EXHIBIT 10(b)
BANKBOSTON CORPORATION
1986 Stock Option Plan
(As amended through October 23, 1997)
1. Purpose.
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The purpose of the 1986 Stock Option Plan is to enable BankBoston
Corporation to provide a special incentive to a limited number of key officers
of the Corporation, the Bank and its other Subsidiaries who are in a position to
have a significant effect upon the Corporation's business and earnings. In
order to accomplish this purpose, the Plan authorizes the grant to such officers
of options to purchase Common Stock and, in the case of the grant of
Nonstatutory Stock Options (as hereinafter defined), the provision of cash
payments as described in Section 6 and Section 10. Increased ownership of
Common Stock will provide such key officers with an incentive to further the
long-term interests of the Corporation.
2. Definitions.
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As used herein, the following words or terms have the meanings set forth
below. The masculine gender is used throughout the Plan but is intended to
apply to members of both sexes.
2.1. "Bank" means BankBoston, N.A., a national banking association.
2.2. "Board of Directors" means the Board of Directors of the Corporation.
2.3. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.
2.4. "Committee" means the Compensation Committee of the Board of
Directors.
2.5. "Common Stock" means the Common Stock of the Corporation.
2.6. "Corporation" means BankBoston Corporation, a corporation established
under the laws of the Commonwealth of Massachusetts.
2.7. "Fair Market Value", in the case of a share of Common Stock on a
particular day, means the closing price of the Common Stock for that day as
reported in the "NYSE-Composite Transactions" section of the Eastern Edition of
The Wall Street Journal, or if no prices are quoted for that day, for the
last preceding day on which such prices of Common Stock are so quoted. In the
event "NYSE-Composite Transactions" cease to be reported, the Committee shall
adopt some other appropriate method for determining such Fair Market Value.
2.8. "Guidelines" means the General Guidelines for interpreting and
administering this Plan as approved from time to time by the Committee and
adopted by the Board of Directors.
2.9. "Incentive Stock Option" means a stock option which satisfies the
requirements of section 422A(b) of the Code.
2.10. "Nonstatutory Stock Option" means a stock option which does not
qualify as an Incentive Stock Option.
2.11. "Participant" means an individual holding a stock option or stock
options granted to him under the Plan.
2.12. "Performance-Based Exception" means the performance-based exception
from the deductibility limits set forth in Section 162(m) of the Code and the
regulations thereunder.
2.13. "Plan" means the 1986 Stock Option Plan set forth herein.
2.14. "Retirement" means termination of employment with the Corporation or
any Subsidiary if such termination of employment constitutes normal retirement,
early retirement, disability retirement or other retirement as provided for at
the time of such termination of employment under the applicable retirement
program then maintained by the Corporation or any Subsidiary, provided that the
Participant does not continue in the employment of the Corporation or any
Subsidiary.
2.15. "Subsidiary" means a corporation or other entity in which the
Corporation owns, directly or indirectly or has the power to vote or cause to be
voted, stock or other ownership interests representing more than 50 percent or
of the total combined voting power.
2.16. "Tax Offset Payment" means a payment provided under Section 6 and
Section 10 of this Plan in respect of the exercise of a Nonstatutory Stock
Option.
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3. Administration.
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3.1. The Plan shall be administered by the Committee. The members of the
Committee shall not include any person who is at the time he exercises
discretion in administering the Plan (or has been at any time within one year
prior thereto) eligible to participate in the Plan or in any other plan of the
Corporation or any of its affiliates entitling participants therein to acquire
stock, stock options or stock appreciation rights of the Corporation or any of
its affiliates (as defined for purposes of Rule 16b-3 issued by the Securities
and Exchange Commission).
3.2. Subject to the provisions set forth herein, the Committee shall have
full authority to determine the provisions of options granted under the Plan and
the amount of Tax Offset Payments made in connection therewith, to interpret the
terms of the Plan and of options granted under the Plan, to adopt, amend and
rescind rules and guidelines for the administration of the Plan and for its own
acts and proceedings and to decide all questions and settle all controversies
and disputes which may arise in connection with the Plan.
3.3. Notwithstanding Section 3.2 and subject to the provisions set forth
herein, the Board of Directors shall approve or ratify options granted under the
Plan to any executive officer who is also a director of the Corporation and the
amount of Tax Offset Payments made in connection therewith.
3.4. The decision of the Committee on any matter as to it is given
authority under subsections 3.2 above shall be final and binding on all persons
concerned.
3.5. Nothing in the Plan shall be deemed to give any officer or employee,
or his legal representatives or assigns, any right to participate in the Plan,
except to such extent, if any, as the Committee may have determined or approved
pursuant to the provisions of the Plan.
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4. Shares Subject to the Plan.
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4.1. The maximum number of shares of Common Stock which may be delivered
upon the exercise of options granted under the Plan shall be 600,000, subject to
adjustment in accordance with the provisions of Section 11.
4.2. If any option granted under the Plan terminates without having been
exercised in full (including an option which terminates by agreement between the
Corporation and the Participant), the number of shares of Common Stock as to
which such option has not been exercised prior to termination shall be available
for future grants within the limits set forth in subsection 4.1.
4.3. Shares of Common Stock delivered upon the exercise of options shall
consist of shares of authorized and unissued Common Stock, except that the Board
of Directors may from time to time in its discretion determine in any case that
the shares to be so delivered shall consist of shares of authorized and issued
Common Stock reacquired by the Corporation and held in its Treasury. No
fractional shares of Common Stock shall be delivered upon the exercise of an
option.
5. Eligibility for Options.
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Employees eligible to receive options under the Plan shall be those
officers of the Corporation, the Bank and the Corporation's other Subsidiaries
who, in the opinion of the Committee, are in a position to have a significant
effect upon the Corporation's business and consolidated earnings.
6. Tax Offset Payments.
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In the case of a Nonstatutory Stock Option, the Committee may, in
accordance with procedures established by it, provide for payment in cash, in
connection with the exercise of the option, of an amount measured by reference
to the difference between the option exercise price and the Fair Market Value of
the Common Stock subject to the option determined at the time of exercise, as
more fully described in Section 10.
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7. Eligibility of Tax Offset Payments.
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Eligibility to receive Tax Offset Payments under the Plan shall be limited
to (i) officers to whom Nonstatutory Stock Options are or have been granted
under this Plan and (ii) the person or persons entitled to exercise such options
after the death of such officers.
8. Grant of Options and Associated Tax Offset Payments.
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8.1. From time to time while the Plan is in effect the Committee may, in
its absolute discretion, select from among the persons eligible to receive
options (including persons to whom options were previously granted) those
persons to whom options are to be granted. It is contemplated that, in general,
options will be granted not more than once in a calendar year and that, in
general, provisions for Tax Offset Payments in respect of the exercise of
Nonstatutory Stock Options if made at all, will be made at the time such options
are granted. However, the Committee may, in its discretion, determine that
because of special circumstances options or rights of Tax Offset Payments are to
be granted, at any time fixed by the Committee, to one or more persons eligible
to receive options or Tax Offset Payments under the Plan.
8.2. The Committee shall, in its absolute discretion, determine the number
of shares of Common Stock to be subject to each option granted by it under the
Plan and, subject to the limitations of subsection 10.1, the calculation to be
made under Section 10 in determining the amount of any Tax Offset Payment made
under the Plan.
8.3. No option may be granted under the Plan after January 23, 1996, but
options theretofore granted may extend beyond that date. No right to a Tax
Offset Payment may be granted later than the date on which the option to which
the Tax Offset Payment pertains is exercised. The right to a Tax Offset Payment
shall expire upon the expiration or forfeiture of the related option.
9. Provisions of Options.
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9.1 Incentive Stock Options or Nonstatutory Stock Options. Options
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granted under the Plan may be either Incentive Stock Options or Nonstatutory
Stock Options, as the Committee shall determine at the time of each grant of
options hereunder. It is contemplated that the options granted under the Plan
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will to the extent possible, but subject to the discretion of the Committee,
qualify as Incentive Stock Options.
9.2. Stock Option Certificates or Agreements. Options granted under the
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Plan shall be evidenced by certificates or agreements in such form as the
Committee shall from time to time approve. Such certificates or agreements
shall comply with the terms and conditions of the Plan and may contain such
other provisions not inconsistent with the terms and conditions of the Plan as
the Committee shall deem advisable. In the case of options intended to qualify
as Incentive Stock Options, the certificates or agreements shall contain such
provisions relating to exercise and other matters as are required of Incentive
Stock Options under the Code. Where provision is made for a Tax Offset Payment
upon exercise of an option, the option certificate or agreement shall also
contain such provisions pertaining to such Tax Offset Payment, not inconsistent
with the terms and conditions of the Plan, as the Committee shall deem
advisable.
9.3. Terms and Conditions. All options granted under the Plan shall be
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subject to the following terms and conditions to the extent applicable and to
such other terms and conditions not inconsistent therewith as the Committee
shall determine.
9.3.1. Option Price. The option price per share of Common Stock, with
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respect to each option, shall not be less than the Fair Market Value per
share at the time the option is granted.
9.3.2. Number of Shares of Common Stock Subject to Incentive Stock
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Options. In the case of an option intended to qualify as an Incentive
Stock Option, the aggregate Fair Market Value (determined as of the time
the option is granted) of the stock with respect to which Incentive Stock
Options granted after December 31, 1986 are exercisable for the first time
by the Participant during any calendar year (under all plans of the
Participant's employer corporation and its parent and subsidiary
corporations) shall not exceed $100,000. The provisions of this Section
9.3.2 shall be construed and applied in accordance with Section 422A (b)(7)
of the Code and the regulations, if any, promulgated thereunder.
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9.3.3. Period of Options. An option shall be exercisable during such
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period of time as the Committee may specify (subject to subsection 9.4
below), but not after the expiration of ten years from the date the option
is granted.
9.3.4. Exercise of Options.
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9.3.4.1. Each option shall be made exercisable at such time or
times as the Committee shall determine, but in all events, subject to
the provisions of Section 9.3.2. It is contemplated that the Committee
will normally provide that the right to exercise an option will accrue
immediately with respect to 25 percent of the number of shares of
Common Stock subject to the option and that the right to exercise the
option with respect to the balance of the shares subject thereto will
accrue in substantially equal installments on the first three
anniversaries of the date of grant. However, the Committee may in any
case provide that the option will be exercisable immediately with
respect to all the shares of Common Stock subject to the option or
that the right to exercise the option will accrue in different
installments and at different times from those set forth above, if, in
the opinion of the Committee, such provisions are appropriate taking
into account the age of the Participant and other relevant
circumstances. In the case of an option made exercisable in
installments, the Committee may later determine to accelerate the time
at which one or more of such installments may be exercised.
9.3.4.2. Notwithstanding the provisions of paragraph 9.3.4.1, if
any person is entitled to receive a Tax Offset Payment in connection
with the exercise of a Nonstatutory Stock Option, the option shall not
be exercisable prior to the expiration of six months from the date on
which the right to such Tax Offset Payment was granted.
9.3.4.3. Any exercise of an option shall be in writing signed by
the proper person and delivered or mailed to the Secretary of the
Committee, accompanied by the option certificate or agreement and
payment in full for the number of shares in respect of which the
option is exercised.
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9.3.4.4. In the event an option is exercised by the executor or
administrator of a deceased Participant, or by the person or persons
to whom the option has been transferred by the Participant's will or
the applicable laws of descent and distribution, the Corporation shall
be under no obligation to deliver stock thereunder or make any Tax
Offset Payment in respect thereof unless and until the Corporation is
satisfied that the person or persons exercising the option is or are
the duly appointed executor or administrator of the deceased
Participant or the person or persons to whom the option has been
transferred by the Participant's will or by the applicable laws of
descent and distribution.
9.3.5. Payment for and Delivery of Stock. The shares of stock
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purchased on any exercise of an option granted hereunder shall be paid for
in full in cash or, if permitted by the Committee, in shares of
unencumbered Common Stock at the time of such exercise. A Participant shall
have the rights of a shareholder only as to stock actually issued to him.
9.3.6. Listing of Stock, Withholding and Other Legal Requirements.
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The Corporation shall not be obligated to deliver any stock until all
federal and state laws and regulations which the Corporation may deem
applicable have been complied with, nor, in the event the outstanding
Common Stock is at the time listed upon any stock exchange, until the stock
to be delivered has been listed or authorized to be added to the list upon
official notice of issuance to such exchange. Without limiting the
generality of the foregoing, the Committee shall require, on such terms as
it deems necessary, that the Participant pay to the Corporation, or make
other satisfactory provision for the payment of, any federal, state or
local taxes required by law to be withheld in respect of the exercise of
any option or the receipt of any Tax Offset Payment. In the Committee's
discretion, a Participant may elect to satisfy all or a portion of his or
her federal, state and local tax withholding requirements or liability, up
to the amount calculated by applying the Participant's maximum marginal tax
rate, by having shares of Common Stock withheld from the shares otherwise
issuable upon the exercise of an option, or by delivering to the
Corporation
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previously owned shares of Common Stock, valued at their Fair Market Value
on the date that withholding taxes are determined. In addition, if the
shares of stock subject to any option have not been registered in
accordance with the Securities Act of 1933, as amended, the Corporation may
require the person or persons who wishes or wish to exercise such option to
make such representation or agreement with respect to the sale of stock
acquired on exercise of the option as will be sufficient, in the opinion of
the Corporation's General Counsel, to avoid violation of said Act.
9.3.7. Non-transferability of Options. Subject to the provisions of
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this Section, (a) no option shall be transferable otherwise than by will,
by the laws of descent and distribution, or by operation of a "qualified
domestic relations order," as that term is defined in the Code, and (b)
during the lifetime of the Participant to whom an option has been granted,
rights under the option may be exercised only by the Participant, the
Participant's guardian or legal representative, or by the assignee of the
option under a "qualified domestic relations order." Notwithstanding the
foregoing, the Committee may provide for greater transferability in the
case of any option, including, without limitation, transfer to one or more
members of the Participant's family or to a partnership or trust
established for the benefit of one or more members of the Participant's
family. In no event shall Incentive Stock Options awarded under the Plan be
transferable other than as permitted under the rules prescribed in the Code
for incentive stock options. An option that is intended to be exempt under
Rule 16b-3 under the Exchange Act or any successor rule, or that is
intended to qualify for the Performance-Based Exception, shall be
transferable only to the extent consistent with such exemption or
qualification.
9.3.8. Death During Employment. If a Participant dies during
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employment after attaining age 62 and at a time when he is entitled to
exercise an option, then at any time or times within three years after
death (or such greater or lesser period after death as may be specified in
the certificate or agreement evidencing the option) such option may be
exercised in part or in full as to all of the shares subject to the option,
subject to the provisions of Section 9.3.2. If a
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Participant dies during employment prior to attaining age 62 and at a time
when he is entitled to exercise an option, then at any time or times within
one year after death (or such greater or lesser period after death as may
be specified in the certificate or agreement evidencing the option) such
option may be exercised, but only as to any or all of those shares which
the Participant was entitled to purchase immediately prior to his death.
In either case, options exercisable after death may be exercised by the
executor or administrator of the deceased Participant or by the person or
persons to whom the option is transferred by will or the applicable laws of
descent and distribution, and except as so exercised shall expire at the
end of the specified post-death exercise period. In no event, however,
may any option granted under the Plan be exercised after the expiration of
ten years from the date the option was granted or, if the option exercise
period established at time of grant was less than ten years, then after the
expiration of such shorter period.
9.3.9. Retirement. In the event of a Participant's Retirement at a
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time when he is entitled to exercise an option, then at any time or times
within the period determined under (a) or (b) below, whichever is
applicable, such option may be exercised as follows:
(a) In the case of Retirement after attaining age 62, then within
three years after Retirement (or such greater or lesser period after
Retirement as may be specified in the certificate or agreement
evidencing the option) the Participant may exercise such option in
full or in part as to all of the shares subject to the option, subject
to the provisions of Section 9.3.2. If the Participant dies within
this three-year (or other specified) post-retirement exercise period,
his option may be exercised, by his executor or administrator or the
person or persons to whom the option is transferred by the laws of
descent and distribution, to the same extent as if the deceased
Participant had survived, during a period equal to the greater of one
year from the date of his death or the remainder of such three-year or
other specified post-Retirement exercise period.
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(b) In the case of Retirement prior to attaining age 62, then
within six months after Retirement (or such greater or lesser period
after Retirement as may be specified in the certificate or agreement
evidencing the option) the Participant may exercise such option only
as to those shares which he was entitled to purchase immediately prior
to his Retirement. If the Participant dies within this six-month (or
other specified) post-Retirement exercise period, his option may be
exercised by his executor or administrator or the person or persons to
whom the option is transferred by the laws of descent and
distribution, to the same extent as if the deceased Participant had
survived, during the greater of one year from the date of his death
or, if a post-Retirement exercise period greater than one year was
specified in the option certificate or agreement, the remainder of
such longer period.
Except as exercised within the applicable period described above, each option
shall expire at the end of such period. In no event, however, may any option
granted under the Plan be exercised after the expiration of ten years from the
date the option was granted or, if the option exercise period established at
time of grant was less than ten years, then after the expiration of such shorter
period.
9.3.10. Other Termination of Employment. If the employment of a
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Participant terminates for any reason other than his death or Retirement,
all options held by the Participant shall thereupon expire subject to the
following provisions:
(a) If termination of employment occurs by the voluntary act of
the Participant, then at any time or times within three months after
such termination of employment (but not after the expiration of ten
years from the date the option was granted or, if the option exercise
period established at time of grant was less than ten years, then
after the expiration of such shorter period), the Participant may
exercise such option as to all or any of the shares which he was
entitled to purchase thereunder immediately prior to such termination
of employment, and except as so exercised such option shall expire at
the end of such period of three months; and
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(b) If termination of employment does not occur by the voluntary
act of the Participant, such option may be exercised following such
termination of employment only to the extent, if any, approved by the
Committee. If the Committee so decides, an option may provide that a
leave of absence granted by the Corporation or a Subsidiary is not a
termination of employment for the purpose of this subsection 9.3.10,
and in the absence of such a provision the Committee may in any
particular case determine that such a leave of absence is not a
termination of employment for such purpose.
9.4. Authority of the Committee. The Committee shall have the
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authority, either generally or in particular instances, to waive compliance
by a Participant with any obligation to be performed by him under an option
and to waive any condition or provision of an option, except that the
Committee may not (i) increase the total number of shares covered by the
option (except in accordance with Section 11), (ii) reduce the option price
per share (except in accordance with Section 11) or (iii) extend the term
of the option to more than ten years, subject, however, to the provisions
of Section 13.
10. Terms and Conditions of Tax Offset Payments.
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10.1. Amount Payable. Each person entitled to a Tax Offset Payment shall
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receive, at the time specified in subsection 10.2 below, an amount of money
equal to a percentage (up to the lesser of 150 percent or the applicable
percentage as hereinafter defined), determined by the Committee at the time the
right of the Tax Offset Payment is granted, of the taxable amount realized in
connection with the exercise of the option to which the Tax Offset Payment
pertains. For purposes of the preceding sentence, the taxable amount realized
upon the exercise of an option shall be the excess of (a) over (b), where little
(b) is the aggregate price paid in cash on exercise of the option, and (a) is
the adjusted aggregate Fair Market Value of the shares of Common Stock received
upon exercise of the option, such adjusted aggregate Fair Market Value to be
determined as follows: the number of shares received upon exercise shall first
be reduced by a number equal to the number of shares of unencumbered Common
Stock (if any) paid as part of the option exercise price, and the net number so
arrived at shall then be multiplied by the Fair Market
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Value of a share of Common Stock measured as of the date of exercise of the
option to which the Tax Offset Payment pertains. For purposes of this Section,
the applicable percentage shall be that percentage which, when applied against
the taxable spread realized in connection with the exercise of the option (the
"option spread"), provides an amount, after reduction for federal income taxes
applicable in respect of such amount, equal to the federal income tax due with
respect to the option spread, in each case assuming that the amount or spread
subject to tax is taxed as the regular maximum marginal rate applicable to
individuals under the Code as in effect for the year in which the income in
respect of the option exercise is realized.
10.2. Time of Payment. Payment of the amount described under subsection
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10.1 subsection 10.1 shall be made on, or as soon as practicable following, the
date of exercise of the option to which the Tax Offset Payment pertains.
10.3. Nontransferability. The right to receive a Tax Offset Payment may
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not be transferred apart from the option to which it pertains.
11. Changes in Stock.
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In the event of a stock dividend, stock split or other change in corporate
structure or capitalization affecting the Common Stock which becomes effective
after the adoption of the Plan by the Board of Directors, the Committee shall
make appropriate adjustments in (i) the number and kind of shares of stock or
securities on which options may thereafter be granted hereunder, (ii) the number
and kind of shares of stock or securities remaining subject to each option
outstanding at the time of such change and (iii) the option price. The
Committee's determination shall be binding on all persons concerned. Subject to
any required action by the stockholders, if the Corporation shall be the
surviving corporation in any merger or consolidation (other than a merger or
consolidation in which the Corporation survives but in which a majority of its
outstanding shares are converted into securities of another corporation or are
exchanged for other consideration), any option granted hereunder shall pertain
and apply to the securities which a holder of the number of shares of stock of
the Corporation then subject to the option would have been entitled to receive,
but a dissolution or liquidation of the
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Corporation or a merger or consolidation in which the Corporation is not the
surviving corporation or in which a majority of its outstanding shares are so
converted or exchanged shall cause every option hereunder to terminate; provided
that if any such dissolution, liquidation, merger or consolidation is
contemplated, the Corporation shall either arrange for any corporation
succeeding to the business and assets of the Corporation to issue to the
Participants replacement options on such corporation's stock which will to the
extent possible preserve the value of the outstanding options or shall make the
outstanding options fully exercisable, subject to the provisions of Section
9.3.2, at least 20 days before the effective date of any such dissolution,
liquidation or consolidation. The existence of the Plan shall not prevent any
such change or other transaction and no Participant thereunder shall have any
right except as herein expressly set forth.
12. Employment Rights.
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Neither the adoption of the Plan nor any grant of options or rights in
respect of Tax Offset Payments confers upon any employee of the Corporation or a
Subsidiary any right to continued employment with the Corporation or a
Subsidiary, as the case may be, nor does it interfere in any way with the rights
of the Corporation or a Subsidiary to terminate the employment of any of its
employees at any time.
13. Discontinuance, Cancellation, Amendment and Termination.
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The Committee may at any time discontinue granting options or providing for
Tax Offset Payments under the Plan and, with the consent of the Participant, may
at any time cancel an existing option in whole or in part and grant another
option to the Participant for such number of shares as the Committee specifies.
The Board of Directors may at any time or times amend the Plan for the purpose
of satisfying the requirements of any changes in applicable laws or regulations
or for any other purpose which may at the time be permitted by law or may at any
time terminate the Plan as to any further grants of options, provided that no
such amendment shall (a) increase the maximum number of shares available under
the Plan except as provided in Section 11, (b) decrease the minimum option price
of options thereafter to be granted to less than the Fair Market Value at the
time the options are granted, or (c) increase the time limits for granting or
exercising options thereafter to be granted. The Committee may make non-material
amendments to the Plan.
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14. Effective Date.
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The Plan shall become effective upon its adoption by the Board of
Directors, and options may be granted under the Plan from and after the date of
such adoption; provided, however, that if prior to January 23, 1987 the
stockholders of the Corporation have not approved the Plan, the Plan shall
terminate and all options and rights to Tax Offset Payments theretofore granted
shall terminate and cease to be of any force or effect.
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