EXHIBIT 10
DIRECTOR SUPPLEMENTAL RETIREMENT PROGRAM
DIRECTOR AGREEMENT
This Agreement, made and entered into this 10th day of February,
1998, by and between Slade's Ferry Trust Company, a Bank organized and
existing under the laws of the Commonwealth of Massachusetts, hereinafter
referred to as "the Bank", and Thomas B. Almy, a member of the Board of
Directors of the Bank, hereinafter referred to as "the Director".
The Director has been on the Board of the Bank for several years and
has now and for years past faithfully served the Bank. It is the consensus
of the Board of Directors that the Director's services have been of
exceptional merit, in excess of the compensation paid and an invaluable
contribution to the profits and position of the Bank in its field of
activity. The Board further believes that the Director's experience,
knowledge of corporate affairs, reputation and industry contacts are of
such value and his continued services so essential to the Bank's future
growth and profits that it would suffer severe financial loss should the
Director terminate his service on the Board.
Accordingly, the Board of the Bank has adopted the Slade's Ferry
Trust Company Director Supplemental Retirement Program (the Plan) and it is
the desire of the Bank and the Director to enter into this Agreement under
which the Bank will agree to make certain payments to the Director upon his
retirement and to his beneficiaries in the event of his death pursuant to
the Plan.
It is the intent of the parties hereto that this Agreement be
considered an arrangement maintained primarily to provide supplemental
retirement benefits for the Director, and to be considered a non-qualified
benefit plan for purposes of the Employee Retirement Security Act of 1974
(ERISA). The Director is fully advised of the Bank's financial status and
has had substantial input in the design and operation of this benefit plan.
Therefore, in consideration of services the Director has performed in
the past and those to be performed in the future and based upon the mutual
promises and covenants herein contained, the Bank and the Director agree as
follows:
I. INDEXED PLAN
The Director is hereby subject to the terms and conditions of the
Plan adopted by the Board of Directors of the Bank to be effective on
February 10, 1998; a copy of the terms and conditions of the Plan
being attached hereto as Exhibit I and made a part hereof by
reference.
II. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
----------------------------------------
Neither the Director, his/her surviving spouse nor any other
beneficiary under this Agreement shall have any power or right
to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify or otherwise encumber in advance any of the
benefits payable hereunder nor shall any of said benefits be
subject to seizure for the payment of any debts, judgments,
alimony or separate maintenance owed by the Director or his
beneficiary, nor be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise. In the event the
Director or any beneficiary attempts assignment, commutation,
hypothecation, transfer or disposal of the benefits hereunder,
the Bank's liabilities shall forthwith cease and terminate.
B. Binding Obligation of the Bank and any Successor in Interest:
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The Bank shall not merge or consolidate into or with another
bank or sell substantially all of its assets to another bank,
firm or person until such bank, firm or person expressly
agrees, in writing, to assume and discharge the duties and
obligations of the Bank under this Agreement. This Agreement
shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.
C. Revocation:
-----------
It is agreed by and between the parties hereto that, during the
lifetime of the Director, this Agreement may be amended or
revoked at any time or times, in whole or in part, by the
mutual written consent of the Director and the Bank.
D. Gender:
-------
Whenever in this Agreement words are used in the masculine or
neuter gender, they shall be read and construed as in the
masculine, feminine or neuter gender, whenever they should so
apply.
E. Effect on Other Bank Benefit Plans:
-----------------------------------
Nothing contained in this Agreement shall affect the right of
the Director to participate in or be covered by any qualified
or non-qualified pension, profit-sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a
part of the Bank's existing or future compensation structure.
F. Headings
--------
Headings and subheadings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part
of this Agreement.
G. Applicable Law:
---------------
The validity and interpretation of this Agreement shall be
governed by the laws of the Commonwealth of Massachusetts.
III. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
---------------------------------------
The "Named Fiduciary and Plan Administrator" of this Plan shall
be Slade's Ferry Trust Company until its resignation or removal
by the Board of Directors. As Named Fiduciary and Plan
Administrator, Slade's Ferry Trust Company shall be responsible
for the management, control and administration of the
Director's Supplemental Retirement Program as established
herein. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Plan including the employment of advisors and the delegation of
ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration:
---------------------------------
In the event a dispute arises over benefits under this
Agreement and benefits are not paid to the Director (or to his
beneficiary in the case of the Director's death) and such
claimants feel they are entitled to receive such benefits, then
a written claim must be made to the Named Fiduciary and Plan
Administrator named above within sixty (60) days from the date
payments are refused. The Named Fiduciary and Plan
Administrator shall review the written claim and if the claim
is denied, in whole or in part, they shall provide in writing
within sixty (60) days of receipt of such claim their specific
reasons for such denial, reference to the provisions of this
Agreement upon which the denial is based and any additional
material or information necessary to perfect the claim. Such
written notice shall further indicate the additional steps to
be taken by claimants if a further review of the claim denial
is desired. A claim shall be deemed denied if the Named
Fiduciary and Plan Administrator fail to take any action within
the aforesaid sixty-day period.
If claimants desire a second review they shall notify the Named
Fiduciary and plan Administrator in writing within sixty (60)
days of the first claim denial. Claimants may review this
Agreement or any documents relating thereto and submit any
written issues and comments they may feel appropriate. In
their sole discretion, the Named Fiduciary and Plan
Administrator shall then review the second claim and provide a
written decision within sixty (60) days of receipt of such
claim. This decision shall likewise state the specific reasons
for the decision and shall include reference to specific
provisions of the Plan Agreement upon which the decision is
based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Agreement or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to a Board of Arbitration for final
arbitration. Said Board shall consist of one member selected
by the claimant, one member selected by the Bank and the third
member selected by the first two members. The Board shall
operate under any generally recognized set of arbitration
rules. The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be bound
by the decision of such Board with respect to any controversy
properly submitted to it for determination.
Where a dispute arises as to the Bank's discharge of the
Director "for cause", such dispute shall likewise be submitted
to arbitration as above described and the parties hereto agree
to be bound by the decision thereunder.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the 10th
day of February, 1998, and that, upon execution, each has received a
conforming copy.
SLADE'S FERRY TRUST COMPANY
/s/ Robert Karam By: /s/ Donald T. Corrigan
- ---------------------------------- --------------------------------
Witness Chairman Title
/s/ Robert Karam /s/ Thomas B. Almy
- ---------------------------------- --------------------------------
Witness Thomas B. Almy
EXHIBIT I
SLADE'S FERRY TRUST COMPANY
DIRECTOR'S SUPPLEMENTAL RETIREMENT PROGRAM
I. DEFINITIONS
A. Effective Date:
---------------
The effective date of the Slade's Ferry Trust Company
Director's Supplemental Retirement Program (the Plan) shall be
February 10, 1998,
B. Plan Year:
----------
Any reference to "the Plan Year" shall mean a calendar year
from January 1 to December 31. In the year of implementation,
the term "the year" shall mean the period from the effective
date to December 31 of the year of the effective date.
C. Normal Retirement Date:
-----------------------
The Normal Retirement Date shall mean retirement from service
on the Board of Directors of the Bank (the Board) which becomes
effective on the first day of the calendar month following the
month in which the Director attains age seventy-five (75), or
completes ten (10) full years of service from the date of first
service, whichever event occurs later.
D. Termination of Service:
-----------------------
Termination of Service shall mean involuntary or voluntary
resignation by the Director from service on the Board or
failure of re-election to the Board prior to the Directors
Normal retirement date [See Subparagraph I (C)].
E. Pre-Retirement Account:
-----------------------
A Pre-Retirement Account shall be established as a liability
reserve account on the books of the Bank for the benefit of
each director in the Plan. Prior to termination of service or
a director's retirement, such liability reserve account shall
be increased or decreased each year by an amount equal to the
annual earnings or loss for that year determined by the Index
(described in Subparagraph I (H) hereinafter), less the Cost of
Funds Expense for that year (described in Subparagraph I (I)
hereinafter), multiplied by a fraction, the numerator of which
is the Trustee's original premium (Exhibit A) and the
denominator of which is the total of all premiums paid (Exhibit
A).
F. Index Retirement Benefit:
-------------------------
The Index Retirement Benefit for each director in the Plan
shall be equal to the annual earnings or loss determined by the
Index [Subparagraph I (G)] less the Cost of Funds Expense
[Subparagraph I (H)], multiplied by a fraction, the numerator
of which is the Trustee's original premium (Exhibit A) and the
denominator of which is the total of all premiums paid (Exhibit
A).
G. Index:
------
The Index for any Plan Year shall be the aggregate annual
after-tax income from the life insurance contracts described in
the attached Exhibit "A" on the lives of the participating
directors [described in Subparagraph I (I)], as defined by FASB
Technical Bulletin 85-4. This Index shall be applied as if
such insurance contracts were purchased on the effective date
of the Plan.
If such contracts of life insurance are actually purchased by
the Bank then the actual policies as of the dates they were
actually purchased shall be used in calculations under this
Agreement. If such contracts of life insurance are not
purchased or are subsequently surrendered or lapsed, then the
Bank shall receive annual policy illustrations from the above
named insurance company(ies) on the increase in value from such
policy(ies) as if they had actually been in force which will be
used to calculate the amount of the Index.
In either case, references to the life insurance contract are
merely for purposes of calculating a benefit. The Bank has no
obligation to purchase such life insurance and, if purchased,
the Director and his beneficiaries shall have no ownership
interest in such policy and shall always have no greater
interest in the benefits under this Agreement than that of an
unsecured creditor of the Bank.
H. Cost of Funds Expense:
----------------------
The Cost of Funds Expense for the year shall be calculated by
taking the sum of the amount of premiums set forth in the
Indexed policies described above (Exhibit "A") plus the amount
of any after-tax benefits paid to any director pursuant to the
Plan (Paragraph II hereinafter) plus the amount of all previous
years' after-tax Costs of Funds Expense, and multiplying that
sum by the average annualized after-tax Cost of Funds of the
Bank's third quarter Call Report for the Plan Year as filed
with the Bank's primary regulatory agency.
I. Number of Participating Directors:
----------------------------------
The Number of Participating Directors for any Plan Year shall
be the number of directors (including those in retirement
status) participating in the Plan as of December 31 of the
previous year. Participating directors are those directors
listed on the attached Exhibit B plus any Director who has
become active with the Board since the date of the attached
Exhibit B and is eligible to participate pursuant to the terms
of this plan, less any of those directors whose service on the
Board has terminated pursuant to Subparagraph II (C)
hereinafter or who have died.
J. Change of Control:
------------------
Change of Control shall be deemed to be the cumulative transfer
of more than fifty percent (50%) of the voting stock of the
Bank from the Effective Date of this Agreement. For the
purposes of this Agreement, transfers on account of deaths or
gifts, transfers between family members or transfers to a
qualified retirement plan maintained by the Bank shall not be
considered in determining whether there has been a change in
control.
II. INDEX BENEFITS
A. Retirement Benefits:
--------------------
Those directors who remain on the Board of the Bank until the
"Normal Retirement Date" defined in Subparagraph I (C), shall
be entitled to receive the balance in their Pre-Retirement
Account in ten (10) equal annual installments commencing thirty
(30) days following the Director's retirement. In addition to
these payments, commencing thirty (30) days following the
Director's retirement, the Index Retirement Benefit (as defined
in Subparagraph I (F) above) for each Plan Year shall be paid
to the Director until his death.
B. Termination of Service:
-----------------------
Subject to Subparagraph II (D) hereinafter, should the Director
suffer a Termination of Service after having serviced five (5)
full years on the board from the date of first service, he
shall be entitled to receive one hundred percent (100%) of the
balance in the Pre-Retirement Account paid over ten (10) years
in equal annual installments commencing thirty (30) days
following the Director's Normal Retirement Date [Subparagraph I
(C)]. In addition to these payments, one hundred percent
(100%) of the Index Retirement Benefit shall be paid to the
Director commencing thirty (30) days following his Normal
Retirement Date and continuing until his death.
C. Death:
------
Should the Director die prior to having received that portion
of the Pre-Retirement Account he was entitled to pursuant to
Subparagraph II (A) or (B) herein above, as the case may be,
the unpaid balance of the Pre-Retirement Account shall be paid
to the beneficiary selected by the Director and filed with the
Bank. In the absence of or a failure to designate a
beneficiary, the unpaid balance shall be paid in a lump sum to
the personal representative of the Director's estate.
D. Termination of Service or Discharge for Cause:
----------------------------------------------
Should a director suffer a Termination of Service from the
Board prior to having serviced five (5) full years on the Board
from the date of first service, or should he be discharged for
cause, all benefits under this Agreement shall be forfeited.
The term "for cause" shall mean gross negligence or gross
neglect or the commission of a felony or gross-misdemeanor
involving moral turpitude, fraud, dishonesty or willful
violation of any law that results in any adverse effect on the
Bank. If a dispute arises as to discharge "for cause," such
dispute shall be resolved by arbitration as set forth in the
Director's Agreement.
E. Death Benefit:
--------------
Except as set forth above, there is no death benefit provided
under this Agreement.
III. RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust
any fund or money with which to pay its obligations under this
Agreement. The directors, their beneficiaries or any successor in
interest shall be and remain simply a general creditor of the Bank in
the same manner as any other creditor having a general claim for
matured and unpaid compensation.
The Bank reserves the absolute right at its sole discretion to either
fund the obligations undertaken by this Agreement or to refrain from
funding the same and to determine the extent, nature and method of
such funding. Should the Bank elect to fund this Agreement, in whole
or in part, through the purchase of life insurance, mutual funds,
disability policies or annuities, the Bank reserves the absolute
right, in its sole discretion, to terminate such funding at any time,
in whole or in part. At no time shall any director be deemed to have
any lien nor right, title or interest in or to any specific funding
investment or to any assets of the Bank.
If the Bank elects to invest in a life insurance, disability or
annuity policy upon the life of the Director, then the Director shall
assist the Bank by freely submitting to a physical exam and supplying
such additional information necessary to obtain such insurance or
annuities.
IV. CHANGE OF CONTROL
Upon a Change of Control [as defined in Subparagraph I (J) herein],
if the Director is subsequently terminated then he shall receive the
benefits promised in this Agreement upon attaining Normal Retirement
Age, as if he had been continuously serving the Bank until his Normal
Retirement Age. The Director will also remain eligible for all
promised death benefits in this Agreement. In addition, no sale,
merger or consolidation of the Bank shall take place unless the new
or surviving entity expressly acknowledges the obligations under this
Agreement and agrees to abide by its terms.
This Director's Supplemental Retirement Program is adopted this 10th day of
February, 1998.
SLADE'S FERRY TRUST COMPANY
/s/ Donald T. Corrigan
------------------------------------
Chairman of the Board
LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer: Canada Life Assurance
Policy Number: US2650747
Bank: Slade's Ferry Trust Company
Insured: Thomas B. Almy
Relationship of Insured to Bank: Director
The respective rights and duties of the Bank and the Insured in the subject
policy shall be as defined in the following:
I. DEFINITIONS
Refer to the policy contract for the definition of all terms in this
Agreement.
II. POLICY TITLE AND OWNERSHIP
Title and ownership shall reside in the Bank for its use and for the
use of the Insured all in accordance with this Agreement. The Bank
alone may, to the extent of its interest, exercise the right to
borrow or withdraw on the policy cash values. Where the Bank and the
Insured (or assignee, with the consent of the Insured) mutually agree
to exercise the right to increase the coverage under the subject
Split Dollar policy, then, in such event, the rights, duties and
benefits of the parties to such increased coverage shall continue to
be subject to the terms of this Agreement.
III. BENEFICIARY DESIGNATION RIGHTS
The Insured (or assignee) shall have the right and power to designate
a beneficiary or beneficiaries to receive his share of the proceeds
payable upon the death of the Insured, and to elect and change a
payment option for such beneficiary, subject to any right or interest
the Bank may have in such proceeds, as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
The Bank shall pay an amount equal to the planned premiums and any
other premium payments that might become necessary to keep the policy
in force.
V. TAXABLE BENEFIT
Annually the Insured will receive a taxable benefit equal to the
assumed cost of insurance as required by the Internal Revenue
Service. The Bank (or its administrator) will report to the Employee
the amount of imputed income received each year on Form W-2 or its
equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraph VII herein, the division of the death proceeds
of the policy is as follows.
A. Should the Insured be employed by the Bank at the time of his
or her death, the Insured's beneficiary(ies), designated in
accordance with Paragraph III, shall be entitled to an amount
equal to eighty percent (80%) of the net at risk insurance
portion of the proceeds. The net at risk insurance portion is
the total proceeds less the cash value of the policy.
B. Should the Insured not be employed by the Bank at the time of
his or her death, the Insured's beneficiary(ies), designated in
accordance with Paragraph III, shall be entitled to the
following percentage of the proceeds described in Subparagraph
VI (A) hereinabove that corresponds to the number of full years
the Insured served with the Bank from the date of first
service:
Total Years
of Service
with the Bank Vested
------------- ------
0-4 years 0%
5 full years or more 100%
C. The Bank shall be entitled to the remainder of such proceeds.
D. The Bank and the Insured (or assignees) shall share in any
interest due on the death proceeds on a pro rata basis as the
proceeds due each respectively bears to the total proceeds,
excluding any such interest.
VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY
The Bank shall at all times be entitled to an amount equal to the
policy's cash value, as that term is defined in the policy contract,
less any policy loans and unpaid interest or cash withdrawals
previously incurred by the Bank and any applicable surrender charges.
Such cash value shall be determined as of the date of surrender or
death as the case may be.
VIII. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Bank's right and interest in any endowment proceeds or annuity
benefits, on expiration of the deferment period, shall be determined
under the provisions of this Agreement by regarding such endowment
proceeds or the commuted value of such annuity benefits as the
policy's cash value. Such endowment proceeds or annuity benefits
shall be considered to be like death proceeds for the purposes of
division under this Agreement.
IX. TERMINATION OF AGREEMENT
1. The Insured shall leave the service of the Bank (voluntarily or
involuntarily) prior to five (5) full years of service with the
Bank, or
2. This Agreement shall terminate at the option of the Bank
following thirty (30) days written notice to the Insured if
Insured shall be discharged form service with the Bank for
cause. The term "for cause" shall mean gross negligence or
gross neglect or the commission of a felony or gross-
misdemeanor involving moral turpitude, fraud, dishonesty or
willful violation of any law that results in any adverse effect
on the Bank.
Upon such termination, the Insured (or assignee) shall have ninety
(90) day option to receive from the Bank an absolute assignment of
the policy in consideration of a cash payment to the Bank, whereupon
this Agreement shall terminate. Such cash payment shall be the
greater of:
1. The Bank's share of the cash value of the policy on the date of
such assignment, as defined in this Agreement.
2. The amount of the premiums which have been paid by the Bank
prior to the date of such assignment.
Should the Insured (or assignee) fail to exercise this option within
the prescribed ninety (90) day period, the Insured (or assignee)
agrees that all of his rights, interest and claims in the policy
shall terminate as of the date of the termination of this Agreement.
Except as provided above, this Agreement shall terminate upon
distribution of the death benefit proceeds in accordance with
Paragraph VI above.
X. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS
The Insured may not, without the written consent of the Bank, assign
to any individual, trust or other organization, any right, title or
interest in the subject policy nor any rights, options, privileges or
duties created under this Agreement.
XI. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank, their heirs,
successors, personal representatives and assigns.
XII. NAMED FIDUCIARY AND PLAN ADMINISTRATOR
Slade's Ferry Trust Company is hereby designated the "Named
Fiduciary" until resignation or removal by the Board of Directors.
As Named Fiduciary, the Bank shall be responsible for the management,
control, and administration of this Split Dollar Plan as established
herein. The Named Fiduciary may allocate to others certain aspects
of the management and operation responsibilities of the plan,
including the employment of advisors and the delegation of any
ministerial duties to qualified individuals.
XIII. FUNDING POLICY
The funding policy for this Split Dollar Plan shall be to maintain
the subject policy in force by paying, when due, all premiums
required.
XIV. CLAIM PROCEDURES FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR PLAN
Claim forms or claim information as to the subject policy can be
obtained by contacting The Benefit Marketing Group, Inc. (770-952-
1529). When the Named Fiduciary has a claim which may be covered
under the provisions described in the insurance policy, he should
contact the office named above, and they will either complete a claim
form and forward it to an authorized representative of the Insurer or
advise the named Fiduciary what further requirements are necessary.
The Insurer will evaluate and make a decision as to payment. If the
claim is payable, a benefit check will be issued to the Named
Fiduciary.
In the event that a claim is not eligible under the policy, the
Insurer will notify the Named Fiduciary of the denial pursuant to the
requirements under the terms of the policy. If the Named Fiduciary
is dissatisfied with the denial of the claim and wishes to contest
such claim denial, he should contact the office named above and they
will assist in making inquiry to the Insurer. All objections to the
Insurer's actions should be in writing and submitted to the office
named above for transmittal to the Insurer.
XV. GENDER
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine,
feminine or neuter gender, whenever they should so apply.
XVI. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT
The Insurer shall not be deemed a party to this Agreement, but will
respect the rights of the parties as herein developed upon receiving
an executed copy of this Agreement. Payment or other performance in
accordance with the policy provisions shall fully discharge the
Insurer for any and all liability.
Executed at Somerset, Massachusetts this 10th day of February, 1998.
Slade's Ferry Trust Company
/s/ Robert Karam By: /s/ Donald T. Corrigan
- ---------------------------------- --------------------------------
Witness Chairman Title
/s/ Robert Karam /s/ Thomas B. Almy
- ---------------------------------- --------------------------------
Witness Thomas B. Almy