EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of January 1, 2005 is by and between
Patriot National Bank, a national banking association ("Patriot") and Xxxxxx
Xxxxxxxxx (the "Executive").
RECITALS
Patriot desires to employ the Executive and to have the benefit of his
skills and services, and the Executive desires to be employed by Patriot on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, terms,
covenants and conditions set forth herein, and the performance of each, the
parties, intending legally to be bound, hereby agree as follows:
AGREEMENTS
SECTION 1. DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings set forth below:
"BOARD" means the Board of Directors of Patriot as same is constituted
from time to time.
"BUSINESS" means the business operations of the Residential Lending
Group of Patriot National Bank, which consists of the residential mortgage
brokerage origination business as it exists on the date hereof.
"CAUSE" means (a) the commission by the Executive of any act, on or
after the date of this Agreement, constituting, as to any cash funds or other
receipts of Patriot, or any material property of Patriot or any other Person,
(i) theft, (ii) embezzlement, (iii) fraud, (iv) gross misconduct, (v) dishonesty
or (vi) or misappropriation of material property under applicable law; (b) the
conviction of the Executive of (i) a crime resulting in material injury to the
business or property of Patriot or (ii) a felony; (c) the material breach by the
Executive of this Agreement, including but not limited to the failure by the
Executive to follow all reasonable and lawful directions of the Board as to any
material matter, or the taking of any action by the Executive that would be
reasonably likely to cause material injury to Patriot or that would be in
conflict with any material interest to Patriot within a reasonable period of
time following Executive's receipt of written notice thereof by Patriot, which
notice is sufficiently specific so as to permit Executive reasonably to cure
such misconduct; or (d) the misuse or unlawful use of drugs, alcohol or other
controlled substances in contravention of written policies of Patriot that are
applicable to all employees of Patriot.
"CONFIDENTIAL INFORMATION" means information that was or is used,
developed or obtained by Patriot in connection with its business, including (a)
products or services, (b) fees, costs and pricing structures, (c) analyses, (d)
computer software, including operating systems, applications
and program listings, (e) flow charts, manuals and documentation, (f) data
bases, (g) accounting and business methods, (h) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice, (i) other copyrightable works, (j) all
technology and trade secrets, and (k) all similar and related information in
whatever form or medium. Notwithstanding the foregoing, this Agreement imposes
no obligation upon the Executive with respect to Confidential Information which
(a) was known to the Executive before receipt from Patriot, (b) is or becomes
publicly available through no fault of the Executive, (c) is disclosed to the
Executive by a third party without a duty of confidentiality on the part of the
third party to Patriot, (d) is subsequently independently developed by the
Executive without a breach of this Agreement, or (e) is required to be disclosed
by the Executive in a judicial or administrative proceeding, provided that the
Executive gives Patriot reasonable advance notice of such required disclosure so
that Executive may contest the disclosure or seek a protective order.
"EFFECTIVE DATE" means the date of this Agreement.
"EMPLOYMENT PERIOD" has the meaning set forth in Section 5 of this
Agreement.
"EXECUTIVE" means Xxxxxx Xxxxxxxxx.
"PERMANENT DISABILITY" shall have occurred if as a result of physical or
mental incapacity, the Employee shall have been incapable of performing
Employee's duties hereunder for a period in excess of 120 consecutive days in
any 6 month period, or an aggregate of 240 days in any 12 month period.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"RLG" means the Residential Lending Group of Patriot.
"REIMBURSABLE EXPENSES" has the meaning set forth in Section 4.4 of this
Agreement.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (a) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or a combination thereof, or
(b) if a partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership interests
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of the Person or a combination thereof. For
purposes of this Agreement, a Person or Persons will be deemed to have a
majority ownership interest in a partnership, limited liability company,
association or other business entity if such Person or Persons are allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or control the managing director or member or
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general partner of such partnership, limited liability company, association or
other business entity.
"TERMINATION DATE" shall mean December 31, 2005.
SECTION 2. EMPLOYMENT. Patriot hereby employs the Executive, and
the Executive hereby accepts employment with Patriot, upon the terms and
conditions set forth in this Agreement, for the Employment Period provided in
Section 5.
SECTION 3. POSITION AND DUTIES.
3.1 POSITION. The Executive shall hold the position of Executive
Vice President of Patriot National Bank, and the title Division Sales Manager of
the Residential Lending Group of Patriot National Bank. During the Employment
Period, the Executive will perform such reasonable executive and management
duties as may, from time to time, be determined and assigned to him by the
Chairman, Chief Executive Officer, President and/or the Management Committee of
Patriot National Bank, which duties shall be similar to the services the
Executive rendered to RLG in the past and shall relate primarily to the
residential real estate mortgage origination business of Patriot and its
affiliates. Patriot shall not require the Executive to relocate to any office of
Patriot outside of Fairfield County, Connecticut.
3.2 PERFORMANCE OF DUTIES; OTHER ACTIVITIES. The Executive shall
devote his best efforts, attention and skills toward performing his duties on
behalf of Patriot, and his full business and professional time to fully and
faithfully perform such duties and responsibilities to the best of his abilities
in a diligent, trustworthy, businesslike and efficient manner. The Executive
shall do such traveling as may reasonably be required in connection with the
performance of his duties and responsibilities hereunder, provided that the
Executive will not be assigned to regular duties such as would require him to
relocate his permanent residence.
3.3 REPORTING. The Executive will report to the Chairman, Chief
Executive Officer, President and/or the Management Committee of Patriot National
Bank.
SECTION 4. COMPENSATION AND BENEFITS.
4.1 COMPENSATION. The compensation payable to the Executive by
Patriot during the Employment Period is set forth on Schedule A hereto.
4.2 Executive Stock Purchases and Stock Options. The Executive may
be granted options and opportunities to purchase Patriot Common Stock consistent
with stock purchase plans and option plans provided to senior management of
Patriot and as may be awarded in the sole discretion of Patriot's Board of
Directors from time to time.
4.3 BENEFITS. In addition to the aforesaid compensation, the
Executive shall be entitled to be included under the same rules or restrictions
in any employee welfare and retirement plan or program of Patriot generally
available to its employees and or officers, including, without
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limitation, plans for hospital services, medical services benefits, sick pay,
dental and other health plans, as well as the following benefits during the
Employment Period:
(a) four weeks of paid vacation per year during the Employment
Period;
(b) five personal/sick days per year;
(c) participation in the 401K Plan of Patriot consistent with
the participation afforded other similarly positioned
Patriot executives.
4.4 EXPENSES. Patriot shall reimburse the Executive for any and all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with Patriot's policies in effect from time
to time with including business travel, entertainment, mileage expenses and
other business expenses ("Reimbursable Expenses"), subject to Patriot's
requirements with respect to reporting and documentation of expenses.
SECTION 5. EMPLOYMENT PERIOD AND TERMINATION.
5.1 EMPLOYMENT PERIOD. The Executive's employment hereunder shall
commence on the Effective Date, and, unless renewed or modified by written
agreement between Patriot and the Executive, the Employment Period will
terminate on the "Termination Date"; provided, however, that (a) the Employment
Period shall terminate prior to such date upon the Executive's death or
Permanent Disability, and (b) the Employment Period may be terminated by Patriot
at any time prior to such date, if such termination shall be for Cause. The
Executive and Patriot agree to begin negotiations to renew this employment
agreement by September 15, 2005 and to use their best efforts to complete
negotiations by October 15, 2005 provided, however, that neither the Executive
nor Patriot shall have any legal obligation to renew this employment agreement.
5.2 UNJUSTIFIED TERMINATION. Except as otherwise provided in
Section 5.3 below, if the Employment Period shall be terminated by Patriot prior
to the Termination Date for any reason other than (a) for Cause, or (b) as a
result of the death or Permanent Disability of the Executive (collectively, an
"Unjustified Termination"), the Executive shall, so long as the Executive has
not breached and does not breach the provisions of Sections 6, 7 or 8 of this
Agreement, be entitled to receive during the unexpired portion of the Employment
Period (i) continuation of his compensation, (ii) reimbursement of all
Reimbursable Expenses incurred by the Executive prior to the termination of the
Employment Period, and (iii) continuation of all medical benefits.
5.3 JUSTIFIED TERMINATION. If the Employment Period shall be
terminated by Patriot prior to the Termination Date (a) for Cause, (b) as a
result of the Executive's resignation, or (c) as a result of the death or
permanent disability of the Executive (collectively, a "Justified Termination"),
the Executive shall be entitled to receive his compensation through the date of
termination and reimbursement of all Reimbursable Expenses incurred by the
Executive prior to the termination of the Employment Period. A termination for
Cause shall become effective on the date designated by Patriot.
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5.4 BENEFITS. Except as otherwise required by law, all of the
Executive's rights to fringe benefits under this Agreement, if any, accruing
after the termination of the Employment Period as a result of a Justified
Termination will cease upon such Justified Termination.
SECTION 6. NON-COMPETITION AGREEMENT.
(a) The Executive covenants and agrees that during the Employment
Period, and for a period of 1 year following the Termination Date (the
"Restricted Period") for any reason (excluding an Unjustified Termination by
Patriot) of such employment, he will not, without the prior written consent of
Patriot, on his own behalf or in the service or on behalf of others anywhere in
Westchester, Nassau or Suffolk counties in the State of New York or in the State
of Connecticut as an owner, manager, stockholder (except as a holder of no more
than 1% of the issued and outstanding stock of a publicly traded company)
consultant, director, officer, principal partner, agent or employee of any
business entity, participate in the development or provision of goods or
services in the area of residential conforming and non-conforming mortgage
origination. The enforcement, which is at the discretion of Patriot, of this
Section 6, for the period following the Termination Date, as a result of either
(i) a non-renewal of the Employment Period under Section 5.1, or (ii) an
Unjustified Termination under Section 5.2, shall be conditioned upon Patriot
paying to the Executive the compensation payable under Section 4.1, Schedule A
#1 - Salary/ Commission during the entire Restricted Period (at 75% of the
amount and in the same manner as paid during the final year immediately
preceding the Employment Period).
(b) The Executive covenants and agrees that during the Restricted
Period, the Executive will refrain from interfering with the employment
relationship between Patriot and its employees and will not solicit any of such
employees for employment by an entity other than Patriot.
SECTION 7. DELIVERY OF MATERIALS UPON TERMINATION OF EMPLOYMENT. As
requested by Patriot from time to time and upon the termination of the
Executive's employment with Patriot for any reason, the Executive will promptly
deliver to Patriot all copies and embodiments, in whatever form or medium, of
all Confidential Information in the Executive's possession or within his control
irrespective of the location or form of such material and, if requested by
Patriot, will provide Patriot with written confirmation that all such materials
have been delivered to Patriot.
SECTION 8. NONDISCLOSURE AND NON-USE OF CONFIDENTIAL INFORMATION. The
Executive will not, at any time, disclose or use any Confidential Information of
which the Executive is or becomes aware, whether or not such information is
developed by him, except to the extent that such disclosure or use is directly
related to and required by the Executive's performance of duties assigned to the
Executive pursuant to this Agreement.
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SECTION 9. AFFILIATES; EQUITABLE RELIEF. The Executive acknowledges
that a breach or threatened breach by him of any of his covenants contained in
Sections 6, 7 and 8 of this Agreement could cause irreparable harm to Patriot
for which it would have no adequate remedy at law. Accordingly, and in addition
to any remedies which Patriot may have at law, in the event of an actual or
threatened breach by the Executive of his covenants contained in Sections 6, 7
and 8 of this Agreement, Patriot shall have the absolute right to apply to any
court of competent jurisdiction for such injunctive or other equitable relief as
such court may deem necessary or appropriate in the circumstances.
SECTION 10. NO PRIOR AGREEMENTS. The Executive hereby represents and
warrants to Patriot that the execution of this Agreement by Executive, his
employment by Patriot, and the performance of his duties hereunder will not
violate or be a breach of any agreement with a former employer, client, or any
other Person. Further, Executive agrees to indemnify and hold harmless Patriot
and its officers, directors, and representatives for any claim, including, but
not limited to, reasonable attorney's fees and expenses of investigation, of any
such third party that such third party may now have or may hereafter come to
have against Patriot or such other persons, based upon or arising out of any
non-competition agreement, invention, secrecy, or other agreement between
Employee and such third party that was in existence as of the date of this
Agreement. To the extent that Employee had any oral or written employment
agreement or understanding with Patriot, this Agreement shall automatically
supersede such agreement or understanding, and upon execution of this Agreement
by Employee and Patriot, such prior agreement or understanding automatically
shall be deemed to have been terminated and shall be null and void.
SECTION 11. MISCELLANEOUS.
11.1 REMEDIES. The parties to this Agreement shall have all rights
and remedies set forth in this Agreement, all rights and remedies which either
party has been granted at any time under any other agreement or contract and all
of the rights which either has under any law. Both parties will be entitled to
enforce such rights specifically, without posting a bond or other security, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law or available in equity.
11.2 WAIVERS AND AMENDMENTS. The provisions of this Agreement may be
amended or waived only by a written agreement executed and delivered by Patriot
and the Executive. No other course of dealing between the parties to this
Agreement or any delay in exercising any rights hereunder will operate as a
waiver of any rights of any such parties.
11.3 SUCCESSORS AND ASSIGNS. All covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and assigns, whether so expressed or not; provided that the Executive
may not assign his rights or delegate his obligations under this Agreement
without the written consent of Patriot.
11.4 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision
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of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
11.5 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all of which counterparts taken together will
constitute one and the same agreement.
11.6 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
11.7 NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally to
the recipient, two business days after the date when sent to the recipient by
certified or registered mail, return receipt requested and postage prepaid. Such
notices, demands, and other communications will be sent to the Executive and to
Patriot at the addresses set forth below.
If to the Executive:
Xxxxxx Xxxxxxxxx
c/o Residential Lending Group of Patriot National Bank
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
And
Xxxxxx Xxxxxxxxx
0 Xxxxxxxxxx Xxxx
Xxx Xxxxxxxxx, XX 00000
If to Patriot:
Patriot National Bank
000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Chairman
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
11.8 NO THIRD PARTY BENEFICIARY. This Agreement will not confer any
rights or remedies upon any person other than Patriot, the Executive and their
respective heirs, executors, administrators, personal representatives,
successors and permitted assigns.
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11.9 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties and supersedes any prior understandings, agreements
or representations by or among the parties, written or oral, that may have
related in any way to the subject matter hereof.
11.10 CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party. Any reference to
any federal, state, local or foreign statute or law will be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise. The use of the word "including" in this Agreement means "including
without limitation" and is intended by the parties to be by way of example
rather than limitation.
11.11 LIFE INSURANCE. The Executive agrees that Patriot shall have the
right to obtain life insurance on the Executive's life, at the sole expense of
Patriot, as the case may be, and with Patriot as the sole beneficiary thereof.
The Executive shall (a) cooperate fully in obtaining such life insurance, (b)
sign any necessary consents, applications and other related forms or documents
and (c) take any reasonably required medical examinations.
11.12 SURVIVAL. Sections 6, 7, 8 and 9, of this Agreement will survive
and continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PATRIOT NATIONAL BANK
By: /s/ Xxxxxx Xx Xxxx
----------------------
Its Chairman
/s/ Xxxxxx Xxxxxxxxx
--------------------
Xxxxxx Xxxxxxxxx
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SCHEDULE A
COMPENSATION
Residential Lending Group
1. SALARY / COMMISSION. The Executive shall receive sixty (60%)
percent of the fee income generated by the Residential Lending Group of Patriot
National Bank from mortgage transactions for customers directly obtained by the
Executive. The annual amount payable pursuant to the preceding sentence shall
not exceed Four Hundred Thousand ($400,000.00) Dollars per year, but shall not
be less than One Hundred Fifty Thousand ($150,000.00) Dollars per year. This
salary will be payable by Patriot in regular installments in accordance with the
general payroll practices of Patriot as in effect from time to time, initially
at the rate of One Hundred Fifty Thousand ($150,000.00) Dollars per year until
such time as Two Hundred and Fifty Thousand ($250,000.00) Dollars in fee income
has been generated, and thereafter, such draw rate will be adjusted to reflect
actual monthly fee income generation.
The Executive shall not be entitled to receive salary/commissions in
respect of new lines of business generated within the Residential Lending Group
of Patriot National Bank (for example, warehouse lending), provided that any
such additional or new business generated by the Executive shall be taken into
account by Patriot's Management Committee and Board of Directors in considering
possible bonuses for the Executive.
2. EMPLOYEE OVERRIDE. In addition, if the Residential Lending Group
earns $225,000.00 after-tax (after deduction of all expenses, salaries,
commissions and deduction for any employee override payments described below),
the Executive shall receive payments equal to (i) five (5%) percent of the
commissions paid to the employees reporting to the Executive where such
employees earn fifty (50%) percent or less of the fee income generated by such
employees and (ii) three (3%) percent of the commissions paid to the employees
reporting to the Executive where such employees earn over fifty (50%) percent of
the fee income generated by such employees. The amount of this employee override
payment shall be payable annually after the results of the annual audit are
certified provided that the Executive is employed by Patriot on the last day of
the Employment Period.
3. PROFIT PARTICIPATION. After such time as the Residential Lending
Group earns $330,000 (after deduction of all expenses, salaries, commissions and
employee override payments and profit participation payments), the Executive
shall receive Twenty Five (25%) percent of the after-tax profits of the Business
over Three Hundred and Thirty Thousand ($330,000.00) Dollars (calculated on a
after-tax basis). In calculating profits for purposes of this paragraph, the
revenues and expenses of the Business shall be accounted for in accordance with
generally accepted accounting principles, consistently applied.
4. RLG REFERRAL CREDITS. In calculating profits for purposes of
paragraph 3 above, the Residential Lending Group of Patriot National Bank will
receive credit for referral fees for any loans booked by Patriot and demand
deposits maintained at Patriot, respectively, which are
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referred to Patriot by the Executive. Such credits will not be included in
calculating the salary, commissions or RLG division profits described in
paragraph 1 above. Such credits shall be in the following amounts:
(i) Residential First Mortgages -- One (1%) percent of
principal, credited in twelve (12) equal monthly installments following
the date such loan is booked, provided such loan remains on the books
during such time;
(ii) Commercial Loans -- One (1%) percent of principal
(renewals of commercial loans and commercial lines of credit do not
qualify);
(iii) Bridge Loans -- one quarter of one percent (.25%) of the
average annual balance for the first year;
(iv) Home Equity and Other Lines of Credit -- one-half of one
percent (0.50%) of the average annual balance for the first year;
(v) Deposits -- Credited on a schedule equivalent to the
schedule applicable for other loan officers of Patriot as determined by
the Management Committee and the Board of Directors from time to time
(see Schedule B attached);
(vi) No referral credits will be given on residential
mortgages, HELOC, or end-financing on construction loans originated by
other Patriot employees, underwritten by Patriot and held in Patriot's
portfolio.
(vii) The Profit Participation amount shall be payable on an
annual basis after the results of the annual audit are certified
provided that the Executive is employed on the last day of the
Employment Period.
5. EXECUTIVE JOB DESCRIPTION - SEE SCHEDULE "C".
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SCHEDULE B
Assumes a Base Salary of $150,000
% of Goal 90% 100% 125% 150% 175% 200%
% of Bonus Target Pay Out 75% 100% 125% 150% 175% 200%
Pay Out Deposits $ 3,936 $ 6,000 $ 7,500 $ 11,252 $ 13,124 $ 30,000
Deposits: $1,800,000 in new average deposits for the calendar year 2005
comprised of checking, savings and money market accounts, of which at
least $600,000 shall be non-interest bearing checking accounts. CD's
are excluded.
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SCHEDULE C
XXXXXX XXXXXXXXX
JOB RESPONSIBILITIES - 2005
RESIDENTIAL LENDING DIVISION
Includes but not limited to:
- Maintain high ethical standards for division
- Recruit and train loan originators
- Assist loan originators in structuring and closing deals
- Manage the resolution of any customer related issues
- Grow our revenue stream by hiring more loan originators, offering
additional types of loans (B and C, FHA, etc.)
- Establish loan origination officers in appropriate geographical
locations, while considering the potential for possible bank branch
expansion
- Encourage loan originators to seek out commercial loans
- Establish and cultivate new investor relationships
- Keeping aware of new technology to support our employees and business
- Administration and budgeting
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