CHANGE IN CONTROL
AGREEMENT
This AGREEMENT
(“Agreement”) is hereby entered into as of
September 30, 2004,
by and between NAUGATUCK VALLEY SAVINGS AND LOAN
(the “Bank”), a federally chartered savings bank, with
its principal offices at 333 Church Street, Naugatuck, Connecticut
06770, Lee R. Schlesinger
(“Executive”), and NAUGATUCK VALLEY FINANCIAL
CORPORATION (the “Company”), a federally
chartered corporation and the holding company of the Bank, as
guarantor.
WHEREAS , the Bank recognizes the importance of
Executive to the Bank’s operations and wishes to protect his
position with the Bank in the event of a change in control of the
Bank or the Company for the period provided for in this Agreement;
and
WHEREAS , Executive and the Board of Directors of the
Bank desire to enter into an agreement setting forth the terms and
conditions of payments due to Executive in the event of a change in
control and the related rights and obligations of each of the
parties.
NOW , THEREFORE , in consideration
of the promises and mutual covenants herein contained, it is hereby
agreed as follows:
a. The term of this
Agreement shall be (i) the initial term, consisting of the period
commencing on the date of this Agreement (the “Effective
Date”) and ending on the second anniversary of the Effective
Date, plus (ii) any and all extensions of the initial term made
pursuant to this Section 1.
b. Commencing on the
first anniversary of the Effective Date and continuing each
anniversary date thereafter, the Board of Directors of the Bank
(the “Board of Directors”) may extend the term of this
Agreement for an additional one (1) year period beyond the then
effective expiration date, provided that Executive shall not have
given at least sixty (60) days’ written notice of his desire
that the term not be extended.
c. Notwithstanding
anything in this Section to the contrary, this Agreement shall
terminate if Executive or the Bank terminates Executive’s
employment prior to a Change in Control.
a. Upon the
occurrence of a Change in Control of the Bank or the Company
followed at any time during the term of this Agreement by the
termination of Executive’s employment in accordance with the
terms of this Agreement, other than for Cause, as defined in
Section 2c. of this Agreement, the provisions of Section 3 of this
Agreement shall apply. Upon the occurrence of a Change in Control,
Executive shall have the right
to elect to
voluntarily terminate his employment at any time during the term of
this Agreement following an event constituting “Good
Reason.”
“Good
Reason” means, unless Executive has consented in writing
thereto, the occurrence following a Change in Control, of any of
the following:
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the assignment
to Executive of any duties materially inconsistent with
Executive’s position, including any material diminution in
status, title, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and that is remedied by the Bank or
Executive’s employer reasonably promptly after receipt of
notice from Executive;
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a reduction by
the Bank or Executive’s employer of Executive’s base
salary in effect immediately prior to the Change in
Control;
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the relocation
of Executive’s office to a location more than twenty-five
(25) miles from its location as of the date of this
Agreement;
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the taking of
any action by the Bank or any of its affiliates or successors that
would materially adversely affect Executive’s overall
compensation and benefits package, unless such changes to the
compensation and benefits package are made on a non-discriminatory
basis and affect substantially all employees; or
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the failure of
the Bank or the affiliate of the Bank by which Executive is
employed, or any affiliate that directly or indirectly owns or
controls any affiliate by which Executive is employed, to obtain
the assumption in writing of the Bank’s obligation to perform
this Agreement by any successor to all or substantially all of the
assets of the Bank or such affiliate within thirty (30) days after
a reorganization, merger, consolidation, sale or other disposition
of assets of the Bank or such affiliate.
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b. For
purposes of this Agreement, a “Change in Control” shall
be deemed to occur on the earliest of any of the following
events:
i. Merger :
The Company merges into or consolidates with another corporation,
or merges another corporation into the Company, and as a result
less than a majority of the combined voting power of the resulting
corporation immediately after the merger or consolidation is held
by persons who were stockholders of the Company immediately before
the merger or consolidation.
ii.
Acquisition of Significant Share Ownership : There is filed,
or is required to be filed, a report on Schedule 13D or another
form or schedule (other than Schedule 13G) required under Sections
13(d) or 14(d) of the Securities Exchange
Act of 1934, if
the schedule discloses that the filing person or persons acting in
concert has or have become the beneficial owner of 25% or more of a
class of the Company’s voting securities, but this clause (b)
shall not apply to beneficial ownership of Company voting shares
held in a fiduciary capacity by an entity of which the Company
directly or indirectly beneficially owns 50% or more of its
outstanding voting securities.
iii.
Change in Board Composition : During any period of two
consecutive years, individuals who constitute the Company’s
Board of Directors at the beginning of the two-year period cease
for any reason to constitute at least a majority of the
Company’s Board of Directors; provided, however, that for
purposes of this clause (iii), each director who is first elected
by the board (or first nominated by the board for election by the
stockholders) by a vote of at least two-thirds (2/3) of the
directors who were directors at the beginning of the two-year
period shall be deemed to have also been a director at the
beginning of such period; or
iv.
Sale of Assets : The Company sells to a third party all or
substantially all of its assets.
Notwithstanding anything in this Agreement to
the contrary, in no event shall the reorganization of the Bank from
the mutual holding company form of organization to the full stock
holding company form of organization (including the elimination of
the mutual holding company) constitute a “Change in
Control” for purposes of this Agreement.
c. Executive
shall not have the right to receive termination benefits pursuant
to Section 3 hereof upon termination for “Cause.”
Termination for Cause shall mean termination of employment because
of Executive’s personal dishonesty, incompetence, willful
misconduct, any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of
any law, rule, regulation (other than traffic violations or similar
offenses), final cease and desist order, or any material breach of
any provision of this Agreement. Notwithstanding the foregoing,
Executive shall not
