Exhibit 10.a
WASHINGTON TRUST BANCORP, INC.
1997 EQUITY INCENTIVE PLAN
Section 1. Purpose
The purpose of the Washington Trust Bancorp, Inc. 1997 Equity Incentive
Plan (the "Plan") is to attract and retain key employees, directors, advisors
and consultants, to provide an incentive for them to assist Washington Trust
Bancorp, Inc. (the "Corporation") to achieve long-range performance goals, and
to enable them to participate in the long-term growth of the Corporation.
Section 2. Definitions
(a) "Affiliate" means any business entity in which the Corporation owns
directly or indirectly 50% or more of the total combined voting power or
has a significant financial interest as determined by the Committee.
(b) "Annual Meeting" means the annual meeting of shareholders or special
meeting in lieu of annual meeting of shareholders at which one or more
directors are elected.
(c) "Award" means any Option, Stock Appreciation Right, Performance or
Award Share, or Restricted Stock awarded under the Plan.
(d) "Award Share" means a share of Common Stock awarded to an employee,
director, advisor or consultant without payment therefor.
(e) "Board" means the Board of Directors of the Corporation.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(g) "Committee" means the Stock Option 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 the members of such Committee
must be Non-Employee Directors as defined in Rule 16b-3(b) promulgated
under the Securities Exchange Act of 1934, as amended.
(h) "Common Stock" or "Stock" means the Common Stock, par value $.0625 per
share, of the Corporation.
(i) "Corporation" means Washington Trust Bancorp, Inc.
(j) "Designated Beneficiary" means the beneficiary designated by a Participant,
in a manner determined by the Board, to receive amounts due or exercise
rights of the Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant, Designated
Beneficiary shall mean the Participant's estate.
(k) "Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Board
in good faith or in the manner established by the Board from time to time.
(l) "Incentive Stock Option" means an option to purchase shares of Common
Stock, awarded to a Participant under Section 6, which is intended to meet
the requirements of Section 422 of the Code or any successor provision.
(m) "Nonqualified Stock Option" means an option to purchase shares of Common
Stock, awarded to a Participant under Section 6 or Section 11, which is not
intended to be an Incentive Stock Option.
(n) "Option" means an Incentive Stock Option or a Nonqualified Stock Option.
(o) "Participant" means a person selected by the Board to receive an Award
under the Plan.
(p) "Performance Cycle" or "Cycle" means the period of time selected by the
Board during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
(q) "Performance Shares" mean shares of Common Stock which may be earned by the
achievement of performance goals, awarded to a Participant under Section 8.
(r) "Restricted Period" means the period of time selected by the Board during
which an award of Restricted Stock may be forfeited to the Corporation.
(s) "Restricted Stock" means shares of Common Stock subject to forfeiture,
awarded to a Participant under Section 9.
(t) "Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the reference price, awarded to a
Participant under Section 7.
(u) "Stock Unit" means an award of Common Stock and/or other rights granted as
units that are valued in whole or in part by reference to, or otherwise
based on, the value of Common Stock, awarded to a Participant under Section
10.
Section 3. Administration
The Plan shall be administered by the Committee, which shall initially
be the Stock Option Committee. The Board shall have authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time consider advisable, and to
interpret the provisions of the Plan. The Board's decisions shall be final and
binding. To the extent permitted by applicable law, the Board may delegate to
the Committee the power to make Awards to Participants and all determinations
under the Plan with respect thereto.
Section 4. Eligibility
All employees and, in the case of Awards other than Incentive Stock
Options, directors, advisors and consultants of the Corporation or any Affiliate
capable of contributing significantly to the successful performance of the
Corporation, other than a person who has irrevocably elected not to be eligible,
are eligible to be Participants in the Plan.
Section 5. Stock Available for Awards
(a) Subject to adjustment under subsection (b), Awards may be made under the
Plan, of Options to acquire not in excess of 450,000 shares of Common Stock.
Other Awards may be made as the Board may determine, provided that a maximum of
450,000 shares of Common Stock may be issued under this Plan. If any Award in
respect of shares of Common Stock expires or is terminated unexercised or is
forfeited for any reason or settled in a manner that results in fewer shares
outstanding than were initially awarded, including without limitation the
surrender of shares in payment for the Award or any tax obligation thereon, the
shares subject to such Award or so surrendered, as the case may be, to the
extent of such expiration, termination, forfeiture or decrease, shall again be
available for award under the Plan, subject, however, in the case of Incentive
Stock Options, to any limitation required under the Code. Common Stock issued
through the assumption or substitution of outstanding grants from an acquired
corporation shall not reduce the shares available for Awards under the Plan.
Shares issued under the Plan may consist in whole or in part of authorized
but unissued shares or treasury shares.
(b) In the event that the Board determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase
Common Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Board, subject, in the case of Incentive
Stock Options, to any limitation required under the Code, shall equitably
adjust any or all of (i) the number and kind of shares in respect of which
Awards may be made under the Plan, (ii) the number and kind of shares subject
to outstanding Awards, and (iii) the award, exercise or conversion price with
respect to any of the foregoing, and if considered appropriate, the Board
may make provision for a cash payment with respect to an outstanding Award,
provided that the number of shares subject to any Award shall always be a whole
number.
Section 6. Stock Options
(a) Subject to the provisions of the Plan, the Board may award Incentive Stock
Options and Nonqualified Stock Options and determine the number of shares
to be covered by each Option, the option price therefor and the conditions
and limitations applicable to the exercise of the Option. The terms and
conditions of Incentive Stock Options shall be subject to and comply with
Section 422 of the Code, or any successor provision, and any regulations
thereunder.
(b) The Board shall establish the option price at the time each Option is
awarded, which price shall not be less than 100% of the Fair Market Value
of the Common Stock on the date of award with respect to Incentive Stock
Options.
(c) Each Option shall be exercisable at such times and subject to such terms
and conditions as the Board may specify in the applicable Award or
thereafter. The Board may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the
Corporation. Such payment may be made in whole or in part in cash or, to
the extent permitted by the Board at or after the award of the Option,
by delivery of a note or shares of Common Stock owned by the optionholder,
including Restricted Stock, valued at their Fair Market Value on the date
of delivery, by the reduction of the shares of Common Stock that the
optionholder would be entitled to receive upon exercise of the Option, such
shares to be valued at their Fair Market Value on the date of exercise,
less their option price (a so-called "cashless exercise"), or such
other lawful consideration as the Board may determine. In addition, an
optionholder may engage in a successive exchange (or series of exchanges)
in which the shares of Common Stock that such optionholder is entitled to
receive upon the exercise of an Option may be simultaneously utilized as
payment for the exercise of an additional Option or Options.
(e) The Board may provide for the automatic award of an Option upon the
delivery of shares to the Corporation in payment of an Option for up to the
number of shares so delivered.
(f) In the case of Incentive Stock Options the following additional conditions
shall apply:
(i) Such options shall be granted only to employees of the Corporation,
and shall not be granted to any person who owns stock that possesses
more than ten percent of the total combined voting power of all
classes of stock of the Corporation or of its parent or subsidiary
corporation (as those terms are defined in Section 422(b) of the
Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder), unless, at the time of such grant, the
exercise price of such option is at least 110% of the fair market
value of the stock that is subject to such option and the option
shall not be exercisable more than five years after the date of
grant;
(ii) Such options shall not be granted more than ten years from the
effective date of the Plan and shall not be exercisable more than ten
years from the date of grant;
(iii)Such options shall, by their terms, be transferable by the optionee
only by the laws of descent and distribution, and shall be
exercisable only by such employee during his lifetime.
Section 7. Stock Appreciation Rights
Subject to the provisions of the Plan, the Board may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised.
Section 8. Performance Shares
(a) Subject to the provisions of the Plan, the Board may award Performance
Shares and determine the number of such shares for each Performance Cycle
and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of
Performance Cycles may differ from each other. The payment value of
Performance Shares shall be equal to the Fair Market Value of the Common
Stock on the date the Performance Shares are earned or, in the discretion
of the Board, on the date the Board determines that the Performance Shares
have been earned.
(b) The Board shall establish performance goals for each Cycle, for the purpose
of determining the extent to which Performance Shares awarded for such
Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Board may from time to time select. During any Cycle, the
Board may adjust the performance goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the
Corporation, changes in applicable tax laws or accounting principles, or
such other factors as the Board may determine.
(c) As soon as practicable after the end of a Performance Cycle, the Board
shall determine the number of Performance Shares which have been earned on
the basis of performance in relation to the established performance goals.
The payment values of earned Performance Shares shall be distributed to the
Participant or, if the Participant has died, to the Participant's
Designated Beneficiary, as soon as practicable thereafter. The Board shall
determine, at or after the time of award, whether payment values will be
settled in whole or in part in cash or other property, including Common
Stock or Awards.
Section 9. Restricted Stock
(a) Subject to the provisions of the Plan, the Board may award shares of
Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Corporation and the other terms and conditions of such Awards. Shares of
Restricted Stock may be issued for no cash consideration or such minimum
consideration as may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred, pledged
or otherwise encumbered, except as permitted by the Board, during the
Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Board may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the
Participant and unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the
Corporation. At the expiration of the Restricted Period, the Corporation
shall deliver such certificates to the Participant or if the Participant
has died, to the Participant's Designated Beneficiary.
Section 10. Stock Units
(a) Subject to the provisions of the Plan, the Board may award Stock Units
subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Board shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit Award shall
be issued for no cash consideration or such minimum consideration as may be
required by applicable law. Such shares of Common Stock may be designated
as Award Shares by the Board.
Section 11. Options Granted to Non-Employee Directors
Unless otherwise determined by the Board, each director of the
Corporation who is not an employee of the Corporation shall automatically be
granted a Nonqualified Option covering 750 shares as of the date of each Annual
Meeting of the Corporation after which such director will continue to serve as a
director of the Corporation, beginning with the 1997 Annual Meeting and in lieu
of options which would have been granted pursuant to Section 14 of the
Corporation's Amended and Restated 1988 Stock Option Plan, the option price for
which shall be the Fair Market Value of the Common Stock on such date and the
expiration of which shall be the tenth anniversary thereof.
Each Nonqualified Option granted pursuant to this Section 11 may be
exercised on and after the date that is one year after the date of grant.
In addition, the Board may provide for such other terms and conditions
of the Options granted pursuant to this Section 11 as it may determine in its
sole discretion and as shall be set forth in the applicable Option agreements,
including, without limitation, acceleration of exercise upon a change of
control, termination of the Options, and the effect on such Options of the
death, retirement or other termination of service as a director of the option
holder. Notwithstanding the foregoing, nothing herein shall preclude the Board
from granting Options to such non-employee directors in addition to, or in
substitution for, those provided for in this Section 11.
Section 12. General Provisions Applicable to Awards
(a) Documentation. Each Award under the Plan shall be evidenced by a written
document delivered to the Participant specifying the terms and conditions
thereof and containing such other terms and conditions not inconsistent
with the provisions of the Plan as the Board considers necessary or
advisable to achieve the purposes of the Plan or comply with applicable tax
and regulatory laws and accounting principles.
(b) Board Discretion. Each type of Award may be made alone, in addition to or
in relation to any other type of Award. The terms of each type of Award
need not be identical, and the Board need not treat Participants uniformly.
Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Board at the time
of award or at any time thereafter. Without limiting the foregoing, an
Award may be made by the Board, in its discretion, to any 401(k), savings,
pension, profit sharing or other similar plan of the Corporation in lieu of
or in addition to any cash or other property contributed or to be
contributed to such plan.
(c) Settlement. The Board shall determine whether Awards are settled in whole
or in part in cash, Common Stock, other securities of the Corporation,
Awards or other property. The Board may permit a Participant to defer all
or any portion of a payment under the Plan, including the crediting of
interest on deferred amounts denominated in cash and dividend equivalents
on amounts denominated in Common Stock.
(d) Dividends and Cash Awards. In the discretion of the Board, any Award under
the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and
(ii) cash payments in lieu of or in addition to an Award.
(e) Termination of Employment. The Board shall determine the effect on an Award
of the disability, death, retirement or other termination of employment of
a Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
receive payment of an Award or exercise rights thereunder.
(f) Change in Control. In order to preserve a Participant's rights under an
Award in the event of a change in control of the Corporation, the Board
in its discretion may, at the time an Award is made or at any time
thereafter, take one or more of the following actions: (i) provide for
the acceleration of any time period relating to the exercise or realization
of the Award, (ii) provide for the purchase of the Award upon the
Participant's request for an amount of cash or other property that could
have been received upon the exercise or realization of the Award had the
Award been currently exercisable or payable, (iii) adjust the terms of the
Award in a manner determined by the Board to reflect the change in control,
(iv) cause the Award to be assumed, or new rights substituted therefore,
by another entity, or (v) make such other provision as the Board may
consider equitable and in the best interests of the Corporation.
(g) Withholding. The Participant shall pay to the Corporation, or make
provision satisfactory to the Board for payment of, any taxes required by
law to be withheld in respect of Awards under the Plan no later than the
date of the event creating the tax liability. In the Board's discretion,
such tax obligations may be paid in whole or in part in shares of Common
Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value on the date of delivery. The
Corporation and its Affiliates may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to the
Participant.
(h) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the
same or a different type, changing the date of exercise or realization and
converting an Incentive Stock Option to a Nonqualified Stock Option,
provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.
Section 13. Miscellaneous
(a) No Right To Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to continued employment. The Corporation
expressly reserves the right at any time to dismiss a Participant free from
any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
shareholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof. A Participant to
whom Common Stock is awarded shall be considered the holder of the Stock at
the time of the Award except as otherwise provided in the applicable Award.
(c) Effective Date. Subject to the approval of the shareholders of the
Corporation, the Plan shall be effective on April 29, 1997. Prior to such
approval, Awards may be made under the Plan expressly subject to such
approval.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that no amendment shall be made
without shareholder approval if such approval is necessary to comply with
any applicable tax requirement, any applicable rules or regulation of the
Securities and Exchange Commission, including Rule 16(b)-3 (or any
successor rule thereunder), or the rules and regulations of The Nasdaq
Stock Market or any other exchange or stock market over which the
Corporation's securities are listed.
(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the State of Rhode Island.
(f) Indemnity. Neither the Board nor the Committee, nor any members of either,
nor any employees of the Corporation or any parent, subsidiary, or other
affiliate, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with their
responsibilities with respect to this Plan, and the Corporation hereby
agrees to indemnify the members of the Board, the members of the Committee,
and the employees of the Corporation and its parent or subsidiaries in
respect of any claim, loss, damage, or expense (including reasonable
counsel fees) arising from any such act, omission, interpretation,
construction or determination to the full extent permitted by law.