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EXHIBIT 10.2
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of June 11, 2001, between Banknorth
Group, Inc., a Maine corporation ("Grantee"), and MetroWest Bank, a
Massachusetts-chartered savings bank ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan
of Consolidation of even date herewith (the "Consolidation Agreement"),
pursuant to which the Company will be combined with an existing national bank
subsidiary of Parent in a series of transactions and in connection therewith
each outstanding share of Company Common Stock (except Dissenting Shares and
Treasury Stock) shall be converted into the right to receive the Consolidation
Consideration; and
WHEREAS, as a condition and an inducement to Grantee to enter into
the Consolidation Agreement, Issuer has agreed to grant Grantee the Option (as
hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Consolidation Agreement,
the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to an aggregate of 2,851,756 fully paid and nonassessable shares (the "Option
Shares") of common stock, par value $0.10 per share, of Issuer (the "Common
Stock") at a price per share equal to $8.76 (the "Option Price"); provided,
however, that in no event shall the number of shares for which this Option is
exercisable exceed 19.9% of the issued and outstanding shares of Common Stock.
The number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common
Stock are either (i) issued or otherwise become outstanding after the date of
this Agreement (other than pursuant to this Agreement and other than pursuant
to an event described in Section 5 hereof), including, without limitation,
pursuant to stock option or other employee plans or as a result of the
exercise of conversion rights, or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of this Agreement, the number
of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such event, such number equals 19.9%
of the number of shares of Common Stock then issued and outstanding without
giving effect to any shares subject to or issued pursuant to the Option.
Nothing contained in this Section l(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the
Consolidation Agreement.
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2. (a) The Holder (as hereinafter defined) may exercise
the Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of
an Exercise Termination Event (as hereinafter defined), provided that the
Holder shall have sent the Exercise Notice (as hereinafter defined) within
ninety (90) days following such Subsequent Triggering Event (or such later
period as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time (as defined in the Consolidation
Agreement); (ii) termination of the Consolidation Agreement in accordance with
the provisions thereof if such termination occurs prior to the occurrence of
an Initial Triggering Event, except a termination by Grantee pursuant to
Section 8.01(b) of the Consolidation Agreement (unless the breach by Issuer
giving rise to such right of termination was non-volitional ( a "Listed
Termination")); or (iii) the passage of 12 months (or such longer period as
provided in Section 10) after termination of the Consolidation Agreement if
such termination follows the occurrence of an Initial Triggering Event or is a
Listed Termination, provided that if an Initial Triggering Event continues or
occurs beyond such termination and prior to the passage of such
12-month-period, the Exercise Termination Event shall be 12 months from the
expiration of the Last Triggering Event but in no event more than 18 months
after such termination. The term "Last Triggering Event" shall mean the last
Initial Triggering Event to be in effect, and the term "Holder" shall mean the
permitted holder or holders of the Option pursuant to this Agreement.
Notwithstanding anything to the contrary contained herein, the Option may not
be exercised at any time when Grantee shall be in willful material breach of
any of its covenants or agreements contained in the Consolidation Agreement
such that Issuer shall be entitled to terminate the Consolidation Agreement
pursuant to Section 8.01(b) thereof as a result of such a willful material
breach.
(b) The term "Initial Triggering Event" shall mean any
of the following events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary (as hereinafter
defined) of Issuer (an "Issuer Subsidiary"), without having
received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction
(as hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the
rules and regulations thereunder), other than Grantee or any
Subsidiary of Grantee (a "Grantee Subsidiary") or the Board
of Directors of Issuer (the "Issuer Board") shall have
recommended that the stockholders of Issuer approve or
accept any Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary. For purposes of this
Agreement, (a) "Acquisition Transaction" shall mean (w) a
merger or consolidation, or any similar transaction,
involving Issuer or any Issuer Subsidiary, (x) a purchase,
lease or other acquisition or assumption of all or any
substantial part of the consolidated assets or consolidated
deposits of Issuer or any Issuer Subsidiary, (y) a purchase
or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or
any Issuer Subsidiary or (z) any substantially similar
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transaction, provided that in no event shall (i) any merger,
consolidation, purchase or similar transaction involving
only Issuer and one or more of its Subsidiaries, or
involving only any two or more of such Subsidiaries, be
deemed to be an Acquisition Transaction, provided that any
such transaction is not entered into in violation of the
terms of the Consolidation Agreement, or (ii) the
transactions contemplated by the Consolidation Agreement or
the entering into of the Consolidation Agreement be deemed
to be an Acquisition Transaction; and (b) "Subsidiary" shall
have the meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) After the date hereof, any person, other
than Grantee or a Grantee Subsidiary, shall have acquired
beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section
13(d) of the 1934 Act, and the rules and regulations
thereunder);
(iii) The stockholders of Issuer shall have
voted and failed to approve the Consolidation Agreement at a
meeting which has been held for that purpose or any
adjournment or postponement thereof, or such meeting shall
not have been held in violation of the Consolidation
Agreement or shall have been cancelled prior to termination
of the Consolidation Agreement if, in each case prior to
such meeting (or if such meeting shall not have been held or
shall have been cancelled, prior to such termination), it
shall have been publicly announced that any person (other
than Grantee or a Grantee Subsidiary) shall have made, or
publicly disclosed an intention to make, a proposal to
engage in an Acquisition Transaction;
(iv) The Issuer Board, without having received
Grantee's prior written consent, shall have withdrawn or
modified, or publicly announced its intention to withdraw or
modify in any manner adverse in any respect to Grantee, its
recommendation that the stockholders of Issuer approve the
transactions contemplated by the Consolidation Agreement in
anticipation of engaging in an Acquisition Transaction, or
Issuer or any Issuer Subsidiary shall have authorized,
recommended or proposed, or publicly announced its intention
to authorize, recommend or propose, an agreement to engage
in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or a Grantee
Subsidiary shall have filed with the Securities and Exchange
Commission ("SEC") a registration statement or tender offer
materials with respect to a potential exchange offer or
tender offer that would constitute an Acquisition
Transaction (or filed a preliminary proxy statement with the
SEC with respect to a potential vote by its stockholders to
approve the issuance of shares to be offered in such an
exchange offer);
(vi) Issuer shall have breached any covenant or
obligation contained in the Consolidation Agreement after a
proposal is made by any third party, other than
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Grantee or a Grantee Subsidiary, to engage in an Acquisition
Transaction and following such breach (x) Grantee would be
entitled to terminate the Consolidation Agreement (whether
immediately or after the giving of notice or passage of time
or both) and (y) such breach shall not have been cured prior
to the Notice Date (as defined below); or
(vii) Any person other than Grantee or a Grantee
Subsidiary, without Grantee's prior written consent, shall
have filed an application or notice with the Board of
Governors of the Federal Reserve System (the "Federal
Reserve Board") or other federal or state bank regulatory or
antitrust authority, which application or notice has been
accepted for processing, for approval to engage in an
Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean
any of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership
of 25% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in clause (i) of subsection (b) of this
Section 2, except that the percentage referred to in clause
(y) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event") of which it has notice, it being understood
that the giving of such notice by Issuer shall not be a condition to the right
of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes
to exercise the Option (or any portion thereof), it shall send to Issuer a
written notice (an "Exercise Notice," the date of which being herein referred
to as the "Notice Date") specifying (i) the total number of shares of Common
Stock it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing," the date of which
being herein referred to as the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board or any other
regulatory or antitrust agency is required in connection with such purchase,
the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have
been obtained and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto. The term "business day" for purposes of this Agreement means
any day, excluding Saturdays, Sundays and any other day that is a legal
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holiday in the Commonwealth of Massachusetts or a day on which banking
institutions in the Commonwealth of Massachusetts are authorized by law or
executive order to close.
(f) At a Closing, the Holder shall (i) pay to Issuer
the aggregate purchase price for the Option Shares purchased pursuant to the
exercise of the Option in immediately available funds by wire transfer to a
bank account designated by Issuer and (ii) present and surrender this
Agreement to Issuer at its principal executive offices, provided that the
failure or refusal of the Issuer to designate such a bank account or accept
surrender of this Agreement shall not preclude the Holder from exercising the
Option.
(g) At a Closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of Option Shares purchased by the Holder and, if the Option should
be exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the Option Shares purchasable hereunder,
and the Holder shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement.
(h) Certificates for Option Shares delivered at a
Closing hereunder may be endorsed (in the sole discretion of Issuer) with a
restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate
is subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of Issuer and will be
provided to the holder hereof without charge upon receipt by Issuer
of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions of
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the
opinion of counsel to the Holder, which shall be set forth in a written
opinion in form and substance reasonably satisfactory to Issuer; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the
written notice of exercise of the Option provided for under paragraph (e) of
this Section 2, the tender of the applicable purchase price in immediately
available funds and the tender of a copy of this Agreement to Issuer, the
Holder shall
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be deemed, subject to the receipt of any necessary regulatory approvals, to be
the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of Issuer shall then
be closed or that certificates representing such shares of Common Stock shall
not then be actually delivered to the Holder. Issuer shall pay all expenses,
and any and all United States federal, state and local taxes and other charges
that may be payable in connection with the preparation, issue and delivery of
stock certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares
of Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment 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; (iii) promptly to take all action as may from time to
time be required (including without limitation (x) complying with all
applicable premerger notification, reporting and waiting period requirements
specified in 15 U.S.C. Section 18a and regulations promulgated thereunder and
(y) in the event, under the Bank Holding Company Act of 1956, as amended (the
"BHCA"), or the Change in Bank Control Act of 1978, as amended, or any state
or other federal banking law, prior approval of or notice to the Federal
Reserve Board or to any state or other federal regulatory authority is
necessary before the Option may be exercised, cooperating fully with the
Holder in connection with the preparation of such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the
Holder to exercise the Option and Issuer duly and effectively to issue shares
of Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Agreement and the Option granted hereby are
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations entitling the
holder thereof to purchase on the same terms and subject to the same
conditions as are set forth herein in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any Stock Option 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, subject to the aforementioned indemnification, if
applicable, whether or not the Agreement so lost, stolen, destroyed or
mutilated shall at any time be enforceable by anyone.
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5. In addition to the adjustment in the number of shares of
Common Stock that are purchasable upon exercise of the Option pursuant to
Section 1 of this Agreement, the number of Option Shares purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment
from time to time as provided in this Section 5. In the event of any change
in, or distributions in respect of, the Common Stock by reason of stock
dividend, stock split, split-up, merger, recapitalization, stock combination,
subdivision, conversion, exchange of shares, distribution on or in respect of
the Common Stock or similar transaction, the type and number of Option Shares
subject to the Option, and the Option Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction, so that Grantee shall receive upon exercise of the Option
the number and class of Option Shares or other securities or property that
Grantee would have received in respect of Option Shares if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable.
6. Upon the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within six (6) months (or such later period as provided in
Section 10) following such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof)
or any of the Option Shares issued pursuant hereto), promptly prepare, file
and keep current, with respect to the Option and the Option Shares, a
registration statement under the 1933 Act, to the extent applicable, and/or
any applicable securities offering rules of a federal or state banking
authority, and qualify such Option and Option Shares for resale or other
disposition under applicable state securities laws, in each case in accordance
with any plan of disposition requested by Grantee. Issuer will use all
reasonable efforts to cause such registration statement promptly to become
effective and then to remain effective for such period not in excess of 180
days from the day such registration statement first becomes effective or such
shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations.
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering by Issuer of shares of Common
Stock, and if in the good faith judgment of the managing underwriter or
managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering, the inclusion of the Option and/or Option Shares would
interfere with the successful marketing of the shares of Common Stock offered
by Issuer, the number of shares represented by the Option and/or the number of
Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of shares represented by the Option and/or the
number of Option Shares to be included in such offering for the account of the
Holder shall constitute at least 25% of the total number of shares to be sold
by the Holder and Issuer in the aggregate; and provided further, however, that
if such reduction occurs, then Issuer shall file a registration statement for
the balance as promptly as practicable thereafter as to which no reduction
pursuant to this Section 6 shall be permitted or occur and Holder shall
thereafter be entitled to one additional registration and the twelve (12)
month period referred to in the first sentence of this section shall be
increased to twenty four (24) months. Each such Holder shall provide all
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information reasonably requested by Issuer for inclusion in any such
registration statement to be filed hereunder. If requested by any such Holder
in connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for Issuer. Upon receiving any request under this Section 6 from
any Holder, Issuer agrees to send a copy thereof to any other person known to
Issuer to be entitled to registration rights under this Section 6, in each
case by promptly mailing the same, postage prepaid, to the address of record
of the persons entitled to receive such copies. Notwithstanding anything to
the contrary contained herein, in no event shall the number of registrations
that Issuer is obligated to effect be increased by reason of the fact that
there shall be more than one Holder as a result of any assignment or division
of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase
Event (as described below), (i) at the request of any Holder delivered prior
to an Exercise Termination Event (or such later period as provided in Section
10), Issuer (or any successor thereto) shall repurchase the Option from the
Holder at a price (the "Option Repurchase Price") equal to the amount by which
(A) the Market/Offer Price (as defined below) exceeds (B) the Option Price,
multiplied by the number of shares for which the Option may then be exercised,
and (ii) at the request of the owner of Option Shares from time to time (the
"Owner"), delivered within 90 days following such occurrence (or such later
period as provided in Section 10), Issuer (or any successor thereto) shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
greater of (A) the Market/Offer Price and (B) the average exercise price per
share paid by the Owner for the Option Shares so designated. The term
"Market/Offer Price" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made,
(ii) the price per share of Common Stock to be paid by any person, other than
Grantee or a Grantee Subsidiary, pursuant to an agreement with Issuer of the
kind described in Section 2(b)(i), (iii) the highest closing price for shares
of Common Stock within the six-month period immediately preceding the date of
such required repurchase of the Option or Option Shares, as the case may be,
or (iv) in the event of a sale of all or any substantial part of Issuer's
assets or deposits, the sum of the price paid in such sale for such
consolidated assets or consolidated deposits and the current market value of
the remaining assets of Issuer as determined by a nationally-recognized
investment banking firm selected by a majority in interest of the Holders or
the Owners, as the case may be, and reasonably acceptable to Issuer, divided
by the number of shares of Common Stock of Issuer outstanding at the time of
such sale. In determining the Market/Offer Price, the value of consideration
other than cash shall be determined by a nationally-recognized investment
banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and any Option
Shares pursuant to this Section 7 by surrendering for such purpose to Issuer,
at its principal office, a copy of this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or notices stating that
such Holder or Owner, as the case may be, elects to require Issuer to
repurchase this Option and/or Option Shares in accordance with the provisions
of this Section 7. As promptly as practicable, and in any event
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within five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto, Issuer shall deliver or cause to be delivered to the
Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Option and/or
the Option Shares in full, Issuer shall immediately so notify each Holder
and/or each Owner and thereafter deliver or cause to be delivered, from time
to time, to such Holder and/or such Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within two business days
after the date on which Issuer is no longer so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of repurchase pursuant
to paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or
regulatory body or agency, from delivering to the Holder and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase
Price, respectively, in part or in full (and Issuer hereby undertakes to use
all reasonable efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to
accomplish such repurchase), such Holder or Owner may revoke its notice of
repurchase of the Option and/or the Option Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase
Price that Issuer is not prohibited from delivering with respect to Options or
Option Shares as to which the Holder or the Owner, as the case may be, has not
revoked its repurchase demand; and (ii) deliver, as appropriate, either (A) to
the Holder, a new Agreement evidencing the right of the Holder to purchase
that number of shares of Common Stock obtained by multiplying the number of
shares of Common Stock for which the surrendered Agreement was exercisable at
the time of delivery of the notice of repurchase by a fraction, the numerator
of which is the Option Repurchase Price less the portion thereof theretofore
delivered to the Holder and the denominator of which is the Option Repurchase
Price, and/or (B) to such Owner, a certificate for the Option Shares it is
then so prohibited from repurchasing.
(d) For purposes of this Agreement, a "Repurchase
Event" shall be deemed to have occurred upon the occurrence of any of the
following events or transactions after the date hereof:
(i) the acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership of 50% or
more of the then outstanding Common Stock; or
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(ii) the consummation of any Acquisition
Transaction described in Section 2(b)(i) hereof, except that the
percentage referred to in clause (y) of the second sentence thereof
shall be 50%;
provided that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event. The parties hereto agree that Issuer's obligations to
repurchase the Option or Option Shares under this Section 7 shall not
terminate upon the occurrence of any Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the occurrence of an
Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate with or merge
into any person, other than Grantee or a Grantee Subsidiary, or engage in a
plan of exchange with any person, other than Grantee or a Grantee Subsidiary,
and Issuer shall not be the continuing or surviving corporation of such
consolidation or merger or the acquiror in such plan of exchange, (ii) to
permit any person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer or be acquired by Issuer in a plan of exchange and Issuer shall be the
continuing or surviving or acquiring corporation, but, in connection with such
merger or plan of exchange, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger or plan of exchange represent less than 50% of the
outstanding shares and share equivalents of the merged or acquiring company,
or (iii) to sell or otherwise transfer all or a substantial part of its or any
Issuer Subsidiary's consolidated assets or consolidated deposits to any
person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision 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 any Holder, of
either (x) the Acquiring Corporation (as hereinafter defined) or (y) any
person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the
continuing or surviving person of a consolidation or merger with
Issuer (if other than Issuer), (ii) the acquiring person in a plan of
exchange in which Issuer is acquired, (iii) Issuer in a merger or
plan of exchange in which Issuer is the continuing or surviving or
acquiring person, and (iv) the transferee of all or a substantial
part of Issuer's consolidated assets or consolidated deposits (or the
assets or deposits of an Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the
common stock issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the
Market/Offer Price, as defined in Section 7.
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(iv) "Average Price" shall mean the average
closing price of a share of the Substitute Common Stock for the one
year immediately preceding the consolidation, merger, share exchange
or sale in question, but in no event higher than the closing price of
the shares of Substitute Common Stock on the day preceding such
consolidation, merger, share exchange 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
the person merging into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect.
(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, to the extent legally
permissible, be as similar as possible to, and in no event less advantageous
to the Holder than, the terms of the Option. The issuer of the Substitute
Option also shall 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 purpose to the provisions of Section 9), which
agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a), divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a)
and the denominator of which shall be the number of shares of Substitute
Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the shares
of Substitute Common Stock outstanding prior to exercise of the Substitute
Option. In the event that the Substitute Option would be exercisable for more
than 19.9% of the shares of Substitute Common Stock outstanding prior to
exercise but for this paragraph (e), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall make a cash payment to Holder equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this paragraph (e) over (ii) the value of the Substitute Option
after giving effect to the limitation in this paragraph (e). This difference
in value shall be determined by a nationally-recognized investment banking
firm selected by a majority in interest of the Holders and reasonably
acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in
paragraph (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder") delivered to the Substitute Option
Issuer, the Substitute Option Issuer shall repurchase the
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Substitute Option from the Substitute Option Holder at a price (the
"Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise price
of the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised, and at the
request of each owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to the greater of (A) the Highest Closing Price and (B) the
average exercise price per share paid by the Substitute Share Owner for the
Substitute Shares so designated, multiplied by the number of Substitute Shares
so designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of
the required repurchase of the Substitute Option or the Substitute Share Owner
gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) Each Substitute Option Holder and Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the
Substitute Shares pursuant to this Section 9 by surrendering for such purpose
to the Substitute Option Issuer, at its principal office, the agreement for
such Substitute Option (or, in the absence of such an agreement, a copy of
this Agreement) and/or certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder or the
Substitute Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the Substitute Shares
in accordance with the provisions of this Section 9. As promptly as
practicable, and in any event within two business days after the surrender of
the Substitute Option and/or certificates representing Substitute Shares and
the receipt of such notice or notices relating thereto, the Substitute Option
Issuer shall deliver or cause to be delivered to the Substitute Option Holder
the Substitute Option Repurchase Price and/or to the Substitute Share Owner
the Substitute Share Repurchase Price therefor, or the portion(s) thereof
which the Substitute Option Issuer is not then prohibited under applicable law
and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from repurchasing
the Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant to this
Section 9 shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the portion of the Substitute Option Repurchase Price
and/or the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within two business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of
a notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation, or as a consequence of administrative
policy, or as a result of a written agreement or other binding obligation with
a governmental or regulatory body or agency, from delivering to the Substitute
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Option Holder and/or the Substitute Share Owner, as appropriate, the
Substitute Option Repurchase Price and the Substitute Share Repurchase Price,
respectively, in full (and the Substitute Option Issuer shall use all
reasonable efforts to obtain all required regulatory and legal approvals as
promptly as practicable in order to accomplish such repurchase), the
Substitute Option Holder and/or Substitute Share Owner may revoke its notice
of repurchase of the Substitute Option or the Substitute Shares either in
whole or to the extent of the prohibition, whereupon, in the latter case, the
Substitute Option Issuer shall promptly (i) deliver to the Substitute Option
Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price
that the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing.
10. The 90-day or six-month periods for exercise of certain
rights under Sections 2, 6, 7 and 9 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of such rights
(for so long as the Holder, Owner, Substitute Option Holder or Substitute
Share Owner, as the case may be, is using its reasonable best efforts to
obtain such regulatory approvals), and for the expiration of all statutory
waiting periods; (ii) during the pendency of any order, injunction or judgment
that prohibits or delays exercise of such rights; and (iii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason of
such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as
follows:
(i) Issuer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Issuer Board and
no other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and
delivered by Issuer.
(ii) The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby
and compliance by Issuer with any of the provisions hereof will not
(i) conflict with or result in a breach of any provision of its
Charter or Bylaws or a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, debenture, mortgage,
indenture, license, material agreement or other material instrument
or obligation to which Issuer is a party, or by which it or any of
its properties or assets may be bound, or (ii) violate any order,
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writ, injunction, decree, statute, rule or regulation applicable to
Issuer or any of its properties or assets.
(iii) 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 through the termination of this Agreement
in accordance with its terms will have reserved for issuance upon the
exercise of the Option, that number of shares of Common Stock equal
to the maximum number of shares of Common Stock at any time and from
time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid
and nonassessable, and will be delivered free and clear of all
claims, liens, encumbrances and security interests and not subject to
any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer
that:
(i) Grantee has full corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement
by Grantee and the performance of its obligations hereunder by
Grantee have been duly and validly authorized by all necessary
corporate action on the part of Grantee and no other corporate
proceedings on the part of Grantee are necessary to authorize this
Agreement for Grantee to perform its obligations hereunder. This
Agreement has been duly and validly executed and delivered by
Grantee.
(ii) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon exercise of
the Option will not be, acquired with a view to the public
distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from
registration under the 1933 Act and any applicable securities
offering rules of a federal or state banking authority.
12. Neither of the parties hereto may assign or otherwise
transfer any of its rights or obligations under this Agreement or the Option
created hereunder to any other person, without the express written consent of
the other party, except that in the event a Subsequent Triggering Event shall
have occurred prior to an Exercise Termination Event, Grantee, subject to the
express provisions hereof, may assign in whole or in part its rights and
obligations hereunder, provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application
by Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the sole purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve Board.
13. Each of Grantee and Issuer will use all reasonable efforts
to make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
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Federal Reserve Board under the BHCA for approval to acquire the shares
issuable hereunder and applying for listing or quotation of such shares on any
exchange or quotation system on which the Common Stock is then listed or
quoted.
14. (a) Notwithstanding any other provision of this
Agreement, in no event shall the Grantee's Total Profit (as hereinafter
defined) exceed $10,000,000 (the "Maximum Profit") and, if it otherwise would
exceed such amount, the Grantee, at its sole election, shall either (i) reduce
the number of shares of Common Stock subject to this Option, (ii) deliver to
the Issuer for cancellation Option Shares previously purchased by Grantee,
(iii) pay cash to the Issuer or (iv) any combination thereof, so that
Grantee's actually realized Total Profit shall not exceed the Maximum Profit
after taking into account the foregoing actions. As used herein, the term
"Total Profit" shall mean the aggregate amount (before taxes) of the
following: (i) the amount received by Grantee pursuant to Issuer's repurchase
of the Option (or any portion thereof) pursuant to Section 7 hereof, (ii) (x)
the amount received by Grantee pursuant to Issuer's repurchase of the Option
Shares pursuant to Section 7 hereof, less (y) the Grantee's purchase price for
such Option Shares, (iii) (x) the net cash amounts received by Grantee
pursuant to the sale of Option Shares (or any other securities into which such
Option Shares are converted or exchanged) to any unaffiliated party, less (y)
the Grantee's purchase price of such Option Shares, (iv) any amounts received
by Grantee on the transfer of the Option (or any portion thereof) to any
unaffiliated party and (v) any equivalent amount with respect to the
Substitute Option.
(b) Notwithstanding any other provision of this
Agreement, this 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 hereinafter
defined) of more than the Maximum Profit, provided that nothing in this
sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date. As used herein, the term "Notional Total Profit" with respect
to any number of shares as to which Grantee may propose to exercise this
Option shall be the Total Profit determined as of the date of such proposed
exercise assuming that this 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 and its affiliates as of such date, were sold for cash at the
closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and
that the obligations of the parties hereto shall be enforceable by either
party hereto through injunctive or other equitable relief. In connection
therewith, both parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer or
Substitute Option Issuer, as the case may be, is not permitted to repurchase
pursuant to Section 7 or Section 9, as the case may be, the full number of
shares of
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Common Stock provided in Section l(a) hereof (as adjusted pursuant to Section
l(b) or Section 5 hereof), it is the express intention of Issuer (which shall
be binding on the Substitute Option Issuer) to allow the Holder to acquire or
to require Issuer or Substitute Option Issuer, as the case may be, to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
17. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when
delivered in person, by fax, telecopy or by registered or certified mail
(postage prepaid, return receipt requested) at the respective addresses of the
parties set forth in the Consolidation Agreement.
18. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maine, without regard to the conflict
of law principles thereof.
19. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
20. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the
Consolidation Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
22. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Consolidation
Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
METROWEST BANK
By: /s/ XXXX X. XXXXXXX III
--------------------------------------------------
Name: Xxxx X. XxXxxxx III
Title: Chief Executive Officer
BANKNORTH GROUP, INC.
By: /s/ XXXXX X. XXXXXXX
--------------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President, Chief Operating Officer
and Chief Executive Officer
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