<PAGE>
Registration No. 333-_____
As filed with the Securities and Exchange Commission on November 27, 1996
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
STATE STREET BOSTON CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2456637
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
225 FRANKLIN STREET
BOSTON, MA 02110
(Address of Principal Executive Offices, including Zip Code)
PRINCETON FINANCIAL SYSTEMS, INC. 1992 STOCK OPTION PLAN
PRINCETON FINANCIAL SYSTEMS, INC. 1995 STOCK OPTION PLAN
PRINCETON FINANCIAL SYSTEMS, INC. 1996 STOCK OPTION PLAN
(Full Title of the Plan)
JOHN R. TOWERS, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
225 FRANKLIN STREET
BOSTON, MA 02110
(617) 786-3000
(Name, Address and Telephone Number of Agent for Service)
COPY TO:
CHAMPE A. FISHER, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MA 02110-2624
(617) 951-7000
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of Amount Proposed Proposed Amount of
securities to be maximum maximum registration
to be registered offering aggregate fee(2)
registered price per offering
share(2) price(2)
<S> <C> <C> <C> <C>
Common Stock, 115,815 $22.45 $1,479,052 $448.20
par value $1.00
per share(1)
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes preferred stock purchase rights. Prior to the occurrence of
certain events, these rights will not be exercisable or evidenced separately
from the Common Stock.
(2) The offering price for shares subject to the options on the date hereof
is the actual price of such options.
================================================================================
Page 1 of
Exhibit Index at Page
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
NOTE: The document(s) containing the information required by Item 1 of this
Form S-8 and the statement of availability of Registrant information, and
other information required by Item 2 of this Form will be sent or given
to employees as specified by Rule 428 under the Securities Act of 1933,
as amended (the "Securities Act"). In accordance with Rule 428 and the
requirements of Part I of Form S-8, such documents are not being filed
with the Securities and Exchange Commission (the "Commission") either as
part of this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424. State Street Boston Corporation (the
"Registrant") shall maintain a file of such documents in accordance with
the provisions of Rule 428. Upon request, the Registrant shall furnish
to the Commission or its staff a copy of any or all of the documents
included in such file.
1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
---------------------------------------
The Registrant hereby incorporates the following documents herein by
reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as filed with the Commission on March 27, 1996.
(b) The Registrant's Quarterly Reports on Form 10-Q for the quarter ended
March 31, 1996, as filed with the Commission May 14, 1996, for the quarter ended
June 30, 1996, as filed with the Commission August 13, 1996, and for the quarter
ended September 30, 1996, as filed with the Commission November 14, 1996.
(c) The description of State Street's Common Stock included in State
Street's effective registration statement on Form 8-A, as filed with the
Commission on January 18, 1995.
(d) All other reports filed by the Registrant with the Securities and
Exchange Commission pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") since the end of the fiscal year
covered by the Registrant's Annual Report referred to above.
All documents subsequently filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15 of the Exchange Act prior to the filing of a post-effective
amendment to this Registration Statement that indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed incorporated herein by reference from the date of filing
of such documents.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
--------------------------------------
The consolidated financial statements of State Street at December 31, 1995 and
1994, and for each of the three years in the period ended December 31, 1995,
incorporated by reference in State Street's Annual Report on Form 10-K for the
year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report therein incorporated by
reference and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in auditing and accounting.
With respect to the unaudited interim consolidated financial information for
the three month periods ended March 31, 1996, June 30, 1996, and September 30,
1996, incorporated by reference in this Prospectus, Ernst & Young LLP have
reported that they have applied limited procedures in accordance with
professional standards for review of such information. However, their separate
reports, included in State Street's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996, June 30, 1996 and September 30, 1996, and
incorporated herein by reference, state that they did not audit and do not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on their report on such information should be the liability
provisions of Section 11 of the Securities Act of 1933 (the "Act") for their
reports on the unaudited interim financial information because those reports are
not "reports" or "parts" of the Registration Statement prepared or certified by
the auditors within the meaning of Sections 7 and 11 of the Securities Act.
2
<PAGE>
The validity of the Common Stock has been passed upon by Ropes & Gray, Boston,
Massachusetts. Truman S. Casner, a director of State Street, is a partner of
Ropes & Gray. Mr. Casner beneficially owns 6,194 shares of Common Stock. In
addition, a total of 600 shares of Common Stock of State Street were
beneficially owned by Ropes & Gray attorneys participating in the preparation of
this Registration Statement.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
Section 67 of Chapter 156B of the General Laws of Massachusetts provides that
to the extent specified in or authorized by the articles of organization, a by-
law adopted by shareholders or a vote adopted by the holders of the majority of
shares of stock entitled to vote on the election of directors, a corporation can
indemnify directors, officers, employees and other agents of the corporation
(and persons who serve at its request as directors, officers, employees or other
agents of another organization or who serve at its request in any capacity with
respect to any employee benefit plan) except as to any matter as to which such
person shall have been adjudicated in any proceeding not to have acted in good
faith in the reasonable belief that the action was in the best interest of the
corporation.
The Articles of Organization of State Street (Article 6) provide the
following:
The corporation shall to the fullest extent legally permissible indemnify
each person who is or was a director, officer, employee or other agent of the
corporation and each person who is or was serving at the request of the
corporation as a director, trustee, officer, employee or other agent of
another corporation or of any partnership, joint venture, trust, employee
benefit plan or other enterprise or organization against all liabilities,
costs and expenses, including but not limited to amounts paid in satisfaction
of judgments, in settlement or as fines and penalties, and counsel fees and
disbursements, reasonably incurred by him in connection with the defense or
disposition of or otherwise in connection with or resulting from any action,
suit or other proceeding, whether civil, criminal, administrative or
investigative, before any court or administrative or legislative or
investigative body, in which he may be or may have been involved as a party or
otherwise or with which he may be or may have been threatened, while in office
or thereafter, by reason of his being or having been such a director, officer,
employee, agent or trustee, or by reason of any action taken or not taken in
any such capacity, except with respect to any matter as to which he shall have
been finally adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that his action was in the best
interests of the corporation (any person serving another organization in one
or more of the indicated capacities at the request of the corporation who
shall not have been adjudicated in any proceeding not to have acted in good
faith in the reasonable belief that his action was in the best interest of
such other organization shall be deemed so to have acted in good faith with
respect to the corporation) or to the extent that such matter relates to
service with respect to an employee benefit plan, in the best interest of the
participants or beneficiaries of such employee benefit plan. Expenses,
including but not limited to counsel fees and disbursements, so incurred by
any such person in defending any such action, suit or proceeding, shall be
paid from time to time by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the person indemnified to repay the amounts so paid if it shall
ultimately be determined that indemnification of such expenses is not
authorized hereunder.
3
<PAGE>
If, in an action, suit or proceeding brought by or in the name of the
corporation, a director of the corporation is held not liable for monetary
damages, whether because that director is relieved of personal liability under
the provisions of this Article Six of the Articles of Organization, or
otherwise, that director shall be deemed to have met the standard of conduct
set forth above and to be entitled to indemnification for expenses reasonably
incurred in the defense of such action, suit or proceeding.
As to any matter disposed of by settlement by any such person, pursuant to
a consent decree or otherwise, no such indemnification either for the amount
of such settlement or for any other expenses shall be provided unless such
settlement shall be approved as in the best interests of the corporation,
after notice that it involves such indemnification, (a) by vote of a majority
of the disinterested directors then in office (even though the disinterested
directors be less than a quorum), or (b) by any disinterested person or
persons to whom the question may be referred by vote of a majority of such
disinterested directors, or (c) by vote of the holders of a majority of the
outstanding stock at the time entitled to vote for directors, voting as a
single class, exclusive of any stock owned by any interested person, or (d) by
any disinterested person or persons to whom the question may be referred by
vote of the holders of a majority of such stock. No such approval shall
prevent the recovery from any such director, officer, employee, agent or
trustee of any amounts paid to him or on his behalf as indemnification in
accordance with the preceding sentence if such person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good
faith in the reasonable belief that his action was in the best interests of
the corporation.
The right of indemnification hereby provided shall not be exclusive of or
affect any other rights to which any director, officer, employee, agent or
trustee may be entitled or which may lawfully be granted to him. As used
herein, the terms "director", "officer", "employee", "agent" and "trustee"
include their respective executors, administrators and other legal
representatives, an "interested" person is one against whom the action, suit
or other proceeding in question or another action, suit or other proceeding on
the same or similar grounds is then or had been pending or threatened, and a
"disinterested" person is a person against whom no such action, suit or other
proceeding is then or had been pending or threatened.
By action of the board of directors, notwithstanding any interest of the
directors in such action, the corporation may purchase and maintain insurance,
in such amounts as the board of directors may from time to time deem
appropriate, on behalf of any person who is or was a director, officer,
employee or other agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or other
agent of another corporation or of any partnership, joint venture, trust,
employee benefit plan or other enterprise or organization against any
liability incurred by him in any such capacity, or arising out of his status
as such, whether or not the corporation would have the power to indemnify him
against such liability.
A director of this corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director notwithstanding any provision of law imposing such
liability, provided, however, that this paragraph of Article Six shall not
eliminate the liability of a director to the extent such liability is imposed
by applicable law (i) for any breach of the director's duty of loyalty to this
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
for any transaction from which the director derived an improper personal
benefit, or (iv) for paying a dividend, approving a stock
4
<PAGE>
repurchase or making loans which are illegal under certain provisions of
Massachusetts law, as the same exists or hereafter may be amended. If
Massachusetts law is hereafter amended to authorize the further limitation of
the legal liability of the directors of this corporation, the liability of the
directors shall then be deemed to be limited to the fullest extent then
permitted by Massachusetts law as so amended. Any repeal or modification of
this paragraph of this Article Six which may hereafter be effected by the
stockholders of this corporation shall be prospective only, and shall not
adversely affect any limitation on the liability of a director for acts or
omissions prior to such repeal or modification.
In addition, State Street maintains a directors' and officers' liability
insurance policy.
ITEM 8. EXHIBITS.
--------
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.1 Restated Articles of Organization as amended (filed with
the Securities and Exchange Commission as Exhibit 3.1 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, and incorporated by reference)
4.2 By-laws as amended (filed with the Securities and Exchange
Commission as Exhibit 3.2 to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, and
incorporated by reference)
4.3 Form of Common Stock Certificate (filed as Exhibit 4.3 to
the Registrant's Registration Statement on Form S-3 dated
June 20, 1995)
5.1 Opinion of Ropes & Gray
15.1 Letter of Ernst & Young LLP re: Unaudited Interim Financial
Information
23.1. Consent of Ropes & Gray (contained in its opinion filed as
Exhibit 5 hereto)
23.2. Consent of Ernst & Young LLP
24. Power of Attorney (contained in Part II hereof under
"Signatures and Power of Attorney")
99.1 Princeton Financial Systems 1992 Stock Option Plan
99.2 Princeton Financial Systems 1995 Stock Option Plan
99.3 Princeton Financial Systems 1996 Stock Option Plan
99.4 Form of Stock Option Agreement
99.5 Form of Non-Qualified Stock Option Agreement
99.6 Form of Stock Option Assumption Agreement for the Princeton
Financial Systems, Inc. 1992 Stock Option Plan
5
<PAGE>
99.7 Form of Stock Option Assumption Agreement for the Princeton
Financial Systems, Inc. 1995 Stock Option Plan
99.8 Form of Stock Option Assumption Agreement for the Princeton
Financial Systems, Inc. 1996 Stock Option Plan
ITEM 9. UNDERTAKINGS.
------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933,
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof), which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement,
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; provided,
--------
however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if the
- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
6
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, State Street
Boston Corporation certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, Commonwealth of Massachusetts, on the
27th day of November, 1996.
STATE STREET BOSTON CORPORATION
By /s/ Rex S. Schuette
----------------------------
REX S. SCHUETTE
Senior Vice President and Comptroller
________________
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated, on November 27, 1996.
We, the undersigned directors of State Street Boston Corporation, hereby
severally constitute and appoint Ronald L. O'Kelley, John R. Towers and Rex S.
Schuette, and each of them singly, our true and lawful attorneys with full power
to them, and each of them singly, to sign for us and in our names in the
capacities as directors, any and all amendments or supplements to the
Registration Statement on Form S-8 of State Street Boston Corporation, and
generally to do all such things in our name and on our behalf in our capacities
as directors to enable State Street Boston Corporation to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be required by our said attorneys or any of them, to any
and all said amendments.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Marshall N. Carter
- ---------------------- Chairman and Chief Executive Officer
MARSHALL N. CARTER and Director (Principal Executive
Officer)
/s/ Ronald L. O'Kelley
- ---------------------- Executive Vice President and Chief
RONALD L. O'KELLEY Financial Officer (Principal
Financial Officer)
/s/ Rex S. Schuette
- ---------------------- Senior Vice President and Comptroller
REX S. SCHUETTE (Principal Accounting Officer)
/s/ Tenley E. Albright
- ---------------------- Director
TENLEY E. ALBRIGHT
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
/s/ Joseph A. Baute
- ------------------------ Director
JOSEPH A. BAUTE
/s/ I. MacAllister Booth
- ------------------------ Director
I. MACALLISTER BOOTH
/s/ James I. Cash, Jr.
- ------------------------ Director
JAMES I. CASH, JR.
/s/ Truman S. Casner
- ------------------------ Director
TRUMAN S. CASNER
/s/ Nader F. Darehshori
- ------------------------ Director
NADER F. DAREHSHORI
- ------------------------ Director
ARTHUR L. GOLDSTEIN
/s/ Charles F. Kaye
- ------------------------ Director
CHARLES F. KAYE
/s/ John M. Kucharski
- ------------------------ Director
JOHN M. KUCHARSKI
/s/ Charles R. Lamantia
- ------------------------ Director
CHARLES R. LAMANTIA
/s/ David B. Perini
- ------------------------ Director
DAVID B. PERINI
/s/ Dennis J. Picard
- ------------------------ Director
DENNIS J. PICARD
- ------------------------ Director
ALFRED POE
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
- ------------------------ Director
BERNARD W. REZNICEK
/s/ David A. Spina
- ------------------------ Director
DAVID A. SPINA
- ------------------------ Director
ROBERT E. WEISSMAN
</TABLE>
9
<PAGE>
EXHIBIT INDEX
Exhibit List
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.1 Restated Articles of Organization as amended (filed with the
Securities and Exchange Commission as Exhibit 3.1 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, and incorporated by reference).
4.2 By-laws as amended (filed with the Securities and Exchange
Commission as Exhibit 3.2 to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, and
incorporated by reference).
4.3 Form of Common Stock Certificate (filed as Exhibit 4.3 to the
Registrant's Registration Statement on Form S-3 dated June 20,
1995).
5.1 Opinion of Ropes & Gray.
15.1 Letter of Ernst & Young LLP re: Unaudited Interim Financial
Information.
23.1. Consent of Ropes & Gray (contained in its opinion filed as
Exhibit 5 hereto).
23.2. Consent of Ernst & Young LLP.
24. Power of Attorney (contained in Part II hereof under "Signatures
and Power of Attorney").
99.1 Princeton Financial Systems 1992 Stock Option Plan
99.2 Princeton Financial Systems 1995 Stock Option Plan
99.3 Princeton Financial Systems 1996 Stock Option Plan
99.4 Form of Stock Option Agreement
99.5 Form of Non-Qualified Stock Option Agreement
99.6 Form of Stock Option Assumption Agreement for the Princeton
Financial Systems, Inc. 1992 Stock Option Plan
99.7 Form of Stock Option Assumption Agreement for the Princeton
Financial Systems, Inc. 1995 Stock Option Plan
99.8 Form of Stock Option Assumption Agreement for the Princeton
Financial Systems, Inc. 1996 Stock Option Plan
<PAGE>
Exhibit 5.1
November __, 1996
State Street Boston Corporation
225 Franklin Street
Boston, MA 02110
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration
statement on Form S-8 (the "Registration Statement") to be filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, for the registration of 115,815 shares of common stock,
$1.00 par value per share (the "Common Stock"), of State Street Boston
Corporation, a Massachusetts corporation (the "Company"), issuable upon exercise
of options assumed by the Company that had previously been issued under the
Princeton Financial Systems, Inc. 1992 Stock Option Plan, the Princeton
Financial Systems, Inc. 1995 Stock Option Plan and the Princeton Financial
Systems, Inc. 1996 Stock Option Plan (collectively, the "Plans").
We have acted as counsel for the Company in connection with the assumption
of the options and are familiar with the actions taken by the Company in
connection therewith. For purposes of this opinion we have examined the
Registration Statement, the Plans and such other documents as we have deemed
appropriate.
Based upon the foregoing, we are of the opinion that (i) the Common Stock
has been duly authorized and (ii) the Common Stock, when issued and sold in
accordance with the terms of the options and Plans, will have been validly
issued and will be fully paid and non-assessable.
We hereby consent to your filing this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE>
EXHIBIT 15.1
The Stockholders and Board of Directors
State Street Boston Corporation
We are aware of the incorporation by reference in the Registration Statement on
Form S-8 of State Street Boston Corporation pertaining to the 1992, 1995, and
1996 Stock Option Plans of Princeton Financial Systems, Inc. of our reports
dated April 12, 1996, July 12, 1996 and October 11, 1996 relating to the
unaudited consolidated interim financial statements of State Street Boston
Corporation that are included in its Forms 10-Q for the quarters ended March 31,
1996, June 30, 1996 and September 30, 1996.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
ERNST & YOUNG LLP
Boston, Massachusetts
November 26, 1996
<PAGE>
EXHIBIT 23.2
Consent of Independent Accountants
We consent to the reference to our firm under the caption "Interests of Named
Experts and Counsel" in the Registration Statement on Form S-8 to be filed on
November 27, 1996, pertaining to the 1992, 1995, and 1996 Stock Option Plans of
Princeton Financial Systems, Inc. and to the incorporation by reference therein
of our report dated January 10, 1996, with respect to the consolidated financial
statements of State Street Boston Corporation incorporated by reference in its
Annual Report (Form 10-K) for the year ended December 31, 1995, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Boston, Massachusetts
November 26, 1996
<PAGE>
Exhibit 99.1
PRINCETON FINANCIAL SYSTEMS, INC.
1992 STOCK OPTION PLAN
1. Purpose of the Plan. Under this Stock Option Plan (the "Plan") of
Princeton Financial Systems, Inc. (the "Company") options may be granted to
eligible employees to purchase shares of the Company's capital stock. The Plan
is designed to enable the Company and its subsidiaries to attract, retain and
motivate their employees by providing for or increasing the proprietary
interests of such employees in the Company. The Plan provides for options which
qualify as incentive stock options ("Incentive Options") under Section 422A of
the Internal Revenue Code of 1986, as amended (the "Code"), as well as options
which do not so qualify.
2. Stock Subject to Plan. The maximum number of shares of stock for
which options granted hereunder may be exercised shall be 100,000 shares of
Princeton Financial Systems, Inc. Common Stock, par value $0.01 per share,
subject to the adjustments provided in Sections 7 and 12. Shares of stock
subject to the unexercised portions of any options granted under this Plan which
expire or terminate or are canceled may again be subject to options under this
Plan, the total number of shares of stock for which further options may be
granted under this Plan shall be irrevocably reduced not only when there is an
exercise of an option granted under this Plan, but also when such option is
surrendered upon an exercise of a stock appreciation right granted under this
Plan, in either case by the number of shares covered by the portion of such
option which is exercised or surrendered.
3. Eligible Employees. The employees eligible to be considered for the
grant of options hereunder are any persons regularly employed by the Company or
its parent(s) or subsidiaries in a managerial, professional or technical
capacity on a full-time, salaried basis.
4. $100,000 Incentive Stock Option Exercise Limitation. The aggregate
fair market value of the stock for which Incentive Options granted to any one
eligible employee under this Plan and under all stock option plans of the
Company, its parent(s) and subsidiaries, may by their terms first become
exercisable during any calendar year shall not exceed $100,000 determining fair
market value of the stock subject to any option as of the time that option is
granted.
5. Minimum exercise Price. The exercise price for each option granted
hereunder shall be not less than 100% of the fair market value of the stock at
the date of the grant of the option.
<PAGE>
6. Nontransferability. Any option granted under this Plan shall by its
terms be nontransferable by the optionee other than by will or the laws of
descent and distribution and is exercisable during the optionee's lifetime only
by him or by his guardian or legal representative.
7. Adjustments. If the outstanding shares of stock of the class then
subject to this Plan are increased or decreased, or are changed into or
exchanged into or exchanged for a different number or kind of shares or
securities, as a result of one or more reorganizations, recapitalization, stock
splits, reverse stock splits, stock dividends or the life, appropriate
adjustments shall be made in the number and/or kind of shares or securities for
which options then outstanding under this Plan may thereafter be exercised. Any
such adjustment in outstanding options shall be made without changing the
aggregate exercise price applicable to the unexercised portions of such options.
8. Maximum Option Term. No option granted under this Plan may be
exercised in whole or in part more than ten years after its date of grant.
9. Plan Duration. Options may not be granted under this Plan more than
ten years after the date of the adoption of this Plan, or of shareholder
approval thereof, whichever is earlier.
10. Payment. Payment for stock purchased under any exercise of an option
granted under this Plan shall be made in full in cash concurrently with such
exercise, except that, if and to the extent the instrument evidencing the option
so provides and if the Company is not then prohibited from purchasing or
acquiring shares of such stock, such payment may be made in whole or in part
with shares of the same class of stock as that then subject to the option,
delivered in lieu of cash concurrently with such exercise, the shares so
delivered to be valued on the basis of the fair market value of the stock
(determined in a manner specified in the instrument evidencing the option) on
the day preceding the date of exercise.
11. Administration. The plan shall be administered by the Company's board
of directors (the "Board") or, in the discretion of the Board, by a committee
(the "Committee") of not less than three members of the Board each of whom shall
not be eligible, and shall not have been eligible at any time within one year
prior to his appointment to the Committee, for selection as a person to whom
stock may be allocated or to whom stock options or stock appreciation rights may
be granted pursuant to the Plan or any other plan of the Company or any of its
affiliates entitling the participants therein to acquire stock, appreciation
rights, or stock options of the Company or any of its affiliates.
The interpretation and construction by the Committee of any term of
provision of the Plan or of any option granted under it shall be final, unless
otherwise determined by the Board in which event such determination by the Board
shall be final. The Committee may from time to time adopt rules and regulations
for carrying out this Plan and, subject to the
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<PAGE>
provisions of this Plan, may prescribe the form or forms of the instruments
evidencing any option granted under this Plan.
Subject to the provisions of this Plan, the Board or, by delegation
from the Board, the Committee shall have full and final authority in its
discretion to select the employees to be granted options, to grant such options
and to determine the number of shares to be subject thereto, the exercise
prices, the terms of exercise, expiration dates and other pertinent provisions
thereof.
12. Corporate Reorganizations. Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation of the Company as a
result of which the outstanding securities of the class then subject to options
hereunder are changed into or exchanged for cash or property or securities not
of the Company's issue, or upon a sale of substantially all the property of the
company to, or the acquisition of stock representing more than eighty percent
(80%) of the voting power of the stock of the Company then outstanding by,
another corporation or person, the Plan shall terminate, and all options
theretofore granted hereunder shall terminate, unless provision be made in
writing in connection with such transaction for the continuance of the Plan
and/or for the assumption of options theretofore granted, or the substitution
for such options of options covering the stock of a successor employer
corporation, or a parent or a subsidiary thereof, with appropriate adjustments
as to the number and kind of shares and prices in which event the Plan and
options theretofore granted shall continue in the manner and under the terms so
provided. If the Plan and unexercised options shall terminate pursuant to the
foregoing sentence, all persons entitled to exercise any unexercised portions of
options then outstanding shall have the right, at such time prior to the
consummation of the transaction causing such termination as the Company shall
designate, to exercise the unexercised portions of their options, including the
portions thereof which would, but for this paragraph entitled "Corporate
Reorganizations," not yet be exercisable.
13. Stock Appreciation Rights. If the instrument evidencing the option so
provides, an option granted under this Plan (herein sometimes referred to as the
"corresponding option") may include the right (a "Stock Appreciation Right") to
receive an amount equal to some or all of the excess of the fair market value
(determined in a manner specified in the instrument evidencing the corresponding
option) of the shares subject to unexercised portions of the corresponding
option over the aggregate exercise price for such shares under the corresponding
option as of the date the Stock Appreciation Right is exercised. The amount
payable upon exercise of a Stock Appreciation Right may be paid in cash or in
shares of the class then subject to the corresponding option (valued on the
basis of their fair market value, determined as specified with respect to the
measurement of the amount payable as aforesaid), or in a combination of cash and
such shares so valued. No Stock Appreciation Right may be exercised in whole or
in part (a) other than in connection with the contemporaneous surrender without
exercise of such corresponding option, or the portion thereof that corresponds
to the portion of the Stock Appreciation right being exercised, or (b) except to
the extent that the
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<PAGE>
corresponding option or such portion thereof is exercisable on the date of
exercise of the Stock Appreciation Right by the person exercising the Stock
Appreciation Right, or (c) unless the class of stock then subject to the
corresponding option is then "publicly traded." For this purpose, a class of
stock is "publicly traded" if it is listed or admitted to unlisted trading
privileges on a national securities exchange or if bid and offer quotations
therefore are reported on the automated quotation system ("NASDAQ") operated by
the National Association of Securities Dealers, Inc. or on any then operative
successor to the NASDAQ system.
14. Restricted Stock. If the instrument evidencing the option so
provides, shares of stock issued on exercise of an option granted under this
Plan may upon issuance be subject to the following restrictions (and, as used
herein, "restricted stock" means shares issued on exercise of options granted
under this Plan which are still subject to restrictions imposed under this
Section 14 that have not yet expired or terminated:
(a) shares of restricted stock may not be sold or otherwise
transferred or hypothecated:
(b) if the employment of the holder of shares of restricted stock
with the Company or a subsidiary is terminated for any reason other than his
death, normal or early retirement in accordance with his employer's established
retirement policies or practices, or total disability, the Company (or any
subsidiary designated by it) shall have the option for sixty (60) days after
such termination of employment to purchase for cash all or any part of his
restricted stock at the lesser of (i) the price paid therefore by the holder, or
(ii) the fair market value of the restricted stock on the date of such
termination of employment (determined in a manner specified in the instrument
evidencing the option); and
(c) as to the shares of stock affected thereby, and additional
restrictions that may be imposed on particular shares of restricted stock as
specified in the instrument evidencing the option.
The restrictions imposed under this Section 14 shall apply as well to all
shares or other securities issued in respect of restricted stock in connection
with any stock split, reverse stock split, stock dividend, recapitalization,
reclassification, spin-off, split-off, merger, consolidation or reorganization,
but such restrictions shall expire or terminate at such time or times as shall
be specified therefore in the instrument evidencing the option which provides
for the restrictions.
15. Financial Assistance. The Company is vested with authority under this
Plan to assist any employee to whom an option is granted hereunder (including
any director or officer of the Company or any of its subsidiaries who is also an
employee) in the payment of the purchase price to such employee on such terms
and at such rates of interest and upon such security (or unsecured) as shall
have been authorized by or under authority of the Board.
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<PAGE>
16. Amendment and Termination. The Board may alter, amend, suspend or
terminate this Plan, provided that no such action shall deprive an optionee,
without his consent, of any of his rights under such option. Excepts as herein
provided, no such action of the Board, unless taken with the approval of the
shareholders of the Company may:
(a) increase the maximum number of shares for which options granted
under this Plan may be exercised;
(b) reduce the minimum permissible exercise price;
(c) extend the ten-year duration of this Plan set forth herein; or
(d) alter the class of employees eligible to receive options under the
Plan.
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<PAGE>
Exhibit 99.2
PRINCETON FINANCIAL SYSTEMS, INC.
1995 STOCK OPTION PLAN
1. Purpose of the Plan. Under this Stock Option Plan (the "Plan") of
Princeton Financial Systems, Inc. (the "Company") options may be granted to
eligible employees to purchase shares of the Company's capital stock. The Plan
is designed to enable the Company and its subsidiaries to attract, retain and
motivate their employees by providing for or increasing the proprietary
interests of such employees in the Company. The Plan provides for options which
qualify as incentive stock options ("Incentive Options") under Section 422A of
the Internal Revenue Code of 1986, as amended (the "Code"), as well as options
which do not so qualify.
2. Stock Subject to Plan. The maximum number of shares of stock for
which options granted hereunder may be exercised shall be 25,000 shares of
Princeton Financial Systems, Inc. Common Stock, par value $0.01 per share,
subject to the adjustments provided in Sections 7 and 12. Shares of stock
subject to the unexercised portions of any options granted under this Plan which
expire or terminate or are canceled may again be subject to options under this
Plan, the total number of shares of stock for which further options may be
granted under this Plan shall be irrevocably reduced not only when there is an
exercise of an option granted under this Plan, but also when such option is
surrendered upon an exercise of a stock appreciation right granted under this
Plan, in either case by the number of shares covered by the portion of such
option which is exercised or surrendered.
3. Eligible Employees. The employees eligible to be considered for the
grant of options hereunder are any persons regularly employed by the Company or
its parent(s) or subsidiaries in a managerial, professional or technical
capacity on a full-time, salaried basis.
4. $100,000 Incentive Stock Option Exercise Limitation. The aggregate
fair market value of the stock for which Incentive Options granted to any one
eligible employee under this Plan and under all stock option plans of the
Company, its parent(s) and subsidiaries, may by their terms first become
exercisable during any calendar year shall not exceed $100,000 determining fair
market value of the stock subject to any option as of the time that option is
granted.
5. Minimum exercise Price. The exercise price for each option granted
hereunder shall be not less than 100% of the fair market value of the stock at
the date of the grant of the option.
<PAGE>
6. Nontransferability. Any option granted under this Plan shall by its
terms be nontransferable by the optionee other than by will or the laws of
descent and distribution and is exercisable during the optionee's lifetime only
by him or by his guardian or legal representative.
7. Adjustments. If the outstanding shares of stock of the class then
subject to this Plan are increased or decreased, or are changed into or
exchanged into or exchanged for a different number or kind of shares or
securities, as a result of one or more reorganizations, recapitalization, stock
splits, reverse stock splits, stock dividends or the life, appropriate
adjustments shall be made in the number and/or kind of shares or securities for
which options then outstanding under this Plan may thereafter be exercised. Any
such adjustment in outstanding options shall be made without changing the
aggregate exercise price applicable to the unexercised portions of such options.
8. Maximum Option Term. No option granted under this Plan may be
exercised in whole or in part more than ten years after its date of grant.
9. Plan Duration. Options may not be granted under this Plan more than
ten years after the date of the adoption of this Plan, or of shareholder
approval thereof, whichever is earlier.
10. Payment. Payment for stock purchased under any exercise of an option
granted under this Plan shall be made in full in cash concurrently with such
exercise, except that, if and to the extent the instrument evidencing the option
so provides and if the Company is not then prohibited from purchasing or
acquiring shares of such stock, such payment may be made in whole or in part
with shares of the same class of stock as that then subject to the option,
delivered in lieu of cash concurrently with such exercise, the shares so
delivered to be valued on the basis of the fair market value of the stock
(determined in a manner specified in the instrument evidencing the option) on
the day preceding the date of exercise.
11. Administration. The plan shall be administered by the Company's board
of directors (the "Board") or, in the discretion of the Board, by a committee
(the "Committee") of not less than three members of the Board each of whom shall
not be eligible, and shall not have been eligible at any time within one year
prior to his appointment to the Committee, for selection as a person to whom
stock may be allocated or to whom stock options or stock appreciation rights may
be granted pursuant to the Plan or any other plan of the Company or any of its
affiliates entitling the participants therein to acquire stock, appreciation
rights, or stock options of the Company or any of its affiliates.
The interpretation and construction by the Committee of any term of
provision of the Plan or of any option granted under it shall be final, unless
otherwise determined by the Board in which event such determination by the Board
shall be final. The Committee may from time to time adopt rules and regulations
for carrying out this Plan and, subject to the
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<PAGE>
provisions of this Plan, may prescribe the form or forms of the instruments
evidencing any option granted under this Plan.
Subject to the provisions of this Plan, the Board or, by delegation
from the Board, the Committee shall have full and final authority in its
discretion to select the employees to be granted options, to grant such options
and to determine the number of shares to be subject thereto, the exercise
prices, the terms of exercise, expiration dates and other pertinent provisions
thereof.
12. Corporate Reorganizations. Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation of the Company as a
result of which the outstanding securities of the class then subject to options
hereunder are changed into or exchanged for cash or property or securities not
of the Company's issue, or upon a sale of substantially all the property of the
company to, or the acquisition of stock representing more than eighty percent
(80%) of the voting power of the stock of the Company then outstanding by,
another corporation or person, the Plan shall terminate, and all options
theretofore granted hereunder shall terminate, unless provision be made in
writing in connection with such transaction for the continuance of the Plan
and/or for the assumption of options theretofore granted, or the substitution
for such options of options covering the stock of a successor employer
corporation, or a parent or a subsidiary thereof, with appropriate adjustments
as to the number and kind of shares and prices in which event the Plan and
options theretofore granted shall continue in the manner and under the terms so
provided. If the Plan and unexercised options shall terminate pursuant to the
foregoing sentence, all persons entitled to exercise any unexercised portions of
options then outstanding shall have the right, at such time prior to the
consummation of the transaction causing such termination as the Company shall
designate, to exercise the unexercised portions of their options, including the
portions thereof which would, but for this paragraph entitled "Corporate
Reorganizations," not yet be exercisable.
13. Stock Appreciation Rights. If the instrument evidencing the option so
provides, an option granted under this Plan (herein sometimes referred to as the
"corresponding option") may include the right (a "Stock Appreciation Right") to
receive an amount equal to some or all of the excess of the fair market value
(determined in a manner specified in the instrument evidencing the corresponding
option) of the shares subject to unexercised portions of the corresponding
option over the aggregate exercise price for such shares under the corresponding
option as of the date the Stock Appreciation Right is exercised. The amount
payable upon exercise of a Stock Appreciation Right may be paid in cash or in
shares of the class then subject to the corresponding option (valued on the
basis of their fair market value, determined as specified with respect to the
measurement of the amount payable as aforesaid), or in a combination of cash and
such shares so valued. No Stock Appreciation Right may be exercised in whole or
in part (a) other than in connection with the contemporaneous surrender without
exercise of such corresponding option, or the portion thereof that corresponds
to the portion of the Stock Appreciation right being exercised, or (b) except to
the extent that the
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<PAGE>
corresponding option or such portion thereof is exercisable on the date of
exercise of the Stock Appreciation Right by the person exercising the Stock
Appreciation Right, or (c) unless the class of stock then subject to the
corresponding option is then "publicly traded." For this purpose, a class of
stock is "publicly traded" if it is listed or admitted to unlisted trading
privileges on a national securities exchange or if bid and offer quotations
therefore are reported on the automated quotation system ("NASDAQ") operated by
the National Association of Securities Dealers, Inc. or on any then operative
successor to the NASDAQ system.
14. Restricted Stock. If the instrument evidencing the option so
provides, shares of stock issued on exercise of an option granted under this
Plan may upon issuance be subject to the following restrictions (and, as used
herein, "restricted stock" means shares issued on exercise of options granted
under this Plan which are still subject to restrictions imposed under this
Section 14 that have not yet expired or terminated:
(a) shares of restricted stock may not be sold or otherwise
transferred or hypothecated:
(b) if the employment of the holder of shares of restricted stock
with the Company or a subsidiary is terminated for any reason other than his
death, normal or early retirement in accordance with his employer's established
retirement policies or practices, or total disability, the Company (or any
subsidiary designated by it) shall have the option for sixty (60) days after
such termination of employment to purchase for cash all or any part of his
restricted stock at the lesser of (i) the price paid therefore by the holder, or
(ii) the fair market value of the restricted stock on the date of such
termination of employment (determined in a manner specified in the instrument
evidencing the option); and
(c) as to the shares of stock affected thereby, and additional
restrictions that may be imposed on particular shares of restricted stock as
specified in the instrument evidencing the option.
The restrictions imposed under this Section 14 shall apply as well to all
shares or other securities issued in respect of restricted stock in connection
with any stock split, reverse stock split, stock dividend, recapitalization,
reclassification, spin-off, split-off, merger, consolidation or reorganization,
but such restrictions shall expire or terminate at such time or times as shall
be specified therefore in the instrument evidencing the option which provides
for the restrictions.
15. Financial Assistance. The Company is vested with authority under this
Plan to assist any employee to whom an option is granted hereunder (including
any director or officer of the Company or any of its subsidiaries who is also an
employee) in the payment of the purchase price to such employee on such terms
and at such rates of interest and upon such security (or unsecured) as shall
have been authorized by or under authority of the Board.
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<PAGE>
16. Amendment and Termination. The Board may alter, amend, suspend or
terminate this Plan, provided that no such action shall deprive an optionee,
without his consent, of any of his rights under such option. Excepts as herein
provided, no such action of the Board, unless taken with the approval of the
shareholders of the Company may:
(a) increase the maximum number of shares for which options granted
under this Plan may be exercised;
(b) reduce the minimum permissible exercise price;
(c) extend the ten-year duration of this Plan set forth herein; or
(d) alter the class of employees eligible to receive options under the
Plan.
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<PAGE>
Exhibit 99.3
PRINCETON FINANCIAL SYSTEMS, INC.
1996 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Princeton Financial Systems, Inc. 1996
-------
Stock Option Plan is to provide an incentive to Employees, consultants and
directors of the Company who are in a position to contribute materially to the
long-term success of the Company, to increase their interest in the Company's
welfare, and to aid in gaining the services of Employees, consultants and
directors of outstanding ability who will contribute to the Company's success.
2. DEFINITIONS.
-----------
2.1 "AFFILIATE" means any entity other than a Subsidiary in which PFS
has a substantial direct or indirect equity interest, as determined by the
Board.
2.2 "BOARD" means the Board of Directors of PFS.
2.3 "CODE" mens the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code shall include any successor to
such section.
2.4 "COMMITTEE" means the committee designated by the Board to
administer the Plan under Section 5.
2.5 "COMPANY" means PFS and its Subsidiaries, collectively, including
any successor to any thereof.
<PAGE>
2.6 "DISINTERESTED PERSON" means a person defined in Rule 16b-
3(c)(2)(i) promulgated by the SEC under the 1934 Act, or any successor
definition adopted by the SEC.
2.7 "ELIGIBLE CONSULTANT" means a consultant providing services to,
and who is not an employee of, PFS or any of its Subsidiaries.
2.8 "ELIGIBLE DIRECTOR" means each director of PFS who is not an
employee of PFS or any of its Subsidiaries.
2.9 "EMPLOYEE" means an officer or employee of the Company or an
Affiliate including a director who is such an employee.
2.10 "FAIR MARKET VALUE" means, on any given date, the fair market
value of the Stock as determined by the Committee on the basis of a review
of the facts and circumstances presented to and reviewed by the Committee.
2.11 "GRANT DATE" means the date on which an Option is granted.
2.12 "HOLDER" means an Employee, Eligible Director or Eligible
Consultant to whom an Option is granted.
2.13 "INCENTIVE STOCK OPTION" or "ISO" means a stock option intended
to meet the requirements of an incentive stock option as defined in Section
422 of the Code and designated as such.
2.14 "1934 ACT" means the Securities Exchange Act of 1934, as amended.
2.15 "NON-QUALIFIED OPTION" or "NQO" means a stock option not intended
to be an Incentive Stock Option, and designated as a Non-Qualified Option.
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<PAGE>
2.16 "OPTION" means any stock option granted by the Committee pursuant
to this Plan.
2.17 "PLAN" means the Princeton Financial Systems, Inc. 1996 Stock
Option Plan herein set forth, as amended from time to time.
2.18 "PFS" means Princeton Financial Systems, Inc., a Delaware
corporation, and any successor thereto.
2.19 "PREFERRED STOCK" means PFS' Series A Preferred Stock, $.10 par
value.
2.20 "RETIREMENT" means retirement from the active employment of the
Company or an Affiliate pursuant to the relevant provisions of the
applicable retirement plan of the employing entity or as otherwise
determined by the Board.
2.21 "SEC" means the United States Securities and Exchange Commission.
2.22 "STOCK" means PFS' common stock, without par value, or such other
class or kind of shares of capital stock or other securities as may result
from the application of Section 8 hereof.
2.23 "SUBSIDIARY" means any corporation that, at the time in question,
is a subsidiary corporation of PFS within the meaning of section 424(f) of
the Code.
2.24 "TEN PERCENT SHAREHOLDER" means a person who on any given date
owns, either directly or within the meaning of the attribution rules
contained in section 424(d) of the Code, stock possessing more than ten
percent of the total combined voting power of all classes of stock of PFS,
a Subsidiary or Affiliate.
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<PAGE>
3. AWARDS.
------
3.1 Options that may be granted under the Plan are either Incentive
Stock Options or Non-Qualified Options, both of which give the Holder the
right for a specified time period to purchase a specified number of shares
of Stock for a specified price per share.
3.2 Each Option shall be evidenced by an agreement with the Holder,
the form of which shall have been approved by the Board, which shall
conform to the requirements of the Plan and may contain such other
provisions as the Committee shall deem advisable.
4. ELIGIBILITY. Any Employee, Eligible Director and Eligible Consultant
-----------
is eligible to receive an Option, provided, that an Incentive Stock Option shall
--------
not be granted to (a) a Ten Percent Shareholder except on such terms concerning
the option price and period of exercise as are provided in subsections 7.1 and
7.2 hereof, or (b) an employee of an Affiliate or to an Eligible Director or
Eligible Consultant.
5. ADMINISTRATION OF PLAN.
----------------------
5.1 The Plan shall be administered and interpreted by the Committee,
which shall have full authority to act in selecting Employees, Eligible
Directors and Eligible Consultants to whom Options will be granted, in
determining the type and amount of Options to be granted to each such
Holder, the terms and conditions of Options and the terms of agreements
which will be entered into with Holders in connection with Options. The
Committee shall be appointed by the Board and shall have at least two
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<PAGE>
members. At such time as PFS registers under the 1934 Act, each member of
the Committee appointed by the Board shall be a Disinterested Person.
5.2 The Committee's powers shall include, but not be limited to, the
power to condition the exercise of an Option upon the attainment of
specified performance goals.
5.3 The Committee shall have the power to adopt regulations for
carrying out the Plan and to make such changes in such regulations as it
shall from time to time deem advisable. The Committee shall have the power
unilaterally and without approval of a Holder to amend any existing Options
in order to carry out the purposes of the Plan so long as such amendment
does not deprive the Holder of any benefit granted by the Option and so
long as the amended Option comports with the terms of the Plan. Amendments
adverse to the interests of the Holder must be approved by the Holder. Any
interpretation by the Committee of the terms and provisions of the Plan and
the administration thereof, and all action taken by the Committee, shall be
final and binding on Plan participants.
6. SHARES OF STOCK SUBJECT TO THE PLAN.
-----------------------------------
6.1 Subject to adjustment as provided in Section 8 hereof, the total
number of shares of Stock available for Options under the Plan shall be
75,000 shares.
6.2 If any shares subject to any Option granted hereunder are
forfeited or such award otherwise terminates without the issuance of such
shares or the payment of other consideration in lieu of such shares, the
shares subject to such Option, to the
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<PAGE>
extent of any such forfeiture or termination, shall again be available for
Options under the Plan.
7. TERMS OF OPTIONS. All Options shall be subject to the following terms
----------------
and conditions:
7.1 OPTION PRICE: The price per share at which Stock may be
purchased upon exercise of an Option shall be determined by the Committee,
but shall, in no case, be less than 100% of the Fair Market Value on the
Grant Date. In the case of any ISO granted to a Ten Percent Shareholder,
the option price per share shall not be less than 100% of the Fair Market
Value on the Grant Date.
7.2 TERM OF OPTIONS: The Option agreement shall specify when an
Option may be exercisable and the terms and conditions applicable thereto
and whether the Option is an ISO or an NQO. The term of an Option shall in
no event be longer than ten years (five years in the case of an ISO granted
to a Ten Percent Shareholder).
7.3 INCENTIVE STOCK OPTIONS: Each provision of the Plan and each
Option agreement relating to an ISO shall be construed so that each ISO
shall be an incentive stock option as defined in Section 422 of the Code,
and any provisions of the Option agreement thereof that cannot be so
construed shall be disregarded. In no event may an ISO be granted after 10
years from Plan adoption. ISOs may not be granted to employees of
Affiliates or to an Eligible Director or Eligible Consultant.
7.4 RESTRICTION OF TRANSFERABILITY: No Option shall be transferable
otherwise than by will or the laws of descent and distribution and, during
the lifetime of the Holder, shall be exercisable only by the Holder. Upon
the death of a Holder,
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<PAGE>
the person to whom the rights have passed by will or by the laws of descent
and distribution may exercise an Option only in accordance with this
Section 7.
7.5 PAYMENT OF OPTION PRICE: The Option price of the shares of Stock
payable upon the exercise of an Option shall be paid in full in cash at the
time of the exercise or, with the consent of the Committee, in whole or in
part in shares of Stock valued at Fair Market Value on the date of
exercise, provided that such shares have been held of record, beneficially
--------
and without restriction by the Holder for at least six months at the time
of exercise. The Committee's determination of Fair Market Value shall be
final and binding on the Holder.
7.6 TERMINATION BY DEATH: If a Holder's employment by the Company or
an Affiliate terminates, or if a Holder who is an Eligible Director or an
Eligible Consultant ceases to be such a director or a consultant (as the
case may be), by reason of death, any Option held by such Holder may
thereafter be exercised, to the extent exercisable at the time of death or
on such accelerated basis as the Committee may determine at or after grant,
by the legal representative of the Holder until the earlier to occur of the
expiration of (a) the period of six months from the date of death or (b)
the stated term of such Option.
7.7 TERMINATION BY REASON OF RETIREMENT OR DISABILITY: If a Holder's
employment by the Company or an Affiliate terminates, or if a Holder who is
an Eligible Director or an Eligible Consultant ceases to be such a director
or a consultant (as determined by the Committee) or Retirement, any Option
held by such Holder may thereafter be exercised by the Holder (or, where
appropriate, the Holder's legal
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<PAGE>
representative), to the extent exercisable at the time of termination or on
such accelerated basis as the Committee may determine at or after grant,
until the earlier to occur of the expiration of (a) the period of three
months from the date of termination; provided, however, if such termination
-------- -------
is by reason of Holder's permanent and total disability, such period of
three months shall be extended to six months or (b) the stated term of such
Option; provided, however, that if the Holder dies during the three-month
-------- -------
period after Retirement, the Option may be exercised only until the end of
such three-month period.
7.8 OTHER TERMINATION: If a Holder's employment by the Company or an
Affiliate terminates, or if a Holder who is an Eligible Director or an
Eligible Consultant ceases to be such a director or a consultant (as the
case may be), for any reason other than death, disability or Retirement,
the Option shall terminate on the earlier to occur of the expiration of (a)
the period of three months from the date of termination or (b) the stated
term of such option.
7.9 LIMIT ON ISOS: Notwithstanding any other provisions hereof, the
aggregate fair market value (determined on the Grant Date), of the stock
with respect to which ISOs are exercisable for the first time by the
Employee during any calendar year (under all such plans of the Company)
shall not exceed $100,000.
8. ADJUSTMENT PROVISIONS
---------------------
8.1 RECAPITALIZATIONS. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse
-8-
<PAGE>
stock split or other similar transaction, (i) the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or
kind of shares of other securities of the Company, or (ii) additional
shares or new or different shares or other securities of the Company or
other non-cash assets are distributed with respect to such shares of Stock
or other securities, an appropriate and proportionate adjustment may be
made in (x) the maximum number and kind of shares reserved for issuance
under the Plan, (y) the number and kind of shares or other securities
subject to then outstanding options under the Plan, and (z) the price for
each share subject to any then outstanding options under the Plan, without
changing the aggregate purchase price as to which such options remain
exercisable, provided that no adjustment shall be made pursuant to this
Section 8 if such adjustment would cause the Plan to fail to comply with
Rule 16b-3 under the 1934 Act or any successor rule. No fractional shares
of Stock shall be issued pursuant to such an adjustment, but an amount
equivalent to the portion of Fair Mark Value on the effective date of such
transaction attributable to any such fractional shares shall, where
appropriate, be paid in cash to the Holder. Adjustments hereunder shall not
be made as a result of an increase in the number of shares of common stock
outstanding resulting solely from conversion of shares of Preferred Stock
outstanding on the date hereof.
8.2 REORGANIZATIONS. In the event of a consolidation or 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 any other corporation or business entity or in the event of a
liquidation of the Company, the Board, or the board
-9-
<PAGE>
of directors of any corporation assuming the obligations of the Company,
may, in its discretion, take any one or more of the following actions, as
to the outstanding Options: (i) provide that such Option 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
Holders, provide that all unexercised Options will terminate immediately
prior to the consummation of such transaction unless exercised by the
Holder within a specified period following the date of such notice, (iii)
in the event of a merger under the terms of which holders of Stock will
receive upon consummation thereof a cash payment for each share surrendered
in the merger (the "Merger Price"), make or provide for a cash payment to
the Holders equal to the difference between (A) the Merger Price times the
number of shares of Stock subject to such outstanding 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 Options in
exchange for the termination of such Options, or (iv) provide that some or
all of the outstanding Options shall become exercisable in full.
9. CHANGE IN CONTROL. Notwithstanding any other provision of the Plan:
-----------------
9.1 If as a result of a Change in Control of the Company an Eligible
Director is removed from the Board of Directors or fails to be re-elected
to the Board upon the expiration of his term, within 12 months following
the effective date of such Change in Control of the Company, then all of
the Options held by such Eligible Director shall become fully vested and
immediately exercisable.
-10-
<PAGE>
9.2 For purposes of the Plan, a "Change in Control of the Company"
shall occur or be deemed to have occurred if:
(a) any "person", as such term is used in Section 13(d) and 14(d)
of the 1934 Act (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as
their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding
securities;
(b) the stockholders of the Company approver a merger or
consolidation of the Company with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
50% of the combined voting power of the voting securities of the
Company of such surviving entity outstanding immediately after such
merger or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no "person" (as hereinabove defined) acquires more than 50%
of the combined voting power of the Company's then outstanding
securities; or
-11-
<PAGE>
(c) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
10. TERMINATION AND AMENDMENT. The Plan shall remain in full force and
-------------------------
effect until terminated by the Board. The Board shall have the power to amend,
suspend or terminate the Plan at any time, provided, that no such amendment
--------
shall be made without shareholder approval which shall:
10.1 Increase (except as provided in Section 8) the total number of
shares available for issuance pursuant to the Plan;
10.2 Change the class of persons eligible to be Holders or materially
modify the eligibility requirements for participation in the Plan;
10.3 Change the provisions of this Section 10; or
10.4 Effect other changes for which shareholder approval would be
required under Rule 16b-3 under the 1934 Act or any successor rule.
Termination of the Plan pursuant to this Section 10 shall not affect
Options outstanding under the Plan at the time of termination.
11. NON-ASSIGNABILITY. Options may not be pledged, assigned or
-----------------
transferred for any reason during the Holder's lifetime, and any attempt to do
so shall be void and the relevant Option shall be forfeited.
12. GENERAL PROVISIONS.
------------------
12. The Plan shall become effective upon its approval by the Board
and subsequent approval by the shareholders of PFS.
-12-
<PAGE>
12.2 Nothing contained in the Plan, or an Option granted pursuant to
the Plan, shall confer upon an Employee any right with respect to
continuance of employment by the Company or an Affiliate or upon any
Eligible Director or Eligible Consultant any right with respect to
continuance of Board service or the consulting arrangement (as the case may
be), nor interfere in any way with the right of the Company or an
Affiliate, as appropriate, to terminate such relationships at any time.
12.3 For purposes of this Plan, transfer of employment between PFS and
any Subsidiary shall not be deemed termination of employment.
12.4 Holders shall be responsible to make appropriate provision for
all taxes required to be withheld in connection with any Option, the
exercise thereof and the transfer of shares of Stock pursuant to this Plan.
Such responsibility shall extent to all applicable federal, state, local or
foreign withholding taxes. In the case of exercise of Options, PFS shall,
at the election of the Holder, have the right to retain the number of
shares of Stock whose aggregate Fair Market Value equals the amount to be
withheld in satisfaction of the applicable withholding taxes. Agreements
evidencing such Options shall contain appropriate provisions to effect
withholding in this manner.
12.5 Without amending the Plan, Options may be granted to Employees
who are foreign nationals or employed outside the United States or both, on
such terms and conditions different from those specified in the Plan as
may, in the judgment of the Committee, be necessary or desirable to further
the purpose of the Plan.
12.6 To the extent that federal laws (such as the 1934 Act, the Code
or the Employee Retirement Income Security Act of 1974) do not otherwise
control, the Plan
-13-
<PAGE>
and all determinations made and actions taken pursuant hereto shall be
governed by the law of the State of New Jersey and construed accordingly.
-14-
<PAGE>
Exhibit 99.4
Princeton Financial Systems, Inc.
STOCK OPTION AGREEMENT
Princeton Financial Systems, Inc. (the "Company"), desiring to afford an
opportunity to the Grantee named below to purchase certain shares of the
Company's common stock, to provide the Grantee with an added incentive as an
employee of the Company or of one or more of its subsidiaries, hereby grants to
Grantee, and the Grantee hereby accepts, an option to purchase the number of
such shares optioned as specified below, during the term ending at midnight
(prevailing local time at the Company's principal offices) on the expiration
date of this Option specified below, at the option exercise price specified
below, subject to and upon the following terms and conditions:
1. Identifying Provisions: As used in this Option, the following terms
shall have the following respective meanings:
(a) Grantee:
(b) Date of grant:
(c) Number of shares optioned:
(d) Option exercise price per share:
(e) Expiration date:
2. Timing of Purchases: This option is not exercisable in any part until
one (1) year after the date of grant. Upon the expiration of (1) year after the
date of grant and subject to the provisions for termination and acceleration
herein, this Option shall become exercisable in installments as follows: This
Option may not in the aggregate be exercised as to more than twenty-five percent
(25%) of the total number of shares optioned until two (2) years after the date
of grant; nor more than fifty percent (50%) of the total number of shares
optioned until three (3) years after the date of grant; nor more than seventy-
five percent (75%) of the total number of shares optioned until four (4) years
after the date of grant; in each case to the nearest whole share. Upon the
expiration of four (4) years after the date for grant this Option may be
exercised as to all optioned shares for which it had not previously been
exercised, until and including the expiration date.
3. Restrictions on Exercise: The following additional provisions shall
apply to the exercise of this Option:
(i) Termination of Employment. If the Grantee's employment by the
Company or any of its subsidiaries is terminated for any reason other than death
only that portion of this Option exercisable at the time of such termination of
employment may
<PAGE>
thereafter be exercised, and it may not be exercised more than three (3) months
after such termination nor after the expiration date of this Option, whichever
date is sooner, unless such termination is by reason of the Grantee's permanent
and total disability, in which case such of three (3) months shall be extended
to one (1) years. In all other respects, this Option shall terminate upon such
termination of employment.
(ii) Death of Grantee. If the Grantee shall die during the term of
this Option, the Grantee's legal representative or representatives, or the
person or persons entitled to do so under the Grantee's last will and testament
or under applicable intestate laws, shall have the right to exercise this
Option, but only for the number of shares as to which the Grantee was entitled
to exercise this option in accordance with Section 2 hereof on the date of his
death, and such right shall expire and this Option shall terminate one (1) year
after the date of the Grantee's death or on the expiration date of this Option,
whichever date is sooner. In all other respects, this Option shall terminate
upon such death.
(iii) Continuity of Employment. This Option shall not be exercisable
by the Grantee in any part unless at all times beginning with the date of grant
and ending no more than three (3) months prior to the date of exercise, the
Grantee has, except for military service leave, sick leave or other bona fide
leave of absence (such as temporary employment by the United States Government)
been in the continuous employ of the Company or a parent or subsidiary thereof,
except that such period of three (3) months shall be one (1) year following any
termination of the Grantee's employment by reason of this permanent and total
disability.
(iv) Previously Granted Incentive Options. This Option shall not be
exercisable in any part while any "incentive stock option" (as that term is
defined in the United States Internal Revenue Code as amended from time to time)
which was granted before the date of this Option to the Grantee to purchase
shares of any class of stock of the Company or of a subsidiary of the Company,
or of a predecessor corporation of any such corporation has not been exercised
in full or has not expired by the lapse of time.
4. Non-Transferable: The Grantee may not transfer this Option except by
will or the laws of descent and distribution. This Option shall not be
otherwise transferred, assigned, pledged, hypothecated or disposed of in any
way, whether by operation of law or otherwise, and shall be exercisable during
the Grantee's lifetime only by the Grantee or his guardian or legal
representative.
5. Adjustments and Corporate Reorganizations: Subject to the provisions
of the Company's Stock Option Plan (as hereinafter defined) if the outstanding
shares of the class then subject to this Option are increased or decreased, or
are changed into or exchanged for a different number or kind of shares or
securities, as a result of one or more reorganizations, recapitalizations, stock
splits, reverse stock splits, stock dividends, or the like, appropriate
adjustments shall be made in the number and/or kind of shares or securities for
which the unexercised portions of this Option may thereafter be exercised, all
without any change in the
-2-
<PAGE>
aggregate exercise price applicable to the unexercised portions of this Option,
but with a corresponding adjustment in the exercise price per share or other
unit. No fractional share of stock shall be issued under this Option or in
connection with any such adjustment. Such adjustments shall be made by or under
authority of the Company's board of directors whose determinations as to what
adjustments shall be made, and to the extent thereof, shall be final, binding
and conclusive.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which the
outstanding securities of the class then subject to this Option are changed into
or exchanged for cash or properties or securities not of the Company's issue, or
upon a sale of substantially all the property of the Company to, or the
acquisition of stock representing more than eighty percent (80%) of the voting
power of the stock of the Company then outstanding by, another corporation or
person, this Option shall terminate, unless provision be made in writing in
connection with such transaction for the assumption of options theretofore
granted under the Stock Option Plan (as hereinafter defined) or the substitution
for such options of any options covering the stock of a successor employer
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices, in which event this option shall
continue in the manner and under the terms so provided. If this Option shall
terminate pursuant to the foregoing sentence, the Grantee shall have the right,
at such time prior to the consummation of the transaction causing such
termination as the Company shall designate, to exercise, subject to the
limitations set forth in Section 2 hereof, the unexercised portions of this
Option.
6. Exercise; Payment for the Delivery of Stock: This Option may be
exercised by the Grantee or other person then entitled to exercise it by giving
four (4) business days' written notice of exercise to the Company specifying the
number of shares to be purchased and the total purchase price, accompanied by a
check to the order of the Company in payment of such price. If the Company is
required to withhold on account of any present or future tax imposed as a result
of such exercise, the notice of exercise shall be accompanied by a check to the
order of the Company in payment of the amount of such withholding tax. In the
event that the notice of exercise is not accompanied by such check for the
payment of applicable withholding taxes, the Company shall be entitled in its
sole discretion (i) to retain in lieu thereof, such number of shares subject to
such exercise as equals in value based upon the exercise price the amount of
taxes required to be withheld, or (ii) to withhold from the Grantee's salary
additional income taxes in respect of such amount.
7. Alternative Payment with Stock: Notwithstanding the foregoing
provisions requiring payment by check, payment of such purchase price or any
portion thereof may be made in the sole discretion of the Company's Board of
Directors, with shares of stock of the same class as the shares then subject to
this Option, if shares of that class are then publicly traded (as defined
below), and if such shares have been held of record and beneficially by the
optionee for more than six months, such shares to be credited toward such
purchase price on the valuation basis set forth below, in which event the stock
certificates evidencing the shares
-3-
<PAGE>
to be used shall accompany the notice of exercise and shall be duly endorsed or
accompanied by duly executed stock powers to transfer the same to the Company;
provided, however, that such payment in stock instead of cash shall not be
effective and shall be rejected by the Company if (i) the Company is then
prohibited from purchasing or acquiring shares of the class of its stock thus
tendered to it, or (ii) the right or power of the person exercising the Option
to deliver such shares in payment of said purchase price is subject to the prior
interests of any other person (excepting the Company), as indicated by legends
upon the certificate(s) or as known to the Company. For the purposes of this
paragraph: (a) "publicly traded" shares are those which are listed or admitted
to unlisted trading privileges on a national securities exchange or as to which
bid and offer quotations are reported in the automated quotation system
("NASDAQ") operated by the National Association of Securities Dealers, Inc.
("NASD"); and (b) for credit toward the purchase price, shares so surrendered
shall be valued as of the day immediately preceding the delivery to the Company
of the certificate(s) evidencing such shares (or, if such day is not a trading
day in the U.S. securities markets, on the nearest preceding trading day), on
the basis of the closing price of stock of that class as reported with respect
to the market (or the composite of the markets, if more than one) in which such
shares are then traded, or if no such closing prices are reported, the lowest
independent offer quotation reported therefor in Level 2 of NASDAQ, or if no
such quotations are reported on the basis of the most nearly comparable
valuation method acceptable to the Company. If the Company rejects the payment
in stock pursuant to the terms hereinabove set forth, the tendered notice of
exercise shall not be effective hereunder unless promptly after being notified
of such rejection the person exercising the Option pays the purchase price in
acceptable form.
8. Rights in Shares Before Issuance and Delivery: No person shall be
entitled to privileges of stock ownership in respect of any shares issuable upon
the exercise of this Option, unless and until such shares have been issued to
such person as fully paid shares.
9. Requirements of Law and Stock Exchanges: By accepting this Option,
the Grantee represents and agrees for himself and his transferees by will or the
laws of descent and distribution that, unless a registration statement under the
Securities Act of 1933 is in effect as to the shares purchased upon any exercise
of this Option, (i) any and all shares so purchased shall be acquired for his
personal account and not with a view to or for sale in connection with any
distribution, and (ii) each notice of the exercise of any portion of this Option
shall be accompanied by a representation and warranty in writing, signed by the
person entitled to exercise the same, that the shares are being so acquired in
good faith for his personal account and not with a view to or for sale in
connection with any distribution.
No certificate or certificates for shares of stock purchased upon exercise
of this Option shall be issued and delivered prior the admission of such shares
to listing on notice of issuance on any stock exchange on which shares of that
class are then listed, nor unless and until, in the opinion of counsel for the
Company, such securities may be issued and delivered without causing the Company
to be in violation of or incur any liability under any federal, state or
-4-
<PAGE>
other securities law, any requirement of any securities exchange listing
agreement to which the Company may be a party, or any other requirement of law
or of any regulatory body having jurisdiction over the Company.
10. (a) Lock-up Agreement. The Grantee agrees that the Grantee will not,
for a period of at least 180 days following the effective date of the Company's
initial distribution of securities in an underwritten public offering to the
general public pursuant to a registration statement filed with the Securities
and Exchange Commission, directly or indirectly, sell, offer to sell or
otherwise dispose of the Company's securities other than any securities which
are included in such initial public offering.
(b) The Grantee agrees that upon exercise of this Option and the
issuance of the shares of common stock pursuant thereto the Grantee will execute
a Stock Restriction Agreement substantially in the form attached hereto as
Exhibit A. Execution of the Stock Restriction Agreement shall be a pre-
condition to the exercising and issuance of the shares.
11. Taxation of Option Shares: The Grantee hereby acknowledges that, upon
the exercise of this Option and the issuance of shares of the Company's Common
Stock pursuant thereto, the Grantee may elect, within a period of not later than
thirty (30) days after said shares are issued, to recognize ordinary income in
an amount equal to the fair market value of the shares on the date of issue less
the price paid for the shares hereunder by the Grantee. If this election is
made, the Company will be required by law to withhold additional income tax in
respect of that amount and in accordance with the provisions set forth in
paragraph 6 hereof. The Grantee acknowledges and agrees that the Company has no
responsibility hereunder for determining the fair market value of the shares
issued to the Grantee pursuant to its exercise of the Option. Furthermore, any
representation made to the Grantee as to the fair market value of such shares
shall not be construed by the Grantee as a determination which will be agreed to
by the U.S. Internal Revenue Service. Once the aforesaid election is made, it
may not be revoked without the consent of the U.S. Internal Revenue Service.
The Grantee further acknowledges that, if it dos not make the election
referred to in the preceding paragraph, the Grantee will be required to
recognize gain taxable as ordinary income on the date upon which the
restrictions on transfer and obligation or resale hereinabove set forth lapse.
The amount of the gain on that date will equal the fair market value of the
aforesaid shares on that date less the price paid for the shares hereunder by
the Grantee.
The Grantee further acknowledges that the Company is not in a position to
counsel the Grantee in respect of the tax consequences to it in connection with
the grant of this Option and the issuance of shares of the Company's common
stock thereunder and the Grantee is urged to consult its personal tax advisor
with respect to the information contained in this paragraph 11.
12. Shareholders Approval; Stock Option Plan: The grant of this Option
and the Company's obligation to perform under the terms and conditions of this
agreement is
-5-
<PAGE>
conditioned upon submission to and approval by the Company's Shareholders of a
stock option plan which substantially conforms to the terms and conditions set
forth herein (the "Stock Option Plan" or the "Plan"). This grant of the Option
shall not be effective until the inception of the Stock Option Plan which shall
take place upon its adoption by the Company's Shareholders. The Company will
notify the Grantee of the action taken by the Board of Directors with respect to
the Plan's approval. This Option is subject to, and the Company and the Grantee
agree to be bound by, all of the terms and conditions of the Company's Stock
Option Plan under which this Option was granted, as the same shall have been
adopted as herein set forth and amended from time to time in accordance with the
terms thereof, provided that no such amendment shall deprive the Grantee,
without his consent, of this Option or any of his rights hereunder. The Grantee
hereunder agrees to execute and deliver to the Company any amendment to this
agreement as shall be necessary upon the adoption of the Plan and in the option
of counsel for the Company, in order for the Plan, the grant of this Option, and
the issuance of shares of the Company's common stock upon exercise of this
Option to be in compliance with all applicable statutes, rules and regulations.
Pursuant to said Plan, the board of directors of the Company or its Committee
established for such purposes is vested with final authority to interpret and
construe the Plan and this Option, and is authorized to adopt rules and
regulations for carrying out the Plan. Upon its adoption by the Company's Board
of Directors, a copy of the Plan in its current form will be available for
inspection during business hours by the Grantee or other persons entitled to
exercise this Option at the Company's principal office.
13. Notices: Any notices to be given to the Company shall be addressed to
the Company in care of its Secretary at its principal office, and any notice to
be given to the Grantee shall be addressed to the address shown beneath his
signature hereto or at such other address as the Grantee may hereafter designate
in writing to the company. Any such notice shall be deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
registered or certified, and deposited, postage and registry or certification
fee prepaid, in a post office or branch post office regularly maintained by the
United States Postal Service.
14. Laws Applicable to Construction: This Option will not be treated as
an "incentive stock option" under the Internal Revenue Code. This Agreement has
been executed and delivered by the Company in New Jersey, and this Agreement
shall be construed and enforced in accordance with the laws of said State.
15. Other Deferred Compensation Arrangements: Grantee acknowledges that
this Agreement supersedes and replaces any and all prior agreements between the
parties for deferred compensation, including any "stock appreciation rights" or
similar arrangements.
-6-
<PAGE>
IN WITNESS WHEREOF, the Company has granted this Option on the date of
grant specified above.
Princeton Financial Systems, Inc.
By______________________________
Title____________________________
ACCEPTED:
__________________________
Grantee
__________________________
Street Address
__________________________
City and State
-7-
<PAGE>
Exhibit 99.5
PRINCETON FINANCIAL SYSTEMS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
This is a Non-Qualified Stock Option Agreement dated___ ("Agreement")
between Princeton Financial Systems, Inc., a Delaware corporation (the
"Company"), and the undersigned individual ("Optionee").
1. Definitions. As used herein, the following terms shall have the
-----------
following respective meanings:
1.1 "Optionee":
--------
1.2 "Grant Date":
----------
1.3 "Shares":
------
1.4 "Option Price":
------------
1.5 "Expiration Date" means the earliest of the following:
---------------
(a) If Optionee shall cease to be employed by the Employer, or if
Optionee is an Eligible Director or Eligible Consultant who ceases to be
such a director or consultant, for any reason other than death, retirement
or disability (as determined under the Plan), the date three months after
the termination of such employment; or
(b) If Optionee shall cease to be employed by the Employer, or if
Optionee is an Eligible Director or Eligible Consultant who ceases to be
such a director or consultant, because of retirement (as determined under
the Plan), the date three months after the date Optionee terminates such
employment because of retirement; or
(c) If Optionee shall cease to be employed by the Employer, or if
Optionee is an Eligible Director or Eligible Consultant who ceases to be
such a director or consultant, because of disability (as determined under
the Plan), the date six months after the date Optionee terminates such
employment because of disability; or
(d) If Optionee dies, the date six months after death; or
(e) The day before the tenth anniversary of the Grant Date.
<PAGE>
1.6 "Board" means the board of directors of the Company.
-----
1.7 "Code" means the Internal Revenue Code of 1986, as amended.
----
1.8 "Committee" means those members of the Board who have been
---------
designated pursuant to the Plan to act in that capacity.
1.9 "Date of Exercise" means the date on which the notice required by
----------------
Section 5 hereof is hand delivered, placed in the United States mail postage
prepaid, or delivered to a telegraph or telex facility.
1.10 "Eligible Consultant" means a consultant providing services to,
-------------------
and who is not an employee of, the Company or any of its Subsidiaries.
1.11 "Eligible Director" means each director of the Company who is not
-----------------
an employee of the Company or any of its Subsidiaries.
1.12 "Employer" means the Company or the Subsidiary for which Optionee
--------
is performing services on the Date of Exercise, or for which he was performing
services at the time of his death, disability or retirement.
1.13 "Fair Market Value" means the fair market value of a Share, as
-----------------
determined pursuant to the Plan.
1.14 "Option" means the option hereby granted.
------
1.15 "Plan" means the Princeton Financial Systems, Inc. 1996 Stock
----
Option Plan attached hereto as Exhibit A and incorporated herein by reference.
1.16 "Subsidiary" means any corporation that, at the time in question,
----------
is a subsidiary corporation of the Company within the meaning of Section 424(f)
of the Code.
2. Grant of Option. Subject to the terms and conditions set forth herein
---------------
and in the Plan, the Company hereby grants to Optionee the Option to purchase
any or all of the Shares. The Option hereby granted is a non-qualified stock
option.
3. Time of Exercise. The Option may be exercised after such time or
----------------
times as set forth below, and shall remain exercisable until the Expiration
Date, when the right to exercise shall terminate absolutely; provided that in no
--------
event shall Shares subject to the Option first become exercisable following the
effective date of Optionee's termination of employment.
________% of the total number of Shares subject to the Option may be
exercised following the first anniversary of the Grant Date.
-2-
<PAGE>
________% of the total number of Shares subject to the Option may be
exercised following the second anniversary of the Grant Date.
________% of the total number of Shares subject to the Option may be
exercised following the third anniversary of the Grant Date.
________% of the total number of Shares subject to the Option may be
exercised following the fourth anniversary of the Grant Date;
4. Payment for Shares. Full payment for Shares purchased upon the
------------------
exercise of the Option shall be made in cash or, with the consent of the
Committee, in whole or in part in Shares valued at Fair Market Value on the date
of exercise, but only to the extent such Shares have been held of record,
beneficially and without restriction by the Optionee for at least six months at
the time of exercise.
5. Manner of Exercise. The Option shall be exercised by giving written
------------------
notice of exercise to the Committee, in care of the Company's Secretary at the
Company's main office in Princeton, New Jersey, accompanied by full payment for
the Shares being purchased upon such exercise. Such notice shall be deemed to
have been given when hand-delivered, telecopied or mailed, first class postage
prepaid, and shall be irrevocable once given.
6. Nontransferability of Option. The Option may not be transferred or
----------------------------
assigned by Optionee otherwise than by will or the laws of descent and
distribution or be exercised other than by Optionee or, in the case of his
death, by his personal representative, heir or legatee.
7. Securities Laws. The Committee may from time to time impose any
---------------
conditions on the exercise of the Option as it deems necessary or advisable to
ensure that all rights granted under the Plan satisfy the requirements of the
Securities and Exchange Commission Rule 16b-3 or any successor rule. Such
conditions may include, without limitation, the partial or complete suspension
of the right to exercise the Option
8. Issuance of Certificates. As promptly as is feasible after the
------------------------
exercise of the Option, and subject to the provisions of Section 7 hereof, a
certificate for the Shares issuable on the exercise of the Option shall be
delivered to Optionee or to his personal representative, heir or legatee;
provided that no certificates for Shares will be so delivered until (a)
- --------
appropriate arrangements have been made with Employer for the withholding of any
taxes which may be due with respect to such Shares and (b) the Option Price has
been paid in full. The Company may condition delivery of certificates for Shares
upon the prior receipt from Optionee of any undertakings which it may determine
are required to assure that the certificates are being issued in compliance with
federal and state securities laws.
-3-
<PAGE>
9. RIGHT OF FIRST REFUSAL.
----------------------
9.1 Notice by Optionee. If at any time after the issuance of the
------------------
Shares upon exercise of the Option, Optionee desires to transfer any or all of
the Shares then owned by him ("Transfer"), then at least sixty days prior to any
Transfer other than a Permitted Transfer (as hereinafter defined), such Optionee
will give notice (the "Notice") to the Company and the stockholders of the
Company listed on Schedule I attached hereto (collectively, the "Stockholders")
of his intention to effect the Transfer. The Notice will set forth (a) the
number and class of shares to be sold by Optionee (the "Sale Shares"), (b) the
date or proposed date of the Transfer and the name and address of the
transferee, (c) the principal terms of the Transfer, including the cash or other
property or consideration to be received upon such Trust, (d) the percentage
which the number of Sale Shares constitutes with respect to the aggregate number
of shares and shares under option then held by the transferring Optionee. For
purposes of this Section, the term "Permitted Transfer" shall mean a Transfer to
Optionee's spouse, parents, brothers, sisters, children (natural or adopted),
stepchildren or grandchildren or a trust for any of their benefit (each, a
"Permitted Transferee"); provided, that, prior to such Transfer, such Permitted
--------
Transferee shall agree in writing to be bound by the terms and conditions of
this Section and Optionee shall retain the power to vote any such Shares
transferred.
9.2 The Stockholders' Option. The Stockholders shall have the right,
------------------------
but not the obligation, to purchase the Sale Shares on the same terms as
specified in the Notice. Within 20 days after the giving of the Notice, the
Stockholder shall given written notice to the transferring Optionee and the
Company stating whether or not he elects to exercise his option, the number of
Sale Shares, if any, he elects to purchase and a proposed closing date not less
than 60 or more than 90 days after the date of the Notice. Failure by a
Stockholder to give such notice within the 20-day time period shall be deemed an
election not to exercise the option. If more than one Stockholder elects to
exercise the option in excess of the aggregate number of Sale Shares, the number
of Sale Shares to be purchased shall be allocated pro rata based on their equity
ownership on a fully diluted basis.
9.3 The Company's Option. If the Stockholders fail to exercise the
--------------------
option as to all the Sale Shares, the Company shall have the option, but not the
obligation, to purchase the remaining Sale Shares on the same terms as specified
in the Notice. After the expiration of the 20-day period in Section 9.2, but
within 30 days after the giving of the Notice, the Company shall give written
notice to the transferring Optionee and the Stockholders stating whether it
elects to exercise the option, the number of Sale Shares it elects to purchase
and (unless a closing date has been set by the Stockholders) a date and time for
consummation of the purchase not less than 60 or more than 90 days after the
giving of the Notice. Failure by the Company to give such notice within such
time period shall be deemed an election not to exercise the option. The
transferring Optionee shall not be entitled to vote, either as a Stockholder or
director, in connection with the decision of the Company whether to exercise its
option to purchase his Sale Shares, provided that if his vote is required for
--------
valid
-4-
<PAGE>
corporate action he shall vote in accordance with the decision of the majority
of the other directors or stockholders.
9.4 Transfers. If the Stockholders and the Company shall not have
---------
exercised their purchase rights in the manner and within the time periods
provided in this Section 9 with respect to all of the Sale Shares, the
transferring Optionee may, within thirty (30) days after the expiration of the
last of the time periods specified in this Section 9, sell the Sale Shares
solely in accordance with the terms as specified in the Notice; provided,
--------
however, that the Sale Shares shall continue to be subject to the terms and
- -------
conditions of this Section 9 and such transferee shall agree in writing to be
bound by the terms and conditions of this Section 9. If the sale of Sale Shares
is not completed within such thirty days, the Sale Shares shall again be subject
to all of the restrictions of this Section 9.
9.5 Transfers Void. Any attempted transfer in violation of the terms
--------------
of this Section 9 shall be ineffective to vest in any transferee any interest
held by Optionee in the Shares. Without limiting the foregoing, any purported
Transfer in violation hereof shall be ineffective as against the Company, and
the Company shall have a continuing right and option (but not an obligation),
until the restrictions contained in this Section 9 terminate, to purchase the
Sale Shares purported to be transferred by Optionee for a price and on terms the
same as those at which the purported Transfer was effected.
9.6 Termination of Restrictions. The restrictions in this Section 9
---------------------------
shall terminate upon a Qualified Public Offering (as hereinafter defined). For
purposes of this Section, a "Qualified Public Offering" means a firm commitment
underwritten registered public offering of the common stock of the Company
registered under the Securities Act of 1933, as amended, that results in an
aggregate offering price of at least $10,000,000 at a price per share greater
than or equal to $7.50 (as such price may have been adjusted from time to time).
10. "Stand-Off" Agreement. Optionee, if requested by the Company and an
---------------------
underwriter of common stock or other securities of the Company in connection
with a public offering, shall agree not to sell or otherwise transfer or dispose
of any Shares or other securities of the Company held by Optionee for a
specified period of time (not to exceed 180 days) following the effective date
of a Registration Statement; provided, that such agreement shall only apply to
--------
the first such Registration Statement covering common stock of the Company to be
sold on its behalf to the public in a public offering. Such agreement shall be
in writing in a form satisfactory to the Company and such underwriter. The
Company may impose stop-transfer instructions with respect to the Shares or
other securities subject to the foregoing restriction until the end of the
stand-off period.
11. Rights Prior to Exercise. Neither Optionee nor his personal
------------------------
representative, heir or legatee shall have any of the rights of a shareholder
with respect to any Shares until the date of the issuance to him or her of a
certificate for such Shares as provided in Section 8 hereof.
-5-
<PAGE>
12. Taxes. Optionee shall be responsible to make appropriate provision
-----
for all taxes required to be withheld in connection with any Option, the
exercise thereof and the transfer of the Shares. Such responsibility shall
extend to all applicable federal, state, local or foreign withholding taxes.
13. Status of Option; Interpretation. The Option hereby granted is a non-
--------------------------------
qualified stock option. The Committee shall have sole power to resolve any
dispute or disagreement arising out of this Agreement. The interpretation and
construction of any provision of this Option or the Plan made by the Committee
shall be final and conclusive.
14. Option Not to Affect Employment. The Option granted hereunder shall
-------------------------------
not confer any Optionee any right to continue in the employment of the Company
or any Subsidiary or upon any Eligible Director or Eligible Consultant any right
with respect to continuance of Board service or the consulting arrangement (as
the case may be).
15. Miscellaneous.
-------------
15.1 The address for Optionee to which notice, demands and other
communications to be given or delivered under or by reason of the provisions
hereof shall be the address set forth below under Optionee's signature.
15.2 This Agreement may be exercised in one or more counterparts all
of which taken together will constitute one and the same instrument.
15.3 The validity, performance, construction and effect of this
Agreement shall be governed by the laws of the State of New Jersey, without
giving effect to principles of conflicts of law.
16. Entire Agreement. The Plan and this Agreement are intended by the
----------------
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement in two
counterparts as of the day and year first above written.
PRINCETON FINANCIAL SYSTEMS, INC.
By:______________________________
WITNESS:
________________________ _________________________________
Optionee
Address:
_________________________________
_________________________________
-7-
<PAGE>
Exhibit 99.6
Form of Stock Option Assumption Agreement
used in connection with the
1992 STOCK OPTION PLAN
STATE STREET BOSTON CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
---------------------------------
OPTIONEE:
STOCK OPTION ASSUMPTION AGREEMENT issued as of the ___ day of November,
1996 by State Street Boston Corporation, a Massachusetts corporation ("State
Street").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Princeton
Financial Systems, Inc., a Delaware corporation ("PFS"), which were granted to
Optionee under the PFS 1992 Stock Option Plan (the "Plan") and are evidenced by
a Stock Option Agreement ("Option Agreement"), between PFS and Optionee.
WHEREAS, PFS has this day been acquired by State Street through merger of a
wholly-owned State Street subsidiary, SSB Merger Sub, Inc. ("Merger Sub"), with
and into PFS (the "Merger"), pursuant to the Agreement and Plan of Merger dated
as of October 17, 1996, by and among State Street, PFS and Merger Sub (the
"Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require State Street to
assume all obligations of PFS under all options outstanding under the Plan at
the consummation of the Merger and to issue to the holder of each outstanding
option a notice setting forth such holder's rights after consummation of the
Merger.
WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange
ratio in effect for the Merger applicable to the options is 0.7128 of a share of
State Street common stock ("State Street Stock") for each outstanding share of
PFS common stock (the "Exchange Rate").
WHEREAS, this Agreement is to become effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options under the Plan which have become
necessary by reason of the assumption of those options by State Street in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
<PAGE>
1. The number of shares of PFS common stock subject to the stock options
held by Optionee under the Plan immediately prior to the Effective Time (the
"PFS Options") and the exercise price payable per share are set forth in Exhibit
A hereto. State Street hereby assumes, as of the Effective Time, all the duties
and obligations of PFS under each of the PFS Options. In connection with such
assumption, the number of shares of State Street Stock purchasable under each
PFS Option hereby assumed and the exercise price payable thereunder have been
adjusted to reflect the Exchange Rate in effect for the Merger applicable to
employee options. Accordingly, the number of shares of State Street Stock
subject to each PFS Option hereby assumed, and the adjusted exercise price
payable per share of State Street Stock under the assumed PFS Option, shall be
as indicated for that option in attached Exhibit B.
2. The following provisions shall govern each PFS Option hereby assumed by
State Street:
- Unless the context otherwise requires, all references to the
"Company" in each Option Agreement and in the Plan (as incorporated
into such Option Agreement) shall mean State Street, all references
to "Stock" shall mean shares of State Street Stock, and all
references to the "Board" shall mean the Executive Compensation
Committee of the Board of Directors of State Street.
- The grant date and the expiration date of each assumed PFS Option
and all other provisions which govern either the exercisability or
the termination of the assumed PFS Option shall remain the same as
set forth in the Option Agreement applicable to that option and
shall accordingly govern and control Optionee's rights under this
Agreement to purchase State Street Stock.
- Each assumed PFS Option shall remain exercisable in accordance with
the same installment exercise schedule in effect under the
applicable Option Agreement immediately prior to the Effective
Time, with the number of shares of State Street Stock subject to
each such installment adjusted to reflect the Exchange Rate.
Accordingly, no accelerated vesting of the PFS Options shall be
deemed to occur by reason of the Merger, and the grant date and
expiration date for each assumed PFS Option shall accordingly
remain the same as in effect under the applicable Option Agreement
immediately prior to the Merger.
- For purposes of applying any and all provisions of the Option
Agreement relating to Optionee's status as an employee with the
Company, Optionee shall be deemed to continue in such employee
status for so long as Optionee renders services as an employee to
State Street or any present or future State Street subsidiary,
including (without limitation) PFS. Accordingly, the provisions of
the Option Agreement governing the termination of the assumed PFS
Option upon the Optionee's cessation of employee status with PFS
shall hereafter be
-2-
<PAGE>
applied on the basis of the Optionee's cessation of employee status
with State Street and its subsidiaries, and each assumed PFS Option
shall accordingly terminate, within the designated time period in
effect under the Option Agreement for that option, following such
cessation of employment with State Street and its subsidiaries.
- The adjusted exercise price payable for the State Street Stock
subject to each assumed PFS Option shall be payable in any of the
forms authorized under the Option Agreement applicable to that
option. For purposes of determining the holding period of any
shares of State Street Stock delivered in payment of such adjusted
exercise price, the period for which such shares were held as PFS
common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed PFS Option, Optionee must deliver
to State Street a written notice of exercise in which the number of
shares of State Street Stock to be purchased thereunder must be
indicated. The exercise notice must be accompanied by payment of
the adjusted exercise price payable for the purchased shares of
State Street Stock and, in addition, tax withholding information
pursuant to any laws or regulations of any jurisdiction should be
delivered to State Street at the following address:
State Street Boston Corporation
225 Franklin Street
Boston, Massachusetts 02110
Attention: [To Be Determined]
3. Except to the extent specifically modified by this Option Assumption
Agreement, all of the terms and conditions of each Option Agreement as in effect
immediately prior to the Merger shall continue in full force and effect and
shall not in any way be amended, revised or otherwise affected by this Stock
Option Assumption Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, State Street Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the ___ day of November, 1996.
STATE STREET BOSTON CORPORATION
By:______________________________
-4-
<PAGE>
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares of
Princeton Financial Systems, Inc. Common Stock (Pre-Merger)
<PAGE>
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares of
State Street Boston Corporation Common Stock (Post-Merger)
<PAGE>
Exhibit 99.7
Form of Stock Option Assumption Agreement
used in connection with the
1995 STOCK OPTION PLAN
STATE STREET BOSTON CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
---------------------------------
OPTIONEE:
STOCK OPTION ASSUMPTION AGREEMENT issued as of the ___ day of November,
1996 by State Street Boston Corporation, a Massachusetts corporation ("State
Street").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Princeton
Financial Systems, Inc., a Delaware corporation ("PFS"), which were granted to
Optionee under the PFS 1995 Stock Option Plan (the "Plan") and are evidenced by
a Stock Option Agreement ("Option Agreement"), between PFS and Optionee.
WHEREAS, PFS has this day been acquired by State Street through merger of a
wholly-owned State Street subsidiary, SSB Merger Sub, Inc. ("Merger Sub"), with
and into PFS (the "Merger"), pursuant to the Agreement and Plan of Merger dated
as of October 17, 1996, by and among State Street, PFS and Merger Sub (the
"Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require State Street to
assume all obligations of PFS under all options outstanding under the Plan at
the consummation of the Merger and to issue to the holder of each outstanding
option a notice setting forth such holder's rights after consummation of the
Merger.
WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange
ratio in effect for the Merger applicable to the options is 0.7128 of a share of
State Street common stock ("State Street Stock") for each outstanding share of
PFS common stock (the "Exchange Rate").
WHEREAS, this Agreement is to become effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options under the Plan which have become
necessary by reason of the assumption of those options by State Street in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
<PAGE>
1. The number of shares of PFS common stock subject to the stock options
held by Optionee under the Plan immediately prior to the Effective Time (the
"PFS Options") and the exercise price payable per share are set forth in Exhibit
A hereto. State Street hereby assumes, as of the Effective Time, all the duties
and obligations of PFS under each of the PFS Options. In connection with such
assumption, the number of shares of State Street Stock purchasable under each
PFS Option hereby assumed and the exercise price payable thereunder have been
adjusted to reflect the Exchange Rate in effect for the Merger applicable to
employee options. Accordingly, the number of shares of State Street Stock
subject to each PFS Option hereby assumed, and the adjusted exercise price
payable per share of State Street Stock under the assumed PFS Option, shall be
as indicated for that option in attached Exhibit B.
2. The following provisions shall govern each PFS Option hereby assumed by
State Street:
- Unless the context otherwise requires, all references to the
"Company" in each Option Agreement and in the Plan (as incorporated
into such Option Agreement) shall mean State Street, all references
to "Stock" shall mean shares of State Street Stock, and all
references to the "Board" shall mean the Executive Compensation
Committee of the Board of Directors of State Street.
- The grant date and the expiration date of each assumed PFS Option
and all other provisions which govern either the exercisability or
the termination of the assumed PFS Option shall remain the same as
set forth in the Option Agreement applicable to that option and
shall accordingly govern and control Optionee's rights under this
Agreement to purchase State Street Stock.
- Each assumed PFS Option shall remain exercisable in accordance
with the same installment exercise schedule in effect under the
applicable Option Agreement immediately prior to the Effective
Time, with the number of shares of State Street Stock subject to
each such installment adjusted to reflect the Exchange Rate.
Accordingly, no accelerated vesting of the PFS Options shall be
deemed to occur by reason of the Merger, and the grant date and
expiration date for each assumed PFS Option shall accordingly
remain the same as in effect under the applicable Option
Agreement immediately prior to the Merger.
- For purposes of applying any and all provisions of the Option
Agreement relating to Optionee's status as an employee with the
Company, Optionee shall be deemed to continue in such employee
status for so long as Optionee renders services as an employee to
State Street or any present or future State Street subsidiary,
including (without limitation) PFS. Accordingly, the provisions
of the Option Agreement governing the termination of the assumed
PFS Option upon the Optionee's cessation of employee status with
PFS shall hereafter be
-2-
<PAGE>
applied on the basis of the Optionee's cessation of employee status
with State Street and its subsidiaries, and each assumed PFS Option
shall accordingly terminate, within the designated time period in
effect under the Option Agreement for that option, following such
cessation of employment with State Street and its subsidiaries.
- The adjusted exercise price payable for the State Street Stock
subject to each assumed PFS Option shall be payable in any of the
forms authorized under the Option Agreement applicable to that
option. For purposes of determining the holding period of any
shares of State Street Stock delivered in payment of such adjusted
exercise price, the period for which such shares were held as PFS
common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed PFS Option, Optionee must deliver
to State Street a written notice of exercise in which the number of
shares of State Street Stock to be purchased thereunder must be
indicated. The exercise notice must be accompanied by payment of
the adjusted exercise price payable for the purchased shares of
State Street Stock and, in addition, tax withholding information
pursuant to any laws or regulations of any jurisdiction should be
delivered to State Street at the following address:
State Street Boston Corporation
225 Franklin Street
Boston, Massachusetts 02110
Attention: [To Be Determined]
3. Except to the extent specifically modified by this Option Assumption
Agreement, all of the terms and conditions of each Option Agreement as in effect
immediately prior to the Merger shall continue in full force and effect and
shall not in any way be amended, revised or otherwise affected by this Stock
Option Assumption Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, State Street Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the ___ day of November, 1996.
STATE STREET BOSTON CORPORATION
By:______________________________
-4-
<PAGE>
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares of
Princeton Financial Systems, Inc. Common Stock (Pre-Merger)
<PAGE>
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares of
State Street Boston Corporation Common Stock (Post-Merger)
<PAGE>
Exhibit 99.8
Form of Stock Option Assumption Agreement
used in connection with the
1996 STOCK OPTION PLAN
STATE STREET BOSTON CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
---------------------------------
OPTIONEE:
STOCK OPTION ASSUMPTION AGREEMENT issued as of the ___ day of November,
1996 by State Street Boston Corporation, a Massachusetts corporation ("State
Street").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Princeton
Financial Systems, Inc., a Delaware corporation ("PFS"), which were granted to
Optionee under the PFS 1996 Stock Option Plan (the "Plan") and are evidenced by
a Stock Option Agreement ("Option Agreement"), between PFS and Optionee.
WHEREAS, PFS has this day been acquired by State Street through merger of a
wholly-owned State Street subsidiary, SSB Merger Sub, Inc. ("Merger Sub"), with
and into PFS (the "Merger"), pursuant to the Agreement and Plan of Merger dated
as of October 17, 1996, by and among State Street, PFS and Merger Sub (the
"Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require State Street to
assume all obligations of PFS under all options outstanding under the Plan at
the consummation of the Merger and to issue to the holder of each outstanding
option a notice setting forth such holder's rights after consummation of the
Merger.
WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange
ratio in effect for the Merger applicable to the options is 0.7128 of a share of
State Street common stock ("State Street Stock") for each outstanding share of
PFS common stock (the "Exchange Rate").
WHEREAS, this Agreement is to become effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options under the Plan which have become
necessary by reason of the assumption of those options by State Street in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
<PAGE>
1. The number of shares of PFS common stock subject to the stock options
held by Optionee under the Plan immediately prior to the Effective Time (the
"PFS Options") and the exercise price payable per share are set forth in Exhibit
A hereto. State Street hereby assumes, as of the Effective Time, all the duties
and obligations of PFS under each of the PFS Options. In connection with such
assumption, the number of shares of State Street Stock purchasable under each
PFS Option hereby assumed and the exercise price payable thereunder have been
adjusted to reflect the Exchange Rate in effect for the Merger applicable to
employee options. Accordingly, the number of shares of State Street Stock
subject to each PFS Option hereby assumed, and the adjusted exercise price
payable per share of State Street Stock under the assumed PFS Option, shall be
as indicated for that option in attached Exhibit B.
2. The following provisions shall govern each PFS Option hereby assumed by
State Street:
- Unless the context otherwise requires, all references to the
"Company" in each Option Agreement and in the Plan (as incorporated
into such Option Agreement) shall mean State Street, all references
to "Stock" shall mean shares of State Street Stock, and all
references to the "Board" shall mean the Executive Compensation
Committee of the Board of Directors of State Street.
- The grant date and the expiration date of each assumed PFS Option
and all other provisions which govern either the exercisability or
the termination of the assumed PFS Option shall remain the same as
set forth in the Option Agreement applicable to that option and
shall accordingly govern and control Optionee's rights under this
Agreement to purchase State Street Stock.
- Each assumed PFS Option shall remain exercisable in accordance with
the same installment exercise schedule in effect under the
applicable Option Agreement immediately prior to the Effective
Time, with the number of shares of State Street Stock subject to
each such installment adjusted to reflect the Exchange Rate.
Accordingly, no accelerated vesting of the PFS Options shall be
deemed to occur by reason of the Merger, and the grant date and
expiration date for each assumed PFS Option shall accordingly
remain the same as in effect under the applicable Option Agreement
immediately prior to the Merger.
- For purposes of applying any and all provisions of the Option
Agreement relating to Optionee's status as an employee with the
Company, Optionee shall be deemed to continue in such employee
status for so long as Optionee renders services as an employee to
State Street or any present or future State Street subsidiary,
including (without limitation) PFS. Accordingly, the provisions
of the Option Agreement governing the termination of the assumed
PFS Option upon the Optionee's cessation of employee status with
PFS shall hereafter be
-2-
<PAGE>
applied on the basis of the Optionee's cessation of employee status
with State Street and its subsidiaries, and each assumed PFS Option
shall accordingly terminate, within the designated time period in
effect under the Option Agreement for that option, following such
cessation of employment with State Street and its subsidiaries.
- The adjusted exercise price payable for the State Street Stock
subject to each assumed PFS Option shall be payable in any of the
forms authorized under the Option Agreement applicable to that
option. For purposes of determining the holding period of any
shares of State Street Stock delivered in payment of such adjusted
exercise price, the period for which such shares were held as PFS
common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed PFS Option, Optionee must deliver
to State Street a written notice of exercise in which the number of
shares of State Street Stock to be purchased thereunder must be
indicated. The exercise notice must be accompanied by payment of
the adjusted exercise price payable for the purchased shares of
State Street Stock and, in addition, tax withholding information
pursuant to any laws or regulations of any jurisdiction should be
delivered to State Street at the following address:
State Street Boston Corporation
225 Franklin Street
Boston, Massachusetts 02110
Attention: [To Be Determined]
3. Except to the extent specifically modified by this Option Assumption
Agreement, all of the terms and conditions of each Option Agreement as in effect
immediately prior to the Merger shall continue in full force and effect and
shall not in any way be amended, revised or otherwise affected by this Stock
Option Assumption Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, State Street Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the ___ day of November, 1996.
STATE STREET BOSTON CORPORATION
By:______________________________
-4-
<PAGE>
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares of
Princeton Financial Systems, Inc. Common Stock (Pre-Merger)
<PAGE>
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares of
State Street Boston Corporation Common Stock (Post-Merger)
