EXHIBIT A
WESTBANK CORPORATION
1996 STOCK INCENTIVE PLAN
1. Purpose
The purpose of the WESTBANK CORPORATION 1996 Stock Incentive
Plan is to provide incentives and rewards for Employees and
Eligible Directors of the Corporation and its Subsidiaries (i) to
support the execution of the Corporation s business and human
resource strategies and the achievement of its goals and (ii) to
associate the interests of Employees and Eligible Directors with
those of the Corporation s shareholders.
2. Definitions
Award includes, without limitation, stock options (including
incentive stock options under Section 422 of the Code and Director
Stock Options), that are valued in whole or in part by reference
to, or are otherwise based on, the Common Stock as described in or
granted under this Plan.
Award Agreement means a written agreement entered into
between the Corporation and a Participant setting forth the terms
and conditions of an Award made to such Participant under this
Plan, in the form prescribed by the Committee.
Board means the Board of Directors of the Corporation.
Change of Control shall have the meaning specified in Section
12(b).
Code means the Internal Revenue Code of 1986, as amended from
time to time.
Committee means the Compensation Committee appointed by the
Board, each member of which shall be a disinterested person
within the meaning of Rule 16b-3 under the Exchange Act and shall
be an outside director within the meaning of Section 162(m) of
the Code. The Committee shall be composed of no fewer than the
minimum number of disinterested persons as may be required by Rule
16b-3.
Common Stock means the common stock of the Corporation, $2.00
par value.
Corporation means WESTBANK CORPORATION, a bank holding
company under the Bank Holding Company Act of 1956, headquartered
in West Springfield, Massachusetts.
Director Stock Option means the right, granted to an Eligible
director, to purchase Common Stock at a stated price for a
specified period of time. Each Director Stock Option shall be a
nonqualified stock option whose grant is not intended to comply
with the requirements of Section 422 of the Code or any successor
Section as it may be amended from time to time.
Eligible Director means any statutory director of the
Corporation who is not an employee of the Corporation or any
Subsidiary.
Employee means an employee of the Corporation or a
Subsidiary.
Employee Award means an Award (other than a Director Stock
Option) to an Employee under this Plan.
ERISA means the Employee Retirement Income Security Act of
1974, as amended.
Exchange Act means the Securities Exchange Act of 1934, as
amended.
Fair Market Value means the closing price of the Common Stock
as reported on the National Association of Securities Dealers
National Market System on the relevant valuation date or, if there
were no Common Stock transactions on the valuation date, on the
next preceding date on which there were Common Stock transactions;
provided, however, that the Committee may specify some other
definition of Fair Market Value with respect to any particular
Employee Award.
Participant means an Employee or an Eligible Director who has
been granted an Award under this Plan.
Plan means this WESTBANK CORPORATION 1996 Stock Incentive
Plan.
Plan Year means a twelve-month period beginning with January
1 of each year.
Reporting Person means an officer or director of the
Corporation subject to the reporting requirements of Section 16 of
the Exchange Act.
Subsidiary means any corporation or other entity, whether
domestic or foreign, in which the Corporation has or obtains,
directly or indirectly, a proprietary interest of more than 50% by
reason of stock ownership or otherwise.
3. Eligibility
(a) Any Employee selected by the Committee is eligible to
receive an Employee Award.
(b) Eligible Directors are entitled to participate in this
Plan solely with respect to the grant of Director Stock Options
and may not receive any other Awards under this Plan. The
selection of Eligible Directors is not subject to the
discretion of the Committee. Persons serving on the Committee
who are Eligible Directors may receive grants of Director Stock
Options.
4. Plan Administration
(a) This Plan shall be administered by the Committee. The
Committee shall periodically make determinations with respect
to the participation of Employees in this Plan, the type of
employee award, and except as otherwise required by law or this
Plan, the grant terms of Awards including vesting schedules,
price, performance standards, length of relevant performance,
restriction or option period, dividend rights, post-retirement
and termination rights, payment alternatives such as cash,
stock, contingent awards or other means of payment consistent
with the purposes of this Plan, and such other terms and
conditions as the Committee deems appropriate. Except as
otherwise required by this Plan, the Committee shall have
authority to interpret and construe the provisions of this Plan
and the Award Agreements and make determinations pursuant to
any Plan provision or Award Agreement which shall be final and
binding on all persons.
(b) The Committee may designate persons other than its members
to carry out its responsibilities under such conditions or
limitations as it may set, other than its authority with regard
to Awards granted to Reporting Persons.
5. Stock Subject To The Provisions Of This Plan
(a) The stock subject to the provisions of this Plan shall
either be shares of authorized but unissued Common Stock,
shares of Common Stock held as treasury stock or previously
issued shares of Common Stock reacquired by the Corporation,
including shares purchased on the open market. Subject to
adjustment in accordance with the provisions of Section 10, the
total number of shares of Common Stock available for grants of
Awards of this Plan shall not exceed 178,500 shares of Common
Stock as reported in the Corporation s Annual Report on Form
10-K for the fiscal year ending immediately prior to such Plan
Year.
6. Employee Awards Under This Plan
As the Committee may determine, the following types of Employee
Awards may be granted under this Plan to Employees on a stand
alone, combination or tandem basis:
(a) Stock Option. A right to buy a specified number of shares
of Common Stock at a fixed exercise price during a specified
time, all as the Committee may determine; provided that the
exercise price of any option shall not be less than 100% of the
Fair Market Value of the Common Stock on the date of grant of
the Award.
(b) Incentive Stock Option. An award in the form of a stock
option which shall comply with the requirements of Section 422
of the Code or any successor Section as it may be amended from
time to time.
The aggregate fair market value of the stock (determined as
of the date of the grant of the option) for which any
employee may be granted incentive stock options intended to
quailify under Section 422 of the Code in any calendar year
shall not exceed the sum of $100,000 plus the carryover
amount, as hereinafter defined. For purposes of this
section, the carryover amount for an employee for any year
is equal to one-half of the amount by which $100,000
exceeds the value at time of grant of the stock for which
incentive stock options were granted in the prior year.
Amounts may be carried over three years. In determining
the maximum fair market value of the stock for which any
employee may be granted incentive stock options in any
calendar year, the $100,000 current year limitation shall
be applied first and then the carryover amount from the
earliest year.
7. Director Stock Options
Subject to the provisions of Section 5, Director Stock Options
shall be granted to Eligible Directors as provided in this Section
7 and the Committee shall have no discretion with respect to any
matters set forth in this Section 7. These Director Stock Option
terms and conditions shall be in addition to the terms and
conditions of the 1995 Director s Stock Option Plan.
(a) Vesting. Each Director Stock Option shall become
exercisable on and after the first anniversary of the date of
the grant.
(b) Number of Shares. Director Stock Options shall be granted
as follows:
Commencing immediately after the adjournment of the
Corporation s annual meeting of shareholders (an Annual
Meeting ) in 1996, and immediately after the adjournment of
the Annual Meeting each year thereafter until the Annual
Meeting in 2001, each Eligible Director who was an Eligible
Director immediately preceding such Annual Meeting and who
has been elected as a director at such Annual Meeting shall
automatically be granted Director Stock Options for 1,000
shares of Common Stock if, but only if, the return on common
equity of the Corporation as set forth in the Corporation s
annual report to shareholders for the immediately preceding
fiscal year is equal to or greater than 12%.
(c) Option Price. Each Director Stock Option shall have an
option price ( Option Price ) that is equal to the Fair Market
Value of the Common Stock on the date the Director Stock Option
is granted.
(d) Duration of Options. No Director Stock Option may be
exercisable later than twenty years and one day from the date
of its grant.
(e) Payment. The Option Price upon exercise of any Director
Stock Option shall be payable to the Corporation in full either
(i) in U.S. dollars by personal check, bank draft or money
order payable to the order of the Corporation, by money
transfers or direct account debits, (ii) through the delivery
or deemed delivery based on attestation of ownership of shares
of Common Stock with a Fair Market Value at the time of
exercise equal to the total Option Price or (iii) by a
combination of the methods described in items (i) and (ii)
above.
(f) Termination of Director Stock Options. If an Eligible
Director ceases to be an Eligible Director for any reason, the
rights under any then outstanding Director Stock Option granted
pursuant to this Plan which are exercisable as of the date such
person ceases to be an Eligible Director shall terminate upon
the date determined as provided in Section 7(d), above, or
three years after such cessation date, whichever first occurs.
Any then outstanding Director Stock Option granted to such
Eligible Director which is not exercisable as of the date such
person ceases to be an Eligible Director shall terminate on and
as of such date.
8. Other Terms And Conditions
(a) Assignability. Except to the extent, if any, as may be
permitted by the Code and rules promulgated under Section 16 of
the Exchange Act, (i) no Award shall be assignable or
transferable except by will or by the laws of descent and
distribution and (ii) during the lifetime of a Participant, the
Award shall be exercisable only by such Participant.
Notwithstanding the foregoing, for Awards other than incentive
stock options within the meaning of Section 422 of the Code,
awards may be (i) assigned or transferred by a domestic
relations order from a court of competent jurisdiction and (ii)
exercised by a Participant's guardian, legal representative or
assignee pursuant to a domestic relations order from a court of
competent jurisdiction.
(b) Award Agreement. Each Award under this Plan shall be
evidenced by an Award Agreement.
(c) Rights As A Shareholder. Except as otherwise provided
herein or in any Award Agreement, a Participant shall have no
rights as a shareholder with respect to shares of Common Stock
covered by an Award until the date the Participant or his
nominee (which, for purposes of this Plan, shall include any
third party agent selected by the Committee to hold such shares
on behalf of a Participant), guardian or legal representative
is the holder of record of such shares.
(d) No Obligation To Exercise. The grant of an Award shall
impose no obligation upon the Participant to exercise the
Award.
(e) Payments By Participants. The Committee may determine
that Employee Awards for which a payment is due from a
Participant may be payable: (i) in U. S dollars by personal
check, bank draft or money order payable to the order of the
Corporation, by money transfers or direct account debits; (ii)
through the delivery or deemed delivery based on attestation to
the ownership of shares of Common Stock with a Fair Market
Value equal to the total payment due from the Participant;
(iii) by a combination of the methods described in (i) and (ii)
above; or (iv) by such other methods as the Committee may deem
appropriate.
(f) Tax Withholding. The Corporation shall have the right
to withhold from any payments made under this Plan, or to
collect as a condition of payment, any taxes required by
law to be withheld. At any time when a Participant is
required to pay to the Corporation an amount required to be
withheld under applicable income tax laws in connection
with a distribution of shares of Common Stock pursuant to
this Plan, the Participant may satisfy this obligation in
whole or in part by electing to have the Corporation
withhold from such distribution shares of Common Stock
having a value equal to the amount required to be withheld.
The value of the shares of Common Stock to be withheld
shall be based on the Fair Market Value of the Common Stock
on the date that the amount of tax to be withheld shall be
determined (the Tax Date ). Any such election is subject
to the following restrictions: (i) the election must be
made on or prior to the Tax Date; (ii) the election must be
irrevocable; and (iii) the election must be subject to the
disapproval of the Committee. To the extent required to
comply with rules promulgated under Section 16 of the
Exchange Act, elections by Reporting Persons are subject to
the following additional restrictions: (i) no election
shall be effective for a Tax Date which occurs within six
months of the grant of the award; and (ii) the election
must be made either (A) six months or more prior to the Tax
Date or (B) during a period beginning on the third business
day following the date of release for publication of the
Corporation s quarterly or annual summary statements of
sales and earnings and ending on the twelfth business day
following such date.
(g) Restrictions On Sale And Exercise. With respect to
Reporting Persons, and if required to comply with rules
promulgated under Section 16 of the Exchange Act, (i) no Award
providing for exercise, a vesting period, a restriction period
or the attainment of performance standards shall permit
unrestricted ownership of shares of Common Stock by the
Participant for at least six months from the date of grant, and
(ii) shares of Common Stock acquired pursuant to this Plan may
not be sold or otherwise disposed of for at least six months
after acquisition.
(h) Requirements Of Law. The granting of Awards and the
issuance of shares of Common Stock upon the exercise of Awards
shall be subject to all applicable requirements imposed by
federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction,
and by any stock exchanges upon which the Common Stock may be
listed. As a condition precedent to the issuer of shares of
Common Stock pursuant to the grant or exercise of an Award, the
Corporation may require the Participant to take any reasonable
action to meet such requirements.
9. Amendments
(a) Except as otherwise provided in this Plan, the Board may
at any time terminate and, from time to time, may amend or
modify this Plan. Any such action of the Board may be taken
without the approval of the Corporation s shareholders, but
only to the extent that such shareholder approval is not
required by applicable law or regulation, including
specifically Rule 16b-3 under the Exchange Act.
(b) Except to the extent, if any, as may be permitted by rules
promulgated under Section 16 of the Exchange Act, the
provisions of this Plan relating to the amount, price and
timing of Director Stock Options may not be amended more than
once every six months, other than to comport with changes in
the Code, ERISA or the rules thereunder.
(c) No amendment, modification or termination of this Plan
shall in any manner adversely affect any Awards theretofore
granted to a Participant under this Plan without the consent of
such Participant.
10. Recapitalization
The aggregate number of shares of Common Stock as to which Awards
may be granted to participants, the number of shares thereof covered
by each outstanding Award, and the price per share thereof in each
such Award, shall all be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting
from a stock split, stock dividend, combination or exchange of
shares, exchange for other securities, reclassification,
reorganization, redesignation, merger, consolidation,
recapitalization or other such change. Any such adjustment may
provide for the elimination of fractional shares.
11. 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 be retained in the employ of the
Corporation or a Subsidiary. Nothing in this Plan shall interfere
with or limit in any way the right of the Corporation or any
Subsidiary to terminate any Participant s employment at any time,
nor confer upon any Participant any right to continue in the employ
of the Corporation or any Subsidiary.
12. Change Of Control
(a) Notwithstanding anything contained in this Plan or any
Award Agreement to the contrary, in the event of a Change of
Control, as defined below, the following (i) may, in the sole
discretion of the Committee, occur with respect to any and all
Employee Awards outstanding as of such Change of Control and
(ii) shall occur with respect to any and all Director Stock
Options outstanding as of such Change of Control:
(i) automatic maximization of performance standards, lapse
of all restrictions and acceleration of any time periods
relating to the exercise, realization or vesting of such
Awards so that such Awards may be immediately exercised,
realized or vested in full on or before the relevant date
fixed in the Award Agreement;
(ii) upon exercise of a stock option or an incentive stock
option (collectively, an Option ) during the 60-day period
from and after the date of a Change of Control, the
Participant exercising the Option may in lieu of the receipt
of Common Stock upon the exercise of the Option, elect by
written notice to the Corporation to receive an amount in
cash equal to the excess of the aggregate Value (as defined
below) of the shares of Common Stock covered by the Option
or portion thereof surrendered determined on the date the
Option is exercised, over the aggregate exercise price of the
Option (such excess is referred to herein as the Aggregate
Spread ); provided, however, and notwithstanding any other
provision of this Plan, if the end of such 60-day period from
and after the date of a Change of Control is within six
months of the date of grant of an Option held by a
Participant who is a Reporting Person, such Option shall be
cancelled in exchange for a cash payment to the Participant
equal to the Aggregate Spread on the day which is six months
and one day after the date of grant of such Option. As used
in this Section 12(a)(ii) the term Value means the higher
of (i) the highest Fair Market Value during the 60-day period
from and after the date of a Change of Control and (ii) if
the Change of Control is the result of a transaction or
series of transactions described in paragraphs (i) or (ii)
of the definition of Change of Control, the highest price per
share of the Common Stock paid in such transaction or series
of transactions (which in the case of paragraph (i) shall be
the highest price per share of the Common Stock as reflected
in a Schedule 13D filed by the person having made the
acquisition);
(iii) if a Participant s employment terminates for any
reason other than retirement or death following a Change of
Control, any Options held by such Participant may be
exercised by such participant until the earlier of three
months after the termination of employment or the expiration
date of such Options; and
(iv) all Awards become non-cancellable.
(b) A Change of Control of the Corporation shall be deemed
to have occurred upon the happening of any of the following
events:
(i) the acquisition, other than from the Corporation, 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 of 20% or more of either the then outstanding
shares of Common Stock of the Corporation or the combined
voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of
directors; provided, however, that any acquisition by the
Corporation or any of its Subsidiaries, or any employee
benefit plan (or related trust) of the Corporation or its
Subsidiaries, or any corporation with respect to which,
following such acquisition, more than 50% of, respectively,
the then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Common Stock and
voting securities of the Corporation immediately prior to
such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of
the then outstanding shares of Common Stock of the
Corporation or the combined voting power of the then
outstanding voting securities of the Corporation entitled to
vote generally in the election of directors, as the case may
be, shall not constitute a Change of Control;
(ii) individuals who, as of January 1, 1996, constitute the
Board as of the date hereof (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 such date whose election, or nomination for election by
the Corporation s shareholders, 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 an actual or threatened election
contest relating to the election of the directors of the
Corporation (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(iii) approval by the shareholders of the Corporation of a
reorganization, merger or consolidation of the Corporation,
in each case, with respect to which the individuals and
entities who were the respective beneficial owners of the
Common Stock and voting securities of the Corporation
immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger
or consolidation, beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares
of Common Stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from such reorganization, merger or
consolidation, or a complete liquidation or dissolution of
the Corporation or of the sale or other disposition of all
or substantially all of the assets of the Corporation.
13. Governing Law
To the extent that federal laws do not otherwise control, this
Plan shall be construed in accordance with and governed by the law
of the Commonwealth of Massachusetts.
14. Indemnification
Each person who is or shall have been a member of the Committee
or of the Board shall be indemnified and held harmless by the
Corporation against and from any loss, cost, liability or expense
that may be imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit or proceeding to
which he may be a party or in which he may be involved by reason of
any action taken or failure to act under this Plan and against and
from any and all amounts paid by him in settlement thereof, with the
Corporation s approval, or paid by him in satisfaction of any
judgment in any such action, suit or proceeding against him,
provided he shall give the Corporation an opportunity, at its own
expense, to handle and defend the same before he undertakes to
handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the
Corporation s Articles of Incorporation or By- Laws, as a matter of
law, or otherwise, or any power that the Corporation may have to
indemnify them or hold them harmless.
15. Savings Clause
This Plan is intended to comply in all aspects with applicable
law and regulation, including, with respect to those Employees who
are Reporting Persons, Rule 16b-3 under the Exchange Act. In case
any one or more of the provisions of this Plan shall be held
invalid, illegal or unenforceable in any respect under applicable
law and regulation (including Rule 16b-3), the validity, legality
and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby and the invalid, illegal or
unenforceable provisions shall be deemed null and void; however, to
the extent permissible by laws, any provision which could be deemed
null and void shall first be construed, interpreted or revised
retroactively to permit this Plan to be construed in compliance with
all applicable laws (including Rule 16b-3) so as to foster the
intent of this Plan. Notwithstanding anything in this Plan to the
contrary, the Committee, in its sole and absolute discretion, may
bifurcate this Plan so as to restrict, limit or condition the use of
any provision of this Plan to Participants who are Reporting Persons
without so restricting, limiting or conditioning this Plan with
respect to other Participants.
16. Effective Date And Term
The effective date of this Plan is February 21, 1996, subject to
its approval by the Corporation s shareholders at their next annual
meeting or any adjournment thereof, within twelve months following
the date of its adoption by the Board. This Plan shall remain in
effect until terminated by the Board.