Exhibit 10.1

 

[g63871kcimage002.gif]

Confirmation of Forward Stock Sale

Transactions

 

 

December 11, 2003

 

ML Ref: 0383828

 

 

To:

Boston Private Financial Holdings, Inc.

 

Ten Post Office Square

 

Boston, MA 02109

 

 

From:

Merrill Lynch International

 

Ropemaker Place

 

25 Ropemaker Street

 

London, England EC2Y 9L4

 

 

From:

Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Solely as Agent

 

tel: (212) 449-3149

 

fax: (212) 449-2697

 

 

Dear Sirs,

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the transaction entered into between us on the Trade
Date specified below (the “Transaction”).  This Confirmation constitutes a
“Confirmation” as referred to in the ISDA Master Agreement specified below.

 

1.                                       The definitions and provisions
contained in the 2000 ISDA Definitions (the “2000 Definitions”) and the 2002
ISDA Equity Derivatives Definitions (the “2002 Definitions” and, together with
the 2000 Definitions, the “Definitions”), each as published by the International
Swaps and Derivatives Association, Inc., are incorporated into this
Confirmation.  In the event of any inconsistency between the 2002 Definitions
and the 2000 Definitions, the 2002 Definitions will govern.  In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern.

 

Party A and Party B undertake to use all reasonable efforts promptly to
negotiate, execute and deliver an agreement (the “Agreement”) in the form of the
1992 ISDA Master Agreement (Multicurrency-Cross Border) (the “ISDA Form”). 
Until we execute and

 

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

 

deliver that Agreement, this Confirmation, together with all other documents
referring to the ISDA Form confirming transaction entered into between us shall
supplement, form a part of, and be subject to an agreement in the form of the
ISDA Form as if we had executed an agreement in such form with the a
Schedule thereto with the elections and variables set forth in Part 5 of this
Confirmation.  In the event of any inconsistency between the provisions of that
agreement and this Confirmation, this Confirmation will prevail for purposes of
this Transaction.

 

This Confirmation shall supplement, form a part of, and be subject to such
Agreement.  Until you and we execute and deliver the Agreement, this
Confirmation (together with all other Confirmations of Transactions previously
entered into between us, notwithstanding anything to the contrary therein) shall
supplement, form a part of, and be subject to the 1992 ISDA Master Agreement as
if, on the Trade Date of the first such Transaction between us, you and we had
executed that agreement (without any Schedule thereto but as supplemented in the
manner provided in Section 5 hereof).

 

Party A and Party B each represents to the other that it has entered into this
Transaction in reliance upon such tax, accounting, regulatory, legal, and
financial advice as it deems necessary and not upon any view expressed by the
other.

 

2.                                       The terms of the particular Transaction
to which this Confirmation relates are as follows:

 

General Terms:

 

Party A:

 

Merrill Lynch International.

 

 

 

Party B:

 

Boston Private Financial Holdings, Inc.

 

 

 

Trade Date:

 

December 11, 2003.

 

 

 

Effective Date:

 

December 17, 2003

 

 

 

Base Amount:

 

Initially, 2,300,000 Shares. On each Settlement Date, the Base Amount shall be
reduced by the number of Settlement Shares for such Settlement Date.

 

 

 

Maturity Date:

 

December 17, 2004

 

 

 

Forward Price:

 

On the Effective Date, the Initial Forward Price, and on any other day, (i) the
Forward Price on the immediately preceding calendar day multiplied by the sum of
(A) 1 plus (B) the Daily Rate for such day, minus (ii) the amount of any cash
dividend paid on such day (other than any cash dividend for which

 

2

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

 

 

 

the ex-dividend date occurred prior to the Effective Date); provided that if on
any Settlement Date an ex-dividend date for a cash dividend has occurred, but
such dividend has not yet been paid, then, solely for the purpose of calculating
the Settlement Amount for such Settlement Date, the present value (as determined
by the Calculation Agent) of such dividend shall be deducted from the Forward
Price on such Settlement Date.

 

 

 

Initial Forward Price:

 

USD $22.886 per Share.

 

 

 

Daily Rate:

 

For any day, (i)(A) USD-Federal Funds-H.15 minus (B) the Spread divided by (ii)
365.

 

 

 

Spread:

 

1.50%.

 

 

 

Shares:

 

Common Stock, $1.00 par value per share, of Boston Private Financial Holdings,
Inc. (the “Issuer”) (Exchange identifier: “BPFH”).

 

 

 

Exchange:

 

NASDAQ.

 

 

 

Related Exchange(s):

 

The principal exchanges(s) for options contracts or futures contracts, if any,
with respect to the Shares.

 

 

 

Clearance System:

 

DTC.

 

 

 

Calculation Agent:

 

Merrill Lynch International.

 

Settlement Terms:

 

Settlement Date:

 

Any Exchange Business Day following the Effective Date and up to and including
the Maturity Date, as designated by Party B in a written notice (a “Settlement
Notice”) delivered to Party A at least (i) ten Exchange Business Days prior to
such Settlement Date, which may be the Maturity Date, if Physical Settlement
applies, and (ii) twenty Exchange Business Days prior to such Settlement Date,
which may be the Maturity Date, if Cash Settlement or Net Stock Settlement
applies; provided that the Maturity Date shall be a Settlement Date if on such
date the Base Amount is greater than zero; and provided further that no more

 

3

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

 

 

 

than three Settlement Dates other than the Maturity Date may be designated by
Party B.

 

 

 

Settlement Shares:

 

With respect to any Settlement Date, a number of Shares, not to exceed the Base
Amount, designated as such by Party B in the related Settlement Notice; provided
that on the Maturity Date the number of Settlement Shares shall be equal to the
Base Amount.

 

 

 

Settlement:

 

Physical, Cash, or Net Stock, at the election of Party B as set forth in the
Settlement Notice; provided that Physical Settlement shall apply (i) if no
Settlement Method is selected, (ii) a Suspension Period exists on any day during
the 15 Exchange Business Days immediately preceding a Settlement Date, or (iii)
a Stock Borrow Event has occurred.

 

 

 

Physical Settlement:

 

On any Settlement Date in respect of which Party B has elected, or is deemed to
have elected, Physical Settlement, Party B shall deliver to Party A a number of
Shares equal to the Settlement Shares for such Settlement Date, and Party A
shall deliver to Party B, by wire transfer of immediately available funds to an
account designated by Party B, an amount in cash equal to the Physical
Settlement Amount for such Settlement Date, on a delivery versus payment basis.

 

 

 

Physical Settlement Amount:

 

For any Settlement Date in respect of which Party B has elected, or is deemed to
have elected, Physical Settlement, an amount in cash equal to the product of the
Forward Price on such Settlement Date and the number of Settlement Shares for
such Settlement Date.

 

 

 

Cash Settlement:

 

On any Settlement Date in respect of which Party B has elected Cash Settlement,
if the Cash Settlement Amount is a positive number, Party A will pay the Cash
Settlement Amount to Party B.  If the Cash Settlement Amount is a negative
number, Party B will pay the absolute value of the Cash Settlement Amount to
Party A.  Such amounts shall be paid on the Settlement Date.

 

4

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

 

Cash Settlement Amount:

 

An amount determined by the Calculation Agent equal to: (i)(A) the Forward Price
minus (B) the volume-weighted average price of the Shares over the immediately
preceding 15 Exchange Business Days, or such other number of Exchange Business
Days as may be agreed upon mutually by Party A and Party B. (“Current Market
Value”) multiplied by (ii) the Settlement Shares.

 

 

 

Net Stock Settlement:

 

On any Settlement Date in respect of which Party B has elected Net Stock
Settlement, if the Cash Settlement Amount is a (i) positive number, Party A
shall deliver a number of Shares to Party B equal to the Net Stock Settlement
Shares, and (ii) negative number, Party B shall deliver a number of Shares to
Party A equal to the Net Stock Settlement Shares.

 

 

 

Net Stock Settlement Shares:

 

With respect to a Settlement Date, the absolute value of the Cash Settlement
Amount divided by the fair market value per share of the Shares as determined by
the Calculation Agent.

 

 

 

Net Stock Settlement Fee:

 

For any Settlement Date in respect of which Party B has elected Net Stock
Settlement, Party B shall pay to Party A on such Settlement Date a fee of $0.03
multiplied by the Settlement Shares.

 

 

 

Settlement Currency:

 

USD.

 

 

 

Failure to Deliver:

 

Applicable.

 

 

 

Payment of Early Termination Fee:

 

If, at the request of Party B, any Settlement Date occurs on or prior to
June 17, 2004, Party B shall pay to Party A in cash on such Settlement Date the
Early Termination Fee for such Settlement Date.

 

 

 

Early Termination Fee:

 

For any Settlement Date, the product of (i) the number of Settlement Shares for
such Settlement Date, (ii) 1.50% divided by 365, (iii) the Initial Forward Price
and (iv) the number of calendar days in the period from but excluding such
Settlement Date to and including June 17, 2004.

 

5

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

 

Suspension of Cash or Net

Stock Settlement:

 

Suspension Period:

 

Any day on which Party A determines based on the advice of counsel that Cash or
Net Stock Settlement may violate applicable securities laws.  Party A shall
notify Party B if it receives such advice from its counsel.   Notwithstanding
any provision in this Agreement to the contrary, (a) Party B agrees that it
shall not elect Cash or Net Stock Settlement if Cash or Net Stock Settlement may
violate applicable securities laws, and (b) Physical Settlement shall apply if a
Suspension Period is in effect at any time during the 15 Exchange Business Days
immediately preceding a Settlement Date.

 

Adjustments:

 

Method of Adjustment:

 

Calculation Agent Adjustment.

 

Extraordinary Events:

 

Consequences of Merger Events:

 

(a)

Share-for-Share:

Cancellation and Payment.

 

 

 

(b)

Share-for-Other:

Cancellation and Payment.

 

 

 

(c)

Share-for-Combined:

Cancellation and Payment.

 

 

 

(d)

Nationalization or
Insolvency:

Cancellation and Payment.

 

Account Details:

 

Payments to Party A:

 

To be advised under separate cover or telephone confirmed prior to each Payment
Date.

 

 

 

Payments to Party B:

 

To be advised under separate cover or telephone confirmed prior to each Payment
Date.

 

 

 

Delivery of Shares to Party A:

 

To be advised.

 

6

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

 

3.                                       Other Provisions:

 

Conditions to Effectiveness:

 

The effectiveness of this Confirmation on the Effective Date shall be subject to
(i) the condition that the representations and warranties of Party B contained
in the Purchase Agreement dated the date hereof among Party B, Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Sandler O’Neill &
Partners, L.P. (the “Purchase Agreement”) and any certificate delivered pursuant
thereto by Party B be true and correct on the Effective Date as if made as of
the Effective Date, (ii) the condition that Party B have performed all of the
obligations required to be performed by it under the Purchase Agreement on or
prior to the Effective Date and (iii) the satisfaction of all of the conditions
set forth in Section 5 of the Pricing Agreement.

 

Additional Representations, Warranties and Agreements of Party B:  Party B
hereby represents and warrants to, and agrees with, Party A as of the date
hereof that:

 

(a)          Any Shares, when issued and delivered in accordance with the terms
of the Transaction, will be duly authorized and validly issued, fully paid and
nonassessable, and the issuance thereof will not be subject to any preemptive or
similar rights.

 

(b)         Party B has reserved and will keep available, free from preemptive
rights, out of its authorized but unissued Shares, solely for the purpose of
issuance upon settlement of the Transaction as herein provided, the full number
of Shares as shall then be issuable upon Physical Settlement of the
Transaction.  All Shares so issuable shall, upon such issuance, be accepted for
listing on the Exchange.

 

(c)          Party B agrees not to repurchase any Shares if, immediately
following such repurchase, the Base Amount would be equal to or greater than
4.9% of the number of then-outstanding Shares.

 

(d)         Party B is not insolvent, nor will Party B be rendered insolvent as
a result of this Transaction.

 

Compliance with Securities Laws:

 

Party A represents and warrants as follows:

 

(a)          in connection with bids and purchases of Shares in connection with
this Transaction, Party A shall comply, or cause compliance, with the timing and
volume provisions of Rule 10b-18(b)(2) and (4) under the Exchange Act;

 

7

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

 

(b)   in connection with bids and purchases of Shares in connection with this
Transaction, Party A shall use its best efforts to comply, or cause compliance,
with the price provisions of Rule 10b-18(b)(3) under the Exchange Act; provided,
however, that  Party A shall not be obligated to comply with clauses (a) and (b)
above in the event and only to the extent that Party A is required to purchase
any Shares as a result of a Stock Borrow Event (as hereinafter defined).

 

Party B represents and warrants as follows:

 

(a)   neither Party B nor any of its affiliates shall take any action that would
cause any purchases of Shares by Party A in connection with this Transaction not
to comply with Rule 10b-18 under the Securities Exchange Act of 1934 (the
“Exchange Act”).

 

Covenant of Party B:

 

The parties acknowledge and agree that any Shares delivered by Party B to Party
A on any Settlement Date and returned by Party A to securities lenders from whom
Party A borrowed Shares in connection with hedging its exposure to the
Transaction will be freely saleable without further registration or other
restrictions under the Securities Act of 1933, as amended, in the hands of those
securities lenders.  Accordingly, Party B agrees that the Settlement Shares that
it delivers to Party A on each Settlement Date will not bear a restrictive
legend and that such Settlement Shares will be deposited in, and the delivery
thereof shall be effected through the facilities of, the Clearance System.

 

Covenants of Party A:

 

(a)          Party A shall use its best efforts to maintain its hedge of its
exposure to the Transaction by borrowing sufficient Shares from lenders.

 

(b)         Party A shall use any Shares delivered by Party B to Party A on any
Settlement Date to return to securities lenders.

 

Acceleration Events:  An Acceleration Event shall occur if:

 

(a)          Notwithstanding any other provision hereof, if, in the judgment of
the Calculation Agent, Party A is unable to hedge Party A’s exposure to the
Transaction because (i) of the lack of sufficient Shares being made available
for Share borrowing by lenders, or (ii) it is otherwise commercially
impracticable, (each of (i) and (ii) a “Stock Borrow Event”) then Party A shall
have the right to designate any Exchange Business Day to be a Settlement Date on
at least two Exchange Business Days’ notice, and to select the number

 

8

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

 

of Settlement Shares for such Settlement Date; provided that the number of
Settlement Shares for any Settlement Date so designated by Party A shall not
exceed the number of Shares as to which such inability exists, and provided
further that Physical Settlement shall apply; or

 

(b)         Notwithstanding any other provision hereof, if the closing sale
price per Share on the Exchange for the regular trading session on any Exchange
Business Day occurring after the Trade Date is less than or equal to $8.00,
Party A shall have the right to designate any Exchange Business Day to be a
Settlement Date on at least fifteen Exchange Business Days’ notice, and to
select the number of Settlement Shares for such Settlement Date.  Upon the
designation of such Settlement Date, Party B shall promptly notify Party A of
the settlement method, provided that if Party B fails to do so, Physical
Settlement shall apply.

 

Assignment:

 

Party A may assign or transfer any of its rights or duties hereunder to any
affiliate of Party A or any entity organized or sponsored by Party A without the
prior written consent of Party B; provided, however, that such assignee’s
obligations shall be guaranteed by Merrill Lynch & Co., Inc. in accordance with
the Agreement.

 

Matters relating to Agent:

 

(a)          As a broker-dealer registered with the U.S. Securities and Exchange
Commission, Merrill Lynch, Pierce, Fenner & Smith Incorporated, in its capacity
as Agent, will be responsible for (i) effecting the Transaction, (ii) issuing
all required confirmations and statements to Party A and Party B and (iii)
maintaining books and records relating to the Transaction.

 

(b)         Merrill Lynch, Pierce, Fenner & Smith Incorporated shall act as
“agent” for Party A and Party B within the meaning of Rule 15a-6 under the
Securities Exchange Act of 1934 in connection with the Transaction.

 

(c)          The Agent, in its capacity as such, shall have no responsibility or
liability (including, without limitation, by way of guarantee, endorsement or
otherwise) to Party A or Party B or otherwise in respect of the Transaction,
including, without limitation, in respect of the failure of Party A or Party B
to pay or perform under this Confirmation, except for its gross negligence or
willful misconduct in performing its duties as Agent hereunder.

 

(d)         Each of Party A and Party B agree to proceed solely against the
other to collect or recover any securities or monies owing to Party A or Party
B, as the case may be, in connection with or as a result of the Transaction.

 

9

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

 

(e)          The Agent will be Party A’s agent for service of process for the
purpose of Section 13(c) of the Agreement.

 

Indemnity

 

Party B agrees to indemnify Party A and its affiliates and their respective
directors, officers, agents and controlling parties (Party A and each such
affiliate or person being an “Indemnified Party”) from and against any and all
losses, claims, damages and liabilities, joint and several, to which such
Indemnified Party may become subject under, in connection with, relating to, or
arising out of, this Agreement or Transaction with respect to any applicable
securities laws and will reimburse any Indemnified Party for all reasonable
expenses (including reasonable legal fees and reasonable expenses) as they are
incurred in connection with the investigation of, preparation for, or defense of
any pending or threatened claim or any action or proceeding arising therefrom,
whether or not such Indemnified Party is a party thereto. Party B will not be
liable under this Indemnity paragraph to the extent that any loss, claim,
damage, liability or expense is found in a final judgment by a court to have
resulted from Party A’s gross negligence, fraud, bad faith and/or willful
misconduct.

 

Miscellaneous

 

Non-Reliance:

 

Applicable

 

 

 

Additional Acknowledgements:

 

Applicable

 

4.                                       The Agreement is further supplemented
by the following provisions:

 

Share Settlement upon Certain Events:

 

Notwithstanding anything to the contrary herein, in the Agreement or in the
Definitions, if at any time (i) an Early Termination Date occurs and Party B
would be required to make a payment pursuant to Sections 6(d) and 6(e) of the
Agreement, (ii) an Early Termination Fee is payable by Party B, or (iii) a
Merger Event occurs and Party B would be required to make a payment pursuant to
Sections 12.2 and 12.7 of the 2002 Definitions, then in lieu of such payment,
Party B at its election, may deliver to Party A, at the time such payment would
have been due and in the manner provided under “Physical Settlement” in the 2002
Definitions, a number of Shares (or, in the case of a Merger Event, common
equity securities of the surviving entity) equal to the quotient obtained by
dividing (A) the amount that would have been so payable by (B) the fair market
value per Share (or per unit of such common equity security) of the Shares (or
units) so delivered at the time of such delivery, as determined by the
Calculation Agent (which fair market value shall take into account whether the
Shares so delivered

 

10

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

 

are freely tradeable).  The Transaction will not be considered for purposes of
determining any Settlement Amount under Section 6(e) of the Agreement.

 

Agreement Regarding Set-off:

 

The last sentence of the first paragraph of Section 6(e) of the Agreement shall
not apply with respect to the Transaction to the extent that any of the events
described in Section 5(a)(vii) of the Agreement occurs with respect to Party B.

 

Bankruptcy Rights:

 

In the event of Party B’s bankruptcy, Party A acknowledges and agrees that this
Confirmation is not intended to convey to it rights with respect to this
Transaction that are senior to the claims of common stockholders.  For the
avoidance of doubt, the parties acknowledge and agree that Party A’s rights with
respect to any other claim arising from this Transaction prior to Party B’s
bankruptcy shall remain in full force and effect and shall not be otherwise
abridged or modified in connection herewith.

 

Miscellaneous:

 

(a)          Addresses for Notices.  For the purpose of Section 12(a):

 

Address for notices or communications to Party A:

 

Address:

 

c/o Merrill Lynch, Pierce, Fenner & Smith

 

 

Incorporated

 

 

Four World Financial Center

 

 

North Tower, 5th Floor

 

 

New York, NY 10080

Attention:

 

Equity-Linked Capital Markets

Telephone No.:

 

(212) 449-6763

Facsimile No.:

 

(212) 738-1069

 

Address for notices or communications to Party B:

 

Address:

 

Senior Vice President and General Counsel

 

 

Boston Private Financial Holdings, Inc.

 

 

Ten Post Office Square

 

 

Boston, MA 02109

 

 

 

Attention:

 

Megan Chambers, Esq.

 

11

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

 

(b)         Waiver of Right to Trial by Jury.  Each party waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
respect of any suit, action or proceeding relating to this Confirmation or any
Credit Support Document.  Each party (i) certifies that no representative, agent
or attorney of the other party has represented, expressly or otherwise, that
such other party would not, in the event of such a suit action or proceeding,
seek to enforce the foregoing waiver and (ii) acknowledges that it and the other
party have been induced to enter into this Confirmation by, among other things,
the mutual waivers and certifications in this Section.

 

5.                                       ISDA Master Agreement

 

With respect to the Agreement, Party A and Party B each agree as follows:

 

Specified Entities:

 

(i) in relation to Party A, for the purposes of:

 

Section 5(a)(v):

not applicable

Section 5(a)(vi):

not applicable

Section 5(a)(vii):

not applicable

Section 5(b)(iv):

not applicable

 

and (ii) in relation to Party B, for the purposes of:

 

Section 5(a)(v):

not applicable

Section 5(a)(vi):

not applicable

Section 5(a)(vii):

not applicable

Section 5(b)(iv):

not applicable

 

“Specified Transaction” will have the meaning specified in Section 14 of this
Agreement.

 

The “Cross Default” provisions of Section 5(a)(vi) of the Agreement will apply
to Party A and to Party B.

 

“Specified Indebtedness” will have the meaning specified in Section 14 of the
Agreement.

 

“Threshold Amount” with respect to Party A means USD 100,000,000 (or the U.S.
dollar equivalent in any other currency or currencies) and with respect to Party
B means USD 10,000,000.

 

The “Credit Event Upon Merger” provisions of Section 5(b)(iv) of the Agreement
will apply to Party A and to Party B.

 

12

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

 

The “Automatic Early Termination” provision of Section 6(a) of the Agreement
will not apply to Party A and to Party B.

 

Payments on Early Termination for the purpose of Section 6(e) of the Agreement: 
(i) Loss shall apply; and (ii) the Second Method shall apply.

 

“Termination Currency” means USD.

 

Additional Termination Event.  The following shall constitute an Additional
Termination Event: None

 

Tax Representations:

 

(I)                                    For the purpose of Section 3(e) of the
Agreement, each party represents to the other party that it is not required by
any applicable law, as modified by the practice of any relevant governmental
revenue authority, of any Relevant Jurisdiction to make any deduction or
withholding for or on account of any Tax from any payment (other than interest
under Section 2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by it to the
other party under the Agreement.  In making this representation, each party may
rely on (i) the accuracy of any representations made by the other party pursuant
to Section 3(f) of the Agreement, (ii) the satisfaction of the agreement
contained in Section 4(a)(i) or 4(a)(iii) of the Agreement, and the accuracy and
effectiveness of any document provided by the other party pursuant to
Section 4(a)(i) or 4(a)(iii) of the Agreement, and (iii) the satisfaction of the
agreement of the other party contained in Section 4(d) of the Agreement;
provided that it will not be a breach of this representation where reliance is
placed on clause (ii) above and the other party does not deliver a form or
document under Section 4(a)(iii) of the Agreement by reason of material
prejudice to its legal or commercial position.

 

(II)                                For the purpose of Section 3(f) of the
Agreement, each party makes the following representations to the other party:

 

(i)                         Party A represents that it is a corporation
organized under the laws of England and Wales.

 

(ii)                      Party B represents that it is a corporation
incorporated under the laws of the State of Massachusetts.

 

Tax Forms:  For the purpose of Section 4(a)(i) of the Agreement, each party
agrees to deliver the following documents to the other party:

 

For the purpose of Sections 3(d), 4(a)(i) and (ii) of the Agreement, each party
agrees to deliver the following documents:

 

13

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

 

Tax forms, documents or certificates to be delivered are:

 

Each party agrees to complete (accurately and in a manner reasonably
satisfactory to the other party), execute, and deliver to the other party,
United States Internal Revenue Service Form W-9 or W-8 BEN, or any successor of
such form(s): (i) before the first payment date under this agreement;
(ii) promptly upon reasonable demand by the other party; and (iii) promptly upon
learning that any such form(s) previously provided by the other party has become
obsolete or incorrect.

 

Other documents to be delivered:-

 

Party Required to
Deliver Document

 

Document Required to be
Delivered

 

When Required

 

Covered by
Section 3(d)
Representation

Party A and Party B

 

Evidence of the authority and true signatures of each official or representative
signing this Confirmation

 

Upon or before execution and delivery of this Confirmation

 

Yes

 

 

 

 

 

 

 

Party A and Party B

 

Certified copy of the resolution of the Board of Directors or equivalent
document authorizing the execution and delivery of this Confirmation

 

Upon or before execution and delivery of this Confirmation

 

Yes

 

 

 

 

 

 

 

Party A and Party B

 

Copy of its most recent annual report containing audited financial statements

 

Promptly upon request by the other party

 

Yes

 

 

 

 

 

 

 

Party A

 

Guarantee of its Credit Support Provider, substantially in the form of Exhibit A
attached hereto, together with evidence of the authority and true signatures of
the signatories, if applicable

 

Upon or before execution and delivery of this Confirmation

 

Yes

 

Addresses for Notices:  For the purpose of Section 12(a) of the Agreement:

 

Address for notices or communications to Party A:

 

Address:

Merrill Lynch International

 

Merrill Lynch Financial Centre

 

2 King Edward Street, London EC1A 1HQ

Attention:

Manager, Fixed Income Settlements

Facsimile No.:

207 995 2004

Telephone No.: 207 9995 3769

 

14

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

 

(For all purposes)

 

Additionally, a copy of all notices pursuant to Sections 5, 6, and 7 as well as
any changes to Party B’s address, telephone number or facsimile number should be
sent to:

 

GMI Counsel

Merrill Lynch World Headquarters

4 World Financial Center

New York, New York 10080

Attention:  Global Equity Derivatives

Facsimile No.: 212 449-6576

Telephone No.: 212 449-6309

 

Address for notices or communications to Party B for all purposes:

 

Megan Chambers, Esq.

Senior Vice President and General Counsel

Boston Private Financial Holdings, Inc.

Ten Post Office Square

Boston, MA 02109

 

With a copy to:

 

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Attention: William P. Mayer, Esq.

 

Process Agent:  For the purpose of Section 13(c) of the Agreement, Party A
appoints as its process agent:

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated

222 Broadway, 16th Floor

New York, NY 10038

Attention: Litigation Department

 

[Party B does not appoint a Process Agent.]

 

Multibranch Party.  For the purpose of Section 10(c) of the Agreement: Neither
Party A nor Party B is a Multibranch Party.

 

Calculation Agent.  The Calculation Agent is Party A.

 

Credit Support Document.

 

15

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

 

Party A:  Guarantee of Merrill Lynch & Co. in the form attached hereto as
Exhibit A.

 

Party B:  [None]

 

Credit Support Provider.

 

With respect to Party A: Merrill Lynch & Co. and with respect to Party B, Not
Applicable.

 

Governing Law.  This Confirmation will be governed by, and construed in
accordance with, the laws of the State of New York.

 

Netting of Payments.  The provisions of Section 2(c) of the Agreement shall not
be applicable to this Transaction; provided, however, that with respect to this
Agreement or any other ISDA Master Agreement between the parties, any Share
delivery obligations on any day of Party B, on the one hand, and Party A, on the
other hand, shall be netted.  The resulting Share delivery obligation of a party
upon such netting shall be rounded down to the nearest number of whole Common
Shares, such that neither party shall be required to deliver any fractional
Common Shares.

 

Accuracy of Specified Information.  Section 3(d) of the Agreement is hereby
amended by adding in the third line thereof after the word “respect” and before
the period the words “or, in the case of audited or unaudited financial
statements or balance sheets, a fair presentation of the financial condition of
the relevant person.”

 

Basic Representations.  Section 3(a) of the Agreement is hereby amended by the
deletion of “and” at the end of Section 3(a)(iv); the substitution of a
semicolon for the period at the end of Section 3(a)(v) and the addition of
Sections 3(a)(vi), as follows:

 

Eligible Contract Participant; Line of Business.  It is an “eligible contract
participant” as defined in the Commodity Futures Modernization Act of 2000 and
it has entered into this Confirmation and this Transaction in connection with
its business or a line of business (including financial intermediation), or the
financing of its business.

 

Amendment of Section 3(a)(iii).  Section 3(a)(iii) of the Agreement is modified
to read as follows:

 

No Violation or Conflict.  Such execution, delivery and performance do not
materially violate or conflict with any law known by it to be applicable to it,
any provision of its constitutional documents, any order or judgment of any
court or agency of government applicable to it or any of its assets or any
material contractual restriction relating to Specified Indebtedness binding on
or affecting it or any of its assets.

 

16

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

 

Amendment of Section 3(a)(iv).  Section 3(a)(iv) of the Agreement is modified by
inserting the following at the beginning thereof:

 

“To such party’s best knowledge,”

 

Additional Representations:

 

Party B Representations.  Party B (i) has such knowledge and experience in
financial and business affairs as to be capable of evaluating the merits and
risks of entering into this Transaction; (ii) has consulted with its own legal,
financial, accounting and tax advisors in connection with this Transaction; and
(iii) is entering into this Transaction for a bona fide business purpose to
hedge an existing position.

 

Party B is not and has not been the subject of any civil proceeding of a
judicial or administrative body of competent jurisdiction that could reasonably
be expected to impair materially Party B’s ability to perform its obligations
hereunder.

 

Party B will by the next succeeding Business Day notify Party A upon obtaining
knowledge of the occurrence of any event that would constitute an Event of
Default, a Potential Event of Default or a Potential Adjustment Event.

 

As of the date hereof, Party B is not insolvent.

 

FDICIA Representation.  Party A represents that it is a “financial institution”
for purposes of Section 402 of the Federal Deposit Insurance Corporation
Improvement Act of 1991, as amended (the “Statute”), and the regulations
promulgated pursuant thereto because either (A) it is a broker or dealer, a
depository institution or a futures commission merchant (as such terms are
defined in the Statute) or (B) it will engage in financial contracts (as so
defined) as a counterparty on both sides of one or more financial markets (as so
defined) and either (I) had one or more financial contracts of a total gross
dollar value of at least $1 billion in notional principal amount outstanding on
any day during the previous 15-month period with counterparties that are not its
affiliates or (II) had total gross mark-to-market positions of at least $100
million (aggregated across counterparties) in one or more financial contracts on
any day during the previous 15-month period with counterparties that are not its
affiliates.

 

Acknowledgements:

 

(1) The parties acknowledge and agree that there are no other representations,
agreements or other undertakings of the parties in relation to this Transaction,
except as set forth in this Confirmation.

 

(2) The parties hereto intend for:

 

17

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

 

(a)                                  this Transaction to be a “securities
contract” as defined in Section 741(7) of Title 11 of the United States Code
(the “Bankruptcy Code”), qualifying for the protections under Section 555 of the
Bankruptcy Code;

 

(b)                                 a party’s right to liquidate this
Transaction and to exercise any other remedies upon the occurrence of any Event
of Default under the Agreement with respect to the other party to constitute a
“contractual right” as defined in the Bankruptcy Code;

 

(c)                                  any cash, securities or other property
provided as performance assurance, credit, support or collateral with respect to
this Transaction to constitute  “margin payments” as defined in the Bankruptcy
Code; and

 

(d)                                 all payments for, under or in connection
with this Transaction, all payments for the Shares and the transfer of such
Shares to constitute “settlement payments” as defined in the Bankruptcy Code.

 

Amendment of Section 6(d)(ii).  Section 6(d)(ii) of the Agreement is modified by
deleting the words “on the day” in the second line thereof and substituting
therefor “on the day that is three Local Business Days after the day”.
Section 6(d)(ii) is further modified by deleting the words “two Local Business
Days” in the fourth line thereof and substituting therefor “three Local Business
Days.”

 

Amendment of Definition of Reference Market-Makers.  The definition of
“Reference Market-Makers” in Section 14 is hereby amended by adding in the
fourth line thereof after the word “credit” the words “or to enter into
transactions similar in nature to Transactions.”

 

Consent to Recording.  Each party consents to the recording of the telephone
conversations of trading and marketing personnel of the parties and their
Affiliates in connection with this Confirmation.

 

Severability.  If any term, provision, covenant or condition of this
Confirmation, or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable in whole or in part for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Confirmation had been executed with the invalid
or unenforceable provision eliminated, so long as this Confirmation as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter of this Confirmation and the deletion of
such portion of this Confirmation will not substantially impair the respective
benefits or expectations of parties to this Agreement; provided, however, that
this severability provision shall not be applicable if any provision of
Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in
Section 14 to the extent that it relates to, or is used in or in connection with
any such Section) shall be so held to be invalid or unenforceable.

 

Affected Parties.  For purposes of Section 6(e) of the Agreement, each party
shall be deemed to be an Affected Party in connection with Illegality and any
Tax Event.

 

18

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

 

Please confirm that the foregoing correctly sets forth the terms of our
agreement by signing and returning this Confirmation.

 

 

Yours faithfully,

 

 

 

MERRILL LYNCH INTERNATIONAL

 

 

 

 

 

By:

 

/s/ Brian Carroll

 

 

Name: Brian Carroll

 

Title: Assistant Vice President

 

 

Confirmed as of the date first written above:

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

By:

/s/ Walter M. Pressey

 

Name: Walter M. Pressey

Title: President and Chief Financial Officer

 

 

MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED, as Agent

 

 

By:

/s/ Keri Peacock

 

Name: Keri Peacock

Title: Vice President

 

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

EXHIBIT A

 

GUARANTEE OF MERRILL LYNCH & CO., INC.

 

FOR VALUE RECEIVED, receipt of which is hereby acknowledged, MERRILL LYNCH &
CO., INC., a corporation duly organized and existing under the laws of the State
of Delaware (“ML & Co.”), hereby unconditionally guarantees to Boston Private
Financial Holdings, Inc. (the “Company”), the due and punctual payment of any
and all amounts payable by Merrill Lynch International, a company organized
under the laws of England and Wales  (“ML”), under the terms of the Master
Agreement between the Company and ML, dated as of December 11, 2003  (the
“Agreement”), including, in case of default, interest on any amount due, when
and as the same shall become due and payable, whether on the scheduled payment
dates, at maturity, upon declaration of termination or otherwise, according to
the terms thereof.  In case of the failure of ML punctually to make any such
payment, ML & Co. hereby agrees to make such payment, or cause such payment to
be made, promptly upon demand made by the Company to ML & Co.; provided, however
that delay by the Company in giving such demand shall in no event affect ML &
Co.’s obligations under this Guarantee.  This Guarantee shall remain in full
force and effect or shall be reinstated (as the case may be) if at any time any
payment guaranteed hereunder, in whole or in part, is rescinded or must
otherwise be returned by the Company upon the insolvency, bankruptcy or
reorganization of ML or otherwise, all as though such payment had not been made.

 

ML & Co. hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Agreement; the
absence of any action to enforce the same; any waiver or consent by the Company
concerning any provisions thereof; the rendering of any judgment against ML or
any action to enforce the same; or any other circumstances that might otherwise
constitute a legal or equitable discharge of a guarantor or a defense of a
guarantor.  ML & Co. covenants that this guarantee will not be discharged except
by complete payment of the amounts payable under the Agreement.  This Guarantee
shall continue to be effective if ML merges or consolidates with or into another
entity, loses its separate legal identity or ceases to exist.

 

ML & Co. hereby waives diligence; presentment; protest; notice of protest,
acceleration, and dishonor; filing of claims with a court in the event of
insolvency or bankruptcy of ML; all demands whatsoever, except as noted in the
first paragraph hereof; and any right to require a proceeding first against ML.

 

ML & Co. hereby certifies and warrants that this Guarantee constitutes the valid
obligation of ML & Co. and complies with all applicable laws.

 

This Guarantee shall be governed by, and construed in accordance with, the laws
of the State of New York.

 

This Guarantee may be terminated at any time by notice by ML & Co. to the
Company given in accordance with the notice provisions of the Agreement,
effective upon receipt of such notice by the Company or such later date as may
be specified in such notice; provided, however,

 

2

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

 

that this Guarantee shall continue in full force and effect with respect to any
obligation of ML under the Agreement entered into prior to the effectiveness of
such notice of termination.

 

This Guarantee becomes effective concurrent with the effectiveness of the
Agreement, according to its terms.

 

IN WITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed in its
corporate name by its duly authorized representative.

 

 

MERRILL LYNCH & CO., INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

Date:

 

 

3

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