Document:

ex_10-3.htm

    EXHIBIT
10.3

     

    

     

    AMENDMENT NO. 2 TO CREDIT
AGREEMENT AND AMENDMENT NO. 1 TO REGISTRATION RIGHTS
AGREEMENT

     

    This
AMENDMENT NO. 2 TO CREDIT
AGREEMENT AND AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT (this
“Amendment”)
dated as of June 4, 2009 (the “Effective Date”), by
and among CADIZ INC. and
CADIZ REAL ESTATE LLC,
as borrowers (the “Borrowers”), the
lenders from time to time party hereto (the “Lenders”) and LC CAPITAL MASTER FUND, LTD.,
as administrative agent (“LC Capital” or, in
such capacity, the “Agent”).

    

    RECITALS

     

    WHEREAS, the Borrowers entered
into that certain Credit Agreement, dated as of June 26, 2006, by and among
the Borrowers, the lenders party thereto and Peloton Partners LLP, as
administrative agent, as amended pursuant to that certain Amendment No. 1 to
Credit Agreement dated as of September 29, 2006, and by and among Borrowers, the
lenders party thereto and Peloton Partners LLP, as administrative agent (and as
the same has been further amended and supplemented from time to time prior to
the Effective Date, the “Credit
Agreement”).

    

    WHEREAS, pursuant to that
certain Assignment and Assumption Agreement dated as of April 16, 2008, by and
among Peloton Multi-Strategy Master Fund (“Peloton”) and LC
Capital., LC Capital replaced Peloton as a lender under the Credit Agreement
(the “Loan
Assignment”).

    

    WHEREAS, pursuant to that
certain Resignation and Appointment Agreement dated as of June, 2008 by and
among Peloton Partners LLP and LC Capital, LC Capital replaced Peloton Partners
LLP as Agent under the Loan Documents (“Successor Agent
Appointment”).

    

    WHEREAS, the Borrowers
consented to the Loan Assignment and the Successor Agent Appointment pursuant to
that certain Consent signed by the Borrowers and dated as of April 16,
2008.

    

    WHEREAS, Cadiz Inc. entered
into that certain Registration Rights Agreement dated as of June 26, 2006 by and
among Cadiz Inc. and Peloton Partners LLP as administrative agent on behalf of
each holder of registrable securities (as the same has been amended and
supplemented from time to time prior to the Effective Date, the “Registration Rights
Agreement”).

    

    WHEREAS, the Borrowers, the
Agent and the Lenders have agreed to amend the Credit Agreement and the
Registration Rights Agreement on the terms and conditions set forth
herein.

    

    WHEREAS, defined terms used
herein shall, if not otherwise defined in this Amendment, have the same meaning
as set forth in the Credit Agreement.

    

    NOW, THEREFORE, in
consideration of the foregoing and other good and valid consideration, the
receipt and adequacy of which are hereby expressly acknowledged, the parties
hereby agree as follows:

    

    ARTICLE
I

    Amendments to Credit
Agreement

    

    1.01 The following
definitions in Section
1.1 of the Credit Agreement are hereby amended by deleting them in their
entirety and replacing them with the following:

     

    ““Accreted Loan Value”
as of the date of determination, the outstanding principal amount of the
applicable Loan, Plus all accreted interest, if any, added to such Loan as of
the calendar day immediately prior to such date of determination.”

    

    ““Maturity Date” (a)
the seventh anniversary of the Closing Date or (b) the ninth anniversary of the
Closing Date if the Two Year Extension Period applies pursuant to Section
9.6(a).”

    

    ““Tranche A Conversion
Price” with respect to the Tranche A-1 Term Loan, the Tranche A-1
Conversion Price, and with respect to the Tranche A-2 Term Loan, the Tranche A-2
Conversion Price.  The Tranche A Conversion Price shall be subject to
anti-dilution protection as described in Section 2.7(f) hereof.”

    

    ““Tranche B Conversion
Price” $35 per common share.  The Tranche B Conversion Price
shall be subject to anti-dilution protection as described in Section 2.7(f)
hereof.”

    

    1.02 The following
definitions are hereby added to Section 1.1 of the
Credit Agreement in their proper alphabetical order:

     

    ““Present Market Value”
the average of the daily closing sale price on NASDAQ of a share of the public
common stock of Cadiz over the twenty (20) consecutive NASDAQ trading days
ending five (5) Business Days prior to the Borrowers giving notice of prepayment
pursuant to Section 2.3(b) hereof.”

    

    ““Second Amendment”
that certain Amendment No. 2 to Credit Agreement and Amendment No. 1 to
Registration Rights Agreement by and among the Borrowers, the Agent and the
Lenders, and dated as of Second Amendment Effective Date.”

    

    ““Second Amendment Effective
Date” June 4, 2009.”

     

    ““Tranche A-1 Conversion
Price” $7 per common share.”

    

    ““Tranche A-1 Prepayment
Amount” the greater of (a) $4,550,000 in cash and (b) an amount of shares
of the public common stock of Cadiz equal to 110% of the quotient of 4,550,000
divided by the Tranche A-1 Conversion Price or an amount in cash equal to the
Present Market Value multiplied by 110% of the quotient of 4,550,000 divided by
the Tranche A-1 Conversion Price. ”

    

    ““Tranche A-1 Term
Loan” with respect to each Lender, such Lender’s pro rata share (based on
the principal amount of such Lender’s Tranche A Term Loan immediately prior to
the Second Amendment Effective Date) of $4,550,000 in principal of the Tranche A
Term Loan.”

    

    ““Tranche A-2 Conversion
Price” $35 per common share.”

    

    ““Tranche A-2 Term
Loan” with respect to each Lender, (a) such Lender’s pro rata share
(based on the principal amount of such Lender’s Tranche A Term Loan immediately
prior to the Second Amendment Effective Date) the principal amount of the
Tranche A Term Loan, determined as of the Second Amendment Effective Date, in
excess of the principal amount of Tranche A-1 Term Loan, plus (b) all of the
interest accrued on the Tranche A Term Loan of such Lender pursuant to Section
2.4 from the Closing Date through but excluding the Second Amendment Effective
Date, plus (c) all of the interest accruing on the Tranche A-1 Term Loan of such
Lender and such Lender’s share of the principal amount described in clause (a)
of this definition pursuant to Section 2.4 from the Second Amendment Effective
Date through but excluding the Maturity Date, the date of prepayment or
conversion thereof or such other date upon which such amounts become due and
payable (including by reason of acceleration thereof).”

    

    ““Two Year Extension
Period” as defined in Section
9.6(a).”

    

    1.03 The following
definitions in Section
1.1 of the Credit Agreement are hereby deleted in their
entirety:

     

    “Adjusted Tranche A
Conversion Price,”

    

    “Adjusted Tranche B
Conversion Price” and

    

    “Reference
Price.”

    

    1.04 Section 2.3(a) of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:

     

    “(a)           The
Borrowers may prepay (i) each of the Tranche A-2 Term Loan and the Tranche B
Term Loan in cash, solely in accordance with Section 2.3(b), in an amount equal
to the Accreted Loan Value of such Loans as of the day prior to the date of such
prepayment and (ii) the Tranche A-1 Term Loan in cash or in stock, at the option
of the Lender, solely in accordance with Sections 2.3(b) and 2.3(c), in an
amount equal to the Tranche A-1 Prepayment Amount, as of the date of such
prepayment.  In no event, may any Loan be prepaid during the Two Year
Extension Period.  The Agent shall deliver any prepayment notice it
receives from the Borrowers under this Section 2.3 to the Lenders within three
(3) Business Days.”

    

    1.05 Section 2.3(b) of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:

     

    “(b)           The
Borrowers may prepay in whole, but not in part,  (i) either or both of
the Tranche A-2 Term Loan and the Tranche B Term Loan and (ii) subject to
Section 2.3(c) below and  only upon concurrent payment of both the
Tranche A-2 Term Loan and the Tranche B Term Loan, the Tranche A-1 Term Loan, in
each case on no less than thirty (30) days’ prior written notice to the
Agent.  It shall not be a condition to the delivery by the Borrowers
of such prepayment notice that the Borrowers have sufficient available funds to
make such prepayment.  The Lenders shall, following delivery of notice
thereof from the Agent and prior to any prepayment under this Section 2.3(b),
have the right to convert any portion of the Loans into the Conversion Shares at
the applicable Conversion Price, subject to the terms and provisions of Section
2.7.”

    

    1.06 Section 2.3(c) of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:

     

    “(c)  Notwithstanding
the foregoing, any Lender shall have the right to refuse a prepayment made by
the Borrowers with respect to the portion of the Tranche A-1 Term Loan held by
such Lender.  In the event that a Lender so refuses, (i) the Agent
shall automatically release all of the Collateral securing the repayment of the
Tranche A-1 Term Loan and (ii) such Lender’s right to repayment, with respect to
the Tranche A-1 Term Loan, pursuant to this Agreement shall be subordinated to
all financial indebtedness for borrowed money incurred by the Borrowers after
the date prepayment of the Tranche A-1 Term Loan is refused.”

    

    1.07 Section 2.4 of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:

     

    2.4           Interest Rates and Payment
Dates.  (a)  Prior to prepayment of the Tranche A-2
Term Loan, interest on the Tranche A-1 Term Loan shall accrete to the principal
amount of the Tranche A-2 Term Loan and after prepayment of the Tranche A-2 Term
Loan, interest on the Tranche A-1 Term Loan shall be payable, in cash, to each
Lender on the first Business Day of each month following the prepayment of the
Tranche A-2 Term Loan.  Interest on each of the Tranche A-2 Term Loan
and the Tranche B Term Loan shall at all times accrete to the principal amount
of the Tranche A-2 Term Loan and the Tranche B Term Loan,
respectively.

    

    (b)  In
each case, interest shall accrete on the principal amount of any Loan (including
additional principal amount added pursuant to this Agreement), or be paid in
cash as applicable pursuant to Section 2.4(a), at the rate of 5.0% per annum
from and including the Closing Date until and including the third anniversary of
the Closing Date, and 6.0% thereafter.  If all or a portion of the
principal amount of any Loan shall not be paid when due (whether at stated
maturity, by acceleration or otherwise), all outstanding Loans (whether or not
overdue) shall bear interest at a rate per annum equal to the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus
2%.

    

    1.08 Section 2.8(a) of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:

     

    “(a)           Each
Lender shall have the right, at such Lender’s option, pursuant to an offer
(subject only to conditions required by applicable law, if any) by Cadiz (the
“Change Of Control
Offer”) communicated to the Agent, to require Cadiz to repay the Tranche
A-2 Term Loan and the Tranche B Term Loan, in cash, in an amount equal to the
Accreted Loan Value of such Loan.”

    

    1.09 Section 3.16(c) of
the Credit Agreement is hereby amended by deleting the reference to Section 2.8(a)(ii)
therein.

     

    1.10 Section 9.6(a)(i)(z)
of the Credit Agreement is hereby amended and restated to read in its entirety
as follows:

     

    “(z)           if
more than 50% of the principal amount of the Loans is transferred without the
Borrowers’ prior written consent, such consent not to be unreasonably withheld,
then the Maturity Date shall automatically be extended for an additional 2 years
(the “Two Year
Extension Period”); provided, however, that if the Borrowers’ consent for
such a transfer is sought and unreasonably withheld, then no such Two Year
Extension Period shall be implemented.”

    

    1.11 Table 1 to the Credit
Agreement is hereby deleted in its entirety.

     

    ARTICLE
II

    Amendments to Registration
Rights Agreement

    

    2.01 The Registration
Rights Agreement is hereby amended by replacing each instance of “Peloton
Partners LLP” with “LC Capital Master Fund, Ltd.” and replacing each instance of
“Peloton” with “LC Capital.”

     

    2.02 The following
definitions are hereby added to Section 1 of the
Registration Rights Agreement in their proper alphabetical order:

     

    ““LC Capital” means LC
Capital Master Fund, Ltd., in its capacity as Agent under the Credit
Agreement.”

    

    ““Loans” means the
principal amount of loans (including any additional principal amount added
pursuant to the Credit Agreement) outstanding to the Company under the Credit
Agreement.”

    

    ““Second Amendment”
means that certain Amendment No. 2 to Credit Agreement and Amendment No. 1 to
Registration Rights Agreement by and among the Company, the Agent and the
lenders party thereto, and dated as of Second Amendment Effective
Date.”

    

    ““Second Amendment Effective
Date” June 4, 2009.”

     

    2.03 The definition of
“New Note” in
Section 1 of
the Registration Rights Agreement is hereby deleted in its
entirety.

     

    2.04 Section 8 of the
Registration Rights Agreement and the definition of “Registerable
Securities” in Section 1 of the
Registration Rights Agreement are hereby amended by replacing each instance of
“New Note” with “Loans.”

     

    2.05 Section 2(a) of the
Registration Rights Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(a)           Any
Holder may, subject to the terms hereof, request the Company in writing (each
such request, a “Demand”) to effect a
registration with the SEC under and in accordance with the provisions of the
Securities Act of all or part of the Registrable Securities Beneficially Owned
by such Holder (a “Demand
Registration”).  The Demand shall specify the aggregate number
of shares of Registrable Securities requested to be so registered on behalf of
such Holder.  For purposes of this Agreement, Holders shall be deemed
to have made a Demand, effective as of the Second Amendment Effective Date, with
respect to all of the Registrable Securities (the “Closing
Demand”).  Any request received by the Company from a Holder as
provided in this Section 2(a) shall be deemed to be a “Demand” for purposes
of this Agreement, unless the Company, in accordance with the terms of this
Agreement, shall have notified such Holder in writing, prior to its receipt of
such request from such Holder, of its intention to register securities with the
SEC, in which case the request from such Holder shall be governed by
Section 3 hereof, not this Section 2.  All Demands to be
made by a Holder pursuant to this Section 2(a) and any notifications by the
Company pursuant to the preceding sentence must be based upon a good faith
intent of such Holder or the Company, as the case may be, to effect the sale of
securities pursuant to such registrations as promptly as practicable after the
date of the Demand or notification, as the case may be, in accordance with the
terms of this Agreement.”

    

    2.06 Section 2(b) of the
Registration Rights Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(b)           After
receipt of a Demand from a Holder, the Company shall use its best efforts to
prepare and file a Registration Statement for the Registrable Securities so
requested to be registered.  With respect to the Closing Demand, the
Company shall use its best efforts to prepare and file a Registration Statement
for the Registrable Securities within 60 days and use its best efforts
to cause such Registration Statement to become effective (i) 90 days, in the
event that the Registration Statement consists of an amendment to an existing
S-3 previously filed by the Company (or 120 days in the event such
amendment to an existing Registration Statement is reviewed by the SEC) or (ii)
120 days, in the event that the Registration Statement consists of a newly filed
S-3 (or 150 days in the event such newly filed Registration Statement
is reviewed by the SEC).  With respect to any other Demand, the
Company shall use its best efforts to prepare and file a Registration Statement
for the Registrable Securities within 60 days and use its reasonable
best efforts to cause such Registration Statement to become effective
within 120 days (or 150 days in the event the Registration
Statement is reviewed by the SEC).”

    

    2.07 Section 2(c)(v) of
the Registration Rights Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “(v)           if
the Company shall have, on or after the Second Amendment Effective Date,
previously effected four (4) Demand Registrations pursuant to the terms of
this Agreement;”

    

    2.08 Section 8 of the
Registration Rights Agreement is hereby amended by replacing “payee” with
“lender.”

     

    2.09 Section 16 of the
Registration Rights Agreement is hereby amended by deleting the notice
information for Peloton Partners LLP and replacing it with the
following:

     

    “if to LC
Capital:

    

    LC
Capital Master Fund, Ltd.

     

    c/o Lampe
Conway & Company LLC

     

    680 Fifth
Avenue, Suite 1202

     

    New York,
New York 10019

     

    Attention:  Steven
G. Lampe

     

    Telecopy:  (212)
581-8999

     

     

    with a
copy to:

     

    Milbank,
Tweed, Hadley & McCloy LLP

     

    1850 K
Street, NW, Suite 1100

     

    Washington,
DC 20006

     

    Attention:  Debra
Alligood White

     

    Telecopy:  (202)
263-7516”

     

    

    ARTICLE
III

    Representations and
Warranties

    

    Each of
the Borrowers represents and warrants to the Lenders and the Agent that the
representations and warranties set forth in the Credit Agreement and in each of
the other Loan Documents are true and complete on the Effective Date as if made
on and as of the Effective Date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, such representation or
warranty shall be true and correct as of such specific date).

     

    ARTICLE
IV

    Conditions
Precedent

    

    This
Amendment shall become effective as of the Effective Date upon satisfaction of
the following conditions:

     

    (a)
receipt by the Agent of counterparts of this Amendment executed by each of the
Borrowers and the Lenders and

     

    (b) the
representations and warranties contained in this Amendment shall be true and
correct and no Default or Event of Default shall have occurred and be
continuing.

     

    ARTICLE
V

    Effect of
Amendment

    

    Except as
expressly amended hereby, the Credit Agreement and the other Loan Documents
shall remain in full force and effect in accordance with their respective
terms.  This Amendment is a Loan Document executed pursuant to the
Credit Agreement and shall be construed, administered and applied in accordance
with all of the terms and provisions of the Credit Agreement, as amended
hereby.

    

    ARTICLE
VI

    Counterparts

    

    This
Amendment may be executed by one or more of the parties to this Amendment on any
number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.  Delivery
of an executed signature page of this Amendment by facsimile transmission shall
be effective as delivery of a manually executed counterpart hereof.  A
set of the copies of this Amendment signed by all the parties shall be lodged
with the Borrowers and the Agent.

     

    ARTICLE
VII

    Severability

    

    Any
provision of this Amendment that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

    

    

    ARTICLE
VIII

    Governing
Law

    

    THIS
AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK.

    

    

    

    [remainder
of page intentionally blank]

     

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2  to Credit Agreement and Amendment No. 1 to Registration Rights
Agreement to be duly executed by their respective authorized representatives as
of the day and year first above written.

     

    

     

    BORROWERS

     

     

    CADIZ
INC., as a Borrower

     

    
      
        	
                By: 

              	
                /s/ Keith
      Brackpool 

              
	
                Name: 

              	
                Keith
      Brackpool 

              
	
                Title: 

              	
                Chief
      Executive Officer 

              

      

    

    

     

    CADIZ
REAL ESTATE LLC, as a Borrower

     

    
      
        	
                By: 

              	
                /s/
      Richard E. Stoddard 

              
	
                Name: 

              	
                Richard
      E. Stoddard 

              
	
                Title: 

              	
                Chief
      Executive Officer 

              

      

    

    

     

    LENDER

     

    

    MILFAM II
L.P., as a Lender

    

    By:  Milfam
LLC, as general partner

     

    
      
        	
                By: 

              	
                /s/ Lloyd Miller,
  III 

              
	
                Name: 

              	
                Lloyd
      Miller, III 

              
	
                Title: 

              	
                Managing
      Member 

              

      

    

    

     

    LENDER

     

    

    LC
CAPITAL MASTER FUND, LTD.

     

    a Cayman
Islands company,

    as a
Lender

     

    
      
        
          
            	
                    By: 

                  	
                    /s/
      Richard F. Conway 

                  
	
                    Name: 

                  	
                    Richard
      F. Conway 

                  
	
                    Title: 

                  	
                    Director 

                  

          

        

      

    

    

     

    AGENT

     

    

    LC
CAPITAL MASTER FUND, LTD.

    a Cayman
Islands company,

    as the
Agent

     

    
      
        	
                By: 

              	
                /s/
      Richard F. Conway 

              
	
                Name: 

              	
                Richard
      F. Conway 

              
	
                Title: 

              	
                Directorexhibit10-2.htm

     

    EXHIBIT
10.2

     

    

    The
form of Change in Control Agreement (the “Agreement”) contains blanks where the
multiple of the executive’s base amount and the term of continued benefits
provided under the Agreement vary for certain executives.  The
executive officers who entered into the Agreement, the multiple of the
executive’s base amount and the term of continued benefits provided under the
Agreement are listed in the following chart:

    

    
      	 
      	
              Number
      of Times Base Amount

            	
              Term
      of Continued Benefits

            
	
              Executive
      Officer

            	
              Section
      (4 a)

            	
              Section
      (4 b & c)

            
	
              Kristen
      L. DiSanto

            	 
      	 
      
	
              Senior
      Vice President, Human Resources of the Bank

            	
              1
      times

            	
              12
      months

            
	 
      	 
      	 
      
	
              Brenda
      H. Senak

            	 
      	 
      
	
              Senior
      Vice President, Risk Management of the Bank

            	
              1
      times

            	
              12
      months

            
	 
      	 
      	 
      
	
              Mark.
      K. W. Gim

            	 
      	 
      
	
              Executive
      Vice President and Treasurer of the Bancorp and the Bank

            	
              2
      times

            	
              24
      months

            
	 
      	 
      	 
      

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    CHANGE
IN CONTROL AGREEMENT

     

    AGREEMENT
made as of this __________ day of _________________ by and among Washington
Trust Bancorp, Inc., a Rhode Island corporation with its principal place of
business in Westerly, Rhode Island (the “Corporation”), The Washington Trust
Company of Westerly, a Rhode Island banking corporation with its principal place
of business in Westerly, Rhode Island (the “Bank”) and _______________ (the
“Executive”), an individual presently employed as an executive of the
Bank.  This Agreement supersedes and fully replaces any previous
executive severance agreement.

     

    1. Purpose.  The
Corporation considers it essential to the best interests of its stockholders to
foster the continuous employment of key management personnel employed by the
Bank.  The Board of Directors of the Corporation (the “Board”)
recognizes, however, that, as is the case with many publicly held corporations,
the possibility of a Change in Control (as defined in Section 2 hereof) exists
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Corporation and its
stockholders.  Therefore, the Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Corporation and the Bank’s management, including
the Executive, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change in
Control.  Nothing in this Agreement shall be construed as creating an
express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Corporation and/or the Bank, the Executive
shall not have any right to be retained in the employ of the Corporation and/or
the Bank.

     

    2. Change in
Control.  For purposes of this Agreement, a “Change in Control”
shall mean the occurrence of any one of the following events:

     

    (a) Consummation
by the Corporation 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 then outstanding shares of common
stock of the Corporation (the “Outstanding Corporation 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 Corporation 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 Corporation, excluding a sale or other
disposition of assets to a subsidiary of the Corporation; or

     

    (b) Consummation
by the Bank of (i) a reorganization, merger or consolidation, in each case, with
respect to which, following such reorganization, merger or consolidation, the
Corporation 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 Corporation or a subsidiary of the
Corporation.

     

    For
purposes of paragraph (a) above, the term “Incumbent Board” shall mean the
individuals who, as of the date of this Agreement, constitute the Board,
provided that any individual becoming a director subsequent to the date of this
Agreement 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 either an actual or threatened election contest (as such terms are used in

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Rule
14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934,
as amended) or other actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board.

     

    3. Terminating
Event.  A “Terminating Event” shall mean any of the events
provided in this Section 3 occurring:

     

    (a) within
12 months following a Change in Control, termination by the Corporation and/or
the Bank of the employment of the Executive with the Corporation and/or the Bank
for any reason other than for Cause or the death or disability (as determined
under the Corporation’s and/or the Bank’s then existing long-term disability
coverage) of the Executive.  “Cause” shall mean, and shall be limited
to, the occurrence of any one or more of the following events:

     

    (i) a
willful act of dishonesty by the Executive with respect to any material matter
involving the Corporation and/or the Bank; or

     

    (ii) the
commission by or indictment of the Executive for (A) a felony or (B) any
misdemeanor involving moral turpitude, deceit, dishonesty or fraud
(“indictment,” for these purposes, means an indictment, probable cause hearing
or any other procedure pursuant to which an initial determination of probable or
reasonable cause with respect to such offense is made);

     

    (iii) the
gross or willful failure by the Executive (other than any such failure after the
Executive gives notice of termination for Good Reason) to substantially perform
the Executive’s duties with the Corporation and/or the Bank and the continuation
of such failure for a period of 30 days after delivery by the Corporation and/or
the Bank to the Executive of written notice specifying the scope and nature of
such failure and their intention to terminate the Executive for
Cause.

     

    A
Terminating Event shall not be deemed to have occurred pursuant to this Section
3(a) solely as a result of the Executive being an employee of any direct or
indirect successor to the business or assets of the Corporation and/or the Bank,
rather than continuing as an employee of the Corporation and/or the Bank
following a Change in Control.  In any proceeding, judicial or
otherwise, the Corporation and/or the Bank shall have the burden of proving by
clear and convincing evidence that the termination of employment was for
“Cause.”  For purposes of clauses (i) and (iii) of this Section 3(a),
no act, or failure to act, on the Executive’s part shall be deemed “willful”
unless done, or omitted to be done, by the Executive without reasonable belief
that the Executive’s act, or failure to act, was in the best interest of the
Corporation and/or the Bank.

     

    (b) Within
12 months following a Change in Control, termination by the Executive of the
Executive’s employment with the Corporation and/or the Bank for Good
Reason.  “Good Reason” shall mean the Executive has complied with the
“Good Reason Process” (hereinafter defined) following the occurrence of any of
the following events:

     

    (i) a
substantial adverse change, not consented to by the Executive,  in the
nature or scope of the Executive’s responsibilities, authorities, powers,
position, functions, or duties from the responsibilities, authorities, powers,
position, functions, or duties exercised by the Executive immediately prior to
the Change in Control; or

     

    (ii) a
material reduction in the Executive’s annual base salary as in effect on the
date hereof or as the same may be increased from time to time except for
across-the-board salary reductions similarly affecting all or substantially all
management employees; or

     

    (iii) the
relocation of the Corporation’s and/or the Bank’s offices at which the Executive
is principally employed immediately prior to the date of a Change in Control to
a location more than 100 miles from such offices, or the requirement by the
Corporation and/or the Bank for the Executive to be based anywhere other than
the Corporation’s and/or the Bank’s offices at such location, except for
required travel on the Corporation’s and/or the Bank’s business to an extent

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      substantially
consistent with the Executive’s business travel obligations immediately prior to
the Change in Control; or

    

     

    (iv) the
failure by the Corporation and/or the Bank to obtain an effective agreement from
any successor to assume and agree to perform this Agreement, as required by
Section 16.

     

    “Good
Reason Process” shall mean that (i) the Executive reasonably determines in good
faith that a “Good Reason” condition has occurred; (ii) the Executive notifies
the Corporation and/or the Bank in writing of the first occurrence of the Good
Reason condition within 60 days of the first occurrence of such condition; (iii)
the Executive cooperates in good faith with the Corporation’s and/or the Bank’s
efforts, for a period not less than 30 days following such notice (the “Cure
Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good
Reason condition continues to exist; and (v) the Executive terminates his
employment within 60 days after the end of the Cure Period.  If the
Corporation and/or the Bank cures the Good Reason condition during the Cure
Period, Good Reason shall be deemed not to have occurred.

     

    (c) During
the period of time after the date that the Corporation and/or the Bank enters
into a definitive agreement (a “Definitive Agreement”) to consummate a
transaction substantially similar to a transaction described in Section 2(c) or
2(d) hereof, and before the consummation of such transaction, termination by the
Corporation and/or the Bank of the employment of the Executive with the
Corporation and/or the Bank for any reason other than for Cause or the death or
disability (as determined under the Corporation’s and/or the Bank’s then
existing long-term disability coverage) of the Executive, provided, however,
that such termination of the Executive’s employment shall only be considered a
Terminating Event if and when the transaction contemplated by the Definitive
Agreement is consummated and a Change in Control has occurred.

     

    4. Special Termination
Payments.  In the event a Terminating Event occurs, provided
that the Executive has executed, returned to the Corporation and has not revoked
a general release of claims in a form satisfactory to the Corporation and the
Bank, no later than thirty (30) days after the Date of Termination, provided
that if a Terminating Event occurs pursuant to Section 3(a), no later than
thirty (30) days after the Change in Control,

     

    (a) the
Corporation and/or the Bank shall pay to the Executive an amount equal to the
sum of the following:

     

    (i) [______]
times the amount of the then current annual base salary of the Executive,
determined prior to any reductions for pre-tax contributions to a cash or
deferred arrangement, a cafeteria plan, or a deferred compensation plan;
and

     

    (ii) [______]
times the Executive’s average bonus paid in the three years prior to the Change
in Control.

     

    The
foregoing amount shall be paid in one lump sum payment thirty (30) days after
the Date of Termination provided that if a Terminating Event occurs pursuant to
Section 3(c), the lump sum shall be paid thirty (30) days after the Change in
Control; and

     

    (b) the
Corporation and/or the Bank shall continue to provide health and dental
insurance to the Executive, on the same terms and conditions as though the
Executive had remained an active employee, for [______] months after the
Terminating Event;

     

    (c) the
Corporation and/or the Bank shall pay to the Executive all reasonable legal and
arbitration fees and expenses incurred by the Executive in obtaining or
enforcing any right or benefit provided by this Agreement, except in cases
involving frivolous or bad faith litigation initiated by the
Executive.  Such reimbursements shall be made within sixty (60) days
after the receipt of invoices, which invoices shall be submitted by the
Executive within thirty (30) days of receipt.

     

    5. Additional
Benefits.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a) Anything
in this Agreement to the contrary notwithstanding, in the event that any
compensation, payment or distribution by the Corporation and/or the Bank to or
for the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the
“Severance Payments”), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then the
benefits payable under this Agreement shall be reduced (but not below zero) to
the extent necessary so that the sum of all Severance Payments shall not exceed
the Threshold Amount.

     

    (b) For
the purposes of this Section 5, “Threshold Amount” shall mean three times the
Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code
and the regulations promulgated thereunder less one dollar ($1.00); and “Excise
Tax” shall mean the excise tax imposed by Section 4999 of the Code, and any
interest or penalties incurred by the Executive with respect to such excise
tax.

     

    (c) The
determination of the reduction provided in Section 5(a) shall be made by a
nationally recognized accounting firm selected by the Corporation and/or the
Bank (the “Accounting Firm”), which shall provide detailed supporting
calculations to the Corporation, the Bank and the Executive within 15 business
days of the Date of Termination, if applicable, or at such earlier time as is
reasonably requested by the Corporation, the Bank or the
Executive.  For purposes of this determination, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation applicable to individuals for the calendar year in which the
determination is to be made, and state and local income taxes at the highest
marginal rates of individual taxation in the state and locality of the
Executive’s residence on the Date of Termination, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and
local taxes.  Any determination by the Accounting Firm shall be
binding upon the parties hereto.

     

    6. Term.  This
Agreement shall take effect on the date first set forth above and shall
terminate upon the earliest of (a) the termination by the Corporation and/or the
Bank of the employment of the Executive for Cause; (b) the resignation or
termination of the Executive for any reason prior to a Change in Control; or (c)
the date which is 12 months and 1 day after a Change in Control.

     

    7. Withholding.  All
payments made by the Corporation and/or the Bank under this Agreement shall be
net of any tax or other amounts required to be withheld by the Corporation
and/or the Bank under applicable law.

     

    8. Notice and Date of
Termination; Disputes; Etc.

     

    (a) Notice of
Termination.  After a Change in Control and during the term of
this Agreement, any purported termination of the Executive’s employment (other
than by reason of death) shall be communicated by written Notice of Termination
from one party hereto to the other party hereto in accordance with this Section
8.  For purposes of this Agreement, a “Notice of Termination” shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and the Date of Termination.  [Further, a Notice
of Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds (2/3) of the entire
membership of the Board at a meeting of the Board (after reasonable notice to
the Executive and an opportunity for the Executive, accompanied by the
Executive’s counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the termination met the criteria for Cause set forth
in Section 3(a) hereof.] [For the Chief Executive Officer and President, when
such individual or individuals executes this agreement.]

     

    (b) Date of
Termination.  “Date of Termination,” with respect to any
purported termination of the Executive’s employment after a Change in Control
and during the term of this Agreement, shall mean the date specified in the
Notice of Termination.  In the case of a termination by the
Corporation and/or the Bank other than a termination for Cause (which may be
effective immediately), the Date of Termination shall not be less than 30 days
after the Notice of Termination is given.  In the case of a
termination by the Executive, the Date of Termination shall not be less than 15
days from the date such Notice of Termination is
given.  Notwithstanding Section 3(a) of this Agreement, in the event
that the Executive gives a Notice of Termination to the Corporation and/or the
Bank, the Corporation and/or the Bank may unilaterally accelerate the Date of
Termination and such acceleration shall not result in a second Terminating Event
for purposes of Section 3(a) of this Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) No
Mitigation.  The Corporation and/or the Bank agrees that, if
the Executive’s employment by the Corporation and/or the Bank is terminated
during the term of this Agreement, the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the
Executive by the Corporation and/or the Bank pursuant to Sections 4 and 5
hereof.  Further, the amount of any payment provided for in this
Agreement shall not be reduced by any compensation earned by the Executive as
the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Corporation and/or
the Bank, or otherwise.

     

    (d) Settlement and Arbitration
of Disputes.  Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled exclusively by
arbitration in accordance with the laws of the State of Rhode Island by three
arbitrators, one of whom shall be appointed by the Corporation and/or the Bank,
one by the Executive, and the third by the first two arbitrators.  If
the first two arbitrators cannot agree on the appointment of a third arbitrator,
then the third arbitrator shall be appointed by the American Arbitration
Association in Boston, Massachusetts.  Such arbitration shall be
conducted in Rhode Island in accordance with the rules of the American
Arbitration Association for commercial arbitrations, except with respect to the
selection of arbitrators, which shall be as provided in this Section
8(d).  Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof.

     

    9. Assignment; Prior
Agreements.  Neither the Corporation, the Bank, nor the
Executive may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party, and without such consent any attempted transfer shall be null and void
and of no effect.  This Agreement shall inure to the benefit of and be
binding upon the Corporation and the Bank and the Executive, as well as their
respective successors, executors, administrators, heirs and permitted
assigns.  In the event of the Executive’s death after a Terminating
Event but prior to the completion by the Corporation and/or the Bank of all
payments due him under Sections 4 and 5 of this Agreement, the Corporation
and/or the Bank shall continue such payments to the Executive’s beneficiary
designated in writing to the Corporation and/or the Bank prior to his death (or
to his estate, if the Executive fails to make such designation).

     

    10. Enforceability.  If
any portion or provision of this Agreement shall to any extent be declared
illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.

     

    11. Waiver.  No
waiver of any provision hereof shall be effective unless made in writing and
signed by the Executive and such officer as may be specifically designated by
the Board.  The failure of any party to require the performance of any
term or obligation of this Agreement, or the waiver by any party of any breach
of this Agreement, shall not prevent any subsequent enforcement of such term or
obligation or be deemed a waiver of any subsequent breach.

     

    12. Notices.  Any
notices, requests, demands, and other communications provided for by this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail, postage prepaid, to the Executive at the last
address the Executive has filed in writing with the Corporation and/or the Bank,
or to the Corporation and/or the Bank at its main offices, attention of the
Board of Directors, with a copy to the Secretary of the Corporation and/or the
Bank, or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of a change of address
shall be effective only upon receipt.

     

    13. Effect on Other
Plans.  An election by the Executive to resign after a Change
in Control under the provisions of this Agreement shall not be deemed a
voluntary termination of employment by the Executive for purposes of
interpreting the provisions of any of the Corporation’s and/or the Bank’s
benefit plans, programs or policies.  Nothing in this Agreement shall
be construed to limit the rights of the Executive under the Corporation’s and/or
the Bank’s benefit plans, programs or policies.

     

    14. Amendment.  This
Agreement may be amended or modified only by a written instrument signed by the
Executive and by a duly authorized representative of the Corporation and/or the
Bank.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    15. Governing
Law.  This contract shall be construed under and be governed in
all respects by the laws of the State of Rhode Island.

     

    16. Obligations of
Successors.  The Corporation and/or the Bank shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the
Corporation and/or the Bank to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Corporation and/or
the Bank would be required to perform if no such succession had taken
place.

     

    17. Section
409A.  Notwithstanding anything to the contrary in the
foregoing, if at the time of the Executive’s separation from service within the
meaning of Section 409A of the Code, the Executive is considered a ‘specified
employee’ within the meaning of Section 409A(a)(2)(B)(i) of the Code, and if any
payment that the Executive becomes entitled to under this Agreement would be
considered deferred compensation subject to interest, penalties and additional
tax imposed pursuant to Section 409A(a) of the Code as a result of the
application of Section 409A(a)(2)(B)(i) of the Code, then no such payment shall
be payable prior to the date that is the earlier of (i) six months and one day
after the Executive’s separation from service, or (ii) the Executive’s
death.  Any such deferred payment shall earn simple interest
calculated at the short-term applicable federal rate in effect on the Date of
Termination.  On or before the Executive’s Date of Termination, either
the Corporation or the Bank shall make an irrevocable contribution to a rabbi
trust with an independent bank trustee in an amount equal to the amount of such
deferred payment plus interest.

     

    IN
WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the
Corporation and the Bank by their duly authorized officers and by the Executive,
as of the date first above written.

     

     

    
    

     

    
      	 	WASHINGTON TRUST
      BANCORP, INC.	 
	 	 	 
	
               By:

            	 	 
	 	John C.
    Warren	 
	 	Chairman and Chief
      Executive Officer	 
	 	 	 
	 	 	 
	 	 THE WASHINGTON
      TRUST COMPANY OF WESTERLY	 
	 	 	 
	
               By:

            	 	 
	 	John C.
    Warren	 
	 	Chairman and Chiel
      Executive Officer	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 Executive

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