STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 10, 1995, between The Boston
Bancorp, a Massachusetts corporation (the "Issuer") and Bank of Boston
Corporation, a Massachusetts corporation (the "Grantee").
WHEREAS, the Grantee and the Issuer are entering into an Agreement and
Plan of Reorganization of even date herewith (the "Acquisition Agreement"),
which agreement is being executed by the parties thereto simultaneously with
this Agreement; and
WHEREAS, as a condition to the Grantee's entry into the Acquisition
Agreement and in consideration for such entry, the Issuer has agreed to grant
the 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 Acquisition Agreement, the
parties hereto agree as follows:
1. (a) The Issuer hereby grants to the Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 1,038,420 fully paid and nonassessable shares (the "Option Shares") of common
stock, $1.00 par value per share, of the Issuer ("Common Stock") at a price of
$33.00 per share (the "Option Price"). 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 provided that in no event shall the number of
shares for which this Option is exercisable exceed 19.9% of the Issuer's issued
and outstanding shares of Common Stock (without giving effect to any shares of
Common Stock issuable pursuant to the Option) less the number of shares
previously issued pursuant to exercise of the Option.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to exercise of the Option pursuant to this Agreement or as contemplated
by Section 5(a) of this Agreement), including, without limitation, pursuant to
stock option or other employee plans or as a result of the exercise of
conversion rights, the number of Option Shares shall be increased so that, after
such issuance, it equals 19.9% of the number of shares of Common Stock then
issued and outstanding without giving effect to any shares subject or issued
pursuant to the Option less the number of shares previously issued pursuant to
exercise of the Option. Nothing contained in this Section 1(b) or elsewhere in
this Agreement shall be deemed to authorize the Issuer or the Grantee to breach
any provision of the Acquisition Agreement.
2. (a) Provided that the Grantee is not in material breach of the
Acquisition Agreement, the Holder (as such term is defined in paragraph (c)
below) may exercise the Option, in whole or part, if, but only if, both an
Initial Triggering Event (as defined in paragraph (e) below) and a Subsequent
Triggering Event (as defined in paragraph (f) below) shall have occurred prior
to the occurrence of an Exercise Termination Event (as defined in paragraph (b)
below), provided that the Holder shall have sent the written notice of such
exercise (as provided in paragraph (h) of this Section 2) within thirty (30)
days following such Subsequent Triggering Event and prior to the Exercise
Termination Event.
(b) The term "Exercise Termination Event" shall mean the earliest of (i)
the Effective Time of the Acquisition Merger, (ii) any termination of the
Acquisition Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial Triggering Event, and
(iii) in the event of any termination of the Acquisition Agreement in accordance
with the provisions thereof after the occurrence of an Initial Triggering Event,
the passage of nine (9) months after such termination. Notwithstanding the
termination of the Option, the Grantee shall be entitled to purchase those
Option Shares with respect to which it has exercised the Option in whole or in
part prior to the termination of the Option.
(c) The term "Holder" shall mean the holder or holders of the Option.
(d) The term "Schedule 13G Investor" shall mean either (i) any Person
holding voting securities of the Issuer eligible to report the beneficial
ownership of such securities on Schedule 13G pursuant to the provisions of Rule
13d-1 under the Exchange Act or (ii) any Person holding voting securities of the
Issuer who is required to report the beneficial ownership of such securities on
Schedule 13D pursuant to the provisions of Rule 13d-1 under the Exchange Act and
who indicates in such Schedule 13D that such Person has acquired such securities
for passive investment purposes and not with the purpose nor with the effect of
changing or influencing the control of the Issuer nor in connection with or as a
participant in any transaction having such purpose or effect.
(e) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The Issuer or any subsidiary of the Issuer, without having
received the Grantee's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction 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 Exchange Act and the
rules and regulations thereunder), other than the Grantee or any
subsidiary of the Grantee, or, without the consent of the Grantee, the
Board of Directors of the Issuer shall have approved an Acquisition
Transaction or recommended that the shareholders of the Issuer approve
or accept any Acquisition Transaction other than as contemplated by the
Acquisition Agreement. For purposes of this Agreement, the term
"Acquisition Transaction" shall mean (A) a merger or consolidation, or
any similar transaction, with the Issuer or any subsidiary of the Issuer
that is a "significant subsidiary" as defined in Regulation S-X
promulgated by the Securities and Exchange Commission (a "Significant
Subsidiary"), or any subsidiary of the Issuer which, after such
transaction, would be a Significant Subsidiary of the Issuer, (B) a
purchase, lease or other acquisition of all or substantially all of the
assets of the Issuer or any Significant Subsidiary of the Issuer (except
as contemplated by the Acquisition Agreement), or (C) a purchase or
other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing ten percent (10%) or
more of the voting power of the Issuer or any Significant Subsidiary of
the Issuer;
(ii) Any Person, other than the Grantee or any subsidiary of the
Grantee or the Issuer in a fiduciary capacity, and other than a Schedule
13G Investor, shall have acquired beneficial ownership (as hereinafter
defined) or the right to acquire beneficial ownership of ten percent
(10%) or more of the outstanding shares of Common Stock if such Person
owned beneficially less than ten percent (10%) of the outstanding shares
of Common Stock on the date of this Agreement, or any Person shall have
acquired beneficial ownership of an additional three percent (3%) of the
outstanding shares of Common Stock if such Person owned beneficially ten
percent (10%) or more of the outstanding shares of Common Stock on the
date of this Agreement (the term "beneficial ownership" for purposes of
this Agreement having the meaning assigned thereto in Section 13(d) of
the Exchange Act, and in the rules and regulations thereunder);
(iii) Any Person, other than the Grantee or any subsidiary of the
Grantee, shall have made a bona-fide proposal to the Issuer or its
shareholders to engage in an Acquisition Transaction by public
announcement or written communication that shall be or become the
subject of public disclosure;
(iv) After any Person other than the Grantee or any subsidiary of
the Grantee has made a proposal to the Issuer or its shareholders to
engage in an Acquisition Transaction, the Issuer shall have breached any
covenant or obligation contained in Sections 5.01, 5.03, 5.04, 5.05,
5.18 or 5.21 of the Acquisition Agreement and such breach (A) would
entitle the Grantee to terminate the Acquisition Agreement and (B) shall
not have been remedied prior to the Notice Date (as defined in paragraph
(h) below); or
(v) Any Person other than the Grantee or any subsidiary of the
Grantee, other than in connection with a transaction to which the
Grantee has given its prior written consent, shall have filed an
application or notice with the OTS or Federal Reserve Board or other
federal or state bank regulatory authority, which application or notice
has been accepted for processing, for approval to engage in an
Acquisition Transaction.
(f) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any Person (other than a Schedule 13G
Investor) of beneficial ownership of 17.5% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
subparagraph (i) of paragraph (e) of this Section 2, except that the
percentage referenced in clause (C) shall be 17.5% in lieu of ten
percent (10%).
(g) The Issuer shall notify the Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by the Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(h) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to the Issuer a written 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 (3) business days nor later than
forty-five (45) business days from the Notice Date for the closing of such
purchase (the "Closing"); provided that if prior notification to or approval of
the OTS or Federal Reserve Board or any other regulatory agency is required in
connection with such purchase, the Holder shall promptly file the required
notice or application for approval 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; provided, however, that in no event shall
the Closing be more than eighteen (18) months after the Notice Date, and if the
Closing shall not have occurred within eighteen (18) months after the Notice
Date due to the failure of the Holder to obtain any such required approval, the
exercise of the Option effected on the Notice Date shall be deemed to have
expired. The term "business day" for purposes of this Agreement means any day,
excluding Saturdays, Sundays and any other day that is a legal holiday in the
Commonwealth of Massachusetts or the State of Connecticut or a day on which
banking institutions in the Commonwealth of Massachusetts or the State of
Connecticut are authorized by law or executive order to close.
(i) At the Closing, the Holder shall pay to the Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to the exercise
of the Option in immediately available funds by a wire transfer to a bank
account designated by the Issuer, provided that failure or refusal of the Issuer
to designate such a bank account shall not preclude the Holder from exercising
the Option.
(j) At such Closing, simultaneously with the delivery of immediately
available funds as provided in paragraph (i) above, the Issuer shall deliver to
the Holder a certificate or certificates representing the number of shares of
Common Stock 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 shares purchasable hereunder, and the Holder shall deliver to
the 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.
(k) Certificates for the Common Stock delivered at a Closing hereunder
may (in the sole discretion of the Issuer) be endorsed with a restrictive legend
that shall read substantially as follows:
"THE TRANSFER OF THE SHARES 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
________________, 1995, A COPY OF WHICH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN
REQUEST THEREFOR."
It is understood and agreed that (i) the reference to the resale restrictions of
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Holder shall have
delivered to the Issuer a copy of a letter from the staff of the Securities and
Exchange Commission, or an opinion of counsel, in form and substance reasonably
satisfactory to the Issuer, to the effect that such legend is not required for
purposes of the Securities 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; 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.
(l) Upon the giving by the Holder to the Issuer of the written notice of
exercise of the Option provided for under paragraph (h) above, the tender of the
applicable purchase price in immediately available funds and the tender of a
copy of this Agreement to the Issuer, such Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Issuer shall then be closed
or that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. The 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. The Issuer agrees (a) 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 requiring the Issuer's
stockholders to approve an increase in the number of authorized shares of Common
Stock after giving effect to all other options, warrants, convertible securities
and other rights to purchase Common Stock, (b) 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 the Issuer, and (c) promptly to take all
action as may from time to time be required (including without limitation (i)
complying with all applicable premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. ss. 18a and regulations promulgated
thereunder and (ii) cooperating fully with any Holders in preparing any
applications or notices required under the Home Owners Loan Act of 1933, as
amended, the Bank Holding Company Act of 1956, as amended, or the Change in Bank
Control Act of 1978, as amended, or any state banking law), in order to permit
such Holders to exercise the Option and the Issuer duly and effectively to issue
shares of Common Stock pursuant hereto.
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of each Holder, upon presentation and surrender
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, 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 the 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, the Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute for all purposes and under all circumstances an additional
contractual obligation on the part of the Issuer.
5. In addition to the adjustment in the number of Option Shares pursuant
to Section 1 of this Agreement, the number of Option Shares shall be subject to
adjustment from time to time as provided in this Section 5.
(a)(i) In the event of any change in the shares of Common Stock by
reason of stock dividend, split-up, merger, recapitalization, subdivision,
conversion, combination, exchange of shares or similar transaction, the type and
number of Option Shares, and the Option Price therefor, shall be adjusted
appropriately in accordance with subsection (b) of this Section 5, 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 shares
of Common Stock that Grantee would have held immediately after such event if the
Option had been exercised immediately prior to such event, or the record date
therefor, as applicable.
(a)(ii) Issuer may make such increases in the number of Option Shares,
in addition to those required under subsection (a)(i), as shall be determined by
its Board of Directors to be advisable in order to avoid taxation so far as
practicable, of any dividend of stock or stock rights or any event treated as
such for Federal income tax purposes to the recipients.
(b) Whenever the number of Option Shares is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the Option Price by
a fraction, the numerator of which is equal to the number of Option Shares prior
to the adjustment and the denominator of which is equal to the number of Option
Shares after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, and provided that the Grantee is not
precluded, pursuant to subsection (a) of Section 2 hereof, from exercising the
Option, the Issuer shall, at the request of the Grantee delivered within thirty
(30) days following such Subsequent Triggering Event (whether on the Grantee's
own behalf or on the behalf of any subsequent Holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto), promptly
prepare, file and keep current, with respect to the Option and the Option
Shares, a "shelf" registration statement under Rule 415 of the Securities Act or
any successor provision and the Issuer shall use all reasonable efforts to
qualify such shares under any applicable state securities laws. The Issuer will
use all reasonable efforts to cause such registration statement first 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 sales or other dispositions of
Option Shares. The Grantee shall have the right to demand two (2) such
registrations. The foregoing notwithstanding, if, at the time of any request by
the Grantee for registration of the Option or Option Shares as provided above,
the Issuer is in registration with respect to any underwritten public offering
of share 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 or Option Shares
would interfere with the successful marketing of the shares of Common Stock
offered by the Issuer in such underwritten public offering, 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 if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practicable and no
reduction shall thereafter occur. Each such Holder shall provide all information
reasonably requested by the Issuer for inclusion in any registration statement
to be filed hereunder. If requested by any such Holder in connection with such
registration, the 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 the Issuer.
7. (a) In the event that, at any time prior to an Exercise Termination
Event, and provided that the Grantee is not precluded, pursuant to subsection
(a) of Section 2 hereof, from exercising the Option, either (i) any Person
acquires beneficial ownership of 25% or more of the then outstanding shares of
Common Stock or (ii) an Initial Triggering Event of the type described in clause
(i) of subsection (e) of Section 2 of this Agreement (except that the percentage
reference in clause (C) thereof shall be 25%) shall occur, then (i) at the
request of any Holder, delivered within thirty (30) days following such
occurrence (or such later period as provided in Section 8), the Issuer or any
successor 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 this Option may then be exercised, plus, to the extent not previously
reimbursed, the Grantee's reasonable out-of-pocket expenses incurred in
connection with the transactions contemplated by, and the enforcement of the
Grantee's rights under, the Acquisition Agreement, including without limitation
legal, accounting and investment banking fees (the "Grantee's Out-of-Pocket
Expenses"), and (ii) at the request of any owner of Option Shares from time to
time (the "Owner"), delivered within thirty (30) days following such occurrence
(or such later period as provided in Section 8), the Issuer shall repurchase
such number of the Option Shares from such Owner as the Owner shall designate at
a price per share ("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, plus, to the extent not previously
reimbursed, the Grantee's Out-of-Pocket Expenses. The term "market/offer price"
shall mean the highest of (w) the price per share of the Common Stock at which a
tender offer or exchange offer therefor has been made, (x) the price per share
of the Common Stock to be paid by any Person, other than the Grantee or a
subsidiary of the Grantee, pursuant to an agreement with the Issuer of the kind
described in Section 2(e)(i), (y) the highest closing price for shares of Common
Stock within the shorter of the period from the date of this Agreement up to the
date on which such required repurchase of Options or Option Shares, as the case
may be, occurs or the six (6) month period immediately preceding the date of
such required repurchase of Options or Option Shares, as the case may be, or (z)
in the event of a sale of all or substantially all of the Issuer's assets, the
sum of the price paid in such sale for such assets and the current market value
of the remaining assets of the Issuer as determined in good faith by a
nationally recognized investment banking firm selected by a majority in the
interest of the Holders or the Owners, as the case may be, and reasonably
acceptable to the Issuer, divided by the number of shares of Common Stock of the
Issuer outstanding at the time of such sale. In determining the market/offer
price, the value of consideration other than cash shall be determined in good
faith 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 the Issuer.
(b) Each Holder and Owner, as the case may be, may exercise its right to
require the Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to the 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 elects to require the 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 within ten (10) business days after the surrender
of the Option and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto, the Issuer shall deliver or cause to be
delivered to each Holder the Option Repurchase Price and/or to each Owner the
Option Share Repurchase Price therefor or the portion thereof that the Issuer is
not then prohibited under applicable law and regulation from so delivering.
(c) To the extent that the 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,
the 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 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 ten (10) business days after the date on which the
Issuer is no longer so prohibited; provided, however, that if the 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, from delivering to any Holder and/or Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase Price,
respectively, in part or in full (and the Issuer hereby undertakes to use all
reasonable efforts to receive 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 or the Option Shares either in whole or to the extent of the prohibition,
whereupon the Issuer shall promptly (i) deliver to such Holder and/or Owner, as
appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that the 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 such Holder, a new Stock Option Agreement evidencing the right of
such Holder to purchase that number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock for which the surrendered Stock
Option 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, or (B) to such Owner, a certificate for
the Option Shares it is then so prohibited from repurchasing.
8. The thirty (30) day period for exercise of certain rights under
Sections 2, 6 7 and 10 hereof shall be extended in each such case: (i) to the
extent necessary to obtain all regulatory approvals for the exercise of such
rights and for the expiration of all statutory waiting periods; and (ii) to the
extent necessary to avoid liability under Section 16(b) of the Exchange Act by
reason of such exercise, provided that notice of intent to exercise such rights
shall be given to the Issuer within the requisite thirty (30) day period and the
Grantee and the Holders shall use their best efforts to promptly obtain all
requisite approvals and cause the expiration of all requisite waiting periods.
9. The Issuer hereby represents and warrants to the Grantee as follows:
(a) The 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
Board of Directors of the Issuer and no other corporate proceedings on the part
of the 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 the Issuer. This Agreement is the valid and legally binding
obligation of the Issuer.
(b) The 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 hereto, will be duly authorized, validly issued. fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
10. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other Person, whether by operation of law or otherwise, 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 and
the Grantee is not precluded, pursuant to Section 2(a), from exercising the
Option, the Grantee may, subject to the right of first refusal set forth in
Section 11, assign, transfer or sell in whole or in part its rights and
obligations hereunder within thirty (30) days following such Subsequent
Triggering Event (or such later period as provided in Section 8).
11. If at any time after the occurrence of a Subsequent Triggering Event
and, with respect to shares of Common Stock or other securities acquired by the
Grantee pursuant to an exercise of the Option, prior to the expiration of
twenty-four (24) months after the expiration of the Option pursuant to Section
2(b), the Grantee shall desire to sell, assign, transfer or otherwise dispose of
the Option, in whole or in part, or all or any of the shares of Common Stock or
other securities acquired by the Grantee pursuant to the Option, the Grantee
shall give the Issuer written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, accompanied by a copy of a
binding offer to purchase the Option or such shares or other securities signed
by such transferee and setting forth the terms of the proposed transaction. An
Offeror's Notice shall be deemed an offer by the Grantee to the Issuer, which
may be accepted within ten (10) business days of the receipt of such Offeror's
Notice, on the same terms and conditions and at the same price at which the
Grantee is proposing to transfer the Option or such shares or other securities
to such transferee. The purchase of the Option or such shares or other
securities by the Issuer shall be settled within ten (10) business days of the
date of the acceptance of the offer and the purchase price shall be paid to the
Grantee in immediately available funds, provided that, if prior notification to
or approval, consent or waiver of the OTS or Federal Reserve Board or any other
regulatory authority is required in connection with such purchase, the Issuer
shall promptly file the required notice or application for approval, consent or
waiver and shall expeditiously process the same (and the Grantee shall cooperate
with the Issuer in the filing of any such notice or application and the
obtaining of any such approval) and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which, as the case
may be, (a) the required notification period has expired or been terminated or
(b) such approval has been obtained and, in either event, any requisite waiting
period shall have passed. In the event of the failure or refusal of the Issuer
to purchase the Option or the shares or other securities, as the case may be,
covered by an Offeror's Notice or if the OTS or Federal Reserve Board or any
other regulatory authority disapproves the Issuer's proposed purchase of the
Option or such shares or other securities, the Grantee may, within sixty (60)
days following the date of the Offeror's Notice (subject to any necessary
extension for regulatory notification, approval, or waiting periods), sell all,
but not less than all, of the portion of the Option (which may be one hundred
percent (100%)) or such shares or other securities, as the case may be, proposed
to be transferred to the proposed transferee identified in the Offeror's Notice
at no less than the price specified and on terms no more favorable to the
proposed transferee than those set forth in the Offeror's Notice. The
requirements of this Section 13 shall not apply to (i) any disposition of the
Option or any shares of Common Stock or other securities by a Person to whom the
Grantee has assigned its rights under the Option with the prior written consent
of the Issuer, (ii) any sale by means of a public offering registered under the
Securities Act in which steps are taken to reasonably ensure that no purchaser
will own securities representing more than two percent (2%) of the outstanding
shares of Common Stock of the Issuer or (iii) any transfer to a direct or
indirect wholly-owned subsidiary of the Grantee which agrees in writing to be
bound by the terms hereof.
12. Notwithstanding anything to the contrary herein, in the event that
the Holder or Owner or any Related Person thereof (as hereinafter defined) is a
person making an offer or proposal to engage in an Acquisition Transaction
(other than the transaction contemplated by the Acquisition Agreement), then (i)
in the case of a Holder or any Related Person thereof, the Option held by it
shall immediately terminate and be of no further force or effect, and (ii) in
the case of an Owner or any Related Person thereof, the Option Shares held by it
shall, at the Issuer's election, be immediately re-purchasable by Issuer at the
Option Price. For purposes of this Agreement, a Related Person of a Holder or
Owner means any Affiliate (as defined in Rule 12b-2 of the rules and regulations
under the Exchange Act) of the Holder or Owner and any person that is required
to file a Schedule 13D with the Holder or Owner with respect to shares of Common
Stock or options to acquire the Common Stock.
13. Each of the Grantee and the 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
Federal Reserve Board under the Bank Holding Company Act of 1956, as amended,
for approval to acquire the shares issuable hereunder.
14. 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.
15. 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 the Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Sections 1(b) or 5
hereof), it is the express intention of the Issuer to allow the Holder to
acquire or to require the Issuer to repurchase such lesser number of shares as
may be permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in Person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Acquisition Agreement.
17. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
18. 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.
19. 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.
20. Except as otherwise expressly provided herein, 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.
21. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Acquisition Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed as a sealed instrument on its behalf by its officers
thereunder duly authorized, all as of the day and year first above written.
THE BOSTON BANCORP
By: /s/ Robert E. Lee
-------------------------------------
Robert E. Lee
President and Chief Executive Officer
BANK OF BOSTON CORPORATION
By: /s/ Peter J. Manning
-------------------------------------
Peter J. Manning
Executive Director