SEVERANCE
AGREEMENT
THIS SEVERANCE AGREEMENT entered into
as of the 31 st day of July, 2009, by and between
Patriot Capital Funding, Inc. (the “Company”), a
Delaware corporation, and Clifford L. Wells, an individual (the
“Executive”) (hereinafter collectively referred to as
the “Parties”).
WHEREAS, the Executive has heretofore
been employed by the Company as its Executive Vice-President and
Chief Compliance Officer, the Company recognizes the
Executive’s experience and relationships in the
Company’s industry, and the Company desires to retain the
services and employment of the Executive; and
WHEREAS, the Company and the
Executive desire to enter into this agreement (the
“Agreement”) which provides that the Executive will
receive severance pay if the Executive’s employment is
terminated under certain circumstances in connection with a change
in control of the Company.
NOW, THEREFORE, in consideration of
the respective agreements of the Parties contained herein, it is
agreed as follows:
1. Term . The term (the
“Term”) of this Agreement shall be from July 31,
2009 through January 31, 2010.
2. Termination of
Employment . The Executive’s employment by the Company
may be terminated by either the Executive or the Company at any
time and, except as expressly set forth in this Section 2,
with no requirement of notice or explanation from either Party.
Upon the Executive’s termination of employment during the
Term, the Executive (or his estate in the event he dies after
becoming entitled to, but before receiving, any payment) shall be
entitled to the payments described below.
(a) Termination in
Connection with Change in Control . If a Change in Control (as
defined below) occurs during the Term, and, within 30 days
before or within six months after such Change in Control, the
Company terminates the Executive’s employment without Cause
(as defined below) or the Executive terminates employment with Good
Reason (as defined below) then, subject to the Executive’s
compliance with Section 2(c) and Section 3 hereof, the Company
shall pay to the Executive his monthly base salary in monthly
installments for six months following his termination of
employment.
The Company shall also pay the
Executive any earned but unpaid base salary, any annual bonus
awards with respect to a completed measurement period that are
fully earned and vested at separation but not yet paid, both at the
time otherwise payable, and any amounts to which the Executive is
entitled under the generally applicable terms of pension, savings,
disability, life insurance, or other programs. Other than the
payments and benefits described in this Section 2(a), the
Company will make no additional severance or similar payments
unless otherwise approved by the Board or an authorized committee
of the Board.
(b) Termination of
Employment for Any Other Reason. If the Executive’s
employment is terminated under any circumstances other than those
described in Section 2(a), (including, without limitation,
involuntary termination of employment more than 30 days before
or more than six months after a Change in Control, voluntary
termination of employment without Good Reason, death, or
disability), the Company shall pay the Executive any earned but
unpaid base salary, any annual bonus payment with respect to a
completed measurement period that is fully earned and vested at
separation or death but not yet paid, both at the time otherwise
payable, and any amounts to which the Executive is legally entitled
under the generally applicable terms of pension, savings,
disability, life insurance, or other programs, and any business
expenses that would otherwise be reimbursed under the
Company’s policies. Other than the payments and benefits
described in this Section 2(b), the Company will be under no
obligation to make additional severance or similar payments to the
Executive or his estate, as the case may be. Notwithstanding the
foregoing, if the Company terminates the Executive’s
employment with Cause, the Company shall pay the Executive only any
earned but unpaid base salary at the time otherwise payable and any
amounts to which the Executive is legally entitled under the
generally applicable terms of pension, savings, disability or other
programs.
(c) Release of Claims .
As a condition to receiving severance payments under Section 2(a)
hereof, the Executive shall be required to deliver to the Company
and not revoke a general release of claims against the Company, its
affiliates, and their officers, directors, employees and agents in
substantially the form attached hereto as Exhibit A. The
Executive shall be afforded seven days after execution and delivery
of such release to revoke it, in which event the Executive shall
not be entitled to the payments, rights or other entitlements
hereunder other than as required by applicable law.
(d) Definitions . The
following terms shall have the following meanings for purposes of
this Agreement.
“ Cause ” means
(i) the Executive’s willful and continued failure to
perform substantially his duties with the Company (other than any
such failure resulting from the Executive’s incapacity due to
physical or mental illness or any such failure subsequent to the
Executive being delivered a notice of termination without Cause by
the Company or delivering a notice of termination for Good Reason
to the Company that results in the Executive’s termination of
employment) after a written demand for substantial performance is
delivered to the Executive by the Company which specifically
identifies the manner in which the Company believes that the
Executive has failed to perform substantially his duties;
(ii) the Executive’s willfully engaging in illegal
conduct or gross misconduct which is demonstrably and materially
injurious to the Company or its affiliates, (iii) the
Executive’s ineligibility to serve as an employee, officer,
or director of the Company pursuant to Section 9 of the
Investment Company Act of 1940, as amended, or (iv) the
Executive’s conviction of a felony or crime involving moral
turpitude; provided, however, that a failure on the part of the
Executive to achieve performance objectives set by the Company
shall not in and of itself constitute Cause pursuant to clause
(i) hereof. Prior to terminating the Executive’s
employment for Cause, the Company must notify the Executive in
writing of any event purporting to constitute Cause within
45 days of the knowledge of the Board of Directors (the
“Board”) of its existence and, if curable, must provide
the Executive with at least 20 days to cure such event. If
such event is not cured by the Executive in such time period, or is
incurable, then the Executive’s employment shall be
terminated for Cause if 2/3 of the independent members of the Board
determine in writing to so terminate his employment.
“ Change in Control
” has the meaning provided in the Patriot Capital Funding,
Inc. Amended Stock Option Plan.
“ Good Reason ”
means, without the Executive’s express written consent, the
occurrence of any of the following events:
(i) any material change in the
duties or responsibilities (including reporting responsibilities)
of the Executive that is inconsistent in any material and adverse
respect with the Executive’s position, duties,
responsibilities or status with the Company (including any material
and adverse diminution of such duties or responsibilities); or
(ii) a material and adverse
change in the Executive’s titles or offices (including, if
applicable, membership on the Board) with the Company hereof;
(iii) a reduction by the
Company in the Executive’s rate of annual base salary or an
adverse
