**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:





**1.**
            **Term
                of Agreement****.**





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.





**2.**
            **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:





i.
            the
                assignment to Executive of any duties materially inconsistent withExecutive’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;





ii.
            a
                reduction by the Bank or Executive’s employer of Executive’s base salary
                in effect immediately prior to the Change in
                Control;





iii.
            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;





iv.
            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








v.
            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.




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




2


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 be deemed
      to have been terminated for Cause unless and until there shall have been
      delivered to him a copy of a resolution duly adopted by the affirmative vote
      of
      a majority of the entire membership of the Board of Directors at a meeting
      of
      the Board of Directors called and held for that purpose (after reasonable notice
      to Executive and an opportunity for him, together with counsel, to be heard
      before the Board of Directors), finding that, in the good faith opinion of
      the
      Board of Directors, Executive was guilty of conduct justifying termination
      for
      Cause and specifying the particulars thereof in detail. Executive shall not
      have
      the right to receive compensation or other benefits for any period after
      termination for Cause. During the period beginning on the date of the Notice
      of
      Termination for Cause pursuant to Section 4 hereof through the Date of
      Termination (as defined in Section 4), stock options granted to Executive under
      any stock option plan shall not be exercisable nor shall any unvested stock
      awards granted to Executive under any stock benefit plan of the Bank, the
      Company or any




3
  subsidiary
        or affiliate thereof, vest. At the Date of Termination, such stock options
        and
        any such unvested stock awards shall become null and void and shall not be
        exercisable by or delivered to Executive at any time subsequent to such
        termination for Cause.


**3.**
            **Termination
                Benefits****.**





a. If
      Executive’s employment is voluntarily (in accordance with Section 2a. of this
      Agreement) or involuntarily terminated within two (2) years of a Change in
      Control, Executive shall receive:





i.
            a
                lump sum cash payment equal to two (2) times the Executive’s “base
                amount,” within the meaning of Section 280G(b)(3) of the Internal Revenue
                Code of 1986, as amended (the “Code”). Such payment shall be made not
                later than five (5) days following Executive’s termination of employment
                under this Section 3.





ii.
            Continued
                benefit coverage under all Bank health and welfare plans (as defined
                in
                accordance with Section (3)(1) of the Employee Retirement Income
                Security
                Act of 1974 (“ERISA”), 29 U.S.C. Sec. 1002(1), and applicable regulations
                thereunder) which Executive participated in as of the date of the
                Change
                in Control (collectively, the “Employee Benefit Plans”) for a period of
                twenty-four (24) months following Executive’s termination of employment.
                Said coverage shall be provided under the same terms and conditions
                in
                effect on the date of Executive’s termination of employment. Solely for
                purposes of benefits continuation under the Employee Benefit Plans,
                Executive shall be deemed to be an active employee. To the extent
                that
                benefits required under this Section 3a. cannot be provided under
                the
                terms of any Employee Benefit Plan, the Bank shall enter into alternative
                arrangements that will provide Executive with comparable
                benefits.





b. Notwithstanding
      the preceding provisions of this Section 3, in no event shall the aggregate
      payments or benefits to be made or afforded to Executive under said paragraphs
      (the “Termination Benefits”) constitute an “excess parachute payment” under
      Section 280G of the Code or any successor thereto, and to avoid such a result,
      Termination Benefits will be reduced, if necessary, to an amount (the
“Non-Triggering Amount”), the value of which is one dollar ($1.00) less than an
      amount equal to three (3) times Executive’s “base amount,” as determined in
      accordance with said Section 280G. The allocation of the reduction required
      hereby among the Termination Benefits provided by this Section 3 shall be
      determined by Executive.




**4.**
            **Notice
                of Termination****.**





a. Any
      purported termination by the Bank or by Executive shall be communicated by
      Notice of Termination to the other party hereto. For purposes of this Agreement,
      a “Notice of Termination” shall mean a written notice which shall indicate the
      specific termination provision in this Agreement relied upon and shall set
      forth
      in detail the facts and circumstances claimed to




4
  provide
        a
        basis for termination of Executive’s employment under the provision so
        indicated.





b. “Date
      of
      Termination” shall mean the date specified in the Notice of Termination (which,
      in the case of a termination for Cause, shall not be less than thirty (30)
      days
      from the date such Notice of Termination is given).




**5.**
            **Source
                of Payments****.**





All
      payments provided in this Agreement shall be timely paid in cash or check from
      the general funds of the Bank. The Company, however, unconditionally guarantees
      payment and provision of all amounts and benefits due hereunder to Executive
      and, if such amounts and benefits due from the Bank are not timely paid or
      provided by the Bank, such amounts and benefits shall be paid or provided by
      the
      Company.





**6.**
            **Effect
                on Prior Agreements and Existing Benefit Plans****.**





This
      Agreement contains the entire understanding between the parties hereto and
      supersedes any prior agreement between the Bank and Executive, except that
      this
      Agreement shall not affect or operate to reduce any benefit or compensation
      inuring to Executive of a kind elsewhere provided. No provision of this
      Agreement shall be interpreted to mean that Executive is subject to receiving
      fewer benefits than those available to him without reference to this Agreement.
      Nothing in this Agreement shall confer upon Executive the right to continue
      in
      the employ of the Bank or shall impose on the Bank any obligation to employ
      or
      retain Executive in its employ for any period.





**7.**
            **No
                Attachment****.**





a. Except
      as
      required by law, no right to receive payments under this Agreement shall be
      subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
      charge, pledge, or hypothecation or to execution, attachment, levy or similar
      process or assignment by operation of law, and any attempt, voluntary or
      involuntary, to affect any such action shall be null, void and of no
      effect.





b. This
      Agreement shall be binding upon, and inure to the benefit of, Executive, the
      Bank and their respective successors and assigns.





**8.**
            **Modification
                and Waiver****.**





a. This
      Agreement may not be modified or amended except by an instrument in writing
      signed by the parties hereto.





b. No
      term
      or condition of this Agreement shall be deemed to have been waived, nor shall
      there be any estoppel against the enforcement of any provision of this
      Agreement, except by written instrument of the party charged with such waiver
      or
      estoppel. No such written waiver shall be deemed a continuing waiver unless
      specifically stated therein, and each such waiver shall operate only as to
      the
      specific term or condition waived and shall not constitute a waiver
      of




5
  such
        term
        or condition for the future or as to any act other than that specifically
        waived.


**9.**
            **Severability****.**





If,
      for
      any reason, any provision of this Agreement, or any part of any provision,
      is
      held invalid, such invalidity shall not affect any other provision of this
      Agreement or any part of such provision not held so invalid, and each such
      other
      provision and part thereof shall to the full extent consistent with law continue
      in full force and effect.





**10.**
            **Headings
                for Reference Only****.**





The
      headings of sections and paragraphs herein are included solely for convenience
      of reference and shall not control the meaning or interpretation of any of
      the
      provisions of this Agreement. In addition, references herein to the masculine
      shall apply to both the masculine and the feminine.





**11.**
            **Governing
                Law****.**





Except
      to
      the extent preempted by federal law, the validity, interpretation, performance,
      and enforcement of this Agreement shall be governed by the laws of the State
      of
      Connecticut, without regard to principles of conflicts of law of that State.





**12.**
            **Arbitration****.**





Any
      dispute or controversy arising under or in connection with this Agreement shall
      be settled exclusively by arbitration, conducted before a panel of three
      arbitrators sitting in a location selected by Executive within fifty (50) miles
      from the location of the Bank, in accordance with the rules of the American
      Arbitration Association then in effect. Judgment may be entered on the
      arbitrator’s award in any court having jurisdiction; provided, however, that
      Executive shall be entitled to seek specific performance of his right to be
      paid
      until the Date of Termination during the pendency of any dispute or controversy
      arising under or in connection with this Agreement.





**13.**
            **Payment
                of Legal Fees****.**





All
      reasonable legal fees and expenses paid or incurred by Executive pursuant to
      any
      dispute or question of interpretation relating to this Agreement shall be paid
      or reimbursed by the Bank, only if Executive is successful pursuant to a legal
      judgment, arbitration or settlement.





**14.**
            **Indemnification****.**





The
      Company or the Bank shall provide Executive (including his heirs, executors
      and
      administrators) with coverage under a standard directors’ and officers’
liability insurance policy at its expense and shall indemnify Executive (and
      his
      heirs, executors and administrators) to the fullest extent permitted under
      applicable law against all expenses and liabilities reasonably incurred by
      him
      in connection with or arising out of any action, suit or proceeding in which
      he




6
  may
        be
        involved by reason of his having been a director or officer of the Company
        or
        the Bank (whether or not he continues to be a director or officer at the
        time of
        incurring such expenses or liabilities), such expenses and liabilities to
        include, but not be limited to, judgments, court costs, attorneys’ fees and the
        costs of reasonable settlements.


**15.**
            **Successors
                to the Bank and the Company****.**





The
      Bank
      and the Company shall require any successor or assignee, whether direct or
      indirect, by purchase, merger, consolidation or otherwise, to all or
      substantially all of the business or assets of the Bank or the Company,
      expressly and unconditionally to assume and agree to perform the Bank’s and the
      Company’s obligations under this Agreement, in the same manner and to the same
      extent that the Bank and the Company would be required to perform if no such
      succession or assignment had taken place.





7





**SIGNATURES**





IN
      WITNESS WHEREOF, Naugatuck Valley Savings and Loan and Naugatuck Valley
      Financial Corporation have caused this Agreement to be executed and their seals
      to be affixed hereunto by their duly authorized officers, and Executive has
      signed this Agreement, on the 30th day of September, 2004.








ATTEST:
            
            **NAUGATUCK
                VALLEY SAVINGS AND LOAN**/s/
                Bernadette A. Mole
            
            By:
            /s/
                John C. RomanCorporate
                Secretary
            
            
            For
                the Entire Board of DirectorsATTEST:
            
            **NAUGATUCK
                VALLEY FINANCIAL CORPORATION****(Guarantor)**/s/
                Bernadette A. Mole
            
            By:
            /s/
                John C. RomanCorporate
                Secretary
            
            
            For
                the Entire Board of Directors








**[SEAL]**








WITNESS:
            
            **EXECUTIVE**/s/
                Bernadette A. Mole
            
            /s/
                Lee R. SchlesingerCorporate
                Secretary
            
            Lee
                R. Schlesinger






8