Document:

exv4w1

 

EXHIBIT 4.1

AMENDMENT NO. 1

TO

RIGHTS AGREEMENT

          AMENDMENT NO. 1 (this “Amendment”), dated as of August 25, 2004, to
the Amended and Restated Rights Agreement, dated as of September 12, 1989 and
amended and restated as of July 27, 1999 and as of July 25, 2000 (the
“Rights Agreement”), between Banknorth Group, Inc., a Maine corporation
(the “Company”), and AMERICAN STOCK TRANSFER & TRUST COMPANY, as Rights
Agent (the “Rights Agent”). Capitalized terms used herein without
definition shall have the meanings given to them in the Rights Agreement.

          WHEREAS, the Board of Directors of the Company has authorized and declared
a dividend of one Right for each Common Share of the Company outstanding at the
close of business on September 25, 1989, each Right representing the right to
purchase one-hundredth (subject to adjustment) of a Preferred Share, upon the
terms and subject to the conditions set forth in the Rights Agreement, and has
further authorized and directed the issuance of one Right with respect to each
Common Share of the Company that shall become outstanding between the Record
Date and the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date;

          WHEREAS, the Rights remain issued and outstanding and the Rights Agreement
remains in effect with respect thereto;

          WHEREAS, no Distribution Date or Final Expiration Date has occurred;

          WHEREAS, the Company proposes to enter into an Agreement and Plan of
Merger, to be dated on or about August 25, 2004 (the “Merger
Agreement”), among the Company, The Toronto-Dominion Bank, a Canadian
chartered bank (“TD”), Berlin Merger Co., a Delaware corporation and
wholly owned subsidiary of TD (“Berlin Mergerco”), and Berlin Delaware,
a Delaware corporation and wholly owned subsidiary of the Company
(“Banknorth Delaware”), pursuant to which and subject to the terms and
conditions thereof, among other things, (i) the Company will merge with and
into Banknorth Delaware, with Banknorth Delaware surviving the merger (the
“Migratory Merger”) and (ii) immediately following the effectiveness of
the Migratory Merger, Berlin Mergerco will merge with and into Banknorth
Delaware with Banknorth Delaware surviving the merger;

          WHEREAS, the Merger Agreement provides that, at or prior to the Closing,
the Company, Banknorth Delaware and TD shall enter in to a Stockholders
Agreement (the “Stockholders Agreement”), providing, among other things,
for certain arrangements with respect to the shares of common stock of
Banknorth Delaware to be beneficially owned by TD and its Affiliates following
the Closing;

          WHEREAS, the Board of Directors of the Company has determined that the
Merger Agreement and the Stockholders Agreement and the terms and conditions
set forth therein and the transactions contemplated thereby, are in the best
interests of the Company and its shareholders;

 

 

          WHEREAS, the Company desires to amend the Rights Agreement to exempt the
Merger Agreement, the Stockholders Agreement, the execution thereof and the
transactions contemplated thereby, from the application of the Rights
Agreement;

          WHEREAS, Section 27 of the Rights Agreement provides that the Company may
from time to time supplement or amend the Rights Agreement without the approval
of any holders of Rights Certificates;

          WHEREAS, in accordance with Section 20 of the Rights Agreement, the
Company has certified to the Rights Agent that this Amendment is in compliance
with the Rights Agreement and has directed the appropriate officers of the
Company to take all appropriate steps to execute and deliver this Amendment;

          NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:

          1. Amendments to Rights Agreement.

               (a) Section 1 of the Rights Agreement is hereby amended to add the
following sentence at the end of the definition of “Acquiring Person”:

               “Notwithstanding anything in this Agreement to the contrary, neither
The Toronto-Dominion Bank, a Canadian chartered bank (“TD”), nor any of
its Affiliates or Associates shall be deemed to be an Acquiring Person
solely as a result of the approval, execution, delivery or adoption of
the Merger Agreement or the Stockholders Agreement or the approval,
adoption or consummation of the Mergers or any other transaction
contemplated by the Merger Agreement, or the public announcement of any
thereof.”

               (b) Section 1 of the Rights Agreement is hereby amended to add the
following sentence at the end of the definition of “Distribution Date”:

               “Notwithstanding anything in this Agreement to the contrary, a
Distribution Date shall not be deemed to have occurred solely as a result
of the approval, execution, delivery or adoption of the Merger Agreement
or the Stockholders Agreement or the approval, adoption or consummation
of the Mergers or any other transaction contemplated by the Merger
Agreement, or the public announcement of any thereof.”

               (c) Section 1 of the Rights Agreement is hereby amended to add the
following sentence at the end of the definition of “Shares Acquisition Date”:

               “Notwithstanding anything in this Agreement to the contrary, a
Shares Acquisition Date shall not be deemed to have occurred solely as a
result of the approval,
execution, delivery or adoption of the Merger Agreement or the
Stockholders Agreement or the approval, adoption or consummation of the
Mergers or any other transaction contemplated by the Merger Agreement, or
the public announcement of any thereof.”

2

 

               (d) Section 1 of the Rights Agreement is hereby amended to add the
following definitions of “Merger Agreement”, “Mergers”, “Migratory Merger
Effective Time” and “Stockholders Agreement” in the appropriate alphabetical
order:

               “Merger Agreement” shall mean that Agreement and Plan of
Merger, dated August 25, 2004, among the Company, TD, Berlin Merger
Co., a Delaware corporation and a wholly owned subsidiary of TD,
and Berlin Delaware Inc., a Delaware corporation and a wholly owned
subsidiary of the Company, as amended from time to time.”

               “Mergers” shall have the meaning set forth in the Merger
Agreement.

               “Migratory Merger Effective Time” shall have the meaning set
forth in the Merger Agreement.”

               “Stockholders Agreement” means the Stockholders Agreement to
be entered into among the Company, Berlin Delaware Inc. and TD in
connection with the consummation of the Mergers, substantially in
the form set forth in Exhibit E to the Merger Agreement, as such
Stockholders Agreement may be amended from time to time.”

               (e) Section 3(a) of the Rights Agreement is hereby amended to add the
following sentence at the end thereof:

               “Notwithstanding anything in this Agreement to the contrary, no
Distribution Date shall be deemed to have occurred solely as a result of
the approval, execution, delivery or adoption of the Merger Agreement or
the Stockholders Agreement or the approval, adoption or consummation of
the Mergers or any other transaction contemplated by the Merger
Agreement, or the public announcement of any thereof.”

               (f) Section 7(a) of the Rights Agreement is hereby modified, amended and
restated in its entirety:

               “Except as otherwise provided herein, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby, in whole or
in part, at any time after the Distribution Date, upon surrender of the
Rights Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal office
of the Rights Agent, together with payment of the Purchase Price for each
one one-hundredth of a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the time immediately prior
to the Migratory Merger Effective Time; (ii) the Close of Business on
September 25, 2009 (the “Final Expiration Date”), (iii) the time at which
the Rights are redeemed as provided in Section 23 hereof (the “Redemption
Date”) or (iv) the time at which the Rights are exchanged as provided in
Section 24 hereof.”

               (g) Section 11(a)(ii) of the Rights Agreement is hereby amended to add the
following at the end thereof immediately prior to the period:

3

 

               “Notwithstanding anything in this Agreement to the contrary, no
event set forth in this Section 11(a)(ii) shall be deemed to have
occurred solely as a result of the approval, execution, delivery or
adoption of the Merger Agreement or the Stockholders Agreement or the
approval, adoption or consummation of the Mergers or any other
transaction contemplated by the Merger Agreement, or the public
announcement of any thereof.”

               (h) Section 13 of the Rights Agreement is hereby amended to add the
following at the end thereof:

               “Notwithstanding anything in this Agreement to the contrary, no
event set forth in clauses (a), (b) or (c) of this Section 13 shall be
deemed to have occurred solely as a result of the approval, execution,
delivery or adoption of the Merger Agreement or the Stockholders
Agreement or the approval, adoption or consummation of the Mergers or any
other transaction contemplated by the Merger Agreement, or the public
announcement of any thereof.”

               (i) Section 24 of the Rights Agreement is hereby amended to add the
following subsection at the end thereof:

               ”(e) Notwithstanding anything in this Agreement to the contrary, no
exchange referred to in Section 24(a) hereof shall be authorized solely
as a result of the approval, execution, delivery or adoption of the
Merger Agreement or the Stockholders Agreement or the approval, adoption
or consummation of the Mergers or any other transaction contemplated by
the Merger Agreement, or the public announcement of any thereof.”

               (j) Section 25 of the Rights Agreement is hereby amended to add the
following subsection at the end thereof:

               ”(c) Notwithstanding anything in this Agreement to the contrary, the
Company shall not be required to give notice hereunder to any holder of a
Rights Certificate solely as a result of the approval, execution,
delivery or adoption of the Merger Agreement or the Stockholders
Agreement or the approval, adoption or consummation of the Mergers or any
other transaction contemplated by the Merger Agreement, or the public
announcement of any thereof.”

          2. Interpretation. The term “Agreement” as used in the Rights
Agreement shall be deemed to refer to the Rights Agreement as amended hereby.

          3. Effectiveness. This Amendment shall be deemed to be in force
and effect immediately prior to the execution and delivery of the Merger
Agreement; provided that if the Merger Agreement shall be terminated in
accordance with Section 8.1 thereof prior to the Effective Time (as defined
therein), then this Amendment shall
automatically terminate and be of no further force or effect. Except as
amended hereby, the Rights Agreement shall remain in full force and effect and
shall be otherwise unaffected hereby.

4

 

          4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Maine applicable to
contracts made and to be performed entirely within such State.

          5. Counterparts. This Amendment may be executed in any number of
counterparts and each of such counterparts shall together constitute but one
and the same instrument.

[SIGNATURE PAGE FOLLOWS]

5

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.

	 	 	 	 	 
	 	 	Banknorth Group, Inc.
	 
	 	 	 	 
	

	 	By:	 	/s/ Peter J. Verrill
	

	 	 	 	

	

	 	 	 	Name: Peter J. Verrill
	

	 	 	 	Title: Chief Operating Officer
	 
	 	 	 	 
	 	 	AMERICAN STOCK TRANSFER AND TRUST
	 	 	COMPANY, as Rights Agent
	 
	 	 	 	 
	

	 	By:	 	 /s/ Herbert J. Lemmer
	

	 	 	 	

	

	 	 	 	Name: Herbert J. Lemmer
	

	 	 	 	Title: Vice President

6

 

OFFICER’S CERTIFICATE

August 25, 2004

          Reference is made to the Amended and Restated Rights Agreement, dated as
of September 12, 1989 and amended and restated as of July 27, 1999 and as of
July 25, 2000 (the “Rights Agreement”), between Banknorth Group, Inc., a
Maine corporation (the “Company”), and American Stock Transfer & Trust
Company, as Rights Agent.

          Pursuant to Section 20 of the Rights Agreement, the undersigned officer of
the Company hereby certifies that, in the opinion of the undersigned officer,
the Amendment No. 1 to the Rights Agreement, dated as of the date set forth
above and provided herewith to the Rights Agent, complies with Section 20 of
the Rights Agreement.

          IN WITNESS WHEREOF, the undersigned has hereunto set his name in the
capacity indicated.

	 	 	 	 	 
	

	 	By:	 	   /s/ Peter J. Verrill
	

	 	 	 	

	

	 	 	 	Name:  Peter J. Verrill
	

	 	 	 	Title:  Chief Operating Officerexv10w1

 

EXHIBIT 10.1

STOCKHOLDERS AGREEMENT

AMONG

BANKNORTH GROUP INC.,

BERLIN DELAWARE INC.

AND

THE TORONTO-DOMINION BANK

DATED AS OF AUGUST 25, 2004

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page
	ARTICLE I DEFINITIONS
	 	 	1	 
	Section 1.1. Certain Defined Terms
	 	 	1	 
	Section 1.2. Other Defined Terms
	 	 	7	 
	Section 1.3. Other Definitional Provisions
	 	 	7	 
	Section 1.4. Methodology for Calculations
	 	 	7	 
	ARTICLE II SHARE OWNERSHIP
	 	 	8	 
	Section 2.1. Acquisition of Additional Voting Securities
	 	 	8	 
	Section 2.2. Going Private Transactions
	 	 	9	 
	Section 2.3. Right of First Refusal to Contribute Capital
	 	 	10	 
	Section 2.4. Stock Purchase Rights
	 	 	11	 
	Section 2.5. Company Share Repurchases
	 	 	12	 
	ARTICLE III TRANSFER RESTRICTIONS
	 	 	13	 
	Section 3.1. General Transfer Restrictions
	 	 	13	 
	Section 3.2. Restrictions on Transfer
	 	 	13	 
	Section 3.3. Right of First Offer
	 	 	14	 
	Section 3.4. Legend on Securities
	 	 	16	 
	ARTICLE IV CORPORATE GOVERNANCE
	 	 	16	 
	Section 4.1. Composition of the Board
	 	 	16	 
	Section 4.2. Vote Required for Board Action; Board Quorum
	 	 	17	 
	Section 4.3. Committees
	 	 	18	 
	Section 4.4. Certificate of Incorporation and Bylaws to be Consistent
	 	 	18	 
	Section 4.5. Information Rights
	 	 	19	 
	Section 4.6. Trade Name
	 	 	19	 
	Section 4.7. Corporate Opportunities
	 	 	19	 
	Section 4.8. NYSE Listing
	 	 	19	 
	Section 4.9. Suspension, Termination of Certain Provisions
	 	 	19	 
	Section 4.10. Acquisition of Competing Entities
	 	 	19	 
	ARTICLE V MISCELLANEOUS
	 	 	19	 
	Section 5.1. Conflicting Agreements
	 	 	19	 
	Section 5.2. Termination
	 	 	19	 
	Section 5.3. Ownership Information
	 	 	19	 
	Section 5.4. Amendment and Waiver
	 	 	19	 
	Section 5.5. Severability
	 	 	19	 
	Section 5.6. Entire Agreement
	 	 	19	 
	Section 5.7. Successors and Assigns
	 	 	19	 
	Section 5.8. Counterparts
	 	 	19	 
	Section 5.9. Remedies
	 	 	19	 
	Section 5.10. Notices
	 	 	19	 

-i-

 

	 	 	 	 	 
	 	 	Page
	Section 5.11. Governing Law; Consent to Jurisdiction
	 	 	19	 
	Section 5.12. Interpretation
	 	 	19	 
	Section 5.13. Effectiveness
	 	 	19	 

-ii-

 

STOCKHOLDERS AGREEMENT

          STOCKHOLDERS AGREEMENT dated as of August 25, 2004 among Banknorth Group,
Inc., a Maine corporation (the “Company”), Berlin Delaware Inc., a
Delaware corporation and a wholly-owned subsidiary of the Company
(“Banknorth Delaware”) and The Toronto-Dominion Bank, a Canadian
chartered bank (“TD”).

          WHEREAS, the Company, Banknorth Delaware, TD and Berlin Merger Co., a
Delaware corporation and a wholly-owned subsidiary of TD (“Berlin
Mergerco”) are entering into an Agreement and Plan of Merger, dated as of
August 25, 2004 (the “Merger Agreement”), pursuant to and subject to the
terms and conditions of which, among other things, (i) the Company will merge
with and into Banknorth Delaware, with Banknorth Delaware surviving the Merger
(the “Migratory Merger”) and (ii) immediately following the
effectiveness of the Migratory Merger, Berlin Mergerco will merge with and into
Banknorth Delaware with Banknorth Delaware surviving the merger (the
“Acquisition Merger”); references in this Agreement to the “Company”
shall include Banknorth Delaware from and after the Migratory Merger Effective
Time (as defined in the Merger Agreement);

          WHEREAS, upon the closing of the Acquisition Merger (the
“Closing”), TD will Beneficially Own (as defined herein), directly
and/or through its Subsidiaries (as defined herein), 51% of the issued and
outstanding Common Stock and the sole share of Class B Common Stock (as defined
herein);

          WHEREAS, it is a condition to the obligations of each of the Company and
TD to consummate the Acquisition Merger and the other transactions contemplated
by the Merger Agreement that this Agreement shall have been duly executed and
delivered by the Company and TD; and

          WHEREAS, the parties hereto desire to enter into this Agreement to
establish certain arrangements with respect to the shares of Company Common
Stock (as defined herein) to be Beneficially Owned by TD and its Affiliates
following the Closing, as well as restrictions on certain activities in respect
of the Company Common Stock, corporate governance and other related corporate
matters.

          NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby
agree as follows:

ARTICLE I

DEFINITIONS

          Section 1.1. Certain Defined Terms. As used herein, the following
terms shall have the following meanings:

     “Affiliate” means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person;
provided, however, that solely for
purposes of this Agreement, notwithstanding anything to the contrary set
forth herein, neither the Company nor any of its

 

 

Subsidiaries shall be deemed
to be a Subsidiary or Affiliate of TD solely by virtue of TD’s ownership of the
Company Common Stock, the election of Class B Directors nominated by it to the
Board, the election of any other Directors nominated by the Nominating
Committee of the Board or any other action taken by TD or its Affiliates which
is permitted under this Agreement which may be deemed to constitute control of
the Company, in each case in accordance with the terms and conditions of, and
subject to the limitations and restrictions set forth in, this Agreement (and
irrespective of the characteristics of the aforesaid relationships and actions
under applicable law or accounting principles).

     “Agreement” means this Stockholders Agreement as it may be amended,
supplemented, restated or modified from time to time.

     “Beneficial Ownership” by a Person of any securities includes
ownership by any Person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares (i) voting
power which includes the power to vote, or to direct the voting of, such
security; and/or (ii) investment power which includes the power to dispose, or
to direct the disposition, of such security; and shall otherwise be interpreted
in accordance with the term “beneficial ownership” as defined in Rule 13d-3
adopted by the Commission under the Exchange Act; provided that for
purposes of determining Beneficial Ownership, a Person shall be deemed to be
the Beneficial Owner of any securities which may be acquired by such Person
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise
(irrespective of whether the right to acquire such securities is exercisable
immediately or only after the passage of time, including the passage of time in
excess of 60 days, the satisfaction of any conditions, the occurrence of any
event or any combination of the foregoing), except that in no event will TD or
any of its Affiliates be deemed to Beneficially Own any securities which it has
the right to acquire pursuant to Sections 2.3 or 2.4 unless, and then only to
the extent that, TD or such Affiliate shall have actually exercised such right.
For purposes of this Agreement, a Person shall be deemed to Beneficially Own
any securities Beneficially Owned by its Affiliates or any Group of which such
Person or any such Affiliate is or becomes a member; provided,
however, that shares of Common Stock subject to options granted under
Company benefit plans or shares of Common Stock (including derivative interests
therein) otherwise issued under Company benefit plans to any Person who, at the
time of the grant or issuance, was an officer or director of the Company or any
of its Subsidiaries shall not solely for that reason be deemed to be
Beneficially Owned by TD or any of its Affiliates; and provided,
further, that securities Beneficially Owned by TD and its Affiliates
shall not include, for any purpose under this Agreement, any Voting Securities
or other securities held: by TD and its Subsidiaries in trust, managed,
brokerage, custodial, nominee or other customer accounts; in mutual funds, open
or closed end investment funds or other pooled investment vehicles sponsored,
managed and/or advised or subadvised by TD or its Affiliates; or by Affiliates
of TD (or any division thereof) which are broker-dealers or otherwise engaged
in the securities business, provided that in each case, such securities were
acquired in the ordinary course of business of their respective banking,
investment management and securities business and not with the intent or
purpose on the part of TD or its Affiliates of influencing control of the
Company or avoiding the provisions of this Agreement. The term
“Beneficially Own” shall have a correlative meaning.

     “Board” means the Board of Directors of the Company.

2

 

     “Business Day” shall mean any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
Portland, Maine, USA or Toronto, Ontario, Canada.

     “By-Laws” means the By-Laws of the Company, as amended or
supplemented from time to time.

     “Capital Stock” means, with respect to any Person at any time, any
and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of capital stock, partnership
interests (whether general or limited) or equivalent ownership interests in or
issued by such Person.

     “Class A Director” means any Director then serving as such, other
than a Class B Director.

     “Class B Common Stock” means the one share of Class B Common Stock,
par value $0.01 per share, of the Company and any securities issued in respect
thereof, or in substitution therefor, in connection with any stock split,
dividend or combination, or any reclassification, recapitalization, merger,
consolidation, exchange or other similar reorganization. In accordance with
the terms of the Surviving Corporation Charter, such one share of Class B
Common Stock (and any such securities issued in respect thereof, or in
substitution therefor) may be Beneficially Owned only by TD and its Affiliates
and shall not otherwise be Transferred. Any attempted Transfer in violation of
the terms of the Class B Common Stock shall be of no effect and null and void,
regardless of whether the purported transferee has any actual or constructive
knowledge of the Transfer restrictions set forth herein, and shall not be
recorded on the stock transfer books of the Company; provided,
however, that upon any termination of this Agreement, such one share of
Class B Common Stock (and any such securities issued in respect thereof, or in
substitution therefor) shall be redeemed for $1.00 paid to the holder thereof,
subject to the availability of lawful funds therefor, and upon such redemption
shall be cancelled and retired and may not be reissued. The Class B Common
Stock shall have no economic interest in the Company and shall have no voting
rights, except for the right to elect Class B Directors pursuant to the terms
hereof, or rights to receive dividends or any other distributions.

     “Class B Director” means any Person who is nominated and elected to
serve as a Class B Director by the holder of the Class B Common Stock or is
designated as a replacement for a Class B Director pursuant to the Surviving
Corporation Charter and is then serving in such capacity. For the avoidance of
doubt, nothing in this Agreement shall be deemed to relieve any Director of any
duty that Director may have to any stockholder of the Company under applicable
law.

     “Commission” means the United States Securities and Exchange
Commission.

     “Common Stock” means the common stock, par value $0.01 per share,
of the Company and any securities issued in respect thereof, or in substitution
therefor, in connection
with any stock split, dividend or combination, or any reclassification,
recapitalization, merger, consolidation, exchange or other similar
reorganization.

     “Company Common Stock” means the Common Stock and the Class B
Common Stock.

3

 

     “control” (including the terms “controlled by” and “under common
control with”), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct
or cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, as trustee or executor, by contract
or any other means, or otherwise to control such Person within the meaning of
such term as used in Section 2(e) of Regulation Y.

     “Designated Independent Director” means each of the four
Independent Directors designated by the Board as such prior to the Effective
Time and their respective successors who are nominated and designated as such
by the Designated Independent Directors and the Nominating Committee in
accordance with Section 4.1(b) and who are then serving in such capacity.

     “Director” means any member of the Board (other than any advisory,
honorary or other non-voting member of the Board).

     “Exchange Act” means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission from time
to time thereunder (or under any successor statute).

     “Fair Market Value” means, as to any securities or other property,
the cash price at which a willing seller would sell and a willing buyer would
buy such securities or property in an arm’s length negotiated transaction
without time constraints. With respect to any securities that are traded on a
national securities exchange or quoted on the Nasdaq National Market or the
Nasdaq Small Cap Market, Fair Market Value shall mean the arithmetic average of
the closing prices of such securities on their principal market for the ten
consecutive trading days immediately preceding the applicable date of
determination. The Fair Market Value of any property or assets, other than
securities described in the preceding sentence, with an estimated value of less
than $5 million shall be determined by the Board (acting through a majority of
the Designated Independent Directors) in its good faith judgment. The Fair
Market Value of all other property or assets shall be determined by an
Independent Investment Banking Firm, selected by a majority of the Designated
Independent Directors, whose determination shall be final and binding on the
parties hereto. The fees and expenses of such investment bank shall be paid by
the Company.

     “Going Private Transaction” means any transaction that would
constitute a “Rule 13e-3 transaction” under paragraph (a)(3) of Rule 13e-3
promulgated under the Exchange Act as in effect on the date of this Agreement.

     “Group” shall have the meaning assigned to it in Section 13(d)(3)
of the Exchange Act.

     “Incidental Acquisition” means an acquisition of control (as such
term is defined in 12 U.S.C. § 1841(a)(2) or any successor provision) of a
Retail Bank in connection with any business combination involving a Person
whose primary business is not the business of providing branch-based retail
consumer and commercial banking services in the continental United States and
not more than 50% of whose consolidated assets consist of Retail Banks;
provided that the primary purpose of such acquisition is not to avoid the
provisions of this Agreement.

4

 

     “Independent Director” means any Director who (i) is or would be an
“independent director” with respect to the Company and with respect to TD
pursuant to Section 303A.02 of the New York Stock Exchange Listed Company
Manual and Section 10A of the Exchange Act (or any successor provisions) and
(ii) is not a Class B Director or an Affiliate or a past or present officer,
director or employee of, and was not nominated by, TD or any of its Affiliates.

     “Independent Investment Banking Firm” means an investment banking
firm of nationally recognized standing that in the reasonable judgment of the
Person or Persons engaging such firm, taking into account any prior
relationship with TD or the Company, is independent of such Person or Persons.

     “Ownership Percentage” means, at any time, the quotient, expressed
as a percentage, of (i) the Total Voting Power of all Voting Securities
Beneficially Owned by TD and its Affiliates divided by (ii) the Total Voting
Power of all Voting Securities then outstanding.

     “Person” means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, other entity,
government or any agency or political subdivision thereof or any Group
comprised of two or more of the foregoing.

     “Prime Rate” means the prime rate, base lending rate or similar
bench mark rate in effect from time to time as announced by Citicorp, N.A. (or
any successor institution).

     “Regulation Y” means Regulation Y (12 C.F.R. Part 225) or any
successor regulation, as promulgated by the Board of Governors of the Federal
Reserve System under the Bank Holding Company Act.

     “Retail Bank” means any insured depository institution (as such
term is defined in 12 U.S.C. § 1813(c)(2) or any successor provision) that is
principally engaged in the business of providing branch-based retail consumer
and commercial banking services in the continental United States, other than TD
Waterhouse Bank, N.A. (or any successor thereto) or other bank whose primary
business is to provide banking services to customers of a brokerage, mutual
fund, or other similar consumer financial business in the United States. For
the avoidance of doubt, in no circumstances will any banking or other business
conducted by TD through its U.S. branches, agencies, representative offices or
subsidiary commercial lending companies (as such terms are defined in 12 C.F.R.
Section 211.21 or any successor provision), existing as of the date hereof or
established, acquired or operated thereafter, be deemed to constitute such
branch, agency, representative office or subsidiary commercial lending company
a Retail Bank.

     “Securities Act” means the U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated by the Commission from time to time
thereunder (or under any successor statute).

     “Subsidiary” means, with respect to any Person, any corporation or
other organization, whether incorporated or unincorporated, (i) of which such
Person or any other Subsidiary of such Person is a general partner (excluding
partnerships, the general partnership interests of which held by such Person or
any Subsidiary of such Person do not have a majority of the voting interests in
such partnership), or (ii) at least a majority of the securities or other
interests of

5

 

which having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such Person or by any one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries.

     “Surviving Corporation Charter” means the Certificate of
Incorporation of the Surviving Corporation (as defined in the Merger
Agreement), the form of which is set forth in Exhibit C to the Merger
Agreement, as amended or supplemented from time to time.

     “Total Voting Power” means the total number of votes entitled to be
cast by the holders of the outstanding Common Stock and any other securities
entitled, in the ordinary course, to vote on matters put before the holders of
the Common Stock generally.

     “Transfer” means, directly or indirectly, to sell, transfer,
assign, pledge, encumber, hypothecate or similarly dispose of (by operation of
law or otherwise), either voluntarily or involuntarily, or to enter into any
contract, option or other arrangement or understanding with respect to the
sale, transfer, assignment, pledge, encumbrance, hypothecation or similar
disposition of (by operation of law or otherwise), any Voting Securities or any
interest in any Voting Securities; provided, however, that a
merger, amalgamation, plan of arrangement or consolidation or similar business
combination transaction in which TD is a constituent corporation (or otherwise
a party including, for the avoidance of doubt, a transaction pursuant to which
a Person acquires all or a portion of TD’s outstanding Capital Stock, whether
by tender or exchange offer, by share exchange, or otherwise) shall not be
deemed to be the Transfer of any Voting Securities Beneficially Owned by TD or
any of its Subsidiaries, provided that the primary purpose of any such
transaction is not to avoid the provisions of this Agreement and that the
successor or surviving person to such a merger, amalgamation, plan of
arrangement or consolidation or similar business combination transaction, if
not TD, expressly assumes all obligations of TD under the Agreement. For
purposes of this Agreement, the term Transfer shall include the sale of an
Affiliate of TD or TD’s interest in an Affiliate which Beneficially Owns Voting
Securities unless such Transfer is in connection with a merger, amalgamation,
plan of arrangement or consolidation or similar business combination
transaction referred to in the first proviso of the previous sentence.

     “Unaffiliated Stockholder Approval” means (i) in the case of a
tender or exchange offer, that a majority of the outstanding shares of Common
Stock not Beneficially Owned by TD and its Affiliates shall have been tendered
and not duly withdrawn at the expiration time of such tender or exchange offer,
as it may have been theretofore extended, and (ii) in the case of a merger or
consolidation, that the holders of a majority of the outstanding
shares of Common Stock not Beneficially Owned by TD and its Affiliates
shall have executed written consents in favor of the applicable transaction or
that the holders of a majority of the outstanding shares of Common Stock not
Beneficially Owned by TD and its Affiliates shall have been duly voted in favor
of the applicable transaction at a meeting of stockholders duly called and
held.

     “Voting Securities” means at any time shares of any class of
Capital Stock or other securities of the Company, other than the Class B Common
Stock, which are then entitled to vote generally in the election of Directors
and not solely upon the occurrence and during the

6

 

continuation of certain
specified events, and any securities convertible into or exercisable or
exchangeable for such shares of Capital Stock.

     Section 1.2. Other Defined Terms. The following terms shall have
the meanings defined for such terms in the Sections set forth below:

	 	 	 
	TERM
	 	SECTION

	Acquisition Merger
	 	Preamble
	Banknorth Delaware
	 	Preamble
	Berlin Mergerco
	 	Preamble
	Closing
	 	Preamble
	Company
	 	Preamble
	Company Process Agent
	 	Section 5.11(b)
	DGCL
	 	Section 1.4
	First Offer Price
	 	Section 3.3(a)
	Litigation
	 	Section 5.11(a)
	Measurement Date
	 	Section 4.9(a)
	Merger Agreement
	 	Preamble
	Migratory Merger
	 	Preamble
	Ownership Cap
	 	Section 2.1
	Permanent Suspension
	 	Section 4.9(d)
	Process Agent
	 	Section 5.11(b)
	Shortfall Amount
	 	Section 4.9(a)
	Suspension
	 	Section 4.9(b)
	TD
	 	Preamble
	TD Process Agent
	 	Section 5.11(b)
	Transfer Events
	 	Section 4.9(a)
	Transfer Notice
	 	Section 3.3
	Transferring Party
	 	Section 3.3(a)

          Section 1.3. Other Definitional Provisions. (a) The words
“hereof”, “herein” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Article and Section references
are to this Agreement unless otherwise specified.

          (b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.

          (c) Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Merger Agreement.

          Section 1.4. Methodology for Calculations. For purposes of
calculating the number of outstanding shares of Common Stock or Voting
Securities and the number of shares of Common Stock or Voting Securities
Beneficially Owned by TD and its Affiliates as of any date, any shares of
Common Stock or Voting Securities held in the Company’s treasury or belonging
to any Subsidiaries of the Company which are not entitled to be voted or
counted for

7

 

purposes of determining the presence of a quorum pursuant to
Section 160(c) of the Delaware General Corporation Law (or any successor
statute (the “DGCL”)) shall be disregarded.

ARTICLE II

SHARE OWNERSHIP

          Section 2.1. Acquisition of Additional Voting Securities. (a)
During the term of this Agreement, except as provided in paragraph (b) below or
Section 2.2 hereof, TD covenants and agrees with the Company that it shall not,
and shall not permit any of its Affiliates to, directly or indirectly, acquire,
offer or propose to acquire or agree to acquire, whether by purchase, tender or
exchange offer, through the acquisition of control of another Person (whether
by way of merger, consolidation or otherwise), by joining a partnership,
syndicate or other Group or otherwise, the Beneficial Ownership of any
additional Voting Securities, or take any other action as a shareholder or
through the Class B Directors or otherwise, if such acquisition or action would
result in TD Beneficially Owning Voting Securities representing more
than 66 2/3%
of the Total Voting Power (the “Ownership Cap”, except that with the
approval of a majority of the Designated Independent Directors, the Board may
authorize a repurchase of Common Stock by the Company as a result of which TD
may Beneficially Own Voting Securities representing up to 70% of the Total
Voting Power, in which case the “Ownership Cap”, for all purposes of this
Agreement, shall mean the percentage of the Total Voting Power of Voting
Securities Beneficially Owned by TD and its Affiliates following the completion
of such share repurchase, provided that if following such increase in
the Ownership Cap TD’s Ownership Percentage declines to 66 2/3% as a result of
Transfers of Voting Securities by TD and its Affiliates, the “Ownership Cap”
shall again be 66 2/3%).

          (b) Notwithstanding the foregoing, the acquisition (whether by merger,
consolidation or otherwise) by TD or an Affiliate thereof of any Person that
Beneficially Owns Voting Securities, or the acquisition of Voting Securities in
connection with securing or collecting a debt previously contracted in good
faith in the ordinary course of TD’s or such
Affiliate’s banking or brokerage business, shall not constitute a
violation of the Ownership Cap; provided that (i) the primary purpose of
any such transaction is not to avoid the provisions of this Agreement,
including the Ownership Cap, and (ii) that in the case of an acquisition of
another Person, TD uses reasonable best efforts to negotiate terms in
connection with the relevant acquisition agreement requiring such other Person
to divest itself of sufficient Voting Securities it Beneficially Owns so that
the Ownership Cap would not be exceeded pro forma for the acquisition, with
such divestiture to be effected concurrently with, or as promptly as
practicable following, the consummation of such acquisition (but in no event
more than 90 days following such consummation, or such longer period as may be
necessary so that neither TD nor any of its Affiliates incurs any liability
under Section 16(b) of the Exchange Act) and, to the extent such divestiture
does not occur despite the use of such reasonable best efforts, the successor
or surviving Person to such transaction, if not TD or such Affiliate, expressly
assumes all obligations of TD or such Affiliate, as the case may be, under this
Agreement; and provided, further, that the provisions of
paragraph (c) below are complied with.

          (c) (i) If at any time TD or any of its Affiliates Beneficially Own in
the aggregate Voting Securities representing more than the Ownership Cap, then
TD shall, as soon as is

8

 

reasonably practicable, but in no event longer than 90
days after its Ownership Percentage first exceeds the Ownership Cap (but in no
manner that would require TD or any such Affiliate to incur liability under
Section 16(b) of the Exchange Act) Transfer (in any manner permitted by Section
3.2(b), regardless of whether such Transfer occurs prior to or after the second
anniversary of the Closing) a number of Voting Securities sufficient to reduce
the amount of Voting Securities Beneficially Owned by it and its Affiliates to
an amount representing not greater than the Ownership Cap.

     (ii) Notwithstanding any other provision of this Agreement, in no
event may TD or any of its Affiliates, directly or indirectly including
through any agreement or arrangement, exercise any voting rights, during
the term of this Agreement, in respect of any Voting Securities
Beneficially Owned by TD and its Affiliates representing in excess of the
Ownership Cap.

          (d) Any additional Voting Securities acquired and Beneficially Owned by TD
or any of its Affiliates following the Closing shall be subject to the
restrictions contained in this Agreement as fully as if such Voting Securities
were acquired by TD at the Closing pursuant to the Merger Agreement.

          Section 2.2. Going Private Transactions. (a) TD shall not, and
shall cause its Affiliates not to, propose or initiate any Going Private
Transaction unless such Going Private Transaction (i) involves the acquisition
of or offer to acquire 100% of the Common Stock not owned by TD and its
Affiliates (and, in the case of a Going Private Transaction to be effected by
means of a tender or exchange offer, includes a commitment by TD or such
Affiliate to promptly consummate a short-form merger to acquire any remaining
shares of Common Stock at the same price in the event it obtains pursuant to
such tender or exchange offer such level of ownership of such classes of
Capital Stock that
would be required to effect a merger pursuant to Section 253 of the DGCL
or any successor provision) and (ii) is conducted in compliance with this
Section 2.2.

          (b) Prior to the second anniversary of the Closing, TD shall not, and
shall cause its Affiliates not to, propose or initiate any Going Private
Transaction unless invited to do so by a majority of the Designated Independent
Directors. Any Going Private Transaction effected during this period shall
also be subject to the requirements of Section 2.2(c).

          (c) From the second anniversary of the Closing until the fifth anniversary
of the Closing:

     (i) TD or any its Affiliates may initiate and hold discussions
regarding a Going Private Transaction with the Board on a confidential
basis that would not reasonably be expected to require either the Company
or TD to make any public disclosure thereof in order to comply with their
disclosure obligations under the U.S. federal securities laws or Canadian
securities laws. In connection with any such Going Private Transaction,
the Designated Independent Directors may retain an Independent Investment
Banking Firm and outside legal counsel, the fees and expenses of which
shall be borne by the Company. If a majority of the Designated
Independent Directors

9

 

approves such transaction, TD or such Affiliates
may publicly announce, commence and effect such Going Private
Transaction.

     (ii) Any Going Private Transaction commenced pursuant to this
Section 2.2(c) may only be completed if it receives Unaffiliated
Stockholder Approval.

          (d) From and after the fifth anniversary of the Closing, TD or any of its
Affiliates may propose, initiate or effect a Going Private Transaction,
provided that such Going Private Transaction is either approved by a majority
of the Designated Independent Directors or by Unaffiliated Stockholder Approval
and further provided that TD and its Affiliates shall not propose, publicly
announce or initiate a Going Private Transaction pursuant to this Section
2.2(d) without providing prior notice to the Designated Independent Directors
and offering to first discuss and negotiate confidentially the terms such
proposed Going Private Transaction with the Designated Independent Directors.
If requested by a majority of the Designated Independent Directors, TD will use
its reasonable best efforts to so negotiate the terms of such proposed Going
Private Transaction in good faith, provided that if, notwithstanding the use of
such reasonable best efforts, TD and the Designated Independent Directors are
unable to agree on the terms of a Going Private Transaction within 60 days, TD
may, subject to applicable law, publicly propose to the Company’s shareholders
and, subject to receiving Unaffiliated Stockholder Approval thereof, publicly
announce, commence and effect a Going Private Transaction. In connection with
any such Going Private Transaction, the Designated Independent Directors may
retain an Independent Investment Banking Firm and outside legal counsel, the
fees and expenses of which shall be borne by the Company.

          Section 2.3. Right of First Refusal to Contribute Capital. Until
TD and its Affiliates no longer Beneficially Own Voting Securities representing
at least 25% of the Total Voting Power, whenever the Company seeks to raise
additional capital in the form of equity securities or securities
convertible into, or exercisable or exchangeable for, equity securities,
whether for purposes of the funding of an acquisition or the expansion of its
business or for any other reason (which shall not include for purposes of this
Section 2.3 (i) the issuance of Capital Stock of the Company upon the exercise
of, or the grant or award of, employee stock options, stock appreciation rights
or similar instruments of the type covered by Section 2.5, (ii) the issuance of
preferred stock that would constitute “nonvoting shares” as defined in Section
225.2(q)(2) of Regulation Y and securities issued by subsidiary trusts of the
type customarily referred to as “trust preferred securities” (provided that
such securities do not constitute Voting Securities) or (iii) the issuance of
Capital Stock to the equityholders of another Person as acquisition
consideration paid to such equityholders pursuant to the acquisition by the
Company of such Person), the Company shall offer to TD the right to provide all
or any portion of such additional capital (at TD’s option) in the form of an
additional investment in shares of Common Stock or, if the Company proposes to
raise such additional capital in the form of other Voting Securities, in such
other Voting Securities; provided, however, that if such
additional investment would result in a violation of the Ownership Cap, TD may
only acquire pursuant to this Section 2.3 such number of shares of Common Stock
(or such number of other Voting Securities, as applicable) as would not result
in such violation. The purchase price paid by TD or any of its Affiliates for
any securities acquired pursuant to this Section 2.3 will be the Fair Market
Value of such securities as of the date on which such issuance is approved by
the Board. The Company shall provide TD with 10 Business Days prior written
notice (or if such notice period is not

10

 

possible under the circumstances, such
prior notice as is practicable) of any proposed issuance subject to this
Section 2.3, and TD may exercise its rights under this Section 2.3 and/or
Section 2.4 (without duplication) by providing written notice to the Company
within 10 Business Days after receiving such written notice from the Company.
In the event that, in connection with any capital raising by the Company
covered by this Section 2.3, TD gives notice of its intent to exercise its
option under this Section 2.3 and it has not purchased the securities subject
thereto within 60 days thereafter for reasons not primarily related to actions
or omissions of the Company, TD shall be deemed to have waived its rights to
purchase such securities under this Section 2.3 with respect to such capital
raising (but such waiver shall not affect its rights with respect to such
capital raising under Section 2.4, to the extent it has provided notice as
contemplated above of its exercise of such rights, or its rights under this
Section 2.3 or Section 2.4 with respect to any future capital raising by the
Company). Notwithstanding any provision of Section 2.2, no purchase of
additional securities pursuant to this Section 2.3 shall be deemed to be a
Going Private Transaction for purposes of this Agreement.

          Section 2.4. Stock Purchase Rights. (a) Until TD and its
Affiliates no longer Beneficially Own Voting Securities representing at least
25% of the Total Voting Power, if the Company at any time shall propose to
issue any shares of Common Stock (whether for financings, acquisitions or
otherwise but excluding such issuances pursuant to the exercise of employee
stock options, stock appreciation rights or similar instruments of the type
covered by Section 2.5), TD shall have the option (to the extent it did not
previously exercise its rights pursuant to Section 2.3) to purchase for cash
directly from the Company up to a sufficient number of shares of Common Stock
at the same purchase price (including any assumed indebtedness which is part of
the purchase price and valuing any non-cash consideration at its Fair Market
Value) as the price for the additional
shares of Common Stock to be issued so that, after the issuance, TD would
Beneficially Own the same Ownership Percentage as was Beneficially Owned by TD
and its Affiliates immediately prior to the issuance of such additional shares
of Common Stock; provided, however, that if such purchase would
result in a violation of the Ownership Cap, TD may only purchase such number of
shares of Common Stock as would not result in such violation. The Company
shall provide such information, to the extent reasonably available, relating to
any non-cash consideration as TD may reasonably request in order to evaluate
any non-cash consideration paid in respect of any such issuance.

          (b) Until TD and its Affiliates no longer Beneficially Own Voting
Securities representing at least 25% of the Total Voting Power, in the event
that the Company shall propose to issue options (other than employee stock
options, stock appreciation rights or similar instruments of the type covered
by Section 2.5) or warrants that are exercisable for, or debt or equity
securities that are convertible into or exchangeable for, shares of Common
Stock, the Company shall offer TD the opportunity to purchase for cash up to
its Ownership Percentage, as of the time of such issuance, of such options,
warrants or convertible debt or equity securities at the same purchase price as
is offered to the other purchasers thereof; provided, however,
that if any exercise, conversion or exchange of such options, warrants or
convertible debt or equity securities would result (on a pro forma
basis after
giving effect to the exercise, conversion or exchange of all other such
options, warrants or convertible debt or equity securities issued at such time)
in a violation of the Ownership Cap, TD may only purchase such number of
options, warrants or convertible debt or equity securities as would not, after
giving effect to the exercise, conversion or exchange of all such options,
warrants or convertible debt or equity securities,

11

 

result in such violation.
To the extent that TD elects to purchase such options, warrants or convertible
debt or equity securities, (x) TD shall not have the right to purchase pursuant
to paragraph (a) above the corresponding number of shares of Common Stock
underlying such options, warrants or convertible debt or equity securities in
connection with the issuance of such underlying shares of Common Stock, and (y)
the shares of Common Stock for which such options, warrants or convertible debt
or equity securities may be exercised, converted or exchanged shall not be
deemed to be Beneficially Owned for purposes of the Ownership Cap unless and
until TD and its Affiliates shall have exercised, converted or exchanged such
options, warrants or debt or equity securities for shares of Common Stock (and
TD shall not exercise or convert any such options, warrants or convertible debt
or equity securities to the extent doing so would result in a violation of the
Ownership Cap).

          (c) The Company shall provide TD with prior written notice of any issuance
subject to this Section 2.4, and TD shall provide written notice to the Company
regarding its exercise of its rights pursuant to this Section 2.4, each in
connection with the notice required by Section 2.3 and in accordance with the
terms of that Section. In the event that, in connection with any proposed
issuance by the Company, TD gives notice of its intent to exercise its option
under this Section 2.4, and it has not purchased the applicable shares of
Common Stock, options, warrants or convertible debt or equity securities
concurrently with the related issuance of such securities by the Company for
reasons not relating primarily to actions or omissions of the Company, TD shall
be deemed to have waived its rights to purchase such securities under this
Section 2.4 with respect to such proposed issuance (but such waiver shall not
affect its rights under this Section 2.4 or Section 2.3 with respect to any
future issuance of securities by the Company).

          Section 2.5. Company Share Repurchases. If, at any time after the
Closing and prior to the first date that TD and its Affiliates no longer
Beneficially Own Voting Securities representing at least 25% of the Total
Voting Power, the Company shall issue shares of Common Stock (i) upon exercise
of any option, warrant, stock appreciation right or other similar instrument
granted to its directors, officers, employees, consultants or others, or (ii)
in the form of restricted shares or similar instruments, in either case
pursuant to any compensation, retention, incentive or similar program or
arrangement in effect from time to time, then the Company shall, unless
prohibited by law, and subject to the receipt of any required regulatory
approval, use its reasonable best efforts to repurchase a corresponding number
of shares of Common Stock in the open market within 120 days after any such
issuance so that the net total number of outstanding shares of Common Stock are
not increased by such issuance, provided that the Company shall have no
repurchase obligation under this Section 2.5 in the event that the issuances of
shares subject hereto, together with any prior issuances contemplated by this
Section 2.5 with respect to which the Company has not yet effected repurchases
hereunder, do not exceed 1% of the outstanding Common Stock in the aggregate.
The Company’s obligation under this Section 2.5 shall be subject to the receipt
of any required regulatory approval, and in the event of any such requirement
the 120-day period referred to above shall not commence until the receipt of
such regulatory approval. In the event that the Company is unable to complete
the repurchases contemplated hereby within the 120-day period, the Company
shall use its reasonable best efforts to complete such repurchases as promptly
as practicable thereafter. The Company shall also be permitted to meet its
obligations hereunder by means of an ongoing regular stock repurchase

12

 

plan, in
which case offsetting repurchases may occur prior to the related issuance of
Common Stock hereunder.

ARTICLE III

TRANSFER RESTRICTIONS

          Section 3.1. General Transfer Restrictions. The right of TD and
its Affiliates to Transfer any Voting Securities is subject to the restrictions
set forth in this Article III, and no Transfer of Voting Securities by TD or
any of its Affiliates may be effected except in compliance with this Article
III. Any attempted Transfer in violation of this Agreement shall be of no
effect and null and void, regardless of whether the purported transferee has
any actual or constructive knowledge of the Transfer restrictions set forth in
this Agreement, and shall not be recorded on the stock transfer books of the
Company.

          Section 3.2. Restrictions on Transfer. (a) Without the prior
written consent of the Company (acting through a majority of the Designated
Independent Directors), during an initial period of two years following the
Closing, TD shall not, and shall not permit its Affiliates to, Transfer any
Voting Securities or agree to Transfer, directly or indirectly, any Voting
Securities; provided that the foregoing restriction shall not prohibit
TD or any of its Affiliates from Transferring any Voting Securities (i) to the
Company pursuant to Section 2.1(c) or (ii) to an Affiliate of TD that
agrees in writing with the Company to be bound by this Agreement as fully
as if it were an initial signatory hereto.

          (b) Following the second anniversary of the Closing and until the fifth
anniversary of the Closing, TD shall not, and shall not permit its Affiliates
to, Transfer any Voting Securities or agree to Transfer, directly or
indirectly, any Voting Securities; provided that the foregoing
restriction shall not be applicable to Transfers:

     (i) to an Affiliate of TD which agrees in writing with the Company
to be bound by this Agreement as fully as if it were an initial signatory
hereto;

     (ii) pursuant to the restrictions of Rule 144 under the Securities
Act applicable to sales of securities by Affiliates of an issuer
(regardless of whether TD or its Affiliates is deemed at such time to be
an Affiliate of the Company);

     (iii) subject to Section 3.3, to any Person who, after giving effect
to such Transfer, would Beneficially Own Voting Securities representing
in the aggregate less than 5% of the Total Voting Power; provided
that such Person is an institutional investor which (x) purchases such
shares in the normal course of its investment business, for investment
purposes only, and with no intention of influencing control of the
Company and (y) provides appropriate certification to the Company as to
the foregoing matters;

     (iv) pursuant to a firm commitment, underwritten distribution to the
public, registered under the Securities Act, in which TD uses its
commercially reasonable efforts to (A) effect as wide a distribution of
such Voting Securities as is reasonably practicable, and (B) not
knowingly, sell Voting Securities to any Person who after consummation of

13

 

such offering would have Beneficial Ownership of Voting Securities
representing in the aggregate 5% or more of the Total Voting Power;

     (v) as a bona fide pledge to a financial institution, entered into
in good faith and not for the purpose of avoiding the restrictions set
forth in this Agreement and with the prior written consent, not to be
unreasonably withheld or delayed, of and on terms reasonably satisfactory
to the Company (acting through a majority of the Designated Independent
Directors); provided that the amount of Voting Securities subject
to the pledge does not exceed 19.9% of the Total Voting Power; or

     (vi) with the Company’s prior written consent (provided by a
majority of the Designated Independent Directors).

          (c) Subject to the provisions of Section 3.3, following the second
anniversary of the Closing, TD and its Affiliates may Transfer Voting
Securities or agree to Transfer Voting Securities to a Person that would
Beneficially Own Voting Securities representing in the aggregate more than 10%
of the Total Voting Power; provided, that if TD and its Affiliates would
Beneficially Own Voting Securities representing in the aggregate less than 50%
of the Total Voting Power as a result of such Transfer, TD and its Affiliates
shall condition such Transfer by them to such Person upon such Person
contemporaneously therewith offering to acquire, or acquiring, on the same
price and other financial terms and conditions as are
applicable to TD and/or its Affiliates in such Transfer, either (x) 100%
of the Voting Securities Beneficially Owned by stockholders of the Company
other than TD and its Affiliates or (y) a number of Voting Securities
Beneficially Owned by stockholders of the Company other than TD and its
Affiliates equal to the product of (A) the aggregate number of Voting
Securities Beneficially Owned by stockholders of the Company other than TD and
its Affiliates multiplied by (B) a fraction, the numerator of which is the
number of Voting Securities proposed to be Transferred by TD and its Affiliates
to such Person and the denominator of which is the aggregate number of Voting
Securities Beneficially Owned by TD and its Affiliates on the date of such
Transfer; and provided, further, that a Transfer pursuant to this Section
3.2(c) may only be made prior to the third anniversary of the Closing if the
Chief Executive Officer of TD advises the Board that he has determined to make
such Transfer based on his good faith assessment of the requirements of TD’s
financial or capital situation at such time, exercising his business judgment
based on changes in circumstances since the date of this Agreement. In order
for the conditions in the preceding proviso to be satisfied, (A) such Person
shall make such offer in compliance with applicable law, including, if
applicable, Section 14(d)(1) of the Exchange Act and Regulation 14D promulgated
thereunder and (B) if a result of such Transfer, such Person would, following
such Transfer, Beneficially Own Voting Securities representing in the aggregate
more than 15% of the Total Voting Power but less than 90% of each class of
Capital Stock of which ownership would be required in order to effect a merger
pursuant to Section 253 of the DGCL or any successor provision, such Person
must, in connection with the closing of such transaction, agree to be bound by
this Agreement as fully as if it were an initial signatory hereto. The
provisions of this Section 3.2(c) shall only apply for as long as TD and its
Affiliates Beneficially Own Voting Securities representing at least 25% of the
Total Voting Power.

          Section 3.3. Right of First Offer. Prior to making any offer to
Transfer any Voting Securities pursuant to clause (iii) of Section 3.2(b) or
any offer to Transfer (in one

14

 

transaction or series of related transactions)
less than 100% of the Voting Securities Beneficially Owned at such time by TD
and its Affiliates pursuant to Section 3.2(c), TD and/or its Affiliates
proposing to effect such Transfer (collectively, the “Transferring
Party”) shall give the Company the opportunity to purchase such Voting
Securities in the following manner:

          (a) The Transferring Party shall give written notice (a “Transfer
Notice”), to the Company stating such Transferring Party’s intention to
effect such a Transfer, the number of and description of the Voting Securities
subject to such Transfer, the price and terms on which such Transferring Party
proposes to offer such Voting Securities for Transfer (the “First Offer
Price”) and the other material terms upon which such Transfer is proposed
to be made.

          (b) Upon receipt of the Transfer Notice, the Company will have an
irrevocable option to purchase all of the Voting Securities subject to such
Transfer Notice at the First Offer Price and otherwise on the terms and
conditions described in the Transfer Notice. The Company shall, within 5
Business Days from receipt of the Transfer Notice, indicate if it accepts such
offer by sending irrevocable written notice of any such acceptance to the
Transferring Party, and the Company shall then be obligated to purchase all
such Voting Securities on the terms and conditions set forth in the Transfer
Notice.

          (c) If the Company elects to purchase all of such Voting Securities, the
Company and the Transferring Party shall be legally obligated to consummate
such transaction and shall use their commercially reasonable efforts to
consummate such transaction as promptly as practicable but in any event within
5 Business Days following the delivery of such election notice or, if later, 5
Business Days after receipt of all required regulatory approvals (but in no
event more than 90 days after the delivery of such election notice). In the
event that the number of Voting Securities to be purchased by the Company in
connection with its exercise of its rights pursuant to this Section 3.3 in any
twelve-month period would exceed 4.9% of the total number of outstanding Voting
Securities at the date of the Transfer Notice (or, if more than one Transfer
Notice has been given, the date of the last of such Transfer Notices), the
Company may, at its option, designate any Person to purchase the Voting
Securities subject to such Transfer Notice; provided that if the closing of the
purchase of the Voting Securities by any such designee is delayed by reason of
the need by such designee to obtain required regulatory approvals beyond the
date on which the Company could have consummated such purchase pursuant to the
first sentence of this Section 3.3(c), the purchase price for such Voting
Securities shall also include interest on the First Offer Price for the Voting
Securities subject to the Transfer Notice at the Prime Rate from the date on
which the Company would have been legally permitted to consummate such purchase
to but excluding the date that the designee actually purchases the shares.

          (d) If the Company does not elect to purchase all of such Voting
Securities pursuant to this Section 3.3 (or if, having made such election, does
not complete such purchase within the applicable time period specified in
Section 3.3(c)), then the Transferring Party shall be free for a period of 90
days from the date the election notice was due to be received from the Company
to enter into definitive agreements to Transfer such Voting Securities to a
transferee for consideration having a value not less than 95% of the First
Offer Price; provided that any such definitive agreement provides for
the consummation of such Transfer to take place within nine months from the
date of such definitive agreement and is otherwise on terms not more

15

 

favorable
to the transferee in any material respect than were contained in the Transfer
Notice. In the event that the Transferring Party has not entered into such a
definitive agreement with such 90-day period, or has so entered into such an
agreement but has not consummated the sale of such Voting Securities within
nine months from the date of such definitive agreement, then the provisions of
this Section 3.3 shall again apply, and such Transferring Party shall not
Transfer or offer to Transfer such Voting Securities not so Transferred without
again complying with this Section 3.3, to the extent applicable.

          Section 3.4. Legend on Securities. (a) Each certificate
representing shares of Company Common Stock Beneficially Owned by TD or its
Affiliates and subject to the terms of this Agreement shall bear the following
legend on the face thereof:

     “THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER LIMITATIONS SET FORTH IN A
CERTAIN STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 25, 2004, BETWEEN TD
BANKNORTH INC. (THE “COMPANY”) AND THE TORONTO-DOMINION BANK, AS THE SAME
MAY BE AMENDED FROM TIME
TO TIME (THE “AGREEMENT”), COPIES OF WHICH AGREEMENT ARE ON FILE AT
THE PRINCIPAL OFFICE OF THE COMPANY.”

          (b) Upon any acquisition by TD or any of its Affiliates of additional
shares of Company Common Stock, TD shall, or shall cause such Affiliate to,
submit the certificates representing such shares of Company Common Stock to the
Company so that the legend required by this Section 3.4 may be placed thereon
(if not so endorsed upon issuance).

          (c) The Company may make a notation on its records or give instructions to
any transfer agents or registrars for the Company Common Stock in order to
implement the restrictions on Transfer set forth in this Agreement.

          (d) In connection with any Transfer of shares of Company Common Stock, the
transferor shall provide the Company with such customary certificates, opinions
and other documents as the Company may reasonably request to assure that such
Transfer complies fully with this Agreement and with applicable securities and
other laws.

ARTICLE IV

CORPORATE GOVERNANCE

          Section 4.1. Composition of the Board. (a) Prior to the Effective
Time, the Company, as the sole stockholder of Banknorth Delaware, shall take
all requisite action so that, effective as of the Effective Time, the Board
shall initially be composed of up to 19 Directors consisting of (i) the
individuals constituting the Board on the date of the Closing (provided that
such number does not exceed 14, in which case the Company shall take all
requisite action to designate no more than 14 of such individuals to become
directors of Banknorth Delaware pursuant to this Section 4.1), including the
Chief Executive Officer of the Company and the Designated Independent
Directors, who shall be Class A Directors, and (ii) up to five individuals
designated by TD in writing to the Company not less than 15 days prior to the
expected date of

16

 

the Closing (or, if such period of notice is not practicable
under the circumstances because an individual who has been so designated is no
longer available for such service, such prior notice as is practicable), who
shall be Class B Directors. Except as provided in Section 4.1(b), the size and
composition of the Board may thereafter be changed as permitted by and in
accordance with applicable law and the Surviving Corporation Charter and the
By-Laws of the Surviving Corporation; provided, however, that
none of TD or its Affiliates may vote its shares, execute a written consent as
a stockholder or otherwise act to remove, or fail to re-elect, any person
serving as a director of Banknorth immediately prior to the Effective Time who
becomes a Class A Director immediately following the Effective Time, prior to
the date that such director would have been required to stand for re-election
of Banknorth measured as of the date hereof.

          (b) Following the Closing, (i) the Board shall include the Designated
Independent Directors, (ii) the present Chief Executive Officer of the Company
shall continue to serve as Chairman and a Director of the Company as long as he
is the Chief Executive Officer of the Company and (iii) the number of Class B
Directors serving at any time shall be as designated
from time to time by the holder of the Class B Common Stock, subject to
Section 4.9(b) and provided that the number of Class B Directors shall not
exceed the sum of (x) one plus (y) the total number of Class A Directors then
in office. Each Designated Independent Director shall remain in office until
his or her successor as Designated Independent Director has been duly nominated
and elected or appointed as a Director. Upon the resignation, retirement or
other removal from office of any Designated Independent Director, the remaining
Designated Independent Directors (or, if no Designated Independent Directors
are then in office, a majority of the Independent Directors) shall as promptly
as practicable fill such vacancy either by designating and nominating a new
candidate (who must meet the requirements of an Independent Director) to fill
such office or by designating another Independent Director then in office as a
Designated Independent Director, subject in each case to the consent of a
majority of the Directors on the Nominating Committee, which (subject to the
exercise of their fiduciary duties) shall not be unreasonably withheld.
Nominations for election or reelection of a Class A Director in connection with
any meeting held for the purpose of electing Class A Directors shall be made by
a majority of the Designated Independent Directors, subject to the consent of a
majority of the Directors then serving on the Nominating Committee, which
(subject to the exercise of their fiduciary duties) shall not be unreasonably
withheld).

          Section 4.2. Vote Required for Board Action; Board Quorum. (a)
Any determination or other action of or by the Board (other than action by
unanimous written consent in lieu of a meeting) shall require the affirmative
vote or consent, at a meeting at which a quorum is present, of a majority of
directors present at such meeting, including a majority of the Class B
Directors present at such meeting.

          (b) A quorum for any meeting of the Board shall require the presence of
(i) a majority of the total number of authorized directors then constituting
the entire Board and (ii) a majority of the Class B Directors then in office.

          (c) TD shall, and shall cause each of its Affiliates who hold Voting
Securities to, be present in person or represented by proxy at all meetings of
securityholders of the Company to the extent necessary so that all Voting
Securities Beneficially Owned by TD and its Affiliates

17

 

shall
be counted as present for the purpose of determining the presence of a quorum at such
meeting.

          Section 4.3. Committees. To the extent permitted by applicable
laws, rules and regulations (including any requirements under the Exchange Act
or the rules of the New York Stock Exchange or any other applicable securities
exchange on which the Common Stock is then listed) and except as otherwise
determined by the Board (in accordance with Section 4.2) or as provided in
Section 4.3(d) and subject to Section 4.9(b), each committee of the Board shall
consist of a majority of Class B Directors and not fewer than two Class A
Directors. All decisions of such committees shall require the affirmative vote
of a majority of the Directors then serving on such committee.

          (b) To the extent that no Class B Director is permitted to serve on a
particular committee under applicable laws, rules and regulations (including
any requirements under the Exchange Act or the rules of the New York Stock Exchange or any other
applicable securities exchange on which the Common Stock is then listed), the
Company shall take all necessary action to permit at least one Class B Director
to attend each meeting of such committee as a non-voting observer, in each case
to the extent permitted by such applicable laws, rules and regulations.

          (c) The Nominating Committee of the Board shall consist of four Class B
Directors and three of the Designated Independent Directors (selected by
majority vote of all the Designated Independent Directors from among their
number), each of whom shall meet the requirements of any applicable laws, rules
and regulations (including any requirements under the Exchange Act or the rules
of the New York Stock Exchange or any other applicable securities exchange on
which the Common Stock is then listed). All decisions of the Nominating
Committee shall require the affirmative vote of a majority of the Directors
then serving on such committee.

          (d) The Designated Independent Directors Committee of the Board shall be
comprised solely of all of the Designated Independent Directors.
Notwithstanding anything to the contrary contained herein, any action or
determination of or by the Designated Independent Directors may be exercised by
the Designated Independent Directors Committee.

          Section 4.4. Certificate of Incorporation and Bylaws to be
Consistent. The Board shall take or cause to be taken all lawful action
necessary or appropriate to ensure that at all times the Certificate of
Incorporation and the Bylaws of the Company contain provisions consistent with
the terms of this Agreement (including without limitation this Article IV) and
none of the Certificate of Incorporation or the Bylaws of the Company or any of
the corresponding constituent documents of the Company’s Subsidiaries contain
any provisions inconsistent therewith or which would in any way nullify or
impair the terms of this Agreement or the rights of the Company or of TD and
its Affiliates hereunder. None of the Company, the Board, any committee
thereof or TD or any of its Affiliates shall take or cause to be taken any
action inconsistent with the terms of this Agreement (including without
limitation this Article IV) or TD’s or the Company’s rights hereunder. Without
limiting the generality of the foregoing, any stockholders’ rights plan or
other anti-takeover measure adopted by the Company shall exclude TD and its
Affiliates from its operation in all respects, and shall not impair in any

18

 

respect the rights of TD or any of its Affiliates hereunder, including their
rights under Section 3.2.

          Section 4.5. Information Rights. The Company acknowledges that
TD’s investment in the Company pursuant to the Merger Agreement is material and
strategic to TD. Accordingly, the Company shall provide TD, on an ongoing and
current basis, such access to and information with respect to the Company’s
business, operations, plans and prospects as TD may from time to time
reasonably determine it requires in order to appropriately manage and evaluate
its investment in the Company.

          (b) Without limiting the generality of the foregoing, as soon as
reasonably practicable following the end of each fiscal quarter and fiscal year
of the Company, the Company shall furnish to TD the consolidated and
consolidating financial statements of the Company (including providing draft
statements as such statements become available and, with respect to fiscal
years, audit reports as such reports become available), together with such
supporting detailed information as TD may reasonably request to enable it to
prepare its own consolidated financial statements. In addition, the Company
shall furnish to TD, promptly after the end of each calendar month, copies of
internal management financial reports regarding the Company’s financial results
and operations, containing such information as TD may reasonably request from
time to time.

          (c) During any Suspension and following a Permanent Suspension:

     (i) Subject to the requirements of law, TD shall keep confidential,
and shall cause its representatives to keep confidential, all information
and documents obtained pursuant to this Section 4.5 unless such
information (w) is or becomes publicly available other than as a result
of a breach of this Section 4.5(c) by TD or its representatives; (x) was
within the possession of TD or any of its representatives prior to its
being furnished to TD by or on behalf of Banknorth, provided that the
source of such information was not known by TD to be bound by a
confidentiality agreement with, or other contractual or legal obligation
of confidentiality to, Banknorth with respect to such information; (y) is
or becomes available to TD or any of its representatives on a
non-confidential basis from a source other than Banknorth or any of its
Representatives; provided that such source was not known to TD to
be bound by a confidentiality agreement with, or other contractual or
legal obligation of confidentiality to, Banknorth with respect to such
information; or (z) is independently developed by or on behalf of TD
without violating any of its obligations under this Section 4.5(c).

     (ii) In the event TD believes that it is legally required to
disclose any information or documents contemplated by this Section
4.5(c), it shall to the extent possible under the circumstances provide
reasonable prior notice to the Company so that the Company may, at its
own expense, seek a protective order or otherwise take reasonable steps
to protect the confidentiality of such information.

     (iii) Notwithstanding the foregoing, TD may disclose any information
or documents contemplated by this Section 4.5(c) in a filing with a
Governmental Entity to

19

 

the extent required by applicable law, provided
that it shall to the extent practicable under the circumstances provide
prior notice to the Company.

     (iv) The rights of TD and the obligations of the Company hereunder
shall be subject to applicable laws relating to the exchange of
information and other applicable laws. The provisions of this Section
4.5(c) shall survive any termination of this Agreement.

          (d) Subject to applicable law, the Company will, and will cause each of
its Subsidiaries to, make available to representatives of the Office of the
Superintendent of Financial Institutions (Canada) and any other regulatory
agencies with authority over TD, such of its books, records and personnel, and provide access to such of its offices
and other facilities, as such representatives may from time to time request,
and will comply promptly and fully with any request for information that such
representatives may make from time to time.

          Section 4.6. Trade Name. The Company and its Subsidiaries shall
use the trade name “TD Banknorth” as their brand and marketing name for general
application, subject to such limitations and variations, if any, as TD and the
Company may from time to time agree upon; provided, however, that
this provision shall terminate (subject to a reasonable transition period as
appropriate to avoid undue disruption of the Company’s business without
impairing TD’s intellectual property rights in its brand) upon written request
by either the Company or TD to the other following a Permanent Suspension.
Such use shall be subject to such customary restrictions, limitations and
regulations as TD shall establish from time to time.

          Section 4.7. Corporate Opportunities.

          (a) In recognition of the fact that the Company and TD currently engage
in, and may in the future engage in, the same or similar activities or lines of
business and have an interest in the same areas and types of corporate
opportunities (subject, in each such case, to the provisions of Section 4.10),
and in recognition of the benefits to be derived by the Company through its
continued contractual, corporate and business relations with TD (including
possible service of officers and directors of TD as officers and directors of
the Company), the provisions of this Section 4.7 are set forth to regulate and
define the conduct of certain affairs of the Company as they may involve TD and
its officers and directors, and the powers, rights, duties and liabilities of
the Company and its officers, directors and stockholders in connection
therewith. In furtherance of the foregoing (but without limiting the
provisions of Section 4.10), the Company renounces any interest or expectancy
in, or in being offered the opportunity to participate in, any corporate
opportunity not allocated to it pursuant to Section 4.7 to the fullest extent
permitted by Section 122(17) of the DGCL (or any successor provision), and TD
renounces any interest or expectancy in, or in being offered the opportunity to
participate in, any corporate opportunity presented to a director or officer of
TD and allocated to the Company pursuant to Section 4.7 to the fullest extent
permitted by applicable law.

          (b) Subject to Section 4.10, TD shall have no duty to refrain from
engaging in the same or similar activities or lines of business as the Company,
and neither TD nor any officer or director thereof (except as provided in
Section 4.7(c)) shall be liable to the Company or its stockholders for breach
of any fiduciary duty by reason of any such activities of TD. In the

20

 

event
that TD acquires knowledge of a potential transaction or matter which may be a
corporate opportunity for both TD and the Company, TD shall have no duty to
communicate or offer such corporate opportunity to the Company and shall not be
liable to the Company or its stockholders for breach of any fiduciary duty as a
stockholder of the Company by reason of the fact that TD pursues or acquires
such corporate opportunity for itself, directs such corporate opportunity to
another Person, or does not communicate information regarding such corporate
opportunity to the Company.

          (c) In the event that a director or officer of the Company who is also a
director or officer of TD acquires knowledge of a potential transaction or
matter which may be a corporate opportunity for both the Company and TD, such
director or officer of the Company shall have fully satisfied and fulfilled the
fiduciary duty of such director or officer to the Company and its stockholders
with respect to such corporate opportunity if such director or officer acts in
a manner consistent with the following policy:

     (i) A corporate opportunity offered to any Person who is an officer
of the Company, and who is also a director but not an officer of TD,
shall belong to the Company;

     (ii) A corporate opportunity offered to any Person who is a director
but not an officer of the Company, and who is also a director or officer
of TD, shall belong to the Company if such opportunity is expressly
offered to such Person in writing solely in his or her capacity as a
director of the Company, and otherwise shall belong to TD; and

     (iii) A corporate opportunity offered to any Person who is an
officer of both the Company and TD (other than the Chief Executive
Officer of the Company if at the relevant time he is also an officer of
TD, with respect to whom opportunities shall be subject to paragraph (i)
above except if such opportunity is expressly offered to such individual
in writing solely in his or her capacity as an officer of TD) shall
belong to the Company if such opportunity is expressly offered to such
Person in writing solely in his or her capacity as an officer of the
Company, and otherwise shall belong to TD.

     (d) For purposes of this Section 4.7 only:

     (i) A director of the Company who is Chairman of the Board of
Directors of the Company or of a committee thereof shall not be deemed to
be an officer of the Company by reason of holding such position (without
regard to whether such position is deemed an office of the Company under
the By-Laws of the Company), unless such Person is a full-time employee
of the Company; and

     (ii) (A) The term “Company” shall mean the Company and its
Subsidiaries, and (B) the term “TD” shall mean TD and its Subsidiaries
(other than the Company and its Subsidiaries).

          Section 4.8. NYSE Listing. Except following the completion of a
Going Private Transaction conducted in accordance with Section 2.2 or with the
prior consent of a majority of the Designated Independent Directors, TD will
not take or cause the Company to take any action to delist, or that would
reasonably be expected to result in the delisting of, the

21

 

Common Stock from the
New York Stock Exchange; provided that nothing in this Section 4.8 shall (i)
prohibit any such action if such delisting is undertaken, in consultation with
the Designated Independent Directors, in connection with the establishment of
the quotation of the Common Stock on the NASDAQ National Market or (ii) require
TD or any of its Affiliates to take any affirmative action to prevent the
Common Stock from being delisted by the New York Stock Exchange in the event
that the Common Stock ceases to meet the applicable New York Stock
Exchange listing standards.

          Section 4.9. Suspension, Termination of Certain Provisions. The
provisions of Sections 4.2 and 4.3 shall be temporarily suspended in the event
that TD and its Affiliates Beneficially Own Voting Securities representing in
the aggregate less than 50% of the Total Voting Power as a result of (i)
Transfers of Voting Securities by TD and its Affiliates (“Transfer
Events”) and such minority ownership position continues for at least 30
consecutive days or (ii) dilution or other actions or events other than
Transfer Events, provided that no such suspension shall occur as a result of
this clause (ii) if TD and its Affiliates (x) do not at any time Beneficially
Own Voting Securities representing in the aggregate less than 35% of the Total
Voting Power and do not after ceasing to Beneficially Own Voting Securities
representing at least 50% of the Total Voting Power Transfer any Voting
Securities other than to an Affiliate unless within 30 days thereafter TD and
its Affiliates repurchase an amount of Voting Securities at least equal to the
amount so Transferred, (y) reacquire, at any time prior to the first
anniversary of a Measurement Date, Beneficial Ownership of Voting Securities
representing at least 50% of the Shortfall Amount as of such Measurement Date,
and (z) prior to the second anniversary of the most recent Measurement Date,
regain Beneficial Ownership of Voting Securities representing at least a
majority of the Total Voting Power.

          A “Measurement Date” shall mean (i) the date on which the Voting
Securities Beneficially Owned by TD and its Affiliates first represent less
than 50% of the Total Voting Power as a result of dilution or other actions or
events other than Transfer Events, and (ii) any subsequent date on which
another event occurs (other than any Transfer of Voting Securities by TD or an
Affiliate of TD) that further decreases such Beneficial Ownership by at least
2% of Total Voting Power since the immediately preceding Measurement Date.

          “Shortfall Amount” shall mean, as of any Measurement Date, the
difference between (i) 50% and (ii) the Total Voting Power (expressed as a
percentage) represented by the Voting Securities Beneficially Owned by TD and
its Affiliates as of such Measurement Date.

          (b) During any suspension of Sections 4.2 and 4.3 pursuant to Section
4.9(a) (a “Suspension”) or following a Permanent Suspension pursuant to
Section 4.9(d):

     (i) the holder of the Class B Common Stock shall have the right to
nominate and elect that number of Class B Directors, rounded to the
nearest whole number, as would represent the same percentage of the total
number of authorized directors then constituting the entire Board of
Directors (after giving effect to the election of such Class B Directors)
as the percentage of the Total Voting Power represented by the Voting
Securities Beneficially Owned by TD and its Affiliates as of the record
date for such election; provided that in no event shall the number
of Class B Directors nominated and

22

 

elected by TD pursuant to this
provision constitute (x) 50% or more of the total number of Directors
then in office, or (y) less than one Director, and

     (ii) to the extent permitted by applicable laws, rules and
regulations (including any requirements under the Exchange Act or the
rules of the New York Stock Exchange or any other applicable securities
exchange on which the Common Stock is then listed), Class B Directors
designated by TD for such committee appointment shall be nominated to
serve on each committee of the Board so that after such appointment(s),
the ratio of such designated Class B Directors who are members of such
committee to the total number of members of such committee is not less
(subject to rounding to the nearest whole number) than the ratio of the
number of Class B Directors entitled to be designated by TD pursuant to
clause (i) above to the total number of authorized Directors then
constituting the entire Board, provided that in no event shall the number
of Directors that TD is so entitled to designate for such committee
appointment be (x) 50% or more of the Directors serving on such committee
or (y) less than one.

          In connection with any Suspension or Permanent Suspension, TD shall
procure the immediate resignations of such Directors from the Board of
Directors and the relevant committees thereof as is necessary to achieve the
representation contemplated by this Section 4.9(b). TD agrees that it will
not, in its capacity as a stockholder of the Company, take any actions which
are inconsistent with the provisions of this Section 4.9(b). During any
Suspension or Permanent Suspension, TD shall not nominate any Directors for
election other than the number of Class B Directors it is entitled to designate
pursuant to clause (i) of this Section 4.9(b).

          (c) Subject to paragraph (d) below, if at any time during a Suspension, TD
and its Affiliates Beneficially Own Voting Securities representing in the
aggregate 50% or more of the Total Voting Power, such Suspension shall
automatically terminate and the provisions of Sections 4.2 and 4.3 shall
automatically be reinstated. A subsequent decrease in TD’s and its Affiliates’
Beneficial Ownership of Voting Securities below 50% of the Total Voting Power
shall again trigger the provisions of this Section 4.9 in accordance with its
terms, in which event new measurement periods pursuant to clauses (i) and
(ii)(y) and (z) of paragraph (a) and pursuant to paragraph (d) shall commence;
provided that if within six months following any such termination of a
Suspension that had resulted from Transfer Events, another Suspension resulting
from Transfer Events occurs, such new measurement periods with respect to such
subsequent Suspension shall not commence and such subsequent Suspension shall
be deemed, for purposes of Section 4.9(d), to be a continuation of the prior
Suspension.

          (d) If a Suspension shall have occurred and be continuing for 12
consecutive months (a “Permanent Suspension”), the provisions of
Sections 4.2 and 4.3 (and the corresponding sections of the Surviving
Corporation Charter) shall thereafter terminate.

          Section 4.10. Acquisition of Competing Entities. Neither TD nor
its Affiliates shall acquire control of (as such term is defined in 12 U.S.C. §
1841(a)(2) or any successor provision) a Retail Bank except pursuant to an
Incidental Acquisition. If TD or any of its Affiliates does so acquire control
of a Retail Bank in connection with an Incidental Acquisition, TD or its
applicable Affiliate shall, within six months of the date of such acquisition
and at its

23

 

sole election, (i) initiate good faith discussions regarding the
contribution of the acquired Retail Bank to the Company on terms mutually
agreed to by TD or such Affiliate and a majority of the Designated Independent Directors,
who shall have the authority to retain an Independent Investment Banking Firm
and outside legal counsel in connection therewith, (ii) initiate good faith
discussions regarding a Going Private Transaction in accordance with the
then-applicable provisions of Section 2.2 and, if TD or such Affiliate and a
majority of the Designated Independent Directors approve the terms of such a
Going Private Transaction or, to the extent such approval is not required under
the then-applicable provisions of Section 2.2, TD or such Affiliate otherwise
complies with its obligations under Section 2.2 and thereafter elects to
commence a Going Private Transaction, use reasonable best efforts to consummate
such Going Private Transaction as promptly as practicable thereafter or (iii)
commence a process to dispose of the acquired Retail Bank as promptly as
commercially practicable, but in any event TD or its Affiliate shall enter into
a definitive agreement with respect to such disposition within two years after
the date of consummation of the acquisition of such Retail Bank. In the event
that TD or its applicable Affiliate elects to comply with clause (i) or clause
(ii) of this Section 4.10 but (x) is unable to agree on terms with respect to a
contribution or a Going Private Transaction, as the case may be, with a
majority of the Designated Independent Directors (if, in the case of compliance
with clause (ii) of this Section 4.10, the approval of such a majority is
required pursuant to the then applicable provisions of Section 2.2), or (y)
such contribution or Going Private Transaction is not consummated within 9
months of the commencement thereof (whether because the Unaffiliated
Stockholder Approval was not received, necessary regulatory approvals were not
received or for any other reason not within the control of TD and its
Affiliates), TD or such Affiliate shall thereafter comply with clause (iii) of
this Section 4.10, provided that if a contemplated contribution or Going
Private Transaction is not consummated within 9 months of the commencement
thereof as contemplated by clause (y), the applicable time period within which
TD must enter into a definitive agreement with respect to such disposition
shall be the later of (1) two years after the consummation of the acquisition
of such Retail Bank and (2) six months after the termination of such attempted
contribution or Going Private Transaction.

ARTICLE V

MISCELLANEOUS

          Section 5.1. Conflicting Agreements. Each party represents and
warrants that it has not granted and is not a party to any proxy, voting trust
or other agreement that is inconsistent with or conflicts with any provision of
this Agreement.

          Section 5.2. Termination. Except as otherwise provided in this
Agreement, this Agreement and the rights and obligations of the parties
hereunder shall terminate upon the first date on which TD and its Affiliates
Beneficially Own either (i) Voting Securities representing less than 15% of the
Total Voting Power, or (ii) 90% or more of each class of Capital Stock of which
ownership would be required in order to effect a merger pursuant to Section 253
of the DGCL or any successor provision (acquired in compliance with the terms
of this Agreement). Nothing in this Section 5.2 shall be deemed to release any
party from any liability for any willful and material breach of this
Agreement occurring prior to the termination hereof or to impair the right
of any party to compel specific performance by any other party of its
obligations under this Agreement.

24

 

          Section 5.3. Ownership Information. For purposes of this
Agreement, all determinations of the amount of outstanding Voting Securities
shall be based on information set forth in the most recent quarterly or annual
report, and any current report subsequent thereto, filed by the Company with
the Commission, unless the Company shall have updated such information by
delivery of written notice to TD.

          (b) If at any time or from time to time the Company becomes aware of any
event that has caused, or which could reasonably be expected to cause, TD’s
Beneficial Ownership of Voting Securities to decrease below a majority of the
Total Voting Power, such as receipt of an option holder’s notice to exercise
such option(s), the Company shall promptly (but in no event more than five
Business Days thereafter) notify TD thereof.

          Section 5.4. Amendment and Waiver. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. Except as otherwise provided herein, no modification,
amendment or waiver of any provision of this Agreement, and no giving of any
consent provided for hereunder, shall be effective unless such modification,
amendment, waiver or consent is approved by a majority of the Designated
Independent Directors (and in any event at least one Designated Independent
Director). The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.

          Section 5.5. Severability. If any provision of this Agreement
shall be declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.

          Section 5.6. Entire Agreement. Except as otherwise expressly set
forth herein, this Agreement and the Merger Agreement, together with the
several agreements and other documents and instruments referred to herein or
therein or annexed hereto or thereto, embody the complete agreement and
understanding among the parties hereto with respect to the subject matter
hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
to the subject matter hereof in any way. Without limiting the generality of
the foregoing, to the extent that any of the terms hereof are inconsistent with
the rights or obligations of TD under any other agreement with the Company, the
terms of this Agreement shall govern.

          Section 5.7. Successors and Assigns. Neither this Agreement nor any of the rights or obligations of any
party under this Agreement shall be assigned, in whole or in part (except by
operation of law pursuant to a merger), by any party without the prior written
consent of the other party (approved, in the case of the Company, by a majority
of the Designated Independent Directors), provided that TD may assign its
rights and obligations hereunder (in whole or in part) to an Affiliate of TD
that agrees in writing with the Company to be bound by this Agreement as fully
as if it were an initial signatory hereto, and any such transferee may
thereafter make corresponding assignments in accordance with this proviso.
Subject to the foregoing, this Agreement shall bind and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
permitted assigns.

25

 

          Section 5.8. Counterparts. This Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.

          Section 5.9. Remedies. Each party hereto acknowledges that
monetary damages would not be an adequate remedy in the event that each and
every one of the covenants or agreements in this Agreement are not performed in
accordance with their terms, and it is therefore agreed that, in addition to
and without limiting any other remedy or right it may have, the non-breaching
party will have the right to an injunction, temporary restraining order or
other equitable relief in any court of competent jurisdiction enjoining any
such breach and enforcing specifically each and every one of the terms and
provisions hereof. Each party hereto agrees not to oppose the granting of such
relief in the event a court determines that such a breach has occurred, and to
waive any requirement for the securing or posting of any bond in connection
with such remedy.

          (b) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.

          Section 5.10. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (upon telephonic confirmation of receipt), on the first
Business Day following the date of dispatch if delivered by a recognized next
day courier service, or on the third Business Day following the date of mailing
if delivered by registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the
party to receive such notice.

	 	 	 	 	 
	 	 	If to the Company:
	 
	 	 	 	 
	 	 	Banknorth Group, Inc.
	 	 	P.O. Box 9540
	 	 	Two Portland Square
	 	 	Portland, Maine 04112-9540
	 	 	Attention: William J. Ryan
	

	 	 	 	Chairman, President and
	

	 	 	 	Chief Executive Officer
	 	 	Fax: (207) 761-8587
	 
	 	 	 	 
	 	 	with a copy (which shall not constitute notice) to:
	 
	 	 	 	 
	 	 	Elias, Matz, Tiernan & Herrick L.L.P.
	 	 	12th Floor, The Walker Building
	 	 	734 15th Street, N.W.
	 	 	Washington, D.C. 20005
	 	 	Attention: Gerard L. Hawkins, Esq.
	 	 	Fax: (202) 347-2172

26

 

	 	 	 	 	 
	 	 	and
	 
	 	 	 	 
	 	 	Wachtell, Lipton, Rosen & Katz
	 	 	51 West 52nd Street
	 	 	New York, New York 10019
	 	 	Attn: Edward D. Herlihy, Esq.
	

	 	 	 	Lawrence S. Makow, Esq.
	 	 	Fax: (212) 403-2000
	 
	 	 	 	 
	 	 	If to TD:
	 
	 	 	 	 
	 	 	The Toronto-Dominion Bank
	 	 	Toronto-Dominion Tower
	 	 	66 Wellington Street West
	 	 	Toronto, Ontario M5K IA2
	 	 	Attention: General Counsel
	 	 	Fax: (416) 308-1943
	 
	 	 	 	 
	 	 	with a copy (which shall not constitute notice) to:
	 
	 	 	 	 
	 	 	Simpson Thacher & Bartlett LLP
	 	 	425 Lexington Avenue
	 	 	New York, New York 10017
	 	 	Attention: Lee Meyerson
	 	 	Fax: (212) 455-2502

          Section 5.11.Governing Law; Consent to Jurisdiction . This
Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without giving effect to the principles of
conflicts of law. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction in the Court
of Chancery of the State of Delaware or any court of the United States located
in the State of Delaware, for any action, proceeding or investigation in any
court or before any governmental authority (“Litigation”) arising out of
or relating to this Agreement and the transactions contemplated hereby. Each
of the parties hereto hereby irrevocably and unconditionally waives, and agrees
not to assert, by way of motion, as a defense, counterclaim or otherwise, in
any such Litigation, the defense of sovereign immunity, any claim that it is
not personally subject to the jurisdiction of the aforesaid courts for any
reason other than the failure to serve process in accordance with this Section
5.11, that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise), and to the fullest extent
permitted by applicable law, that the Litigation in any such court is brought
in an inconvenient forum, that the venue of such Litigation is improper, or
that this Agreement, or the subject matter hereof, may not be enforced in or by
such courts and further irrevocably waives, to the fullest extent permitted by
applicable law, the benefit of any defense that would hinder, fetter or delay
the levy, execution or collection of any amount to which the party is entitled
pursuant to the final judgment of any court having jurisdiction. Each of the
parties irrevocably and unconditionally waives, to the fullest extent permitted
by

27

 

applicable law, any and all rights to trial by jury in connection with any
Litigation arising out of or relating to this Agreement or the transactions
contemplated hereby.

          (b) TD hereby irrevocably designates its New York Branch located at 31
West 52nd Street, New York, NY 10019 (in such capacity, the “TD Process
Agent”) its designee, appointee and agent to receive, for and on its
behalf, service of process in such jurisdiction in any Litigation arising out
of or relating to this Agreement and such service shall be deemed complete upon
delivery thereof to the Process Agent; provided that in the case of any
such service upon the TD Process Agent, the party effecting such service shall
also deliver a copy thereof to TD in the manner provided in Section 5.10. Each
of the parties further irrevocably consents to the service of process out of
any of the aforementioned courts in any such Litigation by the mailing of
copies thereof by registered mail, postage prepaid, to such party at its
address set forth in this Agreement, such service of process to be effective
upon acknowledgment of receipt of such registered mail.

          (c) Each of the parties expressly acknowledges that the foregoing waiver
is intended to be irrevocable under the laws of the State of Delaware and of
the United States of America; provided that consent by TD and Banknorth
to jurisdiction and service contained in this Section 5.11 is solely for the
purpose referred to in this Section 5.11 and shall not be deemed to be a
general submission to said courts or in the State of Delaware other than for
such purpose. If the TD Process Agent shall cease to act as such or to exist,
TD covenants that it shall appoint without delay another such agent reasonably
satisfactory to Banknorth.

          Section 5.12. Interpretation . The table of contents
and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”.

          Section 5.13. Effectiveness. This Agreement shall become effective
upon the Closing and prior thereto shall be of no force or effect. If the
Merger Agreement shall be terminated in accordance with its terms prior to the
Closing, this Agreement shall automatically be of no force or effect.

28

 

          IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the date first written above.

	 	 	 	 	 
	 	BANKNORTH GROUP, INC.

 	 
	 	By:  	/s/ William J. Ryan
 	 
	 	 	Name:  	William J. Ryan 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	BERLIN DELAWARE INC.

 	 
	 	By:  	/s/ William J. Ryan
 	 
	 	 	Name:  	William J. Ryan 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	THE TORONTO-DOMINION BANK

 	 
	 	By:  	/s/ W. Edmund Clark
 	 
	 	 	Name:  	W. Edmund Clark 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

29

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