THE HIBERNIA SAVINGS BANK
STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Date:
FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, THE HIBERNIA SAVINGS BANK, a Massachusetts corporation with its
principal place of business at Washington Street, Boston, Massachusetts (the
"Bank"), hereby grants to:
(the "Optionee"), an Incentive Stock Option ("ISO"), within the meaning of
the provisions of Sections 421 and 422A of the Internal Revenue Code of 1954,
as amended, (the "Code") to purchase shares of the Bank's Common Stock,
$1.00 par value, ("Common Stock") upon the following terms and conditions
1. (a) This ISO is granted pursuant to the Bank's 1986 Stock Option
Plan (the "Plan") and is subject to the terms and conditions of the Plan, a
copy of which is annexed hereto as Exhibit "A" and hereby incorporated herein
by reference.
(b) This ISO is intended to qualify as an "incentive stock option"
as the same is defined in Section 422A of the Code and this Agreement shall
be interpreted consistently with such intent.
(c) For the purposes of determining if an Optionee possesses, as of
the date hereof, more than ten (10%) of the total combined voting power of
all classes of stock of the Bank, an Optionee shall be deemed to possess the
stock owned directly or indirectly by or for his brothers and sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants,
and her or his proportionate share as either a shareholder, partner or
beneficiary of the stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust.
2. This ISO shall not be transferable by the Optionee other than by
Will or by the laws of descent and distribution and shall be exercisable by
the Optionee, during her or his lifetime, only by her or him.
3. (a) The price at which said shares of Common Stock may be purchased
pursuant to this ISO shall be per share (the "Purchase Price"), subject
to adjustment as provided in PARAGRAPH 3(b) hereof, said Purchase Price being
not less than one hundred (100%) percent of the fair market value of such
stock on the date hereof, or not less than one hundred ten (110%) percent of
the fair market value of such stock on the date hereof if the Optionee
possesses, as of the date hereof, more than ten (10%) percent of the total
combined voting power of all classes of stock of the Bank, or its parent or
its subsidiary corporations. Fair market value shall be determined in good
faith by the Board of Directors of the Bank (the "Board of Directors").
(b) If at any time after the date hereof but prior to an exercise of
this ISO there shall occur (i) any subdivision or combination of the Bank's
outstanding Common Stock, by reclassification or otherwise; (ii) the payment
of any Common Stock dividend, or (iii) any other capital adjustment effected
without receipt of consideration from another entity that in the discretion
of the Board of Directors may require adjustment; then at the time of such
occurrence, the number of shares subject to this ISO and the price per share
set forth in PARAGRAPH 3(a) hereof shall be proportionately adjusted. Any
fractional shares resulting from the computation of such adjustment shall be
eliminated from this ISO.
(c) The Purchase Price shall be payable (i) in cash or by check
acceptable to the Bank, (ii) at the discretion of the Management and
Compensation Committee, or the Executive Committee if no Management and
Compensation Committee is in existence, of the Board of Directors, by the
transfer to the Bank of shares of Common Stock having a value at the time of
the exercise equal to the total Purchase Price, or (iii) by a combination of
(i) or (ii). The Bank may not directly or indirectly make any loan to the
Optionee for the purpose of assisting her or him to acquire any shares
issuable upon the exercise of any ISO granted to her or him under the Plan.
4. (a) This ISO must be exercised, if at all, before the expiration of
ten (10) years from the date hereof, provided that, in the event that the
Optionee possesses, as of the date hereof, more than ten (10%) percent of the
total combined voting power of all classes of stock of the Bank, this ISO
must be exercised before the expiration of five (5) years from the date
hereof.
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(b) Subject to the provisions hereinafter set forth, this ISO may be
exercised by the Optionee on or after _________________, 1989 or such later
date as may be specified by the Massachusetts Commissioner of Banks, but in
no event later than 10 years from the date hereof.
(c) This ISO may not be exercised as to any shares whatsoever while
there is outstanding (within the meaning of Section 422A(c)(7) of the Code)
any ISO, granted, to the Optionee before granting of this ISO, to purchase
stock in the Bank or in a corporation which, as of the date hereof, is a
parent or subsidiary corporation of the Bank, or the predecessor corporation
of any such corporation;
(d) This ISO may not be exercised as to any shares whatsoever
(except as provided in PARAGRAPHS 4(e) AND 4(f) herein) unless at all times
during the period beginning on the date hereof and ending on the day three
(3) months before the date of exercise, the Optionee was an employee of the
Bank, its parent, or its subsidiary corporation, or of a corporation (or its
parent or subsidiary) issuing or assuming a stock option in a transaction to
which Section 425(a) of the Code applies; except that, in the case of an
Optionee who is disabled within the meaning of Section 105(d)(4) of the Code,
the three (3) month period referred to above shall be one (1) year.
(e) If employment of the Optionee is terminated by the Bank for
cause, this ISO shall terminate immediately. If the Optionee's employment
ceases by reason of her or his voluntary resignation and acceptance thereof
by the Board of Directors or under circumstances in which the Board of
Directors deems immediate termination of this ISO to be inequitable, the
Optionee may exercise this ISO to the extent that she or he was entitled to
exercise it on the date of such cessation of employment, during the three (3)
months immediately succeeding such cessation of employment, provided such
exercise is in no event made later than ten (10) years from the date hereof,
or five (5) years from the date hereof in the case of an Optionee who
possesses, as of the date hereof, more than ten (10%) percent of the total
combined voting power of all classes of stock of the Bank, its parent, or its
subsidiary corporations, if any. Whether an authorized leave of absence or
absence on military or government service constitutes a termination of
employment for the purposes of this ISO shall be determined by the Board of
Directors. Nothing in this ISO shall confer upon the Optionee any right with
respect to continuation of employment by the Bank or interfere in any way
with the Bank's right to terminate the Optionee's employment.
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(f) In the event that the Optionee dies while this ISO would
otherwise be exercisable by her or him, this ISO may be exercised for a
period of twelve (12) months from the date of death by the person or persons
designated in the Optionee's Will for that purpose or, if no such person is
designated or the Optionee dies intestate, by her or his personal
representative or representatives. Notwithstanding the foregoing, this ISO
may in no event be exercised later than ten (10) years (five (5) years if the
Optionee possesses, as of the date hereof, more than ten (10%) percent of the
total combined voting power of all classes of stock of the Bank, its parent
or subsidiary corporations) from the date hereof and may, at the time of its
exercise, only be exercised to the extent that the Optionee was entitled to
exercise it on the date of her or his death.
(g) This ISO shall be exercisable by, and only by, serving written
notice of the exercise upon the Bank, marked attention "Chief Executive
Officer," at its office at 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, accompanied by payment in full of the Purchase Price in accordance
with PARAGRAPH 3 hereof. This ISO may not be exercised for a fraction of a
share.
(h) The Optionee shall have none of the rights of a stockholder with
respect to any shares subject to this ISO until such shares have been issued
by the Bank.
5. Subject to any required action by the stockholders of the Bank, if
the Bank is a party to any merger or consolidation, any unexercised portion
of this ISO shall, in lieu of the number of shares of Common Stock covered
by such unexercised portion, pertain and apply to the number and class or
classes of securities to which the Optionee would have been entitled under
the agreement of merger or consolidation if, immediately prior to such merger
or consolidation, the Optionee has been the holder of record of the number of
shares Common Stock covered by such unexercised portion. If the Bank
dissolves or liquidates this ISO shall terminate.
6. (a) The benefits provided for in Section 421(a) of the Code shall
apply with respect to the transfer by the Bank of any share of Common Stock
to the Optionee pursuant to the exercise or partial exercise of this ISO only
if no disposition of such share is made by the Optionee (i) within two (2)
years from the date hereof and (ii) within one (1) year after the transfer by
the Bank of such share to the Optionee. If a holder of any share of stock
acquired pursuant to the exercise or partial exercise of this ISO disposes of
said share before the expiration of these periods, she or he shall notify the
Bank of such disposition and the amount realized on such disposition.
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(b) An ISO will not result in any taxable income to the Optionee
when it is granted or when it is timely exercised pursuant to PARAGRAPH 4. If
the stock acquired pursuant to this ISO is not disposed of either (i) within
two (2) years from the date hereof or (ii) within one (1) year of the
transfer of the stock to the Optionee, any gain on the sale of such stock
will be taxed at long-term capital gains rates. If, however, stock acquired
pursuant to this ISO is sold, exchanged, or otherwise disposed of before the
end either of these holding periods, the Optionee will realize ordinary
income at the time of disposition in an amount not exceeding the lesser of
(i) the excess of the fair market value of the stock at the time of exercise
over the Purchase Price or (ii) the excess of the amount realized on the
disposition of the stock over the Purchase Price. Any additional gain will be
capital gain either long-term or short-term depending on the holding period
of the stock. Under Section 1036 of the Code, if the Purchase Price of an ISO
is paid for by the delivery of common stock previously owned by the Optionee,
to the extent that the value of the shares received pursuant to the ISO
equals the value of the shares surrendered as payment, no gain or loss will
be recognized. Further, if the right to deliver stock in payment of the
Purchase Price was part of the original terms of the ISO, the difference
between the value of the shares received pursuant to the ISO and the shares
surrendered as payment at the time of exercise will not be subject to tax if
the holding period and other requirements for an ISO are satisfied. However,
Section 1036 of the Code is not available if the shares surrendered in
payment of the Purchase Price are shares previously acquired by the Optionee
pursuant to the exercise of an ISO (or other "statutory" or "qualified" stock
option) which the Optionee has not held for the necessary holding period. In
such a case the Optionee would realize income upon the surrender of such
shares in payment of the Purchase Price.
7. This Agreement may be amended, altered or modified, only by a
written instrument signed by the parties hereto, or their respective
successors or assigns, and may not be otherwise terminated except as provided
herein.
8. Any notice, consent or demand required or committed to be given
under the provisions of this Agreement shall be in writing and shall be
signed by the party giving or making the same. If such notice, consent or
demand is mailed to a party hereto, it shall be sent by United States
certified mail, postage prepaid, addressed to such parties last known address
as shown on the records of the Bank. The date of such mailing shall be deemed
the date of notice, consent or demand.
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9. This Agreement, and the rights of the parties hereunder, shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, Hibernia Savings Bank has caused this instrument to
be signed by its duly authorized officer and its corporate seal to be hereto
affixed.
HIBERNIA SAVINGS BANK
By:___________________________
Title:_____________________
ACCEPTED:____________________
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