Exhibit 10.2

 

EXECUTION COPY

 

GUARANTEE AGREEMENT

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

DATED AS OF OCTOBER 12, 2004

--------------------------------------------------------------------------------

GUARANTEE AGREEMENT

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

DATED AS OF OCTOBER 12, 2004

 

TABLE OF CONTENTS

 

          Page

--------------------------------------------------------------------------------

     Article I           DEFINITIONS AND INTERPRETATION      SECTION 1.1   
Definitions and Interpretation    1      Article II           TRUST INDENTURE
ACT      SECTION 2.1    Trust Indenture Act; Application    4 SECTION 2.2   
Lists of Holders of Securities    5 SECTION 2.3    Reports by the Trust
Securities Guarantee Trustee    5 SECTION 2.4    Periodic Reports to the Trust
Securities Guarantee Trustee    5 SECTION 2.5    Evidence of Compliance with
Conditions Precedent    5 SECTION 2.6    Events of Default; Waiver    6 SECTION
2.7    Event of Default; Notice    6 SECTION 2.8    Conflicting Interests    6  
   Article III           POWERS, DUTIES AND RIGHTS OF TRUST           SECURITIES
GUARANTEE TRUSTEE      SECTION 3.1    Powers and Duties of the Trust Securities
Guarantee Trustee    6 SECTION 3.2    Certain Rights of Trust Securities
Guarantee Trustee    8 SECTION 3.3    Not Responsible for Recitals or Issuance
of Trust Securities Guarantee    11      Article IV           TRUST SECURITIES
GUARANTEE TRUSTEE      SECTION 4.1    Trust Securities Guarantee Trustee;
Eligibility    11 SECTION 4.2    Appointment, Removal and Resignation of Trust
Securities Guarantee Trustee    12 SECTION 4.3    Compensation and Reimbursement
   13      Article V           GUARANTEE      SECTION 5.1    Guarantee    13
SECTION 5.2    Waiver of Notice and Demand    13

 

i

--------------------------------------------------------------------------------

SECTION 5.3    Obligations Not Affected    14 SECTION 5.4    Rights of Holders
   15 SECTION 5.5    Guarantee of Payment    15 SECTION 5.6    Subrogation    15
SECTION 5.7    Independent Obligations    15      Article VI          
LIMITATION OF TRANSACTIONS; SUBORDINATION      SECTION 6.1    Limitation of
Transactions    16 SECTION 6.2    Ranking    16      Article VII          
TERMINATION      SECTION 7.1    Termination    17      Article VIII          
INDEMNIFICATION      SECTION 8.1    Exculpation    17 SECTION 8.2   
Indemnification    17      Article IX           MISCELLANEOUS      SECTION 9.1
   Successors and Assigns    18 SECTION 9.2    Amendments    18 SECTION 9.3   
Notices    18 SECTION 9.4    Benefit    19 SECTION 9.5    Governing Law    19

 

ii

--------------------------------------------------------------------------------

GUARANTEE AGREEMENT

 

This GUARANTEE AGREEMENT (the “Trust Securities Guarantee”), dated as of October
12, 2004, is executed and delivered by Boston Private Financial Holdings, Inc.,
a Massachusetts corporation (the “Guarantor”), and SunTrust Bank, a Georgia
banking corporation, as trustee (the “Trust Securities Guarantee Trustee”), for
the benefit of the Holders (as defined herein) from time to time of the Trust
Preferred Securities and Trust Common Securities (each as defined herein) of
Boston Private Capital Trust I, a Delaware statutory trust (the “Issuer”).

 

WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
“Declaration”), dated as of October 12, 2004, among the trustees of the Issuer,
the Guarantor, as Sponsor, and the Holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is issuing on the
date hereof (i) 1,500,000 Convertible Trust Preferred Securities, having an
aggregate liquidation amount of $75,000,000, such convertible trust preferred
securities being designated the 4.875% Convertible Trust Preferred Securities
(the “Trust Preferred Securities”), and (ii) 46,392 Trust Common Securities
having an aggregate liquidation amount of $2,319,600, such trust common
securities being designated 4.875% Trust Common Securities (the “Trust Common
Securities”) (the “Trust Preferred Securities” and the “Trust Common Securities”
are collectively referred to as the “Trust Securities”); and

 

WHEREAS, as incentive for the Holders to purchase the Trust Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth in this Trust Securities Guarantee, to pay to the Holders the Guarantee
Payments (as defined below) and to make certain other payments on the terms and
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the purchase by each Holder of Trust
Securities, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers this Trust Securities Guarantee
for the benefit of the Holders.

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1 Definitions and Interpretation

 

In this Trust Securities Guarantee, unless the context otherwise requires:

 

(a) Capitalized terms used in this Trust Securities Guarantee but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;

 

(b) Terms defined in the Declaration as at the date of execution of this Trust
Securities Guarantee have the same meaning when used in this Trust Securities
Guarantee unless otherwise defined in this Trust Securities Guarantee;

 

(c) A term defined anywhere in this Trust Securities Guarantee has the same
meaning throughout;

--------------------------------------------------------------------------------

(d) All references to “the Trust Securities Guarantee” or “this Trust Securities
Guarantee” are to this Guarantee Agreement as modified, supplemented or amended
from time to time;

 

(e) All references in this Trust Securities Guarantee to Articles and Sections
are to Articles and Sections of this Trust Securities Guarantee, unless
otherwise specified;

 

(f) A term defined in the Trust Indenture Act has the same meaning when used in
this Trust Securities Guarantee, unless otherwise defined in this Trust
Securities Guarantee or unless the context otherwise requires; and

 

(g) A reference to the singular includes the plural and vice versa.

 

“Affiliate” has the same meaning as given to that term in Rule 405 under the
Securities Act of 1933, as amended, or any successor rule thereunder,

 

“Business Day” means any day other than a Saturday or a Sunday, or a day on
which banking institutions in New York, New York or the Corporate Trust Office
of the Trust Securities Guarantee Trustee are authorized or required by law,
regulation or executive order to remain closed.

 

“Boston Private Common Stock” means shares of Boston Private Financial Holdings,
Inc. common stock, par value $1.00 per share.

 

“Corporate Trust Office” means the office of the Trust Securities Guarantee
Trustee at which the corporate trust business of the Trust Securities Guarantee
Trustee shall, at any particular time, be principally administered, which office
at the date of execution of this Agreement is located at SunTrust Bank 25 Park
Place, 24th Floor Atlanta, Georgia 30303

 

“Covered Person” means any Holder of Trust Securities.

 

“Debentures” means the series of subordinated debt securities of the Guarantor
designated the 4.875% Junior Subordinated Convertible Debentures due October 1,
2034 held by the Property Trustee (as defined in the Declaration) of the Issuer.

 

“Event of Default” means a default by the Guarantor on any of its payment or
other obligations under this Trust Securities Guarantee, provided, however, that
except with respect to a default in payment of any Guarantee Payment, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.

 

“Guarantee Payments” means the following payments or distributions, without
duplication, with respect to the Trust Securities, to the extent not paid or
made by the Issuer: (i) any accumulated and unpaid Distributions (as defined in
the Declaration) that are required to be paid on the Trust Securities to the
extent the Issuer has funds on hand legally available therefor at such time,
(ii) the redemption price, including the sum of the liquidation amount of $50.00
per Trust Security, plus all accumulated and unpaid Distributions to the date of
redemption (the “Redemption Price”) to the extent the Issuer has funds on hand
legally available therefor at such time, with respect to any Trust Securities
called for redemption by the Issuer and

 

2

--------------------------------------------------------------------------------

(iii) upon a voluntary or involuntary dissolution, winding-up or liquidation of
the Issuer (other than in connection with the distribution of the Debentures to
the Holders or the redemption or conversion of all Trust Securities), the lesser
of (a) the aggregate of the liquidation amount and all accumulated and unpaid
Distributions on the Trust Securities to the date of payment (the “Liquidation
Distribution”) to the extent the Issuer has funds on hand legally available
therefor, and (b) the amount of assets of the Issuer remaining available for
distribution to Holders after satisfying the liabilities owed to the Issuer’s
creditors as required by applicable law.

 

“Holder” shall mean any holder, as registered on the books and records of the
Issuer, of any Trust Securities; provided, however, that, in determining whether
the holders of the requisite percentage of Trust Securities have given any
request, notice, consent or waiver hereunder, “Holder” shall not include the
Guarantor or any Person known to a Responsible Officer of the Trust Securities
Guarantee Trustee to be an Affiliate of the Guarantor.

 

“Indemnified Person” means the Trust Securities Guarantee Trustee, any Affiliate
of the Trust Securities Guarantee Trustee, or any officers, directors,
stockholders, members, partners, employees, representatives, nominees,
custodians or agents of the Trust Securities Guarantee Trustee.

 

“Indenture” means the Indenture dated as of October 12, 2004, between the
Guarantor (the “Debenture Issuer”) and SunTrust Bank as trustee (the “Indenture
Trustee”), pursuant to which the Debentures are to be issued to the Property
Trustee of the Issuer.

 

“Indenture Event of Default” shall mean any event specified in Section 5.01 of
the Indenture.

 

“Majority in Liquidation Amount of the Trust Preferred Securities” means, except
as provided by the Declaration or by the Trust Indenture Act, a vote by
Holder(s) of more than 50% of the aggregate liquidation amount of all Trust
Preferred Securities.

 

“Officers’ Certificate” means, with respect to the Guarantor, a certificate
signed by any of the chairman, a vice chairman, the chief executive officer, the
president, a vice president, the comptroller, the treasurer or an assistant
treasurer of the Guarantor. Any Officers’ Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Securities
Guarantee (other than pursuant to Section 314(d)(4) of the Trust Indenture Act)
shall include:

 

(a) a statement that each officer signing the Officers’ Certificate has read the
covenant or condition and the definitions relating thereto;

 

(b) a statement that each such officer has made such examination or
investigation as, in such officer’s opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

 

(c) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.

 

3

--------------------------------------------------------------------------------

“Other Debentures” means all junior subordinated debentures issued by the
Guarantor from time to time and sold to any other trust, partnership or other
entity affiliated with, established by or to be established by the Guarantor
that is a financing vehicle of the Guarantor, if any, in each case similar to
the Issuer.

 

“Other Guarantees” means all guarantees to be issued by the Guarantor with
respect to capital securities (if any) similar to the Trust Securities issued by
any other trust, partnership or other entity affiliated with, established by or
to be established by the Guarantor, if any, in each case similar to the Issuer.

 

“Person” means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability
company, trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.

 

“Responsible Officer” means, with respect to the Trust Securities Guarantee
Trustee, any officer within the Corporate Trust Office of the Trust Securities
Guarantee Trustee with direct responsibility for the administration of this
Trust Securities Guarantee and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer’s knowledge of and familiarity with the particular
subject.

 

“Successor Trust Securities Guarantee Trustee” means a successor Trust
Securities Guarantee Trustee possessing the qualifications to act as Trust
Securities Guarantee Trustee under Section 4.1.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

 

“Trust Securities Guarantee Trustee” means SunTrust Bank, a Georgia banking
corporation, until a Successor Trust Securities Guarantee Trustee has been
appointed and has accepted such appointment pursuant to the terms of this Trust
Securities Guarantee and thereafter means each such Successor Trust Securities
Guarantee Trustee.

 

ARTICLE II

TRUST INDENTURE ACT

 

SECTION 2.1 Trust Indenture Act; Application

 

(a) This Trust Securities Guarantee is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Securities Guarantee
and shall, to the extent applicable, be governed by such provisions; and

 

(b) if and to the extent that any provision of this Trust Securities Guarantee
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

 

4

--------------------------------------------------------------------------------

SECTION 2.2 Lists of Holders of Securities

 

(a) The Guarantor shall provide the Trust Securities Guarantee Trustee (unless
the Trust Securities Guarantee Trustee is otherwise the registrar of the Trust
Securities) with a list, in such form as the Trust Securities Guarantee Trustee
may reasonably require, of the names and addresses of the Holders (“List of
Holders”) as of such date, (i) within one fifteen days after December 31 and
June 30 of each year, and (ii) at any other time within 30 days of receipt by
the Guarantor of a written request for a List of Holders as of a date no more
than 14 days before such List of Holders is given to the Trust Securities
Guarantee Trustee; PROVIDED, that the Guarantor shall not be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Trust Securities Guarantee
Trustee by the Guarantor. The Trust Securities Guarantee Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.

 

(b) The Trust Securities Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.

 

SECTION 2.3 Reports by the Trust Securities Guarantee Trustee

 

Within 60 days after January 1 of each year, commencing January 1, 2005, the
Trust Securities Guarantee Trustee shall provide to the Holders such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Trust
Securities Guarantee Trustee shall also comply with the other requirements of
Section 313 of the Trust Indenture Act.

 

SECTION 2.4 Periodic Reports to the Trust Securities Guarantee Trustee

 

The Guarantor shall provide to the Trust Securities Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act, provided that such compliance certificate shall be delivered on
or before 120 days after the end of each fiscal year of the Guarantor. Delivery
of such reports, information and documents to the Trust Securities Guarantee
Trustee is for informational purposes only and the Trust Securities Guarantee
Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Guarantor’s compliance with any of its covenants
hereunder (as to which the Trust Securities Guarantee Trustee is entitled to
rely exclusively on Officers’ Certificates).

 

SECTION 2.5 Evidence of Compliance with Conditions Precedent

 

The Guarantor shall provide to the Trust Securities Guarantee Trustee annually
such evidence of compliance with any conditions precedent and covenants, if any,
provided for in this Trust Securities Guarantee that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) of
the Trust Indenture Act may be given in the form of an Officers’ Certificate.

 

5

--------------------------------------------------------------------------------

SECTION 2.6 Events of Default; Waiver

 

The Holders of a Majority in Liquidation Amount of Trust Preferred Securities
may, by vote, on behalf of all Holders, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Trust Securities Guarantee, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.

 

SECTION 2.7 Event of Default; Notice

 

(a) The Trust Securities Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default actually known to a Responsible Officer of the
Trust Securities Guarantee Trustee, mail by first-class postage prepaid, to all
Holders, notices of all defaults actually known to a Responsible Officer, unless
such defaults have been cured before the giving of such notice, provided that,
except in the case of default in the payment of any Guarantee Payment, the Trust
Securities Guarantee Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee, or a trust
committee of directors and/or a Responsible Officer of the Trust Securities
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders.

 

(b) The Trust Securities Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Trust Securities Guarantee Trustee shall have
received written notice from the Guarantor, or a Responsible officer charged
with the administration of this Trust Securities Guarantee shall have obtained
actual knowledge, of such Event of Default.

 

SECTION 2.8 Conflicting Interests

 

The Declaration shall be deemed to be specifically described in this Trust
Securities Guarantee for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.

 

ARTICLE III

POWERS, DUTIES AND RIGHTS OF TRUST

SECURITIES GUARANTEE TRUSTEE

 

SECTION 3.1 Powers and Duties of the Trust Securities Guarantee Trustee

 

(a) This Trust Securities Guarantee shall be held by the Trust Securities
Guarantee Trustee for the benefit of the Holders, and the Trust Securities
Guarantee Trustee shall not transfer this Trust Securities Guarantee to any
Person except a Holder exercising his or her rights pursuant to Section 5.4(b)

 

6

--------------------------------------------------------------------------------

or to a Successor Trust Securities Guarantee Trustee on acceptance by such
Successor Trust Securities Guarantee Trustee of its appointment to act as
Successor Trust Securities Guarantee Trustee. The right, title and interest of
the Trust Securities Guarantee Trustee shall automatically vest in any Successor
Trust Securities Guarantee Trustee, and such vesting and succession of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Trust Securities
Guarantee Trustee.

 

(b) If an Event of Default actually known to a Responsible Officer has occurred
and is continuing, the Trust Securities Guarantee Trustee shall enforce this
Trust Securities Guarantee for the benefit of the Holders.

 

(c) The Trust Securities Guarantee Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Trust Securities Guarantee, and no implied covenants or obligations shall
be read into this Trust Securities Guarantee against the Trust Securities
Guarantee Trustee. In case an Event of Default has occurred (that has not been
cured or waived pursuant to Section 2.6) and is actually known to a Responsible
Officer, the Trust Securities Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Trust Securities Guarantee, and use the
same degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.

 

(d) No provision of this Trust Securities Guarantee shall be construed to
relieve the Trust Securities Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

 

(i) prior to the occurrence of any Event of Default and after the curing or
waiving of all such Events of Default that may have occurred:

 

(A) the duties and obligations of the Trust Securities Guarantee Trustee shall
be determined solely by the express provisions of this Trust Securities
Guarantee, and the Trust Securities Guarantee Trustee shall not be liable except
for the performance of such duties and obligations as are specifically set forth
in this Trust Securities Guarantee, and no implied covenants or obligations
shall be read into this Trust Securities Guarantee against the Trust Securities
Guarantee Trustee; and

 

(B) in the absence of bad faith on the part of the Trust Securities Guarantee
Trustee, the Trust Securities Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any

 

7

--------------------------------------------------------------------------------

certificates or opinions furnished to the Trust Securities Guarantee Trustee and
conforming to the requirements of this Trust Securities Guarantee; but in the
case of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Trust Securities Guarantee Trustee,
the Trust Securities Guarantee Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this Trust
Securities Guarantee (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein);

 

(ii) the Trust Securities Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be proved
that the Trust Securities Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;

 

(iii) the Trust Securities Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a Majority in Liquidation Amount of the Trust
Preferred Securities at such time outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trust
Securities Guarantee Trustee, or exercising any trust or power conferred upon
the Trust Securities Guarantee Trustee under this Trust Securities Guarantee;
and

 

(iv) no provision of this Trust Securities Guarantee shall require the Trust
Securities Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Trust Securities Guarantee
Trustee shall have reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the terms of this Trust
Securities Guarantee or indemnity, reasonably satisfactory to the Trust
Securities Guarantee Trustee, against such risk or liability is not reasonably
assured to it.

 

SECTION 3.2 Certain Rights of Trust Securities Guarantee Trustee

 

(a) Subject to the provisions of Section 3.1:

 

(i) The Trust Securities Guarantee Trustee may conclusively rely, and shall be
fully protected in acting or refraining from acting, upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.

 

8

--------------------------------------------------------------------------------

(ii) Any direction or act of the Guarantor contemplated by this Trust Securities
Guarantee may be sufficiently evidenced by an Officers’ Certificate.

 

(iii) Whenever, in the administration of this Trust Securities Guarantee, the
Trust Securities Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action hereunder,
the Trust Securities Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers’ Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.

 

(iv) The Trust Securities Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or reregistration thereof).

 

(v) The Trust Securities Guarantee Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its employees. The
Trust Securities Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Securities Guarantee
from any court of competent jurisdiction.

 

(vi) The Trust Securities Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust Securities
Guarantee at the request or direction of any Holder, unless such Holder shall
have provided to the Trust Securities Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Trust Securities Guarantee Trustee,
against the costs, expenses (including attorneys’ fees and expenses and the
expenses of the Trust Securities Guarantee Trustee’s agents, nominees or
custodians) and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be requested by
the Trust Securities Guarantee Trustee; PROVIDED that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Trust Securities Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Securities Guarantee.

 

(vii) The Trust Securities Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of

 

9

--------------------------------------------------------------------------------

indebtedness or other paper or document, but the Trust Securities Guarantee
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.

 

(viii) The Trust Securities Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, nominees, custodians or attorneys, and the Trust Securities
Guarantee Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it hereunder.

 

(ix) Any action taken by the Trust Securities Guarantee Trustee or its agents
hereunder shall bind the Holders, and the signature of the Trust Securities
Guarantee Trustee or its agents alone shall be sufficient and effective to
perform any such action. No third party shall be required to inquire as to the
authority of the Trust Securities Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Trust Securities
Guarantee, both of which shall be conclusively evidenced by the Trust Securities
Guarantee Trustee’s or its agent’s taking such action.

 

(x) Whenever in the administration of this Trust Securities Guarantee the Trust
Securities Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Trust Securities Guarantee Trustee (i) may request instructions
from the Holders of a Majority in Liquidation Amount of the Trust Preferred
Securities, (ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received and (iii) shall be protected
in conclusively relying on or acting in accordance with such instructions.

 

(xi) The Trust Securities Guarantee Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without negligence,
and reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Trust Securities Guarantee.

 

(xii) the Trust Securities Guarantee Trustee may request that the Guarantor
deliver an Officers’ Certificate setting forth the names of individuals and/or
titles of officers authorized at such time to take specified actions pursuant to
this Trust Securities Guarantee, which Officers’ Certificate may be signed by
any person authorized to sign an Officers’ Certificate, including any person
specified as so authorized in any such certificate previously delivered and not
superceded.

 

(b) No provision of this Trust Securities Guarantee shall be deemed to impose
any duty or obligation on the Trust Securities Guarantee Trustee to

 

10

--------------------------------------------------------------------------------

perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Trust Securities Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power or
authority available to the Trust Securities Guarantee Trustee shall be construed
to be a duty.

 

SECTION 3.3 Not Responsible for Recitals or Issuance of Trust Securities
Guarantee

 

The recitals contained in this Trust Securities Guarantee shall be taken as the
statements of the Guarantor, and the Trust Securities Guarantee Trustee does not
assume any responsibility for their correctness. The Trust Securities Guarantee
Trustee makes no representation as to the validity or sufficiency of this Trust
Securities Guarantee.

 

ARTICLE IV

TRUST SECURITIES GUARANTEE TRUSTEE

 

SECTION 4.1 Trust Securities Guarantee Trustee; Eligibility

 

(a) There shall at all times be a Trust Securities Guarantee Trustee which
shall:

 

(i) not be an Affiliate of the Guarantor; and

 

(ii) be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this Section
4.1(a)(ii), the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published.

 

(b) If at any time the Trust Securities Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Trust Securities Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).

 

(c) If the Trust Securities Guarantee Trustee has or shall acquire any
“conflicting interest” within the meaning of Section 310(b) of the Trust
Indenture Act, the Trust Securities Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act, subject to the penultimate paragraph thereof.

 

11

--------------------------------------------------------------------------------

SECTION 4.2 Appointment, Removal and Resignation of Trust Securities Guarantee
Trustee

 

(a) Subject to Section 4.2(b), the Trust Securities Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except during an
Event of Default.

 

(b) The Trust Securities Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Trust Securities Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Trust Securities Guarantee Trustee and delivered to the
Guarantor.

 

(c) The Trust Securities Guarantee Trustee shall hold office until a Successor
Trust Securities Guarantee Trustee shall have been appointed or until its
removal or resignation. The Trust Securities Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Trust Securities Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Trust
Securities Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Trust Securities
Guarantee Trustee and delivered to the Guarantor and the resigning Trust
Securities Guarantee Trustee.

 

(d) If no Successor Trust Securities Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of removal or resignation, the Trust
Securities Guarantee Trustee resigning or being removed may, at the expense of
the Guarantor, petition any court of competent jurisdiction for appointment of a
Successor Trust Securities Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Trust Securities Guarantee Trustee.

 

(e) No Trust Securities Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Trust Securities Guarantee Trustee.

 

(f) Upon termination of this Trust Securities Guarantee or removal or
resignation of the Trust Securities Guarantee Trustee pursuant to this Section
4.2, the Guarantor shall pay to the Trust Securities Guarantee Trustee all
amounts due to the Trust Securities Guarantee Trustee accrued to the date of
such termination, removal or resignation.

 

12

--------------------------------------------------------------------------------

SECTION 4.3 Compensation and Reimbursement

 

(a) The Guarantor agrees:

 

(i) to pay the Trust Securities Guarantee Trustee from time to time such
reasonable compensation as the Guarantor and the Trust Securities Guarantee
Trustee shall from time to time agree in writing for all services rendered by it
hereunder (which compensation will not be limited by any provision of law in
regard to the compensation of a trustee of an express trust); and

 

(ii) except as otherwise expressly provided herein, to reimburse the Trust
Securities Guarantee Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trust Securities Guarantee
Trustee in accordance with any provision of this Guarantee (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence, bad faith or willful misconduct.

 

(b) The provisions of this Section shall survive the termination of this Trust
Securities Guarantee and the removal or resignation of the Trust Securities
Guarantee Trustee.

 

ARTICLE V

GUARANTEE

 

SECTION 5.1 Guarantee

 

The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor’s obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders. Notwithstanding the foregoing, in the case of an
Indenture Event of Default by the Debenture Issuer (as defined in the
Declaration), then the Guarantor will not pay any Distribution, Redemption Price
or Liquidation Distribution to the holders of the Trust Common Securities until
making payment in full and in cash of all accumulated and unpaid Distributions
to holders of the outstanding Trust Preferred Securities for all distribution
periods terminating on or prior thereto, and in the case of payment of the
Redemption Price or a Liquidation Distribution, the full amount of the
Redemption Price or Liquidation Distribution to holders of the outstanding Trust
Preferred Securities then called for redemption or liquidation.

 

SECTION 5.2 Waiver of Notice and Demand

 

The Guarantor hereby waives notice of acceptance of this Trust Securities
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

 

13

--------------------------------------------------------------------------------

SECTION 5.3 Obligations Not Affected

 

The obligations, covenants, agreements and duties of the Guarantor under this
Trust Securities Guarantee shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:

 

(a) the release or waiver, by operation of law or otherwise, of the performance
or observance by the Issuer of any express or implied agreement, covenant, term
or condition relating to the Trust Securities to be performed or observed by the
Issuer;

 

(b) the extension of time for the payment by the Issuer of all or any portion of
the Distributions, Redemption Price, Liquidation Distribution (as defined in
Annex I of the Declaration) or any other sums payable under the terms of the
Trust Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Trust Securities
(other than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension of
any interest payment period on the Debentures permitted by the Indenture);

 

(c) any failure, omission, delay or lack of diligence on the part of the Holders
to enforce, assert or exercise any right, privilege, power or remedy conferred
on the Holders pursuant to the terms of the Trust Securities, or any action on
the part of the Issuer granting indulgence or extension of any kind;

 

(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;

 

(e) any invalidity of, or defect or deficiency in, the Trust Securities;

 

(f) the settlement or compromise of any obligation guaranteed hereby or hereby
incurred;

 

(g) any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a guarantor, it being the intent of this
Section 5.3 that the obligations of the Guarantor with respect to the Guarantee
Payments shall be absolute and unconditional under any and all circumstances.

 

There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.

 

No setoff, counterclaim, reduction or diminution of any obligation, or any
defense of any kind or nature that the Guarantor has or may have against any
Holder (except the defense of payment to such Holder) shall be available
hereunder to the Guarantor against such Holder to reduce the payments to it
under this Trust Securities Guarantee.

 

14

--------------------------------------------------------------------------------

SECTION 5.4 Rights of Holders

 

(a) The Holders of a Majority in Liquidation Amount of the Trust Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trust Securities Guarantee Trustee in
respect of this Trust Securities Guarantee or exercising any trust or power
conferred upon the Trust Securities Guarantee Trustee under this Trust
Securities Guarantee, except that the Trust Securities Guarantee Trustee may
refuse to follow any direction it believes is unjustly prejudicial to other
holders not taking part in the direction, is unlawful, or would subject the
Trust Securities Guarantee Trustee to personal liability.

 

(b) Any Holder may institute a legal proceeding directly against the Guarantor
to enforce the Trust Securities Guarantee Trustee’s rights under this Trust
Securities Guarantee, without first instituting a legal proceeding against the
Issuer, the Trust Securities Guarantee Trustee or any other person or entity.
The Guarantor waives any right or remedy to require that any action be brought
first against the Issuer or any other person or entity before proceeding
directly against the Guarantor.

 

SECTION 5.5 Guarantee of Payment

 

This Trust Securities Guarantee creates a guarantee of payment and not of
collection. If an event of default exists with respect to the Debentures that is
attributable to the Guarantor’s failure to pay principal of or an interest
payment on the Debentures on a payment date, then any Holder may institute a
direct action against the Guarantor pursuant to the terms of the Indenture for
enforcement of payment to that Holder of the principal of or interest on such
Debentures having a principal amount equal to the aggregate liquidation amount
of the Trust Securities of the Holder.

 

SECTION 5.6 Subrogation

 

The Guarantor shall be subrogated to all (if any) rights of the Holders against
the Issuer in respect of any amounts paid to such Holders by the Guarantor under
this Trust Securities Guarantee; PROVIDED, HOWEVER, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Trust Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Trust Securities Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.

 

SECTION 5.7 Independent Obligations

 

The Guarantor acknowledges that its obligations hereunder are independent of the
obligations of the Issuer with respect to the Trust Securities, and that the
Guarantor shall be liable as principal and as debtor hereunder to make Guarantee
Payments pursuant to the terms of this Trust Securities Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.

 

15

--------------------------------------------------------------------------------

ARTICLE VI

LIMITATION OF TRANSACTIONS; SUBORDINATION

 

SECTION 6.1 Limitation of Transactions

 

So long as any Trust Securities remain outstanding, the Guarantor shall not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Guarantor’s capital
stock (which includes common and preferred stock), (ii) make any payment of
principal, interest or premium, if any, or repay, repurchase or redeem any debt
securities of the Guarantor (including any Other Debentures) that rank pari
passu with or junior in right of payment to the Debentures or (iii) make any
guarantee payments with respect to any guarantee by the Guarantor of the debt
securities of any subsidiary of the Guarantor (including Other Guarantees) if
such guarantee ranks pari passu with or junior in right of payment to the
Debentures (other than (a) dividends or distributions in shares of, or options,
warrants, rights to subscribe for or purchase shares of, common stock of the
Guarantor, (b) any declaration of a dividend in connection with the
implementation of a shareholders’ rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Trust Securities Guarantee, (d) a
reclassification of the Guarantor’s capital stock or the exchange or conversion
of one class or series of the Guarantor’s capital stock for another series of
the Guarantor’s capital stock, (e) the purchase of fractional shares resulting
from a reclassification of the Guarantor’s capital stock, (f) the purchase of
fractional interests in shares of the Guarantor’s capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged and (g) purchases of common stock related to the issuance
of common stock or rights under any of the Guarantor’s benefit plans for its
directors, officers or employees or any of the Guarantor’s dividend reinvestment
plans) if at such time (i) there shall have occurred any event that would be an
Indenture Event of Default, (ii) if such Debentures are held by the Property
Trustee, the Guarantor shall be in default with respect to its payment of any
obligations under this Trust Securities Guarantee or (iii) the Guarantor shall
have given notice of its election of the exercise of its right to extend the
interest payment period pursuant to Section 16.01 of the Indenture and any such
extension shall be continuing.

 

SECTION 6.2 Ranking

 

This Trust Securities Guarantee will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to Senior
Indebtedness (as defined in the Indenture), to the same extent and in the same
manner that the Debentures are subordinated to Senior Indebtedness pursuant to
the Indenture, (ii) pari passu with the Debentures, the Other Debentures and any
Other Guarantee, and (iii) senior to the Guarantor’s capital stock.

 

16

--------------------------------------------------------------------------------

ARTICLE VII

TERMINATION

 

SECTION 7.1 Termination

 

This Trust Securities Guarantee shall terminate (i) upon full payment of the
Redemption Price (as defined in Annex I of the Declaration) of all outstanding
Trust Preferred Securities, (ii) upon liquidation of the Issuer, the full
payment of the amounts (including all accrued and unpaid interest and other
amounts) payable in accordance with the Declaration, (iii) the distribution of
the Debentures to the Holders and the holders of Trust Common Securities or (iv)
the distribution of Boston Private Common Stock upon conversion of all
outstanding Trust Securities. Notwithstanding the foregoing, this Trust
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
under the Trust Securities or under this Trust Securities Guarantee.

 

ARTICLE VIII

INDEMNIFICATION

 

SECTION 8.1 Exculpation

 

(a) No Indemnified Person shall be liable, responsible or accountable in damages
or otherwise to the Guarantor or any Covered Person for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Trust Securities
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Trust Securities Guarantee or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person’s negligence or willful misconduct with respect to such acts or
omissions.

 

(b) An Indemnified Person shall be fully protected in relying in good faith upon
the records of the Guarantor and upon such information, opinions, reports or
statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person’s
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.

 

SECTION 8.2 Indemnification

 

The Guarantor agrees to indemnify each Indemnified Person for, and to hold each
Indemnified Person harmless against, any and all loss, liability, damage, claim
or expense incurred, including taxes (other than taxes based upon the income of
the Trust Guarantee Trustee), without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any

 

17

--------------------------------------------------------------------------------

claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. The obligation to indemnify as set forth in this
Section 8.2 shall survive the termination of this Trust Securities Guarantee and
the resignation or removal of the Trust Securities Guarantee Trustee.

 

ARTICLE IX

MISCELLANEOUS

SECTION 9.1 Successors and Assigns

 

All guarantees and agreements contained in this Trust Securities Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders then outstanding.

 

SECTION 9.2 Amendments

 

Except with respect to any changes that do not materially adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Trust Securities Guarantee may only be amended with the prior approval of the
Holders of a Majority in Liquidation Amount of the Trust Preferred Securities.
The provisions of the Declaration with respect to consents to amendments thereof
(whether at a meeting or otherwise) shall apply to the giving of such approval.

 

SECTION 9.3 Notices

 

All notices provided for in this Trust Securities Guarantee shall be in writing,
duly signed by the party giving such notice, and shall be delivered, faxed or
mailed by first class mail, as follows:

 

(a) If given to the Issuer, in care of the Administrative Trustee, at the
Issuer’s mailing address set forth below (or such other address as the Issuer
may give notice of to the Holders and the Trust Securities Guarantee Trustee):

 

Boston Private Capital Trust I

c/o Borel Private Bank & Trust Company

160 Bovet Road

San Mateo, CA 94402

Attention: Emanuela M. Allgood

Fax: (650) 378-3774

 

18

--------------------------------------------------------------------------------

(b) If given to the Trust Securities Guarantee Trustee, at the Trust Securities
Guarantee Trustee’s mailing address set forth below (or such other address as
the Trust Securities Guarantee Trustee may give notice of to the Holders and the
Issuer):

 

SunTrust Bank

25 Park Place, 24th Floor

Atlanta, Georgia 30303

 

Attention: George Hogan

Fax: (404) 588-7335

Telephone: (404) 588-7591

 

(c) If given to the Guarantor, at the Guarantor’s mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
and the Trust Securities Guarantee Trustee):

 

Boston Private Financial Holdings, Inc.

Ten Post Office Square

Boston, Massachusetts 02109

 

Attention: Margaret W. Chambers, Esq.

Fax: (617) 912-4491

Telephone: (617) 646-4822

 

(d) If given to any Holder, at the address set forth on the books and records of
the Issuer.

 

All such notices shall be deemed to have been given when received in person,
faxed with receipt confirmed, or mailed by first-class mail, postage prepaid
except that if a notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.

 

SECTION 9.4 Benefit

 

This Trust Securities Guarantee is solely for the benefit of the Holders and,
subject to Section 3.1(a), is not separately transferable from the Trust
Securities.

 

SECTION 9.5 Governing Law

 

THIS TRUST SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

[SIGNATURE PAGE FOLLOWS]

 

19

--------------------------------------------------------------------------------

THIS GUARANTEE AGREEMENT is executed as of the day and year first above written.

 

BOSTON PRIVATE FINANCIAL HOLDINGS

INC., as Guarantor

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

SUNTRUST BANK,

as Trust Securities Guarantee Trustee

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

20