EXHIBIT 4.1
December 30, 1996
Xx. Xxxxx X. Xxxxxxxx
000 Xxxxx Xxxx
Xxxxxxx, XX 00000
Re: Common Stock Option
Dear Xx. Xxxxxxxx:
Reference is made to section 2.12 of the Agreement and Plan of
Reorganization by and among First Essex Bancorp. Inc. ("First Essex"), Finest
Financial Corp. ("Finest") and Pelham Bank and Trust Company dated as of August
5, 1996, as amended as of September 27, 1996 (the "Agreement"). This letter will
confirm that the option to purchase shares of Finest common stock granted to you
by Finest on October 1, 1995, a copy of which is attached hereto as Exhibit A
(the "Finest Option"), shall be converted into an option to purchase shares of
First Essex Common Stock in accordance with the terms and conditions of section
2.12 of the Agreement. We hereby acknowledge that subsequent to the granting of
the Finest Option, Finest has completed a stock split resulting in the Finest
Option now being exercisable in accordance with its terms for 50,000 shares of
Finest Common Stock at an exercise price of $13.50 per share.
FIRST ESSEX BANCORP, INC.
By: /s/Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Executive Vice President
EXHIBIT A
NEITHER THIS OPTION NOR THE SHARES OF STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO
ASSIGNMENT, SALE, TRANSFER OR OTHER DISPOSITION OF THIS OPTION
OR SAID SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND SUCH LAWS RELATED
THERETO, OR (ii) AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT AND SUCH LAWS IS AVAILABLE.
COMMON STOCK OPTION
To Purchase Shares of Common Stock, $1.00 par value of
FINEST FINANCIAL CORP.
Option No. 1 Number of Shares: 5,000
In connection with the Employment Agreement between Finest Financial
Corp. (the "Company") and Pelham Bank and Trust Company (the "Bank") (the
Company and the Bank, collectively referred to as the "Employers") and Xxxxx
Xxxxxxxx (the "Employee") dated as of October 1, 1995 (the "Agreement"), and for
good and valuable consideration, the receipt of which is hereby acknowledged,
the Company does hereby grant the Employee an option to subscribe for and
purchase from the Company 5,000 shares (the "Option Shares") of the Company's
Common Stock, $1.00 par value (the "Common Stock"), upon the terms and
conditions set forth herein, and in the Agreement. All capitalized terms not
defined herein have the meaning specified in the Agreement.
1. Purchase Price.
The price at which the Option Shares may be purchased shall be One
Hundred Thirty-Five Dollars ($135.00) per share (the "Option Exercise Price").
2. Exercise Period.
The purchase rights evidenced by this Option are exercisable commencing
on the date any such rights vest in accordance with Section 3 hereof and ending
as of the close of business on October 1, 2005 (the "Expiration Date").
3. Vesting of Option.
Subject to the provisions of Section 4, the Employee's right to
exercise this Option shall be exercisable beginning on the first anniversary of
the date of grant for up to 20% of the Option Shares and, beginning on each
anniversary of the date of grant thereafter, for up to an additional 20% of the
Option Shares for each additional year, until, on the fifth anniversary date of
grant, the Option may be exercised as to 100% of the Option Shares (the "Vesting
Schedule").
4. Termination.
The Option shall terminate on the earlier of:
(i) the Expiration Date;
(ii) in the case of termination of the Term by reason of
death, six (6) months after the effective date of
such termination;
(iii) in the case of termination of the Term by reason of
disability, ninety (90) days after the effective date
of such termination;
(iv) in the case of termination of the Term by the
Employers without cause, ninety (90) days after the
effective date of such termination; or
(v) in all other cases, the date on which the Term is
terminated.
The right to exercise this Option is subject to fulfillment of the
Employee's relocation obligations set forth in Section 7 thereof.
Notwithstanding the foregoing, this Option shall become fully vested and
immediately exercisable for 100% of the Option Shares, for a period of ninety
(90) days, upon the occurrence of a "Change of Control" as defined in the
Agreement.
5. Non-Transferability: Persons Able to Exercise.
The Option may not be transferred other than by will, the laws of
descent and distribution or pursuant to a qualified domestic relations order, as
defined in Section 414(p)(1)(B) of the Internal Revenue Code (the "Code").
During the life of the Employee, only he (or if he is incapacitated, his legal
guardian or attorney) may exercise the Option. However, if the Employee dies
while still employed by the Company and/or the Bank, the Option may be exercised
by his or her executors, administrators, legatees or distributees.
6. Method of Exercising Option.
The Option may be exercised, in whole or in part (but not as to
fractional shares), by written notice to the Company in the form of Attachment
A. This notice must be accompanied by payment of the Option Exercise Price for
the Option Shares being purchased. As soon as practical after receipt of this
notice and payment, and subject to the conditions of this Option and the
Agreement, the Company shall deliver a certificate or certificates representing
the purchased Option Shares registered in the name of the person or persons
exercising the Option. In the event the Option is exercised by any person other
than the Employee, the notice shall be accompanied by appropriate proof of the
right of such person to exercise the Option. All Option Shares purchased upon
the exercise of this Option and payment of the full Option Exercise Price will
be fully paid and nonassessable.
7. Stock Adjustments.
If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, or other change in the
corporate structure of the Company, corresponding adjustments shall be made by
the Board of Directors to the total number and kind of shares subject to the
Option.
8. No Fractional Shares.
No fractional shares shall be issued upon the exercise of this Option.
In lieu thereof, a cash payment shall be made equal to such fraction multiplied
by the fair market value of such shares of Common Stock, as determined in good
faith by the Company's Board of Directors.
9. Compliance with Laws.
(a) Withholding of Taxes. Pursuant to applicable federal,
state, local or foreign laws, the Company may be required to collect income or
other taxes upon the grant of this Option, exercise of the Option by the
Employee or at some other time. The Company may require, as a condition to the
exercise of this Option, or demand at such other time as it may consider
appropriate, that the Employee pay the Company the amount of any taxes which the
Company may reasonably determine is required to be collected or withheld and the
Employee shall comply with the requirement or demand of the Company. The Company
may withhold the Option Shares, or an equivalent dollar amount, or may accept
cash payments or issued and outstanding Common Stock of the Company in
satisfaction of any such obligation.
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(b) Securities Law Compliance. Upon exercise of the Option,
the Employee shall be required to make such representations and furnish such
information as may, in the opinion of counsel for the Company, be appropriate to
permit the Company to issue or transfer the Option Shares in compliance with the
provisions of applicable federal and state securities laws. The Company, in its
discretion, may postpone the issuance and delivery of Option Shares upon any
exercise of this Option until the Option Shares may be issued in compliance with
the provisions of applicable federal and state securities laws. The Company may
require that prior to the issuance or transfer of Option Shares upon exercise of
the Option, the Employee enter into a written agreement to comply with any
restrictions on subsequent disposition that the Company deems necessary or
advisable under any applicable federal and state securities laws. Certificates
of Common Stock issued hereunder may be legended to reflect such restrictions.
(c) General. No Option Shares shall be issued upon exercise of
this Option unless and until all other legal requirements applicable to the
issuance of such Option Shares have been complied with.
10. Sale or Transfer of Shares; Legend.
The Option Shares shall not be assigned, sold, transferred or otherwise
disposed of unless either (i) they first shall have been registered under the
Act and applicable state securities laws, or (ii) the Company first shall have
been furnished with an opinion of legal counsel satisfactory to the Company to
the effect that an exemption from the registration requirements of the Act and
such laws is available. Each certificate representing any Common Stock shall
bear a legend substantially in the following form, as appropriate:
NEITHER THIS OPTION NOR THE SHARES OF STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO
ASSIGNMENT, SALE, TRANSFER OR OTHER DISPOSITION OF THIS OPTION
OR SAID SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND SUCH LAWS RELATED
THERETO, OR (ii) AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT AND SUCH LAWS IS AVAILABLE.
11. Miscellaneous.
(a) The Option hereby granted is expressly subject to all of
the terms and conditions contained in this Option and the Agreement, which is
incorporated herein by reference.
(b) Unless otherwise provided, the Board of Directors of the
Company shall make all determinations required to be made hereunder, and
interpret all provisions of this Option, as it deems necessary or desirable.
Such determinations and interpretations shall be binding and conclusive upon the
Company and the Employee.
(c) During the term of this Option, the Company shall at all
times reserve and keep available shares of Common Stock sufficient to satisfy
the requirements of this Option.
(d) By accepting this Option, the Employee represents and
warrants that it is acquiring this Option and the Option Shares for his own
account, for investment and not with a view to, or for sale in connection with,
any distribution thereof or any part thereof. The Employee represents and
warrants that he (i) is sophisticated and has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Company, (ii) has the ability to bear the economic
risks of an investment in the Company, and (iii) has been furnished with such
information and afforded the opportunity to ask questions of and to receive
answers from the Company necessary to make an informed investment decision with
respect to an investment in the Company.
(e) This Option may only be modified or amended by a writing
signed by both parties.
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(f) Any notices required to be given under this Option shall
be sufficient if in writing and if sent by certified mail, return receipt
requested, and addressed as follows:
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if to the Company:
Finest Financial Corp.
Pelham Plaza
Route 00, Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxxxxx 00000-0298
If to the Employee:
Xxxxx Xxxxxxxx
000 Xxxxx Xxxx
Xxxxxxx, XX 00000
or to such other address as either party may designate under the provisions
hereof.
(g) The rights and obligations of the Company under this
Option shall inure to the benefit of and be binding upon the successors and
assigns of the Company.
(h) All rights and obligations under this Option shall be
governed by the laws of the State of New Hampshire.
(i) The paragraph headings used in this Option are for
convenience or reference, and are not to be construed as part of this Option.
(j) Unless otherwise required by law, the Employee shall not
disclose the terms of this Option or the fact of this Option to any third party
(other than his lawyers and accountants), including any employees of the Company
or the Bank without the prior written consent of the Company.
IN WITNESS WHEREOF, the parties have executed this Option as an
instrument under seal effective as of October 1, 1995.
FINEST FINANCIAL CORP.
By:______________________
Name:
Title:
EMPLOYEE
/s/Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
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ATTACHMENT A
Finest Financial Corp.
Pelham Plaza
Route 00, Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxxxxx 00000-0298
Attention: President
Gentlemen:
Pursuant to my Common Stock Option dated as of October 1, 1995, I
hereby elect to exercise the Option to the extent indicated:
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Number of Shares Per Share Total
Which I Elect to x Price = Price
Purchase
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Enclosed with this letter is full payment of the total price of the
shares described above in the following form:
(1) a check in the amount of $________ payable to the order of the
Company; and/or
(2) shares of Common Stock of the Company properly endorsed and having
a fair market value equal to $_________.
Kindly issue a certificate or certificates to me representing the
shares which I am acquiring by this exercise, and deliver it to the address
provided above.
Very truly yours,
-------------------------
Xxxxx Xxxxxxxx
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