Document:

exv10w38

 

EXHIBIT 10.38

The form of Executive Severance 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	 	Term of Continued	 
	 	 	 	Base Amount	 	Benefits	 
	 	Executive Officer	 	Section (4 a)	 	Section (4 b & c)	 
	 	 	 
	 	John C Warren
	 	 	 	 	 
	 	Chairman and Chief Executive Officer of the Bancorp and the Bank

	 	3 times
	 	36 months	 
	 	 
	 	 	 	 	 
	 	John F. Treanor
	 	 	 	 	 
	 	President and Chief Operating Officer of the Bancorp and the Bank

	 	3 times
	 	36 months	 
	 	 
	 	 	 	 	 
	 	David V. Devault
	 	 	 	 	 
	 	Executive Vice President, Secretary, Treasurer and Chief Financial Officer
of the Bancorp and the Bank

	 	2 times
	 	24 months	 
	 	 
	 	 	 	 	 
	 	Galan G. Daukas
	 	 	 	 	 
	 	Executive Vice President of Wealth Management of the Bancorp
and the Bank

	 	2 times
	 	24 months	 
	 	 
	 	 	 	 	 
	 	Stephen M. Bessette
	 	 	 	 	 
	 	Executive Vice President – Retail Lending of the Bank

	 	2 times
	 	24 months	 
	 	 
	 	 	 	 	 
	 	B. Michael Rauh, Jr.
	 	 	 	 	 
	 	Executive Vice President – Sales, Service and Delivery of the Bank

	 	2 times
	 	24 months	 
	 	 
	 	 	 	 	 
	 	James M. Vesey
	 	 	 	 	 
	 	Executive Vice President and Chief Credit Officer of the Bank

	 	2 times
	 	24 months	 
	 	 
	 	 	 	 	 
	 	Dennis L. Algiere
	 	 	 	 	 
	 	Senior Vice President – Chief Compliance Officer and Director of
Community Affairs of the Bank

	 	1 time
	 	12 months	 
	 	 
	 	 	 	 	 
	 	Vernon F. Bliven
	 	 	 	 	 
	 	Senior Vice President – Human Resources of the Bank

	 	1 time
	 	12 months	 
	 	 
	 	 	 	 	 
	 	Elizabeth B. Eckel
	 	 	 	 	 
	 	Senior Vice President – Marketing of the Bank

	 	1 time
	 	12 months	 
	 	 
	 	 	 	 	 
	 	William D. Gibson
	 	 	 	 	 
	 	Senior Vice President – Risk Management of the Bank

	 	1 time
	 	12 months	 
	 	 
	 	 	 	 	 
	 	Barbara J. Perino
	 	 	 	 	 
	 	Senior Vice President – Operations and Technology of the Bank

	 	1 time
	 	12 months	 

 

 

Executive Severance Agreement

     
     AGREEMENT made as of this      st 
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
supercedes 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 Plan, a “Change in Control” shall mean the
occurrence of any one of the following events:

          (a)     The acquisition 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”)), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the then outstanding shares of common stock of the
Corporation (the “Outstanding Corporation Common Stock”); provided, however, that
any acquisition by the Corporation or its subsidiaries, or any employee benefit plan (or
related trust) of the Corporation or its subsidiaries of 20% or more of Outstanding
Corporation Common Stock shall not constitute a Change in Control; and provided,
further, that any acquisition by a corporation with respect to which, following such
acquisition, more than 50% of the then outstanding shares of common stock of such
corporation, is then beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners of the Outstanding
Corporation Common Stock immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such acquisition, of the Outstanding
Corporation Common Stock, shall not constitute a Change in Control; or

          (b)      Individuals who, as of the date of this Agreement, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board,
provided that any individual becoming a director subsequent to the date of this Agreement
whose election, or nomination for election by the Corporation’s shareholders, was approved
by a vote

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of at least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office is in connection
with either an actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the Board; or

          (c)     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 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

          (d)      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.

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

          (a)      within 13 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

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          (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; or

          (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 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 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 failure by the Corporation and/or the Bank to pay to the Executive any
portion of his compensation or to pay to the Executive any portion of an installment
of deferred compensation under any deferred compensation program of the Corporation
and/or the Bank within 15 days of the date such compensation is due without prior
written consent of the Executive; or

          (iv)     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 50 miles from such offices, or the requirement by the

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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;

          (v)     the failure by the Corporation and/or the Bank to (A) continue in effect any
material compensation or benefit plan or program (including, without limitation, any
life insurance, medical, health and accident or disability plan and any vacation
program or policy) in which the Executive participates or which is applicable to the
Executive immediately prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternate plan) has been made with respect to
such plan or program, or (B) continue the Executive’s participation therein (or in
such substitute or alternate plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of the Executive’s
participation relative to other participants, than the basis existing immediately
prior to the Change in Control; or

          (vi)     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; or

          (c.)      after 12 months following a Change in Control but within 13 months following a
Change in Control, termination by the Executive of the Executive’s employment with the
Corporation and/or the Bank for any reason or for no reason.

          (d.)      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,

          (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 highest bonus paid in the two years prior to
the Change in Control.

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          The foregoing amount shall be paid in one lump sum payment within thirty days after the
Date of Termination; and

          (b)     the Corporation and/or the Bank shall continue to provide health, dental and life
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 provide the Executive with            (          )
months of additional benefit accrual under the Corporation’s and the Bank’s supplemental
retirement plans, but only to the extent the Executive was eligible to participate in such
plan immediately prior to the Change in Control; and

          (d)     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.

          5.      Additional Benefits.

          (a)      Anything in this Agreement to the contrary notwithstanding, in the event it shall
be determined 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”), or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) such
that the net amount retained by the Executive, after deduction of any Excise Tax on the
Severance Payments, any Federal, state, and local income tax, employment tax and Excise Tax
upon the payment provided by this subsection, and any interest and/or penalties assessed
with respect to such Excise Tax and not after the deduction of any other taxes or amounts,
shall be equal to the Severance Payments. (The Gross-Up Payment is not intended to
compensate the Executive for any income taxes payable with respect to the Severance
Payments.)

          (b)     Subject to the provisions of Section 5(c), all determinations required to be made
under this Section 5, including whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, 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 both to the Executive and the Corporation and/or the Bank within 15
business days of the Date of Termination, if applicable, or at such earlier time as is
reasonably requested by the Executive or the Corporation and/or the Bank. For purposes of
determining the amount of the Gross-Up Payment, 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 Gross-Up Payment is to be made, and state and
local income taxes at the highest

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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. The initial Gross-Up Payment, if
any, as determined pursuant to this Section 5(b), shall be paid to the Executive within five
days of the receipt of the Accounting Firm’s determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, the Corporation and/or the Bank
shall furnish the Executive with an opinion of counsel that failure to report the Excise Tax
on the Executive’s applicable federal income tax return would not result in the imposition
of a negligence or similar penalty. Any determination by the Accounting Firm shall be
binding upon the Executive and the Corporation and/or the Bank. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Corporation and/or the Bank should have been made (an
“Underpayment”). In the event that the Corporation and/or the Bank exhaust its remedies
pursuant to Section 5(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred, consistent with the calculations required to be made hereunder, and any such
Underpayment, and any interest and penalties imposed on the Underpayment and required to be
paid by the Executive in connection with the proceedings described in Section 5(c), shall be
promptly paid by the Corporation and/or the Bank to or for the benefit of the Executive.

          (c)      The Executive shall notify the Corporation and/or the Bank in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment by the
Corporation and/or the Bank of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than 10 business days after the Executive knows of such
claim and shall apprise the Corporation and/or the Bank of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he gives such
notice to the Corporation and/or the Bank (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Corporation and/or the Bank
notifies the Executive in writing prior to the expiration of such period that it desires to
contest such claim, provided that the Corporation and/or the Bank has set aside adequate
reserves to cover the Underpayment and any interest and penalties thereon that may accrue,
the Executive shall:

          (i)      give the Corporation and/or the Bank any information reasonably requested by
the Corporation and/or the Bank relating to such claim,

          (ii)      take such action in connection with contesting such claim as the
Corporation and/or the Bank shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to such
claim by an attorney selected by the Corporation and/or the Bank,

          (iii)      cooperate with the Corporation and/or the Bank in good faith in order
effectively to contest such claim, and

          (iv)      permit the Corporation and/or the Bank to participate in any proceedings

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relating to such claim; provided, however, that the Corporation and/or the Bank
shall bear and pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 5(c), the Corporation and/or the Bank shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate courts, as the Corporation
and/or the Bank shall determine; provided, however, that if the Corporation and/or
the Bank directs the Executive to pay such claim and sue for a refund, the
Corporation and/or the Bank shall advance the amount of such payment to the Executive
on an interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or penalties
with respect thereto, imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any extension
of the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Corporation’s and/or the
Bank’s control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issues raised by the Internal
Revenue Service or any other taxing authority.

          (d)      If, after the receipt by the Executive of an amount advanced by the Corporation
and/or the Bank pursuant to Section 5(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Corporation’s and/or
the Bank’s complying with the requirements of Section 5(c)) promptly pay to the Corporation
and/or the Bank the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Corporation and/or the Bank pursuant to Section 5(c), a determination
is made that the Executive shall not be entitled to any refund with respect to such claim
and the Corporation and/or the Bank does not notify the Executive in writing of its intent
to contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.

          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 13 months and 1 day after a Change in
Control.

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          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.

          (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,

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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.

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          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 Chief Executive Officer 	 
	 	 	

 	 
	 	 	  Executive 	 
	 

10Exhibit 10(vii)

THE STANLEY WORKS

Deferred Compensation Plan For

Non-Employee Directors (the “Plan”)

1. Eligibility. Each member of the Board of Directors of The Stanley Works (the “Corporation”) who is not an employee of the Corporation or any of its subsidiaries is eligible to participate in the Plan.

2. Participation. (a) Time of Election. Prior to the beginning of any calendar year, commencing with calendar year 1981, each eligible Director may elect to participate in the Plan by directing that all or any part of the compensation (including fees payable for services as chairman or a member of a committee of the Board) which otherwise would have been payable currently for services as a Director during such calendar year and succeeding calendar years shall be credited to a deferred compensation account (the “Director’s account”). Any person who shall become a Director during any calendar year, and who was not a Director of the Corporation prior to the beginning of such calendar year, may elect, within 30
days of the date the Director becomes eligible to participate in the Plan, to defer payment of all or any part of the Director’s compensation for the remainder of such calendar year and for succeeding calendar years.

(b) Form and Duration of Election. An election to participate in the Plan shall be made by written notice executed by the Director and filed with the Secretary of the Corporation. Such election shall continue until the Director terminates such election by written notice filed with the Secretary of the Corporation. Any such termination shall become effective as of the end of the calendar year in which such notice is given and only with respect to fees payable for services as a Director thereafter. Amounts credited to the Director’s account prior to the effective date of termination shall not be affected by such termination and shall be distributed only in accordance with the terms of the Plan. Notwithstanding the foregoing, a Director may cancel his or her election due to a medically determinable
physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months, provided that the cancellation occurs by the later of the end of the Director’s taxable year or the 15th day of the third month following the date on which the Director incurs such impairment.

(c) Adjustment of Amount to be Deferred. Prior to the beginning of any calendar year, a Director participating in the Plan may file another written notice with the Secretary of the Corporation electing to change the amount of compensation to be credited to the Director’s account for services as a Director commencing with such calendar year. Amounts credited to the Director’s account prior to the effective date of such change shall not be affected by such change and shall be distributed only in accordance with the terms of the Plan.

 

 

(d) Renewal. A Director who has terminated his election, or a newly elected Director who failed to make an initial election to participate may thereafter file an election to participate for the calendar year subsequent to the filing of such election and succeeding calendar years.

3. The Director’s Account. All compensation which a Director has elected to defer under the Plan shall be credited to the Director’s account, either in cash or in shares of the Corporation’s Common Stock (valued at the mean between the highest and lowest sales prices of the Common Stock reported as New York Stock Exchange-Composite Transactions for the first business day of the calendar quarter immediately following the quarter in which such compensation is earned), as elected by the Director. The Director shall not have any interest in the cash or Common Stock until distributed in accordance with the Plan.

Cash amounts credited to the Director’s account shall accrue interest commencing on the date such fees would otherwise have been paid, at a rate for each calendar quarter fixed by the Treasurer of the Corporation at the commencement of each such calendar quarter based upon the yield for five-year U.S. Treasury Notes as reported for the last business day of the preceding calendar quarter. Interest so determined shall be compounded at the end of each calendar quarter and credited to the Director’s account. Amounts credited to the Director’s account shall continue to accrue interest until distributed in accordance with the Plan.

Shares credited to the Director’s account shall accrue amounts equivalent to cash or stock dividends. Such amounts shall accrue interest or amounts equivalent to dividends in the same manner as other amounts which may be credited to a Director’s account.

4. Distribution from Accounts. (a) Form of Election. An election made pursuant to paragraph 2(b) to participate in the Plan shall also include a Director’s election with respect to the distribution of the amount of cash and shares credited to the Director’s account with respect to such election. A Director may elect to receive such amount in one lump-sum payment or in a number of approximately equal installments (not to exceed 10 installments) as set forth in the applicable election form. Each payment shall be considered a “separate payment” and not of a series of payments for purposes of Section 409A (as defined in paragraph 9). The first payment shall be made on the date specified in the applicable
election form and any subsequent installments shall be paid on the first business day of each succeeding calendar year during the installment period until the entire amount credited to the Director’s account shall have been paid. If shares have been credited to the Director’s account, cash payment will be made with the final installment for any fraction of a share credited to the Director’s account.

(b) Adjustment of Method of Distribution. Once made, an election may not be changed either in amount or method of payment if the effect of such change is to accelerate the distribution of cash and shares credited to the Director’s account, provided that a Director may make a subsequent election to delay a distribution or to change the method of distribution with respect to previously deferred amounts by filing a written notice changing the election with the Secretary of the Corporation as long as such election (i) will not take effect until at least twelve months after the date on which the election is made; (ii) defers the distribution with respect to which such election is made (other than an election made on account of “disability,” “death” or an “unforeseeable
emergency,” each within the meaning of Section 409A) for a period of not less than five years from the date such distribution would otherwise 

 

 

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have been paid; and (iii) is made not less than twelve months before the date the distribution is scheduled to be paid. Notwithstanding the foregoing, the Corporation may, in its sole discretion, authorize the acceleration of a payment in accordance with paragraphs (j)(4)(ii) through (xiv) of Treasury Regulation §1.409A-3.

5. Distribution on Death. If a Director should die before all amounts credited to the Director’s account shall have been paid in accordance with the election referred to in paragraph 4, the balance in such account shall be paid as soon as administratively practicable, but in no event later than 60 days, following the date of the Director’s death (a) to the beneficiary designated in writing by the Director or (b) to the Director’s estate in the event that the designated beneficiary has predeceased the Director or no beneficiary designation has been made by the Director.

6. Miscellaneous. (a) The right of a Director to receive any amount in the Director’s account shall not be transferable or assignable by the Director, except by will or by the laws of descent and distribution, and no part of such amount shall be subject to attachment or other legal process.

(b) The Corporation shall not be required to reserve or otherwise set aside funds or shares of Common Stock for the payment of its obligations hereunder. The Corporation shall make available as and when required a sufficient number of shares of Common Stock to meet the needs of the Plan. To the extent that registration of such shares under the Securities Act of 1933 shall be required prior to their resale, the Corporation undertakes to either file a registration statement relating to such shares or include such shares in another registration statement to be filed within a reasonable time.

(c) The Corporate Governance Committee of the Board of Directors shall interpret the Plan and make all determinations deemed necessary or desirable for the Plan’s implementation.

(d)  The Board of Directors may at any time amend or terminate the Plan. No amendment or termination (other than an amendment or termination as necessary to comply with Section 409A) shall impair the rights of a Director with respect to amounts then in the Director’s account.

(e) Each Director participating in the Plan will receive an annual statement indicating the amount of cash and number of shares credited to the Director’s account as of the end of the preceding calendar year.

(f) If adjustments are made to outstanding shares of Common Stock or to the capital structure of the Corporation as a result of stock dividends, stock splits or combinations, recapitalizations, mergers, consolidations, exchange offers, issuer tender offers, extraordinary cash dividends, or similar events or transactions, an appropriate adjustment will also be made in the number of shares credited to the Director’s account.

7. Definition of Change in Control. For purposes of this Plan, a “Change in Control of the Corporation” shall mean a “change in the ownership” or the “effective control” of the Corporation or a “change in the ownership of a substantial portion of the Corporation’s assets” (each within the meaning of Section 409A).

 

 

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8. Accelerated Payment Following a Change in Control. Notwithstanding any of the preceding provisions of this Plan, as soon as possible following any Change in Control of the Corporation, but in no event later than 30 days following such Change in Control, a lump-sum payment shall be made, in cash, of the entire account hereunder of any current or former Director. For purposes of calculating the amount of such payment, any shares of the Corporation’s common stock credited to, or accrued in, any Director’s account shall be valued at the higher of (i) the closing price of such shares as reported on the New York Stock Exchange - Composite Transactions on the date preceding and nearest the date the Change in Control occurred or (ii) the highest per share price for the common stock of the
Corporation actually paid in connection with such Change in Control; provided, however, that such value shall not exceed the amount necessary to provide a fully equitable payment of such account, taking into consideration any adjustments made pursuant to paragraph 6(f) of the Plan with respect to any events or transactions constituting a Change in Control of the Corporation, or a part thereof.

9. Section 409. Reference to “Section 409” is to section 409 of the Internal Revenue Code of 1986, as amended, and any proposed, temporary or final regulations, or any other guidance, promulgated with respect to section 409 by the U.S. Department of Treasury or the Internal Revenue Service. The Plan is intended to provide for the deferral of compensation in full compliance with Section 409A. The Plan shall be construed in a manner to give effect to such intention.

10. Limited Transition Relief through December 31, 2008. Notwithstanding anything herein to the contrary, pursuant to the transition relief provided under Q&A 19(c) of IRS Notice 2005-1, as amplified by the proposed regulations under Section 409A, and as further amended by IRS Notice 2006-79 and IRS Notice 2007-86, a Director (i) may designate the time and form of distribution to the extent not previously so elected and/or (ii) may make a new election to change the time and form of distribution in a previously filed election, in each case, no later than December 31, 2008. A Director who chooses not to file a new election as provided in clause (ii) shall continue to participate in the Plan pursuant to his or her prior distribution elections, which shall be administered in accordance with Section
409A. Any changes to elections made after December 31, 2008 will be subject to paragraph 4(b) of the Plan.

 

 

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