Exhibit
10.6
BANK
RHODE ISLAND
SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
As
Amended and Restated
TABLE
OF CONTENTS
Page
ARTICLE
I - Introduction
1
ARTICLE
II - Definitions
2
ARTICLE
III - Participation and Vesting
4
ARTICLE
IV - Source of Benefit Payment
5
ARTICLE
V - Retirement Benefits
6
ARTICLE
VI - Change of Control
8
ARTICLE
VII - Administration
10
ARTICLE
VIII - Amendment and Termination
11
ARTICLE
IX - Miscellaneous
12
Schedule
A
14
Schedule
B
17
Schedule
C
19
Schedule
D
20
Exhibit
A - Trust Agreement
ARTICLE
I. INTRODUCTION
1.1
Purpose of Plan. The purpose of this Plan
is to promote loyalty , to attract new employees and to
encourage employees to make and continue careers with the Bank and
its subsidiaries by supplementing their retirement benefits,
thereby giving them assurance of retirement security and promoting
their continued loyalty to the Bank.
1.2
Status. The Plan is intended to be a plan
that is unfunded and is maintained by the Bank primarily for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees within the meaning of
sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement
Income Security Act of 1974 (ERISA), and shall be interpreted and
administered accordingly.
1.3
Authorization. The Plan was
approved by the Board of Directors on January 26, 1999.
1.4
Restatement. This plan document is
a restatement of the original plan, Amendments numbered 1 –
8, the amendment and restatement dated December 18, 2007 and
certain additional changes contain herein.
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ARTICLE
II. DEFINITIONS
The
following terms have the following meanings:
2.1
"Administrator" means the person designated by
the Board to administer the Plan pursuant to Article
VII.
2.2
"Board" means the Board of Directors of the Bank
or the Compensation Committee or other committee of the Board duly
appointed to administer the Plan and having such powers as shall be
specified by the Board.
2.3
"Change of Control" is defined in Schedule
A.
2.4
"Bank" means Bank Rhode Island, a Rhode Island
banking corporation.
2.5
"Effective Date" means January 1,
1999.
2.6
"Employee" means an individual employed by the
Bank.
2.7
"Normal Retirement Age" means age 65.
2.8
"Normal Retirement Benefit" means the benefit
referred to in Section 5.1 hereof.
2.9
"Normal Retirement Date" means the first day of
the month coinciding with or next following the Participant's
sixty-fifth birthday.
2.10
"Participant" means any Employee selected to participate in
the Plan in accordance with Section 3.1.
2.11
"Plan" means this Supplemental Executive Retirement Plan as
set forth herein and in all subsequent amendments
hereto.
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2.12
"Years of Service" means the period of an Employee's
employment with the Bank and its predecessor, EFC, Inc., measured
from the Employee's employment commencement date to the date the
Employee quits or is discharged for any reason.
2.13
"Applicable Benefit Amounts", with respect to a Participant,
is defined in Schedule B or C, as the case may be.
2.14
"Average Base Compensation" means a Participant's average
annual Eligible Base Compensation from the Bank during the three
consecutive calendar years as an Employee in which such
compensation was greatest. For this purpose, "Eligible Base
Compensation" shall mean: (i) the Participant's base salary
including any salary reductions made on behalf of the Participant
under any cafeteria, flexible benefits, or
401(k) plan sponsored by the Bank which are excluded from gross
income under Sections 125 or 402(e) (3) of the Internal Revenue
Code, and (ii) any amount deferred by the Participant on an
elective basis under any other non-qualified deferred compensation
plan of the Bank.
2.15
“Average Total Cash Compensation” means a
Participant’s average annual Eligible Total Cash Compensation
from the Bank duting the three consecutive calendar years as an
Employee in which such compensation was greatest. For this purpose,
“Eligible Total Cash Compensation” shall mean: (i) the
Participant’s base salary and incentive cash bonus including
any salary reductions made on behalf of the Participant under any
cafeteria, flexible benefits, or 401(k) plan sponsored by the Bank
which are excluded from gross income under Sections 125 or 402(e)
(3) of the Internal Revenue Code, and (ii) any amount deferred by
the Participant on an elective basis under any other non-qualified
deferred compensation plan of the Bank, but excluding
non-cash
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compensation
reported on the Participant’s Form W-2 for the year such as
taxable income from the exercise of stock options or from other
equity based compensation.
2.16
“401K Plan Benefit” means the annual payment
calculated by converting that portion of the Participant’s
Bank Rhode Island 401K Plan Account Balance that is attributable to
the Bank’s matching and profit-sharing contributions to an
annuity, payable for the life of the Participant only, using
factors set forth in Schedule D.
2.17
“Primary Social Security Benefit” means the
annual amount of old age insurance benefits payable to a
Participant at his or her Normal Retirement Date computed under the
Social Security Act in effect on the date as of which such
computation is made.
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ARTICLE
III. PARTICIPATION AND VESTING
3.1
Selection of Participants. The Board will
select from time to time those Employees who will be Participants
in the Plan and the Applicable Benefit Amount. The Employees
set forth in the attached Schedules B and C will become
Participants on the Effective Date. If and when additional
Participants are named by the Board, they will be added to the
appropriate Schedule and will become Participants at that
time.
3.2
Vesting.
(a)
Except as provided in paragraph (b) and in
Sections 6 and 9.3 , a Participant will be vested and entitled to
receive benefits under this Plan only if he or she is (i) an
Employee listed on Schedule B, or (ii) an Employee listed on
Schedule C who has accumulated 5 Years of Service. A
Participant who ceases to be an Employee without becoming vested
will forfeit all rights under the Plan.
(b)
A Participant who ceases to be an Employee
because of death before satisfying the requirements of paragraph
(a) shall become vested immediately and entitled to receive
benefits subject to the other provisions of the Plan.
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ARTICLE
IV. SOURCE OF BENEFIT PAYMENTS
4.1
Obligations of the Bank. The Bank will
establish on its books liabilities for obligations to pay benefits
under the Plan. With respect to all benefits payable under the
Plan, each Participant (or other person entitled to receive
benefits with respect to a Participant) will be an unsecured
general creditor of the Bank.
4.2
No Funding Required. Except as otherwise
provided in Article VI, the Bank may, but shall not be required to,
establish a trust of which it is treated as the owner under Subpart
E of Subchapter J, Chapter 1 of the Internal Revenue Code of 1986,
as amended (a "rabbi trust"). The Bank may from time to time
deposit funds with the trustee to provide a sound long-term funding
program.
4.3
No Claim to Specific Assets. Nothing in
the Plan will be construed to give any individual rights to any
specific assets of the Bank, person or entity.
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ARTICLE
V. RETIREMENT BENEFITS
5.1
Normal Retirement Benefit.
(a)
Subject to Section 5.2, the Normal Retirement
Benefit payable under the Plan to a Participant will be a monthly
benefit equal to one-twelfth of (i) the Applicable Benefit Amount.
For this purpose, the Applicable Benefit Amount for a
Participant is listed on Schedule B or Schedule C as the case may
be.
(b)
The Participant's Normal Retirement Benefit will
commence at his or her Normal Retirement Date (or such later date
on which the Participant actually retires) and continue for his or
her lifetime.
(c)
The benefit with respect to a Participant who
ceases to be an Employee for any reason other than retirement at
Normal Retirement Date may not commence prior to his or her Normal
Retirement Date and the Applicable Benefit Amount shall be adjusted
for such early termination pursuant to the provisions of Schedule B
and C.
(d)
In the event that a distribution is made to a Key
Employee (as defined in Section 416(i) of the Code), other
than by reason of death, such distribution shall not be made
before a date that is six months following a separation of
service.
5.2
Death Benefits . Except as
otherwise provided in this paragraph, no death benefits will be
payable to anyone following the death of the
Participant.
(a)
Post Retirement. If a Participant
for whom retirement benefits have commenced under this Plan dies,
there shall be a death benefit payable under this Plan equal to the
unpaid portion of the Participant’s Applicable Benefit Amount
set forth in Schedule B or Schedule C, as the case may be, that can
be provided by the amount the
7
Bank has
accrued on its books as a liability for the Participant’s
benefit under this Plan as of the date of the Participant’s
death, minus the amount of the death benefit, if any, that is
payable under any death benefit or insurance arrangement that
specifically references this Plan (but not less than
zero).
(b)
Pre-Retirement . If a Participant
with a vested benefit for whom retirement benefits have not
commenced dies, then except as otherwise provided in Schedule B,
there shall be a death benefit payable under this Plan equal to the
portion of the Participant’s Applicable Benefit Amount set
forth in Schedule B or Schedule C, as the case may be, that can be
provided by the amount the Bank has accrued on its books as a
liability for the Participant’s benefit under this Plan as of
the date of the Participant’s death, minus the amount of the
death benefit, if any, that is payable under any death benefit or
insurance arrangement that specifically references this Plan (but
not less than zero).
(c)
Beneficiary . Any death benefit
that is payable under this Plan shall be paid to the beneficiary or
beneficiaries designated in writing from time to time in a manner
acceptable to the Administrator. If no designation has been made or
if all designated beneficiaries are dead, payment shall be made to
the following persons in the following priority: to the
Participant’s surviving spouse, if any; but if none to the
Participant’s surviving children in equal shares, if any; but
if none payment shall be made to the estate of the
Participant.
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ARTICLE
VI. CHANGE OF CONTROL
6.1
Vesting of Benefits. In the event of a
"Change of Control", a Participant shall, notwithstanding any other
provision of the Plan, immediately become fully vested in the
greater of: (i) his retirement benefits as described in Section
5.1, or (ii) the Change of Control Benefit Amount set forth in
Schedule B or C.
6.2
Funding of Benefit . In the event
of a Change of Control, the Bank shall immediately establish a
rabbi trust with a third party financial institution with a net
worth of at least $100 million (unless all Plan Participants
entitled to benefits and all surviving spouses receiving benefits
under the Plan consent in writing to the appointment of another
trustee), substantially in the form attached hereto as Exhibit
A and shall deposit funds with the trustee of the trust equal
to the difference between the then present value of all accrued
benefits provided under the Plan (computed on the basis of the
actuarial assumptions stated in Schedule D hereto and taking into
account the benefits that become vested or payable in the
event of a Change of Control) and the then fair market value of the
assets of the trust (if any) and shall thereafter make annual
additional deposits with the trustee to reflect increases in the
accrued benefits. If the principal of the trust, and any
earnings thereon, are not sufficient to make payment of the
benefits provided for under this Plan, the Bank shall make the
balance of each such payment as it falls due.
6.3
Excise Tax Equalization Payment .
In the event that (through acceleration of vesting of
benefits pursuant to Section 6.1 or otherwise) the Participant
becomes entitled to receive a payment under Section 6
(“Change of Control Payment”) that will be
subject
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to the
tax (the “Excise Tax”) imposed by Section 4999 of the
Internal Revenue Code (or any similar tax that may hereafter be
imposed), then the Bank shall pay to Participant in cash an
additional amount (the “Gross-Up Payment) such that the net
amount retained by Participant after deduction of any Excise Tax
upon the Change of Control Payment and any Federal, state and local
income tax and excise tax upon the Gross-Up Payment provided for by
this Section 6.3 (including FICA and FUTA), shall be equal to the
Change of Control Payment. In the event the Participant makes
an election pursuant to the regulations under Section 280G of the
Code (or any similar provision) (the “Acceleration
Election”) to accelerate the payment of any Excise Tax due
with respect to a Change of Control Payment which, pursuant to the
terms of the Plan, will be paid subsequent to the year in which the
Change of Control occurs such Gross-Up Payment shall be made by the
Bank to the Participant within thirty (30) days from the later of
(i) the Change of Control that triggers the payment obligation and
(ii) the date on which the Participant notifies the Bank in writing
of the Participant’s Acceleration Election. In
the event the Participant does not make an Acceleration Election,
such Gross-Up Payment(s) shall be made concurrent with the payment
of any retirement benefit under the Plan which is treated as a
Change of Control Payment. All Gross-Up Payments payable to the
Participant shall be subject to all required and customary
deductions by the Bank and the Participant acknowledges that if the
Participant is an employee of the Bank at the time a Gross-Up
Payment is made, all or subsequently all of the Gross-Up Payment
shall be withheld and remitted to Federal and/or state tax
authorities on behalf of the Participant. For the purpose of
this Section 6.3, all defined terms shall be given the meanings
provided herein.
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ARTICLE
VII. ADMINISTRATION
7.1
Appointment of Administrator . The
Plan will be administered by the person designated by the Board to
administer the Plan (the "Administrator"), but the Board will have
full discretionary authority to interpret the provisions of the
Plan and decide all questions and settle all disputes that may
arise in connection with the Plan. The Board may establish its own
operative and administrative rules and procedures in connection
with the Plan, provided such procedures are consistent with the
requirements of Section 503 of ERISA and the regulations
thereunder. All interpretations, decisions and determinations made
by the Board will be binding on all persons concerned.
7.2
Delegation . The Board in its sole
discretion may delegate certain of its duties and responsibilities
to the Administrator or to an appropriate Employee or Employees.
For purposes of the Plan, any action taken by the Administrator or
a delegee Employee pursuant to such delegation will be considered
to have been taken by the Board. The Bank agrees to indemnify
and to defend to the fullest possible extent permitted by law any
delegee of the Board (including any person who formerly served as a
delegee) against all liabilities, damages, costs and expenses
(including attorneys' fees and amounts paid in settlement of any
claims approved by the Bank) occasioned by any act or omission to
act in connection with the Plan, if such act or omission is in good
faith.
7.3
Expenses . All expenses incurred in
the creation or administration of this Plan shall be paid by the
Bank.
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ARTICLE
VIII. AMENDMENT OR TERMINATION OF PLAN
The Bank
hopes and expects to continue the Plan in effect, but the Board
necessarily reserves the right to amend the Plan at any time, and
from time to time, or to terminate the Plan, provided that such
amendment or termination shall not reduce the vested benefit of any
Participant or amend Section 6.1 or 6.2 without the consent of all
Participants who have vested benefits under the Plan. Any
amendment or termination shall be stated in an instrument in
writing and signed by a duly authorized representative of the
Board.
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ARTICLE
IX. MISCELLANEOUS
9.1
No Assignment or Alienation. None of the
benefits, payments, proceeds or claims of any person under this
Plan shall be subject to any claim of any creditor, spouse or
former spouse of the person or to attachment or garnishment or
other legal process by any such creditor, Spouse or former Spouse;
nor shall any person have any right to alienate, anticipate,
commute, pledge, encumber or assign any of the benefits, payments
or proceeds which he or she may expect to receive, contingently or
otherwise, under the Plan.
9.2
Limitation of Rights. Neither the
establishment of the Plan, nor any amendment thereof, nor the
payment of any benefits will be construed as giving any individual
any legal or equitable right against the Bank, except for those
rights explicitly provided for in the Plan.
9.3
Forfeiture of Benefits. A
Participant shall forfeit all rights or benefits remaining to him
or her under the Plan if such Participant's employment is
terminated on account of, or such Participant is convicted of, or
confesses to, or permits a plea of nolo contendere to be entered
with respect to, a criminal act of fraud, misappropriation,
embezzlement, or the like, which is a felony and involves property
of the Bank.
9.4
Governing Law. The Plan will be
construed, administered, and governed under the laws of the State
of Rhode Island, to the extent not preempted by federal
law.
9.5
Severability. If any provision of this
Plan is held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions shall continue to be fully
effective.
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IN
WITNESS WHEREOF, the Bank has caused this Plan to be executed by
their duly authorized officers this 21st day of
October , 2008.
BANK
RHODE ISLAND
Compensation
Committee Chairman
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SCHEDULE
A
(A)
Change in Control. For purposes of this Plan, a
"Change in Control" shall be deemed to have occurred if and
when:
(1)
a Takeover Transaction is effectuated; or (2)
Bancorp Rhode Island, Inc. (the “Company”) commences
substantive negotiations with a third party with respect to a
Takeover Transaction if within twelve (12) months of the
commencement of such negotiations, enters into a definitive
agreement with respect to a Takeover Transaction with any party
with which negotiations were originally commenced; or (3) any
election of directors of the Company occurs (whether by the
directors then in office or by the shareholders at a meeting or by
written consent) where a majority of the directors in office
following such election are individuals who were not nominated by a
vote of two-thirds of the members of the board of directors
immediately preceding such election; or (4) either of the Company
or the Bank effectuates a complete liquidation.
(B)
Takeover Transaction . A “Takeover
Transaction” shall mean:
(1)
The acquisition of voting securities of the
Company by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), other than by
the Company or its subsidiaries or any employee benefit plan (or
related trust) of the Company or its subsidiaries, which
theretofore did not beneficially own (within the meaning of Rule
13d-3 promulgated under the Exchange Act) securities representing
30% or more of the voting power of all outstanding shares of voting
securities of the Company, if such acquisition results in such
individual, entity or group owning securities representing more
than 30%
15
of the
voting power of all outstanding voting securities of the Company;
provided, that any acquisition by a corporation with respect to
which, following such acquisition, more than 50% of the then
outstanding shares of voting securities 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 voting securities of the Company
outstanding immediately prior to such acquisition in substantially
the same proportion as their ownership, immediately prior to such
acquisition, of the outstanding voting securities of the Company,
shall not constitute a Change in Control; or
(2)
The issuance of additional shares of common stock
of the Company or the Bank, as applicable, in a single transaction
or a series of related transactions if the individuals and entities
who were the beneficial owners of the outstanding voting securities
of the Company or the Bank, as applicable, immediately prior to
such issuance do not, following such issuance, beneficially own,
directly or indirectly, securities representing more than 50% of
the voting power of all then outstanding voting securities of the
Company or the Bank, as applicable; or
(3)
Consummation by the Company or the Bank of (a) 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 voting securities of such
entity immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, securities
representing more than 50% of the voting power of then outstanding
voting securities of the corporation resulting from such a
reorganization, merger or consolidation, or (b) the sale, exchange
or other disposition (in one transaction or a
16
series
of related transactions) of all or substantially all of the assets
of the Company (on a consolidated basis) or the Bank to a party
which is not controlled by or under common control with such
entity, or (c) the sale by the Company in one transaction or in a
series of related transactions of voting securities of the Bank
such that following such transaction or transaction
