[Composite Conformed Copy]
EMPLOYMENT AGREEMENT
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This Employment Agreement, dated October 23, 2000 (this "Agreement")
[as amended by First Amendment to Employment Agreement, dated as of March 21,
2001], is between PATRIOT NATIONAL BANK, a national banking association with
headquarters located in Stamford, Connecticut (the "Bank"), PATRIOT NATIONAL
BANCORP, INC., a Connecticut corporation ("Bancorp") and Xxxxxxx X. Xxxxxx of
Danbury, Connecticut (the "Executive").
RECITALS
WHEREAS, the Executive and the Bank desire that the Executive be
employed by the Bank as President and Chief Executive Officer. The Executive and
the Bank desire to enter into this Employment Agreement with Executive for
several primary reasons: (1) to provide Executive with job security,
particularly in the event that the Bank experiences a change-of-control; (2) to
provide further incentive to Executive in the discharge of his responsibilities
to the Bank; and (3) to define Executive's duties and terms of employment;
WHEREAS, the Bank and Executive contemplate that the Bank will: (i)
disclose to Executive information concerning the Bank's business affairs,
including certain confidential information; and (ii) assist Executive in
establishing goodwill and rapport with certain customers of the Bank. The use by
Executive of this information, goodwill and rapport in competing with or in
aiding others in competing with the Bank would have a detrimental effect on
future profitable operations of the Bank.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter described, the parties agree as follows:
1. TERM OF EMPLOYMENT. The Bank agrees to employ Executive, and Executive agrees
to accept employment with the Bank for a term commencing on October 23, 2000 and
continuing for a period of three years, unless subsequently extended or sooner
terminated as provided in this Agreement (the "Employment Period"). The Bank
further agrees to initiate discussions with Executive promptly following the
second anniversary of the date hereof for the purpose of determining whether a
further extension to this Agreement is acceptable to the parties hereto, it
being understood that neither party shall have any binding obligation to further
extend the Employment Period.
2. DUTIES.
(a) During the Employment Period, Executive shall perform the duties
and exercise the powers relating to the office of the President and Chief
Executive Officer, including all duties assigned to Executive by the Board of
Directors of the Bank (the "Board of Directors"). All duties assigned shall be
consistent with the customary duties of the above-described offices at a
national bank. Bancorp shall use its best efforts to cause the Executive to be
nominated as a director of Bancorp and the Bank, and as a
Vice-Chairman of the Board of Directors of Bancorp. In the event Executive is
not elected as a director of Bancorp and the Bank and as a Vice Chairman of
Bancorp within one week of the date of this Agreement, Executive shall have the
right to terminate this Agreement without any further duties or obligations on
the part of Executive hereunder.
(b) During the Employment Period, Executive shall devote his entire
business time, best efforts and ability to the business of the Bank, shall
faithfully and diligently perform his duties, shall comply in all material
respects with the overall policies established by the Board of Directors of the
Bank and shall do all that is reasonably in his power to promote, develop and
extend the business of the Bank. Notwithstanding the foregoing, it is understood
that the Executive shall be permitted to continue to serve on various civic and
non-profit organizations approved by the Bank.
3. COMPENSATION AND BENEFITS.
(a) BASE SALARY. The Bank shall pay Executive as compensation for his
services during the Employment Period an annual base salary of One Hundred and
Sixty Thousand ($160,000.00) Dollars for the first twelve (12) month period, One
Hundred and Seventy Thousand ($170,000.00) Dollars for the second twelve (12)
month period, and One Hundred and Eighty Thousand ($180,000.00) Dollars for the
third twelve (12) month period (the "Base Salary"). Salary payments shall be
made in equal installments consistent with the Bank's standard payroll practices
for its officers. The Base Salary shall be reviewed by the Board of Directors
each year during the Employment Period and set by the Board of Directors in an
amount not less than the stated contract salary; any increase in Base Salary in
excess of the stated contract may take the form of a contingent increase based
upon the achievement of articulated personal or corporate goals, or both, at the
discretion of the Board of Directors.
(b) EXPENSES. Upon submission of appropriate invoices or vouchers, the
Bank shall pay or reimburse Executive for all reasonable expenses incurred by
him in the performance of his duties under this Agreement in furthering the
business, and in keeping with the policies, of the Bank.
(c) VACATION. Executive shall be entitled to four (4) weeks paid
vacation each contract year, to be taken each year at a time or times as shall
be mutually agreed upon by the Bank and Executive and consistent with applicable
regulatory requirements. If Executive fails to use all of his vacation time
during a particular calendar year, the unused portion shall not be carried over
to the subsequent year, unless approved in writing by the Chairman of the Board
of the Directors.
(d) CASH INCENTIVE COMPENSATION. The Board of Directors, in its sole
discretion, may authorize the payment of special cash incentive compensation to
Executive from time to time in excess of the amount stated in any documented
regular cash incentive plans. Any such special payment of incentive compensation
will not set a precedent requiring or suggesting that similar incentive
compensation will be paid in the future. The Bank's Board of Directors will
consider the adoption of documented regular
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cash incentive compensation plans whereby the Executive would receive specific
cash compensation for the achievement of articulated goals as determined by the
Board of Directors. Any such regular cash incentive compensation shall be
separate and apart from any special cash incentive compensation. The Executive
(President and CEO) shall work closely with senior management of the Bank to
development such incentive plans.
(e) INSURANCE POLICIES.
(i) TERM LIFE INSURANCE. During the Employment Period, Bank shall
provide term life insurance coverage for Executive in such form and amount as is
not less favorable than that coverage provided by the Bank to other Bank
employees from time to time generally.
(ii) KEY MAN INSURANCE. During the Employment Period, Executive
shall permit the Bank to insure his life under a policy or policies of life
insurance issued by an insurance company or companies selected by the Bank, and
to name the Bank as sole beneficiary thereunder. Executive agrees to submit to
any physical examinations which may be reasonably required in connection with
such policies.
(iii) DISABILITY INSURANCE. During the Employment period, Bank
shall provide Executive with disability insurance coverage in such form and
amount consistent with that provided to other Bank employees generally.
(f) BENEFITS. During the Employment Period, Executive shall be entitled
to and shall be included under the same rules or restrictions in any employee
welfare and retirement plan or program of the Bank available generally to its
employees and/or officers including, without limitation, plans for hospital
services, medical services benefits, sick pay, dental and other health plans.
(g) STOCK PLANS. During the Employment Period, Executive may be
included in any stock incentive, stock option, or stock compensation plan as the
Board of Directors of the Bank may determine. Such plans may be documented by
the Board of Directors and the Executive from time to time. The Executive
(President and CEO) shall work with senior management of the Bank to develop
such incentive plans. Without limiting the foregoing, the Bank agrees as
follows:
(i) STOCK GRANTS. Subject to the provisions of this subsection (i),
the Executive will be granted the right to receive unregistered, restricted
shares of the Common Stock of Bancorp. Grants of such shares will be made
effective on December 31, 2000, December 31, 2001, December 31, 2002, and
December 31, 2003. The number of shares granted on December 31, 2000 shall be
that number having a value equal to $48,000 (based on a share price as
determined below), and the number of shares granted on each subsequent December
31st shall be that number in each case having a value equal to 30% of the
Executive's Base Salary in respect of the immediately preceding October 1 -
September 30 period, with the price of such shares being the average of the
closing price per share as reported by the NASDAQ Stock Market, Inc. for the ten
trading
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days prior to each respective December 31st. In respect of each grant, 25% of
the amount of such shares shall be vested and distributed on each succeeding
December 31st during the following four year period (i.e., the first 25% of the
shares granted on December 31, 2000 will vest and be distributed on December 31,
2001). If for any reason such shares are not available in the reasonable opinion
of the Board of Directors, the Bank shall pay to the Executive in cash, on the
same schedule as aforesaid, the value of said shares based on the closing price
of said shares on the applicable vesting date. In the event the Employment
Period is terminated for cause (as defined herein), or is otherwise terminated
by the Executive or by reason of the Executive's death or disability, the
Executive shall forfeit the right to receive any of the aforesaid shares or cash
which have not vested as of the date of such termination, provided, however,
that in the event of a termination based upon a Change of Control (as
hereinafter defined), or a termination other than for cause or by reason of the
Executive's death or disability, all granted but unvested shares will be deemed
to fully vest at the time of such termination.
(ii) STOCK OPTIONS. The Executive will be granted stock options for
a minimum of 10,000 unregistered, restricted shares of Common Stock of Bancorp
on each of December 31, 2000, December 31, 2001, December 31, 2002, and October
16, 2003 (said latter date to be extended to December 31, 2003 in the event of
the Executive remains employed by the Bank after October 16, 2003), exercisable
for a period of ten (10) years from the date of grant and exercisable at a price
equal to the fair market value of such shares on each such date of grant, all as
determined by and subject to the terms of a stock option plan to be approved by
the Board of Directors and the shareholders of the Bancorp. In the event that
any future stock options are granted to any other employees or directors
containing terms or conditions more favorable than the aforesaid options granted
to the Executive, or any existing and outstanding options are modified to
include any such more favorable provisions, the Executive shall have the right
to have the terms and conditions of his stock options modified to incorporate
such more favorable terms. In the event that the Board determines, in its
reasonable discretion, that any of the aforesaid stock options for the Executive
cannot be granted, the Executive shall have the right to receive, as additional
compensation, within 30 days of the Determination Date (as defined below), an
amount equal to the product of (A) the difference between (1) the market value
of a share of Common Stock of Bancorp underlying such option had it been
available on the date of the scheduled award (such market value to be equal to
the average of the closing price of a share of the Common Stock of Bancorp as
reported by the NASDAQ Stock Market Inc. for the ten (10) trading days prior to
the respective December 31) and (2) the market value of a share of Common Stock
of Bancorp on the date chosen by the Executive during the ten year period after
the date of the scheduled award (the date chosen by the Executive, the
"Determination Date"), multiplied by (B) the number of shares of Common Stock of
Bancorp which would have been covered by such option had it been granted. The
Determination Date shall be the date immediately preceding the date on which a
written notice is received by the Bank via overnight mail service and the
applicable market value shall be the closing price of the shares of Bancorp on
the Determination Date. Alternatively, the Executive may hand-deliver such a
written notice to the Chairman of the Board of Bancorp after the closing of the
NASDAQ market on any date during said period stipulating that such date shall be
the
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Determination Date in respect of the aforesaid procedure. The aforesaid cash
amount shall be payable to the Executive only in respect of option shares which
otherwise have been fully vested as of any Determination Date. In the event the
Employment Period is terminated for cause (as defined herein), or is otherwise
terminated by the Executive or by reason of Executive's death or disability, the
Executive shall forfeit the right to exercise any of the aforesaid options,
provided, however, that in the event of a termination based upon a Change of
Control (as hereinafter defined), or a termination other than for cause or by
reason of the Executive's death or disability, all granted but unvested options
will be deemed to fully vest at the time of such termination.
4. DISABILITY. If during any period in which Executive shall have continued to
perform his duties as an employee of the Bank, Executive shall incur a total or
partial disability (as defined in subsection (d) below), then until the earlier
of (a) 180 days after the date such disability is incurred, or (b) the
expiration of the term of the Employment Period (either shall be termed the
"Disability Period"), the Bank shall pay Executive during the Disability Period
on the basis of his then-regular salary (any payments that Executive does or
would otherwise receive pursuant to the Bank's; disability coverage for
employees generally for this period of disability shall be set off against these
payments).
(a) If Executive's total disability shall terminate prior to the
expiration of the Employment Period, then Executive shall return to full and
active employment with the Bank under the terms of this Agreement; provided that
if he shall again become disabled within a period of three (3) months after such
return, other than by reason of an event which is not causatively related to his
original disability, then Executive shall be deemed to have been continuously
disabled from the date he incurred his original disability;
(b) In the event Executive shall incur a partial disability (as defined
in (d) below), then during the period of the partial disability, the
compensation to be paid to him in consideration of his services to the Bank
shall be equitably adjusted to reflect the time that he is able to devote to the
affairs of and the value of the service he is able to impart to the Bank;
provided, however, that during the Disability Period, the compensation shall not
be less than Executive would have received under this Section 4 had he been
totally rather that partially disabled (this is to say, he shall receive his
then-regular salary for that Disability Period);
(c) Payments to Executive under this Section 4 shall be reduced by the
amounts, if any, as may be payable to him by reason of his disability under
policies of insurance maintained and/or paid for by the Bank;
(d) As used in this Agreement, the term "total disability" shall mean a
disability such that, for physical or mental reasons, Executive is unable to
perform substantially his obligations hereunder for the reasonably foreseeable
future (not less than 90 days), as determined by the Bank's Board of Directors
after considering competent medical evidence. As used in this Agreement, the
term "partial disability" shall mean a disability, other than a total
disability, such that, for physical or mental reasons, Executive is unable to
perform a material portion of his usual duties at the Bank on a full-
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time basis as determined by the Bank's Board of Directors after considering
competent evidence.
5. TERMINATION.
(a) TERMINATION BY DEATH. If Executive dies during the Employment
Period, the Bank's obligations under this Agreement shall terminate immediately
and Executive's estate shall be entitled to all arrearages of salary and
expenses but shall not be entitled to further compensation.
(b) TERMINATION WITH OR WITHOUT CAUSE. This Agreement and Executive's
employment with the Bank may be terminated for cause at any time upon thirty
(30) days advance written notice from the Bank to Executive, which notice shall
set forth the facts on which the termination is based. Upon termination,
Executive shall be entitled to all arrearages of salary and expenses, but shall
not be entitled to further compensation or benefits.
As used in this Agreement, and without limitation, "cause" shall
include: (i) Executive's conviction by any trial court of any crime involving
fraud, embezzlement, theft or dishonesty; (ii) serious willful misconduct by
Executive, including personal dishonesty in connection with Bank business or
customers or the breach of a fiduciary duty to the Bank or its customers; (iii)
the total disability of Executive, as defined in Paragraph 4 above; (iv) any
material breach by Executive of this Agreement; or (v) if the Bank's regulatory
authorities issue an order removing Executive from his positions at the Bank, or
if such regulatory authorities inform the Directors that continuation of
Executive in his position at the Bank would constitute an unsafe and unsound
banking practice.
Executive's employment may be terminated by the Bank without cause at
any time, provided that, in such event, Bank shall pay Executive, in one
lump-sum payment within thirty (30) days after such termination, an amount equal
to the higher of the following: (i) that amount which is equal to the aggregate
amount of salary payments that would be made to Executive for the remainder of
the Employment Period, calculated at the Executive's then annual Base Salary; or
(ii) that amount which is equal to 1-1/2 years (18 months) Base Salary,
calculated at Executive's then annual Base Salary, whichever is greater.
In addition, if Executive is terminated without cause, the Bank shall
either continue to carry Executive at no additional cost to him under the Bank's
employee hospital, medical services, dental and other health plans for the
remainder of the Employment Period, or, if he is not eligible for continued
coverage under such plans, pay the cost of similar coverage for Executive
pursuant to COBRA or similar private insurance plans offering comparable
coverage.
The provisions of this Section 5 shall apply only to termination of
this Agreement prior to a Change of Control (as hereinafter defined).
Termination of this Agreement following the occurrence of Change of Control
shall be governed by Section 11 hereof.
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(c) IMMEDIATE CESSATION OF EMPLOYMENT. In the event Executive's
employment terminates pursuant to subparagraph (b), the Bank may further direct
Executive to cease immediately his activities on behalf of the Bank and to
discontinue using any of the Bank's facilities; provided, however, that in the
event of these directions, the Bank shall continue to provide Executive with
salary and other benefits required by this Agreement until the expiration of the
notice period set forth in subparagraph (b).
(d) SURVIVAL. Anything in this Agreement to the contrary
notwithstanding the provisions of Sections 6, 7, 8, 9, and 10 shall survive the
termination of Executive's employment with the bank.
6. NON-COMPETITION AGREEMENT.
(a) Executive absolutely and unconditionally covenants and agrees with
the Bank that, from the period commencing on the date of this Agreement and
continuing for a period of one (1) year following the termination of his
employment as provided for in this Agreement, Executive will not, anywhere in
the Restricted Area (as defined in subparagraph (b) 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 an individual proprietor, partner, shareholder (provided that share
ownership of less than 5% of the share 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
(i) as conducted as of the date of execution of this Agreement; or (ii) as
conducted during the Employment Period; or (iii) as conducted as of the end of
the Employment Period or (iv) as proposed to be conducted by the Bank as of the
end of the Employment Period (collectively, the "Business"). Notwithstanding the
foregoing, the provisions of this Section 6 (a) shall not apply in the event
that (i) the Executive's employment is terminated by the Bank other than for
cause or (ii) the Executive is employed by the Bank for the entire three (3)
year term hereof and the Bank then determines not to further renew or extend
this Agreement on substantially similar terms. In either of the foregoing
events, however, the terms of Sections 7 and 8 hereof shall continue to be
binding upon the Executive. In addition, and notwithstanding the foregoing, the
non-compete provisions of this Section 6(a) shall apply to the Executive in the
event the Executive receives the Severance Amount pursuant to Section 11 herein,
and in such situation only, the "Restricted Area" shall be (i) the towns
identified in Section 6(b) below, (ii) any town or city in which the Bank has an
office or branch as of the time of the Change of Control, and (iii) Westchester
County, New York. Upon any violation of the aforesaid provisions by the
Executive, the Executive shall repay the Severance Amount to the Bank.
(b) As used in this Section 6: (i) the term "compete" shall mean
engaging, participating, or being involved in any respect in the business of
banking, or furnishing any aid, assistance or service of any kind to any person
in connection with, the Business and shall include, without limitation, being
employed by any banking institution which
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has a branch or other place of business in the Restricted Area; (ii) except as
otherwise provided in Section 6(a) above, the term "Restricted Area" shall mean
the following six towns: Greenwich, Stamford, Darien, New Canaan, Norwalk and
Westport.
(c) If a Court or arbitration panel concludes through appropriate
proceedings that Executive has breached the covenant set forth in this Section,
the term of the covenant shall be extended to a term equal to the period for
which Executive is determined to have breached the covenant.
7. COVENANT NOT TO DISCLOSE. Executive agrees that, by virtue of the performance
of the normal duties of his position with the Bank and by virtue of the
relationship of trust and confidence between Executive and the Bank, he
possesses and will possess certain data and knowledge of operations of the Bank
which are proprietary in nature and confidential. Executive covenants and agrees
that he will not, at any time, whether during the term of this Agreement or
otherwise, reveal, divulge or make known to any person (other than the Bank) or
use for his own account, any confidential or proprietary record, data, trade
secret, price policy, rate structure, personnel policy, method or practice of
obtaining or doing business by the Bank, or any other confidential or
proprietary information whatever (the "Confidential Information"), whether or
not obtained with the knowledge and permission of the Bank and whether or not
developed, devised or otherwise created in whole or in part by his efforts.
Executive further covenants and agrees that he shall retain all such knowledge
and information which he shall acquire or develop respecting such Confidential
Information in trust for the sole benefit of the Bank and its successors and
assigns.
8. NON-INTERFERENCE COVENANT. Executive covenants and agrees that he will not,
for a period of one (1) year following the termination of this Agreement,
directly or indirectly, for whatever reason, whether for his own account or for
the account of any other person, firm, corporation or other organization: (i)
solicit, employ, or otherwise interfere with any of the Bank's contracts or
relationships with any employee, officer, director or any independent contractor
who is employed by or associated with the Bank at the time of termination of
this Agreement; or (ii) actively solicit, or cause to be solicited or otherwise
actively interfere with any of the Bank's contracts or relationships with any
independent contractor, customer, client or supplier of the Bank. It shall not
constitute a violation of this Section 8 if customers, clients or employees
follow Executive to his new place of employment without any independent
solicitation on the part of Executive (or caused by Executive) or if such
customers or clients respond to any mass advertising solicitation conducted
independently by Executive's new employer without input from Executive.
9. BUSINESS MATERIALS AND PROPERTY DISCLOSURE. All written materials, records,
and documents made by Executive or coming into his possession concerning the
business or affairs of the Bank shall be the sole property of the Bank and, upon
termination of his employment with the Bank, Executive shall deliver the same to
the Bank and shall retain no copies. Executive shall also return to the Bank all
other property in his possession owned by the Bank upon termination of his
employment.
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10. BREACH BY EXECUTIVE. It is expressly understood, acknowledged and agreed by
Executive that: (i) the restrictions contained in Sections 6, 7, 8, and 9 of
this Agreement represent a reasonable and necessary protection of the legitimate
interests of the Bank and that his failure to observe and comply with his
covenants and agreements in those Sections will cause irreparable harm to the
Bank; (ii) it is and will continue to be difficult to ascertain the nature,
scope and extent of the harm; and (iii) a remedy at law for such failure by
Executive will be inadequate. Accordingly, it is the intention of the parties
that, in addition to any other rights and remedies which the Bank may have in
the event of any breach of said Sections, the Bank shall be entitled, and is
expressly and irrevocably authorized by Executive, to demand and obtain specific
performance, including without limitation, temporary and permanent injunctive
relief, and all other appropriate equitable relief against Executive in order to
enforce against Executive, or in order to prevent any breach or any threatened
breach by Executive, of the covenants and agreements contained in those
Sections.
11. CHANGE OF CONTROL. If, during the Employment Period (and after the
Employment Period so long as the Executive is then still the full-time chief
executive officer of the Bank), there is a "Change of Control" of the Bank (as
defined below) and the Executive's employment is thereafter terminated by the
Executive or by the Bank other than (i) for cause, or (ii) by reason of the
Executive's death or disability, the Executive shall be entitled to receive a
severance payment (the "Severance Amount") in consideration of services
previously rendered to the Bank. The Severance Amount shall be made as a lump
sum cash payment equal to two (2) times the greater of the following: (A) the
Executive's then annual Base Salary; (B) the Executive's cash compensation (the
"Cash Compensation") from the Bank for services rendered for the last full
calendar year immediately preceding the Change of Control; or (C) the
Executive's average annual cash Compensation with respect to the two (2) most
recent taxable years ending before the date on which the Change of Control
occurs.
The Cash Compensation referred to above shall include the amount of
Base Salary and any cash incentive compensation paid to Executive for services
rendered for the time period in question, as such compensation is described in
Sections 3(a) and 3(d) hereof, including any and all of said amounts as may have
been deferred by Executive under deferral plans, if any, of the Bank, and shall
include long-term compensation which, by its terms, is accelerated upon a Change
of Control, or if not, shall by this Agreement be so accelerated and determined
as the present value of any long-term cash incentive compensation previously
awarded to Executive but not yet paid, measured at the time of award with the
assumption that the award would be 100% earned over the performance period. Cash
compensation will not include any cash received in lieu of stock options or
restricted stock. Payment of the Severance Amount under this Section 11 shall be
in lieu of any amount due or payable to the Executive under Sections 3 and 5
hereof. Payment under this Section 11 shall be paid in full within 90 days
following the date of the Change of Control and shall not be reduced by any
compensation which the Executive may receive from other employment with another
employer should Executive's employment with the Bank terminate. The Executive
shall not be entitled to the
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Severance Amount, and shall repay to the Bank (or its successors) any sums
representing the Severance Amount previously paid to the Executive by the Bank,
in the event that the Executive becomes employed as a senior officer of the Bank
or any successor entity to the Bank within a two (2) year period following any
such Change in Control.
For purposes hereof, a "Change in Control" shall have occurred if:
(1) Any "person" other than (i) Xxxxxx XxXxxx and his family members or
family trusts, (ii) Xxxx XxXxxx and his family members or family trusts, or
(iii) any trustee or other fiduciary holding securities under an employee
benefit plan of the Bank within the meaning of Section 14(d) of the Securities
Exchange Act of 1934 (the "Act"), by merger or otherwise, becomes the
"beneficial owner" as defined in Rule 13d-3 thereunder, directly or indirectly,
of more than 35% of the Bancorp's Common Stock;
(2) any "person" other than (i) Xxxxxx XxXxxx and his family members or
family trusts; (ii) Xxxx XxXxxx and his family members or family trusts, or
(iii) any trustee or other fiduciary holding securities under an employee
benefit plan of the Bank, acquires by proxy or otherwise the right to vote more
than 35% of Bancorp's Common Stock for the election of directors, other than
solicitation of proxies by the Incumbent Board (as hereinafter defined), for any
merger or consolidation of the Bank or for any other matter or question;
(3) Bancorp's stockholders have approved the sale of all or
substantially all of the assets of the Bank; or
(4) the Board of Directors determines that a person other than (i)
Xxxxxx XxXxxx 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 the Bank,
A "Change of Control" shall be deemed not to have occurred if (A) such
event is mandated or directed by a regulatory body having jurisdiction over the
Bank's operations; or (B) it occurs pursuant to the terms of a plan for the
acquisition of the capital stock of Bancorp by a newly formed bank holding
company if in the consummation of such plan the shareholders of Bancorp will
receive, pro rata, all of the common stock of such bank holding company; unless,
in such transaction, a Person satisfies sub-paragraph (1), (2), or (4) above.
A "Person" shall include a natural person, corporation, or other
entity. When two or more persons act as a partnership, limited partnership,
syndicate, or other group for the purpose of acquiring, holding or disposing of
Bancorp capital stock, such partnership, syndicate or group shall be considered
a Person. Beneficial ownership shall be determined under the then current
provisions of Rule 13d-3 of the Securities Exchange Act of 1934, as amended,
Reg. Section 240.13d-3, or their successor provision(s). The filing of a Form
F-11A by a Person shall not be deemed a Change of Control.
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If, after a Change of Control of the Bank, the Executive incurs any
fees and expenses of counsel to enforce this Agreement, the Bank agrees to pay
such fees and expenses to Executive. The Executive's choice of counsel and his
decision to retain counsel shall be in his reasonable discretion, provided any
such fees and expenses must be reasonable and shall be payable only if the
Executive prevails on the merits of his claim.
Notwithstanding any other provision hereof, in the event that any
payment or benefit received or to be received by the Executive in connection
with a Change in Control of the Bank or the termination of the Employment Period
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Bank, any person whose actions result in a Change in
Control or any person affiliated with the Bank or such person (collectively with
the Severance Amount, "Total Payments")) would not be deductible (in whole or
part) as a result of Section 280G of the Code, by the Bank, an affiliate or
other person making such payment or providing such benefit, the Severance Amount
shall be reduced until no portion of the Total Payments is not deductible, or
the Severance Amount is reduced to zero. For purposes of this limitation (a) no
portion of the Total Payments the receipt or enjoyment of which the Executive
shall have effectively waived in writing prior to the date of payment of the
Severance Amount shall be taken into account; (b) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected by the Bank's independent auditors and acceptable to the Executive does
not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of
the Code; (c) the Severance Amount shall be reduced only to the extent necessary
so that the Total Payments (other than those referred to in clauses (1) or (2))
in their entirety constitute reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code or are otherwise
not subject to disallowance as deductions, in the opinion of the tax counsel
referred to in clause (b); and (d) the value of any non cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Bank's independent auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.
12. REGULATORY RESTRICTIONS. Notwithstanding any provision to the contrary in
this Agreement, the Bank shall not be required under this Agreement to continue
Executive in his position(s) at the Bank, or to make any payments to Executive,
if the regulatory authorities having jurisdiction over the Bank order the
Executive's removal from the Bank, or if such regulations determine that any
payment xxxx constitute an illegal "excess parachute" payment under 12 U.S.C.
Section 1828(k) and regulations promulgated thereunder, or an "unsafe or unsound
banking practice" pursuant to 12 U.S.C. Section 1818(b).
13. ARBITRATION. Any dispute whatsoever relating to the interpretation, validity
or performance of this Agreement, or any other dispute arising out of this
Agreement which cannot be resolved by any party upon thirty (30) days' written
notice to the other party shall be settled by arbitration in the City of
Stamford, Connecticut, in accordance with the rules then prevailing of the
American Arbitration Association, and the judgment upon the
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award rendered by the arbitrators may be entered in any court of competent
jurisdiction. It is the purpose of this Agreement, and the intent of the parties
hereto to make the submission to arbitration of any dispute or controversy
arising out of this Agreement, as set forth hereinabove, an express condition
precedent to any legal or equitable action or proceeding of any nature
whatsoever.
14. GENERAL PROVISIONS:
(a) All notices required by this Agreement shall be in writing and
shall be sufficiently given if delivered or mailed by registered or certified
mail, return receipt requested, to the parties at their respective addresses set
forth below. Any party may specify a different address by written notice to the
other, in accordance with this Section. All notices shall be deemed to have been
given as of the date so delivered or mailed.
To the Bank:
000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX
Attention: Chairman of the Board of Directors
To Executive:
Xxxxxxx X. Xxxxxx
00 Xxxxx Xxxxx
Xxxxxxx, XX
(x) Except insofar as Executive may be subject to general policies
adopted by the Bank from time to time, this Agreement contains the entire
agreement between the parties, and there are no other representations,
warranties, conditions or agreements relating to the subject matter of this
Agreement.
(c) The waiver by any party of any breach or default of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
(d) This Agreement may not be changed orally but only by an agreement
in writing duly executed on behalf of the party against which enforcement of any
waiver, change, modification, consent or discharge is sought.
(e) This Agreement shall be binding upon and inure to the benefit of
the Bank and Executive and their respective successors, assigns, heirs and legal
representatives. Insofar as Executive is concerned, this Agreement is personal
and Executive's duties under it shall not be assigned by Executive.
(f) 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.
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(g) This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one and the same instrument.
(h) This Agreement shall be construed pursuant to and in accordance
with the laws of the State of Connecticut.
(i) Wherever used in this Agreement, the masculine, feminine and neuter
pronouns shall be fully interchangeable, and the singular shall include the
plural where the context so requires and vice versa.
(j) If any term or provision of this Agreement is held or deemed to be
invalid or unenforceable, in whole or in part, by a court of competent
jurisdiction, such term of provision shall be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
PATRIOT NATIONAL BANK
By: /s/ XXXXXX XXXXXX
-----------------------------------
Chairman of Board of Directors
PATRIOT NATIONAL BANCORP, INC.
By: /s/ XXXXXX XXXXXX
-----------------------------------
President & CEO
/s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx
Executive
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