EXHIBIT 2
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of October 25, 1995
(the "Agreement"), by and between Peoples Heritage Financial
Group, Inc., a Maine corporation ("Issuer"), and Bank of New
Hampshire Corporation, a New Hampshire corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer and First Coastal Banks,
Inc., a wholly-owned subsidiary of Issuer, have entered into an
Agreement and Plan of Merger, dated as of October 25, 1995 (the
"Plan"), providing for, among other things, the merger of First
Coastal Banks, Inc. with and into Grantee (the "Merger"), with
Grantee as the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's
execution of the Plan and Grantee's agreement referred to in
the next WHEREAS clause, Grantee has required that Issuer
agree, and Issuer has agreed, to grant to Grantee the Option
(as hereinafter defined); and
WHEREAS, as a condition and inducement to Issuer's
execution of the Plan and this Agreement, Grantee has agreed to
grant an option to Issuer on terms and conditions which are
substantially identical to those of the Option and this
Agreement with respect to 19.9% of the common stock of Grantee;
NOW THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth herein and in the Plan, 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 Plan.
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 1,674,894
shares (as adjusted as set forth herein) (the "Option Shares,"
which shall include the Option Shares before and after any
transfer of such Option Shares) of Common Stock, par value $.01
per share ("Issuer Common Stock"), of Issuer at a purchase
price per Option Share (the "Purchase Price") of $19.75,
provided, however, that in no event shall the number of Option
Shares for which the Option is exercisable exceed 9.9% of the
issued and outstanding shares of Issuer Common Stock without
giving effect to any shares subject to or issued pursuant to
the Option. Each Option Share issued upon exercise of the
Option shall be accompanied by Acquiror Rights as provided in
the Acquiror Rights Agreement.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as herein-
after defined), as applicable, shall not be in material breach
of the agreements or covenants contained in this Agreement or
the Plan, and (ii) no preliminary or permanent injunction or
other order against the delivery of shares covered by the
Option issued by any court of competent jurisdiction in the
United States shall be in effect, Grantee may exercise the
Option, in whole or in part, at any time and from time to time
following the occurrence of a Purchase Event (as hereinafter
defined); provided that the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the
Effective Time of the Merger, (B) termination of the Plan in
accordance with the terms thereof prior to the occurrence of a
Purchase Event or a Preliminary Purchase Event, other than a
termination of the Plan by Grantee pursuant to Section
7.1(b)(i) (a "Default Termination"), (C) 12 months after the
termination of the Plan by Grantee pursuant to a Default
Termination, and (D) 12 months after termination of the Plan
(other than pursuant to a Default Termination) following the
occurrence of a Purchase Event or a Preliminary Purchase Event;
and provided, further, that any purchase of shares upon exer-
cise of the Option shall be subject to compliance with appli-
cable laws, including without limitation the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). The term
"Holder" shall mean the holder or holders of the Option from
time to time, and which is initially Grantee. The rights set
forth in Section 8 hereof shall terminate when the right to
exercise the Option terminates (other than as a result of a
complete exercise of the Option) as set forth above.
(b) As used herein, a "Purchase Event" means any of
the following events:
(i) Without Grantee's prior written consent,
Issuer shall have authorized, recommended or
publicly-proposed, or publicly announced an intention
to authorize, recommend or propose, or entered into
an agreement with any person (other than Grantee or
any subsidiary of Grantee) to effect (A) a merger,
consolidation or similar transaction involving Issuer
or any of its subsidiaries, (B) the disposition, by
sale, lease, exchange or otherwise, of assets of
Issuer or any of its subsidiaries representing in
either case 20% or more of the consolidated assets of
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Issuer and its subsidiaries, or (C) the issuance,
sale or other disposition of (including by way of
merger, consolidation, share exchange or any similar
transaction) securities representing 20% or more of
the voting power of Issuer or any of its subsidiaries
(any of the foregoing an "Acquisition Transaction");
or
(ii) 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 in Section 13(d)(3) of the
Exchange Act) shall have been formed which bene-
ficially owns or has the right to acquire beneficial
ownership of, 25% or more of the then outstanding
shares of Issuer Common Stock.
(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 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 10% or
more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a
"Tender Offer" and an "Exchange Offer,"
respectively); or
(ii) (A) the holders of Issuer Common Stock
shall not have approved the Plan at the meeting of
such stockholders held for the purpose of voting on
the Plan, (B) such meeting shall not have been held
or shall have been canceled prior to termination of
the Plan, (C) 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 Plan or (D) Issuer shall have
terminated the Plan pursuant to Section 7.1(g) there-
of, in each case after it shall have been publicly
announced that any person (other than Grantee or any
subsidiary of Grantee) shall have (x) made, or dis-
closed an intention to make, a proposal to engage in
an Acquisition Transaction, (y) commenced a Tender
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Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer, or
(z) filed an application (or given notice), whether
in draft or final form, under the BHC Act, the Bank
Merger Act, as amended, or the Change in Bank Control
Act of 1978, as amended, for approval to engage in an
Acquisition Transaction; or
(iii) (A) Issuer shall have breached any
representation, warranty, covenant or obligation
contained in the Plan and such breach would entitle
Grantee to terminate the Plan under Section 7.1(b)
thereof (without regard to the cure period provided
for therein unless such cure is promptly effected
without jeopardizing consummation of the Merger
pursuant to the terms of the Plan) or (B) Issuer
shall have terminated the Plan pursuant to Section
7.1(g) thereof, in each case after (x) a bona fide
proposal is made by any person (other than Grantee or
any subsidiary of Grantee) to Issuer or its stock-
holders to engage in an Acquisition Transaction, (y)
any person (other than Grantee or any subsidiary of
Grantee) states its intention to Issuer or its stock-
holders to make a proposal to engage in an Acquisi-
tion Transaction if the Plan terminates, or (z) any
person (other than Grantee or any subsidiary of
Grantee) shall have filed an application or notice
with any Governmental Entity to engage in an
Acquisition Transaction.
As used in this Agreement, "person" shall have the
meaning specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
(d) Issuer shall notify Grantee promptly in writing
of the occurrence of any Preliminary Purchase Event or Purchase
Event, it being understood that the giving of such notice by
Issuer shall not be a condition to the right of Holder to
exercise the Option.
(e) In the event Holder wishes to exercise the
Option, it shall send to Issuer a written notice (the date of
which being herein 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 place and date not
earlier than three business days nor later than 15 business
days from the Notice Date for the closing (the "Closing") of
such purchase (the "Closing Date"). If prior notification to
or approval of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") or any other Governmental
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Entity is required in connection with such purchase, Issuer
shall cooperate with Grantee in the filing of the required
notice of application for approval and the obtaining of such
approval and the Closing shall occur immediately following such
regulatory approvals (and any mandatory waiting periods).
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 Issuer at the address of Issuer specified in
Section 12(f) hereof.
(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 subject to no
preemptive rights, 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 applicable federal and state law or of
the provisions of this Agreement.
(c) In addition to any other legend that is required
by applicable law, 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 STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
OCTOBER 25, 1995. A COPY OF SUCH AGREEMENT WILL BE
PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend
shall be removed by delivery of substitute certificate(s)
without such legend if Holder shall have delivered to Issuer a
copy of a letter from the staff of the Commission, or an
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opinion of counsel in form and substance reasonably satisfac-
tory to Issuer and its counsel, to the effect that such legend
is not required for purposes of the Securities Act.
(d) Upon the giving by Holder to Issuer of the
written notice of exercise of the Option provided for under
Section 3(e), the tender of the applicable purchase price in
immediately available funds and the tender of this Agreement to
Issuer, Holder shall be deemed to be the holder of record of
the shares of Issuer 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
Issuer Common Stock shall not then be actually delivered to
Holder.
(e) Issuer agrees (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized
but unissued or treasury shares of Issuer Common Stock so that
the Option may be exercised without additional authorization of
Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase
Issuer Common Stock, (ii) that it will not, by charter amend-
ment or through reorganization, consolidation, merger, dissolu-
tion 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 per-
formed hereunder by Issuer, (iii) promptly to take all action
as may from time to time be required (including (A) complying
with all premerger notification, reporting and waiting period
requirements and (B) in the event prior approval of or notice
to any Governmental Entity is necessary before the Option may
be exercised, cooperating fully with Holder in preparing such
applications or notices and providing such information to such
Governmental Entity as it may require) in order to permit
Holder to exercise the Option and Issuer duly and effectively
to issue shares of Issuer Common Stock pursuant hereto, and
(iv) promptly to take all action provided herein to protect the
rights of Holder against dilution.
5. Representations and Warranties of Issuer.
Issuer hereby represents and warrants to Grantee (and Holder,
if different than Grantee) as follows:
(a) Due Authorization. Issuer has all requisite
corporate power and authority to enter into this Agree-
ment, and subject to any approvals referred to herein, to
consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consum-
mation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the
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part of Issuer, and this Agreement has been duly executed
and delivered by Issuer.
(b) No Violations. 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 Articles of Incorpo-
ration 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 agree-
ment 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, writ,
injunction, decree, statute, rule or regulation applicable
to Issuer or any of its properties or assets.
(c) Authorized Stock. Issuer has taken all neces-
sary corporate and other 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 upon exercise of the Option that
number of shares of Issuer Common Stock equal to the maxi-
mum number of shares of Issuer Common Stock at any time
and from time to time purchasable upon exercise of the
Option, and all such shares, upon issuance pursuant to the
Option, will be duly and validly issued, fully paid and
nonassessable, and will be delivered free and clear of all
liens, claims, charges and encumbrances of any kind or
nature whatsoever and not subject to any preemptive
rights.
6. Representations and Warranties of Grantee.
Grantee hereby represents and warrants to Issuer that Grantee
has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents
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 Grantee, and this Agreement has been duly executed and
delivered by Grantee.
7. Adjustment upon Changes in Issuer
Capitalization, etc.
(a) In the event of any change in Issuer Common
Stock by reason of a stock dividend, stock split, split-up,
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recapitalization, combination, exchange of shares or similar
transaction, 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 agreements governing such transactions 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 after the date of this
Agreement (other than 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, it, together with any shares of
Issuer Common Stock previously issued pursuant hereto, equals
9.9% 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.
(b) In the event that Issuer shall enter in 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 repre-
sent less than 50% of the outstanding shares and share equiva-
xxxxx of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its assets 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
Holder, of any of (x) the Acquiring Corporation (as hereinafter
defined), (y) any person that controls the Acquiring Corpora-
tion or (z) in the case of a merger described in clause (ii),
Issuer (such person being referred to as "Substitute Option
Issuer").
(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,
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such terms shall be as similar as possible and in no event less
advantageous to Holder. Substitute Option Issuer also shall
enter into an agreement with Holder in substantially the same
form as this Agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock (as herein-
after defined) as is equal to the Assigned Value (as herein-
after defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The
exercise price of Substitute Option per share of Substitute
Common Stock (the "Substitute Option Price") shall then be
equal to the Purchase Price multiplied by a fraction in which
the numerator is the number of shares of 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) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolida-
tion or merger with Issuer (if other than Issuer),
(ii) Issuer in a merger in which Issuer is the con-
tinuing or surviving person, or (iii) the transferee
of all or substantially all of Issuer's assets (or a
substantial part of the assets of its subsidiaries
taken as a whole).
(2) "Substitute Common Stock" shall mean the
shares of capital stock (or similar equity interest)
with the greatest voting power in respect of the
election of directors (or persons similarly respon-
sible for the direction of the business and affairs)
of the Substitute Option Issuer.
(3) "Assigned Value" shall mean the highest of
(w) the price per share of Issuer Common Stock at
which a Tender Offer or an Exchange Offer therefor
has been made, (x) the price per share of Issuer
Common Stock to be paid by any third party pursuant
to an agreement with Issuer, (y) the highest closing
price for shares of Issuer Common Stock within the
six-month period immediately preceding the consolida-
tion, merger or sale in question and (z) in the event
of a sale of all or substantially all of Issuer's
assets or deposits, an amount equal to (i) the sum of
the price paid in such sale for such assets (and/or
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deposits) and the current market value of the remain-
ing assets of Issuer, as determined by a nationally-
recognized investment banking firm selected by Hold-
er, divided by (ii) the number of shares of Issuer
Common Stock outstanding at such time. In the event
that a Tender Offer or an Exchange Offer is made for
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
Issuer Common Stock shall be determined by a
nationally-recognized investment banking firm
selected by Holder.
(4) "Average Price" shall mean the average
closing price of a share of Substitute Common Stock
for the one year immediately preceding the xxxxxxx-
dation, merger 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 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
such 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 9.9% of the aggregate 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 9.9% of the aggregate of the shares of Substitute
Common Stock but for the limitation in the first sentence of
this Section 7(f), 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
the first sentence of this Section 7(f) over (ii) the value of
the Substitute Option after giving effect to the limitation in
the first sentence of this Section 7(f). This difference in
value shall be determined by a nationally-recognized investment
banking firm selected by Holder.
(g) Issuer shall not enter into any transaction
described in Section 7(b) 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
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the holders of the other shares of common stock issued by
Substitute Option Issuer are not entitled to exercise any
rights by reason of the issuance or exercise of the Substitute
Option and the shares of Substitute Common Stock are otherwise
in no way distinguishable from or have lesser economic value
(other than any diminution in value resulting from the fact
that the shares of Substitute Common Stock are restricted
securities, as defined in Rule 144 under the Securities Act or
any successor provision) than other shares of common stock
issued by Substitute Option Issuer).
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a), at
the request of Holder at any time commencing upon the first
occurrence of a Repurchase Event (as defined in Section 8(d))
and ending 12 months immediately thereafter, Issuer shall
repurchase from Holder (i) the Option and (ii) all shares of
Issuer Common Stock 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 "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder
for any shares of Issuer Common Stock acquired pursuant to
the Option with respect to which Holder then has
beneficial ownership;
(ii) the excess, if any, of (x) the Applicable
Price (as defined below) for each share of Issuer Common
Stock over (y) the Purchase Price (subject to adjustment
pursuant to Section 7), multiplied by the number of shares
of Issuer Common Stock with respect to which the Option
has not been exercised; and
(iii) the excess, if any, of the Applicable Price
over the Purchase Price (subject to adjustment pursuant to
Section 7) 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) by Holder for each
share of Issuer Common Stock with respect to which the
Option has been exercised and with respect to which Holder
then has beneficial ownership, multiplied by the number of
such shares.
(b) If Holder exercises its rights under this
Section 8, Issuer shall, within 10 business days after the
Request Date, pay the Section 8 Repurchase Consideration to
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Holder in immediately available funds, and contemporaneously
with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common
Stock purchased thereunder with respect to which Holder then
has beneficial ownership, and shall warrant 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. Notwithstanding the fore-
going, to the extent that prior notification to or approval of
the Federal Reserve Board or any other Governmental Entity is
required in connection with the payment of all or any portion
of the Section 8 Repurchase Consideration, Holder shall have
the ongoing option to revoke its request for repurchase pur-
suant to Section 8, in whole or in part, or to require that
Issuer deliver from time to time that portion of the Section 8
Repurchase Consideration that it is not then so prohibited from
paying and promptly file the required notice or application for
approval and expeditiously process the same (and each party
shall cooperate with the other in the filing of any such notice
or application and the obtaining of any such approval). If the
Federal Reserve Board or any other Governmental Entity dis-
approves of any part of Issuer's proposed repurchase pursuant
to this Section 8, Issuer shall promptly give notice of such
fact to Holder. If the Federal Reserve Board or any other
Governmental Entity prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the re-
purchase request or (ii) to the extent permitted by the Federal
Reserve Board or other Governmental Entity, determine whether
the repurchase should apply to the Option and/or Option Shares
and to what extent to each, and Holder shall thereupon have the
right to exercise the Option as to the number of Option Shares
for which the Option was exercisable at the Request Date less
the sum of the number of shares covered by the Option in re-
spect of which payment has been made pursuant to Section
8(a)(ii) and the number of shares covered by the portion of the
Option (if any) that has been repurchased. Holder shall notify
Issuer of its determination under the preceding sentence within
five business days of receipt of notice of disapproval of the
repurchase.
Notwithstanding anything herein to the contrary, all
of Grantee's rights under this Section 8 shall terminate on the
date of termination of the Option pursuant to Section 3(a).
(c) 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 8(d)(i), (ii) the price per share
of Issuer Common Stock received by holders of Issuer Common
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Stock in connection with any merger or other business combina-
tion transaction described in Section 7(b)(i), 7(b)(ii) or
7(b)(iii), or (iii) the highest closing sales price per share
of Issuer Common Stock quoted on the Nasdaq Stock Market's
National Market ("NASDAQ/NMS") (or if Issuer Common Stock is
not quoted on NASDAQ/NMS, the highest bid price per share as
quoted on the principal trading market or securities exchange
on which such shares are traded as reported by a recognized
source chosen 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
and the current market value of the remaining assets of Issuer
as determined by a nationally-recognized investment banking
firm selected by Holder, divided by the number of shares of
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 and reasonably acceptable to
Issuer, which determination shall be conclusive for all
purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur
if (i) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership of (as such
term is defined in Rule 13d-3 promulgated under the Exchange
Act), or the right to acquire beneficial ownership of, or any
"group" (as such term is defined in Section 13(d)(3) of the
Exchange Act) shall have been formed which beneficially owns or
has the right to acquire beneficial ownership of, 50% or more
of the then outstanding shares of Issuer Common Stock, or (ii)
any of the transactions described in Section 7(b)(i), Section
7(b)(ii) or Section 7(b)(iii) shall be consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall,
subject to the conditions of Section 9(c), if requested by any
Holder, as expeditiously as possible prepare and file a regis-
tration 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 Holder upon
exercise of the Option in accordance with the intended method
of sale or other disposition stated by Holder in such request,
including without limitation a "shelf" registration statement
under Rule 415 under the Securities Act or any successor
provision, and Issuer shall use its best efforts to qualify
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such shares or other securities for sale under any applicable
state securities laws.
(b) Additional Registration Rights. If Issuer at
any time after the exercise of the Option proposes to 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
Holder of its intention to do so and, upon the written request
of Holder given within 30 days after receipt of any such notice
(which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten
public offering by Holder), Issuer will cause all such shares
for which a Holder shall have requested participation in such
registration to be so registered and included in such under-
written public offering; provided, however, that Issuer may
elect to not cause any such shares to be so registered (i) if
the underwriters in good faith object for valid business
reasons, or (ii) in the case of a registration solely to
implement an employee benefit plan or a registration filed on
Form S-4 under the Securities Act or any successor form;
provided, further, however, that such election pursuant to
clause (i) may only be made one time. If some but not all the
shares of Issuer Common Stock with respect to which Issuer
shall have received requests for registration pursuant to this
Section 9(b) shall be excluded from such registration, Issuer
shall make appropriate allocation of shares to be registered
among Holders permitted to register their shares of Issuer
Common Stock in connection with such registration pro rata in
the proportion that the number of shares requested to be
registered by each such Holder bears to the total number of
shares requested to be registered by all such Holders then
desiring to have Issuer Common Stock registered for sale.
(c) Conditions to Required Registration. Issuer
shall use all reasonable efforts to cause each registration
statement referred to in Section 9(a) to become effective 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 regi-
stration of Option Shares required pursuant to Section 9(a) for
a period not exceeding 90 days if Issuer shall in good faith
determine that any such registration would adversely affect an
offering or contemplated offering of other securities by
Issuer, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 9(a):
(i) prior to the earliest of (A) termination of
the Plan pursuant to Article VII thereof, and (B) a
Purchase Event or a Preliminary Purchase Event;
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(ii) on more than one occasion during any
calendar year;
(iii) within 90 days after the effective date of
a registration referred to in Section 9(b) pursuant to
which the Holder or Holders concerned were afforded the
opportunity to register such shares under the Securities
Act and such shares were registered as requested; and
(iv) unless a request therefor is made to Issuer
by the Holder or Holders of 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 after the expiration of nine months from the
effective date of such registration statement. 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 general jurisdiction or to
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. Issuer will pay all expenses (includ-
ing without limitation registration fees, qualification fees,
blue sky fees and expenses, accounting expenses, legal expenses
and printing expenses incurred by it) in connection with each
registration pursuant to Section 9(a) or (b) and all other
qualifications, notifications or exemptions pursuant to Section
9(a) or (b). Underwriting discounts and commissions relating
to Option Shares, fees and disbursements of counsel to the
Holder(s) of Option Shares being registered and any other
expenses incurred by such Holder(s) in connection with any such
registration shall be borne by such Holder(s).
(e) Indemnification. In connection with any regi-
stration under Section 9(a) or (b), Issuer hereby indemnifies
each Holder, 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 caused by any
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untrue, or alleged untrue, statement of a material fact con-
tained in any registration statement or prospectus or notifica-
tion or offering circular (including any amendments or supple-
ments thereto) or any preliminary prospectus, or caused by any
omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the state-
ments therein not misleading, 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 expressly for use therein,
and Issuer and each officer, director and controlling person of
Issuer shall be indemnified by such Holder, or by such under-
writer, 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 under-
writer, 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, except to the extent of any actual prejudice to
the indemnifying party, the failure so to notify the indemnify-
ing 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 reasonably
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 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
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one or more legal defenses may be available to the indemnifying
party that may be contrary to the interest of the indemnified
party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obli-
gation to bear fees and expenses of such counsel. No indemni-
fying 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 indem-
nified 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 Holders and the underwriters from the
offering of the securities and also the relative fault of
Issuer, the selling Holders and the underwriters in connection
with the statement or omissions which results 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, 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; provided, however, that in no case shall the selling
Holders 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 fraudu-
lent misrepresentation (within the meaning of Section 11(g) 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
Section 9(a) or (b) above, Issuer and each selling Holder
(other than Grantee) shall enter into an agreement containing
the indemnification provisions of this Section 9(e).
(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 Holder(s) in accordance
with and to the extent permitted by any rule or regulation
permitting nonregistered sales of securities promulgated by the
Commission from time to time, including, without limitation,
-17-
Rule 144A. Issuer shall at its expense provide the Holder 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.
(g) Issue Taxes. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares
and in connection with the exercise of the Option, and will
save any Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such
taxes.
10. Quotation; Listing. If Issuer Common Stock or
any other securities to be acquired upon exercise of the Option
are then authorized for quotation or trading or listing on
NASDAQ/NMS or any securities exchange, Issuer, upon the request
of Holder, will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of
Issuer Common Stock or other securities to be acquired upon
exercise of the Option on NASDAQ/NMS or such other securities
exchange and will use its best efforts to obtain approval, if
required, of such quotation or listing as soon as practicable.
11. Division of Option. Upon the occurrence of a
Purchase Event or a Preliminary Purchase Event, this Agreement
(and the Option granted hereby) are exchangeable, without
expense, at the option of Holder, upon presentation and sur-
render of this Agreement at the principal office of the Issuer
for other Agreements providing for 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 "Agreement" and "Option" as
used herein include 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 mutila-
tion 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 muti-
lated, 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 or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by
anyone.
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12. Miscellaneous.
(a) Expenses. Except as otherwise provided in
Section 9, each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connec-
tion with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) 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.
(c) Entire Agreement; No Third Party Beneficiaries;
Severability. This Agreement, together with the Plan and the
other documents and instruments referred to herein and therein,
between Grantee and Issuer (i) constitutes the entire agreement
and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the sub-
ject matter hereof, and (ii) is not intended to confer upon any
person other than the parties hereto (other than the indemni-
fied parties under Section 9(e) and any transferee of the
Option Shares or any permitted transferee of this Agreement
pursuant to Section 12(h)) any rights or remedies hereunder.
If any term, provision, covenant or restriction of this Agree-
ment is held by a court of competent jurisdiction or a federal
or state regulatory agency to be invalid, void or unenforce-
able, 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 invali-
dated. If for any reason such court or regulatory agency
determines that the Option does not permit Holder to acquire,
or does not require Issuer to 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 inten-
tion of Issuer to allow Holder to acquire or to require Issuer
to repurchase such lesser number of shares as may be permis-
sible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Maine
without regard to any applicable conflicts of law rules.
(e) 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.
-19-
(f) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (with confirmation) or sent by
overnight mail service or mailed by registered or certified
mail (return receipt requested) postage prepaid, to the parties
at the following address (or at such other address for a party
as shall be specified by like notice):
If to Grantee:
Bank of New Hampshire Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Chairman and President
Fax: 000-000-0000
With a required copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxx
Fax: 000-000-0000
and
Sheehan, Phinney, Bass & Green, P.A.
0000 Xxx Xxxxxx
P.O. Box 3701
Manchester, New Hampshire 03105-3701
Attn: Xxxxxx X. Field, Jr.
Fax: 000-000-0000
If to Issuer:
Peoples Heritage Financial Group, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxx
Chairman, President and
Chief Executive Officer
Fax: 000-000-0000
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With a required copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
(g) 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.
(h) 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 (whether
by operation of law or otherwise) without the prior written
consent of the other party, except that Holder may assign this
Agreement to a wholly-owned subsidiary of Holder and Holder may
assign its rights hereunder in whole or in part after the
occurrence of a Purchase Event. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their
respective successors and assigns.
(i) 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.
(j) Specific Performance. The parties hereto agree
that this Agreement may be enforced by either party 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.
-21-
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.
BANK OF NEW HAMPSHIRE
Attest: CORPORATION
/s/ Xxxx X. Xxxx By:/s/ Xxxxx X. Xxxxxxx
Name: Xxxx X. Xxxx Name: Xxxxx X. Xxxxxxx
Title: Senior Executive Title: Chairman and President
Vice President
PEOPLES HERITAGE
FINANCIAL GROUP, INC.
Attest:
/s/ Xxxxx X. Xxxxxxx By:/s/ Xxxxxxx X. Xxxx
Name: Xxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxx
Title: Executive Vice Title: Chairman, President
President and Chief Executive
Officer
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