Exhibit 10.3 Luciano



NEWALLIANCE
BANK


RETENTION
AGREEMENT




This
Retention Agreement (this “Agreement”) is made and entered into as of the 12th
of April 2005, by and between Cornerstone Bancorp, Inc., a Connecticut
corporation (“Cornerstone”), Cornerstone Bank, a Connecticut bank and a wholly
owned subsidiary of Cornerstone, NewAlliance Bank, a Connecticut savings bank
(the “Bank”), and Anthony S. Luciano (the “Executive”).




W I T N E
S S E T H:




WHEREAS,
NewAlliance Bancshares, Inc., a Delaware corporation and the parent company of
the Bank (the “Company”), the Bank, Cornerstone and Cornerstone Bank have
entered into an Agreement and Plan of Merger dated as of April 12, 2005,
whereby, among other things, Cornerstone will merge with and into the Company
(the “Merger”);




WHEREAS,
the Executive is currently the Senior Vice President of Cornerstone
Bank;




WHEREAS,
Cornerstone Bank and the Executive entered into an employment agreement dated as
of January 11, 1999 (the “Cornerstone Employment Agreement”), which is being
superseded by this Agreement;




WHEREAS,
the Bank desires to retain the services of the Executive after the Effective
Date of the Merger; and




WHEREAS,
the Executive is willing to serve the Bank (referred to herein as the
“Employer”) on the terms and conditions hereinafter set forth;




NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Bank and the
Executive hereby agree as follows:


 

1.
Definitions.





(a)  Accrued
Benefits
means:




(i)  all
salary earned or accrued through the date the Executive’s employment is
terminated based on the Executive’s base salary as in effect as of the date of
this Agreement;




(ii)  reimbursement
for any and all monies advanced in connection with the Executive’s employment
for documented, reasonable and necessary expenses incurred in the ordinary
course of business, by the Executive through the date the Executive’s employment
is terminated;








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(iii)  any and
all other compensation previously earned by the Executive and deferred under or
pursuant to any deferred compensation plan or plans of the Bank then in effect
together with any interest or deemed earnings thereon pursuant to, and to the
extent consistent with, the terms of such plan or plans; and




(iv)  to the
extent not previously paid or provided to the Executive, all other payments and
benefits to which the Executive may be entitled under the terms of any
applicable compensation or benefit plan, program or arrangement of the Employer
in which the Executive is a participant, except for any severance plan, and
except for any plan, program or arrangement that would result in any duplication
of benefits.




(b)  Affiliate of any
specified person means any other person that, directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under direct or
indirect common control with such specified person. For the purposes of this
definition, “control” means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.




(c)  Bank
Board means
the Board of Directors of the Bank.




(d)  Base
Amount means an
amount equal to the Executive’s Annualized Includable Compensation for the Base
Period as defined in Sections 280G(d)(1) and (2) of the Code (as hereinafter
defined).




(e)  Bonus (whether
or not capitalized) means any bonus to which the Executive is entitled pursuant
to the terms of this Agreement.




(f)  Cause means a
discharge because the Bank Board determines that the Executive has: (A)
willfully failed to perform his assigned duties under this Agreement, other than
any failure resulting from the Executive's incapacity due to physical or mental
injury or illness; (B) committed an act involving moral turpitude in the course
of his employment with the Employer and its subsidiaries, affiliates or
predecessors; (C) engaged in willful misconduct; (D) breached his fiduciary
duties for personal profit; (E) willfully violated, in any material respect, any
law, rule or regulation (other than traffic violations or similar offenses),
written agreement or final cease-and-desist order with respect to his
performance of services for the Bank, as determined by the Bank Board in good
faith; or (F) materially breached the terms of this Agreement and failed to cure
such material breach during a 15-day period following the date on which the Bank
Board gives written notice to the Executive of the material breach. For purposes
of the definition of Cause, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in 







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the best
interests of the Employer. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Bank Board or based upon the
written advice of counsel for the Employer shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Employer. The cessation of employment of the Executive shall
not be deemed to be for "Cause" within the meaning of this Section 1(f) unless
and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of three-fourths of the members
of the Bank Board at a meeting of such Board called and held for such purpose
(after reasonable notice is provided to the Executive and the Executive is given
an opportunity, together with counsel, to be heard before such Board), finding
that, in the good faith opinion of such Board, the Executive is guilty of the
conduct described in this Section 1(f), and specifying the particulars thereof
in detail.





(g)  Code means
the Internal Revenue Code of 1986, as amended.




(h)  Disability means
that the Executive (i) is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than
three months under an accident and health plan covering employees of the
Bank.




(i)  Effective
Date means
the date on which the Effective Time (as defined in the Merger Agreement)
occurs, except that Section 4(a) hereof shall be effective
immediately.




(j)  Good
Reason shall
mean the occurrence of any of the following events during the Retention
Period:




(i) the
failure of the Bank Board to appoint or re-appoint the Executive to the
positions with the Bank stated in Section 3 of this Agreement;




(ii) the
expiration of a 30-day period following the date on which the Executive gives
written notice to the Employer of its material failure, whether by amendment of
the Certificate of Incorporation or Bylaws of the Bank, or by action of the Bank
Board, the Bank's shareholder(s), or otherwise, to vest in the Executive the
functions, duties or responsibilities prescribed in Section 3 of this Agreement,
unless, during such 30-day period, the Employer cures such failure;




(iii) the
expiration of a 30-day period following the date on which the Executive gives
written notice to the Employer of its material breach of any term, condition or
covenant contained in this Agreement (including, without limitation, any
reduction of the Executive's rate of Base Salary in effect from time to time),
unless, during such 30-day period, the Employer cures such failure;




(iv) a Board
approved change in the Executive's principal place of employment by a distance
in excess of 50 miles
from the Executive’s primary office location at the time of the Effective
Date;








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(v) an
adverse change in the Executive's title and position from that set forth in
Section 3;




(vi) an
adverse material change in the Executive's duties, responsibilities and
authorities as prescribed in Section 3; or




(vii) the
liquidation, dissolution, bankruptcy or insolvency of the Company or the
Bank.




(k)  Merger
Agreement means
the Agreement and Plan of Merger, dated as of April 12, 2005, among the Company,
the Bank, Cornerstone and Cornerstone Bank.




(l)  Merger
Agreement Date means
the date upon which the Merger Agreement was executed by the parties
thereto.




(m)  Notice
of Termination means a
notice which shall indicate the specific termination provision relied upon in
this Agreement and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated.




(n)  Retention
Period means a
period commencing on the Effective Date and ending on the six-month anniversary
of the date on which the Effective Time (as defined in the Merger Agreement)
occurs, provided that if the Executive’s employment is terminated in accordance
with the terms of this Agreement prior to such anniversary date, the Retention
Period shall end concurrently with the termination of the Executive’s
employment.




(o)  Retirement means a
termination of the Executive’s employment on account of resignation by the
Executive at or after age sixty-five (65), other than a resignation for Good
Reason.




(p)  401(k)
Plan means the
NewAlliance Bank 401(k) Plan as amended, or any successor plan.




2. Term
of Agreement.




The term
of this Agreement shall begin on the Effective Date and shall terminate on the
six-month anniversary of such date, unless sooner terminated in accordance with
the terms of this Agreement. If the Effective Date does not occur, this
Agreement shall be null and void ab
initio, except
for Section 4(a) hereof unless this Agreement is terminated prior to the time
the payment pursuant to Section 4(a) hereof is made. Nothing in this Agreement
shall be deemed to prohibit the Employer at any time from terminating the
Executive’s employment during the Retention Period with or without notice for
any reason, provided,
however, that the
relative rights and obligations of the Employer and the Executive in the event
of any such termination, including any requirements with respect to prior notice
of such termination, shall be determined under this Agreement.








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3. Positions
and Duties.




Throughout
the Retention Period, the Executive shall serve as the Vice President and Loan
Officer of the Employer, having such power, authority and responsibility and
performing such duties as are prescribed by or under the Bylaws of the Employer
and as are customarily associated with such positions. The Executive shall
devote his full business time, attention, skills and efforts (other than during
holidays, vacation periods, and periods of illness or approved leaves of
absence) to the business and affairs of the Employer and shall use his best
efforts to advance the interests of the Employer.




4. Compensation.




(a) On
December 30, 2005 and in consideration for the Executive executing the General
Release attached hereto as Exhibit A in a timely manner so that it is effective
and irrevocable prior to the date of such payment, Cornerstone or Cornerstone
Bank shall pay to the Executive a lump sum cash amount equal to $176,315, minus
applicable withholding, so that the full amount of such payment is included in
the Executive’s taxable income for 2005.




(b) During
the Retention Period, the Executive shall be compensated by the Bank as
follows:




(i) The
Executive shall receive, at such intervals and in accordance with the Employer’s
customary payroll practices from time to time, a base salary at a rate of
$75,000 per annum (“Base Salary”). The Bank Board may, in its sole discretion,
increase the Base Salary, but in no event may the Base Salary be decreased
without the Executive’s prior consent;




(ii) The
Executive shall be entitled to receive a bonus at the rate of $15,000 per annum,
with the bonus to be paid six months after the Effective Date, provided that the
Executive is still employed by the Employer at such time. The Bank Board may, in
its sole discretion, increase the bonus, but in no event may the bonus be
decreased without the Executive’s prior consent. In light of such bonus, the
Executive shall not be entitled to participate in the Bank’s Executive Short
Term Incentive Plan or any other incentive compensation or bonus plans;
and




(iii) The
Executive shall be entitled to participate in the medical, dental, short-term
and long-term disability, life, and accidental death and dismemberment policies
offered by the Bank to its employees. In addition, the Executive shall be
eligible to participate in the Bank’s 401(k) Profit Sharing Plan, the Bank’s
defined benefit pension plan and the Company’s Employee Stock Ownership Plan
(“ESOP”) in accordance with the plan documents. The Executive shall not receive
credit for service with Cornerstone or any of its subsidiaries (or any
predecessors to such entities) under any existing employee benefit plan of the
Company or the Bank for any purposes, except as set forth below. With respect to
the Bank’s defined benefit pension plan and the Company’s ESOP, the Executive
shall be credited with service as a Cornerstone Bank employee for purposes of
determining eligibility 







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to
participate under such plan (but not for purposes of benefit accrual or
vesting). With respect to any Bank plan which is a health, life or disability
insurance plan, the Executive shall be credited with service as a Cornerstone
Bank employee for purposes of determining eligibility under such plans and shall
not be subject to any pre-existing condition limitation for conditions under
such plans, and each such plan which provides health insurance benefits shall
honor any deductible and out-of-pocket expenses incurred by the Executive under
any comparable Cornerstone Bank plan for the plan year in which the Effective
Time occurs.




(c) The
Executive shall be entitled to paid holidays and sick leave consistent with the
Bank’s policy for officers as in effect from time to time. The Executive may not
carry over vacation days from one fiscal year to another, or be paid extra for
unused vacation days, except with the approval of the Bank Board.




(d) The
Executive shall not be entitled to receive any specific level of grants under
any stock option plan or restricted stock plan to be adopted by the Company. Any
grants that may be made to the Executive under any of such plans will be subject
to the sole discretion of the Board of Directors of the Company or the committee
administering such plans.




(e) During
the Retention Period, the Employer shall reimburse the Executive for his
ordinary and necessary business expenses attributable to the Employer’s
business, including, without limitation, the Executive’s travel expenses
incurred in connection with the performance of his duties for the Employer under
this Agreement, in each case upon presentation to the Employer of an itemized
account of such expenses in such form as the Employer may reasonably require and
subject to the approval of the Employer.




5. Termination
of Employment.




Any
termination by the Employer or the Executive of the Executive’s employment
during the Retention Period shall be communicated by written Notice of
Termination to the Executive if such notice is delivered by the Employer, and to
the Employer if such notice is delivered by the Executive. Any payments made
under this Section 5, other than due to death, shall be contingent on the
Executive’s prior execution and non-revocation of a mutual release substantially
in the form attached hereto as Exhibit A (with Cornerstone and Cornerstone Bank
deleted as parties thereto and with the December 29, 2005 dates in Sections 1(a)
and 3(a) thereof changed to the date of termination); provided, however, that if
the Employer refuses to execute such mutual release, the Executive’s obligation
to execute and not revoke the release as a precondition to receiving severance
benefits shall terminate. The Notice of Termination shall comply with the
requirements of Section 15 below and shall specify which section of this
agreement is the basis for such termination, including a listing of any relevant
facts in support thereof.




(a) Termination
for Disability Prior to the End of the Retention Period. If
during the Retention Period, the Executive’s employment is terminated on account
of the Executive’s Disability, the Executive shall receive any Accrued Benefits,
with any payments pursuant to a deferred compensation plan or other benefit
plan, program or arrangement covered by Sections 1(a)(iii) or (iv) of this
Agreement (the “Accrued Plan Benefits”) to be made in such amounts and at such
times as provided by the applicable plan. In addition, the Executive shall
continue to be covered under the Employer’s medical, dental, accident and life
insurance coverage, with the Executive responsible for paying the employee share
of any 







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premiums,
copayments or deductibles and with the accident and life insurance coverage
subject to the maximum coverage limits in the current policies of Cornerstone
Bank, until the earlier of (I) thirty-six (36) months following termination of
employment, or (II) the date the Executive has commenced new employment and has
thereby become eligible for comparable benefits; provided that, with respect to
any of the coverages described above, if such coverage is provided through an
insurance policy with an insurance company unaffiliated with the Employer and if
under the terms of the applicable policy, it is not possible to provide
continued coverage, the Employer shall pay the Executive a lump sum cash amount,
no later than thirty (30) days following termination of employment, equal to the
Employer’s then estimated share of the cost of such coverage as applicable
immediately prior to termination of employment, with such payment to be
discounted to present value using the discount rates that would be applicable
under Section 280G of the Code (the “Medical Benefits”).




(b) Termination
due to the Executive’s Death or Retirement Prior to the End of the Retention
Period. If,
during the Retention Period, the Executive’s employment is terminated on account
of the Executive’s death or Retirement, the Executive (or the Executive’s estate
or designated beneficiary (or beneficiaries), as applicable) shall receive any
Accrued Benefits, with any Accrued Plan Benefits to be made in such amounts and
at such times as provided by the applicable plan. In addition, medical and
dental coverage shall be provided to the Executive’s spouse and dependents, to
the extent covered at the time of the Executive’s death, for a period ending
with the last day of the calendar month in which occurs the second anniversary
of the Executive’s death.




(c) Voluntary
Termination or Termination for Cause Prior to the End of the Retention
Period. If,
during the Retention Period, (i) the Executive shall terminate employment with
the Employer other than for Good Reason, or (ii) the Executive’s employment is
terminated for Cause, the Executive shall receive from the Employer only (A) the
Accrued Benefits, with any Accrued Plan Benefits to be made in such amounts and
at such times as provided by the applicable plan, and (B) the Medical
Benefits.




(d) Termination
by the Employer Without Cause or by the Executive for Good Reason Prior to the
End of the Retention Period. If,
during the Retention Period, the Executive’s employment with the Employer is
terminated by the Employer other than for Cause, or by the Executive for Good
Reason, then the Executive shall receive from the Employer (i) the Accrued
Benefits, with any Accrued Plan Benefits to be made in such amounts and at such
times as provided by the applicable plan, (ii) the Medical Benefits, and (iii)
the salary and bonus that would have been paid to the Executive if he had
remained employed through the original expiration date of the Retention
Period.




(e) Termination
After the Retention Period. In the
event that the Executive ceases to be employed by the Employer for any reason at
or following the end of the Retention Period (other than by reason of a
termination of the Executive’s employment by the Employer for Cause), the
Executive shall be entitled to the Medical Benefits; provided, however, that
with respect to the definition of Medical Benefits in Section 5(a) hereof, the
reference to “thirty-six (36) months” in clause (I) of Section 5(a) shall be
reduced for purposes of this Section 5(e) by one month for each full month that
the Executive remains employed by the Employer following the end of the
Retention Period.








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6. Certain
Supplemental Payments by the Employer.




(a) In the
event that it is determined that part or all of the compensation and benefits to
be paid to the Executive, whether or not payable hereunder, (i) constitute
“parachute payments” under Section 280G of the Code (the “Payments”), and (ii)
equal or exceed three (3) times the Executive’s Base Amount, the Employer, on or
before the date for payment of the excise tax imposed under Section 4999 of the
Code, shall pay to or on behalf of the Executive, in a single lump sum, an
amount (the “Gross-Up Amount”) such that, after payment of all federal, state
and local income tax and any additional excise tax under Section 4999 of the
Code in respect of the Gross-Up Amount payment, the Executive will be fully
reimbursed for the amount of such excise tax.




(b) The
determination of the Payments, the Base Amount and the Gross-Up Amount, as well
as any other calculations necessary to implement this Section 6 shall be made by
counsel to the Employer, with such counsel’s fee to be paid by the
Employer.




(c) As
promptly as practicable following the above determinations, the Employer shall
pay to or distribute to or for the benefit of the Executive such amounts as are
then due to the Executive under this Agreement and shall promptly pay to or
distribute for the benefit of the Executive in the future such amounts as become
due to the Executive under this Agreement.




(d) As a
result of the uncertainty in the application of Section 280G of the Code at the
time of an initial determination hereunder, it is possible that payments will
not have been made by the Employer which should have been made under clause (a)
of this Section 6 (“Underpayment”). In the event that there is a final
determination by the Internal Revenue Service, or a final determination by a
court of competent jurisdiction, that an Underpayment has been made and the
Executive thereafter is required to make any payment of an excise tax, income
tax, any interest or penalty, the firm selected under clause (b) above shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Employer to or for the benefit of the
Executive. If and to the extent that the Executive receives any tax refund from
the Internal Revenue Service that is attributable to payments by the Employer
pursuant to this Section 6 of amounts in excess of the actual Gross-Up Amount as
finally determined by the Internal Revenue Service or a court of competent
jurisdiction (“Overpayment”), the Executive shall promptly pay to the Employer
the amount of such refund that is attributable to the Overpayment (together with
any interest paid or credited thereon after taxes applicable thereto); provided,
however, the Executive shall not have any obligation to pay the Employer any
amount pursuant to this Section 6(d) if and to the extent that any such
obligation would cause the arrangement to be treated as a loan or extension of
credit prohibited by applicable law.








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7. Further
Obligations of the Executive.




(a) Confidentiality. Unless
he obtains the prior written consent of the Employer, the Executive shall at all
times, both during and following the Retention Period, keep confidential and
shall refrain from using for the benefit of himself, or any person or entity
other than the Employer or its subsidiaries or affiliates, any material document
or information obtained from the Employer or its subsidiaries, affiliates or
predecessors, in the course of his employment with any of them concerning their
properties, operations or business (unless such document or information is
readily ascertainable from public or published information or trade sources or
has otherwise been made available to the public through no fault of his own)
until the same ceases to be material (or becomes so ascertainable or available);
provided,
however, that
nothing in this Section 7(a) shall prevent the Executive, with or without the
Employer’s consent, from participating in or disclosing documents or information
in connection with any judicial or administrative investigation, inquiry or
proceeding or the Company's public reporting requirements to the extent that
such participation or disclosure is required under applicable law.




(b) Non-Solicitation. The
Executive hereby covenants and agrees that, for a period of two years following
his termination of employment with the Employer for any reason, he shall not,
without the written consent of the Employer, either directly or
indirectly:




(i) solicit,
offer employment to, or take any other action intended, or that a reasonable
person acting in like circumstances would expect, to have the effect of causing
any officer or employee of the Employer or any of its subsidiaries or affiliates
to terminate his or her employment and accept employment or become affiliated
with, or provide services for compensation in any capacity whatsoever to, any
savings bank, savings and loan association, bank, bank holding company, savings
and loan holding company, or other institution engaged in the business of
accepting deposits, making loans or doing business within any county in which
the Company or the Bank maintains an office as of the date of termination of the
Executive’s employment (the “Counties” and each a “County”);




(ii) provide
any information, advice or recommendation with respect to any such officer or
employee to any savings bank, savings and loan association, bank, bank holding
company, savings and loan holding company, or other institution engaged in the
business of accepting deposits, making loans or doing business within any County
specified in Section 7(b)(i), that is intended, or that a reasonable person
acting in like circumstances would expect, to have the effect of causing any
officer or employee of the Employer or any of its subsidiaries or affiliates to
terminate his or her employment and accept employment or become affiliated with,
or provide services for compensation in any capacity whatsoever to, any savings
bank, savings and loan association, bank, bank holding company, savings and loan
holding company, or other institution engaged in the business of accepting
deposits, making loans or doing business within any County specified in Section
7(b)(i); or




(iii) solicit,
provide any information, advice or recommendation or take any other action
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any customer of the Company or the Bank to
terminate an existing business or commercial relationship with the Company or
the Bank.








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8. Equitable
Relief.




The
Executive acknowledges and agrees that in the event of a breach by the Executive
of any of the provisions of Sections 7(a) and 7(b) hereof, the Employer may
suffer irreparable harm for which monetary damages alone will constitute an
insufficient remedy. Consequently, in the event of any such breach, the Employer
may, in addition to other rights and remedies existing in its favor, apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof, in each case without the requirement of posting a bond
or proving actual damages.




9. Payment
Obligations Absolute.




The
Employer’s obligation during and after the Retention Period to pay the Executive
the compensation and to make the arrangements provided herein shall be absolute
and unconditional and shall not be affected by any circumstances, including,
without limitation, any setoff, counterclaim, recoupment, defense or other right
which the Employer may have against the Executive or anyone else. All amounts
payable by the Employer hereunder shall be paid without notice or demand. Each
and every payment made hereunder by the Employer shall be final and the Employer
will not seek to recover all or any part of such payment from the Executive or
from whomsoever may be entitled thereto, for any reason whatever except as
provided in Section 6(d) above. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement,
and such amounts (other than the Medical Benefits) shall not be reduced whether
or not the Executive obtains other employment.




10. Successors.




(a) The
Employer will require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Employer, by agreement in form and substance
satisfactory to the Executive, expressly, absolutely and unconditionally to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Employer would be required to perform it if no such succession
or assignment had taken place. Any failure of the Employer to obtain such
agreement prior to the effectiveness of any such succession or assignment shall
be a material breach of this Agreement and shall entitle the Executive to
terminate the Executive’s employment for Good Reason.




(b) This
Agreement and all rights of the Executive shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, estates,
executors, administrators, heirs and beneficiaries. All amounts payable to the
Executive hereunder shall be paid, in the event of the Executive’s death, to the
Executive’s estate, heirs and representatives. Except as provided in this
Section 10, no party may assign this Agreement or any rights, interests, or
obligations hereunder without the prior written approval of the other party.
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns pursuant to Section 10(a). This Agreement shall not be
terminated by the voluntary or involuntary dissolution of the Employer. In
addition, Sections 1, 5, 6, 7, 8, 9, 11, 12, 14, 15, 18 and 20 shall survive the
termination of this Agreement to the extent necessary to give effect to the
terms thereof.








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11. Severability
and Enforcement.




The
provisions of this Agreement shall be regarded as divisible, and if any such
provisions or any part hereof are declared invalid or unenforceable by a court
of competent jurisdiction, the validity and enforceability of the remainder of
such provisions or parts hereof and the applicability thereof shall not be
affected thereby. It is expressly understood and agreed that although the
Executive and the Employer consider the restrictions contained herein to be
reasonable, if a final judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained in
this Agreement is an unenforceable restriction against Executive, the provisions
of this Agreement shall not be rendered void but shall be deemed amended to
apply as to such maximum time and terri-tory and to such maximum extent as such
court may judicially determine or indicate to be enforceable. Alternatively, if
any court of competent jurisdiction finds that any restric-tion contained in
this Agreement is unenforceable, and such restriction cannot be amended so as to
make it enforceable, such finding shall not affect the enforceability of any of
the other restrictions contained herein.




12. Amendment.




This
Agreement may not be amended or modified at any time except by a written
instrument executed by the parties prior to the Effective Time of the Merger and
thereafter by the Employer and the Executive; provided, however, that if the
Bank Board determines, after a review of Section 409A of the Code and all
applicable Internal Revenue Service guidance, that this Agreement should be
amended to comply with Section 409A of the Code, the Bank Board may amend this
Agreement to make any changes required to comply with Section 409A of the
Code.




13. Withholding.




The
Employer shall be entitled to withhold from amounts to be paid to the Executive
hereunder any federal, state or local withholding or other taxes, or charge
which it is from time to time required to withhold. The Employer shall be
entitled to rely on an opinion of counsel if any question as to the amount or
requirement of any such withholding shall arise.




14. Dispute
Resolution.




(a) In the
event of any dispute, claim, question or disagreement arising out of or relating
to this Agreement or the breach hereof, the parties hereto shall use their best
efforts to settle such dispute, claim, question or disagreement. To this effect,
they shall consult and negotiate with each other, in good faith, and,
recognizing their mutual interests, attempt to reach a just and equitable
solution satisfactory to both parties.








11












(b) If they
do not reach such a solution within a period of thirty (30) days, then the
parties agree first to endeavor in good faith to amicably settle their dispute
by mediation under the Commercial Mediation Rules of the American Arbitration
Association (the "AAA"), before resorting to arbitration.




(c) Thereafter,
any unresolved controversy or claim arising out of or relating to this Agreement
or the breach thereof, upon notice by any party to the other, shall be submitted
to and finally settled by arbitration in accordance with the Commercial
Arbitration Rules (the "Rules") of the AAA in effect at the time demand for
arbitration is made by any such party. The parties shall mutually agree upon a
single arbitrator within thirty (30) days of such demand. In the event that the
parties are unable to so agree within such thirty (30) day period, then within
the following thirty (30) day period, one arbitrator shall be named by each
party. A third arbitrator shall be named by the two arbitrators so chosen within
ten (10) days after the appointment of the first two arbitrators. In the event
that the third arbitrator is not agreed upon, he or she shall be named by the
AAA. Arbitration shall occur in New Haven, Connecticut or such other location as
may be mutually agreed to by the parties.




(d) The award
made by all or a majority of the panel of arbitrators shall be final and
binding, and judgment may be entered based upon such award in any court of law
having competent jurisdiction. The award is subject to confirmation,
modification, correction or vacation only as explicitly provided in Title 9 of
the United States Code. The prevailing party shall be entitled to receive any
award of pre- and post-award interest as well as attorney's fees incurred in
connection with the arbitration and any judicial proceedings related thereto.
The parties acknowledge that this Agreement evidences a transaction involving
interstate commerce. The United States Arbitration Act and the Rules shall
govern the interpretation, enforcement, and proceedings pursuant to this
Section. Any provisional remedy which would be available from a court of law
shall be available from the arbitrators to the parties to this Agreement pending
arbitration. Either party may make an application to the arbitrators seeking
injunctive relief to maintain the status quo, or may seek from a court of
competent jurisdiction any interim or provisional relief that may be necessary
to protect the rights and property of that party, until such times as the
arbitration award is rendered or the controversy otherwise
resolved.




15. Notice.




Any
communication required or permitted to be given under this Agreement, including
any notice, direction, designation, consent, instruction, objection or waiver,
shall be in writing and shall be deemed to have been given at such time as it is
delivered personally, or five days after mailing if mailed, postage prepaid, by
registered or certified mail, return receipt requested, addressed to such party
at the address listed below or at such other address as one such party may by
written notice specify to the other party:








12













	 	
      If
      to the Executive:

	 	 
	 	
      Anthony
      S. Luciano

	 	
      At
      the address last appearing

	 	
      on
      the personnel records of

	 	
      the
      Employer

	 	 
	 	
      If
      to Cornerstone and Cornerstone Bank:

	 	 
	 	
      Cornerstone
      Bancorp, Inc.

	 	
      Cornerstone
      Bank

	 	
      550
      Summer Street

	 	
      Stamford,
      Connecticut 06901

	 	 
	 	
      Attention:
      Chairman of the Compensation Committee of the Board

	 	 
	 	
      If
      to the Employer:

	 	 
	 	
      NewAlliance
      Bank

	 	
      195
      Church Street

	 	
      New
      Haven, Connecticut 06510

	 	 
	 	
      (or
      the address of the Bank's principal executive office, if
      different)

	 	
      Attention:
      Chairman of the Compensation Committee of the Board

	 	 
	 	
      with
      a copy, in the case of a notice to the Employer, to:

	 	 
	 	
      Elias,
      Matz, Tiernan & Herrick L.L.P.

	 	
      734
      15th
      Street, N.W.

	 	
      Washington,
      D.C. 20005

	 	
      Attention:
      Raymond A. Tiernan, Esq.

	 	
        
      Gerald F. Heupel, Jr., Esq.




 

16. Waiver.




Failure
to insist upon strict compliance with any of the terms, covenants or conditions
hereof shall not be deemed a waiver of such term, covenant or condition. A
waiver of any provision of this Agreement must be made in writing, designated as
a waiver, and signed by the party against whom its enforcement is sought. Any
waiver or relinquishment of any right or power hereunder at any one or more
times shall not be deemed a waiver or relinquishment of such right or power at
any other time or times.








13











17. Counterparts.

 

    This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, and all of which shall constitute one and the same
Agreement.

 

18. Governing
Law.

 

    This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Connecticut applicable to contracts entered into and to be
performed entirely within the State of Connecticut, except to the extent that
federal law controls.

 

19. Headings
and Construction.

 

    The headings
of sections in this Agreement are for convenience of reference only and are not
intended to qualify the meaning of any section. Any reference to a section
number shall refer to a section of this Agreement, unless otherwise
stated.

 

20. Entire
Agreement.

 

    This
instrument contains the entire agreement of the parties relating to the subject
matter hereof, and supersedes in its entirety any and all prior agreements,
understandings or representations relating to the subject matter hereof
including but not limited to the Cornerstone Employment Agreement.

 

21. Required
Regulatory Provisions.

 

    Notwithstanding
anything herein contained to the contrary, any payments to the Executive by the
Employer, whether pursuant to this Agreement or otherwise, are subject to and
conditioned upon their compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated
thereunder in 12 C.F.R. Part 359.







14













    IN WITNESS
WHEREOF, each of Cornerstone, Cornerstone Bank and the Bank has caused this
Agreement to be executed by it duly authorized officers and the Executive has
hereunto set his hand, all as of the day and year first above
written.

 

    THIS
AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.

 



	 	 
	 	
      /s/
      Anthony S. Luciano

	 	
      Anthony
      S. Luciano, Executive

	 	 
	 	 
	
      ATTEST:
	
      NEWALLIANCE
      BANK

	 	 
	 	 
	 	 
	
      By:
      /s/ Noel Rendell
	
      By:
      /s/ Merrill B. Blanksteen

	
      Name:
      Noel Rendell
	
      Name:
      Merrill B. Blanksteen

	
      Title:
      First Vice President and 
	
      Title:
      Executive Vice President and

	
      Corporate
      Secretary 
	
      Chief
      Financial Officer

	 	 
	
      [Seal]
	 
	 	 
	
      ATTEST:
	
      CORNERSTONE
      BANCORP, INC.

	 	 
	 	 
	 	 
	
      By:
      /s/ Leigh A. Hardisty
	
      By:
      /s/ Merrill J. Forgotson

	
      Name:
      Leigh A. Hardisty
	
      Name:
      Merrill J. Forgotson

	
      Title:
      Secretary
	
      Title:
      President and Chief Executive Officer

	 	 
	
      [Seal]
	 
	 	 
	
      ATTEST:
	
      CORNERSTONE
      BANK

	 	 
	 	 
	 	 
	
      By: 
      /s/ Leigh A. Hardisty
	
      By:
      /s/ Merrill J. Forgotson

	
      Name:
      Leigh A. Hardisty
	
      Name:
      Merrill J. Forgotson

	
      Title:
      Senior Vice President and
	
      Title:
      Chairman and Chief Operating Officer

	
      Secretary
	 
	 	 
	
      [Seal]
	 











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