<Page>
EXHIBIT 10.3
[Composite Conformed Copy]
EMPLOYMENT AGREEMENT
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 Charles F. Howell 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
<Page>
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 cash incentive
compensation plans
2
<Page>
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
3
<Page>
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
4
<Page>
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-time
basis as determined by the Bank's Board of Directors after considering competent
evidence.
5
<Page>
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.
(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
6
<Page>
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 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
7
<Page>
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.
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
8
<Page>
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 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) Angelo DeCaro and his family members
or family trusts, (ii) Fred DeCaro 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
9
<Page>
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) Angelo DeCaro and his family members
or family trusts; (ii) Fred DeCaro 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)
Angelo DeCaro and his family members or family trusts or (ii) Fred DeCaro
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.
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
10
<Page>
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 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).
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 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:
11
<Page>
900 Bedford Street
Stamford, CT
Attention: Chairman of the Board of Directors
To Executive:
Charles F. Howell
13 Delno Drive
Danbury, CT
(b) 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.
(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.
12
<Page>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
PATRIOT NATIONAL BANK
By: /s/ ANGELO DE CARO
-------------------------------------
Chairman of Board of Directors
PATRIOT NATIONAL BANCORP, INC.
By: /s/ ANGELO DE CARO
-------------------------------------
President & CEO
/s/ CHARLES F. HOWELL
-------------------------------------
Charles F. Howell
Executive
13