EXHIBIT 10.7
AMENDED AND RESTATED
SENIOR MANAGEMENT
CHANGE OF CONTROL AGREEMENT
This AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT (the
"AGREEMENT") is made and entered into as of November 3, 2003, 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, the Executive and the Bank entered into a Senior Management
Change of Control Agreement dated as of May 1, 2001 (the "Original Change of
Control Agreement") and the Executive and the Bank desire to modify certain
provisions of the Original Change of Control Agreement and to amend and restate
such agreement in its entirety as set forth herein; and
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 [six months] 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 hereby amend
and restate the Original Change of Control Agreement in its entirety and agree
as follows:
1. DEFINED TERMS. The terms defined below shall have the
following meanings for purposes of this Agreement:
(a) "AGREEMENT" means this Amended and Restated 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.
2
(c) "BANK" means Patriot National Bank, a national banking
association, and wholly-owned subsidiary of Bancorp.
(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 trusts, directly or indirectly exercises a
controlling influence over the management or policies of Bancorp; or
3
(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 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) two times (2x)
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
4
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 six months) 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 six months 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. In
addition, and notwithstanding the foregoing, in the event Executive gives Bank
notice that Executive will voluntarily terminate his employment pursuant to his
employment agreement with 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 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 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
5
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 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
6
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.
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]
7
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
date first above written.
PATRIOT NATIONAL BANK
By:
------------------------------------
Chairman of the Board of Directors
EXECUTIVE
--------------------------------
Xxxxxx X. X'Xxxxxxx
