Exempt Security, a registration statement under the Securities
Act if such registration is necessary in order to permit the sale or other
disposition of any or all shares of Issuer Common Stock or other securities
that have been acquired by or are issuable to the Selling Shareholder upon
exercise of the Option in accordance with the intended method of sale or
other disposition stated by the Selling Shareholder in such request,
including without limitation a "shelf' registration statement under Rule
415 under the Securities Act or any successor provision if the Issuer
Common Stock is not an Exempt Security, and Issuer shall use its best
efforts to qualify such shares or other securities for sale under any
applicable state securities laws. Issuer shall not be obligated to effect
more than three (3) registrations pursuant to this Section 9(a).
(b) ADDITIONAL REGISTRATION RIGHTS. If Issuer at any time after the
exercise of the Option proposes to make a Section 690 Application or
register any shares of Issuer Common Stock under the Securities Act in
connection with an underwritten public offering of such Issuer Common
Stock, Issuer will promptly give written notice to the Holders of its
intention to do so and, upon the written request of any Holder given within
30 days after receipt of any such notice (which request shall specify the
number of shares of Issuer Common intended to be included in such
underwritten public offering by the Holder), Issuer will cause all such
shares for which a Holder requests participation in such registration, to
be so registered and included in such underwritten public offering;
provided, however, that Issuer may elect to not cause any such shares to be
so registered in the case of a registration or Section 690 Application
solely to implement an employee benefit plan or a registration filed on
Form S-4 of the Securities Act or any successor form or a Section 690
Application that relates to a transaction that could be filed on Form S-4
of the Securities Act or any successor form if the Issuer Common Stock was
not an Exempt Security. If the managing underwriter(s) of the offering
pursuant to such registration statement advise Issuer that in their opinion
the number of shares of Issuer Common Stock requested to be included in
such registration exceeds the number which can be sold in such offering,
Issuer shall only include in such registration such number or dollar amount
of Option Shares which, in the good faith opinion of the managing
underwriter(s), can be sold without materially and adversely affecting such
offering. Any shares to be excluded shall be determined in the following
order of priority: (i) securities held by any Person not having any
contractual
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registration rights, (ii) securities held by any Person having contractual
registration rights pursuant to an agreement which is not in this
Agreement, (iii) the Issuer and (iv) the Option Shares.
(c) CONDITIONS TO REQUIRED REGISTRATION. Issuer shall use its best
efforts to cause each registration statement referred to in Section 9(a)
above to become effective as promptly as possible and to obtain all
consents or waivers of other parties which are required therefor and to
keep such registration statement effective; provided, however, that Issuer
may delay any registration of Option Shares required pursuant to Section
9(a) above for a period not exceeding 90 days if Issuer determines, in the
good faith exercise of its reasonable business judgment, that such
registration and offering would require disclosure of information, the
premature disclosure of which would adversely affect Issuer or any
transaction under active consideration by Issuer. Notwithstanding anything
to the contrary stated herein, Issuer shall not be required to register
Option Shares under the Securities Act pursuant to Section 9(a) above:
(i) on more than one occasion during any calendar year;
(ii) within 90 days after the effective date of a registration
referred to in Section 9(b) above pursuant to which the Holders
concerned were afforded the opportunity to register or qualify such
shares under the Securities Act or California Financial Code and such
shares were registered or qualified as requested, and
(iii) unless a request therefor is made to Issuer by Holders that
hold at least 25% or more of the aggregate number of Option Shares
(including shares of Issuer Common Stock issuable upon exercise of the
Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain the
effectiveness of any registration statement or permit issued pursuant to a
Section 690 Application after the expiration of nine months from the
effective date of such registration statement or permit. Issuer shall use all
reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale
or other disposition of the Option Shares so registered in accordance with
the intended method of distribution for such shares; provided, however, that
Issuer shall not be required to consent to the general jurisdiction or
qualify to do business in any state where it is not otherwise required to so
consent to such jurisdiction or to so qualify to do business.
(d) EXPENSES. Except where applicable state law prohibits such
payments, Issuer will pay the costs of such registration or qualification
expenses, including without limitation registration fees, qualification
fees, blue sky fees and expenses, Issuer's legal expenses, costs of special
audits or "cold comfort" letters, expenses of underwriters, (excluding
discounts and commissions), and the reasonable fees and expenses of any
necessary special experts in connection with each registration pursuant to
Section 9(a) or (b) above (including the related offerings and sales by
holders of Option Shares) and all other qualifications, notifications, or
exemptions pursuant to Section 9(a) or 9(b) above.
(e) INDEMNIFICATION. In connection with any registration contemplated
pursuant to this Section 9, Issuer hereby indemnifies the Selling
Shareholders its officers,
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directors and agents, and each underwriter thereof, including each
person, if any, who controls such holder or underwriter within the meaning
of Section 15 of the Securities Act, against all expenses, losses,
claims, damages and liabilities in connection with,
relating to or arising from any such offer or sale of the Issuer's
securities, except insofar as such expenses, losses, claims, damages or
liabilities of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such
indemnified party or any underwriter expressly for use therein, and Issuer
and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Shareholders, or by such underwriter, as the
case may be, for all such expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement, that was included by
Issuer in any such registration statement or prospectus or notification or
offering circular (including any amendments or supplements thereto) in
reliance upon, and in conformity with, information furnished in writing to
Issuer by such holder or such underwriter, as the case may be, expressly
for such use.
Promptly upon receipt by a party indemnified under this Section 9(e) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 9(e), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 9(e). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party either
agrees to pay the same, (ii) the indemnifying party fails to assume the defense
of such action with counsel reasonably satisfactory to the indemnified party, or
(iii) the indemnified party has been advised by counsel that one or more legal
defenses may be available to the indemnified party that may be contrary to the
interest of the indemnifying party. No indemnifying party shall be liable for
any settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this Section 9(e) is unavailable to
a party otherwise entitled to be indemnified in respect of any expenses, losses,
claims, damages or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such party otherwise entitled to be indemnified, shall
contribute to the amount paid or payable by such party to be indemnified as a
result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative benefits received by
Issuer, the Selling Shareholders and the underwriters from the offering of the
securities and also the relative fault of Issuer, the Selling Shareholders and
the underwriters in connection with the statements or omissions which resulted
in such expenses, losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The amount paid or payable by a party as a
result of the expenses,
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losses, claims, damages and liabilities referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. In no case shall
any Selling Shareholder be responsible, in the aggregate, for any amount in
excess of the net offering proceeds attributable to its Option Shares included
in the offering. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any holder to indemnify shall be several
and not joint with other holders.
In connection with any registration pursuant to this Section 9 Issuer and
each Selling Shareholder (other than Grantee) shall enter into an agreement
containing the indemnification provisions of this Section 9(e) and other
customary indemnification provisions.
(f) MISCELLANEOUS REPORTING. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to
permit the expeditious sale at any time of any Option Shares by the Selling
Shareholders thereof in accordance with and to the extent permitted by any
rule or regulation promulgated by the SEC from time to time if the Issuer
Common Stock is not an Exempt Security. Issuer shall at its expense provide
the Selling Shareholders with any information necessary in connection with
the completion and filing of any reports or forms required to be filed by
them under the Securities Act or the Exchange Act, or required pursuant to
any state securities laws or the rules of any stock exchange.
10. LISTING. Promptly after the occurrence of a Purchase Event, and from
time to time thereafter if necessary, Issuer will apply to list all of the
Option Shares subject to the Option on the Nasdaq National Market or such other
national securities exchange or national quotation system and will use its best
efforts to obtain approval of such listing as soon as possible. If Issuer Common
Stock or any other securities to be acquired upon exercise of the Option are not
then authorized for quotation on The Nasdaq National Market or any national
securities exchange or national quotation system, Issuer, upon the request of
Holder, will promptly file an application to authorize for quotation the shares
of Issuer Common Stock or other securities to be acquired upon exercise of the
Option on The Nasdaq Stock Market and will use its best efforts to obtain
approval of such listing as soon as practicable.
11. DIVISION OF OPTION. This Agreement (and the Option granted hereby) are
exchangeable, without expense, to the extent permitted by applicable law or any
Governmental Approval, at the option of Holder, upon presentation and surrender
of this Agreement at the principal office of Issuer for other agreements
providing for other options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "other agreements" and "other options" as
used in the preceding sentence mean any other agreements and related options for
which this Agreement (and the Option granted hereby) may be exchanged. Upon
receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the part of
Issuer, whether
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or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
12. LIMITATION ON TOTAL PROFIT AND NOTIONAL TOTAL PROFIT.
(a) Notwithstanding anything to the contrary contained herein, in no
event shall Grantee's Total Profit (as defined below in Section 12(c)
hereof) exceed $6,000,000 (the "Maximum Amount") and, if it otherwise would
exceed such amount, Grantee, at its sole election, shall either (i) reduce
the number of shares of Issuer common stock subject to the Option, (ii) pay
cash to Issuer, (iii) deliver to Issuer Option Shares previously purchased
by the Holder or (iv) any combination thereof, so that Grantee's actually
realized Total Profit shall not exceed the Maximum Amount after taking into
account the foregoing actions.
(b) Notwithstanding anything to the contrary contained herein, the
Option may not be exercised for a number of shares as would, as of the date
of exercise, result in a Notional Total Profit (as defined below in Section
12(d) hereof) of more than the Maximum Amount; and, if the Notional Total
Profit otherwise would exceed such amount, Grantee, at its sole election
and in its sole election, shall on or prior to the date of exercise either
(i) reduce the number of shares of Issuer common stock subject to such
exercise, (ii) deliver to Issuer Option Shares previously purchased by
Grantee, (iii) pay cash to Issuer or (iv) take any combination of the
foregoing actions, so that the Notional Total Profit shall not exceed the
Maximum Amount after taking into account the foregoing actions; provided,
that nothing in this sentence shall restrict any exercise of the Option
permitted hereby on any subsequent date on which the Notional Total Profit
would be less than the Maximum Amount.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the cash amount actually
received by Grantee pursuant to Issuer's repurchase of the Option (or any
portion thereof) pursuant to Section 8 hereof, (ii) (x) the amount received
by Grantee or any affiliate of Grantee pursuant to Issuer's repurchase of
Option Shares pursuant to Section 8 hereof, less (y) Grantee's or any
affiliate of Grantee's Purchase Price for such Option Shares, (iii)(x) the
net cash amounts received prior to the Expiration Date by Grantee or any
affiliate of Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares shall be converted or exchanged)
to any unaffiliated party, less (y) Grantee's or any affiliate of Grantee's
purchase price of such Option Shares, (iv) the cash amount actually
received by Grantee pursuant to Section 14.1 of the Reorganization
Agreement and (v) any equivalent amounts with respect to the Substitute
Option.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Grantee or any affiliate of Grantee may
propose to exercise the Option shall be the Total Profit determined as of
the date of such proposed exercise assuming that the Option were exercised
on such date for such number of shares and assuming that such shares,
together with all other Option Shares held by Grantee or any affiliate of
Grantee as of such date, were sold for cash at the closing market price for
the Issuer Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
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13. MISCELLANEOUS.
(a) EXTENSION OF EXERCISE PERIODS. The periods for exercise of the
rights hereunder shall be extended in each such case at the request of the
Holder to the extent necessary to avoid liability by the Holder under
Section 16(b) of the Exchange Act by reason of such exercise.
(b) SURVIVAL. All representations, warranties and covenants contained
herein shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(c) EXPENSES. Except as otherwise provided in Section 7 and 9 of this
Agreement and the Reorganization Agreement, each of the parties hereto and
any Holder shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder,
including, without limitation, fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(d) WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(e) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY. This Agreement,
together with the Reorganization Agreement and the other documents and
instruments referred to herein and therein (i) constitutes the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof and (ii) is not intended to confer upon any person other than the
parties hereto, and their respective successors and assigns, any rights or
remedies hereunder, except as expressly provided in this Agreement.
(f) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court or a federal or state regulatory
authority of competent jurisdiction to be invalid, void or unenforceable,
such invalid, void or unenforceable term, provision, covenant or
restriction shall, if it is so susceptible, be deemed modified to the
minimum extent necessary to render the same valid and enforceable and, in
all events, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. Without limiting the
foregoing, if for any reason such court or regulatory authority determines
that Holder may not legally acquire, or Issuer may not legally repurchase,
the full number of shares of Issuer Common Stock as provided in Sections 3
and 8 (as adjusted pursuant to Section 7), it is the express intention of
Issuer to allow Holder to acquire or to require Issuer to repurchase the
maximum number of shares as may be legally permissible without any
amendment or modification hereof.
(g) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of California without regard to any
applicable conflicts of law rules.
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(h) DESCRIPTIVE HEADINGS. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(i) NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be given
(and shall be deemed to have been duly received if so given) by personal
delivery, by telecopy (PROVIDED THAT copy is concurrently sent by first
class U.S. mail, postage prepaid), or by mail (registered or certified
mail, postage prepaid, return receipt requested) to the parties as follows:
To Grantee: Boston Private Financial Holdings, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ Procter LLP
Exchange Place
Boston, Massachusetts 94402
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
To Issuer: Borel Bank & Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Lillick & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as a party may have furnished to the others in
writing in accordance with this paragraph, except that notices of change of
address shall only be effective upon receipt. Any notice, demand or other
communication given pursuant to the provisions of this Section 11(g) shall
be deemed to have been given on the date actually delivered or on the third
day following the date mailed, whichever first occurs.
(j) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
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(k) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by
any of the parties hereto without the prior written consent of the other
party, except that Grantee may assign this Agreement to a wholly-owned
subsidiary of Grantee and at any time after a Purchase Event occurs, Holder
may assign or transfer its rights and obligations hereunder, in whole or in
part, to any Person or Persons, subject to compliance with applicable laws
and any Governmental Approvals. In order to effectuate the foregoing,
Grantee shall be entitled to surrender this Agreement to Issuer in exchange
for two or more Agreements entitling the holders thereof to purchase in the
aggregate the same number of shares of Common Stock as may be purchasable
hereunder. Subject to the foregoing, this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the parties and their
respective successors and permitted assigns.
(l) FURTHER ASSURANCES. In the event of any exercise of the Option by
Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
(m) SPECIFIC PERFORMANCE. The parties agree that the Holder would be
irreparably damaged if for any reason Issuer or the Substitute Option
Issuer failed to issue any of the Option Shares (or other securities or
property deliverable pursuant to Section 7 hereof) upon exercise of the
Option or Substitute Option or to perform any of its other obligations
under this Agreement, and that the Holder would not have an adequate remedy
at law for money damages in such event. Accordingly, the parties hereto
agree that this Agreement may be enforced by the Holder through specific
performance, injunctive relief and other equitable relief. Both parties
further agree to waive any requirement for the securing or posting of any
bond in connection with the obtaining of any such equitable relief and that
this provision is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
BOSTON PRIVATE FINANCIAL BOREL BANK & TRUST COMPANY
HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
----------------------------------- --------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
Chief Executive Officer President and Chief
Executive Officer