Exhibit
10.8
 
 Naugatuck Valley Savings
Change in Control Agreement with William C. Nimons














CHANGE
IN CONTROL AGREEMENT








This
AGREEMENT (“Agreement”),
as amended and restated, is hereby entered into as ofNovember 20, 2007 (the
“Effective Date”),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, William C. Nimons (“Executive”), and
NAUGATUCK VALLEY FINANCIAL
CORPORATION(the “Company”), a federally chartered corporation and the
holding company of the Bank, as guarantor.





WHEREAS, the parties to this
Agreement originally entered into a change in control agreement as ofSeptember 30, 2004;
and





WHEREAS, the Bank recognizes
the importance of Executive to the Bank’s operations and wishes to continue 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 amended and restated
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 and to bring the Agreement into compliance with Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations
and guidance issued with respect to 409A of the Code.





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, as amended and restated, shall be (i) the initial
term, consisting of the period commencing on the Effective Date and ending on
the third anniversary of the Effective Date, plus (ii) any and all extensions of
the initial term made pursuant to this Section 1.





b.           
No later than October 1, 2008 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 her 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 material 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.





Upon the occurrence of any event described in clauses (i) through (v) above,
Executive shall have the right to elect to terminate his employment under this
Agreement by resignation upon sixty (60) days prior written notice given within
a reasonable period of time not to exceed ninety (90) days after the initial
event giving rise to said right to elect; provided, however that the Bank shall
have at least thirty (30) days to cure such condition and provided that
Executive actually terminates employment within two years after the initial
occurrence of such event. Notwithstanding the preceding sentence, in the event
of a continuing breach of this Agreement by the Bank, Executive, after giving
due notice within the prescribed time frame of an initial


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event
specified above, shall not waive any of his rights solely under this Agreement
by virtue of the fact that Executive has submitted his resignation but has
remained in the employment of the Bank and is engaged in good faith discussions
to resolve any occurrence of an event described in clauses (i) through (v)
above.





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),


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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 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 (for “Good Reason” in accordance with
Section 2a. of this Agreement) or involuntarily terminated within three (3)years of a Change in
Control, Executive shall receive:





i.
            a lump sum cash payment equal to
      three (3) 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 thirty-six
      (36)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


4


($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.





c.           
The parties to this Agreement intend for the payments to satisfy the short-term
deferral exception under Section 409A of the Code or, in the case of health and
welfare benefits, not constitute deferred compensation (since such amounts are
not taxable to Executive). However, notwithstanding anything to the contrary in
this Agreement, to the extent payments do not meet the short-term deferral
exception of Section 409A of the Code and, in the event Executive is a
“Specified Employee” (as defined herein) no payment shall be made to Executive
under this Agreement prior to the first day of the seventh month following the
Event of Termination in excess of the “permitted amount” under Section 409A of
the Code.  For these purposes the “permitted amount” shall be an
amount that does not exceed two times the lesser of: (A) the sum of Executive’s
annualized compensation based upon the annual rate of pay for services provided
to the Company for the calendar year preceding the year in which Executive has
an Event of Termination, or (B) the maximum amount that may be taken into
account under a tax-qualified plan pursuant to Section 401(a)(17) of the Code
for the calendar year in which occurs the Event of Termination.  The
payment of the “permitted amount” shall be made within sixty (60) days of the
occurrence of the Event of Termination.  Any payment in excess of the
permitted amount shall be made to Executive on the first day of the seventh
month following the Event of Termination.  “Specified Employee” shall
be interpreted to comply with Section 409A of the Code and shall mean a key
employee within the meaning of Section 416(i) of the Code (without regard to
paragraph 5 thereof), but an individual shall be a “Specified Employee” only if
the Bank is a publicly-traded institution or the subsidiary of a publicly-traded
holding company.





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 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.





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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 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.


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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 may be involved by
reason of 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.


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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.





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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 28thday of November,
2007.








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/
      William
      C. NimonsCorporate
      Secretary
            
            William
      C. Nimons





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