EMPLOYMENT AGREEMENT
EXHIBIT
10(a)(10)
This
Employment Agreement, dated January 1, 2007 (this "Agreement"), 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, the Bank and Bancorp desire that the Executive be employed as
President and Chief Executive Officer of the Bank and as President of Bancorp
(Bank and Bancorp may collectively be referred to as the “Employers”). The
Executive and the Employers desire to enter into this Employment Agreement
with
Executive for several primary reasons: (1) to provide Executive with job
security and the Employers with the security of Executive's services for the
term provided herein; (2) to provide further incentive to Executive in the
discharge of his responsibilities to the Employers; and (3) to define
Executive's duties and terms of employment; and
WHEREAS,
the Employers and Executive contemplate that the Employers will: (i) disclose
to
Executive information concerning the Employer'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 Employers would have a detrimental effect on future
profitable operations of the Employers.
NOW,
THEREFORE, in consideration of the mutual promises and covenants hereinafter
described, the parties agree as follows:
1. Term
of Employment.
The
Employers agree to employ Executive, and Executive agrees to accept employment
with the Employers for a term commencing on January 1, 2007 and continuing
through December 31, 2009, unless subsequently extended or sooner terminated
as
provided in this Agreement (the "Employment Period"). The Employers further
agree 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
of
the Bank and the President of Bancorp, including all duties assigned to
Executive by the respective Boards of Directors of the Bank and Bancorp (the
"Board of Directors"). All duties assigned shall be consistent with the
customary duties of the above-described
(b) During
the Employment Period, Executive shall devote his entire business time, best
efforts and ability to the business of the Bank and Bancorp, shall
faithfully
and
diligently perform his duties, shall comply in all material respects with the
overall policies established by the Boards of Directors and shall do all that
is
reasonably in his power to promote, develop and extend the business of the
Bank
and Bancorp. 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 and Bancorp.
3. Compensation
and Benefits.
(a) Base
Salary.
The
Employers shall pay Executive as compensation for his services during the
Employment Period an annual base salary of Two Hundred Seventy-five Thousand
Dollars ($275,000.00) for the first twelve (12) month period, Two Hundred Ninety
Thousand Dollars ($290,000.00) for the second twelve (12) month period, and
Three Hundred Ten Thousand Dollars ($310,000.00) for the third twelve (12)
month
period (the "Base Salary"). Salary payments shall be made in equal installments
consistent with the Employer’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 Employers 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 Employers.
(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
Employers 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
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(e) Insurance
Policies.
(i) Term
Life Insurance.
During
the Employment Period, Employers shall provide term life insurance coverage
for
Executive in such form and amount as is not less favorable than that coverage
provided by the Employers to other employees of the Employers from time to
time
generally.
(ii) Key
Man Insurance.
During
the Employment Period, Executive shall permit the Employers to insure his life
under a policy or policies of life insurance issued by an insurance company
or
companies selected by the Employers, and to name the Employers 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, Employers shall provide Executive with disability
insurance coverage in such form and amount consistent with that provided to
other Bank employees of Employers 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 Employers 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, as to any stock incentive, stock option, or stock
compensation plan adopted by the Board of Directors, the Executive will be
entitled to participate therein to the extent determined by the Board of
Directors in its reasonable discretion. In addition, notwithstanding the
expiration of the Executive's Employment Agreement dated October 23, 2000 (as
amended) (the "2000 Employment Agreement"), the Executive shall continue to
be
entitled to all of the stock grant and stock option benefits set forth in
Section 3(g) thereof, and the vesting of such stock grants and stock options
and
the effect thereon of any termination of the Executive's employment shall
continue to be governed by the 2000 Employment Agreement.
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4. Disability.
If
during any period in which Executive shall have continued to perform his duties
as an employee of the Employers, 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 Employers 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 Employers 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 Employers 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 Employers; 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 Employers;
(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 Employer’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 Employers on a full-time
basis as determined by the Board of Directors after considering competent
evidence.
5. Termination.
(a) Termination
by Death.
If
Executive dies during the Employment Period, the Employer’s obligations under
this Agreement shall terminate immediately and
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(b) Termination
With or Without Cause.
This
Agreement and Executive's employment with the Employers may be terminated for
cause at any time upon thirty (30) days advance written notice from the
Employers 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 Employers business or customers
or the breach of a fiduciary duty to the Employers 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 Employer’s
regulatory authorities issue an order removing Executive from his positions
at
the Employers, or if such regulatory authorities inform the Directors that
continuation of Executive in his position at the Employers would constitute
an
unsafe and unsound banking practice.
Executive's
employment may be terminated by the Employers without cause at any time,
provided that, in such event, Employers 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 Employers shall either
continue to carry Executive at no additional cost to him under the Employer’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.
In
addition to the foregoing, in the event that Executive's employment is
terminated by the Employers without cause following the occurrence of a "Change
of Control" as defined in that certain Change of Control Agreement dated as
of
January 1, 2007 between the Executive and the Employers (the "Change of Control
Agreement"), the Executive shall be entitled to receive the higher of (i) the
payment amount calculated pursuant to the third paragraph of this Section 5(b),
or (ii) the amount payable pursuant to the Change of Control Agreement but
the
Executive shall not be entitled to receive both of the aforesaid payment
amounts.
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(c) The
Executive shall have the right to terminate this Agreement without any further
duties or obligations on his part in the event that any person other than Xxxxxx
Xx Xxxx holds the position of Chairman of the Board of the Bank or Bancorp
or
Chief Executive Officer of Bancorp, or in the event that Xxxxxx Xx Xxxx and
his
family members or trusts reduce their beneficial ownership of Bancorp's common
stock to an amount less than fifteen percent (15%) of the total outstanding
common stock of Bancorp. In the event of such a termination, Executive shall
not
be entitled to any termination payment.
(d) Immediate
Cessation of Employment.
In the
event Executive's employment terminates pursuant to subparagraphs (b) or (c)
above, the Employers may further direct Executive to cease immediately his
activities on behalf of the Employers and to discontinue using any of the
Employer’s facilities; provided, however, that in the event of these directions,
the Employers 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).
(e) Survival.
Anything in this Agreement to the contrary notwithstanding, the provisions
of
Sections 6, 7, 8 and 9, shall survive the termination of Executive's employment
with the Employers.
6. Non-Competition
Agreement and Non-Interference Covenants.
(a) Executive
absolutely and unconditionally covenants and agrees with the Employers 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 Employers (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 Employers as of the end of the
Employment Period (collectively, the "Business"). In addition, 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 Employer’s contracts or relationships with any employee,
officer, director or any independent contractor who is employed by or associated
with the Employers 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 Employer’s contracts or relationships with any independent
contractor, customer, client or supplier of the Employers. It shall not
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(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 has a branch or other place of business in the Restricted Area; (ii)
the
term "Restricted Area" shall mean the following: Fairfield and New Haven
Counties, Connecticut; Westchester, Nassua and Suffolk Counties, New York and
Manhattan, New York.
(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 Employers and by virtue of the relationship of trust and
confidence between Executive and the Employers, he possesses and will possess
certain data and knowledge of operations of The Employers 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 Employers) 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 Employers, or any other confidential or proprietary
information whatever (the "Confidential Information"), whether or not obtained
with the knowledge and permission of The Employers 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
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information
which he shall acquire or develop respecting such Confidential Information
in
trust for the sole benefit of the Employers and their successors and
assigns.
8. 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 Employers shall be the
sole
property of the Employers and, upon termination of his employment with the
Employers, Executive shall deliver the same to the Employers and shall retain
no
copies. Executive shall also return to the Employers all other property in
his
possession owned by the Employers upon termination of his
employment.
9. Breach
by Executive.
It is
expressly understood, acknowledged and agreed by Executive that: (i) the
restrictions contained in Sections 6, 7 and 8 of this Agreement represent a
reasonable and necessary protection of the legitimate interests of the Employers
and that his failure to observe and comply with his covenants and agreements
in
those Sections will cause irreparable harm to the Employers; (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 Employers have in the event of any breach of
said
Sections, The Employers 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.
10. 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 would 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).
11. 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 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.
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12. 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
Employers:
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 Employers
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 Employers 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.
(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.
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(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 Xx Xxxx
Xxxxxx
Xx
Xxxx
Chairman
of Board of Directors
PATRIOT
NATIONAL BANCORP, INC.
By :
/s/ Xxxxxx Xx Xxxx
Xxxxxx
Xx
Xxxx
Chairman
of Board of Directors
/s/
Xxxxxxx X. Xxxxxx
Xxxxxxx
X. Xxxxxx
Executive
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