BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN
SECTION 1: PURPOSE
The Boston Private Financial Holdings, Inc. (the "Company") 1997 Long-Term
Incentive Plan (the "Plan") has been adopted to encourage and create significant
ownership of the Company's Common Stock by key management employees and
Consultants of the Company and its Subsidiaries. Additional purposes of the plan
o To motivate and reward the building of long-term shareholder value;
o To provide opportunities for acquiring longer term stock ownership which
will align the interests of senior officers and other key employees and
Consultants with those of shareholders;
o To reinforce a strong performance orientation;
o To support retention of key individuals critical to the long-term success
of the company;
o To provide fully competitive compensation opportunities consistent with
o To foster an affiliation with the Company and support collaborative
teamwork across lines of business.
SECTION 2: DEFINITIONS
o AWARD means any Stock Option or Restricted Stock Award granted under the
o BOARD means the Company's Board of Directors.
o CHANGE IN CONTROL means any occurrence of events as defined in the Change
in Control Protection Agreements for Senior Officers.
o CODE means the Internal Revenue Code of 1986, as amended.
o COMMITTEE means a compensation committee of not less than two non-employee
members of the Board, appointed by the Board to administer the Plan.
o COMPANY means Boston Private Financial Holdings, Inc., a corporation
established under the laws of the Commonwealth of Massachusetts, and any
entity that is directly or indirectly controlled by the Company or any
entity in which the Company has a significant equity interest as determined
by the Committee.
o CONSULTANT means a person engaged to provide consulting or advisory
services (other than as an Employee or director) to the Company or its
Subsidiaries, provided that the identity of such person, the nature of such
services or the entity to which such services are provided would not
preclude the Company from offering or selling securities to such person
pursuant to the Plan in reliance on the registration of such securities on
a Form S-8 Registration Statement under the Securities Act of 1933, as
o EMPLOYEE means any person employed by the Company or any present or future
Subsidiary of the Company.
o FAIR MARKET VALUE means, with respect to Common Stock, the fair market
value of such property as determined by the Committee from time to time.
Under no circumstance shall the Fair Market Value be less than the par
value of the Common Stock. Generally, whenever the Common Stock is traded
on a public market, Fair Market Value means the average of the high and low
reported sales prices at which the Common Stock is traded on the day prior
to the grant, or, if no Common Stock is traded on such date, the most
recent date on which Common Stock was traded, as reflected on such public
market. The Committee in its sole discretion may establish any other such
Fair Market Value if in its determination this price is not a fair and
representative sales price for the Common Stock.
o INCENTIVE STOCK OPTION, OR ISO, means a Stock Option to purchase Shares
awarded to an Employee which is intended to meet the requirements of
Section 422 of the Code or any successor provision.
o NON-QUALIFIED STOCK OPTION, OR NQSO, means a Stock Option to purchase
Shares of Common Stock awarded to a Participant which is not intended to
meet the requirements of Section 422 of the Code or any successor
o 1934 ACT means the Securities Exchange Act of 1934, as amended.
o PARTICIPANT means an employee or Consultant of the Company, or any
Subsidiary of the Company, selected by the Committee (or its delegate as
provided under Section 4) to receive an Award under the Plan.
o REPORTING PERSON means an individual who is subject to Rule 16 of the 1934
Act by virtue of his or her relationship with the Company.
o RESTRICTED STOCK AWARD means an Award to a Participant comprised of Common
Stock granted under Section 7 of the Plan.
o SHARES means shares of the Common Stock of the Company.
o STOCK OPTION means an Award in the form of the right to purchase a
specified number of Shares at a specified price during a specified period.
o SUBSIDIARY means any corporation or other entity (other than the Company)
in any unbroken chain or corporations or other entities, beginning with the
Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined
voting power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
SECTION 3: EFFECTIVE DATE
The Plan shall be effective as of May 21, 1997 and amended and restated as of
July 19, 2001. No Awards may be made under the Plan after ten years from the
date of approval or after any earlier termination of the Plan by the Board.
SECTION 4: ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable. The Committee shall also have full discretion to interpret
the provisions of the Plan.
SECTION 5: ELIGIBILITY
The Board, upon recommendation of the Committee, may grant Awards to any senior
officer or other employee or Consultant of the Company or its Subsidiaries as
determined by the Committee.
SECTION 6: STOCK AVAILABLE FOR AWARDS
a) COMMON SHARES AVAILABLE. The maximum number of Shares available for Awards
under the Plan for each fiscal year beginning after December 31, 1997 shall
be the sum of the amounts described in (i) and (ii) below.
(i) Such aggregate number of Shares of Common Stock as does not exceed
four percent (4%) of the total Shares of outstanding Common Stock of
the Company as of the last business day of the preceding fiscal year:
any Shares described in this (i) which are not granted as Awards for a
fiscal year shall not carry over and be available for Awards in any
subsequent fiscal year.
(ii) The Shares of Common Stock underlying any Awards which are forfeited,
canceled, reacquired by the Company, satisfied without the issuance of
Stock or otherwise terminated (other than by exercise) under this
The maximum number of Shares available for Awards under the Plan for the
fiscal year beginning January 1, 1997 and ending December 31, 1997 (the
"Transition Year") shall be 155,877 Shares, which amount represents four
percent (4%) of the total Shares of outstanding Common Stock of the Company
as of the last business day of the fiscal year preceding the Transition
Year less the number of awards previously granted under the Company's 1988
Employee Incentive Stock Option Plan during the Transition Year: any Shares
described in this sentence which are not granted as Awards for the
Transition Year shall not carry over and be available for Awards in any
subsequent fiscal year.
Not to exceed this limitation, the Committee will determine the actual
number of Shares which may be granted in each fiscal year based on the
Company's performance versus goals established by the Committee.
b) SHARE USAGE LIMITS. For the period the Plan is in effect the aggregate
number of Shares that may be granted as Restricted Stock Awards shall not
exceed two percent (2%) of total Shares outstanding each year.
Additionally, the aggregate number of Shares that may be covered by Awards
for any one Participant each calendar year that the Plan is in effect shall
not exceed 100,000 Shares. Subject to the availability of Shares under the
Plan, the maximum number of Shares for which Stock Options may be granted
over the ten-year life of the Plan shall not exceed 3,000,000 Shares.
c) ADJUSTMENTS. In the event of any stock dividend, stock split, combination
or exchange of Shares, merger, consolidation, spin-off or other
distribution (other than normal cash dividends) of Company assets to
shareholders, or any other change affecting Shares, such proportionate
adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change shall be made with respect to (i)
aggregate number of Shares that may be issued under the Plan; (ii) the
number of Shares covered by each outstanding Award made under the Plan; and
(iii) the option, base or purchase price per Share for any outstanding
Stock Options and other Awards granted under the Plan provided that any
such actions are consistently and equitably applicable to all affected
Participants. In addition, any Shares issued by the Company through the
assumption or substitution of outstanding grants or grant commitments from
an acquired entity shall not reduce the Shares available for issuance under
d) COMMON STOCK USAGE. The Shares of Common Stock underlying any Awards which
are forfeited, canceled, reacquired by the Company, satisfied without the
issuance of Common Stock or otherwise
terminated (other than by exercise) shall be added back to the Shares of
Common Stock available for issuance under the Plan.
SECTION 7: AWARDS
a) GENERAL. The Committee shall determine the type or types of Award(s) (as
set forth below) to be made to each Participant and shall approve the terms
and conditions of all such Awards in accordance with Sections 4 and 8 of
b) STOCK OPTIONS. A Stock Option shall confer on a Participant the right to
purchase a specified number of Shares from the Company subject to the terms
and conditions of the Stock Option grant as determined by the Compensation
Committee. The Committee shall establish the option price at the time each
Stock Option is awarded, provided that price shall not be less than 100% of
the Fair Market Value. Stock Options may be in the form of ISOs or NQSOs.
If a Participant owns or is deemed to own (by reason of the attribution
rules applicable under Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any
subsidiary or parent corporation and ISO is awarded to such Participant,
the option price shall not be less than 110% of the Fair Market Value at
the time such ISO is awarded and the term of such option shall be no more
than five years from the date of grant. The aggregate Fair Market Value at
time of grant of the Shares covered by ISOs exercisable by any one optionee
in any calendar year shall not exceed $100,000 (or such other limit as may
be required by the Code). The recipient of a Stock Option grant shall pay
for the Shares at the time of exercise in cash or such other forms as the
Committee may approve, including Shares valued at their Fair Market Value
on the date of exercise, or in a combination of forms. The Committee may
also permit Participants to have the option price delivered to the Company
by a broker pursuant to an arrangement whereby the Company, upon
irrevocable instructions from a Participant, delivers the exercised Shares
to the broker.
c) RESTRICTED STOCK AWARDS. A Restricted Stock Award shall confer on a
Participant the right to receive a specified number of Shares subject to
the terms and conditions of the Award, which may include forfeitability
contingencies based on continued employment with the Company or on meeting
performance criteria or both. Such Awards may be subject to the attainment
of specified performance goals or targets, as determined by the Committee
and set forth in the specific Award agreements.
SECTION 8: GENERAL PROVISIONS APPLICABLE TO AWARDS
a) TRANSFERABILITY AND EXERCISABILITY. Any Award under this Plan will be
non-transferable and accordingly shall not be assignable, alienable,
salable or otherwise transferable by the Participant other than by will or
the laws of descent and distribution. If so permitted by the Committee, a
Participant may designate a beneficiary or beneficiaries to exercise the
Participant's rights and receive any distributions under this Plan upon the
b) GENERAL RESTRICTION. Each Award shall be subject to the requirement that,
if at any time the Committee shall determine, in its sole discretion, that
the listing, registration or qualification of any Award under the Plan upon
any securities exchange or under any state or federal law, or the consent
or approval of any government regulatory body, is necessary or desirable as
a condition of, or in connection with, the granting of such Award or the
grant or settlement thereof, such Award may not be exercised or settled in
whole or in part unless such listing, registration, qualification, consent
or approval has been effected or obtained free of any conditions not
acceptable to the Committee.
c) GRANT TERMS AND CONDITIONS. Subject to the other provisions of the Plan,
the Committee shall determine the provisions and duration of grants made
under the Plan, including the Option Prices for all Stock Options, the
consideration, if any, to be required from Participants for Restricted
Stock Awards, and the conditions under which a Participant will retain
rights under the Plan in the event of the Participant's termination of
employment while holding any outstanding Awards.
d) TAX WITHHOLDING. The Company shall have the right to deduct from any
settlement of an Award, including the delivery or vesting of Shares, made
under the Plan, a sufficient amount to cover withholding of any federal,
state or local taxes required by law or to take such other actions as may
be necessary to satisfy any such withholding obligations. The Committee may
require or permit Shares to be used to satisfy required tax withholding and
such Shares shall be valued at their Fair Market Value on the date the tax
withholding is effective.
e) DOCUMENTATION OF GRANTS. Awards made under this Plan shall be evidenced by
written agreements or such other appropriate documentation as the Committee
shall prescribe. The Committee need not require the execution of any
instrument or acknowledgment of notice of an Award under the Plan, in which
case, acceptance of such Award by the respective Participant will
constitute agreement to the terms of the Award.
f) SETTLEMENT. The Committee shall determine whether Awards are settled in
whole or in part in cash, Shares, or other Awards.
g) CHANGE IN CONTROL/OTHER TRANSACTIONS. In the event of a Change in Control
in the Company, each outstanding Stock Option shall automatically become
fully exercisable and each Restricted Stock Award shall be subject to such
terms, if any, with respect to a Change in Control as have been provided by
the Committee in connection with such Award. In order to preserve a
Participant's rights under an Award from this Plan or any predecessor plan
in the event of a merger or sale of all or substantially all of the assets
of the Company in which outstanding Shares of Stock are exchanged for
securities, cash or other property of an unrelated corporation or business
entity or in the event of a liquidation of the Company (in each case, a
"Transaction"), the Committee in its discretion may take one or more of the
following actions: (i) provide that such Stock Options shall be assumed or
equivalent options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the
optionees, provide that all unexercised Stock Options will terminate
immediately prior to the consummation of the Transaction unless exercised
by the optionee within a specified period following the date of such
notice, and/or (iii) in the event of a business combination under the terms
of which holders of the Stock of the Company will receive upon consummation
thereof a cash payment for each Share surrendered in the business
combination, make or provide for a cash payment to the optionees equal to
the difference between (A) the value (as determined by the Committee) of
the consideration payable per Share of Stock pursuant to the business
combination (the "Merger Price") times the number of Shares of Stock
subject to such outstanding Stock Options (to the extent then exercisable
at prices not in excess of the Merger Price) and (B) the aggregate exercise
price of all such outstanding Stock Options in exchange for the termination
of such Stock Options, or (iv) make such other provisions as the Committee
may consider equitable and in the best interests of the Company.
SECTION 9: MISCELLANEOUS
a) PLAN AMENDMENT. The Committee may amend the Plan as it deems necessary or
appropriate to better achieve the purposes of the Plan, except that no
amendment without the approval of the Company's shareholders shall be made
which would increase the total number of Shares available for issuance
under the Plan.
b) NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to continued employment or service with the
Company or any Subsidiary. The Company expressly reserves the right at any
time to dismiss a Participant free from any liability or claim under the
Plan, except as expressly provided by an applicable agreement or other
documentation of an Award.
c) NO RIGHTS AS SHAREHOLDER. Only upon issuance of Shares to a Participant
(and only in respect to such Shares) shall the Participant obtain the
rights of a shareholder, subject, however, to any limitations imposed by
the terms of the applicable Award.
d) NO FRACTIONAL SHARES. No fractional Shares shall be issued under the Plan,
however, the Committee may provide for a cash payment as settlement in lieu
of any fractional Shares.
e) OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Except as expressly
determined by the Committee, settlements of Awards received by Participants
under this Plan shall not be deemed as part of a Participant's regular,
recurring compensation for purposes of calculating payments or benefits
from any Company benefit or severance program (or severance pay law of any
country). The above notwithstanding, the Company may adopt other
compensation programs, plans or arrangements as it deems appropriate or
f) TERMINATION OF EMPLOYMENT OR SERVICE. If a Participant terminates their
employment or other service relationship with the Company and its
Subsidiaries for reason of retirement, disability or death, any Stock
Options which are vested but not yet exercised shall be exercisable for a
period of up to three years from the date of such termination. If a
Participant terminates their employment or other service relationship with
the Company and its Subsidiaries for any other reason, any Stock Options
which are vested but not yet exercised shall be exercisable for a period of
up to thirty days from the date of such termination.
g) UNFUNDED PLAN. The Plan shall be unfunded and shall not create (or be
construed to create) a trust or separate fund(s). Likewise, the Plan shall
not establish any fiduciary relationship between the Company and any
Participant or other person. To the extent any person holds any rights by
virtue of an Award granted under the Plan, such right shall be no greater
than the right of an unsecured general creditor of the Company.
h) SUCCESSORS AND ASSIGNEES. The Plan shall be binding on all successors and
assignees of a Participant, including, without limitation, the estate of
such Participant and the executor, administrator or trustee of such estate,
or any receiver or trustee in bankruptcy or representative of the
i) GOVERNING LAW. The validity, construction and effect of the Plan and any
actions taken under or relating to the Plan shall be determined in
accordance with the laws of the Commonwealth of Massachusetts and
applicable federal law.