EXHIBIT 10.5
BANCORP RHODE ISLAND, INC.
AMENDED AND RESTATED
1996 INCENTIVE AND NONQUALFIED STOCK OPTION PLAN
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WHEREAS, pursuant to Section 2.5 of that certain Plan of
Reorganization and Merger dated as of February 15, 2000 (the "Merger
Agreement") by and among Bank Rhode Island ("Bank RI"), Bancorp Rhode
Island, Inc. (the "Corporation") and BKRI Interim Bank, each outstanding
option to purchase the common stock of Bank RI, including options to
purchase such common stock granted to pursuant to Bank RI's 1996 Incentive
and Nonqualified Stock Option Plan, as amended (the "1996 Plan"), became,
by virtue of the effectiveness of the Merger Agreement and Section 8.3 of
the 1996 Plan, without any action on the part of the holders of such
options, options to purchase the Common Stock, par value $0.01 per share,
of the Corporation (the "Common Stock"); and
WHEREAS, the Corporation desires to assume the 1996 Plan and to amend
and restate the 1996 Plan to reflect the assumption of the 1996 Plan by the
Corporation as the parent holding company of Bank RI, and to effect the
changes to the 1996 Plan necessary to implement the purposes of the 1996
Plan under the new holding company structure; and
WHEREAS, pursuant to Section 10 of the 1996 Plan, the Board of
Directors of Bank RI has consented to the amendment and restatement of the
1996 Plan as hereinafter set forth; and
WHEREAS, the Board of Directors of the Corporation has consented to
the adoption of the 1996 Plan as hereby amended and restated;
NOW, THEREFORE, the 1996 Plan is amended and restated as follows:
SECTION 1. PURPOSE
This Amended and Restated 1996 Incentive and Nonqualified Stock
Option Plan (the "Plan") of the Corporation, is designed to provide
additional incentive to executives and other key employees of the
Corporation and its subsidiaries and for certain other individuals
providing services to or acting as directors of the Corporation and
its subsidiaries. The Corporation intends that this purpose will be
effected by the granting of incentive stock options ("Incentive Stock
Options") as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and nonqualified stock options
("Nonqualified Options") under the Plan which afford such executives,
key employees, directors and other eligible individuals an
opportunity to acquire or increase their proprietary interest in the
Corporation through the acquisition of shares of its Common Stock.
The Corporation intends that Incentive Stock Options issued under the
Plan will qualify as "incentive stock options" as defined in Section
422 of the Code and the terms of the Plan shall be interpreted in
accordance with this intention. The terms "parent" and "subsidiary"
as used herein shall have the respective meanings set forth in
Section 424 of the Code.
SECTION 2. ADMINISTRATION
2.1 Board of Directors/ Committee.
(a) Except as otherwise provided in section 2.1(b)
below, the Plan shall be administered by the Board of Directors
(the "Board") of the Corporation.
(b) At such time and so long as the Corporation has a
class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Plan shall be administered by a Committee (the
"Committee") consisting of at least two members of the Board of
Directors appointed by the Board of Directors of the
Corporation. None of the members of the Committee shall be an
officer or other employee of the Corporation. It is the
intention of the Corporation that, so long as the Corporation
has a class of securities registered pursuant to the Exchange
Act, the Plan shall be administered, in accordance with the
provisions of Section 4 hereof, by "disinterested persons"
within the meaning of Rule l6b-3 under the Exchange Act, but
the authority and validity of any act taken or not taken by the
Committee shall not be affected if any person administering the
Plan is not a disinterested person. Except as specifically
reserved to the Board under the terms of the Plan, the
Committee shall have full and final authority to the Board
under the operate, manage, and administer the Plan on behalf of
the Corporation. Action by the Committee shall require the
affirmative vote of a majority of all members thereof.
2.2 Powers of the Board/Committee. Subject to the terms and
conditions of the Plan, the Board or the Committee, as the case may be,
shall have the power:
(a) To determine from time to time the persons
eligible to receive options and the options to be granted to
such persons under the Plan and to prescribe the terms,
conditions, restrictions, if any, and provisions (which need
not be identical) of each option granted under the Plan to such
persons;
(b) To construe and interpret the Plan and options
granted thereunder and to establish, amend, and revoke rules
and regulations for administration of the Plan. In this
connection, the Board or the Committee, as the case may be, may
correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, or in any option agreement, in the
manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective. All decisions and
determinations by the Board or the Committee, as the case may
be, in the exercise of this power shall be final and binding
upon the Corporation and optionees;
(c) To make, in its sole discretion, changes to any
outstanding option granted under the Plan, including: (i) to
reduce the exercise price, (ii) to accelerate the vesting
schedule or (iii) to extend the expiration date; and
(d) Generally, to exercise such powers and to perform
such acts as are deemed necessary or expedient to promote the
best interests of the Corporation with respect to the Plan.
SECTION 3. STOCK
3.1 Stock to be Issued. The stock subject to the options
granted under the Plan shall be shares of the Corporation's
authorized but unissued Common Stock or shares of the Common Stock
held in treasury. The total number of shares that may be issued
pursuant to options granted under the Plan shall not exceed an
aggregate of three hundred eighty-five thousand (385,000) shares of
Common Stock; provided, however, that the class and aggregate number
of shares which may be subject to options granted under the Plan
shall be subject to adjustment as provided in Section 8 hereof.
3.2 Expiration. Cancellation or Termination of Option.
Whenever any outstanding option under the Plan expires, is cancelled
or is otherwise terminated (other than by exercise), the shares of
Common Stock allocable to the unexercised portion of such option may
again be the subject of options under the Plan.
SECTION 4. ELIGIBILITY
4.1 Persons Eligible. Incentive Stock Options under the Plan
may be granted only to officers and other employees of the
Corporation or its subsidiaries. Nonqualified Options may be granted
to officers or other employees of the Corporation or its
subsidiaries, to members of the Board of Directors of the Corporation
or its subsidiaries, and to consultants or other persons who render
services to the Corporation or its subsidiaries (regardless of
whether they are also employees), provided, however, that no such
option may be granted to a person who is a member of the Committee,
if any, at the time of grant.
4.2 Greater-Than-Ten -Percent Stockholders. Except as may
otherwise be permitted by the Code or other applicable law or
regulation, no Incentive Stock Option shall be granted to an
individual who, at the time the option is granted, owns (including
ownership attributed pursuant to Section 424 of the Code) more than
ten percent of the total combined voting power of all classes of
stock of the Corporation or any parent or subsidiary (a "greater-
than-ten-percent stockholder"), unless such Incentive Stock Option
provides that (i) the purchase price per share shall not be less than
one hundred ten percent of the fair market value of the Common Stock
at the time such option is granted, and (ii) that such option shall
not be exercisable to any extent after the expiration of five years
from the date it is granted.
4.3 Maximum Aggregate Fair Market Value. The aggregate fair
market value (determined at the time the option is granted in the
manner specified in Section 6.3) of the Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by
any optionee during any calendar year (under the Plan and any other
plans of the Corporation or any parent or subsidiary for the issuance
of incentive stock options) shall not exceed $100,000 (or such
greater amount as may from time to time be permitted with respect to
incentive stock options by the Code or any other applicable law or
regulation).
SECTION 5. TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE
5.1 Termination of Employment. Except as may be otherwise
expressly provided herein, options shall terminate on the earlier of:
(a) the date of expiration thereof,
(b) the date of termination of the optionee's
employment with or services to the Corporation by it for cause
(as determined by the Corporation);
(c) 30 days after the date of termination of the
optionee's employment with or services to the Corporation
voluntarily by the optionee; or
(d) 90 days after the date of termination of the
optionee's employment with or services to the Corporation by it
without cause; provided, that Nonqualified Options granted to
persons who are not employees of the Corporation need not,
unless the Board or the Committee, as the case may be,
determines otherwise, be subject to the provisions set forth in
clauses (b), (c) and (d) above.
An employment relationship between the Corporation and the optionee
shall be deemed to exist during any period in which the optionee is
employed by the Corporation, or any parent or subsidiary. Whether
authorized leave of absence, or absence on military or government
service, shall constitute termination of the employment relationship
between the Corporation and the optionee shall be determined by the
Board or the Committee, as the case may be, at the time thereof.
As used herein, "cause" shall mean (x) any material breach by the
optionee of any agreement to which the optionee and the Corporation
are both parties, (y) any act or omission to act by the optionee
which may have a material and adverse effect on the Corporation's
business or on the optionee's ability to perform services for the
Corporation, including, without limitation, the commission of any
crime (other than ordinary traffic violations), or (z) any material
misconduct or material neglect of duties by the optionee in
connection with the business or affairs of the Corporation or any
affiliate of the Corporation.
5.2 Death or Permanent Disability of Optionee. In the event
of the death or permanent and total disability of the holder of an
option that is subject to clause (b) or (c) of Section 5.1 above
prior to termination of the optionee's employment with or services to
the Corporation and before the date of expiration of such option,
such option shall terminate on the earlier of such date of expiration
or one year following the date of such death or disability. After the
death of the optionee, his/her executors, administrators or any
person or persons to whom his/her option may be transferred by will
or by the laws of descent and distribution, shall have the right, at
any time prior to such termination, to exercise the option to the
extent the optionee was entitled to exercise such option immediately
prior to his/her death. An optionee is permanently and totally
disabled if he/she is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to last for a continuous period of
not less than 12 months; permanent and total disability shall be
determined in accordance with Section 22(e)(3) of the Code and the
regulations issued thereunder.
SECTION 6. TERMS OF THE OPTION AGREEMENTS
Each option agreement shall be in writing and shall contain
such terms, conditions, restrictions, if any, and provisions as the
Board or the Committee, as the case may be, shall from time to time
deem appropriate. Such provisions or conditions may include without
limitation restrictions on transfer, repurchase rights, or such other
provisions as shall be determined by the Board or the Committee, as
the case may be, provided that such additional provisions shall not
be inconsistent with any other term or condition of the Plan and such
additional provisions shall not cause any Incentive Stock Option
granted under the Plan to fail to qualify as an incentive option
within the meaning of Section 422 of the Code. At such time as the
Corporation has a class of securities registered pursuant to Section
12 of the Exchange Act, the shares of stock issuable upon exercise of
an option by any executive officer, director or beneficial owner of
more than ten percent of the Common Stock of the Corporation may not
be sold or transferred (except that such shares may be issued upon
exercise of such option) by such officer, director or beneficial
owner for a period of six months following the grant of such option.
Option agreements need not be identical, but each option
agreement by appropriate language shall include the substance of all
of the following provisions:
6.1 Expiration of Option. Notwithstanding any other
provision of the Plan or of any option agreement, each option shall
expire on the date specified in the option agreement, which date
shall not, in the case of an Incentive Stock Option, be later than
the tenth anniversary (fifth anniversary in the case of a greater-
than-ten-percent stockholder) of the date on which the option was
granted, or as specified in Section 5 of this Plan.
6.2 Exercise. Each option may be exercised, so long as it is
valid and outstanding from time to time in part or as a whole,
subject to any limitations with respect to the number of shares for
which the option may be exercised at a particular time and to such
other conditions as the Board or the Committee, as the case may be,
in its discretion may specify upon granting the option.
6.3 Purchase Price. The purchase price per share under each
option shall be determined by the Board or the Committee, as the case
may be, at the time the option is granted; provided, however, that
the option price of any Incentive Stock Option shall not, unless
otherwise permitted by the Code or other applicable law or
regulation, be less than the fair market value of the Common Stock on
the date the option is granted (110 % of the fair market value in the
case of a greater-than-ten-percent stockholder). For the purpose of
the Plan the fair market value of the Common Stock shall be the
closing price per share on the date of grant of the option as
reported on the Nasdaq Stock Market or by a nationally recognized
stock exchange, or, if the Common Stock is not listed on the Nasdaq
Stock Market or such an exchange, the fair market value as determined
by the Board or the Committee, as the case may be.
6.4 Transferability of Options. Options shall not be
transferable by the optionee otherwise than by will or under the laws
of descent and distribution, and shall be exercisable, during his or
her lifetime, only by him or her.
6.5 Rights of Optionees. No optionee shall be deemed for any
purpose to be the owner of any shares of Common Stock subject to any
option unless and until the option shall have been exercised pursuant
to the terms thereof, and the Corporation shall have issued and
delivered the shares to the optionee.
SECTION 7. METHOD OF EXERCISE, PAYMENT OF PURCHASE PRICE
7.1 Method of Exercise. Any option granted under the Plan may
be exercised by the optionee by delivering to the Corporation, on any
business day a written notice specifying the number of shares of
Common Stock the optionee then desires to purchase and specifying the
address to which the certificates for such shares are to be mailed
(the "Notice"), accompanied by payment for such shares.
7.2 Payment of Purchase Price. Payment for the shares of
Common Stock purchased pursuant to the exercise of an option shall be
made either by (i) cash, certified check, bank draft or postal or
express money order equal to the option price for the number of
shares specified in the Notice, or (ii) with the consent of the Board
or the Committee, as the case may be, shares of Common Stock of the
Corporation having a fair market value equal to the option price of
such shares, or (iii) with the consent of the Board or the Committee,
as the case may be, such other consideration which is acceptable to
said Board or Committee, as the case may be, and which has a fair
market value equal to the option price of such shares, or (iv) with
the consent of the Board or the Committee as the case may be, a
combination of (i), (ii) and/or (iii). For the purpose of the
preceding sentence, the fair market value per share of Common Stock
so delivered to the Corporation shall be determined in the manner
specified in Section 6.3. As promptly as practicable after receipt
of the Notice and accompanying payment, the Corporation shall deliver
to the optionee certificates for the number of shares with respect to
which such option has been so exercised, issued in the optionee's
name; provided, however, that such delivery shall be deemed effected
for all purposes when the Corporation or a stock transfer agent of
the Corporation shall have deposited such certificates in the United
States mail, addressed to the optionee, at the address specified in
the Notice.
SECTION 8. CHANGES IN THE CORPORATION'S CAPITAL STRUCTURE
8.1 Rights of the Corporation. The existence of outstanding
options shall not affect in any way the right or power of the
Corporation or its stockholders to make or authorize, without
limitation, any or all adjustments, recapitalizations,
reorganizations or other changes in the Corporation's capital
structure or its business, or any merger or consolidation of the
Corporation, or any issue of Common Stock, or any issue of bonds,
debentures, preferred or prior preference stock or other capital
stock ahead of or affecting the Common Stock or the rights thereof,
or the dissolution or liquidation of the Corporation, or any sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
8.2 Recapitalization, Stock Splits and Dividends. If the
Corporation shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the Common Stock
outstanding, in any such case without receiving compensation therefor
in money, services or property, then (i) the number, class, and price
per share of shares of stock subject to outstanding options hereunder
shall be appropriately adjusted by the Corporation in such a manner
as to entitle an optionee to receive upon exercise of an option, for
the same aggregate cash consideration, the same total number and
class of shares as he or she would have received as a result of the
event requiring the adjustment had he or she exercised his or her
option in full immediately prior to such event; and (ii) the number
and class of shares with respect to which options may be granted
under the Plan shall be adjusted by substituting for the total number
of shares of Common Stock then reserved for issuance under the Plan
that number and class of shares of stock that the owner of an equal
number of outstanding shares of Common Stock would own as the result
of the event requiring the adjustment.
8.3 Merger without Change of Control. After a merger of one
or more corporations into the Corporation, or after a consolidation
of the Corporation and one or more corporations in each case as a
result of which (i) the Corporation shall be the surviving
corporation, and (ii) the stockholders of the Corporation immediately
prior to such merger or consolidation own after such merger or
consolidation shares representing at least fifty percent of the
voting power of the Corporation, each holder of an outstanding option
shall, at no additional cost, be entitled upon exercise of such
option to receive in lieu of the number of shares as to which such
option shall then be so exercisable, the number and class of shares
of stock or other securities to which such holder would have been
entitled pursuant to the terms of the agreement of merger,
consolidation or reorganization if, immediately prior to such merger,
consolidation or reorganization, such holder had been the holder of
record of a number of shares of, Common Stock equal to the number of
shares for which such option was exercisable.
8.4 Sale or Merger with Change of Control. If the
Corporation is merged into or consolidated with another corporation
under circumstances where the Corporation is not the surviving
corporation, or if there is a merger or consolidation where the
Corporation is the surviving corporation but the stockholders of the
Corporation immediately prior to such merger or consolidation do not
own after such merger or consolidation shares representing at least
fifty percent of the voting power of the Corporation, or if the
Corporation is liquidated, or sells or otherwise disposes of
substantially all of its assets to another corporation while
unexercised options remain outstanding under the Plan (i) subject to
the provisions of clause (iii) below, after the effective date of
such merger, consolidation, reorganization, liquidation, sale or
disposition, as the case may be, each holder of an outstanding option
shall be entitled, upon exercise of such option, to receive, in lieu
of shares of Common Stock, shares of such stock or other securities,
cash or property as the holders of shares of Common Stock received
pursuant to the terms of the merger, consolidation, reorganization,
liquidation, sale or disposition; (ii) the Board or the Committee, as
the case may be, may accelerate the time for exercise of all
unexercised and unexpired options to and after a date prior to the
effective date of such merger, consolidation, reorganization,
liquidation, sale or disposition, as the case may be, specified by
said Board or Committee; or (iii) all outstanding options may be
cancelled by the Board or the Committee, as the case may be, as of
the effective date of any such merger, consolidation, reorganization,
liquidation, sale or disposition provided that (x) notice of such
cancellation shall be given to each holder of an option and (y) each
holder of an option shall have the right to exercise such option to
the extent that the same is then exercisable or, if said Board or
Committee shall have accelerated the time for exercise of all
unexercised and unexpired options, in full during, the 30-day period
preceding the effective date of such merger, consolidation,
reorganization, liquidation, sale or disposition.
8.5 Adjustments to Common Stock Subject to Option. Except as
hereinbefore expressly provided, the issue by the Corporation of
shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property, or for labor or
services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or
obligations of the Corporation convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of
Common Stock then subject to outstanding options.
8.6 Miscellaneous. Adjustments under this Section 8 shall be
determined by the Board or the Committee, as the case may be, and
such determinations shall be conclusive. No fractional shares of
Common Stock shall be issued under the Plan on account of any
adjustment specified above.
SECTION 9. GENERAL RESTRICTIONS
9.1 Investment Representations. The Corporation may require
any person to whom an option is granted, as a condition of exercising
such option, to give written assurances in substance and form
satisfactory to the Corporation to the effect that such person is
acquiring the Common Stock subject to the option for his or her own
account for investment and not with any present intention of selling
or otherwise distributing the same, and to such other effects as the
Corporation deems necessary or appropriate in order to comply with
federal and applicable state securities laws.
9.2 Compliance with Securities Laws. The Corporation shall
not be required to sell or issue any shares under any option if the
issuance of such shares shall constitute a violation by the optionee
or by the Corporation of any provisions of any law or regulation of
any governmental authority. In addition, in connection with the
Securities Act of 1933, as now in effect or hereafter amended (the
"Securities Act"), upon exercise of any option, the Corporation shall
not be required to issue such shares unless the Board or the
Committee, as the case may be, has received evidence satisfactory to
it to the effect that the holder of such option will not transfer
such shares except pursuant to a registration statement in effect
under such Act or unless an opinion of counsel satisfactory to the
Corporation has been received by the Corporation to the effect that
such registration is not required. Any determination in this
connection by the Board or the Committee, as the case may be, shall
be final, binding and conclusive. In the event the shares issuable on
exercise of an option are not registered under the Securities Act,
the Corporation may imprint upon any certificate representing shares
so issued the following legend or any other legend which counsel for
the Corporation considers necessary or advisable to comply with the
Securities Act and with applicable state securities laws:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 or under the
securities laws of any State and may not be sold or transferred
except upon such registration or upon receipt by the
Corporation of an opinion counsel satisfactory to the
Corporation, in form and substance satisfactory to the
Corporation, that registration is not required for such sale or
transfer."
The Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act; and in
the event any shares are so registered the Corporation may remove any
legend on certificates representing such shares. The Corporation
shall not be obligated to take any other affirmative action in order
to cause the exercise of an option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental
authority.
9.3 Employment Obligation. The granting of any option shall
not impose upon the Corporation any obligation to employ or continue
to employ any optionee; and the right of the Corporation to terminate
the employment of any officer or other employee shall not be
diminished or affected by reason of the fact that an option has been
granted to him or her.
SECTION 10. AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors may modify, revise or terminate this Plan at
any time and from time to time, except that the class of persons
eligible to receive options and the aggregate number of shares
issuable pursuant to this Plan shall not be changed or increased,
other than by operation of Section 8 hereof, without the consent of
the stockholders of the Corporation.
SECTION 11. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Corporation for
approval shall be construed as creating any limitations on the power
of the Board of Directors to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the granting
of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.
SECTION 12. EFFECTIVE DATE AND DURATION OF PLAN
The Plan has been approved by the sole shareholder of the Corporation
and shall become effective upon the effective date of the
reorganization contemplated by the Merger Agreement. No option may
be granted under the Plan after the tenth anniversary of the opening
of Bank RI for business (March 25, 2006). The Plan shall terminate
(x) when the total amount of the Common Stock with respect to which
options may be granted shall have been issued upon the exercise of
options or (y) by action of the Board of Directors pursuant to
Section 10 hereof, whichever shall first occur.
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated 1996 Incentive and Nonqualified Stock Option Plan to be executed
by its duly authorized officer as of the 19th day of September, 2000.
BANCORP RHODE ISLAND, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Attest:
/s/ Xxxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxxx X. Xxxxxxx
Secretary
393487 v2
EXHIBIT 10.5
