EXHIBIT 10
WASHINGTON TRUST BANCORP INC. EXHIBIT A
2003 STOCK INCENTIVE PLAN
GENERAL PURPOSE OF THE PLAN; DEFINITIONS
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The name of the plan is the Washington Trust Bancorp, Inc. 2003 Stock Incentive
Plan (the "Plan"). The purpose of the Plan is to encourage and enable the
officers, employees, Non-Employee Directors and other key persons (including
consultants) of Washington Trust Bancorp, Inc. (the "Company") and its
Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such persons with a
direct stake in the Company's welfare will assure a closer identification of
their interests with those of the Company, thereby stimulating their efforts on
the Company's behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
"Administrator" is defined in Section 2(a).
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified
Stock Options, Stock Appreciation Rights, Deferred Stock Awards, Restricted
Stock Awards, Unrestricted Stock Awards and Dividend Equivalent Rights.
"Board" means the Board of Directors of the Company.
"Change of Control" is defined in Section 15.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means the Compensation and Benefits Committee of the Board or
such other committee of not less than three members of the Board appointed
by the Board to administer the Plan, provided that members of such
Committee must be "Non-Employee Directors" within the meaning of Rule
16b-3(b) promulgated under the Exchange Act.
"Deferred Stock Award" means Awards granted pursuant to Section 8.
"Dividend Equivalent Right" means Awards granted pursuant to Section 10.
"Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 17.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Fair Market Value" of the Stock on any given date means the fair market
value of the Stock determined in good faith by the Administrator; provided,
however, that if the Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"),
NASDAQ National System or a national securities exchange, the determination
shall be made by reference to market quotations. If there are no market
quotations for such date, the determination shall be made by reference to
the last date preceding such date for which there are market quotations.
"Incentive Stock Option" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.
"Non-Employee Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Restricted Stock Award" means Awards granted pursuant to Section 7.
"Stock" means the Common Stock, par value $.0625 per share, of the Company,
subject to adjustments pursuant to Section 3.
"Stock Appreciation Right" means any Award granted pursuant to Section 6.
"Subsidiary" means any corporation or other entity (other than the Company)
in which the Company has a controlling interest, either directly or
indirectly.
"Unrestricted Stock Award" means Awards granted pursuant to Section 9.
SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES
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AND DETERMINE AWARDS
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a) Committee.
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The Plan shall be administered by either the Board or the Committee (in
either case, the "Administrator").
b) Powers of Administrator.
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The Administrator shall have the power and authority to grant Awards
consistent with the terms of the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to time be
granted;
(ii) to determine the time or times of grant, and the extent, if any, of
Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Deferred Stock Awards,
Unrestricted Stock Awards and Dividend Equivalent Rights, or any
combination of the foregoing, granted to any one or more grantees;
(iii) to determine the number of shares of Stock to be covered by any
Award;
(iv) to determine and modify from time to time the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan,
of any Award, which terms and conditions may differ among individual
Awards and grantees, and to approve the form of written instruments
evidencing the Awards;
(v) to accelerate at any time the exercisability or vesting of all or any
portion of any Award;
(vi) subject to the provisions of Section 5(a)(ii), to extend at any time
the period in which Stock Options may be exercised;
(vii) to determine at any time whether, to what extent, and under what
circumstances distribution or the receipt of Stock and other amounts
payable with respect to an Award shall be deferred either
automatically or at the election of the grantee and whether and to
what extent the Company shall pay or credit amounts constituting
interest (at rates determined by the Administrator) or dividends or
deemed dividends on such deferrals; and
(viii)at any time to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the
administration of the Plan.
All decisions and interpretations of the Administrator shall be binding on
all persons, including the Company and Plan grantees.
c) Delegation of Authority to Grant Awards.
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The Administrator, in its discretion, may delegate to the Chief Executive
Officer of the Company all or part of the Administrator's authority and
duties with respect to the granting of Awards at Fair Market Value, to
individuals who are not subject to the reporting and other provisions of
Section 16 of the Exchange Act or "covered employees" within the meaning of
Section 162(m) of the Code. Any such delegation by the Administrator shall
include a limitation as to the amount of Awards that may be granted during
the period of the delegation and shall contain guidelines as to the
determination of the exercise price of any Stock Option or Stock
Appreciation Right, the conversion ratio or price of other Awards and the
vesting criteria. The Administrator may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior
actions of the Administrator's delegate or delegates that were consistent
with the terms of the Plan.
d) Indemnification.
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Neither the Board nor the Committee, nor any member of either or any
delegatee thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the
Plan, and the members of the Board and the Committee (and any delegatee
thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or
expense (including, without limitation, reasonable attorneys' fees) arising
or resulting therefrom to the fullest extent permitted by law and/or under
any directors' and officers' liability insurance coverage which may be in
effect from time to time.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
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(a) Stock Issuable.
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The maximum number of shares of Stock reserved and available for issuance
under the Plan shall be 600,000 shares, subject to adjustment as provided
in Section 3(b); provided that not more than 200,000 shares shall be issued
in the form of Awards other than Stock Options or Stock Appreciation Rights
except to the extent such Awards are granted in lieu of cash compensation
or fees. For purposes of this limitation, the shares of Stock underlying
any Awards which are forfeited, canceled, reacquired by the Company,
satisfied without the issuance of Stock or otherwise terminated (other than
by exercise) shall be added back to the shares of Stock available for
issuance under the Plan. Subject to such overall limitation, shares of
Stock may be issued up to such maximum number pursuant to any type or types
of Award; provided, however, that Stock Options or Stock Appreciation
Rights with respect to no more than 100,000 shares of Stock may be granted
to any one individual grantee during any one calendar year period. The
shares available for issuance under the Plan may be authorized but unissued
shares of Stock or shares of Stock reacquired by the Company and held in
its treasury.
(b) Changes in Stock.
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Subject to Section 3(c) hereof, if, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other similar change in the Company's capital stock, the
outstanding shares of Stock are increased or decreased or are exchanged for
a different number or kind of shares or other securities of the Company, or
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, or, if, as a result of any merger or
consolidation, sale of all or substantially all of the assets of the
Company, the outstanding shares of Stock are converted into or exchanged
for a different number or kind of securities of the Company or any
successor entity (or a parent or subsidiary thereof), the Administrator
shall make an appropriate or proportionate adjustment in (i) the maximum
number of shares reserved for issuance under the Plan, including the
maximum number of shares that may be issued in the form of Restricted Stock
Awards, (ii) the number of Stock Options or Stock Appreciation Rights that
can be granted to any one individual grantee, (iii) the number and kind of
shares or other securities subject to any then outstanding Awards under the
Plan, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, (v) the number of Stock Options automatically
granted to Non-Employee Directors, and (vi) the price for each share
subject to any then outstanding Stock Options and Stock Appreciation Rights
under the Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of Stock Options and Stock
Appreciation Rights) as to which such Stock Options and Stock Appreciation
Rights remain exercisable. The adjustment by the Administrator shall be
final, binding and conclusive. No fractional shares of Stock shall be
issued under the Plan resulting from any such adjustment, but the
Administrator in its discretion may make a cash payment in lieu of
fractional shares.
The Administrator may also adjust the number of shares subject to
outstanding Awards and the exercise price and the terms of outstanding
Awards to take into consideration material changes in accounting practices
or principles, extraordinary dividends, acquisitions or dispositions of
stock or property or any other event if it is determined by the
Administrator that such adjustment is appropriate to avoid distortion in
the operation of the Plan, provided that no such adjustment shall be made
in the case of an Incentive Stock Option, without the consent of the
grantee, if it would constitute a modification, extension or renewal of the
Option within the meaning of Section 424(h) of the Code.
(c) Mergers and Other Transactions.
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In the case of and subject to the consummation of (i) the dissolution or
liquidation of the Company, (ii) the sale of all or substantially all of
the assets of the Company on a consolidated basis to an unrelated person or
entity, (iii) a merger, reorganization or consolidation in which the
outstanding shares of Stock are converted into or exchanged for a different
kind of securities of the successor entity and the holders of the Company's
outstanding voting power immediately prior to such transaction do not own a
majority of the outstanding voting power of the successor entity
immediately upon completion of such transaction, or (iv) the sale of all of
the Stock of the Company to an unrelated person or entity (in each case, a
"Sale Event"), all Options and Stock Appreciation Rights that are not
exercisable immediately prior to the effective time of the Sale Event shall
become fully exercisable as of the effective time of the Sale Event and all
other Awards with conditions and restrictions relating solely to the
passage of time and continued employment shall become fully vested and
nonforfeitable as of the effective time of the Sale Event, except as the
Administrator may otherwise specify with respect to particular Awards. Upon
the effective time of the Sale Event, the Plan and all outstanding Awards
granted hereunder shall terminate, unless provision is made in connection
with the Sale Event in the sole discretion of the parties thereto for the
assumption or continuation of Awards theretofore granted by the successor
entity, or the substitution of such Awards with new Awards of the successor
entity or parent thereof, with appropriate adjustment as to the number and
kind of shares and, if appropriate, the per share exercise prices, as such
parties shall agree (after taking into account any acceleration hereunder).
In the event of such termination, each grantee shall be permitted, within a
specified period of time prior to the consummation of the Sale Event as
determined by the Administrator, to exercise all outstanding Options and
Stock Appreciation Rights held by such grantee, including those that will
become exercisable upon the consummation of the Sale Event; provided,
however, that the exercise of Options and Stock Appreciation Rights not
exercisable prior to the Sale Event shall be subject to the consummation of
the Sale Event.
Notwithstanding anything to the contrary in this Section 3(c), in the event
of a Sale Event pursuant to which holders of the Stock of the Company will
receive upon consummation thereof a cash payment for each share surrendered
in the Sale Event, the Company shall have the right, but not the
obligation, to make or provide for a cash payment to the grantees holding
Options and Stock Appreciation Rights, in exchange for the cancellation
thereof, in an amount equal to the difference between (A) the value as
determined by the Administrator of the consideration payable per share of
Stock pursuant to the Sale Event (the "Sale Price") times the number of
shares of Stock subject to outstanding Options and Stock Appreciation
Rights (to the extent then exercisable at prices not in excess of the Sale
Price) and (B) the aggregate exercise price of all such outstanding Options
and Stock Appreciation Rights.
(d) Substitute Awards.
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The Administrator may grant Awards under the Plan in substitution for stock
and stock based awards held by employees, directors or other key persons of
another corporation in connection with the merger or consolidation of the
employing corporation with the Company or a Subsidiary or the acquisition
by the Company or a Subsidiary of property or stock of the employing
corporation. The Administrator may direct that the substitute awards be
granted on such terms and conditions as the Administrator considers
appropriate in the circumstances. Any substitute Awards granted under the
Plan shall not count against the share limitation set forth in Section
3(a).
SECTION 4. ELIGIBILITY
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Grantees under the Plan will be such full or part-time officers and other
employees, Non-Employee Directors and key persons (including consultants and
prospective employees) of the Company and its Subsidiaries as are selected from
time to time by the Administrator in its sole discretion.
SECTION 5. STOCK OPTIONS
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Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after February 20,
2013.
a) Stock Options Granted to Employees and Key Persons.
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The Administrator in its discretion may grant Stock Options to eligible
employees and key persons of the Company or any Subsidiary. Stock Options
granted pursuant to this Section 5(a) shall be subject to the following
terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable. If the Administrator so determines,
Stock Options may be granted in lieu of cash compensation at the optionee's
election, subject to such terms and conditions as the Administrator may
establish.
(i) Exercise Price.
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The exercise price per share for the Stock covered by a Stock Option
granted pursuant to this Section 5(a) shall be determined by the
Administrator at the time of grant but shall not be less than 100
percent of the Fair Market Value on the date of grant in the case of
Incentive Stock Options or Non-Qualified Stock Options (other than
options granted in lieu of cash compensation). If an employee owns or
is deemed to own (by reason of the attribution rules of Section 424(d)
of the Code) more than 10 percent of the combined voting power of all
classes of stock of the Company or any parent or subsidiary
corporation and an Incentive Stock Option is granted to such employee,
the option price of such Incentive Stock Option shall be not less than
110 percent of the Fair Market Value on the grant date.
(ii) Option Term.
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The term of each Stock Option shall be fixed by the Administrator, but
no Stock Option shall be exercisable more than 10 years after the date
the Stock Option is granted. If an employee owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code)
more than 10 percent of the combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation and an
Incentive Stock Option is granted to such employee, the term of such
Stock Option shall be no more than five years from the date of grant.
(iii)Exercisability;
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Rights of a Stockholder. Stock Options shall become exercisable
at such time or times, whether or not in installments, as
shall be determined by the Administrator at or after the grant date.
The Administrator may at any time accelerate the exercisability of all
or any portion of any Stock Option. An optionee shall have the rights
of a stockholder only as to shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options.
(iv) Method of Exercise.
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Stock Options may be exercised in whole or in part, by giving written
notice of exercise to the Company, specifying the number of shares to
be purchased. Payment of the purchase price may be made by one or more
of the following methods to the extent provided in the Option Award
agreement:
(A) In cash, by certified or bank check or other instrument
acceptable to the Administrator;
(B) Through the delivery (or attestation to the ownership) of shares
of Stock that have been purchased by the optionee on the open
market or that have been beneficially owned by the optionee for
at least six months and are not then subject to restrictions
under any Company plan. Such surrendered shares shall be valued
at Fair Market Value on the exercise date; or
(C) By the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company cash or a check payable
and acceptable to the Company for the purchase price; provided
that in the event the optionee chooses to pay the purchase price
as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and
other agreements as the Administrator shall prescribe as a
condition of such payment procedure.
Payment instruments will be received subject to collection. The
delivery of certificates representing the shares of Stock to be
purchased pursuant to the exercise of a Stock Option will be
contingent upon receipt from the optionee (or a purchaser acting in
his stead in accordance with the provisions of the Stock Option) by
the Company of the full purchase price for such shares and the
fulfillment of any other requirements contained in the Option Award
agreement or applicable provisions of laws. In the event an optionee
chooses to pay the purchase price by previously-owned shares of Stock
through the attestation method, the number of shares of Stock
transferred to the optionee upon the exercise of the Stock Option
shall be net of the number of shares attested to.
(v) Annual Limit on Incentive Stock Options.
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To the extent required for "incentive stock option" treatment under
Section 422 of the Code, the aggregate Fair Market Value (determined
as of the time of grant) of the shares of Stock with respect to which
Incentive Stock Options granted under this Plan and any other plan of
the Company or its parent and subsidiary corporations become
exercisable for the first time by an optionee during any calendar year
shall not exceed $100,000. To the extent that any Stock Option exceeds
this limit, it shall constitute a Non-Qualified Stock Option.
b) Stock Options Granted to Non-Employee Directors.
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(i) Automatic Grant of Options.
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(A) Each Non-Employee Director who is serving as Director of the
Company as of the date of each Annual Meeting of the Company
after which such Director will continue to serve as a Director of
the Company, beginning with the 2003 Annual Meeting and in lieu
of options which would be granted pursuant to Section 11 of the
Company's 1997 Equity Incentive Plan, shall automatically be
granted on such day a Non-Qualified Stock Option to acquire 2,000
shares of Stock.
(B) The exercise price per share for the Stock covered by a Stock
Option granted under this Section 5(b) shall be equal to the Fair
Market Value of the Stock on the date the Stock Option is
granted.
(ii) Exercise; Termination.
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(A) Unless otherwise determined by the Administrator, an Option
granted under Section 5(b) shall be exercisable upon the earlier
of (1) the third anniversary of the grant date, or (2) the
Non-Employee Director's retirement from the Board. An Option
issued under this Section 5(b) shall not be exercisable after the
expiration of ten years from the date of grant.
(B) Options granted under this Section 5(b) may be exercised only by
written notice to the Company specifying the number of shares to
be purchased. Payment of the full purchase price of the shares to
be purchased may be made by one or more of the methods specified
in Section 5(a)(iv). An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options.
c) Non-transferability of Options.
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No Stock Option shall be transferable by the optionee otherwise than by
will or by the laws of descent and distribution and all Stock Options shall
be exercisable, during the optionee's lifetime, only by the optionee, or by
the optionee's legal representative or guardian in the event of the
optionee's incapacity. Notwithstanding the foregoing, the Administrator, in
its sole discretion, may provide in the Award agreement regarding a given
Option that the optionee may transfer his Non-Qualified Stock Options to
members of his immediate family, to trusts for the benefit of such family
members, to partnerships in which such family members are the only
partners, or to a former spouse in connection with a divorce settlement,
provided that the transferee agrees in writing with the Company to be bound
by all of the terms and conditions of this Plan and the applicable Option.
SECTION 6. STOCK APPRECIATION RIGHTS
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a) Nature of Stock Appreciation Rights.
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A Stock Appreciation Right is an Award entitling the recipient to receive
an amount in cash or shares of Stock or a combination thereof having a
value equal to the excess of the Fair Market Value of the Stock on the date
of exercise over the exercise price of the Stock Appreciation Right, which
price shall not be less than 100 percent of the Fair Market Value of the
Stock on the date of grant (or more than the option exercise price per
share, if the Stock Appreciation Right was granted in tandem with a Stock
Option) multiplied by the number of shares of Stock with respect to which
the Stock Appreciation Right shall have been exercised, with the
Administrator having the right to determine the form of payment.
b) Grant and Exercise of Stock Appreciation Rights.
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Stock Appreciation Rights may be granted by the Administrator in tandem
with, or independently of, any Stock Option granted pursuant to Section 5
of the Plan. In the case of a Stock Appreciation Right granted in tandem
with a Non-Qualified Stock Option, such Stock Appreciation Right may be
granted either at or after the time of the grant of such Option. In the
case of a Stock Appreciation Right granted in tandem with an Incentive
Stock Option, such Stock Appreciation Right may be granted only at the time
of the grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem
with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Option.
c) Terms and Conditions of Stock Appreciation Rights.
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Stock Appreciation Rights shall be subject to such terms and conditions as
shall be determined from time to time by the Administrator, subject to
the following:
(i) Stock Appreciation Rights granted in tandem with Options shall be
exercisable at such time or times and to the extent that the related
Stock Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the applicable portion of
any related Option shall be surrendered.
(iii)All Stock Appreciation Rights shall be exercisable during the
grantee's lifetime only by the grantee or the grantee's legal
representative.
SECTION 7. RESTRICTED STOCK AWARDS
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a) Nature of Restricted Stock Awards.
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A Restricted Stock Award is an Award entitling the recipient to acquire, at
such purchase price as determined by the Administrator, shares of Stock
subject to such restrictions and conditions as the Administrator may
determine at the time of grant ("Restricted Stock"). Conditions may be
based on continuing employment (or other service relationship) and/or
achievement of pre-established performance goals and objectives. The grant
of a Restricted Stock Award is contingent on the grantee executing the
Restricted Stock Award agreement. The terms and conditions of each such
agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees.
b) Rights as a Stockholder.
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Upon execution of a written instrument setting forth the Restricted Stock
Award and payment of any applicable purchase price, a grantee shall have
the rights of a stockholder with respect to the voting of the Restricted
Stock, subject to such conditions contained in the written instrument
evidencing the Restricted Stock Award. Unless the Administrator shall
otherwise determine, certificates evidencing the Restricted Stock shall
remain in the possession of the Company until such Restricted Stock is
vested as provided in Section 7(d) below, and the grantee shall be
required, as a condition of the grant, to deliver to the Company a stock
power endorsed in blank.
c) Restrictions.
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Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically
provided herein or in the Restricted Stock Award agreement. If a grantee's
employment (or other service relationship) with the Company and its
Subsidiaries terminates for any reason, the Company shall have the right to
repurchase Restricted Stock that has not vested at the time of termination
at its original purchase price, from the grantee or the grantee's legal
representative.
d) Vesting of Restricted Stock.
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The Administrator at the time of grant shall specify the date or dates
and/or the attainment of pre-established performance goals, objectives
and other conditions on which the non-transferability of the Restricted
Stock and the Company's right of repurchase or forfeiture shall lapse.
Notwithstanding the foregoing, in the event that any such Restricted Stock
shall have a performance based goal, the restriction period with respect to
such shares shall not be less than one year and in the event that any such
Restricted Stock shall have a time based restriction, the restriction
period with respect to such shares shall not be less than three years.
Subsequent to such date or dates and/or the attainment of such
pre-established performance goals, objectives and other conditions, the
shares on which all restrictions have lapsed shall no longer be Restricted
Stock and shall be deemed "vested." Except as may otherwise be provided by
the Administrator either in the Award agreement or, subject to Section 13
below, in writing after the Award agreement is issued, a grantee's rights
in any shares of Restricted Stock that have not vested shall automatically
terminate upon the grantee's termination of employment (or other service
relationship) with the Company and its Subsidiaries and such shares shall
be subject to the Company's right of repurchase as provided in Section 7(c)
above.
e) Waiver, Deferral and Reinvestment of Dividends.
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The Restricted Stock Award agreement may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on
the Restricted Stock.
SECTION 8. DEFERRED STOCK AWARDS
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a) Nature of Deferred Stock Awards.
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A Deferred Stock Award is an Award of phantom stock units to a grantee,
subject to restrictions and conditions as the Administrator may determine
at the time of grant. Conditions may be based on continuing employment (or
other service relationship) and/or achievement of pre-established
performance goals and objectives. The grant of a Deferred Stock Award is
contingent on the grantee executing the Deferred Stock Award agreement. The
terms and conditions of each such agreement shall be determined by the
Administrator, and such terms and conditions may differ among individual
Awards and grantees. At the end of the deferral period, the Deferred Stock
Award, to the extent vested, shall be paid to the grantee in the form of
shares of Stock.
b) Election to Receive Deferred Stock Awards in Lieu of Compensation.
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The Administrator may, in its sole discretion, permit a grantee to elect to
receive a portion of the cash compensation or Restricted Stock Award
otherwise due to such grantee in the form of a Deferred Stock Award. Any
such election shall be made in writing and shall be delivered to the
Company no later than the date specified by the Administrator and in
accordance with rules and procedures established by the Administrator. The
Administrator shall have the sole right to determine whether and under what
circumstances to permit such elections and to impose such limitations and
other terms and conditions thereon as the Administrator deems appropriate.
c) Rights as a Stockholder.
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During the deferral period, a grantee shall have no rights as a
stockholder; provided, however, that the grantee may be credited with
Dividend Equivalent Rights with respect to the phantom stock units
underlying his Deferred Stock Award, subject to such terms and conditions
as the Administrator may determine.
d) Restrictions.
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A Deferred Stock Award may not be sold, assigned, transferred , pledged or
otherwise encumbered or disposed of during the deferral period.
e) Termination.
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Except as may otherwise be provided by the Administrator either in the
Award agreement or, subject to Section 13 below, in writing after the Award
agreement is issued, a grantee's right in all Deferred Stock Awards that
have not vested shall automatically terminate upon the grantee's
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.
SECTION 9. UNRESTRICTED STOCK AWARDS
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Grant or Sale of Unrestricted Stock.
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The Administrator may, in its sole discretion, grant (or sell at par value or
such higher purchase price determined by the Administrator) an Unrestricted
Stock Award to any grantee pursuant to which such grantee may receive shares of
Stock free of any restrictions ("Unrestricted Stock") under the Plan.
Unrestricted Stock Awards may be granted in respect of past services or other
valid consideration, or in lieu of cash compensation due to such grantee.
SECTION 10. DIVIDEND EQUIVALENT RIGHTS
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a) Dividend Equivalent Rights.
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A Dividend Equivalent Right is an Award entitling the grantee to receive
credits based on cash dividends that would have been paid on the shares of
Stock specified in the Dividend Equivalent Right (or other award to which
it relates) if such shares had been issued to and held by the grantee. A
Dividend Equivalent Right may be granted hereunder to any grantee as a
component of another Award or as a freestanding award. The terms and
conditions of Dividend Equivalent Rights shall be specified in the Award
agreement. Dividend equivalents credited to the holder of a Dividend
Equivalent Right may be paid currently or may be deemed to be reinvested in
additional shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value on the
date of reinvestment or such other price as may then apply under a dividend
reinvestment plan sponsored by the Company, if any. Dividend Equivalent
Rights may be settled in cash or shares of Stock or a combination thereof,
in a single installment or installments. A Dividend Equivalent Right
granted as a component of another Award may provide that such Dividend
Equivalent Right shall be settled upon exercise, settlement, or payment of,
or lapse of restrictions on, such other award, and that such Dividend
Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different
from such other award.
b) Interest Equivalents.
---------------------
Any Award under this Plan that is settled in whole or in part in cash on a
deferred basis may provide in the grant for interest equivalents to be
credited with respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as may be
specified by the grant.
c) Termination.
------------
Except as may otherwise be provided by the Administrator either in the
Award agreement or, subject to Section 13 below, in writing after the
Award agreement is issued, a grantee's rights in all Dividend Equivalent
Rights or interest equivalents shall automatically terminate upon the
grantee's termination of employment (or cessation of service relationship)
with the Company and its Subsidiaries for any reason.
SECTION 11. TAX WITHHOLDING
---------------
a) Payment by Grantee.
-------------------
Each grantee shall, no later than the date as of which
the value of an Award or of any Stock or other amounts received thereunder
first becomes includable in the gross income of the grantee for Federal
income tax purposes, pay to the Company, or make arrangements satisfactory
to the Administrator regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld with respect to such
income. The Company and its Subsidiaries shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the grantee. The Company's obligation to deliver stock
certificates to any grantee is subject to and conditioned on tax
obligations being satisfied by the grantee.
b) Payment in Stock.
-----------------
Subject to approval by the Administrator, a grantee may
elect to have the minimum required tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an
aggregate Fair Market Value (as of the date the withholding is effected)
that would satisfy the withholding amount due, or (ii) transferring to the
Company shares of Stock owned by the grantee with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.
SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.
--------------------------------
For purposes of the Plan, the following events shall not be deemed a termination
of employment:
a) a transfer to the employment of the Company from a Subsidiary or from the
Company to a Subsidiary, or from one Subsidiary to another; or
b) an approved leave of absence for military service or sickness, or for any
other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.
SECTION 13. AMENDMENTS AND TERMINATION
--------------------------
The Board may, at any time, amend or discontinue the Plan and the Administrator
may, at any time, amend or cancel any outstanding Award for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the holder's
consent. If and to the extent determined by the Administrator to be required by
the relevant securities exchange or by the Code to ensure that Incentive Stock
Options granted under the Plan are qualified under Section 422 of the Code or to
ensure that compensation earned under Awards qualifies as performance-based
compensation under Section 162(m) of the Code, if and to the extent intended to
so qualify, Plan amendments shall be subject to approval by the Company
stockholders entitled to vote at a meeting of stockholders. All Material Plan
Amendments shall be subject to approval by the Company's stockholders entitled
to vote at a meeting of the stockholders. For purposes of this Section 13, a
Material Plan Amendment shall mean any Plan amendment which would require
stockholder approval pursuant to the rules of the national securities exchange
or NASDAQ, on which the Company's stock is listed at the time of such amendment.
Material Plan Amendments shall be approved by the stockholders in accordance
with the rules of NASDAQ or the appropriate national securities exchange, as the
case may be. Nothing in this Section 13 shall limit the Administrator's
authority to take any action permitted pursuant to Section 3(c).
SECTION 14. STATUS OF PLAN
--------------
With respect to the portion of any Award that has not been exercised and any
payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.
SECTION 15. CHANGE OF CONTROL PROVISIONS
----------------------------
Upon the occurrence of a Change of Control as defined in this Section 15:
a) Except as otherwise provided in the applicable Award agreement, each
outstanding Stock Option and Stock Appreciation Right shall automatically
become fully exercisable.
b) Except as otherwise provided in the applicable Award Agreement, conditions
and restrictions on each outstanding Restricted Stock Award and Deferred
Stock Award will be removed.
c) "Change of Control" shall mean the occurrence of any one of the following
events:
(i) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock");
provided, however, that any acquisition by the Company or its
subsidiaries, or any employee benefit plan (or related trust) of the
Company or its subsidiaries of 20% or more of Outstanding Company
Common Stock shall not constitute a Change in Control; and provided,
further, that any acquisition by a corporation with respect to which,
following such acquisition, more than 50% of the then outstanding
shares of common stock of such corporation, is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock immediately prior to such acquisition
in substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock,
shall not constitute a Change in Control; or
(ii) Individuals who, as of the Effective Date, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to the Effective Date whose election, or
nomination for election by the Company's stockholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office is in connection
with either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board; or
(iii)Consummation by the Company of (i) a reorganization, merger or
consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Common Stock immediately
prior to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation, beneficially
own, directly or indirectly, more than 40% of the then outstanding
shares of common stock of the corporation resulting from such a
reorganization, merger or consolidation; (ii) a reorganization, merger
or consolidation, in each case, (A) with respect to which all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Common Stock immediately
prior to such reorganization, merger or consolidation, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 40% but less than 50% of the then outstanding
shares of common stock of the corporation resulting from such a
reorganization, merger or consolidation, (B) at least a majority of
the directors then constituting the Incumbent Board do not approve the
transaction and do not designate the transaction as not constituting a
Change in Control, and (C) following the transaction members of the
then Incumbent Board do not continue to comprise at least a majority
of the Board; or (iii) the sale or other disposition of all or
substantially all of the assets of the Company, excluding a sale or
other disposition of assets to a subsidiary of the Company; or
(iv) Consummation by The Washington Trust Company, the wholly-owned
subsidiary of the Company, of (i) a reorganization, merger or
consolidation, in each case, with respect to which, following such
reorganization, merger or consolidation, the Company does not
beneficially own, directly or indirectly, more than 50% of the then
outstanding shares of common stock of the corporation or bank
resulting from such a reorganization, merger or consolidation or (ii)
the sale or other disposition of all or substantially all of the
assets of the Bank, excluding a sale or other disposition of assets to
the Company or a subsidiary of the Company.
The decision as to whether a Change in Control of the Company has occurred
shall be made by a majority of the Continuing Directors of the Company (as
defined in the Restated Articles of Incorporation of the Company) and shall
be conclusive and binding.
SECTION 16. GENERAL PROVISIONS
------------------
a) No Distribution; Compliance with Legal Requirements.
----------------------------------------------------
The Administrator may require each person acquiring Stock pursuant to
an Award to represent to and agree with the Company in writing that
such person is acquiring the shares without a view to distribution
therof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or
similar requirements have been satisfied. The Administrator may
require the placing of such stop-orders and restrictive legends on
certificates for Stock and Awards as it deems appropriate.
b) Delivery of Stock Certificates.
--------------------------------
Stock certificates to grantees under this Plan shall be deemed
delivered for all purposes when the Company or a stock transfer agent
of the Company shall have mailed such certificates in the United
States mail, addressed to the grantee, at the grantee's last known
address on file with the Company.
c) Other Compensation Arrangements; No Employment Rights.
------------------------------------------------------
Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, including trusts, and
such arrangements may be either generally applicable or applicable
only in specific cases. The adoption of this Plan and the grant of
Awards do not confer upon any employee any right to continued
employment with the Company or any Subsidiary.
d) Trading Policy Restrictions.
----------------------------
Option exercises and other Awards under the Plan shall be subject to
such Company's insider trading policy, as in effect from time to time.
e) Designation of Beneficiary.
---------------------------
Each grantee to whom an Award has been made under the Plan may
designate a beneficiary or beneficiaries to exercise any Award or
receive any payment under any Award payable on or after the grantee's
death. Any such designation shall be on a form provided for that
purpose by the Administrator and shall not be effective until received
by the Administrator. If no beneficiary has been designated by a
deceased grantee, or if the designated beneficiaries have predeceased
the grantee, the beneficiary shall be the grantee's estate.
SECTION 17. EFFECTIVE DATE OF PLAN
----------------------
This Plan shall become effective upon approval by the holders of a majority of
the votes cast at a meeting of stockholders at which a quorum is present.
Subject to such approval by the stockholders and to the requirement that no
Stock may be issued hereunder prior to such approval, Stock Options and other
Awards may be granted hereunder on and after adoption of this Plan by the Board.
SECTION 18. GOVERNING LAW
-------------
This Plan and all Awards and actions taken thereunder shall be governed by, and
construed in accordance with, the laws of the State of Rhode Island, applied
without regard to conflict of law principles.