ex10-8.htm


    


    Exhibit
10.8

    CHANGE
IN CONTROL AGREEMENT

    


    


    This
AGREEMENT (“Agreement”),
as amended and restated, is hereby entered into as of November 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, Mark S. Graveline
(“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 of March 1, 2005;
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 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;

            


    

    


    
      	
               
      

            	
              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 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.

    


    
      
        
           


        

        
          2

          
            

          

        

        
           


        

      

    

    


     

    


    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.  

    


    
      
        
           


        

        
          3

          
            

          

        

        
           


        

      

    

    


    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 ($1.00) less than an
amount equal to three (3) times Executive’s “base amount,” as determined in
accordance with said Section 280G.  

    


    
      
        
           


        

        
          4

          
            

          

        

        
           


        

      

    

    


    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.

    


     

    


    
      
        
           


        

        
          5

          
            

          

        

        
           


        

      

    

    


     

    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
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.

    


    
      
        
           


        

        
          6

          
            

          

        

        
           


        

      

    

    


    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.

    


    
      
        
           


        

        
          7

          
            

          

        

        
           


        

      

    

    


    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.

    


     

     

     

     

     

     

    


    
      
        
           


        

        
          8

          
            

          

        

        
           


        

      

    

    


    


    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 28th day of
November, 2007.

    


    


    
      	
              ATTEST:

            	 
      	
              NAUGATUCK
      VALLEY SAVINGS AND LOAN

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              /s/ Bernadette A. Mole

            	 
      	
              By:

            	
              /s/ John C. Roman

            
	
              Corporate
      Secretary

            	 
      	 
      	
              For
      the Entire Board of Directors

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              ATTEST:

            	 
      	
              NAUGATUCK
      VALLEY FINANCIAL 
CORPORATION

            
	 
      	 
      	
               (Guarantor)

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              /s/ Bernadette A. Mole

            	 
      	
              By:

            	
              /s/ John C. Roman

            
	
              Corporate
      Secretary

            	 
      	 
      	
              For
      the Entire Board of Directors

            
	 
      	 
      	 
      	 
      
	
              [SEAL]

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              WITNESS:

            	 
      	
              EXECUTIVE

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              /s/ Bernadette A. Mole

            	 
      	
              /s/ Mark S. Graveline

            
	
              Corporate
      Secretary

            	 
      	
              Mark
      S. Graveline