SENIOR MANAGEMENT
CHANGE OF CONROL AGREEMENT
This CHANGE OF CONTROL AGREEMENT (the "Agreement") is made and entered
into as of May 1, 2001, by and between XXXXXX X. X'XXXXXXX of Xxxxxxx,
Massachusetts ("Executive") and PATRIOT NATIONAL BANK, a national banking
association with headquarters located in Stamford, Connecticut ("Bank").
W I T N E S S E T H
WHEREAS, it is contemplated that from time to time one or more entities
may consider the possibility of acquiring Patriot (as hereinafter defined) or
that a Change in Control (as hereinafter defined) may otherwise occur, with or
without the approval of the Board of Directors of Bancorp (as hereinafter
defined) or the Board of Directors of Bank (as hereinafter defined); and
WHEREAS, the Board of Directors of Bank has determined that it is in
the best interests of Bank and its securityholders to provide incentive to
Executive to remain employed as an executive officer of Bank during any period
prior to or during a possible Change of Control of Patriot and for a period of
up to 90 days following a Change of Control of Patriot, with the continued
dedication and objectivity of Executive, notwithstanding the possibility, threat
or occurrence of a Change of Control; and
WHEREAS, the Parties (as hereinafter defined) desire to enter into this
Agreement to reflect the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter described and for other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:
1. DEFINED TERMS. The terms defined below shall have the following
meanings for purposes of this Agreement:
(a) "Agreement" means this Senior Management Change of Control
Agreement, as amended, restated, supplemented or modified from time to time and
together with any exhibits or attachments hereto.
(b) "Bancorp" means Patriot National Bancorp, Inc., a Connecticut
corporation.
(c) "Bank" means Patriot National Bank, a national banking
association, and wholly-owned subsidiary of Bancorp.
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(d) "Board of Directors of Bancorp" shall mean the board of
directors of Bancorp.
(e) "Board of Directors of Bank" shall mean the board of directors
of Bank.
(f) "Change of Control" means:
(i) a change in control of the direction and administration of
Patriot's business of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A (or any successor rule or
regulation) promulgated under the Exchange Act, whether or not Bank or Bancorp
is then subject to such reporting requirements;
(ii) any person (as such term is used in Sections 14(d) and
14(d)(2) of the Exchange Act but excluding any employee benefit plan of
Patriot), other than (x) Xxxxxx Xx Xxxx and his family members or family trusts,
(y) Xxxx XxXxxx and his family members or family trusts, or (z) any trustee or
other fiduciary holding securities under an employee benefit plan of Patriot, by
merger or otherwise, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of Bancorp
representing 35% or more of the combined voting power of Bancorp's outstanding
securities then entitled ordinarily (and apart from rights accruing under
special circumstances) to vote for the election of directors;
(iii) the Board of Directors of Bancorp shall approve a sale of
all or substantially all of the assets of Bancorp;
(iv) the Board of Directors of Bank shall approve a sale of all
or substantially all of the assets of Bank;
(v) the Board of Directors of Bancorp shall approve any merger,
consolidation or like business combination or reorganization of Bancorp, the
consummation of which would result in the occurrence of any event described in
clause (ii) above;
(vi) the Board of Directors of Bank shall approve any merger,
consolidation or like business combination or reorganization of Bank, the
consummation of which would result in the occurrence of any event described in
clause (ii) above;
(vii) the Board of Directors of Bancorp determines that any
person (as such term is used in Sections 14(d) and 14(d)(2) of the Exchange Act
but excluding any employee benefit plan of Bancorp), other than (i) Xxxxxx Xx
Xxxx and his family members of family trusts or (ii) Xxxx XxXxxx and his family
members or family
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trusts, directly or indirectly exercises a controlling influence over the
management or policies of Bancorp; or
(viii) the Board of Directors of Bank determines that any
person (as such term is used in Sections 14(d) and 14(d)(2) of the Exchange Act
but excluding any employee benefit plan of Bank), other than (i) Xxxxxx Xx Xxxx
and his family members or family trusts or (ii) Xxxx XxXxxx and his family
members or family trusts, directly or indirectly exercises a controlling
influence over the management or policies of Bank;
provided, however, that (i) the filing of a Form F-11A by any person or (ii) any
event mandated or directed by a regulatory body having jurisdiction over
Bancorp's or Bank's operations, shall not be deemed a Change of Control.
(g) "Change of Control Payments" has the meaning set forth in
Section 2 of this Agreement.
(h) "Cause" shall mean (i) the continued failure by Executive
substantially to perform his duties as an executive officer of Bank (other than
any such failure resulting from his incapacity due to physical or mental
illness) or (ii) the engaging by Executive in conduct which is materially
injurious to Bank, monetarily or otherwise, in either case as determined by the
Board of Directors of Bank.
(i) "Disability" means any physical or mental condition that (i)
would qualify Executive for a disability benefit under any long-term disability
plan maintained by Bank and applicable to such Executive or (ii) renders
Executive unable to perform substantially his obligations as an executive
officer of Bank for the reasonably foreseeable future (not less than ninety (90)
days), as determined by the Board of Directors of Bank after considering
competent medical evidence.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended.
(l) "Party" or "Parties" means, individually or collectively,
Executive and Bank.
(m) "Patriot" means, collectively, Bancorp and Bank.
2. CHANGE OF CONTROL PAYMENT.
(a) If there is a Change of Control, (i) during any time Executive
is a full-time executive officer of Bank, or (ii) within six (6) months
following Executive's
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termination of employment by Bank, other than for Cause or by reason of
Executive's death or Disability, then Executive shall be entitled to receive a
payment (the "Change of Control Payment") in consideration of services
previously rendered to Bank. The Change of Control Payment shall be made as a
lump sum cash payment equal to the greater of (A) one times (1x) Executive's
annual base salary (calculated as of the date of the Change of Control or, in
the case of Section 2(a)(ii), calculated as of the date of prior termination),
or (B) Executive's total compensation, including salary and any cash incentive
compensation, from Bank for services rendered for the last full calendar year
immediately preceding the Change of Control. The Change of Control Payment shall
be paid in full within 15 days following the date of the Change of Control;
provided, however, that such payment may be deferred for such period (not to
exceed 90 days) following the date of the Change of Control as the Bank requests
that Executive continue to provide services to it. If Executive voluntarily
terminates employment with Bank prior to the date (not more than 90 days
following the date of the Change of Control) specified by Bank, Executive shall
forfeit his right to receive the Change of Control Payment. The Change of
Control Payment shall not be reduced by any compensation which Executive may
receive from Bank or from other employment with another employer should
Executive's employment with Bank terminate.
(b) All payments made pursuant to this Agreement will be subject to
withholding of applicable income and employment taxes.
(c) If, after a Change of Control, Executive prevails in any action
to enforce this Agreement, then Bank shall be obligated to reimburse Executive
for all reasonable fees and expenses, including reasonable attorneys' fees of
counsel chosen by Executive in his sole discretion.
(d) Notwithstanding any other provision of this Agreement or of any
other agreement, understanding or compensation plan, Bank shall not be obligated
to pay any amounts which violate restrictions imposed, or which may in the
future be imposed, on such payments by Bank pursuant to Section 18(k)(1) of the
Federal Deposit Insurance Act, or any regulations or orders which are or may be
promulgated thereunder; nor shall any payments be made which would constitute an
"unsafe or unsound banking practice" pursuant to 12 U.C.C. Section 18(b).
(e) Notwithstanding any other provision hereof, in the event that
any payment or benefit received or to be received by Executive in connection
with a Change of Control would not be deductible (in whole or part) as a result
of Section 280G of the Internal Revenue Code, by Bank, an affiliate or other
person making such payment or providing such benefit, the Change of Control
Payment shall reduced until no portion is not deductible, or the Change of
Control Payment is reduced to zero. For purposes of this limitation, (i) no
portion of the Change of Control Payment the receipt or enjoyment of which
Executive shall have effectively waived in writing prior to the date of payment
of the Change of Control Payment shall be taken into account; (ii) no portion of
the Change
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of Control Payment shall be taken into account which in the opinion of tax
counsel selected by Bank's independent auditors and acceptable to Executive does
not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of
the Internal Revenue Code; (iii) the Change of Control Payment shall be reduced
only to the extent necessary so that such payment shall constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Internal Revenue Code or are otherwise not subject to
disallowance as deductions, in the opinion of the tax counsel referred to in
clause (ii); and (iv) the value of any non cash benefit or any deferred payment
or benefit included in the Change of Control Payment shall be determined by
Bank's independent auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Internal Revenue Code.
3. TERM. This Agreement shall terminate on the earliest of: (i)
immediately, upon Executive's termination of employment with Bank for Cause,
death or Disability, (ii) six months following Executive's termination of
employment with Bank, other than for Cause, death or Disability, or (iii) six
months following receipt by Executive of the Change of Control Payment.
4. ASSIGNMENT. This Agreement will be binding on and will inure to the
benefit of the Parties hereto and their respective successors, permitted assigns
and legal representatives. Without otherwise limiting the foregoing, "Bank" as
used herein shall refer to any successor institution whether by merger,
consolidation, acquisition or otherwise.
5. NON-COMPETITION AGREEMENT. If Executive receives the Change of
Control Payment, Executive absolutely and unconditionally agrees with Bank that,
for a period of six (6) months from the date of receipt of the Change of Control
Payment, Executive will not, anywhere in the Restricted Area (as defined below),
either directly or indirectly, solely or jointly with any person or persons (a
"Competitor"), as an employee, consultant or advisor (whether or not engaged in
business for profit), or as an individual proprietor, partner, shareholder
(provided that ownership of less than 5% of the voting power shall be
permitted), director, officer, joint venturer, investor (provided that such
investment will not be a violation if it is limited to less than 5% of the
ownership of such entity), lender or in any other capacity, compete with the
business of the Bank as conducted or proposed to be conducted as of the date of
the Change of Control. As used herein, "Restricted Area" shall be the cities of
Stamford and Norwalk, Connecticut, the Town of Greenwich, Connecticut, and any
town or branch in which the Bank has an office as of the time of the Change of
Control.
6. ENTIRE AGREEMENT; NO WAIVER. This Agreement contains the entire
agreement between the Parties with respect to the subject matter herein and may
not be modified or amended except by a written instrument signed by the Parties.
Neither the failure to insist upon strict performance of any of the terms,
covenants or conditions of this Agreement, nor the acceptance of monies due
hereunder with knowledge of a breach of
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this Agreement, shall be deemed a waiver of any rights or remedies that either
Party may have or a waiver of any subsequent breach or default in any of such
agreements, terms, covenants and conditions.
7. FURTHER INSTRUMENTS. Each of the Parties agrees to execute all
further instruments and documents and to take all further action as the other
Party may reasonably request in order to effectuate the terms and purposes of
this Agreement.
8. MODIFICATION AND SEVERABILITY. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be deemed modified to
the extent necessary to make it enforceable under applicable law. If any such
provision is not enforceable as set forth in the preceding sentence, the
unenforceability of such provision shall not affect the other provisions of this
Agreement, but this Agreement shall be construed as if such unenforceable
provision had never been contained herein.
9. GOVERNING LAW. It is the intention of the Parties that the internal
substantive laws, and not the laws of conflicts, of the State of Connecticut
should govern the enforceability and validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
Parties.
10. JURY WAIVER. The Parties, and any principals for whom they are
agents, waive the right to a trial by jury in any action arising between the
Parties or their principals under this Agreement, whether such actions are
claims in contract, tort, statute, or otherwise, or made by claim, counterclaim,
third-party claim or otherwise.
11. NOTICES. All notices, requests, consents, instructions, approvals
and other communications required or permitted hereunder shall be validly given,
if in writing and delivered personally, or sent by registered or certified mail
or nationally recognized air courier service, postage prepaid at the address
listed above or at such other address as such Party may specify by written
notice to each other Party. Each such notice, request, consent, instruction,
approval and other communication shall for all purposes of this Agreement be
treated as being effective or having been given when delivered, if delivered
personally, or, if sent by mail, at the earlier of its actual receipt or three
(3) days after the same has been deposited in a regularly maintained receptacle
for the deposit of United States mail, addressed and postage prepaid as
aforesaid, and if by air courier, one (1) day after the same has been deposited
with such air courier.
12. HEADINGS. The titles and headings of the various sections and
paragraphs in this Agreement are intended solely for convenience of reference
and are not intended for any other purpose whatsoever, or to explain, modify or
place any construction upon or on any of the provisions of this Agreement.
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13. INTERPRETATION. This Agreement shall be construed as a whole
according to its fair meaning. It shall not be construed strictly for or against
either Party. Unless the context indicates otherwise, the term "or" shall be
deemed to include the term "and" and the singular or plural number shall be
deemed to include the other.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but which collectively
will constitute one and the same instrument.
[Signature page follows]
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the
date first above written.
PATRIOT NATIONAL BANK
By: /s/ XXXXXX XX XXXX
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Chairman of the Board of Directors
EXECUTIVE
/s/ XXXXXX X. X'XXXXXXX
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Xxxxxx X. X'Xxxxxxx
