Contract
EXHIBIT
10(a)(11)
This
CHANGE OF CONTROL AGREEMENT (the "AGREEMENT") is made and entered into as of
January 1, 2007, by, between and among XXXXXXX X. XXXXXX of Danbury, Connecticut
("EXECUTIVE"), PATRIOT NATIONAL BANK, a national banking association with
headquarters located in Stamford, Connecticut ("BANK") and PATRIOT
NATIONAL BANCORP, INC.,
the
parent bank holding company of the Bank ("BANCORP").
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 Bancorp or Bank or that a Change of Control (as
hereinafter defined) may otherwise occur, with or without the approval of the
Board of Directors of Bancorp or the Board of Directors of Bank;
and
WHEREAS,
the Board of Directors of Bancorp has determined that it is in the best
interests of Bancorp and its securityholders to provide incentive to Executive
to remain employed as an executive officer of Bancorp and Bank during any period
prior to or during a possible Change of Control of Bancorp or the Bank and
for a
period of up to six months following a Change of Control of Bancorp or Bank,
with the continued dedication and objectivity of Executive, notwithstanding
the
possibility, threat or occurrence of a Change of Control; and
WHEREAS,
the Executive, Bancorp and the Bank entered into an Employment Agreement dated
October 23, 2003 that contains Change of Control provisions and the Executive,
Bancorp and the Bank desire to amend such provisions in their entirety as set
forth herein; and
WHEREAS,
the Parties (as hereinafter defined) desire to enter into this Agreement to
reflect the terms and conditions contained herein; and
WHEREAS,
this Agreement supersedes in its entirety the Change of Control provisions
in
Executive's Employment Agreement dated October 23, 2003;
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 hereby agree
as
follows:
1. DEFINED
TERMS. The terms defined below shall have the following meanings for purposes
of
this Agreement:
(a) "AGREEMENT"
means this Change of Control Agreement, as amended, restated, supplemented
or
modified from time to time and together with any exhibits or attachments
hereto.
(b) "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.
(c) "CHANGE
OF CONTROL" means:
(i) a
change
in control of the direction and administration of Bancorp'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 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 Bancorp or the Bank), other than
(x)
Xxxxxx Xx Xxxx and his family members or family trusts, or (y) any trustee
or
other fiduciary holding securities under an employee benefit plan of Bancorp
or
the Bank, 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 25% 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
Bancorp shall complete a sale of all or substantially all of the assets of
Bancorp;
(iv) the
Bank
shall complete 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 results
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 results in
someone other than Bancorp owning the Bank or its successor;
(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 Xxxxxx Xx Xxxx and his family members
or
family 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 Bancorp or Xxxxxx Xx Xxxx and his family
members or family
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trusts,
directly or indirectly exercises a controlling influence over the management
or
policies of Bank;
PROVIDED,
HOWEVER, that (i) the filing of a Form 13D or G 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 of itself be deemed a Change of
Control.
(d) "CHANGE
OF CONTROL PAYMENTS" has the meaning set forth in Section 2 of this
Agreement.
(e) "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.
(f) "EXCHANGE
ACT" means the Securities Exchange Act of 1934, as amended.
(g) "INTERNAL
REVENUE CODE" means the Internal Revenue Code of 1986, as amended.
(h) "PARTY"
or "PARTIES" means, individually or collectively, Executive, Bancorp and/or
Bank.
(i) "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 Bancorp or the Bank, or (ii) within six (6) months following the
date
of Executive's 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 Patriot. The Change of Control Payment shall be made
as a
lump sum cash payment equal to the greater of (A) 2.5 times 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)
2.5
times Executive's total compensation, including salary and any cash incentive
compensation, from Patriot 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 six months) following the date of the Change of Control if Bancorp or
the
Bank requests that Executive continue to provide services to it. If Executive
voluntarily terminates employment with Bancorp or the Bank prior to the date
(not more than six months following the date of the Change of Control) specified
by Bancorp or the
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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 Bancorp or the Bank or from other employment with
another employer should Executive's employment with Bancorp or the Bank
terminate. In addition, and notwithstanding the foregoing, in the event
Executive gives Bancorp or the Bank notice that Executive will voluntarily
terminate his employment pursuant to his employment agreement with Bancorp
or
the Bank and thereafter a Change of Control occurs, Executive shall have no
right to receive the Change of Control Payment.
(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 Bancorp or the 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 Patriot, an affiliate or other person making such payment
or
providing such benefit, the Change of Control Payment shall be 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 of Control Payment shall
be
taken into account which in the opinion of tax counsel selected by Patriot'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 Patriot's
independent auditors, in accordance with the principles of Sections 280G(d)(3)
and (4) of the Internal Revenue Code. In the event that Patriot's independent
auditors cannot or decline to act as aforesaid, their duties may be discharged
by such other independent professional firm as the Board of Directors of Bancorp
may determine.
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3. TERM.
This Agreement shall terminate on the earliest of: (i) immediately, upon
Executive's voluntary resignation or termination of employment with Bancorp
or
the Bank for Cause, death or Disability, (ii) six months following Executive's
termination of employment with Bancorp or the 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, "Bancorp" or "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 Bancorp and 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 Bancorp or 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
Fairfield and New Haven Counties, Connecticut; Westchester, Nassau and Suffolk
Counties, New York and Manhattan, New York, 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 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.
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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.
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 BANCORP, INC.
By:
/s/
Xxxxxx Xx Xxxx-
Xxxxxx
Xx
Xxxx
Chairman
of the Board of Directors
PATRIOT
NATIONAL BANK
By:
/s/
Xxxxxx Xx Xxxx
Xxxxxx
Xx
Xxxx
Chairman
of the Board of Directors
EXECUTIVE
/s/
Xxxxxxx X. Xxxxxx
Xxxxxxx
X. Xxxxxx
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